SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
September 30, 1998
For the quarterly period ended. . . . . . . .. . . . . . . . . .
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from. . . . . . . .to. . . . . . . . .
1-14766
Commission file number. . . . . . . . . . . .. . . . . . . . . .
Energy East Corporation
. . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . .
(Exact name of registrant as specified in its charter)
New York 14-1798693
. . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . .
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 12904, Albany, NY 12212-2904
. . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . .
(Address of principal executive offices) (Zip Code)
518-434-3049
Registrant's telephone number, including area code . . . . . . .
N/A
. . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . .
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 of common stock (par value $.01 per
share) outstanding as of October 31, 1998 was 63,161,677.
<PAGE>
TABLE OF CONTENTS
PART I
Page
Item 1. Financial Statements . . . . . . . . . . . . . . 1
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
(a) Liquidity and Capital Resources . . . . . 7
(b) Results of Operations . . . . . . . . . . 12
PART II
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . 15
Item 5. Other Information. . . . . . . . . . . . . . . . 15
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. . . . . . . . . . . . . . . . . 16
(b) Reports on Form 8-K . . . . . . . . . . . 16
Signature . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . 17
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
Energy East Corporation
Consolidated Statements of Income - (Unaudited)
Periods Ended September 30 Three Months Nine Months
1998 1997 1998 1997
(Thousands, except per share amounts)
Operating Revenues
Electric . . . . . . . . . . . . . . $654,655 $456,530 $1,646,120 $1,319,253
Natural gas. . . . . . . . . . . . . 37,576 36,299 213,755 232,083
------- ------- --------- ---------
Total Operating Revenues. . . . 692,231 492,829 1,859,875 1,551,336
------- ------- --------- ---------
Operating Expenses
Fuel used in electric generation . . 63,172 60,583 177,344 173,272
Electricity purchased. . . . . . . . 275,405 102,833 585,971 294,292
Natural gas purchased. . . . . . . . 23,536 21,608 111,924 110,477
Other operating expenses . . . . . . 87,325 106,494 234,491 267,022
Maintenance. . . . . . . . . . . . . 25,467 25,359 85,164 79,826
Depreciation and amortization. . . . 45,104 46,062 140,318 142,378
Other taxes. . . . . . . . . . . . . 53,121 49,064 158,616 152,973
------- ------- --------- ---------
Total Operating Expenses. . . . 573,130 412,003 1,493,828 1,220,240
------- ------- --------- ---------
Operating Income. . . . . . . . . . . 119,101 80,826 366,047 331,096
Other Income and Deductions . . . . . 6,323 3,166 11,196 12,512
Interest Charges, Net . . . . . . . . 30,481 29,623 91,405 90,131
Preferred Stock Dividends of
Subsidiary . . . . . . . . . . . . . 2,351 2,348 6,880 7,015
------- ------- --------- ---------
Income Before Federal Income Taxes. . 79,946 45,689 256,566 221,438
Federal Income Taxes. . . . . . . . . 34,896 19,760 105,992 91,924
------- ------- --------- ---------
Net Income. . . . . . . . . . . . . . $45,050 $25,929 $150,574 $129,514
======= ======= ========= =========
Earnings Per Share, basic and diluted $.71 $.38 $2.32 $1.89
Dividends Per Share . . . . . . . . . $.40 $.35 $1.15 $1.05
Average Shares Outstanding. . . . . . 63,667 67,503 64,798 68,371
The notes on page 6 are an integral part of the financial statements.
<PAGE>
Item 1. Financial Statements (Cont'd)
Energy East Corporation
Consolidated Balance Sheets - (Unaudited)
Sep. 30, Dec. 31,
1998 1997
(Thousands)
Assets
Current Assets
Cash and cash equivalents. . . . . . . . . . . . . . . $35,952 $8,168
Special deposits . . . . . . . . . . . . . . . . . . . 4,498 3,170
Accounts receivable, net . . . . . . . . . . . . . . . 133,759 189,008
Fuel, at average cost. . . . . . . . . . . . . . . . . 45,299 43,706
Materials and supplies, at average cost. . . . . . . . 39,008 41,561
Prepayments. . . . . . . . . . . . . . . . . . . . . . 109,467 68,452
Accumulated deferred federal income
tax benefits, net. . . . . . . . . . . . . . . . . . 9,525 2,148
---------- ----------
Total Current Assets. . . . . . . . . . . . . . . . 377,508 356,213
Utility Plant, at Original Cost
Electric . . . . . . . . . . . . . . . . . . . . . . . 5,287,083 5,234,725
Natural gas. . . . . . . . . . . . . . . . . . . . . . 591,864 576,683
Common . . . . . . . . . . . . . . . . . . . . . . . . 145,476 152,034
---------- ----------
6,024,423 5,963,442
Less accumulated depreciation. . . . . . . . . . . . . 2,172,996 2,093,274
---------- ----------
Net Utility Plant in Service. . . . . . . . . . . . 3,851,427 3,870,168
Construction work in progress . . . . . . . . . . . . . 28,841 52,104
---------- ----------
Total Utility Plant . . . . . . . . . . . . . . . . 3,880,268 3,922,272
Other Property and Investments, Net . . . . . . . . . . 121,446 143,449
Regulatory and Other Assets
Regulatory assets
Unfunded future federal income taxes. . . . . . . . . 190,014 243,129
Unamortized debt expense. . . . . . . . . . . . . . . 72,752 76,418
Demand-side management program costs. . . . . . . . . 64,466 64,466
Environmental remediation costs . . . . . . . . . . . 61,800 82,900
Other . . . . . . . . . . . . . . . . . . . . . . . . 131,238 113,637
---------- ----------
Total regulatory assets. . . . . . . . . . . . . . . . 520,270 580,550
Other assets . . . . . . . . . . . . . . . . . . . . . 40,847 26,197
---------- ----------
Total Regulatory and Other Assets . . . . . . . . . 561,117 606,747
---------- ----------
Total Assets. . . . . . . . . . . . . . . . . . . . $4,940,339 $5,028,681
========== ==========
The notes on page 6 are an integral part of the financial statements.
<PAGE>
Item 1. Financial Statements (Cont'd)
Energy East Corporation
Consolidated Balance Sheets - (Unaudited)
Sep. 30, Dec. 31,
Liabilities 1998 1997
(Thousands)
Current Liabilities
Current portion of long-term debt. . . . . . . . . . . $3,578 $38,240
Commercial paper . . . . . . . . . . . . . . . . . . . 59,900 58,000
Accounts payable and accrued liabilities . . . . . . . 123,340 124,981
Interest accrued . . . . . . . . . . . . . . . . . . . 35,362 20,500
Taxes accrued. . . . . . . . . . . . . . . . . . . . . 42,140 6,146
Other. . . . . . . . . . . . . . . . . . . . . . . . . 68,466 79,631
---------- ----------
Total Current Liabilities. . . . . . . . . . . . . . 332,786 327,498
Regulatory and Other Liabilities
Regulatory liabilities
Deferred income taxes . . . . . . . . . . . . . . . . 100,381 81,986
Deferred income taxes - unfunded future federal
income taxes . . . . . . . . . . . . . . . . . . . . 74,159 99,126
Other . . . . . . . . . . . . . . . . . . . . . . . . 43,453 79,709
---------- ----------
Total regulatory liabilities . . . . . . . . . . . . . 217,993 260,821
Other liabilities
Deferred income taxes . . . . . . . . . . . . . . . . 785,752 753,722
Other postretirement benefits . . . . . . . . . . . . 136,770 117,760
Environmental remediation costs . . . . . . . . . . . 81,800 82,900
Other . . . . . . . . . . . . . . . . . . . . . . . . 80,112 73,021
---------- ----------
Total other liabilities. . . . . . . . . . . . . . . . 1,084,434 1,027,403
Long-term debt . . . . . . . . . . . . . . . . . . . . 1,462,087 1,450,224
---------- ----------
Total Liabilities . . . . . . . . . . . . . . . . . 3,097,300 3,065,946
Commitments - -
Preferred Stock of Subsidiary
Preferred stock redeemable solely at the
option of subsidiary . . . . . . . . . . . . . . . . 104,440 134,440
Preferred stock subject to mandatory
redemption requirements. . . . . . . . . . . . . . . 25,000 25,000
Common Stock Equity
Common stock (Par value of $.01 and $6.66 2/3 at
Sep. 30, 1998 and Dec. 31, 1997, respectively) . . . 633 462,250
Capital in excess of par value. . . . . . . . . . . . 1,068,522 811,648
Retained earnings . . . . . . . . . . . . . . . . . . 644,444 568,844
Treasury stock. . . . . . . . . . . . . . . . . . . . - (39,447)
---------- ----------
Total Common Stock Equity . . . . . . . . . . . . . 1,713,599 1,803,295
---------- ----------
Total Liabilities and Stockholders' Equity . . . . $4,940,339 $5,028,681
========== ==========
The notes on page 6 are an integral part of the financial statements.
<PAGE>
Item 1. Financial Statements (Cont'd)
Energy East Corporation
Consolidated Statements of Cash Flows - (Unaudited)
Nine Months
Periods Ended September 30 1998 1997
(Thousands)
Operating Activities
Net income . . . . . . . . . . . . . . . . . . . $150,574 $129,514
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization. . . . . . . . . 140,318 142,378
Federal income taxes and investment tax credits
deferred, net . . . . . . . . . . . . . . . 2,414 (23,164)
Changes in current operating assets and liabilities
Accounts receivable. . . . . . . . . . . . . . 55,249 68,630
Inventory. . . . . . . . . . . . . . . . . . . 960 (5,870)
Prepayments. . . . . . . . . . . . . . . . . . (41,015) (4,253)
Accounts payable and accrued liabilities . . . (1,641) (25,177)
Taxes accrued. . . . . . . . . . . . . . . . . 35,994 39,278
Interest accrued . . . . . . . . . . . . . . . 14,862 13,354
Other, net . . . . . . . . . . . . . . . . . . . 38,276 63,736
-------- --------
Net Cash Provided by Operating Activities . . 395,991 398,426
-------- --------
Investing Activities
Utility plant additions. . . . . . . . . . . . . (100,392) (90,821)
Proceeds from governmental and other sources . . 319 1,041
Other property and investment additions. . . . . 24,934 (53,179)
-------- --------
Net Cash Used in Investing Activities . . . . (75,139) (142,959)
-------- --------
Financing Activities
Repurchase of common stock . . . . . . . . . . . (166,595) (7,245)
Purchase of treasury stock . . . . . . . . . . . - (39,565)
Repayments of first mortgage bonds and preferred
stock of subsidiary, including net premiums . (60,600) (73,000)
Changes in funds set aside for first
mortgage bond repayments. . . . . . . . . . . - 25,000
Long-term notes, net . . . . . . . . . . . . . . 7,201 (4,339)
Commercial paper, net. . . . . . . . . . . . . . 1,900 (84,900)
Dividends on common stock. . . . . . . . . . . . (74,974) (72,015)
-------- --------
Net Cash Used in Financing Activities . . . . (293,068) (256,064)
-------- --------
Net Increase (Decrease) in Cash and
Cash Equivalents . . . . . . . . . . . . . . . 27,784 (597)
Cash and Cash Equivalents, Beginning of Period. . 8,168 8,253
-------- --------
Cash and Cash Equivalents, End of Period. . . . . $35,952 $7,656
======== ========
Supplemental Disclosure of Cash Flows Information
Cash paid during the period
Interest, net of amounts capitalized. . . . . . $62,777 $66,652
Income taxes. . . . . . . . . . . . . . . . . . $62,349 $74,246
The notes on page 6 are an integral part of the financial statements.
<PAGE>
Item 1. Financial Statements (Cont'd)
Energy East Corporation
Consolidated Statements of Retained Earnings - (Unaudited)
Nine Months
Periods ended September 30, 1998 1997
(Thousands)
Balance, beginning of period. . . . . . . . . $568,844 $489,129
Add net income. . . . . . . . . . . . . . . . 150,574 129,514
Deduct dividends on common stock. . . . . . . 74,974 71,870
-------- --------
Balance, end of period. . . . . . . . . . . . $644,444 $546,773
======== ========
The notes on page 6 are an integral part of the financial statements.
<PAGE>
Item 1. Financial Statements (Cont'd)
Note 1. Holding Company Formation
Energy East Corporation is a diversified energy services
company with operations in New York, Massachusetts, Maine and New
Hampshire. We deliver electricity and natural gas to retail
customers and we provide electricity, natural gas and energy
management and other services to retail and wholesale customers
in the Northeast.
On May 1, 1998, Energy East Corporation became the parent of
New York State Electric & Gas Corporation (NYSEG) pursuant to an
Agreement and Plan of Share Exchange between Energy East and
NYSEG. Each share of NYSEG's outstanding common stock was
exchanged for a share of Energy East's common stock. NYSEG's
common stock was delisted from the New York Stock Exchange. The
preferred stock and debt of NYSEG were not exchanged and remain
securities of NYSEG.
Note 2. Principles of Consolidation
These financial statements consolidate our majority-owned
subsidiaries after eliminating all intercompany transactions.
Note 3. Unaudited Consolidated Financial Statements
The accompanying unaudited consolidated financial statements
reflect all adjustments which are, in the opinion of management,
necessary for a fair presentation of our consolidated results for
the interim periods. All such adjustments, other than those
related to the reorganization into the holding company structure
noted above, are of a normal recurring nature. The unaudited
consolidated financial statements should be read in conjunction
with the consolidated financial statements and notes contained in
NYSEG's annual report for the year ended December 31, 1997. Due
to the seasonal nature of our operations, financial results for
interim periods are not necessarily indicative of trends for a
twelve-month period.
Note 4. Reclassifications
Certain amounts have been reclassified on the consolidated
financial statements to conform with the 1998 presentation.
<PAGE>
Item 2. Management's discussion and analysis of financial
condition and results of operations
(a) Liquidity and Capital Resources
Competitive Conditions (See NYSEG's Form 10-K for the fiscal year
ended December 31, 1997, Item 7 - Liquidity and Capital Resources
- - Competitive Conditions - Electric Industry, Natural Gas
Industry and Accounting Issues; and our Form 10-Q for the quarter
ended June 30, 1998, Item 2(a) - Liquidity and Capital Resources
- - Competitive Conditions - Holding Company Structure, Electric
Industry and Natural Gas Industry.)
Electric Business
Sale of our Coal-fired Generation Assets: Taking advantage of a
strong market for generation assets in the Northeast, we put our
seven coal-fired stations and associated assets and liabilities
up for auction earlier this year. We accepted offers totaling
$1.85 billion from The AES Corporation and Edison Mission Energy
in August 1998 for those generation assets.
All proceeds, net of taxes and transaction costs, in excess
of the net book value of the generation assets, less funded
deferred taxes, will be used to write down our 18% investment in
Nine Mile Point nuclear generating unit No. 2. This treatment is
in accordance with our restructuring plan approved by the Public
Service Commission of the State of New York in January 1998.
There are a number of items such as depreciation, book value of
inventories, taxes and the exact date of the closing that will
affect the financial statements as we continue to precisely
define the specific costs of the items included in the
transactions. Any differences will affect the net proceeds.
On November 4, 1998, we received approval of the sales from
the PSC. Other regulatory approvals are expected by the end of
1998, and we expect the sales to close by the end of the first
quarter of 1999.
We are also developing strategies to satisfy our remaining
energy requirements in New York after the coal-fired stations are
sold and have requested firm proposals for power to meet those
energy requirements. The power may be purchased at market prices
that exceed the cost to generate the power from the coal-fired
stations, which would increase our operating expenses. We expect
to finalize these strategies by the end of 1998.
In approving the sale of the coal-fired stations, the PSC
stated that the $400 million in excess proceeds will be reflected
as a reduction of rate base in the calculation of earnings
subject to the 12% annual earnings cap in NYSEG's electric return
on equity calculation, with earnings in excess of 12% being
returned to customers. The methodology for reflecting the $400
million excess in the earnings cap has not been determined and,
therefore, we are unable to predict what effect, if any, this may
have on future earnings.
<PAGE>
New York Power Pool Restructuring: The Federal Energy Regulatory
Commission issued Orders 888 and 889 in 1996 to foster the
development of competitive wholesale electricity markets by
opening up transmission services and to address the resulting
stranded costs. In subsequent orders the FERC generally affirmed
Orders 888 and 889. Various parties, including NYSEG, have
appealed these orders in the United States Court of Appeals for
the D.C. Circuit.
In response to Order 888, the New York Power Pool submitted
a compliance filing to the FERC that was accepted in 1997. NYPP
members submitted additional filings to the FERC in 1997
proposing the restructuring of the NYPP by establishing a New
York Independent System Operator, a Power Exchange and a New York
State Reliability Council. The FERC approved the formation of the
system operator and reliability council in June 1998 and
indicated that it would rule on the rates, terms and conditions
of service to be implemented by the system operator under the
system operator's tariff at a later time. These additional FERC
rulings are needed before the system operator, the reliability
council and the restructured market can begin operating. We are
unable to predict the outcome that the remaining FERC proceedings
will have on the system operator and their ultimate effect on our
financial position or results of operations.
Natural Gas Business
Natural Gas Rate Agreement: NYSEG filed a natural gas rate
agreement with the PSC in May 1998. This agreement cuts prices
for most customers by reducing natural gas revenues by $26.9
million, or 2.2%, over the course of the agreement. The PSC
approved the agreement in September 1998 after making certain
modifications, which included assuring that no customer receive a
rate increase. After seeking clarification of the modifications
from the PSC Staff, NYSEG accepted the PSC Order with the
clarifications and one modification. NYSEG requested that the
present rates for certain areas be maintained. NYSEG is waiting
for a response from the PSC.
Role of Local Distribution Companies: The PSC issued a press
release on October 7, 1998, setting forth its vision for
furthering competition in the natural gas industry in New York
State. The PSC's vision is based on their Staff's Report issued
in September 1997 and calls for natural gas utilities to become
only transporters of natural gas over a three to seven year
period. We believe the competitive marketplace, not the PSC,
should decide who will be the suppliers of natural gas and that
removing natural gas utilities from this role will result in
higher prices to consumers. Recently we received the PSC's policy
statement related to this issue. We have not yet determined its
effect on us.
<PAGE>
Other Operations
CMP Natural Gas LLC: We signed an agreement with Central Maine
Power Company in November 1997 to form a jointly-owned company
(CMP Natural Gas) to distribute natural gas in Maine and New
Hampshire to customers who are not currently served. CMP Natural
Gas has received approval from the Maine Public Utility Commission
to provide service to 60 towns in Maine. CMP Natural Gas' plans
have been developed to coincide with the construction schedules of
two natural gas pipelines from Canada. One pipeline began
construction in mid-1998 and the other is expected to begin in
early 1999. CMP Natural Gas expects initial service to customers
in early 1999.
New Hampshire Gas Corporation: We established a presence in New
Hampshire with our purchase of a franchise and propane air
distribution system in Keene, New Hampshire. Our short-term plans
call for the continuation of the existing propane air
distribution system. Long-term plans call for bringing natural
gas to the Keene area.
Year 2000
Many of our computer systems, which include mainframe
systems and special-purpose systems, refer to years in terms of
their final two digits only. Such systems may interpret the year
2000 as the year 1900. If not corrected, those systems could
cause us to, among other things, issue inaccurate bills, report
inaccurate data or incur energy delivery problems.
We are working diligently to identify and address all of our
systems affected by this problem. We have identified and taken
appropriate corrective action on all of our mainframe systems.
Those systems are now able to process year 2000 and beyond
transactions.
We have identified approximately 6,000 items in our special-
purpose systems that are potentially affected by the Year 2000
problem. We have fixed, eliminated, replaced or found no problem
with over 80% of these items. However, additional items in our
special-purpose systems continue to be identified as we fully
review our systems. We expect our review of our special-purpose
systems and appropriate corrective action to be completed in
early 1999, except for our desktop computers. All of our desktop
computers will be replaced or certified Year 2000 compliant by
the end of the second quarter of 1999.
Our review of our computer systems revealed that most of
those requiring modifications or "fixes" do not control the
delivery of electricity and natural gas to our customers. Instead
they affect human resources, financial accounting, materials
management and other areas.
<PAGE>
The Year 2000 issue could also adversely affect us if third
parties such as business partners, government agencies, other
utilities, financial institutions, suppliers and customers fail
to correct their Year 2000 problems. We have contacted key
external parties to determine the status of their Year 2000
programs. Some have not responded satisfactorily, and some have
not responded at all. Some contingency plans that we are
developing will assume that such third parties will not be Year
2000 compliant.
Identifying and addressing systems affected by the Year 2000
problem has been a high priority. Senior management began
investigating the Year 2000 problem in 1996. Through the third
quarter of 1998 we have spent approximately $8.5 million and
expect to spend an additional $3.0 million before we finish.
These amounts are being expensed as incurred and are being
financed entirely with internally generated funds. At this time
we believe that we have allocated adequate resources to address
our Year 2000 issues.
Our Year 2000 program is progressing on schedule and we
believe we are taking all necessary steps to address this issue
successfully. As part of our normal business practice we have
plans in place for use during emergencies, some of which could
arise from Year 2000 problems. We are completing contingency
plans to specifically address reasonably likely worst case
scenarios that could arise as a result of the Year 2000 problem.
These scenarios include interruption or failure of normal
business activities or operations such as a partial electrical
and/or natural gas system shutdown; customer service, customer
information system or communication system failure; generating
station outages; the ability to issue accurate and timely bills;
and the ability to maintain continuous operation of our computer
systems. We expect to have our contingency plans tested and ready
by mid-1999.
The PSC issued an Order on October 30, 1998, adopting a July
1, 1999 deadline for New York utilities to complete their Year
2000 readiness programs for "mission critical" systems that are
necessary to provide safe and reliable service, and for
contingency plans. We believe that our Year 2000 readiness
program for mission critical systems and for contingency plans
will be completed by July 1, 1999. The PSC Order requires the
filing of status reports with the PSC regarding certain Year 2000
issues by December 31, 1998 and July 1, 1999.
Investing and Financing Activities
Investing Activities
Capital spending for the first nine months of 1998 were $100
million. We estimate our capital spending for 1998 will be about
$150 million, primarily for extension of service and necessary
improvements to existing facilities. This spending is expected to
be financed entirely with internally generated funds.<PAGE>
Financing Activities
In July 1998 NYSEG redeemed, at a premium, $30 million of
6.48% preferred stock.
During the third quarter of 1998 we repurchased 707,500
shares of common stock as part of our common stock repurchase
program.
Forward-Looking Statements
This Form 10-Q contains certain forward-looking statements
that are based upon management's current expectations and
information that is currently available. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor for forward-
looking statements in certain circumstances. Whenever used in
this report, the words "estimate," "expect," "believe," or
similar expressions are intended to identify such forward-looking
statements.
In addition to the assumptions and other factors referred to
specifically in connection with such statements, factors that
could cause actual results to differ materially from those
contemplated in any forward-looking statements include, among
others, the status of our progress in addressing the Year 2000
problem; the effect on us of other entities failing to adequately
address the Year 2000 problem; regulatory developments; the
rapidly changing and increasingly competitive electric and
natural gas utility markets; the ability to obtain adequate and
timely rate relief; nuclear or environmental incidents; legal or
administrative proceedings; business conditions; technological
developments; changes in the cost or availability of capital;
factors affecting the utility industry in general, such as
deregulation and unbundling of energy services; weather
conditions; changes in electric or natural gas supply or cost;
and other considerations that may be disclosed from time to time
in our publicly disseminated documents and filings. We undertake
no obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or
otherwise.
<PAGE>
(b) Results of Operations
Three Months Ended September 30,
1998 1997 Change
(Thousands, except per share amounts)
Total Operating Revenues $692,231 $492,829 40%
Operating Income $119,101 $80,826 47%
Net Income $45,050 $25,929 74%
Average Shares Outstanding 63,667 67,503 (6%)
Earnings Per Share,
basic and diluted $.71 $.38 87%
Dividends Per Share $.40 $.35 14%
Our earnings for the third quarter of 1998 increased due to
higher electric wholesale prices and higher electric deliveries
due to warmer than normal weather. The prior year third quarter
earnings included a 24 cents per share nonrecurring charge.
Nine Months Ended September 30,
1998 1997 Change
(Thousands, except per share amounts)
Total Operating Revenues $1,859,875 $1,551,336 20%
Operating Income $366,047 $331,096 11%
Net Income $150,574 $129,514 16%
Average Shares Outstanding 64,798 68,371 (5%)
Earnings Per Share,
basic and diluted $2.32 $1.89 23%
Dividends Per Share $1.15 $1.05 10%
Our earnings increased for the nine months due to higher
electric wholesale prices, higher electric deliveries and a
reduction in the number of common shares outstanding. Those
increases were partially offset by lower natural gas retail
deliveries as a result of warmer weather during this past winter.
The prior year nine month earnings included a 24 cents per share
nonrecurring charge.
<PAGE>
Operating Results by Business Segment
Electric Three Months Ended September 30,
1998 1997 Change
(Thousands)
Retail Deliveries-
Megawatt-hours 3,432 3,278 5%
Operating Revenues $654,655 $456,530 43%
Operating Expenses $524,717 $362,942 45%
Operating Income $129,938 $93,588 39%
Electric retail deliveries increased because of warmer
weather this quarter.
Operating revenues increased $198 million due to higher
electric wholesale deliveries of $182 million and higher electric
retail deliveries of $16 million.
Our $162 million increase in operating expenses was
primarily due to a $173 million increase in electricity purchased
offset by a $17 million decrease in other operating costs due to
the effect of a 1997 nonrecurring charge.
Nine Months Ended September 30,
1998 1997 Change
(Thousands)
Retail Deliveries-
Megawatt-hours 9,952 9,841 1%
Operating Revenues $1,646,120 $1,319,253 25%
Operating Expenses $1,303,301 $1,029,850 27%
Operating Income $342,819 $289,403 18%
Operating revenues for the nine months increased $327
million primarily due to a $316 million increase in wholesale
deliveries and a $5 million increase in retail deliveries.
Our $273 million increase in operating expenses for the nine
months was primarily due to a $291 million increase in
electricity purchased offset by a $25 million decrease in other
operating costs primarily due to the effect of a 1997
nonrecurring charge.
<PAGE>
Natural Gas Three Months Ended September 30,
1998 1997 Change
(Thousands)
Retail Deliveries-
Dekatherms 6,794 6,665 2%
Operating Revenues $37,576 $36,299 4%
Operating Expenses $48,413 $49,061 (1%)
Operating Income ($10,837) ($12,762) 15%
The $1 million increase in natural gas operating revenues
was primarily due to higher wholesale deliveries. The decrease in
operating expenses was due to a $3 million decrease in other
operating costs due to the effect of a 1997 nonrecurring charge,
partially offset by a $2 million increase in natural gas
purchased due to higher wholesale deliveries.
Nine Months Ended September 30,
1998 1997 Change
(Thousands)
Retail Deliveries-
Dekatherms 37,378 40,973 (9%)
Operating Revenues $213,755 $232,083 (8%)
Operating Expenses $190,527 $190,390 -
Operating Income $23,228 $41,693 (44%)
Natural gas retail deliveries decreased because of unusually
warm weather during this past winter.
Natural gas operating revenues decreased $18 million for the
nine months. Revenues were reduced $30 million by lower retail
deliveries, primarily due to warmer weather during this past
winter. That decrease was partially offset by a $7 million
increase in wholesale deliveries and a more favorable sales mix
that added $3 million to revenues.
<PAGE>
PART II - OTHER INFORM ATION
Item 1. Legal Proceedings
(a) On May 22, 1998, we, along with fifteen other parties,
received a special notice pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980
from the U.S. Environmental Protection Agency, asking whether the
recipients wished to voluntarily finance or perform the remedial
design and remedial action at the Rosen Brothers Site in the City
of Cortland, New York. The estimated total present-worth cost of
the selected remedy is $3,140,000. The EPA also requested
reimbursement of past costs at the site of approximately
$692,000, plus interest.
On September 25, 1998, we, along with approximately 12 other
parties, entered into a consent decree with the EPA under which
we and the other settling parties will perform the selected
remedy and reimburse the EPA for the requested amount of past
costs. The EPA has agreed not to sue us and to protect us from
other claims with respect to the response and remediation costs
at the Rosen Brothers Site. (See NYSEG's Form 10-K for the fiscal
year ended December 31, 1997, Item 3. Legal Proceedings.)
(b) On August 14, 1997, we were notified by the New York State
Department of Environmental Conservation that the NYSDEC was
contemplating enforcement action against us with respect to
violations of regulations concerning opacity of air emissions at
all of our New York coal-fired stations. We are in the process of
negotiating a consent decree with the NYSDEC under which we will
undertake to bring our New York coal-fired stations into
compliance with the opacity regulations. NYSDEC has also
indicated that it will include in the consent decree a penalty
for exceedances in 1997 of the nitrogen oxide cap at our coal-
fired stations. We will pay a penalty of less than $350,000, and
be liable to pay penalties for any future violations. We
anticipate that this decree will become final before the end of
1998.
Item 5. Other Information
Our next annual meeting is tentatively scheduled for April
23, 1999. We amended our By-Laws to provide that any stockholder
who at the annual meeting wishes to nominate a person for
election to the board of directors or transact other business
must give at least 90 days but not more than 120 days advance
written notice. The notice must also meet certain other
requirements. We also amended our By-Laws to provide that the
holders of a majority of the shares of common stock may request
that a special meeting of stockholders be called.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - See Exhibit Index.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter.
Signature
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
ENERGY EAST CORPORATION
(Registrant)
By Wesley W. von Schack
Wesley W. von Schack
Chairman and Chief Financial Officer
Date: November 13, 1998
<PAGE>
EXHIBIT INDEX
(a) The following exhibits are delivered with this report:
Exhibit No.
3-2 - By-Laws of the Company as amended October 9, 1998.
27 - Financial Data Schedule.
Exhibit 3-2
________________________________________________
________________________________________________
ENERGY EAST CORPORATION
____________
B Y - L A W S
As Amended
October 9, 1998
________________________________________________
________________________________________________
<PAGE>
- -ENERGY EAST CORPORATION
_______
BY-LAWS
_______
STOCKHOLDERS' MEETINGS
1. All meetings of the stockholders shall be held at the
principal office of the Corporation, or at such other location as
shall be stated in the notice of the meeting, except when other-
wise expressly provided by statute. All meetings of stockholders
shall be presided over by the Chairman or by the President or a
Vice President except when by statute the election of a presiding
officer is required.
2. The annual meeting of stockholders shall be held at
such date and time as shall be stated in the notice of the
meeting, at which the stockholders entitled to vote shall elect
directors, and transact such other business as may properly be
brought before the meeting.
3. The holders of a majority of the votes of shares
entitled to vote thereat, without regard to class or series,
present in person or by proxy, shall be requisite for, and shall
constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise expressly provided by
statute, by the Certificate of Incorporation or by these By-Laws.
If, however, the holders of a majority of such votes shall not be
present or represented by proxy at any such meeting, the
stockholders entitled to vote thereat, present in person or by
proxy, shall have power, by a majority vote of those votes present
or represented, to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until the holders
of the amount of votes requisite to constitute a quorum shall be
present in person or by proxy. At any adjourned meeting at which
a quorum shall be present, in person or by proxy, any business may
be transacted which might have been transacted at the meeting as
originally noticed.
4. At each meeting of stockholders each holder of record of
shares of capital stock then entitled to vote shall be entitled to
vote in person, or by proxy appointed by such stockholder or by
his duly authorized attorney; but no proxy shall be valid after
the expiration of eleven months from the date thereof unless
otherwise provided in the proxy. Except as otherwise provided by
statute or by the Certificate of Incorporation each holder of
record of shares of capital stock entitled to vote at any meeting
of stockholders shall be entitled to one vote for every share of
capital stock standing in his name on the books of the
Corporation. All elections shall be determined by a plurality
vote. The vote for directors shall be by ballot.
5. A list of stockholders as of the record date, certified
by the corporate officer responsible for its preparation or by a
transfer agent, shall be produced at any meeting of stockholders
upon the request thereat or prior thereto of any stockholder. If
the right to vote at any meeting is challenged, the inspectors of
election, or person presiding thereat, shall require such list of
stockholders to be produced as evidence of the right of the
persons challenged to vote at such meeting, and all persons who
appear from such list to be stockholders entitled to vote thereat
may vote at such meeting.
6. Except as may be otherwise provided in the Certificate
of Incorporation, only persons who are nominated in accordance
with the following procedures shall be eligible for election as
directors of the Corporation. Nominations of persons for election
to the Board of Directors may be made at any annual meeting of
stockholders, or at any special meeting of stockholders called for
the purpose of electing directors, (a) by or at the direction of
the Board of Directors (or any duly authorized committee thereof)
or (b) by any stockholder of the Corporation (i) who is a
stockholder of record on the date of the giving of the notice
provided for in this By-Law and on the record date for the
determination of stockholders entitled to vote at such meeting and
(ii) who complies with the notice procedures set forth in this
By-Law.
In addition to any other applicable requirements, for a
nomination to be made by a stockholder, such stockholder must have
given timely notice thereof in proper written form to the
Secretary of the Corporation.
To be timely, a stockholder's notice to the Secretary must be
delivered to or mailed and received at the principal executive
offices of the Corporation (a) in the case of an annual meeting,
not less than ninety (90) days nor more than one hundred twenty
(120) days prior to the anniversary date of the immediately
preceding annual meeting of stockholders; provided, however, that
in the event that the annual meeting is called for a date that is
not within thirty (30) days before or after such anniversary date,
notice by the stockholder in order to be timely must be so
received not later than the close of business on the tenth (10th)
day following the day on which such notice of the date of the
annual meeting was mailed or such public disclosure of the date of
the annual meeting was made, whichever first occurs; and (b) in
the case of a special meeting of stockholders called for the
purpose of electing directors, not later than the close of
business on the tenth (10th) day following the day on which notice
of the date of the special meeting was mailed or public disclosure
of the date of the special meeting was made, whichever first
occurs.
To be in proper written form, a stockholder's notice to the
Secretary must set forth (a) as to each person whom the stock-
holder proposes to nominate for election as a director (i) the
name, age, business address and residence address of the person,
(ii) the principal occupation or employment of the person, (iii)
the class or series and number of shares of capital stock of the
Corporation which are owned beneficially or of record by the
person and (iv) any other information relating to the person that
would be required to be disclosed in a proxy statement or other
filings required to be made in connection with solicitations of
proxies for election of directors pursuant to Section 14 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and the rules and regulations promulgated thereunder; and (b) as
to the stockholder giving the notice (i) the name and record
address of such stockholder, (ii) the class or series and number
of shares of capital stock of the Corporation which are owned
beneficially or of record by such stockholder, (iii) a description
of all arrangements or understandings between such stockholder and
each proposed nominee and any other person or persons (including
their names) pursuant to which the nomination(s) are to be made by
such stockholder, (iv) a representation that such stockholder
intends to appear in person or by proxy at the meeting to nominate
the person(s) named in its notice and (v) any other information
relating to such stockholder that would be required to be
disclosed in a proxy statement or other filings required to be
made in connection with solicitations of proxies for election of
directors pursuant to Section 14 of the Exchange Act and the rules
and regulations promulgated thereunder. Such notice must be
accompanied by a written consent of each proposed nominee to being
named as a nominee and to serve as a director if elected.
No person shall be eligible for election as a director of the
Corporation unless nominated in accordance with the procedures set
forth in this By-Law. If the chairman of the meeting determines
that a nomination was not made in accordance with the foregoing
procedures, the chairman shall declare to the meeting that the
nomination was defective and such defective nomination shall be
disregarded.
7. No business may be transacted at an annual meeting of
stockholders, other than business that is either (a) specified in
the notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors (or any duly authorized
committee thereof), (b) otherwise properly brought before the
annual meeting by or at the direction of the Board of Directors
(or any duly authorized committee thereof) or (c) otherwise
properly brought before the annual meeting by any stockholder of
the Corporation (i) who is a stockholder of record on the date of
the giving of the notice provided for in this By-Law and on the
record date for the determination of stockholders entitled to vote
at such annual meeting and (ii) who complies with the notice
procedures set forth in this By-Law.
In addition to any other applicable requirements, for busi-
ness to be properly brought before an annual meeting by a
stockholder, such stockholder must have given timely notice
thereof in proper written form to the Secretary of the
Corporation.
To be timely, a stockholder's notice to the Secretary must be
delivered to or mailed and received at the principal executive
offices of the Corporation not less than ninety (90) days nor more
than one hundred twenty (120) days prior to the anniversary date
of the immediately preceding annual meeting of stockholders;
provided, however, that in the event that the annual meeting is
called for a date that is not within thirty (30) days before or
after such anniversary date, notice by the stockholder in order to
be timely must be so received not later than the close of business
on the tenth (10th) day following the day on which such notice of
the date of the annual meeting was mailed or such public
disclosure of the date of the annual meeting was made, whichever
first occurs.
To be in proper written form, a stockholder's notice to the
Secretary must set forth as to each matter such stockholder
proposes to bring before the annual meeting (i) a brief
description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at the
annual meeting, (ii) the name and record address of such
stockholder, (iii) the class or series and number of shares of
capital stock of the Corporation which are owned beneficially or
of record by such stockholder, (iv) a description of all
arrangements or understandings between such stockholder and any
other person or persons (including their names) in connection with
the proposal of such business by such stockholder and any material
interest of such stockholder in such business and (v) a
representation that such stockholder intends to appear in person
or by proxy at the annual meeting to bring such business before
the meeting.
No business shall be conducted at the annual meeting of
stockholders except business brought before the annual meeting in
accordance with the procedures set forth in this By-Law. If the
chairman of the annual meeting determines that business was not
properly brought before the annual meeting in accordance with the
foregoing procedures, the chairman shall declare to the meeting
that the business was not properly brought before the meeting and
such business shall not be transacted.
8. Special meetings of the stockholders for any purpose
or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called by notice given by or
at the direction of the Chairman or the President, and shall be
called by notice given by or at the direction of the Chairman, the
President or the Secretary at the request in writing of a majority
of the Board of Directors or at the request in writing of the
holders of a majority of the votes of shares of common stock
issued and outstanding. Such request shall state the purpose or
purposes of the proposed meetings. No other person or persons may
call or request special meetings of the stockholders.
No business may be transacted at a special meeting of
the stockholders, other than business that is either (a) specified
in the notice of meeting (or any supplement thereto) given by or
at the direction of the Chairman, the President or the Secretary
or (b) otherwise properly brought before the special meeting by or
at the direction of the Board of Directors.
9. Notice of every meeting of stockholders, setting forth the
time, place and purpose or purposes thereof, shall be mailed, not
less than ten nor more than sixty days prior to such meetings to
all stockholders (at their respective addresses appearing on the
books of the Corporation unless the stockholder shall have filed
with the Secretary of the Corporation a written request that
notices intended for him be mailed to some other address, in which
case the notice shall be mailed to the address designated in such
request) entitled to vote at such meeting, of record as of a date
fixed by the Board of Directors, not more than sixty days in
advance of such meeting, for determining the stockholders entitled
to notice of and to vote at such meeting, unless and except to the
extent that such notice shall have been waived in writing either
before or after the holding of such meeting by stockholders
entitled to notice thereof and to vote thereat.
DIRECTORS
10. The property and business of the Corporation shall be
managed under the direction of its Board of Directors. Directors
need not be stockholders. Directors shall be elected at the
annual meeting of the stockholders, or, if no such election shall
be held, at a meeting called and held in accordance with the
statutes of the State of New York. Each director shall be elected
to hold office until the expiration of the term for which he is
elected, and thereafter until a successor shall be elected and
shall qualify.
A majority of the entire Board of Directors, at any regular
or special meeting, may fix the number of directors and, in the
case of an increase in such number, shall thereupon elect the
additional directors. No decrease in the number of directors
shall shorten the term of any incumbent director. Except as
otherwise provided by statute, at any meeting of the stockholders,
the holders of a majority of the votes of shares of common stock
issued and outstanding, voting separately as a class, may remove
at any time, for cause only, any director. Directors shall not be
removed without cause by the stockholders, except in the case of
a director elected by the holders of any class or series of stock
(other than the common stock), now or hereafter authorized, voting
separately as a class or series, when so entitled by the
provisions of the Certificate of Incorporation applicable thereto.
No director who shall have attained the age of 70 shall stand
for re-election as a director.
MEETINGS OF THE BOARD
11. The first meeting of the Board of Directors held
after the annual meeting of stockholders at which directors shall
have been elected shall be held for the purpose of organization,
the election of officers, and the transaction of any other
business which may come before the meeting.
12. Regular meetings of the Board may be held without
notice, except as otherwise provided by these By-Laws, at such
time and place as shall from time to time be designated by the
Board.
13. Special meetings of the Board may be called by the
Chairman or by the President or a Vice President or any two
directors and may be held at the time and place designated in the
call and notice of the meeting. The Secretary or other officer
performing his duties shall give notice either personally or by
mail or telegram at least twenty-four hours before the meeting.
Meetings may be held at any time and place without notice if all
the directors are present or if those not present waive notice in
writing either before or after the meeting.
14. At all meetings of the Board one-third of the total
number of directors shall be requisite for and shall constitute a
quorum for the transaction of business, and the act of a majority
of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be
otherwise specifically provided by statute or by the Certificate
of Incorporation or by these By-Laws.
15. Any regular or special meeting may be adjourned to
any other time at the same or any other place by a majority of the
directors present at the meeting, whether or not a quorum shall be
present at such meeting, and no notice of the adjourned meeting
shall be required other than announcement at the meeting.
COMPENSATION OF DIRECTORS
16. Directors, other than salaried officers or employees
of the Corporation or of any affiliated company, shall receive
compensation for their services as directors in such form and
amounts and at such times as may be prescribed from time to time
by the Board of Directors. All directors shall be reimbursed for
their reasonable expenses, if any, for attendance at each regular
or special meeting of the Board of Directors. Nothing herein
contained shall be construed to preclude any director from
receiving non-cash compensation for serving as a director or from
serving the Corporation in any other capacity and receiving
compensation therefor.
17. Members of the Executive Committee other than sal-
aried officers or employees of the Corporation or of any
affiliated company, shall receive compensation for their services
on that committee in such form and amounts and at such times as
may be prescribed from time to time by the Board of Directors.
Members of special or standing committees, including the
Executive Committee, shall be allowed such additional compensation
and reimbursement for expenses as may be fixed by the Board of
Directors.
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
18. The Board of Directors may by vote of a majority of
the whole Board designate three or more of their number to
constitute an Executive Committee to hold office for such period
as the Board shall determine. The Chairman and the President
shall each be a member of the Executive Committee. The Board of
Directors may likewise designate one or more alternate members who
shall serve on the Executive Committee in the absence or
disqualification of any regular member or members of such
Committee. When a regular or alternate member of the Executive
Committee ceases to be a director he shall automatically cease to
be such regular or alternate member of the Executive Committee.
Such Executive Committee shall, between meetings of the Board,
have all the powers of the Board of Directors in the management of
the business and affairs of the Corporation, except that no such
committee shall have authority as to: the submission to
stockholders of any action that needs stockholders' authorization
under the Business Corporation Law; the filling of vacancies in
the Board of Directors or in any committee; the fixing of
compensation of the directors for serving on the Board or on any
committee; the amendment or repeal of the By-Laws, or the adoption
of new By-Laws; or the amendment or repeal of any resolution of
the Board which by its terms shall not be so amendable or
repealable.
The Executive Committee shall cause to be kept regular
minutes of its proceedings, which may be transcribed in the
regular minute book of the Corporation, and all such proceedings
shall be reported to the Board of Directors at its next succeeding
meeting, and shall be subject to revision or alteration by the
Board, provided that no rights of third persons shall be affected
by such revision or alteration. A majority of the Executive
Committee shall constitute a quorum at any meeting. The act of a
majority of the Executive Committee present at any meeting at
which there is a quorum shall be the act of the Executive
Committee. The Board of Directors may by vote of a majority
thereof fill any vacancies in the Executive Committee. The
Executive Committee may, from time to time, subject to the
approval of the Board of Directors, prescribe rules and
regulations for the calling and conduct of meetings of the
Committee, and other matters relating to its procedure and the
exercise of its powers.
19. In addition to having the power to designate an
Executive Committee, the Board of Directors may by vote of a
majority of the whole Board designate other committees, whether
special or standing, each to consist of three or more of their
number, to hold office for such period as the Board shall
determine. With respect to each such other committee, the Board
of Directors may likewise designate one or more alternate members
who shall serve in the absence or disqualification of any regular
member or members of such other committee. When a regular or
alternate member of such other committee ceases to be a director
he shall automatically cease to be a regular or alternate member
of such other committee. Each such other committee shall have
authority only to the extent provided by the Board of Directors,
except that no such other committee shall have authority as to:
the submission to stockholders of any action that needs
stockholders' authorization under the Business Corporation Law;
the filling of vacancies in the Board of Directors or in any
committee; the fixing of compensation of the directors for serving
on the Board or on any committee; the amendment or repeal of the
By-Laws, or the adoption of new By-Laws; or the amendment or
repeal of any resolution of the Board which by its terms shall not
be so amendable or repealable. A majority of each such other
committee shall constitute a quorum at any meeting thereof. The
act of a majority of each such other committee present at any
meeting thereof at which there is a quorum shall be the act of
such other committee. The Board of Directors may by vote of a
majority thereof fill any vacancies in each such other committee.
OFFICERS
20. The officers of the Corporation shall be chosen by
the Board of Directors. The officers shall be a Chairman, one or
more Assistants to the Chairman, a President, one or more
Assistants to the President, one or more Vice Presidents, one or
more Assistant Vice Presidents, a Secretary, one or more Assistant
Secretaries, a Treasurer, one or more Assistant Treasurers, a
Controller, one or more Assistant Controllers, and such other
officers as the Board may from time to time choose and appoint.
21. The Board of Directors, at its first meeting after
the election of directors by the stockholders, shall choose a
Chairman and a President from among their own number, and a
Secretary, and may choose a Treasurer and a Controller, and such
Assistants to the Chairman, Assistants to the President, Vice
Presidents, Assistant Vice Presidents, Assistant Secretaries,
Assistant Treasurers and Assistant Controllers, as it shall deem
necessary, none of whom need be members of the Board.
<PAGE>
22. The Board may appoint such other officers and agents
as it shall deem necessary, who shall hold their offices for such
terms, and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board.
23. The salary or other compensation of the officers of
the Corporation shall be fixed by the Board of Directors. The
salary or other compensation of all other employees shall, in the
absence of any action by the Board be fixed by the Chairman or the
President or by such other officers or executives as shall be
designated by the Chairman or the President.
24. The officers of the Corporation shall hold office
until the first meeting of the Board of Directors after the next
succeeding annual meeting of stockholders and until their
successors are chosen and qualify in their stead. Any officer or
agent elected or appointed by the Board of Directors may be
removed at any time, with or without cause, by the affirmative
vote of a majority of the whole Board of Directors. Any other
employee or agent of the Corporation may be removed at any time,
with or without cause, by the affirmative vote of a majority of
the whole Board of Directors or, in the absence of any action by
the Board, by the Chairman or the President or by such other
officers or executives as shall have been designated by the
Chairman or the President.
<PAGE>
CHAIRMAN
25. The Chairman shall be the chief executive officer of the
Corporation and shall, when present, preside at all meetings of
the Board of Directors and of the stockholders, except as
otherwise by law provided. He may sign in the name of and on
behalf of the Corporation, certificates of stock, notes, and any
and all contracts, agreements and other instruments of a
contractual nature pertaining to matters which arise in the normal
conduct and ordinary course of business of the Corporation. He
shall be a member of the Executive Committee and of all standing
committees except the Executive Compensation and Succession
Committee, the Audit Committee and the Nominating Committee. He
shall also generally have the powers and perform the duties which
appertain to the office.
The Assistants to the Chairman shall assist the Chairman in
the performance of his duties and exercise and perform such other
powers and duties as may be conferred or required by the Board.
PRESIDENT
26. The President shall, when present in the absence of
the Chairman, preside at all meetings of the Board of Directors
and of the stockholders, except as otherwise by law provided. He
may sign in the name of and on behalf of the Corporation,
certificates of stock, notes, and any and all contracts,
agreements and other instruments of a contractual nature
pertaining to matters which arise in the normal conduct and
ordinary course of business of the Corporation. He shall be a
member of the Executive Committee and of all standing committees
except the Executive Compensation and Succession Committee, the
Audit Committee and the Nominating Committee. He shall also
generally have the powers and perform the duties which appertain
to the office.
The Assistants to the President shall assist the President in
the performance of his duties and exercise and perform such other
powers and duties as may be conferred or required by the Board.
VICE PRESIDENT
27. A Vice President may sign, in the name of and on
behalf of the Corporation, certificates of stock, notes and any
and all contracts, agreements and other instruments of a
contractual nature pertaining to matters which arise in the normal
conduct and ordinary course of business, and shall perform such
other duties as the Board of Directors may prescribe.
If there be more than one Vice President, the Board of
Directors may designate one or more Vice Presidents as Executive
Vice Presidents who shall have general supervision, direction and
control of the business and affairs of the Corporation in the
absence or disability of the Chairman and the President, and may
designate one or more Vice Presidents as Senior Vice Presidents
who shall have general supervision, direction and control of the
business and affairs of the Corporation in the absence or
disability of the Chairman and the President and the Executive
Vice Presidents. A Vice President who has not been designated as
Executive Vice President or as Senior Vice President shall have
general supervision, direction and control of the business and
affairs of the Corporation in the absence or disability of the
Chairman and the President, and the Executive Vice Presidents and
the Senior Vice Presidents.
The Assistant Vice Presidents shall assist the Vice
Presidents in the performance of their duties and exercise and
perform such other powers and duties as may be conferred or
required by the Board.
SECRETARY
28. The Secretary shall attend all sessions of the Board
and all meetings of the stockholders and record all votes and the
minutes of all proceedings in a book to be kept for that purpose;
and shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all
meetings of the stockholders and of the Board of Directors, and
shall perform such other duties as may be prescribed by the Board
of Directors. He shall be sworn to the faithful discharge of his
duty. Any records kept by him shall be the property of the
Corporation and shall be restored to the Corporation in case of
his death, resignation, retirement or removal from office.
He shall be the custodian of the seal of the Corporation and,
when authorized by the Board of Directors or by the Chairman, the
President or a Vice President, shall affix the seal to all
instruments requiring it and shall attest the seal and/or the
execution of such instruments, as required. He shall have control
of the stock ledger, stock certificate book and minute books of
the Corporation and its committees, and other formal records and
documents relating to the corporate affairs of the Corporation.
The Assistant Secretary or Assistant Secretaries shall assist
the Secretary in the performance of his duties, exercise and
perform his powers and duties in his absence or disability, and
such powers and duties as may be conferred or required by the
Board.
TREASURER
29. (a) The Treasurer shall have the custody of the
corporate funds and securities and shall deposit all moneys, and
other valuable effects in the name and to the credit of the
Corporation, in such depositories as may be designated by the
Board of Directors.
(b) He shall disburse the funds of the Corporation in
such manner as may be ordered by the Board, taking proper vouchers
for such disbursements, and shall render to the Chairman, the
President and directors, at the regular meetings of the Board, or
whenever they may require it, an account of all his transactions
as Treasurer and of the financial condition of the Corporation.
(c) He shall give the Corporation a bond if required by
the Board of Directors in a sum, and with one or more sureties
satisfactory to the Board, for the faithful performance of the
duties of his office, and for the restoration of the Corporation,
in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property
of whatever kind in his possession or under his control belonging
to the Corporation.
The Assistant Treasurer or Assistant Treasurers shall assist
the Treasurer in the performance of his duties, exercise and
perform his powers and duties in his absence or disability, and
such powers and duties as may be conferred or required by the
Board.
CONTROLLER
30. The Controller of the Corporation shall have full
control of all the books of account of the Corporation and keep a
true and accurate record of all property owned by it, of its debts
and of its revenues and expenses and shall keep all accounting
records of the Corporation.
The Assistant Controller or Assistant Controllers shall
assist the Controller in the performance of his duties, exercise
and perform his powers and duties in his absence or disability,
and such powers and duties as may be conferred or required by the
Board.
VACANCIES
31. If the office of any director becomes vacant by
reason of death, resignation, removal or disability, or any other
cause, the directors then in office, except as otherwise provided
in the Certificate of Incorporation, although less than a quorum,
by a majority vote, may choose a successor or successors, who
shall hold office until the next annual meeting of stockholders,
and thereafter until a successor or successors shall be elected
and shall qualify. If the office of any officer of the
Corporation shall become vacant for any reason, the Board, by a
majority vote of those present at any meeting at which a quorum is
present, may choose a successor or successors who shall hold
office for the unexpired term in respect of which such vacancy
occurred.
RESIGNATIONS
32. Any officer or any director of the Corporation may
resign at any time, such resignation to be made in writing and to
take effect from the time of its receipt by the Corporation,
unless some time be fixed in the resignation, and then from that
time.
INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES
33. The Corporation shall fully indemnify to the extent
not prohibited by law any person made, or threatened to be made,
a party to an action or proceeding, whether civil or criminal,
including an investigative, administrative, legislative or other
proceeding, and including an action by or in the right of the
Corporation or any other corporation of any type or kind, domestic
or foreign, or any partnership, joint venture, trust, employee
benefit plan or other enterprise, by reason of the fact that he,
his testator or intestate, (i) is or was a director, officer, or
employee of the Corporation or (ii) is or was serving at the
request of the Corporation, as a director, officer, or in any
other capacity, any other corporation of any type or kind,
domestic or foreign, or any partnership, joint venture, trust,
employee benefit plan or other enterprise, against any and all
judgments, fines, amounts paid in settlement and expenses,
including attorneys' fees, actually and reasonably incurred as a
result of or in connection with any such action or proceeding or
any appeal therein, except as provided in the next paragraph.
No indemnification shall be made to or on behalf of any
director, officer, or employee if a judgment or other final
adjudication adverse to the director, officer, or employee
establishes that his acts were committed in bad faith or were the
result of active and deliberate dishonesty and were material to
the cause of action so adjudicated, or that he personally gained
in fact a financial profit or other advantage to which he was not
legally entitled.
Except in the case of an action or proceeding against a
director, officer, or employee specifically approved by the Board
of Directors, the Corporation shall pay expenses incurred by or on
behalf of such a person in defending such a civil or criminal
action or proceeding (including appeals) in advance of the final
disposition of such action or proceeding. Such payments shall be
made promptly upon receipt by the Corporation, from time to time,
of a written demand of such person for such advancement, together
with an undertaking by or on behalf of such person to repay any
expenses so advanced to the extent that the person receiving the
advancement is ultimately found not to be entitled to
indemnification for such expenses.
The rights to indemnification and advancement of defense
expenses granted by or pursuant to this By-Law (i) shall not limit
or exclude, but shall be in addition to, any other rights which
may be granted by or pursuant to any statute, certificate of
incorporation, by-law, resolution or agreement, (ii) shall be
deemed to constitute contractual obligations of the Corporation to
any director, officer, or employee who serves in such capacity at
any time while this By-Law is in effect, (iii) are intended to be
retroactive and shall be available with respect to events
occurring prior to the adoption of this By-Law and (iv) shall
continue to exist after the repeal or modification hereof with
respect to events occurring prior thereto. It is the intent of
this By-Law to require the Corporation to indemnify the persons
referred to herein for the aforementioned judgments, fines,
amounts paid in settlement and expenses, including attorneys'
fees, in each and every circumstance in which such indemnification
could lawfully be permitted by an express provision of a by-law,
and the indemnification required by this By-Law shall not be
limited by the absence of an express recital of such
circumstances.
The Corporation may, with the approval of the Board of
Directors, enter into an agreement with any person who is, or is
about to become, a director, officer, or employee of the
Corporation, or who is serving, or is about to serve, at the
request of the Corporation, as a director, officer, or in any
other capacity, any other corporation of any type or kind,
domestic or foreign, or any partnership, joint venture, trust,
employee benefit plan or other enterprise, which agreement may
provide for indemnification of such person and advancement of
defense expenses to such person upon such terms, and to the
extent, not prohibited by law.
STOCK OF OTHER CORPORATIONS
34. The Board of Directors shall have the right to
authorize any officer or other person on behalf of the Corporation
to attend, act and vote at meetings of the stockholders of any
corporation in which the Corporation shall hold stock, and to
exercise thereat any and all the rights and powers incident to the
ownership of such stock and to execute waivers of notice of such
meetings and calls therefor; and authority may be given to
exercise the same either on one or more designated occasions, or
generally on all occasions until revoked by the Board. In the
event that the Board shall fail to give such authority, such
authority may be exercised by the Chairman or the President in
person or by proxy appointed by him on behalf of the Corporation.
CERTIFICATES OF STOCK
35. Stock of the Corporation may be in certificated or
uncertificated form. Stock of the Corporation represented by
certificates shall be numbered and shall be entered in the books
of the Corporation as the certificates are issued. The
certificates shall exhibit the holder's name and number of shares
and shall be signed by the Chairman, President or a Vice President
and by the Treasurer or an Assistant Treasurer or the Secretary or
an Assistant Secretary, and the seal of the Corporation shall be
affixed thereto. Where any such certificates of stock are signed
by a transfer agent and by a registrar, the signatures of the
Chairman, President or a Vice President and the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary
upon any such certificates, if authorized by the Board of
Directors, may be made by engraving, lithographing or printing
thereon a facsimile of such signatures, in lieu of actual
signatures, and such facsimile signatures so engraved,
lithographed or printed thereon shall have the same force and
effect as if such officers had actually signed the same.
In case any officer who has signed, or whose facsimile
signature has been affixed to, any such certificate shall cease to
be such officer before such certificate shall have been delivered
by the Corporation, such certificate may nevertheless be issued
and delivered as though the person who signed such certificate, or
whose facsimile signature has been affixed thereto, had not ceased
to be such officer of the Corporation.
To the extent permitted by law, some or all of any or all
classes and series of stock of the Corporation may be
uncertificated stock, provided that no stock represented by a
certificate shall be registered on the books of the Corporation as
uncertificated stock until such certificate is surrendered to the
Corporation.
TRANSFERS OF STOCK
36. Transfers of certificated stock shall be made on the
books of the Corporation only upon the request of the person named
in the certificate or by attorney, lawfully constituted in
writing, and upon surrender of the certificate therefor.
Transfers of uncertificated stock shall be made on the books
of the Corporation only upon the request of the holder of record
of such uncertificated stock or by attorney, lawfully constituted
in writing, and upon receipt by the Corporation of a written
instruction signed by the holder of record of such uncertificated
stock or by such attorney requesting that the transfer of such
uncertificated stock be registered on the books of the
Corporation.
FIXING OF RECORD DATE
37. The Board of Directors is hereby authorized to fix a day
and hour not exceeding sixty (60) days (and in the case of a
meeting not less than ten (10) days) preceding the date of any
meeting of stockholders or the date fixed for the payment of any
dividend or for the delivery of evidences of rights, as a record
time for the determination of the stockholders entitled to notice
of and to vote at any such meeting or entitled to receive any such
dividend or rights, as the case may be; and all persons who are
holders of record of voting stock at such time, and no others,
shall be entitled to notice of and to vote at such meeting, and
only stockholders of record at any time so fixed shall be entitled
to receive any such dividend or rights; and the stock transfer
books shall not be closed during any such period.
<PAGE>
REGISTERED STOCKHOLDERS
38. The Corporation shall be entitled to treat the holder
of record of any share or shares of stock as the holder in fact
thereof and accordingly shall not be bound to recognize any
equitable or other claim to, or interest in, such share on the
part of any other person, whether or not it shall have express or
other notice thereof, save as expressly provided by the statutes
of the State of New York.
INSPECTION OF BOOKS
39. The Board of Directors shall have power to determine
whether and to what extent, and at what time and places and under
what conditions and regulations, the accounts and books of the
Corporation (other than the books required by statute to be open
to the inspection of stockholders), or any of them, shall be open
to the inspection of stockholders, and no stockholders shall have
any right to inspect any account or book or document of the
Corporation, except as such right may be conferred by the statutes
of the State of New York or by resolution of the directors or of
the stockholders.
CHECKS, NOTES, BONDS AND OTHER INSTRUMENTS
40. All checks or demands for money and notes of the
Corporation shall be signed by such person or persons (who may but
need not be an officer or officers of the Corporation) as may be
authorized by these By-Laws or as the Board of Directors may from
time to time designate, either directly or through such officers
of the Corporation as shall, by resolution of the Board of
Directors, be authorized to designate such person or persons. If
authorized by the Board of Directors, the signatures of such
persons, or any of them, upon any checks for the payment of money
may be made by engraving, lithographing or printing thereon a
facsimile of such signatures, in lieu of actual signatures, and
such facsimile signatures so engraved, lithographed or printed
thereon shall have the same force and effect as if such persons
had actually signed the same.
All bonds, mortgages and other instruments requiring a seal
shall be executed on behalf of the Corporation by the Chairman or
the President or a Vice President, and the seal of the Corporation
shall be thereunto affixed by the Secretary or an Assistant
Secretary who shall, when required, attest the seal and/or the
execution of said instruments. If authorized by the Board of
Directors, the signatures of the Chairman or the President or a
Vice President and the Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer upon any engraved,
lithographed or printed bonds, debentures, notes or other
instruments may be made by engraving, lithographing or printing
thereon a facsimile of such signatures, in lieu of actual
signatures, and such facsimile signatures so engraved,
lithographed or printed thereon shall have the same force and
effect as if such officers had actually signed the same.
In case any officer who has signed any such bonds,
debentures, notes or other instruments shall cease to be such
officer before such bonds, debentures, notes or other instruments
shall have been delivered by the Corporation, such bonds,
debentures, notes or other instruments may nevertheless be adopted
by the Corporation and be issued and delivered as though the
person who signed the same had not ceased to be such officer of
the Corporation.
NOTICES
41. Whenever under the provisions of these By-Laws notice
is required to be given to any director, officer or stockholder,
it shall not be construed to require personal notice, but such
notice may be given in writing, by mail, by depositing a copy of
the same in a post office, letter box or mail chute, maintained by
the Post Office Department, in a postpaid sealed wrapper,
addressed to such stockholder, officer or director, at his address
as the same appears on the books of the Corporation.
A stockholder, director or officer may waive in writing any
notice required to be given to him under these By-Laws.
INSPECTORS
42. Preceding each meeting of the stockholders, the Board
of Directors shall appoint two inspectors to act at such meeting
or any adjournment or adjournments thereof as inspectors. In the
event that such inspectors shall not be so appointed, or if any
inspector shall refuse to serve, or neglect to attend the meeting
or his office become vacant, the person presiding at the meeting
shall appoint an inspector in his place. The inspectors appointed
to act at any meeting of the stockholders shall, before entering
upon the discharge of their duties, be sworn to faithfully execute
the duties of inspector at such meeting with strict impartiality,
and according to the best of their ability, and the oaths so taken
shall be subscribed by them and delivered to the Secretary of the
meeting with a certificate of the result of the vote taken
thereat.
AMENDMENTS
43. These By-Laws may be altered, amended or repealed, or
new By-Laws may be adopted, by the affirmative vote of the
stockholders entitled to cast a majority of the votes entitled to
be cast, or by the affirmative vote of a majority of the Board of
Directors at any meeting duly held as provided above; provided
that any alteration, amendment or repeal of, or the adoption of
any provision inconsistent with, By-Laws 6, 7, 8, 10 or 43, if by
action of the stockholders, shall be only upon the affirmative
vote of the stockholders entitled to cast three-fourths of the
votes entitled to be cast.
<TABLE> <S> <C>
<ARTICLE> UT EXHIBIT 27
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE COMPANY'S FINANCIAL STATEMENTS INCLUDED IN ITS FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 3,880,268
<OTHER-PROPERTY-AND-INVEST> 121,446
<TOTAL-CURRENT-ASSETS> 377,508
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 561,117
<TOTAL-ASSETS> 4,940,339
<COMMON> 633
<CAPITAL-SURPLUS-PAID-IN> 1,068,522
<RETAINED-EARNINGS> 644,444
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,713,599
25,000
104,440
<LONG-TERM-DEBT-NET> 1,462,087
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 59,900
<LONG-TERM-DEBT-CURRENT-PORT> 3,578
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,571,735
<TOT-CAPITALIZATION-AND-LIAB> 4,940,339
<GROSS-OPERATING-REVENUE> 1,859,875
<INCOME-TAX-EXPENSE> 105,992
<OTHER-OPERATING-EXPENSES> 234,491
<TOTAL-OPERATING-EXPENSES> 1,493,828
<OPERATING-INCOME-LOSS> 366,047
<OTHER-INCOME-NET> (11,196)
<INCOME-BEFORE-INTEREST-EXPEN> 0
<TOTAL-INTEREST-EXPENSE> 91,405
<NET-INCOME> 150,574
6,880
<EARNINGS-AVAILABLE-FOR-COMM> 0
<COMMON-STOCK-DIVIDENDS> 74,974
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 395,991
<EPS-PRIMARY> 2.32
<EPS-DILUTED> 2.32
</TABLE>
