Form U-3A-2
File No. 69-221
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM U-3A-2
Statement by Holding Company Claiming Exemption
Under Rule U-3A-2 from the Provisions of the Public
Utility Holding Company Act of 1935
PENNSYLVANIA ENTERPRISES, INC.
(Name of Company)
hereby files with the Securities and Exchange Commission, pursuant to Rule 2,
its statement claiming exemption as a holding company from the provisions of
the Public Utility Holding Company Act of 1935, and submits the following
information:
1. Name and Business of Claimant and Subsidiaries
The name of the Claimant is Pennsylvania Enterprises, Inc., a corporation
organized under the laws of the Commonwealth of Pennsylvania having its
principal office at 39 Public Square, Wilkes-Barre, Pennsylvania 18711. The
Claimant is a holding company with two groups of operating subsidiaries,
regulated and non-regulated, as follows:
Regulated Subsidiaries
PG Energy Inc. ("PGE"), a Pennsylvania corporation formerly known as
Pennsylvania Gas and Water Company and having its principal office at 39
Public Square, Wilkes-Barre, Pennsylvania 18711, is a wholly-owned subsidiary
of the Claimant. PGE is an operating public utility engaged in supplying
natural gas in portions of northeastern Pennsylvania. PGE also provided water
service in portions of northeastern Pennsylvania through February 16, 1996,
the date on which PGE sold its regulated water operations and certain related
assets to Pennsylvania-American Water Company, a Pennsylvania corporation and
a wholly-owned subsidiary of American Water Works Company, Inc. PGE is
subject to the jurisdiction of the Pennsylvania Public Utility Commission.
PGE supplies natural gas to an area lying within the Counties of Lackawanna,
Luzerne, Wyoming, Susquehanna, Columbia, Montour, Northumberland, Lycoming,
Union and Snyder, a territory which includes 116 municipalities in addition to
the cities of Scranton, Wilkes-Barre and Williamsport. Through February 16,
1996, PGE supplied water to an area lying within the Counties of Lackawanna,
Luzerne, Susquehanna and Wayne, which included the cities of Scranton and
Wilkes-Barre and 63 other municipalities. As of December 31, 1995, PGE
provided service to 141,800 natural gas customers and 133,400 water customers.
PGE has only one subsidiary, Penn Gas Development Co., which is more fully
described below. The aggregate total assets of PGE's subsidiary are less than
0.5% of PGE's total assets.
Non-Regulated Subsidiaries
Penn Gas Development Co. ("PGD"), a Pennsylvania corporation having its
principal office at 39 Public Square, Wilkes-Barre, Pennsylvania 18711, is a
wholly-owned subsidiary of PGE. PGD was organized in 1969 and its primary
activity was the encouragement of the sale of natural gas by providing
secondary financing to developers and owners of properties using natural gas.
At present, PGD is not providing any such financing and is inactive.
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Pennsylvania Energy Marketing Company ("PEM"), a Pennsylvania corporation
having its principal office at 30 North Franklin Street, Wilkes-Barre,
Pennsylvania 18711, is a wholly-owned subsidiary of the Claimant. PEM is
engaged in the marketing and brokering of natural gas directly to industrial,
commercial and other users.
Pennsylvania Energy Resources, Inc. ("PERI"), a Pennsylvania corporation
having its principal office at 39 Public Square, Wilkes-Barre, Pennsylvania
18711, is a wholly-owned subsidiary of the Claimant. PERI engages in service
activities, primarily the maintenance of gas-heating appliances for PGE
customers, and also in the sale of materials and supplies used in the
distribution of water and natural gas.
Keystone Pipeline Services, Inc. ("Keystone"), a Delaware corporation
having its principal office at 37 Sea Pave Drive, South Windsor, Connecticut,
06074, is a wholly-owned subsidiary of PERI that was acquired by PERI on
December 7, 1995. Keystone is engaged in natural gas distribution pipeline
construction, maintenance and rehabilitation.
Theta Land Corporation ("Theta"), a Pennsylvania corporation having its
principal office at 39 Public Square, Wilkes-Barre, Pennsylvania 18711, is a
wholly-owned subsidiary of the Claimant. Theta owns a small amount of real
estate which is being held for sale or future development. Theta also
periodically engages in the sale of forest products.
2. Properties of Claimant and Subsidiaries
The Claimant does not own any properties, and its assets consist primarily
of investments in the common stock of its subsidiaries, as described above.
The natural gas properties of PGE consist primarily of 2,221 miles of
distribution lines, nine city gate and 67 major regulator stations, buildings,
pumping units, meters, house regulators, shops and miscellaneous facilities,
all of which are located in Pennsylvania, and two propane air-peak shaving
plants (with a combined productive capacity of 10,000 MCF per 24-hour day)
located in Wilkes-Barre and Williamsport, Pennsylvania. PGE also owns the
gas, oil and storage rights for certain property located near the town of
DuBois, in western Pennsylvania, and in connection therewith, certain related
physical property. Additionally, PGE owns approximately 46,000 acres of land.
PGE has no natural gas producing fields, no pipelines receiving gas at the
borders of Pennsylvania and no properties located outside of Pennsylvania.
The water properties which PGE sold to Pennsylvania-American Water Company on
February 16, 1996, consisted of 36 active and standby reservoirs, five wells
and two pump intakes; approximately 8,000 acres of watershed land; and a
treatment and distribution system, including approximately 1,730 miles of
aqueducts and pipelines, ten water treatment plants, storage tanks, pumping
stations, chlorinating stations, hydrants, meters, shops and miscellaneous
facilities, all located in Pennsylvania.
3. Natural Gas Distributed in 1995
During the calendar year 1995, of the Claimant and its various
subsidiaries, only PGE was an operating company distributing natural gas at
retail, and the following data for the calendar year 1995 relates to PGE
alone:
(a) Natural or manufactured gas distributed at retail - 44,766,516
thousand cubic feet (MCF).
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(b) Natural or manufactured gas distributed at retail outside
Pennsylvania - None.
(c) Natural or manufactured gas sold at wholesale outside Pennsylvania or
at the State line - None.
(d) Natural or manufactured gas purchased outside Pennsylvania or at the
State line - 25,568,052 MCF.
4. Interest in Exempt Wholesale Generators or Foreign Utility
Companies
None
EXHIBIT A
A consolidating statement of income and surplus of the Claimant and its
subsidiary companies for the calendar year 1995, together with a consolidating
balance sheet of the Claimant and its subsidiary companies as of the close of
such calendar year, is filed as Exhibit A hereto. In accordance with
generally accepted accounting principles, these financial statements reflect
the regulated water operations and certain related assets of PGE which were
sold to Pennsylvania-American Water Company on February 16, 1996, as
discontinued operations effective April 1, 1995.
EXHIBIT B
A Financial Data Schedule for the Claimant for the calendar year 1995 is
filed as Exhibit B hereto.
EXHIBIT C
Not applicable
The above-named Claimant has caused this statement to be duly executed on
its behalf by its authorized officer on this 28th day of February, 1996.
PENNSYLVANIA ENTERPRISES, INC.
(Name of Claimant)
By /s/ John F. Kell, Jr.
John F. Kell, Jr.
Vice President, Finance
Corporate Seal
Attest:
/s/ Thomas J. Ward
Thomas J. Ward
Secretary
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Name, title, and address of officer to whom notices and correspondence
concerning this statement should be addressed:
Thomas J. Ward
Secretary
Pennsylvania Enterprises, Inc.
39 Public Square
Wilkes-Barre, PA 18711
Copy to:
Garett J. Albert, Esquire
Hughes Hubbard & Reed
One Battery Park Plaza
New York, New York 10004
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<CAPTION>
PENNSYLVANIA ENTERPRISES, INC. AND SUBSIDIARIES
Consolidating Statement of Income and Retained Earnings as of December 31, 1995
(Thousands of Dollars)
CONSOLIDATING
PGE THETA PEM PERI PEI COMBINED ENTRIES CONSOLIDATED
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES $152,756 $ - $ - $ - $ - $152,756 $ - $ 152,756
Cost of Gas 84,372 - - - - 84,372 - 84,372
OPERATING MARGIN 68,384 - - - - 68,384 $ - 68,384
OTHER OPERATING EXPENSES:
Operation 22,438 - - - - 22,438 - 22,438
Maintenance 4,967 - - - - 4,967 - 4,967
Depreciation 6,971 - - - - 6,971 - 6,971
Income taxes 5,168 - - - (1,612) 3,556 - 3,556
Taxes other than income taxes 9,918 - - - - 9,918 - 9,918
Total other operating expenses 49,462 - - - (1,612) 47,850 - 47,850
OPERATING INCOME 18,922 - - - 1,612 20,534 - 20,534
OTHER INCOME (DEDUCTIONS), NET 301 (19) 216 455 2,415 3,368 (2,605) 763
INCOME (LOSS) BEFORE INTEREST CHARGES 19,223 (19) 216 455 4,027 23,902 (2,605) 21,297
INTEREST CHARGES:
Interest on long-term debt 9,304 - - - 4,359 13,663 - 13,663
Other interest 1,543 - - - 381 1,924 (80) 1,844
Allowance for borrowed funds used
during construction ( 94) - - - - (94) - (94)
Total interest charges 10,753 - - - 4,740 15,493 (80) 15,413
INCOME (LOSS) FROM CONTINUING OPERATIONS 8,470 (19) 216 455 (713) 8,409 (2,525) 5,884
DISCONTINUED OPERATIONS:
Income from discontinued operations 2,127 - - - - 2,127 - 2,127
Estimated loss on disposal of
discontinued operations (5,961) - - - - (5,961) - (5,961)
Loss with respect to discontinued
operations (3,834) - - - - (3,834) - (3,834)
INCOME (LOSS) BEFORE SUBSIDIARY'S PREFERRED
STOCK DIVIDENDS 4,636 (19) 216 455 (713) 4,575 (2,525) 2,050
PGE'S PREFERRED STOCK DIVIDENDS 2,763 - - - - 2,763 - 2,763
NET INCOME (LOSS) 1,873 (19) 216 455 (713) 1,812 (2,525) (713)
RETAINED EARNINGS (DEFICIT):
Beginning of year 71,264 (172) 381 236 68,465 140,174 (71,709) 68,465
Cash dividends on common stock (15,269) - (301) (351) (12,605) (28,526) 15,921 (12,605)
End of year $ 57,868 $ (191) $ 296 $ 340 $ 55,147 $113,460 $ (58,313) $ 55,147
NOTES:
Individual companies are identified in column headings and elsewhere as follows:
PGE - PG Energy Inc.
THETA - Theta Land Corporation
PEM - Pennsylvania Energy Marketing Company
PERI - Pennsylvania Energy Resources, Inc.
PEI - Pennsylvania Enterprises, Inc.
See Page 8 for summary of consolidated entries.
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<CAPTION>
PENNSYLVANIA ENTERPRISES, INC. AND SUBSIDIARIES
Consolidating Balance Sheet as of December 31, 1995
(Thousands of Dollars)
CONSOLIDATING
ASSETS PGE THETA PEM PERI PEI COMBINED ENTRIES CONSOLIDATED
<S> <C> <C> <C> <C> <C> <C> <C> <C>
UTILITY PLANT:
At original cost, less acquisition
adjustments of $386,000 $295,895 $ - $ - $ - $ - $295,895 $ - $ 295,895
Accumulated depreciation (76,882) - - - - (76,882) - (76,882)
219,013 - - - - 219,013 - 219,013
OTHER PROPERTY AND INVESTMENTS 5,089 157 85 1,412 211,996 218,739 (211,597) 7,142
CURRENT ASSETS:
Cash 328 - 135 140 26 629 - 629
Accounts receivable -
Customers 18,189 - 731 2,146 - 21,066 - 21,066
Others 815 - - - - 815 - 815
Reserve for uncollectible accounts (781) - (7) - - (788) - (788)
Accrued utility revenues 10,319 - - - - 10,319 - 10,319
Materials and supplies, at average cost 2,609 - - 267 - 2,876 - 2,876
Gas held by suppliers, at average cost 15,140 - - - - 15,140 - 15,140
Natural gas transition costs collectible 4,612 - - - - 4,612 - 4,612
Prepaid expenses and other 3,281 - 12 193 - 3,486 - 3,486
54,512 - 871 2,746 26 58,155 - 58,155
DEFERRED CHARGES:
Regulatory assets
Deferred taxes collectible 30,015 - - - - 30,015 - 30,015
Natural gas transition costs collectible 497 - - - - 497 - 497
Other 2,516 - - - - 2,516 - 2,516
Unamortized debt expense 1,340 - - - 1,290 2,630 - 2,630
34,368 - - - 1,290 35,658 - 35,658
NET ASSETS OF DISCONTINUED OPERATIONS 204,250 - - - - 204,250 - 204,250
TOTAL ASSETS $517,232 $ 157 $ 956 $ 4,158 $213,312 $735,815 $ (211,597) $ 524,218
NOTE:
See page 9 for summary of consolidating entries.
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<TABLE>
<CAPTION>
PENNSYLVANIA ENTERPRISES, INC. AND SUBSIDIARIES
Consolidating Balance Sheet as of December 31, 1995
(Thousands of Dollars)
CONSOLIDATING
CAPITALIZATION AND LIABILITIES PGE THETA PEM PERI PEI COMBINED ENTRIES CONSOLIDATED
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CAPITALIZATION:
Common shareholders' investment $208,356 $ (192) $ 321 $ 1,340 $163,214 $373,039 $ (210,300) $ 162,739
Preferred stock of PGE -
Not subject to mandatory redemption, net 33,615 - - - - 33,615 - 33,615
Subject to mandatory redemption 1,680 - - - - 1,680 - 1,680
Long-term debt 55,000 - - 1,800 49,906 106,706 - 106,706
298,651 (192) 321 3,140 213,120 515,040 (210,300) 304,740
CURRENT LIABILITIES:
Current portion of long-term debt and
preferred stock subject to mandatory
redemption 115,881 - - 200 - 116,081 - 116,081
Notes payable 10,000 - - 180 - 10,180 - 10,180
Accounts payable -
Suppliers 17,781 - 600 140 10 18,531 - 18,531
Affiliates, net 826 349 - 50 - 1,225 (1,225) -
Deferred cost of gas & supplier refunds, net 434 - - - - 434 - 434
Accrued general business and realty taxes 1,542 - 14 50 (113) 1,493 - 1,493
Accrued income taxes 516 - 13 1 (4) 526 - 526
Accrued interest 2,062 - - 9 236 2,307 - 2,307
Accrued natural gas transition costs 2,278 - - - - 2,278 - 2,278
Other 3,162 - 2 370 - 3,534 - 3,534
154,482 349 629 1,000 129 156,589 (1,225) 155,364
DEFERRED CREDITS:
Deferred income taxes 48,848 - 6 2 (21) 48,835 - 48,835
Accrued natural gas transition costs 1,144 - - - - 1,144 - 1,144
Unamortized investment tax credits 4,938 - - - - 4,938 - 4,938
Operating reserves 3,709 - - - - 3,709 - 3,709
Other 5,460 - - 16 84 5,560 (72) 5,488
64,099 - 6 18 63 64,186 (72) 64,114
TOTAL CAPITALIZATION AND LIABILITIES $517,232 $ 157 $ 956 $ 4,158 $213,312 $735,815 $ (211,597) $ 524,218
NOTE:
See page 10 for summary of consolidating entries.
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PENNSYLVANIA ENTERPRISES, INC. AND SUBSIDIARIES
Summary of Consolidating Statement of Income and Retained
Earnings Entries as of December 31, 1995
<TABLE>
<CAPTION>
ENTRY TO ENTRY TO
ELIMINATE ELIMINATE
INTERCOMPANY SUBSIDIARY
INTEREST EARNINGS TOTAL
<S> <C> <C> <C>
OPERATING REVENUES $ - $ - $ -
Cost of gas - - -
OPERATING MARGIN - - -
OTHER OPERATING EXPENSES:
Operation - - -
Maintenance - - -
Depreciation - - -
Income taxes - - -
Taxes other than income taxes - - -
Total other operating expenses - - -
OPERATING INCOME - - -
OTHER INCOME (DEDUCTIONS), NET (80) (2,525) (2,605)
INCOME (LOSS) BEFORE INTEREST CHARGES (80) (2,525) (2,605)
INTEREST CHARGES:
Interest on long-term debt - - -
Other interest (80) - (80)
Allowance for borrowed funds used
during construction - - -
Total interest charges (80) - (80)
INCOME (LOSS) FROM CONTINUING
OPERATIONS - (2,525) (2,525)
DISCONTINUED OPERATIONS:
Income from discontinued operations - - -
Estimated loss on disposal of
discontinued operations - - -
Loss with respect to
discontinued operations - - -
INCOME (LOSS) BEFORE PGE'S PREFERRED
STOCK DIVIDENDS - (2,525) (2,525)
PGE'S PREFERRED STOCK DIVIDENDS - - -
NET INCOME (LOSS) - (2,525) (2,525)
RETAINED EARNINGS (DEFICIT):
Beginning of year - (71,709) (71,709)
Cash dividends on common stock - 15,921 15,921
End of year $ - $ (58,313) $ (58,313)
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<CAPTION>
PENNSYLVANIA ENTERPRISES, INC. AND SUBSIDIARIES
Summary of Consolidating Balance Sheet Entries as of December 31, 1995
(Thousands of Dollars)
ENTRY TO
ENTRY TO ELIMINATE
ENTRY TO ELIMINATE GAIN ON
ELIMINATE INTERCOMPANY INTERCOMPANY
INVESTMENT IN ACCOUNTS PAYABLE SALE OF
ASSETS SUBSIDIARIES AND RECEIVABLE ASSETS TOTAL
UTILITY PLANT:
<S> <C> <C> <C> <C>
At original cost, less acquisition
adjustments of $386,000 $ - $ - $ - $ -
Accumulated depreciation - - - -
- - - -
OTHER PROPERTY AND INVESTMENTS: (210,300) (1,225) (72) (211,597)
CURRENT ASSETS:
Cash - - - -
Accounts receivable -
Customers - - - -
Others - - - -
Reserve for uncollectible accounts - - - -
Accrued utility revenues - - - -
Materials and supplies, at average cost - - - -
Gas held by suppliers, at average cost - - - -
Natural gas transition costs collectible - - - -
Prepaid expenses and other - - - -
- - - -
DEFERRED CHARGES:
Regulatory assets
Deferred taxes collectible
Natural gas transition costs collectible - - - -
Other - - - -
Unamortized debt expense - - - -
- - - -
NET ASSETS OF DISCONTINUED OPERATIONS - - - -
TOTAL ASSETS $ 210,300 $ (1,225) $ (72) $(211,597)
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<CAPTION>
PENNSYLVANIA ENTERPRISES, INC. AND SUBSIDIARIES
Summary of Consolidating Balance Sheet Entries as of December 31, 1995
(Thousands of Dollars)
ENTRY TO
ENTRY TO ELIMINATE
ENTRY TO ELIMINATE GAIN ON
ELIMINATE INTERCOMPANY INTERCOMPANY
INVESTMENT IN ACCOUNTS PAYABLE SALE OF
CAPITALIZATION AND LIABILITIES SUBSIDIARIES AND RECEIVABLE ASSETS TOTAL
<S> <C> <C> <C> <C>
CAPITALIZATION:
Common shareholders' investment $ (210,300) $ - $ - $(210,300)
Preferred stock of PGE -
Not subject to mandatory redemption, net - - - -
Subject to mandatory redemption - - - -
Long-term debt - - - -
(210,300) - - (210,300)
CURRENT LIABILITIES:
Current portion of long-term debt and
preferred stock subject to mandatory redemption - - - -
Notes payable - - - -
Accounts payable -
Suppliers - - - -
Affiliates, net - (1,225) - (1,225)
Deferred cost of gas and supplier refunds, net - - - -
Accrued general business and realty taxes - - - -
Accrued income taxes - - - -
Accrued interest - - - -
Accrued natural gas transition costs - - - -
Other - - - -
- (1,225) - (1,225)
DEFERRED CREDITS:
Deferred income taxes - - - -
Accrued natural gas transition costs - - - -
Unamortized investment tax credits - - - -
Advances for construction - - - -
Contributions in aid of construction - - - -
Operating reserves - - - -
Other - - (72) (72)
- - (72) (72)
TOTAL CAPITALIZATION AND LIABILITIES $ (210,300) $ (1,225) $ (72) $(211,597)
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<TABLE> <S> <C>
<ARTICLE> OPUR3
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-ASSETS> 524,218,000
<TOTAL-OPERATING-REVENUES> 152,756,000
<NET-INCOME> (713,000)
</TABLE>
