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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM 10-Q
(MARK ONE)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1995
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 NO. 33-7591
_______________
OGLETHORPE POWER CORPORATION
(AN ELECTRIC MEMBERSHIP GENERATION & TRANSMISSION CORPORATION)
(Exact name of registrant as specified in its charter)
GEORGIA 58-1211925
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
POST OFFICE BOX 1349
2100 EAST EXCHANGE PLACE
TUCKER, GEORGIA 30085-1349
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (404) 270-7600
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject of such filing
requirements for the past 90 days. YES X NO
----- -----
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date. THE REGISTRANT IS A
MEMBERSHIP CORPORATION AND HAS NO AUTHORIZED OR OUTSTANDING EQUITY SECURITIES.
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OGLETHORPE POWER CORPORATION
INDEX TO QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1995
PAGE NO.
--------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets at March 31, 1995 (Unaudited)
and December 31, 1994 3
Condensed Statements of Revenues and Expenses (Unaudited)
for the Three Months Ended March 31, 1995 and 1994 5
Condensed Statements of Cash Flows (Unaudited)
for the Three Months Ended March 31, 1995 and 1994 6
Notes to the Condensed Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II - OTHER INFORMATION
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OGLETHORPE POWER CORPORATION
CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
ASSETS
AT AT
MARCH 31, DECEMBER 31,
1995 1994
----------- ------------
(UNAUDITED)
ELECTRIC PLANT, AT ORIGINAL COST:
IN SERVICE $5,104,420 $5,100,299
LESS ACCUMULATED PROVISION FOR DEPRECIATION (1,264,679) (1,231,818)
---------- ----------
3,839,741 3,868,481
NUCLEAR FUEL, AT AMORTIZED COST 100,483 105,683
PLANT ACQUISITION ADJUSTMENTS, AT AMORTIZED COST 6,010 6,275
CONSTRUCTION WORK IN PROGRESS 564,682 538,789
---------- ----------
4,510,916 4,519,228
---------- ----------
INVESTMENTS AND FUNDS:
BOND, RESERVE AND CONSTRUCTION FUNDS, AT MARKET 53,694 64,163
DECOMMISSIONING FUND, AT MARKET 62,096 59,164
INVESTMENT IN ASSOCIATED ORGANIZATIONS, AT COST 16,735 17,371
---------- ----------
132,525 140,698
---------- ----------
CURRENT ASSETS:
CASH AND TEMPORARY CASH INVESTMENTS, AT COST 62,240 190,642
OTHER SHORT-TERM INVESTMENTS, AT MARKET 17,107 -
RECEIVABLES 91,240 90,998
INVENTORIES, AT AVERAGE COST 103,367 95,076
PREPAYMENTS AND OTHER CURRENT ASSETS 11,392 14,857
---------- ----------
285,346 391,573
---------- ----------
DEFERRED CHARGES:
PREMIUM AND LOSS ON REACQUIRED DEBT, BEING AMORTIZED 207,717 161,889
DEFERRED AMORTIZATION OF SCHERER LEASEHOLD 81,595 80,132
DISCONTINUED PROJECT, BEING AMORTIZED 25,885 26,342
DEFERRED DEBT EXPENSE, BEING AMORTIZED 21,683 20,936
OTHER 8,017 7,657
---------- ----------
344,897 296,956
---------- ----------
$5,273,684 $5,348,455
========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED STATEMENTS.
3
OGLETHORPE POWER CORPORATION
CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
EQUITY AND LIABILITIES
AT AT
MARCH 31, DECEMBER 31,
1995 1994
---------- ------------
(UNAUDITED)
CAPITALIZATION:
PATRONAGE CAPITAL (NET OF UNREALIZED LOSSES OF $2,324
AT MARCH 31, 1995 AND $3,567 AT DECEMBER 31, 1994
ON AVAILABLE-FOR-SALE SECURITIES) $ 319,201 $ 309,496
LONG-TERM DEBT 4,148,284 4,128,080
OBLIGATION UNDER CAPITAL LEASES 300,108 303,749
---------- ----------
4,767,593 4,741,325
---------- ----------
CURRENT LIABILITIES:
LONG-TERM DEBT AND CAPITAL LEASES DUE WITHIN ONE YEAR 85,761 90,086
DEFERRED MARGINS AND VOGTLE SURCHARGE TO BE
REFUNDED WITHIN ONE YEAR 15,014 21,476
ACCOUNTS PAYABLE 41,822 52,921
ACCRUED INTEREST 20,229 100,010
ACCRUED AND WITHHELD TAXES 7,801 1,566
ENERGY COSTS BILLED IN EXCESS OF ACTUALS 883 2,125
OTHER CURRENT LIABILITIES 10,917 18,177
---------- ----------
182,427 286,361
---------- ----------
DEFFERED CREDITS AND OTHER LIABILITIES:
GAIN ON SALE OF PLANT, BEING AMORTIZED 62,624 63,209
SALE OF INCOME TAX BENEFITS, BEING AMORTIZED 56,217 58,236
ACCUMULATED DEFERRED INCOME TAXES 65,510 65,510
DEFERRED MARGINS AND VOGTLE SURCHARGE 15,568 15,568
DECOMMISSIONING RESERVE 100,944 96,291
OTHER 22,801 21,955
---------- ----------
323,664 320,769
---------- ----------
$5,273,684 $5,348,455
========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED STATEMENTS.
4
OGLETHORPE POWER CORPORATION
CONDENSED STATEMENTS OF REVENUES & EXPENSES (UNAUDITED)
(DOLLARS IN THOUSANDS)
THREE MONTHS ENDED
MARCH 31,
--------------------
1995 1994
-------- ---------
OPERATING REVENUES:
SALES TO MEMBERS $227,849 $225,458
SALES TO NON-MEMBERS 29,698 42,160
-------- --------
TOTAL OPERATING REVENUES 257,547 267,618
-------- --------
OPERATING EXPENSES:
FUEL 47,517 51,232
PRODUCTION 32,243 32,118
PURCHASED POWER 59,947 53,539
DEPRECIATION AND AMORTIZATION 32,884 33,051
TAXES OTHER THAN INCOME TAXES 5,891 6,105
OTHER OPERATING EXPENSES 10,383 9,691
-------- --------
TOTAL OPERATING EXPENSES 188,865 185,736
-------- --------
OPERATING MARGIN 68,682 81,882
-------- --------
OTHER INCOME (EXPENSE):
INTEREST INCOME 3,312 2,951
AMORTIZATION OF DEFERRED MARGINS 6,462 6,641
ALLOWANCE FOR EQUITY FUNDS USED
DURING CONSTRUCTION 761 681
OTHER 2,834 5,475
-------- --------
TOTAL OTHER INCOME 13,369 15,748
-------- --------
INTEREST CHARGES:
INTEREST ON LONG-TERM OBLIGATIONS 83,008 86,302
ALLOWANCE FOR DEBT FUNDS USED
DURING CONSTRUCTION (9,419) (8,856)
-------- --------
NET INTEREST CHARGES 73,589 77,446
-------- --------
NET MARGIN $ 8,462 $ 20,184
======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED STATEMENTS.
5
OGLETHORPE POWER CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(DOLLARS IN THOUSANDS)
1995 1994
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
NET MARGIN $ 8,462 $ 20,184
-------- --------
ADJUSTMENTS TO RECONCILE NET MARGIN TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 47,704 47,213
AMORTIZATION OF DEFERRED MARGINS (6,462) (6,641)
ALLOWANCE FOR EQUITY FUNDS USED DURING CONSTRUCTION (761) (681)
OTHER (843) (4,690)
CHANGE IN NET CURRENT ASSETS, EXCLUDING
LONG-TERM DEBT DUE WITHIN ONE YEAR AND DEFERRED MARGINS AND
VOGTLE SURCHARGE TO BE REFUNDED WITHIN ONE YEAR:
RECEIVABLES (242) 727
INVENTORIES (8,291) 1,207
PREPAYMENTS AND OTHER CURRENT ASSETS 3,465 (6,937)
ACCOUNTS PAYABLE (11,099) (7,600)
ACCRUED INTEREST (79,781) (85,849)
ACCRUED AND WITHHELD TAXES 6,235 (1,573)
ENERGY COST BILLED IN EXCESS OF ACTUAL (1,242) (1,814)
OTHER CURRENT LIABILITIES (7,260) (30,095)
------- --------
TOTAL ADJUSTMENTS (58,577) (96,733)
------- --------
NET CASH USED IN OPERATING ACTIVITIES (50,115) (76,549)
------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
PROPERTY ADDITIONS (36,086) (48,860)
NET PROCEEDS FROM BOND, RESERVE AND CONSTRUCTION FUNDS 11,712 31,372
DECREASE IN INVESTMENT IN ASSOCIATED ORGANIZATIONS 636 273
INCREASE IN OTHER SHORT-TERM INVESTMENTS (17,107) -
(INCREASE) DECREASE IN DECOMMISSIONING FUND (1,041) 1,842
OTHER - (3,434)
------- --------
NET CASH USED IN INVESTING ACTIVITIES (41,886) (18,806)
------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
DEBT PROCEEDS, NET 88,545 243,989
DEBT PAYMENTS (124,534) (318,056)
REFUND OF VOGTLE SURCHARGE - (1,005)
OTHER (412) 97
------- --------
NET CASH USED IN FINANCING ACTIVITIES (36,401) (74,975)
------- --------
NET DECREASE IN CASH AND TEMPORARY CASH INVESTMENTS (128,402) (170,330)
CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF PERIOD 190,642 244,173
-------- --------
CASH AND TEMPORARY CASH INVESTMENTS AT END OF PERIOD $ 62,240 $ 73,843
======== ========
CASH PAID FOR:
INTEREST (NET OF AMOUNTS CAPITALIZED) $149,265 $161,096
INCOME TAXES - -
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED STATEMENTS.
6
OGLETHORPE POWER CORPORATION
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1995 AND 1994
(A) The condensed financial statements included herein have been prepared by
Oglethorpe Power Corporation (Oglethorpe), without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission (SEC). In
the opinion of management, the information furnished herein reflects all
adjustments (which included only normal recurring adjustments) necessary to
present fairly, in all material respects, the results for the periods ended
March 31, 1995 and 1994. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to such SEC rules and regulations, although Oglethorpe believes
that the disclosures are adequate to make the information presented not
misleading. It is suggested that these condensed financial statements be
read in conjunction with the financial statements and the notes thereto
included in Oglethorpe's latest Annual Report on Form 10-K, as filed with
the SEC.
(B) In March 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". This
Statement imposes stricter criteria for regulatory assets by requiring that
such assets be probable of future recovery at each balance sheet date.
Oglethorpe anticipates adopting this standard on January 1, 1996 and does
not expect that adoption will have a material impact on the financial
position or results of operations based on the current regulatory structure
in which Oglethorpe operates. See Note 1.m. of Notes to Financial
Statements in Oglethorpe's Annual Report on Form 10-K for the year ending
December 31, 1994 for a summary of Oglethorpe's regulatory assets and
liabilities.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1995
Oglethorpe's net margin for the quarter ended March 31, 1995 was $8.5 million
compared to $20.2 million for the same period of 1994. Historically, most of
Oglethorpe's annual net margin was earned by May 31 of each year. This pattern
of earnings occurred because non-Member revenues declined significantly on June
1 of each year through the end of such year due to scheduled reductions in
capacity sell-back to Georgia Power Company (GPC) while monthly fixed costs
recovered from the Member Systems (Members) remained virtually unchanged
throughout the year. (See discussion of non-Member revenues from GPC under
"Operating Revenues" below.) Oglethorpe's capacity revenues from the Members
reflect recovery in nearly equal monthly amounts of all budgeted fixed costs
plus the annual net margin goal, less fixed costs projected to be recovered from
GPC pursuant to plant operating agreements. The capacity sell-back arrangement
with GPC will expire on May 31, 1995. The minimal non-Member revenues from GPC
in 1995 has resulted in net margins being earned in a more even manner
throughout the year as opposed to being earned primarily during the first five
months in prior years. Oglethorpe's budgeted net margin for the year 1995 is
approximately the same level as 1994.
OPERATING REVENUES
Total operating revenues have declined in the first quarter of 1995 compared to
the first quarter of 1994 due to the change in the pattern of capacity cost
recovery described above.
Member revenues increased slightly during the first quarter of 1995 compared to
the first quarter of 1994. Energy sales were virtually unchanged for the first
quarter of 1995 compared to the same period of 1994.
Sales to non-Members are primarily made pursuant to three different types of
contractual arrangements with GPC and from energy sales to other non-Member
utilities. The following table summarizes the amounts of non-Member revenues
from these sources for the first quarter of 1995 and 1994:
Three Months Ended March 31,
----------------------------
1995 1994
-------- --------
(dollars in thousands)
Plant operating agreements $ 5,892 $19,094
Power supply arrangements 7,316 9,237
Transmission agreements 2,995 3,199
Other utilities 13,495 10,630
------- -------
Total $29,698 $42,160
======= =======
8
The decrease in revenues from non-Members in the first quarter of 1995 compared
to the same period of 1994 was primarily attributable to lower revenues from GPC
pursuant to plant operating agreements. Under the plant operating agreements,
GPC purchases capacity and energy from Oglethorpe on a declining scale in the
early years of operation of certain co-owned generating units. The decrease in
revenues of this type was due to scheduled reductions in sell-back percentages
for both of the Plant Vogtle units. Effective June 1, 1995, revenues from GPC
pursuant to plant operating agreements will end.
Revenues from other non-Member utilities increased substantially due to a 55%
increase in MWh sales in the three months ended March 1995 compared to the same
period of 1994. Oglethorpe is continuing to pursue energy and capacity sales to
other utilities as a means of reducing amounts that must be recovered from
Members.
OPERATING EXPENSES
The slight increase in operating expenses was primarily attributable to an
increase in purchased power.
Purchased power expenses increased in the first quarter of 1995 primarily as the
result of capacity and energy purchases from Hartwell Energy Limited Partnership
(Hartwell). The agreement to purchase capacity and energy from Hartwell
commenced in April 1994, therefore, there were no corresponding purchases for
the first quarter of 1994. In addition, there was a 7% increase in MWh
purchases in 1995 compared to 1994.
OTHER INCOME
The decrease in other income was due to the completion of amortization in
October 1994 of a gain on the sale of Plant Scherer common facilities. For a
discussion of the gain on the sale of Plant Scherer common facilities, see Note
6 of Notes to Financial Statements in Oglethorpe's Annual Report on Form 10-K
for the year ending December 31, 1994.
MEMBER CONTRACTS
As stated in the Annual Report on Form 10-K for the fiscal year ended December
31, 1994, in response to an increasingly competitive utility environment,
Oglethorpe has been discussing the need for a more flexible power supply
arrangement with its Members. The Oglethorpe Board of Directors has authorized
the study of several options which would alter the existing contractual
relationships between Oglethorpe and the Members. Management and the Board of
Directors are continuing to develop these options under which the existing "all-
requirements" wholesale power contract would be changed to allow a Member to
elect to meet its future capacity and energy requirements above current levels
with Member-owned generation or through purchases from Oglethorpe or from other
power suppliers. Management and the Board of Directors also are continuing to
develop specific implementation procedures for the existing bylaw provision that
9
grants a Member the right to withdraw from membership in Oglethorpe upon
satisfying certain conditions. Oglethorpe's willingness to consider the above
changes in its power supply arrangements with its Members is predicated on the
Members' commitment to honor their current financial obligations to Oglethorpe
under their existing wholesale power contracts.
Under the options currently being evaluated, each Member or withdrawing Member
would remain financially responsible for and required to purchase all capacity
and related energy from Oglethorpe's existing plants, committed projects and
existing power supply contracts based on a fixed percentage allocation. The
methodology for allocating costs of existing and committed resources among the
39 Members was approved by the Oglethorpe Board of Directors on May 8, 1995 for
implementation as early as January 1, 1996.
Since the Members must maintain responsibility for their allocated portions of
all current financial obligations to Oglethorpe, Oglethorpe's future revenues
associated with the Members' current obligations would be unaffected. However,
to the extent the Members choose to secure their projected load growth from
sources other than Oglethorpe, the growth in Oglethorpe's revenues would
decrease as would the related expenses.
The Board of Directors is expected to address these revisions to the existing
wholesale power contract, withdrawal procedures and other implementation issues
during the next several months; however, any action Oglethorpe's Board of
Directors and the Members might take relating to these options cannot be
predicted at this time.
FINANCIAL CONDITION
Total assets and total equity and liabilities as of March 31, 1995 were $5.3
billion which was $75 million less than the total at December 31, 1994. This
reduction was the result of the payment of interest on long-term debt accrued at
year-end on the first business day of January 1995.
ASSETS
Property additions for the first quarter of 1995 totaled $36 million.
Construction of the Rocky Mountain Project (Rocky Mountain), a pumped storage
hydroelectric facility, accounted for $18 million of this amount. Borrowings
under the loan commitment for Rocky Mountain totaled $59 million in the first
quarter of 1995. Rocky Mountain was approximately 99% complete as of March 31,
1995. The initial unit of Rocky Mountain is currently scheduled for commercial
operation on June 1, 1995. All three units of Rocky Mountain are scheduled to
be available for use during peak periods this summer.
The decrease in bond, reserve and construction funds resulted primarily from the
utilization of a portion of the debt service reserve funds for debt service
payments. The available funds resulted from an interest rate swap refinancing
project which did not require a debt service reserve fund.
10
The decrease in cash and temporary cash investments was primarily due to the
December 31, 1994 Federal Financing Bank (FFB) interest payment being made as
due on January 3, 1995 and due to the prepayment of two FFB advances in January
1995. For a discussion of the refinancing transactions, see Note 5 of Notes to
Financial Statements in Oglethorpe's Annual Report on
Form 10-K for the year ending December 31, 1994.
Other short-term investments represent investments whose maturity periods exceed
Oglethorpe's policy of three months or less for classification as cash
equivalents. There were no corresponding investments in 1994.
The increase in the premium and loss on reacquired debt resulted from premiums
paid in connection with FFB note modifications and prepayments, and from a
pollution control bond (PCB) refunding.
EQUITY AND LIABILITIES
Deferred margins and Vogtle surcharge to be refunded within one year decreased
by $6.4 million which is the amount that was refunded to the Members for the
first three months of 1995.
Accounts payable declined as of March 31,1995 as a result of normal variations
in the timing of payables activity.
Accrued interest decreased as discussed under cash and temporary cash
investments above.
Accrued and withheld taxes increased as a result of the normal monthly accruals
of property taxes, which are generally paid in the fourth quarter of the year.
Energy costs billed in excess of actuals decreased as a result of actual energy
costs exceeding budgeted costs by $1.2 million.
Other current liabilities decreased as a result of normal activity.
11
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
NEW OFFICER OF OGLETHORPE
Gary M. Bullock was elected on March 31, 1995 as the new Secretary-Treasurer of
Oglethorpe for a one-year term.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Number Description
- --------- -----------
+4.10.4(d) Third Amendment to First Amended and Restated Letter of
Credit Reimbursement Agreement, dated April 15, 1995,
between Oglethorpe and Credit Suisse.
27.1 Financial Data Schedule (for SEC use only).
___________________
+ Pursuant to 17 C.F.R. 229.601(b)(4)(iii), this document is
not filed herewith, however the registrant hereby agrees
that such document will be provided to the Commission upon
request.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by Oglethorpe for the quarter ended
March 31, 1995.
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Oglethorpe Power Corporation
(An Electric Membership
Generation & Transmission
Corporation)
Date: May 12, 1995 By: /s/ T. D. Kilgore
-------------------------------------
T. D. Kilgore
President and Chief Executive Officer
(Principal Executive Officer)
Date: May 12, 1995 /s/ Gary M. Bullock
-------------------------------------
Gary M. Bullock
Secretary-Treasurer
(Principal Financial Officer)
Date: May 12, 1995 /s/ Eugen Heckl
-------------------------------------
Eugen Heckl
Senior Vice President and Chief
Financial Officer (Principal Financial
Officer)
13