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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998 Commission file number 1-5663
Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
CLECO CORPORATION
(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
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
----- ----
As of August 1, 1998, there were 22,485,876 shares outstanding of the
Registrant's Common Stock, par value $2.00 per share.
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TABLE OF CONTENTS
<TABLE>
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Page
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements............................................................... 1
Report of Independent Accountants................................................ 2
Consolidated Statements of Income................................................ 3
Consolidated Balance Sheets...................................................... 5
Consolidated Statements of Cash Flows............................................ 7
Notes to Consolidated Financial Statements....................................... 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Disclosure Regarding Forward-Looking Statements.................................. 10
Results of Operations............................................................ 10
Financial Condition.............................................................. 13
Item 3. Quantitative and Qualitative Disclosures About Market Risk......................... 14
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders................................ 15
Item 5. Other Information.................................................................. 15
Item 6. Exhibits and Reports on Form 8-K................................................... 19
SIGNATURE...................................................................................... 20
</TABLE>
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The consolidated financial statements for Cleco Corporation (the
Company) included herein are unaudited but reflect, in management's opinion, all
adjustments, consisting only of normal recurring adjustments, that are necessary
for a fair presentation of the Company's financial position and the results of
its operations for the interim periods presented. Because of the seasonal nature
of the Company's business, the results of operations for the six months ended
June 30, 1998 are not necessarily indicative of the results that may be expected
for the full fiscal year. The financial statements included herein should be
read in conjunction with the financial statements and notes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1997
(1997 Form 10-K).
The consolidated financial statements included herein have been subjected to a
limited review by PricewaterhouseCoopers LLP, independent accountants for the
Company, whose report is included herein.
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REPORT OF INDEPENDENT ACCOUNTANTS
July 28, 1998
To the Board of Directors and Shareholders
of Cleco Corporation:
We have made a review of the consolidated balance sheet of Cleco Corporation as
of June 30, 1998, and the related consolidated statements of income and cash
flows for the three-month and six-month periods ended June 30, 1998 and 1997, in
accordance with standards established by the American Institute of Certified
Public Accountants. These financial statements are the responsibility of the
Company's management.
A review of interim financial information consists principally of obtaining an
understanding of the system for the preparation of interim financial
information, applying analytical review procedures to financial data, and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit in accordance with generally accepted
auditing standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the consolidated financial statements referred to above for them to
be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1997, and the
related consolidated statements of income, cash flows and changes in common
shareholders' equity for the year then ended (not presented herein); and in our
report dated January 27, 1998, we expressed an unqualified opinion on those
financial statements. In our opinion, the information set forth in the
accompanying balance sheet as of December 31, 1997, is fairly stated in all
material respects in relation to the balance sheet from which it has been
derived.
PricewaterhouseCoopers LLP
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CLECO CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30
(UNAUDITED)
<TABLE>
<CAPTION>
(In thousands, except share and
per share amounts)
1998 1997
----------- -----------
<S> <C> <C>
OPERATING REVENUES $ 128,298 $ 105,324
----------- -----------
OPERATING EXPENSES
Fuel used for electric generation 34,402 27,887
Power purchased 12,885 8,696
Other operation 24,580 16,833
Restructuring charge 0 1,891
Maintenance 7,615 5,969
Depreciation 11,854 11,374
Taxes other than income taxes 8,639 8,369
Federal and state income taxes 7,377 5,846
----------- -----------
107,352 86,865
----------- -----------
OPERATING INCOME 20,946 18,459
Allowance for other funds used during
construction 301 124
Other income and expenses, net 625 (106)
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INCOME BEFORE INTEREST CHARGES 21,872 18,477
Interest charges, including amortization of
debt expense, premium and discount 7,071 7,277
Allowance for borrowed funds used during
construction (221) (69)
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NET INCOME 15,022 11,269
Preferred dividend requirements, net 531 525
----------- -----------
NET INCOME APPLICABLE TO COMMON STOCK $ 14,491 $ 10,744
=========== ===========
WEIGHTED AVERAGE COMMON SHARES
Basic 22,481,365 22,459,381
Diluted 23,866,067 23,864,412
EARNINGS PER SHARE
Basic $ 0.64 $ 0.48
Diluted $ 0.63 $ 0.47
CASH DIVIDENDS PAID PER SHARE $ 0.405 $ 0.395
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
3
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CLECO CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30
(UNAUDITED)
<TABLE>
<CAPTION>
(In thousands, except share and
per share amounts)
1998 1997
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<S> <C> <C>
OPERATING REVENUES $ 225,507 $ 202,992
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OPERATING EXPENSES
Fuel used for electric generation 62,099 54,967
Power purchased 24,443 21,606
Other operation 39,700 30,115
Restructuring charge 0 1,891
Maintenance 12,799 11,764
Depreciation 23,894 22,712
Taxes other than income taxes 17,389 16,991
Federal and state income taxes 10,408 9,689
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190,732 169,735
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OPERATING INCOME 34,775 33,257
Allowance for other funds used during
construction 582 126
Other income and expenses, net 478 28
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INCOME BEFORE INTEREST CHARGES 35,835 33,411
Interest charges, including amortization of
debt expense, premium and discount 14,248 14,526
Allowance for borrowed funds used during
construction (429) 90
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NET INCOME 22,016 18,795
Preferred dividend requirements, net 1,057 1,049
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NET INCOME APPLICABLE TO COMMON STOCK $ 20,959 $ 17,746
=========== ===========
WEIGHTED AVERAGE COMMON SHARES
Basic 22,475,719 22,458,173
Diluted 23,865,949 23,864,280
EARNINGS PER SHARE
Basic $ 0.93 $ 0.79
Diluted $ 0.91 $ 0.78
CASH DIVIDENDS PAID PER SHARE $ 0.80 $ 0.78
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
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CLECO CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
(In thousands)
JUNE 30, 1998 DECEMBER 31, 1997
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ASSETS
Utility plant
Property, plant and equipment $ 1,522,578 $ 1,506,949
Accumulated depreciation (532,545) (518,664)
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990,033 988,285
Construction work-in-progress 41,358 37,277
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Total utility plant, net 1,031,391 1,025,562
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Investments and other assets 3,741 3,479
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Current assets
Cash and cash equivalents 18,583 18,015
Accounts receivable, net 61,876 48,353
Unbilled revenues 11,693 11,090
Fuel inventory, at average cost 7,036 8,648
Materials and supplies, inventory, at average cost 13,434 14,413
Other current assets 4,767 1,894
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Total current assets 117,389 102,413
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Prepayments 8,325 8,331
Regulatory assets - deferred taxes 111,414 115,285
Other deferred charges 30,560 29,418
Accumulated deferred federal and
state income taxes 77,618 76,556
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TOTAL ASSETS $ 1,380,438 $ 1,361,044
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</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
(Continued on next page)
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CLECO CORPORATION
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
(In thousands,
except share amounts)
JUNE 30, 1998 DECEMBER 31, 1997
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<S> <C> <C>
CAPITALIZATION AND LIABILITIES
Common shareholders' equity
Common stock, $2 par value, authorized
50,000,000 shares, issued 22,764,754
and 22,762,754 shares at June 30,1998
and December 31, 1997, respectively $ 45,530 $ 45,525
Premium on capital stock 113,807 113,763
Retained earnings 258,528 255,549
Treasury stock, at cost, 282,642 and
299,842 shares at June 30, 1998
and December 31, 1997, respectively (5,744) (6,086)
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412,121 408,751
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Preferred stock, cumulative, $100 par value
Not subject to mandatory redemption 29,723 30,102
Deferred compensation related to
preferred stock held by ESOP (17,437) (18,766)
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12,286 11,336
Subject to mandatory redemption 5,990 6,120
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18,276 17,456
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Long-term debt, net 355,915 365,897
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Total capitalization 786,312 792,104
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Current liabilities
Short-term debt 60,049 34,219
Long-term debt due within one year 10,000 15,000
Accounts payable 35,494 53,365
Customer deposits 20,333 20,172
Taxes accrued 31,533 12,211
Interest accrued 7,794 7,681
Accumulated deferred fuel (231) 2,965
Other current liabilities 9,882 5,102
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Total current liabilities 174,854 150,715
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Deferred credits
Accumulated deferred federal and state
income taxes 292,899 296,123
Accumulated deferred investment tax
credits 28,679 29,574
Regulatory liabilities - deferred taxes 62,878 62,468
Other deferred credits 34,816 30,060
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Total deferred credits 419,272 418,225
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TOTAL CAPITALIZATION AND LIABILITIES $ 1,380,438 $ 1,361,044
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</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
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CLECO CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30
(UNAUDITED)
<TABLE>
<CAPTION>
(In thousands)
1998 1997
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 22,016 $ 18,795
Adjustments to reconcile net income
to net cash provided by operating activities
Depreciation and amortization 24,880 23,607
Allowance for funds used during construction (1,011) 36
Amortization of investment tax credits (895) (895)
Deferred income taxes 55 51
Deferred fuel costs (3,196) (418)
Restructuring charges 0 1,891
(Gain) Loss on disposition of utility plant, net 2 (73)
Changes in assets and liabilities
Accounts receivable, net (13,523) (1,567)
Unbilled revenues (603) (3,132)
Fuel inventory, materials and supplies 2,591 1,434
Accounts payable (17,870) (23,252)
Customer deposits 161 38
Other deferred accounts (376) (985)
Taxes accrued 19,322 17,325
Interest accrued 113 168
Other, net 4,980 8,398
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Net cash provided by operating activities 36,646 41,421
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CASH FLOWS FROM INVESTING ACTIVITIES
Additions to utility plant (28,720) (25,020)
Allowance for funds used during construction 1,011 (36)
Sale of utility plant 186 240
Purchase of investments (180) (130)
Sale of investments 0 1
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Net cash used in investing activities (27,703) (24,945)
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CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock 39 21
Issuance of long-term debt 0 15,000
Retirement of long-term debt (15,000) (15,000)
Increase (Decrease) in short-term debt, net 25,830 (818)
Issuance of preferred stock 0 125
Redemption of preferred stock (207) (237)
Dividends paid on common and preferred stock, net (19,037) (18,571)
-------- --------
Net cash used in financing activities (8,375) (19,480)
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 568 (3,004)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 18,015 20,307
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 18,583 $ 17,303
======== ========
Supplementary cash flow information
Interest paid (net of amount capitalized) $ 13,742 $ 13,584
======== ========
Income taxes paid $ 1,000 $ 2,391
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</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
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CLECO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A. RECLASSIFICATION
Certain prior-period amounts have been reclassified to conform with the
presentation shown in the current year's financial statements. These
reclassifications had no effect on net income applicable to common stock or
common shareholders' equity.
NOTE B. LEGAL PROCEEDING: FUEL SUPPLY - LIGNITE
The Company and Southwestern Electric Power Company (SWEPCO), each a 50% owner
of Dolet Hills Power Station Unit 1 (Dolet Hills Unit 1), jointly own lignite
reserves in the Dolet Hills area of northwestern Louisiana. In 1982 the Company
and SWEPCO entered into a Lignite Mining Agreement (LMA) with the Dolet Hills
Mining Venture (DHMV), a partnership for the mining and delivery of lignite from
a portion of these reserves (Dolet Hills Mine). The LMA expires in 2011. The
price of lignite delivered pursuant to the LMA is a base price per ton, subject
to escalation based on certain inflation indices, plus specified "pass-through"
costs.
Currently, the Company is receiving annually a minimum delivery of 1,187,500
tons under the LMA. Since the late 1980s, additional spot lignite deliveries
have been obtained through competitive bidding from DHMV and another lignite
supplier. In 1997 the Company and SWEPCO received deliveries which approximated
28% of the annual lignite consumption at Dolet Hills Unit 1 from the other
lignite supplier.
On April 15, 1997, the Company and SWEPCO filed suit against DHMV and its
partners in the United States District Court for the Western District of
Louisiana (Federal Court Suit) seeking to enforce various obligations of DHMV to
the Company and SWEPCO under the LMA, including provisions relating to the
quality of the delivered lignite, pricing, and mine reclamation practices. On
June 15, 1997, DHMV filed an answer denying the allegations in the Company's
suit and filed a counterclaim asserting various contract-related claims against
the Company and SWEPCO. The Company and SWEPCO have denied the allegations in
the counterclaims on the grounds the counterclaims have no merit.
The counterclaims filed by DHMV in the Federal Court Suit resulted in the
Company and SWEPCO filing a separate lawsuit against the parent companies of
DHMV, namely, Jones Capital Corporation and Philipp Holzmann USA, Inc., on
August 13, 1997, in the First Judicial District Court for Caddo Parish,
Louisiana (State Court Suit). The State Court Suit seeks to enforce a separate
1995 agreement by Jones Capital Corporation and Philipp Holzmann USA, Inc.
related to the LMA. Jones Capital Corporation and Philipp Holzmann USA, Inc.
have asked the State Court to stay that proceeding until the Federal Court Suit
is resolved.
The suits are currently in the discovery phase. At DHMV's request, negotiations
among DHMV, SWEPCO and the Company have been terminated. A status conference was
held on June 4, 1998, at which the Court established a partial discovery
completion schedule. The next status conference
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is currently scheduled for November 5, 1998. At this conference, a trial date is
expected to be set. The Company and SWEPCO will aggressively prosecute the
claims against DHMV and defend against the counterclaims which DHMV has
asserted. The Company and SWEPCO continue to pay DHMV for lignite delivered
pursuant to the LMA. Normal day-to-day operations continue at the Dolet Hills
Mine and Dolet Hills Unit 1. Although the ultimate outcome of this litigation
cannot be predicted at this time, based on information currently available to
the Company, management does not believe that the counterclaims asserted by the
DHMV in the Federal Court Suit will have a significant adverse effect on the
Company's financial position or results of operations.
NOTE C. ACCRUAL FOR ESTIMATED CUSTOMER CREDITS
The Company's reported second quarter earnings reflect a $4 million accrual for
estimated customer credits which may be required under terms of an earnings
review settlement reached with the Louisiana Public Service Commission (LPSC) in
1996. The settlement set the company's rates for a period of five years, and
also provided for annual base rate tariff reductions of $3 million in 1997 and
an additional $2 million in 1998. As part of the settlement, the Company is
allowed to retain all regulated earnings up to a 12.25% return on equity, and to
share equally with customers as credits on their bills all regulated earnings
between 12.25% and 13% return on equity. All earnings above a 13% return on
equity are credited to customers. The amount of credits due customers, if any,
is determined by the LPSC annually based on 12-month-ending results as of
September 30 of each year. The settlement provides for such credits to be made
on customers' bills the following summer.
NOTE D. REPOWERING PROJECT
The Company has announced that its Board of Directors has approved the
construction of a 750-megawatt repowering project (Project) to be implemented at
the site of its existing Coughlin Power Station (CPS). The Project will use
three natural gas-fueled combustion turbine generators to repower two existing
units at CPS.
It is anticipated that the Project's generation capacity and energy will be
available to the Company at competitive market rates and that any excess will be
available for sale to the regional wholesale market.
It is Management's opinion that the additional generating capacity is needed to
meet the Company's own needs and the needs of the region. The additional
capacity will also further the Company's strategy to become a regional power
supplier outside of the traditional service area and take advantage of emerging
deregulated markets.
One of the Company's unregulated subsidiaries will own and operate the Project.
The total cost of the Project is expected to be $240 million and is scheduled to
be completed by June 1, 2000. Implementation of the Project is subject to
approval by the LPSC and the Federal Energy Regulatory Commission (FERC).
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CLECO CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis should be read in combination with
Management's Discussion and Analysis of Financial Condition and Results of
Operations in Item 7 of the Company's 1997 Form 10-K, the financial statements
and notes contained in Item 8 of the Company's 1997 Form 10-K and the interim
financial statements and notes thereto contained elsewhere in this Report.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Report includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements, other than
statements of historical fact included in this Report, are forward-looking
statements. Although the Company believes that the expectations reflected in
such forward-looking statements are reasonable, such forward-looking statements
are based on numerous assumptions (some of which may prove to be incorrect) and
are subject to risks and uncertainties which could cause the actual results to
differ materially from the Company's expectations. Such risks and uncertainties
include, without limitation, the effects of competition in the power industry,
legislative and regulatory changes affecting electric utilities, fluctuations in
the weather and changes in general economic and business conditions, as well as
other factors discussed in this and the Company's other filings with the
Securities and Exchange Commission (Cautionary Statements). All subsequent
written and oral forward-looking statements attributable to the Company or
persons acting on its behalf are expressly qualified in their entirety by the
Cautionary Statements.
RESULTS OF OPERATIONS
For the Three Months Ended June 30, 1998
Net income applicable to common stock totaled $14.5 million or $0.64 per
share for the second quarter of 1998, as compared to $10.7 million or $0.48 per
share for the corresponding period in 1997. The following principal factors
contributed to these results:
Operating revenues for the quarter increased $22.9 million, or 21.8%, compared
to the same period in 1997, primarily due to an increase in fuel cost recovery
revenues, increased activity of the Company's power marketing operations, and a
weather-related increase in kilowatt-hour sales to residential customers. Fuel
cost recovery revenues for the second quarter of 1998 were $10.0 million higher
than the second quarter of 1997. This increase is primarily attributable to
higher kilowatt-hour sales.
Changes in fuel cost have historically had no effect on net income, as fuel
costs are generally recovered through a fuel cost adjustment clause that enables
the Company to pass on to customers substantially all changes in the cost of
generating fuel and purchased power. These adjustments are
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audited monthly and are regulated by the LPSC (representing about 99% of the
total fuel cost adjustment) while the remaining portion, regulated by the FERC,
is audited periodically for several years at a time. Until approval is received,
the adjustments are subject to refund.
Base revenues increased $13.3 million during the second quarter of 1998 compared
to the corresponding period in 1997. The increase in base revenues is primarily
attributable to an increase in kilowatt-hour sales to residential customers, the
most weather-sensitive customer class, and efforts by the Company's power
marketing operations. The increased consumption by residential customers was
primarily due to a warmer-than-normal spring in 1998. Weather during the second
quarter of 1998 was 43% warmer than the second quarter of 1997 and 25% warmer
than normal as measured by degree day calculations. Kilowatt-hour sales to
regular customers increased 14% from the second quarter of 1997. Base revenues
were also affected by the Company's acquisition of residential and commercial
customers from the former Teche Electric Cooperative (Teche). The Company
acquired Teche on September 30, 1997. The acquisition resulted in the addition
of 7,700 mostly residential customers to the Company's service area. Numerous
events in the Midwest, such as extremely high temperatures, several power
plants owned by other companies being out of operation, damages to transmission
lines of other companies, and the default of a major power marketer, caused the
wholesale price and demand of electricity in the Midwest to increase
dramatically for a very short time frame in June. The Company's power marketing
operations were able to capitalize on the situation and increase base revenues
by $9.4 million during the second quarter of 1998 compared to the corresponding
period in 1997. For a further description of the Company's power marketing
operations, see Part II, Item 5, Other Information.
Moderating the base revenue increase was a $4 million accrual for estimated
customer credits which may be required under terms of an earnings review
settlement reached with the Louisiana Public Service Commission (LPSC) in 1996.
The amount of credits due customers, if any, is determined by the LPSC annually
based on 12-month-ending results as of September 30 of each year. See
"Management's Discussion and Analysis of Results of Operations and Financial
Condition - Financial Condition - Retail Rates" in Item 7 of the 1997 Form 10-K
for a discussion of the LPSC settlement.
Operating expenses increased $20.5 million, or 23.5%, during the second quarter
of 1998 compared to the same period in 1997. The increase in operating expenses
for the quarter is primarily due to an increase in fuel and purchased power
costs, other operation expenses, federal and state income taxes and an increase
in maintenance expense. The changes in the cost of fuel used for electric
generation and purchased power are attributable primarily to fluctuations in the
Company's generation mix, fuel costs, availability of economy power and deferral
of expenses for recovery from customers through fuel adjustment clauses in
subsequent months, as compared to the same period in 1997. The Company purchases
electric energy from other electric power generators when the price of the
energy purchased is less than the cost to the Company of generating such energy
from its own facilities. Twenty-two percent of the Company's energy requirements
during the second quarter of 1998 were met with purchased power, compared to 20%
for the corresponding period in 1997. Other operation expenses for the second
quarter of 1998 increased $7.7 million, or 46.0%, compared to the same period in
1997, primarily due to purchases of power by the Company's power marketing
operations for resale and an increase in the employee incentive plan expense.
Federal and state income taxes increased $1.5 million compared to the same
period in 1997 as a result of higher
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taxable income in 1998. Maintenance expense increased $1.6 million, or 27.6%,
compared to the same period in 1997, as a result of an increase in preventative
measures taken at the power plants in order to reduce downtime during the peak
production period of the summer. Depreciation expense increased $0.5 million
compared to the same period in 1997, primarily due to the Teche assets being
placed into service in late 1997.
For the Six Months Ended June 30, 1998
Net income applicable to common stock totaled $20.9 million or $0.93 per
share for the first six months of 1998, as compared to $17.7 million or $0.79
per share for the same period in 1997. The following principal factors
contributed to these results:
Operating revenues for the first six months of 1998 increased $22.5 million, or
11.1%, compared to the same period in 1997, primarily due to a rise in fuel cost
recovery revenues, increased activity of the Company's power marketing
operations, and a rise in kilowatt-hour sales to residential customers. Fuel
cost recovery revenues for the first six months of 1998 were $7.8 million
greater than the fuel cost recovery revenues for the same period in 1997 for the
same reasons discussed above under results for the three months ended June 30,
1998.
Base revenues increased $14.7 million for the first six months of 1998 compared
to the corresponding period in 1997. The increase in base revenues is primarily
attributable to a 12.5% increase in kilowatt-hour sales to residential
customers, the most weather-sensitive of the Company's customers, a 10.2%
increase in kilowatt-hour sales to commercial customers and the Company's power
marketing operations as discussed above under the results for the three months
ended June 30, 1998. The boost in consumption by residential customers is
primarily due to a warmer-than-normal spring of 1998. Kilowatt-hour sales to
regular customers increased 8.1% from the same period in 1997. Offsetting the
increase in base revenues was the $2.0 million reduction of the Company's annual
base rate tariff for electric service effective January 1998 as part of the
Company's October 1996 LPSC earnings review settlement. A $4.0 million accrual
for estimated customer credits in the second quarter of 1998, as discussed above
under results for the three months ended June 30, 1998, also reduced base
revenues.
Operating expenses increased $21.0 million, or 12.4%, for the first six months
of 1998 compared to the same period in 1997. The increase in operating expenses
is primarily due to an increase in fuel and purchased power costs, other
operation expenses and maintenance expense. The changes in the cost of fuel used
for electric generation and purchased power are attributable primarily to
fluctuations in the Company's generation mix, fuel costs, availability of
economy power and deferral of expenses for recovery from customers through fuel
adjustment clauses in subsequent months, as compared to the same period in 1997.
Twenty-five percent of the Company's energy requirements during the first six
months of 1998 were met with purchased power compared to 26% for the
corresponding period in 1997. Other operation expenses for the first six months
of 1998 increased $9.6 million, or 31.8%, compared to the same period in 1997,
primarily due to the increase in power purchased by the Company's power
marketing operations for resale and an increase in employee incentive plan
expense. Maintenance expenses increased by $1.0 million, or 8.8%, for the same
reasons discussed above under the results for the three months ended June 30,
1998.
12
<PAGE> 15
FINANCIAL CONDITION
Liquidity and Capital Resources
At June 30, 1998 and 1997, the Company had $60.0 million and $64.3
million, respectively, of short-term debt outstanding in the form of commercial
paper borrowing and bank loans.
During March 1998, the Company renewed its 364-day, $25 million revolving credit
facility with a scheduled termination date of December 31, 1998, extendable to
March 19, 1999 upon satisfaction of certain conditions, although the Company is
considering an earlier termination date. An existing $100 million revolving
credit facility is scheduled to terminate on June 15, 2000. A new 364-day, $80
million revolving credit facility is expected to be finalized during August
1998. These facilities provide support for the issuance of commercial paper and
working capital needs. Uncommitted lines of credit with banks totaling $20
million are also available to support working capital needs.
At June 30, 1998, CLE Resources, Inc., an unregulated consolidated subsidiary of
the Company, had $11.9 million of cash and temporary cash investments in
securities with original maturities of 90 days or less. Of these funds, $10
million has been committed to provide credit support for working capital and
electricity or natural gas commodity positions for CLECO Energy L.L.C. In
addition, CLE Resources, Inc. has committed up to $25 million over a five-year
period for acquisitions, strategic alliances, and investments in capital
projects to be made by CLECO Energy L.L.C., subject to the satisfaction of
certain conditions.
The cost of the repowering project announced by the Company in July is estimated
to be $240 million. The structure of permanent financing for the project has not
yet been determined and is expected to be finalized by the first quarter of
1999. The Company will use its commercial paper program to fund the interim
needs of the project, which are expected to total approximately $80 million.
Regulatory Matters - Retail Electric Competition
In December 1997, the LPSC Staff made a recommendation to the LPSC that
restructuring of the retail electric market in Louisiana could be in the public
interest if solutions for key issues were determined and properly implemented.
This recommendation was based upon preliminary findings in the LPSC electric
restructuring investigation in Docket U-21453. The LPSC accepted the
recommendation and directed the Staff to further investigate the issues. The
LPSC has scheduled a series of six separate hearings in Docket U-21453 during
1998 to receive input from interested parties, including the utilities that it
regulates, and to investigate alternative courses of action in electric
restructuring. Through the month of June 1998, hearings have been held on
electric restructuring issues including tax implications; unbundling of
functions and charges; and market structure, market power, and utilization of
independent system operators. During the remainder of 1998, hearings are
expected on the topics of stranded costs and benefits; consumer protection,
public policy programs and environmental issues; and future regulatory structure
and affiliate relationships. The Company has participated actively in these
proceedings by offering alternative plans to implement electric restructuring
and expects to continue to do so.
13
<PAGE> 16
Wholesale power markets, as regulated by the FERC, involve sales of power
between power suppliers, marketers, and brokers for subsequent resale to retail,
or end-use, customers. Competition in this market has increased since the FERC
mandated, through its Order number 888 and subsequent interpretations thereof,
open access to transmission facilities that are necessary to complete these
sales. The Company, under FERC rules, has an open access transmission tariff
through which it offers wholesale transmission service to other parties that is
comparable to the service that it provides itself from its facilities. The
Company, as a member of the Southwest Power Pool, may also provide certain
specialized transmission services under an open access tariff administered by
the pool, and as approved by the FERC. In recent years, the Company has
purchased a part of its power requirements from the wholesale market when it is
economical to do so. In this role, the Company has also been a purchaser of open
access transmission service from other parties, and expects to continue to do so
in the immediate future.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
14
<PAGE> 17
PART II
OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The information regarding matters voted upon by security holders at the
Annual Meeting of Shareholders of the Company held on April 24, 1998 was
previously reported in the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998.
ITEM 5. OTHER INFORMATION
NEW ACCOUNTING STANDARDS
On June 15, 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards "SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities." SFAS 133 is effective for all
fiscal quarters of all fiscal years beginning after June 15, 1999 (January 1,
2000 for the Company). SFAS 133 requires that all derivative instruments be
recorded on the balance sheet at their fair value. Changes in the fair value of
derivatives are recorded each period in either current earnings or other
comprehensive income, depending on whether a derivative is designated as part of
a hedge transaction and, if it is, the type of hedge transaction. Management
anticipates that, due to its present limited use of derivative instruments, the
adoption of SFAS 133 will not have a significant effect on the Company's results
of operations or its financial position.
In early 1998, the American Institute of Certified Public Accountants issued
Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use", which will be effective for the Company
in 1999. This SOP requires that computer software costs that are incurred in the
preliminary project stage be expensed as incurred. Once the capitalization
criteria of the SOP have been met, external direct cost of materials and
services used in developing or obtaining internal use computer software, as well
as payroll and payroll-related costs of employees (to the extent of time spent
directly on internal use computer software projects), and interest costs
incurred in developing such computer software should be capitalized. Training
costs and data conversion costs should be expensed as incurred, with certain
exceptions. The adoption of SOP 98-1 is not expected to have a material effect
on the financial position, results of operations, or cash flow of the Company.
FUEL SUPPLY - COAL
The majority of the coal for Rodemacher Power Station Unit 2 (Rodemacher
Unit 2) is purchased under a long-term contract with Jacobs Ranch Coal Company
(formerly owned by Kerr-McGee Coal Corporation) from a mine in Wyoming. The
Company has a 30% interest in the capacity of Rodemacher Unit 2. The coal is
transported under a long-term rail transportation contract with the Union
Pacific Railroad. Union Pacific is currently experiencing operating
15
<PAGE> 18
problems resulting in reduced volumes delivered to Rodemacher Unit 2. The
Company's coal inventory is currently near the Company's desired minimum level.
Based on the anticipated delivery schedule of future coal shipments, management
does not expect that Rodemacher Unit 2 operations will need to be curtailed due
to insufficient fuel supply. The Company is closely monitoring this situation.
Other regional utilities are experiencing similar delivery problems.
REPOWERING PROJECT
The Company has announced that its Board of Directors has approved the
construction of a 750-megawatt repowering project (Project) to be implemented at
the site of its existing Coughlin Power Station (CPS). The Project will use
three natural gas-fueled combustion turbine generators to repower two existing
units at CPS.
It is anticipated that the Project's generation capacity and energy will be
available to the Company at competitive market rates and that any excess will be
available for sale to the regional wholesale market.
It is Management's opinion that the additional generating capacity is needed to
meet the Company's own needs and the needs of the region. The additional
capacity will also further the Company's strategy to become a regional power
supplier outside of the traditional service area and to take advantage of
emerging deregulated markets.
One of the Company's unregulated subsidiaries will own and operate the Project.
The total cost of the Project is expected to be $240 million and is scheduled to
be completed by June 1, 2000. Implementation of the Project is subject to
approval by the LPSC and the FERC.
YEAR 2000 SYSTEMS ISSUES
The year 2000 (Y2K) problem occurs because many systems, both hardware
and software, were designed to accept only two digits instead of four digits for
the year in a date field. Having two digits instead of four digits may cause the
system to read '00' as 1900 instead of 2000. This may cause calculations that
are date sensitive to arrive at an incorrect or impossible solution. This may
affect items such as delivery dates, interest calculations, pension benefit
calculations, and a variety of other date dependent calculations.
The Company is aware of the issues surrounding the year 2000 and the problems
that may occur and has put into action a plan to address these issues. The
Company has completed a survey of all internal information technology (IT) and
non-IT systems. IT systems consist of software programs, such as the operating
system, spreadsheets, accounting and other programs. Non-IT systems refer to
embedded technology such as microcontrollers found in computers and other
hardware systems. This survey has identified systems as Y2K compliant and those
that are not compliant. Systems that the survey identified as non-compliant have
been evaluated and solutions have been proposed and, to varying degrees,
implemented. The following is a list of the major initiatives, the estimated
completion date and the percentage completion of proposed solutions:
16
<PAGE> 19
<TABLE>
<CAPTION>
Major Initiative Completion Date % Completion
---------------- --------------- ------------
<S> <C> <C>
IT Systems/Hardware July 1999* 51%
Transmission July 1999 50%
Distribution July 1998 100%
Generation April 1999 45%
</TABLE>
*(The majority of the IT Systems/Hardware initiative's estimated completion date
is December, 1998. The telephone switches and voice mail systems are estimated
to be complete by July, 1999)
Internal systems are not the only ones that may have a material effect on the
Company. Institutions external to the Company, such as vendors and customers,
may also impact the Company's operations if their systems are not Y2K compliant.
Vendors could impact the Company by the inability to deliver goods and services
required by the Company to operate. Customers could impact the Company by their
inability to operate, reducing the sale of power, or their inability to pay the
Company for the power consumed. The Company has decided to address this issue by
identifying major vendors and customers and sending surveys to discover their
level of Y2K compliance. Major vendors are defined as those that either provide
a large dollar volume of goods or services to the Company, or those that provide
critical components to the Company, or that fall into both categories (such as
fuel suppliers and financial institutions). Major customers are identified as
those customers that are at the greatest risk of being impacted by the Y2K
problem and are large consumers of power (mainly industrial and commercial
customers). To date, the surveys to the major vendors have been sent out, but
response has been sparse. The surveys to major customers are in the process of
being sent out. The projected date of completion of system surveys of external
parties is expected to be September, 1998.
The risks of not addressing the Y2K problem include the failure to bill
customers, collect payments, pay invoices, operate generation facilities,
operate substations, and order and receive critical materials. Each of these
risks, should they materialize, could have a material, negative impact on the
operations, liquidity and financial condition of the Company. However, it is the
opinion of Management that the action plan outlined above will adequately
address the risks and reduce them to a manageable level so that Y2K issues will
not materially impact the Company.
At present, the Company does not have a contingency plan in place to
specifically cover the YK2 issues. However, Management is continually monitoring
the progress of each initiative, In the first quarter of 1999, Management will
evaluate the reasonableness of the projected completion dates and at that time
determine if a contingency plan is required. As of the date of this filing,
Management reasonably expects the completion of the initiatives in a timely
manner; thus, a contingency plan is not required.
POWER MARKETING OPERATIONS
Historically, the Company's power marketing operations focused solely upon
purchasing economic power from other utilities to meet the Company's native load
needs and, where economically feasible, selling any excess generation capacity
to other utilities. In January 1997, the
17
<PAGE> 20
scope of the Company's power marketing operations was expanded to include
trading of electric commodity products in the wholesale energy market.
Activities include back-to-back sales of third party electric energy in short
term (next day) or hourly transactions along with the sale of municipal
generation under partnership agreements. The Company generally enters into
longer term sales or trades, greater than a month, but less than one year when
backed by physical assets and fixed fuel prices or forward purchases. Risk
management controls are in place to minimize risk. Such controls include risk
management hardware/software, mid-office risk management personnel, and an
experienced corporate risk manager.
18
<PAGE> 21
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3(i) Amendment to the Company's Restated Articles of
Incorporation
11 Computation of Net Income Per Common Share for the
three and six months ended June 30, 1998 and June
30, 1997
12 Computation of Earnings to Fixed Charges and
Earnings to Combined Fixed Charges and Preferred
Stock Dividends for the twelve months ended June 30,
1998
15 Awareness letter, dated August 12, 1998, from
PricewaterhouseCoopers LLP regarding review of the
unaudited interim financial statements
27 Financial Data Schedule
(b) Reports on Form 8-K
During the three-month period ended June 30, 1998, the Company
filed no Current Reports on Form 8-K.
19
<PAGE> 22
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CLECO CORPORATION
(Registrant)
BY: /s/ Thomas J. Howlin
---------------------------------
Thomas J. Howlin
Senior Vice President of Finance
and Chief Financial Officer
(Principal Financial Officer)
Date: August 14, 1998
20
<PAGE> 1
UNITED STATES OF AMERICA : AMENDMENT TO RESTATED
STATE OF LOUISIANA : ARTICLES OF INCORPORATION
PARISH OF RAPIDES : OF CENTRAL LOUISIANA
CITY OF PINEVILLE : ELECTRIC COMPANY, INC.
BE IT KNOWN AND REMEMBERED, that on this 24th day of April, 1998,
before me, the undersigned Notary Public, duly commissioned and qualified in and
for the Parish of Rapides, State of Louisiana, therein residing, and in the
presence of the undersigned two competent witnesses, personally came and
appeared Gregory L. Nesbitt, President, and Michael P. Prudhomme, Secretary -
Treasurer, respectively, of Central Louisiana Electric Company, Inc., a
corporation organized and existing under the laws of the State of Louisiana (the
"Corporation"), with its registered office at 2030 Donahue Ferry Road in the
City of Pineville, Rapides Parish, Louisiana, both being above the full age of
majority, who declared unto me, Notary, in the presence of the undersigned
competent witnesses, that:
At the annual meeting of shareholders of the Corporation, duly convened
and held, pursuant to due and legal notice, on the 24th day of April, 1998, at
9:00 a.m., Central Daylight Savings Time, at the Pineville High School
Auditorium at 1511 Line Street, in the City of Pineville, Rapides Parish,
Louisiana, and after all legal prerequisites had been observed, of the
22,835,904 shares of the capital stock of the Corporation outstanding as of the
record date for the meeting, there were 19,192,980 shares of common stock and
323,444 shares of preferred stock represented at the meeting.
The vote on the amendment to the Corporation's Restated Articles of
Incorporation to change the name of the Corporation was as follows: 18,783,364
shares of common stock and 320,103 shares of preferred stock voted for the
amendment, 244,666 shares of common stock and 1,656 shares of preferred stock
voted against and 164,950 shares of common stock and 1,685 shares of preferred
stock abstained. Pursuant to such vote, the Restated Articles of Incorporation
are amended as follows:
"Article 1.
The name of the Corporation is hereby declared to be
CLECO CORPORATION."
Said appearers further declared that this authentic act is executed by
them so that Article 1 of the Restated Articles of Incorporation of Central
Louisiana Electric Company, Inc. shall stand as amended in the particulars and
to the extent herein recited.
<PAGE> 2
THUS DONE AND PASSED, in multiple originals, on the day, month and year
herein first above written, in the presence of the undersigned competent
witnesses, of lawful age and domiciled in the State and Parish aforesaid, who
hereunto sign their names with the said appearers and me, Notary, after due
reading of the whole.
WITNESSES:
/s/ Janice B. Mount /s/ Gregory L. Nesbitt
- ------------------------------ ------------------------------
GREGORY L. NESBITT, PRESIDENT
/s/ Judy P. Miller /s/ Michael P. Prudhomme
- ------------------------------ ------------------------------
MICHAEL P. PRUDHOMME, SECRETARY-
TREASURER
/s/ Cynthia A. McBerry
------------------------------
NOTARY PUBLIC
<PAGE> 1
CLECO CORPORATION
COMPUTATION OF NET INCOME PER COMMON SHARE
FOR THE THREE MONTHS ENDED JUNE 30,
(Unaudited)
<TABLE>
<CAPTION>
(In thousands, except share
and per share amounts)
1998 1997
----------- -----------
<S> <C> <C>
BASIC
Net income applicable to common stock $ 14,491 $ 10,744
=========== ===========
Weighted average number of shares of common
stock outstanding during the period 22,481,365 22,459,381
=========== ===========
Basic net income per common share $ 0.64 $ 0.48
=========== ===========
DILUTED
Net income applicable to common stock $ 14,491 $ 10,744
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 359 364
Deduct additional cash contribution
required which is equal to dividends
on preferred stock less dividends
paid at the common dividend rate, net
of tax (24) (25)
Add tax benefit associated with dividends
paid on allocated common shares 87 73
----------- -----------
Adjusted income applicable to common stock $ 14,913 $ 11,156
=========== ===========
Weighted average number of shares of common
stock outstanding during the period 22,481,365 22,459,381
Number of equivalent common shares
attributable to ESOP 1,378,250 1,398,053
Common stock under stock option grants 6,452 6,978
----------- -----------
Average shares 23,866,067 23,864,412
=========== ===========
Diluted net income per common share $ 0.63 $ 0.47
=========== ===========
</TABLE>
<PAGE> 2
CLECO CORPORATION
COMPUTATION OF NET INCOME PER COMMON SHARE
FOR THE SIX MONTHS ENDED JUNE 30,
(Unaudited)
<TABLE>
<CAPTION>
(In thousands, except share
and per share amounts)
1998 1997
----------- -----------
<S> <C> <C>
BASIC
Net income applicable to common stock $ 20,959 $ 17,746
=========== ===========
Weighted average number of shares of common
stock outstanding during the period 22,475,719 22,458,173
=========== ===========
Basic net income per common share $ 0.93 $ 0.79
=========== ===========
DILUTED
Net income applicable to common stock $ 20,959 $ 17,746
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 718 728
Deduct additional cash contribution
required which is equal to dividends
on preferred stock less dividends
paid at the common dividend rate, net
of tax (47) (58)
Add tax benefit associated with dividends
paid on allocated common shares 171 140
----------- -----------
Adjusted income applicable to common stock $ 21,801 $ 18,556
=========== ===========
Weighted average number of shares of common
stock outstanding during the period 22,475,719 22,458,173
Number of equivalent common shares
attributable to ESOP 1,383,575 1,398,907
Common stock under stock option grants 6,655 7,200
----------- -----------
Average shares 23,865,949 23,864,280
=========== ===========
Diluted net income per common share $ 0.91 $ 0.78
=========== ===========
</TABLE>
<PAGE> 1
CLECO CORPORATION
COMPUTATION OF EARNINGS TO FIXED CHARGES
AND EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
FOR THE TWELVE MONTHS ENDED JUNE 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
(In thousands,
except ratios)
<S> <C>
Earnings $ 55,742
Income taxes 28,448
--------
Earnings from continuing operations before income taxes $ 84,190
--------
Fixed charges:
Interest, long-term debt $ 23,500
Interest, other (including interest on short-term debt) 3,736
Amortization of debt expense, premium, net 1,239
Portion of rentals representative of an interest factor 502
--------
Total fixed charges $ 28,977
--------
Earnings from continuing operations before
income taxes and fixed charges $113,167
========
Ratio of earnings to fixed charges 3.91x
========
Fixed charges from above $ 28,977
Preferred stock dividends* 2,851
--------
Total fixed charges and preferred stock dividends $ 31,828
========
Ratio of earnings to combined fixed charges and
preferred stock dividends 3.56x
========
</TABLE>
* Preferred stock dividends multiplied by the ratio of pretax
income to net income.
<PAGE> 1
August 12, 1998
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Cleco Corporation Registrations on Form S-8 (Registration Nos.
2-79671, 33-10169, 33-38362 and 33-44663) and Form S-3 (Nos. 33-24895,
33-62950 and 333-02895)
We are aware that our report dated July 28, 1998 on our review of the interim
financial information of Cleco Corporation as of June 30, 1998 and for the
three-month and six-month periods ended June 30, 1998 and 1997 included in this
Form 10-Q is incorporated by reference in the above mentioned registration
statements. Pursuant to Rule 43 (C) under the Securities Act of 1933, this
report should not be considered a part of the registration statements prepared
or certified by us within the meaning of Sections 7 and 11 of that Act.
PricewaterhouseCoopers LLP
<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>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,031,391
<OTHER-PROPERTY-AND-INVEST> 3,741
<TOTAL-CURRENT-ASSETS> 117,389
<TOTAL-DEFERRED-CHARGES> 219,592
<OTHER-ASSETS> 8,325
<TOTAL-ASSETS> 1,380,438
<COMMON> 45,530
<CAPITAL-SURPLUS-PAID-IN> 108,063
<RETAINED-EARNINGS> 258,528
<TOTAL-COMMON-STOCKHOLDERS-EQ> 412,121
5,990
12,286
<LONG-TERM-DEBT-NET> 120,915
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 235,000
<COMMERCIAL-PAPER-OBLIGATIONS> 60,049
<LONG-TERM-DEBT-CURRENT-PORT> 10,000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 524,077
<TOT-CAPITALIZATION-AND-LIAB> 1,380,438
<GROSS-OPERATING-REVENUE> 225,507
<INCOME-TAX-EXPENSE> 10,408
<OTHER-OPERATING-EXPENSES> 180,324
<TOTAL-OPERATING-EXPENSES> 190,732
<OPERATING-INCOME-LOSS> 34,775
<OTHER-INCOME-NET> 1,060
<INCOME-BEFORE-INTEREST-EXPEN> 35,835
<TOTAL-INTEREST-EXPENSE> 13,819
<NET-INCOME> 22,016
1,057
<EARNINGS-AVAILABLE-FOR-COMM> 20,959
<COMMON-STOCK-DIVIDENDS> 17,979
<TOTAL-INTEREST-ON-BONDS> 4,543
<CASH-FLOW-OPERATIONS> 36,647
<EPS-PRIMARY> 0.93
<EPS-DILUTED> 0.91
</TABLE>
