Securities and Exchange Commission
Washington, DC 20549
FORM 10-Q
(Mark One)
/X/ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1997
or
/ / Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File No. 1-3548
Minnesota Power & Light Company
A Minnesota Corporation
IRS Employer Identification No. 41-0418150
30 West Superior Street
Duluth, Minnesota 55802
Telephone - (218) 722-2641
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 and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Common Stock, no par value,
32,958,014 shares outstanding
as of April 30, 1997
<PAGE>
Minnesota Power & Light Company
Index
Page
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheet -
March 31, 1997 and December 31, 1996 1
Consolidated Statement of Income -
Quarter Ended March 31, 1997 and 1996 2
Consolidated Statement of Cash Flows -
Quarter Ended March 31, 1997 and 1996 3
Notes to Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
Part II. Other Information
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
<PAGE>
Definitions
The following abbreviations or acronyms are used in the text.
Abbreviation
or Acronym Term
- ------------------ -------------------------------------------------------
1996 Form 10-K Minnesota Power's Annual Report on Form 10-K for
the Year Ended December 31, 1996
ADESA ADESA Corporation
AFC Automotive Finance Corporation
BNI Coal BNI Coal, Ltd.
Common Stock Minnesota Power & Light Company's common stock
Company Minnesota Power & Light Company and its Subsidiaries
DOJ United States Department of Justice
DRIP Dividend Reinvestment and Stock Purchase Plan
EPA United States Environmental Protection Agency
ESOP Employee Stock Ownership Plan
FERC Federal Energy Regulatory Commission
Heater Heater Utilities, Inc.
ISI Instrumentation Services, Inc.
Florida Water Florida Water Services Corporation
FPSC Florida Public Service Commission
Lehigh Lehigh Acquisition Corporation
Minnesota Power Minnesota Power & Light Company and its Subsidiaries
MPUC Minnesota Public Utilities Commission
MW Megawatt(s)
NCUC North Carolina Utilities Commission
Palm Coast Palm Coast Holdings, Inc.
PSCW Public Service Commission of Wisconsin
SCPSC South Carolina Public Service Commission
Square Butte Square Butte Electric Cooperative
SWL&P Superior Water, Light and Power Company
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
Minnesota Power
Consolidated Balance Sheet
In Thousands
<CAPTION>
March 31, December 31,
1997 1996
Unaudited Audited
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Plant and Other Assets
Electric operations $ 792,239 $ 796,055
Water services 319,904 323,869
Automotive services 164,369 167,274
Investments 234,261 236,509
------------ ------------
Total plant and other assets 1,510,773 1,523,707
------------ ------------
Current Assets
Cash and cash equivalents 58,851 40,095
Trading securities 95,498 86,819
Trade accounts receivable (less reserve of
$8,250 and $6,568) 207,208 144,060
Notes and other accounts receivable 19,425 20,719
Fuel, material and supplies 23,796 23,221
Prepayments and other 15,493 17,195
------------ ------------
Total current assets 420,271 332,109
------------ ------------
Deferred Charges
Regulatory 78,401 83,496
Other 30,366 27,086
------------ ------------
Total deferred charges 108,767 110,582
------------ ------------
Intangible Assets
Goodwill 164,739 166,986
Other 11,984 12,665
------------ ------------
Total intangible assets 176,723 179,651
------------ ------------
Total Assets $ 2,216,534 $ 2,146,049
- -----------------------------------------------------------------------------------------------------------------
Capitalization and Liabilities
Capitalization
Common stock without par value, 65,000,000
shares authorized 32,934,958 and
32,758,310 shares outstanding $ 399,185 $ 394,187
Unearned ESOP shares (68,213) (69,124)
Net unrealized gain on securities investments 733 2,752
Cumulative translation adjustment 86 73
Retained earnings 282,787 282,960
------------ ------------
Total common stock equity 614,578 610,848
Cumulative preferred stock 11,492 11,492
Redeemable serial preferred stock 20,000 20,000
Company obligated mandatorily redeemable preferred
securities of subsidiary MP&L Capital I which
holds solely Company Junior Subordinated
Debentures 75,000 75,000
Long-term debt 683,834 694,423
------------ ------------
Total capitalization 1,404,904 1,411,763
------------ ------------
Current Liabilities
Accounts payable 106,535 72,787
Accrued taxes 61,551 48,813
Accrued interest and dividends 10,029 14,851
Notes payable 174,793 155,726
Long-term debt due within one year 25,178 7,208
Other 36,628 37,598
------------ ------------
Total current liabilities 414,714 336,983
------------ ------------
Deferred Credits
Accumulated deferred income taxes 148,875 148,931
Contributions in aid of construction 99,090 98,378
Regulatory 63,881 64,394
Other 85,070 85,600
------------ ------------
Total deferred credits 396,916 397,303
------------ ------------
Total Capitalization and Liabilities $ 2,216,534 $ 2,146,049
- -----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements.
</TABLE>
-1-
<PAGE>
Minnesota Power
Consolidated Statement of Income
In Thousands Except Per Share Amounts - Unaudited
Quarter Ended
March 31,
1997 1996
- ------------------------------------------------------------------------------
Operating Revenue and Income
Electric operations $ 131,457 $ 131,501
Water services 20,648 19,227
Automotive services 60,510 39,693
Investments 9,458 12,255
----------- -----------
Total operating revenue and income 222,073 202,676
----------- -----------
Operating Expenses
Fuel and purchased power 44,029 43,643
Operations 138,379 119,822
Interest expense 17,308 14,160
----------- -----------
Total operating expenses 199,716 177,625
----------- -----------
Income from Equity Investment 4,042 3,777
----------- -----------
Operating Income 26,399 28,828
Distributions on Redeemable
Preferred Securities of Subsidiary 1,509 201
Income Tax Expense 8,796 10,324
----------- -----------
Net Income 16,094 18,303
Dividends on Preferred Stock 487 800
----------- -----------
Earnings Available for Common Stock $ 15,607 $ 17,503
=========== ===========
Average Shares of Common Stock 30,223 28,786
Earnings Per Share of Common Stock $ .52 $ .61
Dividends Per Share of Common Stock $ .51 $ .51
- ------------------------------------------------------------------------------
The accompanying notes are an integral part of this statement.
-2-
<PAGE>
Minnesota Power
Consolidated Statement of Cash Flows
In Thousands - Unaudited
Quarter Ended
March 31,
1997 1996
- --------------------------------------------------------------------------------
Operating Activities
Net income $ 16,094 $18,303
Income from equity investment (4,042) (3,777)
Depreciation and amortization 17,961 16,216
Deferred income taxes (438) (742)
Deferred investment tax credits (493) (623)
Pre-tax gain on sale of plant (3,376) (1,073)
Changes in operating assets and liabilities
Trading securities (8,679) (5,948)
Notes and accounts receivable (59,378) (45,776)
Fuel, material and supplies (575) 3,584
Accounts payable 33,748 33,532
Other current assets and liabilities 8,648 24,279
Other - net 3,315 5,342
--------- --------
Cash from operating activities 2,785 43,317
--------- --------
Investing Activities
Proceeds from sale of investments in
securities 11,882 7,849
Proceeds from sale of plant 4,375 -
Additions to investments (7,809) (672)
Additions to plant (8,558) (25,427)
Changes to other assets - net 966 250
--------- --------
Cash from (for) investing activities 856 (18,000)
--------- --------
Financing Activities
Issuance of common stock 4,935 4,546
Issuance of long-term debt 76,000 77,108
Issuance of Company obligated mandatorily
redeemable preferred securities of
subsidiary MP&L Capital I - net - 72,638
Changes in notes payable - net 19,067 (53,821)
Reductions of long-term debt (68,620) (81,217)
Dividends on preferred and common stock (16,267) (15,878)
--------- --------
Cash from financing activities 15,115 3,376
--------- --------
Change in Cash and Cash Equivalents 18,756 28,693
Cash and Cash Equivalents at Beginning of Period 40,095 31,577
--------- --------
Cash and Cash Equivalents at End of Period $ 58,851 $ 60,270
========= ========
Supplemental Cash Flow Information
Cash paid during the period for
Interest (net of capitalized) $ 18,366 $ 17,781
Income taxes $ 2,362 $ 2,844
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of this statement.
-3-
<PAGE>
Notes to Consolidated Financial Statements
The accompanying unaudited consolidated financial statements and notes should be
read in conjunction with the Company's 1996 Form 10-K. In the opinion of the
Company, all adjustments necessary for a fair statement of the results for the
interim periods have been included. The results of operations for an interim
period may not give a true indication of results for the year.
Note 1. Business Segments
In Thousands
<TABLE>
<CAPTION>
Investments
------------------- Corporate
Electric Water Automotive Portfolio & Real Charges
Consolidated Operations Services Services Reinsurance Estate & Other
------------ ---------- -------- ---------- ----------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Quarter Ended March 31, 1997
Operating revenue and income $ 222,073 $ 131,457 $ 20,648 $ 60,510 $ 4,949 $ 4,831 $ (322)
Operation and other expense 164,447 94,872 14,046 47,856 537 3,844 3,292
Depreciation and amortization
expense 17,961 11,163 3,177 3,510 - 38 73
Interest expense 17,308 5,381 2,700 2,355 255 297 6,320
Income from equity investment 4,042 - - - 4,042 - -
---------- --------- --------- --------- --------- -------- -------
Operating income (loss) 26,399 20,041 725 6,789 8,199 652 (10,007)
Distributions on redeemable
preferred securities of
subsidiary 1,509 420 - - - - 1,089
Income tax expense (benefit) 8,796 7,399 314 3,589 2,891 317 (5,714)
---------- --------- --------- --------- --------- -------- -------
Net income (loss) $ 16,094 $ 12,222 $ 411 $ 3,200 $ 5,308 $ 335 $(5,382)
========== ========= ========= ========= ========= ======== =======
Total assets $2,216,534 $ 982,630 $ 342,832 $ 540,093 $ 263,746 $ 85,409 $ 1,824
Accumulated depreciation $ 670,881 $ 541,863 $ 121,214 $ 7,804 - - -
Accumulated amortization $ 10,512 - - $ 9,425 - $ 1,087 -
Construction work in progress $ 32,842 $ 11,447 $ 10,866 $ 10,529 - - -
Quarter Ended March 31, 1996
Operating revenue and income $ 202,676 $ 131,501 $ 19,227 $ 39,693 $ 3,869 $ 8,676 $ (290)
Operation and other expense 147,249 95,307 11,518 34,202 523 3,213 2,486
Depreciation and amortization
expense 16,216 10,499 3,137 2,550 - 30 -
Interest expense 14,160 5,598 3,287 1,291 1 2 3,981
Income from equity investment 3,777 - - - 3,777 - -
---------- --------- --------- --------- --------- -------- --------
Operating income (loss) 28,828 20,097 1,285 1,650 7,122 5,431 (6,757)
Distributions on redeemable
preferred securities of
subsidiary 201 77 - - - - 124
Income tax expense (benefit) 10,324 7,773 450 662 1,969 2,363 (2,893)
---------- --------- --------- --------- --------- -------- -------
Net income (loss) $ 18,303 $ 12,247 $ 835 $ 988 $ 5,153 $ 3,068 $(3,988)
========== ========= ========= ========= ========= ======== =======
Total assets $2,027,708 $ 990,018 $ 340,312 $ 429,604 $ 210,973 $ 55,225 $ 1,576
Accumulated depreciation $ 631,694 $ 518,311 $ 110,536 $ 2,847 - - -
Accumulated amortization $ 4,195 - - $ 3,398 - $ 797 -
Construction work in progress $ 55,491 $ 12,835 $ 14,880 $ 27,776 - - -
</TABLE>
-4-
<PAGE>
Note 2. Regulatory Matters
FPSC Refund Order in Connection with 1991 Rate Case. Responding to a Florida
Supreme Court decision addressing the issue of retroactive ratemaking with
respect to another company, in March 1996 the FPSC voted to reconsider an
October 1995 order (Refund Order) which would have required Florida Water to
refund about $13 million, which includes interest, to customers who paid more
since October 1993 under uniform rates than they would have paid under
stand-alone rates. Under the Refund Order, the collection through a surcharge of
the $13 million from customers who paid less under uniform rates was not
permitted. The Refund Order was in response to the Florida First District Court
of Appeals (Court of Appeals) reversal in April 1995 of the 1993 FPSC order
which imposed uniform rates for most of Florida Water's service areas in
Florida. With "uniform rates," all customers in the uniform rate areas pay the
same rates for water and wastewater services. Uniform rates are an alternative
to "stand-alone" rates which are calculated based on the cost of serving each
service area. The FPSC reconsidered the Refund Order, but in August 1996 upheld
by a 3 to 2 vote its decision to order refunds without offsetting surcharges.
Florida Water filed an appeal of this decision with the Court of Appeals. A
decision on the appeal is anticipated by the end of 1997. The Company continues
to believe that it is improper for the FPSC to order a refund to one group of
customers without permitting recovery of a similar amount from the remaining
customers since the Court of Appeals affirmed the Company's total revenue
requirement for operations in Florida. No provision for refund has been
recorded. The Company is unable to predict the outcome of this matter.
Florida Water's 1995 Rate Case. Florida Water requested an $18.1 million rate
increase in June 1995. On October 30, 1996 the FPSC issued its final order in
the Florida Water rate case. The final order established water and wastewater
rates for all customers of Florida Water regulated by the FPSC. The new rates,
which became effective on September 20, 1996, resulted in an annualized increase
in revenue of approximately $11.1 million. This increase included, and was not
in addition to, the $7.9 million increase in annualized revenue granted as
interim rates effective on January 23, 1996. The FPSC approved a new rate
structure called "capband," which replaces uniform rates. With capband rates,
areas with similar cost of service are grouped into one of a number of rate
bands, and all customers within a given band are charged the same rate. This
rate structure is designed so that a customer's bill will not exceed a certain
"cap" unless the customer's usage exceeds an assumed level. On November 1,
1996 Florida Water filed with the Court of Appeals an appeal of the FPSC's
final order seeking judicial review of issues relating to the amount of
investment in utility facilities recoverable in rates from current customers.
Other parties to the rate case also filed appeals with the Court of Appeals
regarding the FPSC's final order. The Company is unable to predict the
outcome of this matter. Florida law provides that the new rates be
implemented, subject to refund, while the order is under appeal.
Florida Jurisdictional Issues. In June 1995 the FPSC issued an order assuming
jurisdiction over Florida Water facilities statewide following an investigation
of all of Florida Water's facilities. Several counties in Florida appealed this
FPSC decision to the Court of Appeals. In December 1996 the Court of Appeals
issued an opinion reversing the FPSC order. In January 1997 the Court of Appeals
denied motions for rehearing. No further appeals were filed.
Hernando County Rates. On February 14, 1997 the FPSC issued an order which
requires Florida Water to charge rates to customers in Hernando County based on
a modified stand-alone rate structure instead of the uniform rate structure set
by the FPSC in the 1991 rate case and currently in effect. The imposition of
this rate structure would reduce Florida Water revenue by $1.6 million on a
prospective annual basis. On February 28, 1997 Florida Water filed a motion with
the FPSC for reconsideration of this order. Florida Water's February 28, 1997
request for reconsideration of this order was heard on May 6, 1997, at which
time the FPSC indicated the request would be denied. Florida Water plans on
appealing this denial when the written order is received. Since the order
involves a rate reduction, Florida Water believes that, under FPSC rules, the
FPSC must grant a stay of this rate reduction pending the outcome of any
appeals. The Company is unable to predict the outcome of this matter.
Since Hernando County has assumed jurisdiction over Florida Water's rates within
the county, Florida Water filed a rate increase in April 1997 as requested by
Hernando County. Final rates resulting in $8 million in annualized revenues for
water and wastewater services, if approved by Hernando County, would result in a
$124,000 net annual increase from current revenue levels. By law, the County
must take action by June 1997 on Florida Water's request for interim rates.
-5-
<PAGE>
Note 3. Square Butte Purchased Power Contract
The Company has a contract to purchase power and energy from Square Butte. Under
the terms of the contract which extends through 2007, the Company is purchasing
71 percent of the output from a generating plant which is capable of generating
up to 470 MW. Reductions to about 49 percent of the output are provided for in
the contract and, at the option of Square Butte, could begin after a five-year
advance notice to the Company.
The cost of the power and energy is a proportionate share of Square Butte's
fixed obligations and variable operating costs, based on the percentage of the
total output purchased by the Company. The annual fixed obligations of the
Company to Square Butte are $20.1 million from 1997 through 2001. The variable
operating costs are not incurred unless production takes place. The Company is
responsible for paying all costs and expenses of Square Butte if not paid by
Square Butte when due. These obligations and responsibilities of the Company are
absolute and unconditional whether or not any power is actually delivered to the
Company.
Note 4. Income Tax Expense
Quarter Ended
March 31,
Schedule of Income Tax Expense (Benefit) 1997 1996
- --------------------------------------------------------------------------------
In Thousands
Current tax
Federal $ 8,208 $ 8,859
Foreign (353) (101)
State 1,872 2,931
-------- ---------
9,727 11,689
-------- ---------
Deferred tax
Federal (149) (12)
State (289) (730)
-------- ---------
(438) (742)
-------- ---------
Deferred tax credits (493) (623)
-------- ---------
Total income tax expense $ 8,796 $ 10,324
- --------------------------------------------------------------------------------
-6-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Minnesota Power has operations in four business segments: (1) electric
operations, which include electric and gas services, and coal mining; (2) water
services, which include water and wastewater services; (3) automotive services,
which include auctions, a finance company and an auto transport company; and (4)
investments, which include a securities portfolio, a 21 percent equity
investment in a financial guaranty reinsurance company, and real estate
operations.
Earnings per share of common stock for the quarter ended March 31, 1997 were 52
cents compared to 61 cents for the quarter ended March 31, 1996. Earnings in
1997 reflect a significant increase in automotive services due to the expansion
of ADESA's automobile auction operations and AFC's dealer floor plan financing
business. 1997 earnings also reflect a solid performance from electric
operations, consistent performance by the portfolio and reinsurance part of the
investments segment, and a decrease in earnings from water services due to a
loss incurred by ISI. Corporate charges and other reflect increased debt service
costs due to the higher balance of commercial paper in 1997 and a full quarter
of distributions with respect to the Cumulative Quarterly Income Preferred
Securities issued in March 1996. Earnings in 1996 reflect a gain from the sale
of water assets and a significant gain from the sale of a real estate joint
venture interest by the real estate part of the investments segment.
Quarter Ended March 31,
Earnings Per Share 1997 1996
- -------------------------------------------------------------------------------
Electric Operations $ .40 $ .41
Water Services .01 .03
Automotive Services .11 .03
Investments
Portfolio and reinsurance .18 .18
Real estate .01 .11
----- -----
.19 .29
Corporate Charges and Other (.19) (.15)
----- -----
Total Earnings Per Share $ .52 $ .61
- -------------------------------------------------------------------------------
Consolidated Financial Comparison of the Quarters Ended March 31, 1997 and 1996.
Operating Revenue and Income. Electric operations operating revenue and income
was down slightly compared to 1996 due to a 2 percent decrease in total
kilowatthour sales. The decrease is attributed to a decline in sales to other
power suppliers due to the fact that less power was available for resale. The
decrease was partially offset by an increase in sales to large power taconite
and paper customers because of more favorable winter weather conditions allowing
higher production of taconite pellets compared to 1996 and an increased demand
for paper.
Water services operating revenue and income was 7 percent higher in 1997
primarily because of increased rates approved by the FPSC in September 1996. A
$1.1 million pre-tax gain from the sale of water assets was included in 1996.
Automotive Services. The addition of eight automobile auction sites during 1996
was the primary factor that contributed to the 52 percent increase in automotive
services operating revenue and income and the 29 percent increase in the number
of cars sold. The expansion of AFC's dealer financing business also contributed
to higher operating revenue and income.
Investments operating revenue and income was lower in 1997 because 1996 included
$3.7 million from the sale of Lehigh's joint venture investment in a resort and
golf course.
-7-
<PAGE>
Operations expenses were $18.6 million higher in 1997. The increase reflects
$8.7 million of expenses from the eight automobile auction sites added by ADESA
in 1996. The expansion of AFC, and the 1996 additions of ISI and Palm Coast,
increased operations expense $4.9 million in 1997.
Interest expense was higher in 1997 due primarily to a higher balance of
commercial paper used to fund the expansion of automotive services.
Distributions on redeemable preferred securities of subsidiary are higher in
1997 because the securities were outstanding for the entire quarter in 1997
compared to less than one month in 1996.
Business Segment Comparison of the Quarters Ended March 31, 1997 and 1996.
Electric Operations. Operating revenue and income from electric operations was
down slightly compared to 1996 due to a 2 percent decrease in total kilowatthour
sales. The decrease is attributed to a decline in sales to other power suppliers
due to the fact that less power was available for resale. The decrease was
partially offset by an increase in sales to large power taconite and paper
customers because of more favorable winter weather conditions allowing higher
production of taconite pellets compared to 1996 and an increased demand for
paper.
Revenue from electric sales to taconite customers accounted for 32 percent of
electric operating revenue in 1997 compared to 31 percent in 1996. Electric
sales to paper and other wood-products companies accounted for 12 percent of
electric operating revenue in 1997 and 11 percent in 1996. Sales to other power
suppliers accounted for 3 percent of electric operating revenue in 1997 compared
to 5 percent in 1996.
Water Services. Operating revenue and income from water services was higher in
1997 primarily because of increased rates approved by the FPSC in 1996 for
Florida Water customers. The increase was offset by less revenue following the
sale of two water systems by Heater in 1996. The first quarter of 1996 included
a $1.1 million pre-tax gain on the sale of one water system in South Carolina.
ISI, which was acquired in April 1996, increased revenue by $1.0 million and
operating expenses by $1.6 million in 1997.
Automotive Services. The addition of eight automobile auction sites during 1996
was the primary factor that contributed to the 52 percent increase in operating
revenue and income and the 29 percent increase in the number of cars sold. The
expansion of AFC's dealer financing business also contributed to higher
operating revenue and income. The eight additional automobile auction sites
increased operating expenses by $8.7 million in 1997.
Investments.
- Securities Portfolio and Reinsurance. The Company's securities portfolio
and reinsurance earned an annualized after tax return of 10.1 percent in
1997 compared to 9.2 percent in 1996.
- Real Estate Operations. Revenue was down in 1997 as a result of
fluctuations in sales from quarter to quarter. Revenue in 1996 included
$3.7 million from the sale of Lehigh's joint venture investment in a resort
and golf course. Also, the April 1996 acquisition of Palm Coast increased
1997 operating expenses by $1.3 million.
-8-
<PAGE>
Liquidity and Financial Position
Reference is made to the Consolidated Statement of Cash Flows for the three
months ended March 31, 1997 and 1996, for purposes of the following discussion.
Cash Flow Activities. Cash from operating activities was affected by a number of
factors representative of normal operations.
Working capital, if and when needed, generally is provided by the sale of
commercial paper. In addition, securities investments can be liquidated to
provide funds for reinvestment in existing businesses or acquisition of new
businesses, and approximately 4 million original issue shares of common stock
are available for issuance through the DRIP.
On May 1, 1997 AFC sold an additional $25 million of receivables to a third
party purchaser, in total $75 million. Under the terms of the five year
agreement, the purchaser agrees to make reinvestments up to $100 million to the
extent that such reinvestments are supported by eligible receivables. Proceeds
from the sale of the receivables were used to repay borrowings from the Company.
Capital Requirements. Consolidated capital expenditures for the three months
ended March 31, 1997 totaled $15.1 million. These expenditures include $7.7
million for electric operations, $5.7 million for water services and $1.7
million for automotive services. Internally generated funds were the primary
source for funding electric and water operation expenditures. ADESA issued
long-term debt to finance its capital expenditures.
New Accounting Standard. In February 1997 the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 128 (SFAS 128),
"Earnings per Share," effective for financial statements for both interim and
annual periods ending after December 15, 1997. Earlier application is not
permitted. SFAS 128 specifies the computation, presentation and disclosure
requirements for earnings per share (EPS). The objective of the new standard is
to simplify the computation of EPS and make the U.S. standard for this
computation more compatible with the EPS standards of other countries and with
that of the International Accounting Standards Committee. The adoption of SFAS
128 is expected to be immaterial to the Company's results of operations.
-9-
<PAGE>
PART II. OTHER INFORMATION
Item 5. Other Information
Reference is made to the Company's 1996 Form 10-K for background information on
the following updates. Unless otherwise indicated, cited references are to the
Company's 1996 Form 10-K.
Ref. Page 4. - Table - Contract Status for Minnesota Power Large Power Customers
On May 2, 1997 the MPUC approved a new Large Power contract with Inland Steel
Mining Co. (Inland). The agreement provides for Minnesota Power to remain
Inland's sole electric supplier through December 31, 2007.
Ref. Page 8. - Fifth Paragraph
On March 14, 1997 the Public Service Commission of Wisconsin approved SWL&P's
request to serve potential natural gas customers in the Solon Springs and
Bennett, Wisconsin areas. The project is expected to cost $1.5 million and will
be funded in part through a surcharge to new customers in the expansion area
over a five-year period.
Ref. Page 14. - Second Paragraph
Since Hernando County has assumed jurisdiction over Florida Water's rates within
the county, Florida Water filed a rate increase in April 1997 as requested by
Hernando County. Final rates resulting in $8 million in annualized revenues for
water and wastewater services, if approved by Hernando County, would result in a
$124,000 net annual increase from current revenue levels. By law, the County
must take action by June 1997 on Florida Water's request for interim rates.
Ref. Page 15. - Sixth Paragraph
On April 14, 1997 the DOJ, on behalf of the EPA, served Florida Water with a
complaint in a civil action in the U.S. District Court for the Middle District
of Florida (District Court). The suit seeks civil penalties of not to exceed
$25,000 per day for each alleged violation of effluent limitations in the
National Pollutant Discharge Elimination System permits occurring at the
University Shores and Seaboard wastewater facilities from February 1992 through
March 1994. Florida Water timely filed with the District Court the answer to the
complaint on May 5, 1997.
Ref. Page 16. - Fourth Paragraph
On March 31, 1997 ADESA signed a letter agreement to participate in a joint
venture to open a new automobile auction in Sacramento, California. The
Sacramento site is on 37 acres with five auction lanes. On March 31, 1997 ADESA
sold its Sarasota/Bradenton auction facilities in Florida in favor of
emphasizing its Jacksonville and South Florida auctions.
-10-
<PAGE>
-------------------------------------
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 (Reform Act), the Company is hereby filing
cautionary statements identifying important factors that could cause the
Company's actual results to differ materially from those projected in
forward-looking statements (as such term is defined in the Reform Act) made by
or on behalf of the Company in this quarterly report on Form 10-Q, in
presentations, in response to questions or otherwise. Any statements that
express, or involve discussions as to expectations, beliefs, plans, objectives,
assumptions or future events or performance (often, but not always, through the
use of words or phrases such as "anticipates", "estimates", "expects",
"intends", "plans", "predicts", "projects", "will likely result", "will
continue", or similar expressions) are not statements of historical facts and
may be forward-looking.
Forward-looking statements involve estimates, assumptions, and uncertainties and
are qualified in their entirety by reference to, and are accompanied by, the
following important factors, which are difficult to predict, contain
uncertainties, are beyond the control of the Company and may cause actual
results to differ materially from those contained in forward-looking statements:
(i) prevailing governmental policies and regulatory actions, including those of
the FERC, the MPUC, the FPSC, the NCUC, the SCPSC and the PSCW, with respect to
allowed rates of return, industry and rate structure, acquisition and disposal
of assets and facilities, operation, and construction of plant facilities,
recovery of purchased power, and present or prospective wholesale and retail
competition (including but not limited to retail wheeling and transmission
costs); (ii) economic and geographic factors including political and economic
risks; (iii) changes in and compliance with environmental and safety laws and
policies; (iv) weather conditions; (v) population growth rates and demographic
patterns; (vi) competition for retail and wholesale customers; (vii) pricing and
transportation of commodities; (viii) market demand, including structural market
changes; (ix) changes in tax rates or policies or in rates of inflation; (x)
changes in project costs; (xi) unanticipated changes in operating expenses and
capital expenditures; (xii) capital market conditions; (xiii) competition for
new energy development opportunities; and (xiv) legal and administrative
proceedings (whether civil or criminal) and settlements that influence the
business and profitability of the Company.
Any forward-looking statements speaks only as of the date on which such
statement is made, and the Company undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which such statement is made or to reflect the occurrence of unanticipated
events. New factors emerge from time to time and it is not possible for
management to predict all of such factors, nor can it assess the impact of any
such factor on the business or the extent to which any factor, or combination of
factors, may cause results to differ materially from those contained in any
forward-looking statement.
-------------------------------------
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4 Second Supplemental Indenture, dated as of March 31, 1997,
between Southern States Utilities, Inc.(now Florida Water
Services Corporation) and Nationsbank of Georgia, National
Association (now SunTrust Bank, Central Florida, N.A.), as
Trustee.
27 Financial Data Schedule
(b) Reports on Form 8-K.
Report on Form 8-K dated and filed March 19, 1997 with respect to Item 7.
Financial Statements and Exhibits.
-11-
<PAGE>
Signatures
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.
Minnesota Power & Light Company
-------------------------------
(Registrant)
May 9, 1997 D. G. Gartzke
-------------------------------
D. G. Gartzke
Senior Vice President - Finance
and Chief Financial Officer
May 9, 1997 Mark A. Schober
-------------------------------
Mark A. Schober
Controller
-12-
[DESCRIPTION] Exhibit 4
<PAGE>
Prepared by and Return to:
Gregory W. Glass
Sobering, White & Luczak, P.A.
201 South Orange Ave., Ste. 1000
Orlando, FL 32801
- --------------------------------------------------------------------------------
FLORIDA WATER SERVICES CORPORATION,
formerly known as Southern States Utilities, Inc.
to
SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION,
Successor to NationsBank of Georgia, National
Association, as Trustee under Indenture dated as
of March 1, 1993.
-------------------------------
SECOND SUPPLEMENTAL INDENTURE
Relating to up to $10,000,000 Principal Amount
of First Mortgage Bonds, 8.137% Series
due July 31, 2022
-------------------------------
Dated as of March 31, 1997
- --------------------------------------------------------------------------------
<PAGE>
SECOND SUPPLEMENTAL INDENTURE
THIS SECOND SUPPLEMENTAL INDENTURE (the "Second Supplemental
Indenture") is made and entered into as of the 31st day of March, 1997 by and
between (i) FLORIDA WATER SERVICES CORPORATION, a Florida corporation, formerly
known as Southern States Utilities, Inc. (hereinafter called the "Company") and
(ii) SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, successor to
NationsBank of Georgia, National Association, as Trustee (the "Trustee").
WHEREAS, the Company has executed and delivered that certain Indenture
dated as of March 1, 1993 (the "Original Indenture") to Nationsbank of Georgia,
National Association, a national banking association (the "Original Trustee") to
secure the payment of Securities issued or to be issued under and in accordance
with the provisions thereof, which Indenture was recorded in multiple Florida
Counties, all as set forth on Composite Exhibit A attached hereto and made a
part hereof,
WHEREAS, pursuant to the terms of Section 1701 of the Original
Indenture, the Company and the Original Trustee entered into that certain First
Supplemental Indenture (the "First Supplemental Indenture") dated as of March 1,
1993, recorded as set forth on Composite Exhibit A, relating to those certain
First Mortgage Bonds Variable Rate Series Due December 31, 1993 (the "Securities
of the First Series") and those certain First Mortgage Bonds 8.73% Series due
January 31, 2013 (the "Securities of the Second Series"). The Original
Indenture, as supplemented by the First Supplemental Indenture, is hereinafter
referred to as the "Supplemented Indenture"; the Supplemented Indenture, as
further supplemented by this Second Supplemental Indenture, is hereinafter
referred to as the "Indenture";
WHEREAS, the Securities of the First Series have been fully retired and
the Securities of the Second Series in the aggregate principal amount of
Forty-Five Million Dollars ($45,000,000.00) are owned and held by CoBank, ACB,
formerly known as National Bank for Cooperatives ("CoBank");
WHEREAS, pursuant to that certain Agreement of Resignation, Appointment
and Acceptance dated December 4, 1995, among the Company, the Original Trustee
and The Bank of New York (the "Intermediate Trustee"), the Intermediate Trustee
succeeded to all of the rights, duties and obligations of the Original Trustee
under the Indenture;
WHEREAS, pursuant to that certain Agreement of Resignation, Appointment
and Acceptance dated March 31, 1996, among the Company, the Intermediate Trustee
and the Trustee, the Trustee succeeded to all of the rights, duties and
obligations of the Intermediate Trustee under the Indenture;
WHEREAS, Section 1701 of the Original Indenture provides that the
Company and the Trustee, at any time and from time to time, may enter into one
or more indentures supplemental to the Original Indenture, for various purposes
including to correct or amplify the description of any property at any time
subject to the Lien of the Indenture, to subject to the Lien of the Indenture
any additional property, to add one or more covenants of the Company and to
establish the terms of Securities of any series as contemplated by Section 201
of the Original Indenture;
WHEREAS, the Company now desires to correct the description of certain
property subject to the Lien of the Indenture, to subject certain additional
property to the Lien of the Indenture, to create a third series of Securities
and to add to the covenants contained in the Supplemented Indenture to be
observed by the Company;
WHEREAS, the execution and delivery by the Company of this Second
Supplemental Indenture, and the terms of the third series of Securities, have
been duly authorized by the Company as provided in the Supplemented Indenture;
-1-
<PAGE>
WHEREAS, Section 1702 of the Original Indenture provides that the
Company and the Trustee may, with the consent of the Holders of not less than a
majority in aggregate principal amount of the Outstanding Securities of any
series so affected, amend or modify any of the covenants or other provisions
contained in the Supplemented Indenture;
WHEREAS, the amendments and modifications to the Supplemented Indenture as
set forth in this Second Supplemental Indenture have been consented to by the
Holder of a majority in aggregate principal amount of the Securities of the
Second Series, as evidenced by a consent attached to this Second Supplemental
Indenture;
NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH, that, in
consideration of the premises and of Ten Dollars ($10) to it duly paid by the
Trustee at or before the ensealing and delivery of this Second Supplemental
Indenture, the receipt whereof is hereby acknowledged, and to secure the payment
of the principal of and interest on the Securities and the performance of the
covenants in the Indenture and herein contained and to declare the terms and
conditions on which the Securities are secured, and in consideration of the
premises and of the purchase of the Securities by the Holder thereof, the
Company by these presents does grant, bargain, sell, alien, remise, release,
convey, assign, transfer, mortgage, hypothecate, pledge, set over and confirm to
the Trustee, and grant a security interest in, all of the Trust Estate, and
including those parcels of the land described on Exhibit B attached hereto and
made a part hereof, together with all of the buildings, improvements, plants,
systems, works, structures, water, sewer and other property, pipelines,
conduits, meters, machinery, materials, supplies, implements, stations,
substations, equipment, instruments, house and structure connections and all
other appliances, apparatus, fixtures, fittings and equipment of every nature
and kind whatsoever, pertaining to or useful in the operation of the Company's
utility business, which is placed upon or used in connection with such real
property.
TO HAVE AND TO HOLD all said Trust Estate unto the Trustee and its
successors and assigns forever.
SUBJECT, HOWEVER, to Permitted Liens and, to the extent permitted by
Section 704 of the Original Indenture, as to property hereafter acquired, Prior
Liens existing on the date of acquisition or purchase money mortgages.
BUT IN TRUST, NEVERTHELESS, for the same purposes and upon the same
terms, trusts and conditions and subject to and with the same provisos and
covenants as are set forth in the Supplemented Indenture, this Second
Supplemental Indenture being supplemental thereto.
AND IT IS HEREBY COVENANTED by the Company that all terms, conditions,
provisos, covenants and provisions contained in the Supplemented Indenture shall
affect and apply to the Trust Estate and to the estate, rights, obligations and
duties of the Company and the Trustee and the beneficiaries of the trust with
respect to said property, and to the Trustee and its successors as Trustee of
said property in the same manner and with the same effect as if said property
had been owned by the Company at the time of the execution of the Indenture, and
had been specifically and at length described in and conveyed to said Trustee,
by the Indenture as a part of the property therein stated to be conveyed.
The Company further covenants and agrees to and with the Trustee,
and its successors in said trust under the Indenture, as follows:
-2-
<PAGE>
ARTICLE FIRST
Amendment to Indenture
SECTION 1.01. Confirmation of Waivers.
The requirements of Section 3.09(B) of the First Supplemental
Indenture, pertaining to the Marco Island System Assets, have been waived with
the consent of CoBank, as Holder of all of the Securities Outstanding under the
Indenture, and such Marco Island System Assets shall continue to constitute
Excepted Property, as set forth in paragraph K of the Excepted Property Clause
contained in the Original Indenture.
SECTION 1.02. Correction of Legal Descriptions - Original Indenture.
Exhibit A attached to and incorporated into the Original Indenture is
hereby corrected and revised as set forth on Exhibit C attached hereto and made
a part hereof; provided, however, attachment of such revised Exhibit A is
intended only to correct certain typographical errors contained in the original
Exhibit A attached to the Original Indenture and is not intended to impair the
operation or effect of any previously granted partial release with respect to
any property identified or referred to therein.
SECTION 1.03. Amendments to Original Indenture and First Supplemental Indenture.
(A) All references in the First Supplemental Indenture, including,
without limitation, the reference in Section 2.61 thereof, to "8.73%" are
hereby amended to read "8.53%."
(B) The references in Section 2.02(B) of the First Supplemental
Indenture to "March 31, 1996" is hereby amended to read "July 31, 2000."
(C) Paragraphs J and L of the Excepted Property Clause of the Original
Indenture are hereby deleted in their entireties.
(D) With the exception of the amendments to the First Supplemental
Indenture and the Original Indenture as expressly set forth in this Second
Supplemental Indenture, the Company hereby confirms that the First Supplemental
Indenture and the Original Indenture remain in full force and effect, and that
there has been no novation of, and that the execution and delivery of this
Second Supplemental Indenture shall not constitute a novation of, the
indebtedness evidenced by the Securities of the Second Series.
ARTICLE SECOND
Securities of the Third Series
SECTION 2.01. Description of Series.
There shall be a series of Securities designated '8.137% Series due
July 31, 2022" (herein sometimes referred to as the "Securities of the Third
Series"), each of which shall also bear the descriptive title "First Mortgage
Bond", and the form thereof, which shall be established in an Officer's
Certificate as provided in the Indenture, shall contain suitable provisions with
respect to the matters hereinafter in this Article specified. The aggregate
principal amount of Securities of the Third Series which may be authenticated
and delivered under the Indenture is limited to Ten Million Dollars
($10,000,000.00), except as provided in Sections 205 and 206
-3-
<PAGE>
of the Original Indenture. Securities of the Third Series shall mature on July
31, 2022 and shall be issued as fully registered Securities in denominations of
One Thousand Dollars and, at the option of the Company, in any integral multiple
or multiples thereof (the exercise of such option to be evidenced by the
execution and delivery thereof); they shall bear interest at the rate of 8.137%
per annum, payable on July 3 1, 1997 for the period from March 31, 1997 to July
31, 1997, and semi-annually on January 31 and July 31 of each year thereafter
until Maturity; the principal of, premium, if any, and interest on each said
Security to be payable at the office or agency of the Company in Apopka,
Florida, in such coin or currency of the United States of America as at the time
of payment is legal tender for public and private debts. Securities of the Third
Series shall be dated as in the Indenture provided. Interest on the Securities
of the Third Series shall be computed on the actual number of days elapsed on
the basis of a year consisting of 360 days. If the Company shall default in the
payment of the principal of, or premium or interest on, any Security of the
Third Series, the Company shall pay to the Holder of such Security such overdue
principal, premium or interest, together with interest on such overdue principal
and (to the extent permitted by law) on such overdue premium or interest at the
rate borne by such Security immediately prior to such default plus two per
centum (2%) per annum.
The Regular Record Date referred to in Section 207 of the Indenture for
the payment of the interest on the Securities of the Third Series payable on any
Interest Payment Date shall be the first Business Day next preceding such
Interest Payment Date.
The Company shall be exempt from filing the Cash Flow Certificate
provided in Section 301(d) of the Original Indenture with respect to the
issuance of Securities of the Third Series.
SECTION 2.02. Optional Redemption of Securities of the Third Series.
(I) Securities of the Third Series shall be redeemable on any Business
Day, at the option of the Company, in whole or in part in accordance with
Section 903 of the Original Indenture from time to time, prior to maturity, upon
notice delivered to each Holder at its last address appearing on the Security
Register not less than one Business Day prior to the date fixed for redemption,
at a Redemption Price ("Third Series General Redemption Price") (expressed as a
percentage of the principal amount of the Securities to be redeemed) equal to
the sum of (i) one hundred per centum (100%) plus (ii) a "Third Series
Prepayment Surcharge" calculated as hereinafter provided, in each case together
with accrued interest to the date fixed for redemption. For purposes of
calculating the Third Series General Redemption Price, the Third Series
Prepayment Surcharge shall be calculated as follows:
(A) Determine the difference between: (1) eight and 137/1000 per
centum (8.137%) minus (2) the Discount Rate, as hereinafter
defined, as of the Redemption Date.
(B) Add one half (1/2) of one per centum (1%) to such difference
(such that the minimum result shall at all times be 1/2 of 1%
if the redemption occurs prior to July 31, 2000; thereafter,
no amount shall be added in this step (B) provided that, in any
event, the minimum result shall be at least zero).
(C) Divide the result determined in (B) above by 2.
(D) For each semi-annual period or portion thereof during which
the principal amount redeemed was scheduled to have been
Outstanding, multiply the amount described in (C) above by the
portion of the principal amount redeemed that was scheduled to
have been Outstanding on the last day of such semi-annual
period (such that there is a calculation for each semi-annual
-4-
<PAGE>
period during which the principal amount redeemed was scheduled
to have been Outstanding).
(E) Determine the present value of each semi-annual calculation
made under (D) above based upon the scheduled time that interest
on the principal amount redeemed would have been payable and
the Discount Rate as of the Redemption Date.
(F) Add all of the calculations made under (E) above. The result
shall be the Third Series Prepayment Surcharge.
Unless otherwise agreed with a majority of the Holders of the
Securities of the Third Series to be Outstanding after a redemption under this
Section, the Securities redeemed under this Section may not be used as a credit
for the redemption of Securities provided for in Section 2.03 of this Second
Supplemental Indenture.
(II) A notice containing the calculation of the Third Series General
Redemption Price shall be prepared by the Company and delivered to the Trustee
and the Holders of the Securities of the Third Series to be redeemed on the
Business Day next preceding the Redemption Date. The calculation set forth in
such notice shall be final unless the Holders of the Securities so redeemed
notify the Company and the Trustee of an error in such calculations within 30
days after notice of such calculation. If it is determined that the Company has
made an error in such calculation and the Company pays the difference to such
Holders promptly after such determination, then the Company shall not be deemed
to be in default under the Indenture by reason of late payment of such
difference.
(III) As pertains to Securities of the Third Series, the "Discount
Rate" shall mean an interest rate determined by adding to the yield on treasury
bonds having maturities equal to the weighted average life to maturity of the
Securities to be redeemed, determined as necessary by interpolation of treasury
bonds having the next longer and next shorter maturities ("Treasury Yield"), as
reported on the "MMKS" Reuters monitor screen for the Business Day prior to
the Redemption Date for such Securities, the following:
(A) the estimated spread of Farm Credit Securities over the
Treasury Yield for such day, as reported in a Farm Credit Funding
Corporation Interest Rate Summary report, and
(B) the estimated dealer concession, obtained by a polling of
Farm Credit Funding Corporation dealers on the Business Day next
preceding the Redemption Date, for issuing Farm Credit Securities
having a weighted average life equal to the number of days
between the Redemption Date and Maturity for Securities of the
Third Series to be redeemed.
In the event any fact required for such calculation is not available, the
computation of Discount Rate shall be made on the basis of a reasonably
equivalent method of determination.
SECTION 2.03. Sinking Fund for Securities of the Third Series.
So long as any Securities of the Third Series shall remain Outstanding,
the Company shall redeem the principal thereof in accordance with the following
schedule, commencing on July 31, 1997 and semi-annually on or before each
January 31 and July 31 thereafter, through and including July 31, 2022:
July 31, 1997 $ 61,241.65 January 31, 1998 $ 63,733.27
July 31, 1998 $ 66,326.25 January 31, 1999 $ 69,024.74
-5-
<PAGE>
July 31, 1999 $ 71,833.01 January 31, 2000 $ 74,755.54
July 31, 2000 $ 77,796.96 January 31, 2001 $ 80,962.13
July 31, 2001 $ 84,256.08 January 31, 2002 $ 87,684.04
July 31, 2002 $ 91,251.46 January 31, 2003 $ 94,964.03
July 31, 2003 $ 98,827.64 January 31, 2004 $102,848.44
July 31, 2004 $107,032.83 January 31, 2005 $111,387.46
July 31, 2005 $115,919.26 January 31, 2006 $120,635.44
July 31, 2006 $125,543.49 January 31, 2007 $130,651.23
July 31, 2007 $135,966.77 January 31, 2008 $141,498.58
July 31, 2008 $147,255.45 January 31, 2009 $153,246.54
July 31, 2009 $159,481.37 January 31, 2010 $165,969.87
July 31, 2010 $172,722.36 January 31, 2011 $179,749.56
July 31, 2011 $187,062.68 January 31, 2012 $194,673.32
July 31, 2012 $202,593.60 January 31, 2013 $210,836.13
July 31, 2013 $219,433.99 January 31, 2014 $228,340.85
July 31, 2014 $237,630.90 January 31, 2015 $247,298.91
July 31, 2015 $257,360.27 January 31, 2016 $267,830.97
July 31, 2016 $278,727.67 January 31, 2017 $290,067.71
July 31, 2017 $301,869.11 January 31, 2018 $314,150.66
July 31, 2018 $326,931.88 January 31, 2019 $340,233.10
July 31, 2019 $354,075.49 January 31, 2020 $368,481.05
July 31, 2020 $383,472.70 January 31, 2021 $399,074.28
July 31, 2021 $415,310.62 January 31, 2022 $432,207.53
July 31, 2022 $449,791.13
ARTICLE THIRD
Additional Covenants for Third Series
SECTION 3.01. Asset Sale Restrictions for the Third Series.
(A) So long as any Securities of the Third Series remain Outstanding,
if the Company requests the release of Property Additions pursuant to Section
1003 or 1004 of the Original Indenture (other than for purposes of sales of
property pursuant to or under threat, reasonably believed by the Company to be
genuine, of the exercise of a power of eminent domain or for tax exempt
financing pursuant to Section 1009 of the Original Indenture), the Officer's
Certificate filed in connection with such release shall identify the Property
Additions that are to be so released.
(B) So long as any Securities of the Third Series remain Outstanding,
if the aggregate amount of Property Additions released upon such basis during
any calendar year shall exceed ten per centum (10%) of the amount of Net
Property Additions shown in the most recent Property Additions Certificate filed
with the Trustee, then the Company shall promptly notify the Trustee and, if
there is only one Holder of Securities of such Series, such Holder; and the
Company shall within forty-five days thereafter redeem or have otherwise retired
(other than pursuant to Section 2.03 of this Second Supplemental Indenture),
except to the extent waived by the Holder, an aggregate principal amount of
Securities of such Series equal to a pro rata portion of the amount of such
excess, such pro rata portion to be based upon the ratio of (a) the then
Outstanding aggregate principal amount of Securities of the Third Series, to (b)
the then Outstanding aggregate principal amounts of
-6-
<PAGE>
Securities of the Second Series and of the Third Series; provided however, that
to the extent the Holders of the Securities of the Second Series waive any right
of redemption under Section 4.01(B) of this Second Supplemental Indenture as
provided in Section 4.01(D) hereof, an additional principal amount of Securities
of the Third Series, in an amount equal to the amount waived by the Holders of
the Securities of the Second Series, shall be redeemed as provided in this
Section 3.01(B), except to the extent waived by the Holders of the Securities of
the Third Series.
(C) So long as any Securities of the Third Series remain Outstanding,
if the aggregate amount of Property Additions released since March 1, 1993 upon
such basis shall exceed twenty five per centum (25%) of the amount of Net
Property Additions shown in the most recent Property Additions Certificate filed
with the Trustee, then the Company shall promptly notify the Trustee and, if
there is only one Holder of Securities of such Series, such Holder; and the
Company shall within forty-five days thereafter redeem or have other-wise
retired (other than pursuant to Section 2.03 of this Second Supplemental
Indenture), except to the extent waived, an aggregate principal amount of
Securities of such Series equal to a pro rata portion of the amount of such
excess, such pro rata portion to be based upon the ratio of (a) the then
Outstanding aggregate principal amount of Securities of the Third Series, to (b)
the then Outstanding aggregate principal amounts of Securities of the Second
Series and of the Third Series; provided, however, that to the extent the
Holders of the Securities of the Second Series waive any right of redemption
under Section 4.01(C) of this Second Supplemental Indenture as provided in
Section 4.01(D) hereof, an additional principal amount of Securities of the
Third Series, in an amount equal to the amount waived by the Holders of the
Securities of the Second Series, shall be redeemed as provided in this Section
3.01(C), except to the extent waived by the Holders of the Securities of the
Third Series.
(D) With respect to the redemptions described in paragraphs (B) and (C)
above, the Company shall receive a credit for any Securities of the Third Series
(excluding Securities redeemed pursuant to Section 2.03 of this Second
Supplemental Indenture) retired prior to the respective Redemption Date. With
respect to the redemptions described in paragraphs (B) and (C) above, the
Redemption Price shall be the Third Series General Redemption Price, plus
interest accrued to the Redemption Date. Such redemption shall be prorated among
Holders of Securities of the Third Series except to the extent waived; any
Holder may waive its right to such redemption by delivering a written waiver to
the Trustee, in such form as the Trustee shall deem acceptable, with a copy to
the Company, within ten days after the date of such notice of redemption.
(E) Unless otherwise agreed with a majority of the Holders of the
Securities of the Third Series to be Outstanding after a redemption under this
Section, the Securities redeemed under this Section may not be used as a credit
for the redemption of Securities provided for in Section 2.03 of this Second
Supplemental Indenture.
SECTION 3.02. Ownership by Minnesota Power & Light Company.
So long as any Securities of the Third Series remain Outstanding, if
the Company's entire common stock shall cease to be owned, directly or
indirectly, by Minnesota Power & Light Company, then the Company shall promptly
notify the Trustee and, if there is only one Holder of Securities of such
Series, such Holder; and the Company shall redeem, within ninety days thereafter
and upon at least thirty days' notice, all of the Securities of such Series then
Outstanding at the Third Series General Redemption Price, respectively, plus
interest accrued to the Redemption Date. Any Holder of such Series may waive its
right to such redemption by delivering a written waiver to the Trustee, in such
form as the Trustee shall deem acceptable, with a copy to the Company, within
ten days after the date of such notice of redemption.
-7-
<PAGE>
SECTION 3.03. Additional Debt Covenants.
(A) So long as any Securities of the Third Series shall remain
Outstanding, the Company shall file a Cash Flow Certificate with the Trustee on
or before March 31 of each calendar year after 1996 for the period of twelve
consecutive calendar months ending December 31 of the immediately preceding
calendar year and stating the ratio of its Total Debt divided by its Cash Flow,
determined in accordance with generally accepted accounting principles
existing as of the date of the First Supplemental Indenture, as shown by such
certificate ("Annual Total Debt/Cash Flow Ratio"). If the annual Total Debt/Cash
Flow Ratio shall exceed the maximums specified below for the corresponding
period:
Twelve Month
Period Ending Maximum Total Debt/
December 31, Cash Flow Ratio
------------- ---------------
1996 and thereafter 15:1
then the Company shall promptly notify the Trustee and, if there is only one
Holder of Securities of such Series, such Holder; and the Company shall redeem,
within ninety days thereafter and upon at least thirty days' notice, an
aggregate principal amount of the Securities of such Series then Outstanding
equal to a pro rata portion of the amount sufficient to cause the Annual Total
Debt/Cash Flow Ratio to equal the appropriate maximum, such pro rata portion to
be based upon the ratio of (a) the then Outstanding aggregate principal amount
of Securities of the Third Series to (b) the then Outstanding aggregate
principal amounts of the Securities of the Second Series and of the Third
Series; provided, however, that to the extent the Holders of the Securities of
the Second Series waive any right of redemption under Section 4.03(A) of this
Second Supplemental Indenture as provided in such Section 4.03(A), an additional
principal amount of Securities of the Third Series, in an amount equal to the
amount waived by the Holders of the Securities of the Second Series, shall be
redeemed as provided in this Section 3.03(A), except to the extent waived by the
Holders of the Securities of the Third Series. The Redemption Price shall be the
Third Series General Redemption Price, plus interest accrued to the Redemption
Date. The Holders of a majority of the Securities of the Third Series then
Outstanding may waive such redemption by delivering a written waiver to the
Trustee, in such form as the Trustee shall deem acceptable, with a copy to the
Company, within ten days after the date of such notice of redemption.
(B) So long as any Securities of the Third Series shall remain
Outstanding, the Company shall file with the Trustee, on or before March 31 of
each calendar year, an Accountant's Certificate showing as of December 31 of the
immediately preceding calendar year (1) the aggregate principal amount of
Securities then Outstanding and (2) the net book value of property, plant and
equipment, determined in accordance with generally accepted accounting
principles existing as of the date of the First Supplemental Indenture, which
constitute Property Additions. If such aggregate principal amount of Securities
then Outstanding exceeds sixty per centum (60%) of the net book value of such
property, plant and equipment then the Company shall promptly notify the Trustee
and, if there is only one Holder of Securities of the Third Series, such Holder;
and the Company shall redeem, within ninety days thereafter and upon at least
thirty days' notice, a principal amount of the Securities of such Series then
Outstanding equal to a pro rata portion of the amount necessary to cause the
aggregate principal amount of Securities then Outstanding to equal sixty per
centum (60%) of the net book value of such property, plant and equipment, such
pro rata portion to be based upon the ratio of (a) the then Outstanding
aggregate principal amount of Securities of the Third Series, to (b) the then
Outstanding aggregate principal amounts of Securities of the Second Series and
of the Third Series; provided, however, that to the extent the Holders of the
Securities of the Second Series waive any right of redemption under Section
4.03(B) of this Second Supplemental Indenture as provided in such Section
4.03(B), an additional principal amount of Securities of the
-8-
<PAGE>
Third Series, in an amount equal to the amount waived by the Holders of the
Securities of the Second Series, shall be redeemed as provided in this Section
3.03(B), except to the extent waived by the Holders of the Securities of the
Third Series. The Redemption Price shall be the Third Series General Redemption
Price, plus interest accrued to the Redemption Date. The Holders of a majority
of the Securities of the Third Series then Outstanding may waive such redemption
by delivering a written waiver to the Trustee, in such form as the Trustee shall
deem acceptable, with a copy to the Company, within ten days after the date of
such notice of redemption.
(C) So long as any Securities of the Third Series shall remain
Outstanding, the Company shall file with the Trustee, on or before March 31 of
each calendar year, an Accountant's Certificate showing as of December 31 of the
immediately preceding calendar year (1) the Total Debt of the Company, and (2)
the Company's Capitalization, determined in accordance with generally accepted
accounting principles existing as of the date of the First Supplemental
Indenture: If such Total Debt exceeds sixty-five per centum (65%) of
Capitalization, then the Company shall promptly notify the Trustee and, if there
is only one Holder of Securities of such Series, such Holder; and the Company
shall redeem, within ninety days thereafter and upon at least thirty days'
notice, a principal amount of the Securities of such Series then Outstanding
equal to a pro rata portion of the amount necessary to cause Total Debt to equal
not more than sixty-five per centum (65%) of Capitalization, determined in
accordance with generally accepted accounting principles existing as of the date
of the First Supplemental Indenture, such pro rata portion to be based upon the
ratio of (a) the then Outstanding aggregate principal amount of Securities of
the Third Series, to (b) the then Outstanding aggregate principal amounts of
Securities of the Second Series and of the Third Series; provided, however, that
to the extent the Holders of the Securities of the Second Series waive any right
of redemption under Section 4.03(C) of this Second Supplemental Indenture as
provided in such Section 4.03(C), an additional principal amount of Securities
of the Third Series, in an amount equal to the amount waived by the Holders of
the Securities of the Second Series, shall be redeemed as provided in this
Section 3.03(C), except to the extent waived by the Holders of the Securities of
the Third Series. The Redemption Price shall be the Third Series General
Redemption Price, plus interest accrued to the Redemption Date. The Holders of a
majority of the Securities of the Third Series then Outstanding may waive such
redemption by delivering a written waiver to the Trustee, in such form as the
Trustee shall deem acceptable, with a copy to the Company, within ten days after
the date of such notice of redemption.
(D) So long as any Securities of the Third Series shall remain
Outstanding, the Holders of a majority of the Securities of such Series then
Outstanding may, from time to time but not more than once during any calendar
year, upon thirty days notice, request that the Company file with the Trustee,
as of the end of any calendar month other than December within sixty days after
the end of such month, the Cash Flow Certificate provided in Section 3.03(A)
hereof and the Accountant's Certificates provided in Section 3.03(B) and 3.03(C)
of this Second Supplemental Indenture. The same redemption provisions shall
apply as if such Cash Flow Certificate and Accountant's Certificates had been
delivered pursuant to such Section 3.03(A), 3.03(B) or 3.03(C) of this Second
Supplemental Indenture, using with respect to Section 3.03(A) the maximum for
the period ending on the December 31 next preceding such calendar month.
(E) Unless otherwise agreed by a majority of the Holders of the
Securities of the Third Series to be Outstanding after a redemption under this
Section 3.03, the Securities redeemed under this Section 3.03 may not be used as
a credit for the redemption of Securities provided for in Section 2.03 of this
Second Supplemental Indenture.
-9-
<PAGE>
SECTION 3.04. Restricted Payments.
So long as any Securities of the Third Series remain Outstanding, the
Company shall not declare or pay any Restricted Payments unless the Company
files an Accountant's Certificate with the Trustee and, if there is only one
Holder of Securities of the Third Series, sends a copy to such Holder, within
thirty days prior to such declaration or payment stating that (A) the amount of
such payment shall not exceed cumulative net additions to or deductions from
Surplus, determined in accordance with generally accepted accounting principles
existing as of the date of this Second Supplemental Indenture, made after
December 31, 1992 (excluding any gains on sale of Property Additions during the
immediately preceding 12 months in excess of twenty per centum (20%) of the net
additions to Surplus made during such 12 month period); and (B) that after such
payment Capital plus Surplus shall equal at least thirty-five per centum (35%)
of Capitalization, determined in accordance with generally accepted accounting
principles existing as of the date of the First Supplemental Indenture.
SECTION 3.05. Redemption Upon Taking of Property by Eminent Domain, etc.
So long as any Securities of the Third Series shall remain Outstanding,
any Officer's Certificate provided under Section 1006 of the Original Indenture
shall also state the net book value of the Mortgaged Property described therein
as taken or sold, and shall also state the net book value of such Mortgaged
Property that does not constitute Property Additions. Notwithstanding anything
to the contrary contained in Section 1006 of the Original Indenture, should the
aggregate net book value of Mortgaged Property taken by the exercise of the
power of eminent domain or sold to an entity possessing the power of eminent
domain, or to its designee, under a threat, reasonably believed by the Company
to be genuine, to exercise the same, be in excess of Fifteen Million Dollars
($15,000,000), the Company shall redeem, within ninety days of such taking or
sale and upon at least thirty days' notice, or have otherwise retired, except to
the extent waived, an aggregate principal amount of Securities of such Series
then Outstanding equal to an amount determined pursuant to the next sentence, at
the Redemption Price of par plus interest accrued to the Redemption Date. The
principal amount of Securities of the Third Series to be redeemed pursuant to
this Section 3.05 shall be calculated by dividing (1) the aggregate amount of
Property Additions so taken or sold plus the aggregate net book value of all
Mortgaged Property so taken or sold which are not Property Additions by (2) the
amount of Net Property Additions shown on the most recent Property Additions
Certificate filed with the Trustee and multiplying such ratio by the aggregate
principal amount of Securities of such Series then Outstanding; provided,
however, that to the extent the Holders of the Securities of the Second Series
waive any right of redemption under Section 4.05 of this Second Supplemental
Indenture as provided in such Section 4.05, an additional principal amount of
Securities of the Third Series shall be redeemed as provided in this Section
3.05 in an amount equal to the amount waived by the Holders of the Securities of
the Second Series, except to the extent waived by the Holders of the Securities
of the Third Series. Such redemption shall be prorated among Holders of
Securities of such Series except to the extent waived; any Holder may waive its
right to such redemption by delivering a written waiver to the Trustee, in such
form as the Trustee shall deem acceptable, with a copy to the Company, within
ten days after the date of such notice of redemption; such waiver shall not
cause a recalculation of the proration.
SECTION 3.06. Maintenance of Business.
So long as any Securities of the Third Series remain Outstanding, if
the Company ceases to continue substantially in the business of providing water
and waste water utility service in the State of Florida, then the Company shall
promptly notify the Trustee and, if there is only one Holder of Securities of
such Series, such Holder; and the Company shall redeem, within ninety days and
upon at least thirty days notice, all of the Securities of such Series then
Outstanding at the Third Series General Redemption Price, plus interest accrued
to the Redemption Date. Any Holder may waive its right to such redemption by
delivering a written waiver
-10-
<PAGE>
to the Trustee, in such form as the Trustee shall deem acceptable, with a copy
to the Company, within ten days after the date of such notice of redemption.
SECTION 3.07. Return of Redemption Moneys upon Waiver.
Upon receipt of any waiver of redemption by any Holder, the Trustee
shall return to the Company the redemption money, if any, held by the Trustee
for the redemption of such Holder's Securities.
SECTION 3.08. Special Merger Provisions.
So long as any Securities of the Third Series remain Outstanding, the
Company- shall not merge or consolidate with another entity unless the Company
shall have filed with the Trustee, and, if there is only one Holder of
Securities of such Series, such Holder, an Officer's Certificate stating that
(1) the Company or an entity directly or indirectly owned one hundred per centum
(100%) by Minnesota Power & Light Company shall be the continuing and
surviving corporation and, (2) after such merger or consolidation, there shall
exist no Event of Default or event which, with the lapse of time or giving of
notice, or both, would constitute an Event of Default, and the Company shall be
able to issue at least One Dollar ($1) of Securities under the provisions of
Section 401 or 501 of the Indenture, in each case, using a Cash Flow Certificate
stating an Annual Total Debt/Cash Flow Ratio not to exceed the maximums
specified in Section 3.03(A) hereof (using the maximum for the period ending on
the December 31 next preceding such merger) rather than the Cash Flow
Certificate provided in Section 301(d) of the Original Indenture.
SECTION 3.09. Bond Purchase Agreement.
So long as CoBank shall be the sole owner of all Securities of the
Third Series then Outstanding, the Company shall redeem, within ten days, an
aggregate principal amount of Securities of such Series, the redemption of which
is demanded, in a certificate, signed by the President, any Vice President or
any Assistant Vice President of CoBank, stating that CoBank is entitled to such
redemption under the Bond Purchase Agreement dated March 31, 1997 between CoBank
and the Company, describing the event giving CoBank such right of redemption,
and stating that such redemption is required by terms of such Bond Purchase
Agreement. The Redemption Price shall be the Third Series General Redemption
Price, plus interest accrued to the Redemption Date.
SECTION 3.10. Property Additions Certificates.
So long as any Securities of the Third Series shall remain Outstanding,
the Company shall file a Property Additions Certificate with the Trustee at
least once during each calendar year.
SECTION 3.11. Amendment to Indenture; Acceleration.
So long as the aggregate principal amount of Securities of the Third
Series then Outstanding, combined, if and only if the Holder of a majority in
aggregate principal amount of the Securities of the Third Series then
Outstanding is also the Holder of a majority in aggregate principal amount of
the Securities of the Second Series then Outstanding, with the aggregate
principal amount of the Securities of the Second Series then Outstanding,
exceeds twenty-five per centum (25%) of the aggregate principal amount of
Securities of all series then Outstanding, the words "twenty-five per centum
(25%)" shall be substituted for the words "thirty-three and one-third per
centum (33 1/3%)" in Section 1102 of the Original Indenture. In case any
Securities of the Third
-11-
<PAGE>
Series are paid by reason of a declaration of acceleration pursuant to Section
1102 of the Original Indenture, the Company shall pay to the Holders of such
Securities a premium equal to the Prepayment Surcharge, calculated as provided
in Section 2.02 of this Second Supplemental Indenture with respect to the Third
Series multiplied by the aggregate principal amount of such Securities so
accelerated, provided that the payment of such premium does not render the
Company insolvent. If the aggregate principal amount of Securities of the Third
Series then Outstanding, combined, if and only if the Holder of a majority in
aggregate principal amount of the Securities of the Third Series then
Outstanding is also the Holder of a majority in aggregate principal amount of
the Securities of the Second Series then Outstanding, with the aggregate
principal amount of the Securities of the Second Series then Outstanding,
exceeds twenty-five per centum (25%) of the aggregate principal amount of
Securities of all series then Outstanding and an Event of Default shall exist,
then the Holders of the Securities of the Third Series may demand the redemption
of such Securities of the Third Series held by them upon ten days written notice
to the Company and the Trustee. The Redemption Price shall be the Third Series
General Redemption Price, respectively, plus interest accrued to the Redemption
Date.
SECTION 3.12. Redemptions on a Business Day
In the event any Redemption Date for a redemption required by Section
3.03 hereof shall not be a Business Day, interest on the principal amount then
due shall accrue to and be paid on the next Business Day; provided that the
Company may, at its option, upon ten (10) days prior notice to the Trustee and
the Holders, satisfy a redemption required by Section 3.03 hereof on the
Business Day prior to the applicable Redemption Date at a Redemption Price equal
to par plus interest accrued to such prior Business Day. Any other Redemption
Date for Securities of the Third Series shall be on a Business Day.
SECTION 3.13. Amendment or Waiver of Covenants.
The provisions of this Article Third may be waived or amended, at the
request of the Company, with the written consent of the Holders of at least a
majority of the aggregate principal amount of the Securities of the Third Series
then Outstanding. So long as the aggregate principal amount of Securities of the
Third Series then Outstanding, combined, if and only if the Holder of a majority
in aggregate principal amount of the Securities of the Third Series then
Outstanding is also the Holder of a majority in aggregate principal amount of
the Securities of the Second Series then Outstanding, with the aggregate
principal amount of the Securities of the Second Series then Outstanding,
exceeds twenty-five per centum (25%) of the aggregate principal amount of
Securities of all series then Outstanding, the provisions of this Article Third
may not be waived nor amended without the written consent of the Holders of at
least a majority of the aggregate principal amount of Securities of the Third
Series then Outstanding, except as otherwise specifically provided herein.
ARTICLE FOURTH
Amended Covenants for Second Series
SECTION 4.01. Asset Sale Restrictions for the Second Series.
(A) So long as any Securities of the Second Series remain Outstanding,
if the Company requests the release of Property Additions pursuant to Section
1003 or 1004 of the Original Indenture (other than for purposes of sales of
property pursuant to or under threat, reasonably believed by the Company to be
genuine, of the exercise of a power of eminent domain or for tax exempt
financing pursuant to Section 1009 of the
-12-
<PAGE>
Original Indenture), the Officer's Certificate filed in connection with such
release shall identify the Property Additions that are to be so released.
(B) So long as any Securities of the Second Series remain Outstanding,
if the aggregate amount of Property Additions released since March 31, 1993 upon
such basis during any calendar year shall exceed ten per centum (10%) of the
amount of Net Property Additions shown in the most recent Property Additions
Certificate filed with the Trustee, then the Company shall promptly notify the
Trustee and, if there is only one Holder of Securities of such Series, such
Holder; and the Company shall within forty-five days thereafter redeem or have
otherwise retired (other than pursuant to Section 2.03 of the First Supplemental
Indenture), except to the extent waived by the Holder, an aggregate principal
amount of Securities of such Series equal to a pro rata portion of the amount of
such excess, such pro rata portion to be based upon the ratio of (a) the then
Outstanding aggregate principal amount of Securities of the Second Series, to
(b) the then Outstanding aggregate principal amounts of Securities of the Second
Series and of the Third Series; provided, however, that to the extent the
Holders of the Securities of the Third Series waive any right of redemption
under Section 3.01(B) of this Second Supplemental Indenture as provided in such
Section 3.01(D), an additional principal amount of Securities of the Second
Series, in an amount equal to the amount waived by the Holders of the Securities
of the Third Series, shall be redeemed as provided in this Section 4.01(B),
except to the extent waived by the Holders of the Securities of the Second
Series.
(C) So long as any Securities of the Second Series remain Outstanding,
if the aggregate amount of Property Additions released upon such basis shall
exceed twenty five per centum (25%) of the amount of Net Property Additions
shown in the most recent Property Additions Certificate filed with the Trustee,
then the Company shall promptly notify the Trustee and, if there is only on
Holder of Securities of such Series, such Holder; and the Company shall within
forty-five days thereafter redeem or have otherwise retired (other than pursuant
to Section 2.03 of the First Supplemental Indenture), except to the extent
waived, an aggregate principal amount of Securities of such Series equal to a
pro rata portion of the amount of such excess, such pro rata portion to be based
upon the ratio of (a) the then Outstanding aggregate principal amount of
Securities of the Second Series, to (b) the then Outstanding aggregate principal
amounts of Securities of the Second Series and of the Third Series; provided,
however, that to the extent the Holders of the Securities of the Third Series
waive any right of redemption under Section 3.01(C) of this Second Supplemental
Indenture as provided in such Section 3.01(D), an additional principal amount of
Securities of the Second Series, in an amount equal the amount waived by the
Holders of the Securities of the Third Series, shall be redeemed as provided in
this Section 4.01(C), except to the extent waived by the Holders of the
Securities of the Second Series.
(D) With respect to the redemptions described in paragraphs (B) and (C)
above, the Company shall receive a credit for any Securities of the Second
Series (excluding Securities redeemed pursuant to Section 2.03 of the First
Supplemental Indenture) retired prior to the respective Redemption Date. With
respect to the redemptions described in paragraphs (B) and (C) above, the
Redemption Price shall be the Second Series General Redemption Price, plus
interest accrued to the Redemption Date. Such redemption shall be prorated among
Holders of Securities of the Second Series except to the extent waived; any
Holder may waive its right to such redemption by delivering a written waiver to
the Trustee, in such form as the Trustee shall deem acceptable, with a copy to
the Company, within ten days after the date of such notice of redemption.
(E) Unless otherwise agreed with a majority of the Holders of the
Securities of the Second Series to be Outstanding after a redemption under this
Section, the Securities redeemed under this Section may not be used as a credit
for the redemption of Securities provided for in Section 2.03 of the First
Supplemental Indenture.
-13-
<PAGE>
SECTION 4.02. Ownership by Minnesota Power & Light Company.
So long as any Securities of the Second Series remain Outstanding, if
the Company's entire common stock shall cease to be owned, directly or
indirectly, by Minnesota Power & Light Company, then the Company shall promptly
notify the Trustee and, if there is only one Holder of Securities of such
Series, such Holder; and the Company shall redeem, within ninety days thereafter
and upon at least thirty days' notice, all of the Securities of such Series then
Outstanding at the Second Series General Redemption Price, respectively, plus
interest accrued to the Redemption Date. Any Holder of such Series may waive its
right to such redemption by delivering a written waiver to the Trustee, in such
form as the Trustee shall deem acceptable, with a copy to the Company, within
ten days after the date of such notice of redemption.
SECTION 4.03. Additional Debt Covenants.
(A) So long as any Securities of the Second Series shall remain
Outstanding, the Company shall file a Cash Flow Certificate with the Trustee on
or before March 31 of each calendar year after 1996 for the period of twelve
consecutive calendar months ending December 31 of the immediately preceding
calendar year and stating the ratio of its Total Debt divided by its Cash Flow,
determined in accordance with generally accepted accounting principles existing
as of the date of the First Supplemental Indenture, as shown by such certificate
("Annual Total Debt/Cash Flow Ratio"). If the annual Total Debt/Cash Flow Ratio
shall exceed the maximums specified below for the corresponding period:
Twelve Month
Period Ending Maximum Total Debt/
December 31, Cash Flow Ratio
------------- ---------------
1996 and thereafter 15:1
then the Company shall promptly notify the Trustee and, if there is only one
Holder of Securities of such Series, such Holder; and the Company shall redeem,
within ninety days thereafter and upon at least thirty days' notice, an
aggregate principal amount of the Securities of such Series then Outstanding
equal to a pro rata portion of the amount sufficient to cause the Annual Total
Debt/Cash Flow Ratio to equal the appropriate maximum, such pro rata portion to
be based upon the ratio of (a) the then Outstanding aggregate principal amount
of Securities of the Second Series, to (b) the then Outstanding aggregate
principal amounts of Securities of the Second Series and of the Third Series;
provided, however, that to the extent the Holders of the Securities of the Third
Series waive any right of redemption under Section 3.03(A) of this Second
Supplemental Indenture as provided in such Section 3.03(A), an additional
principal amount of Securities of the Second Series, in an amount equal to the
amount waived by the Holders of the Securities of the Third Series, shall be
redeemed as provided in this Section 4.03(A), except to the extent waived by the
Holders of the Securities of the Second Series. The Redemption Price shall be
the Second Series General Redemption Price, plus interest accrued to the
Redemption Date. The Holders of a majority of the Securities of the Second
Series then Outstanding may waive such redemption by delivering a written waiver
to the Trustee, in such form as the Trustee shall deem acceptable, with a copy
to the Company, within ten days after the date of such notice of redemption.
(B) So long as any Securities of the Second Series shall remain
Outstanding, the Company shall file with the Trustee, on or before March 31 of
each calendar year, an Accountant's Certificate showing as of December 31 of
the immediately preceding calendar year (1) the aggregate principal amount of
Securities then Outstanding and (2) the net book value of property, plant and
equipment, determined in accordance with generally accepted accounting
principles existing as of the date of the First Supplemental Indenture, which
-14-
<PAGE>
constitute Property Additions. If such aggregate principal amount of Securities
then Outstanding exceeds sixty per centum (60%) of the net book value of such
property, plant and equipment then the Company shall promptly notify the Trustee
and, if there is only one Holder of Securities of the Second Series, such
Holder; and the Company shall redeem, within ninety days thereafter and upon at
least thirty days' notice, a principal amount of the Securities of such Series
then Outstanding equal to a pro rata portion of the amount necessary to cause
the aggregate principal amount of Securities then Outstanding to equal sixty
per centum (60%) of the net book value of such property, plant and equipment,
such pro rata portion to be based upon the ratio of (a) the then Outstanding
aggregate principal amount of Securities of the Second Series, to (b) the then
Outstanding aggregate principal amounts of Securities of the Second Series and
of the Third Series; provided, however, that to the extent the Holders of the
Securities of the Third Series waive any right of redemption under Section
3.03(B) of this Second Supplemental Indenture as provided in such Section
3.03(B), an additional principal amount of Securities of the Second Series, in
an amount equal to the amount waived by the Holders of the Securities of the
Third Series, shall be redeemed as provided in this Section 4.03(B), except to
the extent waived by the Holders of the Securities of the Second Series. The
Redemption Price shall be the Second Series General Redemption Price, plus
interest accrued to the Redemption Date. The Holders of a majority of the
Securities of the Second Series then Outstanding may waive such redemption by
delivering a written waiver to the Trustee, in such form as the Trustee shall
deem acceptable, with a copy to the Company, within ten days after the date of
such notice of redemption.
(C) So long as any Securities of the Second Series shall remain
Outstanding, the Company shall file with the Trustee, on or before March 31 of
each calendar year, an Accountant's Certificate showing as of December 31 of the
immediately preceding calendar year (1) the Total Debt of the Company, and (2)
the Company's Capitalization, determined in accordance with generally accepted
accounting principles existing as of the date of the First Supplemental
Indenture. If such Total Debt exceeds sixty-five per centum (65%) of
Capitalization, then the Company shall promptly notify the Trustee and, if there
is only one Holder of Securities of such Series, such Holder; and the Company
shall redeem, within ninety days thereafter and upon at least thirty days'
notice, a principal amount of the Securities of such Series then Outstanding
equal to a pro rata portion of the amount necessary to cause Total Debt to equal
not more. than sixty-five per centum (65%) of Capitalization, determined in
accordance with generally accepted accounting principles existing as of the date
of the First Supplemental Indenture, such pro rata portion to be based upon the
ratio of (a) the then Outstanding aggregate principal amount of Securities of
the Second Series, to (b) the then Outstanding aggregate principal amounts of
Securities of the Second Series and of the Third Series; provided, however, that
to the extent the Holders of the Securities of the Third Series waive any right
of redemption under Section 3.03(C) of this Second Supplemental Indenture as
provided in such Section 3.03(C), an additional principal amount of Securities
of the Second Series, in an amount equal to the amount waived by the Holders of
the Securities of the Third Series, shall be redeemed as provided in this
Section 4.03(C), except to the extent waived by the Holders of the Securities of
the Second Series. The Redemption Price shall be the Second Series General
Redemption Price, plus interest accrued to the Redemption Date. The Holders of a
majority of the Securities of the Second Series then Outstanding may waive such
redemption by delivering a written waiver to the Trustee, in such form as the
Trustee shall deem acceptable, with a copy to the Company, within ten days after
the date of such notice of redemption.
(D) So long as any Securities of the Second Series shall remain
Outstanding, the Holders of a majority of the Securities of such Series then
Outstanding may, from time to time but not more than once during any calendar
year, upon thirty days notice, request that the Company file with the Trustee,
as of the end of any calendar month other than December within sixty days after
the end of such month, the Cash Flow Certificate provided in Section 4.03(A)
hereof and the Accountant's Certificates provided in Section 4.03(B) and 4.03(C)
of this Second Supplemental Indenture. The same redemption provisions shall
apply as if such Cash Flow
-15-
<PAGE>
Certificate and Accountant's Certificates had been delivered pursuant to such
Section 4.03(A), 4.03(B) or 4.03(C) of this Second Supplemental Indenture, using
with respect to Section 4.03(A) hereof the maximum for the period ending on the
December 31 next preceding such calendar month.
(E) Unless otherwise agreed by a majority of the Holders of the
Securities of the Second Series to be Outstanding after a redemption under this
Section, the Securities redeemed under this Section may not be used as a credit
for the redemption of Securities provided for in Section 2.03 of the First
Supplemental Indenture.
SECTION 4.04. Restricted Payments.
So long as any Securities of the Second Series remain Outstanding, the
Company shall not declare or pay any Restricted Payments unless the Company
files an Accountant's Certificate with the Trustee and, if there is only one
Holder of Securities of the Second Series, sends a copy to such Holder, within
thirty days prior to such declaration or payment stating that (A) the amount of
such payment shall not exceed cumulative net additions to or deductions from
Surplus determined in accordance with generally accepted accounting principles
existing as of the date of the First Supplemental Indenture, made after December
31, 1992 (excluding any gains on sale of Property Additions during the
immediately preceding 12 months in excess of twenty per centum (20%) of the net
additions to Surplus made during such 12 month period); and (B) that after such
payment Capital plus Surplus shall equal at least thirty-five per centum (35%)
of Capitalization, determined in accordance with generally accepted accounting
principles existing as of the date of the First Supplemental Indenture.
SECTION 4.05. Redemption Upon Taking of Property by Eminent Domain, etc.
So long as any Securities of the Second Series shall remain
Outstanding, any Officer's Certificate provided under Section 1006 of the
Original Indenture shall also state the net book value of the Mortgaged
Property described therein as taken or sold, and shall also state the net book
value of such Mortgaged Property that does not constitute Property Additions.
Notwithstanding anything to the contrary contained in Section 1006 of the
Original Indenture, should the aggregate net book value of Mortgaged Property
taken by the exercise of the power of eminent domain or sold to an entity
possessing the power of eminent domain, or to its designee, under a threat,
reasonably believed by the Company to be genuine, to exercise the same, be in
excess of Fifteen Million Dollars ($15,000,000), the Company shall redeem,
within ninety days of such taking or sale and upon at least thirty days'
notice, or have otherwise retired, except to the extent waived, an aggregate
principal amount of Securities of such Series then Outstanding equal to an
amount determined pursuant to the next sentence, at the Redemption Price of
par plus interest accrued to the Redemption Date. The principal amount of
Securities of the Second Series to be redeemed pursuant to this Section 4.05
shall be calculated by dividing (1) the aggregate amount of Property Additions
so taken or sold plus the aggregate net book value of all Mortgaged Property
so taken or sold which are not Property Additions by (2) the amount of Net
Property Additions shown on the most recent Property Additions Certificate
filed with the Trustee and multiplying such ratio by the aggregate principal
amount of Securities of such Series then Outstanding; provided, however, that
to the extent the Holders of the Securities of the Third Series waive any
right of redemption under Section 3.05 of this Second Supplemental Indenture
as provided in such Section 3.05, an additional principal amount of Securities
of the Second Series shall be redeemed as provided in this Section 4.05 in an
amount equal to the amount waived by the Holders of the Securities of the
Third Series, except to the extent waived by the Holders of the Securities of
the Second Series. Such redemption shall be prorated among Holders of
Securities of such Series except to the extent waived; any Holder may waive
its right to such redemption by delivering a written waiver to the Trustee, in
such form as the Trustee shall deem acceptable, with a copy to the Company,
within ten days after the date of such notice of redemption; such waiver shall
not cause a recalculation of the proration.
-16-
<PAGE>
SECTION 4.06. Maintenance of Business.
So long as any Securities of the Second Series remain Outstanding, if
the Company ceases to continue substantially in the business of providing water
and waste water utility service in the State of Florida, then the Company shall
promptly notify the Trustee and, if there is only one Holder of Securities of
such Series, such Holder; and the Company shall redeem, within ninety days and
upon at least thirty days notice, all of the Securities of such Series then
Outstanding at the Second Series General Redemption Price, plus interest accrued
to the Redemption Date. Any Holder may waive its right to such redemption by
delivering a written waiver to the Trustee, in such form as the Trustee shall
deem acceptable, with a copy to the Company, within ten days after the date of
such notice of redemption.
SECTION 4.07. Return of Redemption Moneys upon Waiver.
Upon receipt of any waiver of redemption by any Holder, the Trustee
shall return to the Company the redemption money, if any, held by the Trustee
for the redemption of such Holder's Securities.
SECTION 4.08. Special Merger Provisions.
So long as any Securities of the Second Series remain Outstanding, the
Company shall not merge or consolidate with another entity unless the Company
shall have filed with the Trustee, and, if there is only one Holder of
Securities of such Series, such Holder, an Officer's Certificate stating that
(1) the Company or an entity directly or indirectly owned one hundred per centum
(100%) by Minnesota Power & Light Company shall be the continuing and
surviving corporation and, (2) after such merger or consolidation, there shall
exist no Event of Default or event which, with the lapse of time or giving of
notice, or both, would constitute an Event of Default, and the Company shall be
able to issue at least One Dollar ($1) of Securities under the provisions of
Section 401 or 501 of the Indenture, in each case, using a Cash Flow Certificate
stating an Annual Total Debt/Cash Flow Ratio not to exceed the maximums
specified in Section 4.03(A) hereof (using the maximum for the period ending on
the December 31 next preceding such merger) rather than the Cash Flow
Certificate provided in Section 301(d) of the Original Indenture.
SECTION 4.09. Bond Purchase Agreement.
So long as CoBank shall be the sole owner of all Securities of the
Second Series then Outstanding, the Company shall redeem, within ten days, an
aggregate principal amount of Securities of such Series, the redemption of which
is demanded, in a certificate, signed by the President, any Vice President or
any Assistant Vice President of CoBank, stating that CoBank is entitled to such
redemption under the Bond Purchase Agreement dated March 1, 1993 between CoBank
and the Company, describing the event giving CoBank such right of redemption,
and stating that such redemption is required by terms of such Bond Purchase
Agreement. The Redemption Price shall be the Second Series General Redemption
Price, plus interest accrued to the Redemption Date.
SECTION 4.10. Property Additions Certificates.
So long as any Securities of the Second Series shall remain Outstanding, the
Company shall file a Property Additions Certificate with the Trustee at least
once during each calendar year.
-17-
<PAGE>
SECTION 4.11. Amendment to Indenture; Acceleration.
So long as the aggregate principal amount of Securities of the Second
Series then Outstanding, combined, if and only if the Holder of a majority in
aggregate principal amount of the Securities of the Second Series then
Outstanding is also the Holder of a majority in aggregate principal amount of
the Securities of the Third Series then Outstanding, with the aggregate
principal amount of the Securities of the Third Series then Outstanding, exceeds
twenty-five per centum (25%) of the aggregate principal amount of Securities of
all series then Outstanding, the words "twenty-five per centum (25%)" shall be
substituted for the words "thirty-three and one-third per centum (33 1/3%)" in
Section 1102 of the Original Indenture. In case any Securities of the Second
Series are paid by reason of a declaration of acceleration pursuant to Section
1102 of the Original Indenture, the Company shall pay to the Holders of such
Securities a premium equal to the Prepayment Surcharge, calculated as provided
in Section 2.02 of this Second Supplemental Indenture with respect to the Second
Series multiplied by the aggregate principal amount of such Securities so
accelerated, provided that the payment of such premium does not render the
Company insolvent. If the aggregate principal amount of Securities of the Second
Series then Outstanding, combined, if and only if the Holder of a majority in
aggregate principal amount of the Securities of the Second Series then
Outstanding is also the Holder of a majority in aggregate principal amount of
the Securities of the Third Series then Outstanding, with the aggregate
principal amount of the Securities of the Third Series then Outstanding, exceeds
twenty-five per centum (25%) of the aggregate principal amount of Securities of
all series then Outstanding and an Event of Default shall exist, then the
Holders of the Securities of the Second Series may demand the redemption of such
Securities of the Second Series held by them upon ten days written notice to the
Company and the Trustee. The Redemption Price shall be the Second Series
General Redemption Price, respectively, plus interest accrued to the Redemption
Date.
SECTION 4.12. Redemptions on a Business Day
In the event any Redemption Date for a redemption required by Section
4.03 hereof shall not be a Business Day, interest on the principal amount then
due shall accrue to and be paid on the next Business Day; provided that the
Company may, at its option, upon ten (10) days prior notice to the Trustee and
the Holders, satisfy a redemption required by Section 4.03 on the Business Day
prior to the applicable Redemption Date at a Redemption Price equal to par plus
interest accrued to such prior Business Day. Any other Redemption Date for
Securities of the Second Series shall be on a Business Day.
SECTION 4.13. Amendment or Waiver of Covenants.
The provisions of this Article Fourth may be waived or amended, at the
request of the Company, with the written consent of the Holders of at least a
majority of the aggregate principal amount of the Securities of the Second
Series then Outstanding. So long as the aggregate principal amount of Securities
of the Second Series then Outstanding, combined, if and only if the Holder of a
majority in aggregate principal amount of the Securities of the Second Series
then Outstanding is also the Holder of a majority in aggregate principal amount
of the Securities of the Third Series then Outstanding, with the aggregate
principal amount of the Securities of the Third Series then Outstanding, exceeds
twenty-five per centum (25%) of the aggregate principal amount of Securities of
all series then Outstanding, the provisions of this Article Fourth may not be
waived nor amended without the written consent of the Holders of at least a
majority of the aggregate principal amount of Securities of the Second Series
then Outstanding, except as otherwise specifically provided herein.
-18-
<PAGE>
SECTION 4.14. Covenants Superseded.
The provisions of this Article Fourth shall supersede and replace in
their entirety the covenants contained in Article Third of the First
Supplemental Indenture. Notwithstanding the foregoing, Sections 3.14 and 3.17 of
the First Supplemental Indenture shall remain in full force and effect.
ARTICLE FIFTH
Miscellaneous
SECTION 5.01. Definitions.
Subject to the amendments provided for in this Second Supplemental
Indenture, the terms defined in the Supplemented Indenture shall, for all
purposes of this Second Supplemental Indenture, have the meanings specified in
the Supplemented Indenture.
SECTION 5.02. Acceptance of Trust.
The Trustee hereby accepts the trust herein created and agrees to
perform the same upon the terms and conditions herein and in the Indenture set
forth and upon the following terms and conditions:
The Trustee shall not be responsible in any manner whatsoever for or in
respect to the validity or sufficiency of this Second Supplemental Indenture or
for or in respect of the recitals contained herein, all of which recitals are
made by the Company alone. In general each and every term and condition
contained in Article Sixteen of the Original Indenture shall apply to and form
part of this Second Supplemental Indenture with the same force and effect as if
the same were herein set forth in full with such omissions, variations and
insertions, if any, as may be appropriate to make the same conform to the
provisions of this Second Supplemental Indenture.
SECTION 5.03. Successors and Assigns.
Whenever in this Second Supplemental Indenture either of the parties
hereto is named or referred to, this shall, subject to the provisions of
Articles Fifteen and Sixteen of the Original Indenture, be deemed to include the
successors and assigns of such party, and all the covenants and agreements in
this Second Supplemental Indenture contained by or on behalf of the Company, or
by or on behalf of the Trustee, or either of them, shall, subject as aforesaid,
bind and inure to the respective benefits of the respective successors and
assigns of such parties, whether so expressed or not.
SECTION 5.04. Benefit of the Parties.
Nothing in this Second Supplemental Indenture, expressed or implied, is
intended, or shall be construed, to confer upon, or to give to, any person, firm
or corporation, other than the parties hereto and the Holders of the Securities
Outstanding under the Indenture, any right, remedy or claim under or by reason
of this Second Supplemental Indenture or any covenant, condition, stipulation,
promise or agreement hereof, and all the covenants, conditions, stipulations
promises and agreements in this Second Supplemental Indenture contained by or on
behalf of the Company shall be for the sole and exclusive benefit of the parties
hereto and of the Holders of the Securities Outstanding under the Indenture.
-19-
<PAGE>
SECTION 5.05. Counterparts.
This Second Supplemental Indenture shall be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Second Supplemental
Indenture to be executed in its corporate name by its President or one of its
Vice Presidents and its corporate seal to be hereunto affixed and to be attested
by its Secretary or one of its Assistant Secretaries, and SunTrust Bank, Central
Florida, National Association, to evidence its acceptance hereof, has caused
this Second Supplemental Indenture to be executed in its corporate name by a
duly authorized officer thereof and its corporate seal to be hereunto affixed
and to be attested by a duly authorized officer thereof, in several
counterparts, all as of the day and year first above written.
Attest: FLORIDA WATER SERVICES CORPORATION,
formerly known as Southern States
Dona Henry Utilities, Inc.
- ----------------------------------
By: Morris Bencini
Dona Henry, Assistant Secretary ---------------------------------------
- ---------------------------------- Name: Morris Bencini
(Print Name) -------------------------------------
Title: Vice President - Finance and
Treasurer
-----------------------------------
Address: 100 Color Place, Apopka, FL 32703
----------------------------------
In the presence of:
Kristi Jung
- ----------------------------------
(Witness)
Kristi Jung
- ----------------------------------
(Print Name)
Sally Murray
- ----------------------------------
(Witness)
Sally Murray
- ----------------------------------
(Print Name)
-20-
<PAGE>
Attest: SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION, as Trustee
Lisa George
- ----------------------------------
By: M. B. Daiger
Lisa George, Assistant Vice ----------------------------------------
President Name: M. Bruce Daiger
- ---------------------------------- --------------------------------------
(Print Name) Title: Vice President
------------------------------------
Address:222 East Robinson Street, Suite 250
-----------------------------------
Orlando, FL 32801
-------------------------------------------
In the presence of:
Kristi Jung
- ----------------------------------
(Witness)
Kristi Jung
- ----------------------------------
(Print Name)
Sally Murray
- ----------------------------------
(Witness)
Sally Murray
- ----------------------------------
(Print Name)
STATE OF FLORIDA )
COUNTY OF ORANGE )
The foregoing instrument was executed before me, an officer duly
authorized in the state and county aforesaid to administer oaths and to take
acknowledgments, this 27 day of March 1997, by Morris Bencini as Vice President
- - Finance of FLORIDA WATER SERVICES CORPORATION, formerly known as Southern
States Utilities, Inc., a Florida corporation, on behalf of said corporation,
who is personally known to me.
[SEAL] Lisa Freeman Schutz Lisa Freeman Schutz
Notary Public, State of Florida -------------------------
Commission No. CC 486829 NOTARY PUBLIC
My Commission Expires 08/07/99
1-800-3-NOTARY Fla. ______ Service
& Bonding Co.
STATE OF FLORIDA )
COUNTY OF ORANGE )
The foregoing instrument was executed before me, an officer duly authorized
in the state and county aforesaid to administer oaths and to take
acknowledgments, this 27 day of March, 1997, by M. Bruce Daiger as Vice
President of SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, on behalf of
said bank, who is personally known to me.
[SEAL] Lisa Freeman Schutz Lisa Freeman Schutz
Notary Public, State of Florida -------------------------
Commission No. CC 486829 NOTARY PUBLIC
My Commission Expires 08/07/99
1-800-3-NOTARY Fla. ______ Service
& Bonding Co.
-21-
<PAGE>
BONDHOLDER CONSENT
------------------
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of
which are hereby acknowledged, the undersigned, CoBank, ACB, f/k/a National Bank
for Cooperatives, as holder of all the Securities of the Second Series presently
Outstanding, hereby consents to the terms, covenants and conditions of the
foregoing Second Supplemental Indenture.
COBANK, ACB, f/k/a National Bank for
Cooperatives
By: Thomas A. Smith
------------------------------------
Name: Thomas A. Smith
----------------------------------
Title: Senior Vice President
---------------------------------
STATE OF GEORGIA )
COUNTY OF COBB )
The foregoing instrument was executed before me, an officer duly authorized
in the state and county aforesaid to administer oaths and to take
acknowledgments, this 31 day of March, 1997, by Thomas A. Smith, Senior Vice
President of COBANK, ACB, f/k/a National Bank for Cooperatives, on behalf of
said corporation, who is personally known to me or who produced
as identification.
- --------------------------
Susan L. South
------------------------------------
NOTARY PUBLIC
Susan L. South
------------------------------------
Print Name
-22-
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MINNESOTA
POWER'S CONSOLIDATED BALANCE SHEET, STATEMENT OF INCOME, AND STATEMENT OF CASH
FLOW FOR THE PERIOD ENDED MARCH 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,112,143
<OTHER-PROPERTY-AND-INVEST> 398,630
<TOTAL-CURRENT-ASSETS> 420,271
<TOTAL-DEFERRED-CHARGES> 108,767
<OTHER-ASSETS> 176,723
<TOTAL-ASSETS> 2,216,534
<COMMON> 399,185
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 282,787
<TOTAL-COMMON-STOCKHOLDERS-EQ> 614,578
75,000
31,492
<LONG-TERM-DEBT-NET> 683,834
<SHORT-TERM-NOTES> 174,793
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 25,178
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 554,265
<TOT-CAPITALIZATION-AND-LIAB> 2,216,534
<GROSS-OPERATING-REVENUE> 222,073
<INCOME-TAX-EXPENSE> 8,796
<OTHER-OPERATING-EXPENSES> 182,408
<TOTAL-OPERATING-EXPENSES> 199,716
<OPERATING-INCOME-LOSS> 26,399
<OTHER-INCOME-NET> 2,533<F1>
<INCOME-BEFORE-INTEREST-EXPEN> 33,402
<TOTAL-INTEREST-EXPENSE> 17,308
<NET-INCOME> 16,094
487
<EARNINGS-AVAILABLE-FOR-COMM> 15,607
<COMMON-STOCK-DIVIDENDS> 15,780
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 2,785
<EPS-PRIMARY> .52
<EPS-DILUTED> .52
<FN>
<F1>Includes $4,042,000 of Income from Equity Investment and $1,509,000 for
Distributions on Redeemable Preferred Securities of Subsidiary.
</FN>
</TABLE>
