Annual Reports

 
Quarterly Reports

  • 10-Q (Oct 28, 2010)
  • 10-Q (Aug 12, 2010)
  • 10-Q (May 10, 2010)
  • 10-Q (Nov 12, 2009)
  • 10-Q (Aug 13, 2009)
  • 10-Q (May 11, 2009)

 
8-K

 
Other

Maine & Maritimes 10-Q 2010

Documents found in this filing:

  1. 10-Q
  2. Ex-31.1
  3. Ex-31.2
  4. Ex-32
  5.  
maine10q.htm
 



 
 ------------------------------------------------

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

-----------------------------------

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2010

- OR -

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

-----------------------------------

Commission File No.  333-103749

MAINE & MARITIMES CORPORATION

A Maine Corporation                                                      I.R.S. Employer Identification No. 30-0155348

209 STATE STREET, PRESQUE ISLE, MAINE 04769

(207) 760-2499
-----------------------------------

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 by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  
Yes ¨.    No x.  

   Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
   Large accelerated filer ¨.  Accelerated filer ¨.  
   Non-accelerated filer ¨     Smaller reporting company x.  
   (Do not check if a smaller reporting company)    
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨.    No x.

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of October 28, 2010.

Common Stock, $7.00 par value – 1,684,624 shares
 
 
 
 
1

 
 
 
 

MAINE & MARITIMES CORPORATION AND SUBSIDIARIES
Statements of Consolidated Operations >(Unaudited)
(In thousands of dollars, except share and per share information)
 
 
   
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
   
2010
   
2009
   
2010
   
2009
 
Operating Revenues
                       
Regulated Revenues
  $ 7,870     $ 7,273     $ 25,200     $ 24,705  
Unregulated Utility Services Revenues
    38       29       72       577  
Total Operating Revenues
    7,908       7,302       25,272       25,282  
                                 
Operating Expenses
                               
Regulated Operation and Maintenance
    4,029       4,371       11,874       11,925  
Unregulated Utility Services Operation and Maintenance
    39       17       54       371  
Other Unregulated Operation and Maintenance (1)
    97       210       601       598  
Depreciation
    787       811       2,275       2,211  
Amortization of Stranded Costs
    2,583       2,700       7,750       8,101  
Amortization
    60       42       195       114  
Taxes Other Than Income
    478       441       1,447       1,364  
(Benefit of) Provision for Income Taxes—Regulated
    (117 )     (467 )     470       278  
Benefit of Income Taxes—Unregulated
    (55 )     (91 )     (264 )     (198 )
                                 
Total Operating Expenses
    7,901       8,034       24,402       24,764  
                                 
Operating (Loss) Income
    7       (732 )     870       518  
                                 
Other Income (Deductions)
                               
Equity in Income of Associated Companies
    24       37       119       98  
Interest and Dividend Income
    -       -       -       8  
Benefit of Income Taxes
    26       4       529       7  
Unrecoverable Merger Costs
    (71 )     -       (1,264 )     -  
Other—Net
    (37 )     (11 )     (106 )     (68 )
                                 
Total Other (Deductions) Income
    (58 )     30       (722 )     45  
                                 
(Loss) Income Before Interest Charges
    (51 )     (702 )     148       563  
                                 
Interest Charges
                               
Long-Term Debt and Notes Payable
    430       449       1,269       1,355  
Less Stranded Costs Carrying Charge
    (196 )     (274 )     (647 )     (910 )
                                 
Total Interest Charges
    234       175       622       445  
                                 
Net (Loss) Income Available for Common Stockholders
  $ (285 )   $ (877 )   $ (474 )   $ 118  
                                 
Weighted Average Shares of Common Stock Outstanding - Basic
    1,683,949       1,681,249       1,683,274       1,680,507  
Weighted Average Shares of Common Stock Outstanding - Diluted
    1,683,949       1,681,249       1,683,274       1,681,237  
                                 
Basic (Loss) Earnings Per Share
  $ (0.17 )   $ (0.52 )   $ (0.28 )   $ 0.07  
                                 
Diluted (Loss) Earnings Per Share
  $ (0.17 )   $ (0.52 )   $ (0.28 )   $ 0.07  
                                 
(1) Unregulated operation and maintenance expense and income tax benefits included in continuing operations is the activity of the holding company, including operating expenses of MAM USG, other corporate costs directly associated with unregulated operations, and other costs that cannot be charged to the regulated utility.
 

 
 
See Notes to Unaudited Consolidated Financial Statements
 
 
 
 
 
2

 
 

 
MAINE & MARITIMES CORPORATION AND SUBSIDIARIES
Statements of Consolidated Cash Flows >(Unaudited)
(In thousands of dollars)

   
Nine Months Ended
September 30,
 
   
2010
   
2009
 
Cash Flow From Operating Activities
           
Net (Loss) Income
  $ (474 )   $ 118  
Adjustments to Reconcile Net (Loss) Income to Net Cash Provided by Operations:
               
Depreciation
    2,275       2,211  
Amortization of Intangibles
    195       114  
Amortization of Seabrook
    833       833  
Deferred Income Taxes—Net
    (1,336 )     (2,085 )
Deferred Investment Tax Credits
    (10 )     (13 )
Change in Deferred Regulatory and Debt Issuance Costs
    5,746       6,192  
Change in Benefit Obligations
    (1,046 )     (343 )
Change in Deferred Directors' Compensation
    458       (9 )
Change in Current Assets and Liabilities:
               
Accounts Receivable and Unbilled Revenue from Utility
    1,031       4,170  
Other Current Assets
    66       (149 )
Accounts Payable
    676       (1,905 )
Other Current Liabilities
    1,039       (566 )
Other—Net
    481       93  
                 
Net Cash Flow Provided By Operating Activities
    9,934       8,661  
                 
Cash Flow From Financing Activities
               
Dividends Paid
    (252 )     (252 )
Repayments of Long-Term Debt
    (855 )     (1,053 )
Payments of Capital Lease Obligations
    (130 )     (142 )
Short-Term Debt Repayments, Net
    (3,400 )     (2,000 )
                 
Net Cash Flow Used For Financing Activities
    (4,637 )     (3,447 )
                 
Cash Flow From Investing Activities
               
Change in Restricted Investments
    (198 )     (914 )
Dividends Received from Associated Companies
    831       5  
Investment in Fixed Assets
    (5,720 )     (5,034 )
                 
Net Cash Flow Used For Investing Activities
    (5,087 )     (5,943 )
                 
Increase (Decrease) in Cash and Cash Equivalents
    210       (729 )
Cash and Cash Equivalents at Beginning of Period
    747       1,846  
                 
Cash and Cash Equivalents at End of Period
  $ 957     $ 1,117  
                 
Supplemental Disclosure of Cash Flow Information:
               
Cash Paid During the Period for:
               
Interest
  $ 1,261     $ 1,383  
Income Taxes
  $ 1,546     $ 3,416  
Non-Cash Activities:
               
Dividends Declared, Not Yet Paid
  $ 84     $ 84  
Fair Market Value of Stock Issued to Directors and Officers
  $ 83     $ 82  


See Notes to Unaudited Consolidated Financial Statements

 
 
 
 
 
 
3

 
 
 
MAINE & MARITIMES CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets >(Unaudited)
(In thousands of dollars)


   
September 30,
   
December 31,
 
   
2010
   
2009
 
ASSETS
           
Plant:
           
Electric Plant in Service
  $ 120,545     $ 116,729  
Non-Utility Plant
    77       101  
Less Accumulated Depreciation
    (49,586 )     (47,690 )
                 
Net Plant in Service
    71,036       69,140  
Construction Work-in-Progress
    1,907       901  
                 
Total Plant Assets
    72,943       70,041  
                 
Investments in Associated Companies
    400       1,136  
                 
Net Plant and Investments in Associated Companies
    73,343       71,177  
                 
Current Assets:
               
Cash and Cash Equivalents
    957       747  
Accounts Receivable (less allowance for uncollectible accounts of $141 in 2010 and $439 in 2009)
    5,940       6,584  
Unbilled Revenue from Utility
    767       1,154  
Inventory
    1,025       889  
Prepayments
    449       651  
Prepaid Taxes
    999       1,616  
                 
Total Current Assets
    10,137       11,641  
                 
Regulatory Assets:
               
Uncollected Maine Yankee Decommissioning Costs
    2,038       2,296  
Recoverable Seabrook Costs
    6,396       7,229  
Regulatory Assets—Deferred Income Taxes
    5,735       6,055  
Regulatory Assets—Post-Retirement Medical and Pension Benefits
    1,366       1,379  
Deferred Fuel and Purchased Energy Costs
    13,364       18,833  
Unamortized Premium on Early Retirement of Debt
    322       478  
Deferred Regulatory Costs
    1,790       2,527  
                 
Total Regulatory Assets
    31,011       38,797  
                 
Other Assets:
               
Unamortized Debt Issuance Costs
    74       121  
Restricted Investments (at cost, which approximates market)
    203       5  
Miscellaneous Assets
    1,362       1,506  
                 
Total Other Assets
    1,639       1,632  
                 
Total Assets
  $ 116,130     $ 123,247  


See Notes to Unaudited Consolidated Financial Statements
 
 

 
 
4

 
MAINE & MARITIMES CORPORATION AND SUBSIDIARIES
Capitalization and Liabilities >(Unaudited)
(In thousands of dollars)


   
September 30,
   
December 31,
 
   
2010
   
2009
 
Capitalization (see accompanying statement):
           
Shareholders’ Equity
  $ 44,876     $ 46,708  
Long-Term Debt
    22,790       23,645  
                 
Total Capitalization
    67,666       70,353  
                 
Current Liabilities:
               
Long-Term Debt Due Within One Year
    1,140       1,140  
Notes Payable to Banks
    1,400       4,800  
Accounts Payable
    4,463       3,627  
Accounts Payable—Associated Companies
    29       31  
Accrued Employee Benefits
    1,040       1,198  
Customer Deposits
    410       310  
Taxes Accrued
    410       113  
Interest Accrued
    91       83  
Dividends Payable
    84       84  
Unearned Revenue
    54       37  
                 
Total Current Liabilities
    9,121       11,423  
                 
Deferred Credits and Other Liabilities:
               
Accrued Removal Obligations
    5,764       5,701  
Fair Value of Interest Rate Hedge
    5,168       3,178  
Uncollected Maine Yankee Decommissioning Costs
    2,038       2,296  
Other Regulatory Liabilities
    342       1,005  
Deferred Income Taxes
    18,270       20,719  
Accrued Postretirement Benefits and Pension Costs
    5,078       6,137  
Investment Tax Credits
    12       22  
Miscellaneous Liabilities
    2,671       2,413  
                 
Total Deferred Credits and Other Liabilities
    39,343       41,471  
                 
Commitments, Contingencies, and Regulatory Matters (Note 8)
               
                 
Total Capitalization and Liabilities
  $ 116,130     $ 123,247  





See Notes to Unaudited Consolidated Financial Statements

 
 
 
5

 
 
 
 
 

MAINE & MARITIMES CORPORATION AND SUBSIDIARIES
Statement of Consolidated Shareholders’ Equity (Unaudited)
(in thousands of dollars, except share and per share data)


   
Common Shares
                   
   
Shares Issued and Outstanding
   
Par Value Issued ($7/Share)
   
Paid-In Capital
   
Retained Earnings
   
Accumulated Other Compre-hensive Income (Loss)
   
Total
 
Balance,
December 31, 2009
    1,681,924     $ 11,773     $ 1,827     $ 34,995     $ (1,887 )   $ 46,708  
                                                 
Common Stock  Issued
    2,025       14       69                       83  
                                                 
Net Loss
                            (474 )             (474 )
                                                 
Other Comprehensive Income (Loss):
                                               
Unrealized Gain on Investments Available for Sale, Net of Tax Provision of $4
                                    6       6  
Changes in Value of Foreign Exchange Translation Loss
                                    (1 )     (1 )
Change in Fair Value of Interest Rate Hedge, Net of Tax Provision of $796
                                    (1,194 )     (1,194 )
                                                 
Total Other Comprehensive Loss
                                            (1,189 )
                                                 
Total Comprehensive Loss
                                            (1,663 )
                                                 
Dividends Paid ($0.15 per share)
                            (252 )             (252 )
                                                 
Balance,
September 30, 2010
    1,683,949     $ 11,787     $ 1,896     $ 34,269     $ (3,076 )   $ 44,876  
                                                 


MAM had five million shares of $7 per share common stock authorized, with 1,683,949 and 1,681,924 shares issued and outstanding as of September 30, 2010, and December 31, 2009, respectively. At September 30, 2010, and December 31, 2009, MAM had 500,000 shares of $0.01 per share preferred stock authorized, with none issued or outstanding.





See Notes to Unaudited Consolidated Financial Statements.
 
 
 
 
 
6

 

 
NOTES TO UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS

1.    ACCOUNTING POLICIES

Consolidation and Basis of Presentation
 
The accompanying unaudited consolidated financial statements include the accounts of Maine & Maritimes Corporation (“MAM” or the “Company”) and the following wholly-owned subsidiaries and affiliates:

1.  
Maine Public Service Company (“MPS”) and its wholly-owned inactive Canadian subsidiary Maine & New Brunswick Electrical Power Company, Ltd (“Me&NB”); and

2.  
MAM Utility Services Group (“MAM USG”), a wholly-owned United States subsidiary.

MAM is listed on the NYSE Amex under the symbol “MAM.”

In the opinion of management, the accompanying unaudited consolidated balance sheets and related interim unaudited consolidated statements of operations, cash flows, and stockholders’ equity include all adjustments necessary for their fair presentation in conformity with accounting principles generally accepted in the United States of America.  These adjustments consist only of normal recurring items, except for the reclassification of transaction costs.

In the Order approving the stipulations under Maine Public Utilities Commission (“MPUC”) Docket 2010-89, the Request for Approval of Reorganization, all transaction costs associated with BHE Holdings Inc.’s acquisition of MAM were disallowed from recovery in MPS rates.  Therefore, MPS reclassified $1.26 million of merger transaction related costs from “Regulated Operation and Maintenance” expense to “Unrecoverable Merger Costs” on the Statement of Consolidated Operations for the nine months ended September 30, 2010, and presented the $71,000 of MPS merger costs for the three months ended September 30, 2010, also in that line. For the three and nine months ended September 30, 2010, MAM USG was allocated approximately $6,000 and $51,000, respectively, reported in "Other Unregulated Operation and Maintenance" expense on the Statement of Consolidated Operations.

Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Examples of such estimates and assumptions include assumptions around recovery of regulatory assets and liabilities, the estimate of unbilled utility revenue, assumptions for the Company’s postretirement medical and pension plans, estimate of the allowance for doubtful accounts, estimate of asset retirement obligations, the estimated fair value of the interest rate hedge, and estimated Maine Yankee decommissioning costs.  Actual results and outcomes may differ from management’s estimates and assumptions.

Interim results are not necessarily indicative of results for a full year.   The information included in this Form 10-Q should be read in conjunction with information included in the MAM 2009 Form 10-K filed March 25, 2010, with the U.S. Securities and Exchange Commission (“SEC”).

As previously disclosed on the Company’s current report on Form 8-K filed with the SEC on March 12, 2010, and the Company’s 2009 Form 10-K, the Company entered into a certain agreement and plan of merger by and among the Company, BHE Holdings Inc. and BHE Holding Sub One Inc., dated as of March 12, 2010 (the “Merger Agreement”), whereby BHE Holding Sub One Inc. will merge with and into the Company, with the Company as the surviving entity.  Stockholders of the Company will receive $45.00 for each share of common stock of the Company in the transaction.

The merger was approved by MAM shareholders at its Annual Meeting on July 22, 2010, as reported in the Company’s current report on Form 8-K filed with the SEC on July 23, 2010.  The merger was also approved by the MPUC in their Order Approving Stipulation under Docket 2010-89 on October 14, 2010.  In addition to shareholder and MPUC approval, the Merger Agreement is subject to a number of other conditions that must be fulfilled in order to obligate the parties to close the merger. Those conditions include: regulatory approval of the merger by the Federal Energy Regulatory Commission (“FERC”), the continued accuracy of certain representations and warranties by both parties and the performance by both parties of certain covenants and agreements.  There can be no assurance that the conditions to closing the merger will be fulfilled or that the merger will be completed.  In addition, the Merger Agreement can be terminated in accordance with its terms.
 
The Company and its directors received two complaints from certain shareholders, both seeking class action certification and alleging in substance breach of fiduciary duty in connection with the board’s approval of the Merger Agreement.  The settlement of the state claim was approved in an Order and Final Judgment issued by the State of Maine Superior Court on September 23, 2010.  The federal complaint was dismissed on October 13, 2010.  Refer to Note 8 of these financial statements, Commitments, Contingencies and Regulatory Matters, for more information regarding these complaints.
 
 
 
7

 
 
 
All inter-company transactions between MAM and its subsidiaries have been eliminated in consolidation.

Accounting Policies

The Company’s accounting policies are those disclosed in its 2009 Annual Report on Form 10-K, which is hereby incorporated by this reference.


2.    INCOME TAXES

A summary of Federal and State income taxes charged (credited) to income is presented below. For accounting and ratemaking purposes, income tax provisions (benefits) included in “Operating Expenses” reflect taxes applicable to revenues and expenses allowable for ratemaking purposes on MPS regulated activities and unregulated activities for MAM and MAM USG.  The tax effect of items not included in rate base or normal operating activities is allocated as “Other Income (Deductions).”

(In thousands of dollars)
 
For the Three Months Ending
September 30,
   
For the Nine Months Ending
September 30,
 
   
2010
   
2009
   
2010
   
2009
 
Current income taxes
                       
Federal
  $ (346 )   $ 169     $ 944     $ 1,856  
State
    150       86       402       636  
Foreign
    -       -       (3 )     (1 )
                                 
Total current income taxes
    (196 )     255       1,343       2,491  
                                 
Deferred income taxes
                               
Federal
    1       (690 )     (1,408 )     (2,044 )
State
    -       (122 )     (248 )     (361 )
                                 
Total deferred income taxes
    1       (812 )     (1,656 )     (2,405 )
                                 
Investment credits, net
    (3 )     (5 )     (10 )     (13 )
Total income taxes
  $ (198 )   $ (562 )   $ (323 )   $ 73  
                                 
Allocated to:
                               
Operating income
                               
-  Regulated
  $ (117 )   $ (467 )   $ 470     $ 278  
-  Unregulated
    (55 )     (91 )     (264 )     (198 )
                                 
Total Operating
    (172 )     (558 )     206       80  
Other income
    (26 )     (4 )     (529 )     (7 )
Total
  $ (198 )   $ (562 )   $ (323 )   $ 73  

    For the nine months ended September 30, 2010, and 2009, the effective income tax rates were 40.5% and 38.4%, respectively.  The principal reasons for the effective tax rate differing from the US federal income tax rate are the earnings from investments, an Empowerment Zone tax credit, and disallowed meals and lobbying expenses.
 
    The Company has not accrued U.S. income taxes on the undistributed earnings of Me&NB, as the withholding taxes due on the distribution of any remaining amount would be principally offset by foreign tax credits.  No dividends were received from Me&NB in the first nine months of 2010 or 2009.

The taxpayer must conclude that a tax position must be more likely than not to be sustained by the Internal Revenue Service upon examination in order for the position to be recognized in the financial statements.  There were no adjustments required to the reported tax benefits at September 30, 2010 or December 31, 2009, due to Management’s assessment of the likelihood that the Company’s tax positions will meet that standard.  Further, the Company does not expect that the amounts of unrecognized tax benefits will change significantly in the next twelve months.

Interest on income taxes, if any, is presented within interest expense.  Penalties associated with income taxes, if any, are presented within Other Income (Deductions).  As of September 30, 2010 and December 31, 2009, the Company has accrued no interest or penalties related to uncertain tax positions.
 
 
 
8

 

 
The statutes of limitations for audits by Federal, Maine, New Hampshire, Massachusetts and Canadian tax authorities have expired for all tax years ending December 31, 2006, or earlier.

Management of the Company has evaluated the positive and negative evidence bearing upon the likelihood of the Company realizing its deferred tax assets.  For the quarter ended September 30, 2010 and the year ended December 31, 2009, Management determined a valuation allowance was needed on the earnings on investments.  Certain distributions from MPS’s investment in Maine Yankee have been treated for tax as dividend income, resulting in deferred tax assets of $390,000 at September 30, 2010, and $392,000 at December 31, 2009.  As this may become a capital loss for tax purposes, the Company cannot be assured capital gains will exist to allow for the use of this loss, and a full valuation allowance has been provided.  Management assessed the remaining deferred tax assets at September 30, 2010, and December 31, 2009, which consisted principally of pension and post-retirement benefits, accumulated other comprehensive income associated with the interest rate hedge and deferred directors’ compensation, and determined no valuation allowance is required.

The Company files consolidated federal, State of Maine and New Hampshire income tax returns.  The results of operations of each segment are calculated as though each were a stand-alone entity, with the related current and deferred income taxes booked in that segment.  MAM USG has recorded a receivable from MAM of $234,000 at September 30, 2010 and $171,000 at December 31, 2009, for current income taxes.  MPS recorded a $1.03 million payable to MAM at September 30, 2010 for current income taxes.  MAM and MPS had no intercompany payables or receivables related to current income taxes at December 31, 2009.

The following summarizes accumulated deferred income tax (assets) and liabilities established on temporary differences as of September 30, 2010, and December 31, 2009:

(In thousands of dollars)
           
   
September 30,
2010
   
December 31,
2009
 
Seabrook
  $ 3,437     $ 3,897  
Property
    13,635       12,539  
Flexible pricing revenue
    (122 )     (191 )
Deferred fuel
    5,331       7,513  
Pension and post-retirement benefits
    (2,011 )     (2,330 )
Other Comprehensive Income
    (2,025 )     (1,233 )
Deferred Directors' Compensation
    (729 )     (546 )
Other
    754       1,070  
                 
Net Accumulated Deferred Income Tax Liability
  $ 18,270     $ 20,719  


3.    SEGMENT INFORMATION

The Company is organized based on products and services.  Management monitors the operations of the Company in the following operating segments:
 
·  
Regulated electric utility: MPS and its inactive wholly-owned Canadian subsidiary, Me&NB;

·  
Unregulated utility services: MAM USG; and

·  
Other: Corporate costs directly associated with the unregulated subsidiaries, other costs not allocated to the regulated utility and inter-company eliminations.
  
  The accounting policies of the segments are the same as those described in Note 1, “Accounting Policies.”  MAM provides certain administrative support services to MPS and MAM USG.  The costs of services provided to MPS and MAM USG are billed to MPS and MAM USG based on a combination of direct charges and allocations.

MPS also provides services to MAM and other affiliates, including administrative services, such as information technology, human resources and accounting, and operational services.  These administrative services are billed at cost through inter-company transactions.  Operational services for which MPS has an established rate for charging third parties are charged to affiliates at those established rates.
 
 
 
9

 
 
 
   
(In thousands of dollars)
 
   
Three Months Ended September 30, 2010
 
   
Regulated
   
Unregulated
       
   
Electric
Utility
   
Utility
Services
   
Other
   
Total
 
Revenues from External Customers
                       
Regulated Operating Revenues
  $ 7,887     $ -     $ (17 )   $ 7,870  
Unregulated Utility Operating Revenues
    -       38       -       38  
                                 
Total Operating Revenues
    7,887       38       (17 )     7,908  
                                 
Operating Expenses
                               
Regulated Operation & Maintenance
    4,029       -       -       4,029  
Unregulated Operation & Maintenance
    -       155       (19 )     136  
Depreciation
    788       5       (6 )     787  
Amortization of Stranded Costs
    2,583       -       -       2,583  
Amortization
    60       -       -       60  
Taxes Other than Income
    479       -       (1 )     478  
Income Taxes
    (117 )     (57 )     2       (172 )
                                 
Total Operating Expenses
    7,822       103       (24 )     7,901  
                                 
Operating Income (Loss)
    65       (65 )     7       7  
Other Income (Deductions)
                               
Equity in Income of Associated Companies
    24       -       -       24  
Other Deductions
    (81 )     -       (1 )     (82 )
                                 
Total Other Deductions
    (57 )     -       (1 )     (58 )
                                 
Income (Loss) Before Interest Charges
    8       (65 )     6       (51 )
                                 
Interest Charges
    229       4       1       234  
                                 
Net (Loss) Income
  $ (221 )   $ (69 )   $ 5     $ (285 )

 
   
(In thousands of dollars)
 
   
Three Months Ended September 30, 2009
 
   
Regulated
   
Unregulated
       
   
Electric
Utility
   
Utility
Services
   
Other
   
Total
 
Revenues from External Customers
                       
Regulated Operating Revenues
  $ 7,293     $ -     $ (20 )   $ 7,273  
Unregulated Utility Operating Revenues
    -       29       -       29  
                                 
Total Operating Revenues
    7,293       29       (20 )     7,302  
                                 
Operating Expenses
                               
Regulated Operation & Maintenance
    4,371       -       -       4,371  
Unregulated Operation & Maintenance
    -       143       84       227  
Depreciation
    807       3       1       811  
Amortization of Stranded Costs
    2,700       -       -       2,700  
Amortization
    42       -       -       42  
Taxes Other than Income
    441       -       -       441  
Income Taxes
    (467 )     (48 )     (43 )     (558 )
                                 
Total Operating Expenses
    7,894       98       42       8,034  
                                 
Operating Loss
    (601 )     (69 )     (62 )     (732 )
Other Income (Deductions)
                               
Equity in Income of Associated Companies
    37       -       -       37  
Other Deductions
    (5 )     -       (2 )     (7 )
                                 
Total Other Income (Deductions)
    32       -       (2 )     30  
                                 
Loss Before Interest Charges
    (569 )     (69 )     (64 )     (702 )
                                 
Interest Charges
    165       4       6       175  
                                 
Net Loss
  $ (734 )   $ (73 )   $ (70 )   $ (877 )
                                 

 
10

 
 
   
(In thousands of dollars)
 
   
Nine Months Ended September 30, 2010
 
   
Regulated
   
Unregulated
       
   
Electric
Utility
   
Utility
Services
   
Other
   
Total
 
Revenues from External Customers
                       
Regulated Operating Revenues
  $ 25,248     $ -     $ (48 )   $ 25,200  
Unregulated Utility Operating Revenues
    -       72       -       72  
                                 
Total Operating Revenues
    25,248       72       (48 )     25,272  
                                 
Operating Expenses
                               
Regulated Operation & Maintenance
    11,874       -       -       11,874  
Unregulated Operation & Maintenance
    -       480       175       655  
Depreciation
    2,269       12       (6 )     2,275  
Amortization of Stranded Costs
    7,750       -       -       7,750  
Amortization
    195       -       -       195  
Taxes Other than Income
    1,447       -       -       1,447  
Income Taxes
    470       (179 )     (85 )     206  
                                 
Total Operating Expenses
    24,005       313       84       24,402  
                                 
Operating Income (Loss)
    1,243       (241 )     (132 )     870  
Other Income (Deductions)
                               
Equity in Income of Associated Companies
    119       -       -       119  
Other Deductions
    (840 )     -       (1 )     (841 )
                                 
Total Other Deductions
    (721 )     -       (1 )     (722 )
                                 
Income (Loss) Before Interest Charges
    522       (241 )     (133 )     148  
                                 
Interest Charges
    609       13       -       622  
                                 
Net Loss
  $ (87 )   $ (254 )   $ (133 )   $ (474 )
                                 
Total Assets
  $ 114,739     $ 356     $ 1,035     $ 116,130  

 
11

 
 
   
(In thousands of dollars)
 
   
Nine Months Ended September 30, 2009
 
   
Regulated
   
Unregulated
       
   
Electric
Utility
   
Utility
Services
   
Other
   
Total
 
Revenues from External Customers
                       
Regulated Operating Revenues
  $ 24,773     $ -     $ (68 )   $ 24,705  
Unregulated Utility Operating Revenues
    -       577       -       577  
                                 
Total Operating Revenues
    24,773       577       (68 )     25,282  
                                 
Operating Expenses
                               
Regulated Operation & Maintenance
    11,925       -       -       11,925  
Unregulated Operation & Maintenance
    -       789       180       969  
Depreciation
    2,201       9       1       2,211  
Amortization of Stranded Costs
    8,101       -       -       8,101  
Amortization
    114       -       -       114  
Taxes Other than Income
    1,364       -       -       1,364  
Income Taxes
    278       (91 )     (107 )     80  
                                 
Total Operating Expenses
    23,983       707       74       24,764  
                                 
Operating Income (Loss)
    790       (130 )     (142 )     518  
Other Income (Deductions)
                               
Equity in Income of Associated Companies
    98       -       -       98  
Other Deductions
    (51 )     -       (2 )     (53 )
                                 
Total Other Income  (Deductions)
    47       -       (2 )     45  
                                 
Income (Loss) Before Interest Charges
    837       (130 )     (144 )     563  
                                 
Interest Charges
    411       7       27       445  
                                 
Net Income (Loss)
  $ 426     $ (137 )   $ (171 )   $ 118  
                                 
Total Assets
  $ 125,347     $ 835     $ 360     $ 126,542  
                                 

4.    INVESTMENTS IN ASSOCIATED COMPANIES

Maine Yankee and MEPCO

MPS owns 5% of the common stock of Maine Yankee Atomic Power Company (“Maine Yankee”), a jointly-owned nuclear electric power company, and 7.49% of the common stock of MEPCO, a jointly-owned electric transmission company.  Although MPS’s ownership percentage of these entities is relatively low, it does have influence over the operating and financial decisions of these companies through board representation, and, therefore, MPS records its investment in MEPCO and Maine Yankee using the equity method.  This is consistent with industry practice for similar jointly-owned units.
 
No dividends were paid by Maine Yankee in the first nine months of 2010 or 2009.  MPS received dividends of $831,000 from MEPCO in the first nine months of 2010 and $5,000 in the first nine months of 2009.

On September 9, 2010, judgment was entered on the decision reached in the appeal of the Maine Yankee Department of Energy Spent Fuel litigation.  This decision increased the 2006 award to Maine Yankee for the delay in disposal of spent nuclear fuel and other high-level waste by approximately $5.9 million.  The parties have sixty days to file appeals to this decision, and the ultimate outcome of this proceeding remains uncertain.  Because of this uncertainty, the original judgment and this judgment on the appeal have not been reflected in the Maine Yankee financial statements.  The judgments do not impact the income or investment of MPS in Maine Yankee; however, if all other assumptions regarding spent fuel storage and disposal prove correct, MPS’s share of these obligations would be reduced by its 5% share of the award.
 
 
 
12

 

 
5.    DILUTED EARNINGS PER SHARE
 
The dilutive earnings per share impact of outstanding stock options was:

   
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
   
2010
   
2009
   
2010
   
2009
 
Net (Loss) Income (in thousands)
  $ (285 )   $ (877 )   $ (474 )   $ 118  
Shares Used in Computation of Earnings
                               
Weighted-Average Common Shares Outstanding in Computation of Basic (Loss) Earnings per Share
    1,683,949       1,681,249       1,683,274       1,680,507  
Dilutive Effect of Common Stock Options
    -       -       -       730  
Shares Used in Computation of (Loss) Earnings per Common Share Assuming Dilution
    1,683,949       1,681,249       1,683,274       1,681,237  
                                 
Net (Loss) Income per Share (Basic)
  $ (0.17 )   $ (0.52 )   $ (0.28 )   $ 0.07  
Net (Loss) Income per Share (Diluted)
  $ (0.17 )   $ (0.52 )   $ (0.28 )   $ 0.07  

    Due to the losses incurred in the third quarters of 2010 and 2009, and for the nine months ended September 30, 2010, the stock options were anti-dilutive for those periods.  There were 1,254 and 564 potentially dilutive shares in the third quarters of 2010 and 2009, respectively, and 1,042 potentially dilutives shares in the nine months ended September 30, 2010.

6.  DIRECTORS’ COMPENSATION

The compensation program for the MAM Board of Directors includes an option for the director to defer some or all of his or her fees, rather than taking those fees in cash each quarter.  The first deferral option grants the director a number of phantom shares of stock, with the number granted equivalent to the fees earned for the quarter, divided by the closing share price on the last day of that quarter.  The cumulative deferred phantom shares are marked to the closing share price on the last day of each quarter, and the adjustment is recorded as expense.  If applicable, any dividends paid are also converted to an equivalent number of phantom shares, and are added to the cumulative deferred total.

During the third quarter of 2010, the equivalent of 456 shares was deferred, for a total of 1,596 shares year-to-date.  Through September 30, 2010, the equivalent of 39,518 shares have been deferred.  The share price on that date was $44.90, resulting in a $1.77 million unfunded liability at September 30, 2010, recorded on the Consolidated Balance Sheet under “Miscellaneous Liabilities.”  The change in the value of the phantom shares resulted in approximately $73,000 and $69,000 of expense for the three months ended September 30, 2010 and 2009, respectively, and