UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[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 No. 1-8369
CONNECTICUT ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
Connecticut 06-0869582
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
855 Main Street
Bridgeport, Connecticut 06604
(Address of principal executive offices) (Zip Code)
(203) 579-1732
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check 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.
Class Outstanding at May 3, 1996
----- --------------------------
Common Stock, $1 par value 8,940,126
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
CONNECTICUT ENERGY CORPORATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share)
(Unaudited)
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
March 31, March 31,
------------------------- -------------------------
1996 1995 1996 1995
---- ---- ---- ----
Operating Revenues..................... $ 120,189 $ 103,284 $ 189,964 $ 168,807
Purchased gas.......................... 66,766 49,998 104,259 83,275
--------- --------- --------- ---------
Gross margin........................... 53,423 53,286 85,705 85,532
Operating Expenses:
Operations........................... 14,294 14,777 26,593 27,914
Maintenance.......................... 1,063 1,020 2,111 1,996
Depreciation ........................ 3,737 3,473 7,474 6,949
Federal and state income taxes....... 9,449 8,981 12,620 11,911
Municipal, gross earnings and
other taxes........................ 6,773 6,047 10,552 9,702
--------- --------- --------- ---------
Total operating expenses............... 35,316 34,298 59,350 58,472
--------- --------- --------- ---------
Operating income....................... 18,107 18,988 26,355 27,060
Other deductions, net.................. 122 165 252 320
Interest Expense:
Interest on long-term debt and
amortization of debt issue costs... 2,701 2,716 5,403 5,432
Other interest, net.................. 649 392 1,036 652
--------- --------- --------- ---------
Total interest expense................. 3,350 3,108 6,439 6,084
--------- --------- --------- ---------
Net Income............................. $ 14,635 $ 15,715 $ 19,664 $ 20,656
========= ========= ========= =========
Net income per share................... $ 1.64 $ 1.79 $ 2.21 $ 2.37
========= ========= ========= =========
Dividends paid per share............... $ 0.325 $ 0.325 $ 0.65 $ 0.65
--------- --------- --------- ---------
Weighted average number of common
shares outstanding during period..... 8,903,982 8,755,722 8,887,454 8,732,151
--------- --------- --------- ---------
See Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
CONNECTICUT ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share)
<S> <C> <C>
Mar. 31, Sept. 30,
1996 1995
----------- ---------
Assets (Unaudited)
- ------
Utility Plant:
Gross utility plant............................... $361,178 $354,847
Less--accumulated depreciation.................... 112,961 107,244
-------- --------
Net utility plant............................... 248,217 247,603
Nonutility property, net............................ 2,772 2,541
-------- --------
Net utility plant and other property................ 250,989 250,144
-------- --------
Current Assets:
Cash and cash equivalents......................... 5,674 4,635
-------- --------
Accounts receivable............................... 68,677 27,009
Less--allowance for doubtful accounts............. 3,125 3,553
-------- --------
Net accounts receivable......................... 65,552 23,456
-------- --------
Accrued utility revenues, net..................... 7,528 2,675
Unrecovered purchased gas costs................... --- 2,972
Inventories....................................... 6,155 13,115
Prepaid expenses.................................. 1,359 2,247
-------- --------
Total current assets................................ 86,268 49,100
-------- --------
Deferred Charges and Other Assets:
Unamortized debt expenses......................... 6,018 6,090
Unrecovered deferred income taxes................. 38,839 37,717
Other............................................. 30,711 27,037
-------- --------
Total deferred charges and other assets............. 75,568 70,844
-------- --------
Total assets........................................ $412,825 $370,088
======== ========
See Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
CONNECTICUT ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share)
<S> <C> <C>
Mar. 31, Sept. 30,
1996 1995
----------- ---------
Capitalization and Liabilities (Unaudited)
- ------------------------------
Common Shareholders' Equity:
Common Stock: authorized--20,000,000 shares, par value $1 per share, issued and
outstanding--8,936,493 shares; 8,865,210 shares............................... $ 8,936 $ 8,865
Capital in excess of par value.................................................. 89,673 88,295
Retained earnings............................................................... 48,286 34,401
-------- --------
Total common shareholders' equity................................................. 146,895 131,561
-------- --------
Preferred Stock:
The Southern Connecticut Gas Company Redeemable Preferred Stock: authorized--
200,000 shares, par value $100 per share 4.75% cumulative series, none issued;
authorized--600,000 shares, par value $1 per share, none issued............... --- ---
Preference Stock:
The Southern Connecticut Gas Company: authorized--1,000,000 shares, par value
$1 per share, none issued
Connecticut Energy Corporation: authorized--1,000,000 shares, par value $1 per
share, none issued
Total preferred stock............................................................. --- ---
-------- --------
Long-term debt.................................................................... 119,182 119,322
-------- --------
Total capitalization.............................................................. 266,077 250,883
-------- --------
Current Liabilities:
Short-term borrowings........................................................... 20,600 24,200
Current maturities of long-term debt............................................ 594 594
Accounts payable................................................................ 15,057 9,586
Refunds due customers........................................................... 423 862
Federal, state and deferred income taxes........................................ 14,347 2,525
Property and other accrued taxes................................................ 9,678 4,877
Interest payable................................................................ 3,290 3,311
Customers' deposits............................................................. 2,101 1,843
Refundable purchased gas costs.................................................. 10,980 ---
Other accrued liabilities....................................................... 3,086 3,419
-------- --------
Total current liabilities......................................................... 80,156 51,217
-------- --------
Deferred Credits:
Deferred income taxes and investment tax credits................................ 61,827 59,920
Other........................................................................... 4,765 8,068
-------- --------
Total deferred credits............................................................ 66,592 67,988
-------- --------
Total capitalization and liabilities.............................................. $412,825 $370,088
======== ========
See Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
CONNECTICUT ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<S> <C> <C>
Six Months Ended
Mar. 31,
------------------
1996 1995
---- ----
Net cash provided by operating activities............. $19,711 $26,567
------- -------
Cash Flows from Investing Activities:
Capital expenditures................................ (8,503) (15,111)
Proceeds from sale of subsidiaries.................. 3 3
Contributions in aid of construction................ 31 16
Payments for retirement of utility plant............ (33) (237)
Investments in energy ventures...................... (2,100) (50)
------- -------
Net cash used by investing activities................. (10,602) (15,379)
------- -------
Cash Flows from Financing Activities:
Dividends paid on common stock...................... (5,779) (5,680)
Issuance of common stock............................ 1,449 1,764
Repayments of long-term debt........................ (140) (141)
Decrease in short-term borrowings................... (3,600) (4,800)
------- -------
Net cash used by financing activities................. (8,070) (8,857)
------- -------
Net increase in cash and cash equivalents............. 1,039 2,331
Cash and cash equivalents at beginning of period...... 4,635 1,637
------- -------
Cash and cash equivalents at end of period............ $ 5,674 $ 3,968
======= =======
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for:
Interest............................................ $ 6,447 $ 6,023
Income taxes........................................ $ 675 $ 2,176
See Notes to Consolidated Financial Statements.
</TABLE>
CONNECTICUT ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The unaudited consolidated financial statements presented
herein should be read in conjunction with the consolidated
financial statements of Connecticut Energy Corporation
("Connecticut Energy" or "the Company") for the fiscal year ended
September 30, 1995 as presented in the Annual Report on Form 10-K.
In the opinion of management, the accompanying financial
information reflects all adjustments which are necessary to provide
a fair presentation of the interim periods shown. All such
adjustments are of a normal recurring nature.
In preparing the financial statements in conformity with
generally accepted accounting principles, management uses
estimates. The Company discloses estimates in the financial
statements where there is a reasonable possibility for change in
the near term. For this purpose, near term is defined as a period
of time not to exceed one year from the date of the financial
statements.
The Company's financial statements have been prepared
based on management's estimates of the impact of regulations,
legislation and judicial developments on the Company or significant
groups of customers. The recorded amount of certain accruals,
reserves, deferred charges and assets could be materially impacted
if circumstances change which affect these estimates.
2. The Company's principal subsidiary, The Southern
Connecticut Gas Company ("Southern"), prepares its financial
statements in accordance with the provisions of Statement of
Financial Accounting Standards No. 71, "Accounting for the Effects
of Certain Types of Regulation" ("SFAS 71"), which requires a cost-
based, rate-regulated enterprise such as Southern to reflect the
impact of regulatory decisions in its financial statements. The
Connecticut Department of Public Utility Control's ("DPUC") actions
through the ratemaking process can create regulatory assets in
which costs are allowed for ratemaking purposes in a period other
than the period in which the costs would be charged to expense if
the reporting entity were unregulated.
In the application of SFAS 71, Southern follows
accounting policies that reflect the impact of the rate treatment
of certain events or transactions that are permitted to differ from
generally accepted accounting principles. The most significant of
these policies include the recording of deferred gas costs,
pipeline transition costs, environmental evaluation costs, hardship
heating customer accounts receivable and an unfunded deferred
income tax liability, with a corresponding unrecovered asset, for
temporary differences previously flowed through to ratepayers.
Based on current regulations and recent DPUC decisions,
the Company believes that its use of regulatory accounting for
Southern is appropriate and in accordance with the provisions of
SFAS 71.
3. Due to the seasonal nature of gas sales for space heating
purposes by Southern, the results of operations for the six months
ended March 31, 1996 are not indicative of the results to be
expected for the fiscal year ending September 30, 1996.
4. Included in other deferred charges are amounts related to
the deferral of certain hardship heating customer accounts
receivable arrearages totalling $8,927,000 and $10,223,000 at March
31, 1996 and September 30, 1995, respectively; the deferral of
certain shortfalls in energy assistance funding related to the
1991/92 and 1992/93 heating seasons amounting to $1,702,000 and
$2,122,000 at March 31, 1996 and September 30, 1995, respectively;
and prepaid pension and postretirement medical contributions of
$10,344,000 and $7,969,000 at March 31, 1996 and September 30,
1995, respectively. These deferred charges are among other
miscellaneous deferred charges which Southern has been allowed to
recover in rates over periods ranging from three to five years in
accordance with the DPUC's Decision in Southern's last rate case.
5. Included in other deferred credits are amounts related to
various nonqualified benefit arrangements totalling $2,393,000 and
$2,190,000 at March 31, 1996 and September 30, 1995, respectively.
Also included are amounts related to Southern's interruptible
margin sharing mechanisms totalling $1,670,000 and $4,851,000 at
March 31, 1996 and September 30, 1995, respectively.
6. Southern has identified coal tar residue at three sites
in Connecticut resulting from coal gasification operations
conducted at those sites by Southern's predecessors from the late
1800s through the first part of this century. Many gas
distribution companies throughout the country carried on such gas
manufacturing operations during the same period. See section in
Management's Discussion and Analysis entitled "Environmental
Matters" for further detail.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net Income
- ----------
Connecticut Energy Corporation's ("Connecticut Energy" or "the
Company") consolidated net income for the three and six months ended
March 31, 1996 and 1995 is detailed below:
Three Months Ended Six Months Ended
March 31, March 31,
------------------ ----------------
(in thousands, except 1996 1995 1996 1995
per share) ---- ---- ---- ----
Net Income $14,635 $15,715 $19,664 $20,656
======= ======= ======= =======
Net Income Per Share $ 1.64 $ 1.79 $ 2.21 $ 2.37
======= ======= ======= =======
Weighted Average
Shares Outstanding 8,904 8,756 8,887 8,732
------- ------- ------- -------
Lower margins retained by the Company's principal subsidiary,
The Southern Connecticut Gas Company ("Southern"), from
interruptible sales and services for the three and six months ended
March 31, 1996 were partially offset by higher firm margins. Firm
margins were higher primarily due to higher use per customer and the
addition of new residential and commercial heating customers. Lower
operations expense for the three and six months ended March 31, 1996
was offset by higher costs for maintenance, depreciation, federal
and state taxes and short-term interest, resulting in lower net
income for the three and six month periods ended March 31, 1996.
Total Sales and Transportation Volumes
- --------------------------------------
Southern's total volumes of gas sold and transported for the
three and six months ended March 31, 1996 were 13,270 and 24,190
MMcf, respectively, representing decreases of approximately 23% and
19% compared to the three and six months ended March 31, 1995,
respectively. These decreases were primarily attributable to lower
interruptible sales and services volumes due to the colder weather
and the competitive price of alternate fuels. Partially offsetting
these decreases were increases in firm sales volumes.
Firm Sales Volumes
- ------------------
Firm sales volumes for the three and six months ended March 31,
1996 increased approximately 16% compared to the corresponding 1995
periods principally due to weather which was approximately 14% and
18% colder, respectively, than the three and six months ended March
31, 1995, higher use per customer and the addition of new
residential and commercial heating customers.
Interruptible Sales and Transportation Volumes
- ----------------------------------------------
The chart below depicts volumes of gas both sold to and
transported for interruptible customers, off-system sales volumes
and off-system transportation volumes under a special contract with
The Connecticut Light and Power Company for its Devon generating
station ("Devon Station") as well as gross margins earned and
retained due to the margin sharing mechanism on these services:
Three Months Ended Six Months Ended
March 31, March 31,
------------------ ----------------
(in thousands) 1996 1995 1996 1995
---- ---- ---- ----
Gross Margin Earned $3,058 $4,114 $5,896 $7,066
====== ====== ====== ======
Gross Margin Retained $2,829 $4,103 $3,811 $4,819
====== ====== ====== ======
Volumes Sold and
Transported (MMcf) 2,179 7,552 6,485 14,545
------ ------ ------ ------
Margins earned on volumes delivered to interruptible customers
vary depending upon the relationship of the market price for
alternate fuels to the price of natural gas and related
transportation. Additionally, margins earned, net of gross earnings
tax, from on-system interruptible service in excess of an annual
target are allocated through a margin sharing mechanism between firm
customers and Southern.
Margins retained by Southern were lower for the three and six
months ended March 31, 1996 compared to the corresponding 1995
periods principally due to lower volumes of on-system interruptible
sales resulting from the colder weather in the 1996 periods and the
competitive price of alternate fuels. Volumes for the three and six
months ended March 31, 1996 were also affected by the absence of
off-system transportation deliveries to the Devon Station.
Gross Margin
- ------------
The Company's gross margin was slightly higher for the three
and six months ended March 31, 1996 compared to the corresponding
1995 periods.
Southern's firm rates include a Purchased Gas Adjustment clause
("PGA") which allows Southern to pass through to its customers,
through periodic adjustments to amounts billed, increases or
decreases in costs incurred for purchased gas as compared to gas
costs embedded in base rate levels without affecting gross margin.
For the three months ended March 31, 1996, adjustments related to
Southern's PGA increased revenues and gas costs by approximately
$5,746,000 compared to PGA adjustments for the corresponding 1995
period which decreased revenues and gas costs by approximately
$2,353,000. For the six months ended March 31, 1996, PGA
adjustments increased revenues and gas costs by approximately
$6,035,000 compared to PGA adjustments for the corresponding 1995
period which decreased revenues and gas costs by approximately
$2,602,000.
Operations Expense
- ------------------
Operations expense for the three and six months ended March 31,
1996 decreased approximately 3% and 5%, respectively, compared to
the corresponding 1995 periods.
Operations expense for the three months ended March 31, 1996
was lower primarily due to decreased pension and postretirement
health care costs.
Operations expense for the six months ended March 31, 1996 was
lower due to slightly decreased labor costs, increased rates for
service on customers' premises and decreased pension and
postretirement health care costs. Partially offseting these
positive effects on operations expense was an increase related to
regulatory commission expense.
Depreciation
- ------------
Depreciation expense for the three and six months ended March
31, 1996 increased approximately 8%, compared to the corresponding
1995 periods primarily due to additions to plant in service by
Southern.
Federal and State Income Taxes
- ------------------------------
The total provision for federal and state income taxes for the
three and six months ended March 31, 1996 increased approximately 5%
and 6%, respectively, compared to the corresponding 1995 periods
primarily due to a higher effective tax rate for the 1996 periods.
Factors causing the higher effective tax rate were lower projected
amounts of forgiveness to be granted to Southern's hardship
customers under a Connecticut Department of Public Utility Control
("DPUC") approved 3-Way-Payment Plan and lower projected amounts of
tax deductible employee benefit plan contributions.
Interest Expense
- ----------------
Total interest expense increased approximately 8% and 6% for
the three and six months ended March 31, 1996, respectively,
compared to the corresponding 1995 periods primarily because of
higher average short-term borrowings and higher interest expense on
amounts associated with the margin sharing mechanism. Total
interest expense for the three months ended March 31, 1996 was
additionally impacted by higher interest expense on deferred gas
costs.
LIQUIDITY AND CAPITAL RESOURCES
Operating Activities
- --------------------
The seasonal nature of Southern's business creates large short-
term cash demands primarily to finance gas purchases, customer
accounts receivable and certain tax payments. To provide these
funds, as well as funds for its capital expenditure program and
other corporate purposes, Connecticut Energy has committed lines of
credit with a number of banks totalling $37,000,000. Of this total,
Southern has committed lines of credit of $32,000,000 in addition to
uncommitted lines of credit with two of its banks totalling
$14,000,000 and a revolving credit line agreement for up to
$20,000,000 with one of its banks. This latter agreement has a
revolving credit feature through December 21, 1996, followed by a
term loan period through December 21, 2000. At March 31, 1996, the
Company had unused lines of credit of $50,400,000. Because of the
availability of short-term credit and the ability to issue long-term
debt and additional equity, management believes it has adequate
financial flexibility to meet its anticipated cash needs.
Operating cash flows for the six months ended March 31, 1996
were negatively impacted by a higher accounts receivable balance due
to the colder weather and a higher unrecovered purchased gas cost
balance. Partially offsetting these items were lower gas
inventories and higher accounts payable, deferred tax and refundable
purchased gas cost balances.
In March 1996, Southern successfully completed contract
negotiations with its bargaining unit employees. The new contract
will have a five-year term. The expired contract had a three-year
term.
Investing Activities
- --------------------
Capital expenditures approximated $8,472,000 and $15,095,000
for the six months ended March 31, 1996 and 1995, respectively.
Capital expenditures for the six months ended March 31, 1996 were
approximately 44% lower than the 1995 period due to the impact of
more severe winter weather on construction activity. The level of
capital expenditures will likely increase as Southern enters into
its normal construction season. On an annual basis, Southern relies
upon cash flows from operating activities to fund a portion of these
expenditures, with the remainder funded by short-term borrowings
and, at some later date, long-term debt and capital stock
financings.
In February 1996, the Company changed the name of one of its
nonutility subsidiaries from Total Energy Services Group, Inc. to
CNE Energy Services Group, Inc.
Financing Activities
- --------------------
Southern's financing plans for 1996 include a Medium-Term Note
("MTN") program, which has been approved by the DPUC. This program
permits the issuance from time to time of up to $75,000,000 of
secured MTNs over a four-year period in varying amounts and with
varying terms and will likely commence in the summer of 1996.
Proceeds from the sale of the medium-term notes will be used to
reduce short-term borrowings incurred primarily in connection with
Southern's capital expenditure program and for other general corporate
purposes. The method, timing and amounts of any future financings
by the Company or Southern will depend on a variety of factors,
including capitalization ratios, coverage ratios, interest costs,
the state of the capital markets and general economic conditions.
Rate Matters
- ------------
In a Decision dated August 23, 1995, the DPUC provided the
Connecticut local gas distribution companies ("LDC") with guidelines
by which conservation related expenditures not included in current
rates charged would be evaluated by the DPUC for recovery through a
Conservation Adjustment Mechanism ("CAM"). Based upon a DPUC review
of Southern's monthly PGA filing in January, Southern was allowed to
include as part of its monthly PGA a separate CAM factor to begin
recovery of these deferred expenditures.
Pursuant to Southern's 1993 rate order, which incorporated the
provisions of the previously approved Partial Settlement of Certain
Issues, a target margin, net of gross earnings tax, of $4,000,000
was established for on-system sales and transportation to Southern's
interruptible customers. Margins earned in excess of this target
are shared between customers and shareholders on an 80%/20% split.
In January 1996, Southern requested a reopening of the 1993 rate
proceeding to propose a plan to redirect excess margins to be
returned to ratepayers for calendar years 1996, 1997 and 1998 to
fund certain economic development initiatives in Bridgeport ("BEDI")
and provide grants to reduce Southern's current hardship assistance
balances ("HAB"). Southern's proposal estimates that such ratepayer
margins to be earned over the proposed three-year period would be
approximately $14,000,000, which would be divided equally between
BEDI and HAB.
Southern's proposal relating to the BEDI included job training
and services, certain loan subsidies and health promotion outreach
services.
Redirection of ratepayer margins for HAB would benefit
Southern's hardship customers by reducing their accounts receivable
arrearages and would also benefit Southern by reducing its provision
for uncollectibles for such accounts.
On April 26, 1996 the DPUC issued a final Decision regarding
Southern's proposal. The Decision effectively approved Southern's
proposals with certain revisions, including certain modifications in
the direction of BEDI funding initiatives, the imposition of a cap
of $6,000,000 per year on the program to be split between BEDI and
HAB and certain implementation and status reporting requirements.
On August 2, 1995, the DPUC issued a final Decision in Docket
No. 94-11-12, DPUC Review of Connecticut Local Distribution
Companies' Cost of Service Study Methodologies. In this docket, the
DPUC investigated the issues surrounding the development of firm
transportation rates at the state level in response to Federal Energy
Regulatory Commission Order No. 636 and provided guidelines for the
development of firm transportation rates to be offered by Connecticut's
three LDCs. Thereafter, the LDCs filed specific firm transportation
rate proposals in separate company rate dockets.
Effective April 1, 1996, commercial and industrial gas
customers in Connecticut are able to contract for their gas supplies
from sources other than the LDCs. Customers now have the option of
purchasing gas from independent brokers and marketers and paying the
LDC only for the transportation of that gas through its distribution
system at DPUC approved rates. The new firm transportation rates
are margin neutral to Southern because margins provided by the
unbundled service are the same as margins provided by the bundled
service. Unbundling also allows Southern to offer a broader array
of service options to its customers.
Environmental Matters
- ---------------------
Southern has identified coal tar residue at three sites in
Connecticut resulting from coal gasification operations conducted at
those sites by Southern's predecessors from the late 1800s through
the first part of this century. Many gas distribution companies
throughout the country carried on such gas manufacturing operations
during the same period. The coal tar residue is not designated a
hazardous material by any federal or Connecticut agency, but some of
its constituents are classified as hazardous.
On April 27, 1992, Southern notified the Connecticut Department
of Environmental Protection ("DEP") and the United States
Environmental Protection Agency of the presence of coal tar residue
at the sites. On November 9, 1994, the DEP informed Southern that
it had performed a preliminary review of the information provided to
it by Southern and had determined that, based on current priorities
and limited staff resources, a comprehensive review of site
conditions and subsequent participation by the DEP "are not possible
at this time." Until the DEP conducts a comprehensive review, no
discussions with it addressing the extent, timing and type of
remedial action, if any, can occur.
Given the DEP's response, management cannot at this time
predict the costs of any future site analysis and remediation, if
any, nor can it estimate when any such costs, if any, would be
incurred. While such future analytical and cleanup costs could
possibly be significant, management believes, based upon the
provisions of the Partial Settlement in Southern's last rate order,
that Southern will be able to recover these costs through its
customer rates. Although the method, timing and extent of any
recovery remain uncertain, management currently does not expect that
the incurrence of such costs will materially adversely impact the
Company's financial condition or results of operations.
PART II- OTHER INFORMATION
Items 1, 2, 3 and 5 are inapplicable.
Item 4. Submission of Matters to a Vote of Security-Holders
---------------------------------------------------
(a) The annual meeting of the registrant was held on January
30, 1996.
(b) Election of Directors:
Non-
For Against Abstain Vote
--- ------- ------- ----
James P. Comer, M.D. 7,183,635 175,460 0 0
Paul H. Johnson 7,220,625 138,470 0 0
Samuel M. Sugden 7,167,020 192,075 0 0
Helen B. Wasserman 7,234,209 124,886 0 0
(c) Election to employ the firm of Coopers & Lybrand L.L.P. as
the independent accountants to audit the books and affairs
of the registrant and its subsidiaries for the 1996 fiscal
year:
Non-
For Against Abstain Vote
--- ------- ------- ----
Coopers & Lybrand L.L.P. 7,233,318 46,795 78,982 0
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
Exhibit 27 Financial Data Schedule
Submitted only in electronic format to the
Securities and Exchange Commission.
(b) Reports on Form 8-K:
There were no reports filed on Form 8-K during
the quarter.
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.
CONNECTICUT ENERGY CORPORATION
(Registrant)
DATE: May 9, 1996 /s/ Vincent L. Ammann, Jr.
----------- ---------------------------
Vincent L. Ammann, Jr.
Vice President and
Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> UT
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> MAR-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 248,217
<OTHER-PROPERTY-AND-INVEST> 2,772
<TOTAL-CURRENT-ASSETS> 86,268
<TOTAL-DEFERRED-CHARGES> 75,568
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 412,825
<COMMON> 8,936
<CAPITAL-SURPLUS-PAID-IN> 89,673
<RETAINED-EARNINGS> 48,286
<TOTAL-COMMON-STOCKHOLDERS-EQ> 146,895
0
0
<LONG-TERM-DEBT-NET> 119,182
<SHORT-TERM-NOTES> 20,600
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 594
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 125,554
<TOT-CAPITALIZATION-AND-LIAB> 412,825
<GROSS-OPERATING-REVENUE> 120,189
<INCOME-TAX-EXPENSE> 9,449
<OTHER-OPERATING-EXPENSES> 92,633
<TOTAL-OPERATING-EXPENSES> 102,082
<OPERATING-INCOME-LOSS> 18,107
<OTHER-INCOME-NET> (122)
<INCOME-BEFORE-INTEREST-EXPEN> 17,985
<TOTAL-INTEREST-EXPENSE> 3,350
<NET-INCOME> 14,635
0
<EARNINGS-AVAILABLE-FOR-COMM> 14,635
<COMMON-STOCK-DIVIDENDS> 5,779
<TOTAL-INTEREST-ON-BONDS> 2,701
<CASH-FLOW-OPERATIONS> 19,711
<EPS-PRIMARY> 1.64
<EPS-DILUTED> 0
</TABLE>
