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, 1995
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, 1995 was
8,271,201.
COLONIAL GAS COMPANY
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Statements of Income -
Three Months Ended March 31, 1995 and 1994
Twelve Months Ended March 31, 1995 and 1994
Consolidated Condensed Balance Sheets -
March 31, 1995, December 31, 1994 and March 31, 1994
Consolidated Condensed Statements of Cash Flows -
Three Months Ended March 31, 1995 and 1994
Twelve Months Ended March 31, 1995 and 1994
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,
1995 1994
(In Thousands Except
Per Share Amounts)
Operating Revenues $70,353 $86,083
Cost of gas sold 34,861 46,209
Operating Margin 35,492 39,874
Operating Expenses:
Operations 8,252 9,993
Maintenance 1,215 1,295
Depreciation and Amortization 2,522 2,283
Taxes, other than income 1,356 1,262
Total Operating Expenses 13,345 14,833
Income Taxes 7,680 9,284
Utility Operating Income 14,467 15,757
Other Operating Income:
Truck transportation revenues 1,762 3,849
Truck transportation expenses,
including income taxes and interest (1,639) (3,190)
Truck transportation net income 123 659
Other, net of income taxes (45) (46)
Total Other Operating Income 78 613
Non-Operating Income, Net 145 22
Income Before Interest and Debt Expense 14,690 16,392
Interest and Debt Expense 2,241 1,993
Net Income $12,449 $14,399
Average Common Shares Outstanding 8,241 8,048
Income per Average Common Share $ 1.51 $ 1.79
Dividends Paid per Common Share $ .315 $ .310
(See accompanying notes to consolidated condensed financial statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Twelve Months Ended
March 31,
1995 1994
(In Thousands Except
Per Share Amounts)
Operating Revenues $150,529 $174,218
Cost of gas sold 76,109 94,113
Operating Margin 74,420 80,105
Operating Expenses:
Operations 31,263 33,953
Maintenance 4,994 4,918
Depreciation and Amortization 9,474 7,462
Taxes, other than income 5,016 4,536
Restructuring charge 3,185 -
Total Operating Expenses 53,932 50,869
Income Taxes 4,260 8,854
Utility Operating Income 16,228 20,382
Other Operating Income:
Truck transportation revenues 9,980 9,940
Truck transportation expenses,
including income taxes and interest (9,029) (8,583)
Truck transportation net income 951 1,357
Other, net of income taxes (151) (203)
Total Other Operating Income 800 1,154
Non-Operating Income, Net 688 1,052
Income Before Interest and Debt Expense 17,716 22,588
Interest and Debt Expense 8,657 8,201
Net Income $ 9,059 $14,387
Average Common Shares Outstanding 8,166 7,976
Income per Average Common Share $ 1.11 $ 1.80
Dividends Paid per Common Share $ 1.255 $ 1.235
(See accompanying notes to consolidated condensed financial statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS
March 31, December 31, March 31,
1995 1994 1994
(Unaudited) (Unaudited)
(In Thousands)
Utility Property:
At original cost $291,235 $287,158 $262,956
Accumulated depreciation (68,126) (65,473) (60,249)
Net utility property 223,109 221,685 202,707
Non-Utility Property - Net 3,381 3,479 3,177
Net property 226,490 225,164 205,884
Capital Leases - Net 2,948 2,948 3,362
Current Assets:
Cash and cash equivalents 10,160 9,026 8,649
Accounts receivable 25,776 13,846 32,625
Allowance for doubtful
accounts (2,353) (1,670) (3,228)
Accrued utility revenues 4,932 6,148 5,499
Unbilled gas costs - 12,178 2,942
Fuel and other inventories 10,355 16,496 9,984
Prepayments and other
current assets 5,768 9,544 6,230
Total current assets 54,638 65,568 62,701
Deferred Charges and Other Assets:
Unrecovered deferred income
taxes 11,277 11,471 12,495
Unrecovered environmental
expenses - incurred 4,839 4,577 3,053
Unrecovered environmental
expenses - accrued 3,800 3,800 5,300
Unrecovered transition
costs - accrued 4,700 4,700 2,000
Other 13,340 13,120 12,262
Total deferred charges
and other assets 37,956 37,668 35,110
Total Assets $322,032 $331,348 $307,057
(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,
1995 1994 1994
(Unaudited) (Unaudited)
(In Thousands)
Capitalization:
Common equity:
Common Stock - par value $3.33 per share
Authorized - 15,000 shares
Issued and outstanding - 8,268,
8,227 and 8,079 shares $27,532 $27,397 $26,903
Premium on common stock 49,862 49,211 46,724
Retained earnings 32,422 22,567 33,649
Total Common equity 109,816 99,175 107,276
Long-term debt 77,888 77,923 87,432
Total capitalization 187,704 177,098 194,708
Capital Lease Obligations 2,236 2,237 2,652
Current Liabilities:
Current maturities of
long-term debt 8,451 8,449 3,318
Current capital lease
obligations 711 712 710
Notes payable 33,000 49,500 20,000
Gas inventory purchase
obligations 8,041 13,860 7,086
Accounts payable 7,475 9,635 9,149
Other 13,343 9,226 14,936
Total current liabilities 71,021 91,382 55,199
Deferred Credits and Reserves:
Deferred income taxes-funded 30,275 29,373 24,136
Deferred income taxes-unfunded 11,277 11,471 12,495
Accrued environmental expense 3,800 3,800 5,300
Accrued transition costs 4,700 4,700 2,000
Other 11,019 11,287 10,567
Total deferred credits
and reserves 61,071 60,631 54,498
Total Capitalization
and Liabilities $322,032 $331,348 $307,057
(See accompanying notes to consolidated condensed financial statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
1995 1994
(In Thousands)
Cash Flows From Operating Activities:
Net income $12,449 $14,399
Adjustments to reconcile net income
to net cash 2,375 1,785
Changes in current assets and liabilities 13,223 9,010
Net cash provided by
operating activities 28,047 25,194
Cash Flows From Investing Activities:
Capital expenditures (4,021) (2,471)
Change in deferred accounts 1,268 2,597
Net cash (used in) provided by
investing activities (2,753) 126
Cash Flows From Financing Activities:
Dividends paid on Common Stock (2,595) (2,495)
Issuance of Common Stock 786 1,089
Retirement of long-term debt (32) -
Change in notes payable (16,500) (12,600)
Change in gas inventory purchase obligations (5,819) (8,147)
Net cash used in financing activities (24,160) (22,153)
Net increase in cash and cash equivalents 1,134 3,167
Cash and cash equivalents at
beginning of period 9,026 5,482
Cash and cash equivalents at end of period $ 10,160 $ 8,649
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest - net of amount capitalized $ 2,231 $ 1,768
Income and franchise taxes $ 214 $ 891
(See accompanying notes to consolidated condensed financial statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Twelve Months Ended
March 31,
1995 1994
(In Thousands)
Cash Flows From Operating Activities:
Net income $ 9,059 $14,387
Adjustments to reconcile net income
to net cash 10,389 8,120
Changes in current assets and liabilities 5,418 (1,680)
Net cash provided by
operating activities 24,866 20,827
Cash Flows From Investing Activities:
Capital expenditures (30,893) (24,473)
Change in deferred accounts 4,513 4,272
Net cash used in investing activities (26,380) (20,201)
Cash Flows From Financing Activities:
Dividends paid on Common Stock (10,287) (9,890)
Issuance of Common Stock 3,767 4,353
Issuance of long-term debt 741 -
Retirement of long-term debt (5,151) (1,500)
Change in notes payable 13,000 10,500
Change in gas inventory purchase obligations 955 (742)
Net cash provided by financing activities 3,025 2,721
Net increase in cash and cash equivalents 1,511 3,347
Cash and cash equivalents at
beginning of period 8,649 5,302
Cash and cash equivalents at end of period $ 10,160 $ 8,649
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest - net of amount capitalized $ 9,746 $ 9,045
Income and franchise taxes $ 6,610 $ 5,560
(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, 1995 and 1994 and
results of operations for the three and twelve month
periods ended March 31, 1995 and 1994 and cash flows for
the three and twelve month periods ended March 31, 1995
and 1994.
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,
1995 and 1994 are not necessarily indicative of the
results to be expected for the full year.
3. During the three months ended March 31, 1995, the
Company issued 41,000 shares of Common Stock, $3.33 par
value, under a Dividend Reinvestment and Common Stock
Purchase Plan and under an Employee Savings Plan. As a
result, Common Stock, $3.33 par value, increased $135,000
and Premium on Common Stock increased $651,000.
4. Contingencies
Reference is made to Note J/Contingencies of the Notes to
Consolidated Financial Statements contained within the
Company's 1994 Annual Report to Stockholders.
5. Reclassifications are made periodically to previously
issued financial statements to conform to the current
year presentation.
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition
Results of Operations
Three Months Ended March 31, 1995 and 1994
Net income decreased 14% to $12,449,000 compared to
$14,399,000 for the same period last year. This decline
resulted primarily from an 8.2% or $1,290,000 decrease in
operating income for the Company's utility operation. In
addition there was a $536,000 decrease in net income for
Transgas Inc., the Company's energy trucking subsidiary,
compared to the first quarter of 1994, which was the second
busiest quarter in the history of Transgas. For the three
months ending March 31, 1995, operating margin decreased
$4,382,000 or 11% compared to the same 1994 period due to
lower firm gas sales volumes resulting from significantly
warmer weather. During the first quarter of 1995,
temperatures averaged 15% warmer than the same period last
year and 3.4% warmer than normal.
This decrease in operating margin was partially offset by a
$1,821,000 or 16% reduction in operations and maintenance
expenses primarily as a result of cost saving initiatives
and lower bad debts due to lower gas revenues.
Income taxes decreased $1,604,000 or 17% due to a lower
level of income subject to tax.
Other operating income (net of income taxes) decreased
$535,000 over the comparable 1994 period. The decrease in
Transgas' net income is attributable to the warmer weather.
Compared to the first quarter of 1994, Transgas hauls of LNG
and propane decreased 54% and portable pipeline income
decreased 24%.
Interest expense increased $248,000 or 12%. Interest on
short-term debt increased due to increased borrowings and
higher interest rates which was partially offset by a
decrease in long-term interest expense.
Twelve Months Ended March 31, 1995 and 1994
Net income before a restructuring charge was $11,024,000 or
$1.35 per share for the twelve months ending March 31, 1995,
down from $14,387,000 or $1.80 per share for the comparable
1994 period, for a decrease of 25% per share. A
restructuring charge recorded in December 1994 relating to a
voluntary early retirement program and the closing of retail
appliance sales operations amounted to $1,965,000 after-tax
or $0.24 per share. After taking into account the
restructuring charge, earnings for the twelve months ending
March 31, 1995 were $1.11 per share or $0.69 per share less
than the comparable 1994 period.
The decline in net income before restructuring charge for
the twelve-month period ending March 31, 1995 was due to
weather that was 12% warmer than the comparable period last
year and 4.1% warmer than normal and a $406,000 decline in
net income for Transgas as compared to the twelve-month
period ending March 31, 1994, which included the strong 1994
first quarter. The warmer weather for the twelve-month
period ending March 31, 1995 caused an 11% reduction in firm
gas sales volumes and resulted in a reduction in operating
margin of $5,685,000 or 7.1%.
This reduction in operating margin was partially offset by
reductions in operations and maintenance expenses of
$2,614,000 or 6.7%. Based upon the first quarter results,
the Company's expected payback period of less than two years
for the restructuring charge should be achieved.
Income taxes decreased $4,594,000 or 52% due to a lower
level of income subject to tax.
Other operating income (net of income taxes) decreased
$354,000 over the comparable 1994 period primarily due to
the decline in Transgas net income.
Non-Operating income (net of income taxes) decreased
$364,000 as compared to the twelve-month period ending March
31,1994, which included an insurance recovery of $509,000
relating to a line of business that was discontinued in
1979.
Interest and debt expense increased $456,000 or 5.6%
resulting from a rise in interest on short-term debt due to
higher interest rates and more short-term debt outstanding.
Liquidity and Capital Resources
On April 19, 1995, the quarterly dividend on the Company's
common stock was increased to $.32 per share or an
annualized dividend rate of $1.28 per share. This is the
59th consecutive year that the Company has paid a dividend
to common shareholders and the 16th consecutive year that it
has increased its per share dividend payment.
PART II - OTHER INFORMATION
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
None
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 12, 1995 F.L. Putnam, III
President and Chief Executive Officer
Date: May 12, 1995 Nickolas Stavropoulos
Executive Vice President - Finance,
Marketing and Chief Financial Officer