<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 31, 1994
Commission File Number 0-11035
ENERGYNORTH, INC.
(Exact name of registrant as specified in its charter)
New Hampshire 02-0363755
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1260 Elm Street, P.O. Box 329, Manchester, NH 03105
(Address and zip code of principal executive offices)
(603)625-4000
(Registrant's telephone number, including area code)
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 [ ]
EnergyNorth, Inc. had 3,155,108 shares of $1.00 par value common
stock outstanding on January 31, 1995, the filing date of this
Report.
An exhibit index appears on Page 11.
<PAGE>Page 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ENERGYNORTH, INC.
Condensed Consolidated Balance Sheets
Assets
(Unaudited, except for September 30, 1994 data)
(Thousands of dollars)
December 31, September 30,
1994 1993 1994
------------------- -------------
Property:
Utility plant, at cost $126,485 $120,936 $124,617
Accumulated depreciation and amortization 39,448 36,303 38,521
------------------- -------------
Net utility plant 87,037 84,633 86,096
Net non-utility property, at cost 8,332 8,098 7,907
------------------- -------------
Net property 95,369 92,731 94,003
------------------- -------------
Current assets:
Cash and temporary cash investments 507 1,030 3,048
Accounts receivable (net of allowances of
$1,084, $1,070 and $1,050, respectively) 6,224 8,024 2,261
Unbilled revenues 3,179 3,301 544
Deferred gas costs - 3,175 -
Inventories, at average cost:
Materials and supplies 1,628 1,744 1,650
Supplemental gas supplies 7,113 7,494 8,047
Prepaid and deferred taxes 1,763 715 1,468
Recoverable FERC 636 transition costs 2,540 2,268 2,351
Prepaid expenses and other 1,035 1,174 1,226
------------------- -------------
Total current assets 23,989 28,925 20,595
------------------- -------------
Deferred charges:
Regulatory SFAS 109 asset 2,370 - 2,370
Other deferred charges 3,912 2,025 4,051
------------------- -------------
Total deferred charges 6,282 2,025 6,421
------------------- -------------
Total Assets $125,640 $123,681 $121,019
=================== =============
See accompanying notes to condensed consolidated financial statements.
2
<PAGE>Page 3
ENERGYNORTH, INC.
Condensed Consolidated Balance Sheets
Capitalization and Liabilities
(Unaudited, except for September 30, 1994 data)
(Thousands of dollars)
December 31, September 30,
1994 1993 1994
-------------------- -------------
Capitalization:
Common stock - par value of $1 per
share, 10,000,000 shares authorized;
3,153,387, 3,112,513 and 3,141,572
shares issued and outstanding,
respectively $ 3,153 $ 3,113 $ 3,142
Amount in excess of par 29,035 28,376 28,860
Retained earnings 10,220 9,125 8,776
-------------------- -------------
Total common stockholders' equity 42,408 40,614 40,778
Long-term debt 33,029 34,832 32,971
Capital lease obligations 461 734 530
-------------------- -------------
Total capitalization 75,898 76,180 74,279
-------------------- -------------
Current liabilities:
Notes payable to banks 3,565 7,520 -
Current portion of long-term debt 2,076 1,730 2,036
Current portion of capital lease
obligations 272 263 272
Inventory purchase obligation 7,660 7,027 7,334
Accounts payable 6,520 6,888 4,848
Deferred gas costs 1,771 - 4,736
Accrued interest 1,591 1,601 843
Accrued taxes 906 846 414
Accrued FERC 636 transition costs 2,540 2,268 2,351
Customer deposits, environmental
and other 3,023 3,221 4,109
-------------------- -------------
Total current liabilities 29,924 31,364 26,943
-------------------- -------------
Commitments and contingencies
Deferred credits:
Deferred income taxes 13,926 10,057 13,779
Regulatory SFAS 109 liability 1,592 1,623 1,620
Unamortized investment tax credits 2,116 2,263 2,151
Contributions in aid of construction
and other 2,184 2,194 2,247
------------------- -------------
Total deferred credits 19,818 16,137 19,797
------------------- -------------
Total Capitalization and Liabilities $125,640 $123,681 $121,019
==================== =============
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>Page 4
ENERGYNORTH, INC.
Condensed Consolidated Statements of Income
For the periods ended December 31
(Unaudited)
(Thousands of dollars except for per share amounts and shares outstanding)
Three Months Twelve Months
1994 1993 1994 1993
-------------------- --------------------
Total operating revenues $22,472 $25,914 $93,608 $86,366
-------------------- --------------------
Operating expenses:
Cost of gas sold 9,999 12,459 52,670 48,111
Operations and maintenance 5,737 5,700 21,837 20,925
Depreciation and amortization 1,251 1,227 4,878 4,619
Taxes other than income taxes 1,035 972 3,974 3,750
Federal and state income taxes 1,295 1,519 2,392 1,884
-------------------- --------------------
Total operating expenses 19,317 21,877 85,751 79,289
-------------------- --------------------
Operating income 3,155 4,037 7,857 7,077
-------------------- --------------------
Other income:
Net rentals, service and
appliance sales 220 197 672 628
Other, net 45 37 8 145
-------------------- --------------------
Total other income 265 234 680 773
-------------------- --------------------
Income before interest expense 3,420 4,271 8,537 7,850
-------------------- --------------------
Interest expense:
Interest on long-term debt 800 830 3,255 3,346
Other interest 300 201 804 535
Interest charged to construction (4) (3) (26) (26)
-------------------- --------------------
Total interest expense 1,096 1,028 4,033 3,855
-------------------- --------------------
Earnings applicable to common stock $ 2,324 $ 3,243 $ 4,504 $ 3,995
==================== ====================
Weighted average shares outstanding 3,144,600 3,106,119 3,129,402 3,091,899
==================== ====================
Earnings per share $0.74 $1.04 $1.44 $1.29
==================== ====================
Dividends declared per share $0.28 $0.27 $1.09 $1.065
==================== ====================
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>Page 5
ENERGYNORTH, INC.
Condensed Consolidated Statements of Cash Flows
For the three months ended December 31
(Unaudited)
(Thousands of dollars)
1994 1993
-----------------
Cash was provided (used) by:
Operating activities:
Earnings applicable to common stock $ 2,324 $ 3,243
Non-cash items:
Depreciation and amortization 1,448 1,410
Deferred taxes and investment tax credits, net 217 333
-----------------
Total funds provided by operating activities 3,989 4,986
Changes in:
Accounts receivable, net (3,963) (6,130)
Unbilled revenues (2,635) (2,833)
Inventories 956 1,175
Prepaid expenses and other 191 394
Deferred gas costs (2,965) (2,412)
Accounts payable 1,672 2,157
Accrued liabilities 778 692
Accrued/prepaid taxes 64 362
Payments for environmental costs and other (1,198) (15)
-----------------
Net cash used by operating activities (3,111) (1,624)
-----------------
Investing activities:
Additions to property (2,727) (2,459)
-----------------
Financing activities:
Issues of common stock 186 156
Issues of long-term debt 235 217
Change in notes payable to banks 3,565 4,470
Change in inventory purchase obligation 326 -
Change in customer deposits 134 107
Change in contributions in aid of construction and other (63) 20
Cash dividends on common stock (880) (839)
Refunding requirements:
Repayment of long-term debt (137) (131)
Repayment of capital lease obligations (69) (63)
-----------------
Net cash provided by financing activities 3,297 3,937
-----------------
Net decrease in cash and temporary cash investments (2,541) (146)
Cash and temporary cash investments, beginning of period 3,048 1,176
-----------------
Cash and temporary cash investments, end of period $ 507 $ 1,030
=================
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>Page 6
ENERGYNORTH, INC.
Notes to Condensed Consolidated Financial Statements
December 31, 1994
(Unaudited)
EnergyNorth, Inc. is an exempt public utility holding company
operating in southern and central New Hampshire. Its principal
operating subsidiaries include EnergyNorth Natural Gas, Inc.
("ENGI"), a natural gas distribution utility, and EnergyNorth
Propane, Inc. ("ENPI"), a retail propane company.
Note 1. Basis of Presentation
The accompanying condensed consolidated financial statements of
EnergyNorth, Inc. (the "Company") include the accounts of all
subsidiaries. All significant intercompany accounts and
transactions have been eliminated in the accompanying financial
statements.
The condensed consolidated financial statements included herein
have been prepared by the Company, without audit, pursuant to the
rules and regulations of the U. S. Securities and Exchange
Commission. Certain footnote disclosures and other information,
normally included in financial statements prepared in accordance
with generally accepted accounting principles, have been condensed
or omitted from these interim financial statements, pursuant to
such rules and regulations, although the Company believes that the
disclosures are adequate to make the information not misleading.
In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements contain all adjustments, which
include only normal recurring adjustments, necessary to present
fairly the financial position as of December 31, 1994 and 1993 and
the results of operations for the three and twelve months then
ended and statements of cash flows for the three months ended
December 31, 1994 and 1993. All accounting policies and practices
have been applied in a manner consistent with prior periods. These
interim financial statements should be read in conjunction with the
consolidated financial statements and notes thereto contained in
the Company's Annual Report to Shareholders for the year ended
September 30, 1994.
The business of ENGI and ENPI is influenced by seasonal weather
conditions. The amount of gas sold for central and space heating
purposes and, to a lesser extent, water heating, is directly
related to the ambient air temperature. Consequently, more gas is
sold during the winter months than is sold during the summer
months. Therefore, the results of operations for the interim
periods presented are not indicative of the results to be expected
for all or any part of the balance of the current fiscal year.
Certain reclassifications have been made to previously issued
financial statements to conform to the current presentation.
6
<PAGE>Page 7
ENERGYNORTH, INC.
Notes to Condensed Consolidated Financial Statements (continued)
December 31, 1994
(Unaudited)
Note 2. Cash Flows
Supplemental disclosures of cash flow information are as follows
(in thousands):
1994 1993
---- ----
Cash paid during the period for:
Interest (net of amount capitalized) $186 $220
Income taxes, net of refunds 7 41
In preparing the accompanying condensed consolidated statements
of cash flows, all highly liquid investments having maturities of
three months or less were considered cash equivalents.
Note 3. Common Stock
For the three months ended December 31, 1994, the Company sold
through the Dividend Reinvestment and Stock Purchase Plan
approximately 11,800 shares of its $1.00 par value common stock
with net proceeds of approximately $186,600.
Note 4. Commitments and Contingencies
For a discussion of commitments and contingencies, please refer
to Footnote 10 in the Company's 1994 Annual Report to Shareholders.
7
<PAGE>Page 8
ENERGYNORTH, INC.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
December 31, 1994
Results of Operations
- ---------------------
The earnings applicable to common stock decreased by $919,000 to
$2,324,000, or $.74 per share, for the three months ended December
31, 1994 from $3,243,000, or $1.04 per share in 1993. For the
twelve months ended December 31, 1994, earnings applicable to
common stock were $4,504,000, or $1.44 per share compared to
$3,995,000, or $1.29 per share in the prior period.
Temperatures for the three-month period ended December 31, 1994
were significantly warmer when compared to normal and warmer than
in the prior comparable period. Over the twelve-month period ended
December 31, 1994, temperatures were close to normal as was the
prior comparable period. The following chart discloses degree day
data as recorded at the U.S. weather station in Concord, New
Hampshire, comparing actual degree days to the previous period and
to normal. Due to the size and topographical variations of ENGI's
service territory, weather conditions vary. Concord, New Hampshire
weather data is considered to be representative of the territory.
Actual Actual Change vs. Change vs.
12-31-94 12-31-93 Normal Previous Period Normal
-------- -------- ------ --------------- ----------
3 months 2,237 2,628 2,608 -14.9% -14.2%
12 months 7,486 7,496 7,525 - 0.1% - 0.5%
Quarterly Comparison
- --------------------
The margin earned from utility natural gas operations decreased
$762,000 or 6.6%. The weather was 14.9% warmer than the same
quarter last year contributing to a decrease in firm sendout of
over 11%. During 1994, ENGI implemented transportation tariffs and
began transporting gas for customers in October. Transportation
revenue, i.e. margin, recorded during the current quarter was
approximately $189,000. In conjunction with the implementation of
the transportation tariffs, margin earned on 280-day sales is now
returned to customers through the cost of gas adjustment and does
not impact profitability. The 280-day margin recorded in the prior
period was approximately $121,000. Additionally, operating revenue
was impacted by the repeal in June 1994 of the franchise tax
assessed on sales of natural gas. Franchise tax revenue recorded
in the prior period amounted to $205,000.
The margin from retail propane operations decreased slightly from
the prior period as the margin per gallon sold decreased
approximately 4%. While the average number of propane customers
increased over 11%, the warmer temperatures kept the increase in
the volume of gallons sold to only 2.2%.
8
<PAGE>Page 9
ENERGYNORTH, INC.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations (continued)
December 31, 1994
The increase in taxes other than income taxes was attributable
primarily to higher property tax assessments made by cities and
towns partially offset by the elimination of the state utility
franchise tax. The decrease in Federal and state income tax expense
correlates with the decrease in pretax earnings for the quarter.
The increase in other interest expense is due to interest related
to deferred gas costs. A $3.3 million refund received in 1994 from
the Tennessee Gas Pipeline Company is being returned to firm gas
customers, along with interest, through the cost of gas adjustment.
Twelve-Month Comparison
- -----------------------
For the twelve-month period presented, margin earned from utility
natural gas operations increased by $2,097,000 or 6.5% from the
prior year. While temperatures were approximately the same as the
prior year, firm sendout increased 3.3%.
The average number of retail propane customers increased 18.9% and
gallons sold increased 18.8% during the twelve-month period,
contributing to an increase in margin of $720,000.
Operations and maintenance expenses increased 4.4% due mainly to
higher postretirement health care costs resulting from the
implementation of SFAS 106 in October 1993.
Greater charges for depreciation and amortization were a direct
result of plant additions. The increase in taxes other than income
taxes was attributable primarily to higher property tax assessments
made by cities and towns partially offset by the elimination of the
franchise tax. The increase in Federal and state income tax
expense correlates with the increase in pretax earnings.
Other interest expense increased by $269,000 mainly because of
interest due customers resulting from the net impact of the
Tennessee refund in 1994 and the recovery of take-or-pay gas costs
in 1993 flowing through the cost of gas adjustment.
Capital Resources and Liquidity
- -------------------------------
The Company's major capital requirements result from efforts to
maintain the safety and improve the efficiency of existing plant
and to serve additional customers. For the three months ended
December 31, 1994, capital expenditures totaled approximately $2.7
million.
Cash flow patterns reflect the seasonality of the Company's
business. The greatest demand for cash is in the fall and early
winter as construction projects are brought to completion and
during the winter as accounts receivable balances grow.
9
<PAGE>Page 10
ENERGYNORTH, INC.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations (continued)
December 31, 1994
Capital expenditures and accounts receivable balances were financed
by internally generated funds and supplemented by short-term bank
borrowings and proceeds from the Dividend Reinvestment and Stock
Purchase Plan ("DRIP"). During the three months ended December 31,
1994, the Company issued approximately 11,800 shares of common
stock with net proceeds of approximately $186,600. At December 31,
1994, the Company had unsecured bank lines of credit of $13 million
of which $9,435,000 was available.
Construction expenditures for fiscal 1995 are expected to be
approximately $8 million. Construction expenditures, long-term
debt repayments and working capital requirements will continue to
be funded through cash generated by operations supplemented by
available lines of credit and additional equity obtained through
the DRIP.
In June 1994, the Company received a $3.3 million refund from the
Tennessee Gas Pipeline Company resulting from rate case settlements
with the FERC. The refund has been recorded in deferred gas costs
and is being returned to customers through the operation of the
cost of gas adjustment mechanism.
Future financing is subject to the amount and timing of internally
generated funds, rate relief, sales volumes, construction
requirements, regulatory actions and market conditions.
FERC Order 636
- --------------
Accrued transition cost charges from the Company's pipeline gas
supplier resulting from FERC Order 636 are $2,540,000 at
December 31, 1994 and are being recovered through the cost of gas
adjustment mechanism. Additional transition costs are expected to
range from $2.5 million to $5.6 million.
Environmental Matters
- ---------------------
At December 31, 1994, the Company has recorded in deferred charges
$2.7 million associated with the investigation, plan development
and disposal of the contents of the gasholder situated on a former
gas manufacturing site. The Company has filed for a step increase
in rates for the recovery of the costs described above. The
Commission previously approved a method allowing for current
deferral and future recovery of these costs over a seven-year
period without return on the unamortized balance. A hearing has
been scheduled for March 1995 by the Commission to determine
whether such costs have been prudently incurred.
10
<PAGE>Page 11
ENERGYNORTH, INC.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations (continued)
December 31, 1994
In addition, $160,000 has been accrued for sampling and analysis of
certain compounds identified at various locations in the area of a
former gas manufacturing site. The Company is unable to predict at
this time the magnitude of liability that may be imposed on it for
the cost of additional studies or the performance of remedial
action in connection with this site. The Company will pursue
recovery from insurance carriers and claims against any other
responsible parties (none are yet identified) seeking to ensure
that they contribute appropriately to reimburse the Company for any
costs incurred. The Company intends to seek rate relief at such
time that the Company has determined the extent of the
contamination and has received recommendations with regards to
remediation.
PART II. OTHER INFORMATION
Items 1, 2, 3, 4 and 5 are not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27 - Financial Data Schedule.
(b) Reports on Form 8-K:
The Company did not file any reports on Form 8-K during
the quarter ended December 31, 1994.
11
<PAGE>Page 12
ENERGYNORTH, INC.
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 authorized.
EnergyNorth, Inc.
(Registrant)
Date: January 31, 1995 /s/DAVID A. SKRZYSOWSKI
David A. Skrzysowski, duly authorized
Vice President & Controller
(Principal Accounting Officer)
12
<PAGE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
The schedule contains summary financial information extracted from the
EnergyNorth, Inc. Condensed Consolidated Balance Sheet as of December 31, 1994
and Condensed Consolidated Statement of Income and Statement of Cash Flows for
the three months ended December 31, 1994 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<PAGE>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> DEC-31-1994
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 87,037
<OTHER-PROPERTY-AND-INVEST> 8,332
<TOTAL-CURRENT-ASSETS> 23,989
<TOTAL-DEFERRED-CHARGES> 6,282
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 125,640
<COMMON> 3,153
<CAPITAL-SURPLUS-PAID-IN> 29,035
<RETAINED-EARNINGS> 10,220
<TOTAL-COMMON-STOCKHOLDERS-EQ> 42,408
0
0
<LONG-TERM-DEBT-NET> 33,029
<SHORT-TERM-NOTES> 3,565
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 2,076
0
<CAPITAL-LEASE-OBLIGATIONS> 461
<LEASES-CURRENT> 272
<OTHER-ITEMS-CAPITAL-AND-LIAB> 43,829
<TOT-CAPITALIZATION-AND-LIAB> 125,640
<GROSS-OPERATING-REVENUE> 22,472
<INCOME-TAX-EXPENSE> 1,295
<OTHER-OPERATING-EXPENSES> 18,022
<TOTAL-OPERATING-EXPENSES> 19,317
<OPERATING-INCOME-LOSS> 3,155
<OTHER-INCOME-NET> 265
<INCOME-BEFORE-INTEREST-EXPEN> 3,420
<TOTAL-INTEREST-EXPENSE> 1,096
<NET-INCOME> 2,324
0
<EARNINGS-AVAILABLE-FOR-COMM> 2,324
<COMMON-STOCK-DIVIDENDS> 880
<TOTAL-INTEREST-ON-BONDS> 2,852<F1>
<CASH-FLOW-OPERATIONS> (3,111)
<EPS-PRIMARY> $0.74
<EPS-DILUTED> $0.74
<FN>
<F1>$2.852 million represents the forecasted ANNUAL interest on bonds for the
fiscal year ending September 30, 1994. Actual interest on bonds for the three
months ended December 31, 1994 was $724 thousand.
</FN>
</TABLE>
