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 September 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 Nine
Months Ended September 30, 1995 and 1994 3
Consolidated Balance Sheets, September 30, 1995,
September 30, 1994 and December 31, 1994 4-5
Consolidated Statements of Cash Flows - Nine Months
Ended September 30, 1995 and 1994 6
Notes to Consolidated Financial Statements 7-9
Management's Discussion and Analysis of Results of
Operations and Financial Condition 10-12
Exhibit 11 - Computation of Earnings per Average
Common Share Outstanding 13
Part II. Other Information 14
PART 1. FINANCIAL INFORMATION
UNITIL CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
Operating Revenues:
Electric $35,001,463 $33,154,987 $103,682,242 $100,940,257
Gas 2,555,376 2,596,824 12,160,726 13,886,550
Other 247,090 96,661 673,760 288,100
Total Operating Revenues37,803,929 35,848,472 116,516,728 115,114,907
Operating Expenses:
Fuel and Purchased Power 23,357,970 22,020,270 69,607,589 68,245,918
Gas Purchased for Resale 1,715,648 1,721,571 7,300,969 8,387,549
Operations and Maintenance5,642,261 5,463,874 16,759,414 16,203,258
Depreciation 1,588,587 1,523,258 4,707,329 4,607,321
Amort. of Cost of
Abandoned Properties 416,288 410,838 1,233,876 1,217,760
Provisions for Taxes:
Local Property and Other 1,138,261 1,063,413 3,489,152 3,326,681
Federal and State Income 678,819 692,019 2,889,916 2,910,178
Total Operating Expenses34,537,834 32,895,243 105,988,245 104,898,665
Operating Income 3,266,095 2,953,229 10,528,483 10,216,242
Non-Operating Income
(Expense) 55,953 1,031 108,674 20,288
Gross Income 3,322,048 2,954,260 10,637,157 10,236,530
Interest and Other Expenses:
Interest on Long-Term Debt 1,287,777 1,159,897 3,906,988 3,500,645
Other Interest Charges 215,310 264,309 664,997 750,472
Total Income Deductions 1,503,087 1,424,206 4,571,985 4,251,117
Net Income 1,818,961 1,530,054 6,065,172 5,985,413
Less Dividends on
Preferred Stock 70,813 72,437 212,949 219,116
Net Income Applicable to
Common Stock $1,748,148 $1,457,617 $5,852,223 $5,766,297
Average Common Shares
Outstanding 4,307,733 4,241,148 4,291,100 4,225,993
Earnings Per Share of
Common Stock $0.40 $0.34 $1.36 $1.36
Dividends Declared per Share
or Common Stock (Note 1) $0.32 $0.31 $1.28 $1.24
(The accompanying notes are an integral part of these statements.)
UNITIL CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30, December 31,
1995 1994 1994
ASSETS:
Utility Plant (at cost):
Electric $146,164,526 $139,820,321 $142,311,415
Gas 26,561,471 25,111,593 25,652,522
Common 7,319,241 9,888,737 9,783,183
Construction Work in Progress 4,800,757 2,411,752 1,029,681
Total Utility Plant 184,845,995 177,232,403 178,776,801
Less: Accumulated Depreciation 59,895,314 56,682,808 57,203,799
Net Utility Plant 124,950,681 120,549,595 121,573,002
Non-operating Property (at cost) 32,605 120,354 120,355
Miscellaneous (at cost) 9,843 17,343 17,343
Current Assets:
Cash 3,642,708 2,172,289 3,810,123
Accounts Receivable - less
allowance for doubtful
accounts of $584,988
$602,251 and $573,849 14,211,372 13,704,304 13,281,686
Materials and Supplies 2,570,264 2,250,239 2,089,979
Prepayments 510,332 539,071 408,701
Accrued Revenue 1,336,992 944,705 2,292,297
Total Current Assets 22,271,668 19,610,608 21,882,786
Deferred Debits:
Unamortized Debt Expense (amortized)
over term of securities) 899,408 703,315 955,931
Unamortized Cost of Abandon.
Property 27,538,962 29,160,718 28,772,838
Prepaid Pension Costs 6,466,963 5,596,154 5,801,714
Other 23,767,202 25,703,226 25,397,492
Total Deferred Debits 58,672,535 61,163,413 60,927,975
TOTAL ASSETS $205,937,332 $201,461,313 $204,521,461
(The accompanying notes are an integral part of these statements.)
UNITIL CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 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,
4,315,487, 4,251,319 and 4,267,837
Shares Outstanding $32,549,433 $31,474,810 $31,751,984
Paid in Capital - Stock Options 1,306,573 1,079,116 1,062,198
Retained Earnings 27,540,190 25,205,006 27,183,016
Total Common Equity 61,396,196 57,758,932 59,997,198
Preferred Stock:
Non-Redeemable, Non-Cumulative, 225,000 225,000 225,000
Redeemable, Cumulative, 3,773,900 3,868,600 3,868,600
Total Preferred Stock (Note 3)3,998,900 4,093,600 4,093,600
Long-Term Debt (Note 4) 63,466,000 50,431,730 65,288,231
Total Capitalization 128,861,096 112,284,262 129,379,029
Capital Lease Obligations 3,243,496 3,490,226 3,377,389
Current Liabilities:
Long-Term Debt Due Within
One Year 144,000 6,283,238 292,090
Notes Payable 0 6,300,000 0
Accounts Payable 12,286,058 12,094,742 12,491,041
Dividends Declared 1,545,403 1,466,625 152,210
Customer Deposits 2,556,291 2,641,060 2,482,779
Taxes Accrued 662,483 342,319 (345,243)
Interest Accrued 1,453,500 1,001,835 1,376,477
Capitalized Lease Obligations 589,177 490,685 460,152
Other 2,314,465 2,561,721 2,546,878
Total Current Liabilities 21,551,377 33,182,225 19,456,384
Deferred Credits:
Unamortized Investment Tax
Credit 1,854,408 2,058,844 2,006,168
Other 9,555,830 9,404,374 9,212,872
Total Deferred Credits 11,410,238 11,463,218 11,219,040
Deferred Income Taxes 40,871,125 41,041,382 41,089,619
TOTAL LIABILITIES AND CAPITALIZATION
$205,937,332 $201,461,313 $204,521,461
(The accompanying notes are an integral part of these statements.)
UNITIL CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
September 30,
1995 1994
Net Cash Flow from Operating Activities:
Net Income $6,065,172 $5,985,413
Adjustments to Reconcile Net Income to
Net Cash provided by Operating Activities:
Depreciation and Amortization 5,941,205 5,825,081
Deferred Taxes (155,070) 14,363
Amortization of Investment Tax Credit (151,760) (158,000)
Provision for Doubtful Accounts 648,313 564,772
Amortization of Debt Expense 58,101 48,904
Change in Assets and Liabilities
(Increase) Decrease in:
Accounts Receivable (1,577,999) (551,204)
Materials and Supplies (480,285) 277,226
Prepayments (101,631) (50,567)
Prepaid Pension (665,249) (579,033)
Accrued Revenue 955,305 2,701,784
Increase (Decrease) in:
Accounts Payable (204,983) (1,345,543)
Customers' Deposits and Refunds 73,512 902,606
Taxes Accrued 1,007,726 75,137
Interest Accrued 77,023 (158,918)
Other 1,923,474 387,190
Net Cash Provided by Operating Activities 13,412,854 13,939,211
Net Cash Flows from Investing Activities:
Acquisition of Property, Plant and Equip. (9,995,079) (7,098,595)
Proceeds from Taking of Land & Building 2,002,056 0
Net Cash Used in Investing Activities (7,993,023) (7,098,595)
Cash Flows from Financing Activities:
Net (Decrease) in Short-term Debt 0 (2,100,000)
Net (Decrease) in Long-term Debt (1,970,321) (663,125)
Payments of Dividends (4,314,805) (4,125,094)
Issuance of Common Stock 797,449 831,801
Retirement of Preferred Stock (94,700) (104,100)
Net Increase/(Decrease) in Capital Leases (4,869) (213,595)
Net Cash Flows from Financing Activities (5,587,246) (6,374,113)
Net Increase in Cash (167,415) 466,503
Cash at beginning of year 3,810,123 1,705,786
Cash at September 30, $3,642,708 $2,172,289
Supplemental Disclosure of Cash Flow Information:
Cash Paid for:
Interest $4,573,329 $4,361,661
Federal Income Taxes $2,455,000 $3,181,527
(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:
Four common stock dividend declarations were reported for each of the
nine month periods ended September 30, 1995 and 1994. For each of the three
month periods ended September 30, 1995 and 1994 one quarterly dividend was
declared.
Common Stock Dividend:
On September 28, 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 November 15, 1995 to shareholders of record as of
November 1, 1995.
On June 15, 1995, the Company's Board of Directors declared its regular
quarterly dividend on the Company's Common Stock of $0.32 per share which
was paid 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
was paid 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 third quarter of 1995, the Company sold 14,900 shares of
Common Stock, at an average price of $17.17 per share, in connection with
its Dividend Reinvestment and Stock Purchase Plan and its 401(k) plans.
Net proceeds of $255,815 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 September 30, 1995, September 30, 1994 and
December 31, 1994 are shown below:
September 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 Preferred Stock
3,773,900 3,868,600 3,868,600
Total Preferred Stock $3,998,900 $4,093,600 $4,093,600
Note 4.
Long-term Debt:
Details on long-term debt at September 30, 1995, September 30,
1994 and December 31, 1994 are shown below:
September 30, December 31,
1995 1994 1994
Concord Electric Company:
First Mortgage Bonds:
Series C, 6 3/4%, due January 15, 1998 $1,584,000 $1,584,000 $1,584,000
Series D, 8.70%, due November 15, 2001 --- 930,000 ---
Series G, 9.85%, due October 15, 1997 --- 1,500,000 ---
Series H, 9.43%, due September 1, 2003 6,500,000 6,500,000 6,500,000
Series I, 8.49%, due October 14, 2024 6,000,000 --- 6,000,000
Exeter & Hampton Electric Company:
First Mortgage Bonds:
Series E, 6 3/4%, due January 15, 1998 511,000 518,000 518,000
Series F, 8.70%, due November 15, 2001 --- 1,235,000 ---
Series G, 8 7/8%, due April 1, 2004 --- 930,000 ---
Series H, 8.50%, due December 15, 2002 1,015,000 1,120,000 1,015,000
Series I, 9.85%, due October 15, 1997 --- 1,400,000 ---
Series J, 9.43%, due September 1, 2003 5,000,000 5,000,000 5,000,000
Series K, 8.49%, due October 14, 2024 9,000,000 --- 9,000,000
Fitchburg Gas and Electric Light Company:
Promissory Notes:
8.55% Notes due March 31, 2004 15,000,000 15,000,000 15,000,000
6.75% Notes due November 30, 2023 19,000,000 19,000,000 19,000,000
Realty Corp.:
Promissory Note:
10.59% Note due October 25, 1998 --- 1,997,969 1,963,321
Total 63,610,000 56,714,969 65,580,321
Less: Installments due within one year 144,000 6,283,238 292,090
Total Long-term Debt $63,466,000 $50,431,731 $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 September 30, 1995 and 1994; and results of operations for the
nine months ended September 30, 1995 and 1994; and consolidated statements
of cash flows for the nine months ended September 30, 1995 and 1994.
The results of operations for the nine months ended September 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 net income rose 19% in the third quarter ending September
30, 1995, compared to the third quarter of 1994, resulting in earnings per
share of $0.40 -- a $0.06 increase over earnings in the prior period.
This improvement in earnings was primarily a result of higher electric base
revenue and overall reductions in costs related to electric production and
system-wide operations.
The bulk of the increase in third quarter earnings was due to higher
electric base revenue. Total electric base revenue was up 2.8% during the
third quarter of 1995, as compared to 1994, as all three of the System's
retail distribution subsidiaries experienced higher electric sales. The
System's total kilowatt hours rose 3.3% in the third quarter of 1995, to
365,533,151 KWH from 353,952,223 KWH in the same period a year earlier.
Total kilowatt (KW) customer billing demands were also up during the current
period, increasing by 5.6% over the prior period. These sales increases are
primarily attributable to the expansion of the Company's commercial and
industrial customer base, as well as the positive impact of the summer's
weather on customer demands for electric cooling. Kilowatt-hour sales to
the System's largest commercial and industrial customers grew by 6.7% in the
third quarter of 1995 to 132,406,283 KWH, from 124,110,115 KWH in the year
earlier period. Electric sales to regular commercial customers grew by 1.2%
in the third quarter, as sales rose to 104,570,164 KWH from 103,305,893 KWH
in the third quarter of 1994. Residential sales grew 1.6% in the third
quarter, increasing to 125,669,739 KWH from 123,628,260 KWH in the year
earlier period.
Earnings during the third quarter of 1995 also benefited from a 11.9%
reduction in electric production cost of the Company's Massachusetts's
subsidiary and ongoing reductions in the System's base operating costs
( not including fuel, purchased power and conservation program costs which
are normally recoverable from customers through a periodic rate adjustment
mechanism). In addition, UNITIL Resources, the System's non-utility energy
consulting subsidiary continued to increase its contribution to earnings in
the third quarter. However, one of UNITIL Resources' principal customers
recently notified UNITIL Resources of its intent to terminate its service
agreement as of the end of 1995, which will 32 per share which
was paid on May 15, 1995 to shareholders ofless new agreements are entered into
to replace the revenue from the terminated agreement. Partially offsetting
improvements in revenue and expenses during the third quarter were a 15%
increase in local property taxes and, primarily due to the conversion of
short-term debt into long-term debt in late 1994, an 11% increase in interest
expenses.
Earnings per average common share for the nine months ending
September 30, 1995, were $1.36, unchanged from the same
nine-month period a year earlier. The nine-month results
reflect the improvement in second and third quarter earnings -
both up $0.06 per share - which fully offset the effects of
unseasonably warm winter weather that suppressed first quarter
earnings. In addition, overall reductions in the System's
operations-related costs have continued to contribute positively
to the Company's earnings performance throughout the year.
Due to the mild winter heating season, firm gas therm sales
for the first nine months of 1995 decreased approximately 8.9%,
to 16,315,507 therms, from 17,906,247 therms in the first nine
months of 1994. During this same 9-month period, kilowatt-hour
sales and kilowatt billing demands increased by 2.0% and 4.4%,
respectively. Electric sales rose to 1,058,740,558 KWH in the
first nine months of 1995, from 1,037,961,234 in the year
earlier period. The Company's current outlook for 1996 calls for continuation
of this positive trend in electric energy sales growth. Part of this growth
will come from new customers like Massachusetts Recycling Associates, a state
of the art paper recycling complex currently under construction in Fitchburg,
Mass. UNITIL's Massachusetts subsidiary, FG&E, recently finalized an agreement
to supply up to 17 MW of new load to this company, beginning in 1996.
CAPITAL REQUIREMENTS
Capital expenditures for the nine months ended September 30,
1995 were approximately $10 million. This compares to $7.1
million during the same period last year. Capital expenditures
for the year 1995 are estimated to be approximately $15.8
million as compared to $9.8 million for 1994. The projected
increase of $6 million reflects an increase of approximately
$2.9 million for planned utility system expansions, replacements
and other improvements, as well as additional capital
expenditures of approximately $3.1 million for the commencement
in 1995 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 on the new building began during the third quarter
of 1995.
COMPETITION
As the trend continues towards competition in the electric
utility industry, UNITIL has actively participated in industry,
legislative and regulatory proceedings on the issues of
competition and industry restructuring at both the federal and
state levels, favoring a reasonable and orderly transition to
competition and more choice for all customers.
Both the New Hampshire Public Utility Commission ( the "NHPUC")
and the New Hampshire 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 as a
matter of law and directed the marketer to seek a declaratory
order from the Federal Energy Regulatory Commission regarding
its proposed transactions. This decision has been appealed at
theNew Hampshire Supreme Court. Effective July 23, 1994, the
NHPUC was granted the authority 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 committee 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. The legislative committee and its subcommittees have
been meeting regularly gathering information. The subcommittees
are due to report their findings and recommendations to the full
committee by year end. The full committee is attempting to
complete its work in time for the start of the next legislative
session. The NHPUC has issued its preliminary guidelines for
the retail wheeling pilot program and has issued a schedule for
completing its review and approval process that would lead to
program implementation in May, 1996.
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 issued an Order in MDPU 95-30 on August 16, 1995 requiring
the three largest Massachusetts' electric utilities to file
restructuring plans by February 16, 1996 and the remaining
Massachusetts' electric utilities (including FG&E) to file
restructuring plans three months after the MDPU issues orders
regarding the first three plans.
PART I. EXHIBIT 11.
UNITIL CORPORATION AND SUBSIDIARY COMPANIES
COMPUTATION OF EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING
(UNAUDITED)
Three Months Ended Nine Months Ended
PRIMARY September 30, September 30,
EARNINGS PER SHARE 1995 1994 1995 1994
Net Income $1,818,961 $1,530,054 $6,065,172 $5,985,413
Less: Dividend Requirement
on Preferred Stock 70,813 72,437 212,949 219,116
Net Income Applicable
to Common Stock $1,748,148 $1,457,617 $5,852,223 $5,766,297
Average Number of Common
Shares Outstanding 4,307,733 4,241,148 4,291,100 4,225,993
Earnings Per Common Share $0.40 $0.34 $1.36 $1.36
Three Months Ended Nine Months Ended
FULLY-DILUTED September 30, September 30,
EARNINGS PER SHARE 1995 1994 1995 1994
Net Income $1,818,961 $1,530,054 $6,065,172 $5,985,413
Less: Dividend Requirement
on Preferred Stock 70,813 72,437 212,949 219,116
Net Income Applicable
to Common Stock $1,748,148 $1,457,617 $5,852,223 $5,766,297
Average Number of Common
Shares Outstanding 4,390,143 4,309,540 4,370,279 4,298,791
Earnings Per Common Share $0.40 $0.34 $1.34 $1.34
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 September 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: November 13, 1995
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.)