1
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 JUNE 30, 1996
OR
[ ] 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 1-7629
HOUSTON INDUSTRIES INCORPORATED
(Exact name of registrant as specified in its charter)
Texas 74-1885573
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
1111 Louisiana
Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
(713) 207-3000
(Registrant's telephone number, including area code)
______________________________
Commission file number 1-3187
HOUSTON LIGHTING & POWER COMPANY
(Exact name of registrant as specified in its charter)
Texas 74-0694415
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
1111 Louisiana
Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
(713) 207-1111
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrants (1) have 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) have been subject to
such filing requirements for the past 90 days. Yes X No
--- ---
As of July 31, 1996, Houston Industries Incorporated had 261,352,547 shares of
common stock outstanding, including 13,798,263 ESOP shares not deemed
outstanding for financial statement purposes. As of July 31, 1996, all 1,100
shares of Houston Lighting & Power Company's common stock were held, directly
or indirectly, by Houston Industries Incorporated.
2
HOUSTON INDUSTRIES INCORPORATED AND HOUSTON LIGHTING
& POWER COMPANY QUARTERLY REPORT
ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1996
This combined Form 10-Q is separately filed by Houston Industries Incorporated
and Houston Lighting & Power Company. Information contained herein relating to
Houston Lighting & Power Company is filed by Houston Industries Incorporated
and separately by Houston Lighting & Power Company on its own behalf. Houston
Lighting & Power Company makes no representation as to information relating to
Houston Industries Incorporated (except as it may relate to Houston Lighting &
Power Company) or to any other affiliate or subsidiary of Houston Industries
Incorporated.
TABLE OF CONTENTS
Part I. Financial Information Page No.
- ------ --------------------- --------
Item 1. Financial Statements
Houston Industries Incorporated and Subsidiaries
Statements of Consolidated Income
Three Months and Six Months Ended
June 30, 1996 and 1995 3
Consolidated Balance Sheets
June 30, 1996 and December 31, 1995 5
Statements of Consolidated Cash Flows
Six Months Ended June 30, 1996 and 1995 7
Statements of Consolidated Retained Earnings
Three Months and Six Months Ended
June 30, 1996 and 1995 8
Notes to Consolidated Financial Statements 14
Houston Lighting & Power Company
Statements of Income
Three Months and Six Months Ended
June 30, 1996 and 1995 9
Balance Sheets
June 30, 1996 and December 31, 1995 10
Statements of Cash Flows
Six Months Ended June 30, 1996 and 1995 12
Statements of Retained Earnings
Three Months and Six Months Ended
June 30, 1996 and 1995 13
Notes to Financial Statements 14
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 17
Part II. Other Information
- ------- -----------------
Item 1. Legal Proceedings 22
Item 4. Submission of Matters to a Vote of
Security-Holders 22
Item 6. Exhibits and Reports on Form 8-K 23
Signatures 26
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
HOUSTON INDUSTRIES INCORPORATED AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ --------------------------
1996 1995 1996 1995
---------- --------- ---------- ----------
REVENUES:
Electric utility . . . . . . . . . . . . . . . . $1,099,971 $ 978,225 $1,911,936 $1,724,391
Other . . . . . . . . . . . . . . . . . . . . . . 13,792 11,618 26,248 20,690
---------- --------- ---------- ----------
Total . . . . . . . . . . . . . . . . . . . . . 1,113,763 989,843 1,938,184 1,745,081
---------- --------- ---------- ----------
EXPENSES:
Electric Utility:
Fuel . . . . . . . . . . . . . . . . . . . . . 300,666 238,465 498,288 422,067
Purchased power . . . . . . . . . . . . . . . . 74,137 50,822 152,316 116,410
Operation and maintenance . . . . . . . . . . . 237,366 217,650 430,814 416,179
Taxes other than income taxes . . . . . . . . . 65,303 64,616 127,868 135,566
Depreciation and amortization . . . . . . . . . . 129,511 112,286 258,858 216,482
Other operating expenses . . . . . . . . . . . . 20,500 22,210 46,293 39,430
---------- --------- ---------- ----------
Total . . . . . . . . . . . . . . . . . . . . . 827,483 706,049 1,514,437 1,346,134
---------- --------- ---------- ----------
OPERATING INCOME . . . . . . . . . . . . . . . . . . 286,280 283,794 423,747 398,947
---------- --------- ---------- ----------
OTHER INCOME (EXPENSE):
Litigation settlements . . . . . . . . . . . . . (95,000)
Time Warner dividend income . . . . . . . . . . . 10,402 20,805
Interest income . . . . . . . . . . . . . . . . . 1,602 2,125 2,294 2,662
Allowance for other funds used
during construction . . . . . . . . . . . . . . 1,051 2,014 2,182 4,643
Other - net . . . . . . . . . . . . . . . . . . . (529) (8,927) (2,956) (11,575)
---------- --------- ---------- ----------
Total . . . . . . . . . . . . . . . . . . . . . 12,526 (4,788) (72,675) (4,270)
---------- --------- ---------- ----------
INTEREST AND OTHER CHARGES:
Interest on long-term debt . . . . . . . . . . . 68,857 64,042 140,252 129,258
Other interest . . . . . . . . . . . . . . . . . 9,475 9,678 11,049 18,677
Allowance for borrowed funds used
during construction . . . . . . . . . . . . . . (672) (1,133) (1,357) (2,938)
Preferred dividends of subsidiary . . . . . . . . 5,313 7,450 11,945 16,435
---------- --------- ---------- ----------
Total . . . . . . . . . . . . . . . . . . . . . 82,973 80,037 161,889 161,432
---------- --------- ---------- ----------
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES . . . . . . . . . 215,833 198,969 189,183 233,245
INCOME TAXES . . . . . . . . . . . . . . . . . . . . 70,499 65,709 60,589 76,136
---------- --------- ---------- ----------
INCOME FROM CONTINUING
OPERATIONS . . . . . . . . . . . . . . . . . . . 145,334 133,260 128,594 157,109
DISCONTINUED OPERATIONS (NET OF INCOME
TAXES) - Gain on sale of cable
television subsidiary . . . . . . . . . . . . . . 90,607
---------- --------- ---------- ----------
NET INCOME . . . . . . . . . . . . . . . . . . . . . $ 145,334 $ 133,260 $ 128,594 $ 247,716
========== ========= ========== ==========
(continued)
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HOUSTON INDUSTRIES INCORPORATED AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
(CONTINUED)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ --------------------------
1996 1995 1996 1995
---------- --------- ---------- ----------
EARNINGS PER COMMON SHARE:
CONTINUING OPERATIONS . . . . . . . . . . . . . . . . $ 0.58 $ 0.54 $ 0.52 $ 0.63
DISCONTINUED OPERATIONS - Gain on sale of
cable television subsidiary . . . . . . . . . . . 0.37
---------- ---------- ---------- ---------
EARNINGS PER COMMON SHARE . . . . . . . . . . . . . . $ 0.58 $ 0.54 $ 0.52 $ 1.00
========== ========= ========== =========
DIVIDENDS DECLARED PER COMMON SHARE . . . . . . . . . $ 0.375 $ 0.375 $ 0.75 $ 0.75
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING (000) . . . . . . . . . . . . . . . 248,656 247,538 248,561 247,369
See Notes to Consolidated Financial Statements.
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HOUSTON INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(THOUSANDS OF DOLLARS)
ASSETS
June 30, December 31,
1996 1995
------------- -------------
PROPERTY, PLANT AND EQUIPMENT - AT COST:
Electric plant:
Plant in service . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,319,896 $ 12,089,490
Construction work in progress . . . . . . . . . . . . . . . . . . . . 208,235 320,040
Nuclear fuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227,462 217,604
Plant held for future use . . . . . . . . . . . . . . . . . . . . . . 48,631 48,631
Other property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118,856 105,624
------------- -------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,923,080 12,781,389
Less accumulated depreciation and amortization . . . . . . . . . . . . . 4,123,055 3,916,540
------------- -------------
Property, plant and equipment - net . . . . . . . . . . . . . . . 8,800,025 8,864,849
------------- -------------
CURRENT ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . 5,150 11,779
Special deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 433
Accounts receivable - net . . . . . . . . . . . . . . . . . . . . . . . . 32,659 39,635
Accrued unbilled revenues . . . . . . . . . . . . . . . . . . . . . . . . 61,676 59,017
Time Warner dividends receivable . . . . . . . . . . . . . . . . . . . . 10,313 10,313
Fuel stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,195 59,699
Materials and supplies, at average cost . . . . . . . . . . . . . . . . . 133,164 138,007
Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,603 18,562
------------- -------------
Total current assets . . . . . . . . . . . . . . . . . . . . . . 332,770 337,445
------------- -------------
OTHER ASSETS:
Investment in Time Warner securities . . . . . . . . . . . . . . . . . . 1,029,250 1,027,875
Deferred plant costs - net . . . . . . . . . . . . . . . . . . . . . . . 600,243 613,134
Equity investments in and advances to foreign and
non-regulated affiliates - net . . . . . . . . . . . . . . . . . . . . 479,958 41,395
Deferred debits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345,875 311,758
Regulatory asset - net . . . . . . . . . . . . . . . . . . . . . . . . . 216,200 228,587
Recoverable project costs - net . . . . . . . . . . . . . . . . . . . . . 212,265 232,775
Unamortized debt expense and premium on
reacquired debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 158,200 161,788
------------- -------------
Total other assets . . . . . . . . . . . . . . . . . . . . . . . 3,041,991 2,617,312
------------- -------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,174,786 $ 11,819,606
============= =============
See Notes to Consolidated Financial Statements.
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HOUSTON INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(THOUSANDS OF DOLLARS)
CAPITALIZATION AND LIABILITIES
June 30, December 31,
1996 1995
------------- -------------
CAPITALIZATION:
Common Stock Equity:
Common stock, no par value . . . . . . . . . . . . . . . . . . . . . . . $ 2,445,143 $ 2,441,790
Treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (27,156)
Unearned ESOP shares . . . . . . . . . . . . . . . . . . . . . . . . . . (259,883) (268,405)
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,896,173 1,953,672
Unrealized loss on investment in Time Warner
common securities . . . . . . . . . . . . . . . . . . . . . . . . . . (2,600) (3,494)
------------- -------------
Total common stock equity . . . . . . . . . . . . . . . . . . . . 4,051,677 4,123,563
------------- -------------
Preference Stock, no par value, authorized
10,000,000 shares; none outstanding
Cumulative Preferred Stock of Subsidiary, no par
value:
Not subject to mandatory redemption . . . . . . . . . . . . . . . . . 351,345 351,345
Subject to mandatory redemption . . . . . . . . . . . . . . . . . . . 51,055
------------- --------------
Total cumulative preferred stock . . . . . . . . . . . . . . . . . 351,345 402,400
------------- --------------
Long-Term Debt:
Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349,006 348,913
Long-term debt of subsidiaries:
First mortgage bonds . . . . . . . . . . . . . . . . . . . . . . . . 2,704,655 2,979,293
Pollution control revenue bonds . . . . . . . . . . . . . . . . . . . 5,000 4,426
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,620 5,790
------------- --------------
Total long-term debt . . . . . . . . . . . . . . . . . . . . . . . 3,062,281 3,338,422
------------- --------------
Total capitalization . . . . . . . . . . . . . . . . . . . . . 7,465,303 7,864,385
------------- --------------
CURRENT LIABILITIES:
Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 832,136 6,300
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166,658 136,008
Taxes accrued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133,520 174,925
Interest accrued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73,459 79,380
Dividends declared . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98,056 98,502
Accrued liabilities to municipalities . . . . . . . . . . . . . . . . . . . 22,254 20,773
Customer deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,117 61,582
Current portion of long-term debt and preferred
stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 419,457 379,451
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,698 58,664
------------- --------------
Total current liabilities . . . . . . . . . . . . . . . . . . . . 1,863,355 1,015,585
------------- --------------
DEFERRED CREDITS:
Accumulated deferred income taxes . . . . . . . . . . . . . . . . . . . . . 2,054,248 2,067,246
Unamortized investment tax credit . . . . . . . . . . . . . . . . . . . . . 382,425 392,153
Fuel-related credits . . . . . . . . . . . . . . . . . . . . . . . . . . . 89,216 122,063
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320,239 358,174
------------- --------------
Total deferred credits . . . . . . . . . . . . . . . . . . . . . . 2,846,128 2,939,636
------------- --------------
COMMITMENTS AND CONTINGENCIES
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,174,786 $ 11,819,606
============= ==============
See Notes to Consolidated Financial Statements.
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HOUSTON INDUSTRIES INCORPORATED AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(THOUSANDS OF DOLLARS)
Six Months Ended
June 30,
------------------------------
1996 1995
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . $ 128,594 $ 157,109
Adjustments to reconcile income from continuing
operations to net cash provided by operating
activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . 258,858 216,482
Amortization of nuclear fuel . . . . . . . . . . . . . . . . . . . . . . . . 14,895 13,912
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,479) 38,573
Investment tax credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,728) (9,715)
Allowance for other funds used during construction . . . . . . . . . . . . . (2,182) (4,643)
Fuel cost (refund) and over/(under) recovery - net . . . . . . . . . . . . . (89,988) (83,337)
Net cash provided by discontinued cable television
operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,495
Changes in other assets and liabilities:
Accounts receivable and accrued unbilled revenues . . . . . . . . . . . . 4,317 (15,792)
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,653) (9,760)
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,618) 2,608
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,650 10
Interest and taxes accrued . . . . . . . . . . . . . . . . . . . . . . . . (47,326) (51,826)
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . (1,396) (5,165)
Other - net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,654 90,115
---------- ----------
Net cash provided by operating activities . . . . . . . . . . . . . . 275,598 344,066
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Electric capital and nuclear fuel expenditures
(including allowance for borrowed funds used
during construction) . . . . . . . . . . . . . . . . . . . . . . . . . . . . (153,079) (133,151)
Non-regulated electric power project expenditures . . . . . . . . . . . . . . . (438,563) (12,378)
Corporate headquarters expenditures (including
capitalized interest) . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,795) (56,899)
Net cash used in discontinued cable television
operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (47,045)
Other - net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (16,734) (7,552)
---------- ----------
Net cash used in investing activities . . . . . . . . . . . . . . . . (614,171) (257,025)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . (27,156)
Payment of matured bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . (150,000)
Redemption of preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . (51,400) (91,400)
Payment of common stock dividends . . . . . . . . . . . . . . . . . . . . . . . (186,093) (185,581)
Increase in notes payable - net . . . . . . . . . . . . . . . . . . . . . . . . 825,836 274,874
Extinguishment of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . (85,263) (20,273)
Net cash used in discontinued cable television
operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (40,798)
Other - net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,020 3,272
---------- ----------
Net cash provided by (used in)
financing activities . . . . . . . . . . . . . . . . . . . . . . . . 331,944 (59,906)
---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . (6,629) 27,135
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . 11,779 10,443
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD . . . . . . . . . . . . . . . . . . . . . $ 5,150 $ 37,578
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
- ------------------------------------------------
Cash Payments:
Interest (net of amounts capitalized) . . . . . . . . . . . . . . . . . . . . $ 150,742 $ 188,852
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,299 30,525
See Notes to Consolidated Financial Statements.
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HOUSTON INDUSTRIES INCORPORATED AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED RETAINED EARNINGS
(THOUSANDS OF DOLLARS)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ --------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
Balance at Beginning of Period . . . . . . . . . . . . . $1,843,723 $1,242,925 $1,953,672 $1,221,221
Net Income for the Period . . . . . . . . . . . . . . . . 145,334 133,260 128,594 247,716
---------- ---------- ---------- ----------
Total . . . . . . . . . . . . . . . . . . . . . . . 1,989,057 1,376,185 2,082,266 1,468,937
Common Stock Dividends . . . . . . . . . . . . . . . . . (92,884) (92,859) (186,093) (185,611)
---------- ---------- ---------- ----------
Balance at End of Period . . . . . . . . . . . . . . . . $1,896,173 $1,283,326 $1,896,173 $1,283,326
========== ========== ========== ==========
See Notes to Consolidated Financial Statements.
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HOUSTON LIGHTING & POWER COMPANY
STATEMENTS OF INCOME
(THOUSANDS OF DOLLARS)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- -----------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
OPERATING REVENUES . . . . . . . . . . . . . . . . $ 1,099,971 $ 978,225 $ 1,911,936 $ 1,724,391
----------- ----------- ----------- -----------
OPERATING EXPENSES:
Fuel . . . . . . . . . . . . . . . . . . . . . . 300,666 238,465 498,288 422,067
Purchased power . . . . . . . . . . . . . . . . 74,137 50,822 152,316 116,410
Operation . . . . . . . . . . . . . . . . . . . 160,739 153,606 300,511 294,926
Maintenance . . . . . . . . . . . . . . . . . . 76,627 64,044 130,303 121,253
Depreciation and amortization . . . . . . . . . 129,377 111,961 257,811 215,874
Income taxes . . . . . . . . . . . . . . . . . . 82,242 77,292 114,305 96,310
Other taxes . . . . . . . . . . . . . . . . . . 65,303 64,616 127,868 135,566
----------- ----------- ----------- -----------
Total . . . . . . . . . . . . . . . . . . . 889,091 760,806 1,581,402 1,402,406
----------- ----------- ----------- -----------
OPERATING INCOME . . . . . . . . . . . . . . . . . 210,880 217,419 330,534 321,985
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE):
Litigation settlements (net of tax) . . . . . . (61,750)
Allowance for other funds used
during construction . . . . . . . . . . . . . 1,051 2,014 2,182 4,643
Other - net . . . . . . . . . . . . . . . . . . (2,650) (9,055) (6,010) (10,508)
----------- ----------- ----------- -----------
Total . . . . . . . . . . . . . . . . . . . (1,599) (7,041) (65,578) (5,865)
----------- ----------- ----------- -----------
INCOME BEFORE INTEREST CHARGES . . . . . . . . . . 209,281 210,378 264,956 316,120
----------- ----------- ----------- -----------
INTEREST CHARGES:
Interest on long-term debt . . . . . . . . . . . 54,953 61,399 112,458 122,917
Other interest . . . . . . . . . . . . . . . . . 5,360 789 7,770 3,924
Allowance for borrowed funds used
during construction . . . . . . . . . . . . . (672) (1,133) (1,357) (2,938)
----------- ----------- ----------- -----------
Total . . . . . . . . . . . . . . . . . . . 59,641 61,055 118,871 123,903
----------- ----------- ----------- -----------
NET INCOME . . . . . . . . . . . . . . . . . . . . 149,640 149,323 146,085 192,217
DIVIDENDS ON PREFERRED STOCK . . . . . . . . . . . 5,313 7,450 11,945 16,435
----------- ----------- ----------- -----------
INCOME AFTER PREFERRED DIVIDENDS . . . . . . . . . $ 144,327 $ 141,873 $ 134,140 $ 175,782
=========== =========== =========== ===========
See Notes to Financial Statements.
-9-
10
HOUSTON LIGHTING & POWER COMPANY
BALANCE SHEETS
(THOUSANDS OF DOLLARS)
ASSETS
June 30, December 31,
1996 1995
------------- -------------
PROPERTY, PLANT AND EQUIPMENT - AT COST:
Electric plant in service . . . . . . . . . . . . . . . . . . . . . . . . $ 12,319,896 $ 12,089,490
Construction work in progress . . . . . . . . . . . . . . . . . . . . . . 208,235 320,040
Nuclear fuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227,462 217,604
Plant held for future use . . . . . . . . . . . . . . . . . . . . . . . . 48,631 48,631
------------- -------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,804,224 12,675,765
Less accumulated depreciation and
amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,116,921 3,906,139
------------- -------------
Property, plant and equipment - net . . . . . . . . . . . . . . . . 8,687,303 8,769,626
------------- -------------
CURRENT ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . 649 75,851
Special deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 433
Accounts receivable:
Affiliated companies . . . . . . . . . . . . . . . . . . . . . . . . . 2,985 2,845
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,398 23,858
Accrued unbilled revenues . . . . . . . . . . . . . . . . . . . . . . . . 61,676 59,017
Inventory:
Fuel stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,195 59,699
Materials and supplies, at average cost . . . . . . . . . . . . . . . 132,491 137,584
Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,473 11,876
------------- -------------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . 301,877 371,163
------------- -------------
OTHER ASSETS:
Deferred plant costs - net . . . . . . . . . . . . . . . . . . . . . . . 600,243 613,134
Deferred debits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317,730 290,012
Unamortized debt expense and premium on
reacquired debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 156,649 159,962
Regulatory asset - net . . . . . . . . . . . . . . . . . . . . . . . . . 216,200 228,587
Recoverable project costs - net . . . . . . . . . . . . . . . . . . . . . 212,265 232,775
------------- -------------
Total other assets . . . . . . . . . . . . . . . . . . . . . . . . 1,503,087 1,524,470
------------- -------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,492,267 $ 10,665,259
============= =============
See Notes to Financial Statements.
-10-
11
HOUSTON LIGHTING & POWER COMPANY
BALANCE SHEETS
(THOUSANDS OF DOLLARS)
CAPITALIZATION AND LIABILITIES
June 30, December 31,
1996 1995
------------- -------------
CAPITALIZATION:
Common Stock Equity:
Common stock, class A; no par value . . . . . . . . . . . . . . . . . . . $ 1,524,949 $ 1,524,949
Common stock, class B; no par value . . . . . . . . . . . . . . . . . . . 150,978 150,978
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,119,726 2,150,086
------------- -------------
Total common stock equity . . . . . . . . . . . . . . . . . . . . . 3,795,653 3,826,013
------------- -------------
Cumulative Preferred Stock:
Not subject to mandatory redemption . . . . . . . . . . . . . . . . . . . 351,345 351,345
Subject to mandatory redemption . . . . . . . . . . . . . . . . . . . . . 51,055
------------- -------------
Total cumulative preferred stock . . . . . . . . . . . . . . . . . . 351,345 402,400
------------- -------------
Long-Term Debt:
First mortgage bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,704,655 2,979,293
Pollution control revenue bonds . . . . . . . . . . . . . . . . . . . . . 5,000 4,426
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,620 5,790
------------- -------------
Total long-term debt . . . . . . . . . . . . . . . . . . . . . . . . 2,713,275 2,989,509
------------- -------------
Total capitalization . . . . . . . . . . . . . . . . . . . . . . 6,860,273 7,217,922
------------- -------------
CURRENT LIABILITIES:
Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245,725
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158,718 119,032
Accounts payable to affiliated companies . . . . . . . . . . . . . . . . . . 6,673 6,982
Taxes accrued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137,869 192,673
Interest accrued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,552 70,823
Accrued liabilities to municipalities . . . . . . . . . . . . . . . . . . . . 22,254 20,773
Customer deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,117 61,582
Current portion of long-term debt and preferred
stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219,457 179,451
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,403 54,149
------------- -------------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . 963,768 705,465
------------- -------------
DEFERRED CREDITS:
Accumulated deferred federal income taxes . . . . . . . . . . . . . . . . . . 1,955,038 1,947,488
Unamortized investment tax credit . . . . . . . . . . . . . . . . . . . . . . 382,425 392,153
Fuel-related credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89,216 122,063
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241,547 280,168
------------- -------------
Total deferred credits . . . . . . . . . . . . . . . . . . . . . . . 2,668,226 2,741,872
------------- -------------
COMMITMENTS AND CONTINGENCIES
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,492,267 $ 10,665,259
============= =============
See Notes to Financial Statements.
-11-
12
Houston Lighting & POWER COMPANY
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(THOUSANDS OF DOLLARS)
Six Months Ended
June 30,
---------------------------------
1996 1995
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 146,085 $ 192,217
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . 257,811 215,874
Amortization of nuclear fuel . . . . . . . . . . . . . . . . . . . . . 14,895 13,912
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . 7,550 40,933
Investment tax credits . . . . . . . . . . . . . . . . . . . . . . . . (9,728) (9,715)
Allowance for other funds used during
construction . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,182) (4,643)
Fuel cost (refund) and over/(under) recovery
- net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (89,988) (83,337)
Changes in other assets and liabilities:
Accounts receivable - net . . . . . . . . . . . . . . . . . . . . . 3,661 (2,418)
Material and supplies . . . . . . . . . . . . . . . . . . . . . . . 5,093 (527)
Fuel stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,496) (8,901)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . 39,377 (5,975)
Interest and taxes accrued . . . . . . . . . . . . . . . . . . . . (64,075) (41,876)
Other current liabilities . . . . . . . . . . . . . . . . . . . . . (1,405) (3,311)
Other - net . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,920) 72,415
------------ ------------
Net cash provided by operating activities . . . . . . . . . . . 296,678 374,648
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital and nuclear fuel expenditures
(including allowance for borrowed funds
used during construction) . . . . . . . . . . . . . . . . . . . . . . (153,079) (218,151)
Other - net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,498) (6,940)
------------ ------------
Net cash used in investing activities . . . . . . . . . . . . . (157,577) (225,091)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of matured bonds . . . . . . . . . . . . . . . . . . . . . . . . (150,000)
Payment of dividends . . . . . . . . . . . . . . . . . . . . . . . . . . (177,771) (183,057)
Increase in notes payable . . . . . . . . . . . . . . . . . . . . . . . . 245,725
Redemption of preferred stock . . . . . . . . . . . . . . . . . . . . . (51,400) (91,400)
Extinguishment of long-term debt . . . . . . . . . . . . . . . . . . . . (85,263) (20,273)
Other - net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,406 3,709
------------ ------------
Net cash used in financing activities . . . . . . . . . . . . . (214,303) (291,021)
------------ ------------
NET DECREASE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . (75,202) (141,464)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD . . . . . . . . . . . . . . 75,851 235,867
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD . . . . . . . . . . . . . . . . . $ 649 $ 94,403
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
- ------------------------------------------------
Cash Payments:
Interest (net of amounts capitalized) . . . . . . . . . . . . . . . . $ 120,487 $ 123,563
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,088 34,974
See Notes to Financial Statements.
-12-
13
HOUSTON LIGHTING & POWER COMPANY
STATEMENTS OF RETAINED EARNINGS
(THOUSANDS OF DOLLARS)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------- ------------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
Balance at Beginning of
Period . . . . . . . . . . . . . . . $ 2,057,649 $ 2,104,768 $ 2,150,086 $ 2,153,109
Net Income for the Period . . . . . . . . 149,640 149,323 146,085 192,217
----------- ----------- ----------- -----------
Total . . . . . . . . . . . . . . . 2,207,289 2,254,091 2,296,171 2,345,326
----------- ----------- ----------- -----------
Deductions - Cash Dividends:
Preferred . . . . . . . . . . . . . 5,313 7,450 11,945 16,435
Common . . . . . . . . . . . . . . . 82,250 82,250 164,500 164,500
----------- ----------- ----------- -----------
Total . . . . . . . . . . . . . 87,563 89,700 176,445 180,935
----------- ----------- ----------- -----------
Balance at End of Period . . . . . . . . $ 2,119,726 $ 2,164,391 $ 2,119,726 $ 2,164,391
=========== =========== =========== ===========
See Notes to Financial Statements.
-13-
14
HOUSTON INDUSTRIES INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AND
HOUSTON LIGHTING & POWER COMPANY
NOTES TO FINANCIAL STATEMENTS
(1) GENERAL
The interim financial statements and notes (Interim Financial
Statements) contained in this Form 10-Q for the period ended June 30,
1996 (Form 10-Q) are unaudited and condensed. Certain notes and other
information contained in the Combined Annual Report on Form 10-K (File
Nos. 1-7629 and 1-3187) for the year ended December 31, 1995 (Form
10-K), of Houston Industries Incorporated (Company) and Houston
Lighting & Power Company (HL&P) have been omitted in accordance with
Rule 10-01 of Regulation S-X under the Securities Exchange Act of
1934.
The information presented in the Interim Financial Statements should
be read in combination with the information presented in the Form 10-K
and the Combined Quarterly Report on Form 10-Q of the Company and HL&P
for the quarter ended March 31, 1996 (First Quarter 10-Q).
(2) CERTAIN CONTINGENCIES
The following notes to the financial statements in the Form 10-K (as
updated by the notes contained in this Form 10-Q and the First Quarter
10-Q ) are incorporated herein by reference: Note 1(b) (System of
Accounts and Effects of Regulation), Note 2 (Jointly-Owned Nuclear
Plant), Note 3 (Rate Matters), Note 4 (Investments in Foreign and
Non-Regulated Entities) and Note 11 (Commitments and Contingencies).
(3) JOINTLY-OWNED NUCLEAR PLANT
In July 1996, HL&P and City Public Service Board of San Antonio (CPS)
entered into a settlement agreement providing, among other things,
for (i) the dismissal with prejudice of all pending arbitration claims
and lawsuits between HL&P and CPS relating to the South Texas Project
Electric Generating Station (South Texas Project), (ii) a cash payment
by HL&P to CPS of $75 million (accrued in the quarter ended March 31,
1996), (iii) an agreement to support formation of a new operating
company to replace HL&P as project manager for the South Texas Project
and (iv) the execution of a 10-year joint operations agreement under
which HL&P and CPS will share savings resulting from the joint
dispatching of their respective generating assets in order to take
advantage of each system's lower cost resources.
Under the terms of the joint operations agreement entered into between
CPS and HL&P, HL&P will guarantee CPS minimum annual savings of $10
million and a minimum cumulative savings of $150 million over the
ten-year term of the agreement. Based on current forecasts and other
assumptions regarding the combined operation of the two generating
systems, HL&P anticipates that the savings resulting from joint
operations will equal or exceed the minimum savings guaranteed under
the joint operations agreement.
For information regarding the settlement in April 1996 of a similar
lawsuit filed by the City of Austin (Austin) against HL&P and a $13
million (after-tax) charge to earnings recorded in the first quarter
of 1996 in connection with this settlement, see Notes 3 and 7(a) to
the First Quarter 10-Q, which notes are incorporated herein by
reference.
-14-
15
As a result of the settlements of the CPS and Austin litigation, all
litigation and arbitration claims formerly pending between HL&P and
the other co-owners of the South Texas Project have been settled and
dismissed with prejudice.
(4) HI ENERGY
Acquisition of Interest in Brazilian Electric Utility. In May 1996, a
subsidiary of Houston Industries Energy, Inc. (HI Energy) acquired
11.35 percent of the common shares of Light - Servicos de Eletricidade
S.A. (Light), a publicly-held Brazilian corporation, for $392 million.
Light is the operator under a 30-year concession agreement of an
approximately 3,888 megawatt electric power generation, transmission
and distribution system serving 28 municipalities in the state of Rio
de Janeiro, Brazil. HI Energy acquired the shares as a bidder in the
government-sponsored auction of 60 percent of Light's outstanding
shares.
Subsequent to the auction, the winning bidders, including a subsidiary
of HI Energy, formed a consortium whose aggregate ownership interest
of 50.44 percent represents a controlling interest in Light. The
consortium, organized pursuant to a shareholders agreement dated as of
May 27, 1996, is comprised of the direct share ownership interests
held in Light by subsidiaries or affiliates of The AES Corporation
(11.35 percent), Electricite de France (11.35 percent), HI Energy
(11.35 percent), Companhia Sidercgica Nacional (7.25 percent), and
Banco Nacional de Desenvolvimento Economico E Social (BNDES) (9.14
percent). Pursuant to the shareholders agreement, principal
responsibilities for the various aspects of Light's business will be
allocated among the parties. The HI Energy subsidiary will have the
principal responsibility for all matters relating to Light's financial
affairs.
The Company has accounted for this transaction under purchase
accounting and has recorded its investment and its interest in Light's
operations since June 1, 1996, using the equity method. The effect of
Light's income on the Company's net income is immaterial for the
second quarter of 1996 and the six months ended June 30, 1996.
Class B Shares of Edelap. On May 2, 1996, Houston Argentina S.A.
(Houston Argentina), a subsidiary of HI Energy, purchased for
approximately $55 million the Class B Shares of Empresa Distribuidora
de la Plata S.A. (Edelap), an electric utility company operating in
La Plata, Argentina, and surrounding regions. The Class B Shares of
Edelap were sold by the Argentine government in a public auction. On
May 28, 1996, Houston Argentina sold a portion of its Class B Shares
to a third party for approximately $10 million. The remaining Class B
Shares held by Houston Argentina constitute 32 percent of the capital
stock of Edelap. Houston Argentina also owns indirectly through a
holding company an additional 16.6 percent of the capital stock of
Edelap, which shares were acquired in 1992 for $37 million. The
Company has recorded its investment in Edelap using the equity method.
(5) RATE CASE PROCEEDINGS
In June 1996, the Supreme Court of Texas unanimously upheld the
decision of the Public Utility Commission of Texas (Utility
Commission) in Docket No. 8425 (HL&P's 1988 rate case) to include in
HL&P's rate base $93 million in construction costs relating to the
Malakoff project (a canceled lignite generation project). The Supreme
Court also affirmed the Utility Commission's decision granting
deferred accounting treatment for Unit No. 2 of the South Texas
Project and the calculation of HL&P's federal income tax expenses
without taking into account deductions for expenses paid by the
Company's shareholders. As a result of this decision, HL&P's 1988
rate case has now become final.
For information regarding the appeal of Docket No. 6668 (an inquiry
into the prudence of the planning and construction of the South Texas
Project), see Note 3(b) to the Form 10-K.
-15-
16
(6) CAPITAL STOCK
Company. At June 30, 1996 and December 31, 1995, the Company had
400,000,000 authorized shares of common stock, of which 247,690,618
and 248,316,710 shares, respectively, were outstanding as of such
dates. Outstanding shares exclude (i) the unallocated shares of the
Company's Employee Stock Ownership Plan (which as of June 30, 1996 and
December 31, 1995 totaled 13,861,929 and 14,355,758, respectively) and
(ii) 1,195,900 shares purchased by the Company as of June 30, 1996,
under the common stock repurchase program described below. Earnings
per common share for the Company are computed by dividing net income
by the weighted average number of shares outstanding during the
respective period.
In June 1996, the Company announced that its Board of Directors had
authorized the purchase of up to $150 million of the Company's common
stock. It is anticipated that any purchases of common stock under the
program would be effected over the next 12 months, subject to market
conditions, available cash and alternative investment opportunities.
The Company began repurchasing shares in mid-June 1996.
HL&P. All issued and outstanding shares of Class A voting common
stock of HL&P are held by the Company, and all issued and outstanding
shares of Class B non-voting common stock of HL&P are held by Houston
Industries (Delaware) Incorporated (HI Delaware), a wholly owned
subsidiary of the Company. Earnings per share data for HL&P are not
computed because all of its common stock is held by the Company and HI
Delaware.
On June 30, 1996 and December 31, 1995, HL&P had 10,000,000 authorized
shares of preferred stock, of which 3,804,397 and 4,318,397 shares,
respectively, were outstanding.
In April 1996, HL&P redeemed 514,000 shares of its $9.375 cumulative
preferred stock at a cost of approximately $53 million ($102.34375 per
share, including accrued dividends). The redemption included 257,000
shares in satisfaction of mandatory sinking fund requirements and an
additional 257,000 shares as an optional redemption.
(7) LONG-TERM DEBT
In January 1996, HL&P repaid upon maturity $100 million principal
amount of its Collateralized Medium-Term Notes Series B and $10
million principal amount of its Collateralized Medium-Term Notes
Series A, plus accrued interest on the two issues.
In April 1996, HL&P repaid upon maturity $40 million principal amount
of its 5 1/4% first mortgage bonds.
In May 1996, HL&P redeemed all outstanding principal amounts of its 7
1/4% first mortgage bonds ($50,000,000) due February 1, 2001, at a
redemption price of 100.42% (plus accrued interest) and 6 3/4% first
mortgage bonds ($35,000,000) due April 1, 1998, at a redemption price
of 100.15% (plus accrued interest).
(8) SUBSEQUENT EVENT
On August 11, 1996, the Company, HL&P and a newly formed Delaware
subsidiary of the Company (HI Merger, Inc.) entered into an Agreement
and Plan of Merger with NorAm Energy Corp. (NorAm). Under the merger
agreement and assuming all necessary regulatory and shareholder
approvals, the Company would merge with and into HL&P and the currently
outstanding stock of the Company would become the common stock of HL&P,
which would be renamed "Houston Industries Incorporated" (HII). NorAm
would merge with and into HI Merger, Inc. and would become a wholly
owned subsidiary of HII. Consideration for the purchase of NorAm shares
will be a combination of cash and shares of HII common stock. The
transaction is valued at $3.8 billion, consisting of $2.4 billion for
NorAm's common stock and equivalents and $1.4 billion of NorAm debt.
For information regarding the Agreement and Plan of Merger, see the
Company and HL&P's current report on Form 8-K dated August 11, 1996,
which report is incorporated herein by reference.
(9) INTERIM PERIOD RESULTS: RECLASSIFICATIONS
The results of interim periods are not necessarily indicative of
results expected for the year due to the seasonal nature of HL&P's
business. In the opinion of management, the interim information
reflects all adjustments (consisting only of normal recurring
adjustments) necessary for a full presentation of the results for the
interim periods. Certain amounts from the previous year have been
reclassified to conform to the 1996 presentation of financial
statements. Such reclassifications do not affect earnings.
-16-
17
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following discussion and analysis should be read in combination with
Management's Discussion and Analysis of Financial Condition and Results of
Operations in Item 7 of the Form 10-K, the financial statements and notes
contained in Item 8 of the Form 10-K, the First Quarter 10-Q and the Interim
Financial Statements. Statements contained in this Form 10-Q that are not
historical facts are forward-looking statements as defined in the Private
Securities Litigation Reform Act of 1995. Such statements are expectations as
to future economic performance and are not statements of fact. Actual results
might differ materially from those projected in these statements. Important
factors that could cause future results to differ include the effects of
competition, legislative and regulatory changes, fluctuations in the weather and
changes in the economy as well as other factors discussed in this and the
Company's and HL&P's other filings with the Securities and Exchange Commission.
AGREEMENT AND PLAN OF
MERGER
On August 11, 1996, the Company, HL&P and a newly formed Delaware
subsidiary of the Company (HI Merger, Inc.) entered into an Agreement and Plan
of Merger with NorAm Energy Corp. (NorAm). Under the merger agreement and
assuming all necessary regulatory and shareholder approvals, the Company would
merge with and into HL&P, which would be renamed "Houston Industries
Incorporated" (HII). NorAm would merge with and into HI Merger, Inc. and would
become a wholly owned subsidiary of HII. Consideration for the purchase of
NorAm shares will be a combination of cash and shares of HII common stock. The
transaction is valued at $3.8 billion, consisting of $2.4 billion for NorAm's
common stock and equivalents and $1.4 billion of NorAm debt. For information
regarding the merger, reference is made to Note 8 to the Interim Financial
Statements and the Company and HL&P's Combined Report on Form 8-K dated August
11, 1996, which report is incorporated herein by reference. The Company
anticipates that the cash portion of the merger will be financed initially
through a combination of internally generated funds, commercial paper and bank
debt, with eventual refinancing in the capital markets possible.
RESULTS OF OPERATIONS
COMPANY
A summary of selected financial data for the Company and its
subsidiaries is set forth below:
Three Months Ended
June 30, Percent
1996 1995 Change
---------- ---------- ------
(Thousands of Dollars)
Revenues . . . . . . . . . . . . . . . . . . . . . $1,113,763 $ 989,843 13
Operating Expenses . . . . . . . . . . . . . . . . 827,483 706,049 17
Operating Income . . . . . . . . . . . . . . . . . 286,280 283,794 1
Other Income (Expense) . . . . . . . . . . . . . . 12,526 (4,788) ---
Interest and Other Charges . . . . . . . . . . . . 82,973 80,037 4
Income Taxes . . . . . . . . . . . . . . . . . . . 70,499 65,709 7
Net Income . . . . . . . . . . . . . . . . . . . 145,334 133,260 9
Six Months Ended
June 30, Percent
1996 1995 Change
---------- ---------- ------
(Thousands of Dollars)
Revenues . . . . . . . . . . . . . . . . . . . . . $1,938,184 $1,745,081 11
Operating Expenses . . . . . . . . . . . . . . . . 1,514,437 1,346,134 13
Operating Income . . . . . . . . . . . . . . . . . 423,747 398,947 6
Other Income (Expense) . . . . . . . . . . . . . . (72,675) (4,270) ---
Interest and Other Charges . . . . . . . . . . . . 161,889 161,432 ---
Income Taxes . . . . . . . . . . . . . . . . . . . 60,589 76,136 (20)
Income from Continuing Operations . . . . . . . . 128,594 157,109 (18)
Gain from Discontinued Operations . . . . . . . . 90,607 ---
Net Income . . . . . . . . . . . . . . . . . . . 128,594 247,716 (48)
The Company had consolidated earnings per share of $.58 for the second
quarter of 1996 compared to consolidated earnings per share of $.54 for the
second quarter of 1995. The increase in 1996 second quarter earnings was
primarily the result of after-tax dividend income of approximately $9 million
from the Company's investment in Time Warner Inc. (Time Warner) equity
securities. In addition, second quarter earnings benefited from increased
residential and commercial kilowatt-hour (KWH) sales at HL&P, the Company's
principal subsidiary.
- 17 -
18
The Company's consolidated earnings for the six months ended June 30,
1996, were $.52 per share compared to $1.00 per share for the same period in
1995. Earnings for the first six months of 1996 included a $62 million, or $.25
per share, after-tax charge recorded in the first quarter of 1996 in connection
with the settlement of litigation claims relating to the South Texas Project,
while 1995 earnings included a one-time gain of $91 million, or $.37 per share,
recorded in the first quarter of 1995 in connection with the sale of the
Company's cable television subsidiary. Excluding the effects of these items
and a $3.1 million after-tax charge to earnings recorded in the first quarter
of 1996 with respect to HI Energy's two waste tire-to-energy projects, the
Company's consolidated income from continuing operations for the first six
months of 1996 would have been $.78 per share, and its consolidated income from
continuing operations for the first six months of 1995 would have been $.63 per
share. This 24 percent increase in earnings per share reflects increased KWH
sales at HL&P and the Company's after-tax dividend income from its investment
in Time Warner equity securities.
HL&P
A summary of selected financial data for HL&P is set forth below:
Three Months Ended
June 30, Percent
1996 1995 Change
---------- ---------- ------
(Thousands of Dollars)
Base Revenues (1) . . . . . . . . . . . . . . . . . $ 742,313 $ 706,001 5
Reconcilable Fuel Revenues (2) . . . . . . . . . . . 357,658 272,224 31
Operating Expenses (3) . . . . . . . . . . . . . . . 889,091 760,806 17
Operating Income (3) . . . . . . . . . . . . . . . . 210,880 217,419 (3)
Other Income (Expense) . . . . . . . . . . . . . . . (1,599) (7,041) (77)
Interest Charges . . . . . . . . . . . . . . . . . . 59,641 61,055 (2)
Income After Preferred Dividends . . . . . . . . . . 144,327 141,873 2
Six Months Ended
June 30, Percent
1996 1995 Change
---------- ---------- ------
(Thousands of Dollars)
Base Revenues (1) . . . . . . . . . . . . . . . . $1,294,647 $1,230,012 5
Reconcilable Fuel Revenues (2) . . . . . . . . . . 617,289 494,379 25
Operating Expenses (3) . . . . . . . . . . . . . . 1,581,402 1,402,406 13
Operating Income (3) . . . . . . . . . . . . . . . 330,534 321,985 3
Other Income (Expense) . . . . . . . . . . . . . . (65,578) (5,865) ---
Interest Charges . . . . . . . . . . . . . . . . . 118,871 123,903 (4)
Income After Preferred Dividends . . . . . . . . . 134,140 175,782 (24)
(1) Includes miscellaneous revenues, certain non-reconcilable fuel
revenues and certain purchased power related revenues.
(2) Includes revenues collected through a fixed fuel factor net of
adjustment for over/under recovery. See "Operating Revenues
and Sales" below.
(3) Includes income taxes.
In the second quarter of 1996, HL&P's income after preferred dividends
was $144 million compared to $142 million in the second quarter of 1995. The
$2 million increase in income in the second quarter of 1996 reflects increased
electric sales partially offset by increased depreciation and amortization
expenses related to HL&P's investments in the South Texas Project and certain
lignite reserves as described below under " -- Other Operating Expenses."
- 18 -
19
HL&P's income after preferred dividends for the first six months of 1996
was $134 million compared to $176 million for the same period in 1995. The $42
million decrease in HL&P's first six months income after preferred dividends
was primarily the result of the $62 million, or $.25 per share, after-tax
charge to earnings recorded in connection with the settlement of South Texas
Project litigation claims. Excluding this $62 million charge to earnings,
HL&P's income after preferred dividends for the first six months of 1996 would
have been $196 million compared to $176 million for the comparable 1995 period.
This increase primarily reflects increased KWH sales, as described below.
OPERATING REVENUES AND SALES
HL&P's second quarter 1996 base revenues benefited from an 8 percent
increase in residential KWH sales and a 2 percent increase in commercial KWH
sales compared to the second quarter of 1995. Residential and commercial KWH
sales for the first six months of 1996 increased 12 percent and 4 percent,
respectively, compared to the same period in 1995. Weather was a major factor
in the increase of KWH sales. Other factors contributing to increased sales
were continued customer growth and increased electricity usage per customer.
Reconcilable fuel revenues are revenues that are collected through a
fixed fuel factor. These revenues are adjusted monthly to equal certain
related fuel and purchased power expenses; therefore, such revenues and
expenses have no effect on earnings unless such fuel costs are determined not
to be recoverable. For information regarding the recovery of fuel costs, see
"Business of HL&P -- Fuel -- Recovery of Fuel Costs" in Item 1 of the Form
10-K.
FUEL AND PURCHASED POWER EXPENSES
HL&P's fuel expense for the second quarter and first six months of
1996 increased $62 million and $76 million, respectively, compared to the
comparable 1995 periods. The average cost of fuel for the second quarter and
first six months of 1996 was $2.01 per million British Thermal Units (MMBtu)
and $1.87 per MMBtu, respectively, compared to $1.66 per MMBtu and $1.65 per
MMBtu for the comparable 1995 periods. Fuel costs increased due to an increase
in the unit cost of gas (the average cost of which was $2.28 per MMBtu for the
second quarter of 1996 and $2.24 per MMBtu for the first six months of 1996
compared to $1.72 and $1.71, respectively, for the comparable periods in 1995).
Purchased power expense increased $23 million and $36 million,
respectively, for the second quarter and first six months of 1996 compared to
the comparable 1995 periods as a result of increased energy purchases,
primarily reflecting the increase in electric sales. The increase in purchased
power expense for the first six months of 1996 was partially offset by a
decrease in firm capacity costs resulting from the renegotiation of a purchased
power contract in April 1995.
OTHER OPERATING EXPENSES
Operations expense for the second quarter and the first six months of
1996 increased $7 million and $6 million, respectively, compared to the same
periods in 1995. The increase in operations expense was primarily attributable
to an increase in municipal franchise payments, which were lower during the
first six months of 1995 because of the effects of a $112 million refund of
reconcilable fuel revenues in April of that year.
Maintenance expense for the second quarter of 1996 and the first six
months of 1996 increased $13 million and $9 million, respectively, compared to
the comparable 1995 periods. Increased maintenance expense for the second
quarter of 1996 was primarily the result of a scheduled refueling outage at
Unit No. 1 of the South Texas Project. Scheduled outages at the W.A. Parish
and P.H. Robinson generation stations and increases in general plant
maintenance contributed to the increase for the second quarter and first six
months of 1996. In addition, an outage at the W.A. Parish generation station
scheduled to occur in the first six months of 1995 did not occur until the
second quarter of 1996.
Depreciation and amortization expense increased $17 million and $42
million during the second quarter and first six months of 1996, respectively,
compared to the comparable 1995 periods. This increase reflects HL&P's
decision to write down a portion of its investment in the
- 19 -
20
South Texas Project ($12.5 million for the second quarter 1996 and $25 million
for the first six months of 1996 compared to $7 million for both periods in
1995) as permitted under the settlement of HL&P's 1995 rate case (Docket No.
12065). In addition, HL&P began amortization in 1996 of its investment in
certain lignite reserves at a rate of approximately $22 million per year
(amounting to $5.5 million in the second quarter 1996 and $11 million for the
first six months of 1996). The increase in depreciation and amortization
expense for the second quarter and first six months of 1996 also included
amortization of HL&P's 1995 early retirement program and increased plant
depreciation expense.
For information regarding the settlement of HL&P's most recent rate
case and its ongoing effects on HL&P's results of operations, see "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Certain Factors Affecting Future Earnings of the Company and HL&P - Rate
Matters and Other Contingencies" in Item 7 of the Form 10-K and Note 3(a) to
the financial statements in the Form 10-K.
Taxes other than income taxes decreased by $8 million for the first
six months of 1996 compared to the same period in 1995 primarily due to reduced
property tax assessments.
LIQUIDITY AND CAPITAL RESOURCES
COMPANY
GENERAL
The Company's net cash provided by operating activities for the first
six months of 1996 totaled $276 million. Net cash used in the Company's
investing activities for the first six months of 1996 totaled $614 million,
primarily due to equity investments in foreign utilities as well as electric
capital and nuclear fuel expenditures. The Company's financing activities for
the first six months of 1996 resulted in a net cash inflow of $332 million.
The Company's primary financing activities were payment of matured HL&P bonds,
payment of dividends on the Company's common stock, redemption of HL&P
preferred stock, the purchase of common stock under the Company's repurchase
program, and extinguishment of long-term debt funded by an increase in notes
payable in the form of commercial paper.
SOURCES OF CAPITAL RESOURCES AND LIQUIDITY
As of June 30, 1996, the Company had approximately $584 million of
commercial paper outstanding, which is supported by bank credit facilities of
$750 million (exclusive of bank credit facilities of subsidiaries).
During the second quarter of 1996, the Company purchased 1,195,900
shares of its common stock for $27 million. The purchases were financed by
short-term borrowings. For additional information on the Company's common
stock repurchase program, see Note 6 to the Interim Financial Statements.
In the second quarter of 1996, a subsidiary of HI Energy purchased
11.35 percent of the common shares of Light - Servicos de Eletricidade S.A.
(Light), a Brazilian electric utility, for approximately $392 million. HI
Energy obtained the funds to purchase the shares of Light from the Company.
Although it is HI Energy's goal to refinance a portion of the acquisition costs
of Light on a non-recourse basis, no assurance can be given that such financing
will be available on commercially acceptable terms. In the second quarter of
1996, a subsidiary of HI Energy acquired for approximately $45 million an
additional 32 percent of the capital stock of Edelap, an Argentine utility.
For information regarding these acquisitions, see Note 4 to the Interim
Financial Statements.
In the fourth quarter of 1996, the Company will be required to redeem
$200 million of its debentures. Based on current market conditions, the
Company intends to fund this redemption requirement using short-term borrowings
or other external sources. The $200 million in debentures are recorded as
current portion of long-term debt and preferred stock on the Company's
Consolidated Balance Sheet.
- 20 -
21
RATIOS OF EARNINGS TO FIXED CHARGES
The Company's ratios of earnings to fixed charges for the six and
twelve months ended June 30, 1996, were 2.12 and 2.61, respectively. The
Company believes that the ratio for the six-month period is not necessarily
indicative of the ratio for a twelve-month period due to the seasonal nature of
HL&P's business.
HL&P
GENERAL
HL&P's net cash provided by operating activities for the first six
months of 1996 totaled $297 million. Net cash used in HL&P's investing
activities for the first six months of 1996 totaled $158 million. HL&P's
capital and nuclear fuel expenditures (excluding allowance for funds used
during construction) for the first six months of 1996 totaled $152 million out
of the $387 million annual budget. HL&P's financing activities for the first
six months of 1996 resulted in a net cash outflow of approximately $214 million
attributable to the payment of dividends, the extinguishment of long-term debt,
the repayment of matured long-term debt, and the redemption of preferred stock
(all of which exceeded the increase in short-term borrowings).
SOURCES OF CAPITAL RESOURCES AND LIQUIDITY
As of June 30, 1996, HL&P had approximately $246 million of commercial
paper outstanding. HL&P's commercial paper borrowings are supported by a bank
line of credit of $400 million.
In January 1996, HL&P repaid at maturity an aggregate principal amount
of $110 million (plus accrued interest) of two series of its collateralized
medium term notes. In April 1996, HL&P redeemed 514,000 shares of its $9.375
series of preferred stock. In May 1996, HL&P repaid upon maturity $40 million
principal amount of its 5 1/4% first mortgage bonds due April 1, 1996, and
redeemed all outstanding principal amounts of its 6 3/4% first mortgage bonds
due April 1, 1998, and its 7 1/4% first mortgage bonds due February 1, 2001.
For additional information regarding these repurchases and redemptions, see
Note 7 to the Interim Financial Statements.
RATIOS OF EARNINGS TO FIXED CHARGES
HL&P's ratios of earnings to fixed charges for the six and twelve
months ended June 30, 1996 were 2.81 and 3.59, respectively. HL&P's ratios of
earnings to fixed charges and preferred dividends for the six and twelve months
ended June 30, 1996, were 2.45 and 3.12, respectively. HL&P believes that the
ratios for the six-month period are not necessarily indicative of the ratios
for a twelve-month period due to the seasonal nature of HL&P's business.
RECENT REGULATORY DEVELOPMENTS
On June 24, 1996, HL&P and other Texas electric utilities were required
to file estimates of their "Excess Cost Over Market" (ECOM) (sometimes referred
to as "stranded cost investment"). The Utility Commission intends to use the
information derived from these filings in connection with the preparation of a
report to the Texas legislature on methods or procedures for quantifying the
magnitude of stranded investment, procedures for allocating costs and the
acceptable methods of recovering stranded costs. Based on the assumptions,
economic models and methodologies established by the Utility Commission for
purposes of this report, HL&P filed estimates of ECOM in response to 54
scenarios requested by the Utility Commission. The estimates vary by as much as
$7 billion (including one scenario resulting in an estimated ECOM of $6.7
billion and another scenario resulting in an estimated ECOM of negative $300
million). HL&P has filed a motion arguing that the Utility Commission's
assumptions do not adequately capture the range of uncertainty in this matter
and that, based on other scenarios, HL&P's ECOM could vary within a range of
$10 billion. The calculation of ECOM is dependent on a number of factors
(future electric prices, generating needs, the timing of deregulation, etc.);
therefore, no assurance can be given that any estimates regarding ECOM will
ultimately prove to be accurate.
- 21 -
22
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
For a description of legal proceedings affecting the Company and its
subsidiaries, including HL&P and HI Energy, reference is made to the
information set forth in Item 3 of the Form 10-K and Notes 2(b), 3 and
4(c) to the financial statements in the Form 10-K, which information,
as qualified and updated by the description of developments in
regulatory and litigation matters contained in Note 7(a) to the
financial statements in the First Quarter 10-Q and Note 3 of the Notes
to the Interim Financial Statements included in Part I of this Report,
is incorporated herein by reference.
In February 1996, the City of Wharton, on behalf of itself and certain
incorporated municipalities, filed a lawsuit against HL&P and Houston
Industries Finance Co., a wholly-owned subsidiary of the Company,
seeking to recover amounts allegedly owed to such municipalities
pursuant to municipal franchise agreements. The case is now pending in
a district court in Harris County (Cause No. 96-016613, 127th Judicial
District of Harris County, Texas), which has certified the case as a
class action. HL&P has appealed that ruling to the First Court of
Appeals in Houston and is awaiting a ruling from that court. The
plaintiff cities contend that HL&P has underpaid franchise fees under
its franchise agreement primarily by failing to make payments on
revenues received from activities other than the sale of electricity, a
claim HL&P vigorously disputes. Although the plaintiff cities have not
specified the damages sought, one of their witnesses during a hearing
alleged that damages could range as high as $220 million. The Company
and HL&P believe that the claims asserted by the cities are without
merit and intend to vigorously contest the lawsuit, though no assurance
can be given as to the ultimate outcome of this matter.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
Company
At the annual meeting of the Company's shareholders held on May 22,
1996, the matters voted upon and the number of votes cast for, against
or withheld, as well as the number of abstentions and broker non-votes
as to such matters (including a separate tabulation with respect to
each nominee for office) were as stated below:
For Item 1, the election of five nominees for Class III directors to
serve three-year terms expiring in 1999:
For Against or Withheld Broker Non-Vote
----- ------------------- ---------------
James A. Baker, III 224,493,738 6,610,208 0
Richard E. Balzhiser 226,386,244 4,717,702 0
Howard W. Horne 226,536,810 4,567,136 0
Don D. Jordan 226,601,535 4,502,411 0
Kenneth L. Schnitzer, Sr. 225,308,509 5,795,437 0
- 22 -
23
On July 19, 1996, Mr. Schnitzer resigned from the Board of
Directors of the Company.
For Item 2, the adoption of the Houston Industries
Incorporated Stock Plan for Outside Directors:
For Against Abstain Broker Non-Vote
----------- ---------- --------- ---------------
200,170,339 24,693,871 6,238,333 1,403
For Item 3, the ratification of the appointment of Deloitte &
Touche LLP as independent accountants and auditors for the
Company for 1996:
For Against Abstain Broker Non-Vote
----------- --------- --------- ---------------
226,641,726 3,076,347 1,385,873 0
HL&P
The annual shareholder meeting of HL&P was held on May 22,
1996. Houston Industries Incorporated, the owner and holder
of all of the outstanding Class A voting common stock of HL&P,
by the duly authorized vote of its Chairman and Chief
Executive Officer, Don D. Jordan, elected the following Board
of Directors for the ensuing year or until their successors
shall have qualified:
William T. Cottle, Jack D. Greenwade, Lee W. Hogan, Don D.
Jordan, Hugh Rice Kelly, David M. McClanahan, Stephen W.
Naeve, R. Steve Letbetter, Stephen C. Schaeffer, Robert L.
Waldrop.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits. (Exhibits designated by an asterisk (*) are incorporated
herein by reference to a separate filing as indicated.)
Houston Industries Incorporated:
*Exhibit 2 - Agreement and Plan of Merger among the
Company, HL&P, HI Merger, Inc. and NorAm
dated August 11, 1996 (incorporated by
reference to Exhibit 2 to the Company and
HL&P's Report on Form 8-K dated August 11,
1996).
Exhibit 3 - Amended and Restated Bylaws of the Company
(as of May 22, 1996).
Exhibit 10(a) - Seventh Amendment to the Executive Incentive
Compensation Plan of the Company (As Amended
and Restated Effective January 1, 1991)
effective January 1, 1996.
Exhibit 10(b) - Sixth Amendment to the Deferred Compensation
Plan of the Company (As Established Effective
September 1, 1985) effective December 1,
1995.
- 23 -
24
Exhibit 10(c) - Sixth Amendment to the Deferred Compensation
Plan of the Company (As Amended and Restated
Effective January 1, 1989) effective December
1, 1995.
Exhibit 10(d) - Seventh Amendment to the Deferred
Compensation Plan of the Company (As Amended
and Restated Effective January 1, 1991)
effective December 1, 1995.
Exhibit 11 - Computation of Earnings per Common Share and
Common Equivalent Share.
Exhibit 12 - Computation of Ratios of Earnings to Fixed
Charges.
Exhibit 27 - Financial Data Schedule.
Exhibit 99(a) - Notes 1(b), 2, 3, 4 and 11 to the Financial
Statements included on pages 57, 59 through
64 and 73 through 74 of the Form 10-K.
Exhibit 99(b) - Notes 3, 7(a) and 7(b) to the Financial
Statements included on pages 13, 14 and 15 of
the First Quarter Form 10-Q.
*Exhibit 99(c) - Houston Industries Incorporated Savings Plan
(As Amended and Restated Effective July 1,
1995) (incorporated by reference to Exhibit
99(c) to the Company's Report on Form 10-Q
for the quarter ended March 31, 1995).
*Exhibit 99(d) - First Amendment to the Houston Industries
Incorporated Savings Plan (As Amended and
Restated Effective July 1, 1995) effective
June 30, 1995 (incorporated by reference to
Exhibit 99(g) to the Company's Report on Form
10-Q for the quarter ended June 30, 1995.)
Exhibit 99(e) - Second Amendment to the Savings Plan (As
Amended and Restated Effective July 1, 1995)
effective August 1, 1996.
Houston Lighting & Power Company:
*Exhibit 2 - Agreement and Plan of Merger among the
Company, HL&P, HI Merger, Inc. and NorAm
dated August 11, 1996 (incorporated by
reference to Exhibit 2 to the Company and
HL&P's Report on Form 8-K dated August 11,
1996).
Exhibit 3 - Amended and Restated Bylaws of HL&P (as of
June 5, 1996).
*Exhibit 10(a) - Seventh Amendment to the Executive Incentive
Compensation Plan of the Company (As Amended
and Restated Effective January 1, 1991)
effective January 1, 1996 (incorporated by
reference to Exhibit 10(a) to the Company's
Report on Form 10-Q for the quarter ended
June 30, 1996, File No. 1-7629).
- 24 -
25
*Exhibit 10(b) - Sixth Amendment to the Deferred Compensation
Plan of the Company (As Established Effective
September 1, 1985) effective December 1, 1995
(incorporated by reference to Exhibit 10(b)
to the Company's Report on Form 10-Q for the
quarter ended June 30, 1996, File No.
1-7629).
*Exhibit 10(c) - Sixth Amendment to the Deferred Compensation
Plan of the Company (As Amended and Restated
Effective January 1, 1989) effective December
1, 1995 (incorporated by reference to Exhibit
10(c) to the Company's Report on Form 10-Q
for the quarter ended June 30, 1996, File No.
1-7629).
*Exhibit 10(d) - Seventh Amendment to the Deferred
Compensation Plan of the Company (As Amended
and Restated Effective January 1, 1991)
effective December 1, 1995 (incorporated by
reference to Exhibit 10(d) to the Company's
Report on Form 10-Q for the quarter ended
June 30, 1996, File No. 1-7629).
Exhibit 12 - Computation of Ratios of Earnings to Fixed
Charges and Ratios of Earnings to Fixed
Charges and Preferred Dividends.
Exhibit 27 - Financial Data Schedule.
Exhibit 99(a) - Notes 1(b), 2, 3, 4 and 11 to the Financial
Statements included on pages 57, 59 through
64 and 73 through 74 of the Form 10-K.
Exhibit 99(b) - Notes 3, 7(a) and 7(b) to the Financial
Statements included on pages 13, 14 and 15 of
the First Quarter Form 10-Q.
(b) Reports on Form 8-K.
Report on Form 8-K of the Company and HL&P dated August 11, 1996.
- 25 -
26
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HOUSTON INDUSTRIES INCORPORATED
(Registrant)
/s/ Mary P. Ricciardello
-------------------------------
Mary P. Ricciardello
Vice President and Comptroller
(Principal Accounting Officer)
Date: August 13, 1996
- 26 -
27
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HOUSTON LIGHTING & POWER COMPANY
(Registrant)
/s/ Mary P. Ricciardello
-------------------------------
Mary P. Ricciardello
Vice President and Comptroller
(Principal Accounting Officer)
Date: August 13, 1996
- 27 -
28
INDEX TO EXHIBITS
Houston Industries Incorporated:
*Exhibit 2 - Agreement and Plan of Merger among the Company,
HL&P, HI Merger, Inc. and NorAm dated August 11,
1996 (incorporated by reference to Exhibit 2 to
the Company and HL&P's Report on Form 8-K dated
August 11, 1996).
Exhibit 3 - Amended and Restated Bylaws of the Company (as of
May 22, 1996).
Exhibit 10(a) - Seventh Amendment to the Executive Incentive
Compensation Plan of the Company (As Amended and
Restated Effective January 1, 1991) effective
January 1, 1996.
Exhibit 10(b) - Sixth Amendment to the Deferred Compensation Plan
of the Company (As Established Effective September
1, 1985) effective December 1, 1995.
Exhibit 10(c) - Sixth Amendment to the Deferred Compensation Plan
of the Company (As Amended and Restated Effective
January 1, 1989) effective December 1, 1995.
Exhibit 10(d) - Seventh Amendment to the Deferred Compensation Plan
of the Company (As Amended and Restated Effective
January 1, 1991) effective December 1, 1995.
Exhibit 11 - Computation of Earnings per Common Share and Common
Equivalent Share.
Exhibit 12 - Computation of Ratios of Earnings to Fixed Charges.
Exhibit 27 - Financial Data Schedule.
Exhibit 99(a) - Notes 1(b), 2, 3, 4 and 11 to the Financial
Statements included on pages 57, 59 through 64 and
73 through 74 of the Form 10-K.
Exhibit 99(b) - Notes 3, 7(a) and 7(b) to the Financial Statements
included on pages 13, 14 and 15 of the First
Quarter Form 10-Q.
*Exhibit 99(c) - Houston Industries Incorporated Savings Plan (As
Amended and Restated Effective July 1, 1995)
(incorporated by reference to Exhibit 99(c) to the
Company's Report on Form 10-Q for the quarter ended
March 31, 1995).
*Exhibit 99(d) - First Amendment to the Houston Industries
Incorporated Savings Plan (As Amended and Restated
Effective July 1, 1995) effective June 30, 1995
(incorporated by reference to Exhibit 99(g) to the
Company's Report on Form 10-Q for the quarter ended
June 30, 1995.)
Exhibit 99(e) - Second Amendment to the Savings Plan (As Amended
and Restated Effective July 1, 1995) effective
August 1, 1996.
Houston Lighting & Power Company:
*Exhibit 2 - Agreement and Plan of Merger among the Company,
HL&P, HI Merger, Inc. and NorAm dated August 11,
1996 (incorporated by reference to Exhibit 2 to
the Company and HL&P's Report on Form 8-K dated
August 11, 1996).
*Exhibit 10(a) - Seventh Amendment to the Executive Incentive
Compensation Plan of the Company (As Amended and
Restated Effective January 1, 1991) effective
January 1, 1996 (incorporated by reference to
Exhibit 10(a) to the Company's Report on Form 10-Q
for the quarter ended June 30, 1996, File No.
1-7629).
*Exhibit 10(b) - Sixth Amendment to the Deferred Compensation Plan
of the Company (As Established Effective September
1, 1985) effective December 1, 1995 (incorporated
by reference to Exhibit 10(b) to the Company's
Report on Form 10-Q for the quarter ended June 30,
1996, File No. 1-7629).
*Exhibit 10(c) - Sixth Amendment to the Deferred Compensation Plan
of the Company (As Amended and Restated Effective
January 1, 1989) effective December 1, 1995
(incorporated by reference to Exhibit 10(c) to the
Company's Report on Form 10-Q for the quarter ended
June 30, 1996, File No. 1-7629).
*Exhibit 10(d) - Seventh Amendment to the Deferred Compensation Plan
of the Company (As Amended and Restated Effective
January 1, 1991) effective December 1, 1995
(incorporated by reference to Exhibit 10(d) to the
Company's Report on Form 10-Q for the quarter ended
June 30, 1996, File No. 1-7629).
Exhibit 12 - Computation of Ratios of Earnings to Fixed Charges
and Ratios of Earnings to Fixed Charges and
Preferred Dividends.
Exhibit 27 - Financial Data Schedule.
Exhibit 99(a) - Notes 1(b), 2, 3, 4 and 11 to the Financial
Statements included on pages 57, 59 through 64 and
73 through 74 of the Form 10-K.
Exhibit 99(b) - Notes 3, 7(a) and 7(b) to the Financial Statements
included on pages 13, 14 and 15 of the First
Quarter Form 10-Q.