<PAGE>
FORM 10-Q
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.............June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from............to...................
Commission file number...................................1-3268
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
(Exact name of registrant as specified in its charter)
NEW YORK 14-0555980
(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 $5.00 per share; 17,374,677 shares
outstanding as of July 31, 1995.
<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1995
INDEX
PART I - FINANCIAL INFORMATION
Item 1 - Consolidated Financial Statements
Consolidated Statement of Income -
Three Months Ended June 30, 1995 and 1994 1-2
Consolidated Statement of Income -
Six Months Ended June 30, 1995 and 1994 3-4
Consolidated Balance Sheet - June 30, 1995
and December 31, 1994 5-6
Consolidated Statement of Cash Flows -
Six Months Ended June 30, 1995 and 1994 7-8
Notes to Consolidated Financial Statements 9-10
Item 2 - Management's Discussion and Analysis of 11-18
Financial Condition and Results of
Operations
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 19-20
Item 5 - Other Information 20
Item 6 - Exhibits and Reports on Form 8-K 21
Signatures 22
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF INCOME
For the 3 Months Ended
June 30,
1995 1994
(Thousands of Dollars)
Operating Revenues
Electric.............................. $ 91,570 $ 91,680
Gas................................... 25,293 23,228
Total - own territory................ 116,863 114,908
Electric sales to other utilities..... 1,755 2,306
118,618 117,214
Operating Expenses
Operation:
Fuel used in electric generation..... 11,232 14,295
Purchased electricity................ 14,487 11,441
Purchased natural gas................ 14,043 12,115
Other expenses of operation.......... 24,473 24,855
Maintenance........................... 7,158 9,174
Depreciation and amortization......... 10,488 10,118
Taxes, other than income tax.......... 16,337 15,916
Federal income tax.................... 5,669 4,800
103,887 102,714
Operating Income....................... 14,731 14,500
Other Income and Deductions
Allowance for equity funds
used during construction............. 231 224
Federal income tax.................... (174) 264
Other - net........................... 3,128 1,890
3,185 2,378
Income Before Interest Charges......... 17,916 16,878
Interest Charges
Interest on mortgage bonds............ 4,215 5,231
Interest on other long-term debt...... 2,335 1,923
Other interest........................ 435 361
Allowance for borrowed funds
used during construction............. (208) (139)
Amortization of expense on debt....... 283 574
7,060 7,950
-1-
<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF INCOME
For the 3 Months Ended
June 30,
1995 1994
(Thousands of Dollars)
Net Income........................... 10,856 8,928
Dividends Declared on Cumulative
Preferred Stock..................... 1,282 1,282
Income Available for Common Stock.... 9,574 7,646
Dividends Declared on
Common Stock........................ 9,120 8,888
Balance Retained in the Business..... $ 454 $ (1,242)
Common Stock:
Average Shares Outstanding (000s)... 17,347 17,063
Earnings Per Share.................. $ .55 $ .45
Dividends Declared.................. $.525 $ .52
See Notes to Consolidated Financial Statements.
-2-
<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF INCOME
For the 6 Months Ended
June 30,
1995 1994
(Thousands of Dollars)
Operating Revenues
Electric.............................. $ 193,624 $ 202,285
Gas................................... 64,041 70,049
Total - own territory................ 257,665 272,334
Electric sales to other utilities..... 5,640 7,716
263,305 280,050
Operating Expenses
Operation:
Fuel used in electric generation..... 27,512 37,542
Purchased electricity................ 27,101 21,794
Purchased natural gas................ 36,336 39,166
Other expenses of operation.......... 48,857 50,264
Maintenance........................... 13,326 16,989
Depreciation and amortization......... 20,976 20,237
Taxes, other than income tax.......... 33,812 34,011
Federal income tax.................... 16,450 17,373
224,370 237,376
Operating Income....................... 38,935 42,674
Other Income and Deductions
Allowance for equity funds
used during construction............. 495 426
Federal income tax.................... 197 738
Other - net........................... 4,707 3,110
5,399 4,274
Income Before Interest Charges......... 44,334 46,948
Interest Charges
Interest on mortgage bonds............ 8,431 10,516
Interest on other long-term debt...... 4,512 3,719
Interest on short-term debt........... 6 -
Other interest........................ 855 807
Allowance for borrowed funds
used during construction............. (446) (264)
Amortization of expense on debt....... 565 1,175
13,923 15,953
-3-
<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF INCOME
For the 6 Months Ended
June 30,
1995 1994
(Thousands of Dollars)
Net Income........................... 30,411 30,995
Dividends Declared on Cumulative
Preferred Stock..................... 2,563 2,563
Income Available for Common Stock.... 27,848 28,432
Dividends Declared on
Common Stock........................ 18,118 17,652
Balance Retained in the Business..... $ 9,730 $ 10,780
Common Stock:
Average Shares Outstanding (000s)... 17,313 17,028
Earnings Per Share.................. $1.61 $1.67
Dividends Declared.................. $1.045 $1.035
See Notes to Consolidated Financial Statements.
-4-
<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED BALANCE SHEET
June 30, December 31,
1995 1994
(Thousands of Dollars)
ASSETS
Utility Plant
Electric....................... $1,138,547 $1,114,574
Gas............................ 137,367 131,830
Common......................... 82,100 80,652
Nuclear fuel................... 32,652 31,525
1,390,666 1,358,581
Less: Accumulated depreciation. 478,509 462,105
Nuclear fuel amortization 24,649 23,655
887,508 872,821
Construction work in progress.. 42,569 58,252
930,077 931,073
Other Property and
Investments.................... 11,156 10,948
Current Assets
Cash and cash equivalents...... 19,189 5,792
Accounts receivable from
customers-net of allowance for
doubtful accounts............. 49,419 43,908
Accrued unbilled utility
revenues...................... 9,992 15,076
Other receivables.............. 3,925 5,953
Fuel, materials and supplies,
at average cost............... 29,250 33,389
Special deposits and
prepayments................... 12,401 12,092
124,176 116,210
Deferred Charges
Deferred finance charges -
Nine Mile 2 Plant............. 71,332 71,904
Income taxes recoverable....... 67,252 69,331
Unamortized debt expense....... 10,543 11,072
Deferred energy efficiency
costs......................... 9,860 9,583
Deferred gas costs............. 493 6,983
Other.......................... 22,011 23,677
181,491 192,550
Accumulated Deferred Income Tax. 55,425 58,629
$1,302,325 $1,309,410
See Notes to Consolidated Financial Statements.
-5-
<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED BALANCE SHEET
June 30, December 31,
1995 1994
(Thousands of Dollars)
LIABILITIES
Capitalization
Common Stock Equity
Common stock, 30,000,000
authorized; shares out-
standing ($5 par value):
1995 - 17,371,276
1994 - 17,238,464............. $ 86,856 $ 86,192
Paid-in capital................ 280,056 277,205
Retained earnings.............. 89,014 79,284
Capital stock expense.......... (6,739) (6,773)
Unrealized gain on investments. 641 823
449,828 436,731
Cumulative Preferred Stock
Not subject to mandatory
redemption................... 46,030 46,030
Subject to mandatory
redemption................... 35,000 35,000
81,030 81,030
Long-term Debt................. 389,499 389,364
920,357 907,125
Current Liabilities
Current maturities
of long-term debt............. 4,136 3,525
Notes payable.................. - 3,000
Accounts payable............... 20,084 29,441
Accrued taxes and interest..... 10,656 6,829
Dividends payable.............. 10,401 10,246
Accrued vacation............... 4,157 4,081
Customer deposits.............. 3,806 3,763
Other.......................... 5,777 5,556
59,017 66,441
Deferred Credits and Other
Liabilities
Deferred finance charges -
Nine Mile 2 Plant............. 31,431 34,431
Income taxes refundable........ 28,128 28,383
Accrued pension costs.......... 4,391 9,705
Operating reserves............. 4,142 5,663
Other.......................... 15,329 19,078
83,421 97,260
Accumulated Deferred Income Tax 239,530 238,584
$1,302,325 $1,309,410
See Notes to Consolidated Financial Statements.
-6-
<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
For the 6 Months Ended
June 30,
1995 1994
(Thousands of Dollars)
Operating Activities
Net Income.......................... $ 30,411 $30,995
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, amortization and
nuclear fuel amortization........ 22,572 22,352
Deferred income taxes, net........ 6,072 2,891
Allowance for equity funds used
during construction.............. (495) (426)
Nine Mile 2 Plant deferred
finance charges, net............. (2,428) (2,428)
Provision for uncollectibles...... 1,750 1,586
Accrued pension costs............. (5,314) (1,014)
Deferred gas costs................ 6,490 6,075
Deferred gas refunds.............. (1,526) 1,082
Gain on sale of long-term
investments...................... (924) -
Other - net....................... (1,648) (1,800)
Changes in current assets and
liabilities, net:
Accounts receivable and unbilled
utility revenues................. (149) 2,115
Fuel, materials and supplies...... 4,139 4,846
Special deposits and prepayments.. (309) (1,247)
Accounts payable.................. (9,357) (7,725)
Accrued taxes and interest........ 3,827 7,705
Other current liabilities......... 340 1,027
Net cash provided by operating
activities......................... 53,451 66,034
Investing Activities
Additions to plant.................. (20,840) (23,305)
Allowance for equity funds used
during construction................ 495 426
Net additions to plant.............. (20,345) (22,879)
Proceeds from sale of long-term
investments........................ 1,299 -
Roseton Plant restoration costs
related to fire damage............. - (645)
Insurance recoveries related to
Roseton Plant restoration.......... - 3,899
Nine Mile 2 Plant decommissioning
trust fund......................... (981) (436)
Other - net......................... (725) (1,343)
Net cash used in investing
activities......................... (20,752) (21,404)
-7-
<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
For the 6 Months Ended
June 30,
1995 1994
(Thousands of Dollars)
Financing Activities
Proceeds from issuance of:
Long-term debt................. 1,000 -
Common stock................... 3,515 4,062
Repayments of short-term debt..... (3,000) -
Retirement and redemption of
long-term debt .................. (289) (80)
Dividends paid on cumulative
preferred and common stock....... (20,525) (19,952)
Issuance and redemption costs..... (3) (43)
Net cash used in financing
activities....................... (19,302) (16,013)
Net change in Cash and Cash
Equivalents......................... 13,397 28,617
Cash and Cash Equivalents -
Beginning Year...................... 5,792 27,172
Cash and Cash Equivalents -
End of Period....................... $ 19,189 $55,789
Supplemental Disclosure of
Cash Flow Information
Interest paid (net of amounts
capitalized)..................... $ 13,112 $14,354
Federal income tax paid........... 6,100 5,900
See Notes to Consolidated Financial Statements.
-8-
<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
Notes to Consolidated Financial Statements
1. General
The accompanying consolidated financial statements of
Central Hudson Gas & Electric Corporation (herein the Registrant
or the Company) 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. These condensed unaudited quarterly
consolidated financial statements do not contain the detail or
footnote disclosure 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 Company's Annual Report, on Form
10-K, for the year ended December 31, 1994, as amended by
Amendment No. 1 on Form 10-K/A thereto dated March 28, 1995 (as
amended, 10-K Report). Due to the seasonal nature of the
Company's operations, financial results for interim periods are
not necessarily indicative of trends for a twelve-month period.
Certain 1994 amounts have been reclassified to conform to the
1995 presentation.
2. New Accounting Standard
In March 1995, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" (SFAS 121). SFAS 121
requires companies, including utilities, to assess the need to
recognize a loss whenever events or circumstances occur which
indicate that the carrying amount of an asset may not be fully
recoverable. An impairment loss would be recognized if the sum
of the future undiscounted net cash flows expected to be
generated by an asset is less than its book value. SFAS 121 also
amends SFAS 71 to require the write-off of a regulatory asset if
it is no longer probable that future revenues will recover the
cost of the asset. SFAS 121, which is applicable to the Company
starting in 1996, may have consequences for a number of
utilities, including the Company, which are facing growing
competitive pressures that may erode prices for future utility
services, and which have relatively high-cost nuclear generating
assets. The Company does not expect that the adoption of SFAS
121 will have a material impact on the financial position or
results of operations of the Company based on the current
regulatory treatment of its long-lived assets.
-9-
<PAGE>
3. Financial Instruments
During June 1995, the Company sold a portion of its
investment in the stock of an insurance company which the Company
held as an "available-for-sale" investment. The Company
recognized net proceeds of $1.3 million on the stock sold, which
cost $375,000. This sale resulted in a gross realized gain of
$924,000 which is recorded in the Consolidated Statement of
Income. The remaining investment has a cost and market value at
June 30, 1995 of $400,000 and $1.4 million, respectively, and a
resulting unrealized net of tax holding gain of $641,000. Common
stock equity will be adjusted to reflect periodic changes in the
market value of the remaining investment. A realized gain or
loss would be recorded in the Consolidated Statement of Income
upon sale or other disposition of the remaining investment.
Effective April 19, 1995, the Company entered into a three-
year interest rate cap agreement with a bank to manage exposure
to upward changes in interest rates. This interest rate cap
agreement covers all of the Company-secured variable rate bonds
issued by the New York State Energy Research and Development
Authority. Under this agreement, in the event a nationally
recognized tax-exempt bond interest rate index exceeds 8%, the
Company will receive a payment from the counterparty of the
agreement for the excess interest costs over 8%. This agreement
has the effect of capping the interest rate the Company would be
subject to (on a $115.9 million notional amount) at the lesser of
the actual rate or 8%. In the event the counterparty fails to
meet the terms of the interest rate cap agreement, the Company's
exposure would be limited to a maximum interest rate of 15%.
4. Commitments and Contingencies
The Company faces a number of contingencies which arise
during the normal course of business and which have been
discussed in Note 8 (entitled "Commitments and Contingencies") to
the Consolidated Financial Statements included in the Company's
10-K Report for the year ended December 31, 1994. Except as may
be disclosed in Part II of this Quarterly Report, on Form 10-Q,
for the quarterly period ended June 30, 1995, the Quarterly
Report, on Form 10-Q, for the quarterly period ended March 31,
1995, and in any Current Report, on Form 8-K, filed in 1995,
there have been no material changes in the subject matters
discussed in said Note 8.
-10-
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
CAPITAL RESOURCES AND LIQUIDITY
For the six months ended June 30, 1995, cash expenditures
related to the construction program of the Company amounted to
$19.9 million. The amount shown on the Consolidated Statement
of Cash Flows for "Net additions to plant" of $20.3 million
includes the debt portion of $446,000 of the Allowance for Funds
Used During Construction ("AFDC", as such term is described in
Note 1, entitled "Summary of Significant Accounting Policies,"
to the Consolidated Financial Statements included in the
Company's 10-K Report). The cash requirements for such
expenditures were funded from internal sources and proceeds of
$3.5 million from the issuance of 132,812 shares of common stock
under the Company's Automatic Dividend Reinvestment and Stock
Purchase Plan and the Company's Customer Stock Purchase Plan.
The growth of retained earnings in the first six months of 1995
contributed to the increase in the book value of common stock
from $25.34 at December 31, 1994 to $25.90 at June 30, 1995.
The combined effect of the sales of common stock and the growth
of retained earnings in the first six months of 1995 contributed
to the increase in the common equity ratio from 47.8% at
December 31, 1994 to 48.7% at June 30, 1995.
The Company has $52 million of committed short-term credit and
uncommitted short-term credit facilities with four banks, one
for $50 million, another for $30 million, and two for $25
million each. Authorization from the Public Service Commission
of the State of New York (PSC), however, limits the short-term
borrowing amount the Company may have outstanding, at any time,
to $52 million in the aggregate. At June 30, 1995, the Company
had no short-term debt outstanding. Investments in short-term
securities were $13.9 million at the end of June 1995.
-11-
<PAGE>
EARNINGS PER SHARE
Earnings per share of common stock were $.55 for the second
quarter of 1995, as compared to $.45 for the second quarter of
1994, an increase of 22%. Earnings per share of common stock
were $1.61 for the six months ended June 30, 1995, as compared
to $1.67 for the six months ended June 30, 1994, a decrease of
4%.
The increase in earnings per share for the quarter ended
June 30, 1995, as compared to the same period in 1994, resulted
primarily from a decrease in costs associated with the
maintenance of the Company's electric generating plants and a
decrease in interest expense due primarily to the retirement at
maturity of $50 million 8 1/8% Series First Mortgage Bonds in
September 1994. In addition, the non-recurring gain from the
sale of long-term stock investments resulted in a $.03 per share
increase in earnings for the second quarter. This favorable
variance was partially offset by decreased electric net
operating revenues attributable primarily to decreased sales to
residential and industrial customers and by increased
depreciation costs and property taxes.
The decrease in per share earnings for the six months ended
June 30, 1995 resulted primarily from decreased electric and gas
net operating revenues attributable to decreased sales due
primarily to warmer winter weather experienced in the first
quarter of 1995 as compared to the same period in 1994. Also
contributing to the decrease in six-month earnings were
increased depreciation costs and property taxes. The
unfavorable variance in this six-month period was partially
offset by decreased maintenance costs on the Company's electric
generating plants and gas distribution and transmission system
and decreased payroll and related fringe benefit costs. The
six-month period was also impacted favorably by decreased
interest expense, due primarily to the retirement at maturity of
$50 million 8 1/8% Series First Mortgage Bonds in September
1994, and the non-recurring gain of $.03 per share from the sale
of long-term stock investments.
-12-
<PAGE>
RESULTS OF OPERATIONS
The following tables report the variation in the results of
operations for the three months and six months ended June 30,
1995 compared to the same periods for 1994:
3 MONTHS ENDED JUNE 30,
INCREASE
1995 1994 (DECREASE)
(Thousands of Dollars)
Operating Revenues $118,618 $117,214 $ 1,404
Operating Expenses 103,887 102,714 1,173
Operating Income 14,731 14,500 231
Other Income & Deductions 3,185 2,378 807
Income before Interest Charges 17,916 16,878 1,038
Interest Charges 7,060 7,950 (890)
Net Income 10,856 8,928 1,928
Dividends Declared on Cumulative
Preferred Stock 1,282 1,282 -
Income Available for Common Stock $ 9,574 $ 7,646 $ 1,928
6 MONTHS ENDED JUNE 30,
INCREASE
1995 1994 (DECREASE)
(Thousands of Dollars)
Operating Revenues $263,305 $280,050 $(16,745)
Operating Expenses 224,370 237,376 (13,006)
Operating Income 38,935 42,674 (3,739)
Other Income & Deductions 5,399 4,274 1,125
Income before Interest Charges 44,334 46,948 (2,614)
Interest Charges 13,923 15,953 (2,030)
Net Income 30,411 30,995 (584)
Dividends Declared on Cumulative
Preferred Stock 2,563 2,563 -
Income Available for Common Stock $ 27,848 $ 28,432 $ (584)
-13-
<PAGE>
OPERATING REVENUES
Operating revenues increased $1.4 million (1%) for the second
quarter of 1995 as compared to the second quarter of 1994 and
decreased $16.7 million (6%) for the six months ended June 30,
1995 as compared to the six months ended June 30, 1994. Details
of these revenue changes by electric and gas departments are as
follows:
INCREASE (DECREASE) FROM PRIOR PERIOD
SECOND QUARTER SIX MONTHS
Electric Gas Electric Gas
(Thousands of Dollars)
Customer Sales $(2,098) $ 3,281 * $(11,114) $ (240)*
Increases in Base
Rates - - 47 -
Sales to Other
Utilities (551) - (2,076) -
Fuel and Gas Cost
Adjustment 1,822 (920) 2,120 (5,245)
Deferred Revenues (20) (162) 74 (603)
Miscellaneous 186 (134)** 212 80**
$ (661) $ 2,065 $(10,737) $(6,008)
*Both firm and interruptible revenues.
**Includes revenues from transportation of customer-owned gas.
Revenues collected from or credited to customers under the
electric fuel and gas cost adjustment clauses do not affect
earnings since they are offset in fuel costs, with the exception
of revenues collected pursuant to incentive mechanisms.
SALES
Total kilowatt-hour sales of electricity within the Company's
service territory decreased 3%, while firm sales of natural gas
decreased 1%, for the second quarter of 1995 as compared to the
second quarter of 1994. For the six months ended June 30, 1995,
electric sales decreased 6% and firm gas sales decreased 13%
compared to the same period last year. Changes in sales from
last year by major customer classifications are set forth below:
INCREASE (DECREASE) FROM PRIOR PERIOD
SECOND QUARTER SIX MONTHS
Electric Gas Electric Gas
Residential (2)% (6)% (7)% (15)%
Commercial 2 2 (2) (10)
Industrial (8) 12 (8) (15)
Interruptible N/A 118 N/A 117
Transportation of
Customer-owned
Gas N/A (14) N/A 116
-14-
<PAGE>
Billing degree days were 9% lower for the quarter ended June 30,
1995 and 17% lower for the six months ended June 30, 1995 when
compared to the same periods in 1994.
Sales of electricity to residential customers in the second
quarter of 1995 decreased 2% from the comparable prior year
period due to the net effect of a 3% decrease in usage per
customer and a 1% increase in the number of customers.
Commercial sales in the second quarter of 1995 increased 2% as
compared to last year due primarily to an increase in the
number of customers. Electric sales to industrial customers
decreased 8% in the second quarter of 1995 due primarily to a
decline in usage by a large industrial customer.
For the six months ended June 30, 1995, sales of electricity to
residential customers decreased 7% resulting primarily from a
decrease in usage per customer. Sales to commercial customers
decreased 2% due to the net effect of a 4% decrease in usage
per customer and a 2% increase in the number of customers.
Electric sales to industrial customers decreased 8% for such
six-month period due primarily to a decline in usage by a large
industrial customer.
Sales of gas to residential customers for the second quarter of
1995 decreased 6% due primarily to a decrease in usage per
customer. Sales of gas to commercial customers for the second
quarter of 1995 increased 2% due primarily to a 54% increase in
sales to a large commercial customer. Excluding this effect,
sales to commercial customers decreased 2% due to the net
effect of a 6% decrease in usage per customer and a 4% increase
in the number of customers. Firm gas sales to industrial
customers increased 12% for the second quarter of 1995 when
compared to the same period in 1994, due primarily to an
increase in usage by a large industrial customer.
For the six months ended June 30, 1995, residential gas sales
decreased 15% resulting primarily from a decrease in usage per
customer. Commercial gas sales decreased 10% despite a 10%
increase in sales to a large commercial customer. Excluding
this customer's effect, gas sales decreased 12% primarily from
the net effect of a 15% decrease in usage per customer and a 3%
increase in the number of customers. Firm gas sales to
industrial customers for the six months ended June 30, 1995
decreased 15% due largely to a decline in usage by a large
industrial customer.
Interruptible gas sales increased 118% in the second quarter of
1995 and 117% for the six months ended June 30, 1995 due
primarily to the increase in the amount of natural gas sold to
-15-
<PAGE>
the other cotenant owners of the 1,200 MW Roseton Steam
Electric Generating Plant (Roseton Plant) for use as a boiler
fuel at the Roseton Plant.
Transportation gas volumes decreased 14% for the second quarter
and increased 116% for the six months ended June 30, 1995. The
six-month variation is attributable primarily to increased gas
transportation service provided to a large industrial customer
in the first quarter of 1995.
OPERATING EXPENSES
The following table reports the variation in the operating
expenses for the three months and six months ended June 30,
1995 compared to the same periods for the prior year:
INCREASE (DECREASE) FROM PRIOR PERIOD
SECOND QUARTER SIX MONTHS
Amount Percent Amount Percent
(Dollars in Thousands)
Operating Expenses
Fuel and Purchased
Electricity $ (17) - % $ (4,723) (8)%
Purchased Natural Gas 1,928 16 (2,830) (7)
Other Expenses of
Operation (511) (2) (2,119) (5)
Maintenance (1,964) (23) (3,074) (21)
Nine Mile 2 Plant Operation
and Maintenance 77 2 123 2
Depreciation and Amortiza-
tion 370 4 739 4
Taxes, Other than
Federal Income Tax 421 3 (199) (1)
Federal Income Tax 869 18 (923) (5)
Total $ 1,173 1 % $(13,006) (5)%
The cost of fuel and purchased electricity decreased $4.7 million
(8%) for the six months ended June 30, 1995 resulting primarily
from decreased supply requirements to meet reduced customer
loads.
Purchased natural gas costs increased $1.9 million (16%) for the
second quarter of 1995 due primarily to higher interruptible
gas sales. Purchased natural gas costs decreased $2.8 million
(7%) for the six months ended June 30, 1995 resulting primarily
from increased gas refunds from gas suppliers combined with a
lower average cost per Mcf of gas purchased during this period.
-16-
<PAGE>
Other expenses of operation decreased $511,000 (2%) for the
second quarter of 1995 due primarily to decreased costs for
outside services. Other expenses of operation decreased $2.1
million (5%) for the six months ended June 30, 1995 due
primarily to decreased payroll and related fringe benefit costs
and reduced costs for outside services.
Maintenance expenses decreased $2.0 million (23%) for the second
quarter of 1995 and $3.1 million (21%) for the six months ended
June 30, 1995 due primarily to decreased costs associated with
the maintenance of the Company's electric generating plants.
The six-month period was further impacted by reduced costs
related to the Company's gas distribution and transmission
system. When compared to the same period in 1994, higher costs
were incurred in the first quarter of 1994 primarily to repair
damage caused by the extremely cold weather experienced in the
Company's service territory.
Depreciation and amortization expense increased $370,000 (4%)
and $739,000 (4%) for the second quarter and six months ended
June 30, 1995, respectively, due primarily to the growth in
depreciable property.
Federal income taxes increased $869,000 (18%) for the second
quarter of 1995 and decreased $923,000 (5%) for the six months
ended June 30, 1995 due to the variation in pre-tax income when
compared to the same periods in 1994.
OTHER INCOME AND DEDUCTIONS, INTEREST CHARGES AND PREFERRED
DIVIDENDS
Other income and deductions increased $807,000 (34%) for the
second quarter of 1995 and $1.1 million (26%) for the six
months ended June 30, 1995 due largely to the gain on the sale
of long-term stock investments.
Total interest charges decreased $890,000 (11%) for the second
quarter of 1995 and $2.0 million (13%) for the six months ended
June 30, 1995, resulting largely from the retirement at
maturity of $50 million of the Company's 8 1/8% Series First
Mortgage Bonds in September 1994.
COMMON STOCK DIVIDENDS
Reference is made to the subcaption "Common Stock Dividends and
Price Ranges" on Page 30 of Exhibit 13 to the 10-K Report, and
which is incorporated by reference in Part II, Item 5 of said
Report, for a discussion of the Company's dividend policies.
On June 23, 1995, the Board of Directors of the Company
-17-
<PAGE>
declared a quarterly dividend of $.525 per share, payable
August 1, 1995 to shareholders of record as of July 10, 1995,
representing an increase of $.005, or 1%, over the $.52 per
share level established one year ago. The Company presently
intends to increase future dividends by a modest amount if and
to the extent supported by sustained earnings growth, while at
the same time gradually reducing the Company's payout ratio;
however, any determination of future dividend declarations, and
the amounts and dates of such dividends, will depend on the
circumstances known at the time of consideration of such
declaration.
-18-
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
ASBESTOS LITIGATION. Reference is made to Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1994, as amended by Amendment No. 1 on Form 10-K/A thereto dated
March 28, 1995 (collectively, the "10-K Report"), and to the
caption "Asbestos Litigation" in Part I, Item 3 (Legal
Proceedings) of the 10-K Report, and to Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1995 ("10-Q
Report") and to the caption "Asbestos Litigation" in Part II,
Item 1 (Legal Proceedings) therein for a discussion of the
lawsuits regarding asbestos currently pending against Registrant,
which discussions are hereby incorporated herein by reference.
By complaints dated May 3, 1995 and May 4, 1995, the
Registrant was made a defendant in forty (40) new cases, all
filed in the New York State Supreme Court, County of New York.
As of August 1, 1995, 394 cases were pending against the
Registrant in New York State Supreme Court, County of New York,
and two (2) cases were pending against Registrant in the United
States District Court for the Southern District of New York.
Three hundred eighty-four (384) of these plaintiffs each seek
$10,000,000 in compensatory damages, plus punitive damages, nine
(9) plaintiffs seek $10,500,000 in compensatory damages, plus
punitive damages, one (1) plaintiff seeks $27,000,000 in
compensatory damages, plus punitive damages, one (1) plaintiff
seeks $70,000,000 in compensatory damages, plus punitive damages,
and, in one case, in which the Registrant was joined as a third-
party defendant by Owens-Corning Fiberglas ("OCF"), the complaint
alleges that the Registrant is responsible to OCF for the amount
of any recovery obtained by the plaintiff against OCF in the
lawsuit.
In summary, as of August 1, 1995, the Registrant is a
defendant or third-party defendant in 396 asbestos lawsuits.
Although the Registrant is presently unable to assess the
validity of these 396 lawsuits, based on information known to the
Registrant at this time, including its experience in settling
asbestos cases and in obtaining dismissals of asbestos cases, the
Registrant believes that the costs to be incurred in connection
with these lawsuits will not have a material adverse effect on
the Registrant's financial position. However, if the Registrant
were ultimately held liable under these lawsuits and insurance
coverage were not available, the cost thereof could have a
material adverse effect (a reasonable estimate of which cannot be
made at this time) on the financial condition of the Registrant
if the Registrant could not recover all or a substantial portion
thereof through rates. Registrant's insurance does not extend to
punitive damages.
-19-
<PAGE>
ENVIRONMENTAL CLAIMS - NEWBURGH MANUFACTURED GAS SITE.
Reference is made to Registrant's 10-K Report, and to the caption
"Environmental Claims - Newburgh Manufactured Gas Site" in Item 3
of Part I thereof for a discussion of the letters received from
the City of Newburgh, New York ("City") purporting to be notices
pursuant to the "Citizens' Suit" provisions of the following
federal laws: the Resource Conservation and Recovery Act
("RCRA"), the Comprehensive Environmental Response, Compensation
and Liability Act ("CERCLA") and the Emergency Planning and
Community Right to Know Act ("EPRCA"). Reference is also made to
Registrant's Current Report, on Form 8-K, dated June 13, 1995,
for a description of the filing by the City on May 26, 1995, of a
Complaint and Demand for Jury Trial, dated May 26, 1995, against
Registrant in the United States District Court, Southern District
of New York, including the allegations made in such complaint,
the relief sought by the City, and Registrant's response thereto.
Registrant cannot at this time predict the outcome of
this litigation.
Item 5. Other Information.
NINE MILE 2 PLANT. Reference is made to the caption
"Nine Mile 2 Plant" in Part I, Item 2 of the 10-K Report and to
the caption "Nine Mile 2 Plant" in Part II, Item 5 of the 10-Q
Report for a discussion of Registrant's participation as a
tenant-in-common owner of Unit No. 2 of the Nine Mile Point
Nuclear Station ("Nine Mile 2 Plant") which is operated by
Niagara Mohawk Power Corporation. As reported in such 10-Q
Report, a scheduled refueling outage at the Nine Mile 2 Plant
commenced on April 8, 1995. The outage was completed and the
Nine Mile 2 Plant returned to service on June 2, 1995.
-20-
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) EXHIBITS. 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
(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.
(b) REPORTS ON FORM 8-K. Registrant filed the following
Current Report on Form 8-K during the quarter for which this
Quarterly Report on Form 10-Q is filed:
1. Current Report on Form 8-K, dated June 13, 1995:
described the filing, on May 26, 1995, of a Complaint and Demand
for Jury Trial by the City of Newburgh, New York against
Registrant in the United States District Court, Southern District
of New York. Said Report also described the allegations made by
the City in such Complaint, the relief sought by the City, and
Registrant's response to said Complaint and Demand for Jury
Trial.
-21-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned hereunder duly
authorized.
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
(Registrant)
By: (SGD.) DONNA S. DOYLE
Donna S. Doyle
Controller
Authorized Officer and Chief
Accounting Officer
Dated: August 11, 1995
-22-
</PAGE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FOR THE
CONSOLIDATED BALANCE SHEET, CONSOLIDATED STATEMENT OF INCOME AND CONSOLIDATED
STATEMENT OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> $930,077
<OTHER-PROPERTY-AND-INVEST> $11,156
<TOTAL-CURRENT-ASSETS> $124,176
<TOTAL-DEFERRED-CHARGES> $181,491
<OTHER-ASSETS> $55,425
<TOTAL-ASSETS> $1,302,325
<COMMON> $86,856
<CAPITAL-SURPLUS-PAID-IN> $273,317
<RETAINED-EARNINGS> $89,655
<TOTAL-COMMON-STOCKHOLDERS-EQ> $449,828
$35,000
$46,030
<LONG-TERM-DEBT-NET> $389,499
<SHORT-TERM-NOTES> $0
<LONG-TERM-NOTES-PAYABLE> $0
<COMMERCIAL-PAPER-OBLIGATIONS> $0
<LONG-TERM-DEBT-CURRENT-PORT> $4,136
$0
<CAPITAL-LEASE-OBLIGATIONS> $0
<LEASES-CURRENT> $0
<OTHER-ITEMS-CAPITAL-AND-LIAB> $377,832
<TOT-CAPITALIZATION-AND-LIAB> $1,302,325
<GROSS-OPERATING-REVENUE> $263,305
<INCOME-TAX-EXPENSE> $16,450
<OTHER-OPERATING-EXPENSES> $207,920
<TOTAL-OPERATING-EXPENSES> $224,370
<OPERATING-INCOME-LOSS> $38,935
<OTHER-INCOME-NET> $5,399
<INCOME-BEFORE-INTEREST-EXPEN> $44,334
<TOTAL-INTEREST-EXPENSE> $13,923
<NET-INCOME> $30,411
$2,563
<EARNINGS-AVAILABLE-FOR-COMM> $27,848
<COMMON-STOCK-DIVIDENDS> $18,118
<TOTAL-INTEREST-ON-BONDS> $0
<CASH-FLOW-OPERATIONS> $53,451
<EPS-PRIMARY> $1.61
<EPS-DILUTED> $0
</TABLE>
<TABLE> EXHIBIT 12
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
<CAPTION>
1995
3 Months 6 Months 12 Months
Ended Ended Ended Year Ended December 31,
June 30 June 30 June 30 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Earnings:
A. Net Income $10,856 $30,411 $ 50,345 $ 50,929 $ 50,390 $ 47,688 $ 42,941 $ 41,035
B. Federal Income Tax 5,843 16,253 26,424 26,806 27,158 24,363 21,361 20,374
C. Earnings before Income Taxes 16,699 46,664 76,769 77,735 77,548 72,051 64,302 61,409
D. Total Fixed Charges <FN1> 7,628 15,253 30,929 32,679 33,820 34,888 37,737 42,906
E. Total Earnings $24,327 $61,917 $107,698 $110,414 $111,368 $106,939 $102,039 $104,315
Preferred Dividend Requirements:
F. Allowance for Preferred Stock
Dividends Under IRC Sec 247 $ 1,282 $ 2,564 $ 5,127 $ 5,127 $ 5,562 $ 5,544 $ 5,659 $ 5,681
G. Less Allowable Dividend
Deduction 132 264 528 528 528 544 544 544
H. Net Subject to Gross-up 1,150 2,300 4,599 4,599 5,034 5,000 5,115 5,137
I. Ratio of Earnings before Income
Taxes to Net Income (C/A) 1.538 1.534 1.525 1.526 1.539 1.511 1.497 1.497
J. Pref. Dividend (Pre-tax) (HxI) 1,769 3,528 7,013 7,018 7,747 7,555 7,657 7,690
K. Plus Allowable Dividend
Deduction 132 264 528 528 528 544 544 544
L. Preferred Dividend Factor 1,901 3,792 7,541 7,546 8,275 8,099 8,201 8,234
M. Fixed Charges (D) 7,628 15,253 30,929 32,679 33,820 34,888 37,737 42,906
N. Total Fixed Charges
and Preferred Dividends $ 9,529 $19,045 $ 38,470 $ 40,225 $ 42,095 $ 42,987 $ 45,938 $ 51,140
O. Ratio of Earnings to Fixed
Charges (E/D) 3.19 4.06 3.48 3.38 3.29 3.07 2.70 2.43
P. Ratio of Earnings to Fixed Charges
and Preferred Dividends (E/N) 2.55 3.25 2.80 2.74 2.65 2.49 2.22 2.04
<FN>
<FN1> Includes a portion of rent expense deemed to be representive of the interest factor.
</FN>
</TABLE>
