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
March 31, 1999
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, New York 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 April 30, 1999 was 117,128,928.
<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 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . 13
Item 5. Other Information . . . . . . . . . . . . . . . 14
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. . . . . . . . . . . . . . . . . 14
(b) Reports on Form 8-K . . . . . . . . . . . 14
Signature . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . 16
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
Energy East Corporation
Consolidated Statements of Income - (Unaudited)
Three Months
Periods Ended March 31 1999 1998
(Thousands, except per share amounts)
Operating Revenues
Sales and services. . . . . . . . . . $654,438 $637,630
--------- ---------
Operating Expenses
Fuel used in electricity generation . 56,485 59,092
Electricity purchased . . . . . . . . 148,793 146,211
Natural gas purchased . . . . . . . . 66,042 57,137
Other operating expenses. . . . . . . 88,788 84,281
Maintenance.. . . . . . . . . . . . . 25,713 31,948
Depreciation and amortization . . . . 55,332 48,377
Other taxes . . . . . . . . . . . . . 54,061 54,940
--------- ---------
Total Operating Expenses . . . . . 495,214 481,986
--------- ---------
Operating Income. . . . . . . . . . . . 159,224 155,644
Other Income and Deductions . . . . . . (682) 1,224
Interest Charges, Net . . . . . . . . . 32,182 30,636
Preferred Stock Dividends of Subsidiary 1,030 2,269
--------- ---------
Income Before Federal Income Taxes . . 126,694 121,515
Federal Income Taxes. . . . . . . . . . 39,658 45,344
--------- ---------
Net Income. . . . . . . . . . . . . . . $87,036 $76,171
========= =========
Earnings Per Share, basic and diluted . $.71 $.57
Dividends Paid Per Share. . . . . . . . $.21 $.18
Average Shares Outstanding. . . . . . . 122,939 132,817
Per share amounts and number of average shares outstanding have been
restated to reflect the two-for-one common stock split effective
April 1, 1999.
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)
March 31, Dec. 31,
1999 1998
(Thousands)
Assets
Current Assets
Cash and cash equivalents. . . . . . . . . . . . . . $949,489 $48,068
Special deposits . . . . . . . . . . . . . . . . . . 3,731 4,729
Accounts receivable, net . . . . . . . . . . . . . . 175,808 148,712
Fuel, at average cost. . . . . . . . . . . . . . . . 12,035 44,643
Materials and supplies, at average cost. . . . . . . 25,547 38,040
Prepayments. . . . . . . . . . . . . . . . . . . . . 137,435 111,082
---------- ----------
Total Current Assets. . . . . . . . . . . . . . . 1,304,045 395,274
Utility Plant, at Original Cost
Electric . . . . . . . . . . . . . . . . . . . . . . 4,862,913 5,299,604
Natural gas. . . . . . . . . . . . . . . . . . . . . 607,384 602,904
Common . . . . . . . . . . . . . . . . . . . . . . . 141,419 144,043
---------- ----------
5,611,716 6,046,551
Less accumulated depreciation. . . . . . . . . . . . 2,060,153 2,211,608
---------- ----------
Net Utility Plant in Service. . . . . . . . . . . 3,551,563 3,834,943
Construction work in progress. . . . . . . . . . . . 12,114 27,741
---------- ----------
Total Utility Plant . . . . . . . . . . . . . . . 3,563,677 3,862,684
Other Property and Investments, Net . . . . . . . . . . 132,866 129,088
Regulatory and Other Assets
Regulatory assets
Deferred income taxes, sale of generation assets. . 227,474 -
Unfunded future federal income taxes. . . . . . . . 137,925 136,404
Unamortized debt expense. . . . . . . . . . . . . . 70,308 71,530
Demand-side management program costs. . . . . . . . 61,512 64,466
Environmental remediation costs . . . . . . . . . . 59,300 60,600
Other . . . . . . . . . . . . . . . . . . . . . . . 107,346 125,604
---------- ----------
Total regulatory assets. . . . . . . . . . . . . . . 663,865 458,604
Other assets . . . . . . . . . . . . . . . . . . . . 36,354 37,687
---------- ----------
Total Regulatory and Other Assets . . . . . . . . 700,219 496,291
---------- ----------
Total Assets. . . . . . . . . . . . . . . . . . . $5,700,807 $4,883,337
========== ==========
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)
March 31, Dec. 31,
1999 1998
Liabilities (Thousands)
Current Liabilities
Current portion of long-term debt . . . . . . . . . . $28,582 $31,077
Current portion of preferred stock of subsidiary. . . 19,309 75,000
Notes payable . . . . . . . . . . . . . . . . . . . . 252,000 78,300
Accounts payable and accrued liabilities. . . . . . . 105,034 116,582
Interest accrued. . . . . . . . . . . . . . . . . . . 35,869 19,556
Taxes accrued . . . . . . . . . . . . . . . . . . . . 323,147 587
Accumulated deferred federal income tax, net. . . . . 16,639 10,029
Other . . . . . . . . . . . . . . . . . . . . . . . . 61,542 82,143
---------- ----------
Total Current Liabilities . . . . . . . . . . . . . 842,122 413,274
Regulatory and Other Liabilities
Regulatory liabilities
Gain on sale of generation assets. . . . . . . . . . 617,484 -
Deferred income taxes. . . . . . . . . . . . . . . . 91,635 98,038
Deferred income taxes, unfunded future federal
income taxes. . . . . . . . . . . . . . . . . . . . 60,250 60,896
Other . . . . . . . . . . . . . . . . . . . . . . . 36,691 42,182
---------- ----------
Total regulatory liabilities. . . . . . . . . . . . . 806,060 201,116
Other liabilities
Deferred income taxes. . . . . . . . . . . . . . . . 708,867 765,592
Other postretirement benefits. . . . . . . . . . . . 142,667 137,681
Environmental remediation costs. . . . . . . . . . . 79,300 80,600
Other. . . . . . . . . . . . . . . . . . . . . . . . 86,208 82,028
---------- ----------
Total other liabilities . . . . . . . . . . . . . . . 1,017,042 1,065,901
Long-term debt. . . . . . . . . . . . . . . . . . . . 1,435,961 1,435,120
---------- ----------
Total Liabilities . . . . . . . . . . . . . . . . . 4,101,185 3,115,411
Commitments . . . . . . . . . . . . . . . . . . . . . . - -
Preferred Stock of Subsidiary
Preferred stock redeemable solely at the
option of subsidiary . . . . . . . . . . . . . . . 10,131 29,440
Preferred stock subject to mandatory
redemption requirements . . . . . . . . . . . . . . 25,000 25,000
Common Stock Equity
Common stock . . . . . . . . . . . . . . . . . . . . 598 631
Capital in excess of par value. . . . . . . . . . . . 879,700 1,057,904
Retained earnings . . . . . . . . . . . . . . . . . . 723,190 662,562
Treasury stock, at cost . . . . . . . . . . . . . . . (38,997) (7,611)
---------- ----------
Total Common Stock Equity . . . . . . . . . . . . . 1,564,491 1,713,486
---------- ----------
Total Liabilities and Stockholders' Equity . . . . $5,700,807 $4,883,337
========== ==========
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)
Three Months
Periods Ended March 31 1999 1998
(Thousands)
Operating Activities
Net income . . . . . . . . . . . . . . . . . . . $87,036 $76,171
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization. . . . . . . . . 55,332 48,377
Federal income taxes and investment tax credits
deferred, net. . . . . . . . . . . . . . . . (224,366) (5,575)
Changes in current operating assets and liabilities
Accounts receivable . . . . . . . . . . . . . (27,096) 13,592
Prepayments. . . . . . . . . . . . . . . . . . (26,353) (20,955)
Inventory. . . . . . . . . . . . . . . . . . . 45,101 18,430
Accounts payable and accrued liabilities . . . (11,548) (8,980)
Taxes accrued. . . . . . . . . . . . . . . . . 322,560 47,486
Other, net . . . . . . . . . . . . . . . . . . . (62,480) 372
-------- -------
Net Cash Provided by Operating Activities . . 158,186 168,918
-------- -------
Investing Activities
Sale of generation assets. . . . . . . . . . . . 900,500 -
Utility plant additions. . . . . . . . . . . . . (13,572) (38,801)
Other property and investments . . . . . . . . . (4,962) (249)
-------- -------
Net Cash Provided by
(Used in) Investing Activities . . . . . . . 881,966 (39,050)
-------- -------
Financing Activities
Repurchase of common stock . . . . . . . . . . . (178,300) (114,023)
Treasury stock acquired, net . . . . . . . . . . (31,386) -
Repayments of preferred stock and
first mortgage bonds. . . . . . . . . . . . . (75,000) (30,000)
Long-term notes, net . . . . . . . . . . . . . . (1,337) (380)
Notes payable, net . . . . . . . . . . . . . . . 173,700 47,000
Dividends on common stock. . . . . . . . . . . . (26,408) (23,628)
-------- -------
Net Cash Used in Financing Activities . . . . (138,731) (121,031)
-------- -------
Net Increase in Cash and Cash Equivalents . . . . 901,421 8,837
Cash and Cash Equivalents, Beginning of Period. . 48,068 8,168
-------- -------
Cash and Cash Equivalents, End of Period. . . . . $949,489 $17,005
======== =======
Supplemental Disclosure of Cash Flows Information
Cash paid during the period
Interest, net of amounts capitalized. . . . . . $11,035 $11,473
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)
Three Months
Periods Ended March 31 1999 1998
(Thousands)
Balance, beginning of period. . . . . . . . . $662,562 $568,844
Add net income. . . . . . . . . . . . . . . . 87,036 76,171
Deduct dividends on common stock. . . . . . . 26,408 23,628
-------- --------
Balance, end of period. . . . . . . . . . . . $723,190 $621,387
======== ========
The notes on page 6 are an integral part of the financial statements.
<PAGE>
Item 1. Financial Statements (Cont'd)
Note 1. Unaudited Consolidated Financial Statements
The accompanying unaudited consolidated financial statements
reflect all adjustments which are necessary, in the opinion of
management, for a fair presentation of our consolidated results for
the interim periods. All such adjustments 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 our annual report for the year
ended December 31, 1998. Due to the seasonal nature of our
operations, financial results for interim periods are not neces-
sarily indicative of trends for a 12-month period.
Note 2. Common Stock Split
In January 1999 we declared a two-for-one stock split on
common stock outstanding. Shareholders of record at the close of
business on March 12, 1999, were entitled to the shares effective
April 1, 1999. All references to shares outstanding and per share
information reflect the stock split.
Note 3. Segment Information
Selected financial information for each of our business
segments is presented in the following table. "Energy
Distribution" consists of our electricity distribution,
transmission and generation operations in New York and Pennsylvania
and our natural gas distribution, transportation and storage
operations in New York. "Other" includes our energy services
businesses, natural gas and propane air distribution operations
outside of New York, corporate assets and intersegment
eliminations.
Energy
Three Months Ended Distribution Other Total
March 31, 1999
Operating Revenues $637,035 $17,403 $654,438
Net Income (Loss) $90,175 $(3,139) $87,036
March 31, 1998
Operating Revenues $627,232 $10,398 $637,630
Net Income (Loss) $77,745 $(1,574) $76,171
Identifiable Assets
March 31, 1999 $5,613,911 $86,896 $5,700,807
December 31, 1998 $4,807,657 $75,680 $4,883,337
Note 4. Reclassifications
Certain amounts have been reclassified on the consolidated
financial statements to conform with the 1999 presentation.
<PAGE>
Item 2. Management's discussion and analysis of financial
condition and results of operations
(a) Liquidity and Capital Resources
Electric Business
Sale of our Coal-fired Generation Assets: We placed our seven
coal-fired stations and associated assets and liabilities up for
auction in 1998. We accepted offers totaling $1.85 billion from
The AES Corporation and Edison Mission Energy in August 1998 for
those generation assets. We completed the sale of our Homer City
generation assets to Mission Energy in March 1999, and the sale of
our remaining coal-fired generation assets to AES in May 1999.
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 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. The net cash received from the sales will be
used to implement our strategy of selectively growing our energy
distribution business in the Northeast and continued common stock
repurchases.
Now that the sale of our coal-fired generation assets has been
completed, our power requirements will be satisfied through
generation from our nuclear and hydroelectric stations and by
purchases from third parties. We have assumed the risk of market
prices that are sometimes volatile, since we have capped the prices
we can charge customers.
We use electricity contracts to manage our exposure to
fluctuations in the cost of electricity. These contracts allow us
to fix margins on the majority of our retail and wholesale sales of
electricity. The cost or benefit of electricity contracts is
included in the cost of electricity purchased when the electricity
is sold.
Nine Mile Point nuclear generating unit No. 2: We are actively
pursuing the sale of our interest in Nine Mile Point 2. In January
Niagara Mohawk Power Corporation, the operator and 41% owner of
Nine Mile Point 2, announced its intention to pursue the sale of
its interest in Nine Mile Point 2. Together we are in active
discussions concerning the sale with a third party who completed
due diligence at the site earlier this year. We will petition for
all necessary regulatory approvals if an agreement is reached to
sell Nine Mile Point 2.
Natural Gas Business
Role of Local Distribution Companies: On November 3, 1998, the PSC
issued a "Policy Statement Concerning the Future of the Natural Gas
Industry in New York State and Order Terminating Capacity
Assignment." The policy statement includes the PSC's vision for
furthering competition in the natural gas industry in New York
State. The PSC believes the most effective way to establish a
competitive gas market is for natural gas utilities to exit the
merchant function over a three to seven year period. The PSC also
established guidelines and began several proceedings related to
implementing its policy statement. We are participating in each of
the proceedings and continue to believe the competitive marketplace
should decide who will be the suppliers of natural gas.
The PSC's Order requires local distribution companies,
effective April 1, 1999, to cease assigning certain capacity costs
to customers who switch from distribution service to transportation
service. The local distribution companies will be provided a
reasonable opportunity to recover any capacity costs that may be
stranded. We made a compliance filing with the PSC in January 1999
to implement this requirement. The filing provided, among other
things, for the full recovery of stranded capacity costs. In March
1999 the PSC approved the filing, with certain modifications,
allowing for the full recovery of stranded capacity costs.
Other Operations
CMP Natural Gas LLC: We began constructing a natural gas
distribution system in Windham, Maine earlier this year. Windham
is the first of 35 cities and towns we plan to serve in Maine and
the first to draw natural gas from a recently completed interstate
transmission pipeline. We expect to be delivering natural gas to
homes and businesses in parts of Windham later this month.
Other Matters
Year 2000 Readiness Disclosure
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, experience energy delivery problems, report
inaccurate data or issue inaccurate bills.
We are working diligently to address this problem by reviewing
all of our mainframe and special-purpose systems; identifying
potentially affected software, hardware, and date-sensitive
components, often referred to as embedded chips, of various
equipment; determining and taking appropriate corrective action;
and, when appropriate, testing our systems.
Our mainframe systems consist of the hardware and software
components of New York State Electric & Gas Corporation's
information technology systems. We believe we have identified,
taken appropriate corrective action and tested all of our mainframe
systems. We believe those systems are now able to process year
2000 and beyond transactions.
Our special-purpose systems consist of our non-information
technology systems and the information technology systems of our
subsidiaries other than NYSEG. We have identified approximately
6,000 items in our special-purpose systems that may be affected by
the Year 2000 problem. Items identified include software, hardware
and embedded chips in systems such as those that control the
acquisition and the delivery of electricity and natural gas to
customers and those in our communication systems. We believe we
have fixed, eliminated, replaced or found no problem with over 96%
of the special-purpose items we have identified, including those in
our electricity and natural gas delivery systems. We are
determining and taking appropriate corrective action for the
remaining identified items. Additional items, however, continue to
be identified as we proceed with the review of our special-purpose
systems. We expect to have reviewed, identified and determined and
taken the appropriate corrective action on all of our special-
purpose systems by the end of the second quarter of 1999.
Even though we believe we will have taken corrective action
with respect to our own Year 2000 issues, the Year 2000 issue could
adversely affect us if there are items in our mainframe or special-
purpose systems that may be affected by the Year 2000 problem and
that we have not identified in our review of those systems. The
Year 2000 issue could also adversely affect us if third parties
such as suppliers, customers, neighboring or interconnected
utilities and other entities fail to correct any of their Year 2000
problems. We have contacted key third parties to determine the
status of their Year 2000 readiness programs. Many have responded
satisfactorily, some have not responded satisfactorily and some
have not responded at all. We are developing contingency plans,
some of which are discussed below, for reasonably likely worst case
scenarios based upon an assumption that we and those third parties
will not be Year 2000 compliant.
Our Year 2000 program is progressing on schedule and we
believe we are taking all necessary steps to address this issue
successfully. Through March 31, 1999, we have spent approximately
$11.5 million and expect to spend an additional $0.8 million on
Year 2000 readiness. We believe this amount is adequate to address
our Year 2000 issues. These amounts are being expensed as incurred
and are being financed entirely with internally generated funds.
Addressing the Year 2000 issue has not caused us to delay any
significant information system projects.
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.
The contingency plans will address, among other scenarios, the
interruption or failure of normal business activities or operations
such as a partial electrical and/or natural gas system shutdown.
If the interruption or failure is due to embedded chips in
equipment such as automatic control devices, our contingency plan
is to implement the normal system restoration procedures that we
utilize during emergencies. If the interruption or failure is due
to telecommunications not being available, we plan to use
alternative communication devices such as satellite phones.
Another scenario is the failure of our customer information system.
Should that occur, we plan to rely on customer information
previously stored and make the appropriate adjustment to each
customer's next bill after the system is restored.
<PAGE>
We are dependent on others for our supply of natural gas. In
the event a supplier is not able to meet our needs, we plan to
purchase the needed amount of natural gas from one of many other
suppliers on the same transmission line. Since the sale of our
coal-fired generation assets has been completed, we will be buying
instead of producing the majority of the electricity our customers
need. If the electricity available in our region is not adequate
for all of the customers on our system, we plan to operate at lower
levels of power as outlined in our established emergency
procedures. Should our mainframe hardware be disabled, we have a
backup mainframe system that is capable of operating all of our
business systems. We expect to have all of our contingency plans
ready and tested 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 and for contingency
plans. Mission critical systems include those systems that control
the acquisition and the delivery of electricity and natural gas to
customers, emergency management systems and certain electric
generation plants. We believe that our Year 2000 readiness program
for mission critical systems and for contingency plans will be
completed by the PSC's July 1, 1999, deadline. The PSC requires the
filing of status reports with it regarding certain Year 2000 issues.
Investing Activities
Capital spending for the first three months of 1999 was $19
million, primarily for extension of service and necessary
improvements to existing facilities. We estimate our capital
spending for 1999 will be about $140 million, and it is expected to
be paid for entirely with internally generated funds.
Financing Activities
On February 1, 1999, we redeemed, at par, $25 million of 7.40%
preferred stock and $50 million of adjustable rate preferred stock.
On April 1, 1999, we purchased, at a discount, shares of the
following series of preferred stock: $7.2 million of 3.75%, $2.8
million of 4 1/2% (Series 1949), $1.4 million of 4.15%, $4.8 million
of 4.40%, and $3.1 million of 4.15% (Series 1954).
On April 1, 1999, the holders of a majority of the votes of
shares of NYSEG's serial preferred stock consented to increase the
amount of unsecured debt NYSEG may issue by up to an additional $1.2
billion.
We repurchased 7.8 million shares of our common stock during the
first quarter of 1999.
<PAGE>
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 risk that
more Year 2000 problems may be found as we continue the review of our
systems; the risk that our progress in addressing Year 2000 problems
may not proceed as we expect; the fact that despite all of our
efforts, there can be no assurances that all of our Year 2000 issues
can or will be remedied; the fact that there can be no assurances
that all Year 2000 issues that could affect us can or will be totally
eliminated by our suppliers, customers, neighboring or interconnected
utilities and other entities; and the fact that our assessment of the
effects of Year 2000 issues are based, in part, upon information
received from our suppliers, customers, neighboring or interconnected
utilities and other entities, our reasonable reliance upon this
information and the risk that inaccurate or incomplete information
may have been supplied to us.
Some additional factors that could cause actual results to
differ materially from those contemplated in any forward-looking
statements include, among others, the deregulation and unbundling of
energy services; our ability to compete in the rapidly changing and
increasingly competitive electricity and natural gas utility markets;
our ability to control nonutility generator and other costs; changes
in fuel supply or cost and the success of our strategies to satisfy
our power requirements now that all of our coal-fired generation
assets have been sold; our ability to expand our products and
services, including our energy distribution network in the Northeast;
the ability to obtain adequate and timely rate relief; nuclear or
environmental incidents; legal or administrative proceedings; changes
in the cost or availability of capital; growth in the areas in which
we are doing business; weather variations affecting customer energy
usage; 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 March 31,
1999 1998 Change
(Thousands, except per share amounts)
Total Operating Revenues $654,438 $637,630 3%
Operating Income $159,224 $155,644 2%
Net Income $87,036 $76,171 14%
Average Shares Outstanding 122,939 132,817 (7%)
Earnings Per Share,
basic and diluted $.71 $.57 25%
Dividends Paid Per Share $.21 $.18 17%
Our earnings per share for the first quarter of 1999 improved
due to higher retail electricity and natural gas deliveries--caused
by milder-than-normal weather last year--and fewer shares of common
stock outstanding due to our share repurchase program. The increase
was partially offset by price reductions we are providing our
customers to promote competition.
Operating Results by Business Segment
Energy Distribution Three Months Ended March 31,
1999 1998 Change
(Thousands)
Retail Deliveries-
Megawatt-hours 3,624 3,390 7%
Dekatherms 24,887 21,279 17%
Operating Revenues $637,035 $627,232 2%
Operating Expenses $474,378 $470,090 1%
Operating Income $162,657 $157,142 4%
Higher retail electricity and natural gas deliveries, caused by
milder-than-normal weather last year, added $43 million to operating
revenues. That increase was partially offset by a $20 million
decrease due to lower wholesale electricity deliveries and a $14
million decrease due to lower retail electricity and natural gas
prices.
The increase in operating expenses was primarily due to a $19
million increase in electricity purchased for retail deliveries,
partially offset by a $17 million decrease in electricity purchased
for wholesale deliveries. A higher volume of natural gas purchases
was offset by lower purchased gas costs.
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
Our Annual Meeting of stockholders was held on April 23, 1999.
The following matters were voted upon:
(a) The election of two directors:
Nominees Votes For Votes Withheld
Alison P. Casarett 52,021,195 726,706
John M. Keeler 51,796,033 951,868
(b) Approval of an amendment to the Certificate of
Incorporation to authorize 100,000,000 additional shares
of Common Stock:
Shares For: 49,024,851
Shares Against: 3,177,950
Shares Abstain: 545,101
(c) Approval of an amendment to the Certificate of
Incorporation and By-Laws to lower the supermajority vote
requirement from three-fourths to two-thirds in order to
amend certain By-Law provisions:
Shares For: 43,053,619
Shares Against: 2,302,027
Shares Abstain: 782,943
Broker "Non-Voted": 6,609,313
(d) Approval of an amendment to the Certificate of
Incorporation to institute cumulative voting in the
election of directors:
Shares For: 39,257,600
Shares Against: 6,025,044
Shares Abstain: 855,944
Broker "Non-Voted": 6,609,314
(e) A stockholder proposal relating to a percentage reduction
in director remuneration based on a dividend reduction was
defeated:
Shares For: 3,626,643
Shares Against: 41,092,833
Shares Abstain: 1,419,112
Broker "Non-Voted": 6,609,314
<PAGE>
Item 5. Other Information
On April 23, 1999, we reached a definitive merger agreement with
Connecticut Energy Corporation (CNE) under which CNE will become a
wholly-owned subsidiary of Energy East. The transaction is valued
at $617 million, including the assumption of debt. Shareholders of
CNE will receive $42 per share, 50% payable in stock and 50% in cash.
Shareholders will be able to specify the percentage of the
consideration they wish to receive in stock and in cash, subject to
proration. The combination will be accounted for using the purchase
method of accounting.
The merger is subject to, among other things, the approval of
CNE shareholders, the Connecticut Department of Public Utility
Control and the Securities and Exchange Commission. We expect the
transaction to close in the next 12 months.
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.
<PAGE>
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 /s/ Wesley W. von Schack
Wesley W. von Schack
Chairman and Chief Financial Officer
Date: May 14, 1999
<PAGE>
EXHIBIT INDEX
(a) The following exhibits are delivered with this report:
Exhibit No.
3-3 - Certificate of Amendment of the Certificate of
Incorporation filed in the Office of the Secretary of
State of the State of New York on April 26, 1999.
3-4 - By-Laws of the Company as amended April 23, 1999.
27 - Financial Data Schedule.
Exhibit 3-3
CERTIFICATE OF AMENDMENT OF THE CERTIFICATE OF INCORPORATION
OF
ENERGY EAST CORPORATION
Under Section 805 of the
Business Corporation Law
The undersigned, being the Secretary of Energy East
Corporation, a New York corporation, hereby certifies:
FIRST. The name of the corporation is Energy East
Corporation. The name under which the corporation was originally
formed was NGE Resources, Inc.
SECOND. The Certificate of Incorporation of the corporation
was filed by the Department of State on September 23, 1997.
THIRD. The Certificate of Incorporation is amended to
effect the following amendments authorized by the Business
Corporation Law of the State of New York, namely: Article 4(A) is
amended to increase the aggregate number of shares which the
corporation is authorized to issue by authorizing One Hundred
Million (100,000,000) additional shares of Common Stock, Article
4(B)(1) is amended to provide for cumulative voting in the
election of directors, and Article 9 is amended to lower the
supermajority stockholder vote requirement.
FOURTH. Article 4(A) of the Certificate of Incorporation
of the corporation, relating to the authorized shares of the
corporation, is amended to read in its entirety as follows:
4. (A) The aggregate number of shares of stock
which the Corporation shall have authority to
issue is Three Hundred Ten Million (310,000,000)
consisting of:
(1) Three Hundred Million (300,000,000)
shares of Common Stock, with a par value of
One Cent ($.01) per share; and
(2) Ten Million (10,000,000) shares of
Preferred Stock, with a par value of One Cent
($.01) per share.
FIFTH. Article 4(B)(1) of the Certificate of Incorporation
relating to the Common Stock of the corporation is amended to
read in its entirety as follows:
<PAGE>
(1) Common Stock
Each share of Common Stock shall have one
vote, except that at all elections of directors by
the holders of Common Stock, each holder of Common
Stock shall be entitled to as many votes as shall
equal the number of votes which (except for this
provision as to cumulative voting) he would be
entitled to cast for the election of directors
with respect to his shares of Common Stock
multiplied by the number of directors in the class
to be elected, and he may cast all of such votes
for a single director in such class or may
distribute them among the number of directors in
such class to be voted for, or any two or more of
them, as he may see fit. Subject to any voting
rights which may vest in holders of Preferred
Stock under the provisions of any series of
Preferred Stock established by the Board of
Directors pursuant to authority herein provided
and except as otherwise provided by law, the
exclusive voting power for all purposes shall be
vested in the holders of Common Stock. Subject to
the rights of the holders of Preferred Stock under
the provisions of any series of Preferred Stock
established by the Board of Directors pursuant to
authority herein provided, the holders of Common
Stock shall be entitled to receive such dividends,
in cash, securities, or property, as may from time
to time be declared by the Board of Directors. In
the event of any liquidation, dissolution or
winding up of the Corporation, either voluntary or
involuntary, after payment or provision for
payment shall have been made of the amounts to
which the holders of Preferred Stock shall be
entitled under the provisions of any series of
Preferred Stock established by the Board of
Directors pursuant to authority herein provided,
the holders of Common Stock shall be entitled, to
the exclusion of the holders of the Preferred
Stock of any series, to share ratably, according
to the number of shares held by them, in all
remaining assets of the Corporation available for
distribution.
<PAGE>
SIXTH. Article 9 of the Certificate of Incorporation
relating to the supermajority stockholder vote requirement, is
amended to read in its entirety as follows:
9. By-Laws of the Corporation may be altered,
amended, repealed or 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 in the By-Laws of the
Corporation; 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
two-thirds of the votes entitled to be cast.
SEVENTH. The foregoing amendments to the Certificate of
Incorporation of the corporation were authorized at a meeting of
the Board of Directors at which a quorum was present and at a
subsequent meeting of stockholders by the vote of a majority of
the outstanding shares of Common Stock entitled to vote thereon
with respect to the amendments to Article 4(A) and Article
4(B)(1) and by the vote of two-thirds of the outstanding shares
of Common Stock entitled to vote thereon with respect to the
amendment to Article 9.
IN WITNESS WHEREOF, the undersigned has signed this
Certificate of Amendment this 26th day of April, 1999.
ENERGY EAST CORPORATION
/s/ Daniel Farley
Daniel W. Farley
Secretary
Exhibit 3-4
________________________
ENERGY EAST CORPORATION
By-Laws
As Amended
April 23, 1999
________________________
<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 Certifi-
cate 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 stockholder
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 stock-
holder, (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 understand-
ings 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.
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.
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.
<PAGE>
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.
<PAGE>
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.
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 two-thirds of the votes
entitled to be cast.
Eeby-law.doc
<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 MARCH 31, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 3,563,677
<OTHER-PROPERTY-AND-INVEST> 132,866
<TOTAL-CURRENT-ASSETS> 1,304,045
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 700,219
<TOTAL-ASSETS> 5,700,807
<COMMON> 598
<CAPITAL-SURPLUS-PAID-IN> 879,700
<RETAINED-EARNINGS> 723,190
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,564,491
25,000
10,131
<LONG-TERM-DEBT-NET> 1,435,961
<SHORT-TERM-NOTES> 252,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 28,582
19,309
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 2,365,333
<TOT-CAPITALIZATION-AND-LIAB> 5,700,807
<GROSS-OPERATING-REVENUE> 654,438
<INCOME-TAX-EXPENSE> 39,658
<OTHER-OPERATING-EXPENSES> 88,788
<TOTAL-OPERATING-EXPENSES> 495,214
<OPERATING-INCOME-LOSS> 159,224
<OTHER-INCOME-NET> 682
<INCOME-BEFORE-INTEREST-EXPEN> 0
<TOTAL-INTEREST-EXPENSE> 32,182
<NET-INCOME> 87,036
1,030
<EARNINGS-AVAILABLE-FOR-COMM> 0
<COMMON-STOCK-DIVIDENDS> 26,408
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 158,186
<EPS-PRIMARY> .71
<EPS-DILUTED> .71
</TABLE>
