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, 2001 Commission File No. 0-505
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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
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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, 2001
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
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FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2001
PART I - FINANCIAL INFORMATION
- ------------------------------
PAGE
----
Cover Page 1
Index 2
Consolidated Statements of Income 3
Management's Discussion and Analysis of Results of
Operations and Financial Condition 4
Consolidated Balance Sheets - March 31, 2001 and
December 31, 2000 15
Consolidated Statements of Capitalization 17
Consolidated Statements of Cash Flows 18
Consolidated Statements of Common Stock Investment 19
Notes to the Consolidated Financial Statements 20
PART II - OTHER INFORMATION 26
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Item 6 - Exhibits and Reports on Form 8-K 27
Signature Page 28
BANGOR HYDRO-ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF INCOME
000's Omitted Except Per Share Amounts
(Unaudited)
Three Months Ended
Mar. 31, Mar. 31,
2001 2000
---------------------
Electric Operating Revenues
Electric operating revenue $ 34,187 $ 45,789
Standard offer service 22,017 4,332
---------------------
$ 56,204 $ 50,121
---------------------
Operating Expenses:
Fuel for generation and purchased power $ 7,061 $ 17,624
Standard offer service purchased power 21,536 4,259
Other operation and maintenance 8,825 8,871
Depreciation and amortization 2,698 1,971
Amortization of Seabrook nuclear unit 425 425
Amortization of contract buyouts
and restructuring 5,639 5,394
Amortization of deferred asset sale gain (1,704) (491)
Taxes -
Local property and other 1,338 1,387
State Income 594 365
Federal Income 2,165 2,009
---------------------
$ 48,577 $ 41,814
---------------------
Operating Income $ 7,627 $ 8,307
---------------------
Other Income And (Deductions):
Allowance for equity funds used
during construction $ 166 $ (220)
Other, net of applicable income taxes 393 270
---------------------
Income Before Interest Expense $ 8,186 $ 8,357
---------------------
Interest Expense:
Long-term debt $ 3,587 $ 3,979
Other 170 238
Allowance for borrowed funds used
during construction (155) 203
---------------------
$ 3,602 $ 4,420
---------------------
Net Income $ 4,584 $ 3,937
Dividends On Preferred Stock 66 66
---------------------
Earnings Applicable To Common Stock $ 4,518 $ 3,871
=====================
Weighted Average Number Of Shares Outstanding 7,363 7,363
=====================
Earnings Per Common Share:
Basic $ .61 $ .53
Diluted .55 .47
=====================
Dividends Declared Per Common Share $ .20 $ .20
=====================
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, 2000
(2000 Form 10-K) should be read in conjunction with the comments below.
EARNINGS
For the quarters ended March 31, 2001 and 2000 basic earnings per
common share were $.61 and $.53, respectively. Positively impacting earnings
in the first quarter of 2001 were higher energy sales due principally to
colder weather in the 2001 quarter as compared to 2000.
REVENUES
With the implementation of competition in the electric utility
industry starting March 1, 2000, and excluding the standard-offer service,
the Company is no longer selling electricity to customers. The Company's
transmission and distribution (T&D) and stranded cost charges to customers,
though, continue to be based on customers' electricity usage measured in
kilowatt-hours (KWH). Consequently, discussion related to electric operating
revenues will continue to have a KWH sales, or hereafter referred to as
energy sales component.
Electric operating revenue increased by $6.1 million in the first
quarter of 2001. The increase was due to several factors. Total electric
operating revenues attributable to energy sales were $4.3 million, or 8.95%,
higher in the first quarter of 2001 than in the 2000 quarter. The single
greatest impact on increased revenues in the 2001 quarter was the effects of
various increases in the Company's standard-offer service rates since the
advent of competition in March 2000. The current standard-offer service
rates for residential/small commercial and large industrial customers are
approximately 62% and 58% higher, respectively than the initial standard-
offer service rates that were in effect starting March 1, 2000. Also, in the
first quarter of 2001 energy sales to the Company's non-special contract
customers increased by 1.8% as compared to the first quarter of 2000. The
increased sales were positively affected by colder weather in the 2001
quarter as compared to 2000. The increase in revenues in the first quarter
of 2001 was also positively impacted by an $830,000 increase in off-system
sales, which are sales related to power pool and inter-connection agreements
and resales of purchased power. The off-system sales increase is due
principally to the Company's requirement, starting March 1, 2000, to resell
the capacity and energy from its six purchased power contracts pursuant to
Chapter 307 of Maine's 1997 law restructuring the State's electric utility
industry (See the 2000 Form 10-K for a more complete discussion).
Offsetting these revenue increases to some extent was a 43.5% or 43
million KWH energy sales reduction to the Company's largest special contract
customers in the first quarter of 2001 as compared to the 2000 quarter,
largely attributable to the September 15, 2000 shutdown of the Company's
formerly largest special contract customer, HoltraChem Manufacturing Company
(HoltraChem). As a result of the shutdown, energy sales and corresponding
electric operating revenues for HoltraChem were 44.8 million KWH's and $1.2
million lower, respectively, in the 2001 quarter as compared to 2000. For a
discussion of the HoltraChem shutdown, see the 2000 Form 10-K.
EXPENSES
Fuel for generation and purchased power expense, including the cost
of standard-offer service purchased power, increased $6.7 million in the
first quarter of 2001 as compared to 2000. The increased expense was a result
of several factors. Total power purchases in the first quarter of 2001 were
fairly consistent with those in the 2000 quarter due to the Company
continuing to fulfill its existing power purchase contract obligations
subsequent to the implementation of the electric industry restructuring on
March 1, 2000 and procuring power to serve the standard-offer load. In the
first two months of 2001, though, the Company purchased significantly more
power on the spot power market as compared to 2000 as a result of the
expiration of the power contracts that had been in place in the 2000 period.
Further, the market prices for power were higher due to higher fuel prices
and possibly lack of sufficient competition in the generation market.
Offsetting these increases were lower transmission related costs,
including those associated with the New England Power Pool (NEPOOL), in 2001
as compared to 2000. In 2001, the Company realized reduced transmission
costs as a result of the construction of additional qualifying transmission
facilities whose costs are recoverable from the other NEPOOL transmission
owners. ISO costs associated with transmission constraints were $194,000
lower in the 2001 quarter as compared to the 2000 quarter.
Depreciation and amortization expense increased $727,000 in the first
quarter of 2001 as compared to the 2000 due principally to two factors, the
first being additions to the Company's electric plant in service. Also
increasing depreciation expense was the effect of a depreciation study
conducted in December 1996, which determined that the Company's reserve for
depreciation was overaccumulated by approximately $3.6 million. In
connection with the MPUC's rate order in February 1998, the Company was
allowed to amortize this balance over a two-year period, starting in February
1998. The amortization was increased in June 1999 as a result of the
Company's generation asset sale. See the 2000 Form 10-K for a complete
discussion of this transaction. The amortization recorded as a reduction in
depreciation expense in the first quarter of 2000 amounted to $308,000.
The $245,000 increase in amortization of contract buyouts and
restructuring in the 2001 quarter was due to changes, effective March 1, 2000
with the implementation of new rates, in the amortization of the deferred
Beaver Wood contract buyout costs and the deferred costs associated with the
June 1998 restructuring of the Penobscot Energy Recovery Company (PERC)
purchased power contract. The Beaver Wood amortization was $141,000 higher in
the first quarter of 2000 and is being amortized at an annual rate of $3.9
million which started March 2000. Prior to the implementation of new rates
in March 2000, the Company was recovering deferred PERC restructuring costs
at an annual rate of $1 million. Effective March 1, 2000, recovery of PERC
restructuring costs was adjusted to include the estimated future value of
warrants to be exercised. The adjusted annual amortization amounts to $1.6
million. For a complete discussion of the Beaver Wood purchased power
contract buyout and the PERC contract restructuring, see the 2000 Form 10-K.
Effective with the March 1, 2000 rate change, the Company began
amortizing the deferred asset sale gain over a 70 month period. The annual
amortization amounts are being recorded in an uneven manner in order to
levelize the Company's revenue requirement over this period. As a result of
an increase in the Company's FERC regulated transmission rates on June 1,
2000, and the desire to not increase rates to its retail customers close to
the implementation of electric industry restructuring, which occurred on
March 1, 2000, the Company agreed to reduce its MPUC jurisdictional
distribution rates in an amount equal to the increase in its transmission
rates. The reduction in the distribution rates was accomplished by
accelerating the amortization of the deferred asset sale gain through May
2001 by an annualized total of $2.5 million. The Company recorded $1.7
million of amortization in the first quarter of 2001 as compared to $491,000
of amortization in the 2000 quarter.
The decrease in property and other taxes in the first quarter of 2001
was due principally to reductions in payroll taxes as a result of one less
week of payroll in the 2001 quarter as compared to 2000.
The increase in total federal and state income taxes was principally
a function of higher earnings in the first quarter of 2001 as compared to the
2000 quarter. See Footnote 2 to the Consolidated Financial Statements for a
reconciliation of the Company's effective income tax rate.
OTHER INCOME AND (DEDUCTIONS) AND INTEREST EXPENS
Allowance for funds used during construction, which includes carrying
costs on certain regulatory assets and liabilities, increased by $744,000 in
first quarter of 2001 relative to 2000 due mainly to $455,000 in carrying
costs being recorded on the deferred asset sale gain in the 2000 quarter.
The Company also recorded approximately $99,000 of increased carrying costs
on deferred standard-offer service and deferred special rate contract revenue
regulatory assets in the first quarter of 2001 as compared to the 2000
quarter.
Other income, net of income taxes increased by $123,000 in the first
quarter of 2001 principally as a result of earnings associated with the
Company's non-core wholly-owned subsidiary, Bangor Fiber Co., Inc. (Bangor
Fiber), which supplies fiberoptic communications to communications companies
and other third parties. Bangor Fiber started operations in the third
quarter of 2000. Also, in the 2000 quarter, the Company incurred greater
start-up costs associated with non-core business activities.
Long-term debt interest expense decreased $392,000 in the first
quarter of 2001 as compared to 2000 due primarily to a $14 million principal
payment at the end of June 2000 and monthly principal payments on the $24.8
million medium term notes from April 2000 through March 2001 amounted to $5.7
million.
Other interest expense decreased due principally to a reduction in
the amortization of debt issuance costs in the first quarter of 2001. The
amortization decrease was primarily attributable to the end of the
amortization period of certain deferred debt issuance costs in June 2000.
The Company fully repaid the outstanding balance under its revolving credit
line in April 1999, and no new borrowings have subsequently occurred.
LIQUIDITY AND CAPITAL RESOURCES
The Consolidated Statements of Cash Flows reflect events in the first
quarters of 2001 and 2000 as they affect the Company's liquidity. Net
increase in cash from operating activities was $11.4 million in the first
quarter of 2001 as compared to $19.1 million in the 2000 quarter. The
largest single item impacting the change in operating cash flows in the 2001
quarter was payments made in connection with the previously discussed
exercise of the Company's common stock warrants. In the first quarter of
2001 the Company made approximately $7.1 million in payments to the warrant
holders as compared to approximately $310,000 in the first quarter of 2000.
Construction expenditures were approximately $209,000 lower in the
2001 quarter as compared to 2000 due to reductions in the Company's capital
budget.
The increase in common dividends paid in the first quarter of 2001
was due to an increase in the common dividend from $.15 to $.20 per share in
March 2000.
The increase in payments on long-term debt is due principally to the
higher monthly principal payments on the $24.8 million medium term notes in
the 2001 quarter as compared to 2000.
The Company has continued to maintain full borrowing capacity under
its revolving credit facility, with no new borrowings since early 1999. For
additional discussion of liquidity and capital resources, see the Company's
2000 Form 10-K.
ENVIRONMENTAL MATTERS
The Company is regulated by the United States Environmental
Protection Agency (EPA) as to compliance with the Federal Water Pollution
Control Act, the Clean Air Act, and several federal statutes governing the
treatment and disposal of hazardous wastes. The Company is also regulated by
the Maine Department of Environmental Protection (DEP) under various Maine
environmental statutes. The Company is actively engaged in complying with
these federal and state acts and statutes, and it has not, to date,
encountered material difficulties in connection with such compliance.
In 1992, the Company received notice from the DEP that it was
investigating the cleanup of several sites in Maine that were used in the
past for the disposal of waste oil and other hazardous substances, and that
the Company, as a generator of waste oil that was disposed at those sites,
may be liable for certain cleanup costs. The Company learned in October 1995
that the EPA placed one of those sites on the National Priorities List under
the Comprehensive Environmental Response, Compensation and Liability Act and
would pursue potentially responsible parties. With respect to this site, the
Company is one of a number of waste generators under investigation.
The Company has recorded a liability, based on currently available
information, for what it believes are the estimated environmental remediation
costs that the Company expects to incur for this waste disposal site.
Additional future environmental cleanup costs are not reasonably estimable
due to a number of factors, including the unknown magnitude of possible
contamination, the appropriate remediation methods, and possible effects of
future legislation or regulation and the possible effects of technological
changes. At March 31, 2001, the liability recorded by the Company for its
estimated environmental remediation costs amounted to $139,000. The
Company's actual future environmental remediation costs may be higher as
additional factors become known.
The Company estimates that during 2001 it will incur approximately
$248,000 in operations expense to comply with environmental standards for
air, water and hazardous materials. This amount may change based on facts
and circumstances that occur in 2001.
DISCLOSURES ABOUT MARKET RISK
The Company's major financial market risk exposure is changing interest
rates. Changes in interest rates will affect interest paid on variable rate
debt and the fair value of fixed rate debt. The Company manages interest
rate risk through a combination of both fixed and variable rate debt
instruments and an interest rate swap, which is associated with the Company's
medium term notes (See Note 14 to the 2000 Form 10-K). As of March 31, 2001,
the Company had $10.2 million of medium term notes outstanding which bear
floating, LIBOR-based rates (5.08% LIBO rate at March 31, 2001). The
interest rate swap fixes the interest rate on the medium term notes at 5.72%
for the full notional amount of the debt. See Note 4 to the 2000 Form 10-K
for a discussion of these medium term notes.
OTHER
Management's discussion and analysis of results of operations and
financial condition contains items that are "forward-looking" as defined in
the Private Securities Litigation Reform Act of 1995. These statements are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those anticipated in the forward-looking statements.
Readers should not place undue reliance on forward-looking statements, which
reflect management's view only as of the date hereof. The Company undertakes
no obligation to publicly revise these forward-looking statements to reflect
subsequent events or circumstances. Factors that might cause such differences
include, but are not limited to, the Company's proposed merger with Emera,
future economic conditions, relationships with lenders, earnings retention
and dividend payout policies, electric utility restructuring, developments in
the legislative, regulatory and competitive environments in which the Company
operates, environmental issues and other circumstances that could affect
revenues and costs.
BANGOR HYDRO-ELECTRIC COMPANY
CONSOLIDATED BALANCE SHEETS
000's Omitted
(Unaudited)
Mar. 31, Dec. 31,
Assets 2001 2000
--------- ---------
Investment In Utility Plant:
Electric plant in service, at original cost $ 318,591 $ 316,167
Less - Accumulated depreciation and amortization 89,583 86,684
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$ 229,008 $ 229,483
Construction work in progress 7,265 5,458
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$ 236,273 $ 234,941
Investments in corporate joint ventures:
Maine Yankee Atomic Power Company $ 4,886 $ 4,950
Maine Electric Power Company, Inc. 775 672
---------- ----------
$ 241,934 $ 240,563
---------- ----------
Other Investments, at cost $ 3,159 $ 3,175
---------- ----------
Funds held by trustee, at cost $ 23,040 $ 22,696
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Current Assets:
Cash and cash equivalents $ 17,337 $ 12,463
Accounts receivable, net of reserve
$761 in 2001 and $1,075 in 2000 20,451 21,732
Unbilled revenue receivable 14,886 15,779
Inventories, at average cost:
Material and supplies 2,581 2,585
Fuel oil 67 94
Prepaid expenses 380 829
---------- ----------
Total current assets $ 55,702 $ 53,482
---------- ----------
Regulatory Assets and Deferred Charges:
Investment in Seabrook nuclear project, net of
accumulated amortization of $33,996 in 2001
and $33,571 in 2000 $ 24,846 $ 25,271
Costs to terminate/restructure purchased power
contracts, net of accumulated amortization
of $128,811 in 2001 and $123,172 in 2000 98,065 99,312
Maine Yankee decommissioning costs 41,883 43,028
Other regulatory assets 39,648 41,025
Other deferred charges 3,075 3,668
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Total regulatory assets and deferred charges $ 207,517 $ 212,304
---------- ----------
Total Assets $ 531,352 $ 532,220
========== ==========
See notes to the consolidated financial statements.
Mar. 31, Dec. 31,
Stockholders' Investment and Liabilities 2001 2000
--------- ---------
Capitalization:
Common stock investment $ 137,337 $ 137,420
Preferred stock 4,734 4,734
Long-term debt, net of current portion 160,085 161,960
---------- ----------
Total capitalization $ 302,156 $ 304,114
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Current Liabilities:
Notes payable - banks $ - $ -
---------- ----------
Other current liabilities -
Current portion of long-term debt $ 21,715 $ 21,340
Accounts payable 23,455 24,785
Dividends payable 1,539 1,539
Accrued interest 3,643 2,529
Customers' deposits 511 502
Current income taxes payable 4,923 306
---------- ----------
Total other current liabilities $ 55,786 $ 51,001
---------- ----------
Total current liabilities $ 55,786 $ 51,001
---------- ----------
Commitments and Contingencies
Regulatory and Other Long-term Liabilities
Deferred income taxes - Seabrook $ 12,888 $ 13,109
Other accumulated deferred income taxes 56,876 58,314
Maine Yankee decommissioning liability 41,883 43,028
Deferred gain on asset sale 20,949 22,789
Other regulatory liabilities 12,688 12,556
Unamortized investment tax credits 1,417 1,452
Accrued pension and postretirement benefit costs 12,676 12,124
Other long-term liabilities 14,033 13,733
---------- ----------
Total regulatory and other long-term liabilities $ 173,410 $ 177,105
---------- ----------
Total Stockholders' Investment and Liabilities $ 531,352 $ 532,220
========== ==========
See notes to the consolidated financial statements.
BANGOR HYDRO-ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF CAPITALIZATION
000's Omitted
(Unaudited)
Mar. 31, Dec. 31,
2001 2000
--------- ---------
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 2001 and 2000
Amounts paid in excess of par value 55,569 58,643
Accumulated other comprehensive loss (55) -
Retained earnings 45,006 41,960
--------- ---------
Total common stock investment $ 137,337 $ 137,420
--------- ---------
Preferred Stock
Non-participating, cumulative, par value $100 per share,
authorized 600,000 shares, not redemable 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
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Long-Term Debt
First Mortgage Bonds-
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
--------- ---------
$ 85,000 $ 85,000
--------- ---------
Other Long-Term Debt-
Finance Authority of Maine - Taxable Electric Rate
Stabilization Revenue Notes,
7.03% Series 1995A, due 2005 $ 86,600 $ 86,600
Medium Term Notes, Variable interest rate-
LIBO rate plus 1.125%, due 2002 10,200 11,700
--------- ---------
$ 96,800 $ 98,300
Less: Current portion of long-term debt 21,715 21,340
--------- ---------
$ 75,085 $ 76,960
--------- ---------
Total Long-Term Debt $ 160,085 $ 161,960
--------- ---------
Total Capitalization $ 302,156 $ 304,114
========= =========
See notes to the consolidated financial statements.
BANGOR HYDRO-ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
000's Omitted
(Unaudited)
Three Months Ended
Mar. 31, Mar. 31,
2001 2001
--------- ---------
Cash Flows From Operating Activities:
Net income $ 4,584 $ 3,937
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation and amortization 2,698 1,971
Amortization of Seabrook nuclear project 425 425
Amortization of contract buyouts
and restructuring 5,639 5,394
Amortization of deferred asset sale gain (1,704) (448)
Other amortizations 409 640
Allowance for equity funds used
during construction (166) 220
Deferred income tax provision and
amortization of investment tax credits (1,909) (2,616)
Changes in assets and liabilities:
Costs to restructure purchased power contract (250) (250)
Deferred standard-offer service costs 1,845 1,237
Deferred special rate contract revenues (430) -
Deferred incremental Maine Yankee costs - 894
Exercise of PERC warrants-cash paid in
lieu of issuing shares (7,114) (310)
Accounts receivable, net and unbilled revenue 2,174 4,307
Accounts payable (1,330) (2,749)
Accrued interest 1,114 1,369
Current and deferred income taxes 4,587 3,942
Accrued postretirement benefit costs 359 696
Other current assets and liabilities, net 489 495
Other, net (69) (40)
---------- ----------
Net Increase in Cash From Operating Activities: $ 11,351 $ 19,114
---------- ----------
Cash Flows From Investing Activities:
Construction expenditures $ (3,283) $ (3,492)
Allowance for borrowed funds used
during construction (155) 203
---------- ----------
Net Decrease in Cash From Investing Activities $ (3,438) $ (3,289)
---------- ----------
Cash Flows From Financing Activities:
Dividends on preferred stock $ (66) $ (66)
Dividends on common stock (1,473) (1,105)
Payments on long-term debt (1,500) (1,290)
---------- ----------
Net Decrease in Cash From Financing Activities $ (3,039) $ (2,461)
---------- ----------
Net Increase in Cash and Cash Equivalents $ 4,874 $ 13,364
Cash and Cash Equivalents at Beginning of Year 12,463 15,691
---------- ----------
Cash and Cash Equivalents at End of Year $ 17,337 $ 29,055
========== ==========
Cash Paid During the Three Months for:
Interest (Net of Amount Capitalized) $ 2,187 $ 3,046
Income Taxes 367 1,300
========== ==========
See notes to consolidated financial statements.
BANGOR HYDRO-ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF COMMON STOCK INVESTMENT
000's Omitted
(Unaudited)
Amounts Accumulated Total
Paid in Other Common
Common Excess of Retained Comprehensive Stock
Stock Par Value Earnings Loss Investment
-------- ---------- ---------- ------------------------
Balance December 31, 1999 $36,817 $58,890 $37,015 $ - $132,722
Net income - - 3,937 - 3,937
Cash dividends declared on-
Preferred stock - - (66) - (66)
Common stock - - (1,473) - (1,473)
Exercise of warrants-cash paid
in lieu of issuing shares - (47) - - (47)
-------- ---------- ---------- ------------------------
Balance March 31, 2000 $36,817 $58,843 $39,413 $ - $135,073
======== ========== ========== ========================
Balance December 31, 2000 $36,817 $58,643 $41,960 $ - $137,420
Net income - - 4,584 - 4,584
Other comprehensive loss
net of taxes:
Unrealized loss on interest
rate swap - - - (55) (55)
----------
Total Comprehensive income $ 4,529
Cash dividends declared on- ----------
Preferred stock - - (66) - (66)
Common stock - - (1,472) - (1,472)
Exercise of warrants-cash paid -
in lieu of issuing shares - (3,074) - - (3,074)
-------- ---------- ---------- ------------------------
Balance March 31, 2001 $36,817 $55,569 $45,006 $ (55) $137,337
======== ========== ========== ========================
See notes to the consolidated financial statements
BANGOR HYDRO-ELECTRIC COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
-------------
(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 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 consolidated
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,
footnotes and all other information included in the 2000 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, 2001 and the results of operations and cash
flows for the periods ended March 31, 2001 and 2000.
The Company's significant accounting policies are described in the
Notes to the Consolidated Financial Statements included in its 2000
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 federal income tax provision:
Three Months Ended March 31,
---------------------------
2001 2000
---- ----
Amount % Amount %
------ - ------ -
(Dollars in Thousands)
Federal income tax provision
at statutory rate $2,693 35.0 $2,263 35.0
Less permanent reductions
in tax expense resulting
from statutory exclusions
from taxable income (64) (.8) (1) -
------ ---- ------ ----
Federal income tax provision before
effect of temporary differences
and investment tax credits $2,629 34.2 $2,262 35.0
Less temporary differences that
are flowed through for rate-
making and accounting purposes (154) (1.8) (97) (1.6)
Less utilization and amortization
of investment tax credits (35) (.7) (35) (.5)
------ ---- ------ ----
Federal income tax provision $2,440 31.7 $2,130 32.9
====== ==== ====== ====
(3) INVESTMENT IN JOINTLY OWNED FACILITIES:
--------------------------------------
Condensed financial information for Maine Yankee Atomic Power
Company (Maine Yankee), Maine Electric Power Company, Inc. (MEPCO), 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,
2001 2000 2001 2000
OPERATIONS: -------- -------- -------- --------
As reported by investee-
Operating revenues $ 16,311 $ 12,953 $ 1,266 $ 690
======== ======== ======== ========
Earnings applicable to
common stock $ 1,138 $ 1,190 $ 407 $ 273
======== ======== ======== ========
Company's reported equity-
Equity in net income $ 80 $ 83 $ 58 $ 39
Add(Deduct)-Effect of
adjusting Company's
estimate to actual - (4) 47 6
-------- -------- -------- --------
Amounts reported by Company $ 80 $ 79 $ 105 $ 45
======== ======== ======== ========
MAINE YANKEE MEPCO
------------ -----
(Dollars in Thousands - Unaudited)
Financial Position at
---------------------------------------
Mar. 31, Dec. 31, Mar. 31, Dec. 31,
2001 2000 2001 2000
FINANCIAL POSITION: --------- --------- --------- --------
As reported by investee-
Total assets $ 887,989 $ 915,097 $ 5,889 $ 5,873
Less-
Preferred stock 15,000 15,000 - -
Long-term debt 38,400 40,800 - -
Other liabilities and
deferred credits 764,857 788,703 496 863
---------- --------- -------- --------
Net assets $ 69,732 $ 70,594 $ 5,393 $ 5,010
========== ========== ======== ========
Company's reported equity-
Equity in net assets $ 4,881 $ 4,942 $ 766 $ 711
Add(Deduct)- Effect
of adjusting Company's
estimate to actual 5 8 9 (39)
---------- ---------- -------- --------
Amounts reported by Co. $ 4,886 $ 4,950 $ 775 $ 672
========== ========== ======== ========
Chester
------------------------------------------
(Dollars in Thousands - Unaudited)
Operations for Three Months Ended
------------------------------------------
Mar. 31, Mar. 31,
2001 2000
--------- ---------
OPERATIONS:
As reported by investee-
Operating revenues $ 1,034 $ 1,083
======= =======
Net Income $ - $ -
======= =======
Company's reported equity
in net income $ - $ -
======= =======
Financial Position at
Mar. 31, Dec. 31,
2001 2000
--------- --------
FINANCIAL POSITION:
As reported by investee-
Total assets $ 23,570 $ 24,082
Less-
Long-term debt 21,992 22,288
Other liabilities 1,578 1,794
-------- -------
Net assets $ - $ -
======== =======
Company's reported equity
in net assets $ - $ -
======== =======
(4) EARNINGS PER SHARE:
------------------
The following table reconciles basic and diluted earnings per common
share assuming all stock warrants were converted to common shares.
(Amounts in 000's, except per share data)
For the Quarters
Ended
--------------------
Mar. 31, Mar. 31,
2001 2000
-------- ---------
Earnings
applicable to
common stock $ 4,518 $ 3,871
-------- --------
Average common
shares outstanding 7,363 7,363
Plus: incremental
shares from assumed
conversion 923 887
-------- --------
Average common shares
outstanding plus
assumed warrants
converted 8,286 8,250
-------- --------
Basic earnings
per common share $ .61 $ .53
======== =======
Diluted earnings
per common share $ .55 $ .47
======== =======
(5) ACCOUNTING FOR DERIVATIVE INSTRUMENTS:
-------------------------------------
Effective January 1, 2001, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments
and Hedging Activities," as amended by SFAS No. 138. This new accounting
standard requires that all derivative instruments be recorded on the balance
sheet at fair value and establishes criteria for designation and
effectiveness of hedging relationships. The effect of adopting this standard
was not material to the Company's consolidated financial statements.
Adjustments to the fair value of derivative financial instruments
could change based on guidance received from the Derivatives Implementation
Group (DIG). The DIG identifies practice issues that arise from applying the
requirements of SFAS 133 and advises the Financial Accounting Standards Board
on how to resolve those issues.
(6) RECLASSIFICATIONS:
-----------------
Certain 2000 amounts have been reclassified to conform with the
presentation used in Form 10-Q for the quarter ended March 31, 2001.
BANGOR HYDRO-ELECTRIC COMPANY
FORM 10-Q FOR PERIOD ENDING MARCH 31, 2001
PART II
Item 6. Exhibits and Reports on Form 8-K
- ------ --------------------------------
Exhibits: None.
--------
Reports on Form 8-K: None.
-------------------
BANGOR HYDRO-ELECTRIC COMPANY
FORM 10-Q FOR PERIOD ENDED MARCH 31, 2001
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)
/s/ Frederick S. Samp
---------------------
Dated: May 15, 2001
Frederick S. Samp
Vice President - Finance & Law
(Chief Financial Officer)