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, 1997
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 May 1, 1997 was 8,568,245.
COLONIAL GAS COMPANY
INDEX
PAGE NO.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Statements of Income -
Three Months Ended March 31, 1997 and 1996 3
Twelve Months Ended March 31, 1997 and 1996 4
Consolidated Condensed Balance Sheets -
March 31, 1997, December 31, 1996 and
March 31, 1996 5-6
Consolidated Condensed Statements of Cash Flows -
Three Months Ended March 31, 1997 and 1996 7
Twelve Months Ended March 31, 1997 and 1996
Notes to Consolidated Condensed Financial
Statements 9
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial
Condition 10-11
PART II - OTHER INFORMATION
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended
March 31,
1997 1996
(In Thousands Except
Per Share Amounts)
Operating Revenues $83,324 $77,578
Cost of gas sold 43,717 37,995
Operating Margin 39,607 39,583
Operating Expenses:
Operations 7,727 9,117
Maintenance 1,146 1,118
Depreciation and Amortization 2,973 2,895
Taxes, other than income 1,382 1,395
Total Operating Expenses 13,228 14,525
Income Taxes 9,432 8,845
Utility Operating Income 16,947 16,213
Other Operating Income:
Truck transportation revenues 1,339 3,577
Truck transportation expenses,
including income taxes and interest 1,258 2,661
Truck transportation net income 81 916
Other, net of income taxes 49 55
Total Other Operating Income 130 971
Non-Operating Income, Net 121 177
Income Before Interest and Debt Expense 17,198 17,361
Interest and Debt Expense 1,905 2,133
Net Income $15,293 $15,228
Average Common Shares Outstanding 8,543 8,377
Income per Average Common Share $ 1.79 $ 1.82
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)
Twelve Months Ended
March 31,
1997 1996
(In Thousands Except
Per Share Amounts)
Operating Revenues $176,674 $171,874
Cost of gas sold 92,909 86,766
Operating Margin 83,765 85,108
Operating Expenses:
Operations 29,993 32,175
Maintenance 4,505 4,304
Depreciation and Amortization 11,307 10,597
Taxes, other than income 5,357 5,189
Total Operating Expenses 51,162 52,265
Income Taxes 9,675 9,524
Utility Operating Income 22,928 23,319
Other Operating Income:
Truck transportation revenues 8,794 9,390
Truck transportation expenses,
including income taxes and interest 7,602 7,994
Truck transportation net income 1,192 1,396
Other, net of income taxes 203 92
Total Other Operating Income 1,395 1,488
Non-Operating Income, Net 701 898
Income Before Interest and Debt Expense 25,024 25,705
Interest and Debt Expense 8,481 9,163
Net Income $16,543 $16,542
Average Common Shares Outstanding 8,470 8,327
Income per Average Common Share $ 1.95 $ 1.99
Dividends Paid per Common Share $ 1.30 $ 1.28
(See accompanying notes to consolidated condensed financial
statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS
March 31, December 31, March 31,
1997 1996 1996
(Unaudited) (Unaudited)
(In Thousands)
Utility Property:
At original cost $338,174 $333,319 $312,507
Accumulated depreciation (85,433) (82,336) (75,629)
Net utility property 252,741 250,983 236,878
Non-Utility Property - Net 5,879 5,925 5,372
Net property 258,620 256,908 242,250
Capital Leases - Net 2,487 1,811 1,995
Current Assets:
Cash and cash equivalents 3,406 3,541 7,844
Accounts receivable 32,102 17,719 32,276
Allowance for doubtful
accounts (3,445) (2,715) (3,093)
Accrued utility revenues 5,869 6,333 6,448
Unbilled gas costs 12,296 19,238 5,816
Fuel and other inventories 8,785 11,958 7,511
Prepayments and other current
assets 5,778 11,484 4,838
Total current assets 64,791 67,558 61,640
Deferred Charges and Other Assets:
Unrecovered deferred income
taxes 9,580 9,774 10,368
Unrecovered demand side
management costs 7,983 7,075 4,791
Unrecovered environmental
expenses - incurred 4,130 4,011 4,836
Unrecovered environmental
expenses - accrued 1,063 1,183 2,225
Unrecovered transition
costs - accrued 4,500 4,500 3,600
Other 11,499 11,592 12,287
Total deferred charges
and other assets 38,755 38,135 38,107
Total Assets $364,653 $364,412 $343,992
(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,
1997 1996 1996
(Unaudited) (Unaudited)
(In Thousands)
Capitalization:
Common equity:
Common Stock - par value $3.33 per share
Authorized - 15,000 shares
Issued and outstanding -
8,561, 8,518 and 8,398
shares $28,508 $28,366 $27,966
Premium on common stock 54,985 54,221 52,024
Retained earnings 43,838 31,319 38,307
Total Common equity 127,331 113,906 118,297
Long-term debt 85,226 95,266 80,381
Total capitalization 212,557 209,172 198,678
Capital Lease Obligations 1,538 930 1,155
Current Liabilities:
Current maturities of
long-term debt 15,155 5,152 11,144
Current capital lease
obligations 949 881 839
Notes payable 40,100 50,400 40,000
Gas inventory purchase
obligations 7,412 13,039 6,040
Accounts payable 8,556 14,544 12,812
Other 17,733 10,153 13,820
Total current liabilities 89,905 94,169 84,655
Deferred Credits and Reserves:
Deferred income taxes-funded 37,023 35,886 33,346
Deferred income taxes-unfunded 9,580 9,774 10,368
Accrued environmental expenses 1,063 1,183 2,225
Accrued transition costs 4,500 4,500 3,600
Other 8,487 8,798 9,965
Total deferred credits
and reserves 60,653 60,141 59,504
Total Capitalization and
Liabilities $364,653 $364,412 $343,992
(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,
1997 1996
(In Thousands)
Cash Flows From Operating Activities:
Net income $15,293 $15,228
Adjustments to reconcile net income
to net cash 2,540 4,603
Changes in current assets and liabilities 6,173 4,734
Net cash provided by operating
activities 24,006 24,565
Cash Flows From Investing Activities:
Capital expenditures (4,934) (4,746)
Change in deferred accounts (1,376) 733
Net cash used in investing
activities (6,310) (4,013)
Cash Flows From Financing Activities:
Dividends paid on Common Stock (2,774) (2,680)
Issuance of Common Stock 907 680
Issuance of long-term debt, net of
issuance costs 0 9,920
Retirement of long-term debt,
including premiums (37) (34)
Change in notes payable (10,300) (21,835)
Change in gas inventory purchase
obligations (5,627) (6,300)
Net cash used in financing
activities (17,831) (20,249)
Net (decrease) increase in cash and
cash equivalents (135) 303
Cash and cash equivalents at beginning
of period 3,541 7,541
Cash and cash equivalents at end of
period $3,406 $7,844
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest - net of amount capitalized $2,812 $2,167
Income and franchise taxes $ 529 $ 454
(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,
1997 1996
(In Thousands)
Cash Flows From Operating Activities:
Net income $16,543 $16,542
Adjustments to reconcile net income
to net cash 20,456 14,681
Changes in current assets and
liabilities (12,430) (5,640)
Net cash provided by operating
activities 24,569 25,583
Cash Flows From Investing Activities:
Capital expenditures (28,626) (26,795)
Change in deferred accounts (2,924) (169)
Net cash used in investing activities (31,550) (26,964)
Cash Flows From Financing Activities:
Dividends paid on Common Stock (11,013) (10,657)
Issuance of Common Stock 3,503 2,596
Issuance of long-term debt, net of
issuance costs 19,867 26,941
Retirement of long-term debt, including
premiums (11,286) (24,815)
Change in notes payable 100 7,000
Change in gas inventory purchase
obligations 1,371 (2,000)
Net cash (used in) provided by
financing activities 2,542 (935)
Net (decrease) increase in cash and
cash equivalents (4,439) (2,316)
Cash and cash equivalents at beginning
of period 7,845 10,160
Cash and cash equivalents at end of period $3,406 $7,844
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest - net of amount capitalized $9,795 $9,804
Income and franchise taxes $6,817 $3,684
(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, 1997 and 1996 and results of
operations for the three and twelve month periods ended
March 31, 1997 and 1996 and cash flows for the three and
twelve month periods ended March 31, 1997 and 1996.
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,
1997 and 1996 are not necessarily indicative of the
results to be expected for the full year.
3. During the three months ended March 31, 1997, the Company
issued 43,000 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 $142,000 and
Premium on Common Stock increased $764,000.
4. Contingencies
Reference is made to Note I/Contingencies of the Notes to
Consolidated Financial Statements contained within the
Company's 1996 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, 1997 and 1996
Net income for the three months ending March 31, 1997
increased $65,000 to $15,293,000 compared to $15,228,000 for
the same period last year. Weather for the first quarter was
7.9% warmer than the prior year, however, operating margin
remained about the same, principally due to 3.7% customer
growth. Operating income for Colonial's utility operation
increased $734,000 or 4.5%, primarily caused by a $1,390,000
or 15% decrease in operations expenses -- including lower
bad debts, expiration of the amortization of certain
deferred expenses and decreased insurance expense.
Income taxes increased $587,000 or 6.6% due to a higher
level of utility income subject to tax.
Other operating income (net of income taxes) decreased
$841,000 over the comparable 1996 period primarily as a
result of a $835,000 decrease in Transgas' net income which
is attributable to the warmer weather. Compared to the first
quarter of 1996, Transgas hauls of LNG decreased 65%.
Interest expense decreased $228,000 or 10.7%. Interest
expense is less than the same period last year principally
due to greater interest income on higher balances of
regulatory assets (unrecovered gas cost fuel & unrecovered
demand side management cost) which is offset against
interest expense.
Twelve Months Ended March 31, 1997 and 1996
Net income was $16,543,000 for the twelve months ending
March 31, 1997 compared to $16,542,000 for the comparable
1996 period.
Net income for the twelve month period remained the same
despite weather that was 7.8% warmer than the preceding
twelve months. The warmer weather caused operating margin
to decrease $1,343,000, which was offset by a $1,103,000
decrease in operating expenses and a $682,000 decrease in
interest and debt expense.
Operations expenses were down $2,182,000 or 6.8% due to
lower bad debts, expiration of the amortization of certain
deferred charges and decreased insurance expense. This
decrease was partially offset by increased depreciation.
Other operating income (net of income taxes) decreased
$93,000 over the comparable 1996 period. The net income of
Transgas for the twelve months ending March 31, 1997
decreased $204,000 or 15% due to the warm winter of 1996-
1997, which resulted in decreased demand for energy trucking
services. The decrease in Transgas net income was partially
offset by increased merchandise and jobbing net income of
$111,000.
Interest and debt expense decreased $682,000 or 7.4%.
Interest expense has decreased principally due to greater
interest income on higher balances of regulatory assets
(unrecovered gas costs fuel & unrecovered demand side
management costs) which is offset against interest expense.
Liquidity and Capital Resources
No issuance of long term debt occurred in the first
quarter of 1997.
On April 16, 1997, the quarterly dividend on the Company's
common stock was increased to $.335 per share or an
annualized dividend rate of $1.34 per share. This is the
61st consecutive year that the Company has paid a dividend
to common shareholders and the 18th consecutive year that it
has increased its per share dividend payment.
PART II - OTHER INFORMATION
Item 5. Other Information
On January 13, 1997, the Company entered into joint venture
agreements with Cabot LNG Corporation ("Cabot LNG"). The
joint venture agreements are subject to certain regulatory
approvals which remain pending. It is anticipated that the
regulatory decisions will be issued during the second or
third quarter of 1997. If the necessary approvals are
obtained: (1) the Company will sell a 50% interest in
Transgas to Cabot LNG; and (2) the Company will lease its
LNG facility in Tewksbury, Massachusetts to a joint venture
entity owned 50/50 by the Company and Cabot LNG. The
purchase price for the 50% interest in Transgas is
$7,000,000. The Company will recognize a one-time gain of
approximately $.35 per share at the time of the Transgas
sale and after such sale, will recognize 50% of the net
income of Transgas on an equity basis. In connection with
the lease of the Tewksbury LNG facility, Cabot LNG"s
marketing subsidiary, Distrigas of Massachusetts
Corporation, will market and sell vaporized LNG from the
Tewksbury LNG facility above the Company's requirements,
with the joint venture entity sharing in the net revenues
from such sales.
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, 1997 s/F.L. Putnam,III
F.L. Putnam, III
President and Chief
Executive Officer
Date: May 12, 1997 s/Nickolas Stavropoulos
Nickolas Stavropoulos
Executive Vice President
- Finance, Marketing and Chief
Financial Officer
[END OF FORM 10-Q FOR PERIOD ENDING MARCH 31, 1997]