FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended.....................March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from........................to........................
Commission file number...................................................0-30512
CH ENERGY GROUP, INC.
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEW YORK 14-1804460
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
284 SOUTH AVENUE, POUGHKEEPSIE NEW YORK 12601-4879
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (914) 452-2000
--------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES [ X ] NO [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
Common stock, par value $.10 per share; and the number of shares
outstanding of Registrant's Common stock, as of March 31, 2000, was 16,849,087.
<PAGE>
CH ENERGY GROUP, INC.
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2000
INDEX
PART I - FINANCIAL INFORMATION PAGE
------------------------------ ----
Item 1 - Consolidated Financial Statements 1
Consolidated Statement of Income -
Three Months Ended March 31, 2000 and 1999 1
Consolidated Balance Sheet - March 31, 2000
and December 31, 1999 2
Consolidated Statement of Cash Flows -
Three Months Ended March 31, 2000 and 1999 4
Notes to Consolidated Financial Statements 5
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8
Item 3 - Quantitative and Qualitative Disclosure
about Market Risk 13
PART II - OTHER INFORMATION
---------------------------
Item 1 - Legal Proceedings 13
Item 4 - Submission of Matters to a Vote of
Security Holders 14
Item 5 - Other Information 15
Item 6 - Exhibits and Reports on Form 8-K 17
Signatures 18
Exhibit Index
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item I - Consolidated Financial Statements
- ------------------------------------------
CH ENERGY GROUP, INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
For the 3 Months
Ended March 31,
2000 1999
--------- ---------
(Thousands of Dollars)
Operating Revenues
Electric............................................... $118,140 $107,394
Gas.................................................... 40,840 39,077
Other ................................................. 18,970 9,017
-------- -------
Total Operating Revenues........................... 177,950 155,488
-------- -------
Operating Expenses
Operation:
Fuel used in electric generation and
purchased electricity............................. 49,265 31,002
Purchased natural gas................................ 24,830 25,583
Purchased petroleum.................................. 3,029 1,631
Other expenses of operation.......................... 31,873 26,869
Maintenance............................................ 6,999 26,636
Depreciation and amortization.......................... 12,489 11,941
Taxes, other than income tax........................... 16,107 16,640
Federal income tax..................................... 9,072 10,858
-------- -------
153,664 131,160
-------- -------
Operating Income......................................... 24,286 24,328
-------- -------
Other Income and Deductions
Allowance for equity funds used during construction - 62
Federal income tax..................................... (52) 170
Other - net............................................ 2,659 1,808
-------- -------
2,607 2,040
-------- -------
Income before Interest Charges........................... 26,893 26,368
-------- -------
Interest Charges
Interest on mortgage bonds............................. 3,205 3,440
Interest on other long-term debt....................... 2,702 2,377
Other interest......................................... 2,217 1,514
Allowance for borrowed funds used during construction.. (152) (67)
-------- -------
7,972 7,264
Preferred Stock Dividends of Central Hudson.............. 807 807
Net Income............................................... 18,114 18,297
Dividends Declared on Common Stock....................... 9,097 9,106
-------- -------
Balance Retained in the Business......................... $9,017 $9,191
-------- -------
Common Stock:
Average Shares Outstanding (000s).................... 16,860 16,862
Earnings Per Share (Basic and Diluted)............... $1.07 $ 1.09
Dividends Declared................................... $0.540 $ 0.540
See Notes to Consolidated Financial Statements.
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CH ENERGY GROUP, INC.
CONSOLIDATED BALANCE SHEET
March 31, December 31,
2,000 1999
ASSETS (Unaudited) (Audited)
----------- ------------
(Thousands of Dollars)
Utility Plant
Electric........................................ $1,250,840 $1,250,456
Gas............................................. 166,691 164,767
Common.......................................... 100,965 100,659
Nuclear fuel.................................... 46,587 42,847
---------- ----------
1,565,083 1,558,729
Less: Accumulated depreciation................. 647,459 638,910
Nuclear fuel amortization............ 38,938 38,354
---------- ----------
878,686 881,465
Construction work in progress................... 44,210 39,951
---------- ----------
Net Utility Plant....................... 922,896 921,416
---------- ----------
Other Property and Plant.............................. 32,281 31,544
---------- ----------
Investments and Other Assets
Prefunded Pension Costs........................ 50,376 46,038
Other.......................................... 23,142 21,226
---------- ----------
Total Investments and Other Assets..... 73,518 67,264
---------- ----------
Current Assets
Cash and cash equivalents....................... 10,342 20,385
Accounts receivable from customers-net of
allowance for doubtful accounts........... 63,465 57,600
Accrued unbilled utility revenues............... 15,982 16,327
Other receivables............................... 2,496 .4,092
Fuel, materials and supplies, at average cost... 30,332 31,485
Special deposits and prepayments................ 23,164 17,533
---------- ----------
Total Current Assets................... 145,781 147,422
---------- ----------
Deferred Charges
Regulatory assets .............................. 135,785 137,487
Unamortized debt expense........................ 4,915 5,016
Other........................................... 29,114 25,750
---------- ----------
Total Deferred Charges................. 169,814 168,253
---------- ----------
Total Assets................. $1,344,290 $1,335,899
---------- ----------
See Notes to Consolidated Financial Statements.
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CH ENERGY GROUP, INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
March 31, December 31,
2,000 1999
CAPITALIZATION AND LIABILITIES (Unaudited) (Audited)
---------- ----------
(Thousands of Dollars)
<S> <C> <C>
Capitalization
Common Stock Equity:
Common stock, 30,000,000 shares authorized;
shares issued ($.10 par value):
2000 - 16,862,087
1999 - 16,862,087 ............................. $ 1,686 $ 1,686
Paid-in capital ................................... 351,230 351,230
Retained earnings ................................. 141,813 132,796
Reacquired capital stock .......................... (380) --
Capital stock expense ............................. (1,288) (1,306)
---------- ----------
Total Common Stock Equity ................. 493,061 484,406
---------- ----------
Cumulative Preferred Stock
Not subject to mandatory redemption ............. 21,030 21,030
Subject to mandatory redemption ................. 35,000 35,000
---------- ----------
Total Cumulative Preferred Stock .......... 56,030 56,030
---------- ----------
Long-term Debt .................................... 342,948 335,451
---------- ----------
Total Capitalization ...................... 892,039 875,887
---------- ----------
Current Liabilities
Current maturities of long-term debt .............. 35,110 35,100
Notes payable ..................................... 38,500 50,000
Accounts payable .................................. 25,739 36,746
Accrued taxes and interest ........................ 12,897 (162)
Dividends payable ................................. 9,905 9,913
Accrued vacation .................................. 4,472 4,344
Customer deposits ................................. 4,444 4,471
Other ............................................. 6,187 7,545
---------- ----------
Total Current Liabilities ................. 137,254 147,957
---------- ----------
Deferred Credits and Other Liabilities
Regulatory liabilities ............................ 92,760 87,039
Operating reserves ................................ 3,393 6,294
Other ............................................. 19,943 19,101
---------- ----------
Total Deferred Credits and Other Liabilities .. 116,096 112,434
---------- ----------
Accumulated Deferred Income Tax ........................... 198,901 199,621
---------- ----------
TOTAL CAPITALIZATION AND LIABILITIES ... $1,344,290 $1,335,899
---------- ----------
</TABLE>
See Notes to Consolidated Financial Statements.
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CH ENERGY GROUP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the 3 Months Ended
March 31,
2000 1999
---------- ---------
<S> <C> <C>
OPERATING ACTIVITIES: (Thousands of Dollars)
Net Income $18,114 $18,297
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation, amortization & nuclear fuel amortization 13,437 12,856
Deferred income taxes, net ........................... (542) (1,111)
Allowance for equity funds used during construction - (62)
Nine Mile 2 Plant deferred finance charges, net....... (1,214) (1,214)
Provision for uncollectibles.......................... 625 450
Net accrued/deferred pension costs.................... (3,700) (3,119)
Deferred gas costs.................................... 3,851 6,160
Deferred gas refunds.................................. (67) (48)
Other, net............................................ 468 2,636
Changes in current assets and liabilities, net:
Accounts receivable and unbilled revenues............. (6,252) (7,281)
Fuel, materials and supplies.......................... 887 147
Special deposits and prepayments...................... (7,715) 12,969
Accounts payable...................................... (6,897) (1,267)
Accrued taxes and interest............................ 13,017 17,390
Other current liabilities............................. (4,347) (1,591)
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES.................. 19,665 55,212
-------- --------
INVESTING ACTIVITIES:
Additions to plant......................................... (14,419) (8,234)
Allowance for equity funds used during construction........ - 62
-------- --------
Net additions to plant................................... (14,419) (8,172)
Nine Mile 2 Plant decommissioning trust fund............... (217) (217)
Other, net................................................. (1,575) (563)
-------- --------
NET CASH USED IN INVESTING ACTIVITIES...................... (16,211) (8,952)
-------- --------
FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt................... 7,500 22,114
Net borrowings (repayments) of short-term debt............. (11,500) (18,000)
Retirement and redemption of long-term debt................ - (38,106)
Dividends paid on common stock............................. (9,106) (9,106)
Reacquired capital stock .................................. (380) --
Issuance and Redemption Costs.............................. (11) (459)
-------- --------
NET CASH USED IN FINANCING ACTIVITIES...................... (13,497) (43,557)
-------- --------
NET CHANGE IN CASH AND CASH EQUIVALENTS........................... (10,043) 2,703
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR..................... 20,385 10,499
-------- --------
CASH AND CASH EQUIVALENTS - END OF PERIOD......................... $10,342 $13,202
-------- --------
Supplemental Disclosure of Cash Flow Information
Interest paid (net of amounts capitalized)................. $2,947 $2,116
Federal income tax paid.................................... -- --
</TABLE>
See Notes to Consolidated Financial Statements.
- 4 -
<PAGE>
CH ENERGY GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - GENERAL
The accompanying consolidated financial statements of CH Energy Group, Inc.
(herein the Corporation) are unaudited but, in the opinion of management,
reflect adjustments (which include normal recurring adjustments) necessary for a
fair statement of the results for the interim periods presented. In addition,
the results of operations for the prior year have been restated to reflect fully
consolidated results following the formation of the holding company referred to
in Note 2 below. These condensed unaudited quarterly consolidated financial
statements do not contain the detail or footnote disclosures concerning
accounting policies and other matters which would be included in annual
consolidated financial statements and, accordingly, should be read in
conjunction with the audited Consolidated Financial Statements (including the
notes thereto) included in the Corporation's Annual Report, on Form 10-K, for
the year ended December 31, 1999(Corporation's 10-K Report).
Due to the seasonal nature of the Corporation's operations, financial
results for interim periods are not necessarily indicative of trends for a
twelve-month period.
NOTE 2 - REGULATORY MATTERS
Reference is made to Note 2 - Regulatory Matters to the Consolidated
Financial Statements of the Corporation's 10-K Report under the caption "Impact
of Amended Settlement Agreement on Accounting Policies," hereinafter the
(Settlement Agreement).
At March 31, 2000, net regulatory assets of its wholly-owned subsidiary,
Central Hudson Gas & Electric Corporation (Central Hudson) associated with the
fossil-fueled generating assets totaled $583,000. Central Hudson did not charge
against income any of these net regulatory assets because recovery of such
assets is considered probable under the Settlement Agreement.
HOLDING COMPANY RESTRUCTURING
As reported under the caption "Competitive Opportunities Proceeding
Settlement Agreement" in Note 2 to the Consolidated Financial Statements
included in the Corporation's 10-K Report, Central Hudson had received approval
from its shareholders and regulators to form a holding company. The holding
company restructuring occurred on December 15, 1999. As of March 31, 2000, $25.5
million of the $100 million authorized by the Public Service Commission of the
State of New York (PSC) under the Settlement Agreement, has been transferred
from Central Hudson to its competitive affiliates. By Order issued and effective
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<PAGE>
March 7, 2000, the PSC amended the Settlement Agreement with respect to an
extension of the time by which Central Hudson can transfer up to $100 million to
its competitive affiliates, as reported in the Corporation's Current Report, on
Form 8-K, dated March 9, 2000.
NOTE 3 - SEGMENTS AND RELATED INFORMATION
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information," was adopted by Central Hudson during the fourth quarter of 1998
(see Note 10 to the Consolidated Financial Statements included in the
Corporation's 10-K Report).
The Corporation's primary reportable operating segments are the regulated
electric and gas operations of Central Hudson. The Corporation's "Unregulated
Segment" consists of the competitive business affiliates of Central Hudson
Energy Services, Inc., (Services), an unregulated subsidiary of the Corporation.
All of the segments currently operate in the northeast region of the United
States.
Certain additional information regarding these segments is set forth in the
following table. General corporate expenses, property common to both segments
and depreciation of such common property have been allocated to the segments in
accordance with practice established for regulatory purposes.
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<PAGE>
CH Energy Group, Inc. Segment Disclosure - FAS 131 Quarter Ended March 31,
2000
----
REGULATED UNREGULATED TOTAL
--------- ----------- -----
ELECTRIC GAS
-------- ---
Revenues from external customers $118,117 $40,423 $18,970 $177,510
Intersegment revenues 23 417 -- 440
-------- ------- ------- --------
Total revenues $118,140 $40,840 $18,970 $177,950
Earnings per share $ 0.71 $ 0.35 $0.01 $1.07
1999
----
REGULATED UNREGULATED TOTAL
--------- ----------- -----
ELECTRIC GAS
-------- ---
Revenues from external customers $107,374 $38,845 $ 9,017 $155,236
Intersegment revenues 20 232 -- 252
-------- ------- ------- --------
Total revenues $107,394 $39,077 $ 9,017 $155,488
Earnings per share $ 0.81 $ 0.33 $ (0.05) $ 1.09
-7-
<PAGE>
NOTE 4 - NEW ACCOUNTING STANDARDS - DERIVATIVE AND HEDGING
ACCOUNTING
Reference is made to the caption "New Accounting Standards and Other FASB
Projects" of Note 1 - Summary of Significant Accounting Policies, to the
Consolidated Financial Statements of the Corporation's 10-K Report. In March
2000, the FASB issued an exposure draft proposing to amend FASB Statement No.
133, "Accounting for Derivative Instruments and Hedging Activities." Amendment
provisions potentially affecting the Corporation relate to the normal purchases
and sales exception and interest rate risk. The Corporation believes that, in
its final form, FASB 133 will not have a material impact on its financial
position or results of operations upon implementation.
PLANT DECOMMISSIONING: Reference is made to the caption "New Accounting
Standards and Other FASB Projects" of Note 1 - Summary of Significant Accounting
Policies, to the Consolidated Financial Statements of the Corporation's 10-K
Report. In February 2000, the FASB issued an exposure draft proposing to amend
the initial FASB exposure draft entitled "Accounting for Certain Liabilities
Related to Closure and Removal of Long-Lived Assets." The title of the February
17, 2000 exposure draft is "Accounting for Obligations Associated with the
Retirement of Long-Lived Assets," and the FASB is proposing that the statement
be effective for financial statements for fiscal years beginning after June 15,
2001. The Corporation can make no prediction at this time as to the ultimate
form of such proposed accounting standard, assuming it is adopted, nor can it
make any prediction as to its ultimate effect(s) on the financial condition,
results of operations and cash flows of the Corporation.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
The Corporation faces a number of contingencies which arise during the
normal course of business and which have been discussed in Note 9 - Commitments
and Contingencies, to the Consolidated Financial Statements included in the
Corporation's 10-K Report. Except for what is disclosed in Part II of this
Quarterly Report, on Form 10-Q, for the quarterly period ended March 31, 2000,
and all documents previously filed with the Securities and Exchange Commission
in 2000, there have been no material changes in the subject matters discussed in
said Note 9.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
- ----------------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
- -----------------------------------------------------------
CAPITAL RESOURCES AND LIQUIDITY
The growth of retained earnings in the first three months of 2000
contributed to the increase in the book value of common stock from $28.80 at
December 31, 1999 to $29.26 at March 31, 2000
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<PAGE>
and the increase in the common equity ratio from 50.4% at December 31, 1999 to
51.1% at March 31, 2000.
As part of the holding company restructuring, referred to in Note 2 of the
Consolidated Financial Statements contained herein, the Corporation has
established a revolving credit agreement with three commercial banks for
borrowing up to $50 million through December 4, 2001.
Central Hudson has $50 million of committed short-term credit facilities
available, and has also entered into a revolving credit agreement with several
commercial banks. Authorization from the PSC limits the short-term borrowing
amount Central Hudson may have outstanding, at any time, to $52 million in the
aggregate.
Services has entered into a $10.5 million revolving credit agreement with
several commercial banks.
At March 31, 2000, the Corporation had $38.5 million of short-term debt
outstanding. Investments in short-term securities were $10.3 million at the end
of March 2000.
EARNINGS PER SHARE
- ------------------
Earnings per share of common stock were $1.07 for the first quarter of
2000, as compared to $1.09 for the first quarter of 1999, a decrease of 2%.
During that quarter, $2.6 million or $.10 per share, was earned but deferred
under the terms of the Settlement Agreement. Total earnings, including deferred
earnings, would have been $1.17 per share as compared to $1.12 for the prior
year.
The decrease in earnings per share for the quarter ended March 31, 2000 as
compared to the same period in 1999, resulted primarily from the non-recurring
effect of a favorable insurance settlement recorded in the first quarter of
1999. In addition, increased depreciation on the Corporation's plant and
equipment, an increase in non-fuel operating and maintenance costs, reflecting,
in large part, an increase in costs for maintenance of Central Hudson's steam
generating plants, and the net effect of various other items, primarily an
increase in taxes other than income taxes, largely offset by a reduction in
federal income taxes, all contributed to the decrease in earnings per share for
the first quarter of 2000. The decrease was also due to a decrease in electric
utility net operating revenues (net of the cost of fuel, purchased electricity
and revenue taxes) due largely to an increase in non-recoverable fuel costs
related to fuel cost incentive provisions. The change in electric net revenues
also reflects an increase due to increased sales; however, these net revenues
were offset by the deferral of electric utility revenues in excess of the return
on equity cap provision contained in the Settlement Agreement.
-9-
<PAGE>
These decreases were partially offset by an increase in earnings from
Services. Services recorded a loss in the first quarter of 1999 due to expansion
and startup activities related to the acquisition of two electric generating
plants, compared to modest earnings in 2000. Also, offsetting the decreases was
an increase in gas utility net operating revenues (net of the cost of gas and
revenue taxes) in the first quarter of 2000 due primarily to an increase in
total firm sales in such period resulting, in part, from weather that was
slightly colder than the comparable period in 1999, but still milder than
normal. Billing heating degree days increased by 2% as compared to the first
quarter of 1999 but were 3% below normal.
During the first quarter, the Corporation initiated a 500,000 share common
stock repurchase program for 2000. However, the repurchase program commenced in
March 2000, and did not affect financial results for the quarter.
RESULTS OF OPERATIONS
- ---------------------
The following table reports the variation in the results of operations for
the three months ended March 31, 2000 compared to the same period in 1999:
3 MONTHS ENDED MARCH 31,
------------------------------------
INCREASE
2000 1999 (DECREASE)
-------- -------- --------
(Thousands of Dollars)
Operating Revenues ..................... $177,950 $155,488 $ 22,462
Operating Expenses ..................... 153,664 131,160 22,504
-------- -------- --------
Operating Income ....................... 24,286 24,328 (42)
Other Income ........................... 2,607 2,040 567
-------- -------- --------
Income before Interest
Charges ............................... 26,893 26,368 525
Interest Charges ...................... 7,972 7,264 708
-------- -------- --------
Preferred Stock Dividends of
Central Hudson ........................ 807 807 --
-------- -------- --------
Net Income ............................. $ 18,114 $ 18,297 $ (183)
Dividends Declared on Common
Stock ................................. 9,097 9,106 (9)
-------- -------- --------
Amount Retained in Business ............ $ 9,017 $ 9,191 $ (174)
======== ======== ========
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OPERATING REVENUES
- ------------------
Operating revenues increased $22.5 million (14%) for the first quarter of
2000 as compared to the first quarter of 1999. Details of these revenue changes
by electric, gas and other departments are as follows:
INCREASE (DECREASE) FROM PRIOR PERIOD
-------------------------------------
FIRST QUARTER
-------------------------------------
ELECTRIC GAS OTHER
-------- -------- --------
(Thousands of Dollars)
Customer Sales* ..................... $ 1,621 $ 2,113** $ --
Sales to Other Utilities ............ 4,071 586 --
Fuel and Gas Cost Adjustment ........ 6,073 980) --
Deferred Revenues ................... (725)*** (118) --
Miscellaneous ....................... (294) 162 9,953****
-------- -------- --------
$ 10,746 $ 1,763 $ 9,953
======== ======== ========
* Includes electricity and gas supplied by others.
** Both firm and interruptible revenues.
*** Includes the deferral and restoration of revenues related to Central
Hudson's Retail Access Program and earnings in excess of the rate of return
cap under the Settlement Agreement.
**** Operating revenues from Services which was not fully operational in the
first quarter of 1999 and was engaged in expansion and startup activities.
SALES
- -----
Central Hudson's sales vary seasonally in response to weather conditions.
Generally, electric sales peak in the summer and gas sales peak in the winter.
Total Kilowatt-hour sales of electricity within Central Hudson's service
territory increased 3% and firm sales of natural gas increased 4% in the first
quarter of 2000 as compared to the first quarter of 1999. Changes in sales from
last year by major customer classifications including energy supplied by others
are set forth below.
INCREASE (DECREASE) FROM PRIOR PERIOD
-------------------------------------
FIRST QUARTER
-------------------------------------
ELECTRIC GAS
-------- ---
Residential .................................. 3% 5%
Commercial ................................... 4 6
Industrial ................................... 4 5
Interruptible ................................ N/A (23)
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<PAGE>
Billing heating degree days were 2% higher for the three months ended March
31, 2000 when compared to the same period in 1999, but were 3% below normal.
Interruptible gas sales decreased 23% in the first quarter of 2000 due
largely to a reduction in gas sales for electric generation.
OPERATING EXPENSES
- ------------------
The following table reports the variation in the operating expenses for the
three months ended March 31, 2000 compared to the same period in the prior year:
INCREASE (DECREASE) FROM PRIOR PERIOD
-------------------------------------
FIRST QUARTER
-------------------------------------
AMOUNT PERCENT
------ -------
(Thousands of Dollars)
Operating Expenses
Fuel and Purchased
Electricity ................................ $18,263 59 %
Purchased Natural
Gas ......................................... (753) (3)
Purchased Petroleum .......................... 1,398 86
Other Expenses of
Operation ................................... 5,004 19
Maintenance .................................. 363 5
Depreciation and
Amortization ................................ 548 5
Taxes, Other than Income
Tax ......................................... (533) (3)
Federal Income tax ........................... (1,786) (16)
------- ---
Total ............................... $22,504 17 %
Total operating expenses for the first quarter of 2000 increased $22.5
million from the comparable period in 1999 including an increase in expenses for
Services of $8.9 million. The remaining increase of $13.6 million related to
Central Hudson operations was driven primarily by a net increase ($13.5 million)
in the cost of purchased electricity, fuel used in electric generation and
purchased natural gas. The increase in costs is due to both an increase in
electric and gas sales and higher fuel costs.
COMMON STOCK DIVIDENDS
- ----------------------
Reference is made to the caption "Common Stock Dividends and Price Ranges"
of Part II, Item 7 of the Corporation's 10-K Report, for a discussion of the
Corporation's dividend payments. On March 24, 2000, the Board of Directors of
the Corporation declared a quarterly dividend of $.54 per share, payable May 1,
2000 to shareholders of record as of April 10, 2000.
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<PAGE>
OTHER MATTERS
- -------------
FORWARD-LOOKING STATEMENTS
- --------------------------
This quarterly report on Form 10-Q and the documents incorporated by
reference contain statements which, to the extent they are not recitations of
historical fact, constitute "forward-looking statements" within the meaning of
the Securities Litigation Reform Act of 1995 (Reform Act). The statements will
contain words such as "believes," "expects," "intends," "plans," and other
similar words. All such forward-looking statements are intended to be subject to
the safe harbor protection provided by the Reform Act. These statements are not
guarantees of future performance and involve certain risks, uncertainties and
assumptions which are difficult to predict. A number of important factors
affecting the Corporation's business and financial results could cause actual
results to differ materially from those stated in the forward-looking
statements. Those factors include weather, energy supply and demand,
developments in the legislative, regulatory and competitive environment,
electric and gas industry restructuring and cost recovery and certain
environmental matters as well as such other factors as set forth in the
Corporation's 10-K Report and all documents subsequently filed with the
Securities and Exchange Commission. The Corporation undertakes no obligation to
update publicly any forward-looking statements, whether as a result of new
information, future events or otherwise.
Given these uncertainties, undue reliance should not be placed on these
forward-looking statements.
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- -------------------------------------------------------------------
Reference is made to Part II, Item 7A of the Corporation's 10-K Report for
a discussion of market risk. During the first quarter of 2000, the Corporation's
exposure continues to not be material to the Corporation's financial position or
results of operations.
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
(a) ASBESTOS LITIGATION. For a discussion of lawsuits against Central
Hudson involving asbestos, see Note 9 - Commitments and Contingencies, under the
caption "Asbestos Litigation," in Part II, Item 8 of the Corporation's 10-K
Report.
As of April 30, 2000, 127 new cases involving asbestos have been brought
against Central Hudson of the type described under such caption and subject to
the insurance coverage described under such caption (which insurance does not
extend to punitive damages). As of that date, of the 2,099 cases brought against
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<PAGE>
Central Hudson, 1,154 remain pending. Of the 945 cases no longer pending against
Central Hudson, 817 have been dismissed or discontinued, and Central Hudson has
settled 128 cases. The Corporation is presently unable to assess the validity of
the remaining asbestos lawsuits; accordingly, it cannot determine the ultimate
liability relating to these cases. Based on information known to the Corporation
at this time, including the Corporation's experience in settling asbestos cases
and in obtaining dismissals of asbestos cases, the Corporation believes that the
cost to be incurred in connection with the remaining lawsuits will not have a
material adverse effect on the Corporation's financial position or results of
operations.
(b) ENVIRONMENTAL LITIGATION. For a discussion of the citizen suit
commenced in 1999 against Central Hudson under ss.11 of the Endangered Species
Act, 16 U.S.C. ss.1540 (First Citizen Suit), see the caption "Environmental
Litigation - Roseton and Danskammer Plants," in Item 3 of the Corporation's 10-K
Report.
Riverkeeper, Inc.(the same plaintiffs as in the First Citizen Suit)
commenced a citizen suit, on March 28, 2000, in the United States District Court
for the Southern District of New York (00 Civ 2346), against Central Hudson
under ss.11 of said Endangered Species Act seeking injunctive relief from
Central Hudson's alleged unpermitted takings of the endangered shortnose
sturgeon through Central Hudson's Roseton and Danskammer Plants on the Hudson
River (Second Citizen Suit).
The Complaint in the Second Citizen Suit makes substantially the same
allegations as in the Complaint in the First Citizen Suit based on a purported
notice letter sent to Central Hudson in January 2000. The Corporation believes
that the Second Citizen Suit was commenced to correct defects in the notice
relied upon by plaintiffs in the First Citizen Suit.
Although the Corporation believes that Central Hudson has not violated such
Act, if the court were to grant the relief requested by plaintiffs in either of
such Suits, Central Hudson could be required temporarily to cease operations of
the Roseton and Danskammer Plants. If Central Hudson were required to cease such
operations for a substantial period of time, it could have a material adverse
effect on the Corporation's financial position, results of operations and cash
flows.
Item 4. Submission of Matters to a Vote of Security Holders.
Annual Meeting of Shareholders. The Corporation's Annual Meeting of
Shareholders was held on April 25, 2000. The following matters were voted upon
at such meeting:
(a) ELECTION OF DIRECTORS. All of the nominees proposed as directors by
the Board of Directors were elected, and no other nominees were proposed. The
number of shares voted for each such
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director, and the number of shares withheld for each such director, out of a
total number of shares voted of 14,558,445 are as follows:
NAME OF DIRECTOR SHARES FOR SHARES WITHHELD
- ---------------- ---------- ---------------
CLASS I - TERM EXPIRES AT ANNUAL MEETING IN 2001
- ------------------------------------------------
Edward F. X. Gallagher 14,308,869 249,576
Charles LaForge 14,308,159 250,286
Edward P. Swyer 14,324,674 233,771
CLASS II - TERM EXPIRES AT ANNUAL MEETING IN 2002
- -------------------------------------------------
Stanley J. Grubel 14,306,611 251,834
Francis D. Fergusson 14,312,218 246,227
John E. Mack III 14,318,858 239,587
CLASS III - TERM EXPIRE S AT ANNUAL MEETING IN 2003
- ---------------------------------------------------
Jack Effron 14,316,764 241,681
Heinz K. Fridrich 14,305,673 252,772
Paul J. Ganci 14,320,109 238,336
(b) PLAN APPROVAL. The Corporation's Long-term Performance-Based Incentive
Plan was approved by a vote of the shareholders as follows:
SHARES FOR SHARES AGAINST SHARES ABSTAINING
- ---------- -------------- -----------------
10,390,399 3,452,056 715,990
(c) INDEPENDENT ACCOUNTANTS. The appointment by the Board of Directors of
PricewaterhouseCoopers LLP as the Corporation's Independent Accountants for the
five (5) year term beginning in 2000 was ratified by a vote of the shareholders
as follows:
SHARES FOR SHARES AGAINST SHARES ABSTAINING
- ---------- -------------- -----------------
14,324,387 93,818 140,240
Item 5. Other Information
(a) APPOINTMENT OF OFFICERS. Immediately following the Corporation's
Annual Meeting of Shareholders, the Corporation's Board of Directors made the
following appointments Paul J. Ganci as Chairman of the Board, President and
Chief Executive Officer; Carl E. Meyer, Executive Vice President; Allan R. Page,
Executive Vice President; Arthur R. Upright, Senior Vice President; Steven V.
Lant, Chief Financial Officer and Treasurer; Donna S. Doyle, Vice President -
Accounting and Controller; Gladys L. Cooper, Corporate Secretary and Assistant
Vice President - Governmental Relations; Denise D. VanBuren, Assistant Vice
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<PAGE>
President - Corporate Communications; Christopher M. Capone, Assistant Treasurer
- - Investor Relations; and John E. Gould, Assistant Secretary.
(b) NINE MILE 2 PLANT. Reference is made to Note 3 - Nine Mile 2 Plant
under the caption "General," to the Consolidated Financial Statements included
in the Corporation's 10-K Report for a discussion of the July 1999 petitions of
Niagara Mohawk Power Corporation (Niagara Mohawk), New York State Electric & Gas
Corporation (NYSEG) and AmerGen Energy Company, LLC (AmerGen) to the PSC under
Section 70 of the Public Service Law seeking the PSC's consent for the transfer
of Niagara Mohawk's and NYSEG's respective interests in Unit 1 and Unit 2 of the
Nine Mile Point nuclear generation facilities to AmerGen. By Order, issued and
effective April 25, 2000, the PSC authorized the withdrawal of such petitions
principally on the basis that a disposition of these facilities would best be
accomplished through a competitive bidding process.
The PSC in such Order observed that participation in such a competitive
bidding process would constitute appropriate mitigation of stranded costs
related to the Nine Mile 2 Plant and that determination of stranded cost
recovery would be made for each cotenant owner of the Nine Mile 2 Plant pursuant
to settlement agreements or rate case orders applicable to each such cotenant.
Reference is also made to Note 3 - Nine Mile 2 Plant under the caption
"General," for a discussion of the Nuclear Regulatory Commission (NRC) Plant
Performance Review (PPR) issued September 30, 1999 in which the NRC stated it
would increase scrutiny of the operation of the Nine Mile Plants (Units 1 and 2)
over the next six months. On March 31, 2000, the NRC issued a letter to Niagara
Mohawk indicating completion of a PPR on February 24, 2000 covering the period
January 16, 1999 through January 31, 2000. The letter states that although some
performance issues were noted, the NRC observed that the Nine Mile Plants
continued to operate in a safe manner. Improvement was noted in reactor safety
performance, however, some performance problems continue to occur in the areas
of human performance, equipment reliability and material condition, and the
corrective action program. No significant performance issues were identified in
the radiation safety or safeguards strategic performance areas. The NRC plans to
continue inspections for the period April 2000 through March 2001.
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<PAGE>
Item 6. Exhibits and Reports of Form 8-K
(a) The following exhibits are furnished in accordance with the provisions
of Item 601 of Regulation S-K:
EXHIBIT NO.
REGULATION S-K
ITEM 601
DESIGNATION EXHIBIT DESCRIPTION
(3) Articles of Incorporation and Bylaws:
(ii) 1-- Bylaws in effect on the date of this Report.
(10)(iii) 1-- Amendment, effective April 26, 2000, to the Stock Plan for
Outside Directors of the Corporation.
(12) -- Statement Showing Computation of the Ratio of Earnings to Fixed
Charges and the Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends.
(27) -- Financial Data Schedule, pursuant to Item 601(c) of Regulation
S-K.
(99) -- Order of the PSC, issued effective March 7, 2000, approving an
amendment to Central Hudson's Amended and Restated Settlement
Agreement with the PSC Staff and others, dated January 2, 1998
and thereafter amended.
(b) Reports on Form 8-K. During the period covered by this Report on Form
10-Q, the Corporation filed the following Current Report on Form 8-K:
(i) A Report, dated March 9, 2000, which describes the approval by the PSC, (1)
by order issued and effective February 23, 2000, of the Auction Plan which had
been filed by Central Hudson for the auction of the Danskammer Plant and the
Roseton Plant and (2) by order issued and effective March 7, 2000, of an
amendment to the PSC approved Settlement Agreement with respect to an extension
of the time by which Central Hudson can transfer up to $100 million to its
competitive affiliates.
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<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Corporation has duly caused this report to be signed on its behalf by the
undersigned hereunder duly authorized.
CH ENERGY GROUP, INC.
(Registrant)
By: /s/ Arthur R. Upright
-----------------------------------------
Arthur R. Upright
Senior Vice President
Dated: May 12, 2000
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<PAGE>
EXHIBIT INDEX
-------------
Following is the list of Exhibits, as required by Item 601 of Regulation
S-K, filed as part of this Report on Form 10-Q:
EXHIBIT NO.
REGULATION S-K
ITEM 601
DESIGNATION EXHIBIT DESCRIPTION
(3) Articles of Incorporation and Bylaws:
(ii) 1-- Bylaws in effect on the date of this Report.
(10)(iii) 1-- Amendment, effective April 26, 2000, to the Stock Plan for
Outside Directors of the Corporation.
(12) -- Statement Showing Computation of the Ratio of Earnings to Fixed
Charges and the Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends.
(27) -- Financial Data Schedule, pursuant to Item 601(c) of Regulation
S-K.
(99) -- Order of the PSC, issued effective March 7, 2000, approving an
amendment to Central Hudson's Amended and Restated Settlement
Agreement with the PSC Staff and others, dated January 2, 1998
and thereafter amended.
EXHIBIT (3) (ii) 1
BY-LAWS
CH ENERGY GROUP, INC.
POUGHKEEPSIE, NEW YORK
<PAGE>
BY-LAWS
CH ENERGY GROUP, INC.
POUGHKEEPSIE, NEW YORK
INDEX
PAGE
----
ARTICLE I MEETINGS OF SHAREHOLDERS
Section 1.1 Annual Meetings ........................................... 1
Section 1.2 Special Meetings .......................................... 1
Section 1.3 Place of Meetings ......................................... 1
Section 1.4 Presiding at Meetings ..................................... 1
Section 1.5 Quorum .................................................... 1
Section 1.6 Adjournment ............................................... 2
Section 1.7 Notice of Meetings ........................................ 2
Section 1.8 Waiver and Consent ........................................ 3
Section 1.9 Fixing Record Date ........................................ 3
Section 1.10 List of Shareholders at Meetings .......................... 3
Section 1.11 Proxies ................................................... 3
Section 1.12 Notice of Shareholder Business and Nominations ............ 4
Section 1.13 Inspectors of Elections ................................... 7
Section 1.14 Vote of Shareholders ...................................... 7
ARTICLE II BOARD OF DIRECTORS
Section 2.1 Number of Directors ....................................... 7
Section 2.2 Elections, Terms and Vacancies ............................ 8
Section 2.3 Meetings of the Board ..................................... 8
Section 2.4 Notice and Adjournment .................................... 8
(i)
<PAGE>
PAGE
----
ARTICLE II BOARD OF DIRECTORS (Continued)
Section 2.5 Quorum .................................................... 9
Section 2.6 Unanimous Written Consent ................................. 9
Section 2.7 Resignation of Directors .................................. 9
Section 2.8 Removal of Directors ...................................... 9
Section 2.9 Compensation of Directors ................................. 10
Section 2.10 Time and Place of Meetings ................................ 10
Section 2.11 Special Meetings .......................................... 10
Section 2.12 Telephonic Meetings ....................................... 10
ARTICLE III COMMITTEES
Section 3.1 Organization and Authority ................................ 10
Section 3.2 Executive Committee ....................................... 11
Section 3.3 Action by a Committee ..................................... 11
Section 3.4 Quorum .................................................... 11
Section 3.5 Reports to Board of Directors ............................. 12
Section 3.6 Compensation of Committee Members ......................... 12
Section 3.7 Resignation and Removal of Committee Members .............. 12
Section 3.8 Unanimous Written Consent ................................. 12
Section 3.9 Place of Committee Meetings ............................... 12
Section 3.10 Notice .................................................... 12
ARTICLE IV OFFICERS AND THEIR DUTIES
Section 4.1 Officers .................................................. 13
Section 4.2 Term of Office; Resignation; Removal; Vacancies ........... 13
Section 4.3 Powers and Duties ......................................... 13
Section 4.4 Salaries .................................................. 14
Section 4.5 Chairman .................................................. 14
Section 4.6 Vice Chairman ............................................. 14
Section 4.7 Vice President ............................................ 14
Section 4.8 Secretary ................................................. 15
Section 4.9 Treasurer ................................................. 15
Section 4.10 Controller ................................................ 15
Section 4.11 Other Officers ............................................ 16
(ii)
<PAGE>
PAGE
----
ARTICLE V SHARES CERTIFICATED SHARES
Section 5.1 Certificates, Registrar and Transfer Agent ................ 16
Section 5.2 Authorization of Facsimile Signatures and Seal ............ 16
Section 5.3 Transfer of Certificated Shares ........................... 16
Section 5.4 Lost, Stolen or Destroyed Share Certificates .............. 17
ARTICLE VI INDEMNIFICATION
Section 6.1 General Applicability ..................................... 17
Section 6.2 Scope of Indemnification .................................. 17
Section 6.3 Other Indemnification Provisions .......................... 18
Section 6.4 Survival of Indemnification ............................... 18
Section 6.5 Inability to Limit Indemnification ........................ 18
Section 6.6 Severability .............................................. 18
ARTICLE VII OTHER MATTERS
Section 7.1 Books to be Kept .......................................... 19
Section 7.2 Corporate Seal ............................................ 19
Section 7.3 When Notice or Lapse of Time Unnecessary .................. 19
Section 7.4 Contracts, etc., How Executed ............................. 20
Section 7.5 Loans ..................................................... 20
Section 7.6 Deposits .................................................. 20
Section 7.7 General and Special Bank Accounts ......................... 20
Section 7.8 Fiscal Year ............................................... 21
ARTICLE VIII AMENDMENTS TO BY-LAWS
Section 8.1 By Directors .............................................. 21
Section 8.2 By Shareholders ........................................... 21
(iii)
<PAGE>
ARTICLE I
MEETINGS OF SHAREHOLDERS
SECTION 1.1 ANNUAL MEETINGS
The annual meeting of the shareholders, for the election of directors and
the transaction of such other business as may be brought before the meeting,
shall be held each year on the fourth Tuesday in April (or if said day be a
legal holiday, then on the next succeeding business day), at such time of day as
the directors may determine.
SECTION 1.2 SPECIAL MEETINGS
Subject to the rights of the holders of any series of stock having a
preference over the Common Stock of the Company as to dividends or upon
liquidation ("Preferred Stock") with respect to such series of Preferred Stock,
special shareholders' meetings may be called by holders of a majority of the
votes of the outstanding shares of common stock of the Company entitled to vote
or act with respect thereto upon the business to be brought before such meeting,
or by the Chairman of the Board of Directors, President and Chief Executive
Officer pursuant to a resolution adopted by a majority of the total number of
directors which the Company would have if there were no vacancies. At any
special meeting, only such business may be transacted which is related to the
purpose(s) set forth in the notice of such special meeting given pursuant to
Section 1.7 of these By-Laws.
SECTION 1.3 PLACE OF MEETINGS
Shareholders' meetings shall be held at the principal office of the Company
or at such other place as designated by the Board of Directors and stated in the
notice of such meeting.
SECTION 1.4 PRESIDING AT MEETINGS
At all shareholders' meetings, the Chairman of the Board of Directors,
President and Chief Executive Officer, Vice Chairman or a Vice President, shall
act as Chairman of the meeting as provided for in Sections 4.5, 4.7 and 4.8 and
the Secretary or Assistant Secretary shall act as Secretary of the meeting as
provided for in Section 4.9.
SECTION 1.5 QUORUM
Holders of a majority of the votes of the shares of the Company entitled to
vote must be present, in person or by proxy, at each shareholders' meeting to
constitute a quorum at such meeting. When a specified item of business is
required to be voted on by a class or series, voting as a class, the holders of
a majority of the votes of the shares of such class or series shall constitute a
quorum for the transaction of such specified item of business. When a quorum is
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<PAGE>
once present to organize a meeting, it is not broken by the subsequent
withdrawal of any shareholders.
Except as may be provided by or pursuant to the Certificate of
Incorporation, at all shareholders' meetings each shareholder entitled to vote
shall be entitled to one vote for each share held by him or her, and may vote
and otherwise act either in person or by proxy, as provided for in Section 1.11.
SECTION 1.6 ADJOURNMENT
The Chairman of the meeting, or a majority of the shares so represented at
the meeting, may adjourn the meeting despite the absence of a quorum. When a
shareholders' meeting is adjourned to another time or place, it shall not be
necessary to give any notice of the adjourned meeting if the time and place to
which the meeting is adjourned are announced at the meeting at which the
adjournment is taken, and at the adjourned meeting any business may be
transacted that might have been transacted on the original date of the meeting.
However, if after the adjournment the Board of Directors fixes a new record date
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each shareholder of record on the new record date entitled to notice under this
Section 1.6.
SECTION 1.7 NOTICE OF MEETINGS
Written notice of the date, time and place of every shareholders' meeting
shall be given personally, or by first class mail (not less than ten (10) nor
more than sixty (60) days before the date of the meeting) or by third class mail
(not less than twenty-four (24) nor more than sixty (60) days before the date of
the meeting) or as otherwise may be permitted by law, to each shareholder of
record as of the date fixed by the Board of Directors, pursuant to Section 1.9
hereof, and such other notice shall be given as may be required by law.
Notice of a special shareholders' meeting shall indicate that it is being
issued by or at the direction of the person or persons calling the meeting and
shall state the purpose(s) for which the meeting is called.
If mailed, such notice shall be deemed given when deposited in the United
States mail, with postage thereon prepaid, directed to the shareholder at his or
her address as it appears on the shareholders' list or record, or, if he or she
shall have filed with the Secretary of the Company a written request that
notices to him or her be mailed to some other address, then directed to him or
her at such other address.
An affidavit of the Secretary of the Corporation or other person giving the
notice or of a transfer agent of the Corporation that the notice required by
this Section 1.7 has been given shall be supplied at the meeting to which it
relates.
2
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SECTION 1.8 WAIVER AND CONSENT
Notice of meeting need not be given to any shareholder who submits a signed
waiver of notice, in person or by proxy, whether before or after the meeting.
The attendance of any shareholder at a meeting, in person or by proxy, without
objecting to the lack of notice of such meeting prior to the conclusion of the
meeting, shall constitute a waiver of notice by such shareholder.
The transactions of any shareholders' meeting, however called and noticed,
are as valid as though had at a meeting duly held after regular call and notice,
if a quorum is present either in person or by proxy, and if, either before or
after the meeting, each of the persons entitled to vote, not present in person
or by proxy, signs a written waiver of notice, or a consent to the holding of
the meeting, or an approval of the minutes thereof.
All such waivers, consents or approvals shall be filed with the corporate
records or made a part of the minutes of the meeting. Executors, administrators,
guardians, trustees, and other fiduciaries entitled to vote shares may sign such
waivers, consents and approvals.
SECTION 1.9 FIXING RECORD DATE
For the purpose of determining the shareholders entitled to notice of or to
vote at any shareholders' meeting or any adjournment thereof, or for the purpose
of determining shareholders entitled to receive payment of any dividend or the
allotment of any rights, or for the purpose of any other action, the Board of
Directors may fix, in advance, a date as the record date for any such
determination. Such date shall not be more than sixty (60) nor less than ten
(10) days before the date of such meeting, nor more than sixty (60) days before
the date of such action.
SECTION 1.10 LIST OF SHAREHOLDERS AT MEETINGS
A list of shareholders as of the record date, certified by the Secretary or
any Assistant Secretary or by a transfer agent, shall be produced at any
shareholders' meeting upon the request thereat or prior thereto of any
shareholder. If the right to vote at any meeting is challenged, the inspectors,
or the person presiding thereat, shall require such list of shareholders 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 shareholders entitled
to vote thereat may vote at such meeting.
SECTION 1.11 PROXIES
(a) GENERALLY. Every person entitled to vote or execute consents shall have
the right to do so either in person or by one or more agents authorized by a
written proxy executed by such person or his duly authorized agent and filed
with the Secretary of the Company or by telephone or electronic transmission as
permitted by law. Any executor, administrator, guardian, trustee or other
fiduciary may give proxies.
3
<PAGE>
(b) TERM OF PROXIES. A proxy is not valid after the expiration of eleven
(11) months from the date of its execution, unless the length of time for which
such proxy is to continue in force is otherwise specified therein, which in no
case shall exceed seven (7) years from the date of its execution.
(c) REVOCATION AND SUSPENSION OF PROXIES. Any proxy duly executed continues
in full force and effect and is not revoked until an instrument revoking it, or
until a duly executed proxy bearing a later date, is filed with the Secretary of
the Company. A proxy is not revoked by the death or incapacity of the maker
unless, before the vote is counted or the authority is exercised, written notice
of the death or incapacity is given to the Company. Notwithstanding that a valid
proxy is outstanding, if the person executing the proxy is present at the
meeting and elects to vote in person, then the powers of the proxy holder are
suspended, except in the case of a proxy coupled with an interest (which states
that fact on its face).
(d) VOTING BY TWO OR MORE PROXIES. If any instrument of proxy designates
two or more persons to act as proxy, in the absence of any provision in the
proxy to the contrary, the persons designated may represent and vote the shares
in accordance with the vote or consent of the majority of the persons named as
such proxies. If only one such proxy is present, such proxy may vote all the
shares, and all the shares standing in the name of the principal(s) for whom
such proxy acts shall be deemed represented for the purpose of obtaining a
quorum. The foregoing provisions shall apply to the voting of shares by proxies
for any two or more administrators, executors, trustees, or other fiduciaries,
unless an instrument or order of court appointing them otherwise directs.
(e) DIRECTORS' DETERMINATION OF EXECUTION AND USE OF PROXIES. The Board of
Directors may, in advance of any annual or special meeting of the shareholders,
prescribe additional regulations concerning the manner of execution and filing
of proxies and the validation of the same, which are intended to be voted at any
such meeting.
SECTION 1.12 NOTICE OF SHAREHOLDER BUSINESS AND NOMINATIONS
A. ANNUAL SHAREHOLDERS' MEETINGS
(1) Nominations of persons for election to the Board of Directors of the
Company and the proposal of business to be considered by the shareholders may be
made at an annual shareholders' meeting (a) pursuant to the Company's notice of
meeting, (b) by or at the direction of the Board of Directors or (c) by any
shareholder of the Company who was a shareholder of record at the time of giving
of notice provided for in this Section 1.12 who is entitled to vote at the
meeting and who complies with the notice of procedures set forth in this Section
1.12.
4
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(2) For nominations or other business to be properly brought before an
annual meeting by a shareholder pursuant to clause (c) of paragraph A.(1) of
this Section 1.12, the shareholder must have given timely notice thereof in
writing to the Secretary of the Company and such other business must otherwise
be a proper matter for shareholder action. To be timely, a shareholder's notice
shall be delivered to the Secretary at the principal executive offices of the
Company not later than the close of business on the 60th day nor earlier than
the close of business on the 90th day prior to the first anniversary of the
preceding year's annual meeting; provided, however, that in the event that the
date of the annual meeting is more than 30 days before or more than 60 days
after such anniversary date, notice by the shareholder to be timely must be so
delivered not earlier than the close of business on the 90th day prior to such
annual meeting and no later than the close of business on the later of the 60th
day prior to such annual meeting or the 10th day following the day on which the
date of such meeting is first publicly announced or disclosed (in a public
filing or otherwise) by the Company. In no event shall the public announcement
of an adjournment of an annual meeting commence a new time period for the giving
of a shareholder's notice as described above. Such shareholder's notice shall
set forth (a) as to each person whom the shareholder proposes to nominate for
election or reelection as a Director all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
Directors in an election contest, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and Rule 14a-11 thereunder (including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
Director if elected); (b) as to any other business that the shareholder proposes
to bring before the meeting, a brief description of the business desired to be
brought before the meeting, the reasons for conducting such business at the
meeting and any material interest in such business of such shareholder and the
beneficial owner, if any, on whose behalf the proposal is made; and (c) as to
the shareholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made (i) the name and address of such
shareholder, as they appear on the Company's books, and of such beneficial owner
and (ii) the class and number of shares of the Company which are owned
beneficially and of record by such shareholder and such beneficial owner.
(3) Notwithstanding anything in the second sentence of paragraph A.(2) of
this Section 1.12 to the contrary, in the event that the number of Directors to
be elected to the Board of Directors of the Company is increased and there is no
public announcement by the Company naming all of the nominees for Director or
specifying the size of the increased Board of Directors at least 70 days prior
to the first anniversary of the preceding year's annual meeting, a shareholder's
notice required by paragraph A. of Section 1.12 shall also be considered timely,
but only with respect to nominees for any new positions created by such
increase, if it shall be delivered to the Secretary at the principal executive
offices of the Company not later than the close of business on the 10th day
following the day on which such public announcement is first made by the
Company.
5
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B. SPECIAL SHAREHOLDERS' MEETINGS
Only such business shall be conducted at a special shareholders' meeting as
shall have been brought before the meeting pursuant to the Company's notice of
meeting. Nominations of persons for election to the Board of Directors may be
made at a special shareholders' meeting at which Directors are to be elected
pursuant to the Company's notice of meeting (a) by or at the direction of the
Board of Directors or (b) provided that the Board of Directors has determined
that Directors shall be elected at such meeting, by any shareholder of the
Company who is a shareholder of record at the time of giving of notice provided
for in this Section 1.12 who is entitled to vote at the meeting and who complies
with the notice procedures set forth in this Section 1.12. In the event the
Company calls a special shareholders' meeting for the purpose of electing one or
more Directors to the Board of Directors, any such shareholder may nominate a
person or persons (as the case may be), for election to such position(s) as
specified in the Company's notice of meeting, if the shareholder's notice
required by paragraph A.(2) of this Section 1.12 shall be delivered to the
Secretary at the principal executive offices of the Company not earlier than the
close of business on the 90th day prior to such special meeting and not later
than the close of business on the later of the 60th day prior to such special
meeting or the 10th day following the day on which public announcement or other
disclosure (in a public filing or otherwise) is first made of the date of the
special meeting and of the nominees proposed by the Board of Directors to be
elected at such meeting. In no event shall the public announcement of an
adjournment of a special meeting commence a new time period for the giving of a
shareholder's notice as described above.
C. GENERAL
(1) Only such persons who are nominated in accordance with the procedures
set forth in this Section 1.12 shall be eligible to serve as Directors and only
such business shall be conducted at a shareholders' meeting as shall have been
brought before the meeting in accordance with the procedures set forth in this
Section 1.12. Except as otherwise provided by law, the Chairman of the meeting
shall have the power and duty to determine whether a nomination or any business
proposed to be brought before the meeting was made or proposed, as the case may
be, in accordance with the procedures set forth in this Section 1.12 and, if any
proposed nomination or business is not in compliance with this Section 1.12, to
declare that such defective proposal or nomination shall be disregarded.
(2) For purposes of this Section 1.12, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
Company with the Securities and Exchange Commission pursuant to Section 13, 14,
or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Section 1.12, a
shareholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this Section 1.12. Nothing in this Section 1.12
6
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of Article I shall be deemed to affect any rights (i) of shareholders to request
inclusion of proposals in the Company's proxy statement pursuant to Rule 14a-8
under the Exchange Act or (ii) of the holders of any series of Preferred Stock
to elect Directors under specified circumstances.
SECTION 1.13 INSPECTORS OF ELECTIONS
The Board of Directors by resolution shall appoint, or shall authorize an
officer of the Company to appoint, one or more inspectors, which inspector or
inspectors may include individuals who serve the Company in other capacities,
including, without limitation, as officers, employees, agents or
representatives, to act at the meetings of shareholders and make a written
report thereof. One or more persons may be designated as alternate inspector(s)
to replace any inspector who fails to act. If no inspector or alternate has been
appointed to act or is able to act at a meeting of shareholders, the Chairman of
the meeting shall appoint one or more inspectors to act at the meeting. Each
inspector, before discharging such person's duties, shall take and sign an oath
to execute faithfully the duties of inspector with strict impartiality and
according to the best of such person's ability. The inspector(s) shall have the
duties prescribed by law. The Chairman of the meeting shall fix and announce at
the meeting the date and time of the opening and the closing of the polls for
each matter upon which the shareholders will vote at a meeting.
SECTION 1.14 VOTE OF SHAREHOLDERS
Subject to the rights of holders of any series of Preferred Stock,
Directors shall, except as otherwise required by law or by the Certificate of
Incorporation or by a specific provision of these By-Laws adopted by the
shareholders, be elected by a plurality of the votes cast at a meeting of
shareholders by the holders of shares entitled to vote in the election. Subject
to the rights of holders of any series of Preferred Stock, whenever any
corporate action, other than the election of Directors, is to be taken by vote
of the shareholders, it shall, except as otherwise required by law or by the
Certificate of Incorporation, be authorized by a majority of the votes cast at a
meeting of shareholders by the holders of shares entitled to vote thereon.
ARTICLE II
BOARD OF DIRECTORS
SECTION 2.1 NUMBER OF DIRECTORS
The affairs of this Company shall be managed by no less than one (1) nor
more than twenty-five (25) Directors as fixed by resolution adopted by a
majority of the entire Board. Each Director shall be at least 18 years of age.
Persons reaching age 70 during their prospective term of election shall resign
from the Board by their 70th birthday and such director's position shall be, at
the discretion of the Chairman of the Board, President and Chief Executive
Officer, filled or left vacant until the normal expiration of the term held by
that director.
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SECTION 2.2 ELECTIONS, TERMS AND VACANCIES
At the first annual meeting of shareholders following the adoption of the
Restated Certificate of Incorporation of the Company, or any special meeting in
lieu thereof, the Board of Directors shall be divided into three classes
designated Class I, Class II and Class III. Such classes shall be as nearly
equal in number as the then total number of Directors constituting the entire
Board permits. Class I, Class II and Class III Directors shall be elected for
terms expiring at the next succeeding annual meeting, the second succeeding
annual meeting and the third succeeding annual meeting, respectively, and until
their respective successors are elected and qualified. At each annual
shareholders' meeting after such first annual (or special) meeting of
shareholders following the adoption of the Restated Certificate of Incorporation
of the Company, the Directors chosen to succeed those in the class whose terms
then expire shall be elected by shareholders for terms expiring at the third
succeeding annual meeting after election, or for such lesser term for which one
or more may be nominated in a particular case in order to assure that the number
of Directors in each class shall be appropriately constituted and until their
respective successors are elected and qualified. Newly created Directorships or
any decrease in Directorships resulting from increases or decreases in the
number of Directors shall be so apportioned among the classes of Directors as to
make all the classes as nearly equal in number as possible. Vacancies on the
Board at any time may be filled by a majority of the Directors then in office,
although less than a quorum. A Director elected to fill a vacancy, unless
elected by the shareholders, shall hold office until the next meeting of
shareholders at which the election of Directors is in the regular order of
business, and until his or her successor has been elected and qualified.
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of Stock (other than the Common Stock) shall have the right,
voting separately by class or series, to elect Directors at an annual or special
shareholders' meeting, the election, term of office, filling of vacancies and
other features of such Directorships shall be governed by any terms of the
Certificate of Incorporation of the Company applicable thereto, and such
Directors so elected shall not be divided into classes pursuant to this Section
2.2 unless expressly provided by such terms.
SECTION 2.3 MEETINGS OF THE BOARD
An annual meeting of the Board of Directors shall be held in each year as
soon as practicable after the annual meeting of shareholders. Regular meetings
of the Board shall be held at such times as may be fixed by the Board. No notice
need be given of annual or regular meetings of the Board of Directors.
SECTION 2.4 NOTICE AND ADJOURNMENT
Notice of each special meeting of the Board shall be given to each director
either by mail not later than noon, New York time, on the fifth business day
prior to the meeting or by telegram,
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by facsimile transmission, by written message or orally to the Directors not
later than noon, New York time, on the day prior to the meeting. Notices shall
be deemed to have been given by mail when deposited in the United States mail,
by telegram at the time of filing, by facsimile transmission upon confirmation
of receipt, and by messenger at the time of delivery by the messenger. Notices
by mail, telegram, facsimile transmission or messenger shall be sent to each
Director at the address or facsimile number designated by him or her for that
purpose, or, if none has been so designated, at his or her last known residence
or business address. Notice of a meeting of the Board of Directors need not be
given to any Director who submits a signed waiver of notice whether before or
after the meeting, or who attends the meeting without protesting, prior thereto
or at its commencement, the lack of notice to him or her. A notice or waiver of
notice need not specify the purpose of any meeting of the Board of Directors. A
majority of the Directors present, whether or not a quorum is present, may
adjourn any meeting to another time and place. Notice of any adjournment of a
meeting to another time or place shall be given in the manner described above to
the Directors who were not present at the time of the adjournment and, unless
such time and place are announced at the meeting, to the other Directors.
SECTION 2.5 QUORUM
Unless a greater quorum is required by law, a majority of the number of
directors at the time serving on the Board of Directors shall constitute a
quorum for the transaction of business, or of any specified item of business,
provided, however, that a quorum shall not consist of less than one-third of the
entire Board of Directors. Except where otherwise provided by law or in the
Certificate of Incorporation or these By-Laws, the vote of a majority of the
Directors present at a meeting at the time of such vote, if a quorum is then
present, shall be the act of the Board.
SECTION 2.6 UNANIMOUS WRITTEN CONSENT
Any action authorized, in writing, by all of the Directors entitled to vote
thereon and filed with the minutes of the Company shall be the act of the Board
with the same force and effect as if the same had been passed by unanimous vote
at a duly called meeting of the Board.
SECTION 2.7 RESIGNATION OF DIRECTORS
Any Director of the Company may resign at any time. Such resignation shall
be made in writing and shall take effect at the time specified therein, or, if
no time be specified, at the time of its receipt by the Chairman of the Board or
Secretary. The acceptance of a resignation shall not be necessary to make it
effective unless so specified therein.
SECTION 2.8 REMOVAL OF DIRECTORS
Subject to the rights of any class or series of stock having a preference
over the Common Stock as to dividends or upon liquidation to elect Directors
under specified circumstances, any
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Director may be removed from office only for cause by a vote of the shareholders
entitled to vote thereon.
SECTION 2.9 COMPENSATION OF DIRECTORS
Members of the Board shall receive such fees and compensation as fixed from
time to time by the Board and shall be reimbursed for reasonable expenses for
attending Board meetings. In the event of brief unscheduled Board meetings or
Board meetings called on short notice, the Chairman of the Board, President and
Chief Executive Officer may decide to hold the meeting by conference telephone
or similar communications equipment or permit a member of the Board to attend
the meeting by such means, in which case each director participating in the
meeting by such teleconference shall be compensated at 75% of the then normal
fee applicable to such meeting.
SECTION 2.10 TIME AND PLACE OF MEETINGS
Meetings of the Board of Directors shall be held in such month on such day
at such hour and at such place as the Board may from time to time direct.
SECTION 2.11 SPECIAL MEETINGS
Special meetings of the Board may be held on the call of the Chairman of
the Board of Directors, President and Chief Executive Officer or the Secretary
or upon written request of a majority of the Directors at the time serving on
the Board addressed to the Secretary.
SECTION 2.12 TELEPHONIC MEETINGS
In the event it is necessary to obtain a quorum, at the discretion of the
Chairman of the Board, President and Chief Executive Officer and the presiding
committee Chairman, any one or more members of the Board or any committee of the
Board may participate in a meeting of the Board or committee by means of a
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at such meeting.
ARTICLE III
COMMITTEES
SECTION 3.1 ORGANIZATION AND AUTHORITY
The Board of Directors, by resolution adopted by a majority of the entire
Board, may designate from among its members, such committees as the Board of
Directors may from time to time determine, including the committee created by
Section 3.2 of this Article III, each consisting of three or more Directors, and
each of which, to the extent provided in the resolution, shall have
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all the authority of the Board, except that no such committee shall have
authority as to (1) the submission to shareholders of any action that needs
shareholders' approval; (2) the filling of vacancies in the Board or in any
committee thereof; (3) the fixing of compensation of the Directors for serving
on the Board or on any committee thereof; (4) the amendment or repeal of the
By-Laws, or the adoption of new By-Laws; (5) the amendment or repeal of any
resolution of the Board which, by its terms, shall not be so amendable or
repealable; (6) the fixing or changing of the size of the Board; or (7) the
removal or indemnification of Directors. In the event of the absence of any
member(s) from a meeting of a committee, replacements may be made from Directors
designated as alternate members of such committee by the Board. The Chairman of
the Board of Directors, President and Chief Executive Officer, or in his absence
or should he so direct, a Vice President, if such officers are members of the
committee, shall preside at meetings of the committee, otherwise the presiding
officer shall be designated by majority vote of the committee. Vacancies in the
membership of the committee shall be filled by the Board of Directors at a
regular or special meeting of the Board of Directors. Unless the Board of
Directors otherwise provides, each committee designated by the Board may adopt,
amend and repeal rules for the conduct of its business.
SECTION 3.2 EXECUTIVE COMMITTEE
The Board of Directors, by resolution adopted by a majority of the entire
Board, may designate three or more of the directors, together with the Chairman
of the Board of Directors, President and Chief Executive Officer, to constitute
an Executive Committee, to serve at the pleasure of the Board, which Committee
shall during the intervals between meetings of the Board of Directors, unless
limited by the resolution appointing such Committee, have authority to exercise
all or any of the powers of the Board of Directors in the management of the
affairs of the Corporation, insofar as such powers may lawfully be delegated or
as set forth in these By-Laws. The Board may designate one or more directors as
alternate members of such Committee, who may replace any absent member or
members at any meeting of such Committee.
SECTION 3.3 ACTION BY A COMMITTEE
The act of a majority of the members of a committee present at any meeting
at which a quorum is present shall be the act of such committee. The members of
a committee shall act only as a committee, and the individual members thereof
shall have no individual powers as such. Each committee may make such rules as
it may deem expedient for the regulation and carrying on of its meetings and
proceedings.
SECTION 3.4 QUORUM
A majority of the members of a committee shall constitute a quorum.
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SECTION 3.5 REPORTS TO BOARD OF DIRECTORS
Each such committee shall keep a record of its proceedings and make reports
to the Board at its next regular meeting.
SECTION 3.6 COMPENSATION OF COMMITTEE MEMBERS
Members of committees of the Board shall receive such fees and compensation
as fixed from time to time by the Board and shall be reimbursed for reasonable
expenses for attending committee meetings. In the event of brief unscheduled
committee meetings or committee meetings called on short notice, the Chairman of
the Board, President and Chief Executive Officer and the presiding committee
Chairman may decide to hold the meeting by conference telephone or similar
communications equipment or permit a member of the committee to attend the
meeting by such means, in which case each director participating in the meeting
by such teleconference shall be compensated at 75% of the then normal fee
applicable to such meeting.
SECTION 3.7 RESIGNATION AND REMOVAL OF COMMITTEE MEMBERS
Any member of any committee may resign at any time. Such resignation shall
be made in writing and shall take effect at the time specified therein, or, if
no time be specified, at the time of its receipt by the Chairman of the Board of
Directors, President and Chief Executive Officer or Secretary. The acceptance of
a resignation shall not be necessary to make it effective unless so specified
therein. Committee members may be removed by action of the Board of Directors,
with or without cause.
SECTION 3.8 UNANIMOUS WRITTEN CONSENT
Any action authorized in writing, by all of the members of a committee and
filed with the minutes of the Company shall be the act of that committee with
the same force and effect as if the same had been passed by unanimous vote at a
duly called meeting of such committee.
SECTION 3.9 PLACE OF COMMITTEE MEETINGS
Meetings of each committee shall be held in such month on such day at such
hour and at such place as such committee may from time to time direct.
SECTION 3.10 NOTICE
Unless otherwise provided by resolution of the Board or by vote of a
majority of the members of the relevant committee, notice of committee meetings
shall be given in the same manner as notice of special meetings of the Board is
to be given under Section 2.4 of these By-Laws.
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ARTICLE IV
OFFICERS AND THEIR DUTIES
SECTION 4.1 OFFICERS
The Board of Directors, at its regular annual meeting, shall elect or
appoint from their number a Chairman of the Board of Directors, President and
Chief Executive Officer, the Chairmen of Committees of the Board and may elect
or appoint a Vice Chairman of the Board of Directors and Vice Chairmen of
Committees of the Board, which officers shall be officers of the Board; and it
shall elect or appoint one or more Vice Presidents, a Secretary, a Treasurer,
and a Controller which officers shall be officers of the Company. Each of said
officers, subject to the provisions of Sections 4.2 and 4.3 hereof, shall hold
officer, if elected, until the meeting of the board following the next Annual
Meeting of shareholders and until his or her successor has been elected and
qualified, or, if appointed, for the term specified in the resolution appointing
him or her and until his or her successor has been elected or appointed. Any two
or more offices may be held by the same person. Should any of the officers of
the Board cease to be a director, he shall ipso facto cease to be such officer.
SECTION 4.2 TERM OF OFFICE; RESIGNATION; REMOVAL; VACANCIES
Except as otherwise provided in the resolution of the Board of Directors
electing or appointing any officer, all officers shall be elected or appointed
to hold office until the meeting of the Board of Directors following the next
succeeding annual meeting of shareholders. Each officer shall hold office for
the term for which he or she is elected or appointed, and until his or her
successor has been elected or appointed and qualified. Any officer may resign at
any time by giving written notice to the Board or to the Chairman of the Board
of Directors, President and Chief Executive Officer, if any, or the Secretary of
the Company. Such resignation shall take effect at the time specified therein,
and unless otherwise specified therein no acceptance of such resignation shall
be necessary to make it effective. Any officer may be removed by the Board, with
or without cause, at any time. Removal of an officer without cause shall be
without prejudice to his or her contract rights, if any, with the Company, but
the election or appointment of an officer shall not of itself create contract
rights. Any vacancy occurring in any office of the Company by death,
resignation, removal or otherwise may be filled for the unexpired portion of the
term by the Board.
SECTION 4.3 POWERS AND DUTIES
The officers of the Company shall have such authority and perform such
duties in the management of the Company as may be prescribed by the Board of
Directors and, to the extent not so prescribed, as generally pertain to their
respective offices, subject to the control of the Board. Securities of other
companies held by the Company may be voted by any officer designated by the
Board and, in the absence of any such designation, by the Chairman of the
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Board of Directors, President and Chief Executive Officer, any Vice President,
the Secretary or the Treasurer. The Board may require any officer, agent or
employee to give security for the faithful performance of his duties.
SECTION 4.4 SALARIES
Salaries of all officers of the Company shall be fixed by the Board from
time to time; and salaries of all other employees of the Company shall be
regulated by the Chief Executive Officer.
SECTION 4.5 CHAIRMAN OF THE BOARD OF DIRECTORS, PRESIDENT &
CHIEF EXECUTIVE OFFICER
The Chairman of the Board of Directors, President and Chief Executive
Officer shall, when present, preside at all meetings of the shareholders and the
Board of Directors. He shall be Chairman of the Executive Committee. He shall be
responsible for direction of the policy of the Board of Directors and shall have
the power and perform the duties necessary to implement such responsibility. If
the office of the Chairman of the Board, President and Chief Executive Officer
is vacated due to the incumbent's death, retirement, or inability to act, or
should the Board of Directors elect to leave such office vacant, the Board of
Directors shall fill such vacancy as defined in Section 2.2 of these By-Laws. If
the Chairman of the Board, President and Chief Executive Officer is unable to
perform the duties as identified herein for reason of reasons other than those
defined herein on a short-term basis, he may delegate the powers contained
herein to an existing member of the Board of Directors and designate such
individual to serve in the capacity of Chairman of the Board, President and
Chief Executive Officer until his return.
SECTION 4.6 VICE CHAIRMAN
The Vice Chairman shall do and perform all such duties as shall be assigned
to him or her by the Chairman of the Board of Directors, President and Chief
Executive Officer or required by the Board of Directors.
SECTION 4.7 VICE PRESIDENT
The Vice Presidents, respectively, shall do and perform all such duties as
shall be assigned to them by the Chairman of the Board of Directors, President
and Chief Executive Officer or required of them by the Board of Directors. If
designated by the Board of Directors as a member of the Executive Committee, a
Vice President shall perform the duties of Chairman of the Board of Directors,
President and Chief Executive Officer in case of the Chairman of the Board of
Directors, President and Chief Executive Officer's absence or inability to act
or in case of a vacancy in that office. An Assistant Vice President in the
absence or disability of a Vice President may at the discretion of the Chairman
of the Board of Directors, President and Chief Executive Officer perform the
duties of a Vice President and shall perform such other duties as may be
assigned to him or her.
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SECTION 4.8 SECRETARY
It shall be the duty of the Secretary to keep and attest true records of
the proceedings of all meetings of the Board and Executive Committee, to see
that all notices are duly given in accordance with the provisions of these
By-Laws or as required by law and safely keep and account for all documents,
papers and property of the Company which may come into his or her possession. He
or she shall be the custodian of the Corporate Seal of the Company and shall
affix and attest the same whenever it is necessary and proper so to do, and
shall perform such other duties as may be assigned to him or her by the Board.
In the absence or disability of the Secretary, an Assistant Secretary or any
Vice President shall perform his or her duties and such other duties as may be
assigned to him or her.
SECTION 4.9 TREASURER
The Treasurer shall have the custody of all money, funds and securities of
the Company. He or she shall furnish such security for the faithful performance
of his or her duties as may be required by the Board of Directors. He or she
shall receive all money due to the Company and deposit the same in its corporate
name in such banks or trust companies as the Board of Directors shall determine.
He or she shall sign all checks, drafts or orders for the payment of money; and
perform such other duties as may be required of him or her by the Board of
Directors. An Assistant Treasurer shall, in the absence or disability of the
Treasurer, perform his or her duties and such other duties as may be assigned to
him or her. In the absence or disability of the Treasurer and Assistant
Treasurers, any Vice President shall perform his or her duties and such other
duties as may be assigned to him or her. The Treasurer shall, when directed by
the Board of Directors, open special accounts in the Company's depositories; all
checks, drafts or orders for the payment of money out of such special accounts
shall be signed in such manner and by such officers or employees of the Company
as the Board of Directors shall designate; such checks, drafts or orders for the
payment of money shall also be signed, if, as and when so directed by resolution
of the Board of Directors, by such persons and in such manner as the Board of
Directors shall determine.
SECTION 4.10 CONTROLLER
The Controller shall:
(a) Keep at the office of the Company correct books of account of all its
business and transactions;
(b) Exhibit at all reasonable times his or her books of accounts and
records to any of the directors upon application during business hours at the
office of the Company where such books and records are kept;
(c) Render a full statement of the financial condition of the Company
whenever requested
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so to do by the Board of Directors, the Chairman of the Board, President and
Chief Executive Officer; and
(d) In general, perform such duties as may be from time to time assigned to
him or her by the Board of Directors, the Chairman of the Board, President and
Chief Executive Officer.
SECTION 4.11 OTHER OFFICERS
Other officers, including one or more additional Vice Presidents, may from
time to time be appointed by the Board of Directors or by any officer or
committee upon whom a power of appointment may be conferred by the Board of
Directors, which other officers shall have such powers and perform such duties
as may be assigned to them by the Board of Directors, the Chairman of the Board
of Directors, President and Chief Executive Officer and shall hold office for
such terms as may be designated by the Board of Directors or the officer or
committee appointing them.
ARTICLE V
SHARES
CERTIFICATED SHARES
SECTION 5.1 CERTIFICATES, REGISTRAR AND TRANSFER AGENT
Certificates for shares of the capital stock of the Company shall be in
such form as shall be approved by the Board of Directors. The certificates shall
be numbered, as nearly as may be, in the order of their issue and shall be
signed by the Chairman of the Board of Directors, President and Chief Executive
Officer or a Vice President, and by the Secretary or an Assistant Secretary or
the Treasurer or an Assistant Treasurer, and sealed with the seal of the
Company.
SECTION 5.2 AUTHORIZATION OF FACSIMILE SIGNATURES AND SEAL
The signatures of the officers upon a certificate, and the seal of the
Company, may be facsimiles if the certificate is countersigned by a transfer
agent or registered by a registrar other than Company itself or its employee.
SECTION 5.3 TRANSFER OF CERTIFICATED SHARES
Shares of the capital stock of the Company shall be transferable by the
holder thereof in person or by duly authorized attorney upon surrender of the
certificate or certificates for such shares properly endorsed. Every certificate
of stock exchanged or returned to the Company shall be appropriately canceled. A
person in whose name shares of stock stand on the books of the Company shall be
deemed the owner thereof as regards the Company. The Board of Directors may make
such other and further rules and regulations as they may deem necessary or
proper concerning the issue, transfer and registration of stock certificates.
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SECTION 5.4 LOST, STOLEN OR DESTROYED SHARE CERTIFICATES
The Company may issue a new certificate for shares in place of any
certificate theretofore issued by it, alleged to have been lost or destroyed,
and the Company may require the owner of the lost or destroyed certificate, or
such owner's legal representative, to give the Company a bond sufficient to
indemnify it against any claim that may be made against it on account of the
alleged loss or destruction of any such certificate or the issuance of any such
new certificate.
ARTICLE VI
INDEMNIFICATION
SECTION 6.1 GENERAL APPLICABILITY
Except to the extent expressly prohibited by the New York Business
Corporation Law, the Company shall indemnify each person made, or threatened to
be made, a party to or involved in any action, suit or proceeding, whether
criminal or civil, administrative or investigative by reason of the fact that
such person or such person's testator or intestate is or was a Director or
Officer of the Company, against judgments, fines, penalties, amounts paid in
settlement and reasonable expenses, including attorney's fees and expenses,
reasonably incurred in enforcing such person's right to indemnification,
incurred in connection with such action or proceeding, or any appeal therein,
provided that no such indemnification shall be made if a judgment or other final
adjudication adverse to such person establishes that such person's 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 such person
personally gained in fact a financial profit or other advantage to which such
person was not legally entitled, and provided further that no such
indemnification shall be required with respect to any settlement or other
nonadjudicated disposition of any threatened or pending action or proceeding
unless the Company has given its prior consent to such settlement or other
disposition.
SECTION 6.2 SCOPE OF INDEMNIFICATION
The Company promptly shall advance or reimburse upon request, after receipt
by the Company of a statement or statements from the claimant requesting such
advance or advances of reimbursements, to any person entitled to indemnification
hereunder all reasonable expenses, including attorney's fees and expenses,
reasonably incurred in defending any action or proceeding in advance of the
final disposition thereof upon receipt of an undertaking by or on behalf of such
person to repay such amount if such person is ultimately found not to be
entitled to indemnification or, where indemnification is granted, to the extent
the expenses so advanced or reimbursed exceed the amount to which such person is
entitled; provided, however, that such person shall cooperate in good faith with
any request by the Company that common counsel be used by the parties to an
action or proceeding who are similarly situated unless to do so would be
inappropriate due to actual or potential differing interests between or among
such parties.
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SECTION 6.3 OTHER INDEMNIFICATION PROVISIONS
Nothing herein shall limit or affect any right of any Director, Officer or
other corporate personnel otherwise than hereunder to indemnification or
expenses, including attorney's fees, under any statute, rule, regulation,
certificate of incorporation, by-law, insurance policy, contract or otherwise;
without affecting or limiting the rights of any Director, Officer or other
corporate personnel pursuant to this Article VI, the Company is authorized to
enter into agreements with any of its Directors, Officers or other corporate
personnel extending rights to indemnification and advancement of expenses to the
fullest extent permitted by applicable law.
Unless limited by resolution of the Board of Directors or otherwise, the
Company shall advance the payment of expenses to the fullest extent permitted by
applicable law to, and shall indemnify, any Director, Officer or other corporate
person who is or was serving at the request of the Company, as a director,
officer, partner, trustee, employee or agent of another corporation, whether for
profit or not-for-profit, or a partnership, joint venture, trust or other
enterprise, whether or not such other enterprise shall be obligated to indemnify
such person.
SECTION 6.4 SURVIVAL OF INDEMNIFICATION
Anything in these By-Laws to the contrary notwithstanding, no elimination
or amendment of this Article VI adversely affecting the right of any person to
indemnification or advancement of expenses hereunder shall be effective until
the 60th day following notice to such person of such action, and no elimination
of or amendment to this Article VI shall deprive any such person's rights
hereunder arising out of alleged or actual occurrences, acts or failures to act
prior to such 60th day.
SECTION 6.5 INABILITY TO LIMIT INDEMNIFICATION
The Company shall not, except by elimination or amendment of this Article
VI in a manner consistent with the preceding Section 6.4 and with the provisions
of Article VIII ("Amendments to By-Laws"), take any corporate action or enter
into any agreement which prohibits, or otherwise limits the rights of any person
to, indemnification in accordance with the provisions of this Article VI. The
indemnification of any person provided by this Article VI shall continue after
such person has ceased to be a Director or Officer of the Company and shall
inure to the benefit of such person's heirs, executors, administrators and legal
representatives.
SECTION 6.6 SEVERABILITY
In case any provision in this Article VI shall be determined at any
time to be unenforceable in any respect, the other provisions of this Article VI
shall not in any way be affected or impaired thereby, and the affected provision
shall be given the fullest possible
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enforcement in the circumstances, it being the intention of the Company to
afford indemnification and advancement of expenses to its Directors or Officers,
acting in such capacities or in the other capacities mentioned herein, to the
fullest extent permitted by law.
ARTICLE VII
OTHER MATTERS
SECTION 7.1 BOOKS TO BE KEPT
The Company shall keep (a) correct and complete books and records of
account, (b) minutes of the proceedings of the shareholders, Board of Directors
and Executive Committee, if any, and (c) a current list of the Directors and
Officers and their residence addresses. The Company shall also keep, at its
office located in the County of Dutchess in the State of New York or at the
office of its transfer agent or registrar, if any, a record containing the names
and addresses of all shareholders, the number and class of shares held by each
and the dates when they respectively became the owners of record thereof. Any of
the foregoing books, minutes or records may be in written form or in any other
form capable of being converted into written form within a reasonable time. The
Board of Directors shall, subject to the laws of the State of New York, have
power to determine from time to time, whether, to what extent, and under what
conditions and regulations the accounts and books of the Corporation or any of
them shall be open to the inspection of the shareholders, and no shareholder
shall have any right to inspect any account book or document of the Corporation
except as conferred by the laws of the State of New York unless and until
authorized so to do by resolution of the Board of Directors or shareholders of
the Corporation.
SECTION 7.2 CORPORATE SEAL
The Board of Directors may adopt a corporate seal, alter such seal at
pleasure, and authorize it to be used by causing it or a facsimile to be affixed
or impressed or reproduced in any other manner.
SECTION 7.3 WHEN NOTICE OR LAPSE OF TIME UNNECESSARY
Whenever for any reason the Company or the Board of Directors or any
committee thereof is authorized to take any action after notice to any person or
persons or after the lapse of a prescribed period of time, such action may be
taken without notice and without the lapse of such period of time if at any time
before or after such action is completed the person or persons entitled to such
notice or entitled to participate in the action to be taken or, in the case of a
shareholder, his or her attorney-in-fact, submit a signed waiver of notice of
such requirements.
19
<PAGE>
SECTION 7.4 CONTRACTS, ETC., HOW EXECUTED.
The Board of Directors, except as in these By-Laws otherwise provide, may
authorize any officer or officers, agent or agents, to enter into any contract
or execute and deliver any instrument in the name of and on behalf of the
Company, and such authority may be general or confined to specific instances,
and, unless so authorized by the Board of Directors, no officer or agent or
employee shall have any power or authority to bind the Company by any contract
or engagement or to pledge its credits or to render it liable pecuniarily for
any purpose or to any amount.
SECTION 7.5 LOANS.
No loans shall be contracted on behalf of the Company and no negotiable
paper shall be issued in its name, unless authorized by the vote of the Board of
Directors. When so authorized, any officer or agent of the Company may effect
loans and advances for the Company from any bank, trust company or other
institution, or from any firm, Company or individual and for such loans and
advances may make, execute and deliver promissory notes, bonds or other
evidences of indebtedness of the Company. When so authorized any officer or
agent of the Company, as security for the payment of any and all loans,
advances, indebtedness and liabilities of the Company, may pledge, hypothecate
or transfer any and all stocks, securities and other personal property at any
time held by the Company, and to that end endorse, assign and deliver the same.
Such authority may be general or confined to specific instances. The Board of
Directors may authorize any mortgage or pledge of, or the creation of a security
interest in, all or any part of the corporate property, or any interest therein,
wherever situated.
SECTION 7.6. DEPOSITS.
All funds of the Company shall be deposited from time to time to its credit
in such banks, trust companies or other depositaries as the Board of Directors
may select, or as may be selected by an officer or officers, agent or agents of
the Company to whom such power, from time to time, may be delegated by the Board
of Directors and, for the purpose of such deposit, checks, drafts and other
orders for the payment of money which are payable to the order of the Company
may be endorsed, assigned and delivered by the Chairman of the Board, President
and Chief Executive Officer or a Vice President, or the Treasurer or the
Secretary, or by any officer, agent or employee of the Company to whom any of
said officers, or the Board of Directors, by resolution, shall have delegated
such power.
SECTION 7.7 GENERAL AND SPECIAL BANK ACCOUNTS.
The Board of Directors may from time to time authorize the opening and
keeping of general and special bank accounts with such banks, trust companies or
other depositaries as the Board may select and may make such special rules and
regulations with respect thereto, as it may deem expedient.
20
<PAGE>
SECTION 7.8 FISCAL YEAR.
The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
AMENDMENTS TO BY-LAWS
SECTION 8.1 BY DIRECTORS
By-Laws may be adopted, amended, or repealed or new By-Laws may be adopted
by the vote of a majority of the entire Board of Directors at any regular or
special meeting of the Board at which a quorum is present; provided, however,
that any adoption of, amendment to or repeal of any new By-Law or provision
inconsistent with Article I (Section 1.2 - "Special meetings", 1.4 - "Presiding
at Meetings" or 1.12 - "Notice of Shareholder Business and Nominations"),
Article II (Section 2.1 - "Number of Directors", 2.2 - "Elections, Terms and
Vacancies" or 2.8 - "Removal of Directors"), Article VI - "Indemnification" or
this Article VIII -"Amendments to By-Laws" hereof, if by action of the Board,
shall be only upon the approval of not less than two-thirds of the entire Board
at any such regular or special meeting of the Board of Directors.
SECTION 8.2 BY SHAREHOLDERS
By-Laws may be adopted, amended, or repealed by the vote of a majority of
the shareholders entitled to vote in the election of any Directors (as herein
provided) at any annual or special shareholders' meeting at which a quorum is
present, if notice of such proposed action shall have been given in accordance
with the notice requirements of Section 1.12 of these By-Laws; provided,
however, that any adoption of, amendment to or repeal of any new By-Laws or
provision inconsistent with Article I (Section 1.2 -"Special meetings", 1.4 -
"Presiding at Meetings" or 1.12 - "Notice of Shareholder Business and
Nominations"), Article II (Section 2.1 - "Number of Directors", 2.2 - -
"Elections, Terms and Vacancies" or 2.8 - "Removal of Directors"), Article VI -
- - "Indemnification" or this Article VIII - "Amendments to By-Laws" hereof, if by
action of shareholders, shall be only upon the affirmative vote of not less than
80% of the shares entitled to vote thereon at such annual or special
shareholders' meeting at which any such action is proposed.
11/10/98
Amended effective 11/2/99 & Adopted Retroactive to 9/23/98
Amended 11/19/99, 12/17/99, 2/04/00, 3/24/00
21
EXHIBIT (10) (iii) 1
FORM OF AMENDMENT TO
CH ENERGY GROUP, INC.
AMENDED AND RESTATED STOCK PLAN
FOR OUTSIDE DIRECTORS
WHEREAS, CH Energy Group, Inc. ("Energy Group") became the successor
corporation, effective December 15, 1999, of the Central Hudson Gas & Electric
Corporation Stock Plan for Outside Directors ("Plan"), and amended and restated
such Plan effective December 15, 1999; and
WHEREAS, Energy Group now desires to further amend the Plan to increase the
number of shares provided to Directors per quarter under such Plan from 25 to
50;
NOW, THEREFORE, Energy Group hereby amends the Plan as set forth below,
effective as of April 26, 2000:
SECTION 3. CREDITED SHARE EQUIVALENTS of the Plan is hereby amended,
reading in its entirety as follows (all other provisions of the Plan being
ratified, confirmed and approved):
"SECTION 3. CREDITED SHARE EQUIVALENTS
3.1 (a) As additional compensation for services rendered, each
Participant shall be credited with 50 Share Equivalents (except for periods
prior to April 26, 2000, such credited shares shall be for 25 Share
Equivalents) for each full quarterly period of a Fiscal Year during which
such Participant served as a Director. Such credits shall be made as of the
end of each quarterly period (commencing with the first quarterly period
ending in March 1996, when the term Corporation meant Central Hudson)
during which the Participant served as a Director of the Corporation.
(b) As additional compensation for services rendered, each
Participant upon ceasing to serve as a member of the Corporation's Board of
Directors (except for any such member whose service is terminated for
cause) shall also be entitled to receive 50 Share Equivalents (except for
periods prior to April 26, 2000, such credit shall be for 25 Share
Equivalents) for each full quarterly period of a Fiscal Year (but not for
more than 40 quarters) during which such Participant served as an Outside
Director, including periods prior to January 1, 1996. Such entitlement
shall be
<PAGE>
2
implemented by crediting such Participant's Account with 50 Share
Equivalents as of the end of each full quarterly period of a Fiscal Year
commencing with the first such period after such Participant's cessation.
Such entitlement shall be personal to such Participant and shall not
survive such Participant's death, except for Share Equivalents credited to
such participant's Account prior to death.
(c) Such credited Share Equivalents shall be treated as
deferred compensation to be distributed as provided in Section 5."
Pursuant to authorization of the Board of Directors of Energy Group granted
on March 24, 2000, I have executed this Amendment this 24th day of March, 2000.
/s/ Paul J. Ganci
-----------------------------------
Paul J. Ganci
Chairman of the Board, President &
Chief Executive Officer
CH ENERGY GROUP, INC.
Computation Of Ratio of Earnings to Fixed Charges
EXHIBIT 12
<TABLE>
<CAPTION>
2000 Year Ended December 31,
-------------------- -----------------------------------------------------
3 Months 12 Months
Ended Ended
March 31 March 31 1999 1998 (1) 1997 (1) 1996 (1)
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Earnings:
A. Net Income $18,114 $ 48,391 $ 48,573 $ 49,314 $ 51,856 $ 52,852
B. Federal Income Tax 9,124 26,581 28,925 28,627 26,237 31,068
------- -------- -------- -------- -------- --------
C. Earnings before Income Taxes $27,238 $ 74,972 $ 77,498 $ 77,941 $ 78,093 $ 83,920
------- -------- -------- -------- -------- --------
D. Fixed Charges
Interest on Mortgage Bonds 3,205 12,823 13,057 14,225 14,237 15,112
Interest on Other Long-Term Debt 2,702 11,419 11,094 8,890 8,860 8,505
Other Interest 1,937 6,296 4,860 3,639 2,647 2,626
Interest Portion of Rents 245 982 993 1,004 1,020 1,094
Amortization of Premium & Expense on Debt 280 1,038 993 924 906 940
Preferred Stock Dividends of Central Hudson 1,197 4,934 5,078 5,031 4,800 5,054
------- -------- -------- -------- -------- --------
Total Fixed Charges $ 9,566 $ 37,492 $ 36,075 $ 33,713 $ 32,470 $ 33,331
------- -------- -------- -------- -------- --------
E. Total Earnings $36,804 $112,464 $113,573 $111,654 $110,563 $117,251
======= ======== ======== ======== ======== ========
Preferred Dividend Requirements:
F. Allowance for Preferred Stock
Dividends Under IRC Sec 247 $ 807 $ 3,230 $ 3,230 $ 3,230 $ 3,230 $ 3,230
G. Less Allowable Dividend Deduction (32) (127) (127) (127) (127) (127)
------- -------- -------- -------- -------- --------
H. Net Subject to Gross-up 775 3,103 3,103 3,103 3,103 3,103
I. Ratio of Earnings before Income
Taxes to Net Income (C/A) 1.504 1.549 1.595 1.581 1.506 1.588
------- -------- -------- -------- -------- --------
J. Pref. Dividend (Pre-tax) (HxI) 1,165 4,807 4,951 4,904 4,673 4,927
K. Plus Allowable Dividend Deduction 32 127 127 127 127 127
------- -------- -------- -------- -------- --------
L. Preferred Dividend Factor 1,197 4,934 5,078 5,031 4,800 5,054
======= ======== ======== ======== ======== ========
M. Ratio of Earnings to Fixed Charges (E/D) 3.85 3.00 3.15 3.31 3.41 3.52
</TABLE>
(1) CH Energy Group, Inc. was formed on Dec. 15, 1999. Prior Periods have
been restated to reflect preferred stock dividends as a component of
fixed charges.
EXHIBIT (99)
Filed Session of February 29, 2000
Approved as Recommended
and so Ordered
By the Commission
-----------------------
DEBRA RENNER
Acting Secretary
Issued & Effective March 7, 2000
STATE OF NEW YORK
DEPARTMENT OF PUBLIC SERVICE
February 18, 2000
TO: THE COMMISSION
FROM: OFFICE OF ACCOUNTING & FINANCE
SUBJECT: CASE 96-E-0909 - Petition of Central Hudson Gas & Electric
Corporation for Commission approval to Amend the Rate and
Restructuring Plan Adopted in Case 96-E-0909, Order issued and
effective February 19, 1998.
RECOMMENDATION: Staff recommends that the proposed amendment and conforming
revision be approved.
(S.A.P.A. 96-E-0909SA5)
SUMMARY
- -------
Central Hudson Gas & Electric Corporation (Central Hudson) has filed a
petition requesting Commission approval of an amendment and a conforming
revision to the Rate and Restructuring Plan (Restructuring Plan) adopted in Case
96-E-0909 1/. Central Hudson's proposed amendment eliminates an unintended
disincentive for the formation of its holding company prior to the sale of its
fossil generation. The revisions provide clarification and enable Central Hudson
to proceed with its restructuring plans while maintaining authority granted by
the Commission to invest
- ----------
1/ Case 96-E-0909, In the Matter of Central Hudson Gas & Electric
Corporation's Plans for Electric Rates - and Restructuring Pursuant to
Opinion No. 96-12. ORDER ADOPTING TERMS OF SETTLEMENT SUBJECT TO
MODIFICATIONS AND CONDITIONS (Issued and Effective February 19, 1998)
<PAGE>
CASE 96-E-0909
in non-regulated subsidiaries independent of the holding company formation. The
revisions are consistent with the intent underlying the adoption of the
Restructuring Plan. Staff recommends that the proposed amendment and conforming
revision be approved.
BACKGROUND
- ----------
By order issued and effective February 19, 1998, the Commission
adopted the Restructuring Plan. At issue is the effect of the holding company
formation with respect to Section VI.B.6. of the Restructuring Plan. Provisions
of the section allow Central Hudson to transfer up to $100 million of equity to
unregulated subsidiaries and to sell up to $100 million of securities without
further Commission approval.
CH Energy Group, Inc. became the holding company parent of Central
Hudson Gas and Electric Corporation December 15, 1999.1/ However, the
Restructuring Plan contains an unintended disincentive regarding the formation
of the holding company prior to the closing of the sale of fossil generation. As
the Restructuring Plan now exists, once the holding company is formed, Section
VI.B.6. becomes inoperable bringing into question the basis for financings
related to future equity transfers and the need for any Commission approval for
such financings.
PROPOSED REVISIONS
- ------------------
To eliminate the disincentive, Central Hudson proposes that the first
sentence of Section VI.B.6. of the Restructuring Plan be amended as:
Central Hudson is permitted to transfer equity from
regulated operations to its unregulated operations, in the
amount specified by this Section, until the earlier of a)
the time Central Hudson receives the proceeds from the sale
of its fossil
- --------
1/ Another major element of Central Hudson's Restructuring Plan, its FOSSIL
GENERATION AUCTION PLAN, was approved by the Commission on February 9, 2000
(C.96-E-0909).
-2-
<PAGE>
CASE 96-E-0909
generation plants or, b) the end of the rate period covered
by this agreement. This provision is independent of when the
holding company is formed. From the point the holding
company is formed until the receipt of the proceeds from the
plant sales, the balance of equity available for transfer,
as described above, must be reduced by the amount of
dividends Central Hudson Regco pays to its parent company
that exceed the dividends paid by the parent to
shareholders.
The remainder of this sentence that provides total new equity investment in
unregulated subsidiaries, not to exceed $100 million, is retained.
In addition, a conforming revision would be made to the last sentence
of the second paragraph of Section VI.B.6. so that it would read as:
The limitations of this paragraph shall no longer be
applicable upon the latter of the restructuring into the
Holdco organization or the closing on the sale of fossil
generation (or last such closing, in the event there should
be more than one closing).
DISCUSSION
- ----------
As noted above, Section VI.B.6. of the Restructuring Plan
becomes inoperable when the holding company is formed, and therefore
Central Hudson loses its privilege to invest future funds in its
non-regulated subsidiaries without Commission approval. central Hudson
has invested $51.5 million in subsidiary companies since the
Restructuring Plan was adopted by the Commission. In order to avoid
imposing a new restriction on Central Hudson subsidiary company
investment(s), this amendment to the Order in Case 96-E-0909 is
necessary and consistent with the intent and spirit of the
Restructuring Plan. Furthermore, the Commission specifically addressed
Central Hudson's inter-
-3-
<PAGE>
CASE 96-E-0909
affiliate investment in Opinion No. 98-13 1/ and noted that the level of
investment and the authority to invest in non-regulated companies is consistent
with treatments provided in other restructuring proceedings. The proposed
amendment is consistent with the Opinion's inter-affiliate investment position.
The Restructuring Plan anticipated Central Hudson to form the holding
company around the time the generation assets were sold and transferred to a new
owner, which was expected to occur mid 2001. However, under the Restructuring
Plan, Central Hudson's earlier than expected holding company formation would
restrict the availability of funds prematurely without this proposed amendment.
These revisions clarify that the provisions of Section VI.B.6. would
allow equity transfers and related financings independent of the holding company
formation. The elimination of the disincentive allows Central Hudson to proceed
with its restructuring plan while maintaining its authority to invest in its
unregulated subsidiaries without further Commission approval. Financial
integrity safeguards and customer protections are not changed and remain intact.
- ----------
1/ Case 96-E-0909, Central Hudson Gas & Electric Corporation - Electric
Rate/Restructuring, Opinion No. 98-13 (Issued and Effective June 30, 1998)
mimeo p. 33.
-4-
<PAGE>
CASE 96-E-0909
IT IS RECOMMENDED that the proposed amendment and conforming revision
be approved.
Respectfully submitted,
Robert M. Roby
Public Utilities Auditor III
Approved by:
Joe Lochner
Public Utilities Auditor IV
Reviewed by:
Leonard Van Ryn
Office of General Counsel
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET, CONSOL STATEMENT OF INCOME AND CONSOL STATEMENT
OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FIN
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-2000
<PERIOD-START> Jan-01-2000
<PERIOD-END> Mar-31-2000
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 922,896
<OTHER-PROPERTY-AND-INVEST> 105,799
<TOTAL-CURRENT-ASSETS> 145,781
<TOTAL-DEFERRED-CHARGES> 169,814
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,344,290
<COMMON> 1,306
<CAPITAL-SURPLUS-PAID-IN> 349,942
<RETAINED-EARNINGS> 141,813
<TOTAL-COMMON-STOCKHOLDERS-EQ> 493,061
35,000
21,030
<LONG-TERM-DEBT-NET> 342,948
<SHORT-TERM-NOTES> 38,500
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 35,110
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 378,641
<TOT-CAPITALIZATION-AND-LIAB> 1,344,290
<GROSS-OPERATING-REVENUE> 177,950
<INCOME-TAX-EXPENSE> 9,072
<OTHER-OPERATING-EXPENSES> 144,592
<TOTAL-OPERATING-EXPENSES> 153,664
<OPERATING-INCOME-LOSS> 24,286
<OTHER-INCOME-NET> 2,610
<INCOME-BEFORE-INTEREST-EXPEN> 26,896
<TOTAL-INTEREST-EXPENSE> 7,975
<NET-INCOME> 18,114
807
<EARNINGS-AVAILABLE-FOR-COMM> 0
<COMMON-STOCK-DIVIDENDS> 9,097
<TOTAL-INTEREST-ON-BONDS> 6,505
<CASH-FLOW-OPERATIONS> 19,665
<EPS-BASIC> 1.07
<EPS-DILUTED> 1.07
</TABLE>
