THE PROVIDENCE GAS COMPANY
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
{X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended December 31, 1995
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 0-1160
THE PROVIDENCE GAS COMPANY
(Exact name of registrant as specified in its charter)
Rhode Island 05-0203650
(State or other jurisdiction of (I.R.S. Employer)
incorporation or organization) Identification No.)
100 Weybosset Street, Providence, Rhode Island 02903
(Address of principal executive offices)
(Zip Code)
401-272-5040
Registrant's telephone number, including area code
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by checkmark 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 .
APPLICABLE ONLY TO CORPORATE ISSUERS:
Common Stock, $1.00 par value; 1,243,598 shares outstanding at
February 15, 1996.
THE PROVIDENCE GAS COMPANY
FORM 10-Q
DECEMBER 31, 1995
PART I: FINANCIAL INFORMATION PAGE
Item 1 Financial Statements
Consolidated Statements of Income for the
three and twelve months ended
December 31, 1995 and 1994 I-1
Consolidated Balance Sheets as of
December 31, 1995, December 31, 1994
and September 30, 1995 I-2
Consolidated Statements of Cash Flows for the
three months ended December 31, 1995 and 1994 I-3
Consolidated Statements of Capitalization as of
December 31, 1995, December 31, 1994
and September 30, 1995 I-4
Notes to Consolidated Financial Statements I-5
Item 2 Management's Discussion and Analysis of
Financial Conditions and Results of Operations I-9
PART II: OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K II-1
Signature II-2
PAGE i
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
THE PROVIDENCE GAS COMPANY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE PERIODS ENDED DECEMBER 31
(Unaudited)
THREE MONTHS TWELVE MONTHS
1995 1994 1995 1994
(thousands, except per share amounts)
Operating revenues $57,270 $48,282 $189,031 $205,370
Cost of gas sold 31,144 25,692 104,437 120,638
Operating margin 26,126 22,590 84,594 84,732
Operating expenses:
Operation and maintenance 11,502 10,698 44,290 44,857
Depreciation and amortization 2,784 2,485 10,349 9,509
Taxes -
State gross receipts 1,611 1,293 5,323 5,756
Local property and other 1,630 1,596 6,626 6,095
Federal income 2,310 1,675 3,662 4,186
Total operating expenses 19,837 17,747 70,250 70,403
Operating income 6,289 4,843 14,344 14,329
Other income, net 622 149 1,271 364
Income before interest expense 6,911 4,992 15,615 14,693
Interest expense:
Long-term debt 1,313 1,283 5,116 5,152
Other 551 388 2,360 1,358
Interest capitalized (7) (22) (87) (107)
1,857 1,649 7,389 6,403
Net income 5,054 3,343 8,226 8,290
Dividends on preferred stock (174) (174) (696) (696)
Net income applicable to
common stock $ 4,880 $ 3,169 $ 7,530 $ 7,594
======= ======= ======== ========
Earnings per common share $ 3.92 $ 2.55 $ 6.06 $ 6.11
======= ======= ======== ========
Dividends paid per common share $ .92 $ .92 $ 3.68 $ 3.65
======= ======= ======== ========
Weighted average common shares
outstanding 1,243.6 1,243.6 1,243.6 1,243.6
======= ======= ======== ========
PAGE I-1
THE PROVIDENCE GAS COMPANY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Thousands)
December 31, December 31, September 30,
1995 1994 1995
ASSETS
Gas plant, at original cost $256,859 $235,129 $247,933
Less - Accumulated depreciation and
utility plant acquisition adjustment 93,452 81,721 85,867
163,407 153,408 162,066
Current assets:
Cash and temporary cash investments 2,518 3,087 791
Accounts receivable, less allowance of
$2,427 at 12/31/95, $2,463 at 12/31/94
and $2,309 at 9/30/95 28,577 29,393 13,807
Unbilled revenues 13,723 11,264 2,637
Deferred gas costs - 5,319 1,196
Inventories, at average cost -
Liquefied natural gas, propane and
underground storage 8,507 10,702 9,976
Materials and supplies 1,465 1,464 1,427
Prepaid and refundable taxes 2,964 2,349 5,272
Prepayments 797 844 1,328
58,551 64,422 36,434
Deferred charges and other assets 13,644 15,148 16,227
Total assets $235,602 $232,978 $214,727
======== ======== ========
CAPITALIZATION AND LIABILITIES
Capitalization (see accompanying
statement) $155,521 $138,222 $153,502
Current liabilities:
Notes payable 20,140 32,600 4,337
Current portion of long-term debt 1,983 2,091 1,950
Accounts payable 17,888 20,322 13,896
Accrued taxes 3,345 7,603 5,863
Accrued vacation 1,614 1,562 1,634
Customer deposits 3,995 3,562 3,937
Refundable gas costs 621 - -
Other 3,701 3,280 3,574
53,287 71,020 35,191
Deferred credits and reserves:
Accumulated deferred Federal income
taxes 18,229 14,981 17,892
Unamortized investment tax credits 2,629 2,787 2,668
Other 5,936 5,968 5,474
26,794 23,736 26,034
Total capitalization and liabilities $235,602 $232,978 $214,727
======== ======== ========
PAGE I-2
THE PROVIDENCE GAS COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31
(Unaudited)
1995 1994
(Thousands of Dollars)
Cash provided by (used for)
Operating Activities:
Net income $ 5,054 $ 3,343
Items not requiring cash:
Depreciation and amortization-plant 2,817 2,568
Changes as a result of regulatory actions (1,453) -
Amortization of deferred charges and other 309 325
Deferred Federal income taxes 340 195
Amortization of investment tax credits (39) (39)
Changes in assets and liabilities
which provided (used) cash:
Accounts receivable (14,787) (11,729)
Unbilled revenues (11,086) (8,387)
Deferred gas costs 1,817 10,030
Inventories 1,431 547
Prepaid and refundable taxes 2,305 1,158
Prepayments 531 614
Accounts payable 3,992 2,283
Accrued taxes 1,540 1,546
Accrued vacation, customer deposits
and other 232 (113)
Deferred charges and other 627 (368)
Net cash provided by (used for) operations (6,370) 1,973
Investing Activities:
Expenditures for property, plant and
equipment, net (4,696) (4,593)
Financing Activities:
Issuance of mortgage bonds 15,000 -
Payments on long-term debt (1,692) (1,719)
Increase in notes payable, net 803 7,900
Cash dividends on preferred stock (174) (174)
Cash dividends on common stock (1,144) (1,144)
Total 12,793 4,863
Increase in cash & temporary cash
investments 1,727 2,243
Cash and cash equivalents at beginning
of period 791 844
Cash and cash equivalents at end of period $ 2,518 $ 3,087
======== ========
Supplemental disclosures of cash flow information:
Cash paid during the period-
Interest (net of amount capitalized) $ 1,444 $ 1,182
Income taxes (net of refunds) $ 86 $ 200
PAGE I-3
THE PROVIDENCE GAS COMPANY
CONSOLIDATED STATEMENTS OF CAPITALIZATION
(UNAUDITED)
(Thousands)
December 31, December 31, September 30,
1995 1994 1995
Common stockholders' investment:
Common stock, $1 par
Authorized - 2,500 shares
Outstanding - 1,244 as of 12/31/95,
12/31/94 and 9/30/95 $ 1,244 $ 1,244 $ 1,244
Amount paid in excess of par 37,828 37,886 37,820
Retained earnings 35,692 32,739 31,956
Total common equity 74,764 71,869 71,020
Cumulative preferred stock:
Redeemable 8.70% Series, $100 par
Authorized - 80 shares
Outstanding - 80 shares as of
12/31/95, 12/31/94 and 9/30/95 8,000 8,000 8,000
Long-term debt:
First Mortgage Bonds 72,800 59,400 74,400
Capital Leases 1,940 1,044 2,032
Total long-term debt 74,740 60,444 76,432
Less current portion 1,983 2,091 1,950
Long-term debt, net 72,757 58,353 74,482
Total capitalization $155,521 $ 138,222 $153,502
======== ========= ========
PAGE I-4
THE PROVIDENCE GAS COMPANY
Notes to Consolidated Financial Statements
Accounting Policies
It is the Registrant's opinion that the financial information contained
in this report reflects all normal, recurring adjustments necessary to a fair
statement of the results for the periods reported; however, such results are
not necessarily indicative of results to be expected for the year, due to
the seasonal nature of the Registrant's operations. Certain information
and footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted in this Form 10-Q pursuant to the rules and regulations
of the Securities and Exchange commission. However, the disclosures herein
when read with the annual report for 1995 filed on Form 10-K are adequate to
make the information presented not misleading.
Reclassifications
Certain prior period amounts have been reclassified for consistent
presentation with the current year.
Environmental Matters
Federal, state and local laws and regulations establishing standards and
requirements for the protection of the environment have increased in number
and in scope within recent years. The Registrant cannot predict the future
impact of such standards and requirements which are subject to change and
can take effect retroactively. The Registrant continues to monitor the
status of these laws and regulations. Such monitoring involves the review
of past activities and current operations, and may include expending funds
to investigate or clean-up certain sites. To the best of its knowledge,
subject to the following, the Registrant believes it is in substantial
compliance with such laws and regulations.
At December 31, 1995, the Registrant is aware of four sites at which
future costs may be incurred.
The Registrant has been designated as a potentially responsible party
(PRP) under the Comprehensive Environmental Response Compensation and
Liability Act of 1980 at two sites at Plympton, Massachusetts on which waste
material is alleged to have been deposited by disposal contractors employed
in the past either directly or indirectly by the Registrant and other PRPs.
With respect to one of the Plympton sites, the Registrant has joined with
other PRPs in entering into an Administrative Consent Order with the
Massachusetts Department of Environmental Protection. The costs to be borne
by the Registrant, in connection with both Plympton sites, are not
anticipated to be material to the financial condition of the Registrant.
PAGE I-5
During 1995, the Registrant voluntarily began a study at its primary
gas distribution facility located in Providence. In accordance with state
laws, such a voluntary study is monitored by the Rhode Island Department of
Environmental Management. The purpose of this study is to determine the
extent of environmental contamination on the site, if any. The study is
continuing, and although results are not conclusive, preliminary findings
indicate that clean-up may be required. The level of clean-up is likeley
to vary significantly depending upon the proposed future use of the site.
In fact, if the site remains in its present use, only minimal clean-up may
be required. As of December 31, 1995, the Registrant cannot estimate the
future cost of investigation and clean-up as a result of the uncertainties
discussed. As of December 31, 1995, approximately $720,000 had been spent
on studies at this site.
The Registrant recently became aware of the possibility of contamination
from an abandoned underground oil storage tank located at its Westerly,
Rhode Island operations center. The Registrant is currently conducting
tests at the site to confirm the existence of and extent of any
contamination. Due to the early stages of investigation, management is
unable to offer any conclusions regarding this site.
In its rate case filed in February 1995, the Registrant requested that
environmental investigation and remediation costs be recovered by inclusion
in its depreciation factors consistent with the rate recovery treatment for
all types of cost of removal. Accordingly, environmental investigation
costs of approximately $980,0000 have been charged to the accumulated
depreciation reserve at December 31, 1995. Management believes that this
rate recovery mechanism is appropriate for recovery of future costs.
Shoudl future developments warrant additional rate recovery mechanisms,
management will seek such recovery.
In addition to rate recovery, management has a program to ascertain the
possibility of recovery under prior insurance coverage. Also, management
has begun discussions with other parties who may assist the Registrant in
paying future costs incurred at the above sites. Management believes that
its program for managing environmental issues combined with rate recovery,
possible insurance recovery and financial contributions from others, will
likely avoid any material adverse effect on its results of operations or its
financial condition as a result of the ultimate resolution of the above sites.
Gas Supply Restructuring
Federal Energy Regulatory Commission (FERC) Order 636 and other related
orders (the Orders) have significantly changed the structure and types of
services offered by pipeline transportation companies. The most significant
components of the restructuring occurred in November 1993. In response
to these changes, the Registrant has successfully negotiated new pipeline
transportation and gas storage contracts.
At the same time, a number of contracts with gas suppliers have been
negotiated to complement the transportation and storage contracts. The
portfolio of supply contracts is designed to be market responsive and is
diversified with respect to contract lengths, source location and other
contract terms. On a periodic basis, the Registrant reviews all of its
contracts to ensure a diverse, secure, flexible and economical supply
portfolio is maintained.
To meet the requirements of the Orders, the pipelines have incurred
significant costs, collectively known as transition costs. The majority of
these costs will be reimbursed by the pipeline's customers, including the
Registrant. Based upon current information, the Registrant anticipates its
transition costs to net between $17 million and $19 million of which
$13.4 million has been included in the Cost of Gas Adjustment Clause(CGA)
and is currently being collected from customers. The remaining minimum
obligation of $3.6 million has been recorded in the accompanying consolidated
balance sheet along with a regulatoryu asset anticipating future recovery
through the CGA.
The Registrant's ultimate liability may differ from the above estimates
based on FERC settlements with the Registrant's pipeline transportation
suppliers. FERC has approved settlements with three of its pipelines,
which account for the bulk of the Registrant's transition costs.
Negotiations are continuing on one additional pipeline, and based on the
information available, the Registrant believes that its current range for
transition costs is reasonable.
Rate Case
In February 1995, the Registrant filed for rate relief requesting an
approximate 8 percent general rate increase. The major factors contributing
to the rate request were an increase in depreciation due to capital spending,
an increase in working capital needs, and an increase in capital
expenditures. On November 17, 1995, the RIPUC issued its decision on the
rate request made by the Registrant. In its decision, the RIPUC authorized
the Registrant to increase its rates to recover additional annual revenues
in the amount of $3,990,000. Subsequent to the issuance of the rate decision,
the RIPUC approved the Registrant's motion to reconsider a revenue adjustment
of $171,572. That approval increases the overall rate increase to
$4,161,572. Additionally, as a result of the Order, the Registrant recorded
several adjustments to its first quarter 1996 financial statements.
Specifically:
a) The Registrant began calculating property tax expense for rate purposes
based on the current year's expense plus an estimate of one year's increase
in expense. Previously, the Registrant wasrequired to estimate two year's
increase in expense. As a result, the Registrant reduced its regulatory
liability for one year's property tax expense resulting in a one time gain
of approximately $4.1 million before tax.
b) The Registrant wrote-off and will not recover approximately $1.6 million,
before tax, of restructuring costs previously deferred. The RIPUC had
previously allowed the Registrant recovery of similar costs, but determined
that the costs of the 1994 reorganization should not be recovered in rates.
c) The Registrant wrote-off approximately $440,000, before tax, of previously
deferred rate case expenses.
d) The Registrant wrote-off approximately $470,000, before tax, of
construction expenditures previously capitalized. These costs were
capitalized in accordance with generally accepted accounting principles
and were based on Federal Energy Regulatory Commission guidance on
accounting for such costs. The RIPUC agreed that such costs could be
capitalized beginning in 1996, but did not allow recovery of previously
capitalized costs.
New Accounting Pronouncements
Management continues to analyze the new accounting statement, Statement
of Financial Accounting Standards No. 121 (SFAS No 121), "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
of". Based on the current regulatory environment, management does not
believe adoption of SFAS No. 121 will have a material impact on the
financial position or results of operations of the Registrant. Adoption of
SFAS No. 121 is required in fiscal 1997 although the Registrant may adopt
at an earlier date.
PAGE I-8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
For the current quarter, the Registrant's current operating revenues,
operating margin and net income have increased over the comparable period
presented, as shown in the table below:
(thousands where applicable)
Percent
1995 1994 Change Change
Operating revenues $57,270 $48,282 $8,988 18.6
======= ======= ====== =====
Operating margin $26,126 $22,590 $3,536 15.7
======= ======= ====== =====
Net income applicable
to common stock $ 4,880 $ 3,169 $1,711 54.0
======= ======= ====== =====
Operating Revenues and Operating Margin
During the latest quarter, the Registrant experienced colder than normal
weather averaging 25.8 percent colder than the same quarter last year. The
increase in heating load due to the colder temperatures represents
approximately $2.8 million in increased operating margin.
Additionally, the Rhode Island Public Utilities Commission (RIPUC)
approved a rate increase of approximately $4.2 million effective
December 17, 1995. Operating margin for the quarter increased by
approximately $600,000 as a result of the rate increase.
Operating and Maintenance Expenses
Overall, other operating and maintenance expenses increased
approximately $800,000 or 7.5 percent. This increase is attributable to a
higher uncollectible revenue provision due to an increase in operating
revenues and colder weather, normal wage increases granted due to negotiated
union contract terms and employee merit raises, an increase in pension
expense due to an anticipated increase in pension contributions and a
moderate increase in the general liability claim reserve.
Taxes
Taxes for the current quarter versus last year increased approximately
$990,000 or 21.6 percent. The increase in taxes, mainly Federal income and
state gross receipts tax, was the result of higher pretax income and higher
operating revenues, respectively.
PAGE I-9
Other Income
Other income increased approximately $470,000. The increase is due to
regulatory adjustments including a one-time gain for the regulatory change
in accounting for property taxes which was offset by the write-offs of
previously deferred reorganization and other costs for which recovery was
not allowed as part of the rate award received from the RIPUC on
November 17, 1995. (See notes to consolidated financial statements.)
Interest Expense
Interest expense increased approximately $210,000 or 12.6 percent. A
slight increase in short-term interest rates and an increase in weighted
average short-term borrowings caused short-term interest expense to increase.
Future Outlook
The Financial Accounting Standards Board (FASB) recently released
Statement of Financial Accounting Standards No. 121 (SFAS No. 121),
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of", which will be effective for the Registrant in
fiscal 1997. Based on the current regulatory environment, management does
not believe SFAS No. 121 will have a material impact on the Registrant's
results of operations or financial position. The FASB has also released
statement of Financial Accounting Standards No. 123 (SFAS No. 123),
"Accounting for Stock-based Compensation". Although this Statement will
increase footnote disclosures regarding the Registrant's stock plans,
management does not believe SFAS No. 123 will have an impact on the
Registrant's results of operations or financial position.
LIQUIDITY AND CAPITAL RESOURCES
The Registrant meets seasonal cash requirements and finances its
capital expenditures program on an interim basis through short-term
borrowings. For example, during the latest quarter, the Registrant's
accounts receivable and unbilled revenue have increased $25.9 million.
These fluctuations are the result of higher monthly sales during the
latest quarter and a moratorium on residential shut-offs during the
heating season. Because of these increases, which negatively impact
cashflow, the Registrant must borrow to maintain an appropriate level
of liquidity. Management believes its available financings are sufficient
to meet these seasonal needs.
The Registrant experienced a sharp decrease in its net cash provided by
operations during the latest quarter as compared to last year, primarily as
the result of gas cost collections. Last year, the net cash provided by
operations increased as a result of the collection of gas costs from a
substantial underrecovery which previously existed.
PAGE I-10
In December 1995, the Registrant received proceeds of $15 million
related to an issuance of First Mortgage Bonds, Series R (7.5%), which will
mature in December 2025. The net proceeds received from the issuance were
used to pay down short-term debt.
Capital expenditures for the latest quarter of $4.7 million were stable
when compared to $4.6 million last year. Capital expenditures for the
remainder of the fiscal year are expected to be approximately $16.3 million.
Anticipated capital expenditures for the next three years are expected to
total between $55 million to $65 million.
In February 1995, the Registrant filed for rate relief requesting an
approximate eight percent general rate increase. In November 1995, the
RIPUC authorized the Registrant to increase its rates to recover additional
annual revenues in the amount of $3,990,000. Subsequent to the issuance of
the rate decision, the RIPUC approved the Registrant's motion to reconsider
a revenue adjustment of $171,572. That approval increases the overall rate
increase to $4,161,572. As part of this award, the Registrant is allowed
to earn a 10.9% return on common equity. As previously discussed, the rate
order also resulted in several accounting adjustments which had no impact
on the Registrant's cash flow in the current quarter.
In November 1995, the Registrant filed a three-year Settlement Agreement
between itself and the Division of Public Utilities and Carriers (Division)
regarding the Integrated Resource Plan (IRP), which was filed with the RIPUC
in July 1994. The purpose of the IRP is to optimize the utilization of
production transmission and distribution resources so that customers
receive high quality services at the lowest possible costs.
The Settlement Agreement provides for: (1) funding associated with
Demand Side Management programs, which are designed to provide equipment
rebates for specific load building programs; (2) funding associated with a
low income weatherization program, which is designed to assist low income
customers through the installation of conservation measures; and (3) a
performance-based ratemaking mechanism. The Settlement Agreement also
contains a general agreement that the Registrant's strategy and steps
prepared in its supply plan are reasonable.
In February 1996, the Registrant and the Division filed an amendment to
the Settlement Agreement which provides for a one-time funding of $800,000
for a Low Income Assistance Program (LIAP) through a portion of the
Registrant's share of the performance-based ratemaking mechanism. The LIAP
was developed in response to the Registrant's anticipated decrease of
approximately $1.5 million in Federal funding of the low income heat
assistance program administered by the State of Rhode Island.
The reduction in available funds combined with a colder than normal
winter in the Northeast may translate into higher uncollectible revenues;
although the increase is not expected to be dollar for dollar. However,
as a result of the colder than normal weather, the Federal government could
release emergency heating assistance funds. The Registrant will continue
to aggressively pursue ways to mitigate the impact of reductions in Federal
funding on low income customers through involvement with state government,
the RIPUC and other interested parties.
PAGE I-11
THE PROVIDENCE GAS COMPANY
PART II. OTHER INFORMATION
Item 6(a). Exhibits
4.6 Eighteenth Supplemental Indenture of the Registrant dated
as of December 1, 1995.
Item 6 (b). Reports on Form 8-K
No reports on Form 8-K were filed during the quarter for which this report
is filed.
PAGE II-1
THE PROVIDENCE GAS COMPANY
PART II. OTHER INFORMATION
It is the opinion of management that the financial information contained in
this report reflects all adjustments necessary for a fair statement of
results for the period reported, but such results are not necessarily
indicative of results to be expected for the year, due to the seasonal
nature of the Registrant's gas operations. All accounting policies and
practices have been applied in a manner consistent with prior periods.
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.
The Providence Gas Company
(Registrant)
BY:/s/ Gary S. Gillheeney
GARY S. GILLHEENEY
Vice President, Financial and
Information Services, Treasurer
and Assistant Secretary
Date: February 15, 1996
PAGE II - 2
THE PROVIDENCE GAS COMPANY
PART II. OTHER INFORMATION
It is the opinion of management that the financial information contained in
this report reflects all adjustments necessary for a fair statement of
results for the period reported, but such results are not necessarily
indicative of results to be expected for the year, due to the seasonal
nature of the Registrant's gas operations. All accounting policies and
practiceshave been applied in a manner consistent with prior periods.
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 author-
zed.
The Providence Gas Company
(Registrant)
BY:
GARY S. GILLHEENEY
Vice President, Financial and
Information Services, Treasurer
and Assistant Secretary
Date: February 15, 1996
PAGE II-2
Exhibit A
(to Bond Purchase Agreement)
DRAFT OF TUESDAY, DECEMBER 12, 1995
THE PROVIDENCE GAS COMPANY
TO
STATE STREET BANK AND TRUST COMPANY,
AS SUCCESSOR TO
RHODE ISLAND HOSPITAL TRUST COMPANY,
TRUSTEE
EIGHTEENTH SUPPLEMENTAL INDENTURE
DATED AS OF DECEMBER 1, 1995
Table of Contents
SECTION HEADING PAGE
Parties 1
FORM OF SERIES R BOND 2
ARTICLE FIRST. SERIES R BONDS 7
Section 1.01 7
Section 1.02 8
Section 1.03 8
Section 1.04 11
ARTICLE SECOND. ISSUANCE OF $15,000,000 OF SERIES R
BONDS AND CLOSING OF SUCH SERIES AT
THAT AMOUNT 12
Section 2.01 12
Section 2.02 12
ARTICLE THIRD. ADDITIONAL PROVISIONS 12
Section 3.01 12
Section 3.02 12
Section 3.03 13
Section 3.04 13
Section 3.05 13
Section 3.06 13
Section 3.07 13
Section 3.08 13
Section 3.09 15
Section 3.10 15
Section 3.11 15
Section 3.12 15
Section 3.13 15
Section 3.14 15
Section 3.15 16
Section 3.16 16
Signatures 17
Attachments to Eighteenth Supplemental Indenture:
SCHEDULE I - Schedule of Property and Interests
Therein
SCHEDULE II - Schedule of Released Property
PARTIESTHIS EIGHTEENTH SUPPLEMENTAL INDENTURE, dated as
of December 1, 1995, between THE PROVIDENCE GAS COMPANY, a
corporation created by Special Act of the General Assembly
of the State of Rhode Island (hereinafter sometimes called
the "Company"), party of the first part, and STATE STREET
BANK AND TRUST COMPANY, a Massachusetts Trust Company
(successor to Rhode Island Hospital Trust National Bank,
which succeeded Rhode Island Hospital Trust Company), as
Trustee under the Company's First Mortgage hereinbelow
mentioned (hereinafter sometimes called the "Trustee"),
party of the second part:
WHEREAS the Company by an Indenture, dated as of
January 1, 1922, as supplemented by a First Supplemental
Indenture, dated as of February 6, 1933, a Second
Supplemental Indenture, dated as of June 1, 1944, a Third
Supplemental Indenture, dated as of April 1, 1948, a Fourth
Supplemental Indenture, dated as of January 1, 1958, a Fifth
Supplemental Indenture, dated as of July 1, 1960, a Sixth
Supplemental Indenture, dated as of September l, 1963, a
Seventh Supplemental Indenture, dated as of November l,
1971, an Eighth Supplemental Indenture, dated as of July 1,
1972, a Ninth Supplemental Indenture, dated as of October 1,
1975, a Tenth Supplemental Indenture, dated as of April 1,
1976, an Eleventh Supplemental Indenture, dated as of
September 1, 1978, a Twelfth Supplemental Indenture, dated
as of September 1, 1983, a Thirteenth Supplemental Indenture
dated as of May 1, 1986, a Fourteenth Supplemental Indenture
dated as of August 1, 1988, a Fifteenth Supplemental
Indenture dated as of June 1, 1990, a Sixteenth Supplemental
Indenture, dated as of September 1, 1992 and a Seventeenth
Supplemental Indenture dated as of November 1, 1993 (said
instruments being hereinafter sometimes called,
respectively, the "Original Indenture", the "First
Supplemental Indenture", the "Second Supplemental
Indenture", the "Third Supplemental Indenture", the "Fourth
Supplemental Indenture", the "Fifth Supplemental Indenture",
the "Sixth Supplemental Indenture", the "Seventh
Supplemental Indenture", the "Eighth Supplemental
Indenture", the "Ninth Supplemental Indenture", the "Tenth
Supplemental Indenture", the "Eleventh Supplemental
Indenture", the "Twelfth Supplemental Indenture", the
"Thirteenth Supplemental Indenture", the "Fourteenth
Supplemental Indenture", the "Fifteenth Supplemental
Indenture," the "Sixteenth Supplemental Indenture," and the
"Seventeenth Supplemental Indenture," and the Original
Indenture as supplemented by whatsoever supplements,
including, if apt, this Eighteenth Supplemental Indenture,
as have been or shall have been executed and delivered at
the pertinent time, being hereinafter sometimes called,
collectively, the "Indenture"), mortgaged its property and
franchises, including after-acquired property and
franchises, to the Trustee to secure its First Mortgage
Bonds issued and to be issued thereunder in accordance with
the provisions of said Indenture, and there are now
outstanding thereunder $10,000,000 principal amount of First
Mortgage Bonds, Series M, 10.25% due July 31, 2008, being
all of an original issue of $10,000,000 principal amount of
bonds of said Series M, $10,000,000 principal amount of
First Mortgage Bonds, Series N, 9.63% due May 30, 2020,
being all of an original issue of $10,000,000 principal
amount of bonds of said Series N, $12,500,000 principal
amount of First Mortgage Bonds, Series O, 8.46% due
September 30, 2022, being all of an original issue of
$12,500,000 principal amount of bonds of said Series O,
$12,500,000 principal amount of First Mortgage Bonds, Series
P, 8.09% due September 30, 2022, being all of an original
issue of $12,500,000 principal amount of bonds of said
Series P, and $12,800,000 principal amount of First Mortgage
Bonds, Series Q, 5.62% due November 30, 2003, being a
portion of an original issue of $16,000,000 principal amount
of bonds of said Series Q; and
WHEREAS the Company has determined, by due corporate
action, to provide for the immediate issuance, execution,
authentication and delivery of $15,000,000 in aggregate
principal amount of its fully registered First Mortgage
Bonds in the principal amount of $15,000,000 to be known as
the Company's First Mortgage Bonds, Series R, 7.50%
(hereinafter sometimes called "bonds of Series R" or "Series
R bonds") due December 15, 2025; and
WHEREAS each of the bonds to be issued hereunder and
the certificate of the Trustee to be endorsed on the bonds
of such series are to be substantially in the following
forms, respectively, to wit:
[FORM OF SERIES R BOND]
No. R- $__________
PPN 743753 D@ 1
THE PROVIDENCE GAS COMPANY
FIRST MORTGAGE BOND, SERIES R, 7.50%
DUE DECEMBER 15, 2025
THE PROVIDENCE GAS COMPANY, a corporation created by
Special Act of the General Assembly of the State of Rhode
Island (hereinafter called the "Company"), for value
received, hereby promises to pay
______________________________ or registered assigns, on the
fifteenth day of December, 2025, the principal sum of
_________________________ Dollars ($__________), and to pay
interest thereon (unless this bond shall have been called
for previous redemption and payment duly provided therefor)
at the rate of seven and fifty hundredths per cent (7.50%)
per annum, payable semi-annually on the fifteenth day of
June and December in each year, commencing the fifteenth day
of June, 1996, until said principal sum shall have become
due. The Company promises to pay, on demand, interest on
any overdue principal (including any overdue prepayment of
principal) and premium, if any, and (to the extent permitted
by applicable law) on any overdue installment of interest,
at the rate of eight and fifty hundredths per cent (8.50%)
per annum. Interest shall be computed on the basis of a 360-
day year of twelve 30-day months, except that this means of
computation shall not operate to deprive the holder of this
bond of interest for any day or days when applied to a
period of less than six calendar months. The principal of,
interest on and premium, if any, on this bond shall, subject
to the provisions of Section 3.07 of the Eighteenth
Supplemental Indenture hereinafter described, be payable at
the office of State Street Bank and Trust Company, in
Boston, Massachusetts (or at the office of its successor
trustee in the trust to which reference is hereinafter
made), in such coin or currency of the United States of
America as shall be legal tender for the payment of public
and private debts at the time of payment.
This bond is one of a duly authorized issue of First
Mortgage Bonds of the Company, unlimited as to aggregate
principal amount except as set forth in the Indenture
hereinafter mentioned, issuable in series and is one of a
series known as First Mortgage Bonds, Series R, 7.50%, all
bonds of all series being issued and to be issued under and
pursuant to and all equally secured (except as any sinking
or other analogous fund, established in accordance with the
provisions of the Indenture hereinafter mentioned, may
afford additional security for the bonds of any particular
series) by an Indenture, dated as of January 1, 1922, as
supplemented by a First Supplemental Indenture, dated as of
February 6, 1933, a Second Supplemental Indenture, dated as
of June 1, 1944, a Third Supplemental Indenture, dated as of
April 1, 1948, a Fourth Supplemental Indenture, dated as of
January 1, 1958, a Fifth Supplemental Indenture, dated as of
July 1, 1960, a Sixth Supplemental Indenture, dated as of
September 1, 1963, a Seventh Supplemental Indenture, dated
as of November 1, 1971, an Eighth Supplemental Indenture,
dated as of July 1, 1972, a Ninth Supplemental Indenture,
dated as of October l, 1975, a Tenth Supplemental Indenture,
dated as of April l, 1976, an Eleventh Supplemental
Indenture, dated as of September 1, 1978, a Twelfth
Supplemental Indenture, dated as of September l, 1983, a
Thirteenth Supplemental Indenture, dated as of May 1, 1986,
a Fourteenth Supplemental Indenture, dated as of August 1,
1988, a Fifteenth Supplemental Indenture dated as of June 1,
1990, a Sixteenth Supplemental Indenture dated as of
September 1, 1992, a Seventeenth Supplemental Indenture,
dated as of November 1, 1993 and an Eighteenth Supplemental
Indenture dated as of December 1, 1995 (said nineteen
instruments being hereinafter called, collectively, the
"Indenture"), all duly executed and delivered by the Company
to State Street Bank and Trust Company, in Boston,
Massachusetts, as successor to Rhode Island Hospital Trust
National Bank, which succeeded Rhode Island Hospital Trust
Company (hereinafter called the "Trustee"), as trustee, to
which Indenture and to all indentures supplemental thereto
reference is hereby made for a description of the property
transferred, assigned and mortgaged thereunder, the nature
and extent of the security, the terms and conditions upon
which the bonds are secured and additional bonds may be
issued and secured, and the rights of the holders or
registered owners of said bonds, of the Trustee and of the
Company in respect of such security. Subsequent series of
said bonds may vary as to date, date of maturity, rate of
interest and in other ways as in the Indenture provided or
permitted.
Notwithstanding any provisions of the Indenture
(including, without limitation, Section 41 thereof) the
bonds of Series R shall be subject to redemption only in the
manner and to the extent provided in Section 1.03 of the
Eighteenth Supplemental Indenture.
This bond is transferable by the registered owner
hereof, in person or by duly authorized attorney, on books
to be kept for that purpose in the office of the Company, in
Providence, Rhode Island, upon surrender thereof at said
office for cancellation and upon presentation of a written
instrument of transfer duly executed, and thereupon the
Company shall issue in the name of the transferee or
transferees, and the Trustee shall authenticate and deliver,
a new registered bond or bonds, of like form and in an
authorized denomination or in authorized denominations and
of the same series, for the same aggregate principal amount.
Bonds of this series, upon surrender thereof at said office,
may be exchanged for the same aggregate principal amount of
bonds of this series of another authorized denomination or
other authorized denominations, all upon payment of the
charges, if any, and subject to the terms and conditions
specified in the Indenture.
In case of default by the Company, as set forth in the
Indenture, the principal of all the bonds of each and every
series issued and outstanding thereunder may be declared or
may become due and payable in the manner and with the effect
provided in the Indenture.
No recourse shall be had for the payment of any part of
either the principal or interest of this bond, or for any
claim based hereon, or otherwise in any manner in respect
hereof or in respect of the Indenture, to or against any
stockholder, officer or director, past, present or future,
of the Company, by virtue of any statute or provision or
rule of law, or by the enforcement of any assessment or
penalty, all such liability being expressly waived and
released by the acceptance of this bond.
This bond shall not become obligatory for any purpose
until authenticated by the execution by the Trustee of the
certificate endorsed hereon.
IN WITNESS WHEREOF, THE PROVIDENCE GAS COMPANY HAS
CAUSED ITS CORPORATE SEAL TO BE HERETO AFFixed and this bond
to be signed by its President or Vice President and its
Treasurer or Assistant Treasurer, the _____ day of
________________________.
THE PROVIDENCE GAS
COMPANY
By_____________________
President
[CORPORATE SEAL]
and
by__________________
_
Treasurer
[FORM OF TRUSTEE'S CERTIFICATE]
This is one of the bonds of Series R of the issue
described in the Indenture within mentioned.
STATE STREET BANK AND
TRUST COMPANY, as
Successor to Rhode
Island Hospital
Trust Company,
Trustee
By_____________________
Authorized Signature
WHEREAS the Company also desires to confirm the lien of
the Indenture upon property (intended to be thereby
mortgaged) acquired by the Company since the execution of
the Seventeenth Supplemental Indenture;
NOW, THEREFORE, THIS EIGHTEENTH SUPPLEMENTAL INDENTURE
WITNESSETH: That The Providence Gas Company, pursuant to
and in execution of the powers, authorities and obligations
conferred, imposed and reserved in the Original Indenture,
as heretofore supplemented by the First, Second, Third,
Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth,
Eleventh, Twelfth, Thirteenth, Fourteenth, Fifteenth,
Sixteenth and Seventeenth Supplemental Indentures, and every
other power, authority and obligation thereto appertaining
or enabling, in consideration of the premises and of the
authentication, purchase and acceptance of the Series R
bonds, of $10 duly paid to the Company by the Trustee and of
other good and valuable considerations, receipt whereof is
hereby acknowledged, and for the purpose of confirming the
Original Indenture and said First, Second, Third, Fourth,
Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, Eleventh,
Twelfth, Thirteenth, Fourteenth, Fifteenth, Sixteenth and
Seventeenth Supplemental Indentures, as hereby supplemented,
and in order to secure, equally and ratably, the payment of
the principal of and the interest on all of the bonds at any
time outstanding under the Indenture according to their
tenor, purport and effect and in order to secure the
faithful performance and observance of all of the covenants
and conditions set forth herein and in the Original
Indenture, as heretofore supplemented by the First, Second,
Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth,
Eleventh, Twelfth, Thirteenth, Fourteenth, Fifteenth,
Sixteenth and Seventeenth Supplemental Indentures, by these
presents hereby confirms (except for property hereinafter
expressly reserved and excluded from the lien of the
Indenture) the mortgage, conveyance, pledge, assignment and
transfer of the properties, franchises, rights and
privileges set forth and described in the Original Indenture
and said Second, Third, Fourth, Fifth, Sixth, Seventh,
Eighth, Ninth, Eleventh, Twelfth, Thirteenth, Fourteenth,
Fifteenth, Sixteenth and Seventeenth Supplemental
Indentures, and does hereby grant, bargain, sell, release,
convey, mortgage, confirm, assign, transfer, pledge and set
over unto the Trustee, and its successors in the trust, and
its and their assigns, upon the trusts established by the
Indenture, all and singular:
A. The "Schedule of Property and Interests
Therein" hereto attached as Schedule I and made a part
hereof.
B. The Company's gasworks, plant and machinery,
purifiers, generators, service and other pipes,
holders, mains, meters, shops, tools, implements,
fixtures, appurtenances, and (except for property
hereinafter expressly reserved and excluded from the
lien of the Indenture) all other real and tangible
personal property now owned or which shall hereafter be
acquired by the Company, or its successor or
successors, and used or useful in connection with its
business of making, distributing, purchasing and
selling gas, and with any other business authorized or
permitted by the Company's charter, and all of the
Company's leasehold interests in any of such property
now or hereafter leased by the Company as lessee and
all corporate and other franchises of the Company, and
all permits, ordinances, easements, privileges,
immunities and licenses, all rights to lay, construct,
maintain and operate systems for the distribution and
transmission of gas and other agencies for the supply
to itself or others of light, heat and power, and all
rights of way, grants and consents which the Company
now owns or which it may hereafter acquire, being
intended to include, among other things covered by the
Indenture, the entire existing and future light, heat
and power business of the Company and all of its
existing and all of its future rights, franchises,
permits, ordinances and licenses to transact and
conduct the same, and each and every part thereof
(except as hereinafter noted) as provided in the
Original Indenture and said Second, Third, Fourth,
Fifth, Sixth, Seventh, Eighth, Ninth, Eleventh,
Twelfth, Thirteenth, Fourteenth, Fifteenth, Sixteenth
and Seventeenth Supplemental Indentures, which are
hereby made a part hereof, to the same extent as if set
forth herein at length, excepting, however, and there
is expressly reserved and excluded from the lien of the
Indenture:
(1) Such of said properties or interests
therein heretofore conveyed to the Trustee as may
have been released by the Trustee or sold or
otherwise disposed of as permitted by the
provisions of the Indenture; and
(2) All right, title and interest of the
Company now owned or hereafter acquired in and to
(a) all cash, bonds, shares of stock,
obligations and other securities not
deposited with the Trustee under the
provisions of the Indenture;
(b) all accounts and bills receivable
(other than for the recovery of real property
or establishing a lien or charge thereon or
right therein) and choses in action not
specifically assigned to the Trustee and
pledged with the Trustee hereunder;
(c) all goods, wares, merchandise,
products and by-products held for sale in the
ordinary course of business;
(d) all materials and supplies held for
consumption in operation;
(e) all conversion burners, water
heaters, stoves and refrigerators rented to
customers or held for rental;
(f) all motor vehicles; and
(3) The last day of each of the demised
terms created by any lease of property now leased
to the Company and the last day of any demised
term under each and every lease hereafter made or
acquired by the Company and, under each and every
renewal of any lease the last day of each and
every such demised term being hereby expressly
reserved to and by the Company;
until and unless a default shall be made in one or more
obligations of the Company under the Indenture and such
default shall have continued beyond the period of grace, if
any, applicable in respect thereof, and the Trustee or any
receiver or other official shall take control of the
mortgaged properties, in which event the Indenture shall (to
the extent permitted by law) become and be a lien upon all
of the classes of property set forth in 2 above (subject to
any liens or encumbrances then existing thereon), and the
Trustee, receiver or other official shall (to the extent
permitted by law) be entitled to possess, use and dispose of
the same in carrying on the operation of the Company's
enterprise and to include the same in any sale under power
of sale conferred by the Indenture or by law.
TO HAVE AND TO HOLD ALL OF SAID PROPERTy, real,
personal and mixed, now owned or hereafter acquired,
mortgaged and conveyed by the Company as aforesaid, or
intended so to be, unto the Trustee, and its successors in
said trust, and to them and to their assigns forever.
IN TRUST, NEVERTHELESS, FOR THE PURPOSES, WITH THE
POWERS AND SUBJECt to the agreements, covenants and
conditions set forth and expressed in the Original
Indenture, as supplemented and modified by the First
Supplemental Indenture, Second Supplemental Indenture, Third
Supplemental Indenture, Fourth Supplemental Indenture, Fifth
Supplemental Indenture, Sixth Supplemental Indenture,
Seventh Supplemental Indenture, Eighth Supplemental
Indenture, Ninth Supplemental Indenture, Tenth Supplemental
Indenture, Eleventh Supplemental Indenture, Twelfth
Supplemental Indenture, Thirteenth Supplemental Indenture,
Fourteenth Supplemental Indenture, Fifteenth Supplemental
Indenture, Sixteenth Supplemental Indenture, Seventeenth
Supplemental Indenture and this instrument, it being agreed
as follows, to wit:
ARTICLE FIRST. SERIES R BONDS
ARTICLE FIRST
SERIES R BONDS
Section 1.01. There shall be and is hereby created a new
series of bonds entitled "First Mortgage Bonds, Series R,
7.50%" (herein sometimes called the "Series R bonds" or
"bonds of Series R"), limited in aggregate principal amount,
except as noted in Section 2.02 hereof, to Fifteen Million
Dollars ($15,000,000), and to be issued as prescribed in
Section 2.01 hereof. Series R bonds shall be fully
registered bonds of the denomination of One Thousand Dollars
($1,000) and multiples thereof. All Series R bonds shall
mature December 15, 2025 and shall bear interest at the rate
and payable at the times specified in the form of Series R
bond set forth herein. The principal of, interest on and
premium, if any, on bonds of Series R shall, subject to the
provisions of Section 3.07, be payable at the office of the
Trustee in such coin or currency of the United States of
America as shall be legal tender for the payment of public
and private debts.
Bonds of Series R shall be numbered "R-1" and
consecutively upwards.
Section 1.02. Bonds of Series R shall be exchangeable for
a like aggregate principal amount of bonds of such series of
another authorized denomination or other authorized
denominations.
Section 1.03. Notwithstanding any provisions of the
Indenture (including, without limitation, Section 41
thereof) the bonds of Series R shall be subject to
redemption only in the manner and to the extent provided in
this Section 1.03.
(a) Mandatory Redemption. As and for, or in lieu
of, a sinking fund for Series R bonds, the Company
covenants and agrees that, so long as any Series R
bonds are outstanding hereunder, it will call for
redemption and redeem, on December 15 in each year,
commencing December 15, 2006 and ending December 15,
2024, both inclusive, $750,000 aggregate principal
amount of Series R bonds; provided, however, that the
Company may deliver to the Trustee for cancellation, on
or before any and each such December 15th, in lieu of
the redemption of all or any part of the Series R bonds
otherwise required to be so redeemed, an equal
aggregate principal amount of Series R bonds. Any
optional redemption of Series R bonds shall be applied
to the principal payments due on the Series R bonds in
inverse order of scheduled maturities.
Series R bonds, redeemed pursuant to the
provisions of this Section 1.03(a), shall be redeemed,
without premium, at their principal amount and interest
accrued to the date fixed for redemption.
All Series R bonds, redeemed pursuant to the
provisions of this Section 1.03(a) or delivered to the
Trustee pursuant to such provisions, shall be cancelled
by the Trustee and shall be delivered to or upon the
order of the Company and shall not be reissued.
(b) Optional Redemption of Series R Bonds with
Premium. The Company shall have the option, at any
time and from time to time, of redeeming the
outstanding Series R bonds, either in whole or in part
(but if in part then in units of $100,000), by payment
of the principal amount of the Series R bonds to be
redeemed, and accrued interest thereon to the date of
redemption together with the Yield-Maintenance Premium,
if any.
As used in this Section 1.03(b):
"Yield-Maintenance Premium" shall mean, with
respect to any Series R bond, a premium equal to
the excess, if any, of the Discounted Value of the
Called Principal of such Series R bond over the
amount of such Called Principal; provided that the
Yield-Maintenance Premium shall in no event be
less than zero.
"Called Principal" shall mean, with respect
to any Series R bond, the principal of such Series
R bond that is to be redeemed pursuant to the
foregoing provisions of this Section 1.03(b).
"Discounted Value" shall mean, with respect
to the Called Principal of any Series R bond, the
amount calculated by discounting all Remaining
Scheduled Payments with respect to such Called
Principal from their respective scheduled due
dates to the date on which such Called Principal
is to be redeemed, in accordance with accepted
financial practice and at a discount factor
(applied on a semiannual basis) equal to the sum
of (i) the Reinvestment Yield with respect to such
Called Principal, plus (ii) 0.25%.
"Reinvestment Yield" shall mean the yield
reported, as of 10:00 a.m. Boston, Massachusetts
time on the fifth Business Day prior to the date
of prepayment or on the date of acceleration of
the Series R bonds on the display designated "USD"
of the Bloomberg Financial Markets Services Screen
(or, if not available, any other nationally
recognized trading screen reporting on-line
intraday trading in United States government
securities) for actively traded U.S. Treasury
securities having a maturity corresponding to the
Weighted Average Life to Maturity of the Called
Principal or if such yield shall not be reported
as of such time or shall not be usable, then the
arithmetic mean of the yields for the two columns
under the heading "Week Ending" published in the
Statistical Release under the caption "Treasury
Constant Maturities" for the Weighted Average Life
to Maturity of the Called Principal (rounded to
the nearest month). If no maturity exactly
corresponds to the remaining Weighted Average Life
to Maturity of the Called Principal, yields for
the next longer and the next shorter published
maturities shall be calculated pursuant to the
foregoing sentence and the Reinvestment Yield
shall be interpolated from such yields on a
straight-line basis (rounding in each of the
relevant periods to the nearest month). For the
purposes of calculating the Reinvestment Yield,
the most recent Statistical Release published
prior to the date of determination of the Yield-
Maintenance Premium shall be used.
"Statistical Release" shall mean the then
most recently published statistical release
designated "H.15(519)" or any successor
publication which is published weekly by the
Federal Reserve System and which establishes
yields on actively traded U.S. Government
Securities adjusted to constant maturities or, if
such statistical release is not published at the
time of any determination hereunder, then such
other reasonably comparable index which shall be
designated by the holders of 66-2/3% in aggregate
principal amount of the outstanding Series R
bonds.
"Remaining Scheduled Payments" shall mean,
with respect to the Called Principal of any Series
R bond, all payments of such Called Principal and
interest thereon that would be due after the date
scheduled for redemption thereof if no redemption
of such Called Principal were made prior to its
scheduled due date.
"Business Day", as used in the definition of
Reinvestment Yield, shall mean any day excluding
Saturday, Sunday and any day which shall be, in
Boston, Massachusetts, a legal holiday or a day on
which banking institutions are authorized by law
to close.
"Weighted Average Life to Maturity" of the
principal amount of the Series R bonds being
redeemed shall mean, as of the time of any
determination thereof, the number of years
obtained by dividing the then Remaining Dollar-
Years of such principal by the aggregate amount of
such principal. The term "Remaining Dollar-Years"
of such principal shall mean the amount obtained
by (1) multiplying (i) the remainder of (A) the
amount of principal that would have become due on
each scheduled payment date if such prepayment had
not been made, less (B) the amount of principal on
the Series R bonds scheduled to become due on such
date after giving effect to such prepayment and
the application thereof in accordance with the
provisions of Section 1.03(a) hereof by (ii) the
number of years (calculated to the nearest one-
twelfth) which will elapse between the date of
determination and such scheduled payment date, and
(2) totalling the products obtained in (1).
(c) Optional Redemption of Series R Bonds Out of
Condemnation Proceeds. In the event that any property
subject to the lien of the Indenture is (x) taken by
any governmental or other lawful authority pursuant to
a Qualified Condemnation, or (y) sold by the Company in
anticipation of a Qualified Condemnation for a price
which, in the good faith judgment of the Board of
Directors of the Company (as evidenced by a resolution
thereof) is deemed to be equal to or greater than the
fair market value of the property so sold, then the
Company shall have the option (to be exercised within
60 days after such taking or sale), of applying not to
exceed a pro rata portion of the net cash proceeds
resulting from such taking or sale (or any portion of
such proceeds equal to $100,000 or any integral
multiple of $10,000 in excess thereof) to the
redemption of outstanding Series R bonds by payment of
the principal amount of the Series R bonds to be
redeemed and accrued interest thereon to the date of
redemption plus, in the case of any event described in
clause (y) above, an amount equal to the Yield-
Maintenance Premium, if any. The pro rata portion
shall be determined by reference to all bonds of all
series then outstanding under the Indenture.
As used in this Section 1.03(c), "Qualified
Condemnation" shall mean any taking by condemnation or
eminent domain which (i) results in an award to the
Company which, in the good faith judgment of the Board
of Directors of the Company (as evidenced by a
resolution thereof) is deemed to be equal to or greater
than the fair market value of the property so taken,
and (ii) is deemed by said Board of Directors (as
evidenced by a resolution thereof) to be authorized and
proper or which has been contested by the Company in
good faith and by appropriate proceedings.
(d) Miscellaneous. Except as herein otherwise
set forth, the provisions of Article Fourth of the
Original Indenture, with respect to the procedures for
call and redemption, prior to maturity, of Series A and
Series B bonds, shall apply to the call and redemption,
prior to maturity, of all bonds of Series R so to be
called and redeemed. All Series R bonds redeemed
pursuant to the provisions hereof shall be cancelled by
the Trustee and shall be delivered to or upon the order
of the Company, and shall not be reissued.
Whenever any Series R bonds are to be redeemed,
the Trustee shall allocate to each registered owner a
proportion of the Series R bonds to be redeemed, equal,
as nearly as practicable, to the proportion that the
principal amount of the bonds of such series then
outstanding hereunder, registered in the name of such
owner, bears to the principal amount of all bonds of
such series then outstanding under the Indenture.
Redemption notices for Series R bonds shall be
given to each registered owner by registered mail and
not by publication. The redemption notice given to
each registered owner shall comply with the provisions
of Article Fourth of the Original Indenture and shall
also specify (i) the principal amount of such owner's
Series R bonds to be redeemed, (ii) the accrued
interest payable in connection with such redemption,
and (iii) the Company's estimate of the Yield-
Maintenance Premium, if any, payable in connection with
such redemption. The Company's final computation of
the amount of any Yield-Maintenance Premium payable in
connection with any such redemption shall be furnished
to the registered owners of the Series R bonds to be
prepaid as soon as practicable after determination
thereof and, in all events, not less than three days
prior to the date of such redemption. The Trustee
shall have no responsibility for determining
independently the amount of any Yield-Maintenance
Premium payable in connection with any redemption
hereunder.
Section 1.04. The Company covenants and agrees that, so
long as any Series R bonds are outstanding hereunder, it
will pay no dividends and make no distribution either in
cash or property (other than dividends payable in its common
stock), on any class of its capital stock and will purchase
or redeem none of its stock of any class if the sum of all
dividends and all distributions, purchases and redemptions
on or of its stock of any class paid or made by it
(including any then proposed to be paid or made) after
September 30, 1994 and any losses incurred after that date,
charged or properly chargeable against earned surplus, would
exceed the amount of its net income earned after that date
plus Ten Million Dollars ($10,000,000), provided, however,
that there shall be excluded in making the calculation
aforementioned so much of the aggregate of expenditures,
including the reasonable value of property or securities,
made by the Company for the redemption or purchase of its
capital stock as does not exceed the aggregate of all
amounts, including the reasonable value of property or
securities, received by it through the disposal, since
September 30, 1994, of additional capital stock.
Notwithstanding the foregoing sentence, the Company may make
regular dividend payments on, and mandatory sinking fund
redemptions of, all shares of its 8.7% Redeemable Cumulative
Preferred Stock or any class of its preferred stock which
may hereafter be issued, to persons other than persons
controlled by, controlling or under common control with the
Company, provided that such payments and redemptions made
after September 30, 1994 shall be included in any
computation under this Section 1.04. The term "control," as
used in this paragraph, shall mean ownership of 10% or more
of the voting securities of the Company or such other
person. The term "net income," as used in this paragraph,
shall mean the net income available for dividends,
determined in accordance with generally accepted accounting
principles, after allowance for all taxes and other income
deductions. The term "common stock", as used in this
paragraph, shall mean stock of the Company of the class
which is now outstanding.
Article Second. Issuance of $15,000,000 of Series R
Bonds and Closing of Such Series at That Amount
ARTICLE SECOND
ISSUANCE OF $15,000,000 OF SERIES R BONDS AND
CLOSING OF SUCH SERIES AT THAT AMOUNT
Section 2.01. Upon the execution and delivery hereof, the
Company will execute and deliver to the Trustee and the
Trustee will authenticate and deliver to the Company Fifteen
Million Dollars ($15,000,000) in aggregate principal amount
of Series R bonds.
Section 2.02. The issue of Series R bonds hereunder is
hereby limited to the Fifteen Million Dollars ($15,000,000)
in aggregate principal amount of bonds of such series to be
initially issued as provided in Section 2.01 hereof and to
Series R bonds issued in exchange or substitution for
outstanding Series R bonds under the provisions of the
Indenture, permitting the exchange of bonds for other bonds
(under the provisions of Section 1.02 hereof), or permitting
the issuance of bonds in lieu of lost, stolen, destroyed or
mutilated bonds, or permitting the exchange of definitive
bonds for temporary bonds.
ARTICLE THIRD. ADDITIONAL PROVISIONS
ARTICLE THIRD
ADDITIONAL PROVISIONS
Section 3.01. The Company covenants and agrees that it has
good right and lawful authority to mortgage the properties
described in the granting clauses hereof and after-acquired
property as provided herein and that it is lawfully seized
and possessed of the same (except with respect to after-
acquired property).
Section 3.02. The Company covenants and agrees that since
the date of the Seventeenth Supplemental Indenture no real
estate or interest therein has been taken by exercise of the
right of eminent domain or released from the Indenture or
subjected to any easement which has not been terminated of
record except as listed on the "Schedule of Released
Property" attached hereto as Schedule II.
Section 3.03. The Company covenants and agrees that (a) it
will not incorporate into its gas distribution system for
operation as lessee or otherwise any personal property or
fixtures owned by another person or entity except such
property of a type expressly reserved and excluded from the
lien of the Indenture; and (b) without limiting the
generality of the foregoing, it will not enter into, as
lessee, any leases of personal property, fixtures or
improved real property if the cost of all such items so
leased less accumulated depreciation taken from time to time
in accordance with generally accepted accounting principles
would be in excess of 15% of the principal amount of bonds
then outstanding under the Indenture.
Section 3.04. The Company covenants and agrees that it
will promptly comply with all laws, ordinances or
governmental rules and regulations to which it is subject,
including without limitation, the Occupational Safety and
Health Act of 1970, the Employee Retirement Income Security
Act of 1974 and all laws, ordinances, governmental rules and
regulations relating to environmental protection in all
applicable jurisdictions, the violation of which would
materially and adversely affect the properties, business,
prospects, profits or condition of the Company or would
result in any lien or charge upon any property of the
Company which would materially and adversely affect the
conduct of the Company's operations.
Section 3.05. The Company covenants and agrees that it
will not permit any employee benefit plan maintained by it
to be terminated in a manner which would result in the
imposition of a lien on any property of the Company pursuant
to Section 4068 of the Employee Retirement Income Security
Act of 1974, as amended.
Section 3.06. No bonds owned or held by, for the account
of or for the benefit of the Company or any other obligor on
the bonds (other than bonds pledged to secure an obligation)
shall be deemed entitled to share in any payment or
distribution provided in Article Sixth of the Indenture,
provided that the Trustee shall be protected in making any
such payment or distribution unless it shall have actual
knowledge that the bonds in respect of which such payment or
distribution is made are so owned or held.
Section 3.07. Payments of any amounts with respect to the
Series R bonds shall be made at such place and in such
manner as shall be provided in Section 6.4 of the Bond
Purchase Agreement, dated as of December 1, 1995 (the "Bond
Purchase Agreement"), between the Company and the original
purchaser of said Series R bonds, or at such other places
and in such other manners as may, from time to time, be
agreed upon in writing among the Company, the Trustee and
the holder of the Series R bond in question.
Section 3.08. Anything contained elsewhere in the
Indenture notwithstanding, and without limiting the effect
of Section 3.15 of this Eighteenth Supplemental Indenture,
so long as any of the Series R bonds shall remain
outstanding, the Trustee shall be entitled to exercise any
of the remedies provided in the Indenture (including,
without limitation, the remedies provided in Sections 33,
46, 47, 48 and 49 of the Indenture):
(a) if the Company shall default in the payment
of any interest payable on any Series R bonds and such
default shall have continued for a period of ten days,
or the Company shall default in the payment of
principal on any Series R bonds on any mandatory
redemption date or at final maturity or at any date
fixed for the optional redemption thereof pursuant to
the provisions of Section 1.03 of this Eighteenth
Supplemental Indenture;
(b) if the Company or any subsidiary of the
Company shall fail to make when due or payable
(including applicable grace periods, if any) any
payment required to be made by it in respect of any
indebtedness, the outstanding aggregate principal
amount of which indebtedness is at the time of such
failure in excess of three million dollars
($3,000,000);
(c) if the Company shall fail in the observance
or performance of any other covenant, condition or
agreement not enumerated in this Section hereinabove,
contained in the Indenture (including this Eighteenth
Supplemental Indenture) or in the Bond Purchase
Agreement, and such failure shall continue for a period
of sixty (60) days after such failure shall first
become known to the President or the Financial Vice
President of the Company, or to any person charged with
the responsibilities normally associated with either of
such offices;
(d) if any representation or warranty made by the
Company herein, or made by the Company in the Bond
Purchase Agreement, or made by the Company in any
statement or certificate furnished by the Company in
connection with the consummation of the issuance and
delivery of the Series R bonds or furnished by the
Company pursuant hereto or pursuant to the Bond
Purchase Agreement, is untrue in any material respect
as of the date of the issuance or making thereof;
(e) if final judgment or judgments for the
payment of money aggregating in excess of $100,000 is
or are outstanding against the Company or against any
property or assets of the Company and any one of such
judgments has remained unpaid, unvacated, unbonded or
unstayed by appeal or otherwise for a period of 30 days
from the date of its entry;
(f) in the event of the entry of a decree or
order by a court having jurisdiction in the premises
adjudging the Company a bankrupt or insolvent, or
approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition
of, or in respect of, the Company under applicable
Federal bankruptcy law or any other applicable Federal
or State law, or appointing a receiver, liquidator,
assignee, trustee, sequestrator (or other similar
official) of the Company or of any substantial part of
its property, or ordering the winding up or liquidation
of its affairs, and the continuance of any such decree
or order unstayed and in effect for a period of 60
consecutive days; or
(g) in the event of the institution by the
Company of proceedings to be adjudicated a bankrupt or
insolvent, or the consent by it to the institution of
bankruptcy or insolvency proceedings against it, or the
filing by it of a petition or answer or consent seeking
reorganization or relief under applicable Federal
bankruptcy law or any other similar applicable Federal
or State law, or the consent by it to the filing of any
such petition or the appointment of a receiver,
liquidator, assignee, trustee, sequestrator (or other
similar official) of the Company or of any substantial
part of its property, or the making by it of an
assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its
debts generally as they become due, or the taking of
corporate action by the Company in furtherance of any
such action.
Section 3.09. This Eighteenth Supplemental Indenture shall
become void when the Original Indenture shall be void.
Section 3.10. Dates of supplemental indentures and of
bonds are intended as and for dates for the identification
of such bonds and such instruments, respectively, and are
not intended to indicate that any such instrument or any
bond was and no such instrument or bond has been or is to be
executed on a Sunday or a legal holiday, the respective
dates when supplemental indentures were executed being the
dates or respective dates of the acknowledgments of the
parties thereto.
Section 3.11. Whenever reference is made in this
Eighteenth Supplemental Indenture to a Section or an Article
of the Original Indenture and such Section or Article has
been amended by this instrument or any of the indentures
supplemental to the Original Indenture enumerated
hereinabove, or two or more of them, then such reference
shall be to such Section or Article as so amended, whether
or not herein expressly so stated.
Section 3.12. The Company, at its own cost and expense,
will forthwith, upon the execution and delivery by the
parties hereto of this Eighteenth Supplemental Indenture,
cause the same to be recorded pursuant to law in all offices
for the recording of mortgages of real or personal property
in which such recordation is necessary in order to perfect
and protect the lien hereof, and, in any event, in all such
offices in which it has caused or may cause the Original
Indenture to be recorded.
Section 3.13. Anything in the Series R bonds or in the
Indenture to the contrary notwithstanding, upon receipt by
the Company or the Trustee of evidence reasonably
satisfactory to the Company or the Trustee of the ownership
of and loss, theft, destruction or mutilation of any Series
R bond and (a) in the case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to it
(provided, however, that if the holder of such Series R bond
is an institution having a minimum net worth of $10,000,000
or more, its own affidavit and undertaking of indemnity
shall be deemed to be satisfactory evidence, indemnity, and
security) or (b) in the case of mutilation, upon surrender
and cancellation thereof, the Company at its expense will
execute, and thereupon the Trustee will authenticate and
deliver in lieu thereof, a new bond, executed and
authenticated in the same manner as the bond being replaced,
in an aggregate principal amount equal to the unpaid portion
of the principal amount of the bond being replaced.
Section 3.14. This Eighteenth Supplemental Indenture may
be executed in any number of counterparts, each of which
shall be deemed an original; and such counterparts shall
constitute but one and the same instrument, which shall for
all purposes be sufficiently evidenced by any such original
counterpart.
Section 3.15. For any default by the Company in the
covenants, stipulations, promises and agreements herein
contained or contained in the bonds of Series R, the Trustee
and the bondholders shall have the same rights and remedies,
subject to the same limitations, as are provided in the
Original Indenture.
Section 3.16. The Company hereby agrees to unconditionally
indemnify, defend and hold, and covenants not to sue, the
Trustee and each holder of the bonds of Series R from time
to time, their respective directors, officers, employees and
agents harmless for or against any loss, liability, damage,
expense or claim (including, but not limited to, reasonable
fees of attorneys, experts and professionals and reasonable
environmental consulting sampling and analysis costs all of
which are incurred in investigating such claims, defending
such claims and prosecuting the Company under the indemnity
provided by this Section 3.16, whether arising under the
federal Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. Sections 9601 et seq., the
federal Resource Conservation and Recovery Act, 42 U.S.C.
Sections 6901 et seq., or any similar state law or
regulation providing for liability for responding to a
release of hazardous substances (the "Environmental Laws")
(excepting only those attributable solely and completely to
the willful misconduct of any holder or holders of the bonds
of Series R) or which may be incurred by or asserted against
any holder of the bonds of Series R directly or indirectly
arising or resulting from, or relating to, any of the
following: (1) the presence of any Hazardous Substances
(hereinafter defined) on any property previously, presently
or hereafter owned, possessed, occupied, operated or
utilized by the Company; (2) the presence of any Hazardous
Substances on any real property, not previously, presently
or hereafter owned, possessed, occupied or operated by the
Company, which Hazardous Substances were used, generated,
manufactured, produced, stored, transported, disposed,
released, discharged, abandoned or handled by the Company;
and (3) the violation by the Company of any Environmental
Law. This indemnity shall continue in full force and effect
after repayment of the bonds of Series R, and its duration
shall be forever.
"Hazardous Substance" shall mean any hazardous or toxic
material, substance or waste, pollutant or contaminant which
is regulated under any statute, law, ordinance, rule or
regulation of any local, state, regional or federal
authority having jurisdiction over the property of the
Company or its use, including but not limited to any
material, substance or waste which is: (a) defined as a
hazardous substance under Section 311 of the Federal Water
Pollution Control Act (33 U.S.C. Section 1317) as amended;
(b) regulated as a hazardous waste under Section 1004 or
Section 3001 of the Federal Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act (42
U.S.C. Section 6901 et seq.), as amended; (c) defined as a
hazardous substance under Section 101 of the Comprehensive
Environmental Response, Compensation and Liability Act (42
U.S.C. Section 9601 et seq.), as amended, or (d) defined or
regulated as a hazardous substance or hazardous waste under
any rules or regulations promulgated under any of the
foregoing statutes.
IN WITNESS WHEREOF, The Providence Gas Company has
caused its corporate seal to be hereto affixed and these
presents to be executed, acknowledged and delivered in its
name and on its behalf by its President and Treasurer, and
said State Street Bank and Trust Company, as successor as
Trustee to Rhode Island Hospital Trust National Bank, which
succeeded Rhode Island Hospital Trust Company, has caused
its corporate seal to be hereto affixed and these presents
to be executed and delivered by one of its officers, all
hereunto duly authorized, as of the day and year first above
written.
Signatures
THE PROVIDENCE GAS
COMPANY
[CORPORATE SEAL] By______________________
_____________
James H.
Dodge
Its President
By_____________________
_____________
Gary S.
Gillheeney
Its Treasurer
Signed, sealed and delivered
in the presence of:
________________
______________
as to The
Providence Gas
Company
STATE STREET BANK AND
TRUST COMPANY,
Trustee
[CORPORATE SEAL] BY______________________
__________
Authorized Officer
Signed, sealed and delivered
in the presence of:
________________
______________
as to State
Street Bank and
Trust Company
STATE OF RHODE ISLAND )
): SS.:
COUNTY OF PROVIDENCE )
In Providence, this _____ day of December, A.D. 1995,
personally appeared before me James H. Dodge and Gary S.
Gillheeney, to me known and known by me to be the President
and Treasurer, respectively, of THE PROVIDENCE GAS COMPANY,
one of the parties that executed the foregoing instrument,
and acknowledged said instrument to be their free act and
deed in their said capacities, and the free act and deed of
said corporation; and on oath stated that they were duly
authorized to execute said instrument and that the seal
affixed thereto is the corporate seal of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and
affixed my official seal, the day and year first above
written.
_______________________
_______________
Notary Public
My Commission Expires:
[Notarial Seal]
STATE OF RHODE ISLAND )
): SS.:
COUNTY OF PROVIDENCE )
In Providence, this ____ day of December, A.D. 1995,
personally appeared before me ____________________, to me
known and known by me to be ____________ of STATE STREET
BANK AND TRUST COMPANY, one of the parties that executed the
foregoing instrument, and acknowledged said instrument to be
such officer's free act and deed in such officer's said
capacity, and the free act and deed of said corporation, as
Trustee; and on oath stated that such officer was duly
authorized to execute said instrument and that the seal
affixed thereto is the corporate seal of said corporation.
IN WITNESS WHEREOF, I HAVE HEREUNTO Set my hand and
affixed my official seal, the day and year first above
written.
_______________________
_______________
Notary Public
My commission expires: ______________
[Notarial Seal]
Schedule Of Property And Interests Therein
None
SCHEDULE OF RELEASED PROPERTY
AND EASEMENTS
None
??
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> DEC-31-1995
<CASH> 2,518
<SECURITIES> 0
<RECEIVABLES> 31,004
<ALLOWANCES> 2,427
<INVENTORY> 9,972
<CURRENT-ASSETS> 58,551
<PP&E> 256,859
<DEPRECIATION> 93,452
<TOTAL-ASSETS> 235,602
<CURRENT-LIABILITIES> 53,287
<BONDS> 71,200
<COMMON> 39,072
0
8,000
<OTHER-SE> 37,249
<TOTAL-LIABILITY-AND-EQUITY> 235,602
<SALES> 57,270
<TOTAL-REVENUES> 57,270
<CGS> 31,144
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 16,905
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,857
<INCOME-PRETAX> 7,364
<INCOME-TAX> 2,310
<INCOME-CONTINUING> 5,054
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,054
<EPS-PRIMARY> 3.92
<EPS-DILUTED> 3.92
</TABLE>
