<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
-------------------------------
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 2-23416
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BOSTON GAS COMPANY
--------------------------------------------------------
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-1103580
------------------------------ --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE BEACON STREET, BOSTON, MASSACHUSETTS 02108
-----------------------------------------------
(Address of principal executive offices)
(Zip Code)
617-742-8400
--------------------------------------------------
(Registrant's telephone number, including area code)
NONE
---------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Common stock of Registrant at the date of this report was 514,184 shares, all
held by Eastern Enterprises.
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FORM 10-Q
Page 2
PART I. FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
- - - - -----------------------------
Company or group of companies for which report is filed:
BOSTON GAS COMPANY AND SUBSIDIARY ("Registrant")
Consolidated Statements of Earnings
- - - - -----------------------------------
<TABLE>
<CAPTION>
(In Thousands)
Three Months Ended
------------------
March 31, March 31,
1995 1994
-------- --------
<S> <C> <C>
OPERATING REVENUES $294,241 $314,302
Cost of gas sold 182,331 193,416
-------- --------
Operating Margin 111,910 120,886
OPERATING EXPENSES:
Other operating expenses 45,202 44,779
Maintenance 6,702 9,146
Depreciation and amortization 15,448 13,839
Income taxes 15,252 18,918
-------- --------
Total Operating Expenses 82,604 86,682
-------- --------
OPERATING EARNINGS 29,306 34,204
OTHER EARNINGS, NET 39 40
-------- --------
EARNINGS BEFORE INTEREST EXPENSE 29,345 34,244
INTEREST EXPENSE:
Long-term debt 4,607 4,189
Other, including amortization
of debt expense 1,104 916
Less - Interest during construction (45) (148)
-------- --------
Total Interest Expense 5,666 4,957
-------- --------
NET EARNINGS 23,679 29,287
Preferred Stock Dividends 482 482
-------- --------
NET EARNINGS APPLICABLE TO COMMON STOCK $ 23,197 $ 28,805
======== ========
COMMON STOCK DIVIDENDS $ 9,358 $ 12,032
-------- --------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
FORM 10-Q
Page 3
Boston Gas Company and Subsidiary
- - - - ---------------------------------
Consolidated Balance Sheets
- - - - ---------------------------
<TABLE>
<CAPTION>
(In Thousands)
March 31, March 31, December 31,
1995 1994 1994
----------- ----------- --------------
<S> <C> <C> <C>
ASSETS
GAS PLANT, at cost $706,932 $649,903 $704,861
Construction work-in-progress 10,496 13,320 2,070
Less-Accumulated depreciation 237,277 208,364 222,460
-------- -------- --------
Total Net Plant 480,151 454,859 484,471
-------- -------- --------
CURRENT ASSETS:
Cash and cash equivalents 6,629 4,398 3,831
Accounts receivable, less reserves
of $17,165 and $14,850 at
March 31, 1995 and 1994,
respectively, and $15,621 at
December 31, 1994 124,978 160,895 71,408
Deferred gas costs 17,272 24,421 66,865
Natural gas and other inventories 26,824 24,421 46,844
Materials and supplies 4,981 5,395 5,063
Prepaid expenses 3,744 3,412 3,399
Income taxes - - 1,407
-------- -------- --------
Total Current Assets 184,428 222,942 198,817
-------- -------- --------
OTHER ASSETS:
Deferred postretirement benefits cost 96,605 100,461 97,589
Deferred charges and other assets 25,643 48,774 52,759
-------- -------- --------
Total Other Assets 122,248 149,235 150,348
-------- -------- --------
TOTAL ASSETS $786,827 $827,036 $833,636
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
FORM 10-Q
Page 4
Boston Gas Company and Subsidiary
- - - - ---------------------------------
Consolidated Balance Sheets
- - - - ---------------------------
<TABLE>
<CAPTION>
(In Thousands)
March 31, March 31, December 31,
1995 1994 1994
----------- ----------- --------------
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDER'S INVESTMENT
CAPITALIZATION:
Stockholder's investment -
Common stock, $100 par value,
514,184 shares authorized and outstanding $ 51,418 $ 51,418 $ 51,418
Amounts in excess of par value 43,233 43,233 43,233
Retained earnings 121,938 112,453 108,098
-------- -------- --------
Total Common Stockholder's Investment 216,589 207,104 202,749
Variable term cumulative preferred stock,
$1 par value, 1,200,000 shares authorized
and outstanding 29,237 29,205 29,229
Long-term obligations, less current portion 216,041 206,745 216,680
-------- -------- --------
Total Capitalization 461,867 443,054 448,658
Gas Inventory Financing 33,583 32,079 53,578
-------- -------- --------
Total Capitalization and Gas Inventory
Financing 495,450 475,133 502,236
-------- -------- --------
CURRENT LIABILITIES:
Current portion of long-term obligations 1,928 2,201 1,890
Notes payable 9,000 60,500 62,530
Accounts payable 40,894 49,968 42,653
Accrued taxes 4,815 4,069 510
Accrued income taxes 15,011 14,999 -
Accrued interest 7,944 6,853 3,524
Customer deposits 2,825 2,613 2,852
Refunds due customers 18,122 2,397 18,719
Pipeline transition costs 6,060 26,079 11,560
-------- -------- --------
Total Current Liabilities 106,599 169,679 144,238
-------- -------- --------
OTHER LIABILITIES:
Deferred income taxes 66,661 60,959 66,577
Unamortized investment tax credits 8,470 9,246 8,704
Postretirement benefits obligation 90,041 91,582 90,214
Other 19,606 20,437 21,667
-------- -------- --------
Total Other Liabilities 184,778 182,224 187,162
-------- -------- --------
TOTAL LIABILITIES AND STOCKHOLDER'S INVESTMENT $786,827 $827,036 $833,636
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
FORM 10-Q
Page 5
Boston Gas Company and Subsidiary
- - - - ---------------------------------
Consolidated Statements of Cash Flows
- - - - -------------------------------------
<TABLE>
<CAPTION>
(In Thousands)
Three Months Ended
--------------------
March 31, March 31,
1995 1994
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 23,679 $ 29,287
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 15,448 13,839
Deferred taxes 84 (602)
Other changes in assets and liabilities:
Accounts receivable (53,570) (71,799)
Inventory 20,102 28,355
Deferred gas costs 49,593 41,381
Deferred postretirement benefits 811 -
Accounts payable (1,759) (2,805)
Accrued interest 4,420 3,849
Federal and state income taxes 16,418 21,045
Refunds due customers (597) (5,632)
Other 23,488 2,823
-------- --------
Net cash provided by operating activities 98,117 59,741
-------- --------
Cash flows from investing activities:
Capital expenditures (10,964) (6,015)
Net cost of removal (998) (965)
-------- --------
Net cash used for investing activities (11,962) (6,980)
-------- --------
Cash flows from financing activities:
Changes in notes payable, net (53,530) (45,800)
Changes in inventory financing (19,995) (27,218)
Proceeds from issuance of long-term debt - 36,000
Proceeds from issuance of preferred stock 8 8
Cash dividends paid on common and preferred stock (9,840) (12,513)
-------- --------
Net cash used for financing activities (83,357) (49,523)
-------- --------
Increase in cash and cash equivalents 2,798 3,238
Cash and cash equivalents at beginning of period 3,831 1,160
-------- --------
Cash and cash equivalents at end of period $ 6,629 $ 4,398
======== ========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized $ 802 $ 1,256
Income taxes $ (1,163) $ (1,471)
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
FORM 10-Q
Page 6
BOSTON GAS COMPANY AND SUBSIDIARY
---------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
MARCH 31, 1995
--------------
1. ACCOUNTING POLICIES AND OTHER INFORMATION
-----------------------------------------
General
-------
It is the Registrant's opinion that the financial information contained
in this report reflects all normal, recurring adjustments necessary to
present a fair statement of results for the period reported, but such
results are not necessarily indicative of results to be expected for the
year due to the seasonal nature of the Registrant's business. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted in this Form 10-Q pursuant to
the rules and regulations of the Securities and Exchange Commission.
However, the disclosures herein, when read with the annual report for
1994 filed on Form 10-K, are adequate to make the information presented
not misleading.
Seasonal Aspect
---------------
The amount of natural gas sold by the Registrant for purposes of space
heating is directly related to the ambient air temperature. Consequently,
less gas is sold during the summer months than is sold during the winter
months. In order to more properly match depreciation and property tax
expense with gas sales each month, the Registrant charges to depreciation
and property tax expense an amount equal to the percentage of the annual
volume of firm gas sales forecasted for the month, applied to the
estimated annual depreciation and property tax expense.
2. GAS INVENTORY FINANCING
-----------------------
The Registrant funds all of its inventory of gas supplies through
external sources. All costs related to this funding are recoverable from
its customers. The Registrant maintains a credit agreement with a group
of banks which provides for the borrowing of up to $90,000,000 for the
exclusive purpose of funding its inventory of gas supplies or for backing
commercial paper issued for the same purpose. At March 31, 1995 and 1994,
the Registrant had $33,583,000 and $32,079,000, respectively, of
commercial paper outstanding for this purpose. Since the commercial paper
is supported by the credit agreement, these borrowings have been
classified as non-current in the accompanying consolidated balance
sheets.
<PAGE>
FORM 10-Q
Page 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- - - - ------- ---------------------------------------------------------------
RESULTS OF OPERATIONS:
----------------------
RESULTS OF OPERATIONS
Net earnings applicable to common stock for the first quarter of 1995
were $23.2 million, a decrease of $5.6 million or 19% from the same
period in 1994. The decrease was primarily the result of weather, which
was 15% warmer as compared to the first three months of 1994. The
warmer weather reduced earnings by about $6.3 million after taking into
consideration the lower operating costs related to the warmer weather
and ongoing cost containment initiatives. Also contributing to lower
earnings were increased charges for depreciation, bad debts and
property taxes ($2.5 million). Somewhat offsetting the preceding were
sales to new firm customers and the recognition of lost margins
associated with conservation programs.
LIQUIDITY AND CAPITAL RESOURCES
Notes payable at March 31, 1995 were $9.0 million, a decrease of $53.5
million from December 31, 1994. The majority of the decrease in notes
payable reflects a reduction in working capital requirements due to the
seasonal nature of the gas distribution business.
Cash from operations during the first quarter of 1995 was sufficient to
cover dividends to shareholders, capital expenditures and normal debt
repayments including the above mentioned notes payable.
Capital expenditures for the year are expected to be in line with the
original projection of $58.4 million.
The Company believes that projected cash flow from operations, in
combination with currently available resources, is sufficient to meet
1995 capital expenditures, working capital requirements, normal debt
repayments and dividends to shareholders.
<PAGE>
FORM 10-Q
Page 8
PART II. OTHER INFORMATION
--------------------------
ITEM 1. LEGAL PROCEEDINGS
- - - - --------------------------
Other than the ordinary routine litigation involving the Registrant's business,
there are no material pending legal proceedings involving the Registrant.
ITEM 2. CHANGES IN SECURITIES
- - - - ------------------------------
At March 31, 1995, under the most restrictive provision limiting dividend
payments in the Registrant's financing indentures, there were no restrictions on
retained earnings available for payment of dividends.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- - - - ------------------------------------------------------------
(a) The annual meeting of stockholders of the Registrant was held on
April 24, 1995.
(b) On April 24, 1995, 514,184 shares of Registrant's common stock, being all
its capital stock outstanding, voted in favor of electing the following
Directors to serve until the next annual meeting of the stockholders and
until their successors are elected and qualified:
J. F. Bodanza
R. R. Clayton
A. J. DiGiovanni
W. J. Flaherty
J. A. Ives
C. R. Messer
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- - - - -----------------------------------------
(a) List of Exhibits
27 - Financial Data Schedule.
(b) No reports on Form 8-K have been filed during the quarter for which this
report is filed.
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FORM 10-Q
Page 9
SIGNATURES
----------
It is the Registrant's opinion that the financial information contained in this
report reflects all normal, recurring adjustments necessary to a fair statement
of results for the period reported, but such results are not necessarily
indicative of results to be expected for the year due to the seasonal nature of
the business of the Registrant. Except as otherwise herein indicated, all
accounting policies have been applied in a manner consistent with prior periods.
Such financial information is subject to year end adjustments and an annual
audit by independent public accountants.
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.
Boston Gas Company
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(Registrant)
/s/ Joseph F. Bodanza
--------------------------------------------------
J. F. Bodanza, Senior Vice President and Treasurer
(Principal Financial and Accounting Officer)
Dated: May 2, 1995
-------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 480,151
<OTHER-PROPERTY-AND-INVEST> 2,547
<TOTAL-CURRENT-ASSETS> 184,428
<TOTAL-DEFERRED-CHARGES> 23,096
<OTHER-ASSETS> 96,605
<TOTAL-ASSETS> 786,827
<COMMON> 51,418
<CAPITAL-SURPLUS-PAID-IN> 43,233
<RETAINED-EARNINGS> 121,938
<TOTAL-COMMON-STOCKHOLDERS-EQ> 216,589
29,237
0
<LONG-TERM-DEBT-NET> 212,400
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 42,583
<LONG-TERM-DEBT-CURRENT-PORT> 480
0
<CAPITAL-LEASE-OBLIGATIONS> 3,641
<LEASES-CURRENT> 1,448
<OTHER-ITEMS-CAPITAL-AND-LIAB> 280,449
<TOT-CAPITALIZATION-AND-LIAB> 786,827
<GROSS-OPERATING-REVENUE> 294,241
<INCOME-TAX-EXPENSE> 15,252
<OTHER-OPERATING-EXPENSES> 45,202
<TOTAL-OPERATING-EXPENSES> 82,604
<OPERATING-INCOME-LOSS> 29,306
<OTHER-INCOME-NET> 39
<INCOME-BEFORE-INTEREST-EXPEN> 29,345
<TOTAL-INTEREST-EXPENSE> 5,666
<NET-INCOME> 23,679
482
<EARNINGS-AVAILABLE-FOR-COMM> 23,197
<COMMON-STOCK-DIVIDENDS> 9,358
<TOTAL-INTEREST-ON-BONDS> 4,607
<CASH-FLOW-OPERATIONS> 98,117
<EPS-PRIMARY> 45.11
<EPS-DILUTED> 45.11
</TABLE>
