<PAGE> 1
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 March 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-3571
LONG ISLAND LIGHTING COMPANY
Incorporated pursuant to the Laws of New York State
Internal Revenue Service - Employer Identification Number
11-1019782
175 East Old Country Road, Hicksville, New York 11801
(516) 545-4590
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 total number of shares of the registrant's Common Stock, $5 par
value, outstanding on April 30, 1995, was 119,044,385.
<PAGE> 2
LONG ISLAND LIGHTING COMPANY
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Statement of Income 3
Balance Sheet 4
Statement of Cash Flows 6
Notes to Financial Statements 7
Item 2. Management's Discussion and 10
Analysis of Financial Condition and
Results of Operations
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 2. Changes in Securities 17
Item 3. Defaults Upon Senior Securities 17
Item 4. Submission of Matters to a Vote 17
of Security Holders
Item 5. Other Information 17
Item 6. Exhibits and Reports on Form 8-K 17
Signature 19
</TABLE>
- 2 -
<PAGE> 3
LONG ISLAND LIGHTING COMPANY
STATEMENT OF INCOME
(UNAUDITED)
(Thousands of Dollars - except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
-------- --------
1995 1994
-------- --------
<S> <C> <C>
REVENUES
Electric $545,887 $587,266
Gas 245,301 284,877
-------- --------
Total Revenues 791,188 872,143
-------- --------
EXPENSES
Operations - fuel and purchased power 256,695 298,920
Operations - other 96,010 114,053
Maintenance 34,256 27,858
Depreciation and amortization 35,634 31,681
Base financial component amortization 25,243 25,243
Rate moderation component amortization 11,487 48,627
Regulatory liability component amortization (22,143) (22,143)
Other regulatory amortization 13,659 10,014
Operating taxes 111,607 109,640
Federal income tax - current 2,613 2,341
Federal income tax - deferred and other 45,252 42,044
-------- --------
Total Expenses 610,313 688,278
-------- --------
Operating Income 180,875 183,865
-------- --------
Other Income and (Deductions)
Rate moderation component carrying charges 6,842 8,979
Class Settlement (5,467) (5,701)
Other income 3,504 9,496
Allowance for other funds used during construction 714 717
Federal income tax credit - deferred and other 2,209 915
-------- --------
Total Other Income and (Deductions) 7,802 14,406
-------- --------
Income Before Interest Charges 188,677 198,271
-------- --------
Interest Charges and (Credits)
Interest on long-term debt 103,060 112,779
Other interest 16,344 17,075
Allowance for borrowed funds used during construction (1,026) (1,203)
-------- --------
Total Interest Charges and (Credits) 118,378 128,651
-------- --------
Net Income 70,299 69,620
Preferred stock dividend requirements 13,172 13,272
-------- --------
Earnings for Common Stock $57,127 $56,348
======== ========
Average Common Shares Outstanding (000) 118,712 112,536
Earnings per Common Share $0.48 $0.50
Dividends Declared per Common Share $0.445 $0.445
</TABLE>
See Notes to Financial Statements.
- 3 -
<PAGE> 4
LONG ISLAND LIGHTING COMPANY
BALANCE SHEET
(Thousands of Dollars)
<TABLE>
<CAPTION>
March 31 December 31
1995 1994
(unaudited) (audited)
----------- -----------
ASSETS
<S> <C> <C>
UTILITY PLANT
Electric $ 3,694,611 $ 3,657,178
Gas 1,025,030 994,742
Common 233,935 232,346
Construction work in progress 93,232 129,824
Nuclear fuel in process and in reactor 25,127 23,251
----------- -----------
5,071,935 5,037,341
----------- -----------
Less - Accumulated depreciation and
amortization 1,570,064 1,538,995
----------- -----------
Total Net Utility Plant 3,501,871 3,498,346
----------- -----------
REGULATORY ASSETS
Base financial component (less accumulated
amortization of $580,582 and $555,340) 3,458,248 3,483,490
Rate moderation component 460,728 463,229
Shoreham post settlement costs 940,230 922,580
Shoreham nuclear fuel 72,839 73,371
Postretirement benefits other than pensions 404,625 412,727
Regulatory tax asset 1,826,010 1,831,689
Other 333,910 354,524
----------- -----------
Total Regulatory Assets 7,496,590 7,541,610
----------- -----------
Nonutility Property and Other Investments 24,617 24,043
----------- -----------
CURRENT ASSETS
Cash and cash equivalents 223,750 185,451
Special deposits 28,868 27,614
Customer accounts receivable (less allowance
for doubtful accounts of $19,918 and $23,365) 279,525 245,125
Other accounts receivable 12,858 14,030
Accrued unbilled revenues 149,672 164,379
Materials and supplies at average cost 71,048 74,777
Fuel oil at average cost 32,065 37,723
Gas in storage at average cost 17,120 68,447
Prepayments and other current assets 33,633 33,878
----------- -----------
Total Current Assets 848,539 851,424
----------- -----------
DEFERRED CHARGES
Deferred federal income tax 920,836 951,766
Unamortized cost of issuing securities 302,948 313,207
Other 40,487 36,284
----------- -----------
Total Deferred Charges 1,264,271 1,301,257
----------- -----------
Total Assets $13,135,888 $13,216,680
=========== ===========
</TABLE>
See Notes to Financial Statements.
- 4 -
<PAGE> 5
LONG ISLAND LIGHTING COMPANY
BALANCE SHEET
(Thousands of Dollars)
<TABLE>
<CAPTION>
March 31 December 31
CAPITALIZATION AND LIABILITIES 1995 1994
(unaudited) (audited)
----------- -----------
<S> <C> <C>
CAPITALIZATION
Long-term debt $ 5,122,675 $ 5,162,675
Unamortized discount on debt (16,974) (17,278)
----------- -----------
5,105,701 5,145,397
----------- -----------
Preferred stock - redemption required 644,350 644,350
Preferred stock - no redemption required 63,951 63,957
----------- -----------
Total Preferred Stock 708,301 708,307
----------- -----------
Common stock 593,632 592,083
Premium on capital stock 1,104,316 1,101,240
Capital stock expense (51,755) (52,175)
Retained earnings 756,783 752,480
----------- -----------
Total Common Shareowners' Equity 2,402,976 2,393,628
----------- -----------
Total Capitalization 8,216,978 8,247,332
----------- -----------
REGULATORY LIABILITIES
Regulatory liability component 337,277 357,117
1989 Settlement credits 143,565 145,868
Regulatory tax liability 115,032 111,218
Other 147,241 143,611
----------- -----------
Total Regulatory Liabilities 743,115 757,814
----------- -----------
CURRENT LIABILITIES
Current maturities of long-term debt 65,000 25,000
Current redemption requirements of preferred stock 4,800 4,800
Accounts payable and accrued expenses 197,197 241,775
Accrued taxes (including federal income tax of $30,953
and $28,340) 34,761 58,133
Accrued interest 145,184 149,929
Dividends payable 57,496 57,367
Class Settlement 38,333 35,833
Customer deposits 28,658 28,474
----------- -----------
Total Current Liabilities 571,429 601,311
----------- -----------
DEFERRED CREDITS
Deferred federal income tax 2,944,376 2,941,793
Class Settlement 147,798 151,604
Other 12,393 13,204
----------- -----------
Total Deferred Credits 3,104,567 3,106,601
----------- -----------
OPERATING RESERVES
Pension and other postretirements benefits 448,619 453,016
Claims and damages 51,180 50,606
----------- -----------
Total Operating Reserves 499,799 503,622
----------- -----------
COMMITMENTS AND CONTINGENCIES - -
----------- -----------
TOTAL CAPITALIZATION AND LIABILITIES $13,135,888 $13,216,680
=========== ===========
</TABLE>
See notes to Financial Statements.
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<PAGE> 6
LONG ISLAND LIGHTING COMPANY
STATEMENT OF CASH FLOWS
(UNAUDITED)
(Thousands of Dollars)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
-------- --------
1995 1994
-------- --------
<S> <C> <C>
Operating Activities
Net Income $70,299 $69,620
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
Provision for doubtful accounts 4,701 5,282
Depreciation and amortization 35,634 31,681
Base financial component amortization 25,243 25,243
Rate moderation component amortization 11,487 48,627
Regulatory liability component amortization (22,143) (22,143)
Other regulatory amortization 13,659 10,014
Rate moderation component carrying charges (6,842) (8,979)
Class Settlement 5,467 5,701
Amortization of cost of issuing and redeeming securities 10,366 12,795
Federal income taxes - deferred and other 43,043 41,129
Allowance for other funds used during construction (714) (717)
Gas Cost Adjustment 12,750 14,977
Other 10,438 799
CHANGES IN OPERATING ASSETS AND LIABILITIES
Accounts receivable (37,929) (77,987)
Class Settlement (6,773) (7,132)
Accrued unbilled revenues 14,707 (1,262)
Materials and supplies, fuel oil and gas in storage 60,714 44,200
Prepayments and other current assets 245 506
Accounts payable and accrued expenses (44,577) (80,356)
Accrued taxes (23,372) (14,135)
Other (14,436) 12,521
-------- --------
Net Cash Provided by Operating Activities 161,967 110,384
-------- --------
INVESTING ACTIVITIES
Construction and nuclear fuel expenditures (37,549) (12,434)
Shoreham post settlement costs (24,335) (45,721)
Other (717) (783)
-------- --------
Net Cash Used in Investing Activities (62,601) (58,938)
-------- --------
FINANCING ACTIVITIES
Proceeds from sale of common stock 4,619 4,877
Preferred stock dividends paid (13,232) (13,133)
Common stock dividends paid (52,636) (49,988)
Cost of issuing and redeeming securities (10)
Other 182 211
-------- --------
Net Cash Used in Financing Activities (61,067) (58,043)
-------- --------
Net Increase (Decrease) in Cash and Cash Equivalents $38,299 ($6,597)
======== ========
Cash and cash equivalents at beginning of period $185,451 $248,532
Net increase (decrease) in cash and cash equivalents 38,299 (6,597)
-------- --------
Cash and Cash Equivalents at end of period $223,750 $241,935
======== ========
SUPPLEMENTARY INFORMATION
Interest Paid, before reduction for the allowance
for borrowed funds used during construction $113,672 $111,133
Federal income taxes - paid -- --
Federal income taxes - refunded -- --
</TABLE>
See Notes to Financial Statements.
- 6 -
<PAGE> 7
NOTES TO FINANCIAL STATEMENTS
FOR THE QUARTER ENDED MARCH 31, 1995
(UNAUDITED)
These Notes to Financial Statements reflect events subsequent to February 3,
1995, the date of the most recent Report of Independent Auditors, through the
date of this Quarterly Report on Form 10-Q for the quarter ended March 31,
1995. These Notes to Financial Statements should be read in conjunction with
Management's Discussion and Analysis of Financial Condition and Results of
Operations for the three months ended March 31, 1995, Part II, Item 6 of this
report entitled, Reports on Form 8-K and the Notes to Financial Statements
contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 1994, incorporated herein by reference.
The financial statements furnished are unaudited. However, in the opinion of
management, the financial statements include all adjustments, consisting of
normal recurring accruals, necessary for a fair presentation of the interim
period presented. Operating results for this interim period are not
necessarily indicative of results to be expected for the entire year, due to
the seasonal nature of the Company's electric and gas businesses.
Certain prior year amounts have been reclassified to be consistent with
current year presentation.
- 7 -
<PAGE> 8
Note 1. RATE MATTERS
In December 1993, the Company filed a three-year electric rate plan (Plan),
which the Public Service Commission of the State of New York (PSC) responded
to through two Open Session discussions resulting in an Order Directing
Changes in Rate Design (Short Order). The PSC is expected to issue a detailed
opinion and order on the Plan in late May 1995. The Open Session discussions
and the Short Order provided, among other things: that the Company's current
electric rates shall remain in effect for the first rate year of the Plan
which began on December 1, 1994; that the Company begin collection of
previously deferred revenues provided for under the Lilco Ratemaking and
Performance Plan (LRPP); that the LRPP mechanisms remain in effect with
certain modifications; that the Company's expenditures for certain PSC
mandated activities, such as energy conservation and research and development,
be reduced; and that the rate proceeding be continued to determine the
appropriate level of rates for future years of the Plan, in order to, among
other things, provide for the continuing recovery of the Shoreham-related
assets.
The PSC stated in its short order that its decision to continue the rate
proceeding reaffirms their commitment to allow the Company to recover its
Shoreham-related assets, which the PSC also stated is a crucial factor in the
Company's ability to maintain its investment grade bond rating and to secure
reasonably priced capital. The continuation of the rate proceeding would also
enable the PSC to consider the Company's operations and its opportunities for
greater efficiency over the next several years. Toward this end, the PSC
encouraged the parties to this proceeding to negotiate a multi-year electric
rate settlement, with the goal of stabilizing and possibly reducing rates in a
manner consistent with the full recovery of the Shoreham-related assets.
At the PSC Open Sessions, the PSC modified three LRPP performance incentive
programs for the rate year beginning December 1, 1994, including the demand
side management program, the customer service performance program and the
transmission & distribution reliability program. Based upon discussions at
the PSC's Open Sessions, the Company believes that it may be subject to
penalty for poor performance under these programs and that it would not be
entitled to earn, on an aggregate basis, any incentive rate of return under
these programs. Before modification of these programs, the Company could have
earned up to 38 basis points, or forfeit up to 16 basis points, of the allowed
return on common equity. It is not yet known what revisions will be made to
the partial pass through fuel incentive program. Under the previous program,
the Company could have earned or forfeited up to 20 basis points of the
allowed return on common equity.
For the quarter ended March 31, 1995, the Company's electric rate structure
reflects an allowed return on common equity of 11.0%, as requested by the
Company in the three-year electric rate plan and agreed to by the PSC in their
recent Open Session
- 8 -
<PAGE> 9
discussions. In addition, the Company has not recognized any income or loss
related to the incentive programs because the particulars will not be known
until the detailed opinion and order is issued by the PSC. For the same 1994
period, the Company recognized approximately $4.6 million of income, net of
tax effects, or $.04 per common share, related to the incentive programs.
- 9 -
<PAGE> 10
MANAGEMENTS' DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
EARNINGS
Earnings for common stock for the three months ended March 31, 1995 were $57.1
million or $.48 per common share. This compares with $56.3 million or $.50
per share for the same period last year.
The decrease in earnings per share is the result of lower electric earnings
due to the recent actions of the Public Service Commission of the State of New
York (PSC) which provided for a lower return on common equity for the
Company's electric business and eliminated certain performance incentives.
This decline was partially offset by increased earnings in the gas business.
Gas business earnings increased for the three months ended March 31, 1995,
when compared to the same period in the prior year despite an unusually warm
heating season which resulted in lower than anticipated sales. The lower
sales volumes had a limited impact on earnings due to the weather
normalization mechanism contained in the Company's gas rate structure, which
reduces the impact on earnings of experiencing weather which is warmer or
colder than "normal." The increase in gas earnings is primarily the result of
lower operations and maintenance expenses derived in part from the Company's
continuing cost containment measures.
Although earnings cannot be predicted with certainty, the Company anticipates
that the effects of the PSC's electric rate decision will cause a reduction in
1995 earnings to a level below that reported in 1994. While no assurances can
be given, the Company will attempt to mitigate the effect on earnings by
continuing to maximize operating efficiencies wherever possible.
REVENUES
Total revenues for the three months ended March 31, 1995 were $791.2 million,
representing a decrease of $81.0 million over total revenues for the three
months ended March 31, 1994. Electric revenues decreased by $41.4 million and
gas revenues decreased by $39.6 million when compared to the same period in
1994.
The decrease in electric revenues during the quarter ended March 31, 1995,
when compared to the same period in 1994, was primarily due to lower sales
volumes caused by the unusually warm weather experienced during the heating
season and a refinement in the Company's procedure for estimating the accrual
of electric revenues, which was implemented January 1, 1995. The lower sales
volumes and the refinement for estimating the accrual of electric revenues had
no effect on quarterly earnings and will have no
- 10 -
<PAGE> 11
effect on 1995 earnings due to the Company's current electric rate structure
which provides for a revenue reconciliation that eliminates the impact of
actual sales that are above or below adjudicated levels.
The decrease in gas revenues for the three months ended March 31, 1995,
compared with the same period in 1994, is primarily the result of lower sales
volumes accompanied by lower fuel expense recoveries caused by the unusually
warm heating season. Partially offsetting this decrease was a rate increase
of 3.8% effective December 1, 1994 and the addition of approximately 7,000 gas
space heating customers over the twelve month period ended March 31, 1994.
FUELS AND PURCHASED POWER
Fuels and purchased power expenses for the three months ended March 31, 1995
and 1994 were as follows:
<TABLE>
<CAPTION>
Three Months Ended
3/31/95 3/31/94
------- -------
(In Millions)
<S> <C> <C>
ELECTRIC SYSTEM
Oil $ 37 $ 57
Gas 27 11
Nuclear 4 3
Purchased Power 75 76
---- ----
Total Electric Fuel Costs 143 147
GAS SYSTEM 114 152
---- ----
Total $257 $299
==== ====
</TABLE>
The mix of fuels and purchased power to satisfy the
Company's electric system energy requirements during the three months ended
March 31, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
Three Months Ended
3/31/95 3/31/94
------- -------
<S> <C> <C>
Oil 27% 40%
Gas 24 8
Nuclear 8 8
Purchases 41 44
---- ----
Total 100% 100%
==== ====
</TABLE>
For the three months ended March 31, 1995, electric fuel costs were lower,
when compared to the same period last year, as a result of lower sales volumes
coupled with lower per unit generation costs, partially offset by an increase
in the per unit cost of purchased power. The use of gas fuel for electric
generation increased sharply as the cost of producing electricity with natural
gas became more economical than the cost of purchasing power. The per unit
cost of purchased power increased
- 11 -
<PAGE> 12
as a result of extended outages for certain upstate nuclear generating
facilities which ordinarily supply energy at more economical rates.
Gas fuel costs for operating the gas system decreased for the three months
ended March 31, 1995, when compared to the same period last year, as a result
of lower firm sales volumes due to warmer weather conditions and lower gas
prices.
OPERATIONS AND MAINTENANCE EXPENSES
Operations and maintenance (O&M) expenses, excluding fuel and purchased power,
amounted to $130.3 million for the three months ended March 31, 1995, compared
to $141.9 million for the comparable three month period in 1994. The decrease
in O&M for the three months ended March 31, 1995, when compared to same period
of 1994, was principally due to the continuation of the Company's cost
containment program and the recognition of $6.6 million in 1994 of previously
deferred storm costs associated with gas operations.
Had the actions of the PSC, as discussed in Note 1 of the accompanying Notes
to Financial Statements, been implemented as of December 1, 1994, the Company
estimates that O&M expenses for the quarter ended March 31, 1995, would have
increased by approximately $3.5 million, representing the phase in of certain
Other Post Retirement Benefit costs and increased extraordinary storm
reserves. These transactions would have been offset by an adjustment to the
amortization of the RMC and would have had no impact on income. It is
anticipated that the amortization of these items and the corresponding
adjustment to the RMC will be recorded in the second quarter of 1995, when the
detailed opinion and order is received from the PSC.
RATE MODERATION COMPONENT
For the three months ended March 31, 1995 and 1994, the Company recorded non-
cash charges to income of approximately $11.5 million and $48.6 million,
respectively, representing the amortization of the RMC. The RMC primarily
reflects the difference between the Company's revenue requirements under
conventional ratemaking and revenues resulting from the implementation of the
Rate Moderation Agreement and subsequent rate case decisions.
OTHER REGULATORY AMORTIZATION
For the quarters ended March 31, 1995, and 1994, other regulatory amortization
was a non-cash charge to income of $13.7 million and $10.0, million
respectively.
Included in other regulatory amortization is the effect of an electric
ratemaking mechanism which provides for a revenue reconciliation (net margin)
to eliminate the impact on earnings
- 12 -
<PAGE> 13
of experiencing sales that are above or below adjudicated levels. As a result
of actual sales for the quarter ended March 31, 1995, being higher than sales
levels originally expected to be adopted by the PSC in the detailed opinion
and order expected in late May 1995, the Company recorded a non-cash charge to
income of approximately $7.6 million. This net margin expense, combined with
the $6.7 million amortization of Shoreham post settlement costs, partially
offset by a $2.1 million electric excess earnings adjustment related to 1994,
constitutes the major portion of this amortization.
For the quarter ended March 31, 1994, the Company recorded non-cash income of
$10.6 million related to the net margin, as actual sales were below the
adjudicated level. Offsetting the non-cash income was non-cash charges of
$5.4 million of Shoreham post settlement cost amortizations, $7.3 million
related to the recognition of gas excess earnings and $8.0 million of
amortizations related to the 1992 Lilco Ratemaking and Performance Plan (LRPP)
as more fully discussed in Note 3 of Notes to Financial Statements included in
the Form 10-K for the year ended December 31, 1994.
For the quarter ended March 31, 1995, there were no excess gas earnings. In
addition, upon the full collection of the 1992 LRPP deferred balances in
August 1994, the PSC authorized the Company to continue its monthly collection
of an amount equal to the 1992 LRPP deferrals through April 1995. The
approximately $8 million collected for the quarter ended March 31, 1995, via
the fuel adjustment clause, was applied to reduce the RMC balance and
therefore was not included in other regulatory amortization.
INTEREST EXPENSE
For the quarter ended March 31, 1995, interest expense amounted to $118.4
million, representing a decrease of $10.5 million when compared to the same
period in 1994. The decrease in interest expense is principally due to lower
levels of debt and lower borrowing costs. The decrease in outstanding debt
primarily resulted from the Company's use of cash from operations and the net
proceeds from the issuance of common stock to satisfy a portion of maturing
debt in 1994. The lower borrowing costs resulted from the Company's
refinancing efforts in 1994 to replace high interest rate debt with lower cost
debt.
- 13 -
<PAGE> 14
FINANCIAL CONDITION
LIQUIDITY
At March 31, 1995, the Company's cash and cash equivalents amounted to
approximately $224 million, compared to $185 million at December 31, 1994.
The Company also has available for its use a $300 million revolving line of
credit through October 1, 1996, provided by its 1989 Revolving Credit
Agreement (1989 RCA). At March 31, 1995, no amounts were outstanding under
the 1989 RCA. This line of credit is secured by a first lien upon the
Company's accounts receivable and fuel oil inventories.
FINANCING PROGRAMS
The Company has maturing debt of $25 million, $455 million and $286 million in
1995, 1996 and 1997 respectively. The Company plans to satisfy the $25
million of First Mortgage Bonds maturing in June 1995 with cash from
operations. With respect to the 1996 and 1997 maturities, the Company intends
to use cash generated from operations to the maximum extent practicable. Any
balance necessary to satisfy the obligations is expected to be obtained from
the issuance of debt and or equity securities.
The New York State Energy Research and Development Authority (NYSERDA) has
been authorized by New York State to sell, on behalf of the Company, $50
million of Electric Facilities Revenue Bonds for the construction of
facilities for the furnishing of electric energy. The Company currently
anticipates NYSERDA will sell these bonds in June 1995.
- 14 -
<PAGE> 15
CAPITAL REQUIREMENTS AND CAPITAL PROVIDED
Capital requirements and capital provided for the three months ended March 31,
1995 were as follows:
<TABLE>
<CAPTION>
Three Months Ended
Capital Requirements March 31, 1995
- -------------------- ------------------
(In Millions of Dollars)
<S> <C>
Total Construction $ 38
-----
Preferred stock dividends 13
Common stock dividends 53
-----
Total Dividends 66
-----
Shoreham post settlement costs 24
-----
Total Capital Requirements $ 128
=====
Capital Provided
Use of cash $ (38)
Common stock issued 5
Other financing activities (1)
Internal cash generation from
operations 162
-----
Total Capital Provided $ 128
</TABLE> =====
For further information, see the Statement of Cash Flows.
- 15 -
<PAGE> 16
RATE MATTERS
For a discussion of Rate Matters, see Note 1 of the accompanying Notes to
Financial Statements.
- 16 -
<PAGE> 17
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
On May 4, 1995, the New York Court of Appeals denied the request of
the Town of Brookhaven and other respondents for leave to appeal a
1992 decision by a Suffolk County Supreme Court that found that the
Shoreham property was overvalued for property tax purposes between
1976 and 1983 (excluding 1979, which had been previously settled).
(Long Island Lighting Company v. The Assessor of the Town of
Brookhaven, et al.) The Supreme Court's decision had been
previously affirmed in a unanimous decision by the New York State
Appellate Division, Second Department.
The overpayment of taxes, plus interest, is expected to be returned
to the Company and such amount, excluding litigation costs, will be
used to reduce electric rates in the future. The Company's refund
will be approximately $38 million plus interest, resulting in a
total expected refund in excess of $78 million.
For the years to which this lawsuit relates (1976-1983, excluding
1979), the Company paid approximately $190 million in taxes on the
plant. The Company is also seeking recovery for the overpayment of
taxes for the years 1984 - 1992 in a separate trial which is now
pending.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
In accordance with the 1989 Settlement, the Company is required to
reimburse the Long Island Power Authority (LIPA) for any of its
costs associated with the decommissioning of Shoreham. Effective
May 1, 1995, the Nuclear Regulatory Commission (NRC) terminated
LIPA's possession-only license for Shoreham. The termination
signifies the NRC's approval that decommissioning is complete and
that the site is suitable for unrestricted use.
- 17 -
<PAGE> 18
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS
Financial Data Schedule (Exhibit 27).
Computation of Ratio of Earnings to Fixed Charges filed as Exhibit
11.1.
Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends Filed as Exhibit 11.2.
B. REPORTS ON FORM 8-K
In its Report on Form 8-K dated February 1, 1995, the Company
reported earnings for the year ended December 31, 1994.
No other reports on Form 8-K were filed in the first quarter of
1995.
In its Report on Form 8-K dated April 20, 1995, the Company reported
that the Public Service Commission of the State of New York had issued
an Order Directing Changes in Rate Design respecting the Company's
three-year electric rate plan filed in December 1993.
In its Report on Form 8-K dated April 28, 1995, the Company reported
earnings for the three months ended March 31, 1995.
- 18 -
<PAGE> 19
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.
LONG ISLAND LIGHTING COMPANY
(Registrant)
By /s/ ANTHONY NOZZOLILLO
-------------------------
ANTHONY NOZZOLILLO
Senior Vice President and
Chief Financial Officer
Dated: May 11, 1995
- 19 -
<PAGE> 20
EXHIBIT INDEX
11.1 - Computation of Ratio of Earnings to Fixed Charges
11.2 - Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends
27 - Financial Data Schedule
<PAGE> 1
Exhibit 11.1
LONG ISLAND LIGHTING COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In Thousands of Dollars)
<TABLE>
<CAPTION>
Twelve Months For the Year Ended December 31,
Ended --------------------------------------------------------------
March 31,1995 1994 1993 1992 1991 1990
------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Income/(Loss)
per Statement of Income $302,532 $301,852 $296,563 $301,974 $305,538 $319,637 a
Less:
Equity in earnings/loss of less
than 50% owned subsidiary
companies 131 89 77 93 85 83
Add:
Distributed income of less
than 50% owned subsidiary
companies 117 117 58 87 58 58
-------- -------- ---------- -------- ---------- ----------
302,518 301,880 296,544 301,968 305,511 319,612
Add:
Federal income tax 178,898 176,712 172,276 160,962 181,653 183,281
Appropriate portion of rentals 4,701 4,295 4,552 3,504 2,751 2,343
Interest on long term-debt 428,032 437,751 466,538 450,621 472,974 467,700
Other interest and amortizations 61,711 62,433 67,582 62,165 50,881 40,610
-------- -------- ---------- -------- ---------- ----------
Net Income/(Loss) as adjusted $975,860 $983,071 $1,007,492 $979,220 $1,013,770 $1,013,546 a
======== ======== ========== ======== ========== ==========
Fixed Charges:
Appropriate portion of rentals $4,701 $4,295 $4,552 $3,504 $2,751 $2,343
Interest on long term-debt 428,032 437,751 466,538 450,621 472,974 467,700
Other interest and amortizations 61,711 62,433 67,582 62,165 50,881 40,610
-------- -------- ---------- -------- ---------- ----------
Total $494,444 $504,479 $538,672 $516,290 $526,606 $510,653
======== ======== ========== ======== ========== ==========
Ratio of earnings to fixed
charges 1.97 1.95 1.87 1.90 1.93 1.98
</TABLE>
- -----------------------------------------
a Before cumulative effect of accounting change for unbilled gas revenue.
<PAGE> 1
Exhibit 11.2
LONG ISLAND LIGHTING COMPANY
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
(In thousands of Dollars)
<TABLE>
<CAPTION>
Twelve Months For the Year Ended December 31,
Ended ---------------------------------------------------------------
March 31, 1995 1994 1993 1992 1991 1990
-------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Income/(Loss)
per Statement of Income $302,532 $301,852 $296,563 $301,974 $305,538 $319,637 a
Less:
Equity in earnings/loss of less
than 50% owned subsidiary
companies 131 89 77 93 87 86
Add:
Distributed income of less
than 50% owned subsidiary
companies 117 117 58 87 58 58
-------- -------- ---------- -------- ---------- ----------
302,518 301,880 296,544 301,968 305,509 319,609
Add:
Federal income tax 178,898 176,712 172,276 160,962 181,653 183,281
Appropriate portion of rentals 4,701 4,295 4,552 3,504 2,751 2,343
Interest on long term-debt 428,032 437,751 466,538 450,621 472,974 467,700
Other interest and amortizations 61,711 62,433 67,582 62,165 50,881 40,610
-------- -------- ---------- -------- ---------- ----------
Net Income/(Loss) as adjusted $975,860 $983,071 $1,007,492 $979,220 $1,013,768 $1,013,543 a
======== ======== ========== ======== ========== ==========
Fixed Charges:
Appropriate portion of rentals $4,701 $4,295 $4,552 $3,504 $2,751 $2,343
Interest on long term-debt 428,032 437,751 466,538 450,621 472,974 467,700
Other interest and amortizations 61,711 62,433 67,582 62,165 50,881 40,610
Preferred stock dividend
requirements 52,920 53,020 56,108 63,954 66,394 68,161
Tax effect for preferred stock
dividend requirements 31,294 31,045 32,600 34,090 39,481 39,078
-------- -------- ---------- -------- ---------- ----------
Total $578,658 $588,544 $627,380 $614,334 $632,481 $617,892
======== ======== ========== ======== ========== ==========
Ratio of earnings to combined
fixed charges and preferred
stock dividends 1.69 1.67 1.61 1.59 1.60 1.64
</TABLE>
- ------------------------------------------
a Before cumulative effect of accounting change for unbilled gas revenue.
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
NOTE: THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENT OF INCOME, BALANCE SHEET AND STATEMENT OF CASH FLOWS, AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 3,501,871
<OTHER-PROPERTY-AND-INVEST> 24,617
<TOTAL-CURRENT-ASSETS> 848,539
<TOTAL-DEFERRED-CHARGES> 1,264,271
<OTHER-ASSETS> 7,496,590
<TOTAL-ASSETS> 13,135,888
<COMMON> 593,632
<CAPITAL-SURPLUS-PAID-IN> 1,052,561
<RETAINED-EARNINGS> 756,783
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,402,976
644,350
63,951
<LONG-TERM-DEBT-NET> 5,105,701
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 65,000
4,800
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 4,849,110
<TOT-CAPITALIZATION-AND-LIAB> 13,135,888
<GROSS-OPERATING-REVENUE> 791,188
<INCOME-TAX-EXPENSE> 47,865
<OTHER-OPERATING-EXPENSES> 562,448
<TOTAL-OPERATING-EXPENSES> 610,313
<OPERATING-INCOME-LOSS> 180,875
<OTHER-INCOME-NET> 7,802
<INCOME-BEFORE-INTEREST-EXPEN> 188,677
<TOTAL-INTEREST-EXPENSE> 118,378
<NET-INCOME> 70,299
13,172
<EARNINGS-AVAILABLE-FOR-COMM> 57,127
<COMMON-STOCK-DIVIDENDS> 52,636
<TOTAL-INTEREST-ON-BONDS> 103,060
<CASH-FLOW-OPERATIONS> 161,967
<EPS-PRIMARY> $0.48
<EPS-DILUTED> $0.48
</TABLE>
