UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995 Commission file number 1-5663
Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
LOUISIANA 72-0244480
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2030 DONAHUE FERRY ROAD, PINEVILLE, LOUISIANA 71360-5226
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 318/484-7400
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
COMMON STOCK, $2.00 PAR VALUE New York Stock Exchange
Pacific Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
TITLE OF EACH CLASS
Cumulative Preferred Stock, $100 Par Value
4.50% 4.50%, Series of 1955
4.65%, Series of 1964
4.75%, Series of 1965
Convertible, Series of 1991
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of February 19, 1996, the aggregate value of the Registrant's voting stock
held by non-affiliates was $598,490,824. The Registrant's Cumulative Preferred
Stock is not listed on any exchange, nor are prices for the Cumulative Preferred
Stock quoted on NASDAQ; therefore, its market value is not readily determinable
and is not included in the foregoing amount.
As of March 15, 1996, there were 22,440,634 shares outstanding of the
Registrant's Common Stock, par value $2.00 per share.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the year ended
December 31, 1995, furnished to the Securities and Exchange Commission pursuant
to Rule 14a - 3(b) under the Securities Exchange Act of 1934 (1995 Annual Report
to Shareholders), are filed as Exhibit 13 to this report and incorporated by
reference into Part II herein. Portions of the Registrant's definitive Proxy
Statement dated March 5, 1996, for the Annual Meeting of Shareholders to be held
on April 19, 1996, are incorporated by reference into Part III herein.
TABLE OF CONTENTS
PART I
Page
----
Item 1. Business
General ............................................ 1
Electric Operations ................................ 1
Regulatory and Environmental Matters ............... 6
Item 2. Properties ......................................... 12
Item 3. Legal Proceedings .................................. 13
Item 4. Submission of Matters to a Vote
of Security Holders .............................. 13
Executive Officers of the Registrant ............... 14
PART II
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters .................. 16
Item 6. Selected Financial Data ............................ 16
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of
Operations ....................................... 17
Item 8. Financial Statements and
Supplementary Data ............................... 17
Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure ............................. 18
PART III
Item 10. Directors and Executive Officers
of the Registrant ................................ 18
Item 11. Executive Compensation ............................ 18
Item 12. Security Ownership of Certain Beneficial
Owners and Management ............................ 18
Item 13. Certain Relationships and Related
Transactions ..................................... 18
PART IV
Item 14. Exhibits, Financial Statement
Schedule, and Reports on Form 8-K ................ 19
ITEM 1. BUSINESS
GENERAL
Central Louisiana Electric Company, Inc. (the Company) was incorporated in
1934 under the laws of the State of Louisiana and is engaged principally in the
generation, transmission, distribution and sale of electric energy to
approximately 221,000 customers in 63 communities and contiguous rural areas in
a 14,000 square-mile region in the State of Louisiana. At December 31, 1995 the
Company employed 1,192 persons. The Company's mailing address is P. O. Box 5000,
Pineville, Louisiana 71361-5000, and its telephone number is (318) 484-7400.
ELECTRIC OPERATIONS
CERTAIN FACTORS AFFECTING THE COMPANY'S ELECTRIC OPERATIONS
As an electric utility, the Company has been affected, to varying degrees, by
a number of factors affecting the electric utility industry in general. These
factors include increasingly competitive business conditions, the cost of
compliance with environmental regulations, and changes in the federal regulation
of the generation and transmission of electricity. For a discussion of various
regulatory changes and competitive forces affecting the Company and other
electric utilities, see "Regulatory and Environmental Matters - Energy Policy
Act of 1992" - "Competition", and" - Regulatory matters" below.
POWER GENERATION
The Company operates and either owns or has an ownership interest in four
steam electric generating stations and a gas turbine. The Company is the sole
owner of Coughlin Power Station, Teche Power Station and Rodemacher Power
Station Unit 1. The Company owns a 50% interest in Dolet Hills Power Station
Unit 1 (Dolet Hills Unit 1), and a 30% interest in Rodemacher Power Station Unit
2 (Rodemacher Unit 2). In December 1995, the Company assumed formal ownership of
the city of Franklin's electrical system, including a 7 MW gas turbine. At
December 31, 1995 the Company's aggregate electric generating capacity was
1,693,000 kilowatts (excluding the Company's 20,000 kilowatts of firm purchases
from Sabine River Authority). The following table sets forth certain information
with respect to the Company's generating facilities.
1
<TABLE>
<CAPTION>
YEAR CAPACITY TYPE OF
OF AT FUEL
GENERATING INITIAL 12/31/95 USED FOR
GENERATING STATION UNIT # OPERATION (KILOWATTS) GENERATION (1)
- ------------------------- --------- -------- ---------- --------------
<S> <C> <C> <C> <C>
Franklin Gas Turbine ............... 1973 7,000 gas
Coughlin Power Station ............. 6 1961 110,000 gas/oil(standby)
7 1966 224,000 gas/oil(standby)
Teche Power Station ................ 1 1953 23,000 gas
2 1956 48,000 gas
3 1971 359,000 gas/oil(standby)
Rodemacher Power Station ........... 1 1975 440,000 gas/oil
2 1982 157,000(2) coal/gas
Dolet Hills Power Station .......... 1 1986 325,000(3) lignite
---------
Total Generating Capability 1,693,000
=========
</TABLE>
- ------------
(1) Where oil is used on a standby basis, capacity may be reduced.
(2) Represents the Company's 30% interest in the capacity of Rodemacher Unit 2,
a 523,000-kilowatt generating unit.
(3) Represents the Company's 50% interest in the capacity of Dolet Hills Unit 1,
a 650,000-kilowatt generating unit.
FUEL
The following table sets forth, for the periods indicated, the percentages of
power generated from various fuels at the Company's electric generating plants,
the cost of fuel used per kilowatt hour (KWH) attributable to each such fuel and
the weighted average fuel cost per KWH.
<TABLE>
<CAPTION>
LIGNITE COAL GAS FUEL OIL WEIGHTED
-------------------- -------------------- -------------------- -------------------- AVERAGE
COST COST COST COST COST
PER PERCENT PER PERCENT PER PERCENT PER PERCENT PER
KWH OF KWH OF KWH OF KWH OF KWH
YEAR (MILLS) GENERATION (MILLS) GENERATION (MILLS) GENERATION (MILLS) GENERATION (MILLS)
- ---- ------- ---------- ------- ---------- ------- ---------- ------- ---------- -------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995 14.86 35.9 18.88 14.3 19.48 49.8 24.77 0.0 17.74
1994 15.09 36.5 19.53 16.0 22.28 47.4 21.00 0.1 19.22
1993 15.50 32.7 20.28 19.5 25.11 47.8 -- -- 21.02
1992 14.96 37.0 20.07 16.7 21.48 46.3 -- -- 18.83
1991 14.96 37.2 21.07 15.2 19.94 47.6 -- -- 18.26
</TABLE>
For information with respect to the Company's ability to pass through
changes in costs of fuel to its customers, see "Regulatory and Environmental
Matters - Rates" below.
Natural Gas Supply
During 1995, the Company purchased a total of 33,034 billion British
thermal units (MMMBtu) of natural gas for the generation of electricity. The
annual and average per-day quantities of gas purchased by the Company from each
supplier are shown in the table below.
2
AVERAGE
AMOUNT
1995 PURCHASED PERCENT
PURCHASES PER DAY OF TOTAL
NATURAL GAS SUPPLIER (MMMBTU) (MMMBTU GAS USED
- -------------------- ------ ----- -----
NorAm Energy Services, Inc. ............... 15,078 41.3 45.6
Louisiana Intrastate Gas Corporation ...... 13,893 38.1 42.1
Louisiana Land and Exploration Company . 1,824 5.0 5.5
Other .................................. 2,239 6.1 6.8
------ ----- -----
33,034 90.5 100.0
====== ===== =====
The Company has contracted with NorAm Energy Services, Inc. (NES), a
subsidiary of NorAm Energy Corp., for the purchase of natural gas to be
delivered to the Company's four power stations. The contract provides for a firm
gas supply through the year 2000 in quantities sufficient to meet the Company's
internal system requirements and contains options designed to enable the Company
to manage the natural gas component of its total fuel costs. The contract may be
terminated earlier under price reopener provisions which may be initiated by
either party in early 1996; and the Company has exercised its option to
renegotiate the price at this time. If the parties do not come to an agreement
the contract terminates effective January 1, 1997. The contract with NES
contains pricing mechanisms for gas purchased thereunder which are intended to
approximate current market prices at the time of purchase and are designed to be
competitive with prices paid by other Louisiana electric utilities. The Company
plans to construct or have constructed lateral pipelines to connect its
generating station(s) to other interstate natural gas pipelines in order to
provide additional sources of supply and transportation prior to the termination
or expiration of the NES contract.
The NES contract also contains minimum and maximum supply obligations
which are based upon the Company's seasonal generation requirements. The Company
is obligated to purchase certain quantities of gas from NES on an annual basis.
A minimum or base quantity of 20,000 MMMBtu of gas must be purchased during a
year, adjusted by plus or minus 10% at the option of the Company each year, if
all gas is purchased from NES. The Company exercised its option to reduce the
20,000 MMMBtu by 10% for 1995, in effect reducing the 1995 minimum gas purchase
to 18,000 MMMBtu. A minimum of 25,000 MMMBtu must be purchased during a year if
any gas is purchased from third party suppliers, unless a lesser amount is
permitted under the contract. In 1995, the Company met its minimum purchase
obligations under the contract. The contract also allows for the purchase of
natural gas from suppliers other than Louisiana Intrastate Gas Corporation (LIG)
or Louisiana Land and Exploration Company (LL&E), if the gas is purchased for
sales to other utilities.
The Company has a contract with LIG for the sale and transportation of
natural gas to the Company's power stations. A total of 13,893 MMMBtu of "spot"
and surplus gas was purchased from LIG during 1995 under sale and transportation
agreements. The month-to-month contract with LIG provides for the purchase of
spot gas for the Company's internal system requirements when the price of such
gas is less than that of energy purchases from other utilities and provides for
the purchase of surplus gas, if and when it is available, for energy sales to
other utilities. The Company has a separate contract with LIG which provides for
the transportation of gas purchased by the Company from third party suppliers or
under certain circumstances if NES were to fail to meet its contract
obligations.
3
The Company has contracted with LL&E for the purchase of up to 5 MMMBtu of
gas per day on a month-to-month basis, subject to termination by either party.
The purchase price of the gas is based on a monthly index plus a markup and
transportation fee. Purchased gas is transported via the intrastate pipeline
system owned and operated by LIG.
The Company has never incurred a liability for any gas not taken under the
take-or-pay provisions of its gas supply agreements. The Company believes that
it will be able either to renew its gas supply contracts as they terminate or
expire or enter into substitute contractual arrangements with other natural gas
suppliers. Although natural gas has been relatively plentiful in recent years,
supplies available to the Company and other consumers are vulnerable to
disruption due to weather conditions, transportation disruption, price changes
and other events. Large boiler-fuel users of natural gas, including electric
utilities, generally have the lowest priority among gas users in the event
pipeline suppliers are forced to curtail deliveries due to inadequate supplies.
Thus, supplies of natural gas may become unavailable from time to time, or
prices may increase rapidly in response to temporary supply disruptions. Such
events may require the Company to shift its gas-fired generation to alternative
fuel sources, such as fuel oil, to the extent it has the capability to burn
those alternative fuels. Currently, the Company anticipates that its alternative
fuel capability, combined with its solid-fuel generating resources, is adequate
to meet fuel needs during any temporary interruption of gas supplies.
Coal and Lignite Supply
Substantially all of the coal for Rodemacher Unit 2 is purchased under a
long-term contract with Kerr-McGee Coal Corporation from mines in Wyoming. The
price of coal under the contract is a base price per ton plus a "total
escalation charge" to reflect changes in certain indices specified in the
contract. After purchasing a given annual quantity of base coal (504,000 tons in
1995), the Company has the right to purchase coal from third parties in the spot
market, and Kerr-McGee has the right to meet the terms of the proposed purchase
if it chooses to do so. The coal is transported to the Rodemacher Unit 2 site
under terms of a long-term rail transportation contract in unit trains which are
leased by the Company pursuant to various long-term leases.
Substantially all of the lignite used to fuel Dolet Hills Unit 1 is
obtained under two long-term agreements. The Company and Southwestern Electric
Power Company (SWEPCO), each a 50% owner of Dolet Hills Unit 1, have entered
into agreements pursuant to which each acquired an undivided 50% interest in the
other's leased and owned lignite reserves in northwestern Louisiana. The Company
and SWEPCO have also entered into a long-term agreement with the Dolet Hills
Mining Venture for the mining and delivery of such lignite reserves, which
reserves are expected to provide a substantial portion of the fuel requirements
for the projected operating life of Dolet Hills Unit 1. The price of lignite
delivered pursuant to the agreement is a base price per ton, subject to
escalation based on certain inflation indices, plus specified "pass-through"
costs. Additional spot lignite may be obtained through competitive bidding.
Additionally, the Company and SWEPCO, have entered into a long-term
agreement with Red River Mining Co., a joint venture of the North American Coal
Corporation and Phillips Coal Company, which provides for base contract
purchases and spot purchases of lignite. The Company's minimum annual purchase
requirement is 275,000 tons. The base lignite price under the contract is a base
price per MMMBtu, subject to escalation, plus certain pass-through costs, while
the spot lignite price is determined through competitive bidding.
4
The continuous supply of coal and lignite from the mining sources may be
subject to interruption due to adverse weather conditions or other factors which
may disrupt mining operations or transportation. At December 31, 1995, the
Company's coal inventory at Rodemacher Unit 2 was approximately 72,000 tons
(about a 33-day supply) and the Company's lignite inventory at Dolet Hills
Unit 1 was approximately 210,000 tons (about a 37-day supply).
OIL SUPPLY
The Company stores fuel oil as an alternative fuel source. Rodemacher
Power Station has storage capacity for an approximate 75-day supply, and other
generating stations have storage capacity totaling about a 20-day supply.
However, in accordance with the Company's current fuel oil inventory practices,
at December 31, 1995, the Company had between 5 to 10 days supply of fuel oil
stored at its generating stations. During 1995, 1,147 barrels of fuel oil were
burned. The Company has been able to obtain fuel oil by spot purchases as
needed.
POWER PURCHASES
The Company purchases electric energy from neighboring utilities when the
price of the energy purchased is less than the cost to the Company of generating
such energy from its own facilities. Additionally, the Company has a long-term
contract under which it purchases a small percentage of its total energy
requirements from a hydroelectric generating plant. During 1995, the Company
purchased 1,430 million KWH of electricity, or approximately 19% of its total
energy requirements.
SALES
The Company is a "public utility" engaged principally in the generation,
transmission, distribution and sale of electricity within Louisiana. For further
information regarding the Company's generating stations and its transmission and
distribution facilities, see "Power Generation" above and "Properties" in Item 2
of this report. The following table sets forth information concerning sales by
the Company to various classes of customers for each of the last three years.
SALES (MILLION KWH)
-------------------------------
1995 1994 1993
----- ----- -----
Residential ............................. 2,763 2,532 2,470
Commercial .............................. 1,265 1,180 1,109
Industrial .............................. 2,227 2,030 2,005
Other retail ............................ 502 487 463
Sales for resale ........................ 360 210 175
----- ----- -----
Total sales to regular customers ..... 7,117 6,439 6,222
Short-term sales to other utilities ..... 68 174 266
----- ----- -----
Total kilowatt-hour sales ............ 7,185 6,613 6,488
===== ===== =====
The Company's 1995 system peak demand occurred in August and was 1,473,000
kilowatts. Sales and peak demand are affected by seasonal demand influenced by
weather and are generally highest during the summer air-conditioning and winter
heating seasons. The financial effects of seasonal demand on the Company's
quarterly operating results are listed in Note L to the Consolidated Financial
Statements on page 32 of the 1995 Annual Report to Shareholders, which is filed
as Exhibit 13 to this report and incorporated herein by reference.
5
The Company expects the peak demand on the system to grow at a compound
annual rate of approximately 1.9% over the next ten years. The Company's
capacity reserve margin for 1995 was 14.0%. The Company believes it can
economically meet the anticipated growth in customer demand by such measures as
refurbishing, by the year 2000, two existing gas-fired units not currently being
used or by purchasing the needed capacity on the wholesale market.
No customer accounted for 10% or more of the Company's revenues in 1995.
Additional information regarding the Company's sales and revenues is set forth
"Results of Operations" in "Management's Discussion and Analysis" on pages 15
and 16 of the 1995 Annual Report to Shareholders, which is filed as Exhibit 13
to this report and incorporated herein by reference.
CONSTRUCTION AND FINANCING
For information on the Company's construction program, financing and
related matters, see "Financial Condition" under "Management's Discussion and
Analysis" on pages 17 through 19 of the 1995 Annual Report to Shareholders,
which is filed as Exhibit 13 to this report and incorporated herein by
reference.
REGULATORY AND ENVIRONMENTAL MATTERS
RATES
Retail electric operations of the Company are subject to the jurisdiction
of the Louisiana Public Service Commission (LPSC) with respect to rates,
standards of service, accounting and other matters. The LPSC establishes base
rates based upon nonfuel costs, including the cost of capital, and sales. The
Company is also subject to the jurisdiction of the Federal Energy Regulatory
Commission (FERC) with respect to certain aspects of its electric business,
including rates for wholesale service and interconnections with, and the
transmission of power for, other utilities. Periodically, the Company has sought
and received increases in base rates from both the LPSC and the FERC to cover
increases in operating costs and costs associated with additions to generation,
transmission and distribution facilities.
The Company's electric rates include a fuel and purchased power cost
adjustment clause which enables the Company to reflect monthly fluctuations in
the cost of fuel and short-term purchased power. Additionally, pretax income
from certain off-system sales to other utilities is passed on to customers
through the fuel cost adjustment clause. Fuel costs and fuel adjustment billing
factors are approved by the LPSC and the FERC. These cost adjustments are based
on costs from earlier periods which result in over or under-recovery for the
period in which the adjustment is made. Any over or under-recovery is corrected
by adjustment in later periods. As of December 31, 1995, the net accumulated
balance of over-recovery on sales subject to the LPSC's jurisdiction was
approximately $3.7 million.
For information concerning an ongoing LPSC earnings review of the Company,
see "Regulatory Matters" below.
6
FRANCHISES
The Company operates under nonexclusive franchise rights granted by
governmental units and enforced by state regulation. These franchises are for
fixed terms, which vary from 10 years to 50 years. In the past, the Company has
been successful in the timely renewal of franchises as each reaches the end of
its term and expires. The citizens of Leesville (approximately 5,000 customers)
voted to approve a 20-year franchise with the Company in 1995.
ENERGY POLICY ACT OF 1992
The Energy Policy Act, adopted in October 1992, significantly changed U.S.
energy policy, including that governing the electric utility industry. The
Energy Policy Act allows the FERC, on a case-by-case basis and with certain
restrictions, to order wholesale transmission access and to order electric
utilities to enlarge their transmission systems. The Energy Policy Act does,
however, prohibit FERC-ordered retail wheeling (I.E., opening up the electric
utility systems to allow customer choice of energy suppliers at the retail
level), including "sham" wholesale transactions. Further, under the Energy
Policy Act an FERC transmission order requiring a transmitting utility to
provide wholesale transmission services must include provisions generally that
permit the utility to recover from the FERC applicant all of the costs incurred
in connection with the transmission services, any enlargement of the
transmission system and associated services.
In addition, the Energy Policy Act revised the Public Utility Holding
Company Act of 1935 (the Holding Company Act) to permit utilities, including
registered holding companies, and non-utilities to form "exempt wholesale
generators" without the principal restrictions of the Holding Company Act. Under
prior law, independent power producers were generally required to adopt
inefficient and complex ownership structures to avoid pervasive regulation under
the Holding Company Act. Management believes that the Energy Policy Act will
make wholesale markets more competitive.
REGULATORY MATTERS
The LPSC has elected to review the earnings of all electric, gas, water
and telecommunication utilities regulated by it to determine if the returns on
equity of these companies may be higher than returns that might be awarded in
the current economic environment. The LPSC began its review of the Company in
August 1995. Resolution of the earnings review, which is not subject to any
statutory or procedural deadlines, is expected in 1996. Although the Company's
rates are among the lowest in the state, the Company cannot predict the outcome
of the LPSC review or the effect on the Company's financial position, results of
operations, or cash flows.
For more information on regulatory matters, including proposed rulemakings
by the FERC on open transmission access, recovery of stranded cost, and
regulatory accounting, affecting the Company, see "Regulatory Matters" in
"Management's Discussion and Analysis" on page 19 of the 1995 Annual Report to
Shareholders, which is filed as Exhibit 13 to this report and incorporated
herein by reference.
7
COMPETITION
The LPSC does not provide exclusive service territories for electric
utilities under its jurisdiction. Instead, retail service is obtained through
long-term, nonexclusive franchises. The LPSC has used a "300 foot rule" for
determining the supplier for new customers. The application of this rule has led
to competition with neighboring utilities for retail customers at the borders of
the Company's service areas. The Company also competes in its service area with
suppliers of alternative forms of energy, some of which may be less costly for
certain applications than electricity. The Company could experience some
competition for electric sales to industrial customers in the form of
cogeneration or independent power producers. However, the Company believes that
its rates, and the quality and reliability of its service, places it in a
favorable competitive position in current retail markets.
Wholesale energy markets, including the market for wholesale electric
power, have been competitive, and are becoming even more so as the number of
competitors in these markets increases as a result of enactment of the Energy
Policy Act. The Company competes with other public utilities, cogenerators and
qualified facilities in other forms for sales of electric power at wholesale.
Under the Energy Policy Act, any participant in the wholesale market can obtain
a FERC order requiring transmission services be provided by the Company under
certain conditions.
Various federal and state legislative and regulatory bodies are
considering a number of issues in addition to those discussed above that will
shape the future of the electric utility industry. Such issues include the
extent of any deregulation of retail electricity sales, the ability of electric
utilities to recover stranded costs, the repeal or modification of the Public
Utility Holding Company Act of 1935, the unbundling of vertically integrated
electric utility companies into separate business segments or companies (i.e.,
transmission, distribution and generation), the role of electric utilities,
independent power producers and competitive bidding in the construction and
operation of new generating capacity, and the pricing of transmission service on
an electric utility's transmission system. Currently, there are no formal
actions relating to these issues pending before either the Louisiana legislature
or the LPSC. While the Company is unable to predict the outcome of such issues
or their effect on the Company's financial position, results of operations or
cash flows at this time, the Company plans to meet the challenges fostered by
this developing environment by continuing its planned course of action.
First, the Company intends to retain its low-cost supplier status by
continuing to enhance customer service while reducing costs. In 1993 the Company
conducted an organizational effectiveness study which resulted in a plan to
improve operations and provide better customer service at lower costs. As a
result of this study, the Company's organizational structure was streamlined in
1993. The second phase of the Company's reorganization plan commenced in May
1995, when the Company began operating a statewide customer call center to
handle customer calls 24 hours a day, seven days a week. Furthermore, the
Company consolidated 25 customer service offices located throughout the service
territory into 10 regional offices. These regional offices only handle walk-in
business while the call center now handles customer business by telephone. For
those customers who prefer to pay their bills in person, the Company implemented
a payment network of about 60 local businesses in the communities where customer
service offices were closed. This arrangement offers customers more locations
and extended business hours for paying their bills.
Second, the Company has adopted a strategy of adding retail customers near
its present retail markets. The Company's efforts to acquire Teche Electric
Cooperative, Inc. (Teche) are part of this strategy. The Company's purchase and
sale aggrement with Teche expires March 31, 1996, and the Company is currently
negotiating to extend the agreement. For more information on acquisition
efforts, see "Results of Operations - Co-op Developments" in "Management's
Discussion and Analysis" on page 16 of the 1995 Annual Report to Shareholders,
which information is filed as Exhibit 13 to this report and incorporated into
Part II herein by reference.
Additionally, in recent years, the Company has been successful in
competing for wholesale sales within its service territory, including short-term
sales to the city of Alexandria and a full requirements sale to the city of St.
Martinville. Sales under the St. Martinville agreement, which is subject to the
jurisdiction of the FERC, began in May 1995 and represent an approximate 13 MW
load. Sales to St. Martinville are expected to provide additional base revenues,
net of facility payments, of about
8
$4 million over the term of the agreement, which extends through December 2000.
This contract was challenged in 1993 by the previous supplier, Louisiana Energy
and Power Authority (LEPA), as well as the city of Lafayette and the American
Public Power Association, with assertions of preferential, discriminatory and
predatory pricing. An initial decision of the FERC's presiding administrative
law judge (ALJ) in February 1995 rejected LEPA's arguments. Under FERC
procedures, LEPA has filed a brief requesting the FERC to revise the initial
decision. The Company has opposed LEPA's brief.
Management believes that the ALJ's initial decision will be upheld.
At this time it is not possible to predict what changes to the electric
utility industry will emerge as a result of any federal or state regulatory and
legislative initiatives or from specific regulatory decisions of the LPSC or the
FERC, or the impact of such changes on the Company. It seems likely that such
changes will ultimately increase the competition the Company faces in supplying
electric energy to its customers.
ENVIRONMENTAL QUALITY
The Company is subject to numerous laws and regulations administered by
federal, state and local authorities to protect the environment. These statutory
and regulatory provisions impose various substantive requirements, the violation
of which may result in substantial fines and penalties. Environmental
requirements continue to increase as a result of new legislation, administrative
actions and judicial interpretations. Therefore, the precise future effects of
existing and potential requirements are difficult to determine. During 1995, the
Company's capital expenditures related to environmental compliance were about
$1.2 million and such expenditures are estimated to total about $1.4 million in
1996.
Air Quality
The State of Louisiana regulates emissions from each of the Company's
generating units through regulations issued by the Air Quality Division (AQD) of
the Louisiana Department of Environmental Quality (LDEQ). In addition, the AQD
implements certain programs initially established by the federal Environmental
Protection Agency (EPA). The AQD requires permits for certain generating units
on which construction commenced after the effective date of the applicable
regulation. The Company's three generating units which are subject to the AQD
permitting rules, Rodemacher Units 1 and 2 and Dolet Hills Unit 1, have received
AQD permits.
The federal Clean Air Act Amendments of 1990 (the Act) established a
regulatory program to address the effects of acid rain and imposed restrictions
on sulfur dioxide (SO2) emissions from certain utility units. The Act
essentially requires that utilities, like the Company, must hold a regulatory
"allowance" for each ton of SO2 emitted beginning in the year 2000. The EPA is
required to allocate a set number of allowances to each affected unit based on
its historic emissions. After the initial allocation the Company requested an
adjustment to the allowance allocation for Rodemacher Unit 2 because of an
extended outage of the unit during one of the years used in the EPA's
calculation. Because the final allowance allocation did not reflect the
requested adjustment, the Company filed a petition for judicial review of the
EPA's action on May 21, 1993 in the United States Court of Appeals for the
District of Columbia Circuit. In October 1995, the EPA signed a settlement
agreement in which it agreed to give Rodemacher Unit 2 the additional allowances
requested. The EPA should issue a notice of proposed rulemaking in 1996
describing the terms of the settlement agreement.
9
The Act also requires the EPA to revise nitrogen oxides (NOx) emission
limits for existing coal-fired boilers. In March 1994, the EPA lowered the NOx
emission rate for certain boilers, including Rodemacher Unit 2 and Dolet Hills
Unit 1. Rodemacher Unit 2 and Dolet Hills Unit 1 will have to meet this new
emission rate by January 1, 2000. The EPA has recently proposed to lower the NOx
emission rate further. The Company is evaluating its options under these NOx
rules, including the option of "early election." Early election would require
the Company to meet the revised NOx rate by 1997 instead of 2000, but would
protect the Company from any future reductions in the NOx permitted emission
rate until 2008. Significant reductions in NOx emission limits may require
modification of burners or other capital improvements at either or both of the
units.
The Act also requires the installation of continuous emission monitoring
systems (CEMS) on seven of the Company's generating units affected by the acid
rain program. Installation of the CEMS has been completed at a cost of
approximately $2.9 million.
Title V of the Act requires certain utility and industrial facilities to
obtain operating permits. States are required to develop operating permit
programs as part of their State Implementation Plans. In November 1993 the LDEQ
promulgated new regulations to comply with the requirements of Title V of the
Act and the EPA approved the state program in 1995. Title V operating permit
applications must be submitted to the LDEQ by October 1996. The operating
permits will contain acid rain permit requirements, as well as other
requirements of existing state and federal air programs.
Title V of the Act allows states to collect fees up to $25 per ton of
regulated emissions to support their operating permit programs. Fee assessments
on the Company's affected units have already increased because of this
provision. The LDEQ currently charges $9 per ton and that amount is expected to
increase.
Water Quality
The Company has received from the EPA all National Pollutant Discharge
Elimination System (NPDES) permits required under the Clean Water Act for
discharges from its four generating stations. NPDES permits have fixed dates of
expiration, and the Company has applied for renewal of these permits within the
applicable time periods. The Office of Water Resources of the LDEQ requires
facilities which discharge wastewater into Louisiana waters to be permitted
under the Louisiana Water Discharge Permit System (LWDPS). The Company has
applied for and received LWDPS permits for its four generating stations.
The most recently issued NPDES permit for Dolet Hills Unit 1 contained an
Administrative Order requiring biomonitoring of the discharge from the
impoundment associated with the Fly Ash/Scrubber Sludge Landfill. Because the
discharge from this impoundment failed all or part of the biomonitoring test at
various times during the testing schedule specified in the permit, the Company
has had discussions with the EPA regarding the results. The Company does not
expect administrative action on the part of the EPA until the NPDES permit is
renewed in 1997. At that time, the EPA may set
10
a biomonitoring limit in the NPDES permit. Violation of that limit may then
require submittal of a plan describing options for reducing certain constituents
in the discharge to the EPA. None of the options, if implemented, would affect
the operation of the unit, or involve a significant increase in the Company's
five-year construction plan.
Solid Waste Disposal
The Solid Waste Division of the LDEQ has adopted regulations and a
permitting system for the management and disposal of solid waste generated by
electric utilities. The Company has received all required permits from the Solid
Waste Division for the on-site disposal of solid waste generated at its
generating stations.
The Company has requested approval of an alternate liner system for the
Dolet Hills landfill facility and has received conditional approval from the
LDEQ. The Company is in the process of obtaining additional information to
submit to the LDEQ, which will make the approval permanent. The exemption, if
granted, is expected to save $360,000 to $900,000 per year in operating costs at
the landfill.
Hazardous Waste Generation
The Company produces certain wastes at its four generating stations and at
other locations which are classified as hazardous. The Hazardous Waste Division
of the LDEQ regulates these wastes and has issued identification numbers to the
sites where such wastes are produced. The Company does not treat, store or
dispose of these wastes on-site; therefore, no permits are required. All
hazardous wastes produced by the Company are disposed of at federally permitted
hazardous waste disposal sites.
PCB Disposal
In 1986 the Company was named a Potentially Responsible Party (PRP) by the
EPA under the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980 (CERCLA) for its involvement at the Rose Chemicals (Rose)
polychlorinated biphenyl (PCP) disposal site in Holden, Missouri. The Company,
along with other PRPs, has entered into two Administrative Orders on Consent
with Region VII of the EPA for the removal of certain PCB materials from the
site. These materials have now been removed and disposed of at federally
permitted PCB disposal facilities. All clean-up activities at the site were
completed in 1995. The removal and disposal were funded by contributions from
the parties involved into a trust fund established for the clean-up. The site
will now be monitored over the next eight to ten years. To date, the Company has
contributed $142,000, net, to the trust fund.
The Company has complied with the requirements established by the EPA for
the general removal from service and disposal of certain equipment containing
PCBs. The EPA has authorized the continued use of such equipment in locations
where its use does not pose an exposure risk, and the Company uses such
equipment only in restricted or remote areas. In 1995, the Company spent
$262,000 on the disposal of PCB materials used in its system.
11
ELECTROMAGNETIC FIELDS
The possibility that exposure to electromagnetic fields (EMF) emanating from
power lines, household appliances and other electric devices may result in
adverse health effects or damage to the environment has been a subject of
current public attention. The scientific research conducted to date concerning
the effects of EMFs has not led to any definitive results, however, such
research is continuing. Lawsuits have arisen in several states against electric
utilities and others alleging that the presence or use of electric power
transmission and distribution lines has an adverse effect on health and/or
property values.
OTHER EVENTS
Cajun Electric Power Cooperative (Cajun)
Cajun, which provides power to the state's 12 electric distribution
cooperatives, is in Chapter 11 bankruptcy. Cajun's energy is supplied from its
share of a nuclear generating unit and several coal and gas-fired units it owns.
With Cajun in bankruptcy proceedings, the disposition of its assets is under
consideration, and the bankruptcy court trustee has asked for bids from
interested parties. In an effort to grow the Company's power supply business,
the Company, along with a non-utility company, submitted a joint bid on March 8,
for Cajun's nonnuclear generation assets and wholesale contracts. If the
Company's bid were to be accepted, closing of the transaction is subject to
approval of the bankruptcy trustee, Cajun's creditors, and various governmental
and regulatory agencies including the LPSC, the Rural Utilities Service, and the
FERC. An estimated 1,683 megawatts of generating capacity is involved as well as
91 megawatts of firm hydroelectric purchases. The wholesale contracts include
1,362 megawatts of wholesale co-op load and 300 megawatts of firm sales. The
Company has no nuclear generation and is not proposing to acquire Cajun's share
of a nuclear generating unit.
ITEM 2. PROPERTIES
All of the Company's electric generating stations and all other operating
properties are located in the State of Louisiana. The Company considers all of
its properties to be well maintained, in good operating condition and suitable
for their intended purposes.
ELECTRIC GENERATING STATIONS
As of December 31, 1995, the Company either owned or had an ownership
interest in four steam electric generating stations and a gas turbine with a
combined electric generating capacity of 1,693,000 kilowatts. For additional
information regarding the Company's generating facilities, see "Electric
Operations - Power Generation" in Item 1 of this report.
SUBSTATIONS
As of December 31, 1995, the Company owned 80 transmission substations and
308 distribution substations.
12
ELECTRIC LINES
As of December 31, 1995, the Company's transmission system consisted of
approximately 67 circuit miles of 500 kilovolt (KV) lines; 454 circuit miles of
230 KV lines; 648 circuit miles of 138 KV lines; and 21 circuit miles of 69 KV
lines. The Company's distribution system consisted of approximately 2,057
circuit miles of 34.5 KV lines and 10,524 circuit miles of other lines.
GENERAL PROPERTIES
The Company owns various properties which include a seven-story
headquarters office building, regional offices, a central warehouse, service
centers, telecommunications equipment and other facilities owned for general
purposes.
TITLE
The Company's electric generating plants and certain other principal
properties are owned in fee. Electric transmission and distribution lines are
located either on private rights-of-way or along streets or highways by public
consent.
Substantially all of the Company's property, plant and equipment is
subject to liens securing obligations of the Company under an Indenture of
Mortgage, none of which impairs the use of such properties in the operation of
its business.
ITEM 3. LEGAL PROCEEDINGS
The Company is not aware of any legal proceeding to which it is a party
which would have a material adverse effect on its financial condition, results
of operations, cash flows, or competitive position. For a discussion of certain
legal proceedings and regulatory matters involving the Company, see (i)
"Regulatory and Environmental Matters - Competition" "- Regulatory Matters", and
"- Environmental Quality" in Item 1 of this report and (ii) "Results of
Operations-Nonfuel Operating Expenses and Income Taxes" in "Management's
Discussion and Analysis" on pages 16 and 17 of the 1995 Annual Report to
Shareholders, which sections are incorporated herein by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders of the
Company during the fourth quarter of 1995.
13
EXECUTIVE OFFICERS OF THE REGISTRANT
The names of the executive officers of the Company, their positions held,
five-year employment history, ages and years of service as of December 31, 1995,
are presented below. Executive officers are appointed annually to serve for the
ensuing year or until their successors have been appointed.
POSITION AND FIVE-YEAR
NAME OF EXECUTIVE OFFICER EMPLOYMENT HISTORY
- ------------------------- ------------------
Gregory L. Nesbitt....... President and Chief Executive Officer since April
1993; President and Chief Operating Officer from April
1992 to April 1993; Executive Vice President and Chief
Operating Officer from July 1991 to April 1992;
Executive Vice President from January 1988 to July
1991. (Age 57; 15 years of service)
Robert L. Duncan......... Vice President-Customer Operations since July 1984.
(Age 53; 30 years of service)
David M. Eppler.......... Vice President-Power Supply and Energy Transmission
since July 1995; Vice President-Finance from October
1993 to July 1995; Vice President and Treasurer from
July 1987 to October 1993. (Age 45; 14 years of
service)
Leonard G. Fontenot...... Vice President from July 1995 to date of retirement
January 1,1996; Vice President-Power Supply and
Energy Transmission from April 1986 to July 1995.
(Age 58; 33 years of service)
Catherine C. Scheffler... Vice President-Employee and Support Services since
July 1995;Vice President-Human Resources from October
1993 to July 1995; General Manager-Human Resources
from August 1993 to October 1993; Administrator-
Compensation from May 1991 to August 1993; Vice
President at Rapides Bank And Trust Company from
December 1987 to April 1991 (Age 40; 4 years of
service)
David K. Warner.......... Vice President-Finance and Chief Financial Officer
since July 1995;Vice President-Administrative Services
from April 1988 to July 1995. (Age 45; 15 years of
service)
John L. Baltes, Jr....... Controller since April 1989. (Age 49; 14 years of
service)
14
POSITION AND FIVE-YEAR
NAME OF EXECUTIVE OFFICER EMPLOYMENT HISTORY
- ------------------------- ----------------------
Michael P. Prudhomme..... Secretary-Treasurer since January 1994; Secretary from
October 1993 to January 1994; Vice President-Customer
Services from May 1985 to October 1993. (Age 52; 26
years of service)
Judy P. Miller........... Assistant Corporate Secretary since April 1995; Acting
Assistant Corporate Secretary from February 1995 to
April 1995; Supervisor-Plant Accounting from October
1993 to February 1995; Supervisor-Income and Other
Taxes from June 1990 to October 1993. (Age 38; 11
years of service)
15
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is listed for trading on the New York Stock
Exchange (NYSE) and the Pacific Stock Exchange. The following table sets forth
high and low sales prices for the Company's common stock as reported on the NYSE
Composite Tape and dividends paid per share during each calendar quarter of 1995
and 1994.
<TABLE>
<CAPTION>
1995 1994
---------------------------------- ----------------------------------
HIGH LOW DIVIDEND HIGH LOW DIVIDEND
------- ------- ------ ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
First Quarter $24-1/2 $22 $0.365 $24-7/8 $21-1/4 $0.355
Second Quarter $24-1/2 $22-1/8 $0.375 $25-5/8 $22-1/4 $0.365
Third Quarter $25-5/8 $22-1/4 $0.375 $24-3/8 $21-1/4 $0.365
Fourth Quarter $28-1/8 $25-1/4 $0.375 $23-5/8 $20-7/8 $0.365
</TABLE>
Subject to the prior rights of the holders of the respective series of the
Company's preferred stock, such dividends as determined by the Board of
Directors of the Company may be declared and paid on the common stock from time
to time out of funds legally available therefor. The provisions of the Company's
charter applicable to preferred stock and certain provisions contained in the
debt instruments of the Company under certain circumstances restrict the amount
of retained earnings available for the payment of dividends by the Company. The
most restrictive covenant requires that common shareholders' equity be not less
than 30% of total capitalization, including short-term debt. At December 31,
1995, approximately $144,000,000 of retained earnings was not restricted. On
January 26, 1996 the Board of Directors of the Company declared a quarterly
dividend of $0.375 per share, which dividend was paid on February 15, 1996, to
common shareholders of record on February 5, 1996.
As of March 15, 1996, there were 12,081 holders of record of the Company's
common stock, and the closing price of the Company's common stock as reported on
the NYSE Composite Tape was $25.875 per share.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth certain selected financial data for the
respective periods presented and should be read in conjunction with the
Consolidated Financial Statements and the related Notes thereto set forth on
pages 20 through 33 in the 1995 Annual Report to Shareholders, which is filed as
Exhibit 13 to this report and incorporated herein by reference.
16
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
FINANCIAL DATA (IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS AND RATIOS)
Statement of Income Data
Operating revenues ............................. $ 394,426 $ 379,603 $ 382,433 $351,613 $343,350
Net income ..................................... $ 48,703 $ 45,043 $ 41,812 $ 45,239 $ 44,929
Net income applicable
to common stock .............................. $ 46,651 $ 43,017 $ 39,827 $ 43,010 $ 42,957
Primary net income
per common share (1) ......................... $ 2.08 $ 1.92 $ 1.78 $ 1.93 $ 1.92
Fully diluted net income
per common share (1) ......................... $ 2.01 $ 1.86 $ 1.73 $ 1.89 $ 1.87
Cash dividends paid per
common share (1) ............................. $ 1.490 $ 1.450 $ 1.410 $ 1.370 $ 1.325
Ratio of earnings to
fixed charges ................................ 3.49x 3.35x 3.30x 3.16x 2.99x
Ratio of earnings to
combined fixed charges and
preferred stock dividends .................... 3.17x 3.02x 2.96x 2.83x 2.73x
Balance Sheet Data
(at end of period)
Total assets ................................... $1,226,034 $1,178,191 $1,161,635 $978,220 $973,472
Long-term obligations and
redeemable preferred stock ................... $ 367,432 $ 343,509 $ 358,329 $318,214 $400,605
OPERATING STATISTICS
Electric sales - regular system
customers (million KWH)
Residential ................................... 2,763 2,532 2,470 2,353 2,313
Commercial .................................... 1,265 1,180 1,109 1,062 1,043
Industrial .................................... 2,227 2,030 2,005 1,972 1,928
Other retail .................................. 502 487 463 477 464
Sales for resale .............................. 360 210 175 146 141
---------- ---------- ---------- -------- --------
Total sales to regular customers ................ 7,117 6,439 6,222 6,010 5,889
Short-term energy sales to other
utilities (million KWH) ......................... 68 174 266 88 121
---------- ---------- ---------- -------- --------
Total electric sales .......................... 7,185 6,613 6,488 6,098 6,010
========== ========== ========== ======== ========
System peak (thousand kilowatts) .................. 1,473 1,310 1,346 1,308 1,233
Electric customers ................................ 220,923 217,568 212,559 213,941 211,332
</TABLE>
- --------------
(1) All prior-period per share amounts have been restated to reflect a
two-for-one stock split effective in May 1992.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information set forth in "Management's Discussion and Analysis" on pages
15 through 19 of the Company's 1995 Annual Report to Shareholders is
incorporated herein by reference; such information is filed as Exhibit 13 to
this report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information set forth on pages 20 through 33 in the 1995 Annual Report to
Shareholders is incorporated herein by reference; such information is filed as
Exhibit 13 to this report.
17
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information set forth (i) under the subcaption "Directors"
under the caption "Election of Directors" and (ii) in the last paragraph under
the caption "Security Ownership of Directors and Management" in the Company's
definitive Proxy Statement dated March 5, 1996, filed with the Securities and
Exchange Commission pursuant to Regulation 14A under the Securities Exchange Act
of 1934 (1996 Proxy Statement), is incorporated herein by reference. See also
"Executive Officers of the Registrant" on pages 14 and 15 of this report.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth under the subcaption "Organization and
Compensation of the Board of Directors" under the caption "Election of
Directors" and under the caption "Executive Compensation" in the 1996 Proxy
Statement (excluding the information required by paragraphs (k) and (l) of Item
402 of Regulation S-K) is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth under the caption "Security Ownership
of Directors and Management" and under the caption "Security Ownership of
Certain Beneficial Owners" in the 1996 Proxy Statement is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth under the subcaption "Directors" under
the caption "Election of Directors" in the 1996 Proxy Statement is incorporated
herein by reference.
18
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
REFERENCE (PAGE)
---------------------------------
1995 ANNUAL
FORM 10-K REPORT TO
ANNUAL REPORT SHAREHOLDERS
------------- ------------
<C> <C> <C>
14(a)(1) Consolidated Financial Statements and Supplementary Data on
pages 20 through 33 in the Company's 1995 Annual Report to
Shareholders are filed as Exhibit 13 to this report and are
incorporated herein by reference.
Consolidated Statements of Income for the years ended
December 31, 1995, 1994 and 1993 20
Consolidated Balance Sheets at December 31, 1995 and
1994 21
Consolidated Statements of Cash Flows for the years
ended December 31, 1995, 1994 and 1993 22
Consolidated Statements of Changes in Common
Shareholders' Equity for the years ended
December 31, 1995, 1994 and 1993 23
Notes to Consolidated Financial Statements 24
Report of Independent Accountants 33
14(a)(2) Financial Statement Schedules
Report of Independent Accountants 26
Schedule II - Valuation and Qualifying Accounts 27
Financial Statement Schedules other than those shown in the
above index are omitted because they are either not required
or are not applicable or the required information is shown in
the Consolidated Financial Statements and Notes thereto.
</TABLE>
19
14(a)(3) List of Exhibits
The Exhibits designated by an asterisk are filed herewith. The Exhibits not so
designated have been previously filed with the Securities and Exchange
Commission, and are incorporated herein by reference. The Exhibits designated by
two asterisks are management contracts and compensatory plans and arrangements
required to be filed as Exhibits to this report.
<TABLE>
<CAPTION>
SEC FILE OR REGISTRATION
REGISTRATION STATEMENT EXHIBIT
EXHIBITS NUMBER OR REPORT NUMBER
- ----------------------------------------------------------- ------------ ----------- -------
<S> <C> <C> <C>
3(a) Restated Articles of Incorporation of the 1-5663 10-Q(3/92) 3
Company dated as of July 24, 1989,
as amended through April 24, 1992
* 3(b) Amended and Restated Bylaws of the
Company, as amended to March 5, 1996
4(a)(1) Indenture of Mortgage dated as of July 1, 2-27284 S-1(10/17/67) 4(b)(1)
1950, between the Company and First
National Bank of New Orleans, as Trustee
4(a)(2) First Supplemental Indenture dated as 2-27284 S-1(10/17/67) 4(b)(2)
of October 1, 1951, to Exhibit 4(a)(1)
4(a)(3) Second Supplemental Indenture dated as 2-27284 S-1(10/17/67) 4(b)(3)
of June 1, 1952, to Exhibit 4(a)(1)
4(a)(4) Third Supplemental Indenture dated as 2-27284 S-1(10/17/67) 4(b)(4)
of January 1, 1954, to Exhibit 4(a)(1)
4(a)(5) Fourth Supplemental Indenture dated as 2-27284 S-1(10/17/67) 4(b)(5)
of November 1, 1954, to Exhibit 4(a)(1)
4(a)(6) Tenth Supplemental Indenture dated as 1-5663 10-K(1986) 4(a)(11)
of September 1, 1965, to Exhibit 4(a)(1)
4(a)(7) Eleventh Supplemental Indenture dated 2-32069 S-9(4/7/69) 2(m)
as of April 1, 1969, to Exhibit 4(a)(1)
4(a)(8) Eighteenth Supplemental Indenture dated as 1-5663 10-K(1993) 4(a)(8)
of December 1, 1982, to Exhibit 4(a)(1)
4(a)(9) Nineteenth Supplemental Indenture dated as 1-5663 10-K(1993) 4(a)(9)
of January 1, 1983, to Exhibit 4(a)(1)
4(a)(10) Twenty-Sixth Supplemental Indenture dated as 1-5663 8-K(3/90) 4(a)(27)
of March 15, 1990, to Exhibit 4(a)(1)
4(a)(11) Twenty-Seventh Supplemental Indenture dated as 2-27284 S-1(10/17/67) 4(f)(1)
of July 15, 1991, to Exhibit 4(a)(1)
4(b) Indenture between the Company and Bankers 33-24896 S-3(10/11/88) 4(b)
Trust Company, as Trustee, dated as of
October 1, 1988
4(c) Trust Indenture (The Industrial Development 1-5663 10-K(1991) 4(i)
Board of the Parish of Rapides, Inc.
(Louisiana) Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series 1991)
dated as of May 1, 1991, between The Industrial
Development Board of the Parish of Rapides, Inc.
and First National Bank of Commerce
20
4(c)(1) First Supplemental Trust Indenture (The Industrial 1-5663 10-K(1994) 4(e)(1)
Development Board of the Parish of Rapides, Inc.
(Louisiana) Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991) dated as
of May 1, 1993, between The Industrial
Development Board of the Parish of
Rapides, Inc. and First National Bank
of Commerce, relating to Exhibit 4(c)
4(d) Refunding Agreement (The Industrial 1-5663 10-Q(6/91) 10(a)
Development Board of the Parish of Rapides,
Inc. (Louisiana) Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series
1991) dated as of May 1, 1991, between the
Company and The Industrial Development
Board of the Parish of Rapides, Inc.
4(e) Trust Indenture (Parish of DeSoto, State of 1-5663 10-K(1991) 4(k)
Louisiana Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991A) dated
as of May 1, 1991, between Parish of Desoto,
State of Louisiana and First National Bank of
Commerce
4(e)(1) First Supplemental Trust Indenture ( Parish 1-5663 10-K(1994) 4(g)(l)
of DeSoto, State of Louisiana Adjustable Tender
Pollution Control Revenue Refunding Bonds,
Series 1991A) dated as of May 1, 1993,
between the Parish of DeSoto, State of
Louisiana and First National Bank of Commerce,
relating to Exhibit 4(e)
4(f) Refunding Agreement (Parish of DeSoto, 1-5663 10-Q(6/91) 10(b)
State of Louisiana Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series
1991A) dated as of May 1, 1991, between
the Parish of DeSoto, State of Louisiana
and the Company
4(g) Trust Indenture (Parish of DeSoto, State of 1-5663 10-K(1991) 4(m)
Louisiana Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series 1991B)
dated as of May 1, 1991, between Parish of
DeSoto, State of Louisiana and First National
Bank of Commerce
4(g)(1) First Supplemental Trust Indenture (Parish 1-5663 10-K(1994) 4(i)(1)
of DeSoto, State of Louisiana Adjustable
Tender Pollution Control Revenue Refunding
Bonds, Series 1991B) dated as of May 1,
1993, between the Parish of DeSoto, State of
Louisiana and First National Bank of Commerce,
relating to Exhibit 4(g)
21
4(h) Refunding Agreement (Parish of DeSoto, 1-5663 10-Q(6/91) 10(c)
State of Louisiana Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series
1991B) dated as of May 1, 1991, between
the Parish of DeSoto, State of Louisiana
and the Company
4(i) $100,000,000 Credit Agreement dated as of June 1-5663 10-Q(6/95) 4
15, 1995, among the Company, certain Banks
parties thereto, and The Bank of New York as
Agent
**10(a) 1990 Long-Term Incentive Compensation Plan 1-5663 1990 Proxy A
Statement (4/90)
**10(b) 1981 Incentive Stock Option Plan 1-5663 10-K(1992) 10(i)
***10(c) Annual Incentive Compensation Plan
**10(d) Deferred Compensation Plan for Directors 1-5663 10-K(1992) 10(n)
**10(e)(1) Supplemental Executive Retirement Plan 1-5663 10-K(1992) 10(o)(1)
**10(e)(2) Form of Supplemental Executive Retirement 1-5663 10-K(1992) 10(o)(2)
Plan Participation Agreement between the Company
and the following officers: Gregory L. Nesbitt,
Robert L. Duncan David M. Eppler, Leonard G.
Fontenot and David K. Warner
***10(f) Form of Executive Severance Agreement between
the Company and the following officers: Gregory
L. Nesbitt, Robert L. Duncan, David M. Eppler,
and David K. Warner
10(g)(1) Receivables Purchase Agreement, dated 1-5663 10-K(1994) 10(n)(l)
as of April 9, 1990, as Amended and Restated as
of March 1, 1995, among the Company, Corporate
Asset Funding Company, Inc. and Citicorp North
America, Inc.
10(g)(2) Receivables Purchase Agreement, dated 1-5663 10-K(1994) 10(n)(2)
as of April 9, 1990, as Amended and Restated as
of March 1, 1995, among the Company, Citicorp,
N.A. and Citicorp North America, Inc.
10(h)(1) Term Loan Agreement dated as of April 2, 1991, 1-5663 10-Q(3/91) 4(b)
among the 401(k) Savings and Investment Plan
ESOP Trust, the Company, as Guarantor, the
22
Banks listed therein and The Bank of New York,
as Agent, relating to Exhibit 10(m)
10(h)(2) Assignment and Assumption Agreement, effective 1-5663 10-Q(3/91) 4(c)
as of May 6, 1991, between The Bank of New York
and the Canadian Imperial Bank of Commerce,
relating to Exhibit 10(h)(1)
10(h)(3) Assignment and Assumption Agreement dated as of 1-5663 10-K(1991) 10(y)(3)
July 3, 1991, between The Bank of New York and
Rapides Bank and Trust Company in Alexandria,
relating to Exhibit 10(h)(1)
10(h)(4) Assignment and Assumption Agreement dated as of 1-5663 10-K(1992) 10(bb)(4)
July 6, 1992, among The Bank of New York, CIBC,
Inc. and Rapides Bank and Trust Company in
Alexandria, as Assignors, the 401(k) Savings and
Investment Plan ESOP Trust, as Borrower, and the
Company, as Guarantor, relating to Exhibit
10(h)(1)
10(i) Reimbursement Agreement (The Industrial 1-5663 10-Q(6/91) 4(a)
Development Board of the Parish of Rapides, Inc.
(Louisiana) Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991) dated as
of May 29, 1991, among the Company, various
financial institutions, Swiss Bank Corporation
and The First National Bank of Chicago
10(i)(1) Remarketing Agreement (The Industrial Development 1-5663 10-Q(9/94) 10(a)
Board of the Parish of Rapides, Inc. (Louisiana)
Adjustable Tender Pollution Control Revenue
Refunding Bonds, Series 1991) dated as of July
19,1994, between the Company and PaineWebber
Incorporated
10(i)(2) Tender Agreement (The Industrial Development Board 1-5663 10-K(1991) 10(z)(2)
of the Parish of Rapides, Inc. (Louisiana)
Adjustable Tender Pollution Control Revenue
Refunding Bonds, Series 1991) dated as of May 1,
1991, among First National Bank of Commerce, as
Trustee, the Company, The First National Bank of
Chicago, as Tender Agent and Registrar, Smith
Barney, Harris Upham & Co. Incorporated, as
Remarketing Agent, and Swiss Bank Corporation,
as Bank
10 (i)(3) Amendment No. 1 to Reimbursement Agreements (The 1-5663 10-K(1994) 10(p)(3)
Industrial Development Board of the Parish of
Rapides, Inc. (Louisiana) Adjustable Tender
Pollution Control
23
Revenue Refunding Bonds, Series 1991, 1991A and
1991B) dated as of December 9, 1994, among the
Company, various financial institutions, Swiss
Bank Corporation, New York Branch, as Issuer of
the Letters of Credit, and Swiss Bank
Corporation, New York Branch, as Agent, relating
to Exhibits 10(i), 10(j) and 10(k).
10(j) Reimbursement Agreement (Parish of DeSoto, 1-5663 10-Q(6/91) 4(b)
State of Louisiana Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series 1991A)
dated as of May 29, 1991, among the Company,
various financial institutions, Swiss Bank
Corporation and The First National Bank of
Chicago
10(j)(1) Remarketing Agreement (Parish of DeSoto, State of 1-5663 10-Q(9/94) 10(b)
Louisiana Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991A) dated as
of July 19, 1994, between the Company and
PaineWebber Incorporated
10(j)(2) Tender Agreement (Parish of DeSoto, State of 1-5663 10-K(1991) 10(aa)(2)
Louisiana Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991A) dated as
of May 1, 1991, among First National Bank of
Commerce, as Trustee, the Company, The First
National Bank of Chicago, as Tender Agent and
Registrar, Smith Barney, Harris Upham & Co.
Incorporated, as Remarketing Agent, and Swiss
Bank Corporation, as Bank
10(k) Reimbursement Agreement (Parish of DeSoto, 1-5663 10-Q(6/91) 4(c)
State of Louisiana Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series 1991B)
dated as of May 29, 1991, among the Company,
various financial institutions, Swiss Bank
Corporation and The First National Bank of
Chicago
10(k)(1) Remarketing Agreement (Parish of DeSoto, State of 1-5663 10-Q(9/94) 10(c)
Louisiana Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991B) dated as
of July 19, 1994, between the Company and
PaineWebber Incorporated
10(k)(2) Tender Agreement (Parish of DeSoto, State of 1-5663 10-K(1991) 10(bb)(2)
Louisiana Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991B) dated as
of May 1, 1991, among First National Bank of
Commerce,
24
as Trustee, the Company, The First National Bank
of Chicago, as Tender Agent and Registrar, Smith
Barney, Harris Upham & Co. Incorporated, as
Remarketing Agent, and Swiss Bank Corporation,
as Bank
10(l) Selling Agency Agreement between the Company 1-5663 8-K(2/92) 1
and Salomon Brothers Inc, The First Boston
Corporation and Smith Barney, Harris Upham & Co.
Incorporated dated as of February 27, 1992
10(m) 401(k) Savings and Investment Plan ESOP 1-5663 10-Q(3/91) 4(a)
Trust Agreement dated as of April 2, 1991,
between State Street Bank and Trust Company and
the Company
*10(m)(1) First Amendment to 401(k) Savings and Investment
Plan ESOP Trust Agreement dated as of July 30,
1993, between State Street Bank and Trust
Company and the Company
*11 Computation of Net Income Per Common Share
*12 Computation of Earnings to Fixed Charges
and Earnings to Combined Fixed Charges and
Preferred Stock Dividends
*13 Management's Discussion and Analysis of Financial
Condition and Results of Operations,
Consolidated Financial Statements and Notes and
Report of Independent Accountants
*23 Consent of Independent Accountants
*24 Power of Attorney from each Director of the Company
whose signature is affixed to this Form 10-K for
the year ended December 31, 1995
*27 Financial Data Schedule UT
</TABLE>
14(b) Reports on Form 8-K
During the three-month period ended December 31, 1995, the Company filed no
current Reports on Form 8-K.
25
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of Central Louisiana Electric Company, Inc.:
Our report on the consolidated financial statements of Central Louisiana
Electric Company, Inc. has been incorporated by reference in this Form 10-K from
page 33 of the 1995 Annual Report to Shareholders of Central Louisiana Electric
Company, Inc. In connection with our audits of such financial statements, we
have also audited the related financial statement schedule listed in Item
14(a)(2) on page 19 of this Form 10-K. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this financial statement schedule based upon our audit.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
New Orleans, Louisiana
January 26, 1996
26
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years ended December 31, 1995, 1994 and 1993
(In thousands)
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E
- -----------------------------------------------------------------------------------------------------------------------
ADDITIONS UNCOLLECTIBLE
BALANCE AT CHARGED TO ACCOUNTS BALANCE AT
BEGINNING COST AND WRITE-OFFS, END
ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS OF PERIOD EXPENSES LESS RECOVERIES OF PERIOD (1)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Year Ended December 31, 1995 ............ $444 $817 $723 $538
Year Ended December 31, 1994 ............ $537 $442 $535 $444
Year Ended December 31, 1993 ............ $779 $ 92 $334 $537
</TABLE>
- ------------
(1) Deducted in the balance sheet
27
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
(REGISTRANT)
BY: GREGORY L. NESBITT
(Gregory L. Nesbitt, President
and Chief Executive Officer)
Date: March , 29 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
GREGORY L. NESBITT President, Chief Executive Officer and Director March 29, 1996
(Gregory L. Nesbitt) (Principal Executive Officer)
DAVID K. WARNER Vice President, Finance and Chief Financial Officer March 29, 1996
(David K. Warner) (Principal Financial Officer)
JOHN L. BALTES, JR. Controller March 29, 1996
(John L. Baltes, Jr.) (Principal Accounting Officer)
SHERIAN G. CADORIA DIRECTOR*
J. PATRICK GARRETT DIRECTOR*
F. BEN JAMES, JR. DIRECTOR*
HUGH J. KELLY DIRECTOR*
A. DELOACH MARTIN, JR. DIRECTOR*
ROBERT T. RATCLIFF DIRECTOR*
EDWARD D. SIMMONS DIRECTOR*
ERNEST L. WILLIAMSON DIRECTOR*
*BY: DAVID K. WARNER
(David K. Warner, as March 29, 1996
Attorney-in-Fact)
</TABLE>
28
EXHIBIT 3(b)
AMENDED AND RESTATED BYLAWS
OF
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
(as amended to March 5, 1996)
<PAGE>
TABLE OF CONTENTS
ARTICLE I - REGISTERED OFFICE; REGISTERED AGENTS;
CORPORATE SEAL............................................... 1
Section 1 Registered Office and Registered Agents......................... 1
Section 2 Corporate Seal.................................................. 1
ARTICLE II - SHAREHOLDERS..................................................... 1
Section 1 Place of Holding Meetings....................................... 1
Section 2 Quorum; Adjournment of Meetings................................. 1
(a) General Rule............................................... 1
(b) Special Rule............................................... 2
(c) Adjournments............................................... 2
Section 3 Annual Meeting.................................................. 2
Section 4 Special Meetings................................................ 3
Section 5 Conduct of Meetings............................................. 3
Section 6 Voting.......................................................... 5
Section 7 Notice.......................................................... 5
Section 8 Amendment of Articles of Incorporation ......................... 7
(a) Shareholder Proposals...................................... 7
(b) Effectiveness.............................................. 7
Section 9 Effectiveness of Other Amendments to Articles
of Incorporation............................................ 8
ARTICLE III - DIRECTORS....................................................... 9
Section 1 Certain General Provisions...................................... 9
(a) Number..................................................... 9
(b) Classification............................................. 9
(c) Nominations ............................................... 9
(d) Qualifications; Declaration of Vacancy.................... 10
(e) Removal................................................... 12
(f) Powers.................................................... 13
(g) Change in Number of Directors............................. 14
(h) Rights of Preferred Shareholders, etc..................... 14
Section 2 Filling of Vacancies........................................... 14
Section 3 Annual and Regular Meetings.................................... 14
Section 4 Special Meetings............................................... 15
Section 5 Place of Meetings; Telephone Meetings.......................... 15
Section 6 Quorum......................................................... 15
-i-
Section 7 Compensation................................................... 15
Section 8 Committees..................................................... 15
ARTICLE IV - INDEMNIFICATION................................................. 16
Section 1 Right to Indemnification - General....................... 16
Section 2 Certain Provisions Respecting Indemnification
for and Advancement of Expenses..................... 16
Section 3 Procedure for Determination of Entitlement
to Indemnification.................................. 17
Section 4 Presumptions and Effect of Certain Proceedings........... 18
Section 5 Right of Claimant to Bring Suit.......................... 19
Section 6 Non-Exclusivity and Survival of Rights................... 19
Section 7 Definitions.............................................. 20
ARTICLE V - EXECUTIVE COMMITTEE.............................................. 21
Section l Election and Tenure...................................... 21
Section 2 Powers................................................... 22
Section 3 Meetings................................................. 22
Section 4 Compensation............................................. 22
ARTICLE VI - AUDIT COMMITTEE................................................. 22
Section 1 Election and Tenure...................................... 22
Section 2 Audit Committee.......................................... 22
Section 3 Meetings................................................. 23
Section 4 Compensation............................................. 23
ARTICLE VII - COMPENSATION COMMITTEE......................................... 23
Section l Election and Tenure...................................... 23
Section 2 Compensation Committee................................... 23
Section 3 Meetings................................................. 23
Section 4 Compensation............................................. 23
ARTICLE VIII - OFFICERS...................................................... 24
Section 1 Election, Tenure, and Compensation......................... 24
Section 2 Powers and Duties of Chairman of Board of Directors........ 24
-ii-
Section 3 Powers and Duties of President............................. 24
Section 4 Powers and Duties of Vice President........................ 24
Section 5 Powers and Duties of Secretary............................. 25
Section 6 Powers and Duties of Treasurer............................. 25
Section 7 Delegation of Duties....................................... 25
ARTICLE IX - CAPITAL STOCK................................................... 26
Section l Stock Certificates......................................... 26
Section 2 Lost or Destroyed Certificates............................. 26
Section 3 Transfer of Shares......................................... 26
Section 4 Dividends.................................................. 26
Section 5 Closing Transfer Books; Fixing Record Date................. 27
ARTICLE X - FAIR-PRICE PROVISIONS............................................ 27
Section 1 Definitions.............................................. 27
Section 2 Vote Required in Business Combinations................... 30
Section 3 When Voting Requirements Not Applicable.................. 31
(a) Definitions......................................... 31
(b) Conditions.......................................... 31
(c) Other Provisions.................................... 34
ARTICLE XI - NOTICES......................................................... 34
Section 1 Manner of Giving Notice.................................. 34
Section 2 Waiver of Notice......................................... 35
ARTICLE XII - MISCELLANEOUS.................................................. 35
Section 1 Fiscal Year.............................................. 35
Section 2 Checks and Drafts........................................ 35
Section 3 Books and Records........................................ 35
Section 4 Separability............................................. 35
ARTICLE XIII - AMENDMENT OF BYLAWS........................................... 35
Section 1 Voting..................................................... 35
Section 2 Shareholder Proposals...................................... 36
Section 3 Effective Date............................................. 36
-iii-
ARTICLE XIV - OTHER AMENDMENTS TO BYLAWS..................................... 36
Section 1 Effective Date............................................. 36
ARTICLE XV - CONTROL SHARE ACQUISITION STATUTE............................... 37
Section 1.................................................................... 37
-iv-
AMENDED AND RESTATED BYLAWS
OF
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
[as amended to March 5, 1996]
ARTICLE I
Registered Office; Registered Agents; Corporate Seal
Section 1. REGISTERED OFFICE AND REGISTERED AGENTS. The
registered office of the Corporation is 2030 Donahue Ferry Road, Pineville,
Louisiana 71360-5226, and its registered agents are Gregory L. Nesbitt, post
office address 2030 Donahue Ferry Road, Pineville, Louisiana 71360-5226, and
David M. Eppler, post office address 2030 Donahue Ferry Road, Pineville,
Louisiana 71360-5226. The Corporation may also have offices at such other places
as the board of directors or the president may from time to time designate.
Section 2. CORPORATE SEAL. The corporate seal of the
Corporation shall be circular in form and have inscribed on its periphery the
words "Central Louisiana Electric Company, Inc. 1934" and in its center the
words "Incorporated," "Seal," and "Louisiana."
ARTICLE II
Shareholders
Section 1. PLACE OF HOLDING MEETINGS. All meetings of the
shareholders shall be held at the principal office of the Corporation in the
City of Pineville, State of Louisiana, except in cases in which the notices
thereof designate some other place, which may be within or without the State of
Louisiana.
Section 2. QUORUM; ADJOURNMENT OF MEETINGS.
(a) GENERAL RULE. Except as otherwise provided in these
bylaws, the presence in person or by proxy at a meeting of shareholders of the
holders of record of a number of the shares of the capital stock of the
Corporation issued and outstanding and entitled to vote thereat that represents
a majority of the votes entitled to be cast thereat shall constitute a quorum at
such meeting.
-1-
(b) SPECIAL RULE. At a meeting of shareholders at least one
purpose of which is to amend or repeal a provision of or to supplement these
bylaws or the articles of incorporation of the Corporation or to act on a
merger, consolidation, reclassification, repurchase, or exchange of securities,
transfer of all or substantially all of the assets of the Corporation,
dissolution, "business combination" as defined in article X of these bylaws, or
similar transaction, a quorum shall for all purposes consist of the presence in
person or by proxy at such meeting of the holders of the number of the shares of
the capital stock of the Corporation issued and outstanding and entitled to vote
thereat that represents 80% of the votes entitled to be cast thereat. At a
meeting described in the preceding sentence, the quorum for any class of shares
entitled to vote as a class shall be the holders of the number of shares of such
class that represents 80% of the votes entitled to be cast by all holders of all
shares of such class. Notwithstanding the foregoing, if the change in the
articles of incorporation or bylaws, merger, consolidation, reclassification,
repurchase, or exchange of securities, transfer of all or substantially all of
the assets of the Corporation, dissolution, "business combination" as defined in
article X of these bylaws, or similar transaction in question shall have been
approved, before submission of a proposal relating thereto to a vote of
shareholders, by at least 80% of the "continuing directors" (hereinafter
defined) of the Corporation, then, instead of subsection (b), subsection (a) of
this section 2 shall determine the quorum at the meeting of shareholders at
which such proposal is considered by shareholders. For purposes of the
preceding, a "continuing director" shall mean a director elected pursuant to a
solicitation of proxies by the board of directors of the Corporation at an
annual meeting of shareholders held at least 90 days before the date of
determination and who has served continuously since such election, or a director
elected by continuing directors to fill a vacancy.
(c) ADJOURNMENTS. If less than a quorum shall be in attendance
at the time for which a meeting shall have been called, such meeting may,
without any notice other than by announcement at such meeting, be adjourned from
time to time by the vote of the shareholders present in person or by proxy
representing a majority of the votes so present, for a period not exceeding one
month at any one time, without notice other than by announcement at the meeting,
until a quorum shall attend; provided, however, that a meeting at which a
director or directors are to be elected shall be adjourned only from day to day
until such director or directors have been elected. A meeting at which a quorum
is present may also be adjourned in like manner. At an adjourned meeting at
which a quorum shall attend, any business may be transacted which might have
been transacted if such meeting had been held as originally called.
Section 3. ANNUAL MEETING. Except as otherwise provided by
resolution of the board of directors, the annual meeting of shareholders for the
election of directors shall be held on the third Friday after the first Monday
in April of each year. At each annual meeting, the shareholders shall elect
directors to succeed those whose terms have expired as of the date of such
annual meeting. Such other matters as may properly come before a meeting may be
acted upon at an annual meeting.
-2-
Section 4. SPECIAL MEETINGS.
(a) Special meetings of the shareholders for any purpose or
purposes may be called by the president, by a majority of the board of
directors, or by a majority of the executive committee, if any, of the board of
directors; provided, however, that if and whenever dividends payable on any
series of the Corporation's preferred stock shall be in default in an amount
equal to the aggregate dividends payable in any period of 12 consecutive
calendar months, a special meeting shall be called on the demand in writing of
the holders of record of a majority of the outstanding shares of preferred
stock; and, provided further, that a special meeting of shareholders may be
called by a shareholder or shareholders as provided in the Corporation's
articles of incorporation, these bylaws, or otherwise by law.
(b) Any shareholder requesting that a special meeting of
shareholders be called (the "Requesting Person") shall, at the time of making
the request, submit written evidence, reasonably satisfactory to the secretary
of the Corporation, that the Requesting Person is a shareholder of the
Corporation and shall identify in writing (i) the reason or reasons for which
the special meeting is to be called, (ii) the number of shares of each class of
capital stock of the Corporation owned beneficially by the Requesting Person,
(iii) all other persons with whom the Requesting Person is acting in concert,
and (iv) the number of shares of capital stock beneficially owned by each such
person with whom the Requesting Person is acting in concert. Within 15 days
after the Requesting Person has submitted the aforesaid items to the secretary
of the Corporation, the secretary of the Corporation shall determine whether the
evidence of the Requesting Person's status as a shareholder submitted by the
Requesting Person is reasonably satisfactory and shall notify the Requesting
Person in writing of his determination. If the Requesting Person fails to submit
the requisite information in the form or at the time indicated, or if the
secretary of the Corporation fails to find such evidence of shareholder status
reasonably satisfactory, then the request to call a special meeting of
shareholders shall be deemed invalid (by reason of failure to comply with these
bylaws) and no special meeting of shareholders shall be held pursuant to such
request. Beneficial ownership shall be determined in accordance with section 1
of article X of these bylaws. Nothing in this subsection (b) shall affect the
rights of the Corporation's shareholders as provided in section 3(b) of article
6 of the Corporation's articles of incorporation or as provided in subsection
(a) immediately preceding with respect to the rights of the Corporation's
preferred shareholders.
Section 5. CONDUCT OF MEETINGS. Meetings of shareholders shall
be presided over by the president of the Corporation or, if he is not present at
a meeting, by such other person as the board of directors shall designate or, if
no such person is designated by the board of directors, the most senior officer
of the Corporation present at the meeting. The secretary of the Corporation, if
present, shall act as secretary of each meeting of shareholders; if he is not
present at a meeting, then such person as may be designated by the presiding
officer shall act as secretary of the meeting. Meetings of shareholders shall
follow reasonable and fair procedure. Subject to the foregoing, the
-3-
conduct of any meeting of shareholders and the determination of procedure and
rules shall be within the absolute discretion of the presiding officer (the
"Chairman of the Meeting"), and there shall be no appeal from any ruling of the
Chairman of the Meeting with respect to procedure or rules. Accordingly, in any
meeting of shareholders or part thereof, the Chairman of the Meeting shall have
the sole power to determine appropriate rules or to dispense with theretofore
prevailing rules. Without limiting the foregoing, the following rules shall
apply:
(a) The Chairman of the Meeting may ask or require that anyone
not a bona fide shareholder or proxy leave the meeting.
(b) A resolution or motion shall be considered for vote only
if proposed by a shareholder or duly authorized proxy, and seconded by an
individual, who is a shareholder or a duly authorized proxy, other than the
individual who proposed the resolution or motion, subject to compliance with any
other requirements concerning such a proposed resolution or motion contained in
these bylaws. The Chairman of the Meeting may propose any motion for vote. The
order of business at all meetings of shareholders shall be determined by the
Chairman of the Meeting.
(c) The Chairman of the Meeting may impose any reasonable
limits with respect to participation in the meeting by shareholders, including,
but not limited to, limits on the amount of time at the meeting taken up by the
remarks or questions of any shareholder, limits on the numbers of questions per
shareholder, and limits as to the subject matter and timing of questions and
remarks by shareholders.
(d) Before any meeting of shareholders, the board of directors
may appoint any persons other than nominees for office to act as inspectors of
election at the meeting or its adjournment. If no inspectors of election are so
appointed, the Chairman of the Meeting may, and on the request of any
shareholder or a shareholder's proxy shall, appoint inspectors of election at
the meeting of shareholders. The number of inspectors shall be three. If any
person appointed as inspector fails to appear or fails or refuses to act, the
Chairman of the Meeting may, and upon the request of any shareholder or a
shareholder's proxy shall, appoint a person to fill such vacancy.
The duties of these inspectors shall be as follows:
(1) Determine the number of shares outstanding and the voting
power of each, the shares represented at the meeting, the existence of
a quorum, and the authenticity, validity and effect of proxies;
(2) Receive votes or ballots;
(3) Hear and determine all challenges and questions in any way
arising in connection with the right to vote;
-4-
(4) Count and tabulate all votes;
(5) Report to the board of directors the results based on the
information assembled by the inspectors; and
(6) Do any other acts that may be proper to conduct the
election or vote with fairness to all shareholders.
Notwithstanding the foregoing, the final certification of the results of any
election or other matter acted upon at a meeting of shareholders shall be made
by the board of directors.
Section 6. VOTING. Except as otherwise provided by the
articles of incorporation, each holder of shares of capital stock of the
Corporation shall be entitled, at each meeting of shareholders, to one vote for
each share of such stock standing in his name on the books of the Corporation on
the date of such meeting or, if the board of directors, pursuant to section 5 of
article IX of these bylaws, shall have fixed a record date for the purpose of
such meeting or shall have fixed a date as of which the books of the Corporation
shall be temporarily closed against transfers of shares, then as of such date;
except that in the election of directors of the Corporation, each holder of
shares of common stock of the Corporation shall have the right to multiply the
number of votes to which he may be entitled by the number of directors to be
elected, and he may cast all such votes for one candidate or he may distribute
them among any two or more candidates. A shareholder may vote either in person
or by proxy appointed by an instrument in writing, subscribed by such
shareholder or by his duly authorized attorney. Except as otherwise provided by
law, the articles of incorporation, or these bylaws, all elections shall be had
and all questions shall be decided by a majority of the votes cast at a duly
constituted meeting at which a quorum is present.
Section 7. NOTICE.
(a) Unless otherwise provided by the articles of
incorporation, written or printed notice, stating the place, day, and hour of
each meeting of shareholders, and, in the case of a special meeting, the
business proposed to be transacted thereat, shall be given in the manner
provided in article XI of these bylaws to each shareholder entitled to vote at
such meeting, at least 15 days before an annual meeting and at least five days
before a special meeting.
(b) Except as provided in subsection (c) of this section, to
be properly brought before any meeting of the shareholders, business must be
either (i) specified in the notice of meeting (or any supplement thereto) given
by or at the direction of the board of directors pursuant to subsection (a) of
this section 7, (ii) otherwise properly brought before the meeting by or at the
direction of the board of directors, or (iii) otherwise properly brought before
the meeting by a shareholder. In addition to any other applicable requirements,
including (without limitation) requirements imposed by federal securities
-5-
laws pertaining to proxies, for business to be properly brought before any
meeting by a shareholder, the shareholder must have given timely notice thereof
in writing to the secretary of the Corporation. To be timely, a shareholder's
notice must be delivered to or mailed and received at the principal executive
offices of the Corporation at least 120 days prior to the meeting; provided,
however, that in the event that less than 135 days' notice or prior public
disclosure of the date of any meeting of shareholders is given or made to
shareholders by the Corporation, notice by the shareholder to be timely must be
so received not later than the close of business on the 15th day following the
day on which such notice of the date of the meeting was mailed or such public
disclosure was made, whichever first occurs. A shareholder's notice to the
secretary of the Corporation shall set forth in writing as to each matter the
shareholder proposes to bring before any meeting of the shareholders (i) a brief
description of the business desired to be brought before the meeting and the
reasons for conducting such business at the meeting, (ii) the name and record
address of the shareholder proposing such business, (iii) the name of all other
persons with whom the shareholder is acting in concert, (iv) the class and
number of shares of the Corporation which are beneficially owned by the
shareholder, (v) the class and number of shares of the Corporation which are
beneficially owned by each such person with whom the shareholder is acting in
concert, and (vi) any material interest of the shareholder, or any such person
with whom the shareholder is acting in concert, in such business. Beneficial
ownership shall be determined in accordance with section 1 of article X of these
bylaws.
Except as provided in subsection (c) of this section 7,
notwithstanding anything in these bylaws to the contrary, no business shall be
conducted at any meeting of the shareholders except in accordance with the
procedures set forth in this section 7 of article II, provided, however, that
nothing in this section 7 of article II shall be deemed to preclude discussion
by any shareholder as to any business properly brought before any meeting of the
shareholders.
The Chairman of the Meeting shall, if the facts warrant,
determine and declare at any meeting of the shareholders that business was not
properly brought before the meeting of shareholders in accordance with the
provisions of this section 7 of article II, and if he should so determine, he
shall so declare to the meeting and any such business not properly brought
before the meeting shall not be transacted. A determination whether a matter is
or is not properly before the meeting shall not depend on whether such proposal
has been or will be included in any proxy statement delivered or to be delivered
to the Corporation's shareholders.
Nothing in this subsection (b) shall affect the rights of the
Corporation's shareholders as provided in section 3(b) of article 6 of the
Corporation's articles of incorporation or as provided in subsection (a) of
section 4 of article II of these bylaws with respect to the rights of the
Corporation's preferred shareholders.
-6-
(c) Nothing in subsection (b) of this section 7 shall apply to
the following provisions of these bylaws or any proposal by a shareholder or
shareholders with respect to any matter governed by any of the following
provisions:
Article II, section 8(a);
Article III, section 1(c);
Article III, section 1(e); and
Article XIII, section 2.
Section 8. AMENDMENT OF ARTICLES OF INCORPORATION.
(a) SHAREHOLDER PROPOSALS. No proposal by a shareholder to
amend or supplement the articles of incorporation of the Corporation shall be
voted upon at a meeting of shareholders unless, at least 180 days before such
meeting of shareholders, such shareholder shall have delivered in writing to the
secretary of the Corporation (i) notice of such proposal and the text of such
amendment or supplement, (ii) evidence, reasonably satisfactory to the secretary
of the Corporation, of such shareholder's status as such and of the number of
shares of each class of the capital stock of the Corporation beneficially owned
by such shareholder, (iii) a list of the names of other beneficial owners of
shares of the capital stock of the Corporation, if any, with whom such
shareholder is acting in concert, and of the number of shares of each class of
the capital stock of the Corporation beneficially owned by each such beneficial
owner, and (iv) an opinion of counsel, which counsel and the form and substance
of which opinion shall be reasonably satisfactory to the board of directors of
the Corporation, to the effect that the articles of incorporation of the
Corporation, as proposed to be so amended or supplemented, would not be in
conflict with the laws of the State of Louisiana. Within 30 days after such
shareholder shall have delivered the aforesaid items to the secretary of the
Corporation, the secretary and the board of directors of the Corporation shall
respectively determine whether the items to be ruled upon by them are reasonably
satisfactory and shall notify such shareholder in writing of their respective
determinations. If such shareholder fails to submit a required item in the form
or within the time indicated, or if the secretary or the board of directors of
the Corporation determines that the items to be ruled upon by them are not
reasonably satisfactory, then such proposal by such shareholder may not be voted
upon by the shareholders of the Corporation at such meeting of shareholders.
Beneficial ownership shall be determined in accordance with section 1 of article
X of these bylaws.
(b) EFFECTIVENESS. No provision amending or supplementing, or
purporting to amend or supplement, the articles of incorporation of the
Corporation that would have an effect, direct or indirect, on any of the
following items may be included in articles of amendment signed by any officer,
agent or representative of the Corporation on behalf of the Corporation or
delivered to the Secretary of State of Louisiana for filing of record until the
later of (i) one year following the adoption by the shareholders of such
amendment or supplement or (ii) 10 days after the adjournment sine die of the
annual
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meeting of shareholders next succeeding the adoption by the shareholders of the
Corporation of such amendment or supplement:
(1) quorum at a regular or special meeting of shareholders;
(2) procedures for amendment of the articles of incorporation
or bylaws of the Corporation upon a proposal by a shareholder of the
Corporation;
(3) the effective date of an amendment to the articles of
incorporation or bylaws of the Corporation, or the time at which steps
may be taken to effect an amendment to the articles of incorporation or
bylaws of the Corporation; or
(4) votes of shareholders of the Corporation required to
approve (i) an amendment or supplement to or repeal of the bylaws of
the Corporation, (ii) an amendment or supplement to the articles of
incorporation of the Corporation, or (iii) a merger, consolidation,
share exchange, reclassification of securities, repurchase of shares,
transfer of all or substantially all of the assets of the Corporation,
dissolution, "business combination" as defined in article X of these
bylaws, or similar transaction.
Section 9. EFFECTIVENESS OF OTHER AMENDMENTS TO ARTICLES OF
INCORPORATION. No provision amending or supplementing, or purporting to amend or
supplement, the articles of incorporation of the Corporation that would have an
effect, direct or indirect, on any of the following items may be included in
articles of amendment signed by any officer, agent or representative of the
Corporation on behalf of the Corporation or delivered to the Secretary of State
of Louisiana for filing of record until the later of (i) one year following the
adoption by the shareholders of such amendment or supplement or (ii) 10 days
after the adjournment sine die of the annual meeting of shareholders next
succeeding the adoption by the shareholders of the Corporation of such amendment
or supplement:
(1) the number of directors of the Corporation;
(2) the classification of the board of directors of the
Corporation into three classes of as nearly as possible equal size;
(3) the procedures for nomination by a shareholder of persons
to be elected as directors of the Corporation;
(4) qualifications of directors of the Corporation or the
declaration by the board of directors of a vacancy in the office of
director;
(5) removal of directors or officers of the Corporation;
(6) powers of directors of the Corporation;
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(7) the filling of vacancies on the board of directors of the
Corporation and the election of directors to fill newly created
directorships;
(8) powers of committees of the board of directors of the
Corporation;
(9) the calling of special meetings of shareholders;
(10) determinations of the presiding person at a meeting of
shareholders; or
(11) votes of shareholders of the Corporation required to
approve the removal of a director;
provided, however, that the foregoing shall apply to item (9) above only with
respect to a provision adopted by the shareholders subsequent to the annual
meeting of shareholders in April 1991 or an adjournment thereof.
ARTICLE III
Directors
Section 1. CERTAIN GENERAL PROVISIONS.
(a) NUMBER. The corporate powers of the Corporation shall be
vested in and exercised, and the business and affairs of the Corporation shall
be managed, by a board of directors which shall consist of nine directors.
(b) CLASSIFICATION. The board of directors of the Corporation
shall be divided into three classes of as nearly as possible equal size, with
the term of office of directors of one class expiring each year. At the annual
meeting of shareholders in 1991, (i) directors of the first class shall be
elected to hold office for a term expiring at the first succeeding annual
meeting, (ii) directors of the second class shall be elected to hold office for
a term expiring at the second succeeding annual meeting, and (iii) directors of
the third class shall be elected to hold office for a term expiring at the third
succeeding annual meeting. At each annual meeting of shareholders beginning with
the annual meeting in 1992, the successors to the class of directors whose terms
shall have expired at such meeting shall be elected to hold office for a term
expiring at the third annual meeting succeeding such meeting.
(c) NOMINATIONS. Nominations for election of members of the
board of directors may be made by the board of directors or by a shareholder.
The name of a person to be nominated by a shareholder (a "Nominator") as a
member of the board of directors of the Corporation must be submitted in writing
to the secretary of the Corporation not fewer than 180 days before the date of
the meeting of shareholders at which such person is proposed to be nominated.
The Nominator shall also submit written
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evidence, reasonably satisfactory to the secretary of the Corporation, that the
Nominator is a shareholder of the Corporation and shall identify in writing (i)
the number of shares of each class of capital stock of the Corporation
beneficially owned by the Nominator, (ii) all other persons with whom the
Nominator is acting in concert, and (iii) the number of shares of capital stock
of the corporation beneficially owned by each such person with whom the
Nominator is acting in concert. At such time, the Nominator shall also submit in
writing (1) the information with respect to each such proposed nominee which
would be required to be provided in a proxy statement prepared in accordance
with regulation 14A under the Securities Exchange Act of 1934, as amended, (2)
to the extent not provided in the information submitted pursuant to (1)
immediately preceding or otherwise provided pursuant to this subsection (c), (w)
a description of all arrangements or understandings between the Nominator and
each such proposed nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
the Nominator, (x) the name, age, business address and residence address,
business experience or other qualifications of each such proposed nominee, (y)
the principal occupation or employment of each such proposed nominee, and (z)
the number of shares of capital stock beneficially owned by each such proposed
nominee, and (3) a notarized affidavit executed by each such proposed nominee to
the effect (x) that, if elected as a member of the board of directors, he will
serve, (y) that he has reviewed the provisions of section 1 of this article III
of these bylaws, and (z) that he is eligible for election as a member of the
board of directors. Within 30 days after the Nominator has submitted the
aforesaid items to the secretary of the Corporation, the secretary of the
Corporation shall determine whether the evidence of the Nominator's status as a
shareholder submitted by the Nominator is reasonably satisfactory and shall
notify the Nominator in writing of his determination with respect thereto. The
failure of the secretary of the Corporation to find such evidence reasonably
satisfactory, or the failure of the Nominator to submit the requisite
information in the form or within the time indicated, shall make the person to
be nominated ineligible for nomination at the meeting of shareholders at which
such person is proposed to be nominated. Beneficial ownership shall be
determined in accordance with section 1 of article X of these bylaws.
(d) QUALIFICATIONS; DECLARATION OF VACANCY.
(1) No person shall be eligible for election or reelection as
a director after attaining age 72, and no person who is or shall have
been a full-time officer or employee of the Corporation or any
subsidiary thereof shall be eligible for election or reelection as a
director after attaining age 65 or (even if under 65) after such
director's employment by the Corporation has terminated.
(2) Upon attaining the age of 72 or 65, as specified in
paragraph (1) immediately preceding, a director may continue to serve
as a director of the Corporation until no later than the next
succeeding annual meeting of shareholders, at which time, unless he has
previously ceased to be a member of the board of directors of the
Corporation, his position as a director shall cease. Notwithstanding
the foregoing, with regard to a director of the Corporation who is
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also an officer or employee of the Corporation or any subsidiary
thereof, such director's position as a director shall cease immediately
upon termination of such director's employment by the Corporation.
(3) No person shall be eligible for election or reelection or
to continue to serve as a member of the board of directors who is an
officer, director, agent, representative, partner, employee, or nominee
of, or otherwise acting at the direction of, or acting in concert with,
(y) a "public utility company" (except the Corporation) or "holding
company" as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended, or "public utility" (except the
Corporation) as such term is defined in Section 201(e) of the Federal
Power Act of 1920, as amended, or (z) an "affiliate" (as defined in
rule 405 (17 C.F.R. ss. 230.405) under the Securities Act of 1933, as
amended) of any of the persons or entities specified in clause (y)
immediately preceding.
(4) Upon the occurrence of any of the events described in
paragraph (2) of this subsection (d), the affected director shall cease
to be a director of the Corporation at the time specified in such
paragraph. Determination of the eligibility of a person for election,
reelection, or continued service on the board of directors under other
provisions of this subsection (d) or otherwise as provided by
applicable law including, but not limited to, occurrence of an event
specified in section 81.C(2) of the Louisiana Business Corporation Law,
shall, subject to the provisions of paragraph (7) below, be made by
vote of a majority of the members of the board of directors. If the
board of directors, pursuant to such a determination, determines that a
person is ineligible for election, reelection, or continued service on
the board of directors, such ineligibility shall be effective
immediately upon such determination, and, if the affected person is a
director of the Corporation at the time of such determination, his
position as a director shall cease at such time.
Within 30 days after a Nominator has submitted the name of a
person to be nominated as a member of the board of directors, the board
of directors shall determine whether the proposed nominee is eligible
for election under this subsection (d) and shall notify the Nominator
in writing of its determination. If the board of directors shall
determine that such proposed nominee is not eligible for election, such
person shall be ineligible to be nominated at the meeting of
shareholders for which his nomination was proposed.
(5) If a director of the Corporation ceases to be a director
at the annual meeting of shareholders next succeeding the day upon
which he attained the age of 72 or 65, as specified in paragraphs (1),
(2), and (4) of this subsection (d), and if there is time remaining in
the regularly scheduled term of office of such director, then the
vacancy created by the cessation of such person as a director shall be
filled by the shareholders of the Corporation at such meeting of
shareholders as provided in section 2 of this article III of these
bylaws.
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(6) If a director of the Corporation ceases to be a director
because of termination of employment, as provided in paragraphs (1),
(2), and (4) of this subsection (d), or upon the determination of the
board of directors of the Corporation pursuant to paragraph (4) of this
subsection (d) that a director of the Corporation is no longer
qualified to continue serving as a director of the Corporation, the
board of directors shall declare the office held by such director
vacant and may fill such vacancy as provided in section 2 of this
article III of these bylaws.
(7) Without limiting the ability of the board of directors as
provided by applicable law to declare vacant the position of a director
on the board of directors, if a member of the board of directors has
been adjudged by a court of competent jurisdiction to be guilty of
fraud, criminal conduct (other than minor traffic violations), gross
abuse of office amounting to a breach of trust, or similar misconduct,
and no appeal (or further appeal) therefrom is permitted under
applicable law, the other directors then in office, by unanimous vote,
may declare the position occupied by such director vacant, and such
other directors may fill such vacancy as provided in section 2 of this
article III of these bylaws.
(e) REMOVAL. In this subsection (e), the terms "remove" and
"removal" and their related grammatical forms shall refer only to the process of
dismissal provided for in this subsection, and shall not be deemed to refer to
disqualification of a director, cessation of a director to be such, or
declaration of a vacancy in the office of director as provided for in subsection
(d) of this section 1 or otherwise as permitted by law.
A member of the board of directors may be removed by the
shareholders of the Corporation only for cause. Any such removal for cause shall
be at a special meeting of shareholders called for such purpose. The vote of the
holders of shares conferring 80% of the total votes of all shares of capital
stock of the Corporation voting as a single class shall be necessary to remove a
director; provided, however, that if a director has been elected by the exercise
of the privilege of cumulative voting, such director may not be removed if the
votes cast against his removal would be sufficient to elect him if then
cumulatively voted at an election of the class of directors of which he is a
part. For purposes of this subsection (e), cause for removal shall exist only if
a director shall have been adjudged by a court of competent jurisdiction to be
guilty of fraud, criminal conduct (other than minor traffic violations), gross
abuse of office amounting to a breach of trust, or similar misconduct, and no
appeal (or further appeal) therefrom shall be permitted under applicable law.
No proposal by a shareholder to remove a director of the
Corporation shall be voted upon at a meeting of shareholders unless, at least
180 days before such meeting, such shareholder shall have delivered in writing
to the secretary of the Corporation (1) notice of such proposal, (2) a statement
of the grounds on which such director is proposed to be removed, (3) evidence,
reasonably satisfactory to the secretary of the Corporation, of such
shareholder's status as such and of the number of shares of each class of the
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capital stock of the Corporation beneficially owned by such shareholder, (4) a
list of the names of other beneficial owners of shares of the capital stock of
the Corporation, if any, with whom such shareholder is acting in concert, and of
the number of shares of each class of the capital stock of the Corporation
beneficially owned by each such beneficial owner, and (5) an opinion of counsel,
which counsel and the form and substance of which opinion shall be reasonably
satisfactory to the board of directors of the Corporation (excluding the
director proposed to be removed), to the effect that, if adopted at a duly
called special meeting of the shareholders of the Corporation by the vote of the
holders of shares conferring 80% of the total votes of all shares of the capital
stock of the Corporation voting as single class, such removal would not be in
conflict with the laws of the State of Louisiana, the articles of incorporation
of the Corporation, or these bylaws. Within 30 days after such shareholder shall
have delivered the aforesaid items to the secretary of the Corporation, the
secretary and the board of directors of the Corporation shall respectively
determine whether the items to be ruled upon by them are reasonably satisfactory
and shall notify such shareholder in writing of their respective determinations.
If such shareholder fails to submit a required item in the form or within the
time indicated, or if the secretary or the board of directors of the Corporation
determines that the items to be ruled upon by them, respectively, as provided
above are not reasonably satisfactory, then such proposal by such shareholder
may not be voted upon by the shareholders of the Corporation at such meeting of
shareholders. Beneficial ownership shall be determined as specified in section 1
of article X of these bylaws.
(f) POWERS. Subject to the provisions of the laws of the State
of Louisiana, the articles of incorporation of the Corporation, and these
bylaws, the board of directors shall have and exercise, in addition to such
powers as are set forth in the articles of incorporation, all of the powers
which may be exercised by the Corporation, including, but without thereby
limiting the generality of the above, the power to create and to delegate, with
power to subdelegate, any of its powers to any committee, officer, or agent;
provided, however, that the board of directors shall not have the power to
delegate its authority to:
(1) amend, repeal, or supplement the bylaws of the
Corporation;
(2) take definitive action on a merger, consolidation,
reclassification or exchange of securities, repurchase by the
Corporation of any of its equity securities, transfer of all or
substantially all of the assets of the Corporation, dissolution,
"business combination" as defined in article X of these bylaws, or
similar action;
(3) elect or remove a director or officer of the
Corporation;
(4) submit a proposal to shareholders for action by
shareholders;
(5) appoint a director to or remove a director from a
committee of the board of directors; or
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(6) declare a dividend on the capital stock of the
Corporation.
(g) CHANGE IN NUMBER OF DIRECTORS. No amendment or supplement
to or repeal of subsection (a) of section 1 of article III of these bylaws that
would have the effect of increasing the number of authorized directors of the
Corporation by more than two during any 12-month period shall be permitted
unless at least 80% of the "continuing directors" then in office (as defined in
subsection (b) of section 2 of article II of these bylaws) shall authorize such
action. If the number of directorships is changed for any reason, any increase
or decrease in the number of directorships shall be apportioned among the
classes so as to make all classes as nearly equal in number as possible.
(h) RIGHTS OF PREFERRED SHAREHOLDERS, ETC. Nothing in this
section 1 of this article III of these bylaws shall affect the rights of the
Corporation's shareholders as provided in section 3(b) of article 6 of the
Corporation's articles of incorporation.
Section 2. FILLING OF VACANCIES. In the case of a vacancy in
the board of directors caused by the attainment by a director of the age of 72
or 65, as specified in paragraphs (1), (2), (4), and (5) of subsection (d) of
section 1 of this article III, in which case such director shall have continued
to serve as a director until the annual meeting of shareholders next succeeding
his attainment of such age, and in which case there shall be time remaining in
the regularly scheduled term of office of such director, such vacancy shall be
filled for the remaining regularly scheduled term of office of such director by
the shareholders of the Corporation at such meeting of shareholders. Except to
the extent required by law or section 3(b) of article 6 of the articles of
incorporation of the Corporation, in any other case in which a vacancy shall
occur in the board of directors (including without limitation a vacancy
resulting from an increase in the authorized number of directors,
disqualification or removal of a director, or from failure of the shareholders
to elect the full number of authorized directors), the remaining director or
directors, although less than a quorum of the whole board, may fill such vacancy
in the board for the scheduled term of the directorship thus filled. Except to
the extent required by law or section 3(b) of article 6 of the articles of
incorporation of the Corporation, and except as provided in these bylaws, the
shareholders shall have no right to fill vacancies (including without limitation
vacancies resulting from an increase in the authorized number of directors,
disqualification or removal of a director, or from failure of the shareholders
to elect the full number of authorized directors) on the board of directors.
Section 3. ANNUAL AND REGULAR MEETINGS. Within 45 days after
each annual meeting of shareholders, and if possible on the date of each annual
meeting of shareholders immediately following each such meeting, the board of
directors shall hold an annual meeting for the purpose of electing officers and
transacting other corporate business. Such meeting shall be called in the manner
for calling regular or special meetings of the board of directors.
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Other regular meetings of the board of directors shall be held
on the fourth Friday in January and on the third Friday after the first Monday
in the months of July and October at such places as the president may direct in
the notices of such meetings. At least five days' notice by mail or written
telecommunication shall be given to each director of the time and place of
holding each regular meeting of the board of directors.
Section 4. SPECIAL MEETINGS. A special meeting of the board of
directors may be called by the president, to be held at such place as he may
direct in the notice of such meeting, on four days' notice by mail or three
days' notice by written telecommunication, to each director. A special meeting
shall be called by the president in like manner on the written request of at
least 50% of the members of the board.
Section 5. PLACE OF MEETINGS; TELEPHONE MEETINGS. A meeting of
the board of directors may be held either within or without the State of
Louisiana. The time and place of holding a regular or special meeting of the
board of directors may be changed and another place and time fixed for such
regular or special meeting by a majority of the members of the board.
The members of the board of directors, and a committee
thereof, may participate in and hold a meeting of the board or of such committee
by means of conference telephone or similar communications equipment provided
that all persons participating in such meeting can hear and communicate with one
another. Participation in a meeting pursuant to this provision shall constitute
presence in person at such meeting, except where a person participates in such
meeting for the express purpose of objecting to the transaction of any business
on the grounds that such meeting was not lawfully called or convened.
Section 6. QUORUM. A majority of the directors shall
constitute a quorum, but a smaller number may adjourn a meeting from time to
time without further notice until a quorum is secured. If a quorum is present,
the directors present can continue to do business until adjournment
notwithstanding the subsequent withdrawal of enough directors to leave less than
a quorum or the refusal of any director present to vote.
Section 7. COMPENSATION. Each director shall be entitled to
receive from the Corporation reimbursement of his expenses incurred in attending
any regular or special meeting of the board and, by resolution of the board,
such other compensation as it may approve. Such reimbursement and compensation
shall be payable whether or not an adjournment be had because of the absence of
a quorum. Nothing herein contained shall be construed to preclude any director
from serving the Corporation in another capacity and receiving compensation
therefor.
Section 8. COMMITTEES. From time to time, the board of
directors may appoint, from its own number, in addition to the committees
provided for in these bylaws, such other committee or committees for such
purpose or purposes as it shall determine. Subject to the limitations imposed by
these bylaws, the articles of incorporation, and the
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laws of the State of Louisiana, each committee of the board of directors shall
have such powers as shall be specified in the resolution of appointment.
ARTICLE IV
Indemnification
Section 1. RIGHT TO INDEMNIFICATION - GENERAL. The Corporation
shall indemnify any person who was or is, or is threatened to be made, a party
to or otherwise involved in any pending or completed action, suit, arbitration,
alternate dispute resolution mechanism, investigation, administrative hearing or
other proceeding, whether civil, criminal, administrative or investigative (any
such threatened, pending or completed proceeding being hereinafter called a
"Proceeding") by reason of the fact that he is or was a director, officer,
employee or agent of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another business,
foreign or nonprofit corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise (whether the basis of his involvement in such
Proceeding is alleged action in an official capacity or in any other capacity
while serving as such), to the fullest extent permitted by applicable law in
effect on October 1, 1986, and to such greater extent as applicable law may
thereafter from time to time permit, from and against expenses, including
attorney's fees, judgments, fines, amounts paid or to be paid in settlement,
liability and loss, ERISA excise taxes, actually and reasonably incurred by him
or on his behalf or suffered in connection with such Proceeding or any claim,
issue or matter therein; provided, however, that, except as provided in section
5 of this article, the Corporation shall indemnify any such person claiming
indemnity in connection with a Proceeding initiated by such person only if such
Proceeding was authorized by the board of directors.
Section 2. CERTAIN PROVISIONS RESPECTING INDEMNIFICATION FOR
AND ADVANCEMENT OF EXPENSES.
(a) To the extent that a person referred to in section 1 of
this article is required to serve as a witness in any Proceeding referred to
therein, he shall be indemnified against all Expenses (as hereinafter defined)
actually and reasonably incurred by him or on his behalf in connection with
serving as a witness.
(b) The Corporation shall from time to time pay, in advance of
final disposition, all Expenses incurred by or on behalf of any person referred
to in section 1 of this article claiming indemnity thereunder in respect of any
Proceeding referred to therein. Each such advance shall be made within ten days
after the receipt by the Corporation of a statement from the claimant requesting
the advance, which statement shall reasonably evidence the relevant Expenses and
be accompanied or preceded by any such undertaking as may be required by
applicable law respecting the contingent repayment of such Expenses. Whenever
and to the extent applicable law requires the board of directors to act in the
specific case with respect to the payment of Expenses in
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advance of the final disposition of any Proceeding, the board of directors shall
act with respect thereto within the period specified in the preceding sentence
and shall withhold the payment of Expenses in advance only if there is a
reasonable and prompt determination by the board of directors by a majority vote
of a quorum of Disinterested Directors (as hereinafter defined), or (if such
quorum is not obtainable or, even if obtainable, a quorum of Disinterested
Directors so directs) by Independent Counsel (as hereinafter defined) in a
written opinion, that advancement of Expenses is inappropriate, even taking into
account any undertaking given with respect to the repayment of such Expenses,
because based on the facts then known there is no reasonable likelihood that the
claimant would be able ultimately to demonstrate that he met the standard of
conduct necessary for indemnification with respect to such Expenses.
Section 3. PROCEDURE FOR DETERMINATION OF ENTITLEMENT TO
INDEMNIFICATION.
(a) To obtain indemnification under this article, a claimant
shall submit to the Corporation a written application. The secretary of the
Corporation shall, promptly upon receipt of such an application for
indemnification, advise the board of directors in writing of the application. In
connection with any such application, the claimant shall provide such
documentation and information as is reasonably requested by the Corporation and
reasonably available to him and relevant to a determination of entitlement to
indemnification.
(b) A person's entitlement to indemnification under this
article, unless ordered by a court, shall be determined, as required or
permitted by applicable law: (i) by the board of directors by a majority vote of
a quorum consisting of Disinterested Directors, (ii) if a quorum of the board of
directors consisting of Disinterested Directors is not obtainable or, even if
obtainable, a quorum of Disinterested Directors so directs, by Independent
Counsel in a written opinion, or (iii) by the shareholders of the Corporation;
provided, however, that if a Change of Control (as hereafter defined) shall have
occurred, no determination of entitlement to indemnification adverse to the
claimant shall be made other than one made or concurred in by Independent
Counsel, selected as provided in paragraph (d) of this section, in a written
opinion.
(c) If the determination of entitlement to indemnification is
to be made by Independent Counsel in the absence of a Change of Control, the
Corporation shall furnish notice to the claimant within ten days after receipt
of the application for indemnification specifying the identity and address of
Independent Counsel. The claimant may, within fourteen days after receipt of
such written notice of selection, deliver to the Corporation a written objection
to such selection, subject to paragraph (e) of this section. If such an
objection is made, either the Corporation or the claimant may petition any court
of competent jurisdiction for a determination that the objection has no
reasonable basis or for the appointment as Independent Counsel of counsel
selected by the court.
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(d) If there has been a Change of Control, Independent Counsel
to act as and to the extent required by paragraph (b) of this section or
paragraph (b) of section 2 shall be selected by the claimant, who shall give the
Corporation written notice advising of the identity and address of the
Independent Counsel so selected. The Corporation may, within seven days after
receipt of such written notice of selection, deliver to the claimant a written
objection to such selection, subject to paragraph (e) of this section. The
claimant may, within five days after the receipt of such objection, select other
counsel to act as Independent Counsel, and the Corporation may, within seven
days after receipt of such written notice of selection, deliver to the claimant
a written objection, as aforesaid, to such second selection. In the case of any
such objection the claimant may petition any court of competent jurisdiction for
a determination that the objection has no reasonable basis or for the
appointment as Independent Counsel of counsel selected by the court.
(e) Any objection to the selection of Independent Counsel may
be asserted only on the ground that the counsel so selected does not qualify as
Independent Counsel under the definition contained in section 7 of this article,
and the objection shall set forth with particularity the basis of such
assertion. No counsel selected by the Corporation or by the claimant may serve
as Independent Counsel if a timely objection has been made to his selection
unless a court has determined that such objection has no reasonable basis.
(f) The Corporation shall pay any and all reasonable fees and
expenses of Independent Counsel acting pursuant to this article and in any
proceeding in which such counsel is a party or a witness in respect of its
investigation and report. The Corporation shall pay all reasonable fees and
expenses incident to the procedures of this section regardless of the manner in
which Independent Counsel is selected or appointed.
Section 4. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS.
(a) A person referred to in section 1 of this article claiming
a right to indemnification under this article shall be presumed (except as may
be otherwise expressly provided in this article or required by applicable law)
to be entitled to such indemnification upon submission of an application for
indemnification in accordance with section 3, and the Corporation shall have the
burden of proof to overcome the presumption in any determination contrary to the
presumption.
(b) Unless the determination is to be made by Independent
Counsel, if the person or persons empowered under section 3 of this article to
determine entitlement to indemnification shall not have made and furnished the
determination in writing to the claimant within 60 days after receipt by the
Corporation of the application for indemnification, the determination of
entitlement to indemnification shall be deemed to have been made in favor of the
claimant unless the claimant knowingly misrepresented a material fact in
connection with the application or such indemnification is prohibited by law.
The termination of any Proceeding, or of any claim, issue or matter therein, by
judgment, order, settlement or conviction, or upon a plea of nolo contender or
its
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equivalent, shall not of itself adversely affect the right of a claimant to
indemnification or create a presumption that a claimant did not act in a manner
which would deny him the right to indemnification.
Section 5. RIGHT OF CLAIMANT TO BRING SUIT.
(a) If (i) a determination is made pursuant to the procedures
contemplated by section 3 of this article that a claimant is not entitled to
indemnification under this article, (ii) advancement of Expenses is not timely
made pursuant to paragraph (b) of section 2 of this article, (iii) Independent
Counsel has not made and delivered a written opinion as to entitlement to
indemnification within 90 days after the selection or appointment of counsel has
become final by virtue of the lapse of time for objection or the overruling of
objections or appointment of counsel by a court, or (iv) payment of a claim for
indemnification is not made within five days after a favorable determination of
entitlement to indemnification has been made or deemed to have been made
pursuant to section 3 or 4 of this article, the claimant shall be entitled to
bring suit against the Corporation to establish his entitlement to such
indemnification or advancement of Expenses and to recover the unpaid amount of
his claim. It shall be a defense to any such action (other than an action
brought to enforce a claim for Expenses incurred in defending any Proceeding in
advance of its final disposition where the required undertaking, if any is
required, has been tendered to the Corporation) that the claimant did not meet
the applicable standard of conduct which makes it permissible for the
Corporation to indemnify the claimant for the amount claimed, but the burden of
proving such defense shall be upon the Corporation. Neither the failure of the
Corporation (including its board of directors, Independent Counsel or its
shareholders) to have made a determination before the commencement of such
action that indemnification of the claimant is proper under the circumstances
because he has met such applicable standard of conduct, nor an actual
determination by the Corporation (including its board of directors, Independent
Counsel or its shareholders) that the claimant has not met the applicable
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct, and the
claimant shall be entitled to a de novo trial on the merits as to any such
matter as to which no determination or an adverse determination has been made.
(b) If a claimant is successful in whole or in part in
prosecuting any claim referred to in paragraph (a) of this section, the claimant
shall also be entitled to recover from the Corporation, and shall be indemnified
by the Corporation against, any and all Expenses actually and reasonably
incurred by him in prosecuting such claim.
Section 6. NON-EXCLUSIVITY AND SURVIVAL OF RIGHTS. The rights
of indemnification and to receive advancement of Expenses contemplated by this
article shall not be deemed exclusive of any other rights to which any person
may at any time be entitled under any bylaw, agreement, authorization of
shareholders or directors (regardless of whether directors authorizing such
indemnification are beneficiaries thereof), or otherwise, both as to action in
his official capacity and as to action in another
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capacity; provided that no other indemnification measure shall permit
indemnification of any person for the results of such person's willful or
intentional misconduct.
The Corporation may procure or maintain insurance or other
similar arrangement, at its expense, to protect itself and any director,
officer, employee or agent of the Corporation or other corporation, partnership,
joint venture, trust or other enterprise against any expense, liability or loss
asserted against or incurred by such person, whether or not the Corporation
would have the power to indemnify such person against such expense or liability.
In considering the cost and availability of such insurance,
the Corporation, in the exercise of its business judgment, may purchase
insurance which provides for any and all of (i) deductibles, (ii) limits on
payments required to be made by the insurer, or (iii) coverage which may not be
as comprehensive as that previously included in insurance purchased by the
Corporation. The purchase of insurance with deductibles, limits on payments and
coverage exclusions will be deemed to be in the best interest of the Corporation
but may not be in the best interest of certain of the persons covered thereby.
As to the Corporation, purchasing insurance with deductibles, limits on
payments, and coverage exclusions is similar to the Corporation's practice of
self-insurance in other areas. In order to protect the officers and directors of
the Corporation, the Corporation shall indemnify and hold each of them harmless
as provided in section 1 of this article IV, without regard to whether the
Corporation would otherwise be entitled to indemnify such officer or director
under the other provisions of this article IV, to the extent (i) of such
deductibles, (ii) of amounts exceeding payments required to be made by an
insurer or (iii) that prior policies of officers and directors liability
insurance held by the Corporation would have provided for payment to such
officer or director. Notwithstanding the foregoing provisions of this section 6,
no person shall be entitled to indemnification for the results of such person's
willful or intentional misconduct. This section 6 is authorized by section 83(E)
of the Louisiana Business Corporation Law as in effect on October 1, 1986, and
further is intended to establish an arrangement of self-insurance pursuant to
section 83(F) of the Louisiana Business Corporation Law as in effect on October
1, 1986.
The right to indemnification conferred in this article shall
be a contract right, and no amendment, alteration or repeal of this article or
any provision thereof shall restrict the indemnification rights granted by this
article as to any person claiming indemnification with respect to acts, events
and circumstances that occurred, in whole or in part, before such amendment,
alteration or repeal. The provisions of this article shall continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of his heirs, executors and legal representatives.
Section 7. DEFINITIONS. For purposes of this article:
(a) "Change of Control" means the occurrence after October l,
1986 of any of the following events or circumstances: (1) there shall have
occurred an event
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required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A (or in response to any similar item on any similar schedule or form)
promulgated under the Securities Exchange Act of 1934, as amended (the "Act"),
whether or not the Corporation is then subject to such reporting requirement;
(2) (i) any "person" (as such term is used in Section 13(d) and 14(d) of the
Act) shall have become the "beneficial owner" (as defined in Rule 13d-3 under
the Act), directly or indirectly, of securities of the Corporation representing
30% or more of the combined voting power of the Corporation's then outstanding
voting securities without the prior approval of at least two-thirds of the
members of the board of directors in office immediately before such person's
attaining such percentage interest; (3) the Corporation is a party to a merger,
consolidation, sale of assets or other reorganization, or the subject of a proxy
contest, as a consequence of which members of the board of directors in office
immediately before such transaction or event constitute less than a majority of
the board of directors thereafter; (4) during any period of two consecutive
years, individuals who at the beginning of such period constituted the board of
directors (including for this purpose any new director whose election or
nomination for election by the Corporation's shareholders was approved by a vote
of at least two-thirds of the directors then still in office who were directors
at the beginning of such period) cease for any reason to constitute at least a
majority of the board of directors.
(b) "Disinterested Director" means a director of the
Corporation who is not and was not a party to the Proceeding in respect of which
indemnification is sought as provided in this article.
(c) "Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees, and all other disbursements or expenses of the
types customarily incurred in connection with prosecuting, defending, preparing
to prosecute or defend, investigating, or being or preparing to be a witness in
a Proceeding.
(d) "Independent Counsel" means a law firm, or a member of a
law firm, with substantial experience in matters of corporation law that neither
presently is, nor in the five years before his selection or appointment has
been, retained to represent: (i) the Corporation or person claiming
indemnification in any matter material to either, or (ii) any other party to the
Proceeding giving rise to a claim for indemnification hereunder, and is not
otherwise precluded under applicable professional standards from acting in the
capacity herein contemplated.
ARTICLE V
Executive Committee
Section 1. ELECTION AND TENURE. The board of directors may
appoint an executive committee consisting of such number of directors as it may
appoint, to serve at
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the pleasure of the board of directors, but in any event not beyond the next
annual meeting of the board of directors. The board may at any time, without
notice, remove and replace any member of the executive committee.
Section 2. POWERS. Subject to the provisions of subsection (f)
of section 1 of article III of these bylaws, the executive committee shall have
and may exercise all powers of the board of directors between meetings of the
board.
Section 3. MEETINGS. The executive committee shall meet at
stated times or on notice to all by one of its number, in which notice the time
and place of the meeting shall be set forth. The executive committee shall fix
its own rules of procedure, and a majority shall constitute a quorum; but the
affirmative vote of a majority of the whole committee shall be necessary in
every case. The executive committee shall keep regular minutes of its
proceedings and report the same to the board of directors.
Section 4. COMPENSATION. Members of the executive committee,
other than officers of the Corporation, shall receive such compensation for
their services as shall be prescribed by the board of directors. Each member of
the executive committee shall be entitled to receive from the Corporation
reimbursement of his expenses incurred in attending a meeting of such committee.
ARTICLE VI
Audit Committee
Section 1. ELECTION AND TENURE. The board of directors may
appoint an audit committee, consisting of such number of directors as it may
appoint, to serve at the pleasure of the board of directors, but in any event
not beyond the next annual meeting of the board of directors. The board may at
any time, without notice, remove and replace any member of the audit committee.
Section 2. AUDIT COMMITTEE. The audit committee shall
recommend to the board of directors the accounting firm to be selected by the
board or to be recommended by it for shareholder approval, as independent
auditors of the Corporation and its subsidiaries, and to act on behalf of the
board in meeting and reviewing with the independent auditors, the chief internal
auditor, and the appropriate corporate officers matters relating to corporate
financial reporting and accounting procedures and policies, adequacy of
financial, accounting, and operating controls, and the scope of the respective
audits of the independent auditors and the internal auditor. The audit committee
shall review the results of each audit with the respective auditing agency and
shall promptly report thereon to the board of directors. The audit committee
shall additionally submit to the board of directors any recommendations it may
have from time to time with respect to financial reporting and accounting
practices and policies and financial, accounting, and operational controls and
safeguards including establishment and implementation of standards of proper
employee and corporate conduct. Subject to the provisions of
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subsection (f) of section 1 of article III of these bylaws, the audit committee
shall have such other functions as may be authorized or directed from time to
time by the board of directors.
Section 3. MEETINGS. The audit committee shall meet at stated
times or on notice to all by one of its number, in which notice the time and
place of the meeting shall be set forth. The audit committee shall fix its own
rules of procedure, and a majority shall constitute a quorum; but the
affirmative vote of a majority of the whole committee shall be necessary in
every case. The audit committee shall keep regular minutes of its proceedings
and report the same to the board of directors.
Section 4. COMPENSATION. Members of the audit committee, other
than officers of the Corporation, shall receive such compensation for their
services as shall be prescribed by the board of directors. Each member of the
audit committee shall be entitled to receive from the Corporation reimbursement
of his expenses incurred in attending a meeting of the audit committee.
ARTICLE VII
Compensation Committee
Section 1. ELECTION AND TENURE. The board of directors may
appoint a compensation committee, consisting of such number of directors as it
may appoint, to serve at the pleasure of the board of directors, but in any
event not beyond the next annual meeting of the board of directors. The board
may at any time, without notice, remove and replace any member of the
compensation committee.
Section 2. COMPENSATION COMMITTEE. The compensation committee
shall make recommendations to the board of directors concerning the compensation
of the executives and other employees of the Corporation and matters related to
benefits for employees. Subject to the provisions of subsection (f) of section 1
of article III of these bylaws, the compensation committee shall have such other
functions as may be authorized or directed from time to time by the board of
directors.
Section 3. MEETINGS. The compensation committee shall meet at
stated times or on notice to all by one of its number, in which notice the time
and place of the meeting shall be set forth. The compensation committee shall
fix its own rules of procedure, and a majority shall constitute a quorum; but
the affirmative vote of the majority of the whole committee shall be necessary
in every case. The compensation committee shall keep regular minutes of its
proceedings and report the same to the board of directors.
Section 4. COMPENSATION. Members of the compensation
committee, other than officers of the Corporation, shall receive such
compensation for their services as shall be prescribed by the board of
directors. Each member of the compensation
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committee shall be entitled to receive from the Corporation reimbursement of his
expenses incurred in attending a meeting of the compensation committee.
ARTICLE VIII
Officers
Section 1. ELECTION, TENURE, AND COMPENSATION. The officers of
the Corporation shall consist of a president, one or more vice presidents, a
secretary, a treasurer, and such other officers, including a chairman of the
board of directors, as may from time to time be elected or appointed by the
board of directors. Officers of the Corporation shall be elected annually by the
board of directors as provided in section 3 of article III of these bylaws. If
such annual election is not held, the officers then in office shall remain as
such until their respective successors shall be elected and qualify. No officer,
except the chairman of the board of directors, need be a director, and any two
or more offices, except the offices of president and vice president, may be held
by one person. The powers of all officers of the Corporation shall be subject to
the provisions of subsection (f) of section 1 of article III of these bylaws.
Section 2. POWERS AND DUTIES OF CHAIRMAN OF BOARD OF
DIRECTORS. The chairman of the board of directors, if any, shall, when present,
preside at all meetings of the board of directors. He shall be chief executive
officer of the Corporation and, as such, he shall (a) have general and active
management of the business of the Corporation, (b) have the general supervision
and direction of the other officers of the Corporation and shall see that their
duties are properly performed, (c) see that all orders and resolutions of the
board of directors are carried into effect, (d) have the power to execute
contracts and conveyances on behalf of the Corporation, and (e) perform such
other functions normally performed by a chief executive officer. The chairman of
the board of directors shall perform such other duties as from time to time may
be delegated to him by the board of directors.
Section 3. POWERS AND DUTIES OF PRESIDENT. The president shall
be the chief executive officer of the Corporation when no chairman of the board
has been elected and, as such, shall perform the duties specified for the chief
executive officer in section 2 of this article VIII. The president shall be
chief operating officer of the Corporation and, subject to the direction of the
chairman of the board of directors, if any, shall be responsible for the
administration and operation of the Corporation's business. He shall have the
power to execute and deliver contracts and conveyances (including without
limitation conveyances of real and personal property to and by the Corporation)
for and on behalf of the Corporation.
Section 4. POWERS AND DUTIES OF VICE PRESIDENT. The board of
directors may appoint one more vice presidents. Each vice president shall have
the power to execute contracts and conveyances on behalf of the Corporation, and
shall have such
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other powers and shall perform such other duties as may be assigned to him by
the board of directors or by the president.
Section 5. POWERS AND DUTIES OF SECRETARY. The secretary shall
attend and record, in a book kept for such purpose, the proceedings of all
meetings of the shareholders of the Corporation and of the board of directors.
He shall keep an account of stock registered and transferred in such manner as
the board of directors may prescribe. He shall keep the seal of the Corporation
and, when authorized by the board of directors or the executive committee, he
shall affix the seal of the Corporation to any instrument requiring the same,
and attest the same by his signature, or cause the same to be attested by the
signature of an assistant secretary. He shall give proper notice of meetings of
shareholders and directors and shall perform such other duties as shall be
assigned to him. Assistant secretaries shall have such duties as the board of
directors may from time to time prescribe.
Section 6. POWERS AND DUTIES OF TREASURER. The treasurer shall
have custody of the funds and securities of the Corporation, shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
Corporation, and shall deposit or cause to be deposited all moneys and other
valuable effects in the name and to the credit of the Corporation in such
depositories as may be designated by the board of directors. He shall disburse
or cause to be disbursed the funds of the Corporation as may be ordered by the
board of directors, executive committee, or president, taking proper vouchers
for such disbursements, and shall render to the president, and the directors at
the regular meetings of the board of directors, or whenever they require it, an
account of all his transactions as treasurer and of the financial condition of
the Corporation, and at the regular meeting of the board of directors next
preceding the annual shareholders' meeting, a like report for the preceding
fiscal year. He shall give the Corporation a bond, if required by the board of
directors, in such sum and in form and with security satisfactory to the board
of directors, for the faithful performance of the duties of his office and the
restoration to the Corporation, in case of his death, resignation, or removal
from office, of all books, papers, vouchers, moneys, and other property of
whatever kind in his possession belonging to the Corporation. He shall perform
such other duties as the board of directors or executive committee may from time
to time prescribe. Assistant treasurers shall have such duties as the board of
directors may from time to time prescribe.
Section 7. DELEGATION OF DUTIES. In case of the absence or
disability of any officer of the Corporation, or for any other reason deemed
sufficient by the board of directors, the board of directors may delegate such
officer's powers or duties for the time being to any other officer, to any
employee with management responsibility, or to any director.
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ARTICLE IX
Capital Stock
Section 1. STOCK CERTIFICATES. Certificates representing
shares of the capital stock of the Corporation shall be signed by either the
president or one of the vice presidents of the Corporation and also by the
secretary or an assistant secretary, or the treasurer or an assistant treasurer.
Such certificates shall have affixed an impression of the seal of the
Corporation. Where such certificates are countersigned by a transfer agent and
by a registrar, both of which may be the same institution, the signatures of
such officers and the seal of the Corporation thereon may be facsimiles,
engraved or printed. If an officer of the Corporation who shall have signed a
certificate of capital stock, or whose facsimile signature has been affixed for
such purpose, shall cease to be such officer of the Corporation before the stock
certificate so signed shall have been issued by the Corporation, such stock
certificate may nevertheless be issued and delivered with the same force and
effect as though the person who signed such certificate or whose facsimile
signature has been affixed for such purpose had not ceased to be such officer of
the Corporation.
Section 2. LOST OR DESTROYED CERTIFICATES. The board of
directors may determine the conditions upon which a new certificate for capital
stock of the Corporation may be issued in place of a certificate which is
alleged to have been lost, stolen, or destroyed and may, in its discretion,
require the owner of such certificate or his legal representative to give bond
with sufficient surety to the Corporation to indemnify it against any loss or
claim which may arise by reason of the issue of a new certificate in the place
of the one so alleged to have been lost, stolen, or destroyed.
Section 3. TRANSFER OF SHARES. The shares of capital stock of
the Corporation shall be transferable only upon its books by the holders thereof
in person or by their duly authorized attorneys or legal representatives, and
upon such transfer the old certificates shall be surrendered to the Corporation
by the delivery thereof to the person in charge of the stock or transfer books
and ledgers, or to such other person as the board of directors may designate, by
whom they shall be cancelled. New certificates shall thereupon be issued,
representing the shares so transferred. A record shall be made of each transfer.
Section 4. DIVIDENDS. Dividends upon the capital stock may be
declared by the board of directors at a regular or special meeting out of the
net profits or surplus of the Corporation. Before paying a dividend or making a
distribution of profits, there may be set aside out of the accumulated profits
of the Corporation such sum or sums as the directors from time to time, in their
absolute discretion, think proper as a reserve fund for meeting contingencies or
for equalizing dividends or for repairing or maintaining property of the
Corporation or for such other purpose as the directors shall think conducive to
the interests of the Corporation.
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Section 5. CLOSING TRANSFER BOOKS; FIXING RECORD DATE. The
board of directors may fix the time, not exceeding 60 days preceding the date of
a meeting of shareholders, a dividend payment date, or a date for the allotment
of rights, during which the books of the Corporation shall be temporarily closed
against transfers of stock; or, in lieu thereof, the board of directors may fix
a date, not exceeding 60 days preceding the date of a meeting of shareholders, a
dividend payment date, or a date for the allotment of rights, as a date for the
taking of a record of the shareholders entitled to notice of and to vote at such
meeting, or entitled to receive such dividends or such rights, as the case may
be; and only shareholders of record on such date shall be entitled to notice of
and to vote at such meeting, or to receive such dividends or rights, as the case
may be.
ARTICLE X
Fair-Price Provisions
Section 1. DEFINITIONS. As used in article X of these bylaws,
the following terms shall have the indicated meanings:
(a) "Affiliate," including the term "affiliated person," means
a person that directly or indirectly through one or more intermediaries
controls, is controlled by, or is under common control with, a specified person.
(b) "Associate," when used to indicate a relationship with any
person, means any of the following:
(1) A corporation or organization, other than the Corporation
or a subsidiary of the Corporation, of which such person is an officer,
director, or partner or is, directly or indirectly, the beneficial
owner of 10% or more of any class of equity securities.
(2) A trust or other estate in which such person has a
substantial beneficial interest or as to which such person serves as
trustee or in a similar fiduciary capacity.
(3) A relative or spouse of such person, or any relative of
such spouse, who has the same home as such person or who is a director
or officer of the Corporation or any of its affiliates.
(c) "Beneficial owner," when used with respect to voting
stock, means any of the following:
(1) A person who individually or with any of his affiliates or
associates beneficially owns voting stock, directly or indirectly.
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(2) A person who individually or with any of his affiliates or
associates has either of the following rights:
(A) To acquire voting stock, whether such right is
exercisable immediately or only after the passage of time,
pursuant to any agreement, arrangement, or understanding or
upon the exercise of conversion rights, exchange rights,
warrants, or options, or otherwise.
(B) To vote voting stock pursuant to any agreement,
arrangement, or understanding.
(3) A person who has any agreement, arrangement, or
understanding for the purpose of acquiring, holding, voting, or
disposing voting stock with any other person who beneficially owns or
whose affiliates beneficially own, directly or indirectly, such shares
of voting stock.
(d) "Business combination" means any of the following:
(1) Except for a merger, consolidation, or share exchange that
does not alter the contract rights of the stock as expressly set forth
in the articles of incorporation of the Corporation or change or
convert in whole or in part the outstanding shares of the Corporation,
any merger, consolidation, or share exchange of the Corporation or any
subsidiary with:
(A) An interested shareholder; or
(B) Another corporation, whether or not itself an
interested shareholder, which is, or after the merger,
consolidation, or share exchange would be, an affiliate of an
interested shareholder that was an interested shareholder
before the transaction.
(2) A sale, lease, transfer, or other disposition, other than
in the ordinary course of business, in one transaction or a series of
transactions in any twelve-month period, to an interested shareholder
or any affiliate of an interested shareholder, other than the
Corporation or any of its subsidiaries, of any assets of the
Corporation or any subsidiary having, measured at the time the
transaction or transactions are approved by the board of directors of
the Corporation, an aggregate book value as of the end of the
Corporation's most recently ended fiscal quarter of 10% or more of the
total market value of the outstanding stock of the Corporation or of
its net worth as of the end of its most recently ended fiscal quarter.
(3) The issuance or transfer by the Corporation or any
subsidiary, in one transaction or a series of transactions, of any
equity securities of the Corporation or any subsidiary which has an
aggregate market value of five percent or more of
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the total market value of the outstanding stock of the Corporation, to
any interested shareholder or any affiliate of any interested
shareholder, other than the Corporation or any of its subsidiaries,
except pursuant to the exercise of warrants or rights to purchase
securities offered pro rata to all holders of the Corporation's voting
stock or any other method affording substantially proportionate
treatment of the holders of voting stock.
(4) The adoption of a plan or proposal for the liquidation or
dissolution of the Corporation in which anything other than cash will
be received by an interested shareholder or an affiliate of an
interested shareholder.
(5) A reclassification of securities, including a reverse
stock split or recapitalization of the Corporation, or any merger,
consolidation, or share exchange of the Corporation with any of its
subsidiaries which has the effect, directly or indirectly, in one
transaction or a series of transactions, of increasing by five percent
or more of the total number of outstanding shares the proportionate
amount of the outstanding shares of any class of equity securities of
the Corporation or any subsidiary which is directly or indirectly owned
by an interested shareholder or an affiliate of an interested
shareholder.
(e) "Common stock" means stock other than preferred or
preference stock.
(f) "Control," including the terms "controlling," "controlled
by," and "under common control with," means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting securities, by
contract, or otherwise. The beneficial ownership of 10% or more of the votes
entitled to be cast of a corporation's voting stock creates a presumption of
control.
(g) "Equity security" means any of the following:
(1) Stock or a similar security, certificate of interest, or
participation in any profit sharing agreement, voting trust
certificate, or certificate of deposit for an equity security.
(2) A security convertible, with or without consideration,
into an equity security, or any warrant or other security carrying any
right to subscribe to or purchase an equity security.
(3) Any put, call, straddle, or other option or privilege of
buying an equity security from or selling an equity security to another
without being bound to do so.
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(h)(1) "Interested shareholder" means any person other than
the Corporation or any subsidiary that is either of the following:
(A) The beneficial owner, directly or indirectly, of
10% or more of the voting power of the outstanding voting
stock of the Corporation.
(B) An affiliate of the Corporation who at any time
within the two-year period immediately before the date in
question was the beneficial owner, directly or indirectly, of
10% or more of the voting power of the then outstanding voting
stock of the Corporation.
(2) For the purpose of determining whether a person is an
interested shareholder, the number of shares of voting stock deemed to
be outstanding shall include shares deemed owned by the person through
application of subsection (c) of this section, but may not include any
other shares of voting stock which may be issuable pursuant to any
agreement, arrangement, or understanding, or upon exercise of
conversion rights, warrants, or options, or otherwise.
(i) "Market value" means the following:
(A) In the case of stock, the highest closing sale
price during the 30-day period immediately preceding the date
in question of a share of such stock on the principal United
States securities exchange registered under the Securities
Exchange Act of 1934 on which such stock is listed, or if such
stock is not listed on any such exchange, the highest closing
bid quotation with respect to a share of such stock during the
30-day period preceding the date in question on the National
Association of Securities Dealers, Inc., Automated Quotations
System or any system then in use, or if no such quotations are
available, the fair market value on the date in question of a
share of such stock as determined by the board of directors of
the Corporation in good faith.
(B) In the case of property other than cash or stock,
the fair market value of such property on the date in question
as determined by the board of directors of the Corporation in
good faith.
(j) "Subsidiary" means any corporation of which voting stock
having a majority of the votes entitled to be cast is owned, directly or
indirectly, by the Corporation.
(k) "Voting stock" means shares of capital stock of a
corporation entitled to vote generally in the election of directors.
Section 2. VOTE REQUIRED IN BUSINESS COMBINATIONS. In addition
to any vote otherwise required by law or the articles of incorporation of the
Corporation, a
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business combination shall be recommended by the board of directors and approved
by the affirmative vote of at least each of the following:
(a) 80% of the votes entitled to be cast by outstanding shares
of voting stock of the Corporation voting together as a single voting group.
(b) Two-thirds of the votes entitled to be cast by holders of
voting stock other than voting stock held by the interested shareholder who is
or whose affiliate is a party to the business combination or an affiliate or
associate of the interested shareholder, voting together as a single voting
group.
Section 3. WHEN VOTING REQUIREMENTS NOT APPLICABLE.
(a) DEFINITIONS. For purposes of subsection (b) of this
section, the following terms shall have the indicated meanings:
(1) "Announcement date" means the first general public
announcement of a proposal or intention to make a proposal of a
business combination or its first communication generally to
shareholders of the Corporation, whichever is earlier.
(2) "Determination date" means the date on which an interested
shareholder first became an interested shareholder.
(3) "Valuation date" means the following:
(A) For a business combination voted upon by
shareholders, the later of (i) the day before the day of the
shareholders' vote or (ii) the day 20 days before the
consummation of the business combination.
(B) For a business combination not voted upon by
shareholders, the date of the consummation of the business
combination.
(b) CONDITIONS. The vote required by section 2 of this article
X shall not apply to a business combination, as defined in section 1 of this
article X, if each of the following conditions is met:
(1) The aggregate amount of the cash and the market value as
of the valuation date of consideration other than cash to be received
per share by holders of common stock in such business combination is at
least equal to the highest of the following:
(A) The highest per share price, including any
brokerage commissions, transfer taxes, and soliciting dealers'
fees, paid by the interested shareholder for any shares of
common stock of the same class or series that he acquired:
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(i) within the two-year period immediately
before the announcement date of the proposal of the
business combination; or
(ii) in the transaction in which he became an
interested shareholder, whichever is higher; or
(B) The market value per share of common stock of the
same class or series on the announcement date or on the
determination date, whichever is higher; or
(C) The price per share equal to the market value per
share of common stock of the same class or series determined
pursuant to subparagraph (B) immediately preceding, multiplied
by the fraction of:
(i) The highest per share price, including any
brokerage commissions, transfer taxes, and soliciting
dealers' fees, paid by the interested shareholder for
shares of common stock of the same class or series that
he acquired within the two-year period immediately
before the announcement date, over
(ii) The market value per share of common stock
of the same class or series on the first day in such
two-year period on which the interested shareholder
acquired shares of common stock.
(2) The aggregate amount of the cash and the market value as
of the valuation date of consideration other than cash to be received
per share by holders of shares of any class or series of outstanding
stock other than common stock is at least equal to the highest of the
following, whether or not the interested shareholder has previously
acquired shares of a particular class or series of stock:
(A) The highest per share price, including any
brokerage commissions, transfer taxes, and soliciting dealers'
fees, paid by the interested shareholder for any shares of
such class of stock that he acquired:
(i) within the two-year period immediately
before the announcement date of the proposal of the
business combination; or
(ii) in the transaction in which he became an
interested shareholder, whichever is higher; or
(B) The highest preferential amount per share to which
the holders of shares of such class of stock are entitled in
the event of voluntary or involuntary liquidation,
dissolution, or winding up of the Corporation; or
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(C) The market value per share of such class of stock
on the announcement date or on the determination date,
whichever is higher; or
(D) The price per share equal to the market value per
share of such class of stock determined pursuant to
subparagraph (C) immediately preceding, multiplied by the
fraction of:
(i) The highest per share price, including any
brokerage commissions, transfer taxes, and soliciting
dealers' fees, paid by the interested shareholder for
such shares of voting stock acquired by him within the
two-year period immediately before the announcement
date, over
(ii) The market value per share of the same class
of voting stock on the first day in such two-year
period on which the interested shareholder acquired
shares of the same class of voting stock.
(3) The consideration to be received by holders of any class
or series of outstanding stock is to be in cash or in the same form as
the interested shareholder previously paid for shares of the same class
or series of stock. If the interested shareholder has paid for shares
of any class of stock with varying forms of consideration, the form of
consideration for such class of stock shall be either cash or the form
used to acquire the largest number of shares of such class or series of
stock that he previously acquired.
(4) (A) After the interested shareholder has become an
interested shareholder and before the consummation of such
business combination:
(i) There shall have been no failure to declare
and pay at the regular date therefor any full periodic
dividends, cumulative or not, on any outstanding
preferred stock of the Corporation;
(ii) There shall have been:
(aa) No reduction in the annual rate of
dividends paid on any class or series of stock of
the Corporation that is not preferred stock
except as necessary to reflect any subdivision of
such stock; and
(bb) An increase in such annual rate of
dividends as shall have been necessary to reflect
reclassification, including reverse stock split,
recapitalization, reorganization, or similar
transaction, which shall have the effect of
reducing the number of outstanding shares of such
stock; and
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(iii) The interested shareholder did not become
the beneficial owner of additional shares of stock of
the Corporation except as part of the transaction which
resulted in such interested shareholder's becoming an
interested shareholder or by virtue of proportionate
stock splits or stock dividends.
(B) The provisions of (i) and (ii) of subparagraph (A)
shall not apply if neither an interested shareholder nor an
affiliate or associate of an interested shareholder voted as a
director of the Corporation in a manner inconsistent with (i)
and (ii), and the interested shareholder, within 10 days after
an act or failure to act inconsistent with such subparagraphs,
shall have notified the board of directors of the Corporation
in writing that the interested shareholder disapproves thereof
and requests in good faith that the board of directors rectify
such act or failure to act.
(5) After the interested shareholder has become an interested
shareholder, the interested shareholder may not have received the
benefit, directly or indirectly, except proportionately as a
shareholder, of loans, advances, guarantees, pledges, or other
financial assistance, or tax credits or other tax advantages, provided
by the Corporation or any of its subsidiaries, whether in anticipation
of or in connection with such business combination or otherwise.
(c) OTHER PROVISIONS.
(1) Section 2 of this article X shall not apply to a business
combination with a particular interested shareholder or his existing or
future affiliates that has been approved or exempted therefrom by
resolution of the board of directors of the Corporation; provided,
however, that any such resolution shall have been adopted before the
time that such interested shareholder first became an interested
shareholder.
(2) Unless by its terms a resolution adopted under this
subsection is made irrevocable, it may be altered or repealed by the
board of directors, but this shall not affect a business combination
that has been consummated or is the subject of an existing agreement
entered into before the alteration or repeal.
ARTICLE XI
Notices
Section 1. MANNER OF GIVING NOTICE. Notice required to be
given under the provisions of these bylaws to a director, officer, or
shareholder shall not be construed to mean personal notice, but may be given by
depositing written or printed notice in a post office or letter box in a
postpaid wrapper addressed to such director, officer, or shareholder at such
address as appears on the books of the Corporation, such notice to be deemed to
have been given at the time when the same shall have been thus mailed; or, if
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such person has provided a telecommunications address to the Corporation, such
notice may be given by prepaid written telecommunication sent to such address
and in such event shall be deemed to have been given at the time when the same
shall have been transmitted.
Section 2. WAIVER OF NOTICE. Any shareholder, officer, or
director may waive, in writing or by written telecommunication, whether before
or after the time stated, any notice required to be given under these bylaws.
ARTICLE XII
Miscellaneous
Section 1. FISCAL YEAR. The fiscal year of the Corporation
shall begin on the first day of January and end on the last day of December in
each year.
Section 2. CHECKS AND DRAFTS. All checks, drafts, and orders
for the payment of money shall be signed by the treasurer or by such other
officer or officers or agents as the board of directors may from time to time
designate. No check shall be signed in blank.
Section 3. BOOKS AND RECORDS. The books, accounts, and records
of the Corporation shall, subject to the limitations fixed by law, be open to
inspection by the shareholders at such times and subject to such regulations as
the board of directors may prescribe.
Section 4. SEPARABILITY. If one or more of the provisions of
these bylaws shall be held to be invalid, illegal, or unenforceable, such
invalidity, illegality, or unenforceability shall not affect any other provision
hereof and these bylaws shall be construed as if such invalid, illegal, or
unenforceable provision or provisions had never been contained herein.
ARTICLE XIII
Amendment of Bylaws
Section 1. VOTING. These bylaws may be amended, repealed, or
supplemented at any regular meeting of the board of directors, or at any special
meeting called for such purpose, by the affirmative vote of a majority of the
board of directors; provided, however, that in each instance an amendment,
repeal, or supplement shall not be inconsistent with the law or the articles of
incorporation of the Corporation and shall be subject to the power of the
shareholders to amend, repeal, or supplement the bylaws so made but only upon
the affirmative vote of at least 80% of all shares of capital stock entitled to
vote thereon.
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Section 2. SHAREHOLDER PROPOSALS. No proposal by a shareholder
to amend, repeal, or supplement the bylaws of the Corporation may be voted upon
at a meeting of shareholders unless, at least 180 days before such meeting of
shareholders, such shareholder shall have delivered in writing to the secretary
of the Corporation (a) notice of such proposal and the text of the proposed
amendment, repeal, or supplement, (b) evidence, reasonably satisfactory to the
secretary of the Corporation, of such shareholder's status as such and of the
number of shares of each class of capital stock of the Corporation of which such
shareholder is the beneficial owner, (c) a list of the names of other beneficial
owners of shares of the capital stock of the Corporation, if any, with whom such
shareholder is acting in concert, and the number of shares of each class of
capital stock of the Corporation beneficially owned by each such beneficial
owner, and (d) an opinion of counsel, which counsel and the form and substance
of which opinion shall be reasonably satisfactory to the board of directors of
the Corporation, to the effect that the bylaws (if any) resulting from the
adoption of such proposal would not be in conflict with the articles of
incorporation of the Corporation or the laws of the State of Louisiana. Within
30 days after such shareholder shall have submitted the aforesaid items, the
secretary and the board of directors of the Corporation shall respectively
determine whether the items to be ruled upon by them are reasonably satisfactory
and shall notify such shareholder in writing of their respective determinations.
If such shareholder fails to submit a required item in the form or within the
time indicated, or if the secretary or the board of directors of the Corporation
determine that the items to be ruled upon by them are not reasonably
satisfactory, then such proposal by such shareholder may not be voted upon by
the shareholders of the Corporation at such meeting of shareholders. Beneficial
ownership shall be determined in accordance with section 1 of article X of these
bylaws.
Section 3. EFFECTIVE DATE. No amendment or supplement to or
repeal of any of the following provisions of these bylaws, whether resulting
from action of the directors or the shareholders, shall take effect until the
later of (i) one year following the adoption of such amendment, supplement, or
repeal, or (ii) 10 days after the adjournment sine die of the annual meeting of
shareholders next succeeding the adoption of such amendment, supplement, or
repeal:
Article II, section 2;
Article II, section 8;
Article X; and
Article XIII.
ARTICLE XIV
Other Amendments to Bylaws
Section 1. EFFECTIVE DATE. No amendment or supplement to or
repeal of any of the following provisions of these bylaws, whether resulting
from action of the directors or the shareholders, shall take effect until the
later of (i) one year following the
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adoption of such amendment, supplement, or repeal, or (ii) 10 days after the
adjournment sine die of the annual meeting of shareholders next succeeding the
adoption of such amendment, supplement, or repeal:
Article II, section 4;
Article II, section 5;
Article II, section 7;
Article II, section 9;
Article III, section 1;
Article III, section 2; and
Article XIV;
provided, however, that the board of directors shall have the power at any time,
free from the foregoing restrictions, but subject to the provisions of
subsection (g) of section 1 of article III of these bylaws, to amend or
otherwise change subsections (a) and (d)(1) of section 1 of article III of these
bylaws, and, with respect to any amendments to or changes in such subsection
(d)(1), to make appropriate conforming changes in such section 1.
ARTICLE XV
Control Share Acquisition Statute
Section 1. Pursuant to section 136 of the Louisiana Business
Corporation Law as in effect on January 25, 1991, the provisions of sections 135
through 140.2 of the Louisiana Business Corporation Law, enacted as part of
Title 12 of the Louisiana Revised Statutes, shall not apply to "control share
acquisitions" (as defined therein) of this Corporation.
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EXHIBIT 10(c)
ANNUAL INCENTIVE COMPENSATION PLAN
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
1. PURPOSE OF THE PLAN
The purpose of the Annual Incentive Compensation Plan (hereinafter the
"Plan") for Central Louisiana Electric Company, Inc. (Company) is to
provide incentive compensation to those officers and key employees who
contribute significantly to the growth and success of the Company; to
attract and retrain individuals of outstanding ability; and to align the
interests of those who hold positions of major responsibility in the
Company with the interests of Company shareholders.
2. DEFINITIONS
When used in the Plan, the following words and phrases shall have the
following meanings:
"Base Salary" means the year-end base salary in effect for the Plan Year
as shown in the personnel records of the Company.
"Board" means the Board of Directors of the Company.
"Committee" means the Compensation Committee of the Board or any other
committee of the Board designated by resolution of the Board to administer
the Plan.
"Corporate Threshold" means the predetermined level of annual corporate
financial performance that the Committee shall establish each Plan Year.
When actual performance falls below the Corporate Threshold, no awards
will be paid pursuant to the Plan.
"Funding Formula" means the formula established by the Committee each year
that determines the maximum amount of payments that may be made from the
Plan. This formula may be expressed as a percent of net income or any
other relationship determined
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by the Committee to protect the interests of shareholders. Funds generated
by the formula establish a pool of money that may be used for payouts
under the Plan.
"Participant" means any officer, executive or key employee of the Company
selected by the Committee to receive an award under the Plan. Members of
the Board who are not employed on a full-time basis by the Company are not
eligible to receive awards under the Plan.
"Payout Matrix" means a chart that illustrates the relationship between
the performance criteria and the payouts that are generated by the actual
performance each year. The matrix contains the various levels of
performance and the payouts, expressed as a percent of targeted awards,
that will be paid for each level of performance. Payouts determined by the
payout matrix are subject to availability of funds as computed by the
Funding Formula.
"Payout Schedule" means the incentive amount expressed as a percent of
base salary that will be paid at various levels of actual performance when
compared to target performance.
"Peer Companies" means a list of electric utility companies selected by
the Committee, against which the performance of the Company is compared
each year as one element of determining payouts under the Plan.
"Performance Criteria" means those financial, operational or individual
measures that are selected each Plan Year by the Committee and used to
determine awards under the Plan. Performance criteria may be established
for corporate, division, individual or other business unit results.
"Plan" means the Annual Incentive Compensation Plan for the Company.
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"Target" means the level of performance that is judged sufficient by the
Committee, based on predetermined objectives, to obtain the target award.
3. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee of the Board of Directors
of the Company. Subject to the provisions of the Plan, the Committee shall
have exclusive authority to amend, modify, suspend or terminate the Plan
at any time.
At the beginning of each Plan Year, the President of the Company will make
recommendations to the Committee regarding participants, size of awards,
corporate and individual performance criteria, performance targets and
corporate thresholds. The Committee will consider and approve or modify
the recommendations as appropriate. At the Conclusions of each Plan Year,
the President of the Company will present to the Committee a schedule
indicating actual performance and the recommended award earned by each
participant. The Committee will review the recommendations and approve or
modify the recommendations as presented and approve the award to be paid
to each participant.
4. WEIGHTING OF PERFORMANCE CRITERIA
Until modified by action of the Committee, the following weights will be
used for the Plan:
o Financial measures 100%
o Individual measures may add or subtract 5% of base salary to
the award.
5. STEPS IN THE AWARD PROCESS
As soon as practicable after the end of each Plan Year, the Committee,
upon recommendation of the President of the Company, will determine the
actual level of performance for each criteria. This level of performance
will be matched to the appropriate range of performance on the payout
matrix. When both performance criteria have been matched on the matrix,
the indicated payout, expressed as a percent of the target award, will be
identified.
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The Committee may also approve additional awards for outstanding
individual performance and/or reduce the indicated awards for performance
that is clearly below standards for officers of the Company. The magnitude
of such adjustments is limited to 5% of each Participant's base salary and
will be added or subtracted from the indicated payout to arrive at a total
award.
6. FUNDING FORMULA
The Funding Formula for the Plan will be communicated to all participants
through the Plan agreement. Any unused portions in the fund so created by
the formula cannot be used in future years and must be returned to the
general assets of the Company. If the funding formula produces a payout
pool that is not adequate for the payment of awards from the payout
matrix, all awards will be reduced on a proportional basis so that the
pool is not exceeded.
7. CORPORATE THRESHOLD
The Committee will establish a Corporate Threshold for each Plan Year.
When actual corporate performance is below the Corporate Threshold, no
payments will be made under the Plan, regardless of division, individual
or other business unit results. This threshold is included in the Plan
agreement.
8. REVISED AWARD LEVELS AND PERFORMANCE CRITERIA
For Participants who are assigned to different position levels or
transferred between Company organizations during the Plan Year, the
Committee may, at any time, and upon recommendation of the President of
Central Louisiana Electric, establish revised award levels and performance
criteria for that Participant.
9. FORM OF PAYMENT
All awards under the Plan will be paid in cash, in one lump sum, subject
to such payroll taxes and other deductions, if any, as may be in effect at
the time of payment.
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10. TIMING OF PAYMENT
All awards will be paid as soon as practicable following approval by the
Committee of actual awards.
11. ADJUSTMENTS
The Committee may not retroactively change any performance criteria,
targets, payout schedules or participation levels for a Plan Year, except
as and to the extent determined by the Committee in the event of changes
in accounting practices or extraordinary or unanticipated circumstances.
12. TERMINATION, DEATH OR DISABILITY
Awards will be paid only to Participants who are actually employed and on
the payroll on the last day of each Plan Year except as indicated below. A
Participant whose employment terminates prior to the end of the Plan Year
shall forfeit any and all awards and payouts from the Plan, whether
terminated by the Company or voluntarily. Those who terminate employment
due to death, disability or normal retirement will be paid a pro-rata
portion of any award based on their date of termination. Such prorated
payments will be made at the time and in the form that all payments are
normally made to all other Participants.
13. NEW PARTICIPANTS
Participation for new employees will be determined as required by the
Committee.
14. MISCELLANEOUS
No Participant shall have the right to anticipate, alienate, sell,
transfer, assign, pledge or encumber his or her right to receive any award
made under the Plan until such an award becomes payable to him or her.
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No participant shall have any lien on any assets of the Company by reason
of any award made under the Plan.
The adoption of the Plan or any modification or amendment hereof does not
imply any commitment to continue or adopt the same plan, or any
modification thereof, or any other plan for incentive compensation for any
succeeding year, provided, that no such modification or amendment shall
adversely affect rights to receive any amount to which Participants have
become entitled prior to such modifications and amendments. Neither the
Plan nor any award made under the Plan shall create any employment
contract or relationship between the Company and any Participant. This
plan supersedes all officer incentive compensation plans of Central
Louisiana Electric, its divisions and subsidiaries.
Each Participant shall be provided with a Plan description and a Plan Agreement
for each Plan Year. The Plan Agreement shall have attached to it the Plan
specifics for each year, including the following:
o The corporate threshold
o The funding formula
o The payout matrix
o The payout schedule
o The list of peer companies
This Plan shall be binding on the successors of the Company (including any
Successor Company).
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EXHIBIT 10(f)
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
EXECUTIVE SEVERANCE AGREEMENT
(Effective ________________)
This Severance Agreement (the "Agreement") is made as
of______________ between CENTRAL LOUISIANA ELECTRIC COMPANY, INC., a Louisiana
corporation (the "Company"), and_________________________, an individual
("Employee").
WHEREAS, the Company wishes to employ Employee, and Employee wishes
to accept employment by the Company, under the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties agree as follows:
1. EMPLOYMENT:
(a) The Company employs Employee and Employee accepts employment as
__________________________________________ ("Executive Employment").
Employee will perform the duties that are customarily incident to such
position and such other duties as may from time to time be assigned to
him/her by the Chief Executive Officer of the Company.
(b) During the Term of Employment (as hereinafter defined), Employee
will devote his/her full time, attention and energies to the business of
the Company and will not, without the prior written consent of the Chief
Executive Officer of the Company, be engaged (whether or not during normal
business hours) in any other business or professional activity, whether or
not such activities are pursued for gain, profit or other pecuniary
advantage. Notwithstanding the foregoing, Employee will not be prevented
from (i) engaging in any civic or charitable activity for which Employee
receives no compensation or other pecuniary advantage; (ii) investing
his/her personal assets in businesses which do not compete with the
Company provided that such investment will not require any services on the
part of Employee in the operation of the affairs of the businesses in
which investments are made and provided further that Employee's
participation in such businesses is solely that of an investor; (iii)
purchasing securities in any corporation whose securities are regularly
traded, provided that such purchases will not result in Employee owning
beneficially at any time five percent or more of the equity securities of
any corporation engaged in a business competitive with that of the
Company; or (iv) participating in any other activity approved in advance
in writing by the Chief Executive Officer of the Company.
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2. TERM: The Term of Employment will begin on the date set forth
above and will continue through July 1, ____ [3 years]; provided, however, that
commencing July 1, ____ [in the year following the effective day], and
thereafter on each anniversary of this Agreement (the "Extension Date"), the
Term of Employment will be extended by one (1) year, unless the Company or
Employee gives written notice to the other, at least thirty (30) days before the
Extension Date, that the Term of Employment will not be extended.
3. SALARY AND COMPENSATION:
(a) Except as otherwise provided in this paragraph 3(a), the Company
will pay to Employee during the period of his/her Executive Employment a
salary equal to his/her annual base salary as of the date of this
Agreement. Employee's annual base salary will be subject to review no less
often than annually and may be increased or reduced by the Board of
Directors of the Company, in its sole discretion, provided, however, that
Employee's annual base salary may not be reduced at any time unless such
reduction is part of a reduction in pay uniformly applicable to all
officers of the Company. The Company will pay such salary to Employee in
accordance with its customary payroll practices applicable to other
executive officers. Employee will also be eligible for participation in
the Annual Incentive Compensation Plan, the Long-Term Incentive
Compensation Plan and other bonus incentive plans which the Company may
adopt from time to time for similarly situated executives.
(b) Employee will be entitled to all health, disability and life
insurance benefits, pension benefits and other employee benefits and
perquisites generally provided to similarly situated executive officers of
the Company on the same basis as such benefits and perquisites are
provided to such executive officers.
(c) The Company will reimburse Employee for all reasonable expenses
paid or incurred by Employee in performing his/her duties hereunder in
accordance with the Company's standard expense reporting and reimbursement
policies.
4. TERMINATION OF EMPLOYMENT:
(a) Except as specifically provided in this Agreement or under the
terms of any employee benefit plan in which Employee participates,
Employee will not be entitled to any compensation or benefits from the
Company after the date his/her Executive Employment terminates.
(b) If Employee's Executive Employment is terminated prior to the
expiration of the Term of Employment (i) by the Company for any reason
other than a Material Breach of this Agreement by Employee (as hereinafter
defined),
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or (ii) by Employee due to a Constructive Termination (as hereinafter
defined), Employee will be entitled to receive, as severance pay, an
amount equal to one hundred percent (100%) of his/her annual base salary
at time of termination under paragraph 3(a) (determined immediately prior
to any reduction in such salary), provided Employee is not in breach of
any post-termination obligation imposed on her under the terms of this
Agreement. The amount of severance pay provided pursuant to this paragraph
4(b) will be paid to Employee in two equal installments, with the first
installment to be paid on termination of Employee's Executive Employment
and the second installment to be paid six (6) months thereafter.
(c) If Employee's Executive Employment is terminated prior to the
expiration of the Term of Employment by the Company because of a Material
Breach of this Agreement by Employee, or by Employee for any reason other
than the reasons set forth in paragraph 4(b)(ii) and (iii), Employee will
be entitled to receive his/her salary pro rated to the date of
termination.
(d) For purposes of this Agreement, a "Material Breach of this
Agreement by Employee" will occur if Employee: (i) commits an intentional
act of fraud, embezzlement or theft in the course of his/her Executive
Employment or otherwise engages in any intentional misconduct which is
materially injurious to the Company's financial condition or business
reputation; (ii) commits intentional damage to the property of the Company
or any subsidiary or commits intentional wrongful disclosure of
Confidential Information (as hereinafter defined) which is materially
injurious to the Company's financial condition or business reputation; or
(iii) intentionally refuses to perform the material duties of his/her
position under this Agreement. For purposes of this Agreement, no act or
failure to act on the part of Employee will be deemed "intentional" if it
was due primarily to an error in judgment or negligence, but will be
deemed "intentional" only if done or omitted to be done by Employee not in
good faith and without reasonable belief that his/her action or omission
was in the best interest of the Company or any subsidiary.
(e) For purposes of this Agreement, a "Constructive Termination"
will occur if Employee terminates his/her Executive Employment (i)
following a reduction (other than a reduction in pay uniformly applicable
to all officers of the Company) of the annual amount of base salary being
paid to Employee at any time pursuant to paragraph 3(a), or (ii) following
a significant reduction in his/her authority, duties or responsibilities
from those contemplated in paragraph 1 of this Agreement; PROVIDED,
HOWEVER, that no event or condition described in clauses (i) and (ii) of
this paragraph 4(e) shall constitute Constructive Termination unless (X)
Employee gives the Company written notice of his/her objection to such
event or condition within ninety (90) days after the date Employee learns
of such event, (Y)
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such event or condition is not corrected by the Company within thirty (30)
days of its receipt of such notice, and (Z) Employee resigns his/her
employment with the Company not more than fifteen (15) days following the
expiration of the thirty (30) day period described in the foregoing clause
(Y). The failure of Employee to effect a Constructive Termination as to
any one event described in clauses (i) and (ii) above shall not affect
his/her entitlement to effect a Constructive Termination as to any other
such event.
5. ADDITIONAL BENEFITS: Employee will be entitled to the following
additional benefits if his/her Executive Employment is terminated under the
circumstances described in the first sentence of paragraph 4(b).
(a) If Employee's principal office is located in Pineville,
Louisiana at the time of such termination of Executive Employment, the
Company will (i) at the written request of Employee, purchase his/her
principal residence if such residence is located within sixty (60) miles
of the Company's Pineville, Louisiana office (the "Principal Residence")
for an amount equal to the greater of (A) the purchase price of such
Principal Residence plus the documented cost of any capital improvements
to the Principal Residence made by Employee or (B) the fair market value
of such Principal Residence as determined by the Company's usual
relocation practice and (ii) pay or reimburse Employee for the cost of
relocating Employee, his/her family and their household goods and other
personal property, in accordance with the Company's usual relocation
practice, to any location in the continental United States.
Notwithstanding the foregoing, the Company will not be obligated to
purchase Employee's Principal Residence or to pay or reimburse such
relocation expenses unless, within twelve (12) months after the
termination of his/her Executive Employment, the Company is requested to
purchase such Principal Residence or Employee has relocated from the
Pineville, Louisiana area.
(b) If Employee elects continuation coverage within the meaning of
Section 4980B(f)(2) of the Internal Revenue Code of 1986, as amended (the
"Code"), with respect a group health plan sponsored by the Company (other
than a health flexible spending account under a self-insured medical
reimbursement plan described in Sections 125 and 105(h) of the Code), the
Company will pay the continuation coverage premium for the same type and
level of group health plan coverage received by the Employee immediately
prior to such termination of Executive Employment for the period beginning
on the effective date of such continuation coverage and ending on the
earlier of the date that is 18 months after such termination of Executive
Employment or the date Employee becomes covered under the group health
plan of another employer. Notwithstanding the foregoing, the Company will
not be obligated to pay the continuation coverage premium with respect to
Employee's participation in a group health plan sponsored by the
-4-
Company if one or more qualified beneficiaries with respect to Employee
elect such continuation coverage but Employee does not elect such coverage
or during any period that Employee or any qualified beneficiary with
respect to Employee continues to receive such continuation coverage under
a group health plan sponsored by the Company after Employee becomes
covered by the group health plan of another employer.
6. CHANGE IN CONTROL OF THE COMPANY:
(a) If a Change in Control of the Company (as hereinafter defined)
occurs prior to the expiration of the Term of Employment and within three
years after the Change in Control of the Company (i) Employee's Executive
Employment is terminated by the Company for reasons other than a Material
Breach of this Agreement by Employee or (ii) Employee terminates his/her
Executive Employment for Good Reason (as hereinafter defined), the
Company, within thirty (30) days of Employee's termination of Executive
Employment, will pay to Employee, in lieu of any severance obligation
under paragraph 4 and in lieu of the benefits Employee is otherwise
entitled to receive under paragraph 5, an amount equal to 3.0 times
Employee's "base amount" as such term is defined in Section 280G(d) of the
Code minus one dollar.
(b) As used in this Agreement, the term "Change in Control of the
Company" will have the same meaning as the term "Change in Control" set
forth in Section 7.3 of the Central Louisiana Electric Company, Inc. 1990
Long-Term Incentive Compensation Plan.
(c) As used in this Agreement, the term "Good Reason" means that,
following a Change in Control of the Company and without Employee's
written consent, (i) there has been a significant adverse change in the
nature or scope of Employee's authority, duties or responsibilities from
those contemplated in paragraph 1 of this Agreement, (ii) there has been a
reduction in Employee's base salary, or a termination of Employee's rights
to any employee benefits, in effect immediately prior to the Change in
Control, (iii) Employee has reasonably determined that, as a result of a
change in circumstances following the Change in Control of the Company
that significantly affect his/her Executive Employment, she is unable to
exercise the authority, power, duties and responsibilities contemplated by
paragraph 1 of this Agreement or (iv) Employee is required to be away from
his/her office in the course of discharging her duties and
responsibilities under this Agreement significantly more than was required
prior to the Change in Control; PROVIDED, HOWEVER, that no event or
condition described in clauses (i) through (iv) of this paragraph 6(c)
shall constitute Good Reason unless (X) Employee gives the Company written
notice of his/her objection to such event or
-5-
condition at any time after Employee learns of such event, (Y) such event
or condition is not corrected by the Company within thirty (30) days of
its receipt of such notice and (Z) Employee resigns his/her employment
with the Company not more than fifteen (15) days following the expiration
of the thirty (30) day period described in the foregoing clause (Y). The
failure of Employee to effect a termination for Good Reason as to any one
event described in clauses (i) through (iv) above shall not affect his/her
entitlement to effect a termination for Good Reason as to any other such
event.
7. PARACHUTE PAYMENT LIMITATION: Notwithstanding any provision of
this Agreement to the contrary, the aggregate present value of all parachute
payments payable to or for the benefit of Employee, whether payable pursuant to
this Agreement or otherwise, shall be one dollar less than three (3) times
Employee's base amount and, to the extent necessary, payments under this
Agreement ("Severance Benefits") and any parachute payments payable under any
other agreement between Employee and the Company shall be reduced in order that
this limitation not be exceeded. The terms parachute payment, base amount and
present value shall have the meanings assigned thereto under Section 280G of the
Code. It is the intention of this paragraph 7 to avoid excise taxes on Employee
under Section 4999 of the Code or the disallowance of a deduction to the Company
pursuant to Section 280G of the Code. The determination of whether any reduction
in the amount of parachute payments is required under this paragraph 7 shall be
made by the Company's independent accountants, and Employee shall be entitled to
select the parachute payments that will remain payable after the application of
this paragraph 7. The fact that Employee has his/her Severance Payment reduced
as a result of the limitations set forth in this paragraph 7 will not of itself
limit or otherwise affect any rights of Employee arising other than pursuant to
this Agreement.
8. NO MITIGATION OBLIGATION: The Company acknowledges that it will be
difficult and may be impossible (i) for Employee to find reasonably comparable
employment following termination of her Executive Employment and (ii) to measure
the amount of damages which Employee may suffer as a result of termination of
her Executive Employment. Accordingly, the payment of the Severance Payment
provided under this Agreement is acknowledged by the Company to be reasonable
and to be liquidated damages, and Employee will not be required to mitigate the
amount of the Severance Payment by seeking other employment or otherwise, nor
will any profits, income, earnings or other benefits from any source whatsoever
create any mitigation, offset, reduction or any other obligation on the part of
Employee under this Agreement.
9. LEGAL FEES AND EXPENSES: (a) In the event any dispute in
connection with this Agreement arises with respect to obligations of the
Employee or the Company that were required to be performed prior to a Change in
Control of the Company, all costs, fees and expenses, including attorney fees,
of any litigation, arbitration or other legal action in connection with
such matters in which the Employee substantially prevails, shall be borne by,
and be the obligation of, the Company.
-6-
(b) After a Change in Control of the Company has occurred it is the
intent of the Company that Employee not be required to incur legal fees and the
related expenses associated with the interpretation, enforcement or defense of
Employee's rights under this Agreement by litigation or otherwise, because the
cost and expense thereof would substantially detract from the benefits intended
to be extended to Employee under this Agreement. Accordingly, if it should
appear to Employee that, following a Change in Control of the Company, the
Company has failed to comply with any of its obligations under this Agreement or
the Company or any other person takes or threatens to take any action to declare
this Agreement void or unenforceable or in any way reduce the possibility of
collecting the amounts due hereunder, or institutes any litigation or other
action or proceeding designed to deny, or to recover from, Employee the benefits
provided or intended to be provided under this Agreement, the Company
irrevocably authorizes Employee from time to time to retain counsel of
Employee's choice, at the expense of the Company as hereafter provided, to
advise and represent Employee in connection with any such interpretation,
enforcement or defense, including without limitation the initiation or defense
of any litigation, arbitration or other legal action, whether by or against the
Company or any director, officer, stockholder or other person affiliated with
the Company, in any jurisdiction. The Company will pay and be solely financially
responsible for any and all attorneys' and related fees and expenses incurred by
Employee in connection with any of the foregoing without respect to whether
Employee prevails, in whole or in part.
(c) In no event shall the Employee be required to reimburse the
Company for any of the costs and expenses incurred by the Company relating to
arbitration, litigation or other legal action in connection with this Agreement.
10. NON-DISCLOSURE:
(a) Employee recognizes and acknowledges that in the course of
his/her employment and as a result of the position of trust she holds
under this Agreement he/she has obtained private or confidential
information and proprietary data relating to the Company,
including without limitation financial information, customer lists, patent
information and other data which are valuable assets and property rights
of the Company. All of such private or confidential information and
proprietary data is referred to herein as "Confidential Information";
provided, however, that Confidential Information will not include any
information known generally to the public (other than as a result of
unauthorized disclosure by Employee).
(b) Employee agrees that he/she will not, during his/her Executive
Employment or any time after the termination of his/her Executive
Employment, either directly or indirectly, disclose or use Confidential
Information acquired during his/her employment with the Company, except
with the prior written consent of the Chief Executive Officer of the
Company.
-7-
11. NON-COMPETITION: Employee agrees that he/she will not, for a period of
one (1) year after the voluntary termination of his/her Executive Employment
(except termination for Good Reason pursuant to Section 6) or the involuntary
termination of her employment by the Company due to a Material Breach of this
Agreement, in Employee's individual capacity or on behalf of another (i) hire or
offer to hire any of the Company's officers, employees or agents, (ii) persuade
or attempt to persuade in any manner any officer, employee or agent of the
Company to discontinue any relationship with the Company, or (iii) solicit or
divert or attempt to divert any customer or supplier of the Company.
12. ASSISTANCE WITH LITIGATION: For a period of one (1) year after the end
of the last period for which Employee will have received any compensation under
this Agreement, Employee will furnish such information and proper assistance as
may be reasonably necessary in connection with any litigation in which the
Company is then or may become involved.
13. NO SET-OFF RIGHTS: There will be no right of set-off or counterclaim
in respect of any claim, debt or obligation against any payment to Employee
provided for in this Agreement.
14. SOURCE OF PAYMENTS:
(a) All payments provided in this Agreement will be paid in cash from
the general funds of the Company. Employee's status with respect to
amounts owed under this Agreement will be that of a general unsecured
creditor of the Company, and Employee will have no right, title, or
interest whatsoever in or to any, investments which the Company may make
to aid the Company in meeting its obligations hereunder. Nothing contained
in this Agreement, and no action taken pursuant to this provision, will
create or be construed to create a trust of any kind or a fiduciary
relationship between the Company and Employee or any other person.
(b) Notwithstanding the provisions of paragraph 14(a), the Board of
Directors of the Company may establish a trust or trusts out of which
benefits provided under this Agreement may be paid.
15. FEDERAL INCOME TAX WITHHOLDING: The Company may withhold from any
benefits payable under this Agreement all federal, state, city or other taxes
that will be required pursuant to any law or governmental regulation or ruling.
16. ASSIGNMENT: Neither Employee, his/her spouse, nor their estates will
have any right to anticipate, encumber or dispose of any payment under this
Agreement, which payments and the rights to such payments are expressly declared
non-assignable and non-transferable, except as otherwise specifically provided
in this Agreement.
-8-
17. BINDING EFFECT: This Agreement will inure to the benefit of and be
binding upon the Company, its subsidiaries, successors and assigns, including,
without limitation, any person, partnership, Company or corporation which may
acquire substantially all of the Company's assets or business or with or into
which the Company may be liquidated, consolidated, merged or otherwise combined,
and will inure to the benefit of and be binding upon Employee, his/her heirs,
distributees, and personal representatives. If payments become payable to
Employee's surviving spouse or other assigns and such person will thereafter
die, such payment will revert to Employee's estate.
18. SEVERABILITY: If any provision of this Agreement is held to be
invalid, illegal, or unenforceable, in whole or part, such invalidity will not
affect any otherwise valid provision, and all other valid provisions will remain
in full force and effect.
19. SURVIVAL OF CERTAIN PROVISIONS: Notwithstanding anything herein to the
contrary, to the extent applicable, the obligations of the Company under
paragraphs 4, 5, 6 and 9, and the obligations of the Employee under paragraphs
10 and 11, will remain operative and in full force and effect regardless of the
expiration of the Term of Employment.
20. COUNTERPARTS: This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, and all of which
together will constitute one document.
21. TITLES: The titles and headings preceding the text of the paragraphs
and subparagraphs of this Agreement have been inserted solely for convenience of
reference and do not constitute a part of this Agreement or affect its meaning,
interpretation or effect.
22. WAIVER: The failure of either party to insist in any one or more
instances upon performance of any terms or conditions of this Agreement will not
be construed as a waiver or future performance of any such term, covenant, or
condition and the obligations of either party with respect to such term,
covenant or condition will continue in full force and effect.
23. NOTICES: All notices required or permitted to be given under this
Agreement will be given in writing and will be deemed sufficiently given if
delivered by hand or mailed by registered mail, return receipt requested, to
Employee's address set forth at the beginning of this Agreement and to the
Company's principal executive offices. Either party may, by giving notice to the
other party in accordance with this paragraph, change the address at which it is
to receive notices hereunder.
24. ENTIRE AGREEMENT; MODIFICATION: This Agreement supersedes all previous
agreements, negotiations, or communications between Employee and the Company and
contains the complete and exclusive expression of the understanding between the
parties. This Agreement cannot be amended, modified, or supplemented in any
respect except by a subsequent written agreement entered into by both parties.
-9-
25. GOVERNING LAW: This Agreement will be construed and enforced in
accordance with the laws of the State of Louisiana.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date and year first above written.
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
By _____________________________________
President
ATTEST:
_____________________________
Assistant Corporate Secretary
EMPLOYEE
____________________________________
-10-
EXHIBIT 10(m)(1)
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
401 (K) SAVINGS AND INVESTMENT PLAN
ESOP TRUST AGREEMENT
(As Established Effective April 2, 1991)
FIRST AMENDMENT
THIS AGREEMENT, made and entered into this 30th day of July, 1993 but
effective as of April 2, 1993, by and between Central Louisiana Electric
Company, Inc., a Louisiana corporation (the "Company"), and State Street Bank
and Trust Company, a Massachusetts trust company with its principal place of
business in Boston, Massachusetts, as Trustee ("the ESOP Trustee").
W I T N E S S E T H
WHEREAS, by Agreement effective April 2, 1991 between the Company and
State Street Bank and Trust Company (hereinafter referred to as the "ESOP Trust
Agreement"), the Company established a trust in order to effectuate the ESOP
component of the Central Louisiana Electric Company, Inc. 401(k) Savings and
Investment Plan, as amended and restated effective April 2, 1991 (said Plan as
it presently exists together with any amendments thereto hereafter made is
hereinafter referred to as the "Plan") for the benefit of its employees and the
employees of other employers having adopted the Plan and the ESOP Trust
Agreement; and
WHEREAS, certain amendments to the Plan have been required by the
Internal Revenue Service in connection with the issuance of a favorable
determination letter and such amendments to the Plan necessitate parallel
amendments to the Trust Agreement; and
-1-
WHEREAS, having reserved the right under Section 9.1 of the ESOP
Trust Agreement and Section 10.3 of the Plan to amend the ESOP Trust Agreement,
the Company desires to amend the ESOP Trust Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the Company and the ESOP Trustee agree that, effective
as of April 2, 1991, Section 3.4 of the ESOP Trust Agreement is hereby amended
as follows:
"3.4 VOTING SHARES. Each Participant (or beneficiary of a deceased
Participant) is, for purposes of this Section 3.4, hereby designated as a
"named fiduciary" (within the meaning of Section 403(a)(1) of ERISA) with
respect to the shares of Stock allocated to his account and a pro rata
portion of the unallocated shares of Stock held in the ESOP Fund, and each
Participant (or beneficiary or a deceased Participant) shall have the right
to direct the ESOP Trustee with respect to the vote of the shares of Stock
allocated to his account, on each matter brought before any meeting of the
stockholders of the Company. Before each such meeting of stockholders, the
Company shall cause to be furnished to each Participant (or beneficiary) a
copy of the proxy solicitation material, together with a form requesting
confidential directions to the ESOP Trustee on how such shares of Stock
allocated to such Participant's (or beneficiary's) account shall be voted
on each such matter. Upon timely receipt of such directions, the ESOP
Trustee shall on each such matter vote as directed the number of shares
(including fractional shares) of Stock allocated to such Participant's (or
beneficiary's) account, and the ESOP Trustee shall have no discretion in
such matter. The instructions received by the ESOP Trustee from
Participants (or beneficiaries) shall be held by the ESOP Trustee in
confidence and shall not be divulged or released to any person, including
the Committee, officers or employees of the Company or Affiliate (as
defined in the Plan). If the ESOP Trustee shall not receive timely
instruction from a Participant, the Trustee shall not vote any shares of
Company Stock with respect to which such Participant has the right of
direction and the ESOP Trustee shall have no discretion in the matter. The
ESOP Trustee shall vote unallocated shares in the same proportion as
directed shares are voted, and the ESOP Trustee shall have no discretion in
such matter. In determining such proportion, the ESOP Trustee shall under
all circumstances include in its calculation the votes of Participants (or
beneficiaries) on all shares allocated to Participants' (or beneficiaries')
Plan accounts, giving effect to all affirmative directions by Participants,
including directions to vote for or against, to abstain or to withhold the
vote."
-2-
IN WITNESS WHEREOF, the Company and the ESOP Trustee have caused
these presents to be executed by their duly authorized officers in a number of
copies, all of which shall constitute one and the same instrument, which may be
sufficiently evidenced by any executed copy hereof, this 30th day of July, 1993,
but effective as of April 2, 1991.
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
By: /s/ DAVID M. EPPLER
ATTEST:
/s/ VERA J. WHITTINGTON
Secretary
[SEAL]
STATE STREET BANK AND TRUST COMPANY
By: /s/ ELLEN B. CAMPAGNA
Vice President
ATTEST:
/s/ JANET DENNEEN
Asst. Secretary
[SEAL]
-3-
EXHIBIT 11
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
COMPUTATION OF NET INCOME PER COMMON SHARE
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN THOUSANDS, EXCEPT SHARE AND
PER SHARE AMOUNTS)
-----------------------------------------
1995 1994 1993
----------- ----------- -----------
PRIMARY
<S> <C> <C> <C>
Net income applicable to common stock ........................ $ 46,651 $ 43,017 $ 39,827
=========== =========== ===========
Weighted average number of shares of
common stock outstanding during the
year ....................................................... 22,417,522 22,394,891 22,350,475
Common stock under stock option grants ....................... 13,237 19,940 38,060
----------- ----------- -----------
Average shares ............................................. 22,430,759 22,414,831 22,388,535
=========== =========== ===========
Primary net income per common share .......................... $ 2.08 $ 1.92 $ 1.78
=========== =========== ===========
FULLY DILUTED
Net income applicable to common stock ........................ $ 46,651 $ 43,017 $ 39,827
Adjustments to net income related to Employee
Stock Ownership Plan (ESOP) under the "if-converted" method:
Add loss of deduction from net income for actual
dividends paid on convertible preferred stock,
net of tax ............................................... 1,474 1,486 1,497
Deduct additional cash contribution
required which is equal to dividends
on preferred stock less dividends
paid at the common dividend rate, net
of tax ................................................... (176) (213) (250)
Add tax benefit associated with dividends
paid on allocated common shares ......................... 185 114 78
----------- ----------- -----------
Adjusted income applicable to common stock ................... $ 48,134 $ 44,404 $ 41,152
=========== =========== ===========
Weighted average number of shares of common
stock outstanding during the year ........................ 22,417,522 22,394,891 22,350,475
Number of equivalent common shares
attributable to ESOP ..................................... 1,416,360 1,427,368 1,437,901
Common stock under stock option grants ....................... 15,972 19,940 38,278
----------- ----------- -----------
Average shares ............................................. 23,849,854 23,842,199 23,826,654
=========== =========== ===========
Fully diluted net income per common share .................... $ 2.01 $ 1.86 $ 1.73
=========== =========== ===========
</TABLE>
EXHIBIT 12
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
COMPUTATION OF EARNINGS TO
FIXED CHARGES AND EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN THOUSANDS, EXCEPT RATIOS)
------------------------------------------------
1995 1994 1993 1992 1991
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Earnings from continuing operations $ 48,703 $45,043 $41,812 $45,239 $44,929
Income taxes ...................... 25,229 19,901 19,565 18,595 18,918
-------- ------- ------- ------- -------
Earnings from continuing operations
before income taxes ............. 73,932 64,944 61,377 63,834 63,847
-------- ------- ------- ------- -------
Fixed charges:
Interest, long-term debt ........ 24,516 23,194 22,089 26,142 28,192
Interest, other ................. 3,482 2,542 2,750 1,604 2,233
Amortization of debt expense and
premium, net ................. 1,234 1,223 1,402 1,282 1,118
Portion of rental expense
representative of interest
factor ....................... 457 707 485 547 527
-------- ------- ------- ------- -------
Total fixed charges ....... 29,689 27,666 26,726 29,575 32,070
-------- ------- ------- ------- -------
Earnings from continuing operations
before income taxes and
fixed charges ................... $103,621 $92,610 $88,103 $93,409 $95,917
======== ======= ======= ======= =======
Ratio of earnings to fixed charges 3.49X 3.35x 3.30x 3.16x 2.99x
======== ======= ======= ======= =======
Fixed charges from above .......... $ 29,689 $27,666 $26,726 $29,575 $32,070
Preferred dividends ............... 2,960 2,966 3,008 3,440 3,008
-------- ------- ------- ------- -------
Total fixed charges and preferred
stock dividends ............... $ 32,649 $30,632 $29,734 $33,015 $35,078
======== ======= ======= ======= =======
Ratio of earnings to combined
fixed charges and preferred
stock dividends ................. 3.17x 3.02x 2.96x 2.83x 2.73x
======== ======= ======= ======= =======
</TABLE>
EXHIBIT 13
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net income applicable to common stock for 1995 totaled $46.7 million, or $2.08
per share, an increase of $0.16 per share from 1994 earnings of $1.92 per share.
Earnings for 1993 were $1.78 per share on net income applicable to common stock.
Results for 1995 were affected by increased kilowatt-hour sales resulting from
the warmer-than-normal weather, partially offset by higher operating expenses
compared to the previous year. Net income for 1994 included a $0.03 per share
after-tax restructuring charge for a customer service office consolidation plan.
Earnings for 1994 were also affected by an increase in sales, which were more
than offset by higher operating expenses compared to 1993. Earnings for 1993
included a $0.31 per share after-tax restructuring charge arising out of an
organizational effectiveness study.
REVENUES AND SALES
Revenues and kilowatt-hour (kwh) sales were as follows:
Revenues 1995 1994
- -------- ------------------- -------------------
In Percent In Percent
Thousands Change Thousands Change
-------- ---- -------- ----
Base (nonfuel) ............... $261,143 7.0% $244,047 2.7%
Fuel cost recovery ........... 133,283 (1.7)% 135,556 (6.5)%
-------- ---- -------- ----
Total revenues ............ $394,426 3.9% $379,603 (0.7)%
======== ==== ======== ====
Sales 1995 1994
- ----- ----------------- -----------------
Million Percent Million Percent
kwh Change kwh Change
----- ---- ----- -----
Regular customers
Residential ......................... 2,763 9.1% 2,532 2.5%
Commercial .......................... 1,265 7.2% 1,180 6.4%
Industrial .......................... 2,227 9.7% 2,030 1.2%
Other ............................... 502 3.1% 487 5.2%
Sales for resale .................... 360 71.4% 210 20.0%
----- ---- ----- -----
Total sales to regular customers ....... 7,117 10.5% 6,439 3.5%
Short-term sales to other utilities .... 68 (60.9)% 174 (34.6)%
----- ---- ----- -----
Total electric sales ................ 7,185 8.6% 6,613 1.9%
===== ==== ===== =====
The Company's base rates did not change in 1995, 1994 or 1993. Total
operating revenues were higher in 1995 compared to 1994 largely resulting from
the effect on base revenues of weather-related increases in kilowatt-hour sales.
The increase in revenues resulted from an increase in base revenues reduced
slightly by a decrease in fuel cost recovery revenues resulting from lower
natural gas prices. Net income is not affected by changes in the cost of fuel
and purchased power because these cost fluctuations are passed on to customers
through fuel adjustment clauses.
Total operating revenues were lower in 1994 compared to 1993 due primarily
to a decrease in fuel cost recovery revenues resulting from lower natural gas
prices and lower sales to other utilities.
Kilowatt-hour sales are influenced significantly by weather. During 1995
the unusually hot weather together with industrial growth produced more
favorable sales compared to 1994. Winter temperatures in 1994 were more
favorable for sales compared to 1993, but the summer weather in 1994 was less
favorable than 1993.
During the past five years, sales growth averaged 4.0% per year, and is
expected to range from 2% to 2.5% per year during the next five years. The level
of future sales will depend upon weather conditions, customer conservation
efforts, the Company's retail marketing and business development programs,
acquisitions of other electric utility properties and the overall economy of the
service area. Sales to industrial customers are also affected by the national
economy and worldwide demand for wood products, since the Company's two largest
customers are producers of such products. Issues facing the electric utility
industry that could affect sales include deregulation, retail wheeling,
retention of large industrial customers, municipal franchises and transmission
access.
The citizens of Leesville voted to approve a 20-year franchise with the
Company in April 1995. The Company continued to serve the city after the
previous franchise expired on December 31, 1994. The nonexclusive municipal
franchise commenced on June 1 and affects approximately 5,000 customers.
Two existing industrial customers are building new plants. Boise Cascade
Corporation is building a $50 million engineered wood products plant near the
Company's Rodemacher Power Station, and Martco Partnership is building a $50
million plywood plant a little farther north. The two plants, both scheduled for
completion in 1996, will add a combined load of about 12 megawatts.
On May 1, 1995, the Company began providing approximately 13 megawatts of
wholesale power service to the city of St. Martinville under a five-year
contract
-15-
subject to the jurisdiction of the Federal Energy Regulatory Commission (FERC).
This contract was challenged in 1993 by the previous supplier, Louisiana Energy
and Power Authority (LEPA), as well as the city of Lafayette and the American
Public Power Association, with assertions of preferential, discriminatory and
predatory pricing. An initial decision of the FERC's presiding administrative
law judge (ALJ) in February 1995 rejected LEPA's arguments. Under FERC
procedures, LEPA has filed a brief requesting the FERC to revise the initial
decision. The Company has opposed LEPA's brief. Management believes that the
ALJ's initial decision will be upheld.
FUEL AND PURCHASED POWER
Changes in fuel and purchased power expenses reflect fluctuations in generation
mix, fuel costs, availability of economy power and deferral of expenses for
recovery from customers through fuel adjustment clauses in subsequent months.
The Company obtains natural gas, coal and lignite under long-term contracts
and purchases natural gas on the spot market when prices are advantageous. Power
is purchased from other utilities when the purchase price is less than the
Company's cost to generate or when needed to meet system requirements.
Last year the Company negotiated modifications to certain contracts which
provide us with lignite from a Louisiana mine and provide for rail
transportation of coal from Wyoming. Both of these newly modified contracts will
help lower the prices and increase the reliability of these important supplies
of power plant fuel.
CO-OP DEVELOPMENTS
In February 1994 the Company approached the management of Teche Electric
Cooperative, Inc. (Teche) about the possibility of purchasing Teche. Teche
serves about 8,600 customers, and its service area, which comprises parts of
Iberia, St. Martin and St. Mary parishes, is adjacent to the Company's service
area. Based on available data, the acquisition of Teche would result in an
increase in the Company's kilowatt-hour sales to regular customers of about
2.4%.
In February 1995 Teche and the Company executed a purchase and sale
agreement for a purchase price, including the Company's assumption or other
discharge of Teche's liabilities, of approximately $22.4 million. The members of
Teche overwhelmingly approved the sale at their annual meeting in March 1995.
Closing of the transaction is subject to a number of conditions, including the
approval by the Louisiana Public Service Commission (LPSC) and the Rural
Utilities Service, successful resolution of Teche's power supply contract with
Cajun Electric Power Cooperative, Inc. (Cajun) and certain other conditions. All
costs incurred as of December 31, 1995, in association with the acquisition of
Teche have been expensed.
In December 1994 the Company announced its interest in purchasing
Washington-St. Tammany Electric Cooperative, Inc. (WST). WST serves
approximately 30,600 customers in an area adjacent to the Company's service
territory. The Company's proposal to acquire WST, submitted to WST's board on
February 14, 1995, has expired without action from the WST board. The Company
has not renewed its proposal to acquire WST. The potential purchase of WST would
be subject to similar conditions to which the Teche acquisition is subject and
to approval by WST members.
NONFUEL OPERATING EXPENSES AND
INCOME TAXES
The changes in nonfuel operating expenses for 1995 and 1994 were as follows:
Increase (Decrease) from Prior Year
(In thousands except %)
1995 1994
----------------------- -----------------------
Other operation ....... $ 9,402 16.6% $ 5,868 11.6%
Maintenance ........... $(2,064) (8.4)% $ (311) (1.2)%
Depreciation .......... $ 1,157 2.9% $ 2,715 7.3%
Other taxes ........... $ 164 0.6% $ 1,888 7.0%
Income taxes .......... $ 5,328 26.8% $ 336 1.7%
Excluding the effects of restructuring charges, 1995 nonfuel operating
expenses increased 8.2% over 1994. This increase was primarily due to costs
associated with the Company's co-op acquisition efforts, an employee incentive
plan, prior year criteria pollutant fees assessed by the Louisiana Department of
Environmental Quality in 1995, costs associated with the start-up of the
Company's 24-hour call center (while customer service offices remained open
until full implementation of the call center) and uncollectible accounts expense
resulting from higher sales and a pre-bankruptcy receivable from Cajun.
Maintenance expenses in 1995 decreased relative to 1994 as a result of a major
inspection at Teche power plant performed in 1994 and a reduction in the portion
of employees' time associated with maintenance activities. Income taxes
increased primarily due to higher taxable income in 1995.
In 1994 nonfuel operating expenses, excluding restructuring charges,
increased 6.6% over 1993. Other operation expenses increased due to increases in
retirement plan costs, computer software expenses, uncollectible accounts
expense, expenses associated with the FERC proceeding in connection with service
to St. Martinville and Company efforts related to the acquisition of Teche.
Depreciation expenses increased in 1994 due to the installation of a customer
information system and the completion of a large transmission line in 1993,
along with
-16-
the Company's continuing construction program. Property taxes increased because
of routine additions to utility plant in service and higher millages. Higher
city franchise taxes resulted from increased sales and the renegotiation of
several small municipal franchise agreements.
An audit of the Company's 1991 and 1992 tax returns was completed by agents
of the Internal Revenue Service (IRS) in January 1995. A number of assessments
were proposed that would substantially increase federal and Louisiana taxable
income for those years. The Company has contested most of these assessments.
Deferred federal taxes have been provided for all temporary differences, and
reserves have been provided for other issues. If the IRS is completely
successful on all of the contested issues, an additional liability in excess of
current reserves would arise for interest and, if assessed, penalties. In
October 1995 agents of the IRS began an audit of the Company's 1993 and 1994 tax
returns.
A number of parishes have attempted in recent years to impose franchise
fees on retail revenues earned within the unincorporated areas served by the
Company. If the parishes are ultimately successful, taxes other than income
taxes could increase substantially in future years.
INTEREST AND OTHER INCOME AND
INTEREST EXPENSE
Other income increased in 1995 as a result of earnings from short-term
instruments held by an unregulated subsidiary. Earnings from investments held by
this subsidiary declined in 1994 due to unfavorable market conditions.
Interest expense increased in 1995 due to higher interest rates on
short-term debt and variable rate pollution control bonds. Also during 1995 $25
million of medium-term notes were issued at a weighted average interest rate of
6.63% to refinance $14 million of maturing 5.0% first mortgage bonds and to
reduce short-term debt levels. In 1994 the increase in interest expense
attributable to higher interest rates on short-term and variable rate pollution
control bond debt was partially offset by lower average short-term debt balances
and a full year's effect of lower long-term debt costs due to refinancings in
1993.
ALLOWANCE FOR FUNDS USED
DURING CONSTRUCTION (AFUDC)
AFUDC represents the estimated cost of financing construction work-in-progress
and is not a current source of cash. A return on and recovery of AFUDC is
generally permitted by regulatory bodies in setting rates charged for utility
services. AFUDC increased in 1995 from the prior year as a result of higher
average construction balances. AFUDC for 1994 declined from 1993 primarily due
to declining levels of construction work-in-progress, whereas average
construction balances resulted in higher AFUDC in 1993. AFUDC accounted for 4.5%
of net income applicable to common stock in 1995, compared to 3.3% in 1994 and
4.6% in 1993.
EARNINGS PER SHARE
In 1994 potentially dilutive securities had more than a 3% dilutive effect on
net income per common share due to the assumed conversion of the Incentive Stock
Option Plan and the convertible preferred stock held by the Employee Stock
Ownership Plan (ESOP). As a result, both primary and fully diluted average
shares of common stock outstanding and earnings per share are presented in the
Consolidated Statements of Income.
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
Financing for construction requirements and operational needs is dependent upon
the cost and availability of external funds through capital markets and from
financial institutions. Access to funds is dependent upon factors such as
general economic conditions, regulation and the Company's credit rating.
Since 1990 the Company has participated in a program where up to $35
million of receivables are sold on an ongoing basis. The amount of receivables
that may be sold at any time depends upon seasonal fluctuations in the amount of
eligible receivables. The program was amended in March 1995 to allow for its
continuation until the year 2000.
The Company has an effective shelf registration statement and all
regulatory approvals necessary to issue up to $50 million of preferred stock.
At December 31, 1995 and 1994, the Company had $23.1 million and $29.0
million, respectively, of short-term debt outstanding in the form of commercial
paper borrowings and bank loans. In June 1995 the Company replaced its $100
million revolving credit agreement. The new $100 million agreement provides
support for the issuance of commercial paper and is scheduled to continue
through June 15, 2000. Uncommitted lines of credit with banks totaling $20
million are available to meet short-term working capital needs. Additionally, at
December 31, 1995, an unregulated consolidated subsidiary of the Company had
$18.6 million of cash and marketable securities.
CASH GENERATION AND CASH REQUIREMENTS
During 1995 the Company generated $87.7 million of cash flows from operating
activities as shown in the Consolidated Statements of Cash Flows. Net cash
provided by operating activities results from net income, adjusted for noncash
charges to income and changes in working capital. Net cash used in investing
activities is related to additions to utility plant and changes in utility and
nonutility investments. Net cash used in financing activities results
principally from the payment of dividends to shareholders and long-term
financing
-17-
activities.
In recent years the construction program has consisted primarily of
enhancements to the transmission and distribution systems. Expenditures,
excluding AFUDC, totaled $55 million in 1995 and $53 million in 1994.
Construction expenditures, excluding AFUDC, for 1996 are estimated to be
$57 million and for the five-year period ending 2000 are expected to total $302
million. Projected expenditures for the five-year period ending 2000 include a
distribution resource management system, enhancements to the information
technology infrastructure, a new employee information and payroll system and the
addition of a new 230 kv substation. Also included in the five-year period are
the refurbishment of two retired natural gas units and the conversion of one
natural gas unit to combined cycle.
In mid-1995 the Company issued $25 million of medium-term notes at an
average interest rate of 6.63%. Proceeds were used to retire a $14 million issue
of 5.0% first mortgage bonds which matured in September 1995 and to reduce
short-term debt. In early January 1996, the Company issued $25 million of
medium-term notes at an average interest rate of 6.40%. Proceeds from the
issuances were used to reduce short-term debt and for other general corporate
purposes. All debt securities registered under the Company's shelf registration
statement have now been issued.
Scheduled maturities of debt and preferred stock will total about $0.3
million for 1996 and approximately $66.6 million for the five-year period ending
2000. In 1991 the Company began a common stock repurchase program, and as part
of that program, up to $23.5 million of common stock may be repurchased in the
future. The Company may require additional funds to purchase outstanding shares
of the Company's common stock.
Approximately 93% of total construction requirements were funded internally
in 1995 as compared to 100% in 1994 and 90% in 1993. Without the costs of
restructuring in 1993, construction requirements in 1993 would have been
entirely funded with internally generated funds. In 1996 all construction
requirements are expected to be funded internally. For the five-year period
ending 2000, approximately 89% of construction requirements are expected to be
funded internally.
Other capital requirements in 1995 and 1993 were funded by the issuance of
debt, while in 1994, other capital requirements were funded internally.
RETAIL RATES
Retail rates, which are regulated by the LPSC, account for 95% of total
revenues. Fuel costs and monthly fuel adjustment billing factors are subject to
audit by the LPSC. The LPSC establishes base rates for the Company which reflect
nonfuel costs, including the cost of capital, and sales. In the past the Company
has sought increases in base rates to reflect the cost of service related to
plant facility additions and increases in operating costs. If the Company were
to request an increase in its rates and adequate rate relief was not granted on
a timely basis, the Company's ability to attract capital at reasonable costs to
finance its operations and capital improvements might be impaired.
The LPSC has elected to review the earnings of all electric, gas, water and
telecommunication utilities regulated by it to determine if the returns on
equity of these companies may be higher than returns that might be awarded in
the current economic environment. The LPSC project team began its review of the
Company in August 1995. Resolution of the earnings review, which is not subject
to any statutory or procedural deadlines, is expected in early 1996. Although
the Company's rates are among the lowest in the state, we cannot predict the
outcome of the review or the effect on the Company's financial position, results
of its operations or its cash flows.
INFLATION
The Company is a capital-intensive electric utility. As such, it is affected by
inflation since depreciation, which is based on the historical cost of assets,
will in all likelihood not fully reflect the cost of replacing assets. Although
the cost of fuel used for electric generation is a major component of total
costs, the Company is not exposed to the effects of inflation in fuel prices
since fuel costs are recovered from customers through fuel adjustment clauses.
ENVIRONMENTAL MATTERS
The Company is subject to federal, state and local laws and regulations
governing the protection of the environment. Violations may result in
substantial fines and penalties. The Company has obtained all material
environmental permits necessary for its operations and believes it is in
substantial compliance with all applicable environmental laws and regulations.
The Company is preparing operating permit applications under the Clean Air Act
Amendments of 1990 (Clean Air Act).
Implementation of Phase I of the Clean Air Act will not require the Company
to reduce sulfur emissions at its solid-fuel generating units, which either burn
low-sulfur coal or utilize pollution control equipment. Installation of
continuous emission monitoring equipment on its generating units has been
completed at a cost of approximately $2.9 million. Although Phase II of the
legislation, effective in 2000, involves more stringent limits on emissions, it
should not significantly affect the way the Company's generating units are
operated. However, some capital investment may be necessary in order to comply
with Phase II requirements. Capital expenditures for environmental matters in
1996 are estimated to be $1.4 million.
In 1986 the Company was one of a number of
-18-
companies named by the Environmental Protection Agency as potentially
responsible parties for the cleanup of a site in Missouri previously operated by
an authorized PCB (polychlorinated biphenyl) processor. The Company participated
with other parties in the cleanup of this site, which was completed in 1995. The
site is required to be monitored over the next eight to ten years. All
anticipated costs have been funded.
REGULATORY MATTERS
On March 29, 1995, the FERC issued a Notice of Proposed Rulemaking (NOPR)
addressing two key issues: open transmission access and recovery of stranded
cost. The open access provisions of the NOPR propose to require FERC-regulated
electric utilities to offer third parties open access to transmission under the
same or comparable terms and conditions as the utilities' use of their own
systems. Providing unbundled transmission services to firm-requirements
customers may have significant financial consequences to the utility industry.
Providing open access for nonfirm sales may have a significant effect on utility
operations.
The stranded-cost proposal would allow utilities to recover investments in
assets stranded by customers departing as a result of opening the transmission
systems. This proposal could mitigate the financial consequences of unbundling
transmission services to wholesale customers. Currently, the Company has three
wholesale full-requirements customers representing about 1.2% of the Company's
total kilowatt-hour sales.
At this time, it is not possible to predict whether the NOPR will become a
final rule, and if it does become a final rule, the form of such final rule and
its effect on the Company.
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) was issued in March 1995, and effective for fiscal years beginning
after December 15, 1995. SFAS 121 establishes accounting standards for
determining if long-lived assets are impaired, and when losses, if any, should
be recognized and how any such losses should be recognized. In addition, the
Company has recorded regulatory assets and liabilities, primarily for the
effects of income taxes, as a result of past rate actions of the Company's
regulators, pursuant to Statement of Financial Accounting Standards No. 71,
"Accounting for the Effects of Certain Types of Regulation" (SFAS 71). The
effects of potential deregulation of the industry or possible future changes in
the method of rate regulation of the Company could require that the Company
discontinue the application of SFAS 71, pursuant to Statement of Financial
Accounting Standards No. 101, "Regulated Enterprises - Accounting for the
Discontinuation of Application of FASB Statement No. 71". Management believes
that for the foreseeable future, the Company's rates will remain based on its
costs of providing service. The effects of these standards on the Company's
financial position, results of its operations and its cash flows will be
determined by the facts and circumstances at that time.
NEW ACCOUNTING STANDARD
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation", requires beginning in 1996, a fair value based method of
accounting for stock-based compensation plans or, in lieu of a change in
accounting, the disclosure of pro forma differences in net income and earnings
per share. Because of the limited number of shares of common stock currently
being granted pursuant to compensation plans in effect, management estimates
that there would be no significant difference in net income or earnings per
share between the fair value method and the intrinsic value method currently
being used.
-19-
CONSOLIDATED STATEMENTS OF INCOME
(In thousands,
except share and per share amounts)
For the Years Ended December 31 1995 1994 1993
---------- ---------- ----------
OPERATING REVENUES ................... $394,426 $379,603 $382,433
---------- ---------- ----------
Operating expenses
Fuel used for electric generation 108,322 120,546 119,197
Power purchased ................. 27,367 17,376 28,088
Other operation ................. 65,963 56,561 50,693
Restructuring charges ........... 1,203 10,851
Maintenance ..................... 22,616 24,680 24,991
Depreciation .................... 41,164 40,007 37,292
Taxes other than income taxes ... 29,063 28,899 27,011
Federal and state income taxes .. 25,229 19,901 19,565
---------- ---------- ----------
Total operating expenses ... 319,724 309,173 317,688
---------- ---------- ----------
OPERATING INCOME ..................... 74,702 70,430 64,745
Interest income ...................... 219 238 358
Allowance for other funds used
during construction ................. 1,912 1,716 2,556
Other income (expenses), net ......... 74 (967) (88)
---------- ---------- ----------
INCOME BEFORE INTEREST CHARGES ....... 76,907 71,417 67,571
---------- ---------- ----------
Interest charges
Interest on debt and other ...... 27,998 25,736 24,839
Allowance for borrowed funds used
during construction ............ (1,028) (585) (482)
Amortization of debt discount,
premium and expense, net ....... 1,234 1,223 1,402
---------- ---------- ----------
Total interest charges ..... 28,204 26,374 25,759
---------- ---------- ----------
NET INCOME ........................... 48,703 45,043 41,812
Preferred dividend requirements, net . 2,052 2,026 1,985
---------- ---------- ----------
NET INCOME APPLICABLE TO
COMMON STOCK ........................ $46,651 $43,017 $39,827
========== ========== ==========
AVERAGE SHARES OF COMMON
STOCK OUTSTANDING
Primary ......................... 22,430,759 22,414,831 22,388,535
Fully diluted ................... 23,849,854 23,842,199 23,826,654
========== ========== ==========
EARNINGS PER SHARE
Primary ......................... $2.08 $1.92 $1.78
Fully diluted ................... $2.01 $1.86 $1.73
========== ========== ==========
CASH DIVIDENDS PAID PER SHARE
OF COMMON STOCK ..................... $1.49 $1.45 $1.41
========== ========== ==========
The accompanying notes are an integral part of the consolidated financial
statements.
-20-
CONSOLIDATED BALANCE SHEETS
(In thousands)
At December 31 1995 1994
----------- -----------
ASSETS
Utility plant (Notes A and B)
Property, plant and equipment .............. $ 1,319,815 $ 1,276,266
Accumulated depreciation ................... (441,686) (410,513)
----------- -----------
Net property, plant and equipment .......... 878,129 865,753
Construction work-in-progress .............. 51,390 46,379
----------- -----------
Total utility plant, net .............. 929,519 912,132
----------- -----------
Investments and other assets (Note D) ........... 8,097 20,327
----------- -----------
Current assets
Cash and cash equivalents (Note A) ......... 20,621 7,440
Accounts receivable, net (Note C)
Customer accounts receivable .......... 6,081 2,165
Other accounts receivable ............. 10,994 8,982
Unbilled revenues .......................... 3,098 573
Fuel inventory, at average cost ............ 8,699 10,184
Material and supplies inventory,
at average cost ........................... 15,819 14,945
Prepayments and other current assets ....... 2,501 2,374
----------- -----------
Total current assets .................. 67,813 46,663
----------- -----------
Prepayments ..................................... 8,213 7,861
----------- -----------
Regulatory assets and other deferred charges .... 185,934 151,831
----------- -----------
Accumulated deferred federal and state
income taxes (Note J) .......................... 66,458 39,377
----------- -----------
TOTAL ASSETS .......................... $ 1,266,034 $ 1,178,191
=========== ===========
CAPITALIZATION AND LIABILITIES
Common shareholders' equity
Common stock, $2 par value, authorized
50,000,000 shares, issued 22,745,104
and 22,720,074 shares at December 31,
1995 and 1994, respectively (Note F) ...... $ 45,490 $ 45,440
Premium on capital stock ................... 113,444 113,070
Retained earnings .......................... 224,688 211,198
Treasury stock, at cost, 318,446 and
329,433 shares at December 31, 1995
and 1994, respectively .................... (6,459) (6,681)
----------- -----------
Total common shareholders' equity ..... 377,163 363,027
Preferred stock (Note H)
Not subject to mandatory redemption ........ 30,519 30,748
Subject to mandatory redemption ............ 6,610 6,920
Deferred compensation related to preferred
stock held by ESOP ............................. (22,595) (24,404)
Long-term debt, net (Note E) .................... 360,822 336,589
----------- -----------
Total capitalization .................. 752,519 712,880
----------- -----------
Current liabilities
Short-term debt (Note E) ................... 23,062 28,977
Long-term debt due within one
year (Note E) ............................. 14,676
Accounts payable ........................... 51,087 43,466
Customer deposits .......................... 19,725 19,513
Taxes accrued (Note J) ..................... 2,503 3,262
Interest accrued ........................... 8,909 8,298
Accumulated deferred fuel .................. 3,651 6,114
Other current liabilities .................. 2,343 2,618
----------- -----------
Total current liabilities ............. 111,280 126,924
----------- -----------
Deferred credits
Accumulated deferred federal and state
income taxes (Note J) ..................... 266,873 228,803
Accumulated deferred investment tax
credits (Note J) .......................... 33,173 34,987
Regulatory liabilities and other
deferred credits .......................... 102,189 74,597
----------- -----------
Total deferred credits ................ 402,235 338,387
----------- -----------
Commitments and contingencies
(Notes C, E, F, H, I, J and K)
----------- -----------
TOTAL CAPITALIZATION AND LIABILITIES .. $ 1,266,034 $ 1,178,191
=========== ===========
The accompanying notes are an integral part of the consolidated financial
statements.
-21-
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Years Ended December 31 (In thousands)
1995 1994 1993
-------- --------- ---------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income ............................................... $ 48,703 $ 45,043 $ 41,812
Adjustments to reconcile net income
to net cash provided by operating activities
Depreciation and amortization ....................... 42,398 40,095 37,940
Allowance for funds used during construction ........ (2,940) (2,301) (3,038)
Amortization of investment tax credits .............. (1,814) (1,819) (1,826)
Deferred income taxes ............................... 2,854 2,445 1,327
Deferred fuel costs ................................. (2,463) 799 1,869
Restructuring charge ................................ 1,152 7,135
Gain (loss) on disposition of utility plant, net .... (270) 25
Changes in assets and liabilities
Accounts receivable, net ....................... (5,928) (446) (2,655)
Unbilled revenues .............................. (2,525) 933 (384)
Fuel, material and supplies inventories ........ 611 776 (5,195)
Accounts payable ............................... 7,621 2,076 (2,014)
Customer deposits .............................. 212 875 867
Taxes accrued .................................. (759) (1,807) 2,372
Interest accrued ............................... 611 (31) 1,044
Other, net .......................................... 1,343 981 (3,075)
-------- --------- ---------
Net cash provided by operating activities ...... 87,654 88,796 76,179
-------- --------- ---------
INVESTING ACTIVITIES
Additions to utility plant ............................... (57,839) (55,445) (51,507)
Allowance for funds used during construction ............. 2,940 2,301 3,038
Sale of utility plant .................................... 546 373 377
Purchase of investments .................................. (2,618) (203,165) (292,178)
Sale of investments ...................................... 14,278 203,749 296,658
-------- --------- ---------
Net cash used in investing activities .......... (42,693) (52,187) (43,612)
-------- --------- ---------
FINANCING ACTIVITIES
Issuance of common stock ................................. 379 208 1,160
Repurchase of common stock ............................... (309)
Redemption of preferred stock (310) (322) (150)
Issuance of long-term debt ............................... 25,000 75,000
Retirement of long-term debt ............................. (15,481) (650) (35,583)
Increase (decrease) in short-term debt, net .............. (5,915) 603 (35,497)
Dividends paid on common and preferred stock, net ........ (35,453) (34,501) (33,493)
-------- --------- ---------
Net cash used in financing activities .......... (31,780) (34,971) (28,563)
-------- --------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS ..................... 13,181 1,638 4,004
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR ................ 7,440 5,802 1,798
-------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR ...................... $ 20,621 $ 7,440 $ 5,802
======== ========= =========
Supplementary cash flow information
Interest paid (net of amount capitalized) ................ $ 27,744 $ 27,457 $ 24,116
Income taxes paid ........................................ $ 24,357 $ 25,762 $ 17,326
======== ========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
-22-
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON SHAREHOLDERS' EQUITY
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
For the Years Ended Common Stock Premium Treasury Stock
---------------------- on Capital Retained ---------------
December 31, 1993, 1994 and 1995 Shares Amount Stock Earnings Shares Cost
----------- -------- --------- -------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1993 ......................... 22,634,081 $ 45,268 $ 111,811 $192,637 328,334 $6,639
----------- -------- --------- -------- ------- ------
Redemptions of preferred stock ................... 8
Incentive stock options exercised ................ 74,793 150 1,010
Issuance of treasury stock ....................... (1,981) (40)
Incentive shares forfeited ....................... 27 1
Capital stock expense ............................ (48)
Dividend requirements, preferred stock, net ...... (1,985)
Cash dividends paid, common stock, $1.41 per share (31,508)
Net income ....................................... 41,812
----------- -------- --------- -------- ------- ------
BALANCE, DECEMBER 31, 1993 ....................... 22,708,874 45,418 112,829 200,908 326,380 6,600
----------- -------- --------- -------- ------- ------
Redemptions of preferred stock ................... 48
Incentive stock options exercised ................ 11,200 22 186
Repurchase of common stock ....................... 14,300 309
Issuance of treasury stock ....................... 7 (11,247) (228)
Capital stock expense ............................ (12)
Dividend requirements, preferred stock, net ...... (2,026)
Cash dividends paid, common stock, $1.45 per share (32,475)
Unrealized holding loss on available-for-sale
securities, net ................................. (240)
Net income ....................................... 45,043
----------- -------- --------- -------- ------- ------
BALANCE, DECEMBER 31, 1994 ....................... 22,720,074 45,440 113,070 211,198 329,433 6,681
----------- -------- --------- -------- ------- ------
Redemptions of preferred stock ................... 39
Incentive stock options exercised ................ 25,030 50 329
Issuance of treasury stock ....................... 6 (10,987) (222)
Dividend requirements, preferred stock, net ...... (2,052)
Cash dividends paid, common stock, $1.49 per share (33,401)
Change in unrealized holding loss on
available-for-sale securities, net .......... 240
Net income ....................................... 48,703
----------- -------- --------- -------- ------- ------
BALANCE, DECEMBER 31, 1995 ....................... 22,745,104 $ 45,490 $ 113,444 $224,688 318,446 $6,459
=========== ======== ========= ======== ======= ======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
-23-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRESENTATION AND REGULATION
The consolidated financial statements include the accounts of Central Louisiana
Electric Company, Inc. (the Company) and its wholly owned subsidiaries.
The Company maintains its accounts in accordance with the Uniform System of
Accounts prescribed for electric utilities by the Federal Energy Regulatory
Commission (FERC), as adopted by the Louisiana Public Service Commission (LPSC).
The Company provides electric service to a diversified base of residential,
commercial and industrial customers in 23 parishes of Louisiana. The Company's
retail rates for residential, commercial and industrial customers and other
retail sales are regulated by the LPSC, and its rates for transmission services
and wholesale power sales are regulated by the FERC.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
UTILITY PLANT AND DEPRECIATION
Utility plant is stated at the original cost of construction, which includes
certain materials, labor, payroll taxes and benefits, administrative and general
costs, and the estimated cost of funds used during construction. The cost of
repairs and minor replacements is charged as incurred to the appropriate
operating expense and clearing accounts. The cost of improvements is
capitalized. Upon retirement or disposition, the recorded cost of depreciable
plant and the cost of removal, net of salvage value, are charged to accumulated
depreciation.
The provision for depreciation is computed using the straight-line method
at rates which will amortize the unrecovered cost of depreciable property over
its estimated useful life. Annual depreciation provisions expressed as a
percentage of average depreciable property were 3.19% for 1995, 3.17% for 1994
and 3.11% for 1993.
CASH EQUIVALENTS
The Company considers highly liquid, marketable securities and other similar
instruments with original maturity dates of three months or less at the time of
purchase to be cash equivalents.
INCOME TAXES
Deferred income taxes are provided at the current enacted income tax rate on all
temporary differences between tax and book bases of assets and liabilities. The
Company recognizes regulatory assets and liabilities for the tax effect of
temporary differences which, to the extent past ratemaking practices are
continued by regulators, will be realized over the accounting lives of the
related properties.
INVESTMENT TAX CREDITS
Investment tax credits which were deferred for financial statement purposes are
amortized to income over the estimated service lives of the properties which
gave rise to the credits.
DEBT EXPENSE, PREMIUM AND DISCOUNT
Expense, premium and discount applicable to debt securities are amortized to
income ratably over the lives of the related issues. Expense and call premium
related to refinanced debt are amortized over the remaining life of the original
issue.
REVENUES AND FUEL COSTS
Revenues from sales of electricity are recognized based upon the amount of
energy delivered. The cost of fuel is recovered from customers through fuel
adjustment clauses, based upon fuel costs incurred in prior months. These
adjustments are subject to audit and final determination by regulators.
ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION (AFUDC)
The capitalization of AFUDC is a utility accounting practice prescribed by the
FERC. AFUDC represents the estimated cost of financing construction
work-in-progress. AFUDC does not represent a current source of cash, but under
regulatory practices, a return on and recovery of AFUDC is permitted in setting
rates charged for utility services. The composite AFUDC rate, including borrowed
and other funds on a combined basis, for 1995, 1994 and 1993 was 15.10% on a
pre-tax basis (9.29% net of tax).
NET INCOME PER COMMON SHARE
Net income per common share has been computed using the weighted average number
of shares of common stock outstanding during the year. In 1994 potentially
dilutive securities had more than a 3% dilutive effect on net income per common
share due to the assumed conversion of the Incentive Stock Option Plan and the
convertible preferred stock held by the Employee Stock Ownership Plan (ESOP). As
a result, both primary and fully diluted average shares of common stock
outstanding and earnings per share are presented.
-24-
NOTE B -- JOINTLY OWNED GENERATING UNITS
Two electric generating units operated by the Company are jointly owned
with other utilities. The Company's proportionate share of operation and
maintenance expenses associated with these two units is reflected in the
financial statements.
(Dollar amounts in thousands)
Rodemacher Dolet Hills
At December 31, 1995 Unit #2 Unit #1
------- --------
Percentage of ownership ..................... 30% 50%
Utility plant in service .................... $84,765 $270,789
Accumulated depreciation .................... $34,238 $ 78,415
Unit capability (thousand kilowatts) ........ 523.0 650.0
Share of capability (thousand kilowatts) .... 156.9 325.0
NOTE C -- RECEIVABLES
The Company sells an ownership interest in certain types of accounts receivable
and accrued unbilled revenues. A maximum of $35,000,000 of receivables may be
sold at any time, and new receivables are sold as previously sold receivables
are collected. Sales of the Company's receivables are scheduled to continue
through February 2000. The Company is obligated to repurchase a limited amount
of receivables if such receivables were to become uncollectible. The Company
maintains an allowance for uncollectible accounts, based on historical
experience, against which losses on all receivables are charged.
(In thousands)
For the year ended December 31 1995 1994
------- -------
Receivables sold but not collected (at year end) ... $35,000 $34,000
Average amount of receivables sold ................. $34,058 $34,557
Costs charged to operating expense ................. $ 2,251 $ 1,751
Receivables subject to repurchase (at year end) .... $ 4,137 $ 3,510
Accumulated provision for uncollectible
accounts (at year end) ............................ $ 538 $ 444
NOTE D -- INVESTMENTS AND OTHER FINANCIAL INSTRUMENTS
In 1994 the Company classified various debt and equity securities it owned which
were invested through an outside investment manager as "available-for-sale"
securities and carried these securities at fair value. In 1995 this portfolio
was liquidated and the proceeds were invested in government/agency securities
and other securities classified as cash equivalents through a different outside
investment manager pending final determination by the Company as to their
ultimate utilization.
(In thousands)
1995 1994
Original Fair Market Original Fair Market
At December 31 Cost Value Cost Value
------ ------ ------- -------
Equity securities ............... $6,750 $6,466
U.S. Treasury/Government Agency . $ 594 $ 594 4,371 4,317
Corporate obligations ........... 1,333 1,303
------ ------ ------- -------
Total marketable securities ... $ 594 $ 594 $12,454 $12,086
====== ====== ======= =======
Proceeds from the sales of available-for-sale securities in 1995 were
$15,092,000 and in 1994 were $14,448,000. The gross realized gains from these
sales were approximately $78,000 in 1995 and $1,295,000 in 1994 and the gross
realized losses were approximately $76,000 in 1995 and $2,170,000 in 1994. The
contractual maturities of debt securities classified as available-for-sale at
December 31, 1995, were within one year.
The amounts reflected in the financial statements at December 31, 1995 and
1994 for cash and cash equivalents, accounts receivable, accounts payable and
short-term debt approximate fair value because of their short-term nature. The
fair value of investments at December 31, 1995 and 1994 is estimated based on
quoted market prices for these or similar investments. The fair value of the
Company's long-term debt and nonconvertible preferred stock is estimated based
upon the quoted market price for the same or similar issues or by a discounted
present value analysis of future cash flows using current rates obtainable by
the Company for debt and preferred stock with similar maturities. The fair value
of convertible preferred stock is estimated assuming its conversion into common
stock at the market price per common share at December 31, 1995 and 1994, with
proceeds from the sale of the common stock used to repay the principal balance
of the Company's loan to the ESOP.
(In thousands)
At December 31 1995 1994
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
-------- -------- -------- --------
Investments .............. $ 7,786 $ 7,786 $ 19,558 $ 19,558
Long-term debt ........... $361,260 $384,427 $351,741 $345,810
Preferred stock not
subject to mandatory
redemption .............. $ 7,924 $ 13,359 $ 6,344 $ 6,722
Preferred stock
subject to mandatory
redemption .............. $ 6,610 $ 4,597 $ 6,920 $ 5,927
-25-
NOTE E -- DEBT
The Company has a $100,000,000 revolving credit facility with a group of banks
that provides for uncollateralized borrowings at prevailing market interest
rates or at interest rates established by competitive bids. The facility has a
scheduled termination date of June 15, 2000. The Company pays a commitment fee
(currently 0.10%) on the full amount of the facility, based upon the Company's
lowest senior secured debt rating. The Company is not required to maintain
compensating balances in connection with the revolving credit facility. Since
the revolving credit facility provides liquidity support for the issuance of
commercial paper, the aggregate amount of commercial paper notes and borrowings
under the revolving credit facility cannot exceed $100,000,000. In addition to
its revolving credit facility, the Company also has various uncommitted
borrowing arrangements with banks totaling $20,000,000. The banks are not
obligated to lend under these arrangements, and any borrowings are made at
negotiated interest rates and are uncollateralized. The Company pays no fees on
any of these arrangements, nor are compensating balances required. The weighted
average interest rate on short-term debt was 5.90% at December 31, 1995 and
5.87% at December 31, 1994. In January 1996 the Company issued $25 million of
medium-term notes at an average interest rate of 6.40%.
(In thousands)
At December 31 1995 1994
--------- ---------
Commercial paper, net .................... $ 22,922 $ 28,977
Bank loans ............................... 140
--------- ---------
Total short-term debt ............... $ 23,062 $ 28,977
========= =========
First mortgage bonds
Series L, 5%, retired 1995 .......... $ 14,000
Series X, 9 1/2%, due 2005 .......... $ 60,000 60,000
Series Y, 9 5/8%, due 2021 .......... 50,000 50,000
Pollution control revenue bonds,
variable rate, due 2018 ................. 61,260 61,260
Medium-term notes
9.13%, due 1997 ..................... 15,000 15,000
7.85%, due 2000 ..................... 25,000 25,000
7.53%, due 2004 ..................... 25,000 25,000
7.00%, due 2003 ..................... 10,000 10,000
6.90%, due 1998 ..................... 15,000 15,000
5.90%, due 1999 ..................... 10,000 10,000
6.55%, due 2003 ..................... 15,000 15,000
6.33%, due 2002 ..................... 25,000 25,000
5.78%, due 2001 ..................... 10,000 10,000
6.20%, due 2006 ..................... 15,000 15,000
6.42%, due 2001 ..................... 15,000
6.95%, due 2006 ..................... 10,000
Mortgage notes, 2%, retired 1995 ......... 171
Capitalized lease obligations,
5.0% - 6.875%, retired 1995 ............. 1,310
--------- ---------
Total long-term debt ................ 361,260 351,741
Amount due within one year ............... (14,676)
Unamortized premium
and discount, net ....................... (438) (476)
--------- ---------
Total long-term debt, net ........... $ 360,822 $ 336,589
========= =========
(In thousands)
1997 1998 1999 2000 Thereafter Total
------- ------- ------- ------- -------- --------
Amounts payable under
long-term debt
agreements ............ $15,000 $15,000 $10,000 $25,000 $296,260 $361,260
NOTE F -- COMMON STOCK
In association with incentive compensation plans in effect during the three-year
period ended December 31, 1995, certain officers and key employees could be
awarded shares of restricted or unrestricted common stock or granted options to
purchase shares of the Company's common stock at 100% of the fair market value
of the common stock at the dates the options were granted. The cost of the
restricted stock awards, as measured by the fair market value of the common
stock at the time of the grant, is recorded as compensation expense during the
periods in which the restrictions on the common stock lapse. The Company makes
no charge to expense with respect to the granting of options. At December 31,
1995, all options were exercisable, while the number of shares of restricted
stock previously awarded for which restrictions had not lapsed totaled 29,037
shares.
-26-
Changes in incentive shares for the three-year period ended December 31,
1995 were as follows:
Incentive Shares
----------------------------------------------
Option Price Unexercised Available for
per Share Option Shares Future Grants
-------- -------- --------
Balance, January 1, 1993 ...... 145,223 784,232
-------- -------- --------
Options exercised ............. $ 8.875 (6,118)
$ 14.75 (35,275)
$ 16.78 (33,400)
Restricted stock granted ...... (10,320)
Restricted stock forfeited .... 27
Incentive stock awarded ....... (2,624)
-------- -------- --------
Balance, December 31, 1993 .... 70,430 771,315
-------- -------- --------
Options exercised ............. $ 14.75 (6,500)
$ 16.78 (4,700)
Restricted stock granted ...... (9,263)
Incentive stock awarded ....... (2,274)
-------- -------- --------
Balance, December 31, 1994 .... 59,230 759,778
-------- -------- --------
Options exercised ............. $ 14.75 (18,230)
$ 16.78 (6,800)
Restricted stock granted ...... (11,186)
-------- -------- --------
Balance, December 31, 1995 .... 34,200 748,592
======== ======== ========
Various debt agreements of the Company contain covenants which restrict the
amount of retained earnings that may be distributed as dividends to common
shareholders. The most restrictive covenant requires that common shareholders'
equity be not less than 30% of total capitalization, including short-term debt.
At December 31, 1995, approximately $144 million of retained earnings was not
restricted.
NOTE G -- SUPPLEMENTARY PROFIT AND LOSS INFORMATION
(In thousands)
For the years ended December 31 1995 1994 1993
------- ------- -------
Operating revenue derived from
one customer .............................. $28,695 $28,259 $29,731
======= ======= =======
Other taxes included in the
consolidated income statements ............ $29,063 $28,899 $27,011
Other taxes capitalized to plant ........... 1,010 742 882
------- ------- -------
Total other taxes .......................... $30,073 $29,641 $27,893
======= ======= =======
Other taxes consist of:
State and municipal property .......... $15,868 $15,406 $14,174
State and municipal franchise ......... 10,072 10,424 9,443
Other ................................. 4,133 3,811 4,276
------- ------- -------
Total other taxes .......................... $30,073 $29,641 $27,893
======= ======= =======
NOTE H -- PREFERRED STOCK
In 1991 the Company sold 300,000 shares of 8.125% convertible preferred stock to
the ESOP. Each share of preferred stock is convertible into 4.8 shares of common
stock. The amount of total capitalization reflected in the consolidated
financial statements has been reduced by an amount of deferred compensation
expense related to the shares of convertible preferred stock which have not yet
been allocated to ESOP participants. The amount shown in the consolidated
financial statements for preferred dividend requirements in 1995, 1994 and 1993
has been reduced by $716,000, $771,000 and $840,000, respectively, to reflect
the benefit of the income tax deduction for dividend requirements on unallocated
shares held by the ESOP.
Upon involuntary liquidation, preferred shareholders are entitled to
receive par value for shares held before any distribution is made to common
shareholders. Upon voluntary liquidation, preferred shareholders are entitled to
receive the redemption price per share applicable at the time such liquidation
occurs plus any accrued dividends.
-27-
Information about the components of preferred stock capitalization is as
follows:
<TABLE>
<CAPTION>
(In thousands, except share amounts)
Balance Balance Balance Balance
January 1, December 31, December 31, December 31,
1993 Change 1993 Change 1994 Change 1995
----------- ----------- ----------- ----------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CUMULATIVE PREFERRED
STOCK, $100 par value
NOT SUBJECT TO MANDATORY
REDEMPTION
4.50% $ 1,029 $ 1,029 $ 1,029 $ 1,029
Convertible, Series
of 1991, variable
rate .................. 29,994 $ (41) 29,953 $ (234) 29,719 $ (229) 29,490
----------- ----------- ----------- ----------- ----------- -------- -----------
$ 31,023 $ (41) $ 30,982 $ (234) $ 30,748 $ (229) $ 30,519
=========== =========== =========== =========== =========== ======== ===========
SUBJECT TO MANDATORY
REDEMPTION
4.50%, Series of 1955 .. $ 520 $ (40) $ 480 $ (40) $ 440 $ (40) $ 400
4.65%, Series of 1964 .. 3,500 3,500 (140) 3,360 (140) 3,220
4.75%, Series of 1965 .. 3,380 (118) 3,262 (142) 3,120 (130) 2,990
----------- ----------- ----------- ----------- ----------- -------- -----------
$ 7,400 $ (158) $ 7,242 $ (322) $ 6,920 $ (310) $ 6,610
=========== =========== =========== =========== =========== ======== ===========
Deferred compensation related
to convertible preferred
stock held by the ESOP ..... $ (28,306) $ 2,188 $ (26,118) $ 1,714 $ (24,404) $ 1,809 $ (22,595)
=========== =========== =========== =========== =========== ======== ===========
CUMULATIVE PREFERRED
STOCK, $100 par value
Number of Shares
Authorized ................. 1,420,800 (1,181) 1,419,619 (2,819) 1,416,800 (2,700) 1,414,100
Issued and Outstanding ..... 384,232 (1,994) 382,238 (5,562) 376,676 (5,389) 371,287
=========== =========== =========== =========== =========== ======== ===========
CUMULATIVE PREFERRED
STOCK, $25 par value
Number of Shares
Authorized ................. 3,000,000 3,000,000 3,000,000 3,000,000
Issued and Outstanding
</TABLE>
Preferred stock, other than the convertible preferred stock held by the
ESOP, is redeemable at the Company's option, subject to 30 days' prior written
notice to holders. Preferred stock subject to mandatory redemption is redeemable
annually through sinking funds or purchase funds at prices of not more than $100
per share until all shares have been redeemed. The convertible preferred stock
is redeemable at any time upon the occurrence of certain events and, after April
1, 1996, is redeemable at the Company's option. If the Company were to elect to
redeem the convertible preferred shares, shareholders may elect to receive the
optional redemption price or convert the preferred shares into common stock. The
redemption provisions for the various series of preferred stock are shown in the
following table.
Optional
Redemption Mandatory Redemption
---------- ---------------------------
Price per Number of Price per
Series Share Shares Annually Share
- ------ ---- --------------- -----
4.50% .................................. $101
4.50%, Series of 1955 .................. $102 400 $100
4.65%, Series of 1964 .................. $102 1,400 $100
4.75%, Series of 1965 .................. $100 1,300 $100
Convertible, Series of 1991
Through April 1, 1996 ............. $104.875
Thereafter ........................ $104.0625 to $100
-28-
NOTE I -- PENSION PLAN AND EMPLOYEE BENEFITS
Substantially all employees are covered by a noncontributory, defined benefit
pension plan. Benefits under the plan reflect an employee's years of service,
age at retirement and highest total average compensation for any consecutive
five calendar years during the last ten years of employment with the Company.
The Company's policy is to fund contributions to the employee pension plan based
upon actuarial computations utilizing the projected unit credit method, subject
to the Internal Revenue Service full funding limitation. No contributions to the
pension plan were required during the three-year period ended December 31, 1995.
Effective January 1, 1993, the Company began accounting for its pension plan on
an accrual basis for ratemaking purposes with the approval of the LPSC staff. A
previously recorded regulatory credit with regard to the pension plan is being
amortized to income over a five-year period, subject to review by the LPSC in
future proceedings.
(In thousands)
For the years ended December 31 1995 1994 1993
------- ------- -------
Service costs for benefits
earned during the period ............... $ 2,498 $ 2,648 $ 2,559
Interest costs on projected
benefit obligation ..................... 6,542 6,269 5,674
Actual gain on assets ................... (8,920) (8,730) (8,164)
Special termination benefits ............ 3,903
Net amortization and deferral ........... (1,037) (1,037) (1,109)
------- ------- -------
Net pension benefit cost ................ $ (917) $ (850) $ 2,863
======= ======= =======
Actuarial assumptions
Weighted average discount rate ..... 7.00% 7.50% 7.00%
Rate of increase in
future compensation ............... 5.00% 5.00% 5.00%
Rate of return on plan assets ...... 9.50% 9.50% 9.50%
======= ======= =======
Employee pension plan assets are invested in the Company's common stock,
other publicly traded domestic common stocks, U.S. government, federal agency
and corporate obligations, an international equity fund, commercial real estate
funds and pooled temporary investments.
The employee pension plan's funded status as determined by the actuary at
December 31, 1995 and 1994 is presented in the following table.
(In thousands)
1995 1994
--------- ---------
Actuarial present value of benefit obligation
Vested benefits ............................... $ (77,427) $ (71,740)
Nonvested benefits ............................ (3,479) (3,149)
--------- ---------
Accumulated benefit obligation ................ (80,906) (74,889)
Effect of projected future
compensation levels .......................... (19,352) (14,438)
--------- ---------
Projected benefit obligation for service
rendered to date .................................. (100,258) (89,327)
Plan assets at fair market value ................... 121,801 101,432
--------- ---------
Plan assets in excess of projected
benefit obligation ................................ 21,543 12,105
Unamortized transition asset ....................... (10,578) (11,896)
Unrecognized net loss (gain) ....................... (6,336) 3,504
--------- ---------
Prepaid pension asset .............................. $ 4,629 $ 3,713
========= =========
Substantially all employees are eligible to participate in a savings and
investment plan (401(k) Plan). The Company makes matching contributions to
401(k) Plan participants by allocating shares of convertible preferred stock
held by the ESOP. Compensation expense related to the 401(k) Plan is based upon
the value of shares of preferred stock allocated to ESOP participants, and the
amount of interest incurred by the ESOP, less dividends on unallocated shares
held by the ESOP. At December 31, 1995 and 1994, the ESOP had allocated to
employees 71,761 and 55,086 shares, respectively.
The table below contains information about the 401(k) Plan and the ESOP:
(In thousands)
For the years ended December 31 ............ 1995 1994 1993
------ ------ ------
401(k) Plan expense ........................ $1,542 $1,537 $1,449
------ ------ ------
Dividend requirements to ESOP on
convertible preferred stock ............... $2,396 $2,415 $2,434
------ ------ ------
Interest incurred by ESOP on
its indebtedness .......................... $1,905 $2,008 $2,079
------ ------ ------
Company contributions to ESOP .............. $1,071 $1,205 $1,270
====== ====== ======
-29-
The Company's retirees and their dependents are eligible to receive health,
dental and life insurance benefits. The Company recognizes the expected cost of
these benefits during the periods in which the benefits are earned.
The components of net postretirement benefit cost for 1995 and 1994 were as
follows:
(In thousands)
1995 1994
------ ------
Service costs for benefits earned .................. $ 639 $ 640
Interest costs ..................................... 1,066 1,025
Amortization of transition obligation .............. 513 567
------ ------
Net postretirement benefit cost .................... $2,218 $2,232
====== ======
The financial status of the postretirement benefit plan at December 31,
1995 and 1994, as determined by the actuary, is presented in the following
table.
(In thousands)
1995 1994
-------- --------
Accumulated benefit obligation
Retirees ........................................ $ 10,255 $ 10,042
Fully eligible participants ..................... 1,958 2,412
Other active participants ....................... 3,954 2,758
-------- --------
Total accumulated benefit obligation ................. 16,167 15,212
Unamortized transition obligation .................... (8,726) (9,240)
Unrecognized loss .................................... (630) (949)
-------- --------
Accrued unfunded postretirement benefit liability .... $ 6,811 $ 5,023
======== ========
The assumed health care cost trend rate used to measure the expected cost
of benefits was 10% in 1995, declining to 5.5% by 2008 and remaining at 5.5%
thereafter. If the health care cost trend rate assumptions were increased by 1%,
the accumulated benefit obligation would be $16,844,000 at December 31, 1995,
and the aggregate of the service and interest cost components of the net
periodic cost of health care benefits would be $1,801,000 annually. The weighted
average assumed discount rate used to measure the accumulated benefit obligation
in 1995 was changed from 7.5% to 7% and resulted in an unrecognized loss. The
weighted average assumed discount rate used to measure the accumulated benefit
obligation in 1994 was changed from 7% to 7.5% and resulted in an unrecognized
gain.
In 1994 the Company announced a plan to consolidate 25 customer service
offices into ten regional offices by June 1995. This plan resulted in a
restructuring charge to 1994 earnings of $1,203,000. This charge consisted
mainly of voluntary severance benefits and customer service office lease
commitment costs. In 1993 the Company's organizational structure was
streamlined. The resulting reduction in staff was achieved through enhanced
early retirement and voluntary severance programs. The restructuring charge,
which totaled $10,851,000, included $3,903,000 for special pension termination
benefit costs, $1,953,000 for net postretirement plan curtailment costs, and
$4,995,000 for voluntary severance, relocation and other costs.
NOTE J -- INCOME TAXES
Federal income tax expense is less than the amount computed by applying the
statutory federal rate to book income before tax as follows:
<TABLE>
<CAPTION>
(In thousands, except for %)
For the years ended December 31 1995 1994 1993
------------------ ------------------------- ------------------
Amount % Amount % Amount %
-------- ----- -------- ------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Book income before tax .......... $73,932 100.0 $64,944 100.0 $61,377 100.0
-------- ----- -------- ------- -------- -----
Tax at statutory rate on
book income before tax ......... $25,876 35.0 $22,730 35.0 $21,482 35.0
Increase (decrease):
Tax effect of AFUDC ........ (1,029) (1.4) (805) (1.2) (1,063) (1.7)
Amortization of investment
tax credits ............... (1,814) (2.5) (1,819) (2.8) (1,827) (2.9)
Tax effect of prior-year tax
benefits not deferred ..... 900 1.2 537 0.8 444 0.7
Other, net ................. (1,435) (1.9) (3,219) (5.0) (2,194) (3.6)
-------- ----- -------- ------- -------- -----
Total federal income tax expense 22,498 30.4 17,424 26.8 16,842 27.5
-------- ----- -------- ------- -------- -----
Current state income tax expense 2,731 3.7 2,477 3.8 2,723 4.4
-------- ----- -------- ------- -------- -----
Total federal and state income
tax expense .................... $25,229 34.1 $19,901 30.6 $19,565 31.9
======== ===== ======== ======= ======== =====
</TABLE>
-30-
Information about current and deferred income tax expense is as follows:
(In thousands)
1995 1994 1993
-------- -------- --------
Current federal income tax expense ......... $ 21,458 $ 16,798 $ 17,342
Deferred federal income tax expense ........ 2,854 2,445 1,327
Amortization of accumulated
deferred investment tax credits ........... (1,814) (1,819) (1,827)
-------- -------- --------
Total federal income tax expense ........... 22,498 17,424 16,842
Current state income tax expense ........... 2,731 2,477 2,723
-------- -------- --------
Total federal and state income
tax expense ............................... $ 25,229 $ 19,901 $ 19,565
======== ======== ========
Deferred federal income tax
expense attributable to:
Depreciation .......................... $ 3,746 $ 4,466 $ 5,022
Storm damages ......................... (15) (340) 414
Asset basis differences ............... (1,213) (352) (882)
Employee benefits ..................... (558) (455) (2,074)
Fuel costs ............................ 890 (244) (620)
Other ................................. 4 (630) (533)
-------- -------- --------
Total deferred federal income tax expense .. $ 2,854 $ 2,445 $ 1,327
======== ======== ========
The balance of accumulated deferred federal and state income tax assets and
liabilities at December 31, 1995 and 1994 was comprised of the tax effect of the
following:
(In thousands)
1995 1994
------------------- -------------------
Asset Liability Asset Liability
------- -------- ------- --------
Depreciation and property
basis differences ............... $ 6,311 $125,494 $ 5,717 $122,210
Allowance for funds used
during construction ............. 42,038 41,933
Investment tax credits ........... 20,844 21,979
FASB 109 adjustments ............. 34,126 93,383 7,427 59,720
Other ............................ 5,177 5,958 4,254 4,940
------- -------- ------- --------
Accumulated deferred federal
and state income taxes .......... $66,458 $266,873 $39,377 $228,803
======= ======== ======= ========
In 1993 there was no material effect on the Company's results of operations
from the implementation of the new accounting standard for income taxes or the
increase in the federal corporate income tax rate. Regulatory assets recorded
for deferred taxes at December 31, 1995 and 1994 were $160,987,000 and
$125,356,000, respectively. Regulatory liabilities recorded for deferred taxes
at December 31, 1995 and 1994 were $79,332,000 and $51,712,000, respectively.
Regulatory assets and liabilities will be realized over the accounting lives of
the related properties to the extent past ratemaking practices are continued by
regulators.
NOTE K -- COMMITMENTS AND CONTENGENCIES
Construction expenditures for 1996 are estimated to be $57,000,000, excluding
AFUDC, and for the five-year period ending 2000 are expected to total
$302,000,000, excluding AFUDC. Scheduled maturities of debt and preferred stock
will total about $310,000 for 1996 and approximately $66,550,000 for the
five-year period ending 2000.
The Company has entered into various long-term contracts for the
procurement of lignite, coal and natural gas to fuel its generating stations.
Most of these contracts contain provisions for price changes, minimum purchase
levels and other financial commitments.
The Company has accrued for liabilities to third parties, environmental
claims, employee medical benefits, storm damages and deductibles under insurance
policies which it maintains on major properties, primarily generating stations
and transmission substations. Consistent with regulatory treatment, annual
charges to operating expense to provide a reserve for future storm damages are
based upon the average amount of noncapital, uninsured storm damages experienced
by the Company during the previous five years.
An audit of the Company's 1991 and 1992 tax returns was completed by agents
of the Internal Revenue Service (IRS) in January 1995. A number of assessments
were proposed that would substantially increase the Company's federal and
Louisiana taxable income for those years. The Company has contested most of
these assessments. Deferred taxes have been provided for all temporary
differences and reserves have been provided for other issues. If the IRS is
completely successful on all of the contested issues, an additional liability in
excess of current reserves would exist for interest and, if assessed, penalties.
In October 1995 agents of the IRS began an audit of the Company's 1993 and 1994
tax returns.
-31-
In early 1995 the Company and Teche Electric Cooperative, Inc. (Teche)
executed a purchase and sale agreement regarding a purchase of all of the assets
of Teche by the Company for a purchase price, including the Company's assumption
or other discharge of Teche's liabilities, of approximately $22.4 million.
Closing of the transaction is subject to a number of conditions, including
approval by the LPSC and the Rural Utilities Service, successful resolution of
Teche's power supply contract with Cajun Electric Cooperative and certain other
conditions. The Teche members approved the sale at their annual meeting in March
1995.
The LPSC is currently reviewing the Company's earnings. Although the
Company's rates are among the lowest in the state, at this time management
cannot predict the outcome of the review or the effect on the Company's
financial position, results of its operations or its cash flows.
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) was issued in March 1995 and establishes accounting standards for
determining if long-lived assets are impaired, and when and how losses, if any,
should be recognized. In addition, the Company has recorded regulatory assets
and liabilities, primarily for the effects of income taxes, as a result of past
rate actions of the Company's regulators, pursuant to Statement of Financial
Accounting Standards No. 71, "Accounting for the Effects of Certain Types of
Regulation" (SFAS 71). The effects of potential deregulation of the industry or
possible future changes in the method of rate regulation of the Company could
require that the Company discontinue the application of SFAS 71, pursuant to
Statement of Financial Accounting Standards No. 101, "Regulated Enterprises --
Accounting for the Discontinuation of Application of FASB Statement No. 71".
Management believes that for the foreseeable future, the Company's rates will
remain based on its costs of providing service. The future effects of these
standards on the Company's financial position, results of its operations and its
cash flows will be determined by the facts and circumstances at that time.
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation", requires beginning in 1996, a fair value based method
of accounting for stock-based compensation plans or, in lieu of a change in
accounting, the disclosure of pro forma differences in net income and earnings
per share. Because of the limited number of shares of common stock currently
being granted pursuant to compensation plans in effect, management estimates
that there would be no significant difference in net income or earnings per
share between the fair value method and the intrinsic value method currently
being used.
NOTE L -- MISCELLANEOUS FINANCIAL INFORMATION (UNAUDITED)
Quarterly information for 1995 and 1994 is shown below.
(In thousands, except per share amounts)
1995
----------------------------------------------
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter
------- -------- -------- --------
Operating revenues ... $79,872 $100,599 $123,383 $ 90,572
Operating income ..... $14,589 $ 20,295 $ 27,444 $ 12,374
Net income applicable
to common stock ..... $ 7,582 $ 13,490 $ 20,556 $ 5,023
Primary net income per
average common share $ 0.34 $ 0.60 $ 0.92 $ 0.22
Fully diluted net
income per average
common share ........ $ 0.33 $ 0.58 $ 0.88 $ 0.22
Dividends paid per
common share ........ $ 0.365 $ 0.375 $ 0.375 $ 0.375
Market price per share
High ............ $24 1/2 $ 24 1/2 $ 25 5/8 $ 28 1/8
Low ............. $22 $ 22 1/8 $ 22 1/4 $ 25 1/4
======= ======== ======== ========
1994
----------------------------------------------
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter
------- -------- -------- --------
Operating revenues ... $84,147 $100,940 $112,633 $ 81,883
Operating income ..... $14,779 $ 19,276 $ 24,093 $ 12,282
Net income applicable
to common stock ..... $ 8,081 $ 12,268 $ 17,100 $ 5,568
Primary net income per
average common share $ 0.36 $ 0.55 $ 0.76 $ 0.25
Fully diluted net
income per average
common share ........ $ 0.35 $ 0.53 $ 0.73 $ 0.25
Dividends paid per
common share ........ $ 0.355 $ 0.365 $ 0.365 $ 0.365
Market price per share
High ............ $24 7/8 $ 25 5/8 $ 24 3/8 $ 23 5/8
Low ............. $21 1/4 $ 22 1/4 $ 21 1/4 $ 20 7/8
======= ======== ======== ========
The Company's common stock is listed for trading on the New York and
Pacific stock exchanges under the ticker symbol "CNL". The Company's preferred
stock is not listed on any stock exchange. On December 31, 1995, the Company had
12,148 common and 195 preferred shareholders, as determined from the records of
the transfer agent.
On January 26, 1996, the Company's Board of Directors declared a quarterly
dividend of 37 1/2 cents per share payable February 15, 1996, to common
shareholders of record on February 5, 1996.
-32-
REPORT OF MANAGEMENT
To the Shareholders of
Central Louisiana Electric Company, Inc.
The management of Central Louisiana Electric Company, Inc. is responsible for
the preparation of the financial statements and accompanying disclosures.
Financial information throughout this annual report is consistent with the
financial statements. The financial statements have been prepared in conformity
with generally accepted accounting principles and include amounts based upon
currently available facts and the informed estimates and judgments of
management.
Management maintains a system of internal accounting controls which it
believes is adequate to provide reasonable assurance as to the integrity of the
accounting records and the protection of assets. The system of internal
accounting controls is supported by written policies and procedures, by a staff
of internal auditors who conduct comprehensive internal audits, by the selection
and training of qualified personnel and by an organizational structure that
provides for appropriate delegation of authority and segregation of
responsibilities.
The Audit Committee of the Board of Directors, comprised entirely of
outside directors, meets periodically with management, internal auditors and the
Company's independent accountants to discuss accounting, auditing and financial
reporting matters. To ensure their independence, both the internal auditors and
the independent accountants have unrestricted access to the Audit Committee.
DAVID K. WARNER
Vice President - Finance and
Chief Financial Officer
JOHN L. BALTES, JR.
Controller
January 26, 1996
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Central Louisiana Electric Company, Inc.
We have audited the accompanying consolidated balance sheets of Central
Louisiana Electric Company, Inc. as of December 31, 1995 and 1994, and the
related consolidated statements of income, cash flows and changes in common
shareholders' equity for each of the three years in the period ended December
31, 1995. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based upon our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Central Louisiana Electric Company, Inc. as of December 31, 1995 and 1994, and
the consolidated results of its operations and its cash flows for each of the
three years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
New Orleans, Louisiana
January 26, 1996
-33-
EXHIBIT 23
COOPERS CERTIFIED PUBLIC ACCOUNTANTS
& LYBRAND L.L.P.
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Central Louisiana Electric Company, Inc. on Form S-8 (Registration Nos. 2-79671,
33-10169, 33-38362 and 33-44663) and Form S-3 (Nos. 33-24895, and 33-62950) of
our reports dated January 26, 1996, on our audits of the consolidated financial
statements and financial statement schedule of Central Louisiana Electric
Company, Inc. as of December 31, 1995 and 1994 and for each of the three years
in the period ended December 31, 1995, which reports are included or
incorporated by reference in this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
New Orleans, Louisiana
March 27, 1996
EXHIBIT 24
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
POWER OF ATTORNEY
WHEREAS, Central Louisiana Electric Company, Inc., a Louisiana
corporation (the "Company"), intends to file with the Securities and Exchange
Commission (the "Commission") under the Securities Exchange Act of 1934, as
amended (the "Act"), an Annual Report on Form 10-K (the "Form 10-K") for the
Company's fiscal year ended December 31, 1995, with any and all amendments
thereto as may be necessary or appropriate, together with any and all exhibits
and other documents having relation to the Form 10-K;
NOW, THEREFORE, the undersigned, in the capacity of a director or
officer or both a director and officer of the Company, as the case may be, does
hereby appoint Gregory L. Nesbitt and David K. Warner, and each of them
severally, his true and lawful attorney(s)-in-fact and agent(s) with power to
act without the other, with full power of substitution and resubstitution, to
execute in his name, place and stead, in any and all capacities, the Form 10-K
and any and all amendments thereto and any and all instruments necessary or
incidental in connection therewith, to file the same with the Commission and to
appear before the Commission in connection with any matter relating thereto.
Each of said attorneys-in-fact and agents shall have full power and authority to
do and perform in the name and on behalf of the undersigned, in any and all
capacities, every act whatsoever necessary or desirable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying, approving and confirming
the acts that said attorneys-in-fact and agents and each of them, or their or
his substitutes or substitute, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of
attorney as of the 26th day of January, 1996.
SHERIAN G. CADORIA
<PAGE>
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
POWER OF ATTORNEY
WHEREAS, Central Louisiana Electric Company, Inc., a Louisiana
corporation (the "Company"), intends to file with the Securities and Exchange
Commission (the "Commission") under the Securities Exchange Act of 1934, as
amended (the "Act"), an Annual Report on Form 10-K (the "Form 10-K") for the
Company's fiscal year ended December 31, 1995, with any and all amendments
thereto as may be necessary or appropriate, together with any and all exhibits
and other documents having relation to the Form 10-K;
NOW, THEREFORE, the undersigned, in the capacity of a director or
officer or both a director and officer of the Company, as the case may be, does
hereby appoint Gregory L. Nesbitt and David K. Warner, and each of them
severally, his true and lawful attorney(s)-in-fact and agent(s) with power to
act without the other, with full power of substitution and resubstitution, to
execute in his name, place and stead, in any and all capacities, the Form 10-K
and any and all amendments thereto and any and all instruments necessary or
incidental in connection therewith, to file the same with the Commission and to
appear before the Commission in connection with any matter relating thereto.
Each of said attorneys-in-fact and agents shall have full power and authority to
do and perform in the name and on behalf of the undersigned, in any and all
capacities, every act whatsoever necessary or desirable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying, approving and confirming
the acts that said attorneys-in-fact and agents and each of them, or their or
his substitutes or substitute, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of
attorney as of the 26th day of January, 1996.
J. PATRICK GARRETT
<PAGE>
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
POWER OF ATTORNEY
WHEREAS, Central Louisiana Electric Company, Inc., a Louisiana
corporation (the "Company"), intends to file with the Securities and Exchange
Commission (the "Commission") under the Securities Exchange Act of 1934, as
amended (the "Act"), an Annual Report on Form 10-K (the "Form 10-K") for the
Company's fiscal year ended December 31, 1995, with any and all amendments
thereto as may be necessary or appropriate, together with any and all exhibits
and other documents having relation to the Form 10-K;
NOW, THEREFORE, the undersigned, in the capacity of a director or
officer or both a director and officer of the Company, as the case may be, does
hereby appoint Gregory L. Nesbitt and David K. Warner, and each of them
severally, his true and lawful attorney(s)-in-fact and agent(s) with power to
act without the other, with full power of substitution and resubstitution, to
execute in his name, place and stead, in any and all capacities, the Form 10-K
and any and all amendments thereto and any and all instruments necessary or
incidental in connection therewith, to file the same with the Commission and to
appear before the Commission in connection with any matter relating thereto.
Each of said attorneys-in-fact and agents shall have full power and authority to
do and perform in the name and on behalf of the undersigned, in any and all
capacities, every act whatsoever necessary or desirable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying, approving and confirming
the acts that said attorneys-in-fact and agents and each of them, or their or
his substitutes or substitute, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of
attorney as of the 26th day of January, 1996.
F. BEN JAMES, JR.
<PAGE>
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
POWER OF ATTORNEY
WHEREAS, Central Louisiana Electric Company, Inc., a Louisiana
corporation (the "Company"), intends to file with the Securities and Exchange
Commission (the "Commission") under the Securities Exchange Act of 1934, as
amended (the "Act"), an Annual Report on Form 10-K (the "Form 10-K") for the
Company's fiscal year ended December 31, 1995, with any and all amendments
thereto as may be necessary or appropriate, together with any and all exhibits
and other documents having relation to the Form 10-K;
NOW, THEREFORE, the undersigned, in the capacity of a director or
officer or both a director and officer of the Company, as the case may be, does
hereby appoint Gregory L. Nesbitt and David K. Warner, and each of them
severally, his true and lawful attorney(s)-in-fact and agent(s) with power to
act without the other, with full power of substitution and resubstitution, to
execute in his name, place and stead, in any and all capacities, the Form 10-K
and any and all amendments thereto and any and all instruments necessary or
incidental in connection therewith, to file the same with the Commission and to
appear before the Commission in connection with any matter relating thereto.
Each of said attorneys-in-fact and agents shall have full power and authority to
do and perform in the name and on behalf of the undersigned, in any and all
capacities, every act whatsoever necessary or desirable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying, approving and confirming
the acts that said attorneys-in-fact and agents and each of them, or their or
his substitutes or substitute, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of
attorney as of the 26th day of January, 1996.
HUGH J. KELLY
<PAGE>
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
POWER OF ATTORNEY
WHEREAS, Central Louisiana Electric Company, Inc., a Louisiana
corporation (the "Company"), intends to file with the Securities and Exchange
Commission (the "Commission") under the Securities Exchange Act of 1934, as
amended (the "Act"), an Annual Report on Form 10-K (the "Form 10-K") for the
Company's fiscal year ended December 31, 1995, with any and all amendments
thereto as may be necessary or appropriate, together with any and all exhibits
and other documents having relation to the Form 10-K;
NOW, THEREFORE, the undersigned, in the capacity of a director or
officer or both a director and officer of the Company, as the case may be, does
hereby appoint Gregory L. Nesbitt and David K. Warner, and each of them
severally, his true and lawful attorney(s)-in-fact and agent(s) with power to
act without the other, with full power of substitution and resubstitution, to
execute in his name, place and stead, in any and all capacities, the Form 10-K
and any and all amendments thereto and any and all instruments necessary or
incidental in connection therewith, to file the same with the Commission and to
appear before the Commission in connection with any matter relating thereto.
Each of said attorneys-in-fact and agents shall have full power and authority to
do and perform in the name and on behalf of the undersigned, in any and all
capacities, every act whatsoever necessary or desirable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying, approving and confirming
the acts that said attorneys-in-fact and agents and each of them, or their or
his substitutes or substitute, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of
attorney as of the 26th day of January, 1996.
A. DELOACH MARTIN, JR.
<PAGE>
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
POWER OF ATTORNEY
WHEREAS, Central Louisiana Electric Company, Inc., a Louisiana
corporation (the "Company"), intends to file with the Securities and Exchange
Commission (the "Commission") under the Securities Exchange Act of 1934, as
amended (the "Act"), an Annual Report on Form 10-K (the "Form 10-K") for the
Company's fiscal year ended December 31, 1995, with any and all amendments
thereto as may be necessary or appropriate, together with any and all exhibits
and other documents having relation to the Form 10-K;
NOW, THEREFORE, the undersigned, in the capacity of a director or
officer or both a director and officer of the Company, as the case may be, does
hereby appoint Gregory L. Nesbitt and David K. Warner, and each of them
severally, his true and lawful attorney(s)-in-fact and agent(s) with power to
act without the other, with full power of substitution and resubstitution, to
execute in his name, place and stead, in any and all capacities, the Form 10-K
and any and all amendments thereto and any and all instruments necessary or
incidental in connection therewith, to file the same with the Commission and to
appear before the Commission in connection with any matter relating thereto.
Each of said attorneys-in-fact and agents shall have full power and authority to
do and perform in the name and on behalf of the undersigned, in any and all
capacities, every act whatsoever necessary or desirable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying, approving and confirming
the acts that said attorneys-in-fact and agents and each of them, or their or
his substitutes or substitute, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of
attorney as of the 26th day of January, 1996.
ROBERT T. RATCLIFF
<PAGE>
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
POWER OF ATTORNEY
WHEREAS, Central Louisiana Electric Company, Inc., a Louisiana
corporation (the "Company"), intends to file with the Securities and Exchange
Commission (the "Commission") under the Securities Exchange Act of 1934, as
amended (the "Act"), an Annual Report on Form 10-K (the "Form 10-K") for the
Company's fiscal year ended December 31, 1995, with any and all amendments
thereto as may be necessary or appropriate, together with any and all exhibits
and other documents having relation to the Form 10-K;
NOW, THEREFORE, the undersigned, in the capacity of a director or
officer or both a director and officer of the Company, as the case may be, does
hereby appoint Gregory L. Nesbitt and David K. Warner, and each of them
severally, his true and lawful attorney(s)-in-fact and agent(s) with power to
act without the other, with full power of substitution and resubstitution, to
execute in his name, place and stead, in any and all capacities, the Form 10-K
and any and all amendments thereto and any and all instruments necessary or
incidental in connection therewith, to file the same with the Commission and to
appear before the Commission in connection with any matter relating thereto.
Each of said attorneys-in-fact and agents shall have full power and authority to
do and perform in the name and on behalf of the undersigned, in any and all
capacities, every act whatsoever necessary or desirable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying, approving and confirming
the acts that said attorneys-in-fact and agents and each of them, or their or
his substitutes or substitute, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of
attorney as of the 26th day of January, 1996.
EDWARD M. SIMMONS
<PAGE>
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
POWER OF ATTORNEY
WHEREAS, Central Louisiana Electric Company, Inc., a Louisiana
corporation (the "Company"), intends to file with the Securities and Exchange
Commission (the "Commission") under the Securities Exchange Act of 1934, as
amended (the "Act"), an Annual Report on Form 10-K (the "Form 10-K") for the
Company's fiscal year ended December 31, 1995, with any and all amendments
thereto as may be necessary or appropriate, together with any and all exhibits
and other documents having relation to the Form 10-K;
NOW, THEREFORE, the undersigned, in the capacity of a director or
officer or both a director and officer of the Company, as the case may be, does
hereby appoint Gregory L. Nesbitt and David K. Warner, and each of them
severally, his true and lawful attorney(s)-in-fact and agent(s) with power to
act without the other, with full power of substitution and resubstitution, to
execute in his name, place and stead, in any and all capacities, the Form 10-K
and any and all amendments thereto and any and all instruments necessary or
incidental in connection therewith, to file the same with the Commission and to
appear before the Commission in connection with any matter relating thereto.
Each of said attorneys-in-fact and agents shall have full power and authority to
do and perform in the name and on behalf of the undersigned, in any and all
capacities, every act whatsoever necessary or desirable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying, approving and confirming
the acts that said attorneys-in-fact and agents and each of them, or their or
his substitutes or substitute, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of
attorney as of the 26th day of January, 1996.
ERNEST L. WILLIAMSON
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 929,519
<OTHER-PROPERTY-AND-INVEST> 8,097
<TOTAL-CURRENT-ASSETS> 67,813
<TOTAL-DEFERRED-CHARGES> 252,392
<OTHER-ASSETS> 8,213
<TOTAL-ASSETS> 1,266,034
<COMMON> 45,490
<CAPITAL-SURPLUS-PAID-IN> 106,985
<RETAINED-EARNINGS> 224,688
<TOTAL-COMMON-STOCKHOLDERS-EQ> 377,163
6,610
7,924
<LONG-TERM-DEBT-NET> 170,822
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 190,000
<COMMERCIAL-PAPER-OBLIGATIONS> 23,062
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 490,453
<TOT-CAPITALIZATION-AND-LIAB> 1,266,034
<GROSS-OPERATING-REVENUE> 394,426
<INCOME-TAX-EXPENSE> 25,229
<OTHER-OPERATING-EXPENSES> 294,495
<TOTAL-OPERATING-EXPENSES> 319,724
<OPERATING-INCOME-LOSS> 74,702
<OTHER-INCOME-NET> 2,205
<INCOME-BEFORE-INTEREST-EXPEN> 76,907
<TOTAL-INTEREST-EXPENSE> 28,204
<NET-INCOME> 48,703
2,052
<EARNINGS-AVAILABLE-FOR-COMM> 46,651
<COMMON-STOCK-DIVIDENDS> 33,401
<TOTAL-INTEREST-ON-BONDS> 14,551
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</TABLE>
