SECURITIES AND EXCHANGE COMMISSION
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
|
Commission |
Exact name of Registrant as specified in its charter, |
IRS Employer |
|
1-14766 |
Energy East Corporation (A New York Corporation) P. O. Box 12904 Albany, New York 12212-2904 (518) 434-3049 |
14-1798693 |
|
1-5139 |
Central Maine Power Company (A Maine Corporation) 83 Edison Drive Augusta, Maine 04336 (207) 623-3521 |
01-0042740 |
|
1-3103-2 |
New York State Electric & Gas Corporation (A New York Corporation) P. O. Box 3287 Ithaca, New York 14852-3287 (607) 347-4131 |
15-0398550 |
Indicate by check mark whether each 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
As of April 30, 2002, shares of common stock outstanding for each registrant were:
|
Registrant |
Description |
Shares |
|
Energy East Corporation |
Par value $.01 per share |
116,831,563 |
|
Central Maine Power Company |
Par value $5 per share |
31,211,471 (1) |
|
New York State Electric & Gas Corporation |
Par value $6.66 2/3 per share |
64,508,477 (2) |
(1)
All shares are owned by CMP Group, Inc., a wholly-owned subsidiary of Energy East Corporation.This combined Form 10-Q is separately filed by Energy East Corporation, Central Maine Power Company and New York State Electric & Gas Corporation. Information contained herein relating to any individual registrant is filed by such registrant on its own behalf. Each registrant makes no representation as to information relating to the other registrants.
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TABLE OF CONTENTS |
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PART I - FINANCIAL INFORMATION |
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1 |
Financial Statements and |
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Energy East Corporation Consolidated Statements of Income Consolidated Balance Sheets Consolidated Statements of Cash Flows Consolidated Statements of Retained Earnings Consolidated Statements of Comprehensive Income Management's Discussion and Analysis of Financial Condition and Results of Operations (a) Liquidity and Capital Resources (b) Results of Operations |
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Central Maine Power Company Consolidated Statements of Income Consolidated Balance Sheets Consolidated Statements of Cash Flows Consolidated Statements of Retained Earnings Consolidated Statements of Comprehensive Income Management's Discussion and Analysis of Financial Condition and Results of Operations (a) Liquidity and Capital Resources (b) Results of Operations |
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New York State Electric & Gas Corporation Statements of Income Balance Sheets Statements of Cash Flows Statements of Retained Earnings Statements of Comprehensive Income Management's Discussion and Analysis of Financial Condition and Results of Operations (a) Liquidity and Capital Resources (b) Results of Operations |
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Notes to Financial Statements |
24 |
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3 |
Quantitative and Qualitative Disclosures About Market Risk |
28 |
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PART II - OTHER INFORMATION |
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6 |
Exhibits and Reports on Form 8-K (a) Exhibits (b) Reports on Form 8-K |
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Signatures |
29 |
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Exhibit Index |
30 |
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Energy East Corporation
Consolidated Statements of Income - (Unaudited)
|
Three Months Ended March 31 |
2002 |
2001 |
|
(Thousands, except per share amounts) |
||
|
Operating Revenues |
||
|
Sales and services |
$1,028,578 |
$1,271,139 |
|
Operating Expenses |
||
|
Electricity purchased and fuel used in generation |
305,953 |
352,629 |
|
Natural gas purchased |
209,730 |
369,471 |
|
Other operating expenses |
142,452 |
140,739 |
|
Maintenance |
34,825 |
36,013 |
|
Depreciation and amortization |
46,143 |
51,339 |
|
Other taxes |
50,606 |
58,420 |
|
Total Operating Expenses |
789,709 |
1,008,611 |
|
Operating Income |
238,869 |
262,528 |
|
Writedown of Investment |
10,115 |
- |
|
Other (Income) and Deductions |
(5,434) |
1,246 |
|
Interest Charges, Net |
55,910 |
55,625 |
|
Preferred Stock Dividends of Subsidiaries |
7,592 |
478 |
|
Income Before Income Taxes |
170,686 |
205,179 |
|
Income Taxes |
65,116 |
89,578 |
|
Net Income |
$105,570 |
$115,601 |
|
Earnings Per Share, basic and diluted |
$.90 |
$.98 |
|
Dividends Paid Per Share |
$.24 |
$.23 |
|
Average Common Shares Outstanding |
116,720 |
117,386 |
Energy East Corporation
Consolidated Balance Sheets - (Unaudited)
|
March 31, |
Dec. 31, |
|
|
(Thousands) |
||
|
Assets |
||
|
Current Assets |
||
|
Cash and cash equivalents |
$533,824 |
$437,014 |
|
Special deposits |
1,939 |
1,555 |
|
Accounts receivable, net |
589,337 |
563,796 |
|
Note receivable |
59,689 |
12,126 |
|
Fuel, at average cost |
52,816 |
92,234 |
|
Materials and supplies, at average cost |
21,243 |
21,466 |
|
Accumulated deferred income tax benefits, net |
9,987 |
4,170 |
|
Prepayments and other current assets |
52,464 |
42,475 |
|
Total Current Assets |
1,321,299 |
1,174,836 |
|
Utility Plant, at Original Cost |
||
|
Electric |
3,884,733 |
3,874,972 |
|
Natural gas |
1,783,053 |
1,771,636 |
|
Common |
212,115 |
213,362 |
|
5,879,901 |
5,859,970 |
|
|
Less accumulated depreciation |
2,302,563 |
2,270,516 |
|
Net Utility Plant in Service |
3,577,338 |
3,589,454 |
|
Construction work in progress |
26,058 |
36,978 |
|
Total Utility Plant |
3,603,396 |
3,626,432 |
|
Other Property and Investments, Net |
201,030 |
216,556 |
|
Regulatory and Other Assets |
||
|
Regulatory assets |
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|
Nuclear plant obligations |
194,834 |
199,797 |
|
Unfunded future income taxes |
174,749 |
164,657 |
|
Unamortized loss on debt reacquisitions |
52,653 |
53,965 |
|
Demand-side management program costs |
12,426 |
18,137 |
|
Environmental remediation costs |
86,149 |
85,835 |
|
Other |
150,013 |
248,738 |
|
Total regulatory assets |
670,824 |
771,129 |
|
Other assets |
||
|
Goodwill, net |
897,841 |
897,807 |
|
Prepaid pension benefits |
456,752 |
435,901 |
|
Other |
110,957 |
146,571 |
|
Total other assets |
1,465,550 |
1,480,279 |
|
Total Regulatory and Other Assets |
2,136,374 |
2,251,408 |
|
Total Assets |
$7,262,099 |
$7,269,232 |
Energy East Corporation
Consolidated Balance Sheets - (Unaudited)
|
March 31, |
Dec. 31, |
|
|
(Thousands) |
||
|
Liabilities |
||
|
Current Liabilities |
||
|
Current portion of long-term debt |
$406,451 |
$225,678 |
|
Notes payable |
88,700 |
173,383 |
|
Accounts payable and accrued liabilities |
187,975 |
224,150 |
|
Interest accrued |
57,995 |
36,183 |
|
Taxes accrued |
87,136 |
7,020 |
|
Other |
123,374 |
142,926 |
|
Total Current Liabilities |
951,631 |
809,340 |
|
Regulatory and Other Liabilities |
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|
Regulatory liabilities |
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Deferred income taxes |
154,720 |
157,196 |
|
Gain on sale of generation assets |
197,100 |
251,254 |
|
Pension benefits |
51,678 |
52,642 |
|
Other |
49,320 |
68,879 |
|
Total regulatory liabilities |
452,818 |
529,971 |
|
Other liabilities |
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|
Deferred income taxes |
495,487 |
461,600 |
|
Nuclear plant obligations |
194,834 |
199,797 |
|
Other postretirement benefits |
287,114 |
282,791 |
|
Environmental remediation costs |
102,873 |
102,930 |
|
Other |
209,994 |
241,975 |
|
Total other liabilities |
1,290,302 |
1,289,093 |
|
Total Regulatory and Other Liabilities |
1,743,120 |
1,819,064 |
|
Long-term debt |
2,287,824 |
2,471,278 |
|
Total Liabilities |
4,982,575 |
5,099,682 |
|
Commitments |
- |
- |
|
Preferred Stock of Subsidiaries securities of subsidiary holding solely parent debentures Preferred stock redeemable solely at the option of subsidiaries |
|
|
|
Common Stock Equity Common stock |
|
|
|
Capital in excess of par value |
840,198 |
842,989 |
|
Retained earnings |
1,075,848 |
998,281 |
|
Accumulated other comprehensive income (loss) |
7,850 |
(22,335) |
|
Treasury stock, at cost |
(33,973) |
(38,940) |
|
Total Common Stock Equity |
1,891,104 |
1,781,177 |
|
Total Liabilities and Stockholders' Equity |
$7,262,099 |
$7,269,232 |
Energy East Corporation
Consolidated Statements of Cash Flows - (Unaudited)
|
Three Months Ended March 31 |
2002 |
2001 |
|
(Thousands) |
||
|
Operating Activities |
||
|
Net income |
$105,570 |
$115,601 |
|
Adjustments to reconcile net income to net cash |
||
|
Depreciation and amortization |
46,143 |
51,339 |
|
Income taxes and investment tax credits deferred, net |
1,551 |
3,653 |
|
Pension income |
(18,005) |
(18,675) |
|
Writedown of investment |
10,115 |
- |
|
Changes in current operating assets and liabilities |
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|
Accounts receivable |
(25,541) |
(48,095) |
|
Inventory |
39,641 |
45,309 |
|
Accounts payable and accrued liabilities |
(36,175) |
(103,788) |
|
Interest accrued |
21,812 |
19,581 |
|
Taxes accrued |
80,116 |
89,926 |
|
Other current liabilities |
(19,552) |
(68,005) |
|
Other, net |
35,937 |
9,094 |
|
Net Cash Provided by Operating Activities |
241,612 |
95,940 |
|
Investing Activities |
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|
Utility plant additions |
(32,512) |
(32,790) |
|
Other property and investments, net |
(199) |
(13,343) |
|
Other |
130 |
526 |
|
Net Cash Used in Investing Activities |
(32,581) |
(45,607) |
|
Financing Activities |
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Issuance of common stock |
3,829 |
- |
|
Repurchase of common stock |
(1,749) |
(11,765) |
|
Repayments of first mortgage bonds and preferred |
|
|
|
Long-term note issuances |
181 |
25,000 |
|
Long-term note retirements |
(1,356) |
(841) |
|
Notes payable, net |
(84,683) |
(25,716) |
|
Dividends on common stock |
(28,003) |
(27,019) |
|
Net Cash Used in Financing Activities |
(112,221) |
(40,810) |
|
Net Increase in Cash and Cash Equivalents |
96,810 |
9,523 |
|
Cash and Cash Equivalents, Beginning of Period |
437,014 |
143,626 |
|
Cash and Cash Equivalents, End of Period |
$533,824 |
$153,149 |
|
Supplemental Disclosure of Cash Flows Information |
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Cash paid during the period: |
|
|
Energy East Corporation
Consolidated Statements of Retained Earnings - (Unaudited)
|
Three Months Ended March 31 |
2002 |
2001 |
|
(Thousands) |
||
|
Balance, Beginning of Period |
$998,281 |
$918,016 |
|
Add net income |
105,570 |
115,601 |
|
Deduct dividends on common stock |
28,003 |
27,019 |
|
Balance, End of Period |
$1,075,848 |
$1,006,598 |
Energy East Corporation
Consolidated Statements of Comprehensive Income - (Unaudited)
|
Three Months Ended March 31 |
2002 |
2001 |
|
(Thousands) |
||
|
Net income |
$105,570 |
$115,601 |
|
Other comprehensive income, net of tax |
||
|
Net unrealized losses on investments |
(6,425) |
(4,590) |
|
Reclassification adjustment for losses |
|
|
|
Unrealized gains on derivatives qualified as hedges |
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Unrealized gains on derivatives qualified as hedges |
|
|
|
Unrealized gains (losses) on derivatives qualified as hedges |
20,215 |
(14,410) |
|
Reclassification adjustment for losses (gains) included in net income |
10,495 |
(11,034) |
|
Net unrealized gains on derivatives qualified as hedges |
30,710 |
32,806 |
|
Total other comprehensive income |
30,185 |
28,216 |
|
Comprehensive Income |
$135,755 |
$143,817 |
Item 2.
Management's discussion and analysis of financial conditionEnergy East Corporation
(a) Liquidity and Capital Resources
Energy East Corporation and RGS Energy Merger Agreement
In February 2001 Energy East Corporation (Energy East or the company) announced that it had entered into a merger agreement with RGS Energy Group, Inc. under which all of the outstanding common stock of RGS Energy would be exchanged for a combination of cash and Energy East common stock valued at approximately $1.4 billion in the aggregate. The company will also assume approximately $1 billion of RGS Energy debt. RGS Energy will become a wholly-owned subsidiary of the company and the transaction will be accounted for under the purchase method of accounting.
Under the merger agreement 45% of the RGS Energy common stock will be exchanged for Energy East common stock with a value of $39.50 per RGS Energy share, subject to restrictions on the minimum and maximum number of shares to be issued, and 55% of the RGS Energy common stock will be converted into $39.50 in cash per RGS Energy share. RGS Energy shareholders will be able to elect the form of consideration they wish to receive, subject to proration. The company intends to finance the cash portion of the transaction primarily through the issuance of long-term debt and trust preferred securities.
In June 2001 RGS Energy's shareholders approved the merger and Energy East's shareholders approved the issuance of Energy East shares in connection with the merger.
The merger is subject to, among other things, various regulatory approvals, including the New York State Public Service Commission (NYPSC), Federal Energy Regulatory Commission (FERC), Nuclear Regulatory Commission (NRC) and Securities and Exchange Commission (SEC). The company has made all required regulatory filings and received approval from FERC in September 2001 and NRC in December 2001 for the change in control of RGS Energy's nuclear generation assets. In addition, the transaction cleared anti-trust review by the U.S. Department of Justice in October 2001.
On January 15, 2002, the company and New York State Electric & Gas Corporation (NYSEG) reached settlement with the NYPSC Staff and several other parties on a joint proposal for the merger and a new five-year electric rate plan for NYSEG. The NYPSC approved the joint proposal and merger on February 27, 2002. The company expects to complete its merger with RGS Energy in the second quarter of 2002.
Electric Delivery Business
Sale of Nine Mile Point 2: In November 2001 NYSEG sold its 18% interest in the Nine Mile Point 2 nuclear generating station (NMP2) to Constellation Nuclear. For its share of NMP2, NYSEG received at closing $59 million in cash and a $59 million 11% promissory note. On April 12, 2002, Constellation Nuclear paid the remaining balance plus accrued interest on the promissory note.
Management's discussion and analysis of financial condition and results of operations
Energy East Corporation
Regional Transmission Organization: In July 2001 FERC issued an order requiring the New York Independent System Operator (NYISO) and neighboring New England and Mid-Atlantic independent system operators (ISOs) to negotiate to form a single Northeast Regional Transmission Organization (RTO). RTOs are similar to ISOs, but have more authority and cover broader geographic regions. The NYISO and other parties involved in negotiating the formation of the RTO participated in mediation facilitated by a FERC administrative law judge (ALJ) for 45 days, leading to a business plan detailing the process to develop a Northeast RTO. The business plan, coupled with an ALJ's report, have been submitted to the FERC. Subsequently, the New England ISO and the NYISO entered into an agreement to consider forming a RTO and PJM Interconnection, L.L.C. (PJM) entered into an agreement to form common market systems with the Midwest ISO. A FERC decision on the Northeast RTO is expected later this year.
In October 2001 FERC also commenced a proceeding to consider national standard market design issues and is expected to engage in a rulemaking proceeding soon. NYSEG and Central Maine Power Company (CMP) have consistently advocated the formation of a Northeast/Mid-Atlantic RTO, including PJM, or functionally combined markets throughout the Northeast because they believe that a larger wholesale power market is essential to facilitate greater liquidity and competition. A Northeast RTO may include an independent transmission company which would be owned by participating transmission owners. The transmission company would share RTO responsibilities with an independent market administrator and would focus on transmission investment opportunities, instead of energy, capacity and other generation-based markets. The company is unable to predict the ultimate effect, if any, of the expected rulemaking on wholesale power markets and the company's transmission system.
CMP Alternative Rate Plan: In September 2000 the Maine Public Utilities Commission (MPUC) approved CMP's Alternative Rate Plan (ARP 2000). ARP 2000 applies only to CMP's state jurisdictional distribution revenue requirement and excludes revenue requirements related to stranded costs and transmission services. Recovery of stranded costs, primarily over-market nonutility generator (NUG) contracts, has been provided for under Maine's Restructuring Law. ARP 2000 began January 1, 2001, and continues through December 31, 2007, with price changes, if any, occurring on July 1, in the years 2002 through 2007.
On March 15, 2002, CMP submitted a filing to the MPUC for price changes to be effective beginning July 1, 2002. CMP is proposing a 5.85% reduction in distribution rates for customers not subject to special contracts, to be effective July 1, 2002. The reduction reflects a decrease of 3.06% in distribution rates resulting from expiring amortizations and the application of a price cap mechanism, and an additional one-time decrease of 2.79% reflecting over-collections of certain costs, such as demand-side management, and insurance proceeds related to environmental remediation.
CMP Electricity Supply Responsibility: Under Maine Law adopted in 1997 CMP was mandated to sell its generation assets and relinquish its supply responsibilities. However, the MPUC can mandate that CMP be a standard-offer provider for supply service should bids by competitive suppliers be deemed unacceptable by the MPUC. CMP's revenues will fluctuate as its status as a standard-offer provider changes. There is no effect on net income, however, because CMP will not incur costs to purchase electricity for customers during the periods when it is not required to be the standard-offer provider. (See Item 2(b) - Operating Results for the Electric Delivery Business.)
Management's discussion and analysis of financial condition and results of operations
Energy East Corporation
In September 2001 the MPUC chose Constellation Power Source Maine, LLC as the new supplier of standard-offer electricity to CMP's residential and small commercial standard-offer class for a three-year period beginning March 1, 2002. On January 14, 2002, the MPUC chose Select Energy, Inc. as the new supplier of standard-offer electricity to all other CMP commercial customers and all CMP industrial customers for a one-year period beginning March 1, 2002.
NYPSC-mandated Contracts with Customers: In March and April 2002 the NYPSC issued orders directing NYSEG to enter into long-term electric service contracts with two large industrial customers that contain unduly low and preferential rates. In April 2002 NYSEG petitioned for rehearing of these orders on the basis that each order, and each underlying contract, violates law, NYSEG's tariffs and NYPSC guidelines.
Lost revenues associated with these long-term electric service contracts will be recovered through the asset sale gain account created by NYSEG's sale in 2001 of its interest in NMP2. After giving effect to the amortization of the asset sale gain account to fund the first year of the electric rate reduction (See report on Form 10-K for Energy East and NYSEG for fiscal year ended December 31, 2001, Item 7 - Liquidity and Capital Resources, NYSEG Electric Rate Settlement), the remaining balance would be entirely consumed by discounts offered to these two large industrial customers. NYSEG believes that the remaining balance should not be used for discounts provided to just two customers, but should be available to fund other economic development projects and for the recovery of uncontrollable costs. NYSEG's petitions for rehearing are pending.
Natural Gas Delivery Business
Natural Gas Supply Alliance: Four of Energy East's natural gas companies: NYSEG, The Southern Connecticut Gas Corporation, Connecticut Natural Gas Corporation and The Berkshire Gas Company, continued for two years a strategic alliance with BP Energy Company, effective April 1, 2002, for the acquisition, optimization and management of certain natural gas supply, transportation and storage, including price risk management. The alliance provides the companies with greater supply flexibility, enhances the benefits of a larger natural gas portfolio and is based on sharing incremental savings. The companies still own and control their natural gas assets and work with BP Energy to obtain the lowest cost supply while maintaining reliability of service. The Energy East natural gas companies have made appropriate regulatory filings concerning the alliance, seeking approvals as required.
Investing and Financing Activities
Investing Activities: Capital spending for the first three months of 2002 was $33 million. Capital spending, excluding the RGS merger transaction, is projected to be $223 million in 2002, and is expected to be paid for with internally generated funds. Capital spending will be primarily for the extension of energy delivery service, necessary improvements to existing facilities and compliance with environmental requirements.
Financing Activities: During the three months ended March 31, 2002, the company repurchased 92,600 shares of its common stock, at an average price of $18.89 per share, and issued 196,652 shares, at an average price of $19.47 per share, through its Dividend Reinvestment and Stock Purchase Plan, substantially out of treasury stock.
Management's discussion and analysis of financial condition and results of operations
Energy East Corporation
In May 2001 the company filed a shelf registration statement with the SEC to sell up to $1 billion in an unspecified combination of debt and trust preferred securities, of which $405 million is currently available. The company plans to use the net proceeds from this shelf registration to fund the cash portion of the consideration for the pending merger with RGS Energy. (See Energy East Corporation and RGS Energy Merger Agreement.) The company may also use a portion of the proceeds for general corporate purposes, such as short-term debt reduction, repurchases of securities and to fund equity contributions to subsidiaries.
NYSEG will redeem, at a premium, on May 16, 2002, $150 million of 8 7/8% Series first mortgage bonds due November 1, 2021, and will redeem, at par, on May 15, 2002, the remaining $21.34 million of two 9 7/8% Series first mortgage bonds due 2020. The redemptions will be financed with internally generated cash and the proceeds from the promissory note prepaid by Constellation Nuclear. (See Sale of Nine Mile Point 2.) NYSEG will incur a $10 million reduction to earnings in the second quarter of 2002 as a result of these redemptions, but will save over $16 million pre-tax each year in interest costs.
(b) Results of Operations
|
Three months ended March 31 (Thousands, except per share amounts) |
2002 |
2001 |
Change |
|
Operating Revenues |
$1,028,578 |
$1,271,139 |
(19%) |
|
Operating Income |
$238,869 |
$262,528 |
(9%) |
|
Net Income |
$105,570 |
$115,601 |
(9%) |
|
Average Common Shares Outstanding |
116,720 |
117,386 |
(1%) |
|
Earnings Per Share, basic and diluted |
$.90 |
$.98 |
(8%) |
|
Dividends Paid Per Share |
$.24 |
$.23 |
4% |
Earnings per share for the quarter decreased three cents compared to the prior year quarter, excluding a writedown of CMP Group, Inc.'s investment in NEON Communications, Inc. that reduced earnings per share by five cents. (See Note 3 to the company's consolidated Financial Statements.) The decrease is primarily the result of a reduction in electric and natural gas retail deliveries due to mild winter weather, an electric price reduction for NYSEG effective March 1, 2002, and lower electric transmission revenues. Those items were partially offset by lower costs of natural gas purchases and the elimination of goodwill amortization in 2002.
Management's discussion and analysis of financial condition and results of operations
Energy East Corporation
Operating Results for the Electric Delivery Business
|
Three months ended March 31 (Thousands) |
2002 |
2001 |
Change |
|
Retail Deliveries - Megawatt-hours |
5,980 |
6,204 |
(4%) |
|
Operating Revenues |
$631,040 |
$688,006 |
(8%) |
|
Operating Expenses |
$467,955 |
$498,868 |
(6%) |
|
Operating Income |
$163,085 |
$189,138 |
(14%) |
The $57 million decrease in operating revenues for the quarter is primarily the result of CMP not being the standard-offer provider for the supply of electricity effective in March 2002 (See Item 2(a) - CMP Electricity Supply Responsibility), lower retail deliveries due to mild winter weather, a price reduction for NYSEG effective March 1, 2002, and lower transmission revenues.
Operating expenses decreased $31 million for the quarter primarily due to a decrease in electricity purchased because CMP is no longer the standard offer provider for the supply of electricity, and the elimination of goodwill amortization in 2002.
Operating Results for the Natural Gas Delivery Business
|
Three months ended March 31 (Thousands) |
2002 |
2001 |
Change |
|
Retail Deliveries - Dekatherms |
56,107 |
55,496 |
1% |
|
Operating Revenues |
$344,968 |
$513,213 |
(33%) |
|
Operating Expenses |
$264,278 |
$430,860 |
(39%) |
|
Operating Income |
$80,690 |
$82,353 |
(2%) |
The $168 million decrease in operating revenues for the three months is primarily the result of lower retail deliveries due to mild winter weather and lower prices for nonresidential and wholesale customers.
Operating expenses decreased $167 million for the quarter primarily due to a decrease in the cost of natural gas purchased as a result of lower natural gas prices and retail deliveries, and cost control efforts.
Item 1. Financial Statements
Central Maine Power Company
Consolidated Statements of Income - (Unaudited)
|
Three Months Ended March 31 |
2002 |
2001 |
|
(Thousands) |
||
|
Operating Revenues |
||
|
Sales and services |
$200,614 |
$230,161 |
|
Operating Expenses |
||
|
Electricity purchased and fuel used in generation |
84,690 |
118,302 |
|
Other operating expenses |
46,132 |
42,178 |
|
Maintenance |
10,513 |
11,515 |
|
Depreciation and amortization |
8,854 |
9,145 |
|
Other taxes |
5,480 |
5,066 |
|
Total Operating Expenses |
155,669 |
186,206 |
|
Operating Income |
44,945 |
43,955 |
|
Other (Income) and Deductions |
(1,150) |
(278) |
|
Interest Charges, Net |
8,084 |
6,500 |
|
Income Before Income Taxes |
38,011 |
37,733 |
|
Income Taxes |
14,728 |
15,487 |
|
Net Income |
23,283 |
22,246 |
|
Preferred Stock Dividends |
361 |
361 |
|
Earnings Available for Common Stock |
$22,922 |
$21,885 |
Central Maine Power Company
Consolidated Balance Sheets - (Unaudited)
|
March 31, |
Dec. 31, |
|
|
(Thousands) |
||
|
Assets |
||
|
Current Assets |
||
|
Cash and cash equivalents |
$18,326 |
$20,777 |
|
Accounts receivable, net |
116,361 |
123,615 |
|
Materials and supplies, at average cost |
8,841 |
9,018 |
|
Accumulated deferred income tax benefits, net |
102 |
74 |
|
Prepayments and other current assets |
5,045 |
10,439 |
|
Total Current Assets |
148,675 |
163,923 |
|
Utility Plant, at Original Cost |
||
|
Electric |
1,317,023 |
1,312,778 |
|
Less accumulated depreciation |
496,451 |
488,159 |
|
Net Utility Plant in Service |
820,572 |
824,619 |
|
Construction work in progress |
2,863 |
5,546 |
|
Total Utility Plant |
823,435 |
830,165 |
|
Other Property |
5,869 |
5,988 |
|
Investment in Associated Companies, at Equity |
29,457 |
29,868 |
|
Regulatory and Other Assets |
||
|
Regulatory assets |
||
|
Nuclear plant obligations |
194,834 |
199,797 |
|
Unfunded future income taxes |
92,707 |
90,471 |
|
Unamortized loss on debt reacquisitions |
10,652 |
11,006 |
|
Demand-side management program costs |
12,426 |
14,054 |
|
Environmental remediation costs |
5,552 |
6,075 |
|
Other |
84,797 |
139,987 |
|
Total regulatory assets |
400,968 |
461,390 |
|
Other assets |
||
|
Goodwill, net |
325,174 |
325,174 |
|
Prepaid pension benefits |
29,886 |
29,886 |
|
Other |
15,800 |
19,406 |
|
Total other assets |
370,860 |
374,466 |
|
Total Regulatory and Other Assets |
771,828 |
835,856 |
|
Total Assets |
$1,779,264 |
$1,865,800 |
Central Maine Power Company
Consolidated Balance Sheets - (Unaudited)
|
March 31, |
Dec. 31, |
|
|
(Thousands) |
||
|
Liabilities |
||
|
Current Liabilities |
||
|
Current portion of long-term debt |
$63,063 |
$52,959 |
|
Notes payable |
28,500 |
46,500 |
|
Accounts payable and accrued liabilities |
43,952 |
64,104 |
|
Interest accrued |
2,149 |
5,181 |
|
Taxes accrued |
4,997 |
- |
|
Other |
44,328 |
40,206 |
|
Total Current Liabilities |
186,989 |
208,950 |
|
Regulatory and Other Liabilities |
||
|
Regulatory liabilities |
||
|
Deferred income taxes |
95,070 |
92,630 |
|
Gain on sale of generation assets |
135,501 |
190,779 |
|
Pension benefits |
7,205 |
7,355 |
|
Other |
8,477 |
21,840 |
|
Total regulatory liabilities |
246,253 |
312,604 |
|
Other liabilities |
||
|
Deferred income taxes |
25,219 |
17,385 |
|
Nuclear plant obligations |
194,834 |
199,797 |
|
Other postretirement benefits |
67,332 |
66,801 |
|
Environmental remediation costs |
2,719 |
2,790 |
|
Other |
105,881 |
119,575 |
|
Total other liabilities |
395,985 |
406,348 |
|
Total Regulatory and Other Liabilities |
642,238 |
718,952 |
|
Long-term debt |
224,304 |
235,133 |
|
Total Liabilities |
1,053,531 |
1,163,035 |
|
Commitments |
- |
- |
|
Preferred Stock Preferred stock |
|
|
|
Capital in excess of par value |
(3,269) |
(3,316) |
|
Common Stock Equity Common stock |
|
|
|
Capital in excess of par value |
485,296 |
498,141 |
|
Retained earnings |
54,226 |
31,304 |
|
Accumulated other comprehensive income (loss) |
(2,148) |
(2,148) |
|
Treasury stock, at cost |
- |
(19,000) |
|
Total Common Stock Equity |
693,431 |
670,510 |
|
Total Liabilities and Stockholder's Equity |
$1,779,264 |
$1,865,800 |
Central Maine Power Company
Consolidated Statements of Cash Flows - (Unaudited
|
Three Months Ended March 31 |
2002 |
2001 |
|
(Thousands) |
||
|
Operating Activities |
||
|
Net income |
$23,283 |
$22,246 |
|
Adjustments to reconcile net income to net cash |
||
|
Depreciation and amortization |
8,854 |
9,145 |
|
Income taxes and investment tax credits deferred, net |
8,010 |
2,459 |
|
Pension income |
531 |
(200) |
|
Changes in current operating assets and liabilities |
||
|
Accounts receivable |
7,254 |
11,795 |
|
Inventory |
177 |
(15) |
|
Prepayments and other current assets |
5,394 |
5,057 |
|
Accounts payable and accrued liabilities |
(20,152) |
(4,940) |
|
Interest accrued |
(3,032) |
(2,822) |
|
Taxes accrued |
4,997 |
4,607 |
|
Other current liabilities |
4,122 |
(18,430) |
|
Asset sale gain amortization |
(16,487) |
(5,519) |
|
Changes in deferred balances and related carrying costs |
(702) |
(206) |
|
Other, net |
4,415 |
6,901 |
|
Net Cash Provided by Operating Activities |
26,664 |
30,078 |
|
Investing Activities |
||
|
Utility plant additions |
(10,091) |
(13,087) |
|
Other property and investments |
76 |
7 |
|
Net Cash Used in Investing Activities |
(10,015) |
(13,080) |
|
Financing Activities |
||
|
Long-term note issuances |
- |
25,000 |
|
Long-term note retirements |
(739) |
(741) |
|
Notes payable, net |
(18,000) |
(11,500) |
|
Dividends on common and preferred stock |
(361) |
(23,461) |
|
Net Cash Used in Financing Activities |
(19,100) |
(10,702) |
|
Net (Decrease) Increase in Cash and Cash Equivalents |
(2,451) |
6,296 |
|
Cash and Cash Equivalents, Beginning of Period |
20,777 |
17,933 |
|
Cash and Cash Equivalents, End of Period |
$18,326 |
$24,229 |
|
Supplemental Disclosure of Cash Flows Information |
||
|
Cash paid during the period: |
|
|
Central Maine Power Company
Consolidated Statements of Retained Earnings - (Unaudited)
|
Three Months Ended March 31 |
2002 |
2001 |
|
(Thousands) |
||
|
Balance, Beginning of Period |
$31,304 |
$23,291 |
|
Add net income |
23,283 |
22,246 |
|
54,587 |
45,537 |
|
|
Deduct Dividends on Capital Stock |
||
|
Preferred |
361 |
361 |
|
Common |
- |
23,100 |
|
|
361 |
23,461 |
|
Balance, End of Period |
$54,226 |
$22,076 |
Central Maine Power Company
Consolidated Statements of Comprehensive Income - (Unaudited)
|
Three Months Ended March 31 |
2002 |
2001 |
|
(Thousands) |
||
|
Net income |
$23,283 |
$22,246 |
|
Other comprehensive income, net of tax |
||
|
Net unrealized gain on investments |
- |
275 |
|
Total other comprehensive income |
- |
275 |
|
Comprehensive Income |
$23,283 |
$22,521 |
Item 2.
Management's discussion and analysis of financial conditionCentral Maine Power Company
(a) Liquidity and Capital Resources
Electric Delivery Business
Regional Transmission Organization: See Energy East Corporation's Item 2(a), Electric Delivery Business, for the discussion of this item.
CMP Alternative Rate Plan: See Energy East Corporation's Item 2(a), Electric Delivery Business, for the discussion of this item.
CMP Electricity Supply Responsibility: See Energy East Corporation's Item 2(a), Electric Delivery Business, for the discussion of this item.
Investing and Financing Activities
Investing Activities: Capital spending for the first three months of 2002 was $10 million. Capital spending is projected to be $41 million in 2002 and is expected to be paid for with internally generated funds. Capital spending will be primarily for the extension of electric delivery service, necessary improvements to existing facilities and compliance with environmental requirements.
Financing Activities: In January 2002 CMP cancelled its shares of treasury stock, which had a carrying value of $19 million, and restored the shares to the status of authorized but unissued shares of common stock of the corporation.
(b) Results of Operations
|
Three months ended March 31 (Thousands) |
2002 |
2001 |
Change |
|
Retail Deliveries - Megawatt-hours |
2,244 |
2,418 |
(7%) |
|
Operating Revenues |
$200,614 |
$230,161 |
(13%) |
|
Operating Expenses |
$155,669 |
$186,206 |
(16%) |
|
Operating Income |
$44,945 |
$43,955 |
2% |
|
Earnings Available for Common Stock |
$22,922 |
$21,885 |
5% |
Earnings for the quarter increased $1 million primarily due to the elimination of goodwill amortization in 2002.
The $30 million decrease in operating revenues is primarily the result of CMP not being the standard-offer provider for the supply of electricity effective in March 2002. (See Item 2(a) - CMP Electricity Supply Responsibility.) The loss in revenue was offset by a corresponding decrease in electricity purchased, which was the primary reason for the $31 million decrease in operating expenses. Operating expenses also decreased due to the elimination of goodwill amortization in 2002.
Item 1. Financial Statements
New York State Electric & Gas Corporation
Statements of Income - (Unaudited)
|
Three Months Ended March 31 |
2002 |
2001 |
|
(Thousands) |
||
|
Operating Revenues |
||
|
Electric |
$430,374 |
$457,761 |
|
Natural Gas |
126,881 |
167,700 |
|
Total Operating Revenues |
557,255 |
625,461 |
|
Operating Expenses |
||
|
Electricity purchased and fuel used in generation |
207,717 |
201,520 |
|
Natural gas purchased |
76,916 |
122,610 |
|
Other operating expenses |
52,711 |
54,914 |
|
Maintenance |
20,949 |
21,062 |
|
Depreciation and amortization |
24,433 |
25,337 |
|
Other taxes |
31,599 |
34,869 |
|
Total Operating Expenses |
414,325 |
460,312 |
|
Operating Income |
142,930 |
165,149 |
|
Other (Income) and Deductions |
24 |
2,385 |
|
Interest Charges, Net |
25,174 |
26,653 |
|
Income Before Income Taxes |
117,732 |
136,111 |
|
Income Taxes |
48,111 |
56,513 |
|
Net Income |
69,621 |
79,598 |
|
Preferred Stock Dividends |
99 |
99 |
|
Earnings Available for Common Stock |
$69,522 |
$79,499 |
New York State Electric & Gas Corporation
Balance Sheets - (Unaudited)
|
March 31, |
Dec. 31, |
|
|
(Thousands) |
||
|
Assets |
||
|
Current Assets |
||
|
Cash and cash equivalents |
$130,656 |
$21,617 |
|
Special deposits |
1,785 |
1,432 |
|
Accounts receivable, net |
289,128 |
292,687 |
|
Note receivable |
59,689 |
12,126 |
|
Fuel, at average cost |
6,356 |
32,094 |
|
Materials and supplies, at average cost |
6,926 |
7,027 |
|
Accumulated deferred income tax benefits, net |
3,925 |
3,930 |
|
Prepayments |
35,126 |
26,421 |
|
Total Current Assets |
533,591 |
397,334 |
|
Utility Plant, at Original Cost |
||
|
Electric |
2,567,710 |
2,562,194 |
|
Natural gas |
657,760 |
654,224 |
|
Common |
131,368 |
132,928 |
|
3,356,838 |
3,349,346 |
|
|
Less accumulated depreciation |
1,355,839 |
1,341,964 |
|
Net Utility Plant in Service |
2,000,999 |
2,007,382 |
|
Construction work in progress |
15,661 |
22,885 |
|
Total Utility Plant |
2,016,660 |
2,030,267 |
|
Other Property and Investments, Net |
42,991 |
43,242 |
|
Regulatory and Other Assets |
||
|
Regulatory assets |
||
|
Unfunded future income taxes |
21,908 |
12,984 |
|
Unamortized loss on debt reacquisitions |
42,001 |
42,959 |
|
Demand-side management program costs |
- |
4,083 |
|
Environmental remediation costs |
53,867 |
53,167 |
|
Other |
6,646 |
17,917 |
|
Total regulatory assets |
124,422 |
131,110 |
|
Other assets |
||
|
Goodwill, net |
11,199 |
11,199 |
|
Prepaid pension benefits |
355,121 |
334,769 |
|
Note receivable |
- |
47,553 |
|
Other |
28,891 |
18,949 |
|
Total other assets |
395,211 |
412,470 |
|
Total Regulatory and Other Assets |
519,633 |
543,580 |
|
Total Assets |
$3,112,875 |
$3,014,423 |
New York State Electric & Gas Corporation
Balance Sheets - (Unaudited)
|
March 31, |
Dec. 31, |
|
|
(Thousands) |
||
|
Liabilities |
||
|
Current Liabilities |
||
|
Current portion of long-term debt |
$322,017 |
$150,873 |
|
Accounts payable and accrued liabilities |
93,243 |
109,476 |
|
Interest accrued |
26,385 |
15,967 |
|
Taxes accrued |
48,811 |
7,499 |
|
Other |
40,138 |
65,268 |
|
Total Current Liabilities |
530,594 |
349,083 |
|
Regulatory and Other Liabilities |
||
|
Regulatory liabilities |
||
|
Deferred income taxes |
18,479 |
17,308 |
|
Gain on sale of generation assets |
61,598 |
60,476 |
|
Other |
25,600 |
29,810 |
|
Total regulatory liabilities |
105,677 |
107,594 |
|
Other liabilities |
||
|
Deferred income taxes |
332,564 |
310,456 |
|
Other postretirement benefits |
190,927 |
187,916 |
|
Environmental remediation costs |
76,800 |
76,100 |
|
Other |
57,715 |
85,126 |
|
Total other liabilities |
658,006 |
659,598 |
|
Total Regulatory and Other Liabilities |
763,683 |
767,192 |
|
Long-term debt |
868,173 |
1,039,135 |
|
Total Liabilities |
2,162,450 |
2,155,410 |
|
Commitments |
- |
- |
|
Preferred Stock Preferred stock redeemable solely at NYSEG's option |
|
|
|
Common Stock Equity Common stock |
|
|
|
Capital in excess of par value |
270,835 |
270,835 |
|
Retained earnings |
233,719 |
164,197 |
|
Accumulated other comprehensive income (loss) |
5,655 |
(16,235) |
|
Total Common Stock Equity |
940,266 |
848,854 |
|
Total Liabilities and Stockholder's Equity |
$3,112,875 |
$3,014,423 |
New York State Electric & Gas Corporation
Statements of Cash Flows - (Unaudited
|
Three Months Ended March 31 |
2002 |
2001 |
|
(Thousands) |
||
|
Operating Activities |
||
|
Net income |
$69,621 |
$79,598 |
|
Adjustments to reconcile net income to net cash |
||
|
Depreciation and amortization |
24,433 |
25,337 |
|
Income taxes and investment tax credits deferred, net |
4,101 |
5,205 |
|
Pension income |
(17,580) |
(18,041) |
|
Changes in current operating assets and liabilities |
||
|
Accounts receivable |
3,559 |
1,560 |
|
Inventory |
25,839 |
25,679 |
|
Prepayments |
(8,705) |
(12,077) |
|
Accounts payable and accrued liabilities |
(16,233) |
(48,666) |
|
Interest accrued |
10,418 |
10,931 |
|
Taxes accrued |
41,312 |
40,804 |
|
Other current liabilities |
(25,130) |
(21,996) |
|
Other, net |
12,097 |
(120) |
|
Net Cash Provided by Operating Activities |
123,732 |
88,214 |
|
Investing Activities |
||
|
Utility plant additions |
(15,177) |
(11,786) |
|
Other |
583 |
1,217 |
|
Net Cash Used in Investing Activities |
(14,594) |
(10,569) |
|
Financing Activities |
||
|
Notes payable, net |
- |
(39,000) |
|
Dividends on common and preferred stock |
(99) |
(40,642) |
|
Net Cash Used in Financing Activities |
(99) |
(79,642) |
|
Net Increase (Decrease) in Cash and Cash Equivalents |
109,039 |
(1,997) |
|
Cash and Cash Equivalents, Beginning of Period |
21,617 |
17,618 |
|
Cash and Cash Equivalents, End of Period |
$130,656 |
$15,621 |
|
Supplemental Disclosure of Cash Flows Information |
||
|
Cash paid during the period: |
|
|
New York State Electric & Gas Corporation
Statements of Retained Earnings - (Unaudited)
|
Three Months Ended March 31 |
2002 |
2001 |
|
(Thousands) |
||
|
Balance, Beginning of Period |
$164,197 |
$35,329 |
|
Add net income |
69,621 |
79,598 |
|
233,818 |
114,927 |
|
|
Deduct Dividends on Capital Stock |
||
|
Preferred |
99 |
99 |
|
Common |
- |
40,543 |
|
|
99 |
40,642 |
|
Balance, End of Period |
$233,719 |
$74,285 |
New York State Electric & Gas Corporation
Statements of Comprehensive Income - (Unaudited)
|
Three Months Ended March 31 |
2002 |
2001 |
|
(Thousands) |
||
|
Net income |
$69,621 |
$79,598 |
|
Other comprehensive income, net of tax |
||
|
Net unrealized (losses) gains on investments |
(274) |
79 |
|
Unrealized gains on derivatives qualified as hedges |
||
|
Unrealized gains on derivatives qualified as hedges |
|
|
|
Unrealized gains (losses) on derivatives qualified as hedges |
15,510 |
(13,261) |
|
Reclassification adjustment for losses (gains) included in net income |
6,654 |
(9,838) |
|
Net unrealized gains on derivatives qualified as hedges |
22,164 |
31,503 |
|
Total other comprehensive income |
21,890 |
31,582 |
|
Comprehensive Income |
$91,511 |
$111,180 |
Item 2.
Management's discussion and analysis of financial conditionNew York State Electric & Gas Corporation
(a) Liquidity and Capital Resources
Electric Delivery Business
Sale of Nine Mile Point 2: See Energy East Corporation's Item 2(a), Electric Delivery Business, for the discussion of this item.
Regional Transmission Organization: See Energy East Corporation's Item 2(a), Electric Delivery Business, for the discussion of this item.
NYPSC-mandated Contracts with Customers: See Energy East Corporation's Item 2(a), Electric Delivery Business, for the discussion of this item.
Natural Gas Delivery Business
Natural Gas Supply Alliance: See Energy East Corporation's Item 2(a), Natural Gas Delivery Business, for the discussion of this item.
Investing Activities
Investing Activities: Capital spending for the first three months of 2002 was $15 million. Capital spending is projected to be $104 million in 2002 and is expected to be paid for with internally generated funds. Capital spending will be primarily for necessary improvements to existing facilities, the extension of energy delivery service and compliance with environmental requirements.
Financing Activities: NYSEG will redeem, at a premium, on May 16, 2002, $150 million of 8 7/8% Series first mortgage bonds due November 1, 2021, and will redeem, at par, on May 15, 2002, the remaining $21.34 million of two 9 7/8% Series first mortgage bonds due 2020. The redemptions will be financed with internally generated cash and the proceeds from the promissory note prepaid by Constellation Nuclear. (See Sale of Nine Mile Point 2.) NYSEG will incur a $10 million reduction to earnings in the second quarter of 2002 as a result of these redemptions, but will save over $16 million pre-tax each year in interest costs.
(b) Results of Operations
|
Three months ended March 31 (Thousands) |
2002 |
2001 |
Change |
|
Operating Revenues |
$557,255 |
$625,461 |
(11%) |
|
Operating Income |
$142,930 |
$165,149 |
(13%) |
|
Earnings Available for Common Stock |
$69,522 |
$79,499 |
(13%) |
The $10 million decrease in earnings for the quarter was primarily due to an electric price reduction effective March 1, 2002, higher electricity purchased power costs and lower electric deliveries caused by mild winter weather.
Management's discussion and analysis of financial condition and results of operations
New York State Electric & Gas Corporation
Operating Results for the Electric Delivery Business
|
Three months ended March 31 (Thousands) |
2002 |
2001 |
Change |
|
Retail Deliveries - Megawatt-hours |
3,736 |
3,787 |
(1%) |
|
Operating Revenues |
$430,374 |
$457,761 |
(6%) |
|
Operating Expenses |
$312,225 |
$312,574 |
- |
|
Operating Income |
$118,149 |
$145,187 |
(19%) |
The $27 million decrease in operating revenues for the quarter is primarily due to decreases in: wholesale deliveries, retail deliveries due to mild winter weather and transmission revenues, and a price reduction effective March 1, 2002.
Operating expenses did not change significantly for the quarter. Purchased power costs increased due to higher NUG costs, offset by reduced purchases because of lower wholesale deliveries.
Operating Results for the Natural Gas Delivery Business
|
Three months ended March 31 (Thousands) |
2002 |
2001 |
Change |
|
Retail Deliveries - Dekatherms |
21,838 |
23,964 |
(9%) |
|
Operating Revenues |
$126,881 |
$167,700 |
(24%) |
|
Operating Expenses |
$102,100 |
$147,738 |
(31%) |
|
Operating Income |
$24,781 |
$19,962 |
24% |
The $41 million decrease in operating revenues for the quarter is primarily due to lower retail deliveries caused by mild winter weather and lower prices for nonresidential and wholesale customers.
Operating expenses decreased $46 million for the quarter primarily due to a decrease in the cost of natural gas purchased as a result lower natural gas prices and retail deliveries.
Item 1.
Financial StatementsNotes to Financial Statements
for
Energy East Corporation
Central Maine Power Company
New York State Electric & Gas Corporation
Notes to Financial Statements of Registrants:
|
Registrant |
Applicable Notes |
|
Energy East |
1, 2, 3, 4, 5 |
|
CMP |
1, 2, 4, 5 |
|
NYSEG |
1, 2, 4, 5 |
Note 1. Unaudited Financial Statements
The accompanying unaudited financial statements reflect all adjustments which are necessary, in the opinion of the management of the registrants, for a fair presentation of the interim results. All such adjustments are of a normal, recurring nature.
Energy East's financial statements and CMP's financial statements consolidate their majority-owned subsidiaries after eliminating all intercompany transactions.
The accompanying unaudited financial statements for each registrant should be read in conjunction with the financial statements and notes contained in the report on Form 10-K filed by each registrant for the year ended December 31, 2001. Due to the seasonal nature of the registrants' operations, financial results for interim periods are not necessarily indicative of trends for a 12-month period.
Note 2. Goodwill and Other Intangible Assets
Effective January 1, 2002, Energy East, CMP and NYSEG adopted Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets. As required by Statement 142 the companies are no longer amortizing goodwill and are not amortizing intangible assets with indefinite lives (unamortized intangible assets). Both goodwill and unamortized intangible assets will be tested at least annually for impairment. Intangible assets with finite lives are being amortized (amortized intangible assets) and are reviewed for impairment.
The companies are still evaluating the requirement to recognize a transitional goodwill impairment loss. There was no reclassification of goodwill to intangible assets and no reclassification of intangible assets to goodwill as of January 1, 2002. The carrying amount of goodwill on the companies' balance sheets, by operating segment, as of March 31, 2002, is presented below.
|
|
Electric |
Natural Gas |
|
|
|
Energy East |
$325,174 |
$554,787 |
$17,880 |
$897,841 |
|
CMP |
$325,174 |
- |
- |
$325,174 |
|
NYSEG |
- |
$11,199 |
- |
$11,199 |
Goodwill amortization for the year ended December 31, 2001, was $25 million for Energy East, $9 million for CMP and less than $0.4 million for NYSEG.
Other Intangible Assets: Energy East's unamortized intangible assets primarily consist of organization costs and franchises and consents, and had a carrying amount of $1.5 million at March 31, 2002, and December 31, 2001. Energy East's amortized intangible assets primarily consist of investments in pipelines, and had a gross carrying amount of $25.8 million at March 31, 2002, and December 31, 2001. The accumulated amortization was $5.9 million at March 31, 2002, and $5.5 million at December 31, 2001.
CMP's amortized intangible assets primarily consist of technology rights, and had a gross carrying amount and accumulated amortization of less than $0.3 million at March 31, 2002, and December 31, 2001.
NYSEG's unamortized intangible assets primarily consist of franchises and consents, and had a carrying amount of $0.9 million at March 31, 2002, and December 31, 2001. NYSEG's amortized intangible assets consist of hydroelectric licenses, and had a gross carrying amount of $1.5 million and accumulated amortization of $0.9 million at both March 31, 2002, and December 31, 2001.
Estimated intangible assets amortization expense for the five years ended December 31 is as follows (for Energy East, excludes amortizable intangible assets that would result from the RGS Energy merger):
|
(Thousands) |
2002 |
2003 |
2004 |
2005 |
2006 |
|
Energy East |
$1,736 |
$1,736 |
$1,724 |
$1,587 |
$1,553 |
|
CMP |
$8 |
$8 |
$8 |
$8 |
$8 |
|
NYSEG |
$48 |
$48 |
$48 |
$48 |
$31 |
Transitional Information: Results of operations information for the companies as though Statement 142 had been adopted January 1, 2001, is:
|
Energy East |
CMP |
NYSEG |
||||
|
Quarter Ended March 31: |
2002 |
2001 |
2002 |
2001 |
2002 |
2001 |
|
(Thousands, except per share data) |
||||||
|
|
|
|
|
|
|
|
|
Add back: |
|
|
|
|
|
|
|
Adjusted net income |
$105,570 |
$121,771 |
$23,283 |
$24,399 |
$69,621 |
$79,694 |
|
Reported basic and diluted |
|
|
|
Add back: |
|
|
|
Adjusted basic and diluted earnings per share |
|
|
Note 3. Fair Value of Financial Instruments
The company has been evaluating the carrying value of CMP Group's investment in NEON Communications, Inc. because there has been a significant decline in the market value of NEON common shares for nearly two years. That decline is consistent with the market performance of telecommunications businesses as a whole. The investment in NEON is classified as available-for-sale, accounted for by the cost method and carried at its fair value, with changes in fair value recognized in other comprehensive income.
During the first quarter of 2002, the company determined that an additional decline in NEON's market value was other than temporary and wrote down the cost basis of the investment in NEON Communications to $2 million, based on the closing market price of NEON common shares on March 31, 2002. The writedown, which totaled $6 million after taxes, or five cents per share, is reflected in the company's earnings for the first quarter of 2002.
Note 4. Segment Information
Energy East's electric delivery business consists of its regulated transmission, distribution and generation operations in Maine and New York; and its natural gas delivery business consists of its regulated transportation, storage and distribution operations in New York, Connecticut, Maine and Massachusetts. Other includes: the company's corporate assets, interest income, interest expense and operating expenses; intersegment eliminations; and nonutility businesses.
CMP's electric delivery business, which it conducts in the State of Maine, consists of its regulated transmission and distribution operations. Other consists of CMP's corporate assets.
NYSEG's electric delivery business consists of its regulated transmission, distribution and generation operations. Its natural gas delivery business consists of its regulated transportation, storage and distribution operations. NYSEG operates in the State of New York. Other consists of NYSEG's corporate assets.
Selected information for Energy East's, CMP's and NYSEG's business segments is:
|
Electric |
Natural Gas |
|
|
|
|
Three Months Ended |
(Thousands) |
|||
|
March 31, 2002 |
||||
|
Operating Revenues |
|
|
|
|
|
Net Income |
|
|
|
|
|
March 31, 2001 |
||||
|
Operating Revenues |
|
|
|
|
|
Net Income |
|
|
|
|
|
Electric |
Natural Gas |
|
|
|
|
Total Assets |
||||
|
March 31, 2002 Energy East CMP NYSEG |
|
|
|
|
|
December 31, 2001 Energy East CMP NYSEG |
|
|
|
|
Note 5. Reclassifications
Certain amounts have been reclassified on the unaudited financial statements to conform with the 2002 presentation.
Forward-looking Statements
This Form 10-Q contains certain forward-looking statements that are based upon management's current expectations and information that is currently available. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements in certain circumstances. Whenever used in this report, the words "estimate," "expect," "believe," or similar expressions are intended to identify such forward-looking statements.
In addition to the assumptions and other factors referred to specifically in connection with such statements, factors that could cause actual results to differ materially from those contemplated in any forward-looking statements include, among others: the deregulation and continued regulatory unbundling of a vertically integrated industry; the companies' ability to compete in the rapidly changing and increasingly competitive electricity and natural gas utility markets; regulatory uncertainty in a politically-charged environment of rising energy prices; the operation of the New York Independent System Operator and ISO New England, Inc.; the operation of a RTO; the ability to control NUG and other costs; changes in fuel supply or cost and the success of strategies to satisfy power requirements now that all coal-fired generation assets have been sold; the company's ability to expand its products and services, including its energy infrastructure in the Northeast; the company's ability to integrate the operations of Connecticut Energy Corporation, CMP Group, CTG Resources, Inc., Berkshire Energy Resources and RGS Energy with its operations; market risk; the ability to obtain adequate and timely rate relief; nuclear, terrorist or environmental incidents; legal or administrative proceedings; changes in the cost or availability of capital; growth in the areas in which the companies are doing business; weather variations affecting customer energy usage; and other considerations that may be disclosed from time to time in the companies' publicly disseminated documents and filings. The companies undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
(See report on Form 10-K for Energy East, CMP and NYSEG for fiscal year ended December 31, 2001, Item 7A - Quantitative and Qualitative Disclosures About Market Risk.)
Commodity Price Risk: NYSEG has hedged approximately 78% of its expected residential natural gas load through September 2002 with futures and options contracts. For its remaining unhedged positions through September 2002, a $1.00 per dekatherm change in the cost of natural gas would change natural gas costs by less than $1 million. NYSEG has filed for a gas adjustment clause for residential customers that would become effective in October 2002. (See report on Form 10-K for Energy East and NYSEG for fiscal year ended December 31, 2001, Item 7 - Liquidity and Capital Resources, NYSEG Natural Gas Rate Filings.)
NYSEG uses electricity contracts and contracts for differences (CFDs), which are financial contracts with features similar to commodity swap agreements, to manage against fluctuations in the cost of electricity. Those contracts allow NYSEG to fix margins on the majority of its retail electricity sales. The cost or benefit of those contracts is included in the amount expensed for electricity purchased when the electricity is sold. NYSEG has CFDs, generation and other electricity contracts, which provide for 98% of its expected electric energy requirements for the remainder of 2002, 72% for 2003 and 68% for 2004.
NYSEG's electric rate settlement provides for a reconciliation and true-up of certain actual power supply costs during 2002; therefore, the supply cost risk for 2002 is substantially eliminated. (See report on Form 10-K for Energy East and NYSEG for fiscal year ended December 31, 2001, Item 7 - Liquidity and Capital Resources, NYSEG Electric Rate Settlement.)
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - See Exhibit Index.
(b) The following reports on Form 8-K were filed during the quarter:
Energy East and NYSEG each filed two reports on Form 8-K: one dated January 10, 2002, and another dated January 15, 2002, both to report certain information under Item 5, "Other Events."
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, each Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
ENERGY EAST CORPORATION |
|
|
CENTRAL MAINE POWER COMPANY |
|
|
NEW YORK STATE ELECTRIC & GAS CORPORATION |
EXHIBIT INDEX
The following exhibit is delivered with this report:
|
Registrant |
Exhibit No. |
Description of Exhibit |
|
New York State Electric |
(A)10-31 |
Amendment No. 2 to Supplemental Executive Retirement Plan, amended and restated effective August 1, 2001. |
_______________________