UNITED STATES 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 (Fee Required)
For the fiscal year ended December 31, 1994
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (No Fee Required)
For the transition period from to
Commission file number 1-4315
ORANGE AND ROCKLAND UTILITIES, INC.
(Exact name of registrant as specified in its charter)
New York 13-1727729
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One Blue Hill Plaza, Pearl River, New York 10965
(Address of principal executive offices) (Zip Code)
(914) 352-6000
(Registrant's telephone number, including area code)
Common Stock, $5 Par Value -- New York Stock Exchange, Inc.
(Securities registered pursuant to Section 12(b) of the Act)
Preference Stock, No Par Value
(Securities registered pursuant to Section 12(g) of the Act)
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.
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
At February 28, 1995, the approximate aggregate market value of
the voting stock held by nonaffiliates of the registrant was
$434,547,731*
At February 28, 1995, the registrant had 13,632,870 shares of
Common Stock ($5 par value) outstanding.
(Continued)
<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Continued from first page)
ORANGE AND ROCKLAND UTILITIES, INC.
(Exact name of registrant as specified in its charter)
Documents incorporated by reference:
Annual Report to Shareholders for the year ended December 31, 1994
incorporated in Part I, Part II and Part IV to the extent described
therein.
The Company's definitive Proxy Statement in connection with the 1995
Annual Meeting of Common Shareholders incorporated in Part III to
the extent described therein.
* For purposes of this calculation, it is assumed that only directors
and officers of the registrant are affiliates of the registrant.
0064O.wp
<PAGE>
TABLE OF CONTENTS
Page
PART I
Item 1. Business
General Development of Business 1
Financial Information about Industry Segments 1
Narrative Description of Business: 1
Principal Business 1
Events Affecting the Company 2
Electric Operations 3
Gas Operations 9
Diversified Activities 11
Construction Program and Financing 13
Regulatory Matters 16
Utility Industry Risk Factors 19
Competition 20
Marketing 21
Environmental Matters 21
Research and Development 24
Franchises 24
Employee Relations 25
Item 2. Properties 26
Item 3. Legal Proceedings 28
Item 4. Submission of Matters to a Vote of Security Holders 37
Executive Officers of the Registrant 38
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters 39
Item 6. Selected Financial Data 39
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 39
Item 8. Financial Statements and Supplementary Data 40
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 40
PART III
Item 10. Directors and Executive Officers of the Registrant 40
Item 11. Executive Compensation 40
Item 12. Security Ownership of Certain Beneficial Owners
and Management 40
Item 13. Certain Relationships and Related Transactions 40
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K 41
Signatures 47
Report of Independent Public Accountants on Financial
Statement Schedules 49
Consent of Independent Public Accountants 49
-i-
<PAGE>
PART I
Item 1. Business
General Development of Business:
Orange and Rockland Utilities, Inc. (the "Company") is a New York
corporation, with its principal office at One Blue Hill Plaza, Pearl
River, New York 10965 (telephone number 914-352-6000), which was formed
originally under the name Rockland Light and Power Company on May 21,
1926 through the consolidation of a company having the latter name
(organized in 1899), Catskill Power Corporation and Orange County Public
Service Company, Inc. Its present name was adopted on February 28,
1958, when The Orange and Rockland Electric Company was consolidated
with Rockland Light and Power Company.
The Company has two wholly owned utility subsidiaries, Rockland
Electric Company ("RECO"), a New Jersey corporation, and Pike County
Light & Power Company ("Pike"), a Pennsylvania corporation. The Company
has three wholly owned non-utility subsidiaries, O&R Energy Development,
Inc. ("ORED"), a Delaware corporation, Clove Development Corporation
("Clove"), a New York corporation and O&R Development, Inc. ("ORD"), a
Delaware corporation. RECO has a wholly owned non-utility subsidiary,
Saddle River Holdings Corp. ("SRH"), a Delaware corporation. SRH has
two wholly owned non-utility subsidiaries, NORSTAR Holdings, Inc.
("NHI") (formerly O&R Energy, Inc.) and Atlantic Morris Broadcasting,
Inc., both Delaware corporations. NHI has two wholly owned non-utility
subsidiaries, Millbrook Holdings, Inc. and NORSTAR Management, Inc.
("NMI"), both Delaware corporations. NMI is the sole general partner of
a Delaware limited partnership, NORSTAR Energy Limited Partnership. The
businesses of the non-utility subsidiaries are described under the
subheading "Diversified Activities" in this Item 1.
Financial Information about Industry Segments:
Consolidated financial information regarding the Company's
principal business segments, Electric Operations, Gas Operations and
Diversified Activities is contained in Note 13 of the Notes to
Consolidated Financial Statements - "Segments of Business" on page 32
of the 1994 Annual Report to Shareholders, which material is
incorporated by reference in this Form 10-K Annual Report.
Narrative Description of Business:
Principal Business
The Company and its utility subsidiaries supply electricity and
gas to a territory covering approximately 1,350 square miles. The
eastern boundary of the Company's service territory extends along the
west bank of the Hudson River from a point in New Jersey six miles north
of the George Washington Bridge northerly for approximately 37 miles to
a point in New York a short distance north of the United States Military
Academy at West Point. From the Hudson River, the Company's territory
in New York State extends westward to the Delaware River, embracing all
of Rockland County, most of Orange County and a part of Sullivan County.
<PAGE>
In New Jersey, RECO supplies electricity to the northern parts of Bergen
and Passaic Counties and small areas in the northeastern and
northwestern parts of Sussex County. Pike supplies electricity and gas
to the northeastern corner of Pike County, Pennsylvania.
As of December 31, 1994, the Company and its utility subsidiaries
furnished electric service to approximately 260,000 customers in 96
communities with an estimated population of 666,000 and gas service to
approximately 111,000 customers in 57 communities with an estimated
population of 470,000. There have been no significant changes in either
the population of the Company's service territory or in the number of
customers served since December 31, 1993. At that time, electric
service was provided to approximately 257,000 customers in 96
communities with an estimated population of 656,000 and gas service was
provided to approximately 109,000 customers in 57 communities with an
estimated population of 463,000. At December 31, 1994 and 1993, 95% of
the Company's residential gas customers used gas as their major source
of space heating fuel. While the territory served is predominantly
residential, the Company and its utility subsidiaries also serve a
number of commercial and industrial customers in diversified lines of
business activities from which significant electric and gas revenues are
derived. No customer accounts for more than 10% of either gas or
electric sales. The business of the Company and its utility
subsidiaries is seasonal to the extent that sales of electricity are
higher during the summer, mainly due to air conditioning requirements,
and sales of gas are greater in the winter months, primarily as a result
of space heating requirements.
Events Affecting the Company
On August 16, 1993, the Rockland County, New York District
Attorney (the "District Attorney") charged a then Vice President of the
Company with grand larceny, commercial bribery and making illegal
political contributions and commenced a related investigation of the
Company. Two other former employees who had reported to the Vice
President were also charged with grand larceny.
The events which followed these actions include the formation of a
special committee of the Company's Board of Directors and the conduct of
an independent investigation under the supervision of that Committee,
investigations conducted by both the District Attorney and various
utility regulatory agencies, various legal actions brought both by and
against the Company, the refund of misappropriated funds to the
Company's customers and the effects on the Company's rate filings.
Details concerning these events, including the cost incurred for legal
counsel, accounting services, and other professional and consultative
services related to the investigations and their effect on the Company's
results of operations, are contained in the "Review of the Company's
Results of Operations and Financial Condition" under the captions
"Results of Operations", "Events Affecting the Company", "Rate
Activities" and "Other Income and Deductions and Interest Charges" and
in Note 12 of the Notes to Consolidated Financial Statements under the
caption "Legal Proceedings" beginning on pages 9 and 28, respectively,
of the 1994 Annual Report to Shareholders, which material is
incorporated by reference in this Form 10-K Annual Report. Reference is
also made to Item 3, "Legal Proceedings", of this Form 10-K Annual
Report.
<PAGE>
Electric Operations
Generating Capacity and Purchased Power. As described more fully
in Item 2 of this Form 10-K Annual Report under the subheading "Electric
Generating Facilities", the capacity of the Company's plants provides
the Company with a net generating capacity of 1,032 megawatts ("Mw") in
the winter and 1,020 Mw in the summer. Additionally, the Company
purchases capacity, as more fully described below, to satisfy its
reserve requirements, as well as any demand in excess of its installed
capacity. The electric energy which RECO and Pike distribute to their
customers is supplied by the Company. The maximum historical one-hour
demand for the Company and its utility subsidiaries occurred on July 8,
1993 and was 1,037 Mw. Additional statistics regarding electric
operations are contained under the caption "Operating Statistics-
Electric" on page 34 of the 1994 Annual Report to Shareholders, which
material is incorporated by reference in this Form 10-K Annual Report.
In addition to the energy produced at its generating facilities,
the Company, through various transmission interconnections, purchases
both capacity and energy from other utilities when needed to meet load
and reserve requirements and also when such power is available at a
price lower than the cost of production. The Company maintains
transmission interconnections with Central Hudson Gas and Electric
Corporation ("Central Hudson"), Public Service Electric and Gas Company
("PSE&G") and Consolidated Edison Company of New York, Inc. ("Con Ed").
Through these interconnections, and as a member of the New York Power
Pool ("NYPP"), the Company can exchange power directly with the above
utilities and, through the facilities of other members of the NYPP, the
Company can exchange power with all members of the NYPP and with
utilities in pools in neighboring states. In addition, members of the
NYPP are able to coordinate inter-utility transfers of bulk power in
order to achieve economy and efficiency, cooperate in long range
planning of generation and transmission facilities, coordinate inter-
utility operating and emergency procedures to assure reliable, adequate
and economic electric service throughout the state and provide for the
equitable sharing of the resulting benefits and costs. Through the NYPP
control center, the Company is able to purchase power in order to
optimize its generation-interchange mix, using the lowest cost energy
available to the Company in the interconnected system. By agreement
with the NYPP, the Company must maintain capacity reserves including
firm capacity purchases of not less than 18% of its peak load.
During 1994, the Company had agreements in place for both capacity
and energy purchases. Capacity purchases included an agreement with
PSE&G which provided between 75 Mw and 150 Mw of capacity, an agreement
with Pennsylvania Power & Light Company ("PP&L") which provided between
50 Mw and 125 Mw of capacity, an agreement with the New York Power
Authority (the "NYPA") for 25 Mw of year-round capacity from the
Blenheim-Gilboa pumped storage facility (the "Gilboa Facility") and an
agreement with Central Hudson for 50 Mw of capacity which expired at the
end of April 1994.
During 1994 the Company met approximately 32% of its overall power
requirements by aggressively pursuing economic power purchases. These
purchases, which were made pursuant to short-term purchase agreements
<PAGE>
and interchange agreements, resulted in lower costs to the Company's
customers. During 1994, the Company could have generated all of its
customers requirements more than 99% of the time. At the time of the
1994 peak demand, the Company's installed capacity could have satisfied
98% of its power requirements. The use of purchased power under these
circumstances reflects the Company's policy of supplementing it's
electric generation with purchased power not only when needed to meet
load requirements but also when such power is available at a cost lower
than the cost of production. Details regarding the power purchases
during 1994 are as follows:
1994 PURCHASED POWER
Purchased From Megawatt hours(Mwh)
Central Hudson Gas & Electric Corp. 67,485
Consolidated Edison Co. of N.Y. 18,250
Philadelphia Electric Co. 47,405
New York State Electric & Gas Corp. 222,559
General Public Utilities 87
New York Power Authority (1) 288,688
New York Power Pool 331,792
Niagara Mohawk Power Corp. 97,405
Public Service Electric & Gas Corp. 141,997
Pennsylvania Power & Light Company 96,671
Cogeneration and Small Power Producers 196,915
North American Energy Conservation 64,761
Total 1,574,015
=========
(1) The Company is party to an agreement with the NYPA regarding the
purchase of peaking power from the Gilboa Facility. Pursuant to
the agreement, the Company must replace the energy purchased
from the Gilboa Facility at a ratio of three-to-two. During
1994, the Company purchased 33,576 Mwh from the Gilboa Facility
and replaced 50,950 Mwh, for the net amount of (17,374) Mwh,
which is included in the amount shown above.
With regard to future purchases of capacity, contracts are in place
with the NYPA, PP&L and PSE&G. The NYPA agreement for firm purchases from
the Gilboa Facility, which provides for 25 Mw of year-round capacity, will
be in effect through April 2015. The agreement with PP&L will provide
capacity ranging between 10 Mw and 50 Mw through October 1995. In
addition, a firm purchased power agreement with PSE&G will provide between
75 Mw and 300 Mw of capacity during the base contract term which extends
through April 1998, with an additional 100 Mw available throughout the
base contract term at the option of the Company. The contract also
provides that at the option of the Company 400 Mw of additional capacity
will be available from May 1998 through October 2000. Regarding future
purchases of energy, the Company anticipates that agreements will continue
to be in effect which will enable it to take advantage of economic power
purchases on an as available, as-needed basis.
<PAGE>
Additional information regarding future power supply, particularly
the status of capacity purchase contracts with Independent Power Producers
and Qualifying Facilities, is contained under the caption "Future Energy
Supply and Demand" in this Item 1. Information regarding future payments
under capacity purchase contracts is contained in Note 12 of the Notes to
Consolidated Financial Statements under the caption "Power Purchase
Agreements" on page 29 of the 1994 Annual Report to Shareholders, which
material is incorporated by reference in this Form 10-K Annual Report.
Fuel Supply. The Company's 1,032 Mw winter generating capacity is
available from the following fuel sources:
Coal,
Oil Oil Gas
Plant* & Gas & Gas Hydro Turbine Total
(Megawatts)
Lovett Plant
Units 1, 2 & 3 102.0 102.0
Units 4 & 5 399.6 399.6
Hydro Plants
Swinging Bridge,
Mongaup, Rio and
Grahamsville 43.8 43.8
Gas Turbine Plants
Hillburn and
Shoemaker 86.0 86.0
Bowline Point Plant
Units 1 & 2 400.6 400.6
502.6 399.6 43.8 86.0 1,032.0
===== ===== ==== ==== =======
*For a description of the Company's generating plants, see "Electric
Generating Facilities" in Item 2 of this Form 10-K Annual Report.
The availability and cost of fuels and the Company's choice of fuel
in any particular circumstance are affected by a number of factors, the
majority of which are beyond the control of the Company. These factors
include the domestic and international fuel supply situation,
environmental regulations, conservation measures and the availability of
alternative fuels. The Company's principal generating plants use natural
gas, coal or oil as their primary fuels. The Company has, however, reduced
its dependence on oil through the use of coal as the primary fuel for the
Lovett Plant's two largest generating units, the burning of increased
volumes of natural gas in its boilers and the purchase of power from other
systems.
<PAGE>
Electricity available for sale is a mix of Company generation by
various fuel types, supplemented by purchased power when such power is
available at a price lower than the price of generation or is needed to
meet load requirements. Details for the years 1990 through 1994 are as
follows:
1990 1991 1992 1993 1994
Gas 27% 22% 21% 16% 23%
Coal 32 36 33 33 36
Oil 19 14 10 5 6
Hydro 4 3 13 4 3
Purchased Power 18 25 33 42 32
Total 100% 100% 100% 100% 100%
==== ==== ==== ==== ====
Gas - During 1994, the Company was able to use significant volumes of
natural gas for boiler fuel at both its Lovett Plant and the Bowline Point
Plant. It also expects to be able to use natural gas in the Lovett
Plant and the Bowline Point Plant during 1995, whenever such gas is more
economical than alternative fuels. In 1994, the Company used 2.8 billion
cubic feet ("Bcf") and 8.5 Bcf of gas, respectively, at the Lovett Plant
and the Bowline Point Plant. The annual average cost per thousand cubic
feet ("Mcf") of natural gas burned in the Company's generating plants
during each of the years ended December 31, 1990 through 1994 was $2.78,
$2.64, $2.82, $3.01 and $2.53, respectively. This is equivalent to $2.69,
$2.56, $2.74, $2.92 and $2.44, respectively, per million British Thermal
Unit ("MMBTU").
Coal - The low sulfur coal (1.0 lbs. SO2 per MMBTU) used in Lovett
Plant Units 4 and 5 is supplied to the Company primarily through a long
term contract with Massey Coal Sales, Inc. ("Massey"), a short-term
contract with Blue Crystal Coal Sales Co. ("Blue Crystal") and through
spot market purchases, which accounted for approximately 50% of the
Company's 1994 coal requirements. The Company has the right, under the
coal purchase contracts, to suspend the purchase of coal if alternative
fuel sources become less expensive. The coal is washed and, as such, is
low in ash (typically 7%) and high in BTU content (26 MMBTU's per ton).
The annual average cost per ton of coal, including delivery charges,
consumed at the Lovett Plant during each of the years ended December 31,
1990 through 1994 was $58.40, $56.57, $55.95, $55.25 and $53.15,
respectively. This is equivalent to $2.25, $2.18, $2.16, $2.14 and $2.07,
respectively, per MMBTU. During 1994 coal was the predominant fuel burned
at the Lovett Plant, and the Company expects it to be the predominant fuel
burned during 1995. Information regarding the Company's coal supply
contracts is contained in Note 12 of the Notes to Consolidated Financial
Statements under the caption "Coal Supply Contracts" on page 29 of the
1994 Annual Report to Shareholders which material is incorporated by
reference in this Form 10-K Annual Report.
Oil - The Company does not anticipate purchasing any significant
quantity of fuel oil for its Lovett Plant. Con Ed has undertaken the
supply of #6 fuel oil (0.37% maximum sulfur content by weight) to the
<PAGE>
Bowline Point Plant, which is supplied under a contract between Con Ed and
the Company. Pursuant to that contract, Con Ed has also undertaken to
provide a backup oil supply for the Company's Lovett Plant under certain
conditions. The Company believes that it will be able to secure
sufficient oil supplies to meet the total requirements of #6 fuel oil for
the calendar year 1995. The annual average cost per barrel of oil burned
in the Company's generating plants during each of the years ended
December 31, 1990 through 1994 was $23.73, $21.23, $20.43, $21.27 and
$19.99, respectively. This is equivalent to $3.81, $3.40, $3.26, $3.39
and $3.20, respectively, per MMBTU.
Hydro - Water for the operation of the Company's Mongaup River Hydro
Plants is controlled by the Company through the ownership of the necessary
land in fee or through easements. In the case of the Grahamsville Plant,
water is obtained under contract with the City of New York Board of Water
Supply. This contract, which expires in 2005, entitles the Company to 8.1
Bcf of free water each year. Water in excess of 8.1 Bcf, which amounted
to 8.8 Bcf during 1994, is billed at varying rates based on an average
cost of all fuels used in power generation.
Purchased Power - The Company's practice regarding purchased power is
to supplement the Company's electric generation by purchasing both
capacity and energy when needed to meet load and reserve requirements and
also when such power is available at a price lower than the cost of
production. Details regarding purchased power are contained under the
captions "Generating Capacity and Purchased Power" and "Future Energy
Supply and Demand" in this Item 1. In addition, information regarding the
cost of electric energy is contained under the caption "Electric Energy
Costs" in the "Review of the Company's Results of Operations and Financial
Condition" on page 11 in the 1994 Annual Report to Shareholders, which
material is incorporated by reference in this Form 10-K Annual Report.
Future Energy Supply and Demand. The Company continues to be
committed to meeting customer energy needs by providing reliable energy
service at the lowest prudent cost and in an environmentally sound manner.
Through its Integrated Resource Plan the Company has responded to the
changes that have occurred in the utility industry and has incorporated a
significant number of conservation and demand reduction alternatives as
well as purchased power into its energy strategy.
The Demand Side Management ("DSM") program involves efforts to
control electric peak demand and energy usage, and addresses the need to
improve plant utilization by making customer demand more complementary
over time to the available capacity. DSM programs are available to all
market segments. Through December 31, 1994, DSM efforts have reduced the
annual need for increased generating capacity and energy by 123.9 Mw and
193,864 Mwh, respectively, both through programs administered by the
Company and by RECO as well as through contracts with outside energy
service companies pursuant to the competitive bidding program. The New
York State Public Service Commission ("NYPSC") has consistently authorized
the recovery of DSM costs, and in New Jersey, RECO's DSM costs are
recoverable on a current basis. Additional information regarding the
recovery of DSM costs, including the Company's achievement of certain DSM
<PAGE>
related goals and their impact on the 1994 results of operations is
contained under the captions "Electric Operating Revenues and Sales" and
"Rate Activities" in the "Review of the Company's Results of Operations
and Financial Condition" on pages 10 and 14, respectively, of the 1994
Annual Report to Shareholders, which material is incorporated by reference
in this Form 10-K Annual Report.
The Company's Supply-Side Management program involves the acquisition
of future increments of capacity and energy as needed to meet anticipated
load and reserve requirements and, in particular, to reduce the cost of
electricity to the Company's customers. The firm capacity agreements
which are currently in place provide the Company with between 135 Mw and
375 Mw of capacity through 1998 with an additional 400 Mw of capacity
available at the option of the Company through the year 2000.
Regarding future purchases of energy, the Company will continue to
take an aggressive posture in securing economic increments of purchased
power, particularly through interchange transactions, short-term firm
contracts and spot purchases.
The status of the long-term power supply agreements between the
Company and certain independent power producers has been affected by the
abundance of economic power supply which has become available and by
general economic conditions. A summary of the status of these agreements
is as follows:
In 1990, the Company entered into a long-term power supply agreement
("Wallkill Agreement") with Wallkill Generating, L.P. ("Wallkill
Generating"). The Wallkill Agreement was approved by the New Jersey Board
of Regulatory Commissioners ("NJBRC"), now called the New Jersey Board of
Public Utilities ("NJBPU"), in October 1991, and in July 1991 the Federal
Energy Regulatory Commission ("FERC") approved the rates contained in the
Wallkill Agreement. Pursuant to the agreement, Wallkill Generating, a
limited partnership formed by PG&E and Bechtel Generating Company (now
U.S. Generating Company), contracted to construct and operate a gas-fired
combined cycle generating facility in the Town of Wallkill, N.Y. and sell
95 Mw of capacity and associated energy to the Company. The original
target date for commercial operation of this project as set forth in the
Wallkill Agreement was April 1994. Changing economic conditions, however,
have rendered the contract prices increasingly uneconomic. Therefore, on
November 25, 1994, the Company notified Wallkill Generating to stop work
on the proposed generating facility and to commence buyout negotiations.
These buyout negotiations are continuing.
In 1990, the Company also entered into a long-term power supply
agreement ("State Line Agreement") with State Line Power Associates
Limited Partnership ("State Line"). Under the terms of the State Line
Agreement, State Line contracted to construct and operate a gas-fired
combined cycle generating facility in the Borough of Ringwood, New Jersey
and sell 100 Mw of capacity and associated energy to the Company. In July
1992, the State Line Agreement was terminated by the Company for, among
others things, State Line's failure to make a required milestone payment
pursuant to specified contract terms. On August 3, 1992, State Line filed
<PAGE>
suit against the Company in the United States District Court for the
Southern District of New York claiming that the Company had wrongfully
terminated the State Line Agreement. On January 7, 1994, State Line and
the Company settled all litigation relating to the State Line Agreement.
In 1991, the Company entered into a long-term power supply agreement
("Harriman Energy Agreement") with Harriman Energy Partners, Ltd.
("Harriman Energy"), a limited partnership, the general partner of which
is Destec Holdings, Inc. (formerly PSE, Inc.). Pursuant to the terms of
the Harriman Energy Agreement, Harriman Energy contracted to construct and
operate a gas-fired combined cycle generating facility in Harriman,
New York and sell approximately 57 Mw of capacity and associated energy to
the Company. Due to changing economic conditions which rendered the
contract prices increasingly uneconomic, in November 1993 the Company
entered into negotiations to terminate the Harriman Energy Agreement. On
June 15, 1994, the parties reached agreement to terminate the Harriman
Energy Agreement through a buyout.
Information regarding the cost of terminating the State Line
Agreement and the Harriman Energy Agreement is contained in Note 1 of the
Notes to Consolidated Financial Statements under the caption "IPP
Settlement Agreements" and information regarding future payments under
capacity purchase contracts is contained in Note 12 of the Notes to
Consolidated Financial Statements under the caption "Power Purchase
Agreements" on pages 22 and 29, respectively of the 1994 Annual Report
to Shareholders, which material is incorporated by reference in this
Form 10-K Annual Report.
Gas Operations
The Company distributes purchased natural gas, supplemented at times
of peak load by gas produced in its propane air gas plants.
As of December 31, 1994, the gas distribution system included 1,697
miles of mains. The highest historical maximum daily gas sendout of
206,038 Mcf occurred on January 19, 1994. Additional statistics regarding
gas operations are contained under the caption "Operating Statistics -
Gas" on page 35 of the 1994 Annual Report to Shareholders, which material
is incorporated by reference in this Form 10-K Annual Report.
Supply, Transportation and Storage. The Company has firm, long-term
gas supply contracts with seven gas producers. Together these contracts
account for all of the Company's base load gas requirements and include a
contract with a Canadian producer which accounts for approximately 28% of
firm contracted supply and expires in the year 2002. Contracts for the
remaining 72% of the Company's required gas supply have been executed with
six domestic producers. Three of these contracts are scheduled to expire
between March 31 and October 31, 1995. The remainder have expiration
dates ranging between 1996 and 2010. All of the gas supply contracts
<PAGE>
contain options for renewal and certain of the agreements contain "re-
opener" provisions which allow the Company to modify price and operating
terms under certain conditions. This flexibility will ensure the
reliability of the Company's gas supply while allowing the Company to
enhance its supply portfolio as market opportunities arise.
In addition to its long-term contracted supply sources, the Company
purchases spot gas from producers primarily for use in electric
generation. During 1994, the Company made spot purchases of approximately
19.8 million Mcf of gas or 42% of the total gas supply.
In addition to purchased gas, the Company manufactures gas at its
propane air gas plants located in Middletown, Orangeburg and Suffern,
New York which have a combined capacity of 30,600 Mcf per day of natural
gas equivalent. This capacity, together with gas purchases under
contracts between the Company and its suppliers, is expected to provide
adequate peak day supplies to serve existing and projected new customers
through the year 1998. Additional increments of new supply beyond this
point are being negotiated.
In addition to the gas supply contracts, the Company has provided for
the transportation of gas through firm, long-term transportation
agreements with four major pipeline companies: Tennessee Gas Pipeline
Company ("Tennessee"), Columbia Gas Transmission Corporation ("Columbia"),
Algonquin Gas Transmission Corporation ("Algonquin") and Texas Eastern
Transmission Corporation ("Texas Eastern"). The earliest expiration date
of any of these contracts is in the year 1996. The Company also has
entered into interruptible transportation agreements with the same
pipeline companies. All transportation contracts contain options for
renewal.
With regard to gas storage, the Company also has long-term gas
storage contract arrangements with Tennessee, Columbia, Texas Eastern and
National Fuel Gas Supply Corporation ("National Fuel"). The Tennessee,
Columbia and Texas Eastern agreements include a provision for the
transportation of the gas held in storage by these companies, and separate
agreements with Tennessee and Columbia provide for firm transportation
services for gas held in storage by National Fuel. The earliest
expiration date of any of these storage contracts is 1996 and all storage
contracts contain options for renewal. During 1993 the Company elected to
secure capacity in an innovative gas storage project operated by Avoca
Natural Gas Storage. The storage facility, which will be available in
late 1997, uses leached-out caverns in underground salt beds to create a
storage reservoir and is designed for fast withdrawal and refill capacity
which will enhance the Company's ability to meet incremental peak day gas
requirements.
Columbia, which provides the Company with both transportation and gas
storage services, filed for protection under Chapter 11 of the bankruptcy
code during 1991. This action has not affected Columbia's ability to
provide services under existing contracts while bankruptcy proceedings are
in progress.
<PAGE>
As noted earlier, the Company's maximum daily sendout of gas occurred
during January 1994 and amounted to 206,038 Mcf. This compares to the
maximum daily gas delivery capacity of the Company's system of 225,839 Mcf
which is available from the following sources: direct purchases - 119,567
Mcf; storage withdrawals - 75,672 Mcf; and Company manufactured gas -
30,600 Mcf.
Additional information regarding gas supply and gas storage contracts
is contained in Note 12 of the Notes to Consolidated Financial Statements
under the caption "Gas Supply and Storage Contracts" on page 28 of the
1994 Annual Report to Shareholders, which material is incorporated by
reference in this Form 10-K Annual Report.
Transportation for Others. The Company, through the provisions of
FERC Order No. 436 concerning the transportation of natural gas, provides
gas transportation services for end users in the Company's service
territory who elect to obtain their own direct gas supplies. During 1994,
approximately 5.6 million Mcf of gas were transported for such end users.
Take-or-Pay Surcharge Costs and FERC Order No. 636 Transition Costs.
As a result of a 1987 FERC order, as well as other legal and regulatory
actions since that time regarding the pass-through of certain "take-or-
pay" costs by gas suppliers, the Company has deferred approximately $2.8
million of gas surcharges through December 31, 1994.
In addition, certain costs incurred by the gas pipeline companies in
complying with FERC Order No. 636 have been approved by the FERC for
allocation to distribution companies including the Company. It is
currently estimated that the Company's obligation related to Order No. 636
transition costs will amount to $24.6 million. It is anticipated that
transition costs incurred by the Company will be recoverable in gas rates
to the extent such costs are deemed by the NYPSC to have been prudently
incurred.
Information regarding take-or-pay charges and FERC Order No. 636
transition costs is contained under the caption "Gas Energy Costs" in the
"Review of the Company's Results of Operations and Financial Condition",
in Note 1 of the Notes to the Consolidated Financial Statements under the
caption "Rate Regulation" and in Note 12 of the Notes to Consolidated
Financial Statements under the caption "Gas Supply and Storage Contracts"
on pages 12, 21 and 28, respectively, of the 1994 Annual Report to
Shareholders, which material is incorporated by reference in this
Form 10-K Annual Report. Reference is also made to Item 3, "Legal
Proceedings" of this Form 10-K Annual Report.
Diversified Activities
Both the Company and RECO have certain non-utility subsidiaries which
engage in the following diversified, non-regulated business activities:
gas marketing, real estate development and oil and gas production. The
Company's Consolidated Financial Statements, which are incorporated in
this Form 10-K Annual Report by reference to the Company's 1994 Annual
Report to Shareholders, include the results of operations of all
diversified activities. In addition, the diversified activities are
considered to be a reportable business segment, due to the fact that the
<PAGE>
gross operating revenues of the non-regulated business activities, which
are primarily attributable to the gas marketing activities, account for
more than 10 percent of the Company's total consolidated gross revenue.
The nature of the gas marketing business is such, however, that the net
earnings realized from this activity, and from all non-regulated
activities combined, are not considered to be material. In addition,
neither the assets of the non-regulated businesses nor the continued
operation of the non-regulated business lines are material to the
operations of the Company. For these reasons, the disclosure related to
the Company's diversified activities, as prescribed by Regulation S-K,
has, with few exceptions, been omitted from other sections of this Form
10-K Annual Report.
Capital contributions to the non-utility subsidiaries by the Company
and RECO are borne by the shareholders. Any losses, profits, or tax
savings from investments in non-utility subsidiaries accrue to the
shareholders and are not included in the cost of service for ratemaking
purposes. A description of the non-utility subsidiaries of the Company
and RECO follows.
Saddle River Holdings Corp. ("SRH"). SRH, a wholly owned subsidiary
of RECO, was established for the purpose of investing in non-utility
business ventures and, through subsidiaries, is currently engaged in
natural gas marketing and radio broadcasting. During 1994, gas marketing
activities were conducted through a subsidiary, O&R Energy, Inc., which
provided natural gas to industrial, commercial and institutional end
users, gas distribution companies, gas marketing companies and electric
generating facilities in 38 states, the District of Columbia and Canada.
Effective February 28, 1995, O&R Energy, Inc.'s (now NORSTAR Holdings,
Inc. ("NHI")) gas marketing activities were transferred to NORSTAR Energy
Limited Partnership ("NORSTAR Partnership"), a Delaware limited
partnership of which a subsidiary of NHI, NORSTAR Management, Inc., a
Delaware corporation, is the general partner and Shell NORSTAR Inc. is the
limited partner. Additional information regarding the NORSTAR partnership
is contained in the "Review of the Company's Results of Operations and
Financial Condition" under the caption "Diversified Activities" on page 12
of the 1994 Annual Report to Shareholders, which information is
incorporated by reference in this Form 10-K Annual Report.
A subsidiary of NHI, Millbrook Holdings, Inc., holds approximately
twelve acres of non-utility real estate in Morris County, New Jersey.
Broadcasting activities are conducted through Atlantic Morris
Broadcasting, Inc., a subsidiary of SRH which owns radio stations WKTU
(FM) in Ocean City, New Jersey, WABT (FM) in Dundee, Illinois, WALL (AM)
and WKOJ (FM) in Middletown, New York and WCSO (FM) and WLPZ (AM) in
Portland, Maine. During September 1994, the Company adopted a formal plan
to sell the broadcasting properties. Additional information regarding the
sale, which is expected to be completed during the second quarter of 1995,
is contained in the "Review of the Company's Results of Operations and
Financial Condition" under the caption "Diversified Activities", and in
Note 1 of the Notes to Consolidated Financial Statements under the caption
"Sale of Broadcast Properties" on pages 12 and 23 of the 1994 Annual
Report to Shareholders, which information is incorporated by reference in
this Form 10-K Annual Report.
<PAGE>
O&R Development, Inc. ("ORD"). ORD, a wholly owned subsidiary of
the Company, was established to promote industrial and corporate
development within the Company's service territory by providing improved
sites and buildings. ORD's activities are aimed at attracting new
business and industry to the Company's service territory, which would
spread fixed costs for electricity and gas over a wider customer base.
ORD owns the Interchange Commerce Center ("ICC Project"), a 300 acre
tract of land in Orange County, New York. The ICC Project has
governmental approvals for the development of 2.7 million square feet of
light industrial, office, warehouse and retail space. Approximately 2,000
lineal feet of street and utilities have been installed, and two buildings
totaling over 200,000 square feet have been completed and fully leased.
During October 1994, ORD sold a twelve acre parcel of land to
Metroplex Distributors which has begun construction of a 145,000 sq. ft.
warehouse and bakery on the site. In addition, ORD has entered into a
contract of sale with K-Mart Corporation for the sale of sixty eight acres
of land.
Clove Development Corporation ("Clove"). Clove, a wholly owned
subsidiary of the Company, holds approximately 5,500 acres of real estate,
located primarily in the Mongaup Valley region of Sullivan County, New
York. Historically, Clove's revenues have been derived primarily from the
sale of timber and sand, property rentals and periodic sales of land.
Certain portions of Clove's property lend themselves to recreational
development. Two small subdivisions have been developed and substantially
sold off. A third development, Lakeside Forest at Swinging Bridge, is
actively being marketed, with eight lots having been sold through 1994.
O&R Energy Development, Inc. ("ORED"). ORED, a wholly owned
subsidiary of the Company, is engaged in oil and gas production.
Production activities are carried on through ownership interests in
producing wells in Texas, Mississippi, Ohio and Pennsylvania. At
December 31, 1994, ORED's net investment in producing properties was
$390,000.
Additional information regarding the non-utility subsidiaries of the
Company and of RECO is contained in the "Review of the Company's Results
of Operations and Financial Condition" under the caption "Diversified
Activities", and in Note 1 of the Notes to Consolidated Financial
Statements under the caption "Principles of Consolidation" and Note 13 -
"Segments of Business", on pages 12, 21 and 32 respectively, of the 1994
Annual Report to Shareholders, which information is incorporated by
reference in this Form 10-K Annual Report.
Construction Program and Financing
Construction Program. The construction expenditures, excluding
allowance for funds used during construction ("AFDC"), of the Company and
<PAGE>
its utility subsidiaries for the period 1995 through 1999 are presently
estimated at approximately $229.4 million, as set forth in the table
below. The Company's construction program is under continuous review and
the estimated construction expenditures are, therefore, subject to
periodic revision to reflect, among other things, changes in energy
demands, economic conditions, environmental regulations, construction
delays, the level of internally generated funds and other modifications to
the construction program.
Forecasted Construction Expenditures (000's)
1995 1996 1997 1998 1999
Electric Production $22,900 $13,400 $ 8,200 $11,900 $10,500
Electric Transmission
and Substation 5,000 1,700 1,300 2,100 1,600
Electric Distribution 20,600 20,600 16,300 15,400 16,400
Gas Plant 10,800 10,300 8,200 7,900 8,200
General Plant 2,200 1,900 6,000 2,700 3,300
Total Construction $61,500 $47,900 $40,000 $40,000 $40,000
The Company's forecasted construction expenditures for the five year
period 1995 through 1999 consist primarily of routine production,
transmission and distribution projects for capital replacements or system
betterments and do not include any additions to generating capacity. The
1995 forecast does, however, contain forecasted environmental protection
expenditures of $13.5 million which will be required in order to comply
with regulations regarding reductions in nitrogen oxide emissions
resulting from the Clean Air Act Amendments of 1990.
Information regarding the Company's construction program is contained
under the caption "Liquidity and Capital Resources" in the "Review of the
Company's Results of Operations and Financial Condition" and under the
caption "Construction Program" in Note 12 of the Notes to Consolidated
Financial Statements on pages 13 and 28, respectively, of the 1994 Annual
Report to Shareholders, which material is incorporated by reference in
this Form 10-K Annual Report.
Financing. The Company has historically used short-term borrowings
in the form of commercial paper to finance construction expenditures when
such expenditures exceeded internally generated funds and to finance
short-term working capital requirements. Short-term borrowings undertaken
for construction expenditures are periodically repaid with internally
generated funds and the proceeds of long-term debt and equity offerings.
At December 31, 1994, the Company and its utility subsidiaries had
unsecured bank lines of credit totaling $59 million. Commercial paper
borrowings, which are supported by such credit lines, amounted to $29.4
million at year end. Additional information regarding the Company's
short-term debt position is contained under the caption "Liquidity and
Capital Resources" in the "Review of the Company's Results of Operations
and Financial Condition" and in Note 8 of the Notes to Consolidated
Financial Statements - "Cash and Short-Term Debt" on pages 13 and 25,
respectively, of the 1994 Annual Report to Shareholders, which material is
incorporated by reference in this Form 10-K Annual Report.
<PAGE>
The external financing activities of the Company and its utility
subsidiaries during 1994 were limited to refinancing of certain pollution
control revenue bonds and the issuance of approximately $3.9 million of
common stock under the Company's Dividend Reinvestment and Stock Purchase
Plan ("DRP") and Employee Stock Purchase and Dividend Reinvestment Plan
("ESPP"). Information regarding these items, as well as a description of
the interest rate swap agreement which become effective during 1994 in
connection with the pollution control revenue bond refinancing, is
contained under the caption "Liquidity and Capital Resources" in the
"Review of the Company's Results of Operations and Financial Condition"
and in Note 7 of the Notes to Consolidated Financial Statements - "Long-
Term Debt" on pages 13 and 24, respectively, of the 1994 Annual Report
to Shareholders, which material is incorporated by reference in this
Form 10-K Annual Report.
The Company currently has no plans for the issuance of additional
debt or equity securities and it is expected that capital requirements
will be met primarily with funds from operations, supplemented with short
term debt as required. However, the refinancing of the 9% Pollution
Control Revenue Bonds, 1985 Series, which will become subject to call on
August 1, 1995 is being evaluated. In addition, the Company has certain
series of debt which will mature during 1997 and which may be refinanced
at maturity.
The non-utility subsidiaries of the Company and RECO also maintain
certain lines of credit and undertake long and short-term borrowings or
make investments from time to time. The non-utility long-term notes
outstanding are borrowings made pursuant to several loan arrangements.
At December 31, 1994, Atlantic Morris Broadcasting, Inc., a subsidiary of
SRH had debt outstanding aggregating $267,000, the proceeds of which were
used to make investments in broadcasting properties, and ORD had an
intermediate term mortgage outstanding which amounted to $5.3 million.
O&R Energy, Inc. (now NHI) had an available line of credit and standby
letters of credit which together amounted to $15 million under which there
were no borrowings at December 31, 1994. As of March 1, 1995, the
available line of credit and standby letters of credit for O&R Energy,
Inc. (now NHI) were terminated and all amounts owing thereunder were paid
in full. In addition, on March 1, 1995, NORSTAR Partnership received an
available line of credit of up to $25 million. Non-utility temporary cash
investments amounted to $1.8 million at December 31, 1994.
For a description of the non-utility subsidiaries of the Company and
of RECO, see "Diversified Activities" in Item 1 of this Form 10-K Annual
Report.
Information regarding certain financial statistics of the Company is
contained under the caption "Financial Statistics" on page 36 of the 1994
Annual Report to Shareholders, which material is incorporated by reference
in this Form 10-K Annual Report.
<PAGE>
Credit Ratings. The current ratings of the Company's principal
securities and its commercial paper are as follows:
Duff and
Phelps
Moody's Standard Credit Fitch
Investors & Poor's Rating Investors
Service,Inc. Corporation Company Service,Inc.
First Mortgage Bonds A3 A- A+ A-
Unsecured Debt Baa1 A- A A-
Preferred Stock baa- BBB+ A- A-
Commercial Paper P-2 A-2 D-1 F-2
The Company's credit ratings are not fixed, but rather are subject to
periodic revision or withdrawal by the particular rating agency, and each
rating should be evaluated independently of any other rating. The ratings
assigned to the Company's securities by the rating agencies are not a
recommendation to buy, sell or hold the Company's securities, but rather
are assessments of the respective credit-worthiness of the Company's
various securities by the rating agencies. The Company's bonds have an
upper medium grade credit rating, its preferred stock has a lower medium
grade credit rating and its commercial paper has an upper medium grade
credit rating. Information regarding changes in the Company's credit
ratings during 1994 is contained under the caption "Liquidity and Capital
Resources" in the "Review of the Company's Results of Operations and
Financial Condition" on page 13 of the 1994 Annual Report to Shareholders,
which material is incorporated by reference in this Form 10-K Annual
Report.
Regulatory Matters
A description of the general character of rate regulation and its
effect on the financial statements of the Company and its utility
subsidiaries, including a disclosure of the Company's regulatory assets is
contained in Note 1 of Notes to Consolidated Financial Statements under
the caption "Rate Regulation" on page 21 of the 1994 Annual Report to
Shareholders, which information is incorporated by reference in this Form
10-K Annual Report.
State Regulation. The Company and its utility subsidiaries are
subject to the jurisdiction of state commissions in their respective
states of incorporation. The state commissions have the authority to
regulate, among other things, rates, services, the issuance of securities
and accounting and depreciation procedures. The Company is subject to the
jurisdiction of the NYPSC, which covers approximately 77% of consolidated
energy sales. RECO is subject to the jurisdiction of the NJBPU, which
covers approximately 21% of consolidated energy sales. Pike is subject to
the jurisdiction of the Pennsylvania Public Utility Commission (the
"PAPUC") which covers approximately 1% of consolidated energy sales.
Sales for resale, which are subject to regulation by the FERC, account for
the remaining 1% of consolidated energy sales.
Federal Regulation. The Company, pursuant to an order of the
Securities and Exchange Commission, has been exempted from all of the
provisions of the Public Utility Holding Company Act of 1935, except
Section 9(a)(2) thereof relating to the acquisition of securities of other
public utility companies.<PAGE>
The Company and its utility subsidiaries are subject to the
jurisdiction of the FERC as "public utilities". This regulation
primarily relates to sales and exchanges of electricity for resale,
certain transportation, sales and exchanges of natural gas under the
Natural Gas Act, Company sales to its utility subsidiaries and certain
other matters including accounting, recordkeeping and reporting.
Other Regulation. The Company and its utility subsidiaries are also
subject to regulation by various other Federal, state, county and local
agencies under numerous regulations dealing with, among other things,
environmental matters, energy conservation, long-range planning, fuel use,
plant siting and gas pricing.
Current Rate Activities. Information regarding the current rate
filings of the Company and its utility subsidiaries, including the impact
which the recent events affecting the Company had on the rate proceedings
of the Company and its utility subsidiaries, is contained under the
captions "Events Affecting the Company" and "Rate Activities" in the
"Review of the Company's Results of Operations and Financial Condition" on
pages 9 and 14, respectively of the 1994 Annual Report to Shareholders,
which information is incorporated by reference in this Form 10-K Annual
Report, as well as in Item 3, "Legal Proceedings" of this Form 10-K Annual
Report. Information regarding NYPSC proceedings dealing with certain
"take-or-pay" gas contract costs is also contained under Item 3, "Legal
Proceedings" of this Form 10-K Annual Report, and in the 1994 Annual
Report to Shareholders in the "Review of the Company's Results of
Operations and Financial Condition" under the caption "Gas Energy Costs"
beginning on page 12 and in Note 12 of the Notes to Consolidated Financial
Statements under the caption "Gas Supply and Storage Contracts" on page
28, which information is incorporated by reference in this Form 10-K
Annual Report.
<PAGE>
Rate Relief. During the five year period ending December 31, 1994,
the Company and its utility subsidiaries have sought rate relief to cover
the impact of increased costs. The amounts of rate relief approved by the
NYPSC, NJBPU and PAPUC are set forth in the following table.
Historical Rate Relief
1990 - 1994
Annual Amount Overall Rate Return on
Class of ($000's) of Return Equity
Service Effective Date Requested Granted Granted (%) Granted (%)
Electric - N.Y. 01/01/90 (a) 6,800 - -
Gas - Pa. 06/16/90 100 55 (b) (b)
Electric - Pa. 10/01/90 210 105 (b) (b)
Gas - N.Y. 12/01/90 (c) 2,500 (c) (c)
Electric - N.Y. 01/01/91 22,483 10,450 11.45(d) 9.87(d)
Gas - N.Y. 12/29/91 3,570 554 9.42 10.3
Electric - N.J. 01/24/92 12,863 5,100 10.17 12.0
Electric - N.Y. 05/01/92 (e) 7,417 (e) (e)
Gas - N.Y. 12/15/92 7,962 3,776 10.04(f) 11.65(f)
Electric - N.J. 01/01/93 (g) 1,685 - -
Electric - N.Y. 05/08/93 (h) 11,308 - -
Electric - Pa. 06/11/93 498 270 (i) (i)
Gas - Pa. 06/25/93 36 12 (i) (i)
Electric - N.Y. 07/01/94 (j) (6,028) (k) (k)
Gas - N.Y. 11/04/94 (l) (l) (l) (l)
(a) Recovery of DSM costs pursuant to a cost recovery mechanism, Least
Cost Annual Power Supply ("LCAPS"), as approved by the NYPSC.
Beginning in January 1991, DSM cost recovery is accomplished through
the RDM procedures as approved by the NYPSC in Case 89-E-175.
(b) No redetermination of the rate of return on common equity was made
under a stipulated agreement. The implied return on common equity is
12.50%, and the implied overall rate of return is 10.33%.
(c) A third stage filing made pursuant to the NYPSC Order in the Company's
1988 gas base rate case provided for the recovery of wages, employee
welfare expenses, property taxes, inflation on non-fuel operation and
maintenance expenses and gas rate base additions.
(d) The Company was provided with an opportunity to earn a return on
common equity of 12.51%, and an overall rate of return of 10.32%,
through the achievement of incentives related to certain DSM and
customer service goals. For 1993, the value of the incentive related
to DSM goals increased the total opportunity to earn a return on
common equity to 12.61%. However, effective January 1994, the DSM
incentive was reduced and the customer service incentive was
eliminated.
<PAGE>
(e) The first post rate year filing made in accordance with the NYPSC
Order in the Company's 1989 electric base rate case provided for the
recovery of inflation on non-fuel operation and maintenance expenses,
rate base additions and cost of capital. In addition, the Company was
permitted to recover a net under collection resulting from the
reconciliation of revenue and expenses as provided in the 1989 Order.
(f) Under a multi-year gas rate agreement (1993-1996), the Company was
provided with an opportunity to earn a return on common equity of
12.15% through the achievement of incentives related to its main
replacement program, gas efficiency programs and gas marketing
programs.
(g) Rate increase as ordered by the NJBPU to reflect the effect of revised
legislation regarding gross receipts and franchise taxes. Rate
recovery with interest is permitted over a ten year period.
(h) The second post rate year filing made in accordance with the NYPSC
Order in the Company's 1989 electric base rate case provided for the
recovery of inflation on non-fuel operation and maintenance expenses,
rate base additions and cost of capital. In addition, the Company was
permitted to recover a net under collection resulting from the
reconciliation of revenue and expenses as provided in the 1989 Order.
(i) No redetermination of the rate of return on common equity was made
under a stipulated agreement. The implied return on common equity is
12.00%, and the implied overall rate of return is 9.98%.
(j) The third post rate year filing made in accordance with the NYPSC
Order in the Company's 1989 electric base rate case provided for the
recovery of an under collection resulting from the recalculation of
revenue and expenses. The change in rates was scheduled to become
effective on May 1, 1994. However, due to the investigation of
misappropriated funds, the NYPSC postponed the adjustment until July
1, 1994.
(k) By means of its Order dated June 10, 1994, the NYPSC, among
other things, continued the Revenue Decoupling Mechanism
("RDM") and reduced the return on equity threshold for
measuring excess earnings from 12.0% to 10.6%.
(l) On November 4, 1994, the NYPSC issued an order terminating the multi-
year gas rate agreement. The order denied the Company the opportunity
for rate adjustments in the third and fourth years (1995 and 1996) of
the agreement. On February 7, 1995, the Accounting and Finance
Division of the NYPSC issued an interpretation of the November 4, 1994
termination order which stated that the gas incentive mechanism
related to the attainment of certain goals are no longer available.
The Company will not contest this interpretation.
Utility Industry Risk Factors
The electric and gas utility industry is exposed to risks relating
to, among other things, increases in fuel costs, numerous regulatory and
environmental restrictions, delays in obtaining adequate rate relief,
<PAGE>
increases in the costs of construction and construction delays, the
effects of energy conservation, the effect of weather-related sales and
revenue fluctuations and meeting the growth of energy sales.
The Company and its utility subsidiaries are, to some extent,
experiencing all of these challenges. However, the impact on the Company
and its utility subsidiaries has been less than for the utility industry
in general, principally due to the Company's relatively low construction
expenditures, low external financing requirements, and, in particular, due
to rate procedures in effect for the Company's New York electric and gas
operations. Under an electric RDM rate mechanism, the cost of
conservation programs is recoverable on a current basis and, because of
the decoupling of sales volume fluctuations from revenues, any decrease in
earnings which would otherwise result from customer conservation is also
recoverable. This decoupling of sales level fluctuations from revenue,
although reconciled in subsequent periods, also mitigates the risk of loss
of earnings due to abnormal weather conditions. In addition, the NYPSC
has approved certain incentives based on a percent of net resource savings
attained under the Company's DSM programs. Capacity costs associated with
purchased power are recoverable under the RDM. Pursuant to an Order of
the NYPSC dated June 10, 1994, the RDM has been extended. Information
regarding such June 10, 1994 Order and its effect is contained in Item 3,
"Legal Proceedings" of this Form 10-K Annual Report.
With regard to future power supply, the Company will continue to
utilize competitive bidding to mitigate the risks associated with the
Company's purchase of both electric energy and capacity, particularly with
regard to prudency determinations and cost recovery. Additional
information concerning the DSM program and the RDM rate procedure is
contained under the captions "Electric Operating Revenues and Sales", "Gas
Operating Revenues and Sales" and "Rate Activities" in the "Review of the
Company's Results of Operations and Financial Condition" on pages 10, 11
and 14, respectively, of the 1994 Annual Report to Shareholders, which
material is incorporated by reference in this Form 10-K Annual Report.
Reference is also made to the caption "Future Energy Supply and Demand" in
this Item 1.
The problems associated with nuclear energy have not affected the
Company as it has no operating nuclear plants nor any under construction,
and has no plans for future participation in nuclear projects. For
further information on the recovery by the Company of its investment in
the cancelled Sterling Nuclear Project, see Note 3 of the Notes to
Consolidated Financial Statements - "Sterling Nuclear Project" on page 23
of the 1994 Annual Report to Shareholders, which information is
incorporated by reference in this Form 10-K Annual Report.
Competition
There are competitive factors present in the electric and gas
industry which affect utility companies in varying degrees. Among these
are the use by interruptible or dual-fuel customers of lower priced
alternative fuels; the establishment of municipal distribution agencies;
the ability of gas producers to sell gas directly to end users, usually
through an independent gas marketer; the presence of cogenerating systems,
small power producers and independent power producers; and the increasing
interest in, and research on, the development of energy sources other than
those now in use.
<PAGE>
In recent years, changing laws and governmental regulation, combined
with a growing interest in self-generation and an increase in nonregulated
energy suppliers has served to intensify the level of competition experi-
enced by regulated utilities. The National Energy Policy Act of 1992
("Energy Policy Act") is expected to bring major changes to the electric
utility industry, including increased competition from a new category of
wholesale electric generators which are exempt from the Public Utility
Holding Company Act of 1935. The Energy Policy Act also empowers the FERC
to require utilities, under certain circumstances, to provide open access
to electric wholesalers for use of the utility's transmission systems.
With regard to the natural gas industry, FERC Order No. 636 was designed
to increase competition by allowing more flexible utilization of inter-
state pipeline capacity by local distribution companies and end-users.
Additional information regarding competition in the utility industry
and the Company's strategy for meeting the challenges of increased
competition is contained in the "Review of the Company's Results of
Operation and Financial Condition" under the caption "Competition" on
page 16 of the 1994 Annual Report to Shareholders, which information is
incorporated by reference in this Form 10-K Annual Report.
Marketing
In response to increasing competition in the utility industry, the
Company has enhanced its marketing activities, and is developing a market
strategy that will be responsive to customer needs. A major program was
initiated to identify and address commercial and industrial customers
needs, recognizing these customers may have multiple energy supply
choices. The Company is also working with state regulators to promote
flexible ratemaking.
The Company continues to promote the efficient use of energy by
residential, commercial and industrial customers. Existing programs being
marketed include all state approved DSM programs.
Environmental Matters
The Company is subject to regulation by Federal, state, county and,
to some extent, local authorities with respect to the environmental
effects of its operations, including regulations relating to air and water
quality, aesthetics, levels of noise, hazardous wastes, toxic substances,
protection of vegetation and wildlife and limitations on land use. In
connection with such regulation, various permits are required with respect
to the Company's facilities. Generally, the principal environmental areas
and requirements to which the Company is subject are as follows:
Water Quality. The Company is required to comply with Federal and
state water quality statutes and regulations, including the Federal Clean
Water Act ("Clean Water Act"). The Clean Water Act requires that Company
generating stations be in compliance with state issued State Pollutant
Discharge Elimination System Permits ("SPDES permits"), which prescribe
applicable conditions to protect water quality. Effective July 1, 1994,
the State of New York Department of Environmental Conservation (the
"NYDEC") issued a new SPDES permit for the Company's Lovett Coal Ash
Management Facility. The Company also has a SPDES permit, effective
October 1, 1991 for its Lovett generating station. Additional information
concerning the Lovett SPDES permit is contained in Item 3, "Legal
Proceedings" of this Form 10-K Annual Report.
The Bowline Point generating station currently operates under a SPDES
permit which expired on October 1, 1992. This permit remains in effect
since a permit renewal application was filed on April 3, 1992, which was
within the statutory deadline for renewal application. The Company is now
proceeding with the State Environmental Quality Review Act ("SEQUA")
process as part of the permit renewal procedure. The SEQUA process, and
the resulting delay in issuance of a new permit to the Company, has had no
practical impact on the operation of the Bowline Point generating station.
The Company entered into a settlement with the United States
Environmental Protection Agency (the "EPA") and others that relieved the
Company for at least 10 years from a regulatory agency requirement that,
in effect, would have required that cooling towers be installed at the
Bowline Point generating station. In return, the Company agreed to
certain plant modifications, operating restrictions and other measures.
This settlement expired in May 1991. On May 15, 1991, the Company and
others entered into an Interim Agreement with the NYDEC to continue
specific operating conditions and other measures for a period from May 15,
1991 to September 30, 1992. Several intervenors to the original
settlement filed a civil action challenging the Interim Agreement's
legality. On March 23, 1992, the parties to the Interim Agreement and
intervenors signed a Consent Order terminating litigation and agreeing to
certain operating limitations and biological monitoring requirements. The
Consent Order was due to expire on September 1, 1993. On August 5, 1993,
the parties executed the First Amended Consent Order which extended the
agreement until September 1, 1994. On September 1, 1994, the parties
executed a Second Amended Consent Order which extends the agreement until
September 1, 1995.
Air Quality. Under the Federal Clean Air Act, the EPA has
promulgated national primary and secondary air quality standards for
certain pollutants, including sulfur oxides, particulate matter and
nitrogen oxides. The NYDEC has adopted, and the EPA has approved, the
New York State Implementation Plan ("SIP") for the attainment, maintenance
and enforcement of these standards. In order to comply with the SIP, the
Company burns #6 fuel oil at its Lovett and Bowline Point generating
stations with a 0.37% maximum sulfur content by weight.
Pursuant to the SIP, the Company is governed by the following
limitations when it is burning coal at Lovett Units 4 and 5: if one unit
is burning, the Company may emit sulfur dioxide at a rate not to exceed
1.5 lb/MMBTU, and if two units are burning, the Company may emit sulfur
dioxide at a rate not to exceed 1.0 lb/MMBTU per unit.
The NYDEC has requested EPA approval of revisions to the SIP to meet
ozone attainment standards and to provide a mechanism for Title V
emissions fee billing as defined under the Clear Air Act. Beginning with
calendar year 1994, the owners of Title V sources in New York State, which
sources include the Company's Lovett Plant and Bowline Point Plant, are
required to pay an emission fee based upon actual air emissions reported
to NYDEC at a rate of approximately $25 per ton of air emissions. In
1994, the Company paid approximately $468,000 in such emission fees,
approximately $107,000 of which was recovered from Con Ed pursuant to the
Bowline Point Plant operating agreement. In 1995, this emission fee will
be based on 1994 air emissions at a rate established by the NYDEC not to
exceed $50 per ton.
The Clean Air Act Amendments of 1990, which became law on
November 15, 1990, could restrict the Company's ability to meet increased
electric energy demand after the year 2000 or could substantially increase
the cost to meet such demand. Regulations pertaining to nitrogen oxide
reduction and continuous emissions monitoring systems will require capital
expenditures totalling approximately $28.7 million thru 1995, $13.5
million of which will be spent during 1995. The Company will continue to
assess the impact of the Clean Air Act Amendments of 1990 on its power
generating operations as additional regulations implementing these
Amendments are promulgated.
The NYPSC has commenced a proceeding to consider the implications of
compliance with the Clean Air Act Amendments of 1990 by electric utilities
in New York State.
Toxic Substances and Hazardous Wastes. The Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
by the Superfund Amendments and Reauthorization Act of 1986 ("Superfund"),
provides that both the owners and operators of facilities where releases
of hazardous substances into the environment have occurred or are
imminent, and the generators and transporters of hazardous substances
disposed of at the facilities, are, regardless of fault, jointly and
severally liable for all response, removal and remedial action costs and
also for damages to natural resources.
As part of its operations, the Company generates materials which are
deemed to be hazardous substances under Superfund. These materials
include asbestos and dielectric fluids containing polychlorinated
biphenyls ("PCBs"), both of which are disposed of at licensed, off-site
locations not owned by the Company. Other hazardous substances may be
generated in the course of the Company's operations or may be present at
Company-owned locations.
The Company has from time to time, received process or notice of
claims under Superfund or similar state statutes relating to sites at
which it is alleged that hazardous substances generated by the Company
(and, in most instances, by a large number of other potentially
responsible parties) were disposed of. Similar claims may be asserted
from time to time hereafter, involving additional sites. Typically, many
months, and sometimes years, are required to fully determine the probable
magnitude of the cleanup costs for a site, the extent, if any, of the
Company's responsibility, the number and responsibility of other parties
involved, the financial ability of the other parties to pay their
proportionate share of any costs, and the probable ultimate liability
exposure, if any, of the Company. This process is still under way at most
of the sites of which the Company has notice, and the costs at some of
these sites may be substantial. However, based on the information and
relevant circumstances known to the Company at this time, the Company's
share of these costs is not expected to have a material effect on the
financial condition of the Company.
Information concerning certain Superfund claims involving the Company
is included in Item 3, "Legal Proceedings" of this Form 10-K Annual
Report.
Environmental Expenditures. The Company estimates that expenditures
attributable, in whole or in substantial part, to environmental
considerations totaled $21.4 million in 1994.
Compliance with Federal, state and local laws and regulations which
have been enacted or adopted regulating the discharge of materials into
the environment or otherwise relating to the protection of the environment
is not anticipated to have a material effect on the financial condition of
the Company.
The Company's projected environmental expenditures are under
continuous review and are revised periodically to reflect changes in
environmental regulations, inflation, technology and other factors which
are beyond the control of the Company. Although the Company is unable to
predict the ultimate impact of environmental regulations on existing or
proposed facilities or on the operations of the Company, the Company
believes that its expenditures for compliance with environmental
regulations will be given appropriate rate treatment by the respective
regulatory commissions.
Information concerning environmental issues and their potential
effect on the Company's operations is included in Note 12 of the Notes to
Consolidated Financial Statements under the captions "Construction
Program", "Other Legal Proceedings" and "Environmental", beginning on
page 28 of the 1994 Annual Report to Shareholders, which information is
incorporated by reference in this Form 10-K Annual Report, as well as in
Item 3 "Legal Proceedings" of this Form 10-K Annual Report.
Research and Development
The Company supports research and development agencies involved in
utility research, provides funds for joint utility research projects and
conducts its own internal program. Research and development expenditures
amounted to approximately $3.8 million in 1994, $5.0 million in 1993, and
$3.7 million in 1992.
The Company provides support to national agencies such as the
Electric Power Research Institute and the Gas Research Institute. At the
state level, the Company supports the Empire State Electric Energy
Research Corporation, the New York State Energy Research and Development
Authority and the New York Gas Group Research, Development and
Demonstration Committee.
Generally, the Company's internal research and development program
concentrates on projects which uphold the corporate goal of providing safe
and reliable electric and gas service to customers at a minimum price and
in an environmentally acceptable manner. The program includes projects
which seek improvement of generation and distribution systems, mitigation
of environmental impacts of electric power generation, and enhancement of
the value of electric energy for customers. Current projects include a
demonstration of a technology which should provide a low-cost option to
reduce power plant NOx emissions to comply with the Clean Air Act
Amendments; an evaluation of the performance characteristics of
underground distribution cable; and an investigation of the efficient use
of electrotechnologies at a municipal wastewater treatment plant.
Franchises
The Company's and its utility subsidiaries, RECO and Pike, each have
municipal consents or franchises, together with their corporate or charter
<PAGE>
powers, which give each of them the right to carry on their respective
operations in the territories served. The municipal consents or
franchises held by the Company and its utility subsidiaries are not
exclusive. In certain municipalities, the areas served by the Company,
RECO and Pike are limited either by the terms of the consents or
franchises or by order of the NYPSC, the NJBPU, or the Pennsylvania Public
Utility Commission, respectively. Under the present provisions of the
State laws of New York, New Jersey and Pennsylvania, no other private
corporation can commence public utility operations in any part of the
territories now served by the Company, RECO or Pike, respectively, without
obtaining a certificate of public convenience and necessity from the
applicable State utility commission.
A certificate of public convenience and necessity would not be
required with respect to a municipality furnishing electric or gas service
within its borders under the present provisions of the State laws of
New York, New Jersey or Pennsylvania. Municipal corporations, upon
compliance with the State laws of New York, New Jersey or Pennsylvania, as
applicable, are authorized to acquire the public utility service of any
public utility company by purchase or by condemnation. The Company does
not reasonably expect any municipal corporation to acquire the public
utility service of the Company or its utility subsidiaries through either
purchase or condemnation.
The municipal consents or franchises of the Company and its utility
subsidiaries are not uniform and contain, in certain instances, provisions
relating to, among other things, the time of commencing operations, the
furnishing of service to the particular municipality, the approval by the
municipal authorities of the location and construction of distribution
facilities, indemnification of the municipality against liabilities and
damages in consequence of construction, and administrative matters. Such
provisions are not considered by the Company to be unduly burdensome.
Employee Relations
At December 31, 1994, the Company had 1,640 employees of whom 37 were
part-time employees. The Company considers its relationship with its
employees to be satisfactory. The current contract with Local 503 of the
International Brotherhood of Electrical Workers ("IBEW") representing 955
production, maintenance, commercial and service employees of the Company
became effective June 1, 1994 and expires June 1, 1997. This contract
does not include supervisory employees.
The Company's utility subsidiaries, RECO and Pike, have no employees
other than officers. All services are performed for the utility
subsidiaries by employees of the Company pursuant to Joint Operating
Agreements approved by the NJBPU and the PAPUC, through which the Company
is reimbursed for these services. Several employees of the Company
provide managerial and clerical services for the non-utility subsidiaries
of the Company and of RECO, the cost of which are either paid directly by
the subsidiaries or are reimbursed to the Company through periodic
billings. In addition, the non-utility subsidiaries, at December 31,
1994, had 157 full-time and 56 part-time employees, none of whom were
participants in the Company's various employee benefit plans or were
covered by the Company's contract with the IBEW.
<PAGE>
Item 2. Properties
The Company's property consists primarily of electric generation,
transmission and distribution facilities and gas distribution facilities.
This property is required for the continued operation of the Company's
major business segments. In addition, the Company maintains certain
miscellaneous utility and non-utility property. The Company's facilities
are in satisfactory condition, are suitable for the particular purpose for
which they were acquired, and are adequate for the Company's present
operations.
Electric Generating Facilities. The Company's generating plants, all
of which are located in New York State, are as follows:
Maximum
Summer Percent Net Mwh
Net Mw of Total Generated
Plant Name Units Energy Source Capacity Capacity in 1994
Swinging Bridge, 8
Mongaup & Rio Hydroelectric 25.8 2.5% 62,103
Grahamsville 1 Hydroelectric 18.0 1.8 106,046
Hillburn 1 Jet Fuel/Gas 37.0 3.6 1,063
Shoemaker 1 Jet Fuel/Gas 37.0 3.6 9,385
Lovett 5 Coal/Oil/Gas 501.7 49.2 2,098,547
Bowline Point 2 Oil/Gas 400.6(1) 39.3 1,183,869
1,020.1 100.0% 3,461,013
(1) Company's share of maximum summer net megawatt capability.
Electric Transmission and Distribution Facilities. The Company owns, in
whole or in part, and operates 512 miles of transmission lines, 67
substations, 67,901 in-service line transformers and 4,930 miles of
distribution lines. With the exception of the Grahamsville Substation, the
electric transmission and distribution facilities of the Company and its
utility subsidiaries are located within the Company's New York, New Jersey
and Pennsylvania service territory, which is described under the caption
"Principal Business" in Item 1 of this Form 10-K. The Bowline Substation and
the related transmission facilities are jointly owned by the Company and Con
Ed and are operated by the Company. The Ramapo Substation and certain
related transmission facilities consist of property which is either owned by
the Company, owned by Con Ed or jointly owned by the Company and Con Ed and
which is operated and maintained by the Company except for the 500/345 Kv
section of the Ramapo substation and a 500 Kv transmission line now operated
and maintained by Con Ed effective January, 1995.
Gas Facilities. The Company owns and operates three propane air gas
plants at Middletown, Orangeburg and Suffern, New York and its gas
distribution system, which is located within its gas franchise territory in
New York and Pennsylvania, includes 1,697 miles of mains.
Miscellaneous Properties. The Company owns office buildings and
operating facilities in Middletown, Spring Valley, Blooming Grove and West
Nyack, New York, and other structures at different locations within the
Company's service territory which are used as offices, service buildings,
store houses and garages. The Company leases its corporate headquarters in
Pearl River, New York, as well as office space at other locations. In
addition, the Company has lease agreements covering certain of its data
processing equipment, office equipment and vehicle fleet.
Character of Ownership. The Company's electric and gas plants and its
major electric substations are located on land owned by the Company in fee,
except for the Grahamsville Plant and the Bowline Point Plant. The greater
portion of the Grahamsville Plant is located on land leased from the City of
New York and the Bowline Point Plant is located on land in which the Company
has a one-third undivided interest, with the remainder being owned by Con Ed.
Water power and flowage rights for the operation of its Mongaup River Hydro
Plants are controlled by the Company either through ownership of the
necessary land in fee or through easements which are, in practically all
cases, perpetual. In the case of the Grahamsville Plant, however, water is
obtained under contract with the City of New York.
Electric transmission facilities of the Company and its utility
subsidiaries (including substations) are, with minor exceptions, located on
land owned in fee or occupied pursuant to perpetual easements. Electric
distribution lines and gas mains are located in, on or under public highways
or private lands pursuant to lease, easement, permit, municipal consent,
agreement or license, express or implied through use by the Company or its
utility subsidiaries without objection by the owners. In the case of
distribution lines, the Company owns approximately 60% of the poles upon
which its wires are installed and has a joint right of use in the remaining
poles on which its wires are installed, which poles are owned, in most cases,
by telephone companies.
The Company's electric and gas plants are owned by the Company except
for the gas turbines at Hillburn and Shoemaker which are leased and the
Bowline Point Plant which is jointly owned with Con Ed and operated by the
Company. Additional information regarding the investment in the Bowline
Point Plant by the Company and Con Ed is included in Note 1 of the Notes to
Consolidated Financial Statements under the caption "Jointly Owned Utility
Plant" on page 22 of the 1994 Annual Report to Shareholders, which material
is incorporated by reference in this Form 10-K Annual Report.
Substantially all of the utility plant and other physical property owned
by the Company and its utility subsidiaries is subject to the liens of the
respective indentures securing the first mortgage bonds of the Company and
its utility subsidiaries.
Investments in securities of the utility subsidiaries costing $11.8
million which have been eliminated from the Consolidated Balance Sheet are
pledged under the Company's First Mortgage Indenture, as amended and
supplemented.
<PAGE>
Item 3. Legal Proceedings
Investigation and Related Litigation:
On August 26, 1993, the Company filed Orange and Rockland Utilities,
Inc. v. Winikow in the United States District Court, Southern District of New
York, against Linda Winikow, a former Vice President of the Company, three
other former Company employees and two vendors. In its suit, filed under the
Federal Racketeer Influenced and Corrupt Organizations Act ("RICO"), the
Company alleges that the defendants had engaged in a conspiracy to divert
monies from the Company through the submission of false and fraudulent
invoices in order to pay personal expenses of and/or to provide personal
services to the defendants. In addition, the Company alleges that the
defendants made various contributions to political candidates consisting of
money and services diverted from the Company. Accordingly, the Company seeks
treble damages as called for by the RICO statute, punitive damages,
attorney's fees, interest and court costs. On December 19, 1994, the Company
filed a notice dismissing the action against three former Company employees,
two of whom had paid restitution to the Company, and one vendor. The Company
is continuing to pursue its claims against Ms. Winikow and one vendor. The
Company has been directed to report to Judge Brieant on March 29, 1995 as to
whether a settlement can be reached in this case. Settlement negotiations
are ongoing.
On October 6, 1993, Ms. Winikow pleaded guilty in the Supreme Court of
the State of New York, County of Rockland, to grand larceny (a class D
felony), commercial bribery (a class A misdemeanor), and making a campaign
contribution under a false name (an unclassified misdemeanor) and, on
November 10, 1993, the two former employees pleaded guilty to grand larceny
(a class D felony). Ms. Winikow's sentencing on these pleas is currently
scheduled to take place during March 1995.
On October 5, 1993, the independent Directors determined to terminate
for cause the employment of James F. Smith as Chief Executive Officer of the
Company and to remove him as Chairman of the Board. On October 7, 1993,
notice of such termination was delivered to Mr. Smith and he was suspended
from all duties effective immediately. Mr. Smith had certain rights under his
employment agreement with the Company to take corrective action with respect
to his termination for cause which lapsed, without such action being taken,
on December 6, 1993.
On February 7, 1994, the Company commenced Orange and Rockland
Utilities, Inc. v. James F. Smith, in New York State Supreme Court, County of
Rockland, by the filing of a Summons with Notice. The Summons put Mr. Smith
on notice of claims for breach of his fiduciary duties of loyalty and care,
waste, conversion, fraud, and unjust enrichment based on allegations that Mr.
Smith misused Company assets and personnel and misappropriated Company funds
for his own benefit or for other improper purposes, and failed to maintain
proper management controls or to properly supervise corporate affairs and
subordinate employees. The Company seeks an accounting by Mr. Smith of
certain Company funds and property, restitution of all amounts
misappropriated, misused, or unaccounted for, forfeiture of compensation paid
or awarded by the Company to Mr. Smith during the period in which breaches of
fiduciary duties occurred, and compensatory and punitive damages. The
Company seeks recovery in an amount not less than $5,000,000.
<PAGE>
Under the terms of his employment agreement, Mr. Smith had the right to
contest his termination for cause in an arbitration proceeding. On May 5,
1994, Mr. Smith filed a motion demanding arbitration of his termination for
cause and the Company's claims asserted against him in Orange and Rockland
Utilities, Inc. v. Smith. On June 17, 1994, the Court issued an Order
granting Mr. Smith's motion to compel arbitration. Pursuant to a second
Court Order dated August 10, 1994, the parties filed their demands for
arbitration with the American Arbitration Association. Hearings in this
matter are currently scheduled to begin on May 15, 1995.
On March 22, 1994, a Rockland County Grand Jury indictment was returned
charging Mr. Smith with eight felony counts of grand larceny and two
misdemeanor counts of petit larceny. A superseding indictment on 22 counts
was brought against Mr. Smith in June 1994. Mr. Smith has entered a plea of
not guilty. The trial in this matter is scheduled to begin in March 1995.
On August 18, 1993, Feiner v. Orange and Rockland Utilities, Inc., et
al. ("Feiner"), a purported ratepayer class action complaint against the
Company, RECO, Ms. Winikow and others, was filed in the United States
District Court, Southern District of New York. The Feiner complaint alleged
that the defendants violated RICO and New York common law by using false and
misleading information to obtain rate increases from the NYPSC and used funds
obtained from ratepayers in furtherance of an alleged scheme to make illegal
campaign contributions and other illegal payments. On February 18, 1994, the
Company filed a motion to dismiss this case, which motion was granted on
September 8, 1994 and the case was dismissed. Plaintiff then filed a Notice
of Appeal with the United States Court of Appeals for the Second Circuit (the
"Second Circuit") appealing the District Court's decision. Thereafter, the
parties signed a Stipulation of Settlement dismissing the appeal, which was
approved by the Second Circuit on December 7, 1994. The settlement recognizes
the remedial measures already taken by the Company, pays $75,000 toward the
plaintiffs' attorneys fees and leaves the District Court decision dismissing
the case in effect.
On August 31, 1993, Patents Management Corporation v. Orange and
Rockland Utilities, Inc., et al. ("Patents Management"), a purported
shareholder derivative complaint, was filed in the Supreme Court of the State
of New York, County of New York, against the Company, all but one of the
Directors and several other named defendants by an alleged shareholder of
the Company. Plaintiff claimed that the named Directors breached their
fiduciary duties by failing to exercise appropriate supervisory control over
Ms. Winikow and others. Plaintiff requested that the Court require each
Director to indemnify the Company against all losses sustained by the Company
as a result of these alleged wrongful acts. On February 23, 1995, the Court
approved a settlement agreement entered into by the Directors, the plaintiff
and the Company resolving all issues in this case. Under the approved
settlement terms, the Company agrees to implement remedial measures and
provision is made for payment of the plaintiff's attorneys fees and expenses
totaling $155,000.
<PAGE>
On November 23, 1993, Gross v. Orange and Rockland Utilities, Inc.
("Gross"), a purported shareholder class action complaint, was filed in the
United States District Court, Southern District of New York. Plaintiff
alleged that various Securities and Exchange Commission ("SEC") filings of
the Company during the period between March 2, and November 4, 1993 contained
false and misleading information, and thereby violated Sections 11 and 12(2)
of the Securities Act of 1933, by failing to disclose what the plaintiff
alleged was a "scheme" by the Company to make illegal political payments and
campaign contributions to various public officials and politicians. As a
result, plaintiff claimed, during such period persons who purchased the
Company's stock through the Company's Dividend Reinvestment and Stock
Purchase Plan did so at artificially inflated prices. The complaint sought
unspecified money damages.
On March 31, 1994, Bernstein v. Orange and Rockland Utilities, Inc. and
James F. Smith ("Bernstein"), a purported shareholder class action complaint,
was filed in the United States District Court, Southern District of New York.
Plaintiff alleged that various SEC filings of the Company during the period
between March 2 and August 18, 1993 contained false and misleading
information or omitted to state material facts necessary to make the
statements therein not misleading, and thereby violated Section 10 of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, by
failing to disclose what the plaintiff alleged was a "scheme" by the Company
to make illegal political payments and campaign contributions to various
public officials and politicians. As a result, plaintiff claimed, during
such period persons who purchased the Company's stock did so at artificially
inflated prices. The Bernstein complaint sought unspecified money damages.
On November 3, 1994, the Company signed a settlement agreement in
the Gross and Bernstein actions. On November 21, 1994, the Court
consolidated the two cases, approved a notice, and conditionally certified
a class action for settlement purposes only. Notice to the class was mailed
and published at the end of November. The settlement was approved by the
Court on January 27, 1995. Pursuant to the settlement agreement, the Company
has created a settlement fund of $1.85 million, to be distributed on a pro
rata basis to members of the settlement class, and all claims in both cases
have been deemed resolved.
Other Litigation:
On May 11, 1993, an action was commenced against the Company by Hudson
Riverkeeper Fund, Inc. ("Riverkeeper") in the United States District Court
for the Southern District of New York. In its complaint, Riverkeeper alleged
that the Company violated and continues to violate its SPDES permit for its
Lovett Generating Station ("Lovett") by failing to maintain cooling water
intake structures that reflect the best technology available for minimizing
adverse environmental impact. In addition, the complaint alleged that the
Company failed to submit a scope of work for entrainment studies required by
its SPDES permit (the "entrainment studies"). The original complaint
requested that the Court assess civil penalties aggregating $22 million and
order the Company to take steps to insure that the cooling water intake
structures at Lovett reflect the best technology available for minimizing
adverse environmental impact. On May 18, 1992, Riverkeeper amended its
complaint against the Company by withdrawing its entrainment studies
allegation and reducing the amount of civil penalties sought to approximately
<PAGE>
$11 million. On June 30, 1993, the Company filed its answer to Riverkeeper's
amended complaint. In its answer the Company denied Riverkeeper's
allegations and thereafter, reflecting the Company's belief that
Riverkeeper's allegations have no legal merit, on July 20, 1993 the Company
filed a Motion for Summary Judgment seeking the dismissal of this action. On
October 21, 1993, the Court issued a Memorandum and Order denying the
Company's Motion for Summary Judgment and ruling that the New York State
Department of Environmental Conservation ("DEC") should be included as a
party to this action. On January 14, 1994, a conference was held before
Judge Brieant during which the DEC intervened in this litigation as a
designated plaintiff. On April 8, 1994, the parties agreed to have engineers
enter into discussions regarding modifications to the Lovett plant's cooling
water intake structures. These discussions are continuing.
Additional information regarding the Company's SPDES Permits is
contained under the caption "Water Quality" of "Environmental Matters" in
Item 1 of this Form 10-K.
On January 15, 1993, the Company was served with a complaint naming the
Company as one of several defendants in Warwick Administrative Group, et al.
v. Avon Products, Inc. et al. ("Warwick"), which case was filed in the United
States District Court for the Southern District of New York. The allegations
in this case stem from an Administrative Order for Remedial Design and
Remedial Action issued on February 28, 1992 by the United States
Environmental Protection Agency pursuant to Superfund laws which impose
liabilities on entities who are identified as having contributed hazardous
wastes to a particular site requiring clean-up, including generators and
transporters of such wastes. The Order directs certain members of the
Warwick plaintiff group to implement a plan for the clean-up of the Warwick
Landfill site in Greenwood Lake, New York. The Warwick plaintiff group now
alleges that some defendants, including the Company, arranged to have
hazardous substances disposed of at the Warwick site and thus seeks to
recover from the defendants costs incurred and damages suffered in connection
with the clean-up of the Warwick Landfill site. An answer to the complaint,
as amended, was filed by the Company on February 23, 1993, denying all of the
allegations in the amended complaint and setting forth a number of
affirmative defenses.
On May 3, 1993, Judge Goettel of the United States District Court,
Southern District of New York, dismissed the plaintiffs' amended complaint
for failure to state a claim for which relief could be granted and granted
plaintiffs leave to replead. Thereafter, the plaintiffs filed a second
amended complaint which was superseded by a third amended complaint served on
June 3, 1993. On June 23, 1993, the Company filed an answer to the third
amended complaint, denying all of the plaintiffs' allegations and setting
forth a number of affirmative defenses. As it is presently unclear if any
hazardous waste generated by the Company was transported to the Warwick
Landfill site, and because the nature and quantities of hazardous waste sent
by others to such site are undetermined, the Company is unable to determine
its liability, if any, with regard to this proceeding.
On September 25, 1991, the Company was named as one of several hundred
third party defendants in the United States v. Kramer, et al. and State of
New Jersey Dep't of Environmental Protection v. Almo Anti-Pollution Services,
et al., which cases have been consolidated in the United States District
Court for the District of New Jersey, Camden Vicinage. The allegations in
<PAGE>
this action concern the Helen Kramer Landfill site in Mantua, New Jersey,
which operated from 1963 to 1981. Suit in this case was brought under
Superfund laws. Additional information concerning Superfund laws is
contained under the subheading "Environmental Matters" in Item 1 of this Form
10-K Annual Report. While it is presently unclear if any hazardous waste
generated by the Company was transported to the Helen Kramer Landfill site,
the total cost of remediation and damages at the site, while not clearly
established, is reportedly estimated at $100 million or more, and the Company
is monitoring the situation. It appears reasonable to expect the Company's
relative contribution to the Helen Kramer site, if any, to have been less
than 1% of the total volume sent to the site. At this time, the Company does
not believe this action will have a material effect on the financial
condition of the Company.
On March 29, 1994, the Company received a third party summons and
complaint naming it as one of 22 third party defendants in Carpenters Local
No. 964 Pension Fund v. DiGiacinto et al. ("DiGiacinto"), filed in the
Supreme Court of the State of New York, County of Rockland. This complaint
stems from an underlying action, Guarino et al. v. Carpenters Local No. 964
Pension Fund ("Guarino"), brought by residents of a subdivision who allege
that homes developed and sold by the Carpenters Local No. 964 Pension Fund
(the "Pension Fund") were constructed on the site of a former landfill.
Plaintiffs claim that the deterioration of wallboard materials buried at the
site has resulted in a continuous release of hydrogen sulfide gas which has
rendered the houses unfit for dwelling. Plaintiffs seek damages in excess of
$25,000,000.
The third party complaint alleges that (1) the Company owned land that
ultimately became part of the subdivision; (2) the Company permitted the
dumping of wallboard materials on its former property; and (3) certain
improvements constructed by the Company on property adjacent to the
subdivision altered the flow of ground and surface water, contributing to the
production of hydrogen sulfide gas. The third party complaint seeks to hold
the Company responsible for any liability incurred by the Pension Fund as a
result of the Guarino action. On April 26, 1994, the Company filed its
answer denying all of the plaintiff's allegations and setting forth a number
of affirmative defenses.
On June 8, 1994, the New York State Attorney General's office commenced
an action in the Supreme Court of the State of New York, County of Rockland,
entitled State of New York v. Carpenters Local No. 964 Pension Fund, et al.
against the Pension Fund and five other defendants, not including the
Company, alleging that the subdivision site constituted a public nuisance.
On August 8, 1994, the Company was served with United States Gypsum Company
v. Broadhaver Realty Corp. ("U.S. Gypsum"), a third-party complaint brought
by the United States Gypsum Company, a defendant in the action brought by the
Attorney General's office.
The Company has concluded that its liability, if any, in the DiGiacinto
and U.S. Gypsum litigations, individually or in the aggregate, will not have
a material effect on the financial condition of the Company.
<PAGE>
On January 17, 1995, the Company was served with a summons in Payran v.
Orange and Rockland Utilities, Inc. and James Donnery, a purported personal
injury action commenced in the Supreme Court of the State of New York.
Plaintiff seeks compensatory damages of $50 million as a result of injuries
allegedly resulting from actions by the defendants at the Company's Lovett
Power Plant. Since the Company has not been served with the complaint in
this action, it cannot evaluate plaintiff's claims.
Regulatory Matters:
On January 29, 1993, the Company filed an electric rate increase
application with the NYPSC (Case 93-E-0082) requesting a $17.1 million (4.8%)
annual increase in electric revenues to be effective January 1, 1994.
As a result of the ongoing investigation of alleged financial
improprieties, the NYPSC issued an Order on December 21, 1993 which resulted
in the postponement of the effective date of new electric rates from January
1, 1994 until June 30, 1994.
On June 10, 1994, the NYPSC issued an Order terminating Case 93-E-0082
due to the Company's failure to meet its burden of proof. The NYPSC stated
that various improprieties uncovered at the Company negated the credibility
of the record developed in this rate proceeding. In this Order, the NYPSC
reduced the Company's targeted rate of return on equity from 11.45% to 10.6%
retroactive to January 1, 1994. All earnings above 10.6% will be deferred
for later disposition pending the outcome of the investigations in Case 93-M-
0849 discussed below. Additional information regarding the termination of
Case 93-E-0082 is contained under the caption "Current Rate Activities" of
"Regulatory Matters" in Item 1 of this Form 10-K. On September 19, 1994, the
Company filed an Article 78 action against the NYPSC in New York State
Supreme Court, County of Albany appealing the NYPSC's June 10, 1994 Order
reducing the Company's targeted rate of return on equity to 10.6% (from
11.45%) and making such reduction retroactive to January 1, 1994. The appeal
contests the retroactivity of the NYPSC Order. The Company and the NYPSC
have agreed to stay the briefings in this appeal until after the NYPSC has
issued its final report on its investigation of the Company.
On September 30, 1992, the NYPSC approved a four-year settlement
agreement ("Settlement Agreement") in the Company's gas rate case (Case 92-G-
0050). The Settlement Agreement contains a weather adjustment clause which
automatically adjusts rates to offset the effects of variations in weather
from that assumed for setting rates. The Settlement Agreement provides for
an overall rate of return of 10.26%, with a return on common equity of 12.15%
including incentives of 50 basis points. On September 1, 1993, the Company
filed with the NYPSC the second stage adjustment to gas rates pursuant to the
Settlement Agreement. The requested increase in annual gas revenues as a
result of the second-stage adjustment is $3.8 million or 2.5%. Although the
Settlement Agreement provided for an effective date for this adjustment of
January 1, 1994, the Company agreed to extend the effective date until
June 30, 1994, in connection with the ongoing investigations of alleged
financial improprieties. The effective date of this adjustment was further
extended until December 30, 1994 by NYPSC Order issued June 3, 1994.
<PAGE>
On September 1, 1994, the Company filed a plan to implement the second-
stage rate adjustment on January 1, 1995 and to postpone the next adjustment
to gas rates to January 1, 1996. On September 19, 1994, the Company
subsequently requested the further postponement of the second-stage gas rate
adjustment until the NYPSC's investigation of alleged financial improprieties
is concluded. The purpose of the request was to combine the results of the
investigation and staged filings into a single rate change. On November 4,
1994, the NYPSC issued an Order terminating the Settlement Agreement
effective December 31, 1994. The Order denies the Company the opportunity
for rate adjustments in the third and fourth years (1995 and 1996) of the
Settlement Agreement. However, the Order authorizes the Company to defer the
second-stage rate adjustment and all previously authorized reconciliations
through the end of 1994, pending review and audit by the NYPSC Staff and the
conclusion of the NYPSC's investigation of alleged financial improprieties.
On October 4, 1993, the NYPSC issued an order instituting a proceeding
(Case 93-M-0849) to investigate the operations and management of the Company.
On November 10, 1994, the Company filed with the NYPSC a quantification of
the rate making effects of its ongoing investigation into prior financial
improprieties. The Company requested that the NYPSC approve a refund of
approximately $3.4 million to its New York gas and electric customers. This
refund would be in addition to the $369,000 which previously had been
refunded to the Company's New York gas and electric customers. The NYPSC has
not yet acted on this proposal or issued its report of its investigation of
the Company. The Company is unable to predict the final results of this
proceeding and what modifications, if any, will be made to the amount
proposed to be refunded to New York ratepayers.
On November 3, 1993, the New Jersey Board of Regulatory Commissioners,
now the New Jersey Board of Public Utilities ("NJBPU") commenced its periodic
management audit of RECO. As a result of the events and investigations
described above, the NJBPU audit included, in addition to a standard review
of operating procedures, policies and practices, a review of the posture of
RECO management regarding business ethics and a determination regarding the
effect of such events on RECO ratepayers. The NJBPU has not yet issued its
report.
In December 1994, a filing was made with the NJBPU to refund
approximately $.7 million to the Company's New Jersey customers based upon
the Company's ongoing investigation into prior financial improprieties. By
order dated January 27, 1995, the NJBPU accepted this proposal. The Company
is unable to predict the final results of any NJBPU proceedings in this area
and what modifications, if any, will be made to the amount proposed to be
refunded in New Jersey.
On December 30, 1992, in connection with RECO's 1991 electric rate case
(Docket No. ER910303565), the NJBRC issued a Decision and Order dealing with
the appropriateness of additional tax liability placed on New Jersey
utilities pursuant to New Jersey's June 1, 1991 tax legislation. Pursuant to
this legislation, RECO was required to pay a combined additional amount of
approximately $16 million of gross receipts and franchise taxes in 1993 and
1994. In its Decision and Order the NJBRC allowed RECO to recover this
amount over a ten year period with interest on the unamortized balance at
an annual rate of 7.5%. On February 26, 1993, Rate Counsel filed a Notice
of Appeal from the NJBRC Decision and Order with the Superior Court of
<PAGE>
New Jersey, Appellate Division, stating as grounds for the appeal that the
Decision was arbitrary and capricious and would result in unjust and
unreasonable rates. On March 21, 1994, the Superior Court of New Jersey,
Appellate Division, upheld the NJBRC Decision and Order.
On March 29, 1989, the New Jersey Department of Environmental Protection
("NJDEP") issued a directive under the New Jersey Spill and Control Act to
various potentially responsible parties ("PRPs") including the Company, with
respect to a site formerly owned and operated by Borne Chemical Company in
Elizabeth, Union County, New Jersey, ordering certain interim actions
directed at both site security and the off-site removal of certain hazardous
substances. Certain PRPs, including the Company, signed an administrative
consent order with the NJDEP requiring them to perform a removal action at
the site, which action was completed on June 22, 1992. The PRPs have entered
into negotiations with the NJDEP regarding the terms of the additional
administrative consent order which will obligate the PRPs, including the
Company, to perform a remedial investigation and feasibility study at the
site. The results of this study will determine what, if any, subsurface
remediation at the Borne site is required. The Company does not believe that
this matter will have a material effect on the financial condition of the
Company.
On August 2, 1994 the Company entered into a Consent Order with the New
York State Department of Environmental Conservation ("NYSDEC") in which the
Company agreed to conduct a remedial investigation of certain property it
owns in West Nyack, New York. Polychlorinated biphenyls ("PCBs") have been
discovered at the West Nyack site. The results of this investigation will
determine what, if any, remediation at the West Nyack site will be required.
The Company does not believe that this matter will have a material effect on
the financial condition of the Company.
On May 29, 1991 a group of ten electric utilities (the "Metal Bank
Group") entered into an Administrative Consent Order with the United States
Environmental Protection Agency ("EPA") to perform a remedial investigation
and feasibility study ("RIFS") at the Cottman Avenue/Metal Bank Superfund
site in Philadelphia, Pennsylvania. PCBs have been discharged at the Cottman
Avenue site from an underground storage tank and the handling of transformers
and other electrical equipment at the site. On May 25, 1994, the Company
entered into a tolling agreement pursuant to which the Metal Bank Group
reserved its right to file suit against the Company while the Metal Bank
Group and the Company entered into discussions to determine the extent of the
Company's involvement with the Cottman Avenue site. These discussions
continue. The RIFS has been completed and submitted to the EPA for
determination of what remedial measures will be required at the Cottman
Avenue site. The Company is unable at this time to estimate its share, if
any, of past or future costs at this site.
Information regarding the Company's involvement in, and the effect on
the Company of, pipeline take-or-pay proceedings before the FERC is contained
under the caption "Gas Energy Costs" in the "Review of the Company's Results
of Operations and Financial Condition" and in Note 12 of the Notes to
Consolidated Financial Statements - "Gas Supply and Storage Contracts" on
pages 12 and 28, respectively, of the 1994 Annual Report to Shareholders,
which material is incorporated by reference in this Form 10-K Annual Report.
Reference is also made to the information contained under the caption "Take-
or-Pay Surcharge Costs and FERC Order No. 636 Transition Costs" of "Gas
Operations" in Item 1 of this Form 10-K Annual Report.
<PAGE>
The Company's gas operations were not materially affected by take-or-pay
charges in 1994. However, as required by the NYPSC in Case No. 88-G-062, the
Company has deferred a portion of these costs. As of December 31, 1994, $2.8
million of deferred take-or-pay charges and accrued interest remain on the
books of the Company. The Company is negotiating with the Staff of the
Commission to recover the remainder of the take-or-pay liability.
On April 8, 1992, the FERC issued Order No. 636 requiring interstate
natural gas pipelines to unbundle their sales and transportation services and
to offer each of these services on a stand alone basis. It is currently
estimated that the Company's obligation related to Order No. 636 transition
costs will amount to $24.6 million. It is anticipated that transition costs
incurred by the Company will be recoverable in gas rates to the extent such
costs were prudently incurred. Information regarding the Company's
involvement in, and effect on the Company of, Order No. 636 and its related
proceedings is contained under the caption "Gas Energy Costs" in the "Review
of the Company's Results of Operations and Financial Condition" and in Note
12 of the Notes to Consolidated Financial Statements under the caption "Gas
Supply and Storage Contracts" on pages 12 and 28, respectively, of the 1994
Annual Report to Shareholders, which material is incorporated by reference in
this Form 10-K Annual Report. Reference is also made to the information
contained under the caption "Take-or-Pay Surcharge Costs and FERC Order 636
Transition Costs" of "Gas Operations" in Item 1 of this Form 10-K Annual
Report.
The Company has been named as a defendant or third-party defendant in a
number of proceedings involving alleged personal injuries, primarily to
construction workers, as a result of exposure to asbestos at facilities owned
and operated by the Company. Discovery with regard to these cases will
determine, among other things, if the plaintiffs in each of these cases
worked at Company facilities. The Company anticipates that similar asbestos-
related claims may be asserted against the Company from time to time in the
future. However, at this time the Company does not believe that the
asbestos-related lawsuits currently outstanding, nor those which may be
brought in the future, will, individually or in the aggregate, have a
material effect on the financial condition of the Company.
The Company is a party to a number of administrative proceedings
involving potential impact to the environment. Such proceedings arise out of
the operation and maintenance of facilities for the generation, transmission
and distribution of electricity and natural gas. Information regarding the
Company's involvement in these various proceedings is included in Note 12 of
the Notes to Consolidated Financial Statements under the caption
"Environmental" on page 31 of the 1994 Annual Report to Shareholders, which
information is incorporated by reference in Item 1 of this Form 10-K Annual
Report, as well as under the subheading, "Environmental Matters" of this Form
10-K Annual Report. Such proceedings are not, in the aggregate, material to
the financial condition of the Company.
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during the
fourth quarter of the fiscal year ended December 31, 1994.
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
All of the officers of the Company are appointed on an annual basis
at the first Board of Directors' meeting following the annual meeting. The
following list includes two Company employees who, due to the policy making
functions they perform for the Company, are considered executive officers under
SEC criteria, but who are not officers of the Company and who are not appointed
on an annual basis.
Officers, Age, and Title Business Experience Past Five Years
D. Louis Peoples, 54 Vice Chairman of the Board and Chief
Vice Chairman of the Executive Officer since July 14, 1994.
Board of Directors and Executive Vice President, and a member
Chief Executive Officer of the Board of Directors, Madison
Gas and Electric Company from 1992 to
1993. Senior Vice President,
RCG/Hagler, Bailly Inc. from 1991 to
1992. Senior Vice President, and
a member of the Board of the
Directors, Nuclear Services Division,
Tenera, L.P. from 1990 to 1991;
R. Lee Haney, 55 Vice President and Chief Financial
Vice President and Officer since September 8, 1994.
Chief Financial Officer Senior Vice President from January
1993 until September 1994, and Vice
President and Chief Financial Officer
until January 1993, San Diego Gas &
Electric Company.
G. D. Caliendo, 54 Vice President, General Counsel and
Vice President - Secretary since March 2, 1995.
General Counsel Senior Vice President, General
and Secretary Counsel and Secretary of Pennsylvania
Power and Light Company from 1989 to
1994.
Robert J. Biederman, Jr., 42 Vice President since April 1990.
Vice President, Operations Director of Operations from 1986 until
April 1990.
Robert J. McBennett, 52 Treasurer since 1984.
Treasurer
George V. Bubolo, Jr., 50 Director, Engineering and System
Director, Engineering and Operations since November 1, 1994.
System Operations Director, Electric Operations from
1983 until November 1, 1994.
Vincent R. Tummarello, 44 Division Vice President - Electric
Division Vice President, Production since November 1, 1994.
Electric Production Director, Electric Production from
April 1, 1985 until November 1, 1994.
<PAGE>
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
The Common Stock of the Company is listed on the New York Stock Exchange
under the ticker symbol ORU. The stock is listed in published stock tables as
"OranRk".
At December 31 1994, there were 23,299 holders of record of the Company's
common stock, $5.00 par value. During 1994 dividend payments were made to
holders of the Company's common stock on February 1, May 1, August 1 and
November 1.
Quarterly market price and dividend information on the Company's Common
Stock is as follows:
Quarter High Low Dividend
1993 1 $45 7/8 $40 1/4 $.615
2 47 1/2 43 3/8 .615
3 47 1/2 44 3/8 .63
4 45 3/8 38 5/8 .63
1994 1 41 1/4 32 1/8 .63
2 35 7/8 30 1/2 .63
3 31 7/8 29 1/2 .64
4 32 1/2 28 3/8 .64
Information regarding the restriction of retained earnings for dividend
payment is contained in Note 4 of the Notes to Consolidated Financial
Statements - "Retained Earnings" on page 24 of the 1994 Annual Report to
Shareholders, which material is incorporated by reference in this Form 10-K
Annual Report.
Item 6. Selected Financial Data
The information required by this Item is contained under the captions
"Financial Statistics - Common Stock Data", and "Financial Statistics -
Selected Financial Data" on page 36 of the 1994 Annual Report to Shareholders,
which material is incorporated by reference in this Form 10-K Annual Report.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information required by this Item is contained under the caption
"Review of the Company's Results of Operations and Financial Condition" on
pages 8 through 16 of the 1994 Annual Report to Shareholders, which
material is incorporated by reference in this Form 10-K Annual Report.
<PAGE>
Item 8. Financial Statements and Supplementary Data
The financial statements and supplementary financial information
required by this Item are contained on pages 17 through 33 of the 1994
Annual Report to Shareholders, which material is incorporated by reference
in this Form 10-K Annual Report. Such information is listed in Item
l4(a)(1) "Financial Statements" of this Form 10-K Annual Report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
On February 10, 1994, the Executive Committee of the Board of Directors of
the Company appointed the accounting firm of Arthur Andersen LLP to audit the
books, records and accounts of the Company and its subsidiaries for the 1994
fiscal year. The appointment of Arthur Andersen LLP was approved by the
shareholders at the Annual Meeting held on May 11, 1994.
The accounting firm of Grant Thornton LLP audited the Company's
consolidated financial statements for 1993 and prior years. Upon
recommendation of the Audit Committee, the Board of Directors decided to
solicit bids for the performance of auditing services for the Company for 1994.
Bids were received from six public accounting firms, including Grant Thornton
LLP. Based on a review of the competing bids, the Audit Committee believe that
the selection of Arthur Andersen LLP would be in the best interests of the
Company and recommended such selection to the Board of Directors.
The reports of Grant Thornton LLP on the Company's consolidated financial
statements for the fiscal years ended December 31, 1992 and 1993 did not
contain an adverse opinion or a disclaimer of opinion and the reports were not
qualified or modified as to uncertainty, audit scope or accounting principles,
except that the report for 1993 was modified by inclusion of an explanatory
paragraph regarding the uncertainty of the pending investigations of the
Company and related litigation described in the Company's Current Reports on
Form 8-K dated August 16, October 6, November 23 and December 16, 1993 and
Quarterly Report on Form 10-Q for the quarter ended September 30, 1993. Since
January 1, 1992, there have been no disagreements with Grant Thornton LLP on
any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure, which, if not resolved to the
satisfaction of Grant Thornton LLP, would have caused Grant Thornton LLP to
make reference to the subject matter of such disagreements in connection with
its report.
PART III
The information required by Item 10 - Directors and Executive Officers
of the Registrant is contained on page 38 of this Form 10-K Annual Report
and in the Company's definitive Proxy Statement in connection with the 1995
Annual Meeting of Common Shareholders (the "Proxy Statement"), which material
is incorporated by reference in this Form 10-K Annual Report. The information
required by Item 11 - Executive Compensation, Item 12 - Security Ownership of
Certain Beneficial Owners and Management and Item 13 - Certain Relationships
and Related Transactions is contained in Section 1, "Election of Directors,"
of the Proxy Statement which material is incorporated by reference in this
Form 10-K Annual Report. With the exception of this information, the Proxy
Statement is not deemed filed as part of this Form 10-K Annual Report.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)(1) Financial Statements
The following consolidated financial statements of the Company and
its subsidiaries appearing on pages 17 through 33 of the 1994 Annual
Report to Shareholders are incorporated by reference in this Form 10-K
Annual Report. With the exception of these consolidated financial
statements and the information incorporated in Items 1, 3, 5, 6, 7 and 8,
herein, the 1994 Annual Report to Shareholders is not deemed filed as part
of this Form 10-K Annual Report.
Page*
Consolidated Statements of Income and Retained Earnings for the
years ended December 31, 1994, 1993 and 1992. 17
Consolidated Balance Sheets as of December 31, 1994 and 1993. 18
Consolidated Cash Flow Statements for the years ended
December 31, 1994, 1993 and 1992. 20
Notes to Consolidated Financial Statements. 21
Report of Independent Public Accountants. 33
*Page number reference is to the 1994 Annual Report
to Shareholders
(a)(2) Financial Statement Schedules Page**
Valuation and Qualifying Accounts and Reserves for the years
ended December 31, 1994, 1993 and 1992 (Schedule II). 51
**Page number reference is to this Form 10-K Annual Report
All other schedules are omitted because they are not applicable or the
required information is shown in the consolidated financial statements or notes
thereto.
The information required by Rule 5-04, Schedule I - Condensed Financial
Information of Registrant has been omitted since Consolidated Financial State-
ments of the Registrant and its subsidiaries are contained in the Company's
1994 Annual Report to Shareholders and the test prescribed was not met.
<PAGE>
(a)(3) Exhibits
* 3.1 Restated Certificate of Incorporation, as amended through
April 14, 1988. (Exhibit 4.1 to Registration Statement
33-25359).
3.2 By-Laws, as amended through November 3, 1994.
* 4.1 Composite First Mortgage of the Company as Supplemented and
Modified by Twenty-six Supplemental Indentures. (Exhibit 4.1
to Form 10-K for the fiscal year ended December 31, 1990, File
No. 1-4315).
* 4.2 Twenty-seventh Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1980. (Exhibit 4.2 to Form 10-K for
the fiscal year ended December 31, 1990, File No. 1-4315).
* 4.3 Mortgage Trust Indenture of Rockland Electric Company, dated as
of July 1, 1954. (Exhibit 2.16 to Registration Statement
No. 2-14159).
* 4.6 Third Supplemental Indenture of Rockland Electric Company, dated
as of August 15, 1965. (Exhibit 4.23 to Registration Statement
No. 2-24682).
* 4.11 Mortgage Trust Indenture of Pike County Light & Power Company, dated
as of July 15, 1971. (Exhibit 4.31 to Registration Statement
No. 2-45632).
* 4.12 Twenty-eighth Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1982. (Exhibit 4.12 to Form 10-K for the
fiscal year ended December 31, 1992, File No. 1-4315).
* 4.17 Twenty-ninth Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1984. (Exhibit 4.17 to Form 10-K
for the fiscal year ended December 31, 1989, File No. 1-4315).
* 4.20 Thirtieth Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1986. (Exhibit 4.20 to Form 10-K
for the fiscal year ended December 31, 1991, File No. 1-4315).
* 4.21 Thirty-first Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1988. (Exhibit 4.21 to Form 10-K for
the fiscal year ended December 31, 1988, File No. 1-4315).
* 4.22 Thirty-second Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1990. (Exhibit 4.22 to Form 10-K for
the fiscal year ended December 31, 1990, File No. 1-4315).
* 4.25 Indenture between the Company and The Bank of New York as Trustee
regarding unsecured debt, dated March 1, 1990. (Exhibit 4.25 to Form
10-K for the fiscal year ended December 31, 1990, File No. 1-4315).
<PAGE>
* 4.26 First Supplemental Indenture between the Company and The Bank of
New York as Trustee regarding unsecured debt, dated March 7, 1990.
(Exhibit 4.26 to Form 10-K for the fiscal year ended December 31,
1990, File No. 1-4315).
* 4.27 Second Supplemental Indenture between the Company and the Bank of
New York as Trustee regarding unsecured debt, dated October 15, 1992.
(Exhibit 4.27 to Form 10-K for the fiscal year ended December 31, 1992,
File No. 1-4315).
* 4.28 Thirty-third Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1992. (Exhibit 4.28 to Form 10-K for
the fiscal year ended December 3, 1992, File No. 1-4315).
* 4.29 Third Supplemental Indenture between the Company and The Bank of
New York as Trustee regarding unsecured debt, dated as of March 1,
1993. (Exhibit 4.29 to Form 10-K for the fiscal year ended
December 31, 1992, File No. 1-4315).
* 4.30 Ninth Supplemental Indenture of Rockland Electric Company, dated as
of March 1, 1993. (Exhibit 4.30 to Form 10-K for the fiscal year ended
December 31, 1992, File No. 1-4315).
4.31 Thirty-fourth Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1994.
*10.1 General Agreement: Bowline Point Generating Plant, dated as of
October 10, 1969. (Exhibit 5(b) to Registration Statement No. 2-42156).
*10.2 Financing Agreements, dated as of February 1, 1971. (Exhibit 5(a) to
Registration Statement No. 2-42156).
*10.7 New York Power Pool Agreement, dated July 16, 1985. (Exhibit 10.7
to Form 10-K for the fiscal year ended December 31, 1990, File
No. 1-4315).
*10.8 Agreement governing the supply of residual fuel oil by Con Edison to
Bowline Point Generating Station dated August 31, 1983. (Exhibit 10.18
to Form 10-K for fiscal year ended December 31, 1991, File No. 1-4315).
*10.10 PJM Facilities Agreement, dated May 1, 1970, as amended
December 12, 1972. (Exhibit 10.10 to Form 10-K for the fiscal year
ended December 31, 1992, File No. 1-4315).
+*10.11 Officers' Supplemental Retirement Plan, as amended April 1, 1993.
*10.12 Incentive Compensation Plan, amended January 3, 1991. (Exhibit 10.12
to Form 10-K for the fiscal year ended December 31, 1990, File
No. 1-4315).
*10.13 Severance Pay Plan, as amended January 3, 1991. (Exhibit 10.13 to
Form 10-K for the fiscal year ended December 31, 1990, File
No. 1-4315).
*10.14 Management Long-Term Disability Plan. (Exhibit 10.14 to Form 10-K for
the fiscal year ended December 31, 1991, File No. 1-4315).
<PAGE>
*10.15 New York Power Authority Firm Purchase Contract, dated July 28, 1975.
(Exhibit 10.15 to Form 10-K for the fiscal year ended December 31,
1992, File No. 1-4315).
10.17 Coal Purchase and Sale Agreement among Orange and Rockland Utilities,
Inc., Rawl Sales and Processing Company, and Massey Coal Sales, Inc.,
dated March 9, 1984, as amended through July 1, 1994.
*10.18 Agreement between Orange and Rockland Utilities, Inc., and Pittston
Coal Sales Company, dated March 14, 1984 as amended through December 1,
1986. (Exhibit 10.18 to Form 10-K for the fiscal year ended
December 31, 1992, File No. 1-4315).
*10.18A Amendment to the Agreement between Orange and Rockland Utilities, Inc.,
and Pittston Coal Sales Company, dated July 1, 1991 and executed
May 5, 1993. (Exhibit 10.18A to Form 10-K for the fiscal year ended
December 31, 1993, File No. 1-4315).
+*10.19 Employment contract between Orange and Rockland Utilities, Inc. and
James F. Smith as amended December 1, 1990. (Exhibit 10.19 to
Form 10-K for the fiscal year ended December 31, 1990, File
No. 1-4315).
10.20 Orange and Rockland Utilities, Inc. Post Director Service Retainer
Continuation Program, as amended March 2, 1995.
*10.21 Electric Contract for the Sale of Firm Power and Energy by the
Power Authority of the State of New York to Orange and Rockland
Utilities, Inc., dated April 26, 1989, including Application dated
April 20, 1989. (Exhibit 10.21 to Form 10-K for the fiscal year
ended December 31, 1989, File No. 1-4315).
+*10.22 Form of Severance Agreement for Company Officers effective
January 3, 1991. (Exhibit 10.22 to Form 10-K for the fiscal year
ended December 31, 1990, File No. 1-4315).
+*10.23 Performance Unit Incentive Plan effective December 3, 1992. (Exhibit
10.23 to Form 10-K for the fiscal year ended December 31, 1992,
File No. 1-4315).
+*10.24 Award Agreement under the Performance Unit Incentive Plan
applicable to P. J. Chambers, Jr., dated December 3, 1992.
(Exhibit 10.24 to Form 10-K for the fiscal year ended December 31,
1992, File No. 1-4315).
+*10.25 Award Agreement under the Performance Unit Incentive Plan applicable to
J. F. Smith dated December 3, 1992. (Exhibit 10.25 to Form 10-K for
the fiscal year ended December 31, 1992, File No. 1-4315).
+*10.26 Letter agreement dated September 29, 1994 between Orange and Rockland
Utilities, Inc. and R. Lee Haney regarding participation in the
Officers' Supplemental Retirement Plan of Orange and Rockland
Utilities, Inc. (Exhibit 10.26 to Form 10-Q for the period ended
September 30, 1994, File No. 1-4315).
<PAGE>
+*10.27 Letter agreement dated September 29, 1994 between Orange and Rockland
Utilities, Inc. and D. Louis Peoples regarding participation in the
Officers' Supplemental Retirement Plan of Orange and Rockland
Utilities, Inc. (Exhibit 10.27 to Form 10-Q for the period ended
September 30, 1994, File No. 1-4315).
+10.28 Agreement between Orange and Rockland Utilities, Inc. and Victor J.
Blanchet, Jr. dated March 1, 1995.
+10.29 Deferred Compensation Plan for Non Employee Directors as amended
through October 6, 1994.
13 The Company's 1994 Annual Report to Shareholders to the extent
identified in this Form 10-K Annual Report for the fiscal year
ended December 31, 1994.
*16 Letter from Grant Thornton (Exhibit 16 to Form 8-K/A dated
February 22, 1994, File No. 1-4315).
21 Subsidiaries of the Company.
24 Powers of Attorney.
27 Financial Data Schedule.
*99.1 Joint Cooperation Agreement between the Office of the Rockland County
District Attorney and Orange and Rockland Utilities, Inc., dated
November 3, 1993 (Exhibit 99.1 to Form 10-Q for the quarter ended
September 30, 1993, File No. 1-4315).
*99.2 Complaint against James F. Smith dated March 16, 1994. (Exhibit 99.2
to Form 10-K for the year ended December 31, 1993, File No. 1-4315).
*99.5 Agreement Between Orange and Rockland Utilities, Inc. and Kroll
Associates, Inc. dated as of November 1, 1994. (Exhibit 99.5 to
Form 10-Q for the period ended September 30, 1994, File No. 1-4315).
+ Denotes executive compensation plans and arrangements.
* Incorporated by reference to the indicated filings.
The securities issued relevant to each of the following agreements were
not registered with the Securities and Exchange Commission and the total amount
of securities authorized under each agreement does not exceed 10% of the total
assets of the Company and its subsidiaries on a consolidated basis. Therefore,
as provided in Item 601 of Regulation S-K, the following agreements are not
filed as exhibits. The Company agrees, however, to furnish to the Commission a
copy of each agreement upon request:
- Participation Agreement between NYSERDA and Orange and Rockland
Utilities, Inc., dated as of July 1, 1982.
- Indenture of Trust between NYSERDA and The Bank of New York, as
Trustee, relating to the Pollution Control Revenue Bonds (Orange and
Rockland Utilities, Inc. Project) dated as of July 1, 1982.
<PAGE>
- Second Supplemental Indenture of Trust between NYSERDA and the Bank of
New York, as Trustee, relating to the 9% Pollution Control Revenue
Bonds (Orange and Rockland Utilities, Inc. Projects), 1985 Series.
- Second Supplemental Participation Agreement between NYSERDA and Orange
and Rockland Utilities, Inc., dated as of August 1, 1985.
- First Supplemental Indenture, dated August 15, 1990, to the Indenture
of Mortgage and Deed of Trust of Pike County Light & Power Company.
- Eighth Supplemental Indenture of Rockland Electric Company, dated as of
August 15, 1990.
- Indenture of Trust between NYSERDA and the Bank of New York, as
Trustee, relating to the Pollution Control Revenue Bonds (Orange and
Rockland Utilities, Inc. Project) dated as of August 15, 1994.
- Participation Agreement between NYSERDA and Orange and Rockland
Utilities, Inc., dated as of August 15, 1994.
(b) Reports on Form 8-K
The Company has not filed any reports on Form 8-K current report
covering an event during the fourth quarter of 1994.
<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.
ORANGE AND ROCKLAND UTILITIES, INC.
(Registrant)
By D. LOUIS PEOPLES
(D. Louis Peoples
Vice Chairman of the
Board of Directors and
Chief Executive Officer)
Date: March 17, 1995
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.
Signature and Title Capacity in Which Signing
D. LOUIS PEOPLES* Chief Executive
(D. Louis Peoples, Officer, Director
Vice Chairman of the
Board of Directors and
Chief Executive Officer)
R. LEE HANEY* Chief Financial Officer
(R. Lee Haney, Vice President
and Chief Financial Officer)
TERRY L. DITTRICH* Acting Principal
(Terry L. Dittrich, Acting Accounting Officer
Controller)
H. KENT VANDERHOEF* Chairman of the
(H. Kent Vanderhoef) Board of Directors
RALPH M. BARUCH* Director
(Ralph M. Baruch)
J. FLETCHER CREAMER* Director
(J. Fletcher Creamer)
<PAGE>
Signature and Title Capacity in Which Signing
MICHAEL J. DEL GIUDICE* Director
(Michael J. Del Giudice)
FRANK A. McDERMOTT, JR.* Director
(Frank A. McDermott, Jr.)
KENNETH D. McPHERSON* Director
(Kenneth D. McPherson)
JAMES F. O'GRADY, JR.* Director
(James F. O'Grady, Jr.)
FREDERIC V. SALERNO* Director
(Frederic V. Salerno)
LINDA C. TALIAFERRO* Director
(Linda C. Taliaferro)
*By G. D. CALIENDO
(G. D. Caliendo,
Attorney-in-fact)
Date: March 17, 1995
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
We have audited in accordance with generally accepted auditing
standards, the 1994 consolidated financial statements included in Orange
and Rockland Utilities, Inc.'s Annual Report to Shareholders
incorporated by reference in this Form 10-K, and have issued our report
thereon dated February 2, 1995. Our audit was made for the purpose of
forming an opinion on those consolidated financial statements taken as a
whole. Supplemental Schedule II, Valuation and Qualifying Accounts and
Reserves for the year ended December 31, 1994 (see index of financial
statements) is presented for purposes of complying with the Securities
and Exchange Commissions rules and is not part of the basic consolidated
statements and, in our opinion, fairly states in all material respects
the financial statements. This schedule has been subjected to the
auditing procedures applied in the audit of the basic consolidated
statements and, in our opinion, fairly states in all material respects
the financial data required to be set forth therein in relation to the
basic consolidated financial statements taken as a whole.
ARTHUR ANDERSEN LLP
New York, New York
February 2, 1995
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our reports included or incorporated by reference in
this Form 10-K, into the Company's previously filed Registration
Statements on Form S-8 (File Nos. 33-25358, 33-25359 and 33-22129) and
on Form S-3 (File No. 33-63872).
ARTHUR ANDERSEN LLP
New York, New York
March 17, 1995
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
Board of Directors and Shareholders of
Orange and Rockland Utilities, Inc.
In connection with our audit of the consolidated financial
statements of Orange and Rockland Utilities, Inc. and Subsidiaries
referred to in our report dated February 16, 1994, which report included
an explanatory paragraph that described the investigations and
litigation discussed in Note 12 (Legal Proceedings) of those statements,
which is included in the 1993 Annual Report to Shareholders and
incorporated by reference in this Form 10-K, we have also audited the
schedule listed in the Index at Item 14(a)(2). In our opinion, this
schedule presents fairly, in all material respects, the information
required to be set forth therein.
GRANT THORNTON LLP
New York, New York
February 16, 1994
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our reports dated February 16, 1994, accompanying
the consolidated financial statements and schedule incorporated by
reference or included in the Annual Report of Orange and Rockland
Utilities, inc. and Subsidiaries on Form 10-K for the year ended
December 31, 1993. We hereby consent to the incorporation by reference
of said reports in the Registration Statements of Orange and Rockland
Utilities, Inc. and Subsidiaries on Forms S-8 (No. 33-25358,
No. 33-25359 and No. 33-22129) and on Forms S-3 (No. 33-63872).
GRANT THORNTON LLP
New York, New York
March 17, 1995
<TABLE>
SCHEDULE II
ORANGE AND ROCKLAND UTILITIES, INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts and Reserves
Years Ended December 31, 1994, 1993 and 1992
(Thousands of Dollars)
<CAPTION>
Column A Column B Column C Column D Column E
Additions
(1) (2) Balance
Balance at Charged to Charged at
beginning costs and to other end of
Description of period expenses accounts Deductions period
<S> <C> <C> <C> <C> <C>
December 31, 1994
Allowance for Uncollect-
ible accounts:
Customer accounts $2,026 $2,493 $391 $2,710 $2,200
Other accounts 102 544 8 445 209
Gas marketing accounts 471 287 2 433 327
$2,599 $3,324 $401(A) $3,588(B) $2,736
Reserve for Claims
and Damages $3,830 $2,474 $140 $1,731(C) $4,713
Gas Turbine Maintenance
Reserve $(1,375) $1,367 $ - $ 250(C) $ (258)
December 31, 1993
Allowance for Uncollect-
ible accounts:
Customer accounts $1,651 $2,428 $400 $2,453 $ 2,026
Other accounts 86 207 4 195 102
Gas marketing accounts 75 548 - 152 471
$1,812 $3,183 $404(A) $2,800(B) $ 2,599
Reserve for Claims
and Damages $3,521 $1,895 $146 $1,732(C) $ 3,830
Gas Turbine Maintenance
Reserve $(2,532) $1,367 $ - $ 210(C) $(1,375)
</TABLE>
<TABLE>
(Continued)
<PAGE>
SCHEDULE II
ORANGE AND ROCKLAND UTILITIES, INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts and Reserves
Years Ended December 31, 1994, 1993 and 1992
(Thousands of Dollars)
<CAPTION>
Column A Column B Column C Column D Column E
Additions
(1) (2) Balance
Balance at Charged to Charged at
beginning costs and to other end of
Description of period expenses accounts Deductions period
<S> <C> <C> <C> <C> <C>
December 31, 1992
Allowance for Uncollect-
ible accounts:
Customer accounts $1,670 $2,019 $393 $2,431 $1,651
Other accounts 110 132 1 157 86
Gas marketing accounts 40 43 - 8 75
$1,820 $2,194 $394(A) $2,596(B) $1,812
Reserve for Claims
and Damages $3,427 $2,043 $523 $2,472(C) $3,521
Gas Turbine Maintenance
Reserve $(2,889) $ 622 $ - $ 265(C) $(2,532)
(A) Includes collection of accounts previously written off of $401 in 1994, $404
in 1993, and $394 in 1992.
(B) Accounts considered uncollectible and charged off of $3,588 in 1994, $2,800
in 1993 and $2,596 in 1992.
(C) Payments of damage claims of $1,731 in 1994, $1,732 in 1993 and $2,472 in 1992
and maintenance expenses of $250 in 1994, $210 in 1993 and $265 in 1992.
</TABLE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
________________________
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES ACT OF 1934
________________________
Fiscal Year Ended December 31, 1994 Commission File Number 1-4315
ORANGE AND ROCKLAND UTILITIES, INC.
(Exact name of Registrant as Specified in its Charter)
EXHIBITS
Orange and Rockland Utilities, Inc.
Index of Exhibits
1994 Form 10-K
* 3.1 Restated Certificate of Incorporation, as amended through
April 14, 1988. (Exhibit 4.1 to Registration Statement
33-25359).
3.2 By-Laws, as amended through November 3, 1994.
* 4.1 Composite First Mortgage of the Company as Supplemented and
Modified by Twenty-six Supplemental Indentures. (Exhibit 4.1
to Form 10-K for the fiscal year ended December 31, 1990, File
No. 1-4315).
* 4.2 Twenty-seventh Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1980. (Exhibit 4.2 to Form 10-K for
the fiscal year ended December 31, 1990, File No. 1-4315).
* 4.3 Mortgage Trust Indenture of Rockland Electric Company, dated as
of July 1, 1954. (Exhibit 2.16 to Registration Statement
No. 2-14159).
* 4.6 Third Supplemental Indenture of Rockland Electric Company, dated
as of August 15, 1965. (Exhibit 4.23 to Registration Statement
No. 2-24682).
* 4.11 Mortgage Trust Indenture of Pike County Light & Power Company, dated
as of July 15, 1971. (Exhibit 4.31 to Registration Statement
No. 2-45632).
* 4.12 Twenty-eighth Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1982. (Exhibit 4.12 to Form 10-K for the
fiscal year ended December 31, 1992, File No. 1-4315).
* 4.17 Twenty-ninth Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1984. (Exhibit 4.17 to Form 10-K
for the fiscal year ended December 31, 1989, File No. 1-4315).
* 4.20 Thirtieth Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1986. (Exhibit 4.20 to Form 10-K
for the fiscal year ended December 31, 1991, File No. 1-4315).
* 4.21 Thirty-first Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1988. (Exhibit 4.21 to Form 10-K for
the fiscal year ended December 31, 1988, File No. 1-4315).
* 4.22 Thirty-second Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1990. (Exhibit 4.22 to Form 10-K for
the fiscal year ended December 31, 1990, File No. 1-4315).
* 4.25 Indenture between the Company and The Bank of New York as Trustee
regarding unsecured debt, dated March 1, 1990. (Exhibit 4.25 to Form
10-K for the fiscal year ended December 31, 1990, File No. 1-4315).
* 4.26 First Supplemental Indenture between the Company and The Bank of
New York as Trustee regarding unsecured debt, dated March 7, 1990.
(Exhibit 4.26 to Form 10-K for the fiscal year ended December 31,
1990, File No. 1-4315).
* 4.27 Second Supplemental Indenture between the Company and the Bank of
New York as Trustee regarding unsecured debt, dated October 15, 1992.
(Exhibit 4.27 to Form 10-K for the fiscal year ended December 31, 1992,
File No. 1-4315).
* 4.28 Thirty-third Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1992. (Exhibit 4.28 to Form 10-K for
the fiscal year ended December 3, 1992, File No. 1-4315).
* 4.29 Third Supplemental Indenture between the Company and The Bank of
New York as Trustee regarding unsecured debt, dated as of March 1,
1993. (Exhibit 4.29 to Form 10-K for the fiscal year ended
December 31, 1992, File No. 1-4315).
* 4.30 Ninth Supplemental Indenture of Rockland Electric Company, dated as
of March 1, 1993. (Exhibit 4.30 to Form 10-K for the fiscal year ended
December 31, 1992, File No. 1-4315).
4.31 Thirty-fourth Supplemental Indenture to the First Mortgage of the
Company, dated as of April 1, 1994.
*10.1 General Agreement: Bowline Point Generating Plant, dated as of
October 10, 1969. (Exhibit 5(b) to Registration Statement No. 2-42156).
*10.2 Financing Agreements, dated as of February 1, 1971. (Exhibit 5(a) to
Registration Statement No. 2-42156).
*10.7 New York Power Pool Agreement, dated July 16, 1985. (Exhibit 10.7
to Form 10-K for the fiscal year ended December 31, 1990, File
No. 1-4315).
*10.8 Agreement governing the supply of residual fuel oil by Con Edison to
Bowline Point Generating Station dated August 31, 1983. (Exhibit 10.18
to Form 10-K for fiscal year ended December 31, 1991, File No. 1-4315).
*10.10 PJM Facilities Agreement, dated May 1, 1970, as amended
December 12, 1972. (Exhibit 10.10 to Form 10-K for the fiscal year
ended December 31, 1992, File No. 1-4315).
+*10.11 Officers' Supplemental Retirement Plan, as amended April 1, 1993.
*10.12 Incentive Compensation Plan, amended January 3, 1991. (Exhibit 10.12
to Form 10-K for the fiscal year ended December 31, 1990, File
No. 1-4315).
*10.13 Severance Pay Plan, as amended January 3, 1991. (Exhibit 10.13 to
Form 10-K for the fiscal year ended December 31, 1990, File
No. 1-4315).
*10.14 Management Long-Term Disability Plan. (Exhibit 10.14 to Form 10-K for
the fiscal year ended December 31, 1991, File No. 1-4315).
*10.15 New York Power Authority Firm Purchase Contract, dated July 28, 1975.
(Exhibit 10.15 to Form 10-K for the fiscal year ended December 31,
1992, File No. 1-4315).
10.17 Coal Purchase and Sale Agreement among Orange and Rockland Utilities,
Inc., Rawl Sales and Processing Company, and Massey Coal Sales, Inc.,
dated March 9, 1984, as amended through July 1, 1994.
*10.18 Agreement between Orange and Rockland Utilities, Inc., and Pittston
Coal Sales Company, dated March 14, 1984 as amended through December 1,
1986. (Exhibit 10.18 to Form 10-K for the fiscal year ended
December 31, 1992, File No. 1-4315).
*10.18A Amendment to the Agreement between Orange and Rockland Utilities, Inc.,
and Pittston Coal Sales Company, dated July 1, 1991 and executed
May 5, 1993. (Exhibit 10.18A to Form 10-K for the fiscal year ended
December 31, 1993, File No. 1-4315).
+*10.19 Employment contract between Orange and Rockland Utilities, Inc. and
James F. Smith as amended December 1, 1990. (Exhibit 10.19 to
Form 10-K for the fiscal year ended December 31, 1990, File
No. 1-4315).
10.20 Orange and Rockland Utilities, Inc. Post Director Service Retainer
Continuation Program, as amended March 2, 1995.
*10.21 Electric Contract for the Sale of Firm Power and Energy by the
Power Authority of the State of New York to Orange and Rockland
Utilities, Inc., dated April 26, 1989, including Application dated
April 20, 1989. (Exhibit 10.21 to Form 10-K for the fiscal year
ended December 31, 1989, File No. 1-4315).
+*10.22 Form of Severance Agreement for Company Officers effective
January 3, 1991. (Exhibit 10.22 to Form 10-K for the fiscal year
ended December 31, 1990, File No. 1-4315).
+*10.23 Performance Unit Incentive Plan effective December 3, 1992. (Exhibit
10.23 to Form 10-K for the fiscal year ended December 31, 1992,
File No. 1-4315).
+*10.24 Award Agreement under the Performance Unit Incentive Plan
applicable to P. J. Chambers, Jr., dated December 3, 1992.
(Exhibit 10.24 to Form 10-K for the fiscal year ended December 31,
1992, File No. 1-4315).
+*10.25 Award Agreement under the Performance Unit Incentive Plan applicable to
J. F. Smith dated December 3, 1992. (Exhibit 10.25 to Form 10-K for
the fiscal year ended December 31, 1992, File No. 1-4315).
+*10.26 Letter agreement dated September 29, 1994 between Orange and Rockland
Utilities, Inc. and R. Lee Haney regarding participation in the
Officers' Supplemental Retirement Plan of Orange and Rockland
Utilities, Inc. (Exhibit 10.26 to Form 10-Q for the period ended
September 30, 1994, File No. 1-4315).
+*10.27 Letter agreement dated September 29, 1994 between Orange and Rockland
Utilities, Inc. and D. Louis Peoples regarding participation in the
Officers' Supplemental Retirement Plan of Orange and Rockland
Utilities, Inc. (Exhibit 10.27 to Form 10-Q for the period ended
September 30, 1994, File No. 1-4315).
+10.28 Agreement between Orange and Rockland Utilities, Inc. and Victor J.
Blanchet, Jr. dated March 1, 1995.
+10.29 Deferred Compensation Plan for Non Employee Directors as amended
through October 6, 1994.
13 The Company's 1994 Annual Report to Shareholders to the extent
identified in this Form 10-K Annual Report for the fiscal year
ended December 31, 1994.
*16 Letter from Grant Thornton (Exhibit 16 to Form 8-K/A dated
February 22, 1994, File No. 1-4315).
21 Subsidiaries of the Company.
24 Powers of Attorney.
27 Financial Data Schedule.
*99.1 Joint Cooperation Agreement between the Office of the Rockland County
District Attorney and Orange and Rockland Utilities, Inc., dated
November 3, 1993 (Exhibit 99.1 to Form 10-Q for the quarter ended
September 30, 1993, File No. 1-4315).
*99.2 Complaint against James F. Smith dated March 16, 1994. (Exhibit 99.2
to Form 10-K for the year ended December 31, 1993, File No. 1-4315).
*99.5 Agreement Between Orange and Rockland Utilities, Inc. and Kroll
Associates, Inc. dated as of November 1, 1994. (Exhibit 99.5 to
Form 10-Q for the period ended September 30, 1994, File No. 1-4315).
+ Denotes executive compensation plans and arrangements.
* Incorporated by reference to the indicated filings.
The securities issued relevant to each of the following agreements were
not registered with the Securities and Exchange Commission and the total amount
of securities authorized under each agreement does not exceed 10% of the total
assets of the Company and its subsidiaries on a consolidated basis. Therefore,
as provided in Item 601 of Regulation S-K, the following agreements are not
filed as exhibits. The Company agrees, however, to furnish to the Commission a
copy of each agreement upon request:
- Participation Agreement between NYSERDA and Orange and Rockland
Utilities, Inc., dated as of July 1, 1982.
- Indenture of Trust between NYSERDA and The Bank of New York, as
Trustee, relating to the Pollution Control Revenue Bonds (Orange and
Rockland Utilities, Inc. Project) dated as of July 1, 1982.
- Second Supplemental Indenture of Trust between NYSERDA and the Bank of
New York, as Trustee, relating to the 9% Pollution Control Revenue
Bonds (Orange and Rockland Utilities, Inc. Projects), 1985 Series.
- Second Supplemental Participation Agreement between NYSERDA and Orange
and Rockland Utilities, Inc., dated as of August 1, 1985.
- First Supplemental Indenture, dated August 15, 1990, to the Indenture
of Mortgage and Deed of Trust of Pike County Light & Power Company.
- Eighth Supplemental Indenture of Rockland Electric Company, dated as of
August 15, 1990.
- Indenture of Trust between NYSERDA and the Bank of New York, as
Trustee, relating to the Pollution Control Revenue Bonds (Orange and
Rockland Utilities, Inc. Project) dated as of August 15, 1994.
- Participation Agreement between NYSERDA and Orange and Rockland
Utilities, Inc., dated as of August 15, 1994.
As amended through 11/03/94
ORANGE AND ROCKLAND UTILITIES, INC.
(New York)
BY-LAWS
ARTICLE ONE
OFFICES
SECTION 1.1. Corporation's Office in New York; Mailing
Address for Service of Process. The location of the Corporation's
office within the State of New York, and the post office address to
which the Secretary of State of the State of New York shall mail a
copy of process in any action or proceeding against the Corporation
that may be served upon him, shall be in each case as stated in the
Certificate of Incorporation.
ARTICLE TWO
SHAREHOLDERS MEETINGS
SECTION 2.1. Annual Meetings. An annual meeting of
shareholders to elect directors and transact such other business as
may properly be presented to the meeting shall be held on the second
Wednesday in April of each year or if that day is a legal holiday in
the jurisdiction in which the meeting is to be held then on the next
following day not a legal holiday.
SECTION 2.2. Special Meetings. A special meeting of
shareholders may be called at any time and for any purpose by the
Board of Directors, its Chairman or the President and shall be called
by the Secretary upon receipt of a written request to do so
specifying the matter or matters, appropriate for action at a special
meeting, proposed to be presented to the meeting and signed by
holders of record of an aggregate of not less than one-fourth of the
shares outstanding and entitled to act on such matter or matters on
the date of receipt of such request. At any such special meeting
only such business may be transacted as is related to the purpose or
purposes set forth in the notice required by Section 2.4.
SECTION 2.3. Place of Meetings. Each annual meeting shall be
held at such place, within or without the State of New York, as the
Board of Directors, its Chairman or the President shall fix. Each
special meeting shall be held at such place, within or without the
State of New York, as the person or persons calling the meeting shall
fix. If no place shall be so fixed, the meeting shall be held at the
offices of the Corporation in the State of New York.
<PAGE>
SECTION 2.4. Notice of Meetings. (a) Written notice of a
meeting of shareholders shall be given, personally or by mail, not
less than ten nor more than fifty days before the meeting to each
shareholder entitled to vote at such meeting; such notice shall state
the date, place and hour of the meeting and, unless it is the annual
meeting, shall indicate that it is being issued by or at the
direction of the person or persons calling the meeting. Notice of a
special meeting shall also state the purpose or purposes for which
the meeting is called. If mailed, such notice is given when
deposited in the United States mail, with postage thereon prepaid,
directed to each shareholder at his address as it appears on the
record of shareholders, or, if he shall have duly filed with the
Secretary a written request that notices to him be mailed to some
other address, then directed to him at such other address.
(b) When a meeting is adjourned to another time or place, it
shall not be necessary to give any notice of the adjourned meeting if
the time and place to which the meeting is adjourned are announced at
the meeting at which the adjournment is taken, and at the adjourned
meeting any business may be transacted that might have been
transacted on the original date of the meeting. However, if after
adjournment the Board of Directors fixes a new record date for the
adjourned meeting, a notice of the adjourned meeting shall be given
to each shareholder of record on the new record date who is entitled
to notice under paragraph (a) of this Section 2.4.
SECTION 2.5. Waiver of Notice. Notice of a meeting need not
be given to any shareholder who submits a signed waiver of notice, in
person or by proxy, whether before or after the meeting. The
attendance of any shareholder at a meeting, in person or by proxy,
without protesting prior to the conclusion of the meeting the lack of
notice of such meeting, shall constitute a waiver of notice by him.
SECTION 2.6. Quorum. Except as otherwise required by law or
the Certificate of Incorporation, the holders of record of a majority
of the shares entitled to be voted present in person or represented
by proxy at a meeting shall be necessary and sufficient to constitute
a quorum for the transaction of business at the meeting, but in the
absence of a quorum the holders of record present or represented by
proxy at such meeting may vote to adjourn the meeting from time to
time. A quorum once present to organize a meeting is not broken by
the subsequent withdrawal of any shareholders.
SECTION 2.7. Presiding Officer and Secretary at Meetings.
Each shareholders' meeting shall be presided over by the Chairman of
the Board of Directors or in his absence by the Vice Chairman of the
Board of Directors, if any, or in the absence of both of them by the
President, or if none of them is present by the person designated in
writing by the Chairman of the Board of Directors, or if no person is
so designated, then a chairman of the meeting shall be chosen by the
meeting by a plurality vote. The Secretary or in his absence an
Assistant Secretary shall act as secretary of the meeting, or if no
such officer is present a secretary of the meeting shall be
designated by the person presiding at the meeting.
SECTION 2.8. Voting. Except as otherwise required by law or
the Certificate of Incorporation:
(a) each shareholder of record shall be entitled at every
meeting of shareholders to one vote in person or by proxy for each
share standing in his name on the record of shareholders;
(b) directors shall be elected by a plurality vote;
(c) each other matter properly presented to any meeting shall
be decided by a majority of the votes cast on the matter.
SECTION 2.9. Proxies. Every proxy must be executed in writing
by the shareholder or by his attorney-in-fact. No proxy shall be
valid after the expiration of eleven months from the date thereof,
unless otherwise provided in the proxy. Every proxy shall be
revocable at the pleasure of the shareholder executing it, except in
those cases where an irrevocable proxy is expressly stated to be
given and is permitted by law.
Section 2.10. Inspectors of Election. At any meeting for the
election of directors, the presiding officer shall appoint two
inspectors of election to serve at such meeting. The inspectors
shall be sworn to execute their duties with strict impartiality and
according to the best of their ability.
Section 2.11. Record Date. (a) For the purpose of
determining the shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or to express
consent to or dissent from any proposal without a meeting, or for the
purpose of determining shareholders entitled to receive payment of
any dividend or the allotment of any rights, or for the purpose of
any other action, the Board of Directors may fix in advance a date as
the record date for any such determination of shareholders. Such
date shall not be more than fifty nor less than ten days before the
date of the meeting, nor more than fifty days prior to any other
action.
(b) When a determination of shareholders of record entitled to
notice of or to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any
adjournment thereof, unless the Board of Directors shall fix a new
record date under this section for the adjourned meeting.
ARTICLE THREE
DIRECTORS
SECTION 3.1. Number; Term of Office. The business of the
Corporation shall be managed under the direction of the Board of
<PAGE>
Directors. The Board of Directors shall consist of not less than
7(1) or more than 15 persons, the exact number (i) to be 12 persons
upon adoption of this Section 3.1, subject to change exclusively by
the Board of Directors as provided in this Section 3.1, and (ii) if
to be changed from 12 persons to some other number not less than 7 or
more than 15 persons subsequent to the adoption of this Section 3.1,
to be fixed from time to time exclusively by the Board of Directors
pursuant to a resolution adopted by a majority of the total number of
authorized directors from time to time (whether or not there exist
any vacancies in previously authorized directorships at the time any
such resolution is presented to the Board for adoption). At the
annual meeting of the shareholders of the Corporation at which this
Section 3.1 is adopted, the directors shall be classified into three
classes, as nearly equal in number as possible, with the term of
office of the first class to expire at the 1988 annual meeting of
shareholders, the term of office of the second class to expire at the
1989 annual meeting of shareholders and the term of office of the
third class to expire at the 1990 annual meeting of shareholders. At
each annual meeting of the shareholders of the Corporation following
the annual meeting of the shareholders at which this Section 3.1 is
adopted, directors elected to succeed those directors whose terms
expire shall be elected for a term of office to expire at the third
succeeding annual meeting of shareholders after their election.
SECTION 3.2. Resignation; Removal. Any director of the
Corporation may resign at any time either by oral tender of
resignation at any meeting of the Board of Directors or by giving
written notice thereof to the Corporation. Such resignation shall
take effect at the time specified therefor, and unless otherwise
specified with respect thereto the acceptance of such resignation
shall not be necessary to make it effective. Subject to the rights
of the holders of any class or series of Preferred Stock having
preference over the Common Stock as to dividends or upon liquidation
to elect directors under specified circumstances, any director or
directors, or the entire Board of Directors, may be removed from
office at any time, but only for cause and only by the affirmative
vote of the holders of at least 80 percent of the combined voting
power of all of the then-outstanding shares of stock of all classes
and series of the Corporation entitled to vote generally (the "Voting
Stock"), voting together as a single class (it being understood that,
for all purposes of these By-Laws, each share of the Voting Stock
shall have the number of votes granted to it pursuant to Article
SECOND of the Certificate of Incorporation or any designation of the
rights, powers and preferences of any class or series of the
Preferred Stock of the Corporation made pursuant to said Article
SECOND (a "Preferred Stock Designation")). The Corporation must
notify the director of the grounds of his impending removal and the
director shall have an opportunity, at the expense of the
Corporation, to present his defense to the shareholders by a
__________
(1) Section 704(a) of the NYBCL requires a minimum of three Directors per class
on a staggered board. The minimum number of Directors for O&R is nine.
statement which accompanies or precedes the Corporation's
solicitation of proxies to remove him. The term "entire Board of
Directors" as used in these By-Laws means the total number of
directors which the Corporation would have if there were no
vacancies.
SECTION 3.3. Vacancies. Except as otherwise fixed pursuant to
the provisions of Article SECOND of the Certificate of Incorporation
elating to the rights of the holders of any class or series of
Preferred Stock having a preference over the Common Stock as to
dividends or upon liquidation to elect directors under specified
circumstances, newly created directorships resulting from any
increase in the authorized number of directors or any vacancies in
the Board of Directors resulting from death, resignation, retirement,
disqualification, removal from office or other cause may be filled
only by a majority vote of the directors then in office, even though
less than a quorum of the Board of Directors, acting at a regular or
special meeting. Any director elected in accordance with the
preceding sentence shall hold office until the next annual meeting of
shareholders at which the election of directors is in the regular
order of business and until his successor has been elected and
qualified. No decrease in the authorized number of directors
constituting the entire Board of Directors shall shorten the term of
any incumbent director.
SECTION 3.4 Qualifications. Each of the directors shall be at
least 18 years of age. Each director elected to the Board of
Directors pursuant to the provisions of Section 3.1 or Section 3.3
shall not be 70 years of age or older upon election, except those
directors elected on or before April 11, 1990 and who are 60 years of
age or older on such date shall not be 75 years of age or older upon
election. The directors need not be shareholders of the Corporation.
SECTION 3.5. Regular and Annual Meetings; Notice. Regular
meetings of the Board of Directors shall be held at such time and at
such place, within or without the State of New York, as the Board of
Directors may from time to time prescribe. No notice need be given
of any regular meeting and a notice, if given, need not specify the
purposes thereof. A meeting of the Board of Directors may be held
without notice immediately after an annual meeting of shareholders at
the same place as that at which such meeting was held.
SECTION 3.6. Special Meetings; Notice. A special meeting of
the Board of Directors may be called at any time by the Board of
Directors or its Chairman and shall be called by the Board of
Directors, its Chairman or the Secretary upon receipt of a written
request to do so specifying the matter or matters, appropriate for
action at such a meeting, proposed to be presented at the meeting and
signed by at least two directors. Any such meeting shall be held at
such time and at such place, within the State of New York (or without
the State of New York if the Chairman of the Board of Directors shall
so direct), as shall be stated in the request or as shall be
determined by the body or person calling such meeting. Notice of
such meeting stating the time and place thereof shall be given (a) by
deposit of the notice in the mails (first class, postage prepaid) at
least two days before the day fixed for the meeting addressed to each
director at his address as it appears on the Corporation's records or
at such other address as the director may have furnished the
Corporation for that purpose, or (b) by dispatch of the notice
similarly addressed by telegraph, telex, cable or other electronic
means of communication or by delivery of such notice by telephone or
in person, in each case at least 24 hours before the time fixed for
the meeting.
SECTION 3.7. Waiver of Notice. Notice of a meeting of the
Board of Directors or of any committee thereof need not be given to
any director who submits a signed waiver of notice whether before or
after the meeting, or who attends the meeting without protesting,
prior thereto or at its commencement, the lack of notice to him.
*SECTION 3.8. Chairman of the Board; Presiding Officer and
Secretary at Meetings. The Board of Directors at its first meeting
following the annual meeting of shareholders in each year may elect
one of its members to serve at its pleasure as Chairman of the Board.
The Chairman of the Board may but need not be an officer of or
employed in an executive or any other capacity by the corporation.
Each meeting of the Board of Directors shall be presided over by the
Chairman of the Board or in his absence by the Vice Chairman of the
Board, if any, or if neither is present by such member of the Board
of Directors as shall be chosen by the meeting. The Secretary or in
his absence an Assistant Secretary shall act as secretary of the
meeting, or if no such officer is present, a secretary of the meeting
shall be designated by the person presiding at the meeting.
The Chairman of the Board of Directors shall preside at all meetings
of the shareholders, and shall have such further powers and duties as
may be conferred by the Board of Directors.
SECTION 3.9. Quorum; Voting. A majority of the whole Board of
Directors shall constitute a quorum for the transaction of business,
but in the absence of a quorum a majority of those present (or if
only one be present, then that one) may adjourn the meeting, without
notice other than announcement at the meeting, until such time as a
quorum is present. In the absence of any such announcement notice of
any adjournment shall be given in accordance with the provisions of
Section 3.6.
SECTION 3.10. Meeting by Telephone. At the direction of the
Chairman of the Board of Directors, members of the Board of Directors
or of any committee thereof may participate in meetings of the Board
of Directors or of such committee by means of conference telephone or
__________
* Amended 7/14/94<PAGE>
similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such
participation shall constitute presence in person at such meeting.
SECTION 3.11. Action Without Meeting. Any action required or
permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting if all members
of the Board of Directors or of such committee, as the case may be,
consent thereto in writing and the writing or writings are filed with
the minutes of proceedings of the Board of Directors or of such
committee.
SECTION 3.12. Compensation. A director shall receive such
compensation, if any, for his services as a director or as a member
of any committee of the Board of Directors as may from time to time
be fixed by the Board of Directors, which compensation may be based,
in whole or in part, upon his attendance at meetings of the Board of
Directors or of its committees. He may also be reimbursed for his
expenses in attending any meeting.
SECTION 3.13. Executive Committee. (a) The Board of
Directors, at its first meeting following the annual meeting of
shareholders in each year, may, by resolution adopted by a majority
of the entire Board of Directors, appoint an Executive Committee of
the Board of Directors to consist of the Chairman of the Board of
Directors and two or more additional directors as the Board of
Directors may from time to time determine. The Executive Committee
shall have, and may exercise during the intervals between the
meetings of the Board of Directors, all the powers vested in the
Board of Directors, except that the Executive Committee shall not
have authority as to any of the following matters: the declaration
of dividends; the submission to shareholders of any action as to
which shareholder action is required by law; the filling of vacancies
on the Board of Directors or on any committee thereof; the fixing of
compensation of any director for serving on the Board of Directors or
on any committee thereof; the amendment or repeal of these By-Laws or
the adoption of new By-Laws; and the amendment or repeal of any
resolution of the Board of Directors which by its terms shall not be
so amendable or repealable.
(b) The members of the Executive Committee shall serve at the
pleasure of the Board of Directors. The Board of Directors shall
designate the Chairman of the Executive Committee and fix the
compensation, if any, for his service in such capacity.
(c) Three members of the Executive Committee shall constitute
a quorum.
(d) Meetings of the Executive Committee may be called by the
Chairman of the Executive Committee and shall be called by the
Chairman of the Executive Committee upon receipt of a written request
to do so specifying the matter or matters, appropriate for action at
such a meeting, proposed to be presented at the meeting and signed by
at least two members of the Executive Committee.
(e) The Executive Committee shall serve as the Nominating
Committee of the Board of Directors and, in such capacity, when
vacancies in the Board of Directors occur, shall evaluate candidates
and aid the Board of Directors in attracting qualified candidates to
fill such vacancies.
* SECTION 3.14. Audit Committee. (a) The Board of Directors at
its first meeting following the annual meeting of shareholders in
each year, may, by resolution adopted by a majority of the entire
Board of Directors, appoint an Audit Committee of the Board of
Directors to consist of three or more directors (none of whom shall
be officers of the Corporation) as the Board of Directors may from
time to time determine. In order to bring a fresh perspective to the
Audit Committee, members should be rotated periodically. The Board
of Directors will select a member to be chairperson.
(b) The Audit Committee as a committee of the Board of
Directors is primarily responsible to assist the Board of Directors
in fulfilling its oversight responsibilities by reviewing the
financial information which will be provided to the shareholders and
others, the systems of internal controls which management and the
Board of Directors has established, and the audit process. The Audit
Committee shall have adequate resources to discharge its
responsibilities. The Audit Committee shall have the following
specific duties and functions and such other duties and functions as
from time to time may be prescribed by the Board of Directors:
(i) Provide an open avenue of communication between the
internal auditors, the independent accountant, and the
Board of Directors.
(ii) Periodically review and update the Audit Committee's
charter and the charter of the internal audit
department.
(iii) Review management's plans for engaging the independent
accountant to perform management advisory services, and
projected fees, to satisfy itself that the independence
of the auditor is protected.
(iv) Recommend to the Board of Directors the independent
accountants to be nominated, approve the compensation
of the independent accountant, and review and approve
the discharge of the independent accountant.
(v) Review and concur in the appointment, replacement,
reassignment, or dismissal of the manager of internal
auditing.
(vi) Confirm and assure the independence of the internal
auditors and the independent accountant.
__________
* Amended 6/23/94<PAGE>
(vii) Inquire of management, the manager of internal
auditing, and the independent accountant about the
process each performs to assess significant risks or
exposures and evaluate the steps management has taken
to minimize such risks to the Corporation.
(viii) Consider, in consultation with the independent
accountant and the manager of internal auditing, the
audit scope and plan of the internal auditors and the
independent accountant to ensure coverage is
appropriate and the extent to which such plans can be
relied upon to detect fraud or weaknesses in controls.
The Audit Committee shall formally approve the audit
plan of the internal audit department.
(ix) Review with the manager of internal auditing and
independent accountant the coordination of the audit
effort to assure completeness of coverage, reduction of
redundant efforts, and the effective use of the audit
resources.
(x) Consider and review with the independent accountant and
the manager of internal auditing:
1. Their assessment of the adequacy of the
Corporation's internal controls, including
computerized information system controls and
security.
2. Any related significant findings and
recommendations of the independent accountant and
internal auditing, together with management's
responses thereto.
(xi) Review with management and the independent accountant
at the completion of the annual examination:
1. The Corporation's annual financial statements,
related footnotes for completeness and
appropriateness of accounting principles.
2. The independent accountant's audit of the
Corporation's various financial statements and the
reports thereon.
3. Any significant changes required in the independent
accountant's audit plan.
4. Any serious difficulties or disputes with
management encountered during the course of the
audit and how they were resolved.
<PAGE>
5. Other matters related to the conduct of the audit
which are to be communicated to the Audit Committee
under generally accepted auditing standards.
(xii) Consider and review with management and the manager of
internal auditing:
1. Significant findings resulting from internal
audits.
2. Any difficulties encountered by the internal audit
department in the course of its audits, including
any restrictions on the scope of work or access to
required information.
3. The internal audit department budget and staffing.
4. The internal audit department charter.
(xiii) Review interim filings with the Securities and Exchange
Commission and other published documents containing the
Corporation's financial statements.
(xiv) Review policies and procedures with respect to
officers' expense accounts and perquisites, including
their use of corporate assets, and consider the results
of any review of these areas by internal auditing or
the independent accountant.
(xv) Review with the manager of internal auditing and the
independent accountant the results of their review of
the Corporation's monitoring of compliance with the
Corporation's code of conduct. The Audit Committee
shall ensure that appropriate action is taken in cases
of significant violations of such code.
(xvi) Meet with the manager of internal auditing, the
independent accountant, and management in separate
executive sessions to discuss any matters that the
Audit Committee or these groups believe should be
discussed privately with the Audit Committee. The
Audit Committee should also meet periodically in
executive session to assess management's effectiveness
and to assess the performance of the internal audit
department.
(xvii) Report Audit Committee actions to the Board of
Directors with such recommendations as the
Audit Committee may deem appropriate.
(xviii) The Audit Committee shall have the power to conduct or
authorize investigations into any matters within the
Audit Committee's scope of responsibilities. The Audit
Committee shall be empowered to retain independent
counsel, accountants, or others to assist it in the
conduct of any investigation.
(xix) The Audit Committee shall meet at least four times a
year, or more frequently as circumstances require. The
Audit Committee shall meet separately in executive
session with the independent accountant and the manager
of internal auditing at each meeting. Minutes of the
meetings shall be prepared and filed with the records
of the Corporation. Three or more members shall
constitute a quorum for the purpose of conducting Audit
Committee functions.
*(c) The Audit Committee shall have the following
responsibilities and duties with regard to the Company's ethics
program, as approved and endorsed by the Board of Directors
(the "Ethics Program"):
(i) Provide oversight and direction with regard to
the Company's Ethics Program and to the ethics officer
(the "Ethics Officer") appointed pursuant thereto in a
manner that insures that the Company will operate in
accordance with ethical principles;
(ii) Receive reports at least quarterly from the
Ethics Officer detailing the status of ethics
initiatives, investigations, disciplinary procedures,
compliance efforts and other related activities;
(iii) Report to the entire Board of Directors on a
periodic basis regarding the operation of the Company's
Ethics Program and on matters related thereto deemed by
the Committee to be of interest and significance to the
Board;
(iv) Review, determine and recommend to the entire
Board of Directors, the action(s), if any, beyond those
undertaken by the Ethics Officer, that are necessary to
satisfactorily resolve any reported violations of the
Company's Ethics Program;
(v) Be available, through the Ethics Officer, as an
avenue for employees, vendors and others to express
concerns regarding possible ethical transgressions
involving senior management of the Company.
SECTION 3.15. Other Committees. The Board of Directors, by
resolution adopted by a majority of the entire Board of Directors,
may appoint such committees, in addition to the committees specified
in this ARTICLE THREE, as it may deem appropriate. Each such
committee shall consist of three or more members of the Board of
Directors and shall have such powers of the Board of Directors as
_______________
* Added 11/03/94
shall be conferred or authorized by such resolution and as permitted
by law. Each such committee shall have such name as may be
determined by the resolution appointing it. Each such committee
shall serve at the pleasure of the Board of Directors.
ARTICLE FOUR
OFFICES
*SECTION 4.1. Appointment; Qualification. The officers of the
Corporation shall be a Chief Executive Officer, a President, one or
more Vice Presidents, a Secretary, one or more Assistant Secretaries,
a Treasurer and one or more Assistant Treasurers, each of whom shall
be appointed by the Board of Directors. The Board of Directors may
appoint a Vice Chairman of the Board of Directors and such other
officers as it may from time to time determine. Two or more offices
may be held by the same person, except the offices of President and
Secretary.
SECTION 4.2. Term of Office. The term of office of the
officers of the Corporation shall be until the first meeting of the
Board of Directors following the next annual meeting of shareholders.
Subject to Sections 4.3 and 4.4, each officer shall hold office until
the expiration of the term for which he is appointed and until his
successor is appointed and qualified. Any vacancy in any office
shall be filled for the unexpired portion of the term by the Board of
Directors.
*SECTION 4.3. Resignation. Any officer of the Corporation may
resign at any time by giving written notice of such resignation to
the Board of Directors, its Chairman, the Chief Executive Officer,
the President or the Secretary of the Corporation.
SECTION 4.4. Removal. Any officer of the Corporation
appointed by the Board of Directors may be removed at any time, with
or without cause, by the Board of Directors.
SECTION 4.5. Compensation. The compensation of each officer
shall be such as the Board of Directors may from time to time
determine.
________________
* Amended 7/14/94
<PAGE>
*SECTION 4.6. Vice Chairman of the Board of Directors. The
Vice Chairman of the Board of Directors, if one be appointed, shall
preside in the absence of the Chairman of the Board of Directors at
all meetings of the shareholders and the Board of Directors. In the
absence or disability of the Chairman of the Board of Directors, he
shall exercise the powers and perform the duties of the Chairman of
the Board of Directors, subject to the direction of the Board of
Directors. He shall have such further powers and duties as may be
conferred upon him by the Board of Directors.
**SECTION 4.7. Chief Executive Officer. The Chief Executive
Officer shall act as the general manager and chief executive officer
of the Corporation and, subject to the direction of the Board of
Directors, shall have general supervision of the business and affairs
of the Corporation. The Chief Executive Officer shall have such
further powers and duties as may be conferred by the Board of
Directors.
***SECTION 4.8. President. The President, subject to the
direction of the Board of Directors, shall have charge of the
business of the Corporation relating to general operation, and shall
perform all the duties of his office prescribed by law or the Board
of Directors. In the absence or disability of the Chairman of the
Board of Directors and the Vice Chairman of the Board of Directors,
if any, the President shall exercise the powers and perform the
duties of the Chairman of the Board of Directors, subject to the
direction of the Board of Directors.
SECTION 4.9. Vice President. Each Vice President shall have
such duties and powers as are usually incident to such office and as
the Board of Directors shall from time to time prescribe. In the
absence or disability of the President, the Vice President, or if
there shall be more than one Vice President, then the one designated
by the Board of Directors, shall exercise the powers and perform the
duties of the President, subject to the direction of the Board of
Directors.
SECTION 4.10. Secretary. The Secretary shall be the Secretary
both of the Board of Directors and of the Corporation. The Secretary
shall attend all meetings of shareholders and of the Board of
Directors and keep accurate records thereof. The Secretary shall be
custodian of the corporate seal and shall perform the other duties
incident to the office of Secretary, subject to the direction of the
Board of Directors.
________________
* Former SECTION 4.7, renumbered 7/14/94
** Added 7/14/94
*** Amended 7/14/94
<PAGE>
SECTION 4.11. Assistant Secretary. In the absence or
disability of the Secretary, each Assistant Secretary shall have the
powers and perform the duties of the Secretary, subject to the
direction of the Board of Directors.
SECTION 4.12. Treasurer. The Treasurer shall have care of all
funds and securities of the Corporation and shall exercise the powers
and shall perform the duties incident to the office of Treasurer,
subject to the direction of the Board of Directors.
SECTION 4.13. Assistant Treasurer. In the absence or
disability of the Treasurer, each Assistant Treasurer shall have the
power and perform the duties of the Treasurer, subject to the
direction of the Board of Directors.
SECTION 4.14. Other Officers. Each other officer of the
Corporation shall exercise the powers and shall perform the duties
incident to his office, subject to the direction of the Board of
Directors.
SECTION 4.15. Bond. Any officer of the Corporation, if so
required by the Board of Directors, shall give to the Corporation
such bond or other security for the faithful performance of his
duties as may be satisfactory to the Board of Directors.
ARTICLE FIVE
INDEMNIFICATION AND INSURANCE
SECTION 5.1. Indemnification. (a) The Corporation shall
indemnify to the fullest extent now or hereafter provided for or
permitted by law each person involved in, or made or threatened to be
made a party to, any action, suit, claim or proceeding, arbitration,
alternative dispute resolution mechanism, investigation,
administrative or legislative hearing or any other actual,
threatened, pending or completed proceeding, whether civil or
criminal, or whether formal or informal, and including an action by
or in the right of the Corporation or any other corporation, or any
partnership, joint venture, trust, employee benefit plan or other
enterprise, whether profit or non-profit (any such entity, other than
the Corporation, being hereinafter referred to as an "Enterprise"),
and including appeals therein (any such process being hereinafter
referred to as a "Proceeding"), by reason of the fact that such
person, such person's testator or intestate (i) is or was a director
or officer of the Corporation, or (ii) while serving as a director or
officer of the Corporation, is or was serving, at the request of the
Corporation, as a director, officer, or in any other capacity, any
other Enterprise, against any and all judgments, fines, penalties,
amounts paid in settlement, and expenses, including attorneys' fees,
actually and reasonably incurred as a result of or in connection with
any Proceeding, or any appeal therein, except as provided in Section
5.1(b).
(b) No indemnification shall be made to or on behalf of any
such person if a judgment or other final adjudication adverse to such
person establishes that such person's 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 such person
personally gained in fact a financial profit or other advantage to
which such person was not legally entitled. In addition, no
indemnification shall be made with respect to any Proceeding
initiated by any such person against the Corporation, or a director
or officer of the Corporation, other than to enforce the terms of
this ARTICLE FIVE, unless such Proceeding was authorized by the Board
of Directors. Further, no indemnification shall be made with respect
to any settlement or compromise of any Proceeding unless and until
the Corporation has consented to such settlement or compromise.
(c) Written notice of any Proceeding for which indemnification
may be sought by any person shall be given to the Corporation as soon
as practicable. The Corporation shall then be permitted to
participate in the defense of any such proceeding or, unless
conflicts of interest or position exist between such person and the
Corporation in the conduct of such defense, to assume such defense.
In the event that the Corporation assumes the defense of any such
Proceeding, legal counsel selected by the Corporation shall be
acceptable to such person. After such an assumption, the Corporation
shall not be liable to such person for any legal or other expenses
subsequently incurred unless such expenses have been expressly
authorized by the Corporation. In the event that the Corporation
participates in the defense of any such Proceeding, such person may
select counsel to represent such person in regard to such a
Proceeding; however, such person shall cooperate in good faith with
any request that common counsel be utilized by the parties to any
Proceeding who are similarly situated, unless to do so would be
inappropriate due to actual or potential differing interests between
or among such parties.
(d) In making any determination regarding any person's
entitlement to indemnification hereunder, it shall be presumed that
such person is entitled to indemnification, and the Corporation shall
have the burden of proving the contrary.
SECTION 5.2. Advancement of Expenses. Except in the case of a
Proceeding against a director or officer specifically approved by the
Board of Directors, the Corporation shall, subject to Section 5.1
above, pay expenses actually and reasonably incurred by or on behalf
of a director or officer in defending any Proceeding in advance of
the final disposition of such 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 part or all of such expenses.
<PAGE>
SECTION 5.3. Rights Not Exclusive. The rights to
indemnification and advancement of expenses granted by or pursuant to
this ARTICLE FIVE (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, corporate charter, by-law, resolution of shareholders or
directors or agreement, (ii) shall be deemed to constitute
contractual obligations of the Corporation to any director or
officer who serves in a capacity referred to in Section 5.1 at any
time while this ARTICLE FIVE is in effect, (iii) shall continue to
exist after the repeal or modification of this ARTICLE FIVE with
respect to events occurring prior thereto, and (iv) shall continue as
to a person who has ceased to be a director or officer and shall
inure to the benefit of the estate, spouse, heirs, executors,
administrators or assigns of such person. It is the intent of this
ARTICLE FIVE to require the Corporation to indemnify the persons
referred to herein for the aforementioned judgments, fines,
penalties, amounts paid in settlement, and expenses, including
attorney's fees, in each and every circumstance in which such
indemnification could lawfully be permitted by express provisions of
by-laws, and the indemnification required by this ARTICLE FIVE shall
not be limited by the absence of an express recital of such
circumstances.
SECTION 5.4. Indemnification of Employees and Others. The
Corporation may, from time to time, with the approval of the Board of
Directors, and to the extent authorized, grant rights to
indemnification, and to the advancement of expenses, to any employee
or agent of the Corporation or to any person serving at the request
of the Corporation as a director or officer, or in any other
capacity, any other Enterprise, to the fullest extent of the
provisions of this ARTICLE FIVE with respect to the indemnification
and advancement of expenses of directors and officers of the
Corporation.
SECTION 5.5. Authorization of Contracts. 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,
employee or agent 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 Enterprise, which agreement may
provide for indemnification of such person and advancement of
expenses to such person upon terms, and to the extent, not prohibited
by law. The failure to enter into any such agreement shall not
affect or limit the rights of any such person under this ARTICLE
FIVE.
SECTION 5.6. Insurance. The Corporation may purchase and
maintain insurance to indemnify the Corporation and any person
eligible to be indemnified under this ARTICLE FIVE within the limits
permitted by law.
<PAGE>
ARTICLE SIX
SHARES
*SECTION 6.1. Certificates Representing Shares. The shares of
the Corporation shall be represented by certificates in such form
consistent with law and the Certificate of Incorporation as the Board
of Directors may from time to time prescribe, and may be signed by
the Chairman of the Board of Directors, or the Vice Chairman of the
Board of Directors, if any, or the President or a Vice President and
the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer. The signatures of the officers upon a
certificate may be facsimiles if the certificate is countersigned by
a transfer agent or registered by a registrar other than the
Corporation or any of its employees. Such certificates shall also
bear the seal of the Corporation or a facsimile thereof.
SECTION 6.2. Transfer of Shares. Shares of the Corporation
shall be transferable on the books of the Corporation by the holder
of record thereof or by his attorney upon surrender of the
certificate representing such shares with an assignment endorsed
thereon or attached thereto duly executed and with such proof of
authenticity of signatures as the Corporation may reasonably require.
Prior to the transfer of shares of stock on the books of the
Corporation and issuance of a new certificate to the transferee, the
Corporation may treat the holder of record of a share as the complete
owner thereof exclusively entitled to receive dividends thereon and
to vote such share and otherwise entitled to all the rights and
powers of a complete owner thereof, notwithstanding notice to the
contrary.
SECTION 6.3. Lost Certificates. The Corporation shall issue a
new certificate for shares to replace a certificate theretofore
issued by it alleged to have been lost on such reasonable terms and
conditions as the Board of Directors may from time to time prescribe.
ARTICLE SEVEN
MISCELLANEOUS
SECTION 7.1. Inspection of Records. The Board of Directors
shall have authority, except as otherwise provided by law, to
determine the extent to which the books and records of account of the
Corporation shall be open to inspection by a shareholder.
SECTION 7.2. Waiver of Notice and Lapse of Time. Any action
that is authorized to be taken after notice or after the lapse of a
prescribed period of time may be taken without notice and without the
lapse of such period of time, if at any time before or after such
action is completed the person entitled to such notice or entitled to
participate in the action to be taken, or in the case of a
______________
* Amended 7/14/94
<PAGE>
shareholder, his attorney-in-fact, submits a signed waiver of notice
or of such time requirement.
SECTION 7.3. Fiscal Year. The fiscal year of the Corporation
shall end on December 31 in each year.
SECTION 7.4. Corporate Seal. The corporate seal shall be in
such form as the Board of Directors may from time to time prescribe.
ARTICLE EIGHT
AMENDMENT OF BY-LAWS
SECTION 8.1. Amendment of By-Laws. These By-Laws may be
amended, added to, rescinded or repealed at any meeting of the Board
of Directors or of the shareholders, provided notice of the proposed
change was given in the notice of the meeting or, in the case of a
meeting of the Board of Directors, in a notice given not less than
two days prior to the meeting; provided, however, that,
notwithstanding any other provisions of these By-Laws or any
provision of law which might otherwise permit a lesser vote or no
vote, but in addition to any affirmative vote of the holders of any
particular class or series of the Voting Stock required by law, the
Certificate of Incorporation, any Preferred Stock Designation or
these By-Laws, the affirmative vote of the holders of at least 80
percent of the combined voting power of all the then-outstanding
shares of the Voting Stock, voting together as a single class, shall
be required to alter, amend or repeal any provision of Section 3.1,
3.2 or 3.3 of these By-Laws or any provision of these By-Laws
pertaining to the alteration, amendment or repeal of Section 3.1, 3.2
or 3.3 of these By-Laws.
DMG\BY-LAWS.ORU
11/3/94
[CONFORMED COPY]
ORANGE AND ROCKLAND UTILITIES, INC.
TO
BANKERS TRUST COMPANY
Trustee
________________________
Thirty-fourth Supplemental Indenture
Dated as of April 1, 1994
_________________________
Under the First Refunding Mortgage (now First Mortgage)
Originally Made by Rockland Light and Power Company
to Bankers Trust Company, Trustee, Dated as of May 1, 1928
________________________________________________________________
________________________________________________________________
Recorded in the Office of the Clerk of the County of Orange
on May 31, 1994 at 12:30 p.m. in Liber 5125 of Mortgages at Page
264; in the Office of the Clerk of the County of Rockland on May
31, 1994 at 10:20 a.m. in Liber 710 of Land Records at Page 1048;
in the Office of the Clerk of the County of Sullivan on May 31,
1994 at 1:09 p.m. in Liber 1748 of Land Records at Page 096; in
the Office of the Clerk of the County of Ulster on May 31, 1994
at 3:08 p.m. in Liber 2402 of Deeds at Page 0119.
<PAGE>
TABLE OF CONTENTS
Page
Parties and Recitals .................................... 1
Granting Clauses......................................... 8
Habendum and Trust Declaration........................... 14
ARTICLE I
SUNDRY PROVISIONS.
Section 1. Covenant of seizin, warranty, etc............ 15
Section 2. Supplementing, confirming and incorporating
certain provisions of the Indenture
without waiver of default................. 15
Section 3. Acceptance by and protection of the
Trustee................................... 16
Section 4. Cover, table of contents and article and
description headings, and marginal
notes and headings, if any, not to
affect construction....................... 16
Section 5. Execution in counterparts.................... 17
Section 6. Formal and actual and effective date
hereof.................................... 17
Testimonium Clause and Execution......................... 17
___________________
Appendix
Schedule A. Properties in Rockland County, New York
Schedule B. Properties in Orange County, New York
Schedule C. Properties in Sullivan County, New York
<PAGE>
THIRTY-FOURTH SUPPLEMENTAL INDENTURE dated as of the 1st day
of April, 1994 between Orange and Rockland Utilities, Inc.
(formerly named Rockland Light and Power Company), a corporation
duly organized and existing under and by virtue of the laws of
the State of New York (hereinafter called the "Company"), having
its principal office at One Blue Hill Plaza, Pearl River, in the
County of Rockland and State of New York, party of the first
part, and Bankers Trust Company, a corporation duly organized and
existing under and by virtue of the laws of the State of New York
(hereinafter called the "Trustee"), having an office at Four
Albany Street, in the Borough of Manhattan, City, County and
State of New York, party of the second part,
WHEREAS, the Company heretofore executed and delivered to
the Trustee an Indenture of Mortgage (to which this instrument is
supplemental), dated as of the first day of May, 1928, which is
recorded in the office of the County Clerk of Rockland County,
New York, in Liber 277 of Mortgages at page 232, and in the
office of the County Clerk of Orange County, New York, in Liber
616 of Mortgages at page 3, and in the office of the County Clerk
of Sullivan County, New York, in Liber 227 of Mortgages at page
181, and in the office of the County Clerk of Ulster County, New
York, in Liber 579 of Mortgages at page 16, and has also executed
and delivered to the Trustee the following thirty-three
supplemental indentures (said Indenture of Mortgage as amended
and supplemented by such thirty-three supplemental indentures is
hereinafter called the "Indenture"):
First Supplemental Indenture, dated as of February 6,
1933, which is recorded in the office of the County Clerk of
Rockland County, New York, in Liber 308 of Mortgages at page
398, and in the office of the County Clerk of Orange County,
New York, in Liber 661 of Mortgages at page 113, and in the
office of the County Clerk of Sullivan County, New York, in
Liber 258 of Mortgages at page 58, and in the office of the
County Clerk of Ulster County, New York, in Liber 579 of
Mortgages at page 289; and
Second Supplemental Indenture, dated as of November 1,
1935, which is recorded in the office of the County Clerk of
Rockland County, New York, in Liber 326 of Mortgages at page
35, and in the office of the County Clerk of Orange County,
New York, in Liber 688 of Mortgages at page 219, and in the
office of the County Clerk of Sullivan County, New York, in
Liber 278 of Mortgages at page 603, and in the office of the
County Clerk of Ulster County, New York, in Liber 579 of
Mortgages at page 400; and
Third Supplemental Indenture, dated as of October 31,
1940, which is recorded in the office of the County Clerk of
Rockland County, New York, in Liber 356 of Mortgages at page
159, and in the office of the County Clerk of Orange County,
New York, in Liber 755 of Mortgages at page 58, and in the
office of the County Clerk of Sullivan County, New York, in
Liber 310 of Mortgages at page 569, and in the office of the
County Clerk of Ulster County, New York, in Liber 579 of
Mortgages at page 428; and
Fourth Supplemental Indenture, dated as of October 31,
1942, which is recorded in the office of the County Clerk of
Rockland County, New York, in Liber 372 of Mortgages at page
148, and in the office of the County Clerk of Orange County,
New York, in Liber 785 of Mortgages at page 509, and in the
office of the County Clerk of Sullivan County, New York, in
Liber 323 of Mortgages at page 498, and in the office of the
County Clerk of Ulster County, New York, in Liber 579 of
Mortgages at page 468; and
Fifth Supplemental Indenture, dated as of October 31,
1944, which is recorded in the office of the County Clerk of
Rockland County, New York, in Liber 386 of Mortgages at page
191, and in the office of the County Clerk of Orange County,
New York, in Liber 819 of Mortgages at page 460, and in the
office of the County Clerk of Sullivan County, New York, in
Liber 335 of Mortgages at page 78, and in the office of the
County Clerk of Ulster County, New York, in Liber 579 of
Mortgages at page 503; and
Sixth Supplemental Indenture, dated as of October 31,
1946, which is recorded in the office of the County Clerk of
Rockland County, New York, in Liber 409 of Mortgages at page
497, and in the office of the County Clerk of Orange County,
New York, in Liber 873 of Mortgages at page 584, and in the
office of the County Clerk of Sullivan County, New York, in
Liber 355 of Mortgages at page 481, and in the office of the
County Clerk of Ulster County, New York, in Liber 579 of
Mortgages at page 527; and
Seventh Supplemental Indenture, dated as of December 1,
1948, which is recorded in the office of the County Clerk of
Rockland County, New York, in Liber 441 of Mortgages at page
227, and in the office of the County Clerk of Orange County,
New York, in Liber 953 of Mortgages at page 401, and in the
office of the County Clerk of Sullivan County, New York, in
Liber 383 of Mortgages at page 436, and in the office of the
County Clerk of Ulster County, New York, in Liber 579 of
Mortgages at page 549; and
Eighth Supplemental Indenture, dated as of September
28, 1950, which is recorded in the office of the County
Clerk of Rockland County, New York, in Liber 464 of
Mortgages at page 366, and in the office of the County Clerk
of Orange County, New York, in Liber 1006 of Mortgages at
page 77, and in the office of the County Clerk of Sullivan
County, New York, in Liber 406 of Mortgages at page 315, and
in the office of the County Clerk of Ulster County, New
York, in Liber 599 of Mortgages at page 332; and
Ninth Supplemental Indenture, dated as of April 24,
1951, which is recorded in the office of the County Clerk of
Rockland County, New York, in Liber 473 of Mortgages at page
571, and in the office of the County Clerk of Orange County,
New York, in Liber 1025 of Mortgages at page 203, and in the
office of the County Clerk of Ulster County, New York, in
Liber 615 of Mortgages at page 103, and in the office of the
County Clerk of Sullivan County, New York, in Liber 415 of
Mortgages at page 510; and
Tenth Supplemental Indenture, dated as of October 1,
1951, which is recorded in the office of the County Clerk of
Rockland County, New York, in Liber 483 of Mortgages at page
597, and in the office of the County Clerk of Orange County,
New York, in Liber 1039 of Mortgages at page 288, and in the
office of the County Clerk of Ulster County, New York, in
Liber 629 of Mortgages at page 256, and in the office of the
County Clerk of Sullivan County, New York, in Liber 426 of
Mortgages at page 90; and
Eleventh Supplemental Indenture, dated as of October 1,
1953, which is recorded in the office of the County Clerk of
Rockland County, New York, in Liber 522 of Mortgages at page
214, and in the office of the County Clerk of Orange County,
New York, in Liber 1095 of Mortgages at page 202, and in the
office of the County Clerk of Ulster County, New York, in
Liber 678 of Mortgages at page 567, and in the office of the
County Clerk of Sullivan County, New York, in Liber 460 of
Mortgages at page 193; and
Twelfth Supplemental Indenture, dated as of June 15,
1958, which is recorded in the office of the County Clerk of
Rockland County, New York, in Liber 660 of Mortgages at page
269, and in the office of the County Clerk of Orange County,
New York, in Liber 1255 of Mortgages at page 317, and in the
office of the County Clerk of Ulster County, New York, in
Liber 828 of Mortgages at page 509, and in the office of the
County Clerk of Sullivan County, New York, in Liber 554 of
Mortgages at page 110; and
<PAGE>
Thirteenth Supplemental Indenture, dated as of April
15, 1961, which is recorded in the office of the County
Clerk of Rockland County, New York, in Liber 744 of
Mortgages at page 972, and in the office of the County Clerk
of Orange County, New York, in Liber 1351 of Mortgages at
page 415, and in the office of the County Clerk of Sullivan
County, New York, in Liber 616 of Mortgages at page 179, and
in the office of the County Clerk of Ulster County, New
York, in Liber 893 of Mortgages at page 499; and
Fourteenth Supplemental Indenture, dated as of June 1,
1963, which is recorded in the office of the County Clerk of
Rockland County, New York, in Liber 796 of Mortgages at page
510, and in the office of the County Clerk of Orange County,
New York, in Liber 1392 of Mortgages at page 680, and in the
office of the County Clerk of Sullivan County, New York, in
Liber 670 of Mortgages at page 51, and in the office of the
County Clerk of Ulster County, New York, in Liber 923 of
Mortgages at page 249; and
Fifteenth Supplemental Indenture, dated as of August
15, 1965, which is recorded in the office of the County
Clerk of Rockland County, New York, in Liber 853 of
Mortgages at page 115, and in the office of the County Clerk
of Orange County, New York, in Liber 1457 of Mortgages at
page 600, and in the office of the County Clerk of Sullivan
County, New York, in Liber 715 of Mortgages at page 985, and
in the office of the County Clerk of Ulster County, New
York, in Liber 952 of Mortgages at page 762; and
Sixteenth Supplemental Indenture, dated as of October
1, 1967, which is recorded in the office of the County Clerk
of Rockland County, New York, in Liber 910 of Mortgages at
page 533, and in the office of the County Clerk of Orange
County, New York, in Liber 1501 of Mortgages at page 1059,
and in the office of the County Clerk of Sullivan County,
New York, in Liber 733 of Mortgages at page 763, and in the
office of the County Clerk of Ulster County, New York, in
Liber 980 of Mortgages at page 865; and
Seventeenth Supplemental Indenture, dated as of
February 1, 1970, which is recorded in the office of the
County Clerk of Rockland County, New York, in Liber 963 of
Mortgages at page 53, and in the office of the County Clerk
of Orange County, New York, in Liber 1547 of Mortgages at
page 228, and in the office of the County Clerk of Sullivan
County, New York, in Liber 753 of Mortgages at page 521, and
in the office of the County Clerk of Ulster County, New
York, in Liber 1009 of Mortgages at page 112; and
<PAGE>
Eighteenth Supplemental Indenture, dated as of July 1,
1970, which is recorded in the office of the County Clerk of
Rockland County, New York, in Liber 977 of Mortgages at page
931, and in the office of the County Clerk of Orange County,
New York, in Liber 1561 of Mortgages at page 328, and in the
office of the County Clerk of Sullivan County, New York, in
Liber 761 of Mortgages at page 479, and in the office of the
County Clerk of Ulster County, New York, in Liber 1018 of
Mortgages at page 327; and
Nineteenth Supplemental Indenture, dated as of April 1,
1971, which is recorded in the office of the County Clerk of
Rockland County, New York, in Liber 982 of Mortgages at page
632, and in the office of the County Clerk of Orange County,
New York, in Liber 1566 of Mortgages at page 924, and in the
office of the County Clerk of Sullivan County, New York, in
Liber 763 of Mortgages at page 886, and in the office of the
County Clerk of Ulster County, New York, in Liber 1021 of
Mortgages at page 45; and
Twentieth Supplemental Indenture, dated as of December
1, 1971, which is recorded in the office of the County Clerk
of Rockland County, New York, in Liber 1002 of Mortgages at
page 805, and in the office of the County Clerk of Orange
County, New York, in Liber 1583 of Mortgages at page 503,
and in the office of the County Clerk of Sullivan County,
New York, in Liber 772 of Mortgages at page 1034, and in the
office of the County Clerk of Ulster County, New York, in
Liber 1032 of Mortgages at page 882; and
Twenty-first Supplemental Indenture, dated as of May
15, 1973, which is recorded in the office of the County
Clerk of Rockland County, New York, in Liber 1043 of
Mortgages at page 922, and in the office of the County Clerk
of Orange County, New York, in Liber 1625 of Mortgages at
page 393, and in the office of the County Clerk of Sullivan
County, New York, in Liber 793 of Mortgages at page 517, and
in the office of the County Clerk of Ulster County, New
York, in Liber 1057 of Mortgages at page 1117; and
Twenty-second Supplemental Indenture, dated as of March
1, 1974, which is recorded in the office of the County Clerk
of Rockland County, New York, in Liber 1068 of Mortgages at
page 236, and in the office of the County Clerk of Orange
County, New York, in Liber 1648 of Mortgages at page 439,
and in the office of the County Clerk of Sullivan County,
New York, in Liber 805 of Mortgages at page 88, and in the
office of the County Clerk of Ulster County, New York, in
Liber 1070 of Mortgages at page 997; and
<PAGE>
Twenty-third Supplemental Indenture, dated as of
January 15, 1975, which is recorded in the office of the
County Clerk of Rockland County, New York, in Liber 1089 of
Mortgages at page 831, and in the office of the County Clerk
of Orange County, New York, in Liber 1667 of Mortgages at
page 369, and in the office of the County Clerk of Sullivan
County, New York, in Liber 817 of Mortgages at page 243, and
in the office of the County Clerk of Ulster County, New
York, in Liber 1084 of Mortgages at page 009; and
Twenty-fourth Supplemental Indenture, dated as of
September 1, 1978, which is recorded in the office of the
County Clerk of Rockland County, New York, in Liber 1183 of
Mortgages at page 928, and in the office of the County Clerk
of Orange County, New York, in Liber 1761 of Mortgages at
page 931, and in the office of the County Clerk of Sullivan
County, New York, in Liber 925 of Mortgages at page 188, and
in the office of the County Clerk of Ulster County, New
York, in Liber 1144 of Mortgages at page 806; and
Twenty-fifth Supplemental Indenture, dated as of
September 15, 1978, which is recorded in the office of the
County Clerk of Rockland County, New York, in Liber 1183 of
Mortgages at page 994, and in the office of the County Clerk
of Orange County, New York, in Liber 1761 of Mortgages at
page 920, and in the office of the County Clerk of Sullivan
County, New York, in Liber 925 of Mortgages at page 230, and
in the office of the County Clerk of Ulster County, New
York, in Liber 1144 of Mortgages at page 831; and
Twenty-sixth Supplemental Indenture, dated as of April
1, 1979, which is recorded in the office of the County Clerk
of Rockland County, New York, in Liber 1192 of Mortgages at
page 582, and in the office of the County Clerk of Orange
County, New York, in Liber 1768 of Mortgages at page 975,
and in the office of the County Clerk of Sullivan County,
New York, in Liber 932 of Mortgages at page 327, and in the
office of the County Clerk of Ulster County, New York, in
Liber 1149 of Mortgages at page 150; and
Twenty-seventh Supplemental Indenture, dated as of
April 1, 1980, which is recorded in the office of the County
Clerk of Rockland County, New York, in Liber 1224 of
Mortgages at page 690, and in the office of the County Clerk
of Orange County, New York, in Liber 1796 of Mortgages at
page 775, and in the office of the County Clerk of Sullivan
County, New York, in Liber 963 of Mortgages at page 139, and
in the office of the County Clerk of Ulster County, New
York, in Liber 1165 of Mortgages at page 418; and
<PAGE>
Twenty-eighth Supplemental Indenture, dated as of April
1, 1982, which is recorded in the office of the County Clerk
of Rockland County, New York, in Liber 1273 of Mortgages at
page 761, and in the office of the County Clerk of Orange
County, New York, in Liber 1842 of Mortgages at page 731,
and in the office of the County Clerk of Sullivan County,
New York, in Liber 1022 of Mortgages at page 148, and in the
office of the County Clerk of Ulster County, New York, in
Liber 1195 of Mortgages at page 356; and
Twenty-ninth Supplemental Indenture, dated as of April
1, 1984, which is recorded in the office of the County Clerk
of Rockland County, New York, in Liber 51 of Land Records at
page 1977, and in the office of the County Clerk of Orange
County, New York, in Liber 1909 of Mortgages at page 689,
and in the office of the County Clerk of Sullivan County,
New York, in Liber 1093 of Mortgages at page 53, and in the
office of the County Clerk of Ulster County, New York, in
Liber 1245 of Mortgages at page 647; and
Thirtieth Supplemental Indenture, dated as of April 1,
1986, which is recorded in the office of the County Clerk of
Rockland County, New York, in Liber 144 of Land Records at
page 2856, and in the office of the County Clerk of Orange
County, New York, in Liber 2251 of Mortgages at page 166,
and in the office of the County Clerk of Sullivan County,
New York, in Liber 1197 of Mortgages at page 28, and in the
office of the County Clerk of Ulster County, New York, in
Liber 1381 of Mortgages at page 197; and
Thirty-first Supplemental Indenture, dated as of April
1, 1988, which is recorded in the office of the County Clerk
of Rockland County, New York, in Liber 289 of Land Records
at page 2296, and in the office of the County Clerk of
Orange County, New York, in Liber 3037 of Mortgages at page
196, and in the office of the County Clerk of Sullivan
County, New York, in Liber 1363 of Mortgages at page 368,
and in the office of the County Clerk of Ulster County, New
York, in Liber 1792 of Mortgages at page 132; and
Thirty-second Supplemental Indenture, dated as of April
1, 1990, which is recorded in the office of the County Clerk
of Rockland County, New York, in Liber 406 of Land Records
at page 1166, and in the office of the County Clerk of
Orange County, New York, in Liber 3705 of Mortgages at page
1, and in the office of the County Clerk of Sullivan County,
New York, in Liber 1455 of Land Records at page 319, and in
the office of the County Clerk of Ulster County, New York,
in Liber 2161 of Mortgages at page 272; and
<PAGE>
Thirty-third Supplemental Indenture, dated as of April
1, 1992, which is recorded in the office of the County Clerk
of Rockland County, New York, in Liber 0518 of Land Records
at page 1418, and in the office of the County Clerk of
Orange County, New York, in Liber 4269 of Mortgages at page
258, and in the office of the County Clerk of Sullivan
County, New York, in Liber 1584 of Land Records at page 314,
and in the office of the County Clerk of Ulster County, New
York, in Liber 2503 of Mortgages at page 0046; and
WHEREAS, there were included among the properties
mortgaged under the general granting clauses of the Indenture,
but without specific mention, the properties hereinafter in this
Thirty-fourth Supplemental Indenture specifically described; and
WHEREAS, it is, among other things, provided by Section
6 of Article V of the Indenture that the Company will, from time
to time, whenever reasonably requested by the Trustee, make, do,
execute, acknowledge and deliver, at its own expense, any and all
such further and other acts, deeds, conveyances, mortgages,
transfers and assurances as may be necessary or proper for the
better assuring and confirming unto the Trustee of all or any
part of the trust estate whether at the date of the Indenture or
thereafter owned or acquired by the Company, or to facilitate the
execution of the trust established by the Indenture or to secure
the rights and remedies of the holders of the bonds thereby
secured, and the Trustee has requested the Company to execute,
acknowledge and deliver this Thirty-fourth Supplemental
Indenture; and
WHEREAS, it is among other things, provided by Article
XV of the Indenture that the Company, when authorized by vote or
resolution of its Board of Directors, and the Trustee, from time
to time and at any time, subject to the restrictions in the
Indenture contained, may, and when so required by the Indenture
shall, enter into such indentures supplemental thereto as may or
shall by them be deemed necessary or desirable, in order, among
other purposes, to assign, convey, mortgage, pledge, transfer and
set over unto the Trustee additional property or properties of
the Company for the equal and proportionate benefit and security
of the holders and owners of all bonds at any time issued and
outstanding under the Indenture, which supplemental indentures
shall thereafter form a part of the Indenture; and
WHEREAS, the Company desires, pursuant to said
provisions and as hereinafter provided, to assign, convey,
mortgage, pledge, transfer and set over unto the Trustee certain
properties hereinafter specified to be held subject to the lien
of and upon the trust established by the Indenture; and
<PAGE>
WHEREAS, the Board of Directors of the Company has duly
authorized this Thirty-fourth Supplemental Indenture; and
WHEREAS, all requirements of the Indenture, as
heretofore and hereby supplemented and modified, in respect of
the form of this Thirty-fourth Supplemental Indenture have been
duly complied with and all other conditions, acts and things have
been duly complied with, have been performed and have happened to
make this Thirty-fourth Supplemental Indenture a valid, legal and
binding instrument supplemental to and confirmatory of the
Indenture, and enforceable in accordance with its terms, and the
execution, acknowledgment and delivery of this Thirty-fourth
Supplemental Indenture have been in all respects duly authorized;
NOW, THEREFORE, THIS THIRTY-FOURTH SUPPLEMENTAL INDENTURE
WITNESSETH that, in consideration of the premises and of the
mutual covenants herein contained, of the sum of one dollar,
lawful money of the United States of America, to the Company duly
paid by the Trustee at and before the ensealing and delivery
hereof and for other valuable consideration, the receipt whereof
is hereby acknowledged, and for the purpose of confirming the
Indenture, and in order better to secure equally and
proportionately the payment of the principal of and interest on
all bonds at any time issued and outstanding, under and secured
by the Indenture according to their tenor, purport and effect and
the provisions thereof, of the Indenture, and hereof, and to
secure the performance and observance of all the covenants and
conditions in the bonds, in the Indenture and herein contained,
and for the purpose of better assuring and confirming the trust
estate unto the Trustee pursuant to the provisions of Section 6
of Article V of the Indenture, the Company does hereby confirm
the pledge, mortgage, conveyance, assignment and transfer of the
property set forth and described in the Indenture, except such
properties or interests therein as may have been released by the
Trustee or sold or disposed of in whole or in part as permitted
by the provisions of the Indenture, and has executed and
delivered this Thirty-fourth Supplemental Indenture and has
granted, bargained, sold, aliened, remised, released, enfeoffed,
conveyed, confirmed, assigned, transferred, mortgaged, pledged,
set over and delivered, and by these presents does grant,
bargain, sell, alien, remise, release, enfeoff, convey, confirm,
assign, transfer, mortgage, pledge, set over and deliver unto the
Trustee, its successors in the trust of the Indenture as
supplemented and amended by this Thirty-fourth Supplemental
Indenture and its and their assigns, forever, upon and for the
uses and trusts thereby and hereby established and confirmed, all
and singular the following properties:
All of the lands (including all buildings and improvements
thereon erected), properties, rights, easements, franchises,
licenses, permits and privileges identified, enumerated or
referred to in the schedules hereto annexed and marked,
respectively, Schedules "A", "B" and "C", including and intended
to include all items appearing of record under the name of the
Company as having been recorded from March 1, 1990 through
February 29, 1992 in the respective Grantee Indices in the
offices of the Clerks of the Counties of Rockland, Orange and
Sullivan in the State of New York. Schedules A, B and C are
hereby incorporated herein by reference with the same force and
effect as though the same were set forth herein at length.
And also all other real property, interests in real
property, lands, lands under water, dams, towpaths, embankments,
dug banks, locks, gates, feeders, water rights, rights to divert
water, riparian rights, rights to remove timber, brush and other
materials for lands, rights to store and impound waters, flowage
rights, rights of way, easements, licenses, privileges, consents,
leases, permits and rights of every name, nature and description,
plants, power houses, stations, offices, buildings, tanks,
retorts, structures, improvements, machinery, turbines, engines,
pumps, dynamos, generators, boilers, penstocks, fixtures,
equipment, poles, pole lines, transmission lines, transmission
systems, distribution lines, distribution systems, street
lighting lines, street lighting systems, transformers, switch-
boards, pipes, mains, services, meters and other appurtenances
now owned or hereafter acquired or possessed by the Company.
Also all tools, implements, appliances, apparatus,
equipment, accessories, supplies, material, furniture and other
chattels and personal property of every kind, description and
character now owned or hereafter acquired or possessed by the
Company.
Also all franchises (except the Company's franchise to be a
corporation), permits, ordinances, consents, privileges,
immunities, licenses, and rights of every kind, description and
character, and all contracts, trade marks, trade names, letters
patent, patent applications and patent rights, processes,
options, good will, records, surveys, documents and maps now
owned or controlled or that may hereafter be owned or controlled
by the Company.
Also all other properties, real, personal and mixed,
tangible or intangible, of every kind, description or character,
and wheresoever situate, now owned or hereafter acquired or
possessed by the Company.
Together with all and singular the buildings, improvements,
additions, accretions, ways, alleys, passages, rights of way,
waters, water-courses, water power sites and water rights,
riparian rights and all rights to inundate, submerge, flood and
cover with water and to keep under water and to impound and store
water in, upon, across and over so much of said premises and
lands as shall be flooded or covered by the waters impounded or
held back by any dam constructed or to be constructed, easements,
rights, liberties, privileges, licenses, franchises, tenements,
hereditaments and appurtenances whatsoever, belonging or in any
wise appertaining, or hereafter to belong or appertain, unto any
and all of the premises hereby granted or mentioned and intended
so to be; and the reversion and reversions, remainder and
remainders, incomes, rents, issues and profits thereof, and of
every part and parcel thereof; and all of the estate, right,
title, interest, property, claim and demand of every nature and
kind whatsoever of the Company in law, equity or otherwise
howsoever, of, in and to the same and every part and parcel
thereof.
Provided, however, that there are excepted from the property
and property rights by this Thirty-fourth Supplemental Indenture
granted, bargained, sold, aliened, remised, released, enfeoffed,
conveyed, confirmed, assigned, transferred, mortgaged, pledged,
set over and delivered:
(i) all properties or interests therein heretofore released
by the Trustee or sold or disposed of in whole or in part as
permitted by the provisions of the Indenture;
(ii) the last day of the term of each leasehold estate (oral
or written, or any agreement therefor) enjoyed by the
Company at the time of the execution of this Thirty-fourth
Supplemental Indenture or hereafter, and whether falling
within a general or particular description of property
herein;
(iii) all leasehold interests, permits, licenses, franchises
and rights, whether owned at the time of the execution of
this Thirty-fourth Supplemental Indenture or hereafter
acquired by the Company, which were and are intended to be
hereby granted, conveyed, mortgaged, pledged, transferred
and assigned, but which could not and cannot be so granted,
conveyed, mortgaged, pledged, transferred and assigned
without the consent of other parties whose consent is not,
after reasonable effort, secured, or without subjecting the
Trustee to a liability not otherwise contemplated by the
provisions of the Indenture; and
(iv) all of the following properties and rights, whether
owned at the time of the execution of this Thirty-fourth
Supplemental Indenture or hereafter acquired by the Company:
(a) materials, fuel, supplies, store-room contents and
other similar property stored, generated, manufactured,
produced or acquired by the Company for use and
consumption in the ordinary course of operating the
mortgaged property,
(b) cash on hand and in banks (except proceeds of the
mortgaged property, and insurance and other moneys held
by the Trustee or required by the provisions of the
Indenture to be paid to the Trustee or subjected to the
lien thereof),
(c) lamps and supplies, machinery, appliances, goods,
wares, merchandise, equipment, stores, apparatus and
other movable property at any time handled by the
Company for sale or resale in the usual course of
business, whether or not they constitute fixtures,
(d) timber and the right to cut and remove the same,
(e) gas in pipes, tanks or other reservoirs,
(f) minerals, together with the right to mine and
drill and remove the same,
(g) trade acceptances, bills, notes and accounts
receivable, contracts, demands, choses in action and
judgments (other than choses in action and judgments
for the recovery of real property or establishing a
lien, charge or right therein),
(h) books and documents, and
(i) shares of stock, notes, debentures, bonds and
other certificates or evidences of interest or
indebtedness, and the interest and indebtedness
represented thereby
all unless specifically embraced in the Indenture, this Thirty-
fourth Supplemental Indenture, or in some indenture supplemental
thereto, or actually pledged, or required by some provision
hereof or of some indenture supplemental thereto to be pledged
with the Trustee; provided, however, that if and so long as the
Trustee after an event of default shall have entered upon and
remain in possession of the mortgaged property, or if a receiver,
trustee or other official shall be designated by a court having
jurisdiction to have, and so long as any such official shall
have, possession, custody or control of the mortgaged property,
then the property and rights expressly excepted by this subclause
(iv) from the lien and operation of the Indenture and this
Thirty-fourth Supplemental Indenture shall (to the extent
permitted by law) cease to be so excepted, and the Trustee or
such official, as the case may be, may (to the extent permitted
by law) take possession of any and all of the property described
in this subclause (iv) then on hand, subject to any lien thereon
then existing, and possess, use and administer the same to the
same extent as if such property were part of the mortgaged
property, unless and until possession of the mortgaged property
shall be restored, subject to any liens then existing thereon, to
the Company, its successors or assigns; and upon the taking of
such possession, until such possession shall be restored as
aforesaid, the Indenture and this Thirty-fourth Supplemental
Indenture, shall (to the extent permitted by law) become and be a
lien upon all of the property and rights specified in this
subclause (iv) as to which the Trustee or such official shall
take possession.
Subject, however, as to the properties and rights described
in the Indenture and in this Thirty-fourth Supplemental
Indenture, in so far as affected thereby, (i) to the liens,
encumbrances, reservations, restrictions, conditions,
limitations, covenants, interests and exceptions, if any, set
forth or referred to in said descriptions and in the deeds or
grants referred to in said descriptions, and, as to any property
acquired by the Company after the execution of the original
indenture and becoming subject, or intended to become subject, to
the lien of the Indenture, to any mortgages, encumbrances or
liens thereon existing at the time of the acquisition thereof,
(ii) to liens or charges permitted by the provisions of Paragraph
B of Section 8 of Article II of the Indenture, and (iii) to
existing easements for streets, alleys, highways, railroad
purposes and other rights of way in, over or under certain of the
properties so described, and to any and all existing leases for
camp sites, fishing rights, rights of others to cut wood and
other similar rights and privileges given or granted by the
Company relating to any of the properties so described, none of
which rights and privileges substantially interferes with the
free use and enjoyment by the Company of the properties and
rights so described for the general purposes of the Company's
business.
And subject, further, as to any property acquired by the
Company after the execution of the original indenture and the
supplements thereto including this Thirty-fourth Supplemental
Indenture and becoming subject, or intended to become subject, to
the lien of the Indenture, to any mortgages, encumbrances or
liens thereon existing at the time of the acquisition thereof.
All of the real estate, plants, franchises, rights and other
properties above described, and all other property at any time
held by the Trustee under the trusts of the Indenture and this
Thirty-fourth Supplemental Indenture, including the income,
rents, issues and profits thereof, together with the
appurtenances, as aforesaid, at any time subject to the lien of
the Indenture, and this Thirty-fourth Supplemental Indenture, are
hereinafter sometimes collectively referred to as the "trust
estate."
<PAGE>
No words of particular description of property contained in
this Thirty-fourth Supplemental Indenture shall in any way limit,
curtail or detract from, or be deemed, held or construed to
limit, curtail, or detract from, the effect of the words of
general description of property herein contained.
TO HAVE AND TO HOLD the trust estate unto the Trustee, its
successors and assigns, to and for the only proper use, benefit
and behalf of the Trustee, its successors and assigns forever.
IN TRUST NEVERTHELESS, under and subject to the provisions
and conditions herein and in the Indenture set forth for the
purposes aforesaid and for the equal and proportionate use,
benefit and security of all present and future holders of the
bonds and coupons issued and to be issued under the Indenture as
supplemented and amended by this Thirty-fourth Supplemental
Indenture and for the enforcement of the payment of said bonds
and coupons, if any, when payable according to their tenor,
purport and effect, and to secure the performance of and
compliance with the covenants and conditions of said bonds and
coupons, if any, and of the Indenture as supplemented and amended
by this Thirty-fourth Supplemental Indenture without preference,
priority or distinction as to lien or otherwise of any one bond
over any other bond by reason of priority in the time of issue,
sale or negotiation thereof or by reason of the purpose of its
issue or otherwise howsoever, so that, except as in the Indenture
as supplemented and amended by this Thirty-fourth Supplemental
Indenture otherwise provided, each and every bond issued and to
be issued thereunder shall have the same right, lien and
privilege under and by virtue of the Indenture as supplemented
and amended by this Thirty-fourth Supplemental Indenture and so
that the principal of and interest on every bond shall, subject
to the terms of the Indenture as supplemented and amended by this
Thirty-fourth Supplemental Indenture be equally and
proportionately secured thereby, as if all such bonds at any time
outstanding had been duly issued, sold and negotiated
simultaneously with the execution and delivery of the Indenture
of Mortgage, dated as of the first day of May, 1928, and for the
same consideration; it being intended that the lien and security
of the Indenture as supplemented and amended by this Thirty-
fourth Supplemental Indenture and all of the bonds and coupons,
if any, issued and to be issued under the Indenture shall take
effect from the day of the execution and delivery of the
Indenture, without regard to the time of the actual issue, sale
or disposition of said bonds, and with the same force and effect
for all intents and purposes as though upon said date all of said
bonds had been actually sold and delivered to and were in the
hands of innocent holders thereof for value, and as though all
and singular the properties aforesaid, and all properties which
shall hereafter become subject to the Indenture as supplemented
and amended by this Thirty-fourth Supplemental Indenture had been
in existence and owned by the Company at the time of the
execution and delivery of, and had been specifically included in,
the aforesaid Indenture of Mortgage and specifically pledged,
mortgaged, conveyed, assigned and transferred thereby.
The Company hereby declares that it holds and will hold and
apply all property, described in subclauses (ii) and (iii) above
as specifically reserved and excepted, upon the trusts set forth
in the Indenture and as the Trustee (or any purchaser upon any
sale of the trust estate hereunder) shall for such purpose direct
from time to time, to the fullest extent permitted by law or in
equity and by any instruments securing the same, as fully as if
the same could be and had been hereby granted, conveyed,
mortgaged, pledged, transferred and assigned to and vested in the
Trustee.
ARTICLE I
SUNDRY PROVISIONS
Section 1. The Company covenants and agrees that except as
to after-acquired property, it is lawfully seized and possessed
of the trust estate, free and clear of liens, charges and
encumbrances except those specified in the granting clauses
hereof, and in the deeds referred to in said granting clauses,
except liens and charges specified in paragraph B of Section 8 of
Article II of the Indenture; that it has a good right and lawful
authority to sell, convey, mortgage and pledge the trust estate;
and that it will warrant and defend unto the Trustee, its
successors and assigns, for the benefit of the holders for the
time being of the bonds, the trust estate and the lien and
interest of the Trustee thereon and therein under the Indenture
and this Thirty-fourth Supplemental Indenture against all claims
and demands whatsoever of any and all persons; provided, however,
that nothing in the Indenture or in this Thirty-fourth
Supplemental Indenture contained shall prevent the Company from
hereafter acquiring any property or interest in property subject
to an existing mortgage or other encumbrance thereon and holding
the same subject to such mortgage or other encumbrance.
Section 2. This Thirty-fourth Supplemental Indenture is
expressly made supplemental to and in confirmation of the
Indenture, and the pledge, mortgage, conveyance, assignment and
transfer hereby made are subject to all the provisions,
conditions, covenants and warranties contained in the Indenture
as hereby supplemented and modified, all of which are hereby,
mutatis mutandis, adopted and confirmed as so supplemented and
modified, all as if expressly incorporated herein at length. The
use of terms and expressions herein is in accordance with the
definitions and constructions contained in the Indenture.
Without limitation of the generality of the foregoing, the
remedies and provisions of the Indenture, applicable in case of
any default by the Company thereunder, are hereby adopted and
made applicable, in case of any such default, with respect to the
properties described and included herein; the Trustee shall be
entitled to, may exercise, and shall be protected by, where and
to the full extent that the same are applicable, all the rights,
powers, privileges, immunities and exemptions provided in the
Indenture and there are hereby conferred upon the Trustee the
same powers of sale and other powers over the properties
described and included herein as are by the Indenture expressed
to be conferred; all as if the provisions concerning the same
were incorporated herein at length.
It is, however, mutually understood and agreed that
neither the execution of this Thirty-fourth Supplemental
Indenture nor anything herein contained shall, or shall be
construed to in any way, waive any default or event of default
now or hereafter existing under the bonds or coupons secured or
intended to be secured by or under the Indenture, or in any way
impair any right or remedy now or hereafter existing in respect
thereof.
Section 3. The Trustee, for itself and its successors,
accepts the trusts of this Thirty-fourth Supplemental Indenture
and agrees to execute them, but only upon the following
additional terms and conditions, to wit:
The Trustee shall be under no obligation to see to the
filing, registration or recording of this Thirty-fourth
Supplemental Indenture, but the Company covenants and agrees that
it will, with all convenient speed, cause this Thirty-fourth
Supplemental Indenture to be duly filed, registered or recorded,
and will do all other things requisite to preserve, protect and
continue the lien of the Indenture and this Thirty-fourth
Supplemental Indenture. The Trustee shall not be responsible for
the due execution hereof by the Company, nor for the lien or
security purported or intended to be created hereby, nor for the
validity hereof or of the bonds issued hereunder, nor for or in
respect of the title or value of the trust estate, nor for or in
respect of the recitals contained herein or in the bonds, all of
which recitals are made by the Company solely, and shall not be
construed as made by or imposing any obligation or liability upon
the Trustee. The Trustee shall be entitled to, may exercise and
shall be protected by, where and to the full extent that the same
are applicable, all the rights, powers, privileges, immunities
and exemptions provided in the Indenture as fully as if the
provisions concerning the same, as so supplemented and modified,
were incorporated herein at length. It is hereby stipulated that
the Trustee shall not be taken impliedly to waive hereby any
right it would otherwise have.
Section 4. The cover of this Thirty-fourth Supplemental
Indenture, and all article and description headings, and the
table of contents and marginal notes and headings, if any, are
inserted for convenience only, and shall not control or affect
the meaning, construction or effect hereof.
Section 5. This Thirty-fourth Supplemental Indenture may be
executed in any number of counterparts, each of which shall be
deemed an original; and all said counterparts shall constitute
but one and the same instrument, which shall for all purposes be
sufficiently evidenced by any such original counterpart.
Section 6. The date of this Thirty-fourth Supplemental
Indenture is intended as and for a date for reference and for
identification, the actual time of the execution hereof being the
date of the acknowledgment hereof by the officer executing this
instrument on behalf of the Trustee; and this Thirty-fourth
Supplemental Indenture, and all modifications herein contained,
shall be effective from and after the date of said
acknowledgment.
IN WITNESS WHEREOF, Orange and Rockland Utilities, Inc. has
caused this Thirty-fourth Supplemental Indenture to be signed in
its name and on its behalf by its President or one of its Vice
Presidents and its corporate seal to be hereunto affixed, duly
attested by its Secretary or Assistant Secretary, and Bankers
Trust Company, to evidence its acceptance of the provisions
herein, has caused this Thirty-fourth Supplemental Indenture to
be signed in its name and behalf by one of its Vice Presidents or
Assistant Vice Presidents and its Secretary or one of its
Assistant Secretaries, as of the day and year first above
written.
ORANGE AND ROCKLAND UTILITIES, INC.
By /s/ Victor J. Blanchet, Jr.
Title: President
Attest:
/s/ Victor A. Roque
Title: Secretary
BANKERS TRUST COMPANY
By /s/ Robert Caporale
Title: Vice President
Attest:
/s/ M. Lisa Morrone
Title: Assistant Treasurer
STATE OF NEW YORK )
) ss.:
COUNTY OF ROCKLAND )
On the 16th day of May, in the year 1994, before
me personally came Victor J. Blanchet, Jr. to me known, who,
being by me duly sworn, did depose and say that he resides at
Woodlands Drive, Tuxedo, New York; that he is President of Orange
and Rockland Utilities, Inc., the corporation described in and
which executed the above instrument; that he knows the seal of
said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order of the Board
of Directors of said corporation, and that he signed his name
thereto by like order.
/s/ Todd M. Lieval
Notary Public
Todd M. Lieval
Notary Public, State of New York
No. 4954004
Qualified in Rockland County
Commission Expires July 31, 1995
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 25th day of May, in the year 1994, before me
personally came Robert Caporale, to me known, who, being by me
duly sworn, did depose and say that he resides at 35 Meadowbrook
Lane, Mt. Kisco, New York 10549 ; that he is Vice President of
Bankers Trust Company, the corporation described in and which
executed the above instrument; that (s)he knows the seal of said
corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by order of the Board of
Directors of said corporation, and that he signed his name
thereto by like order.
/s/ John Florio
Notary Public
John Florio
NOTARY PUBLIC, State of New York
No. 01FL5021631
Qualified in New York County
Commission Expires 12/20/95
<PAGE>
SCHEDULE A
Listing of all properties acquired by Orange and Rockland
Utilities, Inc. located in Rockland County, New York, appearing
of record in the General Index of Land Records of the Clerk of
the County of Rockland from March 1, 1992 through February 28,
1994.
[The text of this schedule has been omitted from the
counterpart originals of this Thirty-fourth Supplemental
Indenture filed in offices of county clerks other than the
County of Rockland.]
<TABLE>
ROCKLAND COUNTY SCHEDULE A
<CAPTION>
Grantee Grantor Liber Page Year
<S> <C> <C> <C> <C>
Orange and Rockland
Utilities, Inc. Jaytree Partners 0505 2248 Mar. 05, 1992
Same RUR, Inc. 0505 2252 Mar. 05, 1992
Same Fairgrounds, Inc. 0508 0694 Mar. 18, 1992
Same Fairgrounds, Inc. 0508 0698 Mar. 18, 1992
Same Exit 12 Associates, Inc. 0509 1342 Mar. 23, 1992
Same GSI A Partnership 0509 1346 Mar. 23, 1992
Same Clarkstown, Town of 0509 1348 Mar. 23, 1992
Same Thiells Development
Corp. 0511 2891 Apr. 01, 1992
Same Edmund McHale 0511 2895 Apr. 01, 1992
Same George Nicholson 0515 2528 Apr. 16, 1992
Same Ponce De Leon Federal
Savings Bank 0515 2529 Apr. 16, 1992
Same Gaetano Ragusa 0515 2534 Apr. 16, 1992
Same Eliezer Herskowitz 0515 2536 Apr. 16, 1992
Same Tolstoy Foundation,
Inc. 0515 2540 Apr. 16, 1992
Same David E. Owens 0517 2787 Apr. 27, 1992
Same Alice Gerard 0517 2790 Apr. 27, 1992
Same Rolf Greibesland 0517 2792 Apr. 27, 1992
Same Broad Sky Properties,
Inc. 0517 2796 Apr. 27, 1992
Same Broad Sky Properties,
Inc. 0517 2799 Apr. 27, 1992
Same Broad Sky Properties,
Inc. 0517 2802 Apr. 27, 1992
Same FAB Construction Corp. 0519 0040 Apr. 30, 1992
Same Rockhill Bldg. Corp. 0519 0043 Apr. 30, 1992
Same FAB Construction Corp. 0519 0046 Apr. 30, 1992
ROCKLAND COUNTY SCHEDULE A
Same FAB Construction Corp. 0519 0049 Apr. 30, 1992
Same James F. Metress 0522 1025 May 14, 1992
Same Timothy D. Phillips 0522 1027 May 14, 1992
Same Wayne A. Robertson 0522 1030 May 14, 1992
Same Edward Roff 0522 1032 May 14, 1992
Same Robert M. Murphy 0522 1035 May 14, 1992
Same Wilhelm Tomasits 0522 1038 May 14, 1992
Same Mailbox N More, Inc. 0528 2631 June 11, 1992
Same Mar Feld Building Corp. 0530 1110 June 18, 1992
Same Homsum Corp. 0530 1113 June 18, 1992
Same Wide World Realty, Inc. 0530 1116 June 18, 1992
Same Chestnut Hollow Estates,
Inc. 0530 1120 June 18, 1992
Same Gregory W. Miller 0532 2818 June 29, 1992
Same Parker Nanuet Associates 0537 1844 July 17, 1992
Same Costco Wholesale Corp.
Washington Corp. 0537 1848 July 17, 1992
Same Bernard Gollomp 0537 1852 July 17, 1992
Same Michael Mazzucca 0537 1855 July 17, 1992
Same Victor Ostreicher 0537 1858 July 17, 1992
Same Cong Bnai Yakov
Barditochov, Inc. 0537 1861 July 17, 1992
Same Mary Lane 0537 1864 July 17, 1992
Same Nicholas Kalogeras 0539 1221 July 27, 1992
Same Big G. Realty Corp. 0539 1224 July 27, 1992
Same Narlan Develoment Corp. 0542 2370 Aug. 11, 1992
Same Robert E. Barrett 0542 2373 Aug. 11, 1992
Same GHAT Associates 0547 1458 Sep. 01, 1992
Same Eric Bergstol 0547 1461 Sep. 01, 1992
ROCKLAND COUNTY SCHEDULE A
Same Nick Lotito 0547 1464 Sep. 01, 1992
Same Thomas M. Esmond 0548 0321 Sep. 02, 1992
Same Robert D. Gerard 0550 0906 Sep. 15, 1992
Same Cam Am Developement Corp. 0550 0909 Sep. 15, 1992
Same Ralph DeMaio 0550 0913 Sep. 15, 1992
Same Montebello Village of 0550 0916 Sep. 15, 1992
Same Rockland County 0553 1200 Sep. 25, 1992
Same Robert Champeau 0557 2416 Oct. 14, 1992
Same Robert J. Miller 0557 2420 Oct. 14, 1992
Same Camp Venture, Inc. 0557 2423 Oct. 14, 1992
Same John Andriello 0557 2426 Oct. 14, 1992
Same William Quirk 0557 2429 Oct. 14, 1992
Same Douglas J. Cole Hatchard, Jr. 0557 2432 Oct. 14, 1992
Same AGPN Industries, Inc. 0557 2435 Oct. 14, 1992
Same Celtic Construction Corp. 0557 2438 Oct. 14, 1992
Same Clarkstown, Town of 0557 2441 Oct. 14, 1992
Same Thruway Paper Recycling
Center 0557 2444 Oct. 14, 1992
Same Behner Developers, Inc. 0559 1707 Oct. 20, 1992
Same Behner Developers, Inc. 0559 1710 Oct. 20, 1992
Same Behner Developers, Inc. 0559 1713 Oct. 20, 1992
Same George Steward 0559 1716 Oct. 20, 1992
Same Newhaus Corp. 0562 0237 Oct. 28, 1992
Same Celtic Construction Corp. 0562 0240 Oct. 28, 1992
Same George Sikorsky 0562 0243 Oct. 28, 1992
Same Etta Hillson 0564 1948 Nov. 06, 1992
Same New York State Association
for Retarded 0564 1953 Nov. 06, 1992
Same Richard Mills 0564 1956 Nov. 06, 1992
ROCKLAND COUNTY SCHEDULE A
Same Producto Electric Corp. 0564 1959 Nov. 06, 1992
Same Carl Jones 0567 1121 Nov. 17, 1992
Same Cedar Pond Estates Corp. 0567 1124 Nov. 17, 1992
Same Homsum Corp. 0567 1128 Nov. 17, 1992
Same Willow Tree Development Corp. 0567 1131 Nov. 17, 1992
Same Eric Bergstol 0579 2995 Jan. 04, 1993
Same Veterans Memorial Associa-
tion of Piermont, Inc. 0579 2998 Jan. 04, 1993
Same Annies Snack Shack, Inc. 0580 0001 Jan. 04, 1993
Same Dominick Marangi 0580 0004 Jan. 04, 1993
Same George Wald 0580 0007 Jan. 04, 1993
Same Armand Miele 0580 0010 Jan. 04, 1993
Same Mountain Shadows, Inc. 0580 0014 Jan. 04, 1993
Same Sky Les Homes 0583 2451 Jan. 20, 1993
Same Alfonso Guggenti 0583 2454 Jan. 20, 1993
Same Saehill Realty, Inc. 0583 2457 Jan. 20, 1993
Same Henry F. Tew 0583 2460 Jan. 20, 1993
Same Morris Wexler 0583 2463 Jan. 20, 1993
Same Louis Pakosynski 0583 2466 Jan. 20, 1993
Same Wheel Inn Realty, Inc. 0585 0412 Jan. 26, 1993
Same Pat Nazzaro Disposal, Inc. 0585 0415 Jan. 26, 1993
Same USA Construction Corp. 0585 0418 Jan. 26, 1993
Same Barry Pomerantz 0589 0338 Feb. 11, 1993
Same Ramapo Land Co., Inc. 0591 0852 Feb. 23, 1993
Same Presidential Life
Insurance Co. 0591 0855 Feb. 23, 1993
Same Marco Taddeo 0591 0859 Feb. 23, 1993
Same Ronstean Const. Corp. 0591 0862 Feb. 23, 1993
Same Sloatsburg, Village of 0591 0865 Feb. 23, 1993
ROCKLAND COUNTY SCHEDULE A
Same Ruth P. Collazo 0591 0868 Feb. 23, 1993
Same Milton Lieberman 0591 0871 Feb. 23, 1993
Same Roadway Express, Inc. 0591 2451 Feb. 25, 1993
Same Frank A. Kline 0595 1485 Mar. 15, 1993
Same ZD Square Realty Corp. 0595 1488 Mar. 15, 1993
Same Mathew Lonberg 0595 1492 Mar. 15, 1993
Same County of Rockland
Industrial Devel. Agency 0595 1495 Mar. 15, 1993
Same Wayne Tanchak 0595 1502 Mar. 15, 1993
Same MTA Development Corp., Inc. 0595 1506 Mar. 15, 1993
Same Pomona Fields, Inc. 0595 1510 Mar. 15, 1993
Same David Braun 0598 0358 Mar. 29, 1993
Same Nanjappa Ravi 0599 1938 Apr. 05, 1993
Same Anthony Savoca 0599 1942 Apr. 05, 1993
Same Hae A. Kim 0599 1945 Apr. 05, 1993
Same Thomas Aquinas College 0599 1949 Apr. 05, 1993
Same Harvey Houtkin 0599 1952 Apr. 05, 1993
Same Marvin Sontag 0599 1955 Apr. 05, 1993
Same Loupko Todoric 0601 1889 Apr. 15, 1993
Same Vincent Zito 0601 1893 Apr. 15, 1993
Same Stuart M. Kirschner 0601 1894 Apr. 15, 1993
Same Joy Acres, Inc. 0606 0871 May 05, 1993
Same Sidney Edelman 0606 1696 May 06, 1993
Same Kevin Michella 0606 1698 May 06, 1993
Same Timberline Associates 0606 1700 May 06, 1993
Same Walter J. Harrington 0606 2512 May 07, 1993
Same Seymour Selig 0606 2515 May 07, 1993
Same Frank Tucci 0606 2518 May 07, 1993
ROCKLAND COUNTY SCHEDULE A
Same Z. V. Zakarian 0606 2521 May 07, 1993
Same Derek Vidler 0611 1699 May 27, 1993
Same Tomkins Ridge, Inc. 0614 0112 June 07, 1993
Same John F. Walsh 0614 0114 June 07, 1993
Same Clara Calamari 0616 2961 June 17, 1993
Same USA Construction Corp. 0616 2963 June 17, 1993
Same Marshall Davis 0616 2967 June 17, 1993
Same Timothy Gulla 0620 1584 June 30, 1993
Same James H. C. Hu 0624 0673 July 15, 1993
Same Robet M. Kotin 0624 0676 July 15, 1993
Same Myrna Frazin 0624 0679 July 15, 1993
Same Brian Moore 0624 0682 July 15, 1993
Same Broad Sky, Inc. 0628 2478 Aug. 02, 1993
Same Myung Chun Choi 0628 2481 Aug. 02, 1993
Same SGW Construction, Inc. 0628 2483 Aug. 02, 1993
Same Brookvelt, Inc. 0635 0419 Aug. 25, 1993
Same Mar Feld Building Corp. 0635 0422 Aug. 25, 1993
Same Philip M. Scala 0635 0426 Aug. 25, 1993
Same KDJ Realty, Inc. 0635 0428 Aug. 25, 1993
Same Israel Herskowitz 0635 0432 Aug. 25, 1993
Same Dolores A. James 0635 0435 Aug. 25, 1993
Same Rockland County 0635 0437 Aug. 25, 1993
Same Rockland Central Plaza,
Inc. 0638 2358 Sep. 09, 1993
Same United Rockland Stairs 0644 0494 Sep. 29, 1993
Same Shimon Mendlowitz 0644 0497 Sep. 29, 1993
Same Martin Feldi 0644 0499 Sep. 29, 1993
ROCKLAND COUNTY SCHEDULE A
Same Barbara Monteith 0644 0503 Sep. 29, 1993
Same William Brodsky 0644 0505 Sep. 29, 1993
Same Mount Crest Development
Corp. 0648 2739 Oct. 18, 1993
Same Maureen O. Roberts 0648 2743 Oct. 18, 1993
Same New City Fire Engine
Co. No. 1, Inc. 0648 2745 Oct. 18, 1993
Same Dominican College of
Blauvelt 0648 2748 Oct. 18, 1993
Same Nanuet Garage, Inc. 0650 0959 Oct. 21, 1993
Same Wilbur George 0650 1022 Oct. 21, 1993
Same William Helmke 0650 1025 Nov. 21, 1993
Same Marathon Development Corp. 0654 1962 Nov. 05, 1993
Same Israel Herskowitz 0654 1965 Nov. 05, 1993
Same Hegarty Homes, Inc. 0654 1969 Nov. 05, 1993
Same Hegarty Homes, Inc. 0654 1973 Nov. 05, 1993
Same Suffern Hills Subdivision,
Inc. 0657 0310 Nov. 15, 1993
Same Shaul Rosenblum 0657 0314 Nov. 15, 1993
Same Patrick Durkin 0665 0236 Dec. 09, 1993
Same Brian Nelson 0676 0790 Jan. 14, 1994
Same Congregation Khal Torath
Chaim 0676 0791 Jan. 14, 1994
Same Joy Builders, Inc. 0676 0794 Jan. 14, 1994
Same Christopher Walter 0676 0797 Jan. 14, 1994
Same RR Construction 0681 0850 Feb. 02, 1994
Same Tolstoy Foundation, Inc. 0681 0853 Feb. 02, 1994
Same Nellie M. Knorr 0681 0856 Feb. 02, 1994
Same Mates Friesel 0687 2421 Feb. 25, 1994
Same Bradley Industrial Park 0687 2425 Feb. 25, 1994
ROCKLAND COUNTY SCHEDULE A
Same Nyack College 0687 2429 Feb. 25, 1994
Same John Walsh 0687 2432 Feb. 25, 1994
</TABLE>
SCHEDULE B
Listing of all properties acquired by Orange and Rockland
Utilities, Inc. located in Orange County, New York, appearing of
record in the Grantee Index of the Clerk of the County of Orange
from March 1, 1992 through February 28, 1994.
[The text of this schedule has been omitted from the
counterpart originals of this Thirty-fourth Supplemental
Indenture filed in offices of county clerks other than the
County of Orange.]
<TABLE>
<CAPTION>
GRANTEE GRANTOR LIBER PAGE DATE TOWN SEC.BL.LOT
<S> <C> <C> <C> <C> <C>
Orange and Rockland
Utilities, Inc.
(Right of Way) Horowitz, Jeffrey & Anna 3620 28 June 23, 1992 54 18-1-55
Same ( " " ") Monroe-Woodbury Jewish 3620 31 June 23, 1992 40 2-1-4.31
Community Center, Inc.
Same ( " " ") Avery, Alan & Nancy L. 3620 34 June 23, 1992 32 6-1-3
Same ( " " ") Van De Weert, Cornelius & Ruth 3620 37 June 23, 1992 22 17-1-p/o 31.2
Same ( " " ") Holodinski, Michael, Jr.,
Michael S., & Gwendolyn 3620 40 June 23, 1992 54 26-1-26
Same ( " " ") Quality Home Builders of Orange 3620 43 June 23, 1992 20 101-1-3.2
County, Inc.
Same ( " " ") Smith, Howard 3620 46 June 23, 1992 54 8-2-27
Same ( " " ") Ernst, John & Patricia 3620 49 June 23, 1992 44 12-1-7
Same ( " " ") Rossi, Wayne 3620 52 June 23, 1992 54 207-2-2.2
Same ( " " ") Krueger, Gary 3620 55 June 23, 1992 54 10-1-66.4
Same ( " " ") Hernandez, Charles L. & Barbara 3622 151 June 25, 1992 44 12-1-58
Same ( " " ") McGough, Michael & Robin 3622 154 June 25, 1992 54 213-2-19
Same ( " " ") Zabriskie, Glen & Kristi 3622 157 June 25, 1992 32 10-1-124
Same ( " " ") Dolson, Joseph & Margaret 3622 160 June 25, 1992 20 40-1-68.2
Same ( " " ") Woodruff, Homer W. & Lois E. 3622 164 June 25, 1992 28 24-2-2
Same ( " " ") Sterling Forest Corporation 3622 167 June 25, 1992 54 83-1-5.22
Same ( " " ") K & S Development Corp. 3622 170 June 25, 1992 40 232-1-25 & 26
Same ( " " ") Henninger, Alma D. 3622 173 June 25, 1992 20 101-1-1
Same ( " " ") Ross, Bernard & Lillian 3622 176 June 25, 1992 40 207-1-11
Same ( " " ") Dougherty, Raea 3622 179 June 25, 1992 54 66-1-41
Same ( " " ") Ardler, Edmund & Diane 3630 231 July 10, 1992 32 6-1-4
Same ( " " ") Middletown and New Jersey 3630 234 July 10, 1992 9 45-4-14.2
Railway Company, Inc.
Same ( " " ") Faulkner, Robert & Eileen 3630 237 July 10, 1992 54 58-1-18.11
Same ( " " ") Ross, Donald 3630 240 July 10, 1992 44 12-1-8
Same ( " " ") Riccio, Antonio & Maria 3630 243 July 10, 1992 56 4-1-77
Same ( " " ") Petrizzo, Pasquale & Michelina 3630 246 July 10, 1992 52 36-2-11
Same ( " " ") Sickmiller, Daniel & Helen 3630 249 July 10, 1992 38 12-1-46.22
Same ( " " ") Scholz, Helmut 3630 252 July 10, 1992 28 51-4-41
Same ( " " ") Heffner, Todd 3630 255 July 10, 1992 28 24-2-54
Same ( " " ") Ten Eyck, Paul W. & Susan 3630 258 July 10, 1992 54 31-2-34.3
Same ( " " ") R.F.F. Corporation 3644 185 August 5, 1992 54 41-1-72
Same ( " " ") R.F.F. Corporation 3644 188 August 5, 1992 54 41-1-82
Same ( " " ") Vogel, Richard and Davidson, Deborah 3644 191 August 5, 1992 26 21-1-64.2
Same ( " " ") United Talmudical Academy, Inc. 3644 194 August 5, 1992 40 302-2-13.1
Same ( " " ") Dachrisly Realty Corp. 3644 197 August 5, 1992 40 302-2-23.1
Same ( " " ") Westervelt, Joseph 3644 200 August 5, 1992 58 26-1-51.22
Same ( " " ") Mendez, Daniel 3644 203 August 5, 1992 26 17-1-47
Same ( " " ") Stoddard, Jeffrey & Luann 3644 206 August 5, 1992 26 21-1-102
Same ( " " ") Keesler, Harrison 3644 209 August 5, 1992 44 14-1-82.11
14-1-82.12
Same ( " " ") Perino, Robert F. & Ingrid S. 3644 212 August 5, 1992 32 10-1-121
Same ( " " ") Orlando, Anthony & Elizabeth 3647 22 August 11, 1992 13 17-4-5.3
Same ( " " ") Nolan, William & Mary Lou 3647 25 August 11, 1992 54 49-1-41.2
Same ( " " ") ERAR Operating Corp. 3647 28 August 11, 1992 54 101-4-12
Same ( " " ") Williams, Trevor R. & Patricia D. 3647 31 August 11, 1992 22 1-1-3.222
Same ( " " ") 11 Achdus Summer Homes, Inc. 3647 34 August 11, 1992 58 13-1-1.1
Same ( " " ") Peruso, John R. & Lynn A. 3647 37 August 11, 1992 54 49-1-62.1
Same ( " " ") Thompson Ridge Realty Corp. 3647 40 August 11, 1992 26 24-1-54.22
Same ( " " ") Neuhaus, Ralph K. & Heidi 3647 43 August 11, 1992 22 5-1-27.14
Same ( " " ") Bisky, Thomas and Bookey, Catherine 3647 46 August 11, 1992 54 27-1-1.12
Same ( " " ") Konopka, Lawrence and Skoogfors, Madelon 3647 49 August 11, 1992 54 27-1-1.13
Same ( " " ") Ishihara, Naoka 3652 304 August 19, 1992 54 47-1-97.1
Same ( " " ") Pernice, John & Wendie Feman 3652 307 August 19, 1992 52 7-1-46.12
Same ( " " ") Vitucci, Frank & Mary 3652 310 August 19, 1992 28 23-1-23
Same ( " " ") McGee, Charles J. & Doreen P. 3652 313 August 19, 1992 54 29-1-107
Same ( " " ") Warwick Valley Central School Dist. 3652 316 August 19, 1992 54 42-1-35.1
Same ( " " ") Kamalian, Michael 3652 319 August 19, 1992 38 1-1-14.6
Same ( " " ") Miller, Bruce A. & Phylliss M. 3652 322 August 19, 1992 54 17-1-Var. Lots
Same ( " " ") Gauss, Russell & Catherine M. 3652 325 August 19, 1992 52 7-2-47
Same ( " " ") Mendez, Daniel 3652 328 August 19, 1992 26 17-1-47
Same ( " " ") Wenman, Richard & Patricia 3652 331 August 19, 1992 54 11-1-66
Same ( " " ") Capra, Anthony & Maria 3665 38 September 15, 1992 28 50-1-10.1
Same ( " " ") Sinsabaugh, Theodore & Jane M. 3665 41 September 15, 1992 56 25-1-37.12
Same ( " " ") Cerullo, Henry M. 3665 44 September 15, 1992 30 13-1-74 & 75
Same ( " " ") Strang, Robert & Marie 3665 47 September 15, 1992 54 47-1-Var. Lots
Same ( " " ") O'Brien, Joseph 3665 51 September 15, 1992 32 5-1-16
Same ( " " ") Class, Luis A. & Maureen A. 3665 54 September 15, 1992 38 102-6-1.13
Same ( " " ") Blumenthal, Liviu 3665 57 September 15, 1992 54 73-3-21
Same ( " " ") Hamling, Bernard 3665 60 September 15, 1992 54 8-1-5
Same ( " " ") Gag, Robert W. & Roberta B. 3665 63 September 15, 1992 56 10-1-29.31
Same ( " " ") Michalek, Stephen J. 3665 66 September 15, 1992 32 2-1-23.2
Same ( " " ") Van Der Molen, Kenneth & Dawn 3667 17 September 16, 1992 56 23-1-72
Same ( " " ") Angel, Warren A. & Jean J. 3667 20 September 16, 1992 40 22-1-30.1
Same ( " " ") Young, Roger & Julie 3667 23 September 16, 1992 40 22-1-29
Same ( " " ") Colabella, Emanuel & Mary 3667 26 September 16, 1992 40 29-1-28.25
Same ( " " ") Bollenbach, William H. & Lillian B. 3667 29 September 16, 1992 40 7-1-23
Same ( " " ") Powderly, James; Bradley, John; 3667 32 September 16, 1992 58 1-1-p/o 26.2
Schutzman, Benjamin & Santos, Jose
Same ( " " ") Hudson Highlands Realty Restoration 3667 36 September 16, 1992 36 14-4-7
Same ( " " ") Schiff, Robert Lloyd & Kimberle 3667 39 September 16, 1992 32 4-1-2
Same ( " " ") Corr, Debra B. 3667 42 September 16, 1992 30 3-1-Var. Lots
34 15-1-48.1
Same ( " " ") Marcolini, Carl 3667 45 September 16, 1992 38 14-1-75.41
Same ( " " ") Scheriff, Joseph 3670 182 September 21, 1992 54 8-2-25.23
Same ( " " ") Kamalian, Michael 3670 185 September 21, 1992 30 2-1-40
Same ( " " ") Healey, James, Margaret, John & Martha 3670 188 September 21, 1992 54 27-1-40.3
Same ( " " ") Kruger, Gary 3670 191 September 21, 1992 54 10-1-66.4
Same ( " " ") Bucek, John 3670 194 September 21, 1992 40 25-3-14
Same ( " " ") Wal-Mart Stores, Inc. 3701 238 November 12, 1992 52 78-2-5.1
Same ( " " ") Andrews, Charles & Susan 3701 242 November 12, 1992 22 18-1-37.11
Same ( " " ") Hedge, Barrie, Newman, Jane D., 3701 245 November 12, 1992 54 52-1-Var. Lots
Jones, Peter & Helen
Same ( " " ") Valentin, Edwin & Debra 3701 249 November 12, 1992 26 31-1-3 &5.2
Same ( " " ") Curry, Robert L. & Diane C. 3701 252 November 12, 1992 50 106-1-11
Same ( " " ") Premerano, Joseph and Ciappina, Marcello 3701 255 November 12, 1992 30 22-1-117
Same ( " " ") Bartolucci, Edgar & Vivienne D. 3701 258 November 12, 1992 50 106-1-Var. Lots
Same ( " " ") Berger, William J. & Susan C. 3701 262 November 12, 1992 44 14-1-101
Same ( " " ") Paul P. Benz, Trust 3701 265 November 12, 1992 54 31-2-22.21
Same ( " " ") Lambros, Kyriacos 3701 269 November 12, 1992 40 33-1-Var. Lots
Same ( " " ") McCann, Daniel T. & Muriel J. 3703 224 November 17, 1992 26 14-1-29.21
Same ( " " ") McCann, Daniel T. & Muriel J. 3703 227 November 17, 1992 26 14-1-29.21
Same ( " " ") Ruben Irrevocable Trust 3703 230 November 17, 1992 52 7-1-73.3
Same ( " " ") Soutar, Dean & Patricia 3703 233 November 17, 1992 52 7-2-28
Same ( " " ") Clarke, Thomas & June 3703 236 November 17, 1992 56 17-1-74.5
Same ( " " ") Trails Pointe 5, Inc. 3703 239 November 17, 1992 56 23-1-63
Same ( " " ") First Sugar Loaf Development, Inc. 3703 242 November 17, 1992 22 13-3-6
Same ( " " ") Delaney, Thomas F. & Janet M. 3703 245 November 17, 1992 54 11-1-63
Same ( " " ") Pinkney, Wilford 3703 248 November 17, 1992 54 67-4-1.12
Same ( " " ") Babcock, Claude E. 3703 251 November 17, 1992 26 14.1.96
Same ( " " ") Schadt, Norma 3707 195 November 23, 1992 28 19-1-9.9
Same ( " " ") Belsten, Kevin 3707 198 November 23, 1992 28 19-1-9.4
Same ( " " ") S.L. Cottages, Inc. 3707 201 November 23, 1992 20 41-1-8.1
Same ( " " ") Rix, Albert 3707 204 November 23, 1992 52 32-1-45
Same ( " " ") Lycian Center, Ltd. 3707 207 November 23, 1992 22 13-3-5
Same ( " " ") Northrup, Thomas F. & Patricia 3707 210 November 23, 1992 52 78-1-24
Same ( " " ") Dickman, William & Linda 3707 231 November 23, 1992 28 19-1-9.3
Same ( " " ") Van Pelt, Thomas 3711 290 November 30, 1992 28 21-1-2
Same ( " " ") Ross, Don & Gabrielle 3711 293 November 30, 1992 44 14-1-64
Same ( " " ") Ferrante, Angelo 3711 296 November 30, 1992 30 2-1-56 & 57
Same ( " " ") Isomedix Operations, Inc. 3711 299 November 30, 1992 22 119-1-1.2
Same ( " " ") Mead, Chad E. & Jennifer and 3711 302 November 30, 1992 52 6-1-17
Bach, Edward & Jean
Same ( " " ") Savaglio, Laurie Anne 3711 305 November 30, 1992 54 17-1-8.12
Same ( " " ") Gratch, Ariel 3711 308 November 30, 1992 22 7-1-Var. Lots
Same ( " " ") Kohler, Michael & Marianna 3711 311 November 30, 1992 38 1-1-69
Same ( " " ") Dream Homes of Orange County, Inc. 3721 235 December 15, 1992 22 13-2-7
Same ( " " ") Mari, James and Palmer, Andrew L. 3721 238 December 15, 1992 22 1-1-83.22
Same ( " " ") Eretz Land Co., Inc. 3721 241 December 15, 1992 22 16-1-37.11
Same ( " " ") Hub II Housing Development Fund Co. 3721 244 December 15, 1992 20 108-1-2.12
Same ( " " ") Town of Wallkill Industrial 3723 32 December 16, 1992 52 60-1-75 & 77
Development Agency
Same ( " " ") Town of Wallkill Industrial 3723 40 December 16, 1992 52 78-1-Var. Lots
Development Agency 60-1-Var. lots
41-1-Var. Lots
Same ( " " ") PCM Development Company and 3723 49 December 16, 1992 52 78-1-Var. Lots
Town of Wallkill Industrial
Development Agency
Same ( " " ") Drapala, Stanley and Reiner, Jeanette 3723 248 December 17, 1992 32 6-1-16.32
Same ( " " ") Drapala, David M. & Bernetta A. 3723 250 December 17, 1992 32 6-1-16.32
Same ( " " ") Schaffer, Allen H. & Christine L. 3723 253 December 17, 1992 32 7-1-36.212
Same ( " " ") Reiss, Ronald 3723 255 December 17, 1992 22 6-1-33.1
Same ( " " ") Alders, Cornelius & Judith and 3723 257 December 17, 1992 30 24-1-1
Jansen, Jan & Elizabeth
Same ( " " ") R.F.F. Corporation 3723 260 December 17, 1992 54 41-1-72
Same ( " " ") Hui, Raymond C. 3723 263 December 17, 1992 52 74-8-18.2
Same ( " " ") Conway, Francis 3741 80 January 12, 1993 54 67-13-3
Same ( " " ") Lockard, Arthur 3759 295 February 8, 1993 54 49-1-90
Same ( " " ") Felter, Ronald 3759 298 February 8, 1993 20 115-5-18.1
115-5-18.2
Same ( " " ") Willis, John T., Jr. & Linda L. 3759 301 February 8, 1993 44 13-1-4
Same ( " " ") Stephens, John & Nancy Crosier 3759 304 February 8, 1993 32 4-1-60
Same ( " " ") Ford, Thomas & Virginia A. 3759 307 February 8, 1993 44 19-1-9.3
Same ( " " ") Dispigna, Gaetano 3759 310 February 8, 1993 20 38-1-41.122
Same ( " " ") Rogers, James 3759 313 February 8, 1993 32 7-1-73
Same ( " " ") Straub & Sons Excavating, Inc. 3759 316 February 8, 1993 32 7-1-78
Same ( " " ") Stack, John 3759 319 February 8, 1993 40 41-2-5.2
Same ( " " ") Ace Farm, Inc., Etzel, Tyler & Lorraine 3759 322 February 8, 1993 40 1-3-14.2
58 13-1-28.2 & 29
Same ( " " ") Hyrnda, Daniel & Gainsbury, Julia 3767 147 February 23, 1993 52 6-1-47.21
Same ( " " ") Mullins, Daniel M. 3767 150 February 23, 1993 38 6-1-24.2
Same ( " " ") Baty, Lee 3767 153 February 23, 1993 26 17-1-37.32
Same ( " " ") Kocot, Alexander & Rosalinda 3767 156 February 23, 1993 54 6-1-34
Same ( " " ") Pennings, John G. 3767 159 February 23, 1993 54 49-1-36.3
Same ( " " ") DiRaffaele, Alan & Elaine 3767 162 February 23, 1993 32 7-1-75
Same ( " " ") Katz, Lynn 3767 165 February 23, 1993 20 3-1-6
Same ( " " ") Byrne, Garrett & Cynthia 3767 168 February 23, 1993 52 6-1-47
Same ( " " ") Horton, Leslie W., III 3767 171 February 23, 1993 26 22-1-73.2
Same ( " " ") Garry, Keith 3767 174 February 23, 1993 26 27-1-41.32
Same ( " " ") Cuomo, Anthony & Doreen 3770 160 February 25, 1993 20 44-1-147
Same ( " " ") Euser, Joseph & Theresa 3770 162 February 25, 1993 32 2-1-7.1
Same ( " " ") Koeller, Kenneth B. 3770 164 February 25, 1993 30 20-2-12
Same ( " " ") Busch, William & Yvette 3770 166 February 25, 1993 54 16-1-55
Same ( " " ") Sheedy, George W. and 3770 168 February 25, 1993 54 47-1-113.2
Montuori, Patrick A.
Same ( " " ") Sweeney, Charlene 3770 171 February 25, 1993 58 16-7-Var. Lots
Same ( " " ") Monroe-Woodbury Jewish 3770 173 February 25, 1993 40 2-1-4.31
Community Center, Inc.
Same ( " " ") Marasco, Mark 3770 176 February 25, 1993 44 10-1-1.23
Same ( " " ") Stein, Michael P. & Laura 3770 178 February 25, 1993 20 44-1-12.21
Same ( " " ") Middletown Plaza Associates 3777 154 March 11, 1993 52 50-2-2.2
Limited Partnership
Same ( " " ") Leentjes, Brian & Alison 3777 161 March 11, 1993 22 107-2-4.1
Same ( " " ") McLellan, David 3777 164 March 11, 1993 36 11-1-7
Same ( " " ") Sarnowski, Alan 3777 167 March 11, 1993 56 22-1-49
Same ( " " ") Malkan, Paul & Judith 3777 170 March 11, 1993 54 26-1-18.21
Same ( " " ") Sztyndor, Ronald 3777 173 March 11, 1993 54 3-1-10
Same ( " " ") Drake, Herbert, Jr. 3777 176 March 11, 1993 26 18-1-41.63
Same ( " " ") Schaffer, Allen H. & Christine 3777 179 March 11, 1993 32 7-1-36.212
Same ( " " ") Higby, Gary & Linda 3777 182 March 11, 1993 26 19-1-50
Same ( " " ") Mahan, Patrick A. 3778 53 March 11, 1993 36 102-1-11
Same ( " " ") State of New York - Executive Dept. 3786 36 March 29, 1993 9 20-1-11.22
Office of General Services
Same ( " " ") Big V Supermarkets, Inc. 3786 39 March 29, 1993 54 51-1-5.5 & 6.2
Same ( " " ") Woodbury, Town of 3786 42 March 29, 1993 58 19-5-20
Same ( " " ") Danielson, Scott & June 3786 45 March 29, 1993 58 4-1-27.2
Same ( " " ") Tripodi, Denise 3786 48 March 29, 1993 22 18-1-11.2
Same ( " " ") Ketchum, George & Pamela 3786 51 March 29, 1993 22 114-1-10.1
Same ( " " ") Howell, William Harry 3793 215 April 9, 1993 56 23-1-28.23
Same ( " " ") Owen, James C. 3793 217 April 9, 1993 52 61-1-5.225
Same ( " " ") Rometo, Vito Peter 3793 219 April 9, 1993 52 75-2-14
Same ( " " ") Viswakumar, Palanisamy & Jayanthi 3793 221 April 9, 1993 56 18-1-13.21
Same ( " " ") Nixon Road Developers, Inc. 3793 224 April 9, 1993 40 305-1-36.2
Same ( " " ") Senese, Vincent 3793 227 April 9, 1993 56 1-1-61
Same ( " " ") Emmerich, Suzanne B. 3793 229 April 9, 1993 54 49-1-82
Same ( " " ") Fletcher, Robert A. & Elizabeth A. 3793 231 April 9, 1993 54 63-1-13.5
Same ( " " ") Leone, Raffaele 3810 8 May 10, 1993 58 26-1-9.3
Same ( " " ") Foote, Harry & Sharon 3810 11 May 10, 1993 52 61-1-34
Same ( " " ") Williams, Drew 3810 14 May 10, 1993 54 64-1-62.1
Same ( " " ") Cassel, James 3810 17 May 10, 1993 30 103-4-12.2 & 13
Same ( " " ") Aronson, James 3810 20 May 10, 1993 20 52-1-56.1
Same ( " " ") Metzger, John F. & Ellen B. 3810 23 May 10, 1993 54 40-1-67
Same ( " " ") Kiryas Center for Developmental 3826 332 June 8, 1993 40 310-1-3
Disabilities, Inc.
Same ( " " ") Lagakos, Satirios & Alexandros 3826 335 June 8, 1993 40 203-2-3
Same ( " " ") Strack, Robert & Madelaine 3826 338 June 8, 1993 50 12-2-4.11
Same ( " " ") Ferrante, Alvaro 3826 341 June 8, 1993 30 10-1-26
Same ( " " ") Rusaul J. Homes, Ltd. 3826 344 June 8, 1993 56 14-1-48.1
Same ( " " ") Harriman, Village of 3826 347 June 8, 1993 40 51-1-76
Same ( " " ") Hudson Region Enterprises, Inc. 3827 1 June 8, 1993 22 15-1-77
Same ( " " ") Badami, Angela V. and Mancino, Samuel 3827 4 June 8, 1993 40 24-1-99
Same ( " " ") Brooks, James S. & Natalie F. 3828 1 June 10, 1993 22 15-1-74
Same ( " " ") Cavallaro, John A. & Salvatore C. 3828 166 June 10, 1993 30 24-1-51
Same ( " " ") Kocot, Alexander & Rosalinda 3828 169 June 10, 1993 54 6-1-34
Same ( " " ") Moro, Hector A. & Yvonne 3828 172 June 10, 1993 26 20-1-24.122
Same ( " " ") Zwart, Raymond J. 3828 175 June 10, 1993 26 26-7-1.1
Same ( " " ") Tuthill, Scott and Dykstra, Gayle 3828 178 June 10, 1993 54 22-1-30
Same ( " " ") Mead, Joseph S., Jr. 3828 181 June 10, 1993 32 6-1-1.2
Same ( " " ") Decker, Harry F. & Charlotte A. 3828 184 June 10, 1993 54 21-1-21
Same ( " " ") Hunt, Patricia J. 3828 187 June 10, 1993 44 19-1-49
Same ( " " ") Andersen, John R. & Marie 3828 190 June 10, 1993 54 44-1-71.1
Same ( " " ") Segrich, Thomas A. 3828 193 June 10, 1993 54 58-2-1.21
Same ( " " ") Strong, William H. & Jean S. 3828 196 June 10, 1993 30 10-1-11.2
Same ( " " ") Dapra, George D. & Elaine M. 3849 22 July 14, 1993 36 106-6-5
Same ( " " ") Catania, James 3849 26 July 14, 1993 20 9-1-57.41
Same ( " " ") Indig, Moses 3849 29 July 14, 1993 40 1-1-10.22
Same ( " " ") Tedesco, Thomas & Elaine 3849 32 July 14, 1993 13 8-13-11
Same ( " " ") H. Reynolds & Son, Inc. 3849 35 July 14, 1993 58 30-9-4
Same ( " " ") Big V Supermarkets, Inc. 3849 38 July 14, 1993 54 51-1-5.5 & 6
Same ( " " ") Rose, H. Sidney 3849 43 July 14, 1993 13 8-13-8
Same ( " " ") Kovacs, Stefan, Jr. & Anneliese 3849 46 July 14, 1993 26 22-1-20.34
Same ( " " ") Porter, Kenneth & Jacinda 3849 49 July 14, 1993 54 10-1-56.11
Same ( " " ") Gordon, Shirley D. 3849 52 July 14, 1993 52 17-1-11
Same ( " " ") Ridge Associates 3853 70 July 21, 1993 38 5-1-10.1
Same ( " " ") Kings Estates Limited Partnership 3853 73 July 21, 1993 54 35-1-61
Warwick Water Corp.
Same ( " " ") Kosuga, Vincent & Pauline 3853 77 July 21, 1993 44 2-1-16.2
Same ( " " ") DeAngelis, Louis & Holland, Debby 3853 80 July 21, 1993 38 6-1-13.3
Same ( " " ") Callahan Equities, Inc., Posner, 3853 83 July 21, 1993 58 39-1-Var Lots
Barbara & Maltzman, Jen 39-2-Var Lots
Same ( " " ") Roeper, Louis W. & Marguerite 3853 87 July 21, 1993 32 3-2-6
Same ( " " ") Mancuso, Raymond D. 3853 90 July 21, 1993 22 15-1-50.4
Same ( " " ") LaBelle, Jim & Toni 3853 93 July 21, 1993 56 22-1-48
Same ( " " ") DeJong, James & Melanie 3853 96 July 21, 1993 50 106-1-30
Same ( " " ") Bach, John E., Sr. & Carol 3863 318 August 6, 1993 30 10-1-Var Lots
Same ( " " ") Dembek, Barney S. 3863 321 August 6, 1993 30 10-1-61
Same ( " " ") Chester, Village of 3863 324 August 6, 1993 22 104-4-Adj. to 7
Same ( " " ") Briller, Phyllis 3863 327 August 6, 1993 54 66-1-Var Lots
Same ( " " ") Blake, Maximo Brian 3863 330 August 6, 1993 54 66-1-21.2
Same ( " " ") E & E Carpentry, Inc. 3863 333 August 6, 1993 22 5-1-91.3
Same ( " " ") Hempstead Gardens, Inc. 3863 336 August 6, 1993 54 109-2-Var Lots
9-1-19
Same ( " " ") Zwick, John 3863 339 August 6, 1993 38 2-4-2.21
Same ( " " ") Warwick Valley Central School Dist. 3863 342 August 6, 1993 54 42-1-35.1
No. 1 Towns of Warwick & Chester
Same ( " " ") Pittari, Dominick & Grace 3863 345 August 6, 1993 30 18-1-23.23
Same ( " " ") Gaspar, Jose & Maria 3866 184 August 11, 1993 26 18-2-42
Same ( " " ") Whelan, Brendan & Theresa 3866 187 August 11, 1993 32 4-1-12
Same ( " " ") Lewis, Betty 3866 190 August 11, 1993 26 18-2-40
Same ( " " ") United Talmudical Academy of 3866 193 August 11, 1993 40 305-1-28
Kiryas Joel, Inc.
Same ( " " ") Moulton, Keith & Ruth 3866 196 August 11, 1993 56 22-1-97.2
Same ( " " ") Mastracola, Rose Marie and Marino, Lisa 3866 199 August 11, 1993 44 10-1-13.1
101-2-7
Same ( " " ") Pentacosa Land Corp. 3866 202 August 11, 1993 32 13-1-20.1
Same ( " " ") Damia, Mark C. & Patricia G. 3866 205 August 11, 1993 54 11-1-9.11
Same ( " " ") Leach, Richard W. & Patricia A. 3866 208 August 11, 1993 56 17-1-75.21
Same ( " " ") Miller, Naomi and Kollisch, Eva B. 3866 211 August 11, 1993 56 10-1-2
Same ( " " ") Saint Mary's Roman Catholic Church 3877 243 August 27, 1993 20 108-1-1
Same ( " " ") Morgano, Dennis 3877 246 August 27, 1993 20 10-1-29.13
Same ( " " ") Russo, Alfonso & Felicita 3877 249 August 27, 1993 30 20-1-61
Same ( " " ") Vespo, Joseph 3877 252 August 27, 1993 26 18-2-Var Lots
Same ( " " ") Goldsman, Suzanne 3877 255 August 27, 1993 26 18-2-Var Lots
Same ( " " ") Congregation Yetev Len D'Satmar, Inc. 3877 258 August 27, 1993 40 305-1-1.11
Same ( " " ") Dumitru, Gelu 3877 261 August 27, 1993 20 14-1-29.2
Same ( " " ") Patenaude, Daniel & Dianne 3877 264 August 27, 1993 52 12-1-31.1
Same ( " " ") Sawyer's Peak Associates, L.P. 3877 267 August 27, 1993 30 17-1-31.11
Same ( " " ") Fournier, Anita 3877 270 August 27, 1993 32 11-1-7.1
Same ( " " ") Harold Finnegan, Inc. 3885 77 September 9, 1993 54 316-2-8
Same ( " " ") Joyce, Timothy J. & Christine M. 3885 80 September 9, 1993 54 58-1-112
Same ( " " ") Scheuerman, William; 3885 83 September 9, 1993 54 40-1-17.32
Lust, Henry, Jr.; Lopez, Alice
Jane; & Rechner, Linda May
Same ( " " ") N.S. Building Corp. 3885 87 September 9, 1993 26 18-2-Var Lots
Same ( " " ") Greene, Thomas F. & Lorraine B. 3885 90 September 9, 1993 30 19-1-p/o 75.3
Same ( " " ") Ghedina, John & Patricia 3885 93 September 9, 1993 20 14-1-51
Same ( " " ") Kahan, Gerard & Cathy 3885 96 September 9, 1993 52 2-1-8
Same ( " " ") Kandel Associates Limited 3885 99 September 9, 1993 52 50-2-37.2
Same ( " " ") Freddolino, Mary Anne 3885 102 September 9, 1993 54 54-1-16.22
Same ( " " ") Hildenbrand, David & Lucy Ann 3885 105 September 9, 1993 38 6-1-13.2
Same ( " " ") Toumanidis, Sophia 3914 92 October 21, 1993 22 24-2-8.2
Same ( " " ") Wersebe, Scott V. 3914 95 October 21, 1993 54 43-1-42
Same ( " " ") Welsh, Paul 3914 98 October 21, 1993 54 11-1-21.4
Same ( " " ") Conklin, Donna J. 3914 101 October 21, 1993 58 18-2-50
Same ( " " ") American Lemko Park, Inc. 3914 104 October 21, 1993 20 53-1-1
Same ( " " ") U.S. Cablevision Corp. 3914 107 October 21, 1993 40 37-1-9.2
Same ( " " ") Dysinger, Larry & Jane 3914 110 October 21, 1993 22 12-1-73
Same ( " " ") Menna Building Corp. 3914 113 October 21, 1993 22 12-1-70
Same ( " " ") Robert Knebel General Contractor, Inc. 3914 116 October 21, 1993 22 17-1-54
Same ( " " ") Ketcherside, Michael J. & Lesa L. 3914 119 October 21, 1993 22 17-1-23.222
Same ( " " ") Javdan, Parviz & Shahla 3921 12 November 4, 1993 30 2-1-61
Same ( " " ") Laughlin, Stephen 3921 15 November 4, 1993 20 44-1-105
Same ( " " ") Isola, Joseph & Rosita 3921 18 November 4, 1993 54 16-1-56.1
Same ( " " ") Town of Tuxedo 3921 21 November 4, 1993 50 11-11-5.2
Same ( " " ") Ponikvar, Adolph & Helen L. 3921 24 November 4, 1993 22 111-2-6.1
Same ( " " ") Bell, Ruth Gasper 3921 27 November 4, 1993 40 31-1-8.3
Same ( " " ") Amendola, Samuel & Lynn 3921 30 November 4, 1993 20 54-1-15.58
Same ( " " ") Islandia Properties, L.P. 3921 33 November 4, 1993 52 44-1-35.1
Same ( " " ") Behrent, Harry W., Jr. 3921 36 November 4, 1993 30 20-1-44.2
Same ( " " ") Fourham Associates II 3921 39 November 4, 1993 22 1-1-Var Lots
Same ( " " ") Westgate Goshen, Inc. 3924 114 November 9, 1993 30 126-1-1.2
Same ( " " ") Evans, Everett A., Jr. 3924 125 November 9, 1993 44 5-1-9 & 10.4
Same ( " " ") Curabba, Nicholas 3924 128 November 9, 1993 26 27-1-12.2
Same ( " " ") Kahn, George & Nancy 3924 131 November 9, 1993 40 222-1-9
Same ( " " ") Barron, Edward & Barbara 3924 134 November 9, 1993 54 63-2-21
Same ( " " ") DeBuck, Leonard M. & Valorie L. 3924 137 November 9, 1993 54 11-1-4
Same ( " " ") Eton Centers Co. 3924 140 November 9, 1993 36 105-5-1
Same ( " " ") Vidal, Glenn J. 3924 144 November 9, 1993 56 13-1-41
Same ( " " ") Perez, Robert P. & Lucy G. 3924 147 November 9, 1993 44 12-1-2.22
Same ( " " ") Kings Estates Limited Partnership 3924 150 November 9, 1993 22 32-1-29
54 Various Lots
Same ( " " ") Jennings, Madison & Sylvia Garnier 3924 178 November 9, 1993 54 18-1-53
Same ( " " ") Ferrante, Lino 3944 9 December 7, 1993 40 18-6-Var. Lots
Same ( " " ") Parry , Alice B. 3944 11 December 7, 1993 36 104-6-7
Same ( " " ") Gingold, Susan 3944 13 December 7, 1993 32 5-1-5.32
Same ( " " ") Dagele, Frank J., Jr. 3944 15 December 7, 1993 54 7-2-28
Same ( " " ") Petersen, Edward M. & Hanni 3944 17 December 7, 1993 52 12-1-2
Same ( " " ") Ford, Dean C., Sr. & Barbara J. 3944 19 December 7, 1993 38 4-1-21.2
Same ( " " ") Sabini, Gerald S. 3944 21 December 7, 1993 20 52-1-14.2
Same ( " " ") Nature Conservancy, Inc. 3948 148 December 15, 1993 28 Various S-B-L
Same ( " " ") United Talmudical Academy of 3948 151 December 15, 1993 40 306-1-4
Kiryas Joel, Inc.
Same ( " " ") Bayer, Richard 3948 154 December 15, 1993 22 17-1-65
Same ( " " ") Sacco, Robert 3948 203 December 15, 1993 54 29-6-14.2
Same ( " " ") Woods, James N. 3948 206 December 15, 1993 56 25-1-31.1
Same ( " " ") Heads, David 3948 209 December 15, 1993 44 15-1-5
Same ( " " ") Slover, George 3948 212 December 15, 1993 44 12-2-1
Same ( " " ") Brandwein, Paul 3948 215 December 15, 1993 32 12-1-19.21
Same ( " " ") Greenville, Town of 3948 218 December 15, 1993 32 2-1-47
Same ( " " ") Leentjes, Brian 3948 221 December 15, 1993 22 6-1-17.32
Same ( " " ") Uckermark, Herbert, Jr. 3948 224 December 15, 1993 54 16-1-56.4
Same ( " " ") Brosnan, John D. 3948 227 December 15, 1993 54 1-1-34.2
Same ( " " ") Massaro, Allan P. 3948 230 December 15, 1993 22 17-1-64
Same ( " " ") Middletown Plaza Associates 3970 276 January 12, 1994 52 50-2-4.11
Limited Partnership
Same ( " " ") Middletown Plaza Associates 3970 284 January 12, 1994 52 50-2-4.11
Limited Partnership
Same ( " " ") Yoga Society of New York, Inc. 3970 292 January 12, 1994 40 24-1-74
Same ( " " ") Laubsch, Richard & Joan 3970 295 January 12, 1994 50 105-1-2
Same ( " " ") Weinert, Carl W. 3970 298 January 12, 1994 22 6-1-17.31
Same ( " " ") Monaghan, Jerome & Linda 3970 301 January 12, 1994 20 52-1-51
Same ( " " ") Murphy, Nicholas & Jane 3970 304 January 12, 1994 56 22-1-24
Same ( " " ") Baio, Decio 3970 307 January 12, 1994 26 18-1-58
Same ( " " ") Myruski, Lewis 3970 310 January 12, 1994 30 22-1-12.2
Same ( " " ") Poretto, Gregory J. & Deborah E. 3970 313 January 12, 1994 32 3-1-40.2
Same ( " " ") Olzeweski, John J. 3978 322 January 25, 1994 54 33-1-33.32
Same ( " " ") Grzegorzewski, Andrew P. 3978 325 January 25, 1994 54 33-1-33.222
Same ( " " ") Dillon, Christine 3978 328 January 25, 1994 52 13-1-24.5
Same ( " " ") Owney, Michael 3978 331 January 25, 1994 26 18-1-12.21
Same ( " " ") Orenstein, David 3978 334 January 25, 1994 32 4-1-23.1
Same ( " " ") Muhlrad, Elias 3978 337 January 25, 1994 30 20-1-34.1
Same ( " " ") Crescimanno, Stephen 3978 340 January 25, 1994 9 20-6-1
Same ( " " ") Kanans East Main Street, Inc. 3978 343 January 25, 1994 9 32-10-1
Same ( " " ") Leentjes, Brian 3985 147 January 25, 1994 22 6-1-17.32
Same ( " " ") Vogel, Steven H. 3985 149 January 25, 1994 56 23-1-54
Same ( " " ") Russiyan, Nicholas 3985 152 January 25, 1994 22 16-1-59.32
Same ( " " ") Enlarged Middletown City School District 3985 155 January 25, 1994 9 31-12-16.2
Same ( " " ") Middletown, City of 3985 158 January 25, 1994 9 31-12-16.4
Same ( " " ") Petersen, Edward M., Adm. 3985 161 January 25, 1994 52 12-1-47
Same ( " " ") Perna, Thomas 3985 164 February 4, 1994 52 13-1-3.2
Same ( " " ") Casimiro, Fernando 3990 296 February 16, 1994 26 12-1-31.2
Same ( " " ") Stevenson, Robert 3990 299 February 16, 1994 52 7-2-50
Same ( " " ") Lake, Debra Ann 3990 302 February 16, 1994 32 3-2-4
Same ( " " ") Hoehmann, John P. 3990 305 February 16, 1994 52 20-1-29
Same ( " " ") Wagner, James W. 3990 308 February 16, 1994 26 17-1-24.1
Same ( " " ") Weber, Mark 3990 311 February 16, 1994 20 52-1-76.1
Same ( " " ") Wander, Alexander 3990 314 February 16, 1994 22 13-2-2
Same ( " " ") Keegan, Joseph 3990 317 February 16, 1994 28 1-1-9.21
Same ( " " ") Running Brook Builders, Inc. 3991 129 February 16, 1994 30 18-1-120
Same ( " " ") Orange County 3992 197 February 18, 1994 Various T-S-B-L
Same ( " " ") C&S Assocs Limited Partnership I 3992 327 February 18, 1994 40 203-2-5
</TABLE>
SCHEDULE C
Listing of all properties acquired by Orange and Rockland
Utilities, Inc. located in Sullivan County, New York, appearing
of record in the Grantee Index of the Clerk of the County of
Sullivan from March 1, 1992 through February 28, 1994.
<TABLE>
<CAPTION>
GRANTEE GRANTOR LIBER PAGE DATE
<S> <C> <C> <C> <C>
Orange and Rockland
Utilities, Inc.
(Right of Way) Spangenberg, Stephen H. 1572 173 March 5, 1992
Same ( " " ") Kowalczik, John 1574 384 March 18, 1992
Same ( " " ") Tufano, Bernard A. 1577 192 March 31, 1992
Same ( " " ") Lopez, Abel J. 1577 195 March 31, 1992
Same ( " " ") Moore, Richard 1579 43 April 7, 1992
Same ( " " ") Sullivan, Robert N. 1579 46 April 7, 1992
Same ( " " ") DeGroat, Dennis, Jr. 1579 49 April 7, 1992
Same ( " " ") Gilson, Anna 1579 52 April 7, 1992
Same ( " " ") Russo, Vincent M. 1581 154 April 16, 1992
Same ( " " ") Geba, John 1584 114 April 29, 1992
Same ( " " ") Storms, Donald R. 1585 363 May 6, 1992
Same ( " " ") Costescu, Dorin 1589 54 May 21, 1992
Same ( " " ") Nature First Ltd. 1590 392 May 27, 1992
Same ( " " ") Scharffenberg, Lloyd 1613 131 September 3, 1992
Same ( " " ") Kotwica, Richard & Kathleen 1615 236 September 15, 1992
Same ( " " ") Ball, Edward A. 1615 238 September 15, 1992
Same ( " " ") DeVoe, Thomas & Nancy 1615 240 September 15, 1992
Same ( " " ") Levine, Harold 1615 242 September 15, 1992
Same ( " " ") Reich, Robert F. 1615 244 September 15, 1992
Same ( " " ") Barnes, John S. 1615 246 September 15, 1992
Same ( " " ") Roe, Duane B., Jr. 1615 248 September 15, 1992
Same ( " " ") Sullivan, Robert N. & Joan 1615 250 September 15, 1992
Same ( " " ") Han, Paul Un Suk 1615 252 September 15, 1992
Same ( " " ") DeVoe, Richard 1615 254 September 15, 1992
Same ( " " ") Murphy, John V., III and Stanley, Valerie A. 1615 256 September 15, 1992
Same ( " " ") Manville, Timothy 1615 258 September 15, 1992
Same ( " " ") Thiele, Anna, Individually and as Conservator of the 1624 33 October 28, 1992
Same ( " " ") Estate and property of Robert Thiele
Same ( " " ") Monmouth Council, Inc. Boy Scouts of America 1624 35 October 28, 1992
Same ( " " ") Costeseu, Michael 1631 136 November 30, 1992
Same ( " " ") O'Malley Realty Corp. 1631 138 November 30, 1992
Same ( " " ") Garnder, Paul & Mary Ann 1631 140 November 30, 1992
Same ( " " ") Han, Un Suk 1631 142 November 30, 1992
Same ( " " ") Han, Un Suk 1631 144 November 30, 1992
Same ( " " ") Schmitt, R.P., Jr. & Julia Keniston 1631 146 November 30, 1992
Same ( " " ") Geba, John & Elizabeth C. 1631 148 November 30, 1992
Same ( " " ") Schlemmer, Aubrey 1631 150 November 30, 1992
Same ( " " ") Aniston, Stephen A. & Mathilde 1631 152 November 30, 1992
Same ( " " ") Cropley, William 1631 154 November 30, 1992
Same ( " " ") Storms, Donald & Linda M. 1631 156 November 30, 1992
Same ( " " ") Salovin, Martin 1631 158 November 30, 1992
Same ( " " ") Roth, David S. 1631 160 November 30, 1992
Same ( " " ") Benson, Glenn E., Karen L. & Anna 1631 162 November 30, 1992
Same ( " " ") Corrado, Karin and Conlon, Colleen 1631 164 November 30, 1992
Same ( " " ") Corrado, Karin and Conlon, Colleen 1631 166 November 30, 1992
Same ( " " ") Kershaw, John 1631 168 November 30, 1992
Same ( " " ") Karr, Lee 1631 170 November 30, 1992
Same ( " " ") Turek, Andrzej 1631 172 November 30, 1992
Same ( " " ") Horne, Kenneth A. 1631 174 November 30, 1992
Same ( " " ") Garofalo, Vincent R. 1631 176 November 30, 1992
Same ( " " ") Moore, Richard & Hanna S. 1631 178 November 30, 1992
Same ( " " ") Konikowski, Marion J. 1631 180 November 30, 1992
Same ( " " ") Markle, Daniel J. & Karen J. 1631 182 November 30, 1992
Same ( " " ") Tufano, Bernard & Carol J. 1631 184 November 30, 1992
Same ( " " ") Holmes, William C. & Julie Ashworth 1631 186 November 30, 1992
Same ( " " ") Cardillo, Oreste 1657 609 April 9, 1993
Same ( " " ") Van Keuren, Douglas R. & Ruby M. 1657 611 April 9, 1993
Same ( " " ") Applegate, Richard L. 1657 613 April 9, 1993
Same ( " " ") Toomey, Mary Ann 1657 615 April 9, 1993
Same ( " " ") Schultz, Edward S. & Mary 1657 617 April 9, 1993
Same ( " " ") Galbraith, Pauline, Estate of 1657 619 April 9, 1993
Same ( " " ") Sawchuk, Dymtro & Elizabeth 1657 621 April 9, 1993
Same ( " " ") Toomey, Joseph M. & Shirley 1657 623 April 9, 1993
Same ( " " ") Hermanowski, Henry & Wieslawa 1657 625 April 9, 1993
Same ( " " ") Flieger, Kenneth & Darla 1657 627 April 9, 1993
Same ( " " ") Wagers, Lawrence & Christina 1657 629 April 9, 1993
Same ( " " ") Van Patten, Jason B. & Cynthia L. 1657 631 April 9, 1993
Same ( " " ") LeRoux, David B. 1657 633 April 9, 1993
Same ( " " ") LeRoux, Jan E. 1657 635 April 9, 1993
Same ( " " ") Shue, William H. 1657 637 April 9, 1993
Same ( " " ") Daria, Patrick F. & Barbara J. 1657 639 April 9, 1993
Same ( " " ") Alpan Realty, Inc. 1657 641 April 9, 1993
Same ( " " ") Lovelace, Thomas R. 1657 643 April 9, 1993
Same ( " " ") Lake Altamont Association, Inc. 1657 645 April 9, 1993
Same ( " " ") Boniface, Kenneth 1657 647 April 9, 1993
Same ( " " ") Metauque Falls Sportsmen's Club, Inc. 1667 1 May 20, 1993
Same ( " " ") Vik, Joseph 1681 146 July 22, 1993
Same ( " " ") Sunbird Farms, Inc. 1681 148 July 22, 1993
Same ( " " ") Scharffenberg, Lloyd R. 1681 150 July 22, 1993
Same ( " " ") Julien, Serge 1681 152 July 22, 1993
Same ( " " ") Sudol, Stephen & Mary R. 1681 154 July 22, 1993
Same ( " " ") Gordon, Michael S. 1681 156 July 22, 1993
Same ( " " ") Thiele, Anna 1711 668 December 13, 1993
Same ( " " ") Gervasi, Richard M. & Theresa M. 1711 670 December 13, 1993
Same ( " " ") Smith, Morris 1711 672 December 13, 1993
Same ( " " ") Babcock, Charles E. & Patricia P. 1711 674 December 13, 1993
Same ( " " ") Donovan, Denise 1711 676 December 13, 1993
Same ( " " ") Moreau, Thomas & Gloria 1711 678 December 13, 1993
Same ( " " ") Tsoucalas, James 1711 680 December 13, 1993
Same ( " " ") Fanok, Max & Janina 1711 682 December 13, 1993
</TABLE>
SEVENTH AMENDMENT
TO
COAL PURCHASE AND SALES AGREEMENT
This SEVENTH AMENDMENT is made and entered into as of July 1,
1994, between ORANGE AND ROCKLAND UTILITIES, INC., a New York
corporation ("Buyer"), RAWL SALES AND PROCESSING COMPANY, INC.
(withdrawing "Seller"), and MASSEY COAL SALES COMPANY, INC., a
Virginia corporation (substituted "Seller").
RECITALS
1. Buyer and Seller, together with Rawl Sales & Processing
Company, Inc. ("Rawl"), an affiliate of Seller, entered into a Coal
Purchase and Sales Agreement on March 9, 1984 (the "Agreement"),
and have amended the Agreement on six previous occasions, July 30,
1986, July 1986, September 1986, January 1987, January 1990, and
July 1, 1991.
2. Buyer and Seller are mutually interested in continuing
their relationship under the Agreement and agree to amend the
Agreement to effect the amendments herein.
3. Buyer, Seller, and Rawl agree that Rawl no longer should
be a party to the Agreement inasmuch as the coal supplied to Buyer
hereunder is, pursuant to the Agreement, supplied by various
affiliates of Seller. These affiliates of Seller and Seller shall,
unless otherwise stated, be collectively referred to as the
"Seller."
4. Buyer and Seller agree that the requirements of the Clean
Act Amendments of 1990, effective May 15, 1995, and certain
equipment installations attendant thereto, require new coal quality
standards and strict future adherence thereto, including resourcing
of coal if and when necessary to comply.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, and for other good and valuable consideration,
the parties hereto agree as follows:
1. The Agreement is amended to delete Rawl Sales & Processing
Company, Inc. as a party and to substitute Massey Coal Sales
Company, Inc. as the Seller. Rawl agrees to have Massey Coal Sales
Company, Inc. substituted as Seller with respect to performance
hereunder, and Buyer likewise agrees to such substitution. The
Agreement shall be further amended to delete all references to the
Seller's Agent wherever it appears throughout the Agreement.
Seller agrees to perform all obligations of both the Seller and the
Seller's Agent under the Agreement, as amended herein. Upon
execution hereof, Rawl agrees to waive all rights and privileges it
may have under the Agreement.
2. Article I of the Agreement is deleted in its entirety and in
substitution thereof a new Article I is added to read as follows:
ARTICLE I
Amount of Coal - Term of Agreement
1.1 Seller agrees to sell, and Buyer agrees to purchase, coal
of the quality and in quantities hereinafter stated and upon
the terms and conditions herein set forth. Seller will
deliver such coal to Buyer (f.o.b. cars at Seller's Mines
(hereinafter defined)) for a period of twenty (20) years from
the Initial Shipment Date (hereinafter defined), subject to
earlier termination as hereinafter provided.
1.2 The quantity of coal to be sold by Seller to Buyer and
purchased by Buyer from Seller hereunder shall be a base
tonnage of 440,000 tons (hereinafter defined) per Contract
Year (hereinafter defined). Buyer shall have the right to
vary the actual annual tonnage from the base tonnage by no
more than +/- fifteen percent (15%), or between 374,000 and
506,000 tons. At least ninety (90) days prior to the
commencement of each Contract Year, Buyer shall give written
notice to Seller of the quantity of coal to be shipped under
this Agreement during the next succeeding Contract Year. In
no event shall Buyer increase or reduce its annual tonnage
declaration by more than fifteen percent (15%) of the
preceding Contract Year's annual tonnage declaration.
Buyer shall have the option to purchase an additional 100,000
tons per Contract Year. Buyer must exercise its option at
the same time the annual declaration is made for tonnage to
be shipped in the next succeeding Contract Year. The
optional tonnage shall be shipped at the then-current
contract price.
1.3 In the event that Buyer is required or elects to
purchase some amount of coal from another supplier with whom
it currently has a contractual dispute, Buyer's above-
described annual purchase obligation shall, for the period
that Buyer is required or elects to purchase coal from such
supplier, be reduced by the amount Buyer is so required or
elects to purchase, but in no event shall Buyer's purchase
obligation hereunder be reduced to fewer than 300,000 tons
per Contract Year.
1.4 As used in this Agreement, the following terms shall have
the meaning indicated:
(1) "Contract Year" shall mean each 12-month period beginning
on July 1, 1994, and ending on June 30, 1995, and for every
12-month period thereafter during the term of this Agreement.
(2) "F.O.B. cars" means coal free on board railroad cars at
Seller's Mines.
(3) "Initial Shipment Date" shall be July 31, 1987.
(4) "Price per ton FOB cars" means the price of coal as
loaded in railroad cars at Seller's Mines.
(5) "Seller's Mines" means all coal mines located on the
properties owned by or otherwise available to Seller in the
vicinity of Mingo County, West Virginia (see Exhibit A) from
which the coal to be shipped hereunder is to be produced at
Seller's rail-loading site at La Voy, West Virginia.
(6) "Shipment" means a trainload of coal, shipped from
Seller's Mines in any single day.
(7) "Ton" shall mean a net weight of 2,000 pounds avoir-
dupois.
1.5 (a) Notwithstanding any other provision of this
Agreement, if during any calendar month during the term of
this Agreement the cost of the Alternative Fuel (as defined
on Schedule A) available to Buyer is less than the cost of
coal under this Agreement, then Buyer during the ensuing ten
(10) days may elect to suspend further shipments of coal, on
sixty (60) days' written notice, until the end of the first
calendar month during which the price of such coal remains
equal to or less than the price of the Alternative Fuel then
supplied to Buyer.
(b) Seller reserves the right upon the receipt of such
notice of suspension or at any time during such suspension,
on thirty (30) days' prior written notice either to (i)
reduce the then-current price of coal under this Agreement to
match on a month-to-month basis the cost of such Alternative
Fuel, in which event Buyer shall be required to purchase coal
from Seller under this Agreement in lieu of such Alternative
Fuel so long as the price of coal continues to match the
lower cost of such Alternative Fuel; or (ii) if Seller elects
not to reduce the price of coal, Seller shall have the right
to supply for such period No. 6 fuel oil at a price that
matches Buyer's cost of such Alternative Fuel.
(c) Whenever the cost of Alternative Fuel becomes higher
than the cost of coal under this Agreement, and in the event
Seller has not elected either option as provided in
subsection (b), deficiencies in tonnage delivered shall be
made up, subject to the next succeeding sentence, during the
ensuing twenty-four (24) months by increasing the quantity of
coal shipped by Seller above the quantity specified in
Section 1.2 of this Agreement according to a shipment
schedule mutually acceptable to Seller and Buyer. Buyer
shall not purchase coal on the spot market or enter into
contracts with new suppliers for additional contract coal
unless it is willing to accept sufficient additional tonnage
to make up such deficit tonnage during such period, provided
that if Seller is not willing to ship additional tonnage
requested by Buyer to satisfy such requirement, then the
deficit tonnage shall be reduced by the tonnage requested but
not shipped. Coal delivered in any calendar quarter shall be
credited first against deliveries due to that quarter and
then against any deficit tonnage. If during such twenty-four
(24) month period, Buyer has not requested sufficient
additional tonnage to make up such deficit tonnage, then,
subject to the last sentence of this subsection (c), the
then-current price of coal under this Agreement shall be
increased by $2.00 per ton for each ton thereafter delivered
under this Agreement until Buyer shall have accepted at such
adjusted price up to an aggregate number of tons equal to the
remaining deficit tonnage. Notwithstanding the foregoing,
the price shall not be increased above an amount which would
make the cost of coal higher than the cost of Alternative
Fuel available to Buyer.
(d) For purposes of this Section 1.5, the cost of oil,
gas and coal shall each be determined in accordance with
Schedule A attached to this Amendment.
3. Article III of the Agreement is deleted in its entirety and
in substitution thereof a new Article III is added to read as
follows:
ARTICLE III
Price and Price Adjustments
3.1 Unless and until it is adjusted solely in accordance with
the provisions hereinafter set forth in this Article III, the
price per ton F.O.B. cars at Seller's Mines for all coal sold
hereunder shall be $32.00 effective as of July 1, 1994
(hereinafter referred to as the "initial price"), except as
provided in Section 3.3(e) herein. After any such
adjustments have been made, the price per ton f.o.b. cars at
Seller's Mines shall be the initial price as so adjusted.
The initial price includes all costs associated with
compliance with all Federal, State, and local laws and
regulations as of the effective date of this Amendment as
they are now interpreted and enforced in Producing District
8, as defined in the Federal Bituminous Coal Act of 1937, as
amended.
3.2 Seller shall give Buyer notice of any proposed adjustment
hereunder of the initial price within thirty (30) days after
Seller has determined the need for and extent of such
adjustment, together with all documentation required to
permit Buyer to substantiate the adjustment.
3.3 The initial price shall be subject to adjustment (without
duplication) for changes in Seller's mining or other costs,
as set forth below. Such adjustments shall be made using the
methodology illustrated in Exhibit B.
(a) Beginning January 1, 1995, the initial price shall
be revised as of January 1, April 1, July 1, and October
1 of each year to reflect changes to the nearest mil per
ton of coal arising out of changes occurring during the
immediately preceding quarter in the following costs as
they apply to coal sold by Seller.
(1) Labor Costs
(A) The amount included in the initial price as the
cost for labor on January 1, 1995, is $9.60 per ton of
coal.
(B) Effective as of January 1, April 1, July 1, and
October 1 of each year, Seller shall determine the
percentage increase or decrease in the Average Hourly
Earnings-Bituminous Coal & Lignite Mining Index (as first
published by the United States Department of Labor,
Bureau of Labor Statistics in the Employment and Earnings
publication). The decimal equivalent of such percentage
of increase or decrease shall be multiplied by $9.60, and
the resultant amount shall be added to or subtracted
from, as the case may be, the initial price (as adjusted
pursuant to all other provisions of this Agreement) in
substitution for and in lieu of all previous adjustments
pursuant to this Subsection (1). The first-published
(i.e. October published during December, January
published during March, April published during June, and
July published during September) index for the third
month (i.e., October, January, April, and July)
immediately preceding the month in which the adjustment
date occurs shall be used to make such determination.
The base index for adjustments hereunder shall be that
for July, l994.
(2) Capital Equipment
(A) The amount included in the initial price as the
cost for depreciation of capital equipment on January 1,
1995, is $6.40.
(B) Effective as of January 1, April 1, July 1, and
October 1 of each year, Seller shall determine the
percentage increase or decrease in the Implicit Price
Deflator of the United States Gross Domestic Product (as
first published by the United States Department of Labor,
Bureau of Labor Statistics, in the Economic Indicator
publication) after January 1, 1995. The decimal
equivalent of such percentage of increase or decrease
shall be multiplied by $6.40, and the resultant amount
shall be added to or subtracted from, as the case may be,
the initial price (as adjusted pursuant to all other
provisions of this Agreement) in substitution for and in
lieu of all previous adjustments pursuant to this
Subsection (2). The quarterly index for the calendar
quarter two quarters prior to the quarter in which the
adjustment date occurs and first published during the
second month (i.e., November, February, May, and August)
immediately preceding the month in which the adjustment
date occurs shall be used to make such determination.
The base index for adjustments hereunder shall be that
for the second quarter l994 as published in the August
Economic Indicator. E.g., effective January l, l995, the
third quarter l994 index published in November, l994,
shall be compared with the second quarter l994 index
published in August, l994.
(3) Materials and Supplies
(A) The amount included in the initial price as the
cost for materials and supplies is $12.80 per ton of
coal, which amount has been calculated by allocating such
costs to the categories as set forth in the Composite
Index below, which Composite Index is composed of indexes
from the Producer Prices and Price Indexes (as first
published by the United States Department of Labor,
Bureau of Labor Statistics):
BLS
Code No. Index Weight
* - Industrial Commodities 62.5%
*1192-03 Drills and other Mining 12.5%
Machinery
*1192-5301 Mining Machinery Parts, 12.5%
Excluding Drills
**498l-l32 Industrial Power, 500 KW 12.5%
Demand, Mid-Atlantic
Weighted Index Total 100%
* These shall be taken from Table 6 - Producer Price Indexes
and percent change for commodity groupings and individual
items in the Producer Price Index publication.
** These shall be taken from Table 5 - Producer Price Indexes
for the net output of selected industries and their products
in the Producer Price Index publication.
(B) Effective as of January 1, April 1, July 1, and
October 1 of each year, Seller shall determine the
percentage increase or decrease in the Weighted Index
Total from the level thereof computed for the month of
January, l995, as set forth in the Composite Index in
Subsection 3(A). The decimal equivalent of such
percentage of increase or decrease shall be multiplied by
$12.80, and the resultant amount shall be added to or
subtracted from, as the case may be, the initial price
(as adjusted pursuant to all other provisions of this
Agreement) in substitution for and in lieu of all
previous adjustments pursuant to this Subsection (3).
The first-published indexes for the second month (i.e.,
November, February, May, and August) immediately
preceding the month in which the adjustment date occurs
shall be used to make such determination. The base index
for adjustments hereunder shall be that for August, l994.
(4) Fixed Costs
Seller has determined that the other indirect costs
of producing and selling coal hereunder is $3.20 per ton
of coal, and this amount is included in the initial
price. This amount shall remain fixed during the term of
this Agreement unless the parties mutually agree
otherwise.
(5) Cost of Complying with New Federal, State or Local
Regulations
(A) In the event of the imposition on or after July
1, 1994 by Federal, State, or local legislation or
regulations, of any new requirements or change in the
interpretation and enforcement of existing requirements
that affect the cost of production of coal at Seller's
Mines or otherwise, the party proposing a change shall
compute the change in cost per ton of coal produced
resulting therefrom. Seller and Buyer shall agree to an
adjustment in the initial price (as adjusted pursuant to
all other provisions of this Agreement) to reasonably
reflect such change in cost. Seller and Buyer may agree
to a tentative change in the initial price, subject to
retroactive adjustment, to be utilized until the parties
agree on a reasonable final adjustment.
(B) The party proposing a change shall submit
detailed documentation in support of its request for any
such adjustment, and, in the event Seller and Buyer are
unable to agree within ninety (90) days of receipt by the
other party of the proposing party's documentation as to
the amount the price per ton should be increased or
decreased, then the matter shall be submitted to a firm
of mining engineers or independent certified public
accountants mutually agreeable to the parties for final
determination of the amount of the increase or decrease,
if any, which shall be binding upon the parties. The
cost of any such study by an outside consultant shall be
shared equally by Buyer and Seller.
(C) Without limiting the foregoing, the parties
acknowledge that the initial price includes Seller's
costs incurred prior to July 1, 1994, under the Coal
Industry Health Benefit Act of 1992 ("the Act") and the
1950 and 1974 UMWA Pension Plans (collectively, "the
Plans"). The initial price shall be adjusted pursuant to
the provisions of this Subsection (5) for further
governmental imposition relating to the Act and the Plans
only to the extent arising on or after July 1, 1994.
(b) Should any of the indexes specified in Section 3.3(a) be
discontinued, the parties hereto mutually determine that any
of the indexes have become inappropriate, or the basis of the
calculations of such indexes be modified, appropriate indexes
shall be substituted or adjustments made by mutual agreement
of the parties hereto.
(c) Seller agrees that the production and delivery of coal
under this Agreement shall, at all times, be conducted
efficiently and economically and in such manner that the costs
thereof will be kept to a minimum consistent with good
operating practices within the limits set by governmental
regulations and proper mining and engineering techniques.
(d) In the event that a change in any of the above-
enumerated costs occurs which affects the price of coal under
this Agreement, the Seller shall promptly furnish to Buyer
computations showing the effects of such change on the price
of coal under this Agreement.
(e)(1) The initial price, as adjusted according to the
provisions of Section 3.3(a), shall be subject to review by
Buyer and Seller as of July 1, 1996, and every two (2) years
thereafter (each such review date being hereinafter referred
to as a "Review Date"). Sixty (60) days prior to each Review
Date, Buyer and Seller shall begin negotiations in good faith
to reach agreement on a new initial price effective as of the
Review Date for the next succeeding two (2) year period. If
Buyer and Seller are unable to reach agreement by the
applicable Review Date, this Agreement shall automatically
terminate one hundred twenty (120) days after the applicable
Review Date unless Buyer and Seller agree otherwise in
writing. During such one hundred twenty (120) day period,
Seller shall deliver and Buyer shall accept the quantity of
coal provided for in this Agreement at the initial price
prevailing on the last day immediately preceding the Review
Date in question, subject to adjustment as provided for in
Subsection 3.3(a) of this Agreement.
(2) Notwithstanding Section 3.3(e)(1), if Buyer is willing
to accept a ten percent (10%) increase in the initial price as
adjusted in accordance with Section 3.3(a) of this Agreement,
or Seller is willing to accept a ten percent (10%) decrease in
the initial price as adjusted, the initial price effective as
of the applicable Review Date shall be increased by ten
percent (10%) if acceptable to Buyer or decreased by ten
percent (10%) if acceptable to Seller. If Buyer is limited to
a ten percent (10%) price decrease by Seller on any Review
Date, or if Seller is limited to a ten percent (10%) price
increase by Buyer on any Review Date, then the party so
limited shall not be limited in like manner on any subsequent
Review Date for the remaining term of this Agreement.
4. ARTICLE V of the Agreement is deleted in its entirety and in
substitution thereof a new Article V is added to read as follows:
ARTICLE V
Quality of Coal
5.1 The coal to be purchased and sold hereunder shall conform
to the following:
(a) Preparation and Top-Size
Said coal shall be washed coal, free of extraneous
materials, produced by surface or deep mining methods and
meeting the specifications set forth in Section 5.1(b) of
this Article V and having a maximum top-size of two
inches.
(b) Quality Specifications
(1) The quality of the coal delivered hereunder "as
received" at Buyer's Lovett Plant, determined by sampling
and analysis made in conformity with the provisions of
Article VIII, shall be as follows:
REPRESENTATIVE COAL SPECIFICATIONS (AS RECEIVED BASIS)
Moisture 7.0%
Fixed Carbon 52.0%
Volatile Matter 33.0%
Ash 8.0%
Hardgrove Grind 46
Ash Softening Temp.
(Initial Defor.) 2700o F
Ash Fluid Temp. 2700o F
Sulfur (SO2) 1.0 lbs. SO2/mm Btu max.
Btu/lb. 13,000
(2) The level of sulfur dioxide in the coal (lbs. SO2/mm
Btu) shall be calculated based on a 2.5% credit that
Buyer is allowed for sulfur dioxide capture in ash by
Buyer's environmental regulations. The formula to be
used for calculating SO2 in the coal is:
Lbs. SO2/mm Btu = 19.5 x % Sulfur x 1000
Btu/lb
5.2 (a) Buyer's ability to use the coal being dependent on
the coal meeting the specifications set forth in Section 5.1
above, it is agreed that Buyer shall have the right to reject
any and all shipments which, based on the procedures defined
in Article VIII, fail to meet any of the individual shipment
rejection limits shown below:
Individual Shipment Rejection Limits (As Received)
Volatile Matter 30.0% min.
AST (Initial Deformation
in reducing atmosphere 2500o min.
Sulfur (SO2) 1.0 lbs. SO2/mmBtu max.
Moisture 8% max.
Btu/lb 12,800 min.
Hardgrove Grind See below
Moisture Above 7% 7% and below
(maximum 8%)
or and
Heat Content Below 13,000 Btu/lb. 13,000 Btu/lb.
(minimum 12,800 Btu/lb) and Above
then then
HGI 46 or Above 45 Minimum*
* This limit is subject to the exception that one shipment
during any 90-day period can have an HGI of 44 or above. The
moisture associated with this shipment must be 7% or lower and the
Btu content 13,000 Btu/lb. or higher. If a shipment having a 44
HGI is delivered, another shipment of 44 HGI may not be delivered
for another 90 days.
Seller shall pay all freight, diversion, demurrage, testing
and other expenses in connection with any such rejected shipment,
or shipment found by Seller to be non-conforming unless such
shipment is accepted by Buyer. Furthermore, Seller certifies that
it will not make any shipment shown by sampling to exceed the
maximum allowable SO2 levels.
(b) In addition to the limits for individual shipments shown
above, the delivered coal must meet the following specifications
over each thirty (30) and ninety (90) day period:
30-Day Suspension Limits (As Received):
Ash 10% max.
Volatile 30% min.
AST 2500o min.
90-Day Suspension Limits (As Received):
Moisture 7.0% max.
Btu/lb. 12,800 min.
HGI In accordance with
following formula:
Btu/lb. x HGI Index > OR = 600
1000
If the coal delivered hereunder, as determined by sampling and
analysis made in conformity with Article VIII, does not meet the
thirty (30) day limits on specifications on an average for a thirty
(30) day period, or does not meet the ninety (90) day limits on
specifications on average for a ninety (90) day period, Buyer shall
thereupon have the right to suspend delivery under this Agreement
until Seller furnishes reasonable assurance to Buyer in writing
that the deviation from the specifications can and will be
corrected. If Seller fails to promptly furnish reasonable
assurance that such correction can and will be made within sixty
(60) days after Buyer's suspension of deliveries (or within such
longer period as shall be reasonably requested by Seller and agreed
to by Buyer), or if corrections are not made within such sixty (60)
day period (or such longer period agreed to by Buyer), Buyer shall
have the right at any time thereafter to terminate this Agreement
by giving written notice of such termination to Seller, and
thereupon Buyer shall stand discharged of any and all further
obligations or liability under the terms of this Agreement or as a
result of such termination without waiver of any rights that Buyer
may have under this Agreement. If Buyer, after having suspended
shipments for a period of one hundred eighty (180) days, has not
elected to terminate this Agreement, then Seller shall have the
option of terminating this Agreement by giving written notice of
such termination within sixty (60) days after the expiration of
such 180-day period. Nothing in this Section 5.2(b) shall be
construed to relieve Seller of its obligation to conduct its mining
and coal cleaning operations in a competent manner, consistent with
good coal industry practices, so as to produce a product which will
meet the specifications set forth in Section 5.1 above.
The thirty (30) day and ninety (90) day suspension limits
shall be calculated by the Buyer on a weighted average. In
addition, the ninety (90) day weighted averages shall be computed
on a rolling tri-monthly basis. For example, the ninety (90) day
weighted average for the month of May shall consist of the
deliveries during the months of March, April, and May. In a
similar fashion, the ninety (90) day weighted average for the month
of June shall consist of the deliveries actually completed at
Buyer's plant during the months of April, May and June. Exhibit C
sets forth illustrations of how the weighted suspension limits
shall be calculated hereunder.
5.3 Seller shall apply material of quality, in a quantity,
and by method acceptable to Buyer, without delaying loading,
to inhibit the freezing of coal in railroad cars during
periods of cold weather, or for other purposes deemed
necessary by Buyer. Buyer shall provide Seller reasonable
advance notice of the dates for commencement and termination
of such application(s) during each Contract Year. Only the
cost of the freeze-inhibiting materials shall be for Buyer's
account. Such costs shall be accounted for separately by
Seller. Seller shall also invoice Buyer separately for the
costs of these materials.
5. Article VI of the Agreement is deleted in its entirety and in
substitution thereof a new Article VI is added to read as follows:
ARTICLE VI
Alternate Source
Seller shall, at its sole option, have the right, but not the
obligation, to supply all or a portion of the coal required
under Article I hereof from other mines, provided that
shipments from such mines shall (a) enable Seller to meet the
quality specifications of this Agreement and in particular the
environmental regulations of the Clean Air Act Amendments of
1990 (See Supplemental Agreement, dated July 1, 1994), (b)
meet all the other requirements of this Agreement, (c) not
result in higher cents/mm Btu delivered cost to Buyer of coal to
be delivered to Buyer under this Agreement, (d) pass a burn
test at the Lovett Plant to Buyer's satisfaction, and (e) not
adversely affect Buyer's ability to meet tonnage requirements
under its then-effective coal transportation agreements so as
to increase the delivered price per ton of coal under such
agreements or otherwise result in Buyer incurring penalties or
other additional charges under such agreements.
6. Article VIII of the Agreement is deleted in its entirety and
in substitution thereof a new Article VIII is added to read as
follows:
ARTICLE VIII
Sampling and Analysis of Coal
8.1 Each shipment of coal shall be sampled by Seller. Seller
shall determine, by proper analyses made in its laboratory and
at its expense, the quality and characteristics of the coal.
The sampling and analyses shall be performed in accordance
with methods approved by the American Society for Testing and
Materials (ASTM) and Buyer and Seller shall agree on
alternates within the ASTM standards or on other methods.
Buyer shall have the right to have a representative present at
any and all times to observe the sampling and take check
samples at the mine, and Buyer may also analyze the coal
either from its own samples or from samples taken by Seller.
Seller shall retain for a period of sixty (60) days a portion
of each coal sample ("Referee Sample") taken so that Buyer or
a commercial laboratory may analyze such samples.
8.2 The results of the sampling and analyses by Seller shall
be accepted as the quality and characteristics of the coal
delivered hereunder, provided, however, that if either Buyer
or Seller questions the correctness of Seller's analysis, then
Buyer or Seller shall have the right to have the Referee
Sample analyzed by an independent testing laboratory selected
by Buyer from an agreed-to list of such laboratories, not
including a laboratory used by either party on the original
sample. Said laboratory shall use methods approved by ASTM or
such other procedures as may be accepted in writing by Buyer
and Seller.
The parameters for determining the acceptability of an
analysis and use of the Referee Sample shall be in accordance
with ASTM reproducibility standards, except for Btu and HGI
specifications. The results of duplicate determinations
carried out by different laboratories on representative
samples taken from the same bulk sample after the last stage
of reduction will be considered suspect if any of the
analytical determinations differ by more than the
reproducibility standards set by ASTM, except for Btu
specifications where if the "as received" Btu differs more
than 100 Btu's, the Referee sample shall be sent out. If the
analysis obtained by the independent laboratory selected by
Buyer meets the ASTM reproducibility standards and/or the "as
received" Btu is within 100 Btu's, then Seller's original
analysis shall be binding on the parties with regard to both
coal quality and rejection and suspension limits. However, in
the event that the analysis obtained by the independent
laboratory selected by the parties does not meet the ASTM
reproducibility standards and/or the "as received" Btu differs
by more than 100 Btu's, then the analysis obtained by said
independent laboratory shall be binding on the parties with
regard to both coal quality and rejection and suspension
limits.
If the correctness of the grind (HGI) is questioned, the save
split of the sample shall be divided three (3) ways and tested
by three (3) independent laboratories to be selected from a
previously established list of mutually acceptable
laboratories. The average of the results shall govern. The
results of such sampling and analyses shall be accepted as the
quality and characteristics of the coal delivered hereunder in
the period during which the sampling and analyses is thus
performed by the commercial testing laboratory.
No variations in the minimum standards for Hardgrove Grind are
permitted due to error tolerances assumed by testing
laboratories. However, if the standards used by ASTM for
evaluating Hardgrove Grind are changed, the parties agree that
the minimum specifications herein set forth shall be adjusted
to maintain a comparable minimum specification using the new
ASTM standards.
The cost of the analysis made by the independent testing
laboratory shall be borne by the Buyer if Seller's analysis is
confirmed to meet ASTM reproducibility standards and/or the
"as received" Btu is within 100 Btu's and by the Seller if it
is not.
7. Article IX of the Agreement is deleted in its entirety and in
substitution a new Article IX is added to read as follows:
ARTICLE IX
Compensation for Variations in Heating and Ash Values
9.1 Compensation for variations in heating value for coal
purchased and sold hereunder shall be determined in accordance
with the following:
(a) The F.O.B. Seller's Mines price provided for in
Article III ("Price and Price Adjustment") is based on
coal with a heating value as shown in the quality
specifications of Article V ("Quality of Coal"), namely
13,000 as received Btu per pound. In accordance with
Article VIII ("Sampling and Analysis of Coal"), the
average as received Btu per pound of coal shipped
hereunder during each calendar quarter during the term of
this Agreement shall be calculated. Compensation to
either Buyer or Seller, as the case may be, for variation
in the weighted average heating value of the coal
delivered during each calendar quarter shall be
determined as follows:
(1) If the weighted average "as received Btu" for any
calendar quarter is greater than 13,050 Btu per pound,
the additional compensation to Seller shall be computed
in accordance with the following formula:
C = P x T x B - 1
S 13,000
(2) If the weighted average "as received Btu" for any
calendar quarter is less than 12,950 Btu per pound, the
compensation to Buyer shall be computed in accordance
with the following formula:
C = P x T x 1 - B
B 13,000
(b) In the above formula:
C = Total compensation to Seller.
S
C = Total compensation to Buyer.
B
P = The F.O.B. Seller's Mine price per ton
including all adjustments provided in this
Agreement for the applicable calendar quarter.
B = The weighted average "as received Btu" for the
applicable calendar quarter.
T = The total tonnage shipped during the
applicable calendar quarter.
9.2 Within thirty (30) days after the end of each calendar
quarter, Seller shall calculate the three-month average "as
received Btu" (subject to Buyer's verification) and the
compensation to Seller or Buyer, as the case may be, in
accordance with Section 9.1 and shall forward the calculation
to Buyer. Seller shall issue an invoice for payment by Buyer
if the compensation is to Seller or shall issue a credit
memorandum (or cash payments with respect to the final quarter
of this Agreement) to Buyer if the compensation is to Buyer.
9.3 The initial price is based upon Seller supplying coal
with an ash content ("Ash Value") of eight percent (8%) by
weight of the "as received" analysis for the coal in each
shipment. The Ash Value of the coal sold hereunder may vary,
and the initial price shall be adjusted in proportion to such
variance as follows:
For coal having an Ash Value greater than eight percent
(8%), the price shall be reduced at a rate of $.30 per
ton per one percent (1%) in excess of eight percent (8%).
For coal having an Ash Value less than eight percent
(8%), the price shall be increased at a rate of $.30 per
ton per one percent (1%) below eight percent (8%).
9.4 Within thirty (30) days after the end of each calendar
quarter, Seller shall calculate the three-month average Ash
Value (subject to Buyer's verification) and the compensation
to Seller or Buyer, as the case may be, in accordance with
Section 9.3 and shall forward the calculation to Buyer.
Seller shall issue an invoice for payment by Buyer if the
compensation is to Seller or shall issue a credit memorandum
(or cash payments with respect to the final quarter of this
Agreement) to Buyer if the compensation is to Buyer.
8. Article XXV of the Agreement is deleted in its entirety and in
substitution thereof a new Article XXV is added to read as follows:
ARTICLE XXV
Disputes
If a dispute arises between the parties relating to this
Agreement, the parties agree to use the following procedures
prior to either party pursuing other available remedies.
25.1 (a) A meeting shall be held promptly between the
parties, attended by individuals with decision-making
authority regarding the dispute, to attempt in good faith to
negotiate a resolution of the dispute.
(b) If within thirty (30) days after such meeting, the
parties have not succeeded in negotiating a resolution to the
dispute, they agree to submit the dispute to mediation in
accordance with the Commercial Mediation Rules of the American
Arbitration Association. The parties shall bear equally the
cost of the mediation.
(c) The parties will jointly appoint a mutually
acceptable Mediator, seeking assistance in such regard from
the American Arbitration Association if they have been unable
to agree upon such appointment within twenty (20) days from
the conclusion of the negotiation period.
(d) The parties agree to participate in good faith in
the mediation of negotiations related thereto for a period of
thirty (30) days. If the parties are not successful in
resolving the dispute through mediation, then the parties MAY
AGREE (i) to submit the matter to binding arbitration in
accordance with the American Arbitration Association Rules or
to a private adjudicator, or (ii) the parties may mutually
agree to use any other alternative dispute resolution method,
or (iii) any party may seek an adjudicated resolution through
the appropriate court.
25.2 (a) During the term of this Agreement, if a dispute
among the parties arises and such dispute cannot be resolved
as provided for above, the parties may agree in writing that
the dispute shall be submitted to binding or non-binding
arbitration. If so submitted, except as provided for herein,
the arbitration shall be held pursuant to the Commercial Rules
or Arbitration of the American Arbitration Association.
(b) For arbitration, the parties may agree upon a sole
arbitrator, or if a sole arbitrator cannot be agreed upon, a
panel of three arbitrators shall be named. One arbitrator
shall be selected by the Buyer, and one shall be selected by
the Seller. The other arbitrator shall be selected by the two
arbitrators so appointed by the parties. If the arbitrators
previously appointed by the Buyer and Seller cannot agree upon
the third arbitrator within thirty (30) calendar days, then
the parties may apply to the presiding judge in any court
having jurisdiction in the matter for appointment of the third
arbitrator. Each party shall select its own arbitrator within
thirty (30) days of the date that the parties agree to
arbitration hereunder.
(c) The arbitrator(s) shall have no power to modify any
of the provisions of this Agreement, and their jurisdiction is
limited accordingly. The decision of the arbitrator(s) shall
be rendered within one-hundred and eighty (180) days after the
date of the selection of the arbitrator(s) or within such
period as the parties may otherwise agree.
(d) Each party shall be responsible for the expenses
incurred by the arbitrator appointed by such party, and the
expenses, fees and costs of the third arbitrator shall be
borne equally by the parties. In the event that a single
arbitrator is selected, the expenses of that arbitrator will
be borne equally by the parties.
(e) It is the intent of the parties that arbitrator(s),
pursuant to arbitration proceedings described herein, will be
precluded from awarding punitive and/or exemplary damages
against any party to this Agreement.
9. Except as amended hereby, and as previously amended, the
Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their duly authorized officers as of
the date first written above.
ORANGE & ROCKLAND UTILITIES, INC.
(BUYER)
By Frank E. Fischer
Title Vice President
MASSEY COAL SALES COMPANY, INC.
(SELLER)
By Thomas A. McQuade
Title Senior Vice President
RAWL SALES & PROCESSING COMPANY, INC.
By James S. Twigg
Title Treasurer
<PAGE>
GUARANTY
A. T. Massey Coal Company, its successors and/or permitted
assigns, for sufficient and adequate consideration the receipt of
which is hereby acknowledged, unconditionally and irrevocably
guarantees and binds itself as surety to Buyer, Orange and Rockland
Utilities, Inc., its successors and/or assigns, full and timely
performance of Seller as that term is defined by the Seventh
Amendment to Coal Purchase and Sales Agreement, effective July 1,
1994, incorporated herein by reference and made a part hereof, and
assumes all obligations and liabilities of Seller under the terms
of such Coal Purchase and Sales Agreement to the extent Seller
fails to perform same.
The undersigned stipulates that he is an officer of A. T.
Massey Coal Company, Inc. and is authorized to execute same on its
behalf.
A. T. MASSEY COAL COMPANY, INC.
By Wynston D. Holbrook
Attest: Title Executive Vice President
Thomas A. McQuade Date _____8/17/94_________________
ORANGE AND ROCKLAND UTILITIES, INC.
By Frank E. Fischer
Attest: Title Vice President
Debra A. Bogin Date __9/29/94___________
<PAGE>
SCHEDULE A
COMPUTATION OF INTERIM COAL PRICE REDUCTION
1. All pricing, coal, oil and natural gas, will be on a fuel
clause basis.
2. The price for oil or natural gas ("Alternative Fuels") for any
month shall be the weighted average monthly fuel replacement
cost of each fuel as reported to the New York Power Pool
(cents per MMBtu) for that month. This price shall be used as
the basis for calculating the per ton interim coal price
adjustment ("ICPA") for the tons of coal purchased from Seller
during the month. The weighted average monthly fuel
replacement cost for each fuel shall be the sum of the price
on each day divided by the number of days in the month. In no
event shall the weighted average price of each fuel be
adjusted to reflect the quantity purchased at a given price.
3. The BTU content of each fuel unit (Seller's coal, BTU per
pound; oil, BTU per gallon; natural gas, BTU Per thousand
cubic feet) for each month shall be the actual average monthly
BTU content of each fuel unit as computed by Buyer from its
purchase records for the prior month.
4. The full load heat rate (BTU/KWHR) for each month of oil,
natural gas and Seller's coal shall be the most current rate
as computed by Buyer and reported in its Plant Operating
Report.
5. Cost per million BTU expressed in cents shall be computed for
oil, natural gas and Seller's coal on a fuel clause basis
using the weighted average monthly fuel replacement cost of
each Alternative Fuel for the month and utilizing the
following formulas:
Coal:
Fuel Clause Price Per Ton x 106 = Cost per MM/BTU
BTU per pound x 2,000
Oil:
Fuel Clause Price Per Barrel x 106 = Cost per MM/BTU
BTU per gallon x 42
Natural Gas:
Fuel Clause Price Per McF x 106 = Cost per MM/BTU
BTU per McF
6. Cost per megawatt-hour for oil, natural gas, and Seller's coal
expressed in dollars per megawatt-hour shall be computed
utilizing the following formula:
Cost per megawatt-hour = Cost per MM/BTU x Heat Rate
1,000
7. Cost per megawatt-hour for oil, natural gas, and Seller's coal
shall be compared and if the cost for coal exceeds the cost
for oil or natural gas the ICPA for the month shall be
computed utilizing the following formula.
(Coal Cost Per Megawatt-hour - Alternative Fuel
Cost Per Megawatt-hour) x (BTU per pound x 2,000) =
Coal Heat Rate x 1,000
Interim Coal Price Reduction Per Ton
<PAGE>
EXHIBIT A
Seller's Mines
Mingo County, West Virginia Properties
Page 1 of 2
EXHIBIT B
Base Price Adjustment
Orange And Rockland/Massey Coal Sales
January 1, 1995 *
1. Labor Cost
Average Hourly Earnings - (Base) July 1994 18.20
Bituminous Coal & Lignite Mining (SIC 122) October 1994 18.25
Increase 0.27%
Base Labor Cost 9.60
Increase ($9.60 x 0.27%) 0.03
Adjusted Labor Cost 9.63
2. Capital Equipment Cost
Implicit Price Deflator - (Base) 2nd Quarter 1994 121.70
Gross Domestic Product (August Publication)
3rd Quarter 1994 122.50
(November Publication)
Increase 0.65%
Base Capital Equipment Cost 6.40
Increase ($6.40 x 0.65%) 0.04
Adjusted Capital Equipment Cost 6.44
3. Materials And Supplies
BLS Nov. 1994 Weighted
Code No. Index Weight Index Index
Industrial Commodi 62.5% 118.3 73.94
1192-03 Drills & Other Min 12.5% 128.9 16.11
Machinery
1192-5301 Mining Machinery P 12.5% 117.8 14.73
Excluding Drills
4981-132 Industrial Power, 12.5% 103.5 12.94
Demand, Mid-Atlantic
117.72
Base Index - August, 1994 117.30
Weighted Index - November, 1994 117.72
Increase 0.36%
Base Materials And Supplies Cost 12.80
Increase ($12.80 x 0.36%) 0.05
Adjusted Materials And Supplies Cost 12.85
4. Fixed Cost
Base Fixed Cost 3.20
* indices shown are not actuals, used for illustration purposes only
Page 2 of 2
Cost Components
January 1, 1995
Base Adjusted
Cost Adjustments Price
1. Labor Costs $9.60 $0.03 $9.63
2. Capital Equipment 6.40 0.04 6.44
3. Material And Supplies 12.80 0.05 12.85
4. Fixed Cost 3.20 0 3.20
Total $32.00 $0.12 $32.12
* indices shown are not actuals, used for illustration purposes only
EXHIBIT C
a) Illustration of 30 Day Weighted Average Calculation
30 Day Weighted Averages
January 1994
<TABLE>
<CAPTION>
Coal Train Arrival Ash Soft Ash Soft
Vendor Number Mine Date Tonnage Ash Ash % Volatile Volatiles % Temperature Temperature %
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Massey UOR-2 Rawl 1/02/94 9325.45 6.52 60,801.93 33.63 313,614.88 2800 26,111,260.00
UOR-4 Rawl 1/08/94 9252.95 6.81 63,012.59 32.96 304,977.23 2800 25,908,260.00
UOR-6 Rawl 1/12/94 9119.05 6.43 58,635.49 33.42 304,758.65 2800 25,533,340.00
UOR-8 Rawl 1/25/94 8983.15 6.21 55,785.36 31.96 287,101.47 2800 25,152,820.00
Total 36,680.60 238,235.38 1,210,452.24 102,705,680.00
</TABLE>
Total Weighted Average
Tonnage 36,680.60
Ash 238,235.38 6.49
Volatiles 1,210,452.24 33.00
Ash Soft Temp. 102,705,680.00 2,800.00
*Figures shown are not actuals; used for illustration purposes only.
b)Illustration Of 90 Day Weighted Average Calculation
90 Day Weighted Averages
January 1994- March 1994
<TABLE>
<CAPTION>
Coal Train Arrival
Vendor Number Mine Date Tonnage Grind Grind % BTU BTU % Moisture
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Massey UOR-2 Rawl 1/02/94 9325.45 46 428,970.70 13,002 121,249,500.90 6.85
UOR-4 Rawl 1/08/94 9252.95 46 425,635.70 13,205 122,185,204.75 6.39
UOR-6 Rawl 1/12/94 9119.05 47 428,595.35 13,265 120,964,198.25 6.70
UOR-8 Rawl 1/25/94 8983.15 45 404,241.75 13,150 118,128,422.50 6.44
UOR-10 Rawl 2/06/94 9120.25 46 419,531.50 13,158 120,004,249.50 6.38
UOR-12 Rawl 2/11/94 9337.65 48 448,207.20 13,126 122,565,993.90 6.30
UOR-14 Rawl 2/16/94 9102.65 48 436,927.20 13,201 120,164,082.65 6.40
UOR-16 Rawl 2/22/94 8903.9 46 409,579.40 13,148 117,068,477.20 6.49
UOR-18 Rawl 3/02/94 9103.65 47 427,871.55 13,267 120,778,124.55 6.51
UOR-20 Rawl 3/12/94 9037.65 47 424,769.55 13,209 119,378,318.85 6.89
UOR-22 Rawl 3/20/94 9138.15 46 420,354.90 13,231 120,906,862.65 6.52
UOR-24 Rawl 3/30/94 9015.75 48 432,756.00 13,109 118,187,466.75 6.56
Total 109,440.25 5,107,440.80 1,441,580,902.45
</TABLE>
Total Weighted Average
Tonnage 109,440.25
Grindability 5,107,440.80 46.67
BTU 1,441,580,902.45 13,172.31
Moisture 715,270.69 6.54
Grind Matrix 614.74
* Figures shown are not actuals; used for illustration purposes only.
[MAP ATTACHED HERETO]
<PAGE>
SUPPLEMENTAL AGREEMENT
This Supplemental Agreement is made and entered into as of
July 1, 1994, between Orange and Rockland Utilities, Inc. ("O&R")
a New York corporation, and Massey Coal Sales Company, Inc.
("Massey"), a Virginia corporation.
In anticipation of 1995 Clean Air Act requirements,
specifically the NOx emission limits, O&R and Massey have amended
their existing Coal Purchase and Sales Agreement, consisting of the
original contract (dated March 9, 1984) and six subsequent
amendments (dated July 30, 1986, July 1986, September 1986, January
1987, January 1990, and July 1, 1991) (the "Agreement"). Because
of the forthcoming implementation of certain provisions of the
Clean Air Act, the Seventh Amendment (dated July 1, 1994) provides
for a higher quality coal then previously required under the Sixth
Amendment. Specifically, the grind of the coal must be increased
from 43 to 46 in order to ensure compliance with the 1995
requirements. O&R will be installing low NOx burners on Lovett
Unit #4 in November 1994 and on Lovett Unit #5 in March 1995 in
order to meet the NOx emission limits. The design of these low NOx
burners is based on the knowledge that the Units will be burning a
soft coal product, specifically a grind of generally at least 46.
In the interest of purchasing the lowest cost fuel on behalf
of its ratepayers, O&R will continue to accept the lower grind coal
product from Massey's affiliate Sidney Coal Company up until the
time the NOx emission limits go into effect on May 15, 1995. The
price for this coal will be $30.25 per ton F.O.B. mine, effective
July 1, 1994. All other provisions of the Agreement will be in
effect, except the BTU deadband and ash penalty/premium. These
items will become effective when the switch to Rawl Sales &
Processing Company, another Massey affiliate, is made. O&R will
provide Massey two (2) months' advanced notice of its decision to
switch to the higher grind product from Rawl Sales & Processing
Company, Inc. O&R must allow itself adequate time to change out
the coal pile from the low grind product to the high grind product.
ORANGE AND ROCKLAND UTILITIES, MASSEY COAL SALES COMPANY, INC.
INC.
By Frank E. Fischer By Thomas A. McQuade
Title Vice President Title Senior Vice President
ORANGE AND ROCKLAND UTILITIES, INC.
POST-DIRECTOR SERVICE
RETAINER CONTINUATION PROGRAM
Effective: April 8, 1987
Amended as of: April 12, 1989
June 1, 1989
April 5, 1990
April 14, 1993
March 2, 1995
<PAGE>
ORANGE AND ROCKLAND UTILITIES, INC.
POST-DIRECTOR SERVICE
RETAINER CONTINUATION PROGRAM
In recognition of the added value of the continued
service of directors who are experienced with the operations
Orange and Rockland Utilities, Inc. (the "Company") because of
their length of service on the Board and to provide a benefit for
such experience so as to encourage directors to continue to
serve, the following Company Post-Director Service Retainer
Continuation Program is hereby created:
1. Eligibility. Any director who is not otherwise
covered by any retirement plan or program sponsored by the
Company and who has served as a member of the Company's Board of
Directors for a period of at least five continuous years shall be
an "Eligible Director."
2. Retainer Continuation. Upon ceasing to be a member
of the Board of Directors, an Eligible Director shall be entitled
to the continuation of one hundred percent (100%) of the annual
Board and Committee service retainers as in effect and being paid
to such Eligible Director at the time the Eligible Director
ceased to be a member of the Board of Directors, subject to the
limitations contained in Paragraph 3 below.
3. Time and Manner of Payment. The retainer
continuation payments shall commence (i) if the Eligible Director
is living, as of the first day of the calendar month next
following the later of the Eligible Director's attaining age 65
or ceasing to be a member of the Board of Directors or (ii) in
the case of the death of an Eligible Director prior to
commencement of payments, as of the first day of the calendar
month next following the later of the 65th anniversary of the
Eligible Director's birth or the Eligible Director's date of
death; provided, however, if the Eligible Director has already
received an installment of the annual retainer for a period
extending beyond when the retainer continuation payments would
otherwise begin as provided herein, the retainer continuation
payments will not commence until the expiration of the period for
which the retainer has been paid. The retainer continuation
payments shall be made in nearly equal monthly installments equal
to one-twelfth (l/12th) the annual retainer specified in
Paragraph 2 above. Such payments shall be made as of the first
day of each month and shall continue for a period equal to the
Eligible Director's full years of service on the Board of
Directors. In the event an Eligible Director dies, either while
serving on the Board or after retiring from the Board, and where
payments remain to be made, the remaining payments shall be made
to the beneficiary last designated by the Eligible Director in
writing to the Retirement Committee, or if none, to the Eligible
Director's estate. In the event of the death of a beneficiary to
whom payments are due, the remaining payments shall be made to
such beneficiary's estate. In the event payments are to be made
to a beneficiary or to the estate of an Eligible Director or a
beneficiary, the Retirement Committee, at its sole discretion and
at any time, may provide for the lump-sum payment of the present
value of the remaining payments, such present value to be
determined by using a discount factor equal to the interest rate
assumption used to calculate the Company's contribution under the
Employees' Retirement Plan of Orange and Rockland Utilities, Inc.
Beginning as of July 1 of the year for which the
cumulative percentage change in the CPI-U (as defined below)
exceeds 20%, but not earlier than July 1, 1993, and as of each
July 1 thereafter, the retainer continuation payments then being
paid to or with respect to an Eligible Director shall be
increased by an adjustment amount, not less than zero, determined
by multiplying the original retainer continuation payment amount,
by a percentage (rounded to the nearest 1/100 of 1%) equal to 75%
of the cumulative percentage change in the CPI-U for the year in
excess of 20%, but not more than the applicable cumulative
maximum percentage (as each is defined below).
The terms specified below which are used above shall
have the following meanings unless the context clearly dictates
another meaning:
(x) "CPI-U" means the annual average figure under the
Consumer Price Index for All Urban Consumers, U.S. City
Average of All Items (1982-1984=100), or its successor,
as published by the United States Bureau of Labor
Statistics.
(y) "cumulative percentage change in the CPI-U" for a
year is calculated by dividing the difference
between the CPI-U for the prior year and the CPI-U
for the year prior to the year in which the retainer
continuation payment originally commenced by the
CPI-U for the year prior to the year in which the
retainer continuation payment originally commenced,
and rounding to the nearest 1/100 of 1% (e.g., for
purposes of determining the cumulative percentage
change in the CPI-U for 1993 for an Eligible
Director whose retainer continuation payment
commenced in 1990, subtract the CPI-U for 1989 from
CPI-U for 1992, then divide the result by the
CPI-U for 1989 and round to the nearest 1/100 of
1%). Notwithstanding any provisions herein to the
contrary, in all cases when the retainer continuation
payment commenced before January 1, 1989, the
cumulative percentage change in the CPI-U for a year
shall be calculated by dividing the difference
between the CPI-U for the prior year and the CPI-U
for 1991 by the CPI-U for 1991, rounding to the
nearest 1/100 of 1%, and adding 20%.
(z) "cumulative maximum percentage" is 3% for the first
year in which an adjustment is first made hereunder
and for each succeeding year is 3% plus 103% of the
prior year's cumulative maximum percentage, rounded
to the nearest 1/100 of 1% (e.g., 3% for the first
year adjustment, 6.09% for the second year, 9.27%
for the third year and so on).
4. Nature of Payment. The retainer continuation
payments are purely personal to the Eligible Director and may not
be assigned, alienated, anticipated or encumbered. Any attempt
to assign, alienate, anticipate or encumber the payments shall
result in the Eligible Director's forfeiture of all rights to any
retainer continuation payments hereunder.
5. Source of Payments. All payments of awards
provided for under the Program shall be paid in cash from the
general funds of the Company; provided, however, that such
payments shall be reduced by the amount of any payments made to
the director or his or her dependents, beneficiaries or estate
from any trust or special or separate fund established by the
Company to assure such payments. The Company shall not be
required to establish a special or separate fund or other
segregation of assets to assure such payments, and, if the
Company shall make any investments to aid it in meeting its
obligations hereunder, the director shall have no right, title,
or interest whatever in or to any such investments except as may
otherwise be expressly provided in a separate written instrument
relating to such investments. Nothing contained in this Program
and no action taken pursuant to its provisions, shall create or
be construed to create a trust of any kind between the Company
and any persons. To the extent that any person acquires a right
to receive payments from the Company hereunder, such right shall
be no greater than the right of an unsecured creditor of the
Company.
6. Administration. This Program shall be administered
by the Retirement Committee of the Company which shall have the
full power and authority to construe, interpret and administer
the Program. All decisions, actions or interpretations of the
Retirement Committee shall be final, conclusive and binding on
all parties.
7. Amendment. The Board of Directors reserves the
right to amend the Program in whole or in part at any time
without the specific consent of any Eligible Director; provided,
however, that no such amendment shall adversely affect retainer
continuation payments then being made or the rights of any then
Eligible Directors or to receive retainer continuation payments
earned prior to the amendment, calculated on the basis of such
Eligible Director's continuous service as a director at the time
of the amendment and the annual retainer than in effect.
8. Termination. The Board of Directors reserves the
right to terminate the Program at any time. Termination of the
Program shall not affect the retainer continuation payments then
being made. Such payments shall be continued in accordance with
the terms hereof. In addition, termination of the Program shall
not affect the right of any Eligible Director as of the date of
termination to receive retainer continuation payments which shall
be calculated on the basis of the continuous service of the
Eligible Director as of the time of termination of the Program
and the annual retainer then in effect. Such retainer
continuation payments shall commence and be paid in accordance
with the otherwise applicable provisions of the Program
(Paragraph 3).
9. Change in Control. Notwithstanding anything else
herein to the contrary, in the event of the occurrence of a
Change in Control, if any, each Eligible Director shall have the
right to receive and shall be paid, as soon as practicable after
such occurrence becomes reasonably certain, a lump sum cash
amount equal to the present value of the retainer continuation
payments that would otherwise have been paid pursuant to
Paragraph 3, on the assumption that, (a) payments (including any
payments already made) would be made for a period equal to the
lesser of the Eligible Director's full years of service on the
Board of Directors or 10 years, and (b) that, with respect to
Eligible Directors who were not yet receiving retainer
continuation payments, such payments would commence on the later
of the Eligible Directors's attaining age 65 or the date of the
Change in Control. Such present value shall be determined by
using a discount factor equal to the interest rate assumption
used to calculate the Company's contributions under the
Employees' Retirement Plan of Orange and Rockland Utilities, Inc.
as of the date of the Change in Control.
As used in the Plan, "Change in Control" shall mean the
happening of any of the following:
(a) receipt by the Company of a report on Schedule 13D
filed with the Securities and Exchange Commission pursuant
to the Section 13(d) of the Securities Exchange Act of 1934
(the "1934 Act") disclosing that any person, group,
corporation or other entity is the beneficial owner,
directly or indirectly, of 20 percent or more of the
outstanding stock of the Company;
(b) purchase by any person (as defined in Section
13(d) of the 1934 Act), corporation or other entity, other
than the Company or a wholly-owned subsidiary of the
Company, of shares pursuant to a tender or exchange offer to
acquire any stock of the Company (or securities convertible
into stock) for cash, securities or any other consideration,
provided that, after consummation of the offer, such person,
group, corporation or other entity is the beneficial owner
(as defined in Rule 13d-3 under the 1934 Act), directly or
indirectly, of 20 percent or more of the outstanding stock
of the Company (calculated as provided in paragraph (d) of
Rule 13d-3 under the 1934 Act in the case of rights to
acquire stock);
(c) approval by the stockholders of the Company of any
(i) consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or
pursuant to which shares of stock of the Company would be
converted into cash, securities or other property, other
than a consolidation or merger of the Company in which
holders of its common stock immediately prior to the
consolidation or merger have substantially the same
proportionate ownership of common stock of the surviving
corporation immediately after the consolidation or merger as
immediately before, or (ii) sale, lease, exchange or other
transfer (in one transaction or a series of related
transactions) of all or substantially all the assets of the
Company; or
(d) a change in the majority of the members of the
Board of Directors within a 12-month period unless the
election or nomination for election by the Company's
stockholders of each new director was approved by the vote
of two-thirds of the directors then still in office who were
in office at the beginning of the 12-month period.
10. Effective Date. This Program shall be effective
on April 8, 1987.
f:\orlaw\bod\postdirp.bod
SEPARATION AGREEMENT WITH
GENERAL RELEASE AND COVENANT
NOT TO SUE
Victor J. Blanchet, Jr. ("Employee") and Orange and
Rockland Utilities, Inc. ("Employer") hereby knowingly and
voluntarily agree to enter into this Separation Agreement with
General Release and Covenant Not to Sue ("Agreement") in order to
resolve any and all claims between them pertaining to outstanding
issues and to set forth all obligations between the parties.
Employee and Employer acknowledge and agree that this Agreement
constitutes the sole obligation of each to the other and that no
other promises, commitments or representations have been made with
or by each of the parties to the other.
First: In accordance with Employee's resignation letter
attached as Exhibit A, Employee's active employment with the
Employer (and its subsidiaries and affiliates) will cease effective
March 1, 1995. At that time, Employer agrees to place Employee on
a paid leave of absence commencing March 1, 1995 and ending August
31, 1996 ("Leave of Absence") as of which time the Employee hereby
voluntarily retires. During the Leave of Absence, Employer agrees
to pay Employee $25,000 per month, less applicable payroll
withholdings and deductions ("Separation Amount") in accordance
with its regular payroll procedures. However, the parties
acknowledge that should Employee obtain full-time employment during
the Leave of Absence, the Separation Amount shall be reduced by the
monies Employee receives. Employee acknowledges and warrants that
he will furnish to Employer the name of any subsequent full-time
employers and the amount of monies received therefrom during the
Leave of Absence.
(Confidential material has been omitted and filed separately
with the Securities and Exchange Commission)
Employee agrees that during
the Leave of Absence, he will not seek active employment with the
Employer and that at the expiration of the Leave of Absence, he
will no longer be an employee of, nor will he seek employment with,
the Employer.
Second: During the Leave of Absence, Employee shall be
eligible for continued coverage under Employer's health plan
benefits (comprehensive major medical, prescription drugs, vision
care, dental, flexible reimbursement account plan), social
security, management employees' savings plan (401(k) plan), life
insurance, spouse life insurance, at Employee's cost, employees'
retirement plan, officers' supplemental retirement plan ("SRP") and
the 1994 and 1992-1994 executive incentive compensation plans to
the same extent as if he remained an active employee. Except as
provided above, all other Employer benefits shall cease on March 1,
1995.
Third: On March 15, 1995 or as soon thereafter as
administratively possible, Employer shall pay Employee ten (10)
weeks of pay, consisting of his entire accrued but unused vacation.
Employee acknowledges that he is not entitled to any other vacation
benefits.
Fourth: Employee shall be entitled to retain for his
personal use the laptop computer, IBM 360C, that previously has
been made available to him.<PAGE>
Fifth: Employer will pay reasonable attorney's fees and
expenses for legal advice and representation of Employee,
consistent with Employer's indemnification policy for officers and
New York law for legal advice and representation of Employee by
(Confidential material has been omitted and filed separately
with the Securities and Exchange Commission)
Sixth: In exchange for the above stated consideration,
Employee agrees to forever release and discharge Employer and all
of its subsidiaries, parents and affiliates, its officers,
directors, employees, agents, and attorneys from any and all
liabilities arising directly or indirectly out of his employment
and resignation including any claims asserted and non-asserted he
may have under the laws of New York for torts, contract or
employment agreements or under any federal, state or local statute,
regulations, rule, ordinance or order including, but not limited
to, discrimination based on race, sex, age, religion, national
origin, sexual orientation, physical, mental or medical condition,
marital status or retaliation. This waiver includes any and all
claims Employee may have under the Age Discrimination in Employment
Act of 1967, Title VII of the Civil Rights Act of 1964, The Civil
Rights Act of 1991, The Americans with Disabilities Act and the
Employee Retirement Income Security Act.
Seventh: As a material inducement to Employer to enter
into this Agreement, save and except for any right by Employee to
seek indemnity or defense in accordance with existing Employer
policy and New York law with respect to any and all claims against
Employee or Employer based on any and all lawful acts or omissions
which occurred in connection with Employee's employment by and/or
serving as a director of officer of Employer, Employee hereby
irrevocably and unconditionally releases, acquits, and forever
discharges Employer and all directors, officers, employees,
representatives, attorneys, and all persons acting by, through,
under or in concert with any of them, ("Releasees"), from any and
all charges, complaints, claims, liabilities, obligations,
promises, agreements, controversies, damages, actions, causes of
action, suits, rights, demands, costs, losses, debts and expenses
(including attorney's fees and costs actually incurred), of any
nature whatsoever, known or unknown, which Employee now has, owns,
holds, or claims to have, own, or hold, or which Employee at any
time heretofore had, owned, held, or claims to have, own, or hold
against each of the Releasees.
Eighth: Employee agrees not to directly or indirectly
take, support, encourage or participate in any action or attempted
action which in any way would damage the reputation or business
relationships of Employer and/or any of its subsidiaries, parents
or affiliates, except if and to the extent required by law. During
the Leave of Absence, Employee will not directly or indirectly
engage in any competitive activity adverse to the Employer's
interests and/or any of its subsidiaries, parents or affiliates
interests without the express consent of Employer. Employee shall
not divulge any confidential or proprietary information gained from
his employment with Employer, except if and to the extent required
by law. Employee will not disparage the Employer in any way and
will only speak about Employer in positive terms. Employee
warrants that he has returned all Employer property, materials,
credit cards, car, etc. Employee agrees that he will cooperate as
reasonably necessary consistent with his business obligations in
any legal disputes and/or administrative proceedings or functions
relating to issues and/or incidents which took place during his
term of employment.
(Confidential material has been omitted and filed separately
with the Securities and Exchange Commission)
Tenth: Employee acknowledges that the terms of this
agreement and all discussions leading up to it are confidential and
agrees that he will not divulge the terms of this Agreement to any
third party, except his immediate family and attorney. Employer
agrees to pay Employee's reasonable attorney's fees incurred in
reviewing this Agreement by
(Confidential material has been omitted and filed separately
with the Securities and Exchange Commission)
up to $5,000.
Eleventh: Employee warrants that he is fully competent
to enter into this Agreement; he acknowledges that he has been
afforded an opportunity to review this Agreement with independent
counsel, that he has read and understands this Agreement; and that
he has signed this Agreement freely and voluntarily.
Twelfth: Should any provision of this Separation
Agreement be declared or be determined by any court to be illegal
or invalid, the validity of the remaining parts, terms or
provisions shall not be affected thereby and said illegal or
invalid part, term or provision shall not be deemed to be a part of
this Separation Agreement.<PAGE>
Thirteenth: This Agreement constitutes the entire
agreement between the parties. Any amendments to or changes in the
obligations created by this Agreement shall not be effective unless
reduced to writing and signed by the parties. All prior written or
oral agreements between Employer and Employee are hereby terminated
and expressly disavowed including, but not limited to, the Orange
and Rockland Utilities, Inc. Severance Pay Plan dated as of January
3, 1991. This Agreement shall be construed under New York law and
any actions relating thereto must be brought within the State of
New York.
Fourteenth: This Agreement and the payment of any
consideration hereunder shall not be construed as an admission of
any kind whatsoever on the part of Employer, and/or any of its
subsidiaries, parents or affiliates, their officers, agents,
representatives or employees.
Fifteenth: Employee acknowledges that he has been given
at least 21 days to decide whether to sign this Agreement.
Further, Employee understands that he has the opportunity to revoke
such Agreement within 7 days of signing it and that he must return
all amounts received hereunder in such event.
PLEASE READ CAREFULLY. THIS SETTLEMENT AGREEMENT
INCLUDES A WAIVER AND RELEASE. To signify their agreement to the
terms of this Agreement, the parties have executed this Agreement
on the date set forth opposite their signatures which appear below.
February 28, 1995 /s/ Victor J. Blanchet, Jr.
Date Victor J. Blanchet, Jr.
March 1, 1995 /s/ D. L. Peoples
Date Orange and Rockland Utilities, Inc.
Vice Chairman & CEO
EXHIBIT A
February 28, 1995
Mr. D. Louis Peoples
Chief Executive Officer
Orange and Rockland Utilities, Inc.
One Blue Hill Plaza
Pearl River, New York 10965
Dear Lou:
I hereby resign effective March 1, 1995 as a director,
officer and/or active employee of Orange and Rockland Utilities,
Inc., Rockland Electric Co., Pike County Light and Power Co., Clove
Development Corporation, O&R Development, Inc., O&R Energy, Inc.,
O&R Energy Development, Inc., Millbrook Holdings, Inc., Saddle
River Holdings Corp., and Atlantic Morris Broadcasting Inc.
Further, I hereby elect to retire from employment effective August
31, 1996 and until that time agree and request to be placed on a
leave of absence.
Very truly yours,
/s/ Victor J. Blanchet, Jr.
Victor J. Blanchet, Jr.
ORANGE AND ROCKLAND UTILITIES, INC.
DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
As Amended and Restated through October 6, 1994
<PAGE>
ORANGE AND ROCKLAND UTILITIES, INC.
DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
1. Eligibility
Each member of the Board of Directors of Orange and Rockland
Utilities, Inc. (the "Company") who is not an employee of the
Company, or of any of its subsidiaries (an "Eligible Director"),
is eligible to participate in the Orange and Rockland Utilities,
Inc. Deferred Compensation Plan for Non-Employee Directors (the
"Plan").
2. Participation
(a) Prior to the beginning of any calendar quarter,
commencing with the quarter beginning April 1, 1988, each
Eligible Director may elect to participate in the Plan by
directing that all or any part of the compensation (including
fees payable for services as a member of a committee of the Board
of Directors) which would otherwise have been payable currently
for services as a Director during such calendar quarter and
subsequent calendar quarters (the "Fees") shall be credited to a
deferred compensation account (the "Director's Account") subject
to the terms of the Plan. Any person who shall become an
Eligible Director during any calendar quarter and who was not an
Eligible Director of the Company prior to the beginning of such
calendar quarter, may elect, within 30 days after becoming an
Eligible Director, to defer payment of all or any part of the
Fees for the remainder of such calendar quarter and for
succeeding calendar quarters.
(b) An election to participate in the Plan shall be made by
written notice executed by the Eligible Director and filed with
the Secretary of the Company within the time specified in
paragraph 2(a) hereof. An election to participate, related to
Fees otherwise payable with respect to services as an Eligible
Director in subsequent calendar quarters, shall become
irrevocable as of the end of the calendar quarter preceding such
calendar quarter. An election shall continue until a Director
ceases to be an Eligible Director or until the Eligible Director
terminates or modifies such election to participate in the Plan
by written notice filed with the Secretary of the Company. Any
such termination or modification of an election to participate in
the Plan shall become effective as of the end of the calendar
quarter in which such notice is given and only with respect to
Fees payable with respect to services as an Eligible Director in
subsequent calendar quarters. Amounts credited to a Director's
Account prior to the effective date of any termination or
modification shall not be affected by such termination or
modification of an election to participate in the Plan and shall
be distributed only in accordance with the terms of the Plan,
provided however that an Eligible Director may modify an election
with respect to the distribution of amounts credited to a
Director's Account as provided in Section 4(a) hereof.
(c) An Eligible Director who has filed a termination of
election to participate may thereafter file another written
notice with the Secretary of the Company electing to participate
for any calendar quarter commencing subsequent to the filing of
such election and subsequent calendar quarters.
3. The Director's Account
(a) All deferred Fees shall be credited to the Director's
Account and shall bear interest as provided in paragraph 3(b)
hereof. The establishment and maintenance of, or credits to, the
Director's Account shall not vest in the Eligible Director or the
Eligible Director's Beneficiary any right, title or interest in
and to any specific assets of the Company.
(b) Interest shall be credited on the deferred Fees
credited to a Director's Account, commencing on the date such
Fees would otherwise have been paid, at a rate per annum for each
calendar quarter which prior to February 6, 1986 was a rate equal
to the average quoted rate for three-month U.S. Treasury Bills
for the last full week of the preceding calendar quarter and
which beginning February 6, 1986 is a rate equivalent to the
Company's allowable rate of return in effect from time to time as
set by the Department of Public Service of the State of New York
(the "New Rate"). Amounts so determined shall be compounded at
the end of each calendar quarter and credited to the Director's
Account. Amounts credited to a Director's Account shall continue
to be credited with interest until distributed in accordance with
the Plan, which interest beginning with February 6, 1986 shall be
at the New Rate.
4. Distribution from Director's Account
(a) At the time of election to participate in the Plan, an
Eligible Director shall also make a written election with respect
to the distribution of amounts credited to the Director's Account
(an "Initial Election"). An Eligible Director may elect to
receive such amount in one lump-sum payment or in some other
number or ratable annual installments (not exceeding 10). The
first installment (or the single lump-sum payment if the Director
has so elected) shall be paid on the later of the first business
day of the calendar year immediately following the year in which
the Director ceases to be an Eligible Director of the Company, or
the first business day of such later calendar year as the
Director shall have elected in accordance with the terms hereof.
Subsequent installments, if any, shall be paid on the first
business day of each succeeding calendar year until the entire
amount credited to the Director's Account shall have been paid.
(1) An Eligible Director while an Eligible Director
may modify any Initial Election or prior modification of an
election with respect to the distribution of amounts
credited to the Director's Account. Such modification may
relate to either or both (i) Fees payable with respect to
services as an Eligible Director in calendar quarters
subsequent to the effective date of such modification,
and/or (ii) all deferred Fees prior to the effective date of
such modification, provided however that any such
modification related to previously deferred Fees may only
provide for the further deferral of such previously deferred
Fees. In the event that the Eligible Director has made more
than one modification of any election, the most recent
modification shall control distribution of the amounts
credited to the Director's Account.
(2) With respect to any modification of an election
related to Fees payable with respect to services as an
Eligible Director in subsequent calendar quarters, any such
modification shall become effective as of the end of the
calendar quarter in which such notice of modification is
given and only with respect to Fees payable for services as
an Eligible Director in subsequent calendar quarters.
(3) With respect to any modification of an election,
or portion thereof, related to previously deferred Fees, any
such modification shall become effective as of the first day
of the calendar year following the calendar year in which
such notice of modification is given. Amounts credited to a
Director's Account prior to the effective date of any such
modification related to previously deferred Fees may only be
further deferred by such modification made while the
Director is still an Eligible Director, shall be distributed
only in accordance with the terms of the Plan, and shall not
be affected by any modification purporting to accelerate
payment of such deferred Fees.
(b) The election with respect to the distribution of
amounts credited to the Director's Account and/or the
modification of any such election shall be made in the written
notice provided for in paragraph 2(b) hereof.
(c) Notwithstanding the provisions of paragraph 2(b) hereof
or the terms of an election or modification thereof made pursuant
to paragraph 4(a) hereof, if a Director ceases to be an Eligible
Director of the Company and becomes employed by any governmental
agency having jurisdiction over the activities of the Company or
any of its subsidiaries, the termination of the Director's
election to participate shall become effective immediately and
the entire balance of the Director's Account shall be paid in a
single lump-sum payment at the Company's earliest convenience.
(d) If an Eligible Director should die before payment in
full of all amounts credited to the Director's Account, the
balance of the Director's Account shall be paid on the first
business day of the calendar year following the year of death to
the Eligible Director's Beneficiary.
(e) Notwithstanding the terms of any election to defer or
modification thereof made by an Eligible Director hereunder, the
Secretary of the Company may, in his sole discretion, permit the
withdrawal of all or a portion of the amounts credited to a
Director's Account, upon the request of the Eligible Director or
the Eligible Director's representative, or following the death of
an Eligible Director upon the request of an Eligible Director's
Beneficiary or such Beneficiary's representative, if the
Secretary determines that the Eligible Director or Beneficiary,
as the case may be, is confronted with an unforeseeable
emergency. For this purpose, an unforeseeable emergency is an
unanticipated emergency caused by an event that is beyond the
control of the Eligible Director or Beneficiary and that would
result in severe financial hardship to the Eligible Director or
Beneficiary if an early hardship withdrawal were not permitted.
The Eligible Director or Beneficiary shall provide to the
Secretary such evidence as the Secretary may require to
demonstrate that such emergency exists and financial hardship
would occur if the withdrawal were not permitted. Any withdrawal
under this paragraph shall be limited to the amount necessary to
meet the emergency.
(f) The Company shall deduct from the distributions to be
made from a Director's Account any Federal, State or local
withholding or other taxes or charge which the Company is from
time to time required to deduct under applicable law.
5. Designation of Beneficiaries
Each Eligible Director shall file with the Secretary of the
Company a written designation of one or more persons as the
Beneficiary who shall be entitled to receive the amount, if any,
payable under the Plan upon the Eligible Director's death. An
Eligible Director may from time to time revoke or change the
Eligible Director's beneficiary designation without the consent
of any prior Beneficiary by filing a new designation with the
Secretary of the Company. The last such designation received by
the Secretary of the Company shall be controlling; provided
however, that no designation or change or renovation thereof
shall be effective unless received by the Secretary of the
Company prior to the Eligible Director's death, and in no event
shall it be effective as of a date prior to such receipt. If no
such beneficiary designation is in effect at the time of an
Eligible Director's death, or if no designated Beneficiary
survives the Eligible Director, or if such designation conflicts
with law, the Eligible Director's estate shall be the Beneficiary
entitled to receive the amount, if any, payable under the Plan
upon the death of the Eligible Director. If the Secretary of the
Company is in doubt as to the right of any person to receive
such amount, the Company may retain such amount, without
liability for any interest thereon, until the Secretary
determines the rights thereto, or the Company may pay such amount
into any court of appropriate jurisdiction and such payment shall
be a complete discharge of the liability of the Company therefor.
6. Miscellaneous
(a) Neither the Eligible Director nor any Beneficiary
designated by the Eligible Director shall have the right to,
directly or indirectly, alienate, assign, transfer, pledge,
anticipate or encumber (except by reason of death) any amount
that is or may be payable hereunder, nor shall any such amount be
subject to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, attachment, or garnishment by creditors of
the Eligible Director or the Eligible Director's Beneficiary or
to the debts, contracts, liabilities, engagements, or torts of
any Eligible Director or Beneficiary, or transfer by operation of
law in the event of bankruptcy or insolvency of the Eligible
Director or any Beneficiary, or any legal process.
(b) All payments of awards provided for under the Plan
shall be paid in cash from the general funds of the Company;
provided, however, that such payments shall be reduced by the
amount of any payments made to the Eligible Director or his or
her dependents, beneficiaries or estate from any trust or special
or separate fund established by the Company to assure such
payments. The Company shall not be required to establish a
special or separate fund or other segregation of assets to assure
such payments, and, if the Company shall make any investments to
aid it in meeting its obligations hereunder, the Eligible
Director shall have no right, title, or interest whatever in or
to any such investments except as may otherwise be expressly
provided in a separate written instrument relating to such
investments. Nothing contained in this Plan, and no action taken
pursuant to its provisions, shall create or be construed to
create a trust of any kind between the Company and any persons.
To the extent that any person acquires a right to receive
payments from the Company hereunder, such right shall be no
greater than the right of an unsecured creditor of the Company.
(c) Copies of the Plan and any and all amendments thereto
shall be made available at all reasonable times at the office of
the Secretary of the Company to all Eligible Directors.
(d) The Plan shall be administered by the Secretary of the
Company who shall have full power, discretion and authority to
interpret, construe and administer the Plan and any part thereof.
The Secretary's interpretations and constructions of the Plan,
and the actions taken thereunder by the Secretary, shall, except
as otherwise determined by the Board of Directors of the Company,
be binding and conclusive on all persons for all purposes.
(e) The Board of Directors may at any time amend or
terminate the Plan. The Plan may also be amended by the Chief
Executive Officer of the Company, provided that all such
amendments shall be reported to the Board. No amendment or
termination of the Plan shall impair the rights of any person
with respect to amounts then in the Director's Account.
(f) The Company, its officers and its Board of Directors
shall have the right to rely upon a written opinion of legal
counsel, which may be independent legal counsel or legal counsel
regularly employed by the Company, if any question should arise
as to any distribution from a Director's Account or any
obligation under the Plan.
(g) Each Eligible Director participating in the Plan shall
receive an annual statement indicating the amount credited to the
Director's Account as of the end of the preceding calendar year.
(h) All elections, designations, requests, notices,
instructions and other communications from an Eligible Director,
Beneficiary or other person to the Secretary of the Board of
Directors of the Company, required or permitted under the Plan
shall be in such form as is prescribed from time to time by the
Secretary and shall be mailed by first class mail or delivered to
such location as shall be specified by the Secretary.
(i) The terms of the Plan shall be binding upon the Company
and its successors and assigns.
(j) The Plan shall be governed by and construed in
accordance with the laws of the State of New York, as from time
to time in effect.
(k) The Plan became effective upon adoption by the Board of
Directors of the Company on September 8, 1983.
7. Change in Control.
(a) Notwithstanding anything else herein to the contrary,
in the event of the occurrence of a Change in Control, if any,
each Eligible Director shall have the right to receive, and shall
be paid, as soon as practicable after such occurrence becomes
reasonably certain, a lump sum cash amount equal to the entire
unpaid balance of the amount credited to a Director's Account,
including interest, and any prior election of such Eligible
Director to defer the payment of fees shall become null and void.
(b) As used in the Plan, "Change in Control" shall mean the
happening of any of the following:
(i) receipt by the Company of a report on Schedule 13D
filed with the Securities and Exchange Commission pursuant
to Section 13(d) of the Securities Exchange Act of 1934 (the
"1934 Act") disclosing that any person, group, corporation
or other entity is the beneficial owner, directly or
indirectly, of 20 percent or more of the outstanding stock
of the Company;
(ii) purchase by any person (as defined in
Section 13(d) of the 1934 Act), corporation or other entity,
other than the Company or a wholly-owned subsidiary of the
Company, of shares pursuant to a tender or exchange offer to
acquire any stock of the Company (or securities convertible
into stock) for cash, securities or any other consideration,
and, after consummation of the offer, such person, group,
corporation or other entity is the beneficial owner (as
defined in Rule 13d-3 under the 1934 Act) directly or
indirectly, of 20 percent or more of the outstanding stock
of the Company (calculated as provided in paragraph (d) of
Rule 13d-3 under the 1934 Act in the case of rights to
acquire stock);
(iii) approval by the stockholders of the Company of
(a) any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or
pursuant to which shares of stock of the Company would be
converted into cash, securities or other property, other
than a consolidation or merger of the Company in which
holders of its stock immediately prior to the consolidation
or merger have substantially the same proportionate
ownership of common stock of the surviving corporation
immediately after the consolidation or merger as immediately
before, or (b) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of
all or substantially all the assets of the Company; or
(iv) a change in the majority of the members of the
Board of Directors within a 12-month period unless the
election or nomination for election by the Company's
stockholders of each new director was approved by the vote
of two-thirds of the directors then still in office who were
in office at the beginning of the 12-month period.
orlaw\bod\defcomp.bod<PAGE>
REVIEW OF THE COMPANY'S RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FINANCIAL PERFORMANCE
Consolidated earnings per share were $2.50 for 1994, compared to $3.06 in 1993
and $3.15 in 1992. The decline in earnings in 1994, and to a lesser degree in
1993, reflects the impact of the costs associated with the investigation and
litigation involving former officers and others, the establishment of a
provision for the refunding of misappropriated funds to customers, and adverse
regulatory actions related to these events, as well as a decline in non-utility
subsidiary operating results. The investigation and related matters are more
fully described below under "Events Affecting the Company." Despite this adverse
effect on earnings for 1994 and 1993, the core utility business produced strong
operating results. Electric revenues from retail customers increased in 1994 and
1993. Firm gas revenues remained stable in 1994 after increasing 15% in 1993. In
addition, Orange and Rockland Utilities, Inc.'s (Company's) cost containment
program reduced operating expenses. The decline in non-utility earnings is
primarily a result of continuing competitive pressure in the gas marketing
business, which substantially limited the subsidiary's gross profit margin.
Consolidated earnings available for common stock were $34.0 million in 1994,
$41.5 million in 1993 and $42.3 million in 1992. Earnings per average common
share are summarized as follows:
<TABLE>
<CAPTION>
1994 1993 1992
===========================================================================
<S> <C> <C> <C>
Utility operations $ 3.14 $ 3.37 $ 3.12
Events Affecting the Company:
Investigation & litigation costs (.42) (.29) --
Refunds of misappropriated funds (.20) -- --
Diversified activities (.02) (.02) .03
- ---------------------------------------------------------------------------
Consolidated earnings per share $ 2.50 $ 3.06 $ 3.15
- ---------------------------------------------------------------------------
</TABLE>
The earned return on common equity was 9.0% in 1994, compared to 11.2% in
1993, and 11.9% in 1992. Book value per share at year-end 1994 and 1993 was
$27.79, compared to $27.22 in 1992.
The Company continued to provide a fair and equitable return on shareholders'
investments by increasing the dividend paid on common stock to $2.54 per share
from the $2.49 paid in 1993 and the $2.43 paid in 1992. The Company has
maintained a strong capital structure of 46% long-term debt, 6% preferred stock
and 48% common equity.
8
<PAGE>
Orange and Rockland Utilities, Inc. and Subsidiaries
EVENTS AFFECTING THE COMPANY
Following the arrest in August 1993 of a Company Vice President on charges of
grand larceny, commercial bribery and making illegal campaign contributions, the
Company's Board of Directors appointed a Special Committee of outside directors
(Special Committee) on August 20, 1993, giving it a broad mandate to investigate
all wrongdoing at the Company. In turn, the Special Committee retained counsel
specializing in investigations of utility corporations.
On August 23, 1994, the investigative firm completed its inquiries and issued
a report documenting its findings. The Report of the Special Committee, which
was made available to all shareholders, found a pattern of misconduct by James
F. Smith, the Company's former Chief Executive Officer, including a subversion
of the Company's system of internal controls to mask payment by the Company of
personal expenses.
As a result of the investigation, the Company has taken steps to correct the
problems which were found, uncover any remaining problems, and reduce the
likelihood of similar improprieties in the future.
The investigation resulted in the dismissal of the Chairman of the Board and
Chief Executive Officer, as well as the termination of three Vice Presidents,
two of whom had been controllers during the period covered in the investigation,
and the Manager of Internal Auditing. On May 11, 1994 the Company appointed
Arthur Andersen LLP as its new outside auditors. The Company also has entered
into a Joint Cooperation Agreement with the Rockland County (NY) District
Attorney's Office, pursuant to which the Company has, among other things,
appointed an independent Inspector General for a period of up to seven years,
and discontinued for five years all political contributions and the activities
of all political action committees.
The New York Public Service Commission (NYPSC) and the New Jersey Board of
Public Utilities (NJBPU) have undertaken investigations to determine the impact
of these events on the Company's ratepayers. The Company is cooperating fully in
the inquiries and has pledged to return to customers any funds that are
determined to have been misappropriated. To date, the Company has refunded a
total of $369,000 to New York ratepayers, $93,000 to New Jersey ratepayers and
approximately $2,600 to Pennsylvania ratepayers, and has submitted plans to the
NYPSC and NJBPU to refund an additional $4.1 million to ratepayers based on the
findings of the Company's investigation. A similar refund proposal for
approximately $26,000 has been accepted by the Pennsylvania Public Utility
Commission (PPUC). The NYPSC and NJBPU have completed their investigations and
have submitted reports to the Company for comment prior to final adoption and
publication. Neither the NYPSC nor the NJBPU has yet quantified what it
believes to be the impact of the wrongdoing and related investigation on
ratepayers.
The Company is pursuing lawsuits and an arbitration proceeding against certain
former officers and employees to recover misappropriated funds and other costs
attributable to the wrongdoing and related investigation.
Four lawsuits were brought against the Company or its officers and directors,
purportedly on behalf of shareholders or ratepayers, seeking damages resulting
from these events. The ratepayer case has been dismissed, and the three
shareholder suits have been settled, although one of these settlements still
requires court approval. For more information on these legal proceedings, refer
to Note 12 of Notes to Consolidated Financial Statements.
NEW MANAGEMENT TEAM
The Company has engaged in a major corporate restructuring. In addition to the
appointment of D. Louis Peoples as Vice Chairman and Chief Executive Officer, R.
Lee Haney has been appointed Vice President and Chief Financial Officer (CFO).
With these key appointments, the Company's management has been reorganized to
broaden spans of control in order to maximize performance and flexibility in a
competitive environment. The Electric Production Department has been
restructured as a newly-created Division to provide for the segregation of the
Company's electric generation function, and the marketing function has been
strengthened to take advantage of the Company's energy services expertise and
opportunities in new markets. The Company has upgraded the organizational
position of the Internal Auditing function to report directly to the Audit
Committee of the Board of Directors and, in January 1995, appointed a new
Director of Internal Auditing. Also reporting to the Audit Committee of the
Board of Directors and the Chief Executive Officer is an Ethics Officer. The
Ethics Officer, appointed in February 1995, is responsible for administering a
strict set of ethical standards and creating an effective procedure for
employees to report suspected violations of the Company's new comprehensive Code
of Business Conduct. In order to complete its organizational restructuring, the
Company is currently in the process of hiring a Vice President of Human
Resources and a General Counsel.
RESULTS OF OPERATIONS
The discussion which follows identifies the principal causes of the
significant changes in the amounts of revenues and expenses affecting income
available for common stock by comparing 1994 to 1993 and 1993 to 1992. This
discussion should be read in conjunction with the Notes to Consolidated
Financial Statements and other financial and statistical information contained
elsewhere
9
<PAGE>
1994 Annual Report
in this report. The following is a summary of the changes in earnings
available for common stock:
<TABLE>
<CAPTION>
Increase (Decrease) From Prior Year 1994 1993
==================================================================================
(Millions of Dollars)
<S> <C> <C>
Utility Operations:
Operating revenues $ (8.0) $ 39.8
Energy costs (4.9) 15.5
- ----------------------------------------------------------------------------------
Net revenues from utility operations (3.1) 24.3
Other utility operating expenses and taxes 3.6 20.4
Diversified revenues 57.8 87.3
Diversified operating expenses and taxes 58.1 88.1
- ----------------------------------------------------------------------------------
Income from operations (7.0) 3.1
Other income and deductions (.8) (5.4)
Interest charges (.2) (1.3)
- ----------------------------------------------------------------------------------
Net income (7.6) (1.0)
Preferred dividends (.1) (.1)
- ----------------------------------------------------------------------------------
Earnings available for common stock $ (7.5) $ (.9)
- ----------------------------------------------------------------------------------
</TABLE>
ELECTRIC OPERATING REVENUES AND SALES
Electric operating revenues, net of fuel and purchased power costs, decreased
by 1.4% or $4.7 million in 1994 after increasing by 6.1% or $20.0 million in
1993.
The components of these changes are attributable to the following factors:
<TABLE>
<CAPTION>
Increase (Decrease) From Prior Year 1994 1993
=================================================================================
(Millions of Dollars)
<S> <C> <C>
Retail sales:
Base rates including misc. surcharges
and revenue tax recoveries $ (2.2) $ 17.7
Fuel cost recoveries (3.1) 2.0
Sales volume changes 8.7 12.0
- ---------------------------------------------------------------------------------
Subtotal 3.4 31.7
Sales for resale 0.2 (.6)
Other operating revenues:
RDM revenue reconciliation and DSM incentives (8.2) (6.1)
Other (3.3) (1.8)
- ---------------------------------------------------------------------------------
Total electric revenues (7.9) 23.2
Electric energy costs (3.2) 3.2
- ---------------------------------------------------------------------------------
Net electric revenues $ (4.7) $ 20.0
- ---------------------------------------------------------------------------------
</TABLE>
Actual total sales of electric energy to retail customers during 1994 were
4,464 Mmwh, compared with 4,358 Mmwh during 1993 and 4,212 Mmwh in 1992. Before
reflecting the effects of the Revenue Decoupling Mechanism (RDM) in the
Company's New York jurisdiction,electric revenues associated with these sales
were $487.0 million, $483.6 million and $451.9 million in 1994, 1993 and 1992,
respectively.
Electric sales to customers for the last five years are shown in the
accompanying table. [Graphics Chart, see Appendix A of Exhibit 13]
The changes in electric sales by class of customer from the prior year are as
follows:
<TABLE>
<CAPTION>
1994 1993
=============================================================================
<S> <C> <C>
Residential 3.0% 5.1%
Commercial 1.5% 1.6%
Industrial 4.6% 5.6%
Public street lighting .5% .6%
Sales to public authorities (4.3%) 2.5%
- -----------------------------------------------------------------------------
</TABLE>
An increase in the number of customers compared to the previous year was the
primary reason electric retail sales increased 2.4% and 3.5% in 1994 and 1993,
respectively.
The Company continues to meet the needs of its customers by pursuing
least-cost strategies. Demand-Side Management (DSM) programs, which are designed
to reduce peak load, encourage efficient energy usage and reduce the need for
costly investments in new generating capacity, continue to be an integral
component of the Company's resource plan. These efforts resulted in the Company
achieving an energy-efficiency savings of approximately 193,864 Mwh in 1994,
166,697 Mwh in 1993 and 113,315 Mwh in 1992. Based on the energy efficiency
savings in New York, the Company earned and filed to recover the maximum
allowable incentives provided by the NYPSC approved rate agreement for the 1993
and 1992 calendar years. For 1994, the NYPSC significantly reduced the amount of
DSM incentive available to the Company. However, as a result of greater than
projected acquired demand and energy savings, the Company was able to earn an
incentive of approximately $600,000 in 1994. In addition to DSM, the Company
continues to actively seek cost-effective energy supply options, such as
purchased power agreements with other utilities.
An innovative rate-making procedure called RDM, which became effective January
1, 1991, requires among other things, the reconciliation of actual electric
sales revenue based on usage in the Company's New York franchise territory to
the level allowed in rates, thereby minimizing the impact of sales volume
changes on earnings. The Company's earnings from New York electric operations
under the RDM agreement are dependent on its success in achieving its DSM goals,
as well as controlling operating and maintenance costs within levels provided
for in rates. Under the agreement, New York electric revenue targets, net of
fuel and taxes, amounted to $224.8 and $223.2 million, compared to actual sales
revenues based upon usage of $237.1 and $230.1 million in 1994 and 1993,
respectively, requiring the Company to record revenue reductions of $12.3
million in 1994 and $6.9 million in 1993. The Company's success in achieving its
DSM and customer service goals allowed it to earn incentives amounting to
$600,000 for DSM in 1994 and $3.4 million in 1993. Customer service incentives
in 1994 were discontinued by the NYPSC's July 10, 1994 order terminating the
Company's electric rate request. The Customer Service incentives provided $.5
million of additional earnings in 1993.
Although the RDM agreement was scheduled to expire on December 31, 1993, the
NYPSC's June 10, 1994 decision extended the provisions of the agreement with
certain modifications more
10
<PAGE>
Orange and Rockland Utilities, Inc. and Subsidiaries
fully described under "Rate Activities." The RDM agreement will continue to
affect future electric earnings from the Company's New York operations. Electric
earnings from the Company's New Jersey and Pennsylvania operations will continue
to be affected by changes in sales volumes resulting from the strength of the
economy, weather conditions and the conservation efforts of customers.
Sales for resale increased by 13.0% in 1994 after decreasing by 7.3% in 1993.
Revenues from these sales are primarily a recovery of costs, under the
applicable tariff regulations, and have a minimal impact on the Company's
earnings.
ELECTRIC ENERGY COSTS
The cost of fuel used in electric generation and purchased power decreased
2.3% or $3.2 million in 1994 after increasing 2.4% or $3.2 million in 1993. The
components of these changes in electric energy costs are as follows:
<TABLE>
<CAPTION>
Increase (Decrease) From Prior Year 1994 1993
==========================================================================
(Millions of Dollars)
<S> <C> <C>
Prices paid for fuel and purchased power $ (8.3) $ (1.8)
Changes in Kwh generated or purchased 3.1 4.7
Deferred fuel charges 2.0 .3
- --------------------------------------------------------------------------
Total $ (3.2) $ 3.2
- --------------------------------------------------------------------------
</TABLE>
The decrease in electric energy costs in 1994 is primarily a reflection of
reduced prices paid for coal and natural gas used as boiler fuel, partially
offset by an increase in kilowatt hour demand. The increase in 1993 was
primarily due to the increase in kilowatt hour demand and coal prices, offset by
decreased purchased power cost and cost of natural gas used as boiler fuel.
The price paid for fuel and purchased power per kilowatt hour over the last
five years is shown in the accompanying table.[Graphics Chart, see Appendix A
of Exhibit 13]
The Company's tariff schedules include adjustment clauses under which fuel and
certain purchased power costs are recovered. In New York, an incentive-based
mechanism associated with the electric fuel adjustment clause provides for the
sharing of up to a 20% variation between actual costs and forecast fuel targets,
to a maximum of $1,762,000. In 1994, 1993 and 1992, pre-tax earnings were
enhanced by $1,241,000, $755,000 and $800,000, respectively, as a result of this
mechanism. The Company maintains an aggressive program of managing its sources
of fuel and energy purchases to provide its customers with the lowest cost of
energy available at any given time. The Company's ability to burn coal and
natural gas has enabled it to reduce its use of fuel oil significantly. Energy
is purchased from other utilities whenever available, generally at a price lower
than the cost of production at the Company's generating plants. The Company
continues to use the least costly fuel available for generating electricity.
The sources of electricity available for sale during the last three years are
as follows:
<TABLE>
<CAPTION>
1994 1993 1992
========================================================
<S> <C> <C> <C>
Source of Electricity Sold:
Company generation:
Oil 6% 5% 10%
Natural gas 23 16 21
Coal 36 33 33
Hydro 3 4 3
Other supply:
Purchased power 32 42 33
- --------------------------------------------------------
Total 100% 100% 100%
- --------------------------------------------------------
</TABLE>
GAS OPERATING REVENUES AND SALES
Gas operating revenues, net of gas purchased for resale, increased by 2.4%, or
$1.6 million, and 6.8%, or $4.3 million, for 1994 and 1993, respectively.
These changes are attributable to the following factors:
<TABLE>
<CAPTION>
Increase (Decrease) From Prior Year 1994 1993
======================================================
(Millions of Dollars)
<S> <C> <C>
Sales to firm customers:
Base rates including misc. surcharges
and revenue tax recoveries $ .2 $ 5.7
Gas cost recoveries (.2) 13.8
Sales volume changes (.4) .1
- ------------------------------------------------------
Subtotal (.4) 19.6
Sales to interruptible customers 1.4 (.8)
Sales for resale .1 (1.8)
Other operating revenues (1.2) (.4)
- ------------------------------------------------------
Total gas revenues (.1) 16.6
Gas energy costs (1.7) 12.3
- ------------------------------------------------------
Net gas revenues $ 1.6 $ 4.3
- ------------------------------------------------------
</TABLE>
Firm gas sales amounted to 20,421 million cubic feet (Mmcf) during 1994, a
decrease of .7% from the 1993 level of 20,556 Mmcf. Firm gas sales for 1992 were
20,507 Mmcf. Gas revenues from firm customers were $149.4 million, $149.8
million and $130.2 million in 1994, 1993 and 1992, respectively.
Gas sales to firm customers for the last five years are shown in the
accompanying table.[Graphics Chart, see Appendix A of Exhibit 13]
The changes in firm gas sales by class of customer from the prior year are as
follows:
<TABLE>
<CAPTION>
1994 1993
======================================================
<S> <C> <C>
Residential (1.0%) .7%
Commercial and industrial .5% (2.2%)
- ------------------------------------------------------
</TABLE>
Sales in 1994 were adversely affected by weather conditions in the fourth
quarter of 1994. The increase in the number of customers in 1994 and 1993
somewhat offset the decrease in sales in 1994, and was the primary reason for
the slight increase in sales in 1993.
Effective December 15, 1992, under the terms of a multi-year gas rate
agreement, the level of firm sales in New York is subject to a weather
normalization adjustment. The Company adjusts firm
11
<PAGE>
1994 Annual Report
gas sales revenues to the extent actual degree days vary more than plus or
minus 2.2% from the degree days utilized to project sales. Therefore, weather
conditions will have a minimal impact on gas revenues.
Revenues from interruptible gas customers (customers with alternative fuel
sources) increased by 53.4% in 1994, after decreasing by 23.7% in 1993. These
sales are dependent upon the availability and price competitiveness of
alternative fuel sources. As a result of applicable tariff regulations, these
sales do not have a substantial impact on earnings.
GAS ENERGY COSTS
Utility gas energy costs decreased by 1.9%, or $1.7 million in 1994, after
increasing 15.8% or $12.3 million in 1993.
The changes in utility gas energy costs for the years 1994 and 1993 are a
result of the following:
<TABLE>
<CAPTION>
Increase (Decrease) From Prior Year 1994 1993
===========================================================
(Millions of Dollars)
<S> <C> <C>
Prices paid to gas suppliers* $(2.7) $ 2.7
Firm and interruptible Mcf sendout 3.2 (2.1)
Deferred fuel charges (2.2) 11.7
- -----------------------------------------------------------
Total $(1.7) $12.3
- -----------------------------------------------------------
</TABLE>
*Net of refunds received from gas suppliers.
The Company continues its policy of the aggressive use of market purchases in
order to provide price flexibility, while assuring an adequate supply of gas
through a variety of long-term contracts with pipeline suppliers.
The price paid for purchased gas per thousand cubic feet (Mcf) over the last
five years is shown in the accompanying table.[Graphics Chart, see Appendix A
of Exhibit 13]
Gas costs from 1990-1993 were adversely affected by the actions of the Federal
Energy Regulatory Commission (FERC), which had authorized pipeline suppliers to
pass through take-or-pay costs. As required by the NYPSC in Case 88-G-062, the
Company has deferred a portion of these costs. As of December 31, 1994, $2.8
million of deferred take-or-pay charges and accrued interest remain on the books
of the Company. The Company is negotiating with the staff of the NYPSC to
recover the remainder of its incurred take-or-pay costs. The Company's gas costs
were not materially affected by take-or-pay charges in 1994.
As a result of the FERC's objective to restructure the gas transportation
industry to promote competition among gas suppliers and to ensure supply at the
lowest reasonable costs, the FERC, pursuant to Order No. 636, has authorized
pipelines to recover from their customers certain transition costs. The Company
currently estimates that its obligations for Order No. 636 transition costs will
total approximately $24.6 million. Approximately $11.1 million of these
transition costs have been billed to the Company. The Company is presently in
the process of recovering these costs from its customers.
On December 20, 1994, the NYPSC issued an order establishing the regulatory
and rate-making policies applicable to New York gas distribution utilities
resulting from the restructuring of the interstate natural gas industry under
FERC Order No. 636. The order provides mechanisms for recovery of transition
costs which the Company believes will allow it to fully recover the costs
imposed on it by the FERC's actions.
OTHER UTILITY OPERATING EXPENSES AND TAXES
A comparison of other operating expenses and taxes for utility operations is
presented in the following table:
<TABLE>
<CAPTION>
Increase (Decrease) From Prior Year 1994 1993
======================================================
(Millions of Dollars)
<S> <C> <C>
Other operating expenses $ (.2) $12.5
Maintenance 1.1 .4
Depreciation & amortization 1.7 (.1)
Taxes 1.0 7.6
- ------------------------------------------------------
Total $ 3.6 $20.4
- ------------------------------------------------------
</TABLE>
The costs of DSM programs, which decreased by $7.4 million in 1994, after
increasing by $8.0 million in 1993, were the primary causes of the changes in
other operating expenses in 1994 and 1993. These costs are recovered in revenues
on a current basis. Additionally, 1994, as well as 1993, was impacted by higher
operating expenses associated with increases in the cost of labor, materials and
services.
Maintenance costs increased 2.6% and 1.0% in 1994 and 1993, respectively. The
1994 increase was the result of increased maintenance of distribution plant,
while the 1993 increase was the result of slightly higher maintenance costs in
the production plants.
Depreciation and amortization expenses increased $1.7 million in 1994 after
decreasing $.1 million in 1993. The increase in 1994 was the result of normal
plant additions. The prior year's decrease was the result of the amortization of
certain excess depreciation reserves provided in the 1992 gas rate agreement.
Taxes other than income taxes increased $2.6 million and $3.5 million in 1994
and 1993, respectively. The increase in each year was primarily the result of
taxes associated with revenues and property taxes. Federal income tax expense
decreased $1.6 million in 1994, after increasing $4.1 million in 1993. Both
years are the result of changes in pre-tax book income. For a detailed analysis
of income tax components, see Note 2 of Notes to Consolidated Financial
Statements.
DIVERSIFIED ACTIVITIES
The Company's diversified activities consist of gas marketing, gas production
and land development businesses conducted by its wholly owned non-utility
subsidiaries.
Revenues from diversified activities increased $57.8 million and $87.3 million
in 1994 and 1993, respectively. The increases in revenues over the last two
years are primarily the result of gas marketing revenues, which were favorably
impacted by increases in the number of customers and higher sales volumes.
Operating expenses, incurred by the non-utility subsidiaries, increased $58.1
million and $88.1 million in 1994 and 1993, respectively. These increases are
directly related to gas marketing
12
<PAGE>
Orange and Rockland Utilities, Inc. and Subsidiaries
purchases which were $55.5 and $85.9 million higher in 1994 and 1993,
respectively. Other expenses of operation, maintenance, depreciation and taxes
increased $2.6 million and $2.2 million in 1994 and 1993, respectively.
Operating income from diversified activities decreased by $.3 million and $1.0
million in 1994 and 1993, respectively. The declines were primarily a result of
lower gross profit margins realized by the gas marketing subsidiary.
On January 23, 1995, the Company's wholly owned gas marketing subsidiary, O&R
Energy, Inc., signed a Letter of Intent with a wholly owned subsidiary of Shell
Gas Trading Company (Shell) to create a new full service natural gas services
and marketing company--NORSTAR Energy Limited Partnership--contingent upon
certain governmental approvals. Under the terms of the agreement, Shell will
contribute substantial firm gas supplies and other assets in exchange for
approximately a 27 percent limited partnership interest. O&R Energy, Inc. will
transfer its natural gas marketing business to the new venture in exchange for
approximately a 73 percent general partnership interest. The alliance of O&R
Energy, Inc.'s gas marketing and operations expertise with the commitment of
firm gas supplies from Shell will assure NORSTAR a strong capital structure and
increase the range of services available to support an aggressive expansion into
new markets.
In September 1994, the Company sharpened its focus on its core energy services
business by adopting a plan to sell the six radio broadcast properties operated
by one of its non-utility subsidiaries. The assets to be sold consist primarily
of radio broadcast licenses and operating plant and equipment. A contract for
the sale of two of the six broadcasting properties held by the subsidiary was
signed in January 1995. Non-binding offers on the remaining stations have been
received and are being evaluated. The sale of these assets is expected to be
completed by June 1, 1995. Although the final gain or loss which will result
from the sale of the properties cannot be determined at this time, the Company
does not believe, based on the sales and offers received to date, that the
disposition will have any material effect, either positive or negative, on the
Company's financial statements. For more information on this sale, refer to Note
1 of Notes to Consolidated Financial Statements.
OTHER INCOME AND DEDUCTIONS AND INTEREST CHARGES
Other Income and Deductions and Interest Charges decreased by $.6 and $ 5.6
million in 1994 and 1993, respectively. The decrease in 1994 resulted from
higher investigation and litigation expenses described under "Events Affecting
the Company" which reduced Other Income by $1.7 million net of taxes as compared
to the previous year. This decrease in income was somewhat offset by $.7 million
reduction in political expenditures and charitable contributions and a $.4
million improvement in the operating results from the Company's radio
broadcasting subsidiary. The decrease in Other Income in 1993 was primarily due
to the cost of the investigation incurred in that year.
Interest charges decreased $.2 million, or .7% in 1994, after decreasing $1.3
million, or 3.6%, in 1993. The 1994 and 1993 decreases are the result of
refinancing certain of the Company's long-term debt issues, taking advantage of
the lower interest rates available, somewhat offset by an increase in the cost
of short-term debt in 1994, after a decrease in such costs in 1993.
LIQUIDITY AND CAPITAL RESOURCES
The Company's construction program is designed to maintain reliable electric
and gas service, meet future customer service requirements and improve the
Company's competitive position. The cost of the construction program and other
capital requirements for the years 1992-1994 are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
======================================================
(Millions of Dollars)
<S> <C> <C> <C>
Construction expenditures $60.0 $54.0 $56.0
Retirement of long-term debt &
preferred stock-- net 4.1 1.5 (2.5)
- ------------------------------------------------------
Total $64.1 $55.5 $53.5
- ------------------------------------------------------
</TABLE>
At December 31, 1994, the Company estimated the cost of its construction
program in 1995 to be $61.5 million and retirement of long-term debt and
preferred stock to be $20.8 million. The Company's capital requirements for 1995
will be met primarily with funds from operations, supplemented by the issuance
of short-term borrowings.
On August 31, 1994, the New York State Energy Research and Development
Authority (NYSERDA) issued, on behalf of the Company, $55 million of variable
rate Pollution Control Refunding Revenue Bonds (Orange and Rockland Utilities,
Inc. Projects), 1994 Series A due October 1, 2014 (1994 Bonds). The proceeds
from the issuance of the 1994 Bonds were used to refund, on October 1, 1994, the
$55 million NYSERDA 10 1/4% Pollution Control Revenue Bonds (Orange and Rockland
Utilities, Inc. Projects), 1984 Series. In anticipation of issuing the 1994
Bonds, the Company entered into an interest rate swap agreement in 1992.
Pursuant to the swap agreement, the Company will pay interest at a fixed rate of
6.09% to a swap counter party and will receive a variable rate of interest in
return which is identical to the variable rate on the 1994 Bonds. The result is
to effectively establish a fixed rate of interest on the 1994 Bonds of 6.09%.
Effective May 1, 1994 through October 31, 1994, all shares of common stock
purchased, under the Company's Dividend Reinvestment and Stock Purchase Plan
(DRP) and the Employee Stock Purchase and Dividend Reinvestment Plan (ESPP),
were original issue shares purchased from the Company. During that time, $3.9
million of common equity was generated through the issuance of approximately
120,000 shares of common stock under
13
<PAGE>
1994 Annual Report
the Company's DRP and ESPP. Effective November 1, 1994, common stock acquired
under the DRP and ESPP is again being purchased on the open market. The Company
has been authorized by the NYPSC to issue through December 31, 1995, up to
750,000 shares original issue common stock under the DRP and ESPP, of which
692,798 shares were unissued at year-end.
The Company and its utility subsidiaries have available bank lines of credit
of $59 million and O&R Energy, Inc., a non-utility subsidiary of RECO, has a $15
million line of credit. Information regarding short-term borrowings during the
past three years is as follows:
<TABLE>
<CAPTION>
1994 1993 1992
========================================================================
(Millions of Dollars)
<S> <C> <C> <C>
Weighted average interest rate at year-end 6.4% 3.6% 3.7%
Amount outstanding at year-end $29.4 $46.2 $41.5
Average amount outstanding for year $31.3 $35.3 $23.9
Daily weighted average interest rate during year 4.5% 3.3% 3.8%
Maximum amount outstanding
at any month-end $42.9 $46.2 $41.5
- ------------------------------------------------------------------------
</TABLE>
The current credit ratings of the Company's principal securities and its
commercial paper are as follows:
<TABLE>
<CAPTION>
Duff & Phelps Fitch Moody's Standard &
Credit Rating Investors Investors Poor's
Company Service, Inc. Service Corp.
===========================================================================
<S> <C> <C> <C> <C>
Commercial paper D-1 F-2 P-2 A-2
First mortgage bonds A+ A- A3 A-
Unsecured debt A A- Baa1 A-
Preferred stock A- A- baa1 BBB+
- ---------------------------------------------------------------------------
</TABLE>
During June 1994, Standard & Poor's Corporation, Moody's Investors Service,
and Fitch Investors Service, Inc. lowered their ratings on the Company's
securities. The major reasons cited for the downgrades included uncertainties
resulting from the ongoing investigations surrounding alleged financial
improprieties and the termination by the NYPSC of the Company's electric rate
proceeding which included a reduction in the targeted return on equity to 10.6%.
RATE ACTIVITIES
NEW YORK
On September 30, 1992, the NYPSC approved a four-year settlement agreement
(Settlement Agreement) in the Company's gas rate case (Case 92-G-0050). The
Settlement Agreement contained a weather normalization clause which
automatically adjusts rates to offset the effects of variations in gas sales
volumes resulting from weather from the level assumed for setting rates. The
Settlement Agreement provided for an overall rate of return of 10.26%, with a
return on common equity of 12.15%, including incentives of 50 basis points. On
September 1, 1993, the Company filed with the NYPSC the second stage adjustment
to gas rates pursuant to the Settlement Agreement. The requested increase in
annual gas revenues as a result of the second-stage adjustment was $3.8 million,
or 2.5%. Although the Settlement Agreement provided for an effective date for
this adjustment of January 1, 1994, the Company agreed to extend the effective
date until June 30, 1994, in connection with the ongoing investigations of
alleged financial improprieties. The effective date of this adjustment was
further extended until December 30, 1994 by NYPSC Order issued June 3, 1994.
On September 1, 1994, the Company filed a plan to implement the second-stage
rate adjustment on January 1, 1995 and to postpone the next adjustment to gas
rates to January 1, 1996. On September 19, 1994, the Company subsequently
requested the further postponement of the second-stage gas rate adjustment until
the Commission's investigation of alleged financial improprieties is concluded.
The purpose of the request was to combine the results of the investigation and
staged filings into a single rate change. On November 4, 1994, the NYPSC issued
an Order terminating the Settlement Agreement effective December 31, 1994. The
Order denied the Company the opportunity for rate adjustments in the third and
fourth years (1995 and 1996) of the Settlement Agreement. However, the Order
authorized the Company to continue to defer certain items under the second-stage
rate adjustment until the adjustment becomes effective and to defer all
previously authorized reconciliations through the end of 1994, pending review
and audit by the NYPSC Staff and the conclusion of the NYPSC's investigation of
alleged financial improprieties.
On January 29, 1993, the Company filed, with the NYPSC, for an increase in
electric rates of $17.1 million (4.8%) to be effective January 1, 1994.
The NYPSC accepted the Company's proposal for a two-month (November and
December 1993) temporary rate reduction of approximately $115,000 per month
related to any misappropriation of funds identified as a result of the
investigation. The Company voluntarily extended the temporary rate reduction
for a third month, through January 1994.
As a result of the ongoing investigation of alleged financial improprieties,
the NYPSC issued an Order on December 21, 1993 which resulted in the
postponement of the effective date of new electric rates from January 1, 1994
until June 30, 1994.
By Order issued June 10, 1994 (June Order), the electric rate application was
terminated by the NYPSC. The June Order provided for the continuation of the RDM
revenue reconciliation and operating cost adjustment procedures and the
continuation of other provisions of the December 16, 1993 Order, including up to
$3.0 million of revenue made subject to refund, a 5% net resource savings DSM
incentive, and elimination of a customer service incentive. The June Order also
provided for a reduction in the RDM adjustment factor effective July 1, 1994,
reflecting the new recovery level required for 1993 net RDM deferrals. Finally,
the June Order reduced the return on equity threshold for measuring excess
earnings from 12.0% to 10.6%, effective retroactively to January 1, 1994. All
earnings in excess of 10.6% are to be deferred for future disposition pending
the conclusion of the ongoing investigation.
14
<PAGE>
Orange and Rockland Utilities, Inc. and Subsidiaries
On September 19, 1994, the Company filed an appeal with the Supreme Court of
New York challenging the legality of the June Order. The appeal argues that by
changing the targeted return on common equity from 11.45% to 10.6% for the first
six months of 1994, the Commission engaged in retroactive rate-making. The
appeal also argues that there is no evidence in the record to support a
determination that the cost of equity is 10.6%. The Company and the NYPSC have
agreed to stay the briefings in this appeal until after the NYPSC has issued its
final report on its investigation of the Company.
On November 10, 1994, the Company filed, with the NYPSC, a quantification of
the rate-making effects of its ongoing investigation into prior financial
improprieties. The Company requested the NYPSC approve an additional refund of
approximately $3.4 million to its New York electric and gas customers. Although
the NYPSC has not acted on this request, this amount was charged to operations
in the fourth quarter of 1994. The NYPSC has instituted a proceeding (Case
93-17-0849) to provide the opportunity for other parties, including NYPSC Staff
who are conducting an independent investigation, to be heard on this matter. On
November 18, 1994, NYPSC Staff submitted to the Company a draft report of its
investigation of the Company for factual verification. This draft report does
not include the NYPSC Staff's estimate of the inappropriate costs that have been
borne by the Company's ratepayers. Such an estimate will be included in the
final versions of the report. On January 11, 1995, the Company submitted its
response to this draft report. The Company is unable to predict the final
results of this proceeding and what modifications, if any, will be made to the
amount proposed to be refunded.
NEW JERSEY
In January 1992, in response to RECO's March 18, 1991 petition requesting a
$12.9 million increase in base rates, an increase in electric rates of $5.1
million was granted by the New Jersey Board of Regulatory Commissioners (NJBRC).
The NJBRC was renamed effective July 5, 1994 and is now the New Jersey Board of
Public Utilities (NJBPU). This increase included a 12% rate of return on common
equity. In addition, the NJBRC initiated a Phase II proceeding in this case to
address the effect of the State of New Jersey's June 1, 1991 tax legislation.
That legislation changed the procedure under which certain taxes are collected
from the State's utilities. Previously, utilities had been subject to a 12.5%
gross receipts and franchise tax, which the utilities paid in lieu of property
taxes. The new tax is based upon the number of units of energy (kwh or therms)
delivered by a utility rather than revenues. The legislation also required that
utilities accelerate payment to the State of the taxes collected. As a result,
RECO was required to make additional tax payments of approximately $16 million
during the period 1993-1994. On November 12, 1992, the NJBRC issued a Decision
and Order approving the recovery of the additional tax over a ten-year period. A
carrying charge of 7.5% on the unamortized balance was also approved. The amount
of unamortized accelerated payments is included in Deferred Revenue Taxes.
On February 26, 1993, the New Jersey Department of Public Advocate, Division
of Rate Counsel (Rate Counsel) filed a Notice of Appeal from the NJBRC Decision
and Order with the Superior Court of New Jersey, Appellate Division, stating as
grounds for the appeal that the Decision is arbitrary and capricious and would
result in unjust and unreasonable rates. On March 21, 1994, the Superior Court
of New Jersey, Appellate Division, upheld the NJBRC Decision, stating the NJBRC
used proper rate-making principles.
Under an agreement with the NJBPU to return to customers any funds found to be
misappropriated as a result of an ongoing investigation of certain former
officers and employees, RECO has refunded to New Jersey ratepayers $93,000
through reductions in the applicable fuel adjustment charges in February and
March 1994. In December 1994, RECO submitted a proposal to the NJBPU to refund
an additional $.7 million. By order dated January 27, 1995, the NJBPU approved
this proposal ordering the refund to be made in February 1995. The NJBPU
investigation into these matters is continuing and the Company is unable to
predict what modifications, if any, will be made to the amount to be refunded.
On November 3, 1993, the NJBRC (now the NJBPU), commenced its periodic
management audit of RECO. As a result of the events and investigations described
above, the NJBPU audit included, in addition to a standard review of operating
procedures, policies and practices, a review of the posture of RECO management
regarding business ethics and a determination regarding the effect of such
events on RECO ratepayers. The NJBPU's draft findings are contained in its
"Final Report on An Ethics Review of Rockland Electric Company" (Docket No. EA
90030248) dated December 1, 1994, a copy of which was provided to the Company
for comment. On January 11, 1995, the Company submitted its comments to this
audit report to the NJBPU. The NJBPU has not yet issued its final report.
PENNSYLVANIA
On November 19, 1992, Pike County Light & Power Company (Pike) filed, with the
PPUC, for a $497,000 increase in electric rates and a $36,300 increase in gas
rates. During April 1993, Pike and the other parties involved in this proceeding
signed a stipulated agreement providing for an increase of $270,000, or 6.6% for
electric rates and $12,000, or 1.5% for gas rates. On June 10, 1993, the PPUC
approved the electric rate settlement with rates effective June 11, 1993. On
June 24, 1993, the PPUC approved the gas rate settlement with rates effective
June 25, 1993. With regard to the ongoing investigation into the alleged
financial improprieties, Pike has pledged to return to ratepayers any funds
discovered to have been misappropriated due to the financial improprieties of
certain former officers and employees who are the subject of an ongoing
investigation.
15
<PAGE>
1994 Annual Report
COMPETITION
The Company is operating in an increasingly competitive environment. In the
electric industry, the Energy Policy Act of 1992 (Act) permitted unregulated
non-utility generating companies to sell wholesale electric power in competition
with regulated utilities. The Act also required utilities to provide access to
others, under certain conditions, to the utilities' electric transmission
systems. Although the Act does not require utilities to deliver their
competitors' power directly to retail customers, state regulators retain the
right to allow retail competition. Regulatory agencies in the three states in
which the Company has retail electric franchises are currently evaluating
possible changes in regulatory and ratemaking practices designed to promote
increased competition consistent with safety, reliability and affordability
standards. Depending on future developments in this area, the Company's market
share and profit margins could become subject to competitive pressures in
addition to traditional regulatory constraints.
The Company recognizes that the regulated utility environment is changing and
is committed to remaining competitive in its core energy services business and
to capitalizing on new market opportunities. The Company's strategy for meeting
the challenges of increased competition focuses on improving service while
reducing costs. The Company has adopted an aggressive cost reduction program and
is currently evaluating the pricing of services provided to customers. In
addition, the Company's marketing function has been restructured to identify
growth opportunities and strengthen customer relations by improving the value of
energy services offered. Another component of the strategy is to actively
participate, with regulators and others, in developing a transition to a more
competitive environment which provides for an equitable sharing of
environmental, social, regulatory and taxation obligations among all parties, as
well as a reasonable opportunity for utilities to recover past investments and
expenditures made pursuant to their obligation to provide service to the public.
Competition in the Company's gas business has existed for several years, with
interruptible customers and customers with alternative fuel usage capacity
having the option to obtain their own gas supply and transport it through the
Company's distribution system. In addition, FERC Order No. 636, which
deregulated much of the interstate pipeline industry, has enabled the Company to
contract directly with gas producers for supplies of natural gas. The Company is
successfully meeting the challenge of competition in the gas business by taking
advantage of the opportunities provided in this rapidly changing business
environment to obtain greater access to reasonably priced natural gas supplies
and storage. The Company has developed customized supply and flexible pricing
arrangements to provide value-added service to its gas customers and is actively
seeking new marketing opportunities.
OTHER DEVELOPMENTS
SFAS NO. 119
In October 1994, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 119 "Disclosure About Derivative
Financial Instruments and Fair Value of Financial Instruments (SFAS No. 119),
which requires various disclosures about financial instruments and related
transactions. This statement revises previously issued statements related to
disclosure of financial instruments, namely SFAS No. 105 and SFAS No. 107, to
include disclosure of derivatives. For the Company, financial instruments
consist principally of cash and cash equivalents, short-term debt, commercial
paper, long-term debt and redeemable preferred stock. The disclosures required
by SFAS No. 119 are contained in Note 9 of the Notes to Consolidated Financial
Statements.
EFFECTS OF INFLATION
The Company's utility revenues are based on rate regulation, which provides
for recovery of operating costs and a return on rate base. Inflation affects the
Company's construction costs, operating expenses and interest charges and can
impact the Company's financial performance if rate relief is not granted on a
timely basis. Financial statements, which are prepared in accordance with
generally accepted accounting principles, report operating results in terms of
historic costs and do not recognize the impact of inflation.
16
<PAGE>
Orange and Rockland Utilities, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF
INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
Year Ended December 31,
1994 1993 1992
==================================================================================================
(Thousands of Dollars)
<S> <C> <C> <C>
OPERATING REVENUES:
Electric (Note 1) $ 472,393 $480,553 $456,768
Gas (Note 1) 157,168 157,257 140,679
Electric sales to other utilities 6,636 6,414 6,965
- --------------------------------------------------------------------------------------------------
Total Utility Revenues 636,197 644,224 604,412
Diversified activities (Note 1) 380,705 322,925 235,660
- --------------------------------------------------------------------------------------------------
Total Operating Revenues 1,016,902 967,149 840,072
- --------------------------------------------------------------------------------------------------
OPERATING EXPENSES:
Operations:
Fuel used in electric production (Note 1) 84,860 74,480 85,005
Electricity purchased for resale (Note 1) 49,391 62,969 49,245
Gas purchased for resale (Note 1) 88,305 89,984 77,700
Non-utility gas marketing purchases 365,917 310,467 224,579
Other expenses of operation 152,200 149,604 134,253
Maintenance 44,011 42,861 42,474
Depreciation and amortization (Note 1) 35,862 34,056 34,014
Taxes other than income taxes 95,964 93,610 90,371
Federal income taxes (Notes 1 and 2) 24,540 26,225 22,679
- --------------------------------------------------------------------------------------------------
Total Operating Expenses 941,050 884,256 760,320
- --------------------------------------------------------------------------------------------------
INCOME FROM OPERATIONS 75,852 82,893 79,752
- --------------------------------------------------------------------------------------------------
OTHER INCOME AND DEDUCTIONS:
Investigation and litigation costs (Note 12) (8,795) (6,139) --
Other-- net (Note 1) (530) (1,703) 200
Taxes other than income taxes (123) (94) (97)
Federal income taxes (Notes 1 and 2) 4,250 3,525 895
- --------------------------------------------------------------------------------------------------
Total Other Income and Deductions (5,198) (4,411) 998
- --------------------------------------------------------------------------------------------------
INCOME BEFORE INTEREST CHARGES 70,654 78,482 80,750
- --------------------------------------------------------------------------------------------------
INTEREST CHARGES:
Interest on long-term debt 29,105 30,147 32,158
Other interest 3,088 2,404 2,416
Amortization of debt premium and expense -- net 1,244 1,116 364
- --------------------------------------------------------------------------------------------------
Total Interest Charges 33,437 33,667 34,938
- --------------------------------------------------------------------------------------------------
NET INCOME 37,217 44,815 45,812
Dividends on preferred and preference stock, at required rates 3,251 3,364 3,478
- --------------------------------------------------------------------------------------------------
Earnings applicable to common stock 33,966 41,451 42,334
Cash dividends on common stock: $2.54, $2.49 and $2.43 34,486 33,694 32,589
- --------------------------------------------------------------------------------------------------
Balance to retained earnings (520) 7,757 9,745
Retained earnings, beginning of year 184,179 176,422 166,677
- --------------------------------------------------------------------------------------------------
Retained earnings, end of year $ 183,659 $184,179 $176,422
==================================================================================================
Average number of common shares outstanding (000's) 13,594 13,532 13,438
- --------------------------------------------------------------------------------------------------
EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING $ 2.50 $ 3.06 $ 3.15
==================================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
17
<PAGE>
1994 Annual Report
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
1994 1993
=========================================================================================================
(Thousands of Dollars)
<S> <C> <C>
ASSETS:
UTILITY PLANT:
Electric $ 951,019 $ 931,827
Gas 198,755 189,000
Common 55,445 52,525
- ---------------------------------------------------------------------------------------------------------
Utility Plant in Service 1,205,219 1,173,352
Less accumulated depreciation 398,584 372,279
- ---------------------------------------------------------------------------------------------------------
Net Utility Plant in Service 806,635 801,073
Construction work in progress 49,654 30,907
- ---------------------------------------------------------------------------------------------------------
Net Utility Plant (Notes 1, 7, 11 and 12) 856,289 831,980
- ---------------------------------------------------------------------------------------------------------
NON-UTILITY PROPERTY:
Non-utility property 34,585 35,049
Less accumulated depreciation, depletion and amortization 13,977 13,041
- ---------------------------------------------------------------------------------------------------------
Net Non-utility Property (Notes 1 and 7) 20,608 22,008
- ---------------------------------------------------------------------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents (Notes 8 and 9) 16,081 14,256
Temporary cash investments (Note 9) 1,839 1,447
Customer accounts receivable, less allowance for uncollectible
accounts of $2,200 and $2,026 44,105 60,289
Accrued utility revenue (Note 1) 27,273 23,017
Other accounts receivable, less allowance for uncollectible
accounts of $209 and $102 17,384 11,577
Gas marketing accounts receivable, less allowance for
uncollectible accounts of $327 and $471 58,470 49,248
Materials and supplies (at average cost):
Fuel for electric generation 9,309 8,951
Gas in storage 11,544 13,413
Construction and other supplies 16,983 16,698
Prepaid property taxes 19,327 18,414
Prepayments and other current assets 28,877 22,212
- ---------------------------------------------------------------------------------------------------------
Total Current Assets 251,192 239,522
- ---------------------------------------------------------------------------------------------------------
DEFERRED DEBITS:
Income tax recoverable in future rates (Notes 1 and 2) 73,261 75,468
Extraordinary property loss - Sterling Nuclear Project (Notes 1 and 3) 10,139 15,481
Deferred Order No. 636 transition costs (Notes 1 and 12) 13,480 21,500
Deferred revenue taxes (Note 1) 16,888 17,588
Deferred pension and other postretirement benefits (Notes 1 and 10) 10,505 7,277
IPPsettlement agreements (Notes 1 and 12) 17,821 4,300
Unamortized debt expense (amortized over term of securities) 10,493 8,565
Other deferred debits 32,328 37,284
- ---------------------------------------------------------------------------------------------------------
Total Deferred Debits 184,915 187,463
- ---------------------------------------------------------------------------------------------------------
TOTAL $1,313,004 $1,280,973
=========================================================================================================
</TABLE>
18
<PAGE>
Orange and Rockland Utilities, Inc. and Subsidiaries
<TABLE>
<CAPTION>
December 31,
1994 1993
=========================================================================================================
(Thousands of Dollars)
<S> <C> <C>
CAPITALIZATION AND LIABILITIES:
CAPITALIZATION:
Common stock (Note 5) $ 68,265 $ 67,660
Premium on capital stock (Note 5) 133,595 130,313
Capital stock expense (6,116) (6,108)
Retained earnings (Note 4) 183,659 184,179
- ---------------------------------------------------------------------------------------------------------
Total Common Stock Equity 379,403 376,044
- ---------------------------------------------------------------------------------------------------------
Non-redeemable preferred stock 42,844 42,844
Non-redeemable cumulative preference stock 424 443
- ---------------------------------------------------------------------------------------------------------
Total Non-redeemable Stock (Note 5) 43,268 43,287
- ---------------------------------------------------------------------------------------------------------
Redeemable preferred stock (Note 6) 2,774 4,158
- ---------------------------------------------------------------------------------------------------------
Long-term debt (Notes 7 and 9) 359,622 380,266
- ---------------------------------------------------------------------------------------------------------
Total Capitalization 785,067 803,755
- ---------------------------------------------------------------------------------------------------------
NON-CURRENT LIABILITIES:
Reserve for claims and damages (Note 1) 4,713 3,830
Postretirement benefits (Note 10) 15,625 6,719
Pension costs (Note 10) 39,854 34,275
Obligation under capital leases (Note 11) 275 793
- ---------------------------------------------------------------------------------------------------------
Total Non-current Liabilities 60,467 45,617
- ---------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES:
Long-term debt and lease obligation due within one year(Notes 7, 9 and 11) 19,910 1,463
Preferred stock to be redeemed within one year (Note 6) 1,384 1,384
Notes payable (Notes 8 and 9) -- 1,200
Commercial paper (Notes 8 and 9) 29,400 45,000
Accounts payable 63,855 57,359
Gas marketing accounts payable 71,913 54,247
Dividends payable 725 752
Customer deposits 5,669 5,807
Accrued Federal income and other taxes 5,949 9,586
Accrued interest 8,608 9,877
Refundable gas costs 7,554 8,967
Refunds to customers 10,265 793
Other current liabilities 16,127 16,321
- ---------------------------------------------------------------------------------------------------------
Total Current Liabilities 241,359 212,756
- ---------------------------------------------------------------------------------------------------------
DEFERRED TAXES AND OTHER:
Deferred Federal income taxes (Notes 1 and 2) 173,317 172,672
Deferred investment tax credits (Notes 1 and 2) 17,109 18,004
Accrued Order No. 636 transition costs (Note 12) 13,480 21,500
Accrued IPP settlement agreements (Notes 1 and 12) 8,000 --
Refundable fuel costs (Note 1) 10,366 4,405
Other deferred credits 3,839 2,264
- ---------------------------------------------------------------------------------------------------------
Total Deferred Taxes and Other 226,111 218,845
- ---------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (Note 12) -- --
- ---------------------------------------------------------------------------------------------------------
TOTAL $1,313,004 $1,280,973
=========================================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
19
<PAGE>
1994 Annual Report
CONSOLIDATED CASH FLOW STATEMENTS
<TABLE>
<CAPTION>
Year Ended December 31,
1994 1993 1992
==================================================================================================
(Thousands of Dollars)
<S> <C> <C> <C>
CASH FLOW FROM OPERATIONS:
Net Income $37,217 $44,815 $45,812
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 35,938 34,571 34,317
Deferred Federal income taxes (Note 2) (188) (39) 6,593
Deferred investment tax credit (Note 2) (895) (963) (1,132)
Deferred and refundable fuel and gas costs 4,548 7,802 (6,388)
Allowance for funds used during construction (517) (276) (430)
Other non-cash changes 6,042 (8,055) 3,855
Changes in certain current assets and liabilities:
Accounts and gas marketing receivables, net
and accrued utility revenue (3,101) (17,286) (14,509)
Materials and supplies 1,226 (737) 743
Prepaid property taxes (913) (1,066) (1,085)
Prepayments and other current assets (6,665) (3,983) 2,453
Operating and gas marketing accounts payable 24,162 19,407 2,210
Accrued Federal income and other taxes (3,637) 4,911 1,506
Accrued interest (1,269) 779 (1,108)
Refunds to customers 9,472 753 (114)
Other current liabilities (332) 2,336 1,712
Other-- net 16,402 4,814 (5,687)
- --------------------------------------------------------------------------------------------------
Net Cash Provided by Operations 117,490 87,783 68,748
- --------------------------------------------------------------------------------------------------
CASH FLOW FROM INVESTING ACTIVITIES:
Additions to plant (60,542) (54,308) (56,438)
Temporary cash investments (392) (569) (878)
Allowance for funds used during construction 517 276 430
- --------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities (60,417) (54,601) (56,886)
- --------------------------------------------------------------------------------------------------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from:
Issuance of common stock (Note 5) 3,868 -- 7,589
Issuance of long-term debt (Note 7) 55,000 75,000 55,000
Retirement of:
Preference and preferred stock (Note 6) (1,384) (1,384) (1,384)
Long-term debt (57,688) (75,091) (51,159)
Capital lease obligations-- net (Note 11) (479) (443) (410)
Net borrowings (repayments) under short-term debt
arrangements (Note 8) (16,800) 4,700 11,500
Dividends on preferred and common stock (37,765) (37,086) (36,093)
- --------------------------------------------------------------------------------------------------
Net Cash Used in Financing Activities (55,248) (34,304) (14,957)
- --------------------------------------------------------------------------------------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS 1,825 (1,122) (3,095)
Cash and Cash Equivalents at Beginning of Year 14,256 15,378 18,473
- --------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $16,081 $14,256 $15,378
- --------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest, net of amounts capitalized $33,134 $32,012 $35,497
Federal income taxes $21,558 $27,020 $14,450
==================================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
20
<PAGE>
Orange and Rockland Utilities, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.
GENERAL
Orange and Rockland Utilities, Inc. (Company) and its wholly owned utility
subsidiaries, Rockland Electric Company (RECO) and Pike County Light & Power
Company (Pike), are subject to regulation by the Federal Energy Regulatory
Commission (FERC) and various state regulatory authorities with respect to their
rates and accounting. Accounting policies conform to generally accepted
accounting principles, as applied in the case of regulated public utilities, and
are in accordance with the accounting requirements and rate-making practices of
the regulatory authority having jurisdiction. A description of the significant
accounting policies follows.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company, all
subsidiaries and the Company's pro rata share of an unincorporated joint
venture. All intercompany balances and transactions have been eliminated.
The Company's non-utility subsidiaries are wholly owned land development, gas
marketing and gas production companies.
RATE REGULATION
The Company's utility operations are subject to rate regulation by the New
York Public Service Commission (NYPSC), the New Jersey Board of Public Utilities
(NJBPU), the Pennsylvania Public Utility Commission (PPUC) and the FERC. The
financial statements of the Company are based on generally accepted accounting
principles, including the provisions of Statement of Financial Accounting
Standards 71 (SFAS 71), "Accounting for the Effects of Certain Types of
Regulation," which give recognition to the rate-making and accounting practices
of these agencies. The principal effect of the rate-making process on the
Company's financial statements is that of the timing of the recognition of
incurred costs. If rate regulation provides reasonable assurance that an
incurred cost will be recovered in a future period by inclusion of that cost in
rates, SFAS 71 requires the capitalization of the cost. Regulatory assets
represent probable future revenue associated with certain incurred costs, as
these costs are recovered through the rate-making process. The following
regulatory assets were reflected in the Consolidated Balance Sheets as of
December 31, 1994 and 1993:
<TABLE>
<CAPTION>
1994 1993
===============================================================================
(Thousands of Dollars)
<S> <C> <C>
Deferred Income Taxes (Note 2) $ 73,261 $ 75,468
Extraordinary Property Loss (Note 3) 10,139 15,481
FERC Order No. 636 Costs (Note 12) 13,480 21,500
Deferred Revenue Taxes (Note 1) 16,888 17,588
Deferred Pension and Other
Postretirement Benefits (Note 10) 10,505 7,277
Gas Take-or-Pay Costs (Note 12) 2,837 3,635
Revenue Decoupling Mechanism (Note 1) 1,295 10,293
Deferred Plant Maintenance Costs (Note 1) 4,699 3,488
Demand-Side Management Costs (Note 1) (96) 1,544
Deferred Fuel Costs (Note 1) (10,366) (4,405)
IPP Settlement Agreements (Note 1) 17,821 4,300
Other 7,255 4,400
- -------------------------------------------------------------------------------
Total $147,718 $160,569
- -------------------------------------------------------------------------------
</TABLE>
UTILITY REVENUES
Utility revenues are recorded on the basis of cycle billings rendered to
certain customers monthly and others bi-monthly. Unbilled revenues are accrued
at the end of each month for estimated energy usage since the last meter
reading.
Under the Company's Revenue Decoupling Mechanism agreement (RDM), New York's
electric revenues are recognized in the accompanying financial statements based
on established targets. The RDM also provides for the reconciliation of
Demand-Side Management (DSM) expenditures and the adjustment of certain
operating costs. Any variation between actual results and the established
targets are deferred and recovered from or returned to customers over a
subsequent twelve-month period. Customer service performance incentives or
penalties which were discontinued by the NYPSC in 1994 and demand-side
management incentives, as detailed in the Agreement, are recognized as earned.
Effective December 1, 1992, the level of revenues from gas sales in New York
is subject to a weather normalization clause that requires recovery from or
refund to firm customers of shortfalls or excesses of firm net revenues during a
heating season due to variation from normal weather, which is the basis for
projecting base tariff requirements.
FUEL COSTS
The tariff schedules for electric and gas services in New York include
adjustment clauses under which fuel, purchased gas and certain purchased power
costs, above or below levels allowed in approved rate schedules, are billed or
credited to customers up to approximately 60 days after the costs are incurred.
In accordance with regulatory commission policy, such costs, along with the
related income tax effects, are deferred until billed to customers.
A reconciliation of recoverable gas costs with billed gas revenues is done
annually, as of August 31, and the excess or deficiency is refunded to or
recovered from customers during a subsequent twelve-month period. The NYPSC
provides for a modified electric fuel adjustment clause requiring an 80%/20%
sharing between customers and shareholders of variations between actual and
forecasted fuel costs annually. The 20% portion of fluctuations from forecasted
costs is limited to a maximum of $1,762,000 annually. The fuel costs targets are
approved by the NYPSC for each calendar year following the Company's filing of
forecasted fuel costs. Tariffs for electric and gas service in Pennsylvania and
electric service in New Jersey contain adjustment clauses which utilize
estimated prospective energy costs on an annual basis. The recovery of such
estimated costs is made through equal monthly charges over the year of
projection. Any over or under recoveries are deferred and refunded or charged to
customers during the subsequent twelve-month period.
UTILITY PLANT
Utility plant is stated at original cost. The cost of additions to, and
replacements of, utility plant include contracted work, direct labor and
material, allocable overhead, allowance for funds used during construction and
indirect charges for engineering and supervision. Replacement of minor items of
property and the cost of repairs are charged to maintenance expense. At the time
depreciable plant is retired or otherwise disposed of, the original cost,
together with removal cost less salvage, is charged to the accumulated provision
for depreciation.
21
<PAGE>
1994 Annual Report
DEPRECIATION
For financial reporting purposes, depreciation is computed on the
straight-line method based on the estimated useful lives of the various classes
of property. Provisions for depreciation are equivalent to the following
composite rates based on the average depreciable plant balances at the beginning
and end of the year:
<TABLE>
<CAPTION>
Year Ended December 31, 1994 1993 1992
=====================================================
<S> <C> <C> <C>
Plant Classification:
Electric 3.05% 3.04% 3.04%
Gas 2.80% 2.68% 3.59%
Common 6.37% 6.07% 5.88%
- -----------------------------------------------------
</TABLE>
The composite gas depreciation rate, excluding the effect of adjustments
provided for in a 1992 gas rate agreement with the NYPSC, amounted to 3.10% in
1994 and 3.01% in 1993.
JOINTLY-OWNED UTILITY PLANT
The Company has a one-third interest in the 1,200 megawatt Bowline Point
generating facility, which it owns jointly with Consolidated Edison Company of
New York, Inc. The Company is the operator of the joint venture. Each
participant is entitled to its proportionate share of the energy produced. The
operating and maintenance expenses of the facility are shared proportionately,
based on the energy received from the plant by the partners.
Under this agreement, each co-owner has an undivided interest in the facility
and is responsible for its own financing. The Company's interest in this
jointly-owned plant consists primarily of the following:
<TABLE>
<CAPTION>
Year Ended December 31, 1994 1993
===========================================================
(Thousands of Dollars)
<S> <C> <C>
Electric Utility Plant in Service $98,171 $97,753
Construction Work in Progress $ 2,984 $ 1,124
- -----------------------------------------------------------
</TABLE>
FEDERAL INCOME TAXES
The Company and its subsidiaries file a consolidated Federal income tax
return, and income taxes are allocated to its subsidiaries based on the taxable
income or loss of each.
Investment tax credits, which were available prior to the Tax Reform Act of
1986, have been fully normalized and are being amortized over the remaining
useful life of the related property for financial reporting purposes.
The Company adopted Statement of Financial Accounting Standards No. 109 (SFAS
No. 109) "Accounting for Income Taxes" on January 1, 1993, which requires a
change from the deferred method to the asset and liability method of accounting
for income taxes. SFAS No. 109 retains the requirement to record deferred income
taxes for temporary differences that are reported in different years for
financial reporting and tax purposes. The statement also requires that deferred
tax liabilities or assets be adjusted for the future effects of any changes in
tax laws or rates and that regulated enterprises recognize an offsetting
regulatory asset representing the probable future rate recoveries for additional
deferred tax liabilities. The probable future rate recoveries (revenues) to be
recorded take into consideration the additional future taxes which will be
generated by that revenue. Deferred taxes are also provided on temporary
differences of the Company's non-regulated subsidiaries, which are charged to
expense rather than offset by regulatory assets. The balance of deferred tax
assets and liabilities as of January 1, 1993, the date of implementation of SFAS
No. 109, was $69.6 million. The components of deferred tax assets and
liabilities as of January 1, 1993, are as follows; Liabilities: Accelerated
Depreciation -- $63.5 million, Other Liabilities -- $12.1 million; Assets:
Employee Benefits -- $(6.4) million, and Deferred Fuel Costs -- $.4 million.
DEFERRED REVENUE TAXES
Deferred revenue taxes represent the unamortized balance of an accelerated
payment of New Jersey Gross Receipts and Franchise Tax required by legislation
enacted effective June 1, 1991. In accordance with an order by the NJBPU, the
expenditure has been deferred and is being recovered in rates, with a carrying
charge of 7.5% on the unamortized balance, over a ten-year period. In addition,
certain New York State revenue taxes included in rate base are deferred and
amortized over a twelve-month period following payment in accordance with the
requirements of the NYPSC.
IPP SETTLEMENT AGREEMENTS
During 1994, the Company negotiated termination agreements with two of the
three Independent Power Producers (IPP) scheduled to provide electric generating
capacity and energy services to the Company in the late 1990's. The Company is
presently negotiating for a similar arrangement with the remaining IPP, Wallkill
Generating Company, L.P. (Wallkill Generating). As of December 31, 1994, $17.8
million of contract termination charges have been deferred in accordance with
regulatory accounting orders pending a determination of the recoverability of
the costs in rates. On January 24, 1995, the NJBPU authorized the recovery of
$.9 million over a period of twelve months for the portion of one of the
settlement agreements applicable to the Company's New Jersey electric
operations. A decision on the recovery of the remaining $16.9 million, as well
as any additional charges associated with the ongoing negotiation, will be
addressed in future rate proceedings before the NYPSCand NJBPU. Management
believes that these $16.9 million of termination costs were prudently incurred
and therefore should be fully recoverable in rates.
DEFERRED PLANT MAINTENANCE COSTS
The Company utilizes a silicone injection procedure as part of its maintenance
program for residential underground electric cable in order to prevent premature
failures and ensure the realization of the expected useful life of the
facilities. In 1992 the FERC issued an accounting order that required the cost
of this procedure to be treated as maintenance expense rather than as a plant
addition. The Company requested deferred accounting for these expenditures from
the NYPSC and NJBPU in order to properly match the cost of the procedure with
the periods benefited. In 1994 the NYPSC approved the deferred accounting
request and authorized a ten-year amortization period. The NJBPU has not as yet
acted on the Company's petition.
RESERVE FOR CLAIMS AND DAMAGES
Costs arising from workers' compensation claims, property damage, general
liability and unusual production plant repair costs are partially self-funded.
Provisions for the reserves are based on experience, risk of loss and the
rate-making practices of regulatory authorities.
22
<PAGE>
Orange and Rockland Utilities, Inc. and Subsidiaries
SALE OF BROADCAST PROPERTIES
On September 8, 1994, the Company adopted a formal plan to sell the six radio
broadcast properties operated by a wholly owned indirect subsidiary, Atlantic
Morris Broadcasting, Inc. In January 1995, a contract was signed for the sale of
two of the six broadcasting properties. Non-binding offers have been received
for the remaining stations. The sale of the properties is anticipated to be
completed on or before June 1, 1995. Although the final gain or loss which will
result from the sale of the properties cannot be determined at this time, the
Company does not believe, based on the sales and offers received to date, that
the disposition will have any material effect on the Company's financial
statements. Operating results of $(484,000), $(804,000) and $(960,000) for the
years ended December 31, 1994, 1993, and 1992, respectively, for the radio
broadcast properties are included in Other Income and Deductions in the
accompanying Consolidated Statements of Income and Retained Earnings. Net assets
of $6.9 million consisting principally of radio broadcast licenses and operating
plant and equipment are included at book value in the accompanying Consolidated
Balance Sheets.
RECLASSIFICATIONS
Certain amounts from prior years have been reclassified to conform with the
current year presentation.
NOTE 2. FEDERAL INCOME TAXES.
The Internal Revenue Service (IRS) concluded its audits of the Company's tax
returns through 1989. All issues have been resolved, resulting in an immaterial
effect on the Company's results of operations. Presently, the IRS is examining
tax returns for 1990, 1991 and 1992; notification of their findings for these
years has not yet been received.
The components of Federal income taxes are as follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1994 1993 1992
==========================================================================================
(Thousands of Dollars)
<S> <C> <C> <C>
Charged to operations:
Current $ 24,415 $26,332 $16,567
Deferred-net 262 86 6,384
Amortization of investment tax credit (137) (193) (272)
- ------------------------------------------------------------------------------------------
24,540 26,225 22,679
- ------------------------------------------------------------------------------------------
Charged to other income:
Current (3,042) (2,630) (244)
Deferred-net (450) (125) 209
Amortization of investment tax credit (758) (770) (860)
- ------------------------------------------------------------------------------------------
(4,250) (3,525) (895)
- ------------------------------------------------------------------------------------------
Total $ 20,290 $ 22,700 $ 21,784
- ------------------------------------------------------------------------------------------
</TABLE>
Effective January 1, 1993, the Company adopted the provisions of SFAS No.
109. The adoption of SFAS No. 109 did not have a significant impact on the
results of current operations because of the recording of offsetting regulatory
assets for utility operations and the relatively minor impact from diversified
operations. The resulting cumulative effect of the change in accounting
principle of $(.1) million is included in 1993's results of operations. Fiscal
year 1992 was not restated to apply the provisions of SFAS No. 109. The deferred
tax expense for 1992 was the result of the following:
Pollution Control Facilities -- $1.5 million, Abandonment Loss --
Sterling -- $(1.5 million), Accelerated Tax Depreciation --$6.4 million,
Deferred Employee Benefits -- $(2.0 million), Deferred Fuel Costs -- $2.0
million and Other -- $.2 million.
The tax effect of temporary differences which gave rise to deferred tax
assets and liabilities are as follows:
<TABLE>
<CAPTION>
As of December 31, 1994 1993
===============================================================
(Thousands of Dollars)
<S> <C> <C>
Liabilities:
Accelerated depreciation $177,362 $172,815
Other 30,111 30,216
- ---------------------------------------------------------------
Total liabilities 207,473 203,031
- ---------------------------------------------------------------
Assets:
Employee benefits (15,269) (14,417)
Deferred fuel costs (4,784) (2,707)
Other (14,103) (13,235)
- ---------------------------------------------------------------
Total assets (34,156) (30,359)
- ---------------------------------------------------------------
Net Liability $173,317 $172,672
- ---------------------------------------------------------------
</TABLE>
Reconciliation of the difference between Federal income tax expenses and the
amount computed by applying the prevailing statutory income tax rate to income
before income taxes is as follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1994 1993 1992
=====================================================================================
(% of Pre-tax Income)
<S> <C> <C> <C>
Statutory tax rate 35% 35% 34%
Reduction in computed taxes resulting from:
Amortization of investment tax credits (2) (1) (2)
Cost of removal (1) (2) (3)
Additional depreciation deducted for
book purposes 5 4 3
Other (2) (3) --
- ------------------------------------------------------------------------------------
Effective Tax Rate 35% 33% 32%
- ------------------------------------------------------------------------------------
</TABLE>
On August 10, 1993, the Budget Reconciliation Act of 1993 was signed into
law. Among other things, the Act increased the corporate Federal income tax rate
to 35% from 34%, retroactive to January 1, 1993. Pursuant to the provisions of
SFAS No. 109, the Company adjusted its deferred tax and regulatory asset
balances during 1993 to reflect the higher rate. The impact of this rate change
was to increase the deferred tax liability by $7.6 million; however, because of
the recording of offsetting regulatory assets, the increase in income tax
expense was $.1 million.
NOTE 3. STERLING NUCLEAR PROJECT.
Costs associated with the Sterling Nuclear Project, which was abandoned in
1980, and in which the Company was a 33% participant, are recorded in Deferred
Debits -- Extraordinary Property Loss.
The Company has been authorized by the NYPSC to recover all costs associated
with the Sterling Nuclear Project. An annual amortization has been approved
which includes a return on investment equal to the Company's current overall
rate of return. Amortization of project costs applicable to New York operations
will be completed in approximately 15 months. The NJBPU had approved a
twenty-year amortization, which commenced June 23, 1982, of costs (excluding a
return on the unamortized balance) attributable to the Company's subsidiary,
RECO.
At December 31, 1994 and 1993, the unamortized Sterling Project costs which
have been approved for amortization and recovery, before reduction for deferred
taxes, amounted to $10.8 million and $16.5 million, respectively. Approximately
$4.7 million and $5.6 million of such recoverable costs at December 31, 1994 and
December 31, 1993, respectively, are attributable to RECO and are not subject to
an earned return on the unamortized balance.
23
<PAGE>
1994 Annual Report
NOTE 4. RETAINED EARNINGS.
Various restrictions on the availability of retained earnings of RECO for
cash dividends are contained in, or result from, covenants in indentures
supplemental to that company's Mortgage Trust Indenture. Approximately
$7,501,600 at December 31, 1994 and 1993 was so restricted.
NOTE 5. CAPITAL STOCK OTHER THAN REDEEMABLE PREFERRED STOCK.
The table below summarizes the changes in Capital Stock, issued and
outstanding, for the years 1992, 1993 and 1994.
<TABLE>
<CAPTION>
(B) (C)
Non-Redeemable Non-Redeemable
(A) Cumulative Cumulative
Common Preferred Preference Capital
Stock Stock Stock Stock
($5 par value) ($100 par value) (no par value) Premium
=====================================================================================================
Shares Amount* Shares Amount* Shares Amount* Amount*
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance 1/1/92: 13,327,470 $66,637 428,443 $ 42,844 15,041 $490 $123,701
Sales 202,488 1,013 6,575
Conversions 1,233 6 (852) (28) 22
- -----------------------------------------------------------------------------------------------------
Balance 1/1/93: 13,531,191 67,656 428,443 42,844 14,189 462 130,298
Conversions 864 4 (599) (19) 15
- -----------------------------------------------------------------------------------------------------
Balance 1/1/94: 13,532,055 67,660 428,443 42,844 13,590 443 130,313
Sales 120,041 601 3,268
Conversions 817 4 (565) (19) 14
- -----------------------------------------------------------------------------------------------------
Balance 12/31/94: 13,652,913 $68,265 428,443 $ 42,844 13,025 $424 $133,595
- -----------------------------------------------------------------------------------------------------
Shares
Authorized 15,000,000 820,000 1,500,000
- -----------------------------------------------------------------------------------------------------
*(in thousands)
</TABLE>
(A) At December 31, 1994, 19,147 shares of common stock were reserved for
conversion of preference stock.
(B) Non-Redeemable Preferred Stock (cumulative):
<TABLE>
<CAPTION>
Par Value
------------------- Callable
Shares December 31, Redemption
Series Outstanding 1992, 1993 and 1994 Price Per Share
===================================================================
(Thousands of Dollars)
<S> <C> <C> <C>
A,4.65% 50,000 $ 5,000 $104.25 at any time.
B,4.75% 40,000 4,000 $102.00 at any time.
D,4.00% 3,443 344 $100.00 at any time.
F,4.68% 75,000 7,500 $102.00 at any time.
G,7.10% 110,000 11,000 $101.00 at any time.
H,8.08% 150,000 15,000 $102.43 at any time.
- -------------------------------------------------------------------
428,443 $ 42,844
- -------------------------------------------------------------------
</TABLE>
This stock is not subject to mandatory redemption, but rather is subject to
redemption solely at the option of the Company on 30 days' minimum notice upon
payment of the redemption price plus accrued and unpaid dividends to the date
fixed for redemption. Furthermore, the preferred stock is superior to cumulative
preference stock and common stock with respect to dividends and liquidation
rights.
(C) The Non-Redeemable $1.52 Convertible Cumulative Preference Stock, Series
A, is redeemable at the option of the Company on 30 days' minimum notice upon
payment of the redemption price, plus accrued and unpaid dividends. The
redemption price per share is $32.50 plus accrued and unpaid dividends to the
date fixed for redemption. This stock ranks junior to cumulative preferred stock
and superior to common stock as to dividends and liquidation rights.
Furthermore, this stock is convertible, at the option of the shareholder, into
common stock at the ratio of 1.47 shares of common stock for each share of
preference stock, subject to adjustment.
NOTE 6. REDEEMABLE PREFERRED STOCK.
The table below summarizes the changes in Redeemable Cumulative Preferred
Stock, issued and outstanding, for the years 1992, 1993 and 1994.
<TABLE>
<CAPTION>
($100 par value)
- ---------------------------------------------------------------
Shares Amount*
- ---------------------------------------------------------------
<S> <C> <C>
Balance 12/31/91: 83,106 $ 8,310
Redemptions (13,842) (1,384)
- ---------------------------------------------------------------
Balance 12/31/92: 69,264 6,926
Redemptions (13,842) (1,384)
- ---------------------------------------------------------------
Balance 12/31/93: 55,422 5,542
Redemptions (13,842) (1,384)
- ---------------------------------------------------------------
Balance 12/31/94: 41,580 $ 4,158
- ---------------------------------------------------------------
Shares Authorized 180,000
- ----------------------------------------------------
*(in thousands)
</TABLE>
The Redeemable Cumulative Preferred Stock, Series I, 8 1/8%, is redeemable in
whole or in part at the option of the Company on 30 days' minimum notice at the
redemption price plus accrued and unpaid dividends to the date fixed for
redemption. The redemption price per share is $101 through January 1, 1997, and
$100 thereafter.
The preferred stock is superior to the cumulative preference stock and common
stock with respect to dividends and liquidation rights. A sinking fund provision
requires that the Company, on each December 31, call for the redemption and
retirement of 13,842 shares at $100 per share, provided, however, that the
Company will call for redemption and retire on December 31, 1997, the remaining
shares outstanding at the redemption price of $100 per share plus accrued and
unpaid dividends to the date fixed for redemption. The redemption requirement
for each of the three years following 1994 is as follows: $1,384,200 annually in
1995 and 1996 and $1,389,600 at maturity in 1997.
NOTE 7. LONG-TERM DEBT.
Under the terms of the Company's First Mortgage Indenture and the indentures
supplemental thereto, and relative to all series of First Mortgage Bonds, Orange
and Rockland Utilities (ORU) on May 1 of each year is required to make annual
sinking fund payments equal to 1% of the maximum amount of bonds outstanding
during the preceding calendar year. ORU has satisfied such requirements through
the year 1994 by allocating an amount of additional property and expects to
continue such practice in succeeding years. Pike is required, pursuant to its
First Mortgage Indenture, to make annual sinking fund payments in the amount of
$9,500 on July 15 of each year, with respect to its Series "A" Bonds. The
sinking fund requirements of Pike for 1994 were satisfied by the allocation of
an amount of additional property and Pike expects to continue such practice in
succeeding years.
On August 31, 1994, the New York State Energy Research and Development
Authority (NYSERDA) issued, on behalf of the Company, $55 million of variable
rate Pollution Control Refunding Revenue Bonds (Orange and Rockland Utilities,
Inc. Projects), 1994 Series A due October 1, 2014 (1994 Bonds). The proceeds
from the issuance of the 1994 Bonds were used to refund, on October 1, 1994, the
$55 million NYSERDA 10 1/4% Pollution Control Revenue Bonds (Orange and Rockland
Utilities, Inc. Projects), 1984 Series issued on behalf of the Company. In
anticipation of
24
<PAGE>
Orange and Rockland Utilities, Inc. and Subsidiaries
issuing the 1994 Bonds, the Company entered into an interest rate swap agreement
in 1992. Pursuant to the swap agreement, the Company will pay interest at a
fixed rate of 6.09% to a swap counter party and will receive a variable rate of
interest in return which is identical to the variable rate payment made on the
1994 Bonds. The result is to effectively establish a fixed rate of interest on
the 1994 Bonds of 6.09%.
Details of long-term debt at December 31, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
December 31, 1994 1993
===============================================================================
(Thousands of Dollars)
<S> <C> <C>
Orange and Rockland Utilities, Inc.:
First Mortgage Bonds:
Series H, 4 7/8% due Aug. 15, 1995 $ 17,000 $ 17,000
Series I, 6 1/2% due Oct. 1, 1997 23,000 23,000
Promissory Notes (unsecured)
12.9% due through Feb. 15, 1996 25 42
10 1/4% due Oct. 1, 2014 -- 55,000
9% due Aug. 1, 2015 44,000 44,000
6.09% due Oct. 1, 2014 55,000 --
Debentures:
Series A, 9 3/8% due Mar. 15, 2000 80,000 80,000
Series B, 6 1/2% due Oct. 15, 1997 55,000 55,000
Series C, 6.14% due Mar. 1, 2000 20,000 20,000
Series D, 6.56% due Mar. 1, 2003 35,000 35,000
Rockland Electric Company:
First Mortgage Bonds:
Series C, 4 5/8% due Aug. 15, 1995 2,000 2,000
Series H, 9.59 % due July 1, 2020 20,000 20,000
Series I, 6% due July 1, 2000 20,000 20,000
Pike County Light & Power Company:
First Mortgage Bonds:
Series A, 9% due July 15, 2001 884 884
Series B, 9.95% due Aug. 15, 2020 1,800 1,800
Diversified Operations:
Mortgage (secured)
8 1/2% due through June 18, 1999 5,575 5,654
Secured Notes 8 1/2% due through Aug. 31, 1998 277 2,868
- -------------------------------------------------------------------------------
379,561 382,248
Less: Amount due within one year 19,392 984
- -------------------------------------------------------------------------------
360,169 381,264
Unamortized discount on long-term debt (547) (998)
- -------------------------------------------------------------------------------
Total Long-Term Debt $359,622 $380,266
- -------------------------------------------------------------------------------
</TABLE>
The aggregate amount of debt maturities--all of which will be satisfied by
cash payments--and sinking fund requirements -- all of which will be satisfied
by the allocation of additional property -- for each of the five years
following 1994 is as follows:
1995 -- $19,631,200; 1996 -- $531,800; 1997 -- $78,194,500;
1998 -- $120,100; 1999--$4,905,500.
Substantially all of the utility plant and other physical property is subject
to the liens of the respective indentures securing the First Mortgage Bonds of
the Company and its utility subsidiaries.
Investments in the Company's wholly owned utility subsidiaries, costing
$11,828,700, which have been eliminated from the consolidated balance sheet,
are pledged under the Second Supplemental Indenture to the Company's First
Mortgage Indenture.
NOTE 8. CASH AND SHORT-TERM DEBT.
The Company considers all cash and highly liquid debt instruments purchased
with a maturity date of three months or less to be cash and cash equivalents
for the purposes of the Consolidated Financial Statements.
At December 31, 1994, the Company and its utility subsidiaries had unsecured
bank lines of credit with ten commercial banks aggregating $59.0 million. In
most cases the annual fees equal to one-eighth of 1% are paid to the banks for
such lines of credit. The Company may borrow under the lines of credit through
the issuance of promissory notes to the banks at their prevailing interest rate
for prime commercial borrowers. The Company, however, utilizes such lines of
credit to fully support commercial paper borrowings, which are issued through
dealers at the prevailing interest rate for prime commercial paper. The
aggregate amount of borrowings through the issuance of promissory notes and
commercial paper cannot exceed the aggregate lines of credit. In addition, O&R
Energy, Inc., a non-utility subsidiary of RECO, maintains a $15.0 million line
of credit with one commercial bank under which there were no borrowings
outstanding at December 31, 1994 and 1992. At December 31, 1993, there was $1.2
million outstanding under the O&R Energy, Inc. line of credit. There are no fees
associated with this line, and borrowings, made under the line are at a rate of
prime plus one-half percent.
All borrowings for 1994, 1993 and 1992 had maturity dates of three months or
less.
Information regarding short-term borrowings during the past three years is as
follows:
<TABLE>
<CAPTION>
1994 1993 1992
=====================================================================
(Millions of Dollars)
<S> <C> <C> <C>
Weighted average interest rate at year-end 6.4% 3.6% 3.7%
Amount outstanding at year-end $29.4 $46.2 $41.5
Average amount outstanding for the year $31.3 $35.3 $23.9
Daily weighted average interest rate
during the year 4.5% 3.3% 3.8%
Maximum amount outstanding at
any month-end $42.9 $46.2 $41.5
- ---------------------------------------------------------------------
</TABLE>
NOTE 9. FAIR VALUE OF FINANCIAL INSTRUMENTS.
FINANCIAL ASSETS AND LIABILITIES
For the Company, financial assets and liabilities consist principally of cash
and cash equivalents, short-term debt, commercial paper, long-term debt and
redeemable preferred stock. The methods and assumptions used to estimate the
fair value of each class of financial assets and liabilities for which it is
practicable to estimate that value is as follows:
Cash and cash equivalents and temporary cash investments--The carrying amount
reasonably approximates fair value because of the short maturity of those
instruments.
Long-term debt--The fair value of the Company's long-term debt is estimated
based on the quoted market prices for the same or similar issues.
25
<PAGE>
1994 Annual Report
Notes payable and Commercial paper--The carrying amount reasonably
approximates fair value because of the short maturity of those instruments.
Redeemable preferred stock--The fair value of the Company's redeemable
preferred stock is estimated based on the quoted market prices for the same or
similar issues.
<TABLE>
<CAPTION>
1994 1993
=====================================================================
Carrying Fair Carrying Fair
Amount Amount Amount Amount
- ---------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 16,081 $ 16,081 $ 14,256 $ 14,256
Temporary cash investments 1,839 1,839 1,447 1,447
Long-term debt 379,561 371,730 382,248 408,497
Notes payable and commercial
paper 29,400 29,400 46,200 46,200
Redeemable preferred stock 4,158 4,136 5,542 5,732
- ---------------------------------------------------------------------
</TABLE>
OFF BALANCE SHEET AND DERIVATIVE FINANCIAL INSTRUMENTS
In addition, the Company utilizes certain off balance sheet, derivative
financial instruments. Information regarding such instruments is as follows:
Swap Agreement--In connection with the issuance of the 1994 Bonds, the
Company entered into a single interest rate swap agreement during 1992. The
purpose of the swap agreement, which became effective on October 1, 1994, was to
take advantage of the favorable interest rates which existed during 1992. Under
the terms of the interest rate swap agreement, the Company pays interest at a
fixed rate of 6.09% to a swap counterparty and receives a variable rate of
interest in return which is identical to the variable rate payment on the 1994
Bonds made pursuant to an indenture of trust dated August 15, 1994. The result
is to effectively fix the interest rate on the 1994 Bonds at 6.09%. There were
no gains or losses due to the execution of the Swap Agreement. The terms and
conditions of the Swap Agreement are specific to the financing described. As a
result, no market price is available. Under certain circumstances, although none
are anticipated, the agreement may be terminated. The fair value of the
agreement is the amount which one counterparty may be required to pay the other
upon early termination. If the agreement had been terminated on December 31,
1994, the Company would have been required to make a payment of approximately
$1,900,000 to the Swap counterparty.
Gas Futures Contracts--The Company's natural gas marketing subsidiary, O&R
Energy, Inc., enters into futures contracts and commodity price swap agreements
and purchases options to reduce exposure to changes in the price of natural gas.
These transactions are accounted for as hedges in accordance with SFAS No. 80
"Accounting for Futures Contracts." Gains and losses on futures contracts and
purchased options, and payments or receipts under swap agreements, are included
as part of revenue and recognized when the underlying gas is delivered to
customers.
Net futures contracts purchased and outstanding at December 31, 1994,
amounted to 257 contracts and the related margin deposits with brokers amounted
to $678,000. The underlying futures contracts are of varying durations, none of
which extend beyond November 1995. The Company would be required to pay
approximately $30,000 to settle these contracts at December 31, 1994. Deferred
losses at December 31, 1994, were not significant.
Swap transactions were entered into in order to eliminate the commodity price
risk relating to long-term fixed price sales commitments and variable price
purchase commitments. The swap agreements require payments to (or receipt from)
the broker based on the differential between a fixed and variable price for
natural gas. The swap agreements hedge 4.7 BCF of natural gas to be purchased
and delivered over the five years ended October 1999. The related margin
deposits at December 31, 1994, amounted to $1,600,000. Margin deposits consist
of cash and letters of credit. The Company would be required to pay
approximately $1,194,000 to settle these contracts at December 31, 1994.
NOTE 10. PENSION AND POSTRETIREMENT BENEFITS.
PENSION BENEFITS
The Company maintains a non-contributory defined benefit retirement plan,
covering substantially all employees. The plan calls for benefits, based
primarily on years of service and average career compensation, to be paid to
eligible employees at retirement. For financial reporting purposes, pension
costs are accounted for in accordance with the requirements of Statement of
Financial Accounting Standards No. 87 (SFAS No. 87), "Employers' Accounting for
Pensions."
SFAS No. 87 results in a difference in the method of determining pension
costs for financial reporting and funding purposes. Plan valuation for funding
and income tax purposes is prepared on the unit credit cost method, which makes
no assumptions as to future compensation levels. In contrast, the projected unit
credit cost method required for accounting purposes by SFAS No. 87 reflects
assumptions as to future compensation levels. The Company's policy is to fund
the pension costs determined by the unit credit cost method subject to the IRS
funding limitation rules. For rate-making purposes, pension expense determined
under SFAS No. 87 is reconciled with the amount provided in rates for pensions.
Any difference is deferred for subsequent recovery or refund.
Net periodic pension expense calculated pursuant to the requirements of SFAS
No. 87 for the years 1994, 1993 and 1992 includes the following components:
<TABLE>
<CAPTION>
December 31, 1994 1993 1992
==================================================================
(Thousands of Dollars)
<S> <C> <C> <C>
Service cost-benefits earned
during year $ 6,250 $ 5,690 $ 5,896
Interest cost on projected
benefit obligation 14,132 12,915 10,301
Actual return on plan assets 2,634 (19,383) (15,135)
Net deferral and capitalized (18,426) 5,014 4,397
- ------------------------------------------------------------------
Net Pension Expense $ 4,590 $ 4,236 $ 5,459
- ------------------------------------------------------------------
</TABLE>
The following table sets forth, pursuant to the requirements of SFAS No. 87,
the plan's funded status and amounts recognized in the Consolidated Balance
Sheets at December 31, 1994 and 1993. Plan assets are stated at fair market
value and are composed primarily of common stocks and investment grade debt
securities.
26
<PAGE>
Orange And Rockland Utilities, Inc. And Subsidiaries
<TABLE>
<CAPTION>
December 31, 1994 1993
==============================================================================
(Thousands of Dollars)
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested $(154,980) $(153,730)
Nonvested (13,644) (9,758)
- ------------------------------------------------------------------------------
Accumulated benefit obligation $(168,624) $(163,488)
- ------------------------------------------------------------------------------
Projected benefit obligation $(181,625) $(180,176)
Plan assets at fair market value 172,835 182,810
- ------------------------------------------------------------------------------
Excess of plan assets over projected
benefit obligation (8,790) 2,634
Unamortized net transition asset at
adoption of SFAS No. 87 being amortized
over 15 years (7,795) (8,909)
Unrecognized prior service costs 35,425 28,528
Unrecognized net gain (49,137) (47,960)
- ------------------------------------------------------------------------------
Accrued Pension Cost $ (30,297) $ (25,707)
- ------------------------------------------------------------------------------
</TABLE>
The expected long-term rate of return on plan assets, the weighted average
discount rate and the annual rate of increase in future compensation assumed in
determining the projected benefit obligation were 8%, 8.5% and 3.5%,
respectively for 1994. For the year 1993, the expected long-term rate of return
on plan assets, the discount rate and the annual rate of increase in future
compensation assumed in determining the projected benefit obligation were 8%,
7.75% and 4%, respectively.
POSTRETIREMENT BENEFITS
In addition to providing pension benefits, the Company and its subsidiaries
provide certain health care and life insurance benefits for retired employees.
Employees retiring from the Company on or after having attained age 55 who have
rendered at least 10 years of service are entitled to postretirement health care
coverage.
Effective January 1, 1994, the Company adopted the provisions of SFAS No. 112
"Employers' Accounting for Postretirement Benefits" which requires the
recognition, on an accrual basis of disability benefits provided to former or
inactive employees after employment, but before retirement. As a result, the
Company recorded a liability and regulatory asset of $.9 million during 1994.
Effective January 1, 1993, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 106 (SFAS No. 106), "Employers' Accounting
for Postretirement Benefits Other Than Pensions," which established the
accounting and financial reporting standards for postretirement benefits other
than pensions. SFAS No. 106 requires the Company to accrue the estimated future
cost of postretirement health and non-pension benefits during the years that the
employee renders the necessary service, rather than recognizing the cost of such
benefits after the employee has retired and when the benefits are actually paid.
Deferred accounting for any difference between the expense charge required under
SFAS No. 106 and the current rate allowance has been authorized by the NYPSC for
the Company's New York electric and gas operations. A similar procedure has been
adopted by the NJBPU for the operations in that state.
In December 1994, the NYPSC allowed the Company to start recovering SFAS No.
106 costs applicable to New York electric operations. Rate recovery of SFAS No.
106 costs applicable to the Company's New York gas and New Jersey electric
operations will be addressed in future rate filings.
In order to provide funding for active employees' postretirement benefits,
the Company has established Voluntary Employees' Beneficiary Association (VEBA)
trusts for collectively bargained employees and management employees.
Contributions to the VEBA trusts are tax deductible, subject to limitations
contained in the Internal Revenue Code. The Company's policy is to fund
postretirement health and life insurance costs to the extent recoveries are
realized for these costs. In 1994, rate recoveries amounted to $3.5 million and
billings to others totaled $.5 million. The Company will begin funding the VEBA
trusts in 1995.
As permitted by SFAS No. 106, the Company has elected to amortize the
accumulated postretirement benefit obligation at the date of adoption of the
accounting standard, January 1, 1993, over a 20-year period. This transition
obligation totaled $57.2 million. The following table sets forth the plan's
funded status, reconciled with amounts recognized in the Company's financial
statements at December 31, 1994 and December 31, 1993:
<TABLE>
<CAPTION>
1994 1993
==============================================================================
(Thousands of Dollars)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Fully eligible active employees $(19,574) $(18,386)
Other active employees (25,248) (27,073)
Retirees (20,677) (20,337)
- ------------------------------------------------------------------------------
Total benefit obligation (65,499) (65,796)
Plan assets at fair value -0- -0-
- ------------------------------------------------------------------------------
Accumulated postretirement obligation in
excess of plan assets (65,499) (65,796)
Unrecognized experience net (gain) loss (736) 4,694
Unrecognized transition obligation 51,522 54,383
- ------------------------------------------------------------------------------
Accrued Postretirement Benefit Cost $(14,713) $ (6,719)
- ------------------------------------------------------------------------------
</TABLE>
The components of net periodic postretirement benefit cost for the years
ended December 31, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
1994 1993
==============================================================================
(Thousands of Dollars)
<S> <C> <C>
Service cost $ 1,817 $ 1,535
Interest cost 5,198 4,598
Return on plan assets -0- -0-
Amortization of transition obligation 2,861 2,861
Net losses/(gains) 553 -0-
Deferred and capitalized (4,480) (6,719)
- ------------------------------------------------------------------------------
Net Expense $ 5,949 $ 2,275
- ------------------------------------------------------------------------------
</TABLE>
The calculation of the actuarial present value of benefit obligations at
December 31, 1994 assumes a discount rate of 8.5% and health care cost trend
rates of 8.5% for medical costs and 12% for prescription drugs in 1995,
decreasing through 2002 to a rate of 5.0%. If the health care trend rate
assumptions were increased by 1 percent, the accumulated postretirement benefit
obligation would be increased by approximately $6.6 million. The effect of this
change on the sum of the service cost and interest cost would be an increase of
$.9 million. 1993 assumed a discount rate of 7.75% and health care cost trend
rates of 9.0% for medical costs and 14% for prescription drugs in 1994,
decreasing through 2002 to a rate of 5.0%.
27
<PAGE>
1994 Annual Report
OTHER
The Company and two of its wholly owned non-utility subsidiaries have
established a Subsidiary Equity Incentive Plan in which plan participants are
entitled to certain rights measured as Performance Units. Each Performance Unit
gives the plan participant the opportunity to receive an incentive award of 3-5%
of the net increase, subject to certain restrictions, in the value of the
Company's investment in the participating subsidiaries over its initial
investment.
Incentive awards granted during 1994 amounted to $.6 million. No incentive
awards were granted in 1993. As of December 31, 1994 and 1993, $1.1 million and
$1.5 million was reserved for future award grants.
NOTE 11. LEASES.
The Company maintains leases for certain property and equipment which meet
the accounting criteria for capitalization. As required by Statement of
Financial Accounting Standards No. 71 (SFAS No. 71), "Accounting for the Effects
of Certain Types of Regulation," the Company has recorded such leases on its
balance sheets. The amount of leased property included in the accompanying
Consolidated Balance Sheets, and the obligation associated with such leases at
December 31, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1994 1993
===============================================================================
(Thousands of Dollars)
<S> <C> <C>
Utility Plant--Electric $4,245 $4,245
Less accumulated amortization 3,452 2,973
- -------------------------------------------------------------------------------
Net Assets Under Capital Lease $ 793 $1,272
- -------------------------------------------------------------------------------
Noncurrent Liabilities $ 275 $ 793
Current Liabilities 518 479
- -------------------------------------------------------------------------------
Total Liabilities $ 793 $1,272
- -------------------------------------------------------------------------------
</TABLE>
Although current rate-making practices treat all leases as operating leases,
SFAS No. 71 provides that regulated utilities shall recognize as a charge
against income an amount equal to the rental expense allowed for rate-making
purposes. Therefore, the rental payments on these leases have no impact on the
Company's Consolidated Statements of Income and Retained Earnings.
The future minimum rental commitments under the Company's capital leases and
noncancellable operating leases are as follows:
<TABLE>
<CAPTION>
NONCANCELLABLE
CAPITAL OPERATING
LEASES LEASES
===============================================================================
(Thousands of Dollars)
<S> <C> <C>
1995 $ 571 $ 6,238
1996 286 4,311
1997 -- 3,742
1998 -- 3,489
1999 -- 3,264
All years thereafter -- 28,841
- -------------------------------------------------------------------------------
Total 857 $ 49,885
--------------
Less amount representing interest 64
- -----------------------------------------------------------
Present value of net
minimum lease payments $ 793
- -----------------------------------------------------------
</TABLE>
Rental expense for 1994, 1993 and 1992 was $5.3 million, $6.0 million and
$6.3 million, respectively.
NOTE 12. COMMITMENTS AND CONTINGENCIES.
CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Company to concentrations
of credit risk, as defined by Statement of Financial Accounting Standards No.
105 "Financial Instruments with Concentrations of Credit Risk," consist
principally of temporary cash investments, accounts receivables, gas marketing
accounts receivables and an interest rate swap agreement. The Company places its
temporary cash investments with high quality financial institutions.
Concentrations of credit risk with respect to accounts receivable are limited
due to the Company's large, diverse customer base within its service territory.
With respect to gas marketing operations, the customer base consists of a large
diverse group of users of natural gas across the United States, with the
Company's credit risk being dependent on overall economic conditions. Regarding
the interest rate swap agreement, the Company does not use derivative financial
instruments for speculative purposes and is a counterparty in one swap agreement
related to the refinancing of $55 million of pollution control bonds. Therefore,
as of December 31, 1994, the Company had no significant concentrations of credit
risk.
CONSTRUCTION PROGRAM
Under the construction program of the Company and its subsidiaries, it is
estimated that expenditures (excluding AFUDC) of approximately $61.5 million
will be incurred during 1995. As a requirement of the Clean Air Act of 1990,
capital expenditures of $13.5 million are included in the above amount.
GAS SUPPLY AND STORAGE CONTRACTS
The Company has long-term contracts for firm supply, transportation and
storage of gas. The Company's gas purchase obligation under these contracts for
the five years following 1994 is as follows: 1995--$70,272,600;
1996--$72,406,800; 1997--$59,428,300; 1998--$61,193,200 and 1999--$63,043,300.
On August 7, 1987, the FERC issued an order authorizing pipeline suppliers to
pass through to local distribution companies (LDC's) take-or-pay costs resulting
from contract renegotiations with gas producers. The Company's total take-or-pay
liability is approximately $14.7 million. The Company has received refunds from
pipeline suppliers of approximately $2.4 million which it has applied against
this take-or-pay liability. The Company has been allowed by the NYPSC to pass
through 65% of these costs to customers while deferring the remaining amount
until the NYPSC concludes its review of each company in its jurisdiction. As of
December 31, 1994, the Company has deferred $2.8 million of these costs.
On April 8, 1992, the FERC issued Order No. 636. The Order required
significant changes to the structure of the natural gas industry, and more
specifically, to the manner in which pipelines provide service. Order No. 636
changed the manner in which the Company obtains its gas supplies by unbundling
the transportation, storage and supply services offered by interstate gas
pipelines into separate components. During 1993, the Company successfully
completed the process of acquiring its own gas supply and assumed direct
responsibility for its gas acquisition and transportation. While the FERC's
objective is to restructure the industry to promote competition among gas
suppliers to ensure supply at the lowest reasonable cost, there are significant
initial costs associated with the implementation of the
28
<PAGE>
Orange And Rockland Utilities, Inc. and Subsidiaries
restructuring rule. Specifically, Order No. 636 authorizes pipelines to recover
from their customers certain transition costs resulting from implementation of
the rulemaking. The Company's four principal pipeline suppliers made filings
with the FERC during 1993 for approval of a portion of their restructuring
transition costs and allocation procedures to flow the approved costs through to
their customers. Through December 31, 1994, the Company has paid $11.1 million
of transition costs. The Company currently estimates that its remaining
obligation for Order No. 636 transition costs will be approximately $13.5
million. This estimate was determined from information provided in Order No. 636
FERC compliance filings by the Company's pipeline suppliers and from subsequent
transition cost filings. This estimate is subject to adjustment by the FERC in
its deliberations on these filings and any future filings by the suppliers and
the outcome of bankruptcy proceedings involving one of the Company's suppliers.
The Company has provided for the unpaid liability as of December 31, 1994 with
an offsetting charge to Deferred Transition Costs. On October 28, 1993, the
NYPSC instituted a generic proceeding to review the issues associated with Order
No. 636 restructuring. On December 20, 1994, the NYPSC issued Opinion No. 94-26
in this Proceeding. As a result, any transition costs resulting from FERC Order
No. 636 will be fully recoverable in gas rates to the extent such costs were
prudently incurred.
COAL SUPPLY CONTRACTS
The Company has one long-term contract and one short-term contract for the
supply of coal and two long-term contracts for the transportation of coal. The
Company has the right under the long-term coal purchase contract to suspend the
purchase of coal if an alternative fuel source becomes less expensive.
The Company's aggregate contract obligations for the supply and
transportation of coal, for each of the five years following 1994 is as follows:
1995--$33,132,900; 1996--$31,942,400; 1997--$31,495,300; 1998--$32,406,400;
1999--$32,716,600.
POWER PURCHASE AGREEMENTS
The Company has three long-term contracts with other utilities for the
purchase of electric generating capacity and energy. The contracts expire in
1995, 1998 and 2015. Total payments under these contracts were $5.0 million,
$4.6 million and $3.2 million during 1994, 1993 and 1992, respectively. At
December 31, 1994, the estimated future payments for capacity that the Company
is obligated to buy under these contracts for the five years following 1994 are
as follows:
<TABLE>
<CAPTION>
Capacity
Year (Mw) Amount
=============================================================================
<S> <C> <C>
1995 260 $4,152,500
1996 300 4,452,700
1997 325 5,048,000
1998 300 1,031,000
1999 25 690,000
- -----------------------------------------------------------------------------
</TABLE>
The purchase capacities shown in the above table are based on contracts
currently in effect and are exclusive of applicable energy charges.
The Company has a power sales agreement with an independent power producer,
(IPP) Wallkill Generating Company, L.P. (Wallkill Generating), to purchase 95 Mw
of capacity and associated energy. Under the terms of this agreement, purchases
were to commence by no later than January 1, 1997. In November 1994, the Company
notified Wallkill Generating to stop work on the proposed generating facility
and commenced buyout negotiations.
Wallkill Generating has threatened to file a lawsuit against the Company,
arguing that the Company had breached an implied duty of good faith and fair
dealing in connection with the development and permitting of the Wallkill
project. In support of this claim, Wallkill Generating cited, among other
things, an alleged conflict of interest involving a former Company officer who
prior to his retirement in October 1994 had directed the Company's activities
with respect to the Wallkill project. Wallkill Generating alleged that this
former officer had a financial and management interest in another IPP project.
Based on investigations to date, the Company believes that this interest on his
part had no effect on the Company's actions or decisions with respect to the
Wallkill project which the Company has independently determined is an uneconomic
source of power compared with other alternatives.
LEGAL PROCEEDINGS
INVESTIGATION AND RELATED LITIGATION
On February 7, 1994, the Company commenced an action entitled Orange and
Rockland Utilities, Inc. v. James F. Smith (Smith), in New York State Supreme
Court against its former Chief Executive Officer and Chairman of the Board of
Directors, who was terminated for cause by the Company's independent Directors
in October 1993. The action asserts claims against Mr. Smith for breach of his
fiduciary duties of loyalty and care, waste, conversion, fraud and unjust
enrichment based on misuse of Company assets and personnel and misappropriation
of Company funds for his own benefit or for other improper purposes, and failure
to maintain proper management controls or to properly supervise corporate
affairs and subordinate employees. Mr. Smith counterclaimed for benefits and
filed a motion demanding arbitration under his employment agreement with the
Company. On June 17, 1994, the court issued an Order granting Mr. Smith's motion
to compel arbitration. Under a second order dated August 10, 1994, the parties
have filed demands for arbitration of the claims asserted by the Company and by
Mr. Smith with the American Arbitration Association. Hearings are scheduled to
begin on May 15, 1995.
On August 26, 1993 the Company filed an action entitled Orange and Rockland
Utilities, Inc. v. Winikow et al., under the Federal Racketeer Influenced and
Corrupt Organizations Act (RICO), in the United States District Court, Southern
District of New York. The Company alleges that the defendants -- a former
Company Vice President, three other former Company employees and two vendors --
engaged in a conspiracy to divert monies from the Company through the submission
of false and fraudulent invoices in order to pay personal expenses of and/or to
provide personal services to the defendants. In addition, the Company alleges
that the defendants made various contributions to political candidates
consisting of money and services diverted from the Company. Accordingly, the
Company seeks treble damages as called for by the RICO statute, punitive
damages, attorneys' fees, interest and court costs. On December 19, 1994, the
Company filed a notice dismissing the action against three former Company
employees, two of whom had paid restitution to the Company, and one vendor. The
Company is continuing to pursue its claims against the former Vice President and
one vendor.
29
<PAGE>
1994 Annual Report
On August 18, 1993, Feiner v. Orange and Rockland Utilities, Inc., a
purported ratepayer class action complaint against the Company, RECO, a former
Company Vice President and others, was filed in the United States District
Court, Southern District of New York. Plaintiffs alleged that the defendants
violated the Federal Racketeer Influenced and Corrupt Organizations Act (RICO)
and New York common law by using false and misleading information to obtain rate
increases from the NYPSC and used funds obtained from ratepayers in furtherance
of an alleged scheme to make illegal campaign contributions and other illegal
payments. On February 18, 1994, the Company filed a motion to dismiss this case,
which motion was granted on September 8, 1994, and the case was dismissed.
Plaintiff then filed a Notice of Appeal with the United States Court of Appeals
for the Second Circuit (the Second Circuit) appealing the District Court's
decision. Thereafter, the parties signed a Stipulation of Settlement dismissing
the appeal, which was approved by the Second Circuit on December 7, 1994. The
settlement recognizes the remedial measures already taken by the Company, pays
$75,000 towards the plaintiffs' attorneys fees and leaves the District Court
decision dismissing the case in effect.
On November 23, 1993, Gross v. Orange and Rockland Utilities, Inc. (Gross), a
purported shareholder class action complaint, was filed in the United States
District Court, Southern District of New York, and, on March 31, 1994, Bernstein
v. Orange and Rockland Utilities, Inc. and James F. Smith (Bernstein), also a
purported shareholder class action complaint, was filed in the same Court.
Plaintiffs in both actions alleged that various Securities and Exchange
Commission filings of the Company during certain periods in 1993 contained false
and misleading information, and thereby violated certain sections of the
Securities Act of 1933 (Gross) or the Securities Exchange Act of 1934
(Bernstein) by failing to disclose what the plaintiffs alleged was a "scheme" by
the Company to make illegal political payments and campaign contributions. On
November 3, 1994, the Company signed a settlement agreement in the Gross and
Bernstein actions, which settlement was subject to Court approval. On November
21, 1994, the Court consolidated the two cases, approved a notice, and
conditionally certified a class action for settlement purposes only. Notice to
the class was mailed and published at the end of November. The settlement was
approved by the Court on January 27, 1995. Pursuant to the settlement agreement,
the Company will create a settlement fund of $1.85 million, to be distributed on
a pro rata basis to members of the settlement class, and all claims of the
plaintiffs in both cases will be deemed resolved. The cross-claims of the
Company and James F. Smith in the Bernstein action were dismissed without
prejudice.
On August 31, 1993, Patents Management Corp. v. Orange and Rockland
Utilities, Inc., et al., a purported shareholder derivative complaint, was filed
in the Supreme Court of the State of New York, County of New York, against the
Company, most of the Company's Directors and several other named defendants by
an alleged shareholder of the Company. Plaintiff initially claimed that the
named Directors breached their fiduciary duties by condoning the alleged
wrongful acts of a former Vice President or failing to exercise appropriate
supervisory control over such former Vice President and later amended the
complaint to complain of other matters described in the Report of the Special
Committee (see "Events Affecting the Company"). Plaintiff requested that the
Court require the Directors to indemnify the Company against all losses
sustained by the Company as a result of the alleged wrongful acts. A Stipulation
of Settlement with regard to this case has been signed by the Company and the
plaintiff. Under its terms, the Company agrees to implement remedial measures
and provision is made for payment of plaintiff's attorneys fees. A hearing on
the proposed settlement is scheduled before the Court on February 23, 1995. If
approved by the Court, the Settlement will resolve all issues in this case.
On November 10, 1994, the Company filed with the NYPSC a quantification of
the rate-making effects of its ongoing investigation into prior financial
improprieties. The Company requested the NYPSC approve an additional refund of
approximately $3.4 million to its New York electric and gas customers. In
December 1994, a filing was made with the NJBPU proposing to refund
approximately $.7 million to the Company's New Jersey customers. By order dated
January 27, 1995, the NJBPU approved this refund. These amounts were charged to
operations in the fourth quarter of 1994. The NYPSC may conduct a proceeding to
provide the opportunity for other parties, including NYPSC Staff, which is
conducting an independent investigation, to be heard on this matter. The NJBPU
also is conducting an investigation. The Company is unable to predict the final
results of these proceedings and what modifications, if any, will be made to the
amount proposed to be refunded in New York and New Jersey.
OTHER LEGAL PROCEEDINGS
On May 11, 1993, an action was commenced against the Company by Hudson
Riverkeeper Fund, Inc. (Riverkeeper) in the United States District Court for the
Southern District of New York. In its complaint, Riverkeeper alleged that the
Company violated and continues to violate its SPDES Permit for its Lovett
Generating Station (Lovett) by failing to maintain cooling water intake
structures that reflect the best technology available for minimizing adverse
environmental impact. In addition, the complaint alleged that the Company failed
to submit a scope of work for entrainment studies required by its SPDES permit
(entrainment studies). The original complaint requested that the Court assess
civil penalties aggregating $22 million and order the Company to take steps to
insure that the cooling water intake structures at Lovett reflect the best
technology available for minimizing adverse environmental impact. On May 18,
1993, Riverkeeper amended its complaint against the Company by withdrawing its
entrainment studies allegation and reducing the amount of civil penalties sought
to approximately $11 million. On June 30, 1993, the Company filed its answer to
Riverkeeper's allegations. Thereafter, reflecting the Company's belief that
Riverkeeper's allegations have no legal merit, the Company filed a Motion for
Summary Judgment seeking the dismissal of this action. On October 21, 1993, the
Court issued a Memorandum and Order denying the Company's Motion for Summary
Judgment and ruling that the New York State Department of Environmental
Conservation (DEC) should be included as a party to this action. On January 14,
1994, a conference was held before Judge Brieant during which the DEC intervened
in this litigation as a designated plaintiff. On April 8, 1994, the parties
agreed to have engineers enter into discussions regarding modifications to the
Lovett plant's cooling water intake structures. These discussions continued
throughout 1994.
On January 15, 1993, the Company was served with a complaint naming the
Company as one of several defendants in Warwick Administrative Group, et al. v.
Avon Products, Inc. et al., which case was filed in the United States District
Court for the Southern District of New York. The allegations in this case stem
from an
30
<PAGE>
Orange And Rockland Utilities, Inc. and Subsidiaries
Administrative Order for Remedial Design and Remedial Action issued on February
28, 1992 by the United States Environmental Protection Agency pursuant to
Superfund laws which impose liability upon entities who are identified as having
contributed hazardous wastes to a particular site requiring cleanup, including
generators and transporters of such wastes. The Order directs certain members of
the Warwick plaintiff group to implement a plan for the cleanup of the Warwick
Landfill site in Greenwood Lake, New York. The Warwick plaintiff group now
alleges that some defendants, including the Company, arranged to have hazardous
substances disposed of at the Warwick site and thus seeks to recover from the
defendants costs incurred and damages suffered in connection with the cleanup of
the site. An answer to the complaint, as amended, was filed by the Company on
February 23, 1993, denying all of the allegations in the amended complaint and
setting forth a number of affirmative defenses.
On September 25, 1991, the Company was named as one of several hundred third
party defendants in the United States v. Kramer, et al. and State of New Jersey
Department of Environmental Protection v. Almo Anti-Pollution Services, et al.,
which cases have been consolidated in the United States District Court for the
District of New Jersey, Camden Vicinage. The allegations in this action concern
the Helen Kramer Landfill site in Mantua, New Jersey, which operated from 1963
to 1981. Suit in this case was brought under Superfund laws. It is presently
unclear if any hazardous waste generated by the Company was transported to the
Helen Kramer Landfill site. At this time the Company does not believe this
action will have a material effect on the business or financial condition of the
Company.
On March 29, 1989, the New Jersey Department of Environmental Protection
(NJDEP) issued a directive under the New Jersey Spill and Control Act to various
potentially responsible parties (PRPs) including the Company, with respect to a
site formerly owned and operated by Borne Chemical Company in Elizabeth, Union
County, New Jersey, ordering certain interim actions directed at both site
security and the off-site removal of certain hazardous substances. Certain PRPs,
including the Company, signed an administrative consent order with NJDEP
requiring them to perform a removal action at the Borne site, which was
completed on June 22, 1992. The PRPs have entered into negotiations with the
NJDEP regarding the terms of an additional administrative consent order which
will obligate the PRPs, including the Company, to perform a remedial
investigation and feasibility study (RIFS) at the site. The results of this
study will determine what, if any, subsurface remediation at the Borne site is
required. The Company does not believe that this matter will have a material
effect on the financial condition of the Company.
On August 2, 1994, the Company entered into a Consent Order with the New York
State Department of Environmental Conservation (NYSDEC) in which the Company
agreed to conduct a remedial investigation of certain property it owns in West
Nyack, New York. Polychlorinated biphenyls (PCBs) have been discovered at the
West Nyack site. The results of this investigation will determine what, if any,
remediation at the West Nyack site will be required. The Company does not
believe that this matter will have a material effect on the financial condition
of the Company.
On May 29, 1991, a group of ten electric utilities (Metal Bank Group) entered
into an Administrative Consent Order with the United States Environmental
Protection Agency (EPA) to perform a RIFS at the Cottman Avenue/Metal Bank
Superfund site in Philadelphia, Pennsylvania. PCBs have been discharged at the
Cottman Avenue site from an underground storage tank and the handling of
transformers and other electrical equipment. On May 25, 1994, the Company
entered into a tolling agreement by which the Metal Bank Group reserved its
right to file suit against the Company, while the Metal Bank Group and the
Company entered into discussions to determine the Company's involvement with the
Cottman Avenue site. These discussions continue. The RIFS has been completed and
submitted to the EPA for determination of what remedial measures will be
required at the Cottman Avenue site. The Company is unable at this time to
estimate the Company's share, if any, of past or future costs at this site.
On January 17, 1995, the Company was served with a summons in Michael Payran
v. Orange and Rockland Utilities, Inc. and James Donnery, a purported personal
injury action commenced in the Supreme Court of the State of New York. Plaintiff
seeks compensatory and punitive damages of $50 million as a result of injuries
sustained at the Company's Lovett power plant. Since the Company has not been
served with the complaint in this action, it cannot evaluate plaintiff's claims.
ENVIRONMENTAL
The Federal Comprehensive Environmental Response, Compensation and Liability
Act of 1980 and certain similar state statutes authorize various governmental
authorities to issue orders compelling responsible parties to take cleanup
action at sites determined to present an imminent and substantial danger to the
public and to the environment because of an actual or threatened release of
hazardous substances. The Company is a party to a number of administrative
proceedings involving potential impact on the environment. Such proceedings
arise out of, without limitation, the operation and maintenance of facilities
for the generation, transmission and distribution of electricity and natural
gas. Such proceedings are not, in the aggregate, material to the financial
condition of the Company.
Pursuant to the Clean Air Act Amendments of 1990, which became law on
November 15, 1990, a permanent nationwide reduction of 10 million tons in sulfur
dioxide emissions from 1980 levels, as well as a permanent nationwide reduction
of 2 million tons of nitrogen oxide emissions from 1980 levels must be achieved
by January 1, 2000. In addition, continuous emission monitoring systems are
required at all affected facilities effective January 1, 1995. Pursuant to New
York State attainment of ozone standards, nitrogen oxide (NOx) reductions must
be achieved by May 31, 1995.
The Company has two base load generating stations that burn fossil fuels that
will be impacted by this legislation. These generating facilities already burn
low sulfur fuels, so additional capital costs are not anticipated for compliance
with the sulfur dioxide emission requirements. However, installation of low NOx
burners at Lovett plant and operational modifications at Bowline plant are
required to meet NOx reduction levels for ozone attainment. Additional emission
monitoring systems have
31
<PAGE>
1994 Annual Report
been installed at both facilities. The Company's construction expenditures for
this work are estimated to be approximately $28.7 million through 1995.
Approximately $15.2 million has been expended through 1994. Beginning with
calendar year 1994, Title V sources (Bowline Point and Lovett) are required to
pay an emission fee. Each facility's fees are based upon actual air emissions
reported to NYSDEC at a rate of approximately $25 per ton of air emissions for
calendar year 1994. The emission fee will be reevaluated by New York State
annually. The Company will continue to assess the impact of the Clean Air Act
Amendments of 1990 on its power generating operations as additional regulations
implementing these Amendments are promulgated.
To date, the Company has identified six former manufactured gas plant sites
which were owned and operated by the Company or its predecessors. The Company
may be named as a potentially responsible party for these sites under relevant
environmental laws, which may require the Company to clean up these sites. To
date, no claims have been asserted against the Company or consent orders entered
into by the Company regarding these sites.
The NYPSC has commenced a proceeding to consider the most economical method
of compliance with the Clean Air Act Amendments of 1990 by electric utilities in
New York State.
NOTE 13. SEGMENTS OF BUSINESS.
The Company defines its principal business segments as utility (electric and
gas) and diversified activities. The diversified segment includes the gas
marketing, gas production and land development.
Total utility revenue as reported in the Consolidated Statements of Income
and Retained Earnings include both sales to unaffiliated customers and
intersegment sales which are billed at tariff rates. Income from operations is
total revenue less operating expenses. General corporate expenses were allocated
in the manner used in the rate-making process.
Identifiable assets by segment are those assets that are used in the
production, distribution and sales operations in each segment. Allocations were
made in a manner consistent with the rate-making process. Corporate assets are
principally property, cash, sundry receivables and unamortized debt expense.
<TABLE>
<CAPTION>
Segments of Business
Year Ended December 31, 1994 1993 1992
==============================================================================
Operating Information: (Thousands of Dollars)
<S> <C> <C> <C>
Operating revenues:
Sales to unaffiliated customers:
Electric $ 478,909 $ 486,842 $ 463,601
Gas 157,045 157,185 140,630
Intersegment sales:
Electric 120 125 132
Gas 123 72 49
- ------------------------------------------------------------------------------
Total Utility
Operating Revenues 636,197 644,224 604,412
Diversified activities 380,705 322,925 235,660
- ------------------------------------------------------------------------------
Total Operating Revenues $1,016,902 $ 967,149 $ 840,072
- ------------------------------------------------------------------------------
Operating income before
income taxes:
Electric $ 80,355 $ 89,243 $ 83,824
Gas 19,724 19,147 16,539
Diversified activities 313 729 2,067
- ------------------------------------------------------------------------------
Total Operating Income
Before Income Taxes 100,392 109,119 102,430
- ------------------------------------------------------------------------------
Income Taxes:
Electric 19,894 21,380 18,596
Gas 4,644 4,679 3,403
Diversified activities 2 167 679
- ------------------------------------------------------------------------------
Total Income Taxes 24,540 26,226 22,678
- ------------------------------------------------------------------------------
Total Income From
Operations $ 75,852 $ 82,893 $ 79,752
- ------------------------------------------------------------------------------
Other Information:
Identifiable assets:
Electric $ 960,143 $ 944,903 $ 839,122
Gas 214,933 219,508 182,943
Diversified activities 95,846 84,401 73,275
- ------------------------------------------------------------------------------
Total Identifiable Assets 1,270,922 1,248,812 1,095,340
Corporate assets 42,082 32,161 32,161
- ------------------------------------------------------------------------------
Total Assets $1,313,004 $1,280,973 $1,127,501
- ------------------------------------------------------------------------------
Depreciation expense:
Electric $ 29,161 $ 28,049 $ 27,076
Gas 5,940 5,349 6,404
Diversified activities 761 658 534
- ------------------------------------------------------------------------------
Total $ 35,862 $ 34,056 $ 34,014
- ------------------------------------------------------------------------------
Capital expenditures:
Electric $ 44,832 $ 39,441 $ 42,133
Gas 15,242 13,955 13,799
Diversified activities 468 912 506
- ------------------------------------------------------------------------------
Total $ 60,542 $ 54,308 $ 56,438
- ------------------------------------------------------------------------------
</TABLE>
NOTE 14. SUMMARY OF QUARTERLY RESULTS OF OPERATIONS (UNAUDITED).
<TABLE>
<CAPTION>
Earnings Earnings
Applicable Per
Income To Average
Operating From Net Common Common
Revenues Operations Income Stock Share
==============================================================================
<S> <C> <C> <C> <C> <C>
QUARTER ENDED (Thousands of Dollars)
1994
March 31 $292,675 $24,165 $14,068 $13,255 $ .98
June 30 229,735 13,380 3,380 2,567 .19
September 30 239,214 25,615 16,382 15,570 1.14
December 31 255,278 12,692 3,387 2,574 .19
- ------------------------------------------------------------------------------
1993
March 31 $263,189 $23,958 $15,084 $14,243 $1.05
June 30 213,988 15,044 6,601 5,760 .43
September 30 236,402 26,391 17,312 16,471 1.22
December 31 253,570 17,500 5,818 4,977 .36
- ------------------------------------------------------------------------------
</TABLE>
32
<PAGE>
Orange and Rockland Utilities, Inc. and Subsidiaries
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ARTHUR ANDERSEN LLP
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF ORANGE AND ROCKLAND UTILITIES,
INC.:
We have audited the accompanying consolidated balance sheet of Orange and
Rockland Utilities, Inc. and Subsidiaries (a New York corporation) as of
December 31, 1994, and the related consolidated statements of income and
retained earnings and cash flows for the year then ended. These financial
statements are the responsibility of the Company'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 consolidated financial position of Orange and
Rockland Utilities, Inc. and Subsidiaries as of December 31, 1994, and the
consolidated results of their operations and their cash flows for the year then
ended, in conformity with generally accepted accounting principles.
As discussed in Note 12 to the Consolidated Financial Statements under the
subheading Investigation and Related Litigation, the New York Public Service
Commission (NYPSC) and the New Jersey Board of Public Utilities (NJBPU) are
currently investigating, among other things, misappropriations of Company funds
by certain former employees and the impact on ratepayers. Although the Company
has completed its own investigation and has requested the NYPSC and the NJBPU to
approve additional refunds of $3.4 million and $.7 million, respectively, the
Company is unable to predict the final results of this proceeding and what
modifications, if any, will be made to the amounts proposed to be refunded.
Accordingly, no provision for any additional liability that may result from
these investigations has been made in the accompanying consolidated financial
statements.
As discussed in Notes 2 and 10 of the Consolidated Financial Statements, the
Company changed its method of accounting for income taxes and postretirement
benefits in 1993.
/s/ Arthur Andersen LLP
New York, New York
February 2, 1995
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
GRANT THORNTON LLP
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF ORANGE AND ROCKLAND UTILITIES,
INC. AND SUBSIDIARIES
We have audited the accompanying consolidated balance sheets of Orange and
Rockland Utilities, Inc. and Subsidiaries as of December 31, 1993, and the
related consolidated statements of income and retained earnings and cash flows
for each of the two years in the period ended December 31, 1993. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements 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 Orange and
Rockland Utilities, Inc. and Subsidiaries as of December 31, 1993, and the
consolidated results of their operations and their cash flows for each of the
two years in the period ended December 31, 1993, in conformity with generally
accepted accounting principles.
As more fully discussed in Note 12 (Legal Proceedings) to the Consolidated
Financial Statements, the Company and various state regulatory authorities are
currently investigating misappropriations of Company funds by certain former
employees and the impact on ratepayers. As a result of these improprieties,
several class action and derivative complaints have been filed against the
Company and others. Although the Company has refunded certain amounts to
ratepayers as of December 31, 1993, the ultimate outcome of the investigations
and litigation cannot presently be determined. Accordingly, no provision for any
additional liability that may result from these matters has been made in the
accompanying 1993 financial statements.
As discussed in Notes 2 and 10 of the Consolidated Financial Statements, the
Company changed its method of accounting for income taxes and postretirement
benefits in 1993.
/s/ Grant Thornton LLP
New York, New York
February 16, 1994
33
<PAGE>
1994 Annual Report
OPERATING STATISTICS -- ELECTRIC
<TABLE>
<CAPTION>
Year Ended December 31,
1994 1993 1992
=================================================================================================================
<S> <C> <C> <C>
SOURCE OF ELECTRICITY (Mwh):
Generation -- net
Steam 3,282,416 2,720,897 3,083,852
Hydro 168,149 164,378 143,871
Gas Turbine 10,448 7,557 3,938
- -----------------------------------------------------------------------------------------------------------------
Total Net Generation 3,461,013 2,892,832 3,231,661
Purchases 1,574,015 2,054,253 1,532,105
Company Use and Unaccounted For (305,747) (354,806) (298,806)
- -----------------------------------------------------------------------------------------------------------------
Net Energy Sold 4,729,281 4,592,279 4,464,960
- -----------------------------------------------------------------------------------------------------------------
SALES (Mwh):
Residential 1,660,755 1,611,602 1,532,915
Commercial 2,049,265 2,018,240 1,986,048
Industrial 657,142 627,944 594,912
Public Street Lighting 27,836 27,705 27,538
Public Authorities 68,972 72,037 70,257
- -----------------------------------------------------------------------------------------------------------------
Total Sales to Customers 4,463,970 4,357,528 4,211,670
Other Utilities for Resale 265,311 234,751 253,290
- -----------------------------------------------------------------------------------------------------------------
Total Sales of Electricity 4,729,281 4,592,279 4,464,960
- -----------------------------------------------------------------------------------------------------------------
REVENUES (000's):
Residential $ 214,439 $ 211,082 $ 193,124
Commercial 212,214 212,240 202,523
Industrial 51,316 50,983 47,128
Public Street Lighting 4,939 4,967 4,880
Public Authorities 4,051 4,344 4,212
- -----------------------------------------------------------------------------------------------------------------
Total Revenues from Sales to Customers 486,959 483,616 451,867
Other Utilities for Resale 6,636 6,414 6,965
- -----------------------------------------------------------------------------------------------------------------
Total Revenues from Sales of Electricity 493,595 490,030 458,832
Other Electric Operating Revenues (14,566) (3,063) 4,901
- -----------------------------------------------------------------------------------------------------------------
Total Electric Operating Revenues $ 479,029 $ 486,967 $ 463,733
- -----------------------------------------------------------------------------------------------------------------
SYSTEM NET CAPABILITY AND PEAK (Kw):
Net Installed Capability at Time of Peak 1,013,500 1,013,500 1,011,000
Firm Purchases-- net 275,000 250,000 200,000
- -----------------------------------------------------------------------------------------------------------------
Total System Net Capability 1,288,500 1,263,500 1,211,000
- -----------------------------------------------------------------------------------------------------------------
NET PEAK LOAD 1,022,000 1,037,000 943,000
LOAD FACTOR .52 .51 .53
HEAT RATE -- Btu of Fuel per
Kwh Generated 10,772 10,683 10,600
ELECTRIC CUSTOMERS -- Year End 259,708 256,897 254,192
RESIDENTIAL CUSTOMER STATISTICS:
Average Annual Kwh Use 7,357 7,214 6,928
Average Annual Revenue per Kwh 12.91(cents) 13.10(cents) 12.60(cents)
Average Annual Bill Including Fuel $ 949.89 $ 944.82 $ 872.77
Average Annual Fuel Cost Recovery $ 188.74 $ 194.90 $ 192.76
=================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
1991 1990
==========================================================================================
<S> <C> <C>
SOURCE OF ELECTRICITY (Mwh):
Generation -- net
Steam 3,506,037 3,805,705
Hydro 172,752 201,115
Gas Turbine 15,217 23,446
- ------------------------------------------------------------------------------------------
Total Net Generation 3,694,006 4,030,266
Purchases 1,150,460 891,313
Company Use and Unaccounted For (316,748) (329,181)
- ------------------------------------------------------------------------------------------
Net Energy Sold 4,527,718 4,592,398
- ------------------------------------------------------------------------------------------
SALES (Mwh):
Residential 1,597,571 1,496,284
Commercial 1,955,851 1,885,221
Industrial 576,046 574,456
Public Street Lighting 26,780 26,488
Public Authorities 73,455 71,221
- ------------------------------------------------------------------------------------------
Total Sales to Customers 4,229,703 4,053,670
Other Utilities for Resale 298,015 538,728
- ------------------------------------------------------------------------------------------
Total Sales of Electricity 4,527,718 4,592,398
- ------------------------------------------------------------------------------------------
REVENUES (000's):
Residential $ 196,031 $ 179,554
Commercial 196,409 186,423
Industrial 44,724 44,834
Public Street Lighting 4,732 4,686
Public Authorities 4,419 4,242
- ------------------------------------------------------------------------------------------
Total Revenues from Sales to Customers 446,315 419,739
Other Utilities for Resale 9,575 19,292
- ------------------------------------------------------------------------------------------
Total Revenues from Sales of Electricity 455,890 439,031
Other Electric Operating Revenues 1,265 2,506
- ------------------------------------------------------------------------------------------
Total Electric Operating Revenues $ 457,155 $ 441,537
- ------------------------------------------------------------------------------------------
SYSTEM NET CAPABILITY AND PEAK (Kw):
Net Installed Capability at Time of Peak 1,008,700 1,005,000
Firm Purchases-- net 175,000 152,000
- ------------------------------------------------------------------------------------------
Total System Net Capability 1,183,700 1,157,000
- ------------------------------------------------------------------------------------------
NET PEAK LOAD 1,001,000 922,000
LOAD FACTOR .51 .54
HEAT RATE -- Btu of Fuel per
Kwh Generated 10,441 10,486
ELECTRIC CUSTOMERS -- Year End 251,724 248,758
RESIDENTIAL CUSTOMER STATISTICS:
Average Annual Kwh Use 7,286 6,893
Average Annual Revenue per Kwh 12.27(cents) 12.00(cents)
Average Annual Bill Including Fuel $ 894.11 $ 827.20
Average Annual Fuel Cost Recovery $ 207.01 $ 209.92
==========================================================================================
</TABLE>
34
<PAGE>
Orange And Rockland Utilities, Inc. and Subsidiaries
OPERATING STATISTICS -- GAS
<TABLE>
<CAPTION>
Year Ended December 31,
1994 1993 1992 1991 1990
======================================================================================================================
<S> <C> <C> <C> <C> <C>
SOURCE OF GAS (Mmcf):
Purchased 47,618 41,983 47,070 46,438 52,013
Manufactured 38 21 22 15 14
Storage--net (906) 1,077 (450) 1,490 (565)
Used in Electric Production (24,847) (21,234) (24,141) (26,444) (30,741)
Company Use and Unaccounted For (432) (630) (549) (1,176) (634)
- ----------------------------------------------------------------------------------------------------------------------
Net Energy Sold 21,471 21,217 21,952 20,323 20,087
- ----------------------------------------------------------------------------------------------------------------------
SALES (Mmcf):
Residential 15,164 15,323 15,212 13,564 13,555
Commercial and Industrial 5,257 5,233 5,295 4,766 4,807
- ----------------------------------------------------------------------------------------------------------------------
Total Firm Sales 20,421 20,556 20,507 18,330 18,362
Interruptible 1,023 653 889 1,325 889
Other Utilities for Resale 27 8 556 668 836
- ----------------------------------------------------------------------------------------------------------------------
Total Sales of Gas 21,471 21,217 21,952 20,323 20,087
- ----------------------------------------------------------------------------------------------------------------------
REVENUES (000's):
Residential $ 112,759 $ 113,116 $ 97,646 $ 82,198 $ 82,139
Commercial and Industrial 36,676 36,707 32,541 27,811 27,849
- ----------------------------------------------------------------------------------------------------------------------
Total Revenues from Firm Sales 149,435 149,823 130,187 110,009 109,988
Interruptible 3,996 2,605 3,414 5,536 3,683
Other Utilities for Resale 203 105 1,950 1,999 2,404
- ----------------------------------------------------------------------------------------------------------------------
Total Revenues from Sales of Gas 153,634 152,533 135,551 117,544 116,075
Other Gas Revenues 3,534 4,724 5,128 5,143 1,636
- ----------------------------------------------------------------------------------------------------------------------
Total Gas Operating Revenues $ 157,168 $ 157,257 $140,679 $122,687 $117,711
- ----------------------------------------------------------------------------------------------------------------------
MAXIMUM DAILY CAPACITY AT
DEC. 31 (Mmcf):
Pipeline Suppliers 195.2 194.6 195.9 195.9 194.7
Propane Plants 30.6 30.6 30.6 30.6 30.6
- ----------------------------------------------------------------------------------------------------------------------
Total Maximum Daily Capacity 225.8 225.2 226.5 226.5 225.3
- ----------------------------------------------------------------------------------------------------------------------
MAXIMUM 24-HOUR SENDOUT (Mmcf) 206.0 191.3 160.0 167.0 165.2
HEATING DEGREE DAYS 5,522 5,791 5,771 5,106 4,918
GAS CUSTOMERS -- YEAR END 110,631 109,464 108,168 106,854 105,528
RESIDENTIAL CUSTOMER STATISTICS:
Average Annual Mcf Use 151.0 145.2 145.4 131.0 131.9
Average Annual Revenue per Mcf $ 7.44 $ 7.41 $ 6.44 $ 6.08 $ 6.09
Average Annual Bill Including Fuel $1,122.89 $1,075.86 $ 936.63 $ 797.09 $ 802.61
Average Annual Fuel Cost Recovery $ 622.72 $ 595.94 $ 500.42 $ 446.11 $ 458.11
======================================================================================================================
</TABLE>
35
<PAGE>
1994 Annual Report
FINANCIAL STATISTICS
<TABLE>
<CAPTION>
Year Ended December 31,
1994 1993 1992 1991 1990
============================================================================================================================
<S> <C> <C> <C> <C> <C>
COMMON STOCK DATA:
Earnings Per Average Common Share $ 2.50 $ 3.06 $ 3.15 $ 3.12 $ 3.54*
Dividends Declared Per Share $ 2.54 $ 2.49 $ 2.43 $ 2.37 $ 2.32
Book Value Per Share (Year End) $ 27.79 $ 27.79 $ 27.22 $ 26.33 $ 25.46
Market Price Range Per Share:
High $ 41 1/4 $ 47 1/2 $ 41 7/8 $ 39 $ 32 3/8
Low $ 28 3/8 $ 38 5/8 $ 32 3/8 $ 30 7/8 26 1/8
Year End $ 32 1/2 $ 40 5/8 $ 41 5/8 $ 38 5/8 $ 31 3/8
Price Earnings Ratio 13.00 13.28 13.21 12.38 8.86
Dividend Payout Ratio 101.60% 81.37% 77.14% 75.96% 65.54%
Common Shareholders at Year-End 23,299 24,328 25,696 25,989 26,424
Average Number of Common Shares
Outstanding (000's) 13,594 13,532 13,438 13,238 13,040
Total Common Shares Outstanding at
Year-End (000's) 13,653 13,532 13,531 13,327 13,132
Return on Average Common Equity 9.01% 11.16% 11.88% 12.13% 14.49%
- ----------------------------------------------------------------------------------------------------------------------------
CAPITALIZATION DATA (000'S):
Common Stock Equity $ 379,403 $ 376,044 $ 368,321 $ 350,947 $ 334,317
Non-Redeemable Preferred Stock 43,268 43,287 43,306 43,334 43,365
Redeemable Preferred Stock 2,774 4,158 5,542 6,926 8,311
Long-Term Debt 359,622 380,266 380,202 376,839 371,660
- ----------------------------------------------------------------------------------------------------------------------------
Total Capitalization $ 785,067 $ 803,755 $ 797,371 $ 778,046 $ 757,653
- ----------------------------------------------------------------------------------------------------------------------------
CAPITALIZATION RATIOS:
Common Equity 48.33% 46.79% 46.19% 45.11% 44.13%
Non-Redeemable Preferred Stock 5.51% 5.38% 5.43% 5.57% 5.72%
Redeemable Preferred Stock .35% .52% .70% .89% 1.10%
Long-Term Debt 45.81% 47.31% 47.68% 48.43% 49.05%
- ----------------------------------------------------------------------------------------------------------------------------
SELECTED FINANCIAL DATA (000'S):
Operating Revenues $1,016,902 $ 967,149 $ 840,072 $ 727,783 $ 652,892
Operating Expenses $ 941,050 $ 884,256 $ 760,320 $ 650,707 $ 571,191
Operating Income $ 75,852 $ 82,893 $ 79,752 $ 77,076 $ 81,701
Net Income $ 37,217 $ 44,815 $ 45,812 $ 44,868 $ 49,839
Earnings Applicable to Common Stock $ 33,966 $ 41,451 $ 42,334 $ 41,277 $ 46,133
Net Utility Plant $ 856,289 $ 831,980 $ 814,686 $ 792,413 $ 765,287
Total Assets $1,313,004 $1,280,973 $1,127,501 $1,087,846 $1,039,006
Long-Term Debt Including
Redeemable Preferred Stock $ 362,396 $ 384,424 $ 385,744 $ 383,765 $ 379,971
Ratio of Long-Term Debt to Net Plant 44.4% 46.0% 47.0% 48.0% 51.3%
Ratio of Accumulated Depreciation to
Utility Plant in Service 33.1% 31.7% 30.7% 30.0% 29.3%
============================================================================================================================
</TABLE>
*Includes non-recurring gain on sale of non-utility land of $0.55 per share.
36
<PAGE>
ORANGE AND ROCKLAND UTILITIES, INC.
APPENDIX A TO EXHIBIT 13
FORM 10-K DECEMBER 31, 1994
The Review of the Company's Results of Operations and Financial
Condition, which is included in the Company's Annual Report to Shareholders
and is incorporated by reference in this Annual Report on Form 10-K, contains
certain graphic presentations of financial data which are presented in tabular
format as follows:
1. - Graph entitled "Electric Sales to Customers"
Year Millions of Mwh
1990 405
1991 423
1992 421
1993 436
1994 446
2. - Graph entitled "Costs per Kwh" shows the price paid for fuel and
purchased power on a per-kwh basis as follows:
Cost per Kwh of Fuel
Year and Purchased Power
1990 2.87 cents
1991 2.74 cents
1992 2.70 cents
1993 2.67 cents
1994 2.51 cents
3. - Graph entitled "Firm Gas Sales" shows firm gas sales to customers
as follows:
Year Millions of Mcf's
1990 18.4
1991 18.3
1992 20.5
1993 20.6
1994 20.4
4. - Graph entitled "Cost per Mcf" shows the price paid for purchased
gas as follows:
Cost per Mcf of
Year Gas Purchased
1990 $3.17
1991 $2.90
1992 $3.52
1993 $3.63
1994 $3.52
02309.lfh
ORANGE AND ROCKLAND UTILITIES, INC. AND SUBSIDIARIES
Subsidiaries
Exhibit 21
State of
Parent and Subsidiary* Incorporation
Orange and Rockland Utilities, Inc. New York
Rockland Electric Company New Jersey
Saddle River Holdings Corp. Delaware
Atlantic Morris Broadcasting, Inc.-- Delaware
doing business under the names WKOJ (FM),
WALL (FM), WKTU (FM), WABT (FM), WCSO (FM)
and WLPZ (AM).
NORSTAR Holdings, Inc. Delaware
(Formerly O&R Energy, Inc.)
NORSTAR Management, Inc. Delaware
Millbrook Holdings, Inc. Delaware
Pike County Light & Power Company Pennsylvania
Clove Development Corporation New York
O&R Energy Development, Inc. Delaware
O&R Development, Inc. Delaware
*Each level of indentation represents subsidiary status of the company
under which it is immediately indented.
0718.wp
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a
director of Orange and Rockland Utilities, Inc., which Company
proposes to file with the Securities and Exchange Commission an
Annual Report on Form 10-K for the Company's fiscal year ended
December 31, 1994 pursuant to the provisions of the Securities
Exchange Act of 1934, as amended, has made, constituted and
appointed and by these presents does hereby make, constitute and
appoint G. D. CALIENDO, his true and lawful attorney, for him and
in his name, place and stead, and in his office and capacity as
aforesaid, to sign and file said Form 10-K and any and all other
documents to be signed and filed with the Securities and Exchange
Commission in connection therewith, hereby granting to said
G. D. CALIENDO, full power and authority to do and perform each
and every act as fully, to all intents and purposes, as he might
or could do if personally present, hereby ratifying and
confirming in all respects all that G. D. CALIENDO, may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has set his hand and
seal this 2nd day of March 1995.
Signature s/ Ralph M. Baruch
Ralph M. Baruch
Office Director<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a
director of Orange and Rockland Utilities, Inc., which Company
proposes to file with the Securities and Exchange Commission an
Annual Report on Form 10-K for the Company's fiscal year ended
December 31, 1994 pursuant to the provisions of the Securities
Exchange Act of 1934, as amended, has made, constituted and
appointed and by these presents does hereby make, constitute and
appoint G. D. CALIENDO, his true and lawful attorney, for him and
in his name, place and stead, and in his office and capacity as
aforesaid, to sign and file said Form 10-K and any and all other
documents to be signed and filed with the Securities and Exchange
Commission in connection therewith, hereby granting to said
G. D. CALIENDO, full power and authority to do and perform each
and every act as fully, to all intents and purposes, as he might
or could do if personally present, hereby ratifying and
confirming in all respects all that G. D. CALIENDO, may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has set his hand and
seal this 2nd day of March 1995.
Signature s/ Frederic V. Salerno
Frederic V. Salerno
Office Director<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a
director of Orange and Rockland Utilities, Inc., which Company
proposes to file with the Securities and Exchange Commission an
Annual Report on Form 10-K for the Company's fiscal year ended
December 31, 1994 pursuant to the provisions of the Securities
Exchange Act of 1934, as amended, has made, constituted and
appointed and by these presents does hereby make, constitute and
appoint G. D. CALIENDO, his true and lawful attorney, for him and
in his name, place and stead, and in his office and capacity as
aforesaid, to sign and file said Form 10-K and any and all other
documents to be signed and filed with the Securities and Exchange
Commission in connection therewith, hereby granting to said
G. D. CALIENDO, full power and authority to do and perform each
and every act as fully, to all intents and purposes, as he might
or could do if personally present, hereby ratifying and
confirming in all respects all that G. D. CALIENDO, may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has set his hand and
seal this 2nd day of March 1995.
Signature s/ J. Fletcher Creamer
J. Fletcher Creamer
Office Director <PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a
director of Orange and Rockland Utilities, Inc., which Company
proposes to file with the Securities and Exchange Commission an
Annual Report on Form 10-K for the Company's fiscal year ended
December 31, 1994 pursuant to the provisions of the Securities
Exchange Act of 1934, as amended, has made, constituted and
appointed and by these presents does hereby make, constitute and
appoint G. D. CALIENDO, his true and lawful attorney, for him and
in his name, place and stead, and in his office and capacity as
aforesaid, to sign and file said Form 10-K and any and all other
documents to be signed and filed with the Securities and Exchange
Commission in connection therewith, hereby granting to said
G. D. CALIENDO, full power and authority to do and perform each
and every act as fully, to all intents and purposes, as he might
or could do if personally present, hereby ratifying and
confirming in all respects all that G. D. CALIENDO, may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has set his hand and
seal this 2nd day of March 1995.
Signature s/ Michael J. Del Giudice
Michael J. Del Giudice
Office Director<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a
director of Orange and Rockland Utilities, Inc., which Company
proposes to file with the Securities and Exchange Commission an
Annual Report on Form 10-K for the Company's fiscal year ended
December 31, 1994 pursuant to the provisions of the Securities
Exchange Act of 1934, as amended, has made, constituted and
appointed and by these presents does hereby make, constitute and
appoint G. D. CALIENDO, his true and lawful attorney, for him and
in his name, place and stead, and in his office and capacity as
aforesaid, to sign and file said Form 10-K and any and all other
documents to be signed and filed with the Securities and Exchange
Commission in connection therewith, hereby granting to said
G. D. CALIENDO, full power and authority to do and perform each
and every act as fully, to all intents and purposes, as he might
or could do if personally present, hereby ratifying and
confirming in all respects all that G. D. CALIENDO, may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has set his hand and
seal this 2nd day of March 1995.
Signature s/ Frank A. McDermott, Jr.
Frank A. McDermott, Jr.
Office Director<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a
director of Orange and Rockland Utilities, Inc., which Company
proposes to file with the Securities and Exchange Commission an
Annual Report on Form 10-K for the Company's fiscal year ended
December 31, 1994 pursuant to the provisions of the Securities
Exchange Act of 1934, as amended, has made, constituted and
appointed and by these presents does hereby make, constitute and
appoint G. D. CALIENDO, his true and lawful attorney, for him and
in his name, place and stead, and in his office and capacity as
aforesaid, to sign and file said Form 10-K and any and all other
documents to be signed and filed with the Securities and Exchange
Commission in connection therewith, hereby granting to said
G. D. CALIENDO, full power and authority to do and perform each
and every act as fully, to all intents and purposes, as he might
or could do if personally present, hereby ratifying and
confirming in all respects all that G. D. CALIENDO, may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has set his hand and
seal this 2nd day of March 1995.
Signature s/ Kenneth D. McPherson
Kenneth D. McPherson
Office Director<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a
director of Orange and Rockland Utilities, Inc., which Company
proposes to file with the Securities and Exchange Commission an
Annual Report on Form 10-K for the Company's fiscal year ended
December 31, 1994 pursuant to the provisions of the Securities
Exchange Act of 1934, as amended, has made, constituted and
appointed and by these presents does hereby make, constitute and
appoint G. D. CALIENDO, his true and lawful attorney, for him and
in his name, place and stead, and in his office and capacity as
aforesaid, to sign and file said Form 10-K and any and all other
documents to be signed and filed with the Securities and Exchange
Commission in connection therewith, hereby granting to said
G. D. CALIENDO, full power and authority to do and perform each
and every act as fully, to all intents and purposes, as he might
or could do if personally present, hereby ratifying and
confirming in all respects all that G. D. CALIENDO, may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has set his hand and
seal this 2nd day of March 1995.
Signature s/ James F. O'Grady, Jr.
James F. O'Grady, Jr.
Office Director<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a
director of Orange and Rockland Utilities, Inc., which Company
proposes to file with the Securities and Exchange Commission an
Annual Report on Form 10-K for the Company's fiscal year ended
December 31, 1994 pursuant to the provisions of the Securities
Exchange Act of 1934, as amended, has made, constituted and
appointed and by these presents does hereby make, constitute and
appoint G. D. CALIENDO, her true and lawful attorney, for her and
in her name, place and stead, and in her office and capacity as
aforesaid, to sign and file said Form 10-K and any and all other
documents to be signed and filed with the Securities and Exchange
Commission in connection therewith, hereby granting to said
G. D. CALIENDO, full power and authority to do and perform each
and every act as fully, to all intents and purposes, as she might
or could do if personally present, hereby ratifying and
confirming in all respects all that G. D. CALIENDO, may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has set her hand and
seal this 2nd day of March 1995.
Signature s/ Linda C. Taliaferro
Linda C. Taliaferro
Office Director<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a
director of Orange and Rockland Utilities, Inc., which Company
proposes to file with the Securities and Exchange Commission an
Annual Report on Form 10-K for the Company's fiscal year ended
December 31, 1994 pursuant to the provisions of the Securities
Exchange Act of 1934, as amended, has made, constituted and
appointed and by these presents does hereby make, constitute and
appoint G. D. CALIENDO, his true and lawful attorney, for him and
in his name, place and stead, and in his office and capacity as
aforesaid, to sign and file said Form 10-K and any and all other
documents to be signed and filed with the Securities and Exchange
Commission in connection therewith, hereby granting to said
G. D. CALIENDO, full power and authority to do and perform each
and every act as fully, to all intents and purposes, as he might
or could do if personally present, hereby ratifying and
confirming in all respects all that G. D. CALIENDO, may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has set his hand and
seal this 2nd day of March 1995.
Signature s/ H. Kent Vanderhoef
H. Kent Vanderhoef
Office Chairman of the Board
of Directors<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, the
acting principal accounting officer of Orange and Rockland
Utilities, Inc., which Company proposes to file with the
Securities and Exchange Commission an Annual Report on Form 10-K
for the Company's fiscal year ended December 31, 1994 pursuant to
the provisions of the Securities Exchange Act of 1934, as
amended, has made, constituted and appointed and by these
presents does hereby make, constitute and appoint G. D. CALIENDO,
his true and lawful attorney, for him and in his name, place and
stead, and in his office and capacity as aforesaid, to sign and
file said Form 10-K and any and all other documents to be signed
and filed with the Securities and Exchange Commission in
connection therewith, hereby granting to said G. D. CALIENDO,
full power and authority to do and perform each and every act as
fully, to all intents and purposes, as he might or could do if
personally present, hereby ratifying and confirming in all
respects all that G. D. CALIENDO, may or shall lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has set his hand and
seal this 2nd day of March 1995.
Signature s/ Terry L. Dittrich
Terry L. Dittrich
Office Acting Controller<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an
officer of Orange and Rockland Utilities, Inc., which Company
proposes to file with the Securities and Exchange Commission an
Annual Report on Form 10-K for the Company's fiscal year ended
December 31, 1994 pursuant to the provisions of the Securities
Exchange Act of 1934, as amended, has made, constituted and
appointed and by these presents does hereby make, constitute and
appoint G. D. CALIENDO, his true and lawful attorney, for him and
in his name, place and stead, and in his office and capacity as
aforesaid, to sign and file said Form 10-K and any and all other
documents to be signed and filed with the Securities and Exchange
Commission in connection therewith, hereby granting to said
G. D. CALIENDO, full power and authority to do and perform each
and every act as fully, to all intents and purposes, as he might
or could do if personally present, hereby ratifying and
confirming in all respects all that G. D. CALIENDO, may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has set his hand and
seal this 2nd day of March 1995.
Signature s/ R. Lee Haney
R. Lee Haney
Office Vice President and Chief
Financial Officer<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an
officer and director of Orange and Rockland Utilities, Inc.,
which Company proposes to file with the Securities and Exchange
Commission an Annual Report on Form 10-K for the Company's fiscal
year ended December 31, 1994 pursuant to the provisions of the
Securities Exchange Act of 1934, as amended, has made,
constituted and appointed and by these presents does hereby make,
constitute and appoint G. D. CALIENDO, his true and lawful
attorney, for him and in his name, place and stead, and in his
office and capacity as aforesaid, to sign and file said Form 10-K
and any and all other documents to be signed and filed with the
Securities and Exchange Commission in connection therewith,
hereby granting to said G. D. CALIENDO, full power and authority
to do and perform each and every act as fully, to all intents and
purposes, as he might or could do if personally present, hereby
ratifying and confirming in all respects all that G. D. CALIENDO,
may or shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has set his hand and
seal this 2nd day of March 1995.
Signature s/ D. Louis Peoples
D. Louis Peoples
Office Director, Vice Chairman of
the Board and Chief
Executive Officer
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ORANGE AND
ROCKLAND UTILITIES, INC. ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 856,289
<OTHER-PROPERTY-AND-INVEST> 20,608
<TOTAL-CURRENT-ASSETS> 251,192
<TOTAL-DEFERRED-CHARGES> 184,915
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,313,004
<COMMON> 68,265
<CAPITAL-SURPLUS-PAID-IN> 127,479
<RETAINED-EARNINGS> 183,659
<TOTAL-COMMON-STOCKHOLDERS-EQ> 379,403
2,774
43,268
<LONG-TERM-DEBT-NET> 359,622
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 29,400
<LONG-TERM-DEBT-CURRENT-PORT> 19,392
1,384
<CAPITAL-LEASE-OBLIGATIONS> 275
<LEASES-CURRENT> 518
<OTHER-ITEMS-CAPITAL-AND-LIAB> 476,968
<TOT-CAPITALIZATION-AND-LIAB> 1,313,004
<GROSS-OPERATING-REVENUE> 1,016,902
<INCOME-TAX-EXPENSE> 24,540
<OTHER-OPERATING-EXPENSES> 916,510
<TOTAL-OPERATING-EXPENSES> 941,050
<OPERATING-INCOME-LOSS> 75,852
<OTHER-INCOME-NET> (5,198)
<INCOME-BEFORE-INTEREST-EXPEN> 70,654
<TOTAL-INTEREST-EXPENSE> 33,437
<NET-INCOME> 37,217
3,251
<EARNINGS-AVAILABLE-FOR-COMM> 33,966
<COMMON-STOCK-DIVIDENDS> 34,486
<TOTAL-INTEREST-ON-BONDS> 29,105
<CASH-FLOW-OPERATIONS> 117,490
<EPS-PRIMARY> 2.5
<EPS-DILUTED> 0
</TABLE>
