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Previous: PRINCIPAL CAPITAL ACCUMULATION FUND INC, 497J, 1996-05-01 |
Next: SELIGMAN COMMON STOCK FUND INC, 497, 1996-05-01 |
<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, 1996
----------------------------------
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
-------
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.
<PAGE>
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,
1996 1995
-------- --------
<S> <C> <C>
OPERATING REVENUES $343,341 $294,241
COST OF GAS SOLD 221,167 182,331
-------- --------
OPERATING MARGIN 122,174 111,910
OPERATING EXPENSES:
Other operating expenses 49,748 45,202
Maintenance 7,659 6,702
Depreciation and amortization 18,002 15,448
Income taxes 16,431 15,252
-------- --------
Total Operating Expenses 91,840 82,604
-------- --------
OPERATING EARNINGS 30,334 29,306
OTHER EARNINGS, NET 73 39
-------- --------
EARNINGS BEFORE INTEREST EXPENSE 30,407 29,345
INTEREST EXPENSE:
Long-term debt 4,192 4,607
Other, including amortization of debt expense 740 1,104
Less - Interest during construction (28) (45)
-------- --------
Total Interest Expense 4,904 5,666
-------- --------
NET EARNINGS 25,503 23,679
Preferred Stock Dividends 482 482
-------- --------
NET EARNINGS APPLICABLE TO COMMON STOCK $ 25,021 $ 23,197
======== ========
COMMON STOCK DIVIDENDS $ 10,335 $ 9,358
-------- --------
</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,
1996 1995 1995
----------- ----------- --------------
<S> <C> <C> <C>
ASSETS
GAS PLANT, at cost $761,326 $706,932 $761,607
Construction work-in-progress 9,690 10,496 486
Less-Accumulated depreciation 272,310 237,277 254,448
-------- -------- --------
Total Net Plant 498,706 480,151 507,645
-------- -------- --------
CURRENT ASSETS:
Cash and cash equivalents
Accounts receivable, less reserves 2,275 6,629 5,841
of $18,717 and $17,165 at
March 31, 1996 and 1995,
respectively, and $15,324 at
December 31, 1995 142,979 124,978 74,519
Deferred gas costs - 17,272 71,940
Natural gas and other inventories 10,437 26,824 35,136
Materials and supplies 5,278 4,981 4,770
Prepaid expenses 3,317 3,744 3,259
Income taxes - - 368
Total Current Assets -------- -------- --------
164,286 184,428 195,833
-------- -------- --------
OTHER ASSETS:
Deferred postretirement benefits cost 91,225 96,605 93,829
Deferred charges and other assets 30,823 25,643 32,180
-------- -------- --------
Total Other Assets 122,048 122,248 126,009
-------- -------- --------
TOTAL ASSETS $785,040 $786,827 $829,487
======== ======== ========
</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,
1996 1995 1995
--------- ---------- -------------
<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 134,232 121,938 119,546
-------- -------- --------
Total Common Stockholder's Investment 228,883 216,589 214,197
Cumulative preferred stock, $1 par value,
1,200,000 shares authorized and outstanding 29,267 29,237 29,262
Long-term obligations, less current portion 212,091 216,041 212,772
-------- -------- --------
Total Capitalization 470,241 461,867 456,231
Gas Inventory Financing 19,187 33,583 45,600
-------- -------- --------
TOTAL CAPITALIZATION AND GAS INVENTORY
FINANCING 489,428 495,450 501,831
-------- -------- --------
CURRENT LIABILITIES:
Current portion of long-term obligations 1,550 1,928 1,509
Notes payable 11,300 9,000 52,000
Accounts payable 47,535 40,894 53,490
Accrued taxes 5,884 4,815 1,011
Accrued income taxes 19,275 15,011 -
Accrued interest 8,054 7,944 3,959
Customer deposits 2,684 2,825 2,789
Refunds due customers 4,747 18,122 13,173
Pipeline transition costs 9,260 6,060 9,510
Refundable gas costs 2,659 - -
-------- -------- --------
TOTAL CURRENT LIABILITIES 112,948 106,599 137,441
OTHER LIABILITIES:
Deferred income taxes 67,453 66,661 72,001
Unamortized investment tax credits 7,535 8,470 7,767
Postretirement benefits obligation 85,908 90,041 86,589
Other 21,768 19,606 23,858
-------- -------- --------
Total Other Liabilities 182,664 184,778 190,215
-------- -------- --------
TOTAL LIABILITIES AND STOCKHOLDER'S INVESTMENT $785,040 $786,827 $829,487
======== ======== ========
</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,
1996 1995
---------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 25,503 $ 23,679
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 18,002 15,448
Deferred taxes (4,548) 84
Other changes in assets and liabilities:
Accounts receivable (68,460) (53,570)
Inventory 24,191 20,102
Deferred gas costs 74,599 72,431
Deferred postretirement benefits 1,923 811
Accounts payable (5,955) (1,759)
Accrued interest 4,095 4,420
Federal and state income taxes 19,643 16,418
Refunds due customers (8,426) (597)
Other 3,727 650
-------- --------
Net cash provided by operating activities 84,294 98,117
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (9,398) (10,964)
Net cost of removal (537) (998)
-------- --------
Net cash used for investing activities (9,935) (11,962)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Changes in notes payable, net (40,700) (53,530)
Changes in inventory financing (26,413) (19,995)
Proceeds from issuance of preferred stock 5 8
Cash dividends paid on common and preferred stock (10,817) (9,840)
-------- --------
Net cash used for financing activities (77,925) (83,357)
-------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (3,566) 2,798
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 5,841 3,831
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,275 $ 6,629
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest, net of amounts capitalized $ 718 $ 758
Income taxes $ 1,423 $ (1,163)
</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, 1996
--------------
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 1995 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, 1996 and 1995,
the Registrant had $19,187,000 and $33,583,000, 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:
----------------------
Net earnings applicable to common stock for the first quarter of 1996
were $25.0 million, an increase of $1.8 million or 8% from the same
period last year. This increase is primarily due to colder weather and
its resultant impact on customer demand. Weather for the first quarter
of 1996 was 3% colder than normal and 8% colder than the same period
in 1995. Increased throughput to new customers also contributed.
Somewhat offsetting the preceding were higher operating expenses
associated with wage increases, weather related overtime and a lower
level of capitalized expenses partially offset by the savings
generated from the Registrant's reengineering program. In addition,
increased depreciation and property tax expense related to continued
investment in system infrastructure and higher retiree benefit expense
were also offsetting.
LIQUIDITY AND CAPITAL RESOURCE
Notes payable at March 31, 1996 were $11.3 million, a decrease of
$40.7 million from December 31, 1995. This decrease primarily reflects
the seasonal nature of the gas distribution business.
Capital expenditures for the year are expected to be in line with the
original projection of $60 million.
The Registrant believes that projected cash flow form operations, in
combination with currently available resources, is sufficient to meet
1996 capital expenditures and working capital requirements, normal
debt repayments and dividends to shareholders.
The Registrant intends to file a performance based regulation and
restructuring plan with the Massachusetts Department of Public
Utilities during the second quarter of 1996.
<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, 1996, 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, 1996.
(b) On April 24, 1996, 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.
<PAGE>
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
------------------------------------------------------
(Registrant)
/s/ J. F. Bodanza
------------------------------------------------------
J. F. Bodanza, Senior Vice President and Treasurer
(Principal Financial and Accounting Officer)
Dated: April 30, 1996
-------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 498,706
<OTHER-PROPERTY-AND-INVEST> 2,547
<TOTAL-CURRENT-ASSETS> 164,286
<TOTAL-DEFERRED-CHARGES> 28,276
<OTHER-ASSETS> 91,225
<TOTAL-ASSETS> 785,040
<COMMON> 51,418
<CAPITAL-SURPLUS-PAID-IN> 43,233
<RETAINED-EARNINGS> 134,232
<TOTAL-COMMON-STOCKHOLDERS-EQ> 228,883
29,267
0
<LONG-TERM-DEBT-NET> 208,450
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 30,487
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 3,641
<LEASES-CURRENT> 1,550
<OTHER-ITEMS-CAPITAL-AND-LIAB> 282,762
<TOT-CAPITALIZATION-AND-LIAB> 785,040
<GROSS-OPERATING-REVENUE> 343,341
<INCOME-TAX-EXPENSE> 16,431
<OTHER-OPERATING-EXPENSES> 49,748
<TOTAL-OPERATING-EXPENSES> 91,840
<OPERATING-INCOME-LOSS> 30,334
<OTHER-INCOME-NET> 73
<INCOME-BEFORE-INTEREST-EXPEN> 30,407
<TOTAL-INTEREST-EXPENSE> 4,904
<NET-INCOME> 25,503
482
<EARNINGS-AVAILABLE-FOR-COMM> 25,021
<COMMON-STOCK-DIVIDENDS> 10,335
<TOTAL-INTEREST-ON-BONDS> 4,192
<CASH-FLOW-OPERATIONS> 84,294
<EPS-PRIMARY> 48.66
<EPS-DILUTED> 48.66
</TABLE>
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