SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1994
OR
Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the transition period from to
COMMISSION FILE NUMBER 0-10007
COLONIAL GAS COMPANY
(Exact name of registrant as specified in its charter)
Massachusetts 04-1558100
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
40 Market Street, Lowell, Massachusetts 01852
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (508)458-3171
Former name, former address and former fiscal year, if
changed since last report: Not applicable
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
The number of shares of the registrant's common stock,
$3.33 par value, outstanding as of May 1, 1994 was
8,082,279.
COLONIAL GAS COMPANY
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Statements of Income -
Three Months Ended March 31, 1994 and 1993
Twelve Months Ended March 31, 1994 and 1993
Consolidated Condensed Balance Sheets -
March 31, 1994, December 31, 1993 and
March 31, 1993
Consolidated Condensed Statements of Cash Flows -
Three Months Ended March 31, 1994 and 1993
Twelve Months Ended March 31, 1994 and 1993
Notes to Consolidated Condensed Financial Statements
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
PART II - OTHER INFORMATION
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended
March 31,
1994 1993
(In Thousands Except
Per Share Amounts)
Operating Revenues $86,083 $78,126
Cost of gas sold 46,209 43,011
Operating Margin 39,874 35,115
Operating Expenses:
Operations 9,865 8,943
Maintenance 1,594 1,330
Depreciation 2,283 1,652
Taxes, other than income 1,091 1,103
Total Operating Expenses 14,833 13,028
Income Taxes 9,284 7,822
Utility Operating Income 15,757 14,265
Other Operating Income (Expense):
Truck transportation revenues 3,849 1,466
Truck transportation expenses,
including income taxes and
interest (3,190) (1,770)
Truck transportation net income 659 (304)
Other, net of income taxes (46) (29)
Total Other Operating Income (Expense) 613 (333)
Non-Operating Income, Net 22 35
Income Before Interest and Debt Expense 16,392 13,967
Interest and Debt Expense 1,993 1,933
Net Income $14,399 $12,034
Average Common Shares Outstanding 8,048 7,863
Income per Average Common Share $1.79 $1.53
Dividends Paid per Common Share $ .310 $ .305
(See accompanying notes to consolidated condensed financial statements)
COLONIAL GAS COMPANY AND SUBSIDIAIRIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Twelve Months Ended
March 31,
1994 1993
(In Thousands Except
Per Share Amounts)
Operating Revenues $174,218 $159,096
Cost of gas sold 94,113 87,518
Operating Margin 80,105 71,578
Operating Expenses:
Operations 33,668 32,517
Maintenance 5,895 5,522
Depreciation 7,462 6,092
Taxes, other than income 3,844 3,692
Total Operating Expenses 50,869 47,823
Income Taxes 8,854 6,494
Utility Operating Income 20,382 17,261
Other Operating Income (Expense):
Truck transportation revenues 9,940 8,986
Truck transportation expenses,
including income
taxes and interest (8,583) (9,183)
Truck transportation net income 1,357 (197)
Other, net of income taxes (203) (124)
Total Other Operating Income (Expense) 1,154 (321)
Non-Operating Income, Net 1,052 946
Income Before Interest and Debt Expense 22,588 17,886
Interest and Debt Expense 8,201 7,819
Net Income $14,387 $10,067
Average Common Shares Outstanding 7,976 7,782
Income per Average Common Share $ 1.80 $ 1.29
Dividends Paid per Common Share $1.235 $1.218
(See accompanying notes to consolidated condensed financial statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS
March 31, December 31, March 31,
1994 1993 1993
(Unaudited) (Unaudited)
(In Thousands)
Utility Property:
At original cost $262,956 $260,570 $240,093
Accumulated depreciation (60,249) (57,857) (54,390)
Net utility property 202,707 202,713 185,703
Non-Utility Property - Net 3,177 3,235 3,807
Net property 205,884 205,948 189,510
Capital Leases - Net 3,362 3,914 4,141
Current Assets:
Cash and cash equivalents 8,649 5,482 5,302
Accounts receivable 32,625 16,156 31,619
Allowance for doubtful
accounts (3,228) (1,682) (2,392)
Accrued utility revenues 5,499 7,170 4,776
Unbilled gas costs 2,942 16,759 9,501
Fuel and other inventories 9,984 17,529 9,665
Prepayments and other
current assets 6,230 6,254 6,145
Total current assets 62,701 67,668 64,616
Deferred Charges and Other Assets:
Unrecovered deferred income
taxes 12,495 12,689 12,648
Unrecovered environmental
expenses - incurred 3,053 4,062 3,053
Unrecovered environmental
expenses - accrued 5,300 5,300 13,800
Unrecovered transition
costs - accrued 2,000 2,000 -
Other 12,262 10,537 9,311
Total deferred charges
and other assets 35,110 34,588 38,812
Total Assets $307,057 $312,118 $297,079
(See accompanying notes to consolidated condensed financial statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
LIABILITIES AND CAPITALIZATION
March 31, December 31, March 31,
1994 1993 1993
(Unaudited) (Unaudited)
(In Thousands)
Capitalization:
Common equity:
Common Stock - par value
$3.33 per share
Authorized - 15,000,000
shares
Issued and outstanding
- 8,078,958,
8,029,831 and 7,890,017
shares $ 26,903 $26,739 $ 26,274
Premium on Common Stock 46,724 45,799 43,000
Retained earnings 33,649 21,745 29,152
Total Common equity 107,276 94,283 98,426
Long-term debt 87,432 87,432 90,750
Total capitalization 194,708 181,715 189,176
Capital Lease Obligations 2,652 3,149 3,325
Current Liabilities:
Current maturities of
long-term debt 3,318 3,318 1,500
Current capital lease
obligations 710 765 815
Notes payable 20,000 32,600 9,500
Gas inventory purchase
obligations 7,086 15,233 7,828
Accounts payable 9,149 12,161 9,786
Other 14,936 9,336 18,718
Total current liabilities 55,199 73,413 48,147
Deferred Credits and Reserves:
Deferred income taxes-funded 24,136 23,395 19,362
Deferred income taxes-
unfunded 12,495 12,689 12,649
Accrued environmental
expenses 5,300 5,300 13,800
Accrued transition costs 2,000 2,000 -
Other 10,567 10,457 10,620
Total deferred credits
and reserves 54,498 53,841 56,431
Total Capitalization and
Liabilities $307,057 $312,118 $297,079
(See accompanying notes to consolidated condensed financial statements)
COLONIAL GAS COMPANY AND SUBSIDIAIRIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
1994 1993
(In Thousands)
Cash Flows From Operating Activities:
Net income $14,399 $12,034
Adjustments to reconcile net income
to net cash 12,063 17,552
Changes in current assets and
liabilities (1,268) (1,168)
Net cash provided by operating
activities 25,194 28,418
Cash Flows From Investing Activities:
Capital expenditures (2,471) (3,552)
Change in deferred accounts 2,597 (705)
Net cash provided by (used in)
investing activities 126 (4,257)
Cash Flows From Financing Activities:
Dividends paid on Common Stock (2,495) (2,398)
Issuance of Common Stock 1,089 1,019
Issuance of long-term debt - -
Retirement of long-term debt - -
Change in notes payable (12,600)(15,000)
Change in gas inventory purchase
obligations
(8,147) (6,913)
Net cash used in financing
activities (22,153)(23,292)
Net increase in cash and cash
equivalents 3,167 869
Cash and cash equivalents at
beginning of period 5,482 4,433
Cash and cash equivalents at
end of period $8,649 $5,302
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest - net of amount
capitalized $1,768 $1,704
Income and franchise taxes $ 891 $ 270
(See accompanying notes to consolidated condensed financial statements)
COLONIAL GAS COMPANY AND SUBSIDIAIRIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Twelve Months Ended
March 31,
1994 1993
(In Thousands)
Cash Flows From Operating Activities:
Net income $14,387 $10,067
Adjustments to reconcile net income
to net cash 8,189 8,310
Changes in current assets and
liabilities (1,749) 1,697
Net cash provided by operating
activities 20,827 20,074
Cash Flows From Investing Activities:
Capital expenditures (24,473)(27,127)
Change in deferred accounts 4,272 2,186
Net cash used in investing
activities (20,201)(24,941)
Cash Flows From Financing Activities:
Dividends paid on Common Stock (9,890) (9,484)
Issuance of Common Stock 4,353 4,416
Issuance of long-term debt - 45,000
Retirement of long-term debt (1,500) (5,780)
Change in notes payable 10,500 (27,100)
Change in gas inventory purchase
obligations (742) (331)
Net cash provided by financing
activities 2,721 6,721
Net increase in cash and cash equivalents 3,347 1,854
Cash and cash equivalents at beginning
of period 5,302 3,448
Cash and cash equivalents at end of period $8,649 $5,302
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest - net of amount capitalized $9,045 $8,478
Income and franchise taxes $5,560 $3,639
(See accompanying notes to consolidated condensed financial statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. In the opinion of the Company, the accompanying
unaudited consolidated condensed financial statements
contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the
financial position as of March 31, 1994 and 1993 and
results of operations for the three and twelve month
periods ended March 31, 1994 and 1993 and cash flows for
the three and twelve month periods ended March 31, 1994
and 1993.
2. Due to the significant impact of gas used for space
heating during the heating season (November-April) and
the Company's seasonal rate structure, the results of
operations for the three month periods ending March 31,
1994 and 1993 are not necessarily indicative of the
results to be expected for the full year.
3. During the three months ended March 31, 1994, the
Company issued 49,127 shares of Common Stock, $3.33 par
value, under a Dividend Reinvestment and Common Stock
Purchase Plan and under Employee Savings Plans. As a
result, Common Stock, $3.33 par value, increased $164,000
and Premium on Common Stock increased $925,000.
4. Contingencies
Reference is made to Note J/Contingencies of the Notes to
Consolidated Financial Statements contained within the
Company's 1993 Annual Report to Stockholders.
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
Results of Operations
Three Months Ended March 31, 1994 and March 31, 1993
Net income increased 20% to $14,399,000 compared to
$12,034,000 for the same period last year. This improvement
resulted primarily from an 11% or $1,492,000 increase in
operating income for the Company's utility operation and a
$963,000 increase in net income for Transgas Inc., its
energy trucking subsidiary. In the 1994 first quarter,
operating margin increased $4,759,000 or 14% over the 1993
first quarter. This increase in operating margin resulted
from increased firm sales volume due to continued customer
growth and significantly colder 1993/1994 winter weather
(the three-month period was 4% colder than the comparable
period last year and 15% colder than normal), and from a
4.9% rate increase that was effective November 1, 1993.
Total operating expenses (excluding income taxes) increased
over the prior year's first quarter by 14% or $1,805,000,
primarily as a result of higher depreciation rates approved
in the Company's 1993 rate order.
Income taxes increased $1,462,000 or 19% due to a higher
level of income subject to tax.
Other operating income (net of income taxes) increased
$946,000 over the comparable 1993 period. The continuously
frigid winter weather also caused unprecedented demand for
liquefied natural gas (LNG) deliveries and emergency LNG
vaporization services on the East Coast, creating the second
busiest quarter in the history of Transgas. The subsidiary's
activity level is expected to remain high during the next
six months as local distribution companies refill their LNG
inventories to pre-winter conditions.
Twelve Months Ended March 31, 1994 and 1993
Net income climbed to $14,387,000 for the 1994 period versus
$10,067,000 for the comparable 1993 period. This 43%
increase resulted from a $3,121,000 or 18% increase in
utility operating income and a $1,554,000 improvement in
Transgas' results. Over the twelve months ended March 31,
1994, operating margin increased $8,527,000 or 12% for the
comparable period ended March 31, 1993. The increase in
operating margin resulted from increased firm sales volume
due to continued customer growth (the Company added 4,100
new customers over the past twelve months) and significantly
colder 1993/1994 winter weather (the twelve-month period was
the same as the comparable period last year and 10% colder
than normal) and from a 4.9% rate increase that was
effective November 1, 1993. This increase in operating
margin was partially offset by an increase in operating
expenses (excluding income taxes).
Total operating expenses (excluding income taxes) increased
by 6% or $3,046,000, primarily as a result of higher
depreciation rates approved in the Company's 1993 rate
order.
Income taxes increased $2,360,000 or 36% due to a higher
level of income subject to tax.
Other operating income (net of income taxes) increased
$1,475,000 over the comparable 1993 period attributable to
the improved results of Transgas.
Interest and debt expense increased $382,000 or 5% resulting
from a rise in interest on long-term debt due to a full
twelve months of an additional $39,000,000 of long-term debt
outstanding compared to the twelve months of the prior year.
Liquidity and Capital Resources
On March 25, 1994, the Company filed a request with the
Massachusetts Department of Public Utilities for authority
to issue and sell up to 400,000 additional shares of
Common Stock, $3.33 par value, pursuant to its Dividend
Reinvestment and Common Stock Purchase Plan and 75,000 additional
shares of Common Stock, $3.33 par value, pursuant to its
Cape Cod Division Savings Plan for Local 13507 United
Steelworkers of America AFL-CIO-CLC. A ruling is expected
shortly.
As of December 31, 1993, the Company has settled claims
relating to environmental response costs with all liability
insurers and other known potentially responsible parties
("PRP"), except one. The Company received $250,000 in the
second quarter of 1994 from that PRP. In accordance with
a 1990 DPU order, any insurance and other proceeds are
applied first to the Company's costs of pursuing recovery
from insurers and other PRP, with the remainder divided
equally between the ratepayers and shareholders.
The Company has a $60 million credit facility that expires
in June 1994. Up to $30 million of the credit facility can
be used by the Company's gas inventory trust. This facility
allows the Company the option to borrow under any one of
four alternative rates. The Company is in the process of
making new short-term credit arrangements and expects to
finalize these arrangements prior to the expiration of the
credit facility.
PART II - OTHER INFORMATION
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
10fff Amendment, dated March 24, 1994, to Supplemental
Retirement Plan Agreement between Colonial Gas
Company and C. O. Swanson, originally dated
March 28, 1978 and previously updated.
b. Reports on Form 8-K
None
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.
COLONIAL GAS COMPANY
(Registrant)
Date: May 10, 1994 By: F.L. Putnam III
President
Date: May 10, 1994 By: Nickolas Stavropoulos
Vice President - Finance
and Chief Financial Officer
[End of Colonial Gas Company Form 10-Q for the period
ended March 31, 1994]