SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 1997
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) 322-3000
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 July 1, 1997 was 8,601,590.
COLONIAL GAS COMPANY
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Statements of Income -
Three Months Ended June 30, 1997 and 1996
Six Months Ended June 30, 1997 and 1996
Twelve Months Ended June 30, 1997 and 1996
Consolidated Condensed Balance Sheets -
June 30, 1997, December 31, 1996 and
June 30, 1996
Consolidated Condensed Statements of Cash Flows -
Six Months Ended June 30, 1997 and 1996
Twelve Months Ended June 30, 1997 and 1996
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 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
June 30,
1997 1996
(In Thousands Except
Per Share Amounts)
Operating Revenues $27,212 $24,237
Cost of gas sold 16,317 13,899
Operating Margin 10,895 10,338
Operating Expenses:
Operations 7,392 7,290
Maintenance 1,114 1,148
Depreciation and Amortization 2,973 2,765
Taxes, other than income 1,394 1,444
Total Operating Expenses 12,873 12,647
Income Taxes (1,431) (1,620)
Utility Operating Loss (547) (689)
Other Operating Income (Loss):
Truck transportation revenues 451 2,670
Truck transportation expenses, including
income taxes and interest 673 2,295
Truck transportation net (loss)
income (222) 375
Other, net of income taxes 57 44
Total Other Operating (Loss) Income (165) 419
Non-Operating Income, Net 143 174
Loss Before Interest and Debt Expense (569) (96)
Interest and Debt Expense 1,932 2,109
Net Loss $(2,501) $(2,205)
Average Common Shares Outstanding 8,576 8,412
Loss per Average Common Share $ (0.29) $ (0.26)
Dividends Paid per Common Share $ .335 $ .325
(See accompanying notes to consolidated
condensed financial statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Six Months Ended
June 30,
1997 1996
(In Thousands Except
Per Share Amounts)
Operating Revenues $110,536 $101,815
Cost of gas sold 60,034 51,894
Operating Margin 50,502 49,921
Operating Expenses:
Operations 15,119 16,407
Maintenance 2,260 2,266
Depreciation and Amortization 5,946 5,660
Taxes, other than income 2,775 2,839
Total Operating Expenses 26,100 27,172
Income Taxes 8,002 7,225
Utility Operating Income 16,400 15,524
Other Operating Income (Loss):
Truck transportation revenues 1,790 6,247
Truck transportation expenses, including
income taxes and interest 1,931 4,956
Truck transportation net (loss)
income (141) 1,291
Other, net of income taxes 106 99
Total Other Operating (Loss) Income (35) 1,390
Non-Operating Income, Net 264 351
Income Before Interest and Debt Expense 16,629 17,265
Interest and Debt Expense 3,837 4,242
Net Income $12,792 $13,023
Average Common Shares Outstanding 8,554 8,395
Income per Average Common Share $ 1.50 $ 1.55
Dividends Paid per Common Share $ 0.660 $ 0.645
(See accompanying notes to consolidated
condensed financial statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Twelve Months Ended
June 30,
1997 1996
(In Thousands Except
Per Share Amounts)
Operating Revenues $179,650 $173,351
Cost of gas sold 95,328 87,445
Operating Margin 84,322 85,906
Operating Expenses:
Operations 30,095 32,017
Maintenance 4,471 4,430
Depreciation and Amortization 11,515 10,840
Taxes, other than income 5,307 5,237
Total Operating Expenses 51,388 52,524
Income Taxes 9,865 9,826
Utility Operating Income 23,069 23,556
Other Operating Income (Loss):
Truck transportation revenues 6,575 11,175
Truck transportation expenses, including
income taxes and interest 5,980 9,223
Truck transportation net income 595 1,952
Other, net of income taxes 216 150
Total Other Operating Income 811 2,102
Non-Operating Income, Net 672 924
Income Before Interest and Debt Expense 24,552 26,582
Interest and Debt Expense 8,305 8,961
Net Income $16,247 $17,621
Average Common Shares Outstanding 8,511 8,361
Income per Average Common Share $ 1.91 $ 2.11
Dividends Paid per Common Share $ 1.31 $ 1.285
(See accompanying notes to consolidated
condensed financial statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS
June 30, December 31, June 30,
1997 1996 1996
(Unaudited) (Unaudited)
(In Thousands)
Utility Property:
At original cost $345,572 $333,319 $318,828
Accumulated depreciation (88,447) (82,336) (78,434)
Net utility property 257,125 250,983 240,394
Non-Utility Property - Net 6,873 5,925 5,497
Net property 263,998 256,908 245,891
Capital Leases - Net 2,392 1,811 1,886
Current Assets:
Cash and cash equivalents 100 3,541 8,416
Accounts receivable 16,629 17,719 15,073
Allowance for doubtful
accounts (3,429) (2,715) (3,079)
Accrued utility revenues 739 6,333 500
Unbilled gas costs 8,902 19,238 6,869
Fuel and other inventories 10,321 11,958 9,447
Prepayments and other
current assets 5,946 11,484 5,068
Total current assets 39,208 67,558 42,294
Deferred Charges and Other Assets:
Unrecovered deferred income
taxes 9,386 9,774 10,174
Unrecovered Demand Side
Management - costs 8,242 7,075 4,507
Unrecovered environmental
expenses - incurred 3,397 4,011 3,457
Unrecovered environmental
expenses - accrued 900 1,183 2,116
Unrecovered transition
costs - accrued 4,500 4,500 3,600
Other 11,697 11,592 12,419
Total deferred charges
and other assets 38,122 38,135 36,273
Total Assets $343,720 $364,412 $326,344
(See accompanying notes to consolidated
condensed financial statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
LIABILITIES AND CAPITALIZATION
June 30, December 31, June 30,
1997 1996 1996
(Unaudited) (Unaudited)
(In Thousands)
Capitalization:
Common equity:
Common Stock - par value $3.33 per share
Authorized - 15,000 shares
Issued and outstanding -
8,602, 8,518 and
8,436 shares $28,643 $28,366 $28,092
Premium on common stock 55,669 54,221 52,719
Retained earnings 38,464 31,319 33,368
Total Common equity 122,776 113,906 114,179
Long-term debt 100,185 95,266 80,343
Total capitalization 222,961 209,172 194,522
Capital Lease Obligations 1,471 930 1,097
Current Liabilities:
Current maturities of
long-term debt 15,158 5,152 5,147
Current capital lease
obligations 921 881 789
Notes payable 12,700 50,400 41,300
Gas inventory purchase
obligations 6,477 13,039 5,133
Accounts payable 7,615 14,544 8,762
Other 15,504 10,153 10,118
Total current
liabilities 58,375 94,169 71,249
Deferred Credits and Reserves:
Deferred income taxes-funded 37,794 35,886 33,679
Deferred income taxes-
unfunded 9,386 9,774 10,174
Accrued environmental expenses 900 1,183 2,116
Accrued transition costs 4,500 4,500 3,600
Other 8,333 8,798 9,907
Total deferred credits
and reserves 60,913 60,141 59,476
Total Capitalization and
Liabilities $343,720 $364,412 $326,344
(See accompanying notes to consolidated
condensed financial statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
June 30,
1997 1996
(In Thousands)
Cash Flows From Operating Activities:
Net income $12,792 $13,023
Adjustments to reconcile net income
to net cash 7,601 11,664
Changes in current assets and
liabilities 24,176 16,512
Net cash provided by operating
activities 44,569 41,199
Cash Flows From Investing Activities:
Capital expenditures (13,443) (11,324)
Change in deferred accounts (1,233) (1,052)
Net cash used in investing
activities (14,676) (12,376)
Cash Flows From Financing Activities:
Dividends paid on Common Stock (5,647) (5,415)
Issuance of Common Stock 1,725 1,501
Issuance of long-term debt, net
of issuance costs 14,925 9,777
Retirement of long-term debt (75) (6,069)
Change in notes payable (37,700) (20,535)
Change in gas inventory purchase
obligations (6,562) (7,207)
Net cash used in financing
activities (33,334) (27,948)
Net (decrease) increase in cash
and cash equivalents (3,441) 875
Cash and cash equivalents at
beginning of period 3,541 7,541
Cash and cash equivalents at end of
period $ 100 $8,416
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest - net of amount
capitalized $4,645 $4,396
Income and franchise taxes $3,809 $ 649
(See accompanying notes to consolidated
condensed financial statements)
COLONIAL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Twelve Months Ended
June 30,
1997 1996
(In Thousands)
Cash Flows From Operating Activities:
Net income $16,247 $17,621
Adjustments to reconcile net
income to net cash 19,088 17,968
Changes in current assets and
liabilities (3,625) (2,933)
Net cash provided by operating
activities 31,710 32,656
Cash Flows From Investing Activities:
Capital expenditures (30,360) (25,922)
Change in deferred accounts (4,406) (2,372)
Net cash used in investing
activities (34,766) (28,294)
Cash Flows From Financing Activities:
Dividends paid on Common Stock (11,152) (10,742)
Issuance of Common Stock 3,502 2,734
Issuance of long-term debt, net of
issuance costs 34,935 26,810
Retirement of long-term debt (5,289) (27,499)
Change in notes payable (28,600) 8,800
Change in gas inventory purchase
obligations 1,344 (3,318)
Net cash provided by financing
activities (5,260) (3,215)
Net (decrease) increase in cash and
cash equivalents (8,316) 1,147
Cash and cash equivalents at
beginning of period 8,416 7,269
Cash and cash equivalents at end of
period $ 100 $8,416
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest - net of amount
capitalized $9,398 $9,231
Income and franchise taxes $7,867 $ 690
(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 June 30, 1997 and 1996 and results of
operations for the three, six and twelve month periods
ended June 30, 1997 and 1996 and cash flows for the six
and twelve month periods ended June 30, 1997 and 1996.
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 and six month periods
ending June 30, 1997 and 1996 are not necessarily
indicative of the results to be expected for the full
year.
3. During the six months ended June 30, 1997, the Company
issued 84,000 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 $277,000 and
Premium on Common Stock increased $1,448,000.
4. Contingencies
Reference is made to Note I/Contingencies of the Notes to
Consolidated Financial Statements contained within the
Company's 1996 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 June 30, 1997 and June 30, 1996
The Company's net loss for the three months ended June 30,
1997 was $2,501,000, which is 13% or $296,000 more than the
$2,205,000 loss reported for the same period last year.
Although utility operations showed improvement, the increase
in net loss resulted from a $597,000 decrease in net income
for Transgas Inc., Colonial's energy trucking subsidiary.
The Company typically incurs losses for the second and third
quarters while reporting profits for the first and fourth
quarters. This is due to significantly higher natural gas
sales throughout the colder months to meet customers'
heating needs. Approximately 90% of the Company's
residential customers are heating accounts.
The Company's operating margin increased 5.4% or $557,000
during the second quarter due to a 6.4% increase in firm gas
sales. Firm gas sold for the three months ended June 30
rose to 3,317 MMcf in 1997 from 3,117 MMcf in 1996.
Total operating expenses increased by 1.8% or $226,000
mainly due to a $208,000 increase in depreciation and
amortization expense.
Other operating income decreased $584,000 primarily due to
a $597,000 decrease in the net income of Transgas. Second
quarter financial results of Transgas were driven by warmer
than normal weather in the fourth quarter of 1996 and the
first quarter of 1997. As a result, Transgas had a
significant decrease in the demand for the truck
transportation of liquefied natural gas (LNG). Transgas
hauls of LNG decreased 86% for the second quarter of 1997
compared to the same period last year.
Six Months Ended June 30, 1997 and 1996
Net income for the six months ended June 30, 1997 was
$12,792,000 compared to $13,023,000 for the same period in
1996. This $231,000 or 1.8% decrease resulted primarily from
a $1,432,000 decrease in net income for Transgas offset by a
$876,000 increase in utility operating income.
Total operating expenses decreased by 3.9% or $1,072,000.
Operations and maintenance expenses decreased by $1,294,000
or 7.9%, primarily due to the expiration of certain deferred
charges and lower insurance expense.
Income taxes increased $876,000 or 6% due to a higher
level of pre-tax income.
Other operating income decreased $1,425,000 primarily due
to a $1,432,000 decrease in net income for Transgas. Hauls
of LNG decreased 78% for the reasons described above.
Twelve Months Ended June 30, 1997 and 1996
Net income for the twelve month period ended June 30, 1997
was $16,247,000, or $1.91 per share. This was an 8%
decrease over the $17,621,000 net income, or $2.11 per
share, reported for the same period in 1996. The decrease
in net income for the twelve month period ended June 30,
1997 resulted primarily from lower net income for Transgas
due to warmer weather.
The 1.8% or $1,584,000 decrease in the Company's operating
margin was due to weather that was 4.6% warmer than the
preceding twelve months.
Total operating expenses decreased by 2.2% or $1,136,000.
Operations expenses decreased by $1,922,000 or 6% due to
lower bad debts, expiration of the amortization of certain
deferred charges and lower insurance and legal expenses.
Offsetting these decreases was an increase of $675,000 in
depreciation and amortization expense.
Other operating income decreased $1,291,000 due to a
$1,357,000 decrease in net income for Transgas. The warmer
winter of 1996-1997 reduced the demand for energy trucking
services.
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
On July 22, 1997, the Company filed a Form 8-K which
reported that the Massachusetts Department of Public
Utilities (DPU) had not approved a contract relating to
the Company's proposed joint venture with Cabot LNG
Corporation. The proposed joint venture was contingent
upon that DPU approval, and would have involved long-
term joint utilization of the Company's Tewksbury,
Massachusetts LNG facility and Cabot LNG Corporation's
purchase of a 50% interest in the Company's wholly-
owned LNG trucking subsidiary, Transgas Inc. The
Company and Cabot LNG Corporation are discussing
alternative arrangements in which they can work
together to provide additional LNG trucking, storage
and related services to the energy market in the
Northeast United States.
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: August 13, 1997 s/F.L.Putnam, III
F.L. Putnam, III
President and Chief Executive Officer
Date: August 13, 1997 s/Nickolas Stavropoulos
Nickolas Stavropoulos
Executive Vice President - Finance,
Marketing and Chief Financial Officer
[END OF FORM 10-Q FOR PERIOD ENDING JUNE 30, 1997]
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