<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 1998
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 0-1166
ESSEX COUNTY GAS COMPANY
(Exact name of registrant as specified in its charter)
Massachusetts 04-1427020
(State or other jurisdiction (I.R.S.Identification #)
Employer incorporation or organization)
7 North Hunt Road, Amesbury,Massachusetts 01913
(Address of principal executive offices)(Zip Code)
(978) 388-4000
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 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 ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 and 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by court.
Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Number of shares of Common Stock outstanding as of February 28, 1998:
1,720,919
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1 FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They
do not include information and footnotes required by generally
accepted accounting principles for complete financial statements.
For further information, refer to the notes to consolidated
financial statements included in the registrant's Annual Report
on Form 10-K for the year ended August 31, 1997 (1997 10-K). In
the opinion of Management, all adjustments, consisting of normally
recurring adjustments considered necessary for a fair presentation,
have been included. Because of the seasonal nature of the
registrant's business, operating results for the six months ended
February 28, 1998, are not necessarily indicative of the results
that may be expected for the year ending August 31, 1998.
<PAGE> 3
ESSEX COUNTY GAS COMPANY
CONSOLIDATED BALANCE SHEETS
February
28, 1998 August
(Unaudited) 31, 1997
----------- --------
ASSETS
Utility plant $107,496,583 $104,540,111
Less: accumulated depreciation 27,061,350 25,021,795
------------ ------------
Net utility plant 80,435,233 79,518,316
------------ ------------
Other property and investments 775,592 718,838
------------ ------------
Capitalized lease 578,443 604,822
------------ ------------
Current assets:
Cash and cash equivalents 1,946,279 434,930
Accounts receivable, net
Customers 6,847,586 2,275,005
Other 221,502 389,526
Recoverable gas costs - 320,909
Supplemental fuel inventory 2,749,337 4,131,520
Material and supplies 555,076 560,493
Prepaid deferred income taxes 252,625 100,105
Prepayments and other 113,768 622,024
------------ ------------
Total current assets 12,686,173 8,834,512
------------ ------------
Deferred charges:
Regulatory assets 1,437,717 1,790,966
Unamortized debt expense and other 2,098,831 1,278,367
------------ ------------
Total deferred charges 3,536,548 3,069,333
------------ ------------
$ 98,011,989 $ 92,745,821
============= ============
See Notes to Consolidated Financial Statements
<PAGE> 4
ESSEX COUNTY GAS COMPANY
CONSOLIDATED BALANCE SHEETS (Continued)
February
28, 1998 August
(Unaudited) 31, 1997
----------- --------
CAPITALIZATION AND LIABILITIES
Common stock equity:
Common stock, no par (5,000,000
authorized shares, issued and outstanding
1,720,919 shares at February 28, 1998 and
1,685,318 shares at August 31, 1997) $21,423,671 $20,320,890
Unrecognized gain (loss) on investments
available for sale, net 6,759 (6,253)
Retained earnings 17,113,249 15,094,008
----------- ------------
38,543,679 35,408,645
----------- ------------
Long-term debt less current portion 28,199,000 28,799,000
----------- ------------
Non-current obligations under capital lease 522,264 550,939
----------- ------------
Current liabilities:
Current portion of long-term debt 821,779 960,535
Current obligation under capital lease 56,179 53,883
Obligations under supplemental fuel inventory 3,661,135 3,807,788
Notes payable, banks 5,415,000 3,313,000
Accounts payable 2,965,746 3,092,859
Accrued interest 809,598 803,237
Taxes payable 2,066,582 157,098
Refundable gas costs 543,352 -
Transition obligations 152,496 401,465
Supplier refund due customers 722,855 1,567,364
Other 166,589 320,308
----------- ------------
Total current liabilities 17,381,311 14,477,537
----------- ------------
Deferred credits:
Accumulated deferred income taxes 8,742,195 8,941,079
Unamortized investment tax credit 1,106,248 1,141,132
Deferred directors' fees 887,679 1,106,358
Other 2,629,613 2,321,131
----------- ------------
Total deferred credits 13,365,735 13,509,700
----------- ------------
$98,011,989 $92,745,821
=========== ============
See Notes to Consolidated Financial Statements
<PAGE> 5
ESSEX COUNTY GAS COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED
----------------------------
February February
28, 1998 28, 1997
(Unaudited) (Unaudited)
------------ ------------
Operating revenues $23,027,508 $23,220,840
Less: Cost of gas 11,332,610 11,671,220
------------ ------------
Operating margin 11,694,898 11,549,620
------------ ------------
Operating expenses:
Operations and maintenance expenses 3,329,602 3,551,161
Depreciation 1,814,684 1,648,682
Taxes, other than federal income 1,033,363 979,992
Federal income taxes 1,615,679 1,555,558
------------ ------------
Total operating expenses 7,793,328 7,735,393
------------ ------------
Operating income 3,901,570 3,814,227
Other income - net 136,728 144,826
------------ ------------
Income before interest charges 4,038,298 3,959,053
------------ ------------
Interest charges:
Interest on long-term debt 625,597 574,361
Amortization of debt expense 8,147 6,901
Other interest expense 164,681 252,812
Allowance for funds used during
construction (6,583) (6,459)
------------ ------------
Total interest charges 791,842 827,615
------------ ------------
Income available for common stock $ 3,246,456 $3,131,438
============ ============
Common shares outstanding
(weighted average) 1,703,532 1,659,033
------------ ------------
Basic earnings per common share $ 1.91 $ 1.89
------- -------
Diluted earnings per common share $ 1.85 $ 1.84
------- -------
Dividends per common share $ .42 $ .41
------- -------
See Notes to Consolidated Financial Statements
<PAGE> 6
ESSEX COUNTY GAS COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED
----------------------------
February February
28, 1998 28, 1997
(Unaudited) (Unaudited)
------------ ------------
Operating revenues $32,062,323 $31,363,341
Less: Cost of gas 15,525,141 15,801,323
------------ ------------
Operating margin 16,537,182 15,562,018
------------ ------------
Operating expenses:
Operations and maintenance expenses 6,363,846 6,555,537
Depreciation 2,361,369 2,146,442
Taxes, other than federal income 1,307,126 1,208,539
Federal income taxes 1,662,359 1,366,116
------------ ------------
Total operating expenses 11,694,700 11,276,634
------------ ------------
Operating income 4,842,482 4,285,384
Other expense- net 149,856 123,753
------------ ------------
Income before interest charges 4,992,338 4,409,137
------------ ------------
Interest charges:
Interest on long-term debt 1,263,977 1,051,528
Amortization of debt expense 16,207 13,831
Other interest expense 301,009 484,195
Allowance for funds used during
construction (11,842) (11,186)
------------ ------------
Total interest charges 1,569,351 1,538,368
------------ ------------
Income available for common stock $ 3,422,987 $ 2,870,769
============ ============
Common shares outstanding
(weighted average) 1,696,863 1,653,293
------------ ------------
Basic earnings per common share $ 2.02 $ 1.74
------- -------
Diluted earnings per common share $ 1.96 $ 1.70
------- -------
Dividends per common share $ .83 $ 0.81
------- -------
See Notes to Consolidated Financial Statements
<PAGE> 7
ESSEX COUNTY GAS COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED
---------------------------
February February
28, 1998 28, 1997
(Unaudited) (Unaudited)
------------ ------------
Operating activities:
Net income $3,422,987 $2,870,769
------------ ------------
Adjustments to reconcile net income
to net cash:
Depreciation and amortization 2,621,150 2,247,481
Provision for uncollectible accounts 565,797 794,582
Deferred income taxes (357,682) 1,099,395
Non-cash compensation related to ESOP - 75,000
Changes in current assets and liabilities:
Accounts receivable (4,970,354) (7,537,953)
Inventories including fuel 1,387,600 1,220,215
Prepaid expenses and other current assets 508,256 594,477
Refundable gas costs 864,261 (1,456,897)
Accounts payable (127,113) (696,593)
Taxes payable 1,909,484 983,219
Supplier refund due customers (844,509) (275,644)
Other, net (827,410) 326,687
------------ ------------
Total 729,480 (2,626,031)
------------ ------------
Net cash provided by operating
activities 4,152,467 244,738
------------ ------------
Investing activities:
Capital expenditures (3,478,595) (3,778,338)
Cost of property retirements, net of salvage (59,513) 31,542
------------ ------------
Net cash used in investing activities (3,538,108) (3,746,796)
------------ ------------
Financing activities:
Dividends paid (1,403,746) (1,335,174)
Net proceeds from issuance of common stock 1,084,145 596,370
Proceeds from issuance of long-term debt - 10,000,000
Principal retired on long-term debt (738,756) (727,799)
Decrease in fuel obligation (146,653) (48,967)
Principal payment on ESOP obligation - (75,000)
Net borrowings (repayment) of short-term debt 2,102,000 (4,428,000)
----------- ------------
Net cash provided by financing activities 896,990 3,981,430
----------- ------------
Net increase in cash 1,511,349 479,372
Cash at beginning of period 434,930 303,526
----------- ------------
Cash at end of period $1,946,279 $ 782,898
=========== ============
Supplemental disclosures:
Cash paid for interest
(net of amount capitalized) $ 785,481 $1,615,223
Cash paid for income taxes $ 340,000 -
See Notes to Consolidated Financial Statements
<PAGE> 8
Notes to Consolidated Financial Statements
A. Interim Accounting Policies
The amount of natural gas sold for purposes of central and
space heating, and to a lesser extent, water heating, is
directly related to the ambient air temperature. Consequently,
less gas is sold during the summer months than is sold during
the winter months. In order to match its costs more properly
with gas sales revenue each month, the Company charges to
certain expenses, primarily depreciation, an amount equal to
the percentage of the annual volume of firm gas sales forecasted
for the month, applied to the estimated annual expenses.
B. Accounts Receivable
Accounts Receivable - Customers are shown net of allowance
for uncollectible accounts of $1,351,758 and $772,000 as of
February 28, 1998 and August 31, 1997, respectively.
C. Restriction on Retained Earnings
Under the terms of the Indenture of First Mortgage Bonds
dated October 1, 1955, as updated by Supplemental Indentures
numbered One through Fifteen, retained earnings in the amount
of $7,279,482 as of February 28, 1998, were unrestricted as to
the payment of cash dividends on Common Stock and the purchase,
redemption, or retirement of shares of capital stock.
D. Commitments and Contingencies
For information regarding commitments and contingencies, see
Notes to Consolidated Financial Statements in the Company's
1997 Annual Report on Form 10-K.
E. Merger Agreement
The Company has agreed, subject to the terms and conditions
of the Agreement and Plan of Merger dated as of December 19,
1997 (the "Merger Agreement") with Eastern Enterprises
("Eastern"), to merge with a wholly-owned subsidiary of
Eastern. Upon consummation of the proposed merger, the
Company would become a wholly-owned subsidiary of Eastern,
and each share of the Company's common stock would be
converted into the right to receive a number of shares of
Eastern common stock equal to the exchange ratio provided
for in the Merger Agreement. The proposed merger is subject
to a vote of the Company's stockholders, regulatory
approvals, required consents and other conditions.
<PAGE> 9
Item 2
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
For the Three Months Ended February 28, 1998 and February 28, 1997
The Company's gas sales are divided into two categories:
firm, whereby the Company must supply gas to the customers on
demand; and interruptible, whereby the Company may, generally
during colder months, discontinue service to high volume
industrial customers. Sales of gas to interruptible customers
do not materially affect the Company's operating income
because, unless interruptible volumes exceed a certain
threshold specified by the Massachusetts Departpment of
Telecommunications and Energy ("MDTE"), the Company must
return all gross profit on such sales directly to the Company's
firm customers. Once the threshold is attained, the Company
may retain 25% of gross profits. The threshold was not attained
in the period ended February 28, 1998.
The Company's sales are responsive to colder weather as the
majority of its firm customers use natural gas for space heating
purposes. The Company measures weather through the use of
effective degree days ("EDD"). An effective degree day is
calculated by subtracting the average temperature for the day,
adjusted for wind and cloud cover, from 65 degrees Fahrenheit.
The Company's service territory experienced 3,140 EDD during
the three months ended February 28, 1998 as compared to 3,215
EDD for the three months ended February 28, 1997. The Company's
twenty year average for the three months ended February 28,
1998 is 3,437 EDD. Despite the warmer weather, the volume of
firm sales increased 1.0% to 2,502,158 dekatherms ("Dth") for
the three months ended February 28, 1998 from 2,491,596 for
the three months ended February 28, 1997. However, the Company's
total operating revenues decreased 1.0% to $23,027,508 for the
three months ended February 28, 1998 from $23,220,840 for the
three months ended February 28, 1997. This decrease was primarily
due to lower gas costs. The average unit price per Dth of firm
gas sold was $9.13 for the three months ended February 28, 1998
compared to $9.24 for the three months ended February 28, 1997.
The cost of gas decreased 2.9% to $11,332,610 for the three
months ended February 28, 1998 from $11,671,220 for the three
months ended February 28, 1997. The decrease in gas costs is
attributable to a 3.6% decrease in the Company's average cost
of gas to $4.51 per firm Dth for the three months ended
February 28, 1998 from $4.68 per firm Dth for the three months
ended February 28, 1997. The decrease in unit cost is due to
lower prices charged by suppliers.
Operations and maintenance expenses totaled $3,329,602 for
the three months ended February 28, 1998 compared to
$3,551,161 for the three months ended February 28, 1997.
The change was due primarily to a decrease in allowance for
uncollectible accounts.
Depreciation expense increased $166,002 (10.1%) for the three
months ended February 28, 1998 compared to the three months ended
February 28, 1997. This increase was primarily due to an
increase in the depreciation rate approved by the MDTE from 3.03%
to 3.70%.
Interest charges for the three months ended February 28, 1998
decreased by $35,773 (4.3%) compared to the three months ended
February 28, 1997. The decrease was primarily attributable to
lower outstanding balances on long and short-term debt.
Income available for common stock increased $115,018 to
$3,246,456 for the three months ended February 28, 1998 from
$3,131,438 for the three months ended February 28, 1997. Income
per common share increased $.02 to $1.91 for the three months
ended February 28, 1998 from $1.89 per share for the three months
ended February 28, 1997. Dividends per common share were $.42
per share for the three months ended February 28, 1998 compared
to $.41 per share for the three months ended February 28, 1997.
In March 1998, the Company declared a dividend of $.42 per share
which was paid to shareholders on April 1, 1998.
<PAGE> 10
For the Six Months Ended February 28, 1998 and February 28, 1997
Total operating revenues for the six months ended February
28, 1998 increased 2.2% to $32,062,323 from $31,363,341 for the
six months ended February 28, 1997. Firm gas volumes were
3,508,521 Dth for the six month period ended February 28, 1998
compared to 3,412,739 Dth for the six month period ended February
28, 1997. The increase in operating revenues is primarily due to
the increased volumes and a 1% increase in unit prices. There were
4,080 EDD for the six month period ended February 28, 1998 compared
to 4,193 EDD for the six months ended February 28, 1997, representing
a 2.7% decrease. Average EDD in the Company's service area for the
six month period is equivalent to 4,390 EDD. The average selling price
of firm gas was $8.96 per Dth for the six months ended February 28,
1998 compared to $8.87 per Dth for the same period last year. The
increase is due to higher gas costs and, for the six months
ended February 28, 1997, the Company, for only three of the six
months, benefited from higher MTDE approved rates effective
December 1, 1996. Interruptible revenues for the six months ended
February 28, 1998 and February 28, 1997 were $155,794 and $683,943,
respectively.
Operations and maintenance expenses for the six months ended
February 28, 1998 decreased to $6,363,846 from $6,555,537 for the
comparable period a year ago. The decrease is due to the factors
mentioned above for the three month period ended February 28,
1998.
Interest expense increased $30,983 (2.0%) for the six months
ended February 28, 1998 compared to the six months ended February
28, 1997. The increase was due to higher outstanding balances on
long-term debt.
Income available for common stock increased by $552,218 to
$3,422,987 for the six months ended February 28, 1998 as compared
to $2,870,769 for the same period last year while earnings per
share increased to $2.02 from $1.74. Dividends were $.83 and
$.81 per share, respectively.
Liquidity and Capital Resources
Net cash provided by operating activities for the six months
ended February 28, 1998 was $4,152,467. Cash flows were
generated primarily from net income of $3,422,987; depreciation
and amortization of $2,621,150; a decrease in inventory of
$1,387,600; and an increase in taxes payable of $1,909,484.
These sources of cash were offset primarily by an increase in
accounts receivable of $4,910,354. The increase in accounts
receivable is due to the seasonal nature of the Company's
business. The decrease in inventories also resulted from the
seasonal nature of the Company's business whereby gas inventories
increase in the warmer months and decrease when sold in the
colder months.
Occasionally the Company receives refunds from its pipeline
supplier as a result of regulatory action by the Federal Energy
Regulatory Commission. The supplier refunds are returned by the
Company to customers over a twelve month period. The Company did
not receive any supplier refunds during the three months ended
February 28, 1998.
<PAGE> 11
The Company finances its gas inventory with a bank through a
special purpose credit agreement which has a maximum financing
commitment of $10,000,000 with a floating interest rate. This
credit agreement extends from December 12, 1995 through December
31, 2000. As of February 1998, the Company's obligation under
this credit agreement was $3,661,135.
The Company continues to invest a significant amount of
capital in its distribution system to satisfy current and
expected future customer demand. Funding has traditionally been
generated from operations, short-term bank borrowings, issuance
if long-term debt and the issuance of additional equity, including
the issuance of additional shares of common stock through the
Company's Dividend Reinvestment and Common Stock Purchase Plan.
During the quarter ended February 28, 1998, the Company raised
$549,160 of common stock through its Dividend Reinvestment and
Common Stock Purchase Plan (including $32,069 from the cash
infusion portion of the Plan) and $373,969 of common stock issued
to the Company's qualified employee plans. Management anticipates
that these and other sources will remain available and will continue
to adequately serve the Company's needs.
For the six months ended February 28, 1998, the Company's
construction expenditures totaled $3,578,211. Historically, the
second quarter of the Company's fiscal year has been
characterized by significant construction expenditures, high gas
sendout and operating revenues. Cash requirements during this
period have historically been satisfied through short-term bank
borrowings. Planned construction expenditures for the remainder
of fiscal 1998 are currently estimated at $3,100,000 and planned
construction expenditures for fiscal 1999 are currently estimated
at $8,000,000. The Company's planned construction expenditures
and long-term debt repayments have been and will continue to be
funded through cash generated by operations and short-term bank
borrowings which the Company anticipates will be replaced from
time to time with equity and long-term debt financings.
Merger Agreement
The Company has agreed, subject to the terms and conditions
of the Agreement and Plan of Merger dated as of December 19, 1997
(the "Merger Agreement") with Eastern Enterprises ("Eastern"), to
merge with a wholly-owned subsidiary of Eastern. Upon
consummation of the proposed merger, the Company would become a
wholly-owned subsidiary of Eastern, and each share of the
Company's common stock would be converted into the right to
receive a number of shares of Eastern common stock equal to the
exchange ratio provided for in the Merger Agreement. The
proposed merger is subject to a vote of the Company's
stockholders, regulatory approvals, required consents and other
conditions.
Eastern is an unincorporated voluntary association, commonly
referred to as a "Massachusetts business trust." Eastern's
principal subsidiaries are Boston Gas Company ("Boston Gas") and
Midland Enterprises, Inc. ("Midland"). Boston Gas is a regulated
utility that distributes natural gas in and around Boston,
Massachusetts. Midland is engaged in barge transportation,
principally on the Ohio and Mississippi river systems. A copy of
the Merger Agreement has been filed on Form 8-K dated January 9,
1998.
<PAGE> 12
Regulatory and Accounting Issues
The Company's revenues are based on rates regulated by the
MDTE. These rates are designed to allow the Company to recover
its operating costs and provide an opportunity to earn a
reasonable rate of return on investor supplied funds. Once
approved, the Company's rates are adjusted by a Cost of Gas
Adjustment ("CGA") which, subject to approval by the MDTE,
permits the Company to change rates to recover its gas costs and
certain other costs on a dollar-for-dollar basis. The CGA is
also used as the mechanism to reduce charges to firm customers by
the margin earned on sales to interruptible customers.
Net earnings per share amounts have been computed using the
weighted average number of common and common equivalent shares
outstanding during each year. For the period ended February 28,
1998, the Company adopted the provisions of SFAS No. 128,
Earnings Per Share. This statement was issued by the FASB in
March 1997 and establishes standards for computing and presenting
earnings per share (EPS) and applies to entities with publicly
held common stock or potential common stock. This statement
replaces the presentation of primary EPS with a presentation of
basic EPS. It requires dual presentation of basic and diluted
EPS on the face of the statement of operations for all entities.
This statement also requires a restatement of all prior-period
EPS data presented.
The American Institute of Certified Public Accountants issued
a Statement of Position ("SOP") 96-1, Environmental Remediation
Liabilities. The SOP's objective is to make the timing of the
recognition of environmental obligations more uniform by
discussing the estimation process and providing benchmarks to aid
in determining when to recognize environmental liabilities. The
SOP is effective for the Company in fiscal 1998. The adoption of
SOP 96-1 did not have a material effect on the Company's
financial statements.
The "Year 2000" Issue
The company has assessed the impact of the Year 2000 issue on
its computer system and is in the process of modifying its computer
system to address this issue. It currently anticipates completing
these modifications by January 1999. The costs of these modifications
are not expected to be material to the Company's business, operations
or financial condition or to have any material impact on the Company's
results of operations, liquidity or capital resources.
Forward Looking Statements
The statements contained in the section entitled "Management's
Discussion and Analysis of Financial Condition and Results
of Operations" which are not historical facts are "forward-looking
statements" (as that term is defined in the Private Securities
Litigation Reform Act of 1995) that involve risks and uncertainties.
Management wishes to caution the reader that such forward-looking
statements, which include but are not limited to its statements
with regard to the impact of transportation customers on the
Company's profitability, the impact of changes in the cost of gas
and of the CGA mechanism on total margin, its projected capital
expenditures and its sources of cash to fund expenditures, its
estimated costs of environmental remediation and anticipated
regulatory approval of recovery mechanisms, and its treatment of
the Year 2000 issue, are only predictions and estimates regarding
future events and circumstances. No assurance can be given that
such predictions and estimates will be achieved; actual events or
results may differ materially as a result of risks facing the
Company. Such risks include, but are not limited to uncertainty
as to the precise rates for transportation of gas that will be
allowed by the regulators and the transportation-only customers,
as to the regulatory allowance of the recovery charges in the cost
of gas, as to demands for capital expenditures and the availability
of cash from various sources, and as to the regulatory approval
of the full recovery of environmental costs, transition costs,
and other regulatory assets.
<PAGE> 13
PART II - OTHER INFORMATION
Item 1 Legal Proceedings
The information called for by this item is unchanged
from that filed in the Company's Annual Report on Form
10-K for fiscal 1997 filed November 26, 1997.
Item 2 Changes in Securities
None.
Item 3 Defaults Upon Senior Securities
None.
Item 4 Submission of Matters to a Vote of Security Holders
The Company's Special Meeting of Shareholders is
scheduled to be held in mid June 1998. For a description
of the meeting and the matters to be voted, see the
Company's Notice of Special Meeting and Proxy Statement
("Proxy Statement"), to be filed with the Securities and
Exchange Commission in late April 1998, which is
incorporated herein by reference.
Item 5 Other Information
None.
Item 6(a) Exhibits
3.1 Restated Articles of Organization of Essex County
Gas Company.1
3.2 By Laws of Essex County Gas Company.2
27. Financial Data Schedule.
1Previously filed as an exhibit to the Registrant's 10-K filed
for the fiscal year ended August 31, 1988 and is incorporated
herein by this reference.
2Previously filed as an exhibit to the Registrant's 10-Q filed
February 28, 1991 and is incorporated herein by this reference.
Item 6(b) Reports on Form 8-K
A. Form 8-K was filed on January 9, 1998.
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
ESSEX COUNTY GAS COMPANY
By ___/s/Philip H. Reardon___
Philip H. Reardon
President and Chief Executive Officer
By___/s/James H. Hastings___
James H. Hastings
Vice President and Treasurer
(Principal Financial Officer)
Date: April 14, 1998
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted
from the balance sheet, statement of income and statement of cash
flows contained in Form 10-Q of Essex County Gas Company for the
six months ended February 28, 1998 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> FEB-28-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 80,435
<OTHER-PROPERTY-AND-INVEST> 776
<TOTAL-CURRENT-ASSETS> 12,686
<TOTAL-DEFERRED-CHARGES> 3,537
<OTHER-ASSETS> 579
<TOTAL-ASSETS> 98,012
<COMMON> 21,424
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 17,113
<TOTAL-COMMON-STOCKHOLDERS-EQ> 38,544
0
0
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0
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0
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