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, 1995
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, 1995
Common Stock Par Value $3.50 Per Share 9,564,287 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
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
1995 1994
(In Thousands)
OPERATING REVENUES:
Electric $ 82,159 $ 75,502
Gas 4,181 4,306
86,340 79,808
OPERATING EXPENSES:
Operation:
Fuel for electric generation 15,735 16,575
Power purchased 16,447 16,884
Cost of gas sold 3,789 4,597
Other operating expenses 12,753 12,839
Maintenance 3,587 4,264
Depreciation 7,586 6,858
Income taxes:
Federal currently payable 4,755 911
State currently payable 1,428 278
Deferred taxes-net 2,072 2,518
Investment tax credit amortization (257) (257)
Property and other taxes 3,162 3,734
Total operating expenses 71,057 69,201
OPERATING INCOME 15,283 10,607
OTHER INCOME AND DEDUCTIONS 641 771
INCOME BEFORE INTEREST CHARGES 15,924 11,378
INTEREST CHARGES:
Long-term debt 3,649 3,906
Other interest charges 631 699
Allowance for borrowed funds used during construction (87) (94)
Total interest charges 4,193 4,511
NET INCOME 11,731 6,867
PREFERRED AND PREFERENCE STOCK DIVIDENDS 615 614
NET INCOME AVAILABLE FOR COMMON STOCK $ 11,116 $ 6,253
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 9,564 9,505
EARNINGS PER COMMON SHARE OUTSTANDING $ 1.16 $ .65
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
1995 1994
(In Thousands)
OPERATING REVENUES:
Electric $211,046 $201,788
Gas 30,112 35,458
241,158 237,246
OPERATING EXPENSES:
Operation:
Fuel for electric generation 48,353 48,388
Power purchased 43,610 44,628
Cost of gas sold 17,620 23,226
Other operating expenses 31,727 37,636
Maintenance 10,830 12,874
Depreciation 22,072 20,522
Income taxes:
Federal currently payable 9,794 3,145
State currently payable 2,940 950
Deferred taxes-net 5,098 5,291
Investment tax credit amortization (771) (771)
Property and other taxes 11,907 12,239
Total operating expenses 203,180 208,128
OPERATING INCOME 37,978 29,118
OTHER INCOME AND DEDUCTIONS (2,037) 1,089
INCOME BEFORE INTEREST CHARGES 35,941 30,207
INTEREST CHARGES:
Long-term debt 11,163 11,592
Other interest charges 1,712 1,329
Allowance for borrowed funds used during construction (287) (187)
Total interest charges 12,588 12,734
NET INCOME 23,353 17,473
PREFERRED AND PREFERENCE STOCK DIVIDENDS 1,843 1,840
NET INCOME AVAILABLE FOR COMMON STOCK $ 21,510 $ 15,633
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 9,564 9,452
EARNINGS PER COMMON SHARE OUTSTANDING $ 2.24 $ 1.65
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
1995 1994
(In Thousands)
UTILITY PLANT (at original cost) $895,707 $879,897
Less accumulated provision for depreciation 397,664 379,216
Utility plant - net 498,043 500,681
OTHER PROPERTY AND INVESTMENTS 487 522
CURRENT ASSETS:
Cash and cash equivalents 1,561 1,537
Accounts receivable less reserve 26,001 22,350
Inventories - at average cost:
Fuel 22,140 24,220
Materials and supplies 5,624 5,208
Prepaid income tax 6,104 6,197
Other prepayments and current assets 6,188 5,954
Total current assets 67,618 65,466
DEFERRED DEBITS:
Regulatory assets for deferred income taxes 28,119 27,469
Deferred energy efficiency costs 21,949 16,961
Other 22,048 17,746
Total deferred debits 72,116 62,176
TOTAL $638,264 $628,845
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
1995 1994
(In Thousands)
CAPITALIZATION:
Common stock, par value $3.50 per share;
Authorized - 30,000,000 shares; issued
and outstanding - 9,564,287 in 1995
and 9,564,287 in 1994 $ 33,475 $ 33,475
Additional paid-in capital 103,108 103,137
Retained earnings 62,483 55,893
Total common equity 199,066 192,505
Preferred stock, par value $50 per share 34,828 34,752
Total stockholders' equity 233,894 227,257
Long-term debt 189,087 189,032
Total capitalization 422,981 416,289
CURRENT LIABILITIES:
Commercial paper payable 41,200 35,600
Long-term debt maturing within one year 0 14,000
Accounts payable 11,742 14,133
Payroll, interest and taxes accrued 21,789 19,342
Other 12,430 12,147
Total current liabilities 87,161 95,222
DEFERRED CREDITS AND OTHER NON-CURRENT LIABILITIES:
Accumulated deferred income taxes 93,830 88,176
Accumulated deferred investment tax credits 18,298 19,069
Other 15,994 10,089
Total deferred credits and other non-current
liabilities 128,122 117,334
TOTAL $638,264 $628,845
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
1995 1994
(In Thousands)
RECONCILIATION OF NET INCOME TO CASH FLOWS
FROM OPERATING ACTIVITIES:
Net income $23,353 $17,473
Adjustment for non-cash items:
Depreciation 22,072 20,522
Deferred income taxes 5,005 4,382
Investment tax credit amortization (771) (771)
Allowance for equity funds used during construction 0 (144)
Deferred pension cost 0 23
Changes in assets and liabilities:
Accounts receivable - net (3,651) 1,378
Fuel 2,089 553
Materials and supplies (416) (1,243)
Accounts payable and other current liabilities (2,076) 4,288
Accrued and prepaid taxes 950 (4,810)
Interest accrued 1,386 1,401
Other prepayments and current assets (235) (2,123)
Rate refund payable 0 3,329
Deferred energy conservation costs (4,988) (5,657)
Regulatory assets 761 (956)
Other operating activities 2,473 3,485
Cash flows from operating activities 45,952 41,130
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to utility plant (20,361) (29,104)
Allowance for borrowed funds used during construction (287) (187)
Other 443 (918)
Cash flows from investing activities (20,205) (30,209)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 0 3,934
Issuance of long-term debt 0 13,250
Retirement of long-term debt (14,008) (13,259)
Debt and stock discount and financing expenses 0 (355)
Dividends on common, preferred and preference stock (17,315) (16,539)
Sale of commercial paper - net 5,600 900
Cash flows from financing activities (25,723) (12,069)
NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS: $ 24 $(1,148)
CASH AND CASH EQUIVALENTS:
Beginning of period $ 1,537 $ 3,083
End of period $ 1,561 $ 1,935
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) $11,012 $10,885
Income taxes $ 7,622 $ 7,578
The accompanying Notes to Financial Statements are an integral part of these
statements.
INTERSTATE POWER COMPANY
Summarized Financial Information
The September 30, 1995 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 1994 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,
1994.
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.
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, 1995 AND 1994
EARNINGS PER SHARE for the third quarter of 1995 were $1.16 compared to $0.65
for the third quarter of 1994. Net income for the third quarter of 1995 was
$11.7 million, compared to $6.9 million for the third quarter of 1994. Major
contributors to the improved earnings were increased electric sales to air
conditioning customers and an interim Iowa electric rate increase.
The ELECTRIC MARGIN (revenue less cost of fuel and purchased power) for the
third quarter of 1995 was $50.0 million compared to $42.0 million for the
third quarter of 1994. The increase in the electric margin resulted mainly
from higher residential, commercial and industrial sales. In addition, the
Iowa electric rate increase which became effective June 29, 1995, contributed
$2.2 million.
Three Months Ended September 30
ELECTRIC SALES (Mwh) 1995 1994 % Change
Residential 334,129 269,080 24.2
Commercial 201,907 187,554 7.7
Industrial 855,054 810,558 5.5
Interchange 4,149 166,241 N/A
Sales for Resale 69,959 65,962 6.1
Other 14,286 14,291 (0.0)
Total Electric Sales 1,479,484 1,513,686 (2.3)
The increase in residential electric sales was primarily due to warmer
temperatures during the air conditioning season. The increased sales to
commercial, industrial and resale customers were attributable to more air
conditioning load and the strength of the economy. Interchange sales were
unusually high in 1994 due to energy sales to other utilities.
Three Months Ended September 30
ELECTRIC REVENUES (000's) 1995 1994 % Change
Residential $26,143 $21,203 23.3
Commercial 14,619 13,709 6.6
Industrial 35,558 33,995 4.6
Interchange 131 2,033 N/A
Sales for Resale 3,166 2,880 9.9
Other 2,542 1,682 51.1
Total Electric Revenues $82,159 $75,502 8.8
Residential electric revenues for the third quarter of 1995 increased $4.9
million, or 23.3%, compared to the third quarter of 1994. The largest share
of the residential electric revenue increase was due to additional air
conditioning load. Other factors in the increased residential electric
revenue were $0.8 million of interim Iowa electric rate increase, Iowa demand
side management cost recovery effective October 1994, and changes in the
level of the fuel adjustment clause. The increase in commercial and
industrial revenues was primarily attributable to the increased sales
discussed above. Interchange revenues in 1994 were unusually high due to
non-recurring energy sales.
During the third quarter of 1994, the company collected Iowa electric revenue
at interim rates which were higher than the June 1995 Iowa Utilities Board
order. Accordingly, other electric revenue for the third quarter of 1994
reflects a $0.8 million charge for the estimated Iowa electric rate
overcollection, for which actual refund was made in the fourth quarter of
1994. Third quarter 1994 revenues by customer class are affected by
approximately the same amount.
The GAS MARGIN (revenue less purchased gas) for the third quarter of 1995 was
$0.4 million compared to a loss of $0.3 million during the third quarter of
1994. Among the factors contributing to the improved gas margin were the
interim Minnesota gas rate increase effective June 30, 1995, reduced
purchased gas adjustment reconciliation expense, capacity release credits,
recovery of demand side management costs, and sales to one of the company's
generating stations. Increased 1995 gas line losses partially offset the
above factors.
The COST OF GAS SOLD decreased $0.8 million, or 17.6%, during the third
quarter of 1995 compared to the same period of 1994. The decrease was
primarily a result of a 25.3% lower unit cost.
Three Months Ended September 30
GAS DELIVERIES (MMcf) 1995 1994 % Change
Residential 283 285 (0.7)
Commercial 180 182 (1.1)
Industrial 142 258 (45.0)
Other 88 6 N/A
Total Gas Sales 693 731 (5.2)
Gas Transportation 6,372 5,987 6.4
Total Gas Deliveries 7,065 6,718 5.2
Three Months Ended September 30
GAS REVENUES $ (000's) 1995 1994 % Change
Residential $ 1,961 $ 2,057 (4.7)
Commercial 787 821 (4.1)
Industrial 464 821 (43.5)
Other 321 33 N/A
Total Gas Sales Revenues 3,533 3,732 (5.3)
Gas Transportation 648 574 12.9
Total Gas Revenues $ 4,181 $ 4,306 (2.9)
Although kilowatt-hours generated by the company increased 5.6%, FUEL FOR
ELECTRIC GENERATION decreased $0.8 million, or 5.1%, during the third quarter
of 1995 compared to the same period in 1994. The cost per ton of coal, which
is the fuel source for approximately 93% of the company's generation, was
down 1.5%. The cost per Mcf of natural gas, representing approximately 7% of
generation, decreased 13.6%.
The quantity of Kwh's purchased decreased 12.0% while PURCHASED POWER EXPENSE
decreased $0.4 million, or 2.6%, during the third quarter of 1995 compared to
1994. The third quarter of 1994 unit price was low due to the non-recurring
interchange transactions.
MAINTENANCE EXPENSE decreased $0.7 million, or 15.9%, during the third
quarter of 1995 compared to the same period in 1994. This was primarily due
to increased emphasis on construction projects rather than maintenance. In
addition, the third quarter of 1994 included approximately $0.2 million of
power plant furnace and boiler maintenance.
DEPRECIATION EXPENSE increased $0.7 million, or 10.6%, for the third quarter
of 1995 compared to the third quarter of 1994. This was primarily due to
increased investment in utility plant and increased depreciation rates
approved in both the fourth quarter of 1994 and the third quarter of 1995.
OTHER INTEREST EXPENSE decreased $68,000 for the third quarter of 1995
compared to the same period of 1994. The third quarter of 1994 included
interest for IRS audit settlements and interest on the Iowa electric rate
refund. Interest on commercial paper was $591,000 for the third quarter of
1995 compared to $186,000 for the third quarter of 1994. The average
outstanding balance of short-term borrowings during the third quarter of 1995
was $39.0 million compared to $27.8 million during the third quarter of 1994.
Interest rates for the third quarter of 1995 averaged 5.9% compared to 4.6%
in 1994.
AVERAGE TEMPORARY INVESTMENTS during the third quarter of 1995 were $1.1
million compared to $2.2 million in 1994. The average interest
rate was 5.6% in the third quarter of 1995 compared to 4.3% in 1994.
FUEL INVENTORIES were $22.1 million at September 30, 1995, compared to $18.9
million at June 30, 1995, and $22.7 million at September 30, 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 third quarter of 1995 were $7.8 million
compared to $11.3 million in 1994. There were no major individual
construction projects during the third quarter of 1995. Construction work
in progress as of September 30, 1995 totaled $5.5 million compared to $12.2
million at September 30, 1994. The 1995 construction program is currently
estimated to be $25 million.
COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
EARNINGS PER SHARE for the nine months ended September 30, 1995 were $2.24
compared to $1.65 for the corresponding period in 1994. The increase in
earnings was mainly due to the higher third quarter 1995 earnings as
discussed above.
The year-to-date ELECTRIC MARGIN increased to $119.1 million in 1995 from
$108.8 million in 1994. The major portion of the increased margin is due to
increased sales to residential, commercial, industrial and resale customers
during the third quarter of 1995. The decreased interchange sales had
minimal impact on the electric margin, as the profit applicable to the Iowa
jurisdiction is flowed back to customers through the fuel adjustment clause.
Total ELECTRIC SALES during the nine months ended September 30, 1995 were
approximately the same as a year ago. The increase in sales to residential,
commercial and industrial customers was 7.4%, 1.1% and 5.5%, respectively,
mainly due to increased residential air conditioning load during the third
quarter of 1995. Interchange sales decreased 89.7% from 1994 due to
unusually high non-recurring energy sales in 1994.
ELECTRIC REVENUES increased 4.6% during the nine months ended September 30,
1995 compared to the same period in 1994 mainly due to air conditioning load,
the interim Iowa electric rate increase and recovery of demand side
management costs.
GAS DELIVERIES increased 3.2% during the nine months ended September 30, 1995
compared to the same period in 1994. Residential and commercial sales
decreased 6.5% and 5.7%, respectively, primarily due to warmer weather during
the first quarter of 1995. While industrial sales were down, the 8.1%
increase in transportation deliveries resulted in an overall increase of 5.3%
in industrial sales and transportation compared to 1994.
The 15.1% reduction in GAS REVENUES during the nine months ended September
30, 1995 compared to the same period in 1994 was primarily due to decreased
sales and a $0.8 million pipeline rate refund which was passed through to
customers in June 1995.
The year-to-date GAS MARGIN was $12.5 million in 1995 compared to $12.2
million in 1994. The increase resulted mainly from those factors affecting
the third quarter 1995 gas margin as discussed above.
OTHER ITEMS
On November 11, 1995, Interstate Power Company, IES Industries Inc., and WPL
Holdings, Inc. announced the signing of a merger agreement providing for the
combination of the three companies. The resulting holding company will be
known as Interstate Energy Corporation.
The transaction will be structured as a tax-free, stock-for-stock merger. In
the merger, holders of Interstate Power Company common stock will receive
1.11 shares of WPL Holdings common stock for each share of Interstate Power
Company stock they own on the effective date of the merger. Holders of IES
Industries Inc. common stock will receive .98 shares of WPL Holdings common
stock for each share of IES Industries Inc. common stock they own and owners
of WPL Holdings common stock will retain the number of shares of common stock
they own on the effective date. After the combination, WPL Holdings will
change its name to Interstate Energy Corporation. Wisconsin Power and Light
Company, IES Utilities, and Interstate Power Company will continue to operate
under those names as the principal subsidiaries of Interstate Energy
Corporation.
The merger is subject to approval by the shareholders of all three companies,
the utility commissions in Illinois, Iowa, Minnesota and Wisconsin, the
Securities and Exchange Commission, the Federal Energy Regulatory Commission,
and the Nuclear Regulatory Commission. The merger is also subject to the
expiration of the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act. It is a condition of closing that the parties
receive an opinion of counsel to the effect that the exchange of stock
qualifies as a tax-free transaction, and obtain appropriate accountant
assurances that the transaction will be accounted for as a pooling of
interests. Proxy materials will be filed with the Securities and Exchange
Commission in the near future. Based on optimal times for the required
regulatory approvals, the merger is expected to be completed by early 1997.
Interstate Energy Corporation will hold approximately $4 billion in assets
and have operating revenues of nearly $2 billion. Interstate Energy
Corporation will rank 34th in the nation among utility holding companies,
based on 1994 revenues.
In 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. As of June 30, 1995, the company has deferred
approximately $1.8 million of SFAS 106 costs applicable to its Minnesota
jurisdictions pending settlement of the current rate cases.
In March 1995 the company filed an application with the Iowa Utilities Board
for an increase in electric rates in an annual amount of $13.1 million.
Increased interim rates in an annual amount of $7.1 million were placed in
effect in June 1995, subject to refund upon final determination. A tentative
settlement (which must be approved by the Board) has been reached with other
parties to the rate case. The tentative settlement would provide for an
increase of $6.6 million per year, and would require the company to refund
approximately $0.2 million of revenues collected subject to refund. Pending
Board action, no provision for a refund has been recorded.
In May 1995 the company filed an application with the Minnesota Public
Utilities Commission for an increase in gas rates in an annual amount of $2.4
million. Increased interim rates in an annual amount of $1.5 million were
placed in effect in June 1995, subject to refund upon final determination. A
decision on the final rate increase is expected by March 1996.
In June 1995 the company filed an application with the Minnesota Public
Utilities Commission for an increase in electric rates in an annual amount of
$4.6 million. The company did not request an interim rate increase. A
decision on the final rate increase is anticipated by the second quarter of
1996.
In August 1995 the company filed an application with the Iowa Utilities Board
for an increase in gas rates in an annual amount of $2.2 million. Increased
interim rates in an annual amount of $1.3 million were placed in effect in
October 1995, subject to refund upon final determination. A decision on the
final rate increase is expected by June 1996.
The company's liability for coal tar waste at former manufactured gas plant
sites was discussed in the 1994 Annual Report to Stockholders. The status
through September 1995 of the former manufactured gas plant sites remains
substantially unchanged, except that:
1. In April 1995 the company received a deferral accounting order from
the Minnesota Public Utilities Commission. The accounting order
allows the company to seek recovery of certain investigation and
remediation costs for the Albert Lea and Rochester sites. An
additional request for deferred accounting for the three other
sites in Minnesota was filed in June 1995.
2. In 1994, the company filed a lawsuit in Cook County, Illinois,
against certain of its insurers to recover the costs of
investigating and remediating, as necessary, the sites of former
manufactured gas plants. Subsequently, in an April 1995 ruling,
the Court dismissed the action on grounds of forum non conveniens.
The company refiled the case in Iowa on June 23, 1995.
3. An agreement has been reached with Kansas City Power and Light
Company regarding the responsibility for remediation of the Mason
City site. Interstate Power Company will dismiss the suit and
receive $1.0 million from Kansas City Power and Light Company for
expenses incurred in the past. Kansas City Power and Light Company
will pay for all future soil remediation costs up to a $2.6 million
level. If those costs should exceed that level, the next $1.0
million will be shared 2/3 Kansas City Power and Light Company and
1/3 Interstate Power Company. If soil remediation costs should
exceed the $3.6 million level, Interstate Power Company is 100%
responsible. Current estimates for soil remediation range from
$2.3 to $3.3 million. If ground water remediation is required, the
cost will be split 50-50 between Kansas City Power and Light
Company and Interstate Power Company. Actual remediation is
expected to begin in 1996 and the company is assuming
responsibility for the clean-up process.
INTERSTATE POWER COMPANY
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to the 1994 Form 10-K Item 3 for certain pending
legal proceedings. 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 November 11, 1995, Interstate Power Company, IES Industries
Inc., and WPL Holdings, Inc. announced the signing of a merger
agreement providing for the combination of the three companies.
The resulting holding company will be known as Interstate Energy
Corporation.
The transaction will be structured as a tax-free, stock-for-stock
merger. In the merger, holders of Interstate Power Company common
stock will receive 1.11 shares of WPL Holdings common stock for
each share of Interstate Power Company stock they own on the
effective date of the merger. Holders of IES Industries Inc.
common stock will receive .98 shares of WPL Holdings common stock
for each share of IES Industries Inc. common stock they own and
owners of WPL Holdings common stock will retain the number of
shares of common stock they own on the effective date. After the
combination, WPL Holdings will change its name to Interstate Energy
Corporation. Wisconsin Power and Light Company, IES Utilities, and
Interstate Power Company will continue to operate under those names
as the principal subsidiaries of Interstate Energy Corporation.
The merger is subject to approval by the shareholders of all three
companies, the utility commissions in Illinois, Iowa, Minnesota and
Wisconsin, the Securities and Exchange Commission, the Federal
Energy Regulatory Commission, and the Nuclear Regulatory
Commission. The merger is also subject to the expiration of the
applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act. It is a condition of closing that the parties
receive an opinion of counsel to the effect that the exchange of
stock qualifies as a tax-free transaction, and obtain appropriate
accountant assurances that the transaction will be accounted for as
a pooling of interests. Proxy materials will be filed with the
Securities and Exchange Commission in the near future. Based on
optimal times for the required regulatory approvals, the merger is
expected to be completed by early 1997.
Interstate Energy Corporation will hold approximately $4 billion in
assets and have operating revenues of nearly $2 billion.
Interstate Energy Corporation will rank 34th in the nation among
utility holding companies, based on 1994 revenues.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits filed as a part of this report:
EX-27 Financial Data Schedule (required for electronic
filing only in accordance with Item 601 (c) (1) of
Regulation S-K).
(b) No reports were filed on Form 8-K.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Interstate Power Company
(Registrant)
Date November 14, 1995 /s/ W. C. Troy
W. C. Troy, Controller
(Duly Authorized Officer and
Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> UT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 498,043
<OTHER-PROPERTY-AND-INVEST> 487
<TOTAL-CURRENT-ASSETS> 67,618
<TOTAL-DEFERRED-CHARGES> 72,116
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 638,264
<COMMON> 33,475
<CAPITAL-SURPLUS-PAID-IN> 103,108
<RETAINED-EARNINGS> 62,483
<TOTAL-COMMON-STOCKHOLDERS-EQ> 199,066
24,009
10,819
<LONG-TERM-DEBT-NET> 189,087
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 41,200
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 107
<LEASES-CURRENT> 16
<OTHER-ITEMS-CAPITAL-AND-LIAB> 173,960
<TOT-CAPITALIZATION-AND-LIAB> 638,264
<GROSS-OPERATING-REVENUE> 241,158
<INCOME-TAX-EXPENSE> 17,061
<OTHER-OPERATING-EXPENSES> 186,119
<TOTAL-OPERATING-EXPENSES> 203,180
<OPERATING-INCOME-LOSS> 37,978
<OTHER-INCOME-NET> (2,037)
<INCOME-BEFORE-INTEREST-EXPEN> 35,941
<TOTAL-INTEREST-EXPENSE> 12,588
<NET-INCOME> 23,353
1,843
<EARNINGS-AVAILABLE-FOR-COMM> 21,510
<COMMON-STOCK-DIVIDENDS> 14,920
<TOTAL-INTEREST-ON-BONDS> 14,691
<CASH-FLOW-OPERATIONS> (212)
<EPS-PRIMARY> $2.24
<EPS-DILUTED> $2.24
</TABLE>
