OMB APPROVAL
OMB Number: 3235-0161
Expires: September 30, 1998
Estimated average burden
hours per response....4.00
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM U-3A2
Statement by Holding Company Claiming Exemption Under Rule U-3a-2 from the
provisions of the Public Utility Holding Company Act of 1935
To be filed Annually Prior to March 1
ALASKA POWER & TELEPHONE COMPANY
- --------------------------------------------------------------------------------
(Name of Company)
hereby files with the Securities Exchange Commission, pursuant to Rule 2, its
statement claiming exemption as a holding company from the provisions of the
Public Utility Holding Company Act of 1935, and submits the following
information:
1. Name, State of organization, location and nature of business of claimant
and every subsidiary thereof, other than any exempt wholesale generator
(EWG) or foreign utility company in which claimant directly or indirectly
holds an interest.
2. A brief description of the properties of claimant and each of its
subsidiary public utility companies used for the generation,
transmission, and distribution of electric energy for sale, or for the
production, transmission and distribution of natural or manufactured gas,
indicating the location of principal generating plants, transmission
lines, producing fields, gas manufacturing plants, and electric and gas
distribution facilities, including all such properties which are outside
the State in which claimant and its subsidiaries are organized and all
transmission or pipelines which deliver or receive electric energy or gas
at the borders of such State.
3. The following information for the last calendar year with respect to
claimant and each of its subsidiary public utility companies:
(a) Number of kwh. Of electric energy sold (at retail or wholesale) and
Mcf. Of natural or manufactured gas distributed at retail.
(b) Number of kwh. of electric energy and Mfc. Of natural or
manufactured gas distributed at retail outside the State in which
each company is organized.
(c) Number of kwh. Of electric energy and MCF. OF NATURAL OR
MANUFACTURED AS SOLD AT WHOLESALE OUTSIDE THE State in which each
such company is organized, or at the State line.
(d) Number of kwh. Of electric energy and Mcf. Of natural or
manufactured gas purchased outside the State in which each such
company is organized or at the State line.
4. The following information for the reporting period with respect to
claimant and each interest it holds directly or indirectly in an EWG or a
foreign utility company, stating monetary amounts in United States
dollars:
(a) Name, location, business address and description of the facilities
used by the EWG or foreign utility company for the generation,
transmission and distribution of electric energy for sale or for
the distribution at retail of natural or manufactured gas.
(b) Name of each system company that holds an interest in such EWG or
foreign utility company; and description of the interest held.
(c) Type and amount of capital invested, directly or indirectly, by the
holding company claiming exemption; any direct or indirect
guarantee of the security of the EWG or foreign utility company by
the holding company claiming exemption; and any debt or other
financial obligation for which there is recourse, directly or
indirectly, to the holding company claiming exemption or another
system company, other than the EWG or foreign utility company.
Potential persons who are to respond to the collection of information contained
in this form are not required to respond unless the form displays a currently
valid OMB control number. SEC 1834 (2-97)
<PAGE>
(d) Capitalization and earnings of the EWG or foreign utility company
during the reporting period.
(e) Identify any service, sales or construction contract(s) between the
EWG or foreign utility company and a system company, and describe
the services to be rendered or goods sold and fees or revenues under
such agreement(s).
EXHIBIT A
A consolidating statement of income and surplus of the claimant and its
subsidiary companies for the last calendar year, together with a consolidating
balance sheet of claimant and its subsidiary companies as of the close of such
calendar year.
The above-named claimant has caused this statement to be duly executed on its
behalf by its authorized officer on this 19th day of March, 1998.
ALASKA POWER & TELEPHONE COMPANY
- --------------------------------------------------------------------------------
Name of claimant
by /s/ ARNE SATHER
------------------
(title) CONTROLLER
------------
CORPORATE SEAL
Attest: /s/ HOWARD GARNER , EXECUTIVE VICE PRESIDENT
------------------------------------------------
Name, title, and address of officer to whom notices and correspondence
concerning this statement should be addressed:
ALASKA POWER & TELEPHONE COMPANY ARNE SATHER, CONTROLLER
- -------------------------------- -----------------------
(Name) (Title)
P.O. BOX 3222, PORT TOWNSEND, WASHINGTON 98368
EXHIBIT B Financial Data Schedule
If, at the time a report on this form is filed, the registrant is required to
submit this report and any amendments thereto electronically via EDGAR, the
registrant shall furnish a Financial Data Schedule. The Schedule shall set forth
the financial and other data specified below that are applicable to the
registrant on a consolidated basis.
Item No. Caption Heading
1 Total Assets
2 Total Operating Revenues
3 Net Income
EXHIBIT C
An organizational chart showing the relationship of each EWG or foreign utility
company to associate companies in the holding-company system.
<PAGE>
ATTACHMENTS TO FORM U-3A-2
1. Name of claimant is Alaska Power & Telephone Company (AP&T). AP&T operates as
a regulated public utility providing electric and/or telephone service. AP&T is
fully regulated by the Alaska Public Utilities Commission. AP&T is a Holding
Company with the following subsidiaries:
A. Electric Operations
1. Alaska Power Company - Serving Skagway, Tok, Craig, Hydaburg, Tanacross,
Dot Lake, Hollis, Chistochina, Mentasta Lake, Tetlin, Healy Lake.
2. Bettles Power & Light, Inc. - Serving Bettles, Evansville,
Allakaket/Alatna.
3. Coffman Cove Utilities Assoc. - Serving Coffman Cove, Whale Pass,
Naukati.
4. Eagle Power Company - Serving Eagle, Eagle Village.
5. Northway Power & Light - Serving Northway, Northway Village.
6. Haines Light & Power - Serving Haines.
7. BBL Hydro, Inc. - Hydroelectric on Prince of Wales Island (wholesale
generator).
8. Goat Lake Hydro, Inc. - Hydroelectric Project - Skagway.
B. Telephone Operations
1. Alaska Telephone Company - Serving Skagway, Tok, Craig, Hydaburg,
Tanacross, Dot Lake, Hollis, Dry Creek, Tetlin, Healy Lake, Naukati, Whale
Pass, Myers Chuck, Edna Bay.
2. Bettles Telephone, Inc. - Serving Bettles, Evansville, Jim River Camp.
3. North Country Telephone, Inc. - Serving Eagle, Eagle Village.
4. AP&T Wireless - Serving Ketchikan and surrounding areas.
2. All properties of AP&T are located solely within Alaska. There is no natural
gas activity. The electric service in each location is generated by diesel
powered generators (with some hydro in Skagway, Prince of Wales Island, and
Haines). There is no intertie to other electric systems or generation sources
except that AP&T sells wholesale electricity to Tlingit-Haida Regional Electric
Authority for the community of Klawock, Alaska.
3. (a) Number of kwh sold (by individual subsidiary):
Alaska Power Company 36,285,372 kwh retail
4,368,344 kwh wholesale
Bettles Power & Light, Inc. 699,760 kwh retail
Coffman Cove Utilities Assoc. Inc. 1,360,323 kwh retail
Eagle Power Company 630,889 kwh retail
Northway Power & Light, Inc. 1,739,424 kwh retail
Haines Light & Power, Inc. 11,175,494 kwh retail
(b) None sold or distributed out of the state of Alaska.
(c) None sold or distributed out of the state of Alaska.
(d) None sold or distributed out of the state of Alaska.
Exhibit A attached is the consolidating financial statements.
<PAGE>
<TABLE>
<CAPTION>
ALASKA POWER & TELEPHONE COMPANY AND SUBSIDIARIES Exhibit A
CONSOLIDATING BALANCE SHEETS - ASSETS
December 31, 1997
AP&T ALD APC ATC ATW BBL
<S> <C> <C> <C> <C> <C> <C>
Assets
Utility Plant:
Electric 1,720,809 20,950,759 10,309,865
Telephone 8,742,907 1,194,796
-----------------------------------------------------------------
1,720,809 0 20,950,759 8,742,907 1,194,796 10,309,865
Less accumulated depreciation 1,105,353 7,529,812 2,649,959 100,905 495,498
-----------------------------------------------------------------
615,456 0 13,420,947 6,092,948 1,093,891 9,814,367
Utility plant under construction 28,809 1,039,008 64,630 93,665
-----------------------------------------------------------------
Total utility plant 644,265 0 14,459,955 6,157,578 1,187,556 9,814,367
Other assets:
Investment in Subsidiaries 35,708,118
Preliminary survey and investigation costs 323,561
Investment in CoBank 532,237
Notes Receivable 147,197
Special Funds Restricted
Other 1,265,501 11,793 77,513 164,866
-----------------------------------------------------------------
Total other assets 37,653,053 11,793 323,561 0 77,513 164,866
Current assets:
Cash 161,860 32,817 20,718 750
Trade accounts receivable 869,879 704,336 119,925
Other receivables 39,233
Fuel, supplies, and other inventory 382,667 175,809 256,047
Income Taxes Recoverable 367,066
Prepaid expenses and other 122,014 3,609
Current portion of special funds - restricted
- ---------------------------------------------------------------------------------------------------------
Total current assets 690,173 0 1,285,363 904,472 376,722 0
-----------------------------------------------------------------
38,987,491 11,793 16,068,879 7,062,050 1,641,791 9,979,233
=================================================================
BTP BTT CCU EPC GLH HLP
Assets
Utility Plant:
Electric 1,090,697 1,355,938 761,458 5,324,209
Telephone 677,614
-----------------------------------------------------------------
1,090,697 677,614 1,355,938 761,458 0 5,324,209
Less accumulated depreciation 580,629 267,963 214,179 382,737 1,643,088
-----------------------------------------------------------------
510,068 409,651 1,141,759 378,721 0 3,681,121
Utility plant under construction 2,715 117,225 52,478 13,932,878 95,657
-----------------------------------------------------------------
Total utility plant 512,783 409,651 1,258,984 431,199 13,932,878 3,776,778
Other assets:
Investment in Subsidiaries
Preliminary survey and investigation 88,970 86
Investment in CoBank
Notes Receivable
Special Funds Restricted 6,999,656
Other 147,958 506,558
-----------------------------------------------------------------
Total other assets 0 147,958 0 0 7,595,184 86
Current assets:
Cash 50 56
Trade accounts receivable 51,693 67,323 45,491 41,296 349,346
Other receivables
Fuel, supplies, and other inventory 47,886 1,633 14,012 39,698 102,490
Income Taxes Recoverable
Prepaid expenses and other
Current portion of special funds - restricted 2,500,000
- ---------------------------------------------------------------------------------------------------------
Total current assets 99,579 68,956 59,553 80,994 2,500,000 451,892
-----------------------------------------------------------------
612,362 626,565 1,318,537 512,193 24,028,062 4,228,756
=================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALASKA POWER & TELEPHONE COMPANY AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEETS - ASSETS -- continued
December 31, 1997
NCT NPL Combined Elimination Consoldiated
<S> <C> <C> <C> <C> <C>
Assets
Utility Plant:
Electric 1,315,801 42,829,536 42,829,536
Telephone 275,348 10,890,665 10,890,665
--------------------------------------------------------------
275,348 1,315,801 53,720,201 53,720,201
Less accumulated depreciation 64,783 479,355 15,514,261 15,514,261
--------------------------------------------------------------
210,565 836,446 38,205,940 38,205,940
Utility plant under construction 12,318 96,358 15,535,741 15,535,741
--------------------------------------------------------------
Total utility plant 222,883 932,804 53,741,681 0 53,741,681
Other assets:
Investment in Subsidiaries 35,708,118 (35,708,118) 0
Preliminary survey and investigation 412,617 412,617
Investment in CoBank 532,237 532,237
Notes Receivable 147,197 147,197
Special Funds Restricted 6,999,656 6,999,656
Other 2,174,189 2,174,189
--------------------------------------------------------------
Total other assets 0 0 45,974,014 (35,708,118) 10,265,896
Current assets:
Cash 12 216,263 216,263
Trade accounts receivable 31,872 77,155 2,358,316 2,358,316
Other receivables 39,233 39,233
Fuel, supplies, and other inventory 1,037 29,508 1,050,787 1,050,787
Income Taxes Recoverable 367,066 367,066
Prepaid expenses and other 125,623 125,623
Current portion of special funds - restricted 2,500,000 2,500,000
- ------------------------------------------------------------------------------------------------------
Total current assets 32,921 106,663 6,657,288 0 6,657,288
--------------------------------------------------------------
255,804 1,039,467 106,372,983 (35,708,118) 70,664,865
==============================================================
</TABLE>
AP&T Alaska Power & Telephone Company
ALD Alaska Long Distance
APC Alaska Power Company
APT Alaska Telephone Company
ATW AP&T Wireless, Inc.
BBL Black Bear Lake Hydro
BTP Bettles Light & Power
BTT Bettles Telephone Inc.
CCU Coffman Cove Utilities Association Inc.
EPC Eagle Power Company
GLH Goat Lake Hydro
HLP Haines Light & Power
NCT North Country Telephone Inc.
NPL Northway Power & Light
<PAGE>
<TABLE>
<CAPTION>
ALASKA POWER & TELEPHONE COMPANY AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEETS - LIABILITIES AND EQUITY
December 31, 1997
AP&T ALD APC ATC ATW BBL
<S> <C> <C> <C> <C> <C> <C>
Liabilities and stockholders' equity
Stockholders' equity:
Common stock, $1 par value:
Authorized shares, - 2,000,000
Issued and outstanding shares 937,016 1,143,871
Additional paid-in capital 5,086,137
Retained earnings 11,516,593
-----------------------------------------------------------------
Total stockholders' equity 17,746,601 0 0 0 0
Parent Company Equity 11,793 15,846,009 6,849,194 1,533,351 1,972,502
-----------------------------------------------------------------
Long-term debt, less current portion 14,522,895 7,871,265
-----------------------------------------------------------------
Other liabilities:
Deferred investment tax credits 38,418
Deferred income taxes 4,339,942
Customer advances for construction 76,318
-----------------------------------------------------------------
Total other liabilities 4,378,360 0 76,318 0 0 0
Current liabilities:
Trade accounts payable 740,185 77,622 85,796 5,688
Accrued taxes and expenses 779,192 34,324 21,932 8,440 53,815
Income taxes payable
Deferred income taxes 145,322
Customer deposits and advance billings 34,606 105,128
Current portion of long-term debt 674,936 100,000 75,963
-----------------------------------------------------------------
Total current liabilities 2,339,635 0 146,552 212,856 108,440 135,466
-----------------------------------------------------------------
38,987,491 11,793 16,068,879 7,062,050 1,641,791 9,979,233
=================================================================
December 31, 1997 BTP BTT CCU EPC GLH HLP
Liabilities and stockholders' equity
Stockholders' equity
Common stock, $1 par value:
Authorized shares, - 2,000,000
Issued and outstanding shares - 937,016
Additional paid-in capital
Retained earnings
-----------------------------------------------------------------
Total stockholders' equity 0 0 0 0 0 0
Parent Company Equity 611,351 619,655 1,252,558 510,791 1,078,406 4,142,889
-----------------------------------------------------------------
Long-term debt, less current portion 22,677,992
------------------------------------------------------------------
Other liabilities:
Deferred investment tax credits
Deferred income taxes
Customer advances for construction 762 55,278 30,250
-----------------------------------------------------------------
Total other liabilities 762 0 55,278 0 0 30,250
Current liabilities:
Trade accounts payable 4,166 8,801 34,258
Accrued taxes and expenses 49 94 150 2 287,474 7,741
Income taxes payable
Deferred income taxes
Customer deposits and advance billings 200 2,650 1,750 1,400 13,618
Current portion of long-term debt (15,810)
-----------------------------------------------------------------
Total current liabilities 249 6,910 10,701 1,402 271,664 55,617
-----------------------------------------------------------------
612,362 626,565 1,318,537 512,193 24,028,062 4,228,756
=================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALASKA POWER & TELEPHONE COMPANY AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEETS - LIABILITIES AND EQUITY -- continued
December 31, 1997
NCT NPL Combined Elimination Consolidated
<S> <C> <C> <C> <C> <C>
Liabilities and stockholders' equity
Stockholders' equity:
Common stock, $1 par value:
Authorized shares, - 2,000,000
Issued and outstanding shares - 937,016 1,143,871 1,143,871
Additional paid-in capital 5,086,137 5,086,137
Retained earnings 11,516,593 11,516,593
--------------------------------------------------------------
Total stockholders' equity 0 0 17,746,601 17,746,601
Parent Company Equity 252,486 1,027,133 35,708,118 (35,708,118) 0
--------------------------------------------------------------
Long-term debt, less current portion 45,072,152 45,072,152
--------------------------------------------------------------
Other liabilities:
Deferred investment tax credits 38,418 38,418
Deferred income taxes 4,339,942 4,339,942
Customer advances for construction 162,608 162,608
--------------------------------------------------------------
Total other liabilities 0 0 4,540,968 0 4,540,968
Current liabilities:
Trade accounts payable (58) 11,797 968,255 968,255
Accrued taxes and expenses 124 168 1,193,505 1,193,505
Income taxes payable 0 0
Deferred income taxes 145,322 145,322
Customer deposits and advance billings 3,252 369 162,973 162,973
Current portion of long-term debt 835,089 835,089
--------------------------------------------------------------
Total current liabilities 3,318 12,334 3,305,144 3,305,144
--------------------------------------------------------------
255,804 1,039,467 106,372,983 (35,708,118) 70,664,865
==============================================================
</TABLE>
AP&T Alaska Power & Telephone Company
ALD Alaska Long-Distance
APC Alaska Power Company
APT Alaska Telephone Company
ATW AP&T Wireless, Inc.
BBL Black Bear Lake Hydro
BTP Bettles Light & Power
BTT Bettles Telephone Inc.
CCU Coffman Cove Utilities Association Inc.
EPC Eagle Power Company
GLH Goat Lake Hydro
HLP Haines Light & Power
NCT North Country Telephone Inc.
NPL Northway Power & Light
<PAGE>
<TABLE>
<CAPTION>
ALASKA POWER & TELEPHONE COMPANY AND SUBSIDIARIES
CONSOLIDATING STATEMENTS OF INCOME
For the year ended December 31, 1997
AP&T ALD APC ATC ATW BBL
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Electric 7,107,534 1,293,016
Telephone 4,691,781 782,371
-----------------------------------------------------------------
Total revenues 0 0 7,107,534 4,691,781 782,371 1,293,016
Expenses:
Electric (185,945) 5,900,731 509,504
Telephone 3,048,505 935,109
-----------------------------------------------------------------
Total expenses (185,945) 0 5,900,731 3,048,505 935,109 509,504
-----------------------------------------------------------------
Operating income 185,945 0 1,206,803 1,643,276 (152,738) 783,512
Other (income) expense:
Interest income (31,558)
Allowance for funds used
during construction (691,690)
Interest expense 1,310,842 593,275
Miscellaneous (3,146) (11,682) (18,072)
-----------------------------------------------------------------
584,448 0 0 0 (11,682) 575,203
-----------------------------------------------------------------
Income before income taxes (398,503) 0 1,206,803 1,643,276 (141,056) 208,309
Provision for income taxes 350,824 483,720 (41,522) 61,318
-----------------------------------------------------------------
Net income (398,503) 0 855,979 1,159,556 (99,534) 146,991
=================================================================
BTP BTT CCU EPC GLH HLP
Revenues:
Electric 374,057 319,716 262,871 1,993,015
Telephone 277,431
-----------------------------------------------------------------
Total revenues 374,057 277,431 319,716 262,871 0 1,993,015
Expenses:
Electric 381,033 291,030 238,794 1,499,632
Telephone 273,746
-----------------------------------------------------------------
Total expenses 381,033 273,746 291,030 238,794 0 1,499,632
-----------------------------------------------------------------
Operating income (6,976) 3,685 28,686 24,077 0 493,383
Other (income) expense:
Interest income
Allowance for funds used
during construction
Interest expense
Miscellaneous
-----------------------------------------------------------------
0 0 0 0
-----------------------------------------------------------------
Income before income taxes (6,976) 3,685 28,686 24,077 0 493,383
Provision for income taxes 1,085 8,444 7,087 140,153
-----------------------------------------------------------------
Net income (6,976) 2,600 20,242 16,990 0 353,230
=================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALASKA POWER & TELEPHONE COMPANY AND SUBSIDIARIES
CONSOLIDATING STATEMENTS OF INCOME -- continued
For the year ended December 31, 1997
NCT NPL Combined Elimination Consolidated
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Electric 475,288 11,825,497 (1,293,016) 10,532,481
Telephone 228,489 5,980,072 5,980,072
--------------------------------------------------------------
Total revenues 228,489 475,288 17,805,569 (1,293,016) 16,512,553
Expenses:
Electric 444,375 9,079,154 (1,293,016) 7,786,138
Telephone 196,008 4,453,368 4,453,368
--------------------------------------------------------------
Total expenses 196,008 444,375 13,532,522 (1,293,016) 12,239,506
--------------------------------------------------------------
Operating income 32,481 30,913 4,273,047 4,273,047
Other (income) expense:
Interest income (31,558) (31,558)
Allowance for funds used
during construction (691,690) (691,690)
Interest expense 1,904,117 1,904,117
Miscellaneous (32,900) (32,900)
--------------------------------------------------------------
0 1,147,969 1,147,969
--------------------------------------------------------------
Income before income taxes 32,481 30,913 3,125,078 3,125,078
Provision for income taxes 9,561 9,100 1,029,770 1,029,770
--------------------------------------------------------------
Net income 22,920 21,813 2,095,308 0 2,095,308
==============================================================
</TABLE>
AP&T Alaska Power & Telephone Company
ALD Alaska Long-Distance
APC Alaska Power Company
APT Alaska Telephone Company
ATW AP&T Wireless, Inc.
BBL Black Bear Lake Hydro
BTP Bettles Light & Power
BTT Bettles Telephone Inc.
CCU Coffman Cove Utilities Association Inc.
EPC Eagle Power Company
GLH Goat Lake Hydro
HLP Haines Light & Power
NCT North Country Telephone Inc.
NPL Northway Power & Light
<PAGE>
Exhibit B
Alaska Power & Telephone Company
and Subsidiaries
Consolidated Financial Statements
Years Ended December 31, 1997 and 1996
with Report of Independent Auditors
<PAGE>
Alaska Power & Telephone Company and Subsidiaries
Consolidated Financial Statements
Years Ended December 31, 1997 and 1996
Contents
Report of Independent Auditors............................................ 1
Audited Consolidated Financial Statements
Consolidated Balance Sheets.......................................... 2
Consolidated Statements of Income.................................... 4
Consolidated Statements of Stockholders' Equity...................... 5
Consolidated Statements of Cash Flows................................ 6
Notes to Consolidated Financial Statements........................... 7
<PAGE>
Report of Independent Auditors
The Board of Directors
Alaska Power & Telephone Company
We have audited the accompanying consolidated balance sheets of Alaska Power &
Telephone Company and subsidiaries as of December 31, 1997 and 1996, and the
related consolidated statements of income, stockholders' equity, and cash flows
for the years then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Alaska Power &
Telephone Company and subsidiaries at December 31, 1997 and 1996, and the
consolidated results of their operations and their cash flows for the years then
ended, in conformity with generally accepted accounting principles.
/s/Ernst & Young LLP
- --------------------
Ernst & Young LLP
February 23, 1998
1
<PAGE>
<TABLE>
<CAPTION>
Alaska Power & Telephone Company and Subsidiaries
Consolidated Balance Sheets
December 31
1997 1996
-------------------------------
<S> <C> <C>
ASSETS
Utility plant
Electric $ 42,829,536 $ 39,585,745
Telecommunications 10,890,665 8,634,186
-------------------------------
53,720,201 48,219,931
Less accumulated depreciation 15,514,261 14,469,332
-------------------------------
38,205,940 33,750,599
Hydroelectric plant under construction 13,968,869 2,095,299
Other plant under construction 1,566,872 783,522
-------------------------------
Total utility plant, net 53,741,681 36,629,420
Other assets
Preliminary survey and investigation costs 412,617 843,851
Investments and other assets 2,000,983 1,060,439
Goodwill - net of accumulated amortization,
$44,114 and $19,304, respectively 852,640 729,491
Special Funds - Restricted 9,499,656 -
-------------------------------
Total other assets 12,765,896 2,633,781
Current assets
Cash 216,264 235,434
Accounts receivable, less allowance for
doubtful accounts of $16,685 and
$20,853, respectively 2,397,547 2,248,516
Fuel, supplies, and other inventory 1,050,788 789,251
Income taxes recoverable 367,066 74,804
Prepaid expenses 125,623 73,932
-------------------------------
Total current assets 4,157,288 3,421,937
-------------------------------
$ 70,664,865 $ 42,685,138
===============================
</TABLE>
See accompanying notes
2
<PAGE>
<TABLE>
<CAPTION>
Alaska Power & Telephone Company and Subsidiaries
Consolidated Balance Sheets
December 31
1997 1996
-------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Stockholders' equity Common stock, $1 par value:
Authorized shares - 2,000,000
Issued and outstanding shares - 1,143,871 and $ 1,143,871 $ 1,097,881
1,097,881, respectively
Additional paid-in capital 5,086,137 4,279,314
Retained earnings 11,516,593 10,405,640
-------------------------------
Total stockholders' equity 17,746,601 15,782,835
Long-term debt
Goat Lake Hydro, Inc. project note payable 22,662,182 -
Other notes payable, less current portion 22,409,971 20,965,054
-------------------------------
Total long-term debt 45,072,153 20,965,054
Other liabilities
Deferred income taxes 4,378,360 3,395,791
Customer advances for construction 162,608 179,857
-------------------------------
Total other liabilities 4,540,968 3,575,648
Current liabilities
Accounts payable 968,255 718,074
Accrued taxes and expenses 1,193,504 561,840
Deferred income taxes 145,322 272,859
Customer deposits and advance billings 162,973 151,834
Current portion of long-term debt 835,089 656,994
-------------------------------
Total current liabilities 3,305,143 2,361,601
-------------------------------
$ 70,664,865 $ 42,685,138
===============================
</TABLE>
See accompanying notes
3
<PAGE>
<TABLE>
<CAPTION>
Alaska Power & Telephone Company and Subsidiaries
Consolidated Statements of Income
Year Ended December 31
1997 1996
-------------------------------
<S> <C> <C>
Revenues
Electric $ 10,532,481 $ 9,264,818
Telecommunications 5,980,072 4,423,152
-------------------------------
16,512,553 13,687,970
Total revenues
Expenses
Electric 7,786,138 6,858,110
Telecommunications 4,453,368 2,870,014
-------------------------------
Operating expenses 12,239,506 9,728,124
Interest (expense) income
Interest expense (1,872,559) (1,271,860)
Allowance for funds used during construction -
debt portion 238,797 37,152
-------------------------------
Net interest expense (1,633,762) (1,234,708)
-------------------------------
Operating income 2,639,285 2,725,138
Other income
Allowance for funds used during construction -
equity portion 452,893 86,166
Miscellaneous 32,900 22,200
-------------------------------
Total other income 485,793 108,366
-------------------------------
Income before income taxes 3,125,078 2,833,504
Income taxes 1,029,770 926,441
-------------------------------
Net income $ 2,095,308 $ 1,907,063
===============================
Basic earnings per share $ 1.87 $ 1.87
===============================
Diluted earnings per share $ 1.86 $ 1.82
===============================
</TABLE>
See accompanying notes
4
<PAGE>
<TABLE>
<CAPTION>
Alaska Power & Telephone Company and Subsidiaries
Consolidated Statements of Stockholders' Equity
Additional
Common Paid-In Retained
Stock Capital Earnings Total
-----------------------------------------------------
<S> <C> <C> <C> <C>
Balance at January 1, 1996 $ 937,016 $ 1,583,872 $ 9,364,623 $11,885,511
Net income - - 1,907,063 1,907,063
Cash dividends - - (866,046) (866,046)
Sale of common stock to ESOP 31,607 560,887 - 592,494
Repurchase of common stock 24,500 189,200 - 213,700
Common stock issued in connection with 104,758 1,945,355 - 2,050,113
acquisition of Haines Light & Power, Inc.
-----------------------------------------------------
Balance at December 31, 1996 1,097,881 4,279,314 10,405,640 15,782,835
Net income - - 2,095,308 2,095,308
Cash dividends - - (984,355) (984,355)
Sale of common stock to ESOP 29,402 599,878 - 629,280
Common stock options exercised 16,588 206,945 - 223,533
=====================================================
Balance at December 31, 1997 $ 1,143,871 $ 5,086,137 $11,516,593 $17,746,601
=====================================================
</TABLE>
See accompanying notes
5
<PAGE>
<TABLE>
<CAPTION>
Alaska Power & Telephone Company and Subsidiaries
Consolidated Statements of Cash Flows
Year Ended December 31
1997 1996
-------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 2,095,308 $ 1,907,063
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,388,261 1,965,748
Deferred income tax provision 658,229 330,409
Changes in operating activities:
Increase in accounts receivable (150,310) (264,544)
Change in other; assets, liabilities, and receivables (129,218) 641,791
Increase in inventories (54,036) (66,001)
Increase in income taxes (95,459) (19,951)
Change in accounts payable and accrued liabilities 396,776 (172,455)
Other ( 6,110) (41,471)
-------------------------------
Net cash provided by operating activities 5,103,441 4,280,589
-------------------------------
INVESTING ACTIVITIES
Acquisitions of utility plant (17,562,385) (5,518,969)
Acquisition of AP&T Wireless (1,200,000) -
Acquisition of Allakaket Exchange ( 280,000) -
Investment in Special Funds - Restricted (9,499,656) -
Other Investments (336,158) (314,202)
Preliminary survey and investigation costs (176,575) (383,819)
-------------------------------
Net cash used in investing activities (29,054,774) (6,216,990)
-------------------------------
FINANCING ACTIVITIES
Proceeds from long-term debt 49,397,499 4,095,239
Payments on long-term debt (25,212,305) (2,657,204)
Payment of bond issue costs (326,558) -
Payment of cash dividends (779,286) (866,046)
Proceeds from sale of common stock 852,813 806,194
-------------------------------
Net cash provided by financing activities 23,932,163 1,378,183
-------------------------------
Net (decrease) in cash ( 19,170) (558,218)
CASH AT BEGINNING OF YEAR 235,434 793,652
-------------------------------
CASH AT END OF YEAR $ 216,264 $ 235,434
===============================
</TABLE>
See accompanying notes
6
<PAGE>
Alaska Power & Telephone Company and Subsidiaries
Notes to Consolidated Financial Statements (continued)
December 31, 1997
1. The Company and Summary of Significant Accounting Policies
Alaska Power & Telephone Company and subsidiaries (AP&T) supplies electric and
telephone service to several communities in the State of Alaska. AP&T is subject
to regulation by the Alaska Public Utilities Commission, the Federal
Communications Commission, and the Federal Energy Regulatory Commission (the
Commissions) with respect to rates for service and maintenance of its accounting
records. AP&T's accounting policies conform to generally accepted accounting
principles as applied to regulated public utilities and are in accordance with
the accounting requirements and rate-making practices of the Commissions.
Consolidation
The accompanying consolidated financial statements include the accounts of AP&T
and its wholly owned subsidiaries, after elimination of significant intercompany
transactions and balances.
Utility Plant and Depreciation
The cost of additions to and replacements of utility plant are capitalized. Cost
includes direct material, labor, and similar items and charges for such indirect
costs as engineering, supervision, payroll taxes, and pension benefits. AP&T
capitalizes, as an additional cost of utility plant, an allowance for funds used
during construction (AFUDC), which represents the allowed cost of capital used
to finance a portion of construction work in progress for projects of more than
one year in duration. AFUDC consists of debt and equity components that, when
capitalized, are credited as noncash items to other income and interest charges.
The cost of current repairs and maintenance is charged to expense, while the
cost of betterment is capitalized. The original cost of utility plant together
with removal cost, less salvage is charged to accumulated depreciation at such
times as assets are retired and removed from service.
For financial statement purposes, depreciation is computed on the straight-line
method using rates based on average service lives. For income tax purposes, AP&T
computes depreciation using accelerated methods where permitted.
7
<PAGE>
1. The Company and Summary of Significant Accounting Policies (continued)
Goodwill
Goodwill is amortized on a straight-line basis over 15 to 40 years.
Preliminary Survey and Investigation Costs
AP&T defers costs incurred for the preliminary survey and investigation of
proposed construction projects in accordance with the rules of the Commissions.
These deferred costs are capitalized into utility plant when the preliminary
survey and investigation projects are completed or are charged to expense in the
period that a proposed project is abandoned.
Fuel, Supplies, and Other Inventory
Fuel, supplies, and other inventory are valued at the lower of cost or market on
a first-in, first-out basis. The supplies and other inventory are primarily held
for use in construction projects.
Income Taxes
Deferred income taxes result from temporary differences in the recognition of
income and expense for tax and financial reporting purposes. The differences are
primarily due to preliminary survey and investigation costs and depreciation
expense.
Customer Advances for Construction
Customer advances for construction of additions to the electric distribution
systems are recorded as a liability and are amortized through discounted service
billings to the customer over a 60-month period. At the end of the amortization
period, any remaining balance is recorded as a reduction of the respective
utility plant accounts.
8
<PAGE>
1. The Company and Summary of Significant Accounting Policies (continued)
Stock-Based Compensation
The Company has adopted the disclosure only provisions of FASB Statement No.
123, and applies Accounting Principles Board Opinion No. 25 and related
interpretation in accounting for its stock option plans. Accordingly, the
Company's stock-based compensation expense is recognized based on the intrinsic
value of the option on the date of grant. Disclosure in accordance with
Statement 123 is provided in Note 8.
Earnings per Share
The Company has calculated its basic earnings per share data according to the
method prescribed in FASB Statement No. 128 "Earnings per Share". Under this new
Statement, basic earnings per share are based on the weighted average number of
shares of common stock outstanding, excluding any potential dilution that could
occur if any outstanding options were exercised or any other contracts to issue
common stock were converted. FASB Statement No. 128 requires the duel
presentation of basic and diluted earnings per share.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year
presentation.
9
<PAGE>
2. Utility Plant
<TABLE>
<CAPTION>
Annual
Depreciation
1997 1996 Rate
------------------------------------------------------
<S> <C> <C> <C>
Electric plant:
Hydroelectric $ 9,695,267 $ 9,643,523 2%
Other generation 10,764,506 10,058,581 5%
Transmission and distribution 14,090,071 12,444,485 2.5% to 5%
Other 7,482,811 6,733,412 5% to 20%
Land 796,881 705,744 -
-----------------------------------
Electric 42,829,536 39,585,745
-----------------------------------
Telecommunications plant:
General support assets $ 1,158,175 $ 935,986 5% to 20%
Central office assets 4,895,892 4,485,287 6%
Cable and wire facilities 3,245,805 3,099,188 5% to 6%
Nonregulated investment 1,490,671 53,195 7% to 20%
Land 100,122 60,530 -
-----------------------------------
Telecommunications 10,890,665 8,634,186
-----------------------------------
Total utility plant $ 53,720,201 $ 48,219,931
===================================
</TABLE>
10
<PAGE>
3. Long-Term Debt
Long-term debt consists of the following:
<TABLE>
<CAPTION>
1997 1996
--------------- -----------
<S> <C> <C>
Goat Lake Hydro, Inc., project note payable to secure Power
Revenue Bonds series 1997.
Face amount of $23,000,000 less the original issue
discount of $337,818 secured by the Power Sales Agreement, the
Construction Funding Agreement (see Note 5), and all
assets of Goat Lake Hydro Inc. Interest rate average
of 6% per year, principal sinking fund, due through 2032 $22,662,182 -
--------------- ------------
Other Notes Payable:
Notes payable to National Bank for Cooperatives (CoBank):
Note payable, secured by BBL Hydro Inc., assets and
revenues, through 2022, at 7.17% fixed interest rate
through 2002 7,947,228 8,000,000
Note payable, secured by telephone assets, due in
quarterly installments through 2008, at 7.24% fixed
interest rate
4,861,329 5,146,712
Note payable, secured by electric assets, due in quarterly
installments through 2012, at 7.28% fixed interest rate 3,932,477 -
Note payable, secured by electric assets, due in quarterly
installments through 2010, at 7.33% fixed interest rate 3,755,618 3,899,812
Unsecured line of credit, due December 1999, variable interest
rate 7.19% at December 31, 1997 1,000,000 2,900,000
Note payable to commercial banks, unsecured line of
credit, due December 1999, variable interest rate, and
7.96% at December 31, 1997 1,000,000 1,000,000
</TABLE>
11
<PAGE>
3. Long-Term Debt (continued)
<TABLE>
<CAPTION>
1997 1996
--------------- -----------
<S> <C> <C>
Note payable to City of Craig, Alaska, due in equal annual
installments to 2006, variable interest rate 6.4% at
December 31, 1997 180,000 200,000
Other debt, unsecured, with fixed interest rates ranging
from 2% to 11%, maturing at various dates 568,408 475,524
--------------- -----------
23,245,060 21,622,048
Less current portion 835,089 656,994
--------------- -----------
Total other notes payable 22,409,971 20,965,054
--------------- -----------
Total long-term debt $ 45,072,153 $ 20,965,054
=============== ============
</TABLE>
Annual maturities for the five years beginning January 1, 1998, are $835,089,
$2,824,835, $1,120,797, $1,207,566, and $1,300,615, respectively, and
$38,618,340, thereafter.
Project note payable of Goat Lake Hydro, Inc. (GLH), a fully owned subsidiary of
AP&T, to secure the Power Revenue Bonds series 1997, is the result of the
issuance on December 31, 1997, of a series of tax-exempt bonds by the Alaska
Industrial Development and Export Authority (AIDEA). The proceeds are restricted
in use, with the purpose of financing the acquisition, purchase, construction,
improvement, and equipment of the project known as the Upper Lynn Canal Regional
Power Supply System. Of these restricted funds, $2 million is required to remain
in reserve for the term of the bonds. To secure payment of bond principal and
interest, AIDEA has assigned to First Trust National Association all rights and
interests in the project note. The project note is secured by all assets and
revenues of GLH, and a Power Sales Agreement (PSA) between GLH, Alaska Power Co.
(APC) and Haines Light and Power Co. (HLP), all fully owned subsidiaries of
AP&T. The Alaska Public Utilities Commission has approved the PSA for the life
of the GLH project note. This approval allows APC and HLP to charge their
customers the entire annual costs as defined in the PSA, e.g., principal and
interest due on the bonds, all operating costs (excluding depreciation), general
and administrative costs, and the return on equity permitted by the commission.
The PSA requires all GLH's production and sales of electricity be sold to and
purchased by APC and HLP for the life of the agreement.
12
<PAGE>
3. Long-Term Debt (continued)
CoBank is organized similar to a cooperative and is owned by the customers it
serves. As such, a portion of CoBank's earnings is returned to its customers.
AP&T's loan agreements with CoBank require that a portion of CoBank's earnings
returned to AP&T be invested in additional stock of CoBank based on a five-year
average of the outstanding borrowings. These loan agreements are secured by the
electric and telephone assets of the Company's two principal operating
subsidiaries, Alaska Power Company and Alaska Telephone Company. As part of
these agreements the Company is required to meet certain covenants. The Company
is in compliance with all covenants.
As of December 31, 1997, the Company has unsecured lines of credit of $4,000,000
from CoBank and $7,500,000 from other commercial banks. This total of
$11,500,000, less the outstanding amount of $2,000,000, is available for general
and other corporate needs.
Interest paid on debt was $1,808,521 and $1,431,159 in 1997 and 1996,
respectively.
4. Acquisition of Alaska Power & Telephone Wireless, Inc.
On March 1, 1997, AP&T purchased the fixed assets and inventories of
Communications Unlimited Inc., and organized a new company under the name of
Alaska Power & Telephone Wireless. The new company is a nonregulated entity
engaged in various telecommunications services in southeast Alaska. The value of
the assets, as determined by the purchase method of accounting, was $1,300,000.
The consolidated financial statements reflect the operating results of AP&T
Wireless for the period from March 1, 1997, to December 31, 1997.
5. Commitments
AP&T leases its administrative office and a portion of its utility plant under
noncancellable leases expiring through 2011. Total rent expense was $270,013 and
$202,776 for 1997 and 1996, respectively. Certain of the leases include renewal
provisions at AP&T's option. Minimum rental commitments under noncancellable
operating leases, excluding hydroelectric operations, are $515,325. Minimum
annual rental commitments are $51,558 in each of the next five years.
Lease agreements have been secured for the use of the land for hydroelectric
operations. The term of the agreements extend for the life of the hydroelectric
license, 50 years. Total rent expense for hydroelectric operations was $124,395
and $123,360 for 1997 and 1996, respectively.
13
<PAGE>
5. Commitments (continued)
During 1996, the Company began construction of the Goat Lake Hydroelectric
Plant, the Submarine Cable Project, and the Otter Creek Hydro Project (in
preliminary stages), collectively known as the Upper Lynn Canal Regional Power
Supply System (System). The anticipated cost of the project is $22 million. The
Company has a commitment associated with this project known as the Construction
Funding Agreement. This agreement, between the Company and GLH, states the
sources of funds to finance the System consist of $21 million in net proceeds
from bonds issued by AIDEA (see Note 3) and $1 million in federal funds, with
any additional funds necessary to complete the project contributed by the
Company. The agreement further provides the Company consents to GLH's assignment
of all its right, title, and interest in this agreement to AIDEA and to AIDEA's
assignment of all of its right, title, and interest in this Agreement to the
First Trust National Association for the benefit of the Power Revenue Bonds
holders.
6. Income Taxes
The components of the consolidated provision for income taxes are as follows:
1997 1996
--------------------------------
Current:
Federal $ 295,627 $ 479,601
State 75,914 116,431
--------------------------------
371,541 596,032
Deferred 658,229 330,409
================================
Provision for income taxes $1,029,770 $ 926,441
================================
Total tax expense differs from that computed at the statutory federal income tax
rate due to the following:
<TABLE>
<CAPTION>
1997 1996
---------------------------
<S> <C> <C>
Income tax provision at federal rate of 34% $ 1,062,527 $ 963,391
State income taxes, net of federal benefit 171,058 155,274
Amortization of deferred investment tax credits (9,495) (9,495)
Benefit of cash dividends paid to ESOP members (136,578) (121,077)
Other (57,742) (61,652)
---------------------------
Provision for income taxes $ 1,029,770 $ 926,441
===========================
</TABLE>
14
<PAGE>
6. Income Taxes (continued)
The components of the deferred tax assets and liabilities as of December 31,
1997 and 1996, are as follows:
1997 1996
--------------------------------
Current:
Deferred tax assets $ (82,175) $ (64,641)
Deferred tax liabilities 227,497 337,500
--------------------------------
145,322 272,859
Long-term deferred tax liabilities 4,378,360 3,395,791
================================
Total net deferred tax liability $ 4,523,682 $ 3,668,650
================================
Federal and state income taxes paid were $744,993 and $670,836 in 1997 and 1996,
respectively.
7. Employee Stock Ownership Plan
AP&T maintains an employee stock ownership plan. All employees who have
completed one year of full-time service (1,000 hours) and have attained the age
of 21 are eligible to participate in the plan. Participants may elect to
contribute from 1% to 13.5% of their wages to the plan, which can be invested in
the common stock of AP&T or into an interest-bearing account. Employer
contributions match the participant's contributions up to the first 3% of the
participant's wages. Employer matching contributions were $111,940 and $104,420
in 1997 and 1996, respectively. Additional employer contributions are made
annually at 5% of the eligible wages. These additional employer contributions
were $186,565 and $170,990 in 1997 and 1996, respectively. Employer
contributions are allocated to all plan participants as of December 31, the end
of the plan year. The plan provides that participants' interests in
employer-funded contributions become fully vested after five years of full-time
employment.
15
<PAGE>
8. Stock Option Plan
In 1991, AP&T established a stock option plan. The plan provides for the grant
of incentive stock options. Stockholders have approved a total of 200,000 shares
to be reserved for the plan from the authorized and unissued common stock. These
options become exercisable five years after the date of grant and expire ten
years after the date of grant.
The effect on net income and earnings per share of the fair value approach under
FASB Statement No.123 is not materially different from those amounts recorded
under APB 25.
A summary of the activity related to the plan as follows:
Average
Exercise
Shares Price per
under Option Share
---------------------------
Balance at December 31, 1995, unexercised 120,500 12.20
Granted 22,000 18.80
Exercised 24,500 7.72
----------
Balance at December 31, 1996, unexercised 118,000 14.16
Granted 25,000 21.40
Cancelled 13,000 12.82
Exercised 11,000 8.49
----------
Balance at December 31, 1997, unexercised 119,000 14.58
==========
Under an anti dilution provision within the purchase agreement with Alaska
Energy Light & Power, to purchase Haines Light & Power, Inc., on August 1, 1996,
additional options may be exercised under specific conditions.
16
<PAGE>
Exhibit C
EXHIBIT C
Electric Operations
1. Alaska Power Company - Serving Skagway, Tok, Craig, Hydaburg, Tanacross, Dot
Lake, Hollis, Chistochina, Mentasta Lake, Tetlin, Healy Lake.
2. Bettles Power & Light, Inc. - Serving Bettles, Evansville, Allakaket/Alatna.
3. Coffman Cove Utilities Assoc. - Serving Coffman Cove, Whale Pass, Naukati.
4. Eagle Power Company - Serving Eagle, Eagle Village.
5. Northway Power & Light - Serving Northway, Northway Village.
6. Haines Light & Power - Serving Haines.
7. BBL Hydro, Inc. - Hydroelectric on Prince of Wales Island (wholesale
generator).
8. Goat Lake Hydro, Inc. - Hydroelectric Project - Skagway.
Telephone Operations
1. Alaska Telephone Company - Serving Skagway, Tok, Craig, Hydaburg, Tanacross,
Dot Lake, Hollis, Dry Creek, Tetlin, Healy Lake, Naukati, Whale Pass, Myers
Chuck, Edna Bay.
2. Bettles Telephone, Inc. - Serving Bettles, Evansville, Jim River Camp.
3. North Country Telephone, Inc. - Serving Eagle, Eagle Village.
4. AP&T Wireless - Serving Ketchikan and surrounding areas.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> OPUR3
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-ASSETS> 70,664,865
<TOTAL-OPERATING-REVENUES> 16,512,553
<NET-INCOME> 2,095,308
</TABLE>
