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 March 31, 1996
Commission File Number 1-11441
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 3,219,742 shares of $1.00 par value common
stock outstanding on April 26, 1996, the filing date of this
Report.
An exhibit index appears on Page 13.
<TABLE>
<PAGE> 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ENERGYNORTH, INC.
Condensed Consolidated Balance Sheets
Assets
(Unaudited, except for September 30, 1995 data)
(Thousands of dollars)
March 31, September 30,
1996 1995 1995
------------------ -------------
<S> <C> <C> <C>
Property:
Utility plant, at cost $131,913 $126,972 $129,895
Accumulated depreciation and
amortization 43,120 40,435 41,452
------------------ -------------
Net utility plant 88,793 86,537 88,443
Net nonutility property, at cost 7,897 8,163 7,989
------------------ -------------
Net property 96,690 94,700 96,432
------------------ -------------
Current assets:
Cash and temporary cash investments 1,382 5,131 575
Accounts receivable (net of allowances of
$1,235, $951 and $950, respectively) 13,369 9,932 2,171
Unbilled revenues 1,490 1,374 586
Deferred gas costs 2,899 - -
Inventories, at average cost:
Materials and supplies 1,650 1,635 1,624
Supplemental gas supplies 1,542 3,473 8,074
Prepaid and deferred taxes 956 1,244 1,671
Recoverable FERC 636 transition costs 1,733 1,330 1,733
Prepaid expenses and other 734 754 1,341
------------------ -------------
Total current assets 25,755 24,873 17,775
------------------ -------------
Deferred charges:
Regulatory asset - income taxes 2,401 2,370 2,401
Recoverable environmental costs 7,062 3,834 3,741
Other deferred charges 542 1,096 988
------------------ -------------
Total deferred charges 10,005 7,300 7,130
------------------ -------------
Total Assets $132,450 $126,873 $121,337
================== =============
See accompanying notes to condensed consolidated financial statements.
2
</TABLE>
<TABLE>
<PAGE> 3
ENERGYNORTH, INC.
Condensed Consolidated Balance Sheets
Stockholders' Equity and Liabilities
(Unaudited, except for September 30, 1995 data)
(Thousands of dollars)
March 31, September 30,
1996 1995 1995
-----------------------------------
<S> <C> <C> <C>
Capitalization:
Common stockholders' equity:
Common stock - par value of $1 per
share, 10,000,000 shares authorized;
3,219,176, 3,169,253 and 3,196,162
shares issued and outstanding,
respectively $ 3,219 $ 3,169 $ 3,196
Amount in excess of par 29,967 29,206 29,583
Retained earnings 17,901 15,239 9,335
-----------------------------------
Total common stockholders' equity 51,087 47,614 42,114
Long-term debt 29,415 32,649 29,829
Capital lease obligations 137 391 274
------------------------------------
Total capitalization 80,639 80,654 72,217
------------------------------------
Current liabilities:
Notes payable to banks 3,400 - 1,750
Current portion of long-term debt 3,409 2,100 3,495
Current portion of capital lease
obligations 256 272 256
Inventory purchase obligation 2,604 3,891 7,130
Accounts payable 8,729 6,366 4,768
Deferred gas costs - 4,822 5,645
Accrued interest 888 857 874
Accrued taxes 4,221 3,859 214
Accrued FERC 636 transition costs 1,733 1,330 1,733
Customer deposits, environmental
and other 5,363 2,787 2,353
-----------------------------------
Total current liabilities 30,603 26,284 28,218
-----------------------------------
Commitments and contingencies
Deferred credits:
Deferred income taxes 15,556 14,111 15,180
Unamortized investment tax credits 1,940 2,081 2,010
Regulatory liability - income taxes 1,436 1,563 1,497
Contributions in aid of construction
and other 2,276 2,180 2,215
-----------------------------------
Total deferred credits 21,208 19,935 20,902
-----------------------------------
Total Stockholders' Equity and Liabilities $132,450 $126,873 $121,337
===================================
See accompanying notes to condensed consolidated financial statements.
3
</TABLE>
<TABLE>
<PAGE> 4
ENERGYNORTH, INC.
Condensed Consolidated Statements of Income
For the periods ended March 31
(Unaudited)
(Thousands of dollars except for per share amounts and shares outstanding)
Three Months Six Months Twelve Months
1996 1995 1996 1995 1996 1995
--------------------- ---------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
Total operating revenues $39,661 $35,209 $65,637 $57,681 $86,763 $81,809
--------------------- ---------------------- -----------------------
Operating expenses:
Cost of gas sold 20,023 17,987 31,174 27,986 43,150 43,240
Operations and maintenance 5,817 5,039 11,373 10,776 21,643 21,260
Depreciation and amortiz-
ation 1,575 1,250 3,031 2,501 5,601 4,906
Taxes other than income
taxes 1,023 848 2,030 1,883 3,900 3,587
Federal and state income
taxes 3,844 3,342 5,996 4,637 3,331 2,305
--------------------- ---------------------- -----------------------
Total operating
expenses 32,282 28,466 53,604 47,783 77,625 75,298
--------------------- ---------------------- -----------------------
Operating income 7,379 6,743 12,033 9,898 9,138 6,511
--------------------- ---------------------- -----------------------
Other income:
Net rentals, service and
appliance sales 225 205 467 425 869 735
Other, net 23 32 30 77 560 12
---------------------- ---------------------- -----------------------
Total other income 248 237 497 502 1,429 747
---------------------- ---------------------- -----------------------
Income before interest
expense 7,627 6,980 12,530 10,400 10,567 7,258
---------------------- ---------------------- -----------------------
Interest expense:
Interest on long-term debt 756 797 1,520 1,597 3,084 3,226
Other interest 204 288 592 588 1,211 938
Interest charged
to construction (4) (9) (7) (13) (28) (30)
---------------------- ---------------------- -----------------------
Total interest
expense 956 1,076 2,105 2,172 4,267 4,134
---------------------- ---------------------- -----------------------
Earnings applicable
to common stock $ 6,671 $ 5,904 $10,425 $ 8,228 $ 6,300 $ 3,124
====================== ====================== =======================
Weighted average
shares outstanding 3,221,118 3,158,343 3,205,304 3,151,542 3,192,468 3,140,073
====================== ====================== =======================
Earnings per share $ 2.07 $ 1.87 $ 3.25 $ 2.61 $ 1.97 $ 0.99
====================== ====================== =======================
Dividends declared
per share $ 0.29 $ 0.28 $ 0.58 $ 0.56 $ 1.14 $ 1.10
====================== ====================== =======================
See accompanying notes to condensed consolidated financial statements.
4
</TABLE>
<TABLE>
<PAGE> 5
ENERGYNORTH, INC.
Condensed Consolidated Statements of Cash Flows
For the six months ended March 31
(Unaudited)
(Thousands of dollars)
1996 1995
------------------
<S> <C> <C>
Cash flows from operating activities:
Earnings applicable to common stock $10,425 $ 8,228
Noncash items:
Depreciation and amortization 3,431 2,900
Deferred taxes and investment tax credits, net 860 238
------------------
Total funds provided by operating activities 14,716 11,366
Changes in:
Accounts receivable, net (11,198) (7,671)
Unbilled revenues (904) (830)
Inventories 6,506 4,589
Prepaid expenses and other 607 472
Deferred gas costs (8,544) 86
Accounts payable 3,961 1,518
Accrued liabilities (416) (189)
Accrued/prepaid taxes 4,104 3,635
Payments for environmental costs and other 113 (2,214)
------------------
Net cash provided by operating activities 8,945 10,762
------------------
Cash flows from investing activities:
Additions to property (3,268) (3,512)
------------------
Cash flows from financing activities:
Issues of common stock 407 373
Issues of long-term debt 135 360
Change in notes payable to banks 1,650 -
Change in inventory purchase obligation (4,526) (3,443)
Change in customer deposits 32 132
Change in contributions in aid of construction and other 62 (67)
Cash dividends on common stock (1,859) (1,765)
Refunding requirements:
Repayment of long-term debt (633) (618)
Repayment of capital lease obligations (138) (139)
------------------
Net cash used for financing activities (4,870) (5,167)
------------------
Net increase in cash and temporary cash investments 807 2,083
Cash and temporary cash investments, beginning of period 575 3,048
------------------
Cash and temporary cash investments, end of period $ 1,382 $ 5,131
==================
See accompanying notes to condensed consolidated financial statements.
5
</TABLE>
<PAGE> 6
ENERGYNORTH, INC.
Notes to Condensed Consolidated Financial Statements
March 31, 1996
(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 March 31, 1996 and 1995 and the results of
operations for the three, six and twelve months then ended and
statements of cash flows for the six months ended March 31, 1996
and 1995. 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, 1995.
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.
Reclassifications are made periodically to previously issued
financial statements to conform to the current year's
presentation.
6
<PAGE> 7
ENERGYNORTH, INC.
Notes to Condensed Consolidated Financial Statements (continued)
March 31, 1996
(Unaudited)
Note 2. Cash Flows
Supplemental disclosures of cash flow information for the six
months ended March 31, are as follows (in thousands):
1996 1995
------ ------
Cash paid during the period for:
Interest (net of amount capitalized) $1,643 $1,874
Income taxes 818 497
In preparing the accompanying condensed consolidated statements
of cash flows, all highly liquid investments having maturities of
three months or less were considered to be cash equivalents.
Note 3. Commitments and Contingencies
For a discussion of commitments and contingencies, please refer
to Footnote 10 in the Company's 1995 Annual Report to
Shareholders.
7
<PAGE> 8
ENERGYNORTH, INC.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
March 31, 1996
Results of Operations
- ---------------------
Earnings applicable to common stock increased by $767,000 to
$6,671,000, or $2.07 per share, for the three months ended March
31, 1996, from $5,904,000, or $1.87 per share, in 1995. The
earnings applicable to common stock increased by $2,197,000 to
$10,425,000, or $3.25 per share, for the six months ended March
31, 1996, from $8,228,000, or $2.61 per share, in 1995. For the
twelve months ended March 31, 1996, earnings applicable to common
stock were $6,300,000, or $1.97 per share, compared to
$3,124,000, or $.99 per share, in the prior period.
Temperatures for all periods ended March 31, 1996 were approxi-
mately normal and significantly colder than the prior comparable
periods. 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.
03-31-96 03-31-95 Normal Previous Period Normal
-------- -------- ------ --------------- ----------
3 months 3,634 3,265 3,651 11.3% (.5)%
6 months 6,247 5,502 6,250 13.5% - %
12 months 7,579 6,723 7,545 12.7% .5 %
Quarterly Comparison
- --------------------
Total operating revenues increased $4,452,000, or 12.6% for the
quarter ended March 31, 1996. Utility gas service revenues were
$34.6 million compared to $31.2 million in the prior period, a
10.9% increase. The weather was 11.3% colder than the same
quarter last year, contributing to an increase in firm sendout of
13.4%. Margin earned from utility natural gas operations
increased $2,025,000 or 13.6%.
An increase in the average number of retail propane customers of
almost 11% from the prior period and colder temperatures resulted
in an increase in the volume of gallons sold of approximately
11%. Retail propane operating revenues increased $1,114,000.
Increases in wages and bad debt expense were the primary reasons
for the net increase in operations and maintenance expenses for
the quarter. The depreciation and amortization increase reflects
continued capital additions to the distribution system and
related
8
<PAGE> 9
ENERGYNORTH, INC.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations (continued)
March 31, 1996
facilities and amortization of remediation costs. The increase
in Federal and state income tax expense correlates with the
increase in pretax earnings for the quarter.
Six-Month Comparison
- --------------------
Total operating revenues increased $7,956,000, or 13.8% for the
six months ended March 31, 1996. Utility gas service revenues
were $57.2 million compared to $51.2 million in the prior period,
an 11.7% increase. The weather was 13.5% colder than the same
six months last year, contributing to an increase in firm sendout
of 15.6%. Margin earned from utility natural gas operations
increased $3,954,000 or 15.4%.
An increase in the average number of retail propane customers of
almost 11% from the prior period and colder temperatures resulted
in an increase in the volume of gallons sold of over 23%. Retail
propane operating revenues increased $1,910,000.
The increase in operations and maintenance expense for the period
is due primarily to increases in wages, bad debt expense and
insurance costs. The depreciation and amortization increase
reflects continued capital additions to the distribution system
and related facilities and amortization of remediation costs.
The increase in Federal and state income tax expense correlates
with the increase in pretax earnings for the quarter.
Twelve-Month Comparison
- -----------------------
For the twelve-month period ended March 31, 1996, total operating
revenues increased 6.1%, or $4,954,000. Utility gas service
revenue increased $2,818,000, a 3.9% increase. Firm gas sendout
increased 13.3% from the prior period as temperatures were 12.7%
colder than 1995. Utility natural gas margin increased
$4,274,000 or 13.1%.
The average number of retail propane customers increased over 11%
during the twelve-month period ended March 31, 1996. Substantial
customer growth combined with the colder temperatures resulted in
a 19% increase in gallons sold. Operating revenues increased
$2,129,000.
Operations and maintenance expenses increased 1.8% due to
increased wages, bad debt expense, and other operating expenses.
Higher depreciation and amortization charges were a direct result
of plant additions and amortization of remediation costs. The
increase in
9
<PAGE> 10
ENERGYNORTH, INC.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations (continued)
March 31, 1996
taxes other than income taxes was attributable primarily to
higher property tax assessments made by cities and towns. An
increase in pre-tax earnings resulted in the increase in Federal
and state income tax expense for the period.
Total other income for the twelve months ended March 31, 1996
increased $682,000. A gain of $350,000 from the sale of railcars
in the current period combined with a $210,000 environmental
remediation expense in the prior period were the primary causes
for the change.
Other interest expense increased by $273,000 as a result of
higher average outstanding short-term borrowings during the
period.
Capital Resources and Liquidity
- -------------------------------
The Company's major capital requirements result from normal
replacements and efforts to improve the efficiency of existing
plant and serve additional customers. For the six months ended
March 31, 1996, capital expenditures totaled approximately $3.3
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.
Capital expenditures and working capital requirements were
financed by internally generated funds and supplemented by short-
term bank borrowings and proceeds from the Dividend Reinvestment
and Stock Purchase Plan ("DRIP"). For the six months ended March
31, 1996, the Company sold through the DRIP almost 23,000 shares
of its $1.00 par value common stock with net proceeds of
approximately $406,000. At March 31, 1996, the Company had
unsecured bank lines of credit of $13.5 million, $10.1 million of
which was available.
Construction expenditures for fiscal 1996 are expected to be
approximately $9 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.
Future financing requirements are subject to the amount and
timing of internally generated funds, rate relief, sales volumes,
construction requirements, regulatory actions and market
conditions.
10
<PAGE> 11
ENERGYNORTH, INC.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations (continued)
March 31, 1996
FERC Order 636
- --------------
FERC Order 636 allows interstate pipeline companies to recover
transition costs created as they buy out of long-term, fixed-
price gas contracts. Since the Company's supplier began direct
billing these costs on September 1, 1993 as a component of demand
charges, $5.1 million has been billed through March 31, 1996.
The Company is recovering transition costs through the cost of
gas adjustment. Based on current information, additional
transition costs are expected to total between $1.7 million and
$6.4 million and will be billed over a period of approximately
one to three years.
Environmental Matters
- ---------------------
ENGI and certain of its predecessors owned or operated facilities
for the manufacture of gas, a process used through the mid 1900's
which produced byproducts that may be considered contaminated or
hazardous under current law and some of which may still be
present at the sites of such facilities. A site in Concord, New
Hampshire has been investigated and partially remediated, and a
private party has requested ENGI's participation in investigation
of another site. The Company will accrue environmental
investigation and clean-up costs when it is probable that a
liability exists and the amount or range of amounts is reasonably
certain.
Disposal of the contents of the gasholder situated on the former
gas manufacturing site in Concord, New Hampshire has been
completed. Total remediation costs amounted to approximately $3.5
million and were recorded in deferred charges. Recovery of costs
from customers began on July 1, 1995 and will extend over a seven-
year period. The unamortized balance is excluded from rate base.
Field work for a hydrogeologic characterization was completed at
various locations in the area of the Concord site and a
Hydrogeologic Characterization and Risk Evaluation Report was
submitted for review to the New Hampshire Department of
Environmental Services ("NHDES") in November 1995. In addition,
the Company submitted a Remedial Action Plan to the NHDES on
February 16, 1996. The estimated cost of the remedial action
proposed by the Company ranges from $3.3 million to $6.9 million.
The Company, however, is unable to predict the magnitude of the
final liability that may be imposed on it for the cost of any
additional studies or the performance of remedial action in
connection with the Concord site until the NHDES has reviewed the
Report and issued a decision on what, if any, remedial action
will be required.
11
<PAGE> 12
ENERGYNORTH, INC.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations (continued)
March 31, 1996
The Company has held discussions with another utility regarding a
site assessment and cost sharing of investigation costs
concerning a former manufactured gas site in Laconia, New
Hampshire. The Company has entered into an agreement, without
admitting liability, under which it will share site
characterization costs with the other utility. A site
investigation began in March 1996. The Company's share of costs
for site investigation and a report to the NHDES is expected to
total $88,000. The Company is unable to predict at this time the
magnitude of any liability that may be imposed on it for the cost
of additional studies or the performance of remedial action in
connection with the Laconia site.
The Company will pursue recovery from insurance carriers and
claims against any other responsible parties seeking to ensure
that they contribute appropriately to reimburse the Company for
any costs incurred. The Company has brought actions for recovery
against a former owner and operator of the Concord site and
against insurance companies for insurance coverage. The Company
intends to seek approval of a rate recovery method at such time
that it has determined the extent of the contamination and has
received recommendations with regards to remediation at the
Concord and Laconia sites.
12
<PAGE> 13
ENERGYNORTH, INC.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations (continued)
March 31, 1996
PART II. OTHER INFORMATION
Items 1, 2, 3 and 5 are not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
The shareholders of the Company elected certain directors,
amended Article Seventh, Section B of the Articles of
Incorporation to change a reference from NASDAQ to the New York
Stock Exchange, and ratified the appointment of auditors at the
annual meeting held on February 7, 1996. Numbers of votes for
each nominee, Article Seventh and for the ratification of
auditors are shown in the following table.
Against
or Broker
For Withheld Abstain Nonvotes
----------------------------------------
Director Nominees
- -----------------
Edward T. Borer 2,537,947 63,630 - -
Richard B. Couser 2,496,234 105,343 - -
Constance B. Girard-diCarlo 2,519,207 82,370 - -
Article Seventh 2,510,831 41,673 49,073 -
- ---------------
Auditor Ratification 2,573,938 9,263 18,376 -
- --------------------
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
3.1 - Amended Articles of Incorporation of EnergyNorth, Inc.
dated February 22, 1996
27 - Financial Data Schedule
(Submitted only in electronic format to the
Securities and Exchange Commission)
(b) Reports on Form 8-K:
A current report on Form 8-K reporting the occurrence
of an event covered by Item 5 was filed on February 8,
1996 by the Company, regarding the Company's plans to
purchase shares of common stock on the open market for
the purpose of granting the shares to Company officers
pursuant to its key employee incentive plan.
13
<PAGE> 14
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: April 26, 1996 DAVID A. SKRZYSOWSKI
-------------- -------------------------------------
David A. Skrzysowski, duly authorized
Vice President & Controller
(Principal Accounting Officer)
14
As Amended Through February 22, 1996
STATE OF NEW HAMPSHIRE
ARTICLES OF INCORPORATION
OF
EnergyNorth, Inc.
THE UNDERSIGNED, ACTING AS INCORPORATORS OF A CORPORATION UNDER
THE NEW HAMPSHIRE BUSINESS CORPORATION ACT, ADOPT THE FOLLOWING
ARTICLES OF INCORPORATION FOR SUCH CORPORATION:
FIRST: The name of the corporation is EnergyNorth, Inc.
SECOND: The period of its duration is perpetual.
THIRD: The corporation is empowered to transact any and all
lawful business for which corporations may be incorporated under
RSA 293-A and the principal purpose or purposes for which the
corporation is organized are:
To operate as a holding company to hold stock, other
securities or interests in domestic or foreign corporations
or other business organizations, but particularly those
engaged in energy or energy related enterprises such as the
manufacture, purchase, distribution or sale of natural gas,
liquified natural gas, liquified petroleum gas or other
energy related products or by-products.
FOURTH: Approval, license or permit from another New
Hampshire agency, board or commission required prior to receiving
a Certificate of Incorporation from the Secretary of State, has
been obtained from:
Not required.
FIFTH: The aggregate number of shares which the corporation
shall have authority to issue is 10,000,000 shares of common
stock, $1.00 par value.
SIXTH: Provisions, if any, for the limitation or denial
of preemptive rights:
Shareholders shall not have the preemptive right provided
for in RSA 293-A:26.
SEVENTH: Provisions for the regulation of the internal
affairs of the corporation are:
<PAGE> 2
A. 1. The Board of Directors shall be divided into
three classes, Class I, Class II, and Class III, which shall
be as nearly equal in number as possible. Each director in Class
I shall be elected to an initial term to expire at the
first annual meeting of shareholders after his election,
each director in Class II shall be elected to an initial
term to expire at the second annual meeting of shareholders
after his election and each director in Class III shall be
elected to an initial term to expire at the third annual
meeting of shareholders after his election and, in each
case, until the election and qualification of his successor
or until his earlier resignation, death or removal from
office. Thereafter, upon expiration of the term of office
for each class of directors, the directors of each class
shall be elected to hold office until the third succeeding
annual meeting of shareholders and until the election and
qualification of their successors or until their earlier
resignation, death or removal from office.
2. No director nor the entire Board of Directors
may be removed, with or without cause, except by the
affirmative vote of 75% of the outstanding Common Stock of
the Corporation, notwithstanding the fact that some lesser
percentage may be specified by law or these Articles of
Incorporation.
3. The provisions of the bylaws of the
Corporation governing the qualifications and number of
directors of the Corporation, the manner in which vacancies
in the Board of Directors are filled, the affirmative vote
required for action by the Board of Directors, and the
appointment, designation, size, functions and termination
of, vacancies in, and removal from committees of the Board
of Directors shall not be amended, altered, changed or
repealed by the shareholders and no provisions of these
Articles of Incorporation inconsistent with such bylaw
provisions shall be adopted by the shareholders except by
the affirmative vote of 75% of the outstanding Common Stock
of the Corporation.
4. Notwithstanding any other provisions of these
Articles of Incorporation or the bylaws of the Corporation
and notwithstanding the fact that some lesser percentage may
be specified by law, these Articles of Incorporation or the
bylaws of the Corporation, this Section A of Article Seventh
shall not be amended, altered, changed or repealed except by
the affirmative vote of 75% of the outstanding Common Stock
of the Corporation.
B. 1. Any Business Combination, except as set forth
in Section 2 of this Article, that will result in an
involuntary sale, redemption, cancellation or other
termination of ownership of any shares of Common Stock of
the Corporation owned by shareholders who do not vote in
favor of, or consent in writing to, the Business Combination
shall require the affirmative vote of the holders of at
least a majority of all shares of the Common Stock of the
Corporation that are not beneficially owned, directly or
indirectly, by the Controlling Person involved in the
Business Combination. Such affirmative vote as is provided
for in this Article shall be in addition to any vote of the
holders of the stock of the Corporation otherwise provided
by law or any agreement.
2. The provisions of this Article shall not
apply to any Business Combination if:
(a) The cash or fair value of
other readily marketable consideration to be
received by such shareholders for such shares
shall at least be equal to the Minimum Price
Per Share, and
(b) A proxy statement responsive
to the requirements of the Securities
Exchange Act of 1934 shall be mailed to the
shareholders of the Corporation for the
purpose of soliciting shareholder approval of
the proposed Business Combination.
3. For purposes of this Article, the following
definitions shall apply:
(a) Affiliate shall mean a Person
that directly, or indirectly through one or
more intermediaries, controls, or is
controlled by, or is under common control
with another Person.
(b) Associate shall mean (1) any
corporation or organization of which a Person
is an officer or partner or is, directly or
indirectly, the Beneficial Owner of five
percent (5%) or more of any class of equity
securities, (2) any trust or other estate in
which a Person has a five percent (5%) or
larger beneficial interest of any nature or
as to which a Person serves as trustee or in
a similar fiduciary capacity, (3) any spouse
of a Person, and (4) any relative of a
Person, or any relative of a spouse of a
Person, who has the same residence as such
Person or spouse.
(c) Beneficial Owner shall be
deemed to have the same meaning as set forth
in Section 240-13D-3 of the Regulations under
the Securities Exchange Act of 1934.
(d) Business Combination shall
mean:
(i) any merger
or consolidation of the Corporation
with or into a Controlling Person,
or
3
<PAGE> 4
(ii) any sale,
lease, exchange or other
disposition of all or substantially
all of the property and assets of
the Corporation to or with a
Controlling Person, or
(iii) any sale,
lease, exchange or other
disposition to the Corporation of
any assets, cash, securities or
other property of a Controlling
Person, in exchange for securities
of the Corporation, or
(iv) any
acquisition of shares of stock of
the Corporation by a Controlling
Person by means of a statutory
share exchange, or
(v) any
reclassification of securities
(including any reverse stock
split), or recapitalization of the
Corporation, or any other
transaction (whether or not with or
into or otherwise involving a
Controlling Person) which has the
effect, directly or indirectly, of
increasing the proportionate shares
of any class of equity or
convertible securities of the
Corporation which is directly or
indirectly owned by any Controlling
Person.
(e) Control shall mean the
possession, directly or indirectly, of the
power to direct or cause the direction of the
management and policies of a Person, whether
through the ownership of voting securities,
by contract or otherwise.
(f) Controlling Person shall mean
any Person who is the Beneficial Owner of a
number of shares of Common Stock of the
Corporation, whether or not such number
includes shares not then outstanding or
entitled to vote, that exceeds ten percent
(10%) of the outstanding shares of Common
Stock of the Corporation entitled to vote.
The Board of Directors of the Corporation
shall have the power and duty to determine
for the purposes of this Article, on the
basis of information known to the
Corporation, whether any corporation, person
or other entity is a Beneficial Owner of ten
percent (10%) or more of the shares of Common
Stock of the Corporation. Any such
determination made in good faith shall be
4
<PAGE> 5
conclusive and binding for all
purposes of this Article.
(g) Minimum Price Per Share shall
mean the sum of (a) the higher of (i) the
highest gross per share price paid or agreed
to be paid to acquire any shares of Common
Stock of the Corporation Beneficially Owned
by a Controlling Person, provided such
payment or agreement to make payment was made
within five (5) years immediately prior to
the record date set to determine the
shareholders entitled to vote or consent to
the Business Combination in question, or (ii)
the highest per share closing sales price on
the New York Stock Exchange for such Common
Stock during such five (5) year period, plus
(b) the aggregate amount, if any, by which
five percent (5%) for each year, beginning on
the date on which such Controlling Person
became a Controlling Person, of such higher
per share price exceeds the aggregate amount
of all Common Stock dividends per share paid
in cash since the date on which such Person
became a Controlling Person. The calculation
of the Minimum Price Per Share shall require
appropriate adjustments for capital changes,
including without limitation stock splits,
stock dividends and reverse stock splits.
The Board of Directors of the Corporation
shall have the power and duty to determine,
on the basis of information known to the
Corporation, the value of any non-cash
consideration offered in connection with a
Business Combination. Any such determination
made in good faith shall be conclusive and
binding for all purposes of this Article.
(h) Person shall mean an
individual, a corporation, a partnership, an
association, a joint-stock company, a trust,
any unincorporated organization, a government
or political subdivision thereof and any
other entity, and shall include an Affiliate
or Associate of any Person.
4. No amendment to the Articles of Incorporation
of the Corporation shall amend, alter, change or repeal any
of the provisions of this Article unless the amendment
effecting such amendment, alteration, change or repeal shall
receive the affirmative vote of at least a majority of all
shares of the Common Stock of the Corporation that are not
Beneficially Owned, directly or indirectly, by a Controlling
Person, except that such vote may be by a majority of the
outstanding shares of the Common Stock of the Corporation or
as otherwise required by these Articles of Incorporation if
5
<PAGE> 6
as of the record date for the determination of shareholders
entitled to notice thereof and to vote thereon, no Person is
the Beneficial Owner, directly or indirectly, of ten percent
(10%) or more of the outstanding shares of Common Stock of
the Corporation.
5. Nothing contained in this Article shall be
construed to relieve any such Beneficial Owner of shares of
the Corporation from any fiduciary obligations imposed by
law.
C. To the fullest extent now or hereafter permitted
by law, no director or officer of the Corporation shall be
personally liable to the Corporation or its shareholders for
monetary damages for breach of fiduciary duty as a director
or officer. No amendment or repeal of this provision shall
have any effect on any right or protection of any director
or officer for or with respect to acts or omissions
occurring prior to such amendment or repeal.
EIGHTH: The address of the initial registered office of the
corporation is 40 Stark Street, Manchester, New Hampshire 03101,
(Mail: P.O. Box 326, Manchester, New Hampshire 03105) and the
name of its initial registered agent at such address is John R.
Mclane, Jr. The principal place of business is 1260 Elm Street,
Manchester, New Hampshire 03101 and the mail address is P.O. Box
329, Manchester, New Hampshire 03105.
NINTH: The number of directors constituting the initial
board of directors is ten (10), and the names and addresses of
the persons who are to serve as directors until the first annual
meeting of shareholders and until their successors are elected
and shall qualify are:
Name Address
---- -------
Stuart B. Avery, Jr. 2400 Massachusetts Avenue
Cambridge, Massachusetts 02140
Edward T. Borer Hopper Soliday & Co., Inc.
1401 Walnut Street
Philadelphia, Pennsylvania 19102
Dr. Sylvio L. Dupuis Catholic Medical Center
100 McGregor Street
Manchester, New Hampshire 03102
Joseph T. Kelley The Berkshire Gas Co.
115 Cheshire Road, P.O. Box 1388
Pittsfield, Massachusetts 01201
Charles L. Ladner UGI Corporation
Box 858
Valley Forge, Pennsylvania 19482
6
<PAGE> 7
Floyd A. Lamb 4 Loring Avenue
P.O. Drawer M
Kingston, Massachusetts 02364
N. George Mattaini Manchester Gas Company
1260 Elm Street
P.O. Box 329
Manchester, New Hampshire 03105
Leonard Milano 11 Lincoln Village Road
Harwichport, Massachusetts 02646
Charles R. Prichard 43 Berkeley Street
Nashua, New Hampshire 03060
Davis P. Thurber c/o Bank of New Hampshire, N.A.
P.O. Box 600
Manchester, New Hampshire 03105
TENTH: The name and address of each incorporator is:
Name Address
---- -------
Donald S. Inglis Gas Service, Inc.
70 East Pearl Street
P.O. Box 1064
Nashua, New Hampshire 03061
N. George Mattaini Manchester Gas Company
1260 Elm Street
P.O. Box 329
Manchester, New Hampshire 03105
John R. McLane, Jr. McLane, Graf, Raulerson & Middleton
Professional Association
P.O. Box 326
Manchester, New Hampshire 03105
Charles F. Leahy Orr & Reno, P. A.
P.O. Box 709
Concord, New Hampshire 03301
Dated: May 11, 1982
Donald S. Inglis
------------------------------
Donald S. Inglis, Incorporator
N. George Mattaini
--------------------------------
N. George Mattaini, Incorporator
7
<PAGE> 8
John R. McLane, Jr.
---------------------------------
John R. McLane, Jr., Incorporator
Charles F. Leahy
------------------------------
Charles F. Leahy, Incorporator
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
The schedule contains summary financial information extracted from the
EnergyNorth, Inc. condensed consolidated balance sheet as of March 31, 1996
and condensed consolidated statement of income and statement of cash flows
for the six months ended March 31, 1996 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> SEP-30-1996
<PERIOD-END> MAR-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 88,793<F1>
<OTHER-PROPERTY-AND-INVEST> 7,897<F2>
<TOTAL-CURRENT-ASSETS> 25,755
<TOTAL-DEFERRED-CHARGES> 10,005
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 132,450
<COMMON> 3,219
<CAPITAL-SURPLUS-PAID-IN> 29,967
<RETAINED-EARNINGS> 17,901
<TOTAL-COMMON-STOCKHOLDERS-EQ> 51,087
0
0
<LONG-TERM-DEBT-NET> 29,415
<SHORT-TERM-NOTES> 3,400
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 3,409
0
<CAPITAL-LEASE-OBLIGATIONS> 137
<LEASES-CURRENT> 256
<OTHER-ITEMS-CAPITAL-AND-LIAB> 44,746
<TOT-CAPITALIZATION-AND-LIAB> 132,450
<GROSS-OPERATING-REVENUE> 65,637
<INCOME-TAX-EXPENSE> 5,996
<OTHER-OPERATING-EXPENSES> 26,286
<TOTAL-OPERATING-EXPENSES> 32,282
<OPERATING-INCOME-LOSS> 7,379
<OTHER-INCOME-NET> 248
<INCOME-BEFORE-INTEREST-EXPEN> 7,627
<TOTAL-INTEREST-EXPENSE> 956
<NET-INCOME> 6,671
0
<EARNINGS-AVAILABLE-FOR-COMM> 6,671
<COMMON-STOCK-DIVIDENDS> 1,859
<TOTAL-INTEREST-ON-BONDS> 2,721<F3>
<CASH-FLOW-OPERATIONS> 8,923
<EPS-PRIMARY> $3.25
<EPS-DILUTED> $0.00
<FN>
<F1>Net of accumulated depreciation of $43,120
<F2>Net of accumulated depreciation of $7,954
<F3>$2,721 represents the forecasted annual interest on bonds for the fiscal
year ending September 30, 1996. Actual interest on bonds for the six months
ended March 31, 1996 was $1,376.
</FN>
</TABLE>