FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 2-26983
THE PEOPLES GAS LIGHT AND COKE COMPANY
(Exact name of registrant as specified in its charter)
Illinois 36-1613900
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
24th Floor, 130 East Randolph Drive, Chicago, Illinois 60601-6207
(Address of principal executive offices) (Zip Code)
(312) 240-4000
(Registrant's telephone number, including area code)
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 shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes [x] No [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
24,817,566 shares of Common Stock, without par value, outstanding
at July 31, 1995.
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The Peoples Gas Light and Coke Company
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Three Nine Twelve
Months Ended Months Ended Months Ended
June 30, June 30, June 30,
------------- --------------- ---------------
1995 1994 1995 1994 1995 1994
---- ---- ---- ---- ---- ----
(Thousands)
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES:
Gas sales $136,909 $156,749 $690,393 $ 909,851 $775,591 $1,010,591
Transportation of customer-
owned gas 23,022 19,381 92,932 83,624 108,251 98,856
Other 3,794 5,034 15,227 13,132 19,276 17,100
------- ------- ------- --------- ------- ---------
Total Operating Revenues 163,725 181,164 798,552 1,006,607 903,118 1,126,547
------- ------- ------- --------- ------- ---------
OPERATING EXPENSES:
Gas costs 58,260 79,344 360,990 532,602 395,290 578,999
Operation 43,474 42,988 130,683 144,636 182,093 191,959
Maintenance 10,152 9,057 28,535 25,774 37,644 34,922
Depreciation 14,308 14,900 44,121 43,034 58,911 57,320
Taxes - Income 947 33 36,403 41,253 22,563 30,993
- State & local revenue 19,015 20,574 89,786 111,332 100,227 123,626
- Other 4,963 4,248 14,590 13,713 19,311 18,278
------- ------- ------- ------- ------- ---------
Total Operating Expenses 151,119 171,144 705,108 912,344 816,039 1,036,097
------- ------- ------- ------- ------- ---------
OPERATING INCOME 12,606 10,020 93,444 94,263 87,079 90,450
------- ------- ------- ------- ------- ---------
OTHER INCOME:
Interest income 3,222 1,805 5,793 2,748 7,594 2,942
Miscellaneous 80 437 911 12,095 1,683 12,678
----- ----- ----- ------ ----- ------
Total Other Income 3,302 2,242 6,704 14,843 9,277 15,620
----- ----- ----- ------ ----- ------
GROSS INCOME 15,908 12,262 100,148 109,106 96,356 106,070
------ ------ ------- ------- ------ -------
INCOME DEDUCTIONS:
Interest on long-term debt 10,002 9,792 29,864 28,238 39,656 36,787
Other interest 1,861 281 4,581 2,304 4,911 2,671
Amortization of debt discount
and expense 192 176 564 513 739 667
Miscellaneous 34 34 102 102 137 146
------ ------ ------ ------ ------ ------
Total Income Deductions 12,089 10,283 35,111 31,157 45,443 40,271
------ ------ ------ ------ ------ ------
NET INCOME 3,819 1,979 65,037 77,949 50,913 65,799
------ ------ ------ ------ ------ ------
Preferred stock dividends -- -- -- -- -- 71
------ ------ ------ ------ ------ ------
NET INCOME APPLICABLE
TO COMMON STOCK $ 3,819 $ 1,979 $ 65,037 $ 77,949 $ 50,913 $ 65,728
======= ======= ======= ========= ======= =========
<FN>
The Notes to Consolidated Financial Statements are an integral part of these
statements.
</TABLE>
<TABLE>
The Peoples Gas Light and Coke Company
CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30, June 30,
1995 September 30, 1994
(Unaudited) 1994 (Unaudited)
----------- ------------ ----------
(Thousands)
<S> <C> <C> <C>
PROPERTIES AND OTHER ASSETS
CAPITAL INVESTMENTS
Property, plant and equipment,
at original cost $1,801,182 $1,760,004 $1,742,675
Less - Accumulated depreciation 624,731 596,808 589,400
--------- --------- ---------
Net property, plant and equipment 1,176,451 1,163,196 1,153,275
Other investments 5,718 6,235 6,628
--------- --------- ---------
TOTAL CAPITAL INVESTMENTS - NET 1,182,169 1,169,431 1,159,903
--------- --------- ---------
CURRENT ASSETS
Cash 2,824 3,173 3,771
Cash equivalents 210,905 54,935 135,694
Other temporary cash investments,
at cost that approximates market value 600 600 600
Trust fund - utility construction -- 31,493 44,494
- bond redemption 50,237 -- --
Receivables -
Customers, net of allowance for
uncollectible accounts of $18,993,
$23,400, and $17,995, respectively 70,758 68,786 117,931
Other 2,625 3,377 2,563
Accrued unbilled revenues 14,025 17,561 13,269
Materials and supplies, at average cost 15,455 21,564 22,515
Gas in storage, at last-in, first-out cost 72,894 123,584 82,203
Gas costs recoverable through rate adjustments 4,904 12,024 14,208
Prepayments 2,049 1,649 2,129
------- ------- -------
TOTAL CURRENT ASSETS 447,276 338,746 439,377
------- ------- -------
DEFERRED CHARGES 36,758 40,615 36,582
--------- --------- ---------
TOTAL PROPERTIES AND OTHER ASSETS $1,666,203 $1,548,792 $1,635,862
========= ========= =========
<FN>
The Notes to Consolidated Financial Statements are an integral part of
these statements.
</TABLE>
<TABLE>
The Peoples Gas Light and Coke Company
CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30, June 30,
1995 September 30, 1994
(Unaudited) 1994 (Unaudited)
----------- ------------- ---------
(Thousands of Dollars)
<S> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common Stockholder's Equity:
Common stock, without par value
Authorized - 40,000,000 shares
Outstanding - 24,817,566 shares $ 165,307 $ 165,307 $ 165,307
Retained earnings 388,518 366,168 394,189
------- ------- -------
Total Common Stockholder's Equity 553,825 531,475 559,496
Long-term debt, exclusive of sinking fund
payments and maturities due within one year 549,150 549,150 549,150
------- ------- -------
TOTAL CAPITALIZATION 1,102,975 1,080,625 1,108,646
--------- --------- ---------
CURRENT LIABILITIES
Interim loans -- 900 100
Accounts payable 80,792 95,027 105,746
Dividends payable on common stock 14,394 13,898 14,146
Customer gas service and credit deposits 26,650 39,543 16,809
Sinking fund payments and maturities,
due within one year -
Long-term debt 50,000 -- --
Accrued taxes 50,374 26,691 50,897
Gas sales revenue refundable through
rate adjustments 55,365 41,167 28,843
Accrued interest 8,852 10,204 8,392
Temporary LIFO liquidation credit 37,848 -- 45,797
------- ------- -------
TOTAL CURRENT LIABILITIES 324,275 227,430 270,730
------- ------- -------
RESERVES AND DEFERRED CREDITS
Deferred income taxes - primarily
accelerated depreciation 188,448 176,416 191,863
Investment tax credits being amortized
over the average lives of related property 34,623 35,836 36,236
Other 15,882 28,485 28,387
--------- --------- ---------
TOTAL RESERVES AND DEFERRED CREDITS 238,953 240,737 256,486
--------- --------- ---------
TOTAL CAPITALIZATION AND LIABILITIES $1,666,203 $1,548,792 $1,635,862
========= ========= =========
<FN>
The Notes to Consolidated Financial Statements are an integral part of
these statements.
</TABLE>
<TABLE>
The Peoples Gas Light and Coke Company
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Nine Months Ended
June 30,
---------------
1995 1994
---- ----
(Thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income $ 65,037 $ 77,949
Adjustments to reconcile net income to net cash:
Depreciation 44,121 43,034
Deferred income taxes and investment tax credits - net 9,327 7,873
Change in other deferred credits and reserves (11,111) (25,648)
Change in deferred charges 3,857 (10,072)
Other 33 16
Change in current assets and liabilities:
Receivables - net (1,220) (16,838)
Accrued unbilled revenues 3,536 12,930
Materials and supplies 6,109 1,158
Gas in storage 50,690 37,451
Rate adjustments recoverable or refundable 21,318 50,420
Accounts payable (14,235) 4,135
Customer gas service and credit deposits (12,893) (21,684)
Accrued taxes 23,683 25,648
Accrued interest (1,352) 121
Temporary LIFO liquidation credit 37,848 45,796
Other (401) (109)
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 224,347 232,180
------- -------
INVESTING ACTIVITIES:
Capital expenditures - construction (56,052) (50,089)
Other assets (1,324) (1,674)
Other capital investments 484 1,650
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (56,892) (50,113)
-------- --------
FINANCING ACTIVITIES:
Interim loans - net (900) (63,100)
Issuance of long-term debt 50,000 102,000
Trust fund, bond redemption (50,237) --
Trust fund, utility construction 31,493 (44,494)
Redemption of preferred stock -- (3,400)
Dividends paid on preferred stock -- (71)
Dividends paid on common stock (42,190) (41,446)
--------- --------
NET CASH USED IN FINANCING ACTIVITIES (11,834) (50,511)
--------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 155,621 131,556
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 58,108 7,909
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $213,729 $139,465
======== ========
<FN>
The Notes to Consolidated Financial Statements are an integral part of
these statements.
</TABLE>
The Peoples Gas Light and Coke Company
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements have been
prepared by The Peoples Gas Light and Coke Company (Company) in
conformity with the rules and regulations of the Securities and
Exchange Commission (SEC) and reflect all adjustments that are, in
the opinion of management, necessary to present fairly the results
for the interim periods herein and to prevent the information from
being misleading.
Certain footnote disclosures and other information, normally
included in financial statements prepared in accordance with
generally accepted accounting principles, have been condensed or
omitted from these interim financial statements, pursuant to SEC
rules and regulations. Therefore, the statements should be read in
conjunction with the consolidated financial statements and related
notes contained in the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1994.
The business of the Company is influenced by seasonal weather
conditions because a large element of the Company's customer load
consists of gas used for space heating. Weather-related deliveries
can, therefore, have a significant positive or negative impact on
net income. Accordingly, the results of operations for the interim
periods presented are not indicative of the results to be expected
for all or any part of the balance of the current fiscal year.
2. SIGNIFICANT ACCOUNTING POLICIES
2A Revenue Recognition
Gas sales revenues for retail customers are recorded on the
accrual basis for all gas delivered during the month, including
an estimate for gas delivered but unbilled at the end of each
month.
2B Basis of Accounting
The Company accounts for its regulated operations in
accordance with Statement of Financial Accounting Standards
(SFAS) No. 71, "Accounting for the Effects of Certain Types of
Regulation." This standard controls the application of
generally accepted accounting principles for companies whose
rates are determined by an independent regulator. Regulatory
assets represent certain costs which have been or are expected
to be recovered from customers through the ratemaking process.
When such costs occur, they are deferred as assets in the
balance sheet and recorded as expenses when like amounts are
included in rates.
2C Statement of Cash Flows
For purposes of the balance sheet and the statement of cash
flows, the Company considers all short-term liquid investments
with maturities of three months or less to be cash equivalents.
<TABLE>
Income taxes and interest paid (excluding capitalized
interest) were as follows:
<CAPTION>
For the nine months
ended June 30, 1995 1994
---------------------------------------------------
<S> <C> <C>
(Thousands)
Income taxes paid $10,435 $28,121
Interest paid 33,147 30,000
</TABLE>
2D Income Taxes
In March 1993, the Company adopted, effective October 1,
1992, the liability method of accounting for deferred income
taxes required by SFAS No. 109, "Accounting for Income Taxes."
Under the liability method, deferred income taxes have been
recorded using currently enacted tax rates for the differences
between the tax basis of assets and liabilities and the basis
reported in the financial statements. Due to the effects of
regulation on the Company, certain adjustments made to deferred
income taxes to reflect the adoption of SFAS No. 109 are, in
turn, debited or credited to regulatory assets or liabilities.
Such adjustments had no material impact on financial position
or results of operations of the Company.
2E Recovery of Gas Costs, Including Charges for Transition Costs
Under the tariffs of the Company, the difference for any
fiscal year between costs recoverable through the Gas Charge
and revenues billed to customers under the Gas Charge is
refunded or recovered over a 12-month billing cycle beginning
the following January 1. Consistent with these tariff
provisions, such difference for any month is recorded either as
a current liability or as a current asset (with a contra entry
to Gas Costs), and the fiscal year-end balance is amortized
over the 12-month period beginning the following January 1.
The Illinois Commerce Commission (Commission) conducts
annual proceedings regarding, for each gas utility, the
reconciliation of revenues from the Gas Charge and related
costs incurred for gas. In such proceedings, costs recovered
by a utility through the Gas Charge are subject to challenge.
Such proceedings regarding the Company for fiscal years 1992
through 1995 are currently pending before the Commission.
Pursuant to Federal Energy Regulatory Commission (FERC)
Order No. 636 and successor orders, pipelines are allowed to
recover from their customers so-called transition costs. These
costs arise from the restructuring of pipeline service
obligations required by the 636 Orders. The Company is
currently recovering pipeline charges for transition costs
through the Gas Charge. The Commission entered an order on
March 9, 1994, providing for the full recovery of all such
charges from customers. In September 1994, the Commission
entered orders on rehearing that retained the provision for
full recovery from customers. (See Notes 3A and 3B.)
3. RATES AND REGULATION
3A Utility Rate Proceedings
Rate Filing. On December 16, 1994, the Company filed with the
Commission proposed changes in rates. The Company subsequently
lowered its request and is seeking changes in rates that are
designed to increase annual revenues by about $41 million,
exclusive of additional charges for revenue taxes, based on a rate
of return on original-cost rate base of 9.55 percent which reflects
an 11.8 percent cost of common equity.
The Company expects that the Commission, following its usual
practices, will not issue a decision regarding the Company's rate
increase request until November 1995. The Company cannot predict
the outcome of its rate increase request.
Environmental Cost Recovery. In 1992, the Commission issued an
order in its consolidated proceedings, initiated in 1991, regarding
the appropriate ratemaking treatment of environmental costs
relating to past manufactured gas operations incurred by Illinois
utilities, including the Company and North Shore Gas, in connection
with the investigation and treatment of residues associated with
past manufactured gas operations ("environmental costs"). In its
order, the Commission approved rate recovery of environmental costs
over a five-year period, but required the utilities to "share" the
environmental costs by disallowing rate recovery of carrying
charges on unrecovered balances. Reimbursements of environmental
costs from insurance carriers or other entities are to be netted
against costs and reflected in rates over a five-year period. In
1992, several parties, including the Company and North Shore Gas,
appealed the Commission's order to the Illinois Appellate Court.
In 1993, the Third District Appellate Court issued its opinion
affirming the Commission's order in the consolidated proceedings,
which decision was subsequently appealed to the Illinois Supreme
Court. In April 1995, the Illinois Supreme Court upheld in part
and reversed in part the Commission's order. The Supreme Court
upheld the Commission in ruling that environmental costs are
recoverable through rates. The Supreme Court also ruled that the
Commission's approval of a rate recovery method called a "rider"
(the method utilized by the Company and North Shore Gas) as the
preferred mechanism for recovery of environmental costs is within
the Commission's authority. The Supreme Court reversed the part of
the Commission's order that required the utilities to share
environmental costs by disallowing recovery of carrying charges on
unrecovered balances. The order was remanded to the Commission for
further proceedings consistent with the Supreme Court's opinion.
The Commission has until December 20, 1995 to issue its order on
remand. Any change made pursuant to the Supreme Court's decision
will have a prospective effect only.
FERC Order No. 636 Cost Recovery. On September 15, 1993, the
Commission entered an order initiating an investigation into the
appropriate means of recovery by Illinois gas utilities of pipeline
charges for FERC Order No. 636 transition costs. The Commission
issued a final order in this proceeding on March 9, 1994. The
order provides for the full recovery of transition costs from the
Company's gas service customers and transportation customers to the
extent they contract for firm standby service. The Citizens
Utility Board and State's Attorney of Cook County filed an
application for rehearing of the March 9 order with the Commission.
On May 4, 1994, the Commission granted rehearing, limited to the
question of the allocation of transition costs. In September 1994,
the Commission entered orders on rehearing. In its orders on
rehearing, the Commission continued to provide for full recovery of
transition costs, but directed that, effective November 1, 1994,
gas supply realignment (GSR) costs (one of the four categories of
transition costs) be recovered on a uniform volumetric basis from
all transportation and sales customers. In December 1994, a group
of industrial transportation customers of Illinois utilities
appealed the Commission's orders on rehearing to the Illinois
Appellate Court. Any change made pursuant to the Illinois
Appellate Court's order on appeal would have a prospective effect
only. (See Notes 2E and 3B.)
3B FERC Orders 636, 636-A, and 636-B
In 1992, the FERC issued Order Nos. 636, 636-A, and 636-B.
Numerous appeals of the 636 Orders are pending before the Federal
Circuit Court of Appeal for the D.C. Circuit.
The 636 Orders require substantial restructuring of the service
obligations of interstate pipelines. Among other things, the 636
Orders mandated "unbundling" of existing pipeline gas sales
services. Further, the 636 Orders provided for mechanisms for
pipelines to recover prudently incurred transition costs associated
with the restructuring process.
The restructured tariffs of Natural Gas Pipeline Company of
America (Natural), the principal pipeline serving the Company, went
into effect December 1, 1993. The restructured tariffs of other
pipelines serving the Company had previously gone into effect.
Several appeals of the orders approving Natural's and other
pipelines' restructured tariffs are pending before the Federal
Circuit Court of Appeal for the D.C. Circuit.
As part of the restructuring process, the Company elected
necessary levels of services from the menu of restructured services
offered by the various pipelines. Also during 1993, the Company
took the steps necessary to obtain reliable gas supply as a
replacement for the bundled merchant service supply which was no
longer available from the interstate pipelines to any significant
extent.
Under the 636 Orders, pipelines must make separate rate filings
to recover transition costs. There are four categories of such
costs, the largest of which for the Company is GSR costs. The
Company is subject to charges for transition cost recovery by
Natural. Charges by Natural for transition costs commenced on
January 1, 1994. On September 29, 1994, the FERC approved a
Stipulation and Agreement (Agreement) filed by Natural. The
Agreement places a cap of approximately $103 million on the amount
of GSR costs recoverable by Natural from the Company. However,
subject to this cap, the level of costs that the Company will incur
is dependent primarily upon the future market price of natural gas
and pipeline negotiations with producers. The Company is currently
recovering transition costs through the Gas Charge. As of June 30,
1995, the Company has accrued $41.7 million and has made payments
of $38.1 million toward the cap.
The 636 Orders are not expected to have a material adverse
effect on financial position or results of operations of the
Company or its subsidiaries. (See Notes 2E and 3A.)
4. ENVIRONMENTAL MATTERS
The Company, its predecessors, and certain former affiliates
operated facilities in the past for manufacturing gas and storing
manufactured gas. In connection with manufacturing and storing
gas, various by-products and waste materials were produced, some of
which might have been disposed of rather than sold. Under certain
laws and regulations relating to the protection of the environment,
the Company might be required to undertake remedial action with
respect to some of these materials, if found at the sites.
The current owner of a site in McCook, Illinois, near Chicago,
has advised the Company that the owner has found what appear to be
wastes associated with by-products of the gas manufacturing process
under its property. The owner has asserted that these wastes are
the responsibility of the Company. The Company is currently
evaluating this claim.
The Company, in cooperation with the Illinois Environmental
Protection Agency (IEPA), is conducting investigations of certain
sites (a total of 29) to determine whether remedial action might be
necessary. The investigations were initiated pursuant to an
informal request by the IEPA. To the best of the Company's
knowledge, similar informal requests have been made by the IEPA to
other major Illinois gas and electric utilities. The Company has
engaged environmental consulting firms to assist in the Company's
investigations. At this time, except for the 110th Street Station
site (discussed below), it is not known what, if any, remedial
action will be necessary at the sites or, if necessary, what the cost
of any such action would be. As discussed below, the Company may
conduct a remedial investigation/feasibility study (RI/FS) at the
Division Street site under the supervision of the IEPA. In addition,
the Company is conducting investigations under the supervision of the
IEPA at the 110th Street Station and Equitable Distribution Station sites.
In August 1988, the IEPA conducted an inspection at the
Company's Division Street property in Chicago. During the
inspection, the IEPA and the Company took several soil samples for
laboratory analysis. The analysis of the samples collected by the
Company indicates the presence of certain substances within the
soil of the Division Street property that could be attributable to
former manufactured gas operations. The Company may conduct an
RI/FS of the property under the supervision of the IEPA.
The Company has been sued by a prior owner and has received
demands from the current owner of a site in Chicago formerly called
Pitney Court Station. The former owner alleges damages of over $1
million arising from alleged contamination by the Company resulting
from past gas manufacturing activities on the property. The
current owner has demanded that the Company assume responsibility
for investigation and remediation of the alleged contamination.
The Company is currently evaluating these claims.
The Company has observed what appear to be gas purification
wastes on a site in Chicago, formerly called the 110th Street
Station, and property contiguous thereto. The Company has fenced
the site and the contiguous property and is conducting a study
under the supervision of the IEPA to determine the feasibility of a
limited removal action.
The current owners at a site in Chicago, formerly called South
Station, have advised the Company that they have found what appear
to be gas manufacturing wastes underneath their property. The
owners have demanded monetary compensation from the Company because
of the presence of such wastes. The Company is currently
evaluating this claim.
In 1994, the Company became aware of a planned residential
development at a site in Chicago, formerly called the Equitable
Distribution Station. The Company is conducting a preliminary
investigation to determine whether gas manufacturing wastes are
present at the site.
The Company is accruing and deferring the costs it incurs in
connection with all of the sites, including related legal expenses,
pending recovery through rates or from insurance carriers or other
entities. As of June 30, 1995, the total of the costs deferred by
the Company, net of recoveries, was $10.5 million. This amount
includes an estimate of the costs of the investigations initiated
at the request of the IEPA at the sites referred to above. The
amount also includes an estimate of the costs of remediation at the
110th Street Station site in Chicago, at the minimum amount of the
current estimated range of such costs. The costs of remediation at
the other sites cannot be determined until more is known about the
nature and extent of contamination and the remedial action, if any,
to be required by the IEPA. While the Company intends to seek
contribution from other entities for the costs incurred at the
sites, the full extent of such contributions cannot be determined
at this time.
The Company has filed suit against a number of insurance
carriers for the recovery of environmental costs relating to its
former manufactured gas operations. The suit asks the court to
declare that the insurers are liable under policies in effect
between 1938 and 1985 for costs incurred or to be incurred by the
Company in connection with former manufactured gas sites in
Chicago. The Company is also asking the court to award damages
stemming from the insurers' breach of their contractual obligation
to defend and indemnify the Company against these costs. At this time,
management cannot determine the timing and extent of the Company's
recovery of costs from its insurance carriers. Accordingly, the
costs deferred as of June 30, 1995 have not been reduced to reflect
recoveries from insurance carriers.
Costs incurred by the Company for environmental activities
relating to former manufactured gas operations will be recovered
from insurance carriers or other entities or through rates for
utility service. Accordingly, management believes that the costs
incurred by the Company in connection with the sites will not have
a material adverse effect on financial position or results of
operations. The Company is recovering the costs of environmental
activities relating to its former manufactured gas operations under
rate mechanisms approved by the Commission. As of June 30, 1995,
the Company had recovered $369,000 of such costs through rates.
(See Note 3A for a discussion of proceedings regarding the recovery
of such costs through utility rates.)
5. GAS OVER-PRESSURE CONDITION
On January 17, 1992, an over-pressure condition occurred in the
gas mains of the Company serving an approximately one-square-mile
area of the Near Northwest Side of the City of Chicago. The
over-pressure condition caused a major explosion and numerous
fires. The Company is aware of four deaths and 14 personal
injuries allegedly resulting from the explosion and fires. The
Company also has been informed that damage occurred in an estimated
28 buildings. There was also damage, such as broken windows, wall
cracks, and water damage, to additional buildings.
A number of lawsuits have been filed against the Company as a
result of the over-pressure condition. The lawsuits include
wrongful-death claims and several class actions that seek to
certify as a class those persons who suffered bodily harm and/or
property damage. All of the suits allege negligence and seek
compensatory damages. Some of the lawsuits also seek punitive
damages. These suits have not quantified the alleged damages
except for certain amounts that are not material.
In January 1993, the National Transportation Safety Board (NTSB)
completed its report regarding its investigation of the
over-pressure incident that occurred on January 17, 1992. In its
report, the NTSB stated that "the probable cause of the
over-pressure accident and the resulting losses was the failure of
Peoples Gas Light Coke Company to adequately train its gas
operations section employees in recognizing and correctly
responding to abnormal situations, which consequently led to the
failure of the gas operations section crew to properly monitor and
control the pressure of the gas being supplied to the low-pressure
gas system during a routine inspection."
In June 1993, the Staff of the Illinois Commerce Commission
(Commission Staff) released its report concerning the over-pressure
incident. In its report, the Commission Staff concluded that
employee error was the probable cause of the over-pressurization.
The report was critical of the Company's training of its personnel
in its gas operations section and of some of the Company's
practices at the time of the incident.
The Company strongly disagrees with the criticisms by the NTSB
and the Commission Staff of the training given by the Company to
personnel in its gas operations section. The Company also
disagrees with some of the findings and conclusions of the
Commission Staff, including several of the Commission Staff's
findings and its theory, analysis, and conclusions pertaining to
the probable cause of the over-pressurization.
The Company carries substantial insurance coverage. If
liability were found on the part of the Company, management
believes that any costs incurred for damages will be adequately
covered by insurance. However, the Company's primary insurance
carrier has asserted that under Illinois law, liability for
punitive damages is not insurable. The Company has advised the
insurance carrier that it disagrees and intends to assert all of
its rights against the carrier including its right to obtain
recovery for punitive damages, if any. Management is not aware of
any conduct on its part or by employees of the Company that would
give rise to punitive damages under Illinois law. Accordingly,
management believes that the incident will not have a material
adverse effect on financial position or results of operations of
the Company.
6. TAX MATTERS
On September 30, 1993, the Company received notification from
the Internal Revenue Service (IRS) that settlement of past income
tax returns had been reached for fiscal years 1978 through 1990.
The IRS settlement resulted in 1994 payments of principal and
interest to the Company in total amount of approximately $25
million, or $19.4 million after income taxes. The Company received
regulatory authorization to defer the recognition of the settlement
amount in income for fiscal year 1993, and to recognize its portion
of the settlement amount in income for fiscal years 1994 and 1995.
The Company represented to the Commission that, having received
this accounting authorization, it would not file a request for an
increase in base rates before December 1994. The regulatory
treatment of the IRS settlement having been resolved in November
1993, the Company included $12.7 million, or $9.7 million after
income taxes, in income in 1994. The amount after income taxes was
included in Other Income - Miscellaneous. At September 30, 1994,
approximately $12.7 million was included in Reserves and Deferred
Credits - Other.
As a result of the Commission's accounting authorization, the
fiscal year 1995 portion of the settlement amount for the Company
is being amortized (credited) to operation expense. The effect is
to offset increases in costs that the Company will incur during the
year. In the nine months ended June 30, 1995, the Company
amortized approximately $11.6 million, or $8.8 million after income
taxes, leaving a remaining balance of about $1.1 million included
in Reserves and Deferred Credits - Other.
7. LONG-TERM DEBT
7A Issuance Of Bonds
On June 29, 1995, the City of Chicago issued $50 million
aggregate principal amount of 6.10 percent gas supply refunding
revenue bonds, 1995 Series A, which were collateralized by an equal
amount of the Company's 30-year first mortgage bonds. On August 1,
1995, the proceeds were used to redeem $50 million aggregate
principal amount of previously issued gas supply revenue bonds.
Other funds provided by the Company will be used for the payment of
expenses of issuance, including the underwriters' fee.
7B Interest-Rate Adjustments
The rate of interest on the City of Joliet 1984 Series C Bonds,
which are secured by the Company's Adjustable-Rate Bonds, Series W,
is subject to adjustment annually on October 1. Owners of the
Series C Bonds have the right to tender such bonds at par during a
limited period prior to that date. The Company is obligated to
purchase any such bonds tendered if they cannot be remarketed.
All Series C Bonds that were tendered prior to October 1, 1994,
have been remarketed. The interest rate on such bonds is 4.20
percent for the period October 1, 1994, through September 30, 1995.
The rate of interest on the City of Chicago 1993 Series B Bonds,
which are secured by the Company's Adjustable-Rate Bonds, Series
EE, is subject to adjustment annually on December 1. Owners of the
Series B Bonds have the right to tender such bonds at par during a
limited period prior to that date. The Company is obligated to
purchase any such bonds tendered if they cannot be remarketed. All
Series B Bonds that were tendered prior to December 1, 1994, have
been remarketed. The interest rate on such bonds is 4.95 percent
for the period December 1, 1994, through November 30, 1995.
SFAS No. 6 sets forth the requirements for excluding from
current liabilities in the Company's financial statements
obligations that would otherwise be considered short-term
obligations. In order to meet these requirements, the Company
established a three year line of credit with The Northern Trust
Company in the amount of $37.4 million. If the Company were
required to purchase all or a part of the aforementioned
adjustable-rate bonds, the Company could draw on the line of credit
to fund such purchase or purchases.
8. POSTEMPLOYMENT BENEFITS
In November 1992, the Financial Accounting Standards Board
(FASB) issued SFAS No. 112, "Employers' Accounting for
Postemployment Benefits." This statement requires the accrual of
certain benefits provided to former or inactive employees after
employment but before retirement. The Company adopted SFAS No. 112
effective October 1, 1994. Implementation of this statement did
not have a material effect on financial position or results of
operations.
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
RESULTS OF OPERATIONS
Net Income
Net income applicable to common stock increased $1.8 million, to
$3.8 million, for the three-months ended June 30, 1995, from the
results of last year's similar quarter. The current three-month
period benefited from higher natural gas deliveries, partly due to
increased fuel usage during this year's cooler springtime weather.
Also favorably impacting the current three-month period was the
recognition of a portion of the previously announced federal income
tax settlement. (See Note 6 of the Notes to Consolidated Financial
Statements.) These benefits were partially offset by higher
operating costs and interest expense.
Net income applicable to common stock decreased $12.9 million,
to $65.0 million, for the current nine-month period, due mainly to
a decline in natural gas deliveries resulting from weather that was
13 percent warmer than in the year-ago period. Results for the
current nine-month period were also hindered by higher depreciation
and interest expense, partially offset by the sale of certain oil
and gas rights.
Net income applicable to common stock decreased $14.8 million,
to $50.9 million, for the current 12-month period, due mainly to a
decline in natural gas deliveries resulting from weather that was
14 percent warmer than the respective prior period. Results for
the current 12-month period were also adversely affected by
increased operating costs and interest expense, partially offset by
the sale of oil and gas rights, along with an increase in interest
income.
<TABLE>
A summary of variations affecting income between periods is
presented below, with explanations of significant differences
following:
<CAPTION>
Three Months Ended Nine Months Ended 12 Months Ended
June 30, 1995 June 30, 1995 June 30, 1995
Increase/(Decrease) Increase/(Decrease) Increase/(Decrease)
from Prior Period from Prior Period from Prior Period
------------------- ------------------- -------------------
(Thousands of dollars) Amount % Amount % Amount %
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net operating revenues (a) $5,204 6.4 ($14,897) (4.1) $(16,321) (3.9)
Operation and
maintenance expenses 1,581 3.0 (11,192) (6.6) (7,144) (3.1)
Depreciation expense (592) (4.0) 1,087 2.5 1,591 2.8
Income taxes 914 2,769.7 (4,850) (11.8) (8,430) (27.2)
Other income 1,060 47.3 (8,139) (54.8) (6,343) (40.6)
Income deductions 1,806 17.6 3,954 12.7 5,172 12.8
Net Income Applicable
to Common Stock 1,840 93.0 (12,912) (16.6) (14,815) (22.5)
--------------------------------------------------------------------------------------------
<FN>
(a) Operating revenues, net of gas costs and revenue taxes.
</TABLE>
Net Operating Revenues
Gross revenues of the Company are affected by changes in the
unit cost of the Company's gas purchases and do not include the
cost of gas supplies for customers who purchase gas directly from
producers and marketers rather than from the Company. The direct
customer purchases have no effect on net income because the Company
provides transportation service for such gas volumes and recovers
margins similar to those applicable to conventional gas sales.
Changes in the unit cost of gas do not significantly affect net
income because the Company's tariffs provide for dollar-for-dollar
recovery of gas costs. (See Note 2E of the Notes to Consolidated
Financial Statements.) The Company's tariffs also provide for
dollar-for-dollar recovery of the cost of revenue taxes imposed by
the State and City.
Since income is not significantly affected by changes in revenue
from customers' gas purchases from producers or marketers rather
than from the Company, changes in gas costs, or changes in revenue
taxes, the discussion below pertains to "net operating revenues"
(operating revenues, net of gas costs and revenue taxes). The
Company considers net operating revenues to be a more pertinent
measure of operating results than gross revenues.
Net operating revenues increased $5.2 million, to $86.5 million,
for the current three-month period, due mainly to higher gas
deliveries reflecting colder weather than the year-ago period.
Net operating revenues decreased $14.9 million, to $347.8
million, and $16.3 million, to $407.6 million, for the nine- and
12-month periods, respectively, primarily reflecting warmer weather
than in the similar year-ago periods, partially offset by increased
other gas deliveries.
See Other Matters - Operating Statistics for details of selected
financial and operating information by gas service classification.
Operation and Maintenance Expenses
Operation and maintenance expenses increased $1.6 million, to
$53.6 million, in the current three-month period due primarily to
increased costs associated with the following items: distribution
system ($919,000), group insurance expenses ($534,000), rental
expenses ($485,000), reengineering expenses ($424,000), and
contractor maintenance at the underground storage plant ($341,000).
These increases were partially offset by recognizing about $2.1
million for the current period's portion of the balance of the IRS
settlement. (See Note 6 of the Notes to Consolidated Financial
Statements.)
Operation and maintenance expenses decreased $11.2 million, to
$159.2 million, in the current nine-month period due principally to
recognizing approximately $11.6 million for the aforementioned IRS
settlement. Also affecting the current period were a reduction in
the provision for uncollectible accounts ($2.8 million) reflecting
lower sales due to weather partially offset by an increase in the
provision rate, a decline in pension expenses ($518,000)
principally reflecting a change in discount rate, and lower group
insurance expenses ($434,000) related to SFAS No. 106 costs.
Partially offsetting these decreases were increased expenses for
the distribution system ($1.8 million) and underground storage
plant ($1.2 million), an increase in the provision for injuries and
damages ($1.2 million), and incurred reengineering expenses
($917,000).
Operation and maintenance expenses decreased $7.1 million, to
$219.7 million, in the current 12-month period due mainly to
recognizing approximately $11.6 million for the aforementioned IRS
settlement. Additionally, a decline in pension expenses ($1.2
million) and lower group insurance expenses ($569,000) impacted the
current period. These items were partially offset by an increase
in the provision for uncollectible accounts ($3.6 million), which
includes a $3.7 million increase to adjust the balance sheet allowance,
increased expenses for the distribution system ($1.4 million) and
underground storage plant ($1.7 million), and incurred reengineering
expenses ($918,000).
Depreciation Expense
Depreciation expense decreased $592,000, to $14.3 million, for
the current three-month period, due principally to an adjustment
for net dismantling costs.
Depreciation expense increased $1.1 million, to $44.1 million,
and $1.6 million, to $58.9 million, for the current nine- and
12-month periods, respectively, due primarily to depreciable
property additions.
Income Taxes
Income taxes increased $914,000, to $947,000, in the current
three-month period, due principally to higher pre-tax income.
Income taxes, exclusive of amounts included in other income
related to an IRS settlement, declined $4.9 million, to $36.4
million, and $8.4 million, to $22.6 million, in the current nine-
and 12-month periods, due principally to lower pre-tax income.
Other Income
Other income increased $1.1 million, to $3.3 million, for the
current three-month period, due primarily to higher interest income
($1.9 million) reflecting larger cash balances available for
investment. This increase was partially offset by reduced interest
income ($470,000) from the proceeds being held in a trust fund
generated from the Company's December 1993 bond issuance and lower
interest ($495,000) on amounts recoverable from customers.
Other income declined $8.1 million, to $6.7 million, and $6.3
million, to $9.3 million, for the current nine-, and 12-month
periods, due mainly to the recognition of the IRS settlement of
$9.6 million after income taxes (see Note 6 of the Notes to
Consolidated Financial Statements) in the prior periods and by
reduced interest ($1.7 million, and $1.6 million, respectively) on
amounts recoverable from customers. This decrease was partially
offset by higher interest income ($3.7 million, and $4.9 million,
respectively) reflecting larger cash balances available for
investment.
Income Deductions
Income deductions increased $1.8 million, to $12.1 million, $4.0
million, to $35.1 million, and $5.2 million, to $45.4 million, for
the current three-, nine-, and 12-month periods, respectively, due
chiefly to increased interest expense on the following items:
long-term debt, amounts refundable to customers, and budget
accounts. These increased items were partially offset by decreased
interest on short-term borrowings in the current nine- and 12-month
periods.
Other Matters
Effect of Weather. Weather variations affect the volumes of gas
delivered for heating purposes and, therefore, can have a
significant positive or negative impact on net income and coverage
ratios.
FERC Order 636 Costs. In 1992, the FERC issued Order No. 636 and
successor orders that required substantial restructuring of the
service obligations of interstate pipelines. (See Notes 2E, 3A,
and 3B of the Notes to Consolidated Financial Statements.)
On September 15, 1993, the Commission entered an order
initiating an investigation into the appropriate means of recovery
by Illinois gas utilities of pipeline charges for FERC Order No.
636 transition costs. The Commission issued its orders on
rehearing in this proceeding in September 1994. (See Notes 2E, 3A,
and 3B of the Notes to Consolidated Financial Statements.)
Postemployment Benefits. In November 1992, the FASB issued SFAS
No. 112. This statement requires the accrual of certain benefits
provided to former or inactive employees after employment but
before retirement. SFAS No. 112 required adoption by the Company
no later than fiscal 1995. (See Note 8 of the Notes to
Consolidated Financial Statements.)
Reengineering Study. The Company is undertaking a major project to
reengineer its business processes with the goal of increasing
efficiency, responsiveness to customer needs, and cost
effectiveness. The project commenced in September 1994 and is
expected to continue for at least two years.
<TABLE>
Operating Statistics. The following table represents gas
distribution margin components:
<CAPTION>
Three Months Ended Nine Months Ended Twelve Months Ended
June 30, June 30, June 30,
------------------ ----------------- -------------------
1995 1994 1995 1994 1995 1994
-------- --------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues (thousands):
Gas sales
Residential $116,146 $131,658 $578,913 $ 747,692 $651,604 $ 833,453
Commercial 17,091 19,978 92,275 128,792 102,562 141,160
Industrial 3,672 5,113 19,205 33,367 21,425 35,978
-------- -------- -------- ---------- -------- ----------
136,909 156,749 690,393 909,851 775,591 1,010,591
-------- -------- -------- ---------- -------- ----------
Transportation
Residential 7,599 6,666 31,884 29,701 36,520 34,470
Commercial 8,726 7,452 37,524 34,070 43,224 39,613
Industrial 6,697 5,263 23,524 19,853 28,507 24,773
-------- -------- -------- ---------- -------- ----------
23,022 19,381 92,932 83,624 108,251 98,856
-------- -------- -------- ---------- -------- ----------
Other 3,794 5,034 15,227 13,132 19,276 17,100
-------- -------- -------- ---------- -------- ----------
Total Operating Revenues 163,725 181,164 798,552 1,006,607 903,118 1,126,547
Gas Costs (58,260) (79,344) (360,990) (532,602) (395,290) (578,999)
Revenues Taxes (19,015) (20,574) (89,786) (111,332) (100,227) (123,626)
-------- -------- -------- ---------- -------- ----------
Net Operating Revenues $ 86,450 $ 81,246 $347,776 $ 362,673 $407,601 $ 423,922
======== ======== ======== ========== ======== ==========
Deliveries (MMcf):
Sales
Residential 19,511 17,190 102,731 114,925 110,454 123,952
Commercial 3,378 3,038 17,552 21,042 19,075 22,734
Industrial 851 903 3,992 5,889 4,423 6,294
-------- --------- -------- ---------- -------- ----------
23,740 21,131 124,275 141,856 133,952 152,980
-------- --------- -------- ---------- -------- ----------
Transportation
Residential 4,558 3,979 22,000 22,398 24,088 24,597
Commercial 6,742 6,079 31,514 31,851 36,007 36,124
Industrial 7,340 6,089 25,968 23,481 31,716 28,767
-------- --------- -------- ---------- -------- ----------
18,640 16,147 79,482 77,730 91,811 89,488
-------- --------- -------- ---------- -------- ----------
Total Sales
and Transportation 42,380 37,278 203,757 219,586 225,763 242,468
======== ========= ======== ========== ======== ==========
Margin per Mcf
delivered $2.04 $2.18 $1.71 $1.65 $1.81 $1.75
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
Regulatory Actions. On September 30, 1992, the Commission issued
an order in its consolidated proceedings, initiated in March 1991,
regarding the appropriate ratemaking treatment of environmental
costs relating to past manufactured gas operations incurred by
Illinois utilities, including the Company and North Shore Gas. In
its order, the Commission approved rate recovery of such
environmental costs but required that the recovery occur over a
five-year period without recovery of carrying charges on
unrecovered balances. The part of the Commission's order that
disallowed recovery of carrying charges on unrecovered balances has
been reversed on appeal by the Illinois Supreme Court, which has
remanded the case to the Commission. (See Note 3A of the Notes to
Consolidated Financial Statements.)
The Company filed proposed changes in rates with the Commission
in December 1994. (See Note 3A of the Notes to Consolidated
Financial Statements.)
Environmental Matters. The Company is conducting environmental
investigations and work at certain sites that were the location of
former manufactured gas operations. (See Note 4 of the Notes to
Consolidated Financial Statements.)
Over-pressure Condition. On January 17, 1992, an over-pressure
condition occurred in the gas mains of the Company serving an
approximately one-square-mile area of the Near Northwest Side of
the City of Chicago. The over-pressure condition caused a major
explosion and numerous fires. Four deaths, 14 personal injuries,
and extensive property damage allegedly resulted from the explosion
and fires. (See Note 5 of the Notes to Consolidated Financial
Statements.)
Bonds Issued. On June 29, 1995, the City of Chicago issued $50
million aggregate principal amount of 6.10 percent gas supply
refunding revenue bonds, 1995 Series A, which were collateralized
by an equal amount of the Company's 30-year first mortgage bonds.
On August 1, 1995, the proceeds were used to redeem $50 million
aggregate principal amount of previously issued gas supply revenue
bonds. Other funds provided by the Company will be used for the
payment of expenses of issuance, including the underwriters' fee.
(See Note 7A of the Notes to Consolidated Financial Statements.)
Additional bonds are issuable by the Company, upon approval by
the Commission, subject to limitations imposed by certain
restrictive provisions of the Company's open-end mortgages and
supplements thereto. These restrictions are not expected to have
an impact on the Company's ability to issue additional debt, as
needed.
Credit Lines. On July 1, 1994, the Company reduced its lines of
credit to approximately $131 million from $154 million of which
North Shore Gas may borrow up to $30 million. Agreements covering
$93.7 million of the total will expire on June 26, 1996. The
agreement covering the remaining $37.4 million will expire on
January 31, 1997. Such lines of credit cover projected short-term
credit needs of the Company and North Shore Gas and support the
long-term debt treatment of the Company's adjustable-rate mortgage
bonds. (See Note 7B of the Notes to Consolidated Financial
Statements.)
Interest Coverage. The Company's fixed charges coverage ratios for
the 12-months ended June 30, 1995, and for fiscal 1994 and 1993
were 2.62, 3.28, and 3.57, respectively. The decrease in the
ratio for the current 12-months ended primarily reflects lower
pre-tax income. (See Results of Operations - Net Income.)
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
See Note 4 of the Notes to Consolidated Financial Statements for
a discussion pertaining to environmental matters.
See Note 5 of the Notes to Consolidated Financial Statements for
a discussion of an over-pressure condition that occurred on January
17, 1992, in the Company's gas mains on the Near Northwest Side of
the City of Chicago.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit
Number Description of Document
--------- ---------------------------------------------
27 Financial Data Schedule
b. Reports on Form 8-K filed during the quarter ended June
30, 1995
None.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
The Peoples Gas Light and Coke Company
--------------------------------------
(Registrant)
August 10, 1995 By: /s/ K. S. BALASKOVITS
----------------------- ---------------------------------
(Date) K. S. Balaskovits
Vice President and Controller
(Same as above)
--------------------------------
Principal Accounting Officer
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CONSOLIDATED STATEMENTS OF INCOME, CONSOLIDATED BALANCE SHEETS,
CONSOLIDATED STATEMENTS OF CASH FLOWS, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> JUN-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,176,451
<OTHER-PROPERTY-AND-INVEST> 5,718
<TOTAL-CURRENT-ASSETS> 447,276
<TOTAL-DEFERRED-CHARGES> 36,758
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,666,203
<COMMON> 165,307
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 388,518
<TOTAL-COMMON-STOCKHOLDERS-EQ> 553,825
0
0
<LONG-TERM-DEBT-NET> 549,150
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 50,000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 513,228
<TOT-CAPITALIZATION-AND-LIAB> 1,666,203
<GROSS-OPERATING-REVENUE> 798,552
<INCOME-TAX-EXPENSE> 36,403
<OTHER-OPERATING-EXPENSES> 668,705
<TOTAL-OPERATING-EXPENSES> 705,108
<OPERATING-INCOME-LOSS> 93,444
<OTHER-INCOME-NET> 6,038
<INCOME-BEFORE-INTEREST-EXPEN> 99,482
<TOTAL-INTEREST-EXPENSE> 34,445
<NET-INCOME> 65,037
0
<EARNINGS-AVAILABLE-FOR-COMM> 65,037
<COMMON-STOCK-DIVIDENDS> 42,190
<TOTAL-INTEREST-ON-BONDS> 29,864
<CASH-FLOW-OPERATIONS> 224,347
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
