<PAGE>
Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ 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
---------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------------- -----------------
Commission File Number 1-2297
EASTERN ENTERPRISES
-------------------------------------------------------------
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-1270730
------------------------------ -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9 RIVERSIDE ROAD, WESTON, MASSACHUSETTS 02493
-------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
781-647-2300
-------------------------------------------------------------
(Registrant's telephone number, including area code)
-------------------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report.
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
---- ----
The number of shares of Common Stock outstanding of Eastern Enterprises as of
July 22, 1998 was 20,432,396.
<PAGE>
Form 10-Q
Page 2.
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Company or group of companies for which report is filed:
EASTERN ENTERPRISES AND SUBSIDIARIES ("Eastern")
<TABLE>
Consolidated Statement of Operations
- ------------------------------------
<CAPTION>
Three months ended Six months ended
June 30, June 30,
(In thousands, except per share amounts) 1998 1997 1998 1997
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $192,621 $207,856 $535,540 $584,776
Operating costs and expenses:
Operating costs 132,681 146,796 368,326 419,355
Selling, general & adminis-
trative expenses 26,704 26,497 56,328 55,578
Depreciation & amortization 16,649 15,934 39,890 38,237
-------- -------- -------- --------
176,034 189,227 464,544 513,170
-------- -------- -------- --------
Operating earnings 16,587 18,629 70,996 71,606
Other income (expense):
Interest income 1,493 2,228 4,110 4,333
Interest expense (6,998) (8,535) (15,530) (17,325)
Equity in loss of AllEnergy - (1,821) - (3,098)
Other, net 777 85 2,067 58
-------- -------- -------- -------
Earnings before income taxes 11,859 10,586 61,643 55,574
Provision for income taxes 4,514 1,548 23,375 18,313
-------- -------- -------- -------
Earnings before extraordinary
items 7,345 9,038 38,268 37,261
Extraordinary items,net of tax:
Credit for coal miners
retiree health care 48,425 - 48,425 -
Loss on early
extinguishment of debt - - (1,465) -
-------- -------- -------- --------
Net earnings $ 55,770 $ 9,038 $ 85,228 $ 37,261
======== ======== ======== ========
Basic earnings per share before
extraordinary items $ .36 $ .44 $ 1.87 $ 1.83
Extraordinary items, net of tax:
Credit for coal miners
retiree health care 2.37 - 2.37 -
Loss on early
extinguishment of debt - - (.07) -
-------- -------- -------- --------
Basic earnings per share $ 2.73 $ .44 $ 4.17 $ 1.83
======== ======== ======== ========
Diluted earnings per share before
extraordinary items $ .36 $ .44 $ 1.86 $ 1.82
Extraordinary items, net of tax:
Credit for coal miners
retiree health care 2.35 - 2.35 -
Loss on early
extinguishment of debt - - (.07) -
-------- -------- -------- --------
Diluted earnings per share $ 2.71 $ .44 $ 4.14 $ 1.82
======== ======== ======== ========
Dividends per share $ .41 $ .40 $ .81 $ .80
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Form 10-Q
Page 3.
Eastern Enterprises and Subsidiaries
- ------------------------------------
<TABLE>
Consolidated Balance Sheet
- --------------------------
<CAPTION>
June 30, Dec. 31, June 30,
(In thousands) 1998 1997 1997
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and short-term investments $ 106,440 $ 175,274 $ 170,087
Receivables, less reserves 96,535 108,575 95,392
Inventories 40,072 56,644 43,064
Deferred gas costs 24,979 66,595 17,048
Other current assets 7,077 5,145 6,607
---------- ---------- ----------
Total current assets 275,103 412,233 332,198
Property and equipment, at cost 1,561,523 1,516,186 1,466,529
Less--accumulated depreciation 696,945 662,628 640,816
---------- ---------- ----------
Net property and equipment 864,578 853,558 825,713
Other assets:
Deferred post-retirement health care
costs 81,247 83,926 86,245
Investments 15,805 15,072 26,042
Deferred charges and other costs,
less amortization 68,525 69,568 47,205
---------- ---------- ----------
Total other assets 165,577 168,566 159,492
---------- ---------- ----------
Total assets $1,305,258 $1,434,357 $1,317,403
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Form 10-Q
Page 4.
Eastern Enterprises and Subsidiaries
- ------------------------------------
<TABLE>
Consolidated Balance Sheet
- --------------------------
<CAPTION>
June 30, Dec. 31, June 30,
(In thousands) 1998 1997 1997
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current debt $ 4,545 $ 44,051 $ 4,583
Accounts payable 39,719 67,740 43,943
Accrued expenses 41,722 37,143 35,420
Other current liabilities 46,372 65,762 59,830
---------- ------------ -----------
Total current liabilities 132,358 214,696 143,776
Gas inventory financing 29,185 55,502 29,990
Long-term debt 291,461 342,142 345,084
Reserves and other liabilities:
Deferred income taxes 124,163 98,863 94,184
Post-retirement health care 94,188 95,120 96,155
Coal miners retiree health care - 57,000 58,949
Preferred stock of subsidiary 29,343 29,326 29,309
Other reserves 87,027 92,647 69,458
---------- ------------ -----------
Total reserves and other
liabilities 334,721 372,956 348,055
Commitments and Contingencies
Shareholders' equity:
Common stock, $1.00 par value
Authorized shares -- 50,000,000
Issued shares -- 20,442,907 at
June 30, 1998 and December 31, 1997;
20,441,907 at June 30, 1997 20,443 20,443 20,443
Capital in excess of par value 32,547 32,663 32,716
Retained earnings 464,145 395,662 397,490
Accumulated other comprehensive
earnings 780 1,873 2,127
Treasury stock at cost - 11,131
shares at June 30, 1998; 54,928
shares at December 31, 1997 and
88,252 shares at June 30, 1997 (382) (1,580) (2,278)
---------- ----------- ----------
Total shareholders' equity 517,533 449,061 450,498
---------- ----------- ----------
Total liabilities and
shareholders' equity $1,305,258 $ 1,434,357 $1,317,403
========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Form 10-Q
Page 5.
Eastern Enterprises and Subsidiaries
- ------------------------------------
<TABLE>
Consolidated Statement of Cash flows
- ------------------------------------
<CAPTION>
Six months ended June 30,
(In thousands) 1998 1997
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 85,228 $ 37,261
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 39,890 38,237
Income taxes and tax credits 2,934 9,771
Net credit for coal miners retiree
health care (48,425) -
Net loss on early extinguishment of debt 1,465 -
Net gain on sale of assets (1,625) -
Other changes in assets and liabilities:
Receivables 12,040 1,462
Inventories 16,572 18,207
Deferred gas costs 41,616 58,289
Accounts payable (28,021) (30,172)
Other (7,202) (604)
--------- ---------
Net cash provided by operating activities 114,472 132,451
Cash flows from investing activities:
Capital expenditures (49,882) (25,915)
Proceeds on sale of assets 5,654 -
Investments (162) (7,400)
Other (115) (727)
--------- ---------
Net cash used by investing activities (44,505) (34,042)
Cash flows from financing activities:
Dividends paid (16,732) (16,257)
Changes in notes payable (39,700) (56,600)
Repayment of long-term debt (52,741) (2,332)
Changes in gas inventory financing (26,317) (25,604)
Other 1,741 491
--------- ---------
Net cash used by financing activities (133,749) (100,302)
Net decrease in cash and cash equivalents (63,782) (1,893)
Cash and cash equivalents at beginning of year 170,222 159,804
--------- ---------
Cash and cash equivalents at end of period 106,440 157,911
Short-term investments - 12,176
--------- ---------
Cash and short-term investments $ 106,440 $ 170,087
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Form 10-Q
Page 6.
EASTERN ENTERPRISES AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
June 30, 1998
1. Accounting policies
It is Eastern's opinion that the financial information contained in this report
reflects all adjustments necessary to present a fair statement of results for
the periods reported. All of these adjustments are of a normal recurring nature.
Results for the periods are not necessarily indicative of results to be expected
for the year, due to the seasonal nature of Eastern's operations. All accounting
policies have been applied in a manner consistent with prior periods. Such
financial information is subject to year-end adjustments and annual audit by
independent public accountants.
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, the 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.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted in this Form 10-Q. Therefore these interim
financial statements should be read in conjunction with Eastern's 1997 Annual
Report filed on Form 10-K with the Securities and Exchange Commission.
Earnings per share
Basic earnings per share is based on the weighted average number of shares
outstanding. Diluted earnings per share gives effect to the exercise of stock
options using the treasury stock method, as reflected below:
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
(In thousands) 1998 1997 1998 1997
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Weighted average shares 20,429 20,349 20,421 20,339
Dilutive effect of options 151 93 161 91
------ ------ ------ ------
Adjusted weighted average shares 20,580 20,442 20,582 20,430
====== ====== ====== ======
</TABLE>
2. Change in Accounting Principles
Effective January 1, 1998, Eastern adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income." This statement requires
presentation of the components of comprehensive earnings, including the changes
in equity from non-owner sources such as unrealized gains on securities and
minimum pension liability adjustments. Eastern's total comprehensive earnings
were as follows:
<PAGE>
Form 10-Q
Page 7.
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
(In thousands) 1998 1997 1998 1997
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net earnings $55,570 $ 9,038 $85,228 $37,261
Unrealized gains on securities:
Unrealized holding gains
arising during period 79 655 557 912
Less: reclassification
adjustment for gains included
in net earnings (496) - (1,650) -
------- ------- ------- -------
(417) 655 (1,093) 912
------- ------- ------- -------
Comprehensive earnings $55,153 $ 9,693 $84,135 $38,173
======= ======= ======= =======
</TABLE>
3. Coal Miners Retiree Health Care
On June 25, 1998 the U.S. Supreme Court ruled that the Coal Industry Retiree
Health Benefit Act of 1992 ("the Coal Act") is unconstitutional as applied to
Eastern.
Beginning in 1993, Eastern recorded provisions totaling $80.0 million to fund
its liability under the Coal Act. As a result of the Supreme Court's decision,
Eastern reversed those provisions, less associated expenses, resulting in an
extraordinary gain of $74.5 million pre-tax, $48.4 million net or $2.35 per
share in the second quarter of 1998.
4. Debt
In March 1998, Midland utilized currently available cash to call $50 million of
9.9% First Preferred Ship Mortgage Bonds, due 2008. In extinguishing this debt,
Midland recognized an extraordinary charge of $2,254,000 pretax, $1,465,000 net,
or $.07 per share.
Midland has entered into treasury rate locks in order to hedge the interest rate
on long-term debt anticipated to be issued in late 1998. The treasury rate locks
are for $75 million at a weighted average 10-year treasury rate of 5.676%. Upon
issuance of the debt, any gain or loss realized on the treasury rate lock will
be amortized to interest expense over the term of the related debt.
5. Inventories
The components of inventories were as follows:
<TABLE>
<CAPTION>
June 30, Dec. 31, June 30,
(In thousands) 1998 1997 1997
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Supplemental gas supplies $ 29,285 $ 44,590 $ 30,669
Other materials, supplies and
marine fuels 10,787 12,054 12,395
-------- -------- --------
$ 40,072 $ 56,644 $ 43,064
======== ======== ========
</TABLE>
<PAGE>
Form 10-Q
Page 8.
6. Supplemental cash flow information
The following are supplemental disclosures of cash flow information:
<TABLE>
<CAPTION>
Six months ended June 30,
(In thousands) 1998 1997
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash paid during the year for:
Interest, net of amounts capitalized $16,194 $16,762
Income taxes $20,625 $ 8,981
</TABLE>
<PAGE>
Form 10-Q
Page 9.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
<TABLE>
<CAPTION>
RESULTS OF OPERATIONS
Revenues: Three months ended June 30,
(In thousands) 1998 1997 Change
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Boston Gas $126,974 $139,743 (9)%
Midland 65,163 68,113 (4)%
ServicEdge 484 - nm
-------- --------
Total $192,621 $207,856 (7)%
======== ========
</TABLE>
<TABLE>
<CAPTION>
Six months ended June 30,
1998 1997 Change
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Boston Gas $407,235 $452,281 (10)%
Midland 127,821 132,495 (4)%
ServicEdge 484 - nm
-------- --------
Total $535,540 $584,776 (8)%
======== ========
</TABLE>
Boston Gas
Lower revenues for the second quarter of 1998 reflect warmer weather ($15
million) and the migration of customers from firm sales to transportation-only
service ($4 million), partially offset by throughput growth and the pass through
of higher gas costs. Weather in the second quarter was 3% warmer than normal, in
contrast to 24% colder than normal weather in the previous year.
The decrease in year-to-date revenues in 1998 reflects warmer weather ($25
million), the pass through of lower gas costs ($23 million) and migration to
transportation ($16 million), partially offset by higher non-firm sales and
throughput growth. Year-to-date weather was 9% warmer than normal, compared to
near normal weather in 1997.
Midland Enterprises
River transportation markets in the second quarter were nearly unchanged from
those experienced in the first quarter of 1998. Weak demand for export coal and
grain continued during the quarter, resulting in an oversupply of barges and
placing downward pressure on spot and contract renewal rates. The strengthening
of the U.S. dollar and the economic problems of Southeast Asia have contributed
to the export market weakness. Increased demand for domestic coal by electric
utility and industrial customers offset much of the reduced export volume.
However, lower fuel prices decreased rates on multi-year contracts containing
fuel price adjustment clauses.
Second quarter and year-to-date tonnage increased 6% and 8%, respectively, while
related ton miles declined 2% for the quarter and 4% year-to-date as compared to
1997. The tonnage increases primarily reflect replacement of reductions in
export tonnage with shorter haul domestic movements. Coal tonnage increased 10%
and 14% for the quarter and first six months of 1998, respectively, with coal
tonnage under multi-year contracts to utility and industrial customers
increasing 20% in the quarter and 28% year-to-date. Reduced spot and export coal
tonnage was partially offsetting. Non-coal tonnage was flat for the second
quarter and 3% lower for 1998 year-to-date, due to significantly lower grain
shipments, partially offset by increased aggregate tonnage and towing for
others.
<PAGE>
Form 10-Q
Page 10.
ServicEdge
Revenues for the second quarter of 1998 reflect the commencement of services to
customers in April 1998.
<TABLE>
<CAPTION>
Operating Earnings:
Three months ended June 30,
(In thousands) 1998 1997 Change
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Boston Gas $12,919 $11,368 14%
Midland 7,719 9,103 (15)%
ServicEdge (2,520) - nm
Headquarters (1,531) (1,842) 17%
------- -------
Total $16,587 $18,629 (11)%
======= =======
</TABLE>
<TABLE>
<CAPTION>
Six months ended June 30,
1998 1997 Change
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Boston Gas $64,542 $60,159 7%
Midland 13,807 14,531 (5)%
ServicEdge (4,657) - nm
Headquarters (2,696) (3,084) 13%
------- -------
Total $70,996 $71,606 (1)%
======= =======
</TABLE>
Boston Gas
Operating earnings for the second quarter of 1998 increased by $1.6 million,
reflecting lower operating costs ($5 million) and growth in throughput,
partially offset by the margin impact of warmer weather ($5 million).
Operating earnings for the first six months of 1998 increased by $4.4 million,
reflecting lower operating costs ($8 million), growth in throughput and higher
average rates, partially offset by the margin impact of warmer weather ($8
million) and the absence of a pension settlement gain reflected in 1997 ($2
million).
The pass through of higher or lower gas costs and migration to
transportation-only service have no impact on Boston Gas' operating earnings.
The Company earns all of its margins on the local distribution of gas and none
on the resale of the commodity.
Midland Enterprises
Operating earnings for the second quarter and year-to-date 1998 decreased by
$1.8 million and $0.7 million, respectively, reflecting weaker market
conditions, as described above and adverse operating conditions attributable to
El Nino-related storms in 1998, particularly in the Southeast and Gulf regions.
These storms continued to cause high water conditions and intermittent
operational delays and resulted in increased vessel costs similar to the impact
of record flooding on the Ohio River in the comparable period in 1997. In
addition, fleet operational efficiency was negatively impacted by the lack of
export tonnage, as replacement tonnage did not produce equivalent pattern
efficiency. Lower fuel costs partially offset the higher operating costs.
<PAGE>
Form 10-Q
Page 11.
ServicEdge
ServicEdge's operating losses of $2.5 million for the second quarter and $4.7
million for the first six months of 1998, reflect general and administrative
expense associated with starting this new business.
Other:
Interest income and interest expense for the second quarter of 1998 decreased by
$0.7 million and $1.5 million, respectively, primarily reflecting the use of
short-term investments to redeem $50 million of Midland debt in March 1998, as
discussed in Note 4 of Notes to Financial Statements. Eastern recognized an
extraordinary loss of $2.3 million pretax, $1.5 million net, or $.07 per share
on redeeming this debt.
In 1997, other income includes losses for the quarter and first six months of
$1.8 million and $3.1 million, respectively, representing Eastern's share of
AllEnergy's operating losses. Eastern sold its investment in AllEnergy in
December 1997.
In 1998, other, net includes realized gains on investments of $0.5
million for the quarter and $1.6 million year-to-date.
In June 1998, The U.S. Supreme Court held the Coal Industry Retiree Health
Benefit of 1992 ("Coal Act") to be unconstitutional, as applied to Eastern. As
discussed in Footnote 3, the reversal of Coal Act provisions resulted in an
extraordinary gain of $74.5 million pre-tax, $48.4 million net, or $2.35 per
share in the second quarter of 1998.
FORWARD-LOOKING INFORMATION:
This report and other company statements and statements issued or made from time
to time contain certain "forward-looking statements" concerning projected future
financial performance, expected plans or future operations. Eastern cautions
that actual results and developments may differ materially from such projections
or expectations.
Investors should be aware of important factors that could cause actual results
to differ materially from the forward-looking projections or expectations. These
factors include, but are not limited to: the effect of strategic initiatives on
earnings and cash flow, temperatures above or below normal in Boston Gas'
service area, changes in market conditions for barge transportation, adverse
weather and operating conditions on the inland waterways, uncertainties
regarding the start-up of ServicEdge, including expense levels and customer
acceptance, changes in economic conditions, including interest rates and the
value of the dollar versus other currencies, regulatory and court decisions and
developments with respect to Eastern's previously-disclosed environmental
liabilities. Most of these factors are difficult to predict accurately and are
generally beyond Eastern's control.
<PAGE>
Form 10-Q
Page 12.
LIQUIDITY AND CAPITAL RESOURCES
Management believes that projected cash flows from operations, in combination
with currently available resources and the borrowing discussed below, are more
than sufficient to meet Eastern's 1998 capital expenditure and working capital
requirements, potential funding of its environmental liabilities, normal debt
repayments and anticipated dividend payments to shareholders.
Consolidated capital expenditures are budgeted at approximately $110
million, with about 55% at Boston Gas and the balance at Midland.
As discussed in Note 3, in March 1998, Midland utilized currently available cash
to redeem $50 million of 9.9% First Preferred Ship Mortgage Bonds, due 2008.
Midland currently expects to borrow $75 million later in 1998 to refinance the
redeemed debt and to fund capital expenditures for barges during 1998 and 1999.
Midland has entered into treasury rate locks in order to hedge the interest rate
for this debt, as discussed in Note 3.
In June 1998, the shareholders of Essex County Gas Company approved the proposed
acquisition of that utility by Eastern. The merger, which will be accounted for
on a pooling of interests basis, is subject to a number of conditions, including
receipt of various state and federal regulatory approvals.
<PAGE>
Form 10-Q
Page 13.
PART II. OTHER INFORMATION
Item 5. Other Information
Discretionary Voting Authority - 45 Day Advance Notice Requirement
If a proponent fails to notify Eastern Enterprises by February 1, 1999
of a proposal for consideration at the 1999 Annual Shareholders
Meeting, then the proxies named by management with respect to that
meeting shall have discretionary voting authority with respect to that
proposal.
Item 6. Exhibits and Reports on Form 8-K
(a) List of Exhibits
27.1 Financial Data Schedule.
(b) Report on Form 8-K
On June 29, 1998 Eastern filed a Form 8-K which contained the
press release announcing that the U.S. Supreme Court declared
the Coal Industry Retiree Health Benefit Act of 1992
unconstitutional as applied to Eastern Enterprises.
<PAGE>
Form 10-Q
Page 14.
SIGNATURES
It is Eastern's opinion that the financial information contained in
this report reflects all adjustments necessary to present a fair statement of
results for the period reported. All of these adjustments are of a normal
recurring nature. Results for the period are not necessarily indicative of
results to be expected for the year, due to the seasonal nature of Eastern's
operations. All accounting policies have been applied in a manner consistent
with prior periods other than changes disclosed in Notes to Financial
Statements. Such financial information is subject to year-end adjustments and
annual audit by independent public accountants.
Pursuant to the requirements of the Securities Exchange Act of 1934,
Eastern has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EASTERN ENTERPRISES
By /s/ JAMES J. HARPER
-------------------------
James J. Harper
Vice President and Controller
(Chief Accounting Officer)
By /s/ WALTER J. FLAHERTY
-------------------------
Walter J. Flaherty
Senior Vice President and
Chief Financial Officer
July 23, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated statement of earnings and the consolidated balance sheets and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 106,440
<SECURITIES> 0
<RECEIVABLES> 114,040
<ALLOWANCES> 17,505
<INVENTORY> 40,072
<CURRENT-ASSETS> 275,103
<PP&E> 1,561,523
<DEPRECIATION> 696,945
<TOTAL-ASSETS> 1,305,258
<CURRENT-LIABILITIES> 132,358
<BONDS> 291,461
<COMMON> 20,443
29,343
0
<OTHER-SE> 497,090
<TOTAL-LIABILITY-AND-EQUITY> 1,305,258
<SALES> 407,235
<TOTAL-REVENUES> 535,540
<CGS> 300,676
<TOTAL-COSTS> 407,861
<OTHER-EXPENSES> 41,470
<LOSS-PROVISION> 9,116
<INTEREST-EXPENSE> 15,450
<INCOME-PRETAX> 61,643
<INCOME-TAX> 23,375
<INCOME-CONTINUING> 38,268
<DISCONTINUED> 0
<EXTRAORDINARY> 46,960
<CHANGES> 0
<NET-INCOME> 85,228
<EPS-PRIMARY> 4.17<F1>
<EPS-DILUTED> 4.14<F2>
<FN>
<F1> EPS - Primary is EPS Basic per SFAS 128
<F2> EPS - Fully Diluted is EPS - Diluted per SFAS 128
</FN>
</TABLE>
