SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarter Ended March 31, 2000 Commission File No. 0-29812
BERKSHIRE ENERGY RESOURCES
Massachusetts 04-3408946
115 Cheshire Road, Pittsfield, Massachusetts 01201-1803
Registrant's telephone number, including Area Code 413:442-1511
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
------- -------
At March 31, 2000, the Registrant had issued and outstanding 2,526,276
shares of Common Stock, no par value.
BERKSHIRE ENERGY RESOURCES
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
-------------------------------------------------------
Unaudited
---------
(In Thousands Except Per Share Amounts)
Three Months Ended
3/31/00 3/31/99
------- -------
Operating Revenues $25,637 $23,544
Cost of Gas Sold 11,997 10,626
------------------
Operating Margin 13,640 12,918
------------------
Other Operating Expenses 4,779 4,241
Depreciation 1,449 1,974
Other Taxes 921 857
------------------
Total 7,149 7,072
------------------
Operating Income 6,491 5,846
Other Income - Net 764 986
------------------
Operating and Other Income 7,255 6,832
Interest Expense 1,163 1,126
------------------
Pre-Tax Income 6,092 5,706
Income Taxes 2,400 2,192
------------------
NET INCOME 3,692 3,514
Retained Earnings at Beginning
of Period 6,878 7,252
------------------
Total 10,570 10,766
------------------
Dividends Declared:
Preferred Stock 4 3
Common Stock 745 710
------------------
Total Dividends 749 713
------------------
Retained Earnings at End
of Period $ 9,821 $10,053
==================
Earnings Available for Common
Shares $ 3,688 $ 3,511
==================
Average Common Shares
Outstanding 2,526.3 2,448.3
------------------
Basic and Diluted Earnings
Per Common Share $1.46 $1.43
==================
See Independent Accountants' Review Report and Notes to
Financial Statements.
BERKSHIRE ENERGY RESOURCES
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
-------------------------------------------------------
Unaudited
---------
(In Thousands Except Per Share Amounts)
Nine Months Ended
03/31/00 03/31/99
-------- --------
Operating Revenues $44,837 $41,677
Cost of Gas Sold 20,740 18,242
-------------------
Operating Margin 24,097 23,435
-------------------
Other Operating Expenses 12,700 11,416
Depreciation 3,235 3,735
Other Taxes 1,823 1,594
-------------------
Total 17,758 16,745
-------------------
Operating Income 6,339 6,690
Other Income - Net 1,798 1,891
-------------------
Operating and Other Income 8,137 8,581
Interest Expense 3,329 3,361
-------------------
Pre-Tax Income 4,808 5,220
Income Taxes 2,043 1,980
-------------------
NET INCOME 2,765 3,240
Retained Earnings at Beginning
of Period 9,300 8,911
-------------------
Total 12,065 12,151
-------------------
Dividends Declared:
Preferred Stock 11 11
Common Stock 2,233 2,087
-------------------
Total Dividends 2,244 2,098
-------------------
Retained Earnings at End
of Period $ 9,821 $10,053
===================
Earnings Available for Common
Shares $ 2,754 $ 3,229
===================
Average Common Shares
Outstanding 2,523.0 2,384.8
-------------------
Basic and Diluted Earnings
Per Common Share $1.09 $1.35
===================
See Independent Accountants' Review Report and Notes to
Financial Statements.
BERKSHIRE ENERGY RESOURCES
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
-------------------------------------------------------
Unaudited
---------
(In Thousands Except Per Share Amounts)
Twelve Months Ended
03/31/00 03/31/99
-------- --------
Operating Revenues $53,869 $50,707
Cost of Gas Sold 24,983 22,378
--------------------
Operating Margin 28,886 28,329
--------------------
Other Operating Expenses 15,321 14,736
Depreciation 4,105 4,522
Other Taxes 2,276 1,983
--------------------
Total 21,702 21,241
--------------------
Operating Income 7,184 7,088
Other Income - Net 1,949 2,178
--------------------
Operating and Other Income 9,133 9,266
Interest Expense 4,351 4,365
--------------------
Pre-Tax Income 4,782 4,901
Income Taxes 2,024 1,846
--------------------
NET INCOME 2,758 3,055
Retained Earnings at Beginning
of Period 10,053 9,772
--------------------
Total 12,811 12,827
--------------------
Dividends Declared:
Preferred Stock 15 15
Common Stock 2,975 2,759
--------------------
Total Dividends 2,990 2,774
--------------------
Retained Earnings at End
of Period $ 9,821 $10,053
====================
Earnings Available for Common
Shares $ 2,743 $ 3,040
====================
Average Common Shares
Outstanding 2,506.0 2,359.0
--------------------
Basic and Diluted Earnings
Per Common Share $ 1.09 $ 1.29
====================
See Independent Accountants' Review Report and Notes to
Financial Statements.
BERKSHIRE ENERGY RESOURCES
CONSOLIDATED BALANCE SHEETS
---------------------------
(In Thousands)
March 31, June 30,
2000 1999
--------- --------
(Unaudited) (Audited)
ASSETS:
Property, Plant and Equipment
- at original cost:
Gas-related activities $119,142 $110,405
Unregulated activities 13,144 14,007
-----------------------
132,286 124,412
Less: Accumulated Depreciation
and amortization:
Gas-related activities 36,535 34,075
Unregulated activities 5,723 6,973
-----------------------
42,258 41,048
Property, Plant and Equipment - Net:
Gas-related activities 82,607 76,330
Unregulated activities 7,421 7,034
-----------------------
90,028 83,364
Current Assets:
Cash 291 117
Accounts Receivable:
Gas-related activities (less
allowance for doubtful accounts
Mar.2000-$1,242;June 1999-$1,000) 11,180 6,498
Unregulated activities (less
allowance for doubtful accounts
Mar. 2000-$10;June 1999-$19) 2,206 654
Inventories:
Gas-related activities (at cost) 2,068 4,137
Unregulated activities (at the lower 253 164
of average cost or market)
Recoverable Gas Costs 248 188
Prepayments and Other 649 1,238
-----------------------
Total Current Assets 16,895 12,996
-----------------------
Deferred Debits:
Unamortized Debt Expense - Net 2,072 2,150
Capital Stock Expense - Net 198 232
Environmental Cleanup Costs 919 718
Other 3,161 2,293
-----------------------
Total Deferred Debits 6,350 5,393
-----------------------
Recoverable Environmental Cleanup
Costs 3,335 3,335
-----------------------
TOTAL ASSETS $116,608 $105,088
=======================
See Independent Accountants' Review Report and Notes to
Financial Statements.
BERKSHIRE ENERGY RESOURCES
CONSOLIDATED BALANCE SHEETS
---------------------------
(In Thousands)
March 31, June 30,
2000 1999
--------- --------
(Unaudited) (Audited)
CAPITALIZATION AND LIABILITIES
Common Shareholders' Equity:
Common Shares $ 28,937 $ 28,596
Retained Earnings 9,821 9,300
------------------------
Total Common Shareholders' Equity 38,758 37,896
------------------------
Redeemable Cumulative
Preferred Stock 310 312
------------------------
Long-Term Debt 40,000 40,000
------------------------
Current Liabilities:
Notes Payable to Banks 15,480 7,100
Accounts Payable 2,313 2,636
Other Current Liabilities 2,101 2,628
Taxes Accrued (Prepaid) 1,816 (397)
------------------------
Total Current Liabilities 21,710 11,967
------------------------
Other Liabilities 2,361 1,538
------------------------
Unamortized Investment Tax Credit 1,019 1,070
------------------------
Deferred Income Taxes 9,115 8,970
------------------------
Reserve for Recoverable Environmental
Cleanup Costs 3,335 3,335
------------------------
TOTAL CAPITALIZATION
AND LIABILITIES $116,608 $105,088
========================
See Independent Accountants' Review Report and Notes to
Financial Statements.
BERKSHIRE ENERGY RESOURCES
CONSOLIDATED STATEMENTS OF CASH FLOWS - Unaudited
-------------------------------------------------
(In Thousands)
Nine Months Ended
03/31/00 03/31/99
-------- --------
Cash flows from Operating Activities:
Net Income $ 2,765 $ 3,240
Adjustments to Reconcile Net Income
to Net Cash Provided by Operating Activities:
Depreciation and Amortization 3,746 4,107
Provision for Losses on Accounts
Receivable 816 827
Refundable (Recoverable) Gas Costs (60) 480
Deferred Income Taxes 145 (302)
Changes in Assets and Liabilities Which
Provided (Used) Cash:
Accounts Receivable (7,050) (8,535)
Inventories 1,980 1,008
Accounts Payable (323) (1,014)
Taxes Accrued 2,213 2,423
Other (211) (337)
-------------------
Total Adjustments 1,256 (1,343)
-------------------
Net Cash Provided by Operating Activities 4,021 1,897
-------------------
Cash Flows Used in Investing Activities:
Construction Expenditures (10,322) (5,493)
-------------------
Cash Flows Provided by (Used in)
Financing Activities:
Dividends Paid (2,244) (2,098)
Proceeds from Notes Payable 8,380 3,015
Proceeds from Other Stock
Transactions - Net 339 2,778
-------------------
Net Cash Provided by
Financing Activities 6,475 3,695
-------------------
Net Increase in Cash 174 99
Cash at Beginning of Period 117 160
-------------------
Cash at End of Period $ 291 $ 259
===================
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Year for:
Interest(net of amount capitalized) $ 3,736 $ 3,660
===================
Income Taxes(net of refund) $ 372 $ 38
===================
See Independent Accountants' Review Report and Notes to
Financial Statements.
Berkshire Energy Resources
Notes to Consolidated Financial Statements
March 31, 2000
- ---------------------------------------------------------------------------
(Dollars in Thousands Except Share Amounts)
NOTES:
OTHER FINANCIAL INFORMATION:
The accompanying unaudited consolidated financial statements have
been prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and footnotes required by generally accepted
accounting principles for complete consolidated financial statements. The
Company has reclassified certain amounts for prior years to conform with
the fiscal year 2000 presentation. All adjustments, which in the opinion of
management are necessary for a fair presentation of the operations for the
interim periods presented, have been made. These adjustments are of a
normal recurring nature. The results of operations for such interim periods
are not necessarily indicative of results of operations for a full year.
These consolidated financial statements should be read in conjunction with
the summary of accounting policies and notes to financial statements
included in the Company's Annual Report on Form 10-K for the year ended
June 30, 1999.
CONTINGENCIES:
ENVIRONMENTAL:
Like other companies in the natural gas industry, the Company is a
party to governmental actions associated with former gas manufacturing
sites. Management estimates that expenditures to remediate and monitor
known environmental sites will range from $3,335 to $12,673. In accordance
with SFAS No. 5, the Company has recorded the most likely cost of $3,335.
The Company's unamortized cost at March 31, 2000 was $919 and should be
recovered over a seven-year period through the Local Distribution
Adjustment Clause (LDAC).
SEGMENT INFORMATION
The Company operates two segments: regulated activities and
unregulated diversified businesses. Gas-related activities (regulated)
consist primarily of natural gas distribution to residential, commercial
and industrial customers, as well as the sale and leasing of gas-burning
equipment. Diversified businesses (unregulated) consist primarily of the
distribution of liquefied petroleum gas, the commodity sale of energy to
commercial and industrial customers and providing on-premise HVAC (Heating
Ventilation and Air Conditioning) and plumbing services in commercial,
industrial and residential markets. The Company's primary market is western
Massachusetts, eastern New York and southern Vermont.
Information about the Company's operations, by business segments is
presented below.
Revenues: Three Months Ended Nine Months Ended
03/31/00 03/31/99 03/31/00 03/31/99
-------- -------- -------- --------
Gas-Related Activities $22,196 $21,315 $38,420 $37,543
Unregulated Activities 3,441 2,229 6,417 4,134
----------------------------------------------
Total $25,637 $23,544 $44,837 $41,677
==============================================
Operating Margin: Three Months Ended Nine Months Ended
03/31/00 03/31/99 03/31/00 03/31/99
-------- -------- -------- --------
Gas-Related Activities $11,982 $11,695 $21,093 $21,144
Unregulated Activities 1,658 1,223 3,004 2,291
----------------------------------------------
Total $13,640 $12,918 $24,097 $23,435
==============================================
Operating Income(Loss): Three Months Ended Nine Months Ended
03/31/00 03/31/99 03/31/00 03/31/99
-------- -------- -------- --------
Gas-Related Activities $ 6,100 $ 5,387 $ 6,568 $ 6,156
Unregulated Activities 391 459 (229) 534
----------------------------------------------
Total $ 6,491 $ 5,846 $ 6,339 $ 6,690
==============================================
Net Income(Loss): Three Months Ended Nine Months Ended
03/31/00 03/31/99 03/31/00 03/31/99
-------- -------- -------- --------
Gas-Related Activities $ 3,595 $ 3,245 $ 3,278 $ 2,946
Unregulated Activities 97 269 (513) 294
----------------------------------------------
Total $ 3,692 $ 3,514 $ 2,765 $ 3,240
==============================================
Property, Plant and Equipment:
Property, Plant and Equipment for Gas-Related activities include
expenditures related to the construction of a LNG facility of $5,465,000.
Included in the Construction Work-In Progress (CWIP) at December 31, 1999
was $5,116,000 that was transferred into Plant in service during the third
quarter of fiscal 2000.
Merger with Energy East:
On November 9, 1999, the Company signed a definitive merger agreement
with Energy East Corporation under which the Company will become a wholly-
owned subsidiary of Energy East. Energy East will acquire all of the common
shares of Berkshire Energy Resources for $38.00 per share in cash. The
transaction has an equity market value of approximately $96 million, based
on approximately 2,523,479 of Berkshire common shares outstanding. Energy
East will also assume approximately $40,000,000 of Berkshire preferred
stock and long-term debt. The transaction will be accounted for using the
purchase method of accounting.
The merger was approved on February 29, 2000 by Berkshire
shareholders. The merger is also subject to Energy East receiving the
approval of the Securities and Exchange Commission (SEC). The Company
expects the transaction to close by mid-year 2000.
WEATHER PROTECTION
To provide financial protection from dramatic weather fluctuations,
the Company purchased a weather contract for the winter period January 1
through March 31, 2000. The Company has received proceeds based on the
criteria that the total degree-days for the aforementioned winter period
were less than 95% of the twenty-year average degree-days for the period.
The Company recognized proceeds, based on the number of degree-days under
the threshold.
Management's Discussion and Analysis of Financial Condition and
Results of Operations
- ---------------------------------------------------------------------------
Results of Operations - Third Quarter Ended March 31, 2000 versus Third
Quarter Ended March 31, 1999
- ---------------------------------------------------------------------------
Consolidated net income was $3,692,000 for the three months ended
March 31, 2000 compared to $3,514,000 for the same period a year earlier.
Operating Margins from natural gas, propane and HVAC sales increased
$722,000 or 5.6% as compared to 1999.
Operating Margin on sales of natural gas increased $287,000 or 2.5%
as compared to 1999. The increase was due to the growth in the number of
firm customers. Operating Margin (Operating Margin or Gross Profit =
Operating Revenues net of Cost of Gas Sold) is primarily affected by the
level of firm gas sold and transported. Interruptible gas sold and
transported has minimal or no effect on Operating Margin since those
margins are primarily flowed back to the firm customers through the Cost of
Gas Adjustment Clause (CGAC) and LDAC. The Company's sales are affected by
weather as the majority of its firm customers use natural gas for heating.
Changes in the cost of natural gas do not affect Operating Margin as these
changes are recovered or returned to customers through the CGAC. Margins on
sales from unregulated businesses increased $435,000 due to the acquisition
of two plumbing and heating businesses in October, 1999.
2000 1999
---- ----
3 Month Firm MCF Sold & Transported 2,794,000 2,691,000
3 Month Consolidated Operating Margin $13,640,000 $12,918,000
Other Operating Expenses increased $538,000 or 12.7% as compared with
1999. The increase is primarily due to professional fees related to the
merger with Energy East as well as operating expenses associated with
running the plumbing and heating businesses acquired in the fall of 1999.
Depreciation Expense decreased $525,000 or 26.6%. The Company made an
adjustment of $497,000 to correct depreciation recorded in prior periods
related to utility equipment. The adjustment had no material effect on any
period that the Company has previously reported.
Other Taxes increased $64,000, primarily due to increased property
taxes reflecting growth in plant assets and higher tax rates, and to a
lesser extent, payroll taxes on the increased payroll base.
Other Income - Net decreased $222,000 or 22.5% from 1999. The Company
recognized proceeds from a weather protection contract in both fiscal 2000
and 1999. The proceeds were less in the current year because the length and
type of contract was modified in fiscal 2000.
Income taxes increased $208,000 due to higher earnings, and by the
tax effects of non-deductible merger costs of $621,000.
Common Share Dividends increased $35,000 due to additional shares
outstanding through the Company's Dividend and Optional Cash Purchase Plan
(DRIP) and, to a lesser extent, an increase in the quarterly dividend to
$.295 per share from $.29 per share effective the fourth quarter of fiscal
year 1999.
Management's Discussion and Analysis of Financial Condition and
Results of Operations
- ---------------------------------------------------------------------------
Results of Operations - Nine Months Ended March 31, 2000 versus Nine Months
Ended March 31, 1999
- ---------------------------------------------------------------------------
Net Income for the nine months ended March 31, 2000 was $2,765,000 as
compared to $3,240,000 for the same period in 1999. Earnings were impacted
by costs of $621,000 related to the merger with Energy East. Losses
incurred during the initial year of the newly acquired HVAC operations also
effected earnings.
Operating Margin increased $662,000 or 2.8% compared to the nine
months ended March 31, 1999, primarily due to margins on the HVAC
businesses acquired this fiscal year as well as growth in sales of propane.
2000 1999
---- ----
9 Month Firm MCF Sold & Transported 5,086,000 4,988,000
9 Month Consolidated Operating Margin $24,097,000 $23,435,000
Other Operating Expenses increased $1,284,000 or 11.2%, Depreciation
decreased $500,000 or 13.4%, Other Taxes increased $229,000 or 14.4%, Other
Income decreased $93,000 or 4.9%, Income Taxes increased $63,000, and
Common Share Dividends increased $146,000, all for the same reasons
discussed in the Third Quarter Results above.
Management's Discussion and Analysis of Financial Condition and
Results of Operations
- ---------------------------------------------------------------------------
Results of Operations - Twelve Months Ended March 31, 2000 versus Twelve
Months Ended March 31, 1999
- ---------------------------------------------------------------------------
Earnings available for Common Stock were $2,743,000 for the twelve
months ended March 31, 2000 as compared to $3,040,000 for 1999. Earnings
were impacted by merger costs and HVAC losses as discussed in the Nine
Month Results of Operations.
Operating Margin increased $557,000 or 2.0% from 1999, primarily due
to margins on the HVAC businesses acquired this fiscal year as well as
growth in sales of propane.
2000 1999
---- ----
12 Month Firm MCF Sold & Transported 6,288,000 6,121,000
12 Month Consolidated Operating Margin $28,886,000 $28,329,000
Other Operating Expenses increased by $585,000 or 4.0% as a result of
professional fees related to the merger with Energy East as well as
operating expenses associated with running the plumbing and heating
businesses acquired during the second quarter of fiscal 2000, partially
offset by lower bad debts of the regulated utility due to a change in the
recovery mechanism for the portion of bad debt expense related to gas
costs, and a reduction of pension costs as a result of very positive
performance of the investment vehicles in which fund assets are invested.
Depreciation decreased $417,000 or 9.2%. The Company made an
adjustment of $497,000 to correct depreciation recorded in prior periods
related to utility equipment. The adjustment had no material effect on any
period that the Company has previously reported.
Other Taxes increased $293,000 or 14.8% due to increases in the plant
property tax base and municipal tax rates and payroll taxes related to
increased payroll.
Other Income - Net decreased $229,000 or 10.5% due to changes in
weather protection proceeds as explained in the Third Quarter Results.
Income Taxes increased $178,000 due to the tax effects of non-
deductible merger costs.
Common Share Dividends increased by $216,000 or 7.8% due to
additional shares outstanding through the Company's Dividend Reinvestment
and Optional Cash Purchase Plan (DRIP) over the twelve-month period, and to
a lesser extent, an increase in the quarterly dividend to $.295 per share
from $.29 per share effective the fourth quarter of fiscal year 1999.
LIQUIDITY AND CAPITAL RESOURCES - MARCH 31, 2000
Cash flows provided by operating activities were $4,021,000 for the
nine months ended March 31, 2000, as compared to $1,897,000 in 1999,
primarily due to a decrease in accounts receivable and inventory. Capital
requirements have been primarily funded by internal sources. The issuance
of long-term financing is dependent on management's evaluation of needs,
financial market conditions and other factors. Short-term bank financing is
used to meet seasonal cash requirements. The Company has adequate resources
to cover immediate cash needs.
The Company initially finances construction expenditures and other
funding needs primarily with internal sources, short-term bank borrowings
and the reinvestment of dividends. The Company continually evaluates its
short-term borrowing position, and based on prevailing interest rates,
market conditions, and other considerations, makes determinations regarding
conversion of short-term borrowings to long-term debt or equity. The
Company added $10,322,000 to Property, Plant and Equipment during the nine
months ended March 31, 2000, of which $5,465,000 relates to the
construction of a LNG facility and $1,036,000 investment in non-regulated
plant and equipment assets. The remaining construction expenditures
primarily represent investments in new and replacement mains and services.
Merger with Energy East:
On November 9, 1999, the Company signed a definitive merger agreement
with Energy East Corporation under which the Company will become a wholly-
owned subsidiary of Energy East. Energy East will acquire all of the common
shares of Berkshire Energy Resources for $38.00 per share in cash. The
transaction has an equity market value of approximately $96 million, based
on approximately 2,523,479 million of Berkshire common shares outstanding.
Energy East will also assume approximately $40,000,000 of Berkshire
preferred stock and long-term debt. The transaction will be accounted for
using the purchase method of accounting.
The merger was approved on February 29, 2000 by Berkshire
shareholders. The merger is also subject to Energy East receiving the
approval of the Securities and Exchange Commission (SEC). The Company
expects the transaction to close by mid-year 2000.
Business Acquisitions:
The Company purchased the assets of Shedd Inc. and Yankee Plumbing
and Heating Inc., based in Pittsfield, Massachusetts, in the fall of 1999.
Services provided by these companies include the sale, installation and
maintenance of boilers, furnaces, heat pumps and air conditioning equipment
and ductwork. These businesses will be operated under Berkshire Service
Solutions, Inc., an unregulated subsidiary that is engaged in the commodity
sale of energy to commercial and industrial customers and provides on-
premise HVAC and plumbing services in commercial, industrial and
residential markets.
The acquisition of these companies demonstrates the Company's
commitment to expand opportunities in the competitive energy marketplace.
The capital structure of the Company at March 31, 2000 was 49.0%
Common Equity, .4% Preferred Stock and 50.6% Long-Term Debt.
Funds for environmental clean-up costs are initially financed through
short-term borrowings and all such costs will be recovered over a seven-
year period under a ruling issued by the Massachusetts Department of
Telecommunications and Energy (DTE).
Year 2000 Compliance
The Company did not experience any Year 2000 disruptions or system
related problems during the new-year rollover. The total cost to the
Company of Year 2000 Compliance activities has not been material to its
financial position or results of operations in any given year. Management
has budgeted fifty-thousand dollars for fiscal year 2000 to address Year
2000 related expenditures.
Cautionary Statement for Purposes of the "Safe Harbor" Provisions of
the Private Securities Litigation Reform Act of 1995
This Quarterly Report contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Actual
results could differ materially from those contemplated by such statements.
Such statements reflect management's current views, are based on many
assumptions and are subject to risks and uncertainties.
Certain important factors which could cause such results to differ
include risks associated with the Company's maintaining contracts with
specific customers, government regulation, the increasingly competitive
nature of the markets in which the Company is engaged, and dependence on
key personnel. These factors are not intended to represent a complete list
of the general or specific risks that may affect the Company.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
- ------- -----------------
A lawsuit formerly reported by Berkshire Gas Company (BGAS), the
predecessor of Berkshire Energy Resources, on Form 8-K dated December 18,
1998 has been resolved. A settlement was negotiated by both parties, which
had no material impact to the financial statements of the Company.
Item 2. Changes in Securities
- ------- ---------------------
Not Applicable
Item 3. Defaults Upon Senior Securities
- ------- -------------------------------
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
- ------- ---------------------------------------------------
At a special shareholders meeting convened at Company
headquarters in Pittsfield, Massachusetts on February 29, 2000, Berkshire
Energy Resources shareholders voted to approve a proposed merger with
Energy East Corporation. Under the terms of the agreement, Berkshire Energy
Resources shareholders will receive a cash payment of $38.00 per share at
the close of the transaction.
Item 5. Other Information
- ------- -----------------
The Company has made and entered into a collective bargaining
agreement with the Local Union of the United Steelworkers of America for
the period April 1, 2000 through March 31, 2003. The previous contract
expired on March 31, 2000.
Item 6. Exhibits and Reports on Form 8 - K
- ------- ----------------------------------
(a) List of Exhibits
Exhibit 27 - Financial Data Schedule
The consolidated balance sheet as of March 31, 2000, the related
consolidated statements of income and retained earnings for the three
month, nine month and twelve month periods ended March 31, 2000 and 1999,
and the consolidated statements of cash flows for the nine month periods
ended March 31, 2000 and 1999 have been reviewed, prior to filing, by the
Registrant's independent public accountants, Deloitte & Touche LLP, whose
report covering their review of the consolidated financial statements is
presented below.
Deloitte &
Touche LLP
- ------------ ---------------------------------------------------
City Place Telephone:(860) 280-3000
185 Asylum Street Facsimile:(860) 280-3051
Hartford, Connecticut 06103-3402
INDEPENDENT ACCOUNTANTS' REPORT
Berkshire Energy Resources:
We have reviewed the accompanying consolidated balance sheet of Berkshire
Energy Resources (formerly The Berkshire Gas Company) (the "Company") as of
March 31, 2000, the related consolidated statements of income and retained
earnings for the three month, nine month and twelve month periods ended
March 31, 2000 and 1999, and the consolidated statement of cash flows for
the nine month periods ended March 31, 2000 and 1999. These consolidated
financial statements are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical
procedures to financial data and of making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope
than an audit conducted in accordance with auditing standards generally
accepted in the United States of America, the objective of which is the
expression of an opinion regarding the consolidated financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to such condensed consolidated financial statements for them
to be in conformity with accounting principles generally accepted in the
United States of America.
We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the consolidated balance sheet of
Berkshire Energy Resources as of June 30, 1999, and the related
consolidated statements of income, shareholders' equity, and cash flows for
the year then ended (not presented herein); and in our report dated August
12, 1999, we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying consolidated balance sheet as of June 30, 1999 is fairly
stated, in all material respects, in relation to the consolidated balance
sheet from which it has been derived.
Deloitte & Touche LLP
May 1, 2000
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.
Berkshire Energy Resources
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Registrant
/s/Michael J. Marrone
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Michael J. Marrone
Vice President, Treasurer &
Chief Financial Officer
Dated: May 11, 2000