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 June 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
August 1, 1994
Common Stock Par Value $3.50 Per Share 9,498,233 Shares
INTERSTATE POWER COMPANY
STATEMENTS OF INCOME
Three Months
Ended June 30
1994 1993
(In Thousands)
OPERATING REVENUES:
Electric $ 63,911 $ 59,849
Gas 7,952 10,258
71,863 70,107
OPERATING EXPENSES:
Operation:
Fuel for electric generation 16,220 15,327
Power purchased 16,190 13,227
Cost of gas sold 5,619 6,923
Other operating expenses 12,591 11,831
Maintenance 5,082 4,612
Depreciation 6,803 6,664
Income taxes:
Federal currently payable (1,272) (1,125)
State currently payable (368) (342)
Deferred taxes-net 1,601 2,249
Investment tax credit amortization (257) (257)
Property and other taxes 4,194 4,667
Total operating expenses 66,403 63,776
OPERATING INCOME 5,460 6,331
OTHER INCOME AND DEDUCTIONS:
Allowance for equity funds used during construction 79 19
Interest income 56 355
Miscellaneous 113 66
Income taxes (69) (170)
Total other income and deductions 179 270
INCOME BEFORE INTEREST CHARGES 5,639 6,601
INTEREST CHARGES:
Long-term debt 3,843 4,559
Other interest charges 509 89
Allowance for borrowed funds used during construction (67) (27)
Total interest charges 4,285 4,621
NET INCOME 1,354 1,980
PREFERRED AND PREFERENCE STOCK DIVIDENDS 613 907
NET INCOME AVAILABLE FOR COMMON STOCK $ 741 $ 1,073
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 9,448 9,298
EARNINGS PER COMMON SHARE OUTSTANDING $ .07 $ .11
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
Six Months
Ended June 30
1994 1993
(In Thousands)
OPERATING REVENUES:
Electric $126,285 $122,531
Gas 31,152 32,564
157,437 155,095
OPERATING EXPENSES:
Operation:
Fuel for electric generation 31,814 30,160
Power purchased 27,743 26,006
Cost of gas sold 18,629 19,650
Other operating expenses 24,796 24,134
Maintenance 8,610 8,614
Depreciation 13,665 13,310
Income taxes:
Federal currently payable 2,234 2,702
State currently payable 671 842
Deferred taxes-net 2,773 2,403
Investment tax credit amortization (514) (514)
Property and other taxes 8,505 9,040
Total operating expenses 138,926 136,347
OPERATING INCOME 18,511 18,748
OTHER INCOME AND DEDUCTIONS:
Allowance for equity funds used during construction 87 23
Interest income 102 452
Miscellaneous 289 (4)
Income taxes (161) (181)
Total other income and deductions 317 290
INCOME BEFORE INTEREST CHARGES 18,828 19,038
INTEREST CHARGES:
Long-term debt 7,686 8,476
Other interest charges 630 241
Allowance for borrowed funds used during construction (93) (48)
Total interest charges 8,223 8,669
NET INCOME 10,605 10,369
PREFERRED AND PREFERENCE STOCK DIVIDENDS 1,226 1,636
NET INCOME AVAILABLE FOR COMMON STOCK $ 9,379 $ 8,733
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 9,424 9,298
EARNINGS PER COMMON SHARE OUTSTANDING $ 0.99 $ .93
DIVIDENDS PAID PER COMMON SHARE $ 1.04 $ 1.04
The accompanying Notes to Financial Statements are an integral part of these
statements.
INTERSTATE POWER COMPANY
BALANCE SHEETS
ASSETS
June 30 Dec. 31
1994 1993
(In Thousands)
UTILITY PLANT (at original cost) $862,276 $846,294
Less accumulated provision for depreciation 369,492 358,330
Utility plant - net 492,784 487,964
OTHER PROPERTY AND INVESTMENTS 597 825
CURRENT ASSETS:
Cash and cash equivalents 2,759 3,083
Accounts receivable less reserve 27,546 26,060
Inventories - at average cost:
Fuel 15,449 22,985
Materials and supplies 6,161 4,720
Prepaid income tax 7,746 7,994
Other prepayments and current assets 8,300 5,298
Total current assets 67,961 70,140
DEFERRED DEBITS:
Regulatory assets for deferred income taxes 27,460 27,026
Deferred energy efficiency costs 12,433 9,666
Other 8,665 8,740
Total deferred debits 48,558 45,432
TOTAL $609,900 $604,361
The accompanying Notes to Financial Statements are an integral part of these
statements.
INTERSTATE POWER COMPANY
BALANCE SHEETS
CAPITALIZATION AND LIABILITIES
June 30 Dec. 31
1994 1993
(In Thousands)
CAPITALIZATION:
Common stock, par value $3.50 per share;
Authorized - 30,000,000 shares; issued
and outstanding - 9,489,371 in 1994
and 9,389,841 in 1993 $ 33,213 $ 32,865
Additional paid-in capital 101,756 99,547
Retained earnings 56,976 57,397
Total common equity 191,945 189,809
Preferred stock, par value $50 per share 34,703 34,656
Total stockholders' equity 226,648 224,465
Long-term debt 189,222 203,170
Total capitalization 415,870 427,635
CURRENT LIABILITIES:
Commercial paper payable 17,900 20,100
Long-term debt maturing within one year 14,000 0
Accounts payable 15,203 11,733
Rate refund payable 2,423 0
Payroll, interest and taxes accrued 20,396 21,857
Other 9,005 10,933
Total current liabilities 78,927 64,623
DEFERRED CREDITS AND OTHER NON-CURRENT LIABILITIES:
Accumulated deferred income taxes 85,396 82,438
Accumulated deferred investment tax credits 19,583 20,097
Other 10,124 9,568
Total deferred credits and other non-current
liabilities 115,103 112,103
TOTAL $609,900 $604,361
The accompanying Notes to Financial Statements are an integral part of these
statements.
INTERSTATE POWER COMPANY
STATEMENTS OF CASH FLOWS
Six Months
Ended June 30
1994 1993
(In Thousands)
RECONCILIATION OF NET INCOME TO CASH FLOWS
FROM OPERATING ACTIVITIES:
Net income $10,605 $10,369
Adjustment for non-cash items:
Depreciation 13,665 13,310
Deferred income taxes 2,524 2,863
Investment tax credit amortization (514) (514)
Allowance for equity funds used during construction (87) (23)
Deferred pension cost 23 0
Changes in assets and liabilities:
Accounts receivable - net (1,486) 2,494
Fuel 7,759 2,633
Materials and supplies (1,441) (1,202)
Accounts payable and other current liabilities 3,016 6,365
Accrued and prepaid taxes (2,656) (1,714)
Interest accrued (7) (1,056)
Other prepayments and current assets (3,002) (1,400)
Rate refund payable 2,423 (4,064)
Deferred energy conservation costs (2,768) (1,948)
Other operating activities 1,150 1,114
Cash flows from operating activities 29,204 27,227
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to utility plant (17,935) (12,821)
Allowance for borrowed funds used during construction (93) (48)
Other (872) (370)
Cash flows from investing activities (18,900) (13,239)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 2,576 0
Issuance of long-term debt 13,250 94,000
Retirement of long-term debt (13,256) (88,553)
Issuance of preferred stock 0 27,250
Redemption of preferred and preference stock 0 (25,474)
Debt and stock discount and financing expenses 0 (8,559)
Dividends on common, preferred and preference stock (10,998) (11,127)
Sale of commercial paper - net (2,200) (2,000)
Cash flows from financing activities (10,628) (14,463)
NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS: $ (324) $ (475)
CASH AND CASH EQUIVALENTS:
Beginning of period $ 3,083 $ 2,306
End of period $ 2,759 $ 1,831
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) $ 7,974 $ 9,743
Income taxes $ 4,331 $ 4,796
The accompanying Notes to Financial Statements are an integral part of these
statements.
INTERSTATE POWER COMPANY
Summarized Financial Information
The June 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 $2.4
million have been reserved.
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. The FERC has not yet ruled on the
effective date of any allowed increase.
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.
EARNINGS PER SHARE for the second quarter of 1994 were $0.07 compared to
$0.11 for the corresponding period in 1993. The decrease in earnings was
primarily due to lower gas margins and a provision for an estimated Iowa
electric rate refund obligation. These factors were partially offset by the
Iowa electric rate increase placed in effect in October 1993. In addition, a
1993 refinancing resulted in lower 1994 interest on long-term debt and
preferred dividend requirements.
Three Months Ended June 30
ELECTRIC SALES (Mwh) 1994 1993 % Change
Residential 224,332 219,446 2.2
Commercial 167,452 181,162 (7.6)
Large Power & Light 785,616 726,611 8.1
Sales for Resale 88,735 77,653 14.3
Other 14,147 14,883 (4.9)
Total Electric Sales 1,280,282 1,219,755 5.0
The increase in residential electric sales was primarily due to increased air
conditioning during June. The reduction in commercial sales was mainly due
to the switch from a commercial tariff to a large power & light tariff by
approximately 200 customers. Aggregate commercial and large power & light
sales increased 5.0%. The increased sales for resale resulted mainly from
economy sales to other utilities.
Three Months Ended June 30
ELECTRIC REVENUES (000's) 1994 1993 % Change
Residential 17,717 15,936 11.2
Commercial 11,750 11,866 (1.0)
Large Power & Light 31,580 27,194 16.1
Sales for Resale 2,961 2,524 17.3
Other (98) 2,329
Total Electric Revenues 63,910 59,849 6.8
The increased revenues are primarily attributable to increased air
conditioning sales, growth in large power & light sales, and the impact of
the interim Iowa electric rate increase which was initially applied in
November 1993. The seasonal tariffs implemented in August 1993 provide for
higher rates during the four summer cooling season months, and lower rates
during the remainder of the year. While the seasonal tariffs are not
expected to have an impact on total annual revenues, they do affect the
comparability of quarterly revenue between 1994 and 1993. A second quarter
1994 provision for an Iowa electric rate refund partially offset the other
factors. The refund provision decreased second quarter 1994 "Other" electric
revenues by $2.3 million (14 cents per share). Of the $2.3 million
cumulative estimated overcollection, approximately $0.5 million relates to
the fourth quarter of 1993, while approximately $0.9 million relates to the
first quarter of 1994.
The future level of kilowatt-hour sales will depend upon weather conditions,
customer conservation efforts and the overall economy of the company's
service area. Sales to industrial customers are also affected by the
national economy. Also, issues facing the electric utility industry in
general, such as deregulation, transmission access, increased competition and
retention of large industrial customers could affect kilowatt-hour sales.
Three Months Ended June 30
GAS DELIVERIES (MMcf) 1994 1993 % Change
Residential 732 892 (18.0)
Commercial 419 500 (16.2)
Industrial 362 269 34.6
Other 38 7
Total Gas Sales 1,551 1,668 (7.1)
Gas Transportation 6,066 5,953 1.9
Total Gas Deliveries 7,617 7,621 0.0
The decrease in residential and commercial gas sales was primarily a result
of milder temperatures during this period compared to 1993. Overall
industrial deliveries (retail and transportation) were up 3.3% compared to
1993.
Three Months Ended June 30
GAS REVENUES (000's) 1994 1993 % Change
Residential $ 4,224 $ 5,634 (25.0)
Commercial 1,951 2,645 (26.3)
Industrial 1,050 1,226 (14.4)
Other 142 52
Total Gas Sales Revenues 7,367 9,557 (22.9)
Gas Transportation 586 700 (16.3)
Total Gas Revenues $ 7,953 $10,257 (22.5)
The decrease in residential and commercial revenues resulted primarily from
lower sales due to milder temperatures and to a lower purchased gas
adjustment clause. Although industrial retail and transportation deliveries
increased, revenues decreased due to a lower purchased gas adjustment clause.
EARNINGS PER SHARE for the six months ended June 30, 1994 were $0.99 compared
to $0.93 for the corresponding period in 1993. The increase in earnings was
mainly due to increased electric air conditioning sales, the Iowa electric
rate increase and a 1993 refinancing which lowered 1994 interest on long-term
debt and preferred dividend requirements.
ELECTRIC SALES for the first six months of 1994 were 5.0% higher than the
same period a year ago. Residential sales increased 3.1%, primarily due to
cooler winter season weather and warmer summer weather. The 6.9% 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 4.3%. The increased sales for resale was
mainly due to sales to other utilities during extremely cold weather during
the first quarter of 1994, and second quarter economy sales to other
utilities.
ELECTRIC REVENUES for the first six months of 1994 increased 3.1% compared to
the same period of 1993. The increased revenues are primarily attributable
to increased residential sales due to cooler weather in the first quarter and
warmer weather in the second quarter, growth in large power & light sales,
the Iowa electric rate increase and the implementation of seasonal tariffs as
discussed above.
GAS DELIVERIES were essentially unchanged for the first six months of 1994
compared to the first six months of 1993. Gas retail sales increased 2.2%,
while transported volumes declined by an equal amount. Residential sales
were flat, while commercial sales decreased 2.0%, primarily due to the milder
temperatures during the second quarter of 1994. Overall industrial retail
and transport deliveries were up 0.1% compared to 1993.
GAS REVENUES decreased 4.3% during the first six months of 1994 compared to
the second quarter of 1993. The 4.1% decrease in residential revenues was
primarily attributable to a lower purchased gas adjustment clause. The 5.3%
decrease in commercial revenues was a result of lower sales and the reduced
purchased gas adjustment clause. Although industrial retail and
transportation deliveries increased 18.9%, revenues decreased 0.9% compared
to the first six months of 1993. Transportation volumes delivered to
industrials decreased 1.1% while revenue from transported volumes decreased
13.2%. The lower revenue per Mcf can be attributed to a lower purchased gas
adjustment clause and rates placed in effect in Iowa during the first quarter
of 1993 which provided for lower commodity rates on transported volumes.
THE COST OF GAS SOLD decreased 5.1% during the second quarter of 1994
compared to the same period in 1993. The decreased gas cost per Mcf of gas
purchased was partially attributable to the effects of FERC Order 636, which
was effective in late 1993. There have been no significant developments
concerning FERC Order 636 transition costs since the company's discussion in
the 1993 Annual Report to Stockholders.
PURCHASED POWER EXPENSE increased $3.0 million, or 22.4%, during the second
quarter of 1994 compared to 1993. This increase was primarily a result of
the 26.8% increase in Kwh's purchased. Total capacity charges included in
purchased power expense for the second quarter of 1994 were $7.0 million
compared to $6.8 million for the same period in 1993.
The ELECTRIC MARGIN AND GAS MARGIN (revenue less cost of fuel, purchased
power and purchased gas) for the first and second quarters of 1994 and 1993
are as shown below.
1994 1993 Change
(In Thousands)
Electric Margin:
First Quarter $35,228 $35,070 $ 158
Second Quarter 31,500 31,295 205
Year-to-Date $66,728 $66,365 $ 363
Gas Margin:
First Quarter $10,192 $ 9,560 $ 632
Second Quarter 2,325 3,327 (1,002)
Year-to-Date $12,517 $12,887 $ (370)
Total Electric & Gas Margin:
First Quarter $45,420 $44,630 $ 790
Second Quarter 33,825 34,622 (797)
Year-to-Date $79,245 $79,252 $ (7)
The overall year-to-date total electric and gas margin has changed very
little from 1993 to 1994. The electric margin has increased primarily due to
the Iowa electric rate increase, and increased sales due to colder heating
season and warmer cooling season weather. The gas margin has decreased
mainly due to a lower purchased gas adjustment clause and lower sales due to
milder temperatures during the second quarter of 1994.
FUEL FOR ELECTRIC GENERATION increased $1.5 million, or 9.9%, in the second
quarter of 1994 compared to the same period in 1993. The increased fuel
costs were primarily due to the 10-week unavailability of one of the
company's more efficient units (M.L. Kapp) during a shutdown to inspect the
turbine and install low nox burners.
MAINTENANCE EXPENSE increased 10.2%, or $0.5 million during the second
quarter of 1994 compared to the same period in 1993. The second quarter 1994
expense included $0.4 million for the cost of a five-year period turbine
inspection at the M.L. Kapp plant.
PROPERTY AND OTHER TAXES decreased approximately $0.5 million during the
second quarter of 1994 compared to the same period in 1993. The reduction
was primarily attributable to lower assessed valuations in Iowa. In
addition, the second quarter of 1993 included $200,000 of additional expense
for Minnesota property taxes.
OTHER INCOME for the second quarter of 1994 included $212,000 of energy
efficiency carrying costs and curtailment credits compared to $99,000 for the
same period in 1993. The increase was primarily due to an increase in the
total amount of deferred energy efficiency costs ($12.4 million at June 30,
1994 compared to $6.6 million at June 30, 1993) and to an increase in the
AFUDC rate.
INTEREST INCOME for the second quarter of 1994 was $56,000 compared to
$355,000 for the same period of 1993. Interest income for the second quarter
of 1993 included approximately $250,000 of interest income applicable to
approximately $120 million of bond and preferred stock refinancing funds
which were available for approximately one month.
INTEREST ON LONG-TERM DEBT decreased approximately $0.7 million during the
second quarter of 1994 compared to the same period in 1993. The decrease was
due to lower interest rates on a refunding issue plus the fact that both the
original and refunding first mortgage bonds were outstanding for a portion of
the second quarter of 1993. In the second quarter of 1993, $94 million of
7 5/8% Series First Mortgage Bonds were issued to replace existing higher
interest rate bonds. Under the refinancing process, the new bonds were
issued on May 26, 1993, whereas the retirement of higher interest rate series
did not occur until June 30, 1993.
OTHER INTEREST was $0.5 million for the second quarter of 1994 compared to
$0.1 million for the second quarter of 1993. The increase was mainly due to
interest for IRS audit settlements and to accrued interest on the estimated
Iowa electric rate refund. Interest on commercial paper was $150,000 for the
second quarter of 1994 compared to $90,000 for the second quarter of 1993.
The average outstanding balance of short-term borrowings during the second
quarter of 1994 was $5.7 million compared to $4.7 million during the second
quarter of 1993. Interest rates for the second quarter of 1994 averaged
4.17% compared to 3.16% in 1993.
AVERAGE TEMPORARY INVESTMENTS during the second quarter of 1994 were $3.4
million compared to $42.3 million in 1993. The average interest rate was
3.68% in the second quarter of 1994 compared to 3.04% in 1993.
PREFERRED AND PREFERENCE STOCK DIVIDENDS decreased approximately $0.3 million
during the second quarter of 1994 compared to the same period in 1993. The
decrease was due to a lower interest rate on a refunding issue plus the fact
that both the original preferred and preference stock and the refunding
preferred stock were outstanding for a portion of the second quarter of 1993.
In the second quarter of 1993, 545,000 shares ($27,250,000 par value) of
6.40% Redeemable Preferred Stock were issued to replace existing higher
coupon preferred and preference stock. Under the refinancing process, the
new preferred stock was issued on May 26, 1993, whereas the retirement of
higher coupon rate series did not occur until June 30, 1993.
FUEL INVENTORIES were $15.4 million at June 30, 1994 compared to $9.7 million
at March 31, 1994. The increase from the last quarter was primarily
attributable to normal seasonal build-up of coal inventory during the summer
shipping season.
CONSTRUCTION EXPENDITURES during the second quarter of 1994 totaled $12.2
million compared to $6.3 million for the same period in 1993. Major
construction projects include the installation of low nox 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 June 30, 1994 totalled $8.9 million compared to $8.2
million at June 30, 1993. The 1994 construction program is estimated to be
$46 million.
On June 23, 1994 the gross proceeds from the issuance of $13.25 million of
POLLUTION CONTROL REFUNDING REVENUE BONDS were placed in an escrow account.
The escrow account was used to redeem the existing Pollution Control Revenue
Bonds on July 29, 1994. In accordance with SFAS 76, the June 23, 1994
transaction has been treated as an in-substance defeasance.
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 all other jurisdictions until rate cases are
filed to recover the costs.
The status and background of the municipal wholesale customer Complaint and
Request for Investigation and Hearing with FERC was discussed in the 1993
Annual Report to Stockholders. Hearings were scheduled to begin in August
1994.
On August 3, 1994 a tentative settlement of the wholesale customer complaint
was reached. Upon withdrawal of the Complaint, the company would agree to
withdraw the recently filed rate increase application and not file another
rate case that has an effective date prior to February 28, 1996. Approval of
the Agreement by the Federal Energy Regulatory Commission is expected within
approximately two months.
The Iowa Utilities Board on May 2, 1994 issued its final order on the
company's request to recover deferred energy efficiency costs. The company
was granted recovery over a four-year period of energy efficiency costs
incurred through December 31, 1992. Pending reconciliation of rate increase
with filed tariffs, the implementation of the order has not taken place.
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 third 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 on
March 31st and $2.4 million on September 30th 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 $5.2 million at June 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.
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 comtemplated 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 June 30, 1994:
December 31, 1989 3.69
December 31, 1990 3.84
December 31, 1991 3.77
December 31, 1992 2.69
December 31, 1993 2.68
June 30, 1994 2.72
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 June 30, 1994:
December 31, 1989 3.03
December 31, 1990 3.11
December 31, 1991 3.13
December 31, 1992 2.28
December 31, 1993 2.21
June 30, 1994 2.23
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 Dividennds.
(b) The company filed a Form 8-K with the Securities and Exchange
Commission dated June 3, 1994. This report related to the
Iowa Utilities Board Order issued on June 3, 1994 in the
company's 1993 electric rate case.
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 August 9, 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 Jun.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 15,376
Other interest 2,301 860 1,605 586 596 985
Interest component of rents
charged to operating expenses 274 262 232 214 183 171
Total Fixed Charges $ 17,626 16,035 16,957 17,092 16,945 16,532
Earnings:
Net income $ 28,627 27,026 29,510 19,217 18,987 19,223
Income taxes 18,726 18,527 17,382 9,698 9,464 9,174
Fixed charges 17,626 16,035 16,957 17,092 16,945 16,532
Total Earnings $ 64,979 61,588 63,849 46,007 45,396 44,929
Earnings/Fixed Charges 3.69x 3.84x 3.77x 2.69x 2.68x 2.72x
Computation of Ratio of Earnings to Fixed Charges & Preferred Dividends
Twelve Months Ended
Dec.31 Dec.31 Dec.31 Dec.31 Dec.31 Jun.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 15,376
Other interest 2,301 860 1,605 586 596 985
Interest component of rents
charged to operating expenses 274 262 232 214 183 171
Total Fixed Charges $ 17,626 16,035 16,957 17,092 16,945 16,532
Preferred Dividends (a) 3,851 3,785 3,438 3,104 3,604 3,621
Total Fixed Charges &
Preferred Dividends $ 21,477 19,820 20,395 20,196 20,549 20,153
Earnings:
Net income $ 28,627 27,026 29,510 19,217 18,987 19,223
Income taxes 18,726 18,527 17,382 9,698 9,464 9,174
Fixed charges 17,626 16,035 16,957 17,092 16,945 16,532
Total Earnings $ 64,979 61,588 63,849 46,007 45,396 44,929
Earnings/Fixed Charges
& Preferred Dividends 3.03x 3.11x 3.13x 2.28x 2.21x 2.23x
(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.
