SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended JUNE 30, 1994 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 - 7,131,385 Shares
June 30, 1994
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 JUNE 30, 1994
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 - June 30, 1994 and
December 31, 1993 16
Consolidated Statements of Retained Earnings 18
Consolidated Statements of Cash Flows 19
Notes to the Consolidated Financial Statements 20
PART II - OTHER INFORMATION 26
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)
3 Months Ended 6 Months Ended
June 30, June 30, June 30, June 30,
1994 1993 1994 1993
---------- -------- --------- ----------
ELECTRIC OPERATING REVENUES:
Base rate revenue $ 20,957 $ 18,616 $ 40,688 $ 38,093
Fuel charge revenue 18,706 21,932 45,351 52,134
--------- -------- --------- -----------
$ 39,663 $ 40,548 $ 86,039 $ 90,227
--------- -------- --------- -----------
OPERATING EXPENSES:
Fuel for generation $ 18,732 $ 21,865 $ 45,388 $ 51,982
Purchased power 3,384 3,244 6,566 7,165
Other operation and maintenance 8,099 7,054 17,974 13,601
Depreciation and amortization 1,295 1,245 2,593 2,489
Amortization of Seabrook Nuclear
Units 425 425 850 850
Amortization of costs to terminate
purchased power contract 971 -- 1,295 --
Taxes -
Property and payroll 1,132 992 2,368 2,037
State income 139 80 97 352
Federal income 938 1,157 1,322 2,486
-------- -------- -------- ---------
$ 35,115 $ 36,062 $ 78,453 $ 80,962
-------- -------- -------- ---------
OPERATING INCOME $ 4,548 $ 4,486 $ 7,586 $ 9,265
-------- -------- -------- ---------
OTHER INCOME AND (DEDUCTIONS):
Allowance for equity funds used
during construction $ 212 $ 440 $ 765 $ 799
Other, net of applicable income
taxes 59 95 (17) 172
-------- -------- -------- ---------
$ 271 $ 535 $ 748 $ 971
-------- -------- -------- ---------
INCOME BEFORE INTEREST EXPENSE $ 4,819 $ 5,021 $ 8,334 $ 10,236
-------- -------- -------- ---------
INTEREST EXPENSE:
Long-term debt $ 2,705 $ 2,455 $ 5,414 $ 4,816
Other 309 254 712 492
Allowance for borrowed funds
used during construction (203) (454) (895) (746)
-------- -------- -------- ---------
$ 2,811 $ 2,255 $ 5,231 $ 4,562
-------- -------- -------- ---------
NET INCOME 2,008 2,766 3,103 5,674
DIVIDENDS ON PREFERRED STOCK 413 415 826 818
-------- -------- -------- ---------
EARNINGS APPLICABLE TO COMMON STOCK $ 1,595 $ 2,351 $ 2,277 $ 4,856
======== ======== ======== =========
WEIGHTED AVERAGE NUMBER OF SHARES 7,127 5,572 6,727 5,504
======== ======== ======== =========
EARNINGS PER COMMON SHARE, based
on the weighted average number
of shares outstanding during the
period $ 0.22 $ 0.42 $ 0.34 $ 0.88
======== ======== ======== =========
DIVIDENDS DECLARED PER COMMON SHARE $ 0.33 $ 0.33 $ 0.66 $ 0.66
======== ======== ======== =========
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, 1993
("1993 Form 10-K") should be read in conjunction with the comments below.
EARNINGS
Earnings for the quarter ended June 30, 1994 were $.22 per common share
compared to $.42 per common share for the same period in 1993. The second
quarter results brought earnings for the first six months of 1994 to $.34 per
common share compared to $.88 per common share for the same period in 1993.
The 1994 earnings per share numbers are both based on a greater number of
common shares outstanding than in 1993.
Although second quarter earnings were less than the Company's current
common dividend payout, they were about what was expected. As indicated in
prior reports, the Company anticipated a difficult year in 1994 despite a
recent base rate increase. The economy continues to be sluggish and sales
growth remains lower than that which was assumed by the Maine Public
Utilities Commission (MPUC) in the recent base rate order, and the Company
has had to respond to competitive pressures by reducing rates to some
customers in order to keep their business. In response to these challenges,
the Company presented a proposal for flexible pricing to the MPUC which would
allow the Company the opportunity to compete for a greater market share of
the energy service market. The Company is also pursuing the prospects of
additional buyouts of high cost, non-utility generator contracts. The
Company's objective is to provide stable rate levels to our core customers,
competitively priced energy options in expanding markets, and reasonable
returns to investors for the long term. While these steps might not provide
an immediate bolster to the current low level of earnings, the Company
believes the continued success of our business lies in capitalizing on the
fact that the Company provides an energy resource of great value that is
presently underutilized, rather than a never-ending succession of rate
increase requests.
REVENUES
The base rate revenue increase of $2.3 million or 12.6% was primarily
the result of the 15.9% base rate increase effective March 1, 1994. This
increase was offset by the impact of special contract rates with the
Company's two largest industrial customers, Holtrachem (formerly LCP) and
James River, which were implemented in the first quarter of 1994. While
kilowatt hour (KWH) sales to Holtrachem decreased by 11.9% in the second
quarter of 1994, base rate revenue decreased by 25.7%. KWH sales to James
River increased by 28.9%, but base rate revenue for this customer decreased
by 29.8%. Exclusive of the impact of these two special contracts, non-
interruptible (or firm) sales increased by 2.2% in the second quarter of
1994.
Fuel charge revenue decreased by $3.2 million or 14.7% in the second
quarter of 1994 over the same quarter of 1993. This decrease was due
principally to the 12.5% fuel rate decrease effective in November 1993, as
well as the impact of the special contract with James River. The Accounting
Release 14 (AR 14) reclassification resulted in additional fuel charge
revenue of $3.2 million for the second quarter of 1994 as compared to $3.5
million for the same quarter of 1993.
EXPENSES
As a result of the deferred fuel accounting methodology followed by the
Company, retail fuel expense is recorded to match the retail fuel cost
adjustment portion of fuel charge revenue. Fuel expense was also impacted by
the AR 14 reclassification, resulting in an increase of $3.2 million in fuel
expense for the quarter ended June 30, 1994 as compared to an increase of
$3.5 million for the second quarter of 1993.
Purchased power expense increased by $140,000 or 4.3% in the second
quarter of 1994 as compared to the same quarter of 1993. The increase was
principally due to higher capacity and transmission costs associated with the
Maine Yankee nuclear plant in the second quarter of 1994.
Other operation and maintenance (O&M) expense increased $1.045 million
or 14.8% in the second quarter of 1994. This expense increase was impacted
by the Company charging to operations, beginning in March 1994, the full
amount of other postretirement benefit expense under Financial Accounting
Board Statement Number 106 "Employers' Accounting for Postretirement Benefits
Other Than Pensions" (FASB 106) in excess of the amount recorded on a pay-as-
you-go basis, which amounted to $392,000 in the second quarter of 1993. Also
amortizations of certain deferred charges allowed in the most recent base
rate case amounted to $249,000 of expense in the 1994 quarter. In addition
in the second quarter of 1994, other medical costs increased $240,000, and
pension income decreased $106,000 as compared to the second quarter of 1993.
These increases were offset by a $140,000 decrease in O&M payroll. The
decreased payroll is a result of the early retirement program implemented
during the first quarter of 1994, offset by a 3.5% wage rate increase for
bargaining unit employees effective January 1, 1994.
Depreciation and amortization expense increased by $50,000 or 4.0% due
to an increase in depreciable property.
Effective March 1, 1994 in connection with the recent base rate
increase, the Company began amortizing deferred costs associated with the
Beaver Wood Joint Venture (Beaver Wood) purchased power contract termination
over a nine year period. Amortization expense amounted to $971,000 in the
second quarter of 1994.
Property and payroll taxes increased $140,000 or 14.1% as a result of
higher levels of property taxes due to greater property levels and increased
property tax rates.
Income taxes decreased $160,000 or 12.9% due principally to lower
taxable income in the second quarter of 1994.
Allowance for funds used during construction ("AFDC") decreased, the
equity portion by $228,000 or 51.8% and the borrowed portion by $251,000 or
55.3%. A large part of this reduction was due to carrying costs accrued in
1993 on costs associated with the Beaver Wood purchased power contract
termination, which took place in June 1993. In the second quarter of 1993,
approximately $238,000 in Beaver Wood buyout carrying costs were recorded.
In the second quarter of 1994 no such carrying cost were recorded, as
effective with the new base rates implemented March 1, 1994, the Company
discontinued the accrual of these carrying costs, since the recovery of the
contract termination costs (including carrying costs and a return on
unamortized balances) is included in the revised rates. Another factor
impacting decreased AFDC in the 1994 quarter was the cessation of accruing
AFDC on costs related to the Basin Mills project effective December 31, 1993.
In the second quarter of 1993 $118,000 of AFDC was recorded on Basin Mills
costs.
Long-term debt interest expense increased by $250,000 or 10.2% due to
the issuance in June 1993 of $15 million of first mortgage bonds at an
interest rate of 7.3% and the issuance of $14.3 million of first mortgage
bonds at an interest rate of 12.25%. The latter bonds were issued in
exchange for other lenders' debt in connection with the buyout of the Beaver
Wood purchased power contract. These were partially offset by reduced
interest expense as a result of regular and optional sinking fund payments on
certain higher rate bonds as well as the redemption of the remaining
principal balances of the 9.25% series due 2001, 8.25% series due 1999, and
the 8.6% series due 2003.
Other interest expense is composed primarily of interest expense on
short term borrowings. This expense increased by $55,000 or 21.7% due
principally to increased interest rates.
SIX MONTHS OF 1994 VERSUS SIX MONTHS OF 1993
Base rate revenue increased $2.6 million or 6.8% in 1994 due to 15.9%
base rate increase on March 1, 1994. This increase was offset by the impact
of the previously mentioned special contract rates with Holtrachem and James
River. While KWH sales to Holtrachem decreased by 6.0% in the first six
months of 1994, base rate revenue decreased by 29.4%. KWH sales to James
River increased by 30.7%, but base rate revenue for this customer decreased
by 13.3%. Exclusive of the impact of these two special contracts, firm
sales increased by 2.2% in 1994.
Fuel charge revenue decreased by $6.8 million or 13.0% in 1994. This
decrease was due principally to the 12.5% fuel rate decrease effective in
November 1993, as well as the impact of the special contract with James
River. The AR 14 reclassification resulted in additional fuel charge revenue
of $6.3 million for the 1994 period as compared to $7.7 million for 1993.
Purchased power expense decreased $599,000 or 8.4% due to lower capacity
and transmission costs associated with the Maine Yankee nuclear plant in
1994.
Other O&M expense increased $4.4 million or 32.2% for the six months
ended June 30, 1994 as compared to the same period for 1993. This expense
has increased due primarily to the early retirement program implemented in
the first quarter of 1994, which resulted in approximately $2.8 million in
expense being charged to operations. Other postretirement benefits under FASB
106 in excess of pay-as-you-go amounted to $531,000 in the 1994 period, and
other medical costs increased by $263,000 over the 1993 period. In addition,
previously mentioned base rate case amortizations amounted to $336,000 for
the six months ended June 30, 1994. Also increasing other O&M in 1994 was a
decrease in pension income of $211,000 as compared to 1993. Other O&M
payroll increased $144,000 in the 1994 period as compared to 1993. The
reasons for this increase were higher levels of capitalized payroll costs in
1993 and the January 1, 1994 wage rate increase of 3.5% for bargaining unit
employees. These were partially offset by the impact of the early retirement
program in the first quarter of 1994.
Depreciation and amortization expense increased by $104,000 or 4.2% due
to an increase in depreciable property.
Amortization of the costs associated with the buyout of the Beaver Wood
purchased power contract amounted to $1.3 million for the six months ended
June 30, 1994.
Property and payroll taxes increased $331,000 or 16.3% for the six
months ended June 30, 1994 as compared to the same period in 1993 due to
higher levels of taxable property and increased property tax rates.
Income taxes decreased $1.4 million for the 1994 period due principally
to lower taxable income.
The equity portion of AFDC decreased by $34,000 or 4.3% and the borrowed
portion increased by $149,000 or 20.0% for the six months ended June 30, 1994
as compared to 1993. The increase in the borrowed portion is due primarily
to carrying costs associated with the Beaver Wood purchased power contract
buyout, which were $280,000 greater in the 1994 period. This increase was
offset by no AFDC being accrued on Basin Mills costs in 1994 as compared to
$102,000 of AFDC in the 1993 period.
Other income (expense), net of applicable taxes, decreased by $189,000
due principally to a change in Holtrachem's electric rate in the first
quarter of 1994.
Long term debt interest expense increased $598,000 for the 1994 period
as compared to 1993. As previously discussed, the increase is related to the
various first mortgage bonds issued, offset by the reduction in bonds
outstanding as a result of regular and optional sinking fund payments on
certain higher rate bonds, as well as redemptions of certain first mortgage
bonds.
Other interest expense increased $220,000 or 44.7% for the six months
ended June 30, 1994 as compared to the same period in 1993. The increase is
attributable to an $8.2 million increase in average short-term debt
borrowings outstanding in the 1994 period. Also, average short-term interest
rates were .06% higher in the 1994 period as compared to 1993.
LIQUIDITY AND CAPITAL RESOURCES
The Consolidated Statements of Cash Flows reflect events in the first
six months of 1994 and 1993 as they affect the Company's liquidity. Net cash
provided by operations was $20.4 million for the first six months of 1994
compared with $17.6 million for the first six months of 1993. The increase
was due to a $1.1 million decrease in accounts payable in 1994 as compared to
a $5.0 million reduction in 1993. Also enhancing cash flows from operations
was a $5.2 million decrease in accrued current income taxes in the 1993
period compared to no change in 1994. These increases in cash flows from
operations were offset to some degree by a $7.1 million decrease in the
deferred income tax provision in 1994 as compared to 1993. In addition
accounts receivable, net and unbilled revenue increased by $3.1 million in
1994 as compared to a $6.0 million increase in the 1993 period.
Deferred fuel, purchased power and interest costs decreased $4.2 million
for the 1994 period as compared to a $6.1 million decrease for the 1993
period.
On March 30, 1994 the Company completed a common stock offering that
raised approximately $14.1 million with the issuance and sale of 867,500
shares of common stock. The proceeds from the sale were utilized to reduce
the Company's outstanding short-term debt. During the second quarter of 1994
shareholders approved a proposal to increase the amount of additional common
stock, $5 par value, and preferred stock, $100 par value, that the Company is
authorized to issue, by 2.5 million shares and 200,000 shares, respectively.
As previously discussed, external funds in the amount of $15 million
were provided by the issue of first mortgage bonds in 1993. The documents
governing these bonds do not provide for sinking fund payments. The proceeds
from the bond issuance were used to reduce short-term debt balances and fund
the Company's construction program.
Under the Company's Dividend Reinvestment and Common Stock Purchase Plan
the Company realized a common stock investment of $662,000 through the
issuance of 38,491 new common shares in the first six months of 1994 as
compared to $633,000 in the comparable 1993 period through the issue of
30,668 shares.
The Company's bank borrowings are provided through a $25 million
revolving credit facility as well as $30 million in lines of credits.
Effective May 26, 1994 the Company renegotiated its revolving credit
agreement with the participating banks for a period of one year, with an
option to renew for one additional year.
As previously discussed, the Company made regular and optional sinking
fund payments on certain of the higher rate coupon bonds and also redeemed
the remaining principal balances of three series of first mortgage bonds in
1993.
BANGOR HYDRO-ELECTRIC COMPANY
CONSOLIDATED BALANCE SHEETS
000's Omitted
(Unaudited)
ASSETS June 30, Dec. 31,
1994 1993
---------- ----------
INVESTMENT IN UTILITY PLANT:
Electric plant in service, at original cost $ 258,645 $ 250,123
Less - Accumulated depreciation and amortization 73,560 71,184
---------- ----------
$ 185,085 $ 178,939
Construction in progress 28,290 26,602
---------- ----------
$ 213,375 $ 205,541
Investments in corporate joint ventures:
Maine Yankee Atomic Power Company $ 4,745 $ 4,756
Maine Electric Power Company, Inc. 125 125
---------- ----------
$ 218,245 $ 210,422
---------- ----------
OTHER INVESTMENTS, principally at cost $ 3,261 $ 4,474
---------- ----------
CURRENT ASSETS:
Cash and cash equivalents $ 540 $ 2,387
Accounts receivable, net of reserve 16,679 18,763
Unbilled revenue receivable 6,099 7,162
Inventories, at average cost:
Material and supplies 2,914 3,220
Fuel oil 233 635
Prepaid expenses 1,151 1,574
Deferred fuel and interest costs -- 2,569
Deferred purchased power costs 1,016 1,796
Current deferred income taxes 711 --
---------- ----------
Total current assets $ 29,343 $ 38,106
---------- ----------
DEFERRED CHARGES:
Investment in Seabrook Nuclear Project, net of
accumulated amortization of $22,528 in 1994
and $21,678 in 1993 $ 36,314 $ 37,164
Costs to terminate purchased power contract 39,682 40,302
Deferred regulatory asset 33,489 33,068
Prepaid pension costs 854 2,398
Demand-side management costs 3,483 3,691
Other 4,215 3,896
----------- ----------
Total deferred charges $ 118,037 $ 120,519
----------- ----------
Total assets $ 368,886 $ 373,521
=========== ==========
See notes to the consolidated financial statements.
BANGOR HYDRO-ELECTRIC COMPANY
CONSOLIDATED BALANCE SHEETS
000's Omitted
(Unaudited)
June 30, Dec. 31,
STOCKHOLDERS' INVESTMENT AND LIABILITIES 1994 1993
--------- --------
CAPITALIZATION:
Common stock, par $5 per share -
Authorized - 10,000,000 shares in 1994 and 7,500,000
shares in 1993
Outstanding - 7,131,385 shares in 1994 and
6,225,394 shares in 1993 $ 35,657 $ 31,127
Amounts paid in excess of par value 55,581 45,431
Retained earnings 14,962 17,386
---------- ----------
$ 106,200 $ 93,944
Preferred stock, non-participating, cumulative,
par value $100 per share, authorized - 600,000
shares in 1994 and 400,000 shares in 1993
Not redeemable or redeemable solely at the
option of the Company $ 4,734 $ 4,734
Subject to mandadory redemption requirements -
8.76% non-voting not redeemable prior to
December 27, 1994, 150,000 shares authorized 15,204 15,168
and outstanding
Long-term debt, exclusive of current sinking fund 117,787 119,126
requirements
---------- ----------
Total capitalization $ 243,925 $ 232,972
---------- ----------
CURRENT LIABILITIES:
Notes payable - banks $ 16,000 $ 36,000
---------- ----------
Other current liabilities -
Current sinking fund requirements of long-term debt $ 1,377 $ 1,297
Accounts payable 14,866 15,961
Dividends payable 2,748 2,449
Accrued interest 3,641 3,706
Customers' deposits 498 498
Deferred fuel and interest costs 872 --
---------- ----------
Total other current liabilities $ 24,002 $ 23,911
---------- ----------
Total current liabilities $ 40,002 $ 59,911
---------- ----------
Deferred income taxes - Seabrook $ 18,742 $ 19,176
Other accumulated deferred income taxes 49,873 47,001
Deferred regulatory liability 9,230 9,347
Unamortized investment tax credits 2,182 2,272
Other 4,932 2,842
---------- ----------
Total deferred credits and reserves $ 84,959 $ 80,638
---------- ----------
Total Stockholders' Investment and Liabilities $ 368,886 $ 373,521
========== ==========
See notes to the consolidated financial statements.
BANGOR HYDRO-ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
FOR THE SIX MONTHS ENDED JUNE 30, 1994 AND 1993
000's Omitted
(Unaduited)
1994 1993
--------- ---------
BALANCE AT JANUARY 1 $ 17,386 $ 21,639
ADD - NET INCOME 3,103 5,674
--------- ---------
$ 20,489 $ 27,313
--------- ---------
DEDUCT:
Dividends -
Preferred stock $ 790 $ 790
Common stock 4,701 3,839
Other 36 28
--------- ---------
$ 5,527 $ 4,657
--------- ---------
BALANCE AT JUNE 30 $ 14,962 $ 22,656
========= =========
See notes to the consolidated financial statements.
BANGOR HYDRO-ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1994 AND 1993
000's Omitted
(Unaudited)
1994 1993
-------- --------
CASH FLOWS FROM OPERATIONS:
NET INCOME $ 3,103 $ 5,674
Adjustments to reconcile net income to net cash
provided by operations:
Depreciation and amortization 2,593 2,489
Amortization of Seabrook Nuclear Project 850 850
Amortization of costs to terminate purchased
power contract 1,295 --
Allowance for equity funds used during
construction (765) (799)
Deferred income tax provision 1,732 8,831
Deferred income taxes on Seabrook Nuclear Project (208) (207)
Deferred investment tax credits (90) (89)
Changes in assets and liabilities:
Deferred fuel, purchased power and interest costs 4,221 6,101
Receivables, net and unbilled revenue 3,147 6,044
Materials, supplies and fuel oil 708 (126)
Prepaid pension costs 1,544 (170)
Accounts payable (1,095) (4,964)
Accrued interest (65) 474
Accrued current income taxes -- (5,214)
Accrued postretirement benefit costs 1,445 629
Other current assets and liabilities, net 165 327
Other, net 1,794 (2,201)
---------- ----------
Net Cash Provided By Operations $ 20,374 $ 17,649
---------- ----------
CASH FLOWS FROM INVESTING:
Construction expenditures $ (9,621) $ (13,259)
Costs to terminate purchased power contract -- (23,008)
Allowance for borrowed funds used during construction (895) (746)
---------- ----------
Net Cash Used in Investing $ (10,516) $ (37,013)
---------- ----------
CASH FLOWS FROM FINANCING:
Dividends on preferred stock $ (790) $ (790)
Dividends on common stock (4,402) (3,583)
Issuance of long-term debt -- 15,000
Issuance of common stock:
Public offering (867,500 shares in 1994 and 745,000
shares in 1993) 14,084 14,803
Dividend reinvestment plan (38,491 shares in 1994
and 30,668 in 1993) 662 633
Payments on long-term debt (1,259) (7,445)
Short-term debt, net (20,000) 1,000
---------- ----------
Net Cash (Used in) Provided by Financing $ (11,705) $ 19,618
---------- ----------
NET CHANGE IN CASH AND TEMPORARY CASH INVESTMENTS $ (1,847) $ 254
CASH AND TEMPORARY CASH INVESTMENTS - BEGINNING OF YEAR 2,387 1,488
---------- ----------
CASH AND TEMPORARY CASH INVESTMENTS - END OF SIX MONTHS $ 540 $ 1,742
========== ==========
CASH PAID DURING THE SIX MONTHS FOR:
INTEREST (Net of Amount Capitalized) $ 4,373 $ 2,950
INCOME TAXES -- --
========== ==========
See notes to the consolidated financial statements.
BANGOR HYDRO-ELECTRIC COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1994
-------------
(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. These statements should be read in conjunction
with the consolidated financial statements and the notes thereto and all
other information included in the 1993 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 June 30,
1994 and the results of operations and cash flows for the periods ended June
30, 1994 and 1993.
The Company's significant accounting policies are described
in the Notes to the Consolidated Financial Statements included in its 1993
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:
SIX MONTHS ENDED JUNE 30,
--------------------------
1994 1993
------------ -----------
AMOUNT % AMOUNT %
------- ---- ------- ---
(Dollars in Thousands)
Federal income tax provision
at statutory rate $1,543 34% $2,971 34%
Less permanent reductions in
tax expense resulting from
statutory exclusions from
taxable income 241 5 220 2
------ -- ------ --
Federal income tax provision
before effect of temporary
differences $1,302 29% $2,751 32%
(Plus) Less temporary differences
that are flowed through for rate-
making and accounting purposes (33) - 164 2
------ -- ------ --
Federal income tax provision $1,335 29% $2,587 30%
====== == ====== ==
(3) INVESTMENT IN MAINE YANKEE AND MEPCO:
Condensed financial information for Maine Yankee Atomic Power Company
("Maine Yankee") and Maine Electric Power Company, Inc. ("MEPCO") is as
follows:
MAINE YANKEE MEPCO
-------------- ----------------
(Dollars in Thousands)
(Unaudited)
Operations for
Six Months Ended
-------------------------------------
June 30, June 30, June 30, June 30,
1994 1993 1994 1993
-------- -------- -------- -------
OPERATIONS:
As reported by investee-
Operating revenues $82,249 $83,870 $ 7,788 $ 3,527
======= ======= ======= ========
Earnings applicable to
common stock $ 3,488 $ 4,161 $ 53 $ 53
======= ======= ======= ========
Company's reported equity-
Equity in net income $ 244 $ 291 $ 7 $ 7
Add(deduct)-Effect of
adjusting Company's
estimate to actual (9) 3 - -
------- ------- ------- --------
Amounts reported by
Company $ 235 $ 294 $ 7 $ 7
======= ======= ======= ========
MAINE YANKEE MEPCO
------------------ ----------------
(Dollars in Thousands)
(Unaudited)
Financial Position at
June 30, Dec. 31, June 30, Dec. 31,
1994 1993 1994 1993
-------- -------- ------- -------
FINANCIAL POSITION:
As reported by investee-
Total assets $527,355 $534,817 $ 7,045 $ 6,363
Less-
Preferred stock 19,200 19,800 - -
Long-term debt and
long-term note 101,666 115,333 2,590 2,590
Other Liabilities and
deferred credits 338,971 332,030 3,577 2,895
-------- -------- -------- -------
Net assets $ 67,518 $ 67,654 $ 878 $ 878
======== ======== ======== =======
Company's reported equity-
Equity in net assets $ 4,726 $ 4,736 $ 125 $ 125
Add - Effect of
adjusting Company's
estimate to actual 19 20 - -
-------- -------- -------- -------
Amounts reported by
Company $ 4,745 $ 4,756 $ 125 $ 125
======== ======== ======== =======
(4) BUYOUT OF PURCHASED POWER CONTRACT:
In June 1993 the Company negotiated an agreement to cancel its
purchased power agreement with the Beaver Wood Joint Venture
("Beaver Wood"). The cancellation called for the Company to pay Beaver Wood
$24 million and additionally issue $14.3 million of a new series of 12.25%
First Mortgage Bonds due July 15, 2001 to the holders of Beaver Wood's debt
in substitution for Beaver Wood's previously outstanding 12.25% Secured
Notes. The cancellation agreement also called for Beaver Wood to pay the
Company $1 million at the time of settling the transaction and also to pay $1
million annually for the next six years. These payments are secured by a
mortgage on the property of the Beaver Wood facility. The Company believes
this transaction will result in significant savings to its customers compared
to the continuation of payments under the purchased power agreement.
In May 1993 the Company received an accounting order from the MPUC
related to the purchased power contract buyout. The order stipulated that
the Company may seek recovery of the costs associated with the buyout in a
future base rate case, as well as record carrying costs on the deferred
balance. Effective with the implementation of the new base rates on March 1,
1994, the Company began recovering over a nine year period the deferred
balance of $34,977,179 (net of the $6 million anticipated to be
received from Beaver Wood) at a monthly amortization of $323,863.
(5) RECLASSIFICATIONS:
Certain 1993 amounts have been reclassified to conform with
presentation used in Form 10-Q for the quarter ended June 30, 1994.
BANGOR HYDRO-ELECTRIC COMPANY
FORM 10-Q FOR PERIOD ENDING JUNE 30, 1994
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
Exhibit 3.1 Certificate of Organization of
Bangor Hydro-Electric Company
Exhibit 3.2 Bylaws of Bangor Hydro-Electric Company
REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter for which this
report is submitted.
BANGOR HYDRO-ELECTRIC COMPANY
FORM 10-Q FOR PERIOD ENDED JUNE 30, 1994
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/ Robert C. Weiser
Dated: August 11, 1994 -----------------------------
Robert C. Weiser
Treasurer
(Chief Financial Officer)