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 June 30, 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 August 1, 1995 was 8,306,857.
COLONIAL GAS COMPANY
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Statements of Income -
Three Months Ended June 30, 1995 and 1994
Six Months Ended June 30, 1995 and 1994
Twelve Months Ended June 30, 1995 and 1994
Consolidated Condensed Balance Sheets -
June 30, 1995, December 31, 1994 and June 30, 1994
Consolidated Condensed Statements of Cash Flows -
Six Months Ended June 30, 1995 and 1994
Twelve Months Ended June 30, 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
June 30,
1995 1994
(In Thousands Except Per Share Amounts)
Operating Revenues $22,760 $19,073
Cost of gas sold 13,219 10,328
Operating Margin 9,541 8,745
Operating Expenses:
Operations 7,448 8,149
Maintenance 1,021 1,245
Depreciation and Amortization 2,523 2,283
Taxes, other than income 1,396 1,380
Total Operating Expenses 12,388 13,057
Income Taxes (1,922) (2,463)
Utility Operating Loss (925) (1,849)
Other Operating Income (Loss):
Truck transportation revenues 886 3,430
Truck transportation expenses, including
income taxes and interest (1,066) (2,925)
Truck transportation net income (loss) (180) 505
Other, net of income taxes (14) (45)
Total Other Operating Income (Loss) (194) 460
Non-Operating Income, Net 145 155
Loss Before Interest and Debt Expense (974) (1,234)
Interest and Debt Expense 2,309 2,104
Net Loss $(3,283) $(3,338)
Average Common Shares Outstanding 8,279 8,104
Loss per Average Common Share $ (0.40) $ (0.41)
Dividends Paid per Common Share $ .320 $ .315
(See accompanying notes to consolidated condensed financial statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Six Months Ended
June 30,
1995 1994
(In Thousands Except Per Share Amounts)
Operating Revenues $93,113 $105,156
Cost of gas sold 48,080 56,537
Operating Margin 45,033 48,619
Operating Expenses:
Operations 15,699 18,141
Maintenance 2,237 2,540
Depreciation and Amortization 5,045 4,567
Taxes, other than income 2,752 2,642
Total Operating Expenses 25,733 27,890
Income Taxes 5,758 6,821
Utility Operating Income 13,542 13,908
Other Operating Income (Loss):
Truck transportation revenues 2,648 7,278
Truck transportation expenses, including
income taxes and interest (2,705) (6,115)
Truck transportation net income (loss) (57) 1,163
Other, net of income taxes (59) (91)
Total Other Operating Income (Loss) (116) 1,072
Non-Operating Income, Net 291 177
Income Before Interest and Debt Expense 13,717 15,157
Interest and Debt Expense 4,551 4,096
Net Income $ 9,166 $ 11,061
Average Common Shares Outstanding 8,260 8,069
Income per Average Common Share $ 1.11 $ 1.37
Dividends Paid per Common Share $ 0.635 $ 0.625
(See accompanying notes to consolidated condensed financial statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Twelve Months Ended
June 30,
1995 1994
(In Thousands Except Per Share Amounts)
Operating Revenues $154,216 $172,704
Cost of gas sold 79,000 92,752
Operating Margin 75,216 79,952
Operating Expenses:
Operations 30,563 33,775
Maintenance 4,770 5,036
Depreciation and Amortization 9,713 8,093
Taxes, other than income 5,032 4,762
Restructuring charge 3,185 -
Total Operating Expenses 53,263 51,666
Income Taxes 4,801 8,336
Utility Operating Income 17,152 19,950
Other Operating Income (Loss):
Truck transportation revenues 7,436 12,388
Truck transportation expenses, including
income taxes and interest (7,170) (10,491)
Truck transportation net income 266 1,897
Other, net of income taxes (120) (188)
Total Other Operating Income 146 1,709
Non-Operating Income, Net 679 856
Income Before Interest and Debt Expense 17,977 22,515
Interest and Debt Expense 8,863 8,231
Net Income $ 9,114 $ 14,284
Average Common Shares Outstanding 8,213 8,022
Income per Average Common Share $ 1.11 $ 1.78
Dividends Paid per Common Share $ 1.265 $ 1.245
(See accompanying notes to consolidated condensed financial statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS
June 30, December 31, June 30,
1995 1994 1994
(Unaudited) (Unaudited)
(In Thousands)
Utility Property:
At original cost $297,259 $287,158 $269,511
Accumulated depreciation (70,666) (65,473) (62,590)
Net utility property 226,593 221,685 206,921
Non-Utility Property - Net 4,642 3,479 3,007
Net property 231,235 225,164 209,928
Capital Leases - Net 2,948 2,948 3,276
Current Assets:
Cash and cash equivalents 7,269 9,026 8,487
Accounts receivable 11,456 13,846 12,346
Allowance for doubtful
accounts (2,273) (1,670) (3,159)
Accrued utility revenues 624 6,148 619
Unbilled gas costs - 12,178 4,159
Fuel and other inventories 13,485 16,496 13,877
Prepayments and other
current assets 6,826 9,544 6,458
Total current assets 37,387 65,568 42,787
Deferred Charges and Other Assets:
Unrecovered deferred income taxes 11,083 11,471 12,301
Unrecovered environmental
expenses - incurred 3,982 4,577 4,028
Unrecovered environmental
expenses - accrued 3,222 3,800 5,300
Unrecovered transition
costs - accrued 4,700 4,700 2,000
Other 13,303 13,120 11,921
Total deferred charges
and other assets 36,290 37,668 35,550
Total Assets $307,860 $331,348 $291,541
(See accompanying notes to consolidated condensed financial statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
LIABILITIES AND CAPITALIZATION
June 30, December 31, June 30,
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 - 8,304,
8,227 and 8,118 shares $ 27,652 $ 27,397 $ 27,032
Premium on common stock 50,424 49,211 47,369
Retained earnings 26,490 22,567 27,763
Total Common equity 104,566 99,175 102,164
Long-term debt 75,035 77,923 82,364
Total capitalization 179,601 177,098 184,528
Capital Lease Obligations 2,236 2,237 2,538
Current Liabilities:
Current maturities of long-term debt 7,954 8,449 3,318
Current capital lease obligations 711 712 738
Notes payable 32,500 49,500 18,000
Gas inventory purchase obligations 8,451 13,860 7,723
Accounts payable 6,481 9,635 8,453
Other 9,286 9,226 11,520
Total current liabilities 65,383 91,382 49,752
Deferred Credits and Reserves:
Deferred income taxes-funded 30,745 29,373 24,726
Deferred income taxes-unfunded 11,083 11,471 12,301
Accrued environmental expenses 3,222 3,800 5,300
Accrued transition costs 4,700 4,700 2,000
Other 10,890 11,287 10,396
Total deferred credits
and reserves 60,640 60,631 54,723
Total Capitalization and Liabilities $307,860 $331,348 $291,541
(See accompanying notes to consolidated condensed financial statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
June 30,
1995 1994
(In Thousands)
Cash Flows From Operating Activities:
Net income $ 9,166 $11,061
Adjustments to reconcile net income
to net cash 5,876 8,160
Changes in current assets and liabilities 22,293 24,290
Net cash provided by
operating activities 37,335 43,511
Cash Flows From Investing Activities:
Capital expenditures (11,472) (9,091)
Change in deferred accounts 1,947 (1,057)
Net cash used in investing activities (9,525) (10,148)
Cash Flows From Financing Activities:
Dividends paid on Common Stock (5,244) (5,043)
Issuance of Common Stock 1,468 1,863
Issuance of long-term debt - -
Retirement of long-term debt (3,382) (5,068)
Change in notes payable (17,000) (14,600)
Change in gas inventory purchase obligations (5,409) (7,510)
Net cash used in financing activities (29,567) (30,358)
Net (decrease) increase in cash and
cash equivalents (1,757) 3,005
Cash and cash equivalents at
beginning of period 9,026 5,482
Cash and cash equivalents at end of period $ 7,269 $ 8,487
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest - net of amount capitalized $ 5,033 $ 4,580
Income and franchise taxes $ 3,402 $ 4,287
(See accompanying notes to consolidated condensed financial statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Twelve Months Ended
June 30,
1995 1994
(In Thousands)
Cash Flows From Operating Activities:
Net income $ 9,114 $14,284
Adjustments to reconcile net income
to net cash 10,842 11,899
Changes in current assets and liabilities (792) 1,890
Net cash provided by
operating activities 19,164 28,073
Cash Flows From Investing Activities:
Capital expenditures (31,734) (25,566)
Change in deferred accounts 5,529 179
Net cash used in investing activities (26,205) (25,387)
Cash Flows From Financing Activities:
Dividends paid on Common Stock (10,387) (9,987)
Issuance of Common Stock 3,675 4,021
Issuance of long-term debt 741 -
Retirement of long-term debt (3,434) (5,068)
Change in notes payable 14,500 11,300
Change in gas inventory purchase obligations 728 734
Net cash provided by financing activities 5,823 1,000
Net (decrease) increase in cash and
cash equivalents (1,218) 3,686
Cash and cash equivalents at
beginning of period 8,487 4,801
Cash and cash equivalents at end of period $ 7,269 $ 8,487
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest - net of amount capitalized $ 9,736 $ 9,064
Income and franchise taxes $ 7,074 $ 6,753
(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 June 30, 1995 and 1994 and
results of operations for the three, six and twelve month
periods ended June 30, 1995 and 1994 and cash flows for
the six and twelve month periods ended June 30, 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 and six month periods
ending June 30, 1995 and 1994 are not necessarily
indicative of the results to be expected for the full year.
3. During the six months ended June 30, 1995, the Company
issued 76,677 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 $255,000 and
Premium on Common Stock increased $1,213,000.
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 June 30, 1995 and June 30, 1994
The Company's net loss for the three months ended June 30,
1995 was $3,283,000, which is 1.6% or $55,000 less than the
$3,338,000 loss reported for the same period last year. The
principal reasons for this change are described below. The
Company typically incurs losses for the second and third
quarters while reporting profits for the first and fourth
quarters. This is due to significantly higher natural gas
sales throughout the colder months to meet customers'
heating needs. Approximately 90% of the Company's
residential customers are heating accounts.
The Company's operating margin increased 9.1% or $796,000
during the second quarter due to higher firm gas sales
resulting from weather which was 18% colder than the
comparable period last year and 13% colder than normal.
Total operating expenses decreased by 5.1% or $669,000
primarily due to a $925,000 or 10% decrease in operations
and maintenance expenses primarily as a result of cost
saving initiatives and lower bad debts due to lower gas
revenues.
Income taxes credit decreased $541,000 or 22% due to a
decrease in operating loss.
Other operating income declined $654,000 due to a $685,000
decrease in the net income of Transgas Inc., the Company's
energy trucking subsidiary. Transgas' 1994 financial results
were driven by extremely cold weather in the first quarter
of 1994 which generated a significant increase in demand for
the truck transportation of liquefied natural gas (LNG) and
propane throughout the first three quarters of 1994.
Transgas hauls of LNG and propane decreased 64% for the
second quarter of 1995 compared to the same period last
year.
Six Months Ended June 30, 1995 and 1994
Net income for the six months ended June 30, 1995 was
$9,166,000, compared to $11,061,000 for the comparable 1994
period. This $1,895,000 or 17% decline is due to warmer
weather.
The 7.4% or $3,586,000 decrease in the Company's operating
margin during the period was due to lower firm gas sales
resulting from weather which was 11.5% warmer than the
comparable period last year and 1.1% warmer than normal.
Total operating expenses decreased by 7.7% or $2,157,000.
Operations and maintenance expenses decreased by $2,745,000
or 13% primarily as a result of cost saving initiatives and
lower bad debts due to lower gas revenues. Depreciation and
amortization expense increased $478,000, due to an increase
in utility property.
Income taxes decreased $1,063,000 or 16% due to a lower
level of income subject to tax.
Other operating income decreased $1,188,000 due to a
$1,220,000 decrease in net income for Transgas. Hauls of LNG
and propane decreased 59% for the reasons described above.
Twelve Months Ended June 30, 1995 and 1994
Net income before a restructuring charge was $11,079,000
or $1.35 per share for the twelve months ended June 30, 1995
down from $14,284,000 or $1.78 per share for the comparable
1994 period, for a decrease of 24% 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 ended
June 30, 1995 were $1.11 per share or $0.67 per share less
than the comparable 1994 period.
The 5.9% or $4,736,000 reduction in the Company's
operating margin during the period was due to weather that
was 11.5% warmer than the comparable period last year and
3.2% warmer than normal. This warmer weather resulted in a
9% reduction in firm gas sales volumes.
Total operating expenses increased by 3.1% or $1,597,000.
This increase was due to the restructuring charge of
$3,185,000 as described above and an increase in
depreciation and amortization expense of $1,620,000 or 20%
due to higher depreciation rates approved with the Company's
November, 1993 rate increase and additions to utility
property, partially offset by a $3,478,000 or 9% reduction
in operations and maintenance expenses resulting from cost
saving initiatives and lower bad debts due to lower gas
revenues.
Income taxes decreased $3,535,000 or 42% due to a lower
level of income subject to tax.
Other operating income decreased $1,563,000 due to a
$1,631,000 decrease in net income for Transgas. The milder
winter of 1995 adversely affected Transgas' performance as
compared to the twelve-month period ended June 30, 1994,
which included the strong 1994 first two quarters.
Liquidity and Capital Resources
On June 23, 1995, the Company applied for approval from
the Massachusetts Department of Public Utilities for
authority to issue and sell up to $75 million of first
mortgage bonds pursuant to a medium term note (MTN) program.
It is anticipated that these bonds will be issued in several
series over the next two years.
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: August 4, 1995 F.L. Putnam, III
President and Chief Executive Officer
Date: August 4, 1995 Nickolas Stavropoulos
Executive Vice President -Finance,
Marketing and Chief Financial Officer
[END OF FORM 10-Q FOR PERIOD ENDED JUNE 30, 1995]