FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
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 0-1160
THE PROVIDENCE GAS COMPANY
(Exact name of registrant as specified in its charter)
Rhode Island 05-0203650
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
100 Weybosset Street, Providence, Rhode Island 02903
(Address of principal executive offices)
(Zip Code)
(401) 272-5040
Registrant's telephone number, including area code
(Former name,former address and former fiscal year,if changed since last
report)
Indicate by checkmark 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 .
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock, $1.00 par value; 1,243,598 shares outstanding at
August 12, 1994.
THE PROVIDENCE GAS COMPANY
FORM 10-Q
JUNE 30, 1994
PART I: FINANCIAL INFORMATION PAGE
Item 1: Financial Statements
Consolidated Statements of Income for the
three, nine and twelve months ended
June 30, 1994 and June 30, 1993 I-1
Consolidated Balance Sheets as of June 30, 1994,
June 30, 1993 and September 30, 1993 I-2
Consolidated Statements of Cash Flows
for the nine months ended June 30, 1994
and June 30, 1993 I-3
Consolidated Statements of Capitalization
as of June 30, 1994, June 30, 1993
and September 30, 1993 I-4
Notes to Consolidated Financial Statements I-5
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of Operations I-8
PART II: OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K II-1
Signature II-2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE PROVIDENCE GAS COMPANY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE PERIODS ENDED JUNE 30
(Unaudited)
THREE MONTHS NINE MONTHS TWELVE MONTHS
1994 1993 1994 1993 1994 1993
(Thousands, except per share amounts)
Operating revenues $ 41,917 $ 37,642 $185,785 $173,154 $218,745 $201,384
Cost of gas sold 25,612 23,704 114,262 102,359 136,581 120,318
Operating margin 16,305 13,938 71,523 70,795 82,164 81,066
Operating expenses:
Other operation 10,171 9,708 33,602 30,271 42,849 39,738
Maintenance 978 962 2,900 2,583 3,804 3,441
Depreciation and
amortization 2,324 2,231 6,971 6,700 9,183 8,722
Taxes -
State gross
receipts 1,166 1,021 5,360 4,785 6,327 5,224
Local property and
other 1,670 1,805 5,005 5,231 6,489 6,626
Federal income (556) (1,145) 4,432 5,438 2,501 3,624
Total operating
expenses 15,753 14,582 58,270 55,008 71,153 67,375
Operating income
(loss) 552 (644) 13,253 15,787 11,011 13,691
Nonutility income, net 118 146 559 79 576 530
Income (loss)
before interest
expense 670 (498) 13,812 15,866 11,587 14,221
Interest expense:
Long-term debt 1,277 1,383 3,687 3,890 4,967 4,840
Other 334 335 966 1,217 1,204 1,795
Interest capitalized (26) (18) (79) (57) (101) (99)
1,585 1,700 4,574 5,050 6,070 6,536
Net income (loss) (915) (2,198) 9,238 10,816 5,517 7,685
Dividends on preferred
stock (174) (174) (522) (522) (696) (696)
Net income (loss) applicable
to common stock $ (1,089) $ (2,372) $ 8,716 $ 10,294 $ 4,821 $ 6,989
======== ======== ======== ======== ======== ========
Earnings (loss) per
common share $ (.88) $ (1.91) $ 7.01 $ 8.28 $ 3.88 $ 5.62
======== ======== ======== ======== ======== ========
Dividends paid per
common share $ .92 $ .89 $ 2.70 $ 2.67 $ 3.59 $ 3.56
======== ======== ======== ======== ======== ========
PAGE I-1
Weighted average common shares
outstanding 1,243.6 1,243.6 1,243.6 1,243.6 1,243.6 1,243.6
======== ======== ======== ======== ======== ========
PAGE I-1(a)
THE PROVIDENCE GAS COMPANY
CONSOLIDATED BALANCE SHEETS
(Thousands)
(Unaudited)
June 30, June 30, September 30,
1994 1993 1993
ASSETS
Gas plant, at original cost $223,964 $210,533 $213,218
Less - Accumulated depreciation and
utility plant acquisition adjustment 77,658 69,783 71,289
146,306 140,750
141,929
Current assets:
Cash and temporary cash investments 1,265 887 597
Accounts receivable and unbilled revenue, less
allowance of $4,915 at 6/30/94, $4,194 at
6/30/93 and $2,354 at 9/30/93 30,598 27,217 19,727
Deferred gas costs 10,300 - 16,369
Inventories, at average cost -
Liquefied natural gas, propane and under-
ground storage 8,373 5,347 11,363
Materials and supplies 2,443 1,678 1,763
Deferred capacity charges - 323 -
Prepaid and refundable taxes 4,198 5,351 6,169
Prepayments 583 1,360 837
57,760 42,163
56,825
Deferred charges and other assets 14,207 11,079 12,657
Total assets $218,273 $193,992 $211,411
======== ======== ========
CAPITALIZATION AND LIABILITIES
Capitalization: $138,342 $137,564 $135,024
Current liabilities:
Notes payable 15,200 8,000 20,800
Current portion of long-term debt 2,080 1,861 466
Accounts payable 20,844 8,116 18,463
Accrued taxes 7,205 8,535 7,356
Accrued vacation 1,987 1,932 1,664
Customer deposits 3,485 2,850 2,895
Refundable gas costs 730 846 -
Other 3,182 3,508 2,955
54,713 35,648 54,599
Deferred credits and reserves:
Accumulated deferred Federal income
taxes 14,577 12,934 13,423
Unamortized investment tax credits 2,865 3,023 2,984
Other 7,776 4,823 5,381
25,218 20,780 21,788
Total capitalization and
liabilities $218,273 $193,992 $211,411
======== ======== ========
Page I-2
THE PROVIDENCE GAS COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30
(Unaudited)
1994 1993
(Thousands)
Cash provided by (used for)
Operations:
Net income $ 9,238 $ 10,816
Items not requiring cash-
Depreciation and amortization 6,953 6,816
Deferred Federal income taxes 594 (174)
Amortization of investment tax credits(119) (117)
Change in assets and liabilities
which provided (used) cash:
Accounts receivable (10,871) (9,511)
Deferred gas costs 10,499 (921)
Inventories 2,310 2,017
Deferred capacity charges - 1,020
Prepaid and refundable taxes 952 1,114
Prepayments 254 (181)
Accounts payable (1,319) (2,089)
Accrued taxes 1,832 1,353
Accrued vacation, customer deposits
& other 1,140 1,327
Net cash provided by operations 21,463 11,470
Investment Activities:
Expenditures for property, plant and
equipment (11,241) (9,476)
Deferred charges and other 272 (316)
Total (10,969) (9,792)
Financing Activities:
Equity infusion - 16,500
Issuance of mortgage bonds 16,000 -
Payments on long-term debt (347) (1,260)
(Decrease) in notes payable (21,600) (12,410)
Cash dividends on preferred stock (522) (522)
Cash dividends on common stock (3,357) (3,320)
Total (9,826) (1,012)
Increase in cash & temporary cash
investments 668 666
Cash and cash equivalents at beginning
of year 597 221
Cash and cash equivalents at end
of period $ 1,265 $ 887
======== ========
Supplemental disclosures of cash flow information:
Cash paid year-to-date for -
Interest (net of amount capitalized)$ 4,089 $ 4,785
Income taxes (net of refunds) $ 2,300 $ 2,300
PAGE I-3
THE PROVIDENCE GAS COMPANY
CONSOLIDATED STATEMENTS OF CAPITALIZATION
(THOUSANDS)
(Unaudited)
June 30, June 30, September 30,
1994 1993 1993
Common stock equity:
Common stock, $1 par
Authorized - 2,500 shares
Outstanding - 1,244 at 6/30/94, 6/30/93
and 9/30/93 $ 1,244 $ 1,244 $ 1,244
Amount paid in excess of par 36,372 36,452 36,452
Retained earnings 32,524 32,167 27,165
Total common stock equity 70,140 69,863 64,861
Cumulative preferred stock:
Redeemable 8.70% Series, $100 par
Authorized - 80 shares
Outstanding - 80 shares at 6/30/94,
6/30/93 and 9/30/93 8,000 8,000 8,000
Long-term debt:
First mortgage bonds 61,000 52,300 61,000
Senior debentures - 7,520 -
Capital leases 1,282 1,742 1,629
Total long-term debt 62,282 61,562 62,629
Less: current portion 2,080 1,861 466
Long-term debt, net 60,202 59,701 62,163
Total capitalization $ 138,342 $ 137,564 $ 135,024
========= ========= =========
PAGE I-4
THE PROVIDENCE GAS COMPANY
Notes to Consolidated Financial Statements
Accounting Policies
It is the Registrant's opinion that the consolidated financial
information contained in this report reflects all normal, recurring
adjustments necessary to provide a fair statement of the results for the
periods reported; however, such results are not necessarily indicative of
results to be expected for the year, due to the seasonal nature of the
Registrant's operations. Certain information and footnote disclosures
normally included in the consolidated financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted in this Form 10-Q pursuant to the rules and
regulations of the Securities and Exchange Commission. However, the
disclosures herein when read with the annual report for 1993 filed on Form
10-K are adequate to make the information presented not misleading.
Reclassification
Certain amounts included in prior year balance sheets and income
statements have been reclassified for consistent presentation with the
current period.
Environmental Matters
Federal, state, and local laws and regulations establishing standards
and requirements for the protection of the environment have increased both
in number and in scope within recent years. The Registrant cannot predict
the future impact of such standards and requirements which are subject to
change and can take effect retroactively. The Registrant continues to
monitor the status of these laws and regulations. Such monitoring involves
the review of past and current operations and properties. To the best of
its knowledge, subject to the following paragraph, the Registrant believes
it is in substantial compliance with such laws and regulations. However,
should future costs be incurred, the Registrant anticipates recovery from
third parties or through its rate filings.
In January 1990, the Registrant received notice from the Massachusetts
Department of Environmental Protection that it is one of several
"potentially responsible parties" under the Massachusetts Oil and Hazardous
Material Release Prevention Act of 1983 as amended. This will require the
Registrant to share in the clean-up costs, if any, at a waste disposal site
in Massachusetts. While no preliminary estimates of costs are currently
available, the Registrant's degree of responsibility is believed to be
minimal.
Management anticipates requesting rate relief for all costs related to
the environmental matters and believes that the ultimate resolution of
these matters will not have a materially adverse effect on the Registrant's
results of operations and financial condition.
PAGE I-5
Gas Supply Restructuring
Through Order 636 and other orders, the Federal Energy Regulatory
Commission ("FERC") required pipelines to unbundle pipeline services.
The Registrant has participated in the various restructuring
proceedings at the FERC and has new pipeline transportation and storage
contracts in place to serve all firm requirements. At the same time, a
number of contracts with gas suppliers have been negotiated and
additional contracts will be negotiated before November 1, 1994. The
portfolio of supply contracts is designed to be market responsive and
is diversified with respect to contract lengths, source location and
other contract terms. The pipeline and supply contracts in place
during the 1993-94 winter enabled the Registrant to successfully meet
its customers needs during the unusually cold winter months.
Based upon current information, the Registrant anticipates
transition costs to total between $16 million and $19 million. The
Registrant will recover $5.9 million by September 1994, through its
Cost of Gas Adjustments Clause ("CGA"). At the appropriate time, full
recovery of remaining transition costs will be pursued by the
Registrant through the regulatory process.
FERC has approved settlements with two of the Registrant's four
pipelines, which account for the bulk of the transition costs. Under
one of the settlements, a significant portion of the gas supply
realignment costs have been shifted to a commodity surcharge,
significantly reducing the impact on gas costs and enabling the
Registrant to avoid a portion of these costs by utilizing other
suppliers. Negotiations are continuing on two additional pipelines,
but recent developments have considerably reduced the uncertainty
previously disclosed. As a result, the Registrant has decreased the
range for potential transition costs accordingly.
Properties
The Registrant owns certain properties that are located in
Providence, Rhode Island adjacent to the Providence River. These
properties, along with much of downtown Providence, appear to have been
the result of the filling of lands formerly flowed by tidal waters.
The extent to which the Registrant's properties consist of such land
cannot be established with precision, but they most likely include its
main distribution center and the land on which is situated an Algonquin
Gas Transmission Co. LNG storage tank.
In 1991, the Rhode Island Supreme Court issued an opinion
containing statements to the effect that the State retains title to
shoreland created by fill from ocean dredging. The statements appear
to contradict earlier judicial authority to the effect that where the
owner of land abutting the river extends the upland out from the
natural shoreline to an established harbor line, all of the rights of
the public in the upland, as extended, are extinguished.
To date, the Registrant and three other plaintiffs have jointly
filed with the State of Rhode Island, a declatory judgement seeking the
Rhode Island Supreme Court to clarify the legal issues pertaining to
the ownership of such filled tidal lands. Although the Rhode Island
Supreme Court has not clarified its opinion and the Rhode Island
Legislature has taken no meaningful action to resolve the problem,
management believes no action will be taken by the state which will
interfere in any material way with the Registrant's ability to conduct
its normal course of operations or impact its financial condition.
Legal Matters
The Registrant is involved in legal and administrative proceedings
in the normal course of business, including certain proceedings in
which claims against it have
PAGE I-6
been or may be made. In total, these proceedings may be material.
However, management believes, after review of insurance coverage and
consultation with legal counsel, that the ultimate resolution of the
legal proceedings to which it is or can at the present time be
reasonably expected to be a party, will not have a materially adverse
effect on the Registrant's results of operations or financial
condition.
Financial Accounting Standard No. 106
The Registrant has adopted the Financial Accounting Standard Boards
("FASB") Financial Accounting Standard No. 106. Complete footnote
disclosure is provided in the Registrant's December 31, 1993 Form 10-Q.
Financial Accounting Standard No. 109
The Registrant has adopted the FASB's new standard on Accounting
for Income Taxes
(FAS 109) beginning fiscal 1994. The accompanying consolidated
financial statements reflect this new accounting. The Registrant did
not restate prior periods.
The standard requires the use of the liability method of
accounting. Under this method, the existing deferred tax accounts on
the accompanying consolidated balance sheet have been adjusted to
reflect the effect of currently enacted tax rates applicable to the
years in which these taxes will become payable. Also, the accounts have
been adjusted to reflect the cumulative timing differences for which
deferred taxes had not been previously recorded.
Consistent with regulatory precedent, the related adjustments to
the deferred tax accounts will be recovered from or returned to
ratepayers in future periods. As a result, the adoption of FAS 109 has
not had an impact on current earnings and is not expected to impact
future earnings. The Registrant has recorded a net regulatory asset of
approximately $100,000 upon adoption of FAS 109.
Restructuring Initiative
In June 1994, the Registrant, following a six month study of its
major processes, realigned its personnel to meet the existing and future
challenges associated with an increasingly competitive energy market
place. The intent of the restructuring was to significantly improve the
Registrant's customer services, lower operating costs and increase
operating efficiencies. Approximately 30 people were separated from
the Registrant, while approximately 18 new employees will be hired
throughout the upcoming year to fill newly defined positions. The
employees eventually hired for these new positions will bring skill,
expertise and experiences to the Registrant not previously available
within its workforce.
The direct cost of this realignment is estimated to be about $1
million, net of tax. A significant portion of this $1 million is
severance pay and related benefits for personnel who were separated
prior to June 30, 1994. The Registrant anticipates paying all amounts
accrued within the next twelve months. The Registrant has discussed the
reorganization with the Rhode Island Public Utilities Commission
("RIPUC") and based on prior RIPUC allowance of similar costs, the
Registrant has deferred these costs in anticipation of recovery in its
next rate case. Overall, the anticipated annual savings from the
realignment is expected to be approximately $500,000.
PAGE I-7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
As shown in the table below, the Registrant's current operating
revenues and operating margin have increased over the comparable fiscal
periods last year. Net income has increased for the current quarter,
while decreasing for the current nine and twelve month periods versus
the respective periods last year.
THREE MONTHS NINE MONTHS TWELVE MONTHS
1994 1993 1993 1993 1994 1993
(000's)
Operating revenues $41,917 $37,642 $185,785 $173,154 $218,745 $201,384
================ ================== ==================
Operating margin $16,305 $13,938 $ 71,523 $ 70,795 $ 82,164 $ 81,066
================ ================== ==================
Net income (loss)
applicable to $(1,089) $(2,372) $ 8,716 $10,294 $ 4,821 $ 6,989
common stock ================ ================== ==================
Revenues:
Rate Design: The Rhode Island Public Utilities Commission (RIPUC)
during fiscal 1993 approved the Registrant's request to adopt a
declining block rate structure. This structure allows the Registrant to
recover more fixed costs through rates immediately when a customer
begins buying natural gas. Also, the structure will help balance
customer bills during the year and will protect the Registrant and its
customers during periods of extreme weather conditions. This results in
a stabilization of earnings from year to year. For accounting and gas
cost recovery purposes, the Registrant will record the embedded cost of
gas using seasonal gas cost factors: $4.36 per Mcf in the heating season
(October through March) and $2.77 per Mcf in the non-heating season
(April through September). The ultimate effect of the seasonal gas cost
accounting will be that quarterly operating margin will decrease in the
heating season and increase in the non-heating season when compared to
the previous method. Annual earnings, however, should not be affected
by this rate design.
Another significant attribute of the new rate design structure as
compared to the previous method is a higher customer charge. The
average monthly customer charge has been increased to recognize that a
substantial portion of the Registrant's costs are relatively fixed and
should be recovered from customers even when gas consumption is less
than expected. The Registrant's volumetric charge has decreased in
order to off-set the increased customer charge.
As demonstrated in the above table, the Registrant's operating
margin has increased as compared to the comparable periods last year
reflecting the change in rate design. The increase in margin for the
quarter, as compared to last year, was $2.0 million. This rate design
change is expected to continue to increase margin in the upcoming fourth
quarter as compared to the prior year. The Registrant anticipates this
increase in margin to be approximately $2.5 million.
Degree Days: The following table illustrates the change in degree
days (weather) during the three, nine and twelve month periods this year
versus last year.
PAGE I-8
1994 1993 Change % Change
Three months 680 603 77 12.8
Nine months 5,879 5,615 264 4.7
Twelve months 6,007 5,730 277 4.8
As a result of the colder temperatures experienced during the
latest nine and twelve month periods, residential sales, which provide
the Registrant with its greatest source of sales, increased 373 million
cubic feet (MMcf) or 3.1 percent and 325 MMcf or 2.4 percent,
respectively. Three month residential sales were flat in contrast to
the above temperatures experienced. This was due to warmer temperatures
experienced in a high sales month (April) and colder temperatures
experienced in a low sales month (May).
Customers: The net increase in the average monthly number of
customers for the latest three, nine and twelve month periods was
approximately 2,300, 2,200 and 2,000, respectively. The modest
increases were the result of new housing construction and conversions
from other energy sources offset by shut-offs for non-payments and
housing vacancies due to the stagnant economy.
Firm revenues were $38.9 million during the latest quarter, up $4.2
million or 12.1 percent over the comparable period last year. For the
current nine and twelve month periods, firm revenues increased $10.5
million or 6.4 percent and $15.7 million or 8.4 percent, respectively.
These increases were the result of higher gas costs passed on to
customers through the Cost of Gas Adjustment Clause (CGA), rate design
and rate increase implemented in November 1993 and additional customers.
For additional information on the rate case awards, please refer to the
discussion of liquidity and capital resources below.
Expenses:
Overall, other operation and maintenance (O&M) expenses have
increased during the current periods presented. The increase for the
quarter was $480,000 or 4.5 percent. Reasons for the above increase
include additional uncollectible expenses due to a stagnant, but slowly
improving, local economy, compliance with Financial Accounting Standard
No. 106 relative to post retirement expenses offset by a decrease in
labor costs as a result of fewer personnel, prior to the Registrant's
realignment.
O&M expenses have increased $3.6 million or 11.1 percent for the
latest nine months period while increasing $3.5 million or 8 percent for
the current twelve month period. The explanation for the above
quarterly increase is applicable here but also include additional
consultant expenses required to meet the challenges of FERC Order 636
and additional maintenance and related expenses as a result of a colder
than normal heating season. A significant amount of these increased
expenses were considered in the Registrant's recent rate award.
The increases discussed above in the Registrant's O&M expenses are
expected to be "one-time" expenses associated with compliance of FAS 106
and FERC Order 636 as well as colder than normal weather. The
Registrant's "core" spending, excluding the impact of the above
increases, would have experienced only a modest increase as compared to
last year for all the periods presented. In addition, earnings for the
upcoming fourth quarter, and future periods, are estimated to be
favorably impacted by a decrease in O&M expenses as a result of the
reorganization in late June and other cost improvements initiated by the
Registrant.
Taxes for the quarter have increased $600,000 over the comparable
period last year due to higher pretax income (relative to the change in
rate design) and higher gross receipts tax due to higher operating
revenues. Taxes have decreased $600,000 and $150,000 for the current
nine and twelve month periods, respectively. The
PAGE I-9
decrease in taxes was the result of lower pretax income (relative to the
change in rate design) subject to Federal income tax offset by an
increase in state gross
receipts tax due to higher operating revenues.
Interest expenses for the latest three, nine and twelve month
periods decreased $115,000 or 6.8 percent, $476,000 or 9.4 percent and
$466,000 or 7.1 percent, respectively. A small increase in short-term
interest rates offset by a decline in weighted average borrowings caused
a decrease in short-term interest expenses for the current periods
presented. Long-term interest expenses decreased during the current
three and nine month periods as a result of the refinancing of higher
cost debt and sinking fund payments.
LIQUIDITY AND CAPITAL RESOURCES
On October 14, 1993, the Registrant received approval from the
Rhode Island Public Utilities Commission (RIPUC) to implement a new rate
design, effective November 14, 1993, which is expected to help promote
economic development and reduce the Registrant's earnings sensitivity to
weather. In addition to the improved stability in earnings, the new
rates are designed to increase annual operating margin by approximately
$700,000. Other components of the rate award included an allowed return
on equity of 11.2 percent.
In November 1993, the Registrant received proceeds of $16 million
related to an issuance of First Mortgage Bonds, Series Q (5.62%). The
net proceeds received from the issuance were used to pay down short-term
debt. Short-term debt was used earlier to call long-term debt bearing a
higher interest rate. The previous issuances called were First Mortgage
Bonds, Series L (8.85%) and the Series 2 Senior Debentures (8.50%).
This issuance will generate annual savings to the Registrant of
approximately $300,000, net of tax.
In late June 1993, the Registrant's parent, Providence Energy
Corporation, priced its public offering of 850,000 shares of common
stock at $19 per common share. The net proceeds of $15.3 million, along
with an additional $1.1 million of available cash, totalling $16.4
million, were contributed as capital to the Registrant. The Registrant
used the equity for repayment of short-term debt incurred to finance the
Registrant's capital expenditures.
In November 1992, the Registrant issued $25 million of First
Mortgage Bonds. These bonds, which consisted of $12.5 million (8.46%)
designated as Series O and $12.5 million (8.09%) designated as Series P,
will mature in September 2022. The Series P issuance is subject to an
annual mandatory redemption provision in the amount of $625,000
beginning in fiscal year 2003. The net proceeds provided by this
issuance were used to paydown short-term debt.
The Registrant meets seasonal cash requirements and finances its
capital expenditures program on an interim basis through short-term
borrowings. For example, the accounts receivable balance has increased
from $16.9 million as of September 1993 to a peak of $53.0 million as of
March 1994, then declining to its present level of $30.6 million. These
fluctuations are the result of higher monthly sales and a moratorium on
residential shut-offs during the current winter months. Because of
these increases, which cause a negative impact on cash flow, the
Registrant must borrow to maintain an appropriate level of liquidity.
PAGE I-10
Capital expenditures for the latest nine month period were $11.2
million as compared to $9.5 million last year. Anticipated capital
expenditures for the next three years are expected to total between
approximately $45 million and $55 million. These expenditures will be
related mostly to construction activity and technology.
PAGE I-11
PART II: OTHER INFORMATION
Item 6(a) Exhibits
The following exhibits are referenced as part of this report:
4.1 Fourteenth, Fifteenth and Sixteenth Supplemental Indentures of
The Providence Gas Company dated as of August 1, 1988, June 1,
1990 and November 1, 1992, respectively (Incorporated by
reference to Exhibit 4 to the report of the Registrant to the
Securities and Exchange Commission on Form 10-Q for the quarter
ended March 31, 1993).
4.2 Seventeenth Supplemental Indenture of The Providence Gas Company
dated as of November 1, 1993. (Incorporated by reference to
Exhibit 4.5 to the Report of the Registrant to the Securities
and Exchange Commission on Form 10-K for the year ended
September 30, 1993.)
10.1 Material contracts filed as Exhibit 10.A through 10.I of the
Registrant (Incorporated by reference in the report of the
Registrant to the Securities and Exchange Commission on Form 10-
Q for the quarter ended March 31, 1993.)
10.2 Employment agreement dated August 20, 1990 between James H.
Dodge, President of The Providence Gas Company, and the said
Company. (Filed as Exhibit 10.2 to the report of the Registrant
in Form 10-K for the year ended September 30, 1992, incorporated
herein by this reference.)
10.3 Non-firm Margin Sharing Agreement. (Filed as Exhibit 10.3 to
the report of the Registrant in Form 10-K for the year ended
September 30, 1993, incorporated herein by this reference.)
10.4 Employment agreement date April 1, 1992 between James DeMetro,
Vice President, Energy Services of The Providence Gas Company,
and the said Company. (Filed as Exhibit 10.4 to the report of
the Registrant in Form 10-K for the year ended September 30,
1992, incorporated herein by this reference.)
10.5 Employment agreement date August 15, 1991 between Robert W.
Owens, Vice President, Treasurer and Chief Financial Officer of
The Providence Gas Company. (Filed as Exhibit 10.5 to the
report of the Registrant in Form 10-K for the year ended
September 30, 1992 incorporated herein by this reference.)
10.6 Employment agreement dated July 1, 1991 between William D.
Mullin, Vice President, Operations of The Providence Gas
Company, and the said Company. (Filed as Exhibit 10.7 to the
report of the Registrant in Form 10-K for the year ended
September 30, 1992, incorporated herein by this reference.)
Reports on Form 8-K
Item 6(b)
No reports on Form 8-K were filed during the quarter for which this
report is filed.
PAGE II-1
THE PROVIDENCE GAS COMPANY
It is the opinion of management that the financial infor-
mation contained in this report reflects all adjustments neces-
sary to a fair statement of results for the period reported,
but such results are not necessarily indicative of results to
be expected for the year, due to the seasonal nature of the Company's
gas operations. All accounting policies and practices have been
applied in a manner consistent with prior periods.
SIGNATURE
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.
The Providence Gas Company
(Registrant)
BY:
GARY S. GILLHEENEY
Vice President, Financial
and Information Services,
Treasurer and Assistant Secretary
Date: August 12, 1994
PAGE II - 2
THE PROVIDENCE GAS COMPANY
It is the opinion of management that the financial infor-
mation contained in this report reflects all adjustments neces-
sary to a fair statement of results for the period reported,
but such results are not necessarily indicative of results to
be expected for the year, due to the seasonal nature of the
Company's gas operations. All accounting policies and practices
have been applied in a manner consistent with prior periods.
SIGNATURE
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.
The Providence Gas Company
(Registrant)
BY:/s/ Gary S. Gillheeney
GARY S. GILLHEENEY
Vice President, Financial
and Information Services,
Treasurer and Assistant Secretary
Date: August 12, 1994
PAGE II - 2