FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1995
Commission File Number 1-8858
UNITIL Corporation
(Exact name of registrant as specified in its charter)
New Hampshire 02-0381573
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
216 Epping Road, Exeter, New Hampshire 03833
(Address of principal executive office) (Zip Code)
(603) 772-0775
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year, if changed
since last report.)
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
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at August 8, 1995
Common Stock, No par value 4,302,334 Shares
UNITIL CORPORATION AND SUBSIDIARY COMPANIES
INDEX
Part I. Financial Information Page No.
Consolidated Statements of Earnings - Three and Six
Months Ended June 30, 1995 and 1994 3
Consolidated Balance Sheets, June 30, 1995,
June 30, 1994 and December 31, 1994 4-5
Consolidated Statements of Cash Flows - Six Months
Ended June 30, 1995 and 1994 6
Notes to Consolidated Financial Statements 7-8
Management's Discussion and Analysis of Results of
Operations and Financial Condition 9-10
Exhibit 11 - Computation of Earnings per Average
Common Share Outstanding 11
Part II. Other Information 12
PART 1. FINANCIAL INFORMATION
UNITIL CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Operating Revenues:
Electric $34,050,063 $32,363,117 $68,680,779 $67,785,270
Gas 3,423,175 3,573,344 9,605,350 11,289,726
Other 207,034 78,140 426,670 191,439
Total Oper. Rev. 37,680,272 36,014,601 78,712,799 79,266,435
Operating Expenses:
Fuel and Purc. Power 23,050,619 22,152,656 46,249,619 46,225,647
Gas Purc. for Resale 2,126,771 2,250,157 5,585,321 6,665,978
Operations and 5,732,168 5,396,818 11,117,153 10,739,385
Maintenance
Depreciation 1,548,067 1,537,372 3,118,742 3,084,063
Amort. of Cost of 396,869 384,601 817,588 806,922
Abandoned Properties
Provisions for Taxes:
Local Property and 1,055,275 974,339 2,249,717 2,157,933
Other
Federal and State 848,735 634,991 2,312,271 2,323,494
Income
Total Operating 34,758,504 33,330,927 71,450,411 72,003,422
Expenses
Operating Income 2,921,768 2,683,674 7,262,388 7,263,013
Non-Operating Inc. 110,445 7,474 52,721 19,257
(Expense)
Gross Income 3,032,213 2,691,148 7,315,109 7,282,270
Interest and Other
Expenses:
Interest on LT 1,285,403 1,168,688 2,619,211 2,340,748
Debt
Other Int. Chrges 219,466 236,949 449,687 486,163
Total Income 1,504,869 1,405,637 3,068,898 2,826,911
Deductions
Net Income 1,527,344 1,285,511 4,246,211 4,455,359
Less Dividends on 70,835 72,461 142,136 146,679
Preferred Stock
Net Income Applicable $1,456,509 $1,213,050 $4,104,075 $4,308,680
to Common Stock
Average Common Shares 4,290,940 4,225,030 4,282,783 4,218,416
Outstanding
Earnings Per Share of $0.34 $0.29 $0.96 $1.02
Common Stock
Dividends Declared per
Share $0.32 $0.31 $0.96 $0.93
or Common Stock (Note 1)
(The accompanying notes are an integral part of these
statements.)
UNITIL CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
June 30, December 31,
1995 1994 1994
ASSETS:
Utility Plant (at cost):
Electric $144,392,906 $137,888,009 $142,311,415
Gas 26,102,007 24,639,902 25,652,522
Common 7,873,934 9,972,967 9,783,183
Construction Work in 3,058,274 2,041,082 1,029,681
Progress
Total Utility Plant 181,427,121 174,541,960 178,776,801
Less: Accumulated 58,542,627 56,014,672 57,203,799
Depreciation
Net Utility Plant 122,884,494 118,527,288 121,573,002
Non-operating Property (at 32,605 120,355 120,355
cost)
Miscellaneous (at cost) 9,843 17,478 17,343
Current Assets:
Cash 2,199,060 1,611,741 3,810,123
Accounts Receivable - less
allowance for doubtful
accounts of $539,741
$618,873 and $573,849 13,008,798 13,562,728 13,281,686
Materials and Supplies 2,009,732 2,080,936 2,089,979
Prepayments 678,516 732,081 408,701
Accrued Revenue 2,029,452 2,669,791 2,292,297
Total Current Assets 19,925,558 20,657,277 21,882,786
Deferred Debits:
Unamortized Debt Expense
(amortized over term of
securities) 913,559 713,274 955,931
Unamortized Cost of 27,955,250 29,571,556 28,772,838
Abandon. Property
Prepaid Pension Costs 6,244,710 5,390,594 5,801,714
Other 24,460,235 25,776,980 25,397,492
Total Deferred Debits 59,573,754 61,452,404 60,927,975
TOTAL ASSETS $202,426,254 $200,774,802 $204,521,461
(The accompanying notes are an integral part of these
statements.)
UNITIL CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
June 30, December 31,
1995 1994 1994
CAPITALIZATION AND
LIABILITIES:
Capitalization:
Common Stock Equity (Notes 1
and 2):
Common Stock, No Par
Value,
8,000,000 Shares
Authorized
4,300,587, 4,232,666 and
4,267,837
Shares Outstanding $32,293,618 $31,150,980 $31,751,984
Paid in Capital - Stock 1,251,643 1,045,482 1,062,198
Options
Retained Earnings 27,173,413 25,063,758 27,183,016
Total Common Equity 60,718,674 57,260,220 59,997,198
Preferred Stock:
Non-Redeemable, 225,000 225,000 225,000
Non-Cumulative,
Redeemable, Cumulative, 3,773,900 3,868,600 3,868,600
Total Preferred Stock 3,998,900 4,093,600 4,093,600
(Note 3)
Long-Term Debt (Note 4) 63,466,000 55,521,229 65,288,231
Total Capitalization 128,183,574 116,875,049 129,379,029
Capital Lease Obligations 3,260,128 3,597,658 3,377,389
Current Liabilities:
Long-Term Debt Due Within 144,000 1,227,486 292,090
One Year
Notes Payable 0 5,340,000 0
Accounts Payable 10,656,094 12,930,463 12,491,041
Dividends Declared 1,534,903 1,454,971 152,210
Customer Deposits 2,721,807 2,587,590 2,482,779
Taxes Accrued 39,958 193,511 (345,243)
Interest Accrued 1,408,871 1,177,454 1,376,477
Capitalized Lease 498,770 512,773 460,152
Obligations
Other 1,832,404 2,185,267 2,546,878
Total Current 18,836,807 27,609,515 19,456,384
Liabilities
Deferred Credits:
Unamortized Investment Tax 1,904,994 2,111,510 2,006,168
Credit
Other 9,268,130 9,470,977 9,212,872
Total Deferred Credits 11,173,124 11,582,487 11,219,040
Deferred Income Taxes 40,972,621 41,110,093 41,089,619
TOTAL LIABILITIES AND 202,426,254 200,774,802 204,521,461
CAPITALIZATION
(The accompanying notes are an integral part of these
statements.)
UNITIL CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
June 30,
1995 1994
Net Cash Flow from Operating Activities:
Net Income $4,246,211 $4,455,359
Adjustments to Reconcile Net Income to
Net Cash provided by Operating
Activities:
Depreciation and Amortization 3,936,330 3,890,985
Deferred Taxes (29,899) (17,188)
Amortization of Investment Tax (101,174) (105,334)
Credit
Provision for Doubtful Accounts 369,264 372,381
Amortization of Debt Expense 43,950 32,676
Change in Assets and Liabilities
(Increase) Decrease in:
Accounts Receivable (96,377) (217,238)
Materials and Supplies 80,247 446,529
Prepayments (269,815) (243,577)
Prepaid Pension (442,996) (373,473)
Accrued Revenue 262,845 976,698
Increase (Decrease) in:
Accounts Payable (1,834,947) (509,822)
Customers' Deposits and Refunds 239,028 849,136
Taxes Accrued 385,201 (73,671)
Interest Accrued 32,394 16,701
Other 443,110 142,265
Net Cash Provided by Operating Activities 7,263,372 9,642,427
Net Cash Flows from Investing
Activities:
Acquisition of Property, Plant and (6,401,340) (3,618,948)
Equip.
Proceeds from Taking of Land & 2,002,056 0
Building
Net Cash Used in Investing Activities (4,399,284) (3,618,948)
Cash Flows from Financing Activities:
Net (Decrease) in Short-term Debt 0 (3,060,000)
Net (Decrease) in Long-term Debt (1,970,322) (629,380)
Payments of Dividends (2,873,120) (2,747,940)
Issuance of Common Stock 541,634 507,971
Retirement of Preferred Stock (94,700) (104,100)
Net Increase/(Decrease) in Capital (78,643) (84,075)
Leases
Net Cash Flows from Financing Activities (4,475,151) (6,117,524)
Net Increase in Cash (1,611,063) (94,045)
Cash at beginning of year 3,810,123 1,705,786
Cash at June 30, $2,199,060 $1,611,741
Supplemental Disclosure of Cash Flow
Information:
Cash Paid for:
Interest $2,994,398 $2,777,987
Federal Income Taxes $955,000 $2,231,000
(The accompanying notes are an integral part of these
statements.)
UNITIL CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1.
Dividends Declared Per Share:
Three common stock dividend declarations were reported for the
six months ended June 30, 1995 and 1994. For the three months ended
June 30, 1995 and 1994 one quarterly dividend was declared.
Common Stock Dividend:
On June 16, 1995, the Company's Board of Directors declared its
regular quarterly dividend on the Company's Common Stock of $0.32 per
share which is payable on August 15, 1995 to shareholders of record
as of August 1, 1995.
On March 23, 1995, the Company's Board of Directors declared its
regular quarterly dividend on the Company's Common Stock of $0.32 per
share which is payable on May 15, 1995 to shareholders of record as
of May 1, 1995.
On January 17, 1995, the Company's Board of Directors approved a
3.2% increase to the dividend rate on its common stock. The new
regular dividend rate is $0.32 per share and was payable February 15,
1995 to shareholders of record as of February 1, 1995.
Note 2.
Common Stock:
During the second quarter of 1995, the Company sold 17,105
shares of Common Stock, at an average price of $16.831 per share, in
connection with its Dividend Reinvestment and Stock Purchase Plan and
its 401(k) plans. Net proceeds of $281,929 were used primarily for additions,
extensions, and betterments to the Company's property, plant and equipment.
Note 3.
Preferred Stock:
Details on preferred stock at June 30, 1995, June 30, 1994 and
December 31, 1994 are shown below:
June 30, December 31,
1995 1994 1994
Preferred Stock:
Non-Redeemable,
Non-Cumulative,
6%, $100 Par Value 225,000 225,000 225,000
Redeemable, Cumulative,
$100 Par Value:
8.70% Series 215,000 230,000 230,000
5% Dividend Series 98,000 105,000 105,000
6% Dividend Series 168,000 175,000 175,000
8.75% Dividend Series 344,300 344,300 344,300
8.25% Dividend Series 406,000 436,000 436,000
5.125% Dividend Series 1,076,600 1,108,100 1,108,100
8% Dividend Series 1,466,000 1,470,200 1,470,200
Total Redeemable 3,773,900 3,868,600 3,868,600
Preferred Stock
Total Preferred 3,998,900 4,093,600 4,093,600
Stock
Note 4.
Long-term Debt:
Details on long-term debt at June 30, 1995, June 30, 1994 and
December 31, 1994 are shown below:
June 30, December 31,
1995 1994 1994
Concord Electric Company:
First Mortgage Bonds:
Series C, 6 3/4%, due 1,584,000 1,584,000 1,584,000
January 15, 1998
Series D, 8.70%, due 930,000
November 15, 2001
Series G, 9.85%, due 1,500,000
October 15, 1997
Series H, 9.43%, due 6,500,000 6,500,000 6,500,000
September 1, 2003
Series I, 8.49%, due 6,000,000 6,000,000
October 14, 2024
Exeter & Hampton Electric
Company:
First Mortgage Bonds:
Series D, 4 3/4%, due
June 1, 1994
Series E, 6 3/4%, due 511,000 518,000 518,000
January 15, 1998
Series F, 8.70%, due 1,235,000
November 15, 2001
Series G, 8 7/8%, due 930,000
April 1, 2004
Series H, 8.50%, due 1,015,000 1,120,000 1,015,000
December 15, 2002
Series I, 9.85%, due 1,400,000
October 15, 1997
Series J, 9.43%, due 5,000,000 5,000,000 5,000,000
September 1, 2003
Series K, 8.49%, due 9,000,000 9,000,000
October 14, 2024
Fitchburg Gas and Electric
Light Company:
Promissory Notes:
8.55% Notes due March 31, 15,000,000 15,000,000 15,000,000
2004
6.75% Notes due November 19,000,000 19,000,000 19,000,000
30, 2023
Realty Corp.:
Promissory Note:
10.59% Note due October 25, 2,031,715 1,963,321
1998
Total 63,610,000 56,748,715 65,580,321
Less: Installments due (144,000) 1,227,486 292,090
within one year
Total Long-term Debt 63,466,000 55,521,229 65,288,231
Note 5.
In the opinion of the Company, the accompanying unaudited
consolidated financial statements contain all adjustments (consisting
only of normal recurring accruals) necessary to present fairly the
consolidated financial position as of June 30, 1995 and 1994; and
results of operations for the six months ended June 30, 1995 and
1994; and consolidated statements of cash flows for the six months
ended June 30, 1995 and 1994.
The results of operations for the six months ended June 30, 1995
and 1994 are not necessarily indicative of the results to be expected
for the full year.
UNITIL CORPORATION AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
EARNINGS
Consolidated earnings per average common share outstanding were
$0.34 for the three-months ended June 30, 1995, as compared to $0.29
per average common share outstanding for the three-months ended June
30, 1994. This increase of $0.05 per share was primarily due to
higher electric base revenues.
Over half of the increase in second quarter earnings was due to
higher electric and gas base revenues. All three of the UNITIL
System's retail distribution subsidiaries experienced increased base
revenues in the second quarter of 1995, as compared to 1994,
reflecting increases in kilowatt-hour sales, kilowatt billing demands
and firm gas therm sales. Total kilowatt-hour sales rose 5.5% in the
second quarter of 1995, to 332,318,888 KWH from 314,992,652 KWH in
the year earlier period. Firm gas therm sales increased 1.9% during
the second quarter of 1995, to 4,660,553 therms, from 4,573,514
therms in the same period of 1994.
While the demand for energy increased across all customer
classes-residential, commercial and industrial - electricity sales
were particularly strong to the System's largest industrial and
commercial customers. Kilowatt-hour sales to these groups grew by
8.5% in the second quarter of 1995 to 123,641,762 KWH, from
113,957,504 KWH in the year earlier period. Electric sales to
smaller non-residential customers also demonstrated solid growth in
the quarter as sales rose to 90,629,970 KWH, an increase of
approximately 5.6% over sales of 85,843,265 KWH in the second quarter
of 1994. Residential sales grew 2.6% in the second quarter,
increasing to 115,209,139 KWH in the second quarter of 1995 from
112,298,278 KWH in the year earlier period. This growth reflects an
ongoing expansion of the companies' large commercial and industrial
customer base, as well as, higher overall energy demand by existing
customers.
The remaining increase in second quarter earnings was primarily
attributable to a reduction of over 5% in the System's
operations-related costs ( excluding conservation program costs which
are normally recoverable from customers through a periodic rate
adjustment mechanism). Increased earnings by UNITIL Resources, the
System's non-utility energy consulting subsidiary, also contributed
to the improved second quarter operating results. Partially
offsetting these improvements in revenues and expenses during the
quarter, was a 10% increase in interest expenses, due to the
conversion of short-term debt into long-term debt in late 1994.
Earnings per average common share for the six months ending June
30, 1995 and 1994 were $0.96 and $1.02, respectively. This decrease
in earnings in the first six months of 1995 was primarily
attributable to lower gas base revenues and increased interest
expenses. Higher electric sales coupled with a reduction in the cost
of operations partially offset these factors and continue to
contribute positively to earnings during the current period.
As a result of the extremely mild 1995 heating season, firm gas
therm sales for the first half of 1995 decreased approximately 10.0%,
to 14,380,297 therms, from 15,982,402 therms in the first half of
1994. During this same 6-month period, kilowatt-hour sales and
kilowatt billing demands increased by 1.3% and 3.7%, respectively.
Electric sales rose to 693,207,407 KWH in the first half of 1995,
from 684,009,011 in the first half of 1994.
Interest-related expenses increased approximately 11.9% in the
first half of 1995, primarily reflecting the late 1994 conversion of
short-term debt into long-debt debt by the Company's two New
Hampshire retail distribution subsidiaries.
CAPITAL REQUIREMENTS
Capital expenditures for the six months ended June 30, 1995 were
approximately $6,400,000. This compares to $3,600,000 during the
same period last year. Capital expenditures for the year 1995 are
estimated to be approximately $15,500,000 as compared to $9,800,000
for 1994. The projected increase of $5,700,000 reflects an increase
of approximately $2,600,000 for planned utility system expansions,
replacements and other improvements, as well as additional capital
expenditures of approximately $3,100,000 for the commencement of
construction of a new corporate headquarters. The Company completed
the purchase of land for this facility during the second quarter of
1995, and site preparation work and construction are expected to
begin immediately.
COMPETITION
As the trend continues towards competition in the electric
utility industry, UNITIL has actively participated in the debates and
proceedings on the issue in both New Hampshire and Massachusetts,
favoring a reasonable and orderly transition to competition and more
choice for all customers.
Within New Hampshire, both the New Hampshire Public Utility
Commission ( the "NHPUC") and the State Legislature have been
involved in discussions and analysis relative to competition in the
industry. The NHPUC recently issued its initial order in response to
a petition by a power marketer seeking to sell to certain industrial
customers of an investor-owned New Hampshire utility. In its order
the NHPUC ruled that utilities in New Hampshire do not have exclusive
franchise territories and directed the marketer to seek a declaratory
order from the Federal Energy Regulatory Commission regarding its
proposed transactions. This decision is likely to be appealed at the
state Supreme Court. Effective July 23, 1994, the NHPUC was granted
the authority pursuant to RSA 374:3-a to approve alternative forms of
regulation upon either the petition of a utility or the NHPUC's own
initiative. On June 9, 1995 the New Hampshire Legislature passed
Senate Bill 168 (SB 168), which was signed into law on June 19, 1995.
SB 168 establishes a legislative task force to consider changes in
the structure of the electric utility industry. The act also directs
the NHPUC to begin a retail wheeling pilot program and to act within
five months to establish standards for utility discounts to
industrial customers.
In Massachusetts, the Massachusetts Department of Public
Utilities (the "MDPU") has concluded hearings in its electric
industry restructuring docket, DPU 95-30. On July 17, 1995, a
coalition of 19 organizations filed with the MDPU a set of
principles, known as the Massachusetts Roundtable Principles, that
would lead to restructuring of the electric industry. The MDPU is
expected to issue a decision in DPU 95-30 in the fall of 1995.
Although the Company can not predict the outcome of these
legislative and regulatory changes, the Company does believe the increasing
competition in the industry is inevitable. The Company is well positioned to
continue to respond to the emergence of a competitive environment.
PART I. EXHIBIT
11.
UNITIL CORPORATION AND SUBSIDIARY COMPANIES
COMPUTATION OF EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING
(UNAUDITED)
Three Months Ended Six Months Ended
PRIMARY June 30, June 30,
1995 1994 1995 1994
Net Income $1,527,344 $1,285,511 $4,246,211 $4,455,359
Less: Dividend
Requirement
on Preferred Stock 70,835 72,461 142,136 146,679
Net Income Applicable
to Common Stock 1,456,509 1,213,050 4,104,075 4,308,680
Average Number of Common
Shares Outstanding 4,290,940 4,225,030 4,282,783 4,218,416
Earnings Per Common Share $0.34 $0.29 $0.96 $1.02
Three Months Ended Six Months Ended
FULLY-DILUTED June 30, June 30,
1995 1994 1995 1994
Net Income $1,527,344 $1,285,511 $4,246,211 $4,455,359
Less: Dividend
Requirement
on Preferred Stock 70,835 72,461 142,136 146,679
Net Income Applicable
to Common Stock 1,456,509 1,213,050 4,104,075 4,308,680
Average Number of Common
Shares Outstanding 4,365,961 4,298,194 4,357,227 4,291,015
Earnings Per Common Share $0.33 $0.28 $0.94 $1.00
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit No. Description of Exhibit Reference
11 Computation in Support of
Earnings Per Average Common Share Filed herewith
(b) Reports on Form 8-K
During the quarter ended June 30, 1995, the Company did not
file any reports on Form 8-K.
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.
UNITIL CORPORATION
(Registrant)
Date: August 12, 1995 /s/ Gail A.Siart
Gail A. Siart, Treasurer and Chief
Financial Officer
(Gail A. Siart is the Principal
Financial Officer and has been
duly authorized to sign on behalf of the
registrant.)