FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended June 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-10032
PROVIDENCE ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
Rhode Island 05-0389170
(State or other jurisdiction of incorporation (I.R.S. Employer
Identification No.)
100 Weybosset Street, Providence, Rhode Island 02903
(Address of principal executive offices)
(Zip Code)
401-272-9191
Registrant's telephone number, including area code
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by checkmark 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 .
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes
of common stock, as of the latest practicable date.
Common Stock, $1.00 par value; 5,559,493 shares outstanding at
August 12, 1994.
<PAGE>
PROVIDENCE ENERGY CORPORATION
FORM 10-Q
JUNE 30, 1994
PART I: FINANCIAL INFORMATION PAGE
Item 1 Financial Statements
Consolidated Statements of Income for the
three, nine and twelve months ended
June 30, 1994 and June 30, 1993 I-1
Consolidated Balance Sheets as of June 30, 1994,
June 30, 1993 and September 30, 1993 I-2
Consolidated Statements of Cash Flows
for the nine months ended June 30, 1994
and June 30, 1993 I-3
Consolidated Statements of Capitalization
as of June 30, 1994, June 30, 1993 and
September 30, 1993 I-4
Notes to Consolidated Financial Statements I-5
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations I-8
PART II OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K II-1
Signature II-2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
PROVIDENCE ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE PERIODS ENDED JUNE 30
(Unaudited)
(thousands, except per share amounts)
THREE MONTHS NINE MONTHS
TWELVE MONTHS
1994 1993 1994 1993 1994
1993
Operating revenues $ 42,492 $ 38,205 $189,047 $176,122 $222,280 $204,554
Cost of gas sold 25,942 24,027 115,884 103,877 138,321 121,911
Operating margin 16,550 14,178 73,163 72,245 83,959 82,643
Operating expenses:
Other operation 10,384 9,924 34,283 30,965 43,754 40,629
Maintenance 996 993 2,973 2,680 3,894 3,563
Depreciation and
amortization 2,394 2,272 7,171 6,822 9,422 8,873
Taxes -
State gross receipts1,164 1,021 5,359 4,785 6,326 5,223
Local property and
other 1,699 1,837 5,097 5,335 6,607 6,741
Federal income (603) (1,188) 4,580 5,520 2,614 3,665
Total operating
expenses 16,034 14,859 59,463 56,107 72,617 68,694
Operating income (loss) 516 (681) 13,700 16,138 11,342 13,949
Nonutility income, net 93 194 532 68 650 300
Income (loss) before interest
expense 609 (487) 14,232 16,206 11,992 14,249
Interest expense:
Long-term debt 1,277 1,384 3,688 3,893 4,967 4,845
Other, net 376 379 1,092 1,336 1,370 1,956
Interest capitalized (36) (30) (111) (98) (146) (160)
1,617 1,733 4,669 5,131 6,191 6,641
Income (loss) after interest
expense (1,008) (2,220) 9,563 11,075 5,801 7,608
Preferred dividends of
subsidiary (174) (174) (522) (522) (696) (696)
Net income (loss) $ (1,182) $ (2,394) $ 9,041 $ 10,553 $ 5,105 $ 6,912
======== ======= ======== ======== ======== =======
Net income (loss) per
common share $ (.21) $ (.52) $ 1.64 $ 2.31 $ .93 $ 1.52
======== ======== ======== ======== ======== =======
Dividends paid per
common share $ .27 $ .26 $ .79 $ .76 $ 1.05 $ 1.01
======== ======== ======== ======== ======== =======
Weighted average common
shares outstanding5,546.4 4,595.9 5,522.1 4,572.1 5,474.3 4,559.5
======== ======== ======== ======== ======== =======
PAGE I-1
PROVIDENCE ENERGY CORPORATION AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands)
(Unaudited)
June 30, June 30, September 30,
1994 1993 1993
ASSETS
Gas plant, at original cost $232,779 $219,086 $221,769
Less - accumulated depreciation and
utility plant acquisition
adjustments 78,951 71,023 72,436
153,828 148,063 149,333
Nonutility property, net 2,054 2,139 2,118
Current assets:
Cash and temporary cash investments 3,393 1,561 1,455
Accounts receivable and unbilled revenue,
less allowance of $5,048 at 6/30/94, $4,286
at 6/30/93 and $2,404 at 9/30/93 30,974 27,731 20,092
Deferred gas costs 10,300 - 16,453
Inventories, at average cost -
Liquefied natural gas, propane and under-
ground storage 8,377 5,363 11,390
Materials and supplies 2,529 1,770 1,854
Deferred capacity charges - 323 -
Prepaid and refundable taxes 4,656 6,464 7,170
Prepayments 630 1,364 910
60,859 44,576 59,324
Deferred charges and other assets 15,534 12,135 13,775
Total assets $232,275 $206,913 $224,550
======== ======== ========
CAPITALIZATION AND LIABILITIES
Capitalization: $147,464 $146,084 $143,531
Current liabilities:
Notes payable 18,200 11,000 23,800
Current portion of long-term debt 2,080 1,861 466
Accounts payable 21,059 8,260 18,618
Accrued taxes 7,522 8,721 7,560
Accrued vacation 2,032 1,979 1,703
Customer deposits 3,544 2,912 2,952
Refundable gas costs 543 852 -
Other 3,530 3,887 3,408
58,510 39,472 58,507
Deferred credits and reserves:
Accumulated deferred Federal income taxes 15,482 13,386 14,018
Unamortized investment tax credits 2,890 3,050 3,010
Other 7,929 4,921 5,484
26,301 21,357 22,512
Total capitalization and liabilities $232,275 $206,913 $224,550
======== ======== ========
PAGE I-2
<PAGE>
PROVIDENCE ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30
(Unaudited)
1994 1993
(thousands)
Cash provided by (used for)
Operations:
Income after interest expense $ 9,563 $ 11,075
Items not requiring cash -
Depreciation and amortization 7,217 6,992
Deferred Federal income taxes 700 (88)
Amortization of investment tax credits (120) (117)
Change in assets and liabilities,
which provided (used) cash:
Accounts receivable and unbilled revenue (10,882) (9,620)
Deferred gas costs 10,396 (943)
Inventories 2,338 2,079
Deferred capacity charges - 1,020
Prepaid and refundable taxes 1,495 1,043
Prepayments 280 (149)
Accounts payable (1,259) (2,166)
Accrued taxes 1,945 1,312
Accrued vacation, customer deposits
and other 1,043 1,347
Net cash provided by operations 22,716 11,785
Investment Activities:
Expenditures for property, plant
and equipment (11,505) (9,960)
Deferred charges and other 343 (526)
Total (11,162) (10,486)
Financing Activities:
Issuance of common stock 1,208 16,807
Issuance of mortgage bonds 16,000 -
Payments on long-term debt (347) (1,326)
(Decrease) in notes payable (21,600) (12,410)
Cash dividends on preferred shares (522) (522)
Cash dividends on common shares (4,355) (3,468)
Total (9,616) (919)
Increase in cash and temporary
cash investments 1,938 380
Cash and cash equivalents at beginning
of year 1,455 1,181
Cash and cash equivalents at end of period $ 3,393 $ 1,561
======== ========
Supplemental disclosures of cash flow information
Cash paid year-to-date for -
Interest (net of amount capitalized) $ 4,164 $ 4,852
Income taxes (net of refunds) $ 2,307 $ 2,307
PAGE I-3
<PAGE>
PROVIDENCE ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CAPITALIZATION
(THOUSANDS)
(Unaudited)
June 30, June 30, September 30,
1994 1993 1992
Common stock equity:
Common stock, $1 par
Authorized - 20,000 shares
Outstanding - 5,560 at 6/30/94,
5,476 at 6/30/93 and
5,486 at 9/30/93 $ 5,560 $ 5,476 $ 5,486
Amount paid in excess of par 52,716 51,250 51,582
Retained earnings 20,986 21,657 16,300
Total common stock equity 79,262 78,383 73,368
Cumulative preferred stock of subsidiary:
The Providence Gas Company -
Redeemable 8.7% Series, $100 par
Authorized - 80 shares
Outstanding - 80 shares as of
6/30/94, 6/30/93 and
9/30/93 8,000 8,000 8,000
Long-term debt:
First mortgage bonds 61,000 52,300 61,000
Senior debentures - 7,520 -
Capital leases 1,282 1,742 1,629
Total long-term debt 62,282 61,562 62,629
Less: current portion 2,080 1,861 466
Long-term debt, net 60,202 59,701 62,163
Total capitalization $147,464 $146,084 $143,531
======== ======== ========
PAGE I-4
PROVIDENCE ENERGY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Accounting Policies
It is the Registrant's opinion that the consolidated financial
information contained in this report reflects all normal, recurring
adjustments necessary to provide a fair statement of the results for the
periods reported; however, such results are not necessarily indicative of
results to be expected for the year, due to the seasonal nature of the
Registrant's operations. Certain information and footnote disclosures
normally included in the consolidated financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted in this Form 10-Q pursuant to the rules and
regulations of the Securities and Exchange Commission. However, the
disclosures herein when read with the annual report for 1993 filed on Form
10-K are adequate to make the information presented not misleading.
Reclassification
Certain amounts included in prior year balance sheets and income
statements have been reclassified for consistent presentation with the
current period.
Environmental Matters
Federal, state, and local laws and regulations establishing standards
and requirements for the protection of the environment have increased both
in number and in scope within recent years. The Registrant cannot predict
the future impact of such standards and requirements which are subject to
change and can take effect retroactively. The Registrant continues to
monitor the status of these laws and regulations. Such monitoring
involves the review of past and current operations and properties. To the
best of its knowledge, subject to the following paragraph, the Registrant
believes it is in substantial compliance with such laws and regulations.
However, should future costs be incurred, the Registrant anticipates
recovery from third parties or through its rate filings.
In January 1990, the Registrant received notice from the
Massachusetts Department of Environmental Protection that it is one of
several "potentially responsible parties" under the Massachusetts Oil and
Hazardous Material Release Prevention Act of 1983 as amended. This will
require the Registrant to share in the clean-up costs, if any, at a waste
disposal site in Massachusetts. While no preliminary estimates of costs
are currently available, the Registrant's degree of responsibility is
believed to be minimal.
Management anticipates requesting rate relief for all costs related
to the environmental matters and believes that the ultimate resolution of
these matters will not have a materially adverse effect on the
Registrant's results of operations and financial condition.
PAGE I-5
<PAGE>
Gas Supply Restructuring
Through Order 636 and other orders, the Federal Energy Regulatory
Commission ("FERC") required pipelines to unbundle pipeline services.
The Registrant has participated in the various restructuring
proceedings at the FERC and has new pipeline transportation and storage
contracts in place to serve all firm requirements. At the same time, a
number of contracts with gas suppliers have been negotiated and
additional contracts will be negotiated before November 1, 1994. The
portfolio of supply contracts is designed to be market responsive and
is diversified with respect to contract lengths, source location and
other contract terms.
Based upon current information, the Registrant anticipates
transition costs to total between $16 million and $19 million. The
Registrant will recover $5.9 million by September 1994, through its
Cost of Gas Adjustments Clause ("CGA"). At the appropriate time, full
recovery of remaining transition costs will be pursued by the
Registrant through the regulatory process.
FERC has approved settlements with two of the four pipelines,
which account for the bulk of the transition costs. Under one of the
settlements, a significant portion of the gas supply realignment costs
have been shifted to a commodity surcharge, significantly reducing the
impact on gas costs and enabling the Registrant to avoid a portion of
these costs by utilizing other suppliers. Negotiations are continuing
on two additional pipelines, but recent developments have considerably
reduced the uncertainty previously disclosed. As a result, the
Registrant has decreased the range for potential transition costs
accordingly.
Properties
The Providence Gas Company ("ProvGas"), the Registrant's largest
subsidiary, owns certain properties that are located in Providence,
Rhode Island adjacent to the Providence River. These properties, along
with much of downtown Providence, appear to have been the result of the
filling of lands formerly flowed by tidal waters. The extent to which
ProvGas' properties consist of such land cannot be established with
precision, but they most likely include its main distribution center
and the land on which is situated an Algonquin Gas Transmission Co. LNG
storage tank.
In 1991, the Rhode Island Supreme Court issued an opinion
containing statements to the effect that the State retains title to
shoreland created by fill from ocean dredging. The statements appear
to contradict earlier judicial authority to the effect that where the
owner of land abutting the river extends the upland out from the
natural shoreline to an established harbor line, all of the rights of
the public in the upland, as extended, are extinguished.
To date, the Registrant and three other plaintiffs have jointly
filed with the State of Rhode Island, a declatory judgement seeking the
Rhode Island Supreme Court to clarify the legal issues pertaining to
the ownership of such filled tidal lands. Although the Rhode Island
Supreme Court has not clarified its opinion and the Rhode Island
Legislature has taken no meaningful action to resolve the problem,
management believes no action will be taken by the state which will
interfere in any material way with the Registrant's ability to conduct
its normal course of operations or impact its financial condition.
Legal Matters
The Registrant is involved in legal and administrative proceedings
in the normal course of business, including certain proceedings in
which claims against it have
PAGE I-6
been or may be made. In total, these proceedings may be material.
However, management believes, after review of insurance coverage and
consultation with legal counsel, that the ultimate resolution of the
legal proceedings to which it is or can at the present time be
reasonably expected to be a party, will not have a materially adverse
effect on the Registrant's results of operations or financial
condition.
Financial Accounting Standard No. 106
The Registrant has adopted the Financial Accounting Standard Boards
("FASB") Financial Accounting Standard No. 106. Complete footnote
disclosure is provided in the Registrant's December 31, 1993 Form 10-Q.
Financial Accounting Standard No. 109
The Registrant has adopted the FASB's new standard on Accounting
for Income Taxes
(FAS 109) beginning fiscal 1994. The accompanying consolidated
financial statements reflect this new accounting. The Registrant did
not restate prior periods.
The standard requires the use of the liability method of
accounting. Under this method, the existing deferred tax accounts on
the accompanying consolidated balance sheet have been adjusted to
reflect the effect of currently enacted tax rates applicable to the
years in which these taxes will become payable. Also, the accounts have
been adjusted to reflect the cumulative timing differences for which
deferred taxes had not been previously recorded.
Consistent with regulatory precedent, the related adjustments to
the deferred tax accounts will be recovered from or returned to
ratepayers in future periods. As a result, the adoption of FAS 109 has
not had an impact on current earnings and is not expected to impact
future earnings. The Company has recorded a net regulatory asset of
$300,000 upon adoption of FAS 109.
ProvGas' Restructuring Initiative
In June 1994, ProvGas, following a six month study of its major
processes, realigned its personnel to meet the existing and future
challenges associated with an increasingly competitive energy market
place. The intent of the restructuring was to significantly improve
ProvGas' customer services, lower operating costs and increase operating
efficiencies. Approximately 30 people were separated from ProvGas,
while approximately 18 new employees will be hired throughout the
upcoming year to fill newly defined positions. The employees eventually
hired for these new positions will bring skill, expertise and
experiences to ProvGas not previously available within its workforce.
The direct cost of this realignment is estimated to be about $1
million, net of tax. A significant portion of this $1 million is
severance pay and related benefits for personnel who were separated
prior to June 30, 1994. ProvGas anticipates paying all amounts accrued
within the next twelve months. ProvGas has discussed the reorganization
with the Rhode Island Public Utilities Commission ("RIPUC") and based on
prior RIPUC allowance of similar costs, ProvGas has deferred these costs
in anticipation of recovery in its next rate case. Overall, the
anticipated annual savings from the realignment is expected to be
approximately $500,000.
PAGE I-7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
As shown in the table below, the Registrant's current operating
revenues and operating margin have increased over the comparable fiscal
periods last year. Net income has increased for the current quarter,
while decreasing for the current nine and twelve month periods versus
the respective periods last year.
THREE MONTHS NINE MONTHS TWELVE MONTHS
1994 1993 1993 1993 1994 1993
(000's)
Operating revenues $42,492 $38,205 $189,047 $176,122 $222,280 $204,554
================ ================== ==================
Operating margin $16,550 $14,178 $ 73,163 $ 72,245 $ 83,959 $ 82,643
================ ================== ==================
Net income (loss) $(1,182) $(2,394) $ 9,041 $10,553 $ 5,105 $ 6,912
================ ================== ==================
Revenues:
Rate Design: The Rhode Island Public Utilities Commission (RIPUC)
during fiscal 1993 approved ProvGas' request to adopt a declining block
rate structure. This structure allows ProvGas to recover more fixed
costs through rates immediately when a customer begins buying natural
gas. Also, the structure will help balance customer bills during the
year and will protect ProvGas and its customers during periods of
extreme weather conditions. This results in a stabilization of earnings
from year to year. For accounting and gas cost recovery purposes,
ProvGas will record the embedded cost of gas using seasonal gas cost
factors: $4.36 per Mcf in the heating season (October through March) and
$2.77 per Mcf in the non-heating season (April through September). The
ultimate effect of the seasonal gas cost accounting will be that
quarterly operating margin will decrease in the heating season and
increase in the non-heating season when compared to the previous method.
Annual earnings, however, should not be affected by this rate design.
Another significant attribute of the new rate design structure as
compared to the previous method is a higher customer charge. The
average monthly customer charge has been increased to recognize that a
substantial portion of ProvGas' costs are relatively fixed and should be
recovered from customers even when gas consumption is less than
expected. ProvGas' volumetric charge has decreased in order to off-set
the increased customer charge.
As demonstrated in the above table, the Registrant's operating
margin has increased as compared to the comparable periods last year
reflecting the change in rate design. The increase in margin for the
quarter, as compared to last year, was $2.0 million. This rate design
change is expected to continue to increase margin in the upcoming fourth
quarter as compared to the prior year. The Registrant anticipates this
increase in margin to be approximately $2.5 million.
Degree Days: The following table illustrates the change in degree
days (weather) during the three, nine and twelve month periods this year
versus last year.
PAGE I-8
1994 1993 Change % Change
Three months 680 603 77 12.8
Nine months 5,879 5,615 264 4.7
Twelve months 6,007 5,730 277 4.8
As a result of the colder temperatures experienced during the
latest nine and twelve month periods, residential sales, which provide
the Registrant with its greatest source of sales, increased 381 million
cubic feet (MMcf) or 3.0 percent and 333 MMcf or 2.4 percent,
respectively. Three month residential sales were flat in contrast to
the above temperatures experienced. This was due to warmer temperatures
experienced in a high sales month (April) and colder temperatures
experienced in a low sales month (May).
Customers: The net increase in the average monthly number of
customers for the latest three, nine and twelve month periods was
approximately 2,400, 2,300 and 2,100, respectively. The modest
increases were the result of new housing construction and conversions
from other energy sources offset by shut-offs for non-payments and
housing vacancies due to the stagnant economy.
Firm revenues were $39.5 million during the latest quarter, up $4.2
million or 11.7 percent over the comparable period last year. For the
current nine and twelve month periods, firm revenues increased $10.8
million or 6.6 percent and $16.1 million or 8.4 percent, respectively.
These increases were the result of higher gas costs passed on to
customers through the Cost of Gas Adjustment Clause (CGA), rate design
and rate increases implemented in November 1993 and additional
customers. For additional information on the rate case awards, please
refer to the discussion of liquidity and capital resources below.
Expenses:
Overall, other operation and maintenance (O&M) expenses have
increased during the current periods presented. The increase for the
quarter was $460,000 or 4 percent. Reasons for the above increase
include additional uncollectible expenses due to a stagnant, but slowly
improving, local economy, compliance with Financial Accounting Standard
No. 106 relative to post retirement expenses offset by a decrease in
labor costs as a result of fewer personnel, prior to ProvGas'
realignment.
O&M expenses have increased $3.6 million or 11 percent for the
latest nine months period while increasing $3.5 million or 8 percent for
the current twelve month period. The explanation for the above
quarterly increase is applicable here but also include additional
consultant expenses required to meet the challenges of FERC Order 636
and additional maintenace and related expenses as a result of a colder
than normal heating season. A significant amount of these increased
expenses were considered in ProvGas' recent rate award.
The increases discussed above in the Registrant's O&M expenses are
expected to be "one-time" expenses associated with compliance of FAS 106
and FERC Order 636 as well as colder than normal weather. The
Registrant's "core" spending, excluding the impact of the above
increases, would have experienced only a modest increase as compared to
last year for all the periods presented. In addition, earnings for the
upcoming fourth quarter, and future periods, are estimated to be
favorably impacted by a decrease in O&M expenses as a result of the
reorganization in late June and other cost improvements initiated by the
Registrant.
Taxes for the quarter have increased $500,000 over the comparable
period last year due to higher pretax income (relative to the change in
rate design) and higher gross receipts tax due to higher operating
revenues. Taxes have decreased $700,000 and $200,000 for the current
nine and twelve month periods, respectively. The
PAGE I-9
decrease in taxes was the result of lower pretax income (relative to the
change in rate design) subject to Federal income tax offset by an
increase in state gross
receipts tax due to higher operating revenues.
Interest expenses for the latest three, nine and twelve month
periods decreased $117,000 or 7 percent, $463,000 or 9 percent and
$451,000 or 7 percent, respectively. A small increase in short-term
interest rates offset by a decline in weighted average borrowings caused
a decrease in short-term interest expenses for the current periods
presented. Long-term interest expenses decreased during the current
three and nine month periods as a result of the refinancing of higher
cost debt and sinking fund payments.
LIQUIDITY AND CAPITAL RESOURCES
On October 14, 1993, ProvGas received approval from the Rhode
Island Public Utilities Commission (RIPUC) to implement a new rate
design, effective November 14, 1993, which is expected to help promote
economic development and reduce the Registrant's earnings sensitivity to
weather. In addition to the improved stability in earnings, the new
rates are designed to increase annual operating margin by approximately
$700,000. Other components of the rate award included an allowed return
on equity of 11.2 percent.
On October 3, 1991, the Massachusetts Department of Public
Utilities (MDPU) approved a settlement order reached between the
Massachusetts Attorney General's Office and North Attleboro Gas Company
regarding a rate request filed by North Attleboro Gas. Due to the
magnitude of the rate award (32 percent), the MDPU ordered North
Attleboro Gas to phase-in the rate award over a five year period
effective November 1, 1991. As a result, North Attleboro Gas phased-in
an annual revenue increase of $201,000 on November 1, 1993. Future
increases will phase-in each November 1 through the year 1995.
In November 1993, ProvGas received proceeds of $16 million related
to an issuance of First Mortgage Bonds, Series Q (5.62%). The net
proceeds received from the issuance were used to pay down short-term
debt. Short-term debt was used earlier to call long-term debt bearing a
higher interest rate. The previous issuances called were First Mortgage
Bonds, Series L (8.85%) and the Series 2 Senior Debentures (8.50%).
This issuance will generate annual savings to the Registrant of
approximately $300,000, net of tax.
In late June 1993, the Registrant priced its public offering of
850,000 shares of common stock at $19 per common share. The net
proceeds of $15.3 million, along with an additional $1.1 million of
available cash, totalling $16.4 million, were contributed as capital to
ProvGas. ProvGas used the equity for repayment of short-term debt
incurred to finance ProvGas' capital expenditures.
In November 1992, ProvGas issued $25 million of First Mortgage
Bonds. These bonds, which consisted of $12.5 million (8.46%) designated
as Series O and $12.5 million (8.09%) designated as Series P, will
mature in September 2022. The Series P issuance is subject to an annual
mandatory redemption provision in the amount of $625,000 beginning in
fiscal year 2003. The net proceeds provided by this issuance were used
to paydown short-term debt.
The Registrant meets seasonal cash requirements and finances its
capital expenditures program on an interim basis through short-term
borrowings. For example, the accounts receivable balance has increased
from $17.2 million as of September 1993 to a peak of $53.9 million as of
March 1994, then declining to its present level of $31 million. These
fluctuations are the result of higher monthly sales and a moratorium on
residential shut-offs during the current winter months. Because of
these increases, which cause a negative impact on cash flow, the
Registrant must borrow to maintain an appropriate level of liquidity.
PAGE I-10
Capital expenditures for the latest nine month period were $11.5
million as compared to $10 million last year. Anticipated capital
expenditures for the next three years are expected to total between
approximately $45 million and $55 million. These expenditures will be
related mostly to construction activity and technology.
PAGE I-11<PAGE>
PART II. OTHER INFORMATION
Item 6(a) Exhibits
The following exhibits are referenced as part of this report:
4.1 Fourteenth, Fifteenth and Sixteenth Supplemental Indentures of
The Providence Gas Company dated as of August 1, 1988, June 1,
1990 and November 1, 1992, respectively. (Incorporated by
reference to Exhibit 4 to the report of the Registrant to the
Securities and Exchange Commission on Form 10-Q for the quarter
ended March 31, 1993.)
4.2 Seventeenth Supplemental Indenture of The Providence Gas Company
dated as of November 1, 1993. (Incorporated by reference to
Exhibit 4.5 to the report of the Registrant to the Securities
and Exchange Commission on Form 10-K for the year ended
September 30, 1993.)
10.A Material contracts filed as Exhibit 10.A through 10.E and 10.G
through 10.P of the Registrant. (Incorporated by reference in
the report of the Registrant to the Securities and Exchange
Commission on Form 10-Q for the quarterly period ended March 31,
1993.)
10.B Employment agreement dated August 20, 1990 between James H.
Dodge, President of The Providence Gas Company, and the said
Company. (Filed as Exhibit 10.2 to the report of the Registrant
in Form 10-K for the year ended September 30, 1992, incorporated
herein by this reference.)
10.C 1989 Non-Employee Director Stock Option Plan. (Incorporated by
reference to Exhibit A to the Registrant's proxy statement for
the annual meeting of shareholders held January 9, 1989.)
10.D 1989 Stock Option Plan. (Incorporated by reference to Exhibit B
to the Registrant's proxy statement for the annual meeting of
shareholders held January 9, 1989.)
10.E Non-firm Margin Sharing Agreement. (Filed as Exhibit 10.3 to
the report of the Registrant in Form 10-K for the year ended
September 30, 1992, incorporated herein by this reference.)
10.F Employment agreement date April 1, 1992 between James DeMetro,
Vice President, Energy Services of The Providence Gas Company,
and the said Company. (Filed as Exhibit 10.4 to the report of
the Registrant in Form 10-K for the year ended September 30,
1992, incorporated herein by this reference.)
10.G Employment agreement date August 15, 1991 between Robert W.
Owens, Vice President, Treasurer and Chief Financial Officer of
The Providence Gas Company, and the said Company. (Filed as
Exhibit 10.5 to the report of the Registrant in Form 10-K for
the year ended September 30, 1992, incorporated herein by this
reference.)
10.H Employment agreement dated July 1, 1991 between William D.
Mullin, Vice President, Operations of The Providence Gas
Company, and the said Company. (Filed as Exhibit 10.7 to the
report of the Registrant in Form 10-K for the year ended
September 30, 1992, incorporated herein by this reference.)
10.I Providence Energy Corporation's 1992 Performance and Equity
Incentive Plan. (Incorporated by reference to Exhibit 10.F to
the report of the Registrant to the Securities and Exchange
Commission on Form 10-Q for the quarter ended March 31, 1993.)
PAGE II-1
REPORTS ON FORM 8-K
Item 6(b).
No reports on Form 8-K were filed during the quarter for which this
report is filed.
PAGE II-1(a)
PROVIDENCE ENERGY CORPORATION
It is the opinion of management that the financial information
contained in
this report reflects all adjustments necessary to a fair statement
of results
for the period reported, but such results are not necessarily
indicative of
results to be expected for the year, due to the seasonal nature of
the
Company's gas operations. All accounting policies and practices
have been applied in a manner consistent with prior periods.
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly author-
ized.
Providence Energy Corporation
(Registrant)
BY:
GARY S. GILLHEENEY
Vice President, Financial
and Information Services,
Treasurer and Assistant Secretary
Date: August 12, 1994
PAGE II-2
PROVIDENCE ENERGY CORPORATION
It is the opinion of management that the financial information
contained
in this report reflects all adjustments necessary to a fair
statement of results
for the period reported, but such results are not necessarily
indicative of
results to be expected for the year, due to the seasonal nature of
the
Company's gas operations. All accounting policies and practices
have been applied in a manner consistent with prior periods.
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly author-
ized.
Providence Energy Corporation
(Registrant)
BY:/s/Gary S. Gillheeney
GARY S. GILLHEENEY
Vice President, Financial
and Information Services,
Treasurer and Assistant Secretary
Date: August 12, 1994
PAGE II-2
