-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, iEX86GEZg5Pmwc/iUODvBbiMX8X1yvE55vYbDqFJSKhZLz3G5xeV0qAbaeGMY2YK SkjlLoVZ4K68JaGk5mAiKw== 0000950123-95-001322.txt : 19950512 0000950123-95-001322.hdr.sgml : 19950512 ACCESSION NUMBER: 0000950123-95-001322 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950511 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LONG ISLAND LIGHTING CO CENTRAL INDEX KEY: 0000060251 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 111019782 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03571 FILM NUMBER: 95536735 BUSINESS ADDRESS: STREET 1: 175 E OLD COUNTRY RD CITY: HICKSVILLE STATE: NY ZIP: 11801 BUSINESS PHONE: 5169334590 10-Q 1 FORM 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1995 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 1-3571 LONG ISLAND LIGHTING COMPANY Incorporated pursuant to the Laws of New York State Internal Revenue Service - Employer Identification Number 11-1019782 175 East Old Country Road, Hicksville, New York 11801 (516) 545-4590 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- The total number of shares of the registrant's Common Stock, $5 par value, outstanding on April 30, 1995, was 119,044,385. 2 LONG ISLAND LIGHTING COMPANY
PAGE NO. -------- PART I - FINANCIAL INFORMATION Item 1. Financial Statements Statement of Income 3 Balance Sheet 4 Statement of Cash Flows 6 Notes to Financial Statements 7 Item 2. Management's Discussion and 10 Analysis of Financial Condition and Results of Operations PART II - OTHER INFORMATION Item 1. Legal Proceedings 17 Item 2. Changes in Securities 17 Item 3. Defaults Upon Senior Securities 17 Item 4. Submission of Matters to a Vote 17 of Security Holders Item 5. Other Information 17 Item 6. Exhibits and Reports on Form 8-K 17 Signature 19
- 2 - 3 LONG ISLAND LIGHTING COMPANY STATEMENT OF INCOME (UNAUDITED) (Thousands of Dollars - except per share amounts)
THREE MONTHS ENDED MARCH 31 -------- -------- 1995 1994 -------- -------- REVENUES Electric $545,887 $587,266 Gas 245,301 284,877 -------- -------- Total Revenues 791,188 872,143 -------- -------- EXPENSES Operations - fuel and purchased power 256,695 298,920 Operations - other 96,010 114,053 Maintenance 34,256 27,858 Depreciation and amortization 35,634 31,681 Base financial component amortization 25,243 25,243 Rate moderation component amortization 11,487 48,627 Regulatory liability component amortization (22,143) (22,143) Other regulatory amortization 13,659 10,014 Operating taxes 111,607 109,640 Federal income tax - current 2,613 2,341 Federal income tax - deferred and other 45,252 42,044 -------- -------- Total Expenses 610,313 688,278 -------- -------- Operating Income 180,875 183,865 -------- -------- Other Income and (Deductions) Rate moderation component carrying charges 6,842 8,979 Class Settlement (5,467) (5,701) Other income 3,504 9,496 Allowance for other funds used during construction 714 717 Federal income tax credit - deferred and other 2,209 915 -------- -------- Total Other Income and (Deductions) 7,802 14,406 -------- -------- Income Before Interest Charges 188,677 198,271 -------- -------- Interest Charges and (Credits) Interest on long-term debt 103,060 112,779 Other interest 16,344 17,075 Allowance for borrowed funds used during construction (1,026) (1,203) -------- -------- Total Interest Charges and (Credits) 118,378 128,651 -------- -------- Net Income 70,299 69,620 Preferred stock dividend requirements 13,172 13,272 -------- -------- Earnings for Common Stock $57,127 $56,348 ======== ======== Average Common Shares Outstanding (000) 118,712 112,536 Earnings per Common Share $0.48 $0.50 Dividends Declared per Common Share $0.445 $0.445
See Notes to Financial Statements. - 3 - 4 LONG ISLAND LIGHTING COMPANY BALANCE SHEET (Thousands of Dollars)
March 31 December 31 1995 1994 (unaudited) (audited) ----------- ----------- ASSETS UTILITY PLANT Electric $ 3,694,611 $ 3,657,178 Gas 1,025,030 994,742 Common 233,935 232,346 Construction work in progress 93,232 129,824 Nuclear fuel in process and in reactor 25,127 23,251 ----------- ----------- 5,071,935 5,037,341 ----------- ----------- Less - Accumulated depreciation and amortization 1,570,064 1,538,995 ----------- ----------- Total Net Utility Plant 3,501,871 3,498,346 ----------- ----------- REGULATORY ASSETS Base financial component (less accumulated amortization of $580,582 and $555,340) 3,458,248 3,483,490 Rate moderation component 460,728 463,229 Shoreham post settlement costs 940,230 922,580 Shoreham nuclear fuel 72,839 73,371 Postretirement benefits other than pensions 404,625 412,727 Regulatory tax asset 1,826,010 1,831,689 Other 333,910 354,524 ----------- ----------- Total Regulatory Assets 7,496,590 7,541,610 ----------- ----------- Nonutility Property and Other Investments 24,617 24,043 ----------- ----------- CURRENT ASSETS Cash and cash equivalents 223,750 185,451 Special deposits 28,868 27,614 Customer accounts receivable (less allowance for doubtful accounts of $19,918 and $23,365) 279,525 245,125 Other accounts receivable 12,858 14,030 Accrued unbilled revenues 149,672 164,379 Materials and supplies at average cost 71,048 74,777 Fuel oil at average cost 32,065 37,723 Gas in storage at average cost 17,120 68,447 Prepayments and other current assets 33,633 33,878 ----------- ----------- Total Current Assets 848,539 851,424 ----------- ----------- DEFERRED CHARGES Deferred federal income tax 920,836 951,766 Unamortized cost of issuing securities 302,948 313,207 Other 40,487 36,284 ----------- ----------- Total Deferred Charges 1,264,271 1,301,257 ----------- ----------- Total Assets $13,135,888 $13,216,680 =========== ===========
See Notes to Financial Statements. - 4 - 5 LONG ISLAND LIGHTING COMPANY BALANCE SHEET (Thousands of Dollars)
March 31 December 31 CAPITALIZATION AND LIABILITIES 1995 1994 (unaudited) (audited) ----------- ----------- CAPITALIZATION Long-term debt $ 5,122,675 $ 5,162,675 Unamortized discount on debt (16,974) (17,278) ----------- ----------- 5,105,701 5,145,397 ----------- ----------- Preferred stock - redemption required 644,350 644,350 Preferred stock - no redemption required 63,951 63,957 ----------- ----------- Total Preferred Stock 708,301 708,307 ----------- ----------- Common stock 593,632 592,083 Premium on capital stock 1,104,316 1,101,240 Capital stock expense (51,755) (52,175) Retained earnings 756,783 752,480 ----------- ----------- Total Common Shareowners' Equity 2,402,976 2,393,628 ----------- ----------- Total Capitalization 8,216,978 8,247,332 ----------- ----------- REGULATORY LIABILITIES Regulatory liability component 337,277 357,117 1989 Settlement credits 143,565 145,868 Regulatory tax liability 115,032 111,218 Other 147,241 143,611 ----------- ----------- Total Regulatory Liabilities 743,115 757,814 ----------- ----------- CURRENT LIABILITIES Current maturities of long-term debt 65,000 25,000 Current redemption requirements of preferred stock 4,800 4,800 Accounts payable and accrued expenses 197,197 241,775 Accrued taxes (including federal income tax of $30,953 and $28,340) 34,761 58,133 Accrued interest 145,184 149,929 Dividends payable 57,496 57,367 Class Settlement 38,333 35,833 Customer deposits 28,658 28,474 ----------- ----------- Total Current Liabilities 571,429 601,311 ----------- ----------- DEFERRED CREDITS Deferred federal income tax 2,944,376 2,941,793 Class Settlement 147,798 151,604 Other 12,393 13,204 ----------- ----------- Total Deferred Credits 3,104,567 3,106,601 ----------- ----------- OPERATING RESERVES Pension and other postretirements benefits 448,619 453,016 Claims and damages 51,180 50,606 ----------- ----------- Total Operating Reserves 499,799 503,622 ----------- ----------- COMMITMENTS AND CONTINGENCIES - - ----------- ----------- TOTAL CAPITALIZATION AND LIABILITIES $13,135,888 $13,216,680 =========== ===========
See notes to Financial Statements. - 5 - 6 LONG ISLAND LIGHTING COMPANY STATEMENT OF CASH FLOWS (UNAUDITED) (Thousands of Dollars)
THREE MONTHS ENDED MARCH 31 -------- -------- 1995 1994 -------- -------- Operating Activities Net Income $70,299 $69,620 ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Provision for doubtful accounts 4,701 5,282 Depreciation and amortization 35,634 31,681 Base financial component amortization 25,243 25,243 Rate moderation component amortization 11,487 48,627 Regulatory liability component amortization (22,143) (22,143) Other regulatory amortization 13,659 10,014 Rate moderation component carrying charges (6,842) (8,979) Class Settlement 5,467 5,701 Amortization of cost of issuing and redeeming securities 10,366 12,795 Federal income taxes - deferred and other 43,043 41,129 Allowance for other funds used during construction (714) (717) Gas Cost Adjustment 12,750 14,977 Other 10,438 799 CHANGES IN OPERATING ASSETS AND LIABILITIES Accounts receivable (37,929) (77,987) Class Settlement (6,773) (7,132) Accrued unbilled revenues 14,707 (1,262) Materials and supplies, fuel oil and gas in storage 60,714 44,200 Prepayments and other current assets 245 506 Accounts payable and accrued expenses (44,577) (80,356) Accrued taxes (23,372) (14,135) Other (14,436) 12,521 -------- -------- Net Cash Provided by Operating Activities 161,967 110,384 -------- -------- INVESTING ACTIVITIES Construction and nuclear fuel expenditures (37,549) (12,434) Shoreham post settlement costs (24,335) (45,721) Other (717) (783) -------- -------- Net Cash Used in Investing Activities (62,601) (58,938) -------- -------- FINANCING ACTIVITIES Proceeds from sale of common stock 4,619 4,877 Preferred stock dividends paid (13,232) (13,133) Common stock dividends paid (52,636) (49,988) Cost of issuing and redeeming securities (10) Other 182 211 -------- -------- Net Cash Used in Financing Activities (61,067) (58,043) -------- -------- Net Increase (Decrease) in Cash and Cash Equivalents $38,299 ($6,597) ======== ======== Cash and cash equivalents at beginning of period $185,451 $248,532 Net increase (decrease) in cash and cash equivalents 38,299 (6,597) -------- -------- Cash and Cash Equivalents at end of period $223,750 $241,935 ======== ======== SUPPLEMENTARY INFORMATION Interest Paid, before reduction for the allowance for borrowed funds used during construction $113,672 $111,133 Federal income taxes - paid -- -- Federal income taxes - refunded -- --
See Notes to Financial Statements. - 6 - 7 NOTES TO FINANCIAL STATEMENTS FOR THE QUARTER ENDED MARCH 31, 1995 (UNAUDITED) These Notes to Financial Statements reflect events subsequent to February 3, 1995, the date of the most recent Report of Independent Auditors, through the date of this Quarterly Report on Form 10-Q for the quarter ended March 31, 1995. These Notes to Financial Statements should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations for the three months ended March 31, 1995, Part II, Item 6 of this report entitled, Reports on Form 8-K and the Notes to Financial Statements contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1994, incorporated herein by reference. The financial statements furnished are unaudited. However, in the opinion of management, the financial statements include all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the interim period presented. Operating results for this interim period are not necessarily indicative of results to be expected for the entire year, due to the seasonal nature of the Company's electric and gas businesses. Certain prior year amounts have been reclassified to be consistent with current year presentation. - 7 - 8 Note 1. RATE MATTERS In December 1993, the Company filed a three-year electric rate plan (Plan), which the Public Service Commission of the State of New York (PSC) responded to through two Open Session discussions resulting in an Order Directing Changes in Rate Design (Short Order). The PSC is expected to issue a detailed opinion and order on the Plan in late May 1995. The Open Session discussions and the Short Order provided, among other things: that the Company's current electric rates shall remain in effect for the first rate year of the Plan which began on December 1, 1994; that the Company begin collection of previously deferred revenues provided for under the Lilco Ratemaking and Performance Plan (LRPP); that the LRPP mechanisms remain in effect with certain modifications; that the Company's expenditures for certain PSC mandated activities, such as energy conservation and research and development, be reduced; and that the rate proceeding be continued to determine the appropriate level of rates for future years of the Plan, in order to, among other things, provide for the continuing recovery of the Shoreham-related assets. The PSC stated in its short order that its decision to continue the rate proceeding reaffirms their commitment to allow the Company to recover its Shoreham-related assets, which the PSC also stated is a crucial factor in the Company's ability to maintain its investment grade bond rating and to secure reasonably priced capital. The continuation of the rate proceeding would also enable the PSC to consider the Company's operations and its opportunities for greater efficiency over the next several years. Toward this end, the PSC encouraged the parties to this proceeding to negotiate a multi-year electric rate settlement, with the goal of stabilizing and possibly reducing rates in a manner consistent with the full recovery of the Shoreham-related assets. At the PSC Open Sessions, the PSC modified three LRPP performance incentive programs for the rate year beginning December 1, 1994, including the demand side management program, the customer service performance program and the transmission & distribution reliability program. Based upon discussions at the PSC's Open Sessions, the Company believes that it may be subject to penalty for poor performance under these programs and that it would not be entitled to earn, on an aggregate basis, any incentive rate of return under these programs. Before modification of these programs, the Company could have earned up to 38 basis points, or forfeit up to 16 basis points, of the allowed return on common equity. It is not yet known what revisions will be made to the partial pass through fuel incentive program. Under the previous program, the Company could have earned or forfeited up to 20 basis points of the allowed return on common equity. For the quarter ended March 31, 1995, the Company's electric rate structure reflects an allowed return on common equity of 11.0%, as requested by the Company in the three-year electric rate plan and agreed to by the PSC in their recent Open Session - 8 - 9 discussions. In addition, the Company has not recognized any income or loss related to the incentive programs because the particulars will not be known until the detailed opinion and order is issued by the PSC. For the same 1994 period, the Company recognized approximately $4.6 million of income, net of tax effects, or $.04 per common share, related to the incentive programs. - 9 - 10 MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS EARNINGS Earnings for common stock for the three months ended March 31, 1995 were $57.1 million or $.48 per common share. This compares with $56.3 million or $.50 per share for the same period last year. The decrease in earnings per share is the result of lower electric earnings due to the recent actions of the Public Service Commission of the State of New York (PSC) which provided for a lower return on common equity for the Company's electric business and eliminated certain performance incentives. This decline was partially offset by increased earnings in the gas business. Gas business earnings increased for the three months ended March 31, 1995, when compared to the same period in the prior year despite an unusually warm heating season which resulted in lower than anticipated sales. The lower sales volumes had a limited impact on earnings due to the weather normalization mechanism contained in the Company's gas rate structure, which reduces the impact on earnings of experiencing weather which is warmer or colder than "normal." The increase in gas earnings is primarily the result of lower operations and maintenance expenses derived in part from the Company's continuing cost containment measures. Although earnings cannot be predicted with certainty, the Company anticipates that the effects of the PSC's electric rate decision will cause a reduction in 1995 earnings to a level below that reported in 1994. While no assurances can be given, the Company will attempt to mitigate the effect on earnings by continuing to maximize operating efficiencies wherever possible. REVENUES Total revenues for the three months ended March 31, 1995 were $791.2 million, representing a decrease of $81.0 million over total revenues for the three months ended March 31, 1994. Electric revenues decreased by $41.4 million and gas revenues decreased by $39.6 million when compared to the same period in 1994. The decrease in electric revenues during the quarter ended March 31, 1995, when compared to the same period in 1994, was primarily due to lower sales volumes caused by the unusually warm weather experienced during the heating season and a refinement in the Company's procedure for estimating the accrual of electric revenues, which was implemented January 1, 1995. The lower sales volumes and the refinement for estimating the accrual of electric revenues had no effect on quarterly earnings and will have no - 10 - 11 effect on 1995 earnings due to the Company's current electric rate structure which provides for a revenue reconciliation that eliminates the impact of actual sales that are above or below adjudicated levels. The decrease in gas revenues for the three months ended March 31, 1995, compared with the same period in 1994, is primarily the result of lower sales volumes accompanied by lower fuel expense recoveries caused by the unusually warm heating season. Partially offsetting this decrease was a rate increase of 3.8% effective December 1, 1994 and the addition of approximately 7,000 gas space heating customers over the twelve month period ended March 31, 1994. FUELS AND PURCHASED POWER Fuels and purchased power expenses for the three months ended March 31, 1995 and 1994 were as follows:
Three Months Ended 3/31/95 3/31/94 ------- ------- (In Millions) ELECTRIC SYSTEM Oil $ 37 $ 57 Gas 27 11 Nuclear 4 3 Purchased Power 75 76 ---- ---- Total Electric Fuel Costs 143 147 GAS SYSTEM 114 152 ---- ---- Total $257 $299 ==== ====
The mix of fuels and purchased power to satisfy the Company's electric system energy requirements during the three months ended March 31, 1995 and 1994 were as follows:
Three Months Ended 3/31/95 3/31/94 ------- ------- Oil 27% 40% Gas 24 8 Nuclear 8 8 Purchases 41 44 ---- ---- Total 100% 100% ==== ====
For the three months ended March 31, 1995, electric fuel costs were lower, when compared to the same period last year, as a result of lower sales volumes coupled with lower per unit generation costs, partially offset by an increase in the per unit cost of purchased power. The use of gas fuel for electric generation increased sharply as the cost of producing electricity with natural gas became more economical than the cost of purchasing power. The per unit cost of purchased power increased - 11 - 12 as a result of extended outages for certain upstate nuclear generating facilities which ordinarily supply energy at more economical rates. Gas fuel costs for operating the gas system decreased for the three months ended March 31, 1995, when compared to the same period last year, as a result of lower firm sales volumes due to warmer weather conditions and lower gas prices. OPERATIONS AND MAINTENANCE EXPENSES Operations and maintenance (O&M) expenses, excluding fuel and purchased power, amounted to $130.3 million for the three months ended March 31, 1995, compared to $141.9 million for the comparable three month period in 1994. The decrease in O&M for the three months ended March 31, 1995, when compared to same period of 1994, was principally due to the continuation of the Company's cost containment program and the recognition of $6.6 million in 1994 of previously deferred storm costs associated with gas operations. Had the actions of the PSC, as discussed in Note 1 of the accompanying Notes to Financial Statements, been implemented as of December 1, 1994, the Company estimates that O&M expenses for the quarter ended March 31, 1995, would have increased by approximately $3.5 million, representing the phase in of certain Other Post Retirement Benefit costs and increased extraordinary storm reserves. These transactions would have been offset by an adjustment to the amortization of the RMC and would have had no impact on income. It is anticipated that the amortization of these items and the corresponding adjustment to the RMC will be recorded in the second quarter of 1995, when the detailed opinion and order is received from the PSC. RATE MODERATION COMPONENT For the three months ended March 31, 1995 and 1994, the Company recorded non- cash charges to income of approximately $11.5 million and $48.6 million, respectively, representing the amortization of the RMC. The RMC primarily reflects the difference between the Company's revenue requirements under conventional ratemaking and revenues resulting from the implementation of the Rate Moderation Agreement and subsequent rate case decisions. OTHER REGULATORY AMORTIZATION For the quarters ended March 31, 1995, and 1994, other regulatory amortization was a non-cash charge to income of $13.7 million and $10.0, million respectively. Included in other regulatory amortization is the effect of an electric ratemaking mechanism which provides for a revenue reconciliation (net margin) to eliminate the impact on earnings - 12 - 13 of experiencing sales that are above or below adjudicated levels. As a result of actual sales for the quarter ended March 31, 1995, being higher than sales levels originally expected to be adopted by the PSC in the detailed opinion and order expected in late May 1995, the Company recorded a non-cash charge to income of approximately $7.6 million. This net margin expense, combined with the $6.7 million amortization of Shoreham post settlement costs, partially offset by a $2.1 million electric excess earnings adjustment related to 1994, constitutes the major portion of this amortization. For the quarter ended March 31, 1994, the Company recorded non-cash income of $10.6 million related to the net margin, as actual sales were below the adjudicated level. Offsetting the non-cash income was non-cash charges of $5.4 million of Shoreham post settlement cost amortizations, $7.3 million related to the recognition of gas excess earnings and $8.0 million of amortizations related to the 1992 Lilco Ratemaking and Performance Plan (LRPP) as more fully discussed in Note 3 of Notes to Financial Statements included in the Form 10-K for the year ended December 31, 1994. For the quarter ended March 31, 1995, there were no excess gas earnings. In addition, upon the full collection of the 1992 LRPP deferred balances in August 1994, the PSC authorized the Company to continue its monthly collection of an amount equal to the 1992 LRPP deferrals through April 1995. The approximately $8 million collected for the quarter ended March 31, 1995, via the fuel adjustment clause, was applied to reduce the RMC balance and therefore was not included in other regulatory amortization. INTEREST EXPENSE For the quarter ended March 31, 1995, interest expense amounted to $118.4 million, representing a decrease of $10.5 million when compared to the same period in 1994. The decrease in interest expense is principally due to lower levels of debt and lower borrowing costs. The decrease in outstanding debt primarily resulted from the Company's use of cash from operations and the net proceeds from the issuance of common stock to satisfy a portion of maturing debt in 1994. The lower borrowing costs resulted from the Company's refinancing efforts in 1994 to replace high interest rate debt with lower cost debt. - 13 - 14 FINANCIAL CONDITION LIQUIDITY At March 31, 1995, the Company's cash and cash equivalents amounted to approximately $224 million, compared to $185 million at December 31, 1994. The Company also has available for its use a $300 million revolving line of credit through October 1, 1996, provided by its 1989 Revolving Credit Agreement (1989 RCA). At March 31, 1995, no amounts were outstanding under the 1989 RCA. This line of credit is secured by a first lien upon the Company's accounts receivable and fuel oil inventories. FINANCING PROGRAMS The Company has maturing debt of $25 million, $455 million and $286 million in 1995, 1996 and 1997 respectively. The Company plans to satisfy the $25 million of First Mortgage Bonds maturing in June 1995 with cash from operations. With respect to the 1996 and 1997 maturities, the Company intends to use cash generated from operations to the maximum extent practicable. Any balance necessary to satisfy the obligations is expected to be obtained from the issuance of debt and or equity securities. The New York State Energy Research and Development Authority (NYSERDA) has been authorized by New York State to sell, on behalf of the Company, $50 million of Electric Facilities Revenue Bonds for the construction of facilities for the furnishing of electric energy. The Company currently anticipates NYSERDA will sell these bonds in June 1995. - 14 - 15 CAPITAL REQUIREMENTS AND CAPITAL PROVIDED Capital requirements and capital provided for the three months ended March 31, 1995 were as follows:
Three Months Ended Capital Requirements March 31, 1995 - -------------------- ------------------ (In Millions of Dollars) Total Construction $ 38 ----- Preferred stock dividends 13 Common stock dividends 53 ----- Total Dividends 66 ----- Shoreham post settlement costs 24 ----- Total Capital Requirements $ 128 ===== Capital Provided Use of cash $ (38) Common stock issued 5 Other financing activities (1) Internal cash generation from operations 162 ----- Total Capital Provided $ 128
===== For further information, see the Statement of Cash Flows. - 15 - 16 RATE MATTERS For a discussion of Rate Matters, see Note 1 of the accompanying Notes to Financial Statements. - 16 - 17 PART II. OTHER INFORMATION Item 1. LEGAL PROCEEDINGS On May 4, 1995, the New York Court of Appeals denied the request of the Town of Brookhaven and other respondents for leave to appeal a 1992 decision by a Suffolk County Supreme Court that found that the Shoreham property was overvalued for property tax purposes between 1976 and 1983 (excluding 1979, which had been previously settled). (Long Island Lighting Company v. The Assessor of the Town of Brookhaven, et al.) The Supreme Court's decision had been previously affirmed in a unanimous decision by the New York State Appellate Division, Second Department. The overpayment of taxes, plus interest, is expected to be returned to the Company and such amount, excluding litigation costs, will be used to reduce electric rates in the future. The Company's refund will be approximately $38 million plus interest, resulting in a total expected refund in excess of $78 million. For the years to which this lawsuit relates (1976-1983, excluding 1979), the Company paid approximately $190 million in taxes on the plant. The Company is also seeking recovery for the overpayment of taxes for the years 1984 - 1992 in a separate trial which is now pending. ITEM 2. CHANGES IN SECURITIES None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION In accordance with the 1989 Settlement, the Company is required to reimburse the Long Island Power Authority (LIPA) for any of its costs associated with the decommissioning of Shoreham. Effective May 1, 1995, the Nuclear Regulatory Commission (NRC) terminated LIPA's possession-only license for Shoreham. The termination signifies the NRC's approval that decommissioning is complete and that the site is suitable for unrestricted use. - 17 - 18 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K A. EXHIBITS Financial Data Schedule (Exhibit 27). Computation of Ratio of Earnings to Fixed Charges filed as Exhibit 11.1. Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends Filed as Exhibit 11.2. B. REPORTS ON FORM 8-K In its Report on Form 8-K dated February 1, 1995, the Company reported earnings for the year ended December 31, 1994. No other reports on Form 8-K were filed in the first quarter of 1995. In its Report on Form 8-K dated April 20, 1995, the Company reported that the Public Service Commission of the State of New York had issued an Order Directing Changes in Rate Design respecting the Company's three-year electric rate plan filed in December 1993. In its Report on Form 8-K dated April 28, 1995, the Company reported earnings for the three months ended March 31, 1995. - 18 - 19 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. LONG ISLAND LIGHTING COMPANY (Registrant) By /s/ ANTHONY NOZZOLILLO ------------------------- ANTHONY NOZZOLILLO Senior Vice President and Chief Financial Officer Dated: May 11, 1995 - 19 - 20 EXHIBIT INDEX 11.1 - Computation of Ratio of Earnings to Fixed Charges 11.2 - Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends 27 - Financial Data Schedule EX-11.1 2 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES 1 Exhibit 11.1 LONG ISLAND LIGHTING COMPANY COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (In Thousands of Dollars)
Twelve Months For the Year Ended December 31, Ended -------------------------------------------------------------- March 31,1995 1994 1993 1992 1991 1990 ------------- ---- ---- ---- ---- ---- Net Income/(Loss) per Statement of Income $302,532 $301,852 $296,563 $301,974 $305,538 $319,637 a Less: Equity in earnings/loss of less than 50% owned subsidiary companies 131 89 77 93 85 83 Add: Distributed income of less than 50% owned subsidiary companies 117 117 58 87 58 58 -------- -------- ---------- -------- ---------- ---------- 302,518 301,880 296,544 301,968 305,511 319,612 Add: Federal income tax 178,898 176,712 172,276 160,962 181,653 183,281 Appropriate portion of rentals 4,701 4,295 4,552 3,504 2,751 2,343 Interest on long term-debt 428,032 437,751 466,538 450,621 472,974 467,700 Other interest and amortizations 61,711 62,433 67,582 62,165 50,881 40,610 -------- -------- ---------- -------- ---------- ---------- Net Income/(Loss) as adjusted $975,860 $983,071 $1,007,492 $979,220 $1,013,770 $1,013,546 a ======== ======== ========== ======== ========== ========== Fixed Charges: Appropriate portion of rentals $4,701 $4,295 $4,552 $3,504 $2,751 $2,343 Interest on long term-debt 428,032 437,751 466,538 450,621 472,974 467,700 Other interest and amortizations 61,711 62,433 67,582 62,165 50,881 40,610 -------- -------- ---------- -------- ---------- ---------- Total $494,444 $504,479 $538,672 $516,290 $526,606 $510,653 ======== ======== ========== ======== ========== ========== Ratio of earnings to fixed charges 1.97 1.95 1.87 1.90 1.93 1.98
- ----------------------------------------- a Before cumulative effect of accounting change for unbilled gas revenue. EX-11.2 3 COMP. OF RATIO OF EARNINGS TO CFC AND PSD 1 Exhibit 11.2 LONG ISLAND LIGHTING COMPANY COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS (In thousands of Dollars)
Twelve Months For the Year Ended December 31, Ended --------------------------------------------------------------- March 31, 1995 1994 1993 1992 1991 1990 -------------- ---- ---- ---- ---- ---- Net Income/(Loss) per Statement of Income $302,532 $301,852 $296,563 $301,974 $305,538 $319,637 a Less: Equity in earnings/loss of less than 50% owned subsidiary companies 131 89 77 93 87 86 Add: Distributed income of less than 50% owned subsidiary companies 117 117 58 87 58 58 -------- -------- ---------- -------- ---------- ---------- 302,518 301,880 296,544 301,968 305,509 319,609 Add: Federal income tax 178,898 176,712 172,276 160,962 181,653 183,281 Appropriate portion of rentals 4,701 4,295 4,552 3,504 2,751 2,343 Interest on long term-debt 428,032 437,751 466,538 450,621 472,974 467,700 Other interest and amortizations 61,711 62,433 67,582 62,165 50,881 40,610 -------- -------- ---------- -------- ---------- ---------- Net Income/(Loss) as adjusted $975,860 $983,071 $1,007,492 $979,220 $1,013,768 $1,013,543 a ======== ======== ========== ======== ========== ========== Fixed Charges: Appropriate portion of rentals $4,701 $4,295 $4,552 $3,504 $2,751 $2,343 Interest on long term-debt 428,032 437,751 466,538 450,621 472,974 467,700 Other interest and amortizations 61,711 62,433 67,582 62,165 50,881 40,610 Preferred stock dividend requirements 52,920 53,020 56,108 63,954 66,394 68,161 Tax effect for preferred stock dividend requirements 31,294 31,045 32,600 34,090 39,481 39,078 -------- -------- ---------- -------- ---------- ---------- Total $578,658 $588,544 $627,380 $614,334 $632,481 $617,892 ======== ======== ========== ======== ========== ========== Ratio of earnings to combined fixed charges and preferred stock dividends 1.69 1.67 1.61 1.59 1.60 1.64
- ------------------------------------------ a Before cumulative effect of accounting change for unbilled gas revenue. EX-27 4 FINANCIAL DATA SCHEDULE
UT NOTE: THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE STATEMENT OF INCOME, BALANCE SHEET AND STATEMENT OF CASH FLOWS, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1995 MAR-31-1995 PER-BOOK 3,501,871 24,617 848,539 1,264,271 7,496,590 13,135,888 593,632 1,052,561 756,783 2,402,976 644,350 63,951 5,105,701 0 0 0 65,000 4,800 0 0 4,849,110 13,135,888 791,188 47,865 562,448 610,313 180,875 7,802 188,677 118,378 70,299 13,172 57,127 52,636 103,060 161,967 $0.48 $0.48
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