SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended September 30, 1996
Commission file number 1-1910
BALTIMORE GAS AND ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
Maryland 52-0280210
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(State of incorporation) (IRS Employer Identification No.)
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410-783-5920
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report)
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, and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
Common Stock, without par value - 147,567,114 shares outstanding on October 31, 1996.
BALTIMORE GAS AND ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Quarter Ended Nine Months Ended
September 30, September 30,
---------------------------- -----------------------------
1996 1995 1996 1995
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(In Thousands, Except Per-Share Amounts)
Revenues
Electric ........................................................... $ 664,364 $ 713,769 $ 1,736,587 $ 1,726,220
Gas ................................................................ 62,874 49,477 375,653 270,229
Diversified businesses ............................................. 98,722 85,535 306,756 212,638
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Total revenues ..................................................... 825,960 848,781 2,418,996 2,209,087
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Expenses Other Than Interest and Income Taxes
Electric fuel and purchased energy ................................. 134,241 155,085 415,561 435,667
Gas purchased for resale ........................................... 28,099 18,339 206,511 129,330
Operations ......................................................... 131,447 135,056 393,812 401,184
Maintenance ........................................................ 40,310 34,478 135,562 122,720
Diversified businesses - selling, general, and administrative ...... 71,351 54,590 223,175 148,337
Depreciation and amortization ...................................... 83,655 93,559 251,385 245,574
Taxes other than income taxes ...................................... 61,190 57,930 167,372 157,389
----------- ----------- ----------- -----------
Total expenses other than interest and income taxes ................ 550,293 549,037 1,793,378 1,640,201
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Income From Operations ............................................. 275,667 299,744 625,618 568,886
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Other Income
Allowance for equity funds used during construction ................ 1,007 2,026 4,979 12,227
Equity in earnings of Safe Harbor Water Power Corporation .......... 1,208 1,108 3,454 3,323
Net other income and deductions .................................... (341) (1,661) (4,439) (7,600)
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Total other income ................................................. 1,874 1,473 3,994 7,950
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Income Before Interest and Income Taxes ............................ 277,541 301,217 629,612 576,836
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Interest Expense
Interest charges ................................................... 55,966 55,436 161,737 165,746
Capitalized interest ............................................... (4,523) (3,509) (11,091) (10,676)
Allowance for borrowed funds used during construction .............. (546) (1,096) (2,692) (6,615)
----------- ----------- ----------- -----------
Net interest expense ............................................... 50,897 50,831 147,954 148,455
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Income Before Income Taxes ......................................... 226,644 250,386 481,658 428,381
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Income Taxes
Current ............................................................ 66,194 64,611 136,325 69,523
Deferred ........................................................... 15,883 24,470 39,256 79,865
Investment tax credit adjustments .................................. (1,915) (2,030) (5,739) (6,085)
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Total income taxes ................................................. 80,162 87,051 169,842 143,303
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Net Income ......................................................... 146,482 163,335 311,816 285,078
Preferred and Preference Stock Dividends ........................... 8,620 10,231 30,387 30,135
----------- ----------- ----------- -----------
Earnings Applicable to Common Stock ................................ $ 137,862 $ 153,104 $ 281,429 $ 254,943
=========== =========== =========== ===========
Average Shares of Common Stock Outstanding 147,565 147,527 147,540 147,527
Earnings Per Share of Common Stock $0.93 $1.04 $1.91 $1.73
Dividends Declared Per Share of Common Stock $0.40 $0.39 $1.19 $1.16
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See Notes to Consolidated Financial Statements.
CONSOLIDATED BALANCE SHEETS September 30, December 31,
1996* 1995
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(In Thousands)
ASSETS
Current Assets
Cash and cash equivalents ........................................................ $ 42,244 $ 23,443
Accounts receivable (net of allowance for uncollectibles ......................... 414,643 400,005
of $17,569 and $16,390 respectively)
Fuel stocks ...................................................................... 78,093 59,614
Materials and supplies ........................................................... 143,182 145,900
Prepaid taxes other than income taxes ............................................ 92,498 60,508
Deferred income taxes ............................................................ 4,551 36,831
Trading securities ............................................................... 66,838 47,990
Other ............................................................................ 15,897 31,487
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Total current assets ............................................................. 857,946 805,778
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Investments and Other Assets
Real estate projects ............................................................. 510,919 479,344
Power generation systems ......................................................... 370,843 358,629
Financial investments ............................................................ 198,062 205,841
Nuclear decommissioning trust fund ............................................... 107,845 85,811
Net pension asset ................................................................ 81,301 60,077
Safe Harbor Water Power Corporation .............................................. 34,422 34,327
Senior living facilities ......................................................... 34,488 16,045
Other ............................................................................ 81,114 71,894
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Total investments and other assets ............................................... 1,418,994 1,311,968
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Utility Plant
Plant in service
Electric ....................................................................... 6,463,998 6,360,624
Gas ............................................................................ 753,586 692,693
Common ......................................................................... 523,713 522,450
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Total plant in service ......................................................... 7,741,297 7,575,767
Accumulated depreciation ......................................................... (2,569,036) (2,481,801)
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Net plant in service ............................................................. 5,172,261 5,093,966
Construction work in progress .................................................... 215,462 247,296
Nuclear fuel (net of amortization) ............................................... 145,280 130,782
Plant held for future use ........................................................ 25,737 25,552
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Net utility plant ................................................................ 5,558,740 5,497,596
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Deferred Charges
Regulatory assets (net) .......................................................... 616,989 637,915
Other deferred charges ........................................................... 76,250 63,406
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Total deferred charges ........................................................... 693,239 701,321
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TOTAL ASSETS ....................................................................... $ 8,528,919 $ 8,316,663
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* Unaudited
See Notes to Consolidated Financial Statements.
PART I. FINANCIAL INFORMATION (Continued)
CONSOLIDATED BALANCE SHEETS September 30, December 31,
1996* 1995
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(In Thousands)
LIABILITIES AND CAPITALIZATION
Current Liabilities
Short-term borrowings ............................................................ $ 389,160 $ 279,305
Current portions of long-term debt and preference stock .......................... 268,173 146,969
Accounts payable ................................................................. 143,664 177,092
Customer deposits ................................................................ 28,324 26,857
Accrued taxes .................................................................... 40,198 8,244
Accrued interest ................................................................. 52,045 56,670
Dividends declared ............................................................... 67,379 67,198
Accrued vacation costs ........................................................... 31,175 33,403
Other ............................................................................ 28,901 39,417
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Total current liabilities ........................................................ 1,049,019 835,155
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Deferred Credits and Other Liabilities
Deferred income taxes ............................................................ 1,312,473 1,311,530
Pension and postemployment benefits .............................................. 161,773 148,594
Decommissioning of federal uranium enrichment facilities ......................... 43,694 43,695
Other ............................................................................ 63,905 55,568
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Total deferred credits and other liabilities ..................................... 1,581,845 1,559,387
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Capitalization
Long-term Debt
First refunding mortgage bonds of BGE ............................................ 1,619,357 1,538,528
Other long-term debt of BGE ...................................................... 622,000 649,500
Long-term debt of Constellation Companies ........................................ 570,041 546,903
Unamortized discount and premium ................................................. (14,431) (15,708)
Current portion of long-term debt ................................................ (173,673) (120,969)
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Total long-term debt ............................................................. 2,623,294 2,598,254
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Preferred Stock .................................................................... -- 59,185
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Redeemable Preference Stock ........................................................ 240,500 268,000
Current portion of redeemable preference stock ................................... (94,500) (26,000)
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Total redeemable preference stock ................................................ 146,000 242,000
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Preference Stock Not Subject to Mandatory Redemption ............................... 210,000 210,000
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Common Shareholders' Equity
Common stock ..................................................................... 1,426,746 1,425,805
Retained earnings ................................................................ 1,487,272 1,381,417
Net unrealized gain on available-for-sale securities ............................. 4,743 5,460
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Total common shareholders' equity ................................................ 2,918,761 2,812,682
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Total capitalization ............................................................. 5,898,055 5,922,121
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TOTAL LIABILITIES AND CAPITALIZATION ............................................... $ 8,528,919 $ 8,316,663
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* Unaudited
See Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended September 30,
--------------------------------
1996 1995
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(In Thousands)
Cash Flows From Operating Activities
Net income ............................................................................... $ 311,816 $ 285,078
Adjustments to reconcile to net cash provided by operating activities
Depreciation and amortization .......................................................... 288,491 288,698
Deferred income taxes .................................................................. 39,256 79,865
Investment tax credit adjustments ...................................................... (5,739) (6,085)
Deferred fuel costs .................................................................... 14,962 21,690
Disallowance of replacement energy costs ............................................... 6,763 --
Accrued pension and postemployment benefits ............................................ (11,277) (10,540)
Allowance for equity funds used during construction .................................... (4,979) (12,227)
Equity in earnings of affiliates and joint ventures (net) .............................. (42,130) (14,854)
Changes in current assets, other than sale of accounts receivable ...................... (61,729) (57,784)
Changes in current liabilities, other than short-term borrowings ....................... (16,853) (38,415)
Other .................................................................................. 8,907 (767)
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Net cash provided by operating activities ................................................ 527,488 534,659
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Cash Flows From Financing Activities
Proceeds from issuance of
Short-term borrowings (net) ............................................................ 97,855 (49,900)
Long-term debt ......................................................................... 217,655 56,164
Preference Stock ....................................................................... -- 59,475
Common stock ........................................................................... 798 140
Reacquisition of long-term debt .......................................................... (140,046) (67,002)
Redemption of preferred and preference stock ............................................. (89,559) --
Common stock dividends paid .............................................................. (174,082) (169,656)
Preferred and preference stock dividends paid ............................................ (28,697) (29,856)
Other .................................................................................... (917) 325
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Net cash used in financing activities .................................................... (116,993) (200,310)
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Cash Flows From Investing Activities
Utility construction expenditures ........................................................ (258,846) (262,533)
Allowance for equity funds used during construction ...................................... 4,979 12,227
Nuclear fuel expenditures ................................................................ (45,695) (45,434)
Deferred energy conservation expenditures ................................................ (21,731) (30,068)
Contributions to nuclear decommissioning trust fund ...................................... (21,075) (7,335)
Purchases of marketable equity securities ................................................ (28,196) (12,055)
Sales of marketable equity securities .................................................... 32,152 40,856
Other financial investments .............................................................. 10,390 7,941
Real estate projects ..................................................................... (37,127) (3,898)
Power generation systems ................................................................. (11,341) (29,949)
Other .................................................................................... (15,204) (14,610)
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Net cash used in investing activities .................................................... (391,694) (344,858)
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Net Increase (Decrease) in Cash and Cash Equivalents ....................................... 18,801 (10,509)
Cash and Cash Equivalents at Beginning of Period ........................................... 23,443 38,590
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Cash and Cash Equivalents at End of Period ................................................. $ 42,244 $ 28,081
========= =========
Other Cash Flow Information Cash paid during the period for:
Interest (net of amounts capitalized) .................................................. $ 151,456 $ 148,018
Income taxes ........................................................................... $ 90,901 $ 46,197
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See Notes to Consolidated Financial Statements.
Certain prior period amounts have been reclassified to conform with the current period presentation.
Results for interim periods, which can be largely influenced by weather conditions, are not necessarily indicative of results to be expected for the year.
The preceding interim financial statements of Baltimore Gas and Electric Company (BGE) and Subsidiaries (collectively, the Company) reflect all adjustments which are, in the opinion of Management, necessary for the fair presentation of the Company's financial position and results of operations for such interim periods. These adjustments are of a normal recurring nature.
Date Net
Issuance Principal Issued Proceeds
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First Refunding Mortgage Bonds
Remarketed Floating Rate Series
Due September 1, 2006 $125,000,000 6/24/96 $124,875,000
Medium-Term Notes, Series D
6.68% Due October 11, 2001 $50,000,000 10/11/96 $49,750,000
6.90% Due February 1, 2005 $20,000,000 10/23/96 $19,890,000
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6.46% Due November 5, 2001 $10,000,000 11/5/96 $ 9,950,000 6.79% Due November 15, 2004 $20,000,000 11/5/96 $19,890,000 6.70% Due December 1, 2006 $10,000,000 11/15/96 $ 9,940,000
The $125,000,000 Remarketed Floating Rate Series Due September 1, 2006 Mortgage Bonds include a provision that allows the bondholders the option to tender their bonds back to BGE on an annual basis. BGE is required to repurchase and retire any bonds tendered that are not remarketed or purchased by the remarketing agent. In addition, BGE has the option to call the bonds annually at par on each remarketing date.
On August 1, 1996, BGE redeemed $5,541,000 principal amount of the 7-1/8% Series Due January 1, 2002 and $418,000 from several other series of First Refunding Mortgage Bonds at various prices tendered in connection with the annual sinking fund required by BGE's mortgage. In addition, on August 29, 1996, BGE redeemed $11,420,000 principal amount of the 7-1/8% Series Due January 1, 2002 at par to complete the sinking fund for 1996.
BGE may purchase First Refunding Mortgage Bonds of various series in open market transactions, from time to time in the future, depending upon market conditions and BGE's assessment of optimal capital structure, including the mix of secured and unsecured debt.
Cumulative Preferred Stock, Price
$100 Par Value Shares Per Share
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Series B, 4-1/2% 222,921 $110
Series C, 4% 68,928 $105
Series D, 5.40% 300,000 $101
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In addition, BGE exercised its option to double-up the required sinking fund on certain series of Preference Stock. The total shares redeemed, including the optional redemptions, were as follows:
Cumulative Preference Stock, Date Price
$100 Par Value Shares Redeemed Per Share
-------------- ------ -------- ---------
8.625% 1990 Series 260,000 7/1/96 $100
8.25% 1989 Series 200,000 10/1/96 $100
7.50% 1986 Series 30,000 10/1/96 $100
Common Stock
- ------------
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During the period July 1, 1996 through the date of this Report, BGE issued a total of 140,000 shares of Common Stock, without par value, through its Common Stock Continuous Offering Program with net proceeds to BGE of approximately $3,987,000.
Preliminary estimates by the managements of PEPCO and BGE indicate that the synergies resulting from the combination of their utility operations could generate net cost savings of up to $1.3 billion over a period of 10 years following the Merger. These estimates indicate that about two-thirds of the savings will come from reduced labor costs, with the remaining savings split between nonfuel purchasing and corporate and administrative programs. These savings are net of costs to achieve, presently estimated to be approximately $150 million, and are expected to be allocated among shareholders and customers. This allocation will depend upon the results of regulatory proceedings in the various jurisdictions in which BGE and PEPCO operate their utility businesses (see discussion of the issues raised in regulatory proceedings regarding the allocation and other matters). The analyses employed in order to develop estimates of the potential savings as a result of the Merger were necessarily based upon various assumptions which involve judgments with respect to, among other things, future national and regional economic and competitive conditions, inflation rates, regulatory treatment, weather conditions, financial market conditions, interest rates, future business decisions and other uncertainties, all of which are difficult to predict and many of which are beyond the control of BGE and PEPCO. Accordingly, while BGE believes that such assumptions are reasonable for purposes of the development of estimates of potential savings, there can be no assurance that such assumption will approximate actual experience or that all such savings will be realized.
Major regulatory proceedings, together with an indication of the current status of the proceeding, which must be concluded in order to proceed with the merger are listed below. The Merger Agreement provides that a condition to closing is that no such approvals shall impose terms and conditions that would have, or would be reasonably likely to have, a material adverse effect on the business, operations, properties, assets, condition (financial or otherwise), prospects, or results of operations of the new company.
Federal Energy Regulatory Commission (FERC) - The merger has been set for hearing to explore the merged company's generation market power, including the appropriate geographic markets, and to consider appropriate remedies if the merged company is found to possess generation market power. Testimony of FERC staff included the suggestion that a significant portion of generation (approximately
2400-3600 megawatts) be divested or transmission capability be upgraded or both due to the perceived market power of the merged company in both the wholesale and retail markets.
Maryland Public Service Commission (PSC) - Hearings are in progress
and testimony has been filed by all parties to the proceeding. Since
the Report on Form 10-Q for the second quarter 1996 was filed,
rebuttal and surrebuttal testimony has been filed. Office of People's
Counsel (the advocates for residential customers) recommended that the
PSC not approve the Merger until the Applicants demonstrate that
Maryland customers will not be harmed by potential restrictions on
competition due to the market power of the new company. If, however,
the PSC decides to approve the Merger, People's Counsel continues to
recommend rate decreases. Due to the use of a different test period,
the amounts are somewhat different than reported in the second quarter
Report on Form 10-Q. Based on a test period proposed by People's
Counsel in recent testimony, they recommend a pre-merger rate
reduction of approximately $108.3 million ($84.7 million to BGE
customers and $23.6 million to PEPCO customers) with Merger savings
being reflected in further reduced rates of approximately $65 million
($45 million to BGE customers and $20 million to PEPCO customers)
contemporaneously with the date of the Merger. A number of other
recommendations are also included in People's Counsel testimony. The
Maryland Energy Administration (MEA) continues to recommend that the
PSC adopt an alternative regulatory plan and also asks that rates be
examined. PSC Staff testimony also utilizes the new test period. Based
on the new test period PSC Staff recommends an immediate decrease of
$63.6 million (BGE's rates reduced by $54.3 million and PEPCO's by
$9.3 million) at the time of the Merger. PSC Staff's surrebuttal
testimony also recommends that CEC be required to make a rate filing
15 months after the Merger becomes effective.
District of Columbia Public Service Commission - Testimony was filed by the parties in September 1996. The D.C. Office of People's Counsel (the advocates for residential customers) opposes the Merger based on its contention that BGE and PEPCO have not proved that the Merger is in the public interest. Testimony of the D.C. People's Counsel also provides that should the Merger be approved, an immediate rate reduction of $44.2 million be imposed at the time of the Merger, followed by a 5-year moratorium on rate increases. Further, testimony of D.C. People's Counsel advocates divestiture of all nonutility affiliate companies, exclusion of BGE's Calvert Cliffs Nuclear Plant from production plant assigned to D.C., and a 5-year $23.37 million per year economic development program. GSA, a major D.C. customer, requests that any approval should be coupled with an imposition of retail competition access for ratepayers such as GSA, a 25-year amortization of costs to achieve the Merger, and elimination of Calvert Cliffs from the generating mix. In addition to these matters, D.C. People's Counsel, an intervenor, Washington Gas Light Company, and the D.C. Corporation Counsel have questioned the interpretation by BGE and PEPCO that a D.C. statute known as the Antimerger Law is inapplicable to this transaction. Should such statute be deemed to be applicable, authorization of the Merger by Congress would be required. Allegations also were made that BGE and PEPCO should have received Congressional approval for their owning 50% of the shell company, CEC, prior to consummation of the Merger.
The reasons for the Merger, the terms and conditions contained in the Merger Agreement, the regulatory approvals required prior to closing the Merger, and other matters concerning the Merger, PEPCO, and CEC are discussed in more detail in the Registration Statement on Form S-4 (Registration No. 33-64799) which is included as an exhibit to this Report on Form 10-Q by incorporation by reference.
The Merger Agreement provides that, upon consummation of the Merger, the CEC Board of Directors will consist of 16 persons - 9 designated by BGE and 7 designated by PEPCO. However, disclosure in the Registration Statement on Form S-4 stated the number of Directors might be reconsidered because of a District of Columbia public utility law. That law, which precluded utilities serving the District of Columbia from having more than 15 directors, was recently amended. As a result, at the effective time of the Merger CEC will have 16 Directors as specified in the Merger Agreement.
2000. BGE met the requirements of Phase I by installing flue gas desulfurization systems and fuel switching and through unit retirements. BGE is currently examining what actions will be required in order to comply with Phase II of the Act. However, BGE anticipates that compliance will be attained by some combination of fuel switching, flue gas desulfurization, unit retirements, or allowance trading.
At this time, plans for complying with NOx control requirements under Title I of the Act are less certain because all implementation regulations have not yet been finalized by the government. It is expected that by the year 1999 these regulations will require additional NOx controls for ozone attainment at BGE's generating plants and at other BGE facilities. The controls will result in additional expenditures that are difficult to predict prior to the issuance of such regulations. Based on existing and proposed ozone nonattainment regulations, BGE currently estimates that the NOx controls at BGE's generating plants will cost approximately $90 million. BGE is currently unable to predict the cost of compliance with the additional requirements at other BGE facilities.
BGE has been notified by the Environmental Protection Agency and several state agencies that it is being considered a potentially responsible party with respect to the cleanup of certain environmentally contaminated sites owned and operated by third parties. In addition, a subsidiary of Constellation Holdings, Inc. has been named as a defendant in a case concerning an alleged environmentally contaminated site owned and operated by a third party. Cleanup costs for these sites cannot be estimated, except that BGE's 15.79% share of the possible cleanup costs at one of these sites, Metal Bank of America, a metal reclaimer in Philadelphia, could exceed amounts BGE has recognized by up to approximately $7 million based on the highest estimate of costs in the range of reasonably possible alternatives. Although the cleanup costs for certain of the remaining sites could be significant, BGE believes that the resolution of these matters will not have a material effect on its financial position or results of operations.
Also, BGE is coordinating investigation of several former gas manufacturing plant sites, including exploration of corrective action options to remove tar. However, no formal legal proceedings have been instituted against BGE. The technology for cleaning up such sites is still developing, and remedies for these sites are being determined. BGE has recognized estimated environmental costs at these sites which are considered probable totaling $50 million in nominal dollars. These costs, net of accumulated amortization, have been deferred as a regulatory asset (see Note 5 of the Form 10-K for the year ended December 31, 1995). Accounting rules also require BGE to disclose additional costs deemed by BGE to be less likely than probable costs, but still "reasonably possible" of being incurred at these sites. Because of the results of recent studies at these sites, it is reasonably possible that these additional costs could exceed the amount recognized by approximately $48 million in nominal dollars ($11 million in current dollars, plus the impact of inflation at 3.1% over a period of up to 60 years).
In addition, in the event of an incident at any commercial nuclear power plant in the country, BGE could be assessed for a portion of any third party claims associated with the incident. Under the provisions of the Price Anderson Act, the limit for third party claims from a nuclear incident is $8.92 billion. If third party claims relating to such an incident exceed $200 million (the amount of primary insurance), BGE's share of the total liability for third party claims could be up to $159 million per incident, that would be payable at a rate of $20 million per year.
BGE and other operators of commercial nuclear power plants in the United States are required to purchase insurance to cover claims of certain nuclear workers. Other non-governmental commercial nuclear facilities may also purchase such insurance. Coverage of up to $400 million is provided for claims against BGE or others insured by these policies for radiation injuries. If certain claims were made under these policies, BGE and all policyholders could be assessed, with BGE's share being up to $6.02 million in any one year.
For physical damage to Calvert Cliffs, BGE has $2.75 billion of property insurance from industry mutual insurance companies. If an outage at Calvert Cliffs is caused by an insured physical damage loss and lasts more than 21 weeks, BGE has up to $473.2 million per unit of insurance, provided by an industry mutual insurance company, for replacement power costs. This amount can be reduced by up to $94.6 million per unit if an outage to both units at Calvert Cliffs is caused by a singular insured physical damage loss. If accidents at any insured plants cause a shortfall of funds at the industry mutuals, BGE and all policyholders could be assessed, with BGE's share being up to $43.6 million.
Since the two units at BGE's Calvert Cliffs Nuclear Power Plant utilize BGE's lowest cost fuel, replacement energy costs associated with outages at these units can be significant. BGE cannot estimate the amount of replacement energy costs that could be challenged or disallowed in future fuel rate proceedings, but such amounts could be material.
In October 1988, BGE filed its first fuel rate application for a change in its electric fuel rate under GUPP. The resultant case before the PSC covers BGE's operating performance in calendar year 1987, and BGE's filing demonstrated that it met the system-wide and individual nuclear plant performance targets for 1987. In November 1989, testimony was filed on behalf of the Maryland People's Counsel (People's Counsel) alleging that seven outages at the Calvert Cliffs plant in 1987 were due to management imprudence and that the replacement energy costs associated with those outages should be disallowed by the Commission. Total replacement energy costs associated with the 1987 outages were approximately $33 million. On January 23, 1995, the Hearing Examiner issued his decision in the 1987 fuel rate proceeding and found that the Company had met the GUPP standard which establishes a presumption that BGE had operated the plant at a reasonably productive capacity level. However, the Order found that the presumption of reasonableness would be overcome by a showing of mismanagement and that such a showing was made with respect to the environmental qualifications outage time. The Hearing Examiner had mitigated the disallowance of replacement energy costs due to the fact the GUPP standard was met. The Hearing Examiner's Order was appealed to the PSC by both BGE and People's Counsel. The PSC upheld the Hearing Examiner's findings with respect to the environmental qualification related outage time, but disagreed with certain methodologies applied by the Hearing Examiner. The impact of the PSC's decision on the Company's earnings was approximately $4.5 million which equaled BGE's previous estimate reported in the Form 10-Q for the quarter ended March 31, 1996. People's Counsel has filed a motion for rehearing.
In May 1989, BGE filed its fuel rate case in which 1988 performance was examined. BGE met the system-wide and nuclear plant performance targets in 1988. People's Counsel alleged that BGE imprudently managed several outages at Calvert Cliffs, and BGE estimates that the total replacement energy costs associated with these 1988 outages were approximately $2 million. On November 14, 1991, a Hearing Examiner at the PSC issued a proposed Order, which became final on December 17, 1991 and concluded that no disallowance was warranted. The Hearing Examiner found that BGE maintained the productive capacity of the Plant at a reasonable level, noting that it produced a near record amount of power and exceeded the GUPP standard. Based on this record, the
Order concluded there was sufficient cause to excuse any avoidable failures to maintain productive capacity at higher levels.
During 1989, 1990, and 1991, BGE experienced extended outages at its Calvert Cliffs Nuclear Power Plant. In the Spring of 1989, a leak was discovered around the Unit 2 pressurizer heater sleeves during a refueling outage. BGE shut down Unit 1 as a precautionary measure on May 6, 1989, to inspect for similar leaks and none were found. However, Unit 1 was out of service for the remainder of 1989 and 285 days of 1990 to undergo maintenance and modification work to enhance the reliability of various safety systems, to repair equipment, and to perform required periodic surveillance tests. Unit 2, which returned to service on May 4, 1991, remained out of service for the remainder of 1989, 1990, and the first part of 1991 to repair the pressurizer, perform maintenance and modification work, and complete the refueling. The replacement energy costs associated with these extended outages for both units at Calvert Cliffs, concluding with the return to service of Unit 2, are estimated to be $458 million.
In a December 1990 Order issued by the PSC in a BGE base rate proceeding, the PSC found that certain operations and maintenance expenses incurred at Calvert Cliffs during the test year should not be recovered from ratepayers. The PSC found that this work, which was performed during the 1989-1990 Unit 1 outage and fell within the test year, was avoidable and caused by BGE actions which were deficient.
The PSC noted in the Order that its review and findings on these issues pertain to the reasonableness of BGE's test-year operations and maintenance expenses for purposes of setting base rates and not to the responsibility for replacement power costs associated with the outages at Calvert Cliffs. The PSC stated that its decision in the base rate case will have no res judicata (binding) effect in the fuel rate proceeding examining the 1989- 1991 outages. The work characterized as avoidable significantly increased the duration of the Unit 1 outage. Despite the PSC's statement regarding no binding effect, BGE recognizes that the views expressed by the PSC make the full recovery of all of the replacement energy costs associated with the Unit 1 outage doubtful. Therefore, in December 1990, BGE recorded a provision of $35 million against the possible disallowance of such costs. BGE cannot determine whether replacement energy costs may be disallowed in the present fuel rate proceeding in excess of the provision, but such amounts could be material. Hearings in this proceeding took place in August 1996, but an initial decision is not expected until some time in 1997.
The financial condition and results of operations of Baltimore Gas and Electric Company (BGE) and Subsidiaries (collectively, the Company) are set forth in the Consolidated Financial Statements and Notes to Consolidated Financial Statements sections of this Report. Factors significantly affecting results of operations, liquidity, and capital resources are discussed below.
RESULTS OF OPERATIONS FOR THE QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED WITH THE CORRESPONDING PERIODS OF 1995:
Quarter Ended Nine Months Ended
September 30 September 30
------------ ------------
1996 1995 1996 1995
---- ---- ---- ----
Utility operations $.86 $ .96 $1.70 $1.59
Diversified businesses .07 .08 .21 .14
--- --- --- ---
Total $.93 $1.04 $1.91 $1.73
==== ===== ===== =====
|
Earnings from utility operations decreased during the quarter ended September 30, 1996 as compared to the corresponding period last year primarily due to lower electric system sales resulting from the milder summer weather in 1996, offset partially by lower depreciation and amortization expenses. Earnings from utility operations increased during the nine months ended September 30, 1996 primarily due to higher electric and gas system sales resulting from the colder winter weather and an increased number of customers in 1996. This was offset partially by lower electric system sales in the third quarter, higher expenses other than interest and income taxes, and a decrease in the allowance for funds used during construction. The effect of weather on utility sales is discussed below under the heading "Effect of Weather on Utility Sales."
The following factors influence BGE's utility operations earnings:
regulation by the Maryland Public Service Commission (PSC), the effect of
weather and economic conditions on sales, and competition in the generation and
sale of electricity. The gas base rate increase authorized by the PSC in
November 1995 favorably affected utility earnings during the quarter and nine
months ended September 30, 1996. The electric fuel rate cases now pending before
the PSC discussed in the Notes to Consolidated Financial Statements under the
heading "Recoverability of Electric Fuel Costs" could also affect future years'
earnings.
Future competition may also affect earnings in ways that are not possible to predict (see the discussion of "Response to Regulatory Change" in the Form 10-K).
Earnings from diversified businesses, which primarily represent the operations of Constellation Holdings, Inc. and Subsidiaries (collectively, the Constellation Companies), BGE Home Products & Services, Inc. and Subsidiary (HP&S), BGE Energy Projects & Services, Inc. and Subsidiaries (EP&S) and BNG, Inc., decreased during the quarter and increased during the nine months ended September 30, 1996 compared to the corresponding periods of 1995. These changes are discussed under the heading "Diversified Businesses Earnings."
Quarter Ended Nine Months Ended
September 30 September 30
------------ ------------
1996 1995 1996 1995
---- ---- ---- ----
Heating degree days 102 53 3,324 2,772
Percent change compared
to prior period 92.5% 19.9%
Cooling degree days 491 746 770 997
Percent change compared
|
to prior period (34.2)% (22.8)%
Quarter Ended Nine Months Ended
September 30 September 30
1996 vs. 1995 1996 vs. 1995
------------- -------------
(In millions)
System sales volumes $(37.6) $12.1
Base rates 8.5 17.7
Fuel rates (9.1) (9.9)
---- ----
Revenues from system sales (38.2) 19.9
Interchange and other sales (11.7) (10.0)
Other revenues 0.5 0.5
--- ---
Total $(49.4) $10.4
====== =====
|
Electric system sales represent volumes sold to customers within BGE's service territory at rates determined by the PSC. These amounts exclude interchange sales and sales to other utilities, which are discussed separately. Following is a comparison of the changes in electric system sales volumes:
Quarter Ended Nine Months Ended
September 30 September 30
1996 vs. 1995 1996 vs. 1995
------------- -------------
Residential (10.3)% 4.4%
Commercial (3.4) 0.2
Industrial (0.4) 1.9
Total (5.7) 2.1
|
Sales to residential, commercial, and industrial customers decreased during the quarter ended September 30, 1996 compared to the same period last year due primarily to milder summer weather, offset partially by greater usage per customer and by increases in the number of customers. Sales to residential, commercial, and industrial customers increased during the nine months ended September 30, 1996 compared to the same period last year due to colder winter weather, greater usage per customer, and an increase in the number of customers, offset partially by milder summer weather.
Base rates are affected by two principal items: rate orders by the PSC and recovery of eligible electric conservation program costs through the energy conservation surcharge. Base rates increased for the quarter and nine months ended September 30, 1996 compared to last year due to recovery of a higher level of eligible electric conservation program costs.
Under the energy conservation surcharge, if the PSC determines that BGE is earning in excess of its authorized rate of return, BGE will have to refund (by means of lowering future surcharges) a portion of energy conservation surcharge revenues to its customers. This determination is now made on an annual basis at the end of each year. The portion subject to the refund is compensation for foregone sales from conservation programs and incentives for achieving conservation goals and will be refunded to customers with interest beginning in the ensuing July when the annual resetting of the conservation surcharge rates occurs.
Changes in fuel rate revenues result from the operation of the electric fuel rate formula. The fuel rate formula is designed to recover the actual cost of fuel, net of revenues from interchange sales and sales to other utilities (See Notes 1 and 12 of the Form 10-K). Changes in fuel rate revenues and interchange and other sales normally do not affect earnings. However, if the PSC were to disallow recovery of any part of these costs, earnings would be reduced as discussed in Note 12 of the Form 10-K.
Fuel rate revenues were lower for the quarter ended September 30, 1996 as compared to the same period in 1995 as a result of a lower fuel rate and lower electric system sales volumes. Fuel rate revenues were lower for the nine months ended September 30, 1996 as compared to the same period in 1995 as a result of a lower fuel rate, offset partially by higher electric system sales volumes primarily during the first quarter of 1996. The fuel rate was lower for the quarter and nine months ended September 30, 1996 as compared to the same periods last year because of a less costly twenty-four month generation mix at the Company's generating plants. BGE expects electric fuel rate revenues to remain relatively constant through the remainder of 1996.
Interchange and other sales represent sales of BGE's energy to the Pennsylvania - New Jersey - Maryland Interconnection (PJM), a regional power pool of eight member companies including BGE, and sales to other parties. These sales occur after BGE has satisfied the demand for its own system sales of electricity. Interchange and other sales decreased for the quarter and nine months ended September 30, 1996 compared to the same periods last year because of lower generation from the Calvert Cliffs Nuclear Power Plant, offset partially by a higher price per megawatt of electricity sold.
Gas revenues changed for the quarter and nine months ended September 30, 1996 because of the following factors:
Quarter Ended Nine Months Ended
September 30 September 30
1996 vs. 1995 1996 vs. 1995
------------- -------------
(In millions)
Sales volumes $0.1 $ 9.2
Base rates 3.7 16.6
Gas cost adjustment revenues 1.8 57.4
--- ----
Revenues from system sales 5.6 83.2
Off-system Sales 8.0 21.3
Other revenues (0.2) 0.9
---- ---
Total $13.4 $105.4
===== ======
|
Below is a comparison of the changes in gas sales volumes:
Quarter Ended Nine Months Ended
September 30 September 30
1996 vs. 1995 1996 vs. 1995
------------- -------------
Residential 6.5% 15.9%
Commercial (6.8) 4.0
Industrial 2.0 (3.6)
Total 0.8 5.1
|
Gas sales to residential customers increased during the quarter ended September 30, 1996 as compared to the same period last year due to greater usage per customer and an increase in the number of customers. Sales to commercial customers decreased compared to last year due primarily to decreased usage per customer, offset partially by an increase in the number of customers. Sales to industrial customers increased compared to last year due to increased usage per customer which more than offset decreased usage by Bethlehem Steel.
Gas sales to residential customers increased during the nine months ended September 30, 1996 as compared to the same period last year primarily due to colder winter and early spring weather, an increase in the number of customers, and an increase in usage per customer. Sales to commercial customers also increased compared to last year due to colder winter weather and an increase in the number of customers, but this was offset partially by lower usage per customer. Sales to industrial customers decreased compared to last year due to decreased usage by Bethlehem Steel and a greater number of interruptions caused by the colder winter weather this year, offset partially by increased usage by other industrial customers and by an increase in the number of customers.
Base rates increased during the quarter and nine months ended September 30, 1996 compared to the same period last year primarily as a result of the PSC's November 1995 rate order, which increased annual base rate revenues by $19.3 million, including $2.4 million to recover higher depreciation expense.
Changes in gas cost adjustment revenues result primarily from the operation of the purchased gas adjustment clause, commodity charge adjustment clause, and the actual cost adjustment clause which are designed to recover actual gas costs. (See Note 1 of the Form 10-K.) Changes in gas cost adjustment revenues normally do not affect earnings. Gas cost adjustment revenues increased for the quarter and nine months ended September 30, 1996 because of higher prices for purchased gas. Gas cost adjustment revenues also increased for the nine months ended September 30, 1996 because of higher sales volumes subject to gas cost adjustment clauses. Delivery service sales volumes are not subject to gas cost adjustment clauses because these customers purchase their gas directly from third parties.
Off-system gas sales volumes represent direct sales to end users of natural gas outside BGE's service territory and are not subject to gas cost adjustment clauses. BGE began sales of off- system gas during the first quarter of 1996. Pursuant to a sharing arrangement approved by the PSC, the gross margin earned on these sales reduces gas cost adjustment charges to customers and increases income available to common shareholders.
Quarter Ended Nine Months Ended
September 30 September 30
------------ ------------
1996 1995 1996 1995
---- ---- ---- ----
(In millions)
Actual costs $140.4 $156.7 $419.6 $420.2
Net (deferral) recovery
of costs under electric
fuel rate clause (see
Note 1 of the Form 10-K) (6.2) (1.6) (10.8) 15.5
Disallowed deferred fuel costs 0.0 0.0 6.8 0.0
--- --- --- ---
Total $134.2 $155.1 $415.6 $435.7
====== ====== ====== ======
|
Total electric fuel and purchased energy expenses decreased during the quarter ended September 30, 1996 as a result lower actual costs and the operation of the electric fuel rate clause. Total electric fuel and purchased energy expenses decreased during the nine months ended September 30, 1996 as a result of slightly lower actual costs and the operation of the electric fuel rate clause, offset partially by the write-off of previously deferred fuel costs which were disallowed by the PSC in a May 1996 Order.
Actual electric fuel and purchased energy costs decreased for the quarter ended September 30, 1996 compared to the same period last year as a result of a lower net output of electricity and lower purchased energy
costs. Actual electric fuel and purchased energy costs were essentially unchanged for the nine months ended September 30, 1996 compared to the same period last year.
Purchased gas expenses were as follows:
Quarter Ended Nine Months Ended
September 30 September 30
------------ ------------
1996 1995 1996 1995
---- ---- ---- ----
(In millions)
Actual costs $28.6 $ 16.9 $203.8 $135.6
Net (deferral) recovery
of costs under purchased gas
adjustment clause (see
Note 1 of the Form 10-K) (.5) 1.4 2.7 (6.3)
--- --- --- ----
Total $28.1 $ 18.3 $206.5 $129.3
===== ====== ====== ======
|
Total purchased gas expenses increased for the quarter and nine months ended September 30, 1996 compared to last year due to an increase in actual gas costs. Total purchased gas expenses also increased for the nine months ended September 30, 1996 due to the operation of the purchased gas adjustment clause. Actual gas costs increased for the quarter and nine months ended September 30, 1996 due to higher gas prices compared to last year and the purchase of gas for off-system sales which began in 1996. Actual gas costs also increased for the nine months ended September 30, 1996 due to higher sales volumes. Purchased gas costs exclude gas purchased by delivery service customers, including Bethlehem Steel, who obtain gas directly from third parties.
Depreciation and amortization expense decreased $9.9 million during the quarter ended September 30, 1996 compared to the same period last year because depreciation and amortization expense during the third quarter of 1995 reflected a $14.2 million write-off of certain Perryman costs. Depreciation and amortization expense increased $5.8 million during the nine months ended September 30, 1996 compared to the same period last year because of a higher level of depreciable plant in service and higher amortization of deferred energy conservation surcharge expenditures, offset partially by the write-off mentioned above.
Taxes other than income taxes increased $3.3 million and $10.0 million, respectively, during the quarter and nine months ended September 30, 1996 due to an increase in property taxes resulting from plant additions during 1995 and higher payroll taxes due to greater incentive-based payouts and a 3% general wage increase granted March 1, 1996. Taxes other than income taxes also increased during the nine months ended September 30, 1996 due to higher gross receipts taxes as a result of increased revenues.
Interest charges were essentially unchanged for the quarter ended September 30, 1996. Interest charges decreased $4.0 million for the nine months ended September 30, 1996 due primarily to the maturity of long-term debt as well as lower interest rates compared to last year, offset partially by a higher overall level of debt outstanding.
Income tax expense decreased $6.9 million for the quarter ended September 30, 1996 and increased $26.5 million for the nine months ended September 30, 1996 due primarily to changes in the level of taxable income from utility operations and diversified businesses during those periods.
Quarter Ended Nine Months Ended
September 30 September 30
------------ ------------
1996 1995 1996 1995
---- ---- ---- ----
Constellation Holdings, Inc.
Power generation systems $.03 $.07 $.14 $.11
Financial investments .04 .02 .08 .06
Real estate development and
senior living facilities (.01) (.01) (.02) (.02)
Other .00 .00 (.01) (.01)
--- --- ---- ----
Total Constellation Holdings, Inc. .06 .08 .19 .14
Other Subsidiaries. .01 .00 .02 .00
--- --- --- ---
Total diversified businesses $.07 $.08 $.21 $.14
==== ==== ==== ====
|
The Constellation Companies' power generation systems business includes the development, ownership, management, and operation of wholesale power generating projects in which the Constellation Companies hold ownership interests, as well as the provision of services to power generation projects under operation and maintenance contracts. Power generation systems earnings decreased for the quarter ended September 30, 1996 due primarily to the $6.2 million after-tax write-off of an investment in a solar power project in which the Constellation Companies have a minority ownership interest and which is being restructured pursuant to negotiation with the lender. Power generation systems earnings increased for the nine months ended September 30, 1996 due primarily to higher equity earnings from the Constellation Companies' energy projects and a $14.6 million after-tax gain on the sale by a Constellation partnership of a power purchase agreement with Jersey Central Power & Light back to that utility. These increases were partially offset by the $7.0 million after-tax write-off of the investment in two geothermal wholesale power generating plants, discussed below in connection with the Interim Standard Offer No. 4 power purchase agreements, the $3.0 million after-tax write-off of development costs of a proposed coal-fired power project that will not be built, and the $6.2 million after-tax write-off of the solar power project investment mentioned above.
The Constellation Companies' investment in wholesale power generating projects includes $216 million representing ownership interests in 16 projects, including the two geothermal projects which were written-off as discussed below, that sell electricity in California under Interim Standard Offer No. 4 (SO4) power purchase agreements. Under these agreements, the projects supply electricity to purchasing utilities at a fixed rate for the first ten years of the agreements and thereafter at fixed capacity payments plus variable energy rates based on the utilities' avoided cost for the remaining term of the agreements. Avoided cost generally represents a utility's next lowest cost generation to service the demands on its system. These power generation projects are scheduled to convert to supplying electricity at avoided cost rates in various years beginning in 1996 through the end of 2000. As a result of declines in purchasing utilities' avoided costs subsequent to the inception of these agreements, revenues at these projects based on current avoided cost levels would be substantially lower than revenues presently being realized under the fixed price terms of the agreements. At current avoided cost levels, the Constellation Companies could experience reduced earnings or incur losses associated with these projects, which could be significant. While nine projects (including the two geothermal projects that have been written-off) transition from fixed to variable energy rates in the 1996 through 1998 timeframe, revenues from the other projects having SO4 contracts are expected to continue to increase during this period tending to offset revenue declines on the nine projects. Six of the seven largest revenue producing projects will not make the transition to variable energy rates until the 1999-2000 timeframe such that any material reductions in revenues would not be anticipated until the years 2000 and 2001.
The Constellation Companies are investigating and pursuing alternatives for certain of these power generation projects including, but not limited to, repowering the projects to reduce operating costs, changing fuels,
renegotiating the power purchase agreements, restructuring financings, and selling its ownership interests in the projects. During the second quarter of 1996, the Constellation Companies determined that successful mitigation measures for two geothermal power plants are now unlikely and that the investment in these plants was impaired. Accordingly, the Constellation Companies recorded a $7.0 million after-tax write off of the investment in these plants. Two of the other wholesale power generating projects, in which the Constellation Companies' investment totals $34 million, have executed agreements with Pacific Gas & Electric (PG&E) providing for the curtailment of output through the end of the fixed price period in return for payments from PG&E. The payments from PG&E during the curtailment period will be sufficient to fully amortize the existing project finance debt. However, following the curtailment period, the projects remain contractually obligated to commence production of electricity at the avoided cost rates, which could result in reduced earnings or losses for the reasons described above. The Company cannot predict the impact that these matters regarding any of these projects may have on the Constellation Companies or the Company, but the impact could be material.
Earnings from the Constellation Companies' portfolio of financial investments include capital gains and losses, dividends, income from financial limited partnerships, and income from financial guaranty insurance companies. Financial investment earnings were higher for the quarter and nine months ended September 30, 1996 because of higher earnings realized from various financial limited partnerships.
The Constellation Companies' real estate development business includes land under development; office buildings; retail projects; commercial projects; an entertainment, dining and retail complex in Orlando, Florida; a mixed-use planned-unit- development; and senior living facilities. The majority of these projects are in the Baltimore-Washington corridor. They have been affected adversely by the oversupply of and limited demand for land and office space due to modest economic growth and corporate downsizings. Earnings from real estate development and senior living facilities for the quarter and nine months ended September 30, 1996 are essentially unchanged from the prior year.
The Constellation Companies' continued investment in real estate projects is a function of market demand, interest rates, credit availability, and the strength of the economy in general. The Constellation Companies' Management believes until the economy reflects sustained growth that results in a demand for new development, real estate values will not improve significantly. If the Constellation Companies were to sell their real estate projects in the current depressed market, losses would occur in amounts difficult to determine. Depending upon market conditions, future sales could also result in losses.
The Constellation Companies' real estate portfolio has experienced continuing carrying costs and depreciation. Additionally, the Constellation Companies have been expensing rather than capitalizing interest on certain undeveloped land for which substantially all development activities have been suspended. These factors have affected earnings negatively and are expected to continue to do so until the levels of undeveloped land are reduced. Cash flow from real estate operations has been insufficient to cover the debt service requirements of certain of these projects. Resulting cash shortfalls have been satisfied through cash infusions from Constellation Holdings, Inc., which obtained the funds through a combination of cash flow generated by other Constellation Companies and its corporate borrowings. Applicable accounting rules would require a write-down of a real estate project to market value if one of two situations occur. The first is if the Constellation Companies change their intent about any project from an intent to hold to an intent to sell and the market value of the project is below the book value. The second is if the expected future cash flows from the project are less than the investment in the project. Currently, the Constellation Companies are reevaluating their real estate strategy in the context of competing financial demands, changes in the utility industry, and the proposed merger with PEPCO.
The earnings of other subsidiaries, which include HP&S, EP&S, and BNG, Inc., increased slightly during the quarter and nine months ended September 30, 1996 compared to the same periods last year, due primarily to improved operating results from HP&S.
former operating sites, including Environmental Protection Agency Superfund sites. Details regarding these matters, including financial information, are presented in the Notes to Consolidated Financial Statements under the heading "Environmental Matters".
LIQUIDITY AND CAPITAL RESOURCES
Nine Months Ended
September 30 Calendar Year Estimate
1996 1996 1997 1998
---- ---- ---- ----
(In millions)
Utility Business:
- -----------------
Construction expenditures (excluding AFC)
Electric $153 $218 $214 $212
Gas 57 73 73 69
Common 41 49 48 44
-- -- -- --
Total construction expenditures 251 340 335 325
AFC 8 9 10 10
Nuclear fuel (uranium purchases
and processing charges) 46 49 45 44
Deferred energy conservation
expenditures 22 34 25 19
Retirement of long-term debt
and redemption of
preferred and preference stock 161 184 165 117
--- --- --- ---
Total utility business 488 616 580 515
--- --- --- ---
Diversified Businesses:
- -----------------------
Retirement of long-term debt 47 51 131 183
Investment requirements 48 83 71 82
-- -- -- --
Total diversified businesses 95 134 202 265
-- --- --- ---
Total $583 $750 $782 $780
==== ==== ==== ====
BGE Utility Capital Requirements
- --------------------------------
|
BGE utility capital requirements do not reflect costs to achieve the pending merger with PEPCO which are discussed in the Notes to Consolidated Financial Statements under the heading "Pending Merger With Potomac Electric Power Company."
BGE's construction program is subject to continuous review and modification, and actual expenditures may vary from the estimates above. Electric construction expenditures include the installation of the second of two 5,000 kilowatt diesel generators at Calvert Cliffs Nuclear Power Plant, which was placed in service during June 1996, and improvements in BGE's existing generating plants and its transmission and distribution facilities. Future electric construction expenditures do not include additional generating units.
During the twelve months ended September 30, 1996, the internal generation of cash from utility operations provided 97% of the funds required for BGE's capital requirements exclusive of retirements and redemptions of debt and preference stock. During the three-year period 1996 through 1998, the Company expects to provide through utility operations 115% of the funds required for BGE's capital requirements, exclusive of retirements and redemptions.
Utility capital requirements not met through the internal generation of cash are met through the issuance of debt and equity securities. The amount and timing of issuances and redemptions depend upon market conditions and BGE's actual capital requirements. From January 1, 1996 through the date of this Report, BGE's issuances of long-term debt and common equity were $235 million and $4 million, respectively. During the same period, $72 million principal amount of debt and $110 million par value of preferred and preference stock either matured or were redeemed by BGE. All outstanding preferred stock was redeemed as described in the Notes to Consolidated Financial Statements under the heading "BGE Financing Activity."
At the date of this Report, BGE's securities ratings are as follows:
Standard Moody's
& Poors Investors Duff & Phelps
Rating Group Service Credit Rating Co.
------------ ------- -----------------
Senior Secured Debt A+ A1 AA-
(First Mortgage Bonds)
Unsecured Debt A A2 A+
Preference Stock A "a2" A
|
The Constellation Companies' capital requirements are discussed below under the heading "Diversified Businesses Capital Requirements-Debt and Liquidity." The Constellation Companies are exploring expansion of their energy, real estate service, and senior living facility businesses. Expansion may be achieved in a variety of ways, including without limitation increased investment activity and acquisitions. The Constellation Companies plan to meet their capital requirements with a combination of debt and internal generation of cash from their operations. Additionally, from time to time, BGE may make loans to Constellation Holdings, Inc., or contribute equity to enhance the capital structure of Constellation Holdings, Inc.
Historically, Constellation's energy projects have been in the United States. Over the last year, Constellation has pursued energy projects in Latin America. As of September 30, 1996, one of the Constellation Companies had invested about $17.5 million and committed another $6.0 million in power projects in Latin America. Constellation's future energy business expansion may include domestic and international projects.
The first type, direct claims by individuals exposed to asbestos, were described in a Report on Form 8-K filed August 20, 1993. BGE and approximately 70 other defendants are involved. Approximately 516 non-employee plaintiffs each claim $6 million in damages ($2 million compensatory and $4 million punitive). BGE does not know the specific facts necessary for BGE to assess its potential liability for these type claims, such as the identity of the BGE facilities at which the plaintiffs allegedly worked as contractors, the names of the plaintiffs' employers, and the date on which the exposure allegedly occurred.
The second type are claims by one manufacturer - Pittsburgh Corning Corp. - against BGE and approximately eight others, as third-party defendants. These claims relate to approximately 1,500 individual plaintiffs. BGE does not know the specific facts necessary for BGE to assess its potential liability for these type claims, such as the identity of BGE facilities containing asbestos manufactured by the manufacturer, the relationship (if any) of each of the individual plaintiffs to BGE, the settlement amounts for any individual plaintiffs who are shown to have had a relationship to BGE, and the dates on which/places at which the exposure allegedly occurred.
Until the relevant facts for both type claims are determined, BGE is unable to estimate what its liability, if any, might be. Although insurance and hold harmless agreements from contractors who employed the plaintiffs may cover a portion of any ultimate awards in the actions, BGE's potential liability could be material.
In September, 1996, BGE received an information request from the U.S. Environmental Protection Agency concerning the Drumco Drum Dump Site, located in the Curtis Bay area of Maryland. This site was the subject of an emergency drum removal action in 1991, due to a concern about hazardous substances leaking from drums and posing a threat to human health and the environment. According to EPA documents, approximately $2 million dollars was spent on the drum removal action. To our knowledge, no long-term remediation is planned for this site. In addition, we understand that EPA has sent information requests to approximately 17 other parties. BGE's records indicate that it sold empty drums to Drumco, Inc. from approximately 1983-1990. BGE is currently reviewing all relevant documents and interviewing employees involved in selling the drums to Drumco. BGE's potential liability cannot be estimated at this time. However we believe that any liability is not likely to be material based on BGE's records showing that only empty storage drums were sold to Drumco, Inc.
ITEM 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) Exhibit No. 2* Registration Statement on Form S-4
of Constellation Energy
Corporation, as amended, which
became effective February 9,
1996, Registration No. 33-64799.
Exhibit No. 3 Articles of Restatement, dated as
of August 16, 1996, to the Charter
of Baltimore Gas and Electric
Company.
Exhibit No. 10(a) Baltimore Gas and Electric Company
Executive Benefits Plan, as
amended and restated.
Exhibit No. 10(b) Baltimore Gas and Electric Company
Manager Benefits Plan, as amended
and restated.
Exhibit No. 12 Computation of Ratio of Earnings
to Fixed Charges and Computation
of Ratio of Earnings to Combined
Fixed Charges and Preferred and
Preference Dividend Requirements.
Exhibit No. 27 Financial Data Schedule.
|
*Incorporated by Reference.
(b) Form 8-K None
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.
Date November 14, 1996 /s/ C.W. Shivery
-------------------
C. W. Shivery, Vice President
on behalf of the Registrant and
as Principal Financial Officer
|
EXHIBIT INDEX
2* Registration Statement on Form S-4 of
Constellation Energy Corporation, as
amended, which became effective
February 9, 1996, Registration No. 33-
64799.
3 Articles of Restatement, dated as of
August 16, 1996, to the Charter of
Baltimore Gas and Electric Company.
10(a) Baltimore Gas and Electric Company
Executive Benefits Plan, as amended and
restated.
10(b) Baltimore Gas and Electric Company
Manager Benefits Plan, as amended and
restated.
12 Computation of Ratio of Earnings to
Fixed Charges and Computation of Ratio
of Earnings to Combined Fixed Charges
and Preferred and Preference Dividend
Requirements.
27 Financial Data Schedule.
|
*Incorporated by Reference.
ARTICLES OF RESTATEMENT
TO THE CHARTER OF
BALTIMORE GAS AND ELECTRIC COMPANY
Baltimore Gas and Electric Company, a corporation organized and existing under the laws of the State of Maryland, hereby certifies as follows:
1.The corporation desires to restate its Charter as currently in effect.
2.The provisions of the Charter set forth in these Articles of Restatement are all of the provisions of the Charter currently in effect.
3.The restatement of the Charter was approved by a majority of the Executive Committee of the Board of Directors of the corporation at its March 26, 1996 meeting, and was unanimously approved, ratified and confirmed by written consent of the Board of Directors of the corporation.
4.The Charter is not amended by these Articles of Restatement.
5.The current address of the principal office of the corporation is Gas and Electric Building, 39 West Lexington Street, Baltimore, Maryland 21201.
6.The names of the corporation's current resident agents are David A. Brune and Stephen J. Rosasco, and the address for both of them is 39 West Lexington St., Baltimore, Maryland 21201.
7.The number of Directors of the corporation is 14 and the names of those currently in office are as follows:
Christian H. Poindexter Edward A. Crooke H. Furlong Baldwin Beverly B. Byron J. Owen Cole Dan A. Colussy James R. Curtiss Jerome W. Geckle Martin L. Grass Freeman A. Hrabowski, III Nancy Lampton George V. McGowan George L. Russell, Jr.
Michael D. Sullivan
8.The restated provisions of the charter are as follows:
I
The name of the said corporation shall be
BALTIMORE GAS AND ELECTRIC COMPANY
II
Without in any particular limiting or restricting any of the objects and powers of the corporation hereby formed, it is expressly provided that it shall have power to manufacture, buy, deal in or otherwise acquire gas, and to furnish, convey, distribute, sell or otherwise dispose of the same for any and all purposes, public or private; to generate or otherwise acquire electricity or other mechanical power, and to transmit, convey, distribute, furnish, sell or otherwise dispose of the same for light, heat, power, refrigeration, signaling, traction and any and all other purposes, both public and private; to acquire, hold, sell or otherwise dispose of all property, real, personal or mixed, useful in carrying out any lawful purpose whatsoever; and to have, enjoy and exercise all the rights, powers and privileges which are now or may hereafter be conferred upon corporations organized under the laws of Maryland; and, in carrying on its business, or for the purpose of attaining or furthering any of its objects and purposes, to do any and all other things and exercise any and all other powers which now are or hereafter may be permitted by law.
It is expressly declared that the corporate purposes and powers of this corporation, the purposes for which it was formed and the business and objects to be carried on and promoted by it, and the powers of its Board of Directors, include, among other things, the making, by this corporation alone or together with one or more persons or corporations of this or any state or jurisdiction, of any and all contracts and arrangements for the purchase or acquisition of electricity in this state or elsewhere from any one or more persons or corporations of this or any state or jurisdiction and/or the acquisition, by purchase, subscription or otherwise, holding, sale and/or other disposition of all or any part, whether more or less than a majority, of the capital stock or any class thereof, bonds, notes and/or other obligations of any such last mentioned persons or corporations and/or the guaranteeing, whether severally by this corporation or jointly and/or severally with one or more persons or corporations of this or any state or jurisdiction, of dividends on any such stock aforesaid and/or principal of and/or interest on any such bonds, notes and/or other obligations aforesaid and/or other terms or provisions of any such stock, bonds, notes and/or other obligations aforesaid and/or mortgages or other instruments securing the same. This express declaration shall not be construed as implying that the purposes, powers, business and objects of this corporation, and the powers of its directors, do not already (without this declaration) include all those herein stated.
III
The business and operations of said corporation are to be carried on in the City of Baltimore, and in such other place or places within and without the State of Maryland as the directors may determine. The principal offices of said corporation shall be located in the City of Baltimore.
IV
1.The total amount of capital stock which this corporation is authorized to issue is one hundred eighty-two million, five hundred thousand (182,500,000) shares, classified as follows: (1) one million (1,000,000) shares of the par value of one hundred dollars ($100) each, with an aggregate par value of one hundred million dollars ($100,000,000), are preferred stock, of which one million (1,000,000) shares of the aggregate par value of one hundred million dollars ($100,000,000) are authorized but unissued and unclassified preferred stock; (2) six million, five hundred thousand (6,500,000) shares with an aggregate par value of six hundred fifty million dollars ($650,000,000) are preference stock, of which two hundred thousand (200,000) shares of the aggregate par value of twenty million dollars ($20,000,000) are issued and outstanding 7.78% Cumulative Preference Stock, 1973 Series, four hundred twenty-five thousand (425,000) shares of the aggregate par value of forty-two million, five hundred thousand dollars ($42,500,000) are issued and outstanding 7.50% Cumulative Preference Stock, 1986 Series, four hundred forty thousand (440,000) shares of the aggregate par value of forty-four million dollars ($44,000,000) are issued and outstanding 6.75% Cumulative Preference Stock, 1987 Series, five hundred thousand (500,000) shares of the aggregate par value of fifty million dollars ($50,000,000) are issued and outstanding 7.80% Cumulative Preference Stock, 1989 Series, three hundred thousand (300,000) shares of the aggregate par value of thirty million dollars ($30,000,000) are issued and outstanding 8.25% Cumulative Preference Stock, 1989 Series, three hundred ninety thousand (390,000) shares of the aggregate par value of thirty-nine million dollars ($39,000,000) are issued and outstanding 8.625% Cumulative Preference Stock, 1990 Series, three hundred fifty thousand (350,000) shares of the aggregate par value of thirty five million dollars ($35,000,000) are issued and outstanding 7.85% Cumulative Preference Stock, 1991 Series, four hundred thousand (400,000) shares of the aggregate par value of forty million dollars ($40,000,000) are issued and outstanding 7.125% Cumulative Preference Stock, 1993 Series, five hundred thousand (500,000) shares of the aggregate par value of fifty million dollars ($50,000,000) are issued and outstanding 6.97% Cumulative Preference Stock, 1993 Series, four hundred thousand (400,000) shares of the aggregate par value of forty million dollars ($40,000,000) are issued and outstanding 6.70% Cumulative Preference Stock, 1993 Series, six hundred thousand (600,000) shares of the aggregate par value of sixty million dollars ($60,000,000) are issued and outstanding 6.99% Cumulative Preference Stock, 1995 Series, one million, nine hundred
ninety-five thousand (1,995,000) shares of the aggregate par value of one hundred ninety-nine million five hundred thousand dollars ($199,500,000) are authorized, but unissued and unclassified preference stock; and (3) the balance, one hundred seventy-five million (175,000,000) shares without par value, is common stock of which one hundred fifty-one million, eleven thousand, six hundred and sixty-three (151,011,663) shares have either been issued and are now outstanding or have been reserved for issuance and twenty-three million, nine hundred eighty-eight thousand, three hundred thirty-seven (23,988,337) shares are authorized but unissued and unreserved. The aggregate par value of all the authorized shares of all classes of stock having par value, viz., the preference stock and the preferred stock, is seven hundred fifty million dollars ($750,000,000).
The issued and outstanding shares of common stock without par value mentioned in this paragraph numbered 1 include both the number of such shares for which stock certificates have been issued and also the number of shares for which new stock certificates are now issuable in lieu and upon cancellation of outstanding certificates for shares of common stock of the par value of one hundred dollars ($100) each formerly authorized.
2.All preferred stock redeemed shall forthwith be cancelled and retired but shall have the status of authorized but unissued preferred stock of the corporation.
3.In the event of any liquidation or dissolution or winding up, whether voluntary or involuntary, of the corporation, the holders of the preferred stock shall be entitled to be paid in full both the par amount of their shares and an amount equal to the unpaid dividends accrued thereon (whether earned or declared or not) adjusted to date of such payment, before any amount shall be paid to either the holders of the preference stock or the holders of the common stock.
4.All payments to the holders of the preferred stock, whether payments of dividends or payments in the event of redemption, liquidation, dissolution or winding up, shall be made without deduction for any tax or taxes, other than income taxes, which the corporation may be required or permitted to pay thereon or to retain therefrom under any present or future law of the United States of America or of any state, county or municipality therein.
5.The right is hereby reserved to make from time to time any amendments of the charter of the corporation which change the terms of the preferred stock by classification or sub classification of all or any of the authorized but unissued preferred stock into one or more series of the preferred stock, which series may differ from each other and other series already outstanding in any or all of the following respects: (a) the rate and/or payment periods of the fixed preferential dividends payable thereon, which rate shall, however, in no case exceed eight per cent. per annum, (b) whether or not, and if so to what extent and on what terms and conditions, such series shall participate in dividends in excess of the fixed preferential
dividends thereon, or in distribution of assets, upon liquidation, dissolution or winding up, in excess of the fixed preferential distribution thereof to the holders of the preferred stock, (c) whether or not, and if so on what terms and conditions, such series shall be convertible at the option of the holders into other stock (preferred, preference, or common), bonds or securities of the corporation, and (d) the prices and times, if any, of redemption thereof. Up to the fixed preferential dividends payable on each series of preferred stock, all series of preferred stock shall participate (not before the respective dividend dates of each series of preferred stock) at the same rate per cent. per annum in any payments for, or including any period (whether a dividend period or part of such a period) aggregating less than the full preferential dividends on all series of preferred stock for such period; if for any period (whether a dividend period or part of such a period) full preferential dividends shall not have been paid on any series of preferred stock when payable, the deficiency shall be payable before any dividends for any subsequent dividend period, or part of such a period, shall be paid upon or set apart for any series of the preferred stock. All of the preferred stock having identical characteristics shall be given the same serial designation. Except in the event of a failure to pay full dividends on the preferred stock and/or on the preference stock, and the continuance of such failure for one year as hereinafter, in the paragraph numbered 6 hereof, provided, neither the preferred stock nor the preference stock shall have any voting power and the common stock shall have full sole voting power with respect to any such proposed amendment of the charter of the corporation. The express reservation of the right to make, through the sole voting power of the common stock and without the vote of any of the preferred stock or any of the preference stock, any such amendments of the charter of the corporation as are specified in this paragraph, numbered 5, shall not be construed as in any way limiting the right to make any other amendments of the charter of the corporation in accordance with the laws of Maryland and the provisions of the next succeeding paragraph, numbered 6, hereof.
6.The common stock shall have full voting powers, that is to say, one vote for each share with respect to all matters. Neither the preferred stock nor the preference stock shall have any voting power except that: (a) the preferred stock shall have four votes for each share of preferred stock, with respect to any proposed amendment of the charter of the corporation (other than any such amendment as is specified in the paragraphs numbered 5 and 16 hereof), any proposed consolidation with any other corporation or corporations, any proposed sale, lease or exchange of all its property and assets as an entirety, including its good will and franchises, to or with any other corporation or any proposed dissolution of the corporation, and no such amendment of the charter of the corporation, consolidation, sale, lease, exchange or dissolution shall be authorized, ratified, accepted or effected without the affirmative vote of two-thirds of all the shares of preferred stock in favor of such amendment, consolidation, sale,
lease, exchange or dissolution, as the case may be; (b) whenever the corporation shall fail to pay full dividends on the preferred stock and such failure shall continue for one year, the preferred stock shall then have four votes for each share of preferred stock with respect to all matters, until and unless all such dividends shall have been paid in full; (c) the preference stock shall have one vote for each share of preference stock with respect to any proposed amendment of the charter of the corporation which would create or authorize any shares of stock ranking prior to or on a parity with the preference stock as to dividends or as to distribution of assets, or which would substantially adversely affect the contract rights, as expressly set forth in the charter, of the preference stock, and no such amendment of the charter of the corporation of the nature described in this subsection (c) of this paragraph 6 shall be authorized, ratified, accepted or effected without the affirmative vote of two-thirds of all the shares of preference stock outstanding in favor of such amendment; and (d) whenever the corporation shall fail to pay full dividends on the preference stock and such failure shall continue for one year, the preference stock shall then have one vote for each share of preference stock with respect to all matters, until and unless all such dividends shall have been paid in full.
7.While any shares of preferred stock are outstanding, there shall not be issued without the prior affirmative vote or written consent of the holders of two-thirds of the total number of shares of preferred stock then outstanding, any additional preferred stock if, at the time of issuance of such additional preferred stock and after giving effect to such issuance, the aggregate par value of the preferred stock to be outstanding after such issuance, would exceed an amount equal to the aggregate amount in dollars in the common stock account of the corporation plus any capital surplus represented by consideration received for the issuance of common stock, all as shown on the books of account of the corporation, provided, however, that if preferred stock is issued for the purpose of retiring outstanding preferred stock then the preferred stock to be retired shall not be counted as outstanding for purposes of the foregoing limitation; nor, without like affirmative vote or written consent, shall the outstanding common stock not held or owned by the corporation be reduced by purchase or retirement by the corporation or such capital surplus be reduced by distribution, if and to the extent that, after such reduction, the aggregate par value of the outstanding preferred stock would exceed the sum of the dollars in the common stock account of the corporation plus any capital surplus represented by consideration received for the issuance of common stock, all as shown on the books of account of the corporation. For the purpose of determining compliance with the limitations contained in this paragraph, if the corporation purchases common stock, the said common stock and capital surplus accounts shall be deemed to be thereby reduced by that portion of the total dollars in said accounts which is equivalent to the ratio of the number of shares of common stock purchased to the number outstanding and not held or owned by the corporation immediately before such purchase, but in such a case if the common stock so purchased is
subsequently sold or retired the said common stock and capital surplus accounts shall be deemed to be reduced thereafter only by the actual charges to said accounts.
8.At no time shall any preferred stock be issued unless at the time of such issuance the net earnings of the corporation, over and above operating expenses (including allowance for depreciation and other reserves), fixed charges and any other deductions from or charges against income ranking prior to dividends on the preferred stock, for a period of twelve successive calendar months ending within the sixty days immediately preceding such issuance of preferred stock, shall have been at least twice a sum equal to full preferential dividends for one year on (a) all preferred stock already outstanding at the time of such issuance, and (b) the preferred stock so to be issued, provided that in the case of preferred stock being issued for the purpose of retiring outstanding preferred stock, the preferred stock to be retired shall not be counted as outstanding for purposes of this limitation.
9.Subject to and upon compliance with all the provisions foregoing, the capital stock of the corporation, preferred, preference, and common, may be issued and disposed of as and when such issuance may, pursuant to the laws of Maryland, be authorized by the Board of Directors. The Board of Directors is hereby empowered to authorize the issuance from time to time of shares of common stock without par value and securities convertible into shares of common stock without par value and rights to purchase the same for such consideration as said Board of Directors may deem advisable. The Board of Directors is hereby empowered by resolution to authorize the issuance of any number of shares of stock of one or more classes and/or any amount of convertible securities and/or rights to purchase the same from time to time for such considerations as said Board of Directors may deem advisable. The holders of shares of capital stock of the corporation shall have no preferential or preemptive right, as stockholders, to subscribe for, purchase or receive any proportionate or other part of any issue of additional capital stock of any class, now or hereafter authorized, which may be issued by the corporation, except such right, if any, as may be conferred by the Board of Directors in authorizing such issuance. In furtherance and not in limitation of the powers already vested in the corporation or the Board of Directors, the corporation, through the Board of Directors, may authorize from time to time the issuance and disposition, pursuant to the laws of Maryland, of shares of common stock to any or all of its employees, including officers, or to trustees on behalf of such employees for such considerations as said Board of Directors may deem advisable. Notwithstanding any other provision contained in this Charter, the Board of Directors of the corporation may authorize the issue of some or all of the shares of any or all classes or series of stock authorized under this Charter to be issued without certificates. This authorization may not affect shares already represented by certificates outstanding until they are surrendered to the corporation.
10. The Board of Directors is hereby empowered from time to time to classify or
reclassify all or any of the authorized but unissued preferred stock into one
or more series of the preferred stock, which series may differ from each other
and other series already outstanding in any or all of the following respects:
(a) the rate and/or payment periods of the fixed preferential dividends
payable thereon, which rate shall, however, in no case exceed eight per cent.
per annum, (b) whether or not, and if so on what terms and conditions, such
series shall be convertible at the option of the holders into other stock
(preferred, preference, or common), bonds or securities of the corporation,
and (c) the prices and times, if any, of redemption thereof. Up to the fixed
preferential dividends payable on each series of preferred stock, all series
of preferred stock shall participate (not before the respective dividend dates
of each series of preferred stock) at the same rate per cent. per annum in any
payments for, or including, any period (whether a dividend period or part of
such period) aggregating less than the full preferential dividends on all
series of preferred stock for such period; if for any period (whether a
dividend period or part of such a period) full preferential dividends shall
not have been paid on any series of preferred stock when payable, the
deficiency shall be payable before any dividends for any subsequent dividends
period, or part of such a period, shall be paid upon or set apart for the
preferred stock. All of the preferred stock having identical characteristics
shall be given the same serial designation.
11. Subject to the provisions of paragraph 6 hereof, notwithstanding any provision of law requiring any action to be taken or authorized by the affirmative vote of the holders of a majority or other designated proportion of the shares of stock of the corporation or of the shares of each class or to be otherwise taken or authorized by vote of the stockholders of the corporation, such action shall be effective and valid if taken or authorized by such vote of its stockholders as is hereby required for such action, viz., by the affirmative vote of the holders of a majority or other designated proportion of all of the shares of preferred stock outstanding and entitled to vote thereon voting as a class, and the affirmative vote of the holders of a majority or other designated proportion of the shares of common stock outstanding and entitled to vote thereon, voting as a class, the same (in the case of preferred stock and common stock respectively) as the majority or other designated proportion of the shares of each class of stock otherwise required by law; the requisite number of affirmative votes in any case not to be less than a majority in number of the aggregate number of votes to which the holders of all of the shares of preferred stock outstanding and entitled to vote thereon shall be entitled and a majority in number of the aggregate number of votes to which the holders of all of the shares of common stock outstanding and entitled to vote thereon shall be entitled, except in cases in which the law authorizes such action to be taken or authorized by a less vote; the requisite number of affirmative votes in any case not to be less than the affirmative vote, if any, of
shares of preferred stock required in such case by the provisions of the paragraph numbered 6 hereof.
12. The preference stock shall entitle the holders thereof to receive, when and as declared, from the surplus or net profits of the corporation remaining after the preferential dividend requirements for the outstanding preferred stock have been provided for yearly dividends payable at such times and at such rates as hereinafter provided. The dividends on the preference stock shall be cumulative and shall be payable before any dividend on the common stock shall be paid or set apart.
13. In the event of any liquidation or dissolution or winding up, whether voluntary or involuntary, of the corporation, the holders of the preference stock shall be entitled to be paid in full, from any assets and funds of the corporation remaining after payment to the holders of the preferred stock as provided in paragraph numbered 3 hereof, both the par amount of their shares and an amount equal to the unpaid dividends accrued thereon (whether earned or declared or not) adjusted to date of such payment before any amount shall be paid to the holders of the common stock; and after the payment to the holders of the preference stock of its par value and an amount equal to the unpaid dividends accrued thereon, the remaining assets and funds shall be divided and paid to the holders of the common stock according to their respective shares.
14. All preference stock redeemed shall forthwith be cancelled and retired but shall have the status of authorized but unissued preference stock of the corporation.
15. The Board of Directors is hereby empowered from time to time to classify or
reclassify all or any of the authorized, but unissued preference stock into
one or more series of preference stock, which series may differ from each
other and other series already outstanding in any or all of the following
respects: (a) the rate or rates of the preferential dividends payable thereon,
and, if applicable, the manner in which such dividends are determined, (b)
whether or not, and if so, on what terms and conditions, such series shall be
convertible at the option of the holders into other stock, bonds or securities
of the corporation, (c) the prices and times, if any, of redemption thereof,
(d) the sinking fund provisions, if any, applicable thereto, (e) the date(s),
or the method of determining the date(s), on which such dividends are payable
thereon, and (f) the par value thereof. Up to the preferential dividends
payable on each series, all series of preference stock shall participate at
the same rate per cent per annum, in any payments for, or including, any
period (whether a dividend period or part of such a period) aggregating less
than the full preferential dividends on all series of preference stock for
such period; if for any period (whether a dividend period or part of such a
period) full preferential dividends shall not have been paid on any series of
preference stock when payable, the deficiency shall be payable before any
dividends for any subsequent dividend period,or part of such a period,shall be
paid upon or set apart for the preference stock. All of the preference stock having identical characteristics shall be given the same serial designation.
16. The right is hereby reserved to make from time to time amendments of the charter of the corporation to provide that one or more series of the authorized but unissued preference stock shall, and to what extent and on what terms and conditions, participate in dividends in excess of the fixed preferential dividends thereon, or in distribution of assets, upon liquidation, dissolution, or winding up, in excess of the fixed preferential distribution thereof to the holders of preference stock. Except in the event of a failure to pay full dividends on the preferred stock and/or on the preference stock, and the continuance of such failure for one year as provided in paragraph numbered 6 hereof, neither the preferred stock nor the preference stock shall have any voting power and the common stock shall have full sole voting power with respect to any such proposed amendment of the charter of the corporation.
17. At no time shall any preference stock be issued unless at the time of such issuance the net earnings of the corporation, over and above operating expenses (including allowance for depreciation and other reserves), fixed charges and any other deductions from or charges against income (including dividend requirements on stock ranking prior to preference stock) which rank prior to dividends on the preference stock, for a period of twelve successive calendar months ending within the three calendar months immediately preceding the month in which such preference stock is issued, shall have been at least twice a sum equal to full preferential dividends for one year on (a) all preference stock already outstanding at the time of such issuance, and (b) the preference stock so to be issued.
18. (a) The 7.78% Cumulative Preference Stock, 1973 Series ($100 par value), shall entitle the holders thereof to receive, when and as declared, from the surplus or net profits of the corporation remaining after the preferential dividend requirements for the outstanding preferred stock have been provided for, yearly dividends at the rate of seven and seventy-eight hundredths per cent per annum and no more, payable quarterly on the first days of January, April, July, and October in each year commencing January 1, 1974. The dividends on the 7.78% Cumulative Preference Stock, 1973 Series ($100 par value), shall be cumulative and shall be payable before any dividend on the common stock shall be paid or set apart; so that, if in any year or years dividends amounting to seven and seventy-eight hundredths per cent shall not have been paid thereon, the deficiency shall be payable before any dividends shall be paid upon or set apart for the common stock. Dividends on 7.78% Cumulative Preference Stock, 1973 Series ($100 par value), will accrue from November 28, 1973.
(b) The 7.78% Cumulative Preference Stock, 1973 Series ($100 par value), or any portion thereof, may whenever the Board of Directors shall so determine, be redeemed by the payment to the holders thereof of the sum hereinafter specified as the redemption price at the time of
redemption, in cash, for each share thereof, together with all accrued dividends. The redemption price shall be one hundred eight dollars ($108) per share at any time prior to December 1, 1978, then one hundred five dollars and fifty cents ($105.50) per share prior to December 1, 1983, then one hundred three dollars ($103) per share prior to December 1, 1988, and one hundred one dollars ($101) per share thereafter; provided, however, that the corporation will not, prior to December 1, 1978, redeem any shares of the 7.78% Cumulative Preference Stock, 1973 Series ($100 par value), if such redemption is a part of or in anticipation of any refunding operation involving the application, directly or indirectly, of borrowed funds or the proceeds of an issue of any stock ranking prior to or on a parity with 7.78% Cumulative Preference Stock, 1973 Series ($100 par value) if such borrowed funds have an interest rate or cost to the corporation (calculated in accordance with generally accepted financial practice), or such stock has a dividend rate or cost to the corporation (so calculated), less than the dividend rate per annum of the 7.78% Cumulative Preference Stock, 1973 Series ($100 par value). In case less than all of the preference stock of this series at the time being outstanding is so redeemed, the shares to be redeemed shall be, as nearly as is reasonably practicable without creating fractional shares, a proportionate part of the holdings of each holder of preference stock of this series, or shall be selected in whole or in part, by lot. At least thirty (30) days written notice of the election of the corporation to redeem the preference stock of this series, or any part thereof, and (in case less than all is to be redeemed) of the shares thereof so to be redeemed, shall be given to each holder of preference stock of this series so to be redeemed by mailing the same, postage prepaid, and addressed to him at his address as it appears upon the books of the corporation. When such notice shall have been so given and the funds for payment of the redemption price plus accrued dividends shall have been provided and set apart, the dividends on the shares of preference stock of this series so called for redemption and all other rights of the holders thereof, except the right to receive the redemption price plus accrued dividends, shall cease.
19. (a) The 7.50% Cumulative Preference Stock, 1986 Series ($100 par value), shall entitle the holders thereof to receive, when and as declared, from the surplus or net profits of the corporation remaining after the preferential dividend requirements for the outstanding preferred stock have been provided for, yearly dividends at the rate of seven and one half per cent per annum and no more, payable quarterly on the first days of January, April, July, and October in each year commencing January 1, 1987. The dividends on the 7.50% Cumulative Preference Stock, 1986 Series ($100 par value), shall be cumulative and shall be payable before any dividend on the common stock shall be paid or set apart; so that, if in any year or years dividends amounting to seven and one half per cent shall not have been paid thereon, the deficiency shall be payable before any dividends shall be paid upon or set apart
for the common stock. Dividends on 7.50% Cumulative Preference Stock, 1986 Series ($100 par value) will accrue from and including the date of issuance.
(b) The 7.50% Cumulative Preference Stock, 1986 Series ($100 par value), or any portion thereof, may whenever the Board of Directors shall so determine, be redeemed by the payment to the holders thereof of the sum hereinafter specified as the redemption price at the time of redemption, in cash, for each share thereof, together with all accrued dividends. The redemption price shall be one hundred seven dollars and fifty cents ($107.50) per share at any time prior to October 1, 1991, then one hundred five dollars ($105) per share prior to October 1, 1996, then one hundred two dollars and fifty cents ($102.50) per share prior to October 1, 2001, and one hundred dollars ($100) per share thereafter; provided, however, that prior to October 1, 1991, the corporation will not redeem any shares of the 7.50% Cumulative Preference Stock, 1986 Series ($100 par value), if such redemption is a part of or in anticipation of any refunding operation involving the application, directly or indirectly, of borrowed funds or the proceeds of an issue of any stock ranking prior to or on a parity with 7.50% Cumulative Preference Stock, 1986 Series ($100 par value), if such borrowed funds have an interest rate or cost to the corporation (calculated in accordance with generally accepted financial practice), or such stock has a dividend rate or cost to the corporation (so calculated), less than the dividend rate per annum of the 7.50% Cumulative Preference Stock, 1986 Series ($100 par value). In case less than all of the preference stock of this series at the time being outstanding is so redeemed, the shares to be redeemed shall be, as nearly as is reasonably practicable without creating fractional shares, a proportionate part of the holdings of each holder of preference stock of this series, or shall be selected, in whole or in part, by lot. At least thirty (30) days written notice of the election of the corporation to redeem the preference stock of this series (or any part thereof, in which case the notice shall specify the particular shares to be redeemed) shall be given to each holder of the preference stock of this series so to be redeemed by mailing the same, postage prepaid, and addressed to him at his address as it appears upon the books of the corporation. When such notice shall have been so given and the funds for payment of the redemption price plus accrued dividends shall have been provided and set apart, the dividends on the shares of preference stock of this series so called for redemption and all other rights of the holders thereof, except the right to receive the redemption price plus accrued dividends, shall cease.
(c) On or before October 1 of each year commencing October 1, 1992 and continuing through October 1, 2025, there shall be provided and set apart by the corporation a sum sufficient for the sinking fund redemption of 15,000 shares of 7.50% Cumulative Preference Stock, 1986 Series ($100 par value). On October 1 of each year commencing October 1, 1992 and continuing through October 1, 2025, the corporation shall make sinking fund redemptions of
15,000 shares of the 7.50% Cumulative Preference Stock, 1986 Series ($100 par value) by the payment to the holders thereof, in cash, of the sum of one hundred dollars and no cents ($100.00) for each share thereof, together with all accrued dividends. Shares shall be selected for sinking fund redemption by lot. At least thirty (30) days written notice of the shares of the 7.50% Cumulative Preference Stock, 1986 Series ($100 par value) so to be redeemed shall be given to the respective holders thereof by mailing the same, postage prepaid, and addressed to such holder at the address as it appears upon the books of the corporation. When such notice shall have been so given and funds for the payment of the sinking fund redemption price, plus accrued dividends, shall have been provided and set apart by the corporation, the dividends on the shares of the 7.50% Cumulative Preference Stock, 1986 Series ($100 par value) so called for sinking fund redemption and all other rights of the holders thereof, except the right to receive the sinking fund redemption price plus accrued dividends, shall cease.
The corporation may, at its option, in connection with any sinking fund redemption, increase by not more than 15,000 shares the number of shares of 7.50% Cumulative Preference Stock, 1986 Series ($100 par value) to be redeemed for the sinking fund, at such sinking fund redemption price, on any such sinking fund redemption date, together, in every case, with all accrued dividends; provided, however, that the right to make such optional increases shall not be cumulative.
The corporation may, at its option, satisfy its obligation to make sinking
fund redemptions provided for in the first paragraph of this Section 19(c) by
crediting shares of 7.50% Cumulative Preference Stock, 1986 Series ($100 par
value) acquired by purchase in the open market, by redemption (otherwise than
by reason of the required sinking fund redemption provided for by the first
paragraph of this Section 19(c)) or otherwise. Notwithstanding the foregoing
provisions of this Section 19(c), the obligation to redeem shares of 7.50%
Cumulative Preference Stock, 1986 Series ($100 par value) by reason of the
sinking fund redemption (provided for in the first paragraph of this Section
19(c)) annually commencing on October 1, 1992 shall be cumulative, and unless
full cumulative redemptions of shares of 7.50% Cumulative Preference Stock,
1986 Series ($100 par value) for the sinking fund required hereby have been
made, no dividends shall be declared nor any distribution made on the Common
Stock, except dividends paid in stock of the corporation ranking junior to the
7.50% Cumulative Preference Stock, 1986 Series ($100 par value), nor shall any
purchase or other acquisition for value of such Common Stock be made. The
provisions of this Section 19(c) shall apply so long as any shares of 7.50%
Cumulative Preference Stock, 1986 Series ($100 par value) are outstanding.
20. (a) The 6.75% Cumulative Preference Stock, 1987 Series ($100 par value), shall entitle the holders thereof to receive, when and as declared, from the surplus or net profits of the
corporation remaining after the preferential dividend requirements for the outstanding preferred stock have been provided for, yearly dividends at the rate of six and seventy five hundredths per cent per annum and no more, payable quarterly on the first days of January, April, July, and October in each year commencing April 1, 1987. The dividends on the 6.75% Cumulative Preference Stock, 1987 Series ($100 par value), shall be cumulative and shall be payable before any dividend on the common stock shall be paid or set apart; so that, if in any year or years dividends amounting to six and seventy five hundredths per cent shall not have been paid thereon, the deficiency shall be payable before any dividends shall be paid upon or set apart for the common stock. Dividends on 6.75% Cumulative Preference Stock, 1987 Series ($100 par value), will accrue from and include January 22, 1987.
(b) The 6.75% Cumulative Preference Stock, 1987 Series ($100 par value), or any portion thereof, may whenever the Board of Directors shall so determine, be redeemed by the payment to the holders thereof of the sun hereinafter specified as the redemption price at the time of redemption, in cash, for each share thereof, together with all accrued dividends. The redemption price shall be one hundred six dollars and seventy-five cents ($106.75) per share at any time prior to April 1, 1992, then one hundred four dollars and fifty cents ($104.50) per share prior to April 1, 1997, then one hundred two dollars and twenty-five cents ($102.25) per share prior to April 1, 2002, and one hundred dollars ($100) per share thereafter; provided, however, that prior to April 1, 1992, the corporation will not redeem any shares of the 6.75% Cumulative Preference Stock, 1987 Series ($100 par value), if such redemption is a part of or in anticipation of any refunding operation involving the application, directly or indirectly, of borrowed funds or the proceeds of an issue of any stock ranking prior to or on a parity with 6.75% Cumulative Preference Stock, 1987 Series ($100 par value), if such borrowed funds have an interest rate or cost to the corporation (calculated in accordance with generally accepted financial practice), or such stock has a dividend rate or cost to the corporation (so calculated), less than the dividend rate per annum of the 6.75% Cumulative Preference Stock, 1987 Series ($100 par value). In case less than all of the preference stock of this series at the time being outstanding is so redeemed, the shares to be redeemed shall be, as nearly as is reasonably practicable without creating fractional shares, a proportionate part of the holdings of each holder of preference stock of this series, or shall be selected, in whole or in part, by lot. At least thirty (30) days written notice of the election of the corporation to redeem the preference stock of this series (or any part thereof, in which case the notice shall specify the particular shares to be redeemed) shall be given to each holder of the preference stock of this series so to be redeemed by mailing the same, postage prepaid, and addressed to him at his address as it appears upon the books of the corporation. When such notice shall have been so given and the funds for payment of the redemption price plus accrued dividends shall have been provided and set apart, the dividends on the shares of preference stock of this series so
called for redemption and all other rights of the holders thereof, except the right to receive the redemption price plus accrued dividends, shall cease.
(c) On or before April 1 of each year commencing April 1, 1993 and continuing through April 1, 2026, there shall be provided and set apart by the corporation a sum sufficient for the sinking fund redemption of 15,000 shares of 6.75% Cumulative Preference Stock, 1987 Series ($100 par value). Thereafter, on April 1 of each year commencing April 1, 1993 and continuing through April 1, 2026, the corporation shall make sinking fund redemptions of 15,000 shares of the 6.75% Cumulative Preference Stock, 1987 Series ($100 par value) by the payment to the holders thereof, in cash, of the sum of one hundred dollars and no cents ($100.00) for each share thereof, together with all accrued dividends. Shares shall be selected for sinking fund redemption by lot. At least thirty (30) days written notice of the shares of the 6.75% Cumulative Preference Stock, 1987 Series ($100 par value) so to be redeemed shall be given to the respective holders thereof by mailing the same, postage prepaid, and addressed to such holder at the address as it appears upon the books of the corporation. When such notice shall have been so given and funds for the payment of the sinking fund redemption price, plus accrued dividends, shall have been provided and set apart by the corporation, the dividends on the shares of the 6.75% Cumulative Preference Stock, 1987 Series ($100 par value) so called for sinking fund redemption and all other rights of the holders thereof, except the right to receive the sinking fund redemption price Plus accrued dividends, shall cease.
The corporation may, at its option, in connection with any sinking fund redemption, increase by not more than 15,000 shares the number of shares of 6.75% Cumulative Preference Stock, 1987 Series ($100 par value) to be redeemed for the sinking fund, at such sinking fund redemption price, on any such sinking fund redemption date, together, in every case, with all accrued dividends; provided, however, that the right to make such optional increases shall not be cumulative.
The corporation may, at its option, satisfy its obligation to make sinking
fund redemptions provided for in the first paragraph of this Section 20(c) by
crediting shares of 6.75% Cumulative Preference Stock, 1987 Series ($100 par
value) acquired by purchase in the open market, by redemption (otherwise than
by reason of the required sinking fund redemption provided for by the first
paragraph of this Section 20(c)) or otherwise. Notwithstanding the foregoing
provisions of this Section 20(c), the obligation to redeem shares of 6.75%
Cumulative Preference Stock, 1987 Series ($100 par value) by reason of the
sinking fund redemption provided for in the first paragraph of this Section
20(c), annually commencing on April 1, 1993 shall be cumulative, and unless
full cumulative redemptions of shares of 6.75% Cumulative Preference Stock,
1987 Series ($100 par value) for the sinking fund required hereby have been
made, no dividends shall be declared nor any distribution made on the
common stock, except dividends paid in stock of the corporation ranking junior to the 6.75% Cumulative Preference Stock, 1987 Series ($100 par value), nor shall any purchase or other acquisition for value of such common stock be made. The provisions of this section 20(c) shall apply so long as any shares of 6.75% Cumulative Preference Stock, 1987 Series ($100 par value) are outstanding.
21. (a) The 7.80% Cumulative Preference Stock, 1989 Series ($100 par value), shall entitle the holders thereof to receive, when and as declared, from the surplus or net profits of the corporation remaining after the preferential dividend requirements for the outstanding preferred stock have been provided for, yearly dividends at the rate of seven and eighty hundredths per cent per annum and no more, payable quarterly on the first days of January, April, July, and October in each year commencing October 1, 1989. The dividends on the 7.80% Cumulative Preference Stock, 1989 Series ($100 par value), shall be cumulative and shall be payable before any dividend on the common stock shall be paid or set apart; so that, if in any year or years dividends amounting to seven and eighty hundredths per cent shall not have been paid thereon, the deficiency shall be payable before any dividends shall be paid upon or set apart for the common stock. Dividends on 7.80% Cumulative Preference Stock, 1989 Series ($100 par value) will accrue from and include June 22, 1989.
(b) The 7.80% Cumulative Preference Stock, 1989 Series ($100 par value) shall be redeemed in whole on July 1, 1997 by the payment to the holders thereof, in cash, of the sum of one hundred dollars and no cents ($100.00) for each share thereof, together with all accrued dividends. At least thirty (30) days written notice shall be given to each holder of the preference stock of this series so to be redeemed by mailing the same, postage prepaid, and addressed to him at his address as it appears upon the books of the corporation. When such notice shall have been so given and the funds for payment of the redemption price plus accrued dividends shall have been provided and set apart, the dividends on the shares of preference stock of this series so called for redemption and all other rights of the holders thereof, except the right to receive the redemption price plus accrued dividends, shall cease.
22. (a) The 8.25% Cumulative Preference Stock, 1989 Series ($100 par value), shall entitle the holders thereof to receive, when and as declared, from the surplus or net profits of the corporation remaining after the preferential dividend requirements for the outstanding preferred stock have been provided for, yearly dividends at the rate of eight and twenty-five hundredths per cent per annum and no more, payable quarterly on the first days of January, April, July, and October in each year commencing January 1, 1990. The dividends on the 8.25% Cumulative Preference Stock, 1989 Series ($100 par value), shall be cumulative and shall be payable before any dividend on the common stock shall be paid or set apart; so that, if in any year or years dividends amounting to eight and twenty-five hundredths per cent shall not
have been paid thereon, the deficiency shall be payable before any dividends shall be paid upon or set apart for the common stock. Dividends on the 8.25% Cumulative Preference Stock, 1989 Series ($100 par value) will accrue from and include November 21, 1989.
(b) On or before October 1 of each year commencing October 1, 1995 and
continuing through October 1, 1999 (or such earlier October 1 on which there
remain any shares of 8.25% Cumulative Preference Stock, 1989 Series ($100 par
value) outstanding), there shall be provided and set apart by the corporation
a sum sufficient for the sinking fund redemption of 100,000 shares of 8.25%
Cumulative Preference Stock, 1989 Series ($100 par value). Thereafter, on
October 1 of each year commencing October 1, 1995 and continuing through
October 1, 1999 (or such earlier October 1 on which there remain any shares of
8.25% Cumulative Preference Stock, 1989 Series ($100 par value) outstanding),
the corporation shall make sinking fund redemptions of 100,000 shares of the
8.25% Cumulative Preference Stock, 1989 Series ($100 par value) by the payment
to the holders thereof, in cash, of the sum of one hundred dollars and no
cents ($100.00) for each share thereof, together with all accrued dividends.
Shares shall be selected for sinking fund redemption by lot. At least thirty
(30) days written notice of the shares of the 8.25% Cumulative Preference
Stock, 1989 Series ($100 par value) so to be redeemed shall be given to the
respective holders thereof by mailing the same, postage prepaid, and addressed
to such holder at the address as it appears upon the books of the corporation.
When such notice shall have been so given and funds for the payment of the
sinking fund redemption price, plus accrued dividends, shall have been
provided and set apart by the corporation, the dividends on the shares of the
8.25% Cumulative Preference Stock, 1989 Series ($100 par value) so called for
sinking fund redemption and all other rights of the holders thereof, except
the right to receive the sinking fund redemption price plus accrued dividends,
shall cease.
The corporation may, at its option, in connection with any sinking fund redemption, increase by not more than 100,000 shares the number of shares of 8.25% Cumulative Preference Stock, 1989 Series ($100 par value) to be redeemed for the sinking fund, at the sinking fund redemption price of one hundred dollars and no cents ($100.00) for each share thereof, on any such sinking fund redemption date, together, in every case, with all accrued dividends; provided, however, that the right to make such optional increases shall not be cumulative.
The corporation may, at its option, satisfy its obligation to make sinking fund redemptions provided for in the first paragraph of this Section 22(b) by crediting shares of 8.25% Cumulative Preference Stock, 1989 Series ($100 par value) acquired by purchase in the open market or otherwise. Notwithstanding the foregoing provisions of this section 22(b), the obligation to redeem shares of 8.25% Cumulative Preference Stock, 1989 Series ($100 par value) by reason of the sinking fund redemption (provided for in the first paragraph of this
Section 22(b)), annually commencing on October 1, 1995 shall be cumulative, and unless full cumulative redemptions of shares of 8.25% Cumulative Preference Stock, 1989 Series ($100 par value) for the sinking fund required hereby have been made, no dividends shall be declared nor any distribution made on the common stock, except dividends paid in stock of the corporation ranking junior to the 8.25% Cumulative Preference Stock, 1989 Series ($100 par value), nor shall any purchase or other acquisition for value of such common stock be made. The provisions of this section 22(b) shall apply so long as any shares of 8.25% Cumulative Preference Stock, 1989 Series ($100 par value) are outstanding.
23. (a) The 8.625% Cumulative Preference Stock, 1990 Series ($100 par value) shall entitle the holders thereof to receive, when and as declared, from the surplus or net profits of the corporation remaining after the preferential dividend requirements for the outstanding preferred stock have been provided for, yearly dividends at the rate of eight and six hundred and twenty-five thousandths per cent per annum and no more, payable quarterly on the first days of January, April, July, and October in each year commencing July 1, 1990. The dividends on the 8.625% Cumulative Preference Stock, 1990 Series ($100 par value) shall be cumulative and shall be payable before any dividend on the common stock shall be paid or set apart; so that, if in any year or years dividends amounting to eight and six hundred and twenty-five thousandths per cent shall not have been paid thereon, the deficiency shall be payable before any dividends shall be paid upon or set apart for the common stock. Dividends on the 8.625% Cumulative Preference Stock, 1990 Series ($100 par value) will accrue from and include June 7, 1990.
(b) On or before July 1 of each year commencing on July 1, 1996 and continuing through July 1, 2000, there shall be provided and set apart by the corporation a sum sufficient for the sinking fund redemption of 130,000 shares of 8.625% Cumulative Preference Stock, 1990 Series ($100 par value). Thereafter, on July 1 of each year commencing July 1, 1996 and continuing through July 1, 2000, the corporation shall make sinking fund redemptions of 130,000 shares of the 8.625% Cumulative Preference Stock, 1990 Series ($100 par value) by the payment to the holders thereof, in cash, of the sum of one hundred dollars and no cents ($100.00) for each share thereof, together with all accrued dividends. Shares shall be selected for sinking fund redemption by lot. At least thirty (30) days written notice of the shares of the 8.625% Cumulative Preference Stock, 1990 Series ($100 par value) so to be redeemed shall be given to the respective holders thereof by mailing the same, postage prepaid, and addressed to such holder at the address as it appears upon the books of the corporation. When such notice shall have been so given and funds for payment of the sinking fund redemption price, plus accrued dividends, shall have been provided and set apart by the corporation, the dividends on the shares of the 8.625% Cumulative Preference Stock, 1990 Series ($100 par value) so called
for sinking fund redemption and all other rights of the holders thereof, except the right to receive the sinking fund redemption price plus accrued dividends, shall cease.
The corporation may, at its option, in connection with any sinking fund redemption, increase by not more than 130,000 shares the number of shares of 8.625% cumulative Preference stock, 1990 Series ($100 par value) to be redeemed for the sinking fund, at the sinking fund redemption price of one hundred dollars and no cents ($100.00) for each share thereof, on any such sinking fund redemption date, together, in every case, with all accrued dividends; provided, however, that the right to make such optional increases shall not be cumulative.
The corporation may, at its option, satisfy its obligation to make sinking fund redemptions provided for in the first paragraph of this Section 23(b) by crediting shares of 8.625% Cumulative Preference Stock, 1990 Series ($100 par value) acquired by purchase in the open market or otherwise. Notwithstanding the foregoing provisions of this Section 23(b), the obligation to redeem shares of 8.625% cumulative Preference Stock, 1990 Series ($100 par value) by reason of the sinking fund redemption provided for in the first paragraph of this Section 23(b), annually commencing on July 1, 1996 shall be cumulative, and unless full cumulative redemptions of shares of 8.625% Cumulative Preference Stock, 1990 Series ($100 par value) for the sinking fund required hereby have been made, no dividends shall be declared nor any distribution made on the common stock, except dividends paid in stock of the corporation ranking junior to the 8.625% Cumulative Preference Stock, 1990 Series ($100 par value), nor shall any purchase or other acquisition for value of such common stock be made. The provisions of this Section 23(b) shall apply so long as any shares of 8.625% Cumulative Preference Stock, 1990 Series ($100 par value) are outstanding.
24. (a) The 7.85% Cumulative Preference Stock, 1991 Series ($100 par value) shall entitle the holders thereof to receive, when and as declared, from the surplus or net profits of the corporation remaining after the preferential dividend requirements for the outstanding preferred stock have been provided for, yearly dividends at the rate of seven and eighty-five hundredths per cent per annum and no more, payable quarterly on the first days of January, April, July, and October in each year commencing July 1, 1991. The dividends on the 7.85% Cumulative Preference Stock, 1991 Series ($100 par value) shall be cumulative and shall be payable before any dividend on the common stock shall be paid or set apart; so that, if in any year or years dividends amounting to seven and eighty-five hundredths per cent shall not have been paid thereon, the deficiency shall be payable before any dividends shall be paid upon or set apart for the common stock. Dividends on the 7.85% Cumulative Preference Stock, 1991 Series ($100 par value) will accrue from and include May 1, 1991.
(b) On or before July 1 of each year commencing on July 1, 1997 and continuing
through July 1, 2001, there shall be provided and set apart by the corporation
a sum sufficient for the sinking fund redemption of 70,000 shares of 7.85%
Cumulative Preference Stock, 1991 Series ($100 par value). Thereafter, on July
I of each year commencing July 1, 1997 and continuing through July 1, 2001,
the corporation shall make sinking fund redemptions of 70,000 shares of the
7.85% Cumulative Preference Stock, 1991 Series ($100 par value) by the payment
to the holders thereof, in cash, of the sum of one hundred dollars and no
cents ($100.00) for each share thereof, together with all accrued dividends.
Shares shall be selected for sinking fund redemption by lot. At least thirty
(30) days written notice of the shares of the 7.85% Cumulative Preference
Stock, 1991 Series ($100 par value) so to be redeemed shall be given to the
respective holders thereof by mailing the same, postage prepaid, and addressed
to such holder at the address as it appears upon the books of the corporation.
When such notice shall have been so given and funds for payment of the sinking
fund redemption price, plus accrued dividends, shall have been provided and
set apart by the corporation, the dividends on the shares of the 7.85%
Cumulative Preference Stock, 1991 Series ($100 par value) so called for
sinking fund redemption and all other rights of the holders thereof, except
the right to receive the sinking fund redemption price plus accrued dividends,
shall cease.
The corporation may, at its option, in connection with any sinking fund redemption, increase by not more than 70,000 shares the number of shares of 7.85% Cumulative Preference Stock, 1991 Series ($100 par value) to be redeemed for the sinking fund, at the sinking fund redemption price of one hundred dollars and no cents ($100.00) for each share thereof, on any such sinking fund redemption date, together, in every case, with all accrued dividends; provided, however, that the right to make such optional increases shall not be cumulative.
The corporation may, at its option, satisfy its obligation to make sinking fund redemptions provided for in the first paragraph of this Section 24(b) by crediting shares of 7.85% Cumulative Preference Stock, 1991 Series ($100 par value) acquired by purchase in the open market or otherwise. Notwithstanding the foregoing provisions of this Section 24(b), the obligation to redeem shares of 7.85% Cumulative Preference Stock, 1991 Series ($100 par value) by reason of the sinking fund redemption provided for in the first paragraph of this Section 24(b), annually commencing on July 1, 1997 shall be cumulative, and unless full cumulative redemptions of shares of 7.85% Cumulative Preference Stock, 1991 Series ($100 par value) for the sinking fund required hereby have been made, no dividends shall be declared nor any distribution made on the common stock, except dividends paid in stock of the corporation ranking junior to the 7.85% Cumulative Preference Stock, 1991 Series ($100 par value), nor shall any purchase or other acquisition for value of such common stock be made.
The provisions of this Section 24(b) shall apply so long as any shares of 7.85% Cumulative Preference Stock, 1991 Series ($100 par value) are outstanding.
25. (a) The 7.125% Cumulative Preference Stock, 1993 Series ($100 par value), shall entitle the holders thereof to receive, when and as declared, from the surplus or net profits of the corporation remaining after the preferential dividend requirements for the outstanding preferred stock have been provided for, yearly dividends at the rate of seven and one hundred twenty-five thousandths per cent per annum and no more, payable quarterly on the first days of January, April, July, and October in each year commencing October 1, 1993. The dividends on the 7.125% Cumulative Preference Stock, 1993 Series ($100 par value), shall be cumulative and shall be payable before any dividend on the common stock shall be paid or set apart; so that, if in any year or years dividends amounting to seven and one hundred twenty-five thousandths per cent shall not have been paid thereon, the deficiency shall be payable before any dividends shall be paid upon or set apart for the common stock. Dividends on the 7.125% Cumulative Preference Stock, 1993 Series ($100 par value), will accrue from and include June 24, 1993.
(b) The 7.125% Cumulative Preference Stock, 1993 Series ($100 par value), or any portion thereof, may whenever the Board of Directors shall so determine, be redeemed by the payment to the holders thereof of the sum hereinafter specified as the redemption price at the time of redemption, in cash, for each share thereof, together with all accrued dividends. The applicable redemption prices shall be:
Redemption Price Twelve Month Period
Per Share Beginning July 1,
--------- -----------------
$103.56 2003
103.21 2004
102.85 2005
102.49 2006
102.14 2007
101.78 2008
101.42 2009
101.07 2010
100.71 2011
100.36 2012
100.00 2013 and thereafter
|
provided, however, that prior to July 1, 2003, the corporation will not redeem any shares of the 7.125% Cumulative Preference Stock, 1993 Series ($100 par value). In case less than all of
the preference stock of this series at the time being outstanding is so redeemed, the shares to be redeemed shall be, as nearly as is reasonably practicable without creating fractional shares, a proportionate part of the holdings of each holder of preference stock of this series, or shall be selected, in whole or in part, by lot. At least thirty (30) days written notice of the election of the corporation to redeem the preference stock of this series (or any part thereof, in which case the notice shall specify the particular shares to be redeemed) shall be given to each holder of the preference stock of this series so to be redeemed by mailing the same, postage prepaid, and addressed to him at his address as it appears upon the books of the corporation. When such notice shall have been so given and the funds for payment of the redemption price plus accrued dividends shall have been provided and set apart, the dividends on the shares of preference stock of this series so called for redemption and all other rights of the holders thereof, except the right to receive the redemption price plus accrued dividends, shall cease.
26. (a) The 6.97% Cumulative Preference Stock, 1993 Series ($100 par value), shall entitle the holders thereof to receive, when and as declared, from the surplus or net profits of the corporation remaining after the preferential dividend requirements for the outstanding preferred stock have been provided for, yearly dividends at the rate of six and ninety-seven hundredths per cent per annum and no more, payable quarterly on the first days of January, April, July, and October in each year commencing October 1, 1993. The dividends on the 6.97% Cumulative Preference Stock, 1993 Series ($100 par value), shall be cumulative and shall be payable before any dividend on the common stock shall be paid or set apart; so that, if in any year or years dividends amounting to six and ninety-seven hundredths per cent shall not have been paid thereon, the deficiency shall be payable before any dividends shall be paid upon or set apart for the common stock. Dividends on the 6.97% Cumulative Preference Stock, 1993 Series ($100 par value), will accrue from and include August 5, 1993.
(b) The 6.97% Cumulative Preference Stock, 1993 Series ($100 par value), or any portion thereof, may whenever the Board of Directors shall so determine, be redeemed by the payment to the holders thereof of the sum hereinafter specified as the redemption price at the time of redemption, in cash, for each share thereof, together with all accrued dividends. The applicable redemption prices shall be:
Redemption Price Twelve Month Period
Per Share Beginning October 1,
--------- --------------------
$103.49 2003
103.14 2004
102.79 2005
102.44 2006
102.09 2007
|
101.74 2008 101.39 2009 101.05 2010 100.70 2011 100.35 2012 100.00 2013 and thereafter |
provided, however, that prior to October 1, 2003, the corporation will not
redeem any shares of the 6.97% Cumulative Preference Stock, 1993 Series ($100
par value). In case less than all of the preference stock of this series at
the time being outstanding is so redeemed, the shares to be redeemed shall be,
as nearly as is reasonably practicable without creating fractional shares, a
proportionate part of the holdings of each holder of preference stock of this
series, or shall be selected, in whole or in part, by lot. At least thirty
(30) days written notice of the election of the corporation to redeem the
preference stock of this series (or any part thereof, in which case the notice
shall specify the particular shares to be redeemed) shall be given to each
holder of the preference stock of this series so to be redeemed by mailing the
same, postage prepaid, and addressed to him at his address as it appears upon
the books of the corporation. When such notice shall have been so given and
the funds for payment of the redemption price plus accrued dividends shall
have been provided and set apart, the dividends on the shares of preference
stock of this series so called for redemption and all other rights of the
holders thereof, except the right to receive the redemption price plus accrued
dividends, shall cease.
27. (a) The 6.70% Cumulative Preference Stock, 1993 Series ($100 par value), shall entitle the holders thereof to receive, when and as declared, from the surplus or net profits of the corporation remaining after the preferential dividend requirements for the outstanding preferred stock have been provided for, yearly dividends at the rate of six and seventy hundredths per cent per annum and no more, payable quarterly on the first days of January, April, July, and October in each year commencing January 1, 1994. The dividends on the 6.70% Cumulative Preference Stock, 1993 Series ($100 par value), shall be cumulative and shall be payable before any dividend on the common stock shall be paid or set apart; so that, if in any year or years dividends amounting to six and seventy hundredths per cent shall not have been paid thereon, the deficiency shall be payable before any dividends shall be paid upon or set apart for the common stock. Dividends on the 6.70% Cumulative Preference Stock, 1993 Series ($100 par value), will accrue from and include October 14, 1993.
(b) The 6.70% Cumulative Preference Stock, 1993 Series ($100 par value), or any portion thereof, may whenever the Board of Directors shall so determine, be redeemed by the payment to the holders thereof of the sum hereinafter specified as the redemption price at the time of
redemption, in cash, for each share thereof, together with all accrued dividends. The applicable redemption prices shall be:
Twelve Month Period Redemption Price
Beginning January 1, Per Share
-------------------- ---------
2004 $103.35
2005 103.02
2006 102.68
2007 102.35
2008 102.01
2009 101.68
2010 101.34
2011 101.01
2012 100.67
2013 100.34
2014 and thereafter 100.00
|
provided, however, that prior to January 1, 2004, the corporation will not
redeem any shares of the 6.70% Cumulative Preference Stock, 1993 Series ($100
par value). In case less than all of the preference stock of this series at
the time being outstanding is so redeemed, the shares to be redeemed shall be,
as nearly as is reasonably practicable without creating fractional shares, a
proportionate part of the holdings of each holder of preference stock of this
series, or shall be selected, in whole or in part, by lot. At least thirty
(30) days written notice of the election of the corporation to redeem the
preference stock of this series (or any part thereof, in which case the notice
shall specify the particular shares to be redeemed) shall be given to each
holder of the preference stock of this series so to be redeemed by mailing the
same, postage prepaid, and addressed to him at his address as it appears upon
the books of the corporation. When such notice shall have been so given and
the funds for payment of the redemption price plus accrued dividends shall
have been provided and set apart, the dividends on the shares of preference
stock of this series so called for redemption and all other rights of the
holders thereof, except the right to receive the redemption price plus accrued
dividends, shall cease.
28. (a) The 6.99% Cumulative Preference Stock, 1995 Series ($100 par value), shall entitle the holders thereof to receive, when and as declared, from the surplus or net profits of the corporation remaining after the preferential dividend requirements for the outstanding preferred stock have been provided for, yearly dividends at the rate of six and ninety-nine hundredths per cent per annum and no more, payable quarterly on the first days of January, April, July, and October in each year commencing October 1, 1995. The dividends on the 6.99% Cumulative Preference Stock, 1995 Series ($100 par value), shall be cumulative and
shall be payable before any dividend on the common stock shall be paid or set apart; so that, if in any year or years dividends amounting to six and ninety-nine hundredths per cent shall not have been paid thereon, the deficiency shall be payable before any dividends shall be paid upon or set apart for the common stock. Dividends on the 6.99% Cumulative Preference Stock, 1995 Series ($100 par value), will accrue from and include September 7, 1995.
(b) The 6.99% Cumulative Preference Stock, 1995 Series ($100 par value), or any portion thereof, may whenever the Board of Directors shall so determine, be redeemed by the payment to the holders thereof of the sum hereinafter specified as the redemption price at the time of redemption, in cash, for each share thereof, together with all accrued dividends. The applicable redemption prices shall be:
Twelve Month Period Redemption Price
Beginning October 1, Per Share
-------------------- ---------
2005 $103.50
2006 103.15
2007 102.80
2008 102.45
2009 102.10
2010 101.75
2011 101.40
2012 101.05
2013 100.70
2014 100.35
2015 and thereafter 100.00
|
provided, however, that prior to October 1, 2005, the corporation will not
redeem any shares of the 6.99% Cumulative Preference Stock, 1995 Series ($100
par value). In case less than all of the preference stock of this series at
the time being outstanding is so redeemed, the shares to be redeemed shall be,
as nearly as is reasonably practicable without creating fractional shares, a
proportionate part of the holdings of each holder of preference stock of this
series, or shall be selected, in whole or in part, by lot. At least thirty
(30) days written notice of the election of the corporation to redeem the
preference stock of this series (or any part thereof, in which case the notice
shall specify the particular shares to be redeemed) shall be given to each
holder of the preference stock of this series so to be redeemed by mailing the
same, postage prepaid, and addressed to him at his address as it appears upon
the books of the corporation. When such notice shall have been so given and
the funds for payment of the redemption price plus accrued dividends shall
have been provided and set apart, the dividends on the shares of preference
stock of this series so called for redemption and all other rights of the
holders thereof, except the right to receive the redemption price plus accrued
dividends, shall cease.
V
A director or officer of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages except (i) to the extent that it is proved that the person actually received an improper benefit or profit in money, property, or services for the amount of the benefit or profit in money, property or services actually received or (ii) to the extent that a judgment or other final adjudication adverse to the person is entered in a proceeding based on a finding in the proceeding that the person's action or failure to act was the result of active and deliberate dishonesty and was material to the cause of action adjudicated in the proceeding. It is the intent of this Article that the liability of directors and officers shall be limited to the fullest extent permitted by the Maryland General Corporation Law, as amended from time to time.
Any repeal or modification of the foregoing paragraph by the stockholders of the corporation shall not adversely affect any right or protection of a director or officer of the corporation existing at the time of such repeal or modification.
IN WITNESS WHEREOF, Baltimore Gas and Electric Company has caused these Articles of Restatement to its Charter to be signed in its corporate name and on its behalf by a Vice President, and its corporate seal to be hereto affixed, duly attested by its Assistant Secretary on August 15, 1996 who each hereby (1) acknowledge that the execution of these Articles of Restatement is the act of Baltimore Gas and Electric Company, and (2) state that to the best of their respective knowledge, information and belief, the matters and facts set forth herein are true in all material respects, such statement being made under the penalties for perjury.
BALTIMORE GAS AND ELECTRIC COMPANY
By: /s/ C.W. Shivery
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Vice President
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SEAL: BALTIMORE GAS AND ELECTRIC COMPANY,
INCORPORATED JUNE 20, 1906
Attest: /s/ T.E. Ruszin, Jr.
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Assistant Secretary
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BALTIMORE GAS AND ELECTRIC COMPANY
EXECUTIVE BENEFITS PLAN
Effective August 1, 1996
TABLE OF CONTENTS
Page No.
1. Objective 1
2. Definitions 1
3. Plan Administration 3
4. Eligibility 3
5. Supplemental Pension Benefit 4
(a) Retirement benefits 4
(i) Eligibility for retirement benefits 4
(ii) Computation of retirement benefits 4
(iii)Form of payout of retirement benefits 5
(iv) Amount, timing, and source of monthly
retirement benefit payout 6
(v) Amount, timing, and source of lump sum
retirement benefit payout 6
(vi) Death of participant entitled to lump
sum payout 7
(vii)Health and dental benefits 7
(b) Accrued benefit 7
(i) Computation of gross accrued benefit 8
(ii) Computation of net accrued benefit 8
(c) Entitlement to benefit upon happening of
certain events 8
(i) Satisfaction of requirements 8
(ii) Other events 9
(1) Change in control 9
(2) Plan amendment 10
(3) Involuntary Demotion, Termination
From Employment With BGE, or
eligibility withdrawal without
Cause 11
(iii)Form of benefit payout 11
(iv) Amount, timing and source of benefit
payout 11
(v) Death of participant entitled to lump
sum payout 12
(d) Other benefits 13
(i) Eligibility for other benefits 13
(ii) Computation of other benefits 13
(iii)Form of payout of other benefits 14
(iv) Amount, timing, and source of monthly
other benefit payout 14
1
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6. Supplemental Long-Term Disability Benefit 14
(i) Eligibility for disability benefits 14
(ii) Computation of disability benefits 15
(iii)Form of payment of disability benefits 15
(iv) Amount, timing, and source of monthly
disability benefit payout 15
(v) Bonus 16
7. Supplemental Survivor Annuity Benefit 16
(a) Survivor annuity benefit 16
(i) Eligibility for survivor
annuity benefit 16
(ii) Computation of survivor
annuity benefit 17
(iii)Form of payout of survivor annuity
benefits 18
(iv) Amount, timing, and source of monthly 18
survivor annuity benefit payout 18
(b) Other survivor benefit 19
(i) Eligibility for other survivor benefit 19
(ii) Computation of other survivor benefit 19
(iii)Form of payout of other survivor
benefit 19
(iv) Amount, timing, and source of monthly
other survivor benefit payout 20
8. Death Benefit 20
9. Dependent Death Benefit 20
10. Sickness Benefit 21
11. Vacation Benefit 21
12. Planning Benefit 21
13. Miscellaneous 22
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BALTIMORE GAS AND ELECTRIC COMPANY
EXECUTIVE BENEFITS PLAN
1. Objective. The objective of this Plan is to enhance the benefits provided to officers and key employees of BGE and its subsidiaries in order to attract and retain talented executive personnel.
2. Definitions. All words beginning with an initial capital letter and not otherwise defined herein shall have the meaning set forth in the Pension Plan. All singular terms defined in this Plan will include the plural and vice versa. As used herein, the following terms will have the meaning specified below:
"Annual Base Salary" means an amount determined by adding the monthly base rate of pay amounts (i.e., the types of such pay that are includable in the computation of Pension Plan benefits)earned over the twelve calendar months immediately preceding the month that includes the date of the computation.
"Average Incentive Award" (or "Average Award") means generally the product of the percentage equal to an average of the two highest of the participant's five immediately prior year award percentages earned under BGE's Executive Annual Incentive Plan, BGE's Manager Annual Incentive Plan and/or the Results Incentive Awards Program multiplied by the participant's annualized base rate of pay amount (i.e., the types of such pay that are includable in the computation of Pension Plan benefits) in effect at the end of the prior year.
"BGE" means Baltimore Gas and Electric Company, a Maryland corporation, or its successor.
"BGE's Executive Annual Incentive Plan" means such plan or other incentive plan or arrangement designated in writing by the Plan Administrator.
"BGE's Manager Annual Incentive Plan" means such plan or other incentive plan or arrangement designated in writing by the Plan Administrator.
"Cause" means the participant's (a) failure to comply with BGE policy, (b) deliberate and continual refusal to satisfactorily perform employment duties on substantially a full-time basis, (c) deliberate and continual refusal to act in accordance with any specific instructions of a majority of BGE's Board of Directors, (d) disclosure, without the consent of a majority of BGE's Board of Directors, of confidential information or trade secrets concerning BGE which could be materially damaging to BGE, or (e) deliberate misconduct which could be materially damaging to BGE without reasonable good faith belief by the participant that such conduct was in the best interest of BGE.
"Committee" means the Committee on Management of the Board of Directors of
BGE.
"Demotion" means a transfer to a position with BGE or a subsidiary of BGE that either (a) is below the substantially equivalent position in which the participant was employed on the date of transfer, or (b) results in a substantial reduction in pay when compared to the participant's pay on the date of the transfer. Whether a position is a substantially equivalent position shall be determined in the reasonable discretion of the Committee, with reference to factors including whether the participant retains principal responsibility for a department or division, and whether the participant remains eligible for the perquisites enjoyed by the participant before the position change.
"Income Replacement Percentage" means the percentage under the LTD Plan that is used to calculate the participant's actual LTD Plan benefit.
"Interest Rate" means the rate equal to 3.5% plus 65% of yield on the Lehman Brothers Government/Corporate Bond Index.
"LTD Plan" means the Baltimore Gas and Electric Company Disability Insurance Plan as may be amended from time to time, or any successor plan.
"Mortality Table" means the mortality table used to value liabilities for Pension Plan funding purposes.
"Pension Plan" means the Pension Plan of Baltimore Gas and Electric Company as may be amended from time to time, or any successor plan.
"Plan Administrator" means, as set forth in Section 3, the Committee.
"Rabbi Trust" means the trust established by BGE pursuant to the Grantor Trust Agreement Dated as of July 31, 1994, between BGE and Citibank, N.A.
"Results Incentive Awards Program" means the program applicable to BGE employees that provides awards; but includes only the types of awards that are includable in the computation of Pension Plan benefits.
"Termination From Employment With BGE" means a participant's separation from service with BGE or a subsidiary of BGE; however, a participant's retirement, disability, or transfer of employment to or from a subsidiary of BGE shall not constitute a Termination From Employment With BGE.
3. Plan Administration. The Committee is the Plan Administrator and has sole authority (except as specified otherwise herein) to interpret the Plan and, in general, to make all other determinations advisable for the administration of the Plan to achieve its stated objective. Appeals of written decisions by the Plan Administrator may be made to the Board of Directors of BGE. Decisions by the Board shall be final and not subject to further appeal. The Plan Administrator shall have the power to delegate all or any part of its duties to one or more designees, and to withdraw such authority, by written designation.
4. Eligibility. Each officer or key employee of BGE or its subsidiaries may be
designated in writing by the Plan Administrator as a participant with
respect to one or more benefits under the Plan. Once designated,
participation shall continue until such designation is withdrawn at the
discretion and by written order of the Plan Administrator, provided,
however, that such withdrawal may not be made for benefits provided
pursuant to Sections 5 and 7 with respect to a participant who has
satisfied the eligibility requirements to retire (as set forth in Section
5(a)(i)). Notwithstanding the foregoing, any participant who is disabled
under the LTD Plan shall continue to participate in this Plan while
classified as disabled and, for purposes of the supplemental pension
benefit provided by this Plan, while classified as disabled, shall be
deemed to continue to accrue Credited Service until no later than his/her
Normal Retirement Date.
5. Supplemental Pension Benefit.
(a) Retirement benefits.
(i) Eligibility for retirement benefits. A participant shall be
eligible to retire under this Plan on or after the participant's
Normal Retirement Date, or on the first day of any month preceding
his/her Normal Retirement Date, if the participant has attained
(1) age 55 and has accumulated at least 20 years of Credited
Service; or (2) age 60 and has accumulated at least one year of
Credited Service.
(ii)Computation of retirement benefits. A participant who is eligible to retire under this Plan will be entitled to supplemental pension retirement benefits under this Plan, which will be calculated as set forth below on the participant's Retirement Date:
(1) add the Annual Base Salary and the Average Incentive Award,
(2) divide the sum by 12,
(3) multiply this dollar amount by the appropriate percentage, determined as follows: Chairman of the Board and President of BGE, and President of Constellation Holdings, Inc. - 60%; all other participants (by completed years of Credited Service) 1 through 9 - 3% per year; 10 through 19 - 40%; 20 through 24 - 45%; 25 through 29 - 50%; and 30 or more - 55%,
(4) multiply this dollar amount by the Early Retirement Adjustment Factor set forth under the Pension Plan; provided, however, if the participant is age 62 or older and is an officer or key employee of BGE or its subsidiaries, other than the Chairman of the Board or the President of BGE or the President of Constellation Holdings, Inc., such factor shall be one (1),
(5) subtract from this dollar amount the charges relating to coverage for a preretirement
survivor annuity in excess of 50%, and for a post-retirement survivor annuity in excess of 50%, and
(6) subtract from the remainder the net amount payable to the participant under the Pension Plan.
(iii)Form of payout of retirement benefits. Each participant entitled to supplemental pension retirement benefits will receive his/her supplemental pension retirement benefits payout in the form of a monthly payment, unless the participant makes a valid election to receive his/her supplemental pension retirement benefits payout in the form of a lump sum.
A participant may elect to receive his/her supplemental pension retirement benefits payout in the form of a lump sum by submitting to the Plan Administrator a signed Lump Sum Election Form. The Form must be received by the Plan Administrator before the beginning of the calendar year during which the participant's Retirement Date occurs. The election may be revoked at any time before the beginning of the calendar year during which the participant's Retirement Date occurs, by submitting to the Plan Administrator a signed Lump Sum Revocation Form.
(iv)Amount, timing, and source of monthly retirement benefit payout. A participant entitled to monthly supplemental pension retirement benefits will receive monthly payments equal to the amount determined under paragraph (a)(ii). Such payments shall commence effective with the participant's Retirement Date. If such participant receives (or would have received but for the Internal Revenue Code limitations) cost of living adjustment(s) under the Pension Plan, the monthly payments hereunder will be automatically increased based on the percentage of, and at the same time as, such adjustment(s). Monthly payments hereunder shall permanently cease upon the death of the participant, effective with the monthly payment for the month following the month of the participant's death. Monthly payments hereunder shall be made in accordance with the provisions of
the Rabbi Trust and, to the extent not paid under the terms of the Rabbi Trust, from general corporate assets.
(v) Amount, timing, and source of lump sum retirement benefit payout.
A participant entitled to a lump sum supplemental pension
retirement benefit will receive a lump sum payment. This lump sum
payment will be calculated by a certified actuary and will be
equal to the present value of an immediate annuity including the
estimated present value of post-retirement supplemental survivor
annuity benefits described in Section 7, using (1) the
supplemental pension retirement benefit amount calculated under
paragraph (a)(ii), which is expressed as a monthly amount, (2) the
Interest Rate computed on the participant's Retirement Date, and
(3) the Mortality Table. Such lump sum payment shall be made
within 60 days after the participant's Retirement Date. The lump
sum payment shall be made in accordance with the provisions of the
Rabbi Trust and, to the extent not paid under the terms of the
Rabbi Trust, from general corporate assets. A participant who
receives a lump sum payment shall not be entitled to any cost of
living adjustments or to post-retirement survivor annuity coverage
under the Plan.
(vi)Death of participant entitled to lump sum payout. In the event of the death of a participant after his/her Retirement Date and before the participant receives the lump sum payment under paragraph (a)(v), such lump sum payment shall be made to the participant's surviving spouse (as defined in Section 7(i)). The lump sum payment shall be the same amount and made at the same time and from the same sources as set forth in paragraph (a)(v). If there is no surviving spouse at the date of the participant's death, no payments shall be made pursuant to Sections 5 or 7. A surviving spouse who receives a lump sum benefit under this paragraph (a)(vi) shall not be entitled to any cost of living adjustments or to post-retirement survivor annuity coverage under the Plan.
(vii) Health and dental benefits. A participant who receives supplemental pension retirement benefits
under this Plan, but who is not eligible for benefits under the BGE Retiree Flexible Benefits Program, is entitled to health and dental benefits under this Plan that in the sole discretion of the Plan Administrator, are reasonably similar to health and dental benefits provided for participants under the BGE Retiree Flexible Benefits Program, taking into account age and service.
(b) Accrued benefit.
(i) Computation of gross accrued benefit. The computation of the gross accrued supplemental pension benefit for a participant as of the date of the computation will be made as follows:
(1) add the Annual Base Salary and the Average Incentive Award,
(2) divide the sum by 12, and
(3) multiply this dollar amount by the appropriate percentage, determined as follows: Chairman of the Board and President of BGE and President of Constellation Holdings, Inc. - 60%; all other participants (by completed years of Credited Service as of the date of the computation) 1 through 9 - 3% per year; 10 through 19 - 40%; 20 through 24 - 45%; 25 through 29 - 50%; and 30 or more - 55%.
(ii)Computation of net accrued benefit. The computation of the net accrued supplemental pension benefit for a participant as of the date of the computation will be made by subtracting from the gross accrued benefit determined under paragraph (b)(i) the amount, computed on the date a benefit is payable under paragraph (c)(iv), of (1) the participant's Accrued Gross Pension under the Pension Plan, expressed as a monthly amount if the participant is not eligible for Normal Retirement, Early Retirement or Disability Retirement benefits under the Pension Plan, otherwise (2) the gross amount payable to the participant under the Pension Plan.
(c) Entitlement to benefit upon happening of certain events.
(i) Satisfaction of requirements. A participant who has satisfied the age and Credited Service requirements set forth in Section 5(a)(i) while eligible as set forth in Section 4, but who does not retire under the Plan due to Demotion, Termination From Employment With BGE, or the withdrawal of a participant's eligibility to participate under Section 5, shall be entitled to his/her net accrued supplemental pension benefit. The effective date of the Demotion, Termination From Employment With BGE, or eligibility withdrawal event shall be the date of such Demotion, Termination From Employment With BGE, or eligibility withdrawal.
(ii)Other events. A participant, regardless of his/her age and years of Credited Service, shall be entitled to his/her net accrued supplemental pension benefit upon the happening of any of the following entitlement events, but only if such entitlement event occurs before a participant retires under this Plan:
(1) Change in control. A change in control, followed within two years by the participant's Demotion, a participant's Termination From Employment With BGE, or the withdrawal of the participant's eligibility to participate under the Plan, is an entitlement event. The effective date of the entitlement event shall be the date of the Demotion, Termination From Employment With BGE, or eligibility withdrawal.
A change in control for purposes of this paragraph (c)(i)(1) shall mean (w) the purchase or acquisition by any person, entity or group of persons, (within the meaning of section 13(d) or 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), or any comparable successor provisions), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20 percent or more of either the outstanding shares of common stock of BGE or
the combined voting power of BGE's then outstanding shares of voting securities entitled to a vote generally, or (x) the approval by the stockholders of BGE of a reorganization, merger, or consolidation, in each case, with respect to which persons who were stockholders of BGE immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than 50 percent of the combined voting power entitled to vote generally in the election of directors of the reorganized, merged or consolidated entity's then outstanding securities, or (y) a liquidation or dissolution of BGE or the sale of substantially all of its assets, or (z) a change of more than one-half of the members of the Board of Directors of BGE within a 90- day period for reasons other than the death, disability, or retirement of such members.
(2) Plan amendment. A Plan amendment that has the effect of reducing a participant's gross accrued supplemental pension benefit is an entitlement event. In determining whether such a reduction has occurred, the participant's gross accrued supplemental pension benefit calculated on the day immediately preceding the effective date of the amendment shall be compared to the participant's gross accrued supplemental pension benefit calculated on the effective date of the amendment. An amendment that has the effect of reducing future benefit accruals is not an entitlement event. It is intended that an entitlement event under this paragraph (c)(i)(2) will occur only with respect to those amendments that are substantially similar to amendments that are prohibited by Internal Revenue Code section 411(d)(6) with respect to qualified pension plans. The effective date of the entitlement event shall be the effective date of the Plan amendment.
(3) Involuntary Demotion, Termination From Employment With BGE, or eligibility withdrawal without Cause. A participant's
involuntary Demotion or involuntary Termination From Employment With BGE without Cause, or the withdrawal of a participant's eligibility to participate under Sections 5 or 7 of the Plan without Cause, is an entitlement event. The effective date of the entitlement event shall be the effective date of the participant's involuntary Demotion or involuntary Termination From Employment With BGE without Cause, or the eligibility withdrawal without Cause.
(iii)Form of benefit payout. Each participant entitled to a payout under this paragraph (c) will receive such payout in the form of a lump sum payment.
(iv)Amount, timing, and source of benefit payout. A participant
entitled to a payout of his/her net accrued benefit, as a result
of the occurrence of an event described in paragraphs (c)(i),
(c)(ii)(1), (2), or (3) will be entitled to a lump sum benefit.
This lump sum benefit will be calculated by a certified actuary as
the present value of an annuity beginning at age 62 (unless the
participant is the Chairman of the Board or President of BGE, or
the President of Constellation Holdings, Inc. in which case age
65) (or the participant's actual age, if the participant is older
than age 62 (unless the participant is the Chairman of the Board
or President of BGE, or the President of Constellation Holdings,
Inc. in which case age 65) on the date the lump sum benefit is
payable), including the estimated present value of post-retirement
survivor annuity benefits described in Section 7, using (1) the
net accrued benefit amount calculated under paragraph (b)(ii) on
the effective date of the event, which is expressed as a monthly
amount, (2) the Early Retirement Adjustment Factor computed by
substituting the date the lump sum benefit is payable for the
Retirement Date, (3) the Interest Rate computed on the date the
lump sum benefit is payable, and (4) the Mortality Table. The lump
sum benefit shall be payable on the date that is the later of the
date of the participant's Termination From Employment With BGE or
the date the participant reaches age 55. The lump sum payment
shall be
made within 60 days after such date and shall be made in accordance with the provisions of the Rabbi Trust and, to the extent not paid under the terms of the Rabbi Trust, from general corporate assets. A participant who receives a lump sum benefit under this paragraph (c)(iv) shall not be entitled to any cost of living adjustments or to preretirement or post-retirement survivor annuity coverage.
(v) Death of participant entitled to lump sum payout. In the event of
the death of a participant after the occurrence of an event
described in paragraphs (c)(i), (c)(ii)(1), (2), or (3) and before
the participant receives the lump sum payment under paragraph
(c)(iv), such lump sum payment shall be made to the participant's
surviving spouse (as defined in Section 7(i)). The lump sum
payment will be calculated by a certified actuary and will be
equal to 50% of the present value of an immediate annuity using
(1) the monthly amount under paragraph (c)(iv), (2) the Early
Retirement Adjustment Factor computed using the participant's age
at the date of the participant's death, or if the participant was
younger than age 60 on the date of death, using age 60, (3) the
Interest Rate computed on the date the lump sum benefit is
payable, and (4) the Mortality Table. However, if the
participant's death occurred during the 60 day period described in
paragraph (c)(iv), 100% shall be used instead of 50% in the
preceding sentence. The lump sum benefit shall be payable on the
date that is the later of the date that the participant would have
reached age 55 or the date of the participant's death. The lump
sum payment shall be made within 60 days after such date, and
shall be made in accordance with the provisions of the Rabbi Trust
and, to the extent not paid under the terms of the Rabbi Trust,
from general corporate assets. If there is no surviving spouse at
the date of the participant's death, no payments shall be made
pursuant to Sections 5 or 7. A surviving spouse who receives a
lump sum benefit under this paragraph (c) (v) shall not be
entitled to any cost of living adjustments or to preretirement or
post-retirement survivor annuity coverage under the Plan.
(d) Other benefits.
(i) Eligibility for other benefits. Upon a participant's Termination From Employment With BGE, if such participant (1) does not satisfy the requirements of Sections 5(a)(i), 5(c)(i), and/or 5(c)(ii), and (2) is a vested participant under the Pension Plan, such participant shall be entitled to the benefits in this Section 5(d).
(ii)Computation of other benefits. A participant who is eligible for other benefits will be entitled to benefits under this Plan, which will be calculated as set forth below on the date the participant begins receipt of benefit payments under the Pension Plan:
(1) compute the participant's adjusted monthly benefit payment under the terms of the Pension Plan, by also treating awards, if any, paid to the participant under BGE's Executive Annual Incentive Plan and/or BGE's Manager Annual Incentive Plan during the immediately preceding twenty-four consecutive months as bonuses and/or incentives included in the computation of the participant's Average Pay (as defined under the Pension Plan), and
(2) subtract from the amount in (1) above the participant's actual monthly benefit payment under the Pension Plan.
For purposes of the computation in (1), the participant will bear the cost of any post-retirement survivor annuity coverage provided under Section 7(b).
(iii)Form of payout of other benefits. Each participant entitled to other benefits will receive his/her other benefits payout in the form of a monthly payment.
(iv)Amount, timing, and source of monthly other benefit payout. A
participant entitled to monthly other benefits will receive
monthly payments equal to the amount determined under paragraph
(d)(ii). Such payments shall commence effective with the
date the participant commences receipt of benefit payments under the Pension Plan. Monthly payments hereunder shall permanently cease upon the death of the participant, effective with the monthly payment for the month following the month of the participant's death. Monthly payments hereunder shall be made from general corporate assets.
6. Supplemental Long-Term Disability Benefit.
(i) Eligibility for disability benefits. Any participant who has completed at least one full calendar month of service with BGE or its subsidiaries, who has elected coverage under the LTD Plan, and who is disabled (as determined under the LTD Plan) will be entitled to supplemental disability benefits under this Plan.
(ii) Computation of disability benefits. The amount of such supplemental disability benefits shall be determined as follows:
(1) multiply the monthly base rate of pay amount in effect immediately prior to becoming entitled to benefits under the LTD Plan by twelve,
(2) add the Average Incentive Award to the product,
(3) add certain bonuses and incentives that are included in the computation of Average Pay under the Pension Plan (except that awards under the Results Incentive Awards Program shall be excluded), earned over the last 12 months to the product,
(4) divide the sum by 12,
(5) multiply this monthly dollar amount by the Income Replacement Percentage, and
(6) subtract from the product the gross monthly amount provided for the participant under the LTD Plan before such amount is reduced for other benefits as set forth under the LTD Plan.
(iii)Form of payment of disability benefits. Each participant entitled to supplemental disability benefits will receive his/her supplemental disability benefit payout in the form of a monthly payment.
(iv) Amount, timing, and source of monthly disability benefit payout. A participant entitled to supplemental disability benefits will receive a monthly payment equal to the amount determined under (ii) above. Such payments shall commence effective with the commencement of the participant's LTD Plan benefit payments. Monthly payments shall permanently cease when benefit payments under the LTD Plan cease. Monthly payments shall be made from BGE's general corporate assets.
If a participant receiving payments pursuant to this Section 6 receives cost of living adjustment(s) under the LTD Plan, the payments hereunder will be automatically increased based on the same percentage of, and at the same time as, such adjustment(s).
(v) Bonus. Any participant who has less than ten years of Credited Service shall be entitled to a monthly taxable cash bonus, equal to an amount based on the cost of LTD Plan coverage, using the formula for computing BGE-provided Flexible Benefits Plan credits for LTD Plan coverage and taking into account the Participant's Credited Service and covered compensation. Such cash bonus shall be made from BGE's general corporate assets.
7. Supplemental Survivor Annuity Benefit.
(a) Survivor annuity benefit.
(i) Eligibility for survivor annuity benefit. Following the death of a
participant (other than a participant who satisfied the
requirements of Section 5(d)(i) upon such participant's
Termination From Employment With BGE), a supplemental survivor
annuity may be paid to the participant's surviving spouse until
the death of that spouse, using the same percentage to compute
such supplemental benefit that is actually used to compute any
survivor annuity provided on behalf of the participant under the
Pension Plan. The participant will not bear the cost of up to a
50% survivor annuity benefit, but will bear the cost of a survivor
annuity benefit in excess of 50%. For purposes of this Section
7(a), a participant's surviving spouse is the individual married
to the participant on the date of the participant's death. If
there is no surviving spouse, or if the participant or the
participant's spouse previously received or is entitled to receive
a lump sum payment under Section 5, no supplemental survivor
annuity will be payable.
(ii)Computation of survivor annuity benefit. The amount of the supplemental survivor annuity will be determined as follows:
(1) if the participant had retired prior to the date of death:
(a) begin with the monthly pension benefit (under Section 5(a) of this Plan) that the participant was receiving prior to the date of death, and
(b) multiply this dollar amount by the percentage used to compute the survivor annuity provided on behalf of the participant under the Pension Plan.
(2) otherwise:
(a) begin with the larger of the Early Retirement pension benefit (under both the Pension Plan and Section 5(a) of this Plan) to which the participant would have been entitled to receive if the:
(A) participant had been retired at age 60 on the date of death for purposes of computing the Early Retirement Adjustment Factor, or
(B) participant had retired on the date of death for purposes of computing the Early Retirement Adjustment Factor,
(b) multiply this dollar amount by the percentage used to compute the survivor annuity provided on behalf of the participant under the Pension Plan,
(c) subtract from the product the net amount, if any, of the survivor annuity provided on behalf of the participant under the Pension Plan, and
(d) subtract from this dollar amount the charges relating to coverage (under both the Pension Plan and this Plan) for a preretirement survivor annuity in excess of 50%, and for a post-retirement survivor annuity in excess of 50%.
(iii)Form of payout of survivor annuity benefits. Each surviving spouse entitled to a supplemental survivor annuity benefit will receive his/her survivor annuity benefit payout in the form of a monthly payment.
(iv)Amount, timing, and source of monthly survivor annuity benefit payout. A surviving spouse entitled to monthly supplemental survivor annuity benefits will receive a monthly payment equal to the amount determined under (ii) above. Such payments shall commence effective with the first day of the month following the month of the participant's death. If such surviving spouse receives (or would have received but for the Internal Revenue Code limitations) cost of living adjustment(s) under the Pension Plan, the monthly payments hereunder will be automatically increased based on the percentage of, and at the same time as, such adjustment(s). Monthly payments hereunder shall permanently cease upon the death of the surviving spouse, effective with the monthly payment for the month following the month of the surviving spouse's death. Monthly payments hereunder shall be made in accordance with the provisions of the Rabbi Trust and, to the extent not paid under the terms of the Rabbi Trust, from general corporate assets.
(b) Other survivor benefit.
(i) Eligibility for other survivor benefit. Following the death of a participant who satisfied the requirements of Section 5(d)(i) upon such participant's Termination From Employment With BGE, a survivor benefit may be paid to the participant's surviving spouse until the death of that spouse. For purposes of this Section 7(b), a participant's surviving spouse is the individual who is the Surviving Spouse under the Pension Plan. If there is no surviving spouse, no survivor benefit will be payable.
(ii)Computation of other survivor benefit. The amount of the survivor benefit will be calculated as set forth below on the date the surviving spouse begins receipt of benefit payments under the Pension Plan:
(1) compute the surviving spouse's adjusted monthly benefit payment under the terms of the Pension Plan, by also treating awards, if any, paid to the participant under BGE's Executive Annual Incentive Plan and/or BGE's
Manager Annual Incentive Plan during the immediately preceding twenty-four consecutive months as bonuses and/or incentives included in the computation of the participant's Average Pay (as defined under the Pension Plan), and
(2) subtract from the amount in (1) above the surviving spouse's actual monthly benefit payment under the Pension Plan.
For purposes of the computation in (1), the surviving spouse will bear the cost of the survivor benefit.
(iii)Form of payout of other survivor benefit. Each surviving spouse entitled to a survivor benefit will receive his/her survivor benefit payout in the form of a monthly payment.
(iv)Amount, timing, and source of monthly other survivor benefit payout. A surviving spouse entitled to monthly survivor benefits will receive monthly payments equal to the amount determined under paragraph (b)(ii). Such payments shall commence effective with the date the surviving spouse commences receipt of benefit payments under the Pension Plan. Monthly payments hereunder shall permanently cease upon the death of the surviving spouse, effective with the monthly payment for the month following the month of the surviving spouse's death. Monthly payments hereunder shall be made from general corporate assets.
8. Death Benefit. BGE shall make arrangements, through its split-dollar life insurance program or otherwise, for life insurance coverage for each participant providing that the participant's beneficiary shall receive, as a pre-rollout death benefit, an amount which is approximately equal to three times the participant's compensation, and as a post- rollout benefit, an amount which is approximately equal to two times the participant's compensation, as set forth in a separate agreement between BGE and the participant.
As determined in the sole discretion of the Plan Administrator, in the
event that either (i) a participant is ineligible to receive the type of
life insurance coverage provided to other participants under this Plan, or
(ii) such coverage is not available on reasonably cost-effective terms as a
result of any penalty for smoking or other factors that are reflected in
the insurance carrier's rates, then BGE shall provide a benefit that, in
the discretion of the Plan Administrator, is substantially equivalent to
the cost of the benefit provided to other participants under this Plan.
9. Dependent Death Benefit. In the event of the death of a participant's qualified dependent while the participant is an active employee of BGE, BGE shall make a death benefit payment to the participant, from general corporate assets. For purposes of this Section 9, qualified dependent shall have the same meaning as set forth in BGE's Family Life Insurance Plan. For purposes of this Section 9, the amount of the death benefit payment shall be the highest amount of insurance that would have been payable with respect to such qualified dependent if coverage had been provided under BGE's Family Life Insurance Plan. The dependent death
benefit payment under this Plan shall be grossed-up for income tax withholding.
10. Sickness Benefit. Each participant, without regard to length of service, shall be entitled to the greater of the benefits stipulated under the BGE sick benefit policy for employees or twenty-six (26) weeks of paid sick benefits within a rolling 52-week period.
11. Vacation Benefit. Each participant, without regard to length of service, shall be entitled to the greater of the benefits stipulated under the BGE vacation benefit policy for employees or five weeks of paid vacation during a calendar year.
12. Planning Benefit. Each participant shall be entitled to certain personal financial, tax, and estate planning services paid for by BGE but provided through designated professional firms. This entitlement shall be subject to any dollar limitation established by the Plan Administrator with respect to all such fees. The services shall be provided to each participant by the chosen firm(s) on a personalized and confidential basis; and each firm shall have sole responsibility for quality of the services which it may render.
The services to be provided shall be on an on-going and continuous basis, but shall be limited to (i) the development and legal documentation of both career-oriented financial plans and personal estate plans, and (ii) tax counseling regarding personal tax return preparation and the most advantageous structuring, tax-wise, of proposed personal transactions.
Such planning benefit shall continue during the year of retirement plus the next two calendar years and include the completion of the federal and state personal tax returns for the second calendar year following retirement. However, if a retired member of senior management continues to serve as a member of the Board of Directors of BGE, his/her planning benefit period shall be extended until he/she no longer serves as a member of the Board of Directors.
Upon the death of a participant entitled to the planning benefit provided hereunder, his/her surviving spouse shall be entitled to receive the following planning benefit: (i) if the deceased was not retired at the time of death, the surviving spouse shall be entitled to the planning benefit
for the year in which the death occurred plus the next two calendar years, including completion of the federal and state personal tax returns for the second calendar year after the year in which the death occurred; or (ii) if the deceased was retired at the time of death, then the surviving spouse shall receive a planning benefit equal to that the deceased would have received if he/she had not died prior to expiration of the planning benefit. The surviving spouse of a retired member of senior management whose death occurs while serving as a member of the Board of Directors of BGE, shall be entitled to a planning benefit as set forth in (i) above.
The planning benefit provided under this Plan shall be grossed-up for income tax withholding.
13. Miscellaneous. None of the benefits provided under this Plan shall be subject to alienation or assignment by any participant or beneficiary nor shall any of them be subject to attachment or garnishment or other legal process except (i) to the extent specially mandated and directed by applicable State or Federal statute; (ii) as requested by the participant or beneficiary to satisfy income tax withholding or liability; and (iii) any policy of insurance written by a commercial carrier on a split-dollar basis shall be assignable.
This Plan may be amended from time to time, or suspended or terminated at any time, provided, however, that no amendment or termination shall reduce any previously accrued supplemental pension benefit under this Plan or prejudice the rights of any participant or beneficiary entitled to receive payment hereunder at the time of such action. All amendments to this Plan which would increase or decrease the compensation of any Officer of BGE, either directly or indirectly, must be approved by the Board of Directors. All other permissible amendments may be made at the written direction of the Committee.
Participation in this Plan shall not constitute a contract of employment between BGE and any person and shall not be deemed to be consideration for, or a condition of, continued employment of any person.
The Plan, notwithstanding the creation of the Rabbi Trust, is intended to be unfunded for purposes of Title I of the Employee Retirement Income Security Act of 1974. BGE shall make contributions to the Rabbi Trust in accordance with the
terms of the Rabbi Trust. Any funds which may be invested and any assets which may be held to provide benefits under this Plan shall continue for all purposes to be a part of the general funds and assets of BGE and no person other than BGE shall by virtue of the provisions of this Plan have any interest in such funds and assets. To the extent that any person acquires a right to receive payments from BGE under this Plan, such rights shall be no greater than the right of any unsecured general creditor of BGE.
This Plan shall be governed in all respects by Maryland law.
BALTIMORE GAS AND ELECTRIC COMPANY
MANAGER BENEFITS PLAN
Effective August 1, 1996
TABLE OF CONTENTS
Page No.
1. Objective 1
2. Definitions 1
3. Plan Administration 2
4. Eligibility 2
5. Supplemental Pension Benefit 3
(a) Retirement benefits
(i) Eligibility for retirement benefits
3
(ii) Computation of retirement benefits 3
(iii)Form of payout of retirement benefits
4
(iv) Amount and timing of monthly retirement
benefit payout 5
(v) Health and dental benefits
5
(b) Other benefits
(i) Eligibility for other benefits
5
(ii) Computation of other benefits 6
(iii)Form of payout of other benefits 6
(iv) Amount and timing of monthly other
benefit payout 6
6. Supplemental Long-Term Disability Benefit 7
(i) Eligibility for disability benefits 7
(ii) Computation of disability benefits 7
(iii)Form of payment of disability benefits 8
(iv) Amount and timing of monthly disability
benefit payout 8
(v) Bonus 8
7. Supplemental Survivor Annuity Benefit 8
(a) Survivor annuity benefit 8
(i) Eligibility for survivor annuity benefit 8
(ii) Computation of survivor annuity benefit 9
(iii)Form of payout of survivor annuity benefits 10
1
|
(iv) Amount and timing of monthly survivor
annuity benefit payout 10
(b) Other survivor benefit 11
(i) Eligibility for other survivor benefit 11
(ii) Computation of other survivor benefit 11
(iii)Form of payout of other survivor benefit 12
(iv) Amount and timing of monthly other
survivor benefit 12
8. Death Benefit 12
9. Dependent Death Benefit 13
10. Sickness Benefit 13
11. Vacation Benefit 13
12. Planning Benefit 13
13. Miscellaneous 14
|
BALTIMORE GAS AND ELECTRIC COMPANY
MANAGER BENEFITS PLAN
1. Objective. The objective of this Plan is to enhance the benefits provided to manager level employees of BGE and its subsidiaries in order to attract and retain talented personnel.
2. Definitions. All words beginning with an initial capital letter and not otherwise defined herein shall have the meaning set forth in the Pension Plan. All singular terms defined in this Plan will include the plural and vice versa. As used herein, the following terms will have the meaning specified below:
"Annual Base Salary" means an amount determined by adding the monthly base rate of pay amounts (i.e., the types of such pay that are includable in the computation of Pension Plan benefits) earned over the twelve calendar months immediately preceding retirement or becoming classified as disabled under the LTD Plan.
"Average Incentive Award" (or "Average Award") means generally the product of the percentage equal to an average of the two highest of the participant's five immediately prior year award percentages earned under BGE's Manager Annual Incentive Plan and/or Results Incentive Awards Program multiplied by the participant's annualized base rate of pay amount (i.e., the types of such pay that are includable in the computation of Pension Plan benefits) in effect at the end of the prior year.
"BGE" means Baltimore Gas and Electric Company, a Maryland corporation, or its successor.
"BGE's Manager Annual Incentive Plan" means such plan or other incentive plan or arrangement designated in writing by the Plan Administrator.
"Income Replacement Percentage" means the percentage under the LTD Plan that is used to calculate the participant's actual LTD Plan benefit.
"LTD Plan" means the Baltimore Gas and Electric Company Disability Insurance Plan as may be amended from time to time, or any successor plan.
"Pension Plan" means the Pension Plan of Baltimore Gas and Electric Company as may be amended from time to time, or any successor plan.
"Plan Administrator" means, as set forth in Section 3, the Vice President - Management Services of BGE.
"Results Incentive Awards Program" means the program applicable to BGE employees that provides awards; but includes only the types of awards that are includable in the computation of Pension Plan benefits.
"Termination From Employment With BGE" means a participant's separation from service with BGE or a subsidiary of BGE; however, a participant's retirement, disability, or transfer of employment to or from a subsidiary of BGE shall not constitute a Termination From Employment With BGE.
3. Plan Administration. The Vice President - Management Services of BGE is the Plan Administrator and has sole authority (except as specified otherwise herein) to interpret the Plan and, in general, to make all other determinations advisable for the administration of the Plan to achieve its stated objective. The Plan Administrator shall have the power to delegate all or any part of his/her duties to one or more designees, and to withdraw such authority, by written designation.
4. Eligibility. Participants are employees of BGE who hold manager level positions, and participation shall continue while in such manager level positions. Also, other employees of BGE or its subsidiaries may be designated in writing by the Plan Administrator as participants with respect to one or more benefits under the Plan, and once designated, participation shall continue until such designation is withdrawn at the discretion and by written order of the Plan Administrator. Notwithstanding the foregoing, any participant who is disabled under the LTD Plan shall continue to participate in this Plan while classified as disabled and, for purposes of the supplemental pension benefit provided by this Plan, while classified as disabled, shall be deemed to continue to accrue Credited Service until no later than his/her Normal Retirement Date.
5. Supplemental Pension Benefit.
(a) Retirement benefits.
(i) Eligibility for retirement benefits. A participant shall be eligible to retire under this Plan on or after the participant's Normal Retirement Date, or on the first day of any month preceding his/her Normal Retirement Date, if the participant has attained (1) age 55 and has accumulated at least 20 years of Credited Service; or (2) age 60 and has accumulated at least five years of Credited Service.
(ii) Computation of retirement benefits. A participant who is eligible to retire under this Plan will be entitled to supplemental pension retirement benefits under this Plan, which will be calculated as set forth below on the participant's Retirement Date:
(1) add the Annual Base Salary, Average Incentive Award, and certain bonuses and incentives that are included in the computation of Average Pay under the Pension Plan (except that awards paid under the Results Incentive Awards Program shall be excluded), earned over the last 12 months,
(2) divide the sum by 12,
(3) multiply this dollar amount by the appropriate percentage, determined as follows: (by completed years of Credited Service) 1 through 10 - 3% per year; plus 1% for each additional year; however, the maximum appropriate percentage is 50%,
(4) multiply this dollar amount by the Early Retirement Adjustment Factor set forth under the Pension Plan; provided, however, if the Participant is age 60 or older, such factor shall be one (1),
(5) add to this dollar amount an amount equal to one-half of the participant's estimated age 62 Social Security benefits, but only if the
participant retires after attaining age 60 and before reaching age 62; provided, however, that the participant's supplemental pension retirement benefit shall be reduced by such estimated age 62 Social Security benefits amount when the participant is first eligible to receive reduced old-age insurance benefits under Title II of the Social Security Act, and
(6) subtract from this dollar amount the charges relating to coverage for a preretirement survivor annuity in excess of 50%, and for a post-retirement survivor annuity in excess of 50%, and
(7) subtract from this dollar amount the net amount payable to the participant under the Pension Plan.
(iii)Form of payout of retirement benefits. Each participant entitled to supplemental pension retirement benefits will receive his/her supplemental pension retirement benefits payout in the form of a monthly payment.
(iv) Amount and timing of monthly retirement benefit payout. A participant entitled to monthly supplemental pension retirement benefits will receive monthly payments equal to the amount determined under Section 5 (ii). Such payments shall commence effective with the participant's Retirement Date. If such participant receives (or would have received but for the Internal Revenue Code limitations) cost of living adjustment(s) under the Pension Plan, the monthly payments hereunder will be automatically increased based on the percentage of, and at the same time as, such adjustment(s). Monthly payments hereunder shall permanently cease upon the death of the participant, effective with the monthly payment for the month following the month of the participant's death.
(v) Health and dental benefits. A participant who receives supplemental pension retirement benefits under this Plan, but who is not eligible for
benefits under the BGE Retiree Flexible Benefits Program, is entitled to health and dental benefits under this Plan that in the sole discretion of the Plan Administrator, are reasonably similar to health and dental benefits provided for participants under the BGE Retiree Flexible Benefits Program, taking into account age and service.
(b) Other benefits.
(i) Eligibility for other benefits. Upon a participant's Termination From Employment With BGE, if such participant (1) does not satisfy the requirements of Section 5(a)(i) and (2) is a vested participant under the Pension Plan, such participant shall be entitled to the benefits in this Section 5(b).
(ii) Computation of other benefits. A participant who is eligible for other benefits will be entitled to benefits under this Plan, which will be calculated as set forth below on the date the participant begins receipt of benefit payments under the Pension Plan:
(1) compute the participant's adjusted monthly benefit payment under the terms of the Pension Plan, by also treating awards, if any, paid to the participant under BGE's Manager Annual Incentive Plan during the immediately preceding twenty-four consecutive months as bonuses and/or incentives included in the computation of the participant's Average Pay (as defined under the Pension Plan), and
(2) subtract from the amount in (1) above the participant's actual monthly benefit payment under the Pension Plan.
For purposes of the computation in (1), the participant will bear the cost of any post-retirement survivor annuity coverage provided under Section 7(b).
(iii)Form of payout of other benefits. Each participant entitled to other benefits will
receive his/her other benefits payout in the form of a monthly payment.
(iv) Amount and timing of monthly other benefit payout. A participant entitled to monthly other benefits will receive monthly payments equal to the amount determined under paragraph (b)(ii). Such payments shall commence effective with the date the participant commences receipt of benefit payments under the Pension Plan. Monthly payments hereunder shall permanently cease upon the death of the participant, effective with the monthly payment for the month following the month of the participant's death.
6. Supplemental Long-Term Disability Benefit.
(i) Eligibility for disability benefits. Any participant who has completed at least one full calendar month of service with BGE or its subsidiaries, who has elected coverage under the LTD Plan, and who is disabled (as determined under the LTD Plan) will be entitled to supplemental disability benefits under this Plan.
(ii) Computation of disability benefits. The amount of such supplemental disability benefits shall be determined as follows:
(1) multiply the monthly base rate of pay amount in effect immediately prior to becoming entitled to benefits under the LTD Plan by twelve,
(2) add the Average Incentive Award to the product,
(3) add certain bonuses and incentives that are included in the computation of Average Pay under the Pension Plan (except that awards under the Results Incentive Awards Program shall be excluded), earned over the last 12 months to the product,
(4) divide the sum by 12,
(5) multiply this monthly dollar amount by the Income Replacement Percentage, and
(6) subtract from the product the gross monthly amount provided for the participant under the LTD Plan before such amount is reduced for other benefits as set forth under the LTD Plan.
(iii)Form of payment of disability benefits. Each participant entitled to supplemental disability benefits will receive his/her supplemental disability benefit payout in the form of a monthly payment.
(iv) Amount and timing of monthly disability benefit payout. A
participant entitled to supplemental disability benefits will
receive a monthly payment equal to the amount determined under
Section 6 (ii) above. Such payments shall commence effective with
the commencement of the participant's LTD Plan benefit payments.
Monthly payments shall permanently cease when benefit payments
under the LTD Plan cease.
If a participant receiving payments pursuant to this Section 6 receives cost of living adjustment(s) under the LTD Plan, the payments hereunder will be automatically increased based on the same percentage of, and at the same time as, such adjustment(s).
(v) Bonus. Any participant who has less than ten years of Credited Service shall be entitled to a monthly taxable cash bonus, equal to an amount based on the cost of LTD Plan coverage, using the formula for computing BGE-provided Flexible Benefits Plan credits for LTD Plan coverage and taking into account the participant's Credited Service and covered compensation.
7. Supplemental Survivor Annuity Benefit.
(a) Survivor annuity benefit.
(i) Eligibility for survivor annuity benefit. Following the death of a participant (other than a participant who satisfied the requirements of Section 5(b)(i) upon such participant's Termination From Employment With BGE), a supplemental survivor annuity may be paid to the
participant's surviving spouse until the death of that spouse, using the same percentage to compute such supplemental benefit that is actually used to compute any survivor annuity provided on behalf of the participant under the Pension Plan. The participant will not bear the cost of up to a 50% survivor annuity benefit, but will bear the cost of a survivor annuity benefit in excess of 50%. For purposes of this Section 7(a), a participant's surviving spouse is the individual married to the participant on the date of the participant's death. If there is no surviving spouse, no supplemental survivor annuity will be paid.
(ii) Computation of survivor annuity benefit. The amount of the supplemental survivor annuity will be determined as follows:
(1) if the participant had retired prior to the date of death:
(a) begin with the monthly pension benefit (under Section 5(a) of this Plan) that the participant was receiving prior to the date of death; provided, however, that this dollar amount shall not include the amount of any estimated age 62 Social Security benefits, and
(b) multiply this dollar amount by the percentage used to compute the survivor annuity provided on behalf of the participant under the Pension Plan.
(2) otherwise:
(a) begin with the larger of the Early Retirement pension benefit (under both the Pension Plan and Section 5(a) of this Plan) to which the participant would have been entitled to receive if the:
(I) participant had been retired at age 60 on the date of death for purposes of computing the Early Retirement Adjustment Factor, or
(II) participant had retired on the date of death for purposes of computing the Early Retirement Adjustment Factor, provided, however, that this dollar amount shall not include the amount of any estimated age 62 Social Security benefits,
(b) multiply this dollar amount by the percentage used to compute the survivor annuity provided on behalf of the participant under the Pension Plan, and
(c) subtract from the product the net amount, if any, of the survivor annuity provided on behalf of the participant under the Pension Plan, and
(d) subtract from this dollar amount the charges relating to coverage (under both the Pension Plan and this Plan) for a pre-retirement survivor annuity in excess of 50%, and for a post-retirement survivor annuity in excess of 50%.
(iii)Form of payout of survivor annuity benefits. Each surviving spouse entitled to a supplemental survivor annuity benefit will receive his/her survivor annuity benefit payout in the form of a monthly payment.
(iv) Amount and timing of monthly survivor annuity benefit payout. A surviving spouse entitled to monthly supplemental survivor annuity benefits will receive a monthly payment equal to the amount determined under Section 7(a)(ii) above. Such payments shall commence effective with the first day of the month following the month of the participant's death. If such surviving spouse receives (or would have received but for the Internal Revenue Code limitations) cost of living adjustment(s) under the Pension Plan, the monthly payments hereunder will be automatically increased based on the percentage of, and at the same time as, such adjustment(s). Monthly payments shall permanently cease upon the death of the surviving spouse, effective with the monthly payment for the
month following the month of the surviving spouse's death.
(b) Other survivor benefit.
(i) Eligibility for other survivor benefit. Following the death of a
participant who satisfied the requirements of Section 5(b)(i)
upon such participant's Termination From Employment With BGE, a
survivor benefit may be paid to the participant's surviving
spouse until the death of that spouse. For purposes of this
Section 7(b), a participant's surviving spouse is the individual
who is the Surviving Spouse under the Pension Plan. If there is
no surviving spouse, no survivor benefit will be payable.
(ii) Computation of other survivor benefit. The amount of the survivor benefit will be calculated as set forth below on the date the surviving spouse begins receipt of benefit payments under the Pension Plan:
(1) compute the surviving spouse's adjusted monthly benefit payment under the terms of the Pension Plan, by also treating awards, if any, paid to the participant under BGE's Manager Annual Incentive Plan during the immediately preceding twenty-four consecutive months as bonuses and/or incentives included in the computation of the participant's Average Pay (as defined under the Pension Plan), and
(2) subtract from the amount in (1) above the surviving spouse's actual monthly benefit payment under the Pension Plan.
For purposes of the computation in (1), the surviving spouse will bear the cost of the survivor benefit.
(iii)Form of payout of other survivor benefit. Each surviving spouse entitled to a survivor benefit will receive his/her survivor benefit payout in the form of a monthly payment.
(iv) Amount and timing of monthly other survivor benefit payout. A surviving spouse entitled to monthly survivor benefits will receive monthly payments equal to the amount determined under paragraph (b)(ii). Such payments shall commence effective with the date the surviving spouse commences receipt of benefit payments under the Pension Plan. Monthly payments hereunder shall permanently cease upon the death of the surviving spouse, effective with the monthly payment for the month following the month of the surviving spouse's death.
8. Death Benefit. BGE shall make arrangements, through its split-dollar life insurance program or otherwise, for life insurance coverage for each participant providing that the participant's beneficiary shall receive, as a pre-rollout death benefit, an amount which is approximately equal to two and one-half times the participant's compensation, and as a post-rollout benefit, an amount which is approximately equal to one and one-half times the participant's compensation, as set forth in a separate agreement between BGE and the participant.
As determined in the sole discretion of the Plan Administrator, in the
event that either (i) a participant is ineligible to receive the type of
life insurance coverage provided to other participants under this Plan, or
(ii) such coverage is not available on reasonably cost-effective terms as a
result of any penalty for smoking or other factors that are reflected in
the insurance carrier's rates, then BGE shall provide a benefit that, in
the discretion of the Plan Administrator, is substantially equivalent to
the cost of the benefit provided to other participants under this Plan.
9. Dependent Death Benefit. In the event of the death of a participant's qualified dependent while the participant is an active employee of BGE, BGE shall make a death benefit payment to the participant, from general corporate assets. For purposes of this Section 9, qualified dependent shall have the same meaning as set forth in BGE's Family Life Insurance Plan. For purposes of this Section 9, the amount of the death benefit payment shall be the highest amount of insurance that would have been payable with respect to such qualified dependent if coverage had been provided under BGE's Family Life Insurance Plan. The dependent death
benefit payment under this Plan shall be grossed-up for income tax withholding.
10. Sickness Benefit. Each participant, without regard to length of service, shall be entitled to the greater of the benefits stipulated under the BGE sick benefit policy for employees or twenty-six (26) weeks of paid sick benefits within a rolling 52-week period.
11. Vacation Benefit. Each participant, without regard to length of service, shall be entitled to the greater of the benefits stipulated under the BGE vacation benefit policy for employees or four weeks of paid vacation during a calendar year.
12. Planning Benefit. Each participant shall be entitled to certain personal financial and tax planning services paid for by BGE but provided through designated professional firms. This entitlement shall be subject to any dollar limitation established by the Plan Administrator with respect to all such fees. The services shall be provided to each participant by the chosen firm(s) on a personalized and confidential basis; and each firm shall have sole responsibility for quality of the services which it may render.
The services to be provided shall be on an on-going and continuous basis, but shall be limited to (i) the development and legal documentation of career-oriented financial plans, and (ii) tax counseling regarding personal tax return preparation and the most advantageous structuring, tax-wise, of proposed personal transactions.
Such planning benefit shall continue during the year of retirement plus the next two calendar years and include the completion of the federal and state personal tax returns for the second calendar year following retirement.
Upon the death of a participant entitled to the planning benefit provided hereunder, his/her surviving spouse shall be entitled to receive the following planning benefit: (i) if the deceased was not retired at the time of death, the surviving spouse shall be entitled to the planning benefit for the year in which the death occurred plus the next two calendar years, including completion of the federal and state personal tax returns for the second calendar year after the year in which the death occurred; or (ii) if the deceased was retired at the time of death, then the
surviving spouse shall receive a planning benefit equal to that the deceased would have received if he/she had not died prior to expiration of the planning benefit.
The planning benefit provided under this plan shall be grossed-up for income tax withholding.
13. Miscellaneous. None of the benefits provided under this Plan shall be subject to alienation or assignment by any participant or beneficiary nor shall any of them be subject to attachment or garnishment or other legal process except (i) to the extent specially mandated and directed by applicable State or Federal statute; (ii) as requested by the participant or beneficiary to satisfy income tax withholding or liability; and (iii) any policy of insurance written by a commercial carrier on a split-dollar basis shall be assignable.
This Plan may be amended from time to time, or suspended or terminated at any time. All amendments may be made at the written direction of the Plan Administrator. No amendment or termination of this Plan shall prejudice the rights of any participant or beneficiary entitled to receive payment hereunder at the time of such action.
Participation in this Plan shall not constitute a contract of employment between BGE and any person and shall not be deemed to be consideration for, or a condition of, continued employment of any person.
Except for benefits, if any, provided through life insurance policies under
Section 8, all payments made under the Plan shall be made from general
corporate assets. The Plan is intended to be unfunded for purposes of Title
I of the Employee Retirement Income Security Act of 1974. To the extent
that any person acquires a right to receive payments from BGE under this
Plan, such rights shall be no greater than the right of any unsecured
general creditor of BGE.
This Plan shall be governed in all respects by Maryland law.
EXHIBIT 12
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED AND PREFERENCE DIVIDEND REQUIREMENTS
12 Months Ended
---------------
September December December December December December
--------- -------- -------- -------- -------- --------
1996 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ----
(In Thousands of Dollars)
Net Income $ 364,745 $ 338,007 $ 323,617 $309,866 $ 264,347 $ 233,681
Taxes on Income 199,161 172,388 156,702 140,833 105,994 88,041
------- ------- ------- ------- ------- ------
Adjusted Net Income $ 563,906 $ 510,395 $ 480,319 $450,699 $ 370,341 $ 321,722
--------- --------- --------- -------- --------- ---------
Fixed Charges:
Interest and Amortization
of Debt Discount and Expense
and Premium on all
Indebtedness $ 202,221 $206,666 $204,206 $ 199,415 $ 200,848 $ 213,616
Capitalized Interest 15,465 15,050 12,427 16,167 13,800 20,953
Interest Factor in Rentals 1,643 2,099 2,010 2,144 2,033 1,801
----- ----- ----- ----- ----- -----
Total Fixed Charges $ 219,329 $223,815 $218,643 $ 217,726 $ 216,681 $ 236,370
--------- -------- -------- --------- --------- ---------
Preferred and Preference
Dividend Requirements: (1)
Preferred and
Preference Dividends $ 40,830 $ 40,578 $ 39,922 $ 41,839 $ 42,247 $ 42,746
Income Tax Required 22,048 20,434 19,074 18,763 16,729 15,916
------ ------ ------ ------ ------ ------
Total Preferred and
Preference Dividend
Requirements $ 62,878 $ 61,012 $ 58,996 $ 60,602 $ 58,976 $ 58,662
--------- -------- --------- --------- --------- ---------
Total Fixed Charges and
Preferred and Preference
Dividend Requirements $ 282,207 $284,827 $ 277,639 $ 278,328 $ 275,657 $ 295,032
========= ======== ========= ========= ========= =========
Earnings (2) $ 767,770 $719,160 $ 686,535 $ 652,258 $ 573,222 $ 537,139
== ========= ======== ========= ========= ========= =========
Ratio of Earnings to
Fixed Charges 3.50 3.21 3.14 3.00 2.65 2.27
Ratio of Earnings to
Combined Fixed Charges and
Preferred and Preference
Dividend Requirements 2.72 2.52 2.47 2.34 2.08 1.82
|
(1)Preferred and preference dividend requirements consist of an amount equal to the pre-tax earnings that would be required to meet dividend requirements on preferred stock and preference stock.
(2)Earnings are deemed to consist of net income that includes earnings of BGE's consolidated subsidiaries, equity in the net income of BGE's unconsolidated subsidiary, income taxes (including deferred income taxes and investment tax credit adjustments), and fixed charges other than capitalized interest.
| ARTICLE UT |
| THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BGE'S SEPTEMBER 30, 1996 INTERIM CONSOLIDATED INCOME STATEMENT, BALANCE SHEET AND STATEMENT OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS. |
| MULTIPLIER: 1,000 |
| PERIOD TYPE | 9 MOS |
| FISCAL YEAR END | DEC 31 1996 |
| PERIOD START | JAN 01 1996 |
| PERIOD END | SEP 30 1996 |
| BOOK VALUE | PER BOOK |
| TOTAL NET UTILITY PLANT | 5,558,740 |
| OTHER PROPERTY AND INVEST | 1,418,994 |
| TOTAL CURRENT ASSETS | 857,946 |
| TOTAL DEFERRED CHARGES | 693,239 |
| OTHER ASSETS | 0 |
| TOTAL ASSETS | 8,528,919 |
| COMMON | 1,426,746 |
| CAPITAL SURPLUS PAID IN | 0 |
| RETAINED EARNINGS | 1,487,272 |
| TOTAL COMMON STOCKHOLDERS EQ | 2,918,761 |
| PREFERRED MANDATORY | 146,000 |
| PREFERRED | 210,000 |
| LONG TERM DEBT NET | 2,623,294 |
| SHORT TERM NOTES | 0 |
| LONG TERM NOTES PAYABLE | 0 |
| COMMERCIAL PAPER OBLIGATIONS | 389,160 |
| LONG TERM DEBT CURRENT PORT | 173,673 |
| PREFERRED STOCK CURRENT | 94,500 |
| CAPITAL LEASE OBLIGATIONS | 0 |
| LEASES CURRENT | 0 |
| OTHER ITEMS CAPITAL AND LIAB | 1,973,531 |
| TOT CAPITALIZATION AND LIAB | 8,528,919 |
| GROSS OPERATING REVENUE | 2,418,996 |
| INCOME TAX EXPENSE | 169,842 |
| OTHER OPERATING EXPENSES | 1,793,378 |
| TOTAL OPERATING EXPENSES | 1,963,220 |
| OPERATING INCOME LOSS | 455,776 |
| OTHER INCOME NET | 3,994 |
| INCOME BEFORE INTEREST EXPEN | 459,770 |
| TOTAL INTEREST EXPENSE | 147,954 |
| NET INCOME | 311,816 |
| PREFERRED STOCK DIVIDENDS | 30,387 |
| EARNINGS AVAILABLE FOR COMM | 281,429 |
| COMMON STOCK DIVIDENDS | 174,082 |
| TOTAL INTEREST ON BONDS | 161,737 |
| CASH FLOW OPERATIONS | 527,488 |
| EPS PRIMARY | 1.91 |
| EPS DILUTED | 1.91 |