View:
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1998
Commission File Number 1-8858
Unitil Corporation
(Exact name of registrant as specified in its charter)
New Hampshire 02-0381573
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6 Liberty Lane West, Hampton, New Hampshire 03842
(Address of principal executive office) (Zip Code)
(603) 772-0775
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year, if changed since last
report.)
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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at August 1, 1998
Common Stock, No par value 4,503,420 Shares
UNITIL CORPORATION AND SUBSIDIARY COMPANIES
INDEX
Part I. Financial Information Page No.
Consolidated Statements of Earnings - Three and Six
Months Ended June 30, 1998 and 1997 3
Consolidated Balance Sheets, June 30, 1998,
June 30, 1997 and December 31, 1997 4-5
Consolidated Statements of Cash Flows - Six Months
Ended June 30, 1998 and 1997 6
Notes to Consolidated Financial Statements 7-8
Management's Discussion and Analysis of Results of
Operations and Financial Condition 9-12
Exhibit 11 - Computation of Earnings per Average
Common Share Outstanding 13
Part II. Other Information 14
PART 1. FINANCIAL INFORMATION
UNITIL CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF EARNINGS
(000's except common shares and per share data)
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
Operating Revenues:
Electric $38,200 $36,899 $75,859 $74,958
Gas 3,335 3,702 9,661 10,968
Other 7 13 15 21
Total Operating Revenues 41,542 40,614 85,535 85,947
Operating Expenses:
Fuel and Purchased Power 25,645 24,644 50,787 50,116
Gas Purchased for Resale 2,044 2,228 5,639 6,594
Operating and Maintenance 6,124 5,901 11,754 11,548
Depreciation 2,571 2,223 4,901 4,526
Provisions for Taxes:
Local Property and Other 1,430 1,353 2,837 2,724
Federal and State Income 519 834 1,889 2,392
Total Operating Expenses 38,333 37,183 77,807 77,900
Operating Income 3,209 3,431 7,728 8,047
Non-Operating Expense (Income) 27 11 71 17
Income Before Interest Expense 3,182 3,420 7,657 8,030
Interest Expense, Net 1,704 1,765 3,557 3,460
Net Income 1,478 1,655 4,100 4,570
Less Dividends on Preferred Stock 69 69 138 138
Net Income Applicable to
Common Stock $1,409 $1,586 $3,962 $4,432
Average Common Shares
Outstanding 4,496,758 4,404,558 4,487,546 4,397,062
Basic Earnings Per Share $0.31 $0.36 $0.88 $1.01
Diluted Earnings Per Share $0.30 $0.35 $0.86 $0.98
Dividends Declared Per Share
of Common Stock (Note 1) $0.34 $0.335 $1.02 $1.005
(The accompanying notes are an integral part of these statements.)
UNITIL CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS (000'S)
(UNAUDITED) (AUDITED)
June 30, December 31,
1998 1997 1997
ASSETS:
Utility Plant:
Electric $170,583 $161,688 $166,636
Gas 30,942 29,135 30,473
Common 20,003 19,220 19,689
Construction Work in Progress 3,570 2,902 2,677
Total Utility Plant 225,098 212,945 219,475
Less: Accumulated Depreciation 71,345 66,827 68,360
Net Utility Plant 153,753 146,118 151,115
Other Property & Investments 42 42 42
Current Assets:
Cash 3,415 2,752 2,337
Accounts Receivable -
Less Allowance for
Doubtful Accounts of
$682, $721 and $653 15,363 15,694 16,890
Materials and Supplies 2,695 2,278 2,663
Prepayments 648 703 434
Accrued Revenue 4,257 6,172 6,796
Total Current Assets 26,378 27,599 29,120
Deferred Assets:
Debt Issuance Costs 886 800 918
Cost of Abandoned Properties 23,054 24,676 23,885
Prepaid Pension Costs 8,363 7,731 8,120
Other Deferred Assets 25,526 24,365 24,777
Total Deferred Assets 57,829 57,572 57,700
TOTAL $238,002 $231,331 $237,977
(The accompanying notes are an integral part of these statements.)
UNITIL CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS (Cont.) (000's)
UNAUDITED) (AUDITED)
June 30, December 31,
1998 1997 1997
CAPITALIZATION AND LIABILITIES:
Capitalization:
Common Stock Equity $71,881 $68,756 $71,644
Preferred Stock,
Non-Redeemable, Non-Cumulative 225 225 225
Preferred Stock, Redeemable,
Cumulative 3,618 3,666 3,666
Long-Term Debt,
Less Current Portion 60,729 65,400 63,896
Total Capitalization 136,453 138,047 139,431
Capitalized Leases,
Less Current Portion 4,418 4,492 4,733
Current Liabilities:
Long-Term Debt,
Current Portion 4,539 4,273 4,470
Capitalized Leases,
Current Portion 1,054 923 883
Accounts Payable 15,713 16,091 14,734
Short-Term Debt 18,000 9,625 18,000
Dividends Declared and Payable 1,752 1,673 212
Refundable Customer Deposits 1,556 2,474 2,187
Taxes (Refundable) Payable (73) (132) (554)
Interest Payable 1,030 1,086 1,087
Other Current Liabilities 3,132 2,566 2,635
Total Current Liabilities 46,703 38,579 43,654
Deferred Liabilities:
Investment Tax Credits 1,248 1,522 1,437
Other Deferred Liabilities 8,470 8,128 7,864
Total Deferred Liabilities 9,718 9,650 9,301
Deferred Income Taxes 40,710 40,563 40,858
TOTAL $238,002 $231,331 $237,977
(The accompanying notes are an integral part of these statements.)
UNITIL CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (000'S)
(UNAUDITED)
Six Months Ended June 30,
1998 1997
Net Cash Flow from Operating Activities:
Net Income $4,100 $4,570
Adjustments to Reconcile Net Income
to Net Cash Provided by Operating Activities:
Depreciation and Amortization 4,901 4,526
Deferred Taxes (33) 187
Amortization of Investment Tax Credit (190) (87)
Provision of Doubtful Accounts 363 416
Amortization of Debt Issuance Costs 32 28
Changes in Assets and Liabilities:
(Increase) Decrease in:
Accounts Receivable 1,164 273
Materials and Supplies (32) 201
Prepayments and Prepaid Pension (457) (605)
Accrued Revenue 2,539 2,687
Increase (Decrease) in:
Accounts Payable 979 987
Refundable Customer Deposits (631) 889
Taxes and Interest Accrued 424 (383)
Other, Net (308) (911)
Net Cash Provided by
Operating Activities 12,851 12,778
Net Cash Flows from Investing Activities:
Acquisition of Property,
Plant and Equip. (6,213) (5,863)
Net Cash Used in Investing Activities (6,213) (5,863)
Cash Flows from Financing Activities:
Net Decrease in Short-Term Debt -- (11,775)
Proceeds from Long-Term Debt -- 7,500
Repayments of Long-Term Debt (3,098) (39)
Dividends Paid (3,176) (3,066)
Issuance of Common Stock 905 573
Retirement of Preferred Stock (47) --
Repayment of Capital Lease Obligations (144) (259)
Net Cash Flows from
Financing Activities (5,560) (7,066)
Net Increase (Decrease) in Cash 1,078 (151)
Cash at Beginning of Year 2,337 2,903
Cash at June 30, $3,415 $2,752
Supplemental Cash Flow Information:
Cash Paid for:
Interest Paid $3,650 $3,800
Federal Income Taxes Paid $1,290 $1,960
Non-Cash Financing Activities:
Capital Leases Incurred $365 --
(The accompanying notes are an integral part of these statements.)
UNITIL CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
Note 1.
Dividends Declared Per Share:
Three regular quarterly common stock dividends were declared during
the six month periods ended June 30, 1998 and 1997.
Common Stock Dividend:
On June 18, 1998, the Company's Board of Directors declared its
regular quarterly dividend on the Company's Common Stock of $0.34 per share
which was payable on August 14, 1998 to shareholders of record as of
July 31, 1998.
On March 5, 1998, the Company's Board of Directors declared its
regular quarterly dividend on the Company's Common Stock of $0.34 per share
which was payable on May 15, 1998 to shareholders of record as of
May 1, 1998.
On January 20, 1998, the Company's Board of Directors approved a
1.5% increase to the dividend rate on its common stock. The new regular
dividend rate of $0.34 per share was payable February 13, 1998 to
shareholders of record as of January 30, 1998.
Note 2.
Common Stock:
During the second quarter of 1998, the Company sold 12,123 shares of
Common Stock, at an average price of $21.83 per share, in connection with
its Dividend Reinvestment and Stock Purchase Plan, 401(k) plan and Key
Employee Stock Option Plan. Net proceeds of $264,614 were used to reduce
short-term borrowings.
Note 3.
Preferred Stock:
Details on preferred stock at June 30, 1998, June 30, 1997 and
December 31, 1997 are shown below: (Amounts in Thousands)
June 30, December 31,
1998 1997 1997
Preferred Stock:
Non-Redeemable, Non-Cumulative,
6%, $100 Par Value $225 $225 $225
Redeemable, Cumulative,
$100 Par Value:
8.70% Series 215 215 215
5% Dividend Series 91 91 91
6% Dividend Series 168 168 168
8.75% Dividend Series 344 344 344
8.25% Dividend Series 395 406 406
5.125% Dividend Series 998 1,035 1,035
8% Dividend Series 1,407 1,407 1,407
Total Redeemable
Preferred Stock 3,618 3,666 3,666
Total Preferred Stock $3,843 $3,891 $3,891
Note 4.
Long-term Debt:
Details on long-term debt at June 30, 1998, June 30, 1997 and
December 31, 1997 are shown below: (Amounts in Thousands)
June 30, December 31,
1998 1997 1997
Concord Electric Company:
First Mortgage Bonds:
Series C, 6 3/4%, due January 15, 1998 -- $1,520 $1,520
Series H, 9.43%, due September 1, 2003 5,200 5,850 5,200
Series I, 8.49%, due October 14, 2024 6,000 6,000 6,000
Exeter & Hampton Electric Company:
First Mortgage Bonds:
Series E, 6 3/4%, due January 15, 1998 -- 498 498
Series H, 8.50%, due December 15, 2002 700 805 700
Series J, 9.43%, due September 1, 2003 4,000 4,500 4,000
Series K, 8.49%, due October 14, 2024 9,000 9,000 9,000
Fitchburg Gas and Electric Light Company:
Promissory Notes:
8.55% Notes due March 31, 2004 14,000 15,000 15,000
6.75% Notes due November 30, 2023 19,000 19,000 19,000
Unitil Realty Corp.
Senior Secured Notes:
8.00% Notes Due August 1, 2017 7,368 7,500 7,448
Total 65,268 69,673 68,366
Less: Installments due within one year 4,539 4,273 4,470
Total Long-term Debt $60,729 $65,400 $63,896
Note 5.
In the opinion of the Company, the accompanying unaudited
consolidated financial statements contain all adjustments (consisting only
of normal recurring accruals) necessary to present fairly the consolidated
financial position as of June 30, 1998 and 1997; and results of operations
for the three and six months ended June 30, 1998 and 1997; and consolidated
statements of cash flows for the six months ended June 30, 1998 and 1997.
Reclassifications of amounts are made periodically to previously issued
financial statements to conform with the current year presentation.
The results of operations for the six months ended June 30, 1998 and
1997 are not necessarily indicative of the results to be expected for the
full year.
UNITIL CORPORATION AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
EARNINGS
The Company earned $0.31 per average common share (basic) for the
second quarter of 1998, a decrease of $0.05 compared to the $0.36 earned
for the second quarter of 1997. On a year-to-date basis, basic earnings per
average common share were $0.88 for the six months ended June 30, 1998, a
decrease of $0.13 compared to the $1.01 earned in the first half of 1997.
Earnings decreased approximately $0.08 per share, as a result of lower energy
sales during the mild weather in the first six months of 1998. The remainder
of the decrease in earnings for the six-month period is primarily
attributable to the impact of the restructuring of the electric utility
industry in Massachusetts.
Total Operating Revenues were $41.5 million in the second quarter of 1998,
compared to $40.6 million a year earlier, and $85.5 million in the first six
months of 1998, compared to $85.9 million in the first six months of 1997.
Despite the mild weather over the first six months of 1998, total electric
kilowatt-hour (kWh) sales increased over the same periods last year, by 2.0%
for the three months ended June 30, and 1.3% for the six months ended June
30 (See table on the next page). This increase in electric energy sales
reflects strong system growth and a robust regional economy. KWh Sales to
our Commercial and Industrial customers were up 4.7% and 2.9%, respectively,
over the second quarter of last year.
Unitil's local distribution operating companies experienced extremely warm
winter temperatures in their service territories this year, the warmest in
over 100 years since such data has been kept. Gas firm therm sales, which
are at their high point of the sales cycle during the winter months, were
down 6.2% through the end of the second quarter of 1998 compared to the same
six month period last year. Gas Revenues were 11.9% lower through the first
six months of 1998, compared to 1997, because of the lower sales volumes and
cost of gas sold.
Electric utility industry restructuring in Massachusetts became effective on
March 1, 1998, ("Choice Date"). On that date Fitchburg Gas and Electric
Light Company, (FG&E), Unitil's Massachusetts subsidiary, implemented open
retail access and all of FG&E's customers gained the right to choose their
electricity supplier. FG&E will continue to deliver electricity to all of
its customers within its distribution system, which remains a regulated
business. FG&E is Unitil's largest subsidiary. On Choice Date, FG&E's
customers received a 10% rate discount under a statewide legislated
mandate. Fitchburg is also required to divest its electric generating
assets and power contracts.
The second quarter of 1998 marks the first full quarterly reporting period
in which FG&E has been operating under the restructuring rules in
Massachusetts. The decreases in earnings in the second quarter and
year-to-date caused by Massachusetts restructuring are primarily due to
the 10% rate discount implemented on Choice Date. Since Choice Date, FG&E
has been authorized to earn a lower return on its generation-related
investments.
The increase in Operation and Maintenance expenses compared to last year
reflects higher administrative costs associated with filing and
implementation of FG&E's restructuring plan and energy supply portfolio
divestiture efforts. Depreciation and Amortization expense is higher in
the current periods due to the accelerated write-off, in 1998, of electric
generating assets in accordance with FG&E's restructuring plan. These
additional expenses related to industry restructuring in Massachusetts are
partially offset by revenues accrued to be recovered, in the future, upon
divestiture of the energy supply portfolio or through other rate making cost
reconciliation mechanisms including retail access charges.
Higher Operating Expenses are further offset currently by lower income taxes,
due to lower taxable income and higher amortization of flow through
Investment Tax Credits in 1998.
Basic earnings per average common share for the twelve months ended June 30,
1998 and 1997, were $1.68 and $1.88, respectively.
Energy Sales (000's)
Three Months Ended Six Months Ended
KWH Sales 6/30/98 6/30/97 Change 6/30/98 6/60/97 Change
Residential 120,693 122,045 (1.1%) 271,823 273,308 (0.5%)
Commercial 97,996 93,627 4.7% 199,972 195,115 2.5%
Industrial 141,785 137,829 2.9% 280,666 274,066 2.4%
Total KWH Sales 360,474 353,501 2.0% 752,461 742,489 1.3%
Total Electric
Revenues $38,200 $36,899 3.5% $75,859 $74,958 1.2%
Firm Therm Sales
Residential 2,497 3,040 (17.9%) 7,989 8,806 (9.3%)
Commercial 931 912 2.1% 3,196 3,409 (6.2%)
Insustrial 1,267 1,222 3.7% 3,286 3,214 2.2%
Total Firm
Therm Sales 4,695 5,174 (9.3%) 14,471 15,429 (6.2%)
Total Gas Revenues $3,335 $3,702 (9.9%) $9,661 $10,968 (11.9%)
RESTRUCTURING AND COMPETITION - ELECTRIC UTILITY INDUSTRY
Regulatory activity in both New Hampshire and Massachusetts
continues to focus on deregulating the retail sale of electric energy. March
1, 1998 was the "Retail Access Date" or the beginning of competition in
Massachusetts, while New Hampshire's "Choice Date" slipped past the proposed
January 1, 1998, and did not make the legislature's mandated July 1, 1998.
Both states' restructuring efforts have focused on allowing customers to
choose their supplier of electricity from the competitive market, and have
their local utility deliver that electricity over its distribution systems
at regulated rates for the distribution service.
Massachusetts
On December 31, 1997, FG&E filed its restructuring plan (the "Plan")
with the Massachusetts Department of Telecommunications and Energy (MDTE) as
required by the Massachusetts restructuring law enacted in November, 1997.
The Plan provides customers with: a) choice of energy supplier; b) an
optional transition energy service provided by FG&E at regulated rates for
up to seven years; and c) a 10% price decrease. In the Plan, FG&E has
proposed to divest of owned and leased generation units and its portfolio of
purchased power contracts by year end 1998. Also under the Plan, to the
extent that the divestiture fails to recoup the full cost of electric supply
resources, the Company will be afforded full recovery of any shortfall
through non-bypassable retail access charges.
The MDTE conditionally approved the Plan for effect on March 1, 1998.
Several days of evidentiary hearings were held followed by rounds of legal
briefs. The Company expects to receive final approval of the Plan by the
MDTE in September, 1998.
When the Company receives a Final Order from the MDTE on its Plan,
the Company will be able to determine, in sufficient detail, the impact of
such order on the generation portion of its business that will no longer be
regulated and on the distribution portion of its business that will remain
regulated. As a result, the Company may be required to stop applying the
provisions of Statement of Financial Accounting Standards 71, "Accounting for
the Effects of Certain Types of Regulation," to a portion of its business.
Upon receiving the Final Order, the Company will review the measurement and
recording of Regulatory Assets and Liabilities arising from the Final Order.
Based upon settlements already reached between other electric utilities and
the MDTE in Massachusetts, the Company believes it will recover its
generation investments and the above market portion of its power contract
commitments through regulated cash flows to be realized from the
distribution portion of FG&E's business.
New Hampshire
On February 28, 1997, the New Hampshire Public Utilities Commission
(NHPUC) issued its Final Plan for transition to a competitive electric market
in New Hampshire. The order allowed Concord Electric Company (CECo) and
Exeter & Hampton Electric Company (E&H), Unitil's New Hampshire based retail
distribution utilities, to recover 100% of costs which will be "stranded"
due to this restructuring, but the NHPUC also took certain positions
undermining the legal basis for such recovery in the future. Northeast
Utilities' affiliate, Public Service Company of New Hampshire, appealed the
decision in Federal Court, which issued a temporary restraining order. In
June 1997, Unitil was admitted as a Plaintiff Intervenor in this proceeding.
The Judge has indicated that this case will go to trial in November of 1998.
On March 20, 1998, the NHPUC issued Order No. 22,875 affirming in
part and modifying in part its February 29, 1997 Final Plan. The March 20
NHPUC order required CECo, E&H and all other New Hampshire electric utilities
except the Public Service Company of New Hampshire to submit a compliance
filing by May 1, 1998. CECo and E&H submitted a response to the NHPUC's
March 20 order on May 1 which included: a) unbundled delivery service rates;
b) plans to implement the NHPUC affiliate rules when promulgated, mitigate
stranded costs, implement low-income customer policies, meet the energy needs
of special contract customers and implement data transfers electronically
with suppliers; c) proposed tariffs for delivery services; and d) proposed
terms and conditions for interfacing with competitive suppliers. The NHPUC
has taken no action on the Company's submittal, and Competition has been
delayed beyond the original legislative timetable of July 1, 1998. Unitil
continues to participate actively in all proceedings and in several
NHPUC-established working groups which will define the details of the
transition to competition and customer choice.
The Company also continues to work towards a comprehensive settlement
of all restructuring issues for Unitil and is hopeful that such a settlement
can be reached in the near future.
Unitil Resources, Inc., the Company's competitive market subsidiary,
will continue to participate in the New Hampshire Retail Competition Pilot
Program (Pilot Program), in which up to 3% of New Hampshire electric
customers are allowed to choose from competing electric suppliers, and have
this supply delivered across the local utility system. This program began in
May 1996, and will terminate on Choice Date.
OTHER REGULATORY MATTERS
On May 15, 1998, FG&E filed a base rate case with the MDTE seeking
an increase of $1.55 million or nine percent in annual revenues from firm
gas customers. This is the first requested base rate increase in 14 years.
The Company has requested an 11.25 percent return on common equity and is
seeking to modernize its rate structures for commercial and industrial
accounts. The Company is also unbundling its rates into delivery and supplier
charges to prepare for customer choice of gas supplier which is now expected
to be initiated on April 1, 1999. To provide time for a thorough
investigation including several days of evidentiary hearings, the
filing was routinely suspended by the MDTE and new rates will become
effective on December 1, 1998. The Company is also participating in a
statewide Collaborative that, in concert with MDTE efforts, will resolve
issues and establish rules for providing customers with choice of gas
supplier. After choice date, FG&E will continue to own and operate its
natural gas distribution system and deliver gas to its customers at regulated
rates for distribution services.
MILLSTONE UNIT NO. 3
Unitil's Massachusetts operating subsidiary, Fitchburg Gas and
Electric Light Company, has a 0.217% nonoperating ownership in the Millstone
Unit No. 3 (Millstone 3) nuclear generating unit which supplies it with 2.49
megawatts (MW) of electric capacity. In January 1996 the Nuclear Regulatory
Commission (NRC) placed Millstone 3 on its watch list as a Category 2
facility, which calls for increased NRC inspection attention. In March 1996,
the NRC requested additional information about the operation of the unit
from Northeast Utilities companies (NU), which operate the unit. As a result
of an engineering evaluation completed by NU, Millstone 3 was taken out of
service on March 30, 1996. The NRC later informed NU, in a letter dated June
28, 1996, that it had reclassified Millstone 3 as a Category 3 facility. The
NRC assigns this rating to plants which it deems to have significant
weaknesses that warrant maintaining the plant in shutdown condition until
the operator demonstrates that adequate programs have been established and
implemented to ensure substantial improvement in the operation of the plant.
The NRC's letter also informed NU that this designation would require the
NRC staff to obtain NRC approval by vote prior to a restart of the unit. On
June 15, 1998 the NRC redesignated Millstone 3 as a Category 2 facility and
allowed the NRC's Executive Director for Operations to determine when
Millstone 3 was ready for restart. Authorization for restart was given on
June 29, 1998. Millstone 3 began producing electric power in early
July, 1998 and reached full output on July 15, 1998. As a Category 2
facility, the unit remains on the NRC's Watch List. On August 11, 1998, NU
announced that Millstone 3 would be shut down for an estimated 7 to 10 days
to repair a leaking motor-operated valve located in the auxiliary feedwater
system. While the leakage rate on this valve, located on the non-radioactive
side of the plant, is within permitted rates, NU has decided to make the
repair at this time rather than to wait until a time when the repair may be
more critical. Millstone 2 remains out of service with a Category 3
designation. NU has determined that Millstone 1 will be retired and,
therefore, has been removed from the NRC's Watch List. The Company has no
ownership or contract interests in Millstone Units 1 and 2.
During the period that Millstone 3 was out of service, FG&E continued
to incur its proportionate share of the unit's ongoing Operations and
Maintenance (O&M) costs, and may incur additional O&M costs and capital
expenditures to meet NRC requirements. FG&E also incurred costs to replace
the power that was expected to be generated by the unit. During the outage,
FG&E had been incurring approximately $35,000 per month in replacement power
costs, and had been recovering those costs through its fuel adjustment
clause, which will be subject to review and approval by the MDTE. In August
1997, FG&E, in concert with other nonoperating joint owners, filed a demand
for arbitration in Connecticut and a lawsuit in Massachusetts, in an effort
to recover costs associated with the extended unplanned shutdown and the
associated costs. The arbitration and legal cases are proceeding.
CAPITAL REQUIREMENTS
Capital expenditures for the six months ended June 30, 1998 were
approximately $6.2 million. This compares to $5.9 million during the same
period last year. Capital expenditures for the year 1998 are estimated to
be approximately $16.3 million as compared to $15.4 million for 1997. This
projection reflects capital expenditures for utility system expansions,
replacements and other improvements.
LEGAL PROCEEDINGS
The Company is involved in legal and administrative proceedings and
claims of various types which arise in the ordinary course of business. In
the opinion of the Company's management, based upon information furnished
by counsel and others, the ultimate resolution of these claims will not
have a material impact on the Company's financial position.
FORWARD-LOOKING INFORMATION
This report contains forward-looking statements which are subject to
the inherent uncertainties in predicting future results and conditions.
Certain factors that could cause the actual results to differ materially
from those projected in these forward-looking statements include, but are
not limited to; variations in weather, changes in the regulatory
environment, customers' preferences on energy sources, general economic
conditions, increased competition and other uncertainties, all of which
are difficult to predict, and many of which are beyond the control
of the Company.
COMPUTATION OF EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING
(UNAUDITED)
(Amounts in thousands, except Shares and Per Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
BASIC EARNINGS PER SHARE 1998 1997 1998 1997
Net Income $1,478 $1,655 $4,100 $4,570
Less: Dividend Requirement
on Preferred Stock 69 69 138 138
Net Income Applicable
to Common Stock $1,409 $1,586 $3,962 $4,432
Average Number of Common
Shares Outstanding 4,496,758 4,404,558 4,487,546 4,397,062
Basic Earnings per
Common Share $0.31 $0.36 $0.88 $1.01
DILUTED EARNINGS PER SHARE
Net Income $1,478 $1,655 $4,100 $4,570
Less: Dividend Requirement
on Preferred Stock 69 69 138 138
Net Income Applicable
to Common Stock $1,409 $1,586 $3,962 $4,432
Average Number of Common
Share Outstanding 4,605,770 4,515,653 4,599,252 4,507,918
Diluted Earnings Per
Common Share $0.30 $0.35 $0.86 $0.98
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description of Exhibit Reference
11 Computation in Support Filed herewith
of Earnings per Share
(b) Reports on Form 8-K
During the quarter ended June 30, 1998, the Company did not file
any reports on Form 8-K.
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.
UNITIL CORPORATION
(Registrant)
Date: August 14, 1998 /s/Anthony Baratta
Anthony Baratta
Chief Financial Officer
Date: August 14, 1998 /s/Mark H. Collin
Mark H. Collin
Treasurer