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, 1997
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, 1997, was 121,146,042.
<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 21
Item 2. Changes in Securities 21
Item 3. Defaults Upon Senior Securities 21
Item 4. Submission of Matters to a Vote
of Security Holders 21
Item 5. Other Information 23
Item 6. Exhibits and Reports on Form 8-K 23
Signature 25
- 2 -
<PAGE>
LONG ISLAND LIGHTING
STATEMENT OF INCOME
(UNAUDITED)
(Thousands of Dollars - except per share amounts)
Three Months Ended
------------------
June 30
-------
1997 1996
---- ----
Revenues
Electric $ 560,086 $ 576,963
Gas 104,402 117,639
------- -------
Total Revenues 664,488 694,602
------- -------
Expenses
Operations - fuel and purchased power 191,776 203,891
Operations - other 94,306 89,979
Maintenance 27,782 29,952
Depreciation and amortization 38,893 37,952
Base financial component amortization 25,243 25,243
Rate moderation component amortization 9,198 (10,604)
Regulatory liability component amortization (22,143) (22,143)
Other regulatory amortization 13,052 57,990
Operating taxes 109,324 111,295
Federal income tax - current 22,615 10,162
Federal income tax - deferred and other 10,363 19,820
------ ------
Total Expenses 520,409 553,537
------- -------
Operating Income 144,079 141,065
------- -------
Other Income and (Deductions)
Rate moderation component carrying charges 5,981 6,274
Class Settlement (4,199) (5,009)
Other income and deductions, net 2,370 10,186
Allowance for other funds used during construction 958 617
Federal income tax - current (701) -
Federal income tax - deferred and other (188) (2,099)
---- ------
Total Other Income and (Deductions) 4,221 9,969
----- -----
Income Before Interest Charges 148,300 151,034
------- -------
Interest Charges and (Credits)
Interest on long-term debt 87,916 96,024
Other interest 16,274 15,301
Allowance for borrowed funds used during construction (1,051) (815)
------ ----
Total Interest Charges and (Credits) 103,139 110,510
------- -------
Net Income 45,161 40,524
Preferred stock dividend requirements 12,968 13,071
------ ------
Earnings for Common Stock $ 32,193 $ 27,453
========= =========
Average Common Shares Outstanding (000) 121,146 120,221
Earnings per Common Share $ 0.26 $ 0.23
Dividends Declared per Common Share $ 0.445 $ 0.445
See Notes to Financial Statements.
- 3 -
<PAGE>
LONG ISLAND LIGHTING COMPANY
STATEMENT OF INCOME
(UNAUDITED)
(Thousands of Dollars - except per share amounts)
Six Months Ended
----------------
June 30
-------
1997 1996
---- ----
Revenues
Electric $1,117,876 $1,136,231
Gas 397,793 422,586
------- -------
Total Revenues 1,515,669 1,558,817
--------- ---------
Expenses
Operations - fuel and purchased power 493,643 514,160
Operations - other 189,979 193,848
Maintenance 57,123 60,439
Depreciation and amortization 77,454 75,517
Base financial component amortization 50,485 50,485
Rate moderation component amortization 15,105 (25,930)
Regulatory liability component amortization (44,286) (44,286)
Other regulatory amortization 25,271 85,202
Operating taxes 226,837 231,323
Federal income tax - current 45,993 23,000
Federal income tax - deferred and other 43,986 63,569
------ ------
Total Expenses 1,181,590 1,227,327
--------- ---------
Operating Income 334,079 331,490
------- -------
Other Income and (Deductions)
Rate moderation component carrying charges 11,901 12,175
Class Settlement (8,695) (10,381)
Other income and deductions, net 3,015 16,106
Allowance for other funds used during construction 1,676 1,336
Federal income tax - current (701) -
Federal income tax - deferred and other 600 352
--- ---
Total Other Income and (Deductions) 7,796 19,588
----- ------
Income Before Interest Charges 341,875 351,078
------- -------
Interest Charges and (Credits)
Interest on long-term debt 178,084 198,282
Other interest 32,933 32,272
Allowance for borrowed funds used during construction (2,000) (1,757)
------ ------
Total Interest Charges and (Credits) 209,017 228,797
------- -------
Net Income 132,858 122,281
Preferred stock dividend requirements 25,937 26,143
------ ------
Earnings for Common Stock $ 106,921 $ 96,138
========== ==========
Average Common Shares Outstanding (000) 121,066 120,082
Earnings per Common Share $ 0.88 $ 0.80
Dividends Declared per Common Share $ 0.89 $ 0.89
See Notes to Financial Statements.
- 4 -
<PAGE>
LONG ISLAND LIGHTING COMPANY
BALANCE SHEET
(Thousands of Dollars)
June 30 March 31 December 31
1997 1997 1996
ASSETS (unaudited) (unaudited) (audited)
----------- ----------- ---------
Utility Plant
Electric $ 3,939,163 $ 3,900,264 $ 3,882,297
Gas 1,180,860 1,171,183 1,154,543
Common 265,111 263,267 260,268
Construction work in progress 119,435 108,850 112,184
Nuclear fuel in process
and in reactor 15,512 15,503 15,454
------ ------ ------
5,520,081 5,459,067 5,424,746
--------- --------- ---------
Less - Accumulated depreciation and
amortization 1,790,662 1,759,110 1,729,576
--------- --------- ---------
Total Net Utility Plant 3,729,419 3,699,957 3,695,170
--------- --------- ---------
Regulatory Assets
Base financial component (less
accumulated amortization of
$807,768, $782,525 and $757,282) 3,231,062 3,256,305 3,281,548
Rate moderation component 406,148 409,512 402,213
Shoreham post-settlement costs 1,000,623 996,270 991,795
Shoreham nuclear fuel 68,050 68,581 69,113
Unamortized cost of issuing
securities 180,467 187,309 194,151
Postretirement benefits
other than pensions 353,851 357,668 360,842
Regulatory tax asset 1,760,486 1,767,164 1,772,778
Other 191,131 200,137 199,879
------- ------- -------
Total Regulatory Assets 7,191,818 7,242,946 7,272,319
--------- --------- ---------
Nonutility Property and
Other Investments 19,235 18,870 18,597
------ ------ ------
Current Assets
Cash and cash equivalents 54,010 64,539 279,993
Special deposits 67,916 37,631 38,266
Customer accounts receivable (less
allowance for doubtful accounts of
$22,853, $23,675 and $25,000) 255,126 305,436 255,801
Other accounts receivable 36,981 42,946 65,764
Accrued unbilled revenues 142,969 141,389 169,712
Materials and supplies at average cost 55,053 55,454 55,789
Fuel oil at average cost 48,940 49,703 53,941
Gas in storage at average cost 43,231 10,893 73,562
Deferred tax asset 86,447 93,349 145,205
Prepayments and other current assets 39,595 8,805 8,569
------ ----- -----
Total Current Assets 830,268 810,145 1,146,602
------- ------- ---------
Deferred Charges 81,133 77,656 76,991
------ ------ ------
Total Assets $11,851,873 $11,849,574 $12,209,679
=========== =========== ===========
See Notes to Financial Statements.
- 5 -
<PAGE>
LONG ISLAND LIGHTING COMPANY
BALANCE SHEET
(Thousands of Dollars)
June 30 March 31 December 31
1997 1997 1996
CAPITALIZATION AND LIABILITIES (unaudited) (unaudited) (audited)
----------- ----------- ---------
Capitalization
Long-term debt $ 4,371,675 $ 4,471,675 $ 4,471,675
Unamortized discount on debt (14,372) (14,628) (14,903)
------- ------- -------
4,357,303 4,457,047 4,456,772
--------- --------- ---------
Preferred stock - redemption required 638,500 638,500 638,500
Preferred stock - no redemption
required 63,584 63,598 63,664
------ ------ ------
Total Preferred Stock 702,084 702,098 702,164
------- ------- -------
Common stock 605,923 605,022 603,921
Premium on capital stock 1,134,998 1,131,576 1,127,971
Capital stock expense (48,588) (48,915) (49,330)
Retained earnings 840,034 861,751 840,867
Treasury stock, at cost (902) (385) (60)
---- ---- ---
Total Common Shareowners' Equity 2,531,465 2,549,049 2,523,369
--------- --------- ---------
Total Capitalization 7,590,852 7,708,194 7,682,305
--------- --------- ---------
Regulatory Liabilities
Regulatory liability component 158,718 178,558 198,398
1989 Settlement credits 122,835 125,138 127,442
Regulatory tax liability 96,771 100,377 102,887
Other 162,406 158,660 139,510
------- ------- -------
Total Regulatory Liabilities 540,730 562,733 568,237
------- ------- -------
Current Liabilities
Current maturities of long-term debt 101,000 1,000 251,000
Current redemption requirements
of preferred stock 1,050 1,050 1,050
Accounts payable and
accrued expenses 263,674 230,189 289,141
LRPP payable 40,499 40,499 40,499
Accrued taxes (including federal
income tax of $49,561, $49,262
and $25,884) 43,070 51,157 63,640
Accrued interest 158,377 143,983 160,615
Dividends payable 58,538 58,474 58,378
Class Settlement 60,000 58,333 55,833
Customer deposits 29,051 29,173 29,471
------ ------ ------
Total Current Liabilities 755,259 613,858 949,627
------- ------- -------
Deferred Credits
Deferred federal income tax 2,421,021 2,420,443 2,442,606
Class Settlement 81,380 89,487 98,497
Other 27,705 20,889 39,447
------ ------ ------
Total Deferred Credits 2,530,106 2,530,819 2,580,550
--------- --------- ---------
Operating Reserves
Pensions and other postretirement
benefits 388,830 387,048 381,996
Claims and damages 46,096 46,922 46,964
------ ------ ------
Total Operating Reserves 434,926 433,970 428,960
------- ------- -------
Commitments and Contingencies - - -
------- ------- -------
Total Capitalization and
Liabilities $11,851,873 $11,849,574 $12,209,679
=========== =========== ===========
See Notes to Financial Statements.
- 6 -
<PAGE>
LONG ISLAND LIGHTING COMPANY
STATEMENT OF CASH FLOWS
(UNAUDITED)
(Thousands of Dollars)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating Activities
Net Income $ 45,161 $ 40,524 $ 132,858 $ 122,281
Adjustments to reconcile net income to net
cash provided by operating activities
Provision for doubtful accounts 3,870 3,847 8,691 8,675
Depreciation and amortization 38,893 37,952 77,454 75,517
Base financial component amortization 25,243 25,243 50,485 50,485
Rate moderation component amortization 9,198 (10,604) 15,105 (25,930)
Regulatory liability component amortization (22,143) (22,143) (44,286) (44,286)
Other regulatory amortization 13,052 57,990 25,271 85,202
Rate moderation component carrying charges (5,981) (6,274) (11,901) (12,175)
Class Settlement 4,199 5,009 8,695 10,381
Amortization of cost of issuing and
redeeming securities 7,934 8,682 16,021 18,168
Federal income tax - deferred and other 10,551 21,918 43,386 63,217
Allowance for other funds used during
construction (958) (617) (1,676) (1,336)
Gas Cost Adjustment 2,512 6,873 (5,379) 26,063
Other 23,066 15,738 47,551 31,280
Changes in operating assets and liabilities
Accounts receivable 54,655 60,563 23,017 56,571
Accrued unbilled revenues (1,580) (1,459) 26,743 34,313
Materials and supplies, fuel oil and
gas in storage (31,174) (48,202) 36,068 (4,500)
Accounts payable and accrued expenses 33,485 22,994 (25,467) (9,003)
Accrued taxes (8,087) (48,948) (20,570) (59,197)
Class Settlement (10,639) (11,219) (21,645) (16,585)
Special deposits (30,285) 27,159 (29,650) 27,159
Other (27,288) (18,171) (57,522) (30,414)
------- ------- ------- -------
Net Cash Provided by Operating Activities 133,684 166,855 293,249 405,886
------- ------- ------- -------
Investing Activities
Construction and nuclear fuel expenditures (69,219) (62,594) (118,634) (106,783)
Shoreham post-settlement costs (11,983) (14,307) (24,087) (30,105)
Other 221 4 (577) (1,202)
--- - ---- ------
Net Cash Used in Investing Activities (80,981) (76,897) (143,298) (138,090)
------- ------- -------- --------
Financing Activities
Proceeds from sale of common stock 4,309 4,753 8,950 9,425
Redemption of long-term debt - (415,000) (250,000) (415,000)
Preferred stock dividends paid (12,968) (13,071) (25,938) (26,143)
Common stock dividends paid (53,844) (53,381) (107,593) (106,628)
Other (729) 133 (1,353) (226)
---- --- ------ ----
Net Cash Used in Financing Activities (63,232) (476,566) (375,934) (538,572)
------- -------- -------- --------
Net (decrease) in cash and cash equivalents ($10,529) ($386,608) ($225,983) ($270,776)
======== ========= ========= =========
Cash and cash equivalents at beginning
of period $ 64,539 $ 467,285 $ 279,993 $ 351,453
Net (decrease) in cash and cash equivalents (10,529) (386,608) (225,983) (270,776)
------- -------- -------- --------
Cash and cash equivalents at end of period $ 54,010 $ 80,677 $ 54,010 $ 80,677
========= ========= ========= =========
</TABLE>
See Notes to Financial Statements.
- 7 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
These Notes to Financial Statements reflect events subsequent to January 31,
1997, the date of the most recent Report of Independent Auditors, through the
date of this Report on Form 10-Q for the three months ended June 30, 1997. 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 and six months ended June 30, 1997, the Company's Quarterly Report on Form
10-Q for the three months ended March 31, 1997, the Company's Annual Report on
Form 10-K/A filed June 30, 1997, for the Year Ended December 31, 1996, and the
Company's Joint Proxy Statement/Prospectus filed June 30, 1997.
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 the interim
periods are not necessarily indicative of results to be expected for an entire
year, due to seasonal, operating and other factors.
On April 11, 1997 the Company changed its year end to March 31. Accordingly, the
Company's financial statements have been presented on the new basis as well as
its historical basis for comparative purposes.
Certain prior year amounts have been reclassified to be consistent with current
year presentation.
NOTE 2. BROOKLYN UNION/LIPA TRANSACTIONS
BROOKLYN UNION TRANSACTION
On December 29, 1996, the Company and Brooklyn Union entered into an Agreement
and Plan of Exchange (Share Exchange Agreement or Brooklyn Union Transaction),
pursuant to which the outstanding common stock of the companies will be
exchanged for common stock of a new holding company, yet to be named. The Share
Exchange Agreement, filed as an exhibit to a Form 8-K filed December 30, 1996,
was amended and restated to reflect certain technical changes as of February 7,
1997 and again as of June 26, 1997.
The Brooklyn Union Transaction has been approved by both companies' boards of
directors; the common stock shareholders of both companies approved the
transaction at separate meetings held
- 8 -
<PAGE>
on August 7, 1997.
The Brooklyn Union Transaction is conditioned upon, among other things, the
receipt of all required regulatory approvals. On July 17, 1997, the Federal
Energy Regulatory Commission (FERC) approved the Brooklyn Union Transaction. The
Company is unable to determine when, or if, all other required regulatory
approvals will be obtained.
LONG ISLAND POWER AUTHORITY TRANSACTION
On June 26, 1997, LILCO and the Long Island Power Authority (LIPA) entered into
definitive agreements pursuant to which, after the transfer of LILCO's gas
assets, non-nuclear electric generating facility assets and certain other assets
and liabilities to one or more newly-formed subsidiaries of the new holding
company, LILCO's stock will be sold to LIPA for $2.4975 billion in cash. Upon
completion of the LIPA transaction, it is anticipated that LIPA will own LILCO's
electric transmission and distribution system, its 18% interest in the Nine Mile
Point 2 Nuclear Power Station, and its electric regulatory assets and
liabilities, and will assume or refinance approximately $339 million in
preferred stock and approximately $3.6 billion in long term debt.
As part of the LIPA Transaction, the definitive agreements contemplate that one
or more subsidiaries of the newly formed holding company will enter into
agreements with LIPA, pursuant to which such subsidiaries will provide
management and operations services to LIPA with respect to the transmission and
distribution system, sell power generated by the non-nuclear power plants to
LIPA, and manage LIPA's fuel and electric purchases and any off-system electric
sales. In addition, three years after the LIPA Transaction is consummated, LIPA
will have the right for a one year period to acquire the non-nuclear generating
assets. The purchase price for such assets would be the fair market value at the
time of the exercise of the right, which value will be determined by independent
appraisers.
On July 16, 1997, the New York State Public Authorities Control Board
unanimously approved the definitive agreements related to the LIPA Transaction
subject to the following conditions: (1) within one year, LIPA must establish a
plan for open access to the electric distribution system; (2) LIPA may not
purchase the generating facilities, as contemplated in the generation purchase
right agreement, at a price greater than book value; (3) the holding company
formed in connection with the LIPA Transaction (or the Brooklyn Union
Transaction) must agree to invest, over a ten year period, at least $1.3 billion
in energy-related and economic development projects, and natural gas
infrastructure projects on Long Island; (4) LIPA will guarantee that, over a ten
year period, average electric rates will be reduced by no less
- 9 -
<PAGE>
than fourteen percent when measured against the Company's rates today. As part
of this guarantee, no less than 2% cost savings to LIPA customers must result
from the savings attributable to the Brooklyn Union transaction; and (5) LIPA
will not increase average customer rates by more than 2 1/2% over a twelve month
period without approval from the PSC.
In addition, the holders of common and preferred stock of the Company eligible
to vote approved the LIPA Transaction at the meeting held on August 7, 1997.
RELATED FILINGS
On June 30, 1997, a Registration Statement on Form S-4 was filed with the
Securities and Exchange Commission in conjunction with the filing of a Joint
Proxy Statement on the proposed transactions affecting the Company.
In July 1997, the Company, Brooklyn Union and LIPA filed requests for private
letter rulings with the Internal Revenue Service regarding certain federal
income tax issues which require favorable rulings in order for the LIPA
Transaction to close.
NOTE 3. RATE MATTERS
In May 1997, the Company filed a petition with the PSC, seeking among other
things to: 1) re-institute the gas excess earnings mechanism for the gas rate
year ending November 30, 1997 whereby earnings in excess of a return on common
equity of 11.0% would be allocated equally between ratepayers and shareowners,
with the ratepayers' portion being applied to manufactured gas plant site
remediation costs; and 2) continue a) the Rate Moderation Component (RMC) and b)
the Long Island Ratemaking and Performance Plan (LRPP) ratemaking mechanisms and
c) the performance incentive programs for the electric rate year ending November
30, 1997.
NOTE 4. CAPITALIZATION
In February 1997, the Company retired $250 million of General and Refunding
Bonds at maturity. The Company satisfied this obligation with cash on hand and
by utilizing interim financing of $30 million obtained through its Revolving
Credit Agreement (RCA). The Company repaid this short-term RCA borrowing of $30
million in March 1997.
At the August 7, 1997 meeting the holders of common stock approved an amendment
to the Company's certificate of incorporation to increase the total amount of
authorized common stock to 160,000,000 common shares.
- 10 -
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
EARNINGS
Earnings for common stock for the three months ended June 30, 1997, were $32.2
million or $0.26 per common share compared with $27.5 million or $0.23 per share
for the same period last year. For the six months ended June 30, 1997, earnings
for common stock amounted to $106.9 million or $.88 per common share compared to
$96.1 million or $.80 per common share for the same period last year.
Electric business earnings increased for the three and six month periods ended
June 30, 1997, compared to the same periods last year. Factors contributing to
these increases included the Company's continuing efforts to control operations
and maintenance expenses and the efficient use of cash generated by operations
to retire maturing debt.
Gas business earnings for the three month period ended June 30, 1997 decreased
when compared to the prior year as a result of lower sales volumes. For the six
month period ended June 30, 1997, earnings were equal to those of the same
period last year, despite lower sales volumes resulting from warmer weather.
Contributing to earnings for the six months ended June 30, 1997 were a one-time
revenue enhancement relating to an Independent Power Producer (IPP) contract and
lower operations and maintenance expenses.
REVENUES
Electric
The decrease in electric revenues of approximately $16.9 and $18.4 million for
the three and six months ended June 30, 1997, respectively, when compared to the
same periods in 1996, was primarily due to lower sales volumes resulting from
milder weather experienced in the region during the three months ended June 30,
1997. The decrease in revenues resulting from these lower sales volumes,
however, had 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 decrease in gas revenues of approximately $13.2 and $24.8 million for the
three and six months ended June 30, 1997, respectively, when compared to the
same periods in 1996, was primarily the result of lower fuel expense recoveries
driven by
- 11 -
<PAGE>
lower sales volumes associated with the milder weather experienced in the
Company's service territory during 1997. Variations in weather have a limited
impact on revenues as the Company's gas rate structure includes a weather
normalization clause which mitigates the impact on revenues of experiencing
weather that is warmer or colder than normal.
FUEL AND PURCHASED POWER
Fuel and purchased power expenses for the three and six months ended June 30,
1997 and 1996 were as follows:
Three Months Ended Six Months Ended
6/30/97 6/30/96 6/30/97 6/30/96
------- ------- ------- -------
(In Millions) (In Millions)
Electric System
Oil $ 18 $ 26 $ 55 $ 92
Gas 52 37 91 45
Nuclear 4 4 8 8
Purchased Power 75 81 160 162
-- -- --- ---
Total Electric Fuel Costs 149 148 314 307
Gas System 43 56 180 207
-- -- --- ---
Total $192 $204 $494 $514
==== ==== ==== ====
Electric
For the three months ended June 30, 1997, electric fuel expense increased
slightly despite lower sales volumes as oil and purchased power prices
increased. This increase in electric fuel costs was mitigated as the Company was
able to generate increased amounts of energy with more economical gas.
Of the Company's eleven steam generation units, nine are capable of burning
natural gas, while seven are dual-fired. This provides the Company with the
ability to burn the most cost efficient fuel available, consistent with seasonal
environmental requirements. In an effort to maximize the Company's operating
flexibility, the Company has plans to convert its two remaining oil-fired steam
generating units to dual fired units within the next two years.
For the six months ended June 30, 1997, electric fuel costs were higher when
compared to the same period last year, primarily as a result of a reduction in
profits generated by electric off-system gas sales. Profits from such gas sales
are used to offset the cost of fuel for electric generation, supporting the
Company's goal of providing electric energy to customers at the lowest cost
possible. Also contributing to the increase in this period were higher fuel oil
and purchased power prices.
- 12 -
<PAGE>
Electric Energy Available
The percentages of total electric energy available by type of fuel for electric
operations for the three months ended and the six months ended June 30, 1997 and
1996 were as follows:
Three Months Ended Six Months Ended
6/30/97 6/30/96 6/30/97 6/30/96
------- ------- ------- -------
Oil 8% 16% 16% 29%
Gas 43 25 38 18
Nuclear 11 11 10 10
Purchases 38 48 36 43
-- -- -- --
Total 100% 100% 100% 100%
=== === === ===
The use of gas for electric generation increased for the three and six months
ended June 30, 1997 as gas became more economical than fuel oil and purchased
power. The Company also experienced lower electric off-system gas sales for the
six months ended June 30, 1997, making more gas available for use in generating
electricity.
Gas
Gas fuel costs for operating the gas business decreased for the three and six
months ended June 30, 1997, when compared to the same period last year, due to
lower gas prices coupled with a decrease in sales volumes. Also contributing to
the decrease in the gas fuel costs is the operation of the Gas Cost Adjustment
(GCA) mechanism which requires the Company to increase or decrease current year
fuel expense for differences between amounts collected and amounts actually
spent for fuel during the previous rate year. For the three and six months ended
June 30, 1997, the amount being refunded, via the GCA, is greater than that of
the same three and six month periods of the prior year.
OPERATIONS AND MAINTENANCE EXPENSES
Operations and maintenance (O&M) expenses, excluding fuel and purchased power,
amounted to $122.1 million for the three months ended June 30, 1997, compared to
$119.9 million for the three months ended June 30, 1996. This increase is
primarily due to the timing of the recognition of costs related to certain
employee benefits.
For the six months ended June 30, 1997, O&M expenses amounted to $247.1 million,
compared to $254.3 million for the six months ended June 30, 1996. This
decrease, partially offset by the employee benefit costs noted above, is
primarily attributable to the Company's cost containment programs.
- 13 -
<PAGE>
RATE MODERATION COMPONENT
The Rate Moderation Component (RMC) reflects the difference between the
Company's electric revenue requirements under conventional ratemaking and the
revenues provided by its electric rate structure. The RMC is adjusted monthly
for the operation of the Company's Fuel Moderation Component (FMC) mechanism and
the difference between the Company's share of actual operating costs at Nine
Mile Point 2 Nuclear Power Station (NMP2) and amounts provided for in electric
rates.
For the three and six months ended June 30, 1997, the Company recorded non-cash
charges to income of approximately $9.2 million and $15.1 million, respectively,
as operating income generated by the Company's electric rate structure exceeded
that required under a conventional ratemaking calculation. For the three and six
months ended June 30, 1996, the Company recorded non-cash credits to income of
approximately $10.6 million and $25.9 million, respectively, as operating income
generated by the Company's electric rate structure was below that required under
a conventional ratemaking calculation.
The Company continues to believe that the full amortization and recovery of the
RMC balance, which at June 30, 1997, was approximately $406 million, will take
place within the time frame established by the Rate Moderation Agreement (RMA),
in accordance with the rate plans submitted to the PSC for the single rate year
(1997) and the three year rate period 1997 through 1999. In the event that the
Long Island Power Authority (LIPA) Transaction is terminated, the Company
expects that the PSC will issue an order providing for, among other things, the
continuing recovery, through rates, of the RMC balance. If such an electric rate
order is not obtained or does not provide for the continuing recovery of the RMC
balance, the Company may be required to write-off the amount not expected to be
provided for in rates. For a further discussion of the LIPA Transaction, see the
Joint Proxy Statement/Prospectus filed June 30, 1997.
For a further discussion of the RMC, RMA and FMC, see the Company's Annual
Report on Form 10-K/A filed June 30, 1997, for the Year Ended December 31, 1996.
OTHER REGULATORY AMORTIZATION
For the three months ended June 30, 1997 and 1996, other regulatory amortization
was a non-cash charge to income of $13.1 million and $58.0 million,
respectively. For the six months ended June 30, 1997, and 1996, other regulatory
amortization was a non-cash charge to income of $25.3 million and $85.2 million,
respectively. These variances are primarily due to changes in the items
discussed below. Such variances have no impact on earnings since they reflect
the net deferral of income and
- 14 -
<PAGE>
expense resulting from the Company's ratemaking mechanisms.
The changes in Other Regulatory Amortizations for the three and six months ended
June 30, 1997 are as follows:
Three Months Six Months
- --------------------------------------------------------------------------------
(In thousands of dollars)
- --------------------------------------------------------------------------------
(Income) (Income)
Expense Expense
- --------------------------------------------------------------------------------
Net Margin $(28,794) $(36,985)
Amortization of LRPP Deferral (15,899) (32,189)
Excess Earnings - Electric (5,586) 5,066
Excess Earnings - Gas 5,909 5,313
Other (568) (1,136)
- --------------------------------------------------------------------------------
$(44,938) $(59,931)
================================================================================
Net Margin- An electric revenue reconciliation mechanism, established under the
LILCO Ratemaking and Performance Plan (LRPP), which eliminates the impact on
earnings of experiencing sales that are above or below adjudicated levels by
providing a fixed annual net margin level (defined as sales revenue, net of fuel
and gross receipts taxes). Variations in electric revenue resulting from
differences between actual and adjudicated net margin sales levels are deferred
on a monthly basis during the rate year through a charge or credit to other
regulatory amortization. These deferrals are either refunded to or recovered
from ratepayers as explained below under "LRPP Amortization."
For the three months ended June 30, 1997, actual and adjudicated sales levels
approximated the target levels. For the three months ended June 30, 1996, the
Company recorded a non-cash charge to income of $28.7 million. Actual sales
levels for six months ended June 30, 1997 were lower than the adjudicated amount
and the Company recorded a non-cash credit to income of $10.3 million, whereas
for the six months ended June 30, 1996, actual levels were higher than the
adjudicated net margin and the Company recorded a non-cash charge to income of
$26.7 million.
LRPP Amortization- As established under the LRPP, deferred balances resulting
from the electric business net margin, electric property tax reconciliation,
earned performance incentives, and associated carrying charges are accumulated
until the end of each rate year. The first $15 million of the total deferral is
recovered from or credited to electric ratepayers by increasing or decreasing
the RMC balance. Amounts deferred in excess of $15 million, upon approval by the
PSC, are refunded to or recovered from ratepayers through the FCA mechanism over
a subsequent 12-month period, with the offset being recorded in other regulatory
amortization.
For the three and six months ended June 30, 1997, the Company has
- 15 -
<PAGE>
not refunded the deferred LRPP balance in excess of $15 million, related to the
rate year ended November 30, 1995, as the PSC has yet to grant the Company
permission to do so. For the three and six months ended June 30, 1996, the
Company recognized $15.9 million and $32.2 million, respectively, of non-cash
charges to income representing the amortization of the deferred LRPP balance for
the rate year ended November 30, 1994. For a further discussion of the LRPP, see
Note 3 of Notes to Financial Statements included in the Company's Annual Report
on Form 10-K/A filed June 30, 1997, for the Year Ended December 31, 1996.
Excess Earnings- Also recorded in other regulatory amortization, if applicable
are, non-cash charges representing: a) 100% of electric earnings generated by
the Company in excess of amounts provided for in electric rates, which is
returned to the electric ratepayer through a reduction to the RMC balance; and
b) 50% of the gas earnings generated by the Company in excess of amounts
provided for in gas rates, which is returned to the customer in the form of a
reduction in the amount due from gas ratepayers related to manufactured gas
plant site (MGP) clean-up costs and certain employee benefit expenses, in
accordance with PSC mandates. These excess earnings calculations are updated
quarterly to reflect the Company's best estimate of amounts that it may earn in
excess of a return on common equity of 11%, and as a result, non-cash charges or
credits may be recorded in the period.
For the three months ended June 30, 1997, the Company recorded non-cash charges
of approximately $8.7 million bringing the six month total of gas excess
earnings to $10.5 million, including $1.6 million related to the 1994, 1995 and
1996 rate years that were not previously recognized. The Company recognized
approximately $2.8 million of gas excess earnings for the three months ended
June 30, 1996, for a six month total at June 30, 1996, of approximately $5.2
million.
For the three months ended June 30, 1997, the Company recorded a non-cash credit
of approximately $5.6 million to adjust previously recorded electric excess
earnings. As a result, electric excess earnings for the six months ended June
30, 1997 totaled approximately $5.0 million. The Company did not earn any
electric excess earnings for either the three or six months ended June 30, 1996.
OPERATING TAXES
For the three and six months ended June 30, 1997, operating taxes decreased
compared to the same periods in the prior year as a result of lower revenue.
- 16 -
<PAGE>
FEDERAL INCOME TAX
For the three months and six months ended June 30, 1997, federal income tax
(FIT) expense increased as a result of an increase in pre-tax book income.
The current portion of FIT liability for the three months ended June 30, 1997
totaled $22.6 million, of which $11.1 million was Alternative Minimum Tax. The
FIT liability for the six months ended June 30, 1997 totaled $46.0 million, of
which $34.5 million was Alternative Minimum Tax. The increase in FIT liability
over the comparable periods last year is primarily attributable to the Company's
full utilization of the Alternative Minimum Tax Net Operating Loss during 1996.
OTHER INCOME AND DEDUCTIONS
Other income and deductions for the three and six months ended June 30, 1997,
decreased when compared to the same periods in 1996 as a result of the Company
recognizing less income associated with its fuel incentive program, due to the
increased cost of electric fuel. In addition, interest income from short term
investments was lower than the prior year due to lower cash balances.
INTEREST EXPENSE
Interest expense decreased for the three and six months ended June 30, 1997 when
compared to the same period of 1996 as a result of lower debt levels.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1997, the Company's cash and cash equivalents amounted to
approximately $54 million, compared to $65 million at March 31, 1997.
At June 30, 1997, March 31, 1997 and December 31, 1996, the Company's
capitalization ratios were as follows:
- --------------------------------------------------------------------------------
6/30/97 3/31/97 12/31/96
Amount Percent Amount Percent Amount Percent
- --------------------------------------------------------------------------------
(000's) % (000's) % (000's) %
- --------------------------------------------------------------------------------
Long-term debt $4,458 58.0 $4,458 57.8 $4,708 59.3
Preferred stock 703 9.1 703 9.1 703 8.9
Common shareowners'
equity 2,531 32.9 2,549 33.1 2,523 31.8
- --------------------------------------------------------------------------------
$7,692 100.0 $7,710 100.0 $7,934 100.0
================================================================================
The Company has no current plans to access the public markets for permanent
financing as cash from operations should be sufficient
- 17 -
<PAGE>
to meet operating requirements and debt maturities through 1998. The Company
however, would access the public securities market, should market conditions
prove favorable, to refinance existing debt or preferred stock, subject to any
restrictions contained in the agreements with Brooklyn Union or LIPA. The
Company would also take advantage of any tax-exempt financing made available by
the New York State Energy Research and Development Authority.
A $250 million line of credit, secured by a first lien upon the Company's
accounts receivable and fuel oil inventories, is available to the Company under
its Revolving Credit Agreement (RCA). The lending banks participating in the RCA
have agreed to extend their commitments through October 1, 1998. In February
1997, the Company utilized $30 million in interim financing under the RCA, which
was repaid in March 1997. In July 1997, the Company borrowed $40 million
pursuant to the RCA, which was repaid on August 7, 1997. The Company will, in
order to satisfy short-term cash requirements, continue to avail itself of such
interim financing through its RCA if necessary.
LIPA Transaction
In July 1997, the Company and the Brooklyn Union Gas Company formed a limited
partnership and each invested $30 million in order to purchase an interest rate
swap option instrument to protect LIPA against market risk associated with the
municipal bond financing contemplated by the LIPA Transaction agreements.
Upon the closing of the LIPA Transaction, each limited partner will receive from
LIPA $30 million plus interest thereon, based on each partners' average weighted
cost of capital. In the event that the LIPA transaction is not consummated, the
maximum potential loss to the Company is the amount originally invested. In the
event of a loss, the Company plans to defer the amount and petition the PSC to
allow recovery from the ratepayers.
- 18 -
<PAGE>
CAPITAL REQUIREMENTS AND CAPITAL PROVIDED
Capital requirements and capital provided for the three and six months ended
June 30, 1997 were as follows:
(In Millions of Dollars)
- --------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, 1997 June 30, 1997
- --------------------------------------------------------------------------------
CAPITAL REQUIREMENTS
Construction $ 69 $119
- --------------------------------------------------------------------------------
Redemptions and Dividends
Long-term debt - 250
Preferred stock dividends 13 26
Common stock dividends 54 108
- --------------------------------------------------------------------------------
Total Redemptions and Dividends 67 384
- --------------------------------------------------------------------------------
Shoreham post-settlement costs 12 24
- --------------------------------------------------------------------------------
Total Capital Requirements $148 $527
================================================================================
CAPITAL PROVIDED
Cash generation from operations $134 $293
Decrease in cash balances 11 226
Common stock issued 4 9
Other investing and financing
activities (1) (1)
- --------------------------------------------------------------------------------
Total Capital Provided $148 $527
================================================================================
For further information, see the Statement of Cash Flows.
Rate Matters
For a discussion of Rate Matters see, Note 3 of Notes to Financial Statements.
ACCOUNTING PRONOUNCEMENT
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share" (SFAS No. 128).
This statement supersedes APB Opinion No. 15, "Earnings per Share" and
simplifies the computation of earnings per share (EPS). SFAS No. 128 will be
effective for financial statements for both interim and annual periods ending
after December 15, 1997. The Company will adopt this statement March 31, 1998.
The adoption of SFAS 128 is not expected to have any impact on the Company's EPS
calculations.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This report contains 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. In this respect, the words
"estimate,"
- 19 -
<PAGE>
"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 proposed transactions with
Brooklyn Union and Long Island Power Authority, state and federal regulatory
rate proceedings, competition, and certain environmental matters each as
discussed herein, in the Company's Annual Report on Form 10-K/A, filed June 30,
1997, for the Year Ended December 31, 1996 or in other reports filed by the
Company with the Securities and Exchange Commission.
- 20 -
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Shareholders was held on August 7, 1997 (Annual
Meeting). 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:
IN FAVOR WITHHELD
-------- --------
William J. Catacosinos 104,373,735 2,004,424
John H. Talmage 104,564,755 1,813,404
Basil A. Paterson 104,436,584 1,888,575
George Bugliarello 104,436,584 1,941,575
George J. Sideris 104,536,484 1,814,675
A. James Barnes 104,606,012 1,772,147
Richard L. Schmalensee 104,567,530 1,810,629
Renso L. Caporali 104,564,969 1,813,190
Peter O. Crisp 104,474,835 1,903,324
Katherine D. Ortega 104,571,459 1,806,700
Vicki L. Fuller 104,601,593 1,776,566
James T. Flynn 104,573,020 1,805,139
The voting results of the other items that were approved by shareholders at the
Annual Meeting are as follows:
- 21 -
<PAGE>
1. Adoption of the Amended and Restated Agreement and Plan of
Exchange and Merger, dated as of June 26, 1997, between the
Brooklyn Union Gas Company and the Long Island Lighting
Company.
BROKER
FOR AGAINST ABSTAIN NON-VOTES
--- ------- ------- ---------
Common Shares 92,515,320 1,093,241 744,289 11,755,305
2. Adoption of the Agreement and Plan of Merger, dated as of June 26,
1997, between the Long Island Power Authority, LIPA Acquisition
Corp., and Long Island Lighting Company.
BROKER
FOR AGAINST ABSTAIN NON-VOTES
--- ------- ------- ---------
Common Shares 92,107,780 1,414,065 830,801 11,755,509
Preferred Shares:
Series CC, par $100 448,296 0 0 Not Applicable
Series AA, par $ 25 2,759,463 16,456 14,982 Not Applicable
Series GG, par $ 25 169,048 150 50 Not Applicable
Series UU, par $ 25 452,677 220 75 Not Applicable
Series QQ, par $ 25 710,530 646 22,130 Not Applicable
3. Ratification of the appointment of Ernst & Young LLP as independent
auditors for the period January 1, 1997 to March 31, 1998.
BROKER
FOR AGAINST ABSTAIN NON-VOTES
--- ------- ------- ---------
Common Shares 104,526,680 516,040 1,065,435 Not Applicable
4. Approval of the LILCO Annual Stock Incentive Plan.
BROKER
FOR AGAINST ABSTAIN NON-VOTES
--- ------- ------- ---------
Common Shares 97,030,196 6,396,441 2,681,516 Not Applicable
5. Approval of the LILCO Employee Stock Purchase Plan.
FOR AGAINST ABSTAIN
--- ------- -------
Common Shares 100,056,842 3,738,119 2,307,194
- 22 -
<PAGE>
6. Approval of an amendment to the Company's certificate
of incorporation to increase the total number of
authorized shares of of common stock.
FOR AGAINST ABSTAIN
--- ------- -------
Common Shares 96,256,646 4,864,511 1,977,998
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBIT 10
(1) Executive Employment Agreement by and between the Company and Jane
E. Fernandez dated as of November 21, 1994 which agreement is
substantially the same as Executive Employment Agreement by and
between the Company and certain officers dated as of November 21,
1994 (filed as an Exhibit to the Company's Form 10-K for the Year
Ended December 31, 1994).
(2) Indemnification Agreement by and between the Company and Jane E.
Fernandez dated as of September 19, 1994 which agreement is
substantially the same as Indemnification Agreement by and between
the Company and certain officers dated as of February 23, 1994
(filed as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1994).
(3) Executive Employment Agreement by and between the Company and Howard
A. Kosel dated as of April 1, 1997, which agreement is substantially
the same as Executive Employment Agreement by and between the
Company and certain officers dated as of November 21, 1994 (filed as
an Exhibit to the Company's Form 10-K for the Year Ended December
31, 1994).
(4) Indemnification Agreement by and between the Company and Howard A.
Kosel dated as of April 1, 1997, which agreement is substantially
the same as Indemnification Agreement by and between the Company and
certain officers dated as of February 23, 1994 (filed as an Exhibit
to the Company's Form 10-K for the Year Ended December 31, 1994).
*(5) Amendment by and between the Company and William J. Catacosinos
dated as of December 29, 1996, which amends the Executive Employment
Agreement by and between the Company and William J.
- 23 -
<PAGE>
Catacosinos dated as of January 30, 1984, as amended.
EXHIBIT 27
*(1) Financial Data Schedule UT for the three-month period ended June 30,
1997.
b. Reports on Form 8-K
(1) In its current report on Form 8-K dated April 11, 1997, the Company
reported that it changed its fiscal year-end to March 31.
(2) In its current report on Form 8-K dated June 26, 1997, the Company
reported that the Company, BL Holding Corp., Long Island Power
Authority and LIPA Acquisition Corp. executed an Agreement and Plan
of Merger dated as of June 26, 1997.
- ----------------------
* Filed herewith
- 24 -
<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 14, 1997
- 25 -
EXHIBIT 10
Amendment, dated December 29, 1996, to the Agreement dated January 30,
1984 between LONG ISLAND LIGHTING COMPANY, a New York Corporation (the
"Company") and WILLIAM J. CATACOSINOS (the "Executive").
WHEREAS, the Company and the Executive entered into an agreement on the
30th day of January 1984 with regard to the employment of the Executive (the
"Agreement");
WHEREAS, the Agreement has been previously amended from time to time;
WHEREAS, the Company and the Executive by this agreement wish to make
additional amendments to certain provisions of the Agreement regarding the Term
of the Agreement (the "Amendment");
NOW, THEREFORE, the Company and the Executive agree as follows:
1. Section 1(a) of the Agreement is amended to delete the following:
"For all purposes of this Agreement, "Original Term" shall mean and
include such First Renewal Term and such Second Renewal Term to the
extent the Original Term is extended as provided in the immediately
preceding sentence."
2. Section 1(a) of the Agreement is amended and restated by adding the
following paragraph to Subsection 1(a) as follows:
The Original Term shall be further extended for an additional period
beginning on February 1, 1997 and ending on January 31, 2002 (the
"Extension"), if, with respect to this further Extension, the
Executive notifies the Company after September 1, 1996 and before
January 15, 1997 of Executive's desire to further extend the
Original Term, and if the Company does not within fifteen (15) days
after receipt of such notice inform Executive that it does not wish
to extend the Original Term. For all purposes of this Agreement,
"Original Term" shall continue to mean and include the Renewal Term
and the Extension to the extent the Original Term is extended as
provided in this Section 1(a).
2. This Amendment shall become effective immediately.
3. Upon the effectiveness of this Amendment, any reference to the
Agreement in the Agreement and in any of the amendments thereto shall mean and
be a reference to the Agreement as amended by each of the amendments thereto.
4. Except as amended previously and by this amendment, the Agreement shall
remain in full force and effect and is in all respects ratified and confirmed.
<PAGE>
IN WITNESS WHEREOF, as of the date hereof, the Company has caused this
Amendment to be executed pursuant to authorization of the Board of Directors by
an officer in its name and for and on its behalf and the Executive has set his
hand.
LONG ISLAND LIGHTING COMPANY
Attest: By: /s/ Leonard P. Novello
---------------------------
Name: Leonard P. Novello
Title: General Counsel
Date: May 13, 1997
/s/ Kathleen A. Marion
- ------------------------
Secretary
(Corporate Seal)
/s/ William J. Catacosinos
--------------------------
WILLIAM J. CATACOSINOS
Cleft Road
Laurel Hill
Mill Neck, New York 11765
Date: May 13, 1997
<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> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> JUN-30-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 3,729,419
<OTHER-PROPERTY-AND-INVEST> 19,235
<TOTAL-CURRENT-ASSETS> 830,268
<TOTAL-DEFERRED-CHARGES> 81,133
<OTHER-ASSETS> 7,191,818
<TOTAL-ASSETS> 11,851,873
<COMMON> 605,923
<CAPITAL-SURPLUS-PAID-IN> 1,085,508
<RETAINED-EARNINGS> 840,034
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,531,465
638,500
63,584
<LONG-TERM-DEBT-NET> 4,371,675
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 101,000
1,050
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 4,144,599
<TOT-CAPITALIZATION-AND-LIAB> 11,851,873
<GROSS-OPERATING-REVENUE> 664,488
<INCOME-TAX-EXPENSE> 32,978
<OTHER-OPERATING-EXPENSES> 487,431
<TOTAL-OPERATING-EXPENSES> 520,409
<OPERATING-INCOME-LOSS> 144,079
<OTHER-INCOME-NET> 4,221
<INCOME-BEFORE-INTEREST-EXPEN> 148,300
<TOTAL-INTEREST-EXPENSE> 103,139
<NET-INCOME> 45,161
12,968
<EARNINGS-AVAILABLE-FOR-COMM> 32,193
<COMMON-STOCK-DIVIDENDS> 53,844
<TOTAL-INTEREST-ON-BONDS> 87,916
<CASH-FLOW-OPERATIONS> 133,684
<EPS-PRIMARY> $0.26
<EPS-DILUTED> $0.26
</TABLE>
