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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549-1004
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, 1999
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 2-1647
COMMONWEALTH GAS COMPANY
(Exact name of registrant as specified in its charter)
Massachusetts 04-1989250
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Main Street, Cambridge, Massachusetts 02142-9150
(Address of principal executive offices) (Zip Code)
(617) 225-4000
(Registrant's telephone number, including area code)
(Former name, address and 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.
Outstanding at
Class of Common Stock August 1, 1999
Common Stock, $25 par value 2,857,000 shares
The Company meets the conditions set forth in General Instruction H(1)(a) and
(b) of Form 10-Q as a wholly-owned subsidiary and is therefore filing this
Form with the reduced disclosure format.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
COMMONWEALTH GAS COMPANY
CONDENSED BALANCE SHEETS
JUNE 30, 1999 AND DECEMBER 31, 1998
ASSETS
(Dollars in thousands)
June 30, December 31,
1999 1998
(Unaudited)
PROPERTY, PLANT AND EQUIPMENT, at original cost$397,298 $392,612
Less - Accumulated depreciation 127,429 120,811
269,869 271,801
Add - Construction work in progress 3,506 1,066
273,375 272,867
CURRENT ASSETS
Cash 9 427
Advances to affiliates 14,825 -
Accounts receivable 27,090 39,741
Unbilled revenues 5,009 10,358
Inventories, at average cost 19,017 25,885
Prepaid taxes -
Property - 3,135
Income 4,647 5,034
Other 928 874
71,525 85,454
DEFERRED CHARGES
Regulatory assets 19,724 19,616
Other 4,903 5,307
24,627 24,923
$369,527 $383,244
See accompanying notes.
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COMMONWEALTH GAS COMPANY
CONDENSED BALANCE SHEETS
JUNE 30, 1999 AND DECEMBER 31, 1998
CAPITALIZATION AND LIABILITIES
(Dollars in thousands)
June 30, December 31,
1999 1998
(Unaudited)
CAPITALIZATION
Common Equity -
Common stock, $25 par value -
Authorized and outstanding -
2,857,000 shares, wholly-owned by
Commonwealth Energy System (Parent) $ 71,425 $ 71,425
Amounts paid in excess of par value 27,739 27,739
Retained earnings 23,845 17,998
123,009 117,162
Long-term debt, less current sinking
fund requirements 102,150 102,150
225,159 219,312
CURRENT LIABILITIES
Interim Financing -
Advances from affiliates - 30,825
Other Current Liabilities -
Current sinking fund requirements 3,650 3,650
Accounts payable -
Affiliates 4,385 2,527
Other 10,779 27,153
Accrued taxes -
Local property and other 610 3,251
Other 46,122 20,457
65,546 57,038
65,546 87,863
DEFERRED CREDITS
Accumulated deferred income taxes 41,847 40,767
Unamortized investment tax credits 5,166 5,263
Other 31,809 30,039
78,822 76,069
$369,527 $383,244
See accompanying notes.
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COMMONWEALTH GAS COMPANY
CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(Dollars in thousands - unaudited)
Three Months Ended Six Months Ended
1999 1998 1999 1998
GAS OPERATING REVENUES $ 53,898 $ 56,301 $164,218 $165,089
OPERATING EXPENSES
Cost of gas sold 27,093 32,618 80,006 88,163
Other operation and maintenance20,724 20,207 41,964 40,057
Depreciation 1,930 1,842 6,586 6,500
Taxes -
Income (103) (1,145) 9,487 7,311
Local property 1,091 994 3,914 3,721
Payroll and other 623 619 1,764 1,738
51,358 55,135 143,721 147,490
OPERATING INCOME 2,540 1,166 20,497 17,599
OTHER INCOME 417 100 693 280
INCOME BEFORE INTEREST
CHARGES 2,957 1,266 21,190 17,879
INTEREST CHARGES
Long-term debt 2,103 2,186 4,207 4,372
Other interest charges 832 645 1,589 1,373
Allowance for borrowed funds
used during construction (10) (20) (24) (29)
2,925 2,811 5,772 5,716
NET INCOME (LOSS) 32 (1,545) 15,418 12,163
RETAINED EARNINGS -
Beginning of period 33,384 30,579 17,998 16,871
Dividends on common stock (9,571) (10,713) (9,571) (10,713)
RETAINED EARNINGS -
End of period $ 23,845 $ 18,321 $ 23,845 $ 18,321
See accompanying notes.
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COMMONWEALTH GAS COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30 1999 AND 1998
(Dollars in thousands - unaudited)
1999 1998
OPERATING ACTIVITIES
Net income $ 15,418 $ 12,163
Effects of noncash items -
Depreciation and amortization 8,196 8,069
Deferred income taxes and investment
tax credits, net 773 650
Change in working capital, exclusive of cash,
advances to affiliates and interim financing 36,844 35,141
All other operating items 1,008 85
Net cash provided by operating activities 62,239 56,008
INVESTING ACTIVITIES
Additions to property, plant and equipment
(inclusive of AFUDC) (7,436) (7,428)
Advances to affiliates (14,825) (400)
Net cash used for investing activities (22,261) (7,828)
FINANCING ACTIVITIES
Payment of dividends (9,571) (10,713)
Payment of short-term borrowings - (39,325)
Payments to affiliates (30,825) -
Net cash used for financing activities (40,396) (50,038)
Net decrease in cash (418) (1,858)
Cash at beginning of period 427 1,867
Cash at end of period $ 9 $ 9
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest (net of capitalized amounts) $ 5,550 $ 5,462
Income taxes $ 8,195 $ 4,638
See accompanying notes.
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COMMONWEALTH GAS COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
(1) General Information
Commonwealth Gas Company (the Company) is a wholly-owned subsidiary
of Commonwealth Energy System. The parent company is referred to in this
report as the "Parent" and together with its subsidiaries is collectively
referred to as "COM/Energy." The Parent is an exempt public utility
holding company under the provisions of the Public Utility Holding
Company Act of 1935 and, in addition to its investment in the Company,
has interests in other utility and several non-regulated companies. In
December 1998, the Parent signed an Agreement and Plan of Merger with BEC
Energy, the parent company of Boston Edison Company, that will create an
energy delivery company serving approximately 1.3 million customers
located entirely within Massachusetts including more than one million
electric customers in 81 communities and the Company's 240,000 gas
customers in 51 communities.
The Company has 595 regular employees including 401 (67%) who are
represented by three collective bargaining units with contracts in place
until March and June of 2002 and April of 2003.
(2) Significant Accounting Policies
(a) Principles of Accounting
The Company's significant accounting policies are described in Note
2 of Notes to Financial Statements included in its 1998 Annual Report on
Form 10-K filed with the Securities and Exchange Commission. For interim
reporting purposes, the Company follows these same basic accounting
policies but considers each interim period as an integral part of an
annual period and makes allocations of certain expenses to interim
periods based upon estimates of revenue from firm sales for the year.
Generally, certain expenses which relate to more than one interim
period are allocated to other periods to more appropriately match
revenues and expenses. Principal items of expense which are allocated
other than on the basis of passage of time are depreciation and property
taxes. These expenses are recorded for interim reporting purposes based
upon projected gas revenue. Income tax expense is recorded using the
statutory rates in effect applied to book income subject to tax recorded
in the interim period.
The unaudited financial statements for the periods ended June 30,
1999 and 1998 reflect, in the opinion of the Company, all adjustments
necessary to summarize fairly the results for such periods. In addition,
certain prior period amounts are reclassified from time to time to
conform with the presentation used in the current period's financial
statements.
The results for interim periods are not necessarily indicative of
results for the entire year because of variations in gas consumption due
to the heating season and also because of the Company's seasonal rate
structure.
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COMMONWEALTH GAS COMPANY
(b) Regulatory Assets and Liabilities
The Company is regulated as to rates, accounting and other matters
by the Massachusetts Department of Telecommunications and Energy (DTE).
Based on the current regulatory framework, the Company accounts for
the economic effects of regulation in accordance with the provisions of
Statement of Financial Accounting Standards (SFAS) No. 71, "Accounting
for the Effects of Certain Types of Regulation." The Company has
established various regulatory assets in cases where the DTE has
permitted or is expected to permit recovery of specific costs over time.
If all or a separable portion of the Company's operations becomes no
longer subject to the provisions of SFAS No. 71, a write-off of related
regulatory assets and liabilities would be required, unless some form of
transition cost recovery continues through rates established and
collected for the Company's remaining regulated operations. In addition,
the Company would be required to determine any impairment to the carrying
costs of deregulated plant and inventory assets.
The principal regulatory assets included in deferred charges were as
follows:
June 30, December 31,
1999 1998
(Dollars in thousands)
Postretirement benefits costs $ 8,049 $ 8,568
FERC Order 636 transition costs 6,206 5,968
Environmental costs 5,469 5,080
$19,724 $19,616
The principal regulatory liability, reflected in deferred credits-
other and relating to income taxes, was $7.9 million at June 30, 1999 and
$8 million at December 31, 1998.
(3) Commitments
Construction Program
The Company is engaged in a continuous construction program presently
estimated at $93.4 million for the five-year period 1999 through 2003. Of
that amount, $18.6 million is estimated for 1999. As of June 30, 1999,
the Company's actual construction expenditures amounted to approximately
$7.4 million, including an allowance for funds used during construction.
The Company expects to finance these expenditures on an interim basis with
internally-generated funds and short-term borrowings which are ultimately
expected to be repaid with the proceeds from the issuance of long-term
debt and/or equity securities.
The program is subject to periodic review and revision because of
factors such as changes in business conditions, rates of growth, effects
of inflation, equipment delivery schedules, licensing delays, availability
and cost of capital and environmental regulations.
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COMMONWEALTH GAS COMPANY
Item 2. Management's Discussion and Analysis of Results of Operations
The following is a discussion of certain significant factors which have
affected operating revenues, expenses and net income during the periods
included in the accompanying Condensed Statements of Income. This discussion
should be read in conjunction with the Notes to Condensed Financial Statements
appearing elsewhere in this report.
A summary of the period to period changes in the principal items included
in the Condensed Statements of Income for the three and six months ended June
30, 1999 and 1998 and total throughput for these periods is shown below:
Three Months Six Months
Ended June 30, Ended June 30,
1999 and 1998 1999 and 1998
Increase (Decrease)
(Dollars in thousands)
Gas Operating Revenues $(2,403) (4.3)% $ (871) (0.5)%
Operating Expenses -
Cost of gas sold (5,525) (16.9) (8,157) (9.3)
Other operation and maintenance 517 2.6 1,907 4.8
Depreciation 88 4.8 86 1.3
Taxes -
Federal and state income 1,042 91.0 2,176 29.8
Local property and other 101 6.3 219 4.0
(3,777) (6.9) (3,769) (2.6)
Operating Income 1,374 117.8 2,898 16.5
Other Income 317 317.0 413 147.5
Income Before Interest Charges 1,691 133.6 3,311 18.5
Interest Charges 114 4.1 56 1.0
Net Income $ 1,577 102.1 $ 3,255 26.8
Firm Unit Sales - BBTU (970) (19.0) 870 4.4
The following is a summary of total throughput for the periods indicated:
Total Throughput - In Billions of British Thermal Units (BBTU)
Total
Interruptible Total Trans- Through-
Firm and Other Sales portation put
Three Months Ended
June 30, 1999 4,137 841 4,978 3,139 8,117
June 30, 1998 5,107 1,354 6,461 2,239 8,700
Six Months Ended
June 30, 1999 20,435 2,740 23,175 5,920 29,095
June 30, 1998 19,565 2,917 22,482 5,398 27,880
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COMMONWEALTH GAS COMPANY
Operating Revenues and Unit Sales
Operating revenues for the current quarter decreased by $2.4 million due
primarily to the 23% decrease in total unit sales and a $5.5 million decrease
in the cost of gas sold offset, in part, by a $1.7 million increase in
transportation revenues. For the current six-month period, operating revenues
decreased by $871,000 due to an $8.2 million decrease in the cost of gas sold
offset to a significant degree by higher transportation revenues ($3 million)
and a 3.1% increase in total unit sales.
The 4.4% increase in unit sales to firm customers during the current six-
month period reflects higher sales to all customer segments due to colder
weather conditions experienced during the first quarter of 1999 compared to
the same period last year. The 19% decrease in firm unit sales for the
current quarter reflects the warmer weather experienced throughout the region
during that time. The fluctuation in interruptible and other sales reflects
the competitive market that exists today in the natural gas industry.
Other Operation and Maintenance
Other operation and maintenance increased by $517,000 (2.6%) in the
current quarter due primarily to increases in employee benefit and insurance
costs ($338,000) and higher costs associated with a services company affiliate
which provides accounting, legal, computer-related and other services
(approximately $300,000). The $1.9 million (4.8%) increase in other operation
and maintenance costs for the current quarter reflects higher costs associated
with the aforementioned services company affiliate (approximately $900,000),
the absence in the current period of an adjustment to year-end 1997 payroll
(made in January 1998) related to the 1997 personnel reduction program
($527,000), higher maintenance costs associated with the Company's
distribution system ($197,000) and an increase in the provision for bad debts
($159,000).
Taxes
The increase in federal and state income taxes for both current periods
was due to the level of pre-tax income. Local property and other taxes
increased due primarily to higher tax rates and valuations in the Company's
service territory.
Other Income
The increase in other income for both current periods was due primarily to
higher revenues associated with the Company's merchandising program for water
heaters and heating systems and interest earned from the Company's
participation in the COM/Energy Money Pool.
Environmental Matters
The Company is participating in the assessment of a number of former
manufactured gas plant (MGP) sites and alleged MGP waste disposal locations to
determine if and to what extent such sites have been contaminated and whether
the Company may be responsible for remedial actions. The DTE has approved
recovery of costs associated with MGP sites. The Company is also involved in
certain other known or potentially contaminated sites where the associated
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COMMONWEALTH GAS COMPANY
costs may not be recoverable in rates. For further information on other
related environmental matters, refer to the Company's 1998 Annual Report on
Form 10-K.
Merger with BEC Energy
The electric utility industry has continued to change in response to
legislative and regulatory mandates that are aimed at lowering prices for
energy by creating a more competitive marketplace. These pressures have
resulted in an increasing trend in the electric industry to seek competitive
advantages and other benefits through business combinations. On December 5,
1998, COM/Energy and BEC Energy (BEC), headquartered in Boston, Massachusetts,
entered into an Agreement and Plan of Merger (the Merger Agreement). Pursuant
to the Merger Agreement, COM/Energy and BEC will be merged into a new holding
company to be known as NSTAR. The merger will create an energy delivery
company serving approximately 1.3 million customers located entirely within
Massachusetts, including more than one million electric customers in 81
communities and 240,000 gas customers in 51 communities. The merger is
expected to occur shortly after the satisfaction of certain conditions,
including the receipt of the required approvals. On June 24, 1999, common
shareholders of COM/Energy and BEC approved the merger. On June 30, 1999, the
FERC approved the merger. On July 27, 1999, the DTE approved the rate plan
filed by the retail utility subsidiaries of the two companies that is an
integral part of the merger. On August 16, 1999, the Massachusetts Attorney
General's Office and a group of four intervenors filed appeals of the DTE's
rate plan order with the Massachusetts Supreme Judicial Court. The
significant elements of the rate plan include a four-year distribution rate
freeze for each of the NSTAR retail utility subsidiaries and recovery of all
merger-related costs including an acquisition premium of approximately $516
million. On August 11, 1999, the Nuclear Regulatory Commission approved the
transfer of control of Canal Electric's interest in the Seabrook nuclear
generating plant from COM/Energy to NSTAR. The remaining merger approval from
the Securities and Exchange Commission is expected to be issued in August.
The Merger Agreement may be terminated under certain circumstances,
including by any party if the merger is not consummated by December 5, 1999,
subject to an automatic extension of six months if the requisite regulatory
approvals have not yet been obtained by such date. The merger will be
accounted for as an acquisition of COM/Energy by BEC using the purchase method
of accounting.
Upon effectiveness of the merger, Thomas J. May, BEC's current Chairman,
President and Chief Executive Officer (CEO), will become the Chairman and CEO
of NSTAR. Russell D. Wright, COM/Energy's current President and CEO, will
become the President and Chief Operating Officer of NSTAR and will serve on
NSTAR's board of trustees. Also, upon effectiveness of the merger, NSTAR's
board of trustees will consist of COM/Energy's and BEC's current trustees.
Year 2000
The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any computer
program that has date sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in a temporary
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COMMONWEALTH GAS COMPANY
inability to process transactions or engage in normal business activities.
COM/Energy has been involved in Year 2000 compliancy since 1996.
COM/Energy, on a coordinated basis and with the assistance of RCG Informa-
tion Technologies and other consultants, is addressing the Year 2000 issue.
COM/Energy has followed a five-phase process in its Year 2000 compliance
efforts, as follows: Awareness (through a series of internal announcements to
employees and through contacts with vendors); Inventory (all computers,
applications and embedded systems that could potentially be affected by the
Year 2000 problem); Assessment (all applications or components and the impact
on overall business operations and a plan to correct deficiencies and the cost
to do so); Remediation (the modification, upgrade or replacement of deficient
hardware and software applications and infrastructure modifications); and
Testing (a detailed, comprehensive testing program for the modified critical
component, system or software that involves the planning, execution and
analysis of results).
COM/Energy's inventory phase required an assessment of all date sensitive
information and transaction processing computer systems and determined that
approximately 90% of its software systems needed some modifications or
replacement. Plans were developed, implemented, and all of these systems have
been modified, upgraded or replaced. COM/Energy is currently at a 98%
completion level in its five-phase process for all systems, with completion of
the last stages of its extensive testing process for the final six systems
expected by September 30, 1999.
COM/Energy has also inventoried its non-information technology systems
that may be date sensitive (facilities, electric and gas operations, energy
supply/production and distribution) that use embedded technology such as
micro-controllers and micro-processors. COM/Energy has completed its
assessment of these non-information technology systems and determined that 20%
of these systems required remediation or replacement. COM/Energy has reported
to the North American Electric Reliability Council (NERC) that it met the NERC
target date of June 30, 1999 for 100% readiness of all its mission critical
components required for the continued safe and reliable delivery of electrici-
ty into the Year 2000. COM/Energy's gas and other operations are also at a
100% completion level for all mission critical issues regarding Year 2000
readiness. Overall, the non-information technology systems are at a 99%
completion level, with the final items scheduled for completion by August 31,
1999.
Modifying and testing COM/Energy's information and transaction processing
systems from 1996 through 2000 is currently expected to cost approximately
$10.2 million, including approximately $900,000, $3.1 million and $3.2 million
incurred through 1997, 1998 and the first half of 1999, respectively.
Approximately $3 million is expected to be spent during the remainder of 1999
and in 2000. Year 2000 costs have been expensed as incurred and will continue
to be funded from operations.
In addition to its internal efforts, COM/Energy has initiated formal
communications with its significant suppliers to determine the extent to which
COM/Energy may be vulnerable to its suppliers' failure to correct their own
Year 2000 issues. COM/Energy has ranked its vendors in terms of importance,
and as of June 30, 1999 has received adequate responses from 100% of its
"critical" and "high" rated vendors. Failure of COM/Energy's significant
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COMMONWEALTH GAS COMPANY
suppliers to address Year 2000 issues could have a material adverse effect on
COM/Energy's operations, although it is not possible at this time to quantify
the amount of business that might be lost or the costs that could be incurred
by COM/Energy. Contact with all other vendors is continuing and inadequate
responses are being pursued by COM/Energy. COM/Energy is prepared to replace
certain suppliers or to initiate other contingency plans for any vendor not
responding to COM/Energy's satisfaction.
In addition, parts of the global infrastructure, including national
banking systems, electrical power grids, gas pipelines, transportation
facilities, communications and governmental activities, may not be fully
functional after 1999. Infrastructure failures could significantly reduce
COM/Energy's ability to acquire energy and its ability to serve its customers
as effectively as they are now being served. COM/Energy has identified the
elements of the infrastructure that are critical to its operations and has
requested and obtained information as to the expected Year 2000 readiness of
these elements.
COM/Energy has completed the development of its Year 2000 contingency
plans for all operational areas that may be effected by Year 2000 issues.
COM/Energy's gas and electric operations currently have emergency operating
plans, as well as information technology disaster recovery plans, as compo-
nents of their standard operating procedures. These plans have been enhanced,
identifying potential Year 2000 risks to normal operations and the appropriate
response to these potential failures. These plans also include actions to be
taken in the event of third party and infrastructure failures with regard to
the Year 2000 event, although in certain cases, there may be no practical
alternative course of action available to COM/Energy. The implementation of
the contingency plans will continue throughout the remainder of 1999.
COM/Energy is working with other energy industry entities, both regionally
and nationally, with respect to Year 2000 readiness and is cooperating in the
development of local and wide-scale contingency planning.
While COM/Energy believes its efforts to address the Year 2000 issue will
allow it to be successful in avoiding any material adverse effect on
COM/Energy's operations or financial condition, it recognizes that failing to
resolve Year 2000 issues on a timely basis would, in a "most reasonably likely
worst case scenario," significantly limit its ability to acquire and distrib-
ute energy and process its daily business transactions for a period of time,
especially if such failure is coupled with third party or infrastructure
failures. Similarly, COM/Energy could be significantly effected by the
failure of one or more significant suppliers, customers or components of the
infrastructure to conduct their respective operations after 1999. Adverse
affects on COM/Energy could include, among other things, business disruption,
increased costs, loss of business and other similar risks.
The foregoing discussion regarding Year 2000 project timing, effective-
ness, implementation and costs includes forward-looking statements that are
based on management's current evaluation using available information. Factors
that might cause material changes include,but are not limited to, the avail-
ability of key Year 2000 personnel, the readiness of third parties, and
COM/Energy's ability to respond to unforeseen Year 2000 complications.
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COMMONWEALTH GAS COMPANY
New Accounting Standard
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 (SFAS No. 133), "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133 establishes
accounting and reporting standards requiring that every derivative instrument
(including certain derivative instruments embedded in other contracts possibly
including fixed-price gas supply contracts) be recorded on the balance sheet
as either an asset or liability measured at its fair value. SFAS No. 133
requires that changes in the derivative's fair value be recognized currently
in earnings unless specific hedge accounting criteria are met. Special
accounting for qualifying hedges allows a derivative's gains and losses to
offset related results on the hedged item in the income statement, and
requires that a company must formally document, designate and assess the
effectiveness of transactions that receive hedge accounting.
SFAS No. 133 is effective for fiscal years beginning after June 15, 2000
and may be implemented as of the beginning of any fiscal quarter after
issuance but cannot be applied retroactively. SFAS No. 133 must be applied to
derivative instruments and certain derivative instruments embedded in hybrid
contracts that were issued, acquired or substantively modified after December
31, 1997 and, at the company's election, before January 1, 1998.
The Company has not yet quantified the impacts of adopting SFAS No. 133 on
its financial statements and has not determined the timing of its method of
adopting SFAS No. 133.
Forward-Looking Statements
This discussion contains statements which, to the extent it is not a
recitation of historical fact, constitute "forward-looking statements" and is
intended to be subject to the safe harbor protection provided by the Private
Securities Litigation Reform Act of 1995. A number of important factors
affecting the Company's business and financial results could cause actual
results to differ materially from those reflected in the forward-looking
statements or projected amounts. Those factors include developments in the
legislative, regulatory and competitive environment, certain environmental
matters, demands for capital and the availability of cash from various
sources.
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COMMONWEALTH GAS COMPANY
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not a party to any pending material legal proceeding.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule
Filed herewith as Exhibit 1 is the Financial Data Schedule for the
six months ended June 30, 1999.
(b) Reports on Form 8-K
No reports on Form 8-K were filed for the three months ended June 30,
1999.
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COMMONWEALTH GAS COMPANY
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COMMONWEALTH GAS COMPANY
(Registrant)
Principal Financial and
Accounting Officer:
JAMES D. RAPPOLI
James D. Rappoli,
Financial Vice President
and Treasurer
Date: August 16, 1999
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the
balance sheet, statement of income, statement of retained earnings and
statement of cash flows contained in Form 10-Q of Commonwealth Gas Company for
the six months ended June 30, 1999 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000022620
<NAME> COMMONWEALTH GAS COMPANY
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<PERIOD-TYPE> 6-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 273,375
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 71,525
<TOTAL-DEFERRED-CHARGES> 24,627
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 369,527
<COMMON> 71,425
<CAPITAL-SURPLUS-PAID-IN> 27,739
<RETAINED-EARNINGS> 23,845
<TOTAL-COMMON-STOCKHOLDERS-EQ> 123,009
0
0
<LONG-TERM-DEBT-NET> 102,150
<SHORT-TERM-NOTES> 0
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<OTHER-ITEMS-CAPITAL-AND-LIAB> 140,718
<TOT-CAPITALIZATION-AND-LIAB> 369,527
<GROSS-OPERATING-REVENUE> 164,218
<INCOME-TAX-EXPENSE> 9,487
<OTHER-OPERATING-EXPENSES> 134,234
<TOTAL-OPERATING-EXPENSES> 143,721
<OPERATING-INCOME-LOSS> 20,497
<OTHER-INCOME-NET> 693
<INCOME-BEFORE-INTEREST-EXPEN> 21,190
<TOTAL-INTEREST-EXPENSE> 5,772
<NET-INCOME> 15,418
0
<EARNINGS-AVAILABLE-FOR-COMM> 15,418
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 4,207
<CASH-FLOW-OPERATIONS> 62,239
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
