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 September 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 November 1, 1995 was 8,336,465.
[END OF COVER PAGE]
COLONIAL GAS COMPANY
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Statements of Income -
Three Months Ended September 30, 1995 and 1994
Nine Months Ended September 30, 1995 and 1994
Twelve Months Ended September 30, 1995 and 1994
Consolidated Condensed Balance Sheets -
September 30, 1995, December 31, 1994 and
September 30, 1994
Consolidated Condensed Statements of Cash Flows -
Nine Months Ended September 30, 1995 and 1994
Twelve Months Ended September 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
[END OF INDEX]
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended
September 30,
1995 1994
(In Thousands Except
Per Share Amounts)
Operating Revenues $14,911 $13,026
Cost of gas sold 7,875 6,797
Operating Margin 7,036 6,229
Operating Expenses:
Operations 7,271 7,874
Maintenance 995 1,249
Depreciation and Amortization 2,579 2,316
Taxes, other than income 1,172 1,170
Total Operating Expenses 12,017 12,609
Income Taxes (2,730) (3,248)
Utility Operating Loss (2,251) (3,132)
Other Operating Income:
Truck transportation revenues 2,878 3,476
Truck transportation expenses, including
income taxes and interest (2,355) (3,158)
Truck transportation net income 523 318
Other, net of income taxes 45 8
Total Other Operating Income 568 326
Non-Operating Income, Net 124 81
Loss Before Interest and Debt Expense (1,559) (2,725)
Interest and Debt Expense 2,373 2,109
Net Loss $(3,932) $(4,834)
Average Common Shares Outstanding 8,312 8,142
Loss per Average Common Share $ (0.47) $(0.59)
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)
Nine Months Ended
September 30,
1995 1994
(In Thousands Except
Per Share Amounts)
Operating Revenues $108,024 $118,182
Cost of gas sold 55,955 63,334
Operating Margin 52,069 54,848
Operating Expenses:
Operations 22,971 26,016
Maintenance 3,232 3,789
Depreciation and Amortization 7,624 6,882
Taxes, other than income 3,924 3,812
Total Operating Expenses 37,751 40,499
Income Taxes 3,027 3,573
Utility Operating Income 11,291 10,776
Other Operating Income:
Truck transportation revenues 5,526 10,754
Truck transportation expenses, including
income taxes and interest (5,060) (9,273)
Truck transportation net income 466 1,481
Other, net of income taxes (14) (83)
Total Other Operating Income 452 1,398
Non-Operating Income, Net 415 258
Income Before Interest and Debt Expense 12,158 12,432
Interest and Debt Expense 6,924 6,206
Net Income $5,234 $ 6,226
Average Common Shares Outstanding 8,277 8,094
Income per Average Common Share $ 0.63 $0.77
Dividends Paid per Common Share $0.955 $0.940
(See accompanying notes to consolidated condensed
financial statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Twelve Months Ended
September 30,
1995 1994
(In Thousands Except
Per Share Amounts)
Operating Revenues $156,100 $173,471
Cost of gas sold 80,078 92,845
Operating Margin 76,022 80,626
Operating Expenses:
Operations 29,959 34,450
Maintenance 4,516 5,116
Depreciation and Amortization 9,977 8,757
Taxes, other than income 5,034 4,850
Restructuring charge 3,185 -
Total Operating Expenses 52,671 53,173
Income Taxes 5,318 7,897
Utility Operating Income 18,033 19,556
Other Operating Income:
Truck transportation revenues 6,839 12,833
Truck transportation expenses, including
income taxes and interest (6,368) (11,226)
Truck transportation net income 471 1,607
Other, net of income taxes (83) (148)
Total Other Operating Income 388 1,459
Non-Operating Income, Net 721 370
Income Before Interest and Debt Expense 19,142 21,385
Interest and Debt Expense 9,126 8,213
Net Income $10,016 $13,172
Average Common Shares Outstanding 8,256 8,069
Income per Average Common Share $ 1.21 $ 1.63
Dividends Paid per Common Share $ 1.27 $ 1.25
(See accompanying notes to consolidated condensed
financial statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS
September 30, December 31, September 30,
1995 1994 1994
(Unaudited) (Unaudited)
(In Thousands)
Utility Property:
At original cost $304,113 $287,158 $278,576
Accumulated depreciation (73,237) (65,473) (64,920)
Net utility property 230,876 221,685 213,656
Non-Utility Property - Net 4,527 3,479 3,621
Net property 235,403 225,164 217,277
Capital Leases - Net 2,948 2,948 3,113
Current Assets:
Cash and cash equivalents 7,248 9,026 8,032
Accounts receivable - net 6,455 12,176 3,478
Accrued utility revenues 533 6,148 701
Unbilled gas costs 4,093 12,178 9,254
Fuel and other inventories 15,372 16,496 18,196
Prepayments and other current 6,071 9,544 8,789
assets
Total current assets 39,772 65,568 48,450
Deferred Charges and Other Assets:
Unrecovered deferred income 10,889 11,471 12,107
taxes
Unrecovered environmental
expenses - incurred 4,324 4,577 4,453
Unrecovered environmental
expenses - accrued 3,222 3,800 5,300
Unrecovered transition costs 4,700 4,700 2,000
- accrued
Other 13,195 13,120 13,013
Total deferred charges
and other assets 36,330 37,668 36,873
Total Assets $314,453 $331,348 $305,713
(See accompanying notes to consolidated condensed financial
statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
LIABILITIES AND CAPITALIZATION
September 30, December 31, September 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 - 8,334,
8,227 and 8,177 shares $27,754 $27,397 $27,229
Premium on common stock 50,899 49,211 48,420
Retained earnings 19,898 22,567 20,364
Total Common equity 98,551 99,175 96,013
Long-term debt 70,138 77,923 77,956
Total capitalization 168,689 177,098 173,969
Capital Lease Obligations 2,237 2,237 2,417
Current Liabilities:
Current maturities of 7,818 8,449 8,446
long-term debt
Current capital lease 712 712 697
obligations
Notes payable 51,800 49,500 35,500
Gas inventory purchase
obligations 11,867 13,860 13,647
Accounts payable 5,963 9,635 6,300
Other 3,837 9,226 9,456
Total current
liabilities 81,997 91,382 74,046
Deferred Credits and Reserves:
Deferred income taxes-funded 31,910 29,373 25,565
Deferred income taxes-
unfunded 10,889 11,471 12,107
Accrued environmental expenses 3,222 3,800 5,300
Accrued transition costs 4,700 4,700 2,000
Other 10,809 11,287 10,309
Total deferred credits
and reserves 61,530 60,631 55,281
Total Capitalization and
Liabilities $314,453 $331,348 $ 305,713
(See accompanying notes to consolidated condensed
financial statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30,
1995 1994
(In Thousands)
Cash Flows From Operating Activities:
Net income $ 5,234 $ 6,226
Adjustments to reconcile net income
to net cash 11,281 13,853
Changes in current assets and
liabilities 13,764 13,785
Net cash provided by operating
activities 30,279 33,864
Cash Flows From Investing Activities:
Capital expenditures (18,408) (19,071)
Change in deferred accounts 318 (4,714)
Net cash used in investing
activities (18,090) (23,785)
Cash Flows From Financing Activities:
Dividends paid on Common Stock (7,903) (7,607)
Issuance of Common Stock 2,044 3,111
Issuance of long-term debt - 721
Retirement of long-term debt (8,415) (5,068)
Change in notes payable 2,300 2,900
Change in gas inventory purchase
obligations (1,993) (1,586)
Net cash used in financing
activities (13,967) (7,529)
Net (decrease) increase in cash and
cash equivalents (1,778) 2,550
Cash and cash equivalents at beginning
of period 9,026 5,482
Cash and cash equivalents at end of
period $ 7,248 $ 8,032
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest - net of amount
capitalized $ 6,368 $ 6,383
Income and franchise taxes $ 3,428 $ 5,947
(See accompanying notes to consolidated condensed
financial statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Twelve Months Ended
September 30,
1995 1994
(In Thousands)
Cash Flows From Operating Activities:
Net income $10,016 $13,172
Adjustments to reconcile net income
to net cash 13,931 15,987
Changes in current assets and
liabilities 1,185 1,199
Net cash provided by operating
activities 25,132 30,358
Cash Flows From Investing Activities:
Capital expenditures (28,667) (27,836)
Change in deferred accounts 4,156 (3,292)
Net cash used in investing
activities (24,511) (31,128)
Cash Flows From Financing Activities:
Dividends paid on Common Stock (10,482) (10,086)
Issuance of Common Stock 3,003 4,190
Issuance of long-term debt - 721
Retirement of long-term debt (8,446) (5,068)
Change in notes payable 16,300 15,300
Change in gas inventory purchase
obligations (1,780) (1,177)
Net cash (used in) provided by
financing activities (1,405) 3,880
Net (decrease) increase in cash
and cash equivalents (784) 3,110
Cash and cash equivalents at
beginning of period 8,032 4,922
Cash and cash equivalents at
end of period $ 7,248 $ 8,032
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest - net of amount
capitalized $ 9,268 $ 9,269
Income and franchise taxes $ 4,762 $ 6,734
(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 September 30, 1995 and 1994 and results of
operations for the three, nine and twelve month periods
ended September 30, 1995 and 1994 and cash flows for the
nine and twelve month periods ended September 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 nine month periods
ending September 30, 1995 and 1994 are not necessarily
indicative of the results to be expected for the full
year.
3. During the nine months ended September 30, 1995, the
Company issued 107,000 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 $357,000
and Premium on Common Stock increased $1,688,000.
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 September 30, 1995 and 1994
The Company's net loss for the three months ended
September 30, 1995 was $3,932,000, which is 19% or $902,000
less than the $4,834,000 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 13% or $807,000
during the third quarter of 1995 due to additional revenue
of $942,000 related to the regulatory approval to recover
financial incentives and lost margins associated with
Colonial's residential conservation programs.
Total operating expenses decreased by 4.7% or $592,000
principally due to an $807,000 or 13% 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 $518,000 or 16% due to a
decrease in operating loss.
Other operating income increased $242,000 due to an
increase in portable pipeline revenue and decreases in
operating expenses of Transgas which more than offset the
28% decline in Transgas' deliveries of liquefied natural gas
(LNG).
Interest and debt expense increased by 13% or $264,000
principally due to higher short-term borrowings.
Nine Months Ended September 30, 1995 and 1994
Net income for the nine months ended September 30, 1995
was $5,234,000, compared to $6,226,000 for the comparable
1994 period. This $992,000 or 16% decrease is due to factors
described below.
The Company's operating margin decreased 5.1% or
$2,779,000 during the period due to lower firm gas sales as
a result of weather which was 11.4% warmer than the
comparable period in the prior year and 1.0% warmer than
normal.
Total operating expenses decreased by 6.8% or $2,748,000
principally due to a $3,602,000 or 12% decrease in
operations and maintenance expenses primarily as a result of
cost saving initiatives and lower bad debts due to lower gas
revenues. Depreciation and amortization expense increased
$742,000 or 11%, due to an increase in utility property.
Income taxes decreased $546,000 or 15% due to a lower
level of income subject to tax.
Other operating income decreased $946,000 due to the
decline in financial results for Transgas compared to the
1994 period when extremely cold weather in the first quarter
of 1994 generated a significant increase in demand for the
truck transportation of LNG and propane throughout the first
three quarters of 1994.
Twelve Months Ended September 30, 1995 and 1994
Net income before a restructuring charge was $11,981,000
or $1.45 per share for the twelve months ended September 30,
1995 down from $13,172,000 or $1.63 per share for the
comparable 1994 period, for a decrease of 11% per share due
to factors described below. 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 September 30, 1995 were $1.21 per
share or $0.42 per share less than the comparable 1994
period.
The Company's operating margin increased 11% or $7,750,000
during the period due to higher firm gas sales resulting
from continued customer growth and an increase in rates
effective November 1, 1993. Weather for the twelve-month
period ended September 30, 1995 was 1.6% colder than the
comparable prior twelve-month period and 9.1% colder than
normal.
Total operating expenses decreased by 1% or $502,000. This
decrease was due a $5,091,000 or 13% reduction in operations
and maintenance expenses resulting from cost saving
initiatives and lower bad debts due to lower gas revenues
partially offset by the restructuring charge of $3,185,000
as described above and an increase in depreciation and
amortization expense of $1,220,000 or 14% due to an increase
in utility property.
Income taxes decreased $2,579,000 or 33% due to a lower
level of income subject to tax.
Other operating income decreased $1,071,000 due to a
$1,136,000 decline in net income for Transgas. The milder
winter of 1995 adversely affected Transgas performance as
compared to the twelve-month period ended September 30,
1994, which included the strong 1994 first three quarters.
Interest and debt expense increased $913,000 or 11%
principally due to higher short-term borrowings.
Liquidity and Capital Resources
On September 12, 1995, the Company received approval from
the Massachusetts Department of Public Utilities (DPU) for
authority to issue and sell up to $75 million of first
mortgage bonds pursuant to a medium term note (MTN) program.
The program was established effective September 27.
On October 12, 1995, the Company issued $10 million of 30-
year bonds with an interest rate of 6.44% in the first ten
years and 7.38% in the next 20 years (an average of 6.85%)
under the MTN program. The bonds are redeemable at the
option of the holder at the end of 10 years. It is
anticipated that the remaining bonds under the MTN program
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. List of Exhibits
None
b. Reports on Form 8-K
There were no reports filed on Form 8-K for the quarter
ended September 30, 1995.
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: November 13, 1995 s/F.L. Putnam III
F.L. Putnam III
President and Chief
Executive Officer
Date: November 13, 1995 s/Nickolas Stavropoulos
Nickolas Stavropoulos
Executive Vice President -
Finance, Marketing and Chief
Financial Officer
[END OF FORM 10-Q FOR PERIOD ENDED SEPTEMBER 30, 1995]