UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
Quarterly report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
X For the quarterly period ended June 30, 1996 or
Transition report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the transition period from ______________ to
____________.
Commission file number: 1-3368
THE EMPIRE DISTRICT ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
Kansas 44-0236370
(State of Incorporation) (I.R.S. Employer
Identification No.)
602 Joplin Street, Joplin, Missouri 64801
(Address of principal executive offices) (zip code)
Registrant's telephone number: (417) 625-5100
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Common stock outstanding as of August 1, 1996: 16,303,571
shares.
THE EMPIRE DISTRICT ELECTRIC COMPANY
INDEX
Page Number
Part I - Financial Information:
Item 1. Financial Statements:
a. Statements of Income 3
b. Balance Sheets 6
c. Statements of Cash Flows 7
d. Notes to Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Part II Other Information:
- -
Item 1. Legal Proceedings - (none)
Item 2. Changes in Securities - (none)
Item 3. Defaults Upon Senior Securities - (none)
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended
June 30,
1996 1995
Operating revenues:
Electric $47,347,988 $42,226,197
Water 258,315 238,752
47,606,303 42,464,949
Operating revenue deductions:
Operating expenses:
Fuel 7,270,682 6,814,283
Purchased power 12,694,375 8,339,702
Other 7,202,533 7,827,310
Total operating expenses 27,167,590 22,981,295
Maintenance and repairs 4,379,212 3,374,389
Depreciation and amortization 5,356,981 4,826,221
Provision for income taxes 1,498,050 1,803,790
Other taxes 2,821,125 2,475,626
41,222,958 35,461,321
Operating income 6,383,345 7,003,628
Other income and deductions:
Allowance for equity funds used 162,653 336,502
during construction
Interest income 46,862 140,047
Other - net (47,449) (91,125)
162,066 385,424
Income before interest charges 6,545,411 7,389,052
Interest charges:
Long-term debt 3,695,737 3,873,631
Commercial paper 59,449 99,988
Allowance for borrowed funds used (143,518) (400,971)
during construction
Other 82,789 84,633
3,694,457 3,657,281
Net income 2,850,954 3,731,771
Preferred stock dividend requirements 604,085 604,085
Net income applicable to common stock $2,246,869 $3,127,686
Weighted average number of common 16,119,268 14,697,172
shares outstanding
Earnings per weighted average share of $ 0.14 $ 0.21
common stock
Dividends per share of common stock $ 0.32 $ 0.32
<FOOTNOTE)
See accompanying Notes to Financial Statements.
STATEMENTS OF INCOME (UNAUDITED)
Six Months Ended
June 30,
1996 1995
Operating revenues:
Electric $94,730,538 $84,860,719
Water 515,828 472,861
95,246,366 84,860,580
Operating revenue deductions:
Operating expenses:
Fuel 15,910,399 14,205,348
Purchased power 23,796,300 16,238,250
Other 14,674,663 15,449,432
Total operating expenses 54,381,362 45,893,030
Maintenance and repairs 7,141,861 6,192,899
Depreciation and amortization 10,639,395 9,498,930
Provision for income taxes 3,493,660 3,820,545
Other taxes 5,822,142 5,004,243
81,478,420 70,409,647
Operating income 13,767,946 14,450,933
Other income and deductions:
Allowance for equity funds used during 305,753 739,947
construction
Interest income 73,712 169,192
Other - net (162,696) (40,665)
216,769 868,474
Income before interest charges 13,984,715 15,319,407
Interest charges:
Long-term debt 7,391,474 7,466,347
Commercial paper 236,960 372,044
Allowance for borrowed funds used (285,948) (959,498)
during construction
Other 144,607 142,754
7,487,093 7,021,647
Net income 6,497,622 8,297,760
Preferred stock dividend requirements 1,208,170 1,208,170
Net income applicable to common stock $5,289,452 $7,089,590
Weighted average number of common 15,678,758 14,333,650
shares outstanding
Earnings per weighted average share of $ 0.34 $ 0.49
common stock
Dividends per share of common stock $ 0.64 $ 0.64
<FOOTNOTE>
See accompanying Notes to Financial Statements.
STATEMENTS OF INCOME (UNAUDITED)
Twelve Months Ended
June 30,
1996 1995
Operating revenues:
Electric $202,190,579 $178,380,726
Water 1,033,268 968,822
203,223,847 179,349,548
Operating revenue deductions:
Operating expenses:
Fuel 33,630,244 30,259,513
Purchased power 43,674,228 33,246,801
Other 32,427,109 31,270,066
Voluntary early retirement program 4,583,188 -
Total operating expenses 114,314,769 94,776,380
Maintenance and repairs 13,734,452 12,183,558
Depreciation and amortization 20,991,164 18,714,344
Provision for income taxes 10,093,115 10,478,075
Other taxes 11,622,750 10,167,619
170,756,250 146,319,976
Operating income 32,467,597 33,029,572
Other income and deductions:
Allowance for equity funds used during 635,584 1,146,432
construction
Interest income 156,012 244,977
Other - net (322,981) (186,399)
468,615 1,205,010
Income before interest charges 32,936,212 34,234,582
Interest charges:
Long-term debt 14,783,791 14,072,923
Commercial paper 367,639 725,086
Allowance for borrowed funds used (495,255) (1,656,722)
during construction
Other 282,350 260,995
14,938,525 13,402,282
Net income 17,997,687 20,832,300
Preferred stock dividend requirements 2,416,340 2,416,340
Net income applicable to common stock $15,581,347 $18,415,960
Weighted average number of common 15,398,696 14,080,338
shares outstanding
Earnings per weighted average share of $ 1.01 $ 1.31
common stock
Dividends per share of common stock $ 1.28 $ 1.28
<FOOTNOTE>
See accompanying Notes to Financial Statements.
BALANCE SHEETS
June 30,
1996 December 31,
(Unaudited) 1995
ASSETS
Utility plant, at original cost:
Electric $699,297,837 $677,583,831
Water 5,180,059 5,073,019
Construction work in progress 15,647,634 16,303,408
720,125,530 698,960,258
Accumulated depreciation 232,907,238 223,268,355
487,218,292 475,691,903
Current assets:
Cash and cash equivalents 3,911,109 3,816,776
Accounts receivable - trade, net 13,848,860 12,512,800
Accrued unbilled revenues 7,326,048 6,579,858
Accounts receivable - other 1,586,502 1,745,999
Fuel, materials and supplies 14,989,933 14,511,898
Prepaid expenses 763,047 682,413
42,425,499 39,849,744
Deferred charges:
Regulatory asset 25,688,005 25,589,864
Unamortized debt expenses 14,121,850 14,546,428
Other 4,277,967 1,690,334
44,087,822 41,826,626
Total Assets $573,731,613 $557,368,273
CAPITALIZATION AND LIABILITIES:
Common stock, $1 par value, 16,293,126
and 15,215,933 shares issued and
outstanding, respectively $16,293,126 $15,215,933
Capital in excess of par value 142,536,113 125,690,842
Retained earnings (Note 2) 47,454,495 52,230,584
Total common stockholders' equity 206,283,734 193,137,359
Preferred stock 32,901,800 32,901,800
Long-term debt 194,712,746 194,704,814
433,898,280 420,743,973
Current liabilities:
Accounts payable and accrued 13,373,762 14,308,497
liabilities
Commercial paper 13,000,000 14,000,000
Customer deposits 2,633,726 2,516,903
Interest accrued 3,430,777 3,354,668
Taxes accrued, including income taxes 5,574,222 1,486,304
38,012,487 35,666,372
Noncurrent liabilities and deferred
credits:
Regulatory liability 19,158,375 19,680,363
Deferred income taxes 61,998,392 60,495,301
Unamortized investment tax credits 9,970,370 10,141,000
Postretirement benefits other than 4,359,879 4,343,938
pensions
Other 6,333,830 6,297,326
101,820,846 100,957,928
Total Capitalization and Liabilities $573,731,613 $557,368,273
<FOOTNOTE>
See accompanying Notes to Financial Statements.
STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended
June 30,
1996 1995*
Operating activities:
Net income $6,497,622 $8,297,760
Adjustments to reconcile net income to
cash flows:
Depreciation and amortization 11,204,183 10,056,015
Deferred income taxes - net 767,409 925,577
Investment tax credit - net (170,630) (196,720)
Allowance for equity funds used
during construction (305,753) (739,947)
Issuance of common stock for 401(k)
plan 319,578 332,584
Other 1,554,682 1,865,344
Cash flows impacted by changes in:
Receivables and accrued unbilled
revenues (1,922,753) 282,126
Fuel, materials and supplies (478,035) (1,681,657)
Prepaid expenses and deferred
charges (2,135,212) 63,921
Accounts payable and accrued
liabilities (934,735) 601,341
Customer deposits, interest and
taxes accrued 4,280,850 2,823,364
Other liabilities and deferred
credits (1,487,229) (2,021,869)
Net cash provided by operating activities 17,189,977 20,607,839
Investing activities:
Construction expenditures (22,730,571) (28,301,277)
Allowance for equity funds used
during construction 305,753 739,947
Net cash used in investing activities (22,424,818) (27,561,330)
Financing activities:
Proceeds from issuance of first
mortgage bonds - 40,000,000
Proceeds from issuance of common
stock 17,602,886 17,574,438
Dividends (11,273,711) (10,470,821)
Repayment of first mortgage bonds - (30,125,000)
Premium paid on extinguished debt - (1,500,000)
Payment of debt issue costs - (548,488)
Net issuances from short-term
borrowings (1,000,000) (8,000,000)
Net cash provided by financing
activities 5,329,175 6,930,129
Net increase (decrease) in cash and
cash equivalents 94,334 (23,362)
Cash and cash equivalents at beginning
of period 3,816,775 3,362,653
Cash and cash equivalents at end of
period $3,911,109 $3,339,291
*Certain reclassifications have been made to conform with
current year reporting methodology.
<FOOTNOTE>
See accompanying Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Note 1 - Summary of Significant Accounting Policies
The accompanying interim financial statements do not
include all disclosures included in the annual financial
statements and therefore should be read in conjunction with
the financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995.
The information furnished reflects all adjustments,
consisting only of normal recurring adjustments, which are, in
the opinion of the Company, necessary to present fairly the
results for the interim periods presented.
Note 2 - Retained Earnings
Balance at January 1, 1996 $52,230,584
Changes January 1 through March 31:
Net Income 3,646,668
Quarterly cash dividends on common stock:
$0.32 per share (4,872,395)
Quarterly cash dividends on preferred stock:
8-1/8% cumulative - $0.203125 per share (507,813)
5% cumulative - $0.125 per share (48,772)
4-3/4% cumulative - $0.11875 per share (47,500)
Total changes January 1 through March 31 (1,829,812)
Balance April 1, 1996 50,400,772
Changes April 1 through June 30:
Net Income 2,850,954
Quarterly cash dividends on common stock:
$0.32 per share (5,193,146)
Quarterly cash dividends on preferred stock:
8-1/8% cumulative - $0.203125 (507,812)
5% cumulative - $0.125 per share (48,773)
4-3/4% cumulative - $0.11875 per share (47,500)
Total changes April 1 through June 30 (2,946,277)
Balance June 30, 1996 $47,454,495
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS
The following discussion analyzes significant changes in
the results of operations for the three-month, six-month and
twelve-month periods ended June 30, 1996, compared to the same
periods ended June 30, 1995.
Operating Revenues and Kilowatt-Hour Sales
The Company's total electric operating revenues increased
approximately $5.1 million (12.1%) during the second quarter
of 1996 compared to the second quarter of 1995. Approximately
39% of total electric operating revenues during the second
quarter of 1996 were from residential customers, 31% from
commercial, 19% from industrial, 5% from wholesale on-system
customers and 2% from wholesale off-system customers. The
remainder of such revenues was derived from miscellaneous
sources. The percentage changes from the prior year in
kilowatt-hour ("Kwh") sales and revenue by major customer
class were as follows:
Operating
Kwh Sales Revenues
Six Twelve Six Twelve
Second Months Months Second Months Months
Quarter Ended Ended Quarter Ended Ended
Residential 15.7% 16.5% 16.1% 14.1% 14.3% 17.0%
Commercial 12.8 12.9 12.3 11.0 11.8 13.8
Industrial 7.2 6.2 5.1 8.9 7.6 7.8
Wholesale On-
System 10.5 9.2 7.6 23.0 20.6 14.0
Total System 11.8 12.2 11.4 12.2 12.4 14.0
Residential Kwh sales and operating revenue increased
substantially during the second quarter of 1996 compared to
the same period of 1995, primarily due to weather conditions
which were significantly warmer than those experienced during
the second quarter of 1995, when temperatures were much cooler
than average. An increase of 2.3% in the average number of
residential customers served over the same period a year ago
also contributed to the increase in Kwh sales and related
revenue. Residential revenues were also positively affected by
the increase in Missouri rates which became effective November
15, 1995.
Commercial Kwh sales and operating revenue increased
during the quarter reflecting the warmer temperatures and an
increase of 3.6% in the average number of commercial customers
served over the same period last year. Both commercial and
industrial Kwh sales and related revenues were positively
affected by continuing increases in business activity
throughout the Company's service territory. The increase in
industrial revenues was due in part to the November 1995
increase in Missouri rates.
Residential and commercial Kwh sales increased more than
the corresponding increases in revenues during the quarter and
six-months ended June 30, 1996 due to the effect of changes in
the Company's rate design as a result of its 1994 Missouri
rate increase. This restructuring resulted in, among other
things, the shifting of revenue from winter billing periods to
summer billing periods.
On-system wholesale Kwh sales were up during the period
reflecting the weather conditions discussed above. The larger
percentage increase in revenues associated with these FERC
regulated sales resulted from the operation of the fuel
adjustment clause applicable to such sales, which permits the
pass through to customers of higher fuel and purchased power
costs.
For the six and twelve months ended June 30, 1996, Kwh
sales to and operating revenues from the Company's on-system
customers were up over the year earlier periods, primarily as
a result of the warmer temperatures experienced during June
1996 compared to the cooler than normal weather during the
second quarter of 1995, and also reflecting significantly
colder weather during the first quarter of 1996, significant
customer growth throughout the Company's service territory and
the effect of electric rate increases in Missouri in 1994 and
1995.
In addition to sales to its own customers, the Company
also sells power to other utilities to the extent it is
available, and provides transmission service through its
system for transactions between other energy suppliers. For
the second quarter of 1996, revenues from such transactions
amounted to approximately $1.7 million, compared with
approximately $1.6 million during the second quarter of 1995.
For the six months ended June 30, 1996, revenues from such off-
system transactions were approximately $3.1 million, compared
with approximately $2.8 million during the six months ended
June 30, 1995. For the twelve months ended June 30, 1996,
revenues from such off-system transactions were approximately
$6.5 million, compared with approximately $6.6 million during
the twelve months ended June 30, 1995. The increase in revenue
from off-system transactions during the three-month and six-
month ended current periods was due primarily to an increase
in transmission service transactions through the Western
Systems Power Pool, of which the Company is a member.
On August 1, 1996, the Company filed a request with the
Missouri Public Service Commission for an interim increase in
rates for its Missouri electric customers in the amount of
$4,018,071, or 2.4% to allow the Company to recover higher
expenses resulting from natural gas prices and purchased power
prices in 1996 which have been significantly higher than the
levels contemplated by the Company's existing rates. The
Company cannot predict the extent of any increase which might
be granted as a result of this filing. The Company currently
anticipates filing for permanent rate relief in Missouri and
in its other jurisdictions later in 1996.
Operating Revenue Deductions
During the second quarter of 1996, total operating and
maintenance expenses increased approximately $5.2 million
(19.7%) compared to the same period last year. Purchased power
costs were up approximately $4.4 million (52.2%) during the
second quarter of 1996. The amount of power the Company
purchased during the second quarter of 1996 was significantly
higher than that purchased during the same period last year,
primarily due to increased purchases to meet the higher
customer demand discussed above, particularly during an
extended maintenance outage at the Company's Asbury Plant. The
maintenance outage, which was a major five-year turbine
inspection normally scheduled to last approximately six weeks,
began on March 22 and was extended until June 1. During the
inspection, extensive work was performed on the boiler,
turbine and related equipment, including replacement of
blading on the high pressure and intermediate pressure rotors.
To avoid further extension of the outage, blade replacement on
the low pressure rotor will be performed during scheduled
spring maintenance in 1997. In addition, purchased power
during the second quarter of 1996 was more expensive than in
the same period last year. Reduced generation at the Company's
Ozark Beach Hydro Plant during the second quarter compared to
the same period last year due to low lake levels also
contributed to the need for additional purchased energy.
Total fuel costs were approximately $0.5 million (6.7%)
higher during the second quarter of 1996, reflecting primarily
the increased generation from higher-cost, gas-fired
combustion turbine units at the Riverton, Energy Center and
State Line Plants during periods of high customer demand
during the Asbury outage. In addition, natural gas prices were
considerably higher than in the same period last year.
Other operating expenses decreased approximately $0.6
million (8.0%) during the second quarter, due primarily to
lower general and administrative costs. Such amounts for the
second quarter of 1995 were higher due to expenses in
connection with the Company's 1995 Competitive Positioning
Process ("CPP") and the proceedings relating to the proposed
purchase of energy from Ahlstrom Development Corporation.
Maintenance and repairs expense increased approximately $1.0
million (29.8%) during the period, primarily due to increased
distribution system maintenance and increased expenses
associated with the Asbury maintenance outage discussed above.
Distribution system maintenance expenses were approximately
$0.8 million (60.2%) higher during the period, primarily due
to repairs associated with damage from a wind storm. On April
28, 1996 a major wind storm caused extensive damage throughout
the Company's service territory, requiring maintenance
expenses of approximately $0.7 million and capital
expenditures of approximately $0.3 million to restore the
Company's system. Costs related to the Asbury five-year
turbine inspection were deferred and will be amortized over a
five-year period.
Depreciation and amortization expense increased
approximately $0.5 million (11.0%) during the second quarter
of 1996 due to increased levels of plant and equipment placed
in service, particularly at the Company's State Line Power
Plant. Total income taxes declined due primarily to lower
taxable income during the current period. Other taxes were up
approximately $0.3 million (14.0%) during the quarter
reflecting increased property tax rates, higher levels of
plant-in-service and increased franchise taxes relating to
higher revenues.
For the six months ended June 30, 1996, total operating
and maintenance expenses were up approximately $9.4 million
(18.1%) compared to the same period last year. Total purchased
power costs increased $7.6 million (46.5%) during the period,
due primarily to the reduced availability of the Company's
Asbury Plant discussed above. In addition, periods of
extremely cold weather during January and February of this
year caused the Company's suppliers to curtail the delivery of
natural gas to the Company and other utilities in the region,
and also resulted in the decreased availability of low-cost
nuclear and hydro-generated power from other utilities. These
factors contributed to higher demand and a tight market for
purchased energy and resulted in significantly higher prices
during the period. Total fuel costs increased approximately
$1.7 million (12.0%) during the six-month period, due
primarily to the increased generation from higher-cost, gas-
fired combustion turbine units at the Riverton, Energy Center
and State Line Plants during periods of high customer demand
during the Asbury outage Fuel costs were also impacted by the
use of higher cost fuel oil at the Energy Center and Riverton
Power Plant during periods of extremely cold weather when
natural gas supplies were curtailed. In addition, natural gas
prices were considerably higher during the second quarter of
1996 compared to the same period of 1995.
Other operating expenses during the six months ended June
30, 1996 decreased approximately $0.8 million (5.0%) compared
to the same period in 1995, due primarily to the lower general
and administrative costs discussed above. Maintenance and
repairs expense increased $0.9 million (15.3%), due primarily
to the increased maintenance performed on the Company's
distribution system and Asbury Plant, as discussed above.
Total provision for income taxes decreased due to lower
taxable income. Other taxes increased approximately $0.8
million (16.3%) during the period for the same reasons as
discussed in the second quarter results.
For the twelve months ended June 30, 1996, total
operating and maintenance expenses increased approximately
$21.1 million (19.7%) ($16.5 million, or 15.4% exclusive of
the one-time charge relating to the Company's voluntary early
retirement program) when compared to the same period ended
June 30, 1995. Total purchased power costs were up
approximately $10.4 million (31.4%). Purchased power costs
were substantially higher due primarily to the factors
discussed for the second quarter and six months ended June 30,
1996, along with increased purchases of higher-cost energy
needed to meet increased customer demand resulting from the
warm summer temperatures experienced during 1995. Fuel costs
increased approximately $3.4 million (11.1%) during the twelve-
month ending period, due primarily to the factors discussed
for the second quarter and six months ended June 30, 1996,
along with a substantial increase in generation from higher-
cost, gas-fired combustion turbine units following completion
of the conversion of the Company's Energy Center to utilize
gas as a primary fuel, as well as the commercial availability
of the State Line Power Plant.
Other operating expenses during the twelve months ended
June 30, 1996 increased approximately $5.7 million (18.4%)
compared to the same period last year, due primarily to higher
general and administrative costs associated with the CPP, the
proceedings relating to the proposed purchase of energy from
Ahlstrom Development Corporation, additional costs related to
FAS 106 and increased customer accounts
expense. During the third quarter of 1995, the Company
incurred a one-time pre-tax charge of approximately $4.6
million related to the implementation and acceptance by
qualifying employees of an enhanced voluntary early retirement
program. Maintenance and repair expense increased
approximately $1.6 million (12.7%) during the period, due
primarily to the same factors discussed for the second quarter
and six months ended June 30, 1996. Depreciation and
amortization expense increased due to the additional plant and
equipment placed in service. Total provision for income taxes
decreased during the period due to lower taxable income.
Nonoperating Items
Total allowance for funds used during construction
("AFUDC") decreased significantly during each of the periods
presented compared to prior year levels, reflecting lower
levels of construction work in progress, particularly due to
completion of the Company's State Line Power Plant in May
1995.
Interest income decreased during each of the periods
ended June 30, 1996, primarily reflecting lower balances of
cash available for investment. Interest charges on first
mortgage bonds increased during the twelve-month period due to
additional issuances of the Company's First Mortgage Bonds.
Other interest charges were down during the periods due to
decreased levels of short-term borrowing.
Earnings
Earnings per share of common stock for the second quarter
of 1996 were $0.14 compared to $0.21 earned during the second
quarter of 1995. Earnings per common share for the first six
months of 1996 were $0.34 compared to $0.49 earned during the
first six months of 1995. Increased revenues resulting from
weather conditions favorable to increased Kwh sales, customer
growth and the 1995 Missouri rate increase were more than
offset by the increase in expenses discussed above,
particularly increases in purchased power expenses, fuel costs
and distribution system maintenance expenses, as well as
decreased levels of AFUDC. Earnings per share also reflect the
Company's issuance of 880,000 shares of common stock in April
1996.
For the twelve months ending June 30, 1996, earnings per
share of common stock were $1.01 compared to $1.31 earned
during the twelve months ending June 30, 1995. For the twelve
month period, earnings per share of common stock were down due
to the factors discussed above with respect to the second
quarter and first six months of 1996, along with the one-time
pre-tax charge of approximately $4.6 million related to the
enhanced voluntary early retirement program, increased
interest requirements resulting from the issuance of first
mortgage bonds and the issuance of 900,000 shares of the
Company's Common Stock on April 27, 1995.
Competition
In accordance with FERC Orders No. 888 and 889, on July 9,
1996 the Company filed its open access transmission tariff
with the FERC. This tariff, which is required to be filed by
all electric utilities under FERC jurisdiction, makes the
Company's transmission services available to all wholesale
buyers and sellers under the same tariffs. The Company
believes that the tariff will not have a material impact on
its current operations.
LIQUIDITY AND CAPITAL RESOURCES
The Company's construction-related expenditures totaled
$12.8 million during the second quarter of 1996, compared to
$14.2 million for the same period in 1995. For the six months
ended June 30, 1996, construction-related expenditures totaled
$22.7 million compared to $28.3 million for the same period in
1995. Approximately one-fourth of construction expenditures
for the first six months of 1996 were satisfied internally
from operations; the remainder was provided from the sale to
the public of the Company's common stock, the issuance of
commercial paper and from the sale of common stock through the
Company's Dividend Reinvestment Plan and Employee Stock
Purchase Plan. On April 9, 1996, the Company sold to the
public in an underwritten offering 880,000 shares of its
Common Stock. The net proceeds of the offering of
approximately $15.0 million were added to the Company's
general funds which were used to repay short-term indebtedness
and for expenses incurred in connection with the Company's
construction program.
The Company's construction expenditures are expected to
total approximately $60.7 million in 1996, including
approximately $21.7 million for additions to the Company's
distribution system to meet projected increases in customer
demand and approximately $15.7 million for new generating
facilities.
On August 5, 1996, the Company entered into an amendment
to its existing agreement with Westinghouse to increase the
aggregate megawatt capability of the second unit at the State
Line Plant from 99 mw to 153 mw. The Company currently
anticipates that this increase will add approximately $6.0
million to 1997 construction expenditures. This unit is
currently scheduled for completion in May 1997.
The Company estimates that internally generated funds
will provide approximately one-half of the funds required for
the remainder of its 1996 construction expenditures. As in the
past, the Company intends to utilize short-term debt to
finance the additional amounts needed for such construction
and repay such borrowings with the proceeds of sales of public
offerings of long-term debt or equity securities, including
the sale of the Company's common stock pursuant to its
Dividend Reinvestment Plan and Employee Stock Purchase Plan
and from internally-generated funds. Subject to market and
other conditions, the Company currently plans to issue First
Mortgage Bonds during the second half of 1996. The Company
will continue to utilize short-term debt as needed to support
normal operations or other temporary requirements.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The annual meeting of Common Stockholders was held on
April 25, 1996.
(b) The following persons were re-elected Directors of the
Company to serve until the 1999 Annual Meeting of
Stockholders:
M. F. Chubb, Jr. (11,505,048 votes for; 188,110
withheld authority).
R. L. Lamb (11,531,132 votes for; 162,026 withheld
authority).
R. E. Mayes (11,505,956 votes for; 187,202 withheld
authority).
The term of office as Director of the following other
Directors continued after the meeting: V. E. Brill, R. D.
Hammons, R. C. Hartley, J. R. Herschend, F. E. Jeffries,
M. W. McKinney and M. M. Posner.
Item 5. Other Information.
At June 30, 1996, the ratio of earnings to fixed charges,
and the ratio of earnings to fixed charges and preferred stock
dividend requirements, were 2.80x and 2.26x, respectively. See
Exhibit (12) hereto.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
(10) Amendment to The Empire District Electric
Company Change in Control Severance Pay Plan and
revised Forms of Agreement.
(12) Computation of Ratio of Earnings to Fixed
Charges and Earnings to Combined Fixed Charges and
Preferred Stock Dividend Requirements.
(27) Financial Data Schedule.
(b) No reports on Form 8-K were filed during the second
quarter of 1996.
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 EMPIRE DISTRICT ELECTRIC COMPANY
Registrant
By R. B. Fancher
-----------------------------
R. B. Fancher
Vice President - Finance
By G. A. Knapp
------------------------------
G. A. Knapp
Controller and Assistant Treasurer
August 9, 1996