THE CONSOLIDATED 10-Q FOR AMERICAN ELECTRIC POWER CO., INC, AND
SUBSIDIARIES IS REQUESTED TO BE INCLUDED AS PART OF THE FILING.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended September 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Transition Period from to
Commission Registrant; State of Incorporation; I. R. S. Employer
File Number Address; and Telephone Number Identification No.
1-3525 AMERICAN ELECTRIC POWER COMPANY, INC. 13-4922640
(A New York Corporation)
1 Riverside Plaza, Columbus, Ohio 43215
Telephone (614) 223-1000
0-18135 AEP GENERATING COMPANY (An Ohio Corporation) 31-1033833
1 Riverside Plaza, Columbus, Ohio 43215
Telephone (614) 223-1000
1-3457 APPALACHIAN POWER COMPANY (A Virginia Corporation) 54-0124790
40 Franklin Road, Roanoke, Virginia 24011
Telephone (540) 985-2300
1-2680 COLUMBUS SOUTHERN POWER COMPANY (An Ohio Corporation) 31-4154203
215 North Front Street, Columbus, Ohio 43215
Telephone (614) 464-7700
1-3570 INDIANA MICHIGAN POWER COMPANY (An Indiana Corporation) 35-0410455
One Summit Square
P.O. Box 60, Fort Wayne, Indiana 46801
Telephone (219) 425-2111
1-6858 KENTUCKY POWER COMPANY (A Kentucky Corporation) 61-0247775
1701 Central Avenue, Ashland, Kentucky 41101
Telephone (800) 572-1141
1-6543 OHIO POWER COMPANY (An Ohio Corporation) 31-4271000
301 Cleveland Avenue S.W., Canton, Ohio 44702
Telephone (216) 456-8173
AEP Generating Company, Columbus Southern Power Company and Kentucky Power Company meet
the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and are
therefore filing this Form 10-Q with the reduced disclosure format specified in General
Instruction H(2) to Form 10-Q.
Indicate by check mark whether the registrants (1) have filed all reports required to
be filed by Sections 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
The number of shares outstanding of American Electric Power Company, Inc. Common Stock,
par value $6.50, at October 31, 1995 was 186,285,000.
/TABLE
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
FORM 10-Q
For The Quarter Ended September 30, 1995
INDEX
Page
Part I. FINANCIAL INFORMATION
American Electric Power Company, Inc. and Subsidiary Companies:
Consolidated Statements of Income and
Consolidated Statements of Retained Earnings . . . . . . . A-1
Consolidated Balance Sheets. . . . . . . . . . . . . . . . . A-2 - A-3
Consolidated Statements of Cash Flows. . . . . . . . . . . . A-4
Notes to Consolidated Financial Statements . . . . . . . . . A-5 - A-6
Management's Discussion and Analysis of Results of
Operations and Financial Condition . . . . . . . . . . . . A-7 - A-9
AEP Generating Company:
Statements of Income and Statements of Retained Earnings . . B-1
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . B-2 - B-3
Statements of Cash Flows . . . . . . . . . . . . . . . . . . B-4
Notes to Financial Statements. . . . . . . . . . . . . . . . B-5
Management's Narrative Analysis of Results of Operations . . B-6 - B-7
Appalachian Power Company and Subsidiaries:
Consolidated Statements of Income and
Consolidated Statements of Retained Earnings . . . . . . . C-1
Consolidated Balance Sheets. . . . . . . . . . . . . . . . . C-2 - C-3
Consolidated Statements of Cash Flows. . . . . . . . . . . . C-4
Notes to Consolidated Financial Statements . . . . . . . . . C-5
Management's Discussion and Analysis of Results of
Operations and Financial Condition . . . . . . . . . . . . C-6 - C-8
Columbus Southern Power Company and Subsidiaries:
Consolidated Statements of Income and
Consolidated Statements of Retained Earnings . . . . . . . D-1
Consolidated Balance Sheets. . . . . . . . . . . . . . . . . D-2 - D-3
Consolidated Statements of Cash Flows. . . . . . . . . . . . D-4
Notes to Consolidated Financial Statements . . . . . . . . . D-5
Management's Narrative Analysis of Results of Operations . . D-6 - D-8
Indiana Michigan Power Company and Subsidiaries:
Consolidated Statements of Income and
Consolidated Statements of Retained Earnings . . . . . . . E-1
Consolidated Balance Sheets. . . . . . . . . . . . . . . . . E-2 - E-3
Consolidated Statements of Cash Flows. . . . . . . . . . . . E-4
Notes to Consolidated Financial Statements . . . . . . . . . E-5
Management's Discussion and Analysis of Results of
Operations and Financial Condition . . . . . . . . . . . . E-6 - E-9
Kentucky Power Company:
Statements of Income and Statements of Retained Earnings . . F-1
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . F-2 - F-3
Statements of Cash Flows . . . . . . . . . . . . . . . . . . F-4
Notes to Financial Statements. . . . . . . . . . . . . . . . F-5
Management's Narrative Analysis of Results of Operations . . F-6 - F-8
Ohio Power Company and Subsidiaries:
Consolidated Statements of Income and
Consolidated Statements of Retained Earnings . . . . . . . G-1
Consolidated Balance Sheets. . . . . . . . . . . . . . . . . G-2 - G-3
Consolidated Statements of Cash Flows. . . . . . . . . . . . G-4
Notes to Consolidated Financial Statements . . . . . . . . . G-5
Management's Discussion and Analysis of Results of
Operations and Financial Condition . . . . . . . . . . . . G-6 - G-8
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
FORM 10-Q
For The Quarter Ended September 30, 1995
INDEX
Page
Part II. OTHER INFORMATION
Item 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
Item 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1 - II-2
Item 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-3
This combined Form 10-Q is separately filed by American Electric Power Company,
Inc., AEP Generating Company, Appalachian Power Company, Columbus Southern Power
Company, Indiana Michigan Power Company, Kentucky Power Company and Ohio Power Company.
Information contained herein relating to any individual registrant is filed by such
registrant on its own behalf. Each registrant makes no representation as to
information relating to the other registrants.
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per-share amounts)
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
OPERATING REVENUES . . . . . . . . . .$1,523,390 $1,385,278 $4,244,901 $4,222,026
OPERATING EXPENSES:
Fuel and Purchased Power . . . . . . 456,496 427,125 1,225,538 1,359,517
Other Operation. . . . . . . . . . . 316,850 243,056 868,667 736,581
Maintenance. . . . . . . . . . . . . 131,134 133,690 393,130 409,217
Depreciation and Amortization. . . . 150,424 145,516 444,844 426,958
Taxes Other Than Federal
Income Taxes . . . . . . . . . . . 125,052 122,076 371,282 371,233
Federal Income Taxes . . . . . . . . 80,886 66,800 210,052 194,492
TOTAL OPERATING EXPENSES . . 1,260,842 1,138,263 3,513,513 3,497,998
OPERATING INCOME . . . . . . . . . . . 262,548 247,015 731,388 724,028
NONOPERATING INCOME. . . . . . . . . . 5,693 3,989 10,574 4,946
INCOME BEFORE INTEREST CHARGES AND
PREFERRED DIVIDENDS. . . . . . . . . 268,241 251,004 741,962 728,974
INTEREST CHARGES . . . . . . . . . . . 99,784 96,975 301,040 291,704
PREFERRED STOCK DIVIDEND REQUIREMENTS
OF SUBSIDIARIES. . . . . . . . . . . 14,301 14,203 42,438 40,696
NET INCOME . . . . . . . . . . . . . .$ 154,156 $ 139,826 $ 398,484 $ 396,574
AVERAGE NUMBER OF SHARES OUTSTANDING . 186,024 184,621 185,671 184,564
EARNINGS PER SHARE . . . . . . . . . . $0.83 $0.76 $2.15 $2.15
CASH DIVIDENDS PAID PER SHARE. . . . . $0.60 $0.60 $1.80 $1.80
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
(in thousands)
BALANCE AT BEGINNING OF PERIOD . . . .$1,347,260 $1,304,036 $1,325,581 $1,269,283
NET INCOME . . . . . . . . . . . . . . 154,156 139,826 398,484 396,574
DEDUCTIONS:
Cash Dividends Declared. . . . . . . 111,563 110,723 334,058 332,168
Other. . . . . . . . . . . . . . . . (154) (54) - 496
BALANCE AT END OF PERIOD . . . . . . .$1,390,007 $1,333,193 $1,390,007 $1,333,193
See Notes to Consolidated Financial Statements.
/TABLE
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30, December 31,
1995 1994
(in thousands)
ASSETS
ELECTRIC UTILITY PLANT:
Production . . . . . . . . . . . . . . . . . . . . . $ 9,231,228 $ 9,172,766
Transmission . . . . . . . . . . . . . . . . . . . . 3,299,451 3,247,280
Distribution . . . . . . . . . . . . . . . . . . . . 4,109,423 3,966,442
General (including mining assets and nuclear fuel) . 1,468,520 1,529,436
Construction Work in Progress. . . . . . . . . . . . 313,846 258,700
Total Electric Utility Plant . . . . . . . . 18,422,468 18,174,624
Accumulated Depreciation and Amortization. . . . . . 7,055,191 6,826,514
NET ELECTRIC UTILITY PLANT . . . . . . . . . 11,367,277 11,348,110
OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . . 788,874 735,042
CURRENT ASSETS:
Cash and Cash Equivalents. . . . . . . . . . . . . . 93,721 62,866
Accounts Receivable. . . . . . . . . . . . . . . . . 504,576 436,915
Allowance for Uncollectible Accounts . . . . . . . . (6,545) (4,056)
Fuel . . . . . . . . . . . . . . . . . . . . . . . . 265,961 306,700
Materials and Supplies . . . . . . . . . . . . . . . 223,996 216,741
Accrued Utility Revenues . . . . . . . . . . . . . . 139,122 167,486
Prepayments and Other. . . . . . . . . . . . . . . . 118,619 94,786
TOTAL CURRENT ASSETS . . . . . . . . . . . . 1,339,450 1,281,438
REGULATORY ASSETS. . . . . . . . . . . . . . . . . . . 1,992,692 2,033,892
DEFERRED CHARGES . . . . . . . . . . . . . . . . . . . 211,417 340,274
TOTAL. . . . . . . . . . . . . . . . . . . $15,699,710 $15,738,756
See Notes to Consolidated Financial Statements.
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30, December 31,
1995 1994
(in thousands)
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common Stock-Par Value $6.50:
1995 1994
Shares Authorized . . . .300,000,000 300,000,000
Shares Issued . . . . . .195,284,992 194,234,992
(8,999,992 shares were held in treasury) . . . . . $ 1,269,352 $ 1,262,527
Paid-in Capital. . . . . . . . . . . . . . . . . . . 1,653,238 1,640,661
Retained Earnings. . . . . . . . . . . . . . . . . . 1,390,007 1,325,581
Total Common Shareholders' Equity. . . . . . 4,312,597 4,228,769
Cumulative Preferred Stocks of Subsidiaries:
Not Subject to Mandatory Redemption. . . . . . . . 233,240 233,240
Subject to Mandatory Redemption. . . . . . . . . . 515,300 590,300
Long-term Debt . . . . . . . . . . . . . . . . . . . 4,845,908 4,686,648
TOTAL CAPITALIZATION . . . . . . . . . . . . 9,907,045 9,738,957
OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . . 806,667 735,689
CURRENT LIABILITIES:
Preferred Stock Due Within One Year. . . . . . . . . 75,085 85
Long-term Debt Due Within One Year . . . . . . . . . 200,736 293,671
Short-term Debt. . . . . . . . . . . . . . . . . . . 212,550 316,985
Accounts Payable . . . . . . . . . . . . . . . . . . 200,331 251,186
Taxes Accrued. . . . . . . . . . . . . . . . . . . . 255,300 382,677
Interest Accrued . . . . . . . . . . . . . . . . . . 124,972 88,916
Obligations Under Capital Leases . . . . . . . . . . 90,063 93,252
Other. . . . . . . . . . . . . . . . . . . . . . . . 371,922 339,913
TOTAL CURRENT LIABILITIES. . . . . . . . . . 1,530,959 1,766,685
DEFERRED INCOME TAXES. . . . . . . . . . . . . . . . . 2,639,962 2,657,062
DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . . 438,044 456,043
DEFERRED GAIN ON SALE AND LEASEBACK -
ROCKPORT PLANT UNIT 2. . . . . . . . . . . . . . . . 252,195 259,152
DEFERRED CREDITS . . . . . . . . . . . . . . . . . . . 124,838 125,168
CONTINGENCIES (Note 4)
TOTAL. . . . . . . . . . . . . . . . . . . $15,699,710 $15,738,756
See Notes to Consolidated Financial Statements.
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30,
1995 1994
(in thousands)
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . $ 398,484 $ 396,574
Adjustments for Noncash Items:
Depreciation and Amortization. . . . . . . . . . . . . 431,936 419,219
Deferred Income Taxes. . . . . . . . . . . . . . . . . 2,747 (16,122)
Deferred Investment Tax Credits. . . . . . . . . . . . (17,862) (22,332)
Amortization of Deferred Property Taxes. . . . . . . . 120,710 98,377
Amortization of Operating Expenses and
Carrying Charges (net) . . . . . . . . . . . . . . . 39,975 14,028
Changes in Certain Current Assets and Liabilities:
Accounts Receivable (net). . . . . . . . . . . . . . . (65,172) 39,268
Fuel, Materials and Supplies . . . . . . . . . . . . . 33,484 24,535
Accrued Utility Revenues . . . . . . . . . . . . . . . 28,364 35,591
Accounts Payable . . . . . . . . . . . . . . . . . . . (50,855) (74,429)
Taxes Accrued. . . . . . . . . . . . . . . . . . . . . (127,377) (138,524)
Other (net). . . . . . . . . . . . . . . . . . . . . . . 12,066 44,069
Net Cash Flows From Operating Activities . . . . . 806,500 820,254
INVESTING ACTIVITIES:
Construction Expenditures. . . . . . . . . . . . . . . . (427,716) (443,172)
Proceeds from Sale of Property and Other . . . . . . . . 11,560 38,853
Net Cash Flows Used For Investing Activities . . . (416,156) (404,319)
FINANCING ACTIVITIES:
Issuance of Common Stock . . . . . . . . . . . . . . . . 35,302 10,732
Issuance of Cumulative Preferred Stock . . . . . . . . . - 88,787
Issuance of Long-term Debt . . . . . . . . . . . . . . . 425,309 361,639
Retirement of Cumulative Preferred Stock . . . . . . . . - (35,800)
Retirement of Long-term Debt . . . . . . . . . . . . . . (381,607) (440,451)
Change in Short-term Debt (net). . . . . . . . . . . . . (104,435) (64,797)
Dividends Paid on Common Stock . . . . . . . . . . . . . (334,058) (332,168)
Net Cash Flows Used For Financing Activities . . . (359,489) (412,058)
Net Increase in Cash and Cash Equivalents. . . . . . . . . 30,855 3,877
Cash and Cash Equivalents at Beginning of Period . . . . . 62,866 42,561
Cash and Cash Equivalents at End of Period . . . . . . . . $ 93,721 $ 46,438
Supplemental Disclosure:
Cash paid for interest net of capitalized amounts was $255,342,000 and
$249,101,000 and for income taxes was $220,897,000 and $242,975,000 in 1995 and
1994, respectively. Noncash acquisitions under capital leases were $78,170,000
and $155,857,000 in 1995 and 1994, respectively.
See Notes to Consolidated Financial Statements.
/TABLE
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(UNAUDITED)
1. GENERAL
The accompanying unaudited consolidated financial state-ments should be
read in conjunction with the 1994 Annual Report
as incorporated in and filed with the Form 10-K. Certain
prior-period amounts have been reclassified to conform to
current-period presentation.
2. FINANCING AND RELATED ACTIVITIES
Significant financing transactions by subsidiaries during
the first nine months of 1995 included the following:
Principal Amount
(in thousands)
Issuances: Junior Subordinated Deferrable
Interest Debentures
8.72% Series due 2025 $ 40,000
8-3/8% Series due 2025 75,000
First Mortgage Bonds
6.89% Series due 2005 30,000
8% Series due 2005 50,000
8% Series due 2025 50,000
Pollution Control Revenue
Refunding Bonds
6.55% Series 1995 A due 2025 50,000
(a) Series 1995 B due 2025 50,000
(b) Series 1995 A due 2025 45,000
(b) Series 1995 B due 2025 45,000
Total Issuances $435,000
(a) The variable rate Series B will bear interest at a rate set
weekly which ranged from 2.9% to 4.4% during 1995. The Company
may designate the use of a daily, commercial paper or term rate
instead of the weekly rate.
(b) Both variable rate Series A and Series B will bear interest
at a market rate set daily which ranged from 3.15% to 4.5%
during 1995. The Company may designate the use of a weekly,
commercial paper or term rate instead of the daily rate.
Principal Amount
(in thousands)
Retirements: First Mortgage Bonds
9-1/8% Series due 2019 $ 47,000
9-7/8% Series due 2020 26,900
9-7/8% Series due 2020 43,600
Pollution Control Revenue Bonds
9-1/4% Series due 2014 50,000
9-3/8% Series due 2014 55,000
(c) 6-5/8% Series due 2014 55,000
(c) 6-3/4% Series due 2014 50,000
Notes Payable
8.79% due 1995 50,000
Total Retirements $377,500
(c) Adjustable rate series.
Redemption of the 9-1/8% Series First Mortgage Bonds due
in 2019 reduced the restriction on the subsidiaries use of
retained earnings for the payment of cash dividends on their
common stock from $234 million to $230 million.
In October 1995 a subsidiary issued $85 million of an 8.16%
Series of Junior Subordinated Deferrable Interest Debentures
due in 2025. The proceeds will be used to redeem three series
of $100 par value cumulative preferred stock in November 1995:
350,000 shares of the 7.60% Series; 350,000 shares of the 7-6/10% Series;
and 150,000 shares of the 8.04% Series.
In November 1995 a subsidiary used the proceeds of their
September issuance of junior subordinated debentures to redeem
675,000 shares of their 9.50% cumulative preferred stock, $100
par value, at $106.33 per share.
3. RESTRUCTURING
The Company recorded severance costs of $27.2 million
($17.7 million net of income taxes) in the third quarter of
1995 in connection with a planned staffing reduction of
approximately 900 positions at the Company s power plants. The
staffing reduction is part of an AEP restructuring program to
functionally realign operations in preparation for increased
competition.
4. CONTINGENCIES
The Company continues to be involved in certain matters
discussed in the 1994 Annual Report.
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
THIRD QUARTER 1995 vs. THIRD QUARTER 1994
AND
YEAR-TO-DATE 1995 vs. YEAR-TO-DATE 1994
RESULTS OF OPERATIONS
Net income increased $14.3 million or 10% for the quarter
primarily due to increased energy sales resulting from warmer
weather in the summer of 1995 partially offset by the unfavorable
earnings effect of a $17.7 million after-tax provision for
severance pay recorded during the quarter. Net income increased
sightly for the year-to-date period due to the increased energy
sales in the third quarter which were offset by the severance pay
provision and a reduction in sales in the first six months of 1995
due to milder winter weather in 1995.
Income statement lines which changed significantly were:
Increase (Decrease)
Third Quarter Year-To-Date
(in millions) % (in millions) %
Operating Revenues . . . . . $138.1 10 $ 22.9 1
Fuel and Purchased
Power Expense. . . . . . . 29.4 7 (134.0) (10)
Other Operation Expense. . . 73.8 30 132.1 18
Federal Income Taxes . . . . 14.1 21 15.6 8
The increase in operating revenues during the third quarter was
primarily due to a 7% increase in energy sales to retail customers
and a 22% increase in sales to wholesale customers. Retail sales
rose mainly due to increased usage by residential and commercial
customers reflecting the warmer summer weather in 1995 and growth
in the number of retail customers. The increase in wholesale sales
also resulted from the weather-related energy demand.
Year-to-date operating revenues rose slightly mainly due to a
3% increase in energy sales to retail customers resulting from
increased usage and growth in the number of retail customers. The
increase in retail sales was partially offset by a 7% decline in
sales to wholesale customers as a result of milder weather during
the first six months of 1995 and a reduction in the fuel cost
component of retail revenues due to rate commission orders that
reduced fuel recoveries in certain jurisdictions and decreased fuel
costs.
Fuel and purchased power expense increased during the third
quarter due to the weather-related increase in energy demand which
resulted in increased generation and fuel consumption and increased
energy purchases. Partially offsetting the quarter s increases was
a deferral of under-recovered fuel expense in 1995 and the effect
of amortization in 1995 of deferred over-recovered fuel expense in
1994. The decline in fuel and purchased power expense for the
year-to-date period resulted from the deferral of under and over-recovered
fuel expense described above; increased utilization of
low-cost nuclear generation which had been unavailable in the first
six-months of 1994 due to refueling and maintenance outages at the
Cook Plant; a decrease in the average cost of fossil fuel resulting
from reduced coal prices reflecting the renegotiation of certain
long-term coal contracts and a reduction of coal prices under the
terms of other contracts; and decreased energy purchases due to the
mild weather during the first half of 1995.
The significant rise in other operation expense during both
periods was primarily due to rent expense and other operating costs
of the Gavin Plant's flue gas desulfurization systems (scrubbers)
which went into service in the first quarter of 1995, costs related
to the development of a new activity based budgeting system and a
$27.2 million ($17.7 million after-tax) provision for severance pay
recorded in the third quarter of 1995 discussed below.
Federal income tax expense attributable to operations increased
for both periods due to an increase in pre-tax operating income and
changes in certain book/tax differences accounted for on a flow-through basis.
FINANCIAL CONDITION
Total plant and property additions including capital leases for
the first nine months were $508 million.
During the first nine months subsidiaries issued $295 million
principal amount of long-term debt at fixed interest rates ranging
from 6.55% to 8.72% and $140 million at variable rates which ranged
from 2.9% to 4.5% in 1995; retired $378 million principal amount of
long-term debt with interest rates ranging from 6-5/8% to 9-7/8%;
and decreased short-term debt by $104 million.
In October 1995, a subsidiary issued $85 million of an 8.16%
Series of Junior Subordinated Deferrable Interest Debentures due in
2025. The proceeds will be used to redeem three series of $100 par
value cumulative preferred stock in November 1995: 350,000 shares
of the 7.60% Series; 350,000 shares of the 7-6/10% Series; and
150,000 shares of the 8.04% Series.
In November 1995, a subsidiary will use the $75 million
proceeds of their September issuance of junior subordinated
debentures to redeem 675,000 shares of their 9.50% cumulative
preferred stock, $100 par value, at $106.33 per share. The
remaining 75,000 shares of this series are expected to be redeemed
on February 1, 1996 at $100 per share. Under the terms of the
sinking fund, the redemption of 37,500 shares is required by
February 1 and an additional 37,500 shares may be redeemed.
RESTRUCTURING
As part of an AEP restructuring program, the Company is
reducing staff at the subsidiary companies power plants. The
restructuring program, which is part of an effort to prepare for
increased competition, calls for the functional realignment of
operations. As indicated above, in the third quarter of 1995 the
Company provided for the cost of currently identified staff
reductions at its power plants.
AEP GENERATING COMPANY
STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
(in thousands)
OPERATING REVENUES . . . . . . . . . . . $58,916 $60,828 $172,910 $180,259
OPERATING EXPENSES:
Fuel . . . . . . . . . . . . . . . . . 25,422 26,281 74,062 78,020
Rent - Rockport Plant Unit 2 . . . . . 17,070 17,897 49,689 52,042
Other Operation. . . . . . . . . . . . 2,944 2,618 8,621 7,901
Maintenance. . . . . . . . . . . . . . 2,618 2,788 8,959 8,363
Depreciation . . . . . . . . . . . . . 5,421 5,396 16,255 16,212
Taxes Other Than Federal Income Taxes. 897 1,000 2,175 3,023
Federal Income Taxes . . . . . . . . . 979 929 2,466 2,862
TOTAL OPERATING EXPENSES . . . 55,351 56,909 162,227 168,423
OPERATING INCOME . . . . . . . . . . . . 3,565 3,919 10,683 11,836
NONOPERATING INCOME. . . . . . . . . . . 1,012 820 2,757 2,505
INCOME BEFORE INTEREST CHARGES . . . . . 4,577 4,739 13,440 14,341
INTEREST CHARGES . . . . . . . . . . . . 1,977 2,448 6,787 7,283
NET INCOME . . . . . . . . . . . . . . . $ 2,600 $ 2,291 $ 6,653 $ 7,058
STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
(in thousands)
BALANCE AT BEGINNING OF PERIOD . . . . . $4,321 $1,185 $4,268 $1,339
NET INCOME . . . . . . . . . . . . . . . 2,600 2,291 6,653 7,058
CASH DIVIDENDS DECLARED. . . . . . . . . 5,000 2,260 9,000 7,181
BALANCE AT END OF PERIOD . . . . . . . . $1,921 $1,216 $1,921 $1,216
The common stock of the Company is wholly owned by
American Electric Power Company, Inc.
See Notes to Financial Statements.
/TABLE
AEP GENERATING COMPANY
BALANCE SHEETS
(UNAUDITED)
September 30, December 31,
1995 1994
(in thousands)
ASSETS
ELECTRIC UTILITY PLANT:
Production. . . . . . . . . . . . . . . . . . . . . . . $628,110 $627,429
General . . . . . . . . . . . . . . . . . . . . . . . . 2,933 2,658
Construction Work in Progress . . . . . . . . . . . . . 1,385 1,441
Total Electric Utility Plant. . . . . . . . . . 632,428 631,528
Accumulated Depreciation. . . . . . . . . . . . . . . . 213,245 199,264
NET ELECTRIC UTILITY PLANT. . . . . . . . . . . 419,183 432,264
CURRENT ASSETS:
Cash and Cash Equivalents . . . . . . . . . . . . . . . 25 7
Accounts Receivable . . . . . . . . . . . . . . . . . . 19,684 19,868
Fuel. . . . . . . . . . . . . . . . . . . . . . . . . . 18,305 18,368
Materials and Supplies. . . . . . . . . . . . . . . . . 3,961 4,167
Prepayments . . . . . . . . . . . . . . . . . . . . . . 789 452
TOTAL CURRENT ASSETS. . . . . . . . . . . . . . 42,764 42,862
REGULATORY ASSETS . . . . . . . . . . . . . . . . . . . . 6,185 1,520
DEFERRED CHARGES. . . . . . . . . . . . . . . . . . . . . 2,543 2,573
TOTAL . . . . . . . . . . . . . . . . . . . . $470,675 $479,219
See Notes to Financial Statements.
AEP GENERATING COMPANY
BALANCE SHEETS
(UNAUDITED)
September 30, December 31,
1995 1994
(in thousands)
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common Stock - Par Value $1,000:
Authorized and Outstanding - 1,000 Shares . . . . $ 1,000 $ 1,000
Paid-in Capital . . . . . . . . . . . . . . . . . . 47,735 47,735
Retained Earnings . . . . . . . . . . . . . . . . . 1,921 4,268
Total Common Shareholder's Equity . . . . . 50,656 53,003
Long-term Debt. . . . . . . . . . . . . . . . . . . 89,535 53,340
TOTAL CAPITALIZATION. . . . . . . . . . . . 140,191 106,343
OTHER NONCURRENT LIABILITIES. . . . . . . . . . . . . 1,947 2,019
CURRENT LIABILITIES:
Long-term Debt Due Within One Year. . . . . . . . . - 55,000
Short-term Debt - Notes Payable . . . . . . . . . . 11,025 7,200
Accounts Payable. . . . . . . . . . . . . . . . . . 8,174 9,506
Taxes Accrued . . . . . . . . . . . . . . . . . . . 3,439 3,648
Interest Accrued. . . . . . . . . . . . . . . . . . 320 2,955
Rent Accrued - Rockport Plant Unit 2. . . . . . . . 23,427 6,490
Other . . . . . . . . . . . . . . . . . . . . . . . 1,311 4,456
TOTAL CURRENT LIABILITIES . . . . . . . . . 47,696 89,255
DEFERRED GAIN ON SALE AND LEASEBACK -
ROCKPORT PLANT UNIT 2 . . . . . . . . . . . . . . . 151,436 155,614
REGULATORY LIABILITIES:
Deferred Investment Tax Credits . . . . . . . . . . 77,934 80,471
Amounts Due to Customers for Income Taxes . . . . . 37,097 38,101
TOTAL REGULATORY LIABILITIES. . . . . . . . 115,031 118,572
DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . 14,178 7,293
DEFERRED CREDITS. . . . . . . . . . . . . . . . . . . 196 123
TOTAL . . . . . . . . . . . . . . . . . . $470,675 $479,219
See Notes to Financial Statements.
AEP GENERATING COMPANY
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30,
1995 1994
(in thousands)
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . $ 6,653 $ 7,058
Adjustments for Noncash Items:
Depreciation . . . . . . . . . . . . . . . . . . . . . 16,255 16,212
Deferred Income Taxes. . . . . . . . . . . . . . . . . 5,881 3,286
Deferred Investment Tax Credits. . . . . . . . . . . . (2,537) (2,538)
Amortization of Deferred Gain on Sale
and Leaseback - Rockport Plant Unit 2. . . . . . . . (4,178) (4,178)
Changes in Certain Current Assets and Liabilities:
Accounts Receivable. . . . . . . . . . . . . . . . . . 184 (1,555)
Fuel, Materials and Supplies . . . . . . . . . . . . . 269 (4,037)
Accounts Payable . . . . . . . . . . . . . . . . . . . (1,332) (3,030)
Taxes Accrued. . . . . . . . . . . . . . . . . . . . . (209) 2,492
Interest Accrued . . . . . . . . . . . . . . . . . . . (2,635) (2,218)
Rent Accrued - Rockport Plant Unit 2 . . . . . . . . . 16,937 19,290
Other (net). . . . . . . . . . . . . . . . . . . . . . . (3,989) 1,836
Net Cash Flows From Operating Activities . . . . . 31,299 32,618
INVESTING ACTIVITIES - Construction Expenditures . . . . . (3,127) (2,938)
FINANCING ACTIVITIES:
Capital Contributions Returned to Parent Company . . . . - (6,700)
Issuance of Long-term Debt . . . . . . . . . . . . . . . 88,368 -
Change in Short-term Debt (net). . . . . . . . . . . . . 3,825 (15,250)
Retirement of Long-term Debt . . . . . . . . . . . . . . (111,347) -
Dividends Paid . . . . . . . . . . . . . . . . . . . . . (9,000) (7,181)
Net Cash Flows Used For Financing Activities . . . (28,154) (29,131)
Net Increase in Cash and Cash Equivalents. . . . . . . . . 18 549
Cash and Cash Equivalents at Beginning of Period . . . . . 7 3
Cash and Cash Equivalents at End of Period . . . . . . . . $ 25 $ 552
Supplemental Disclosure:
Cash paid (received) for interest net of capitalized amounts was $9,136,000 and
$9,227,000 and for income taxes was $(2,136,000) and $(1,026,000) in 1995 and
1994, respectively.
See Notes to Financial Statements.
AEP GENERATING COMPANY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(UNAUDITED)
1. GENERAL
The accompanying unaudited financial statements should be read
in conjunction with the 1994 Annual Report as incorporated in and
filed with the Form 10-K. Certain prior-period amounts have been
reclassified to conform to current-period presentation.
2. FINANCING
On July 18, 1995, the Company entered into transactions relating
to two series (Series 1995 A and Series 1995 B) of $45 million City
of Rockport, Indiana, Pollution Control Revenue Refunding Bonds
(Bonds) with maturity dates of July 1, 2025. The proceeds from the
Series 1995 A Bonds along with additional funds were used to redeem
the $55 million City of Rockport, Indiana, 9-3/8% Fixed Rate Bonds,
Series 1985 A, on September 1, 1995. The proceeds from the Series
1995 B Bonds along with additional funds were used to redeem the $55
million City of Rockport, Indiana, Adjustable Rate Bonds (6-5/8%),
Series 1985 A, on September 1, 1995. The two new series of Bonds
bear interest at a rate set daily which has ranged from 3.15% to
4.5%. The Company may designate the use of a weekly, commercial
paper or term rate instead of the daily rate.
AEP GENERATING COMPANY
MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS
THIRD QUARTER 1995 vs. THIRD QUARTER 1994
AND
YEAR-TO-DATE 1995 vs. YEAR-TO-DATE 1994
Operating revenues are derived from the sale of Rockport Plant
energy and capacity to two affiliated companies and one unaffiliated
utility pursuant to Federal Energy Regulatory Commission (FERC) approved
long-term unit power agreements. The unit power agreements provide for
recovery of costs including a FERC approved rate of return on common
equity and a return on other capital net of temporary cash investments.
Net income increased $0.3 million or 13% in the third quarter and
decreased $0.4 million or 6% in the year-to-date period. The increase
for the quarter resulted from refinancing transactions that led to
decreased interest charges as $20 million of debt was retired and $90
million was refinanced at lower rates and increased interest income from
debt issuance proceeds held from mid-July to September 1, 1995. The
decrease in the year-to-date period reflects a reduction in common
equity on which a return is earned and a decreased return on other
capital due to an increase in temporary cash investments during the
second quarter 1995 offset in part by the favorable effects of the third
quarter 1995 refinancing transactions. The reduction in common equity
resulted from the return of $6.7 million of capital to the parent
company in 1994.
Income statement items which changed significantly were as follows:
Increase (Decrease)
Third Quarter Year-To-Date
(in millions) % (in millions) %
Operating Revenues. . . . . $(1.9) (3) $(7.3) (4)
Fuel Expense. . . . . . . . (0.9) (3) (4.0) (5)
Rent Expense-Rockport
Plant Unit 2. . . . . . . (0.8) (5) (2.4) (5)
The decrease in operating revenues for the third quarter and year-to-date
periods reflects the decrease in recoverable operating expenses
in accordance with the unit power agreements as well as the reduced
return on capital previously discussed.
The decrease in fuel expense for the third quarter was due to a 5%
reduction in generation. The decline for the year-to-date period is
mainly attributable to 15% lower generation in the second quarter of
1995 when Rockport Plant Unit 1 was out-of-service for general boiler
inspection and repair.
Rent expense for Rockport Plant Unit 2 decreased in both periods due
to a reversal of a provision recorded in the third quarter of 1994 for
Indiana gross income taxes applicable to the lease.
APPALACHIAN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
(in thousands)
OPERATING REVENUES . . . . . . . . $403,786 $371,842 $1,151,259 $1,179,799
OPERATING EXPENSES:
Fuel . . . . . . . . . . . . . . 98,091 92,453 270,066 299,147
Purchased Power. . . . . . . . . 82,526 78,716 219,378 250,320
Other Operation. . . . . . . . . 57,689 46,770 163,604 141,237
Maintenance. . . . . . . . . . . 32,550 30,311 101,976 101,307
Depreciation and Amortization. . 33,535 32,195 99,963 95,377
Taxes Other Than Federal
Income Taxes . . . . . . . . . 29,489 28,559 88,831 90,964
Federal Income Taxes . . . . . . 14,545 11,992 44,097 41,997
TOTAL OPERATING EXPENSES 348,425 320,996 987,915 1,020,349
OPERATING INCOME . . . . . . . . . 55,361 50,846 163,344 159,450
NONOPERATING INCOME (LOSS) . . . . 25 (697) (4,614) (4,240)
INCOME BEFORE INTEREST CHARGES . . 55,386 50,149 158,730 155,210
INTEREST CHARGES . . . . . . . . . 27,008 24,418 79,929 72,939
NET INCOME . . . . . . . . . . . . 28,378 25,731 78,801 82,271
PREFERRED STOCK DIVIDEND
REQUIREMENTS . . . . . . . . . . 4,102 4,277 12,303 11,557
EARNINGS APPLICABLE TO COMMON
STOCK . . . . . . . . . . . . . . $ 24,276 $ 21,454 $ 66,498 $ 70,714
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
(in thousands)
BALANCE AT BEGINNING OF PERIOD . . $195,165 $222,835 $206,361 $227,816
NET INCOME . . . . . . . . . . . . 28,378 25,731 78,801 82,271
DEDUCTIONS:
Cash Dividends Declared:
Common Stock . . . . . . . . . 26,709 27,035 80,127 81,105
Cumulative Preferred Stock . . 3,918 3,921 11,755 11,002
Capital Stock Expense. . . . . . 184 185 548 555
BALANCE AT END OF PERIOD . . . . . $192,732 $217,425 $192,732 $217,425
The common stock of the Company is wholly owned by
American Electric Power Company, Inc.
See Notes to Consolidated Financial Statements.
/TABLE
APPALACHIAN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30, December 31,
1995 1994
(in thousands)
ASSETS
ELECTRIC UTILITY PLANT:
Production . . . . . . . . . . . . . . . . . . . $1,852,420 $1,848,263
Transmission . . . . . . . . . . . . . . . . . . 1,037,390 1,010,344
Distribution . . . . . . . . . . . . . . . . . . 1,388,661 1,315,915
General. . . . . . . . . . . . . . . . . . . . . 164,726 160,752
Construction Work in Progress. . . . . . . . . . 67,576 63,453
Total Electric Utility Plant . . . . . . 4,510,773 4,398,727
Accumulated Depreciation and Amortization. . . . 1,679,447 1,627,852
NET ELECTRIC UTILITY PLANT . . . . . . . 2,831,326 2,770,875
OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . 30,622 48,928
CURRENT ASSETS:
Cash and Cash Equivalents. . . . . . . . . . . . 6,791 5,297
Accounts Receivable. . . . . . . . . . . . . . . 129,224 124,092
Allowance for Uncollectible Accounts . . . . . . (1,979) (830)
Fuel . . . . . . . . . . . . . . . . . . . . . . 60,938 65,581
Materials and Supplies . . . . . . . . . . . . . 49,534 49,451
Accrued Utility Revenues . . . . . . . . . . . . 44,524 51,686
Prepayments. . . . . . . . . . . . . . . . . . . 14,467 6,487
TOTAL CURRENT ASSETS . . . . . . . . . . 303,499 301,764
REGULATORY ASSETS. . . . . . . . . . . . . . . . . 431,855 467,213
DEFERRED CHARGES . . . . . . . . . . . . . . . . . 49,495 59,015
TOTAL. . . . . . . . . . . . . . . . . $3,646,797 $3,647,795
See Notes to Consolidated Financial Statements.
APPALACHIAN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30, December 31,
1995 1994
(in thousands)
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common Stock - No Par Value:
Authorized - 30,000,000 Shares
Outstanding - 13,499,500 Shares. . . . . . . . . . $ 260,458 $ 260,458
Paid-in Capital. . . . . . . . . . . . . . . . . . . 524,867 504,408
Retained Earnings. . . . . . . . . . . . . . . . . . 192,732 206,361
Total Common Shareholder's Equity. . . . . . 978,057 971,227
Cumulative Preferred Stock:
Not Subject to Mandatory Redemption. . . . . . . . 55,000 55,000
Subject to Mandatory Redemption. . . . . . . . . . 190,300 190,300
Long-term Debt . . . . . . . . . . . . . . . . . . . 1,278,298 1,228,911
TOTAL CAPITALIZATION . . . . . . . . . . . . 2,501,655 2,445,438
OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . . 85,520 68,515
CURRENT LIABILITIES:
Long-term Debt Due Within One Year . . . . . . . . . 7,251 -
Short-term Debt. . . . . . . . . . . . . . . . . . . 65,175 122,825
Accounts Payable . . . . . . . . . . . . . . . . . . 86,964 93,712
Taxes Accrued. . . . . . . . . . . . . . . . . . . . 34,435 34,623
Customer Deposits. . . . . . . . . . . . . . . . . . 14,406 14,362
Interest Accrued . . . . . . . . . . . . . . . . . . 34,511 17,347
Other. . . . . . . . . . . . . . . . . . . . . . . . 71,942 74,877
TOTAL CURRENT LIABILITIES. . . . . . . . . . 314,684 357,746
DEFERRED INCOME TAXES. . . . . . . . . . . . . . . . . 645,752 658,660
DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . . 91,692 95,907
DEFERRED CREDITS . . . . . . . . . . . . . . . . . . . 7,494 21,529
CONTINGENCIES (Note 4)
TOTAL. . . . . . . . . . . . . . . . . . . $3,646,797 $3,647,795
See Notes to Consolidated Financial Statements.
/TABLE
APPALACHIAN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30,
1995 1994
(in thousands)
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . $ 78,801 $ 82,271
Adjustments for Noncash Items:
Depreciation and Amortization. . . . . . . . . . . . . . 101,123 97,283
Deferred Income Taxes. . . . . . . . . . . . . . . . . . (2,975) 13,374
Deferred Investment Tax Credits. . . . . . . . . . . . . (3,645) (3,672)
Deferred Power Supply Costs (net). . . . . . . . . . . . (2,557) 9,981
Provision for Rate Refunds . . . . . . . . . . . . . . . 11,425 (9,975)
Storm Damage Expense Amortization (Deferrals). . . . . . 13,184 (22,617)
Changes in Certain Current Assets and Liabilities:
Accounts Receivable (net). . . . . . . . . . . . . . . . (3,983) 14,475
Fuel, Materials and Supplies . . . . . . . . . . . . . . 4,560 (26,421)
Accrued Utility Revenues . . . . . . . . . . . . . . . . 7,162 16,925
Prepayments. . . . . . . . . . . . . . . . . . . . . . . (7,980) (3,677)
Accounts Payable . . . . . . . . . . . . . . . . . . . . (6,748) 16,868
Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . (188) (22,467)
Interest Accrued . . . . . . . . . . . . . . . . . . . . 17,164 14,530
Other (net). . . . . . . . . . . . . . . . . . . . . . . . 6,062 4,149
Net Cash Flows From Operating Activities . . . . . . 211,405 181,027
INVESTING ACTIVITIES:
Construction Expenditures. . . . . . . . . . . . . . . . . (151,498) (154,061)
Proceeds from Sales of Property. . . . . . . . . . . . . . 7,284 824
Net Cash Flows Used For Investing Activities . . . . (144,214) (153,237)
FINANCING ACTIVITIES:
Capital Contributions from Parent Company. . . . . . . . . 30,000 -
Issuance of Cumulative Preferred Stock . . . . . . . . . . - 29,574
Issuance of Long-term Debt . . . . . . . . . . . . . . . . 128,785 20,817
Change in Short-term Debt (net). . . . . . . . . . . . . . (57,650) 71,550
Retirement of Long-term Debt . . . . . . . . . . . . . . . (74,950) (58,221)
Dividends Paid on Common Stock . . . . . . . . . . . . . . (80,127) (81,105)
Dividends Paid on Cumulative Preferred Stock . . . . . . . (11,755) (10,641)
Net Cash Flows Used For Financing Activities . . . . (65,697) (28,026)
Net Increase (Decrease) in Cash and Cash Equivalents . . . . 1,494 (236)
Cash and Cash Equivalents at Beginning of Period . . . . . . 5,297 4,626
Cash and Cash Equivalents at End of Period . . . . . . . . . $ 6,791 $ 4,390
Supplemental Disclosure:
Cash paid for interest net of capitalized amounts was $60,835,000 and $56,652,000
and for income taxes was $46,449,000 and $37,400,000 in 1995 and 1994,
respectively. Noncash acquisitions under capital leases were $11,339,000 and
$18,740,000 in 1995 and 1994, respectively.
See Notes to Consolidated Financial Statements.
/TABLE
APPALACHIAN POWER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(UNAUDITED)
1. GENERAL
The accompanying unaudited consolidated financial state-ments should be
read in conjunction with the 1994 Annual Report
as incorporated in and filed with the Form 10-K. Certain
prior-period amounts have been reclassified to conform to
current-period presentation.
2. FINANCING ACTIVITY
In 1995 the Company issued the following series of first
mortgage bonds:
Series Due Date Principal Amount
(in thousands)
8.00% 2005 $50,000
8.00% 2025 50,000
6.89% 2005 30,000
In April 1995 the Company redeemed the remaining $46.5
million outstanding balance of its 9-1/8% Series First Mortgage
Bonds due in 2019. This redemption decreased the restriction
on the use of retained earnings for common stock cash dividends
from $37.0 million to $33.2 million. Also in June 1995, the
Company redeemed at 103.95% $26.2 million of its 9-7/8% Series
First Mortgage Bonds due in 2020. The Company received $30
million of cash capital contributions from its parent which
were credited to paid-in capital.
3. RESTRUCTURING
The Company recorded severance costs of $5.6 million ($3.7
million net of income taxes) in the third quarter of 1995 in
connection with a planned staffing reduction of approximately
160 positions at the Company s power plants. The staffing
reduction is part of an AEP restructuring program to
functionally realign operations in preparation for increased
competition.
4. CONTINGENCIES
The Company continues to be involved in certain matters
discussed in the 1994 Annual Report.
APPALACHIAN POWER COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
THIRD QUARTER 1995 vs. THIRD QUARTER 1994
AND
YEAR-TO-DATE 1995 vs. YEAR-TO-DATE 1994
RESULTS OF OPERATIONS
A substantial increase in energy sales to weather-sensitive
wholesale, residential and commercial customers in response to
warmer summer weather resulted in a net income increase for the
quarter of $2.6 million or 10%. Although energy sales to retail
customers increased for the year-to-date period, net income
decreased $3.5 million or 4%. The favorable impact of the increased
energy sales was partially offset by provisions for severance pay
recorded in the second and third quarters of 1995 and increased
software development expenses. Higher interest charges in both
periods also negatively impacted earnings.
Income statement items which changed significantly were:
Increase (Decrease)
Third Quarter Year-to-Date
(in millions) % (in millions) %
Operating Revenues . . . . $31.9 9 $(28.5) (2)
Fuel Expense . . . . . . . 5.6 6 (29.1) (10)
Purchased Power Expense. . 3.8 5 (30.9) (12)
Other Operation Expense. . 10.9 23 22.4 16
Maintenance. . . . . . . . 2.2 7 0.7 1
Federal Income Taxes . . . 2.6 21 2.1 5
Interest Charges . . . . . 2.6 11 7.0 10
Operating revenues increased for the third quarter primarily
due to a 31% increase in energy sales to wholesale customers and a
7% increase in retail sales. Wholesale sales rose due to increased
energy sales to unaffiliated utilities by the AEP System Power
(Power Pool) resulting from weather-related demand. The increase
in retail energy sales was due to increased usage by residential
and commercial customers as a result of the warmer summer weather
in 1995.
The decrease in revenues in the year-to-date period reflects
reduced wholesale energy sales to unaffiliated utilities resulting
from milder winter and spring weather, and increased availability
of unaffiliated generating units in the first half of 1995. While
wholesale revenues decreased, retail revenues increased for the
year-to-date period as a result of increased sales partially offset
by a decrease in the fuel component of Virginia retail rates of
$28.9 million annually effective November 1994. A reduction in
fuel costs accounted for the reduction in fuel revenues.
The increase in fuel and purchased power expenses for the third
quarter reflects the rise in weather-related energy demand which
resulted in increased generation and increased energy purchases
from unaffiliated utilities for pass-through sales to other
unaffiliated utilities. A lower average cost of fuel consumed
partially offset the effects of the increased generation during the
quarter. The primary reason for the year-to-date fuel expense
decrease was the lower average fuel costs which resulted mainly
from a reduction in coal prices due to the renegotiation of certain
long-term coal contracts. The decline during the year-to-date
period in purchased power expense was due to a reduction in the
Power Pool capacity charges and decreased purchases from
unaffiliated utilities for pass-through sales to other unaffiliated
utilities reflecting the effects of the milder winter and cooler
spring weather. The decrease in Power Pool capacity charges
resulted from a reduction in the Company's prior twelve-month peak
demand relative to the total peak demand of all Power Pool members.
Power Pool members whose internal demand exceeds their capacity are
allocated capacity costs based on the relative peak demands and
generating reserves of all Power Pool members.
The increase in other operation expense was primarily due to
provisions for severance pay recorded in the second and third
quarters of 1995 related to an organizational review study and
planned power plant staffing reductions, respectively. Other
operation expense also increased due to costs associated with the
development of a new activity based budgeting system and in the
year-to-date period due to the effect of a $4.6 million favorable
adjustment in 1994 which capitalized previously expensed software
costs in accordance with an order of the Virginia regulatory
commission.
Maintenance expense increased as a result of the amortization
of deferred Virginia retail incremental storm damage expenses
incurred to repair distribution facilities from two major ice
storms in February and March 1994. Concurrent with rate recovery
being collected subject to refund, the Company is amortizing over
a three-year period the deferred storm damage expenses.
The increase in federal income tax expense was primarily due
to an increase in pre-tax operating income and changes in certain
book/tax differences accounted for on a flow-through basis.
Interest charges increased primarily as a result of an increase
in the balance of long-term debt outstanding and for the year-to-date period
higher rates on increased average balances of
short-term borrowings.
FINANCIAL CONDITION
Total plant and property additions including capital leases for
the first nine months of 1995 were $163 million.
During the first nine months of 1995, the Company issued $130
million of first mortgage bonds with interest rates ranging from
6.89% to 8% due from 2005 to 2025. The proceeds were used to
redeem first mortgage bonds totaling $74 million principal amount
with interest rates of 9-1/8% and 9-7/8% due in 2019 and 2020,
respectively, and to repay short-term debt. Short-term debt
decreased by $58 million since the beginning of the year. The
restriction on the use of retained earnings for common stock cash
dividends was reduced from $37 million to $33.2 million by certain
first mortgage bond redemptions. Also in 1995 the Company received
$30 million of cash capital contributions from its parent which
were credited to paid-in capital.
RESTRUCTURING
As part of an AEP restructuring program, the Company is
reducing staff at its power plants. The restructuring program,
which is part of an effort to prepare for increased competition,
calls for the functional realignment of operations. As indicated
above, in the third quarter of 1995 the Company provided for the
cost of currently identified staff reductions at its power plants.
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
(in thousands)
OPERATING REVENUES . . . . . . . . . .$310,141 $ 280,470 $813,311 $793,053
OPERATING EXPENSES:
Fuel . . . . . . . . . . . . . . . . 40,854 52,430 128,908 154,084
Purchased Power. . . . . . . . . . . 51,607 35,028 124,706 109,673
Other Operation. . . . . . . . . . . 49,630 40,106 139,233 126,968
Maintenance. . . . . . . . . . . . . 18,082 17,512 52,071 50,120
Depreciation . . . . . . . . . . . . 21,386 20,870 63,840 62,188
Amortization of Zimmer Plant
Phase-in Costs . . . . . . . . . . 10,026 8,960 25,549 19,811
Taxes Other Than Federal
Income Taxes . . . . . . . . . . . 26,740 24,261 80,932 75,705
Federal Income Taxes . . . . . . . . 25,274 19,706 47,914 44,916
TOTAL OPERATING EXPENSES . . 243,599 218,873 663,153 643,465
OPERATING INCOME . . . . . . . . . . . 66,542 61,597 150,158 149,588
NONOPERATING INCOME. . . . . . . . . . 197 1,402 2,636 5,958
INCOME BEFORE INTEREST CHARGES . . . . 66,739 62,999 152,794 155,546
INTEREST CHARGES . . . . . . . . . . . 19,607 20,471 59,587 63,124
NET INCOME . . . . . . . . . . . . . . 47,132 42,528 93,207 92,422
PREFERRED STOCK DIVIDEND REQUIREMENTS. 3,308 3,203 9,714 8,880
EARNINGS APPLICABLE TO COMMON STOCK. .$ 43,824 $ 39,325 $ 83,493 $ 83,542
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
Three Months Ended Nine Months Ended
Sepember 30, September 30,
1995 1994 1995 1994
(in thousands)
BALANCE AT BEGINNING OF PERIOD . . . .$50,625 $ 27,895 $46,976 $ 18,288
NET INCOME . . . . . . . . . . . . . . 47,132 42,528 93,207 92,422
DEDUCTIONS:
Cash Dividends Declared:
Common Stock . . . . . . . . . . . 17,975 17,197 53,925 51,591
Cumulative Preferred Stock . . . . 3,203 3,203 9,609 9,026
Capital Stock Expense. . . . . . . . 35 35 105 105
BALANCE AT END OF PERIOD . . . . . . .$76,544 $ 49,988 $76,544 $ 49,988
The common stock of the Company is wholly owned by American Electric Power
Company,Inc.
See Notes to Consolidated Financial Statements.
/TABLE
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30, December 31,
1995 1994
(in thousands)
ASSETS
ELECTRIC UTILITY PLANT:
Production . . . . . . . . . . . . . . . . . . . . $1,468,400 $1,461,484
Transmission . . . . . . . . . . . . . . . . . . . 308,392 306,744
Distribution . . . . . . . . . . . . . . . . . . . 828,005 797,570
General. . . . . . . . . . . . . . . . . . . . . . 117,454 111,623
Construction Work in Progress. . . . . . . . . . . 79,624 52,156
Total Electric Utility Plant . . . . . . . 2,801,875 2,729,577
Accumulated Depreciation . . . . . . . . . . . . . 935,845 884,237
NET ELECTRIC UTILITY PLANT . . . . . . . . 1,866,030 1,845,340
OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . 26,106 26,744
CURRENT ASSETS:
Cash and Cash Equivalents. . . . . . . . . . . . . 59,214 14,065
Accounts Receivable (net). . . . . . . . . . . . . 77,670 53,937
Fuel . . . . . . . . . . . . . . . . . . . . . . . 21,428 28,060
Materials and Supplies . . . . . . . . . . . . . . 22,346 24,923
Accrued Utility Revenues . . . . . . . . . . . . . 24,646 31,595
Prepayments and Other. . . . . . . . . . . . . . . 31,271 31,241
TOTAL CURRENT ASSETS . . . . . . . . . . . 236,575 183,821
REGULATORY ASSETS. . . . . . . . . . . . . . . . . . 444,865 475,019
DEFERRED CHARGES . . . . . . . . . . . . . . . . . . 23,146 63,418
TOTAL. . . . . . . . . . . . . . . . . . $2,596,722 $2,594,342
See Notes to Consolidated Financial Statements.
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30, December 31,
1995 1994
(in thousands)
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common Stock - No Par Value:
Authorized - 24,000,000 Shares
Outstanding - 16,410,426 Shares. . . . . . . . . . $ 41,026 $ 41,026
Paid-in Capital. . . . . . . . . . . . . . . . . . . 563,641 565,642
Retained Earnings. . . . . . . . . . . . . . . . . . 76,544 46,976
Total Common Shareholder's Equity. . . . . . 681,211 653,644
Cumulative Preferred Stock - Subject to
Mandatory Redemption . . . . . . . . . . . . . . . 75,000 150,000
Long-term Debt . . . . . . . . . . . . . . . . . . . 992,950 917,608
TOTAL CAPITALIZATION . . . . . . . . . . . . 1,749,161 1,721,252
OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . . 38,827 38,072
CURRENT LIABILITIES:
Preferred Stock Due Within One Year. . . . . . . . . 75,000 -
Long-term Debt Due Within One Year . . . . . . . . . 30,000 80,000
Accounts Payable . . . . . . . . . . . . . . . . . . 40,557 48,991
Taxes Accrued. . . . . . . . . . . . . . . . . . . . 64,489 113,362
Interest Accrued . . . . . . . . . . . . . . . . . . 28,588 18,923
Other. . . . . . . . . . . . . . . . . . . . . . . . 33,675 25,310
TOTAL CURRENT LIABILITIES. . . . . . . . . . 272,309 286,586
DEFERRED INCOME TAXES. . . . . . . . . . . . . . . . . 463,304 467,593
DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . . 61,741 64,597
DEFERRED CREDITS . . . . . . . . . . . . . . . . . . . 11,380 16,242
CONTINGENCIES (Note 4)
TOTAL. . . . . . . . . . . . . . . . . . . $2,596,722 $2,594,342
See Notes to Consolidated Financial Statements.
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30,
1995 1994
(in thousands)
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . .$ 93,207 $ 92,422
Adjustments for Noncash Items:
Depreciation . . . . . . . . . . . . . . . . . . . . . 63,556 61,900
Deferred Income Taxes. . . . . . . . . . . . . . . . . (510) 2,391
Deferred Investment Tax Credits. . . . . . . . . . . . (2,752) (2,765)
Deferred Fuel Cost (net) . . . . . . . . . . . . . . . (7,969) (1,760)
Amortization of Zimmer Plant Operating Expenses and
Carrying Charges . . . . . . . . . . . . . . . . . . 22,244 13,176
Amortization of Deferred Property Taxes. . . . . . . . 43,314 41,884
Changes in Certain Current Assets and Liabilities:
Accounts Receivable (net). . . . . . . . . . . . . . . (23,733) (9,450)
Fuel, Materials and Supplies . . . . . . . . . . . . . 9,209 5,679
Accrued Utility Revenues . . . . . . . . . . . . . . . 6,949 4,799
Prepayments and Other Current Assets . . . . . . . . . (30) 5,141
Accounts Payable . . . . . . . . . . . . . . . . . . . (8,434) (13,084)
Taxes Accrued. . . . . . . . . . . . . . . . . . . . . (48,873) (53,576)
Other (net). . . . . . . . . . . . . . . . . . . . . . . 11,457 4,735
Net Cash Flows From Operating Activities . . . . . 157,635 151,492
INVESTING ACTIVITIES:
Construction Expenditures. . . . . . . . . . . . . . . . (74,400) (52,179)
Proceeds from Sale and Leaseback Transactions and Other. 2,922 518
Net Cash Flows Used For Investing Activities . . . (71,478) (51,661)
FINANCING ACTIVITIES:
Issuance of Cumulative Preferred Stock . . . . . . . . . - 24,596
Issuance of Long-term Debt . . . . . . . . . . . . . . . 72,526 198,298
Change in Short-term Debt (net). . . . . . . . . . . . . - (25,225)
Retirement of Long-term Debt . . . . . . . . . . . . . . (50,000) (225,834)
Dividends Paid on Common Stock . . . . . . . . . . . . . (53,925) (51,591)
Dividends Paid on Cumulative Preferred Stock . . . . . . (9,609) (8,589)
Net Cash Flows Used For Financing Activities . . . (41,008) (88,345)
Net Increase in Cash and Cash Equivalents. . . . . . . . . 45,149 11,486
Cash and Cash Equivalents at Beginning of Period . . . . . 14,065 6,633
Cash and Cash Equivalents at End of Period . . . . . . . .$ 59,214 $ 18,119
Supplemental Disclosure:
Cash paid for interest net of capitalized amounts was $46,745,000 and $52,895,000
and for income taxes was $45,117,000 and $46,663,000 in 1995 and 1994,
respectively. Noncash acquisitions under capital leases were $8,914,000 and
$8,736,000 in 1995 and 1994, respectively.
See Notes to Consolidated Financial Statements.
/TABLE
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(UNAUDITED)
1. GENERAL
The accompanying unaudited consolidated financial
statements should be read in conjunction with the 1994 Annual
Report as incorporated in and filed with the Form 10-K.
Certain prior-period amounts have been reclassified to conform
to current-period presentation.
2. FINANCING ACTIVITIES
In September 1995, the Company issued $75 million of 8-3/8%
Junior Subordinated Debentures Series A due in 2025. The
proceeds were used to redeem 675,000 shares of the 9.50%
Cumulative Preferred Stock, $100 par value, on November 1, 1995
at $106.33 per share.
3. RESTRUCTURING
The Company recorded severance costs of $3.2 million ($2.1
million net of income taxes) in the third quarter of 1995 in
connection with a planned staffing reduction of approximately
90 positions at the Company s power plants. The staffing
reduction is part of an AEP restructuring program to
functionally realign operations in preparation for increased
competition.
4. CONTINGENCIES
The Company continues to be involved in certain matters
discussed in its 1994 Annual Report.
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS
THIRD QUARTER 1995 vs. THIRD QUARTER 1994
AND
YEAR-TO-DATE 1995 vs. YEAR-TO-DATE 1994
Net income increased $4.6 million or 11% for the quarter and
$0.8 million or 1% for the year-to-date period primarily due to
increased energy sales resulting from warmer summer weather in
1995.
Income statement lines which changed significantly were:
Increase (Decrease)
Third Quarter Year-to-Date
(in millions) % (in millions) %
Operating Revenues. . . . . $ 29.7 11 $ 20.3 3
Fuel Expense. . . . . . . . (11.6) (22) (25.2) (16)
Purchased Power Expense . . 16.6 47 15.0 14
Other Operation Expense . . 9.5 24 12.3 10
Amortization of Zimmer
Plant Phase-in Costs. . . 1.1 12 5.7 29
Taxes Other Than
Federal Income Taxes. . . 2.5 10 5.2 7
Federal Income Taxes. . . . 5.6 28 3.0 7
Nonoperating Income . . . . (1.2) (86) (3.3) (56)
Interest Charges. . . . . . (0.9) (4) (3.5) (6)
The increase in operating revenues in both periods was mainly
due to increased energy usage by retail customers attributable to
the warm summer weather in 1995. In the third quarter increased
sales to wholesale customers, reflecting the warm summer weather,
also contributed to the increase in operating revenues. Mild
winter and cooler spring weather in 1995 caused wholesale revenues
to decline for the year-to-date period.
Although increased energy demand in the quarter resulted in a
small increase in generation, fuel expense for the quarter declined
due to the operation of the fuel clause adjustment mechanism.
Under the fuel clause adjustment mechanism the Company defers fuel
expense to the extent it varies from the allowed electric fuel
component rate until such deferrals are amortized to expense
commensurate with their inclusion in fuel rates in later months.
In the third quarter of 1995 the fuel clause adjustment mechanism
decreased fuel expense due to the deferral of undercollections in
1995, increased amortizations in 1995 of previously deferred
overcollections and the effect of the deferral of overcollections
in 1994. The decrease in year-to-date fuel expense was due to
decreased generation and the operation of the fuel clause
adjustment mechanism. Maintenance outages at several Conesville
Plant units and at the Picway Plant reduced the Company s
generation. In the year-to-date period the fuel clause adjustment
mechanism decreased fuel expense due to deferral of undercollected
fuel cost in 1995 compared with the effect of the deferral of
overcollections in 1994.
Purchased power expense increased in both periods due to
increased energy purchases from the AEP System Power Pool (Power
Pool) as a result of the weather-related increase in demand for
energy.
The increase in other operation expense resulted from a
favorable adjustment in 1994 to the provision for injuries and
damages claims and the recordation in 1995 of production plant
severance expenses. A $3.2 million ($2.1 million after-tax)
provision for severance pay recorded in the third quarter of 1995
was related to planned power plant staffing reductions. An AEP
restructuring program to functionally realign operations in an
effort to prepare for increased competition caused the staffing
reductions.
The increase during the quarter and year-to-date periods of
amortization of Zimmer Plant phase-in costs, which is based on a
rate per kilowatthour sold, reflects the rise in kilowatthour sales
and, in the year-to-date period, the conclusion of phase-in plan
deferrals on February 1, 1994.
The rise in taxes other than federal income taxes was due to
an increase in the gross receipts tax reflecting the increase in
retail revenues and higher property taxes due to increases in the
tax base and tax rates.
Federal income taxes increased during both periods primarily
due to an increase in pre-tax operating income and in the third
quarter due to changes in certain book/tax differences accounted
for on a flow-through basis.
The decrease in nonoperating income was due to a decline in
deferred Zimmer Plant carrying charges as a result of a reduction
in the deferred balance on which a return is earned and in the
year-to-date period the effect of the cessation of deferrals in
February 1994 commensurate with inclusion of the Zimmer Plant
investment in rate base. The deferred balance declined due to its
amortization and recovery through a rate surcharge.
Interest charges declined due to the retirement of long-term
debt during the second quarter of 1995.
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
(in thousands)
OPERATING REVENUES . . . . . . . . $334,846 $317,061 $969,843 $965,086
OPERATING EXPENSES:
Fuel . . . . . . . . . . . . . . 53,967 51,591 173,584 151,534
Purchased Power. . . . . . . . . 39,745 29,956 93,156 110,186
Other Operation. . . . . . . . . 78,992 73,628 226,628 219,309
Maintenance. . . . . . . . . . . 34,319 36,479 98,893 109,486
Depreciation and Amortization. . 34,800 33,911 103,883 102,051
Amortization of Rockport Plant
Unit 1 Phase-in Plan Deferrals 3,911 3,911 11,733 11,733
Taxes Other Than Federal
Income Taxes . . . . . . . . . 19,254 19,155 55,087 54,760
Federal Income Taxes . . . . . . 15,458 12,961 44,782 36,992
TOTAL OPERATING EXPENSES 280,446 261,592 807,746 796,051
OPERATING INCOME . . . . . . . . . 54,400 55,469 162,097 169,035
NONOPERATING INCOME. . . . . . . . 736 328 1,387 5,077
INCOME BEFORE INTEREST CHARGES . . 55,136 55,797 163,484 174,112
INTEREST CHARGES . . . . . . . . . 17,732 18,061 53,912 54,119
NET INCOME . . . . . . . . . . . . 37,404 37,736 109,572 119,993
PREFERRED STOCK DIVIDEND
REQUIREMENTS . . . . . . . . . . 3,031 2,898 8,843 8,783
EARNINGS APPLICABLE TO
COMMON STOCK . . . . . . . . . . $ 34,373 $ 34,838 $100,729 $111,210
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
(in thousands)
BALANCE AT BEGINNING OF PERIOD . . $227,505 $200,611 $216,658 $177,638
NET INCOME . . . . . . . . . . . . 37,404 37,736 109,572 119,993
DEDUCTIONS:
Cash Dividends Declared:
Common Stock . . . . . . . . . 27,713 26,652 83,139 79,956
Cumulative Preferred Stock . . 2,890 2,890 8,670 8,760
Capital Stock Expense. . . . . . 58 56 173 166
BALANCE AT END OF PERIOD . . . . . $234,248 $208,749 $234,248 $208,749
The common stock of the Company is wholly owned
by American Electric Power Company, Inc.
See Notes to Consolidated Financial Statements.
/TABLE
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30, December 31,
1995 1994
(in thousands)
ASSETS
ELECTRIC UTILITY PLANT:
Production . . . . . . . . . . . . . . . . . . . $2,514,884 $2,494,834
Transmission . . . . . . . . . . . . . . . . . . 864,133 849,920
Distribution . . . . . . . . . . . . . . . . . . 658,437 644,720
General (including nuclear fuel) . . . . . . . . 185,396 204,909
Construction Work in Progress. . . . . . . . . . 80,718 74,923
Total Electric Utility Plant . . . . . . 4,303,568 4,269,306
Accumulated Depreciation and Amortization. . . . 1,738,733 1,659,940
NET ELECTRIC UTILITY PLANT . . . . . . . 2,564,835 2,609,366
NUCLEAR DECOMMISSIONING AND SPENT NUCLEAR FUEL
DISPOSAL TRUST FUNDS. . . . . . . . . . . . . . . 407,111 341,089
OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . 140,063 127,424
CURRENT ASSETS:
Cash and Cash Equivalents. . . . . . . . . . . . 6,210 9,907
Accounts Receivable. . . . . . . . . . . . . . . 126,443 132,053
Allowance for Uncollectible Accounts . . . . . . (428) (121)
Fuel . . . . . . . . . . . . . . . . . . . . . . 27,859 35,802
Materials and Supplies . . . . . . . . . . . . . 63,786 59,897
Accrued Utility Revenues . . . . . . . . . . . . 35,159 40,582
Prepayments. . . . . . . . . . . . . . . . . . . 11,948 8,414
TOTAL CURRENT ASSETS . . . . . . . . . . 270,977 286,534
REGULATORY ASSETS. . . . . . . . . . . . . . . . . 467,124 482,107
DEFERRED CHARGES . . . . . . . . . . . . . . . . . 25,766 31,515
TOTAL. . . . . . . . . . . . . . . . . $3,875,876 $3,878,035
See Notes to Consolidated Financial Statements.
/TABLE
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30, December 31,
1995 1994
(in thousands)
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common Stock - No Par Value:
Authorized - 2,500,000 Shares
Outstanding - 1,400,000 Shares . . . . . . . . $ 56,584 $ 56,584
Paid-in Capital. . . . . . . . . . . . . . . . . 731,044 733,650
Retained Earnings. . . . . . . . . . . . . . . . 234,248 216,658
Total Common Shareholder's Equity. . . . 1,021,876 1,006,892
Cumulative Preferred Stock:
Not Subject to Mandatory Redemption. . . . . . 52,000 52,000
Subject to Mandatory Redemption. . . . . . . . 135,000 135,000
Long-term Debt . . . . . . . . . . . . . . . . . 1,037,790 929,887
TOTAL CAPITALIZATION . . . . . . . . . . 2,246,666 2,123,779
OTHER NONCURRENT LIABILITIES:
Nuclear Decommissioning. . . . . . . . . . . . . 255,949 211,963
Other. . . . . . . . . . . . . . . . . . . . . . 171,799 179,013
TOTAL OTHER NONCURRENT LIABILITIES . . . 427,748 390,976
CURRENT LIABILITIES:
Long-term Debt Due Within One Year . . . . . . . 40,000 140,000
Short-term Debt. . . . . . . . . . . . . . . . . 22,400 50,600
Accounts Payable . . . . . . . . . . . . . . . . 51,580 63,137
Taxes Accrued. . . . . . . . . . . . . . . . . . 46,889 63,621
Interest Accrued . . . . . . . . . . . . . . . . 21,787 19,436
Rent Accrued - Rockport Plant Unit 2 . . . . . . 23,427 6,490
Obligations Under Capital Leases . . . . . . . . 31,623 39,003
Other. . . . . . . . . . . . . . . . . . . . . . 73,678 72,664
TOTAL CURRENT LIABILITIES. . . . . . . . 311,384 454,951
DEFERRED INCOME TAXES. . . . . . . . . . . . . . . 621,613 634,902
DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . 158,217 164,206
DEFERRED GAIN ON SALE AND LEASEBACK -
ROCKPORT PLANT UNIT 2. . . . . . . . . . . . . . 100,759 103,539
DEFERRED CREDITS . . . . . . . . . . . . . . . . . 9,489 5,682
CONTINGENCIES (Note 4)
TOTAL. . . . . . . . . . . . . . . . . $3,875,876 $3,878,035
See Notes to Consolidated Financial Statements.
/TABLE
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30,
1995 1994
(in thousands)
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . $ 109,572 $ 119,993
Adjustments for Noncash Items:
Depreciation and Amortization. . . . . . . . . . . . . . 111,209 110,331
Amortization of Rockport Plant Unit 1
Phase-in Plan Deferrals. . . . . . . . . . . . . . . . 11,733 11,733
Amortization (Deferral) of Incremental Nuclear
Refueling Outage Expenses (net). . . . . . . . . . . . 5,998 (10,881)
Deferred Income Taxes. . . . . . . . . . . . . . . . . . (11,166) (9,446)
Deferred Investment Tax Credits. . . . . . . . . . . . . (5,989) (10,208)
Changes in Certain Current Assets and Liabilities:
Accounts Receivable (net). . . . . . . . . . . . . . . . 5,917 4,901
Fuel, Materials and Supplies . . . . . . . . . . . . . . 4,054 1,430
Accrued Utility Revenues . . . . . . . . . . . . . . . . 5,423 (3,065)
Accounts Payable . . . . . . . . . . . . . . . . . . . . (11,557) (8,722)
Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . (16,732) 5,073
Rent Accrued - Rockport Plant Unit 2 . . . . . . . . . . 16,937 19,290
Other (net). . . . . . . . . . . . . . . . . . . . . . . . (26,978) (5,506)
Net Cash Flows From Operating Activities . . . . . . 198,421 224,923
INVESTING ACTIVITIES:
Construction Expenditures. . . . . . . . . . . . . . . . . (78,957) (83,904)
Proceeds from Sale and Leaseback Transactions and Other. . 1,151 1,207
Net Cash Flows Used For Investing Activities . . . . (77,806) (82,697)
FINANCING ACTIVITIES:
Issuance of Cumulative Preferred Stock . . . . . . . . . . - 34,618
Issuance of Long-term Debt . . . . . . . . . . . . . . . . 96,819 89,221
Retirement of Cumulative Preferred Stock . . . . . . . . . - (35,798)
Retirement of Long-term Debt . . . . . . . . . . . . . . . (101,122) (101,833)
Change in Short-term Debt (net). . . . . . . . . . . . . . (28,200) (38,375)
Dividends Paid on Common Stock . . . . . . . . . . . . . . (83,139) (79,956)
Dividends Paid on Cumulative Preferred Stock . . . . . . . (8,670) (8,364)
Net Cash Flows Used For Financing Activities . . . . (124,312) (140,487)
Net Increase (Decrease) in Cash and Cash Equivalents . . . . (3,697) 1,739
Cash and Cash Equivalents at Beginning of Period . . . . . . 9,907 3,752
Cash and Cash Equivalents at End of Period . . . . . . . . . $ 6,210 $ 5,491
Supplemental Disclosure:
Cash paid for interest net of capitalized amounts was $49,511,000 and
$49,498,000 and for income taxes was $75,420,000 and $66,249,000 in 1995 and
1994, respectively. Noncash acquisitions under capital leases were $19,500,000
and $70,933,000 in 1995 and 1994, respectively.
See Notes to Consolidated Financial Statements.
/TABLE
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(UNAUDITED)
1. GENERAL
The accompanying unaudited consolidated financial statements should be read
in conjunction with the 1994 Annual Report as incorporated in and filed with the
Form 10-K. Certain prior-period amounts have been reclassified to conform to
current-period presentation.
2. FINANCINGS
On June 28, 1995, the Company entered into transactions relating to two
series (Series 1995 A and Series 1995 B) of $50 million City of Rockport,
Indiana, Pollution Control Revenue Refunding Bonds (Bonds) with maturity dates
of June 1, 2025. The proceeds from the Series 1995 A Bonds were used on August
1, 1995 to redeem the $50 million City of Rockport, Indiana, 9-1/4% Fixed Rate
Series 1985 A Bonds. The proceeds from the Series 1995 B Bonds were used on
August 1, 1995 to redeem the $50 million City of Rockport, Indiana, Adjustable
Rate Series 1985 A Bonds. The Series 1995 A Bonds will accrue interest at 6.55%
per annum while the Series 1995 B Bonds will accrue interest at a market rate
set weekly which has ranged from 2.9% to 4.4%. The Company may designate
the use of a daily, commercial paper, or term rate instead of the weekly rate.
3. RESTRUCTURING
The Company recorded severance costs of $5.6 million ($3.7 million net of
income taxes) in the third quarter of 1995 in connection with a planned staffing
reduction of approximately 200 positions at the Company s power plants. The
recorded severance provision includes amounts for the Rockport Plant which is
operated by the Company but jointly owned and leased with an affiliate. Half the
amounts for that plant will be billed to the affiliate which has long-term unit
power agreements for the sale of its power. The staffing reduction is part of
an AEP restructuring program to functionally realign operations in preparation
for increased competition.
4. CONTINGENCIES
In September 1995, the Indiana Supreme Court ruled in favor of the Company
when it denied an appeal of a March 1995 opinion from the Court of Appeals of
Indiana. The appeals court upheld and affirmed a lower court s decision. The
case resulted from an earlier Supreme Court of Indiana decision which overruled
a lower court decision and voided an Indiana Utility Regulatory Commission order
assigning a customer to the Company. The Company had received approximately $29
million in gross revenues from the customer which was not in the Company s
service territory. The lower court had dismissed the case filed under a
provision of Indiana law that allows a utility to seek damages equal to the
gross revenues received by the Company for rendering service in the
designated service territory of another utility.
The Company continues to be involved in certain other matters discussed in
its 1994 Annual Report.
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
THIRD QUARTER 1995 vs. THIRD QUARTER 1994
AND
YEAR-TO-DATE 1995 vs. YEAR-TO-DATE 1994
RESULTS OF OPERATIONS
Although retail energy sales for the third quarter increased
7% due to warmer summer weather, net income decreased $0.3 million
or 1% for the quarter primarily due to the recordation of
provisions for severance pay. In the year-to-date period net
income decreased $10 million or 9% reflecting a decline in sales to
residential customers and unaffiliated utilities during the first
half of 1995 due to milder winter and cooler spring weather, the
provision for severance pay and the favorable federal income tax
effect of the retirement of the Breed Plant in the first quarter of
1994.
Income statement line items which changed significantly were:
Increase (Decrease)
Third Quarter Year-to-Date
(in millions) % (in millions) %
Operating Revenues. . . . $17.8 6 $ 4.8 N.M.
Fuel Expense. . . . . . . 2.4 5 22.1 15
Purchased Power Expense . 9.8 33 (17.0) (15)
Other Operation Expense . 5.4 7 7.3 3
Maintenance Expense . . . (2.2) (6) (10.6) (10)
Federal Income Taxes. . . 2.5 19 7.8 21
Nonoperating Income . . . 0.4 N.M. (3.7) (73)
N.M. = Not Meaningful
The increase in operating revenues for the quarter resulted
from increased energy sales to retail customers, including a 19%
increase to weather-sensitive residential customers reflecting
warmer summer temperatures in 1995. The increase in retail
revenues was partially offset by decreased wholesale energy sales
as energy deliveries to the AEP System Power Pool (Power Pool) were
reduced due to a refueling outage at one unit of the D.C. Cook
Nuclear Plant (Cook Plant).
Year-to-date revenues increased slightly due to increased
energy sales; however, the effects of the increased sales were
largely offset by reduced recoveries of fuel and purchased power
supply costs. Sales to retail customers increased 2% due to the
warmer summer weather in 1995. Year-to-date wholesale energy sales
rose due to the increased availability of the Cook Plant units
mainly because of reduced outages in 1995. Maintenance and
refueling outages were performed on both of the Cook Plant units
during the first nine months of 1994, while only one unit was out
of service for refueling in 1995. During 1994, one of the Cook
Plant units was out of service for refueling from mid-February
until the end of May and the other unit experienced an unscheduled
maintenance outage from late-February through late-April and was
removed from service for refueling in early September. In 1995
only one Cook Plant unit was out of service for unscheduled
maintenance and scheduled refueling from mid-July through early-November.
The reduced fuel and purchased power supply cost
recovery revenues resulted from lower average fuel costs and
reduced purchased power costs which are reflected in regulator-approved fuel
and power supply cost recovery mechanisms. The
reduction in fuel and power supply revenue does not affect net
income since fuel costs are matched with accrued revenues in
accordance with rate commission orders.
Fuel expense increased in the quarter reflecting increased
generation from higher cost fossil units as the availability of
nuclear generation was reduced by the maintenance and refueling
outage of one of the Cook Plant units during most of the third
quarter of 1995. Year-to-date fuel expense increased reflecting a
26% increase in generation due to the increased availability of the
Cook Plant units in the first half of of 1995.
The increase in purchased power expense for the quarter
reflected the unavailability of the one Cook Plant unit and the
weather-related summer demand in 1995. Year-to-date purchased
power expense declined from the prior year due to reduced demand,
as a result of the milder winter weather in 1995, and the Cook
Plant outages in the first half of 1994.
Other operation expense increased mainly due to the provision
for severance pay recorded in the third quarter of 1995 discussed
below and increased accruals of nuclear plant decommissioning
expense. The recordation of an increased provision for
decommissioning expense reflects increased earnings on the nuclear
decommissioning trust funds. The Company records nuclear
decommissioning expense in an amount equal to recoveries through
rates plus the earnings on the nuclear decommissioning trust funds.
The reduction in maintenance expense reflects a lower level of
fossil plant maintenance and reduced preventive maintenance of
transmission and distribution towers and poles. The year-to-date
reduction also includes the effect of the 1994 Breed Plant
retirement.
In both periods federal income taxes attributable to operations
increased due to changes in certain book/tax timing differences
accounted for on a flow-through basis. The quarter increase was
also due to an increase in pre-tax operating income.
Nonoperating income declined in the year-to-date period
reflecting the favorable tax effect in 1994 of the retirement of
the Breed Plant.
FINANCIAL CONDITION
Total plant and property additions including capital leases for
the first nine months were $99 million. During the first nine
months of 1995 short-term debt outstanding decreased $28 million
from year-end levels.
The Company entered into two series of $50 million City of
Rockport, Indiana, Pollution Control Revenue Refunding Bonds
(Bonds) with maturity dates of June 1, 2025. The proceeds were
used to redeem higher interest rate Bonds issued in 1985. The
interest rates for the new series are 6.55% per annum fixed and a
variable rate to be determined weekly. The retired series paid
interest at 9-1/4% and 6-3/4% per annum.
LEGAL MATTERS
In September 1995, the Indiana Supreme Court ruled in favor of
the Company when it denied an appeal of a March 1995 opinion from
the Court of Appeals of Indiana. The appeals court upheld and
affirmed a lower court s decision. The case resulted from an
earlier Supreme Court of Indiana decision which overruled a lower
court decision and voided an Indiana Utility Regulatory Commission
order assigning a customer to the Company. The Company had received
approximately $29 million in gross revenues from the customer which
was not in the Company s service territory. The lower court had
dismissed the case filed under a provision of Indiana law that
allows a utility to seek damages equal to the gross revenues
received by the Company for rendering service in the designated
service territory of another utility.
RESTRUCTURING
As part of an AEP restructuring program, the Company is
reducing staff at the Company s power plants. The restructuring
program, which is part of an effort to prepare for increased
competition, calls for the functional realignment of operations.
As indicated above, in the third quarter of 1995 the Company
provided for the cost of currently identified staff reductions at
its power plants.
KENTUCKY POWER COMPANY
STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
(in thousands)
OPERATING REVENUES . . . . . . . . . .$79,532 $75,346 $237,533 $238,459
OPERATING EXPENSES:
Fuel . . . . . . . . . . . . . . . . 15,654 16,151 55,390 54,571
Purchased Power. . . . . . . . . . . 24,819 23,346 67,446 70,355
Other Operation. . . . . . . . . . . 10,854 9,622 33,135 28,463
Maintenance. . . . . . . . . . . . . 7,016 7,204 20,675 24,712
Depreciation and Amortization. . . . 6,117 5,778 18,236 17,231
Taxes Other Than Federal
Income Taxes . . . . . . . . . . . . 2,078 2,004 6,098 6,272
Federal Income Taxes . . . . . . . . 823 609 2,177 3,236
TOTAL OPERATING EXPENSES. . . 67,361 64,714 203,157 204,840
OPERATING INCOME . . . . . . . . . . . 12,171 10,632 34,376 33,619
NONOPERATING LOSS. . . . . . . . . . . (57) (49) (157) (174)
INCOME BEFORE INTEREST CHARGES . . . . 12,114 10,583 34,219 33,445
INTEREST CHARGES . . . . . . . . . . . 6,114 5,192 17,857 15,466
NET INCOME . . . . . . . . . . . . . .$ 6,000 $ 5,391 $ 16,362 $ 17,979
STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
(in thousands)
BALANCE AT BEGINNING OF PERIOD . . . .$88,075 $87,186 $89,173 $85,296
NET INCOME . . . . . . . . . . . . . . 6,000 5,391 16,362 17,979
CASH DIVIDENDS DECLARED. . . . . . . . 5,730 5,349 17,190 16,047
BALANCE AT END OF PERIOD . . . . . . .$88,345 $87,228 $88,345 $87,228
The common stock of the Company is wholly owned by
American Electric Power Company, Inc.
See Notes to Financial Statements.
/TABLE
KENTUCKY POWER COMPANY
BALANCE SHEETS
(UNAUDITED)
September 30, December 31,
1995 1994
(in thousands)
ASSETS
ELECTRIC UTILITY PLANT:
Production . . . . . . . . . . . . . . . . . . . $231,372 $224,365
Transmission . . . . . . . . . . . . . . . . . . 261,416 258,178
Distribution . . . . . . . . . . . . . . . . . . 305,721 297,754
General. . . . . . . . . . . . . . . . . . . . . 58,322 56,613
Construction Work in Progress. . . . . . . . . . 14,149 15,002
Total Electric Utility Plant . . . . . . 870,980 851,912
Accumulated Depreciation and Amortization. . . . 267,424 259,984
NET ELECTRIC UTILITY PLANT . . . . . . . 603,556 591,928
OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . 6,454 6,533
CURRENT ASSETS:
Cash and Cash Equivalents. . . . . . . . . . . . 940 879
Accounts Receivable. . . . . . . . . . . . . . . 24,065 21,706
Allowance for Uncollectible Accounts . . . . . . (331) (260)
Fuel . . . . . . . . . . . . . . . . . . . . . . 9,162 11,735
Materials and Supplies . . . . . . . . . . . . . 9,352 9,615
Accrued Utility Revenues . . . . . . . . . . . . 5,387 9,128
Prepayments. . . . . . . . . . . . . . . . . . . 2,350 1,476
TOTAL CURRENT ASSETS . . . . . . . . . . 50,925 54,279
REGULATORY ASSETS. . . . . . . . . . . . . . . . . 81,320 76,006
DEFERRED CHARGES . . . . . . . . . . . . . . . . . 8,846 11,049
TOTAL. . . . . . . . . . . . . . . . . $751,101 $739,795
See Notes to Financial Statements.
KENTUCKY POWER COMPANY
BALANCE SHEETS
(UNAUDITED)
September 30, December 31,
1995 1994
(in thousands)
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common Stock - $50 Par Value:
Authorized - 2,000,000 Shares
Outstanding - 1,009,000 Shares . . . . . . . . $ 50,450 $ 50,450
Paid-in Capital. . . . . . . . . . . . . . . . . 68,750 68,750
Retained Earnings. . . . . . . . . . . . . . . . 88,345 89,173
Total Common Shareholder's Equity. . . . 207,545 208,373
First Mortgage Bonds . . . . . . . . . . . . . . 224,213 253,583
Subordinated Debentures. . . . . . . . . . . . . 38,844 -
TOTAL CAPITALIZATION . . . . . . . . . . 470,602 461,956
OTHER NONCURRENT LIABILITIES . . . . . . . . . . . 11,660 11,449
CURRENT LIABILITIES:
Long-term Debt Due Within One Year . . . . . . . 29,436 -
Short-term Debt. . . . . . . . . . . . . . . . . 31,300 55,150
Accounts Payable . . . . . . . . . . . . . . . . 18,769 19,420
Customer Deposits. . . . . . . . . . . . . . . . 3,837 4,297
Taxes Accrued. . . . . . . . . . . . . . . . . . 3,973 6,256
Interest Accrued . . . . . . . . . . . . . . . . 6,336 5,794
Other. . . . . . . . . . . . . . . . . . . . . . 12,151 14,467
TOTAL CURRENT LIABILITIES. . . . . . . . 105,802 105,384
DEFERRED INCOME TAXES. . . . . . . . . . . . . . . 143,707 140,490
DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . 18,932 19,875
DEFERRED CREDITS . . . . . . . . . . . . . . . . . 398 641
CONTINGENCIES (Note 4)
TOTAL. . . . . . . . . . . . . . . . . $751,101 $739,795
See Notes to Financial Statements.
KENTUCKY POWER COMPANY
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30,
1995 1994
(in thousands)
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . $ 16,362 $ 17,979
Adjustments for Noncash Items:
Depreciation . . . . . . . . . . . . . . . . . . . . . . 18,291 17,255
Deferred Income Taxes. . . . . . . . . . . . . . . . . . (1,693) (1,080)
Deferred Investment Tax Credits. . . . . . . . . . . . . (943) (952)
Changes in Certain Current Assets and Liabilities:
Accounts Receivable (net). . . . . . . . . . . . . . . . (2,288) 5,483
Fuel, Materials and Supplies . . . . . . . . . . . . . . 2,836 (437)
Accrued Utility Revenues . . . . . . . . . . . . . . . . 3,741 6,601
Accounts Payable . . . . . . . . . . . . . . . . . . . . (651) (4,356)
Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . (2,283) (643)
Other (net). . . . . . . . . . . . . . . . . . . . . . . . (4,749) 4,639
Net Cash Flows From Operating Activities . . . . . . 28,623 44,489
INVESTING ACTIVITIES - Construction Expenditures . . . . . . (26,169) (32,795)
FINANCING ACTIVITIES:
Capital Contributions from Parent Company. . . . . . . . . - 10,000
Issuance of Subordinated Debentures. . . . . . . . . . . . 38,647 -
Change in Short-term Debt (net). . . . . . . . . . . . . . (23,850) (5,425)
Dividends Paid . . . . . . . . . . . . . . . . . . . . . . (17,190) (16,047)
Net Cash Flows Used For Financing Activities . . . . (2,393) (11,472)
Net Increase in Cash and Cash Equivalents. . . . . . . . . . 61 222
Cash and Cash Equivalents at Beginning of Period . . . . . . 879 858
Cash and Cash Equivalents at End of Period . . . . . . . . . $ 940 $ 1,080
Supplemental Disclosure:
Cash paid for interest net of capitalized amounts was $17,126,000 and $15,801,000
and for income taxes was $4,092,000 and $5,672,000 in 1995 and 1994, respectively.
Noncash acquisitions under capital leases were $2,693,000 and $3,093,000 in 1995
and 1994, respectively.
See Notes to Financial Statements.
KENTUCKY POWER COMPANY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(UNAUDITED)
1. GENERAL
The accompanying unaudited financial statements should be
read in conjunction with the 1994 Annual Report as incorporated
in and filed with the Form 10-K. Certain prior-period amounts
were reclassified to conform with current-period presentation.
2. FINANCING ACTIVITIES
In April 1995 the Company issued $40 million of 8.72%
Junior Subordinated Deferrable Interest Debentures Series A,
due 2025 and used the proceeds primarily to reduce short-term
debt.
3. RESTRUCTURING
The Company recorded severance costs of $1.8 million ($1.1
million net of income taxes) in the third quarter of 1995 in
connection with a planned staffing reduction of approximately
35 positions at the Big Sandy Power Plant and the Company s
share of planned staffing reductions at an affiliated company s
generating plant with which the Company has a unit power
agreement. The staffing reduction is part of an AEP
restructuring program to functionally realign operations in
preparation for increased competition.
4. CONTINGENCIES
The Company continues to be involved in certain matters
discussed in the 1994 Annual Report.
KENTUCKY POWER COMPANY
MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS
THIRD QUARTER 1995 vs. THIRD QUARTER 1994
AND
YEAR-TO-DATE 1995 vs. YEAR-TO-DATE 1994
Net income increased $0.6 million or 11% for the quarter
primarily as a result of increased energy sales to retail customers
attributable to warmer summer weather in 1995. Such increase was
partly offset by the accrual of severance costs due to AEP s
functional realignment. Net income decreased $1.6 million or 9%
for the year-to-date period mainly due to a decrease in sales to
unaffiliated utilities, the accrual of severance costs and
increased interest expense resulting from additional long-term
borrowings.
Income statement items that changed significantly were:
Increase (Decrease)
Third Quarter Year-To-Date
(in millions) % (in millions) %
Operating Revenues $ 4.2 6 $(0.9) N.M.
Purchased Power Expense 1.5 6 (2.9) (4)
Other Operation Expense 1.2 13 4.7 16
Maintenance Expense (0.2) (3) (4.0) (16)
Federal Income Taxes 0.2 35 (1.1) (33)
Interest Charges 0.9 18 2.4 15
N.M. = Not Meaningful
The warmer summer weather in 1995 led to a residential sales
increase of 19% and a commercial sales increase of 11% for the
quarter. Although warmer summer weather caused year-to-date retail
energy sales to rise 4%, year-to-date operating revenues declined
due to a 12% decline in wholesale energy sales reflecting reduced
energy deliveries to the AEP System Power Pool (Power Pool) and
reduced demand by unaffiliated utilities due to mild winter weather
and cooler spring weather in 1995.
The increase in purchased power expense for the quarter
resulted from increased Power Pool capacity charges and increased
energy purchases from unaffiliated utilities to meet the increased
energy demand resulting from the hot summer weather in 1995. As a
Power Pool member whose internal demand exceeds its capacity, the
Company pays its share of capacity charges allocated to Power Pool
members based on their relative peak demands. An increase in the
Company's prior twelve month peak demand relative to the total peak
demand of all Power Pool members caused the increase in Power Pool
capacity charges. The decrease in year-to-date purchased power
expense resulted from decreased energy purchases from unaffiliated
utilities for pass-through sales due to the mild winter and spring
weather in 1995, decreased purchases from an affiliated company
under a unit power agreement due to an outage at the affiliate s
generating unit and a reduction in energy purchases from the AEP
System Power Pool reflecting increased availability of lower cost
affiliated nuclear generation. These decreases were partly offset
by an increase in the Company's share of Power Pool capacity
charges.
A $1.8 million ($1.1 million after tax) provision for severance
costs related to planned power plant staffing reductions recorded
in the third quarter of 1995 was the reason for the increase in
other operation expense during the quarter. The staffing
reductions are part of an AEP restructuring program and the
resulting functional realignment of operations as part of
management's efforts to prepare for increased competition. The
year-to-date increase in other operation expense reflects the
severance provision, accruals for incentive pay and a reduction in
transmission equalization credits under the AEP System transmission
equalization agreement as a result of the aforementioned increase
in the Company s peak demand. The transmission agreement provides
for the sharing through equalization payments and receipts of the
cost of investment in the AEP System s transmission facilities in
proportion to the System companies respective peak demands. On
that basis, the Company receives equalization payments.
Maintenance expense decreased reflecting the cost of
significant distribution line maintenance expenditures to repair
damage from severe winter storms in 1994 and a decrease in planned
steam plant maintenance.
The decrease in federal income tax expense in the year-to-date
period was primarily due to the decrease in pre-tax operating
income.
The issuance of $40 million of Junior Subordinated Debentures
in April 1995 was the main reason for the increase in interest
charges.
OHIO POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
(in thousands)
OPERATING REVENUES . . . . . . . . .$507,516 $429,496 $1,360,319 $1,333,889
OPERATING EXPENSES:
Fuel . . . . . . . . . . . . . . . 185,612 167,530 458,591 528,119
Purchased Power. . . . . . . . . . 19,315 12,503 49,118 50,661
Other Operation. . . . . . . . . . 96,623 50,295 238,429 153,001
Maintenance. . . . . . . . . . . . 34,751 37,829 105,951 110,909
Depreciation and Amortization. . . 34,001 33,331 101,730 98,913
Taxes Other Than Federal
Income Taxes . . . . . . . . . . 44,312 44,804 131,466 133,695
Federal Income Taxes . . . . . . . 24,624 21,014 71,557 65,786
TOTAL OPERATING EXPENSES . 439,238 367,306 1,156,842 1,141,084
OPERATING INCOME . . . . . . . . . . 68,278 62,190 203,477 192,805
NONOPERATING INCOME. . . . . . . . . 3,886 2,624 9,295 4,820
INCOME BEFORE INTEREST CHARGES . . . 72,164 64,814 212,772 197,625
INTEREST CHARGES . . . . . . . . . . 23,356 22,416 70,424 67,016
NET INCOME . . . . . . . . . . . . . 48,808 42,398 142,348 130,609
PREFERRED STOCK DIVIDEND
REQUIREMENTS . . . . . . . . . . . 3,860 3,826 11,578 11,476
EARNINGS APPLICABLE TO COMMON STOCK.$ 44,948 $ 38,572 $ 130,770 $ 119,133
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
(in thousands)
BALANCE AT BEGINNING OF PERIOD . . .$499,330 $485,759 $483,222 $474,500
NET INCOME . . . . . . . . . . . . . 48,808 42,398 142,348 130,609
DEDUCTIONS:
Cash Dividends Declared:
Common Stock . . . . . . . . . . 34,857 34,617 104,571 103,851
Cumulative Preferred Stock . . . 3,826 3,826 11,476 11,476
Capital Stock Expense. . . . . . . 34 33 102 101
BALANCE AT END OF PERIOD . . . . . .$509,421 $489,681 $509,421 $489,681
The common stock of the Company is wholly owned by
American Electric Power Company, Inc.
See Notes to Consolidated Financial Statements.
/TABLE
OHIO POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30, December 31,
1995 1994
(in thousands)
ASSETS
ELECTRIC UTILITY PLANT:
Production . . . . . . . . . . . . . . . . . . . . $2,536,043 $2,516,390
Transmission . . . . . . . . . . . . . . . . . . . 796,380 790,736
Distribution . . . . . . . . . . . . . . . . . . . 814,054 798,387
General (including mining assets). . . . . . . . . 724,851 782,719
Construction Work in Progress. . . . . . . . . . . 65,077 49,889
Total Electric Utility Plant . . . . . . . 4,936,405 4,938,121
Accumulated Depreciation and Amortization. . . . . 2,092,690 2,077,626
NET ELECTRIC UTILITY PLANT . . . . . . . . 2,843,715 2,860,495
OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . 110,171 120,856
CURRENT ASSETS:
Cash and Cash Equivalents. . . . . . . . . . . . . 18,651 30,700
Accounts Receivable. . . . . . . . . . . . . . . . 198,528 158,681
Allowance for Uncollectible Accounts . . . . . . . (1,581) (1,019)
Fuel . . . . . . . . . . . . . . . . . . . . . . . 128,271 147,152
Materials and Supplies . . . . . . . . . . . . . . 74,032 67,719
Accrued Utility Revenues . . . . . . . . . . . . . 25,969 28,775
Prepayments. . . . . . . . . . . . . . . . . . . . 50,740 43,894
TOTAL CURRENT ASSETS . . . . . . . . . . . 494,610 475,902
REGULATORY ASSETS. . . . . . . . . . . . . . . . . . 566,404 540,080
DEFERRED CHARGES . . . . . . . . . . . . . . . . . . 85,199 153,807
TOTAL. . . . . . . . . . . . . . . . . . $4,100,099 $4,151,140
See Notes to Consolidated Financial Statements.
OHIO POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30, December 31,
1995 1994
(in thousands)
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common Stock - No Par Value:
Authorized - 40,000,000 Shares
Outstanding - 27,952,473 Shares. . . . . . . . . $ 321,201 $ 321,201
Paid-in Capital. . . . . . . . . . . . . . . . . . 461,346 463,100
Retained Earnings. . . . . . . . . . . . . . . . . 509,421 483,222
Total Common Shareholder's Equity. . . . . 1,291,968 1,267,523
Cumulative Preferred Stock:
Not Subject to Mandatory Redemption. . . . . . . 126,240 126,240
Subject to Mandatory Redemption. . . . . . . . . 115,000 115,000
Long-term Debt . . . . . . . . . . . . . . . . . . 1,089,278 1,188,319
TOTAL CAPITALIZATION . . . . . . . . . . . 2,622,486 2,697,082
OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . 196,383 181,446
CURRENT LIABILITIES:
Long-term Debt Due Within One Year . . . . . . . . 56,049 670
Short-term Debt. . . . . . . . . . . . . . . . . . 32,200 17,235
Accounts Payable . . . . . . . . . . . . . . . . . 92,054 122,432
Taxes Accrued. . . . . . . . . . . . . . . . . . . 99,635 156,525
Interest Accrued . . . . . . . . . . . . . . . . . 30,051 22,681
Obligations Under Capital Leases . . . . . . . . . 27,242 25,314
Other. . . . . . . . . . . . . . . . . . . . . . . 95,410 95,218
TOTAL CURRENT LIABILITIES. . . . . . . . . 432,641 440,075
DEFERRED INCOME TAXES. . . . . . . . . . . . . . . . 718,102 712,646
DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . 50,898 53,430
DEFERRED CREDITS . . . . . . . . . . . . . . . . . . 79,589 66,461
CONTINGENCIES (Note 4)
TOTAL. . . . . . . . . . . . . . . . . . $4,100,099 $4,151,140
See Notes to Consolidated Financial Statements.
OHIO POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30,
1995 1994
(in thousands)
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . $ 142,348 $ 130,609
Adjustments for Noncash Items:
Depreciation, Depletion and Amortization . . . . . . . . 114,836 109,780
Deferred Income Taxes. . . . . . . . . . . . . . . . . . 14,489 (19,438)
Deferred Investment Tax Credits. . . . . . . . . . . . . (2,532) (2,606)
Deferred Fuel Costs (net). . . . . . . . . . . . . . . . (21,126) (4,351)
Amortization of Deferred Property Taxes. . . . . . . . . 50,437 50,808
Changes in Certain Current Assets and Liabilities:
Accounts Receivable (net). . . . . . . . . . . . . . . . (39,285) 15,094
Fuel, Materials and Supplies . . . . . . . . . . . . . . 12,568 48,419
Accrued Utility Revenues . . . . . . . . . . . . . . . . 2,806 8,682
Prepayments. . . . . . . . . . . . . . . . . . . . . . . (6,846) 26
Accounts Payable . . . . . . . . . . . . . . . . . . . . (30,378) (52,798)
Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . (56,890) (65,955)
Interest Accrued . . . . . . . . . . . . . . . . . . . . 7,370 9,844
Other (net). . . . . . . . . . . . . . . . . . . . . . . . 30,155 (4,319)
Net Cash Flows From Operating Activities . . . . . . 217,952 223,795
INVESTING ACTIVITIES:
Construction Expenditures. . . . . . . . . . . . . . . . . (87,302) (110,660)
Proceeds from Sale of Property and Other . . . . . . . . . 2,571 36,693
Net Cash Flows Used For Investing Activities . . . . (84,731) (73,967)
FINANCING ACTIVITIES:
Issuance of Long-term Debt . . . . . . . . . . . . . . . . - 48,302
Change in Short-term Debt (net). . . . . . . . . . . . . . 14,965 (38,146)
Retirement of Long-term Debt . . . . . . . . . . . . . . . (44,188) (54,566)
Dividends Paid on Common Stock . . . . . . . . . . . . . . (104,571) (103,851)
Dividends Paid on Cumulative Preferred Stock . . . . . . . (11,476) (11,476)
Net Cash Flows Used For Financing Activities . . . . (145,270) (159,737)
Net Decrease in Cash and Cash Equivalents. . . . . . . . . . (12,049) (9,909)
Cash and Cash Equivalents at Beginning of Period . . . . . . 30,700 20,803
Cash and Cash Equivalents at End of Period . . . . . . . . . $ 18,651 $ 10,894
Supplemental Disclosure:
Cash paid for interest net of capitalized amounts was $61,043,000 and $55,187,000
and for income taxes was $51,487,000 and $85,171,000 in 1995 and 1994,
respectively. Noncash acquisitions under capital leases were $25,908,000 and
$31,837,000 in 1995 and 1994, respectively.
See Notes to Consolidated Financial Statements.
OHIO POWER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(UNAUDITED)
1. GENERAL
The accompanying unaudited consolidated financial state-ments should
be read in conjunction with the 1994 Annual Report
as incorporated in and filed with the Form 10-K. Certain
prior-period amounts have been reclassified to conform to
current-period presentation.
2. FINANCING ACTIVITY
In August 1995, the Company redeemed $43.6 million of the
9-7/8% Series First Mortgage Bonds due in 2020. At September
30, 1995, $2.5 million of the 9-7/8% Series First Mortgage
Bonds remained outstanding.
In October 1995, the Company issued $85 million of an 8.16%
Series of Junior Subordinated Deferrable Interest Debentures
due in 2025. The proceeds will be used to redeem three series
of $100 par value cumulative preferred stock in November 1995:
350,000 shares of the 7.60% Series; 350,000 shares of the 7-6/10%
Series; and 150,000 shares of the 8.04% Series.
3. RESTRUCTURING
The Company recorded severance costs of $11.1 million ($7.2
million net of income taxes) in the third quarter of 1995 in
connection with a planned staffing reduction of approximately
360 positions at the Company s power plants. The staffing
reduction is part of an AEP restructuring program to
functionally realign operations in preparation for increased
competition.
4. CONTINGENCIES
The Company continues to be involved in certain other
matters discussed in the 1994 Annual Report.
OHIO POWER COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
THIRD QUARTER 1995 vs. THIRD QUARTER 1994
AND
YEAR-TO-DATE 1995 vs. YEAR-TO-DATE 1994
RESULTS OF OPERATIONS
Net income increased $6.4 million or 15% for the quarter
primarily due to increased energy sales resulting from warmer
weather and a retail base rate increase in March of 1995. Net
income increased $11.7 million or 9% for the year-to-date period
mainly due to the retail rate increase and the favorable effect of
a $12.7 million adjustment to revenues recorded in June 1995 under
a major industrial contract.
Income statement lines which changed significantly were:
Increase (Decrease)
Third Quarter Year-To-Date
(in millions) % (in millions) %
Operating Revenues. . . . . . $ 78.0 18 $ 26.4 2
Fuel Expense. . . . . . . . . 18.1 11 (69.5) (13)
Purchased Power Expense . . . 6.8 54 (1.5) (3)
Other Operation Expense . . . 46.3 92 85.4 56
Maintenance Expense . . . . . (3.1) (8) (5.0) (4)
Federal Income Taxes. . . . . 3.6 17 5.8 9
The large increase in operating revenues for the third quarter
was primarily due to an 83% increase in sales to wholesale
customers and increased usage by residential and commercial retail
customers resulting from the warm summer weather. Wholesale energy
sales rose mainly due to an increase in energy supplied to the AEP
System Power Pool (Power Pool) reflecting increased weather-related
energy demand of affiliated members of the Power Pool, increased
sales to unaffiliated utilities by the Power Pool and the
unavailability of an affiliate s nuclear generating unit which was
out of service for maintenance and refueling during part of the
quarter. The increase in retail base rates also contributed to the
increase in revenues.
Year-to-date operating revenues increased mainly due to the
increase in retail base rates and the industrial revenues contract
adjustment in June 1995. Energy sales during the nine-month period
remained unchanged. A 2% increase in retail energy sales as a
result of increased energy usage and growth in the number of retail
customers offset a 4% decline in energy sales to wholesale
customers during the year. Wholesale sales decreased primarily due
to a reduction in the Company s share of sales to unaffiliated
utilities by the Power Pool resulting from mild weather during the
first six months of 1995.
Fuel and purchased power expenses increased during the third
quarter due to the weather-related increase in energy demand which
resulted in increased generation and fuel usage and increased
energy purchases. A lower average cost of fuel consumed partially
offset the effects of increased generation during the quarter. The
primary reason for the decrease in year-to-date fuel expense was
lower average fuel cost which resulted mainly from a reduction in
coal prices under the terms of long-term coal contracts. The
effect of retiring coal-mining equipment at an affiliated mining
operation in June 1994 also contributed to the decline in
comparable fuel expense.
The significant increase in other operation expense in both
periods was primarily due to rent expense and other operating costs
of the Gavin Plant's flue gas desulfurization systems (scrubbers)
which went into service in 1995 and an $11.1 million ($7.2 million
after-tax) provision for severance pay recorded in the third
quarter of 1995 discussed below.
Maintenance expense declined in both periods as a result of
reduced steam plant boiler maintenance. Federal income tax expense
attributable to operations increased in both periods due to the
increase in pre-tax operating income.
FINANCIAL CONDITION
Total plant and property additions including capital leases for
the first nine months of 1995 were $114 million.
During the first nine months of 1995, the Company redeemed
$43.6 million of the 9-7/8% Series First Mortgage Bonds due in
2020. Short-term debt increased by $15 million since the beginning
of the year.
In October 1995, the Company issued $85 million of an 8.16%
Series of Junior Subordinated Deferrable Interest Debentures due in
2025. The proceeds will be used to redeem three series of $100 par
value cumulative preferred stock in November 1995: 350,000 shares
of the 7.60% Series; 350,000 shares of the 7-6/10% Series; and
150,000 shares of the 8.04% Series.
RESTRUCTURING
As part of an AEP restructuring program, the Company is
reducing staff at its power plants. The restructuring program,
which is part of an effort to prepare for increased competition,
calls for the functional realignment of operations. As indicated
above, in the third quarter of 1995 the Company provided for the
cost of currently identified staff reductions at its power plants.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
American Electric Power Company, Inc. ("AEP") and Ohio Power
Company ("OPCo")
Reference is made to page 34 of the Annual Report on Form 10-K
for the year ended December 31, 1994 ("1994 10-K") and page II-1 of
the Quarterly Report on Form 10-Q for the quarter ended June 30,
1995 for a discussion of proceedings instituted by the U.S.
Environmental Protection Agency ("Federal EPA") alleging that
OPCo's Kammer Plant has been operating in violation of applicable
federally enforceable air pollution control requirements for sulfur
dioxide since January 1, 1989. On September 22, 1995, the West
Virginia Division of Environmental Protection submitted a proposed
schedule to Federal EPA providing for development of a revised
State Implementation Plan for sulfur dioxide for sources in the
Marshall County area by November 1998. On September 25, 1995,
Federal EPA accepted the proposal. Negotiations are underway to
modify the consent decree to reflect this proposal and extend the
deadline for compliance by the Kammer Plant with the federally
enforceable sulfur dioxide emission limit. At the request of the
parties, a moratorium has been granted by the U.S. District Court
with respect to the penalty portion of the litigation to allow the
parties to pursue settlement negotiations.
Item 5. Other Information.
AEP, AEP Generating Company ("AEGCo"), Appalachian Power Company
("APCo"), Columbus Southern Power Company ("CSPCo"), Indiana
Michigan Power Company ("I&M"), Kentucky Power Company ("KEPCo")
and OPCo
Reference is made to pages 2 and 3 of the 1994 10-K and page
II-3 of the Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995 for a discussion of possible changes to the Public
Utility Holding Company Act of 1935, as amended ("PUHCA"). On
October 12, 1995, legislation was introduced in the U.S. Senate to
repeal PUHCA. The proposed legislation generally codifies the
changes recommended by the Securities and Exchange Commission in
June 1995.
AEP and APCo
Reference is made to pages 8 through 10 of the 1994 10-K for
a discussion of competition. By order dated September 18, 1995,
the State Corporation Commission of Virginia ("Virginia SCC")
instituted a proceeding to review and consider policy regarding
restructuring and the role of competition in the electric utility
industry in Virginia. The Virginia SCC has directed its staff to
conduct an investigation of current issues in the electric utility
industry and to file a report of its observations and
recommendations on issues identified in the Virginia SCC's order.
The staff report is scheduled for issuance on or before March 29,
1996.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
AEP, APCo and OPCo
Exhibit 10 - Performance Share Incentive Plan as
Amended and Restated through October 1, 1995.
APCo, CSPCo, I&M, KEPCo and OPCo
Exhibit 12 - Statement re: Computation of Ratios.
AEP, AEGCo, APCo, CSPCo, I&M, KEPCo and OPCo
Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K:
AEP, AEGCo, APCo, CSPCo, I&M, KEPCo and OPCo
No reports on Form 8-K were filed during the quarter
ended September 30, 1995.
In the opinion of the companies, the financial statements contained herein
reflect all adjustments (consisting of only normal recurring accruals) which are
necessary to a fair presentation of the results of operations for the interim
periods.
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. The signatures for each undersigned
company shall be deemed to relate only to matters having reference to such
company and any subsidiaries thereof.
AMERICAN ELECTRIC POWER COMPANY, INC.
G.P. Maloney P.J. DeMaria
G.P. Maloney, Vice President P.J. DeMaria, Controller
and Secretary
AEP GENERATING COMPANY
G.P. Maloney P.J. DeMaria
G.P. Maloney, Vice President P.J. DeMaria, Vice President
and Controller
APPALACHIAN POWER COMPANY
G.P. Maloney P.J. DeMaria
G.P. Maloney, Vice President P.J. DeMaria, Vice President
and Controller
COLUMBUS SOUTHERN POWER COMPANY
G.P. Maloney P.J. DeMaria
G.P. Maloney, Vice President P.J. DeMaria, Vice President
and Controller
INDIANA MICHIGAN POWER COMPANY
G.P. Maloney P.J. DeMaria
G.P. Maloney, Vice President P.J. DeMaria, Vice President
and Controller
KENTUCKY POWER COMPANY
G.P. Maloney P.J. DeMaria
G.P. Maloney, Vice President P.J. DeMaria, Vice President
and Controller
OHIO POWER COMPANY
G.P. Maloney P.J. DeMaria
G.P. Maloney, Vice President P.J. DeMaria, Vice President
and Controller
Date: November 10, 1995
II-5