UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(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, 1997
---------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------------------- -------------------
Commission file number 1-12859
-----------------------------------------------------
CTG RESOURCES, INC.
----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Connecticut 06-1466463
----------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Columbus Boulevard, Hartford, Connecticut 06103
----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(860) 727-3010
----------------------------------------------------------------------------
(Registrant's telephone number, including area code)
----------------------------------------------------------------------------
(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 (applicable only
to Corporate Issuers). Number of shares of common stock outstanding as of
the close of business on July 31, 1997: 10,634,496.
<PAGE>
FINANCIAL STATEMENTS
CTG RESOURCES, INC.
The condensed financial statements included herein have been prepared
by the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. Although the Company believes that
the disclosures are adequate to make the information presented not
misleading, it is suggested that these condensed financial statements be
read in conjunction with the financial statements and the notes thereto
included in the Connecticut Natural Gas Corporation's annual report on Form
10-K (Commission File No. 1-7727). In the opinion of the Company, all
adjustments necessary to present fairly the consolidated financial position
of CTG Resources, Inc. as of June 30, 1997 and 1996 and the results of its
operations and its cash flows for the three months, nine months and twelve
months ended June 30, 1997 and 1996 have been included. The results of
operations for such interim periods are not necessarily indicative of the
results for the full year.
<PAGE>
<TABLE>
<CAPTION>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
<S> <C> <C> <C>
June 30, Sept. 30, June 30,
ASSETS 1997 1996 1996
------ --------- --------- ---------
Plant and Equipment:
Regulated energy $ 415,023 $ 403,862 $ 397,070
Unregulated energy 60,935 60,515 64,031
Construction work in progress 6,107 6,417 3,770
--------- --------- ---------
482,065 470,794 464,871
Less-Allowance for depreciation 157,097 145,042 143,973
--------- --------- ---------
324,968 325,752 320,898
--------- --------- ---------
Investments, at equity 11,538 9,914 10,482
--------- --------- ---------
Current Assets:
Cash and cash equivalents 16,877 8,515 31,226
Accounts and notes receivable 39,265 29,852 42,844
Allowance for doubtful accounts (5,150) (4,819) (6,048)
Accrued utility revenue 3,436 4,180 4,253
Inventories 9,693 15,968 8,782
Prepaid expenses 5,348 10,920 3,814
--------- --------- ---------
69,469 64,616 84,871
--------- --------- ---------
Deferred Charges and Other Assets:
Unrecovered future taxes 39,181 44,812 48,641
Recoverable transition costs 1,213 2,858 3,315
Other assets 22,056 19,027 21,262
--------- --------- ---------
62,451 66,697 73,218
--------- --------- ---------
$ 468,426 $ 466,979 $ 489,469
========= ========= =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS (Concluded)
(Thousands of Dollars)
<S> <C> <C> <C>
June 30, Sept. 30, June 30,
CAPITALIZATION AND LIABILITIES 1997 1996 1996
------------------------------ --------- --------- ---------
Capitalization:
Common Stock $ 120,117 $ 120,620 $ 120,722
Retained Earnings 56,969 49,026 55,587
--------- --------- ---------
177,086 169,646 176,309
Unearned compensation -
Restricted stock awards (1,136) (312) (240)
Treasury stock - (452) (129)
--------- --------- ---------
Common stock equity 175,950 168,882 175,940
Preferred stock, not subject to
mandatory redemption 884 899 902
Long-term debt 135,447 136,432 149,205
--------- --------- ---------
312,281 306,213 326,047
--------- --------- ---------
Current Liabilities:
Current portion of long-term debt 13,759 13,968 3,924
Accounts payable and accrued expenses 29,148 40,721 35,887
Refundable purchased gas costs 12,586 6,012 16,546
Accrued liabilities 2,667 4,479 1,374
--------- --------- ---------
58,160 65,180 57,731
--------- --------- ---------
Deferred Credits:
Deferred income taxes 48,016 40,011 46,018
Unfunded deferred income taxes 39,181 44,812 48,641
Investment tax credits 3,038 3,203 3,258
Refundable taxes 3,486 3,445 3,501
Other 4,264 4,115 4,273
--------- --------- ---------
97,985 95,586 105,691
--------- --------- ---------
$ 468,426 $ 466,979 $ 489,469
========= ========= =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Thousands of dollars except for per share data)
Three Months Ended
June 30,
-----------------------------
<S> <C> <C>
1997 1996
---------- ----------
Operating Revenues $ 53,234 $ 53,954
Less: Cost of Energy 27,689 27,778
State Gross Receipts Tax 1,815 1,863
---------- ----------
Operating Margin 23,730 24,313
---------- ----------
Other Operating Expenses:
Operations & maintenance expenses 13,666 15,077
Depreciation 4,621 4,497
Income taxes 247 511
Other taxes 1,854 1,821
---------- ----------
20,388 21,906
---------- ----------
Operating Income 3,342 2,407
---------- ----------
Other Income (Deductions):
Allowance for equity funds used
during construction 25 28
Equity in partnership earnings 701 543
Other income 259 324
Income Taxes (303) (318)
---------- ----------
682 577
---------- ----------
Interest and Debt Expense 3,366 3,546
---------- ----------
Net Income/(Loss) 658 (562)
Less-Dividends on Preferred Stock 15 16
---------- ----------
Net Income/(Loss) Applicable to Common
Stock $ 643 $ (578)
========== ==========
Income/(Loss) Per Average Share of
Common Stock $ 0.06 $ (0.06)
========== ==========
Dividends Per Share of Common Stock $ 0.38 $ 0.38
========== ==========
Average Common Shares Outstanding
During the Period 10,634,496 10,092,017
========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CTG RESOURCES, INC. "UNAUDITED"
CONSOLIDATED STATEMENTS OF INCOME
(Thousands of dollars except for per share data)
Nine Months Ended
June 30,
-----------------------------
<S> <C> <C>
1997 1996
---------- ----------
Operating Revenues $ 267,184 $ 275,022
Less: Cost of Energy 147,102 150,163
State Gross Receipts Tax 9,956 10,507
---------- ----------
Operating Margin 110,126 114,352
---------- ----------
Operating Expenses:
Operations & maintenance expenses 42,183 44,390
Depreciation 13,573 13,296
Income taxes 19,682 19,972
Other taxes 5,875 5,687
---------- ----------
81,313 83,345
---------- ----------
Operating Income 28,813 31,007
---------- ----------
Other Income (Deductions):
Allowance for equity funds used
during construction 95 111
Equity in partnership earnings 2,187 1,227
Other income/(deductions) (596) 88
Income Taxes (739) (556)
---------- ----------
947 870
---------- ----------
Interest and Debt Expense 9,697 10,377
---------- ----------
Net Income 20,063 21,500
Less-Dividends on Preferred Stock 46 47
---------- ----------
Net Income Applicable to Common Stock $ 20,017 $ 21,453
========== ==========
Income Per Average Share of
Common Stock $ 1.88 $ 2.15
========== ==========
Dividends Per Share of Common Stock $ 1.14 $ 1.12
========== ==========
Average Common Shares Outstanding
During the Period 10,630,668 9,984,610
========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CTG RESOURCES, INC. "UNAUDITED"
CONSOLIDATED STATEMENTS OF INCOME
(Thousands of dollars except for per share data)
Twelve Months Ended
June 30,
-----------------------------
<S> <C> <C>
1997 1996
---------- ----------
Operating Revenues $ 307,525 $ 317,989
Less: Cost of Energy 172,114 173,281
State Gross Receipts Tax 11,159 12,682
---------- ----------
Operating Margin 124,252 132,026
---------- ----------
Operating Expenses:
Operations & maintenance expenses 56,048 58,471
Depreciation 18,042 17,448
Income taxes 14,074 17,255
Other taxes 7,778 7,511
---------- ----------
95,942 100,685
---------- ----------
Operating Income 28,310 31,341
---------- ----------
Other Income (Deductions):
Allowance for equity funds used
during construction 128 141
Equity in partnership earnings 2,997 1,427
Other deductions (436) (441)
Nonrecurring items 892 3,624
Income Taxes (1,298) (2,040)
---------- ----------
2,283 2,711
---------- ----------
Interest and Debt Expense 13,035 13,916
---------- ----------
Net Income 17,558 20,136
Less-Dividends on Preferred Stock 62 63
---------- ----------
Net Income Applicable to Common Stock $ 17,496 $ 20,073
========== ==========
Income Per Average Share of
Common Stock $ 1.65 $ 2.01
========== ==========
Dividends Per Share of Common Stock $ 1.52 $ 1.49
========== ==========
Average Common Shares Outstanding
During the Period 10,630,593 9,971,204
========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
Three Months Ended
June 30,
----------------------
<S> <C> <C>
1997 1996
---- ----
Cash Flows from Operations $ 14,738 $ 8,449
-------- --------
Cash Flows from Investing Activities:
Capital expenditures (5,329) (4,386)
Other investing activities 11 (5,442)
-------- --------
Net cash used in investing activities (5,317) (9,828)
-------- --------
Cash Flows from Financing Activities:
Dividends paid (4,056) (4,055)
Issuance of common stock, net (148) 15,659
Principal retired on long-term debt (172) (166)
-------- --------
Net cash provided by/(used in)
financing activities (4,376) 11,438
-------- --------
Increase in Cash and
Cash Equivalents 5,045 10,059
Cash and Cash Equivalents at
Beginning of Period 11,832 21,167
-------- --------
Cash and Cash Equivalents at
End of Period $ 16,877 $ 31,226
======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)
(Thousands of Dollars)
Three Months Ended
June 30,
----------------------
<S> <C> <C>
1997 1996
---- ----
Schedule Reconciling Earnings to
Cash Flows from Operations:
Income $ 658 $ (562)
-------- --------
Adjustments to reconcile income
to net cash:
Depreciation and amortization 4,820 4,641
Deferred income taxes, net (186) (1,085)
Equity in partnership earnings (701) (543)
Cash distributions received from
investments 831 971
Change in assets and liabilities:
Accounts receivable 20,908 21,863
Accrued utility revenue 12,280 11,934
Inventories (4,329) (6,095)
Purchased gas costs (2,482) (6,391)
Prepaid expenses (275) (745)
Accounts payable and accrued expenses (13,933) (17,734)
Other assets/liabilities (2,853) 2,195
-------- --------
Total adjustments 14,080 9,011
-------- --------
Cash flows from operations $ 14,738 $ 8,449
======== ========
Supplemental Disclosures of Cash Flow
Information:
Cash Paid During the Period for:
Interest (net of amount capitalized) $ 4,399 $ 3,960
======== ========
Income taxes $ 5,715 $ 7,600
======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
Nine Months Ended
June 30,
----------------------
<S> <C> <C>
1997 1996
---- ----
Cash Flows from Operations $ 36,081 $ 46,288
-------- --------
Cash Flows from Investing Activities:
Capital expenditures (13,591) (12,285)
Other investing activities 334 (4,659)
-------- --------
Net cash used in investing activities (13,257) (16,944)
-------- --------
Cash Flows from Financing Activities:
Dividends paid (12,120) (11,435)
Issuance of common stock, net (503) 15,659
Other stock activity, net (645) (2)
Principal retired on long-term debt (1,194) (1,182)
Short-term debt - (4,200)
-------- --------
Net cash used in
financing activities (14,462) (1,160)
-------- --------
Increase in Cash and
Cash Equivalents 8,362 28,184
Cash and Cash Equivalents at
Beginning of Period 8,515 3,042
-------- --------
Cash and Cash Equivalents at
End of Period $ 16,877 $ 31,226
======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)
(Thousands of Dollars)
Nine Months Ended
June 30,
----------------------
<S> <C> <C>
1997 1996
---- ----
Schedule Reconciling Earnings to
Cash Flows from Operations:
Income $ 20,063 $ 21,500
-------- --------
Adjustments to reconcile income
to net cash:
Depreciation and amortization 14,123 13,703
Deferred income taxes, net 7,881 8,004
Equity in partnership earnings (2,187) (1,227)
Cash distributions received from
investments 1,031 1,331
Change in assets and liabilities:
Accounts receivable (8,910) (9,138)
Accrued utility revenue 744 840
Inventories 6,275 5,729
Purchased gas costs 6,574 14,246
Prepaid expenses 5,572 2,281
Accounts payable and accrued expenses (11,740) (14,298)
Other assets/liabilities (3,345) 3,317
-------- --------
Total adjustments 16,018 24,788
-------- --------
Cash flows from operations $ 36,081 $ 46,288
======== ========
Supplemental Disclosures of Cash Flow
Information:
Cash Paid During the Period for:
Interest (net of amount capitalized) $ 11,313 $ 10,192
======== ========
Income taxes $ 8,261 $ 14,520
======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
Twelve Months Ended
June 30,
----------------------
<S> <C> <C>
1997 1996
---- ----
Cash Flows from Operations $ 28,076 $ 41,160
-------- --------
Cash Flows from Investing Activities:
Capital expenditures (25,587) (22,908)
Nonrecurring Items 892 4,124
Other investing activities 3,655 (4,806)
-------- --------
Net cash used in investing activities (21,040) (23,590)
-------- --------
Cash Flows from Financing Activities:
Dividends paid (16,176) (15,126)
Issuance of common stock, net (605) 15,659
Other stock activity, net (681) (4)
Principal retired on long-term debt (3,923) (3,876)
Short-term debt - (1,000)
-------- --------
Net cash used by
financing activities (21,385) (4,347)
-------- --------
Increase (Decrease) in Cash and
Cash Equivalents (14,349) 13,223
Cash and Cash Equivalents at
Beginning of Period 31,226 18,003
-------- --------
Cash and Cash Equivalents at
End of Period $ 16,877 $ 31,226
======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)
(Thousands of Dollars)
Twelve Months Ended
June 30,
----------------------
<S> <C> <C>
1997 1996
---- ----
Schedule Reconciling Earnings to
Cash Flows from Operations:
Income $ 17,558 $ 20,136
-------- --------
Adjustments to reconcile income
to net cash:
Depreciation and amortization 18,329 17,939
Deferred income taxes, net 1,763 4,391
Equity in partnership earnings (2,997) (1,427)
Nonrecurring Items (892) (4,124)
Cash distributions received from
investments 1,761 1,499
Change in assets and liabilities:
Accounts receivable 3,188 (9,600)
Accrued utility revenue 817 (1,658)
Inventories (911) 2,191
Purchased gas costs (3,960) 7,805
Prepaid expenses (1,534) (1,605)
Accounts payable and accrued expenses (3,344) (513)
Other assets/liabilities (1,702) 6,126
-------- --------
Total adjustments 10,518 21,024
-------- --------
Cash flows from operations $ 28,076 $ 41,160
======== ========
Supplemental Disclosures of Cash Flow
Information:
Cash Paid During the Period for:
Interest (net of amount capitalized) $ 13,314 $ 12,293
======== ========
Income taxes $ 11,374 $ 15,820
======== ========
</TABLE>
<PAGE>
"UNAUDITED"
CTG RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
(Thousands of Dollars)
(1) Investments
In June 1997 the Company and Koch Gas Services Company acquired the
partnership interest of Bay State Energy Enterprises in the KBC Energy
Services ("KBC") joint venture. As a result of this transaction the
Company's interest in KBC has increased from one third to one half. At
June 30, 1997 the Company's investment in KBC was approximately $355.
(2) Regulatory Matters
Local gas distribution companies ("LDCs") pass on to firm customers any
increases or decreases in gas costs from those reflected in tariff
charges under Purchased Gas Adjustment ("PGA") provisions. During
fiscal 1996 the Connecticut Department of Public Utility Control
("DPUC") initiated a review of the need to continue PGA accounting for
all Connecticut LDCs. In April 1997 the DPUC issued a decision
affirming the need to continue the PGA.
(3) Reclassifications
Certain prior year amounts have been reclassified to conform with
current year classifications.
<PAGE>
"UNAUDITED"
CTG RESOURCES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 1997
(Thousands of Dollars Except Per Share Amounts)
RESULTS OF OPERATIONS
The Company recorded consolidated earnings per share of $.06 for the quarter
ended June 1997, compared to a loss of $(.06) for the quarter ended June
1996. Earnings for the nine months ended June 1997 were $1.88, compared to
$2.15 for fiscal 1996. Twelve months ended June 30 earnings were $1.65 in
fiscal 1997 and $2.01 in 1996. The twelve months ended June 1997 include
earnings per share of $.05 related to the sale of a building and land.
Earnings for the twelve months ended June 30, 1996 include a gain of $.24
per share from a negotiated settlement for the termination of a steam supply
contract and a charge of $(.05) per share in connection with legal matters
related to the Company's 4.87% interest in the Iroquois Gas Transmission
System partnership (Iroquois). Without the effect of these items, earnings
per share for the twelve months ended periods would be $1.60 in fiscal 1997
and $1.82 in fiscal 1996.
Higher quarter ended 1997 earnings, as compared to 1996, have come about
because the reduction in operations and maintenance expenses more than
offset the impact of the lower operating margin.
Lower fiscal 1997 earnings between the nine and twelve months ended
comparable periods are the result of the warmer weather experienced in the
Company's service area during the winter heating season. Our customers'
greatest use of energy during the year is in the winter, mostly for the
purpose of heating their homes or businesses.
Warmer weather also impacts several other areas of the financial statements.
The cost of energy is lower because the Company used less gas to satisfy
customers' requirements. At the same time, interest expense is lower
because the Company did not need to borrow as much cash on a short-term
basis to fund winter gas purchases. Income taxes are lower because the
Company earned less and had lower taxable income. Bad debt expense is lower
because customers' bills were smaller. Overtime labor is lower because of
fewer weather related requirements.
Operating Margin
The following table presents the changes in gas revenues, gas operating
margin, heating degree days (a measure of weather) and gas deliveries for
all periods reported in the statements of income:
<PAGE>
<TABLE>
<CAPTION>
Three Months Nine Months Twelve Months
Ended Ended Ended
June 30, June 30, June 30,
<S> <C> <C> <C> <C> <C> <C>
1997 1996 1997 1996 1997 1996
-------- -------- -------- -------- -------- --------
Gas Revenues $ 48,176 $ 48,860 $251,670 $258,716 $285,806 $295,289
======== ======== ======== ======== ======== ========
Gas Operating Margin $ 20,381 $ 21,111 $ 99,866 $103,498 $112,472 $117,203
======== ======== ======== ======== ======== ========
Heating Degree Days 864 726 5,939 6,275 6,074 6,431
===== ===== ===== ===== ===== =====
Commodity and
Transportation
Volumes(mmcf):
Firm Gas Sales 3,598 3,633 20,625 22,210 22,338 24,144
Interruptible Gas
Sales 2,086 1,694 7,777 6,548 9,838 8,083
Off-System Gas
Sales 2,338 3,376 7,840 8,564 11,711 15,306
Transportation -
Services 1,020 1,063 3,321 3,210 4,440 5,018
------ ------ ------ ------ ------ ------
Total 9,042 9,766 39,563 40,532 48,327 52,551
====== ====== ====== ====== ====== ======
</TABLE>
Gas operating margin is equal to gas revenues less the cost of gas and
Connecticut gross revenues tax. A somewhat lower gas operating margin was
earned in 1997, as compared to 1996, for all periods presented. Warmer
winter weather is the principal reason for the decline in gas operating
margin recorded in fiscal 1997 as compared to fiscal 1996. This has
resulted in fewer gas sales to the firm class of customers because less gas
was needed by these customers for the purpose of heating. Because firm
sales generate the highest per-unit margin, changes in firm sales impact gas
operating margin more than changes in other sales categories. The reduced
firm customers' needs during the fiscal 1997 winter made gas available for
sale to interruptible customers and resulted in higher interruptible sales
in fiscal 1997. Because of higher rates, these sales also contributed
higher interruptible margins and offset some of the overall reduction in
operating margin in the nine and twelve months ended June 1997. A lower
level of off-system sales was also recorded in all periods ended June 1997.
Operations and Maintenance Expenses
Variations in many different costs have combined to result in lower
operations and maintenance expenses in all periods ended June 1997, as
compared to 1996. Lower costs were incurred for labor, reflecting the
savings from early retirements and reduced overtime costs as a result of the
warmer winter and fewer weather related expenses. Computer hardware rentals
and maintenance costs were lower, because of renegotiated contracts. Costs
related to workers compensation insurance were lower because of lower actual
and projected claims as a result of Company training and programs. Reduced
costs were also recorded for employee benefits and pension expenses, outside
purchased services and lower levels of bad debts, which are down because of
lower customer bills -- the result of less energy used because of the warmer
winter. Higher margins generated by service contract work also offset
increases in other expense categories. Expenses related to conservation
programs increased because of increased awareness of these programs and a
corresponding increase in applications and approvals for qualified
conservation projects.
<PAGE>
The twelve months ended June 1997 include the one-time costs related to a
voluntary early retirement program, recorded in September of 1996. This
created an increase in employee severence and pension costs for the twelve
months ended June 1997. All the other expense variables listed above for
the three and nine months ended periods impact the comparable twelve months
ended periods in the same way.
Income Taxes
The on-going turn around of flow-through book tax depreciation differences
on older plant and the absence of prior periods' cost of removal deductions
taken during fiscal 1996 have resulted in an overall higher effective income
tax rate in fiscal 1997. In fiscal 1997, this higher rate has offset the
benefits of lower taxable income that were recorded because of the warmer
winter weather.
Other Income (Deductions)
Overall, other income or deductions have not changed significantly between
1997 and 1996 for the quarter and twelve months ended June. There are
several offsetting factors that have produced this result. These include
higher income from merchandising operations, interest income from the
investment of available cash balances and the absence of the 1996 costs
associated with terminating the Company's regulated propane service program.
These benefits were offset by higher premiums related to certain life
insurance plans and higher promotional and advertising expenses.
These same factors impact the nine months ended June 1997, as compared to
1996. In fiscal 1996, however, the Company had recorded the benefits from
reduced insurance premiums that had resulted from the reconfiguration of
certain policies. It is the absence of these benefits in fiscal 1997 that
caused the change from other income to other deductions from 1996 to 1997.
Interest and Debt Expense
Interest expense is lower in all periods ending June 30, 1997, as compared
to 1996. This decline in interest expense reflects lower levels of long-
term debt outstanding, as a result of scheduled sinking fund payments, a
reduced need for short-term borrowings for working capital, because of the
warmer winter, and lower interest related to pipeline refunds and deferred
gas costs.
Earnings from Unregulated Operations
The unregulated operations contributed $.05, $.15 and $.28 to earnings per
share for the three, nine and twelve months ended June 1997. These compare
to $.07, $.21 and $.49 contributed to earnings per share for the three, nine
and twelve months ended June 1996.
Twelve months ended June 1997 and 1996 include $.05 and $.24 of earnings per
share, respectively, from certain special items. These were the sale of a
building and land in the twelve months ended June 1997 and the settlement
related to the termination agreement negotiated with a supplier of steam in
the twelve months ended June 1996. The twelve months ended June 1996
earnings also include a charge of $(.05) per share in connection with legal
matters related to the Company's interest in Iroquois.
<PAGE>
In April 1996 the Company increased its ownership interest in Iroquois from
2.4% to 4.87%. As a result, proportionately higher earnings from Iroquois
were recorded in the nine and twelve months ended June 1997, as compared to
1996. These have offset lower contributions to earnings from district
heating and cooling ("DHC") and other energy services. The lower earnings
have resulted from increases in operating expenses which have been absorbed
by the DHC and other energy services in order to maintain competitive
pricing, lower DHC sales for winter heating because of the warmer weather,
lower DHC sales for spring cooling because of cooler spring weather, and the
absence of rental income from the building that was sold in fiscal 1996.
MATERIAL CHANGES IN FINANCIAL CONDITION
Cash Flows
Over the three months and nine months ended June 1997, the cash received
from day to day operations paid for the expenses related to those operations
and for the Company's construction program, dividends and principal payments
that were due on long-term debt. In the twelve months ended June 1997, the
expenses of operations, construction costs, dividends and long-term debt
principal payments that were due were paid from cash on hand at year-end
1996 together with cash received from operations. Cash received from
operations in the twelve months ended June 1997 includes the proceeds from
the unregulated operations' sale of a building and land.
Cash flows from operations are lower in the nine and twelve months ended
June 1997, as compared to 1996, primarily due to lower revenues because the
Company's customers used less energy for heat during this year's warmer
winter. They are higher in the quarter ending June 1997, as compared to
1996, because of the timing of customer receipts and the Company's payments
of invoices.
Throughout all of the periods ended June 1996 the proceeds from the June
1996 common stock issue combined with cash from operations to pay for day to
day operating costs, construction costs and dividends and to repay short-
term borrowings and long-term debt principal payments. Cash received from
operations in the twelve months ended June 1996 includes the unregulated
operations' receipt of the settlement amount from the termination of a steam
supply contract.
Investing Activities
In June 1997 the Company and Koch Gas Services Company acquired the
partnership interest of Bay State Energy Enterprises in the KBC Energy
Services ("KBC") joint venture. As a result of this transaction the
Company's interest in KBC has increased from one third to one half. At June
30, 1997 the Company's investment in KBC was approximately $355.
Regulatory Matters
Local gas distribution companies ("LDCs") pass on to firm customers any
increases or decreases in gas costs from those reflected in tariff charges
under Purchased Gas Adjustment ("PGA") provisions. During fiscal 1996, the
Connecticut Department of Public Utility Control ("DPUC") initiated a review
of the need to continue PGA accounting for all Connecticut LDCs. In April
1997 the DPUC issued a decision affirming the need to continue the PGA.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
(a) Exhibits
99(i) Exhibit Index
10(cviii) Connecticut Natural Gas Corporation Employee Savings Plan
Trust Agreement, including amendments thereto, filed as
exhibit 4(ii) to the Connecticut Natural Gas Corporation
Employee Savings Plan Registration Statement on Form S-8,
filed with the Commission on July 20, 1994 (Commission File
No. 33-54643)
10(cix) Connecticut Natural Gas Corporation Union Employee Savings
Plan Trust Agreement, including amendments thereto, filed
as exhibit 4(ii) to the Connecticut Natural Gas Corporation
Union Employee Savings Plan Registration Statement on Form
S-8, filed with the Commission on July 20, 1994 (Commission
File No. 33-54653)
10(cx) First Amendment to Connecticut Natural Gas Corporation
Employee Savings Plan Trust Agreement, dated March 25, 1997
10(cxi) First Amendment to Connecticut Natural Gas Corporation
Union Employee Savings Plan Trust Agreement, dated March
25, 1997
10(cxii) Amendment to Connecticut Natural Gas Corporation Officers'
Retirement Plan, dated March 25, 1997
10(cxiii) Fourth Amendment to Connecticut Natural Gas Corporation
Deferred Compensation Plan, dated March 25, 1997
10(cxiv) First Amendment to Connecticut Natural Gas Corporation
Executive Restricted Stock Plan, dated March 25, 1997
10(cxv) Third Amendment to CNG Nonemployee Directors' Fee Plan
Trust Agreement, dated March 25, 1997
10(cxvi) Fourth Amendment to The Connecticut Natural Gas Corporation
Officers Retirement Plan and Deferred Compensation Plan
Trust Agreement, dated March 25, 1997
10(cxvii) Second Amendment to Agreement and Declaration of Trust,
Connecticut Natural Gas Corporation Employee Benefit Trust,
dated March 25, 1997
10(cxviii) Sixth Amendment to Connecticut Natural Gas Corporation
Employee Savings Plan (As Amended and Restated, Effective
as of January 1, 1989), dated May 2, 1997
10(cxix) Seventh Amendment to Connecticut Natural Gas Corporation
Union Employee Savings Plan (As Amended and Restated,
Effective as of January 1, 1989), dated May 2, 1997
10(cxx) First Amendment to CNG Nonemployee Directors' Fee Plan,
dated May 2, 1997
27 Financial Data Schedule<PAGE>
Item 6. Exhibits and Reports on Form 8-K (concluded)
----------------------------------------------------
(b) A report on Form 8-K was filed on April 1, 1997 by the Connecticut
Natural Gas Corporation ("CNG"), Commission File NO. 1-7727, CIK
0000023432, to disclose the Company's reorganization into a holding
company structure and the resulting change in control of CNG, making
CNG a wholly owned subsidiary of a new holding company, CTG Resources,
Inc. The Agreement and Plan of exchange which effected the
reorganization and a press release issued by CNG announcing the
reorganization were also filed as exhibits to this Form 8-K.
<PAGE>
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.
CTG RESOURCES, INC.
Date 08/13/97 By: S/ Andrew H. Johnson
-------------------- -----------------------------------
(Andrew H. Johnson)
Treasurer and Chief Accounting Officer
(On behalf of the registrant and as
Chief Accounting Officer)
<PAGE>
Exhibit 99(i)
Page 1 of 1
CTG RESOURCES, INC.
Quarterly Report on Form 10-Q
Exhibit Index
Quarter Ended June 30, 1997
Document
Item Description Description
------------ ----------- ------------
99(i) Exhibit Index Ex-99.1
10(cx) First Amendment to Connecticut Ex-10.110
Natural Gas Corporation Employee
Savings Plan Trust Agreement
10(cxi) First Amendment to Connecticut Ex-10.111
Natural Gas Corporation Union
Employee Savings Plan Trust
Agreement
10(cxii) Amendment to Connecticut Natural Ex-10.112
Gas Corporation Officers'
Retirement Plan
10(cxiii) Fourth Amendment to Connecticut Ex-10.113
Natural Gas Corporation Deferred
Compensation Plan
10(cxiv) First Amendment to Connecticut Ex-10.114
Natural Gas Corporation Executive
Restricted Stock Plan
10(cxv) Third Amendment to CNG Nonemployee Ex-10.115
Directors' Fee Plan Trust Agreement
10(cxvi) Fourth Amendment to The Connecticut Ex-10.116
Natural Gas Corporation Officers
Retirement Plan and Deferred
Compensation Plan Trust Agreement
10(cxvii) Second Amendment to Agreement and Ex-10.117
Declaration of Trust, Connecticut
Natural Gas Corporation Employee
Benefit Trust
10(cxviii) Sixth Amendment to Connecticut Ex-10.118
Natural Gas Corporation Employee
Savings Plan
10(cxix) Seventh Amendment to Connecticut Ex-10.119
Natural Gas Corporation Union
Employee Savings Plan
10(cxx) First Amendment to CNG Nonemployee Ex-10.120
Directors' Fee Plan
27 Financial Data Schedule Ex-27
<PAGE>
FIRST AMENDMENT TO
CONNECTICUT NATURAL GAS CORPORATION
EMPLOYEE SAVINGS PLAN TRUST AGREEMENT
This Amendment is made this 25th day of March, 1997 by and
between Connecticut Natural Gas Corporation, a corporation
organized under the laws of the State of Connecticut, having its
principal office in Hartford, Connecticut (the "Company") and
Putnam Fiduciary Trust Company, a Massachusetts trust company,
having its principal office in Boston, Massachusetts (the
"Trustee");
W I T N E S S E T H :
WHEREAS, by Trust Agreement made as of January 1, 1993, the
Company and the Trustee adopted the Connecticut Natural Gas
Corporation Employee Savings Plan Trust Agreement (the "Trust
Agreement"); and
WHEREAS, the parties wish to amend the Trust Agreement in
the particulars set forth below; and
WHEREAS, the Company reserved the right to amend the Trust
Agreement in Section 18 thereof;
NOW, THEREFORE, the Company and the Trustee hereby agree as
follows:
1. In accordance with a certain Agreement and Plan of
Exchange, the outstanding shares of Company stock will be
exchanged for shares of the common stock of CTG Resources, Inc.
As of the effective date of such Agreement and Plan of Exchange,<PAGE>
each share of Company stock will be exchanged for one share of
common stock of CTG Resources, Inc. Effective as of said date,
any reference to "Company stock" in the Trust Agreement shall be
deemed to refer to stock of CTG Resources, Inc.
2. Except as hereinabove modified and amended, the Trust
Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the Company and Trustee hereby execute
this Amendment as of the day and year first above written.
WITNESS: CONNECTICUT NATURAL GAS CORPORATION
S/ R. L. Babcock S/ James P. Bolduc
__________________________ By_________________________________
Its
WITNESS: PUTNAM FIDUCIARY TRUST COMPANY
S/ Mary MacDonald S/ Genna R. Spear VP
___________________________ By________________________________
Its
2<PAGE>
FIRST AMENDMENT TO
CONNECTICUT NATURAL GAS CORPORATION
UNION EMPLOYEE SAVINGS PLAN TRUST AGREEMENT
This Amendment is made this 25th day of March, 1997 by and
between Connecticut Natural Gas Corporation, a corporation
organized under the laws of the State of Connecticut, having its
principal office in Hartford, Connecticut (the "Company") and
Putnam Fiduciary Trust Company, a Massachusetts trust company,
having its principal office in Boston, Massachusetts (the
"Trustee");
W I T N E S S E T H :
WHEREAS, by Trust Agreement made as of January 1, 1993, the
Company and the Trustee adopted the Connecticut Natural Gas
Corporation Union Employee Savings Plan Trust Agreement (the
"Trust Agreement"); and
WHEREAS, the parties wish to amend the Trust Agreement in
the particulars set forth below; and
WHEREAS, the Company reserved the right to amend the Trust
Agreement in Section 18 thereof;
NOW, THEREFORE, the Company and the Trustee hereby agree as
follows:
1. In accordance with a certain Agreement and Plan of
Exchange, the outstanding shares of Company stock will be
exchanged for shares of the common stock of CTG Resources, Inc.
As of the effective date of such Agreement and Plan of Exchange,<PAGE>
each share of Company stock will be exchanged for one share of
common stock of CTG Resources, Inc. Effective as of said date,
any reference to "Company stock" in the Trust Agreement shall be
deemed to refer to stock of CTG Resources, Inc.
2. Except as hereinabove modified and amended, the Trust
Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the Company and Trustee hereby execute
this Amendment as of the day and year first above written.
WITNESS: CONNECTICUT NATURAL GAS CORPORATION
S/ R. L. Babcock S/ James P. Bolduc
__________________________ By_________________________________
Its
WITNESS: PUTNAM FIDUCIARY TRUST COMPANY
S/ Mary MacDonald S/ Genna R. Spear VP
___________________________ By________________________________
Its
2<PAGE>
AMENDMENT TO
CONNECTICUT NATURAL GAS CORPORATION
OFFICERS' RETIREMENT PLAN
THIS AMENDMENT made this 25th day of March, 1997 by
CONNECTICUT NATURAL GAS CORPORATION (the "Company") for the
purpose of amending its Officers' Retirement Plan,
W I T N E S S E T H:
WHEREAS, the Company has adopted and maintains the Officers'
Retirement Plan (the "Plan"); and
WHEREAS, the Company reserved the right to amend the Plan in
Section 11 thereof; and
WHEREAS, the Company now wishes to amend the Plan in the
following respects:
NOW, THEREFORE, the Company amends the Plan as follows:
1. Section 15, relating to "Change of Control," as added
by Plan Amendment dated June 27, 1995, is amended by the addition
of the words "or any related corporation" after the words "of the
Company" set forth in the parenthetical phrase in subsection
(iii)(2) thereof; and by the addition of the following two
sentences at the end thereof:
"As used in this Section 15, the term 'Company' shall
mean CTG Resources, Inc. It is intended that following
the Agreement and Plan of Exchange referenced in part 2
of this Amendment, 'Change of Control' shall be
determined with reference to CTG Resources, Inc."
2. This amendment shall be effective following the
effective date of the Agreement and Plan of Exchange, pursuant to
which the outstanding shares of CNG common stock will be
exchanged for shares of common stock of CTG Resources, Inc. <PAGE>
Nevertheless, Connecticut Natural Gas Corporation shall continue
to be the Company sponsoring and maintaining the Plan.
3. Except as hereinabove modified and amended, the
Officers' Retirement Plan, as amended, shall remain in full force
and effect.
IN WITNESS WHEREOF, the Company hereby executed this
Amendment on the date first written above.
CONNECTICUT NATURAL GAS CORPORATION
S/ James P. Bolduc
By: ______________________________
Its
-2-<PAGE>
FOURTH AMENDMENT TO
CONNECTICUT NATURAL GAS CORPORATION
DEFERRED COMPENSATION PLAN
THIS AMENDMENT made this 25th day of March, 1997 by
CONNECTICUT NATURAL GAS CORPORATION (the "Company") for the pur-
pose of amending its Deferred Compensation Plan,
W I T N E S S E T H :
WHEREAS, by Agreement dated December 29, 1992, the Company
adopted an Amended and Restated Deferred Compensation Plan (the
"Plan"); and
WHEREAS, the Plan has previously been amended three times;
and
WHEREAS, the Company now wishes to amend the Plan in certain
additional respects;
NOW, THEREFORE, the Company amends the Plan as follows:
1. Section 2.3A relating to "Change of Control," as set
forth in the Third Amendment, is amended by the addition of the
words "or any related corporation" after the words "of the Com-
pany" set forth in the parenthetical phrase in subsection
(iii)(2) thereof; and by the addition of the following two
sentences at the end thereof:
"As used in this Section 2.3A, the term 'Company' shall
mean CTG Resources, Inc. It is intended that, follow-
ing the Agreement and Plan of Exchange referenced in
part 5 of this Fourth Amendment, 'Change of Control'
shall be determined with reference to CTG Resources,
Inc."
2. Sections 4.4(c) (as set forth in the First Amendment),
5.2 and 5.3 (as amended by the Third Amendment) shall be amended<PAGE>
by the deletion of the terms "Company stock" and "CNG common
stock" and substitution of the term "CTG common stock" in lieu
thereof.
3. Section 5.4 shall be amended by the deletion of the
term "Connecticut Natural Gas Corporation Dividend Reinvestment
Plan" and the substitution of the term "CTG Resources, Inc.
Dividend Reinvestment Plan" in lieu thereof.
4. Section 5.5 (as added by the Third Amendment) shall be
amended by the deletion of the term "Stock of the Company" and
substitution of the term "Stock of CTG Resources, Inc." in lieu
thereof.
5. This amendment shall be effective upon (or, in the case
of part 1 of this Amendment, following) the effective date of the
Agreement and Plan of Exchange, pursuant to which the outstanding
shares of CNG common stock will be exchanged for shares of the
common stock of CTG Resources, Inc. ("CTG Common Stock").
Nevertheless, Connecticut Natural Gas Corporation shall continue
to be the Company sponsoring and maintaining the Plan.
6. Except as hereinabove modified and amended, the
Deferred Compensation Plan, as amended, shall remain in full
force and effect.
IN WITNESS WHEREOF, the Company hereby executes this Fourth
Amendment this 30th day of April, 1997.
Witness: CONNECTICUT NATURAL GAS CORPORATION
S/ R. L. Babcock S/ James P. Bolduc
___________________________ By ________________________________
Its
-2-<PAGE>
FIRST AMENDMENT TO
CONNECTICUT NATURAL GAS CORPORATION
EXECUTIVE RESTRICTED STOCK PLAN
THIS AMENDMENT made this 25th day of March, 1997, by the
Connecticut Natural Gas Corporation for the purpose of amending
its Executive Restricted Stock Plan,
W I T N E S S E T H :
WHEREAS, Connecticut Natural Gas Corporation (the
"Corporation") adopted an Executive Restricted Stock Plan (the
"Plan") effective October 1, 1990; and
WHEREAS, the Corporation reserved the right to amend the
Plan by action of its Board; and
WHEREAS, pursuant to an Agreement and Plan of Exchange, it
is anticipated that the outstanding shares of CNG Common Stock
will be exchanged for shares of the common stock of CTG
Resources, Inc.; and
WHEREAS, such shares will thereafter be considered to be
"Shares" pursuant to this Plan;
NOW, THEREFORE, the Corporation hereby amends the Plan as
follows:
1. Paragraph (j) of Section 2 is amended to read as
follows:
"(j) 'Shares' means shares of common stock of CTG
Resources, Inc."
2. The first sentence of Paragraph (d) of Section 10 is
amended by the insertion of the words "or cause to be issued"
after the word "issue" wherever the same shall appear therein.<PAGE>
3. This amendment shall be effective upon the effective
date of an Agreement and Plan of Exchange pursuant to which
shares of CNG Common Stock are exchanged for shares of CTG
Resources, Inc. Common Stock.
IN WITNESS WHEREOF, the Corporation hereby executes this
amendment on the day and year above written.
ATTEST: CONNECTICUT NATURAL GAS CORPORATION
S/ R. L. Babcock S/ James P. Bolduc
______________________ By__________________________________
Its
-2-<PAGE>
THIRD AMENDMENT
TO
CNG NONEMPLOYEE DIRECTORS' FEE PLAN TRUST AGREEMENT
This Agreement made this 25th day of March, 1997 by and
between Connecticut Natural Gas Corporation of Hartford,
Connecticut ("CNG") and Putnam Fiduciary Trust Company, a
Massachusetts trust company having its principal office in
Boston, Massachusetts ("Trustee");
W I T N E S S E T H :
WHEREAS, by Agreement dated September 28, 1995, CNG and
Fleet Bank, N.A. entered into the CNG Nonemployee Directors' Fee
Plan Trust Agreement (the "Agreement"); and
WHEREAS, Fleet Bank, N.A. has been removed as Trustee and
Putnam Fiduciary Trust Company has been appointed successor
Trustee and has accepted said position of trust; and
WHEREAS, CNG and the Trustee wish to amend the Agreement in
the particulars set forth below; and
WHEREAS, the right to amend the Agreement has been reserved
in Paragraph 10.1 thereof; and
WHEREAS, the Agreement was previously amended by a First and
Second Amendment thereto;
NOW, THEREFORE, CNG and the Trustee hereby agreed to amend
the Agreement as follows:
1. Subparagraph (j) of Paragraph 5.2, as added by the
Second Amendment, is hereby amended by the deletion of the first
sentence thereof and the substitution of the following sentence
in lieu thereof:<PAGE>
"The Trustee may invest in securities (including stock
or rights to acquire stock) or obligations issued by
CTG Resources, Inc., including CTG Resources, Inc.
common stock, as directed by CNG."
2. Section 11.1, defining the term "Change of Control, is
amended by the deletion of "CNG" wherever the same shall appear
therein and the substitution of "CTG Resources, Inc." in lieu
thereof; and by the addition of the words "or any related
corporation" immediately preceding the words "or such corpora-
tion" set forth in the parenthetical phrase in subsection
(iii)(2) thereof.
3. This amendment shall be effective upon or, in the case
of part 2 hereof, following the effective date of the Agreement
and Plan of Exchange, pursuant to which the outstanding shares of
CNG common stock will be exchanged for shares of common stock of
CTG Resources, Inc.
4. Except as hereinabove modified and amended, the
Agreement, as amended, shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed this 30th day of April, 1997.
ATTEST: CONNECTICUT NATURAL GAS CORPORATION
S/ R. L. Babcock S/ James P. Bolduc
___________________________ By_________________________________
Its
ATTEST: PUTNAM FIDUCIARY TRUST COMPANY
S/ Mary MacDonald S/ Genna R. Spear VP
___________________________ By_________________________________
Its
2<PAGE>
STATE OF CONNECTICUT )
: ss. 1997
COUNTY OF )
Personally appeared ____________________________________,
______________________ of Connecticut Natural Gas Corporation as
aforesaid, signer of the foregoing instrument, and acknowledged
the same to be ______ free act and deed as such
_______________________ and the free act and deed of said
corporation, before me.
Commissioner of the Superior Court
Notary Public
My Commission Expires:
________ OF ____________ )
: ss. 1997
COUNTY OF )
Personally appeared ____________________________________,
______________________ of Putnam Fiduciary Trust Company, as
aforesaid, signer of the foregoing instrument, and acknowledged
the same to be ______ free act and deed as such
_______________________ and the free act and deed of said
corporation, before me.
Notary Public
My Commission Expires:
3<PAGE>
FOURTH AMENDMENT TO
THE CONNECTICUT NATURAL GAS CORPORATION
OFFICERS RETIREMENT PLAN AND
DEFERRED COMPENSATION PLAN TRUST AGREEMENT
THIS AMENDMENT is made and entered into this 25th day of
March, 1997, by and between CONNECTICUT NATURAL GAS CORPORATION,
a Connecticut corporation with its principal office in Hartford,
Connecticut (hereinafter referred to as the "Company") and FLEET
NATIONAL BANK, a bank with trust powers having a principal place
of business in Hartford, Connecticut (hereinafter referred to as
the "Trustee"),
W I T N E S S E T H:
WHEREAS, by Agreement dated January 9, 1989 (the "Agree-
ment"), the Company and The Connecticut Bank and Trust Company,
N.A. entered into an Agreement entitled The Connecticut Natural
Gas Corporation Officers Retirement Plan Trust Agreement; and
WHEREAS, Fleet National Bank has succeeded to the trust
business of The Connecticut Bank and Trust Company, N.A., and is
currently serving as Trustee; and
WHEREAS, the parties entered into a First Amendment to the
Agreement dated August 5, 1993 which, among other things, renamed
the Agreement; and
WHEREAS, the parties entered into a Second Amendment to the
Agreement dated February 17, 1995; and
WHEREAS, the parties entered into a Third Amendment to the
Agreement dated September 12, 1995; and<PAGE>
WHEREAS, the parties reserved the right to amend the
Agreement in Article X, Section 10.1 thereof, subject to the
conditions set forth therein; and
WHEREAS, the Company wishes to amend the Agreement in the
particulars set forth below;
NOW, THEREFORE, the Company and the Trustee agree as
follows:
1. Section 13.1, relating to "Change of Control," as added
by the Third Amendment, is amended by the addition of the words
"or any related corporation" after the words "of the Company" set
forth in the parenthetical phrase in subsection (iii)(2) thereof;
and by the addition of the following two sentences at the end
thereof:
"As used in this Section 13.1, the term 'Company' shall
mean CTG Resources, Inc. It is intended that following
the Agreement and Plan of Exchange referenced in part 2
of this Amendment, 'Change of Control' shall be
determined with reference to CTG Resources, Inc."
2. This amendment shall be effective following the
effective date of the Agreement and Plan of Exchange, pursuant to
which the outstanding shares of CNG common stock will be
exchanged for shares of common stock of CTG Resources, Inc.
Nevertheless, Connecticut Natural Gas Corporation shall continue
to be the Company sponsoring and maintaining the Plan.
3. Except as hereinabove modified and amended, the
Agreement, as amended, shall remain in full force and effect.
2<PAGE>
IN WITNESS WHEREOF, the parties have caused this Fourth
Amendment to be duly executed and the respective corporate seals
to be hereunto affixed as of the date first above written.
ATTEST: CONNECTICUT NATURAL GAS CORPORATION
S/ R. L. Babcock S/ James P. Bolduc
____________________________ By_______________________________
Its
ATTEST: FLEET NATIONAL BANK
S/ James A. Weir, AVP S/ William B. Parent
____________________________ By______________________________
Its Vice President
STATE OF CONNECTICUT )
) ss. April 30, 1997
COUNTY OF HARTFORD )
Personally appeared James P. Bolduc,
-----------------------------------
Executive V.P. of Connecticut Natural Gas Corporation,
---------------------
signer of the foregoing instrument, and acknowledged the same to
be his free act and deed as such Executive V.P. , and the
-----------------------
free act and deed of said corporation, before me.
S/ R. L. Babcock
________________________________
Commissioner of the Superior Court
3<PAGE>
STATE OF CONNECTICUT )
) ss. May 29, 1997
COUNTY OF HARTFORD )
Personally appeared William B. Parent ,
------------------------------------
Vice President of Fleet National Bank, signer of the
---------------------------
foregoing instrument, and acknowledged the same to be his free
act and deed as such Vice President , and the free act and
----------------------
deed of said corporation, before me.
S/ Frances A. Maslona
________________________________
Commissioner of the Superior Court
Notary Public
My Commission Expires:
Frances A. Maslona
Notary Public
My Commission Expires Apr. 30, 1999
4<PAGE>
SECOND AMENDMENT TO
AGREEMENT AND DECLARATION OF TRUST
CONNECTICUT NATURAL GAS CORPORATION
EMPLOYEE BENEFIT TRUST
THIS AMENDMENT is made and entered into this 25th day of
March, 1997 by and between CONNECTICUT NATURAL GAS CORPORATION, a
Connecticut corporation with its principal office in Hartford,
Connecticut (hereinafter referred to as the "Grantor") and FLEET
NATIONAL BANK, a bank with trust powers having a principal place
of business in Hartford, Connecticut (hereinafter referred to as
the "Trustee"),
W I T N E S S E T H :
WHEREAS, by Agreement dated December 28, 1987 (the
"Agreement"), the Grantor and the Trustee entered into a certain
Agreement and Declaration of Trust known as the Connecticut
Natural Gas Corporation Employee Benefit Trust; and
WHEREAS, the parties reserved the right to amend the
Agreement in Section 8.7 thereof; and
WHEREAS, the Grantor wishes to amend the Agreement in the
particulars set forth below; and
WHEREAS, the Agreement was previously amended by a First
Amendment thereto;
NOW, THEREFORE, the Grantor and the Trustee agree as
follows:
1. Section 7.2 is hereby deleted.
2. Except as hereinabove modified and amended, the
Agreement shall remain in full force and effect.<PAGE>
IN WITNESS WHEREOF, the Grantor and the Trustee have caused
their corporate hands and seals to be hereunto affixed as of the
date first above written.
ATTEST: CONNECTICUT NATURAL GAS CORPORATION
S/ R. L. Babcock S/ James P. Bolduc
____________________________ By_______________________________
Its
ATTEST: FLEET NATIONAL BANK
S/ James A. Weir S/ William B. Parent
____________________________ By______________________________
Its Vice President
STATE OF CONNECTICUT )
: ss. April 30, 1997
COUNTY OF HARTFORD )
Personally appeared James P. Bolduc ,
----------------------------------
Executive V.P. of Connecticut Natural Gas Corporation as
----------------------
aforesaid, signer of the foregoing instrument, and acknowledged
the same to be his free act and deed as such
----
Executive V.P. and the free act and deed of said
------------------------------
corporation, before me.
__________________________________
Commissioner of the Superior Court
Notary Public
My Commission Expires:
2<PAGE>
STATE OF CONNECTICUT )
: ss. May 29, 1997
COUNTY OF HARTFORD )
Personally appeared William B. Parent ,
-------------------------------------
Vice President of Fleet National Bank, as aforesaid,
-------------------------
signer of the foregoing instrument, and acknowledged the same to
be his free act and deed as such Vice President and
--- -------------------------
the free act and deed of said corporation, before me.
S/ Frances A. Maslona
_________________________________
Commissioner of the Superior Court
Notary Public
My Commission Expires:
Frances A. Maslona
Notary Public
My Commission Expires Apr. 30, 1999
3<PAGE>
SIXTH AMENDMENT TO
CONNECTICUT NATURAL GAS CORPORATION EMPLOYEE SAVINGS PLAN
(AS AMENDED AND RESTATED
EFFECTIVE AS OF JANUARY 1, 1989)
The Connecticut Natural Gas Corporation Employee Savings
Plan is hereby amended as follows:
1. Pursuant to an Agreement and Plan of Exchange,
outstanding shares of CNG Common Stock will be exchanged for
shares of the common stock of CTG Resources, Inc. Each share of
CNG Common Stock will be exchanged for one share of common stock
of CTG Resources, Inc. ("CTG"). As of the effective date of such
Agreement and Plan of Exchange, any reference in the Plan docu-
ment to "CNG Common Stock" as an investment option under the Plan
(including voting rights relating thereto), and as a distribution
option, shall be deleted and replaced by reference to "CTG Common
Stock." This change from CNG to CTG shall relate solely to the
investment of such stock under the Plan; CNG shall continue to be
the Company sponsoring and maintaining the Plan.
2. The last sentence of Section 2.05A, as added by the
Second Amendment, relating to "Change of Control," is amended by
the addition of the words "or any related corporation" after the
words "of the Corporation" set forth in the parenthetical phrase
in subsection (iii)(2) thereof; and by the deletion of the last
sentence thereof and the substitution of the following sentence
in lieu thereof:
"Following the effective date of an Agreement and Plan
of Exchange, pursuant to which outstanding shares of
CNG Common Stock will be exchanged for shares of the
common stock of CTG Resources, Inc., the term<PAGE>
'Corporation,' as used in this Section 2.05A, shall
mean CTG Resources, Inc., or any successor thereto."
3. Except as hereinabove modified and amended, the Amended
and Restated Plan (as amended) shall remain in full force and
effect.
IN WITNESS WHEREOF, the Company hereby executes this Sixth
Amendment this 2nd day of May, 1997.
WITNESS: CONNECTICUT NATURAL GAS CORPORATION
S/ R. L. Babcock S/ James P. Bolduc
_________________________ By:_______________________________
Its
2<PAGE>
SEVENTH AMENDMENT TO
CONNECTICUT NATURAL GAS CORPORATION UNION EMPLOYEE SAVINGS PLAN
(AS AMENDED AND RESTATED
EFFECTIVE AS OF JANUARY 1, 1989)
The Connecticut Natural Gas Corporation Union Employee
Savings Plan is hereby amended as follows:
1. Pursuant to an Agreement and Plan of Exchange, out-
standing shares of CNG Common Stock will be exchanged for shares
of the common stock of CTG Resources, Inc. Each share of CNG
Common Stock will be exchanged for one share of common stock of
CTG Resources, Inc. ("CTG"). As of the effective date of such
Agreement and Plan of Exchange, any reference in the Plan docu-
ment to "CNG Common Stock" as an investment option under the Plan
(including voting rights relating thereto), and as a distribution
option, shall be deleted and replaced by reference to "CTG Common
Stock." This change from CNG to CTG shall relate solely to the
investment of such stock under the Plan; CNG shall continue to be
the Company sponsoring and maintaining the Plan.
2. The last sentence of Section 2.05A, as added by the
Third Amendment, relating to "Change of Control," is amended by
the addition of the words "or any related corporation" after the
words "of the Corporation" set forth in the parenthetical phrase
in subsection (iii)(2) thereof; and by the deletion of the last
sentence thereof and the substitution of the following sentence
in lieu thereof:
"Following the effective date of an Agreement and Plan
of Exchange, pursuant to which outstanding shares of
CNG Common Stock will be exchanged for shares of the<PAGE>
common stock of CTG Resources, Inc., the term
'Corporation,' as used in this Section 2.05A, shall
mean CTG Resources, Inc., or any successor thereto."
3. Except as hereinabove modified and amended, the Amended
and Restated Plan (as amended) shall remain in full force and
effect.
IN WITNESS WHEREOF, the Company hereby executes this Seventh
Amendment this 2nd day of May, 1997.
WITNESS: CONNECTICUT NATURAL GAS CORPORATION
S/ R. L. Babcock James P. Bolduc
_________________________ By:_______________________________
Its
2<PAGE>
FIRST AMENDMENT TO
CNG NONEMPLOYEE DIRECTORS' FEE PLAN
The CNG Nonemployee Directors' Fee Plan, as amended and
restated effective October 1, 1996, is hereby amended as follows:
1. Subparagraph (d) of paragraph 3, subparagraph (c) of
paragraph 4, and subparagraph (g) of paragraph 5 are amended by
the deletion of the term "CNG Common Stock" and substitution of
the term "CTG Resources, Inc. Common Stock" in lieu thereof.
This change shall be effective upon the effective date of the
Agreement and Plan of Exchange pursuant to which the outstanding
shares of CNG common stock will be exchanged for shares of the
common stock of CTG Resources, Inc. Nevertheless, Connecticut
Natural Gas Corporation shall continue to be the Company
sponsoring and maintaining the Plan.
2. The second sentence of subparagraph (a) of paragraph 3
is amended to read as follows:
"Such election may be revoked by the Director giving
written notice to the Secretary as to retainer and
meeting fees earned subsequent to such revocation; and
if a subsequent election is made hereunder, that
election may be revoked in the same fashion."
3. The following two sentences are added to subparagraph
(a) of paragraph 4, between the first and second sentences
thereof:
"If the initial election (or any subsequent election
made hereunder) is revoked, and if the Director wishes
to defer future retainer and meeting fees, the
Director, by written notice to the Secretary, shall
make an election specifying the terms and conditions of
the payment of such future fees. There shall be
separate accounting maintained for fees subject to
separate elections hereunder."<PAGE>
4. The purpose of the modifications in 2 and 3 above are
to clarify the operation of the Plan relating to subsequent
elections as to retainer and meeting fees.
5. Except as hereinabove modified and amended, the
Directors' Fee Plan shall remain in full force and effect.
IN WITNESS WHEREOF, Connecticut Natural Gas Corporation
hereby executes this First Amendment this 2nd day of May, 1997.
Witness: CONNECTICUT NATURAL GAS CORPORATION
S/ R. L. Babcock S/ James P. Bolduc
_________________________ By_________________________________
Its
2<PAGE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1996
<PERIOD-END> JUN-30-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 283,080
<OTHER-PROPERTY-AND-INVEST> 53,426
<TOTAL-CURRENT-ASSETS> 69,469
<TOTAL-DEFERRED-CHARGES> 62,451
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 468,426
<COMMON> 118,981
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 56,969
<TOTAL-COMMON-STOCKHOLDERS-EQ> 175,950
0
884
<LONG-TERM-DEBT-NET> 135,447
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 13,759
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 142,386
<TOT-CAPITALIZATION-AND-LIAB> 468,426
<GROSS-OPERATING-REVENUE> 267,184
<INCOME-TAX-EXPENSE> 20,421
<OTHER-OPERATING-EXPENSES> 217,950
<TOTAL-OPERATING-EXPENSES> 238,371
<OPERATING-INCOME-LOSS> 28,813
<OTHER-INCOME-NET> 947
<INCOME-BEFORE-INTEREST-EXPEN> 29,760
<TOTAL-INTEREST-EXPENSE> 9,697
<NET-INCOME> 20,063
46
<EARNINGS-AVAILABLE-FOR-COMM> 20,017
<COMMON-STOCK-DIVIDENDS> 12,074
<TOTAL-INTEREST-ON-BONDS> 2,243
<CASH-FLOW-OPERATIONS> 36,081
<EPS-PRIMARY> 1.88
<EPS-DILUTED> 1.88
<PAGE>
</TABLE>
