SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-3632
INTERSTATE POWER COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 42-0329500
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1000 Main Street, P.O. Box 769, Dubuque, Iowa 52004-0769
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 319-582-5421
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock.
Shares Outstanding
November 1, 1994
Common Stock Par Value $3.50 Per Share 9,558,219 Shares
INTERSTATE POWER COMPANY
Form 10-Q
Table of Contents
Part I - Financial Information
Item 1. Statements of Income - Three Months Ended 1
Statements of Income - Nine Months Ended 2
Balance Sheets - Assets 3
Balance Sheets - Capitalization and Liabilities 4
Statements of Cash Flows 5
Summarized Financial Information 6
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis 7
Part II - Other Information
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 14
INTERSTATE POWER COMPANY
STATEMENTS OF INCOME
Three Months
Ended September 30
1994 1993
(In Thousands)
OPERATING REVENUES:
Electric $ 75,502 $ 70,400
Gas 4,306 6,848
79,808 77,248
OPERATING EXPENSES:
Operation:
Fuel for electric generation 16,575 16,240
Power purchased 16,884 15,514
Cost of gas sold 4,597 7,910
Other operating expenses 12,839 13,814
Maintenance 4,264 3,825
Depreciation 6,858 6,679
Income taxes:
Federal currently payable 911 1,505
State currently payable 278 423
Deferred taxes-net 2,518 354
Investment tax credit amortization (257) (257)
Property and other taxes 3,734 4,152
Total operating expenses 69,201 70,159
OPERATING INCOME 10,607 7,089
OTHER INCOME AND DEDUCTIONS:
Allowance for equity funds used during construction 57 20
Interest income 310 62
Miscellaneous 903 507
Income taxes (499) (237)
Total other income and deductions 771 352
INCOME BEFORE INTEREST CHARGES 11,378 7,441
INTEREST CHARGES:
Long-term debt 3,906 3,845
Other interest charges 699 114
Allowance for borrowed funds used during construction (94) (37)
Total interest charges 4,511 3,922
NET INCOME 6,867 3,519
PREFERRED AND PREFERENCE STOCK DIVIDENDS 614 612
NET INCOME AVAILABLE FOR COMMON STOCK $ 6,253 $ 2,907
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 9,505 9,311
EARNINGS PER COMMON SHARE OUTSTANDING $ .65 $ .31
DIVIDENDS PAID PER COMMON SHARE $ .52 $ .52
The accompanying Notes to Financial Statements are an integral part of these
statements.
INTERSTATE POWER COMPANY
STATEMENTS OF INCOME
Nine Months
Ended September 30
1994 1993
(In Thousands)
OPERATING REVENUES:
Electric $201,788 $192,931
Gas 35,458 39,413
237,246 232,344
OPERATING EXPENSES:
Operation:
Fuel for electric generation 48,388 46,400
Power purchased 44,628 41,520
Cost of gas sold 23,226 27,560
Other operating expenses 37,636 37,948
Maintenance 12,874 12,439
Depreciation 20,522 19,990
Income taxes:
Federal currently payable 3,145 4,207
State currently payable 950 1,265
Deferred taxes-net 5,291 2,757
Investment tax credit amortization (771) (771)
Property and other taxes 12,239 13,192
Total operating expenses 208,128 206,507
OPERATING INCOME 29,118 25,837
OTHER INCOME AND DEDUCTIONS:
Allowance for equity funds used during construction 144 43
Interest income 412 514
Miscellaneous 1,192 503
Income taxes (659) (418)
Total other income and deductions 1,089 642
INCOME BEFORE INTEREST CHARGES 30,207 26,479
INTEREST CHARGES:
Long-term debt 11,592 12,321
Other interest charges 1,329 355
Allowance for borrowed funds used during construction (187) (85)
Total interest charges 12,734 12,591
NET INCOME 17,473 13,888
PREFERRED AND PREFERENCE STOCK DIVIDENDS 1,840 2,248
NET INCOME AVAILABLE FOR COMMON STOCK $ 15,633 $ 11,640
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 9,452 9,302
EARNINGS PER COMMON SHARE OUTSTANDING $ 1.65 $ 1.25
DIVIDENDS PAID PER COMMON SHARE $ 1.56 $ 1.56
The accompanying Notes to Financial Statements are an integral part of these
statements.
INTERSTATE POWER COMPANY
BALANCE SHEETS
ASSETS
Sept. 30 Dec. 31
1994 1993
(In Thousands)
UTILITY PLANT (at original cost) $872,073 $846,294
Less accumulated provision for depreciation 374,934 358,330
Utility plant - net 497,139 487,964
OTHER PROPERTY AND INVESTMENTS 528 825
CURRENT ASSETS:
Cash and cash equivalents 1,935 3,083
Accounts receivable less reserve 24,682 26,060
Inventories - at average cost:
Fuel 22,677 22,985
Materials and supplies 5,963 4,720
Prepaid income tax 7,085 7,994
Other prepayments and current assets 7,420 5,298
Total current assets 69,762 70,140
DEFERRED DEBITS:
Regulatory assets for deferred income taxes 27,676 27,026
Deferred energy efficiency costs 15,323 9,666
Other 8,579 8,740
Total deferred debits 51,578 45,432
TOTAL $619,007 $604,361
The accompanying Notes to Financial Statements are an integral part of these
statements.
INTERSTATE POWER COMPANY
BALANCE SHEETS
CAPITALIZATION AND LIABILITIES
Sept. 30 Dec. 31
1994 1993
(In Thousands)
CAPITALIZATION:
Common stock, par value $3.50 per share;
Authorized - 30,000,000 shares; issued
and outstanding - 9,550,165 in 1994
and 9,389,841 in 1993 $ 33,425 $ 32,865
Additional paid-in capital 102,892 99,547
Retained earnings 58,287 57,397
Total common equity 194,604 189,809
Preferred stock, par value $50 per share 34,727 34,656
Total stockholders' equity 229,331 224,465
Long-term debt 189,240 203,170
Total capitalization 418,571 427,635
CURRENT LIABILITIES:
Commercial paper payable 21,000 20,100
Long-term debt maturing within one year 14,000 0
Accounts payable 16,867 11,733
Rate refund payable 3,329 0
Payroll, interest and taxes accrued 17,994 21,857
Other 9,757 10,933
Total current liabilities 82,947 64,623
DEFERRED CREDITS AND OTHER NON-CURRENT LIABILITIES:
Accumulated deferred income taxes 87,470 82,438
Accumulated deferred investment tax credits 19,326 20,097
Other 10,693 9,568
Total deferred credits and other non-current
liabilities 117,489 112,103
TOTAL $619,007 $604,361
The accompanying Notes to Financial Statements are an integral part of these
statements.
INTERSTATE POWER COMPANY
STATEMENTS OF CASH FLOWS
Nine Months
Ended Sept. 30
1994 1993
(In Thousands)
RECONCILIATION OF NET INCOME TO CASH FLOWS
FROM OPERATING ACTIVITIES:
Net income $17,473 $13,888
Adjustment for non-cash items:
Depreciation 20,522 19,990
Deferred income taxes 4,382 3,999
Investment tax credit amortization (771) (771)
Allowance for equity funds used during construction (144) (43)
Deferred pension cost 23 0
Changes in assets and liabilities:
Accounts receivable - net 1,378 539
Fuel 553 2,109
Materials and supplies (1,243) (416)
Accounts payable and other current liabilities 4,288 6,802
Accrued and prepaid taxes (4,810) (4,627)
Interest accrued 1,401 631
Other prepayments and current assets (2,123) (161)
Rate refund payable 3,329 (4,064)
Deferred energy conservation costs (5,657) (3,804)
Other operating activities 2,529 1,735
Cash flows from operating activities 41,130 35,807
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to utility plant (29,104) (22,947)
Allowance for borrowed funds used during construction (187) (85)
Other (918) (95)
Cash flows from investing activities (30,209) (23,127)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 3,934 1,471
Issuance of long-term debt 13,250 94,000
Retirement of long-term debt (13,259) (88,556)
Issuance of preferred stock 0 27,250
Redemption of preferred and preference stock 0 (25,474)
Debt and stock discount and financing expenses (355) (8,716)
Dividends on common, preferred and preference stock (16,539) (16,868)
Sale of commercial paper - net 900 3,950
Other 0 (15)
Cash flows from financing activities (12,069) (12,958)
NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS: $(1,148) $ (278)
CASH AND CASH EQUIVALENTS:
Beginning of period $ 3,083 $ 2,306
End of period $ 1,935 $ 2,028
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) $10,885 $11,922
Income taxes $ 7,578 $ 6,783
The accompanying Notes to Financial Statements are an integral part of these
statements.
INTERSTATE POWER COMPANY
Summarized Financial Information
The September 30, 1994 financial statements included herein have been
prepared by the company, without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. The accounting policies followed
by the company are set forth in Note 1 to the company's financial statements
in the 1993 Form 10-K. It is suggested that these condensed financial
statements be read in conjunction with the financial statements and the notes
thereto included in the company's Form 10-K for the year ended December 31,
1993.
In the opinion of the company, the financial statements reflect all
adjustments, consisting only of normal recurring accruals, necessary to
fairly state the results of operations.
Notes to Financial Statements
In August 1993 the company filed an application with the Iowa Utilities Board
for an increase in electric rates in an annual amount of $11.5 million.
Increased interim rates in an annual amount of $11.0 million were placed in
effect in November 1993, subject to refund. A Board order issued June 3,
1994 allowed an annual increase of $7.4 million. Revenues collected in
excess of the Board's ordered level and interest in the amount of $3.1
million plus interest of $0.2 million have been reserved and were refunded in
October 1994.
In July 1994 the company filed an application with the Federal Energy
Regulatory Commission (FERC) for an increase in firm electric wholesale rates
in an annual amount of $1.4 million. On August 3, 1994, in accord with a
tentative settlement of a wholesale customer complaint, the company withdrew
the rate request. The proposed settlement also provides for the company to
pay the wholesale customers a cash settlement of $0.3 million, and that the
company will not file another firm wholesale rate case with an effective date
prior to February 28, 1996. The wholesale customer complaint, which was
initially filed in November 1992, alleged that the company had been imprudent
by entering into certain long-term coal contracts, a transloading agreement,
and a rail transportation agreement and sought recovery of approximately $4
million. The FERC is expected to rule on the proposed settlement in the
fourth quarter of 1994. If the FERC approves the tentative settlement, the
proposed $0.3 million cash payment will be recorded as an expense.
INTERSTATE POWER COMPANY
PART I - FINANCIAL INFORMATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
The company's results of operations and financial condition are affected by
numerous factors, including weather, sales, and the amount of changes in
customer rates. The dividend of $2.08 per share annually and $0.52 per
quarter has been maintained, however, the Board of Directors will be
monitoring future dividends and the current level cannot be assured.
COMPARISON OF THE QUARTERS ENDED SEPTEMBER 30, 1994 AND 1993
EARNINGS PER SHARE for the third quarter of 1994 were $0.65 compared to $0.31
for the corresponding period in 1993. The improved third quarter 1994
earnings reflect the Iowa electric rate increase implemented in November 1993
and the full impact of seasonal rates implemented in mid-July 1993. These
factors were offset by reduced air conditioning load due to milder
temperatures in July and August of 1994. In addition, third quarter 1993
earnings were depressed by a $2.4 million accrual for clean-up expense at the
former manufactured gas plant site in Rochester, Minnesota.
The ELECTRIC MARGIN (revenue less cost of fuel and purchased power) for the
third quarter of 1994 was $42.0 million compared to $38.6 million for the
third quarter of 1993. A $7.4 million Iowa electric rate increase effective
in November 1993 and the full impact of seasonal rates contributed to the
improved margin. Purchase power expense in 1994 included charges applicable
to an additional 10 MW of capacity purchased for the period May through
October 1994. Total capacity charges included in purchased power expense for
the third quarter of 1994 were $7.6 million compared to $7.3 million in 1993.
Three Months Ended September 30
ELECTRIC SALES (Mwh) 1994 1993 % Change
Residential 269,080 275,095 (2.2)
Commercial 187,554 201,958 (7.1)
Large Power & Light 810,558 772,975 4.9
Interchange 166,241 36,274 358.3
Sales for Resale 65,962 62,814 5.0
Other 14,291 15,053 (5.1)
Total Electric Sales 1,513,686 1,364,169 11.0
The decline in residential electric sales was primarily due to mild weather
during the air conditioning season. The reduction in commercial sales was
mainly due to mild temperatures, demand side management/conservation efforts,
and the switch from a commercial tariff to a large power & light tariff by
approximately 200 customers. Aggregate commercial and large power & light
sales increased 2.4%. The increased interchange sales resulted from economy
sales to other utilities.
Three Months Ended September 30
ELECTRIC REVENUES (000's) 1994 1993 % Change
Residential 21,203 20,243 4.7
Commercial 13,709 13,656 0.4
Large Power & Light 33,995 30,513 11.4
Interchange 2,033 898 126.4
Sales for Resale 2,880 2,597 10.9
Other 1,682 2,492 (32.5)
Total Electric Sales 75,502 70,399 7.2
The increased electric revenues are primarily attributable to the Iowa
electric rate increase, seasonal rates being in effect for the entire
quarter, and to increased interchange and large power & light sales. Margins
on interchange sales allocable to the Iowa jurisdiction are flowed through
the fuel clause adjustment and therefore net income is not affected.
The GAS MARGIN (revenue less purchased gas) for the third quarter of 1994 was
$(0.3) million compared to $(1.1) million for the third quarter of 1993. The
change was primarily attributable to lower purchased gas adjustment
overcollection expense. The COST OF GAS SOLD decreased $3.3 million, or
41.9%, during the third quarter of 1994 compared to the same period in 1993
primarily due to a 46.4% decrease in volumes sold.
Three Months Ended September 30
GAS DELIVERIES (MMcf) 1994 1993 % Change
Residential 285 310 (8.1)
Commercial 182 192 (5.2)
Industrial 258 301 (14.3)
Other 6 560
Total Gas Sales 731 1,363 (46.4)
Gas Transportation 5,987 5,872 2.0
Total Gas Deliveries 6,718 7,235 (7.1)
Mild temperatures in September of this year resulted in reduced residential
and commercial heating sales. However, the major portion of the decrease in
total gas deliveries can be attributed to natural gas burned at the company's
M. L. Kapp generating station in July and August of 1993 in an effort to
conserve coal during the 1993 Mississippi River flooding.
Three Months Ended September 30
GAS REVENUES $ (000's) 1994 1993 % Change
Residential 2,057 2,477 (17.0)
Commercial 821 1,044 (21.4)
Industrial 821 1,103 (25.6)
Other 33 1,514
Total Gas Sales Revenues 3,732 6,138 (39.2)
Gas Transportation 574 711 (19.3)
Total Gas Revenues 4,306 6,849 (37.1)
The decrease in residential and commercial revenues is primarily a result of
decreased sales volumes and a lower purchased gas adjustment clause which
reflects a decline in the cost of natural gas purchased by the company.
Although industrial retail and transportation deliveries increased slightly,
revenues decreased due to a lower purchased gas adjustment clause. "Other"
gas revenues for the third quarter of 1993 included approximately $1.4
million of gas used at the company's M. L. Kapp generating station as
discussed above.
COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
EARNINGS PER SHARE for the nine months ended September 30, 1994 were $1.65
compared to $1.25 for the corresponding period in 1993. The increase in
earnings was mainly due to the Iowa electric rate increase and the accrual of
$3.5 million of environmental clean-up costs in the first and third quarters
of 1993.
The year-to-date ELECTRIC MARGIN has increased to $108.8 million in 1994 from
$105.0 million in 1993 primarily due to the Iowa electric rate increase and
increased large power & light sales.
ELECTRIC SALES during the nine months ended September 30, 1994 were 7.1%
higher than the same period a year ago. The increase was primarily
attributable to interchange sales which increased 247.0% due to economy sales
to other utilities. Residential sales increased 1.2%, primarily due to
cooler winter season weather. The 7.0% reduction in commercial sales was
mainly due to the switch by commercial customers to a large power & light
tariff as discussed above. Aggregate commercial and large power & light
sales increased 3.6%.
ELECTRIC REVENUES increased 4.6% during the nine months ended September 30,
1994 compared to the same period of 1993. The increased revenues are a
result of the increased sales and the Iowa electric rate increase which was
implemented in November 1993.
The year-to-date GAS MARGIN has increased to $12.2 million in 1994 from $11.9
million in 1993 mainly as a result of the Iowa gas rate increase implemented
in early 1993 and a lower purchased gas adjustment overcollection expense.
GAS DELIVERIES decreased 2.0% during the nine months ended September 30, 1994
compared to the same period in 1993. The major portion of the decrease in
total gas deliveries is attributable to natural gas burned at the company's
M. L. Kapp generating station during the third quarter of 1993. The 1.3%
decrease in residential and commercial sales is primarily due to milder
temperatures during the second and third quarters of this year.
GAS REVENUES decreased $4.0 million, or 10.0%, during the first nine months
of 1994 compared to 1993. The decreased revenues relate to the decreased
sales discussed above and a lower purchased gas adjustment clause. Also
contributing to the decrease in revenues this year were the higher revenues
last year resulting from natural gas burned at the company's M. L. Kapp
generating station as discussed above.
MAINTENANCE EXPENSE increased 11.5%, or $0.4 million during the third quarter
of 1994 compared to the same period in 1993. The third quarter 1994 expense
included approximately $0.3 million for furnace and boiler maintenance at
three of the company's steam generating stations. Maintenance expense for
the first nine months of 1994 was $12.9 million compared to $12.4 for the
first nine months of 1993. The company anticipates maintenance expense in
the fourth quarter of 1994 to exceed fourth quarter 1993 expense.
DEPRECIATION EXPENSE - The company is required by the Minnesota Public
Utilities Commission to perform a comprehensive depreciation study every five
years. Such a study was approved by the Minnesota Commission in October
1994. The revised depreciation rates were ordered to become effective
January 1, 1994 and an additional $0.6 million will be recorded in the fourth
quarter of 1994 to reflect the new rates for the first nine months of 1994.
The additional book depreciation expense will not affect taxable income.
Total INCOME TAX EXPENSE for the three months ending September 30, 1994 was
$3.9 million, compared to $2.3 million for the same period in 1993. The
higher income tax expense was primarily due to higher taxable income. The
effective tax rate for the third quarter of 1993 was unusually high due to a
Federal income tax rate change from 34% to 35%, retroactive to January 1,
1993.
PROPERTY AND OTHER TAXES decreased approximately $0.4 million during the
third quarter of 1994 compared to the same period in 1993. The decrease is
primarily attributable to lower assessed valuations in the State of Iowa.
OTHER INCOME for the third quarter of 1994 included $1,006,000 of energy
efficiency carrying costs and curtailment credits compared to $547,000 for
the same period in 1993. The increase was primarily due to increased
participation by residential customers in an interruptible air-conditioning
plan, and an increase in the total amount of deferred energy efficiency costs
($15.3 million at September 30, 1994 compared to $8.5 million at September
30, 1993).
INTEREST INCOME for the third quarter of 1994 was $310,000 compared to
$62,000 for the same period of 1993. Interest income for the third quarter
of 1994 included approximately $220,000 of interest income applicable to an
Iowa income tax refund for the period from 1988 through 1991. Approximately
$1.3 million of interest income applicable to the Federal income tax refund
will be recorded in the fourth quarter of 1994.
OTHER INTEREST EXPENSE was $0.7 million for the third quarter of 1994
compared to $0.1 million for the third quarter of 1993. The increase was
primarily due to interest on IRS audit settlements and to interest on the
Iowa electric rate refund.
AVERAGE TEMPORARY INVESTMENTS during the third quarter of 1994 were $2.2
million compared to $3.8 million in 1993. The average interest rate was
4.26% in the third quarter of 1994 compared to 2.98% in 1993.
FUEL INVENTORIES were $22.7 million at September 30, 1994 compared to $15.4
million at June 30, 1994, and $18.8 million at September 30, 1993. The
increase from the last quarter was primarily attributable to normal seasonal
build-up of coal inventory during the summer shipping season. Fuel
inventories at September 30, 1993 were unusually low due to the curtailment
of deliveries during the 1993 Mississippi River flooding.
CONSTRUCTION EXPENDITURES during the third quarter of 1994 totaled $11.3
million compared to $10.1 million in 1993. Major 1994 construction projects
include the installation of low nitrogen oxide burners at the company's M. L.
Kapp generating station, reconstruction of a transmission line, and a
supervisory control and data acquisition system. Construction work in
progress as of September 30, 1994 totaled $12.2 million compared to $5.5
million at September 30, 1993. The 1994 construction program is estimated to
be $46 million.
FIRST MORTGAGE BONDS in the amount of $14.0 million issued in 1965 at a
4 5/8% interest rate will mature on May 1, 1995. This amount is now
classified as a current liability.
In the first quarter of 1993 the company adopted Statement of Financial
Accounting Standards (SFAS) 106, "EMPLOYER'S ACCOUNTING FOR POSTRETIREMENT
BENEFITS OTHER THAN PENSIONS". Under the provisions of SFAS 106, the
estimated future cost of providing postretirement benefits will be accrued
during the employees' service periods. The Iowa Utilities Board has allowed
the company to recover SFAS 106 costs in its Iowa gas rates effective May
1993 and Iowa electric rates effective October 1993. The company is
deferring the SFAS 106 costs in other jurisdictions until rate cases are
filed to recover the costs.
In July 1994 the company filed an application with the Federal Energy
Regulatory Commission (FERC) for an increase in firm electric wholesale rates
in an annual amount of $1.4 million. On August 3, 1994, in accord with a
tentative settlement of a wholesale customer complaint, the company withdrew
the rate request. The proposed settlement also provides for the company to
pay the wholesale customers a cash settlement of $0.3 million, and that the
company will not file another wholesale rate case with an effective date
prior to February 28, 1996. The wholesale customer complaint, which was
initially filed in November 1992, alleged that the company had been imprudent
by entering into certain long-term coal contracts, a transloading agreement,
and a rail transportation agreement and sought recovery of approximately $4
million. The FERC is expected to rule on the proposed settlement in the
fourth quarter of 1994. If the FERC approves the tentative settlement, the
proposed $0.3 million cash payment will be recorded as an expense.
The Iowa Utilities Board (IUB) on May 2, 1994 issued its final order on the
company's request to recover deferred energy efficiency costs. The company's
cost recovery rates have been approved by the IUB and the rates were placed
in effect in October 1994. A total of $6.5 million, covering energy
efficiency costs from July 1990 to the end of 1992 and related carrying
costs, will be recovered over a four year period. Filings will be made in
July 1995 to recover expenses subsequent to 1992.
In the first quarter of 1994 the Minnesota Environmental Protection Agency
designated the company as a Potentially Responsible Party for former
manufactured gas plant sites in New Ulm, Owatonna, and Austin, Minnesota.
To-date, no investigative procedures have been undertaken. Investigative
procedures are currently underway at sites in Savanna, Illinois and Clinton,
Iowa. The results from the tests will not be available to the company until
the fourth quarter of 1994. There has been no change during 1994 in the
status of the former manufactured gas plant sites in: Mason City, Iowa;
Galena, Illinois; and Albert Lea, Minnesota. Remediation is in progress at
the Rochester, Minnesota site. In 1993, the company accrued $1.1 million in
the first quarter and $2.4 million in the third quarter for additional
remediation costs at the Rochester site. During the second quarter of 1994,
the company received permission from the Illinois Commerce Commission to
recover environmental clean-up expenditures in Illinois from electric and gas
customers through a special tariff recovery mechanism. The company did not
accrue any additional liability for environmental costs in 1994, as it
believes that the aggregate provision of $3.6 million at September 30, 1994
is adequate to cover the remaining investigative costs for sites that have
been identified and the estimated remediation costs for those sites at which
an investigative study has been completed.
Recent legislation requires that the company pay air toxics fees to the State
of Iowa. The fee is based on the amount of fuel burned at company-owned
power plants. The 1994 payment of $0.4 million will be recorded as an
expense in the fourth quarter of 1994.
The company established a record peak demand for electricity on June 17, 1994
at 932,081 kilowatts. This surpassed the previous record of 927,366
kilowatts established in August 1993.
INTERSTATE POWER COMPANY
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to the 1993 Form 10-K Item 3 for certain pending
legal proceedings and proceedings known to be contemplated by
governmental authorities. Reference is also made to the Management
Discussion and Analysis included herein. Other than these items,
there are no material pending legal proceedings, or proceedings
known to be contemplated by governmental authorities, other than
ordinary routine litigation incidental to the business, to which
the company is a party or of which any of the company's property is
the subject.
ITEM 2. CHANGES IN SECURITIES
The rights of holders of registered securities have not been
materially modified, limited or qualified.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
No defaults upon senior securities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) THE DATE OF THE MEETING AND WHETHER IT WAS AN ANNUAL OR SPECIAL
MEETING.
(b) IF THE MEETING INVOLVED THE ELECTION OF DIRECTORS, THE NAME OF EACH
DIRECTOR ELECTED AT THE MEETING AND THE NAME OF EACH OTHER DIRECTOR
WHOSE TERM OF OFFICE AS A DIRECTOR CONTINUED AFTER THE MEETING.
(c) A BRIEF DESCRIPTION OF EACH OTHER MATTER VOTED UPON AT THE MEETING
AND STATE THE NUMBER OF VOTES CAST FOR, AGAINST OR WITHHELD, AS
WELL AS THE NUMBER OF ABSTENTIONS AND BROKER NON-VOTES, AS TO EACH
SUCH MATTER, INCLUDING A SEPARATE TABULATION WITH RESPECT TO EACH
NOMINEE FOR OFFICE.
No submission of matters to a vote of security holders.
ITEM 5. OTHER INFORMATION
On March 11, 1993, the company filed a shelf registration with the
Securities and Exchange Commission for $125 million of First
Mortgage Bonds and 745,000 shares of $50 par value Preferred Stock.
On May 26, 1993 the company issued $94 million of 7 5/8% Series
First Mortgage Bonds due in 2023. The proceeds from the sale of
the bonds were used to retire higher cost series bonds due in 1999,
2001, 2002 and 2008. Also, on May 26, 1993 the company issued
545,000 shares of 6.40% Preferred Stock. The proceeds from the
issuance of the stock were used to redeem higher cost series
Preferred and Preference Stock.
INTERSTATE POWER COMPANY
PART II - OTHER INFORMATION (Cont'd)
Below is set forth the ratio of earnings to fixed charges for each
of the years in the period 1989 through 1993 and for the 12 months
ended September 30, 1994:
December 31, 1989 3.69
December 31, 1990 3.84
December 31, 1991 3.77
December 31, 1992 2.69
September 30, 1994 2.95
Below is set forth the ratio of earnings to fixed charges and
Preferred Stock dividends for each of the years in the period 1989
through 1993 and for the 12 months ended September 30, 1994:
December 31, 1989 3.03
December 31, 1990 3.11
December 31, 1991 3.13
December 31, 1992 2.28
September 30, 1994 2.43
See Exhibit EX-12 for the computation of the above ratios.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits filed as a part of this report:
EX-12 Computation of Ratio of Earnings to Fixed Charges
and Computation of Ratio of Earnings to Fixed Charges
and Preferred Dividends.
(b) No reports were filed on Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Interstate Power Company
(Registrant)
Date November 14, 1994 W. C. Troy /s/
W. C. Troy, Controller
(Duly Authorized Officer and
Principal Accounting Officer)
EX-12
Computation of Ratio of Earnings to Fixed Charges
Twelve Months Ended
Dec.31 Dec.31 Dec.31 Dec.31 Dec.31 Sep.30
1989 1990 1991 1992 1993 1994
(Thousands of Dollars)
Fixed Charges:
Interest on long-term debt $ 15,051 14,913 15,120 16,292 16,166 15,437
Other interest 2,301 860 1,605 586 596 1,570
Interest component of rents
charged to operating expenses 274 262 232 214 183 173
Total Fixed Charges $ 17,626 16,035 16,957 17,092 16,945 17,180
Earnings:
Net income $ 28,627 27,026 29,510 19,217 18,987 22,572
Income taxes 18,726 18,527 17,382 9,698 9,464 10,861
Fixed charges 17,626 16,035 16,957 17,092 16,945 17,180
Total Earnings $ 64,979 61,588 63,849 46,007 45,396 50,613
Earnings/Fixed Charges 3.69x 3.84x 3.77x 2.69x 2.68x 2.95x
Computation of Ratio of Earnings to Fixed Charges & Preferred Dividends
Twelve Months Ended
Dec.31 Dec.31 Dec.31 Dec.31 Dec.31 Sep.30
1989 1990 1991 1992 1993 1994
Fixed Charges & (Thousands of Dollars)
Preferred Dividends:
Interest on long-term debt $ 15,051 14,913 15,120 16,292 16,166 15,437
Other interest 2,301 860 1,605 586 596 1,570
Interest component of rents
charged to operating expenses 274 262 232 214 183 173
Total Fixed Charges $ 17,626 16,035 16,957 17,092 16,945 17,180
Preferred Dividends (a) 3,851 3,785 3,438 3,104 3,604 3,633
Total Fixed Charges &
Preferred Dividends $ 21,477 19,820 20,395 20,196 20,549 20,813
Earnings:
Net income $ 28,627 27,026 29,510 19,217 18,987 22,572
Income taxes 18,726 18,527 17,382 9,698 9,464 10,861
Fixed charges 17,626 16,035 16,957 17,092 16,945 17,180
Total Earnings $ 64,979 61,588 63,849 46,007 45,396 50,613
Earnings/Fixed Charges
& Preferred Dividends 3.03x 3.11x 3.13x 2.28x 2.21x 2.43x
(a) Preferred dividends, as defined (not including preference dividends),
have been adjusted by multiplying the requirement by the ratio that
income before income taxes bears to net income. Such ratios were
as follows: 165% in 1989, 169% in 1990, 159% in 1991, 151% in 1992,
150% in 1993 and 148% in 1994.
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