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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:
1
<PAGE>
(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)
(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 31st day of March, 2000.
ALASKA POWER & TELEPHONE COMPANY
- --------------------------------------------------------------------------------
Name of claimant
By Russell A. Smith
------------------
(title) VP/CONTROLLER
--------------
CORPORATE SEAL
Attest: 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 RUSSELL A. SMITH, VP/CONTROLLER
- -------------------------------- --------------------------------
(Name) (Title)
P.O. BOX 3222, PORT TOWNSEND, WASHINGTON 98368
2
<PAGE>
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.
3
<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 Regulatory Commission of Alaska (RCA). AP&T is a Holding
Company with the following subsidiaries:
Electric Operations
- -------------------
Alaska Power Company - Serving the following communities in Alaska: Skagway,
Haines, Tok, Dot Lake, Chistochina, Mentasta Lake, Tetlin, Tanacross, Healy
Lake, Bettles/Evansville, Northway, Northway Village, Allakaket/Alatna,
Eagle, Eagle Village, Craig, Hydaburg, Hollis, Coffman Cove, Klawock, and
Whale Pass. (Retail and wholesale electric generation and distribution).
BBL Hydro, Inc. - Prince of Wales Island (wholesale hydroelectric generation).
Goat Lake Hydro, Inc. - Skagway (wholesale hydroelectric generation).
Telecommunication Operations
- ----------------------------
Alaska Telephone Company - Serving the following communities in Alaska: Skagway,
Tok, Dot Lake, Dry Creek, Tetlin, Chisana, Healy Lake, Craig, Hydaburg,
Hollis, Naukati, Whale Pass, Myers Chuck, and Edna Bay.
Bettles Telephone, Inc. - Serving; Bettles, Evansville and Jim River Camp.
North Country Telephone, Inc. - Serving; Eagle and Eagle Village.
AP&T Wireless Inc. - Serving; Ketchikan, Juneau and the surrounding areas.
AP&T Long Distance Inc. - Serving; Alaska communities
2. All operations of AP&T are conducted solely within Alaska. There is no
natural gas activity. Diesel-powered generators and or hydroelectric
generation systems generate the electric service in each location. There is
no intertie to other electric systems or generation sources.
3. (a) Number of kWh sold (by individual subsidiary):
Alaska Power Company 58,909,638 kWh retail
4,629,106 kWh wholesale
(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.
4. There are no holdings directly or indirectly in an EWG or a foreign utility
company.
Exhibit A, attached is the consolidating financial statements.
<PAGE>
<TABLE>
Exhibit A
CONSOLIDATING BALANCE SHEETS - ASSETS
December 31, 1999
AP&T ALD APC ATC ATW BBL BTT
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
Utility Plant:
Electric 2,328,080 37,974,713 10,361,242
Telecommunications 12,535,619 644,251 725,351
Non-Utility Plant 257,978
----------- ------- ------------ ---------- ---------- ----------- ---------
2,586,058 0 37,974,713 12,535,619 644,251 10,361,242 725,351
Less accumulated depreciation 1,427,116 13,132,816 3,807,959 99,334 924,896 361,129
----------- ------- ------------ ---------- ---------- ----------- ---------
1,158,942 0 24,841,897 8,727,660 544,917 9,436,346 364,222
Utility plant under construction 258,948 1,812,501 661,432 30,302 355
----------- ------- ------------ ---------- ---------- ----------- ---------
Total utility plant 1,417,890 0 26,654,398 9,389,092 575,219 9,436,346 364,577
Other assets:
Investment in Subsidiaries 24,407,792
Preliminary survey and investigation costs 491,447
Investment in CoBank 794,148
Notes Receivable 31,407
Special Funds Restricted
Other 3,005,313 7,061 129,978 11,414 140,866
----------- ------- ------------ ---------- ---------- ----------- ---------
Total other assets 28,238,660 7,061 621,425 0 11,414 140,866 0
Current assets:
Cash 710,453 48,272 23,207 1,090
Trade accounts receivable 756 1,111,077 941,114 81,861 20,788
Other receivables 457,395 21,430 36,108
Contracts Receivable 447,431
Fuel, supplies, and other inventory 632,929 91,637 301,607 1,217
Income Taxes Recoverable 347,894
Prepaid expenses and other 57,815
Costs in Exces of Billing 297,708
----------- ------- ------------ ---------- ---------- ----------- ---------
Total current assets 2,319,452 0 1,813,708 1,055,958 420,666 0 22,005
----------- ------- ------------ ---------- ---------- ----------- ---------
31,976,002 7,061 29,089,531 10,445,050 1,007,299 9,577,212 386,582
=========== ======= ============ ========== ========== =========== =========
</TABLE>
AP&T Alaska Power & Telephone Company
ALD AP&T Long Distance
APC Alaska Power Company
ATC Alaska Telephone Company
ATW AP&T Wireless, Inc.
BBL BBL Hydro, Inc.
BTT Bettles Telephone, Inc.
GLH Goat Lake Hydro, Inc.
NCT North Country Telephone, Inc.
<PAGE>
<TABLE>
CONSOLIDATING BALANCE SHEETS - ASSETS
December 31, 1999
GLH NCT Combined Elimination Consoldiated
<S> <C> <C> <C> <C> <C>
Assets
Utility Plant:
Electric 16,940,134 67,604,169 67,604,169
Telecommunications 291,953 14,197,174 14,197,174
Non-Utility Plant 257,978 257,978
------------ -------- ------------ ------------ ---------------
16,940,134 291,953 82,059,321 0 82,059,321
Less accumulated depreciation 358,098 106,074 20,217,422 20,217,422
------------ -------- ------------ ------------ ---------------
16,582,036 185,879 61,841,899 61,841,899
Utility plant under construction 13,491 0 2,777,029 2,777,029
------------ -------- ------------ ------------ ---------------
Total utility plant 16,595,527 185,879 64,618,928 0 64,618,928
Other assets:
Investment in Subsidiaries 244,031 735,478 735,478
Investment in CoBank 794,148 794,148
Notes Receivable 31,407 31,407
Special Funds Restricted 6,753,104 6,753,104 6,753,104
Other 517,857 3,812,489 3,812,489
------------ -------- ------------ ------------ ---------------
Total other assets 7,514,992 0 36,534,418 (24,407,792) 12,126,626
Current assets:
Cash (6) 783,016 783,016
Trade accounts receivable 27,761 2,183,357 2,183,357
Other receivables 757,690 1,272,623 1,272,623
Contracts Receivable 447,431
Fuel, supplies, and other inventory 2,090 1,029,480 1,029,480
Income Taxes Recoverable 347,894 347,894
Prepaid expenses and other 57,815 57,815
Costs in Exces of Billing 297,708 297,708
------------ -------- ------------ ------------ ---------------
Total current assets 757,690 29,845 6,419,324 0 5,971,893
------------ -------- ------------ ------------ ---------------
24,868,209 215,724 107,572,670 (24,407,792) 83,164,878
============ ======== ============ ============ ===============
</TABLE>
AP&T Alaska Power & Telephone Company
ALD AP&T Long Distance
APC Alaska Power Company
ATC Alaska Telephone Company
ATW AP&T Wireless, Inc.
BBL BBL Hydro, Inc.
BTT Bettles Telephone, Inc.
GLH Goat Lake Hydro, Inc.
NCT North Country Telephone, Inc.
<PAGE>
<TABLE>
ALASKA POWER & TELEPHONE COMPANY AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEETS - LIABILITIES AND EQUITY
December 31, 1999
AP&T ALD APC ATC ATW BBL BTT
<S> <C> <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 1,202,034
Additional paid-in capital 6,027,600
Retained earnings 13,743,576
------------ ------- ------------ ---------- ---------- ----------- ---------
Total stockholders' equity 20,973,210 0 0 0 0 0
Parent Company Equity 7,061 12,426,996 9,297,313 750,203 402,910 275,462
------------ ------- ------------ ---------- ---------- ----------- ---------
Long-term debt, less current portion 9,258,906 13,541,973 7,632,724
------------ ------- ------------ ---------- ---------- ----------- ---------
Other liabilities:
Deferred investment tax credits 12,804
Deferred income taxes 192,417 1,899,389 956,004 165,556 1,337,845 51,031
Customer advances for construction 207,910
Deferred Credits 86,386 55,000
------------ ------- ------------ ---------- ---------- ----------- ---------
Total other liabilities 205,221 0 2,107,299 956,004 251,942 1,337,845 106,031
Current liabilities:
Trade accounts payable 656,934 31,868 47,349 35,210 1,679
Accrued taxes and expenses 546,693 146,048 18,670 6,857 51,075 (91)
Deferred income taxes (39,348) 114,894 25,175 (1,703) (1,253) (60)
Customer deposits and advance billings 63,520 100,539 3,561
Current portion of long-term debt 374,386 656,933 118,701
------------ ------- ------------ ---------- ---------- ----------- ---------
Total current liabilities 1,538,665 0 1,013,263 191,733 5,154 203,733 5,089
------------ ------- ------------ ---------- ---------- ----------- ---------
31,976,002 7,061 29,089,531 10,445,050 1,007,299 9,577,212 386,582
============ ======= ============ ========== ========== =========== =========
</TABLE>
AP&T Alaska Power & Telephone Company
ALD AP&T Long Distance
APC Alaska Power Company
ATC Alaska Telephone Company
ATW AP&T Wireless, Inc.
BBL BBL Hydro, Inc.
BTT Bettles Telephone, Inc.
GLH Goat Lake Hydro, Inc.
NCT North Country Telephone, Inc.
<PAGE>
<TABLE>
ALASKA POWER & TELEPHONE COMPANY AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEETS - LIABILITIES AND EQUITY
December 31, 1999
GLH NCT 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 1,202,034 1,202,034
Additional paid-in capital 6,027,600 6,027,600
Retained earnings 13,743,576 13,743,576
------------ -------- ------------ ------------ ---------------
Total stockholders' equity 0 0 20,973,210 20,973,210
Parent Company Equity 1,083,022 164,825 24,407,792 (24,407,792) 0
------------ -------- ------------ ------------ ---------------
Long-term debt, less current portion 22,470,187 52,903,790 52,903,790
------------ -------- ------------ ------------ ---------------
Other liabilities:
Deferred investment tax credits 12,804 12,804
Deferred income taxes 1,320,318 45,682 5,968,242 5,968,242
Customer advances for construction 207,910 207,910
Deferred Credits 141,386 141,386
------------ -------- ------------ ------------ ---------------
Total other liabilities 1,320,318 45,682 6,330,342 0 6,330,342
Current liabilities:
Trade accounts payable 1,830 774,870 774,870
Accrued taxes and expenses 11,100 (215) 780,137 780,137
Deferred income taxes 97,705 97,705
Customer deposits and advance billings 3,602 171,222 171,222
Current portion of long-term debt (16,418) 1,133,602 1,133,602
------------ -------- ------------ ------------ ---------------
Total current liabilities (5,318) 5,217 2,957,536 2,957,536
------------ -------- ------------ ------------ ---------------
24,868,209 215,724 107,572,670 (24,407,792) 83,164,878
============ ======== ============ ============ ===============
</TABLE>
AP&T Alaska Power & Telephone Company
ALD AP&T Long Distance
APC Alaska Power Company
ATC Alaska Telephone Company
ATW AP&T Wireless, Inc.
BBL BBL Hydro, Inc.
BTT Bettles Telephone, Inc.
GLH Goat Lake Hydro, Inc.
NCT North Country Telephone, Inc.
<PAGE>
<TABLE>
ALASKA POWER & TELEPHONE COMPANY AND SUBSIDIARIES
CONSOLIDATING STATEMENTS OF INCOME
For the year ended December 31, 1999
AP&T ALD APC ATC ATW BBL BTT
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Electric 11,667,136 1,402,270
Telecommunications 353,036 6,251,780 669,023 340,061
------------ ------- ------------ ---------- ---------- ----------- ---------
Total revenues 0 353,036 11,667,136 6,251,780 669,023 1,402,270 340,061
Expenses:
Electric 33,690 8,996,407 570,249
Telecommunications 424,710 4,805,219 944,891 251,789
------------ ------- ------------ ---------- ---------- ----------- ---------
Total expenses 33,690 424,710 8,996,407 4,805,219 944,891 570,249 251,789
------------ ------- ------------ ---------- ---------- ----------- ---------
Operating income (33,690) (71,674) 2,670,729 1,446,561 (275,868) 832,021 88,272
Other (income) expense:
Interest expense 561,838 847,476 579,576
Interest income (39,513)
Gross profit on contract revenues (957,155)
Gain on sale on non-utility plant (65,904)
Miscellaneous 223,009 (150) (9,500)
------------ ------- ------------ ---------- ---------- ----------- ---------
(277,725) 0 847,476 0 (150) 570,076 0
------------ ------- ------------ ---------- ---------- ----------- ---------
Income before income taxes 244,035 (71,674) 1,823,253 1,446,561 (275,718) 261,945 88,272
Provision for income taxes 84,285 (24,755) 616,915 499,619 (95,227) 90,471 30,488
------------ ------- ------------ ---------- ---------- ----------- ---------
Net income 159,750 (46,919) 1,206,338 946,942 (180,491) 171,474 57,784
============ ======= ============ ========== ========== =========== =========
</TABLE>
AP&T Alaska Power & Telephone Company
ALD AP&T Long Distance
APC Alaska Power Company
ATC Alaska Telephone Company
ATW AP&T Wireless, Inc.
BBL BBL Hydro, Inc.
BTT Bettles Telephone, Inc.
GLH Goat Lake Hydro, Inc.
NCT North Country Telephone, Inc.
<PAGE>
<TABLE>
ALASKA POWER & TELEPHONE COMPANY AND SUBSIDIARIES
CONSOLIDATING STATEMENTS OF INCOME
For the year ended December 31, 1999
GLH NCT Combined Elimination Consolidated
<S> <C> <C> <C> <C> <C>
Revenues:
Electric 1,406,428 14,475,834 (2,808,698) 11,667,136
Telecommunications
------------ --------- ------------ ------------ ---------------
Total revenues 1,406,428 230,265 22,319,999 (2,808,698) 19,511,301
Expenses:
Electric 605,933 10,206,279 (2,808,698) 7,397,581
Telecommunications 161,407 6,588,016 6,588,016
------------ --------- ------------ ------------ ---------------
Total expenses 605,933 161,407 16,794,295 (2,808,698) 13,985,597
------------ --------- ------------ ------------ ---------------
Operating income 800,495 68,858 5,525,704 5,525,704
Other (income) expense:
Interest expense 1,377,490 3,366,380 3,366,380
Interest income (367,899) (407,412) (407,412)
Gross profit on contract revenues (957,155) (957,155)
Gain on sale on non-utility plant (65,904) (65,904)
Miscellaneous (43,707) 169,652 169,652
------------ --------- ------------ ------------ ---------------
965,884 0 2,105,561 0 2,105,561
------------ --------- ------------ ------------ ---------------
Income before income taxes (165,389) 68,858 3,420,143 0 3,420,143
Provision for income taxes (57,123) 23,782 1,168,455 1,168,455
------------ --------- ------------ ------------ ---------------
Net income (108,266) 45,076 2,251,688 0 2,251,688
</TABLE>
AP&T Alaska Power & Telephone Company
ALD AP&T Long Distance
APC Alaska Power Company
ATC Alaska Telephone Company
ATW AP&T Wireless, Inc.
BBL BBL Hydro, Inc.
BTT Bettles Telephone, Inc.
GLH Goat Lake Hydro, Inc.
NCT North Country Telephone, Inc.
<PAGE>
Alaska Power & Telephone Company
and Subsidiaries
Consolidated Financial Statements
Years Ended December 31, 1999 and 1998
with Report of Independent Auditors
<PAGE>
Alaska Power & Telephone Company and Subsidiaries
Consolidated Financial Statements
Years Ended December 31, 1999 and 1998
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, 1999 and 1998, 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 auditing standards generally accepted
in the United States. 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, 1999 and 1998, and the
consolidated results of their operations and their cash flows for the years then
ended, in conformity with accounting principles generally accepted in the United
States.
February 25, 2000
1
<PAGE>
Alaska Power & Telephone Company and Subsidiaries
Consolidated Balance Sheets
-------------------------------
December 31
1999 1998
-------------------------------
ASSETS
Utility plant
Electric and non-utility $ 67,862,147 $ 63,816,373
Telecommunications 14,197,174 12,446,407
-------------- -------------
82,059,321 76,262,780
Less accumulated depreciation 20,217,422 17,659,799
-------------- -------------
61,841,899 58,602,981
Utility plant under construction 2,777,029 1,055,788
Total utilityplant, net 64,618,928 59,658,769
-------------- -------------
Other assets
Preliminary survey and investigation costs 735,478 595,308
Investments and other assets 3,823,593 2,653,961
Goodwill - net of accumulated amortization of
$113,713 in 1999, and $80,023 in 1998 783,041 816,731
Special Funds - Restricted 6,753,104 6,753,104
-------------- -------------
Total other assets 12,095,216 10,819,104
Current assets
Cash 783,016 779,910
Accounts receivable, less allowance for
doubtful accounts of $22,508 in 1999, and
$16,685 in 1998 3,049,589 2,770,220
Contracts receivable 885,232 63,360
Fuel, supplies, and other inventory 1,029,480 976,583
Income taxes recoverable 347,894 8,599
Prepaid expenses 57,815 87,649
Costs and estimated earnings in excess of
billings on uncompleted contracts 297,708 321,022
-------------- -------------
Total current assets 6,450,734 5,007,343
-------------- -------------
$ 83,164,878 $ 75,485,216
============== =============
See accompanying notes. 2
<PAGE>
Alaska Power & Telephone Company and Subsidiaries
Consolidated Balance Sheets
-------------------------------
December 31
1999 1998
-------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Stockholders' equity Common stock, $1 par value:
Authorized shares - 2,000,000
Issued and outstanding shares -
1,202,034 in 1999, and 1,177,534 in 1998 $ 1,202,034 $ 1,177,534
Additional paid-in capital 6,027,600 5,705,804
Retained earnings 13,743,575 12,688,063
-------------- -------------
Total stockholders' equity 20,973,209 19,571,401
Long-term debt
Goat Lake Hydro, Inc. note payable 22,453,769 22,662,182
Other notes payable, less current portion 30,450,020 25,195,306
-------------- -------------
Total long-term debt 52,903,789 47,857,488
Other liabilities
Deferred income taxes 5,981,046 4,800,944
Customer advances for construction 207,910 146,862
-------------- -------------
Total other liabilities 6,188,956 4,947,806
Current liabilities
Accounts payable 774,869 1,280,320
Accrued taxes and expenses 921,526 721,101
Deferred income taxes 97,704 117,867
Customer deposits and advance billings 171,223 165,175
Current portion of long-term debt 1,133,602 824,058
-------------- -------------
Total current liabilities 3,098,924 3,108,521
-------------- -------------
83,164,878 $ 75,485,216
============== =============
See accompanying notes. 3
<PAGE>
Alaska Power & Telephone Company and Subsidiaries
Consolidated Statements of Income
-------------------------------
Year Ended December 31
1999 1998
-------------------------------
Revenues
Electric $ 11,667,136 $ 10,562,706
Telecommunications 7,844,165 6,259,424
-------------- -------------
Total revenues 19,511,301 16,822,130
Expenses
Operations and maintenance - Electric 5,387,848 5,514,805
Depreciation and amortization - Electric 2,131,611 1,696,334
Interest expense, net - Electric 2,645,327 1,237,152
-------------- -------------
Electric Expenses 10,164,786 8,448,291
-------------- -------------
Operations and maintenance - Telecommunications 5,418,639 4,314,793
Depreciation - Telecommunications 1,169,377 814,762
Interest expense - Telecommunications 313,640 336,958
-------------- -------------
Telecommunications Expenses 6,901,656 5,466,513
-------------- -------------
Operating income 2,444,859 2,907,326
-------------- -------------
Other income
Gross profit on construction contract revenues 957,155 82,264
Gain on sale of non-utility plant 65,904 381,375
Miscellaneous (47,775) 13,525
-------------- -------------
Income before income tax 3,420,143 3,384,490
-------------- -------------
Provision for income taxes 1,168,455 1,169,981
-------------- -------------
Net income $ 2,251,688 $ 2,214,509
============== =============
Basic earnings per share $ 1.89 $ 1.91
============== =============
Diluted earnings per share $ 1.86 $ 1.86
============== =============
See accompanying notes. 4
<PAGE>
Alaska Power & Telephone Company and Subsidiaries
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Additional
Common Paid-In Retained
Stock Capital Earnings Total
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Balance at January 1, 1998 $1,143,871 $5,086,137 $11,516,593 $17,746,601
Net income - - 2,214,509 2,214,509
Cash dividends - - (1,043,039) (1,043,039)
Sale of common stock to ESOP 28,316 610,188 - 638,504
Sale of common stock 4,490 96,760 - 101,250
Repurchase of common stock (8,143) (174,056) - (182,199)
Common stock options exercised 9,000 86,775 - 95,775
---------- ---------- ----------- -----------
Balance at December 31, 1998 1,177,534 5,705,804 12,688,063 19,571,401
Net income - - 2,251,688 2,251,688
Cash dividends - - (1,196,176) (1,196,176)
Sale of common stock to ESOP 35,484 780,657 - 816,141
Sale of common stock 3,242 71,324 - 74,566
Repurchase of common stock (31,726) (698,010) - (729,736)
Common stock options exercised 17,500 167,825 - 185,325
---------- ---------- ----------- -----------
Balance at December 31, 1999 $1,202,034 $6,027,600 $13,743,575 $20,973,209
========== ========== =========== ===========
</TABLE>
See accompanying notes. 5
<PAGE>
Alaska Power & Telephone Company and Subsidiaries
Consolidated Statements of Cash Flows
-------------------------------
Year Ended December 31
1999 1998
-------------------------------
OPERATING ACTIVITIES
Net income $ 2,251,688 $ 2,214,509
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,300,988 2,511,096
Gain on sale of non-utility plant (65,904) (381,375)
Deferred income tax provision 1,159,939 456,795
Changes in operating activities:
Change in accounts receivable (216,009) 7,117
Change in other; assets, liabilities,
and receivables (832,083) (632,269)
Change in inventories (52,897) 74,205
Change in income taxes (339,295) 296,801
Change in accounts payable and accrued
liabilities (237,931) (160,338)
-------------- -------------
Net cash provided by operating activities 4,968,496 4,386,541
-------------- -------------
INVESTING ACTIVITIES
Acquisitions of utility plant (8,161,554) (5,371,822)
Investment in GTE (916,215) 0
Other Investments (253,418) (652,977)
Preliminary survey and investigation costs (140,170) (182,691)
-------------- -------------
Net cash used in investing activities (9,471,357) (6,207,490)
-------------- -------------
FINANCING ACTIVITIES
Proceeds from long-term debt 17,940,286 6,535,976
Payments on long-term debt (12,584,439) (3,761,672)
Payment of cash dividends (1,196,176) (1,043,039)
Proceeds from sale of common stock 1,076,032 835,529
Repurchase of common stock (729,736) (182,199)
-------------- -------------
Net cash provided by financing activities 4,505,967 2,384,595
-------------- -------------
Net increase in cash 3,106 563,646
CASH AT BEGINNING OF YEAR 779,910 216,264
-------------- -------------
CASH AT END OF YEAR $ 783,016 $ 779,910
============== =============
See accompanying notes. 6
<PAGE>
Alaska Power & Telephone Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 1999
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 and acts as the
general contractor on certain power projects. AP&T is subject to regulation by
the Regulatory Commission of Alaska, 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.
Revenue and Cost Recognition
The Company recognizes revenues from fixed-price and modified fixed-price
construction contracts on the percentage-of-completion method, measured by the
percentage of cost incurred to date to estimated total cost for each contract.
This method is used because management considers total cost to be the best
available measure of progress on these contracts. Because of inherent
uncertainties in estimating costs and percentage of completion, actual results
could differ from those estimates.
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 electric 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.
7
<PAGE>
1. The Company and Summary of Significant Accounting Policies (continued)
In relation to one specific construction project, Goat Lake Hydro, the Company
used Power Revenue Bond financing to fund construction. As a result interest
costs incurred in 1998 of $1 million related to construction in progress were
capitalized. In addition, operating cost of $0.3 million, offset by power sales
of $0.7 million, were capitalized during the construction period in 1998. Goat
Lake became operational on January 1, 1999.
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.
Goodwill
Goodwill is amortized on a straight-line basis over periods ranging from 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
AP&T uses the liability method in accounting for income taxes. Accordingly,
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.
8
<PAGE>
1. The Company and Summary of Significant Accounting Policies (continued)
Customer Advances for Construction
Customer advances for construction of additions to the electric distribution
systems are deferred and 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.
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 employee 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 9.
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
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. Diluted earnings per share reflect the impact of
the dilution caused by outstanding stock options using the treasury stock
method. FASB Statement No. 128 requires the dual presentation of basic and
diluted earnings per share. Average stock outstanding for purposes of
calculating diluted earnings per share was 1,207,858 in 1999, and 1,188,480 in
1998 (including the dilutive effect of stock options of 18,074, and 27,777).
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year
presentation.
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.
9
<PAGE>
2. Utility Plant
<TABLE>
Annual
Depreciation
1999 1998 Rate
--------------------------------------------------
<S> <C> <C> <C>
Electric plant:
Hydroelectric $ 19,531,805 $ 19,254,755 2%
Other generation 14,904,219 13,153,194 4% to 8%
Transmission and distribution 23,405,780 22,327,121 2.5% to 4%
Other 9,290,997 8,365,382 2.5% to 20%
Land 729,326 715,921 -
------------- -------------
Electric 67,862,147 63,816,373
------------- -------------
Telecommunications plant:
General support assets 3,199,389 1,360,146 2.5% to 20%
Central office assets 5,997,341 5,152,424 8% to 13%
Cable and wire facilities 3,841,375 3,564,312 4% to 6%
Nonregulated investment 1,056,151 2,285,970 10% to 20%
Land 102,918 83,555 -
------------- -------------
Telecommunications 14,197,174 12,446,407
------------- -------------
Total utility plant $82,059,321 $ 76,262,780
============= =============
</TABLE>
3. Investments and Other Assets
During 1999, AP&T entered into an agreement through ATEAC Inc. to purchase the
assets and assume the related liabilities of GTE Alaska, a subsidiary of the GTE
Corporation. The agreement is between GTE Corporation and ATEAC Inc., of which
AP&T is a 25% shareholder. The total purchase price of $43.35 million will be
allocated to the shareholders according to the book value, and any related
liabilities, of the particular exchanges each shareholder has agreed to
purchase. AP&T's share of the purchase price is approximately $16 million.
Financing for the purchase has been arranged through the National Bank for
Cooperatives (CoBank). AP&T's investment of $916,215 as of December 31, 1999,
represents a down payment on the purchase. Closing on the sale is expected to
take place on July 1, 2000.
The company owns a 50% share of Ketchikan Electric Company LLC (KEC), with a
total investment of $908,000 as of December 31, 1999. The principal purpose and
business of KEC is to construct, own, operate and manage a hydroelectric power
system in the Ketchikan Gateway Borough. (See Note 6)
10
<PAGE>
4. Long-Term Debt
Long-term debt consists of the following:
1999 1998
-------------------------------
Goat Lake Hydro, Inc., note payable to secure
Power Revenue Bonds series 1997. Face amount of
$23,000,000 less the original issue discount of
$321,231, and the bond sinking fund amount of
$225,000, secured by the Power Sales Agreement,
a Construction Funding Agreement, and all
assets of Goat Lake Hydro, Inc. Interest rate
average of 6% per year, principal due in annual
installments from 2000 through 2032 $ 22,453,769 $ 22,662,182
Other notes payable:
Notes payable to National Bank for Cooperatives (CoBank):
Note payable, secured by BBL Hydro Inc., assets
and revenues, due in monthly installments,
through 2022, at 7.17% fixed interest rate
through 2002 7,751,425 7,860,486
Note payable, secured by telephone assets, due
in quarterly installments through 2008, at
7.15% fixed interest rate 4,218,048 4,552,420
Note payable, secured by electric assets, due in
quarterly installments through 2014, at 7.28%
fixed interest rate 3,631,882 3,788,540
Note payable, secured by electric assets, due in
quarterly installments through 2010, at 7.33%
fixed interest rate 3,426,628 3,598,289
Note payable, secured by electric assets, due in
quarterly installments through 2012, variable
interest rate 6.96% at December 31, 1999 5,891,908 0
Note payable, unsecured line of credit, due
January 2001, variable interest rate 6.96% at
December 31, 1999 4,000,000 4,000,000
11
<PAGE>
4. Long-Term Debt (continued)
1999 1998
-------------------------------
Note payable to commercial bank, unsecured line
of credit, due December 2001, variable interest
rate 7.37% at December 31, 1999 $ 1,300,000 $ 1,500,000
Other debt, unsecured, with interest rates
ranging from 2% to 11%, maturing at various
dates 1,363,731 719,629
-------------- -------------
54,037,391 48,681,546
Less current portion 1,133,602 824,058
-------------- -------------
Total long-term debt $ 52,903,789 $ 47,857,488
============== =============
Annual maturities for the five years beginning January 1, 2000 are $1,133,602,
$6,783,381, $1,593,933, $1,802,801, and $1,940,640, respectively, and
$40,783,034, thereafter.
Note payable by Goat Lake Hydro, Inc. (GLH), a wholly 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,
for 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 U.S. Bank Trust National Association all rights
and interests in the note. The note is secured by all assets and revenues of GLH
and a Power Sales Agreement (PSA) between GLH and Alaska Power Co. (APC), both
wholly owned subsidiaries of AP&T. The Regulatory Commission of Alaska has
approved the PSA for the life of the GLH note. This approval allows APC to
charge its customers the entire annual costs as defined in the PSA, i.e.,
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 for the life of the agreement.
12
<PAGE>
4. 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. The electric and telephone assets of the
Company's two principal operating subsidiaries, Alaska Power Company and Alaska
Telephone Company, secure these loan agreements. As part of these agreements,
the Company is required to meet certain covenants. At December 31, 1999, the
Company is in compliance with all covenants.
As of December 31, 1999, the Company had 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 $5,300,000, is available for general
and other corporate needs.
Interest paid on debt was $3,373,242 in 1999, and $1,897,446 in 1998.
5. Operating Lease Agreements
AP&T leases its administrative office and a portion of its utility plant under
noncancellable leases expiring through 2011. Total rent expense was $409,296 and
$338,018 for 1999 and 1998, respectively. Certain of the leases include renewal
provisions at AP&T's option. Minimum rental commitments under noncancellable
operating leases, excluding hydroelectric operations, are $434,872. Minimum
annual rental commitments are $54,516 in each of the next five years. Additional
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 $133,010
in 1999, and $126,570 in 1998.
6. Construction Contract Commitments
The Company has signed a fixed price construction contract totaling $17.2
million with KEC (See Note 3) to build the Mahoney Lake Hydroelectric project.
License requirements and permitting were performed during 1999. The primary
construction efforts are expected to begin in the year 2000. A construction line
of credit from CoBank to KEC will supply the financing requirements for the
project. Obtaining funding of the construction line of credit is subject to the
completion of a Power Sales Agreement between KEC and Ketchikan Public Utility,
and will be secured by the assets of KEC. Construction contract revenues and
expenses on completed contracts during 1999, were $4.3 million and $3.2 million
respectively.
13
<PAGE>
7. Income Taxes
The components of the consolidated provision for income taxes are as follows:
1999 1998
-------------------------------
Current:
Federal $ 10,806 $ 564,667
State (2,290) 148,519
-------------- -------------
8,516 713,186
Deferred 1,159,939 456,795
-------------- -------------
Provision for income taxes $ 1,168,455 $ 1,169,981
============== =============
Total tax expense differs from that computed at the statutory federal income tax
rate due to the following:
1999 1998
-------------------------------
Income tax provision at federal rate of 34% $ 1,162,849 $ 1,150,727
State income taxes, net of federal benefit 189,049 188,458
Amortization of deferred investment tax credits (12,807) (12,807)
Benefit of cash dividends paid to ESOP members (173,408) (149,077)
Other 2,772 (7,320)
-------------- -------------
Provision for income taxes $ 1,168,455 $ 1,169,981
============== =============
The components of the deferred tax assets and liabilities as of December 31,
1999 and 1998 are as follows:
1999 1998
-------------------------------
Current:
Deferred tax assets $ (109,761) $ (94,038)
Deferred tax liabilities 207,465 211,905
-------------- -------------
97,704 117,867
Long-term deferred tax liabilities 5,981,046 4,800,944
-------------- -------------
Total net deferred tax liability $ 6,078,750 $ 4,918,811
============== =============
Federal and state income taxes paid were $649,000 in 1999, and $410,000 in 1998.
14
<PAGE>
8. 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 16% of their wages to the plan, which can be invested in
the common stock of AP&T or into other investment accounts. Employer
contributions match the participant's contributions up to the first 3% of the
participant's wages. Employer matching contributions were $136,719 and $124,657
in 1999 and 1998, respectively. Additional employer contributions are made
annually at 5% of the eligible employees' gross wages. These additional employer
contributions were $233,832 and $217,909 in 1999 and 1998, 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. ESOP shares outstanding are included in the earnings per share
calculations.
9. 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 250,000 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 is as follows:
Weighted
Shares Average Exercise
Under Price Per Share
Option
-------------------------------
Balance at December 31, 1997, unexercised 119,000 $ 14.58
Granted 38,500 22.55
Canceled 1,500 12.45
Exercised 9,000 10.64
---------------
Balance at December 31, 1998, unexercised 147,000 18.29
---------------
Granted 38,500 23.00
Canceled 11,500 17.81
Exercised 17,500 10.59
---------------
Balance at December 31, 1999, unexercised 156,500 $ 20.34
===============
16
<TABLE> <S> <C>
<ARTICLE> OPUR3
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-ASSETS> 83,164,878
<TOTAL-OPERATING-REVENUES> 19,511,301
<NET-INCOME> 2,251,688
</TABLE>
