SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1996
OR
Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the transition period from to
COMMISSION FILE NUMBER 0-10007
COLONIAL GAS COMPANY
(Exact name of registrant as specified in its charter)
Massachusetts 04-1558100
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
40 Market Street, Lowell, Massachusetts 01852
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(508) 458-3171
Former name, former address and former fiscal year, if
changed since last report: Not applicable
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
The number of shares of the registrant's common stock, $3.33
par value, outstanding as of May 1, 1996 was 8,404,572.
COLONIAL GAS COMPANY
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Statements of Income -
Three Months Ended March 31, 1996 and 1995
Twelve Months Ended March 31, 1996 and 1995
Consolidated Condensed Balance Sheets -
March 31, 1996, December 31, 1995 and
March 31, 1995
Consolidated Condensed Statements of Cash Flows -
Three Months Ended March 31, 1996 and 1995
Twelve Months Ended March 31, 1996 and 1995
Notes to Consolidated Condensed Financial Statements
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
PART II - OTHER INFORMATION
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended
March 31,
1996 1995
(In Thousands Except
Per Share Amounts)
Operating Revenues $77,578 $70,353
Cost of gas sold 37,995 34,861
Operating Margin 39,583 35,492
Operating Expenses:
Operations 9,117 8,252
Maintenance 1,118 1,215
Depreciation and Amortization 2,895 2,522
Taxes, other than income 1,395 1,356
Total Operating Expenses 14,525 13,345
Income Taxes 8,845 7,680
Utility Operating Income 16,213 14,467
Other Operating Income:
Truck transportation revenues 3,577 1,762
Truck transportation expenses,
including income taxes and
interest (2,661) (1,639)
Truck transportation net income 916 123
Other, net of income taxes 55 (45)
Total Other Operating Income 971 78
Non-Operating Income, Net 177 145
Income Before Interest and Debt Expense 17,361 14,690
Interest and Debt Expense 2,133 2,241
Net Income $15,228 $12,449
Average Common Shares Outstanding 8,377 8,241
Income per Average Common Share $ 1.82 $ 1.51
Dividends Paid per Common Share $ .320 $ .315
(See accompanying notes to consolidated condensed
financial statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Twelve Months Ended
March 31,
1996 1995
(In Thousands Except
Per Share Amounts)
Operating Revenues $171,874$150,529
Cost of gas sold 86,766 76,109
Operating Margin 85,108 74,420
Operating Expenses:
Operations 32,175 31,263
Maintenance 4,304 4,994
Depreciation and Amortization 10,597 9,474
Taxes, other than income 5,189 5,016
Restructuring charge - 3,185
Total Operating Expenses 52,265 53,932
Income Taxes 9,524 4,260
Utility Operating Income 23,319 16,228
Other Operating Income:
Truck transportation revenues 9,390 9,980
Truck transportation expenses,
including income
taxes and interest (7,994) (9,029)
Truck transportation net income 1,396 951
Other, net of income taxes 92 (151)
Total Other Operating Income 1,488 800
Non-Operating Income, Net 898 688
Income Before Interest and Debt Expense 25,705 17,716
Interest and Debt Expense 9,163 8,657
Net Income $16,542 $9,059
Average Common Shares Outstanding 8,327 8,166
Income per Average Common Share $ 1.99 $ 1.11
Dividends Paid per Common Share $1.275 $ 1.255
(See accompanying notes to consolidated condensed financial
statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS
March 31, December 31, March 31,
1996 1995 1995
(Unaudited) (Unaudited)
(In Thousands)
Utility Property:
At original cost $312,507 $308,191 $291,235
Accumulated depreciation (75,629) (72,636) (68,126)
Net utility property 236,878 235,555 223,109
Non-Utility Property - Net 5,372 5,036 3,381
Net property 242,250 240,591 226,490
Capital Leases - Net 1,995 2,253 2,948
Current Assets:
Cash and cash equivalents 7,844 7,541 10,160
Accounts receivable 32,276 19,069 25,776
Allowance for doubtful
accounts (3,093) (2,205) (2,353)
Accrued utility revenues 6,448 8,924 4,932
Unbilled gas costs 5,816 9,688 -
Fuel and other inventories 7,511 13,648 10,355
Prepayments and other
current assets 4,838 4,337 5,768
Total current assets 61,640 61,002 54,638
Deferred Charges and Other Assets:
Unrecovered deferred
income taxes 10,368 10,562 11,277
Unrecovered demand side
management costs 4,791 4,977 4,856
Unrecovered environmental
expenses - incurred 4,836 4,761 4,839
Unrecovered environmental
expenses - accrued 2,225 2,300 3,800
Unrecovered transition
costs - accrued 3,600 3,600 4,700
Other 12,287 12,375 8,484
Total deferred charges
and other assets 38,107 38,575 37,956
Total Assets $343,992 $342,421 $322,032
(See accompanying notes to consolidated condensed financial
statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
LIABILITIES AND CAPITALIZATION
March 31, December 31, March 31,
1996 1995 1995
(Unaudited) (Unaudited)
(In Thousands)
Capitalization:
Common equity:
Common Stock - par value $3.33 per share
Authorized - 15,000 shares
Issued and outstanding
- 8,398, 8,367 and
8,268 shares $27,966 $27,863 $27,532
Premium on common stock 52,024 51,447 49,862
Retained earnings 38,307 25,760 32,422
Total Common equity 118,297 105,070 109,816
Long-term debt 80,381 75,418 77,888
Total capitalization 198,678 180,488 187,704
Capital Lease Obligations 1,155 1,359 2,236
Current Liabilities:
Current maturities of
long-term debt 11,144 6,141 8,451
Current capital lease
obligations 839 894 711
Notes payable 40,000 61,835 33,000
Gas inventory purchase
obligations 6,040 12,340 8,041
Accounts payable 12,812 12,150 7,475
Other 13,820 8,306 13,343
Total current liabilities 84,655 101,666 71,021
Deferred Credits and Reserves:
Deferred income taxes-funded 33,346 32,299 30,275
Deferred income taxes-
unfunded 10,368 10,562 11,277
Accrued environmental
expenses 2,225 2,300 3,800
Accrued transition costs 3,600 3,600 4,700
Other 9,965 10,147 11,019
Total deferred credits
and reserves 59,504 58,908 61,071
Total Capitalization and
Liabilities $343,992 $342,421 $322,032
(See accompanying notes to consolidated condensed financial
statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
1996 1995
(In Thousands)
Cash Flows From Operating Activities:
Net income $15,228 $12,449
Adjustments to reconcile net income
to net cash 4,603 2,375
Changes in current assets and liabilities 4,734 13,223
Net cash provided by operating
activities 24,565 28,047
Cash Flows From Investing Activities:
Capital expenditures (4,746) (4,021)
Change in deferred accounts 733 1,268
Net cash used in investing
activities (4,013) (2,753)
Cash Flows From Financing Activities:
Dividends paid on Common Stock (2,680) (2,595)
Issuance of Common Stock 680 786
Issuance of long-term debt, net of
issuance costs 9,920 -
Retirement of long-term debt,
including premiums (34) (32)
Change in notes payable (21,835)(16,500)
Change in gas inventory purchase
obligations (6,300) (5,819)
Net cash used in financing
activities (20,249)(24,160)
Net increase in cash and cash
equivalents 303 1,134
Cash and cash equivalents at beginning of
period 7,541 9,026
Cash and cash equivalents at end of
period $ 7,844 $10,160
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest - net of amount
capitalized $ 2,167 $ 2,231
Income and franchise taxes $ 454 $ 214
(See accompanying notes to consolidated condensed financial
statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Twelve Months Ended
March 31,
1996 1995
(In Thousands)
Cash Flows From Operating Activities:
Net income $16,542 $ 9,059
Adjustments to reconcile net income
to net cash 14,681 10,389
Changes in current assets and
liabilities (5,640) 5,418
Net cash provided by operating
activities 25,583 24,866
Cash Flows From Investing Activities:
Capital expenditures (26,795) (30,893)
Change in deferred accounts (169) 4,513
Net cash used in investing
activities (26,964) (26,380)
Cash Flows From Financing Activities:
Dividends paid on Common Stock (10,657) (10,287)
Issuance of Common Stock 2,596 3,767
Issuance of long-term debt, net
of issuance costs 26,941 741
Retirement of long-term debt,
including premiums (24,815) (5,151)
Change in notes payable 7,000 13,000
Change in gas inventory purchase
obligations (2,000) 955
Net cash (used in) provided by
financing activities (935) 3,025
Net (decrease) increase in cash and
cash equivalents (2,316) 1,511
Cash and cash equivalents at
beginning of period 10,160 8,649
Cash and cash equivalents at end
of period $ 7,844 $10,160
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest - net of amount
capitalized $ 9,804 $9,746
Income and franchise taxes $ 3,684 $6,610
(See accompanying notes to consolidated condensed financial
statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. In the opinion of the Company, the accompanying unaudited
consolidated condensed financial statements contain all
adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial
position as of March 31, 1996 and 1995 and results of
operations for the three and twelve month periods ended
March 31, 1996 and 1995 and cash flows for the three and
twelve month periods ended March 31, 1996 and 1995.
2. Due to the significant impact of gas used for space
heating during the heating season (November-April) and
the Company's seasonal rate structure, the results of
operations for the three month periods ending March 31,
1996 and 1995 are not necessarily indicative of the
results to be expected for the full year.
3. During the three months ended March 31, 1996, the Company
issued 31,000 shares of Common Stock, $3.33 par value,
under a Dividend Reinvestment and Common Stock Purchase
Plan and under an Employee Savings Plan. As a result,
Common Stock, $3.33 par value, increased $103,000 and
Premium on Common Stock increased $577,000.
4. Contingencies
Reference is made to Note J/Contingencies of the Notes to
Consolidated Financial Statements contained within the
Company's 1995 Annual Report to Stockholders.
5. Reclassifications are made periodically to previously
issued financial statements to conform to the current
year presentation.
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition
Results of Operations
Three Months Ended March 31, 1996 and 1995
Net income for the three months ending March 31, 1996 rose
22% to $15,228,000 compared to $12,449,000 for the same
period last year. This increase resulted primarily from a
12% or $1,746,000 increase in operating income for the
Company's utility operation. In addition there was a
$793,000 increase in net income for Transgas Inc., the
Company's energy trucking subsidiary, compared to the first
quarter of 1995. For the three months ending March 31, 1996,
operating margin increased $4,091,000 or 11.5% compared to
the same 1995 period due to higher firm gas sales volumes
resulting from significantly colder weather. During the
first quarter of 1996 temperatures averaged 7.5% colder than
the same period last year and 3.5% colder than normal.
This increase in operating margin was partially offset by a
$1,180,000 or 8.8% rise in operating expenses -- primarily
as a result of higher bad debts due to higher gas revenues
and increased depreciation.
Income taxes increased $1,165,000 or 15% due to a higher
level of income subject to tax.
Other operating income (net of income taxes) increased
$893,000 over the comparable 1995 period primarily as a
result of the increase in Transgas' net income which is
attributable to the colder weather. Compared to the first
quarter of 1995, Transgas hauls of LNG increased 141%.
Interest expense decreased $108,000 or 4.8%. Interest on
short-term debt increased due to increased borrowings which
were partially offset by lower interest rates. This was
further offset by a decrease in long-term interest expense
due to the early retirement of higher interest debt in
December 1995.
Twelve Months Ended March 31, 1996 and 1995
Net income was $16,542,000 for the twelve months ending
March 31, 1996 up from $9,059,000 for the comparable 1995
period, for an increase of 83%. The Company's earnings for
the twelve months ending March 31, 1995 reflected a
restructuring charge of $1,965,000 after-tax relating to a
voluntary early retirement program and the closing of retail
appliance sales operations.
The rise in net income for the twelve-month period ending
March 31, 1996 was due to weather that was 12% colder than
the comparable 1995 period and 6.6% colder than normal. The
colder weather for the twelve-month period ending March 31,
1996 caused a 12% increase in firm gas sales volumes and
resulted in an increase in operating margin of $10,688,000
or 14%. In addition, net income for Transgas increased
$445,000 as compared to the twelve-month period ending March
31, 1995.
Operating expenses were down $1,667,000 or 3.1% of which
$3,185,000 relates to the restructuring charge referred to
above. This decrease was partially offset by higher bad
debts due to higher gas revenues and increased depreciation.
Income taxes increased $5,264,000 due to a higher level of
income subject to tax.
Other operating income (net of income taxes) increased
$688,000 over the comparable 1995 period due to the rise in
Transgas net income and merchandise net income.
Interest and debt expense increased $506,000 or 5.8%.
Interest on short-term debt increased due to increased
borrowings which were partially offset by a decrease in long-
term interest expense due to the early retirement of higher
interest debt in December 1995.
Liquidity and Capital Resources
On February 5, 1996, the Company issued $10 million of 30-
year bonds with an interest rate of 6.94% under the MTN program.
It is anticipated that the remaining $45 million of bonds under
the MTN program will be issued in several series within the
next two years.
On April 17, 1996, the quarterly dividend on the Company's
common stock was increased to $.325 per share or an
annualized dividend rate of $1.30 per share. This is the
60th consecutive year that the Company has paid a dividend
to common shareholders and the 17th consecutive year that it
has increased its per share dividend payment.
PART II - OTHER INFORMATION
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
None
b. Reports on Form 8-K
None
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.
COLONIAL GAS COMPANY
(Registrant)
Date: May 6, 1996 F.L. Putnam, III
President and Chief Executive Officer
Date: May 6, 1996 Nickolas Stavropoulos
Executive Vice President - Finance,
Marketing and Chief Financial Officer
[END OF FORM 10-Q FOR PERIOD ENDED MARCH 31, 1996]
<TABLE> <S> <C>
<ARTICLE> UT
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 236,878
<OTHER-PROPERTY-AND-INVEST> 7,268
<TOTAL-CURRENT-ASSETS> 61,640
<TOTAL-DEFERRED-CHARGES> 25,820
<OTHER-ASSETS> 12,287
<TOTAL-ASSETS> 343,992
<COMMON> 27,966
<CAPITAL-SURPLUS-PAID-IN> 52,024
<RETAINED-EARNINGS> 38,307
<TOTAL-COMMON-STOCKHOLDERS-EQ> 118,297
0
0
<LONG-TERM-DEBT-NET> 80,381
<SHORT-TERM-NOTES> 46,040
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 11,144
0
<CAPITAL-LEASE-OBLIGATIONS> 1,155
<LEASES-CURRENT> 839
<OTHER-ITEMS-CAPITAL-AND-LIAB> 86,136
<TOT-CAPITALIZATION-AND-LIAB> 343,992
<GROSS-OPERATING-REVENUE> 77,578
<INCOME-TAX-EXPENSE> 8,845
<OTHER-OPERATING-EXPENSES> 55,520
<TOTAL-OPERATING-EXPENSES> 61,365
<OPERATING-INCOME-LOSS> 16,213
<OTHER-INCOME-NET> 1,148
<INCOME-BEFORE-INTEREST-EXPEN> 17,361
<TOTAL-INTEREST-EXPENSE> 2,133
<NET-INCOME> 15,228
0
<EARNINGS-AVAILABLE-FOR-COMM> 15,228
<COMMON-STOCK-DIVIDENDS> 2,680
<TOTAL-INTEREST-ON-BONDS> 1,776
<CASH-FLOW-OPERATIONS> 19,831
<EPS-PRIMARY> 1.82
<EPS-DILUTED> 1.82
</TABLE>
