SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark One)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (Fee required)
For the fiscal year ended June 30, 1995 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
(No fee required)
For the transition period from to .
Commission File Number 0-1857-3
The Berkshire Gas Company
(Exact Name of Registrant as Specified in Its Charter)
Massachusetts 04-1731220
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
115 Cheshire Road, Pittsfield, MA 01201-1879
(Address of Principal Executive Offices) (Zip Code)
(413) 442-1511
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $2.50 Per Share
(Title of Class)
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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
Aggregate market value of shares of Common Stock, $2.50 par value of
the Registrant held by non-affiliates as of July 31, 1995 was $33,020,921.
Total shares of common stock of the Registrant outstanding as of July 31,
1995 were 2,112,233.
Documents Incorporated by Reference:
1. The Berkshire Gas Company's Annual Report to Shareholders for the
fiscal year ended June 30, 1995 (Items 5, 6, 7, and 8 of Part II).
2. The Berkshire Gas Company's definitive Proxy Statement, dated
October 10, 1995, filed pursuant to Regulation 14A under the Securities
and Exchange Act of 1934 (Items 10, 11, 12 and 13 of Part III).
THE BERKSHIRE GAS COMPANY
Table of Contents
PART I
------
Item Page
Number Number
------ ------
Business 1 3
Properties 2 13
Legal Proceedings 3 13
Submission of Matters to a Vote of Security Holders 4 14
Additional Items - 14
(Executive Officers of the Registrant
PART II
-------
Market For Registrant's Common Equity and Related
Stockholder Matters 5 15
Selected Financial Data 6 15
Management's Discussion and Analysis of Financial
Condition and Results of Operations 7 15
Financial Statements and Supplementary Data 8 15
Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 9 15
PART III
--------
Directors and Executive Officers of the Registrant 10 16
Executive Compensation 11 16
Security Ownership of Certain Beneficial Owners and
Management 12 16
Certain Relationships and Related Transactions 13 16
PART IV
-------
Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 14 16
THE BERKSHIRE GAS COMPANY
PART 1
------
Item 1. Business
- ----------------
General
The Berkshire Gas Company ("the Company") was incorporated in the
Commonwealth of Massachusetts in 1853 and is a publicly-held utility engaged
in the distribution and sale of natural gas for residential, commercial and
industrial use. The Company also has an appliance rental division that sells
and leases gas burning equipment. Through its Berkshire Propane division,
the Company markets liquefied petroleum gas.
Territory Served
The Company's utility service territory includes 19 communities in the
western portion of the Commonwealth of Massachusetts, including the cities
of Pittsfield and North Adams, the towns of Adams, Amherst, Great
Barrington, Greenfield and Williamstown, and twelve smaller municipalities.
The population of the area served is estimated at 190,000 and is primarily
residential in character, but the territory also includes industrial,
agricultural, educational, cultural and resort facilities. The Company also
markets propane throughout the western portion of Massachusetts and eastern
New York state. The Company serves approximately 32,000 natural gas and
5,000 propane customers.
Customers
The largest group of natural gas customers is the residential class.
During the fiscal years ended June 30, 1995, 1994 and 1993, residential
consumers accounted for approximately 53%, 54% and 54%; commercial and
industrial consumers accounted for 44%, 44% and 46%; and transportation
consumers accounted for approximately 3%, 2% and 0% of operating revenues
respectively. This business is not dependent upon one or even a few
customers, so the loss of any one customer or limited number of customers
would have no material adverse effect on the business.
The number of natural gas customers increased 1.5% in 1995 over 1994,
from 31,445 to 31,925 primarily in the residential heating class as a result
of increased marketing efforts. Total Mcf sold and transported increased
from 7,362,210 Mcf in 1994 to 7,392,382 in 1995, primarily attributable to
increased transportation and interruptible volumes, and increased customer
meters, offset by lower residential and commercial and industrial volumes
due to warmer weather during the heating season. In 1995, Mcf sales
increased 10.1% over 1993 due to the same factors as noted above. Total
natural gas customers by classification at June 30 in each of the previous
five years were:
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Residential 27,894 27,524 27,199 26,734 26,812
Commercial & Industrial 4,031 3,921 3,854 3,773 3,829
</TABLE>
Competition
Implementation of the Federal Energy Regulatory Commission's ("FERC")
Order 636 has increased the potential for competition in gas procurement,
supply and sale. FERC's actions have sought to encourage competition and
natural gas market efficiency through deregulation and "unbundling of
services" at the interstate pipeline level. This unbundling has changed the
historical relationships, whereby producers sold to pipelines, pipelines
sold to local distribution companies ("LDCs") such as Berkshire Gas and LDCs
sold to end-users. Now LDCs or end-users may utilize pipeline services not
only for purchases but also for the transportation of gas purchased from
third parties.
While historically the Company has been subject to competition from
electricity, oil, propane, coal and other fuels for heating, water heating,
cooking, air conditioning and industrial applications, the regulatory
changes have created the potential for competition among existing and new
suppliers or brokers of natural gas. As a result, opportunities may arise
for others to sell natural gas or provide brokerage service to end-users to
whom the Company might otherwise make sales or provide brokerage service.
Large volume end-users are most likely to be the primary target for third
parties seeking to make such sales. If third parties do, in fact, provide a
substantial volume of sales or brokerage service to end-users located within
the Company's service territory, and the Company does not increase its sales
to other end-users, then the Company would have a smaller sales base across
which it can allocate fixed costs. That in turn could necessitate further
requests for rate relief, thereby affecting the Company's competitive
posture. At the current time, however, no such third party sales are
occurring in the Company's service territory. Similar opportunities may
exist for the Company to broker gas to new or existing customers, whether or
not they are located within the Company's service territory.
Rates and Regulations
The Company is subject to the regulatory authority of the
Massachusetts Department of Public Utilities ("MDPU") with respect to
various matters, including rates, financing, certain gas supply contracts,
demand-side management programs and planning and safety matters.
The principal rate classifications are residential, and commercial and
industrial. The Company also offers five Quasi-Firm transportation rates for
large end-users as well as interruptible sales and transportation service.
The Company's rate structure is based on the cost of providing service to
each customer class. In March 1993, the MDPU authorized the Company to
increase rates for sales of gas effective April 1993. The amount of the
increase on an annualized basis was $1,252,000. In December 1993, the MDPU
authorized the Company to increase rates for sales of gas effective January
1, 1994. The amount of the increase on an annualized basis was $124,000.
This increase was due to recalculations of the original rate increase
granted in March 1993.
The Company's residential rates are designed separately for heating
and non-heating purposes. Additionally, for the Company, like most other
utility companies in Massachusetts, subsidized rates are available to
residential customers who receive Supplemental Security Income from the
Social Security Administration, Aid for Dependent Children, Emergency
Assistance for the Elderly, Disabled, and Children (formerly General
Relief), Fuel Assistance, Refugee Resettlement, Medicaid, and/or Veteran's
Benefits. These customers receive a 20% discount from the standard
residential rates. The commercial and industrial rates are based on load
factor; that is, the cost is based on how much gas is consumed and when it
is consumed. Those customers who use more than 30% of their annual usage in
the summer are considered high load factor; those using less than 30% of
their annual usage during the summer season are considered low load factor.
There are seven classifications of load factor rates as follows: small,
medium, large, and extra-large high load factor; and small, medium, and
large low load factor.
The current firm rate structure is based on seasonal rates, whereby
base rates are higher in the winter (November through April) and lower in
the summer (May through October). In addition to the base rates, the Company
has a seasonal Cost of Gas Adjustment Clause ("CGAC") rate schedule,
pursuant to which the Company recovers (primarily variable) gas costs.
Charges under the CGAC rate schedule are added to the base rates and are
designed to recover higher gas costs in the winter and refund lower gas
costs in the summer.
The Company also provides several non-firm and special rates to meet
the varying needs of large customers. Interruptible Sales Service is
available for large interruptible end-users for the sale and delivery of
interruptible gas supplies while Interruptible Transportation Service is
available for large interruptible end-users for only the delivery of gas
supplies through the Company's distribution system. Five Quasi-Firm
Transportation Rates are available for large end-users and provide firm
transportation and optional standby service for less than twelve months.
Additionally, a Load Management Rate is available for nonresidential
customers who agree to reduce demand to a predetermined minimum level on
peak days. Finally, the Company makes sales to primarily larger customers
under special contracts that reflect charges, levels, and terms of service
different from those under generally available tariffs. Often arrangements
of this nature are made to meet competitive challenges. Such contracts must
be approved by the MDPU on an individual case basis.
The Company is also subject to standards prescribed by the Secretary
of Transportation under the Natural Gas Pipeline Safety Act of 1968 with
respect to the design, installation, testing, construction and maintenance
of pipeline facilities. The enforcement of these standards has been
delegated to the MDPU, which has taken an active role in such enforcement,
including the application of civil penalties and the requirement of remedial
programs.
The regulation of prices, terms and conditions of interstate pipeline
sales of natural gas is subject to the jurisdiction of FERC. The Company is
not under direct jurisdiction of FERC, but monitors, and periodically
participates in, proceedings before FERC which involve the Company's
pipeline gas suppliers/transporters, the Company's operations, and other
matters pertinent to the Company's business. (See also "Competition".)
Environmental Matters
Federal, state and local laws and regulations establishing standards
and requirements for protection of the environment have increased in number
and scope in recent years. The Company cannot predict the future impact of
such standards and requirements, which are subject to change and can have
retroactive effect.
During fiscal 1990, the MDPU issued a generic ruling on cost recovery
for environmental cleanup costs with respect to former gas manufacturing
sites. Under the ruling, the Company will recover, excluding carrying costs,
the prudently incurred annual cleanup costs over a seven-year period through
the CGAC. This ruling also provides for the sharing of any proceeds received
from insurance carriers equally between the Company and its ratepayers, and
establishes maximum amounts that can be recovered from customers during any
one year.
During the fiscal year ended June 30, 1995, the Company continued the
analysis and field review of two parcels of real estate formerly used for
gas manufacturing operations, which had been found to contain coal tar
deposits and other substances associated with by-products of the gas
manufacturing process. The review and assessment process began in 1985 with
respect to the first site, which is owned by the Company, and in 1989 with
respect to the second site which was formerly owned by the Company. With the
review and approval by the Massachusetts Department of Environmental
Protection ("MDEP"), at the first site, the investigative work is near
completion and remedial alternatives are being examined. At the second site,
investigative activities are proceeding. It is difficult to predict the
potential financial impact of a site until first, the nature and risk is
fully characterized, and second, the remedial strategies and related
technologies are determined. The general philosophy of the Company is one of
source removal and/or reduction coupled with risk minimization. Assuming
successful implementation, it is anticipated that, through 2010, the level
of expenditure for the sites will range from $2,894,000 to $8,777,000. The
anticipated level of expenditures has remained the same in 1995 from 1994
and been reduced from 1993 estimates resulting from the Company's analysis
and review of the sites and the commencement of clean-up activities at the
first site. The Company has recorded the most likely amount of $2,894,000 in
accordance with the requirements of SFAS No. 5. Ultimate expenditures cannot
be determined until a remedial action plan can be developed and approved by
MDEP. The Company's unamortized costs at June 30, 1995 were $1,046,000 and
should be recovered using the formula discussed above.
Seasonality
The Company's business has a distinct seasonal quality because a large
percentage of its sendout serves residential and commercial heating loads.
Gas operating revenues reflect the seasonal nature of the business. Such
revenues are affected by temperature variations between the heating and non-
heating seasons and by seasonal pricing differentials embodied in the
Company's effective schedule of rates and charges for gas services. (See
also "RATES AND REGULATIONS").
Employee Relations
The Company has 160 employees, approximately 58% of whom are
represented by the United Steelworkers of America, AFL, CIO, CLC, under a
contract which remains in effect until March 31, 1996. Relations with
employees are generally satisfactory.
Gas Supply
In 1992, the FERC issued a series of Orders: Order 636, Order 636-A,
and Order 636-B (together "Order 636"), which restructured interstate
natural gas pipeline services. Order 636 was intended to complete the
restructuring of the natural gas pipeline industry that FERC and Congress
began in prior years with respect to natural gas pricing and open access to
transportation on interstate pipelines. The long-term objective of Order 636
was to promote fair competition among suppliers of gas, thus giving
customers an adequate and reliable supply of clean and abundant natural gas
at the lowest reasonable price.
Order 636 required that interstate pipeline companies unbundle (i.e.,
separate) their sales, transportation and storage services and provide all
transportation services on a basis that was equal in quality for gas
supplies whether purchased from the pipeline or from any gas supplier.
Consequently, LDCs, such as the Company, that previously had purchased the
majority of their firm gas supplies through the interstate pipelines'
bundled contract demand service had to arrange their own portfolio of
supply, transportation and storage contracts (i.e., they had to "convert"
their prior purchases from interstate pipelines to direct purchases from
producers or marketers). This constituted a major change to the manner in
which the Company obtained gas supplies and the sources from which it
obtained those supplies.
During fiscal 1994, the Company completed its conversion of firm
supply contracts from its former interstate pipeline supplier, Tennessee Gas
Pipeline Company ("Tennessee"), to third party suppliers as mandated by
Order 636. This followed the initial conversion of 30% of the Company's
former pipeline supplies to third party suppliers during fiscal 1993 under
Tennessee's transitional restructuring settlement (called "Cosmic
Settlement").
Order 636's restructuring mandate issued April 8, 1992, was
implemented by Tennessee Gas Pipeline Company on September 1, 1993.
Subsequently, the Company completed the conversion of the remaining 70% of
its firm gas supplies from Tennessee Gas Pipeline to two third-party
suppliers. The two suppliers were Natural Gas Clearing House ("NGC") and
Tenngasco Corporation ("TC"). The daily volumes contracted were 4,920 Mcf
with NGC for a term of 9 years and 7,599 Mcf with TC for a term of six
years. On March 14, 1994, the Company received approval from the MDPU for
its final two conversion contracts. With this final approval, the Company's
portfolio of firm natural gas contracts consisted of Aquila Energy Marketing
(2,683 Mcf); Boundary Gas (1,050 Mcf); NGC "Cosmic" (2,682 Mcf); NGC "636"
(4,920 Mcf); TC (7,599 Mcf).
The Company's purchases of natural gas under contracts lasting more
than one year are subject to the approval of the MDPU. This is a change from
the procedures applicable prior to FERC Order 636, where supplies were
previously approved by FERC as part of the "bundled" sales service provided
by Tennessee.
Ultimately, the Company's customers should benefit over the long-term
from the restructuring undertaken the past two years under the "Cosmic
Settlement" and Order 636. However, during the near term, the Company is
subject to the pass-through of additional transition costs associated with
the industry restructuring that Tennessee is and will be incurring.
Under the terms of a fuel purchase agreement executed with Altresco,
Inc. on December 11, 1992, the Company is entitled to receive gas peaking
service of up to 7,310 Mcf per day during the Winter Period of November 1
through March 31 of each year (not to exceed 307,018 Mcf for each Winter
Period) and back-up gas supplies of up to 30,702 Mcf per day in the event of
proration or curtailment of firm gas supplies (including propane).
In addition, on December 21, 1994, the Company executed two contracts
with Distrigas of Massachusetts Corporation ("DOMAC") which entitled the
Company to receive up to 5,263 Mcf per day of peaking gas.
The Company estimates that its supply of natural gas and supplemental
sources under contract are adequate to meet the anticipated needs of the
Company's customers for the foreseeable future. The annual sources of supply
are as follows: firm long-haul pipeline natural gas, including storage gas,
9,913,803 Mcf; natural gas peaking (Altresco), 307,000 Mcf; ("DOMAC")
1,067,251 MCF; and Liquefied Petroleum Gas, 13,800 (daily capability) Mcf.
Several factors may affect the acquisition of additional supplies by the
Company. Additional pipeline supplies designated as "best efforts" or
"interruptible" are available from time to time, but are subject to daily
curtailment at the suppliers'/transporters' discretion.
Although availability to the Company of Liquefied Petroluem Gas ("LPG")
and Liquid Natural Gas ("LNG") supplies is subject to various contingencies
including transportation problems, suppliers' operational difficulties and
extraordinary weather conditions, the Company has not faced any supply
acquisition and/or delivery problems since December, 1989. At that date,
despite extreme weather, the Company was able to maintain service to all
firm customers. The acquisition of additional gas supplies and the ability
to deliver to customers under design conditions experienced during the 93-94
winter attests to the reliability and integrity of the Company's supply
portfolio and distribution system.
The Company has five LPG gas plants and one temporary portable LNG
vaporizing unit which are utilized on peak days to supplement the pipeline
natural gas supply. By supplementing its natural gas supply with LPG, the
Company is able to meet its customers' requirements during peak periods. The
Company's pipeline deliveries combined with LPG facilities' storage capacity
yield a maximum daily sendout of approximately 54,900 Mcf. Actual maximum
daily sendout during the 94-95 heating season was 45,760 Mcf, which occurred
on February 6, 1995 with an average temperature of -3 degrees Fahrenheit.
On August 1, 1991, Tennessee filed, in FERC Docket No. RP 91-203, a
request for a general increase of its rates by approximately $343 million.
The rate tariff sheets with some modifications were placed in effect subject
to refund on February 1, 1992. Several rate conferences between Tennessee,
its customers and the FERC staff were held in an attempt to settle various
cost of service and rate design issues. A Stipulation and Agreement (the
"Agreement") was subsequently filed by Tennessee on June 2, 1993 and was
approved by the FERC on April 5, 1994. Pursuant to the terms of the
Agreement, Berkshire received refunds (including interest) from Tennessee of
$2,076,000 on June 3, 1994 and $1,838,700 on February 16, 1995. All such
refunds were returned to the Company's customers through the Company's CGAC
and effectively reduced the cost of gas to the customers.
On December 29, 1994, Tennessee filed with the FERC a general rate
increase (Docket RP 95-112) seeking $181 million in jurisdictional revenues.
On January 25, 1995, the FERC issued an order which accepted Tennessee's
rate filing, suspended it for five months, and established hearing and
technical conference procedures to address various rate and operational
tariff issues.
Subsequently, numerous rate settlements conferences were held by
Tennessee with its customers and the FERC staff. On June 2, 1995, Tennessee
presented an offer of settlement which was not supported by the majority of
its customers. On June 30, 1995, Tennessee filed a motion to place its
proposed tariff rates with some modifications into effect. Unless a
settlement between Tennessee and its customers is reached, formal rate
hearings will begin at FERC in March, 1996.
During the fiscal year ended June 30, 1995, the Company purchased an
aggregate of 5,949,176 Mcf of interstate pipeline natural gas at an average
cost of $3.2820 per Mcf. The average cost in each of the four preceding
years ended June 30 was: 1994 - $3.9725; 1993 - $3.9881; 1992 - $3.6421;
and 1991 - $3.5887. The composition of gas supply for customer requirements
during the fiscal year ended June 30, 1995 was: 99.9% natural gas and .1%
LNG and LPG.
Item 2. Properties
- ------------------
The Company has approximately 654 miles of distribution mains, the
major portion of which are constructed of coated steel, plastic or cast
iron. Berkshire owns and operates five auxiliary liquefied petroleum gas
plants for supplementing its supply of natural gas. (See "Business - Gas
Supply"). The Company has five terminal stations receiving gas from
Tennessee.
All the principal properties of the Company are owned in fee, subject
to the lien of the mortgage securing the Company's First Mortgage Bonds, and
are also subject to covenants, restrictions, easements, leases, rights-of-
way and other similar minor encumbrances or defects common to properties of
comparable size and character; none of which in the opinion of the Company's
management materially interferes with the Company's use of its properties in
order to conduct its business. The Company's gas mains are primarily located
under public highways and streets. Where they are under private property,
the Company has obtained easements or rights-of-way from the record holders
of title. These easements and rights are deemed by the Company to be
adequate for the purposes for which they are being used.
Item 3. Legal Proceedings
- -------------------------
With reference to the matters discussed above in Item I "Environmental
Matters", the Company notified its present and former insurance carriers
that it has incurred and will incur further costs associated with the
previously-referenced coal tar deposits, for which it will seek coverage
under applicable insurance policies. No litigation has yet commenced and it
is not possible to determine the extent to which recovery of costs will
ultimately be obtained from such insurance carriers.
Claims against the Company have been asserted by a general contractor
involved in the construction of a transportation pipeline for which the
Company served as developer. Although the Company cannot predict the
ultimate outcome of the claims, which the Company believes are without
merit, it intends to contest the claims vigorously and believes that the
outcome will not have a material adverse impact on the overall financial
position of the Company.
Item 4. Submission of Matters To A Vote Of Security Holders
- -----------------------------------------------------------
None.
Item 4. Additional Items
- ------------------------
Additional Items
- ----------------
Executive Officers of the Registrant
The table set forth below shows the names, titles and ages of all
executive officers of the Registrant as of June 30, 1995. There is no family
relationship among officers of the Registrant. There is no arrangement
between any of the officers and any other person(s) pursuant to which such
officer was or is to be elected as an officer.
<TABLE>
<CAPTION>
Served in This
Name Title Capacity Since Age
- ---- ----- -------------- ---
<S> <S> <C> <C>
S.S. Robinson President and Chief 10-28-87 55
Executive Officer
M.J. Marrone Vice President, Treasurer 10-28-87 53
and Chief Financial Officer
L.H. Hotman Vice President of Supply, 10-16-91 52
Rates and Planning
</TABLE>
The executive officers are elected annually.
Listed below is a brief account of the business of each of the above
executive officers during the past five years.
<TABLE>
<CAPTION>
Name Capacity in Which Served During Past Five Years
- ---- -----------------------------------------------
<S> <S>
S.S. Robinson President and Chief Executive Officer
M.J. Marrone Vice President, Treasurer and Chief Financial Officer
L.H. Hotman Vice President of Supply, Rates & Planning; Vice
President of Supply, Rates & Marketing; Director of
Planning.
</TABLE>
PART II
-------
Item 5. Market For Registrant's Common Equity and Related Stockholder Matters
- -----------------------------------------------------------------------------
The number of registered common shareholders of record of the
Registrant's Common stock as of the close of business on July 31, 1995 was
1,874. The other information required is contained in The Berkshire Gas
Company's Annual Report to Shareholders for the fiscal year ended June 30,
1995 ("Registrant's Annual Report") on page 27, under the heading "Quarterly
Financial Information". This information is hereby incorporated by reference
in this report.
Item 6. Selected Financial Data
- -------------------------------
The information required is contained in Registrant's Annual Report on
pages 10 - 11, under the heading "10-Year Comparative Summary of Operations
and Statistics". This information is hereby incorporated by reference in
this report.
Item 7. Management's Discussion and Analysis of Financial Condition and
- -----------------------------------------------------------------------
Results of Operations
---------------------
The information required is contained in Registrant's Annual Report on
pages 12 - 14, under the heading "Management's Discussion and Analysis of
Financial Condition and Results of Operations". This information is hereby
incorporated by reference in this report.
Item 8. Financial Statements and Supplementary Data
- ---------------------------------------------------
The information required is contained in Registrant's Annual Report on
pages 15 - 27, in the financial statements of The Berkshire Gas Company for
the years ended June 30, 1995, 1994 and 1993 together with the related
notes, under the heading "Independent Auditors' Report", and under the
heading "Quarterly Financial Information". This information is hereby
incorporated by reference in this report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
- ------------------------------------------------------------------------
Financial Disclosure
--------------------
None.
PART III
--------
Items 10, 11, 12 and 13
- -----------------------
The information required regarding the Executive Officers of the
Registrant is included in Part I under "Additional Items". Certain other
information called for by Items 10, 11, 12 and 13 has been omitted from this
report pursuant to General Instruction G(3), and is incorporated herein by
reference to the definitive proxy statement to be filed with the Securities
and Exchange Commission pursuant to Regulation 14A not later than 120 days
after the close of the Company's last fiscal year.
PART IV
-------
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
- ------------------------------------------------------------------------
(a) 1. Financial Statements
--------------------
The following financial statements and related notes are contained in
the Registrant's Annual Report for the fiscal year ended June 30, 1995 and
are incorporated herein by reference.
Report of Independent Auditors.
Statements of Income and Retained Earnings for the years ended
June 30, 1995, 1994 and 1993.
Balance Sheets, June 30, 1995, 1994 and 1993.
Statements of Common Shareholders' Equity and Redeemable Cumulative
Preferred Stock, June 30, 1995, 1994 and 1993.
Statements of Cash Flows for the years ended June 30, 1995, 1994 and
1993.
Notes to Financial Statements.
Selected Quarterly Financial Data (unaudited) for the years ended
June 30, 1995, 1994 and 1993.
Financial Statement Schedules
- -----------------------------
The information called for by this item appears under the caption
"Financial Statement Schedules and Exhibits Filed with Annual Report
on Form 10-K" (page 1 hereof). Such information is incorporated by
reference herein.
3. Exhibits
-----------
The information called for by this item appears under the caption
"Financial Statement Schedules and Exhibits Filed with Annual Report
on Form 10-K" (page 1 hereof). Such information is incorporated by
reference herein.
(b) Reports on Form 8-K
-------------------
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has caused this report to
be signed on its behalf by the undersigned thereunto duly authorized.
Date: August 29, 1995 By: /s/ SCOTT S. ROBINSON
Scott S. Robinson, President & CEO
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons in the
capacities on the dates indicated.
<TABLE>
<CAPTION>
Signatures Capacity Date
- ---------- -------- ----
<S> <S> <C>
/s/ J.T. KELLEY Director August 29, 1995
J.T. Kelley
Chairman of the Board
/s/ SCOTT S. ROBINSON Principal Executive August 29, 1995
Scott S. Robinson Officer; Director
President and Chief
Executive Officer
/s/ MICHAEL J. MARRONE Principal Financial August 29, 1995
Michael J. Marrone & Accounting Officer
Vice President, Treasurer
and Chief Financial Officer
/s/ GEORGE R. BALDWIN Director August 29, 1995
George R. Baldwin
/s/ JOHN W. BOND Director August 29, 1995
John W. Bond
/s/ PAUL L. GIOIA Director August 29, 1995
Paul L. Gioia
/s/ WILLIAM S. GOEDECKE Director August 29, 1995
William S. Goedecke
/s/ FRANKLIN M. HUNDLEY Director August 29, 1995
Franklin M. Hundley
/s/ ROBERT B. TRASK Director August 29, 1995
Robert B. Trask
</TABLE>
THE BERKSHIRE GAS COMPANY
FINANCIAL STATEMENT SCHEDULES
and
EXHIBITS
Filed With
ANNUAL REPORT ON FORM 10-K
EXHIBIT INDEX
Certain of the following exhibits are filed herewith or will be filed
herewith by amendment. Certain other of the following exhibits have
heretofore been filed with the Commission and pursuant to Rule 411 are
incorporated herein by reference.
<TABLE>
<CAPTION>
Exhibit
Number** Description
- -------- -----------
<C> <S>
4(a) First Mortgage Indenture and Deed of Trust, dated as of July 1, 1954,
between Pittsfield Coal Gas Company (now The Berkshire Gas Company)
and Chemical Corn Exchange Bank (now Chemical Bank), Trustee. Filed
as Exhibit 4(c) to the Company's Registration Statement on Form S-1,
Registration Statement No. 2-19808, and incorporated herein by
reference.
4(b) First Supplemental Indenture, dated as of June 1, 1956, between the
Company and Chemical Corn Exchange Bank (now Chemical Bank),
Trustee. Filed as Exhibit 4(d) to the Company's Registration
Statement on Form S-1, Registration Statement No. 2-19808, and
incorporated herein by reference.
4(c) Second Supplemental Indenture, dated as of October 1, 1957, between
the Company and Chemical Corn Exchange Bank (now Chemical Bank),
Trustee. Filed as Exhibit 4(e) to the Company's Registration
Statement on Form S-2, Registration Statement No. 2-19808, and
incorporated herein by reference.
4(d) Third Supplemental Indenture, dated as of October 1, 1958, between
the Company and Chemical Corn Exchange Bank (now Chemical Bank),
Trustee. Filed as Exhibit 4(f) to the Company's Registration
Statement on Form S-1, Registration Statement No. 2-19808, and
incorporated herein by reference.
4(e) Fourth Supplemental Indenture, dated as of August 1, 1960, between
the Company and Chemical Bank New York Trust Company (now Chemical
Bank), Trustee. Filed as Exhibit 4(e) to the Company's Registration
Statement on Form S-2, File No. 33-1492, and incorporated herein by
reference.
4(f) Fifth Supplemental Indenture, dated as of June 1, 1962, between the
Company and Chemical Bank New York Trust Company (now Chemical
Bank), Trustee. Filed as Exhibit 4(f) to the Company's Registration
Statement on Form S-2, File No. 33-1492, and incorporated herein by
reference.
4(g) Sixth Supplemental Indenture, dated as of February 1, 1965, between
the Company and Chemical Bank New York Trust Company (now Chemical
Bank), Trustee. Filed as Exhibit 4(g) to the Company's Registration
Statement on Form S-2, File No. 33-1492, and incorporated herein by
reference.
4(h) Seventh Supplemental Indenture, dated as of October 1, 1965, between
the Company and Chemical Bank New York Trust Company (now Chemical
Bank), Trustee. Filed as Exhibit 4(h) to the Company's Registration
Statement on Form S-2, File No. 33-1492, and incorporated herein by
reference.
4(i) Eighth Supplemental Indenture, dated as of September 1, 1967, between
the Company and Chemical Bank New York Trust Company (now Chemical
Bank), Trustee. Filed as Exhibit 4(i) to the Company's Registration
Statement on Form S-2, File No. 33-1492, and incorporated herein by
reference.
4(j) Ninth Supplemental Indenture, dated as of April 1, 1969, between the
Company and Chemical Bank, Trustee. Filed as Exhibit 4(j) to the
Company's Registration Statement on Form S-2, File No. 33-1492, and
incorporated herein by reference.
4(k) Tenth Supplemental Indenture, dated as of March 1, 1972, between the
Company and Chemical Bank, Trustee. Filed as Exhibit 4(k) to the
Company's Registration Statement on Form S-2, File No. 33-1492, and
incorporated herein by reference.
4(l) Eleventh Supplemental Indenture, dated as of April 15, 1975, between
the Company and Chemical Bank, Trustee. Filed as Exhibit 4(l) the
Company's Registration Statement on Form S-2, File No. 33-1492, and
incorporated herein by reference.
4(m) Twelfth Supplemental Indenture, dated as of November 27, 1978,
between the Company and Chemical Bank, Trustee. Filed as Exhibit
4(m) to the Company's Registration Statement on Form S-2, File No.
33-1492, and incorporated herein by reference.
4(n) Thirteenth Supplemental Indenture, dated as of October 15, 1981,
between the Company and Chemical Bank, Trustee. Filed as Exhibit
4(n) to the Company's Registration Statement on Form S-2, File
No. 33-1492, and incorporated herein by reference.
4(o) Fourteenth Supplemental Indenture, dated as of August 19, 1983,
between the Company and Chemical Bank, Trustee. Filed as Exhibit
4(o) to the Company's Registration Statement on Form S-2, File No.
33-1492, and incorporated herein by reference.
4(p) Fifteenth Supplemental Indenture, dated as of August 19, 1985,
between the Company and Chemical Bank, Trustee. Filed as Exhibit
4(p) to the Company's Registration Statement on Form S-2,
Registration No. 33-1492, and incorporated herein by reference.
4(q) Sixteenth Supplemental Indenture, dated as of January 1, 1988,
between the Company and Chemical Bank, Trustee. Filed as Exhibit
4(q) to the Company's Registration Statement on Form S-3,
Registration No. 33-27785, and incorporated herein by reference.
4(r) Seventeenth Supplemental Indenture, dated as of February 1, 1989,
between the Company and Chemical Bank, Trustee. Filed as Exhibit
4(r) to the Company's Registration Statement on Form S-3,
Registration Statement No. 33-27785, and incorporated herein by
reference.
4(s) Eighteenth Supplemental Indenture, dated as of September 1, 1991,
between the Company and Chemical Bank, Trustee. Filed as Exhibit
4(x) to the Company's Registration Statement on Form S-3,
Registration Statement No. 33-64302, and incorporated herein by
reference.
4(t) Nineteenth Supplemental Indenture, dated as of September 1, 1992,
between the Company and Chemical Bank, Trustee. Filed as Exhibit
4(z) to the Company's Registration Statement on Form S-3,
Registration Statement No. 33-64302, and incorporated herein by
reference.
4(u) Debenture Indenture, dated as of November 1, 1986, between the
Company and Centerre Trust Company of St. Louis (now Boatmen's Trust
Company), as Trustee. Filed as Exhibit 4(q) to the Company's
Registration Statement on Form S-2, Registration Statement
No. 33-9509, and incorporated herein by reference.
4(v) Senior Note Agreement, dated as of July 1, 1990, between the Company
and Allstate Life Insurance Company. Filed as Exhibit 4(w) to the
Company's Registration Statement on Form S-3, Registration Statement
No. 33-64302, and incorporated herein by reference.
4(w) Charter of the Company. Filed as Exhibit 3(a) to the Company's
Form 8, amending the Company's Form 10-Q for the fiscal quarter
ended September 30, 1984, File No. 0-1857-3, and incorporated
herein by reference.
4(x) Amendment to the Company's Charter, dated October 30, 1985. Filed as
Exhibit 3(b) to the Company's Registration Statement on Form S-2,
Registration Statement No. 33-1492, and incorporated herein by
reference.
4(y) Amendment to the Company's Charter, dated July 14, 1986. Filed as
Exhibit 3(a) to the Company's Form 10-K for the fiscal year ended
June 30, 1986, File No. 0-1857-3, and incorporated herein by
reference.
4(z) Amendment to the Company's Charter, dated October 28, 1986. Filed as
Exhibit 4(v) to the Company's Registration Statement on Form S-3,
Registration Statement No. 33-27785, and incorporated herein by
reference.
4(aa) Amendment to the Company's Charter, dated June 15, 1992. Filed as
Exhibit 4(y) to the Company's Registration Statement on Form S-3,
Registration Statement No. 33-64302, and incorporated herein by
reference.
4(bb) Amendment to the Company's Charter, dated July 29, 1994. Filed as
Exhibit 4(bb) on the Company Registration Statement on Form S-2,
Registration Statement No. 33-838 28, and is incorporated herein by
reference thereto.
10(a) Employment Contract between the Company and Scott S. Robinson. Filed
as Exhibit 10(f) to the Company's Form 10-K for the fiscal year
ended June 30, 1985, File No. 01857-3, and incorporated herein by
reference.
10(b) Contract for the operation and maintenance of a cogeneration
pipeline between the Company and Altresco Financial, Inc., dated
December 11, 1992. Filed as Exhibit 10(n) to the Company's Form 10-K
for the fiscal year ended June 30, 1993, File No. 0-18573, and
incorporated herein by reference.
10(c) Year-to-year contract for the purchase of propane gas between the
Company and Enron Gas Liquids, dated June 1, 1993. Filed as Exhibit
10(c) on the Company Registration Statement on Form S-2,
Registration Statement No. 33-83828, and is incorporated herein by
reference thereto.
10(d) Contract for the transportation of natural gas under IT rate
schedule between the Company and Tennessee Gas Pipeline Company,
contract number 103250-8, dated September 1, 1993. Filed as Exhibit
10(d) on the Company Registration Statement on Form S-2,
Registration Statement No. 33-83828, and is incorporated herein by
reference thereto.
10(e) Contract for the transportation of natural gas under FT-A rate
schedule between the Company and Tennessee Gas Pipeline Company,
contract number 2030, dated September 1, 1993. Filed as Exhibit
10(e) on the Company Registration Statement on Form S-2,
Registration Statement No. 33-83828, and is incorporated herein by
reference thereto.
10(f) Contract for the transportation of natural gas under FT-A rate
schedule between the Company and Tennessee Gas Pipeline Company,
contract number 2064, dated September 1, 1993. Filed as Exhibit
10(f) on the CompanyRegistration Statement on Form S-2, Registration
Statement No. 33-83828, and is incorporated herein by reference
thereto.
10(g) Contract for the transportation of natural gas under FT-A rate
schedule between the Company and Tennessee Gas Pipeline Company,
contract number 779, dated September 1, 1993. Filed as Exhibit 10(g)
on the Company Registration Statement on Form S-2, Registration
Statement No. 33-83828, and is incorporated herein by reference
thereto.
10(h) Contract for the transportation of natural gas under CGT-NE rate
schedule between the Company and Tennessee Gas Pipeline Company,
contract number 2063, dated September 1, 1993. Filed as Exhibit
10(h) on the Company Registration Statement on Form S-2,
Registration Statement No. 33-83828, and is incorporated herein by
reference thereto.
10(i) Contract for the purchase of natural gas between the Company and
Tenngasco Corporation, dated September 14, 1993. Filed as Exhibit
10(i) on the Company Registration Statement on Form S-2,
Registration Statement No. 33-83828, and is incorporated herein by
reference thereto.
10(j) Contract for the purchase of natural gas between the Company and
Natural Gas Clearinghouse, dated as of November 1, 1993. Filed as
Exhibit 10(j) on the Company Registration Statement on Form S-2,
Registration Statement No. 33-83828, and is incorporated herein by
reference thereto.
10(k) Gas Storage Agreement between the Company and Tennessee Gas Pipeline
Company, dated as of September 1, 1993. Filed as Exhibit 10(k) on
the Company Registration Statement on Form S-2, Registration
Statement No. 33-838 28, and is incorporated herein by reference
thereto.
10(l) Company Corporate Incentive Compensation Plan ("ICP"). Filed as
Exhibit 10(l) on the Company Registration Statement on Form S-2,
Registration Statement No. 33-838 28, and is incorporated herein by
reference thereto.
10(m) Severance Agreement, dated September 28, 1993, by and between the
Company and Donald Atwater. Filed as Exhibit 10(m) on the Company
Registration Statement on Form S-2, Registration Statement No.
33-83828, and is incorporated herein by reference thereto.
10(n) Severance Agreement, dated September 28, 1993, by and between the
Company and Robert M. Allessio. Filed as Exhibit 10(n) on the
Company Registration Statement on Form S-2, Registration Statement
No. 33-83828, and is incorporated herein by reference thereto.
10(o) Severance Agreement, dated October 15, 1993, by and between the
Company and Michael J. Marrone. Filed as Exhibit 10(o) on the
Company Registration Statement on Form S-2, Registration Statement
No. 33-83828, and is incorporated herein by reference thereto.
10(p) Severance Agreement, dated October 15, 1993, by and between the
Company and Leslie H. Hotman. Filed as Exhibit 10(p) on the Company
Registration Statement on Form S-2, Registration Statement No.
33-83828, and is incorporated herein by reference thereto.
10(q) Severance Agreement, dated October 15, 1993, by and between the
Company and Cheryl M. Clark. Filed as Exhibit 10(q) on the Company
Registration Statement on Form S-2, Registration Statement No.
33-83828, and is incorporated herein by reference thereto.
13(a) Annual Report to Shareholders
Filed Herewith:
A copy of the Company's Annual Report to Shareholders for fiscal
year ended June 30, 1995.
27(a) Financial Data Schedule
Filed Herewith:
Financial Data Schedule for the fiscal year ended June 30, 1995.
</TABLE>
THE BERKSHIRE GAS COMPANY
OTHER ALLOWANCES
FOR THE YEAR ENDED JUNE 30, 1995
($000'S)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------- -------- -------- -------- --------
ADDITIONS DEDUCTIONS
------------------------------------------ ------------------------
BALANCE AT CHARGED TO CHARGED TO OTHER ACCTS. BALANCE
BEGINNING OPERATING PROFIT ----------------------- AT CLOSE
DESCRIPTION OF PERIOD & LOSS OR INCOME ACCOUNT AMOUNT DESCRIPTION AMOUNT OF PERIOD
- ----------- ---------- ---------------- ------- ------ ----------- ------ ---------
<S> <C> <C> <S> <C> <S> <C> <C>
ALLOWANCES DEDUCTED FROM
ASSETS TO WHICH THEY APPLY
Reserved for bad debts:
Gas Accounts $727 $628 App. Rental $ 18 Accts. charged $541 $832
off - less
recoveries
Merchandise & 21 Merchandise & 50 Accts. charged 27 44
Jobbing Accts. Jobbing off - less
Operations recoveries
Liq. Petroleum 68 Liq. Petroleum 45 Accts. charged 39 74
Gas Accounts Operations off - less
recoveries
---- ---- ---- ---- ----
TOTAL $816 $628 $113 $607 $950
==== ==== ==== ==== ====
</TABLE>
THE BERKSHIRE GAS COMPANY
OTHER ALLOWANCES
FOR THE YEAR ENDED JUNE 30, 1994
($000'S)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------- -------- -------- -------- --------
ADDITIONS DEDUCTIONS
------------------------------------------ ------------------------
BALANCE AT CHARGED TO CHARGED TO OTHER ACCTS. BALANCE
BEGINNING OPERATING PROFIT ----------------------- AT CLOSE
DESCRIPTION OF PERIOD & LOSS OR INCOME ACCOUNT AMOUNT DESCRIPTION AMOUNT OF PERIOD
- ----------- ---------- ---------------- ------- ------ ----------- ------ ---------
<S> <C> <C> <S> <C> <S> <C> <C>
ALLOWANCES DEDUCTED FROM
ASSETS TO WHICH THEY APPLY
Reserved for bad debts:
Gas Accounts $600 $1,176 App. Rental $13 Accts. charged $1,062 $727
off - less
recoveries
Merchandise & 20 Merchandise & 7 Accts. charged 6 21
Jobbing Accts. Jobbing off - less
Operations recoveries
Liq. Petroleum 54 Liq. Petroleum 42 Accts. charged 28 68
Gas Accounts Operations off - less
recoveries
---- ------ --- ------ ----
TOTAL $674 $1,176 $62 $1,096 $816
==== ====== === ====== ====
</TABLE>
THE BERKSHIRE GAS COMPANY
OTHER ALLOWANCES
FOR THE YEAR ENDED JUNE 30, 1993
($000'S)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------- -------- -------- -------- --------
ADDITIONS DEDUCTIONS
------------------------------------------ -------------------------
BALANCE AT CHARGED TO CHARGED TO OTHER ACCTS. BALANCE
BEGINNING OPERATING PROFIT ----------------------- AT CLOSE
DESCRIPTION OF PERIOD & LOSS OR INCOME ACCOUNT AMOUNT DESCRIPTION AMOUNT OF PERIOD
- ----------- ---------- ---------------- ------- ------ ----------- ------ ----------
<S> <C> <C> <S> <C> <S> <C> <C>
ALLOWANCES DEDUCTED FROM
ASSETS TO WHICH THEY APPLY
Reserved for bad debts:
Gas Accounts $467 $737 App. Rental $14 Accts. charged $618 $600
off - less
recoveries
Merchandise & 16 Merchandise & 19 Accts. charged 15 20
Jobbing Accts. Jobbing off - less
Operations recoveries
Liq. Petroleum 59 Liq. Petroleum 38 Accts. charged 43 54
Gas Accounts Operations off - less
recoveries
---- ---- --- ---- ----
TOTAL $542 $737 $71 $676 $674
==== ==== === ==== ====
</TABLE>
Berkshire Gas Company
------------------------------------------------------------
1 9 9 5 A N N U A L R E P O R T
A Strong Tomorrow
Built on Today's Achievements
A Strong Tomorrow Built
on Today's Achievements
A strong future is built on a track record of solid achievements
and successes. The theme of this year's Annual Report centers
on many advances that have been and are being made throughout
the Company with a focus on improving both short and long-term
performance. While specific actions are as diverse as a record
sales send out, lower purchased gas costs, automated meter
reading and sophisticated new computer systems, they all present
a positive and compelling profile of Berkshire Gas and its
comprehensive efforts to ensure continued growth and a strong
profitable future.
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Fiscal Year Ended June 30
1995/1994 1994/1993
OPERATIONS ($000) 1995 1994 % Change 1993 % Change
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating Revenues $47,934 $53,029 -9.6% $47,132 12.5%
Operating Margin 23,114 25,144 -8.1 22,301 12.7
Operating and Other Income 9,418 11,201 -15.9 9,399 19.2
Net Income 2,529 3,673 -31.1 2,810 30.7
Earnings Available for Common Stock 1,835 2,953 -37.9 2,066 42.9
COMMON SHARE DATA
- ------------------------------------------------------------------------------------------------------------
Earnings Per Share $0.92 $1.69 -45.6% $1.20 40.8%
Dividends Per Share 1.10 1.085 1.4 1.080 0.5
Book Value Per Share 13.16 12.99 1.3 12.30 5.6
Market Price (Year-End) 15.00 16.25 -7.7 18.00 -9.7
Average Shares of Common Stock Outstanding 1,990,517 1,751,830 13.6 1,718,522 1.9
Number of Registered Common Shareholders 1,878 1,835 2.3 1,879 -2.3
OTHER DATA
- ------------------------------------------------------------------------------------------------------------
Gross Utility Plant ($000) $91,863 $86,098 6.7% $83,016 3.7%
Net Utility Plant ($000) 69,326 66,191 4.7 65,846 0.5
Capital Expenditures ($000) 7,746 5,112 51.5 5,458 -6.3
Total Gas Sold and Transported (MCF-000's) 7,392 7,362 0.4 6,712 9.7
Total Natural Gas Customers 31,925 31,445 1.5 31,053 1.3
Propane Gallons Sold (000's) 3,738 3,904 -4.3 3,522 10.8
</TABLE>
Berkshire Gas Company
To Our Shareholders:
This year's report provides an overview of many of the positive
developments and advances made by the Company over the course of the past
year as well as a preview of future initiatives that are currently being
planned. All of these efforts are geared toward improving short and
long-term profitability.
Despite a stagnant economy and yet another heating season beset by
substantially warmer than normal weather, Berkshire Gas continues to focus
on efficiency, productivity and profitability as its highest priorities.
Earnings
The combination of a lackluster economy and warm weather exerted
downward pressure on financial performance. Earnings for the year were $.92
as compared to 1994 earnings of $1.69 which reflected colder than normal
weather and included a one time insurance settlement of $.23 per share.
Normal weather during the winter period would have increased earnings by
approximately $.45 per share. Current year earnings also reflect a dilution
of approximately $.11 per share as a result of the issuance of 295,000
additional shares of Common Stock in October 1994.
Weather
As has been the case in four out of the last five years, weather was
substantially warmer than normal during the 1994-95 heating season.
Temperatures for the winter period were 8.4% warmer than normal and 13%
warmer than the preceding year.
Weather during the month of January, which is traditionally the coldest
winter month, was 20% warmer than normal. Lost heating load in January
significantly handicaps our best efforts to achieve a normal winter send out
over the remaining months, even in the event of a return to normal
temperatures. Given the cyclical nature of weather patterns, we anticipate
a return to more normal winter conditions in the near future.
Sales
Firm sales declined by 12% from the prior year largely due to lower
heating demand as a result of warmer winter weather. Firm transportation
for the year, however, increased by 29% from 1994 partially offsetting the
loss of margins from lower firm sales.
Capitalizing on the recent restructuring of the natural gas industry,
the Company has been successful in tailoring its services and rates to the
specific needs of larger customers. In some cases, this has included
conversion of firm sales to firm transportation. Our ability to be flexible
and responsive to the needs of individual customers greatly enhances
our competitive position in what has become a truly open marketplace.
Despite warmer temperatures, the Company did establish a new record for
gas sold during a single twenty-four hour period on February 6, 1995. Sales
for that day totaled 45,760 MCF, largely as a result of the Company's
ability to offer additional transportation volumes to commercial and
industrial customers. The previous sales record was established in January
of 1994 when volumes totaling 43,934 MCF were sold in one day.
Rates
During the year, the Company was successful in reducing its retail
rates on three occasions. These reductions were made possible as a result
of refunds to the Company from its primary pipeline supplier, as mandated
by the Federal Energy Regulatory Commission, and lower gas costs. The full
amount of these recoveries is passed on to customers through the Cost of
Gas Adjustment Clause on their monthly bills in concert with requirements
of the Massachusetts Department of Public Utilities.
As a result of these reductions and the Company's commitment to contain
rates, customers are paying less today for natural gas service in 1995
dollars than they did ten years ago. Stable rates play a key role in
retaining customers and in the Company's ability to attract new business.
Cost Reduction
The Company continues to reduce costs across the board. Operating
expenses for 1995 were 10% lower than in the previous year. This was
accomplished in part by reductions in insurance cost, uncollectible
accounts, legal expense, regulatory expense, salary and benefit costs and
professional fees. In addition, the Company anticipates further savings as
a result of attrition, retirements and the realignment of staff to meet
changing needs. Company-wide employment is now below 160, down from an
all-time high of 194 in 1989.
Regulatory Environment
As the nature of our industry has changed in recent years, so has the
tenor of the regulatory environment. In many sectors, new demands have been
placed on regulators forcing them to rethink the role of government in the
regulation of utilities. Resulting changes have been, and will continue to
be, positive for our industry. We are working cooperatively with federal
and state regulatory authorities to fully explore many of the new approaches
to regulation currently being discussed.
Berkshire Propane
The Berkshire Propane Division attained new milestones in customer
growth during the year. The Division has consistently achieved annual
double digit growth in the number of customer served. At the same time,
Berkshire Propane has added to its service territory and is lowering costs
by increasing efficiency, as outlined elsewhere in this report. As with the
utility, Berkshire Propane also saw a reduction in volumes sold during the
year due to warmer winter weather.
New Initiatives
To further heighten efficiency and increase productivity, while at the
same time remaining mindful of our customers' needs, several key-automation
based initiatives have been undertaken this year which hold great short and
long-range promise. Plans currently call for the investment of up to $2
million dollars in systems and equipment which will significantly reduce
costs.
The flow of accurate and timely information is important in any
organization. Whether it is information needed to provide new service, to
repair customer equipment or to assure adequate supplies of natural gas,
reliable up-to-date information technology can make all the difference in
the world. In recognition of this, the Company has conducted an exhaustive
review of both hardware and software, with the aid of expert information
systems consultants, toward the goal of implementing an integrated
information network Company-wide. The adoption of this advanced technology
will provide both management and employees with an extremely powerful tool
that can be used to save time, improve customer service and make critical
information available at a moment's notice. Our investment in this project
represents a commitment to further improvements at all levels of our
organization.
Our Distribution Department has also inaugurated a program which will
have far reaching benefits both for customers and the Company. Automated
meter reading is being widely adopted by the natural gas industry. Its use
saves time, yields greater accuracy and makes it possible to read meters in
difficult locations, or during periods of inclement weather when meters may
not be readily accessible. Additionally, it will eliminate the need to
estimate bills, which focus group research has found to be chief among our
customers' concerns. Cost savings will be realized by a reduction in
manpower needs as the program becomes fully implemented, as well as by a
reduction in billing inquiries handled by customer service representatives.
To date, more than 25% of the Company's 32,000 customer meters have been
adapted to this new technology.
Our employees are to be commended for openly embracing automated
technology. Many have been actively involved with the Company's consultants
in the review, selection and implementation of the various systems discussed
above, and their participation has been invaluable.
These initiatives represent just a portion of the work that has been
undertaken toward improving operations and performance. Other initiatives
currently under way, or under consideration, are highlighted throughout this
year's report. Together they represent real advancements in technology and
efficiency that will serve both the customer and the shareholder.
Summary
In spite of challenges presented by nature, this has been a year of
progress toward our goal of improved profitability. Berkshire Gas is
an innovative and progressive company whose management is committed to
providing the best possible service at the lowest possible cost while at
the same time fulfilling the expectations of its shareholders. Recent
weather and economic trends have made it difficult to balance these
interests, but you may be sure that we will continue our pursuit of these
goals. We are continuing along avenues intended to enhance performance and
improve profitability during periods of adverse weather or economic
conditions. Most importantly, we are confident that today's achievements
are providing a solid foundation for a bright future filled with
opportunities for growth and expansion. Your investment represents an
endorsement of our initiatives for the future, and we thank you for your
confidence and support.
-----------------------------
| |
| |
| Photo of |
| Joseph T. Kelley |
| Chairman of the Board |
| |
| |
-----------------------------
/s/ Joseph T. Kelley
Chairman of the Board
---------------------------------------
| |
| |
| Photo of |
| Scott S. Robinson |
| President & Chief Executive Officer |
| |
| |
---------------------------------------
/s/ Scott S. Robinson
President & Chief Executive Officer
Berkshire Gas Company
Operations
Today's Accomplishments
* Initiated automated meter-reading.
* Automated productivity reporting and reduced supervisory staff.
* Expanded and upgraded the Supervisory Control and Data Acquisition
System.
* Implemented a computerized distribution-modeling system.
* Expanded distribution network.
* Streamlined Engineering record keeping.
* Accelerated cash flow.
* Improved response to customer inquiries.
Tomorrow's Advances
* Evaluate computer-aided dispatch systems.
* Expand distribution system capacity.
* Install paperless engineering systems.
The following pages present a tour of each of the functional areas of the
Berkshire Gas Company. This state-of-the-Company overview has a dual focus:
to highlight today's achievements and profile improvements, with an
eye toward additional advances planned for the future.
----------------------------------------------------------
| |
| Photo of |
| |
| Meter Shop Technicians, Steve Fellmann and |
| Tom Stefanik, complete installation of an automated |
| rotary natural gas meter at Williams College to |
| accommodate increased demand. |
| |
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| |
| Photo of |
| |
| Production Technician, Chris Benham, fine tunes a |
| portion of the Company's Supervisory Control and Data |
| Acquisition System used to monitor real time performance |
| of the pipeline distribution network. |
| |
----------------------------------------------------------
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| |
| Photo of |
| |
| A van equipped with automated meter reading equipment |
| travels through a residential neighborhood collecting |
| readings from customer meters for use in billing. |
| |
----------------------------------------------------------
The nerve center of a dynamic utility company is Operations. At
Berkshire Gas, this key component includes Customer Operations, Distribution
and Engineering. Together these departments are responsible for design,
construction, operation and maintenance of the pipeline network and
associated technology. The Customer Information Center also falls under the
aegis of Operations. As the Company's front-line interface with customers,
the importance of this function cannot be over stressed.
Customer Operations reached a milestone this year with the installation
of 8,000 automated meters. When all of the Company's 32,000 meters have
been converted, this technology will eliminate estimated billing, simplify
the billing process, reduce inquiries and increase customer satisfaction.
Customer Operation continually monitors its performance to ensure peak
efficiency and cost-effectiveness. An automated productivity-reporting
system is being developed to computerize analyses now performed manually by
supervisors. As a result of effective use of new technology, the Company
has been able to reduce supervisory staff requirements in this area.
In another technological advance, Distribution has expanded and
upgraded its Supervisory Control and Data Acquisition system. Sensors and
electronic controllers at critical locations throughout the distribution
network allow dispatchers to view system performance in real time and make
appropriate adjustments. In addition, new computer models of the
distribution system allow the Company to evaluate alternatives for future
growth.
To meet increasing demand for natural gas, Engineering is planning new
facilities to serve the Amherst/Greenfield area, the fastest-growing segment
of the Company's service area. Engineering is also converting manual
records to an Automated Mapping and Facilities Management system in order to
streamline its operations.
The spotlight is also on efficiency in the Customer Information Center
where monthly reports will soon be produced in two working days rather than
the six-to-eight now required. Cash flow also has been substantially
improved by engaging an outside service firm to accelerate collection of
overdue bills. In addition, cross-training programs and advanced
communications systems continue to improve the speed and quality of
responses to information and service requests.
For the future, Customer Operations personnel are actively evaluating
computer-aided dispatch systems that will provide information to field
personnel more quickly and efficiently.
Further expansion of the Company's pipeline network and implementation
of paperless engineering systems are two areas currently being reviewed by
the Company's Engineering Department. These advancements will help to
increase efficiency and reduce costs in the future.
These successes, coupled with future plans to implement new technology
and optimize staff resources, will improve the service the Company provides
to its customers, while also making it possible to control costs and focus
on profitability.
---------------------------------------------------------
| |
| Photo of |
| |
| Senior Engineer, Dave Grande, evaluates avenues for |
| future load growth using a computer model of the |
| Company's distribution system. |
| |
---------------------------------------------------------
---------------------------------------------------------
| |
| Photo of |
| |
| Customer Representative, Nicolette McGovern, accesses |
| customer information using innovative technology |
| designed to speed response time. |
| |
---------------------------------------------------------
Berkshire Gas Company
Gas Supply Acquisition and Management
Today's Accomplishments
* Reduced the cost of purchased gas.
* Met record demand.
* Realized conservation and load management benefits.
Tomorrow's Advances
* Secure fixed-price futures contracts.
* Accrue conservation performance incentives.
Deregulation and market-driven forces make it imperative for the
Company to ensure reliable supplies of natural gas at competitive rates. As
a member of the Mansfield Consortium, which includes five other natural gas
distribution companies, Berkshire Gas has the same purchasing power as the
state's largest utilities.
By skillfully negotiating contracts with multiple suppliers and
capturing low wellhead prices, the Company purchases natural gas today for
less than it did two years ago. In addition to earning high ratings from
the Massachusetts Department of Public Utilities, the ability to negotiate
favorable contracts on the open market permits competitive pricing that is
helping Berkshire Gas retain existing customers and obtain new ones.
The availability of low-cost gas supplies has aided the Company in
meeting growing consumer demand. This was particularly evident this winter
when the Company realized an all-time 24 hour sales record, despite
unusually mild weather.
Energy conservation programs also continue to contribute to a healthy
financial picture. Conservation and load-management program services
provided to 2,600 customers this year generated gas cost savings of
approximately $1 million.
Looking toward the future, the Company's supply professionals are
exploring new ways to meet customer pricing demands, including the
utilization of natural gas futures contracts on the New York Mercantile
Exchange ("NYMEX") exchange. At the same time, the Company's Conservation
Department is completing a filing which, when approved by the Massachusetts
Department of Public Utilities, will enable the Company to earn incentives
and additional revenues from the successful implementation of its programs.
---------------------------------------------------------
| |
| Photo of |
| |
| Specialty Minerals Purchasing Manager, James Mirante |
| and Quarry Superintendent, Lynn Burton, discuss the |
| future growth of their operations and associated energy |
| needs with Les Hotman, Berkshire Gas Vice-President of |
| Rates, Supply and Planning and Karen Zink, Manager of |
| Rates and Planning. |
| |
---------------------------------------------------------
Berkshire Gas Company
Administration
Today's Accomplishments
* Obtained favorable financing rates.
* Reduced employee benefit costs.
* Offered early-retirement options.
* Committed to company-wide, utility-specific software.
Tomorrow's Advances
* Install integrated information systems.
* Realign staff assets.
---------------------------------------------------------
| |
| Photo of |
| |
| Frank Swigut, Senior Manager and Business Systems |
| Consulting for Deloitte & Touche, discusses various |
| options for integrating technology and information |
| with Berkshire Gas personnel as part of the Company's |
| evaluation of new information processing hardware |
| and software. |
| |
---------------------------------------------------------
Administration provides services essential to Company growth: financial
strength, information management and manpower planning. In the financial
area, innovative financing negotiated at very favorable rates and the sale
of additional equity in October of 1994, represent major steps toward a more
balanced capital structure. Banking costs are also being significantly
reduced by aggressively negotiating lower fees.
Additionally, competitive bidding has yielded broader and more flexible
employee benefit plans at reduced cost to the Company. As a result of
regulatory reform and aggressive case management, workmen's compensation
costs have been cut by one-third. As automation continues to reduce the
physical workload, the Company has been able to offer early-retirement
options designed to maintain appropriate staffing levels.
Implementation of a networked computer system and company-wide,
utility-specific software represents probably the most sweeping procedural
change in Company history. By promoting fast, easy and complete exchange of
information between all departments, the new system will significantly
improve internal productivity and responsiveness to customers.
In planning for the future, the Company is evaluating staffing needs
and requirements in light of early retirements and the changing nature of
the workplace as a result of automation. Consequently, employees displaced
by technology are being retrained and reeducated to assume new duties and
meet needs that are emerging throughout the organization. The realignment
of staffing assets plays a critical role in cost control as well as
providing employees new opportunities for growth and experience.
Finance, information services and manpower planning play critical roles
in every aspect of the Company's operation. Advances in these areas yield
direct results to the bottom line. The Company's finance and information
services professionals are engaged daily in the pursuit of additional
technology and innovative financial vehicles for the benefit of the
Company's customers and its shareholders. The strength of these departments
provides support for the Company's effort to seize opportunities and lay the
foundation for a bright future.
Berkshire Gas Company
Marketing
Today's Accomplishments
* Adopted team marketing.
* Realized load growth.
* Implemented target marketing program.
* Instituted customer retention program.
* Customized rates for large customers.
Tomorrow's Advances
* Future load expansion.
* Expansion of custom services.
* Underground storage tank program.
---------------------------------------------------------
| |
| Photo of |
| |
| Yankee Candle founder and President, Mike Kittredge, |
| discusses the firm's recent conversion to natural gas |
| with Walter Martin, a Senior Commercial and Industrial |
| Marketing Representative at Berkshire Gas. Yankee |
| Candle manufacturers and sells an exciting line of top |
| quality candles around the globe. |
| |
---------------------------------------------------------
---------------------------------------------------------
| |
| Photo of |
| |
| Senior Commercial and Industrial Marketing |
| Representative, Rick Ryer, reviews details of the |
| recent conversion of Pittsfield High School to natural |
| gas with Principal, Mark Matthews, and Sally Douglas, |
| Budget Officer for the Pittsfield School Department. |
| |
---------------------------------------------------------
"Working together we can accomplish more than we can individually."
With this in mind, the Company's marketing effort has focused on
coordinating resources company-wide in a teamwork approach to promote and
sell natural gas. Combining the resources and talents of people throughout
the organization has proven to be an effective approach.
As a result of this coordinated effort, the Company realized
significant load additions over the past year. Natural gas has been
selected as the fuel of choice by new customers such as Wal Mart, the Old
Country Buffet and the Willowood Nursing Home, all in Pittsfield, as well as
the Clark Art Museum and Williams College in Williamstown, and the Yankee
Candle Company in Deerfield.
Effective marketing requires both a knowledge of the marketplace as
well as a thorough understanding of a potential customer's needs. In
identifying those needs, the Company's marketing professionals target key
segments of specific markets. Working with decision makers such as
architects and engineers, the marketing team is able to secure additional
load by providing information and access to the latest and most efficient
natural gas technology, as well as detailed information about the Company
and its services. This program has been expanded to include traditional
trade allies such as heating contractors and plumbers. Building strong
relationships with these target groups has paid solid dividends and
contributed significantly to the Company's growth.
The quality of customer relationships is more important than ever in
today's competitive marketplace. In recognition of this, Berkshire Gas has
initiated a pro-active marketing strategy. A team of representatives from
several Company departments is going out in the field, calling on key
commercial and industrial customers. These personal visits demonstrate a
strong service commitment while eliminating potential problems and keeping
the Company in touch with the latest business developments and customer
requirements.
The advent of customized rates also has played a key role in meeting
customers' changing needs. Deregulation of the natural gas industry has
introduced new competitive dimensions in the marketplace. The Company now
competes daily with marketers and outside suppliers. Our ability to tailor
services and rates to meet specific customer requirements is a key factor in
the success of our marketing efforts. The Company continues to focus on
providing competitive services that are flexible and superior to those
offered by all other suppliers. Looking forward, the Company is committed
to continued load growth. The Amherst and Greenfield areas of the Company's
service territory continue to offer the greatest near-term growth potential.
To penetrate these markets, sales representatives are pursing new avenues,
such as tailoring customer service packages to meet the particular needs of
residential and commercial customers.
Environmental concerns are providing an opportunity for marketing to
promote and expand the Company's underground storage tank program. Owners
of homes and businesses with leaking underground oil storage tanks are
becoming increasingly concerned with the cost of environmental remediation
of their property. By packaging and offering attractive alternatives, new
customers are converting daily to natural gas to satisfy their energy needs.
An emphasis on doing more with less, on teamwork and on change has
helped the Company adjust to meet the evolving needs of the business and at
the same time, capitalize on growth opportunities in the marketplace.
Least-cost growth will continue to be an important goal as the Company
markets its products and services in the future.
Berkshire Gas Company
Berkshire Propane
Today's Accomplishments
* Increased customer base.
* Reduced truck loading time.
* Avoided a planned expansion of clerical staff.
* Reduced supervisory staff.
* Reduced capital costs.
Tomorrow's Advances
* Explore information-processing improvements.
* Expand service area.
---------------------------------------------------------
| |
| Photo of |
| |
| Berkshire Propane reached a milestone in its history |
| this year with the addition of its 5000th customer, the |
| Open Hearts Camp in Great Barrington, Massachusetts. |
| The 400 acre camp is a summer retreat for youngsters |
| who have undergone open heart surgery. It was |
| established and endowed by the late Edward J. Madden, |
| one of the first open heart patients. |
| |
---------------------------------------------------------
Aggressive marketing initiatives have continued to expand Berkshire
Propane's customer base. Solid customer growth has led to the addition of
the Division's 5,000th customer this year. Management envisions further
expanding the existing service area in New York and Massachusetts to
continue to build on the Division's growth record.
Significant productivity improvements have resulted from modifications
to Berkshire Propane's truck-filing facilities in Pittsfield, cutting
loading time by 60 percent. Steps such as this reduce overhead costs and
heighten overall efficiency.
In addition, enhancements to the Company's computer system eliminated
the need for a scheduled expansion of clerical staff. Supervisory staff
also has been reduced as the result of Company-wide improvements. Other
information-processing advances planned for the near future include
computerized on-board ticketing and customer information storage.
The purchase of cylinders and tanks represents a significant capital
expense which can be partially offset by refurbishing tanks recovered from
customers. Berkshire Propane has been able to more than triple the number
of tanks refurbished this year, substantially cutting capital expenditures.
These reductions in both operating and capital costs, coupled with
planned improvements in information processing and expansion of the service
territory, will enhance the Division's ability to maintain consistent
contributions to the profitability of the Company.
Berkshire Gas Company
Service Area
A strong future is built on a sound past. For more than 140 years,
Berkshire Gas has been serving the energy needs of western Massachusetts.
Located in one of the most desirable areas of the Northeast, the Company's
neighbors include prestigious educational institutions, R&D centers and
high-tech businesses attracted by the region's natural beauty and superb
quality of life.
A tradition of excellence has been built on the Company's long record
of service. Today we provide natural gas service to 19 cities and towns in
Massachusetts with a combined population of 190,000. The Berkshire Propane
Division serves 107 communities in a 5,000 square mile area in western
Massachusetts and eastern New York.
Our past success has been built on countless singular achievements and
advancements. The prospects for our future will likely be similarly
determined. With that in mind, we endeavor daily to change and adapt in the
continued pursuit of excellence as we build on a long and proud history.
---------------------------------------------------------
| |
| Photo of |
| |
| Map of Western Massachusetts and Eastern New York |
| State depicting service area by town and county. |
| |
---------------------------------------------------------
The examples contained in this report all share a common goal: to
demonstrate accomplishments achieved or planned across all Company
departments and functions. Together they present the image of a Company
that is optimizing its resources, controlling costs, and improving customer
service. With this strong foundation, coupled with clearly defined plans
for the future, the Berkshire Gas Company is positioned for continued growth
and profitability.
Berkshire Gas Company
Financial Review
- ----------------------------------------------------------------------
Contents
- ----------------------------------------------------------------------
10-Year Comparative Summary
of Operations and Statistics 14
Management's Discussion and Analysis
of Financial Condition and Results of Operations 16
Financial Statements:
Statements of Income and
Retained Earnings 19
Balance Sheets 20
Statements of Common Shareholders'
Equity and Redeemable Cumulative
Preferred Stock 21
Statements of Cash Flows 22
Notes to Financial Statements 23
Independent Auditors' Report 29
Quarterly Financial Information 31
Officers and Directors 32
10-YEAR COMPARATIVE SUMMARY OF OPERATIONS AND STATISTICS
<TABLE>
<CAPTION>
For the Years Ended June 30
OPERATIONS ($000) 1995 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating Revenues $ 47,934 $ 53,029 $ 47,132 $ 47,969 $ 41,408
Cost of Gas Sold 24,820 27,885 24,831 26,741 22,341
Operating Margin 23,114 25,144 22,301 21,228 19,067
Net Income 2,529 3,673 2,810 1,952 1,462
Earnings Available for
Common Stock 1,835 2,953 2,066 1,849 1,377
COMMON SHARE DATA*
- -----------------------------------------------------------------------------------------------
Earnings Per Share $ 0.92 $ 1.69 $ 1.20 $ 1.10 $ 0.83
Annualized Dividends Per Share 1.10 1.10 1.08 1.08 1.08
Dividends Declared Per Share 1.10 1.085 1.08 1.08 1.23
Book Value Per Share 13.16 12.99 12.30 12.13 12.07
Market Price (Year-End) 15.00 16.25 18.00 14.75 13.00
Average Shares of Common Stock
Outstanding 1,990,517 1,751,830 1,718,522 1,687,734 1,655,550
CAPITALIZATION ($000)
- -----------------------------------------------------------------------------------------------
Common Equity $ 27,688 $ 22,946 $ 21,326 $ 20,626 $ 20,155
Preferred Stock 8,448 8,491 9,026 9,111 1,196
Long-Term Debt 30,983 31,083 25,413 26,564 28,156
- -----------------------------------------------------------------------------------------------
Total Capitalization $ 67,119 $ 62,520 $ 55,765 $ 56,301 $ 49,507
% OF TOTAL
- -----------------------------------------------------------------------------------------------
Common Equity 41.2% 36.7% 38.2% 36.6% 40.7%
Preferred Stock 12.6 13.6 16.2 16.2 2.4
Long-Term Debt 46.2 49.7 45.6 47.2 56.9
RATIOS (%)
- -----------------------------------------------------------------------------------------------
Payout Ratio 120% 65% 90% 98% 130%
Market-to-Book Ratio 114 125 146 122 108
Return on Average Common Equity 7.2 13.3 9.8 9.1 6.8
PROPERTY ($000)
- -----------------------------------------------------------------------------------------------
Capital Expenditures $ 7,746 $ 5,112 $ 5,458 $ 5,165 $ 4,245
Pipeline Construction 0 0 5,659 1,539 4,526
Gross Utility Plant 91,863 86,098 83,016 79,942 76,404
Net Utility Plant 69,326 66,191 65,846 64,840 63,277
Net Non-Utility Plant 5,962 5,715 5,004 8,965 10,627
Total Assets 91,983 90,991 91,891 92,124 95,971
GAS SALES (MCF-000'S)
- -----------------------------------------------------------------------------------------------
Residential 2,513 2,839 2,730 2,639 2,347
Commercial & Industrial 2,305 2,625 2,681 2,703 2,480
Interruptible 1,104 807 1,012 1,468 1,092
- -----------------------------------------------------------------------------------------------
Total Natural Gas Sales 5,922 6,271 6,423 6,810 5,919
- -----------------------------------------------------------------------------------------------
GAS TRANSPORTED (MCF-000'S)
- -----------------------------------------------------------------------------------------------
Firm Transportation 1,130 874 289 0 0
Interruptible Transportation 340 217 0 0 0
- -----------------------------------------------------------------------------------------------
Total Gas Sold and Transported 7,392 7,362 6,712 6,810 5,919
- -----------------------------------------------------------------------------------------------
Propane Gallons Sold 3,738 3,904 3,522 3,158 2,927
OTHER STATISTICS
- -----------------------------------------------------------------------------------------------
Customer Meters 31,925 31,445 31,053 30,507 30,641
Maximum Daily MCF Sendout 45,760 43,934 39,446 38,237 37,095
Minimum Daily MCF Sendout 8,216 8,114 7,371 8,060 6,855
Degree Days 6,748 7,651 7,396 7,210 6,261
20-Year Average Degree Days 7,354 7,356 7,341 7,348 7,432
Number of Employees 160 173 181 180 185
<FN>
<F1> * Reflects the 2-for-1 Common Stock split in August 1986.
</FN>
</TABLE>
10-YEAR COMPARATIVE SUMMARY OF OPERATIONS AND STATISTICS
<TABLE>
<CAPTION>
For the Years Ended June 30
OPERATIONS ($000) 1990 1989 1988 1987 1986
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating Revenues $ 39,476 $ 37,274 $ 34,992 $ 37,321 $ 36,958
Cost of Gas Sold 20,280 20,953 19,619 21,033 23,938
Operating Margin 19,196 16,321 15,373 16,288 13,020
Net Income 2,047 1,769 1,757 2,364 1,395
Earnings Available for
Common Stock 1,955 1,671 1,653 2,253 1,278
COMMON SHARE DATA*
- -----------------------------------------------------------------------------------------------
Earnings Per Share $ 1.21 $ 1.05 $ 1.14 $ 1.83 $ 1.15
Annualized Dividends Per Share 1.28 1.28 1.28 1.22 1.10
Dividends Declared Per Share 1.28 1.28 1.235 1.15 1.07
Book Value Per Share 12.40 12.40 12.57 11.96 11.17
Market Price (Year-End) 14.50 17.25 16.75 18.50 16.00
Average Shares of Common Stock
Outstanding 1,622,563 1,595,075 1,444,738 1,232,884 1,115,500
CAPITALIZATION ($000)
- -----------------------------------------------------------------------------------------------
Common Equity $ 20,299 $ 19,904 $ 19,848 $ 14,866 $ 13,634
Preferred Stock 1,290 1,378 1,465 1,559 1,647
Long-Term Debt 29,147 23,066 14,952 16,906 10,792
- -----------------------------------------------------------------------------------------------
Total Capitalization $ 50,736 $ 44,348 $ 36,265 $ 33,331 $ 26,073
% OF TOTAL
- -----------------------------------------------------------------------------------------------
Common Equity 40.1% 44.9% 54.7% 44.6% 52.3%
Preferred Stock 2.5 3.1 4.1 4.7 6.3
Long-Term Debt 57.4 52.0 41.2 50.7 41.4
RATIOS (%)
- -----------------------------------------------------------------------------------------------
Payout Ratio 106% 122% 112% 67% 96%
Market-to-Book Ratio 117 139 133 155 143
Return on Average Common Equity 9.7 8.4 9.5 15.8 10.4
PROPERTY ($000)
- -----------------------------------------------------------------------------------------------
Capital Expenditures $ 6,438 $ 12,308 $ 9,778 $ 6,983 $ 5,320
Pipeline Construction 6,475 0 0 0 0
Gross Utility Plant 71,805 65,657 55,310 47,105 41,196
Net Utility Plant 60,558 55,991 46,576 39,163 34,137
Net Non-Utility Plant 8,119 2,882 2,616 2,531 2,384
Total Assets 83,680 65,240 56,886 49,979 43,072
GAS SALES (MCF-000'S)
- -----------------------------------------------------------------------------------------------
Residential 2,545 2,547 2,428 2,333 2,254
Commercial & Industrial 2,778 2,702 2,564 2,209 1,902
Interruptible 1,163 1,026 893 763 1,243
- -----------------------------------------------------------------------------------------------
Total Natural Gas Sales 6,486 6,275 5,885 5,305 5,399
- -----------------------------------------------------------------------------------------------
GAS TRANSPORTED (MCF-000'S)
- -----------------------------------------------------------------------------------------------
Firm Transportation 0 0 0 0 0
Interruptible Transportation 169 118 31 0 0
- -----------------------------------------------------------------------------------------------
Total Gas Sold and Transported 6,655 6,393 5,916 5,305 5,399
- -----------------------------------------------------------------------------------------------
Propane Gallons Sold 2,789 2,588 2,293 2,075 1,905
OTHER STATISTICS
- -----------------------------------------------------------------------------------------------
Customer Meters 30,395 29,733 28,684 27,894 27,250
Maximum Daily MCF Sendout 38,012 37,480 38,917 35,469 32,659
Minimum Daily MCF Sendout 7,294 7,228 6,603 5,821 6,279
Degree Days 7,045 7,581 7,471 7,276 7,182
20-Year Average Degree Days 7,474 7,474 7,479 7,504 7,502
Number of Employees 191 194 182 155 149
<FN>
<F1> * Reflects the 2-for-1 Common Stock split in August 1986.
</FN>
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- -----------------------------------------------------------------------------
(Dollars in Thousands Except Share and per Share Amounts)
An Overview of 1995
- -----------------------------------------------------------------------------
Operating Margin for 1995 decreased 8.1% to $23,114 from
1994 levels of $25,144, resulting in decreased Net Income and
Earnings Per Share of Common Stock of 31.1% to $2,529 and 45.6%
to $.92, respectively, over the prior year's results. The
decreases in Operating Margins and Net Income for 1995 are
primarily due to significantly warmer weather during the
heating season relative to 1994, furthermore, 1994 results
included proceeds from an insurance settlement which
contributed $.23 to earnings per share, and to a lesser extent,
the issuance of 295,000 shares of Common Stock diluted 1995
earnings by $.11 per share. Continued efforts in cost
containment resulted in increased operating efficiencies
reducing operating expenses by $1,320. The number of degree
days in 1995 was 6,748, a decrease of 11.8% from the 1994
level, and 8.2% below the 20-year average.
Net Utility Plant increased to approximately $69,326, a 4.7%
increase above 1994, reflecting capital expenditures of $7,746,
which were 52% above 1994 levels. During 1995, the Company
sold 295,000 shares of Common Stock netting proceeds of $4,213
to repay short-term bank borrowings. In 1995 the book value
per share rose to $13.16 from $12.99 in 1994.
Results of Operations
- -----------------------------------------------------------------------------
1995 vs. 1994
Earnings available for Common Stock were $1,835 for 1995 as
compared to $2,953 for 1994; Earnings Per Share of Common Stock
based on the average number of shares outstanding for the same
periods were $.92 and $1.69, respectively. The $.77 or 45.6%
decrease in per share earnings from 1994 is due primarily to
significantly warmer weather during the heating season,
furthermore 1994 results included proceeds from an insurance
settlement which increased 1994 earnings by $.23 per share, and
to a lesser extent, the issuance of 295,000 shares of Common
Stock diluted 1995 earnings by $.11 per share.
Berkshire Gas Company considers Operating Margin (Operating
Margin or Gross Profit=Operating Revenues Net of Cost of Gas
Sold) to be a more pertinent measure of operating results than
operating revenues because income is not significantly affected
by changes in revenue due to similar fluctuations in gas costs.
The Company is required to recover from or return to the
customers through the Company's Cost of Gas Adjustment Clause
("CGAC") any changes in the cost of natural gas.
Operating Margin decreased $2,030 or 8.1% as compared with
1994. Operating Margin is primarily affected by the change in
the level of firm gas sold and transported. Interruptible gas
sold and transported has no effect on Operating Margin since
those margins are flowed back to the firm customer. The
Company's sales are affected by weather as the majority of its
firm customers use natural gas for heating. The decrease from
1994 is primarily due to lower volumes of firm gas sold due to
11.8% warmer weather than 1994, partially offset by higher
volumes of gas sold and transported at slightly lower margins
from increased firm transportation volumes to industrial
customers.
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Firm MCF Sold and Transported 5,948 6,338
Operating Margin $23,114 $25,144
Average Operating Margin Per Firm MCF $ 3.89 $ 3.97
</TABLE>
Other Operating Expenses consisted of the following:
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Transmission and Distribution $ 3,400 $ 3,407
Customer Accounts 2,740 3,162
Administrative and General 4,173 4,909
Other 1,276 1,431
------- -------
Total $11,589 $12,909
======= =======
</TABLE>
Other Operating Expenses decreased $1,320 or 10.2% from 1994
levels. The decrease in Other Operating Expenses primarily
reflects lower Customer Accounts expense of $422 due to lower
levels of uncollectible accounts; decreased Administrative and
General costs due to lower insurance costs of $254, lower
employee welfare of $196 due to fewer medical claims, reduced
legal expense of $64, lower shareholders expense of $45, lower
regulatory expense of $49 and lower salaries and benefits of
$138. Other costs were $155 less than 1994, primarily due to
lower professional fees associated with restructuring supply
contracts brought about by the Federal Energy Regulatory
Commission ("FERC") Order 636.
Depreciation Expense increased by $203 in 1995 over 1994 due
to an increase in the amount of depreciable assets.
Other Income decreased $871 from 1994. The decrease was
primarily due to an insurance settlement that was included in
1994 income in the amount of $403 (net of taxes and amounts
previously recorded). Propane revenue was $170 less than 1994
due to the significantly warmer weather during the heating
season. Interest income was $60 less resulting from the
overcollection of prior period gas costs through the CGAC.
Interest Expense increased $178 due to higher long-term
interest expense due to semi-annual pricing of the Medium-Term
note, partially offset by lower short-term interest due to
lower levels of borrowing. Other Taxes increased $70 due to
higher personal property valuations and rates.
Income Taxes decreased $887 from 1994 due to lower earnings
in 1995.
Dividends Declared on Common Stock increased $312 due to
additional shares outstanding, and to a lesser extent,
dividends increased $.015 per share in 1995. The Company sold
295,000 shares of Common Stock during the second quarter of
fiscal 1995.
1994 vs. 1993
Earnings available for Common Stock were $2,953 for 1994 as
compared to $2,066 for 1993; Earnings Per Share of Common Stock
based on the average number of shares outstanding for the same
periods were $1.69 and $1.20, respectively. The $.49 or 40.8%
increase in per share earnings over 1993 is primarily due to
colder weather during the heating season, increased operating
efficiencies and the settlement of an insurance claim relating
to a line of business that was discontinued in the 1970's ($403
net of taxes and amounts previously recorded which equates to
$.23 on a per share basis).
Operating Margins increased $2,843 as compared with 1993.
Operating Margin is primarily affected by the change in the
level of firm gas sold and transported. Interruptible gas sold
and transported has no effect on Operating Margin since the
margins are flowed back to the firm customer. The Company's
sales are affected by the weather as the majority of its firm
customers use natural gas for heating. The increase in
Operating Margin in 1994 is primarily due to colder weather
during the heating season which increased the volumes of firm
gas sold by 638 MCF or 11.2%. To a lesser extent, a 2.54% base
rate increase effective April 1, 1993 contributed to the
increased Margin.
<TABLE>
<CAPTION>
1994 1993
------- -------
<S> <C> <C>
Firm MCF Sold and Transported 6,338 5,700
Operating Margin $25,144 $22,301
Average Operating Margin Per Firm MCF $ 3.97 $ 3.91
</TABLE>
Operating Expenses consisted of the following:
<TABLE>
<CAPTION>
1994 1993
------- -------
<S> <C> <C>
Transmission and Distribution $ 3,407 $ 3,382
Customer Accounts 3,162 2,599
Administrative and General 4,909 4,087
Other 1,431 1,164
------- -------
Total $12,909 $11,232
======= =======
</TABLE>
Other Operating Expenses increased $1,677 or 14.9% over 1993
levels. The increase in Other Operating Expenses primarily
reflects higher Customer Accounts expense of $439 due to higher
levels of uncollectible accounts; increased Administrative and
General costs resulting from higher salaries, associated
benefits and fees of $537, additional legal expense of $153,
additional regulatory costs of $62, increased shareholder
expenses primarily associated with the Company's Share Owner
Dividend Reinvestment and Stock Purchase Plan ("DRIP") of $43;
Other costs for the residential conservation program of $121
and professional fees of $123 associated with restructuring
supply contracts brought about by the Federal Energy Regulatory
Commission ("FERC") Order 636.
Depreciation increased by $230 in 1994 over 1993 due to an
increase in the level of depreciable assets, and, to a lesser
extent, an increase in the composite depreciation rate from
3.64% to 4.04% effective April 1, 1993.
Other Income increased $866 in 1994 over 1993. The increase
resulted primarily from the settlement of an insurance claim
relating to a line of business that was discontinued in the
1970's, in the amount of $403 (net of taxes and amounts
previously recorded) and higher jobbing margins of $147.
Increased interest income resulted from an undercollection of
prior period gas costs through the CGAC approximating $137.
The increase in other income is partially offset by lower
rental income of $184 due to higher depreciation expense
reflecting an adjustment for the change in the lives of rental
assets during 1993.
Income Taxes for 1994 as compared with 1993 increased by
$857 due to changes in net earnings as discussed above.
Liquidity and Capital Resources
- -----------------------------------------------------------------------------
Cash flows from operations, net of dividend payments, have
generally provided the principal liquidity to meet operating
requirements. Capital requirements have been generally funded
by both internal and external sources. The issuance of long-term
financing is dependent on management's evaluation of need,
financial market conditions and other factors. Short-term
financing is used to meet seasonal cash requirements.
The Company initially finances construction expenditures and
other funding needs primarily with short-term bank borrowings,
and to a lesser extent with the reinvestment of dividends. The
Company continually evaluates its short-term borrowing position
and based on prevailing interest rates, market conditions,
etc., makes determinations regarding conversion of short-term
borrowings to long-term debt or equity. As part of this
strategy, the Company sold 295,000 shares of Common Stock
during the second quarter of fiscal 1995, netting proceeds of
$4,213 to repay short-term bank borrowings.
The Company's capital expenditures were $7,746 in 1995,
$5,112 in 1994, and $5,458 in 1993. In addition, during 1993,
approximately $5,659 was spent for the construction, planning
and permitting of a pipeline for a 160 megawatt cogeneration
project, for which the Company acted as the developer. In
1993, the Company conveyed its interest in the pipeline, at
which time approximately $8,472 was transferred out of
construction work in progress as these costs were completely
reimbursed to the Company. The Company expects fiscal 1996
capital expenditures to total approximately $8,000.
Construction expenditures will be financed initially through
short-term borrowings and refinanced by issuing long-term debt
and/or equity, to the extent that internally generated funds
are not available.
Beginning June 15, 1993, the Company's Share Owner Dividend
Reinvestment and Stock Purchase Plan ("DRIP") allowed for the
sale of Common Stock shares at a 3.0% discount to plan
participants to increase cash flow to support current
construction expenditures.
As of June 30, 1995, the Company had lines of credit
aggregating $25,500, all of which remained unused.
The Company's continued evaluation of its environmental
protection requirements has indicated that present estimates of
investigative and cleanup costs range from $2,894 to $8,777 and
are expected to be incurred through 2010. The anticipated
level of expenditures has remained the same in 1995 from 1994
and been reduced from 1993 estimates resulting from the
Company's analysis and review of the sites and the commencement
of clean-up activities at the first site. The Company has
recorded the most likely costs of $2,894 in accordance with
SFAS No. 5. All costs, excluding carrying charges, are
expected to be subject to recovery over a seven-year period
under a ruling issued by the MDPU.
Capitalization at June 30, 1995, excluding current
redemption requirements of long-term debt, consisted of 46.2%
long-term debt, 41.2% common equity, and 12.6% preferred stock.
It is management's view that the Company has adequate access
to capital markets and will have sufficient capital resources,
both internal and external, to meet anticipated capital
requirements.
Inflation
- -----------------------------------------------------------------------------
The accompanying financial statements reflect the historical
cost of events and transactions, regardless of the purchasing
power of the dollar at the time. Due to the capital intensive
nature of the Company's business, the most significant impact
of inflation is on the Company's depreciation of utility plant.
Rate regulation, to which the Company is subject, allows
recovery through its rates of only the historical cost of
utility plant as depreciation. The Company expects that any
higher costs experienced upon replacement of existing
facilities will be recovered through the normal regulatory
process.
STATEMENTS OF INCOME AND RETAINED EARNINGS
- -----------------------------------------------------------------------------
(In Thousands Except Share Amounts)
<TABLE>
<CAPTION>
Years Ended June 30
1995 1994 1993
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues $ 47,934 $ 53,029 $ 47,132
Cost of Gas Sold 24,820 27,885 24,831
- ------------------------------------------------------------------------------------------
Operating Margin 23,114 25,144 22,301
- ------------------------------------------------------------------------------------------
Other Operating Expenses 11,589 12,909 11,232
Depreciation 3,624 3,421 3,191
- ------------------------------------------------------------------------------------------
Total 15,213 16,330 14,423
- ------------------------------------------------------------------------------------------
Utility Operating Income 7,902 8,814 7,878
Other Income - Net 1,516 2,387 1,521
- ------------------------------------------------------------------------------------------
Operating and Other Income 9,418 11,201 9,399
Interest Expense 3,667 3,489 3,490
Other Taxes 1,697 1,627 1,544
- ------------------------------------------------------------------------------------------
Pre-tax Income 4,054 6,085 4,365
Income Taxes 1,525 2,412 1,555
- ------------------------------------------------------------------------------------------
NET INCOME $ 2,529 $ 3,673 $ 2,810
Retained Earnings At Beginning of Period 7,098 5,658 5,450
Adjustment to Retained Earnings 0 390 0
- ------------------------------------------------------------------------------------------
Total 9,627 9,721 8,260
- ------------------------------------------------------------------------------------------
Dividends Declared:
Preferred Stock 694 720 744
Common Stock 2,215 1,903 1,858
- ------------------------------------------------------------------------------------------
Total Dividends 2,909 2,623 2,602
- ------------------------------------------------------------------------------------------
Retained Earnings at End of Period $ 6,718 $ 7,098 $ 5,658
==========================================================================================
Earnings Available for Common Stock $ 1,835 $ 2,953 $ 2,066
==========================================================================================
Average Shares of Common Stock Outstanding 1,990,517 1,751,830 1,718,522
- ------------------------------------------------------------------------------------------
Earnings Per Share of Common Stock $ 0.92 $ 1.69 $ 1.20
==========================================================================================
</TABLE>
Reference should be made to Notes to Financial Statements.
BALANCE SHEETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(In Thousands) June 30
1995 1994 1993
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Utility Plant:
Utility Plant-at original cost $91,863 $86,098 $83,016
Less: Accumulated Depreciation 22,537 19,907 17,170
- --------------------------------------------------------------------------------------------
Utility Plant-Net 69,326 66,191 65,846
- --------------------------------------------------------------------------------------------
Other Property:
Other Property-at original cost 10,766 9,957 8,750
Less: Accumulated Depreciation 4,804 4,242 3,746
- --------------------------------------------------------------------------------------------
Other Property-Net 5,962 5,715 5,004
- --------------------------------------------------------------------------------------------
Current Assets:
Cash and Cash Equivalents 492 65 59
Accounts Receivable 6,612 8,687 6,891
Other Receivables 234 133 176
Inventories 3,236 3,629 3,089
Prepayments 178 146 145
- --------------------------------------------------------------------------------------------
Total Current Assets 10,752 12,660 10,360
- --------------------------------------------------------------------------------------------
Deferred Debits:
Unamortized Debt Expense 578 624 647
Capital Stock Expense 638 340 420
Environmental Cleanup Costs 1,046 1,030 872
Other 787 1,537 1,740
- --------------------------------------------------------------------------------------------
Total Deferred Debits 3,049 3,531 3,679
- --------------------------------------------------------------------------------------------
Recoverable Environmental Cleanup Costs. 2,894 2,894 7,002
- --------------------------------------------------------------------------------------------
TOTAL ASSETS $91,983 $90,991 $91,891
============================================================================================
LIABILITIES AND OTHER CREDITS
Common Shareholders' Equity:
Common Stock $ 5,259 $4,417 $4,333
Premium on Common Stock 15,711 11,431 10,945
Surplus Invested in Plant 0 0 390
Retained Earnings 6,718 7,098 5,658
- --------------------------------------------------------------------------------------------
Total Common Shareholders' Equity 27,688 22,946 21,326
- --------------------------------------------------------------------------------------------
Redeemable Cumulative Preferred Stock 8,448 8,491 9,026
- --------------------------------------------------------------------------------------------
Long-Term Debt (less current maturities) 30,983 31,083 25,413
- --------------------------------------------------------------------------------------------
Current Liabilities:
Notes Payable to Banks 0 6,580 11,840
Current Maturities of Long-Term Debt 900 900 1,670
Accounts Payable 3,091 2,776 3,047
Taxes Accrued 125 (155) (85)
Refundable (Recoverable) Gas Costs 4,117 502 (1,019)
Other Current Liabilities 5,518 5,261 2,931
- --------------------------------------------------------------------------------------------
Total Current Liabilities 13,751 15,864 18,384
- --------------------------------------------------------------------------------------------
Unamortized Investment Tax Credit 1,355 1,430 1,506
- --------------------------------------------------------------------------------------------
Deferred Income Taxes 6,864 8,283 9,234
- --------------------------------------------------------------------------------------------
Reserve for Recoverable Environmental Cleanup Costs 2,894 2,894 7,002
- --------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND OTHER CREDITS $91,983 $90,991 $91,891
============================================================================================
</TABLE>
Reference should be made to Notes to Financial Statements.
STATEMENTS OF COMMON SHAREHOLDERS' EQUITY
AND REDEEMABLE CUMULATIVE PREFERRED STOCK
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
(In Thousands Except Share Amounts)
June 30
1995 1994 1993
- ---------------------------------------------------------------------------------------
<C> <C> <C> <C>
Common Shareholders' Equity:
Common Stock, $2.50 par value;shares authorized:
1995, 1994 and 1993 - 2,600,000; 2,600,000 and
2,100,000, respectively.
Shares issued and outstanding: 1995-2,103,432;
1994-1,766,909; 1993-1,733,068 $ 5,259 $ 4,417 $ 4,333
Premium on Common Stock 15,711 11,431 10,945
Surplus Invested in Plant 0 0 390
Retained Earnings 6,718 7,098 5,658
- ---------------------------------------------------------------------------------------
Total Common Shareholders' Equity $27,688 $22,946 $21,326
=======================================================================================
Redeemable Cumulative Preferred Stock:
4.80%, $100 par value; 15,000 shares
authorized;issued and outstanding:
1995-4,478;1994-4,906;1993-5,257 $ 448 $ 491 $ 526
9.00%, $100 par value;10,000 shares
authorized;issued and outstanding:
1995-0;1994-0;1993-5,000 0 0 500
8.40%, $100 par value; 80,000 shares
authorized;issued and outstanding:
1995, 1994, and 1993-80,000 8,000 8,000 8,000
- ---------------------------------------------------------------------------------------
Total Redeemable Cumulative Preferred Stock $ 8,448 $ 8,491 $ 9,026
=======================================================================================
</TABLE>
Reference should be made to Notes to Financial Statements.
STATEMENTS OF CASH FLOWS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(In Thousands) Years Ended June 30
1995 1994 1993
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 2,529 $ 3,673 $ 2,810
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation and Amortization 4,477 4,107 3,588
Provision for Losses on Accounts Receivable 741 1,274 808
Refundable (Recoverable) Gas Costs 3,615 1,521 (1,771)
Deferred Income Taxes (1,419) (1,553) 841
Changes in Assets and Liabilities Which
Provided (Used) Cash:
Accounts and Other Receivables 1,233 (3,027) (1,355)
Inventories 393 (540) (1,090)
Unamortized Debt Expense 0 (24) 0
Unamortized Investment Tax Credit 0 0 (30)
Unamortized Capital Stock Expense (155) 0 (183)
Accounts Payable 315 (271) 1,010
Taxes Accrued 280 (70) (129)
Consumer Rebates and Other 960 2,977 172
- ---------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 12,969 8,067 4,671
- ---------------------------------------------------------------------------------------------
Cash Flows from Investing Activities:
Capital Expenditures and Disposal Costs (7,746) (5,112) (5,458)
Capital Expenditures - Transportation Pipeline 0 0 (5,659)
- ---------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities (7,746) (5,112) (11,117)
- ---------------------------------------------------------------------------------------------
Cash Flows from Financing Activities:
Dividends Paid (2,909) (2,623) (2,452)
Current Maturities of Long-Term Debt 0 (770) (120)
Proceeds from (Principal Payments on)
Issuance of Long-Term Debt (100) 5,670 (1,151)
Proceeds from (Principal Payments on)
Notes Payable Borrowings-Net (6,580) (5,260) 3,500
Principal Payments on
Construction Loan Borrowings-Net 0 0 (4,284)
Proceeds from Issuance of Common Stock-Net 4,213 0 0
Proceeds from Other Stock Transactions-Net 580 34 408
Proceeds from Reimbursement of Transportation
Pipeline Expenditures 0 0 2,091
Proceeds from the Sale of Transportation Pipeline 0 0 8,472
- ---------------------------------------------------------------------------------------------
Net Cash (Used in) Provided by Financing Activities (4,796) (2,949) 6,464
- ---------------------------------------------------------------------------------------------
Net Increase in Cash and Cash Equivalents 427 6 18
Cash and Cash Equivalents at Beginning of Year 65 59 41
- ---------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 492 $ 65 $ 59
=============================================================================================
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Year for:
Interest (net of amount capitalized) $ 3,452 $ 3,380 $ 3,327
Income Taxes (net of refund) 3,027 2,552 974
=============================================================================================
</TABLE>
Reference should be made to Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
(Dollars in Thousands Except Share and Per Share Amounts)
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
- -----------------------------------------------------------------------------
The Berkshire Gas Company ("the Company") is a publicly owned utility
engaged in the distribution and sale of natural gas for residential,
commercial and industrial use, as well as the transportation of natural gas
for larger industrial users. The Company also sells and leases gas burning
equipment, and markets liquefied petroleum gas through its Berkshire Propane
operations. The Company is subject to regulation by the Massachusetts
Department of Public Utilities ("MDPU"). The Company's accounting policies
conform to Generally Accepted Accounting Principles ("GAAP") as applied to
public utilities giving effect to the accounting practices and policies of
the MDPU.
Income Taxes
- -----------------------------------------------------------------------------
Effective July 1, 1993, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes."
("SFAS No. 109"), which requires that the liability method be used in
calculating deferred income taxes. Upon adoption, the Company recorded
deferred income tax liabilities for temporary differences for which deferred
income taxes had not been provided and to adjust deferred tax balances to
reflect changes in tax rates expected to be in effect during the periods the
temporary differences reverse.
With the adoption of SFAS No. 109, the Company has determined that it
has excess deferred taxes which has resulted in the recording of a
regulatory liability. The regulatory liability reflects amounts due to the
ratepayers which will be refunded through the regulatory process.
Depreciation
- -----------------------------------------------------------------------------
The Company depreciates its utility plant at straight line rates
approved by the MDPU. The current depreciable composite rate is 4.04% and
has been in effect since April 1, 1993. Depreciable non-utility property
consists of rental equipment, propane tanks and related equipment used in
the Company's liquefied petroleum gas operations, and is depreciated at
annual rates ranging from 2.5% to 20.0%.
Revenues
- -----------------------------------------------------------------------------
Customer meters are read or estimated on a monthly basis. After the
reading or estimation is prepared, customers are billed for their gas usage
and any applicable monthly rental fee. At the time of billing, revenues are
recorded.
Pursuant to the MDPU, the Company is allowed to recover increases in
gas costs and to refund any decreases in gas costs by way of the Cost of Gas
Adjustment Clause ("CGAC"). A gas adjustment charge or refund for estimated
gas costs as compared with actual gas costs and any profit on the sale or
transportation of interruptible volumes is included in the monthly customer
billings via the CGAC. Any difference between actual and estimated gas
costs plus interest is accrued or deferred and is recorded in the month the
related revenue is billed.
Unamortized Debt Expense
- -----------------------------------------------------------------------------
The issuance costs associated with long-term debt are deferred and
amortized over the life of the issue.
Investment Tax Credit
- -----------------------------------------------------------------------------
The unamortized balance of the investment tax credit ("ITC") relating
to machinery and equipment acquisitions up through 1986 is deducted from
federal income taxes and is deferred on the balance sheet, as prescribed by
the MDPU, and is being amortized over the expected lives of the applicable
assets. The unamortized balance of the ITC for the years ended June 30,
1995, 1994 and 1993 was $1,355, $1,430 and $1,506, respectively. The
amortized portion for the years ended June 30, 1995, 1994 and 1993 was $75,
$75 and $47, respectively.
Utility Plant
- -----------------------------------------------------------------------------
The cost of maintenance, repairs and the renewal of items determined to
be less than full units of plant property are charged to maintenance expense
accounts. The cost of betterments and the renewal of full units of plant
property are charged to plant property accounts. Costs include materials,
labor and indirect charges for engineering, general and administrative and
supervisory services. The book value of plant property replaced, retired or
sold is concurrently removed from such plant property accounts and charged
to accumulated depreciation along with its associated removal costs, less
any salvage value.
A functional classification for the cost of utility plant at June 30 is
as follows:
<TABLE>
<CAPTION>
1995 1994 1993
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Transmission and
Distribution Plant........... $77,128 $72,000 $69,199
General Plant................. 9,549 8,995 8,664
Manufactured Gas
Production Plant............. 4,455 4,464 4,458
Construction in Progress...... 731 639 695
- -----------------------------------------------------------------------------
Total.................... $91,863 $86,098 $83,016
=============================================================================
</TABLE>
Transmission and distribution plant consists of mains; services and
meters, the cost for their installation; land and rights of way; and
measuring and regulating station equipment which is used to deliver and to
monitor gas used by the customer.
General plant consists of structures and their improvements, office
furniture and equipment, including computers, and transportation equipment.
The manufactured gas production plant consists of land, gas mixing
equipment and liquefied petroleum gas equipment used to supplement natural
gas volumes during the peak season in order to meet customer demand.
ACCOUNTS RECEIVABLE
- -----------------------------------------------------------------------------
Details of accounts receivable, net of allowance for doubtful accounts,
as of June 30 are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Utility Service.................. $6,103 $8,133 $6,406
Merchandise and Jobbing.......... 118 140 124
Liquefied Petroleum.............. 391 414 361
- ---------------------------------------------------------------------
Total - Net ................ $6,612 $8,687 $6,891
=====================================================================
</TABLE>
The allowance for doubtful accounts as of June 30, 1995, 1994 and 1993,
respectively, is: Utility - $832, $727 and $600; Merchandise - $44, $21 and
$20; Liquefied Petroleum - $75, $68 and $54.
INVENTORIES
- -----------------------------------------------------------------------------
Materials, supplies and liquefied petroleum used in the non-utility
operations are valued at the lower of average cost or market value;
liquefied petroleum used in the utility operations is valued at cost;
natural gas is recorded at cost. The details of these inventories as of
June 30 are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Materials and Supplies.......... $1,284 $1,357 $1,413
Natural Gas..................... 1,702 2,088 1,526
Liquefied Petroleum............. 250 184 150
- -----------------------------------------------------------------------------
TOTAL - Net............... $3,236 $3,629 $3,089
=============================================================================
</TABLE>
RECLASSIFICATION
- -----------------------------------------------------------------------------
The Company has reclassified certain amounts for prior years to conform
with the 1995 presentation.
RETAINED EARNINGS
- -----------------------------------------------------------------------------
On April 29, 1994, the Company received authorization from the MDPU to
transfer $390 from Surplus Invested in Plant to Retained Earnings
representing the surpluses resulting from the 1954 acquisition of Berkshire
Gas Company and the 1958 acquisition of Greenfield Gas Light Company at less
than net book value. This transfer had no effect on the Company's earnings.
COMMON STOCK
- -----------------------------------------------------------------------------
Earnings per share of Common Stock are calculated after the recognition
of the dividend requirements for the Redeemable Cumulative Preferred Stock
of $694 $720 and $744 for the fiscal years ended June 30, 1995, 1994 and
1993, respectively. Earnings per share of Common Stock are based on the
average number of Common shares outstanding. The average number of Common
Stock shares outstanding for the fiscal years ended June 30, 1995, 1994 and
1993 were 1,990,517, 1,751,830 and 1,718,522, respectively.
The Company issued shares pursuant to the Share Owner Dividend
Reinvestment and Stock Purchase Plan ("DRIP") of 41,586, 33,841 and 32,147
for a total of $628, $569, and $492 during 1995, 1994 and 1993, respectively.
Beginning June 15, 1993, the Company initiated a plan for the purchase
of Common Stock whereby all holders of 10 shares or more are eligible to
purchase shares of Common Stock at a 3% discount of the average of the bid
and asked prices for the five days preceding the purchase date.
Participants can purchase shares by either reinvesting dividends on Common
Stock already held or through optional cash payments.
During fiscal 1995, the Company sold 295,000 shares of Common Stock in
a public offering. During fiscal 1994, 100,000 additional shares were
authorized and approved by the MDPU pursuant to the DRIP. See "Redeemable
Cumulative Preferred Stock" below concerning the restrictions on the
payment of cash dividends on, or purchases of, Common Stock.
REDEEMABLE CUMULATIVE PREFERRED STOCK
- -----------------------------------------------------------------------------
The Company has authorized two series of Cumulative Preferred Stock:
the 4.8% and the 8.4%. The redemption price per share for the 4.8%
Cumulative Preferred Stock (as well as the amount due on voluntary
liquidation) is $100.00. The provisions of the 4.8% Cumulative Preferred
Stock require the Company to offer to purchase up to 450 shares at par
annually on September 15. Pursuant thereto, the Company purchased 428
shares during 1995, 351 shares during the 1994 fiscal year, and 357 shares
during 1993.
The Company called and retired the 4,500 remaining shares of the 9.0%
Cumulative Preferred Stock in January 1994.
The provisions of the 8.4% Cumulative Preferred Stock provide for an
annual mandatory sinking fund of 5,334 shares at par commencing in the year
2003. The redemption price per share of the 8.4% Cumulative Preferred Stock
(as well as the amount due on a voluntary liquidation basis) is $105.10
beginning May 30, 2002 and thereafter gradually reduces to $100.
The Charter provisions applicable to the Cumulative Preferred Stock and
the First Mortgage Indenture contain restrictions on the use of retained
earnings for the payment of cash dividends on, or purchases of, Common
Stock. At June 30, 1995, the Company's retained earnings were $6,718. At
such date, under the most restrictive of these provisions, $2,945 of the
retained earnings were unrestricted.
LONG-TERM DEBT
- -----------------------------------------------------------------------------
Details regarding the Company's First Mortgage Bonds, Debentures,
Senior and Medium-Term Notes Payable, and sinking funds (due after one year)
as of June 30 are as follows:
<TABLE>
<CAPTION>
Portions
Description Maturing
Interest Annually
First Mortgage Bonds: Rate Through 1995 1994 1993
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Series K 7.7850 1997 $ 520 $ 540 $ 560
M 9.3750 1998 720 800 880
O 12.7500 1995 0 0 210
P 10.0600 2019 10,000 10,000 10,000
Debenture: 9.1250 2006 5,743 5,743 5,763
Senior Note: 9.6000 2020 8,000 8,000 8,000
Medium-Term Note: 7.0625 1999 6,000 6,000 0
- ----------------------------------------------------------------------------------
TOTAL..................................... $30,983 $31,083 $25,413
==================================================================================
</TABLE>
All interest rates are fixed except in the case of the Medium-Term
Note, which is variable based upon the LIBOR six month rate and which is
convertible at the option of the Company to a fixed rate based upon the
lender's cost of funds rate. The aggregate amount of sinking fund and other
maturities due in each of the next five years are: 1996 - $500; 1997 -
$1,000; 1998 - $480; 1999 - $6,960; and 2000 - $400. Series P, the Senior
Note and the Medium-Term Note do not have sinking fund requirements. The
redemption of the Debenture is voluntary by the holder, is non-cumulative
and cannot exceed $400 per year.
The First Mortgage Bonds are collateralized by substantially all
of the utility plant.
OTHER CURRENT LIABILITIES
- -----------------------------------------------------------------------------
Details of other current liabilities as of June 30 are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
- ------------------------------------------------------------------
<S> <C> <C> <C>
Accrued Interest.................. $ 839 $ 841 $ 881
Insured Retirement Plan........... 377 414 314
Dividends Declared................ 752 660 654
Accrued Consumer Rebates.......... 2,044 2,091 6
Other............................. 1,506 1,255 1,076
- ------------------------------------------------------------------
TOTAL....................... $5,518 $5,261 $2,931
==================================================================
</TABLE>
Accrued consumer rebates represent refunds received from a major
supplier of natural gas to the Company. The refunds are associated with the
supplier rate case before FERC, and are to be refunded to the ratepayer
during the next fiscal year.
SHORT-TERM LOANS AND
COMPENSATING BALANCES
- -----------------------------------------------------------------------------
The Company has lines of credit aggregating $25,500 with various banks,
all of which remained unused as of June 30, 1995. The lines of credit are
reviewed periodically with various banks and may be renewed or canceled. In
connection with these lines of credit, the Company borrows primarily at less
than the prime rate. In lieu of compensating balance requirements, the
Company pays commitment fees on a portion of its credit lines equating to
3/8 of 1% on $11,000 with the various banks.
Information as to short-term borrowings is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Balance Outstanding at June 30.......... $ 0 $ 6,580 $11,840
Maximum Amount of Borrowings
at Any Month-End....................... 10,470 20,570 18,260
Average Borrowings During the Year...... 5,604 15,407 14,393
Average Interest Rate at End of Year.... 7.31% 5.04% 4.41%
Weighted Average Interest Rate During
the Year............................... 6.60% 4.65% 5.05%
</TABLE>
INCOME TAXES
- -----------------------------------------------------------------------------
The difference in the effective tax rate compared with the statutory
tax rate is shown in the following table:
<TABLE>
<CAPTION>
1995 1994 1993
- -------------------------------------------------------------------
<S> <C> <C> <C>
Tax at Statutory Rate........... 34% 34% 34%
State Taxes (Net of Federal
Benefit)....................... 4.5 4.6 4.4
Investment Tax Credit........... (1.9) (1.2) (1.7)
Permanent Differences........... 1.0 2.2 (1.1)
- ------------------------------------------------------------------
Effective Tax Rate.............. 37.6% 39.6% 35.6%
==================================================================
</TABLE>
A summary of the tax provision is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
- ------------------------------------------------------------------
<S> <C> <C> <C>
Federal Income - Current.......... $2,169 $2,740 $ 585
Federal Income - Deferred......... (923) (751) 681
State - Current................... 512 571 130
State - Deferred.................. (233) (148) 159
- ------------------------------------------------------------------
TOTAL....................... $1,525 $2,412 $1,555
==================================================================
</TABLE>
The components of the net deferred income tax liability at
June 30 are as follows:
<TABLE>
<CAPTION>
1995 1994
- --------------------------------------------------------------------
<S> <C> <C>
Deferred Liabilities:
Investment Tax Credit....................... $ 558 $ 602
Excess Tax over Book Depreciation........... 8,731 8,545
Environmental Response Costs................ 207 216
- --------------------------------------------------------------------
Total Deferred Liabilities.............. 9,496 9,363
- --------------------------------------------------------------------
Deferred Assets:
Recoverable Gas Cost........................ (1,789) (354)
Other....................................... (843) (726)
- --------------------------------------------------------------------
Total Deferred Assets................... (2,632) (1,080)
- --------------------------------------------------------------------
Total Net Deferred Income Taxes......... $6,864 $8,283
====================================================================
</TABLE>
CONTINGENCIES
- -----------------------------------------------------------------------------
Federal, state and local laws and regulations establishing standards
and requirements for the protection of the environment have increased in
number and scope in recent years. The Company cannot predict the future
impact of such standards and requirements, which are subject to change and
can have retroactive effectiveness.
During fiscal 1990, the MDPU issued a generic ruling on cost recovery
for environmental cleanup with respect to former gas manufacturing sites.
Under the ruling, the Company will recover annual cleanup costs, excluding
carrying costs, over a seven-year period through the CGAC. This ruling also
provides for the sharing of any proceeds received from insurance carriers
equally between the Company and its ratepayers, and establishes maximum
amounts that can be recovered from customers in any one year.
During the fiscal year ended June 30, 1995, the Company continued the
analysis and field review of two parcels of real estate formerly used for
gas manufacturing operations, which had been found to contain coal tar
deposits and other substances associated with by-products of the gas
manufacturing process. The review and assessment process began in 1985 with
respect to the first site, which is owned by the Company, and in 1989 with
respect to the second site, which was formerly owned by the Company. With
the review and approval of the Massachusetts Department of Environmental
Protection ("MDEP"), at one site, the investigative activities are proceeding,
while at the second site, the investigative work is near completion and
remedial alternatives are being examined. It is difficult to predict the
potential financial impact of the sites until first, the nature and risk is
fully characterized, and second, the remedial strategies and related
technologies are determined. The general philosophy of the Company is one
of source removal and/or reduction coupled with risk minimization. Assuming
successful implementation, it is anticipated that through 2010 the level of
expenditures for the sites will range from $2,894 to $8,777. The
anticipated level of expenditures has remained the same in 1995 from 1994
and been reduced from 1993 estimates resulting from the Company's analysis
and review of the sites and the commencement of clean-up activities at the
first site. The Company has recorded the most likely cost of $2,894 in
accordance with SFAS No. 5. Ultimate expenditures cannot be determined
until a remedial action plan can be developed and approved by the MDEP. The
Company's unamortized costs at June 30, 1995 were $1,046 and should be
recovered using the formula discussed above.
Claims against the Company have been asserted by a general contractor
and certain subcontractors involved in the construction of a transportation
pipeline for which the Company served as developer. Although the Company
cannot predict the ultimate outcome of the claims, which the Company
believes are without merit, it intends to contest the claims vigorously and
believes that the outcome will not have a material adverse impact on the
overall financial position or results of operations of the Company.
FERC Order 636 provides for 100% recovery by pipelines of any
"Transition Costs" prudently incurred as a result of industry restructuring.
As these costs have been and may be approved in the future, they have been
and will be passed through to the Company as demand charges associated with
the transportation of gas through the pipeline. Under current rate
structures, these costs are recovered through the CGAC.
OTHER INCOME
- -----------------------------------------------------------------------------
A condensed summary of the Company's non-utility operations before
income tax (included in the "Statements of Income and Retained Earnings"
under "Other Income - Net") as of June 30 is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Merchandise and Jobbing:
Sales................................ $1,068 $1,438 $1,057
Cost of Sales and Expenses........... 862 1,117 910
- -------------------------------------------------------------------------
Net.............................. 206 321 147
- -------------------------------------------------------------------------
Appliance Rentals:
Revenues............................. 1,380 1,314 1,218
Expenses............................. 671 580 309
- -------------------------------------------------------------------------
Net.............................. 709 734 909
- -------------------------------------------------------------------------
Liquefied Petroleum Gas:
Sales................................ 4,022 3,890 3,628
Cost of Sales and Expenses........... 3,703 3,463 3,235
- -------------------------------------------------------------------------
Net.............................. 319 427 393
- -------------------------------------------------------------------------
Miscellaneous Net...................... 282 905 72
- -------------------------------------------------------------------------
TOTAL............................ $1,516 $2,387 $1,521
=========================================================================
</TABLE>
POST-RETIREMENT BENEFITS
- -----------------------------------------------------------------------------
The Company has non-contributory funded retirement income plans
covering substantially all employees. The cost of the plans is actuarially
determined, and it is the Company's policy to fund accrued pension costs.
The net pension cost in 1995, 1994 and 1993 is summarized as follows:
<TABLE>
<CAPTION>
1995 1994 1993
- --------------------------------------------------------------------
<S> <C> <C> <C>
Service Cost...................... $ 634 $ 588 $ 600
Interest Cost..................... 1,135 1,100 1,040
Return on Plan Assets:
Actual.......................... (1,009) (347) (1,907)
Deferred........................ (397) (978) 789
- --------------------------------------------------------------------
Net Recognized Return....... (1,406) (1,325) (1,118)
Other............................. 259 249 242
- --------------------------------------------------------------------
Net Pension Cost............ $ 622 $ 612 $ 764
====================================================================
</TABLE>
The funded status and accrued pension cost for the defined benefit
plans at June 30 are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Fair Value of Plan Assets............ $17,267 $16,150 $15,737
Projected Benefit Obligation......... 16,647 16,545 15,715
- --------------------------------------------------------------------------
Excess (Deficiency) of Fair
Value of Plan Assets Over
Projected Benefit Obligation........ 620 (395) 22
Unrecognized Net Gain................ (3,315) (2,564) (3,208)
Unrecognized Prior Service Cost...... 930 1,001 1,048
Unrecognized Net Obligation
(at transition)..................... 1,469 1,649 1,829
- --------------------------------------------------------------------------
Accrued Pension Cost................. (296) (309) (309)
Accumulated Benefit Obligation....... 13,314 13,558 12,659
Vested Benefit Obligation............ 13,293 13,182 12,282
- --------------------------------------------------------------------------
Assumed Discount Rate................ 7.00% 7.00% 7.00%
Assumed Rate of Compensation
Increase............................ 5.625% 5.875% 5.875%
Expected Rate of Return on Plan
Assets.............................. 9.25% 9.25% 8.75%
- --------------------------------------------------------------------------
</TABLE>
Approximately 98.7% of plan assets are invested in equity securities,
debt securities and cash equivalents, and the balance is in other
investments, principally real estate. The benefit formula is based either
on the number of years of service or the employee's average base salary for
the five years yielding the highest average.
The Company maintains a 401(k) Post-Retirement Plan for all Company
employees. The Company matches up to 3 1/2% of a participating employee's
annual salary. The expense for the years ended June 30, 1995, 1994 and 1993
related to the 401(k) Plan was $223, $213 and $204, respectively.
INDEPENDENT AUDITORS' REPORT
- -----------------------------------------------------------------------------
DELOITTE & City Place
Touche LLP 185 Asylum Street
Hartford, Connecticut 06103-3402
To the Shareholders of
The Berkshire Gas Company:
We have audited the accompanying balance sheets of The Berkshire Gas Company
as of June 30, 1995, 1994 and 1993 and the related statements of income and
retained earnings, common shareholders' equity and redeemable cumulative
preferred stock and of cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company at June 30, 1995, 1994 and
1993, and the results of its operations and its cash flows for the years
then ended in conformity with generally accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
August 25, 1995
QUARTERLY FINANCIAL INFORMATION
- -------------------------------
A comparison of unaudited quarterly financial information is presented
on page 31.
ANNUAL MEETING
- --------------
The annual meeting of shareholders will be held at the Berkshire Hilton
Inn, Pittsfield, Massachusetts, on November 14, 1995, at 10:00 A.M.
SHARE OWNER DIVIDEND
REINVESTMENT AND
STOCK PURCHASE PLAN
- -------------------
The Company has a program which allows for the reinvestment of
dividends and optional cash payments to purchase additional shares of the
Company's Common Stock at a 3% discount. The Plan is available to holders
of 10 shares or more and provides a convenient method to acquire additional
shares without fees or other charges. Shareholders who wish to take
advantage of the Plan or want additional information may do so by
contacting:
The Berkshire Gas Company
Attn: Secretary of the Share Owner Dividend
Reinvestment and Stock Purchase Plan Committee
115 Cheshire Road
Pittsfield, Massachusetts 01201-1388
(413) 442-1511
TRANSFER AGENT
- --------------
State Street Bank and Trust Company
P.O. Box 8200
Boston, Massachusetts 02266-8200
STOCK LISTING
- -------------
The Common Stock of The Berkshire Gas Company is traded on the
National Over-the-Counter Market and is quoted through the NASDAQ System
under the symbol BGAS.
FORM 10-K INFORMATION
- ---------------------
Upon written request to the Company at 115 Cheshire Road, Pittsfield,
Massachusetts 01201-1388, a copy of the Company's current Form 10-K Annual
Report, as filed with the Securities and Exchange Commission, will be
provided to any shareholder without charge.
This report has been prepared for the purposes of information and
record only and not in connection with the sale or offer for sale of
securities, or any solicitation of an offer to buy securities.
QUARTERLY FINANCIAL INFORMATION
- -------------------------------
<TABLE>
<CAPTION>
For the Fiscal Year Ended June 30 (In Thousands Except Per Share Amounts)
(Unaudited)
1995 First Second Third Fourth
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Revenues $ 4,832 $12,086 $21,615 $9,401
Operating and Other Income (Loss) (124) 2,378 5,869 1,295
Income (Loss) Before Income Taxes (1,258) 1,036 4,180 96
Net Income (Loss) (766) 656 2,556 83
Earnings (Loss) Per Share (0.53) 0.23 1.14 (0.04)
Dividends Declared Per Share 0.275 0.275 0.275 0.275
Prices of Common Shares:
High 17 3/4 16 3/4 16 15 3/4
Low 16 14 1/4 14 3/4 14
1994
- ------------------------------------------------------------------------------------------
Operating Revenues $ 4,542 $12,951 $25,948 $9,588
Operating and Other Income (Loss) (239) 2,881 7,290 1,269
Income (Loss) Before Income Taxes (1,249) 1,611 5,652 72
Net Income (Loss) (752) 1,013 3,507 (95)
Earnings (Loss) Per Share (0.54) 0.47 1.89 (0.15)
Dividends Declared Per Share 0.27 0.27 0.27 0.275
Prices of Common Shares:
High 19 19 18 1/4 17 1/4
Low 17 1/4 17 16 1/2 15 1/2
1993
- -----------------------------------------------------------------------------------------
Operating Revenues $ 5,092 $12,192 $21,037 $8,811
Operating and Other Income (Loss) (431) 2,440 6,184 1,206
Income (Loss) Before Income Taxes (1,471) 1,265 4,593 (22)
Net Income (Loss) (879) 810 2,863 16
Earnings (Loss) Per Share (0.62) 0.36 1.55 (0.10)
Dividends Declared Per Share 0.27 0.27 0.27 0.27
Prices of Common Shares:
High 15 1/4 15 3/4 17 1/2 18 1/4
Low 14 14 1/4 14 16 1/2
</TABLE>
The Common Stock of The Berkshire Gas Company is traded on the National
Over-the-Counter Market and is quoted through the NASDAQ System (BGAS).
Primarily because of the relatively small number of shareholders and the
infrequency of trading, the average bid and asked prices noted above do not
necessarily reflect actual transactions.
Earnings per Common Share have been computed based on average Common
Shares outstanding in each period after recognition of Preferred Stock
dividends.
It is currently the policy of the Board of Directors to declare cash
dividends payable in July, October, January and April. The dividend rate is
reassessed regularly in light of existing conditions, the needs of the
Company and the interests of shareholders.
The sum of the quarterly earnings (loss) per share amounts many not
equal the annual income per share due to the issuance of Common Stock.
The Berkshire Gas Company
- -----------------------------------------------------------------------------
Officers
- -----------------------------------------------------------------------------
Scott S. Robinson Michael J. Marrone
President and Chief Executive Officer Vice President, Treasurer and
Chief Financial Officer
Les H. Hotman Cheryl M. Clark
Vice President, Supply, Rates and Planning Clerk of the Corporation
Directors
- -----------------------------------------------------------------------------
George R. Baldwin** Franklin M. Hundley
Area Chairman Managing Director,
Arthur J. Gallagher & Co., Rich, May, Bilodeau &
a national insurance brokerage firm Flaherty, P.C., a law firm
John W. Bond* ** Joseph T. Kelley*
President, Chairman of the Board
Kimbell Securities Corp., a securities The Berkshire Gas Company
broker/dealer; Real estate management
Paul L. Gioia** Scott S. Robinson*
Partner, President and Chief Executive
LeBoeuf, Lamb, Greene & MacRae, Officer
a law firm The Berkshire Gas Company
William S. Goedecke** Robert B. Trask**
First Vice President, Retired President and Chief Operating
Smith Barney Harris Upham & Co., Inc., Officer,
An investment banking and stock brokerage Country Curtains, Inc.,
firm a mail-order/retail firm
* Executive Committee
** Audit Committee
<TABLE> <S> <C>
<ARTICLE> UT
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> JUN-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 69,326
<OTHER-PROPERTY-AND-INVEST> 5,962
<TOTAL-CURRENT-ASSETS> 10,752
<TOTAL-DEFERRED-CHARGES> 3,049
<OTHER-ASSETS> 2,894
<TOTAL-ASSETS> 91,983
<COMMON> 5,259
<CAPITAL-SURPLUS-PAID-IN> 15,711
<RETAINED-EARNINGS> 6,718
<TOTAL-COMMON-STOCKHOLDERS-EQ> 27,688
0
8,448
<LONG-TERM-DEBT-NET> 30,983
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 900
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 23,964
<TOT-CAPITALIZATION-AND-LIAB> 91,983
<GROSS-OPERATING-REVENUE> 47,934
<INCOME-TAX-EXPENSE> 1,525
<OTHER-OPERATING-EXPENSES> 11,589
<TOTAL-OPERATING-EXPENSES> 15,213
<OPERATING-INCOME-LOSS> 7,902
<OTHER-INCOME-NET> 1,516
<INCOME-BEFORE-INTEREST-EXPEN> 9,418
<TOTAL-INTEREST-EXPENSE> 3,667
<NET-INCOME> 2,529
694
<EARNINGS-AVAILABLE-FOR-COMM> 1,835
<COMMON-STOCK-DIVIDENDS> 2,215
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 427
<EPS-PRIMARY> .92
<EPS-DILUTED> 0
</TABLE>
