Page 1 of 13
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15 (d) of
the Securities Exchange Act of 1934
For Quarter Ended June 30, 1995
Commission file number 1-255-2
WEST PENN POWER COMPANY
(Exact name of registrant as specified in its charter)
Pennsylvania 13-5480882
(State of Incorporation) (I.R.S. Employer Identification No.)
Cabin Hill, Greensburg, Pennsylvania 15601
Telephone number 412-837-3000
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 and (2) has been subject to such filing requirements for
the past 90 days.
At August 11, 1995, 24,361,586 shares of the Common Stock (no par
value) of the registrant were outstanding, all of which is held by Allegheny
Power System, Inc., the Company's parent.
<PAGE>
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WEST PENN POWER COMPANY AND SUBSIDIARY COMPANIES
Form 10-Q for Quarter Ended June 30, 1995
Index
Page
No.
PART I--FINANCIAL INFORMATION:
Consolidated statement of income -
Three and six months ended June 30, 1995 and 1994 3
Consolidated balance sheet - June 30, 1995
and December 31, 1994 4
Consolidated statement of cash flows -
Six months ended June 30, 1995 and 1994 5
Notes to consolidated financial statements 6-7
Management's discussion and analysis of financial
condition and results of operations 8-12
PART II--OTHER INFORMATION 13
<PAGE>
<TABLE>
<CAPTION>
- 3 -
WEST PENN POWER COMPANY AND SUBSIDIARY COMPANIES
Consolidated Statement Of Income
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
(Thousands of Dollars)
ELECTRIC OPERATING REVENUES:
<S> <C> <C> <C> <C>
Residential $ 86 974 $ 84 512 $200 474 $199 279
Commercial 51 627 49 037 108 696 102 903
Industrial 87 773 79 791 178 999 161 833
Nonaffiliated utilities 38 370 32 739 81 249 81 328
Other, including affiliates 17 344 17 867 38 461 39 654
Total Operating Revenues 282 088 263 946 607 879 584 997
OPERATING EXPENSES:
Operation:
Fuel 54 121 62 730 118 102 135 818
Purchased power and exchanges, net 65 191 56 695 134 933 130 167
Deferred power costs, net 1 899 (1 994) 9 689 113
Other 34 554 34 948 68 703 71 302
Maintenance 26 743 28 847 54 910 59 177
Depreciation 28 974 22 370 57 700 44 299
Taxes other than income taxes 21 743 20 301 44 444 44 047
Federal and state income taxes 12 082 9 172 32 726 27 059
Total Operating Expenses 245 307 233 069 521 207 511 982
Operating Income 36 781 30 877 86 672 73 015
OTHER INCOME AND DEDUCTIONS:
Allowance for other than borrowed funds
used during construction 364 1 578 1 182 2 661
Other income, net 3 583 3 003 5 911 6 228
Total Other Income and Deductions 3 947 4 581 7 093 8 889
Income Before Interest Charges 40 728 35 458 93 765 81 904
INTEREST CHARGES:
Interest on long-term debt 15 880 13 892 31 389 27 783
Other interest 842 510 1 474 1 045
Allowance for borrowed funds used during
construction (607) (950) (1 123) (1 595)
Total Interest Charges 16 115 13 452 31 740 27 233
Consolidated Income before Cumulative
Effect of Accounting Change 24 613 22 006 62 025 54 671
Cumulative Effect of Accounting
Change, net 0 0 0 19 031
Consolidated Net Income $ 24 613 $ 22 006 $ 62 025 $ 73 702
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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WEST PENN POWER COMPANY AND SUBSIDIARY COMPANIES
Consolidated Balance Sheet
June 30 December 31
1995 1994
(Thousands of Dollars)
ASSETS
Property, Plant, and Equipment:
At original cost, including $116,761,000 and
<S> <C> <C>
$103,514,000 under construction $3 053 150 $3 013 777
Accumulated depreciation (1 037 818) (1 009 565)
2 015 332 2 004 212
Investments and Other Assets:
Allegheny Generating Company - common stock
at equity 98 321 100 228
Other 1 287 1 474
99 608 101 702
Current Assets:
Cash and temporary cash investments 304 345
Accounts receivable:
Electric service, net of $8,383,000 and
$8,267,000 uncollectible allowance 122 136 119 020
Affiliated and other 10 508 11 862
Notes receivable from affiliates 23 800 1 000
Materials and supplies - at average cost:
Operating and construction 40 619 39 922
Fuel 39 615 38 205
Deferred income taxes 12 172 12 538
Prepaid taxes 27 619 11 100
Other 4 865 1 425
281 638 235 417
Deferred Charges:
Regulatory assets 364 036 364 473
Unamortized loss on reacquired debt 12 888 10 494
Other 19 265 15 560
396 189 390 527
Total Assets $2 792 767 $2 731 858
CAPITALIZATION AND LIABILITIES:
Capitalization:
Common stock $ 465 994 $ 465 994
Other paid-in capital 55 687 55 687
Retained earnings 445 322 433 801
967 003 955 482
Preferred stock - not subject to mandatory redemption 79 708 149 708
Long-term debt 906 583 836 426
1 953 294 1 941 616
Current Liabilities:
Long-term debt and preferred stock
due within one year 97 000 27 000
Accounts payable 75 156 107 792
Accounts payable to affiliates 7 938 6 477
Taxes accrued:
Federal and state income 10 947 9 217
Other 9 897 20 637
Interest accrued 16 407 16 475
Other 25 961 24 028
243 306 211 626
Deferred Credits and Other Liabilities:
Unamortized investment credit 51 656 52 946
Deferred income taxes 479 190 471 515
Regulatory liabilities 37 442 39 881
Other 27 879 14 274
596 167 578 616
Total Capitalization and Liabilities $2 792 767 $2 731 858
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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WEST PENN POWER COMPANY AND SUBSIDIARY COMPANIES
Consolidated Statement Of Cash Flows
Six Months Ended
June 30
1995 1994
(Thousands of Dollars)
CASH FLOWS FROM OPERATIONS:
<S> <C> <C>
Consolidated net income $ 62 025 $ 73 702
Depreciation 57 700 44 299
Deferred investment credit and income taxes, net 4 206 (11 083)
Deferred power costs, net 9 689 113
Unconsolidated subsidiaries' dividends in
excess of earnings 1 997 1 832
Allowance for other than borrowed funds used
during construction (1 182) (2 661)
Cumulative effect of accounting change before
income taxes - (32 891)
Changes in certain current assets and liabilities:
Accounts receivable, net, excluding cumulative
effect of accounting change (1 762) 10 197
Materials and supplies (2 107) (8 456)
Accounts payable (31 175) (14 540)
Taxes accrued (9 010) 1 302
Interest accrued (68) 6
Other, net (12 293) 9 764
78 020 71 584
CASH FLOWS FROM INVESTING:
Construction expenditures (70 752) (96 659)
Allowance for other than borrowed
funds used during construction 1 182 2 661
(69 570) (93 998)
CASH FLOWS FROM FINANCING:
Issuance of long-term debt 143 700 1 644
Retirement of long-term debt (78 888) -
Short-term debt, net - 49 747
Notes receivable from affiliates (22 800) 24 900
Dividends on capital stock:
Preferred stock (4 460) (4 127)
Common stock (46 043) (49 866)
(8 491) 22 298
NET CHANGE IN CASH AND TEMPORARY CASH INVESTMENTS (41) (116)
Cash and Temporary Cash Investments at January 1 345 565
Cash and Temporary Cash Investments at June 30 $ 304 $ 449
Supplemental cash flow information:
Cash paid during the period for:
Interest (net of amount capitalized) $ 30 570 $ 26 230
Income taxes 26 467 31 362
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
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WEST PENN POWER COMPANY AND SUBSIDIARY COMPANIES
Notes to Consolidated Financial Statements
1. The Company's Notes to Consolidated Financial Statements in the
Allegheny Power System companies' combined Annual Report on Form
10-K for the year ended December 31, 1994, should be read with the
accompanying financial statements and the following notes. With
the exception of the December 31, 1994 consolidated balance sheet
in the aforementioned annual report on Form 10-K, the accompanying
consolidated financial statements appearing on pages 3 through 5
are unaudited. In the opinion of the Company, such consolidated
financial statements together with these notes thereto contain all
adjustments (which consist only of normal recurring adjustments)
necessary to present fairly the Company's financial position as of
June 30, 1995, the results of operations for the three and six
months ended June 30, 1995 and 1994, and cash flows for the six
months ended June 30, 1995 and 1994.
2. The Consolidated Statement of Income reflects the results of past
operations and is not intended as any representation as to future
results. For purposes of the Consolidated Balance Sheet and
Consolidated Statement of Cash Flows, temporary cash investments
with original maturities of three months or less, generally in the
form of commercial paper, certificates of deposit, and repurchase
agreements, are considered to be the equivalent of cash.
3. Earnings for the 1994 periods have been restated to reflect
retroactively the effect of an accounting change adopted as of
January 1994 to record unbilled revenues.
4. The Company issued $30 million of 7.75% Series MM, 30-year first
mortgage bonds in May 1995 to refund $30 million of 9% Series EE
due 2019. In June 1995, the Company issued $31.5 million of 6.15%,
20-year pollution control revenue notes, to refund $11.5 million
of 6.95% Series B due 2003 and $20 million of 7% Series B due 2008,
and issued $15.4 million of 6.05% Series G 19-year pollution
control revenue notes to refund $15.4 million of 9.375% Series E
due 2014. The Company also issued $70 million of 8% Junior
Subordinated Deferrable Interest Debentures in June 1995 to replace
the following issues of preferred stock: $10 million of $7.00
Series D, $10 million of $7.12 Series E, $10 million of $7.60
Series H, $10 million of $7.64 Series I, $10 million of $8.08
Series G, and $20 million of $8.20 Series J.
The Series B pollution control revenue notes will be refunded in
July 1995 but have been extinguished as of the June 30, 1995,
balance sheet because funds have been placed in an irrevocable
trust to satisfy the obligation.
5. The Company owns 45% of the common stock of Allegheny Generating
Company (AGC), and affiliates of the Company own the remainder.
AGC owns an undivided 40% interest, 840 MW, in the 2,100-MW pumped-
storage hydroelectric station in Bath County, Virginia, operated
by the 60% owner, Virginia Power Company, a nonaffiliated utility.
Following is a summary of income statement information for AGC:
<PAGE>
<TABLE>
<CAPTION>
- 7 -
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Electric operating revenues $22 061 $21 869 $44 157 $44 300
Operation and maintenance expense 1 571 1 444 3 367 3 277
Depreciation 4 224 4 236 8 448 8 472
Taxes other than income taxes 1 248 1 528 2 547 2 868
Federal income taxes 3 502 3 408 6 725 6 921
Interest charges 4 432 4 487 9 417 8 913
Other income, net (9) (5) (9) (7)
Net income $ 7 093 $ 6 771 $13 662 $13 856
</TABLE>
The Company's share of the equity in earnings above was $3.2
million and $3.0 million for the three months ended June 30, 1995
and 1994, respectively, and $6.1 million and $6.2 million for the
six months ended June 30, 1995 and 1994, respectively, and was
included in other income, net, on the Consolidated Statement of
Income.
6. Common stock dividends per share declared and paid during the
periods for which income statements are included are as follows:
<TABLE>
<CAPTION>
1995 1994
1st 2nd 1st 2nd
Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
Number of Shares 24,361,586 24,361,586 22,361,586 22,361,586
Amount Per Share $.94 $.95 $1.12 $1.11
</TABLE>
Earnings per share are not reported inasmuch as the common stock
of the Company is 100% owned by its parent, Allegheny Power System,
Inc.
<PAGE>
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WEST PENN POWER COMPANY AND SUBSIDIARY COMPANIES
Management's Discussion and Analysis of Financial Condition
and Results of Operations
COMPARISON OF SECOND QUARTER AND SIX MONTHS ENDED JUNE 30, 1995
WITH SECOND QUARTER AND SIX MONTHS ENDED JUNE 30, 1994
CONSOLIDATED NET INCOME
Consolidated net income for the second quarter and
first six months of 1995 was $24.6 million and $62.0 million, respectively,
compared with $22.0 million and $54.7 million for the corresponding 1994
periods, before the cumulative effect of an accounting change to record
unbilled revenues.
The increase in consolidated net income for the second
quarter and in consolidated income before cumulative effect of accounting
change for the first six months of 1995 reflects increased retail revenues
resulting primarily from a previously reported rate increase and also in the
quarter from greater kilowatthour (kWh) sales to retail customers. The
increased retail revenues in the 1995 periods more than offset increases in
depreciation, interest, and other expenses.
SALES AND REVENUES
Retail kWh sales to commercial and industrial customers
in the second quarter increased 1% and 10%, respectively, and to residential
customers decreased 2%. In the first six months, retail kWh sales to
commercial and industrial customers increased 1% and 8%, respectively, and
to residential customers decreased 5%. Milder weather in the second
quarter and first six months of 1995 as compared to some of the coldest
temperatures ever recorded in much of the Company's service territory during
the first quarter of 1994 resulted in reduced residential kWh sales. The
increase in kWh sales to industrial customers in the second quarter and first
six months of 1995 resulted primarily from increased sales to primary metals
customers. KWh sales to primary metals customers in the second quarter of
1994 were impacted by a 70-day strike, ending June 9, 1994, at the Company's
largest industrial customer. The increases in revenues from retail customers
resulted from the following:
<TABLE>
<CAPTION>
Change from Prior Periods
Quarter Six Months
(Millions of Dollars)
<S> <C> <C>
Change in kWh sales $ 1.9 $ (.2)
Fuel and energy cost adjustment
clauses (1) (1.2) (2.0)
Rate increases (2) 11.7 25.3
Other .6 1.1
$13.0 $24.2
</TABLE>
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(1) Changes in revenues from fuel and energy cost
adjustment clauses have little effect on consolidated
net income.
(2) Reflects a base rate increase on an annual basis of
about $55.5 million in Pennsylvania effective December
31, 1994. This increase included recovery of carrying
charges on investment, depreciation, and operating
costs required to comply with Phase I of the Clean Air
Act Amendments of 1990 (CAAA), and other increasing
levels of expense.
KWh sales to and revenues from nonaffiliated utilities
are comprised of the following items:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
KWh sales (in billions):
<S> <C> <C> <C> <C>
From Company generation .1 .2 .1 .3
From purchased power 1.2 .7 2.7 2.2
1.3 .9 2.8 2.5
Revenues (in millions):
From Company generation $ 1.5 $ 4.3 $ 3.1 $ 8.6
From sales of purchased power 36.9 28.4 78.1 72.7
$38.4 $32.7 $ 81.2 $ 81.3
</TABLE>
Sales from Company generation decreased because of
growth of kWh sales to retail customers and generating unit outages, both of
which reduce the amount available for sale, and because of decreased demand
and continuing price competition. Sales of purchased power vary depending
on the availability of eastern utilities' generating equipment, demand for
energy, and competition. Most of the aggregate benefits from sales to
nonaffiliated utilities is passed on to retail customers and has little
effect on consolidated net income.
<PAGE>
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OPERATING EXPENSES
Fuel expenses for the second quarter and first six months
of 1995 decreased 14% and 13%, respectively, due primarily to decreases of
5% and 4% respectively, in kWhs generated, and a 9% decrease in average coal
prices in both periods. The reduced average coal prices are primarily the
result of renegotiations of long-term fuel contracts which reduced fuel
prices effective January 1995. Fuel expenses are primarily subject to
deferred power cost accounting procedures with the result that changes in
fuel expenses have little effect on consolidated net income.
"Purchased power and exchanges, net" represents power
purchases from and exchanges with nonaffiliated utilities and qualified
facilities under the Public Utility Regulatory Policies Act of 1978 (PURPA),
capacity charges paid to Allegheny Generating Company (AGC), and other
transactions with affiliates made pursuant to a power supply agreement
whereby each company uses the most economical generation available in the
Allegheny Power System at any given time, and is comprised of the following
items:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
(Millions of Dollars)
Nonaffiliated transactions:
Purchased power:
<S> <C> <C> <C> <C>
For resale to other utilities $32.9 $25.0 $ 69.1 $ 64.2
From PURPA generation 16.0 16.7 32.6 32.5
Other 7.0 4.1 11.4 10.1
Power exchanges, net (1.0) (1.1) .7 .4
Affiliated transactions:
AGC capacity charges 9.4 9.7 19.0 19.5
Energy and spinning reserve charges .8 2.1 1.7 3.1
Other affiliated capacity charges .1 .2 .4 .4
$65.2 $56.7 $134.9 $130.2
</TABLE>
The amount of power purchased from nonaffiliated utilities
for use by the Company and for resale to nonaffiliated utilities depends upon
the availability of the Company's generating equipment, transmission
capacity, and fuel, and its cost of generation and the cost of operations of
nonaffiliated utilities from which such purchases are made. The cost of
power and capacity purchased for use by the Company, including power from
PURPA generation and affiliated transactions, is mostly recovered from
customers currently through the regular fuel and energy cost recovery
procedures followed by the Company's regulatory commissions and is primarily
subject to deferred power cost procedures with the result that changes in
such costs have little effect on consolidated net income. The primary reason
for the increases in purchases for resale to nonaffiliated utilities is
described under SALES AND REVENUES above.
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The decreases in other operation expense for the second
quarter and first six month periods resulted primarily from a decrease in
transmission service charges and environmental liabilities recorded in the
first quarter of 1994, offset in part by increased power station operating
costs, including expenses related to the Harrison scrubbers which became
available for service in November 1994.
Maintenance expenses represent costs incurred to maintain
the power stations, the transmission and distribution (T&D) system, and
general plant, and reflect routine maintenance of equipment and rights-of-way
as well as planned major repairs and unplanned expenditures, primarily from
forced outages at the power stations and periodic storm damage on the T&D
system. The Company is also experiencing, and expects to continue to
experience, increased expenditures due to the aging of its power stations.
Variations in maintenance expense result primarily from unplanned events and
planned major projects, which vary in timing and magnitude depending upon the
length of time equipment has been in service without a major overhaul and the
amount of work found necessary when equipment is dismantled.
The increases in depreciation expense for the second quarter
and first six months of 1995 resulted from additions to electric plant,
primarily because of the Harrison scrubbers which became available for
service in November 1994, and an increase in depreciation rates concurrent
with the Pennsylvania base rate increase effective on December 31, 1994.
Taxes other than income taxes increased $1.4 million for the
second quarter and $.4 million for the first six months resulting primarily
from increased West Virginia Business and Occupation taxes (B & O taxes), due
to increased generation within that state. As a result of an amendment in
the B & O tax law effective June 1, 1995, which changed the basis of this tax
from generation to generating capacity, this tax is expected to decrease
effective February 1, 1996, because of a rate reduction for scrubbed
capacity.
The net increases of $2.9 and $5.7 million in federal and state
income taxes for the second quarter and the first six month periods,
respectively, resulted primarily from increases in income before income taxes
offset in part by a 1% decrease in the Pennsylvania corporate net income tax
retroactive to January 1, 1995.
The combined decrease of $1.6 million and $2.0 million in
allowance for funds used during construction (AFUDC) for the second quarter
and first six month periods, respectively, reflect decreases in capital
expenditures upon substantial completion of Phase I of the CAAA.
The increase in other income, net for the second quarter of
1995 was due primarily to interest income earned on funds available as a
result of the timing of the debt and preferred stock refinancings in the
second quarter of 1995.
Interest on long-term debt increased $2.0 million for the
quarter and
$3.6 million for the first six months due primarily to the timing of the
refinancing of the $30 million of first mortgage bonds and $46.9 million of
pollution control revenue notes, interest related to the issuance of $70
million of Junior Subordinated Deferrable Interest Debentures, and new
security issues in 1994. Fluctuations in other interest expense reflect
changes in the level of short-term debt maintained by the Company.
LIQUIDITY AND CAPITAL RESOURCES
The Company's discussion on Liquidity and Capital Resources
in the Allegheny Power System companies' combined Annual Report on Form 10-K
for the year ended December 31, 1994 should be read with the following
information.
In the normal course of business, the Company is subject to
various contingencies and uncertainties relating to its operations and
construction programs, including cost recovery in the regulatory process,
laws, regulations and uncertainties relating to environmental matters, and
legal actions.
<PAGE>
- 12 -
As previously reported, Monongahela Power Company, an
affiliated company, has been named as a defendant along with multiple other
defendants in 2,343 pending asbestos cases involving one or more plaintiffs,
and the Company and its affiliates have been named as defendants along with
multiple other defendants in an additional 813 cases by one or more
plaintiffs, including 815 new cases filed in 1995 to date. While the
cumulative number of claims appears to be significant, previous cases have
been settled for an amount substantially less than the anticipated cost of
defense. Also as previously reported, the Company and its affiliates and
approximately 875 others have been identified by the Environmental Protection
Agency as potentially responsible parties in a Superfund site subject to
cleanup. The company believes that provisions for liabilities and insurance
recoveries are such that final resolution of these matters will not have a
material effect on its financial position.
In March 1995, the Federal Energy Regulatory Commission
(FERC) published a Notice of Proposed Rulemaking (NOPR) that would mandate
sweeping changes to promote increased competition in the wholesale electric
industry. The proposals would require that utilities file nondiscriminatory
open access transmission tariffs and offer comparable transmission services
to eligible third parties. It also would allow utilities the opportunity to
recover stranded costs. The Company has submitted comments to the FERC.
On May 11, 1995, at the annual meeting of stockholders, the
System announced that it was proceeding with a functional reorganization.
As a result of the reorganization and consolidation efforts currently
underway, staff reductions with possible future layoffs appear to be
inevitable.
<PAGE>
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WEST PENN POWER COMPANY AND SUBSIDIARY COMPANIES
Part II--Other Information to Form 10-Q
for Quarter Ended June 30, 1995
Item 1. LEGAL PROCEEDINGS
On July 20, 1995, the Pennsylvania Commonwealth Court
reversed the Pennsylvania Public Utility Commission's (PUC) recalculation of
capacity costs to be paid to the Shannopin PURPA project. The court remanded
the case to the PUC for recalculation, concluding that the PUC erred in
escalating the rates past October 1, 1995. The developer has filed for
reconsideration of that portion of the order which remanded the case to the
PUC.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule.
(b) On May 19, 1995, the Company filed a report on Form
8-K including an exhibit consisting of a
Supplemental Indenture dated as of May 1, 1995.
On June 15, 1995, the Company filed a report on Form
8-K including an exhibit consisting of an indenture
dated as of May 15, 1995.
Signature
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.
WEST PENN POWER COMPANY
C. V. BURKLEY
C. V. Burkley, Controller
(Chief Accounting Officer)
August 11, 1995
<TABLE> <S> <C>
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<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<EXCHANGE-RATE> 1
<CASH> 272
<SECURITIES> 32
<RECEIVABLES> 141,027
<ALLOWANCES> (8,383)
<INVENTORY> 80,234
<CURRENT-ASSETS> 281,638
<PP&E> 3,053,150
<DEPRECIATION> 1,037,818
<TOTAL-ASSETS> 2,792,767
<CURRENT-LIABILITIES> 243,306
<BONDS> 906,583
<COMMON> 465,994
0
149,708
<OTHER-SE> 501,009
<TOTAL-LIABILITY-AND-EQUITY> 2,792,767
<SALES> 607,879
<TOTAL-REVENUES> 607,879
<CGS> 386,337
<TOTAL-COSTS> 488,481
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31,740
<INCOME-PRETAX> 94,751
<INCOME-TAX> 32,726
<INCOME-CONTINUING> 62,025
<DISCONTINUED> 0
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<CHANGES> 0
<NET-INCOME> 62,025
<EPS-PRIMARY> 0.00<F1>
<EPS-DILUTED> 0.00<F1>
<FN>
<F1>All common stock is owned by parent. No. EPS required.
</FN>
</TABLE>
