SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR SECTION
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended MARCH 31, 1999 Commission File No. 0-505
-------------- -----
BANGOR HYDRO-ELECTRIC COMPANY
------------------------------------------------------
(Exact Name of Registrant as specified in its Charter
MAINE 01-0024370
- ------------------------------- --------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
33 STATE STREET, BANGOR, MAINE 04401
- ---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code 207-945-5621
------------
NONE
- -----------------------------------------------------------------------
Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report
Outstanding Common Stock, $5 Par Value - 7,363,424 Shares
March 31, 1999
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
----- ----
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1999
PART I - FINANCIAL INFORMATION
PAGE
Cover Page 1
Index 2
Consolidated Statements of Income 3
Management's Discussion and Analysis of Results of
Operations and Financial Condition 4
Consolidated Balance Sheets - March 31, 1999 and
December 31, 1998 15
Consolidated Statements of Capitalization 17
Consolidated Statements of Cash Flows 18
Consolidated Statements of Common Stock Investment 19
Notes to the Consolidated Financial Statements 20
PART II - OTHER INFORMATION 26
Item 6 - Exhibits and Reports on Form 8-K 27
Signature Page 28
<TABLE>
BANGOR HYDRO-ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF INCOME
000's Omitted Except Per Share Amounts
(UNAUDITED)
<CAPTION>
Three Months Ended
Mar. 31, Mar. 31,
1999 1998
----------- -----------
<C> <S> <S>
ELECTRIC OPERATING REVENUES $ 50,222 $ 49,100
----------- -----------
OPERATING EXPENSES:
Fuel for generation and purchased power $ 18,515 $ 21,359
Other operation and maintenance 9,593 8,310
Depreciation and amortization 2,520 2,614
Amortization of Seabrook Nuclear Unit 425 425
Amortization of contract buyouts
and restructuring 5,200 5,091
Taxes -
Property and payroll 1,633 1,535
State income 494 228
Federal income 1,956 1,128
----------- -----------
$ 40,336 $ 40,690
----------- -----------
OPERATING INCOME $ 9,886 $ 8,410
----------- -----------
OTHER INCOME AND (DEDUCTIONS):
Allowance for equity funds used
during construction $ 143 $ 69
Other, net of applicable income taxes 260 197
----------- -----------
$ 403 $ 266
----------- -----------
INCOME BEFORE INTEREST EXPENSE $ 10,289 $ 8,676
----------- -----------
INTEREST EXPENSE:
Long-term debt $ 5,753 $ 5,475
Other 528 922
Allowance for borrowed funds used
during construction (204) (129)
----------- -----------
$ 6,077 $ 6,268
----------- -----------
NET INCOME $ 4,212 $ 2,408
DIVIDENDS ON PREFERRED STOCK 279 312
----------- -----------
EARNINGS APPLICABLE TO COMMON STOCK $ 3,933 $ 2,096
=========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES 7,363 7,363
=========== ===========
EARNINGS PER COMMON SHARE,
Basic $ .53 $ 0.28
Diluted $ .47 $ 0.28
=========== ===========
DIVIDENDS DECLARED PER COMMON SHARE $ - $ -
=========== ===========
See notes to the consolidated financial statements.
</TABLE>
BANGOR HYDRO-ELECTRIC COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
Management's Discussion and Analysis of the Results of Operations and
Financial Condition contained in Bangor Hydro-Electric Company's (the
Company) Annual Report on Form 10-K for the year ended December 31, 1998
(1998 Form 10-K) should be read in conjunction with the comments below.
EARNINGS
The quarter ended March 31, 1999 resulted in basic earnings per
common share of $.53, as compared to $.28 per common share for the quarter
ended March 31, 1998. The improvement in first quarter earnings is
attributable largely to the February 13, 1998 rate increase authorized by
the Maine Public Utilities Commission (MPUC) designed to increase annual
revenues by approximately $13.2 million. That amount included the $5.1
million authorized in a temporary rate increase that became effective on
July 1, 1997. Earnings were also positively impacted in the first quarter of
1999 by an increase in kilowatt hour (KWH) sales and a one-time benefit of
$802,000 due to the settlement, by the New England Power Pool (NEPOOL), of a
contract dispute with Hydro-Quebec (HQ).
IMPORTANT CURRENT ACTIVITIES-
ALTERNATIVE RATE PLAN (ARP) FILING - Because of a number of interrelated
regulatory issues, the Company's proposed ARP rate increase of 2%, expected
to become effective May 1, 1999, did not take effect. The Company expects
these regulatory issues to be resolved by the end of 1999. For a more
complete discussion of the proposed ARP increase, see the 1998 Form 10-K.
REVENUES
Electric operating revenue increased by $1.1 million, or 2.3% in the
first quarter of 1999 due principally to the impact of the 5.83% rate
increase which became effective February 13, 1998 and an overall 3.4%
increase in KWH sales (excluding off-system sales) in the 1999 quarter. The
increase in KWH sales in the first quarter of 1999 was affected by service
interruption during the ice storm in January 1998, as well as slightly
colder weather in the 1999 quarter as compared to 1998. The increased
revenues were offset slightly by a $545,000 reduction in revenue sharing
from the Company's largest industrial customer (See the 1998 Form 10-K for
further discussion of this revenue sharing arrangement).
EXPENSES
Fuel for generation and purchased power expense decreased $2.8
million or 13.3% in the first quarter of 1999 as compared to 1998. The
decreased expense was a result of several factors. The previously discussed
settlement of the dispute with HQ resulted in a $747,000 reduction in
expense in the first quarter of 1999. The Company recorded a benefit of
$529,000 in the 1999 quarter related to savings realized from the
restructuring of the Penobscot Energy Recovery Company (PERC) purchased
power contract in June 1998 (See the 1998 Form 10-K for a complete
discussion of this transaction). Also there was a $2 million reduction in
oil-related and other purchased power costs. A significant portion of the
Company's power contracts are directly tied to the price of residual oil,
which was 17% lower in the first quarter of 1999 as compared to 1998.
Purchased power expenses were also reduced in the 1999 quarter by an
increase in power generation by the Company's hydroelectric facilities.
Settlement payments associated with the Company's fuel risk
management program increased by approximately $360,000 in first quarter of
1999 compared to the 1998 quarter. This was largely the result of the 17%
reduction in the spot price of residual oil in the 1999 quarter. The
Company continued its hedge program in late 1998 and increased its hedge
volume by 30% as a result of replacing a fixed price power contract with a
residual oil indexed contract. The net outcome was a 12% reduction in the
effective price the Company agreed to pay in the 1999 quarter compared to
the 1998 quarter. The increase in settlement payments were largely offset
by the reduction in purchased power expenses. See the 1998 Form 10-K for a
more complete discussion of the Company's fuel risk management program.
Other operation and maintenance (O&M) expense increased by $1.3
million in the first quarter of 1999 as compared to 1998. Increasing other
O&M expense in the 1999 quarter was a $363,000 increase in postretirement
and active medical costs; advertising expenses with the Company's third
party advertising agency increased by $120,000 in the 1999 quarter; and the
Company incurred increased non-labor expenditures in the first quarter of
1999 related to electric utility industry restructuring activities, costs
associated with assessment and testing of systems for year 2000 (Y2K)
compliance, an upgrade to the Company's customer information system, and
various legal and consulting services.
O&M payroll expense decreased by $167,000 due principally to service
restoration costs associated with the January 1998 ice storm. The Company
was ordered by the MPUC to defer incremental non-capital costs related to
the ice storm, but the non-incremental labor costs were charged principally
to other O&M in the first quarter of 1998. Principally as a result of the
ice storm, there was significantly less payroll charged to the Company's
capital program in the first quarter of 1998. Offsetting the decreased O&M
payroll to some extent was a 2.6% union wage increase effective January 1,
1999 and higher employee levels in 1999.
Depreciation and amortization expense decreased $94,000 in the first
quarter of 1999 as compared to the 1998 quarter. Effective February 13,
1998, in connection with the Company's last rate order, the Company began
amortizing its $3.6 million overaccumulated depreciation reserve over a 24
month period ($450,000 amortization in the first quarter of 1999 as compared
to $225,000 in the 1998 quarter), thus causing a reduction in depreciation
expense. This decrease was offset somewhat by the impact of anticipated
1999 property additions.
The $109,000 increase in amortization of contract buyouts and
restructuring in the 1999 quarter was also due principally to the June 1998
restructuring of the PERC purchased power contract. In the first quarter of
1999 the Company recorded $250,000 of amortization related to deferred PERC
contract restructuring costs. This was offset to some extent by the
February 1998 rate order, whereby the MPUC required the Company to reduce
the amortization of the deferred regulatory asset associated with the 1993
buyout of one of its high-priced non-utility generator contracts by an
annualized amount of approximately $1.1 million, effective February 13,
1998. The amortization of this regulatory asset amounted to $690,000 in the
first quarter of 1999 as compared to $831,000 in the 1998 quarter.
The increase in property and other taxes in the first quarter of 1998
was due principally to greater property taxes, which were primarily a result
of electric plant additions.
The increase in income taxes was principally a function of greater
earnings in the first quarter of 1999 as compared to the 1998 quarter. See
Footnote 2 to the Consolidated Financial Statements for a reconciliation of
the Company's effective income tax rate.
The increase in other income in the 1999 quarter was due primarily to
$54,000 in interest income received attributable to the previously discussed
HQ settlement and a reduction in start-up costs associated with non-core
business ventures by the Company, offset by higher non-operating income
taxes.
Allowance for funds used during construction increased in 1999
relative to 1998 due mainly to higher levels of construction work in
progress in the 1999 quarter, as well as an increase in carrying costs
recorded on deferred incremental Maine Yankee and ice storm costs in the
first quarter of 1999 as compared to the 1998 quarter.
Long-term debt interest expense increased $278,000 in the first
quarter of 1999 as compared to 1998 due to the issuance of $24.8 million of
medium term notes on March 31, 1998 and the $45 million term loan issued in
June 1998. The increase was also affected by $144,000 of carrying costs
recorded on the $4.4 deferred gain on sale of Graham Station property (See
the 1998 Form 10-K for a complete discussion of the property sale). These
increases were offset to some extent by a total of $1.8 in principal
payments on the Company's 12.25% first mortgage bonds in July 1998 and
January 1999; a $12.3 million principal payment in June 1998 on the Finance
Authority of Maine Revenue Notes; the $2.5 million final maturity of the
6.75% first mortgage bonds in March 1998; monthly principal payments from
June 1998 through March 1999 amounting to $4.1 million on the $24.8 million
medium term notes; a $6.2 million principal repayment on the $45 million
medium term notes in January 1999; and principal payments of $4 million and
$30 million in March and June, 1998, respectively, on the Company's old
medium term notes.
Other interest expense decreased due principally to a $23 million
reduction in weighted average short-term borrowings outstanding in the 1999
quarter as compared to 1998, as well as a decrease in average short-term
interest rates in 1999. These decreases were offset to some extent by a
$139,000 increase in the amortization of debt issuance costs in the first
quarter of 1999, as a result of the previously discussed medium term note
issuances in 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Consolidated Statements of Cash Flows reflect events in the first
quarters of 1999 and 1998 as they affect the Company's liquidity. Net
increase in cash from operating activities was $22.5 million in 1999 as
compared to $7.8 million in the 1998 quarter. Positively impacting cash
flows from operating activities in the 1999 quarter as compared to the 1998
quarter was the beneficial impact of the 5.83% rate increase effective
February 13, 1998, the $6.2 million in proceeds from the Graham Station
property sale which were released by the trustee in January 1999 (see 1998
Form 10-K), a $1.75 million payment received in the 1999 quarter related to
a terminated purchased power contract (See 1998 Form 10-K), $3.9 million in
incremental costs incurred in the first quarter of 1998 in connection with
the January 1998 ice storm. In addition, in the first quarter of 1998 cash
flows were reduced by the effect of a large customer, who prepaid its
electric usage for a one-year period in the third quarter of 1997.
Construction expenditures were $1.5 million greater in the 1999
quarter due principally to increased construction activity on the
transmission and distribution system in 1999.
The reduction in preferred dividends paid resulted principally from a
$1.5 million sinking fund payment made on the Company's 8.76% mandatory
redeemable preferred stock in December 1998.
The increase in payments on long-term debt is due to the previously
discussed principal payment activity. The Company utilized the $6.2 million
in property sale proceeds released by the trustee in January 1999 to repay
principal in connection with the $45 million medium term notes.
The reduction in short-term borrowings in the 1999 quarter is a
result of improved cash flows from operating activities and the $1.75
million payment received related to the terminated purchased power contract.
Borrowings under the Company's revolving credit facility were significantly
reduced in the 1998 quarter due to the utilization of proceeds from the
$24.8 million medium term notes to pay down short-term debt.
For additional discussion of liquidity and capital resources, see the
Company's 1998 Form 10-K.
Y2K UPDATE
The Company has identified all of its information technology systems
and continues its assessment and testing of its Y2K compliance. The Company
has established a structured approach which inventories and prioritizes its
electrical systems, client server and network applications, desktop and
personal computer systems, telecommunications equipment and facilities. The
Company's goal remains that most, if not all, computer programs and embedded
chips that support its mission critical operations will be compliant by mid-
year 1999.
The Company has also identified the third parties with which it has a
material relationship in order to establish their Y2K status in a timely
fashion, and is continuing to do so.
The Company is working to mitigate the risk of electrical system
failures by participation on the Independent System Operator (ISO)
subcommittees and in the NEPOOL/ISO New England Year 2000 Joint Oversight
Committee which has been given responsibility for operational reliability of
the NEPOOL Control Area. This group is progressing and expects to achieve
its goal of ensuring the NEPOOL Control Area is Y2K compliant by July 1,
1999. In addition, the Company is continuing to participate in and complying
with North American Electric Reliability Council (NERC) Y2K reporting and
guidelines.
The Company has also begun comprehensive contingency planning for its
own operations and continues to monitor the integrated contingency planning
efforts of NERC and the Northeast Power Coordinating Council.
The estimated cost to conduct testing, develop or modify contingency
plans, and replace non-compliant technologies is approximately $2 million.
Approximately $850,000 of these estimated costs are expected to be
capitalized, instead of being charged to expense, since the costs relate
principally to investments in new equipment and technologies and not the
modification of existing systems. During the first quarter of 1999,
approximately $300,000 was expended in connection with Y2K activities, of
which $100,000 was capitalized and $200,000 charged to expense. Through
March 31, 1999, on a cumulative basis, $706,000 has been expended, of which
$418,000 has been capitalized and $288,000 charged to expense. Time and cost
estimates are based on currently available information and could be affected
by the ability to correct all relevant computer codes and equipment, and the
Y2K readiness of the Company's business partners, among other factors.
There is no certainty as to whether the Company will be able to solve
its potential Y2K issues. Consequently, the Company is in the process of
identifying and verifying realistic failure scenarios which will require
contingency plans. While its analysis has not been completed, the Company
anticipates establishing a prioritized list of potential failures with a
formal contingency plan for each one deemed critical to its ongoing
operations during 1999.
Based on information reviewed to date, the Company believes its plans
of action are adequate for Y2K compliance of its critical systems and to
reduce the risk of external impacts to its operations. Nevertheless,
achieving Y2K compliance is subject to the risks and uncertainties described
above and adverse effects, should they occur, could be material despite the
Company's efforts to prevent or mitigate them.
OTHER
Management's discussion and analysis of results of operations and
financial condition contains items that are "forward-looking" as defined in
the Private Securities Litigation Reform Act of 1995. These statements are
subject to certain risks and uncertainties that could cause actual results
to differ materially from those anticipated in the forward-looking
statements. Readers should not place undue reliance on forward-looking
statements, which reflect management's view only as of the date hereof. The
Company undertakes no obligation to publicly revise these forward-looking
statements to reflect subsequent events or circumstances. Factors that might
cause such differences include, but are not limited to, future economic
conditions, relationships with lenders, earnings retention and dividend
payout policies, electric utility restructuring, developments in the
legislative, regulatory and competitive environments in which the Company
operates, the Y2K issue, and other circumstances that could affect revenues
and costs.
<TABLE>
BANGOR HYDRO-ELECTRIC COMPANY
CONSOLIDATED BALANCE SHEETS
000's Omitted
(Unaudited)
<CAPTION>
Mar. 31, Dec. 31,
ASSETS 1999 1998
-------- --------
<S> <C> <C>
INVESTMENT IN UTILITY PLANT:
Electric plant in service,at original cost $ 353,766 $ 352,975
Less - Accumulated depreciation and
amortization 104,043 101,633
-------- --------
$ 249,723 $ 251,342
Construction work in progress 19,223 13,930
-------- --------
$ 268,946 $ 265,272
Investments in corporate joint ventures:
Maine Yankee Atomic Power Company $ 5,545 $ 5,439
Maine Electric Power Company, Inc. 452 439
-------- --------
$ 274,943 $ 271,150
-------- --------
OTHER INVESTMENTS, principally at cost $ 6,186 $ 5,882
-------- --------
FUNDS HELD BY TRUSTEE, at cost $ 23,973 $ 29,868
-------- --------
CURRENT ASSETS:
Cash and cash equivalents $ 2,863 $ 2,946
Accounts receivable, net of reserve 21,690 17,558
Unbilled revenue receivable 10,127 12,086
Inventories, at average cost:
Material and supplies 2,516 2,909
Fuel oil 236 16
Prepaid expenses 325 1,129
-------- --------
Total current assets $ 37,757 $ 36,644
-------- --------
DEFERRED CHARGES:
Investment in Seabrook Nuclear Project,
net of accumulated amortization of
$30,598 in 1999 and $30,173 in 1998 $ 28,244 $ 28,669
Costs to terminate/restructure power
contracts, net of accumulated amortiz-
ation of $85,259 in 1999 and $80,059
in 1998 130,176 136,979
Maine Yankee decommissioning costs 48,912 50,055
Deferred regulatory assets 32,972 32,996
Demand-side management costs 596 779
Other 12,676 12,666
-------- --------
Total deferred charges $ 253,576 $ 262,144
-------- --------
Total assets $ 596,435 $ 605,688
======== ========
See notes to the consolidated financial statements.
</TABLE>
<TABLE>
BANGOR HYDRO-ELECTRIC COMPANY
CONSOLIDATED BALANCE SHEETS
000's Omitted
(Unaudited)
<CAPTION>
Mar. 31, Dec. 31,
STOCKHOLDERS' INVESTMENT AND LIABILITIES 1999 1998
-------- --------
<S> <C> <C>
CAPITALIZATION:
Common stock investment $ 122,797 $ 118,864
Preferred stock 4,734 4,734
Preferred stock subject to mandatory
redemption, exclusive of current
sinking fund requirements 7,619 7,604
Long-term debt, net of current portion 254,622 263,028
-------- --------
Total capitalization $ 389,772 $ 394,230
-------- --------
CURRENT LIABILITIES:
Notes payable - banks $ 4,000 $ 12,000
-------- --------
Other current liabilities -
Current portion of long-term debt
and sinking fund requirements on
preferred stock $ 27,347 $ 27,109
Accounts payable 13,660 13,896
Dividends payable 263 295
Accrued interest 4,430 3,474
Customers' deposits 335 329
Current income taxes payable 386 86
-------- --------
Total other current liabilities $ 46,421 $ 45,189
-------- --------
Total current liabilities $ 50,421 $ 57,189
-------- --------
DEFERRED CREDITS AND RESERVES:
Deferred income taxes - Seabrook $ 14,659 $ 14,880
Other accumulated deferred income taxes 66,315 63,775
Maine Yankee decommissioning liability 48,912 50,055
Deferred regulatory liability 9,580 9,618
Unamortized investment tax credits 1,669 1,721
Accrued pension and postretirement
benefit costs 8,190 7,770
Other 6,917 6,450
-------- --------
Total deferred credits and reserves $ 156,242 $ 154,269
-------- --------
Total Stockholders' Investment and
Liabilities $ 596,435 $ 605,688
========= =========
See notes to the consolidated financial statements.
</TABLE>
<TABLE>
BANGOR HYDRO-ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF CAPITALIZATION
000's Omitted
(Unaudited)
<CAPTION>
Mar. 31, Dec. 31,
1999 1998
--------- ---------
<S> <C> <C>
COMMON STOCK INVESTMENT
Common stock, par value $5 per share- $ 36,817 $ 36,817
Authorized -- 10,000,000 shares
Outstanding -- 7,363,424 shares in 1999 and 1998
Amounts paid in excess of par value 59,054 59,054
Retained earnings 26,926 22,993
--------- ---------
Total common stock investment $ 122,797 $ 118,864
--------- ---------
PREFERRED STOCK-Non participating, cumulative-
Par value $100 per share, authorized 600,000 shares
Not redeemable or redeemable solely at the option of the issuer-
7%, Noncallable, 25,000 shares, authorized and outstanding $ 2,500 $ 2,500
4.25%, Callable at $100, 4,840 shares, authorized and outstanding 484 484
4%, Series A, Callable at $110, 17,500 shares, authorized
and outstanding 1,750 1,750
--------- ---------
$ 4,734 $ 4,734
--------- ---------
8.76%, Subject to mandatory redemption requirements-
Callable at 103.13% if called on or prior to December 27, 1999,
150,000 shares authorized and 90,000 shares outstanding
in 1999 and 1998 $ 9,213 $ 9,198
Less: Sinking fund requirements 1,594 1,594
--------- ---------
$ 7,619 $ 7,604
--------- ---------
LONG-TERM DEBT
First Mortgage Bonds-
10.25% Series due 2019 $ 15,000 15,000
10.25% Series due 2020 30,000 30,000
8.98% Series due 2022 20,000 20,000
7.38% Series due 2002 20,000 20,000
7.30% Series due 2003 15,000 15,000
12.25% Series due 2001 2,930 3,743
--------- ---------
$ 102,930 $ 103,743
Less: Sinking fund requirements 1,778 1,675
--------- ---------
Total first mortgage bonds $ 101,152 $ 102,068
--------- ---------
Variable rate demand pollution control revenue bonds
Series 1983 due 2009 $ 4,200 $ 4,200
--------- ---------
Other Long-Term Debt-
Finance Authority of Maine - Taxable Electric Rate
Stabilization Revenue Notes, 7.03% Series 1995A, due 2005 $ 113,700 $ 113,700
Medium Term Notes, Variable interest rate- LIBO Rate plus 1.125%,
due 2002 20,745 21,900
Medium Term Notes, Variable interest rate- LIBO Rate plus 2%,
due 2000 38,800 45,000
--------- ---------
$ 173,245 $ 180,600
Less: Current portion of long-term debt 23,975 23,840
--------- ---------
$ 149,270 $ 156,760
--------- ---------
Total long-term debt $ 254,622 $ 263,028
--------- ---------
Total Capitalization $ 389,772 $ 394,230
========= =========
See notes to the consolidated financial statements.
</TABLE>
<TABLE>
BANGOR HYDRO-ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
000's Omitted
(Unaudited)
<CAPTION>
Three Months Ended
Mar. 31, Mar. 31,
1999 1998
--------- ---------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 4,212 $ 2,408
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation and amortization 2,520 2,614
Amortization of Seabrook Nuclear Project 425 425
Amortization of contract buyouts and restructuring 5,200 5,091
Other amortizations 530 445
Allowance for equity funds used during construction (143) (69)
Deferred income tax provision and investment tax credits 2,333 1,505
Changes in assets and liabilities:
Payment received related to terminated purchased power contract 1,750 -
Costs to restructure purchased power contract (349) -
Deferred incremental ice storm costs - (3,942)
Deferred incremental Maine Yankee costs 384 (822)
Deferred Maine Yankee refueling costs - 286
Release of Graham Station property sale proceeds by trustee 6,200 -
Accounts receivable, net and unbilled revenue (2,173) 554
Accounts payable (236) (419)
Accrued interest 956 1,157
Current and deferred income taxes 202 (16)
Accrued postretirement benefit costs 396 175
Deferred revenue - (731)
Other current assets and liabilities, net 983 (331)
Other, net (667) (527)
--------- ---------
Net Increase in Cash From Operating Activities: $ 22,523 $ 7,803
--------- ---------
Cash Flows From Investing Activities:
Construction expenditures $ (5,938) $ (4,426)
Allowance for borrowed funds used during construction (204) (129)
--------- ---------
Net Decrease in Cash From Investing Activities $ (6,142) $ (4,555)
--------- ---------
Cash Flows From Financing Activities:
Dividends on preferred stock $ (296) $ (327)
Payments on long-term debt (8,168) (7,513)
Proceeds from issuance of long-term debt, net of
capital reserve fund requirements - 23,300
Short-term debt, net (8,000) (18,000)
--------- ---------
Net Decrease in Cash From Financing Activities $ (16,464) $ (2,540)
--------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents $ (83) $ 708
Cash and Cash Equivalents at Beginning of Period 2,946 937
--------- ---------
Cash and Cash Equivalents at End of Period $ 2,863 $ 1,645
========= =========
Cash Paid During the Three Months For:
Interest (Net of Amount Capitalized) $ 4,674 $ 4,876
Income Taxes - 11
========= =========
See notes to consolidated financial statements.
</TABLE>
<TABLE>
BANGOR HYDRO-ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF COMMON STOCK INVESTMENT
000's Omitted
(Unaudited)
<CAPTION>
Amounts Total
Paid in Common
Common Excess of Retained Stock
Stock Par Value Earnings Investment
<S> <C> <C> <C> <C>
BALANCE DECEMBER 31, 1997 $ 36,817 $ 56,969 $ 12,772 $106,558
Net income - - 2,408 2,408
Cash dividends declared on-
Preferred stock - - (296) (296)
Other - - (15) (15)
---------- ---------- ----------- -----------
BALANCE MARCH 31, 1998 $ 36,817 $ 56,969 $ 14,869 $108,655
========== ========== =========== ===========
BALANCE DECEMBER 31, 1998 $ 36,817 $ 59,054 $ 22,993 $118,864
Net income - - 4,212 4,212
Cash dividends declared on-
Preferred stock - - (264) (264)
Other - - (15) (15)
---------- ---------- ----------- -----------
BALANCE MARCH 31, 1999 $ 36,817 $ 59,054 $ 26,926 $122,797
========== ========== =========== ===========
See notes to the consolidated financial statements.
</TABLE>
BANGOR HYDRO-ELECTRIC COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
-------------
(Unaudited)
(1) BASIS OF PRESENTATION AND ACCOUNTING POLICIES:
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, in the opinion of Bangor Hydro-Electric Company
(the Company), the disclosures contained in this Form 10-Q are adequate
to make the information presented not misleading. The year end
condensed balance sheet data was derived from audited consolidated
financial statements but does not include all disclosures required by
generally accepted accounting principles. These statements should be
read in conjunction with the consolidated financial statements,
footnotes and all other information included in the 1998 Form 10-K.
In the opinion of the Company, the accompanying unaudited
consolidated financial statements reflect all adjustments, including
normal recurring accruals, necessary to present fairly the financial
position as of March 31, 1999 and the results of operations and cash
flows for the periods ended March 31, 1999 and 1998.
The Company's significant accounting policies are described in the
Notes to the Consolidated Financial Statements included in its 1998
Form 10-K filed with the Securities and Exchange Commission. For
interim reporting purposes, the Company follows these same basic
accounting policies but considers each interim period as an integral
part of an annual period. Accordingly, certain expenses are allocated
to interim periods based upon estimates of such expenses for the year.
(2) INCOME TAXES:
The following table reconciles a provision calculated by multiplying
income before federal income taxes by the statutory federal income tax rate
to the federal income tax provision:
Three Months Ended March 31,
1999 1998
Amount % Amount %
(Dollars in Thousands)
Federal income tax provision
at statutory rate $2,395 35 $1,369 34
(Less) Plus permanent reductions
in tax expense resulting
from statutory exclusions
from taxable income (47) - 24 1
------ --- ----- ---
Federal income tax provision before
effect of temporary differences
and investment tax credits $2,348 35 $1,393 35
(Less) temporary differences that
are flowed through for rate-
making and accounting purposes (198) (3) (97) (2)
(Less) utilization and amortization
of investment tax credits (52) (1) (53) (1)
------ --- ----- ---
Federal income tax provision $2,098 31 $1,243 32
====== === ===== ===
(3) INVESTMENT IN JOINTLY OWNED FACILITIES:
Condensed financial information for Maine Yankee Atomic Power Company
(Maine Yankee), Maine Electric Power Company, Inc. (MEPCO), Bangor-Pacific
Hydro Associates (BPHA), Chester SVC Partnership (Chester) and Bangor Gas
Company, LLC (Bangor Gas) is as follows:
MAINE YANKEE MEPCO
(Dollars in Thousands)
Unaudited)
Operations for Three Months Ended
-------------------------------------
Mar. 31, Mar. 31, Mar. 31, Mar. 31,
1999 1998 1999 1998
OPERATIONS: -------- -------- -------- --------
As reported by investee-
Operating revenues $ 15,683 $ 37,603 $ 744 $ 701
======== ======== ======== ========
Earnings applicable to
common stock $ 1,253 $ 2,075 $ 2,888 $ 222
======== ======== ======== ========
Company's reported equity-
Equity in net income $ 88 $ 145 $ 410 $ 32
Add(Deduct)-Effect of
adjusting Company's
estimate to actual 169 7 (390) (20)
-------- -------- -------- --------
Amounts reported by Company $ 257 $ 152 $ 20 $ 12
======== ======== ======== ========
MAINE YANKEE MEPCO
(Dollars in Thousands)
(Unaudited)
Financial Position at
---------------------------------------
Mar. 31, Dec. 31, Mar. 31, Dec. 31,
1999 1998 1999 1998
FINANCIAL POSITION: --------- --------- --------- --------
As reported by investee-
Total assets $1,175,126 $1,183,298 $ 9,464 $ 5,515
Less-
Preferred stock 16,200 16,800 - -
Long-term debt 62,000 68,433 170 220
Other liabilities and
deferred credits 1,018,358 1,018,575 3,214 2,079
---------- --------- -------- --------
Net assets $ 78,568 $ 79,490 $ 6,080 $ 3,216
========== ========== ======== ========
Company's reported equity-
Equity in net assets $ 5,500 $ 5,564 $ 863 $ 457
Add(Deduct)- Effect
of adjusting Company's
estimate to actual 45 (125) (411) (18)
---------- ---------- -------- --------
Amounts reported by Co. $ 5,545 $ 5,439 $ 452 $ 439
========== ========== ======== ========
BPHA Chester
------------------- ------------------
(Dollars in Thousands)
(Unaudited)
Operations for Three Months Ended
------------------------------------------
Mar. 31, Mar. 31, Mar. 31, Mar. 31,
1999 1998 1999 1998
--------- --------- --------- ---------
OPERATIONS:
As reported by investee-
Operating revenues $ 2,035 $ 1,847 $ 1,089 $ 1,076
======= ======= ======= =======
Net Income $ 885 $ 646 $ - $ -
======= ======= ======= =======
Company's reported equity
in net income $ 443 $ 323 $ - $ -
======= ======= ======= =======
Financial Position at
Mar. 31, Dec. 31, Mar. 31, Dec. 31,
1999 1998 1999 1998
--------- -------- --------- --------
FINANCIAL POSITION:
As reported by investee-
Total assets $ 38,225 $38,324 $ 25,979 $26,478
Less-
Long-term debt 25,750 26,300 24,359 24,654
Other liabilities 2,483 2,517 1,620 1,824
------- ------- -------- -------
Net assets $ 9,992 $ 9,507 $ - $ -
======= ======= ======== =======
Company's reported equity
in net assets $ 4,996 $ 4,754 $ - $ -
======= ======= ======== =======
At March 31, 1999, and December 31, 1998, the Company's wholly owned
subsidiary, Penobscot Natural Gas Company, had a $140,000 and $77,000 equity
investment in Bangor Gas, respectively and recorded equity losses in Bangor
Gas of approximately $37,000 and $15,000 for the quarters ended March 31,
1999 and 1998, respectively. At March 31, 1999 and December 31, 1998, Bangor
Gas' total assets, principally construction work in progress, amounted to
$3.0 million and $2.9 million, respectively.
(4) EARNINGS PER SHARE:
The following table reconciles basic and diluted earnings per common
share assuming all stock warrants were converted to common shares.
(Amounts in 000's, except per share data)
For the Quarters
Ended
--------------------
Mar. 31, Mar. 31,
1999 1998
-------- ---------
Earnings
applicable to
common stock $ 3,933 $ 2,096
-------- --------
Average common
shares outstanding 7,363 7,363
Plus: incremental
shares from assumed
conversion 940 -
-------- --------
Average common shares
outstanding plus
assumed warrants
converted 8,303 7,363
-------- --------
Basic earnings
per common share $ .53 $ .28
======== =======
Diluted earnings
per common share $ .47 $ .28
======== =======
(5) RECLASSIFICATIONS -
Certain 1998 amounts have been reclassified to conform with the
presentation used in Form 10-Q for the quarter ended March 31, 1999.
BANGOR HYDRO-ELECTRIC COMPANY
FORM 10-Q FOR PERIOD ENDING MARCH 31, 1999
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------ --------------------------------
EXHIBITS: None.
--------
REPORTS ON FORM 8-K: None.
-------------------
BANGOR HYDRO-ELECTRIC COMPANY
FORM 10-Q FOR PERIOD ENDED MARCH 31, 1999
The information furnished in this report reflects all adjustments which
are, in the opinion of management, necessary to a fair statement of the
results for the interim period.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BANGOR HYDRO-ELECTRIC COMPANY
(Registrant)
Dated: May 13, 1999 /s/ Frederick S. Samp
-------------------------
Frederick S. Samp
Vice President - Finance & Law
(Chief Financial Officer)
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from Bangor
Hydro-Electric Company's form 10Q 1st qtr 1999 and is qualified in its entirety
by reference to such 10Q filing.
</LEGEND>
<CIK> 0000009548
<NAME> BANGOR HYDRO-ELECTRIC COMPANY
<MULTIPLIER> 1,000
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