form10q.htm


UNITED STATES
 
SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2011

OR

o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _______________ to _______________

 
Commission
File Number
 
Registrant, State of Incorporation
Address and Telephone Number
 
IRS Employer
Identification No.
 
             
     
     
 
0-30512
 
CH Energy Group, Inc.
(Incorporated in New York)
284 South Avenue
Poughkeepsie, New York 12601-4839
(845) 452-2000
 
14-1804460
 
             
     
     
 
1-3268
 
Central Hudson Gas & Electric Corporation
(Incorporated in New York)
284 South Avenue
Poughkeepsie, New York 12601-4839
(845) 452-2000
 
14-0555980
 
 


 
 
 

 
 
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrants were required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

CH Energy Group, Inc.
Yes  þ
 
No  o
Central Hudson Gas & Electric Corporation
Yes  þ
 
No  o

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

CH Energy Group, Inc.
Yes  þ
 
No  o
Central Hudson Gas & Electric Corporation
Yes  þ
 
No  o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

CH Energy Group, Inc.
 
Central Hudson Gas & Electric Corporation
Large Accelerated Filer þ
 
Large Accelerated Filer o
Accelerated Filer o
 
Accelerated Filer o
Non-Accelerated Filer o
 
Non-Accelerated Filer þ
Smaller Reporting Company o
 
Smaller Reporting Company o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

CH Energy Group, Inc.
Yes  o
 
No  þ
Central Hudson Gas & Electric Corporation
Yes  o
 
No  þ

As of the close of business on October 31, 2011 (i) CH Energy Group, Inc. had outstanding 14,888,149 shares of Common Stock ($0.10 per share par value) and (ii) all of the outstanding 16,862,087 shares of Common Stock ($5 per share par value) of Central Hudson Gas & Electric Corporation were held by CH Energy Group, Inc.

CENTRAL HUDSON GAS & ELECTRIC CORPORATION MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS (H)(1)(a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT PURSUANT TO GENERAL INSTRUCTIONS (H)(2)(a), (b) AND (c).
 
 
 

 
 
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2011

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

ITEM 1 – Financial Statements (Unaudited)
 
CH Energy Group, Inc.
PAGE
   
 
    Three and Nine Months Ended September 30, 2011 and 2010
1
     
   
 
    Three and Nine Months Ended September 30, 2011 and 2010
2
     
   
 
Nine Months Ended September 30, 2011 and 2010
3
     
   
 
September 30, 2011, December 31, 2010 and September 30, 2010
4
     
   
 
Nine Months Ended September 30, 2011 and 2010
6

Central Hudson Gas & Electric Corporation
 
   
 
    Three and Nine Months Ended September 30, 2011 and 2010
7
     
   
 
    Three and Nine Months Ended September 30, 2011 and 2010
7
     
   
 
Nine Months Ended September 30, 2011 and 2010
8
     
   
 
September 30, 2011, December 31, 2010 and September 30, 2010
9
     
   
 
Nine Months Ended September 30, 2011 and 2010
11

12
 
 
 

 
 
TABLE OF CONTENTS
 
   
PAGE
     
Management’s Discussion and Analysis of Financial Condition and Results of Operations
57
     
Quantitative and Qualitative Disclosure About Market Risk
89
     
Controls and Procedures
89

PART II – OTHER INFORMATION

Legal Proceedings
89
     
Risk Factors
89
     
ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds 90
     
Exhibits
90
     
91
   
92
_______________________________________________
 
FILING FORMAT

This Quarterly Report on Form 10-Q is a combined quarterly report being filed by two different registrants:  CH Energy Group, Inc. (“CH Energy Group”) and Central Hudson Gas & Electric Corporation (“Central Hudson”), a wholly owned subsidiary of CH Energy Group.  Except where the content clearly indicates otherwise, any reference in this report to CH Energy Group includes all subsidiaries of CH Energy Group, including Central Hudson.  Central Hudson makes no representation as to the information contained in this report in relation to CH Energy Group and its subsidiaries other than Central Hudson.
 
 
 

 
 
PART 1 – FINANCIAL INFORMATION

ITEM 1 – Financial Statements (Unaudited)
 
CH ENERGY GROUP CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(In Thousands, except per share amounts)
 

 
 
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
 
 
2011
   
2010
   
2011
   
2010
 
Operating Revenues
 
 
   
 
   
 
   
 
 
Electric
  $ 149,706     $ 165,304     $ 418,511     $ 436,362  
Natural gas
    18,462       18,823       127,941       120,371  
Competitive business subsidiaries:
                               
Petroleum products
    47,951       34,429       194,612       151,767  
Other
    4,936       5,101       14,630       14,942  
   Total Operating Revenues
    221,055       223,657       755,694       723,442  
Operating Expenses
                               
Operation:
                               
Purchased electricity and fuel used in electric generation
    60,734       76,890       168,797       196,413  
Purchased natural gas
    6,337       7,217       63,425       59,619  
Purchased petroleum
    43,564       30,268       167,558       125,352  
Other expenses of operation - regulated activities
    55,480       58,495       181,460       166,389  
Other expenses of operation - competitive business subsidiaries
    10,997       11,080       34,870       35,223  
Depreciation and amortization
    10,180       9,766       30,599       29,049  
Taxes, other than income tax
    11,760       11,243       36,687       32,626  
   Total Operating Expenses
    199,052       204,959       683,396       644,671  
Operating Income
    22,003       18,698       72,298       78,771  
Other Income and Deductions
                               
Income from unconsolidated affiliates
    25       (95 )     644       (393 )
Interest on regulatory assets and other interest income
    1,226       853       4,673       3,487  
Impairment of Investments
    (3,582 )     (11,408 )     (3,582 )     (11,408 )
Regulatory adjustments for interest costs
    319       (427 )     1,032       (675 )
Business development costs
    (529 )     (216 )     (1,027 )     (1,018 )
Other - net
    154       (86 )     (887 )     (119 )
   Total Other Income (Deductions)
    (2,387 )     (11,379 )     853       (10,126 )
Interest Charges
                               
Interest on long-term debt
    6,620       5,591       20,090       16,848  
Penalty for early retirement of debt     2,982       -       2,982       -  
Interest on regulatory liabilities and other interest
    1,553       1,288       4,568       4,439  
   Total Interest Charges
    11,155       6,879       27,640       21,287  
 
                               
Income before income taxes, non-controlling interest and preferred dividends of subsidiary
    8,461       440       45,511       47,358  
Income Taxes (Benefit)
    3,550       (1,360 )     17,213       17,278  
Net Income from Continuing Operations
    4,911       1,800       28,298       30,080  
 
                               
Discontinued Operations
                               
Income (loss) from discontinued operations before tax
    (10 )     393       1,149       (1,167 )
Gain from sale of discontinued operations
    2,070       -       841       -  
Income tax (benefit) expense from discontinued operations
    (1,599 )     60       (1,669 )     (524 )
Net Income (loss) from Discontinued Operations
    3,659       333       3,659       (643 )
 
                               
Net Income
    8,570       2,133       31,957       29,437  
 
                               
Net Income (loss) attributable to non-controlling interest:
                               
Non-controlling interest in subsidiary
    -       112       -       (272 )
Dividends declared on Preferred Stock of subsidiary
    242       242       727       727  
Net income attributable to CH Energy Group
    8,328       1,779       31,230       28,982  
 
                               
Dividends declared on Common Stock
    8,263       8,545       25,021       25,629  
Change in Retained Earnings
  $ 65     $ (6,766 )   $ 6,209     $ 3,353  
 
The Notes to Financial Statements are an integral part hereof.
 
 
- 1 -

 
 
CH ENERGY GROUP CONSOLIDATED STATEMENT OF INCOME (CONT'D) (UNAUDITED)
(In Thousands, except per share amounts)
 
 
 
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
 
 
2011
   
2010
   
2011
   
2010
 
Common Stock:
 
 
   
 
   
 
   
 
 
Average shares outstanding - Basic
    15,126       15,790       15,416       15,783  
Average shares outstanding - Diluted
    15,314       15,952       15,604       15,954  
 
                               
Income from continuing operations attributable to CH Energy Group common shareholders
                               
Earnings per share - Basic
  $ 0.31     $ 0.09     $ 1.79     $ 1.88  
Earnings per share - Diluted
  $ 0.30     $ 0.09     $ 1.77     $ 1.86  
 
                               
Income (loss) from discontinued operations attributable to CH Energy Group common shareholders
                               
Earnings per share - Basic
  $ 0.24     $ 0.02     $ 0.24     $ (0.04 )
Earnings per share - Diluted
  $ 0.24     $ 0.02     $ 0.23     $ (0.04 )
 
                               
Amounts attributable to CH Energy Group common shareholders
                               
Earnings per share - Basic
  $ 0.55     $ 0.11     $ 2.03     $ 1.84  
Earnings per share - Diluted
  $ 0.54     $ 0.11     $ 2.00     $ 1.82  
Dividends Declared Per Share
  $ 0.56     $ 0.54     $ 1.64     $ 1.62  
 
(In Thousands)

 
 
 
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
 
 
2011
   
2010
   
2011
   
2010
 
Net Income
  $ 8,570     $ 2,133     $ 31,957     $ 29,437  
 
                               
Other Comprehensive Income:
                               
Fair value of cash flow hedges:
                               
Unrealized (loss)/gains - net of tax of $0 and $0 in 2011 and $0 and ($13) in 2010, respectively
    -       -       -       19  
Reclassification for gains realized in net income - net of tax of $0 and $0 in 2011 and $0 and $35 in 2010, respectively
    -       -       -       (52 )
Net unrealized gains/(losses) recorded from investments held by equity method investees - net of tax of ($37) and ($10) in 2011 and ($7) and ($78) in 2010, respectively
    56       10       15       117  
 
                               
Other comprehensive income
    56       10       15       84  
 
                               
Comprehensive Income
    8,626       2,143       31,972       29,521  
 
                               
Comprehensive income attributable to non-controlling interest
    242       354       727       455  
 
                               
Comprehensive income attributable to CH Energy Group
  $ 8,384     $ 1,789     $ 31,245     $ 29,066  
 
The Notes to Financial Statements are an integral part hereof.
 
(In Thousands)
 
 
 
Nine Months Ended
September 30,
 
 
 
2011
   
2010
 
Operating Activities:
 
 
   
 
 
Net income
  $ 31,957     $ 29,437  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation
    28,614       27,055  
Amortization
    3,120       2,907  
Deferred income taxes - net
    15,061       25,618  
Bad debt expense
    6,049       2,410  
Impairment of investments
    3,582       11,408  
Distributed (undistributed) equity in earnings of unconsolidated affiliates
    (644 )     756  
Pension expense
    20,725       22,728  
Other post-employment benefits ("OPEB") expense
    5,203       4,883  
Regulatory liability - rate moderation
    (7,849 )     (14,019 )
Revenue decoupling mechanism recorded
    4,956       (1,568 )
Regulatory asset amortization
    3,524       3,451  
(Gain) loss on sale of assets
    (897 )     11  
Changes in operating assets and liabilities - net of business acquisitions:
               
Accounts receivable, unbilled revenues and other receivables
    2,380       6,546  
Fuel, materials and supplies
    (843 )     (2,298 )
Special deposits and prepayments
    2,779       211  
Income and other taxes
    (1,773 )     (10,772 )
Accounts payable
    (18,092 )     (4,279 )
Accrued interest
    1,566       218  
Customer advances
    (508 )     (3,640 )
Pension plan contribution
    (32,536 )     (31,854 )
OPEB contribution
    (1,184 )     (4,275 )
Revenue decoupling mechanism collected
    2,388       4,271  
Regulatory asset - storm deferral
    (3,441 )     (16,720 )
Regulatory asset - manufactured gas plant ("MGP") site remediation
    3,761       (10,802 )
Regulatory asset - Temporary State Assessment
    (2,169 )     (3,112 )
Deferred natural gas and electric costs
    22,164       5,052  
Other - net
    6,895       7,655  
Net cash provided by operating activities
    94,788       51,278  
 
               
Investing Activities:
               
Proceeds from sale of assets
    42,234       40  
Additions to utility and other property and plant
    (61,755 )     (75,771 )
Acquisitions made by competitive business subsidiaries
    (2,255 )     (749 )
Proceeds from federal grants
    14,744       -  
Other - net
    (3,022 )     (3,910 )
Net cash used in investing activities
    (10,054 )     (80,390 )
 
               
Financing Activities:
               
Redemption of long-term debt
    (20,464 )     (24,000 )
Proceeds from issuance of long-term debt
    33,400       40,000  
Borrowings of short-term debt - net
    5,000       -  
Dividends paid on Common Stock
    (25,290 )     (25,619 )
Dividends paid on Preferred Stock of subsidiary
    (727 )     (727 )
Shares repurchased
    (48,612 )     -  
Other - net
    (647 )     (293 )
Net cash used in financing activities
    (57,340 )     (10,639 )
Net Change in Cash and Cash Equivalents
    27,394       (39,751 )
Cash and Cash Equivalents at Beginning of Period
    29,420       73,436  
Cash and Cash Equivalents at End of Period
  $ 56,814     $ 33,685  
 
               
Supplemental Disclosure of Cash Flow Information:
               
Interest paid
  $ 22,276     $ 17,189  
Federal and state taxes paid
  $ 17,150     $ 21,208  
Additions to plant included in liabilities
  $ 3,997     $ 2,685  
Regulatory asset - storm deferral costs in liabilities
  $ 9,396     $ 2,648  
 
The Notes to Financial Statements are an integral part hereof.
 
 
- 3 -

 
 
(In Thousands)
 
 
 
September 30,
   
December 31,
   
September 30,
 
 
 
2011
   
2010
   
2010
 
ASSETS
 
 
   
 
   
 
 
Utility Plant
 
 
   
 
   
 
 
Electric
  $ 988,319     $ 963,261     $ 945,139  
Natural gas
    301,989       292,358       288,052  
Common
    142,201       142,255       143,918  
Gross Utility Plant
    1,432,509       1,397,874       1,377,109  
 
                       
Less: Accumulated depreciation
    385,198       395,776       393,514  
Net
    1,047,311       1,002,098       983,595  
 
                       
Construction work in progress
    63,996       52,607       55,468  
Net Utility Plant
    1,111,307       1,054,705       1,039,063  
 
                       
Non-Utility Property & Plant
                       
Griffith non-utility property & plant
    30,795       29,881       29,177  
Other non-utility property & plant
    6,181       64,059       62,488  
Gross Non-Utility Property & Plant
    36,976       93,940       91,665  
 
                       
Less:  Accumulated depreciation - Griffith
    21,656       20,519       20,071  
Less:  Accumulated depreciation - other
    1,121       5,108       4,576  
Net Non-Utility Property & Plant
    14,199       68,313       67,018  
 
                       
Current Assets
                       
Cash and cash equivalents
    56,814       29,420       33,685  
Accounts receivable from customers - net of allowance for doubtful accounts of $6.5 million, $6.7 million and $7.0 million, respectively
    90,155       99,402       84,091  
Accrued unbilled utility revenues
    11,320       16,233       10,862  
Other receivables
    8,618       8,006       7,686  
Fuel, materials and supplies
    25,530       25,447       27,182  
Regulatory assets
    43,407       89,905       106,607  
Income tax receivable
    2,822       2,802       47,819  
Fair value of derivative instruments
    42       146       86  
Special deposits and prepayments
    19,836       22,869       21,149  
Accumulated deferred income tax
    12,956       -       -  
Total Current Assets
    271,500       294,230       339,167  
 
                       
Deferred Charges and Other Assets
                       
Regulatory assets - pension plan
    121,238       142,647       144,781  
Regulatory assets - other
    105,899       90,264       79,571  
Goodwill
    36,538       35,940       35,956  
Other intangible assets - net
    12,682       12,867       13,431  
Unamortized debt expense
    5,017       4,774       5,092  
Investments in unconsolidated affiliates
    3,043       6,681       6,656  
Other investments
    14,422       12,883       12,052  
Other
    6,175       5,971       7,193  
Total Deferred Charges and Other Assets
    305,014       312,027       304,732  
Total Assets
  $ 1,702,020     $ 1,729,275     $ 1,749,980  
 
The Notes to Financial Statements are an integral part hereof.
 
 
- 4 -

 
 
CH ENERGY GROUP CONSOLIDATED BALANCE SHEET (CONT'D) (UNAUDITED)
(In Thousands)
 
 
 
September 30,
   
December 31,
   
September 30,
 
 
 
2011
   
2010
   
2010
 
CAPITALIZATION AND LIABILITIES
 
 
   
 
   
 
 
Capitalization
 
 
   
 
   
 
 
  CH Energy Group Common Shareholders' Equity
 
 
   
 
   
 
 
Common Stock (30,000,000 shares authorized: $0.10 par value; 16,862,087 shares issued) 14,885,037 shares, 15,799,262 shares and 15,823,926 shares outstanding, respectively
  $ 1,686     $ 1,686     $ 1,686  
Paid-in capital
    350,693       350,360       350,444  
Retained earnings
    236,551       230,342       229,352  
Treasury stock - 1,977,050 shares, 1,062,825 shares and 1,038,161 shares, respectively
    (93,210 )     (44,887 )     (43,652 )
Accumulated other comprehensive income
    474       459       268  
Capital stock expense
    (328 )     (328 )     (328 )
Total CH Energy Group Common Shareholders' Equity
    495,866       537,632       537,770  
Non-controlling interest in subsidiary
    -       172       1,113  
Total Equity
    495,866       537,804       538,883  
Preferred Stock of subsidiary
    21,027       21,027       21,027  
Long-term debt
    446,466       502,959       503,900  
Total Capitalization
    963,359       1,061,790       1,063,810  
Current Liabilities
                       
Current maturities of long-term debt
    70,373       941       -  
Notes payable
    5,000       -       -  
Accounts payable
    47,915       57,059       42,252  
Accrued interest
    7,964       6,398       6,285  
Dividends payable
    8,505       8,774       8,787  
Accrued vacation and payroll
    6,956       6,663       6,676  
Customer advances
    18,801       19,309       18,810  
Customer deposits
    6,651       7,727       7,982  
Regulatory liabilities
    12,444       18,596       16,461  
Fair value of derivative instruments
    12,778       13,183       35,184  
Accrued environmental remediation costs
    5,227       2,233       5,593  
Deferred revenues
    3,699       4,650       3,723  
Accumulated deferred income tax
    -       9,634       9,109  
Other
    14,565       18,961       14,553  
Total Current Liabilities
    220,878       174,128       175,415  
Deferred Credits and Other Liabilities
                       
Regulatory liabilities - OPEB
    12,038       6,976       4,936  
Regulatory liabilities - other
    110,280       99,793       99,395  
Operating reserves
    3,414       3,187       3,938  
Fair value of derivative instruments
    3,193       11,698       -  
Accrued environmental remediation costs
    11,937       4,312       3,468  
Accrued OPEB costs
    46,426       45,367       45,367  
Accrued pension costs
    76,414       102,555       128,379  
Tax reserve
    9,668       11,486       8,322  
Other
    18,831       16,967       16,034  
Total Deferred Credits and Other Liabilities
    292,201       302,341       309,839  
Accumulated Deferred Income Tax
    225,582       191,016       200,916  
Commitments and Contingencies
                       
Total Capitalization and Liabilities
  $ 1,702,020     $ 1,729,275     $ 1,749,980  
 
The Notes to Financial Statements are an integral part hereof.
 
 
- 5 -

 
 
(In Thousands, except share amounts)
 
 
 
CH Energy Group Common Shareholders
   
 
   
 
 
 
 
Common Stock
   
Treasury Stock
   
 
   
 
   
 
   
 
   
 
   
 
 
 
 
Shares Issued
   
Amount
   
Shares Repurchased
   
Amount
   
Paid-In Capital
   
Capital Stock Expense
   
Retained Earnings
   
Accumulated Other Comprehensive Income / (Loss)
   
Non-controlling Interest
   
Total Equity
 
Balance at December 31, 2009
    16,862,087     $ 1,686       (1,057,525 )   $ (44,406 )   $ 350,367     $ (328 )   $ 225,999     $ 184     $ 1,385     $ 534,887  
Comprehensive income:
                                                                               
Net income
                                                    29,709               (272 )     29,437  
Dividends declared on Preferred Stock of subsidiary
                                                    (727 )                     (727 )
Change in fair value:
                                                                               
Derivative instruments
                                                            19               19  
Investments
                                                            117               117  
Reclassification adjustments for gains recognized in net income
                                                            (52 )             (52 )
Dividends declared on common stock
                                                    (25,629 )                     (25,629 )
Treasury shares activity - net
                    19,364       754       77                                       831  
Balance at September 30, 2010
    16,862,087     $ 1,686       (1,038,161 )   $ (43,652 )   $ 350,444     $ (328 )   $ 229,352     $ 268     $ 1,113     $ 538,883  
 
                                                                               
Balance at December 31, 2010
    16,862,087     $ 1,686       (1,062,825 )   $ (44,887 )   $ 350,360     $ (328 )   $ 230,342     $ 459     $ 172     $ 537,804  
Comprehensive income:
                                                                               
Net income
                                                    31,957                       31,957  
Dividends declared on Preferred Stock of subsidiary
                                                    (727 )                     (727 )
Sale of majority owned subsidiary
                                                                    (172 )     (172 )
Change in fair value:
                                                                               
Investments
                                                            15               15  
Dividends declared on common stock
                                                    (25,021 )                     (25,021 )
Treasury shares activity - net
                    (914,225 )     (48,323 )     333                                       (47,990 )
Balance at September 30, 2011
    16,862,087     $ 1,686       (1,977,050 )   $ (93,210 )   $ 350,693     $ (328 )   $ 236,551     $ 474     $ -     $ 495,866  
 
The Notes to Financial Statements are an integral part hereof.
 
 
- 6 -

 
(In Thousands)
 
 
 
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
 
 
2011
   
2010
   
2011
   
2010
 
Operating Revenues
 
 
   
 
   
 
   
 
 
Electric
  $ 149,706     $ 165,304     $ 418,511     $ 436,362  
Natural gas
    18,462       18,823       127,941       120,371  
Total Operating Revenues
    168,168       184,127       546,452       556,733  
 
                               
Operating Expenses
                               
Operation:
                               
Purchased electricity and fuel used in electric generation
    60,734       76,890       168,796       196,413  
Purchased natural gas
    6,337       7,217       63,425       59,619  
Other expenses of operation
    55,480       58,495       181,460       166,389  
Depreciation and amortization
    8,909       8,526       26,791       25,362  
Taxes, other than income tax
    11,644       11,142       36,303       32,255  
Total Operating Expenses
    143,104       162,270       476,775       480,038  
 
                               
Operating Income
    25,064       21,857       69,677       76,695  
 
                               
Other Income and Deductions
                               
Interest on regulatory assets and other interest income
    1,209       853       4,646       3,486  
Regulatory adjustments for interest costs
    319       (427 )     1,032       (675 )
Other - net
    327       (168 )     (636 )     (206 )
Total Other Income
    1,855       258       5,042       2,605  
 
                               
Interest Charges
                               
Interest on long-term debt
    5,872       4,785       17,668       14,371  
Interest on regulatory liabilities and other interest
    1,529       1,279       4,517       4,430  
Total Interest Charges
    7,401       6,064       22,185       18,801  
 
                               
Income Before Income Taxes
    19,518       16,051       52,534       60,499  
 
                               
Income Taxes
    7,853       6,311       20,858       24,125  
 
                               
Net Income
    11,665       9,740       31,676       36,374  
 
                               
Dividends Declared on Cumulative Preferred Stock
    242       242       727       727  
 
                               
Income Available for Common Stock
  $ 11,423     $ 9,498     $ 30,949     $ 35,647  
 
 
 
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
 
 
2011
   
2010
   
2011
   
2010
 
Net Income
  $ 11,665     $ 9,740     $ 31,676     $ 36,374  
Other Comprehensive Income
    -       -       -       -  
Comprehensive Income
  $ 11,665     $ 9,740     $ 31,676     $ 36,374  
 
The Notes to Financial Statements are an integral part hereof.
 
 
- 7 -

 
 
 
 
Nine Months Ended
September 30,
 
 
 
2011
   
2010
 
Operating Activities:
 
 
   
 
 
Net income
  $ 31,676     $ 36,374  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation
    25,463       24,159  
Amortization
    1,328       1,203  
Deferred income taxes - net
    19,975       19,490  
Bad debt expense
    5,075       1,835  
Pension expense
    20,725       22,728  
OPEB expense
    5,203       5,344  
Regulatory liability - rate moderation
    (7,849 )     (14,019 )
Revenue decoupling mechanism recorded
    4,956       (1,568 )
Regulatory asset amortization
    3,524       3,451  
Changes in operating assets and liabilities - net:
               
Accounts receivable, unbilled revenues and other receivables
    1,690       (1,646 )
Fuel, materials and supplies
    (2,550 )     (3,100 )
Special deposits and prepayments
    1,563       1,997  
Income and other taxes
    (682 )     4,425  
Accounts payable
    (10,420 )     1,507  
Accrued interest
    1,346       (617 )
Customer advances
    (3,597 )     (4,554 )
Pension plan contribution
    (32,536 )     (31,854 )
OPEB contribution
    (1,184 )     (4,275 )
Revenue decoupling mechanism collected
    2,388       4,271  
Regulatory asset - storm deferral
    (3,441 )     (16,720 )
Regulatory asset - MGP site remediation
    3,761       (10,802 )
Regulatory asset - Temporary State Assessment
    (2,169 )     (3,112 )
Deferred natural gas and electric costs
    22,164       5,052  
Other - net
    10,658       11,971  
Net cash provided by operating activities
    97,067       51,540  
 
               
Investing Activities:
               
Additions to utility plant
    (57,434 )     (49,424 )
Other - net
    (3,705 )     (3,964 )
Net cash used in investing activities
    (61,139 )     (53,388 )
 
               
Financing Activities:
               
Redemption of long-term debt
    -       (24,000 )
Proceeds from issuance of long-term debt
    33,400       40,000  
Dividends paid to parent - CH Energy Group
    (33,000 )     -  
Dividends paid on cumulative Preferred Stock
    (727 )     (727 )
Other - net
    (647 )     (294 )
Net cash (used in) provided by financing activities
    (974 )     14,979  
 
               
Net Change in Cash and Cash Equivalents
    34,954       13,131  
Cash and Cash Equivalents - Beginning of Period
    9,622       4,784  
Cash and Cash Equivalents - End of Period
  $ 44,576     $ 17,915  
 
               
Supplemental Disclosure of Cash Flow Information:
               
Interest paid
  $ 17,036     $ 15,416  
Federal and state taxes paid
  $ 16,113     $ 15,656  
Additions to plant included in liabilities
  $ 3,997     $ 2,183  
Regulatory asset - storm deferral costs in liabilities
  $ 9,396     $ 2,648  
 
The Notes to Financial Statements are an integral part hereof.
 
 
- 8 -

 
 
 
 
September 30,
   
December 31,
   
September 30,
 
 
 
2011
   
2010
   
2010
 
ASSETS
 
 
   
 
   
 
 
Utility Plant
 
 
   
 
   
 
 
Electric
  $ 988,319     $ 963,261     $ 945,139  
Natural gas
    301,989       292,358       288,052  
Common
    142,201       142,255       143,918  
Gross Utility Plant
    1,432,509       1,397,874       1,377,109  
 
                       
Less: Accumulated depreciation
    385,198       395,776       393,514  
Net
    1,047,311       1,002,098       983,595  
 
                       
Construction work in progress
    63,996       52,607       55,468  
Net Utility Plant
    1,111,307       1,054,705       1,039,063  
 
                       
Non-Utility Property and Plant
    681       681       681  
Less: Accumulated depreciation
    36       35       34  
       Net Non-Utility Property and Plant
    645       646       647  
 
                       
Current Assets