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                    SECURITIES AND EXCHANGE COMMISSION
                         WASHINGTON, D.C. 20549

                              -----------------_______________

                                FORM 10-Q

(Mark One)


/X/(MARK ONE)

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

For the quarterly period ended September 30, 1994FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1995

                                     OR

/ /[ ]          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

For the transition period fromFOR THE TRANSITION PERIOD FROM ___________ toTO _____________

                           Commission File No.COMMISSION FILE NO. 33-7591
                                 -----------------_______________

                          OGLETHORPE POWER CORPORATION

             (AN ELECTRIC MEMBERSHIP GENERATION & TRANSMISSION CORPORATION)
                 (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)(Exact name of registrant as specified in its charter)

           GEORGIA                                        58-1211925
      (State or other jurisdiction of                  (I.R.S. employer
       incorporation or organization)                 identification no.)

           POST OFFICE BOX 1349
         2100 EAST EXCHANGE PLACE
             TUCKER, GEORGIA                              30085-1349
     (Address of principal executive offices)             (Zip Code)

Registrant's telephone number, including area code:code       (404) 270-7600


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding  12  months (or for such shorter period that the  registrant  was
required  to  file  such  reports), and (2) has  been  subject  of  such  filing
requirements for the past 90 days.    YesYES  X      No
                                               -------       -------NO
                                         -----      -----
      Indicate  the  number of shares outstanding of each  of  the  registrant's
classes of common stock, as of the latest practicable date.  The Registrant
is a membership corporation and has no authorized or outstanding equity
securities.THE REGISTRANT IS A
MEMBERSHIP CORPORATION AND HAS NO AUTHORIZED OR OUTSTANDING EQUITY SECURITIES.

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                         OGLETHORPE POWER CORPORATION

                    INDEX TO QUARTERLY REPORT ON FORM 10-Q
                     FOR THE QUARTER ENDED SEPTEMBER 30, 1994MARCH 31, 1995


                                                                      PAGE NO.
                                                                      ________--------
PART I - FINANCIAL INFORMATION

   Item 1.  Financial Statements

        Condensed Balance Sheets as of September 30, 1994at March 31, 1995 (Unaudited)
        and December 31, 19931994                                              3

        Condensed Statements of Revenues and Expenses (Unaudited)
        for the Three Months Ended March 31, 1995 and Nine Months Ended
          September 30, 1994 and 1993                 5

        Condensed Statements of Cash Flows (Unaudited)
        for the NineThree Months Ended September 30,March 31, 1995 and 1994 and 1993                 6

        Notes to the Condensed Financial Statements                        7

   Item 2.  Management's Discussion and Analysis of
            Financial Condition and Results of Operations                  98


PART II - OTHER INFORMATION

   Item 5.  Other Information                                             1412

   Item 6.  Exhibits and Reports on Form 8-K                              1612


SIGNATURES                                                                1713


                                    2

PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

                          OGLETHORPE POWER CORPORATION
                            CONDENSED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)

                                    ASSETS
AT AT MARCH 31, DECEMBER 31, 1995 1994 ----------- ------------ (UNAUDITED) ELECTRIC PLANT, AT ORIGINAL COST: IN SERVICE $5,104,420 $5,100,299 LESS ACCUMULATED PROVISION FOR DEPRECIATION (1,264,679) (1,231,818) ---------- ---------- 3,839,741 3,868,481 NUCLEAR FUEL, AT AMORTIZED COST 100,483 105,683 PLANT ACQUISITION ADJUSTMENTS, AT AMORTIZED COST 6,010 6,275 CONSTRUCTION WORK IN PROGRESS 564,682 538,789 ---------- ---------- 4,510,916 4,519,228 ---------- ---------- INVESTMENTS AND FUNDS: BOND, RESERVE AND CONSTRUCTION FUNDS, AT MARKET 53,694 64,163 DECOMMISSIONING FUND, AT MARKET 62,096 59,164 INVESTMENT IN ASSOCIATED ORGANIZATIONS, AT COST 16,735 17,371 ---------- ---------- 132,525 140,698 ---------- ---------- CURRENT ASSETS: CASH AND TEMPORARY CASH INVESTMENTS, AT COST 62,240 190,642 OTHER SHORT-TERM INVESTMENTS, AT MARKET 17,107 - RECEIVABLES 91,240 90,998 INVENTORIES, AT AVERAGE COST 103,367 95,076 PREPAYMENTS AND OTHER CURRENT ASSETS 11,392 14,857 ---------- ---------- 285,346 391,573 ---------- ---------- DEFERRED CHARGES: PREMIUM AND LOSS ON REACQUIRED DEBT, BEING AMORTIZED 207,717 161,889 DEFERRED AMORTIZATION OF SCHERER LEASEHOLD 81,595 80,132 DISCONTINUED PROJECT, BEING AMORTIZED 25,885 26,342 DEFERRED DEBT EXPENSE, BEING AMORTIZED 21,683 20,936 OTHER 8,017 7,657 ---------- ---------- 344,897 296,956 ---------- ---------- $5,273,684 $5,348,455 ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED STATEMENTS. 3 OGLETHORPE POWER CORPORATION CONDENSED BALANCE SHEETS (DOLLARS IN THOUSANDS) EQUITY AND LIABILITIES
AT AT MARCH 31, DECEMBER 31, 1995 1994 ---------- ------------ (UNAUDITED) CAPITALIZATION: PATRONAGE CAPITAL (NET OF UNREALIZED LOSSES OF $2,324 AT MARCH 31, 1995 AND $3,567 AT DECEMBER 31, 1994 ON AVAILABLE-FOR-SALE SECURITIES) $ 319,201 $ 309,496 LONG-TERM DEBT 4,148,284 4,128,080 OBLIGATION UNDER CAPITAL LEASES 300,108 303,749 ---------- ---------- 4,767,593 4,741,325 ---------- ---------- CURRENT LIABILITIES: LONG-TERM DEBT AND CAPITAL LEASES DUE WITHIN ONE YEAR 85,761 90,086 DEFERRED MARGINS AND VOGTLE SURCHARGE TO BE REFUNDED WITHIN ONE YEAR 15,014 21,476 ACCOUNTS PAYABLE 41,822 52,921 ACCRUED INTEREST 20,229 100,010 ACCRUED AND WITHHELD TAXES 7,801 1,566 ENERGY COSTS BILLED IN EXCESS OF ACTUALS 883 2,125 OTHER CURRENT LIABILITIES 10,917 18,177 ---------- ---------- 182,427 286,361 ---------- ---------- DEFFERED CREDITS AND OTHER LIABILITIES: GAIN ON SALE OF PLANT, BEING AMORTIZED 62,624 63,209 SALE OF INCOME TAX BENEFITS, BEING AMORTIZED 56,217 58,236 ACCUMULATED DEFERRED INCOME TAXES 65,510 65,510 DEFERRED MARGINS AND VOGTLE SURCHARGE 15,568 15,568 DECOMMISSIONING RESERVE 100,944 96,291 OTHER 22,801 21,955 ---------- ---------- 323,664 320,769 ---------- ---------- $5,273,684 $5,348,455 ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED STATEMENTS. 4 OGLETHORPE POWER CORPORATION CONDENSED STATEMENTS OF REVENUES & EXPENSES (UNAUDITED) (DOLLARS IN THOUSANDS)
THREE MONTHS ENDED MARCH 31, -------------------- 1995 1994 -------- --------- OPERATING REVENUES: SALES TO MEMBERS $227,849 $225,458 SALES TO NON-MEMBERS 29,698 42,160 -------- -------- TOTAL OPERATING REVENUES 257,547 267,618 -------- -------- OPERATING EXPENSES: FUEL 47,517 51,232 PRODUCTION 32,243 32,118 PURCHASED POWER 59,947 53,539 DEPRECIATION AND AMORTIZATION 32,884 33,051 TAXES OTHER THAN INCOME TAXES 5,891 6,105 OTHER OPERATING EXPENSES 10,383 9,691 -------- -------- TOTAL OPERATING EXPENSES 188,865 185,736 -------- -------- OPERATING MARGIN 68,682 81,882 -------- -------- OTHER INCOME (EXPENSE): INTEREST INCOME 3,312 2,951 AMORTIZATION OF DEFERRED MARGINS 6,462 6,641 ALLOWANCE FOR EQUITY FUNDS USED DURING CONSTRUCTION 761 681 OTHER 2,834 5,475 -------- -------- TOTAL OTHER INCOME 13,369 15,748 -------- -------- INTEREST CHARGES: INTEREST ON LONG-TERM OBLIGATIONS 83,008 86,302 ALLOWANCE FOR DEBT FUNDS USED DURING CONSTRUCTION (9,419) (8,856) -------- -------- NET INTEREST CHARGES 73,589 77,446 -------- -------- NET MARGIN $ 8,462 $ 20,184 ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED STATEMENTS. 5 OGLETHORPE POWER CORPORATION CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 (DOLLARS IN THOUSANDS)
1995 1994 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: NET MARGIN $ 8,462 $ 20,184 -------- -------- ADJUSTMENTS TO RECONCILE NET MARGIN TO NET CASH PROVIDED BY OPERATING ACTIVITIES: DEPRECIATION AND AMORTIZATION 47,704 47,213 AMORTIZATION OF DEFERRED MARGINS (6,462) (6,641) ALLOWANCE FOR EQUITY FUNDS USED DURING CONSTRUCTION (761) (681) OTHER (843) (4,690) CHANGE IN NET CURRENT ASSETS, EXCLUDING LONG-TERM DEBT DUE WITHIN ONE YEAR AND DEFERRED MARGINS AND VOGTLE SURCHARGE TO BE REFUNDED WITHIN ONE YEAR: RECEIVABLES (242) 727 INVENTORIES (8,291) 1,207 PREPAYMENTS AND OTHER CURRENT ASSETS 3,465 (6,937) ACCOUNTS PAYABLE (11,099) (7,600) ACCRUED INTEREST (79,781) (85,849) ACCRUED AND WITHHELD TAXES 6,235 (1,573) ENERGY COST BILLED IN EXCESS OF ACTUAL (1,242) (1,814) OTHER CURRENT LIABILITIES (7,260) (30,095) ------- -------- TOTAL ADJUSTMENTS (58,577) (96,733) ------- -------- NET CASH USED IN OPERATING ACTIVITIES (50,115) (76,549) ------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: PROPERTY ADDITIONS (36,086) (48,860) NET PROCEEDS FROM BOND, RESERVE AND CONSTRUCTION FUNDS 11,712 31,372 DECREASE IN INVESTMENT IN ASSOCIATED ORGANIZATIONS 636 273 INCREASE IN OTHER SHORT-TERM INVESTMENTS (17,107) - (INCREASE) DECREASE IN DECOMMISSIONING FUND (1,041) 1,842 OTHER - (3,434) ------- -------- NET CASH USED IN INVESTING ACTIVITIES (41,886) (18,806) ------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: DEBT PROCEEDS, NET 88,545 243,989 DEBT PAYMENTS (124,534) (318,056) REFUND OF VOGTLE SURCHARGE - (1,005) OTHER (412) 97 ------- -------- NET CASH USED IN FINANCING ACTIVITIES (36,401) (74,975) ------- -------- NET DECREASE IN CASH AND TEMPORARY CASH INVESTMENTS (128,402) (170,330) CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF PERIOD 190,642 244,173 -------- -------- CASH AND TEMPORARY CASH INVESTMENTS AT END OF PERIOD $ 62,240 $ 73,843 ======== ======== CASH PAID FOR: INTEREST (NET OF AMOUNTS CAPITALIZED) $149,265 $161,096 INCOME TAXES - -
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED STATEMENTS. 6 OGLETHORPE POWER CORPORATION NOTES TO THE CONDENSED FINANCIAL STATEMENTS SEPTEMBER 30,MARCH 31, 1995 AND 1994 AND 1993 (A) The condensed financial statements included herein have been prepared by Oglethorpe Power Corporation (Oglethorpe), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). In the opinion of management, the information furnished herein reflects all adjustments (which included only normal recurring adjustments) necessary to present fairly, in all material respects, the results for the periods ended September 30, 1994March 31, 1995 and 1993.1994. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such SEC rules and regulations, although Oglethorpe believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in Oglethorpe's latest Annual Report on Form 10-K, as filed with the SEC. (B) Oglethorpe adoptedIn March 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 115,121, "Accounting for Certain Investments in Debtthe Impairment of Long-Lived Assets and Equity Securities", asfor Long-Lived Assets to Be Disposed Of". This Statement imposes stricter criteria for regulatory assets by requiring that such assets be probable of future recovery at each balance sheet date. Oglethorpe anticipates adopting this standard on January 1, 1994. Under this Statement, investment securities held by Oglethorpe are classified as either available-for-sale or held-to-maturity. Available-for-sale securities are carried at market value with unrealized gains1996 and losses, net of any tax effect, added to or deducted from patronage capital. Unrealized gains and losses from investment securities held in the decommissioning fund, which are also classified as available- for-sale, are directly added to or deducted from the decommissioning reserve. Held-to-maturity securities are carried at cost. All realized and unrealized gains and losses are determined using the specific identification method. In accordance with the provisions of this Statement, the amounts classified as bond, reserve and construction funds and decommissioning fund on the accompanying Condensed Balance Sheets are carried at cost as of December 31, 1993. (C) Oglethorpe's share of the undiscounted cost of decommissioning co-owned nuclear facilities, assuming decommissioning occurs promptly after the unit is taken out of service, is estimated at approximately $254 million for Hatch Unit No. 1, $356 million for Hatch Unit No. 2, $416 million for Vogtle Unit No. 1 and $543 million for Vogtle Unit No. 2. The years in which the above plants are expected to begin decommissioning are 2014, 2018, 2027 and 2029, respectively. The annual provision for decommissioning, which totaled $5.9 million in 1993, is currently recovered from Members as depreciation expense. In developing the 7 amount of the annual provision, the escalation rate was assumed to be 4% and return on trust assets was assumed to be 8%. Oglethorpe's management is of the opinion that any changes in cost estimates of decommissioning will be fully recovered in future rates. Beginning in the years noted above in which the units begin decommissioning, the expected timing of payments for decommissioning costs will extend for a period of 9 to 14 years. Oglethorpe's management does not expect such payments tothat adoption will have an adversea material impact on liquiditythe financial position or capital resources. 8results of operations based on the current regulatory structure in which Oglethorpe operates. See Note 1.m. of Notes to Financial Statements in Oglethorpe's Annual Report on Form 10-K for the year ending December 31, 1994 for a summary of Oglethorpe's regulatory assets and liabilities. 7 ItemITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1995 Oglethorpe's net margin for the quarter ended September 30, 1994March 31, 1995 was $4.4$8.5 million as compared to a net loss of $43,000$20.2 million for the same period of 1993.1994. Historically, most of Oglethorpe's annual net margin (before cumulative effectwas earned by May 31 of each year. This pattern of earnings occurred because non-Member revenues declined significantly on June 1 of each year through the change in accounting for income taxes) for the nine months ended September 30, 1994 was $38.1 million as compared to $26.7 million for the first nine monthsend of 1993. Net margin was higher for the 1994 periodssuch year due to unbudgeted savingsscheduled reductions in interest costs as a result of the refinancing efforts discussed under "Interest Charges" below. OPERATING REVENUES The changes in Member revenues for the three month and nine month periods ended September 30, 1994 as comparedcapacity sell-back to the same periods of 1993 were the result of lower energy revenues and increased billings of fixed costs resulting from the decline in Sell-back revenues from Georgia Power Company (GPC) while monthly fixed costs recovered from the Member Systems (Members) remained virtually unchanged throughout the year. (See discussion of non-Member revenues from GPC under "Operating Revenues" below.) Oglethorpe's capacity revenues from the Members reflect recovery in nearly equal monthly amounts of all budgeted fixed costs plus the annual net margin goal, less fixed costs projected to be recovered from GPC pursuant to plant operating agreements (as discussed below). Oglethorpe implementedagreements. The capacity sell-back arrangement with GPC will expire on May 31, 1995. The minimal non-Member revenues from GPC in 1995 has resulted in net margins being earned in a new ratemore even manner throughout the year as opposed to being earned primarily during the first five months in January 1994 which has increased revenues to addressprior years. Oglethorpe's budgeted net margin for the Members' increasing share of fixed costs. Member energyyear 1995 is approximately the same level as 1994. OPERATING REVENUES Total operating revenues have declined in the first quarter of 1995 compared to the first quarter of 1994 as a resultdue to the change in the pattern of capacity cost recovery described above. Member revenues increased slightly during the flow throughfirst quarter of reduced fuel costs and in addition,1995 compared to the first quarter of 1994. Energy sales were virtually unchanged for the three month period, due to lower megawatt-hour (MWh) sales to Members. For the three months ended September 30, 1994, energy revenues from Members declined by 18.4%first quarter of 1995 compared to the same period of 1993 whereas corresponding MWh sales decreased by only 13%. For the nine month period ended September 30, 1994, energy revenues were 9.4% lower than in the prior year despite a 1.0% increase in MWh sales. See "Operating Expenses" below for a discussion of the reduction in average fuel costs.1994. Sales to non-Members are primarily made pursuant to three different types of contractual arrangements with GPC and from energy sales to other non-Member utilities. The following table summarizes the amounts of non-Member revenues from these sources for the three monthsfirst quarter of 1995 and nine months ended September 30, 1994 and 1993:1994:
THREE MONTHS ENDED SEPT. 30, NINE MONTHS ENDED SEPT. 30,Three Months Ended March 31, ---------------------------- --------------------------1995 1994 1993 1994 1993 ---- ---- ---- ------------ -------- (dollars in thousands) Plant operating agreements $ 5,557 $19,895 $39,076 $ 86,0705,892 $19,094 Power supply arrangements 4,237 4,715 19,696 35,7987,316 9,237 Transmission agreements 2,771 3,392 8,503 12,7062,995 3,199 Other utilities 9,863 8,006 31,191 20,97513,495 10,630 ------- ------- -------- ------- Total $22,428 $36,008 $98,466 $155,549 ------- ------- ------- -------- ------- ------- ------- --------$29,698 $42,160 ======= =======
98 The decreasesdecrease in revenues from non-Members for both comparable periods werein the first quarter of 1995 compared to the same period of 1994 was primarily attributable to lower revenues from GPC pursuant to plant operating agreements. Under the plant operating agreements, GPC purchases capacity and energy from Oglethorpe on a declining scale in the early years of operation of certain co-owned generating units. The decreasesdecrease in revenues of this type werewas due to scheduled reductions in sell-back percentages for both of the Plant Vogtle units and for Plant Scherer Unit No. 2. The second source of non-Memberunits. Effective June 1, 1995, revenues is derived pursuant to power supply arrangements with GPC. These revenues are derived, for the most part, from energy sales arising from dispatch situations whereby GPC causes co-owned coal-fired generating resources to be operated when Oglethorpe's system does not require all of its contractual entitlement to the generation. These revenues essentially represent reimbursement of costs to Oglethorpe since, under the operating agreements, Oglethorpe is responsible for its share of fuel costs any time a unit operates. See the discussion under "Operating Expenses" below of the lower average fuel costs of the coal-fired generating units in 1994. Revenues from sales of this type to GPC were lower for the nine month period ended September 30, 1994 due to the fact that Oglethorpe retained much of its share of the output from the Plant Scherer and Wansley units because the lower average fuel costs made those units more attractive than certain purchased resources. Pursuant to the amendments to the Plant Scherer ownership and operating agreements (effective October 1993), OPC elected to separately dispatch its ownership interest in Plant Scherer beginning May 1, 1994. This election removed Plant Scherer as a source for energy sales to GPC pursuant to the power supply arrangements. Accordingly, parts of the decreases in both comparable periods are due to the Plant Wansley units being the only source for this type of sale after May 1, 1994.plant operating agreements will end. Revenues from other non-Member utilities increased substantially due to a 47%55% increase in MWh sales in the ninethree months ended September 30, 1994 asMarch 1995 compared to the same period of 1993.1994. Oglethorpe is continuing to pursue energy and capacity sales to other utilities as a means of reducing amounts that must be recovered from Members. OPERATING EXPENSES The decreasesslight increase in total operating expenses for the three months and nine months ended September 30, 1994 as compared to the same periods of 1993 werewas primarily attributable to lower energy costs due to greater utilization of owned generation instead of purchased power resources. Most of the increases in fuel expenses for both comparable periods were attributable to substantially greater generation from Plant Scherer Units No. 1 and 2. Output from these units was approximately 213,000 and 1.7 million MWh higher, respectively, for the three months and nine months ended September 30, 1994. Oglethorpe began receiving shipments at Plant Scherer of lower-priced coal from the mining regions of the western United States in the last quarter of 1993. Due primarily to the use of this lower-priced coal, the average fuel cost for the Plant Scherer units decreased by approximately 9% 10 from last year's third quarter and by 10% from the first nine months of 1993. The average fuel cost for the Plant Wansley units also decreased from 1993 levels, by 9% in the third quarter and by 11% in the first nine months. These decreases were the result of increased spot purchases of coal. The significant increase in coal-fired generation (prompted by declining average fuel costs) as well as declining sales from these coal-fired resources to GPC pursuant to power supply arrangements (see discussion under "Operating Revenues" above) have resulted in substantially lower utilization of purchased power resources. Energy purchases decreased by 41% and 43%, respectively, in the three months and nine months ended September 30, 1994 as compared to the same periods of 1993. Other Income Other income was higher in 1994 primarily as a result of an increase in the amount of deferred margins being amortized. Oglethorpe's Board of Directors authorizes the amount of deferred margins to be returned to the Members each year. For 1994, the annual amount being returned is $19.5 million compared to $4.1 million for 1993. Interest income declined due to lower average cash balances. (See "Assets" under FINANCIAL CONDITION for a discussion of the change in cash balances.) Interest Charges The decrease in net interest charges resulted from the refinancing efforts completed in the fourth quarter of 1993 andpurchased power. Purchased power expenses increased in the first quarter of 1995 primarily as the result of capacity and energy purchases from Hartwell Energy Limited Partnership (Hartwell). The agreement to purchase capacity and energy from Hartwell commenced in April 1994, therefore, there were no corresponding purchases for the first quarter of 1994. In addition, there was a 7% increase in MWh purchases in 1995 compared to 1994. OTHER INCOME The decrease in other income was due to the completion of amortization in October 1994 of a gain on the sale of Plant Scherer common facilities. For a discussion of the refinancing transactions,gain on the sale of Plant Scherer common facilities, see the "Management's Discussion and AnalysisNote 6 of Notes to Financial Condition and results of Operations"Statements in Oglethorpe's Annual Report on Form 10-K for the year ending December 31, 1994. MEMBER CONTRACTS As stated in the Annual Report on Form 10-K for the fiscal year ended December 31, 1993. As1994, in response to an increasingly competitive utility environment, Oglethorpe has been discussing the need for a resultmore flexible power supply arrangement with its Members. The Oglethorpe Board of Directors has authorized the study of several options which would alter the existing contractual relationships between Oglethorpe and the Members. Management and the Board of Directors are continuing to develop these options under which the existing "all- requirements" wholesale power contract would be changed to allow a Member to elect to meet its future capacity and energy requirements above current levels with Member-owned generation or through purchases from Oglethorpe or from other power suppliers. Management and the Board of Directors also are continuing to develop specific implementation procedures for the existing bylaw provision that 9 grants a Member the right to withdraw from membership in Oglethorpe upon satisfying certain conditions. Oglethorpe's refinancing transactions,willingness to consider the average interest rateabove changes in its power supply arrangements with its Members is predicated on long-term debt declinedthe Members' commitment to honor their current financial obligations to Oglethorpe under their existing wholesale power contracts. Under the options currently being evaluated, each Member or withdrawing Member would remain financially responsible for and required to purchase all capacity and related energy from 8.11% at September 30, 1993Oglethorpe's existing plants, committed projects and existing power supply contracts based on a fixed percentage allocation. The methodology for allocating costs of existing and committed resources among the 39 Members was approved by the Oglethorpe Board of Directors on May 8, 1995 for implementation as early as January 1, 1996. Since the Members must maintain responsibility for their allocated portions of all current financial obligations to 7.16% at September 30, 1994. Allowance for debt funds used during construction continues to increase in proportionOglethorpe, Oglethorpe's future revenues associated with the Members' current obligations would be unaffected. However, to the levelextent the Members choose to secure their projected load growth from sources other than Oglethorpe, the growth in Oglethorpe's revenues would decrease as would the related expenses. The Board of investmentDirectors is expected to address these revisions to the existing wholesale power contract, withdrawal procedures and other implementation issues during the next several months; however, any action Oglethorpe's Board of Directors and the Members might take relating to these options cannot be predicted at the Rocky Mountain Project, a pumped storage hydroelectric facility.this time. FINANCIAL CONDITION Total assets and total equity and liabilities as of September 30, 1994March 31, 1995 were $5.2$5.3 billion which was $83$75 million less than the total at December 31, 1993. Assets The increase in construction work in progress is primarily1994. This reduction was the result of propertythe payment of interest on long-term debt accrued at year-end on the first business day of January 1995. ASSETS Property additions duringfor the nine-month periodfirst quarter of $62.4 million for Rocky Mountain Project construction. Oglethorpe is nearing completion of construction of the Rocky Mountain Project. Based on current arrangements, Oglethorpe's ultimate ownership interest upon completion is 11 expected to be approximately 75%, with GPC owning the remaining 25%. As of September 30, 1994, the Rocky Mountain Project was 97% complete, and Oglethorpe's investment was approximately $4771995 totaled $36 million. The current schedule anticipates completion and commercial operation of the three unitsConstruction of the Rocky Mountain Project in early to mid-1995. Construction at(Rocky Mountain), a pumped storage hydroelectric facility, accounted for $18 million of this amount. Borrowings under the loan commitment for Rocky Mountain Projecttotaled $59 million in the first quarter of 1995. Rocky Mountain was approximately 99% complete as of March 31, 1995. The initial unit of Rocky Mountain is currently scheduled for commercial operation on schedule and under budget.June 1, 1995. All three units of Rocky Mountain are scheduled to be available for use during peak periods this summer. The decrease in bond, reserve and construction funds resulted primarily resulted from the utilization of a portion of the debt service reserve funds for debt service payments. The available funds resulted from an interest rate swap refinancing projectsproject which did not require a debt service reserve fund or which required a lower debt service reserve fund than the refunded bonds.fund. 10 The decrease in cash and temporary cash investments is partlywas primarily due to the December 31, 19931994 Federal Financing Bank (FFB) interest payment being made as due on January 3, 19941995 and partly due to premiums paidthe prepayment of two FFB advances in connection with FFB note modifications and a pollution control bond (PCB) refunding.January 1995. For a discussion of the refinancing transactions, see the "Management's Discussion and AnalysisNote 5 of Notes to Financial Condition and Results of Operations"Statements in Oglethorpe's Annual Report on Form 10-K for the year endedending December 31, 1993.1994. Other short-term investments represent investments whose maturity periods exceed Oglethorpe's policy of three months or less for classification as cash equivalents. There were no corresponding investments in 1994. The increase in the premium and loss on reacquired debt resulted from premiums paid in connection with both FFB note modifications and the PCBprepayments, and from a pollution control bond (PCB) refunding. Equity and Liabilities For a discussion of unrealized losses on available-for-sale securities see Note B of Notes to the Condensed Financial Statements. Long-term debt due within one year decreased due to normal maturities of PCBs and mortgage notes payable to the FFB.EQUITY AND LIABILITIES Deferred margins and Vogtle surcharge to be refunded within one year decreased by $17.3$6.4 million which is the amount that was refunded to the Members for the ninefirst three months ended September 30, 1994. See "Other Income" under RESULTS OF OPERATIONS forof 1995. Accounts payable declined as of March 31,1995 as a discussionresult of normal variations in the 1994 amortizationtiming of deferred margins. For a description of the Vogtle Surcharge, see Note 1 of Notes to Financial Statements in Oglethorpe's Annual Report on Form 10-K for the year ended December 31, 1993.payables activity. Accrued interest decreased as discussed under cash and temporary cash investments above. Accrued and withheld taxes increased as a result of the normal monthly accruals of property taxes, which are generally paid in the lastfourth quarter of the year. 12 Energy costs billed in excess of actuals decreased as a net result of the refunding to Members of amounts over-collected in 1993 and the realization of 1994actual energy cost savings compared tocosts exceeding budgeted amounts. The decrease in othercosts by $1.2 million. Other current liabilities is partly due to an $11 million refund to GPCdecreased as a result of an option payment related to the canceled Pickens County Pumped Storage Hydroelectric Project and partly due to normal timing variations. Changes in Liquidity In September 1994, Oglethorpe reassessed its overall liquidity needs and determined that its commercial paper program (which then authorized the issuance of up to $355 million) was higher than needed. Under its current program, Oglethorpe may issue commercial paper not to exceed $300 million outstanding at any time. 13activity. 11 PART II - OTHER INFORMATION ITEM 5. OTHER INFORMATION MEMBER RELATIONS As stated in its Quarterly ReportNEW OFFICER OF OGLETHORPE Gary M. Bullock was elected on Form 10-Q forMarch 31, 1995 as the period ended June 30, 1994, Oglethorpe and its Members believe that changes in the industry, along with the growing diversity of needs of the Members, make it beneficial to study the feasibility of altering certain aspects of the relationship between Oglethorpe and its Members. Cobb EMC, Snapping Shoals EMC, and Walton EMC, three large Membersnew Secretary-Treasurer of Oglethorpe have initiatedfor a feasibility study of, among other things, separating from Oglethorpe by acquiring their pro rata shares of Oglethorpe's assets and either paying or assuming their corresponding portions of Oglethorpe's debt. Oglethorpe has furnished data to these Members to be used in their study. The Oglethorpe Board of Directors recently reviewed several alternatives to the relationship between Oglethorpe and some or all of the Members, including the three Members' asset acquisition concept. Oglethorpe's preliminary analysis indicates a lack of feasibility of the asset acquisition concept. Accordingly, the Board directed the Oglethorpe staff to limit its study to two other alternatives. The first is a study of the feasibility of a change in the current all-requirements Wholesale Power Contracts between Oglethorpe and each of the Members to allow for some portion of any Member's future capacity and energy to be supplied from sources other than Oglethorpe, including the use of dispersed generation. Initial analysis indicates some economics may be available to Oglethorpe and the Members through a small amount of Member-owned, Oglethorpe-dispatched dispersed generation. Amendments to the Wholesale Power Contract to permit this type of generation may, therefore, prove to be desirable. The second alternative authorized by the Board to be studied involves the development of specific implementation procedures for the existing bylaw provision that grants any Member the right to withdraw from Oglethorpe upon satisfying certain conditions. These conditions include, but are not limited to, satisfying or making adequate provisions for the satisfaction of the Members' obligations under their Wholesale Power Contract. The Board directed the staff to consider a contract by which a Member could withdraw and freeze its power purchase obligation at its current pro rata share of existing plants, committed generating projects and power supply contracts. The results of Oglethorpe's and any Member's studies and any action Oglethorpe and the Members might take based thereon cannot be predicted at this time. However, Oglethorpe's Board of Directors must approve any changes to the current Wholesale Power Contracts and intends that any new arrangements be structured so as not to have a material adverse effect on Oglethorpe or the other Members. The Rural Electrification Administration (REA) must also approve any changes to these contracts. 14 The three Members who have expressed an interest in considering altering their relationship with Oglethorpe have stated their commitment to Oglethorpe and REA to honor their current financial obligations to Oglethorpe under their Wholesale Power Contracts. DISPERSED GENERATION Oglethorpe's Board of Directors has adopted a policy to allow for greater use of dispersed generation units installed by Oglethorpe's Members. Such policy has been submitted to REA for approval. If permitted by REA and subject to any other required approvals, such units could be used to maintain reliability of electric service during emergencies on a Member's distribution system, to serve specific customer needs, or by Oglethorpe to serve the demands of Members on its system. The installation and use of dispersed generation units by any Member would also be governed by other procedures to be developed and individual contracts with the Members, giving Oglethorpe control of the dispersed generation units to meet system requirements and emergencies. Some of Oglethorpe's Members, including Cobb EMC, Snapping Shoals EMC and Walton EMC, have installed small diesel generating units. The aggregate capacity of these units amounts to approximately 1% of Oglethorpe's total capacity requirements. During the 1994 summer season, some or all of these units were operated. While it is possible to operate such units in a manner that violates the existing Wholesale Power Contracts between such Members and Oglethorpe, the Members involved have assured Oglethorpe that the manner of operation was not in violation of the Wholesale Power Contract. At present, Oglethorpe has not been able to make any such determination but has requested more specific information from these Members in order to make its own determination as to whether any violation occurred. Each of the concerned Members has agreed with Oglethorpe that they will not operate such units in violation of the Wholesale Power Contracts and has agreed to furnish Oglethorpe with such information as is required for Oglethorpe to complete its review of the matter. Oglethorpe intends to enforce the Wholesale Power Contracts. Oglethorpe has advised REA of the situation and intends to consult with REA as more information is developed. With the exception of Snapping Shoals EMC, all of the Members involved in this matter remain REA borrowers. As discussed above under "Member Relations", Oglethorpe and certain of its Members continue to study the feasibility of altering certain aspects of their relationship. The installation and use of generating units such as those discussed above is likely to be encompassed within any resulting revision to the relationship. 15 ELECTRIC RATES As required by the Wholesale Power Contract with each Member, Oglethorpe is currently engaged in the annual review of its wholesale rates to Members. The rates have a capacity charge and an energy charge. The capacity charge is a proportional allocation of fixed costs over the previous year's billing demand for each Member. The energy charge is the projected energy cost (primarily fuel) over the projected kilowatt-hour sales for 1995. Oglethorpe is in the process of developing its 1995 budget and based on current estimates, management expects a net increase in fixed costs for 1995. Because of this increase and the weather-related decline in the Members' 1994 peak demand, Oglethorpe's capacity rate for 1995 is expected to increase. However, because of increasing energy sales and decreasing fuel costs, management expects average Member revenues (measured in cents per kilowatt-hour) to remain constant with 1994 levels. Oglethorpe's Board of Directors is scheduled to take action on the 1995 capacity rate at its December meeting. The level of any capacity rate increase will also depend upon the amounts of credits for deferred margins elected to be taken by the Members in 1995. POWER PURCHASE ARRANGEMENTS Oglethorpe currently purchases 1,250 MW of capacity and associated energy from GPC under the Block Power Sale Agreement. Because Oglethorpe intends to obtain more economical alternatives, it has, pursuant to the terms of such Agreement, given notice of its election to reduce its purchases from GPC by 250 MW beginning September 1, 1996.one-year term. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS NUMBER DESCRIPTIONNumber Description - --------- ----------- +4.10.4(d) Third Amendment to First Amended and Restated Letter of Credit Reimbursement Agreement, dated April 15, 1995, between Oglethorpe and Credit Suisse. 27.1 Financial Data Schedule (for SEC use only). ___________________ + Pursuant to 17 C.F.R. 229.601(b)(4)(iii), this document is not filed herewith, however the registrant hereby agrees that such document will be provided to the Commission upon request. (b) REPORTS ON FORMReports on Form 8-K No reports on Form 8-K were filed by Oglethorpe for the quarter ended September 30, 1994. 16March 31, 1995. 12 SIGNATURES 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. Oglethorpe Power Corporation (An Electric Membership Generation & Transmission Corporation)
Date: NOVEMBER 10, 1994 By: /s/ T. D. Kilgore ------------------ T. D. Kilgore President and Chief Executive Officer (Principal Executive Officer) Date: NOVEMBER 10, 1994 /s/ John S. Dean, Sr. --------------------- John S. Dean, Sr. Secretary-Treasurer (Principal Financial Officer) Date: NOVEMBER 10, 1994 /s/ Eugen Heckl ---------------Date: May 12, 1995 By: /s/ T. D. Kilgore ------------------------------------- T. D. Kilgore President and Chief Executive Officer (Principal Executive Officer) Date: May 12, 1995 /s/ Gary M. Bullock ------------------------------------- Gary M. Bullock Secretary-Treasurer (Principal Financial Officer) Date: May 12, 1995 /s/ Eugen Heckl ------------------------------------- Eugen Heckl Senior Vice President and Chief Financial Officer (Principal Financial Officer)
17 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS OGLETHORPE POWER CORPORATION CONDENSED BALANCE SHEETS (DOLLARS IN THOUSANDS) ASSETS
AT AT SEPTEMBER 30, DECEMBER 31, 1994 1993 ------------- ------------ (UNAUDITED) ELECTRIC PLANT, AT ORIGINAL COST: IN SERVICE $5,094,390 $5,047,739 LESS ACCUMULATED PROVISION FOR DEPRECIATION (1,205,290) (1,110,296) ------------- ------------ 3,889,100 3,937,443 NUCLEAR FUEL, AT AMORTIZED COST 105,447 110,177 PLANT ACQUISITION ADJUSTMENTS, AT AMORTIZED COST 6,540 7,336 CONSTRUCTION WORK IN PROGRESS 521,604 450,965 ------------- ------------ 4,522,691 4,505,921 INVESTMENTS AND FUNDS: BOND, RESERVE AND CONSTRUCTION FUNDS, AT MARKET 78,070 110,390 DECOMMISSIONING FUND, AT MARKET 54,803 56,911 INVESTMENT IN ASSOCIATED ORGANIZATIONS, AT COST 17,947 19,123 OTHER 486 486 ------------- ------------ 151,306 186,910 CURRENT ASSETS: CASH AND TEMPORARY CASH INVESTMENTS, AT COST 86,654 244,173 RECEIVABLES 90,311 82,274 INVENTORIES, AT AVERAGE COST 90,600 86,468 PREPAYMENTS AND OTHER CURRENT ASSETS 16,261 14,763 ------------- ------------ 283,826 427,678 DEFERRED CHARGES: PREMIUM AND LOSS ON REACQUIRED DEBT, BEING AMORTIZED 161,746 91,981 DEFERRED AMORTIZATION OF SCHERER LEASEHOLD 77,989 71,559 DEFERRED DEBT EXPENSE, BEING AMORTIZED 19,038 21,527 DISCONTINUED PROJECT, BEING AMORTIZED 17,257 18,314 OTHER 6,675 -- ------------- ----------- 282,705 203,381 ------------- ----------- $5,240,528 $5,323,890 ------------- ----------- ------------- -----------
The accompanying notes are an integral part of these condensed statements. 3 OGLETHORPE POWER CORPORATION CONDENSED BALANCE SHEETS (DOLLARS IN THOUSANDS) EQUITY AND LIABILITIES
AT AT SEPTEMBER 30, DECEMBER 31, 1994 1993 ------------- ------------ (UNAUDITED) CAPITALIZATION: PATRONAGE CAPITAL AND MEMBERSHIP FEES (NET OF UNREALIZED LOSSES OF $ 3,129 ON AVAILABLE-FOR-SALE SECURITIES) $324,933 $289,982 LONG-TERM DEBT 4,088,816 4,058,251 OBLIGATION UNDER CAPITAL LEASES 303,677 303,458 ------------ ------------ 4,717,426 4,651,691 ------------ ------------ CURRENT LIABILITIES: LONG-TERM DEBT DUE WITHIN ONE YEAR 68,246 78,644 DEFERRED MARGINS AND VOGTLE SURCHARGE TO BE REFUNDED WITHIN ONE YEAR 4,261 21,577 ACCOUNTS PAYABLE 53,589 62,186 ACCRUED INTEREST 23,161 108,702 ACCRUED AND WITHHELD TAXES 21,400 9,401 ENERGY COSTS BILLED IN EXCESS OF ACTUALS 6,313 11,456 OTHER CURRENT LIABILITIES 11,866 40,234 ------------ ----------- 188,836 332,200 ------------ ----------- DEFFERED CREDITS AND OTHER LIABILITIES: GAIN ON SALE OF PLANT, BEING AMORTIZED 63,795 65,550 GAIN ON SALE OF SCHERER COMMON FACILITIES, BEING AMORTIZED - 7,644 SALE OF INCOME TAX BENEFITS, BEING AMORTIZED 60,761 66,838 ACCUMULATED DEFERRED INCOME TAXES 65,510 65,510 DEFERRED MARGINS AND VOGTLE SURCHARGE 26,283 26,283 DECOMMISSIONING RESERVE 94,009 90,476 OTHER 23,908 17,698 ----------- ----------- 334,266 339,999 ----------- ----------- $5,240,528 $5,323,890 ----------- ----------- ----------- -----------
The accompanying notes are an integral part of these condensed statements. Certain prior year amounts have been reclassified to conform with current year presentation. 4 OGLETHORPE POWER CORPORATION CONDENSED STATEMENTS OF REVENUES & EXPENSES (DOLLARS IN THOUSANDS)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ---------------------- ----------------------- 1994 1993 1994 1993 --------- --------- --------- --------- OPERATING REVENUES: SALES TO MEMBERS......... $244,390 $248,729 $699,005 $684,650 SALES TO NON-MEMBERS..... 22,428 36,008 98,466 155,549 --------- --------- --------- --------- TOTAL OPERATING REVENUES... 266,818 284,737 797,471 840,199 --------- --------- --------- --------- OPERATING EXPENSES: FUEL .................... 57,887 56,603 157,719 134,922 PRODUCTION .............. 28,719 27,142 91,774 93,293 PURCHASED POWER.......... 60,905 74,372 172,097 210,440 DEPRECIATION AND AMORTIZATION........... 32,375 30,945 98,648 95,557 TAXES OTHER THAN INCOME TAXES ................ 5,920 5,995 17,952 18,071 INCOME TAXES ............ -- 1,820 -- 1,820 OTHER OPERATING EXPENSES. 12,925 11,345 33,609 29,829 --------- --------- --------- --------- TOTAL OPERATING EXPENSES... 198,731 208,222 571,799 583,932 --------- --------- --------- --------- OPERATING MARGIN .......... 68,087 76,515 225,672 256,267 --------- --------- --------- --------- OTHER INCOME (EXPENSE): INTEREST INCOME ......... 2,842 5,860 7,976 15,306 AMORTIZATION OF DEFERRED MARGINS................ 4,011 1,033 15,284 3,103 ALLOWANCE FOR EQUITY FUNDS USED DURING CONSTRUCTION............ 718 565 2,074 1,532 OTHER.................... 5,157 4,998 16,452 15,911 --------- --------- --------- --------- TOTAL OTHER INCOME......... 12,728 12,456 41,786 35,852 --------- --------- --------- --------- INTEREST CHARGES: INTEREST ON LONG-TERM OBLIGATIONS............ 85,127 96,391 255,317 285,691 ALLOWANCE FOR DEBT FUNDS USED DURING CONSTRUCTION........... (8,698) (7,377) (25,940) (20,299) --------- --------- --------- --------- NET INTEREST CHARGES....... 76,429 89,014 229,377 265,392 --------- --------- --------- --------- MARGIN BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE..... 4,386 (43) 38,081 26,727 CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING FOR INCOME TAXES......... -- -- -- 13,340 --------- --------- --------- --------- NET MARGIN (LOSS).......... $ 4,386 $ (43) $ 58,081 $ 40,067 --------- --------- --------- --------- --------- --------- --------- ---------
The accompanying notes are an integral part of these condensed statements. 5 OGLETHORPE POWER CORPORATION CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993 (DOLLARS IN THOUSANDS)
1994 1993 ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: NET MARGIN $ 38,081 $ 40,067 --------- --------- ADJUSTMENTS TO RECONCILE NET MARGIN TO NET CASH PROVIDED BY OPERATING ACTIVITIES: CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING FOR INCOME TAXES -- (13,340) DEPRECIATION AND AMORTIZATION 141,986 134,797 DEFERRED MARGINS AND AMORTIZATION OF DEFERRED MARGINS (15,284) (3,103) ALLOWANCE FOR EQUITY FUNDS USED DURING CONSTRUCTION (2,074) (1,532) DEFERRED INCOME TAXES -- 1,820 OTHER (14,216) (9,489) DECREASE (INCREASE) IN NET CURRENT ASSETS, EXCLUDING LONG-TERM DEBT DUE WITHIN ONE YEAR AND DEFERRED MARGINS AND VOGTLE SURCHARGE TO BE REFUNDED WITHIN ONE YEAR: RECEIVABLES (8,037) (8,635) INVENTORIES (4,132) 4,004 PREPAYMENTS AND OTHER CURRENT ASSETS (1,498) 877 ACCOUNTS PAYABLE (8,597) 3,732 ACCRUED INTEREST (85,541) (24,410) ACCRUED AND WITHHELD TAXES 11,999 17,925 ENERGY COST BILLED IN EXCESS OF ACTUAL (5,143) (16,194) OTHER CURRENT LIABILITIES (28,368) (3,426) ---------- ---------- TOTAL ADJUSTMENTS (18,905) 83,026 ---------- ---------- NET CASH PROVIDED BY OPERATING ACTIVITIES 19,176 123,093 ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: PROPERTY ADDITIONS (152,136) (170,863) NET PROCEEDS FROM BOND, RESERVE AND CONSTRUCTION FUNDS 29,190 34,231 DECREASE IN INVESTMENT IN ASSOCIATED ORGANIZATIONS 1,176 483 DECREASE IN OTHER SHORT-TERM INVESTMENTS -- 66,165 DECREASE (INCREASE) IN DECOMMISSIONING FUND 38 (5,047) ---------- ---------- NET CASH USED IN INVESTING ACTIVITIES (121,732) (75,031) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: DEBT PROCEEDS, NET 294,092 35,646 DEBT PAYMENTS (350,233) (132,074) REFUND OF VOGTLE SURCHARGE (2,031) (1,300) OTHER 3,209 (4,687) ---------- ---------- NET CASH USED IN FINANCING ACTIVITIES (54,963) (102,415) ---------- ---------- NET DECREASE IN CASH AND TEMPORARY CASH INVESTMENTS (157,519) (54,353) CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF PERIOD 244,173 275,624 ---------- ---------- CASH AND TEMPORARY CASH INVESTMENTS AT END OF PERIOD $ 86,654 $ 221,271 ---------- ---------- CASH PAID FOR: INTEREST (NET OF AMOUNTS CAPITALIZED) $308,003 $280,314 INCOME TAXES -- (43)
The accompanying notes are an integral part of these condensed statements. 613