form10q.htm
UNITED STATES
 
SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

T  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 
For the quarterly period ended June 30, 2009
 
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
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 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  T      No  £
 
 
 
 

Indicate by check mark CH Energy Group, Inc. 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).

Yes  £      No  £

Indicate by check mark Central Hudson Gas & Electric Corporation 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).

Yes  £      No  £

Indicate by check mark whether CH Energy Group, Inc. 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):

Large Accelerated Filer £   Accelerated Filer T

Non-Accelerated Filer £   Smaller Reporting Company £

Indicate by check mark whether Central Hudson Gas & Electric Corporation 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):

Large Accelerated Filer £   Accelerated Filer £

Non-Accelerated Filer T   Smaller Reporting Company £

Indicate by check mark whether CH Energy Group, Inc. is a shell company (as defined in Rule 12b-2 of the Exchange Act):

Yes  £      No  T

Indicate by check mark whether Central Hudson Gas & Electric Corporation is a shell company (as defined in Rule 12b-2 of the Exchange Act):

Yes  £      No  T

As of the close of business on July 31, 2009, (i) CH Energy Group, Inc. had outstanding 15,790,053 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 JUNE 30, 2009

TABLE OF CONTENTS

   
PART I – FINANCIAL INFORMATION
PAGE
       
ITEM 1 – FINANCIAL STATEMENTS (UNAUDITED)
  
       
CH ENERGY GROUP, INC.
  
       
 
Consolidated Statement of Income –
  
   
6
   
7
       
 
Consolidated Statement of Comprehensive Income –
  
   
8
   
8
       
 
Consolidated Statement of Cash Flows –
  
   
9
       
 
Consolidated Balance Sheet –
 
   
10
       
 
Consolidated Statement of Changes In Equity –
  
   
12
       
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
  
       
 
Statement of Income –
  
   
13
   
14
       
 
Statement of Comprehensive Income –
  
   
15
   
15
       
 
Statement of Cash Flows –
  
   
16
       
 
Balance Sheet –
 
   
17
       
 
Statement of Changes In Equity –
  
   
19
       
 
20

 
 
 

TABLE OF CONTENTS

   
PAGE
     
ITEM 2
64
     
ITEM 3
107
     
ITEM 4
107
     
 
PART II – OTHER INFORMATION
  
     
ITEM 1
108
     
ITEM 1A
108
     
ITEM 4
109
     
ITEM 6
110
     
111
     
112
     
CERTIFICATIONS
115

 
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
  
   
June 30,
  
   
2009
    
2008
  
Operating Revenues
  
 
    
 
  
Electric
   $ 108,597     $ 145,844  
Natural gas
     31,056       44,275  
Competitive business subsidiaries:
                
Petroleum Products
     50,451       99,796  
Other
     10,126       23,737  
Total Operating Revenues
     200,230       313,652  
Operating Expenses
                
Operation:
                
Purchased electricity and fuel used in electric generation
     51,884       90,441  
Purchased natural gas
     19,301       31,465  
Purchased petroleum
     40,669       102,122  
Other expenses of operation - regulated activities
     44,390       41,254  
Other expenses of operation - competitive business subsidiaries
     20,443       21,540  
Depreciation and amortization
     10,122       9,549  
Taxes, other than income tax
     9,595       9,327  
Total Operating Expenses
     196,404       305,698  
Operating Income
     3,826       7,954  
Other Income and Deductions
                
(Loss) income from unconsolidated affiliates
     (153 )     66  
Interest on regulatory assets and investment income
     2,350       1,792  
Other - net
     (1,652 )     (559 )
Total Other Income
     545       1,299  
Interest Charges
                
Interest on long-term debt
     4,568       5,049  
Interest on regulatory liabilities and other interest
     1,883       1,343  
Total Interest Charges
     6,451       6,392  
(Loss) income before income taxes, non-controlling interest and preferred dividends of subsidiary
     (2,080 )     2,861  
Income Taxes
     (708 )     972  
Net (Loss) Income
     (1,372 )     1,889  
Net (loss) income attributable to non-controlling interest:
                
Non-controlling interest in subsidiary
     (157 )     (23 )
Dividends declared on Preferred Stock of subsidiary
     242       242  
Net (loss) income attributable to CH Energy Group
     (1,457 )     1,670  
Dividends declared on Common Stock
     8,526       8,523  
Change in Retained Earnings
   $ (9,983 )   $ (6,853 )
Common Stock:
                
Average shares outstanding
                
Basic
     15,774       15,768  
Diluted
     15,826       15,812  
Amounts attributable to CH Energy Group common shareholders
                
Earnings per share
                
Basic
   $ (0.09 )   $ 0.11  
Diluted
   $ (0.09 )   $ 0.11  
Dividends Declared Per Share
   $ 0.54     $ 0.54  

The Notes to Financial Statements are an integral part hereof.


CH ENERGY GROUP CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(In Thousands, except per share amounts)

   
Six Months Ended
  
   
June 30,
  
   
2009
    
2008
  
Operating Revenues
            
Electric
   $ 265,350     $ 289,658  
Natural gas
     121,179       120,494  
Competitive business subsidiaries:
                
Petroleum Products
     171,030       272,476  
Other
     21,145       40,816  
Total Operating Revenues
     578,704       723,444  
Operating Expenses
                
Operation:
                
Purchased electricity and fuel used in electric generation
     143,635       174,775  
Purchased natural gas
     84,126       84,603  
Purchased petroleum
     126,940       252,980  
Other expenses of operation - regulated activities
     90,710       84,167  
Other expenses of operation - competitive business subsidiaries
     44,630       45,207  
Depreciation and amortization
     20,285       19,009  
Taxes, other than income tax
     19,738       18,790  
Total Operating Expenses
     530,064       679,531  
Operating Income
     48,640       43,913  
Other Income and Deductions
                
Income from unconsolidated affiliates
     77       335  
Interest on regulatory assets and investment income
     3,466       3,065  
Reserve for note receivable
     (1,299 )     -  
Other - net
     (2,361 )     (118 )
Total Other Income
     (117 )     3,282  
Interest Charges
                
Interest on long-term debt
     9,348       10,138  
Interest on regulatory liabilities and other interest
     3,391       2,631  
Total Interest Charges
     12,739       12,769  
Income before income taxes, non-controlling interest and preferred dividends of subsidiary
     35,784       34,426  
Income Taxes
     13,825       12,909  
Net Income
     21,959       21,517  
Net (loss) income attributable to non-controlling interest:
                
Non-controlling interest in subsidiary
     (190 )     61  
Dividends declared on Preferred Stock of subsidiary
     485       485  
Net income attributable to CH Energy Group
     21,664       20,971  
Dividends declared on Common Stock
     17,050       17,041  
Change in Retained Earnings
   $ 4,614     $ 3,930  
Common Stock:
                
Average shares outstanding
                
Basic
     15,773       15,765  
Diluted
     15,825       15,809  
Amounts attributable to CH Energy Group common shareholders
                
Earnings per share
                
Basic
   $ 1.37     $ 1.33  
Diluted
   $ 1.37     $ 1.33  
Dividends Declared Per Share
   $ 1.08     $ 1.08  

The Notes to Financial Statements are an integral part hereof.


CH ENERGY GROUP CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
(In Thousands)

   
Three Months Ended
  
   
June 30,
  
   
2009
    
2008
  
Net (loss) Income
   $ (1,372 )   $ 1,889  
                 
Other Comprehensive Income:
                
                 
Fair value of cash flow hedges - FAS 133:
                
Unrealized gains - net of tax of ($38) and ($273)
     57       410  
Reclassification for gains realized in net income - net of tax of $0 and $340
     -       (511 )
Net unrealized losses on investments held by equity method investees - net of tax of $0 and ($33)
     -       50  
Other comprehensive income (loss)
     57       (51 )
Comprehensive (loss) Income
     (1,315 )     1,838  
Comprehensive income attributable to non-controlling interest
     85       219  
Comprehensive (loss) income attributable to CH Energy Group
   $ (1,400 )   $ 1,619  

   
Six Months Ended
  
   
June 30,
  
   
2009
    
2008
  
Net Income
   $ 21,959     $ 21,517  
                 
Other Comprehensive Income:
                
                 
Fair value of cash flow hedges - FAS 133:
                
Unrealized gains - net of tax of ($39) and ($455)
     58       682  
Reclassification for gains realized in net income -net of tax of $0 and $806
     -       (1,208 )
Net unrealized losses on investments held by equity method investees - net of tax of $0 and $153
     -       (230 )
Other comprehensive income (loss)
     58       (756 )
Comprehensive Income
     22,017       20,761  
Comprehensive income attributable to non-controlling interest
     295       546  
Comprehensive income attributable to CH Energy Group
   $ 21,722     $ 20,215  

The Notes to Financial Statements are an integral part hereof.


CH ENERGY GROUP CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(In Thousands)

   
Six Months Ended
  
   
June 30,
  
   
2009
    
2008
  
Operating Activities:
            
Net income
   $ 21,959     $ 21,517  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation
     17,678       16,563  
Amortization
     2,607       2,446  
Deferred income taxes - net
     (11,916 )     13,434  
Provision for uncollectibles
     8,216       4,596  
Distributed equity in earnings of unconsolidated affiliates
     550       488  
Pension expense
     6,352       6,565  
Other post-employment benefits ("OPEB") expense
     5,056       5,226  
Regulatory liability - rate moderation
     -       (5,900 )
Regulatory asset amortization
     2,812       2,765  
Gain on sale of property and plant
     (39 )     (27 )
Changes in operating assets and liabilities - net of business acquisitions:
                
Accounts receivable, unbilled revenues and other receivables
     34,596       4,153  
Fuel, materials and supplies
     8,695       2,148  
Special deposits and prepayments
     (860 )     4,110  
Prepaid income taxes
     -       (9,828 )
Accounts payable
     (16,323 )     6,954  
Accrued income taxes and interest
     19,094       (997 )
Customer advances
     (7,639 )     (12,544 )
Pension plan contribution
     (6,850 )     (12,762 )
OPEB contribution
     -       (4,200 )
Regulatory asset - Manufactured gas plant ("MGP") site remediations
     (1,970 )     (789 )
Deferred natural gas and electric costs
     30,912       (8,790 )
Customer benefit fund
     (9 )     (366 )
Other - net
     4,157       931  
Net cash provided by operating activities
     117,078       35,693  
Investing Activities:
                
Proceeds from sale of short-term investments
     -       3,545  
Proceeds from sale of property and plant
     189       45  
Additions to utility and other property and plant
     (66,162 )     (39,545 )
Acquisitions made by competitive business subsidiaries
     -       (9,259 )
Other - net
     (2,676 )     712  
Net cash used in investing activities
     (68,649 )     (44,502 )
Financing Activities:
                
Redemption of long-term debt
     (20,000 )     -  
Proceeds from issuance of long-term debt
     50,000       -  
(Repayments) borrowings of short-term debt - net
     (35,500 )     33,500  
Dividends paid on Preferred Stock of subsidiary
     (485 )     (485 )
Dividends paid on Common Stock
     (17,046 )     (17,036 )
Debt issuance costs
     (116 )     (7 )
Net cash (used in) provided by financing activities
     (23,147 )     15,972  
Net Change in Cash and Cash Equivalents
     25,282       7,163  
Cash and Cash Equivalents at Beginning of Period
     19,825       11,313  
Cash and Cash Equivalents at End of Period
   $ 45,107     $ 18,476  
Supplemental Disclosure of Cash Flow Information:
                
Interest paid
   $ 10,172     $ 11,447  
Federal and state income tax paid
   $ 7,039     $ 9,852  
Additions to plant included in liabilities
   $ 5,113     $ 12,523  

The Notes to Financial Statements are an integral part hereof.


CH ENERGY GROUP CONSOLIDATED BALANCE SHEET (UNAUDITED)
(In Thousands)

   
June 30,
    
December 31,
    
June 30,
  
   
2009
    
2008
    
2008
  
ASSETS
                  
Utility Plant
                  
Electric
     888,772       862,465       832,509  
Natural gas
     274,251       263,874       257,348  
Common
     137,619       135,732       117,247  
      1,300,642       1,262,071       1,207,104  
Less: Accumulated depreciation
     379,502       369,925       362,363  
      921,140       892,146       844,741  
Construction work in progress
     57,358       53,778       70,346  
Net Utility Plant
     978,498       945,924       915,087  
Non-Utility Property & Plant
                        
Griffith non-utility property & plant
     42,724       42,691       41,351  
Other non-utility property & plant
     20,534       15,345       13,775  
      63,258       58,036       55,126  
Less:  Accumulated depreciation - Griffith
     24,786       23,398       22,046  
Less:  Accumulated depreciation - other
     2,634       2,212       1,788  
Net Non-Utility Property & Plant
     35,838       32,426       31,292  
Current Assets
                        
Cash and cash equivalents
     45,107       19,825       18,476  
Accounts receivable from customers - net of allowance for doubtful accounts; $9.1 million, $8.8 million and $5.6 million, respectively
     94,872       131,727       134,288  
Accrued unbilled utility revenues
     8,542       12,657       7,372  
Other receivables
     7,371       7,914       7,288  
Fuel, materials and supplies
     27,890       36,585       31,580  
Regulatory assets
     35,510       60,502       46,090  
Prepaid income tax
     -       -       9,828  
Fair value of derivative instruments
     -       -       9,997  
Special deposits and prepayments
     22,255       21,344       24,014  
Accumulated deferred income tax
     21,851       7,498       1,088  
Total Current Assets
     263,398       298,052       290,021  
Deferred Charges and Other Assets
                        
Regulatory assets - pension plan
     181,083       197,934       44,078  
Regulatory assets - OPEB
     7,682       4,257       -  
Regulatory assets - other
     93,922       109,743       103,816  
Goodwill
     67,455       67,455       67,559  
Other intangible assets - net
     34,045       36,129       38,065  
Unamortized debt expense
     4,937       5,009       4,161  
Investments in unconsolidated affiliates
     8,834       9,711       10,799  
Other investments
     9,559       7,815       9,797  
Other
     15,242       15,728       14,628  
Total Deferred Charges and Other Assets
     422,759       453,781       292,903  
Total Assets
     1,700,493       1,730,183       1,529,303  

The Notes to Financial Statements are an integral part hereof.


CH ENERGY GROUP CONSOLIDATED BALANCE SHEET (CONT’D) (UNAUDITED)
(In Thousands)

   
June 30,
    
December 31,
    
June 30,
  
   
2009
    
2008
    
2008
  
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) 15,789,759 shares, 15,783,083 shares, and 15,782,774 shares outstanding, respectively
     1,686       1,686       1,686  
Paid-in capital
     350,851       350,873       350,783  
Retained earnings
     221,248       216,634       219,569  
Treasury stock - 1,072,328 shares, 1,079,004 shares, and 1,079,313 shares, respectively
     (45,059 )     (45,386 )     (45,397 )
Accumulated other comprehensive income
     113       55       417  
Capital stock expense
     (328 )     (328 )     (328 )
Total CH Energy Group Common Shareholders' Equity
     528,511       523,534       526,730  
Non-controlling interest in subsidiary
     1,258       1,448       1,406  
Total Equity
     529,769       524,982       528,136  
Preferred Stock of subsidiary
     21,027       21,027       21,027  
Long-term debt
     463,896       413,894       383,892  
Total Capitalization
     1,014,692       959,903       933,055  
Current Liabilities
                        
Current maturities of long-term debt
     -       20,000       20,000  
Notes payable
     -       35,500       76,000  
Accounts payable
     36,621       52,824       50,448  
Accrued interest
     6,080       5,899       5,964  
Dividends payable
     8,769       8,765       8,765  
Accrued vacation and payroll
     7,528       6,628       8,080  
Customer advances
     22,803       30,442       10,501  
Customer deposits
     8,446       8,445       8,328  
Regulatory liabilities
     30,575       4,275       11,225  
Fair value of derivative instruments
     14,177       15,759       -  
Accrued environmental remediation costs
     8,950       5,757       7,075  
Accrued income taxes
     19,354       441       -  
Deferred revenues
     6,642       8,827       6,528  
Accumulated deferred income tax
     -       -       4,173  
Other
     15,258       27,974       23,019  
Total Current Liabilities
     185,203       231,536       240,106  
Deferred Credits and Other Liabilities
                        
Regulatory liabilities - OPEB
     -       -       13,412  
Regulatory liabilities - other
     86,112       130,893       119,416  
Operating reserves
     4,620       5,155       5,222  
Accrued environmental remediation costs
     17,564       21,796       23,393  
Accrued OPEB costs
     54,298       52,645       29,470  
Accrued pension costs
     161,712       161,674       6  
Other
     12,104       12,478       12,389  
Total Deferred Credits and Other Liabilities
     336,410       384,641       203,308  
Accumulated Deferred Income Tax
     164,188       154,103       152,834  
Commitments and Contingencies
                        
Total Capitalization and Liabilities
     1,700,493       1,730,183       1,529,303  

The Notes to Financial Statements are an integral part hereof.


CH ENERGY GROUP CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
(In Thousands, except share and per share amounts)

   
CH Energy Group Common Shareholders
              
   
Common Stock $0.10 par value; 30,000,000 shares authorized
    
Treasury Stock
     Paid-In Capital     Capital Stock Expense     Retained Earnings     Accumulated Other Comprehensive Income / (Loss)     Non-controlling Interest     Total Equity  
   
Shares Issued
    
Amount
    
Shares Repurchased
    
Amount
                          
Balance at January 1, 2008
     16,862,087     $ 1,686       (1,100,087 )   $ (46,252 )   $ 351,230     $ (328 )   $ 215,639     $ 1,173     $ 1,345     $ 524,493  
Comprehensive income:
                                                                                
Net income
                                                     20,971               61       21,032  
Change in fair value:
                                                                                
Derivative instruments
                                                             682               682  
Investments
                                                             (1,208 )             (1,208 )
Reclassification adjustments for losses recognized in net income
                                                             (230 )             (230 )
Dividends declared on common stock ($2.16 per share)
                                                     (17,041 )                     (17,041 )
Treasury shares issued
                     20,774       855       (447 )                                     408  
Balance at June 30, 2008
     16,862,087     $ 1,686       (1,079,313 )   $ (45,397 )   $ 350,783     $ (328 )   $ 219,569     $ 417     $ 1,406     $ 528,136  
                                                                                 
Balance at January 1, 2009
     16,862,087     $ 1,686       (1,079,004 )   $ (45,386 )   $ 350,873     $ (328 )   $ 216,634     $ 55     $ 1,448     $ 524,982  
Comprehensive income:
                                                                                
Net income
                                                     21,664               (190 )     21,474  
Change in fair value:
                                                                                
Derivative instruments
                                                             58               58  
Investments
                                                                             -  
Reclassification adjustments for losses recognized in net income
                                                                             -  
Dividends declared on common stock ($2.16 per share)
                                                     (17,050 )                     (17,050 )
Treasury shares issued
                     6,676       327       (22 )                                     305  
Balance at June 30, 2009
     16,862,087     $ 1,686       (1,072,328 )   $ (45,059 )   $ 350,851     $ (328 )   $ 221,248     $ 113     $ 1,258     $ 529,769  

The Notes to Financial Statements are an integral part hereof.


CENTRAL HUDSON STATEMENT OF INCOME (UNAUDITED)
(In Thousands)

   
Three Months Ended
  
   
June 30,
  
   
2009
    
2008
  
Operating Revenues
  
 
    
 
  
Electric
   $ 108,597     $ 145,844  
Natural gas
     31,056       44,275  
Total Operating Revenues
     139,653       190,119  
                 
Operating Expenses
                
Operation:
                
Purchased electricity and fuel used in electric generation
     51,242       89,138  
Purchased natural gas
     19,301       31,465  
Other expenses of operation
     44,390       41,254  
Depreciation and amortization
     7,989       7,450  
Taxes, other than income tax
     9,363       9,132  
Total Operating Expenses
     132,285       178,439  
                 
Operating Income
     7,368       11,680  
                 
Other Income and Deductions
                
Interest on regulatory assets and other interest income
     1,866       1,436  
Other - net
     (1,202 )     (158 )
Total Other Income
     664       1,278  
                 
Interest Charges
                
Interest on other long-term debt
     4,568       5,049  
Interest on regulatory liabilities and other interest
     1,323       1,114  
Total Interest Charges
     5,891       6,163  
                 
Income Before Income Taxes
     2,141       6,795  
                 
Income Taxes
     924       2,604  
                 
Net Income
     1,217       4,191  
                 
Dividends Declared on Cumulative Preferred Stock
     242       242  
                 
Income Available for Common Stock
   $ 975     $ 3,949  

The Notes to Financial Statements are an integral part hereof.


CENTRAL HUDSON STATEMENT OF INCOME (UNAUDITED)
(In Thousands)

   
Six Months Ended
  
   
June 30,
  
   
2009
    
2008
  
Operating Revenues
  
 
    
 
  
Electric
   $ 265,350     $ 289,658  
Natural gas
     121,179       120,494  
Total Operating Revenues
     386,529       410,152  
                 
Operating Expenses
                
Operation:
                
Purchased electricity and fuel used in electric generation
     141,765       171,744  
Purchased natural gas
     84,126       84,603  
Other expenses of operation
     90,711       84,167  
Depreciation and amortization
     15,998       14,814  
Taxes, other than income tax
     19,330       18,434  
Total Operating Expenses
     351,930       373,762  
                 
Operating Income
     34,599       36,390  
                 
Other Income and Deductions
                
Interest on regulatory assets and other interest income
     2,611       2,328  
Other - net
     (1,561 )     438  
Total Other Income
     1,050       2,766  
                 
Interest Charges
                
Interest on other long-term debt
     9,348       10,138  
Interest on regulatory liabilities and other interest
     2,761       2,214  
Total Interest Charges
     12,109       12,352  
                 
Income Before Income Taxes
     23,540       26,804  
                 
Income Taxes
     9,729       10,866  
                 
Net Income
     13,811       15,938  
                 
Dividends Declared on Cumulative Preferred Stock
     485       485  
                 
Income Available for Common Stock
   $ 13,326     $ 15,453  

The Notes to Financial Statements are an integral part hereof.


CENTRAL HUDSON STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
(In Thousands)

 
Three Months Ended
  
 
June 30,
  
 
2009
  
2008
  
Net Income
   $ 1,217     $ 4,191  
Other Comprehensive Income
     -       -  
Comprehensive Income
   $ 1,217     $ 4,191  

 
Six Months Ended
  
 
June 30,
  
 
2009
  
2008
  
Net Income
   $ 13,811     $ 15,938  
Other Comprehensive Income
     -       -  
Comprehensive Income
   $ 13,811     $ 15,938  

The Notes to Financial Statements are an integral part hereof.


CENTRAL HUDSON STATEMENT OF CASH FLOWS (UNAUDITED)
(In Thousands)

   
Six Months Ended
  
   
June 30,
  
   
2009
    
2008
  
Operating Activities:
            
Net Income
   $ 13,811     $ 15,938  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation
     15,470       14,410  
Amortization
     528       404  
Deferred income taxes - net
     (13,394 )     11,450  
Provision for uncollectibles
     5,122       3,059  
Pension expense
     6,352       6,565  
OPEB expense
     5,056       5,226  
Regulatory liability - rate moderation
     -       (5,900 )
Regulatory asset amortization
     2,812       2,765  
Changes in operating assets and liabilities - net:
                
Accounts receivable, unbilled revenues and other receivables
     20,599       10,198  
Fuel, materials and supplies
     7,946       (212 )
Special deposits and prepayments
     1,261       5,375  
Prepaid income taxes
     -       (5,904 )
Accounts payable
     (12,702 )     11,660  
Accrued income taxes and interest
     15,974       (3,506 )
Customer advances
     (2,985 )     (9,179 )
Pension plan contribution
     (6,850 )     (12,762 )
OPEB contribution
     -       (4,200 )
Regulatory asset - MGP site remediations
     (1,970 )     (789 )
Deferred natural gas and electric costs
     30,912       (8,790 )
Customer benefit fund
     (9 )     (366 )
Other - net
     5,114       572  
Net cash provided by operating activities
     93,047       36,014  
Investing Activities:
                
Additions to utility plant
     (60,389 )     (37,730 )
Other - net
     (2,941 )     (1,093 )
Net cash used in investing activities
     (63,330 )     (38,823 )
Financing Activities:
                
Redemption of long-term debt
     (20,000 )     -  
(Repayments) borrowings of short-term debt - net
     (25,500 )     4,500  
Additional paid-in capital
     25,000       -  
Dividends paid on cumulative Preferred Stock
     (485 )     (485 )
Debt issuance costs
     (118 )     (7 )
Net cash (used in) provided by financing activities
     (21,103 )     4,008  
Net Change in Cash and Cash Equivalents
     8,614       1,199  
Cash and Cash Equivalents - Beginning of Period
     2,455       3,592  
Cash and Cash Equivalents - End of Period
   $ 11,069     $ 4,791  
Supplemental Disclosure of Cash Flow Information:
                
Interest paid
   $ 10,064     $ 10,955  
Federal and state income tax paid
   $ 7,417     $ 8,642  
Plant additions in liabilities
   $ 5,113     $ 12,523  

The Notes to Financial Statements are an integral part hereof.


CENTRAL HUDSON BALANCE SHEET (UNAUDITED)
(In Thousands)

   
June 30,
    
December 31,
    
June 30,
  
   
2009
    
2008
    
2008
  
                   
ASSETS
                  
Utility Plant
                  
Electric
   $ 888,772     $ 862,465     $ 832,509  
Natural gas
     274,251       263,874       257,348  
Common
     137,619       135,732       117,247  
      1,300,642       1,262,071       1,207,104  
Less: Accumulated depreciation
     379,502       369,925       362,363  
      921,140       892,146       844,741  
Construction work in progress
     57,358       53,778       70,346  
Net Utility Plant
     978,498       945,924       915,087  
                         
Non-Utility Property and Plant
     441       445       445  
Less: Accumulated depreciation
     31       32       31  
Net Non-Utility Property and Plant
     410       413       414  
                         
Current Assets
                        
Cash and cash equivalents
     11,069       2,455       4,791  
Accounts receivable from customers - net of allowance for doubtful accounts; $5.1 million, $4.0 million and $3.2 million, respectively
     64,420       85,352       71,834  
Accrued unbilled utility revenues
     8,542       12,657       7,372  
Other receivables
     2,774       3,447       3,681  
Fuel, materials and supplies - at average cost
     23,169       31,115       24,482  
Regulatory assets
     35,510       60,502       46,090  
Prepaid income tax
     -       -       5,904  
Fair value of derivative instruments
     -       -       9,656  
Special deposits and prepayments
     17,363       18,573       19,122  
Accumulated deferred income tax
     19,033       4,685       -  
Total Current Assets
     181,880       218,786       192,932  
                         
Deferred Charges and Other Assets
                        
Regulatory assets - pension plan
     181,083       197,934       44,078  
Regulatory assets - OPEB
     7,682       4,257       -  
Regulatory assets - other
     93,922       109,743       103,816  
Unamortized debt expense
     4,937       5,009       4,161  
Other investments
     9,374       7,697       9,719  
Other
     2,148       2,433       2,854  
Total Deferred Charges and Other Assets
     299,146       327,073       164,628  
Total Assets
   $ 1,459,934     $ 1,492,196     $ 1,273,061  

The Notes to Financial Statements are an integral part hereof.


CENTRAL HUDSON BALANCE SHEET (CONT'D) (UNAUDITED)
(In Thousands)

   
June 30,
    
December 31,
    
June 30,
  
   
2009
    
2008
    
2008
  
CAPITALIZATION AND LIABILITIES
                  
Capitalization
                  
Common Stock, 30,000,000 shares authorized; 16,862,087 shares issued and outstanding, $5 par value
   $ 84,311     $ 84,311     $ 84,311  
Paid-in capital
     199,980       174,980       174,980  
Retained earnings
     132,270       118,944       108,129  
Capital stock expense
     (4,961 )     (4,961 )     (4,961 )
Total Equity
     411,600       373,274       362,459  
                         
Cumulative Preferred Stock not subject to mandatory redemption
     21,027       21,027       21,027  
                         
Long-term debt
     413,896       413,894       383,892  
Total Capitalization
     846,523       808,195       767,378  
Current Liabilities
                        
Current maturities of long-term debt
     -       20,000       20,000  
Notes payable
     -       25,500       47,000  
Accounts payable
     30,332       42,913       40,045  
Accrued interest
     5,559       5,895       5,910  
Dividends payable - Preferred Stock
     242       242       242  
Accrued vacation and payroll
     4,694       4,896       5,330  
Customer advances
     6,589       9,574       1,663  
Customer deposits
     8,332       8,317       8,188  
Regulatory liabilities
     30,575       4,275       11,225  
Fair value of derivative instruments
     14,274       15,759       -  
Accrued environmental remediation costs
     8,819       5,563       6,838  
Accrued income taxes
     16,397       87       -  
Accumulated deferred income tax
     -       -       4,173  
Other
     7,406       21,284       15,696  
Total Current Liabilities
     133,219       164,305       166,310  
Deferred Credits and Other Liabilities