NEW YORK STATE ELECTRIC & GAS CORPORATION
(Registrant)
FORM 10-K
---------
ANNUAL REPORT
For Fiscal Year Ended December 31, 1996
To
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
<PAGE>
TABLE OF CONTENTS
Page
PART I
Item 1. Business
(a) General development of business. . . . . . . . . . 3
(b) Financial information about industry segments. . . 3
(c) Narrative description of business
Principal business. . . . . . . . . . . . . . . . 3
New product or segment. . . . . . . . . . . . . . 4
Sources and availability of raw materials . . . . 4
Franchises . . . . . . . . . . . . . . . . . . . 5
Seasonal business . . . . . . . . . . . . . . . . 5
Working capital items . . . . . . . . . . . . . . 5
Single customer . . . . . . . . . . . . . . . . . 5
Backlog of orders . . . . . . . . . . . . . . . . 5
Business subject to renegotiation . . . . . . . . 5
Competitive conditions. . . . . . . . . . . . . . 5
Research and development. . . . . . . . . . . . . 6
Environmental matters . . . . . . . . . . . . . . 6
Water quality . . . . . . . . . . . . . . . . . 6
Air quality . . . . . . . . . . . . . . . . . . 7
Waste disposal. . . . . . . . . . . . . . . . . 8
Number of employees. . . . . . . . . . . . . . . . 8
(d) Financial information about foreign and domestic
operations and export sales. . . . . . . . . . . . 8
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . 9
Item 3. Legal proceedings. . . . . . . . . . . . . . . . . . . 10
Item 4. Submission of matters to a vote of security holders. . 16
Executive officers of the Registrant . . . . . . . . . . . . . . 16
PART II
Item 5. Market for Registrant's common equity and related
stockholder matters. . . . . . . . . . . . . . . . . 17
Item 6. Selected financial data. . . . . . . . . . . . . . . . 18
Item 7. Management's discussion and analysis of financial
condition and results of operations. . . . . . . . . 19
<PAGE>
TABLE OF CONTENTS (Cont'd)
Page
Item 8. Financial statements and supplementary data. . . . . . 35
Financial Statements
Consolidated Statements of Income. . . . . . . . . . 35
Consolidated Balance Sheets. . . . . . . . . . . . . 36
Consolidated Statements of Cash Flows. . . . . . . . 38
Consolidated Statements of Changes in
Common Stock Equity. . . . . . . . . . . . . . . . 39
Notes to Consolidated Financial Statements . . . . . . 40
Report of Independent Accountants. . . . . . . . . . . 58
Financial Statement Schedules
II. Consolidated Valuation and Qualifying
Accounts . . . . . . . . . . . . . . . . . . 59
Item 9. Changes in and disagreements with accountants on
accounting and financial disclosure. . . . . . . . . 60
PART III
Item 10. Directors and executive officers of the Registrant . . 60
Item 11. Executive compensation . . . . . . . . . . . . . . . . 60
Item 12. Security ownership of certain beneficial owners
and management . . . . . . . . . . . . . . . . . . . 60
Item 13. Certain relationships and related transactions . . . . 60
PART IV
Item 14. Exhibits, financial statement schedules, and
reports on Form 8-K
(a) List of documents filed as part of this report
Financial statements . . . . . . . . . . . . . . 60
Financial statement schedules. . . . . . . . . . 60
Exhibits
Exhibits delivered with this report. . . . . . 61
Exhibits incorporated herein by reference. . . 61
(b) Reports on Form 8-K. . . . . . . . . . . . . . . . 65
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark one)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996.
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission file number 1-3103-2.
NEW YORK STATE ELECTRIC & GAS CORPORATION
(Exact name of Registrant as specified in its charter)
New York 15-0398550
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P. O. Box 3287, Ithaca, New York 14852-3287
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (607) 347-4131
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
First Mortgage Bonds, 7 5/8% Series
due 2001 (Due November 1, 2001) New York Stock Exchange
3.75% Cumulative Preferred Stock
(Par Value $100) New York Stock Exchange
7.40% Cumulative Preferred Stock
(Par Value $25) New York Stock Exchange
Adjustable Rate Cumulative Preferred
Stock, Series B (Par Value $25) New York Stock Exchange
Common Stock (Par Value $6.66 2/3) New York Stock Exchange
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Securities registered pursuant to Section 12(g) of the Act:
Title of Class
4 1/2% Cumulative Preferred Stock (Series 1949) (Par Value $100)
4.15% Cumulative Preferred Stock (Par Value $100)
4.40% Cumulative Preferred Stock (Par Value $100)
4.15% Cumulative Preferred Stock (Series 1954) (Par Value $100)
* * * * * * * * * * *
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X . No .
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of Registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ X ].
* * * * * * * * * * *
The aggregate market value as of February 28, 1997, of the
common stock held by non-affiliates of the Registrant was
$1,612,095,178.
Common stock - 69,337,427 shares outstanding as of
February 28, 1997.
DOCUMENTS INCORPORATED BY REFERENCE
Document 10-K Part
The company has incorporated by reference
certain portions of its Proxy Statement
dated April 11, 1997, which will be filed
with the Commission prior to April 30, 1997. III
<PAGE>
PART I
Item 1. Business
(a) General development of business
New York State Electric & Gas Corporation (company) was
organized under the laws of the State of New York in 1852.
The following general developments have occurred in the
business of the company since January 1, 1996:
Regulatory and Rate Matters
(See Item 7 - Competitive Conditions and Rate Matters.)
Energy Services
(See Item 7 - Energy Services and Note 10 to the Consolidated
Financial Statements.)
(b) Financial information about industry segments
(See Note 12 to the Consolidated Financial Statements.)
(c) Narrative description of business
(i) Principal business
The company's principal business is generating, purchasing,
transmitting and distributing electricity and purchasing,
transporting and distributing natural gas. The service
territory, 99% of which is located outside the corporate limits
of cities, is in the central, eastern and western parts of the
State of New York. The service territory has an area of
approximately 19,600 square miles and a population of 2,400,000.
The larger cities in which the company serves both electricity
and natural gas are Binghamton, Elmira, Auburn, Geneva, Ithaca
and Lockport. The company serves approximately 808,000 electric
customers and 238,000 natural gas customers. Its service
territory reflects a diversified economy, including high-tech
firms, light industry, colleges and universities, agriculture and
recreational facilities. No customer accounts for 5% or more of
either electric or natural gas revenues. For the years 1996, 1995
and 1994, 84%, 85% and 84%, respectively, of operating revenue
was derived from electric service and the balance was derived
from natural gas service.
The 1996-1997 winter peak load of 2,404 megawatts (mw), was
set on January 17, 1997. This is 207 mw less than the all-time
peak of 2,611 mw set on January 19, 1994. Power supply
capability to meet peak loads is currently 3,094 mw. This is
composed of 2,511 mw of generating capacity (89% coal-fired, 8%
nuclear and 3% hydroelectric) and 1,190 mw of purchases offset by
607 mw of firm sales. The purchases are composed of 599 mw from
nonutility generators (NUGs) and 591 mw from the New York Power
Authority (NYPA). Most purchases from NYPA are hydroelectric
power.
On January 18, 1997, the company experienced its 1996-1997
maximum peak daily sendout for natural gas of 413,309 dekatherms.
This exceeded, by 9,686 dekatherms, the previous year peak of
403,623 dekatherms set on February 5, 1996.
(ii) New product or segment
(See Item 7 - Energy Services and Note 10 to the
Consolidated Financial Statements.)
(iii) Sources and availability of raw materials
Electric
In 1996, approximately 88% of the company's generation was
coal-fired steam electric, 10% nuclear and 2% hydroelectric
power. About 44% of the company's steam electric generation in
1996 was supplied from its one-half share of the output from the
Homer City Generating Station, which is owned in common with
Pennsylvania Electric Company. An additional 31% was supplied
from the company's Kintigh Generating Station, and the remaining
25% was supplied from its other generating stations which are
located in New York State.
Coal
Coal for the New York generating stations is obtained
primarily from Pennsylvania and West Virginia. Of the 3.1
million tons of coal purchased for the New York generating
stations in 1996, approximately 84% was purchased under
contract and the balance on the open market. Coal purchased
under contract is expected to be approximately 88% of the
estimated 3.4 million tons to be purchased in 1997.
The annual coal requirement for the Homer City
Generating Station is approximately 4.7 million tons, the
majority of which is obtained under long-term contracts.
During 1996, approximately 58% of Homer City Generating
Station coal was obtained under these contracts. The
company anticipates obtaining approximately 60% of the 1997
requirements under these contracts. The balance will be
purchased under short-term contracts and, when necessary, on
the open market.
Nuclear
During the fall of 1996, Niagara Mohawk Power Corpora-
tion (Niagara Mohawk), the operator of Nine Mile Point
nuclear generating unit No. 2 (NMP2), in which the company
has an 18% interest, installed reload No. 5 into the reactor
core at NMP2. This refueling will support NMP2 operations
through the spring of 1998. Reload No. 6 is scheduled for
May 1998 and will support operations through the spring of
2000. Enrichment services are under contract with the U.S.
Enrichment Corporation for 100% of the enrichment
requirements through 1998 and 75% of the requirements
through 2003. Fuel fabrication services are under contract
through 2004. Approximately 90% of the uranium and
conversion requirements are under contract through 2003.
Natural Gas
(See Item 7 - Competitive Conditions - Natural Gas Industry,
Seneca Lake Natural Gas Storage Project.)
The natural gas supply mix includes long-term, short-term
and spot natural gas purchases transported on both firm and
interruptible transportation contracts. During 1996, about 60%
of the company's natural gas supply was purchased from various
suppliers under long-term and short-term sales contracts and 40%
was purchased on the monthly spot natural gas market to maximize
natural gas cost savings. The company's natural gas supply is
expected to be purchased in 1997 in a similar proportion as in
1996.
(iv) Franchises
(See Item 7 - Competitive Conditions.)
The company has, with minor exceptions, valid franchises
from the municipalities in which it renders service to the
public. In 1996, the company obtained authorization from the
Public Service Commission of the State of New York (PSC) for
natural gas distribution service in the city of Plattsburgh, the
towns of Carlisle, Cobleskill, Davenport and Saranac, the
villages of Cobleskill and Dannemora and certain sections of the
town of Halfmoon and village of Rouses Point.
(v) Seasonal business
Sales of electricity are highest during the winter months
primarily due to space heating usage and fewer daylight hours.
Sales of natural gas are highest during the winter months
primarily due to space heating usage.
(vi) Working capital items
The company has been granted, through the ratemaking
process, an allowance for working capital to operate its ongoing
electric and natural gas utility services.
(vii) Single customer - Not applicable
(viii) Backlog of orders - Not applicable
(ix) Business subject to renegotiation - Not applicable
(x) Competitive conditions
(See Item 7 - Competitive Conditions and Accounting
Issues.)
<PAGE>
(xi) Research and development
Expenditures on research and development in 1996, 1995 and
1994 amounted to $11.9 million, $13.1 million and $14.5 million,
respectively, principally for the company's internal research
programs and for contributions to research administered by the
Electric Power Research Institute, the Empire State Electric
Energy Research Corporation, the New York Gas Group and the New
York State Energy Research and Development Authority. These
expenditures are designed to improve existing technologies and to
develop new technologies for the production, distribution and
customer use of energy.
(xii) Environmental matters
(See Item 3 - Legal proceedings, Item 7 - Accounting
Issues and Notes 7, 8 and 9 to the Consolidated
Financial Statements.)
The company is subject to regulation by the federal
government and by state and local governments in New York and
Pennsylvania with respect to environmental matters and is also
subject to the New York State Public Service Law requiring
environmental approval and certification of proposed major
transmission facilities.
The company continually assesses actions that may need to be
taken to comply with changing environmental laws and regulations.
Any additional compliance programs will require changes in the
company's operations and facilities and increase the cost of
electric and natural gas service. Historically, rate recovery
has been authorized for environmental compliance costs.
Capital additions to meet environmental requirements during
the three years ended December 31, 1996 were approximately $37
million and are estimated to be $7 million for 1997, $10 million
for 1998 and $2 million for 1999.
Water quality
The company is required to comply with federal and state
water quality statutes and regulations including the Clean Water
Act (Water Act). The Water Act requires that generating stations
be in compliance with federally issued National Pollutant
Discharge Elimination System Permits (NPDES Permits) or state
issued State Pollutant Discharge Elimination System Permits
(SPDES Permits), which reflect water quality considerations for
the protection of the environment. The company has SPDES Permits
for its six coal-fired generating stations in New York and NMP2.
The company's Homer City Generating Station in Pennsylvania has a
NPDES permit.
In connection with the issuance of permits under the Water
Act, the company has conducted studies of the effects of its coal
pile operations on groundwater quality at its Greenidge,
Jennison, Milliken and Hickling Generating Stations. New York
State groundwater standards are sometimes exceeded at certain
locations at each of those stations. Preliminary studies at
Greenidge Generating Station indicate that elevated levels of
groundwater constituents do not appear to be directly
attributable to the coal pile. The remedial work at Jennison
Generating Station was completed in 1995. The remediation action
at Milliken Generating Station is expected to cost $1.5 million.
The remedial action, if required, at Hickling and Greenidge
Generating Stations is estimated to cost $1.4 million.
Groundwater monitoring data for Kintigh and Homer City Generating
Stations does not indicate facility-induced groundwater
contamination.
Air quality
The company is required to comply with federal and state air
quality statutes and regulations. All stations have the required
federal or state operating permits. Stack tests and continuous
emissions monitoring indicate that the stations are generally in
compliance with permit emission limitations, although occasional
opacity exceedances occur. Efforts continue in the
identification and elimination of the causes of opacity
exceedances. The company and Pennsylvania Electric Company may
find it necessary either to upgrade or install additional
equipment at the Homer City Generating Station in order to
consistently meet the particulate emission requirements.
The Clean Air Act Amendments of 1990 (1990 Amendments) limit
emissions of sulfur dioxide and nitrogen oxides and require
emissions monitoring. The U. S. Environmental Protection Agency
(EPA) allocates annual emissions allowances to each of the
company's coal-fired generating stations based on statutory
emissions limits. An emissions allowance represents an
authorization to emit, during or after a specified calendar year,
one ton of sulphur dioxide.
The costs of controlling toxic emissions under the 1990
Amendments, if required, cannot be estimated at this time, since
the type and level of reductions that may be required is
dependent on several studies currently being performed by the
EPA. Regulations may be adopted at the state level that would
limit toxic emissions even further, at an additional cost to the
company.
The company estimates that it will have allowances in excess
of the affected coal-fired generating stations' actual emissions
during Phase I, which began January 1, 1995. The company's
present strategy is to bank excess allowances for use in later
years. It is estimated that the company will meet Phase II
(which begins January 1, 2000) emissions requirements through the
year 2004, by using allowances banked during Phase I together
with the company's Phase II annual emissions allowances. This
strategy could be modified should market or business conditions
change.
<PAGE>
Waste disposal
The company has received or applied for SPDES Permits, Solid
Waste Disposal Facilities Permits and applicable local permits
for its active ash disposal sites for its New York generating
stations. Groundwater standards have been exceeded in areas
close to portions of the Milliken and Weber ash disposal sites.
Corrective actions have been taken and studies are continuing to
monitor the effectiveness of the corrective actions.
The company has received NPDES permits, a Solid Waste
Disposal Permit and applicable local permits for its active ash
disposal site for the Homer City Generating Station and for the
active refuse disposal site for the Homer City Coal Cleaning
Plant.
A low level radioactive waste management and contingency
plan for NMP2 provides assurance that NMP2 is properly prepared
to handle interim storage of low level radioactive waste until
2006.
Niagara Mohawk has contracted with the U.S. Department of
Energy (DOE) for disposal of high level radioactive waste (spent
fuel) from NMP2. The company is reimbursing Niagara Mohawk for
its 18% share of the costs under the contract (currently
approximately $1 per megawatt hour of net generation). The DOE's
schedule for start of operations of their high level radioactive
waste repository will be no sooner than 2010. The company has
been advised by Niagara Mohawk that the NMP2 Spent Fuel Storage
Pool has a capacity for spent fuel that is adequate until 2014.
If further DOE schedule slippage should occur, construction of
pre-licensed dry storage facilities would extend the on-site
storage capability for spent fuel at NMP2 beyond 2014.
(xiii) Number of employees
The company had 4,114 employees as of December 31, 1996.
(d) Financial information about foreign and domestic operations
and export sales - Not applicable
<PAGE>
Item 2. Properties
(See Item 7 - Competitive Conditions - Electric Industry,
Generation Business.)
The company's electric system includes coal-fired, nuclear,
hydroelectric and internal combustion generating stations,
substations and transmission and distribution lines, all of which
are located in the State of New York, except for the Homer City
Generating Station and related facilities which are located in
the Commonwealth of Pennsylvania. Generating facilities are:
Name and location of station Generating
Coal-fired capability (mw)
Goudey (Binghamton, N.Y.) 80 (1)
Greenidge (Dresden, N.Y.) 104 (1)
Hickling (East Corning, N.Y.) 44 (1)
Jennison (Bainbridge, N.Y.) 72
Milliken (Lansing, N.Y.) 302
Kintigh (Somerset, N.Y.) 675
Homer City (Homer City, Pa.) 959 (2)
-----
Total coal-fired 2,236
Nuclear
NMP2 (Oswego, N.Y.) 206 (3)
Hydroelectric (Various - 9 locations) 62
Internal combustion (Various - 2 locations) 7
-----
Total - all stations 2,511
=====
(1) The company has one unit at each of the Goudey, Greenidge
and Hickling Generating Stations, with a combined capability
of 133 megawatts, on long-term cold standby. These units
can be brought on-line in three to fourteen days.
(2) Company's 50% share of the generating capability.
(3) Company's 18% share of the generating capability.
The company owns 433 substations having an aggregate
transformer capacity of 13,367,720 kilovolt-amperes. The
transmission system consists of 4,840 circuit miles of line. The
distribution system consists of 33,724 pole miles of overhead
lines and 2,025 miles of underground lines.
The company's natural gas system consists of the
distribution of natural gas through 745 miles of transmission
pipelines (over 3-inch equivalent) and 6,000 miles of
distribution pipelines (under 3-inch equivalent).
Somerset Railroad Corporation (SRC), a wholly-owned
subsidiary, owns a rail line consisting of 15 1/2 miles of track
and related property rights in Lockport, Newfane and Somerset,
New York which is used primarily to transport coal and other
materials to the Kintigh Generating Station.
The company's first mortgage bond indenture constitutes a
direct first mortgage lien on substantially all of the company's
properties. Substantially all of the properties of SRC, other
than rolling stock, are subject to a lien of a mortgage and
security agreement.
Item 3. Legal proceedings
(See 1(c)(xii) - Environmental matters and Item 7 - Competitive
Conditions and Rate Matters.)
The company is unable to predict the ultimate disposition of
the matters referred to below in (a), (b), (d), (g), (h), (i),
the first paragraphs in (c) and (f) and the first three
paragraphs in (e). However, since the PSC has allowed the
company to recover in rates remediation costs for certain of the
sites referred to in the preceding sentence, there is a
reasonable basis to conclude that the company will be permitted
to recover in rates any remediation costs that it may incur for
all of the sites referred to in the preceding sentence.
Therefore, the company believes that the ultimate disposition of
the matters referred to below in (a), (b), (d), (g), (h), (i),
the first paragraphs in (c) and (f) and the first three
paragraphs in (e) will not have a material adverse effect on its
results of operations or financial position.
(a) By letter dated February 29, 1988, the New York State
Department of Environmental Conservation (NYSDEC) notified the
company that it had been identified as a potentially responsible
party (PRP) for investigation and remediation of hazardous wastes
at the Lockport City Landfill Site (Lockport Site) in Lockport,
New York. The Lockport Site is listed on the New York State
Registry of Inactive Hazardous Waste Disposal Sites (New York
State Registry). Five other PRPs were identified in the NYSDEC
letter. The company believes that remediation costs at the
Lockport Site might rise to $4 million. The Lockport Site has
been remediated by the site owner, the City of Lockport. By
letter dated May 2, 1988, the company notified the NYSDEC that it
declined to finance remediation costs because it believed that
the NYSDEC had not demonstrated that a significant threat to
public health or the environment existed as a result of hazardous
waste disposal at the Lockport Site.
(b) By letter dated December 10, 1990, the NYSDEC notified the
company that it had been identified as a PRP for investigation
and remediation of hazardous wastes at the Schreck's scrapyard
site (Schreck's Site) in the City of North Tonawanda, New York.
The Schreck's Site is listed on the New York State Registry.
Seven other PRPs were identified in the NYSDEC letter. On
February 3, 1992, the NYSDEC again notified the company that it
had been identified as a PRP for investigation and remediation
costs at the Schreck's Site, this time listing eight other PRPs.
The company was offered an opportunity to conduct remediation or
finance remediation costs at the Schreck's Site, failing which
the NYSDEC might remediate the Schreck's Site itself and commence
an action to recover its costs and damages. By letter dated
April 1, 1992, the company notified the NYSDEC that it believed
it had no responsibility for the alleged contamination at the
Schreck's Site, and it declined to conduct remediation or finance
remediation costs. NYSDEC completed the soil remediation at the
Schreck's Site in February 1994 at a cost of $2.6 million.
Monitoring for groundwater contamination continues at the site.
<PAGE>
(c) By letter dated June 7, 1991, the NYSDEC notified the
company that it had been identified as a PRP at the Pfohl
Brothers Landfill, an inactive hazardous waste disposal site
(Pfohl Site) in Cheektowaga, New York. The Pfohl Site is listed
on the National Priorities List and the New York State Registry.
The NYSDEC offered the company an opportunity to enter into
negotiations with it to undertake the investigation and remedia-
tion of the Pfohl Site. The NYSDEC informed the company that if
it declined such negotiations, the NYSDEC would perform the
necessary work at the Pfohl Site using the Hazardous Waste
Remedial Fund and would seek recovery of its expenses from the
company. On July 3, 1991, the company responded to the NYSDEC by
declining to negotiate to undertake work at the Pfohl Site and
noted that the NYSDEC had not shown any significant
responsibility on the part of the company for the situation at
the Pfohl Site. The company believes that remediation costs at
the Pfohl Site will be $35 million to $55 million. By letter
dated April 2, 1992, the NYSDEC again notified the company that
it had been identified as a PRP for the Pfohl Site and offered
the company an opportunity to conduct or finance the on-site
remedial design and action. This notice letter was also sent to
19 other PRPs. Ten of these other PRPs have agreed to perform
the remedial work required by the NYSDEC. By letter dated June
1, 1992, the company notified the NYSDEC that it declined to
perform such remedial work because it believed that it was not a
significant contributor to the Pfohl Site. The company believes
the PRPs currently involved in conducting remediation at the
Pfohl Site were much larger contributors. In May 1995 the
company agreed to participate in a process for allocating
remedial costs at the Pfohl Site with the other PRPs. The company
contributed $20,000 toward past costs, which sum is subject to
that allocation process.
Four actions were commenced against the company and
approximately 19 other defendants in the New York State Supreme
Court, Erie County (on January 17, 1995, April 7, 1995, June 14,
1995 and January 10, 1997), by plaintiffs who allegedly resided
near or recreated at the Pfohl Site in Cheektowaga, New York,
claiming damages for personal injuries, wrongful death and loss
of consortium allegedly caused by exposure to hazardous chemicals
from the Pfohl Site. The plaintiffs allege that the defendants
are strictly liable, and were negligent or grossly negligent, for
disposing of hazardous and toxic materials at the Pfohl Site, and
they seek compensatory and punitive damages that total $103.5
million in the aggregate. The company believes that the actions
against it are without merit and will defend them vigorously.
In 1995, four actions were commenced against approximately
11 defendants, and in 1996, an action was commenced against 13
defendants, by plaintiffs who allegedly resided near or recreated
at the Pfohl Site for personal injuries, wrongful death, and loss
of consortium allegedly caused by exposure to hazardous chemicals
from the Pfohl Site. The plaintiffs allege that the defendants
are strictly liable, and were negligent or grossly negligent, for
disposing of hazardous and toxic materials at the Pfohl Site, and
they seek compensatory and punitive damages. The company was not
named as a defendant in these actions. Third-party actions were
commenced in the four 1995 actions against the company and ten
other third-party defendants in the United States District Court
for the Western District of New York (District Court) (two on
April 27, 1995, one on June 9, 1995, and one on November 7,
1995), by third-party plaintiffs who were named as defendants in
the main actions. A third-party action was commenced in the
District Court on August 23, 1996, against the company and ten
other third-party defendants. In each of the five actions, the
third-party plaintiffs allege that the company and the other
third-party defendants are liable for all or a part of any
damages recovered by the plaintiffs. Recovery in these third-
party actions depends on the plaintiffs recovering money damages
against the third-party plaintiffs in the main actions. The
company believes that the actions against it are without merit
and will defend them vigorously.
(d) By letter dated January 21, 1992, the NYSDEC notified the
company that it had been identified as a PRP at the Peter Cooper
Corporation's Landfill Site (Peter Cooper Site) in the village of
Gowanda, New York. Three other PRPs were identified in the
NYSDEC letter. The NYSDEC letter also notified the company that
state surface water and groundwater standards had been exceeded
at the Peter Cooper Site and offered the company an opportunity
to conduct or finance a remedial program. NYSDEC indicated that
if the company did not agree to enter into a consent order it
would perform the necessary work itself or seek a court order
requiring the company to conduct the work. The company believes
that remediation costs at the Peter Cooper Site might rise to $16
million. By letter dated May 12, 1992, the company notified the
NYSDEC that it believed it had no responsibility for the alleged
contamination at the Peter Cooper Site, and it declined to
conduct remediation or finance remediation costs.
On July 2, 1996, the EPA notified the company of its concern
regarding the stream bank erosion along a portion of the Peter
Cooper Site that is located on the company's property. The
company, without admitting any liability or responsibility,
entered into an Order on Consent on October 24, 1996, with the
EPA to stabilize the stream bank. This project was completed in
January 1997 at a cost of $120,000.
(e) By letter dated April 20, 1992, the EPA notified the company
that it had been identified as a PRP at the Bern Metals Removal
Site (Bern Metals Site) in Buffalo, New York. Six other PRPs
have been identified by the EPA. The EPA has taken response
actions at the Bern Metals Site, including investigation,
excavation, and removal of drums and contaminated soil, and
implementation of measures to prevent surface water run-off. The
EPA demanded that the company reimburse the EPA Hazardous
Substances Superfund $2 million in response costs incurred to
date by the EPA, with interest accruing from the date of the
demand. In September 1995 the company and the EPA reached
agreement on a consent order under which the company will pay the
sum of $10,000 in return for a covenant by the EPA not to sue the
company for the EPA's response costs, and to protect the company
from claims of contribution by other PRPs for such costs incurred
to date. The order is awaiting final government approval.
<PAGE>
In addition to the foregoing, the NYSDEC, by letter dated
July 21, 1992, notified the company that it had been identified
as a PRP at the Bern Metals Site, which the NYSDEC defined to
include an adjacent property known as the Universal Iron & Metal
Site (Bern Metals/Universal Iron Site). The Bern
Metals/Universal Iron Site is listed on the New York State
Registry. The NYSDEC also identified eight other PRPs for the
Bern Metals/Universal Iron Site. The NYSDEC has requested that
the company, and the eight other identified PRPs, enter into
negotiations in which the company and the other identified PRPs
would agree to finance or conduct a Remedial Investigation and
Feasibility Study (RI/FS) designed to determine what further
remediation or removal actions may be appropriate for the Bern
Metals/Universal Iron Site. By letter dated December 3, 1992,
the company declined to negotiate with NYSDEC to finance or
conduct an RI/FS for the Bern Metals/Universal Iron Site, because
the company believes it was only a very small contributor to the
Bern Metals Site and had no involvement with the Universal Iron &
Metal Site.
An RI/FS was performed at the Bern Metals/Universal Iron
Site by certain of the other PRPs, and a proposed remedial action
plan identifying the preferred remedy and summarizing the other
alternatives considered has been issued for the site. The
NYSDEC, by letter dated March 22, 1996, to the company and six of
the other eight PRPs, inquired whether the company and such six
other PRPs were willing to conduct or finance the design and
implementation of the remedial alternative once it was selected.
The NYSDEC informed the company that if it declined to enter into
negotiations with it for such purpose, it might remediate the
Bern Metals/Universal Iron Site itself using the Hazardous Waste
Remedial Fund and would seek recovery of its expense from the
company. On March 29, 1996, NYSDEC issued a Record of Decision
which provided for remedial action having an estimated cost of
$1.9 million. By letter dated April 4, 1996, the company offered
to enter into negotiations with NYSDEC without admission of
liability or responsibility even though the company's
contribution to the site, if any, was of a de minimis nature,
provided that NYSDEC take action to send notices of
responsibility to a substantial number of other PRPs. In
addition, the company believes that it does not have any
connection with the Universal Iron & Metal Site.
On September 11, 1996, the company was named as a third-
party defendant by Niagara Frontier Transportation Authority
(NFTA) claiming contributions for costs that might be recovered
against NFTA in an action filed by EPA in the United States
District Court for the Western District of New York. Fifty-five
other third-party defendants were sued in addition to the
company. NFTA is seeking contributions for response costs
incurred by EPA at the Universal Iron Site. The company believes
that the action against it is without merit and will defend it
vigorously.
<PAGE>
(f) By letter dated April 20, 1992, the EPA notified the company
that the EPA had reason to believe that the company was a PRP for
the Clinton-Bender Removal Site (Clinton-Bender Site) in Buffalo,
New York. Five other PRPs have been identified by the EPA. Nine
private residential lots and one commercial property at the
Clinton-Bender Site were contaminated with lead, allegedly due to
run-off from the adjacent Bern Metals Site. The EPA ordered the
company to perform the necessary removal work at the Clinton-
Bender Site and the company is remediating the site in
conjunction with four other identified PRPs. The total cost of
the removal actions to be performed at the Clinton-Bender Site is
estimated to be $3.1 million. The company and the other
participating parties are seeking to recover from other PRPs, not
participating in the remedial action at the Clinton-Bender Site,
any cost that the company and other participating parties have
incurred or will incur.
On November 3, 1993, the company was served with a summons
and complaint filed on behalf of certain of the homeowners at the
Clinton-Bender Site. Seven other defendants were named in the
complaint, which was filed in the New York State Supreme Court,
Erie County (Supreme Court, Erie County). The action was removed
to the U.S. District Court for the Western District of New York
(Western District Court). In their complaint, plaintiffs make
general allegations that the defendants violated federal
environmental laws without alleging facts in support of these
allegations. Plaintiffs also allege personal injury, property
damage, and fear of cancer which they claim were caused by the
presence of hazardous substances on their property, allegedly
resulting from the disposal of such substances by the defendants
at the Bern Metals Site. Any liability incurred as a result of
these claims may be joint and several. The plaintiffs ask for
$30 million in direct damages from all defendants, as well as
treble damages (for unspecified reasons) from all defendants, and
an additional $10 million in punitive damages from each
defendant. By order dated September 1, 1995, the Western
District Court dismissed the plaintiffs claims made under the
Clean Air Act, the Clean Water Act, and the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980
(CERCLA), which are the only claims based upon federal causes of
action, and remanded the action to the Supreme Court, Erie
County. The company believes that the ultimate disposition of
this matter will not have a material adverse effect on its
results of operations or financial position.
(g) By letter dated February 12, 1993, NYSDEC notified the
company that it had been identified as a PRP for remediation of
hazardous wastes at the Booth Oil Site (Booth Oil Site) in North
Tonawanda, New York. The Booth Oil Site is listed on the New
York State Registry. Nineteen other PRPs were identified in the
NYSDEC letter. Booth Oil Company is a waste oil re-refiner and
recycler. The company had sent waste oils to Booth Oil Company
for disposal as had numerous other companies in the Buffalo area.
According to NYSDEC, the Booth Oil Site is contaminated with
PCBs, lead, and other substances. NYSDEC has requested that the
company and the other identified PRPs conduct remediation at the
Booth Oil Site pursuant to an Order on Consent to be negotiated
with NYSDEC. The company estimates that the present value of
costs for remedial alternatives range from $7.2 million to $21.7
million. The company has been actively involved both in trying
to persuade NYSDEC to name additional PRPs and in examining the
process which led to the NYSDEC treatment alternatives. Other
named PRPs have also been involved in these efforts. The PRPs
and NYSDEC have agreed to study an alternative concept for
remediation of the Booth Oil Site.
(h) On June 14, 1994, the company was served with a summons and
complaint joining the company as a defendant in an action that
was filed in the United States District Court for the Northern
District of New York. The plaintiffs are five companies which
have been required by the EPA to conduct remedial activities at
the Rosen Brothers Site (Rosen Site) in the City of Cortland, New
York. The Rosen Site was the location of a scrap metal
processing operation and industrial waste disposal site between
approximately 1971 and 1985, and it is now allegedly contaminated
with hazardous substances including heavy metals, solvents and
PCBs. The Rosen Site is listed on the National Priorities List
and the New York State Registry. Among other claims, the
plaintiffs seek contribution under CERCLA from the company and
sixteen other defendants for the costs of complying with the EPA
order to remediate the Rosen Site. The plaintiffs allege that
the company was a contributor of transformers which may have
contained polychlorinated biphenyls (PCBs). Liability under
CERCLA may be joint and several.
By letter dated August 16, 1994, the EPA notified the
company that the EPA had reason to believe that the company was a
PRP for the Rosen Site and requested that the company participate
in the RI/FS then being prepared for the Rosen Site by the other
named PRPs. By letter dated October 20, 1994, the company
declined to participate in this study because it believes that no
facts have been established showing that it was responsible for
any contamination at the Rosen Site. While the study has been
completed, the EPA has not yet selected a remedy for the site,
and therefore, the total amount of remedial costs is currently
unknown.
(i) The company responded on October 3, 1995, to a request for
information by the EPA concerning alleged disposal of PCBs at
facilities owned or operated by PCB Treatment, Inc. in Kansas
City, Kansas and Kansas City, Missouri. On September 27, 1996,
the company entered into an Order on Consent with the EPA under
which the company and at least nine other companies will conduct
a Removal Site Evaluation and Engineering Evaluation/Cost
Analysis (Site Evaluation) at the two facilities operated by PCB
Treatment, Inc. The cost to the company of its obligations under
this Order on Consent is not expected to exceed $65,000. Since
the Site Evaluation has not been completed, the total cost to
remediate these sites is unknown.
<PAGE>
Item 4. Submission of matters to a vote of security holders -
Not applicable.
* * * * * * * * * *
Executive officers of the Registrant
Positions, offices and
business experience -
Name Age January 1992 to date
Wesley W. von Schack 52 Chairman, President and Chief Execu-
tive Officer, September 1996 to date;
Chairman, President, Chief Executive
Officer and a Director of DQE, Inc.
and Duquesne Light Company to August
1996.
Jack H. Roskoz 58 Executive Vice President, January
1995 to date; Senior Vice President-
Electric Business Unit, to January
1995.
Michael I. German 46 Senior Vice President-Gas Business
Unit, December 1994 to date; Senior
Vice President, American Gas Assoc-
iation, Arlington, Virginia, to
December 1994.
Gerald E. Putman 46 Senior Vice President-Customer
Service Business Unit, January 1995
to date; Vice President-Fuel Supply
and Operation Services, May 1993 to
January 1995; Vice President-East
Region Electric, September 1992 to
May 1993; Executive Assistant to the
Chairman, President and Chief
Executive Officer, to September 1992.
Sherwood J. Rafferty 49 Senior Vice President and Chief
Financial Officer, February 1996 to
date; Vice President and Treasurer,
to February 1996.
Daniel W. Farley 41 Vice President and Secretary.
Jeffrey K. Smith 48 Vice President-Generation, January
1995 to date; Executive Assistant to
the Chairman, President and Chief
Executive Officer, February 1994 to
January 1995; Assistant to the Senior
Vice President-Electric Business
Unit, to February 1994.
<PAGE>
Executive officers of the Registrant (Cont'd)
Positions, offices and
business experience -
Name Age January 1992 to date
Ralph R. Tedesco 43 Vice President-Strategic Growth
Business Unit, February 1994 to date;
Executive Assistant to the Chairman,
President and Chief Executive
Officer, September 1992 to February
1994; Manager, Corporate Performance,
to September 1992.
Gary J. Turton 49 Vice President and Controller,
February 1996 to date; Controller,
December 1994 to February 1996;
Assistant Controller, to December
1994.
Denis E. Wickham 48 Vice President-Electric Resource
Planning.
Robert D. Kump 35 Treasurer, February 1996 to date;
Director of Financial Services,
February 1995 to February 1996;
Manager-Investor Relations, October
1993 to February 1995; Specialist-
Investor Relations, to October 1993.
The company has entered into an agreement with Wesley W. von
Schack which provides for his employment as Chairman, President
and Chief Executive Officer of the company for a term ending on
September 8, 1999, with automatic one-year extensions unless
either party gives notice that the agreement is not to be
extended.
Each officer holds office for the term for which he is
elected or appointed, and until his successor shall be elected
and shall qualify. The term of office for each officer extends
to and expires at the meeting of the Board of Directors
following the next annual meeting of shareholders.
PART II
Item 5. Market for Registrant's common equity and related
stockholder matters
See Note 4 and Note 13 to the Consolidated Financial
Statements.
<PAGE>
Item 6. Selected financial data
1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------
(Thousands - except per share amounts)
Operating revenues $2,059,371 $2,009,541 $1,898,855 $1,800,149 $1,691,689
Net income $178,241(1) $196,690 $187,645(2) $166,028(3) $183,968
Earnings per share $2.37(1) $2.49 $2.37(2) $2.08(3) $2.40
Dividends paid
per share $1.40 $1.40 $2.00 $2.18 $2.14
Average shares
outstanding 71,127 71,503 71,254 69,990 67,972
Book value per share
of common stock
(year end) $25.41 $24.38 $23.28 $22.89 $22.85
Interest charges,
Net $122,729 $129,567 $136,092 $141,099 $151,831
Depreciation and
amortization $189,401 $184,770 $178,326 $164,568 $158,977
Other taxes $206,715 $210,910 $210,729 $204,962 $200,941
Capital
expenditures $211,837 $158,681 $224,306 $245,029 $245,618
Total assets $5,059,681 $5,114,331 $5,230,685 $5,287,958 $5,077,916
Long-term obliga-
tions, capital
leases and
redeemable
preferred stock $1,505,814 $1,606,448 $1,776,081 $1,755,629 $1,883,927
(1)Includes the effect of the writedown of the investment in EnerSoft
Corporation that decreased net income by $10 million and earnings per share
by 14 cents.
(2)Includes the effect of the 1993 production-cost penalty that decreased net
income by $8 million and decreased earnings per share by 12 cents.
(3)Includes the effect of restructuring expenses that decreased net income by
$17 million and decreased earnings per share by 25 cents.
<PAGE>
Item 7. Management's discussion and analysis of financial
condition and results of operations
Liquidity and Capital Resources
Competitive Conditions
Movement toward competition was swift during 1996 for the
historically regulated electric industry. The company is
addressing numerous issues as it adjusts to operate under the
complex and sweeping changes faced by its electric and natural
gas businesses.
Electric Industry
The Public Service Commission of the State of New York
(PSC), the Federal Energy Regulatory Commission (FERC) and
regulators in other states are revising their policies to
introduce competition and reduce rates in the electric industry.
Orders were issued during 1996 in two significant proceedings:
the PSC's Competitive Opportunities Proceeding and the FERC's
proceeding relating to competitive wholesale electric markets.
Competitive Opportunities Proceeding: The transition to a more
competitive electric industry in New York State was set in motion
in August 1994 when the PSC instituted the Competitive
Opportunities Proceeding. The overall objective of this
proceeding is to identify regulatory and ratemaking practices
that will assist in the transition to a more competitive electric
industry.
On May 20, 1996, the PSC issued its Order in the Competitive
Opportunities Proceeding, which calls for a competitive wholesale
power market in early 1997 and the introduction of retail access
for all electric customers in early 1998. The Order also calls
for lowering rates for consumers, increasing customers' choice of
suppliers, continuing reliability of service, continuing programs
that are in the public interest, allaying concerns about market
power and continuing customer protections and the utilities'
obligation to serve.
The Order strongly encourages divestiture, particularly of
generation assets, but does not require it. The Order states
that incentives for divestiture will be worked out for each
utility in conjunction with the rate and restructuring plan it
was required to submit by October 1, 1996. (See Electric Rate
and Restructuring Plan.) The Order also states that utilities
should have a reasonable opportunity to seek recovery of
strandable costs consistent with the goals of lowering rates,
fostering economic development, increasing customer choices and
maintaining reliable service. Certain aspects of the
restructuring envisioned by the PSC -- particularly its apparent
determinations that it can deny a reasonable opportunity to
recover prudent past investments made on behalf of the public,
order retail wheeling, require divestiture of generation assets
and deregulate certain sectors of the energy market -- could, if
implemented, have a negative effect on the operations of New
York's investor-owned electric utilities, including the company.
On October 9, 1996, the PSC issued a procedural order
allowing until January 7, 1997, (subsequently extended for the
company until March 25, 1997) to complete the discovery and
settlement negotiations regarding the utilities' submissions. An
evidentiary hearing will be held in each case in which a proposed
settlement agreement is filed and opposed by one or more parties.
Energy Association Lawsuit: In September 1996 the company joined
with six other New York utilities and the Energy Association of
New York State (Energy Association) in filing a lawsuit in the
New York State Supreme Court, Albany County (Court) to annul the
PSC's Order in the Competitive Opportunities Proceeding. The
lawsuit seeks a declaration that the PSC's Order is unlawful, or
in the alternative, that the Court clarify that the PSC's Order
is simply a policy statement and can be given no binding effect
by the PSC. The intent of the lawsuit is not to challenge the
transition to competition, but to ensure that the transition is
orderly and competition is fair to customers, shareholders and
taxpayers. The lawsuit was necessary to preserve the company's
shareholders' rights to have the opportunity to recover prudent
investments made to serve customers and to protect the
reliability of the electric system. To preserve those rights a
lawsuit had to be filed within four months of the PSC's Order.
The lawsuit contends, among other things, that the PSC did
not follow proper procedures in reaching its decision in the
Competitive Opportunities Proceeding and lacks the statutory or
legal authority to: deny a reasonable opportunity for utilities
to recover past expenditures prudently incurred to fulfill their
legal obligation to provide electricity service to the public,
mandate retail wheeling, deregulate the rates charged by
electricity generators or the energy services sector and order
divestiture of the utilities' assets. On November 26, 1996, the
Court issued a decision denying the relief requested.
On December 24, 1996, the seven New York utilities and the
Energy Association appealed the decision to the New York State
Supreme Court, Appellate Division (Third Department).
Given the uncertainties regarding the Competitive
Opportunities Proceeding and the Energy Association lawsuit to
annul the PSC's Order in that proceeding, the company is unable
to predict the outcome of this proceeding and the ultimate effect
on the company's financial position, results of operations, or
<PAGE>
its eligibility to continue applying Statement of Financial
Accounting Standards No. 71 (Statement 71), Accounting for the
Effects of Certain Types of Regulation. (See Accounting Issues.)
Electric Rate and Restructuring Plan: On September 27, 1996, the
company submitted a five-year rate and restructuring plan
(NYSEGPlan) in response to the PSC's Order dated May 20, 1996, in
the Competitive Opportunities Proceeding. The company
anticipates amending NYSEGPlan in the near future to provide for
the formation of a holding company. If implemented with the
anticipated amendments, NYSEGPlan would:
- Freeze the average retail price of electricity for five
years, beginning August 1, 1997, and allow customers to
increase their electricity use at up to half the
present price.
- Allow the company to form a holding company and
transfer designated coal-fired generation assets
to a generation company or companies within the
holding company structure.
- Introduce wholesale competition on August 1, 1997, and
phase in retail competition beginning August 1, 1998.
- Give investors a reasonable opportunity to fully
recover past, prudently incurred costs.
In NYSEGPlan, the company emphasizes that lowering electric
prices will take a combination of competition and a reduction of
mandated costs, such as power purchases from nonutility
generators (NUGs) and New York State's high taxes. Those
mandated costs have resulted in excess payments to NUGs and taxes
in New York State that are more than twice the national average.
Such above-market costs will diminish the ability of New York
State utilities to compete in the retail market with utilities in
other states.
NYSEGPlan is contingent upon the receipt of electric price
increases of 2.8% scheduled for August 1, 1996, and 2.7% a year
later, as approved by the PSC in August 1995 under the company's
three-year electric rate settlement agreement. The price
increases are needed primarily to cover the rising cost of NUG
power, higher taxes and past expenditures whose recovery has been
delayed. NYSEGPlan is also contingent upon the reasonable
opportunity to fully recover prudently incurred investments, the
outcome of the Energy Association lawsuit, FERC approval and
implementation of a statewide Independent System Operator and
Power Exchange, no restriction on investment and earnings by
unregulated affiliates and final corporate and regulatory
approvals. (See Energy Association Lawsuit and Rate Matters.)
Generation Business: The company plans to transfer designated
generation assets to a generation company or companies. (See
Electric Rate and Restructuring Plan.) The company has sharpened
its focus on the evolving wholesale power market and is
concentrating on maximizing short-term wholesale power sales and
pursuing and negotiating creative medium- and long-term wholesale
sales contracts to improve its competitive position.
In July 1996 the company announced plans to remove three
generating units from active service by mid-1997, if initiatives
to improve the marketability of their output do not succeed. The
three units, two at Jennison Generating Station and one at
Hickling Generating Station, represent 116 megawatts (MW) of
capacity and would be placed on long-term cold standby.
Currently Goudey, Greenidge and Hickling generating stations each
have one unit on long-term cold standby, representing a combined
capacity of 133 MW. Certain of these units operated
intermittently in 1996 when energy markets were favorable.
Petition to the FERC on NUGs: In February 1995 the company
petitioned the FERC asking for relief from having to pay
approximately $2 billion more than its avoided costs for power
purchased over the lives of two NUG contracts. The FERC denied
that petition in April 1995 and denied the company's subsequent
request for a rehearing. The company believes that the
overpayments under the two contracts violate the Public Utility
Regulatory Policies Act of 1978.
In June 1995 the company filed a petition with the United
States Court of Appeals for the District of Columbia to review
the FERC's decision.
The company continues to seek cost-effective ways to
terminate or renegotiate existing NUG contracts and thus reduce
its overpayment burdens under such contracts.
FERC Orders 888 and 889: In April 1996 the FERC issued Orders
888 and 889 adopting final rules to facilitate the development of
competitive wholesale electric markets by opening up transmission
services and to address the resulting stranded costs.
The FERC directed all public utilities to file a compliance
open-access transmission tariff on or before July 9, 1996. Order
888 allows each utility to submit further modifications to its
tariff, and allows customers to request modifications to the
tariff. The company filed its compliance open-access
transmission tariff and a modified open-access transmission
tariff on July 9 and July 10, 1996, respectively. The FERC
accepted the company's transmission rates filed on July 9, 1996,
subject to refund and set the rates for hearing. As required by
<PAGE>
the FERC, in February 1997 the company filed a new compliance
tariff with respect to non-rate terms and conditions, which
became effective retroactively on January 29, 1997.
Under the compliance tariff, the company must offer
transmission service to its wholesale customers on terms
comparable to those it applies to itself, and it is also required
to offer and/or provide certain ancillary services. The
company's tariff and tariffs of other utilities could adversely
affect the revenues received and payments made by the company in
connection with its transmission and wholesale power
transactions.
On December 30, 1996, the New York Power Pool (NYPP), of
which the company is a member, submitted a compliance filing with
the FERC in response to Order 888. This filing indicates the
intention to restructure the NYPP using an Independent System
Operator (ISO) structure, as endorsed by the FERC. On January
31, 1997, the NYPP submitted an additional restructuring filing,
which includes proposals to establish an ISO, a Power Exchange
and a New York State Reliability Council. The company is unable
to predict the outcome of these filings and their ultimate effect
on the company's financial position or results of operations.
Natural Gas Industry
During 1996 the company added nine natural gas franchises
and gained approximately 5,000 natural gas customers in both new
and existing franchise areas. The company plans to continue to
increase its natural gas business through the expansion of
natural gas service in existing franchise areas and to acquire
new franchises. The company completed two new large pipelines in
December 1996. A 25-mile pipeline system was constructed, and
natural gas began flowing to large industrial and public
authority customers in the Plattsburgh area. A 10-mile pipeline
was constructed, and natural gas began flowing to a large
industrial customer in Cobleskill.
The natural gas business has experienced a number of
regulatory changes, including FERC Order 636, which has been in
effect for three years, and recent PSC opinions and orders.
PSC Opinions and Orders: The PSC issued an Opinion and Order in
December 1994 (December Order) that set forth the policy
framework to guide the transition of New York's gas distribution
industry to a more competitive marketplace after the
implementation of FERC Order 636. The PSC subsequently issued an
Order on Reconsideration in August 1995 addressing petitions for
rehearing or clarification of the December Order. In November
1995 the company and other utilities filed restructuring tariffs
in compliance with the Order on Reconsideration.
<PAGE>
Under the company's natural gas tariffs that were approved
by PSC Order in March 1996 (March Order) with certain
modifications, all of the company's customers -- residential,
small business and commercial, and industrial -- may buy natural
gas from other sources under a small customer aggregation
program, with the company providing delivery service for a
separate fee. The company has been offering unbundled
transportation services for a decade. The March Order approving
the company's tariffs is not expected to have a material effect
on the company's natural gas operations. Consistent with the
March Order, the company is implementing new services to compete
more effectively for sales to larger, more sophisticated
transportation customers as well as smaller customers.
Seneca Lake Natural Gas Storage Project: The company's Seneca
Lake storage project was placed in service in December 1996. The
project consists of a natural gas storage cavern, a compressor
station and two natural gas transmission pipelines. The storage
facility, located north of Watkins Glen on the west side of
Seneca Lake, includes a depleted salt cavern that has a working
capacity of 800 million cubic feet of natural gas.
The project's primary purposes are to ensure an adequate
natural gas supply to customers and to support economic growth in
southern and central New York. The project also allows the
company to increase supply flexibility, retire two inefficient
and expensive propane plants and reduce pipeline demand charges.
The company expects to expand the project in 1997, at an
estimated cost of $10 million. The expansion will allow for
growth in the company's wholesale natural gas business through
the sale of storage capacity in interstate commerce. The company
submitted a filing to the PSC in December 1996 for approval to
expand the project, and submitted a filing to the FERC in January
1997 for approval to provide additional services related to the
project expansion.
Economic and Business Climate
For the past few years the sluggish economy in New York
State has limited the company's sales growth opportunities and
increased the difficulty of retaining and expanding its
industrial customer base. There are indications, however, that
the state's economic and business climate is improving. When
fully implemented, proposed tax cuts in combination with
previously legislated tax cuts will reduce business and personal
taxes by $5.7 billion a year, and more than 400 burdensome
business regulations will have been eliminated or changed.
<PAGE>
The company continues to focus on improving sales. The
flexible rates the company has developed allow it to negotiate
long-term contracts with eligible electric and natural gas
customers. The contracts may cover existing or new load, or
both.
Accounting Issues (See Note 1.)
The PSC's Competitive Opportunities Proceeding could affect
the eligibility of the company to continue applying Statement 71.
If the company could no longer meet the criteria of Statement 71
for all or a separable part of its business, the company may have
to record as expense or revenue certain previously deferred items
(regulatory assets and regulatory liabilities) and may have to
record as a loss the amount for power purchase contracts with
NUGs that is above the estimated price in a competitive
marketplace. These items are currently recovered in rates.
At December 31, 1996 and 1995, the company had $604 million
and $690 million, respectively, of regulatory assets, and $269
million and $294 million, respectively, of regulatory liabilities
on its balance sheets. At December 31, 1996, the company also
had power purchase contracts with NUGs that, on a present value
basis, are $1.8 billion above the estimated price in a
competitive marketplace. Although the company believes it will
continue to meet the criteria of Statement 71 in the near future,
it cannot predict what effect a competitive marketplace or future
PSC actions will have on its ability to continue to do so.
The company has other costs currently being recovered in
rates that may not be fully recoverable in a competitive
marketplace, including operating costs for certain generating
plants that may be above the market price for electricity. The
inability to recover those above-market costs would have an
adverse effect on the company's financial position and results of
operations.
Energy Services (See Note 10.)
The company has been making investments in energy services
companies through its subsidiary, NGE Enterprises, Inc. (NGE).
Those companies provide energy, financial and environmental
services.
During 1996 NGE determined that EnerSoft Corporation
(EnerSoft), a computer software and real-time information and
trading systems company, no longer fit NGE's strategic focus. As
a result, the company took a $10 million (14 cents per share)
charge against earnings in 1996 to write down NGE's investment in
EnerSoft, and exited that business in December 1996.
XENERGY, Inc. (XENERGY), acquired in June 1994, is an energy
services, information systems and energy-consulting company
serving utilities, governmental agencies and end-use energy
consumers. XENERGY's revenues were slightly higher in 1996 than
in 1995, and are expected to grow in 1997.
XENERGY has been successful in securing customers under
pilot programs for retail electricity competition. In
Massachusetts, XENERGY was chosen to supply 200 thousand
megawatt-hours per year to the Massachusetts High Technology
Council, a group of 13 companies participating in the pilot
program. In New Hampshire, XENERGY has formed an alliance with
Freedom Energy Company, L.L.C. to supply power to customers
representing approximately 10% of the 50-megawatt load in the
pilot program.
The company's investment as of December 31 and net loss for
the year ended December 31 related to NGE are:
1996 1995 1994
(Millions)
Investment $57 $54 $47
Net Loss* $21 $12 $6
*Includes net loss from EnerSoft of $16 million, $7 million and
$5 million in 1996, 1995 and 1994, respectively. EnerSoft's 1996
net loss includes $10 million related to NGE's decision to exit
that business.
The company expects that NGE will continue to incur
operating losses at least through 1997, but at a lower level due
to the exit from EnerSoft.
Rate Matters
Electric Rate Settlement
The company's current three-year electric rate settlement
agreement (electric agreement), approved by the PSC on August 1,
1995, is effective for the period August 1, 1995, through July
31, 1998. Effective August 1 each year, the electric agreement
provides for:
1995 1996 1997
Revenue increase (millions) $45.1 $45.3 $45.5
Percent increase 2.9% 2.8% 2.7%
Allowed return on equity 11.1% 11.2% 11.2%
The rate increases for years two and three of the electric
agreement are primarily to cover increases in the mandated
purchases of power from NUGs, higher taxes and past expenditures
whose recovery has been delayed to lessen previous rate
increases.
NUG power purchases, including termination costs, totaled
$320 million in 1996, and the company estimates that such
purchases will total $338 million in 1997, $351 million in 1998
and $352 million in 1999. (See Note 8.)
At the time the electric agreement was approved by the PSC,
the rate design for years two and three had yet to be determined.
In May 1996 a PSC administrative law judge issued a Recommended
Decision (RD) on the rate design for years two and three. In
July 1996 the company submitted the draft rate design for year
two to the PSC. This rate design was based on the RD and had an
effective date of September 1, 1996.
The PSC issued an order in August 1996 that deferred the use
of the year-two rates contained in the filing through December
30, 1996, unless otherwise ordered by the PSC. In September 1996
the company filed a petition for rehearing with the PSC
requesting that the PSC vacate its August Order and place in
effect a tariff containing a revenue allocation and rate design
that would increase revenues $45.3 million during year two of the
electric agreement. On December 18, 1996, the PSC issued an
order that further deferred use of the year-two rates through
June 30, 1997. On January 16, 1997, the PSC issued an order
denying the petition for rehearing and stated that the petition
should be considered in the context of NYSEGPlan. (See Electric
Rate and Restructuring Plan.)
On December 23, 1996, the company filed a lawsuit in the New
York State Supreme Court, Albany County. Among other things, the
lawsuit asks for a judgment directing the PSC to immediately
issue an order granting the company rates that include year-two
rate increases.
The company is unable to predict the outcome of this matter
and its ultimate effect on the company's financial position or
results of operations.
Natural Gas Rate Settlement
The company's natural gas rate settlement agreement (gas
agreement), which was authorized by the PSC in December 1995,
freezes natural gas prices from December 15, 1995, until July 31,
1998. The natural gas rates approved in the gas agreement made
permanent, until July 31, 1998, a 3.2% increase, less an
adjustment of about $1 million. That increase became effective
August 1, 1995, the final year of the gas portion of the previous
three-year electric and natural gas rate settlement agreement.
An earnings sharing mechanism in the gas agreement provides
that the average of the earned equity returns (exclusive of
service quality awards or penalties) will be determined for the
three years, and half of the three-year average of net earnings
in excess of 14%, if any, will be shared with customers.
The gas agreement eliminated, effective August 1, 1995, the
gas adjustment clause and the weather normalization clause, which
were used to collect from, or refund to, customers amounts
resulting from changes in the cost of purchased natural gas and
the effect of unusually warm or cold weather on natural gas
sales. The company uses risk management techniques such as
natural gas futures and options to manage natural gas commodity
prices and to fix margins on sales of natural gas.
Environmental Matters (See Notes 8 and 9.)
The company continually assesses actions needed to comply
with changing environmental laws and regulations. Any additional
compliance programs will require changes in the company's
operations and facilities and increase the cost of electric and
natural gas service. Historically, rate recovery has been
authorized for environmental compliance costs.
The Clean Air Act Amendments of 1990 (1990 Amendments) limit
emissions of sulfur dioxide and nitrogen oxides and require
emissions monitoring. The U.S. Environmental Protection Agency
(EPA) allocates annual emissions allowances to each of the
company's coal-fired generating stations based on statutory
emissions limits. An emissions allowance represents an
authorization to emit, during or after a specified calendar year,
one ton of sulphur dioxide.
The company estimates that it will have allowances in excess
of the affected coal-fired generating stations' actual emissions
during Phase I, which began on January 1, 1995. The company's
present strategy is to bank excess allowances for use in later
years. It is estimated that the company will meet Phase II
(begins January 1, 2000) emissions requirements through the year
2004, by using allowances banked during Phase I together with the
company's Phase II annual emissions allowances. This strategy
could be modified should market or business conditions change.
<PAGE>
Investing and Financing Activities
Investing Activities
Capital expenditures for the company's electric and natural
gas businesses, including nuclear fuel and the allowance for
funds used during construction (AFDC), totaled $215 million in
1996, $164 million in 1995 and $248 million in 1994.
Expenditures in those three years were primarily for the
extension of service, necessary improvements to existing
facilities and compliance with environmental requirements. In
1996 and 1995 capital expenditures were financed entirely with
internally generated funds.
Capital expenditures projected for 1997, 1998 and 1999 are
$141 million, $157 million and $128 million, respectively, and
are expected to be financed entirely with internally generated
funds. (See Note 8.)
Financing Activities
In September 1996 the company initiated a common stock
repurchase program of not to exceed four million shares. As of
December 31, 1996, the company had repurchased 1,832,500 shares
at an average price of $21.90 per share. Common stock equity was
reduced by $40 million as a result of the repurchase. The
company plans to purchase shares from time to time as market and
other conditions warrant.
The company's other financing activities during 1996, funded
through the issuance of commercial paper, consisted of:
- The redemption, at a premium, of $100 million of 8.95%
preferred stock.
- The redemption, at par, of $23 million of 9 7/8% Series
first mortgage bonds, due February 1, 2020, pursuant to
a sinking fund provision in the company's mortgage
indenture.
- The redemption, at a premium, of the remaining $37
million of 8 5/8% Series first mortgage bonds due 2007.
- The purchase, at a discount, of $2.60 million of 4.15%
preferred stock, $1.98 million of 4.40% preferred stock
and $1.48 million of 4.15% (1954) preferred stock.
Since 1987 the company has reduced its debt from 62% to 45%
of total capital (includes current maturities) and has raised its
common stock equity from 33% to 51% of total capital at December
31, 1996.
The company reduced its embedded cost of long-term debt to
6.9% at the end of 1996, and has refinanced and/or redeemed more
than $1.8 billion in long-term debt since the beginning of 1988.
The embedded cost of preferred stock, which was reduced
significantly due to the redemption of the 8.95% preferred stock,
was 6% at December 31, 1996. Annual interest expense and
preferred stock dividends have been reduced by nearly $80 million
since the beginning of 1988.
The company uses short-term, unsecured notes, usually
commercial paper, to finance certain refundings and for other
corporate purposes. There was $129 million and $29 million of
commercial paper outstanding at December 31, 1996 and 1995,
respectively, at weighted average interest rates of 5.8% and
6.1%, respectively.
The company also has a revolving credit agreement with
certain banks that provides for borrowing up to $200 million
until December 31, 2001. There were no amounts outstanding under
this agreement during 1996 or 1995.
<PAGE>
Results of Operations
1996 1995
over over
1995 1994
1996 1995 1994 Change Change
(Thousands, except per share amounts)
Total Operating Revenues $2,059,371 $2,009,541 $1,898,855 2% 6%
Operating Income $457,543 $472,144 $438,575 (3%) 8%
Earnings Available for
Common Stock $168,711 $177,969 $168,698 (5%) 5%
Average Shares Outstanding 71,127 71,503 71,254 (1%) -
Earnings Per Share $2.37 $2.49 $2.37 (5%) 5%
Earnings Per Share Excluding
Certain Charges $2.51 $2.49 $2.49 1% -
Dividends Per Share $1.40 $1.40 $2.00 - (30%)
Earnings per Share
Earnings per share for 1996 were 12 cents lower than 1995
earnings per share. Without a charge of 14 cents per share to
write down an investment in EnerSoft Corporation by NGE
Enterprises, Inc., 1996 earnings per share would have been two
cents higher than the prior year.
Higher electric and natural gas retail sales, mainly due to
a combination of cold weather in the first quarter of 1996 and
additional customers, added five cents per share to earnings.
Lower interest charges in 1996 added nine cents per share to
earnings and a reduction in preferred stock dividends, primarily
due to the redemption of $100 million of 8.95% preferred stock,
net of related interest expense on commercial paper, added 10
cents per share to earnings. Earnings per share were reduced 15
cents because of lower electric retail margins, primarily due to
increases in mandated purchases of power from NUGs. (See Electric
Rate Settlement.) Higher operating costs further decreased
earnings six cents per share.
Earnings per share in 1995 were 12 cents higher than in
1994. Excluding a charge for the 1993 production-cost penalty
that lowered 1994 earnings by 12 cents per share, earnings per
share were unchanged between 1995 and 1994.
<PAGE>
Higher electric and natural gas prices added eight cents per
share to 1995 earnings and higher profits on wholesale sales of
electricity added five cents. The company's efforts to control
operating costs increased 1995 earnings two cents per share.
Lower interest charges in 1995, primarily due to the refinancing
and retirement of debt, added six cents per share to earnings.
Those increases were offset by an 11 cent per share decrease in
other income and deductions, mostly because of higher losses
incurred by NGE, and a nine cent charge to earnings per share for
higher maintenance expenses, including storm-related costs.
Interest Expense
Compared to the prior year, interest expense (before the
reduction for allowance for borrowed funds used during
construction) decreased $6 million and $9 million in 1996 and
1995, respectively. The decreases in both years were primarily
the result of the refinancing and retirement of certain issues of
long-term debt.
Dividends Per Share
The quarterly common stock dividend for 1996 was unchanged
compared to 1995. Dividends per share for 1995 decreased 30%
compared to the prior year because the board of directors reduced
the quarterly common stock dividend from 55 cents per share to 35
cents per share in October 1994. Future dividend levels will
depend on many factors, including the effect of industry
restructuring on earnings.
<PAGE>
Operating Results for the Electric Business Segment
1996 1995
over over
1995 1994
1996 1995 1994 Change Change
(Thousands)
Retail Sales - Megawatt-
Hours(mwh) 13,216 13,093 13,148 1% -
Operating Revenues $1,723,147 $1,708,297 $1,600,075 1% 7%
Operating Expenses $1,322,885 $1,286,969 $1,202,328 3% 7%
Operating Income $400,262 $421,328 $397,747 (5%) 6%
Electric retail sales increased in 1996 primarily because of
cold weather in the first quarter of 1996 and additional
customers.
The slight decrease in electric retail sales in 1995
resulted from the sluggish economy in the company's service
territory. Although there were significant changes in weather
during 1995 compared to 1994, the overall effect on sales was
minimal.
Operating Revenues: The $15 million increase in electric
operating revenues for 1996 was primarily due to higher retail
sales, which added $14 million to revenues. An increase in
wholesale sales of electricity added $12 million to revenues and
changes in prices effective August 1995, net of the effect of
eliminating the fuel adjustment clause, added $6 million to
revenues. Those increases were partially offset by an increase
in regulatory deferrals of $21 million.
Electric operating revenues for 1995 were $108 million
higher than 1994 revenues. Revenues rose $87 million because of
increases in electric prices, due to changes in rates effective
August 1995 and 1994, primarily to accommodate increased mandated
purchases of NUG power. An increase in wholesale sales of
electricity added $9 million to 1995 revenues. Electric revenues
for 1994 were reduced by $13 million because of the 1993
production-cost penalty that was recorded in the second quarter
of 1994.
Operating Expenses: Electric operating expenses rose $36 million
in 1996. Electricity purchases, mostly required purchases from
NUGs, increased operating expenses $42 million. That increase
was partially offset by an $8 million decrease in fuel used in
electric generation.
The $85 million increase in electric operating expenses in
1995 is primarily attributable to an increase of $76 million in
electricity purchased, mostly due to NUG purchases. Maintenance
expenses, including storm-related costs, rose $10 million.
Operating Results for the Natural Gas Business Segment
1996 1995
over over
1995 1994
1996 1995 1994 Change Change
(Thousands)
Deliveries -
Dekatherms (dth) 61,542 58,535 58,624 5% -
Operating Revenues $336,224 $301,244 $298,780 12% 1%
Operating Expenses $278,943 $250,428 $257,952 11% (3%)
Operating Income $57,281 $50,816 $40,828 13% 24%
Natural gas deliveries increased in 1996 due to a
combination of cold weather in the first quarter of 1996
and additional customers.
Natural gas deliveries for 1995 were almost equal to 1994
deliveries. The sluggish economy in the company's service
territory continued to affect sales, which were below
expectations. There were significant changes in weather during
1995 compared to 1994, but the overall effect on 1995 sales was
minimal.
Operating Revenues: Natural gas operating revenues for 1996
increased $35 million over 1995 revenues. A change in rate
structure effective December 1995 and changes in rates effective
August 1995 added $20 million to revenues. Higher retail sales
added $9 million to revenues and an increase in transportation of
customer-owned gas added $4 million to revenues for the year.
In 1995 natural gas operating revenues increased $2 million,
primarily as a result of higher natural gas prices that added $3
million to revenues. Changes in rates effective in August 1995
and 1994 were the primary reason for the higher natural gas
prices.
Operating Expenses: Comparing 1996 to 1995, natural gas
operating expenses rose $29 million. An increase in natural gas
purchased, due to higher commodity costs and higher deliveries,
added $23 million and an increase in certain operating costs
added $5 million to expenses.
The $8 million reduction in natural gas operating expenses
in 1995 was due to a combination of factors. Natural gas
purchased decreased $12 million mainly because of lower commodity
prices. That decrease was partially offset by higher
depreciation and distribution operation expenses that each added
$1 million to operating expenses.
<PAGE>
Item 8. Financial statements and supplementary data
New York State Electric & Gas Corporation
Consolidated Statements of Income
Year Ended December 31 1996 1995 1994
- ----------------------------------------------------------------------------
(Thousands, except per share amounts)
Operating Revenues
Electric . . . . . . . . . . . . . . . $1,723,147 $1,708,297 $1,600,075
Natural gas . . . . . . . . . . . . . . 336,224 301,244 298,780
---------- ---------- ----------
Total Operating Revenues. . . . . . . 2,059,371 2,009,541 1,898,855
---------- ---------- ----------
Operating Expenses
Fuel used in electric generation. . . . 222,102 229,759 231,648
Electricity purchased . . . . . . . . . 360,753 318,440 242,352
Natural gas purchased . . . . . . . . . 172,705 149,789 161,627
Other operating expenses. . . . . . . . 342,455 326,922 328,961
Maintenance.. . . . . . . . . . . . . . 107,697 116,807 106,637
Depreciation and amortization . . . . . 189,401 184,770 178,326
Other taxes . . . . . . . . . . . . . . 206,715 210,910 210,729
---------- ---------- ----------
Total Operating Expenses. . . . . . . 1,601,828 1,537,397 1,460,280
---------- ---------- ----------
Operating Income. . . . . . . . . . . . . 457,543 472,144 438,575
Interest Charges, Net . . . . . . . . . . 122,729 129,567 136,092
Other Income and Deductions . . . . . . . 48,630 30,023 12,377
---------- ---------- ----------
Income Before Federal Income Taxes. . . . 286,184 312,554 290,106
Federal Income Taxes. . . . . . . . . . . 107,943 115,864 102,461
---------- ---------- ----------
Net Income. . . . . . . . . . . . . . . . 178,241 196,690 187,645
Preferred Stock Dividends . . . . . . . . 9,530 18,721 18,947
---------- ---------- ----------
Earnings Available for Common Stock . . . $168,711 $177,969 $168,698
========== ========== ==========
Earnings Per Share. . . . . . . . . . . . $2.37 $2.49 $2.37
Average Shares Outstanding. . . . . . . . 71,127 71,503 71,254
The notes on pages 40 through 57 are an integral part of the financial
statements.
<PAGE>
New York State Electric & Gas Corporation
Consolidated Balance Sheets
December 31 1996 1995
- -----------------------------------------------------------------------------
(Thousands)
Assets
Current Assets
Cash and cash equivalents. . . . . . . . . . . . . . . $ 8,253 $11,433
Special deposits . . . . . . . . . . . . . . . . . . . 31,364 5,785
Accounts receivable, net . . . . . . . . . . . . . . . 189,043 195,834
Fuel, at average cost. . . . . . . . . . . . . . . . . 36,472 33,682
Materials and supplies, at average cost. . . . . . . . 43,044 44,809
Prepayments. . . . . . . . . . . . . . . . . . . . . . 47,169 31,371
Accumulated deferred federal income
tax benefits, net . . . . . . . . . . . . . . . . . 3,424 7,594
---------- ----------
Total Current Assets . . . . . . . . . . . . . . . . 358,769 330,508
Utility Plant, at Original Cost
Electric . . . . . . . . . . . . . . . . . . . . . . . 5,177,365 5,090,044
Natural gas. . . . . . . . . . . . . . . . . . . . . . 529,023 445,256
Common . . . . . . . . . . . . . . . . . . . . . . . . 151,290 140,686
---------- ----------
. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,857,678 5,675,986
Less accumulated depreciation. . . . . . . . . . . . . 1,933,599 1,791,625
---------- ----------
Net Utility Plant in Service . . . . . . . . . . . . 3,924,079 3,884,361
Construction work in progress. . . . . . . . . . . . . 58,285 79,229
---------- ----------
Total Utility Plant. . . . . . . . . . . . . . . . . 3,982,364 3,963,590
Other Property and Investments, Net . . . . . . . . . . 99,221 99,633
Regulatory and Other Assets
Regulatory assets
Unfunded future federal income taxes. . . . . . . . . 269,767 323,446
Unamortized debt expense. . . . . . . . . . . . . . . 80,745 85,023
Demand-side management program costs. . . . . . . . . 71,425 74,824
Other regulatory assets . . . . . . . . . . . . . . . 181,661 206,736
---------- ---------
Total regulatory assets. . . . . . . . . . . . . . . . 603,598 690,029
Other assets . . . . . . . . . . . . . . . . . . . . . 15,729 30,571
---------- ----------
Total Regulatory and Other Assets. . . . . . . . . . 619,327 720,600
---------- ----------
Total Assets . . . . . . . . . . . . . . . . . . . . $5,059,681 $5,114,331
========== ==========
The notes on pages 40 through 57 are an integral part of the financial
statements.
<PAGE>
New York State Electric & Gas Corporation
Consolidated Balance Sheets
December 31 1996 1995
- ------------------------------------------------------------------------------
(Thousands)
Liabilities
Current Liabilities
Current portion of long-term debt. . . . . . . . . . . $83,488 $37,003
Commercial paper . . . . . . . . . . . . . . . . . . . 129,300 28,620
Accounts payable and accrued liabilities . . . . . . . 121,123 117,637
Interest accrued . . . . . . . . . . . . . . . . . . . 22,195 24,093
Taxes accrued. . . . . . . . . . . . . . . . . . . . . - 22,231
Other. . . . . . . . . . . . . . . . . . . . . . . . . 71,324 68,027
---------- ----------
Total Current Liabilities . . . . . . . . . . . . . 427,430 297,611
Regulatory and Other Liabilities
Regulatory liabilities
Deferred income taxes - unfunded future federal
income taxes. . . . . . . . . . . . . . . . . . . . 109,065 128,643
Deferred income taxes . . . . . . . . . . . . . . . . 94,004 108,605
Other liabilities . . . . . . . . . . . . . . . . . . 65,471 56,729
---------- ----------
Total regulatory liabilities . . . . . . . . . . . . . 268,540 293,977
Other liabilities
Deferred income taxes . . . . . . . . . . . . . . . . 751,553 743,484
Other postretirement benefits . . . . . . . . . . . . 95,195 75,683
Liability for environmental restoration . . . . . . . 32,100 31,800
Other . . . . . . . . . . . . . . . . . . . . . . . . 74,627 81,288
---------- ----------
Total other liabilities . . . . . . . . . . . . . . . 953,475 932,255
Long-term debt . . . . . . . . . . . . . . . . . . . . 1,480,814 1,581,448
---------- ----------
Total Liabilities . . . . . . . . . . . . . . . . . 3,130,259 3,105,291
Commitments . . . . . . . . . . . . . . . . . . . . . . - -
Preferred Stock Redeemable Solely at the Option of
the Company . . . . . . . . . . . . . . . . . . . . . 134,440 140,500
Preferred Stock Subject to Mandatory Redemption
Requirements. . . . . . . . . . . . . . . . . . . . . 25,000 125,000
Common Stock Equity
Common stock ($6.66 2/3 par value, 90,000,000
shares authorized and 69,670,327 and 71,502,827
shares issued and outstanding at December 31,
1996 and 1995, respectively) . . . . . . . . . . . . 464,469 476,686
Capital in excess of par value . . . . . . . . . . . . 816,384 842,442
Retained earnings. . . . . . . . . . . . . . . . . . . 489,129 424,412
---------- ----------
Total Common Stock Equity . . . . . . . . . . . . . 1,769,982 1,743,540
---------- ----------
Total Liabilities and Stockholders' Equity. . . . . $5,059,681 $5,114,331
========== ==========
The notes on pages 40 through 57 are an integral part of the financial
statements.
New York State Electric & Gas Corporation
Consolidated Statements of Cash Flows
Year Ended December 31 1996 1995 1994
- ------------------------------------------------------------------------------
(Thousands)
Operating Activities
Net income . . . . . . . . . . . . . . . . . . . . $178,241 $196,690 $187,645
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization. . . . . . . . . . 189,401 184,770 178,326
Deferred fuel and purchased gas. . . . . . . . . 1,066 15,022 (1,944)
Federal income taxes and investment tax credits
deferred, net. . . . . . . . . . . . . . . . . 28,928 52,362 37,910
Changes in current operating assets and liabilities
Accounts receivable . . . . . . . . . . . . . . 6,791 (40,169) 25,921
Inventory. . . . . . . . . . . . . . . . . . . . (1,025) 19,286 5,924
Accounts payable and accrued liabilities . . . . 3,486 10,281 (4,125)
Other, net . . . . . . . . . . . . . . . . . . . . 52,144 13,589 20,721
-------- -------- --------
Net Cash Provided by Operating Activities . . . 459,032 451,831 450,378
-------- -------- --------
Investing Activities
Utility plant capital expenditures . . . . . . . . (214,373)(163,401)(246,536)
Proceeds from governmental and other sources . . . 2,977 5,621 23,915
Expenditures for other property and investments. . (916) (3,145) (34,482)
Funds restricted for capital expenditures. . . . . - 1,324 41,113
-------- -------- --------
Net Cash Used in Investing Activities. . . . . . (212,312)(159,601)(215,990)
-------- -------- --------
Financing Activities
Issuance of pollution control notes and
first mortgage bonds . . . . . . . . . . . . . . - 37,000 275,000
(Repurchase) sale of common stock. . . . . . . . . (40,198) - 23,386
Revolving credit agreement, net. . . . . . . . . . - - (50,000)
Repayments of preferred stock, first mortgage
bonds and pollution control notes,
including net premiums . . . . . . . . . . . . . (171,478) (92,395)(497,450)
Changes in funds set aside for first mortgage
bond and preferred stock repayments. . . . . . . (25,000) - 95,000
Long-term notes, net . . . . . . . . . . . . . . . (2,581) (5,504) (2,290)
Commercial paper, net. . . . . . . . . . . . . . . 100,680 (123,280) 101,700
Dividends on common and preferred stock. . . . . . (111,323)(118,940)(161,676)
-------- -------- --------
Net Cash Used in Financing Activities. . . . . . (249,900)(303,119)(216,330)
-------- -------- --------
Net (Decrease) Increase in Cash and
Cash Equivalents. . . . . . . . . . . . . . . . . (3,180) (10,889) 18,058
Cash and Cash Equivalents, Beginning of Year. . . . 11,433 22,322 4,264
-------- -------- --------
Cash and Cash Equivalents, End of Year. . . . . . . $8,253 $11,433 $22,322
======== ======== ========
The notes on pages 40 through 57 are an integral part of the financial
statements.
<PAGE>
<TABLE>
<CAPTION>
New York State Electric & Gas Corporation
Consolidated Statements of Changes in Common Stock Equity
(Thousands, except shares and per share amounts)
<S> <C> <C> <C> C> <C>
Common Stock Capital in
$6.66 2/3 Par Value Excess of Retained
Shares Amount Par Value Earnings Total
Balance, January 1, 1994 70,595,985 $470,640 $824,943 $320,114 $1,615,697
Net income 187,645 187,645
Cash dividends declared
Preferred stock (at serial rates)
Redeemable - optional (8,419) (8,419)
- mandatory (10,528) (10,528)
Common stock ($2.00 per share) (142,265) (142,265)
Issuance of stock
Dividend reinvestment and
stock purchase plan 906,842 6,046 17,450 23,496
Amortization of capital stock
issue expense (769) (769)
Balance, December 31, 1994 71,502,827 476,686 841,624 346,547 1,664,857
Net income 196,690 196,690
Cash dividends declared
Preferred stock (at serial rates)
Redeemable - optional (8,196) (8,196)
- mandatory (10,525) (10,525)
Common stock ($1.40 per share) (100,104) (100,104)
Amortization of capital stock
issue expense 818 818
Balance, December 31, 1995 71,502,827 476,686 842,442 424,412 1,743,540
Net income 178,241 178,241
Cash dividends declared
Preferred stock (at serial rates)
Redeemable - optional (7,955) (7,955)
- mandatory (1,575) (1,575)
Common stock ($1.40 per share) (99,611) (99,611)
Common stock repurchase (1,832,500) (12,217) (27,981) (40,198)
Premium paid on preferred stock
redemption, net (4,383) (4,383)
Amortization of capital stock
issue expense 1,923 1,923
Balance, December 31, 1996 69,670,327 $464,469 $816,384 $489,129 $1,769,982
The notes on pages 40 through 57 are an integral part of the financial statements.
</TABLE>
<PAGE>
Notes to Consolidated Financial Statements
1 Significant Accounting Policies
Principles of consolidation
The consolidated financial statements include the company's subsidiaries,
Somerset Railroad Corporation (SRC) and NGE Enterprises, Inc. (NGE).
Utility plant
The cost of repairs and minor replacements is charged to the appropriate
operating expense accounts. The cost of renewals and betterments, including
indirect costs, is capitalized. The original cost of utility plant retired or
otherwise disposed of and the cost of removal less salvage are charged to
accumulated depreciation.
Depreciation and amortization
Depreciation expense is determined using straight-line rates, based on the
average service lives of groups of depreciable property in service.
Depreciation accruals were equivalent to 3.5% of average depreciable property
for 1996, 1995 and 1994. Amortization expense includes the amortization of
certain regulatory assets authorized by the Public Service Commission of the
State of New York (PSC).
Accounts receivable
The company has an agreement that expires in November 2000 to sell, with
limited recourse, undivided percentage interests in certain of its accounts
receivable from customers. The agreement allows the company to receive up to
$152 million from the sale of such interests. At December 31, 1996 and 1995,
accounts receivable on the consolidated balance sheets are shown net of
$152 million of interests in accounts receivable sold. All fees associated
with the program are included in other income and deductions on the
consolidated statements of income and amounted to approximately $9 million, $10
million and $7 million in 1996, 1995 and 1994, respectively. Accounts
receivable on the consolidated balance sheets are also shown net of an
allowance for doubtful accounts of $7 million at December 31, 1996 and 1995.
Bad debt expense was $19 million, $18 million and $20 million in 1996, 1995 and
1994, respectively.
In June 1996 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 125 (Statement 125), Accounting for the
Transfer and Servicing of Financial Assets and Extinguishment of Liabilities,
effective for transactions occurring after December 31, 1996. The company's
accounting complies with the provisions of Statement 125.
<PAGE>
Income taxes
The company files a consolidated federal income tax return with SRC and
NGE. Deferred income taxes are provided on all temporary differences between
financial statement basis and
taxable income in accordance with Statement of Financial Accounting Standards
No. 109 (Statement 109), Accounting for Income Taxes. Investment tax credits,
which reduce federal income taxes currently payable, were deferred and are
being amortized over the estimated lives of the applicable property.
Regulatory assets and liabilities
Pursuant to Statement of Financial Accounting Standards No. 71 (Statement
71), Accounting for the Effects of Certain Types of Regulation, the company
capitalizes, as regulatory assets, incurred costs that are probable of recovery
in future electric and natural gas rates. In accordance with the company's
current electric and natural gas rate settlement agreements, the company is no
longer deferring certain costs that were previously subject to deferral
accounting, such as fuel and natural gas purchased. The company also records
as regulatory liabilities, obligations to customers to refund previously
collected revenue or to spend revenue collected from customers on future costs.
The company's regulatory assets and liabilities consisted of the
following:
December 31 1996 1996 1995 1995
Liabil- Liabil-
Assets ities Assets ities
(Thousands)
Unfunded future federal
income taxes $269,767 - $323,446 -
Deferred income taxes - unfunded
future federal income taxes - $109,065 - $128,643
Deferred income taxes - 94,004 - 108,605
Unamortized debt expense 80,745 - 85,023 -
Demand-side management
(DSM) program costs 71,425 - 74,824 -
Nonutility generator (NUG)
termination agreements 43,991 - 43,847 -
Environmental remediation costs 32,100 - 31,763 -
Other postretirement benefits 18,417 - 21,179 -
Other 87,153 65,471 109,947 56,729
-------- -------- -------- --------
Total $603,598 $268,540 $690,029 $293,977
======== ======== ======== ========
<PAGE>
Unfunded future federal income taxes and deferred income
taxes are amortized as the related temporary differences reverse.
Unamortized debt expense is amortized over the lives of the
related debt issues. DSM program costs, other regulatory assets
and other regulatory liabilities are amortized over various
periods in accordance with the company's rate settlement
agreements. The company is earning a return on all regulatory
assets for which the company has spent funds.
If the company could no longer meet the criteria of
Statement 71 for all or a separable part of its business, the
company may have to record as expense or revenue all or a portion
of its regulatory assets and liabilities and may have to record
as a loss the amount for power purchase contracts with NUGs that
is above the estimated price in a competitive marketplace.
Consolidated Statements of Cash Flows
The company considers all highly liquid investments with a
maturity or put date of three months or less when acquired to be
cash equivalents. Those investments are included in cash and
cash equivalents on the consolidated balance sheets.
Total income taxes paid were $98 million, $55 million and
$69 million for the years ended December 31, 1996, 1995 and 1994,
respectively.
Interest paid, net of amounts capitalized, was $112 million,
$118 million and $132 million for the years ended December 31,
1996, 1995 and 1994, respectively.
Estimates
Preparation of the consolidated financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could
differ from those estimates.
Reclassifications
Certain amounts have been reclassified on the consolidated
financial statements to conform with the 1996 presentation.
<PAGE>
2 Income Taxes
Year ended December 31 1996 1995 1994
(Thousands)
Charged to operations
Current $79,015 $63,502 $64,551
Deferred, net
Accelerated depreciation 52,572 55,493 57,564
Revenue decoupling mechanism (2,153) (4,608) 6,870
Alternative minimum tax
(AMT) credit 310 18,009 6,076
Demand-side management (1,267) 21 (9,048)
Miscellaneous (14,197) (10,339) (17,514)
Investment tax credit (ITC) (6,337) (6,214) (6,038)
-------- -------- --------
Total $107,943 $115,864 $102,461
======== ======== ========
The company's effective tax rate differed from the statutory rate
of 35% due to the following:
Year ended December 31 1996 1995 1994
(Thousands)
Tax expense at statutory rate $100,165 $109,396 $101,537
Depreciation not normalized 20,542 19,774 18,552
ITC amortization (6,337) (6,214) (6,038)
Research & Development credit 83 (5,547) (1,352)
Cost of removal (2,825) (3,772) (5,462)
Other, net (3,685) 2,227 (4,776)
-------- -------- --------
Total $107,943 $115,864 $102,461
======== ======== ========
<PAGE>
The company's deferred tax assets and liabilities consisted of
the following:
December 31 1996 1995
(Thousands)
Current Deferred Tax Assets $3,424 $7,594
======== ========
Noncurrent Deferred Taxes
Depreciation $761,794 $727,630
Unfunded future federal
income taxes 109,065 128,643
Accumulated deferred ITC 119,696 126,032
Future income tax benefit - ITC (41,847) (44,488)
Other 4,529 40,063
-------- --------
Total Noncurrent Deferred
Tax Liabilities 953,237 977,880
Valuation allowance 1,385 2,852
Less amounts classified as
regulatory liabilities
Deferred income taxes - unfunded
future federal income taxes 109,065 128,643
Deferred income taxes 94,004 108,605
-------- --------
Noncurrent Deferred Income Taxes $751,553 $743,484
======== ========
<PAGE>
3 Long-Term Debt
At December 31, 1996 and 1995, long-term debt was:
Amount
Maturity Interest
Dates Rates 1996 1995
(Thousands)
First mortgage
bonds (1) 1997 to 2023 5 5/8% to 9 7/8% $903,000 $963,000
Pollution control
notes (2) 2006 to 2034 3.30% to 6.15% 613,000 613,000
Long-term notes 12/31/99 29,900 31,000
Various long-term notes 15,809 5,501
Obligations under capital leases 10,699 14,799
Unamortized premium and discount on debt, net (8,106) (8,849)
---------- ----------
1,564,302 1,618,451
Less debt due within one year - included
in current liabilities 83,488 37,003
---------- ----------
Total $1,480,814 $1,581,448
========== ==========
At December 31, 1996, long-term debt and capital lease
payments that will become due during the next five years are:
1997 1998 1999 2000 2001
(Thousands)
$83,488 $35,634 $33,906 $1,899 $51,641
(1) The company's first mortgage bond indenture constitutes a
direct first mortgage lien on substantially all utility plant.
The mortgage also provides for a sinking and improvement fund.
This provision requires the company to make an annual cash
deposit with the Trustee equivalent to 1% of the principal amount
of all bonds delivered and authenticated by the Trustee prior to
January 1 of that year (excluding any bonds issued on the basis
of the retirement of bonds). The company satisfied the
requirement by depositing $23 million in cash in 1996 and 1997.
The funds were used to redeem, at par, $23 million of 9 7/8%
Series first mortgage bonds, due February 2020, in both February
1996 and February 1997.
(2) Fixed-rate pollution control notes totaling $306 million
were issued to secure the same amount of tax-exempt pollution
control revenue bonds issued by a governmental authority. The
interest rates range from 5.70% to 6.15%.
<PAGE>
Adjustable-rate pollution control notes totaling $132
million were issued to secure the same amount of tax-exempt
adjustable-rate pollution control revenue bonds (Adjustable-rate
Revenue Bonds) issued by a governmental authority. The
Adjustable-rate Revenue Bonds bear interest at rates ranging from
3.30% to 3.85% through dates preceding various annual interest
rate adjustment dates. On the annual interest rate adjustment
dates the interest rates will be adjusted, or at the option of
the company, subject to certain conditions, a fixed rate of
interest may become effective. Bond owners may elect, subject to
certain conditions, to have their Adjustable-rate Revenue Bonds
purchased by the Trustee.
Multi-mode pollution control notes totaling $175 million
were issued to secure the same amount of tax-exempt multi-mode
pollution control refunding revenue bonds (Multi-mode Revenue
Bonds) issued by a governmental authority. The Multi-mode
Revenue Bonds have a structure that allows the interest rates to
be based on a daily rate, a weekly rate, a commercial paper rate,
an auction rate, a term rate or a fixed rate. Bond owners may
elect, while the Multi-mode Revenue Bonds bear interest at a
daily or weekly rate, to have their bonds purchased by the
Registrar and Paying Agent. The maturity dates of the Multi-mode
Revenue Bonds are February 1, 2029, June 1, 2029, and October 1,
2029, and can be extended subject to certain conditions. At
December 31, 1996, the multi-mode pollution control notes bore
interest at the daily rate. The weighted average interest rate
for all three series was 3.2%, excluding letter of credit fees,
for the year ended December 31, 1996.
The company has irrevocable letters of credit that support
certain payments required to be made on the Adjustable-rate
Revenue Bonds and Multi-mode Revenue Bonds, and that expire on
various letter of credit expiration dates. If the company is
unable to extend the letter of credit that is related to a
particular series of Adjustable-rate Revenue Bonds, that series
will have to be redeemed unless a fixed rate of interest becomes
effective. Multi-mode Revenue Bonds are subject to mandatory
purchase upon any change in the interest rate mode and in certain
other circumstances. Payments made under the letters of credit
in connection with purchases of Adjustable-rate Revenue Bonds and
Multi-mode Revenue Bonds are repaid with the proceeds from the
remarketing of those Bonds. To the extent the proceeds are not
sufficient, the company is required to reimburse the bank that
issued the letter of credit.
<PAGE>
4 Preferred Stock
At December 31, 1996 and 1995, serial cumulative preferred stock
was:
Shares
Par Value Authorized
Per Redeemable and Amount
Series Share Prior to Per Share Outstanding(1) 1996 1995
(Thousands)
Redeemable solely at the option of the company:
3.75% $100 $104.00 150,000 $15,000 $15,000
4 1/2%(1949) 100 103.75 40,000 4,000 4,000
4.15% (2) 100 101.00 14,000 1,400 4,000
4.40% (2) 100 102.00 55,200 5,520 7,500
4.15% (1954)(2) 100 102.00 35,200 3,520 5,000
6.48% 100 102.00 300,000 30,000 30,000
7.40% (3) 25 12/1/98 26.85 1,000,000 25,000 25,000
Thereafter 25.00
Adjustable
Rate (4) 25 12/1/98 27.50 2,000,000 50,000 50,000
Thereafter 25.00
-------- --------
Total $134,440 $140,500
======== ========
Subject to mandatory redemption requirements:
6.30% (5) 100 1/1/98 103.78 250,000 $25,000 $25,000
8.95% (6) 25 - - 100,000
-------- --------
Total $25,000 $125,000
======== ========
At December 31, 1996, there were no preferred stock redemptions
or annual redeemable preferred stock sinking fund requirements
for the next five years.
(1) At December 31, 1996, there were 1,610,600 shares of $100 par
value preferred stock, 7,800,000 shares of $25 par value
preferred stock and 1,000,000 shares of $100 par value preference
stock authorized but unissued.
(2) In 1996 the company purchased the following, at a discount,
through the issuance of commercial paper: $2.60 million of 4.15%
preferred stock, $1.98 million of 4.40% preferred stock and $1.48
million of 4.15% (1954) preferred stock.
(3) The company is restricted in its ability to redeem this
Series prior to December 1, 1998.
(4) The payment on this Series, for April 1, 1997, is at an
annual rate of 5.40% and subsequent payments can vary from an
annual rate of 4% to 10%, based on a formula included in the
company's Certificate of Incorporation. The company is
restricted in its ability to redeem this Series prior to December
1, 1998.
(5) On January 1 in each year 2004 through 2008, the company must
redeem 12,500 shares at par, and on January 1, 2009, the company
must redeem the balance of the shares at par. This Series is
redeemable at the option of the company at $103.78 per share
prior to January 1, 1998. The $103.78 price will be reduced
annually by 63 cents for the years ending 1998 through 2002;
thereafter, the redemption price is $100.00. The company is
restricted in its ability to redeem this Series prior to January
1, 2004.
(6) Redeemed January 1, 1996.
Dividend Limitations: After dividends on all outstanding
preferred stock have been paid, or declared, and funds set apart
for their payment, the common stock is entitled to cash dividends
as may be declared by the board of directors out of retained
earnings accumulated since December 31, 1946. Common stock
dividends are limited if common stock equity (52% at December 31,
1996) falls below 25% of total capitalization, as defined in the
company's Certificate of Incorporation. Dividends on common
stock cannot be paid unless sinking fund requirements of the
preferred stock are met. The company has not been restricted in
the payment of dividends on common stock by these provisions.
Retained earnings accumulated since December 31, 1946, were
approximately $489 million and $424 million as of December 31,
1996 and 1995, respectively.
5 Bank Loans and Other Borrowings
The company has a revolving credit agreement with certain
banks that provides for borrowing up to $200 million to December
31, 2001. At the option of the company, the interest rate on
borrowings is related to the prime rate, the London Interbank
Offered Rate or the interest rate applicable to certain
certificates of deposit. The agreement also provides for the
payment of a commitment fee that can fluctuate from .10% to .25%
depending on the credit ratings of the company's first mortgage
bonds. The commitment fee was .125% at December 31, 1996 and
1995, and .1875% at December 31, 1994.
The revolving credit agreement does not require compensating
balances. The company had no outstanding loans under the
revolving credit agreement at December 31, 1996 or 1995.
The company uses short-term unsecured notes, usually
commercial paper, to finance certain refundings and for other
corporate purposes. The weighted average interest rates on
commercial paper balances at December 31, 1996, 1995 and 1994
were 5.8%, 6.1% and 5.8%, respectively.
<PAGE>
6 Retirement Benefits
Pensions
The company has a noncontributory retirement annuity plan
that covers substantially all employees. Benefits are based
principally on the employee's length of service and compensation
for the five highest paid consecutive years during the last 10
years of service. It is the company's policy to fund pension
costs accrued each year to the extent deductible for federal
income tax purposes.
Net pension benefit included the following components:
Year ended December 31 1996 1995 1994
(Thousands)
Service cost: Benefits
earned during the year $18,593 $16,391 $17,637
Interest cost on projected
benefit obligation 46,070 45,400 43,328
Actual return on plan assets (138,957) (185,816) (17,409)
Net amortization and deferral 58,162 111,209 (48,824)
-------- -------- --------
Net pension (benefit) $(16,132) $(12,816) $(5,268)
======== ======== ========
The funded status of the plan was:
December 31 1996 1995
(Thousands)
Actuarial present value of accumulated
benefit obligation
Vested $472,786 $450,857
Nonvested 52,272 53,837
-------- --------
Total $525,058 $504,694
======== ========
Fair value of plan assets $(995,795) $(888,190)
Actuarial present value of
projected benefit obligation (PBO) 679,778 661,138
-------- --------
Plan assets in excess of PBO (316,017) (227,052)
Unrecognized net transition asset 51,898 59,136
Unrecognized net gain 275,531 178,927
Unrecognized prior service cost (26,464) (9,931)
-------- --------
Net pension (asset) liability $(15,052) $1,080
======== ========
<PAGE>
Assumptions used to determine actuarial valuations
Discount rate used to determine PBO 7.25% 7.0%
Rate of compensation increase
used to determine PBO 4.75% 4.75%
Long-term rate of return on plan
assets for net pension benefit 8.0% 8.0%
Plan assets primarily consist of domestic and international
equity securities; U.S. agency, corporate and Treasury bonds; and
cash equivalents.
Postretirement benefits other than pensions
The company has postretirement benefit plans, such as a
comprehensive health insurance plan and a prescription drug plan,
that provide certain benefits for retired employees and their
dependents. Substantially all of the company's employees who
retire under the company's pension plan may become eligible for
those benefits at retirement. The postretirement benefit plans
were unfunded as of December 31, 1996 and 1995.
The net periodic postretirement benefits cost other than
pensions recognized on the income statements for 1996, 1995 and
1994 (below) represent the portion of costs related to Statement
of Financial Accounting Standards No. 106 (Statement 106),
Employers' Accounting for Postretirement Benefits Other Than
Pensions, that the company has been allowed to collect from its
customers. The company has deferred $18 million and $21 million
of Statement 106 costs as of December 31, 1996 and 1995,
respectively. The company expects to recover any deferred
Statement 106 amounts by the year 2000.
Net postretirement benefits cost other than pensions
included the following components:
Year ended December 31 1996 1995 1994
(Thousands)
Service cost: Benefits accumulated
during the year $6,436 $5,412 $7,050
Interest cost on accumulated
postretirement benefit obligation 15,795 15,228 15,903
Amortization of transition obligation
over 20 years 10,330 10,330 10,330
Amortization of (gain) loss (3,246) (4,575) 2
Deferral for future recovery (8,950) (7,742) (18,757)
------- ------- -------
Net periodic postretirement
benefits cost $20,365 $18,653 $14,528
======= ======= =======
<PAGE>
The status of the plans for postretirement benefits other
than pensions, as reflected in the company's consolidated balance
sheets, was as follows:
December 31 1996 1995
(Thousands)
Accumulated postretirement benefit
obligation (APBO)
Retired employees $103,912 $114,383
Fully eligible active plan
participants 15,259 15,214
Other active plan employees 107,022 106,689
-------- --------
Total APBO 226,193 236,286
Less unrecognized transition
obligation 165,278 175,608
Less unrecognized net gain (34,280) (15,005)
-------- --------
Accrued postretirement liability $95,195 $75,683
======== ========
A 9% annual rate of increase in the per capita costs of
covered health care benefits was assumed for 1997, gradually
decreasing to 5% by the year 2003. Increasing the assumed health
care cost trend rates by 1% in each year would increase the APBO
as of January 1, 1997, by $39 million and increase the aggregate
of the service cost and interest cost components of the net
postretirement benefits cost for 1996 by $5 million. Discount
rates of 7.25% and 7% were used to determine the APBO in 1996 and
1995, respectively.
7 Jointly-Owned Generating Stations
Nine Mile Point Unit 2
The company has an undivided 18% interest in the output and
costs of the Nine Mile Point nuclear generating unit No. 2
(NMP2), which is operated by Niagara Mohawk Power Corporation
(Niagara Mohawk). Ownership of NMP2 is shared with Niagara
Mohawk 41%, Long Island Lighting Company 18%, Rochester Gas and
Electric Corporation 14% and Central Hudson Gas & Electric
Corporation 9%. The company's share of the rated capability is
206 megawatts. The company's share of net utility plant
investment, excluding nuclear fuel, was approximately $610
million and $625 million, at December 31, 1996 and 1995,
respectively. The accumulated provision for depreciation was
approximately $144 million and $129 million, at December 31, 1996
and 1995, respectively. The company's share of operating
expenses is included in the consolidated statements of income.
<PAGE>
Nuclear insurance
Niagara Mohawk maintains public liability and property
insurance for NMP2. The company reimburses Niagara Mohawk for
its 18% share of those costs.
The public liability limit for a nuclear incident is
approximately $8.3 billion. Should losses stemming from a
nuclear incident exceed the commercially available public
liability insurance, each licensee of a nuclear facility would be
liable for up to $76 million per incident, payable at a rate not
to exceed $10 million per year. The company's maximum liability
for its 18% interest in NMP2 would be approximately $14 million
per incident. The $76 million assessment is subject to periodic
inflation indexing and a 5% surcharge should funds prove
insufficient to pay claims associated with a nuclear incident.
The Price-Anderson Act also requires indemnification for
precautionary evacuations whether or not a nuclear incident
actually occurs.
Niagara Mohawk has procured property insurance for NMP2
aggregating approximately $2.8 billion through the Nuclear
Insurance Pools and the Nuclear Electric Insurance Limited
(NEIL). In addition, the company has purchased NEIL insurance
coverage for the extra expense that would be incurred by
purchasing replacement power during prolonged accidental outages.
Under NEIL programs, should losses resulting from an incident at
a member facility exceed the accumulated reserves of NEIL, each
member, including the company, would be liable for its share of
the deficiency. The company's maximum liability per incident
under the property damage and replacement power coverages is
approximately $3 million.
Nuclear plant decommissioning costs
Based on the results of a 1995 decommissioning study, the
company's 18% share of the cost to decommission NMP2 is $150
million in 1997 dollars ($422 million in 2026 when NMP2's
operating license will expire). The estimated annual
contribution needed to cover the company's share of costs as
outlined in the study is approximately $4 million.
The company's estimated liability for decommissioning NMP2
using the Nuclear Regulatory Commission's (NRC) minimum funding
requirement is approximately $82 million in 1997 dollars. The
company's electric rates currently include an annual allowance
for decommissioning of $2 million, which approximates the NRC's
minimum funding requirement. Decommissioning costs are charged
to depreciation and amortization expense and are recovered over
the expected life of the plant. In its five-year electric rate
and restructuring plan submitted in the PSC's Competitive
Opportunities Proceeding, the company used the 1995
decommissioning study as a basis for increasing the amount
proposed to be recovered in rates for decommissioning. The
company believes that any increase in decommissioning costs will
ultimately be recovered in rates.
The company has established a Qualified Fund under
applicable provisions of the federal tax law and to comply with
NRC funding regulations. The balance in the fund, including
reinvested earnings, was approximately $11 million and $9 million
at December 31, 1996 and 1995, respectively. Those amounts are
included on the consolidated balance sheets in other property and
investments, net. The related liability for decommissioning is
included in other liabilities - other. At December 31, 1996, the
external trust fund investments were classified as
available-for-sale, and their carrying value approximated fair
value.
In early 1996 the Financial Accounting Standards Board
issued an exposure draft, Accounting for Certain Liabilities
Related to Closure and Removal of Long-Lived Assets. The
exposure draft proposes that companies recognize the present
value of estimated decommissioning costs. If the final statement
includes that requirement, the estimated liability the company
would have to recognize on its balance sheet related to
decommissioning NMP2 is approximately $61 million, based on the
1995 decommissioning study.
Homer City
The company has an undivided 50% interest in the output and
costs of the Homer City Generating Station, which comprises three
generating units. The station is owned with Pennsylvania
Electric Company and is operated by its affiliate, GPU
Generation, Inc. The company's share of the rated capability is
959 megawatts, and its net utility plant investment was
approximately $269 million and $276 million at December 31, 1996
and 1995, respectively. The accumulated provision for
depreciation was approximately $181 million and $168 million, at
December 31, 1996 and 1995, respectively. The company's share of
operating expenses is included in the consolidated statements of
income.
8 Commitments
Capital expenditures
The company has substantial commitments in connection with
its capital expenditure program and estimates that expenditures
for 1997, 1998 and 1999 will approximate $141 million, $157
million and $128 million, respectively, and are expected to be
financed entirely with internally generated funds. The program
is subject to periodic review and revision. Actual capital
expenditures may change to reflect additional regulatory
requirements and the company's continued focus on minimizing
capital expenditures. Capital expenditures will be primarily for
the extension of service, necessary improvements to existing
facilities and compliance with environmental requirements.
<PAGE>
Nonutility generator power purchase contracts
During 1996, 1995 and 1994 the company expensed
approximately $320 million, $284 million and $214 million,
respectively, for NUG power, including termination costs. The
company estimates that NUG power purchases, including termination
costs, will total $338 million in 1997, $351 million in 1998 and
$352 million in 1999.
9 Environmental Liability
The company has been notified by the U. S. Environmental
Protection Agency (EPA) and the New York State Department of
Environmental Conservation (NYSDEC), as appropriate, that it is
among the potentially responsible parties (PRPs) who may be
liable to pay for costs incurred to remediate certain hazardous
substances at nine waste sites, not including the company's
inactive gas manufacturing sites, which are discussed below.
With respect to the nine sites, seven sites are included in the
New York State Registry of Inactive Hazardous Waste Sites (New
York State Registry) and two of the sites are also included on
the National Priorities list.
Any liability may be joint and several for certain of those
sites. The company has recorded an estimated liability of $1
million related to six of the nine sites, which is reflected in
the company's consolidated balance sheets at December 31, 1996.
The ultimate cost to remediate the sites may be significantly
more than the estimated amount and will be dependent on such
factors as the remedial action plan selected, the extent of site
contamination and the portion attributed to the company.
The company has a program to investigate and perform
necessary remediation at its known inactive gas manufacturing
sites. In March 1994 and October 1996 the company entered into
Orders on Consent with the NYSDEC requiring the company to
investigate and, where necessary, remediate 34 of the company's
38 known inactive gas manufacturing sites. With respect to the
38 sites, eight sites are included in the New York State
Registry.
<PAGE>
Expenditures through the year 2009 are estimated at $31
million, including the impact of the Orders on Consent. That
estimate was determined by using the company's experience and
knowledge related to the sites as a result of the investigation
and remediation that the company has performed to date. It could
change materially, based on facts and circumstances derived from
site investigations, changes in required remedial action, changes
in technology relating to remedial alternatives and changes in
presently enacted laws and regulations. The liability to
investigate and perform remediation, as necessary, at the known
inactive gas manufacturing sites, is reflected in the company's
consolidated balance sheets at December 31, 1996 and 1995, in the
amount of $31 million. The company has recorded a corresponding
regulatory asset, since it expects to recover such expenditures
in rates, as the company has previously been allowed by the PSC
to recover such costs in rates. The company has notified its
former and current insurance carriers that it seeks to recover
from them certain of the cleanup costs. The company is unable to
predict the amount of insurance recoveries, if any, that it may
obtain.
10 Energy Services
The company, pursuant to a PSC Order, is allowed to invest
up to 5% of its consolidated capitalization (approximately $171
million at December 31, 1996) in one or more subsidiaries that
may engage or invest in energy-related or environmental-services
businesses and provide related services.
The company has been making investments in energy services
companies through NGE Enterprises, Inc. (NGE). Those companies
provide energy, financial and environmental services.
The company's investment as of December 31 and net loss for
the year ended December 31 related to NGE are:
1996 1995 1994
(Millions)
Investment $57 $54 $47
Net Loss* $21 $12 $6
*Includes net loss from EnerSoft Corporation (EnerSoft) of $16
million, $7 million and $5 million in 1996, 1995 and 1994,
respectively. EnerSoft's 1996 net loss includes $10 million
related to NGE's decision to exit that business.
The majority of the company's investment is included in
other property and investments, net on the consolidated balance
sheets. NGE's total liabilities and capitalization at December
31, 1996 and 1995, was approximately $45 million and $48 million,
respectively. NGE's net loss is included in other income and
deductions on the consolidated statements of income.
<PAGE>
11 Fair Value of Financial Instruments
Certain of the company's financial instruments had carrying
amounts and estimated fair values (based on the quoted market
prices for the same or similar issues of the same remaining
maturities) as follows:
December 31 1996 1996 1995 1995
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
(Thousands)
Preferred stock subject
to mandatory redemption
requirements $25,000 $22,531 $125,000 $130,085
First mortgage bonds $894,894 $938,873 $954,151 $1,025,696
Pollution control notes $613,000 $623,666 $613,000 $617,446
The carrying amount for the following items approximates
estimated fair value because of the short maturity (within one
year) of those instruments: cash and cash equivalents, commercial
paper and interest accrued.
Special deposits include restricted funds that are set aside
for preferred stock and long-term debt redemptions. The carrying
amount approximates fair value because the special deposits have
been invested in securities with a short-term maturity (within
one year).
12 Industry Segment Information
Certain information pertaining to the electric and natural
gas operations of the company follows:
1996 1996 1995 1995 1994 1994
Natural Natural Natural
Electric Gas Electric Gas Electric Gas
(Thousands)
Operating
Revenues $1,723,147 $336,224 $1,708,297 $301,244 $1,600,075 $298,780
Income $400,262 $57,281 $421,328 $50,816 $397,747 $40,828
Depreciation and
amortization $176,906 $12,495 $172,831 $11,939 $167,484 $10,842
Capital
expenditures $129,212 $82,625 $113,539 $45,142 $183,910 $40,396
Identifiable
assets* $4,376,814 $550,196 $4,525,541 $493,537 $4,631,511 $486,075
* Assets used in electric, natural gas and energy services operations not
included above were $132,671, $95,253 and $113,099 at December 31, 1996, 1995
and 1994, respectively. They consist primarily of cash and cash equivalents,
special deposits, prepayments and subsidiaries' assets.
<PAGE>
13 Quarterly Financial Information (Unaudited)
Quarter ended March 31 June 30 Sept. 30 Dec. 31
(Thousands, except per share amounts)
1996
Operating revenues $618,764 $452,933 $456,568 $531,106
Operating income $196,353 $74,924 $74,285 $111,981
Net income $98,676 $20,882 $11,052* $47,631
Earnings available
for common stock $96,343 $18,496 $8,616 $45,256
Earnings per share $1.35 $.26 $.12* $.65
Dividends per share $.35 $.35 $.35 $.35
Average shares outstanding 71,503 71,503 71,416 70,096
Common stock price**
High $26.38 $24.50 $24.88 $22.63
Low $21.88 $22.00 $21.13 $20.38
1995
Operating revenues $571,910 $439,916 $464,694 $533,021
Operating income $157,323 $81,035 $106,638 $127,148
Net income $75,584 $24,630 $43,503 $52,973
Earnings available
for common stock $70,825 $19,914 $38,878 $48,352
Earnings per share $.99 $.28 $.54 $.68
Dividends per share $.35 $.35 $.35 $.35
Average shares outstanding 71,503 71,503 71,503 71,503
Common stock price**
High $21.75 $24.00 $26.75 $26.38
Low $19.00 $21.25 $22.50 $24.75
* Includes the effect of the writedown of the investment in EnerSoft
Corporation that decreased net income and earnings available for common
stock by $10 million and decreased earnings per share by 14 cents.
** The company's common stock is listed on the New York Stock Exchange. The
number of shareholders of record at December 31, 1996, was 45,608.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
_______________________
To the Shareholders and Board of Directors,
New York State Electric & Gas Corporation and Subsidiaries
Ithaca, New York
We have audited the consolidated financial statements and the
financial statement schedule of New York State Electric & Gas
Corporation and Subsidiaries listed in Item 14(a) of this Form
10-K. These financial statements and financial statement
schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of New York State Electric & Gas Corporation
and Subsidiaries as of December 31, 1996 and 1995, and the
consolidated results of their operations and their cash flows for
each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles. In
addition, in our opinion, the financial statement schedule
referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all
material respects, the information required to be included
therein.
COOPERS & LYBRAND L.L.P.
New York, New York
January 31, 1997
<PAGE>
<TABLE>
<CAPTION>
NEW YORK STATE ELECTRIC & GAS CORPORATION
SCHEDULE II - Consolidated Valuation and Qualifying Accounts
(Thousands of Dollars)
Years Ended December 31, 1996, 1995 and 1994
<S> <C> <C> <C> <C> <C>
Beginning End
Classification of Year Additions Write-offs (a) Adjustments of Year (b)
1996
Allowance for Doubtful
Accounts - Accounts
Receivable $6,785 $18,858 $(18,937) $100(c) $6,806
Deferred Tax Asset
Valuation Allowance $2,852 $158 $(1,625) - $1,385
1995
Allowance for Doubtful
Accounts - Accounts
Receivable $7,198 $17,891 $(18,304) - $6,785
Deferred Tax Asset
Valuation Allowance $2,211 $641 - - $2,852
1994
Allowance for Doubtful
Accounts - Accounts
Receivable $4,000 $19,594 $(16,894) $498 (c) $7,198
Deferred Tax Asset
Valuation Allowance $663 $1,548 - - $2,211
(a) Uncollectible accounts charged against the allowance, net of recoveries.
(b) Represents an estimate of the write-offs that will not be recovered in rates.
(c) Due to acquisition of XENERGY, Inc. in 1994 and KENETECH Energy Management, Inc. in 1996.
</TABLE>
<PAGE>
Item 9. Changes in and disagreements with accountants on accounting and
financial disclosure - None
PART III
Item 10. Directors and executive officers of the Registrant
Incorporated herein by reference to the information under the caption
"Election of Directors" and "Section 16(a) Beneficial Ownership Reporting
Compliance" in the Company's Proxy Statement dated April 11, 1997. The
information regarding executive officers is on pages 16 - 17 of this report.
Item 11. Executive compensation
Incorporated herein by reference to the information under the captions
"Executive Compensation," "Employment and Change in Control Arrangements,"
"Directors' Compensation," "Compensation Committee Interlocks and Insider
Participation," "Report of Executive Compensation and Succession Committee"
and "Stock Performance Graph" in the Company's Proxy Statement dated April 11,
1997.
Item 12. Security ownership of certain beneficial owners and management
Incorporated herein by reference to the information under the caption
"Security Ownership of Management" in the Company's Proxy Statement dated
April 11, 1997.
Item 13. Certain relationships and related transactions
Incorporated herein by reference to the information under the caption
"Election of Directors" in the Company's Proxy Statement dated April 11, 1997.
PART IV
Item 14. Exhibits, financial statement schedules, and reports on Form 8-K
(a) The following documents are filed as part of this report:
1. Financial statements
Included in Part II of this report:
a) Consolidated Balance Sheets as of December 31, 1996 and 1995
b) For the three years ended December 31, 1996:
Consolidated Statements of Income
Consolidated Statements of Cash Flows
Consolidated Statements of Changes in Common Stock Equity
c) Notes to Consolidated Financial Statements
d) Report of Independent Accountants
2. Financial statement schedule
Included in Part II of this report:
For the three years ended December 31, 1996:
II. Consolidated Valuation and Qualifying Accounts
Schedules other than those listed above have been omitted since they are
not required, are inapplicable or the required information is presented in the
Consolidated Financial Statements or notes thereto.
<PAGE>
3. Exhibits
(a)(1) The following exhibits are delivered with this report:
Exhibit No.
3-15 - By-Laws of the company as amended January 10, 1997.
(A) 10-16 - Retirement Plan for Directors Amendment No. 3.
(A) 10-19 - Director Share Plan.
(A) 10-20 - Deferred Compensation Plan for the Director Share Plan.
(A) 10-21 - Supplemental Executive Retirement Plan as amended through
Amendment No. 11.
(A) 10-22 - Amended and Restated Annual Executive Incentive Plan.
12 - Computation of Ratio of Earnings to Fixed Charges.
21 - Subsidiaries.
23 - Consent of Coopers & Lybrand L.L.P. to incorporation by
reference into certain registration statements.
27 - Financial Data Schedule.
99-1 - Form 11-K for New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Salaried Employees.
99-2 - Form 11-K for New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Hourly Paid Employees.
(a)(2) The following exhibits are incorporated herein by reference:
Exhibit No. Filed in As Exhibit No.
3-1 - Restated Certificate of Incorporation of the
Company pursuant to Section 807 of the Business
Corporation Law filed in the Office of the
Secretary of State of the State of New York on
October 25, 1988 - Registration No. 33-50719 . . . 4-11
3-2 - Certificate of Amendment of the Certificate of
Incorporation filed in the Office of the
Secretary of State of the State of New York
on October 17, 1989 - Registration No. 33-50719 . . 4-12
3-3 - Certificate of Amendment of the Certificate of
Incorporation filed in the Office of the Secretary
of State of the State of New York on May 22, 1990 -
Registration No. 33-50719 . . . . . . . . . . . . . 4-13
3-4 - Certificate of Amendment of the Certificate of
Incorporation filed in the Office of the
Secretary of State of the State of New York
on October 31, 1990 - Registration No. 33-50719 . . 4-14
3-5 - Certificate of Amendment of the Certificate of
Incorporation filed in the Office of the
Secretary of State of the State of New York
on February 6, 1991 - Registration No. 33-50719 . . 4-15
3-6 - Certificate of Amendment of the Certificate of
Incorporation filed in the Office of the
Secretary of State of the State of New York
on October 15, 1991 - Registration No. 33-50719 . . 4-16
3-7 - Certificate of Merger of Columbia Gas of New York,
Inc. into the Company filed in the Office of the
Secretary of State of the State of New York on
April 8, 1991 - Registration No. 33-50719 . . . . . 4-20
3-8 - Certificate of Amendment of the Certificate of
Incorporation filed in the Office of the Secretary
of State of the State of New York on May 28, 1992 -
Registration No. 33-50719 . . . . . . . . . . . . . 4-17
______________________________
(A) Management contract or compensatory plan or arrangement.
Exhibit No. Filed in As Exhibit No.
3-9 - Certificate of Amendment of the Certificate of
Incorporation filed in the Office of the Secretary
of State of the State of New York on October 20, 1992 -
Registration No. 33-50719 . . . . . . . . . . . . . 4-18
3-10 - Certificate of Amendment of the Certificate of
Incorporation filed in the Office of the Secretary
of State of the State of New York on October 14, 1993
Registration No. 33-50719 . . . . . . . . . . . . . 4-19
3-11 - Certificate of Amendment of the Certificate of Incor-
poration filed in the Office of the Secretary of State
of the State of New York on December 10, 1993 -
Company's 10-K for year ended December 31, 1993 -
File No. 1-3103-2 . . . . . . . . . . . . . . . . . 3-11
3-12 - Certificate of Amendment of the Certificate of Incor-
poration filed in the Office of the Secretary of State
of the State of New York on December 20, 1993 -
Company's 10-K for year ended December 31, 1993 -
File No. 1-3103-2 . . . . . . . . . . . . . . . . . 3-12
3-13 - Certificate of Amendment of the Certificate of Incor-
poration filed in the Office of the Secretary of State
of the State of New York on December 20, 1993 -
Company's 10-K for year ended December 31, 1993 -
File No. 1-3103-2 . . . . . . . . . . . . . . . . . 3-13
3-14 - Certificates of the Secretary of the Company concern-
ing consents dated March 20, 1957 and May 9, 1975 of
holders of Serial Preferred Stock with respect to
issuance of certain unsecured indebtedness -
Registration No. 2-69988. . . . . . . . . . . . . . 4-7
4-1 - First Mortgage dated as of July 1, 1921 executed by
the Company under its then name of "New York State
Gas and Electric Corporation" to The Equitable Trust
Company of New York, as Trustee (The Chase Manhattan
Bank is Successor Trustee) - Registration No. 33-4186. 4-1
Supplemental Indentures to First Mortgage dated as of July 1, 1921:
4-2 - No. 37 - Registration No. 33-31297. . . . . . . . . 4-2
4-3 - No. 39 - Registration No. 33-31297. . . . . . . . . 4-3
4-4 - No. 43 - Registration No. 33-31297. . . . . . . . . 4-4
4-5 - No. 51 - Registration No. 2-59840 . . . . . . . . . 2-B(46)
4-6 - No. 69 - Registration No. 2-59840 . . . . . . . . . 2-B(64)
4-7 - No. 71 - Registration No. 2-59840 . . . . . . . . . 2-B(66)
4-8 - No. 74 - Registration No. 2-59840 . . . . . . . . . 2-B(69)
4-9 - No. 75 - Registration No. 2-59840 . . . . . . . . . 2-B(70)
4-10 - No. 80 - Registration No. 2-59840 . . . . . . . . . 2-B(75)
4-11 - No. 81 - Registration No. 2-59840 . . . . . . . . . 2-B(76)
4-12 - No. 103- Registration No. 33-43458. . . . . . . . . 4-8
4-13 - No. 104- Registration No. 33-43458. . . . . . . . . 4-9
4-14 - No. 105- Registration No. 33-52040. . . . . . . . . 4-8
4-15 - No. 106- Company's 10-K for year ended
December 31, 1992 - File No. 1-3103-2. . . 4-23
4-16 - No. 107- Company's 10-K for year ended
December 31, 1992 - File No. 1-3103-2. . . 4-24
4-17 - No. 108- Registration No. 33-50719. . . . . . . . . 4-8
4-18 - No. 109- Registration No. 33-50719. . . . . . . . . 4-9
<PAGE>
Agreements and amendments with the Power Authority of the State of New York:
Exhibit No. Filed in As Exhibit No.
10-1 - Letter Agreement dated February 3, 1982 relating to
transmission services - Registration No. 2-82192. . 10-1
10-2 - Amendment dated December 21, 1989 to the Letter
Agreement dated February 3, 1982 relating to trans-
mission services - Company's 10-K for year ended
December 31, 1989 - File No. 1-3103-2 . . . . . . 10-4
10-3 - Transmission Agreement dated December 12, 1983,
with respect to connection of the Company's Kintigh
(Somerset) Generating Station to the Niagara-Edic
345 kv transmission system - Company's 10-K for year
ended December 31, 1988 - File No. 1-3103-2 . . . . 10-6
10-4 - Amendment dated December 21, 1989 to the Transmission
Agreement dated December 12, 1983 with respect to
connection of the Company's Kintigh (Somerset) Gener-
ating Station to the Niagara-Edic 345 kv transmission
system - Company's 10-K for the year ended December
31, 1989 File No. 1-3103-2. . . . . . . . . . . . . 10-7
* * * * * * * * * *
10-5 - New York Power Pool Agreement dated July 11, 1985 -
Company's 10-K for year ended December 31, 1988 -
File No. 1-3103-2 . . . . . . . . . . . . . . . . . 10-7
10-6 - Transmission Agreement dated January 10, 1990 between
New York State Electric & Gas Corporation and Niagara
Mohawk Power Corporation, with respect to remote load
and generation wheeling service for the Company -
Company's 10-K for year ended December 31, 1990 -
File No. 1-3103-2 . . . . . . . . . . . . . . . . . 10-17
10-7 - Coal Sales Agreement dated December 21, 1983 between
the Company and Consolidation Coal Company - Company's
10-K for year ended December 31, 1993 -
File No. 1-3103-2 . . . . . . . . . . . . . . . . . . 10-14
10-8 - Amendment No. 1 dated as of October 1, 1985 to the
Coal Sales Agreement dated December 21, 1983 between
the Company and Consolidation Coal Company -
Company's 10-K for year ended December 31, 1986 -
File No. 1-3103-2 . . . . . . . . . . . . . . . . . 10-11
10-9 - Amendment No. 2 dated as of August 28, 1986 to the
Coal Sales Agreement dated December 21, 1983 between
the Company and Consolidation Coal Company -
Company's 10-K for year ended December 31, 1986 -
File No. 1-3103-2 . . . . . . . . . . . . . . . . . 10-12
10-10 - Basic Agreement dated as of September 22, 1975
between New York State Electric & Gas Corporation
and others concerning Nine Mile Point Nuclear
Station, Unit No. 2 - Registration No. 2-54903. . . 5-0
10-11 - Nine Mile Point Nuclear Station Unit 2 Operating
Agreement effective as of January 1, 1993 among
New York State Electric & Gas Corporation and
others - Company's 10-K for the year ended
December 31, 1992 - File No. 1-3103-2 . . . . . . . 10-18
<PAGE>
Exhibit No. Filed in As Exhibit No.
10-12 - Coal Hauling Agreement dated as of March 9, 1983
between Somerset Railroad Corporation and New
York State Electric & Gas Corporation -
Registration No. 2-82352. . . . . . . . . . . . . . 10
(A)10-13 - Retirement Plan for Directors - Company's 10-K
for the year ended December 31, 1991 -
File No. 1-3103-2 . . . . . . . . . . . . . . . . . 10-26
(A)10-14 - Retirement Plan for Directors Amendment No. 1 -
Company's 10-K for year ended December 31, 1993 -
File No. 1-3103-2 . . . . . . . . . . . . . . . . . 10-21
(A)10-15 - Retirement Plan for Directors Amendment No. 2 -
Company's 10-K for year ended December 31, 1995 -
File No. 1-3103-2 . . . . . . . . . . . . . . . . . 10-15
(A)10-17 - Form of Deferred Compensation Plan for Directors -
Company's 10-K for year ended December 31, 1989 -
File No. 1-3103-2 . . . . . . . . . . . . . . . . . 10-22
(A)10-18 - Deferred Compensation Plan for Directors Amendment
No. 1 - Company's 10-K for year ended December
31, 1993 - File No. 1-3103-2. . . . . . . . . . . . 10-23
(A)10-23 - Long-term Executive Incentive Share Plan -
Company's 10-K for year ended December 31, 1995 -
File No. 1-3103-2 . . . . . . . . . . . . . . . . . 10-43
(A)10-24 - Long-Term Executive Incentive Share Plan Deferred
Compensation Agreement - Company's 10-K for year
ended December 31, 1995 - File No. 1-3103-2 . . . . 10-44
(A)10-25 - Employment Contract for A. E. Kintigh - Company's
10-K for year ended December 31, 1988 - File
No. 1-3103-2. . . . . . . . . . . . . . . . . . . . 10-26
(A)10-26 - Agreement with M.I. German - Company's 10-K for the
year ended December 31, 1994 - File No. 1-2103-2. . 10-41
(A)10-27 - Employment Agreement for J. A. Carrigg - Company's
10-K for year ended December 31, 1993 - File No.
1-3103-2. . . . . . . . . . . . . . . . . . . . . . 10-46
(A)10-28 - Employment Agreement for J. A. Carrigg Amendment
No. 1 - Company's 10-K for year ended December 31,
1995 - File No. 1-3103-2. . . . . . . . . . . . . . 10-48
(A)10-29 - Form of Severance Agreement for Senior Vice
Presidents - Company's 10-K for year ended December
31, 1993 - File No. 1-3103-2. . . . . . . . . . . . . 10-47
(A)10-30 - Form of Severance Agreement for Senior Vice
Presidents Amendment No. 1 - Company's 10-K for year
ended December 31, 1995 - File No. 1-3103-2 . . . . . 10-50
(A)10-31 - Form of Severance Agreement for Vice Presidents -
Company's 10-K for year ended December 31, 1993 -
File No. 1-3103-2 . . . . . . . . . . . . . . . . . . 10-48
(A)10-32 - Form of Severance Agreement for Vice Presidents
Amendment No. 1 - Company's 10-K for year ended
December 31, 1995 - File No. 1-3103-2 . . . . . . . . 10-52
(A)10-33 - Deferred Compensation Plan for Salaried Employees -
Company's 10-K for year ended December 31, 1995 -
File No. 1-3103-2 . . . . . . . . . . . . . . . . . . 10-53
_____________________________
(A) Management contract or compensatory plan or arrangement.
Exhibit No. Filed in As Exhibit No.
(A)10-34 - Employment Agreement for W. W. von Schack -
Company's 10-Q for quarter ended September 30,
1996 - File No. 1-3103-2. . . . . . . . . . . . . . . 10-54
(A)10-35 - Employment agreement for W. W. von Schack Amendment
No. 1 - Company's 10-Q for quarter ended September
30, 1996 - File No. 1-3103-2. . . . . . . . . . . . . 10-55
The company agrees to furnish to the Commission, upon request, a copy of
the Revolving Credit Agreement dated as of July 31, 1992, as amended, between
the company, The Chase Manhattan Bank, as Agent, and certain banks; a copy of
the Participation Agreements dated as of June 1, 1987 and December 1, 1988
between the company and New York State Energy Research and Development
Authority (NYSERDA) relating to Adjustable Rate Pollution Control Revenue Bonds
(1987 Series A), and (1988 Series A), respectively; a copy of the Participation
Agreements dated as of March 1, 1985, October 15, 1985, and December 1, 1985
between the company and NYSERDA relating to Annual Tender Pollution Control
Revenue Bonds (1985 Series A), (1985 Series B), and (1985 Series D),
respectively; a copy of the Participation Agreements dated as of February 1,
1993, February 1, 1994, June 1, 1994, October 1, 1994 and December 1, 1994
between the company and NYSERDA relating to Pollution Control Refunding Revenue
Bonds (1994 Series A), (1994 Series B), (1994 Series C), (1994 Series D), and
(1994 Series E), respectively; a copy of the Participation Agreement dated as
of December 1, 1993 between the company and NYSERDA relating to Solid Waste
Disposal Revenue Bonds (1993 Series A); a copy of the Participation Agreement
dated as of December 1, 1994 between the company and the Indiana County
Industrial Development Authority relating to Pollution Control Refunding
Revenue Bonds (1994 Series A); a copy of the Credit Agreement dated as of March
9, 1983, as amended, between Somerset Railroad Corporation and The Chase
Manhattan Bank, and a copy of the Revolving Credit Agreement dated as of June
30, 1994, as amended, between XENERGY Inc. and The First National Bank of
Boston. The total amount of securities authorized under each of such
agreements does not exceed 10% of the total assets of the company and its
subsidiaries on a consolidated basis.
(b) Reports on Form 8-K
None
______________________________
(A) Management contract or compensatory plan or arrangement.
<PAGE>
Signatures
Pursuant to the requirements of Section 13 or 15(d) 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.
NEW YORK STATE ELECTRIC & GAS CORPORATION
Date: March 14, 1997 By Gary J. Turton
Gary J. Turton
Vice President and Controller
Chief Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
PRINCIPAL EXECUTIVE OFFICER
Date: March 14, 1997 By Wesley W. von Schack
Wesley W. von Schack
Chairman, President,
Chief Executive Officer and
Director
PRINCIPAL FINANCIAL OFFICER
Date: March 14, 1997 By Sherwood J. Rafferty
Sherwood J. Rafferty
Senior Vice President and
Chief Financial Officer
PRINCIPAL ACCOUNTING OFFICER
Date: March 14, 1997 By Gary J. Turton
Gary J. Turton
Vice President and Controller
<PAGE>
Signatures (Cont'd)
Date: March 14, 1997 By James A. Carrigg
James A. Carrigg
Director
Date: March 14, 1997 By Alison P. Casarett
Alison P. Casarett
Director
Date: March 14, 1997 By Joseph J. Castiglia
Joseph J. Castiglia
Director
Date: March 14, 1997 By Lois B. DeFleur
Lois B. DeFleur
Director
Date: March 14, 1997 By Everett A. Gilmour
Everett A. Gilmour
Director
Date: March 14, 1997 By Paul L. Gioia
Paul L. Gioia
Director
Date: March 14, 1997 By John M. Keeler
John M. Keeler
Director
Date: March 14, 1997 By Allen E. Kintigh
Allen E. Kintigh
Director
Date: March 14, 1997 By Ben E. Lynch
Ben E. Lynch
Director
Date: March 14, 1997 By Alton G. Marshall
Alton G. Marshall
Director
<PAGE>
EXHIBIT INDEX
* 3-1 -- Restated Certificate of Incorporation of the company
pursuant to Section 807 of the Business Corporation Law
filed in the Office of the Secretary of State of the
State of New York on October 25, 1988.
* 3-2 -- Certificate of Amendment of the Certificate of
Incorporation filed in the Office of the Secretary of
State of the State of New York on October 17, 1989.
* 3-3 -- Certificate of Amendment of the Certificate of
Incorporation filed in the Office of the Secretary of
State of the State of New York on May 22, 1990.
* 3-4 -- Certificate of Amendment of the Certificate of
Incorporation filed in the Office of the Secretary of
State of the State of New York on October 31, 1990.
* 3-5 -- Certificate of Amendment of the Certificate of
Incorporation filed in the Office of the Secretary of
State of the State of New York on February 6, 1991.
* 3-6 -- Certificate of Amendment of the Certificate of
Incorporation filed in the Office of the Secretary of
State of the State of New York on October 15, 1991.
* 3-7 -- Certificate of Merger of Columbia Gas of New York, Inc.
into the company filed in the Office of the Secretary of
State of the State of New York on April 8, 1991.
* 3-8 -- Certificate of Amendment of the Certificate of
Incorporation filed in the Office of the Secretary of
State of the State of New York on May 28, 1992.
* 3-9 -- Certificate of Amendment of the Certificate of
Incorporation filed in the Office of the Secretary of
State of the State of New York on October 20, 1992.
* 3-10 -- Certificate of Amendment of the Certificate of
Incorporation filed in the Office of the Secretary of
State of the State of New York on October 14, 1993.
* 3-11 -- Certificate of Amendment of the Certificate of
Incorporation filed in the Office of the Secretary of
State of the State of New York on December 10, 1993.
* 3-12 -- Certificate of Amendment of the Certificate of
Incorporation filed in the Office of the Secretary of
State of the State of New York on December 20, 1993.
* 3-13 -- Certificate of Amendment of the Certificate of
Incorporation filed in the Office of the Secretary of
State of the State of New York on December 20, 1993.
* 3-14 -- Certificates of the Secretary of the company concerning
consents dated March 20, 1957 and May 9, 1975 of holders
of Serial Preferred Stock with respect to issuance of
certain unsecured indebtedness.
3-15 -- By-Laws of the company as amended January 10, 1997.
* 4-1 -- First Mortgage dated as of July 1, 1921 executed by the
company under its then name of "New York State Gas and
Electric Corporation" to The Equitable Trust Company of
New York, as Trustee (The Chase Manhattan Bank is
Successor Trustee).
___________________________________
* Incorporated by reference.
<PAGE>
EXHIBIT INDEX (Cont'd)
Supplemental Indentures to First Mortgage dated as of July 1, 1921:
* 4-2 -- No. 37 * 4-8 -- No. 74 * 4-14 -- No. 105
* 4-3 -- No. 39 * 4-9 -- No. 75 * 4-15 -- No. 106
* 4-4 -- No. 43 * 4-10 -- No. 80 * 4-16 -- No. 107
* 4-5 -- No. 51 * 4-11 -- No. 81 * 4-17 -- No. 108
* 4-6 -- No. 69 * 4-12 -- No. 103 * 4-18 -- No. 109
* 4-7 -- No. 71 * 4-13 -- No. 104
Agreements and Amendments with the Power Authority of the State of New
York:
* 10-1 -- Letter Agreement dated February 3, 1982 relating to
transmission services.
* 10-2 -- Amendment dated December 21, 1989 to the Letter
Agreement dated February 3, 1982 relating to
transmission services.
* 10-3 -- Transmission Agreement dated December 12, 1983, with
respect to connection of the company's Kintigh
(Somerset) Generating Station to the Niagara-Edic 345 kv
transmission system.
* 10-4 -- Amendment dated December 21, 1989 to the Transmission
Agreement dated December 12, 1983 with respect to
connection of the company's Kintigh (Somerset)
Generating Station to the Niagara-Edic 345 kv
transmission system.
* * * * * * * * * *
* 10-5 -- New York Power Pool Agreement dated July 11, 1985.
* 10-6 -- Transmission Agreement dated January 10, 1990 between New
York State Electric & Gas Corporation and Niagara Mohawk
Power Corporation, with respect to remote load and
generation wheeling service for the company.
* * * * * * * * * *
Coal Sales Agreement and Amendments between New York State Electric &
Gas Corporation and Consolidation Coal Company:
* 10-7 -- Agreement dated December 21, 1983.
* 10-8 -- Amendment No. 1 dated as of October 1, 1985.
* 10-9 -- Amendment No. 2 dated as of August 28, 1986.
* * * * * * * * * *
___________________________________
* Incorporated by reference.
<PAGE>
EXHIBIT INDEX (Cont'd)
* 10-10 -- Basic Agreement dated as of September 22, 1975 between
New York State Electric & Gas Corporation and others
concerning Nine Mile Point Nuclear Station, Unit No. 2.
* 10-11 -- Nine Mile Point Nuclear Station Unit 2 Operating
Agreement effective as of January 1, 1993 among New York
State Electric & Gas Corporation and others.
* 10-12 -- Coal Hauling Agreement dated as of March 9, 1983 between
Somerset Railroad Corporation and New York State
Electric & Gas Corporation.
(A)* 10-13 -- Retirement Plan for Directors.
(A)* 10-14 -- Retirement Plan for Directors Amendment No. 1.
(A)* 10-15 -- Retirement Plan for Directors Amendment No. 2.
(A) 10-16 -- Retirement Plan for Directors Amendment No. 3.
(A)* 10-17 -- Form of Deferred Compensation Plan for Directors.
(A)* 10-18 -- Deferred Compensation Plan for Directors Amendment
No. 1.
(A) 10-19 -- Director Share Plan.
(A) 10-20 -- Deferred Compensation Plan for the Director Share Plan.
(A) 10-21 -- Supplemental Executive Retirement Plan as amended
through Amendment No. 11.
(A) 10-22 -- Amended and Restated Annual Executive Incentive Plan.
(A)* 10-23 -- Long-Term Executive Incentive Share Plan.
(A)* 10-24 -- Long-Term Executive Incentive Share Plan Deferred
Compensation Agreement.
(A)* 10-25 -- Employment Contract for A. E. Kintigh.
(A)* 10-26 -- Agreement with M. I. German.
(A)* 10-27 -- Employment Agreement for J. A. Carrigg.
(A)* 10-28 -- Employment Agreement for J. A. Carrigg Amendment No. 1.
(A)* 10-29 -- Form of Severance Agreement for Senior Vice Presidents.
(A)* 10-30 -- Form of Severance Agreement for Senior Vice Presidents
Amendment No. 1.
(A)* 10-31 -- Form of Severance Agreement for Vice Presidents.
(A)* 10-32 -- Form of Severance Agreement for Vice Presidents
Amendment No. 1.
(A)* 10-33 -- Deferred Compensation Plan for Salaried Employees.
(A)* 10-34 -- Employment Agreement for W. W. von Schack.
(A)* 10-35 -- Employment Agreement for W. W. von Schack Amendment
No. 1.
12 -- Computation of Ratio of Earnings to Fixed Charges.
21 -- Subsidiaries.
23 -- Consent of Coopers & Lybrand L.L.P. to incorporation by
by reference into certain registration statements.
27 -- Financial Data Schedule.
99-1 -- Form 11-K for New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Salaried Employees.
99-2 -- Form 11-K for New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Hourly Paid Employees.
___________________________________
* Incorporated by reference.
EXHIBIT 3-15
__________________________________________________
__________________________________________________
NEW YORK STATE ELECTRIC & GAS
CORPORATION
____________
B Y - L A W S
As Amended
January 10, 1997
__________________________________________________
__________________________________________________
<PAGE>
NEW YORK STATE ELECTRIC & GAS CORPORATION
_______
BY-LAWS
_______
OFFICES
1. The office shall be at the place specified in the
Certificate of Incorporation as from time to time amended, now
Town of Dryden, County of Tompkins, State of New York.
The Corporation may also have offices at such other places
as the Board of Directors may from time to time designate or the
business of the Corporation may require.
SEAL
2. The corporate seal shall have inscribed thereon the name
of the Corporation, the year of its organization and the words
"CORPORATE SEAL, NEW YORK". If authorized by the Board of
Directors, the corporate seal may be affixed to any certificates
of stock, bonds, debentures, notes or other engraved,
lithographed or printed instruments, by engravings, lithographing
or printing thereon such seal or a facsimile thereof, and such
seal or facsimile thereof so engraved, lithographed or printed
thereon shall have the same force and effect, for all purposes,
as if such corporate seal had been affixed thereto by
indentation.
STOCKHOLDERS' MEETINGS
3. All meetings of the stockholders shall be held at the
principal office of the Corporation, or at such other location in
the State of New York as shall be stated in the notice of the
meeting, except when otherwise expressly provided by statute.
All meetings of stockholders shall be presided over by the
Chairman or by the President or a Vice President except when by
statute the election of a presiding officer is required.
4. The annual meeting of stockholders shall be held on the
second Friday of May in each year, if not a legal holiday, and if
a legal holiday, then on the next business day following, at
eleven o'clock A.M. or at such other date and time as shall be
stated in the notice of the meeting, at which the stockholders
entitled to vote shall elect directors, and transact such other
business as may properly be brought before the meeting.
<PAGE>
5. The holders of a majority of the shares of stock of the
Corporation issued and outstanding and entitled to vote thereat,
without regard to class, present in person or by proxy, shall be
requisite for, and shall constitute a quorum at all meetings of
the stockholders for the transaction of business except for the
election or removal of directors and except as otherwise
expressly provided by statute, by the Certificate of
Incorporation, as amended, or by these By-Laws; provided that, in
the case of any meeting of holders of the serial preferred stock
of the Corporation, the presence in person or by proxy of the
holders of record of shares representing a majority of the votes
entitled to be cast thereat by the holders of the outstanding
shares of serial preferred stock, without regard to series, shall
be necessary to constitute a quorum for the transaction of
business except for the election or removal of directors and
except as otherwise expressly provided by statute, by the
Certificate of Incorporation, as amended, or by these By-Laws.
If, however, the holders of a majority of such shares of stock or
votes, as the case may be, shall not be present or represented by
proxy at any such meeting, the stockholders entitled to vote
thereat, present in person or by proxy, shall have power, by a
majority vote of those present or represented, to adjourn the
meeting from time to time, without notice other than announcement
at the meeting, until the holders of the amount of stock or
votes, as the case may be, requisite to constitute a quorum shall
be present in person or by proxy. At any adjourned meeting at
which a quorum shall be present, in person or by proxy, any
business may be transacted which might have been transacted at
the meeting as originally noticed.
At any meeting for the election of directors by the common
stockholders, the presence in person or by proxy of the holders
of record of a majority of the outstanding shares of common stock
shall be necessary to constitute a quorum for the election of
such directors, except when otherwise expressly provided by
statute.
6. At each meeting of stockholders each holder of record of
shares of capital stock then entitled to vote shall be entitled
to vote in person, or by proxy appointed by instrument executed
in writing, by such stockholder or by his duly authorized
attorney; but no proxy shall be valid after the expiration of
eleven months from the date of its execution unless the
stockholder executing it shall have specified therein its
duration, which shall be for some limited period. Except as
otherwise provided by statute or by the Certificate of
Incorporation, as amended, each holder of record of shares of
capital stock entitled to vote at any meeting of stockholders
shall be entitled to one vote for every share of capital stock
standing in his name on the books of the Corporation, but, as
provided by the Certificate of Incorporation, as amended, at all
elections of directors by the common stockholders, each holder of
common stock shall be entitled to as many votes as shall equal
the number of votes which (except for such provision as to
cumulative voting) he would be entitled to cast for the election
of directors with respect to his shares of common stock
multiplied by the number of directors to be elected and he may
cast all of such votes for a single director or may distribute
them among the number of directors to be voted for, or any two or
more of them, as he may see fit. All elections shall be
determined by a plurality vote. The vote for directors shall be
by ballot and, except as otherwise provided by statute or by the
Certificate of Incorporation, as amended, or by these By-Laws,
all other matters shall be determined by a vote of the holders of
a plurality of the shares of the capital stock present or
represented at a meeting and entitled to vote on such matters,
and by ballot, if demanded by any stockholder or his duly
authorized proxy.
7. A list of stockholders as of the record date, certified
by the corporate officer responsible for its preparation or by a
transfer agent, shall be produced at any meeting of stockholders
upon the request thereat or prior thereto of any stockholder. If
the right to vote at any meeting is challenged, the inspectors of
election, or person presiding thereat, shall require such list of
stockholders to be produced as evidence of the right of the
persons challenged to vote at such meeting, and all persons who
appear from such list to be stockholders entitled to vote thereat
may vote at such meeting.
8. Except as may be otherwise provided in the Certificate
of Incorporation, as amended, with respect to the right of
holders of serial preferred stock or preference stock of the
Corporation to elect a specified number of directors in certain
circumstances, only persons who are nominated in accordance with
the following procedures shall be eligible for election as
directors of the Corporation. Nominations of persons for
election to the Board of Directors may be made at any annual
meeting of stockholders, or at any special meeting of
stockholders called for the purpose of electing directors, (a) by
or at the direction of the Board of Directors (or any duly
authorized committee thereof) or (b) by any stockholder of the
Corporation (i) who is a stockholder of record on the date of the
giving of the notice provided for in this By-Law and on the
record date for the determination of stockholders entitled to
vote at such meeting and (ii) who complies with the notice
procedures set forth in this By-Law.
In addition to any other applicable requirements, for a
nomination to be made by a stockholder, such stockholder must
have given timely notice thereof in proper written form to the
Secretary of the Corporation.
<PAGE>
To be timely, a stockholder's notice to the Secretary must
be delivered to or mailed and received at the principal executive
offices of the Corporation (a) in the case of an annual meeting,
not less than sixty (60) days nor more than ninety (90) days
prior to the anniversary date of the immediately preceding annual
meeting of stockholders; provided, however, that in the event
that the annual meeting is called for a date that is not within
thirty (30) days before or after such anniversary date, notice by
the stockholder in order to be timely must be so received not
later than the close of business on the tenth (10th) day
following the day on which such notice of the date of the annual
meeting was mailed or such public disclosure of the date of the
annual meeting was made, whichever first occurs; and (b) in the
case of a special meeting of stockholders called for the purpose
of electing directors, not later than the close of business on
the tenth (10th) day following the day on which notice of the
date of the special meeting was mailed or public disclosure of
the date of the special meeting was made, whichever first occurs.
To be in proper written form, a stockholder's notice to the
Secretary must set forth (a) as to each person whom the stock-
holder proposes to nominate for election as a director (i) the
name, age, business address and residence address of the person,
(ii) the principal occupation or employment of the person, (iii)
the class or series and number of shares of capital stock of the
Corporation which are owned beneficially or of record by the
person and (iv) any other information relating to the person that
would be required to be disclosed in a proxy statement or other
filings required to be made in connection with solicitations of
proxies for election of directors pursuant to Section 14 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and the rules and regulations promulgated thereunder; and (b) as
to the stockholder giving the notice (i) the name and record
address of such stockholder, (ii) the class or series and number
of shares of capital stock of the Corporation which are owned
beneficially or of record by such stockholder, (iii) a
description of all arrangements or understandings between such
stockholder and each proposed nominee and any other person or
persons (including their names) pursuant to which the
nomination(s) are to be made by such stockholder, (iv) a
representation that such stockholder intends to appear in person
or by proxy at the meeting to nominate the person(s) named in its
notice and (v) any other information relating to such stockholder
that would be required to be disclosed in a proxy statement or
other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to
Section 14 of the Exchange Act and the rules and regulations
promulgated thereunder. Such notice must be accompanied by a
written consent of each proposed nominee to being named as a
nominee and to serve as a director if elected.
<PAGE>
No person shall be eligible for election as a director of
the Corporation unless nominated in accordance with the
procedures set forth in this By-Law. If the chairman of the
meeting determines that a nomination was not made in accordance
with the foregoing procedures, the chairman shall declare to the
meeting that the nomination was defective and such defective
nomination shall be disregarded.
9. No business may be transacted at an annual meeting of
stockholders, other than business that is either (a) specified in
the notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors (or any duly authorized
committee thereof), (b) otherwise properly brought before the
annual meeting by or at the direction of the Board of Directors
(or any duly authorized committee thereof) or (c) otherwise
properly brought before the annual meeting by any stockholder of
the Corporation (i) who is a stockholder of record on the date of
the giving of the notice provided for in this By-Law and on the
record date for the determination of stockholders entitled to
vote at such annual meeting and (ii) who complies with the notice
procedures set forth in this By-Law.
In addition to any other applicable requirements, for busi-
ness to be properly brought before an annual meeting by a
stockholder, such stockholder must have given timely notice
thereof in proper written form to the Secretary of the
Corporation.
To be timely, a stockholder's notice to the Secretary must
be delivered to or mailed and received at the principal executive
offices of the Corporation not less than sixty (60) days nor more
than ninety (90) days prior to the anniversary date of the
immediately preceding annual meeting of stockholders; provided,
however, that in the event that the annual meeting is called for
a date that is not within thirty (30) days before or after such
anniversary date, notice by the stockholder in order to be timely
must be so received not later than the close of business on the
tenth (10th) day following the day on which such notice of the
date of the annual meeting was mailed or such public disclosure
of the date of the annual meeting was made, whichever first
occurs.
To be in proper written form, a stockholder's notice to the
Secretary must set forth as to each matter such stockholder
proposes to bring before the annual meeting (i) a brief
description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at
the annual meeting, (ii) the name and record address of such
stockholder, (iii) the class or series and number of shares of
capital stock of the Corporation which are owned beneficially or
of record by such stockholder, (iv) a description of all
arrangements or understandings between such stockholder and any
other person or persons (including their names) in connection
with the proposal of such business by such stockholder and any
material interest of such stockholder in such business and (v) a
representation that such stockholder intends to appear in person
or by proxy at the annual meeting to bring such business before
the meeting.
No business shall be conducted at the annual meeting of
stockholders except business brought before the annual meeting in
accordance with the procedures set forth in this By-Law. If the
chairman of the annual meeting determines that business was not
properly brought before the annual meeting in accordance with the
foregoing procedures, the chairman shall declare to the meeting
that the business was not properly brought before the meeting and
such business shall not be transacted.
10. Special meetings of the stockholders for any purpose or
purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, as amended, may be called by the
Chairman or by the President, and shall be called by the Chairman
or the President or Secretary at the request in writing of a
majority of the Board of Directors. Such request shall state the
purpose or purposes of the proposed meetings.
11. Except as otherwise may be required by provisions of the
Certificate of Incorporation of the Corporation, as amended,
relative to meetings of stockholders required or authorized by
the provisions of paragraph (F) or (H) of Article 7 of the
Restated Certificate of Incorporation filed October 25, 1988,
notice of every meeting of stockholders, setting forth the time,
place and purpose or purposes thereof, shall be mailed, not less
than ten nor more than fifty days prior to such meetings to all
stockholders (at their respective addresses appearing on the
books of the Corporation unless the stockholder shall have filed
with the Secretary of the Corporation a written request that
notices intended for him be mailed to some other address, in
which case the notice shall be mailed to the address designated
in such request) entitled to vote at such meeting, of record as
of a date fixed by the Board of Directors, not more than fifty
days in advance of such meeting, for determining the stockholders
entitled to notice of and to vote at such meeting, unless and
except to the extent that such notice shall have been waived in
writing either before or after the holding of such meeting by
stockholders entitled to notice thereof and to vote thereat.
If any By-Law regulating an impending election of directors
is adopted or amended or repealed by the Board, there shall be
set forth in the notice of the next meeting of the stockholders
of the Corporation for the election of directors the By-Laws so
adopted or amended or repealed together with a concise statement
of the changes made.
<PAGE>
DIRECTORS
12. The property and business of the Corporation shall be
managed under the direction of its Board of Directors, which
shall consist of not less than nine (9) nor more than fifteen
(15) directors. Directors need not be stockholders. Directors
shall be elected at the annual meeting of the stockholders, or,
if no such election shall be held, at a meeting called and held
in accordance with the statutes of the State of New York. Each
director shall be elected to hold office until the expiration of
the term for which he is elected, and thereafter until a
successor shall be elected and shall qualify. The directors
shall be divided, with respect to the terms for which they
severally hold office, into three classes, hereby designated
Class I, Class II and Class III. Each class shall have at least
three directors and the three classes shall be as nearly equal in
number as possible. The initial terms of office of the Class I,
Class II and Class III directors, elected at the 1987 annual
meeting of stockholders, shall expire at the next succeeding
annual meeting of stockholders, the second succeeding annual
meeting of stockholders and the third succeeding annual meeting
of stockholders, respectively. At each annual meeting of
stockholders after 1987, the successors of the class of directors
whose term expires at that annual meeting shall be elected to
hold office for a term expiring at the annual meeting of
stockholders to be held in the third year following the year of
their election.
The stockholders, at any annual meeting, or at any special
meeting called for that purpose, or a majority of the entire
Board of Directors, at any regular or special meeting, may
determine to increase or decrease the number of directors to the
respective maximum or minimum limits above prescribed, and, in
the case of an increase, shall thereupon elect the additional
directors. No decrease in the number of directors shall shorten
the term of any incumbent director. Any newly created director-
ships or any decrease in directorships shall be so apportioned
among the classes as to make all classes as nearly equal in
number as possible. If the number of directors is increased by
the Board and any newly created directorships are filled by the
Board, there shall be no classification of the additional
directors until the next annual meeting of stockholders. At any
meeting of the stockholders, the holders of a majority of the
shares of common stock issued and outstanding, voting separately
as a class, or by written consent without a meeting may remove at
any time, with or without cause, any director theretofore elected
by the common stockholders or elected by the Board to fill a
vacancy among the directors elected by the common stockholders,
and may fill the vacancy in the Board for the unexpired term thus
caused.
<PAGE>
No director who shall have attained the age of 70 shall
stand for re-election as a director; provided, however, that such
age limitation shall not apply in connection with the election of
directors at the 1997 annual meeting of stockholders.
In the event that the holders of serial preferred stock or
preference stock become entitled to exercise their special rights
to elect directors pursuant to Article 5 or Article 7,
respectively, of the Certificate of Incorporation, as amended,
the above provisions respecting the classification of directors
shall not apply, and election of directors shall be accomplished
in accordance with the provisions of such Article 5 or Article 7.
The election of directors by holders of common stock at the first
annual or special meeting of stockholders after the divestment of
such special rights of the holders of serial preferred stock or
preference stock shall be accomplished in accordance with the
provisions applicable to the initial terms of the classified
directors set forth above.
13. In addition to the powers and authorities by these By-
Laws expressly conferred upon them, the Board may exercise all
such powers of the Corporation, and do all such lawful acts and
things as are not by statute or by the Certificate of
Incorporation or by these By-Laws directed or required to be
exercised or done by the stockholders. A director or officer of
this Corporation shall not be disqualified by his office from
dealing or contracting with the Corporation either as a vendor,
purchaser or otherwise, nor shall any transaction or contract of
this Corporation be void or voidable by reason of the fact that
any director or officer or any firm of which any director or
officer is a member or employee or any corporation of which any
director or officer is a shareholder, director, officer or
employee, is in any way interested in such transaction or
contract, provided that such transaction or contract is or shall
be authorized, ratified or approved either (1) by vote of a
majority of a quorum of the Board of Directors or of the
Executive Committee without counting in such majority or quorum
any director so interested or member or employee of a firm so
interested or a shareholder, director, officer or employee of a
corporation so interested or (2) by vote at a stockholders'
meeting of the holders of record of a majority of all the
outstanding shares of capital stock of the Corporation having
full voting power or by writing or writings signed by a majority
of such holders; nor shall any director or officer be liable to
account to the Corporation for any profits realized by and from
or through any such transaction, or contract of this Corporation
authorized, ratified or approved as aforesaid by reason of the
fact that he or any firm of which he is a member or employee, or
any corporation of which he is a shareholder, director, officer
or employee was interested in such transaction or contract.
<PAGE>
MEETINGS OF THE BOARD
14. The first meeting of the Board of Directors held after
the annual meeting of stockholders at which directors shall have
been elected shall be held for the purpose of organization, the
election of officers, and the transaction of any other business
which may come before the meeting.
15. Regular meetings of the Board may be held without
notice, except as otherwise provided by these By-Laws, at such
time and place as shall from time to time be designated by the
Board.
16. Special meetings of the Board may be called by the
Chairman or by the President or a Vice President or any two
directors and may be held at the time and place designated in the
call and notice of the meeting. The Secretary or other officer
performing his duties shall give notice either personally or by
mail or telegram at least twenty-four hours before the meeting.
Meetings may be held at any time and place without notice if all
the directors are present or if those not present waive notice in
writing either before or after the meeting.
17. At all meetings of the Board one-third of the total
number of directors shall be requisite for and shall constitute a
quorum for the transaction of business, and the act of a majority
of the directors present at any meeting at which there is a
quorum shall be the act of the Board of Directors, except as may
be otherwise specifically provided by statute or by the
Certificate of Incorporation or by these By-Laws.
18. Any regular or special meeting may be adjourned to any
other time at the same or any other place by a majority of the
directors present at the meeting, whether or not a quorum shall
be present at such meeting, and no notice of the adjourned
meeting shall be required other than announcement at the meeting.
COMPENSATION OF DIRECTORS
19. Directors, other than salaried officers or employees of
the Corporation or of any affiliated company, shall receive cash
compensation for their services as directors, at the rate of
$22,000 per annum, payable monthly, and in addition $1,000 for
each regular or special meeting of the Board of Directors
attended, but compensation for meetings attended by means of
conference telephone or similar equipment, for which no travel is
required, shall be $500 for each such meeting so attended. All
directors shall be reimbursed for their reasonable expenses for
attendance, if any, at each regular or special meeting of the
Board of Directors. Nothing herein contained shall be construed
<PAGE>
to preclude any director from receiving non-cash compensation for
serving as a director or from serving the Corporation in any
other capacity and receiving compensation therefor.
20. Members of the Executive Committee other than salaried
officers or employees of the Corporation or of any affiliated
company, shall receive compensation for their services on that
committee at the rate of $1,500 per annum, paid monthly.
Members of special or standing committees, including the
Executive Committee, shall be allowed such additional
compensation and reimbursement for expenses as may be fixed by
the Board of Directors.
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
21. The Board of Directors may by vote of a majority of the
whole Board designate three or more of their number to constitute
an Executive Committee to hold office for such period as the
Board shall determine. The Chairman and the President shall each
be a member of the Executive Committee. The Board of Directors
may likewise designate one or more alternate members who shall
serve on the Executive Committee in the absence of any regular
member or members of such Committee. When a regular or alternate
member of the Executive Committee ceases to be a director he
shall automatically cease to be such regular or alternate member
of the Executive Committee. Such Executive Committee shall,
between meetings of the Board, have all the powers of the Board
of Directors in the management of the business and affairs of the
Corporation, except that no such committee shall have authority
as to: the submission to stockholders of any action that needs
stockholders' authorization under the Business Corporation Law;
the filling of vacancies in the Board of Directors or in any
committee; the fixing of compensation of the directors for
serving on the Board or on any committee; the amendment or repeal
of the By-Laws, or the adoption of new By-Laws; the amendment or
repeal of any resolution of the Board which by its terms shall
not be so amendable or repealable.
The Executive Committee shall cause to be kept regular
minutes of its proceedings, which may be transcribed in the
regular minute book of the Corporation, and all such proceedings
shall be reported to the Board of Directors at its next
succeeding meeting, and shall be subject to revision or
alteration by the Board, provided that no rights of third persons
shall be affected by such revision or alteration. A majority of
the Executive Committee shall constitute a quorum at any meeting.
The act of a majority of the Executive Committee present at any
meeting at which there is a quorum shall be the act of the
Executive Committee. The Board of Directors may by vote of a
majority thereof fill any vacancies in the Executive Committee.
The Executive Committee may, from time to time, subject to the
approval of the Board of Directors, prescribe rules and
regulations for the calling and conduct of meetings of the
Committee, and other matters relating to its procedure and the
exercise of its powers.
22. In addition to having the power to designate an
Executive Committee, the Board of Directors may by vote of a
majority of the whole Board designate other committees, whether
special or standing, each to consist of three or more of their
number, to hold office for such period as the Board shall
determine. With respect to each such other committee, the Board
of Directors may likewise designate one or more alternate
members who shall serve in the absence of any regular member or
members of such other committee. When a regular or alternate
member of such other committee ceases to be a director he shall
automatically cease to be a regular or alternate member of such
other committee. Each such other committee shall have authority
only to the extent provided by the Board of Directors, except
that no such other committee shall have authority as to: the
submission to stockholders of any action that needs stockholders'
authorization under the Business Corporation Law; the filling of
vacancies in the Board of Directors or in any committee; the
fixing of compensation of the directors for serving on the Board
or on any committee; the amendment or repeal of the By-Laws, or
the adoption of new By-Laws; the amendment or repeal of any
resolution of the Board which by its terms shall not be so
amendable or repealable. A majority of each such other committee
shall constitute a quorum at any meeting thereof. The act of a
majority of each such other committee present at any meeting
thereof at which there is a quorum shall be the act of such other
committee. The Board of Directors may by vote of a majority
thereof fill any vacancies in each such other committee.
MEETINGS OF THE BOARD AND COMMITTEE THEREOF
BY CONFERENCE TELEPHONE OR SIMILAR MEANS
23. Any one or more of the members of the Board of
Directors, the Executive Committee or any special or standing
committee of the Board of Directors may participate in a meeting
of the Board or such committee by means of a conference telephone
or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person
at a meeting.
<PAGE>
ACTION BY BOARD OR COMMITTEE WITHOUT A MEETING
24. If all members of the Board of Directors, the Executive
Committee or any special or standing committee of the Board of
Directors consent in writing to the adoption of a resolution
authorizing action required or permitted to be taken by the Board
or any committee, such action may be taken without a meeting.
The resolution and the written consents thereto shall be filed
with the minutes of the proceeding.
OFFICERS
25. The officers of the Corporation shall be chosen by the
Board of Directors. The officers shall be a Chairman, one or
more Assistants to the Chairman, a President, one or more
Assistants to the President, one or more Vice Presidents, one or
more Assistant Vice Presidents, a Secretary, one or more
Assistant Secretaries, a Treasurer, one or more Assistant
Treasurers, a Controller, one or more Assistant Controllers, and
such other officers as the Board may from time to time choose and
appoint. The Chairman and President may not occupy any other
such office, except that the same person may occupy both the
office of Chairman and the office of President. Neither the
Treasurer nor an Assistant Treasurer may at the same time be
Controller or an Assistant Controller. Except as above set
forth, any two of such offices may be occupied by the same person
but no officer shall execute, acknowledge or verify any
instrument in more than one capacity.
26. The Board of Directors, at its first meeting after the
election of directors by the stockholders, shall choose a
Chairman and a President from among their own number, and a
Secretary, a Treasurer and a Controller, and such Assistants to
the Chairman, Assistants to the President, Vice Presidents,
Assistant Vice Presidents, Assistant Secretaries, Assistant
Treasurers and Assistant Controllers, as it shall deem necessary,
none of whom need be members of the Board.
27. The Board may appoint such other officers and agents as
it shall deem necessary, who shall hold their offices for such
terms, and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board.
28. The salary or other compensation of the officers of the
Corporation shall be fixed by the Board of Directors. The salary
or other compensation of all other employees shall, in the
absence of any action by the Board be fixed by the Chairman or
the President or by such other officers or executives as shall be
designated by the Chairman or the President.
<PAGE>
29. The officers of the Corporation shall hold office until
the first meeting of the Board of Directors after the next
succeeding annual meeting of stockholders and until their
successors are chosen and qualify in their stead. Any officer or
agent elected or appointed by the Board of Directors may be
removed at any time, with or without cause, by the affirmative
vote of a majority of the whole Board of Directors. Any other
employee or agent of the Corporation may be removed at any time,
with or without cause, by the affirmative vote of a majority of
the whole Board of Directors or, in the absence of any action by
the Board, by the Chairman or the President or by such other
officers or executives as shall have been designated by the
Chairman or the President.
CHAIRMAN
30. The Chairman shall be the chief executive officer of the
Corporation and shall, when present, preside at all meetings of
the Board of Directors and of the stockholders, except as
otherwise by law provided. He may sign in the name of and on
behalf of the Corporation, certificates of stock, notes, and any
and all contracts, agreements and other instruments of a
contractual nature pertaining to matters which arise in the
normal conduct and ordinary course of business of the
Corporation. He shall be a member of the Executive Committee and
of all standing committees except the Executive Compensation and
Succession Committee, the Audit Committee and the Nominating
Committee. He shall also generally have the powers and perform
the duties which appertain to the office.
The Assistants to the Chairman shall assist the Chairman in
the performance of his duties and exercise and perform such other
powers and duties as may be conferred or required by the Board.
PRESIDENT
31. The President shall, when present in the absence of the
Chairman, preside at all meetings of the Board of Directors and
of the stockholders, except as otherwise by law provided. He may
sign in the name of and on behalf of the Corporation,
certificates of stock, notes, and any and all contracts,
agreements and other instruments of a contractual nature
pertaining to matters which arise in the normal conduct and
ordinary course of business of the Corporation. He shall be a
member of the Executive Committee and of all standing committees
except the Executive Compensation and Succession Committee, the
Audit Committee and the Nominating Committee. He shall also
generally have the powers and perform the duties which appertain
to the office.
<PAGE>
The Assistants to the President shall assist the President
in the performance of his duties and exercise and perform such
other powers and duties as may be conferred or required by the
Board.
VICE PRESIDENT
32. A Vice President may sign, in the name of and on behalf
of the Corporation, certificates of stock, notes and any and all
contracts, agreements and other instruments of a contractual
nature pertaining to matters which arise in the normal conduct
and ordinary course of business, and shall perform such other
duties as the Board of Directors may prescribe.
If there be more than one Vice President, the Board of
Directors may designate one or more Vice Presidents as Executive
Vice Presidents who shall have general supervision, direction and
control of the business and affairs of the Corporation in the
absence or disability of the Chairman and the President, and may
designate one or more Vice Presidents as Senior Vice Presidents
who shall have general supervision, direction and control of the
business and affairs of the Corporation in the absence or
disability of the Chairman and the President and the Executive
Vice Presidents. A Vice President who has not been designated as
Executive Vice President or as Senior Vice President shall have
general supervision, direction and control of the business and
affairs of the Corporation in the absence or disability of the
Chairman and the President, and the Executive Vice Presidents and
the Senior Vice Presidents.
The Assistant Vice Presidents shall assist the President and
Vice Presidents in the performance of their duties and exercise
and perform such other powers and duties as may be conferred or
required by the Board.
SECRETARY
33. The Secretary shall attend all sessions of the Board and
all meetings of the stockholders and record all votes and the
minutes of all proceedings in a book to be kept for that purpose;
and shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all
meetings of the stockholders and of the Board of Directors, and
shall perform such other duties as may be prescribed by the Board
of Directors. He shall be sworn to the faithful discharge of his
duty. Any records kept by him shall be the property of the
Corporation and shall be restored to the Corporation in case of
his death, resignation, retirement or removal from office.
He shall be the custodian of the seal of the Corporation
and, when authorized by the Board of Directors or by the
Chairman, the President or a Vice President, shall affix the seal
to all instruments requiring it and shall attest the seal and/or
the execution of such instruments, as required. He shall have
control of the stock ledger, stock certificate book and minute
books of the Corporation and its committees, and other formal
records and documents relating to the corporate affairs of the
Corporation.
The Assistant Secretary or Assistant Secretaries shall
assist the Secretary in the performance of his duties, exercise
and perform his powers and duties in his absence or disability,
and such powers and duties as may be conferred or required by the
Board.
TREASURER
34. (a) The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the
Corporation and shall deposit all moneys, and other valuable
effects in the name and to the credit of the Corporation, in such
depositories as may be designated by the Board of Directors.
(b) He shall disburse the funds of the Corporation in
such manner as may be ordered by the Board, taking proper
vouchers for such disbursements, and shall render to the
Chairman, the President and directors, at the regular meetings of
the Board, or whenever they may require it, an account of all his
transactions as Treasurer and of the financial condition of the
Corporation.
(c) He shall give the Corporation a bond if required by
the Board of Directors in a sum, and with one or more sureties
satisfactory to the Board, for the faithful performance of the
duties of his office, and for the restoration of the Corporation,
in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property
of whatever kind in his possession or under his control belonging
to the Corporation.
The Assistant Treasurer or Assistant Treasurers shall assist
the Treasurer in the performance of his duties, exercise and
perform his powers and duties in his absence or disability, and
such powers and duties as may be conferred or required by the
Board.
<PAGE>
CONTROLLER
35. The Controller of the Corporation shall have full
control of all the books of account of the Corporation and keep a
true and accurate record of all property owned by it, of its
debts and of its revenues and expenses and shall keep all
accounting records of the Corporation other than the record of
receipts and disbursements and those relating to the deposit or
custody of money and securities of the Corporation, which shall
be kept by the Treasurer, and shall also make reports to the
directors and others of or relating to the financial condition of
the Corporation.
The Assistant Controller or Assistant Controllers shall
assist the Controller in the performance of his duties, exercise
and perform his powers and duties in his absence or disability,
and such powers and duties as may be conferred or required by the
Board.
VACANCIES
36. If the office of any director becomes vacant by reason
of death, resignation, removal or disability, or any other cause,
the directors then in office, except as otherwise provided in the
Certificate of Incorporation, as amended, although less than a
quorum, by a majority vote, may choose a successor or successors,
who shall hold office until the next annual meeting of
stockholders, and thereafter until a successor or successors
shall be elected and shall qualify. If the office of any officer
of the Corporation shall become vacant for any reason, the Board,
by a majority vote of those present at any meeting at which a
quorum is present, may choose a successor or successors who shall
hold office for the unexpired term in respect of which such
vacancy occurred.
RESIGNATIONS
37. Any officer or any director of the Corporation may
resign at any time, such resignation to be made in writing and to
take effect from the time of its receipt by the Corporation,
unless some time be fixed in the resignation, and then from that
time.
<PAGE>
DUTIES OF OFFICERS MAY BE DELEGATED
38. In case of the absence of any officer of the
Corporation, or for any other reason the Board may deem
sufficient, the Board may delegate, for the time being, the
powers or duties, or any of them, of such officer to any other
officer or to any director, provided a majority of the entire
Board concur therein.
INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES
39. The Corporation shall fully indemnify to the extent not
prohibited by law any person made, or threatened to be made, a
party to an action or proceeding, whether civil or criminal,
including an investigative, administrative, legislative or other
proceeding, and including an action by or in the right of the
Corporation or any other corporation of any type or kind,
domestic or foreign, or any partnership, joint venture, trust,
employee benefit plan or other enterprise, by reason of the fact
that he, his testator or intestate, (i) is or was a director,
officer, or employee of the Corporation or (ii) is or was serving
at the request of the Corporation, as a director, officer, or in
any other capacity, any other corporation of any type or kind,
domestic or foreign, or any partnership, joint venture, trust,
employee benefit plan or other enterprise, against any and all
judgments, fines, amounts paid in settlement and expenses,
including attorneys' fees, actually and reasonably incurred as a
result of or in connection with any such action or proceeding or
any appeal therein, except as provided in the next paragraph.
No indemnification shall be made to or on behalf of any
director, officer, or employee if a judgment or other final
adjudication adverse to the director, officer, or employee
establishes that his acts were committed in bad faith or were the
result of active and deliberate dishonesty and were material to
the cause of action so adjudicated, or that he personally gained
in fact a financial profit or other advantage to which he was not
legally entitled.
Except in the case of an action or proceeding against a
director, officer, or employee specifically approved by the Board
of Directors, the Corporation shall pay expenses incurred by or
on behalf of such a person in defending such a civil or criminal
action or proceeding (including appeals) in advance of the final
disposition of such action or proceeding. Such payments shall be
made promptly upon receipt by the Corporation, from time to time,
of a written demand of such person for such advancement, together
with an undertaking by or on behalf of such person to repay any
expenses so advanced to the extent that the person receiving the
advancement is ultimately found not to be entitled to
indemnification for such expenses.
<PAGE>
The rights to indemnification and advancement of defense
expenses granted by or pursuant to this By-Law (i) shall not
limit or exclude, but shall be in addition to, any other rights
which may be granted by or pursuant to any statute, certificate
of incorporation, by-law, resolution or agreement, (ii) shall be
deemed to constitute contractual obligations of the Corporation
to any director, officer, or employee who serves in such capacity
at any time while this By-Law is in effect, (iii) are intended to
be retroactive and shall be available with respect to events
occurring prior to the adoption of this By-Law and (iv) shall
continue to exist after the repeal or modification hereof with
respect to events occurring prior thereto. It is the intent of
this By-Law to require the Corporation to indemnify the persons
referred to herein for the aforementioned judgments, fines,
amounts paid in settlement and expenses, including attorneys'
fees, in each and every circumstance in which such indem-
nification could lawfully be permitted by an express provision of
a by-law, and the indemnification required by this By-Law shall
not be limited by the absence of an express recital of such
circumstances.
The Corporation may, with the approval of the Board of
Directors, enter into an agreement with any person who is, or is
about to become, a director, officer, or employee of the
Corporation, or who is serving, or is about to serve, at the
request of the Corporation, as a director, officer, or in any
other capacity, any other corporation of any type or kind,
domestic or foreign, or any partnership, joint venture, trust,
employee benefit plan or other enterprise, which agreement may
provide for indemnification of such person and advancement of
defense expenses to such person upon such terms, and to the
extent, not prohibited by law.
STOCK OF OTHER CORPORATIONS
40. The Board of Directors shall have the right to authorize
any officer or other person on behalf of the Corporation to
attend, act and vote at meetings of the stockholders of any
corporation in which the Corporation shall hold stock, and to
exercise thereat any and all the rights and powers incident to
the ownership of such stock and to execute waivers of notice of
such meetings and calls therefor; and authority may be given to
exercise the same either on one or more designated occasions, or
generally on all occasions until revoked by the Board. In the
event that the Board shall fail to give such authority, such
authority may be exercised by the Chairman or the President in
person or by proxy appointed by him on behalf of the Corporation.
<PAGE>
CERTIFICATES OF STOCK
41. Stock of the Corporation may be in certificated or
uncertificated form. Stock of the Corporation represented by
certificates shall be numbered and shall be entered in the books
of the Corporation as the certificates are issued. The
certificates shall exhibit the holder's name and number of shares
and shall be signed by the Chairman, President or a Vice
President and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary, and the seal of the
Corporation shall be affixed thereto. Where any such
certificates of stock are signed by a transfer agent and by a
registrar, the signatures of the Chairman, President or a Vice
President and the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary upon any such certificates,
if authorized by the Board of Directors, may be made by
engraving, lithographing or printing thereon a facsimile of such
signatures, in lieu of actual signatures, and such facsimile
signatures so engraved, lithographed or printed thereon shall
have the same force and effect as if such officers had actually
signed the same.
In case any officer who has signed, or whose facsimile
signature has been affixed to, any such certificate shall cease
to be such officer before such certificate shall have been
delivered by the Corporation, such certificate may nevertheless
be issued and delivered as though the person who signed such
certificate, or whose facsimile signature has been affixed
thereto, had not ceased to be such officer of the Corporation.
To the extent permitted by law, some or all of any or all
classes and series of stock of the Corporation may be
uncertificated stock, provided that no stock represented by a
certificate shall be registered on the books of the Corporation
as uncertificated stock until such certificate is surrendered to
the Corporation.
TRANSFERS OF STOCK
42. Transfers of certificated stock shall be made on the
books of the Corporation only upon the request of the person
named in the certificate or by attorney, lawfully constituted in
writing, and upon surrender of the certificate therefor.
Transfers of uncertificated stock shall be made on the books
of the Corporation only upon the request of the holder of record
of such uncertificated stock or by attorney, lawfully constituted
in writing, and upon receipt by the Corporation of a written
instruction signed by the holder of record of such uncertificated
stock or by such attorney requesting that the transfer of such
uncertificated stock be registered on the books of the
Corporation.
FIXING OF RECORD DATE
43. Except as otherwise may be required by provisions of the
Certificate of Incorporation, as amended, relative to meetings of
stockholders required or authorized by the provisions of
paragraph (F) or (H) of Article 7 of the Restated Certificate of
Incorporation filed October 25, 1988, the Board of Directors is
hereby authorized to fix a day and hour not exceeding fifty (50)
days (and in the case of a meeting not less than ten (10) days)
preceding the date of any meeting of stockholders or the date
fixed for the payment of any dividend or for the delivery of
evidences of rights, as a record time for the determination of
the stockholders entitled to notice of and to vote at any such
meeting or entitled to receive any such dividend or rights, as
the case may be; and all persons who are holders of record of
voting stock at such time, and no others, shall be entitled to
notice of and to vote at such meeting, and only stockholders of
record at any time so fixed shall be entitled to receive any such
dividend or rights; and the stock transfer books shall not be
closed during any such period.
REGISTERED STOCKHOLDERS
44. The Corporation shall be entitled to treat the holder of
record of any share or shares of stock as the holder in fact
thereof and accordingly shall not be bound to recognize any
equitable or other claim to, or interest in, such share on the
part of any other person, whether or not it shall have express or
other notice thereof, save as expressly provided by the statutes
of the State of New York.
LOST CERTIFICATES
45. Any person claiming a certificate of stock to be lost or
destroyed shall make an affidavit or affirmation of that fact,
whereupon a new certificate may be issued of the same tenor and
for the same number of shares as the one alleged to be lost or
destroyed; provided, however, that the Board of Directors may
require, as a condition to the issuance of a new certificate, a
bond of indemnity in such form and amount and with such surety or
sureties, or without surety, as the Board of Directors shall
determine, and may also require the advertisement of such loss in
such manner as the Board may prescribe.
INSPECTION OF BOOKS
46. The Board of Directors shall have power to determine
whether and to what extent, and at what time and places and under
what conditions and regulations, the accounts and books of the
Corporation (other than the books required by statute to be open
to the inspection of stockholders), or any of them, shall be open
to the inspection of stockholders, and no stockholders shall have
any right to inspect any account or book or document of the
Corporation, except as such right may be conferred by the
statutes of the State of New York or by resolution of the
directors or of the stockholders.
CHECKS, NOTES, BONDS AND OTHER INSTRUMENTS
47. All checks or demands for money and notes of the
Corporation shall be signed by such person or persons (who may
but need not be an officer or officers of the Corporation) as may
be authorized by these By-Laws or as the Board of Directors may
from time to time designate, either directly or through such
officers of the Corporation as shall, by resolution of the Board
of Directors, be authorized to designate such person or persons.
If authorized by the Board of Directors, the signatures of such
persons, or any of them, upon any checks for the payment of money
may be made by engraving, lithographing or printing thereon a
facsimile of such signatures, in lieu of actual signatures, and
such facsimile signatures so engraved, lithographed or printed
thereon shall have the same force and effect as if such persons
had actually signed the same.
All bonds, mortgages and other instruments requiring a seal
shall be executed on behalf of the Corporation by the Chairman or
the President or a Vice President, and the seal of the
Corporation shall be thereunto affixed by the Secretary or an
Assistant Secretary who shall, when required, attest the seal
and/or the execution of said instruments. If authorized by the
Board of Directors, the signatures of the Chairman or the
President or a Vice President and the Secretary or an Assistant
Secretary or the Treasurer or an Assistant Treasurer upon any
engraved, lithographed or printed bonds, debentures, notes or
other instruments may be made by engraving, lithographing or
printing thereon a facsimile of such signatures, in lieu of
actual signatures, and such facsimile signatures so engraved,
lithographed or printed thereon shall have the same force and
effect as if such officers had actually signed the same.
In case any officer who has signed any such bonds,
debentures, notes or other instruments shall cease to be such
officer before such bonds, debentures, notes or other instruments
shall have been delivered by the Corporation, such bonds,
debentures, notes or other instruments may nevertheless be
adopted by the Corporation and be issued and delivered as though
the person who signed the same had not ceased to be such officer
of the Corporation.
<PAGE>
RECEIPTS FOR SECURITIES
48. All receipts for stocks, bonds or other securities
received by the Corporation shall be signed by the Treasurer or
an Assistant Treasurer or by such other person or persons as the
Board of Directors or Executive Committee shall designate.
FISCAL YEAR
49. The fiscal year shall begin the first day of January in
each year.
DIVIDENDS
50. Dividends upon the capital stock of the Corporation,
when earned, may be declared by the Board of Directors at any
regular or special meeting.
The Board of Directors shall have power to fix and
determine, and from time to time to vary, the amount to be
reserved as working capital; to determine whether any, and if
any, what part of any, accumulated surplus net profits shall be
declared and paid as dividends, to determine the date or dates
for the declaration or payment of dividends and to direct and
determine the use and disposition of any surplus net profits, and
before payment of any dividend or making any distribution of
profits there may be set aside out of the surplus or net profits
of the Corporation such sum or sums as the directors from time to
time, in their absolute discretion, think proper as a reserve
fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for
such other purpose as the directors shall think conducive to the
interests of the Corporation.
DIRECTORS' ANNUAL STATEMENT
51. The Board of Directors shall present at each annual
meeting, and when called for by vote of the stockholders at any
special meeting of the stockholders, a full and clear statement
of the business and condition of the Corporation.
NOTICES
52. Whenever under the provisions of these By-Laws notice is
required to be given to any director, officer or stockholder, it
shall not be construed to require personal notice, but such
notice may be given in writing, by mail, by depositing a copy of
the same in a post office, letter box or mail chute, maintained
<PAGE>
by the Post Office Department, in a postpaid sealed wrapper,
addressed to such stockholder, officer or director, at his
address as the same appears on the books of the Corporation.
A stockholder, director or officer may waive in writing any
notice required to be given to him under these By-Laws.
INSPECTORS OF ELECTION
53. Preceding each meeting of the stockholders for the
election of directors, the Board of Directors shall appoint two
inspectors of election to act at such meeting or any adjournment
or adjournments thereof as inspectors of election. In the event
that such inspectors shall not be so appointed, they shall be
appointed at the meeting at which such election is to be held,
and if any inspector shall refuse to serve, or neglect to attend
at the election or his office become vacant, the meeting may
appoint an inspector in his place. The inspectors appointed to
act at any meeting of the stockholders shall, before entering
upon the discharge of their duties, be sworn to faithfully
execute the duties of inspector at such meeting with strict
impartiality, and according to the best of their ability, and the
oaths so taken shall be subscribed by them and delivered to the
Secretary of the meeting with a certificate of the result of the
vote taken thereat.
AMENDMENTS
54. These By-Laws may be altered or amended by the
affirmative vote of a majority of the stock issued and
outstanding and entitled to vote, or by the affirmative vote of a
majority of the Board of Directors at any meeting duly held as
above provided, the notice of which includes notice of the
proposed amendment; provided, however, that no By-Laws adopted by
the Board of Directors regulating the election of directors or
officers shall be valid unless published for at least once a week
for two successive weeks in a newspaper in the County where the
election is to be held, and at least thirty days before such
election.
EMERGENCY BY-LAWS
1. These Emergency By-Laws shall be effective upon the
order of the New York State Defense Council, as constituted under
the New York State Defense Emergency Act, or any successor body,
in the event of attack and shall cease to be effective when the
Council or successor body declares the end of the period of
attack. During such period, the By-Laws of this Corporation
shall remain in effect except to the extent superseded by or
inconsistent with these Emergency By-Laws.
2. The powers of the Board of Directors of the Corporation
shall be vested in such directors of the Corporation as are
readily available to act. If such directors do not constitute a
quorum, then the full powers of the Board shall be vested in the
members of the Executive Committee who are readily available to
act. If members of the Executive Committee readily available to
act do not constitute a quorum, then the property and business of
the Corporation shall be managed by an Emergency Management
Committee composed of not more than five of the following persons
who are readily available to act: (a) Directors of the
Corporation; (b) to the extent necessary, Executive Vice
Presidents of the Corporation, in order of seniority of service
in that office; (c) to the extent necessary, Senior Vice
Presidents of the Corporation, in order of seniority of service
in that office; (d) to the extent necessary, Vice Presidents of
the Corporation, in order of seniority of service in that office;
and (e) to the extent necessary and in the following order:
Assistant Vice Presidents in order of seniority of service in
that office; Assistants to the Chairman in order of seniority of
service in that office; Assistants to the President in order of
seniority of service in that office; Secretary; Treasurer.
3. Meetings of such Directors, the Executive Committee or
the Emergency Management Committee may be held at any time and
place. At any meeting of the Emergency Management Committee,
three shall constitute a quorum and the act of a majority present
at any meeting at which there is a quorum shall be the act of the
Committee.
In the event it is impracticable to hold a meeting of such
Directors, the Executive Committee or the Emergency Management
Committee, the concurrence of individuals comprising any such
group may be expressed orally or in writing (regardless of the
manner of transmission or communication) and such concurrence
shall be deemed to be the act of any such group.
4. Nothing herein shall be deemed to abrogate the power of
Directors remaining in office to choose a successor or successors
in the event of vacancy in the office of any Director, as
provided in the By-Laws of the Corporation. Upon the taking of
any such action, any powers theretofore vested pursuant to these
Emergency By-Laws in the Executive Committee or the Emergency
Management Committee shall terminate.
5. Any action taken in good faith under these Emergency By-
Laws shall be as valid and binding as if taken by the Board of
Directors even though subsequent developments may show that at
the time such action was taken conditions requisite for such
action did not in fact exist.
<PAGE>
I, , the
Vice President and Secretary of NEW YORK STATE ELECTRIC & GAS
CORPORATION, a New York corporation, DO HEREBY CERTIFY that the
foregoing is a true, correct and complete copy of the By-Laws and
Emergency By-Laws of said Corporation, as amended to date.
IN WITNESS WHEREOF, I have hereunto subscribed my name and
affixed the seal of said Corporation this day of
, 19 .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(CORPORATE SEAL)
EXHIBIT 10-16
AMENDMENT NO. 3
to
THE RETIREMENT PLAN FOR DIRECTORS
of
NEW YORK STATE ELECTRIC & GAS CORPORATION
The Retirement Plan for Directors of New York State Electric &
Gas Corporation (the "Plan") as heretofore amended, is hereby
amended, effective as of January 1, 1997, as follows:
1. The first sentence of Article 3 is hereby amended to read as
follows:
The Plan shall be administered by a Committee to be
known as the Director Share Plan Committee (the
"Committee") of the Company, the members of which shall
be appointed by the Board of Directors of the Company.
2. A new Article 12 is hereby added to the Plan, to read in its
entirety as follows:
12) Withdrawal from Participation in the Plan
Notwithstanding anything to the contrary contained
in any other provision of the Plan, any
Participant who pursuant to Article IV A. 2. of
the Company's Director Share Plan, effective
January 1, 1997 ("Share Plan"), elects to cease
participation in the Plan and instead participate
in the Share Plan, shall as of January 1, 1997, no
longer have any rights to any benefits, whether
accrued or otherwise, under the Plan.
EXHIBIT 10-19
NEW YORK STATE ELECTRIC & GAS CORPORATION
DIRECTOR SHARE PLAN
I. Plan Objective
The objective of the Director Share Plan (the "Plan") is to
attract and retain current and future Directors of New York
State Electric & Gas Corporation (the "Company") by
providing such Directors with benefits, in addition to
current cash compensation, that enhance the linkage between
director and shareholder interests.
II. Definitions
Wherever used in the Plan, unless the context clearly
indicates otherwise, the following words and phrases shall
have the meanings set forth below:
A. "Account" shall mean the account to be established by
the Committee to which Phantom Shares and Dividend
Phantom Shares will be credited for each Participant.
B. "Board" shall mean the Board of Directors of New York
State Electric & Gas Corporation.
C. "Director" shall mean a member of the Board on the
effective date of the Plan or thereafter.
D. "Dividend Phantom Shares" shall mean the "phantom" (not
corporate) shares that accrue in accordance with Article
V hereof during each Plan Year.
E. "Participant" shall mean a non-employee Director who has
satisfied the eligibility and participation requirements
of Article IV hereof.
F. "Phantom Shares" shall mean the "phantom" (not
corporate) shares that are granted to Participants in
the Plan pursuant to Article VI hereof.
G. "Plan" shall mean the New York State Electric & Gas
Corporation Director Share Plan as embodied herein and
as amended from time to time.
H. "Plan Year" shall mean the calendar year.
I. "Prior Plan" shall mean the New York State Electric &
Gas Corporation Retirement Plan for Directors, effective
as of January 1, 1992, as amended.
III. Administration
The Plan shall be administered by a committee to be known as
the Director Share Plan Committee (the "Committee"), the
members of which shall be appointed by the Board. No member
of the Committee while serving as such shall be eligible for
participation in the Plan. Decisions and determinations by
the Committee shall be final and binding upon all parties.
The Committee shall have the authority to interpret the
Plan, to establish and revise rules and regulations relating
to the Plan, and to make any other determinations that it
believes necessary or advisable for the administration of
the Plan.
IV. Eligibility and Participation
All Directors who are non-employee Directors on the
effective date of the Plan or thereafter are eligible to
participate in the Plan in accordance with the following
provisions:
A. Each eligible Director first elected to the Board prior
to January 1, 1996 must chose one of the following
irrevocable options by January 31, 1997:
1. To remain in the Prior Plan and receive retirement
benefits pursuant to the Prior Plan. An eligible
Director choosing this option will not participate
in the Plan and shall have no rights under the Plan.
2. To cease participation in the Prior Plan effective
January 1, 1997 and instead participate in the Plan
as of that date. An eligible Director choosing this
option shall have no further rights under the Prior
Plan.
B. Each eligible Director first elected to the Board at any
time between January 1, 1996 and December 31, 1996,
inclusive, shall become a Plan Participant on the
effective date of the Plan.
C. Each eligible Director who first becomes a non-employee
Director on or after the effective date of the Plan
automatically becomes a Plan Participant upon becoming a
non-employee Director.
<PAGE>
V. Phantom Shares and Dividend Phantom Shares
All Phantom Shares granted to a Participant shall be
credited to a Phantom Share Account which shall be
maintained for the Participant. On each common stock
dividend payment date of the Company, Dividend Phantom
Shares, including fractional Dividend Phantom Shares
computed to four decimal places, shall be credited to each
Participant s Phantom Share Account. The number of Dividend
Phantom Shares to be credited shall be calculated by first
determining the amount of the dividends that would be paid
by the Company upon all Phantom Shares and Dividend Phantom
Shares held for the Participant as if such shares actually
were issued and outstanding common stock of the Company.
The amount of dividends so determined shall then be divided
by the price per share paid by the Company s dividend
reinvestment plan for common stock that was purchased by
said Plan with respect to the common stock dividend payment
date for which the Dividend Phantom Shares are being
credited. The quotient of said division is the number of
Dividend Phantom Shares which shall be credited to a
Participant s Phantom Share Account.
An award of Phantom Shares or Dividend Phantom Shares under
the Plan shall not entitle the recipient to any actual
dividend or voting rights or any other rights of a
shareholder with respect to such Phantom Shares or Dividend
Phantom Shares.
VI. Plan Grants
A. Each Participant who chooses to cease participation in
the Prior Plan and participate in this Plan pursuant to
Article IV.A.2 hereof shall receive an initial grant of
Phantom Shares based on the actuarial present value of
the vested accrued benefit the Participant earned under
the Prior Plan as set forth in the following schedule:
Present Value of
Director Vested Accrued Benefit
Carrigg $133,000
Casarett 181,000
Castiglia 23,000
DeFleur 23,000
Gilmour 181,000
Gioia 40,000
Keeler 99,000
Kintigh 192,000
Lynch 95,000
Marshall 183,000
Stuart 192,000
The initial number of Phantom Shares to be granted will
be determined for a Participant by dividing the
Participant's Present Value of Vested Accrued Benefit by
the average closing price of the Company's common stock
for the five trading days immediately preceding the
effective date of the Plan.
B. In addition, commencing January 1, 1997 and on each
April 1, July 1, October 1, and January 1 thereafter,
150 Phantom Shares will be granted to each Director who
is a Plan Participant as of that date.
VII. Form and Timing of Payments
A. Form - Upon a Participant's ceasing to serve as a
Director of the Company, all Phantom Shares and
Dividend Phantom Shares in the Participant's
Phantom Share Account on the date the Participant
ceases to serve as a Director of the Company
shall be settled in cash. Payments shall be
calculated by multiplying the number of Phantom
Shares and Dividend Phantom Shares in a
Participant's Phantom Share Account on the date
the Participant ceases to serve as a Director of
the company by the average of the Company's
Common Stock closing prices for the five trading
days immediately preceding the date the
Participant ceases to serve as a Director of the
Company.
B. Timing-Cash payments shall be made by the tenth day of
the calendar month next following the date the
Participant ceases to serve as a Director of the
Company. The Committee or the Board may adopt
procedures allowing Participants to defer the
cash payments they will be entitled to receive
under the Plan.
VIII. Dilution and Other Adjustments
In the event of any change in the outstanding shares of
common stock of the Company by reason of any stock dividend
or split, recapitalization, merger, consolidation, spin-off,
reorganization, combination or exchange of shares or other
similar corporate change, if the Committee shall determine,
in its sole discretion, that such change equitably requires
an adjustment in the number of Phantom Shares then held in
each Participant's Phantom Share Account or which may be
awarded to any Participant, or an adjustment in the number
of Dividend Phantom Shares then held in each Participant s
<PAGE>
Phantom Share Account or which may be awarded to any
Participant, such adjustments shall be made by the Committee
and shall be conclusive and binding for all purposes of the
Plan.
IX. Amendments and Termination
The Board of Directors may at any time suspend, terminate,
modify or amend the Plan. Neither the suspension or
termination of the Plan nor any modification or amendment
thereto shall diminish the previously accrued rights of any
Director who, at the date of such suspension, termination,
modification or amendment, is a Participant in the Plan.
X. Miscellaneous Provisions
A. In the case of a Participant s death, payments with
respect to Phantom Shares and Dividend Phantom Shares
shall be made to his or her designated beneficiary, or
in the absence of such designation, by will or the laws
of descent and distribution.
B. Except as set forth in A. above, a Participant s rights
and benefits under the Plan shall not be subject in any
manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment,
attachment, execution or levy of any kind, either
voluntary or involuntary, including any such liability
which arises from the Participant s bankruptcy or for
the support of a spouse or former spouse or for any
other relative of the Participant prior to payments
actually being received by the person eligible to
benefit under the Plan. Any attempt at such prohibited
anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, charge, garnishment, attachment,
execution or levy, shall be void and unenforceable
except as otherwise provided by law.
C. No Participant shall have any claim or right to be
granted an award under this Plan. Neither this Plan nor
any action taken hereunder shall be construed as giving
a Participant any right to be retained in the service of
the Company.
D. The Company shall have the right to deduct from the cash
payments made pursuant to Article VII any taxes required
by law to be withheld with respect to such cash
payments.
<PAGE>
E. The Plan shall inure to the benefit of, and be binding
upon, the Company, and its successors and assigns,
including any company into or with which the Company may
be merged or consolidated, and shall inure to the
benefit of, and be binding upon, the Director or
Participant and his or her heirs, executors,
administrators, and, if applicable, his or her
committee, conservator or other person serving in a
similar capacity.
XI. Effective Date
The Plan shall be effective as of January 1, 1997.
XII. Funding
There shall be no funding of any amounts to be paid pursuant
to this Plan; provided, however, that the Company, in its
discretion, may establish a trust to pay such amounts, which
trust shall be subject to the claims of the Company's
creditors in the event of the Company's bankruptcy or
insolvency; and provided, further, that the Company shall
remain responsible for the payment of any such amounts which
are not so paid by any such trust.
<PAGE>
INITIAL BENEFICIARY FORM
I hereby designate ______________________ as beneficiary
under the Director Share Plan of New York State Electric & Gas
Corporation.
____________________ __________
Director Date
<PAGE>
CHANGE OF BENEFICIARY FORM
I hereby designate ____________________ as beneficiary under
the Director Share Plan of New York State Electric & Gas
Corporation superseding all beneficiary designations previously
made by me.
_________________________ ________
Director Date
Receipt Acknowledged:
_____________________________ ________
Director Share Plan Date
Committee Member
EXHIBIT 10-20
NEW YORK STATE ELECTRIC & GAS CORPORATION
DEFERRED COMPENSATION PLAN - DIRECTOR SHARE PLAN
1. Effective Date.
New York State Electric & Gas Corporation (hereinafter
called the "Company") hereby establishes a deferred compensation
plan (hereinafter called the "Plan") and is the Plan Sponsor.
The Plan will permit directors of the Company who participate in
the Director Share Plan (the "Share Plan") and who elect to
participate herein to defer receipt of payments that otherwise
would be due at the time specified in Article VII.B of the Share
Plan. The Plan is effective January 1, 1997, and will continue
in effect from year to year thereafter unless previously
terminated or modified by the Company. Any capitalized term that
is used herein and not defined herein shall have the meaning
given to it in the Share Plan.
All directors of the Company who participate in the Share
Plan are entitled to participate in the Plan. Election to
participate in the Plan shall be evidenced by the execution and
delivery of a deferred compensation agreement (the "Agreement").
In the case of directors who were first elected to the Board
prior to January 1, 1996, and who elect to cease participating in
the Prior Plan, any executed Agreement that covers the one-time
grant of Phantom Shares (and related Dividend Phantom Shares)
must be delivered to the Company at the time the election to
cease participating in the Prior Plan is delivered to the
Company. In the case of such directors, any executed Agreement
that covers any quarterly grants of Phantom Shares (and related
Dividend Phantom Shares) must be delivered to the Company prior
to January 1st of the calendar year in which the grants are to be
made, except that any executed Agreement that covers the
quarterly grants of Phantom Shares (and related Dividend Phantom
Shares) that are to be made during 1997 must be delivered to the
Company at the time the election to cease participating in the
Prior Plan is delivered to the Company.
In the case of any other director, any executed Agreement
that covers any quarterly grants of Phantom Shares (and related
Dividend Phantom Shares) must be delivered to the Company prior
to the later of (i) January 1st of the calendar year in which the
grants are to be made and (ii) the 31st day following the day
that the director becomes a participant in the Share Plan.
<PAGE>
2. Plan Administrator.
The Plan Administrator is the Company.
3. Continuing Effectiveness of Elections.
Once a director has made an election to defer amounts due
with respect to the quarterly grants of Phantom Shares (and
related Dividend Phantom Shares), the deferral election shall
apply to amounts that are received with respect to all quarterly
grants of Phantom Shares (and related Dividend Phantom Shares)
that are attributable to service on or after the date specified
in the Agreement. However, a director may elect to terminate
deferral by executing and delivering to the Company a Notice of
Termination of Election (a "Notice"), in which event the deferral
election shall not apply to amounts that are received with
respect to any quarterly grants of Phantom Shares (and related
Dividend Phantom Shares) that are made in a calendar year that
commences after the delivery to the Company of the Notice. Such
a director may re-elect to have deferral apply by executing and
delivering to the Company a new Agreement, in which case deferral
shall be applicable to amounts attributable to quarterly grants
of Phantom Shares (and related Dividend Phantom Shares) that are
made in calendar years that commence subsequent to the calendar
year in which the new Agreement is executed and delivered to the
Company.
4. Payment of Amounts Deferred.
After the director ceases to serve as a director of the
Company for any reason, the accumulated amount deferred by a
director, with interest thereon from the tenth day of the
calendar month next following the calendar month in which the
director ceases to serve as a director of the Company, shall be
paid to the director in up to ten yearly installments that are in
such percentages as the director shall elect. Such election must
be made at the time that the director elects for the first time
to participate in the Plan. A director may change, but only with
the Company's consent, his election of payment terms by executing
and delivering to the Company a new payment terms election.
However, no such change shall be effective during the one-year
period beginning with the day the director executes a new payment
terms election. If, during such one-year period, the director
becomes entitled to receive a payment or payments under the Plan
pursuant to the director's last effective payment terms election,
said last effective payment terms election shall remain in full
force and effect and the new election shall be null and void.
Only one payment terms election shall be effective for a director
at any time.
<PAGE>
5. Other Provisions.
The Company reserves the right to terminate or modify the
Plan by action of the Board of Directors of the Company. Any
such termination or modification shall not affect rights
previously accrued. A director's rights and benefits under the
Plan may not be assigned, pledged or encumbered by the director
or the estate or beneficiary of the director.
6. Funding.
There shall be no funding of any amounts to be paid pursuant
to this Plan; provided, however, that the Company, in its
discretion, may establish a trust to pay such amounts, which
trust shall be subject to the claims of the Company's creditors
in the event of the Company's bankruptcy or insolvency; and
provided, further, that the Company shall remain responsible for
the payment of any such amounts which are not so paid by any such
trust.
EXHIBIT 10-21
NEW YORK STATE ELECTRIC & GAS CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(Includes amendments through Amendment No. 11 as last
adopted by Board of Directors on February 9, 1996)
<PAGE>
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
1. Establishment of the Plan and Effective Date. New York
State Electric & Gas Corporation (hereinafter called the
"Corporation") has established a Supplemental Executive Retire-
ment Plan (hereinafter called the "Plan"). The Corporation is
the Plan Sponsor. The purpose of the Plan is to increase
retirement benefits for salaried employees beyond those currently
provided for in the Corporation's tax qualified Retirement
Benefit Plan for Employees. The Plan is effective as of
September 7, 1984 and will continue in effect unless terminated
or modified by the Corporation.
2. Plan Administrator. The Plan Administrator is the
Corporation.
3. Provisions Applicable to All Salaried Employees
Concerning Pension Benefits. All employees of the Corporation,
other than ones included in a unit of employees covered by a
collective bargaining agreement, shall receive the amount of
benefits specified under the Corporation's tax qualified
Retirement Benefit Plan for Employees (i) without regard to any
limitations imposed on these pension benefits by any provision of
the Internal Revenue Code of 1954, as amended, and the
regulations thereunder, whether now existing or as may hereafter
be adopted and (ii) by including as "Basic Compensation" for
purposes of said plan any amounts of the salaried employee's
compensation that would constitute "Basic Compensation" under
said plan but for the salaried employee's election to defer such
amount pursuant to the Corporation's Deferred Compensation Plan
for Salaried Employees (hereinafter called the "Deferred
Compensation Plan"). Payment of this benefit shall be made in
the same form as elected by the salaried employee under the
Retirement Benefit Plan for Employees. The benefit payable
pursuant to this Paragraph 3 shall be calculated by subtracting
the sum of (i) the benefit payable under the Corporation's
Retirement Benefit Plan for Employees and (ii) any benefit
payable pursuant to Section 7 of a Deferred Compensation
Agreement executed pursuant to the Deferred Compensation Plan in
order to defer part of the salaried employee's compensation
(other than awards pursuant to the Corporation's Annual Executive
Incentive Plan, or its predecessor plan, the Annual Executive
Incentive Compensation Plan) from the benefit described in the
first sentence of this Paragraph 3.
<PAGE>
4. Provisions Applicable to Certain Key Persons Concerning
Pension Benefits.
A. Determination of Benefit. In addition to the
benefits provided pursuant to Paragraph 3 hereof, all Key
Persons who retire either voluntarily or by reason of a
disability at age 60 (or age 55 in the case of a Participant
in the Corporation's tax qualified Retirement Benefit Plan
for Employees who is described in Section 2 of Article XI of
said plan) or later shall be entitled to receive a total
retirement benefit equivalent to the percentage of the
average of such Key Person's highest three years of earnings
within the last ten years of employment with the Corporation
that is determined as follows: (i) the percentage benefit
shall be 45% for each Key Person who has ten years of
service; (ii) the percentage amount shall be increased by
one percentage point per year for each additional full year
of Service up to a maximum of 75% for forty or more years of
service. For the purpose of determining the earnings of a
Key Person who is a participant in the Corporation's Annual
Executive Incentive Plan or Long Term Executive Incentive
Share Plan, (or their respective predecessor plans, the
Annual Executive Incentive Compensation Plan and the
Performance Share Plan), there shall be excluded any
amounts received pursuant to such plans. Additionally, upon
and after a Change in Control (as defined in Paragraph 7
hereof), all Key Persons whose employment is terminated at
age 55 or later for any reason other than death or Cause (as
defined in Paragraph 7 hereof) shall be entitled to receive
the retirement benefit described in this Paragraph 4A, as
well as any benefits provided pursuant to the terms of
Paragraph 3 hereof. For purposes of the benefits payable
pursuant to the immediately preceding sentence, the benefit
calculated under Paragraph 4A hereof shall be determined by
applying the same reduction in benefits for commencement
prior to age 60 as is applied upon early retirement under
the Corporation's Retirement Benefit Plan for Employees.
From the amount determined in accordance with the
provisions of this paragraph there shall be subtracted (i)
any amounts received by the Key Person pursuant to Paragraph
3 hereof or from the Company's tax qualified Retirement
Benefit Plan for Employees (prior to reduction for the
survivor's benefit or ten year certain benefit) and (ii) any
social security benefits which the Key Person is eligible or
expected to become eligible to receive as determined by the
Plan Administrator. If after the subtraction there remains
a positive amount, that amount shall be paid by the
Corporation as an additional benefit to the Key Person in
accordance with the terms of this Plan.
<PAGE>
For purposes of making the subtraction set forth in the
immediately preceding paragraph, if (i) a Key Person retires
at or after age 60 (or age 55 in the case of a Participant
in the Corporation's tax qualified Retirement Benefit Plan
for Employees who is described in Section 2 of Article XI of
said plan) and prior to age 62, or (ii) a Key Person's
employment is terminated, upon and after a Change in Control
(as defined in Paragraph 7 hereof), for any reason other
than death or Cause (as defined in Paragraph 7 hereof) at or
after age 55 and prior to age 62, the amount of social
security benefits subtracted will be the amount of estimated
social security benefits that the Plan Administrator
estimates that the Key Person would have received if he had
retired at age 62.
B. Survivor's Benefit. One-half of any amount being
paid to a key person pursuant to Paragraph 4A hereof after
retirement will be paid to the surviving spouse of the Key
Person during the spouse's lifetime upon the death of the
Key Person after retirement. If a Key Person dies prior to
retirement and such Key Person would have been entitled to
payments pursuant to Paragraph 4A hereof if, at the time of
his death, he had retired rather than died, his spouse shall
be paid during her lifetime the amount specified in the next
sentence of this Paragraph 4B. Said amount shall be
determined by applying the first sentence of this Paragraph
4B as if the Key Person had retired on the date of his
death, rather than dying on such date, and survived long
enough to receive the first payment due to him pursuant to
Paragraph 4A hereof.
C. Payment of Benefit. Benefits payable under
Paragraph 4A of this Plan shall be payable monthly to the
Key Person.
All benefits payable pursuant to Paragraphs 4A and 4B
of this Plan will cease upon the death of the surviving
spouse of the Key Person or, if there is no surviving
spouse, upon the death of the Key Person. No rights shall
accrue under this paragraph to (i) the estate of the Key
Person, (ii) any beneficiary of the Key Person other than a
surviving spouse or (iii) the estate of the surviving
spouse.
Except as specifically provided in the last two
sentences of the first paragraph of Paragraph 4A hereof or
in the second and third sentences of Paragraph 4B hereof, no
benefits will be paid to the Key Person or any surviving
spouse pursuant to this plan if the Key Person dies prior to
retirement or the employment of the Key Person is terminated
by the Corporation.
D. Definition of Key Person. For purposes of this
Plan, the term "Key Person" means a person who has at least
10 years of service and either (i) who, for at least 5
years, either had been an officer of the Corporation or had
a salary grade level of at least 18, or (ii) who was, on
December 31, 1990, a member of the Executive Staff of the
Corporation and who first became a member of the Executive
Staff of the Corporation at least 5 years prior to his
retirement.
5. Other Provisions. The Corporation reserves the right to
terminate or modify the Plan in whole or in part at any time by
action of the Board of Directors of the Corporation. Any such
termination or modification shall not affect rights previously
accrued. Participation in the Plan shall not be deemed to be an
employment contract. A participant's rights and benefits under
the Plan may not be assigned, pledged, or encumbered by the
participant, his estate or beneficiary. The Plan Administrator
will make such decisions, rules and regulations as are necessary
to administer the Plan and interpret the provisions of the Plan.
6. Funding. There will be no funding of any amounts to be
paid pursuant to this Plan; provided, however, that the
Corporation, in its discretion, may establish a trust to pay such
amounts, which trust shall be subject to the claims of the
Corporation's creditors in the event of the Corporation's
bankruptcy or insolvency; and provided, further, that the
Corporation shall remain responsible for the payment of any such
amounts which are not so paid by any such trust.
7. Definitions of Cause and Change in Control. "Cause" for
termination by the Corporation of a Key Person's employment (for
purposes of this Plan), after any Change in Control, shall mean
(i) the willful and continued failure by the Key Person to
substantially perform the Key Person's duties with the
Corporation (other than any such failure resulting from the Key
Person's incapacity due to physical or mental illness) after a
written demand for substantial performance is delivered to the
Key Person by the Board of Directors, which demand specifically
identifies the manner in which the Board of Directors believes
that the Key Person has not substantially performed the Key
Person's duties, or (ii) the willful engaging by the Key Person
in conduct which is demonstrably and materially injurious to the
Corporation or its subsidiaries, monetarily or otherwise. For
purposes of clauses (i) and (ii) of this definition, no act, or
failure to act, on the Key Person's part shall be deemed
<PAGE>
"willful" unless done, or omitted to be done, by the Key Person
not in good faith and without reasonable belief that the Key
Person's act, or failure to act, was in the best interest of the
Corporation.
A "Change in Control" shall be deemed to have occurred if
the conditions set forth in any one of the following paragraphs
shall have been satisfied:
(i) any Person (as defined in this Paragraph 7) is or
becomes the Beneficial Owner (as defined in this Paragraph
7), directly or indirectly, of securities of the Corporation
(not including in the securities beneficially owned by such
Person any securities acquired directly from the Corporation
or its affiliates) representing 25% or more of the combined
voting power of the Corporation's then outstanding
securities; or
(ii) during any period of two consecutive years (not
including any period prior to January 7, 1994), individuals
who at the beginning of such period constitute the Board of
Directors and any new director (other than a director
designated by a Person who has entered into an agreement
with the Corporation to effect a transaction described in
paragraph (i), (iii) or (iv) of this Change in Control
definition) whose election by the Board of Directors or
nomination for election by the Corporation's stockholders
was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at
the beginning of the period or whose election or nomination
for election was previously so approved, cease for any
reason to constitute a majority thereof; or
(iii) the shareholders of the Corporation approve a
merger or consolidation of the Corporation with any other
corporation, other than (x) a merger or consolidation which
would result in the voting securities of the Corporation
outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity),
in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan
of the Corporation, at least 75% of the combined voting
power of the voting securities of the Corporation or such
surviving entity outstanding immediately after such merger
or consolidation or (y) a merger or consolidation effected
to implement a recapitalization of the Corporation (or
similar transaction) in which no Person acquires more than
50% of the combined voting power of the Corporation's then
outstanding securities; or
<PAGE>
(iv) the shareholders of the Corporation approve a
plan of complete liquidation of the Corporation or an
agreement for the sale or disposition by the Corporation of
all or substantially all the Corporation's assets.
For purposes of the definition of Change in Control in
this Paragraph 7:
"Beneficial Owner" shall have the meaning
defined in Rule 13d-3 under the Exchange Act.
"Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended from time to time.
"Person" shall have the meaning given in
Section 3(a) (9) of the Exchange Act, as modified
and used in Sections 13(d) and 14(d) thereof;
however, a Person shall not include (i) the
Corporation or any of its subsidiaries, (ii) a
trustee or other fiduciary holding securities under
any employee benefit plan of the Corporation or any
of its subsidiaries, (iii) an underwriter temporarily
holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or
indirectly, by the stockholders of the Corporation
in substantially the same proportions as their
ownership of stock of the Corporation.
EXHIBIT 10-22
As Amended and Restated
effective January 1, 1997
NEW YORK STATE ELECTRIC & GAS CORPORATION
ANNUAL EXECUTIVE INCENTIVE PLAN
I. Plan Objective
The objective of the Annual Executive Incentive Plan (the
"Plan") is to provide certain key employees of New York
State Electric & Gas Corporation (hereinafter referred to
as the "Company") with the opportunity to earn annual
incentive compensation through superior management
performance. Exceptional performance will promote the
future growth and success of the Company and enhance the
linkage between employee and shareholder interests.
II. Definitions
Wherever used in the Plan, unless the context clearly
indicates otherwise, the following words and phrases shall
have the meanings set forth below:
A. "Plan" shall mean the New York State Electric & Gas
Corporation Annual Executive Incentive Plan as
embodied herein and as amended from time to time.
B. "Participant" shall mean an individual who has
satisfied the eligibility requirements of Article IV
hereof.
C. "Performance Period" shall mean the period commencing
January 1 and ending December 31 of the same calendar
year for which performance is being measured.
D. "Earnings Per Common Share (Earnings)" shall mean the
Company's annual net income reduced by preferred stock
dividends and divided by the average common shares
outstanding during the year.
E. "Threshold Earnings Level" shall mean the minimum level
of Earnings Per Common Share at which an award may be
earned.
F. "Maximum Earnings Level" shall mean the level of
Earnings Per Common Share at which a maximum award may
be earned.
G. "Level of Achievement" shall mean the Participant's
achievement of a Participant's individual objective for
the Performance Period expressed as a percentage,
ranging from zero to 100%.
<PAGE>
III. Administration
The Plan shall be administered by the Executive
Compensation and Succession Committee of the Board of
Directors of the Company (the "Committee") composed of such
members as shall be appointed from time to time by the
Board. No member of the Committee while serving as such
shall be eligible for participation in the Plan.
Except as otherwise provided in this Plan, decisions and
determinations by the Committee shall be final and binding
upon all parties. The Committee shall have the authority
to interpret the Plan, to establish and revise rules and
regulations relating to the Plan, and to make any other
determinations that it believes necessary or advisable for
the administration of the Plan.
IV. Eligibility
Eligibility for participation in the Plan is limited to
officers of the Company holding the positions set forth
below, plus any other employee of the Company who is
approved for participation by the Chairman. Participants
shall be grouped as follows:
Group I Chairman and President
Group II Executive Vice Presidents and Senior Vice
Presidents
Group III Vice Presidents
Group IV All other Participants
In the event that, during the Performance Period an
employee becomes eligible for participation in the Plan,
incentive awards payable under the Plan will be determined
based on length of participation in the Plan measured
retroactively from the first day of the month in which the
employee becomes eligible for participation in the Plan.
In the event that, during the Performance Period a
Participant changes from one eligibility group to another,
incentive awards payable under the Plan will be prorated
based on length of participation in each eligibility group
measured from the first day of the month coinciding with or
following the Participant's change in eligibility.
If during any Performance Period a Participant ceases to be
an employee of the Company for any reason, other than
disability, retirement or death, such Participant shall not
be entitled to receive an award for such Performance Period
unless otherwise determined by the Committee in its sole
discretion. In the event of disability, retirement or
death, the Participant (or his or her successor in
interest) shall be entitled to a prorated award based on
the number of full months of participation.
Participation in the Plan precludes a Participant's
eligibility in any other annual incentive compensation plan
provided by the Company (such as the Performance Plus
Plan). Individuals entering the Plan during a Performance
Period remain eligible to receive prorated awards under
other annual incentive compensation plans provided by the
Company for periods prior to their participation in the
Plan.
V. Performance Measurement and Criteria
The Plan uses the financial performance measure of Earnings
Per Common Share (Earnings) in determining whether
incentive awards may be earned by Participants. A
Threshold Earnings Level, a Maximum Earnings Level and
individual objectives for each Participant will be
established for each Performance Period. The Threshold
Earnings Level must be achieved by the Company in order for
Participants to be eligible for incentive awards. The
actual Earnings level achieved at or above Threshold Level
will then be used to determine the Participant's Incentive
Level Percentage in accordance with the provisions of
Article VII. A Participant's actual award will also depend
on the Participant's Level of Achievement of the
Participant's individual objectives for the Performance
Period, as further set forth in Article VII.
VI. Objective Setting
A. Corporate
Performance objectives will be established annually upon a
recommendation of the Chairman which recommendation shall
be reviewed by the Committee and approved by the Board of
Directors of the Company.
B. Adjustments
The Committee may adjust the size of incentive awards in
its discretion for extraordinary events if it determines
that such adjustment is necessary for the benefit of the
Company. All determinations of the Committee pursuant to
this Article VI, Section B shall be submitted to the Board
of Directors for approval.
C. Timing
The Threshold and Maximum Earnings Levels and the
individual objectives for each Participant for the yearly
Performance Period are to be established not later than the
January Board of Directors meeting, retroactive to the
first of that year.
<PAGE>
VII. Determination of Incentive Award
At the conclusion of each Performance Period a
determination will be made by the Committee as to the
Earnings level achieved by the Company. The achievement of
an Earnings level at or above the Threshold Earnings Level
is the first step in qualifying Participants for an
incentive award.
Each Participant has Threshold and Maximum Incentive Level
Percentages assigned to the Participant's Group, as
defined in Article IV, based on that Group's potential
impact on the Company's performance. The Threshold and
Maximum Incentive Level Percentages by Group are as
follows:
Threshold Incentive Maximum Incentive
Group Level Percentages Level Percentages
I 35% 40%
II 30% 35%
III 25% 30%
IV 20% 25%
A Participant's Incentive Level Percentage will depend on
the Earnings level achieved by the Company for each
Performance Period. If only the Threshold Earnings Level
is achieved, the Participant's Incentive Level Percentage
will be the Threshold Incentive Level Percentage for the
Participant's Group. If the Maximum Earnings Level is met
or exceeded, the Participant's Incentive Level Percentage
will be the Maximum Incentive Level Percentage for the
Participant's Group. When the Earnings level achieved by
the Company is greater than the Threshold Earnings Level
but less than Maximum Earnings Level, the Participant's
Incentive Level Percentage will be calculated based on a
corresponding interpolation between Threshold and Maximum
Incentive Level Percentages for the Participant's Group.
Each Participant will be assigned individual objectives for
the Performance Period which will be used to measure
individual performance. Each individual objective will
also be assigned a relative weight, which in the aggregate
will total 100%. To determine the Incentive Award
Percentage to be used in calculating a Participant's
Incentive Award, the weight of each individual objective
will be multiplied by the Participant's Level of
Achievement for that objective with the product further
multiplied by the Participant's Threshold Incentive Level
Percentage. The resultant Incentive Award Percentages for
each individual objective will then be aggregated to
determine the Participant's Incentive Award Percentage.
The following is an example of the calculation of an
Incentive Award Percentage for a Group III Participant at
the Threshold Incentive Level Percentage:
Threshold
Level of Incentive Incentive
Objective Achieve- Level Award
Weight ment Percentage Percentage
Individual
Objective 1 40% x 100% x 25% = 10%
Individual
Objective 2 40% x 50% x 25% = 5%
Individual
Objective 3 20% x 0% x 25% = 0%
100 % 15%
To calculate an Incentive Award for a Participant, the
Participant's cumulative Incentive Award Percentage will be
multiplied by the Participant's annual base salary as of
the last day of the Performance Period. The Incentive
Award will be rounded to the nearest whole dollar amount.
The Committee's determination of incentive awards will be
submitted to the Board of Directors for approval. Final
determination of incentive awards by the Board of Directors
will be made not later than the end of February following
the end of each Performance Period. Distribution of
incentive awards will be made as soon thereafter as
practical.
VIII. Incentive Award
Incentive awards will be granted in cash. Participants may
elect, during the year preceding the performance period, to
defer up to 100% of any potential incentive award pursuant
to the Company's Deferred Compensation Plan for Salaried
Employees. Incentive awards payable under the Plan will
not be considered as a component of regular earnings or
base compensation for any purpose.
IX. Effective Date
This Plan shall be effective as of January 1, 1996.
X. Miscellaneous
The Board of Directors may at any time suspend, terminate,
modify or amend this Plan.
No Participant shall have any claim or right to be granted
an award under this Plan. Participation in the Plan shall
not be deemed an employment contract.
<PAGE>
The Company shall have the right to deduct from the cash
incentive awards made pursuant to this Plan any taxes
required by law to be withheld with respect to such cash
payments.
In the case of a Participant's death, an incentive award
shall be made to his or her designated beneficiary, or in
the absence of such designation, by will or the laws of
descent and distribution.
Except as set forth in the preceding paragraph, a
Participant's rights and benefits under the Plan shall not
be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, charge,
garnishment, attachment, execution or levy of any kind,
either voluntary or involuntary, including any such
liability which arises from the Participant's bankruptcy or
for the support of a spouse or former spouse or for any
other relative of the Participant prior to the incentive
award actually being received by the person eligible to
benefit under the Plan. Any attempt at such prohibited
anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, charge, garnishment, attachment,
execution or levy, shall be void and unenforceable except
as otherwise provided by law.
XI. Payments Upon a Change in Control
A. Calculation of Payments
Notwithstanding any other provisions hereof (including,
without limitation, Article VIII hereof), if a Change in
Control (as defined in Section B of this Article XI) shall
occur, the following shall be paid, in cash, no later than
the tenth (10th) day following such Change in Control:
i) all incentive awards for any completed fiscal year of
the Company which preceded the Change in Control, which
awards have been finally determined but not yet either (x)
distributed or (y) deferred pursuant to the Deferred
Compensation Plan for Salaried Employees,
ii) if, at the time of the Change in Control, the Board of
Directors has not yet finally determined the incentive
awards with respect to the fiscal year of the Company
immediately preceding the fiscal year in which the Change
in Control occurs, an incentive award with respect to such
fiscal year, determined by the Board of Directors in
accordance with the provisions of the preceding Articles
hereof, and
<PAGE>
iii) an incentive award with respect to the fiscal year of
the Company in which the Change in Control occurs which
shall be calculated by (x) assuming that the Threshold
Earnings Level for such fiscal year has been achieved and
that a Participant's Level of Achievement for each
individual objective is one hundred percent, and (y)
multiplying the result so obtained by a fraction the
numerator of which is the number of days elapsed from the
beginning of such fiscal year until the Change in Control
and the denominator of which is three hundred and sixty-
five (365).
B. Definition of a Change in Control
A "Change in Control" shall be deemed to have occurred if
the conditions set forth in any one of the following
paragraphs shall have been satisfied:
i) any Person (as defined in this Section B) is or becomes
the Beneficial Owner (as defined in this Section B),
directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such
Person any securities acquired directly from the Company or
its affiliates) representing 25% or more of the combined
voting power of the Company's then outstanding securities;
or
ii) during any period of two consecutive years (not
including any period prior to January 7, 1994), individuals
who at the beginning of such period constitute the Board of
Directors and any new director (other than a director
designated by a Person who has entered into an agreement
with the Company to effect a transaction described in
paragraph (i), (iii) or (iv) of this Change in Control
definition) whose election by the Board of Directors or
nomination for election by the Company's stockholders was
approved by a vote of at least two thirds (2/3) of the
directors then still in office who either were directors at
the beginning of the period or whose election or nomination
for election was previously so approved, cease for any
reason to constitute a majority thereof; or
iii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation,
other than (x) a merger or consolidation which would result
in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting
securities of the surviving entity), in combination with
the ownership of any trustee or other fiduciary holding
securities under an employee benefit plan of the Company,
at least 75% of the combined voting power of the voting
securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation,
or (y) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in
which no Person acquires more than 50% of the combined
voting power of the Company's then outstanding securities;
or
iv) the shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially
all the Company's assets.
For purposes of the definition of Change in Control in this
Section B:
"Beneficial Owner" shall have the meaning defined in Rule
13d-3 under the Exchange Act.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
"Person" shall have the meaning given in Section 3(a) (9)
of the Exchange Act, as modified and used in Sections 13(d)
and 14(d) thereof; however, a Person shall not include (i)
the Company or any of its subsidiaries, (ii) a trustee or
other fiduciary holding securities under an employee
benefit plan of the Company or any of its subsidiaries,
(iii) an underwriter temporarily holding securities
pursuant to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
XII. Plan Administration After a Change in Control
Notwithstanding any other provisions of the Plan
(including, without limitation, Articles VI (B) and X
hereof), upon and after the occurrence of a Change in
Control, neither the Board of Directors nor the Committee
shall be authorized to, and no termination, suspension,
modification or amendment of the Plan shall be permitted
to, amend or modify the terms and provisions (including,
without limitation, the payment provisions) of any
incentive awards theretofore made to Participants in any
way which adversely affects the rights of such
Participants.
EXHIBIT 12
NEW YORK STATE ELECTRIC & GAS CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Calendar Year
1996 1995 1994 1993 1992
(Thousands of Dollars)
Net Income (Loss) . . . . . $178,241 $196,690 $187,645 $166,028 $183,968
Add:
Federal income tax -
current. . . . . . . . . 84,861 71,144 75,892 36,024 38,066
Federal income tax -
deferred . . . . . . . . 23,082 44,720 26,569 49,726 51,210
-------- -------- -------- -------- --------
Pre-tax income (loss) . 286,184 312,554 290,106 251,778 273,244
Fixed charges . . . . . . . 127,713 136,703 145,494 153,696 160,253
-------- -------- -------- -------- --------
Earnings, as defined. . . . $413,897 $449,257 $435,600 $405,474 $433,497
======== ======== ======== ======== ========
Fixed Charges:
Interest on long-term
debt . . . . . . . . . . $108,431 $115,687 $126,083 $134,331 $145,822
Other interest . . . . . . 9,752 8,744 6,628 3,878 3,634
Amortization of premium
and expense on debt. . . 6,507 6,488 7,014 7,242 5,933
Interest portion of
rental charges . . . . . 3,023 5,784 5,769 8,245 4,864
-------- -------- -------- -------- -------
Total fixed charges,
as defined. . . . . . . . $127,713 $136,703 $145,494 $153,696 $160,253
======== ======== ======== ======== ========
Ratio of Earnings to
Fixed Charges . . . . . . 3.24 3.29 2.99 2.64 2.71
======== ======== ======== ======== ========
EXHIBIT 21
Subsidiaries
EnerSoft Corporation - Incorporated in the State of Delaware.
KENETECH Energy Management, Inc. - Incorporated in the State of
Massachusetts.
NGE Enterprises, Inc. - Incorporated in the State of Delaware.
NGE Funding Corporation - Incorporated in the State of Delaware.
Somerset Railroad Corporation - Incorporated in the State of New
York.
XENERGY, Inc. - Incorporated in the State of Massachusetts.
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statements of New York State Electric & Gas Corporation on Form
S-3 (Registration Nos. 33-54155 and 33-50719) and on Form S-8
(Registration Nos. 33-54993 and 333-16201) of our report dated
January 31, 1997, on our audits of the consolidated financial
statements and financial statement schedule of New York State
Electric & Gas Corporation and Subsidiaries as of December 31,
1996 and 1995, and for the years ended December 31, 1996, 1995,
and 1994, which report is included in this Annual Report on Form
10-K.
COOPERS & LYBRAND L.L.P.
New York, New York
March 14, 1997
<TABLE> <S> <C>
<ARTICLE> UT EXHIBIT 27
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE COMPANY'S FINANCIAL STATEMENTS INCLUDED IN ITS FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 3,982,364
<OTHER-PROPERTY-AND-INVEST> 99,221
<TOTAL-CURRENT-ASSETS> 358,769
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 619,327
<TOTAL-ASSETS> 5,059,681
<COMMON> 464,469
<CAPITAL-SURPLUS-PAID-IN> 816,384
<RETAINED-EARNINGS> 489,129
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,769,982
25,000
134,440
<LONG-TERM-DEBT-NET> 1,480,814
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 129,300
<LONG-TERM-DEBT-CURRENT-PORT> 83,488
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,436,657
<TOT-CAPITALIZATION-AND-LIAB> 5,059,681
<GROSS-OPERATING-REVENUE> 2,059,371
<INCOME-TAX-EXPENSE> 107,943
<OTHER-OPERATING-EXPENSES> 342,455
<TOTAL-OPERATING-EXPENSES> 1,601,828
<OPERATING-INCOME-LOSS> 457,543
<OTHER-INCOME-NET> (48,630)
<INCOME-BEFORE-INTEREST-EXPEN> 0
<TOTAL-INTEREST-EXPENSE> 122,729
<NET-INCOME> 178,241
9,530
<EARNINGS-AVAILABLE-FOR-COMM> 168,711
<COMMON-STOCK-DIVIDENDS> 99,611
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 459,032
<EPS-PRIMARY> 2.37
<EPS-DILUTED> 2.37
</TABLE>
EXHIBIT 99-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Act of 1934
For the fiscal year ended December 31, 1996
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Salaried Employees
--------------------------------------------------------
(Full title of the plan)
New York State Electric & Gas Corporation
--------------------------------------------------------
(Name of issuer of the securities held pursuant to the plan)
P. O. Box 3287, Ithaca, New York 14852-3287
--------------------------------------------------------
(Address of principal executive office)
<PAGE>
REQUIRED INFORMATION
The Tax Deferred Savings Plan for Salaried Employees ("Plan") is
subject to the Employee Retirement Income Security Act of 1974
("ERISA"). Therefore, in lieu of the requirements of Items 1-3
of Form 11-K, the financial statements and schedules of the Plan
for the two fiscal years ended December 31, 1996 and 1995, which
have been prepared in accordance with the financial reporting
requirements of ERISA, are attached hereto as Appendix 1 and
incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Committee to administer the Tax Deferred Savings Plan
for Salaried Employees has duly caused this Annual Report to be
signed by the undersigned hereunto duly authorized.
New York State Electric & Gas Corporation Tax
Deferred Savings Plan for Salaried Employees
By Richard R. Benson March 14, 1997
Richard R. Benson
Committee Member
By Gerald E. Putman March 14, 1997
Gerald E. Putman
Committee Member
By Sherwood J. Rafferty March 14, 1997
Sherwood J. Rafferty
Committee Member
<PAGE>
APPENDIX 1
NEW YORK STATE ELECTRIC & GAS CORPORATION
TAX DEFERRED SAVINGS PLAN FOR SALARIED EMPLOYEES
FINANCIAL STATEMENTS AS OF AND
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995,
SUPPLEMENTAL SCHEDULES AS OF AND FOR THE YEAR ENDED
DECEMBER 31, 1996 AND INDEPENDENT AUDITORS' REPORTS
<PAGE>
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Salaried Employees
Year ended December 31, 1996
INDEX
Reports of Independent Auditors .......................................... 1
Statement of Net Assets Available for Benefits, With Fund
Information--December 31, 1996......................................... 4
Statement of Net Assets Available for Benefits, With Fund
Information--December 31, 1995......................................... 6
Statement of Changes in Net Assets Available for Benefits, With
Fund Information--Year ended December 31, 1996......................... 8
Statement of Changes in Net Assets Available for Benefits, With
Fund Information--Year ended December 31, 1995......................... 10
Notes to Financial Statements ........................................... 12
Schedule of Assets Held for Investment Purposes--December 31, 1996....... 16
Schedule of Reportable Transactions--Year ended December 31, 1996........ 17
Consents of Independent Auditors .........................................18
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Tax Deferred Savings Plan for Salaried Employees
Administrative Committee
New York State Electric & Gas Corporation
We have audited the accompanying statements of net assets
available for benefits of the New York State Electric & Gas
Corporation Tax Deferred Savings Plan for Salaried Employees as
of December 31, 1996, and the related statements of changes in
net assets available for benefits for the year ended December 31,
1996. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion
on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the net assets
available for benefits of the New York State Electric & Gas
Corporation Tax Deferred Savings Plan for Salaried Employees at
December 31, 1996, and the changes in its net assets available
for benefits for the year ended December 31, 1996, in conformity
with generally accepted accounting principles.
Our audit was performed for the purpose of forming an opinion of
the financial statements taken as a whole. The supplemental
schedules of assets held for investment purposes as of
December 31, 1996 and reportable transactions for the year ended
December 31, 1996 are presented for the purpose of additional
analysis and are not a required part of the basic financial
statements, but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of
1974. The Fund Information in the statements of net assets
available for benefits and the statements of changes in net
assets available for benefits is presented for purposes of
additional analysis rather than to present the net assets
available for benefits and changes in net assets available for
benefits of each fund. The supplemental schedules and Fund
Information have been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in
our opinion, are fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
<PAGE>
The schedule of assets held for investment purposes that
accompanies the Plan's financial statements does not disclose
historical cost of certain plan assets held by the Plan trustee.
Disclosure of this information is required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974.
COOPERS & LYBRAND L.L.P.
New York, New York
February 14, 1997
<PAGE>
Report of Independent Auditors
Tax Deferred Savings Plan for Salaried Employees
Administrative Committee
New York State Electric & Gas Corporation
We have audited the accompanying statement of net assets
available for benefits of the New York State Electric & Gas
Corporation Tax Deferred Savings Plan for Salaried Employees as
of December 31, 1995, and the related statement of changes in net
assets available for benefits for the year then ended. These
financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the net assets
available for benefits of the New York State Electric & Gas
Corporation Tax Deferred Savings Plan for Salaried Employees at
December 31, 1995, and the changes in its net assets available
for benefits for the year then ended, in conformity with
generally accepted accounting principles.
Ernst & Young L.L.P.
Syracuse, New York
April 17, 1996
<PAGE>
<TABLE>
<CAPTION>
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Salaried Employees
Statement of Net Assets Available for Benefits, With Fund Information
December 31, 1996
<S> <C> <C> <C> <C> <C> <C> <C>
Fund Information
----------------------------------------------------------------------------------------
Guaranteed
Capital Government Money Company Investment
Appreciation Equity Obligation Market Stock Contract
Fund Fund Fund Fund Fund Fund Subtotal
-----------------------------------------------------------------------------------------
Assets
Investments:
Guaranteed investment contracts $1,120,237 $1,120,237
Common stock of New York State
Electric & Gas Corporation $26,216,251 26,216,251
Other $30,856,044 $32,348,253 $3,103,452 $6,388,691 72,696,440
Loans to participants
------------------------------------------------------------------------------------------
Net assets available for benefits $30,856,044 $32,348,253 $3,103,452 $6,388,691 $26,216,251 $1,120,237 $100,032,928
==========================================================================================
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Salaried Employees
Statement of Net Assets Available for Benefits, With Fund Information (Continued)
December 31, 1996
<S> <C> <C> <C> <C> <C> <C> <C>
Fund Information
------------------------------------------------------------------
Asset Asset Asset
Subtotal Global Allocation Allocation Allocation
Brought Growth Growth Balanced Conservative Loan
Forward Fund Portfolio Portfolio Portfolio Fund Total
------------------------------------------------------------------------------------
Assets
Investments:
Guaranteed investment contracts $1,120,237 $1,120,237
Common stock of New York State
Electric & Gas Corporation 26,216,251 26,216,251
Other 72,696,440 $3,085,090 $1,718,485 $1,399,123 $447,609 79,346,747
Loans to participants $3,325,702 3,325,702
-------------------------------------------------------------------------------------
Net assets available for benefits $100,032,928 $3,085,090 $1,718,485 $1,399,123 $447,609 $3,325,702 $110,008,937
=====================================================================================
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Salaried Employees
Statement of Net Assets Available for Benefits, With Fund Information
December 31, 1995
<S> <C> <C> <C> <C> <C> <C> <C>
Fund Information
----------------------------------------------------------------------------------------
Guaranteed
Capital Government Money Company Investment
Appreciation Equity Obligation Market Stock Contract
Fund Fund Fund Fund Fund Fund Subtotal
----------------------------------------------------------------------------------------
Assets
Investments:
Guaranteed investment contracts $3,319,662 $3,319,662
Common stock of New York State
Electric & Gas Corporation $31,027,515 31,027,515
Other $23,610,555 $24,920,863 $3,103,601 $4,885,098 56,520,117
Loans to participants
----------------------------------------------------------------------------------------
Net assets available for benefits $23,610,555 $24,920,863 $3,103,601 $4,885,098 $31,027,515 $3,319,662 $90,867,294
========================================================================================
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Salaried Employees
Statement of Net Assets Available for Benefits, With Fund Information (Continued)
December 31, 1995
<S> <C> <C> <C> <C> <C> <C> <C>
Fund Information
------------------------------------------------------------------
Asset Asset Asset
Subtotal Global Allocation Allocation Allocation
Brought Growth Growth Balanced Conservative Loan
Forward Fund Portfolio Portfolio Portfolio Fund Total
-----------------------------------------------------------------------------------
Assets
Investments:
Guaranteed investment contracts $3,319,662 $3,319,662
Common stock of New York State
Electric & Gas Corporation 31,027,515 31,027,515
Other 56,520,117 $1,514,329 $801,940 $698,912 $273,968 59,809,266
Loans to participants $3,033,421 3,033,421
-----------------------------------------------------------------------------------
Net assets available for benefits $90,867,294 $1,514,329 $801,940 $698,912 $273,968 $3,033,421 $97,189,864
===================================================================================
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Salaried Employees
Statement of Changes in Net Assets Available for Benefits, With Fund Information
Year ended December 31, 1996
<S> <C> <C> <C> <C> <C> <C> <C>
Fund Information
-----------------------------------------------------------------------------------------
Guaranteed
Capital Government Money Company Investment
Appreciation Equity Obligation Market Stock Contract
Fund Fund Fund Fund Fund Fund Subtotal
------------------------------------------------------------------------------------------
Additions
Investment income:
Net appreciation (depreciation)
in fair value of investments $1,260,520 $2,962,290 $(82,780) $(5,276,790) $(1,136,760)
Dividends:
New York State Electric & Gas Corp. 1,693,820 1,693,820
Other 1,939,080 2,744,695 198,740 $279,812 5,162,327
Interest on investments $54,848 54,848
Interest on loans to participants -
------------------------------------------------------------------------------------------
3,199,600 5,706,985 115,960 279,812 (3,582,970) 54,848 5,774,235
Contributions:
Employer 1,039,803 1,039,803
Employee 2,363,986 1,812,580 261,395 378,496 2,257,844 7,074,301
Transfers from Hourly Plan 35,431 (6,559) 13,256 (13,792) 57,471 1,341 87,148
Interfund transfers (net) 2,109,738 871,506 (267,122) 1,333,526 (3,809,736) (2,184,402) (1,946,490)
------------------------------------------------------------------------------------------
Total additions 7,708,755 8,384,512 123,489 1,978,042 (4,037,588) (2,128,213) 12,028,997
Deductions
Withdrawal benefits-stock 745,995 745,995
Withdrawal benefits-cash 453,789 948,226 122,508 470,971 71,191 2,066,685
Administrative fees 9,477 8,896 1,130 3,478 27,681 21 50,683
------------------------------------------------------------------------------------------
Total deductions 463,266 957,122 123,638 474,449 773,676 71,212 2,863,363
------------------------------------------------------------------------------------------
Net increase (decrease) 7,245,489 7,427,390 (149) 1,503,593 (4,811,264) (2,199,425) 9,165,634
Net assets available for benefits
at beginning of year 23,610,555 24,920,863 3,103,601 4,885,098 31,027,515 3,319,662 90,867,294
------------------------------------------------------------------------------------------
Net assets available for benefits
at end of year $30,856,044 $32,348,253 $3,103,452 $6,388,691 $26,216,251 $1,120,237 $100,032,928
==========================================================================================
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Salaried Employees
Statement of Changes in Net Assets Available for Benefits, With Fund Information (Continued)
Year Ended December 31, 1996
<S> <C> <C> <C> <C> <C> <C> <C>
Fund Information
-----------------------------------------------------------------------------
Asset Asset Asset
Subtotal Global Allocation Allocation Allocation
Brought Growth Growth Balanced Conservative Loan
Forward Fund Portfolio Portfolio Portfolio Fund Total
-------------------------------------------------------------------------------------------
Additions
Investment income:
Net appreciation (depreciation) in
fair value of investments $(1,136,760) $140,855 $114,806 $80,165 $15,347 $(785,587)
Dividends:
New York State Electric & Gas Corp. 1,693,820 1,693,820
Other 5,162,327 215,648 89,104 98,208 28,476 5,593,763
Interest on investments 54,848 54,848
Interest on loans to participants - $298,343 298,343
--------------------------------------------------------------------------------------------
5,774,235 356,503 203,910 178,373 43,823 298,343 6,855,187
Contributions:
Employer 1,039,803 1,039,803
Employee 7,074,301 372,758 224,776 133,889 24,163 7,829,887
Transfers from Hourly Plan 87,148 (208) 86,940
Interfund transfers (net) (1,946,490) 867,394 581,484 389,957 107,710 (55)
--------------------------------------------------------------------------------------------
Total additions 12,028,997 1,596,447 1,010,170 702,219 175,696 298,288 15,811,817
Deductions
Withdrawal benefits-stock 745,995 745,995
Withdrawal benefits-cash 2,066,685 24,918 93,115 1,676 1,955 6,007 2,194,356
Administrative fees 50,683 768 510 332 100 52,393
--------------------------------------------------------------------------------------------
Total deductions 2,863,363 25,686 93,625 2,008 2,055 6,007 2,992,744
--------------------------------------------------------------------------------------------
Net increase 9,165,634 1,570,761 916,545 700,211 173,641 292,281 12,819,073
Net assets available for benefits
at beginning of year 90,867,294 1,514,329 801,940 698,912 273,968 3,033,421 97,189,864
--------------------------------------------------------------------------------------------
Net assets available for benefits
at end of year $100,032,928 $3,085,090 $1,718,485 $1,399,123 $447,609 $3,325,702 $110,008,937
============================================================================================
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Salaried Employees
Statement of Changes in Net Assets Available for Benefits, With Fund Information
Year ended December 31, 1995
<S> <C> <C> <C> <C> <C> <C> <C>
Fund Information
------------------------------------------------------------------------------------------
Capital Government Money Company Guaranteed
Appreciation Equity Obligation Market Stock Investment
Fund Fund Fund Fund Fund Contract Fund Subtotal
-------------------------------------------------------------------------------------------
Additions
Investment income:
Net appreciation in fair value
of investments $5,038,754 $4,797,742 $223,497 $8,208,070 $18,268,063
Dividends:
New York State Electric & Gas Corp. 1,692,966 1,692,966
Other 1,245,657 1,608,617 201,913 $244,233 3,300,420
Interest on investments $232,246 232,246
Interest on loans to participants -
-------------------------------------------------------------------------------------------
6,284,411 6,406,359 425,410 244,233 9,901,036 232,246 23,493,695
Contributions:
Employer 969,088 969,088
Employee 1,894,802 1,593,465 287,229 350,812 1,581,913 5,708,221
Transfers from other plan 595,628 595,628
Transfers from Hourly Plan 19,625 67,960 5,597 13,487 122,130 3,128 231,927
Interfund transfers (net) 1,144,499 678,310 (10,483) 1,274,536 (3,236,549) (1,517,689) (1,667,376)
-------------------------------------------------------------------------------------------
Total additions 9,343,337 8,746,094 707,753 1,883,068 9,933,246 (1,282,315) 29,331,183
Deductions
Withdrawal benefits-stock 924,194 924,194
Withdrawal benefits-cash 595,322 961,992 247,967 237,034 188,561 2,230,876
Administrative fees 7,079 7,110 1,148 2,628 40,318 12,144 70,427
-------------------------------------------------------------------------------------------
Total deductions 602,401 969,102 249,115 239,662 964,512 200,705 3,225,497
-------------------------------------------------------------------------------------------
Net increase (decrease) 8,740,936 7,776,992 458,638 1,643,406 8,968,734 (1,483,020) 26,105,686
Net assets available for benefits
at beginning of year 14,869,619 17,143,871 2,644,963 3,241,692 22,058,781 4,802,682 64,761,608
-------------------------------------------------------------------------------------------
Net assets available for benefits
at end of year $23,610,555 $24,920,863 $3,103,601 $4,885,098 $31,027,515 $3,319,662 $90,867,294
===========================================================================================
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Salaried Employees
Statement of Changes in Net Assets Available for Benefits, With Fund Information (Continued)
Year Ended December 31, 1995
Fund Information
<S> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------
Asset Asset Asset
Subtotal Global Allocation Allocation Allocation
Brought Growth Growth Balanced Conservative Loan
Forward Fund Portfolio Portfolio Portfolio Fund Total
-------------------------------------------------------------------------------------------
Additions
Investment income:
Net appreciation in fair
value of investments $18,268,063 $68,206 $81,576 $45,018 $24,862 $18,487,725
Dividends:
New York State Electric & Gas Corp. 1,692,966 1,692,966
Other 3,300,420 80,519 38,508 34,339 14,444 3,468,230
Interest on investments 232,246 232,246
Interest on loans to participants - $198,579 198,579
------------------------------------------------------------------------------------------
23,493,695 148,725 120,084 79,357 39,306 198,579 24,079,746
Contributions:
Employer 969,088 969,088
Employee 5,708,221 306,783 171,066 98,929 19,746 6,304,745
Transfers from other plan 595,628 595,628
Transfers from Hourly Plan 231,927 567 13,625 15,919 262,038
Interfund transfers (net) (1,667,376) 654,672 213,726 430,205 106,331 262,442 0
-----------------------------------------------------------------------------------------
Total additions 29,331,183 1,110,747 518,501 608,491 165,383 476,940 32,211,245
Deductions
Withdrawal benefits-stock 924,194 924,194
Withdrawal benefits-cash 2,230,876 44,518 73 200 8,186 2,283,853
Administrative fees 70,427 317 194 112 37 71,087
------------------------------------------------------------------------------------------
Total deductions 3,225,497 44,835 267 312 8,223 3,279,134
------------------------------------------------------------------------------------------
Net increase (decrease) 26,105,686 1,065,912 518,234 608,179 157,160 476,940 28,932,111
Net assets available for benefits
at beginning of year 64,761,608 448,417 283,706 90,733 116,808 2,556,481 68,257,753
-------------------------------------------------------------------------------------------
Net assets available for benefits
at end of year $90,867,294 $1,514,329 $801,940 $698,912 $273,968 $3,033,421 $97,189,864
===========================================================================================
See notes to financial statements.
</TABLE>
<PAGE>
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Salaried Employees
Notes to Financial Statements
December 31, 1996 and 1995
1. DESCRIPTION OF THE SALARIED PLAN
The New York State Electric & Gas Corporation Tax Deferred Savings Plan for
Salaried Employees (the Salaried Plan) was established effective January 1,
1985 to provide for before-tax contributions in accordance with Internal
Revenue Code (Code) Section 401(k).
The Salaried Plan is for the exclusive benefit of New York State Electric & Gas
Corporation (company) employees who are eligible to participate under the
Salaried Plan provisions.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements are prepared on an accrual basis and in conformity
with generally accepted accounting principles, which require management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements. Estimates also affect the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Certain amounts have been reclassified on the financial statements to conform
to the 1996 presentation.
Investments
Investments consisting of the company's publicly traded common stock and
various Putnam Investment vehicles are carried at current value using the
market price at closing on the last business day of the year.
Guaranteed investment contracts are valued at contract value (which
approximates fair market value) which represents contributions plus interest
thereon at the contract rate.
The change during the period between fair value and carrying value is reflected
in the statement of changes in net assets available for benefits as net
appreciation (depreciation) in fair value of investments.
Contributions
Contributions to the Salaried Plan are allocated to participant accounts.
Participants have full and immediate vesting rights in employee and employer
contributions, investment earnings and other amounts allocated to their
accounts.
<PAGE>
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Salaried Employees
Notes to Financial Statements
December 31, 1996 and 1995
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Contributions (Continued)
During 1996 and 1995, an employee not covered by a collective bargaining
agreement was eligible for participation in the Salaried Plan generally upon
completion of at least 1,000 hours of service during the 12 consecutive month
period beginning on the date of employment or any anniversary thereof.
Effective January 1, 1997, an employee may become a participant in the Salaried
Plan as of the first day of any calendar month that commences after the
completion of the employee's first 30 days of employment.
Employee contributions, with certain exceptions, range from 1% to 15% of the
participant's base compensation plus any overtime pay. Subject to limitations
stipulated by the Code, a participant's total contribution could not exceed
$9,500 per year in 1996 and $9,240 per year in 1995.
During 1996 and 1995, the company contributed solely to the Company Stock Fund
an amount equivalent to 25% of the participant's contributions to any fund (up
to 1.5% of the participant's annual base compensation as of the first day of
the year).
Benefit Payments
Distributions from the Equity Fund, Money Market Fund, Capital Appreciation
Fund, Government Obligation Fund, Guaranteed Investment Contract Fund, Global
Growth Fund, and the Asset Allocation Funds are made in cash. Distributions
from the Company Stock Fund are made in either whole shares of the company's
common stock or in cash as specified by the participant and subject to approval
by the Salaried Plan's administrative committee.
Loans
Participants may, under certain circumstances, borrow against their account
balances. The principal amount of the loan is subject to certain limitations
as defined in the Salaried Plan document. The term of the loan may not exceed
five years, and the interest rate established by the Salaried Plan's
administrative committee provides the Salaried Plan with a return commensurate
with the interest rate charged by persons in the business of lending money for
loans which would be made under similar circumstances. Interest rates range
from 6.5% to 10.5%. The loan must be repaid by payroll deductions over the
term of the loan. Loan payments are credited to an applicable fund based upon
the participant's election. If a participant's employment terminates for any
reason, the loan will become immediately due and payable.
<PAGE>
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Salaried Employees
Notes to Financial Statements
December 31, 1996 and 1995
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Plan Termination
Although the company has not expressed any intent to terminate the Salaried
Plan, it has the right to discontinue contributions at any time and terminate
the Salaried Plan. In the event of termination of the Salaried Plan, the net
assets of the Salaried Plan are set aside, first for payment of all Salaried
Plan expenses and, second, for distribution to the participants, based upon the
balances in their individual accounts.
3. INVESTMENTS
Contributions by the participants are invested, at the election of the
participant, in one or a combination of the following nine funds: (1) the
Company Stock Fund, consisting of common stock of the company; (2) the Equity
Fund, a mutual fund, consisting primarily of common stock; (3) the Money Market
Fund, a mutual fund, consisting of money market instruments; (4) the Capital
Appreciation Fund, a mutual fund, consisting primarily of common stock; (5)
the Government Obligation Fund, a mutual fund, consisting of securities that
are backed by the full faith and credit of the United States Government; (6)
the Global Growth Fund, a mutual fund, consisting primarily of U.S. and
international common stocks; or (7) the three Asset Allocation funds,
consisting primarily of equity and fixed income securities. Effective
January 1, 1992, the Guaranteed Investment Contract Fund did not accept any new
investments. Prior to November 18, 1988, the Guaranteed Investment Contract
Fund consisted of investments in insurance contracts that guaranteed
an effective annual rate of interest through a specified period, and effective
November 18, 1988, included investments in securities and other obligations
issued by any company that guaranteed an effective annual rate of interest
through a specified period.
4. INCOME TAX STATUS
The company has received a determination letter from the Internal Revenue
Service dated March 24, 1995, that the Salaried Plan qualifies as a tax
deferred savings plan under Sections 401(a) and 401(k) of the Code. The Plan
has been amended subsequent to the receipt of the latest determination letter.
However, the Plan's administrator and tax counsel believe that the Plan is
designed and currently being operated in compliance with the applicable
requirements of the Code.
5. TRANSACTIONS WITH PARTIES-IN-INTEREST
All administrative fees are paid by the participants in the Salaried Plan.
Audit and legal fees are paid by the company.
<PAGE>
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Salaried Employees
Notes to Financial Statements
December 31, 1996 and 1995
6. UNITS OF PARTICIPATION
Total number of units and net asset value per unit during the period from
January 1, 1995 to December 31, 1996, by quarter, are as follows:
GLOBAL ALLOCATION ALLOCATION ALLOCATION
GROWTH GROWTH BALANCED CONSERVATIVE
-------------- -------------- ------------- --------------
Units $ Unit Units $ Unit Units $ Unit Units $ Unit
01/01/95 48.635 9.22 34.590 8.32 11.011 8.24 14.385 8.12
03/31/95 84.573 9.23 47.696 8.42 26.817 8.26 22.107 8.17
06/30/95 91.968 9.25 54.681 8.5 36.336 8.41 23.352 8.2
09/30/95 122.957 9.5 68.632 9.11 55.394 8.8 29.470 8.41
12/31/95 151.584 9.9 80.194 10 72.577 9.63 29.715 9.22
03/31/96 191.975 10.58 96.378 10.52 94.23 9.99 34.441 9.32
06/30/96 208.281 10.95 103.612 11.01 100.753 10.36 37.818 9.46
09/30/96 234.567 11.11 118.939 11.41 115.442 10.71 43.153 9.69
12/31/96 284.602 10.82 153.036 11.23 132.538 10.49 46.724 9.58
CAPITAL MONEY EQUITY GOVERNMENT
APPRECIATION MARKET FUND OBLIGATIONS
----------------- --------------- ---------------- ---------------
Units $ Unit Units $ Unit Units $ Unit Units $ Unit
01/01/95 1,290.853 11.52 3,228.868 1.00 1,347.789 12.72 216.978 12.19
03/31/95 1,365.577 12.83 4,286.385 1.00 1,312.927 10.49 220.870 13.34
06/30/95 1,336.338 10.6 4,666.584 1.00 1,389.280 12.9 225.631 13.3
09/30/95 1,408.207 10.89 4,917.421 1.00 1,438.141 13.07 222.589 13.25
12/31/95 1,548.233 15.25 4,876.371 1.00 1,539.275 16.19 235.299 13.19
03/31/96 1,612.747 16.19 5,696.149 1.00 1,596.605 17.05 237.709 12.79
06/30/96 1,693.416 16.81 5,663,621 1.00 1,637.049 17.46 242.029 12.61
09/30/96 1,759.393 17.55 5,348.973 1.00 1,676.201 17.87 240.336 12.63
12/31/96 1,911.364 16.12 6,309.305 1.00 1,792.471 18.02 241.891 12.83
<PAGE>
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Salaried Employees
Line 27a - Schedule of Assets Held for Investment Purposes
December 31, 1996
Balance Held at Market
Name of Issuer and Title of Issue End of Year Cost ** Value
- ------------------------------------------------------------------------------
Capital Appreciation Fund
*Putnam Voyager Fund 1,914,147 shares $30,856,044
Equity Fund
*Putnam Fund for Growth
and Income 1,795,131 shares 32,348,253
Government Obligation Fund
*Putnam U.S. Government
Income Trust 241,890 shares 3,103,452
Money Market Fund
*Putnam Money Market Fund 6,388,691 shares 6,388,691
Global Growth Fund
*Putnam Global Growth Fund 285,128 shares 3,085,090
Asset Allocation - Growth Portfolio
*Putnam Asset Allocation - Growth
Portfolio 153,026 shares 1,718,485
Asset Allocation - Balanced Portfolio
*Putnam Asset Allocation - Balanced
Portfolio 133,377 shares 1,399,123
Asset Allocation - Conservative
Portfolio
*Putnam Asset Allocation -
Conservative Portfolio 46,723 shares 447,609
-----------
Total $79,346,747
===========
Company Stock Fund
*New York State Electric & Gas
Corporation common stock 1,212,312 shares $26,216,251
===========
Guaranteed Investment Contracts $1,120,237 $ 1,120,237
=======================
Participant Loans - interest
rates from 6.5% to 10.5% $ 3,325,702
===========
* Denotes a party-in-interest.
** Information pertaining to the historical cost was not available from the
trustee.
<PAGE>
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Salaried Employees
Line 27d - Schedule of Reportable Transactions
Year ended December 31, 1996
Current Value
of Asset on
Purchase Selling Transaction Net Gain
Description of Assets Price Price Date (Loss)
- -------------------------------------------------------------------------------
Category (iii) - Series of transactions in excess of 5% of plan assets
Company Stock Fund
*New York State Electric
& Gas Corporation $6,401,282 $6,401,282
Common Stock $5,601,292 5,601,292 $(799,990)
There were no category (i), (ii), or (iv) reportable transactions during 1996.
* Denotes a party-in-interest.
<PAGE>
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 333-16201) pertaining to the New York
State Electric & Gas Corporation Tax Deferred Savings Plan for
Salaried Employees of our report dated February 14, 1997, with
respect to the financial statements and schedules of the New York
State Electric & Gas Corporation Tax Deferred Savings Plan for
Salaried Employees for the year ended December 31, 1996, which
report is included in this Annual Report on Form 11-K.
COOPERS & LYBRAND L.L.P.
New York, New York
March 5, 1997
<PAGE>
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 333-16201) pertaining to New York State
Electric & Gas Corporation Tax Deferred Savings Plan for Salaried
Employees of our report dated April 17, 1996, with respect to the
financial statements of the New York State Electric & Gas
Corporation Tax Deferred Savings Plan for Salaried Employees for
the year ended December 31, 1995, which report is included in
this Annual Report on Form 11-K.
Ernst & Young L.L.P.
Syracuse, New York
February 14, 1997
EXHIBIT 99-2
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1996
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Hourly Paid Employees
--------------------------------------------------------
(Full title of the plan)
New York State Electric & Gas Corporation
--------------------------------------------------------
(Name of issuer of the securities held pursuant to the plan)
P. O. Box 3287, Ithaca, New York 14852-3287
--------------------------------------------------------
(Address of principal executive office)
<PAGE>
REQUIRED INFORMATION
The Tax Deferred Savings Plan for Hourly Paid Employees ("Plan")
is subject to the Employee Retirement Income Security Act of 1974
("ERISA"). Therefore, in lieu of the requirements of Items 1-3
of Form 11-K, the financial statements and schedules of the Plan
for the two fiscal years ended December 31, 1996 and 1995, which
have been prepared in accordance with the financial reporting
requirements of ERISA, are attached hereto as Appendix 1 and
incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Committee to administer the Tax Deferred Savings Plan
for Hourly Paid Employees has duly caused this Annual Report to
be signed by the undersigned hereunto duly authorized.
New York State Electric & Gas Corporation Tax
Deferred Savings Plan for Hourly Paid Employees
By Richard R. Benson March 14, 1997
Richard R. Benson
Committee Member
By Gerald E. Putman March 14, 1997
Gerald E. Putman
Committee Member
By Sherwood J. Rafferty March 14, 1997
Sherwood J. Rafferty
Committee Member
<PAGE>
APPENDIX 1
NEW YORK STATE ELECTRIC & GAS CORPORATION
TAX DEFERRED SAVINGS PLAN FOR HOURLY PAID EMPLOYEES
FINANCIAL STATEMENTS AS OF AND
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995,
SUPPLEMENTAL SCHEDULES AS OF AND FOR THE YEAR ENDED
DECEMBER 31, 1996 AND INDEPENDENT AUDITORS' REPORTS
<PAGE>
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Hourly Paid Employees
Year ended December 31, 1996
INDEX
Reports of Independent Auditors......................................... 1
Statement of Net Assets Available for Benefits, With Fund
Information--December 31, 1996...................................... 4
Statement of Net Assets Available for Benefits, With Fund
Information--December 31, 1995...................................... 6
Statement of Changes in Net Assets Available for Benefits, With
Fund Information--Year ended December 31, 1996...................... 8
Statement of Changes in Net Assets Available for Benefits, With
Fund Information--Year ended December 31, 1995...................... 10
Notes to Financial Statements.......................................... 12
Schedule of Assets Held for Investment Purposes--December 31, 1996..... 16
Schedule of Reportable Transactions--Year ended December 31, 1996...... 17
Consents of Independent Auditors ...................................... 18
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Tax Deferred Savings Plan for Hourly Paid Employees
Administrative Committee
New York State Electric & Gas Corporation
We have audited the accompanying statements of net assets
available for benefits of the New York State Electric & Gas
Corporation Tax Deferred Savings Plan for Hourly Paid Employees
as of December 31, 1996 and the related statements of changes in
net assets available for benefits for the year ended December 31,
1996. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion
on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the net assets
available for benefits of the New York State Electric & Gas
Corporation Tax Deferred Savings Plan for Hourly Paid Employees
at December 31, 1996, and the changes in its net assets available
for benefits for the year ended December 31, 1996, in conformity
with generally accepted accounting principles.
Our audit was performed for the purpose of forming an opinion on
the basic financial statements taken as a whole. The
supplemental schedules of assets held for investment purposes as
of December 31, 1996 and reportable transactions for the year
ended December 31, 1996 are presented for the purpose of
additional analysis and are not a required part of the basic
financial statements but are supplementary information required
by the Department of Labor's Rules and Regulations for Reporting
and Disclosure under the Employee Retirement Income Security Act
of 1974. The Fund Information in the statements of net assets
available for benefits and the statements of changes in net
assets available for benefits is presented for purposes of
additional analysis rather than to present the net assets
available for benefits and changes in net assets available for
benefits of each fund. The supplemental schedules and Fund
Information have been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in
our opinion, are fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
<PAGE>
The schedule of assets held for investment purposes that
accompanies the Plan's financial statements does not disclose
historical cost of certain plan assets held by the Plan trustee.
Disclosure of this information is required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974.
COOPERS & LYBRAND L.L.P.
New York, New York
February 14, 1997
<PAGE>
Report of Independent Auditors
Tax Deferred Savings Plan for Hourly Paid Employees
Administrative Committee
New York State Electric & Gas Corporation
We have audited the accompanying statement of net assets
available for benefits of the New York State Electric & Gas
Corporation Tax Deferred Savings Plan for Hourly Paid Employees
as of December 31, 1995, and the related statement of changes in
net assets available for benefits for the year then ended. These
financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the net assets
available for benefits of the New York State Electric & Gas
Corporation Tax Deferred Savings Plan for Hourly Paid Employees
at December 31, 1995, and the changes in its net assets available
for benefits for the year then ended, in conformity with
generally accepted accounting principles.
Ernst & Young L.L.P.
Syracuse, New York
April 17, 1996
<PAGE>
<TABLE>
<CAPTION>
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Hourly Paid Employees
Statement of Net Assets Available for Benefits, With Fund Information
December 31, 1996
<S> <C> <C> <C> <C> <C> <C> <C>
Fund Information
-----------------------------------------------------------------------------------------
Guaranteed
Capital Government Money Company Investment
Appreciation Equity Obligation Market Stock Contract
Fund Fund Fund Fund Fund Fund Subtotal
-----------------------------------------------------------------------------------------
Assets
Investments:
Guaranteed investment contracts $909,182 $909,182
Common stock of New York State
Electric & Gas Corporation $30,474,962 30,474,962
Other $21,069,829 $24,203,575 $2,188,125 $7,090,991 54,552,520
Loans to participants
-----------------------------------------------------------------------------------------
Net assets available for benefits $21,069,829 $24,203,575 $2,188,125 $7,090,991 $30,474,962 $909,182 $85,936,664
=========================================================================================
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Hourly Paid Employees
Statement of Net Assets Available for Benefits, With Fund Information (Continued)
December 31, 1996
<S> <C> <C> <C> <C> <C> <C> <C>
Fund Information
-----------------------------------------------------------------------
Asset Asset Asset
Subtotal Global Allocation Allocation Allocation
Brought Growth Growth Balanced Conservative Loan
Forward Fund Portfolio Portfolio Portfolio Fund Total
------------------------------------------------------------------------------------
Assets
Investments:
Guaranteed investment contracts $909,182 $909,182
Common stock of New York State
Electric & Gas Corporation 30,474,962 30,474,962
Other 54,552,520 $2,346,254 $1,202,133 $1,076,226 $317,023 59,494,156
Loans to participants $3,271,689 3,271,689
-------------------------------------------------------------------------------------
Net assets available for benefits $85,936,664 $2,346,254 $1,202,133 $1,076,226 $317,023 $3,271,689 $94,149,989
=====================================================================================
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Hourly Paid Employees
Statement of Net Assets Available for Benefits, With Fund Information
December 31, 1995
<S> <C> <C> <C> <C> <C> <C> <C>
Fund Information
------------------------------------------------------------------------------------------
Guaranteed
Capital Government Money Company Investment
Appreciation Equity Obligation Market Stock Contract
Fund Fund Fund Fund Fund Fund Subtotal
------------------------------------------------------------------------------------------
Assets
Investments:
Guaranteed investment contracts $3,129,923 $3,129,923
Common stock of New York State
Electric & Gas Corporation $37,115,333 37,115,333
Other $13,894,560 $17,371,729 $2,138,010 $4,422,847 37,827,146
Loans to participants
-----------------------------------------------------------------------------------------
Net assets available for benefits $13,894,560 $17,371,729 $2,138,010 $4,422,847 $37,115,333 $3,129,923 $78,072,402
=========================================================================================
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Hourly Paid Employees
Statement of Net Assets Available for Benefits, With Fund Information (Continued)
December 31, 1995
<S> <C> <C> <C> <C> <C> <C> <C>
Fund Information
-----------------------------------------------------------------------
Asset Asset Asset
Subtotal Global Allocation Allocation Allocation
Brought Growth Growth Balanced Conservative Loan
Forward Fund Portfolio Portfolio Portfolio Fund Total
------------------------------------------------------------------------------------
Assets
Investments:
Guaranteed investment contracts $3,129,923 $3,129,923
Common stock of New York State
Electric & Gas Corporation 37,115,333 37,115,333
Other 37,827,146 $918,554 $393,831 $433,455 $172,634 39,745,620
Loans to participants $2,816,260 2,816,260
-------------------------------------------------------------------------------------
Net assets available for benefits $78,072,402 $918,554 $393,831 $433,455 $172,634 $2,816,260 $82,807,136
=====================================================================================
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Hourly Paid Employees
Statement of Changes in Net Assets Available for Benefits, With Fund Information
Year ended December 31, 1996
<S> <C> <C> <C> <C> <C> <C> <C>
Fund Information
-----------------------------------------------------------------------------------------
Guaranteed
Capital Government Money Company Investment
Appreciation Equity Obligation Market Stock Contract
Fund Fund Fund Fund Fund Fund Subtotal
------------------------------------------------------------------------------------------
Additions
Investment income:
Net appreciation (depreciation)
in fair value of investments $665,174 $2,070,273 $(57,134) $(6,182,420) $(3,504,107)
Dividends:
New York State Electric & Gas Corp. 2,018,810 2,018,810
Other 1,319,941 2,032,642 140,882 3,493,465
Interest on investments $314,406 $39,433 353,839
Interest on loans to participants -
----------------------------------------------------------------------------------------
1,985,115 4,102,915 83,748 314,406 (4,163,610) 39,433 2,362,007
Contributions:
Employer 1,270,641 1,270,641
Employee 2,611,340 2,157,860 316,813 691,248 2,496,687 8,273,948
Interfund transfers (net) 2,889,489 1,027,182 (311,124) 1,856,065 (5,215,922) (2,229,905) (1,984,215)
------------------------------------------------------------------------------------------
Total additions 7,485,944 7,287,957 89,437 2,861,719 (5,612,204) (2,190,472) 9,922,381
Deductions
Withdrawal benefits - stock 926,667 926,667
Withdrawal benefits - cash 262,877 450,334 24,278 199,764 28,917 966,170
Transfers to Salaried Plan 35,431 (6,559) 13,256 (13,792) 57,471 1,341 87,148
Administrative fees 12,367 12,336 1,788 7,603 44,029 11 78,134
------------------------------------------------------------------------------------------
Total deductions 310,675 456,111 39,322 193,575 1,028,167 30,269 2,058,119
------------------------------------------------------------------------------------------
Net increase (decrease) 7,175,269 6,831,846 50,115 2,668,144 (6,640,371) (2,220,741) 7,864,262
Net assets available for benefits
at beginning of year 13,894,560 17,371,729 2,138,010 4,422,847 37,115,333 3,129,923 78,072,402
------------------------------------------------------------------------------------------
Net assets available for benefits
at end of year $21,069,829 $24,203,575 $2,188,125 $7,090,991 $30,474,962 $909,182 $85,936,664
==========================================================================================
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Hourly Paid Employees
Statement of Changes in Net Assets Available for Benefits, With Fund Information (Continued)
Year Ended December 31, 1996
<S> <C> <C> <C> <C> <C> <C> <C>
Fund Information
------------------------------------------------------------------------
Asset Asset Asset
Subtotal Global Allocation Allocation Allocation
Brought Growth Growth Balanced Conservative Loan
Forward Fund Portfolio Portfolio Portfolio Fund Total
---------------------------------------------------------------------------------------
Additions
Investment income:
Net appreciation (depreciation)
in fair value of investments $(3,504,107) $73,346 $65,077 $48,385 $5,324 $(3,311,975)
Dividends:
New York State Electric & Gas Corp. 2,018,810 2,018,810
Other 3,493,465 163,865 61,017 72,630 17,003 3,807,980
Interest on investments 353,839 353,839
Interest on loans to participants - $233,793 233,793
--------------------------------------------------------------------------------------
2,362,007 237,211 126,094 121,015 22,327 233,793 3,102,447
Contributions:
Employer 1,270,641 1,270,641
Employee 8,273,948 425,319 185,155 175,342 42,229 9,101,993
Interfund transfers (net) (1,984,215) 791,571 500,440 356,823 100,576 234,805
--------------------------------------------------------------------------------------
Total additions 9,922,381 1,454,101 811,689 653,180 165,132 468,598 13,475,081
Deductions
Withdrawal benefits - stock 926,667 926,667
Withdrawal benefits - cash 966,170 25,591 2,837 9,944 20,589 13,169 1,038,300
Transfers to Salaried Plan 87,148 (208) 86,940
Administrative fees 78,134 1,018 550 465 154 80,321
---------------------------------------------------------------------------------------
Total deductions 2,058,119 26,401 3,387 10,409 20,743 13,169 2,132,228
---------------------------------------------------------------------------------------
Net increase (decrease) 7,864,262 1,427,700 808,302 642,771 144,389 455,429 11,342,853
Net assets available for benefits
at beginning of year 78,072,402 918,554 393,831 433,455 172,634 2,816,260 82,807,136
---------------------------------------------------------------------------------------
Net assets available for benefits
at end of year $85,936,664 $2,346,254 $1,202,133 $1,076,226 $317,023 $3,271,689 $94,149,989
=======================================================================================
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Hourly Paid Employees
Statement of Changes in Net Assets Available for Benefits, With Fund Information
Year ended December 31, 1995
<S> <C> <C> <C> <C> <C> <C> <C>
Fund Information
----------------------------------------------------------------------------------------
Guaranteed
Capital Government Money Company Investment
Appreciation Equity Obligation Market Stock Contract
Fund Fund Fund Fund Fund Fund Subtotal
-----------------------------------------------------------------------------------------
Additions
Investment income:
Net appreciation in fair
value of investments $2,672,529 $3,141,981 $149,688 $9,446,958 $15,411,156
Dividends:
New York State Electric & Gas Corp. 1,931,882 1,931,882
Other 731,094 1,096,406 135,853 $235,120 2,198,473
Interest on investments $229,574 229,574
Interest on loans to participants -
-----------------------------------------------------------------------------------------
3,403,623 4,238,387 285,541 235,120 11,378,840 229,574 19,771,085
Contributions:
Employer 1,203,833 1,203,833
Employee 2,010,430 1,856,322 366,511 657,528 3,037,305 7,928,096
Interfund transfers (net) 1,362,393 844,623 (112,292) 97,996 (2,140,885) (1,035,648) (983,813)
-----------------------------------------------------------------------------------------
Total additions 6,776,446 6,939,332 539,760 990,644 13,479,093 (806,074) 27,919,201
Deductions
Withdrawal benefits - stock 840,410 840,410
Withdrawal benefits - cash 158,730 120,086 83,445 115,463 108,216 585,940
Transfers to Salaried Plan 19,625 67,960 5,597 13,487 122,130 3,128 231,927
Administrative fees 8,394 9,725 1,712 5,695 56,331 13,024 94,881
-----------------------------------------------------------------------------------------
Total deductions 186,749 197,771 90,754 134,645 1,018,871 124,368 1,753,158
-----------------------------------------------------------------------------------------
Net increase (decrease) 6,589,697 6,741,561 449,006 855,999 12,460,222 (930,442) 26,166,043
Net assets available for benefits
at beginning of year 7,304,863 10,630,168 1,689,004 3,566,848 24,655,111 4,060,365 51,906,359
-----------------------------------------------------------------------------------------
Net assets available for benefits
at end of year $13,894,560 $17,371,729 $2,138,010 $4,422,847 $37,115,333 $3,129,923 $78,072,402
=========================================================================================
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Hourly Paid Employees
Statement of Changes in Net Assets Available for Benefits, With Fund Information (Continued)
Year Ended December 31, 1995
<S> <C> <C> <C> <C> <C> <C> <C>
Fund Information
------------------------------------------------------------------------
Asset Asset Asset
Subtotal Global Allocation Allocation Allocation
Brought Growth Growth Balanced Conservative Loan
Forward Fund Portfolio Portfolio Portfolio Fund Total
---------------------------------------------------------------------------------------
Additions
Investment Income:
Net appreciation in
fair value of investments $15,411,156 $32,270 $39,772 $39,473 $5,922 $15,528,593
Dividends:
New York State Electric & Gas Corp. 1,931,882 1,931,882
Other 2,198,473 48,804 16,246 22,705 7,054 2,293,282
Interest on investments 229,574 229,574
Interest on loans to participants - $175,288 175,288
---------------------------------------------------------------------------------------
19,771,085 81,074 56,018 62,178 12,976 175,288 20,158,619
Contributions:
Employer 1,203,833 1,203,833
Employee 7,928,096 274,617 100,226 136,526 24,254 8,463,719
Interfund transfers (net) (983,813) 405,793 105,107 86,143 102,090 284,680 0
---------------------------------------------------------------------------------------
Total additions 27,919,201 761,484 261,351 284,847 139,320 459,968 29,826,171
Deductions
Withdrawal benefits - stock 840,410 840,410
Withdrawal benefits - cash 585,940 14,750 141 600,831
Transfers to Salaried Plan 231,927 567 13,625 15,919 262,038
Administrative fees 94,881 335 173 157 67 95,613
---------------------------------------------------------------------------------------
Total deductions 1,753,158 15,652 13,939 157 67 15,919 1,798,892
---------------------------------------------------------------------------------------
Net increase (decrease) 26,166,043 745,832 247,412 284,690 139,253 444,049 28,027,279
Net assets available for benefits
at beginning of year 51,906,359 172,722 146,419 148,765 33,381 2,372,211 54,779,857
---------------------------------------------------------------------------------------
Net assets available for benefits
at end of year $78,072,402 $918,554 $393,831 $433,455 $172,634 $2,816,260 $82,807,136
=======================================================================================
See notes to financial statements.
</TABLE>
<PAGE>
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Hourly Paid Employees
Notes to Financial Statements
December 31, 1996 and 1995
1. DESCRIPTION OF THE HOURLY PLAN
The New York State Electric & Gas Corporation Tax Deferred Savings Plan for
Hourly Paid Employees (the Hourly Plan) was established effective January 1,
1986 to provide for before-tax contributions in accordance with Internal
Revenue Code (Code) Section 401(k).
The Hourly Plan is for the exclusive benefit of New York State Electric & Gas
Corporation (company) employees who are eligible to participate under the
Hourly Plan provisions.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements are prepared on an accrual basis and in conformity
with generally accepted accounting principles, which require management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements. Estimates also affect the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Certain amounts have been reclassified on the financial statements to conform
to the 1996 presentation.
Investments
Investments consisting of the company's publicly traded common stock and
various Putnam Investment vehicles are carried at current value using the
market price at closing on the last business day of the year.
Guaranteed investment contracts are valued at contract value (which
approximates fair market value) which represents contributions plus interest
thereon at the contract rate.
The change during the period between fair value and carrying value is reflected
in the statement of changes in net assets available for benefits as net
appreciation (depreciation) in fair value of investments.
Contributions
Contributions to the Hourly Plan are allocated to participant accounts.
Participants have full and immediate vesting rights in employee and employer
contributions, investment earnings and other amounts allocated to their
accounts.
<PAGE>
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Hourly Paid Employees
Notes to Financial Statements
December 31, 1996 and 1995
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Contributions (Continued)
During 1996 and 1995, an employee covered by a collective bargaining agreement
was eligible for participation in the Hourly Plan generally upon completion of
at least 1,000 hours of service during the 12 consecutive month period
beginning on the date of employment or any anniversary thereof. Effective
January 1, 1997, an employee may become a participant in the Hourly Plan as of
the first day of any calendar month that commences after the completion of the
employee's first 30 days of employment.
Employee contributions, with certain exceptions, range from 1% to 15% of the
participant's base compensation plus any overtime pay. Subject to limitations
stipulated by the Code, a participant's total contribution could not exceed
$9,500 per year in 1996 and $9,240 per year in 1995.
During 1996 and 1995, the company contributed solely to the Company Stock Fund
an amount equivalent to 25% of the participant's contributions to any fund (up
to 1.5% of the participant's annual base compensation as of the first day of
the year).
Benefit Payments
Distributions from the Equity Fund, Money Market Fund, Capital Appreciation
Fund, Government Obligation Fund, Guaranteed Investment Contract Fund, Global
Growth Fund and the Asset Allocation Funds are made in cash. Distributions
from the Company Stock Fund are made in either whole shares of the company's
common stock or in cash, as specified by the participant and subject to
approval by the Hourly Plan's administrative committee.
Loans
Participants may, under certain circumstances, borrow against their account
balances. The principal amount of the loan is subject to certain limitations
as defined in the Hourly Plan document. The term of the loan may not exceed
five years, and the interest rate established by the Hourly Plan's adminis-
trative committee provides the Hourly Plan with a return commensurate with the
interest rate charged by persons in the business of lending money for loans
which would be made under similar circumstances. Interest rates range from
6.5% to 10.5%. The loan must be repaid by payroll deductions over the term of
the loan. Loan payments are credited to an applicable fund based upon the
participant's election. If a participant's employment terminates for any
reason, the loan will become immediately due and payable.
<PAGE>
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Hourly Paid Employees
Notes to Financial Statements
December 31, 1996 and 1995
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Plan Termination
Although the company has not expressed any intent to terminate the Hourly Plan,
it has the right to discontinue contributions at any time and terminate the
Hourly Plan. In the event of termination of the Hourly Plan, the net assets of
the Hourly Plan are set aside, first for payment of all Hourly Plan expenses
and, second, for distribution to the participants, based upon the balances in
their individual accounts.
3. INVESTMENTS
Contributions by the participants are invested, at the election of the
participant, in one or a combination of the following nine funds: (1) the
Company Stock Fund, consisting of common stock of the company; (2) the Equity
Fund, a mutual fund, consisting primarily of common stock; (3) the Money Market
Fund, a mutual fund, consisting of money market instruments; (4) the Capital
Appreciation Fund, a mutual fund, consisting primarily of common stock; (5) the
Government Obligation Fund, a mutual fund, consisting of securities that are
backed by the full faith and credit of the United States Government; (6) the
Global Growth Fund, a mutual fund, consisting primarily of U.S. and
international common stocks; or (7) the three Asset Allocation Funds,
consisting primarily of equity and fixed income securities. Effective
January 1, 1992, the Guaranteed Investment Contract Fund did not accept any new
investments. Prior to November 18, 1988, the Guaranteed Investment Contract
Fund consisted of investments in insurance contracts that guaranteed an
effective annual rate of interest through a specified period, and effective
November 18, 1988, included investments in securities and other obligations
issued by any company that guaranteed an effective annual rate of interest
through a specified period.
4. INCOME TAX STATUS
The company has received a determination letter from the Internal Revenue
Service, dated June 4, 1994, that the Hourly Plan qualifies as a tax deferred
savings plan under Sections 401(a) and 401(k) of the Code. The Plan has been
amended subsequent to the receipt of the latest determination letter. However,
the Plan's administrator and tax counsel believe that the Plan is designed and
currently being operated in compliance with the applicable requirements of the
Code.
5. TRANSACTIONS WITH PARTIES-IN-INTEREST
All administrative fees are paid by the participants in the Hourly Plan. Audit
and legal fees are paid by the company.
<PAGE>
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Hourly Paid Employees
Notes to Financial Statements
December 31, 1996 and 1995
6. UNITS OF PARTICIPATION
Total number of units and net asset value per unit during the period from
January 1, 1995 to December 31, 1996, by quarter, are as follows:
GLOBAL ALLOCATION ALLOCATION ALLOCATION
GROWTH GROWTH BALANCED CONSERVATIVE
---------------- --------------- --------------- ---------------
Units $ Unit Units $ Unit Units $ Unit Units $ Unit
01/01/95 48.635 9.22 34.590 8.32 11.011 8.24 14.385 8.12
03/31/95 84.573 9.23 47.696 8.42 26.817 8.26 22.107 8.17
06/30/95 91.968 9.25 54.681 8.5 36.336 8.41 23.352 8.2
09/30/95 122.957 9.5 68.632 9.11 55.394 8.8 29.470 8.41
12/31/95 151.584 9.9 80.194 10.00 72.577 9.63 29.715 9.22
03/31/96 115.061 10.58 51.375 10.52 59.709 9.99 19.667 9.32
06/30/96 147.799 10.95 67.076 11.01 72.131 10.36 20.331 9.46
09/30/96 167.564 11.11 78.838 11.41 80.959 10.71 21.925 9.69
12/31/96 216.844 10.82 106.550 11.23 102.596 10.49 29.464 9.58
CAPITAL MONEY EQUITY GOVERNMENT
APPRECIATION MARKET FUND OBLIGATIONS
--------------- --------------- --------------- ---------------
Units $ Unit Units $ Unit Units $ Unit Units $ Unit
01/01/95 1,290.853 11.52 3,228.868 1.00 1,347.789 12.72 216.978 12.19
03/31/95 1,365.577 12.83 4,286.385 1.00 1,312.927 10.49 220.870 13.34
06/30/95 1,336.338 10.6 4,666.584 1.00 1,389.280 12.9 225.631 13.3
09/30/95 1,408.207 10.89 4,917.421 1.00 1,438.141 13.07 222.589 13.25
12/31/95 1,548.233 15.25 4,876.371 1.00 1,539.275 16.19 235.299 13.19
03/31/96 969.930 16.19 6,456.405 1.00 1,114.522 17.05 169.630 12.79
06/30/96 1,061.344 16.81 6,268.397 1.00 1,169.993 17.46 172.589 12.61
09/30/96 1,145.709 17.55 6,553.174 1.00 1,208.239 17.87 168.490 12.63
12/31/96 1,303.300 16.12 7,090.710 1.00 1,341.891 18.02 170.548 12.83
<PAGE>
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Hourly Paid Employees
Schedule of Assets Held for Investment Purposes
December 31, 1996
Balance Held at Market
Name of Issuer and Title of Issue End of Year Cost ** Value
- -----------------------------------------------------------------------------
Capital Appreciation Fund
*Putnam Voyager Fund 1,307,061 shares $21,069,829
Equity Fund
*Putnam Fund for Growth
and Income 1,343,151 shares 24,203,575
Government Obligation Fund
*Putnam U.S. Government
Income Trust 170,547 shares 2,188,125
Money Market Fund
*Putnam Money Market Fund 7,090,991 shares 7,090,991
Global Growth Fund
*Putnam Global Growth Fund 216,844 shares 2,346,254
Asset Allocation Growth Portfolio
*Putnam Asset Allocation - Growth
Portfolio 107,047 shares 1,202,133
Asset Allocation Balanced Portfolio
*Putnam Asset Allocation - Balanced
Portfolio 102,595 shares 1,076,226
Asset Allocation Conservative
Portfolio
*Putnam Asset Allocation
Conservative Portfolio 33,092 shares 317,023
-----------
Total $59,494,156
===========
Company Stock Fund
*New York State Electric & Gas
Corporation common stock 1,409,247 shares $30,474,962
===========
Guaranteed Investment Contracts $909,182 $909,182
=======================
Loans to participants - interest
rates from 6.5% to 10.5% $3,271,689
===========
* Denotes a party-in-interest.
** Information pertaining to the historical cost was not available from the
Trustee.
<PAGE>
New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Hourly Paid Employees
Schedule of Reportable Transactions
Year ended December 31, 1996
Current Value
of Asset on
Purchase Selling Transaction Net Gain
Description of Assets Price Price Date (Loss)
- -------------------------------------------------------------------------------
Category (iii) - Series of transactions in excess of 5% of plan assets
Company Stock Fund
*New York State Electric
& Gas Corporation $8,369,137 $8,369,137
Common Stock $7,292,349 7,292,349 $(1,076,788)
There were no category (i), (ii), or (iv) reportable transactions during 1996.
* Denotes a party-in-interest.
<PAGE>
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 333-16201) pertaining to the New York
State Electric & Gas Corporation Tax Deferred Savings Plan for
Hourly Paid Employees of our report dated February 14, 1997, with
respect to the financial statements and schedules of the New York
State Electric & Gas Corporation Tax Deferred Savings Plan for
Hourly Paid Employees for the year ended December 31, 1996, which
report is included in this Annual Report on Form 11-K.
COOPERS & LYBRAND L.L.P.
New York, New York
March 5, 1997
<PAGE>
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 333-16201) pertaining to New York State
Electric & Gas Corporation Tax Deferred Savings Plan for Hourly
Paid Employees of our report dated April 17, 1996, with respect
to the financial statements of the New York State Electric & Gas
Corporation Tax Deferred Savings Plan for Hourly Paid Employees
for the year ended December 31, 1995, which report is included in
this Annual Report on Form 11-K.
Ernst & Young L.L.P.
Syracuse, New York
February 14, 1997
