<PAGE>
<PAGE>
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 ENDING SEPTEMBER 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ___________
Commission file number 1-6788
THE UNITED ILLUMINATING COMPANY
(Exact name of registrant as specified in its charter)
Connecticut 06-0571640
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
157 Church Street, New Haven, Connecticut 06506
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 203-499-2000
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
----- ------
The number of shares outstanding of the issuer's only class of
common stock, as of October 31, 1995, was 14,097,291.
- 1 -<PAGE>
<PAGE>
<TABLE>
INDEX
Part I. FINANCIAL INFORMATION
<CAPTION>
Page
Number
------
<S> <C>
Item 1. Financial Statements. 3
Consolidated Statement of Income for the three
and nine months ended September 30, 1995 and 1994. 3
Consolidated Balance Sheet as of September 30, 1995 and
December 31, 1994. 4
Consolidated Statement of Cash Flows for the three months
and nine months ended September 30, 1995 and 1994. 6
Notes to Consolidated Financial Statements. 7
- Statement of Accounting Policies 7
- Capitalization 7
- Accounting for Phase-in Plan 9
- Income Taxes 10
- Short-term Credit Arrangements 11
- Supplementary Information 12
- Fuel Financing Obligations and Other Lease Obligations 13
- Commitments and Contingencies 13
- Capital Expenditure Program 13
- Nuclear Insurance Contingencies 13
- Other Commitments and Contingencies 14
- Hydro-Quebec 14
- Site Remediation Costs 14
- Property Taxes 14
- Nuclear Fuel Disposal and Nuclear Plant Decommissioning 14
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 16
- Major Influences on Financial Condition 16
- Capital Expenditure Program 17
- Liquidity and Capital Resources 18
- Results of Operations 20
- Outlook 23
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K. 25
SIGNATURES 26
</TABLE>
- 2 -<PAGE>
<PAGE>
<TABLE>
PART I: FINANCIAL INFORMATION
ITEM I: FINANCIAL STATEMENTS
THE UNITED ILLUMINATING COMPANY
CONSOLIDATED STATEMENT OF INCOME
(Thousands except per share amounts)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
OPERATING REVENUES (NOTE G) $200,308 $184,592 $529,135 $505,604
--------- --------- --------- ---------
OPERATING EXPENSES
Operation
Fuel and energy 36,459 33,413 107,867 100,836
Capacity purchased 11,600 10,805 35,986 33,525
Other 36,171 36,211 106,615 110,732
Maintenance 7,797 11,103 25,155 31,008
Depreciation 15,374 14,554 46,086 43,546
Amortization of cancelled nuclear project
and deferred return 3,440 293 10,319 879
Income taxes (Note E) 26,319 20,512 49,802 38,218
Other taxes (Note G) 15,717 12,939 45,204 42,840
--------- --------- --------- ---------
Total 152,877 139,830 427,034 401,584
--------- --------- --------- ---------
OPERATING INCOME 47,431 44,762 102,101 104,020
--------- --------- --------- ---------
OTHER INCOME AND (DEDUCTIONS)
Allowance for equity funds used during construction - 136 - 723
Other-net (Note G) (1,433) 644 (2,671) (75)
Non-operating income taxes 343 579 3,084 1,899
--------- --------- --------- ---------
Total (1,090) 1,359 413 2,547
--------- --------- --------- ---------
INCOME BEFORE INTEREST CHARGES 46,341 46,121 102,514 106,567
--------- --------- --------- ---------
INTEREST CHARGES
Interest on long-term debt 16,137 18,491 46,671 55,949
Other interest (Note G) 2,078 1,113 8,264 2,501
Allowance for borrowed funds used during construction (712) (890) (1,989) (2,247)
--------- --------- --------- ---------
17,503 18,714 52,946 56,203
Amortization of debt discount and redemption premiums 1,100 1,620 3,410 4,931
--------- --------- --------- ---------
Net Interest Charges 18,603 20,334 56,356 61,134
--------- --------- --------- ---------
MINORITY INTEREST IN PREFERRED SECURITIES 1,203 - 2,379 -
--------- --------- --------- ---------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE 26,535 25,787 43,779 45,433
--------- --------- --------- ---------
Cumulative effect for years prior to 1994 of accounting
change for postemployment benefits
(net of income taxes of $956) - - - (1,294)
--------- --------- --------- ---------
NET INCOME 26,535 25,787 43,779 44,139
Discount on Preferred Stock Redemptions (191) - (2,183) -
Dividends on Preferred Stock 131 747 1,198 2,576
--------- --------- --------- ---------
INCOME APPLICABLE TO COMMON STOCK $26,595 $25,040 $44,764 $41,563
========= ========= ========= =========
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 14,087 14,087 14,087 14,085
EARNINGS PER SHARE OF COMMON STOCK BEFORE
CUMULATIVE EFFECT OF ACCOUNTING CHANGE $1.89 $1.78 $3.18 $3.04
Cumulative effect for years prior to 1994 of accounting
change for postemployment benefits - - - (0.09)
--------- --------- --------- ---------
EARNINGS PER SHARE OF COMMON STOCK $1.89 $1.78 $3.18 $2.95
========= ========= ========= =========
CASH DIVIDENDS DECLARED PER SHARE OF COMMON STOCK $0.705 $0.69 $2.115 $2.07
</TABLE>
The accompanying Notes to Consolidated Financial
Statements are an integral part of the financial statements.
- 3 -<PAGE>
<PAGE>
<TABLE>
THE UNITED ILLUMINATING COMPANY
CONSOLIDATED BALANCE SHEET
ASSETS
(Thousands of Dollars)
<CAPTION>
September 30, December 31,
1995 1994*
---- ----
(Unaudited)
<S> <C> <C>
Utility Plant at Original Cost
In service $1,787,003 $1,761,627
Less, accumulated provision for depreciation 525,701 493,482
----------- -----------
1,261,302 1,268,145
Construction work in progress 58,884 57,669
Nuclear fuel 21,926 31,443
----------- -----------
Net Utility Plant 1,342,112 1,357,257
----------- -----------
Other Property and Investments 25,400 21,824
----------- -----------
Current Assets
Cash and temporary cash investments 42,596 11,432
Accounts receivable
Customers, less allowance for doubtful
accounts of $5,400 and $4,900 73,387 61,042
Other 11,980 26,981
Accrued utility revenues 25,441 23,139
Fuel, materials and supplies, at average cost 23,361 22,318
Prepayments 9,029 12,307
Other 96 90
----------- -----------
Total 185,890 157,309
----------- -----------
Regulatory Assets (future amounts due from customers
through the ratemaking process)
Income taxes due principally to book-tax
differences 378,614 403,132
Deferred return - Seabrook Unit 1 53,490 62,929
Unamortized cancelled nuclear projects 24,912 25,792
Unamortized redemption costs 22,781 26,269
Uranium enrichment decommissioning cost 1,537 1,540
Deferred fossil fuel costs 164 112
Unamortized debt issuance expenses 7,409 5,527
Other 11,741 13,300
----------- -----------
Total 500,648 538,601
----------- -----------
$2,054,050 $2,074,991
=========== ===========
*Derived from audited financial statements
</TABLE>
The accompanying Notes to Consolidated Financial
Statements are an integral part of the financial statements.
- 4 -<PAGE>
<PAGE>
<TABLE>
THE UNITED ILLUMINATING COMPANY
CONSOLIDATED BALANCE SHEET
CAPITALIZATION AND LIABILITIES
(Thousands of Dollars)
<CAPTION>
September 30, December 31,
1995 1994*
---- ----
(Unaudited)
<S> <C> <C>
Capitalization (Note B)
Common stock equity
Common stock $284,314 $284,133
Paid-in capital 749 738
Capital stock expense (2,207) (2,402)
Retained earnings 160,335 145,559
----------- -----------
443,191 428,028
Preferred stock 10,539 44,700
Minority interest in preferred securities 50,000 -
Long-term debt 847,626 708,340
----------- -----------
Total 1,351,356 1,181,068
----------- -----------
Noncurrent Liabilities
Obligations under capital leases 17,583 17,799
Uranium enrichment decommissioning reserve 1,332 1,337
Nuclear decommissioning obligation 9,667 7,628
Other 2,900 2,517
----------- -----------
Total 31,482 29,281
----------- -----------
Current Liabilities
Current portion of long-term debt 87,800 193,133
Notes payable - 67,000
Accounts payable 29,910 42,846
Dividends payable 10,063 10,467
Taxes accrued 21,720 16,607
Pensions accrued 32,984 30,177
Interest accrued 19,107 20,926
Obligations under capital leases 286 1,169
Other accrued liabilities 32,797 30,069
----------- -----------
Total 234,667 412,394
----------- -----------
Customers' Advances for Construction 2,642 2,628
----------- -----------
Regulatory Liabilities (future amounts owed
to customers through
the ratemaking process)
Accumulated deferred investment tax credits 18,100 18,671
Deferred gain on sale of utility plant - 276
Other 1,814 1,820
----------- -----------
Total 19,914 20,767
----------- -----------
Deferred Income Taxes (future tax liabilities owed
to taxing authorities) 413,989 428,853
Commitments and Contingencies - -
----------- -----------
$2,054,050 $2,074,991
=========== ===========
*Derived from audited financial statements
</TABLE>
The accompanying Notes to Consolidated Financial
Statements are an integral part of the financial statements.
- 5 -<PAGE>
<PAGE>
<TABLE>
THE UNITED ILLUMINATING COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Thousands of Dollars)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $26,535 $25,787 $43,779 $44,139
--------- --------- --------- ---------
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 16,925 16,570 50,646 49,554
Deferred income taxes 10,010 4,732 11,061 3,848
Deferred investment tax credits - net (190) (190) (571) (571)
Amortization of nuclear fuel 3,848 2,600 11,295 7,776
Cumulative effect for years prior to 1994 of
accounting change for postemployment benefits-net - - - 1,294
Allowance for funds used during construction (712) (1,026) (1,989) (2,970)
Amortization of deferred return 3,146 - 9,439 -
Sales adjustment revenue - 3,278 - 9,835
Changes in:
Accounts receivable - net 2,679 (4,024) 2,656 (9,011)
Fuel, materials and supplies (27) (227) (1,043) (2,262)
Prepayments (4,059) (5,131) 3,278 (14,048)
Accounts payable (16,733) (8,115) (12,936) (18,664)
Interest accrued (9,354) (12,435) (1,819) (1,888)
Taxes accrued 4,156 9,852 5,113 14,639
Other assets and liabilities 4,571 4,842 (73) 1,461
--------- --------- --------- ---------
Total Adjustments 14,260 10,726 75,057 38,993
--------- --------- --------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 40,795 36,513 118,836 83,132
--------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock 192 - 192 109
Long-term debt 150,000 - 150,000 -
Preferred securities of subsidiary - - 50,000 -
Notes payable (175,850) 27,000 (67,000) 75,000
Securities redeemed and retired:
Preferred stock (500) (245) (34,161) (15,245)
Long-term debt - (30,000) (116,133) (90,333)
(Premium) Discount on preferred stock redemption 191 117 2,183 (33)
Expenses of issue - - (1,831) -
Lease obligations (68) (599) (1,099) (1,747)
Dividends
Preferred stock (137) (750) (1,813) (2,909)
Common stock (9,931) (9,718) (29,582) (28,802)
--------- --------- --------- ---------
NET CASH USED IN FINANCING ACTIVITIES (36,103) (14,195) (49,244) (63,960)
--------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Plant expenditures, including nuclear fuel (11,111) (16,884) (38,428) (44,551)
--------- --------- --------- ---------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (11,111) (16,884) (38,428) (44,551)
--------- --------- --------- ---------
CASH AND TEMPORARY CASH INVESTMENTS:
NET CHANGE FOR THE PERIOD (6,419) 5,434 31,164 (25,379)
BALANCE AT BEGINNING OF PERIOD 49,015 17,358 11,432 48,171
--------- --------- --------- ---------
BALANCE AT END OF PERIOD $42,596 $22,792 $42,596 $22,792
========= ========= ========= =========
CASH PAID DURING THE PERIOD FOR:
Interest (net of amount capitalized) $26,529 $31,188 $54,699 $58,499
========= ========= ========= =========
Income taxes $11,800 $8,100 $26,450 $19,000
========= ========= ========= =========
</TABLE>
The accompanying Notes to Consolidated Financial
Statements are an integral part of the financial statements.
- 6 -<PAGE>
<PAGE>
THE UNITED ILLUMINATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The consolidated financial statements of the Company and
its wholly-owned subsidiaries, United Resources, Inc.,
Research Center, Inc. and United Energy International, Inc.,
have been prepared pursuant to the rules and regulations of
the Securities and Exchange Commission. The statements
reflect all adjustments that are, in the opinion of
management, necessary to a fair statement of the results for
the periods presented. All such adjustments are of a normal
recurring nature. Certain information and footnote
disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such
rules and regulations. The Company believes that the
disclosures are adequate to make the information presented
not misleading. These consolidated financial statements
should be read in conjunction with the consolidated
financial statements and the notes to consolidated financial
statements included in the annual report on Form 10-K for
the year ended December 31, 1994. Such notes are
supplemented as follows:
(A) STATEMENT OF ACCOUNTING POLICIES
RECLASSIFICATION OF PREVIOUSLY REPORTED AMOUNTS
Certain amounts previously reported have been reclassified
to conform with current year presentations.
ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION (AFUDC)
The weighted average AFUDC rates applied in the first nine
months of 1995 and 1994 were 7.44% and 8.58%, respectively,
on a before-tax basis.
CASH AND CASH EQUIVALENTS
For cash flow purposes, the Company considers all highly
liquid debt instruments with a maturity of three months or
less at the date of purchase to be cash equivalents.
NUCLEAR DECOMMISSIONING TRUSTS
External trust funds are maintained to fund the estimated
future decommissioning costs of the nuclear generating units
in which the Company has an ownership interest. These costs
are accrued as a charge to depreciation expense over the
estimated service lives of the units and are recovered in
rates on a current basis. The Company paid $462,000 and
$449,000 in the third quarter of 1995 and 1994,
respectively, into the decommissioning trust funds for
Seabrook Unit 1 and Millstone Unit 3. During the first nine
months of 1995 and 1994, the Company paid $1,386,000 and
$1,283,000, respectively, into the decommissioning trust
funds for Seabrook Unit 1 and Millstone Unit 3. At
September 30, 1995, the Company's shares of the trust fund
balances, which included accumulated earnings on the funds,
were $6.7 million and $3.0 million for Seabrook Unit 1 and
Millstone Unit 3, respectively. These fund balances are
included in "Other Property and Investments" and the accrued
decommissioning obligation is included in "Noncurrent
Liabilities" on the Company's Consolidated Balance Sheet.
(B) CAPITALIZATION
(A) COMMON STOCK
The number of shares outstanding of the Company's common
stock, no par value, at September 30, 1995 was 14,092,691.
- 7 -<PAGE>
<PAGE>
THE UNITED ILLUMINATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
In 1990, the Company's Board of Directors and the
shareowners approved a stock option plan for officers and
key employees of the Company. The plan provides for the
awarding of options to purchase up to 750,000 shares of the
Company's common stock over periods of from one to ten years
following the dates when the options are granted. On June
5, 1991, the DPUC approved the issuance of 500,000 shares of
stock pursuant to this plan. The exercise price of each
option cannot be less than the market value of the stock on
the date of the grant. Options to purchase 198,000 shares
of stock at an exercise price of $30.75 per share, 1,800
shares of stock at an exercise price of $31.1875 per share,
4,000 shares of stock at an exercise price of $35.625 per
share, 35,133 shares of stock at an exercise price of
$39.5625 per share, 5,000 shares of stock at an exercise
price of $42.375 per share and 18,600 shares of stock at an
exercise price of $30 per share have been granted by the
Board of Directors and remain outstanding at September 30,
1995. Options to purchase 4,600 shares of stock at an
exercise price of $30.75 per share and 1,400 shares of stock
at an exercise price of $28.3125 were exercised during the
first nine months of 1995.
(B) RETAINED EARNINGS RESTRICTION
The indenture under which the Company's Notes are issued
places limitations on the payment of cash dividends on
common stock and on the purchase or redemption of common
stock. Retained earnings in the amount of $102.1 million
were free from such limitations at September 30, 1995.
(C) PREFERRED AND PREFERENCE STOCK
The Company called for redemption $12.5 million of the
Company's outstanding 7.60% Preferred Stock, Series E and
$15.0 million of the Company's outstanding 7.60% Preferred
Stock, Series F. The Company paid a redemption premium of
$275,000 in effecting these redemptions, which were
completed on May 10, 1995.
On June 12, 1995, the Company repurchased and retired, at
a discount of $2,266,881, 61,611 shares of its $100 par
value preferred stock, pursuant to a tender offer dated
May 10, 1995. On July 17, 1995, the Company repurchased and
retired, at a discount of $190,650, 5,000 shares of its $100
par value preferred stock. Shares tendered included 19,178
shares of the 4.35% Series A, 17,790 shares of the 4.72%
Series B, 19,155 shares of the 4.64% Series C and 10,488
shares of the 5.625% Series D.
(D) PREFERRED CAPITAL SECURITIES
On April 3, 1995, United Capital Funding Partnership L.P.
("United Capital"), a special purpose limited partnership in
which the Company owns all of the general partner interests,
issued $50 million of its monthly income 9 5/8% Preferred
Capital Securities, Series A, ("Preferred Capital
Securities") representing limited partnership interests in
United Capital. United Capital loaned the proceeds of the
issuance and sale of the Preferred Capital Securities to the
Company in return for the Company's 9 5/8% Junior
Subordinated Deferrable Interest Debentures, Series A, Due
2025. The net proceeds to the Company, approximately $48.4
million, have been used to call for redemption $27.5 million
of the Company's outstanding 7.60% Preferred Stock and to
reduce its short-term borrowings under the revolving credit
facility described in Note (F). The Company consolidates
United Capital for financial reporting purposes.
(E) LONG-TERM DEBT
On January 17, 1995, the Company repaid $55.3 million
principal amount of maturing 10.32% First Mortgage Bonds of
Bridgeport Electric Company, a wholly-owned subsidiary of
the Company that was merged with and into the Company in
September of 1994, and $50 million principal amount of
maturing 6.00% Notes of the Company. On February 15, 1995,
the Company repaid $10.8 million principal amount of
maturing 9.44% First Mortgage Bonds of Bridgeport Electric
Company.
- 8 -<PAGE>
<PAGE>
THE UNITED ILLUMINATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
On August 29 and September 6, 1995, the Company borrowed
$50 million and $100 million, respectively, under a Term
Loan Agreement with a group of banks for a five-year period.
The Company will pay interest on the borrowings at a
floating rate equal to the three-month London Interbank
Borrowing Rate (LIBOR) plus 0.55%. The interest rates for
the initial three month-periods of these borrowings are
6.4875% and 6.425%, respectively.
In May 1995 and June 1995, the Company entered into two
separate, five-year, $50 million interest rate swap
agreements with a major money center bank. These
arrangements will effectively convert the interest rate on
$100 million of the Company's floating rate Term Loan
borrowings to fixed rates. Under the terms of the
agreements, the Company will pay interest to the bank at
fixed annual rates of 6.40% and 5.92%, respectively, and the
bank will pay the Company interest at floating rates equal
to the three-month LIBOR, which floating rates correspond to
the floating rates on the Term Loan borrowings described in
the preceding paragraph. As a result, the interest rates on
two $50 million borrowings under the Term Loan are fixed at
6.95% and 6.47%. The fair value of interest rate swaps is
the estimated amount that the Company would receive or pay
to terminate the swap agreements at the reporting date,
taking into account current interest rates. The fair value
of the interest rate swaps was approximately $216,000 at
September 30, 1995.
The Company simultaneously reduced the borrowing limits on
its revolving credit facility from $225 million to $75
million.
(D) ACCOUNTING FOR PHASE-IN PLAN
The Company phased into rate base its allowable investment
in Seabrook Unit 1, amounting to $640 million, during the
period January 1, 1990 to January 1, 1994. In conjunction
with this phase-in plan, the Company was allowed to record a
deferred return on the portion of allowable investment
excluded from rate base during the phase-in period. The
accumulated deferred return had been added to rate base each
year beginning January 1, 1991 in the same proportion as the
phase-in installment for that year has borne to the portion
of the $640 million remaining to be phased-in. The Company
began amortizing the accumulated deferred return over a
five-year period commencing January 1, 1995.
- 9 -<PAGE>
<PAGE>
<TABLE>
THE UNITED ILLUMINATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)
(E) INCOME TAXES
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
---- ---- ---- ----
(000's) (000's)
<S> <C> <C> <C> <C>
Income tax expense consists of:
Income tax provisions:
Current
Federal $11,107 $11,241 $25,984 $24,267
State 5,049 4,150 10,244 8,775
-------- -------- -------- --------
Total current 16,156 15,391 36,228 33,042
-------- -------- -------- --------
Deferred
Federal 6,924 4,701 9,536 5,816
State 3,086 31 1,525 (2,924)
-------- -------- -------- --------
Total deferred 10,010 4,732 11,061 2,892
-------- -------- -------- --------
Investment tax credits (190) (190) (571) (571)
-------- -------- -------- --------
Total income tax expense $25,976 $19,933 $46,718 $35,363
======== ======== ======== ========
Income tax components charged as follows:
Operating expenses $26,319 $20,512 $49,802 $38,218
Other income and deductions - net (343) (579) (3,084) (1,899)
Cumulative effect of change in accounting
for postemployment benefits - - - (956)
-------- -------- -------- --------
Total income tax expense $25,976 $19,933 $46,718 $35,363
======== ======== ======== ========
The following table details the components
of the deferred income taxes:
Accelerated depreciation $2,274 $2,873 $6,822 $8,659
Tax depreciation on unrecoverable plant investment 1,727 2,042 5,181 6,127
Conservation and load management 227 626 543 1,623
Seabrook sale/leaseback transaction 1,650 1,662 (3,706) (3,702)
Premiums on BEC bond redemption (174) (397) (579) (1,222)
Sales adjustment revenues - (1,389) - (4,165)
Alternative minimum tax 3,661 - 3,661 -
Pension benefits (335) (442) (1,125) (424)
Postretirement benefits (312) 117 (920) (572)
Postemployment benefits - - - (956)
Other - net 1,292 (360) 1,184 (2,476)
-------- -------- -------- --------
Deferred income taxes - net $10,010 $4,732 $11,061 $2,892
======== ======== ======== ========
</TABLE>
- 10 -<PAGE>
<PAGE>
THE UNITED ILLUMINATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(F) SHORT-TERM CREDIT ARRANGEMENTS
The Company has a revolving credit agreement with a group
of banks, which currently extends to December 14, 1995. The
borrowing limit of this facility was recently reduced to $75
million concurrent with the borrowings under the $150
million Term Loan Agreement. The facility permits the
Company to borrow funds at a fluctuating interest rate
determined by the prime lending market in New York, and also
permits the Company to borrow money for fixed periods of
time specified by the Company at fixed interest rates
determined by the Eurodollar interbank market in London, or
by bidding, at the Company's option. If a material adverse
change in the business, operations, affairs, assets or
condition, financial or otherwise, or prospects of the
Company and its subsidiaries, on a consolidated basis,
should occur, the banks may decline to lend additional money
to the Company under this revolving credit agreement,
although borrowings outstanding at the time of such an
occurrence would not then become due and payable. As of
September 30, 1995, the Company had no short-term borrowings
outstanding under this facility.
- 11 -<PAGE>
<PAGE>
THE UNITED ILLUMINATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(G) SUPPLEMENTARY INFORMATION
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
---- ---- ---- ----
(000's) (000's)
<S> <C> <C> <C> <C>
Operating Revenues
- ------------------
Retail $188,770 $176,063 $488,424 $475,671
Wholesale - capacity 1,560 1,738 4,816 5,380
- energy 9,257 5,989 33,625 22,343
Other 721 802 2,270 2,210
-------- -------- -------- --------
Total Operating Revenues $200,308 $184,592 $529,135 $505,604
======== ======== ======== ========
Other Income and (Deductions) - net:
- -----------------------------------
Interest and dividend income $1,415 $463 $2,134 $1,226
Earnings of subsidiaries and
Connecticut Yankee (1,132) (496) (2,408) (1,157)
Miscellaneous other income
and (deductions) - net (1,716) 677 (2,397) (144)
-------- -------- -------- --------
Total Other Income
and (Deductions) - net $(1,433) $644 $(2,671) $(75)
======== ======== ======== ========
Other Taxes
- -----------
Charged to:
Operating:
State gross earnings $8,093 $7,779 $20,926 $21,069
Local real estate
and personal property 6,283 3,763 19,713 17,065
Payroll taxes 1,341 1,397 4,563 4,703
Other - - 2 3
-------- -------- -------- --------
15,717 12,939 45,204 42,840
Nonoperating and other accounts 124 (337) 416 115
-------- -------- -------- --------
Total Other Taxes $15,841 $12,602 $45,620 $42,955
======== ======== ======== ========
Other Interest Charges
- ----------------------
Notes Payable $1,876 $806 $7,354 $1,705
Other 202 307 910 796
-------- -------- -------- --------
Total Other Interest Charges $2,078 $1,113 $8,264 $2,501
======== ======== ======== ========
</TABLE>
- 12 -<PAGE>
<PAGE>
THE UNITED ILLUMINATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(K) FUEL FINANCING OBLIGATIONS AND OTHER LEASE OBLIGATIONS
The Company has a Fossil Fuel Supply Agreement with a
financial institution providing for financing up to $37.5
million in fossil fuel purchases. Under this agreement, the
financing entity acquires and stores coal and fuel oil for
sale to the Company, and the Company purchases these fossil
fuels from the financing entity at a price for each type of
fuel that reimburses the financing entity for the direct
costs it has incurred in purchasing and storing the fuel,
plus a charge for maintaining an inventory of the fuel
determined by reference to the fluctuating interest rate on
thirty-day, dealer-placed commercial paper in New York. The
Company is obligated to insure the fuel inventories and to
indemnify the financing entity against all liabilities,
taxes and other expenses incurred as a result of its
ownership, storage and sale of fossil fuel to the Company.
This agreement currently extends to November 1996. At
September 30, 1995, approximately $11.4 million of fossil
fuel purchases were being financed under this agreement.
(L) COMMITMENTS AND CONTINGENCIES
CAPITAL EXPENDITURE PROGRAM
The Company has entered into commitments in connection
with its continuing capital expenditure program, including
nuclear fuel, which is presently estimated at approximately
$336.1 million, excluding AFUDC, for 1995 through 1999.
NUCLEAR INSURANCE CONTINGENCIES
The Price-Anderson Act, currently extended through August
1, 2002, limits public liability resulting from a single
incident at a nuclear power plant. The first $200 million
of liability coverage is provided by purchasing the maximum
amount of commercially available insurance. Additional
liability coverage will be provided by an assessment of up
to $75.5 million per incident, levied on each of the nuclear
units licensed to operate in the United States, subject to a
maximum assessment of $10 million per incident per nuclear
unit in any year. In addition, if the sum of all public
liability claims and legal costs resulting from any nuclear
incident exceeds the maximum amount of financial protection,
each reactor operator can be assessed an additional 5% of
$75.5 million, or $3.775 million. The maximum assessment is
adjusted at least every five years to reflect the impact of
inflation. Based on its interests in nuclear generating
units, the Company estimates its maximum liability would be
$23.2 million per incident. However, assessment would be
limited to $3.1 million per incident, per year. With
respect to each of the operating nuclear generating units in
which the Company has an interest, the Company will be
obligated to pay its ownership and/or leasehold share of any
statutory assessment resulting from a nuclear incident at
any nuclear generating unit.
The NRC requires nuclear generating units to obtain
property insurance coverage in a minimum amount of $1.06
billion and to establish a system of prioritized use of the
insurance proceeds in the event of a nuclear incident. The
system requires that the first $1.06 billion of insurance
proceeds be used to stabilize the nuclear reactor to prevent
any significant risk to public health and safety and then
for decontamination and cleanup operations. Only following
completion of these tasks would the balance, if any, of the
segregated insurance proceeds become available to the unit's
owners. For each of the nuclear generating units in which
the Company has an interest, the Company is required to pay
its ownership and/or leasehold share of the cost of
purchasing such insurance.
- 13 -<PAGE>
<PAGE>
THE UNITED ILLUMINATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
OTHER COMMITMENTS AND CONTINGENCIES
HYDRO-QUEBEC
The Company is a participant in the Hydro-Quebec
transmission intertie facility linking New England and
Quebec, Canada. Phase II of this facility, in which UI has
a 5.45% participating share, has increased the capacity
value of the intertie from 690 megawatts to a maximum of
2000 megawatts. A ten-year Firm Energy Contract, which
provides for the sale of 7 million megawatt-hours per year
by Hydro-Quebec to the New England participants in the Phase
II facility, became effective on July 1, 1991. The Company
is obligated to furnish a guarantee for its participating
share of the debt financing for the Phase II facility.
Currently, the Company's guarantee liability for this debt
amounts to approximately $8.7 million.
SITE REMEDIATION COSTS
The Company has estimated that the cost of demolition and
environmental remediation of its decommissioned Steel Point
Station power plant and property in Bridgeport will be
approximately $11.3 million, and that the value of the
property following remediation will not exceed $6.0 million.
In its December 16, 1992 decision on UI's application for
retail rate increases, the DPUC provided for additional
revenues to be recovered from customers in the amount of
$4.3 million of the difference during the period 1993-1996,
subject to true-up in the Company's next retail rate
proceeding based on actual remediation costs and actual gain
on the Company's disposition of the property.
PROPERTY TAXES
On November 2, 1993, the Company received "updated"
personal property tax bills from the City of New Haven (the
City) for the tax year 1991-1992, aggregating $6.6 million,
based on an audit by the City's tax assessor. On May 7,
1994, the Company received a "Certificate of
Correction....to correct a clerical omission or mistake"
from the City's tax assessor relative to the assessed value
of the Company's personal property for the tax year
1994-1995, which certificate purports to increase said
assessed value by approximately 53% above the tax assessor's
valuation at February 28, 1994. The Company is contesting
each of these actions of the City's tax assessor vigorously,
and has commenced actions in the Superior Court to enjoin
the City from any effort to collect the "updated" personal
property tax bills for the tax year 1991-1992 and
challenging both the May 7, 1994 "Certificate of Correction"
and the tax assessor's valuation at February 28, 1994. In
December of 1994 and April of 1995, the City's tax assessor
conducted hearings regarding the assessed value of the
Company's personal property for the tax years 1992-1993 and
1993-1994; and on May 11, 1995, the Company received from
the City notices of assessment changes, increasing the
assessed valuations of the Company's personal property for
these tax years by 45% and 49%, respectively, over the
valuations declared by the Company. On March 1, 1995, the
Company received from the City notices of assessment
changes, increasing the assessed valuation of the Company's
personal property for the tax year 1995-1996 by 48% over the
valuation declared by the Company. The Company expects to
take the legal actions necessary to challenge all of these
assessed valuation increases. It is the present opinion of
the Company that the ultimate outcome of this dispute will
not have a significant impact on the financial position of
the Company.
(M) NUCLEAR FUEL DISPOSAL AND NUCLEAR PLANT DECOMMISSIONING
New Hampshire has enacted a law requiring the creation of
a government-managed fund to finance the decommissioning of
nuclear generating units in that state. The New Hampshire
Nuclear Decommissioning Financing Committee (NDFC) has
established $414 million (in 1995 dollars) as the
decommissioning cost estimate for Seabrook Unit 1, of which
the Company's share would be about $72 million. This
estimate premises the prompt removal and dismantling of the
Unit at the end of its estimated 36-year energy producing
life. Monthly
- 14 -<PAGE>
<PAGE>
THE UNITED ILLUMINATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
decommissioning payments are being made to the state-managed
decommissioning trust fund. UI's share of the
decommissioning payments made during the nine months of 1995
was $1,044,000. UI's share of the fund at September 30,
1995 was approximately $6.7 million.
Connecticut has enacted a law requiring the operators of
nuclear generating units to file periodically with the DPUC
their plans for financing the decommissioning of the units
in that state. Current decommissioning cost estimates for
Millstone Unit 3 and the Connecticut Yankee Unit are $448
million (in 1995 dollars) and $357 million (in 1995
dollars), respectively, of which the Company's share would
be about $17 million and $34 million, respectively. These
estimates premise the prompt removal and dismantling of each
unit at the end of its estimated 40-year energy producing
life. Monthly decommissioning payments, based on these cost
estimates, are being made to decommissioning trust funds
managed by Northeast Utilities. UI's share of the Millstone
Unit 3 decommissioning payments made during the first nine
months of 1995 was $342,000. UI's share of the fund at
September 30, 1995 was approximately $3.0 million. For the
Company's 9.5% equity ownership in Connecticut Yankee,
decommissioning costs of $986,000 were funded by UI during
the first nine months of 1995, and UI's share of the fund at
September 30, 1995 was $16.4 million.
- 15 -<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
MAJOR INFLUENCES ON FINANCIAL CONDITION
The Company's financial condition will continue to be
dependent on the level of retail and wholesale sales. The
two primary factors that affect sales volume are economic
conditions and weather. A 1% increase in retail sales would
increase revenues by $6.0 million (and would increase sales
margin, which is revenues less fuel expense and
revenue-based taxes, by about $5.0 million).
Another major factor affecting the Company's financial
condition will be the Company's ability to control expenses.
A significant reduction in interest expense has been
achieved since 1989, and additional annual savings of
$5.0-$6.0 million are expected in 1995 due to debt reduction
and refinancing. Since 1990, annual growth in total
operation and maintenance expense, excluding one-time items
and cogeneration capacity purchases, has averaged
approximately 2.0%, and the Company hopes to restrict future
increases to less than the rate of inflation.
The Company's financial status and financing capability
will continue to be sensitive to many other factors,
including conditions in the securities markets, economic
conditions, interest rates, the level of the Company's
income and cash flow, and legislative and regulatory
developments, including the cost of compliance with
increasingly stringent environmental legislation and
regulations and competition within the electric utility
industry.
The electric utility industry is being subjected to
increasing competition. Currently, the Company's retail
electric service rates are subject to regulation and are
based on the Company's costs. Therefore, the Company, and
all regulated utilities, are subject to certain accounting
standards (Statement of Financial Accounting Standards No.
71 (SFAS No. 71), "Accounting for the Effects of Certain
Types of Regulation") that are not applicable to other
businesses in general. These accounting rules allow all
regulated utilities, where appropriate, to defer the income
statement impact of certain costs that are expected to be
recovered in future regulated service rates and to establish
regulatory assets on balance sheets for such costs. The
effects of competition could cause the operations of the
Company, or a portion thereof, to no longer meet the
criteria for application of these accounting rules. While
the Company expects to continue to meet these criteria in
the near future, if the Company were to cease meeting these
criteria, accounting standards for business in general would
become applicable and immediate recognition of any
previously deferred costs would be required in the year in
which the criteria are no longer met. If this change in
accounting were to occur, it would have a material adverse
effect on the Company's earnings and retained earnings in
that year and may have a material adverse effect on the
Company's ongoing financial condition as well.
The Financial Accounting Standards Board recently issued
SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets to Be Disposed Of." This standard, which is
effective for the 1996 calendar year, requires the
recognition of impairment losses on long-lived assets when
the book value of an asset exceeds the sum of the expected
future undiscounted cash flows that result from the use of
the asset and its eventual disposition. This standard also
requires that rate-regulated companies recognize an
impairment loss when a regulator excludes all or part of a
cost from rates, even if the regulator allows the company to
earn a return on the remaining allowable costs. A review of
the recoverability of an asset is required whenever events
or circumstances indicate that the carrying amount of an
asset may not be recoverable. At this time, the Company
does not have any assets that are impaired based on this
standard.
- 16 -<PAGE>
<PAGE>
CAPITAL EXPENDITURE PROGRAM
The Company's 1995-1999 capital expenditure program, excluding
allowance for funds used during construction (AFUDC) and its
effect on certain capital related items, is presently budgeted as
follows:
<TABLE>
<CAPTION>
1995 1996 1997 1998 1999 Total
---- ---- ---- ---- ---- -----
(000's)
<S> <C> <C> <C> <C> <C> <C>
Production $15,361 $19,464 $15,240 $14,304 $32,700 $ 97,069
Distribution 18,268 22,272 19,956 19,236 18,996 98,728
Transmission 6,799 2,436 3,360 5,436 5,304 23,335
Conservation and
Load Management 9,663 9,576 8,028 8,424 8,388 44,079
Nuclear Fuel 9,847 2,988 8,292 2,952 10,488 34,567
Other 8,530 14,880 6,612 4,260 3,996 38,278
------- -------- ------- ------- ------- --------
Total Expenditures $68,468 $71,616 $61,488 $54,612 $79,872 $336,056
======= ======= ======= ======= ======= ========
AFUDC (Pre-tax) $2,891 $2,626 $2,815 $2,606 $2,502
Book Depreciation (1) 57,892 62,325 65,939 69,751 73,696
Decommissioning 2,035 2,083 2,238 2,330 2,436
Normalized Tax
Depreciation 34,230 37,501 39,372 41,946 44,917
Accelerated Tax
Depreciation 66,802 56,937 55,021 56,578 58,392
Amortization of Deferred
Return on Seabrook
Unit 1 Phase-In (2) 12,586 12,586 12,586 12,586 12,586
Estimated Rate Base
(end of period) $1,187,787 $1,164,804 $1,144,189 $1,118,876 $1,112,784
<FN>
(1) Steel Point Station environmental remediation costs of $4,093,000 and
$3,793,000 are included in years 1995 and 1996.
(2) Deferred return will be amortized over the period 1995-1999.
</TABLE>
- 17 -<PAGE>
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1995, the Company had $42.6 million of
cash and temporary cash investments, an increase of $31.2
million from the balance at December 31, 1994. The
components of this increase, which are detailed in the
Consolidated Statement of Cash Flows, are summarized as
follows:
<TABLE>
<CAPTION>
(Millions)
----------
<S> <C>
Balance, December 31, 1994 $11.4
Net cash provided by operating activities 118.8
Net cash provided by (used in) financing activities:
- Financing activities, excluding dividend payments (17.8)
- Dividend payments (31.4)
Cash invested in plant, including nuclear fuel (38.4)
-------
Net increase 31.2
-------
Balance, September 30, 1995 $42.6
=======
</TABLE>
The Company's capital requirements are presently projected
as follows:
<TABLE>
<CAPTION>
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
(000's)
<S> <C> <C> <C> <C> <C>
Capital Expenditure Program $ 68,468 $71,616 $ 61,488 $ 54,612 $ 79,872
Long-term Debt Maturities 97,000 - 50,000 100,000 100,000
Mandatory Redemptions/
Repayments 66,133 12,770 15,171 15,562 15,988
Optional Redemptions (1) 31,978 - - - -
------- ------ ------- ------- -------
Total Capital Requirements $263,579 $84,386 $126,659 $170,174 $195,860
======= ====== ======= ======= =======
<FN>
(1) Including redemption premiums and discounts
</TABLE>
For the year 1995, the Company presently estimates that
its cash on hand and temporary cash investments at the
beginning of 1995, totaling $11.4 million, its projected net
cash provided by operations, less dividends, of $115.3
million, will be sufficient to fund the Company's entire
capital expenditure program of $68.5 million and $58.2
million of the $195.1 million necessary to satisfy the 1995
requirements for long-term debt maturities and mandatory and
optional redemptions and repayments. For the year 1996, the
Company presently estimates that its projected net cash
provided by operations, less dividends, of $97.7 million,
will be sufficient to fund the Company's entire capital
expenditure program of $71.6 million and all of the
Company's 1996 requirements for mandatory redemptions and
repayments of $12.8 million. For the years 1997-1999, the
Company presently estimates that its projected net cash
provided by operations, less dividends, of $282.0 million,
will be sufficient to fund the Company's entire capital
expenditure program of $196.0 million and $86.0 million of
the $296.7 million necessary to satisfy the 1997 through
1999 requirements for long-term debt maturities and
mandatory long-term debt redemptions and repayments.
All of the Company's capital requirements that exceed
available cash will have to be provided by external
financing. Although the Company has no source of funds and
no commitment to provide such financing from any source of
funds, other than proceeds from the financing described in
the following paragraph and a $75 million
- 18 -<PAGE>
<PAGE>
revolving credit agreement with a group of banks, described
below, the Company expects to be able to satisfy its
external financing needs by issuing common stock, preferred
stock and additional short-term and long-term debt, although
the continued availability of these methods of financing
will be dependent on many factors, including conditions in
the securities markets, economic conditions, and the level
of the Company's income and cash flow.
On April 3, 1995, United Capital Funding Partnership L.P.
("United Capital"), a special purpose limited partnership in
which the Company owns all of the general partner interests,
issued $50 million of its monthly income 9 5/8% Preferred
Capital Securities, Series A, ("Preferred Capital
Securities") representing limited partnership interests in
United Capital. United Capital loaned the proceeds of the
issuance and sale of the Preferred Capital Securities to the
Company in return for the Company's 9 5/8% Junior
Subordinated Deferrable Interest Debentures, Series A, Due
2025. The net proceeds to the Company, approximately $48.4
million, have been used to call for redemption $27.5 million
of the Company's outstanding 7.60% Preferred Stock and to
reduce its short-term borrowings under the revolving credit
facility described below.
On August 29 and September 6, 1995, the Company borrowed
$50 million and $100 million, respectively, under a Term
Loan Agreement with a group of banks for a five-year period.
The Company will pay interest on the borrowings at a
floating rate equal to the three-month London Interbank
Borrowing Rate (LIBOR) plus 0.55%. The interest rates for
the initial three month-periods of these borrowings are
6.4875% and 6.425%, respectively.
In May 1995 and June 1995, the Company entered into two
separate, five-year, $50 million interest rate swap
agreements with a major money center bank. These
arrangements will effectively convert the interest rate on
$100 million of the Company's floating rate Term Loan
borrowings to fixed rates. Under the terms of the
agreements, the Company will pay interest to the bank at
fixed annual rates of 6.40% and 5.92%, respectively, and the
bank will pay the Company interest at floating rates equal
to the three-month LIBOR, which floating rates correspond to
the floating rates on the Term Loan borrowings described in
the preceding paragraph. As a result, the interest rates on
two $50 million borrowings under the Term Loan are fixed at
6.95% and 6.47%. The fair value of interest rate swaps is
the estimated amount that the Company would receive or pay
to terminate the swap agreements at the reporting date,
taking into account current interest rates. The fair value
of the interest rate swaps was approximately $216,000 at
September 30, 1995.
The Company has a revolving credit agreement with a group
of banks, which currently extends to December 14, 1995. The
borrowing limit of this facility was recently reduced to $75
million concurrent with the borrowings under the $150
million Term Loan Agreement. The facility permits the
Company to borrow funds at a fluctuating interest rate
determined by the prime lending market in New York, and also
permits the Company to borrow money for fixed periods of
time specified by the Company at fixed interest rates
determined by the Eurodollar interbank market in London, or
by bidding, at the Company's option. If a material adverse
change in the business, operations, affairs, assets or
condition, financial or otherwise, or prospects of the
Company and its subsidiaries, on a consolidated basis,
should occur, the banks may decline to lend additional money
to the Company under this revolving credit agreement,
although borrowings outstanding at the time of such an
occurrence would not then become due and payable. As of
September 30, 1995, the Company had no short-term borrowings
outstanding under this facility.
The Company called for redemption $12.5 million of the
Company's outstanding 7.60% Preferred Stock, Series E and
$15.0 million of the Company's outstanding 7.60% Preferred
Stock, Series F. The Company paid a redemption premium of
$275,000 in effecting these redemptions, which were
completed on May 10, 1995.
On June 12, 1995, the Company repurchased and retired, at
a discount of $2,266,881, 61,611 shares of its $100 par
value preferred stock, pursuant to a tender offer dated
May 10, 1995. On July 17, 1995, the Company repurchased and
retired, at a discount of $190,650, 5,000 shares of its $100
par value preferred stock. Shares tendered included 19,178
shares of the 4.35% Series A, 17,790 shares of the 4.72%
Series B, 19,155 shares of the 4.64% Series C and 10,488
shares of the 5.625% Series D.
- 19 -<PAGE>
<PAGE>
The Company has a Fossil Fuel Supply Agreement with a
financial institution providing for financing up to $37.5
million in fossil fuel purchases. Under this agreement, the
financing entity acquires and stores coal and fuel oil for
sale to the Company, and the Company purchases these fossil
fuels from the financing entity at a price for each type of
fuel that reimburses the financing entity for the direct
costs it has incurred in purchasing and storing the fuel,
plus a charge for maintaining an inventory of the fuel
determined by reference to the fluctuating interest rate on
thirty-day, dealer-placed commercial paper in New York. The
Company is obligated to insure the fuel inventories and to
indemnify the financing entity against all liabilities,
taxes and other expenses incurred as a result of its
ownership, storage and sale of fossil fuel to the Company.
This agreement currently extends to November 1996. At
September 30, 1995, approximately $11.4 million of fossil
fuel purchases were being financed under this agreement.
UI has three wholly-owned subsidiaries. Research Center,
Inc. (RCI) has been formed to participate in the development
of one or more regulated power production ventures,
including possible participation in arrangements for the
future development of independent power production and
cogeneration facilities. United Energy International, Inc.
(UEI) was formed to facilitate participation in a joint
venture relating to power production plants abroad. United
Resources, Inc. (URI) serves as the parent corporation for
several unregulated businesses, each of which is
incorporated separately to participate in business ventures
that will complement and enhance UI's electric utility
business and serve the interests of the Company and its
shareholders and customers.
Four wholly-owned subsidiaries of URI have been
incorporated. Souwestcon Properties, Inc. (SPI)
participated as a 25% partner in the ownership of a medical
hotel building in New Haven, which has recently been sold.
SPI no longer owns any property and is currently inactive.
A second wholly-owned subsidiary of URI is Thermal Energies,
Inc., which is participating in the development of district
heating and cooling facilities in the downtown New Haven
area, including the energy center for an office tower and
participation as a 37% partner in the energy center for a
city hall and office tower complex. A third URI subsidiary,
Precision Power, Inc., provides power-related equipment and
services to the owners of commercial buildings and
industrial facilities. A fourth URI subsidiary, American
Payment Systems, Inc., manages agents and equipment for
electronic data processing of bill payments made by
customers of utilities, including UI, at neighborhood
businesses. In addition to these subsidiaries, URI also has
a majority ownership interest in Ventana Corporation, an
inactive subsidiary that is being dissolved, which formerly
offered energy conservation engineering and project
management services to governmental and private
institutions.
The Board of Directors of the Company has authorized the
investment of a maximum of $22.0 million, in the aggregate,
of the Company's assets in all of URI's ventures, UEI and
RCI, and, at September 30, 1995, $21.0 million had been so
invested.
RESULTS OF OPERATIONS
THIRD QUARTER OF 1995 VS. THIRD QUARTER OF 1994
- -----------------------------------------------
Earnings for the third quarter of 1995 were $26.6 million,
or $1.89 per share, up $1.6 million, or $.11 per share, from
the third quarter of 1994. Earnings from operations, which
exclude one-time items, were $28.0 million, or $2.00 per
share, up $3.0 million, or $.22 per share. The one-time
items recorded in the third quarter of 1995 were: a one-time
charge of $1.6 million (after-tax), or $.12 per share,
reflecting the effects of recently legislated future state
income tax rate reductions on tax benefits recorded in prior
years, and a one-time gain of $0.2 million, or $.01 per
share, from the repurchase of preferred stock at a discount
to par value.
Retail operating revenues increased by about $12.7 million
in the third quarter of 1995 compared to the third quarter
of 1994:
. A retail kilowatt-hour sales increase of 2.2% from the
prior year increased retail revenues by $4.0 million and
sales margin (revenue less fuel expense and revenue-based
taxes) by $3.1 million. As stated in the "RESULTS
- 20 -<PAGE>
<PAGE>
OF OPERATIONS" section of the Company's FORM 10-Q, FOR
THE QUARTERLY PERIOD ENDING JUNE 30, 1995, the Company
believes that there was a "real" (i.e. not attributable to
abnormal weather) kilowatt-hour sales increase of about 0.5%
in the second quarter of 1995 compared to the second quarter
of 1994. Estimates indicate that there was a "real"
kilowatt-hour sales increase of about 0.5% in the third
quarter of 1995 compared to the third quarter of 1994 as
well, with the remaining retail kilowatt-hour sales growth
coming as a result of hotter weather.
. Other retail revenues increased by $3.3 million due to
the absence of the 1994 non-cash amortization of deferred
sales adjustment revenues ($13.1 million was amortized,
evenly, and collected in rates in 1994), by $1.7 million ($6
million annual) from the recovery, through the Conservation
Adjustment Mechanism, of previously recorded and projected
conservation program costs mandated by the Department of
Public Utility Control, by $0.8 million from other pricing
mechanisms, and by a net $2.9 million from pass-through
charges for certain expense changes, including the absence
of a property tax credit that occurred in the third quarter
of 1994 and increases in fuel costs.
Wholesale "capacity" revenues decreased slightly in the
third quarter of 1995 compared to the third quarter of 1994.
Wholesale "energy" revenues are a direct offset to wholesale
energy expense and do not contribute to sales margin. These
energy revenues, as well as the associated fuel expense,
increased during the third quarter of 1995, compared to the
third quarter of 1994, as a result of higher demand by other
New England utilities.
Retail fuel and energy expenses decreased by $0.2 million
in the third quarter of 1995 compared to the third quarter
of 1994. A decrease of $2.2 million was due to improved
nuclear unit output: the Seabrook, Millstone 3 and
Connecticut Yankee nuclear power plants each had unscheduled
outages in the third quarter of 1994. Increases in sales
volume and other fuel and energy expenses, including
pass-through charges, offset the expense savings from
nuclear unit performance.
Operating expenses for operations, maintenance and
purchased capacity charges decreased by $2.6 million in the
third quarter of 1995 compared to the third quarter of 1994:
. Purchased capacity was $0.8 million higher, due to the
absence of a credit booked in the third quarter of 1994 and
due to higher cogeneration output in the third quarter of
1995 compared to the third quarter of 1994.
. Operation and maintenance expense decreased by $3.3
million. There was a $3.1 million reduction in fossil power
plant costs, reflecting reduced scheduled maintenance
activity. Other costs decreased slightly.
Other amortizations increased by $3.1 million (after-tax)
in the third quarter of 1995 compared to the third quarter
of 1994, due to commencement of the amortization of Seabrook
phase-in costs (deferred return that was recorded and
accumulated during the period January 1, 1990 to December
31, 1993). The annual amortization amount is $12.6 million
after-tax (equivalent, approximately, to a $23 million
revenue requirement) per year for five years beginning in
1995.
Other operating expenses increased in the third quarter of
1995 compared to the third quarter of 1994, from higher
depreciation expense and income taxes as well as from the
absence of a pass-through (to customers) of a property tax
credit that occurred in the third quarter of 1994.
Interest charges decreased by $1.9 million in the third
quarter of 1995 compared to the third quarter of 1994 as a
result of the Company's refinancing program and strong cash
flows. Also, preferred stock capitalization and total
preferred dividends (net-of-tax) increased slightly in the
third quarter of 1995 compared to the third quarter of 1994,
as a result of the issuance of new preferred securities by a
limited partnership (Minority Interest in Preferred
Securities) and the repurchase of higher cost preferred
stock.
- 21 -<PAGE>
<PAGE>
NINE MONTHS OF 1995 VS. NINE MONTHS OF 1994
- -------------------------------------------
Earnings for the first nine months of 1995 were $44.8
million, or $3.18 per share, up $3.2 million, or $.23 per
share, from the first nine months of 1994. Earnings from
operations, which exclude one-time items, were $44.2
million, or $3.15 per share, for the first nine months of
1995. Earnings from operations for the first nine months of
1994 were $42.9 million, or $3.04 per share. The one-time
items were: a one-time charge of $.12 per share, taken in
the third quarter of 1995, reflecting the effects of
legislated future state income tax rate reductions, which
reduced future tax benefits on plant previously written off;
a one-time gain of $.15 per share, recorded in 1995, from
the repurchase of preferred stock at a discount to par
value, and a one-time charge of $.09 per share, recorded in
the first quarter of 1994, for an accounting change to
reflect the accrual of Post Employment Benefits under
Statement of Financial Accounting Standards (SFAS) No. 112.
Retail operating revenues increased by $12.8 million in
the first nine months of 1995 compared to the first nine
months of 1994:
. A retail kilowatt-hour sales decrease of 1.1% from the
prior year reduced retail revenues by $4.5 million and sales
margin by $3.3 million. The Company believes that the sales
decrease due to weather factors (1995 has been relatively
mild compared to the abnormally severe weather in the first
nine months of 1994) was greater than 1.1%, and that there
was a small but "real" (i.e. not attributable to abnormal
weather) sales increase of about 0.5% in the first nine
months of 1995 compared to the first nine months of 1994.
. Other retail revenues increased by $9.8 million due to
the absence of the 1994 non-cash amortization of deferred
sales adjustment revenues ($13.1 million was amortized,
evenly, and collected in rates in 1994), by $4.7 million ($6
million annual) from the recovery, through the Conservation
Adjustment Mechanism, of previously recorded and projected
conservation program costs, and by a net $2.7 million from
pass-through charges for certain expense changes, including
the absence of a property tax credit that occurred in the
third quarter of 1994 and increases in fuel costs.
Wholesale "capacity" revenues decreased by $0.6 million in
the first nine months of 1995 compared to the first nine
months of 1994. Wholesale "energy" revenues are a direct
offset to wholesale energy expense.
Retail fuel and energy expenses decreased by $4.3 million
in the first nine months of 1995 compared to the first nine
months of 1994. A decrease of $6.4 million was due to
improved nuclear power plant output: the Seabrook nuclear
power plant had a refueling outage in the second quarter of
1994 and the Seabrook, Millstone 3 and Connecticut Yankee
nuclear power plants had unscheduled outages in 1994, while
the Millstone 3 and Connecticut Yankee nuclear power plants
(much smaller sources of generation for the Company) had
refueling outages in the first nine months of 1995.
Operating expenses for operations, maintenance and
purchased capacity charges decreased by $7.5 million in the
first nine months of 1995 compared to the first nine months
of 1994:
. Purchased capacity was $2.5 million higher, due
primarily to nine weeks of scheduled refueling outage at the
Connecticut Yankee nuclear plant in the first quarter of
1995.
. Operation and maintenance expense decreased by $10.0
million. There was a $5.0 million reduction in nuclear
power plant costs: lower general expenses at the Seabrook
unit in the first quarter, and lower Seabrook unit costs
because of the refueling outage in the second quarter of
1994, partly offset by higher costs at Millstone Unit 3
reflecting the refueling outage in the second quarter of
1995. There was a $3.3 million reduction in fossil power
plant costs reflecting reduced scheduled maintenance
activity. Employment costs decreased by $2.0 million due
primarily to the Company's 1993 reorganization and early
retirement program which was phased-in over 1994. Other
costs increased slightly.
- 22 -<PAGE>
<PAGE>
Other amortization increased by $9.4 million (after-tax)
in the first nine months of 1995 compared to the first nine
months of 1994, due to commencement of the amortization of
Seabrook phase-in costs (deferred return that was recorded
and accumulated during the period January 1, 1990 to
December 31, 1993). The annual amortization amount is $12.6
million after-tax (equivalent, approximately, to a $23
million revenue requirement) per year for five years
beginning in 1995.
Other operating expenses increased in the first nine
months of 1995 compared to the first nine months of 1994,
from higher depreciation expense and income taxes as well as
from the absence of a pass-through of a property tax credit
that occurred in the third quarter of 1994.
Interest charges decreased by $5.0 million in the first
nine months of 1995 compared to the first nine months of
1994 as a result of the Company's refinancing program and
strong cash flows. Also, total preferred dividends (net-of-
tax) were unchanged in the first nine months of 1995
compared to the first nine months of 1994.
OUTLOOK
The 1995 quarterly earnings from operations are following
a pattern similar to that of 1994, with significantly higher
earnings in the third quarter when compared to other
quarters. Summer seasonal retail sales and summer pricing
are the predominant factors contributing to this pattern.
Revenues for all of 1995 will increase by $13.1 million
compared to 1994, due to the completion of the non-cash
amortization of deferred sales adjustment revenues ($13.1
million amortized and collected in rates in 1994). Revenues
for all of 1995 will also increase as a result of recovery,
through the Conservation Adjustment Mechanism, of
approximately $6 million of previously recorded and
projected conservation costs mandated by the Department of
Public Utility Control.
The Company's financial condition will continue to be
dependent on the level of retail and wholesale sales. The
two primary factors that affect sales volume are economic
conditions and weather. Retail kilowatt-hour sales
decreased by 1.1% for the first nine months of 1995 compared
to the first nine months of 1994. The Company believes that
the sales decrease due to weather factors was greater than
1.1% (1995 has been relatively mild compared to the
abnormally severe weather in the first nine months of 1994),
and that there was a small but "real" (i.e. not attributable
to abnormal weather) sales increase of about 0.5% in the
first nine months of 1995 compared to 1994. This belief is
supported by a sales increase of about 1% in April 1995
compared to April 1994, a month not noted for having weather-
affected sales. Estimates for the third quarter also
support this belief, with about 0.5% "real" kilowatt-hour
sales growth in the third quarter of 1995 compared to the
third quarter of 1994. (A "real" sales decrease was
reported in the first quarter of 1995 compared to the first
quarter of 1994.)
The Company had also expected that higher generating
output from the nuclear units (earlier this year, there was
no planned outage for Seabrook in 1995) and lower nuclear
fuel prices would add $3-$4 million to sales margin from
lower fuel expense, if normal operating assumptions were
met. A margin improvement of $6.4 million, due to improved
nuclear power plant output, has already been realized in the
first nine months of 1995. The excellent availability of
the Seabrook nuclear unit since its 1994 refueling outage
has caused its next planned refueling outage to be moved
from early 1996 into the fourth quarter of 1995, which will
have the effect of reducing 1995 earnings and increasing
1996 earnings. However, the estimated additional fuel
expense associated with the refueling outage is being
accrued during the year as the unit's fuel is being used.
The additional maintenance expense impact of moving the
planned refueling outage to 1995, currently estimated to be
about $3.5 million, or $.15 per share, will occur in the
fourth quarter. Overall, relative to previously estimated
amounts, the Seabrook unit performance and outage is
expected to have a negative impact on earnings in 1995 of
about $.15-$.20 per share, but is expected to have an
offsetting positive earnings impact in 1996.
The Company's prospects for a $23-$25 million growth in
sales margin (see the "Outlook" section of the Company's
ANNUAL REPORT on FORM 10K FOR THE FISCAL YEAR ENDED DECEMBER
31, 1994) have
- 23 -<PAGE>
<PAGE>
been diminished by the results for the first nine months of
1995. With no other assumption changes, the sales margin
results of the first nine months of 1995, and the impact of
moving the Seabrook refueling outage to 1995, have reduced
that expectation to $18-$20 million. These sales margin
increases are being offset by the expected amortization of
Seabrook phase-in costs at $12.6 million after-tax,
(equivalent, approximately, to a $23 million revenue
requirement) per year for five years beginning in 1995.
Another major factor affecting the Company's financial
condition will be the Company's ability to control expenses.
Operation and maintenance expense was previously expected to
decline by several million dollars in 1995 compared to 1994,
due primarily to lower maintenance costs at generating
units, the full impact of the Company's 1993 reorganization
and early retirement program, and other cost reduction
efforts. However, the maintenance expense associated with
the advanced Seabrook refueling outage will likely offset
most of those decreases.
As part of a new three year agreement between the Company
and its union employees (the Bargaining Unit), and in
conjunction with the Company's cost savings programs, a
Bargaining Unit Voluntary Early Retirement Program has been
initiated and will result in a one-time charge against
income to be taken in early 1996. Savings from the program
should begin accruing in the second quarter of 1996. The
overall agreement also resulted in the commitment, by the
Company and the Bargaining Unit, to a partnership to improve
the efficiency, cost-effectiveness, and the quality of
customer service through the development of a flexible,
multi-skilled, and highly trained workforce, and to support
the involvement of bargaining unit employees in helping to
streamline work processes to yield maximum results at
minimum costs while sustaining quality customer service.
Anticipated depreciation expense and property taxes should
increase expenses by $3-$4 million in 1995 from 1994 levels.
The Company expects continued reductions in interest
expense from the 1994 level of $84 million to about $78-$79
million in 1995. This 1995 interest expense level would be
30% below the 1989 level and would mark the sixth
consecutive year of interest expense decline.
The Company's long term earnings goal is to achieve growth
in earnings per share from operations of 4% annually from
the 1992 level. The excellent availability of the Seabrook
nuclear unit since its 1994 refueling outage has caused its
next refueling outage to be moved from early 1996 to the
fourth quarter of 1995. This will impact earnings
negatively by about $.15-$.20 per share in 1995, but is
expected to have an offsetting positive earnings impact in
1996. Without this change, the current outlook for the
fourth quarter of 1995 would have put the Company close to
achieving the 4 percent growth target of $3.55 per share.
- 24 -<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
<TABLE>
<CAPTION>
Exhibit
Table Item Exhibit
Number Number Description
---------- ------- -----------
<C> <C> <C>
(3) 3.1b Copy of Certificate Amending
Certificate of Incorporation By
Action of Board of Directors, dated
August 4, 1995.
(4) 4.3 Term Loan Agreement, dated as of
August 29, 1995 Among The United
Illuminating Company, as Borrower,
and The Banks Named Herein, as
Banks, and Citibank, N.A., as
Agent.*
(12), (99) 12 Statement Showing Computation of
Ratios of Earnings to Fixed Charges
and Ratios of Earnings to Combined
Fixed Charges and Preferred Stock
Dividend Requirements (Twelve Months
Ended September 30, 1995 and Twelve
Months Ended December 31, 1994,
1993, 1992, 1991 and 1990).
(27) 27 Financial Data Schedule
* Not filed herewith. Registrant hereby agrees to furnish a
copy of this document to the Commission upon request.
</TABLE>
(b) Reports on Form 8-K.
None
- 25 -<PAGE>
<PAGE>
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.
THE UNITED ILLUMINATING COMPANY
Date 11/13/95 Signature /s/ Robert L. Fiscus
------------------ -----------------------------
Robert L. Fiscus
President and
Chief Financial Officer
- 26 -<PAGE>
<PAGE>
EXHIBIT INDEX
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Table Item Exhibit
Number Number Description Page No.
---------- ------- ----------- --------
<C> <C> <C>
(3) 3.1b Copy of Certificate Amending
Certificate of Incorporation By
Action of Board of Directors, dated
August 4, 1995.
(4) 4.3 Term Loan Agreement, dated as of
August 29, 1995 Among The United
Illuminating Company, as Borrower,
and The Banks Named Herein, as
Banks, and Citibank, N.A., as
Agent.*
(12), (99) 12 Statement Showing Computation of
Ratios of Earnings to Fixed Charges
and Ratios of Earnings to Combined
Fixed Charges and Preferred Stock
Dividend Requirements (Twelve
Months Ended September 30, 1995 and
Twelve Months Ended December 31,
1994, 1993, 1992, 1991 and 1990).
(27) 27 Financial Data Schedule
* Not filed herewith. Registrant hereby agrees to
furnish a copy of this document to the Commission upon
request.
</TABLE>
<PAGE>
<PAGE>
THE UNITED ILLUMINATING COMPANY
(A SPECIALLY CHARTERED STOCK CORPORATION)
CERTIFICATE AMENDING CERTIFICATE OF INCORPORATION
BY ACTION OF BOARD OF DIRECTORS
1. The name of the corporation is THE UNITED ILLUMINATING
COMPANY (the "Company").
2. The Certificate of Incorporation of the Company is
amended only by the following resolutions of the Board of
Directors, acting alone:
RESOLVED: That, pursuant to Section 33-341(d) of the General
Statutes of Connecticut, Revision of 1958, as amended, Subsection
3(b)(5) and 3(b)(6) of the Certificate of Incorporation, setting
forth the descriptions of the terms, limitations and relative
rights and preferences of the 7.60% Preferred Stock - Series E,
and 7.60% Preferred Stock - Series F, of the Company be and they
hereby are deleted from the Certificate of Incorporation of the
Company, all of the shares of each such series of capital stock
having been redeemed and retired pursuant to the provisions of
Subsection 3(b) of the Certificate of Incorporation of the
Company.
RESOLVED: That, 66,611 shares of the Company's class of
preferred stock of the par value of $100 per share having been
purchased by the Company and cancelled, pursuant to Section
33-351(a) of the General Statutes of Connecticut, Revision of
1958, as amended, the authorized amount of said class of
preferred stock shall be and it hereby is reduced by $6,661,100,
to $118,039,400, consisting of a class of 1,180,394 shares of the
par value of $100 per share, and that, pursuant to Section
33-352(a) of the General Statutes of Connecticut, Revision of
1958, as amended, the first paragraph of ARTICLE I. AUTHORIZED
AMOUNT OF PREFERRED STOCK. of Subsection 3(b) of the Certificate
of Incorporation be and it hereby is amended to read as follows:
The authorized amount of preferred stock subject to these
Articles (herein called the Preferred Stock), unless
increased in accordance with the provisions hereof, shall be
$178,039,400, consisting of a class of 1,180,394 shares of
the par value of $100 per share and a class of 2,400,000
shares of the par value $25 per share. Shares of either
class may, subject to the provisions of these Articles, be
issued from time to time in one or more series in such
amounts, on such terms and for such consideration as may be
determined and authorized by the Board of Directors. The
series designation, dividend rate, redemption prices, and
other special rights, if any, of such series of the
Preferred Stock shall be determined and authorized by the
Board of Directors.
<PAGE>
<PAGE>
3. The above resolutions were adopted by the Company's Board
of Directors, acting alone, pursuant to Sections 33-341(d) and
33-352(a) of the General Statutes of Connecticut (Revision of
1958).
The number of affirmative Directors' votes required to adopt
the above resolutions was six.
The number of Directors' votes in favor of adoption of each
of the above resolutions was eleven.
WE, THE UNDERSIGNED, being the President and Chief Financial
Officer and the Treasurer and Secretary of The United
Illuminating Company, hereby declare, under penalties of false
statement, that the statements made in the foregoing certificate
are true.
Dated at New Haven, Connecticut, this 4th day of August,
1995.
THE UNITED ILLUMINATING COMPANY
________________________________
Robert L. Fiscus
President and Chief Financial
Officer
________________________________
Kurt Mohlman
Treasurer and Secretary
<PAGE>
<PAGE>
<TABLE>
EXHIBIT 12
Page 1 of 2
THE UNITED ILLUMINATING COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS)
<CAPTION>
TWELVE
MONTHS
YEAR ENDED DECEMBER 31, ENDED
------------------------------------------ SEPT. 30,
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
EARNINGS
Net income $ 54,048 $ 55,550 $ 56,768 $ 40,481 $ 46,795 $ 46,435
Federal income taxes 17,053 20,844 19,276 22,342 34,551 39,988
State income taxes 9,037 12,647 16,878 4,645 6,216 12,134
Fixed charges 115,997 107,548 109,449 97,928 88,093 85,180
------- ------- ------- ------- ------- -------
Earnings available for
fixed charges (1) $196,135 $196,589 $202,371 $165,396 $175,655 $183,737
======= ======= ======= ======= ======= =======
FIXED CHARGES
Interest on long-term debt $ 94,056 $ 90,296 $ 88,666 $ 80,030 $ 73,772 $ 64,494
Other interest 15,468 9,847 12,882 12,260 10,301 16,922
Interest on nuclear fuel burned 1,533 2,440 2,963 928 - -
One third of rental charges 4,940 4,965 4,938 4,710 4,020 3,764
------- ------- ------- ------- ------- -------
$115,997 $107,548 $109,449 $ 97,928 $ 88,093 $ 85,180
======= ======= ======= ======= ======= =======
RATIO OF EARNINGS TO FIXED
CHARGES 1.69 1.83 1.85 1.69 1.99 2.16
======= ======= ======= ======= ======= =======
- ---------------
<FN>
(1) Reflects the after-tax effects of write-offs of costs of nuclear generating units
pursuant to SFAS No. 90 of ($1,551,000), ($1,965,000) and ($2,304,000) for the twelve
months ended December 31, 1992, 1991 and 1990, respectively.
/TABLE
<PAGE>
<PAGE>
<TABLE>
EXHIBIT 12
Page 2 of 2
THE UNITED ILLUMINATING COMPANY
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDEND REQUIREMENTS
(IN THOUSANDS)
<CAPTION>
TWELVE
MONTHS
YEAR ENDED DECEMBER 31, ENDED
----------------------------------------- SEPT. 30,
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
EARNINGS
Net income $ 54,048 $ 55,550 $ 56,768 $ 40,481 $ 46,795 $ 46,435
Federal income taxes 17,053 20,844 19,276 22,342 34,551 39,988
State income taxes 9,037 12,647 16,878 4,645 6,216 12,134
Fixed charges 115,997 107,548 109,449 97,928 88,093 85,180
------- ------- ------- ------- ------- -------
Earnings available for
combined fixed charges
and preferred stock
dividend requirements(1) $196,135 $196,589 $202,371 $165,396 $175,655 $183,737
======= ======= ======= ======= ======= =======
FIXED CHARGES AND PREFERRED
STOCK DIVIDEND REQUIREMENTS
Interest on long-term debt $ 94,056 $ 90,296 $ 88,666 $ 80,030 $ 73,772 $ 64,494
Other interest 15,468 9,847 12,882 12,260 10,301 16,922
Interest on nuclear fuel burned 1,533 2,440 2,963 928 - -
One third of rental charges 4,940 4,965 4,938 4,710 4,020 3,764
Preferred stock dividend
requirements (2) 7,049 7,260 7,100 7,197 6,223 4,128
------- ------- ------- ------- ------- -------
$123,046 $114,808 $116,549 $105,125 $ 94,316 $ 89,308
======= ======= ======= ======= ======= =======
RATIO OF EARNINGS TO FIXED
CHARGES AND PREFERRED
STOCK DIVIDEND REQUIREMENTS 1.59 1.71 1.74 1.57 1.86 2.06
======= ======= ======= ======= ======= =======
- ------------
<FN>
(1) Reflects the after-tax effects of write-offs of costs of nuclear generating units
pursuant to SFAS No. 90 of ($1,551,000), ($1,965,000) and ($2,304,000) for the twelve
months ended December 31, 1992, 1991, and 1990, respectively.
(2) Preferred Stock Dividends increased to reflect the pre-tax earnings required to cover
such dividend requirements.
</TABLE>
<TABLE> <S> <C>
<PAGE>
<PAGE>
<ARTICLE> UT
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,342,112
<OTHER-PROPERTY-AND-INVEST> 25,400
<TOTAL-CURRENT-ASSETS> 202,916
<TOTAL-DEFERRED-CHARGES> 500,648
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 2,071,076
<COMMON> 284,314
<CAPITAL-SURPLUS-PAID-IN> (1,458)
<RETAINED-EARNINGS> 160,335
<TOTAL-COMMON-STOCKHOLDERS-EQ> 443,191
0
10,539
<LONG-TERM-DEBT-NET> 847,626
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 87,800
0
<CAPITAL-LEASE-OBLIGATIONS> 17,583
<LEASES-CURRENT> 286
<OTHER-ITEMS-CAPITAL-AND-LIAB> 664,051
<TOT-CAPITALIZATION-AND-LIAB> 2,071,076
<GROSS-OPERATING-REVENUE> 529,135
<INCOME-TAX-EXPENSE> 49,802
<OTHER-OPERATING-EXPENSES> 377,232
<TOTAL-OPERATING-EXPENSES> 427,034
<OPERATING-INCOME-LOSS> 102,101
<OTHER-INCOME-NET> 413
<INCOME-BEFORE-INTEREST-EXPEN> 102,514
<TOTAL-INTEREST-EXPENSE> 56,356
<NET-INCOME> 43,779
1,198
<EARNINGS-AVAILABLE-FOR-COMM> 44,764
<COMMON-STOCK-DIVIDENDS> 29,793
<TOTAL-INTEREST-ON-BONDS> 70,183
<CASH-FLOW-OPERATIONS> 135,862
<EPS-PRIMARY> 3.18
<EPS-DILUTED> 3.18
</TABLE>
