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.................September 30, 1998
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; 16,911,387 shares outstanding as of September 30, 1998.
<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1998
INDEX
PART I - FINANCIAL INFORMATION PAGE
Item 1 - Consolidated Financial Statements
Consolidated Statement of Income -
Three Months Ended September 30, 1998 and 1997 1
Consolidated Statement of Income -
Nine Months Ended September 30, 1998 and 1997 3
Consolidated Balance Sheet - September 30, 1998
and December 31, 1997 5
Consolidated Statement of Cash Flows -
Nine Months Ended September 30, 1998 and 1997 8
Notes to Consolidated Financial Statements 11
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of
Operations 14
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 26
Item 4 - Submission of Matters to a Vote of
Security Holders 27
Item 6 - Exhibits and Reports on Form 8-K 27
Signatures 29
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
For the 3 Months Ended
September 30,
1998 1997
--------- --------
(Thousands of Dollars)
<S> <C> <C>
Operating Revenues
Electric.............................. $ 108,262 $ 105,575
Gas................................... 10,569 13,520
--------- --------
Total - own territory................ 118,831 119,095
Sales to other utilities.............. 6,892 4,412
--------- ---------
125,723 123,507
--------- --------
Operating Expenses
Operation:
Fuel used in electric generation..... 25,856 19,569
Purchased electricity................ 10,906 12,514
Purchased natural gas................ 4,479 8,012
Other expenses of operation.......... 24,467 23,997
Maintenance........................... 6,766 6,821
Depreciation and amortization......... 11,413 10,904
Taxes, other than income tax.......... 15,538 16,328
Federal income tax.................... 7,948 7,451
--------- --------
107,373 105,596
--------- --------
Operating Income....................... 18,350 17,911
--------- --------
Other Income and Deductions
Allowance for equity funds
used during construction............. 95 114
Federal income tax.................... 159 199
Other - net........................... 1,947 1,706
--------- --------
2,201 2,019
--------- --------
Income Before Interest Charges......... 20,551 19,930
--------- --------
</TABLE>
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<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
For the 3 Months Ended
September 30,
1998 1997
-------- --------
(Thousands, Except for Per Share Amounts)
<S> <C> <C>
Interest Charges
Interest on mortgage bonds............ 3,559 3,559
Interest on other long-term debt...... 2,174 2,203
Other interest........................ 896 644
Allowance for borrowed funds
used during construction............. (115) (71)
Amortization of expense on debt....... 227 227
--------- --------
6,741 6,562
--------- --------
Net Income............................. 13,810 13,368
Dividends Declared on Cumulative
Preferred Stock....................... 807 807
--------- --------
Income Available for Common Stock...... 13,003 12,561
Dividends Declared on
Common Stock.......................... 9,129 9,290
--------- --------
Balance Retained in the Business....... $ 3,874 $ 3,271
========= ========
Common Stock:
Average Shares Outstanding (000s)..... 16,961 17,408
Earnings Per Share on Average Shares
Outstanding........................... $.77 $.72
Dividends Declared.................... $.54 $.535
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
For the 9 Months Ended
September 30,
1998 1997
--------- --------
(Thousands of Dollars)
<S> <C> <C>
Operating Revenues
Electric.............................. $ 299,893 $ 301,347
Gas................................... 62,740 80,265
--------- --------
Total - own territory................ 362,633 381,612
Sales to other utilities.............. 19,078 12,375
--------- --------
381,711 393,987
--------- --------
Operating Expenses
Operation:
Fuel used in electric generation..... 62,731 47,776
Purchased electricity................ 33,556 39,981
Purchased natural gas................ 30,523 46,407
Other expenses of operation.......... 72,600 73,630
Maintenance........................... 19,101 19,698
Depreciation and amortization......... 34,075 32,712
Taxes, other than income tax.......... 48,075 49,767
Federal income tax.................... 24,294 25,462
--------- --------
324,955 335,433
--------- ---------
Operating Income....................... 56,756 58,554
--------- --------
Other Income and Deductions
Allowance for equity funds
used during construction............. 284 297
Federal income tax.................... 733 558
Other - net........................... 5,447 5,586
--------- --------
6,464 6,441
--------- --------
Income Before Interest Charges......... 63,220 64,995
--------- --------
</TABLE>
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<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
For the 9 Months Ended
September 30,
1998 1997
-------- --------
(Thousands, Except for Per Share Amounts)
<S> <C> <C>
Interest Charges
Interest on mortgage bonds............ 10,678 10,678
Interest on other long-term debt...... 6,524 6,584
Other interest........................ 2,667 1,923
Allowance for borrowed funds
used during construction............. (346) (185)
Amortization of expense on debt....... 679 679
--------- --------
20,202 19,679
--------- --------
Net Income............................. 43,018 45,316
Dividends Declared on Cumulative
Preferred Stock....................... 2,422 2,422
--------- --------
Income Available for Common Stock...... 40,596 42,894
Dividends Declared on
Common Stock.......................... 27,462 27,894
--------- --------
Balance Retained in the Business....... $ 13,134 $ 15,000
========= ========
Common Stock:
Average Shares Outstanding (000s)..... 17,084 17,472
Earnings Per Share on Average Shares
Outstanding......................... $2.38 $2.46
Dividends Declared.................... $1.615 $1.60
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------ -----------
(Unaudited) (Audited)
(Thousands of Dollars)
ASSETS
<S> <C> <C>
Utility Plant
Electric....................... $1,204,463 $1,193,735
Gas............................ 155,482 151,222
Common......................... 94,364 91,522
Nuclear fuel................... 42,319 37,262
--------- ---------
1,496,628 1,473,741
Less: Accumulated depreciation. 589,607 560,304
Nuclear fuel amortization 34,619 33,059
--------- ---------
872,402 880,378
Construction work in progress.. 58,159 52,413
--------- ---------
Net Utility Plant............ 930,561 932,791
--------- ---------
Investments and Other Assets
Prefunded Pension Costs........ 36,047 23,536
Other.......................... 16,885 14,958
--------- ---------
Total Investments and
Other Assets................ 52,932 38,494
--------- ---------
Current Assets
Cash and cash equivalents...... 23,407 9,054
Accounts receivable from
customers-net of allowance for
doubtful accounts............. 40,448 49,643
Accrued unbilled utility
revenues...................... 9,460 16,229
Other receivables.............. 1,153 2,073
Fuel, materials and supplies,
at average cost............... 25,175 24,100
Special deposits and
prepayments................... 19,246 14,210
--------- ---------
Total Current Assets......... 118,889 115,309
--------- ---------
Deferred Charges
Regulatory assets.............. 129,503 139,236
Unamortized debt expense....... 4,761 5,002
Other.......................... 23,402 21,258
--------- ---------
Total Deferred Charges....... 157,666 165,496
--------- ---------
Total Assets.................... $1,260,048 $1,252,090
========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
----------- -------------
(Unaudited) (Audited)
(Thousands of Dollars)
LIABILITIES and CAPITALIZATION
<S> <C> <C>
Capitalization
Common Stock Equity
Common stock, 30,000,000 shares
authorized; shares issued
($5 par value):
1998 - 17,554,987
1997 - 17,554,987............ $ 87,775 $ 87,775
Paid-in capital............... 284,465 284,465
Retained earnings............. 133,674 120,540
Reacquired capital stock...... (25,086) (9,398)
Capital stock expense......... (6,222) (6,278)
--------- ---------
Total Common Stock Equity... 474,606 477,104
--------- ---------
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................ 356,790 361,829
--------- ---------
Total Capitalization....... 887,426 894,963
--------- ---------
Current Liabilities
Current maturities
of long-term debt............ 21,696 1,317
Accounts payable.............. 18,693 24,368
Accrued taxes and interest.... 15,197 3,240
Dividends payable............. 9,936 10,052
Accrued vacation.............. 4,400 4,339
Customer deposits............. 4,102 4,001
Other......................... 6,304 6,545
--------- ---------
Total Current Liabilities... 80,328 53,862
--------- ---------
</TABLE>
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<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------ -------------
(Unaudited) (Audited)
(Thousands of Dollars)
<S> <C> <C>
LIABILITIES and CAPITALIZATION
Deferred Credits and Other
Liabilities
Regulatory liabilities........ 73,889 81,271
Operating reserves............ 5,240 6,582
Other......................... 10,168 10,019
--------- ---------
Total Deferred Credits and
Other Liabilities.......... 89,297 97,872
--------- ---------
Accumulated Deferred Income Tax 202,997 205,393
--------- ---------
Total Capitalization and
Liabilities................... $1,260,048 $1,252,090
========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
- 7 -
<PAGE>
See Notes to Consolidated Financial Statements.
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the 9 Months Ended
September 30,
1998 1997
------- -------
(Thousands of Dollars)
<S> <C> <C>
Operating Activities
Net Income.......................... $ 43,018 $ 45,316
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation, amortization and
nuclear fuel amortization....... 36,503 36,101
Deferred income taxes, net........ (1,195) 4,637
Allowance for equity funds used
during construction............. (284) (297)
Nine Mile 2 Plant deferred
finance charges, net............ (3,642) (3,642)
Provision for uncollectibles...... 2,125 2,475
Accrued pension costs............. (8,106) (6,420)
Deferred gas costs................ (489) 4,081
Deferred gas refunds.............. (1,465) 2,183
Other - net....................... (616) (2,601)
Changes in current assets and
liabilities, net:
Accounts receivable and unbilled
revenues................. 14,759 11,196
Fuel, materials and supplies...... (1,075) 2,167
Special deposits and prepayments.. (5,036) (2,920)
Accounts payable.................. (5,675) (10,106)
Accrued taxes and interest........ 11,957 14,643
Other current liabilities......... (79) (1,126)
------- -------
Net cash provided by operating
activities......................... 80,700 95,687
------- --------
</TABLE>
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<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
For the 9 Months Ended
September 30,
1998 1997
------ -----
(Thousands of Dollars)
Investing Activities
Additions to plant.................. (34,082) (28,035)
Allowance for equity funds used
during construction................ 284 297
------- -------
Net additions to plant.............. (33,798) (27,738)
Nine Mile 2 Plant decommissioning
trust fund......................... (651) (651)
Other - net......................... (1,479) (499)
-------- --------
Net cash used in investing
activities......................... (35,928) (28,888)
------- -------
Financing Activities
Proceeds from issuance of
long-term debt................... 16,502 1,169
Repayments of short-term debt...... - (15,600)
Retirement and redemption of
long-term debt.................... (1,233) (438)
Dividends paid on cumulative
preferred and common stock........ (30,000) (30,331)
Reacquired capital stock........... (15,688) (6,066)
--------- --------
Net cash used in financing
activities........................ (30,419) (51,266)
-------- --------
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<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
For the 9 Months Ended
September 30,
1998 1997
------- --------
(Thousands of Dollars)
Net Change in Cash and Cash
Equivalents ................................... 14,353 15,533
Cash and Cash Equivalents -
Beginning of Year ............................. 9,054 4,235
------- -------
Cash and Cash Equivalents -
End of Period ................................. $23,407 $19,768
======= =======
Supplemental Disclosure of
Cash Flow Information
Interest paid (net of amounts
capitalized) ............................... $13,100 $13,365
Federal income tax paid ..................... 17,900 14,111
======= =======
See Notes to Consolidated Financial Statements.
- 10 -
<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
Notes to Consolidated Financial Statements
NOTE 1 - GENERAL
The accompanying consolidated financial statements of Central Hudson Gas &
Electric Corporation (herein "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 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 Company's Annual Report, on Form 10-K, for the
year ended December 31, 1997 (Company's 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.
NOTE 2 - REGULATORY MATTERS
Amended Settlement Agreement Order
Reference is made to the Amended and Restated Settlement Agreement, as described
in Item 7 under the caption "Competition/Deregulation" and Note 1 -
"Regulatory Matters" to the Consolidated Financial Statements of the Company's
10-K Report, regarding the Company's plan for transition to a competitive
generation and energy services market (Amended Settlement Agreement). The
Company has received the final Order dated June 30, 1998, from the Public
Service Commission of the State of New York (PSC) confirming the February 19,
1998 (Order) of the PSC adopting the terms of the Amended Settlement Agreement
subject to modifications and conditions therein, which modifications and
conditions were approved by the PSC on February 4, 1998. These modifications
and conditions include the following: a) the PSC reserved its authority to
require an auction and transfer of the Company's fossil-fueled electric
generating assets prior to June 30, 2001, if such accelerated auction and
transfer is found by the PSC to be in the public interest (at September 30,
1998, the net book value of the Company's fossil generating assets represented
approximately 19% of net utility plant); b) the PSC directed the PSC Staff to
provide assurance that the Company does not incur imprudent
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<PAGE>
generation costs which could be avoided by divestiture of fossil-fueled
electric generating assets prior to June 30, 2001; c) "Strandable costs" of
the Company, as defined in the Amended Settlement Agreement, were clarified to
be those "production expenditures of the Company made in fulfilling its
obligation to serve and provide safe, reliable electric service to customers
within its franchise territory which are not expected to be recoverable in a
competitive electricity market"; d) the PSC added a provision dealing with
mergers and acquisitions; namely, pursuant to a petition filed jointly or
individually by the Company, the Company will have the flexibility to retain,
on a cumulative basis, all savings associated with an acquisition or merger
with another utility for a period of five years from the date of closing of
any merger or acquisition up to the amount of the acquisition premium paid
over the lesser of book value or fair market value of assets merged or
acquired, and savings in excess of the recovery will be disposed of by order
of the PSC.
Impact of Amended Settlement Agreement on Accounting Policies
The Amended Settlement Agreement creates certain changes to the Company's
accounting policies. The Company's accounting policies conform to generally
accepted accounting principles, which, for regulated public utilities, include
Statement of Financial Accounting Standards No. 71, "Accounting for the
Effects of Certain Types of Regulation" (SFAS 71) as issued by the Financial
Accounting Standards Board (FASB). Under SFAS 71, regulated companies defer
costs and credits on the balance sheet as regulatory assets and liabilities
when it is probable that those costs and credits will be allowed in the
rate-making process in a period different from when they otherwise would have
been reflected in income. These deferred regulatory assets and liabilities are
then reflected in the income statement in the period in which the same amounts
are reflected in rates. If some portion of an enterprise's operations are
regulated and meet the appropriate criteria, SFAS 71 is applied only to the
regulated portion of the enterprise's operations.
Upon approval of the Amended Settlement Agreement by the PSC, the Company
applied the provisions of Statement of Financial Accounting Standards No. 101,
"Regulated Enterprises Accounting for the Discontinuation of Application of
FASB Statement No. 71" (SFAS 101) to the fossil-fueled generating portion of
its business. Therefore, on February 4, 1998 the Company discontinued
application of SFAS 71 to its fossil-fueled generating portion of its
business. Because the Amended Settlement Agreement includes a provision for
future recovery of costs, the application of SFAS 101 to the fossil-fueled
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<PAGE>
generating portion of the Company's business did not have a significant effect
on the Company's financial position or results of operations as of such
discontinuance. Certain regulatory assets and liabilities have been created as
a result of transactions relating to the Company's fossil-fueled generating
assets. At September 30, 1998, net regulatory assets associated with the
fossil-fueled generating assets totaled $6.7 million. The Company did not
charge against income any of these net regulatory assets because recovery of
such assets is considered probable under the Amended Settlement Agreement.
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), requires that long-lived assets be reviewed for impairment if the
carrying value of the asset may not be recoverable. SFAS 121 also requires
that long-lived assets to be disposed of be carried at the lower of net book
value or fair value, and amends SFAS 71 to require that regulatory assets be
charged against earnings if recovery of such assets is no longer probable. The
Company will not recognize an impairment of its fossil-fueled generating
assets because the estimated cash flows from operations, the sale of such
generating assets, and stranded cost recovery provisions of the Amended
Settlement Agreement are not expected to be less than the net carrying amount
of such generating assets.
Formation of Holding Company
Reference is made to the caption "Amended Settlement Agreement" of Note 1,
"Regulatory Matters," to the Consolidated Financial Statements of the
Company's 10-K Report and to the Company's Form 8-K, dated January 7, 1998, in
which a proposed new holding company structure for the Company was disclosed
in the context of the PSC's Competitive Opportunities Proceeding. Effective
April 24, 1998, the Company formed a wholly-owned subsidiary named CH Energy
Group, Inc., which, upon a one-for-one share exchange, will become the holding
company owner of Central Hudson Gas & Electric Corporation. The Company has
received approval from the Federal Energy Regulatory Commission, the
Securities and Exchange Commission, the Nuclear Regulatory Commission and at a
Special Meeting of Shareholders, on September 25, 1998, shareholder approval.
Results of the shareholder vote, approving the holding company restructuring,
were reported on Form 8-K dated October 9, 1998. The holding company
restructuring will be delayed until some time during the first half of 1999 in
order for the Company to coordinate closely with such restructuring the
transfer of up to $100
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<PAGE>
million in equity (as authorized by the PSC under said Amended Settlement
Agreement referred to above under the subcaption "Amended Settlement Agreement
Order") from the Corporation to unregulated business ventures. Initially, the
holding company will be comprised of Central Hudson Gas & Electric Corporation
and its existing subsidiaries as described under the subcaption "Affiliates"
under the caption "Other Matters" of Item 1 of the Company's 10-K Report, with
the exception of Phoenix Development Company, Inc. which will remain a wholly
owned subsidiary of Central Hudson Gas & Electric Corporation. The holding
company may also establish other subsidiaries over time.
NOTE 3 - NEW ACCOUNTING STANDARDS - SEGMENT DISCLOSURES
In June 1997, the FASB issued Statement of Financial Accounting Standards No.
131, "Disclosures about Segments of an Enterprise and Related Information"
(SFAS 131). This Statement establishes standards for reporting information
about operating segments in annual and interim financial statements. It also
establishes standards for related disclosures about products and services,
geographic areas and major customers. In compliance with the requirements of
this Statement, the Company will adopt SFAS 131 in its financial statements
for the year ended December 31, 1998. The Company does not expect that the
adoption of SFAS 131 will have a significant impact on the reporting
requirements of the Company.
NOTE 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 9,"Commitments and
Contingencies", to the Consolidated Financial Statements of the Company's 10-K
Report. Except for that which is disclosed in Part II of this Quarterly
Report, on Form 10-Q, for the quarterly period ended September 30, 1998, and
all documents previously filed with the Securities and Exchange Commission in
1998, 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 nine months of 1998 contributed to
the increase in the book value of common stock from $27.61 at December 31,
1997 to $28.06 at September 30, 1998; however, the common equity ratio
decreased from 53.2% at
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<PAGE>
December 31, 1997 to 52.2% at September 30, 1998, due to the combined effect
of the repurchase of common stock which exceeded the increase in retained
earnings and the issuance of $15 million Medium Term Notes as discussed below.
For the nine months ended September 30, 1998, the Company repurchased 368,400
shares of its common stock for $15.7 million under its stock repurchase
program (See Note 6, "Capitalization- Capital Stock", to the Consolidated
Financial Statements of the Company's 10-K Report).
For the nine months ended September 30, 1998, cash expenditures related to the
construction program of the Company amounted to $33.5 million. The amount
shown on the Consolidated Statement of Cash Flows for "Net additions to Plant"
of $33.8 million includes the debt portion of $346,000 of the Allowance for
Funds Used During Construction ("AFDC", as such term is described in Note 1,
"Regulatory Matters", to the Consolidated Financial Statements of the
Company's 10-K Report). The cash requirements for such expenditures were
funded from internal sources.
The Company has $52 million of committed short-term credit facilities available.
In order to diversify its sources of short-term financing, the Company has
also entered into short-term credit facilities with several commercial banks.
At September 30, 1998, the Company had no short-term debt outstanding and had
investments in short-term securities in the amount of $31.1 million at the end
of September 1998. Authorization from the PSC limits the short-term borrowing
amount the Company may have outstanding, at any time, to $52 million in the
aggregate.
Pursuant to Article XXI of the Company's First Mortgage Bond Indenture, the
Company deposited $722,226 on March 24, 1998 with the Indenture Trustee. Such
Article requires the deposit of the amount by which depreciation exceeds
property additions in each calendar year, less property additions made in the
subsequent calendar year, up to the date of deposit which must be made no
later than March 31 of each year. Such deposit may be withdrawn at a
subsequent date to fund redemptions of outstanding mortgage bonds.
As described in Note 7,"Capitalization-Long-Term Debt", to the Consolidated
Financial Statements of the Company's 10-K Report, the Company's interest rate
cap agreement expired in April 1998. On April 1, 1998, the Company entered
into an interest rate cap agreement with a bank, which agreement expires March
31, 2000. Under this agreement, in the event a nationally recognized
tax-
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<PAGE>
exempt bond interest rate index exceeds 5%, the Company will receive a payment
from such bank equal to the amount by which the actual interest costs on its
variable rate 1985 and 1987 New York State Energy Research and Development
Authority Bonds exceeds 5% per annum. This agreement has the effect of
limiting the interest the Company must pay on such bonds (on a $115.9 million
notional amount) to the lesser of their actual rate or 5% per annum.
On May 5, 1998, Moody's Investor Service, Inc. upgraded the Company's senior
secured debt rating from "A3" to "A2". The Company's other service debt
ratings are "A" from Standard and Poor's Corporation, Duff & Phelps Credit
Rating Co. and Fitch/IBCA.
On September 8, 1998, the Company issued and sold 5.93% Medium Term Notes under
its Medium Term Note Program. The principal amount of the notes is $15 million
and matures on September 10, 2001. The net proceeds to the Company were
$14,947,500 or 99.65%.
The Company intends to refinance its 8.375% series NYSERDA bonds ($16.7
million)on or soon after their call date on December 1, 1998 at a lower cost.
EARNINGS PER SHARE
Earnings per share of common stock were $.77 for the third quarter of 1998, as
compared to $.72 for the third quarter of 1997, an increase of 7%. Earnings
per share of common stock were $2.38 for the nine months ended September 30,
1998, as compared to $2.46 for the nine months ended September 30, 1997, a
decrease of 3%.
The increase in earnings per share for the quarter ended September 30, 1998, as
compared to the same period in 1997, resulted primarily from the increased
electric and gas net operating revenues largely due to increased electric
sales to residential, commercial and industrial customers and also, sales to
other utilities. These increases were partially offset by the non-recurring
provision for the non-recoverable portion of a purchased power contract. The
increase in gas net operating revenues results primarily from favorable
reconciling adjustments to gas costs collected from customers through the
company's gas cost adjustment. Also contributing to the increased earnings is
the combined effect of decreased property taxes and decreased payroll taxes
and the favorable impact of the Company's common stock repurchase program.
Offsetting these
- 16 -
<PAGE>
increases were increased operation and maintenance costs in 1998 resulting
from increased output of the Company's electric generating plants and the net
effect of various other items, including increased depreciation expense on the
Company's plant and equipment.
The decrease in per share earnings for the nine months ended September 30, 1998,
as compared to the same period in 1997, resulted largely from a decrease in
electric net operating revenues due primarily to the non-recurring final
provision for the non-recoverable portion of a purchased power contract. Also
impacting this decrease was the net effect of various other items, including
increased depreciation expense on the Company's plant and equipment and the
favorable impact of the Company's common stock repurchase program.
- 17 -
<PAGE>
RESULTS OF OPERATIONS
The following table reports the variation in the results of operations for the
three months and the nine months ended September 30, 1998 compared to the same
periods for 1997:
<TABLE>
<CAPTION>
3 MONTHS ENDED SEPTEMBER 30,
INCREASE
1998 1997 (DECREASE)
---- ---- ----------
(Thousands of Dollars)
<S> <C> <C> <C>
Operating Revenues............... $125,723 $123,507 $ 2,216
Operating Expenses............... 107,373 105,596 1,777
------- ------- -------
Operating Income................. 18,350 17,911 439
Other Income..................... 2,201 2,019 182
------- ------- -------
Income before Interest Charges... 20,551 19,930 621
Interest Charges................. 6,741 6,562 179
------- ------- -------
Net Income....................... 13,810 13,368 442
Dividends Declared on Cumulative
Preferred Stock................. 807 807 -
------- ------- -------
Income Available for Common Stock $ 13,003 $ 12,561 $ 442
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
9 MONTHS ENDED SEPTEMBER 30,
INCREASE
1998 1997 (DECREASE)
---- ---- ----------
(Thousands of Dollars)
<S> <C> <C> <C>
Operating Revenues............... $381,711 $393,987 $(12,276)
Operating Expenses............... 324,955 335,433 (10,478)
------- ------- -------
Operating Income................. 56,756 58,554 (1,798)
Other Income..................... 6,464 6,441 23
------- ------- -------
Income before Interest Charges... 63,220 64,995 (1,775)
Interest Charges................. 20,202 19,679 523
------- -------- -------
Net Income....................... 43,018 45,316 (2,298)
Dividends Declared on Cumulative
Preferred Stock................. 2,422 2,422 -
------- ------- -------
Income Available for Common Stock $ 40,596 $ 42,894 $ (2,298)
======= ======= =======
</TABLE>
- 18 -
<PAGE>
OPERATING REVENUES
Operating revenues increased $2.2 million (2%) for the third quarter of 1998 as
compared to the third quarter of 1997 and decreased $12.3 million (3%) for the
nine months ended September 30, 1998. Details of these revenue changes by
electric and gas departments are as follows:
INCREASE (DECREASE) FROM PRIOR PERIOD
THIRD QUARTER NINE MONTHS
Electric Gas Electric Gas
--------- --------- --------- ----------
(Thousands of Dollars)
Customer Sales ........... $ 4,842 $ (3,228)* $ 3,199 $(10,794)*
Sales to Other
Utilities ............... 2,484 (4) 6,191 512
Fuel and Gas Cost
Adjustment .............. 468 28 1,577 (8,325)
Deferred Revenues ........ (2,445) 256 (5,170) 1,648
Miscellaneous** .......... (178) (7) (1,060) (54)
-------- -------- -------- --------
$ 5,171 $ (2,955) $ 4,737 $(17,013)
======== ======== ======== ========
*Both firm and interruptible revenues.
**Includes revenues from delivery service of electric for retail access
customers, transportation of customer-owned gas and sales to customers outside
the Company's service territory.
SALES
The Company's sales vary seasonally in response to weather. Generally electric
revenues peak in the summer and gas revenues peak in the winter.
Total kilowatt-hour sales of electricity within the Company's service territory
increased 6%, while firm sales of natural gas decreased 9%, for the third
quarter of 1998 as compared to the third quarter of 1997. For the nine months
ended September 30, 1998, electric sales increased 2% and firm gas sales
decreased 11% compared to the same period last year. Changes in sales from
last year by major customer classifications, including interruptible gas
sales, are set forth below. Also indicated are changes related to
transportation of customer-owned gas:
- 19 -
<PAGE>
INCREASE (DECREASE) FROM PRIOR PERIOD
THIRD QUARTER NINE MONTHS
Electric Gas Electric Gas
-------- --- -------- ----
Residential ......................... 7 (9)% 1 (10)%
Commercial .......................... 6 -- 3 (8)
Industrial .......................... 6 (52) 1 (28)
Interruptible ....................... N/A (47) N/A (44)
Transportation of
Customer-owned
Gas ................................ N/A 1 N/A 5
Delivery service of electric retail access customers first began in the quarter
ended March 31, 1998. The related volume was .9% and .4% of total own
territory sales for the quarter and for the nine months ended September 30,
1998, respectively.
Sales of electricity to residential customers in the third quarter of 1998
increased 7% primarily from an increase in usage per customer. Commercial
sales in the third quarter of 1998 increased 6% as compared to last year due
to the combined effect of a 3% increase in usage per customer and a 3%
increase in the number of customers. Electric sales to industrial customers
increased 6% in the third quarter of 1998 due primarily to an increase in
usage by a large industrial customer.
For the nine months ended September 30, 1998, sales of electricity to
residential customers increased 1% due to an increase in usage per customer.
Sales to commercial customers increased 3% due to the combined effect of a 2%
increase in the number of customers and a 1% increase in the usage per
customer. Electric sales to industrial customers increased 1% for such
nine-month period.
Sales of gas to residential customers for the third quarter of 1998 decreased 9%
due to the net effect of a 10% decrease in usage per customer and a 1%
increase in the number of customers. Sales of gas to commercial customers for
the third quarter of 1998 remained flat due to the net effect of a 4%
increase in the number of customers and a 4% decrease in usage per customer.
Firm gas sales to industrial customers decreased 52% for the third quarter of
1998 when compared to the same period in 1997, due primarily to decreased
usage by a large industrial customer and the conversion of a number of
industrial customers to gas transportation service.
For the nine months ended September 30, 1998, residential gas sales decreased
10% due to a decrease in usage per customer.
- 20 -
<PAGE>
Commercial gas sales decreased 8% due to the net effect of a 11% decrease in
usage per customer and a 3% increase in the number of customers. Firm gas
sales to industrial customers for the nine months ended September 30, 1998
decreased 28% due largely to a decrease in usage by a large industrial
customer and the conversion of a number of industrial customers to gas
transportation service.
Interruptible gas sales decreased 47% in the third quarter of 1998 and 44% for
the nine months ended September 30, 1998, due largely to a decrease in boiler
gas usage for electric generation.
Transportation gas volumes increased 1% for the third quarter and increased 5%
for the nine months ended September 30, 1998, due primarily to the conversion
of a number of industrial customers to gas transportation service.
-21 -
<PAGE>
OPERATING EXPENSES
Thefollowing table reports the variation in the operating expenses for the
three months and nine months ended September 30, 1998 compared to the same
periods for the prior year:
INCREASE (DECREASE) FROM PRIOR PERIOD
THIRD QUARTER NINE MONTHS
--------------- -----------
Amount Percent Amount Percent
------ ------- ------ -------
(Dollars in Thousands)
Operating Expenses
Fuel and Purchased
Electricity ........ $ 4,679 15 % $ 8,530 10%
Purchased Natural Gas (3,533) (44) (15,884) (34)
Other Expenses of
Operation .......... 470 2 (1,030) (1)
Maintenance ......... (55) (1) (597) (3)
Depreciation and
Amortization ....... 509 5 1,363 4
Taxes, Other than
Federal Income Tax . (790) (5) (1,692) (3)
Federal Income Tax .. 497 7 (1,168) (5)
-------- -------- -------- --------
Total .......... $ 1,777 2% $(10,478) (3)%
======== ======== ======== ========
Fuel and purchased electricity costs increased $4.7 million (15%) for the third
quarter of 1998 and $8.5 million (10%) for the nine months ended September
30, 1998, resulting from the combined effect of higher electric sales
(including sales to other utilities) and the non-recurring final provision
for the non-recoverable portion of a purchased power contract. Purchased
natural gas costs decreased $3.5 million (44%) for the third quarter of 1998
resulting primarily from lower interruptible gas sales for usage as boiler
fuel. Also contributing to this decrease was the favorable reconciling
adjustments to gas costs collected from customers through the Company's gas
cost adjustment. Purchased natural gas costs decreased $15.9 million (34%)
for the nine months ended September 30, 1998 resulting primarily from the
combined effect of lower interruptible gas sales for usage as boiler fuel, a
decrease in the restoration of deferred gas costs related to the Company's
gas cost adjustment and a reduction in the base cost of gas resulting from
decreased own territory firm sales.
COMMON STOCK DIVIDENDS
Reference is made to the caption "Common Stock Dividends and Price Ranges" on
Page 37 of Item 7 to the Company's 10-K
- 22 -
<PAGE>
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 September 25,
1998, the Board of Directors of the Company declared a quarterly dividend of
$.54 per share, payable November 2, 1998 to shareholders of record as of
October 9, 1998, representing an increase of $.005, or 1%, over the $.535 per
share level established one year ago.
OTHER MATTERS
FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q and the documents incorporated by reference
may 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). These
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. A number of important factors affecting the Company'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 Company's Annual Report on Form 10-K for the year ended
December 31, 1997 and all documents subsequently filed with the Securities
and Exchange Commission.
Given these uncertainties, undue reliance should not be placed on these
forward-looking statements.
THE YEAR 2000 ISSUE
Overview
Thedate change in the year 2000 has the potential to disrupt the proper
functioning of computer programs and embedded system chips which employ two
digit year representation and may be unable to distinguish between the year
1900 and the year 2000. This problem is believed to be widespread and
expensive to correct throughout the economy.
The Company has established its "Year 2000 Project" ("Project") to analyze and,
if necessary, correct this problem as it
- 23 -
<PAGE>
relates to all effected Company operations. The Project is a high-priority
undertaking, encompassing all aspects of the Company's operations. A Project
Committee comprised of Company officers reports directly to the Chief
Executive Officer on a monthly basis on the status of its efforts to assess
and remediate mission critical and business critical systems. The Project is
currently on schedule and completion is expected by July 1999. In addition,
the Company is coordinating its efforts with industry organizations to
remediate potential problems on the electric transmission grid and interstate
gas pipeline system.
Scope & Status
The Company's Year 2000 Project began in 1995. Project Teams were established
for each major area of operations to address computer hardware and software
operating systems and infrastructure, information systems applications,
telecommunication services, digital systems and devices with embedded
processors. In addition, contacts were established with major suppliers to
assess their Year 2000 compliance status.
As of September 30, 1998, the inventory and assessment of substantially all of
the Company mission critical and business critical systems and programs has
been completed. Mission critical are those systems with a potential to affect
the delivery of electricity and natural gas to the customer, the safety of
individuals and the integrity of the environment. Business critical systems
are those with the potential to affect the financial and operational
infrastructure of the Company.
Remediation, testing and implementation of modifications to Company systems to
achieve Year 2000 compliant status for critical systems are on schedule.
Evaluation of the Year 2000 compliant status of key suppliers is also on
schedule. An independent review of the Company's Year 2000 project is
scheduled for completion by June 30, 1999.
Risks
Given the complexity of Year 2000 issues in the gas and electric industry and
related industries, even the most comprehensive program cannot assure that
unforeseen problems will not occur. Therefore contingency plans are under
development. The Company is unable at this time to determine whether any
unforeseen impacts could have a material effect on the Company's financial
condition.
- 24 -
<PAGE>
Costs
The total cost of the Company's Year 2000 Project, which is estimated at $3
million, is not expected to have a material effect on the Company's financial
position.
- 25 -
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Asbestos Litigation. For a discussion of lawsuits against the Company
involving asbestos, see Note 9 - "Commitments and Contingencies", to the
Consolidated Financial Statements of the Company's 10-K Report under the caption
"Asbestos Litigation".
Since 1987, the Company has been involved as a defendant in the "mass
tort" asbestos litigation in the United States District Courts for the Southern
and Eastern Districts of New York and the New York State Supreme Court, County
of New York. This litigation involves thousands of plaintiffs who seek large
amounts of compensatory and punitive damages from numerous defendants for deaths
and injuries allegedly caused by exposure to asbestos. As of September 30, 1998,
the Company has been a defendant in approximately 1,475 such individual
lawsuits. Many of these lawsuits have been disposed of without any payment by
the Company, or for immaterial amounts. As of September 30, 1998, 542 such
individual lawsuits were pending against the Company. While the amounts demanded
in all the remaining lawsuits total several billions of dollars, it is the
Company's opinion, based on its experience in such litigation and on information
and relevant circumstances known to it at this time, that these lawsuits will
not have a material adverse effect on the Company's financial position. However,
if the Company 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 Company if the Company could not recover all or a
substantial portion thereof in rates. The Company's insurance does not extend to
punitive damages.
Former Manufactured Gas Plant Facilities. Reference is made to Note 9,
"Commitments and Contingencies", to the Consolidated Financial Statements of the
Company's 10-K Report, under the caption "Former Manufactured Gas Plant
Facilities", and to the similar caption in Part II, Item 1 of the Company's
Quarterly Report, on Form 10-Q, for the quarterly period ended June 30, 1998,
for a description of a lawsuit filed by the City of Newburgh, New York (City)
against the Company involving one of the Company's former manufactured gas plant
facilities.
The cost to the Company of constructing a clarifier at the City's
sewage treatment plant and related activities, as described in said Quarterly
Report, is now estimated to be
- 26 -
<PAGE>
approximately $2.9 million. A trial date for the issues remaining in this
litigation has now been set by the Court for November 30, 1998.
Item 4. Submission of Matters to a Vote of Security Holders
Reference is made to the Company's Current Report, on Form 8-K, dated
October 9, 1998, for a discussion of the results of the matter submitted to a
vote of the holders of the Company's Common Stock at a special meeting of
shareholders held on September 25, 1998.
Item 6. Exhibits and Reports on 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
--------------------
(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. During the period covered by this Report on
Form 10-Q, the Company filed the following Current Reports on Form 8-K:
(i) A Report, dated October 9, 1998, describing the
results of the matter submitted to a vote of the
holders of the Company's Common Stock at a special
meeting of shareholders held on September 25, 1998.
(ii) A Report, dated July 24, 1998, as amended by Form
8-K/A Amendment No. 1, dated August 14, 1998,
describing (a) the Order of the PSC issued and
effective June 30, 1998, explaining in greater detail
the Abbreviated Order of the PSC, issued and
effective February 19, 1998, which February 19, 1998
Order modified and, as modified, approved the Amended
and Restated Settlement Agreement,
- 27 -
<PAGE>
dated January 2, 1998, entered into among the
Company, the PSC Staff and others as part of the
PSC's "Competitive Opportunities" proceeding, (b) the
Order, dated June 24, 1998, of the Federal Energy
Regulatory Commission conditionally authorizing the
establishment of an Independent System Operator by
the member systems of the New York Power Pool, and
(c) effective August 1, 1998, Paul J. Ganci's
appointment by the Company's Board of Directors as
President and Chief Executive Officer. John E. Mack,
III, formerly Chairman of the Board and Chief
Executive Officer, continues as Chairman of the
Board.
- 28 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company 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: November 6, 1998
-29-
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
<TABLE>
<CAPTION>
1998 YEAR ENDED DECEMBER 31,
-------------------------------- ------------------------------------------
3 Months 9 Months 12 Months 1997(2) 1996(2) 1995 1994
Ended Ended Ended -------- -------- ---- ----
SEPT. 30 SEPT. 30 SEPT. 30
--------------------------------
Earnings:
<S> <C> <C> <C> <C> <C> <C> <C>
A. Net Income $ 13,810 $ 43,018 $ 52,789 $ 55,086 $ 56,082 $ 52,722 $ 50,929
B. Federal Income Tax 7,789 23,561 24,893 26,237 31,068 28,687 26,806
-------- -------- -------- -------- -------- -------- --------
C. Earnings before Income Taxes 21,599 66,579 77,682 81,323 87,150 81,409 77,735
======== ======== ======== ======== ======== ======== ========
D. Total Fixed Charges 1 7,099 21,296 28,348 27,670 28,277 30,433 32,679
-------- -------- -------- -------- -------- -------- --------
E. Total Earnings $ 28,698 $ 87,875 $106,030 $108,993 $115,427 $111,842 $110,414
======== ======== ======== ======== ======== ======== ========
Preferred Dividend Requirements:
F. Allowance for Preferred Stock
Dividends Under IRC Sec 247 $ 807 $ 2,422 $ 3,230 $ 3,230 $ 3,230 $ 4,903 $ 5,127
G. Less Allowable Dividend Deduction 32 96 127 127 127 528 528
-------- -------- -------- -------- -------- -------- --------
H. Net Subject to Gross-up 775 2,326 3,103 3,103 3,103 4,375 4,599
I. Ratio of Earnings before Income
Taxes to Net Income (C/A) 1.564 1.548 1.472 1.476 1.554 1.544 1.526
-------- -------- -------- -------- -------- -------- --------
J. Pref. Dividend (Pre-tax) (HxI) 1,212 3,601 4,568 4,580 4,822 6,755 7,018
K. Plus Allowable Dividend Deduction 32 96 127 127 127 528 528
-------- -------- -------- -------- -------- -------- --------
L. Preferred Dividend Factor 1,244 3,697 4,695 4,707 4,949 7,283 7,546
M. Fixed Charges (D) 7,099 21,296 28,348 27,670 28,277 30,433 32,679
-------- -------- -------- -------- -------- -------- --------
N. Total Fixed Charges
and Preferred Dividends $ 8,343 $ 24,993 $ 33,043 $ 32,377 $ 33,226 $ 37,716 $ 40,225
======== ======== ======== ======== ======== ======== ========
O. Ratio of Earnings to Fixed
Charges (E/D) 4.04 4.13 3.74 3.94 4.08 3.68 3.38
======== ======== ======== ======== ======== ======== ========
P. Ratio of Earnings to Fixed Charges
and Preferred Dividends (E/N) 3.44 3.52 3.21 3.37 3.47 2.97 2.74
======== ======== ======== ======== ======== ======== ========
</TABLE>
1 Includes a portion of rent expense deemed to be representive of the
interest factor.
2 Restated to properly reflect the exclusion of AFUDC from fixed charges.
<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> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> $930,561
<OTHER-PROPERTY-AND-INVEST> $52,932
<TOTAL-CURRENT-ASSETS> $118,889
<TOTAL-DEFERRED-CHARGES> $157,666
<OTHER-ASSETS> $0
<TOTAL-ASSETS> $1,260,048
<COMMON> $87,775
<CAPITAL-SURPLUS-PAID-IN> $253,157
<RETAINED-EARNINGS> $133,674
<TOTAL-COMMON-STOCKHOLDERS-EQ> $474,606
$35,000
$21,030
<LONG-TERM-DEBT-NET> $356,790
<SHORT-TERM-NOTES> $0
<LONG-TERM-NOTES-PAYABLE> $0
<COMMERCIAL-PAPER-OBLIGATIONS> $0
<LONG-TERM-DEBT-CURRENT-PORT> $21,696
$0
<CAPITAL-LEASE-OBLIGATIONS> $0
<LEASES-CURRENT> $0
<OTHER-ITEMS-CAPITAL-AND-LIAB> $350,926
<TOT-CAPITALIZATION-AND-LIAB> $1,260,048
<GROSS-OPERATING-REVENUE> $381,711
<INCOME-TAX-EXPENSE> $24,294
<OTHER-OPERATING-EXPENSES> $300,661
<TOTAL-OPERATING-EXPENSES> $324,955
<OPERATING-INCOME-LOSS> $56,756
<OTHER-INCOME-NET> $6,464
<INCOME-BEFORE-INTEREST-EXPEN> $63,220
<TOTAL-INTEREST-EXPENSE> $20,202
<NET-INCOME> $43,018
$2,422
<EARNINGS-AVAILABLE-FOR-COMM> $40,596
<COMMON-STOCK-DIVIDENDS> $27,462
<TOTAL-INTEREST-ON-BONDS> $0
<CASH-FLOW-OPERATIONS> $80,700
<EPS-PRIMARY> $2.38
<EPS-DILUTED> $0
</TABLE>
