SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
X THE SECURITIES EXCHANGE ACT OF 1934
------
For the quarterly period ended June 30, 1995
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
------ THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 0-337
Wisconsin Power and Light Company
(Exact name of registrant as specified in its charter)
Wisconsin 39-0714890
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or organization) No.)
222 West Washington Avenue, Madison, Wisconsin 53703
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 608-252-3311
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
-------- --------
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock Outstanding at June 30, 1995: 13,236,601 shares
<PAGE>
CONTENTS
PAGE
PART I. Financial Information:
Consolidated Financial Statements of Wisconsin Power and Light Co.
Consolidated Balance Sheets as of June 30, 1995
and 1994 and December 31, 1994 . . . . . . . . . . . . . . . . . 2
Consolidated Statements of Income for the Three and Six
Months Ended June 30, 1995 and 1994 . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows - Six
Months Ended June 30, 1995 and 1994 . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . . . . . . 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . 7
PART II. Other Information . . . . . . . . . . . . . . . . . . . . . . 13
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . 15
<PAGE>
WISCONSIN POWER AND LIGHT COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
June 30, June 30, December 31,
1995 1994 1994
(Thousands of dollars)
ASSETS
UTILITY PLANT:
Plant in service --
Electric . . . . . . $1,651,351 $1,531,411 $1,611,351
Gas . . . . . . . . 211,062 195,233 204,514
Water . . . . . . . 22,006 20,945 22,070
Common . . . . . . . 128,897 110,565 123,255
---------- ---------- ------------
2,013,316 1,858,154 1,961,190
Dedicated
decommissioning funds 64,342 50,970 51,791
---------- ----------- ------------
2,077,658 1,909,124 2,012,981
Less: Accumulated
provision for
depreciation . . . . 853,853 780,514 808,853
----------- ------------ ------------
1,223,805 1,128,610 1,204,128
Construction work in
progress . . . . . . 33,486 76,540 42,731
Nuclear fuel, net . . . 16,949 15,558 19,396
---------- ----------- -----------
Total utility plant . . 1,274,240 1,220,708 1,266,255
---------- ----------- -----------
OTHER PROPERTY AND
EQUIPMENT, net . . . 13,955 646 9,133
---------- ----------- ----------
INVESTMENTS . . . . . . 12,303 12,514 12,228
---------- ----------- ----------
CURRENT ASSETS:
Cash and equivalents . 3,937 3,504 2,234
Net accounts receivable
and unbilled revenue,
less allowance for
doubtful accounts of
$209, $159, and $209,
respectively . . . . 12,773 18,943 21,689
Coal, at average cost . 12,689 12,772 15,824
Materials and supplies,
at average cost . . 21,041 22,310 20,835
Gas in storage, at
average cost . . . . 5,178 4,610 7,975
Prepayments and other . 27,155 20,448 22,310
---------- ---------- ----------
Total current assets . 82,773 82,587 90,867
---------- ---------- ----------
DEFERRED CHARGES:
Regulatory assets . . . 144,988 131,535 144,476
Other . . . . . . . . . 61,939 73,922 62,165
---------- ----------- -----------
Total deferred charges 206,927 205,457 206,641
---------- ----------- -----------
TOTAL ASSETS . . . . . $1,590,198 $1,521,912 $1,585,124
========== ========== ==========
The accompanying notes are an integral part of the consolidated
financial statements.
<PAGE>
WISCONSIN POWER AND LIGHT COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
June 30, June 30, December 31,
1995 1994 1994
(Thousands of dollars)
CAPITALIZATION AND
LIABILITIES
COMMON SHAREOWNER'S
INVESTMENT:
Common stock, $5 par
value, authorized --
18,000,000 shares;
issued and outstanding
-- 13,236,601 shares . $ 66,183 $ 66,183 $ 66,183
Premium on capital stock
and capital surplus . . 199,169 197,982 199,170
Reinvested earnings . . 280,417 276,817 279,153
-------- -------- ---------
545,769 540,982 544,506
PREFERRED STOCK WITHOUT
MANDATORY REDEMPTION:
Cumulative, without par
value, authorized
3,750,000 shares
maximum aggregate
stated value
$150,000,000;
Cumulative, without par
value, $100 stated
value, 449,765 shares
outstanding . . . . . 44,977 44,977 44,977
Cumulative, without par
value, $25 stated
value, 599,460 shares
outstanding . . . . . 14,986 14,986 14,986
--------- --------- -----------
Total preferred stock . 59,963 59,963 59,963
FIRST MORTGAGE BONDS, NET . 318,569 336,507 336,538
--------- ---------- ----------
Total capitalization . . 924,301 937,452 941,007
--------- ---------- ----------
CURRENT LIABILITIES:
Variable rate demand
bonds . . . . . . . . . 56,975 56,975 56,975
Short-term debt . . . . 68,000 24,500 50,500
Accounts payable . . . . 59,270 50,330 67,518
Accrued payroll and
vacation . . . . . . . 12,715 12,185 12,624
Accrued taxes . . . . . 8,777 4,791 7,299
Accrued interest . . . . 7,583 7,618 7,669
Other . . . . . . . . . 16,998 23,416 12,456
--------- --------- ---------
Total current
liabilities . . . . . 230,318 179,815 215,041
--------- --------- ---------
OTHER CREDITS:
Accumulated deferred
income taxes . . . . . 226,415 216,612 222,373
Accumulated deferred
investment tax credits 39,800 41,721 40,758
Accrued environmental
remediation costs . . . 79,044 80,244 79,280
Other . . . . . . . . . 90,320 66,068 86,665
--------- --------- ---------
Total other credits . . 435,579 404,645 429,076
--------- --------- ---------
TOTAL CAPITALIZATION AND
LIABILITIES . . . . . . $1,590,198 $1,521,912 $1,585,124
========== ========== ==========
The accompanying notes are an integral part of the consolidated
financial statements.
<PAGE>
WISCONSIN POWER AND LIGHT COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
(Thousands of Dollars)
OPERATING REVENUES:
Electric . . . . $ 126,093 $ 125,271 $ 257,244 $ 262,468
Gas . . . . . . 22,450 24,629 77,657 89,704
Water . . . . . 1,014 1,024 1,998 2,001
--------- ---------- --------- ----------
149,557 150,924 336,899 354,173
OPERATING EXPENSES:
Electric
production
fuels . . . . . 27,898 32,646 57,611 64,932
Purchased power 10,234 8,440 17,382 17,927
Purchased gas . 12,359 15,360 46,241 59,045
Other operation 35,821 34,830 70,801 69,440
Maintenance . . 13,216 12,387 23,048 21,759
Depreciation . . 19,913 17,519 39,408 37,015
Taxes --
Current federal
income . . . . 3,053 3,814 14,499 15,341
Deferred income
taxes . . . . 2,825 2,782 4,546 4,563
Investment tax
credit
(restored) . . (479) (481) (958) (963)
Current state
income . . . . 759 748 3,324 3,535
Property,
payroll &
other . . . . 7,144 7,041 14,304 14,056
------- --------- -------- --------
132,743 135,086 290,206 306,650
------- --------- -------- --------
NET OPERATING
INCOME . . . . . 16,814 15,838 46,693 47,523
-------- --------- -------- --------
OTHER INCOME AND
(DEDUCTIONS):
Allowance for
equity funds
used during
construction . 451 681 722 1,130
Other, net . . . 400 4,140 463 9,415
Current income
tax . . . . . . (120) 693 (88) (1,791)
Deferred income
tax . . . . . . 17 (1,968) 21 (1,866)
------- ------- -------- --------
748 3,546 1,118 6,888
------- -------- -------- --------
INCOME BEFORE
INTEREST EXPENSE 17,562 19,384 47,811 54,411
------- -------- --------- --------
INTEREST EXPENSE:
Interest on
bonds . . . . . 7,256 7,142 15,065 14,316
Allowance for
borrowed funds
used during
construction
(credit) . . . (151) (245) (241) (434)
Other . . . . . 784 429 1,587 1,009
------- -------- --------- --------
7,889 7,326 16,411 14,891
------ --------- -------- --------
NET INCOME . . . . 9,673 12,058 31,400 39,520
PREFERRED STOCK
DIVIDENDS . . . 827 827 1,655 1,655
------- ------- -------- --------
NET INCOME AFTER
PREFERRED STOCK
DIVIDENDS . . . $ 8,846 $ 11,231 $ 29,745 $ 37,865
======== ======== ========= ========
The accompanying notes are an integral part of the consolidated
financial statements.
<PAGE>
WISCONSIN POWER AND LIGHT COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended
June 30,
1995 1994
(Thousands of Dollars)
Cash flows from (used for)
operating activities:
Net income . . . . . . . . $ 31,400 $ 39,520
Adjustments to reconcile
net income to net cash
from operating activities:
Depreciation . . . . . . 39,408 37,015
Amortization of nuclear
fuel . . . . . . . . . . 3,404 2,749
Deferred income tax . . . 4,567 6,429
Investment tax credit
restored . . . . . . . . (958) (963)
Allowance for equity funds
used during construction (722) (1,130)
Changes in assets and
liabilities:
Net accounts receivable
and unbilled revenues . 8,916 13,746
Coal . . . . . . . . . . 3,135 521
Materials and supplies . (206) (631)
Gas in storage . . . . . 2,797 4,144
Prepayments and other . . (4,844) 1,229
Accounts payable and
accruals . . . . . . . . (3,704) (22,007)
Accrued taxes . . . . . . 1,478 3,987
Other, net . . . . . . . 530 6,894
--------- ---------
Net cash generated from
operating activities 85,201 91,503
--------- ---------
Cash flows from (used for)
financing activities:
Common stock cash dividends (28,482) (28,696)
Preferred stock dividends (1,655) (1,655)
Preferred stock issuance
expense . . . . . . . . . - 648
Net change in short term
debt . . . . . . . . . . 17,500 (34,500)
Retirement of first
mortgage bonds . . . . . (17,999) -
Equity contribution from
parent . . . . . . . . . - 8,462
--------- --------
Net cash (used for)
financing activities . . (30,636) (55,741)
Cash flows from (used for)
investing activities:
Additions to utility plant,
excluding AFUDC . . . . . (36,698) (36,616)
Allowance for borrowed
funds used during
construction . . . . . . (241) (434)
Dedicated decommissioning
funds . . . . . . . . . . (12,551) (1,167)
Other, net . . . . . . . . (3,372) 29
---------- ----------
Net cash (used for)
investing activities . . (52,862) (38,188)
---------- -----------
Net increase in cash and
equivalents . . . . . . . 1,703 (2,426)
Cash and equivalents at
beginning of period . . . 2,234 5,930
---------- -----------
Cash and equivalents at end of
period . . . . . . . . . . $ 3,937 $ 3,504
========== ===========
Supplemental disclosures of
cash flow information:
Cash paid during the period
for:
Interest - debt . . . . . $ 14,840 $ 8,427
Income taxes . . . . . . $ 10,175 $ 14,971
The accompanying notes are an integral part of the
consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated financial statements included herein have been
prepared by Wisconsin Power and Light Company (the "Company" or
"WPL"), without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Accordingly, certain information
and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles
have been condensed or omitted. The consolidated financial statements
include the Company and its wholly-owned consolidated subsidiaries.
The Company is a wholly-owned subsidiary of WPL Holdings, Inc. These
financial statements should be read in conjunction with the financial
statements and the notes thereto included in the Company's latest
annual report on Form 10-K.
In the opinion of the Company, the consolidated interim financial
statements reflect all adjustments necessary to fairly state the
results of operations for the interim periods presented. However,
because of the seasonal nature of the Company's operations, the
results shown for portions of a year are not indicative of annual
results.
2. On June 23, 1995, the Company filed an application with the Public
Service Commission of Wisconsin (PSCW) for the sale of $60 million of
first mortgage bonds to occur sometime in 1995. The Company intends
to use the net proceeds from the sale of these bonds first to repay
short-term debt which was incurred in June of 1995 to repurchase in
private transactions $18 million aggregate principal amount of the
Company's first mortgage bonds, Series V, due December 1, 2025,
interest rate of 9.30%. The remainder of the net proceeds will be
used to repay other short-term debt incurred by the Company to finance
utility construction expenditures and for general corporate purposes.
3. In March 1995, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and 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. The Company 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 of the Company based on the current regulatory
structure in which the Company operates. This conclusion may change
in the future as competitive factors influence wholesale and retail
pricing in this industry.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1995 VS. JUNE 30, 1994:
OVERVIEW
The Company reported consolidated second quarter net income of $9.7
million down from $12.1 million for the same period in 1994. Second
quarter 1995 net income was $2.0 million lower due to approval to
recollect in the second quarter of 1994 a previously refunded penalty
assessed by the PSCW relating to WPL's administration of a coal contract.
Also, operating and maintenance expense increased $1.1 million after-tax
primarily due to Kewaunee Nuclear Power Plant ("Kewaunee" or "Plant")
refueling and maintenance overhaul costs. Depreciation expense increased
$1.4 million after-tax due to increased investment in property, plant and
equipment. Offsetting these decreases is a $2.3 million after-tax
increase in electric margin primarily from lower electric production fuel
costs per kWh and decreased cost per kWh of purchased power.
<TABLE>
Electric Operations
<CAPTION>
Revenues and Costs
KWhs Sold, Generated Per kWh Sold
Revenues and Costs and Purchased Generated and Customers at End of
(In Thousands) % Change (In Thousands) % Change Purchased Quarter
1995 1994 1995 1994 1995 1994 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Residential
and Farm $43,247 $42,801 1% 622,251 602,761 3% $.070 $.071 327,319 322,202
Industrial 36,080 35,777 1% 991,595 955,781 4% .036 .037 778 755
Commercial 24,168 24,055 0% 412,304 393,496 5% .059 .061 44,227 43,437
Wholesale
and Class A 20,319 20,877 -3% 628,782 606,255 4% .032 .034 83 40
Other 2,279 1,761 29% 14,856 12,203 22% .153 .144 1,497 1,471
------ ------ ----- ------- ------- ----- ------ ------- ------ ------
Total $126,093 $125,271 1% 2,669,788 2,570,496 4% $.047 $.049 373,904 367,905
====== ====== ====== ========= ========= ===== ===== ===== ======= =======
Electric
production
fuels $27,898 $32,646 -15% 2,261,305 2,344,507 -4% $.012 $.014
========= ========= === ==== =====
Purchased
Power $10,234 $8,440 21% 516,992 325,804 59% $.020 $.026
------ -------- ----- ======= ======== === === =====
Margin $87,961 $84,185 4%
======= ======= ===
</TABLE>
Electric margin increased in the second quarter of 1995 compared to the
second quarter of 1994 primarily from slightly increased revenues coupled
with reductions in electric production fuels per kWh and the cost of
purchased power per kWh. Revenues increased from growth among all
customer classes due to favorable economic conditions in WPL's service
territory. These revenue increases were somewhat offset by an overall
2.8% decrease in retail electric rates effective January 1, 1995.
Electric production fuels and purchased power per kWh were reduced
through lower coal costs and from successful procurement strategies,
respectively.
<TABLE>
Gas Operations
<CAPTION>
Terms Sold and Revenues and Costs
Revenues and Costs Purchased per Therms Sold and Customers at End of
(In Thousands) % Change (In Thousands) % Change Purchased Quarter
1995 1994 1995 1994 1995 1994 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Residential $10,697 $10,337 3% 18,843 18,154 4% $.568 $.569 126,581 122,476
Firm 5,839 5,930 -2% 13,419 13,022 3% .435 .455 15,733 15,298
Interruptible 606 1,463 -59% 1,942 4,768 -59% .312 .307 236 233
Transport 3,858 3,384 14% 29,590 17,870 66% .130 .189 164 87
Other 1,450 3,515 -0.59 10,598 20,473 -0.48 .137 .172 79 93
------ ----- ---- ------- ------ ------- ------- ----- ------ -------
Total $22,450 $24,629 -9% 74,392 74,287 0% $.302 $.332 142,793 138,187
======= ======= ====== ====== ====== ====== ====== ===== ======= =======
Purchased gas $12,359 $15,360 -20% 58,546 50,499 16% $.211 $.304
------- ------ ----- ======= ======= ======= ===== ======
Margin $10,091 $ 9,269 9%
====== ====== =====
</TABLE>
Gas margin increased in the second quarter of 1995 compared to the
second quarter of 1994 from favorable gas procurement strategies and some
change in the mix of sales from lower margin to higher margin customer
classes. Customer growth continued from the solid economic conditions in
WPL's service territory.
Other Operation Expense
Other operation expense increased due to an increase in accounts
receivable factoring costs related to a rise in the short-term market
interest rates and increased conservation expenditures recently approved
in WPL's latest rate order, effective January 1, 1995.
Maintenance Expense
Maintenance expense increased due to a more extensive refueling and
maintenance overhaul at Kewaunee. (also, see: Liquidity and Capital
Resources, page 12, "Other")
Depreciation and Amortization
Depreciation and amortization expense increased primarily reflecting
increased property additions.
Income Taxes
Income taxes decreased between second quarters primarily due to lower
taxable income.
Other Income and Deductions - Other, Net
Other, net decreased for the second quarter of 1995 compared with the
same period in 1994, primarily due to the approval to recollect, in 1994,
$2.0 million after-tax from ratepayers from an assessment by the PSCW
relating to the administration of a coal contract.
SIX MONTHS ENDED JUNE 30, 1995 VS. JUNE 30, 1994:
OVERVIEW
The Company reported consolidated net income of $31.4 million for the
six months ended June 30, 1995 compared to $39.5 million for the same
period in 1994. The operating factors include an increase in operating
and maintenance expenses of $1.6 million after-tax principally related to
Kewaunee refueling and maintenance overhaul costs. Also, depreciation
expense increased $1.4 million after-tax from increased investment in
property, plant and equipment. Offsetting the above decreases is a $1.6
million after-tax increase in electric margin primarily from lower
electric fuel cost per kWh and purchased power cost per kWh.
An additional factor impacting other income and deductions is the
reversal of a $4.9 million after-tax reserve in the first six months of
1994 which represented a penalty assessment by the PSCW relating to the
administration of a coal contract.
<TABLE>
Electric Operations
<CAPTION>
kWhs Sold, Revenues and Costs
Generated and Per kWh Sold
Revenues and Costs Purchased % Generated and Customers at End of
(In Thousands) % Change (In Thousands) Change Purchased Quarter
1995 1994 1995 1994 1995 1994 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Residential
and Farm $95,137 $97,356 -2% 1,391,862 1,389,627 0% $.068 $.070 326,397 322,202
Industrial 67,636 67,989 -1% 1,874,769 1,822,824 3% .036 .037 776 755
Commercial 48,457 49,605 -2% 833,344 821,480 1% .058 .060 44,126 43,437
Wholesale
and Class A 42,058 43,239 -3% 1,313,920 1,312,372 0% .032 .033 81 40
Other 3,956 4,279 -8% 28,104 28,986 -3% .141 .148 1,494 1,471
-------- ------- ----- -------- -------- ---- ------ ----- ------- -------
Total $257,244 $262,468 -2% 5,441,999 5,375,289 1% $.047 $.049 372,874 367,905
======= ======= ===== ========= ========= ==== ====== ===== ======= =======
Electric
production
fuels $57,611 $64,932 -11% 4,770,259 4,790,116 0% $.012 $.014
========= ========= ==== ===== =====
Purchased
Power $17,382 $17,927 -3% 897,941 767,945 17% $.019 $.023
------- ------- ---- ======== ======= ===== ======= ======
Margin $182,251 $179,609 1%
======= ======= ===
</TABLE>
Electric margin increased slightly for the six months ended June 30,
1995 compared to the same period in 1994. Revenues decreased slightly due
to a 2.8% decrease in retail electric rates effective January 1, 1995 and
less favorable weather conditions, offset by increased kWh sales from
growth among customer classes. However, lower electric production fuel
and purchased power costs per kWh resulting from successful procurement
strategies increased overall margin.
<TABLE>
Gas Operations
<CAPTION>
Terms Sold and Revenues and Costs
Revenues and Costs Purchased per Therms Sold Customers at End of
(In Thousands) % Change (In Thousands) % Change and Purchased Quarter
1995 1994 1995 1994 1995 1994 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Residential $39,564 $45,090 -12% 73,793 78,399 -6% $.536 $.575 126,155 122,476
Firm 21,617 26,060 -17% 51,899 57,089 -9% .417 .456 15,694 15,298
Interruptible 1,777 4,308 -59% 6,102 11,762 -48% .291 .366 239 233
Transport 8,351 8,345 -11% 54,257 42,934 26% .155 .194 160 87
Other 6,348 5,901 8% 39,895 33,911 18% .158 .174 81 93
------- -------- ----- ------- ------- ----- ------ ------ ------- -------
Total $77,657 $89,704 -0% 225,946 224,095 1% $.344 $.400 142,329 138,187
======= ======= ==== ======= ======= ===== ====== ===== ======= =======
Purchased
gas $46,241 $59,045 -22% 207,352 191,517 8% $.223 $.308
------- ------- ---- ======== ======== ==== ===== =====
Margin $31,416 $30,659 2%
======= ======= ====
</TABLE>
Gas margin for the six month period ended June 30, 1995 increased when
compared to the same period in 1994. Revenues decreased due to less
favorable weather conditions but were somewhat offset by increased therm
sales as a result of customer growth from the solid economic conditions in
WPL's service territory.
Favorable gas procurement strategies significantly reduced purchased gas
expense which resulted in the overall increase in margin.
Other Operation Expense
Other operation expense increased due to an increase in accounts
receivable factoring costs related to a rise in the short-term market
interest rates and increased conservation expenditures recently approved
in WPL's latest rate order, effective January 1, 1995.
Maintenance Expense
Maintenance expense increased due to refueling and maintenance overhaul
costs at Kewaunee. (Also see: Liquidity and Capital Resources, page 11,
"Other.")
Depreciation and Amortization
Depreciation and amortization expense increased primarily reflecting
increased property additions.
Income Taxes
Income taxes decreased for the six month period ended June 30, 1995
primarily due to lower taxable income.
Other Income and Deductions - Other, Net
Other, net decreased for the six months ended June 30, 1995 compared
with the same period in 1994, primarily due to the reversal of a $2.9
million after-tax reserve which represented a penalty assessment by the
PSCW, and also the $2.0 million after-tax approval to recollect from
ratepayers, both relating to the administration of a coal contract.
LIQUIDITY AND CAPITAL RESOURCES
Financing and Capital Structure
The level of short-term borrowing fluctuates based primarily on seasonal
corporate needs, the timing of long-term financing and capital market
conditions. To maintain flexibility in its capital structure and to take
advantage of favorable short-term rates, the Company also uses proceeds
from the sales of accounts receivable and unbilled revenues to finance a
portion of its long-term cash needs.
The Company's capitalization at June 30, 1995, including the current
maturities of long-term debt, variable rate demand bonds and short-term
debt, consisted of 52 percent common equity, 6 percent preferred stock and
42 percent long-term debt.
Capital Expenditures
The Company's liquidity is primarily determined by the level of cash
generated from operations and the funding requirements of WPL's ongoing
construction and maintenance programs. Cash flows from operating
activities, after dividends paid, provided approximately $66 million and
$67 million for the three months ended June 30, 1995 and 1994,
respectively and $57 million and $63 million for the six months ended June
30, 1995 and 1994, respectively. The Company finances its construction
expenditures through internally generated funds supplemented, when
required, by outside financing. The estimated construction expenditures
for the remainder of 1995 are $73 million. The Company currently
anticipates that it will finance approximately 94 percent of these
expenditures through internally generated funds. (Also see: Note 2 in the
"Notes to Financial Statements," page 6.)
The expenditures for the decommissioning of Kewaunee are estimated to
begin in 2014. It is anticipated that expenditures related to the actual
decommissioning of the plant will occur between 2014 and 2021 of which
WPL's share in terms of future dollars, approximates $581 million. An
additional $435 million related to the storage of spent nuclear fuel on
site and other maintenance of the site will likely occur from 2022 to
2050. WPL currently expects to have the cost collected through electric
rates and funded in an external trust by 2013. Therefore, such
expenditures are not expected to have a direct impact on the liquidity or
the availability of capital resources.
Industry Outlook
The PSCW has recently opened a formal docket initiating an inquiry into
the goals of Wisconsin utility regulation and identification of
alternative forms of regulation.
WPL has submitted its views which, in summary form, call for open access
to transmission and distribution systems and a competitive power
generation market place. It is not possible at this time to predict the
outcome of these proceedings.
The Federal Energy Regulatory Commission (FERC) is developing regulation
which will begin to provide open access to utility's transmission
facilities for wholesale customers subject to certain approved FERC
tariffs. WPL believes its existing open access tariffs position it well
to compete under such market conditions.
Other
The Company's Form 10-Q for the quarter ended March 31, 1995, at Part I,
"Other", Page 10, reported the shutdown of Kewaunee on April 1, 1995 for
scheduled maintenance and refueling and related steam generator matters.
Wisconsin Public Service Corporation is the operator and 41.2% owner of
Kewaunee which is owned jointly with WPL and Madison Gas and Electric
Company which own 41% and 17.8%, respectively.
During the shutdown, inspection of the steam generators revealed higher
levels of tube degradation than was anticipated. Continued use of
degraded tubes raises concerns regarding primary-to-secondary leakage of
reactor coolant. Thus, the degraded tubes were removed from service by
plugging. Tube plugging and the build-up of deposits on the tubes affect
the heat-transfer capability of the steam generators to the point where
eventually full-power operation is affected. Prior to the recent
shutdown, the equivalent of approximately 12% of the tubes in the steam
generators were plugged with no loss of capacity. When the Plant was
returned to service on May 18, 21% of the tubes were plugged, resulting
in a capacity reduction of 3.8% during the Plant's current operating cycle
which extends into the fall of 1996. Thus, net Plant output has been
reduced from 525 megawatts to approximately 510 megawatts. Although
preliminary estimates indicated slightly increased maintenance and
purchased power expenses as reported in the Company's Form 10-Q for the
quarter ended March 31, 1995, revised estimates indicate that during 1995
additional expenses related to recent steam generator plugging likely will
be offset by reduced nuclear expenses in other areas and, therefore,
should not affect earnings significantly. WPL with it's joint partners
continue the study of tube repair alternatives.
See Part I, Item 1. Business - Electric Operations - Kewaunee Nuclear
Power Plant in the WPL Form 10-K for the year ended December 31, 1994 for
additional background on this matter.
<PAGE>
PART II--OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's annual meeting of shareowners held on May 17, 1995, L.
David Carley, Donald R. Haldeman, Arnold M. Nemirow and Judith D. Pyle
were elected directors of the Company for terms expiring in 1998. The
following table sets forth certain information with respect to the
election of directors at the annual meeting.
Shares Withholding
Name of Nominee Shares Voted For Authority
L. David Carley 13,707,173 9,036
Donald R. Haldeman 13,712,756 3,453
Arnold M. Nemirow 13,712,710 3,499
Judity D. Pyle 13,711,881 4,328
The following table sets forth the other directors of the Company whose
terms of office continued after the 1994 annual meeting.
Year in which
Name of Director Term Expires
Katherine C. Lyall 1996
Henry F. Scheig 1996
Rockne G. Flowers 1996
Henry C. Prange 1996
Erroll B. Davis, Jr. 1997
Milton E. Neshek 1997
Carol T. Toussaint 1997
In addition, at the annual meeting, shareowners approved the appointment
of Arthur Andersen LLP as the Company's independent auditors for the 1995
calendar year. With respect to such matter, the number of shares voted
for and against were 13,711,631 and 1,320, respectively. The number of
shares abstaining and the number of shares subject to broker non-votes
were 3,258 and 0, respectively.
Item 6. Exhibits and Reports on Form 8-K
1. Exhibits:
27 Financial Data Schedule
2. Reports on Form 8-K: None
<PAGE>
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.
Wisconsin Power and Light Company
August 9, 1995 /s/ Daniel A. Doyle
Daniel A. Doyle, Vice President - Finance,
Controller and Treasurer, Wisconsin Power and
Light Company (principal accounting officer
and officer authorized to sign on behalf of
the registrant.)
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANICAL
STATEMENTS CONTAINED IN THE FORM 10-Q FILED BY WISCONSIN POWER AND LIGHT COMPANY
FOR THE QUARTER ENDED JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,274,240
<OTHER-PROPERTY-AND-INVEST> 26,298
<TOTAL-CURRENT-ASSETS> 93,443
<TOTAL-DEFERRED-CHARGES> 196,257
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,590,198
<COMMON> 66,183
<CAPITAL-SURPLUS-PAID-IN> 199,169
<RETAINED-EARNINGS> 280,417
<TOTAL-COMMON-STOCKHOLDERS-EQ> 545,769
0
59,963
<LONG-TERM-DEBT-NET> 318,569
<SHORT-TERM-NOTES> 56,975
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 68,000
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 540,922
<TOT-CAPITALIZATION-AND-LIAB> 1,590,198
<GROSS-OPERATING-REVENUE> 149,557
<INCOME-TAX-EXPENSE> 6,158
<OTHER-OPERATING-EXPENSES> 35,821
<TOTAL-OPERATING-EXPENSES> 132,743
<OPERATING-INCOME-LOSS> 16,814
<OTHER-INCOME-NET> 748
<INCOME-BEFORE-INTEREST-EXPEN> 17,562
<TOTAL-INTEREST-EXPENSE> 7,889
<NET-INCOME> 9,673
827
<EARNINGS-AVAILABLE-FOR-COMM> 8,846
<COMMON-STOCK-DIVIDENDS> 14,148
<TOTAL-INTEREST-ON-BONDS> 5,352
<CASH-FLOW-OPERATIONS> 84,901
<EPS-PRIMARY> 0<F1>
<EPS-DILUTED> 0<F1>
<FN>
<F1>Earnings per share of common stock is not reflected because all of such shares
are held by WPL Holdings, Inc.
</FN>
</TABLE>
