SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
(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 0-4117-1
IES UTILITIES INC.
(Exact name of registrant as specified in its charter)
Iowa 42-0331370
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
IE Tower, Cedar Rapids, Iowa 52401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (319) 398-4411
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, as of the latest practicable
date.
Class Outstanding at October 31, 1994
Common Stock, $2.50 par value 13,370,788 shares
<PAGE>
IES UTILITIES INC.
INDEX
Page No.
Part I. Financial Information.
Item 1. Financial Statements.
Balance Sheets -
September 30, 1994 and December 31, 1993 3 - 4
Statements of Income -
Three, Nine and Twelve Months Ended
September 30, 1994 and 1993 5
Statements of Cash Flows -
Three, Nine and Twelve Months Ended
September 30, 1994 and 1993 6
Notes to Financial Statements 7 - 18
Item 2. Management's Discussion and Analysis of the
Results of Operations and Financial Condition. 19 - 30
Part II. Other Information. 31 - 33
Signatures. 34
<PAGE>
PART 1. - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
BALANCE SHEETS
September 30,
1994 December 31,
ASSETS (Unaudited) 1993
(in thousands)
Utility plant, at original cost:
Plant in service -
Electric $ 1,750,922 $ 1,707,278
Gas 155,861 147,956
Other 79,277 75,845
1,986,060 1,931,079
Less - Accumulated depreciation 869,029 813,312
1,117,031 1,117,767
Leased nuclear fuel, net of amortization 50,349 51,681
Construction work in progress 65,115 41,937
1,232,495 1,211,385
Current assets:
Cash and temporary cash investments 200 18,313
Accounts receivable -
Customer, less reserve 11,473 22,679
Other 6,591 10,330
Income tax refunds receivable 7,458 8,767
Production fuel, at average cost 12,848 14,338
Materials and supplies, at average cost 26,654 26,861
Adjustment clause balances 499 0
Regulatory assets 14,984 13,319
Prepayments and other 26,094 31,502
106,801 146,109
Other assets:
Regulatory assets 177,020 143,080
Nuclear decommissioning trust funds 32,681 28,059
Other investments 3,793 2,821
Deferred charges and other 18,413 15,524
231,907 189,484
$ 1,571,203 $ 1,546,978
September 30,
1994 December 31,
CAPITALIZATION AND LIABILITIES (Unaudited) 1993
(in thousands)
Capitalization:
Common stock - par value $2.50 per share -
authorized 24,000,000 shares; 13,370,788
shares outstanding $ 33,427 $ 33,427
Paid-in surplus 279,042 279,042
Retained earnings ($18,209,000 restricted as
to payment of cash dividends) 201,107 188,862
Total common equity 513,576 501,331
Cumulative preferred stock - par value $50
per share - authorized 466,406 shares;
366,406 shares outstanding 18,320 18,320
Long-term debt 430,277 480,074
962,173 999,725
Current liabilities:
Notes payable to associated companies 2,608 0
Short-term borrowings 0 24,000
Capital lease obligations 14,241 15,345
Maturities and sinking funds 50,224 224
Accounts payable 40,348 47,179
Dividends payable 229 5,229
Accrued interest 11,090 9,438
Accrued taxes 60,491 39,763
Accumulated refueling outage provision 12,049 2,660
Adjustment clause balances 0 5,149
Provision for rate refund liability 0 8,670
Other 22,413 22,369
213,693 180,026
Long-term liabilities:
Capital lease obligations 36,108 36,336
Liability under National Energy Policy
Act of 1992 11,967 11,984
Environmental liabilities 18,434 9,130
Other 38,181 29,866
104,690 87,316
Deferred credits:
Accumulated deferred income taxes 250,185 237,464
Accumulated deferred investment tax credits 40,462 42,447
290,647 279,911
Commitments and contingencies (Note 7 )
$ 1,571,203 $ 1,546,978
The accompanying Notes to Financial Statements are an integral
part of these statements.
<TABLE>
STATEMENTS OF INCOME (UNAUDITED)
<CAPTION>
For the Three For the Nine For the Twelve
Months Ended Months Ended Months Ended
September 30 September 30 September 30
1994 1993 1994 1993 1994 1993
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Operating revenues:
Electric $ 165,621 $ 170,224 $ 412,610 $ 419,157 $ 543,974 $ 527,057
Gas 12,209 15,427 100,506 104,568 150,256 160,146
Steam 1,647 1,741 6,393 6,370 8,932 8,815
179,477 187,392 519,509 530,095 703,162 696,018
Operating expenses:
Fuel for production 29,419 20,107 68,067 63,375 92,394 79,763
Purchased power 17,305 32,410 48,132 71,690 69,892 89,948
Gas purchased for resale 5,388 8,766 69,386 73,550 104,958 115,247
Other operating expenses 34,563 28,696 96,515 88,367 131,358 118,617
Maintenance 11,577 13,289 35,772 35,683 46,307 46,458
Depreciation and amortization 18,960 17,882 57,280 53,200 73,487 69,128
Property taxes 9,261 10,300 29,449 28,099 37,776 35,489
Federal and state income taxes:
Current 18,030 14,948 33,278 29,972 31,667 39,229
Deferred 286 4,150 3,968 5,818 14,061 2,058
Amortization of investment
tax credits -662 -696 -1,984 -2,087 -4,758 -2,779
Miscellaneous taxes 1,227 1,445 4,104 4,137 4,852 5,140
145,354 151,297 443,967 451,804 601,994 598,298
Operating income 34,123 36,095 75,542 78,291 101,168 97,720
Other income and deductions:
Allowance for equity funds
used during construction 647 64 1,800 305 2,320 669
Miscellaneous, net 779 -643 2,442 1,313 3,376 2,092
1,426 -579 4,242 1,618 5,696 2,761
Interest:
Long-term debt 9,471 7,881 28,448 25,419 37,955 34,522
Other 785 1,438 2,568 4,039 3,774 5,054
Allowance for debt funds
used during construction -440 -17 -1,164 -676 -1,638 -929
9,816 9,302 29,852 28,782 40,091 38,647
Net income 25,733 26,214 49,932 51,127 66,773 61,834
Preferred dividend
requirements 229 229 686 686 914 914
Net income available for
common stock $ 25,504 $ 25,985 $ 49,246 $ 50,441 $ 65,859 $ 60,920
The accompanying Notes to Financial Statements are an integral part of these statements.
</TABLE>
<TABLE>
STATEMENTS OF CASH FLOWS (UNAUDITED)
<CAPTION>
For the Three For the Nine For the Twelve
Months Ended Months Ended Months Ended
September 30 September 30 September 30
1994 1993 1994 1993 1994 1993
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 25,733 $ 26,214 $ 49,932 $ 51,127 $ 66,773 $ 61,834
Adjustments to reconcile net income to
net cash flows from operating activities -
Depreciation and amortization 18,960 17,882 57,280 53,200 73,487 69,128
Principal payments under capital lease obligations 4,079 877 12,584 7,709 16,304 10,147
Deferred taxes and investment tax credits -511 2,925 1,471 2,713 9,290 -1,299
Amortization of deferred charges 277 265 821 678 1,092 884
Refueling outage provision 3,338 -8,182 9,389 -3,548 8,048 -534
Allowance for equity funds used during construction -647 -64 -1,800 -305 -2,320 -669
Other 1,115 295 1,666 302 1,913 777
Other changes in assets and liabilities -
Accounts receivable 2,431 -8,754 15,145 -4,107 10,934 -20,057
Sale of utility accounts receivable 0 -3,300 -200 10,490 -200 18,200
Production fuel, materials and supplies -1,323 1,253 1,559 8,012 -545 11,793
Accounts payable 3,644 18,302 -4,942 8,089 -10,714 18,021
Accrued taxes 21,574 514 22,037 -3,835 14,521 -863
Provision for rate refunds 0 1,278 -8,670 -1,168 -7,852 -4,798
Adjustment clause balances -3,575 -6,741 -5,648 1,009 -291 610
Gas in storage -5,994 -9,111 2,963 -253 907 -2,767
Deferred energy efficiency costs -4,340 -2,135 -11,511 -6,036 -15,221 -8,032
Accrued interest 1,625 64 1,652 -1,371 3,213 -2,507
Other 2,664 3,832 4,044 5,359 2,412 1,037
Net cash flows from operating activities 69,050 35,414 147,772 128,065 171,751 150,905
Cash flows from financing activities:
Dividends declared on common stock -15,000 -3,800 -37,000 -19,500 -48,800 -23,528
Dividends declared on preferred stock -229 -229 -686 -686 -914 -914
Dividends payable 0 0 -5,000 0 0 229
Equity infusion from parent company 0 0 0 50,000 0 50,000
Proceeds from issuance of long-term debt 0 0 0 0 119,400 0
Reductions in long-term debt 0 0 -224 -60,224 -19,624 -60,224
Net change in short-term borrowings -14,658 5,140 -21,392 -9,172 -81,192 65,791
Principal payments under capital lease obligations -4,078 -3,415 -12,225 -10,400 -13,102 -13,816
Net cash flows from financing activities -33,965 -2,304 -76,527 -49,982 -44,232 17,538
Cash flows from investing activities:
Construction and acquisition expenditures -33,369 -32,814 -81,704 -74,982 -119,933 -165,000
Nuclear decommissioning trust funds -1,383 -1,383 -4,149 -4,149 -5,532 -5,532
Other -824 1,458 -3,505 1,314 -4,276 1,897
Net cash flows from investing activities -35,576 -32,739 -89,358 -77,817 -129,741 -168,635
Net increase (decrease) in cash and
temporary cash investments -491 371 -18,113 266 -2,222 -192
Cash and temporary cash investments
at beginning of period 691 1,638 18,313 1,743 2,422 2,201
Cash and temporary cash investments
at end of period $ 200 $ 2,009 $ 200 $ 2,009 $ 200 $ 2,009
Supplemental cash flow information:
Cash paid during the period for -
Interest $ 8,578 $ 9,187 $ 30,526 $ 30,739 $ 39,079 $ 41,757
Income taxes $ 5,442 $ 7,921 $ 22,049 $ 29,261 $ 32,917 $ 43,495
Noncash investing and financing activities -
Capital lease obligations incurred $ 10,828 $ 1,001 $ 11,252 $ 14,398 $ 11,460 $ 13,572
The accompanying Notes to Financial Statements
are an integral part of these statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
September 30, 1994
(1) GENERAL:
The interim Financial Statements have been prepared by
IES Utilities Inc. (the Company), without audit, pursuant to
the rules and regulations of the Securities and Exchange
Commission. The Company is a wholly-owned subsidiary of IES
Industries Inc. (Industries) and was formed as a result of the
merger of Industries' former wholly-owned utility
subsidiaries, Iowa Electric Light and Power Company (IE) and
Iowa Southern Utilities Company (IS), effective
December 31, 1993. Certain information and footnote
disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the
disclosures are adequate to make the information presented not
misleading. In the opinion of the Company, the Financial
Statements include all adjustments, which are normal and
recurring in nature, necessary for the fair presentation of
the results of operations and financial position. Certain
prior period amounts have been reclassified on a basis
consistent with the 1994 presentation.
It is suggested that these 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. The accounting and financial policies
relative to the following items have been described in those
notes and have been omitted herein because they have not
changed materially through the date of this report:
General
Summary of significant accounting policies (other than
discussed in Note 2)
Acquisition of Iowa service territory of Union Electric
Company
Leases (other than discussed in Note 6)
Income taxes
Benefit plans (other than discussed in Note 2(a))
Preferred and preference stock
Debt (other than discussed in Note 5)
Estimated fair value of financial instruments (other than
discussed in Note 2(b))
Commitments
Jointly-owned electric utility plant
Segments of business
(2) NEW ACCOUNTING STANDARDS:
(a) Accounting for Postemployment Benefits -
On January 1, 1994, the Company adopted the provisions of
Statement of Financial Accounting Standards (SFAS) 112,
"Employers' Accounting for Postemployment Benefits," and its
adoption did not have a material effect on the Company's
financial position or results of operations. This statement
requires that benefits offered to former or inactive employees
after termination of employment, but before retirement, be
accrued over the service lives of the employees if all of the
following conditions are met: 1) the obligation relates to
services already performed; 2) the employees' rights vest; 3)
the payments are probable; and 4) the amounts are reasonably
determinable. Otherwise, such obligations are to be
recognized at the time they become probable and reasonably
determinable. Prior to 1994, the Company had generally
accounted for these obligations as they were paid.
(b) Accounting for Certain Investments in Debt and
Equity Securities -
On January 1, 1994, the Company adopted SFAS 115,
"Accounting for Certain Investments in Debt and Equity
Securities." This standard, which applies to the Company's
nuclear decommissioning trust funds at September 30, 1994,
requires that unrealized gains and losses on such investments
be included in the reported balance of such investments. At
September 30, 1994, the balance of the "Nuclear
decommissioning trust funds" as shown in the Balance Sheets
included $0.6 million of unrealized losses on the investments
held in the trust funds. The reserve for decommissioning
costs, included in "Accumulated depreciation" in the Balance
Sheets was adjusted by a corresponding amount, and there was
no effect on net income from adopting this standard.
(3) RATE MATTERS:
(a) 1991 Electric Rate Case -
In October 1991, IE applied to the Iowa Utilities Board
(IUB) for an increase in retail electric rates of $18.9
million annually, or 6.0%. The IUB approved an interim rate
increase of $15.6 million, annually, which became effective in
December 1991, subject to refund.
In December 1992, the IUB issued its "Order On
Rehearing," which affirmed its original decision approving an
annual electric rate increase of $7.9 million. IE appealed
one issue in the IUB's Order to the Iowa District Court
(Court) and, in December 1993, the Court issued its decision
upholding the IUB's Order. As a result of the Court's
decision, the Company completed a refund of $9.2 million,
including interest, in the second quarter of 1994. There was
no effect on electric revenues or net income when the refund
was made because the Company had been reserving for the effect
of the refund.
(b) 1994 Electric Rate Case -
On July 8, 1994, the Company applied to the IUB for an
increase in retail electric rates of approximately $21 million
annually, or 4.3%. The Company's proposal includes
approximately $19 million in annual revenue requirement
related to increased recovery levels of depreciation expense,
nuclear decommissioning expense and post-employment benefit
costs. To the extent these proposals are approved by the IUB,
corresponding increases in expense would be recorded and there
would be no effect on net income. Any increase approved by
the IUB is not expected to be effective before May 1995. No
interim increase was requested.
Included in the requested increase is a proposal to
increase the annual recovery of anticipated costs to
decommission the Duane Arnold Energy Center (DAEC), the
Company's nuclear generating plant, to approximately
$12 million annually, from the current level of $5.5 million.
Decommissioning expense is included in "Depreciation and
amortization" in the Statements of Income and the cumulative
amount is included in "Accumulated depreciation" in the
Balance Sheets to the extent recovered through rates. The
proposal is based on the following assumptions: 1) cost to
decommission the DAEC of $252.7 million in 1993 dollars, based
on the Nuclear Regulatory Commission (NRC) minimum formula
(which exceeds the amount in the current site-specific study);
2) inflation of 5.56% annually to the year 2014, when
decommissioning is expected to begin; 3) the prompt
dismantling and removal method of decommissioning; 4) monthly
funding of all future collections into external trust funds
and funded on a tax-qualified basis to the extent possible; 5)
an average after-tax return of 5.88% for all external
investments; and 6) a collection method that levelizes the
recovery through rates, in real terms, through 2014. Current
levels of rate recovery: 1) do not recognize estimated future
inflation for the entire period prior to commencement of the
decommissioning process; 2) assume that decommissioning begins
in 2010; and 3) provide recovery on a straight-line basis
without considering the effects of inflation. Earnings on the
external trust funds are recorded as interest income and a
corresponding interest expense payable to the funds is
recorded. The earnings accumulate in the external trust fund
balances and in accumulated depreciation.
On October 21, 1994, the Office of Consumer Advocate
(OCA) filed a petition in connection with this proceeding to
reduce the rates for retail electric service by approximately
$40 million or 8.2%. The primary differences between the
amount of the increase requested by the Company and the
decrease proposed by the OCA are: 1) a 12.9% return on common
equity requested by the Company compared to 10.05% proposed by
the OCA; 2) OCA's rejection of the Company's proposal to
increase collections for decommissioning the DAEC; 3) OCA's
rejection of the Company's proposal to increase depreciation
rates; 4) OCA's rejection of the Company's request to recover
an acquisition adjustment associated with its acquisition of
the Iowa service territory of Union Electric Company; and 5)
an adjustment to test year sales levels proposed by the OCA.
If a rate reduction is ultimately ordered by the IUB, the
reduction would be effective from October 21, 1994, and
revenues collected beyond that date would be subject to refund
to the extent of the reduction approved by the IUB, if any.
As of September 30, 1994, no revenues were collected subject
to refund.
Other parties also filed on October 21, 1994, as
intervenors in the proceeding. The parties, which primarily
represent individual or groups of customers, generally object
to the price increase. Certain intervenors made specific
comments on various aspects of the Company's proposal, and
those that quantified their positions have generally argued
for a price decrease, but none as large as that proposed by
the OCA.
The Company will file its rebuttal testimony to the
intervenors' positions in December 1994, and a hearing is
scheduled for February 1995.
(c) 1994 Energy Efficiency Cost Recovery Filing -
The IUB has adopted rules which mandate the Company to
spend 2% of electric and 1.5% of gas gross retail operating
revenues for energy efficiency programs. On August 15, 1994,
the Company applied to the IUB for recovery of approximately
$23 million and $13 million for the electric and gas programs,
respectively, related to costs incurred through 1993 for such
programs. The $36 million total for the electric and gas
programs is comprised of $21 million of direct expenditures
(recorded as a "Regulatory asset" in the Balance Sheets) and
carrying costs, $7 million for a return on the expenditures
and $8 million for a reward based on a sharing of the benefits
of such programs.
On October 31, 1994, the OCA and another intervenor in
the proceeding filed their direct testimony. The principal
difference between the Company and the OCA is approximately
$7 million in the reward calculation. Rebuttal testimony by
all parties will be filed during the fourth quarter of 1994,
and a hearing is scheduled for January 1995. Any increase
approved by the IUB is not expected to be effective before
March 1995, and recovery is likely to be over a four-year
period with a return allowed on the unrecovered portion over
the recovery period.
(4) UTILITY ACCOUNTS RECEIVABLE:
The Company has entered into an agreement, which expires
in 1999, with a financial institution to sell, with limited
recourse, an undivided fractional interest of up to
$65 million in its pool of utility accounts receivable. At
September 30, 1994, $53 million was sold under the agreement.
(5) SHORT-TERM DEBT:
At September 30, 1994, the Company had bank lines of
credit aggregating $67.7 million, of which $7.7 million was
being used to support pollution control obligations.
Commitment fees are paid to maintain these lines and there are
no conditions that restrict the unused lines of credit. In
addition to the above, the Company has an uncommitted credit
facility with a financial institution whereby it can borrow up
to $40 million, of which none was outstanding at
September 30, 1994. Rates are set at the time of borrowing
and no fees are paid to maintain this facility. The Company
also has a letter of credit in the amount of $3.4 million
supporting its variable rate pollution control obligations.
(6) OFFICE LEASE GUARANTY:
The Company entered into a lease agreement, effective
July 1, 1994, as lessee for its corporate general office in
Cedar Rapids, Iowa. The lessor is a trust (IES Utilities
Trust, not affiliated with the Company) formed by various
financial institutions. The term of the lease is five years,
with two one-year extensions available at the Company's
option. The Company had previously been leasing the building
from a different lessor. Pursuant to its Guaranty associated
with the lease, if the Company defaults on its obligations
under the lease, it will be required to pay all debt service
payments related to the debt incurred by the lessor for
purchase of the building, all amounts payable with respect to
the equity contributions (including a return on the
contributions) made to the trust by the financial
institutions, and other payments associated with the lease
transaction. The aggregate amount of the potential payments
with respect to the Guaranty is approximately $20 million.
(7) CONTINGENCIES:
(a) Nuclear Insurance Programs -
The Price-Anderson Amendments Act of 1988 (1988 Act)
provides the Company with the benefit of $9.0 billion of
public liability coverage consisting of $200 million of
insurance and $8.8 billion of potential retroactive
assessments from the owners of nuclear power plants. Based
upon its ownership of the DAEC, under the 1988 Act, the
Company could be assessed a maximum of $79.3 million per
nuclear incident, with a maximum of $10 million per year (of
which the Company's 70% ownership portion would be
approximately $55 million and $7 million, respectively) if
losses relating to the incidents exceeded $200 million. These
limits are subject to adjustments for inflation in future
years.
The Company is a member of Nuclear Electric Insurance
Limited (NEIL), which provides insurance coverage for the cost
of certain property losses at nuclear generating stations and
for the cost of replacement power during certain outages.
Companies insured through NEIL are subject to retroactive
premium adjustments if losses exceed accumulated reserve
funds. NEIL's accumulated reserve funds are currently
sufficient to more than cover its exposure in the event of a
single incident under the property damage or replacement power
coverages. However, the Company could be assessed annually a
maximum of $8.5 million for certain property losses and
$0.7 million for replacement power if NEIL's losses relating
to accidents exceeded its accumulated reserve funds. The
Company is not aware of any losses that it believes are likely
to result in an assessment.
(b) Environmental Liabilities -
At September 30, 1994, the Company's Balance Sheets
reflect $22.7 million (including $4.3 million as current) of
liabilities for investigation and remediation of environmental
issues. The recorded amount represents the Company's estimate
of the minimum aggregate amount that will be incurred for
investigation and remediation of the environmental
contamination, which amount is substantially related to
clean-up costs associated with certain former manufactured gas
plant (FMGP) sites. In April 1994, the Company received
updated investigation reports on a number of sites, which, at
some sites, indicated a greater volume of contaminated soil
surface and ground water needing treatment, and a greater
volume of substances requiring higher cost incineration, than
was anticipated in prior estimates. Prior estimates were
based on investigations conducted at what were expected to be
representative sites. It is possible that future cost
estimates will be greater than the current estimates as
further investigations are conducted and as additional facts
become known. The Company has not initiated the investigation
on two of its 27 sites for which it has been identified as a
Potentially Responsible Party (PRP), but intends to do so, and
is continuing work on sites requiring remediation.
The Company has been named as a PRP for its FMGP sites by
either the Iowa Department of Natural Resources (IDNR) or the
United States Environmental Protection Agency (EPA). The
Company is working pursuant to the requirements of the IDNR
and EPA to investigate, mitigate, prevent and remediate, where
necessary, damage to property, including damage to natural
resources, at and around its 27 sites in order to protect
public health and the environment. Such investigations are
expected to be completed by 1999 and site-specific
remediations, based on recommendations from the IDNR and EPA,
are anticipated to be completed within three years after the
completion of the investigations of each site. The Company
may be required to monitor these sites for a number of years
upon completion of remediation. Such monitoring costs are not
included in the estimates above.
The Company has begun pursuing coverage for
investigation, mitigation, prevention, remediation and
monitoring costs from its insurance carriers and is
investigating the potential for third party cost sharing for
FMGP investigation and clean-up costs. The amount of shared
costs, if any, can not be reasonably determined and,
accordingly, no potential sharing has been recorded at
September 30, 1994. Regulatory assets of $22.5 million have
been recorded in the Balance Sheets, which reflect the future
recovery that is being provided through rates. Considering
the recorded reserves for environmental liabilities and the
past rate treatment allowed by the IUB, management believes
that the clean-up costs incurred by the Company for these FMGP
sites will not have a material adverse effect on its financial
position or results of operations.
(c) Clean Air Act -
The Clean Air Act Amendments Act of 1990 (Act) requires
emission reductions of sulfur dioxide and nitrogen oxides to
achieve reductions of atmospheric chemicals believed to cause
acid rain. The provisions of the Act will be implemented in
two phases with Phase I affecting two of the Company's units
beginning in 1995 and Phase II affecting all units beginning
in the year 2000.
The Company expects to meet the requirements of the Act
by switching to lower sulfur fuels and through capital
expenditures primarily related to fuel burning equipment and
boiler modifications. The Company estimates capital
expenditures at approximately $28 million, including
$5 million in 1994, in order to meet these requirements of the
Act.
(d) National Energy Policy Act of 1992 -
The National Energy Policy Act of 1992 requires owners of
nuclear power plants to pay a special assessment into a
"Uranium Enrichment Decontamination and Decommissioning Fund."
The assessment is based upon prior nuclear fuel purchases and,
for the DAEC, averages $1.4 million annually through 2007, of
which the Company's 70% share is $1.0 million. The Company is
recovering the costs associated with this assessment through
its electric fuel adjustment clauses over the period the costs
are assessed. The Company's 70% share of the future
assessment, $12.7 million payable through 2007, has been
recorded as a liability in the Balance Sheets, including
$0.8 million included in "Current liabilities - Other," with a
related regulatory asset for the unrecovered amount.
(e) Federal Energy Regulatory Commission (FERC) Order
No. 636 -
The FERC issued Order No. 636 (Order 636) in 1992. Order
636, as modified on rehearing: 1) requires the Company's
pipeline suppliers to unbundle their services so that gas
supplies are obtained separately from transportation service,
and transportation and storage services are operated and
billed as separate and distinct services; 2) requires the
pipeline suppliers to offer "no notice" transportation service
under which firm transporters (such as the Company) can
receive delivery of gas up to their contractual capacity level
on any day without prior scheduling; 3) allows pipelines to
abandon long-term (one year or more) transportation service
provided to a customer under an expiring contract whenever the
customer fails to match the highest rate and longest term (up
to 20 years) offered to the pipeline by other customers for
the particular capacity; and 4) provides for a mechanism under
which pipelines can recover prudently incurred transition
costs associated with the restructuring process. The Company
has enhanced access to competitively priced gas supply and
more flexible transportation services as a result of
Order 636. However, the Company will be required to pay
certain transition costs incurred and billed by its pipeline
suppliers as Order 636 is implemented.
The Company's three pipeline suppliers have filed tariffs
with the FERC implementing Order 636 and the pipelines have
also made filings with the FERC to begin collecting their
respective transition costs. The Company began paying the
transition costs in November 1993, and, at September 30, 1994,
has recorded a liability of $6.6 million for those transition
costs that have been incurred by the pipelines to date,
including $2.5 million expected to be billed through
September 1995. The Company is currently recovering the
transition costs from its customers through its Purchased Gas
Adjustment Clause as such costs are billed by the pipelines.
While the magnitude of the total transition costs to
ultimately be charged to the Company cannot yet be determined,
the Company believes any transition costs, which the FERC
would allow the pipelines to collect from the Company, would
be recovered from its customers, based upon regulatory
treatment of these costs currently and similar past costs by
the IUB. Accordingly, regulatory assets, in amounts
corresponding to the liabilities, have been recorded to
reflect the anticipated recovery.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The following discussion analyzes significant changes in
the components of net income and financial condition from the
prior periods for IES Utilities Inc. (the Company).
RESULTS OF OPERATIONS
The Company's net income available for common stock as
compared to the same periods last year decreased $0.5 million
and $1.2 million for the three and nine month periods,
respectively, and increased $4.9 million for the twelve month
period ended September 30, 1994. The Company's operating
income decreased $2.0 million and $2.7 million for the three
and nine month periods, respectively, and increased
$3.4 million during the twelve month period. Reasons for the
changes in the results of operations are explained in the
following discussion.
ELECTRIC REVENUES
Electric revenues and Kwh sales (before off-system sales)
increased or (decreased) for the periods ended
September 30, 1994, compared with prior periods, as follows:
Revenues Kwh
Sales
(millions)
Three months $ (4.6) 8.0%
Nine months $ (6.5) 5.3%
Twelve months $ 16.9 9.0%
After adjusting for the effects of weather, sales
increased 8.7%, 4.6% and 8.5% for the three, nine and twelve
month periods, respectively. The underlying growth in the
Company's service territory is reflected in increases in
commercial and industrial sales for all periods. The increase
for the twelve month period also reflects the acquisition of
the Iowa service territory from Union Electric Company (UE) on
December 31, 1992, for the full 1994 period, but for only
three quarters of the 1993 period. Excluding the effects of
the sales to the former UE customers, sales for the twelve
month period increased 4.7%.
The Company's electric tariffs include energy adjustment
clauses (EAC) that are designed to currently recover the costs
of fuel and the energy portion of purchased power billings to
customers.
The revenue decreases for the three and nine month
periods were primarily the result of lower average revenue per
Kwh sold, in part because of the sales mix among customer
classes, and lower off-system sales to other utilities,
partially offset by the overall increase in Kwh sales. Lower
fuel costs collected through the EAC also contributed to the
revenue decrease for the nine month period.
The revenue increase for the twelve month period was
primarily because of the increase in Kwh sales, partly related
to the acquisition of the UE territory, and increased
recoveries of fuel costs through the EAC. The effect of the
sales increase was partially offset by lower off-system sales
and lower average revenue per Kwh sold.
GAS REVENUES
Gas revenues decreased $3.2 million, $4.1 million and
$9.9 million for the three, nine and twelve month periods,
respectively. The Company's gas tariffs include purchased gas
adjustment clauses (PGA) that are designed to currently
recover the cost of gas sold. Sales, including transported
volumes, were flat for the three month period and decreased
0.5% and 2.0% for the nine and twelve month periods,
respectively. The reduction in gas revenues for all periods
was attributable to lower gas costs recovered through the PGA
and, for the nine and twelve month periods, lower dekatherm
sales. After adjusting for the effects of weather, sales
increased 1.5% and 1.0% for the three and nine month periods,
respectively, and were flat for the twelve month period.
OPERATING EXPENSES
Fuel for production increased $9.3 million, $4.7 million
and $12.6 million during the three, nine and twelve month
periods, respectively, primarily because of increased
generation at the Company's nuclear and fossil-fueled
generating stations. The Company's nuclear generating
station, the Duane Arnold Energy Center (DAEC), was down for
a refueling outage in the third quarter of 1993, which was the
primary reason for increased nuclear generation in 1994. The
underlying reason for the generation increases in total was
the increased Kwh sales discussed earlier.
Purchased power decreased $15.1 million, $23.6 million
and $20.1 million during the three, nine and twelve month
periods, respectively. The decreases were primarily because of
lower energy purchases resulting from the increased
generation, as explained above, and lower capacity costs for
the nine and twelve month periods. The decreased capacity
charges were attributable to the expiration, in April 1993, of
the Muscatine purchase power agreement, net of higher capacity
costs associated with other contracts, in part related to the
acquisition of the UE territory.
Gas purchased for resale decreased $3.4 million,
$4.2 million and $10.3 million for the three, nine and twelve
month periods, respectively. The decrease for all periods is
largely related to a reduction in gas purchases caused by a
decrease in sales to ultimate consumers. Transported volumes
increased during all periods but the Company does not incur a
purchased gas cost for such volumes.
Other operating expenses increased $5.9 million,
$8.1 million and $12.7 million for the three, nine and twelve
month periods, respectively. The increases for all periods
are primarily attributable to increased costs at the DAEC,
higher information systems costs and increased clean-up costs
for former manufactured gas plant sites. Increased labor and
benefit costs also contributed to the increase for the nine
and twelve month periods.
Maintenance expenditures decreased $1.7 million for the
three month period primarily because of less maintenance
activities at the Company's fossil generating stations.
Depreciation and amortization increased during all
periods primarily because of increases in utility plant in
service. Depreciation and amortization expenses for both
years include a provision for decommissioning the DAEC ($5.5
million annually), which is collected through rates.
The staff of the Securities and Exchange Commission (SEC)
has questioned certain of the current accounting practices
regarding the recognition, measurement and classification of
decommissioning costs for nuclear generating stations in the
financial statements of electric utilities. In response to
these questions, the Financial Accounting Standards Board has
agreed to review the accounting for removal costs, including
decommissioning. If such current electric utility industry
accounting practices are changed, annual provisions for
decommissioning could increase, the estimated cost for
decommissioning could be recorded as a liability rather than
as accumulated depreciation, and the liability for the entire
expected cost to decommission the DAEC may be required to be
recorded currently. If such changes are required, the Company
believes that there would not be an adverse effect on its
financial position or results of operations based on current
rate making practices. (See Note 3(b) of the Notes to
Financial Statements for a discussion of the Company's
proposal for collection of decommissioning costs included in
its current rate filing).
Property taxes decreased $1.0 million for the three month
period primarily because of an adjustment recorded to property
tax accruals. Property taxes increased $1.4 million and
$2.3 million during the nine and twelve month periods,
respectively, primarily because of increased property taxes
associated with increases in assessed property values of
utility property.
INTEREST
Interest expense on long-term and other debt increased
$0.9 million, $1.6 million and $2.2 million during the three,
nine and twelve month periods, primarily because of increases
in the average amount of debt outstanding. The average
interest rate for all periods remained fairly constant.
LIQUIDITY AND CAPITAL RESOURCES
The Company's capital requirements are primarily
attributable to its construction programs, debt maturities and
sinking fund requirements. Cash flows from operating
activities for the twelve months ended September 30, 1994,
were approximately $172 million. These funds were primarily
used for construction expenditures and dividends on common
stock.
It is anticipated that the Company's future capital
requirements will be met by both cash flows from operations
and external financing. The level of cash flows from
operations is partially dependent upon economic conditions,
legislative activities, environmental matters and timely rate
relief. See Note 3 and Note 7 of the Notes to Financial
Statements for a discussion of rate cases and contingencies,
respectively. Access to the long-term and short-term capital
and credit markets is necessary for obtaining funds
externally. The Company's debt ratings currently are as
follows:
Moody's Standard & Poors
Long-term debt A1 A
Short-term debt P1 A1
The Company's liquidity and capital resources will be
affected by environmental and legislative issues, including
the ultimate disposition of remediation issues surrounding the
former manufactured gas plant (FMGP) issue, the Clean Air Act
as amended, the National Energy Policy Act of 1992, and
Federal Energy Regulatory Commission (FERC) Order 636, as
discussed in Note 7 of the Notes to Financial Statements.
Consistent with rate making principles, management believes
that the costs incurred for the above matters will not have a
material adverse effect on the financial position or results
of operations of the Company.
The Iowa Utilities Board (IUB) has adopted rules which
mandate the Company to spend 2% of electric and 1.5% of gas
gross retail operating revenues for energy efficiency
programs. Energy efficiency costs in excess of the amount in
the most recent electric and gas rate cases are being recorded
as regulatory assets. At September 30, 1994, the Company had
$30 million of such costs recorded as regulatory assets.
Under this mandate, the Company made its initial filing for
recovery of certain of these costs in August 1994, but does
not expect to begin recovering the costs until 1995. See Note
3(c) of the Notes to Financial Statements for a further
discussion of the filing.
CONSTRUCTION AND ACQUISITION PROGRAM
The Company's construction program anticipates
expenditures of $150 million for 1994, of which approximately
44% represents expenditures for electric transmission and
distribution facilities, 18% represents fossil-fueled
generation expenditures and 10% represents nuclear generation
expenditures. The Company had construction expenditures of
approximately $82 million for the nine months ended
September 30, 1994. Substantial commitments have been made in
connection with the expenditures anticipated before the end of
1994.
The Company's levels of construction expenditures are
projected to be $149 million in 1995, $144 million in 1996,
$149 million in 1997, and $160 million in 1998. It is
estimated that approximately 80% of construction expenditures
will be provided by cash from operating activities (after
payment of dividends) for the five year period 1994-1998.
Capital expenditure, investment and financing plans are
subject to continual review and change. The capital
expenditure and investment programs may be revised
significantly as a result of many considerations including
changes in economic conditions, variations in actual sales and
load growth compared to forecasts, requirements of
environmental, nuclear and other regulatory authorities,
acquisition opportunities, the availability of alternate
energy and purchased power sources, the ability to obtain
adequate and timely rate relief, escalations in construction
costs and conservation and energy efficiency programs.
LONG-TERM FINANCING
Other than periodic sinking fund requirements, which the
Company intends to meet by pledging additional property,
approximately $124 million of long-term debt has scheduled
maturities prior to December 31, 1998. The Company intends to
refinance the majority of the debt maturities with long-term
debt.
The Indentures pursuant to which the Company issues First
Mortgage Bonds constitute direct first mortgage liens upon
substantially all tangible public utility property and contain
covenants that restrict the amount of additional bonds that
may be issued. At September 30, 1994, such restrictions would
have allowed the Company to issue $290 million of additional
First Mortgage Bonds. The Company has received authority from
the FERC to issue $250 million of First Mortgage Bonds and is
currently authorized by the SEC to issue $50 million of
long-term debt under an existing registration statement.
The Company's Articles of Incorporation authorize and
limit the aggregate amount of additional shares of Cumulative
Preferred Stock and Cumulative Preference Stock which may be
issued. At September 30, 1994, the Company could have issued
700,000 shares of Cumulative Preference Stock, $100 par value,
and 100,000 additional shares of Cumulative Preferred Stock,
$50 par value.
The Company's capitalization ratios at September 30, were
as follows:
1994 1993
Long-term debt 47% 43%
Preferred stock 2 2
Common equity 51 55
100% 100%
The 1994 ratios include $50 million of long-term debt
that is due in less than one year because it is the
Company's intention to refinance the debt with long-term
issues. The 1993 common equity ratio was temporarily
high because the Company had not yet issued long-term
debt to replace other long-term debt that had been
recently redeemed.
SHORT-TERM FINANCING
For interim financing, the Company is authorized by the
FERC to issue, through 1994, up to $125 million of short-term
notes. In the fourth quarter of 1994, the Company filed with
the FERC to increase its authorized level of short-term
borrowings to $200 million through 1996. Approval from the
FERC is expected before December 31, 1994. This availability
of short-term financing provides flexibility in the issuance
of long-term securities. At September 30, 1994, the Company
had $2.6 million of notes payable to associated companies
outstanding.
The Company has an agreement, which expires in 1999, with
a financial institution to sell, with limited recourse, an
undivided fractional interest of $65 million in its pool of
utility accounts receivable. At September 30, 1994,
$53 million was sold under the agreement.
At September 30, 1994, the Company had bank lines of
credit aggregating $67.7 million, of which $7.7 million was
being used to support pollution control obligations.
Commitment fees are paid to maintain these lines and there are
no conditions that restrict the unused lines of credit. In
addition to the above, the Company has an uncommitted credit
facility with a financial institution whereby it can borrow up
to $40 million, of which none was outstanding at September 30,
1994. Rates are set at the time of borrowing and no fees are
paid to maintain this facility. The Company also has a letter
of credit in the amount of $3.4 million supporting its
variable rate pollution control obligations.
ENVIRONMENTAL MATTERS
At September 30, 1994, the Company's Balance Sheets
reflect $22.7 million of liabilities for investigation and
remediation of environmental issues. The recorded amount
represents the Company's estimate of the minimum aggregate
amount that will be incurred for investigation and remediation
of the environmental contamination, which amount is
substantially related to clean-up costs associated with
certain former manufactured gas plant (FMGP) sites. In
April 1994, the Company received updated investigation reports
on a number of sites, which, at some sites, indicated a
greater volume of contaminated soil surface and ground water
needing treatment, and a greater volume of substances
requiring higher cost incineration, than was anticipated in
prior estimates. Prior estimates were based on investigations
conducted at what were expected to be representative sites. It
is possible that future cost estimates will be greater than
the current estimates as further investigations are conducted
and as additional facts become known. The Company has not
initiated the investigation on two of its 27 sites for which
it has been identified as a Potentially Responsible Party
(PRP), but intends to do so, and is continuing work on sites
requiring remediation.
The Company has begun pursuing coverage for
investigation, mitigation, prevention, remediation and
monitoring costs from its insurance carriers and is
investigating the potential for third party cost sharing for
FMGP investigation and clean-up costs. The amount of shared
costs, if any, can not be reasonably determined and,
accordingly, no potential sharing has been recorded at
September 30, 1994.
Considering the recorded reserves for environmental
liabilities and the past rate treatment allowed by the IUB,
management believes that the clean-up costs incurred by the
Company for these FMGP sites will not have a material adverse
effect on its financial position or results of operations.
Refer to Note 7 of the Notes to Financial Statements for
information relating to potential environmental liabilities
associated with certain FMGP sites.
The Low-Level Radioactive Waste Policy Amendments Act of
1985 (Act), which mandated that each state must take
responsibility for the storage of low-level radioactive waste
produced within its borders, will have an impact on disposal
practices for low-level radioactive waste over the next
several years. The State of Iowa has joined the Midwest
Interstate Low-Level Radioactive Waste Compact Commission
(Midwest Compact Commission), which is planning a storage
facility to be located in Ohio to store waste generated by the
six states in the Midwest Compact Commission. At
September 30, 1994, the Company has prepaid costs of
approximately $1 million (included in "Current assets
- - Prepayments and other" in the Balance Sheets) to the Midwest
Compact Commission for the building of such a facility. Due
to the legal and political uncertainties, the Company cannot
estimate the future payments, if any, that will be made to the
Midwest Compact Commission.
The Company and the other members of the Midwest Compact
Commission shipped their low-level wastes to waste management
facilities in Barnwell, South Carolina, Hanford, Washington
and/or Beatty, Nevada, through June 30, 1994. Currently, the
Company is storing its low-level radioactive waste generated
at the DAEC on-site until new disposal arrangements are
finalized among the Midwest Compact Commission members.
On-site storage capability currently exists for low-level
radioactive waste expected to be generated under normal
operating conditions through the DAEC's license life.
In February 1993, the Nuclear Regulatory Commission (NRC)
proposed a rule that would not permit on-site storage of
low-level radioactive waste after January 1, 1996, unless the
generator of such waste can document that it has exhausted
other reasonable waste management options. The Company is
currently investigating its options for the disposal of its
low-level radioactive waste.
<PAGE>
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings.
Reference is made to Notes 3 and 7 of the Notes to
Financial Statements for a discussion of rate matters and
environmental matters, respectively.
Item 2. Changes in the Rights of the Company's Security
Holders.
None.
Item 3. Default Upon Senior Securities.
None.
Item 4. Results of Votes of Security Holders.
None.
Item 5. Other Information.
(a) The Company has calculated the ratio of earnings to fixed
charges pursuant to Item 503 of Regulation S-K of the
Securities and Exchange Commission as follows:
For the twelve months ended:
September 30, 1994 3.28
December 31, 1993 3.41
December 31, 1992 2.49
December 31, 1991 2.64
December 31, 1990 2.65
December 31, 1989 2.82
(b) Mr. Stephen W. Southwick was named Vice President,
General Counsel & Secretary effective November 2, 1994.
Mr. Southwick had previously been Vice President &
General Counsel.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits -
3(a) Bylaws of Registrant, as amended
May 17, 1994 (Filed as Exhibit 3(a) to
Company's Form 10-Q for the quarter ended June
30, 1994).
10(a) Receivables Purchase and Sale
Agreement dated as of June 30, 1989, as Amended
and Restated as of April 15, 1994, among IES
Utilities Inc. (as Seller) and CIESCO L.P. (as
the Investor) and Citicorp North America, Inc.
(as Agent). (Filed as Exhibit 10(a) to the
Company's Form 10-Q for the quarter ended
March 31, 1994).
10(b) Guaranty (IES Utilities Trust
No. 1994-A) from IES Utilities Inc., dated as
of June 29, 1994. (Filed as Exhibit 10(b) to
the Company's Form 10-Q for the quarter ended
June 30, 1994).
*12 Ratio of Earnings to Fixed Charges.
*27 Financial Data Schedule.
* Exhibits designated by an asterisk are filed herewith.
(b) Reports on Form 8-K -
None.
<PAGE>
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.
IES UTILITIES INC.
(Registrant)
Date November 10, 1994 By /s/ Dr. Robert J. Latham
(Signature)
Dr. Robert J. Latham
Senior Vice President, Finance
and Corporate Affairs, & Treasurer
By /s/ Richard A. Gabbianelli
(Signature)
Richard A. Gabbianelli
Controller & Chief Accounting Officer
<TABLE>
EXHIBIT 12
IES UTILITIES INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<CAPTION>
Twelve Months
Year Ended December 31, Ended
1989 1990 1991 1992 1993 September 30, 1994
(in thousands, except ratio of earnings to fixed charges)
<S> <C> <C> <C> <C> <C> <C>
Net income $ 53,454 $45,969 $47,563 $45,291 $67,970 $ 66,773
Federal and state
income taxes 22,574 22,364 23,494 20,760 37,963 37,877
Net income before
income taxes 76,028 68,333 71,057 66,051 105,933 104,650
Interest on long-term
debt 29,044 28,853 31,171 35,689 34,926 37,955
Other interest 3,130 4,704 5,595 3,939 5,243 3,774
Estimated interest
component of rents 9,494 7,936 6,594 4,567 3,729 4,080
Fixed charges as defined 41,668 41,493 43,360 44,195 43,898 45,809
Earnings as defined $ 117,696$109,826$114,417$110,246$149,831 $ 150,459
Ratio of earnings to
fixed charges
(unaudited) 2.82 2.65 2.64 2.49 3.41 3.28
For the purposes of computation of these ratios (a) earnings have been calculated by adding fixed charges and Federal and state inco
taxes to net income; (b) fixed charges consist of interest (including amortization of debt expense, premium and discount) on long-te
other debt and the estimated interest component of rents.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
The schedule contains summary financial information extracted from the
Balance Sheet at September 30,1994 and the Statement of Income and the
Statement of Cash Flows for the nine months ended September 30, 1994
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<MULTIPLIER> 1,000
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,232,495
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 106,801
<TOTAL-DEFERRED-CHARGES> 18,413
<OTHER-ASSETS> 213,494
<TOTAL-ASSETS> 1,571,203
<COMMON> 33,427
<CAPITAL-SURPLUS-PAID-IN> 279,042
<RETAINED-EARNINGS> 201,107
<TOTAL-COMMON-STOCKHOLDERS-EQ> 513,576
0
18,320
<LONG-TERM-DEBT-NET> 430,277
<SHORT-TERM-NOTES> 2,608
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 50,224
0
<CAPITAL-LEASE-OBLIGATIONS> 36,108
<LEASES-CURRENT> 14,241
<OTHER-ITEMS-CAPITAL-AND-LIAB> 505,849
<TOT-CAPITALIZATION-AND-LIAB> 1,571,203
<GROSS-OPERATING-REVENUE> 519,509
<INCOME-TAX-EXPENSE> 35,262
<OTHER-OPERATING-EXPENSES> 408,705
<TOTAL-OPERATING-EXPENSES> 443,967
<OPERATING-INCOME-LOSS> 75,542
<OTHER-INCOME-NET> 4,242
<INCOME-BEFORE-INTEREST-EXPEN> 79,784
<TOTAL-INTEREST-EXPENSE> 29,852
<NET-INCOME> 49,932
686
<EARNINGS-AVAILABLE-FOR-COMM> 49,246
<COMMON-STOCK-DIVIDENDS> 37,000
<TOTAL-INTEREST-ON-BONDS> 37,080
<CASH-FLOW-OPERATIONS> 147,772
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
