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 December 31, 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
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CTG RESOURCES, INC.
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(Exact name of registrant as specified in its charter)
Connecticut 06-1466463
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Columbus Boulevard, Hartford, Connecticut 06103
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(Address of principal executive offices) (Zip Code)
(860) 727-3010
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(Registrant's telephone number, including area code)
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(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 January 30, 1998: 8,652,159.
<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 Company's annual report on Form 10-K (Commission File No. 1-
12859). In the opinion of the Company, all adjustments necessary to present
fairly the consolidated financial position of CTG Resources, Inc. as of
December 31, 1997 and 1996 and the results of its operations and its cash
flows for the three months and twelve months ended December 31, 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)
December 31, Sept. 30, December 31,
<S> <C> <C> <C>
ASSETS 1997 1997 1996
------ --------- --------- ---------
Plant and Equipment:
Regulated energy $ 426,915 $ 423,087 $ 407,837
Unregulated energy 60,615 61,163 60,726
Construction work in progress 8,075 7,703 4,276
--------- --------- ---------
495,605 491,953 472,839
Less-Allowance for depreciation 165,555 160,313 148,194
--------- --------- ---------
330,050 331,640 324,645
--------- --------- ---------
Investments, at equity 11,118 11,530 10,673
--------- --------- ---------
Current Assets:
Cash and cash equivalents 3,527 4,458 1,436
Accounts and notes receivable 45,341 28,726 41,596
Allowance for doubtful accounts (3,551) (3,439) (5,025)
Accrued utility revenue 20,313 4,624 16,375
Inventories 14,414 17,584 13,992
Prepaid expenses 5,213 8,903 3,708
--------- --------- ---------
85,257 60,856 72,082
--------- --------- ---------
Deferred Charges and Other Assets:
Unrecovered future taxes 37,177 37,177 44,812
Recoverable transition costs 464 839 2,128
Other assets 22,698 22,245 20,263
--------- --------- ---------
60,338 60,261 67,203
--------- --------- ---------
$ 486,763 $ 464,287 $ 474,603
========= ========= =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS (Concluded)
(Thousands of Dollars)
December 31, Sept. 30, December 31,
<S> <C> <C> <C>
CAPITALIZATION AND LIABILITIES 1997 1997 1996
------------------------------ --------- --------- ---------
Capitalization:
Common Stock $ 67,569 $ 120,409 $ 120,635
Retained Earnings 55,868 49,924 51,735
--------- --------- ---------
123,437 170,333 172,370
Unearned compensation -
Restricted stock awards (932) (1,034) (1,342)
--------- --------- ---------
Common stock equity 122,505 169,299 171,028
Preferred stock, not subject to
mandatory redemption 883 884 899
Long-term debt 187,374 126,787 135,474
--------- --------- ---------
310,762 296,970 307,401
--------- --------- ---------
Current Liabilities:
Current portion of long-term debt 4,085 1,487 14,069
Notes Payable 30,500 27,500 9,000
Accounts payable and accrued expenses 32,369 36,968 41,221
Refundable purchased gas costs 5,577 4,714 3,315
Accrued liabilities 8,211 4,531 3,539
--------- --------- ---------
80,742 75,200 71,144
--------- --------- ---------
Deferred Credits:
Deferred income taxes 45,642 44,302 40,347
Unfunded deferred income taxes 37,177 37,177 44,812
Investment tax credits 2,927 2,982 3,148
Refundable taxes 3,491 3,491 3,445
Other 6,022 4,165 4,306
--------- --------- ---------
95,259 92,117 96,058
--------- --------- ---------
$ 486,763 $ 464,287 $ 474,603
========= ========= =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Thousands of dollars except for per share data)
Three Months Ended
December 31,
-----------------------------
<S> <C> <C>
1997 1996
---------- ----------
Operating Revenues $ 92,396 $ 89,269
Less: Cost of Energy 51,292 50,107
State Gross Receipts Tax 3,369 3,470
---------- ----------
Operating Margin 37,735 35,692
---------- ----------
Other Operating Expenses:
Operations & maintenance expenses 13,523 13,945
Depreciation 4,689 4,412
Income taxes 6,238 5,978
Other taxes 1,813 1,936
---------- ----------
26,263 26,271
---------- ----------
Operating Income 11,472 9,421
---------- ----------
Other Income (Deductions):
Allowance for equity funds used
during construction 49 49
Equity in partnership earnings 874 851
Other income 188 (168)
Income Taxes (561) (304)
---------- ----------
550 428
---------- ----------
Interest and Debt Expense 3,899 3,133
---------- ----------
Net Income 8,123 6,716
Less-Dividends on Preferred Stock 15 16
---------- ----------
Net Income Applicable to Common Stock $ 8,108 $ 6,700
========== ==========
Income Per Average Share of
Common Stock $ 0.85 $ 0.63
========== ==========
Dividends Per Share of Common Stock $ 0.25 $ 0.38
========== ==========
Average Common Shares Outstanding
During the Period 9,521,734 10,623,137
========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CTG RESOURCES, INC. "UNAUDITED"
CONSOLIDATED STATEMENTS OF INCOME
(Thousands of dollars except for per share data)
Twelve Months Ended
December 31,
-----------------------------
<S> <C> <C>
1997 1996
---------- ----------
Operating Revenues $ 308,692 $ 314,170
Less: Cost of Energy 167,971 176,210
State Gross Receipts Tax 11,006 11,390
---------- ----------
Operating Margin 129,715 126,570
---------- ----------
Operating Expenses:
Operations & maintenance expenses 56,500 58,702
Depreciation 18,461 17,794
Income taxes 17,219 13,912
Other taxes 7,600 7,604
---------- ----------
99,780 98,012
---------- ----------
Operating Income 29,935 28,558
---------- ----------
Other Income (Deductions):
Allowance for equity funds used
during construction 125 148
Equity in partnership earnings 2,933 2,486
Other deductions 19 189
Nonrecurring items - 892
Income Taxes (923) (1,267)
---------- ----------
2,154 2,448
---------- ----------
Interest and Debt Expense 13,607 13,469
---------- ----------
Net Income 18,482 17,537
Less-Dividends on Preferred Stock 61 63
---------- ----------
Net Income Applicable to Common Stock $ 18,421 $ 17,474
========== ==========
Income Per Average Share of
Common Stock $ 1.78 $ 1.69
========== ==========
Dividends Per Share of Common Stock $ 1.39 $ 1.51
========== ==========
Average Common Shares Outstanding
During the Period 10,354,387 10,328,158
========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
Three Months Ended
December 31,
----------------------
<S> <C> <C>
1997 1996
---- ----
Cash Flows from Operations $(10,040) $ (7,186)
-------- --------
Cash Flows from Investing Activities:
Capital expenditures (4,322) (3,623)
Other investing activities 2,265 210
-------- --------
Net cash used in investing activities (2,058) (3,413)
-------- --------
Cash Flows from Financing Activities:
Dividends paid (2,178) (4,007)
Repurchase of common stock (52,839) -
Other stock activity, net (2) (616)
Issuance of long-term debt 64,000 -
Principal retired on long-term debt (815) (857)
Short-term debt 3,000 9,000
-------- --------
Net cash provided by
financing activities 11,166 3,520
-------- --------
Decrease in Cash and
Cash Equivalents (931) (7,079)
Cash and Cash Equivalents at
Beginning of Period 4,458 8,515
-------- --------
Cash and Cash Equivalents at
End of Period $ 3,527 $ 1,436
======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)
(Thousands of Dollars)
Three Months Ended
December 31,
----------------------
<S> <C> <C>
1997 1996
---- ----
Schedule Reconciling Earnings to
Cash Flows from Operations:
Net Income $ 8,123 $ 6,716
-------- --------
Adjustments to reconcile net income
to net cash:
Depreciation and amortization 4,895 4,563
Deferred income taxes, net 1,285 281
Equity in partnership earnings (874) (851)
Cash distributions received from
investments 244 200
Change in assets and liabilities:
Accounts receivable (16,305) (12,006)
Accrued utility revenue (15,689) (12,195)
Inventories 3,170 1,976
Purchased gas costs 863 (2,697)
Prepaid expenses 3,690 7,212
Accounts payable and accrued expenses (544) 2,418
Other assets/liabilities 1,103 (2,803)
-------- --------
Total adjustments (18,163) (13,902)
-------- --------
Cash flows from operations $(10,040) $ (7,186)
======== ========
Supplemental Disclosures of Cash Flow
Information:
Cash Paid During the Period for:
Interest (net of amount capitalized) $ 3,869 $ 4,936
======== ========
Income taxes $ 1,614 $ 1,517
======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
Twelve Months Ended
December 31,
----------------------
<S> <C> <C>
1997 1996
---- ----
Cash Flows from Operations $ 29,194 $ 34,388
-------- --------
Cash Flows from Investing Activities:
Capital expenditures (25,293) (23,900)
Nonrecurring Items - 892
Other investing activities 2,109 (912)
-------- --------
Net cash used in investing activities (23,184) (23,920)
-------- --------
Cash Flows from Financing Activities:
Dividends paid (14,348) (15,807)
Repurchase of common stock (53,473) 15,557
Other stock activity, net 486 (652)
Issuance of long-term debt 64,000 -
Principal retired on long-term debt (22,084) (3,904)
Short-term debt 21,500 (5,100)
-------- --------
Net cash used by
financing activities (3,919) (9,906)
-------- --------
Increase in Cash and
Cash Equivalents 2,091 562
Cash and Cash Equivalents at
Beginning of Period 1,436 874
-------- --------
Cash and Cash Equivalents at
End of Period $ 3,527 $ 1,436
======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)
(Thousands of Dollars)
Twelve Months Ended
December 31,
----------------------
<S> <C> <C>
1997 1996
---- ----
Schedule Reconciling Earnings to
Cash Flows from Operations:
Net Income $ 18,482 $ 17,537
-------- --------
Adjustments to reconcile net income
to net cash:
Depreciation and amortization 19,162 17,971
Deferred income taxes, net 5,119 1,888
Equity in partnership earnings (2,933) (2,486)
Nonrecurring Items - (892)
Cash distributions received from
investments 1,805 1,901
Change in assets and liabilities:
Accounts receivable (4,317) 1,572
Accrued utility revenue (3,938) 5,288
Inventories (422) (2,659)
Purchased gas costs 2,262 (2,134)
Prepaid expenses (1,505) (1,538)
Accounts payable and accrued expenses (2,516) 87
Other assets/liabilities (2,005) (2,147)
-------- --------
Total adjustments 10,712 16,851
-------- --------
Cash flows from operations $ 29,194 $ 34,388
======== ========
Supplemental Disclosures of Cash Flow
Information:
Cash Paid During the Period for:
Interest (net of amount capitalized) $ 11,991 $ 13,051
======== ========
Income taxes $ 8,358 $ 14,543
======== ========
</TABLE>
<PAGE>
"UNAUDITED"
CTG RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
(Thousands of Dollars)
(1) Stock Repurchase
On October 30, 1997, through a tender offer made by The Energy Network,
Inc. (TEN), a wholly-owned, unregulated subsidiary of the Company, the
Company repurchased 2.0 million shares of its no par common stock at
$26.00 per share for a total purchase price of approximately $52,000.
Effective with the first quarter of fiscal 1998 the Company also
reduced its quarterly dividend on common stock from $0.38 ($1.52
annually) to $0.25 ($1.00 annually) per share. The stock repurchase
was financed with a combination of revolving bank debt and a term loan.
(2) Short-term Debt
On October 1, 1997, TEN entered into a 364-day secured revolving credit
agreement for $10,000 with a bank. This agreement matures on September
29, 1998. Interest is based on a Bank Rate or a LIBOR rate plus a
variable margin and is determined at the time of each borrowing. There
is a one-time $5 commitment fee and a .35% facility fee upon renewal.
On October 1, 1997, TEN entered into a three year revolving credit
agreement for $10,000 with a bank. The maximum borrowing amount is
reduced by $500 at the start of each fiscal quarter, beginning January
1, 1998. Interest is based on a Bank Rate or a LIBOR rate plus a
variable margin and is determined at the time of each borrowing. There
is a one-time $5 commitment fee and an on-going .45% to .6% facility
fee on the unused portion of the agreement.
(3) Long-term Debt
On October 1, 1997, TEN issued Senior Secured Notes for $45,000, due in
2009, at 6.99%. The principal will be retired through semi-annual
payments of $2,500 beginning in 2001. The proceeds were used to
repurchase approximately 2.0 million shares of CTG common stock.
In October 1997, the Company issued a total of $19,000 of Medium Term
Notes ("MTNs") due 2007. These MTNs are unsecured and have no call
provisions or sinking fund requirements. The proceeds were used to
refinance existing short-term debt. The face values and interest rates
of these MTNs are:
Face Value Interest Rate
---------- -------------
$ 1,000 6.62%
$ 1,000 6.65%
$17,000 6.69%
<PAGE>
In a Forward Equity Purchase Agreement dated October 1, 1997, CTG has
committed to fund $7,500 per year into TEN from 1998 through 2009 for
an aggregate additional cash infusion into TEN of $90,000. In
exchange, TEN caused all shares of CTG common stock purchased through
the October 1997 tender offer to be transferred directly to CTG by the
depositary. As a provision of this agreement, CTG is restricted from
declaring or paying any dividends or distributions to its holders of
common stock if any amounts due and payable under this agreement are in
arrears.
(4) Reclassifications
Certain prior year amounts have been reclassified to conform with
current year classifications.
<PAGE>
"UNAUDITED"
CTG RESOURCES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 1997
(Thousands of Dollars Except Per Share Amounts)
CTG Resources, Inc. ("the Company" or "CTG")is a holding company and parent
of the Connecticut Natural Gas Corporation ("CNG") and The Energy Network,
Inc. ("TEN"). CNG is an energy provider engaged in the regulated
distribution, sale and transportation of natural gas. TEN holds and
operates, through divisions or wholly-owned subsidiaries, CTG's unregulated,
diversified businesses. The diversified businesses are primarily engaged in
district heating and cooling and also include energy-related products and
services, energy equipment rentals, energy system management and operating
services and the Company's equity investments in several partnerships.
RESULTS OF OPERATIONS
The Company recorded consolidated earnings per share of $.85 for the quarter
ended December 1997, compared to $.63 for the quarter ended December 1996.
Earnings for the twelve months ended December 1997 were $1.78 as compared to
$1.69 for the twelve months ended December 1996. Lower weighted average
shares outstanding, as a result of the stock repurchase described below,
provided an $.08 benefit to earnings per share for the quarter ended
December 1997. The twelve months ended December 1996 include earnings per
share of $.05 related to the sale of a building and land.
Higher earnings in the three months ended December 1997, as compared to
1996, are the result of higher operating margins recorded because of cooler
winter heating season weather. Higher twelve months ended December 1997
earnings, as compared to December 1996, reflect the benefits of lower
operating and maintenance expenses and additional natural gas heating
customers as well as the impact of the cooler December 1997 quarter. Our
customers' greatest use of energy during the year is in the winter, mostly
for the purpose of heating their homes or businesses.
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>
Three Months Twelve Months
Ended Ended
December 31, December 31,
1997 1996 1997 1996
-------- -------- -------- --------
Gas Revenues $ 87,627 $ 84,279 $286,672 $291,936
======== ======== ======== ========
Gas Operating Margin $ 34,614 $ 32,490 $114,677 $114,664
======== ======== ======== ========
Heating Degree Days 2,269 2,169 6,156 6,288
===== ===== ===== =====
Commodity and
Transportation
Volumes(mmcf):
Firm Gas Sales 7,260 6,815 22,799 23,426
Interruptible Gas
Sales 2,886 2,829 9,630 8,926
Off-System Gas
Sales 2,163 3,247 9,080 12,004
Transportation -
Services 1,102 1,160 4,073 4,442
------ ------ ------ ------
Total 13,411 14,051 45,582 48,798
====== ====== ====== ======
Gas operating margin is equal to gas revenues less the cost of gas and
Connecticut gross revenues tax. A higher gas operating margin was earned
in the three months ended December 1997 as compared to 1996. Cooler winter
heating season weather is the principal reason for this increase in gas
operating margin. This has resulted in higher gas sales to the firm class
of customers because more 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.
Between the comparable twelve months ended periods gas operating margin is
nearly unchanged. The benefits of additional heating customers offset the
impact of warmer weather during the twelve months ended December 1997.
Operations and Maintenance Expenses
Variations in many different costs have combined to result in lower
operations and maintenance expenses in both the three and twelve months
periods ended December 1997, as compared to 1996. Lower costs were incurred
for labor, reflecting the savings from early retirements. A reduction in
pension costs reflects the absence of the expenses related to the early
retirement program offered in fiscal 1996 and reduced costs because of those
retirements. Fluctuations in bad debt costs relate to customers' natural
gas bills which are higher in colder winters and lower in warmer winters.
Costs related to workers compensation insurance were lower because of lower
actual and projected claims (used to set the Company's premiums) as a result
of the Company's aggressive management of claims. Lower costs were also
recorded for outside purchased services.
Income Taxes
Higher income taxes have been recorded in the quarter ending December 1997,
as compared to 1996, because of higher taxable income. In the twelve months
ended December 1997, as compared to 1996, higher income taxes reflect both
higher taxable income and an increase to the Company's income tax reserve
that was recorded in fiscal 1997.
Other Income (Deductions)
Overall, other income (deductions) have not changed significantly between
fiscal 1998 and 1997 for the quarter and twelve months ended December.
There are several offsetting factors that have produced this result. The
<PAGE>
first quarter of fiscal 1998 reflects higher costs for life insurance
premiums, as compared to fiscal 1997, offset by lower promotional and
advertising expenses. Between the comparable twelve months ended, higher
interest income from the investment of available cash balances was offset by
higher premiums related to certain life insurance plans and higher
promotional and advertising expenses.
Interest and Debt Expense
Higher interest and debt expense has been recorded in fiscal 1998 primarily
because of the additional long-term debt issued during the first quarter.
Earnings from Diversified Businesses
The diversified, unregulated businesses contributed $.06 and $.25 to
earnings per share for the quarter and twelve months ended December 1997.
These compare to $.06 and $.34 contributed to earnings per share for the
quarter and twelve months ended December 1996. The twelve months ended
December 1996 include $.05 of earnings per share related to the sale of a
building and land.
Two significant factors impacting earnings from diversified businesses
occurred in this first quarter of fiscal 1998. First, the assets of TEN's
wholly-owned HVAC subsidiary, ENServe, Corp., were sold in October 1997.
The subsequent winding up of this operation is still in progress. This
transaction has produced an immediate benefit to earnings in this first
quarter of fiscal 1998 by ending the losses that had been incurred from this
operation throughout fiscal 1997. Second, higher interest costs have been
incurred as a result of an additional $45,000 of long-term debt and $4,000
of short-term borrowings issued to finance the purchase of approximately 2.0
million shares of the Company's common stock in a tender offer made by TEN
in October of 1997 (See Stock Repurchase, below).
MATERIAL CHANGES IN FINANCIAL CONDITION
Cash Flows
Negative cash flows from operations are frequently experienced during the
first quarter of the fiscal year which begins the winter heating season.
This occurs because the Company must pay for large quantities of natural gas
in advance of the receipt of payments from customers. This lag between when
gas is consumed and when payment for it is received creates the need to
provide cash for operations from other sources.
Available cash on hand and short-term borrowings provided the necessary cash
for the Company's operations, dividend payments, long-term debt principal
payments and construction expenditures during the first quarter of both
fiscal 1998 and 1997. Long-term financing issued in the first quarter of
fiscal 1998 was used to finance a stock repurchase and to refinance existing
short-term debt, as described below.
In the twelve months ended December 31, 1997, available cash from
operations, together with short-term borrowings, paid for expenses related
to operations and for construction, dividends and principal payments on
long-term debt. In the twelve months ended December 31, 1996, available
cash from operations, together with the proceeds from the June 1996 issue of
common stock, funded both construction and all other financing activities.
<PAGE>
Stock Repurchase
On October 30, 1997, through a tender offer made TEN, the Company
repurchased 2.0 million shares of CTG common stock for $52,000. TEN
financed the purchase with a combination of revolving bank debt and the
issuance of Senior Subordinated Notes. The shares repurchased by TEN were
transferred by the depositary directly to CTG. In connection with the
repurchase, effective with the first quarter of fiscal 1998, CTG reduced its
quarterly dividend on common stock from $0.38 ($1.52 annually) to $0.25
($1.00 annually) per share. In future periods the lower shares outstanding
should help to increase overall earnings per share. In the long-term, the
lower dividend will enable CTG to retain more of its earnings to fund the
future growth of the Company.
Forward Equity Purchase Agreement
In a Forward Equity Purchase Agreement dated October 1, 1997, CTG has
committed to fund $7,500 per year into TEN from 1998 through 2009 for an
aggregate additional cash infusion into TEN of $90,000. In exchange, TEN
caused all shares of CTG common stock purchased through the October 1997
tender offer to be transferred directly to CTG by the depositary. As a
provision of this agreement, CTG is restricted from declaring or paying any
dividends or distributions to its holders of common stock if any amounts due
and payable under this agreement are in arrears.
Financing Activities
On October 1, 1997, TEN issued Senior Secured Notes for $45,000, due in
2009, at 6.99%. The principal will be retired through semi-annual payments
of $2,500 beginning in 2001. The proceeds were used to repurchase
approximately 2.0 million shares of CTG common stock.
In October 1997, the Company issued a total of $19,000 of Medium Term Notes
("MTNs") due 2007. These MTNs are unsecured and have no call provisions or
sinking fund requirements. The proceeds were used to refinance existing
short-term debt. The face values and interest rates of these MTNs are:
Face Value Interest Rate
---------- -------------
$ 1,000 6.62%
$ 1,000 6.65%
$17,000 6.69%
The MTNs are rated at A3 by Moody's and A- by Standard and Poor's.
On October 1, 1997, TEN entered into a 364-day secured revolving credit
agreement for $10,000 with a bank. This agreement matures on September 29,
1998. Interest is based on a Bank Rate or a LIBOR rate plus a variable
margin. It is determined at the time of each borrowing. There is a one-time
$5 commitment fee and a .375% facility fee upon renewal.
<PAGE>
On October 1, 1997, TEN entered into a three-year revolving credit agreement
for $10,000 with a bank. The maximum borrowing amount is reduced by $500 on
each fiscal quarter, beginning January 1, 1998. Interest is based on a Bank
Rate or a LIBOR rate plus a variable margin and is determined at the time of
each borrowing. There is a one-time $5 commitment fee and an on-going .45%
to .6% facility fee on the unused portion of the agreement.
Sale of Assets
In October 1997, the Company sold the operating assets of ENServe Corp., a
wholly owned subsidiary of TEN engaged in the HVAC business, for
approximately $1,200. ENServe is currently in the process of winding up its
operations. Any gain or loss is not expected to be significant.
FORWARD LOOKING INFORMATION
This report and other Company reports, including filings with the Securities
and Exchange Commission, press releases and oral statements, contain forward
looking statements. Forward looking statements are made based upon
management's expectations and beliefs concerning future developments and
their potential effect upon the Company. The Company cautions that, while it
believes such statements to be reasonable and makes them in good faith, they
almost always vary from actual results, and the differences can be material,
depending upon the circumstances. Investors should be aware of important
factors that could have a material impact on future results. These factors
include, but are not limited to, weather, the regulatory environment,
legislative and judicial developments which affect the Company or significant
groups of its customers, economic conditions in the Company's service
territory, fluctuations in energy-related commodity prices, customer
conservation efforts, financial market conditions, interest rate
fluctuations, customers' preferences, unforeseen competition, and other
uncertainties, all of which are difficult to predict and beyond the control
of the Company.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
(a) Exhibits
99(i) Exhibit Index
27 Financial Data Schedule
(b)(1) A report on Form 8-K was filed by the Company on October 31, 1997,
to file a copy of a press release, dated October 31, 1997, which
announced the preliminary results of the Company's stock repurchase
plan.
(2) A report on Form 8-K was filed by the Company on November 6, 1997,
to file a copy of a press release, dated November 6, 1997, which
announced the Company's fourth quarter results and fiscal year 1997
earnings and to file unaudited financial statements of the Company
for the fiscal year ended September 30, 1997.
(3) A report on Form 8-K was filed by the Company on November 7, 1997,
to file a copy of a press release, dated November 7, 1997, which
announced the final results of the Company's stock repurchase plan.
<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 02/05/98 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 December 31, 1997
Document
Item Description Description
------------ ----------- ------------
99(i) Exhibit Index Ex-99.1
27 Financial Data Schedule Ex-27
<PAGE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND> THIS SCHEDULE CONTAINS
SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM
THE CONSOLIDATED BALANCE
SHEETS, STATEMENTS OF
INCOME, STATEMENTS OF
CASHFLOWS AND STATEMENTS OF
CAPITALIZATION AND IS
QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 289,436
<OTHER-PROPERTY-AND-INVEST> 51,732
<TOTAL-CURRENT-ASSETS> 85,257
<TOTAL-DEFERRED-CHARGES> 60,338
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 486,763
<COMMON> 66,637
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 55,868
<TOTAL-COMMON-STOCKHOLDERS-EQ> 122,505
0
883
<LONG-TERM-DEBT-NET> 187,374
<SHORT-TERM-NOTES> 30,500
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 4,085
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 141,416
<TOT-CAPITALIZATION-AND-LIAB> 486,763
<GROSS-OPERATING-REVENUE> 92,396
<INCOME-TAX-EXPENSE> 6,799
<OTHER-OPERATING-EXPENSES> 74,125
<TOTAL-OPERATING-EXPENSES> 80,924
<OPERATING-INCOME-LOSS> 11,472
<OTHER-INCOME-NET> 550
<INCOME-BEFORE-INTEREST-EXPEN> 12,022
<TOTAL-INTEREST-EXPENSE> 3,899
<NET-INCOME> 8,123
15
<EARNINGS-AVAILABLE-FOR-COMM> 8,108
<COMMON-STOCK-DIVIDENDS> 2,163
<TOTAL-INTEREST-ON-BONDS> 533
<CASH-FLOW-OPERATIONS> (10,040)
<EPS-PRIMARY> 0.85
<EPS-DILUTED> 0.85
<PAGE>
</TABLE>
