===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED SEPTEMBER 30, 1996
DUKE POWER COMPANY
422 SOUTH CHURCH STREET
CHARLOTTE, NORTH CAROLINA 28242-0001
704-594-0887
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED SEPTEMBER 30, 1996 COMMISSION FILE NUMBER 1-4928
DUKE POWER COMPANY
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-0205520
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
422 SOUTH CHURCH STREET,
CHARLOTTE, N.C. 28242-0001
(Address of principal executive office)
(Zip Code)
Registrant's telephone number, including area code 704-594-0887
NO CHANGE
(Former name, former address and former fiscal year, if changed since last
report)
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 (Check Mark) No ___
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Number of shares of Common Stock, without par value, outstanding at October 31,
1996..... 201,589,596 shares
================================================================================
DUKE POWER COMPANY
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Consolidated Statements of Income for the Three and Nine Months Ended September 30, 1996 and 1995 . . . 2
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 1996 and 1995. . . . . . . 3
Consolidated Balance Sheets - September 30, 1996 and December 31, 1995. . . . . . . . . . . . . . . . . . 4-5
Consolidated Statements of Capitalization - September 30, 1996 and December 31, 1995. . . . . . . . . . . 6
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . 8-9
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . . . . 10
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Part I. FINANCIAL INFORMATION
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
DUKE POWER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(dollars in thousands)
Three Months Ended Nine Months Ended
September 30 September 30
----------------------------------------------------------
1996 1995 1996 1995
-------------- -------------- ------------ -------------
Operating revenues $ 1,292,426 $ 1,379,978 $ 3,574,234 $ 3,543,446
-------------- -------------- ------------ -----------
Operating expenses
Fuel used in electric generation 214,686 222,689 573,499 559,465
Net interchange and purchased power 69,540 122,287 278,499 358,443
Other operation and maintenance 345,536 348,307 1,024,671 954,800
Depreciation and amortization 123,445 115,055 369,881 341,490
General taxes 68,513 67,133 198,335 191,451
--------------- ------------- ------------- -----------
Total operating expenses 821,720 875,471 2,444,885 2,405,649
--------------- ------------- ------------- -----------
Operating income 470,706 504,507 1,129,349 1,137,797
--------------- ------------- ------------- -----------
Interest expense and other income
Interest expense (71,381) (72,119) (212,970) (217,327)
Allowance for funds used during
construction and other deferred returns 28,883 31,328 85,339 95,636
Other, net 3,881 3,426 9,361 7,634
---------------- ------------ ------------- -----------
Total interest expense and other income (38,617) (37,365) (118,270) (114,057)
---------------- ------------ ------------- -----------
Income before income taxes 432,089 467,142 1,011,079 1,023,740
---------------- ------------ ------------- -----------
Income taxes 167,102 181,942 397,406 399,741
---------------- --------------------------- -----------
Net income 264,987 285,200 613,673 623,999
Dividends on preferred and preference
stock 11,050 12,409 33,210 37,821
---------------- ------------- ------------ ------------
Earnings for common stock $ 253,937 $ 272,791 $ 580,463 $ 586,178
============= =========== ============ ============
Common stock data
Average common shares outstanding (thousands) 202,913 204,859 204,207 204,859
Earnings per share $ 1.25 $ 1.33 $ 2.84 $ 2.86
Dividends per share $ 0.53 $ 0.51 $ 1.55 $ 1.49
See Notes to Consolidated Financial Statements.
2
DUKE POWER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(dollars in thousands)
Nine Months Ended
-------------------------------
September 30
-------------------------------
1996 1995
-------------- --------------
Cash flows from operating activities
Net income $ 613,673 $ 623,999
-------------- --------------
Adjustments to reconcile net income to net cash provided by operating
activities:
Non-cash items
Depreciation and amortization 517,955 499,998
Deferred income taxes and investment tax credit amortization (16,201) 21,780
Allowance for equity funds used during construction (11,998) (18,200)
Purchased capacity levelization 62,750 (31,011)
Other, net 10,103 18,490
(Increase) Decrease in
Accounts 21,771 (70,988)
Inventory 15,569 5,039
Prepayments 1,083 (2,279)
Increase (Decrease) in
Accounts payable (49,416) (65,313)
Taxes accrued 69,620 82,656
Interest accrued and other liabilities (63,986) (11,647)
-------------- --------------
Total adjustments 557,250 428,525
-------------- --------------
Net cash provided by operating activities 1,170,923 1,052,524
-------------- --------------
Cash flows from investing activities
Construction expenditures and other property additions (504,073) (545,443)
External funding for decommissioning (42,353) (42,353)
Investment in nuclear fuel (54,516) (31,209)
Investment in joint ventures (22,178) (43,645)
Net change in investment securities (16,391) 25,626
-------------- --------------
Net cash used in investing activities (639,511) (637,024)
-------------- --------------
Cash flows from financing activities
Proceeds from the issuance of
First and Refunding Mortgage Bonds - 173,839
Short-term notes payable, net (88,950) (52,900)
Construction loans and other 65,930 30,983
Payments for the redemption of
First and Refunding Mortgage Bonds (3,097) (117,065)
Common stock (159,000) -
Preferred stock - (100,516)
Construction loans and other (7,483) (7,792)
Dividends paid (349,687) (342,687)
Other 3,694 (1,140)
-------------- --------------
Net cash used in financing activities (538,593) (417,278)
-------------- --------------
Net increase (decrease) in cash (7,181) (1,778)
Cash at beginning of period 45,410 37,430
============== ==============
Cash at end of period $38,229 $35,652
============== ==============
See Notes to Consolidated Financial Statements.
3
DUKE POWER COMPANY
CONSOLIDATED BALANCE SHEETS
(unaudited)
(dollars in thousands)
ASSETS
SEPTEMBER 30 DECEMBER 31
1996 1995
------------------ ----------------
Current assets
Cash $ 38,229 $ 45,410
Short-term investments 77,344 76,300
Receivables (less allowance for losses:
1996 - $6,002; 1995 - $6,352) 667,933 689,703
Inventory - at average cost 326,251 341,841
Prepayments and other 21,816 22,900
----------------- ---------------
Total current assets 1,131,573 1,176,154
----------------- ---------------
Investments and other assets
Investments in joint ventures 185,453 163,274
Other investments, at cost or less 100,542 85,194
Nuclear decommissioning trust funds 330,950 273,466
Pre-funded pension cost 80,000 80,000
----------------- ---------------
Total investments and other assets 696,945 601,934
----------------- ---------------
Property, plant and equipment
Electric plant in service (at original cost)
Production 7,261,415 7,154,332
Transmission 1,540,694 1,532,302
Distribution 4,246,916 4,105,513
Other 1,069,785 1,030,226
----------------- ---------------
Electric plant in service 14,118,810 13,822,373
Less accumulated depreciation and amortization 5,376,664 5,122,192
----------------- ---------------
Electric plant in service, net 8,742,146 8,700,181
----------------- ---------------
Nuclear fuel 667,922 731,691
Less accumulated amortization 440,746 453,921
----------------- ---------------
Nuclear fuel, net 227,176 277,770
----------------- ---------------
Construction work in progress (including nuclear fuel in process:
1996 - $15,623; 1995 - $25,500) 361,512 382,582
----------------- ---------------
Total electric plant, net 9,330,834 9,360,533
Other property - at cost (less accumulated depreciation:
1996 - $33,519; 1995 - $29,956) 429,620 354,713
----------------- ---------------
Total property, plant and equipment, net 9,760,454 9,715,246
----------------- ---------------
Deferred debits
Purchased capacity costs 902,723 965,473
Debt expense, primarily refinancing costs, being amortized
over the terms of related debt 172,611 180,930
Regulatory asset related to income taxes 488,773 490,676
Regulatory asset related to DOE assessment fee 101,274 101,274
Other 110,410 126,797
----------------- ---------------
Total deferred debits 1,775,791 1,865,150
----------------- ---------------
Total assets $13,364,763 $13,358,484
================= ===============
See Notes to Consolidated Financial Statements.
4
DUKE POWER COMPANY
CONSOLIDATED BALANCE SHEETS
(unaudited)
(dollars in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
SEPTEMBER 30 DECEMBER 31
1996 1995
-------------------- ------------------
Current liabilities
Accounts payable $ 227,694 $ 343,692
Notes payable 66,350 155,300
Taxes accrued 102,003 34,884
Interest accrued 46,894 73,675
Current maturities of long-term debt and
preferred stock 182,182 12,071
Other 112,095 149,555
---------------- ---------------
Total current liabilities 737,218 769,177
---------------- ---------------
Long-term debt 3,603,847 3,711,405
---------------- ---------------
Accumulated deferred income taxes 2,373,223 2,382,204
---------------- ---------------
Deferred credits and other liabilities
Investment tax credit 252,935 261,347
DOE assessment fee 101,274 101,274
Nuclear decommissioning costs externally funded 330,950 273,466
Other 391,109 390,427
---------------- ---------------
Total deferred credits and other liabilities 1,076,268 1,026,514
---------------- ---------------
Preferred and preference stock with sinking fund
requirements 234,000 234,000
---------------- ---------------
Preferred and preference stock without sinking
fund requirements 450,000 450,000
---------------- ---------------
Common stockholders' equity
Common stock, no par 1,896,141 1,926,909
Retained earnings 2,994,066 2,858,275
---------------- ---------------
Total common stockholders' equity 4,890,207 4,785,184
---------------- ---------------
Total liabilities and stockholders' equity $ 13,364,763 $ 13,358,484
================ ===============
See Notes to Consolidated Financial Statements.
5
DUKE POWER COMPANY
CONSOLIDATED STATEMENTS OF CAPITALIZATION
(unaudited)
(dollars in thousands)
September 30 December 31
1996 1995
-------------------- --------------------
Common stock equity
Common stock, no par, 300,000,000 shares authorized;
201,589,596 shares outstanding for 1996 and
204,859,339 shares outstanding for 1995 $ 1,896,141 $ 1,926,909
Retained earnings 2,994,066 2,858,275
----------------- ------------------
Total common stock equity 4,890,207 4,785,184
----------------- ------------------
Preferred and preference stock
(At September 30, 1996 and December 31, 1995,
12,500,000 shares of preferred stock,
10,000,000 shares of preferred stock A,
and 1,500,000 shares of preference stock were
authorized with or without sinking fund requirements)
Without sinking fund requirements 450,000 450,000
With sinking fund requirements 234,000 234,000
----------------- ------------------
Total preferred and preference stock 684,000 684,000
----------------- ------------------
Long-term debt
First and refunding mortgage bonds 3,463,184 3,466,281
Capitalized leases 11,811 7,477
Other long-term debt 146,771 147,410
Unamortized debt discount and premium, net (58,165) (61,674)
Current maturities of long-term (174,532) (4,295)
----------------- -----------------
Subtotal long-term debt 3,389,069 3,555,199
----------------- -----------------
Subsidiary long-term debt
Church Street Capital Corp 50,000 -
Crescent Resources, Inc 139,053 130,694
Nantahala Power and Light Company 33,375 33,288
Current maturities of long-term debt (7,650) (7,776)
----------------- -----------------
Subtotal subsidiary long-term debt 214,778 156,206
----------------- -----------------
Total consolidated long-term debt 3,603,847 3,711,405
----------------- -----------------
Total capitalization $ 9,178,054 $ 9,180,589
================= ==================
See Notes to Consolidated Financial Statements.
6
DUKE POWER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Total income taxes paid for the quarter ended September 30 were
$148,351,000 and $116,370,000 for 1996 and 1995, respectively. For the nine
months ended September 30, 1996 and 1995, income taxes paid were
$384,785,000 and $336,456,000, respectively. Interest paid, net of amounts
capitalized, for the quarter ended September 30 was $83,982,000 and
$65,510,000 for 1996 and 1995, respectively. For the nine months ended
September 30, 1996 and 1995, interest paid was $221,666,000 and
$195,080,000, respectively.
2. The South Carolina Public Service Commission, on May 7, 1996, ordered a
rate reduction in the form of a decrement rider of 0.4319 cents per
kilowatt-hour, or an average of approximately 8%, affecting South Carolina
retail customers. The rate reduction was reflected on bills rendered on or
after June 1, 1996. This net decrement rider reflects a reduction for an
interim true-up adjustment associated with Catawba Nuclear Station
purchased capacity costs as well as an increase for demand side management
costs recovery. The rate adjustment was made because, in the South Carolina
retail jurisdiction, cumulative levelized revenues associated with the
recovery of Catawba purchased capacity costs have exceeded purchased
capacity payments and accrual of deferred returns.
Certain of the Company's wholesale customers, excluding the other Catawba
joint owners, initiated proceedings in 1995 before the Federal Energy
Regulatory Commission (FERC) concerning rate matters. The Company and nine
of its eleven wholesale customers entered into a settlement in July 1996
which reduced the customers' rates by approximately 9%. The two customers
that did not enter into the settlement may choose to either be subject to
rates determined under the FERC's ruling in the proceeding, which is
pending, or seek alternative sources of power. The eleven wholesale
customers involved in this matter accounted for less than 2% of the
Company's overall electric revenues during 1995.
3. The Company is involved in legal, tax and regulatory proceedings before
various courts, regulatory commissions and governmental agencies regarding
matters arising in the ordinary course of business, some of which involve
substantial amounts. Where appropriate, the Company has made accruals in
accordance with Statement of Financial Accounting Standards No. 5
"Accounting for Contingencies," in order to provide for such matters.
Management is of the opinion that final disposition of these proceedings
will not have a material adverse effect on the results of operations or
financial position of the Company.
4. These are quarterly financial statements and the amounts reported in the
Consolidated Statements of Income are not necessarily indicative of amounts
expected for the respective years. These amounts may be affected by
seasonal temperature variations, timing of scheduled and unscheduled
maintenance of certain electric generating units, and the Company's policy
of accruing estimates for certain other expenses ratably over twelve months
until final amounts are determined.
5. In the opinion of the Company, the accompanying financial statements
contain adjustments of a normal recurring nature such that the financial
statements present fairly the financial position of the Company as of the
respective dates shown and the results of its operations for the respective
periods then ended.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
During the period January 1, 1996 through September 30, 1996, additions
to property (including nuclear fuel) of $497.9 million and retirements of $207.8
million resulted in a net increase in gross plant of $290.1 million.
The Company has completed the construction of a combustion turbine
facility in Lincoln County, North Carolina to provide capacity at periods of
peak demand. During 1995, twelve units of the Lincoln Combustion Turbine Station
began commercial operation. The last four units began commercial operation in
the first quarter of 1996, two units on February 1, 1996 and two units on March
1, 1996.
As a result of bids received in response to the two requests for
proposals (RFP) issued in 1995, the Company signed a Letter of Intent with PECO
Energy Co. of Philadelphia for the option to purchase up to 250 megawatts of
capacity during the summer months of 1998 through 2001. Contract arrangements
between the parties were finalized on August 1, 1996. The long-term RFP is
closed and will not be awarded.
The Company normally experiences seasonal peak loads in the summer and
winter which are relatively in balance. On August 14, 1995, the Company
experienced a new all-time peak load of 15,542 megawatts. This peak load figure
excludes both the portion of the demand of the other joint owners of the Catawba
Nuclear Station met by their retained ownership and the load of Nantahala Power
and Light Company.
Fixed charges coverage for the twelve months ended September 30, 1996,
using the SEC method, was 4.93 times. Internal cash generation for the twelve
months ended September 30, 1996 was 93 percent.
During July 1996, the Company made its first purchases under a program,
announced in March 1996, to repurchase up to $1 billion of its outstanding
Common Stock over the next five years. The Company has repurchased approximately
3.3 million shares of common stock for $159 million through September 30, 1996.
The Company may repurchase shares periodically subject to available cash and
alternative investment opportunities.
The Company is involved in legal, tax and regulatory proceedings before
various courts, regulatory commissions and governmental agencies regarding
matters arising in the ordinary course of business, some of which involve
substantial amounts. Where appropriate, the Company has made accruals in
accordance with Statement of Financial Accounting Standards No. 5 "Accounting
for Contingencies," in order to provide for such matters. Management is of the
opinion that the final disposition of these proceedings will not have a material
adverse effect on the results of operations or financial position of the
Company.
The South Carolina Public Service Commission, on May 7, 1996, ordered a
rate reduction in the form of a decrement rider of 0.4319 cents per
kilowatt-hour, or an average of approximately 8%, affecting South Carolina
retail customers. The rate reduction was reflected on bills rendered on or after
June 1, 1996. This net decrement rider reflects a reduction for an interim
true-up adjustment associated with Catawba Nuclear Station purchased capacity
costs as well as an increase for demand side management costs recovery. The rate
adjustment was made because, in the South Carolina retail jurisdiction,
cumulative levelized revenues associated with the recovery of Catawba purchased
capacity costs have exceeded purchased capacity payments and accrual of deferred
returns.
8
Certain of the Company's wholesale customers, excluding the
other Catawba joint owners, initiated proceedings in 1995 before the Federal
Energy Regulatory Commission (FERC) concerning rate matters. The Company and
nine of its eleven wholesale customers entered into a settlement in July 1996
which reduced the customers' rates by approximately 9%. The two customers that
did not enter into the settlement may choose to either be subject to rates
determined under the FERC's ruling in the proceeding, which is pending, or seek
alternative sources of power. The eleven wholesale customers involved in this
matter accounted for less than 2% of the Company's overall electric revenues
during 1995.
On April 24, 1996, the FERC issued final rules on open access
transmission. On July 9, 1996, the Company filed a pro forma open access
transmission tariff complying with the requirements of the final rules. Such a
filing was required of all transmission-owning utilities subject to the FERC's
final rules. The Company also filed on that date a proposed settlement of all
rate issues previously pending before the FERC. The Company's pro forma tariff
contains the rates agreed upon under the settlement. The settlement and the July
9, 1996 tariff filing remain subject to final FERC approval.
RESULTS OF OPERATIONS
Earnings per share for the third quarter and year-to-date September
1996 were $1.25 and $2.84, respectively, down 6.0% and .7% compared to the same
periods in 1995.
Revenues for third quarter 1996 decreased $87.6 million when compared
to the same period in 1995. Total electric sales for the third quarter were down
3.7% compared to the third quarter of 1995, primarily because of extremely warm
weather in August 1995. Billed residential sales decreased by 1.7%, while
general service sales increased by 2.8%. Textile sales were down 2.8%, due to a
weaker demand for textile goods, while other industrial sales were up 3.4%. The
South Carolina retail rate reduction also decreased third quarter revenues when
compared to 1995. (For additional information concerning the South Carolina rate
reduction, see Note 2 to the Consolidated Financial Statements.) Revenues for
year-to-date September 1996 increased $30.8 million when compared to the same
period in 1995. For year-to-date September 1996, total revenues increased
primarily because of increased revenues from the Associated Enterprises Group
business units. Increased electric revenues primarily from colder winter weather
was offset by the South Carolina rate reduction.
Fuel expense for third quarter 1996 decreased $8.0 million when
compared to the same period in 1995. The third quarter decrease was primarily
due to lower fossil fuel costs, which were partially offset by increased
production requirements and higher levels of fossil generation as a percentage
to total generation. Year-to-date September 1996 fuel expense increased $14.0
million when compared to year-to-date September 1995, primarily because of
higher levels of fossil generation as a percentage of total generation and
increased production requirements. These increases were partially offset by
lower fossil fuel costs.
Net interchange and purchased power expense decreased $52.7 and $79.9
million for the third quarter and year-to-date September 1996, respectively,
compared to the same periods in 1995. These decreases were primarily due to
decreases in power purchased from the other Catawba joint owners.
Operating and maintenance expenses decreased $2.8 million for the third
quarter 1996 compared to the same period in 1995. This decrease was primarily
due to lower nuclear and fossil outage costs and reduced nuclear maintenance
expenses. These reduced expenses were partially offset by repair costs
associated with Hurricane Fran, which affected the northeastern portion of the
Company's service area. Year-to-date September 1996 operating and maintenance
expenses increased $69.9 million compared to the same period in 1995. This
increase was primarily due to costs associated with a severe winter storm
affecting large portions of the Company's service area in February 1996 and
repair costs associated with Hurricane Fran. Costs incurred in connection with
the increased activity of the Associated Enterprises Group business units also
contributed to this increase.
Depreciation and amortization increased $8.4 and $28.4 million for the
third quarter and year-to-date September 1996, respectively, compared to the
same periods in 1995. These increases are primarily due to the completion of the
Lincoln Combustion Turbine Station and additions to distribution plant,
including investment to support customer growth.
9
Allowance for funds used during construction and other deferred returns
decreased $2.4 and $10.3 million for the third quarter and year-to-date
September 1996, respectively, compared to the same periods in 1995. These
decreases were largely due to the completion of the Lincoln Combustion Turbine
Station.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of the security holders
of the Company during the third quarter of 1996.
ITEM 5. OTHER INFORMATION
The Oconee Nuclear Station was removed from service in October
1996 for inspection and possible modification of piping systems, after a steam
line on the non-nuclear side of the plant ruptured. As a result of these
inspections the Oconee Nuclear Station outage is expected to continue through
the end of the year. Also, both units at the McGuire Nuclear Station were
removed from service to replace battery banks, which are designed to supply
backup power to instrumentation systems at the plant. Both McGuire Nuclear
Station units are expected to return to service by mid-November 1996. The
Company expects to meet customer needs with a combination of other Duke Power
generation and purchases of energy from neighboring utilities. Management is of
the opinion that these outages will not have a material adverse effect on the
results of operations or the financial position of the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits
(27)Financial Data Schedule (included in electronic filing only)
(B) Reports on Form 8-K
The Company filed no Form 8-K reports during the third quarter of
1996.
10
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.
DUKE POWER COMPANY
Date: November 7, 1996 -------------------------------------------------
Richard J. Osborne
Senior Vice President and Chief Financial Officer
Date: November 7, 1996 -------------------------------------------------
Jeffrey L. Boyer
Controller