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, 1996
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) 322-3000
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, 1996 was 8,478,313.
COLONIAL GAS COMPANY
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Statements of Income -
Three Months Ended September 30, 1996 and 1995
Nine Months Ended September 30, 1996 and 1995
Twelve Months Ended September 30, 1996 and 1995
Consolidated Condensed Balance Sheets -
September 30, 1996, December 31, 1995 and
September 30, 1995
Consolidated Condensed Statements of Cash Flows -
Nine Months Ended September 30, 1996 and 1995
Twelve Months Ended September 30, 1996 and 1995
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
September 30,
1996 1995
(In Thousands Except
Per Share Amounts)
Operating Revenues $15,245 $14,911
Cost of gas sold 8,474 7,875
Operating Margin 6,771 7,036
Operating Expenses:
Operations 7,156 7,271
Maintenance 968 995
Depreciation and Amortization 2,765 2,579
Taxes, other than income 1,237 1,172
Total Operating Expenses 12,126 12,017
Income Taxes (2,789) (2,730)
Utility Operating Loss (2,566) (2,251)
Other Operating Income:
Truck transportation revenues 2,902 2,878
Truck transportation expenses,
including income taxes and
interest (2,050) (2,355)
Truck transportation net income 852 523
Other, net of income taxes 76 45
Total Other Operating Income 928 568
Non-Operating Income, Net 219 124
Loss Before Interest and Debt Expense (1,419) (1,559)
Interest and Debt Expense 2,161 2,373
Net Loss $ (3,580) $ (3,932)
Average Common Shares Outstanding 8,448 8,312
Loss per Average Common Share $ (0.42) $ (0.47)
Dividends Paid per Common Share $ .325 $ .320
(See accompanying notes to consolidated condensed
financial statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Nine Months Ended
September 30,
1996 1995
(In Thousands Except
Per Share Amounts)
Operating Revenues $117,060 $108,024
Cost of gas sold 60,368 55,955
Operating Margin 56,692 52,069
Operating Expenses:
Operations 23,563 22,971
Maintenance 3,234 3,232
Depreciation and Amortization 8,424 7,624
Taxes, other than income 4,077 3,924
Total Operating Expenses 39,298 37,751
Income Taxes 4,435 3,027
Utility Operating Income 12,959 11,291
Other Operating Income:
Truck transportation revenues 9,148 5,526
Truck transportation expenses,
including income taxes and
interest (7,006) (5,060)
Truck transportation net income 2,142 466
Other, net of income taxes 175 (14)
Total Other Operating Income 2,317 452
Non-Operating Income, Net 570 415
Income Before Interest and Debt Expense 15,846 12,158
Interest and Debt Expense 6,402 6,924
Net Income $9,444 $ 5,234
Average Common Shares Outstanding 8,413 8,277
Income per Average Common Share $ 1.12 $ 0.63
Dividends Paid per Common Share $0.970 $0.955
(See accompanying notes to consolidated condensed
financial statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Twelve Months Ended
September 30,
1996 1995
(In Thousands Except
Per Share Amounts)
Operating Revenues $173,685 $156,100
Cost of gas sold 88,045 80,078
Operating Margin 85,640 76,022
Operating Expenses:
Operations 31,901 29,959
Maintenance 4,403 4,516
Depreciation and Amortization 11,025 9,977
Taxes, other than income 5,303 5,034
Restructuring charge 0 3,185
Total Operating Expenses 52,632 52,671
Income Taxes 9,767 5,318
Utility Operating Income 23,241 18,033
Other Operating Income:
Truck transportation revenues 11,197 6,839
Truck transportation expenses,
including income taxes and
interest (8,918) (6,368)
Truck transportation net income 2,279 471
Other, net of income taxes 181 (83)
Total Other Operating Income 2,460 388
Non-Operating Income, Net 1,021 721
Income Before Interest and Debt Expense 26,722 19,142
Interest and Debt Expense 8,749 9,126
Net Income $17,973 $10,016
Average Common Shares Outstanding 8,395 8,256
Income per Average Common Share $ 2.14 $ 1.21
Dividends Paid per Common Share $ 1.29 $ 1.27
(See accompanying notes to consolidated condensed
financial statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS
September 30, December 31, September 30,
1996 1995 1995
(Unaudited) (Unaudited)
(In Thousands)
Utility Property:
At original cost $327,102 $308,191 $304,113
Accumulated depreciation (81,273) (72,636) (73,237)
Net utility property 245,829 235,555 230,876
Non-Utility Property - Net 6,001 5,036 4,527
Net property 251,830 240,591 235,403
Capital Leases - Net 1,795 2,253 2,948
Current Assets:
Cash and cash equivalents 9,061 7,541 7,248
Accounts receivable - net 4,827 16,864 6,455
Accrued utility revenues 701 8,924 533
Unbilled gas costs 13,201 9,688 4,093
Fuel and other inventories 14,492 13,648 15,372
Prepayments and other current
assets 10,323 4,337 6,071
Total current assets 52,605 61,002 39,772
Deferred Charges and Other
Assets:
Unrecovered deferred income
taxes 9,980 10,562 10,889
Unrecovered environmental
expenses - incurred 3,779 4,761 4,324
Unrecovered environmental
expenses - accrued 1,793 2,300 3,222
Unrecovered transition
costs - accrued 3,600 3,600 4,700
Other 16,625 17,352 13,195
Total deferred charges
and other assets 35,777 38,575 36,330
Total Assets $342,007 $342,421 $314,453
(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,
1996 1995 1995
(Unaudited) (Unaudited)
(In Thousands)
Capitalization:
Common equity:
Common Stock - par value
$3.33 per share
Authorized - 15,000
shares Issued and
outstanding - 8,472,
8,412 and 8,334 shares $28,212 $27,863 $27,754
Premium on common stock 53,363 51,447 50,899
Retained earnings 27,043 25,760 19,898
Total Common equity 108,619 105,070 98,551
Long-term debt 85,305 75,418 70,138
Total capitalization 193,923 180,488 168,689
Capital Lease Obligations 967 1,359 2,237
Current Liabilities:
Current maturities of
long-term debt 5,149 6,141 7,818
Current capital lease
obligations 828 894 712
Notes payable 52,000 61,835 51,800
Gas inventory purchase
obligations 10,899 12,340 11,867
Accounts payable 8,605 12,150 5,963
Other 9,713 8,306 3,837
Total current
liabilities 87,194 101,666 81,997
Deferred Credits and Reserves:
Deferred income taxes-funded 34,771 32,299 31,910
Deferred income taxes-
unfunded 9,980 10,562 10,889
Accrued environmental
expenses 1,793 2,300 3,222
Accrued transition costs 3,600 3,600 4,700
Other 9,779 10,147 10,809
Total deferred credits
and reserves 59,923 58,908 61,530
Total Capitalization and
Liabilities $342,007 $ 342,421 $ 314,453
(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,
1996 1995
(In Thousands)
Cash Flows From Operating Activities:
Net income $ 9,444 $ 5,234
Adjustments to reconcile net income to
net cash 18,198 11,281
Changes in current assets and liabilities 6,118 13,764
Net cash provided by operating
activities 33,760 30,279
Cash Flows From Investing Activities:
Capital expenditures (20,187) (18,408)
Change in deferred accounts (3,499) 318
Net cash used in investing activities (23,686) (18,090)
Cash Flows From Financing Activities:
Dividends paid on Common Stock (8,160) (7,903)
Issuance of Common Stock 2,265 2,044
Issuance of long-term debt 20,000 -
Retirement of long-term debt (11,105) (8,415)
Debt issue cost (278) -
Change in notes payable (9,835) 2,300
Change in gas inventory purchase
obligations (1,441) (1,993)
Net cash used in financing activities (8,554) (13,967)
Net (decrease) increase in cash and
cash equivalents 1,520 (1,778)
Cash and cash equivalents at beginning
of period 7,541 9,026
Cash and cash equivalents at end
of period $ 9,061 $ 7,248
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest - net of amount
capitalized $ 6,989 $ 6,368
Income and franchise taxes $ 6,780 $ 3,428
(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,
1996 1995
(In Thousands)
Cash Flows From Operating Activities:
Net income $17,973 $10,016
Adjustments to reconcile net income
to net cash 21,492 13,931
Changes in current assets and
liabilities (4,798) 1,185
Net cash provided by operating
activities 34,667 25,132
Cash Flows From Investing Activities:
Capital expenditures (27,850) (28,667)
Change in deferred accounts (5,611) 4,156
Net cash used in investing
activities (33,461) (24,511)
Cash Flows From Financing Activities:
Dividends paid on Common Stock (10,829) (10,482)
Issuance of Common Stock 2,923 3,003
Issuance of long-term debt 40,000 -
Retirement of long-term debt (27,502) (8,446)
Debt issue costs (3,217) -
Change in notes payable 200 16,300
Change in gas inventory purchase
obligations (968) (1,780)
Net cash (used in) provided by
financing activities 607 (1,405)
Net (decrease) increase in cash and
cash equivalents 1,813 (784)
Cash and cash equivalents at beginning
of period 7,248 8,032
Cash and cash equivalents at end of
period $ 9,061 $ 7,248
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest - net of amount
capitalized $ 10,489 $ 9,268
Income and franchise taxes $ 6,827 $ 4,762
(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, 1996 and 1995 and results of
operations for the three, nine and twelve month periods
ended September 30, 1996 and 1995 and cash flows for the
nine and twelve month periods ended September 30, 1996
and 1995.
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, 1996 and 1995 are not necessarily
indicative of the results to be expected for the full
year.
3. During the nine months ended September 30, 1996, the
Company issued 105,020 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 $349,000
and Premium on Common Stock increased $1,916,000.
On September 18, 1996, the Company issued $10 million of
18 month First Mortgage Bonds bonds with an interest rate
of 6.20% under its Medium Term Note program.
4. Contingencies
Reference is made to Note J/Contingencies of the Notes to
Consolidated Financial Statements contained within the
Company's 1995 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, 1996 and 1995
The Company's net loss for the three months ended
September 30, 1996 was $3,580,000, or $.42 per share, which
is 8.9% or $352,000 less than the $3,932,000 loss, or $.47
per share, reported for the same period last year. The
principal reasons for the change in net income are the
increase in Transgas operating income as 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.
Other operating income included a $329,000 increase in
operating income for Transgas, principally due to gains on
the sale of used tractors.
Nine Months Ended September 30, 1996 and 1995
Net income for the nine months ended September 30, 1996
was $9,444,000, compared to $5,234,000 for the comparable
1995 period. This $4,210,000 or 80% increase is due to
factors described below.
The Company's operating margin increased 8.9% or
$4,623,000 during the period due to a 7.8% increase in firm
gas sales as a result of weather which was 3.6% colder than
the comparable period in the prior year and 2.5% colder than
normal and continued customer growth.
Total operating expenses increased by 4.1% or $1,547,000
principally due to two factors. First, a $594,000 or 2.3%
increase in operations and maintenance expenses principally
due to increased bad debt expense as a result of higher gas
revenues; and second, an $800,000 or 11% increase in
depreciation and amortization expense due to an increase in
utility property.
Income taxes increased $1,408,000 or 47% due to a higher
level of income subject to tax.
Other operating income increased $1,865,000, or 413% due
primarily to the improved financial results for Transgas
compared to the 1995 period. An 86% increase in Transgas'
LNG hauls over the first nine months led to a $3,622,000
increase in revenue and resulted in a $1,676,000 increase in
truck transportation net income. The increased LNG hauls
were primarily due to the colder than normal weather during
the winter months.
Twelve Months Ended September 30, 1996 and 1995
Net income for the twelve month period ended September
30, 1996 rose to $17,973,000, or $2.14 per share, up 79%
from $10,016,000 or $1.21 per share over twelve month
period ended September 30, 1995. Net income for the prior
twelve month period was after a restructuring charge of
$3,185,000 which was recorded in December 1994. This
charge resulted from a voluntary early retirement program
and the closing of retail appliance sales operations. Net
income for the twelve month period ended September 30,
1995, excluding the restructuring charge, was $11,981,000
or $1.45 per share.
The Company's operating margin increased 13% or $9,618,000
during the current twelve month period due to a 13% increase
in firm gas sales resulting from weather that was 8.4%
colder than the comparable prior year period (4.9% colder
than normal), and continued customer growth.
Total operating expenses decreased by $39,000. Operations
and maintenance expenses increased $1,829,000, or 5.4%,
principally due to higher bad debt expense, based on
increased revenues. Depreciation and amortization increased
$1,048,000, or 11% due to an increase in utility property.
These increases were offset by the $3,185,000 restructuring
charge recorded in December 1994, as described above.
Income taxes increased $4,449,000 or 84% due to a higher
level of income subject to tax.
Other operating income increased $2,072,000 primarily due
to a $1,808,000 increase in net income for Transgas. The
colder winter of 1995-1996 favorably affected Transgas'
performance as compared to the twelve-month period ended
September 30, 1995.
Interest and debt expense decreased $377,000 or 4.1% due
to decreased interest expense on long term debt, increased
regulatory interest income as a result of increased unbilled
gas costs; both partially offset by an increase in interest
on higher short term debt balances.
Liquidity and Capital Resources
On September 18, 1996, the Company issued $10 Million of
18 month First Mortgage Bonds with an interest rate of 6.20%
under its Medium Term Note program.
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
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: November 13, 1996 F.L. Putnam III
President and Chief Executive Officer
Date: November 13, 1996 Nickolas Stavropoulos
Executive Vice President - Finance,
Marketing and Chief Financial Officer
[END OF FORM 10-Q FOR PERIOD ENDING SEPTEMBER 30, 1996]