<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, 1996
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 No. 11-1019782
175 East Old Country Road, Hicksville, New York 11801
(516) 755-6650
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 June 30, 1996, was 120,221,240.
<PAGE>
LONG ISLAND LIGHTING COMPANY
Page No.
--------
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Statement of Income 3
Balance Sheet 5
Statement of Cash Flows 7
Notes to Financial Statements 8
Item 2. Management's Discussion and
Analysis of Financial Condition and
Results of Operations 11
Part II - OTHER INFORMATION
Item 1. Legal Proceedings 23
Item 2. Changes in Securities 24
Item 3. Defaults Upon Senior Securities 24
Item 4. Submission of Matters to a Vote
of Security Holders 25
Item 5. Other Information 25
Item 6. Exhibits and Reports on Form 8-K 25
Signature 27
<PAGE>
LONG ISLAND LIGHTING COMPANY
STATEMENT OF INCOME
(UNAUDITED)
(Thousands of Dollars - except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
June 30
------------------------
1996 1995
------------------------
<S> <C> <C>
REVENUES
Electric $576,963 $561,285
Gas 117,639 92,539
---------- ----------
Total Revenues 694,602 653,824
---------- ----------
EXPENSES
Operations - fuel and purchased power 203,891 175,608
Operations - other 89,979 96,662
Maintenance 29,952 35,646
Depreciation and amortization 37,952 36,190
Base financial component amortization 25,243 25,243
Rate moderation component amortization (10,604) (22,244)
Regulatory liability component amortization (22,143) (22,143)
Other regulatory amortization 57,990 46,691
Operating taxes 111,295 105,142
Federal income tax - current 10,162 3,615
Federal income tax - deferred and other 19,820 30,168
---------- ----------
Total Expenses 553,537 510,578
---------- ----------
OPERATING INCOME 141,065 143,246
---------- ----------
OTHER INCOME AND (DEDUCTIONS)
Rate moderation component carrying charges 6,274 6,630
Class Settlement (5,009) (5,433)
Other income and deductions, net 10,186 17,285
Allowance for other funds used during construction 617 675
Federal income tax - deferred and other (2,099) (2,267)
---------- ----------
Total Other Income and (Deductions) 9,969 16,890
---------- ----------
INCOME BEFORE INTEREST CHARGES 151,034 160,136
---------- ----------
INTEREST CHARGES AND (CREDITS)
Interest on long-term debt 96,024 103,577
Other interest 15,301 16,075
Allowance for borrowed funds used during construction (815) (908)
---------- ----------
Total Interest Charges and (Credits) 110,510 118,744
---------- ----------
NET INCOME 40,524 41,392
Preferred stock dividend requirements 13,071 13,172
---------- ----------
EARNINGS FOR COMMON STOCK $27,453 $28,220
========== ==========
AVERAGE COMMON SHARES OUTSTANDING (000) 120,221 119,045
EARNINGS PER COMMON SHARE $0.23 $0.24
DIVIDENDS DECLARED PER COMMON SHARE $0.445 $0.445
</TABLE>
See Notes to Financial Statements.
<PAGE>
LONG ISLAND LIGHTING COMPANY
STATEMENT OF INCOME
(UNAUDITED)
(Thousands of Dollars - except per share amounts)
<TABLE>
<CAPTION>
Six Months Ended
June 30
----------------------------
1996 1995
----------------------------
<S> <C> <C>
REVENUES
Electric $1,136,231 $1,107,172
Gas 422,586 337,840
------------ -----------
Total Revenues 1,558,817 1,445,012
------------ -----------
EXPENSES
Operations - fuel and purchased power 514,160 432,302
Operations - other 193,848 192,672
Maintenance 60,439 69,902
Depreciation and amortization 75,517 71,824
Base financial component amortization 50,485 50,485
Rate moderation component amortization (25,930) (10,757)
Regulatory liability component amortization (44,286) (44,286)
Other regulatory amortization 85,202 60,350
Operating taxes 231,323 216,749
Federal income tax - current 23,000 6,228
Federal income tax - deferred and other 63,569 75,420
------------ -----------
Total Expenses 1,227,327 1,120,889
------------ -----------
OPERATING INCOME 331,490 324,123
------------ -----------
OTHER INCOME AND (DEDUCTIONS)
Rate moderation component carrying charges 12,175 13,472
Class Settlement (10,381) (10,900)
Other income and deductions, net 16,106 20,788
Allowance for other funds used during construction 1,336 1,389
Federal income tax - deferred and other 352 (58)
------------ -----------
Total Other Income and (Deductions) 19,588 24,691
------------ -----------
INCOME BEFORE INTEREST CHARGES 351,078 348,814
------------ -----------
INTEREST CHARGES AND (CREDITS)
Interest on long-term debt 198,282 206,637
Other interest 32,272 32,419
Allowance for borrowed funds used during construction (1,757) (1,933)
------------ -----------
Total Interest Charges and (Credits) 228,797 237,123
------------ -----------
NET INCOME 122,281 111,691
Preferred stock dividend requirements 26,143 26,343
------------ -----------
EARNINGS FOR COMMON STOCK $96,138 $85,348
============ ===========
AVERAGE COMMON SHARES OUTSTANDING (000) 120,082 118,878
EARNINGS PER COMMON SHARE $0.80 $0.72
DIVIDENDS DECLARED PER COMMON SHARE $0.89 $0.89
</TABLE>
See Notes to Financial Statements.
<PAGE>
LONG ISLAND LIGHTING COMPANY
BALANCE SHEET
(Thousands of Dollars)
<TABLE>
<CAPTION>
June 30 December 31
1996 1995
ASSETS (unaudited) (audited)
----------------- ----------------
<S> <C> <C>
UTILITY PLANT
Electric $3,833,230 $3,786,540
Gas 1,114,210 1,086,145
Common 254,968 244,828
Construction work in progress 97,925 100,521
Nuclear fuel in process and in reactor 19,168 16,456
----------------- ----------------
5,319,501 5,234,490
----------------- ----------------
Less - Accumulated depreciation and
amortization 1,688,978 1,639,492
----------------- ----------------
Total Net Utility Plant 3,630,523 3,594,998
----------------- ----------------
REGULATORY ASSETS
Base financial component (less accumulated
amortization of $706,796 and $656,311) 3,332,034 3,382,519
Rate moderation component 437,177 383,086
Shoreham post-settlement costs 984,640 968,999
Shoreham nuclear fuel 70,181 71,244
Unamortized cost of issuing securities 207,835 222,567
Postretirement benefits other than pensions 377,234 383,642
Regulatory tax asset 1,788,873 1,802,383
Other 183,905 230,663
----------------- ----------------
Total Regulatory Assets 7,381,879 7,445,103
----------------- ----------------
----------------- ----------------
NONUTILITY PROPERTY AND OTHER INVESTMENTS 16,718 16,030
----------------- ----------------
CURRENT ASSETS
Cash and cash equivalents 80,677 351,453
Special deposits 36,253 63,412
Customer accounts receivable (less allowance
for doubtful accounts of $19,805 and $24,676) 301,943 282,218
LRPP receivable 2,705 69,558
Other accounts receivable 22,417 107,387
Accrued unbilled revenues 150,127 184,440
Materials and supplies at average cost 62,299 63,595
Fuel oil at average cost 46,334 32,090
Gas in storage at average cost 44,628 53,076
Deferred tax asset 199,000 191,000
Prepayments and other current assets 36,114 8,986
----------------- ----------------
Total Current Assets 982,497 1,407,215
----------------- ----------------
----------------- ----------------
DEFERRED CHARGES 16,887 21,023
----------------- ----------------
TOTAL ASSETS $12,028,504 $12,484,369
================= ================
</TABLE>
See Notes to Financial Statements.
<PAGE>
LONG ISLAND LIGHTING COMPANY
BALANCE SHEET
(Thousands of Dollars)
<TABLE>
<CAPTION>
June 30 December 31
1996 1995
CAPITALIZATION AND LIABILITIES (Unaudited) (Audited)
-------------- ---------------
<S> <C> <C>
CAPITALIZATION
Long-term debt $4,472,675 $4,722,675
Unamortized discount on debt (15,472) (16,075)
-------------- ---------------
4,457,203 4,706,600
-------------- ---------------
Preferred stock - redemption required 639,550 639,550
Preferred stock - no redemption required 63,859 63,934
-------------- ---------------
Total Preferred Stock 703,409 703,484
-------------- ---------------
Common stock 601,106 598,277
Premium on capital stock 1,121,178 1,114,508
Capital stock expense (50,044) (50,751)
Retained earnings 780,178 790,919
-------------- ---------------
Total Common Shareowners' Equity 2,452,418 2,452,953
-------------- ---------------
-------------- ---------------
Total Capitalization 7,613,030 7,863,037
-------------- ---------------
REGULATORY LIABILITIES
Regulatory liability component 238,078 277,757
1989 Settlement credits 132,048 136,655
Regulatory tax liability 114,959 116,060
Other 159,255 133,098
-------------- ---------------
Total Regulatory Liabilities 644,340 663,570
-------------- ---------------
CURRENT LIABILITIES
Current maturities of long-term debt 250,000 415,000
Current redemption requirements of preferred stock 4,800 4,800
Accounts payable and accrued expenses 251,877 260,879
Accrued taxes (including federal income tax of $11,686 and $28,736) 1,301 60,498
Accrued interest 156,282 158,325
Dividends payable 58,150 57,899
Class Settlement 50,833 45,833
Customer deposits 29,371 29,547
-------------- ---------------
Total Current Liabilities 802,614 1,032,781
-------------- ---------------
DEFERRED CREDITS
Deferred federal income tax 2,396,466 2,337,732
Class Settlement 118,605 129,809
Other 9,437 8,304
-------------- ---------------
Total Deferred Credits 2,524,508 2,475,845
-------------- ---------------
OPERATING RESERVES
Pension and other postretirements benefits 395,202 396,490
Claims and damages 48,810 52,646
-------------- ---------------
Total Operating Reserves 444,012 449,136
-------------- ---------------
COMMITMENTS AND CONTINGENCIES - -
-------------- ---------------
TOTAL CAPITALIZATION AND LIABILITIES $12,028,504 $12,484,369
============== ===============
</TABLE>
See Notes to Financial Statements.
<PAGE>
LONG ISLAND LIGHTING COMPANY
STATEMENT OF CASH FLOWS
(UNAUDITED)
(Thousands of Dollars)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
-----------------------------
1996 1995
-----------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $122,281 $111,691
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
Provision for doubtful accounts 8,675 8,614
Depreciation and amortization 75,517 71,824
Base financial component amortization 50,485 50,485
Rate moderation component amortization (25,930) (10,757)
Regulatory liability component amortization (44,286) (44,286)
Other regulatory amortization 85,202 60,350
Rate moderation component carrying charges (12,175) (13,472)
Class Settlement 10,381 10,900
Amortization of cost of issuing and redeeming securities 18,168 20,604
Federal income tax - deferred and other 63,217 75,478
Allowance for other funds used during construction (1,336) (1,389)
Gas Cost Adjustment 26,063 13,344
Other 31,280 11,578
CHANGES IN OPERATING ASSETS AND LIABILITIES
Accounts receivable 56,571 (6,777)
Accrued unbilled revenues 34,313 15,976
Materials and supplies, fuel oil and gas in storage (4,500) 41,801
Accounts payable and accrued expenses (9,003) (3,980)
Accrued taxes (59,197) (35,110)
Class Settlement (16,585) (14,287)
Special deposits 27,159 (27,533)
Prepayments and other current assets (27,128) (31,698)
Other (3,286) (8,347)
------------ ------------
Net Cash Provided by Operating Activities 405,886 295,009
------------ ------------
INVESTING ACTIVITIES
Construction and nuclear fuel expenditures (106,783) (106,196)
Shoreham post-settlement costs (30,105) (45,429)
Other (1,202) 9,185
------------ ------------
Net Cash Used in Investing Activities (138,090) (142,440)
------------ ------------
FINANCING ACTIVITIES
Proceeds from sale of common stock 9,425 9,453
Redemption of long-term debt (415,000) (25,000)
Preferred stock dividends paid (26,143) (26,343)
Common stock dividends paid (106,628) (105,529)
Other (226) 435
------------ ------------
Net Cash Used in Financing Activities (538,572) (146,984)
------------ ------------
Net (Decrease) Increase in Cash and Cash Equivalents ($270,776) $5,585
============ ============
Cash and cash equivalents at January 1 $351,453 $185,451
Net (decrease) increase in cash and cash equivalents (270,776) 5,585
------------ ------------
Cash and Cash Equivalents at June 30 $80,677 $191,036
============ ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
FOR THE QUARTER ENDED JUNE 30, 1996
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
These Notes to Financial Statements reflect events subsequent to February 7,
1996, the date of the most recent Report of Independent Auditors, through the
date of this Quarterly Report on Form 10-Q for the three months ended June 30,
1996. 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 six months ended June 30, 1996, the Company's Quarterly
Report on Form 10-Q for the three months ended March 31, 1996, and the Company's
Annual Report on Form 10-K, as amended, for the year ended December 31, 1995,
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 financial
statements for the interim periods presented. Operating results for these
interim periods are not necessarily indicative of results to be expected for the
entire year, due to seasonal, operating and other factors.
Certain prior year amounts have been reclassified to be consistent with current
year presentation.
NOTE 2. RATE MATTERS
ELECTRIC
In 1995, the Company requested that the Public Service Commission of the State
of New York (PSC) extend the provisions of its 1995 electric rate Order through
November 30, 1996. The 1995 rate Order, which became effective December 1, 1994,
froze electric rates, reduced the Company's allowed return on common equity from
11.6% to 11.0% and modified or eliminated certain performance-based incentives.
In early 1996, the PSC issued an Order to Show Cause and instituted a proceeding
to examine various opportunities to reduce the Company's current electric rates.
Specifically, the Company was directed to address the following: (i) should all
or a part of the $81 million Suffolk County property tax recovery, net of legal
expenses, that the Company received in January 1996, pursuant to a final
judgment that the Shoreham property was overvalued for property tax purposes
between 1976 and 1983
<PAGE>
(excluding 1979 which had previously been settled), be used to reduce current
rates; (ii) should the Company accelerate the schedule to return to customers
the $26 million 1995 rate year net reconciliation credit; (iii) whether any
adjustments to the Company's previously filed 1996 rate year cost of service
forecast could be made and used to reduce rates; and (iv) revisit the mechanics
of the Fuel Cost Adjustment (FCA) clause to determine whether all or a portion
of any fuel cost savings could be reflected in current customer bills rather
than being applied to reduce the Rate Moderation Component (RMC) balance. For a
further discussion of the RMC and the FCA see Notes 1, 2 and 3 of Notes to
Financial Statements included in the Company's Annual Report on Form 10-K, as
amended, for the year ended December 31, 1995.
In its March 8, 1996, response to the Order to Show Cause the Company stated
that it shared the PSC's concern regarding electric rate levels and is prepared
to assist the PSC in pursuing every reasonable opportunity to reduce electric
rates. Consistent with the Rate Moderation Agreement (RMA), one of the
constituent documents of the 1989 Settlement, the Company favors long-term rate
stabilization and opposes short-term rate reductions followed by a period of
rate increases. The Company also addressed the negative effects that the
adoption, in whole or in part, of any or all of the items set forth in the Order
to Show Cause, would have on long-term rates and on the Company's financial
condition. For a further discussion of the Company's response to the Order to
Show Cause see the Company's Quarterly Report on Form 10-Q for the three months
ended March 31, 1996.
In April 1996, the PSC Staff (Staff) and other intervenors submitted their
responses to the Company's filing in the Order to Show Cause proceeding. Staff's
primary recommendation was that the Company's rates be decreased by 2%, or
approximately $50 million, on a temporary basis effective July 1, 1996. Staff's
recommendation proposed maintaining rates at this reduced level for a three-year
period. For a further discussion of the Staff's response to the Company's
filing, see the Company's Quarterly Report on Form 10-Q for the three months
ended March 31, 1996.
At the April 17, 1996, PSC Open Session, the Chairman of the PSC, after
reviewing the Company's response and the replies of Staff and the other
intervenors, stated that the PSC would expand the scope of the Order to Show
Cause in an effort to provide "immediate and substantial rate relief." The PSC's
Chairman did not address either Staff's recommended 2% temporary rate reduction,
or any Order to Show Cause issues. On April 25, 1996, the PSC issued its Order
expanding the scope of the Show Cause proceeding. The Order directed the Company
to file, within 60 days, or by June 24, 1996, financial and other information
sufficient to provide a legal basis for setting new rates for the
<PAGE>
Company's electric service both for the single rate year beginning January 1,
1997, and the three-year period 1997-1999.
On May 15, 1996, after assessing the scope of the work and resources required to
develop a multi-year rate case, the Company notified the Chairman of the PSC
that the earliest the Company could submit a full rate case filing was September
27, 1996. Thereafter, the Company submitted to the PSC a petition for rehearing
and request for an extension of time to submit the rate filing. While this
request has not yet been acted upon by the PSC, the Company, as part of its good
faith efforts to comply with the PSC's Order dated April 25, 1996, submitted
those portions of the requested rate case filing which the Company was able to
satisfactorily complete within the 60-day deadline. The remainder of the
information necessary to complete the Company's rate case filing will be filed
by September 27, 1996.
After acknowledging that the Company will not be submitting its full rate case
filing until September and that a considerable amount of time will be required
to adjudicate permanent rates, the PSC, at its July 17, 1996, Open Session,
announced that it was issuing an order instituting an expedited temporary rate
phase in the Show Cause proceeding which will be conducted in parallel with the
ongoing phase concerning permanent rates. This Order, which was issued on July
18, 1996, invites the Company, PSC Staff and all other interested parties to
submit, by August 2, 1996, pre-filed testimony and exhibits which would provide
a sufficient basis for the PSC to determine an appropriate temporary rate level
until such time as the permanent rate case proceedings are completed. Following
these submissions, an expedited hearing, currently scheduled for early August,
will be conducted so that this matter can be brought before the PSC at its
September 11, 1996, Open Session. The Company is currently unable to determine
the impact, if any, that this proceeding will have on its financial condition.
NOTE 3. CAPITALIZATION
On May 1, 1996, the Company, utilizing cash on hand and cash previously
deposited with the Trustee of the General and Refunding (G&R) Mortgage, retired
at maturity $415 million of G&R Bonds.
<PAGE>
MANAGEMENTS' DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For the Six Months Ended June 30, 1996
RESULTS OF OPERATIONS
EARNINGS
Earnings for common stock for the three months ended June 30, 1996 were $27.5
million or $0.23 per common share compared with $28.2 million or $0.24 per
common share for the same period last year. For the six months ended June 30,
1996, earnings for common stock amounted to $96.1 million or $0.80 per common
share, compared with $85.3 million or $0.72 per common share for the same period
last year.
Gas business earnings increased for the three and six month periods ended June
30, 1996, when compared to the same periods in 1995, as a result of a 3.2% gas
rate increase which became effective December 1, 1995, and additional sales
volumes from gas space heating customers resulting from: (i) colder than normal
weather and (ii) an increase in the total number of space heating customers. In
addition, earnings for the six months ended June 30, 1996 increased as a result
of higher off-system gas sales.
For the six months ended June 30, 1996, the Company recorded a non-cash charge
of $3.5 million, net of tax effects, to reflect the firm gas customer's portion
of estimated gas earnings in excess of the 10.6% allowed return on common equity
as required under the three year gas rate settlement, which became effective
December 1, 1993. The Company computed this amount based upon the aggregate of
actual gas operating income for the seven month period ended June 30, 1996, and
forecasted gas operating income for the five month period ending November 30,
1996. However, since the actual amount of earnings in excess of the allowed
return on common equity will not be determined until after the completion of the
rate year ending November 30, 1996, amounts charged to earnings during the year
will be subject to adjustments as actual financial data replaces forecasted
values in the Company's excess earnings calculation. For the six months ended
June 30, 1995, there was no gas excess earnings adjustment.
Electric business earnings decreased for the three and six months ended June 30,
1996 when compared to the same period in 1995. These decreases are primarily due
to the recognition in June 1995, of certain litigation proceeds related to the
construction of the Shoreham Nuclear Power Station partially offset by decreases
in non-fuel operations and maintenance expenses.
<PAGE>
REVENUES
Total revenues for the three months ended June 30, 1996 were $694.6 million,
representing an increase of $40.8 million over total revenues for the three
months ended June 30, 1995. Electric revenues increased by $15.7 million or 2.8%
and gas revenues increased by $25.1 million or 27.1% when compared to the same
period in 1995.
For the six months ended June 30, 1996, revenues totaled $1.6 billion, an
increase of $113.8 million or 7.9% compared with the same period last year.
Electric revenues were higher by $29.1 million or 2.6% and gas revenues were
higher by $84.7 million or 25.1%, when compared with the same period in 1995.
Electric
The increase in electric revenues for the three and six months ended June 30,
1996, compared to the same period in 1995, are primarily due to increased sales
volumes resulting from weather and system growth. However, higher revenue from
sales has no effect on earnings due to the Company's current electric rate
structure which includes a revenue reconciliation mechanism that eliminates the
impact on earnings of sales volumes that are above or below adjudicated levels.
Gas
The increase in gas revenues for the three and six months ended June 30, 1996,
compared with the same period in 1995, is primarily the result of a gas rate
increase of 3.2% which was effective December 1, 1995, higher sales volumes
resulting from colder weather (January thru mid-May) and an increase in the
number of gas space heating customers. Also contributing to higher gas revenues
were higher recoveries of gas fuel expenses due to increased sales volumes and
higher gas prices. In addition, the Company experienced higher off-system gas
sales during 1996.
<PAGE>
FUELS AND PURCHASED POWER
Fuels and purchased power expenses for the three and six months ended June 30,
1996 and 1995 were as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
6/30/96 6/30/95 6/30/96 6/30/95
(In Millions) (In Millions)
------------- -------------
<S> <C> <C> <C> <C>
ELECTRIC SYSTEM
Oil $ 25 $ 20 $ 92 $ 57
Gas 38 36 44 63
Nuclear 4 2 8 6
Purchased Power 81 77 163 151
-- -- --- ---
Total Electric Fuel Costs 148 135 307 277
GAS SYSTEM 56 41 207 155
-- -- --- ---
Total $204 $176 $514 $432
==== ==== ==== ====
</TABLE>
For the three and six months ended June 30, 1996, electric fuel costs were
higher when compared to the same period last year primarily due to increased
sales volumes resulting from weather and system growth. Also contributing to the
higher fuel costs were higher per unit prices for oil, gas and purchased power.
Fuel costs for operating the gas business increased for the three and six months
ended June 30, 1996, when compared to the same periods last year due to an
increase in sales volumes coupled with higher gas prices.
The percentages of total electric energy available by type of fuel for electric
operations for the three and six months ended June 30, 1996 and 1995 were as
follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
6/30/96 6/30/95 6/30/96 6/30/95
------- ------- ------- -------
<S> <C> <C> <C> <C>
Oil 15% 15% 29% 21%
Gas 28 36 18 30
Nuclear 11 3 10 6
Purchases 46 46 43 43
-- -- -- --
Total 100% 100% 100% 100%
=== === === ===
</TABLE>
For the three months ended June 30, 1996, the Company utilized nuclear power to
displace more costly generation with gas. For the three months ended June 30,
1995, the amount of nuclear power available was limited due to a scheduled
outage at Nine Mile Point 2 Nuclear Power Station, in which the Company has an
ownership interest of 18%.
For the six months ended June 30, 1996 electricity generated with
<PAGE>
gas decreased compared to the same period in 1995 as high demand resulting from
the unusually cold winter experienced in the northeast caused an increase in gas
prices, making generation with oil more economical. During this period the
Company sold portions of its gas supply for electric generation to off-system
entities. Profits from these sales totaling $5 million were used to offset the
cost of fuel for electric generation, thereby providing electric energy to
customers at the lowest possible cost.
OPERATIONS AND MAINTENANCE EXPENSES
Operations and maintenance (O&M) expenses, excluding fuel and purchased power,
amounted to $119.9 million for the three months ended June 30, 1996, compared to
$132.3 million for the same period in 1995. For the six months ended June 30,
1996 and 1995, these expenses amounted to $254.3 million and $262.6 million
respectively. These decreases reflect the Company's continuing efforts to
control costs.
RATE MODERATION COMPONENT
The Rate Moderation Component (RMC) reflects the difference between the
Company's revenue requirements under conventional ratemaking and the revenues
resulting from the implementation of the rate moderation plan provided in the
Rate Moderation Agreement (RMA) and subsequent rate case decisions.
For the three months ended June 30, 1996 and 1995, the Company recorded non-cash
credits to income of approximately $10.6 million and $22.2 million,
respectively, representing amounts, net of offsets generated by the Fuel
Moderation Component (FMC) mechanism, by which adjudicated revenues were below
revenues that would have been earned under conventional ratemaking. For the six
months ended June 30, 1996 and 1995, the Company recorded non-cash credits to
income of approximately $25.9 million and $10.8 million, respectively.
For the years 1993 through 1995, the operation of the FMC had been a significant
contributor to the reduction of the RMC balance. However, recent increases in
the cost of fuel have resulted in a reduction in the FMC credit to a level below
that which the Company had experienced over the past several years.
Nevertheless, the Company continues to believe that the full amortization of the
RMC balance will take place within the time frame established by the RMA.
For a further discussion of the RMC, RMA and FMC see Notes 1, 2 and 3 of Notes
to Financial Statement included in the Company's Annual Report on Form 10-K, as
amended, for the year ended December 31, 1995.
<PAGE>
OTHER REGULATORY AMORTIZATION
Charges or credits to other regulatory amortization have no impact on earnings
as the Company recovers from or returns to customers an equivalent amount of
revenue through various mechanisms contained in its current rate structure.
For the three months ended June 30, 1996 and 1995, other regulatory amortization
was a non-cash charge to income of approximately $58.0 million and $46.7
million, respectively. This increase is primarily the result of a $22.2 million
higher non-cash charge relating to an electric ratemaking mechanism which
provides a revenue reconciliation adjustment to eliminate the impact on earnings
of experiencing sales that are in this case above adjudicated levels (net margin
revenue deferral). This increase was partially offset by a $12.0 million
decrease in the amortization of LILCO Ratemaking and Performance Plan (LRPP)
deferrals of deferrals of prior rate years.
For the six months ended June 30, 1996 and 1995, other regulatory amortization
was a non-cash charge to income of approximately $85.2 million and $60.4
million, respectively. This increase is the result of a higher net margin
revenue deferral, higher LRPP amortizations, higher charges related to the gas
excess earnings and increased amortization related to Shoreham post-settlement
costs.
OPERATING TAXES
For the three months ended June 30, 1996, operating taxes totaled $111.3
million, an increase of $6.2 million or 5.9% over the comparable period last
year. For the six months ended June 30, 1996, these taxes amounted to $231.3
million, an increase of $14.6 million or 6.7% over the same period in 1995. The
increase in operating taxes was attributable to higher property and revenue
taxes.
FEDERAL INCOME TAXES
The current portion of the Company's federal income tax expense for the three
month and six month periods ended June 30, 1996 was $10.2 million and $23.0
million, respectively. This represents an increase of $6.5 million and $16.8
million in the Company's current federal income tax expense over the three month
and six month periods ended June 30, 1995, respectively. These increases are
primarily attributable to the utilization of the Company's Alternative Minimum
Tax (AMT) net operating loss (NOL) carryfoward.
As a result of an updated analysis of its AMT NOL carryforward position, the
Company currently estimates that its AMT NOL carryforward will not be exhausted
until the end of 1996.
<PAGE>
Accordingly, the Company's current federal income tax for the year ended
December 31, 1996, will amount to approximately $46 million, exclusive of the
utilization of investment tax credit carryforward.
INTEREST EXPENSE
Interest expense for the three months ended June 30, 1996, was $111.3 million, a
decrease of $8.3 million or 7.0% when compared to the same quarter in 1995. For
the six months ended June 30, 1996, this expense amounted to $230.6 million, a
decrease of $8.5 million or 3.6% compared with the same period last year. These
decreases are due to lower debt levels.
<PAGE>
FINANCIAL CONDITION
LIQUIDITY
At June 30, 1996, the Company's cash and cash equivalents amounted to
approximately $80.7 million, compared to $351.5 million at December 31, 1995.
The decrease in the cash balance at June 30, 1996 resulted primarily from the
utilization of cash on hand and cash previously deposited with the Trustee of
the General and Refunding (G&R) Mortgage to satisfy the mandatory redemption of
$415 million of the Company's G&R Bonds on May 1, 1996.
As a result of the above redemption the Company's debt ratio dropped from 61.8%
at December 31, 1995, to 59.8% at June 30, 1996. The use of cash to satisfy this
obligation is part of the Company's commitment to improving its capital
structure and lowering its cost of providing service.
In January 1996 the Company received $81 million, including interest, from
Suffolk County pursuant to a judgment that found that the Shoreham property was
overvalued for property tax purposes between 1976 and 1983 (excluding 1979 which
had been previously settled). Depending upon the outcome of the current electric
rate proceeding, the Company may be required to directly return all or a portion
of this recovery, net of legal expenses, to its electric ratepayers instead of
crediting the RMC balance as requested by the Company. For a further discussion
of this tax certiorari proceeding see Item 7: Management's Discussion and
Analysis of Financial Condition and Results of Operations and Note 3 of Notes to
Financial Statements included in the Company's Annual Report on Form 10-K, as
amended, for the year ended December 31, 1995.
In February 1997 and April 1998 the Company has maturing debt obligations of
$250 million and $100 million, respectively. The Company intends to use cash
generated from operations to the maximum extent practicable to satisfy these
obligations. Although the Company has no current plans for accessing the public
markets to raise capital for the next several years, the Company would refinance
existing debt or preferred stock should market conditions prove favorable. The
Company would also take advantage of any tax-exempt financing made available by
the New York State Energy Research and Development Authority (NYSERDA).
The Company has available for its use a revolving line of credit through October
1, 1997, provided by its 1989 Revolving Credit Agreement (1989 RCA). Effective
July 19, 1996, the amount committed by the banks participating in the facility
has been reduced, at the Company's option, from $300 million to $250 million.
The Company believes this action is appropriate given the levels of cash on
hand, projected future cash generated from
<PAGE>
operations and modest debt and preferred stock maturities through 1998. This
line of credit is secured by a first lien upon the Company's accounts receivable
and fuel oil inventories.
CAPITAL REQUIREMENTS AND CAPITAL PROVIDED
Capital requirements and capital provided for the three and six months ended
June 30, 1996, were as follows:
<TABLE>
<CAPTION>
(In Millions of Dollars)
------------------------
Three Months Ended Six Months Ended
June 30, 1996 June 30, 1996
------------- -------------
<S> <C> <C>
CAPITAL REQUIREMENTS
Construction $ 63 $107
---- ----
Redemptions and Dividends
Long-term debt 415 415
Preferred stock dividends 13 26
Common stock dividends 54 107
-- ---
Total Redemptions and Dividends 482 548
--- ---
Shoreham post-settlement costs 14 30
-- --
Total Capital Requirements $559 $685
==== ====
CAPITAL PROVIDED
Cash generation from operations $167 $406
Decrease in cash 387 271
Common stock issued 4 9
Other investing and financing
activities 1 (1)
- --
Total Capital Provided $559 $685
==== ====
</TABLE>
For further information, see the Statement of Cash Flows.
Given the Company's current electric load forecast and considering the
availability of electric energy provided by the Company's generating facilities
and firm purchases from others, the Company believes it will need additional
capacity in 1998, which it plans to satisfy through a firm purchase contract of
approximately 100 megawatts (MW). The Company anticipates it will need an
additional generating facility
<PAGE>
of approximately 144 MW by 2001. This facility will most likely be constructed
on behalf of the Company by an outside party and as such, will not be financed
by the Company.
The Company estimates that cash generated from operations will be sufficient to
meet total capital expenditures for the remainder of 1996.
INVESTMENT RATING
The Company's securities are rated by Standard and Poor's Corporation (S&P),
Moody's Investors Service (Moody's), Fitch Investors Service, L.P. (Fitch) and
Duff and Phelps, Inc. (D&P).
Given the PSC's commitment to reduce rates and the PSC's recent decision to
institute a comprehensive examination of the Company's rate structure and
financial condition, several of the rating agencies have been reexamining the
Company's ratings. In June, Moody's downgraded its rating of the Company's G&R
Bonds from minimum investment grade (Baa3) to one notch below minimum investment
grade (Ba1). Moody's also downgraded its ratings of the Company's Debentures and
Preferred Stock, which were already below minimum investment grade, to Ba3 and
ba3, respectively. In April 1996 Fitch placed the Company's securities on
FitchAlert with "negative implications". No further actions have transpired with
regard to Fitch since that date. D&P and S&P's outlooks remain unchanged from
December 31, 1995.
For a further discussion of the Company's credit ratings see Investment Rating
in the Company's Annual Report on Form 10-K, as amended, for the year ended
December 31, 1995.
RATE MATTERS
For a discussion of rate matters see Note 2 of Notes to Financial Statements and
Note 3 of Notes to Financial Statements included in the Company's Annual Report
on Form 10-K, as amended, for the year ended December 31, 1995.
COMPETITIVE OPPORTUNITIES
New York State Competitive Opportunities Proceeding
In May 1996 the Public Service Commission (PSC) issued an order (Order) in its
Competitive Opportunities Proceeding in which it is investigating issues related
to the future of the regulatory process as the electric utility industry moves
toward competition. In its Order, which generally adopted the Recommended
Decision issued by an Administrative Law Judge in December 1995 (RD), the PSC
stated its belief that introducing competition to the electric industry in New
York has the potential to reduce rates over time, increase customer choice and
<PAGE>
encourage economic growth. However, the PSC also stated that because of
differences in (i) individual service territories, primarily as a result of the
existence of transmission constraints, (ii) the level and type of strandable
investments (i.e. costs that utilities would have otherwise recovered through
rates under traditional cost of service regulation that, under market
competition, would not be recoverable), and (iii) financial conditions,
competition should be implemented on an individual company basis. The Order
calls for a competitive wholesale power market to be in place by early 1997
followed by the introduction of retail access for all customers by early 1998.
The Order contemplates that implementation of this plan will proceed on two
tracks. The first track generally requires that, by October 1, 1996, each
utility file a rate/restructuring plan with the PSC. However, the Company has
been exempted from this requirement for now, because of the PSC's pending
investigation of the Company's electric rates and because of the Long Island
Power Authority (LIPA) Proposed Plan. For information regarding the LIPA
Proposed Plan, see the Company's Quarterly Report on Form 10-Q for the three
months ended March 31, 1996 and Note 10 of Notes to Financial Statements in the
Company's Annual Report on Form 10-K, as amended, for the year ended December
31, 1995. The second track anticipates that certain other filings be made by all
utilities, also by October 1, 1996, to both the PSC and Federal Energy
Regulatory Commission (FERC) addressing other significant issues.
Additionally, as proposed in the RD, the Order calls for the movement to full
retail competition through a model known as the Flexible Retail Poolco Model
that provides (i) for the creation of an Independent System Operator (ISO) to
coordinate the safe and reliable operation of electric generation and
transmission; (ii) for open access to the transmission system, which would be
regulated by the FERC; (iii) for the continuation of a regulated distribution
company to operate and maintain the distribution system; (iv) for the
deregulation of energy/customer services such as meter reading and customer
billing; (v) that customers be given a choice among suppliers of electricity;
and (vi) that customers be allowed to acquire electricity either by long-term
contracts or purchases on the spot market or a combination of the two.
With respect to strandable investments, the PSC stated in its Order that it is
not required to allow recovery of all prudently incurred costs, that it has
considerable discretion to set rates that balance ratepayer and shareholder
interests and that the amount of strandable investments that a utility will be
permitted to recover will depend on the particular circumstances of each
utility. Additionally, the Order provided that every effort should be made by
utilities to mitigate these costs.
<PAGE>
The New York State utilities have not petitioned the PSC for reconsideration of
the Commission's Order and have not yet determined whether or not to challenge
the Order in court.
The Electric Industry - Federal Regulatory Issues
In April 1996, in response to its Notice of Proposed Rulemaking (NOPR) issued in
March 1995, the FERC issued two orders relating to the development of
competitive wholesale electric markets.
Order 888, a final rule on open transmission access and stranded cost recovery,
provides that the FERC has exclusive jurisdiction over interstate wholesale
wheeling and that utility transmission systems must now be open to qualifying
sellers and purchasers of power on a non-discriminatory basis. Order 888 allows
utilities to recover legitimate, prudent and verifiable stranded costs
associated with wholesale transmission, including the circumstances where full
requirements customers become wholesale transmission customers such as where a
municipality establishes its own electric system. With respect to retail
wheeling, the FERC concluded that it has jurisdiction over rates, terms and
conditions of service, but would leave the issue of recovery of the costs
stranded by retail wheeling to the states.
Order 888 required utilities to file open access tariffs under which they would
provide transmission services, comparable to that which they provide themselves,
to third parties on a non-discriminatory basis. Additionally, utilities must use
these same tariffs for their own wholesale sales. The Company filed its open
access tariff in July.
Order 889, a final rule on a transmission pricing bulletin board, addresses the
rules and technical standards for operation of an electronic bulletin board that
will make available, on a real-time basis, the price, availability and other
pertinent information concerning each transmission utility's services. It also
addresses standards of conduct to ensure that transmission utilities
functionally separate their transmission and wholesale power merchant functions
to prevent discriminatory self-dealing.
With other members of the industry, the Company has participated in several
joint petitions for rehearing and/or clarification of the FERC's Orders 888 and
889. Among other issues, these petitions address the FERC's obligation to
exercise its jurisdiction to provide for the recovery of strandable investments
in any retail wheeling situations. The outcome and timing of the FERC Orders on
rehearing are uncertain.
It is not possible to predict the amount of stranded costs if any, that the
Company would be unable to recover in a competitive environment. The outcome of
the state and federal regulatory proceedings could adversely affect the
Company's ability to apply
<PAGE>
Statement of Financial Accounting Standards (SFAS) No. 71, "Accounting for the
Effects of Certain Types of Regulation," which, pursuant to SFAS No. 101,
"Accounting for Discontinuation of Application of SFAS No. 71", could then
require a significant write-down of assets, the amount of which cannot presently
be determined.
Notwithstanding the outcome of the state and federal regulatory proceedings, or
any other state action, the Company believes that, among other obligations, the
State has a contractual obligation to allow the Company to recover its
Shoreham-related assets.
LONG ISLAND POWER AUTHORITY PROPOSED PLAN
For information regarding the LIPA Proposed Plan, see the Company's Form 10-Q
for the three months ended March 31, 1996 and Note 10 of Notes to Financial
Statements in the Company's Annual Report on Form 10-K, as amended, for the year
ended December 31, 1995.
FORWARD-LOOKING STATEMENTS
This Form 10-Q and the documents incorporated by reference contain statements
which, to the extent they are not recitations of historical fact, constitute
"forward-looking statements" within the meaning of the Securities Litigation
Reform Act of 1995 (Reform Act). In this respect, the words "estimate",
"project", "anticipate", "expect", "intend", "believe" and similar expressions
are intended to identify forward-looking statements. All such forward-looking
statements are intended to be subject to the safe harbor protection provided by
the Reform Act. A number of important factors affecting the Company's business
and financial results could cause actual results to differ materially from those
stated in the forward-looking statements. Those factors include the state and
federal regulatory rate proceedings, the LIPA Proposed Plan, certain
environmental matters as well as such other factors as set forth in the
Company's Annual Report on Form 10-K, as amended, for the year ended December
31, 1995 and all documents subsequently filed with the Securities and Exchange
Commission.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
SHOREHAM
Pursuant to the Long Island Power Authority (LIPA) Act, LIPA is required to make
payments-in-lieu-of-taxes (PILOTs) to the municipalities that impose real
property taxes on Shoreham. Pursuant to the 1989 Settlement, the Company agreed
to fund LIPA's obligation to make these PILOTs. On June 13, 1996, the New York
State Court of Appeals rendered its opinion on the cross-appeals filed by the
parties regarding the timing, duration and refundability of PILOTs under the
LIPA Act (LIPA, et. al. v. Shoreham-Wading River Central School District, et.
al.). The Court affirmed the Appellate Division, Second Department's ruling by
holding that (a) LIPA's PILOT obligation is perpetual, (b) PILOTS, like taxes,
are subject to refund if the assessment upon which the PILOTs were based are
determined to be excessive, and (c) PILOTs phase down by ten percent of the
prior year's amount, rather than ten percent of the first PILOT year amount,
until PILOTs reach a level that equals the taxes that would have been levied on
the plant in a non-operative state. Additionally, the Court modified the
Appellate Division's ruling by finding that PILOTs commence, not at the time the
Company transferred Shoreham to LIPA in February 1992, but rather on December 1,
1992, the beginning of the next tax year.
As a result of the Court of Appeal's decision, the Town of Brookhaven has taken
the position that LIPA currently owes approximately $44 million in additional
PILOTs. However, the Company believes that the Town's allegation regarding
additional PILOTs is inappropriate because it is based on an excessive
assessment of Shoreham. The proper assessment of Shoreham for the relevant time
period is to be determined in the tax certiorari proceeding currently pending in
New York Supreme Court, Suffolk County (Long Island Lighting Company v. The
Assessor of the Town of Brookhaven, et. al.). If the proper assessment of
Shoreham as determined in this tax certiorari proceeding results in PILOTs that
are less than the amount of PILOTs that have already been paid, LIPA, and
therefore the Company, should be entitled to refunds of excessive PILOTs already
made. However, the Company is currently unable to determine the amount of
recovery, if any, and the timing of all refunds as a result of this pending
proceeding.
ENVIRONMENTAL
In May 1996 the Connecticut Department of Environmental
<PAGE>
Protection (DEP) issued a modification to an Administrative Consent Order (ACOM)
previously issued in connection with an investigation of an electric
transmission cable located under the Long Island Sound (Sound Cable) that is
jointly owned by the Company and the Connecticut Light and Power Company
(Owners). The ACOM requires the Owners to submit a series of reports and studies
describing cable system condition, operation and repair practices, alternatives
for cable improvements or replacement and environmental impacts associated with
leaks of fluid into the Long Island Sound. The Company is in the process of
compiling and coordinating the activities necessary to perform these studies and
at the present time is unable to determine the costs it will incur to complete
the requirements of the ACOM or to comply with any additional DEP requirements.
In addition, in April 1996 the Long Island Soundkeeper Fund, a non-profit
organization, filed a suit against the Owners in Federal District Court in
Connecticut alleging that the Sound Cable fluid leaks constitute unpermitted
discharges of pollutants in violation of the Clean Water Act and that such
pollutants present a threat to the environment and public health. The suit
seeks, among other things, injunctive relief prohibiting the Owners from
continuing to operate the Sound Cable in alleged violation of the Clean Water
Act and civil penalties of $25,000 per day for each violation from each of the
Owners. The Company is unable to determine the outcome of this proceeding or
what impact, if any, it will have on its financial condition.
For additional information concerning the Sound Cable and a related
investigation by the United States Attorney's office, see "Item 1. Business
Environment - Water" in the Company's Form 10-K, as amended, for the year ended
December 31, 1995.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Shareholders was held on May 9, 1996. The
persons named below were elected as Directors by holders of the Company's Common
Stock, voting cumulatively, casting votes in favor or withholding votes as
indicated:
<TABLE>
<CAPTION>
IN FAVOR WITHHELD
-------- --------
<S> <C> <C>
William J. Catacosinos 98,968,692 2,319,080
John H. Talmage 99,709,435 1,578,337
Basil A. Paterson 98,929,466 2,358,306
George Bugliarello 99,613,384 1,674,388
George J. Sideris 99,806,422 1,481,350
A. James Barnes 99,745,831 1,541,941
Richard L. Schmalensee 99,690,854 1,596,918
Renso L. Caporali 92,406,675 8,881,097
Peter O. Crisp 92,419,480 8,868,292
Katherine D. Ortega 99,735,483 1,552,289
Vicki L. Fuller 99,685,918 1,601,854
</TABLE>
The shareowners also (i) ratified the appointment of Ernst & Young LLP as
independent auditors for the year 1996 with 99,691,990 votes cast for
ratification, 730,676 votes against and 865,105 votes abstaining; (ii) approved
a Directors' Stock Unit Retainer Plan with 92,262,878 votes cast for approval,
6,812,959 votes cast against and 2,211,934 votes abstaining; and (iii) approved
an Officers' Long-Term Incentive Plan with 90,455,731 votes cast for approval,
8,464,516 votes cast against and 2,367,524 votes abstaining.
Of the shares held by brokers and nominees, 1,709,425 and 5,898,278
respectively, were not voted.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
Exhibit 27 - Financial Data Schedule UT for the six-month period
ended June 30, 1996.
b. Reports on Form 8-K
None.
<PAGE>
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
Principal Financial Officer
Dated: August 2, 1996
<PAGE>
EXHIBIT INDEX
-------------
PAGE NO.
-------
Exhibit 27 - Financial Data Schedule UT
for the six-month period ended June 30, 1996 28
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
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> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> $ 3,630,523
<OTHER-PROPERTY-AND-INVEST> 16,718
<TOTAL-CURRENT-ASSETS> 982,497
<TOTAL-DEFERRED-CHARGES> 16,887
<OTHER-ASSETS> 7,381,879
<TOTAL-ASSETS> 12,028,504
<COMMON> 601,106
<CAPITAL-SURPLUS-PAID-IN> 1,071,134
<RETAINED-EARNINGS> 780,178
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,452,418
639,550
63,859
<LONG-TERM-DEBT-NET> 4,472,675
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 250,000
4,800
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 4,145,202
<TOT-CAPITALIZATION-AND-LIAB> 12,028,504
<GROSS-OPERATING-REVENUE> 1,558,817
<INCOME-TAX-EXPENSE> 86,569
<OTHER-OPERATING-EXPENSES> 1,140,758
<TOTAL-OPERATING-EXPENSES> 1,227,327
<OPERATING-INCOME-LOSS> 331,490
<OTHER-INCOME-NET> 19,588
<INCOME-BEFORE-INTEREST-EXPEN> 351,078
<TOTAL-INTEREST-EXPENSE> 228,797
<NET-INCOME> 122,281
26,143
<EARNINGS-AVAILABLE-FOR-COMM> 96,138
<COMMON-STOCK-DIVIDENDS> 106,628
<TOTAL-INTEREST-ON-BONDS> 198,282
<CASH-FLOW-OPERATIONS> 405,886
<EPS-PRIMARY> 0.80
<EPS-DILUTED> 0.80
</TABLE>
