-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MvqIDcSlNMyYcVTfCrS1N4F41l0YNxLNiAwHxlgi2rhRKhXSajv7tZOsioU0tgPS cPNhgftDYSCd7MeVyUuwHQ== 0000009548-97-000016.txt : 19970520 0000009548-97-000016.hdr.sgml : 19970520 ACCESSION NUMBER: 0000009548-97-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANGOR HYDRO ELECTRIC CO CENTRAL INDEX KEY: 0000009548 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 010024370 STATE OF INCORPORATION: ME FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10922 FILM NUMBER: 97609017 BUSINESS ADDRESS: STREET 1: 33 STATE ST CITY: BANGOR STATE: ME ZIP: 04401 BUSINESS PHONE: 2079455621 MAIL ADDRESS: STREET 1: PO BOX 932 CITY: BANGOR STATE: ME ZIP: 04401 10-Q 1 1ST QUARTER 10Q DOCUMENT/BANGOR HYDRO-ELECTRIC CO. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended March 31, 1997 Commission File No. 0-505 -------------- ----- BANGOR HYDRO-ELECTRIC COMPANY ------------------------------------------------------ (Exact Name of Registrant as specified in its Charter) Maine 01-0024370 ------------------------------- ------------------ (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 33 State Street, Bangor, Maine 04401 ------------------------------------ ---------- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, including Area Code 207-945-5621 ------------ None ------------------------------------------------------------- Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report Outstanding Common Stock, $5 Par Value - 7,363,424 Shares March 31, 1997 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ---- FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997 PART I - FINANCIAL INFORMATION PAGE ---- Cover Page 1 Index 2 Consolidated Statements of Income 3 Management's Discussion and Analysis of Financial Statements 4 Consolidated Balance Sheets - March 31, 1997 and December 31, 1996 13 Consolidated Statements of Capitalization 15 Consolidated Statements of Cash Flows 16 Consolidated Statements of Retained Earnings 17 Notes to the Consolidated Financial Statements 18 PART II - OTHER INFORMATION 23 Item 6 - Exhibits and Reports on Form 8-K 24 Signature Page 25 BANGOR HYDRO-ELECTRIC COMPANY CONSOLIDATED STATEMENTS OF INCOME 000's Omitted Except Per Share Amounts (UNAUDITED) Three Months Ended Mar. 31, Mar. 31, 1997 1996 ---------- ---------- ELECTRIC OPERATING REVENUES $ 48,176 $ 48,161 ---------- ---------- OPERATING EXPENSES: Fuel for generation and purchased power $ 24,282 $ 18,753 Other operation and maintenance 7,762 7,737 Depreciation and amortization 2,752 1,960 Amortization of Seabrook Nuclear Unit 425 425 Amortization of contract buyouts 5,228 5,190 Taxes - Property and payroll 1,412 1,290 State income (280) 257 Federal income (62) 2,095 ---------- ---------- $ 41,519 $ 37,707 ---------- ---------- OPERATING INCOME $ 6,657 $ 10,454 ---------- ---------- OTHER INCOME AND (DEDUCTIONS): Allowance for equity funds used during construction $ 95 $ 99 Other, net of applicable income taxes 297 298 ---------- ---------- $ 392 $ 397 ---------- ---------- INCOME BEFORE INTEREST EXPENSE $ 7,049 $ 10,851 ---------- ---------- INTEREST EXPENSE: Long-term debt $ 5,755 $ 6,057 Other 766 911 Allowance for borrowed funds used during construction (188) (212) ---------- ---------- $ 6,333 $ 6,756 ---------- ---------- NET INCOME $ 716 $ 4,095 DIVIDENDS ON PREFERRED STOCK 344 393 ---------- ---------- EARNINGS APPLICABLE TO COMMON STOCK $ 372 $ 3,702 ========== ========== WEIGHTED AVERAGE NUMBER OF SHARES 7,363 7,312 ========== ========== EARNINGS PER COMMON SHARE, based on the weighted average number of shares outstanding during the period $ .05 $ .51 ========== ========== DIVIDENDS DECLARED PER COMMON SHARE $ .00 $ .18 ========== ========== See notes to the consolidated financial statements. BANGOR HYDRO-ELECTRIC COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Management's Discussion and Analysis of the Results of Operations and Financial Condition contained in Bangor Hydro-Electric Company's (the Company) Annual Report on Form 10-K for the year ended December 31, 1996 (1996 Form 10-K) should be read in conjunction with the comments below. EARNINGS The quarter ended March 31, 1997 resulted in earnings of $.05 per common share, compared to earnings of $.51 per common share for the quarter ended March 31, 1996. The decline in first quarter earnings compared to 1996 is attributable largely to the fact that the Maine Yankee nuclear power plant, in which Bangor Hydro has a 7% interest, has been shut down since early December 1996. While the plant remains shut down for repairs and inspections, Bangor Hydro incurs approximately $1 million per month in replacement power costs. Maine Yankee's operating budget has been substantially increased as well, and these costs are being borne by its owners. Aside from the Maine Yankee concerns, the economy in Bangor Hydro's service area remains sluggish, and energy sales growth is low. Earnings for the first quarter of 1997 were positively affected by three transactions that were nonrecurring in nature. The Company recorded $335,000 in revenues from the sale of air emission allowances to a coal fired generating facility, and $350,000 in revenue was recognized under a shared savings distribution agreement with another utility. Also, the Company recorded a $204,000 state income tax benefit as the result of an Internal Revenue Service examination of the Company's 1994 federal income tax return. Without the impact of these one-time events benefitting earnings, the Company would have incurred a $.03 loss per common share in the first quarter of 1997. IMPORTANT CURRENT ACTIVITIES SUSPENSION OF COMMON DIVIDEND PAYMENT - At its March 19, 1997 meeting, the Company's Board of Directors decided not to declare its regular quarterly dividend on the Company's common stock because of current financial pressures, primarily caused by the ongoing difficulties at the Maine Yankee nuclear generating plant. The quarterly common dividend payment had previously been reduced, from $.33 to $.18, in the second quarter of 1995, and had been maintained at that level until the decision on March 19, 1997. PROPOSED INCREASE IN RATES - In a major initiative to improve the Company's financial outlook, on March 3, 1997, the Company filed with the Maine Public Utilities Commission (the MPUC) notice of intent to file for a general increase in rates. In the notice, the Company notified the MPUC that it expected to seek a two step rate increase of $5 million beginning in 1998 and $4.5 million beginning in 1999. This would represent an overall increase of about 3% per year over the two year period. While the decision to increase rates runs counter to the strategies articulated by the Company in recent years, the Company believes it is important to hold the increases to minimum levels while providing a level of financial relief that will restore the Company's position to acceptable levels. RATE EMERGENCY RATE REQUEST - On April 1, 1997, the Company filed with the MPUC a Petition for Temporary Rates to increase its rates by an amount that would increase its annual revenues by $10 million effective June 1, 1997. Under Maine law, a utility must ordinarily notify the MPUC two months in advance of the filing of a request for a general increase in rates and the MPUC then has 9 months to investigate that request. The Company provided such a notice to the MPUC on March 3, 1997. However, under certain circumstances, the MPUC may allow a utility to implement a requested increase in rates on a temporary basis pending the conclusion of its investigation of the utility s request for a general increase in rates. In making its Petition for a Temporary Increase in Rates, the Company cited the continuing impact on the Company s financial condition and cash flow of the ongoing outage at the Maine Yankee nuclear power plant. The Company also cited potential noncompliance with financial covenants contained in its bank credit agreement (including the fixed charge coverage ratio, discussed below, as to which a temporary waiver of noncompliance is in effect) and the need to maintain adequate borrowing capacity for working capital purposes, including mandatory debt repayments. The Company cannot predict the outcome of its Petition. BANK CREDIT AGREEMENT COVENANT COMPLIANCE - The Company's credit agreement with its lending banks contains a number of covenants keyed to the Company's financial condition and performance. One such covenant, contained in its Credit Agreement dated June 30, 1995 with a group of seven banks, requires the Company maintain a consolidated fixed charge ratio of 1.5 to 1.0 (defined as the ratio of the sum of the Company s net income, income tax expense and interest expense to the Company s interest expense, subject to a few minor adjustments) on a rolling four quarter basis. Based on the unaudited actual first quarter 1997 financial results, the Company was out of compliance with this covenant. The Company has obtained a temporary waiver of the noncompliance effective through May 15, 1997 and a second waiver effective through June 6, 1997. The Company also projects that later in 1997 or during 1998 it may not maintain compliance with other financial covenants contained in its lending agreements. Failure to comply with these financial covenants is an Event of Default under the Credit Agreement that may result in restrictions on the Company s continuing access to adequate borrowing capacity for working capital purposes, including mandatory debt repayments. As indicated above, the costs of the ongoing outage at Maine Yankee, including replacement power costs, is a principal factor affecting the Company s financial condition and cash flow. MAINE YANKEE - As discussed in the 1996 Form 10-K, Maine Yankee, in which the Company has a 7% ownership interest, continued to be out of service during the first quarter of 1997. The plant has been off-line since early December 1996 when it was shut down to address cable separation and associated issues. Since then, Maine Yankee also determined that a portion of the nuclear fuel in the reactor was defective and had to be replaced, thereby extending the shutdown into a refueling outage. During the refueling outage, the Company and other sponsors of Maine Yankee are reviewing their analyses of the economics of operating the plant, the risks and potential benefits of continued operation, and other considerations relevant to the future of the plant. In addition, Maine Yankee is evaluating the sale of the plant or its ownership interests to a potential purchaser that has expressed preliminary interest. The Company cannot predict when or whether the plant will return to service of whether any form of sale of the plant or transfer of Maine Yankee ownership interests will take place. The Company has been incurring replacement power costs of approximately $1 million per month while the plant is out of service, and expects such costs to continue at the same rate until the plant returns to service. In addition to the replacement power costs, the Company has been bearing 7% of the additional costs being incurred at Maine Yankee necessary to return the plant to service. While Maine Yankee's board of directors approved a budget that included about $30 million in additional operating and maintenance costs in 1997, revised budgets and actual results for the first quarter of 1997 indicate that these costs will be substantially greater. SPECIAL CONTRACTS WITH LARGE INDUSTRIAL CUSTOMERS - Effective January 1, 1997 the Company renegotiated the revenue sharing portion of a special rate contract with its largest industrial customer. The rate for this customer is based in part on a revenue sharing arrangement whereby the revenues for service vary depending on the price and volume of product sold by the industrial customer to its customers. Under the revised revenue sharing formula, the Company estimates that annual revenues from the revenue sharing could be reduced by approximately $2.6 million. The Company also entered into a special rate contract with a large pulp and paper manufacturer, effective April 1, 1997. Annual revenues for this customer are estimated to be reduced by approximately $1.5 million due to the reduced rate. It was necessary to reduce rates to this pulp and paper manufacturer in order to retain the customer, since the customer was exploring self-generation for its energy needs. EMPLOYEES - On February 26, 1997, the employees of the Company's customer service center, approximately 50 employees, voted to join the International Brotherhood of Electrical Workers (AFL-CIO). To date no contract has been negotiated between the Company and the union with respect to these new members. REVENUES While there was an overall 1.9% increase in total kilowatt hour (KWH) sales (excluding off-system sales) in the first quarter of 1997 over first quarter 1996 sales, associated revenues only increased by .2% due to the effect of adjusting prices downward to some customers in order to retain sales that would otherwise be lost to competitive pressures. The lack of growth in sales remains a function of the continued sluggish economy in the Company's service territory. Revenues related to the previously discussed revenue sharing arrangement with the Company's largest industrial customer decreased by approximately $986,000 in the first quarter of 1997 as compared to the 1996 quarter. Positively impacting revenues in the first quarter of 1997 were the previously discussed sale of air emission allowances and revenue associated with the shared distribution savings with another utility. EXPENSES Fuel for generation and purchased power expense increased principally due to the previously mentioned shutdown of Maine Yankee during the entire first quarter of 1997 and the increase in its operating and maintenance expenditures in 1997. In the first quarter of 1997 the Company incurred approximately $3.5 million in incremental Maine Yankee replacement power costs, as compared to $934,000 in the first quarter of 1996. In the 1996 quarter, Maine Yankee operated for approximately 2 1/2 months. The Company has also borne a greater level of Maine Yankee operating costs, which increased by approximately $1.6 million in 1997, as compared to the 1996 quarter. Under the Company's fuel hedging program, fuel expense was reduced by $158,000 in the 1997 quarter, as compared to a $1.1 million reduction in the 1996 quarter. Other operation and maintenance (O&M) expense increased by only $25,000 in the first quarter of 1997, due principally to the Company's efforts to control costs and conserve cash. O&M payroll expense decreased by $184,000 due to a reduction in overtime labor in 1997 (fewer storms in the winter of 1997 compared to 1996), and higher level of payroll being charged to the Company's capital program. These decreases were offset by slightly higher employee levels in 1997 and the impact of wage rate increases. The $793,000 increase in depreciation and amortization expense was due principally to the ending of the amortization of the overaccumulated depreciation reserve in 1996 (See the 1996 Form 10-K for a more complete discussion). This amortization resulted in a $438,000 reduction in depreciation expense in the first quarter of 1996. Also increasing depreciation and amortization expense in the 1997 quarter were anticipated property additions for 1997, including the effect of the implementation of three large information system projects in 1997. The increase in property and other taxes in the first quarter of 1997 was due principally to greater property taxes, which was a result of increased property levels and property tax rates. The decrease in income taxes was primarily a function of lower earnings in the first quarter of 1997 as compared to the 1996 quarter. Also reducing income tax expense in the 1997 quarter was the previously discussed $204,000 state income tax benefit. See Footnote 2 to the Consolidated Financial Statements for a reconciliation of the Company's effective income tax rate. Allowance for funds used during construction decreased in 1997 relative to 1996 primarily due to lower levels of construction expenditures in the 1997 quarter. Long-term debt interest expense decreased $302,000 in the first quarter of 1997 as compared to 1996 due to $12 million in principal repayments on the Company's $60 million medium term notes on June 30, 1996, as well as sinking fund payments on the Company's 12.25% first mortgage bonds. Other interest expense, which is composed principally of interest expense on short term borrowings, decreased due to a $5.0 million decrease in weighted average short-term borrowings outstanding in the 1997 quarter as compared to 1996 and a reduction in average short-term interest rates in 1997. LIQUIDITY AND CAPITAL RESOURCES The Consolidated Statements of Cash Flows reflect events in the first quarters of 1997 and 1996 as they affect the Company's liquidity. Net cash provided by operations decreased by $4.7 million in the first quarter of 1997 as compared to the 1996 quarter. Negatively impacting cash flows from operations in the 1997 quarter were the incremental costs incurred to replace the Company's share of Maine Yankee's output. These additional fuel costs amounted to $3.5 million for the first quarter of 1997 as compared to $934,000 for the 1996 quarter. Cash flows were also reduced by the additional Maine Yankee operating costs, costs associated with the current refueling in progress at the Plant, and the Company's share of the cable separation repair (see the 1996 Form 10-K for a more complete discussion). Offsetting these cash flow decreases in the first quarter of 1997 were improved collections of the Company's accounts receivable, resulting in a cash flow benefit of $1.2 million, as compared to a $21,000 deterioration in accounts receivable in the 1996 quarter. Due to efforts by the Company to control costs and enhance cash flows in 1997, construction expenditures were reduced by $400,000 in the 1997 quarter as compared to 1996. The Company in each quarter made sinking fund payments on its 12.25% first mortgage bonds. Also in the first quarter of 1996 the Company made a sinking fund payment of $1.5 million on its 8.76% mandatory redeemable preferred stock. As discussed in more detail in the footnotes to the consolidated financial statements contained in the 1996 Form 10-K, the Company in the first quarter of 1996 made a $115,000 payment to this preferred stockholder related to a "make whole provision" under the preferred stock agreement. In 1997 the Company amended its Dividend Reinvestment and Common Stock Purchase Plan (the Plan) to allow for the option of purchasing shares either in the open market or from newly issued shares sold by the Company. The Company anticipates that for the foreseeable future common stock will be purchased on the open market. In the first quarter of 1996, under the Plan, the Company realized a common stock investment of $163,000 through the issuance of 13,542 new common shares. For a discussion of liquidity and capital resources, see the Company's 1996 Form 10-K. OTHER The Company occasionally makes forward-looking statements such as forecasts and projections of expected future performance or statements of the Company's plans and objectives. These forward-looking statements may be contained in filings with the Securities and Exchange Commission, press releases, and oral statements. Actual results could potentially differ materially from these statements. Therefore, no assurances can be given that such forward-looking statements and estimates will be achieved. BANGOR HYDRO-ELECTRIC COMPANY CONSOLIDATED BALANCE SHEETS 000's Omitted (Unaudited) ASSETS March 31, Dec. 31, 1997 1996 --------- --------- INVESTMENT IN UTILITY PLANT: Electric plant in service, at original cost $ 321,108 $ 317,833 Less - Accumulated depreciation and amortization 89,835 87,736 --------- --------- $ 231,273 $ 230,097 Construction work in progress 18,149 18,554 --------- --------- $ 249,422 $ 248,651 Investments in corporate joint ventures: Maine Yankee Atomic Power Company $ 5,008 $ 5,014 Maine Electric Power Company, Inc. 125 125 --------- --------- $ 254,555 $ 253,790 --------- --------- OTHER INVESTMENTS, principally at cost $ 4,582 $ 4,813 --------- --------- FUNDS HELD BY TRUSTEE, at cost $ 21,544 $ 21,199 --------- --------- CURRENT ASSETS: Cash and cash equivalents $ 3,942 $ 1,274 Accounts receivable, net of reserve 20,285 20,691 Unbilled revenue receivable 8,476 9,230 Inventories, at average cost: Material and supplies 2,935 2,994 Fuel oil 627 303 Prepaid expenses 887 1,672 Deferred Maine Yankee refueling costs 967 896 --------- --------- Total current assets $ 38,119 $ 37,060 --------- --------- DEFERRED CHARGES: Investment in Seabrook Nuclear Project, net of accumulated amortization of $27,200 in 1997 and $26,775 in 1996 $ 31,642 $ 32,067 Costs to terminate purchased power contracts, net of accumulated amortization of $41,626 in 1997 and $36,398 in 1996 166,475 171,703 Deferred regulatory assets 30,976 29,498 Demand-side management costs 2,400 2,632 Other 3,609 3,867 --------- --------- Total deferred charges $ 235,102 $ 239,767 --------- --------- Total assets $ 553,902 $ 556,629 ========= ========= See notes to the consolidated financial statements. BANGOR HYDRO-ELECTRIC COMPANY CONSOLIDATED BALANCE SHEETS 000's Omitted (Unaudited) March 31, Dec. 31, STOCKHOLDERS' INVESTMENT AND LIABILITIES 1997 1996 --------- --------- CAPITALIZATION: Common stock investment $ 108,693 $ 108,321 Preferred stock 4,734 4,734 Preferred stock subject to mandatory redemption, exclusive of current sinking fund requirements 10,685 10,671 Long-term debt, net of current portion 273,209 274,221 --------- --------- Total capitalization $ 397,321 $ 397,947 --------- --------- CURRENT LIABILITIES: Notes payable - banks $ 32,000 $ 32,500 --------- --------- Other current liabilities - Current portion of long-term debt and sinking fund requirements on preferred stock $ 15,561 $ 15,447 Accounts payable 10,586 13,433 Dividends payable 329 1,687 Accrued interest 4,905 3,719 Customers' deposits 330 360 Deferred fuel revenue 756 1,008 --------- --------- Total other current liabilities $ 32,467 $ 35,654 --------- --------- Total current liabilities $ 64,467 $ 68,154 --------- --------- DEFERRED CREDITS AND RESERVES: Deferred income taxes - Seabrook $ 16,435 $ 16,651 Other accumulated deferred income taxes 56,824 54,806 Deferred regulatory liability 8,116 8,446 Unamortized investment tax credits 2,131 2,179 Accrued pension 629 640 Other 7,979 7,806 --------- --------- Total deferred credits and reserves $ 92,114 $ 90,528 --------- --------- Total Stockholders' Investment and Liabilities $ 553,902 $ 556,629 ========= ========= See notes to the consolidated financial statements. BANGOR HYDRO-ELECTRIC COMPANY CONSOLIDATED STATEMENTS OF CAPITALIZATION 000's Omitted (Unaudited) Mar. 31, Dec. 31, 1997 1996 -------- -------- COMMON STOCK INVESTMENT Common stock, par value $5 per share- $ 36,817 $ 36,817 Authorized -- 10,000,000 shares Outstanding -- 7,363,424 shares in 1997 and 1996 Amounts paid in excess of par value 56,969 56,969 Retained earnings 14,907 14,535 -------- -------- Total common stock investment $ 108,693 $ 108,321 -------- -------- PREFERRED STOCK-Non participating, cumulative- Par value $100 per share, authorized 600,000 shares Not redeemable or redeemable solely at the option of the issuer- 7%, Noncallable, 25,000 shares, authorized and outstanding $ 2,500 $ 2,500 4.25%, Callable at $100, 4,840 shares, authorized and outstanding 484 484 4%, Series A, Callable at $110, 17,500 shares, authorized and outstanding 1,750 1,750 -------- -------- $ 4,734 $ 4,734 -------- -------- 8.76%, Subject to mandatory redemption requirements- Callable at 104.38% if called on or prior to De- cember 27, 1997, 150,000 shares authorized and 120,000 shares outstanding in 1997 and 1996$ 12,279 $ 12,265 Less: Sinking fund requirements 1,594 1,594 -------- -------- $ 10,685 $ 10,671 -------- -------- LONG-TERM DEBT First Mortgage Bonds- 6.75% Series due 1998 $ 2,500 $ 2,500 10.25% Series due 2019 15,000 15,000 10.25% Series due 2020 30,000 30,000 8.98% Series due 2022 20,000 20,000 7.38% Series due 2002 20,000 20,000 7.30% Series due 2003 15,000 15,000 12.25% Series due 2001 6,476 7,375 -------- -------- $ 108,976 $ 109,875 Less: Sinking fund requirements 1,967 1,854 -------- -------- Total first mortgage bonds $ 107,009 $ 108,021 -------- -------- Variable rate demand pollution control revenue bonds Series 1983 due 2009 $ 4,200 $ 4,200 -------- -------- Other Long-Term Debt- Finance Authority of Maine - Taxable Electric Rate Stabilization Revenue Notes, 7.03% Series 1995A, due 2005 $ 126,000 $ 126,000 -------- -------- Medium Term Notes, Variable interest rate- LIBO Rate plus 2%, due 2000 $ 48,000 $ 48,000 Less: Current portion of long-term debt 12,000 12,000 -------- -------- $ 36,000 $ 36,000 -------- -------- Total long-term debt $ 273,209 $ 274,221 -------- -------- Total Capitalization $ 397,321 $ 397,947 ======== ======== See notes to the consolidated financial statements. BANGOR HYDRO-ELECTRIC COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996 000's Omitted (Unaudited) 1997 1996 -------- -------- Cash Flows From Operations: Net Income $ 716 $ 4,095 Adjustments to reconcile net income to net cash provided by (used in) operations: Depreciation and amortization 2,752 1,960 Amortization of Seabrook Nuclear Project 425 425 Amortization of contract buyouts 5,228 5,190 Other amortizations 473 249 Allowance for equity funds used during construction (95) (99) Deferred income tax provision (134) 2,691 Deferred investment tax credits (48) (44) Changes in assets and liabilities: Deferred fuel revenue and Maine Yankee (323) 84 refueling costs Accounts receivable, net and unbilled 1,160 (21) revenue Accounts payable (2,847) (1,389) Accrued interest 1,186 1,039 Current and deferred income taxes 110 (403) Accrued postretirement benefit costs 500 (335) Other current assets and liabilities, net 490 (73) Other, net (473) 471 -------- -------- Net Cash Provided By Operations $ 9,120 $ 13,840 -------- -------- Cash Flows From Investing: Construction expenditures $ (3,179) $ (3,595) Allowance for borrowed funds used during construction (188) (212) -------- -------- Net Cash Used In Investing $ (3,367) $ (3,807) -------- -------- Cash Flows From Financing: Dividends on preferred stock $ (362) $ (395) Dividends on common stock (1,325) (1,314) Payments on long-term debt (898) (798) Payments on mandatory redeemable preferred stock - (1,615) Issuances: Common stock Dividend reinvestment plan - 163 Short-term debt, net (500) - -------- -------- Net Cash Used In Financing $ (3,085) $ (3,959) -------- -------- Net Change in Cash and Cash Equivalents $ 2,668 $ 6,074 Cash and Cash Equivalents at Beginning of Period 1,274 1,424 -------- -------- Cash and Cash Equivalents at End of Period $ 3,942 $ 7,498 ======== ======== Cash Paid During the Three Months For: Interest (Net of Amount Capitalized) $ 4,906 $ 5,472 Income Taxes - - ======== ======== See notes to consolidated financial statements BANGOR HYDRO-ELECTRIC COMPANY CONSOLIDATED STATEMENTS OF RETAINED EARNINGS FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996 000's Omitted (Unaudited) 1997 1996 ---------- ---------- BALANCE AT JANUARY 1 $ 14,535 $ 10,073 ADD - NET INCOME 716 4,095 ---------- ---------- $ 15,251 $ 14,168 ---------- ---------- DEDUCT: Dividends - Preferred stock $ 329 $ 362 Common stock 0 1,317 Other 15 30 ---------- ---------- $ 344 $ 1,709 ---------- ---------- BALANCE AT MARCH 31 $ 14,907 $ 12,459 ========== ========== See notes to the consolidated financial statements. BANGOR HYDRO-ELECTRIC COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS March 31, 1997 (Unaudited) (1) BASIS OF PRESENTATION AND ACCOUNTING POLICIES: Certain information and footnote disclosures, normally included in financial statements prepared in accordance with generally accepted accounting principles, have been condensed or omitted in this Form 10-Q pursuant to the Rules and Regulations of the Securities and Exchange Commission. However, in the opinion of Bangor Hydro-Electric Company, the disclosures contained in this Form 10-Q are adequate to make the information presented not misleading. The year end condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles. These statements should be read in conjunction with the consolidated financial statements and the notes thereto and all other information included in the 1996 Form 10-K. In the opinion of the Company, the accompanying unaudited consolidated financial statements reflect all adjustments, including normal recurring accruals, necessary to present fairly the financial position as of March 31, 1997 and the results of operations and cash flows for the periods ended March 31, 1997 and 1996. The Company's significant accounting policies are described in the Notes to the Consolidated Financial Statements included in its 1996 Form 10-K filed with the Securities and Exchange Commission. For interim reporting purposes, the Company follows these same basic accounting policies but considers each interim period as an integral part of an annual period. Accordingly, certain expenses are allocated to interim periods based upon estimates of such expenses for the year. (2) INCOME TAXES: The following table reconciles a provision calculated by multiplying income before federal income taxes by the statutory federal income tax rate to the above provisions for federal income taxes: Three Months Ended March 31, ----------------------------- 1997 1996 ---- ---- Amount % Amount % --------- --- -------- --- (Dollars in Thousands) Federal income tax provision at statutory rate $ 198 34% $2,267 34% Plus (Less)permanent reductions in tax expense resulting from statutory exclusions from taxable income 11 2 (6) - ----- ---- ------ --- Federal income tax provision before effect of temporary differences and investment tax credits $ 209 36% $2,261 34% Plus (Less) temporary differences that that are flowed through for rate- making and accounting purposes (25) (4) (47) (1) (Less) utilization and amortization of investment tax credits (85) (15) (119) (2) ----- ---- ------ --- Federal income tax provision $ 99 17% $2,095 31% ===== ==== ====== === 3) INVESTMENT IN JOINTLY OWNED FACILITIES: Condensed financial information for Maine Yankee Atomic Power Company ("Maine Yankee"), Maine Electric Power Company, Inc. ("MEPCO"), Bangor- Pacific Hydro Associates ("BPHA") and Chester SVC Partnership ("Chester") is as follows: MAINE YANKEE MEPCO ------------------ -------------- (Dollars in Thousands) (Unaudited) Operations for Three Months Ended ---------------------------------- Mar.31, Mar.31, Mar.31, Mar.31, 1997 1996 1997 1996 OPERATIONS: -------- -------- -------- ------ As reported by investee- Operating revenues $63,864 $41,812 $12,995 $14,860 ======= ======= ======= ======= Earnings applicable to common stock $ 1,766 $ 1,786 $ 307 $ 56 ======= ======= ======= ======= Company's reported equity- Equity in net income $ 124 $ 125 $ 44 $ 8 (Deduct)-Effect of adjusting Company's estimate to actual (2) (50) (41) (4) ------- ------- ------- ------- Amounts reported by Company $ 122 $ 75 $ 3 $ 4 ======= ======= ======= ======= MAINE YANKEE MEPCO ------------------ -------------- (Dollars in Thousands) (Unaudited) Financial Position at ----------------------------------- Mar.31, Dec. 31, Mar.31, Dec. 31, 1997 1996 1997 1996 FINANCIAL POSITION: -------- -------- ------- ------- As reported by investee- Total assets $642,683 $602,061 $ 7,086 $10,727 Less- Preferred stock 17,400 18,000 - - Long-term debt 124,332 103,332 570 620 Other liabilities and deferred credits 427,848 409,392 4,845 9,110 -------- -------- ------- ------- Net assets $ 73,103 $ 71,337 $ 1,671 $ 997 ======== ======== ======= ======= Company's reported equity- Equity in net assets $ 5,117 $ 4,994 $ 237 $ 142 (Deduct) Add - Effect of adjusting Company's estimate to actual (109) 20 (112) (17) -------- -------- ------- ------- Amounts reported by Company $ 5,008 $ 5,014 $ 125 $ 125 ======== ======== ======= ======= BPHA Chester ----------------- ----------------- (Dollars in Thousands) (Unaudited) Operations for Three Months Ended ------------------------------------- Mar.31, Mar.31, Mar.31, Mar.31, 1997 1996 1997 1996 ------- ------- -------- ------- OPERATIONS: As reported by investee- Operating revenues $ 1,806 $ 2,088 $ 1,134 $ 1,222 ======= ======= ======= ======= Net Income $ 559 $ 799 $ - $ - ======= ======= ======= ======= Company's reported equity in net income $ 280 $ 400 $ - $ - ======= ======= ======= ======= Financial Position at Mar. 31, Dec. 31, Mar. 31, Dec. 31, 1997 1996 1997 1996 -------- -------- -------- -------- FINANCIAL POSITION: As reported by investee- Total assets $39,877 $39,864 $28,456 $28,898 Less- Long-term debt 30,075 30,600 26,725 27,021 Other liabilities 2,337 2,359 1,731 1,877 ------- ------- ------- ------- Net assets $ 7,465 $ 6,905 $ - $ - ======= ======= ======= ======= Company's reported equity in net assets $ 3,733 $ 3,453 $ - $ - ======= ======= ======= ======= 4. BANK CREDIT AGREEMENT COVENANT COMPLIANCE: The Company's credit agreement with its lending banks contains a number of covenants keyed to the Company's financial condition and performance. One such covenant, contained in its Credit Agreement dated June 30, 1995 with a group of seven banks, requires the Company maintain a consolidated fixed charge ratio of 1.5 to 1.0 (defined as the ratio of the sum of the Company s net income, income tax expense and interest expense to the Company s interest expense, subject to a few minor adjustments) on a rolling four quarter basis. Based on the unaudited actual first quarter 1997 financial results, the Company was out of compliance with this covenant. The Company has obtained a temporary waiver of the noncompliance effective through May 15, 1997 and a second waiver effective through June 6, 1997. The Company also projects that later in 1997 or during 1998 it may not maintain compliance with other financial covenants contained in its lending agreements. Failure to comply with these financial covenants is an Event of Default under the Credit Agreement that may result in restrictions on the Company s continuing access to adequate borrowing capacity for working capital purposes, including mandatory debt repayments. As of March 31, 1997 the Company has classified the Medium Term Notes as long-term, the classification which the Company believes to be most appropriate. If in the future it became likely that the lenders would call the debt, then the outstanding borrowings could be classified as short-term. 5. RECLASSIFICATIONS: Certain 1996 amounts have been reclassified to conform with the presentation used in Form 10-Q for the quarter ended March 31, 1997. BANGOR HYDRO-ELECTRIC COMPANY FORM 10-Q FOR PERIOD ENDING MARCH 31, 1997 PART II ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K EXHIBITS - None. -------- REPORTS ON FORM 8-K ------------------- Two Current Reports on Form 8-K, one dated February 19, 1997 and one dated March 19, 1997, were filed in the first quarter of 1997. The filing dated February 19, 1997 was regarding the operations of the Maine Yankee nuclear generating facility. The filing dated March 19, 1997 was regarding the Company's suspension of its common dividend. BANGOR HYDRO-ELECTRIC COMPANY FORM 10-Q FOR PERIOD ENDED MARCH 31, 1997 The information furnished in this report reflects all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim period. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BANGOR HYDRO-ELECTRIC COMPANY ----------------------------- (Registrant) Dated: May 15, 1997 /s/ Frederick S. Samp ----------------------------- Frederick S. Samp Vice President - Finance & Law (Chief Financial Officer) EX-27 2 FINANCIAL DATA SCHEDULE/BANGOR HYDRO-ELECTRIC CO.
UT This schedule contains summary financial information extracted from Bangor Hydro-Electric Company's March 31, 1997 Form 10-Q and is qualified in its entirety by reference to such 10-Q. 0000009548 BANGOR HYDRO-ELECTRIC COMPANY 1,000 3-MOS DEC-31-1996 MAR-31-1997 PER-BOOK 231,273 49,408 38,119 235,102 0 553,902 36,817 56,969 14,907 108,693 10,685 4,734 273,209 0 32,000 0 13,967 1,594 0 0 109,020 553,902 48,176 (342) 41,861 41,519 6,657 392 7,049 6,333 716 344 372 0 22,323 9,120 .05 .05
-----END PRIVACY-ENHANCED MESSAGE-----