THE CONSOLIDATED 10-Q FOR AMERICAN ELECTRIC POWER CO., INC. AND
SUBSIDIARIES IS REQUESTED TO BE INCLUDED AS PART OF THIS FILING.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[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
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934<PAGE>
For The Transition Period from to
Commission Registrant; State of Incorporation; I. R. S. Employer
File Number Address; and Telephone Number Identification
No.
1-3525 AMERICAN ELECTRIC POWER COMPANY, INC. 13-4922640
(A New York Corporation)
1 Riverside Plaza, Columbus, Ohio 43215
Telephone (614) 223-1000
0-18135 AEP GENERATING COMPANY
(An Ohio Corporation) 31-1033833
1 Riverside Plaza, Columbus, Ohio 43215
Telephone (614) 223-1000
1-3457 APPALACHIAN POWER COMPANY
(A Virginia Corporation) 54-0124790
40 Franklin Road, Roanoke, Virginia 24011
Telephone (703) 985-2300
1-2680 COLUMBUS SOUTHERN POWER COMPANY
(An Ohio Corporation) 31-4154203
215 North Front Street, Columbus, Ohio 43215
Telephone (614) 464-7700
1-3570 INDIANA MICHIGAN POWER COMPANY
(An Indiana Corporation) 35-0410455
One Summit Square
P.O. Box 60, Fort Wayne, Indiana 46801
Telephone (219) 425-2111
1-6858 KENTUCKY POWER COMPANY
(A Kentucky Corporation) 61-0247775
1701 Central Avenue, Ashland, Kentucky 41101
Telephone (606) 327-1111
1-6543 OHIO POWER COMPANY
(An Ohio Corporation) 31-4271000
301 Cleveland Avenue S.W., Canton, Ohio 44702
Telephone (216) 456-8173
AEP Generating Company, Columbus Southern Power Company and
Kentucky Power Company meet the conditions set forth in General
Instruction H(1)(a) and (b) of Form 10-Q and are therefore
filing this Form 10-Q with the reduced disclosure format
specified in General Instruction H(2) to Form 10-Q.
Indicate by check mark whether the registrants (1) have filed all
reports required to be filed by Sections 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrants were required to
file and (2) have been subject to such filing requirements for
the past 90 days.
Yes X No
The number of shares outstanding of American Electric Power
Company, Inc. Common Stock, par value $6.50, at October 31, 1994
was 184,885,000.
<PAGE>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
FORM 10-Q
For The Quarter Ended September 30, 1994
INDEX
Part I. FINANCIAL INFORMATION
American Electric Power Company, Inc. and Subsidiary Companies:
Consolidated Statements of Income . . . . . . . . . . .
Consolidated Balance Sheets . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows . . . . . . . . .
Consolidated Statements of Retained Earnings. . . . . .
Notes to Consolidated Financial Statements. . . . . . .
Management's Discussion and Analysis of Results of
Operations and Financial Condition. . . . . . . . . .
AEP Generating Company:
Statements of Income and Statements of Retained
Earnings . . . . . . . . . . . . . . . . . . . . . .
Balance Sheets . . . . . . . . . . . . . . . . . . . .
Statements of Cash Flows . . . . . . . . . . . . . . .
Notes to Financial Statements. . . . . . . . . . . . .
Management's Narrative Analysis of Results of
Operations . . . . . . . . . . . . . . . . . . . .
Appalachian Power Company and Subsidiaries:
Consolidated Statements of Income and
Consolidated Statements of Retained Earnings . . . .
Consolidated Balance Sheets. . . . . . . . . . . . . .
Consolidated Statements of Cash Flows. . . . . . . . .
Notes to Consolidated Financial Statements . . . . . .
Management's Discussion and Analysis of Results of
Operations and Financial Condition.. . . . . . . . .
Columbus Southern Power Company and Subsidiaries:
Consolidated Statements of Income. . . . . . . . . . .
Consolidated Balance Sheets. . . . . . . . . . . . . .
Consolidated Statements of Cash Flows. . . . . . . . .
Consolidated Statements of Retained Earnings . . . . .
Notes to Consolidated Financial Statements . . . . . .
Management's Narrative Analysis of Results of
Operations . . . . . . . . . . . . . . . . . . . . .
<PAGE>
Indiana Michigan Power Company and Subsidiaries:
Consolidated Statements of Income and
Consolidated Statements of Retained Earnings . . . .
Consolidated Balance Sheets. . . . . . . . . . . . . .
Consolidated Statements of Cash Flows. . . . . . . . .
Notes to Consolidated Financial Statements . . . . . .
Management's Discussion and Analysis of Results of
Operations and Financial Condition . . . . . . . . .
Kentucky Power Company:
Statements of Income and Statements of Retained
Earnings . . . . . . . . . . . . . . . . . . . . . .
Balance Sheets . . . . . . . . . . . . . . . . . . . .
Statements of Cash Flows . . . . . . . . . . . . . . .
Notes to Financial Statements. . . . . . . . . . . . .
Management's Narrative Analysis of Results of
Operations . . . . . . . . . . . . . . . . . . . . .
Ohio Power Company and Subsidiaries:
Consolidated Statements of Income and
Consolidated Statements of Retained Earnings . . . .
Consolidated Balance Sheets. . . . . . . . . . . . . .
Consolidated Statements of Cash Flows. . . . . . . . .
Notes to Consolidated Financial Statements . . . . . .
Management's Discussion and Analysis of Results of
Operations and Financial Condition . . . . . . . . .
<PAGE>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
FORM 10-Q
For The Quarter Ended September 30, 1994
INDEX
Part II. OTHER INFORMATION
Item 1 . . . . . . . . . . . . . . . . . . . .
Item 6 . . . . . . . . . . . . . . . . . . . .
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . .
This combined Form 10-Q is separately filed by American
Electric Power Company, Inc., AEP Generating Company, Appalachian
Power Company, Columbus Southern Power Company, Indiana Michigan
Power Company, Kentucky Power Company and Ohio Power Company.
Information contain herein relating to any individual registrant
is filed by such registrant on its own behalf. Each registrant
makes no representation as to information relating to the other
registrants.
<PAGE>
<PAGE>
<TABLE>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per-share amounts)
(UNAUDITED)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
OPERATING REVENUES . . . . . . . . . . . $1,385,278 $1,406,311 $4,222,026 $3,938,159
OPERATING EXPENSES:
Fuel and Purchased Power . . . . . . . 427,125 458,224 1,359,517 1,236,927
Other Operation. . . . . . . . . . . . 241,660 251,378 732,391 719,686
Maintenance. . . . . . . . . . . . . . 133,690 137,895 409,217 401,391
Depreciation and Amortization. . . . . 145,516 133,990 426,958 396,723
Taxes Other Than Federal Income Taxes. 122,588 116,581 372,771 351,885
Federal Income Taxes . . . . . . . . . 67,753 66,087 197,350 153,230
TOTAL OPERATING EXPENSES . . . 1,138,332 1,164,155 3,498,204 3,259,842
OPERATING INCOME . . . . . . . . . . . . 246,946 242,156 723,822 678,317
NONOPERATING INCOME:
Deferred Zimmer Plant Carrying
Charges (net of tax) . . . . . . . . 1,063 4,584 4,621 20,527
Other. . . . . . . . . . . . . . . . . 2,926 5,351 325 16,473
TOTAL NONOPERATING INCOME . . . 3,989 9,935 4,946 37,000
LOSS FROM ZIMMER PLANT DISALLOWANCE:
Disallowed Cost. . . . . . . . . . . . - 159,067 - 159,067
Related Income Taxes . . . . . . . . . - (14,534) - (14,534)
NET ZIMMER LOSS. . . . . . . . - 144,533 - 144,533
INCOME BEFORE INTEREST CHARGES AND
PREFERRED DIVIDENDS. . . . . . . . . . 250,935 107,558 728,768 570,784
INTEREST CHARGES . . . . . . . . . . . . 96,914 102,983 291,521 317,072
PREFERRED STOCK DIVIDEND REQUIREMENTS
OF SUBSIDIARIES. . . . . . . . . . . . 14,195 14,714 40,673 44,574
NET INCOME (LOSS). . . . . . . . . . . . $ 139,826 $ (10,139) $ 396,574 $ 209,138
AVERAGE NUMBER OF SHARES OUTSTANDING . . 184,621 184,535 184,564 184,535
EARNINGS (LOSS) PER SHARE. . . . . . . . $0.76 $(0.06) $2.15 $1.13
CASH DIVIDENDS PAID PER SHARE. . . . . . $0.60 $0.60 $1.80 $1.80
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
September 30, December 31,
1994 1993
(in thousands)
ASSETS
<S> <C> <C>
ELECTRIC UTILITY PLANT:
Production . . . . . . . . . . . . . . . . . . . . . $ 9,035,432 $ 9,079,130
Transmission . . . . . . . . . . . . . . . . . . . . 3,225,168 3,169,347
Distribution . . . . . . . . . . . . . . . . . . . . 3,875,367 3,743,047
General (including mining assets and nuclear fuel) . 1,507,261 1,406,159
Construction Work in Progress. . . . . . . . . . . . 355,058 314,489
Total Electric Utility Plant . . . . . . . . 17,998,286 17,712,172
Accumulated Depreciation and Amortization. . . . . . 6,757,134 6,612,131
NET ELECTRIC UTILITY PLANT . . . . . . . . . 11,241,152 11,100,041
OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . . 748,709 724,373
CURRENT ASSETS:
Cash and Cash Equivalents. . . . . . . . . . . . . . 46,438 42,561
Accounts Receivable (net). . . . . . . . . . . . . . 424,497 463,765
Fuel . . . . . . . . . . . . . . . . . . . . . . . . 287,319 314,441
Materials and Supplies . . . . . . . . . . . . . . . 209,960 207,373
Accrued Utility Revenues . . . . . . . . . . . . . . 134,314 169,905
Prepayments and Other. . . . . . . . . . . . . . . . 96,879 98,958
TOTAL CURRENT ASSETS . . . . . . . . . . . . 1,199,407 1,297,003
REGULATORY ASSETS:
Amounts Due From Customers For
Future Federal Income Taxes. . . . . . . . . . . . 1,360,637 1,363,802
Other. . . . . . . . . . . . . . . . . . . . . . . . 852,200 856,182
TOTAL REGULATORY ASSETS. . . . . . . . . . . 2,212,837 2,219,984
TOTAL. . . . . . . . . . . . . . . . . . . $15,402,105 $15,341,401
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
September 30, December 31,
1994 1993
(in thousands)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
CAPITALIZATION:
Common Stock-Par Value $6.50:
1994 1993
Shares Authorized . . . .300,000,000 300,000,000
Shares Issued . . . . . .193,884,992 193,534,992
(8,999,992 shares were held in treasury) . . . . . $ 1,260,252 $ 1,257,977
Paid-in Capital. . . . . . . . . . . . . . . . . . . 1,632,239 1,625,068
Retained Earnings. . . . . . . . . . . . . . . . . . 1,333,193 1,269,283
Total Common Shareowners' Equity . . . . . . 4,225,684 4,152,328
Cumulative Preferred Stocks of Subsidiaries:
Not Subject to Mandatory Redemption. . . . . . . . 233,240 268,240
Subject to Mandatory Redemption. . . . . . . . . . 590,450 500,450
Long-term Debt . . . . . . . . . . . . . . . . . . . 4,722,132 4,964,060
TOTAL CAPITALIZATION . . . . . . . . . . . . 9,771,506 9,885,078
OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . . 633,940 509,317
CURRENT LIABILITIES:
Long-term Debt Due Within One Year . . . . . . . . . 210,587 31,141
Short-term Debt. . . . . . . . . . . . . . . . . . . 214,179 278,976
Accounts Payable . . . . . . . . . . . . . . . . . . 184,716 259,145
Taxes Accrued. . . . . . . . . . . . . . . . . . . . 270,674 409,198
Interest Accrued . . . . . . . . . . . . . . . . . . 124,771 91,161
Obligations Under Capital Leases . . . . . . . . . . 87,772 62,215
Other. . . . . . . . . . . . . . . . . . . . . . . . 421,834 338,988
TOTAL CURRENT LIABILITIES. . . . . . . . . . 1,514,533 1,470,824
DEFERRED FEDERAL INCOME TAXES. . . . . . . . . . . . . 2,451,585 2,468,015
DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . . 465,032 487,501
DEFERRED GAIN ON SALE AND LEASEBACK -
ROCKPORT PLANT UNIT 2. . . . . . . . . . . . . . . . 418,943 430,091
DEFERRED CREDITS . . . . . . . . . . . . . . . . . . . 146,566 90,575
CONTINGENCIES (Note 5)
TOTAL. . . . . . . . . . . . . . . . . . . $15,402,105 $15,341,401
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Nine Months Ended
September 30,
1994 1993
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . $ 396,574 $ 209,138
Adjustments for Noncash Items:
Depreciation and Amortization. . . . . . . . . . . . . . 419,219 419,271
Deferred Federal Income Taxes. . . . . . . . . . . . . . (13,265) (60,526)
Deferred Investment Tax Credits. . . . . . . . . . . . . (22,332) (20,070)
Loss from Zimmer Plant Disallowance. . . . . . . . . . . - 159,067
Amortization of Deferred Property Taxes. . . . . . . . . 98,377 99,311
Changes in Certain Current Assets and Liabilities:
Special Deposits - Restricted Funds. . . . . . . . . . . - 16,316
Accounts Receivable (net). . . . . . . . . . . . . . . . 39,268 (9,030)
Fuel, Materials and Supplies . . . . . . . . . . . . . . 24,535 119,706
Accrued Utility Revenues . . . . . . . . . . . . . . . . 35,591 78,420
Accounts Payable . . . . . . . . . . . . . . . . . . . . (74,429) (37,912)
Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . (138,524) (53,602)
Other (net). . . . . . . . . . . . . . . . . . . . . . . . 55,240 72,705
Net Cash Flows From Operating Activities . . . . . . 820,254 992,794
INVESTING ACTIVITIES:
Construction Expenditures. . . . . . . . . . . . . . . . . (443,172) (408,320)
Proceeds from Sale of Property and Other . . . . . . . . . 38,853 2,002
Net Cash Flows Used For Investing Activities . . . . (404,319) (406,318)
FINANCING ACTIVITIES:
Issuance of Common Stock . . . . . . . . . . . . . . . . . 10,732 -
Issuance of Cumulative Preferred Stock . . . . . . . . . . 88,787 59,095
Issuance of Long-term Debt . . . . . . . . . . . . . . . . 361,639 871,372
Retirement of Cumulative Preferred Stock . . . . . . . . . (35,800) (63,952)
Retirement of Long-term Debt . . . . . . . . . . . . . . . (440,451) (1,096,037)
Change in Short-term Debt (net). . . . . . . . . . . . . . (64,797) (50,266)
Dividends Paid on Common Stock . . . . . . . . . . . . . . (332,168) (332,168)
Net Cash Flows Used For Financing Activities . . . . (412,058) (611,956)
Net Increase (Decrease) in Cash and Cash Equivalents . . . . 3,877 (25,480)
Cash and Cash Equivalents at Beginning of Period . . . . . . 42,561 128,896
Cash and Cash Equivalents at End of Period . . . . . . . . . $ 46,438 $ 103,416
Supplemental Disclosure:
Cash paid for interest net of capitalized amounts was $249,101,000 and $296,077,000
and for income taxes was $242,975,000 and $165,176,000 in 1994 and 1993, respectively.
Noncash acquisitions under capital leases were $155,857,000 and $38,204,000 in
1994 and 1993, respectively.
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
(in thousands)
<S> <C> <C> <C> <C>
BALANCE AT BEGINNING OF PERIOD . . . . . $1,304,036 $1,356,530 $1,269,283 $1,358,800
NET INCOME (LOSS). . . . . . . . . . . . 139,826 (10,139) 396,574 209,138
DEDUCTIONS:
Cash Dividends Declared. . . . . . . . 110,723 110,723 332,168 332,168
Other. . . . . . . . . . . . . . . . . (54) 55 496 157
BALANCE AT END OF PERIOD . . . . . . . . $1,333,193 $1,235,613 $1,333,193 $1,235,613
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1994
(UNAUDITED)
1. GENERAL
The accompanying unaudited consolidated financial state-
ments should be read in conjunction with the 1993 Annual
Report as incorporated in and filed with the Form 10-K.
Certain prior-period amounts have been reclassified to
conform to current-period presentation.
2. RATE MATTERS
Appalachian Power Company (APCo) filed a request with
the Virginia State Corporation Commission (VA SCC), for a
net decrease of $12.3 million in rates charged to its
Virginia retail customers to be effective November 15, 1994.
The net decrease consisted of a $28 million decrease in the
fuel factor component of its rates offset, in part, by an
increase of $15.7 million in base rates. The increase in
base rates would, in part, recover the costs of extensive
repairs to facilities damaged by last winter's severe
storms. APCo has deferred $23.7 million of Virginia retail
incremental storm damage expenses related to two major ice
storms in February and March 1994. APCo proposes in this
rate proceeding to amortize the $23.7 million deferred storm
damage expenses over a three-year period, consistent with
the amortization of $4.1 million of major storm damage
expenses approved by the VA SCC in the previous 1992 rate
case. Failure to recover the storm damage deferral in cost
of service would require an immediate write-off of $15.4
million after tax.
On July 6, 1994 Ohio Power Company (OPCo) filed an
application to increase base retail rates with the Public
Utilities Commission of Ohio (PUCO) seeking up to $152.5
million or a 13.8% increase in annual revenues. More than
half of the increase reflects recovery of costs associated
with the Gavin Plant's flue gas desulfurization system and
other costs associated with meeting environmental
restrictions imposed by the Clean Air Act Amendments of 1990
(CAAA). The remainder of the request seeks to recover
increased costs of service since the last base rate increase
in 1986; an increase in depreciation rates which includes
recovery on a remaining life basis of the cost of plant and
equipment and the cost of removal of plant and equipment;
and deferred costs associated with pressurized fluidized bed
combustion (PFBC) research and development as well as energy
conservation demand-side management (DSM) programs. Failure
to recover these deferred PFBC and DSM costs in cost of
service would require an immediate write-off of $15.6
million after tax.
3. FINANCING AND RELATED ACTIVITIES
In August 1994 subsidiaries issued a $21 million series
of 7.70% First Mortgage Bonds due in 2004 and entered into a
$5 million term loan agreement with a 7.69% interest rate
due in 1999.
<PAGE>
<PAGE>
4. VALUATION OF SECURITIES
On January 1, 1994, the Company adopted Statement of
Financial Accounting Standards No. 115, Accounting for
Certain Investments in Debt and Equity Securities, (SFAS
115) which requires fair value accounting for investments in
equity securities with readily determinable market values
and investments in debt securities except those that the
reporting enterprise has the positive intent and ability to
hold to maturity. Debt securities not classified as held-
to-maturity, shall be classified as trading or available-
for-sale. Investments held in trust for decommissioning
nuclear facilities and for disposal of spent nuclear fuel
were classified as available-for-sale under SFAS 115. SFAS
115 requires that unrealized gains and losses on investments
classified as available-for-sale should be reported as a
separate component of shareholder's equity. However, due to
the rate-making process, SFAS 115 adjustments for unrealized
gains and losses to the carrying value of investments held
in the trusts will result in corresponding adjustments to
the nuclear decommissioning liability and the regulatory
asset for future recovery of spent nuclear fuel disposal
costs.
The cumulative effect of adopting SFAS 115 on January 1,
1994 resulted in an increase in the decommissioning and
spent nuclear fuel trust fund assets of $20.4 million
comprised of an unrealized holding gain of $21.4 million and
an unrealized holding loss of $1 million, with no effect on
net income and/or shareholder's equity due to a corre-
sponding net increase to the decommissioning liability and a
reduction to regulatory assets. As required by SFAS 115,
prior year amounts were not restated.
The trust investments reported in other property and
investments had a fair value of $321 million at January 1,
1994 and consist primarily of long-term tax-exempt municipal
bonds. At January 1, 1994, the maturities of investments in
debt securities range from 1994 to 2024.
5. CONTINGENCIES
Kammer Plant
On August 4, 1994, the United States Environmental
Protection Agency (Federal EPA) issued a Notice of Violation
(NOV) to OPCo alleging that the Kammer Plant has been
operating in violation of applicable federally enforceable
air pollution control requirements since January 1, 1989.
The Clean Air Act provides that Federal EPA may, after the
expiration of 30 days following the issuance of the NOV,
commence a civil action for injunctive relief and/or civil
penalties of up to $25,000 per day for each day of
violation. On October 24, 1994, following several months of
negotiations, OPCo executed a Consent Decree which resolves
that portion of the August 4, 1994 NOV relating to
compliance. The Decree has been transmitted to the U.S.
Department of Justice and Federal EPA for their execution
and lodging with the U.S. District Court for the Northern
District of West Virginia. That portion of the NOV relating
to penalties will be addressed independently. At this time
management is unable to estimate the amount of any civil
penalties that may be imposed by the Federal EPA. It is not
anticipated that the ultimate resolution of this matter will
have a material adverse impact on financial condition.
<PAGE>
Other
The Company continues to be involved in certain other
matters discussed in the 1993 Annual Report.
<PAGE>
<PAGE>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
THIRD QUARTER 1994 vs. THIRD QUARTER 1993
AND
YEAR-TO-DATE 1994 vs. YEAR-TO-DATE 1993
RESULTS OF OPERATIONS
Net income increased by $150 million for the third quarter
and by $187 million for the year-to-date period due mainly to a
1993 disallowance of a portion of the investment in the Zimmer
Plant. In November 1993 the Ohio Supreme Court rejected the
Company's argument that it should be allowed to include in rate
base $165 million of certain costs incurred when the Zimmer Plant
was converted from a nuclear project to a coal-fired facility.
As a result of the ruling, the adverse impact of the disallowance
on results of operations was recorded in the third quarter of
1993 which reduced net income by $144.5 million after tax.
Third quarter net income, exclusive of the disallowance,
increased by $5 million or 4% as a result of reduced interest
charges due to a refinancing program and the recordation in 1993
of reorganization costs and a retroactive increase in the
statutory federal income tax rate. Year-to-date net income,
excluding the disallowance, increased $43 million or 12% due to
the favorable impact of increased energy sales reflecting severe
winter weather and unseasonably hot weather in June 1994 and
continued improvement in industrial sales; rate increases in
several jurisdictions; and decreased interest expense due to the
refinancing of debt at lower interest rates.
Income statement lines which changed significantly were:
Increase (Decrease)
Third Quarter Year-To-Date
(in millions) % (in millions) %
Operating Revenues . . . . . $(21.0) (1) $283.9 7
Fuel and Purchased
Power Expense. . . . . . . (31.1) (7) 122.6 10
Other Operation Expense. . . (9.7) (4) 12.7 2
Depreciation and
Amortization Expense . . . 11.5 9 30.2 8
Taxes Other Than
Federal Income Taxes . . . 6.0 5 20.9 6
Federal Income Taxes . . . . 1.7 3 44.1 29
Deferred Zimmer Plant
Carrying Charges
(net of tax) . . . . . . . (3.5) (77) (15.9) (77)
Other Nonoperating Income. . (2.4) (45) (16.1) (98)
Interest Charges . . . . . . (6.1) (6) (25.6) (8)
<PAGE>
<PAGE>
The slight decline in third quarter operating revenues was
mainly due to decreased energy demand as a result of mild summer
weather. Wholesale energy sales decreased 24% reflecting the
weather-related decline in energy sales to other utilities.
Retail revenues were essentially unchanged due to the retail rate
increases in several jurisdictions and a 4% improvement in
industrial energy sales which offset a 7% decrease in energy
demands of weather sensitive residential customers.
Operating revenues for the year-to-date period rose as the
severe winter weather and unseasonably hot June weather increased
the energy requirements of retail customers and other utilities
by 3% and 1%, respectively. Retail revenues also rose due to the
effect of retail rate increases and the continued growth in
industrial customers and their energy usage. Higher than normal
energy demands caused an increase in the average revenue per
kilowatthour sold to other utilities as a result of the unseason-
able winter weather and forced outages at their generating units.
Fuel and purchased power expense decreased in the quarter
reflecting the reduced energy requirements which caused a decline
in generation and energy purchases from other utilities for
immediate pass-through sales to other utilities. Year-to-date
fuel and purchased power expense increased primarily due to the
weather-related increase in energy demand which increased energy
purchases from other utilities for pass-through sales and
increased generation. Also adding to the year-to-date increase
in fuel costs was increased utilization of coal-fired generation
due to a reduction of low-cost nuclear generation resulting from
scheduled refueling and maintenance outages at both nuclear
units.
Other operation expense decreased in the third quarter
mainly due to severance costs recognized in 1993 in connection
with the reorganization of the Company's Ohio operations.
The increase in depreciation and amortization expense was
primarily due to the court ordered discontinuance of Zimmer
phase-in plan deferrals effective in February 1994 and the
subsequent amortization of such costs, commensurate with rate
recovery.
Taxes other than federal income tax expense increased in
both periods primarily due to increased West Virginia business
and occupation tax on generation reflecting an increase in
generation at West Virginia power plants. State income taxes
also increased in the third quarter due to higher taxable income.
<PAGE>
<PAGE>
The rise in federal income tax expense attributable to
operations for the third quarter was primarily due to an increase
in pre-tax operating income and changes in certain book/tax
differences accounted for on a flow-through basis offset in part
by a retroactive 1% federal income tax rate increase enacted in
August 1993 and recorded in the third quarter of 1993. The
increase in pre-tax operating income caused the increase in
federal income tax expense for the year-to-date period.
Deferred Zimmer Plant carrying charges declined from the
prior year since the carrying charges in 1994 were accrued on the
unamortized phase-in plan deferral balance while the 1993
carrying charges were accrued on the larger Zimmer investment not
yet phased into rates.
The decrease in other nonoperating income in the year-to-
date period was mainly due to a subsidiary, AEP Investments,
Inc., recording a provision for loss of $8.2 million after tax in
June 1994 on a demand side management investment. Also
contributing to the decrease was the effect of interest income
recorded in March 1993 on tax refunds received from the Internal
Revenue Service in connection with the settlement of audits of
prior years' tax returns.
Refinancing programs of several major subsidiaries during
1993 and the early part of 1994 reduced the average interest rate
on outstanding long-term debt as well as reduced levels of long-
term debt resulted in the decline in interest expense in both
periods.
FINANCIAL CONDITION
Total plant and property additions including capital leases
for the first nine months were $602 million.
During the first nine months subsidiaries issued $361
million principal amount of long-term debt at interest rates
ranging from 3.725% (variable) to 7.70% and three series of
cumulative preferred stock: $35 million at 6.30%, $30 million at
6.85% and $25 million at 7%. Subsidiaries retired $432 million
principal amount of long-term debt with interest rates ranging
from 5-1/8% to 9-7/8%; redeemed $35 million of $100 par value
7.76% cumulative preferred stock; and decreased short-term debt
by $65 million since the beginning of the year.
<PAGE>
<PAGE>
RATE ACTIVITY
Appalachian Power Company (APCo) filed a request with the
Virginia State Corporation Commission for a net decrease of $12.3
million in rates charged to its Virginia retail customers to be
effective November 15, 1994. The net decrease consists of a $28
million reduction in the fuel factor component of rates offset,
in part, by an increase of $15.7 million in base rates. The
requested increase in base rates includes, among other things,
recovery of the costs of extensive repairs to facilities damaged
by last winter's severe storms and increased Power Pool capacity
charges. APCo proposes in this rate proceeding to amortize the
$23.7 million deferred storm damage expenses over a three-year
period, in accordance with a prior precedent. Failure to recover
such deferred expenses in cost of service would result in the
immediate write-off of $15.4 million after tax.
On July 6, 1994, Ohio Power Company (OPCo) filed with the
PUCO for an annual revenue increase of up to $152.5 million.
More than half of the requested retail base rate increase is to
recover costs associated with the Gavin Plant's flue gas
desulfurization system (scrubbers) and other costs resulting from
complying with the Clean Air Act Amendments of 1990. The
remainder of the increase is to recover the additional cost of
providing service to customers since the last base rate increase
in 1986; increased depreciation rates for investment in plant and
equipment based on a remaining life method and recovery of
removal costs; and deferred costs associated with pressurized
fluidized bed combustion (PFBC) research and development as well
as energy conservation demand-side management (DSM) programs.
Failure to recover these deferred PFBC and DSM costs in cost of
service would result in the immediate write-off of $15.6 million
after tax.
NOTICE OF VIOLATION - KAMMER PLANT
On August 4, 1994, the United States Environmental
Protection Agency (Federal EPA) issued a Notice of Violation
(NOV) to OPCo alleging that the Kammer Plant has been operating
in violation of applicable federally enforceable air pollution
control requirements since January 1, 1989. By law the Federal
EPA may seek penalties of up to $25,000 per day for each day of
violation. On October 24, 1994, following several months of
negotiations, OPCo executed a Consent Decree which resolves that
<PAGE>
<PAGE>
portion of the August 4, 1994 NOV relating to compliance. The
Decree has been transmitted to the U.S. Government for its
execution and filing with the U.S. District Court for the
Northern District of West Virginia. That portion of the NOV
relating to penalties will be addressed independently. At this
time management is unable to estimate the amount of any civil
penalties that may be imposed by the Federal EPA. It is not
anticipated that the ultimate resolution of this matter will have
a material adverse impact on financial condition.
<PAGE>
<PAGE>
<TABLE>
AEP GENERATING COMPANY
STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
(in thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES . . . . . . . . . . . $60,828 $63,733 $180,259 $176,635
OPERATING EXPENSES:
Fuel . . . . . . . . . . . . . . . . . 26,281 28,596 78,020 71,326
Rent - Rockport Plant Unit 2 . . . . . 17,401 16,574 50,553 49,762
Other Operation. . . . . . . . . . . . 2,618 3,008 7,901 8,506
Maintenance. . . . . . . . . . . . . . 2,788 3,336 8,363 10,009
Depreciation . . . . . . . . . . . . . 5,396 5,393 16,212 16,231
Taxes Other Than Federal Income Taxes. 1,234 1,192 3,726 4,163
Federal Income Taxes . . . . . . . . . 1,200 1,300 3,675 3,749
TOTAL OPERATING EXPENSES . . . 56,918 59,399 168,450 163,746
OPERATING INCOME . . . . . . . . . . . . 3,910 4,334 11,809 12,889
NONOPERATING INCOME. . . . . . . . . . . 820 1,002 2,505 3,522
INCOME BEFORE INTEREST CHARGES . . . . . 4,730 5,336 14,314 16,411
INTEREST CHARGES . . . . . . . . . . . . 2,439 2,801 7,256 8,225
NET INCOME . . . . . . . . . . . . . . . $ 2,291 $ 2,535 $ 7,058 $ 8,186
STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
(in thousands)
BALANCE AT BEGINNING OF PERIOD . . . . . $1,185 $14,430 $1,339 $23,173
NET INCOME . . . . . . . . . . . . . . . 2,291 2,535 7,058 8,186
CASH DIVIDENDS DECLARED. . . . . . . . . 2,260 7,197 7,181 21,591
BALANCE AT END OF PERIOD . . . . . . . . $1,216 $ 9,768 $1,216 $ 9,768
The common stock of the Company is wholly owned by
American Electric Power Company, Inc.
See Notes to Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
AEP GENERATING COMPANY
BALANCE SHEETS
(UNAUDITED)
<CAPTION>
September 30, December 31,
1994 1993
(in thousands)
ASSETS
<S> <C> <C>
ELECTRIC UTILITY PLANT:
Production. . . . . . . . . . . . . . . . . . . . . . . . $626,012 $627,502
General . . . . . . . . . . . . . . . . . . . . . . . . . 2,700 1,757
Construction Work in Progress . . . . . . . . . . . . . . 2,216 1,773
Total Electric Utility Plant. . . . . . . . . . . 630,928 631,032
Accumulated Depreciation. . . . . . . . . . . . . . . . . 194,136 181,587
NET ELECTRIC UTILITY PLANT. . . . . . . . . . . . 436,792 449,445
CURRENT ASSETS:
Cash and Cash Equivalents . . . . . . . . . . . . . . . . 552 3
Accounts Receivable . . . . . . . . . . . . . . . . . . . 20,284 18,729
Fuel. . . . . . . . . . . . . . . . . . . . . . . . . . . 16,854 12,867
Materials and Supplies. . . . . . . . . . . . . . . . . . 4,171 4,121
Prepayments . . . . . . . . . . . . . . . . . . . . . . . 540 731
TOTAL CURRENT ASSETS. . . . . . . . . . . . . . . 42,401 36,451
DEFERRED FEDERAL INCOME TAX ASSETS. . . . . . . . . . . . . 5,716 10,975
REGULATORY ASSETS . . . . . . . . . . . . . . . . . . . . . 30,508 30,536
TOTAL . . . . . . . . . . . . . . . . . . . . . $515,417 $527,407
See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
AEP GENERATING COMPANY
BALANCE SHEETS
(UNAUDITED)
<CAPTION>
September 30, December 31,
1994 1993
(in thousands)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
CAPITALIZATION:
Common Stock - Par Value $1,000:
Authorized and Outstanding - 1,000 Shares . . . . . . . $ 1,000 $ 1,000
Paid-in Capital . . . . . . . . . . . . . . . . . . . . . 47,735 54,435
Retained Earnings . . . . . . . . . . . . . . . . . . . . 1,216 1,339
Total Common Shareowner's Equity. . . . . . . . . 49,951 56,774
Long-term Debt. . . . . . . . . . . . . . . . . . . . . . 53,302 108,188
TOTAL CAPITALIZATION. . . . . . . . . . . . . . . 103,253 164,962
OTHER NONCURRENT LIABILITIES. . . . . . . . . . . . . . . . 2,119 1,736
CURRENT LIABILITIES:
Long-term Debt Due Within One Year. . . . . . . . . . . . 55,000 -
Short-term Debt - Notes Payable . . . . . . . . . . . . . - 15,250
Accounts Payable. . . . . . . . . . . . . . . . . . . . . 5,779 8,809
Taxes Accrued . . . . . . . . . . . . . . . . . . . . . . 6,189 3,697
Interest Accrued. . . . . . . . . . . . . . . . . . . . . 745 2,963
Rent Accrued - Rockport Plant Unit 2. . . . . . . . . . . 24,878 5,588
Other . . . . . . . . . . . . . . . . . . . . . . . . . . 2,120 1,063
TOTAL CURRENT LIABILITIES . . . . . . . . . . . . 94,711 37,370
DEFERRED GAIN ON SALE AND LEASEBACK -
ROCKPORT PLANT UNIT 2 . . . . . . . . . . . . . . . . . . 212,978 218,646
DEFERRED INVESTMENT TAX CREDITS . . . . . . . . . . . . . . 81,363 83,901
DEFERRED AMOUNTS DUE TO CUSTOMERS FOR
FEDERAL INCOME TAXES. . . . . . . . . . . . . . . . . . . 19,632 20,792
DEFERRED CREDITS. . . . . . . . . . . . . . . . . . . . . . 1,361 -
CONTINGENCIES (Note 2)
TOTAL . . . . . . . . . . . . . . . . . . . . . $515,417 $527,407
See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
AEP GENERATING COMPANY
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Nine Months Ended
September 30,
1994 1993
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . $ 7,058 $ 8,186
Adjustments for Noncash Items:
Depreciation . . . . . . . . . . . . . . . . . . . . . . 16,212 16,231
Deferred Federal Income Taxes. . . . . . . . . . . . . . 4,099 3,428
Deferred Investment Tax Credits. . . . . . . . . . . . . (2,538) (2,542)
Amortization of Deferred Gain on Sale
and Leaseback - Rockport Plant Unit 2. . . . . . . . . (5,668) (5,668)
Changes in Certain Current Assets and Liabilities:
Accounts Receivable. . . . . . . . . . . . . . . . . . . (1,555) 844
Fuel, Materials and Supplies . . . . . . . . . . . . . . (4,037) 10,158
Accounts Payable . . . . . . . . . . . . . . . . . . . . (3,030) (38)
Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . 2,492 12,820
Interest Accrued . . . . . . . . . . . . . . . . . . . . (2,218) (2,243)
Rent Accrued - Rockport Plant Unit 2 . . . . . . . . . . 19,290 18,464
Other (net). . . . . . . . . . . . . . . . . . . . . . . . 2,513 428
Net Cash Flows From Operating Activities . . . . . . 32,618 60,068
INVESTING ACTIVITIES - Construction Expenditures . . . . . . (2,938) (1,554)
FINANCING ACTIVITIES:
Capital Contributions Returned to Parent Company . . . . . (6,700) -
Change in Short-term Debt (net). . . . . . . . . . . . . . (15,250) -
Dividends Paid . . . . . . . . . . . . . . . . . . . . . . (7,181) (21,591)
Net Cash Flows Used For Financing Activities . . . . (29,131) (21,591)
Net Increase in Cash and Cash Equivalents. . . . . . . . . . 549 36,923
Cash and Cash Equivalents at Beginning of Period . . . . . . 3 27,974
Cash and Cash Equivalents at End of Period . . . . . . . . . $ 552 $ 64,897
Supplemental Disclosure:
Cash paid (received) for interest net of capitalized amounts was $9,227,000 and
$10,201,000 and for income taxes was $(1,026,000) and $(9,527,000) in 1994 and
1993, respectively.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
AEP GENERATING COMPANY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1994
(UNAUDITED)
1. GENERAL
The accompanying unaudited financial statements should
be read in conjunction with the 1993 Annual Report as
incorporated in and filed with the Form 10-K.
2. CONTINGENCIES
The Company continues to be involved in certain matters
discussed in its 1993 Annual Report.
<PAGE>
<PAGE>
AEP GENERATING COMPANY
MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS
THIRD QUARTER 1994 vs. THIRD QUARTER 1993
AND
YEAR-TO-DATE 1994 vs. YEAR-TO-DATE 1993
Operating revenues are derived from the sale of Rockport
Plant energy and capacity to two affiliated companies and one
unaffiliated utility pursuant to Federal Energy Regulatory
Commission (FERC) approved long-term unit power agreements. The
unit power agreements provide for recovery of costs including a
FERC approved rate of return on common equity and other capital
net of temporary cash investments. Net income declined $0.2
million or 10% in the third quarter and $1.1 million or 14% in
the year-to-date period resulting from a reduction in common
equity on which a return was earned and lower interest income,
offset in part by an increase in the return on other capital due
to significantly lower temporary cash investments during 1994.
The reduction in common equity resulted primarily from the
payment of dividends in excess of net income in 1993 as well as
capital returned to the parent company subsequent to September
30, 1993.
Income statement items which changed significantly were as
follows:
Increase (Decrease)
Third Quarter Year-To-Date
(in millions) % (in millions) %
Operating Revenues. . . . . $(2.9) (5) $ 3.6 2
Fuel Expense. . . . . . . . (2.3) (8) 6.7 9
Rent Expense-Rockport
Plant Unit 2. . . . . . . 0.8 5 0.8 2
Other Operation Expense . . (0.4) (13) (0.6) (7)
Maintenance Expense . . . . (0.5) (16) (1.6) (16)
Taxes Other Than Federal
Income Taxes. . . . . . . - - (0.4) (10)
Nonoperating Income . . . . (0.2) (18) (1.0) (29)
Interest Charges. . . . . . (0.4) (13) (1.0) (12)
Operating revenues decreased in the third quarter primarily
due to the recovery of lower fuel expense and increased in the
year-to-date period reflecting the recovery of increased fuel
expense partially offset by lower maintenance expense, other
operation expense and taxes other than federal income taxes. The
<PAGE>
decline in fuel expense in the third quarter was due to a 3%
reduction in generation and a favorable inventory adjustment of
$0.9 million. In the year-to-date period the increase in fuel
expense resulted from an increase in generation of more than 4%
primarily due to increased availability of Rockport Plant Unit 2
which had been out of service for routine maintenance in April
and May of 1993 and the effect of a coal transportation cost
refund received in the first quarter of 1993.
Rent expense for Rockport Plant Unit 2 increased in both
periods due to a third quarter 1994 accrual for Indiana Gross
income tax applicable to the lease. The decrease in other
operation expense for the quarter resulted from a substantial
reduction of a FERC annual operating assessment. The year-to-
date decrease in other operation expense resulted from a
reduction in accruals for postretirement benefits other than
pensions which are billed to the Company by Indiana Michigan
Power Company, an affiliate, the operator of Rockport Plant as
well as the lower FERC annual operating assessment. In 1994
maintenance expense decreased due to the effect of boiler
inspections and repairs at both Rockport Plant units in 1993.
Taxes other than federal income taxes decreased in the year-to-
date period as a result of an additional accrual for Indiana
property taxes recorded in 1993 and a reduction in the 1994
accrual for Indiana supplemental net income taxes reflecting
reduced taxable income.
Nonoperating income decreased in both comparable periods due
to a significant reduction in interest income reflecting reduced
temporary cash investments in 1994 compared with 1993. The
reduction in temporary cash investments reflects the repayment of
debt and return of capital to the parent company. The reduction
in year-to-date nonoperating income was also caused by interest
income recorded in March 1993 on prior years' income tax refunds
from the Internal Revenue Service. The redemption of a $55
million installment purchase contract in December 1993 accounted
for the decline in interest charges offset, in part, by an
increase in interest on short-term debt borrowings.
<PAGE>
<PAGE>
<TABLE>
APPALACHIAN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
(in thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES . . . . . . . . . . . $371,842 $393,671 $1,179,799 $1,127,324
OPERATING EXPENSES:
Fuel . . . . . . . . . . . . . . . . . 92,453 96,927 299,147 265,538
Purchased Power. . . . . . . . . . . . 78,716 87,666 250,320 250,960
Other Operation. . . . . . . . . . . . 46,770 47,991 141,237 141,069
Maintenance. . . . . . . . . . . . . . 30,311 30,821 101,307 88,614
Depreciation and Amortization. . . . . 32,195 30,939 95,377 92,029
Taxes Other Than Federal Income Taxes. 28,559 27,813 90,964 79,469
Federal Income Taxes . . . . . . . . . 11,992 14,863 41,997 40,374
TOTAL OPERATING EXPENSES . . . 320,996 337,020 1,020,349 958,053
OPERATING INCOME . . . . . . . . . . . . 50,846 56,651 159,450 169,271
NONOPERATING INCOME (LOSS) . . . . . . . (697) 506 (4,240) (1,931)
INCOME BEFORE INTEREST CHARGES . . . . . 50,149 57,157 155,210 167,340
INTEREST CHARGES . . . . . . . . . . . . 24,418 25,216 72,939 75,417
NET INCOME . . . . . . . . . . . . . . . 25,731 31,941 82,271 91,923
PREFERRED STOCK DIVIDEND REQUIREMENTS. . 4,277 4,217 11,557 12,672
EARNINGS APPLICABLE TO COMMON STOCK. . . $ 21,454 $ 27,724 $ 70,714 $ 79,251
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
(in thousands)
BALANCE AT BEGINNING OF PERIOD . . . . . $222,835 $227,989 $227,816 $229,920
NET INCOME . . . . . . . . . . . . . . . 25,731 31,941 82,271 91,923
DEDUCTIONS:
Cash Dividends Declared:
Common Stock . . . . . . . . . . . . 27,035 32,534 81,105 85,992
Cumulative Preferred Stock . . . . . 3,921 4,100 11,002 12,322
Capital Stock Expense. . . . . . . . . 185 116 555 349
BALANCE AT END OF PERIOD . . . . . . . . $217,425 $223,180 $217,425 $223,180
The common stock of the Company is wholly owned by
American Electric Power Company, Inc.
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
APPALACHIAN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
September 30, December 31,
1994 1993
(in thousands)
ASSETS
<S> <C> <C>
ELECTRIC UTILITY PLANT:
Production . . . . . . . . . . . . . . . . . . . . . $1,814,042 $1,781,005
Transmission . . . . . . . . . . . . . . . . . . . . 1,000,800 987,147
Distribution . . . . . . . . . . . . . . . . . . . . 1,289,348 1,225,436
General. . . . . . . . . . . . . . . . . . . . . . . 157,734 140,942
Construction Work in Progress. . . . . . . . . . . . 70,821 59,170
Total Electric Utility Plant . . . . . . . . 4,332,745 4,193,700
Accumulated Depreciation and Amortization. . . . . . 1,612,439 1,550,855
NET ELECTRIC UTILITY PLANT . . . . . . . . . 2,720,306 2,642,845
OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . . 49,202 51,551
CURRENT ASSETS:
Cash and Cash Equivalents. . . . . . . . . . . . . . 4,390 4,626
Accounts Receivable. . . . . . . . . . . . . . . . . 117,319 132,206
Allowance for Uncollectible Accounts . . . . . . . . (932) (1,344)
Fuel . . . . . . . . . . . . . . . . . . . . . . . . 70,335 46,881
Materials and Supplies . . . . . . . . . . . . . . . 46,318 43,351
Accrued Utility Revenues . . . . . . . . . . . . . . 41,369 58,294
Prepayments. . . . . . . . . . . . . . . . . . . . . 11,107 7,430
TOTAL CURRENT ASSETS . . . . . . . . . . . . 289,906 291,444
REGULATORY ASSETS:
Amounts Due From Customers For Future
Federal Income Taxes . . . . . . . . . . . . . . . 316,276 320,160
Other. . . . . . . . . . . . . . . . . . . . . . . . 136,312 122,367
TOTAL REGULATORY ASSETS. . . . . . . . . . . 452,588 442,527
TOTAL. . . . . . . . . . . . . . . . . . . $3,512,002 $3,428,367
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
APPALACHIAN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
September 30, December 31,
1994 1993
(in thousands)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
CAPITALIZATION:
Common Stock - No Par Value:
Authorized - 30,000,000 Shares
Outstanding - 13,499,500 Shares. . . . . . . . . . $ 260,458 $ 260,458
Paid-in Capital. . . . . . . . . . . . . . . . . . . 494,408 494,834
Retained Earnings. . . . . . . . . . . . . . . . . . 217,425 227,816
Total Common Shareowner's Equity . . . . . . 972,291 983,108
Cumulative Preferred Stock:
Not Subject to Mandatory Redemption. . . . . . . . 55,000 55,000
Subject to Mandatory Redemption. . . . . . . . . . 190,450 160,450
Long-term Debt . . . . . . . . . . . . . . . . . . . 1,179,036 1,215,124
TOTAL CAPITALIZATION . . . . . . . . . . . . 2,396,777 2,413,682
OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . . 63,191 55,865
CURRENT LIABILITIES:
Short-term Debt. . . . . . . . . . . . . . . . . . . 111,050 39,500
Accounts Payable . . . . . . . . . . . . . . . . . . 85,026 68,158
Taxes Accrued. . . . . . . . . . . . . . . . . . . . 29,661 52,128
Customer Deposits. . . . . . . . . . . . . . . . . . 14,203 13,670
Interest Accrued . . . . . . . . . . . . . . . . . . 32,742 18,212
Other. . . . . . . . . . . . . . . . . . . . . . . . 69,448 71,259
TOTAL CURRENT LIABILITIES. . . . . . . . . . 342,130 262,927
DEFERRED FEDERAL INCOME TAXES. . . . . . . . . . . . . 588,473 578,948
DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . . 79,590 82,987
DEFERRED CREDITS . . . . . . . . . . . . . . . . . . . 41,841 33,958
CONTINGENCIES (Note 4)
TOTAL. . . . . . . . . . . . . . . . . . . $3,512,002 $3,428,367
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
APPALACHIAN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Nine Months Ended
September 30,
1994 1993
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . $ 82,271 $ 91,923
Adjustments for Noncash Items:
Depreciation and Amortization. . . . . . . . . . . . . . 97,283 93,934
Deferred Federal Income Taxes. . . . . . . . . . . . . . 13,374 (4,934)
Deferred Investment Tax Credits. . . . . . . . . . . . . (3,672) (3,695)
Deferred Power Supply Costs (net). . . . . . . . . . . . 9,981 18,104
Provision for Rate Refunds . . . . . . . . . . . . . . . (9,975) 10,185
Storm Damage Expense Deferrals (net) . . . . . . . . . . (22,617) (3,690)
Changes in Certain Current Assets and Liabilities:
Accounts Receivable (net). . . . . . . . . . . . . . . . 14,475 (247)
Fuel, Materials and Supplies . . . . . . . . . . . . . . (26,421) 20,036
Accrued Utility Revenues . . . . . . . . . . . . . . . . 16,925 12,408
Accounts Payable . . . . . . . . . . . . . . . . . . . . 16,868 (4,210)
Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . (22,467) (6,546)
Interest Accrued . . . . . . . . . . . . . . . . . . . . 14,530 11,213
Other (net). . . . . . . . . . . . . . . . . . . . . . . . 472 13,946
Net Cash Flows From Operating Activities . . . . . . 181,027 248,427
INVESTING ACTIVITIES - Construction Expenditures . . . . . . (153,237) (130,434)
FINANCING ACTIVITIES:
Issuance of Cumulative Preferred Stock . . . . . . . . . . 29,574 -
Issuance of Long-term Debt . . . . . . . . . . . . . . . . 20,817 138,737
Change in Short-term Debt (net). . . . . . . . . . . . . . 71,550 (32,850)
Retirement of Long-term Debt . . . . . . . . . . . . . . . (58,221) (126,663)
Dividends Paid on Common Stock . . . . . . . . . . . . . . (81,105) (85,992)
Dividends Paid on Cumulative Preferred Stock . . . . . . . (10,641) (12,344)
Net Cash Flows Used For Financing Activities . . . . (28,026) (119,112)
Net Decrease in Cash and Cash Equivalents. . . . . . . . . . (236) (1,119)
Cash and Cash Equivalents at Beginning of Period . . . . . . 4,626 9,501
Cash and Cash Equivalents at End of Period . . . . . . . . . $ 4,390 $ 8,382
Supplemental Disclosure:
Cash paid for interest net of capitalized amounts was $56,652,000 and $62,713,000 and
for income taxes was $37,400,000 and $44,093,000 in 1994 and 1993, respectively.
Noncash acquisitions under capital leases were $18,740,000 and $8,473,000 in 1994 and
1993, respectively.
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
APPALACHIAN POWER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1994
(UNAUDITED)
1. GENERAL
The accompanying unaudited consolidated financial state-
ments should be read in conjunction with the 1993 Annual
Report as incorporated in and filed with the Form 10-K.
2. RATE MATTERS
The Company filed a request with the Virginia State
Corporation Commission (VA SCC) for a net decrease of $12.3
million in rates charged to its Virginia retail customers to
be effective November 15, 1994. The net decrease consists
of a $28 million decrease in the fuel factor component of
rates offset, in part, by an increase of $15.7 million in
base rates. The increase in base rates would, in part,
recover the costs of extensive repairs to facilities damaged
by last winter's severe storms. The Company has deferred
$23.7 million of Virginia retail incremental storm damage
expenses related to two major ice storms in February and
March 1994. The Company proposes in this rate proceeding to
amortize the $23.7 million deferred storm damage expenses
over a three-year period, consistent with the amortization
of $4.1 million of major storm damage expenses approved by
the VA SCC in the previous 1992 rate case. Failure to
recover such deferrals in cost of service would result in an
immediate write-off of $15.4 million after tax.
3. FINANCING ACTIVITY
In August 1994, the Company issued $21 million of 7.70%
Series First Mortgage Bonds due in 2004. The proceeds were
used to repay short-term debt and for other corporate
purposes.
4. CONTINGENCIES
The Company continues to be involved in certain matters
discussed in its 1993 Annual Report.
<PAGE>
<PAGE>
APPALACHIAN POWER COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
THIRD QUARTER 1994 vs. THIRD QUARTER 1993
RESULTS OF OPERATIONS
Net income decreased $6.2 million or 19% primarily due to a
decrease in energy sales as cooler weather reduced the demand of
residential and wholesale customers and increased capacity costs
from the AEP System Power Pool (Power Pool) resulting from an
increase in the relative peak demand allocation ratio established
in January 1994.
Income statement lines which changed significantly were:
Decrease
(in millions) %
Operating Revenues. . . . . . . . . . . . . . . $(21.8) (6)
Fuel Expense. . . . . . . . . . . . . . . . . . (4.5) (5)
Purchased Power Expense . . . . . . . . . . . . (9.0) (10)
Federal Income Taxes. . . . . . . . . . . . . . (2.9) (19)
Operating revenues for retail and wholesale customers
decreased due to the weather-related decrease in demand for
energy. Residential energy sales decreased 7% and sales to
commercial customers declined 1%. Wholesale sales decreased 26%
as the Company's share of sales to unaffiliated utilities by the
Power Pool was lower due to the milder summer weather in 1994.
Fuel expense decreased primarily due to a lower average cost
of fuel consumed. Purchased power expense decreased due to a
reduction in energy purchased from the Power Pool, reflecting
decreased internal demand, partially offset by an increase in
Power Pool capacity charges. The Power Pool allocates capacity
costs to its members based on their relative peak demands in the
prior twelve months. As a result of a new all-time internal peak
demand experienced in January 1994, the Company is being charged
with a greater portion of the Power Pool's capacity charges which
are recorded as purchased power expense. Until the Company is
able to recover from its ratepayers the increase in capacity
charges, currently estimated to be $27 million higher than in
1993, results of operations will be adversely affected. The
Company is seeking recovery, as described below, of the
additional Power Pool capacity charges above those currently in
<PAGE>
rates in the Virginia jurisdiction. The three-year rate change
moratorium in West Virginia ending October 31, 1996 is preventing
the Company from currently seeking recovery of increased Power
Pool capacity charges in the West Virginia jurisdiction.
Federal income tax expense decreased primarily due to a
decrease in pre-tax operating income.
YEAR-TO-DATE 1994 vs. YEAR-TO-DATE 1993
RESULTS OF OPERATIONS
Although severe winter weather and unseasonably warm spring
weather caused energy sales to increase and retail rates were
increased in the Virginia jurisdiction, year-to-date net income
decreased $9.7 million or 11% primarily due to excessive winter
storm damage, the increased capacity costs, explained above, and
an increase in West Virginia business and occupation taxes on
generation.
Income statement lines which changed significantly were:
Increase
(in millions) %
Operating Revenues. . . . . . . . . . . . . . . $52.5 5
Fuel. . . . . . . . . . . . . . . . . . . . . . 33.6 13
Maintenance . . . . . . . . . . . . . . . . . . 12.7 14
Taxes Other Than Federal Income Taxes . . . . . 11.5 14
The increase in operating revenues was primarily due to
increased energy demand by retail and wholesale customers as a
result of severe winter weather in the first quarter of 1994 and
unseasonably hot weather in June 1994 and the effects of the
Virginia retail rate increase. Residential energy sales
increased 2% while sales to both commercial and industrial
customers increased 3% for the period. Wholesale revenues
increased $24 million or 11% primarily due to an increase in the
Company's share of increased Power Pool sales to unaffiliated
utilities, an increase in energy provided to the Power Pool as a
result of the unseasonable weather and forced outages at
unaffiliated generating units.
Fuel expense increased primarily due to an increase in coal-
fired generation partially offset by a reduction in the average
cost of fuel consumed. The increase in generation resulted from
the increased demand for retail and wholesale energy and fewer
maintenance outages compared with the same period last year.
<PAGE>
<PAGE>
A January 1994 snow storm, primarily in the West Virginia
service territory, two major ice storms in February and March
1994, mainly in the Virginia service territory, and several other
smaller storms significantly increased year-to-date maintenance
expense. Storm damage expenditures from these storms in 1994
were $42.9 million of which $23.7 million of Virginia
jurisdictional incremental expenses were deferred for future
recovery as a regulatory asset in accordance with a precedent
established in a previous rate proceeding. Should the Company be
unable to recover such deferrals in its current Virginia rate
case, results of operations would be adversely impacted.
Taxes other than federal income taxes increased primarily
due to the generation based West Virginia business and occupation
tax reflecting the increased generation at West Virginia plants.
FINANCIAL CONDITION
Total plant and property additions including capital leases
for the first nine months of 1994 were $173 million, a 24%
increase.
In March 1994, the Company redeemed the remaining $56.7
million outstanding balance of 8-3/4% Series First Mortgage Bonds
due in 2017. In June 1994, $30 million of $100 stated value
6.85% Cumulative Preferred Stock was issued. In August and
October two series of first mortgage bonds were issued: $21
million of 7.70% bonds and $50 million of 7.85% bonds.
Outstanding short-term debt increased $71.6 million from
year-end levels.
RATE MATTERS
The Company filed a request with the Virginia State
Corporation Commission for a net decrease of $12.3 million in
rates charged to its Virginia retail customers to be effective
November 15, 1994. The net decrease consists of a $28 million
reduction in the fuel factor component of rates offset, in part,
by an increase of $15.7 million in base rates. The requested
increase in base rates includes, among other things, recovery of
the costs of extensive repairs to facilities damaged by last
winter's severe storms and increased Power Pool capacity charges.
The Company proposes in this rate proceeding to amortize the
$23.7 million deferred storm damage expenses over a three-year
period, in accordance with a prior precedent. Failure to recover
such deferrals in cost of service would result in the immediate
write-off of $15.4 million after tax.
<PAGE>
<PAGE
<TABLE>
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
(in thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES . . . . . . . . . . . $280,470 $ 276,438 $793,053 $716,133
OPERATING EXPENSES:
Fuel . . . . . . . . . . . . . . . . . 52,430 53,258 154,084 136,036
Purchased Power. . . . . . . . . . . . 35,028 46,097 109,673 124,382
Other Operation. . . . . . . . . . . . 40,106 45,853 126,968 126,609
Maintenance. . . . . . . . . . . . . . 17,512 17,616 50,120 51,411
Depreciation . . . . . . . . . . . . . 20,870 21,575 62,188 64,406
Amortization (Deferral) of Zimmer
Plant Phase-in Costs . . . . . . . . 8,960 (1,492) 19,811 (7,409)
Taxes Other Than Federal Income Taxes. 24,261 25,172 75,705 75,439
Federal Income Taxes . . . . . . . . . 19,706 17,564 44,916 31,368
TOTAL OPERATING EXPENSES . . . 218,873 225,643 643,465 602,242
OPERATING INCOME . . . . . . . . . . . . 61,597 50,795 149,588 113,891
NONOPERATING INCOME:
Deferred Zimmer Plant Carrying
Charges (net of tax) . . . . . . . . 1,063 4,584 4,621 20,527
Other. . . . . . . . . . . . . . . . . 339 1,302 1,337 3,792
TOTAL NONOPERATING INCOME. . . 1,402 5,886 5,958 24,319
LOSS FROM ZIMMER PLANT DISALLOWANCE:
Disallowed Cost. . . . . . . . . . . . - 159,067 - 159,067
Related Income Taxes . . . . . . . . . - (14,534) - (14,534)
NET ZIMMER LOSS. . . . . . . . - 144,533 - 144,533
INCOME (LOSS) BEFORE INTEREST CHARGES. . 62,999 (87,852) 155,546 (6,323)
INTEREST CHARGES . . . . . . . . . . . . 20,471 22,405 63,124 67,054
NET INCOME (LOSS). . . . . . . . . . . . 42,528 (110,257) 92,422 (73,377)
PREFERRED STOCK DIVIDEND REQUIREMENTS. . 3,203 2,766 8,880 8,297
EARNINGS (LOSS) APPLICABLE
TO COMMON STOCK. . . . . . . . . . . . $ 39,325 $(113,023) $ 83,542 $(81,674)
The common stock of the Company is wholly owned by American Electric Power Company, Inc.
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
September 30, December 31,
1994 1993
(in thousands)
ASSETS
<S> <C> <C>
ELECTRIC UTILITY PLANT:
Production . . . . . . . . . . . . . . . . . . . . . $1,456,980 $1,443,506
Transmission . . . . . . . . . . . . . . . . . . . . 306,239 295,539
Distribution . . . . . . . . . . . . . . . . . . . . 786,984 755,342
General. . . . . . . . . . . . . . . . . . . . . . . 102,701 97,874
Construction Work in Progress. . . . . . . . . . . . 46,057 52,794
Total Electric Utility Plant . . . . . . . . 2,698,961 2,645,055
Accumulated Depreciation . . . . . . . . . . . . . . 866,756 811,817
NET ELECTRIC UTILITY PLANT . . . . . . . . . 1,832,205 1,833,238
OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . . 33,034 34,558
CURRENT ASSETS:
Cash and Cash Equivalents. . . . . . . . . . . . . . 18,119 6,633
Accounts Receivable. . . . . . . . . . . . . . . . . 62,347 52,088
Allowance for Uncollectible Accounts . . . . . . . . (1,800) (991)
Fuel . . . . . . . . . . . . . . . . . . . . . . . . 26,534 32,257
Materials and Supplies . . . . . . . . . . . . . . . 25,816 25,772
Accrued Utility Revenues . . . . . . . . . . . . . . 24,090 28,889
Prepayments. . . . . . . . . . . . . . . . . . . . . 24,478 28,372
Other. . . . . . . . . . . . . . . . . . . . . . . . 616 1,863
TOTAL CURRENT ASSETS . . . . . . . . . . . . 180,200 174,883
REGULATORY ASSETS:
Amounts Due From Customers For Future
Federal Income Taxes . . . . . . . . . . . . . . . 287,057 290,644
Other. . . . . . . . . . . . . . . . . . . . . . . . 208,969 249,348
TOTAL REGULATORY ASSETS. . . . . . . . . . . 496,026 539,992
TOTAL. . . . . . . . . . . . . . . . . . . $2,541,465 $2,582,671
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
September 30, December 31,
1994 1993
(in thousands)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
CAPITALIZATION:
Common Stock - No Par Value:
Authorized - 24,000,000 Shares
Outstanding - 16,410,426 Shares. . . . . . . . . . $ 41,026 $ 41,026
Paid-in Capital. . . . . . . . . . . . . . . . . . . 565,642 566,046
Retained Earnings. . . . . . . . . . . . . . . . . . 49,988 18,288
Total Common Shareowner's Equity . . . . . . 656,656 625,360
Cumulative Preferred Stock - Subject to
Mandatory Redemption . . . . . . . . . . . . . . . 150,000 125,000
Long-term Debt . . . . . . . . . . . . . . . . . . . 947,494 997,013
TOTAL CAPITALIZATION . . . . . . . . . . . . 1,754,150 1,747,373
OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . . 21,999 17,189
CURRENT LIABILITIES:
Long-term Debt Due Within One Year . . . . . . . . . 50,000 20,700
Short-term Debt. . . . . . . . . . . . . . . . . . . - 25,225
Accounts Payable . . . . . . . . . . . . . . . . . . 37,463 50,547
Taxes Accrued. . . . . . . . . . . . . . . . . . . . 60,657 114,233
Interest Accrued . . . . . . . . . . . . . . . . . . 30,411 23,245
Other. . . . . . . . . . . . . . . . . . . . . . . . 35,239 22,189
TOTAL CURRENT LIABILITIES. . . . . . . . . . 213,770 256,139
DEFERRED FEDERAL INCOME TAXES. . . . . . . . . . . . . 473,094 474,290
DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . . 65,762 68,533
DEFERRED CREDITS . . . . . . . . . . . . . . . . . . . 12,690 19,147
CONTINGENCIES (Note 2)
TOTAL. . . . . . . . . . . . . . . . . . . $2,541,465 $2,582,671
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Nine Months Ended
September 30,
1994 1993
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income (Loss). . . . . . . . . . . . . . . . . . . . . $ 92,422 $ (73,377)
Adjustments for Noncash Items:
Depreciation . . . . . . . . . . . . . . . . . . . . . . 61,900 67,009
Deferred Federal Income Taxes. . . . . . . . . . . . . . 2,391 2,606
Deferred Investment Tax Credits. . . . . . . . . . . . . (2,765) (4,032)
Deferred Fuel Cost (net) . . . . . . . . . . . . . . . . (1,760) 7,532
Deferred Zimmer Plant Operating Expenses and
Carrying Charges . . . . . . . . . . . . . . . . . . . 13,176 (37,888)
Loss from Zimmer Plant Disallowance. . . . . . . . . . . - 159,067
Amortization of Deferred Property Taxes. . . . . . . . . 41,884 41,731
Changes in Certain Current Assets and Liabilities:
Accounts Receivable (net). . . . . . . . . . . . . . . . (9,450) (20,988)
Fuel, Materials and Supplies . . . . . . . . . . . . . . 5,679 1,037
Accrued Utility Revenues . . . . . . . . . . . . . . . . 4,799 595
Prepayments. . . . . . . . . . . . . . . . . . . . . . . 3,894 1,969
Accounts Payable . . . . . . . . . . . . . . . . . . . . (13,084) (518)
Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . (53,576) (52,114)
Other (net). . . . . . . . . . . . . . . . . . . . . . . . 5,982 (637)
Net Cash Flows From Operating Activities . . . . . . 151,492 91,992
INVESTING ACTIVITIES - Construction Expenditures . . . . . . (51,661) (62,968)
FINANCING ACTIVITIES:
Issuance of Cumulative Preferred Stock . . . . . . . . . . 24,596 -
Issuance of Long-term Debt . . . . . . . . . . . . . . . . 198,298 177,885
Change in Short-term Debt (net). . . . . . . . . . . . . . (25,225) (42,019)
Retirement of Long-term Debt . . . . . . . . . . . . . . . (225,834) (129,542)
Dividends Paid on Common Stock . . . . . . . . . . . . . . (51,591) (25,436)
Dividends Paid on Cumulative Preferred Stock . . . . . . . (8,589) (8,297)
Net Cash Flows Used For Financing Activities . . . . (88,345) (27,409)
Net Increase in Cash and Cash Equivalents. . . . . . . . . . 11,486 1,615
Cash and Cash Equivalents at Beginning of Period . . . . . . 6,633 8,322
Cash and Cash Equivalents at End of Period . . . . . . . . . $ 18,119 $ 9,937
Supplemental Disclosure:
Cash paid for interest net of capitalized amounts was $52,895,000 and $64,591,000
and for income taxes was $46,663,000 and $26,654,000 in 1994 and 1993, respectively.
Noncash acquisitions under capital leases were $8,736,000 and $4,827,000 in 1994 and
1993, respectively.
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
(in thousands)
<S> <C> <C> <C> <C>
BALANCE AT BEGINNING OF PERIOD . . . . . $27,895 $ 133,405 $18,288 $127,562
NET INCOME (LOSS). . . . . . . . . . . . 42,528 (110,257) 92,422 (73,377)
DEDUCTIONS:
Cash Dividends Declared:
Common Stock . . . . . . . . . . . . 17,197 - 51,591 25,436
Cumulative Preferred Stock . . . . . 3,203 2,766 9,026 8,297
Capital Stock Expense. . . . . . . . . 35 35 105 105
BALANCE AT END OF PERIOD . . . . . . . . $49,988 $ 20,347 $49,988 $ 20,347
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1994
(UNAUDITED)
1. GENERAL
The accompanying unaudited consolidated financial
statements should be read in conjunction with the 1993
Annual Report as incorporated in and filed with the Form 10-
K. Certain prior-period amounts have been reclassified to
conform to current-period presentation.
2. CONTINGENCIES
The Company continues to be involved in certain matters
discussed in its 1993 Annual Report.
<PAGE>
<PAGE>
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS
THIRD QUARTER 1994 vs. THIRD QUARTER 1993
AND
YEAR-TO-DATE 1994 vs. YEAR-TO-DATE 1993
Net income increased by $153 million for the third quarter
and by $166 million for the year-to-date period comparisons due
to a 1993 disallowance of a portion of the Company's investment
in the Zimmer Plant. In November 1993 the Ohio Supreme Court
rejected the Company's argument that it should be allowed to
include in rate base $165 million of certain costs incurred when
the Zimmer Plant was converted from a nuclear project to a coal-
fired facility. As a result of the ruling, the Company reflected
the adverse impact of the disallowance on results of operations
in the third quarter of 1993 reducing net income by $144.5
million after tax.
Exclusive of the Zimmer Plant disallowance, net income
increased by $8 million or 24% in the third quarter 1994 due to
reorganization costs recorded in 1993, a reduction in 1994 other
operation expenses and a reduction of interest charges due to
refinancing debt at lower rates. Year-to-date 1994 net income,
excluding the Zimmer Plant disallowance, increased $21 million or
30% due to the favorable impact of increased energy sales
reflecting unseasonable weather in 1994 and a reduction of
interest charges due to refinancing debt at lower rates.
Retail revenues increased $8 million or 3% for the third
quarter and $60 million or 9% for the year-to-date period due to
a rate increase and for the year-to-date period due to severe
winter and spring weather partly offset by milder temperatures
during the summer. The Public Utilities Commission of Ohio
(PUCO) granted a 7.11% increase in rates effective February 1,
1994 as a result of the November 1993 Ohio Supreme Court ruling
that the PUCO did not have authority under state law to order a
rate phase-in for the Zimmer Plant. The increase includes a
3.72% base rate increase, which represents the acceleration of
the final step of the court rejected rate phase-in plan, and a
3.39% surcharge, which provides for recovery of $96.9 million of
previous deferrals under the phase-in plan and a return thereon,
<PAGE>
to be collected over a period that is not expected to exceed four
and one-half years. The rate increase has no effect on net
income since it is offset by the amortization of prior year
phase-in plan deferrals and the cessation of current year
deferrals which would have occurred had the phase-in plan
continued in effect.
Wholesale revenues decreased $5 million or 21% for the
quarter as the Company's share of decreased sales to unaffiliated
utilities by the AEP System Power Pool (Power Pool) was lower due
to the milder weather in the current period. Wholesale revenues
increased $15 million or 28% for the year-to-date period
primarily due to the Company's share of increased Power Pool
sales to unaffiliated utilities and an increase in the energy
requirements of the Power Pool as a result of the severe winter
weather in the first quarter of 1994, unseasonably warm weather
during the late spring and early summer and forced outages at
unaffiliated generating units.
Other income statement lines which changed significantly
were as follows:
Increase (Decrease)
Third Quarter Year-to-Date
(in millions) % (in millions) %
Fuel Expense. . . . . . . . $ (0.8) (2) $ 18.0 13
Purchased Power Expense . . (11.1) (24) (14.7) (12)
Other Operation Expense . . (5.7) (13) 0.4 -
Amortization (Deferral) of
Zimmer Plant Phase-in
Costs . . . . . . . . . . 10.5 N.M. 27.2 N.M.
Federal Income Taxes. . . . 2.1 12 13.5 43
Deferred Zimmer Plant
Carrying Charges
(net of tax). . . . . . . (3.5) (77) (15.9) (77)
N.M. = Not Meaningful
The year-to-date increase in fuel expense was due to an
increase in net generation reflecting the availability in 1994 of
three units that had been out of service for scheduled main-
tenance in the second quarter of 1993. Amortization of
previously over collected fuel costs through the operation of a
fuel clause adjustment mechanism partly offset the effects of the
increased generation. Under the fuel clause adjustment mechanism
the Company defers fuel cost to the extent it varies from the
authorized electric fuel component rate. Such cost variance
<PAGE>
deferrals are amortized to fuel expense commensurate with their
recovery in fuel rates.
Purchased power expense decreased for both periods due to a
reduction in demand caused by the cooler late summer weather.
The decrease in the year-to-date period also resulted from the
increase in net generation.
Other operation expense decreased in the third quarter
reflecting the reduction in an accrual for uninsured losses based
on prior years experience and the provision for reorganization
costs recorded in 1993.
The amortization of Zimmer Plant phase-in costs increased
sharply due to the court ordered discontinuance of Zimmer phase-
in plan deferrals in February 1994 and the subsequent
amortization of the deferred costs, commensurate with their
recovery.
Federal income tax expense attributable to operations
increased substantially primarily due to the increase in pre-tax
operating income offset in part by changes in certain book/tax
differences accounted for on a flow-through basis in both periods
and a retroactive 1% federal income tax rate increase enacted in
August 1993 and recorded in the third quarter of 1993 retroactive
to January 1, 1993.
Deferred Zimmer Plant carrying charges declined from the
prior year since the carrying charges in 1994 were accrued on the
unamortized phase-in plan deferral balance while the 1993
carrying charges were accrued on the larger Zimmer investment not
yet phased into rates.
<PAGE>
<PAGE>
<TABLE>
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
(in thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES . . . . . . . . . . . $317,061 $320,409 $965,086 $901,477
OPERATING EXPENSES:
Fuel . . . . . . . . . . . . . . . . . 51,591 61,106 151,534 172,118
Purchased Power. . . . . . . . . . . . 29,956 32,270 110,186 79,740
Other Operation. . . . . . . . . . . . 72,728 65,415 216,608 193,279
Maintenance. . . . . . . . . . . . . . 36,479 40,146 109,486 118,181
Depreciation and Amortization. . . . . 33,911 34,757 102,051 103,561
Amortization of Rockport Plant Unit 1
Phase-in Plan Deferrals. . . . . . . 3,911 3,911 11,733 11,733
Taxes Other Than Federal Income Taxes. 19,433 17,591 55,595 54,308
Federal Income Taxes . . . . . . . . . 13,643 12,315 39,037 21,668
TOTAL OPERATING EXPENSES . . . 261,652 267,511 796,230 754,588
OPERATING INCOME . . . . . . . . . . . . 55,409 52,898 168,856 146,889
NONOPERATING INCOME (LOSS) . . . . . . . 328 538 5,077 (1,809)
INCOME BEFORE INTEREST CHARGES . . . . . 55,737 53,436 173,933 145,080
INTEREST CHARGES . . . . . . . . . . . . 18,009 19,778 53,963 61,503
NET INCOME . . . . . . . . . . . . . . . 37,728 33,658 119,970 83,577
PREFERRED STOCK DIVIDEND REQUIREMENTS. . 2,890 3,470 8,760 10,746
EARNINGS APPLICABLE TO COMMON STOCK. . . $ 34,838 $ 30,188 $111,210 $ 72,831
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
(in thousands)
BALANCE AT BEGINNING OF PERIOD . . . . . $200,611 $161,460 $177,638 $171,309
NET INCOME . . . . . . . . . . . . . . . 37,728 33,658 119,970 83,577
DEDUCTIONS:
Cash Dividends Declared:
Common Stock . . . . . . . . . . . . 26,652 31,934 79,956 84,406
Cumulative Preferred Stock . . . . . 2,890 3,470 8,760 10,746
Capital Stock Expense. . . . . . . . . 48 15 143 35
BALANCE AT END OF PERIOD . . . . . . . . $208,749 $159,699 $208,749 $159,699
The common stock of the Company is wholly owned
by American Electric Power Company, Inc.
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
September 30, December 31,
1994 1993
(in thousands)
ASSETS
<S> <C> <C>
ELECTRIC UTILITY PLANT:
Production . . . . . . . . . . . . . . . . . . . . . $2,464,621 $2,602,527
Transmission . . . . . . . . . . . . . . . . . . . . 845,552 839,198
Distribution . . . . . . . . . . . . . . . . . . . . 629,796 608,752
General (including nuclear fuel) . . . . . . . . . . 195,646 152,470
Construction Work in Progress. . . . . . . . . . . . 111,202 88,010
Total Electric Utility Plant . . . . . . . . 4,246,817 4,290,957
Accumulated Depreciation and Amortization. . . . . . 1,644,289 1,714,829
NET ELECTRIC UTILITY PLANT . . . . . . . . . 2,602,528 2,576,128
OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . . 477,470 432,459
CURRENT ASSETS:
Cash and Cash Equivalents. . . . . . . . . . . . . . 5,491 3,752
Accounts Receivable (net). . . . . . . . . . . . . . 116,435 121,336
Fuel . . . . . . . . . . . . . . . . . . . . . . . . 31,123 34,476
Materials and Supplies . . . . . . . . . . . . . . . 59,723 57,800
Accrued Utility Revenues . . . . . . . . . . . . . . 37,707 34,642
Prepayments. . . . . . . . . . . . . . . . . . . . . 8,404 12,043
TOTAL CURRENT ASSETS . . . . . . . . . . . . 258,883 264,049
REGULATORY ASSETS:
Amounts Due From Customers For Future
Federal Income Taxes . . . . . . . . . . . . . . . 298,850 286,948
Other. . . . . . . . . . . . . . . . . . . . . . . . 237,034 205,874
TOTAL REGULATORY ASSETS. . . . . . . . . . . 535,884 492,822
TOTAL. . . . . . . . . . . . . . . . . . . $3,874,765 $3,765,458
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
September 30, December 31,
1994 1993
(in thousands)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
CAPITALIZATION:
Common Stock - No Par Value:
Authorized - 2,500,000 Shares
Outstanding - 1,400,000 Shares . . . . . . . . . . $ 56,584 $ 56,584
Paid-in Capital. . . . . . . . . . . . . . . . . . . 734,477 734,933
Retained Earnings. . . . . . . . . . . . . . . . . . 208,749 177,638
Total Common Shareowner's Equity . . . . . . 999,810 969,155
Cumulative Preferred Stock:
Not Subject to Mandatory Redemption. . . . . . . . 52,000 87,000
Subject to Mandatory Redemption. . . . . . . . . . 135,000 100,000
Long-term Debt . . . . . . . . . . . . . . . . . . . 967,840 1,073,154
TOTAL CAPITALIZATION . . . . . . . . . . . . 2,154,650 2,229,309
OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . . 376,666 288,197
CURRENT LIABILITIES:
Long-term Debt Due Within One Year . . . . . . . . . 100,000 -
Short-term Debt. . . . . . . . . . . . . . . . . . . 11,700 50,075
Accounts Payable . . . . . . . . . . . . . . . . . . 49,196 57,918
Taxes Accrued. . . . . . . . . . . . . . . . . . . . 59,546 54,473
Interest Accrued . . . . . . . . . . . . . . . . . . 21,767 18,894
Rent Accrued - Rockport Plant Unit 2 . . . . . . . . 24,878 5,588
Obligations Under Capital Leases . . . . . . . . . . 34,983 20,585
Other. . . . . . . . . . . . . . . . . . . . . . . . 80,273 73,779
TOTAL CURRENT LIABILITIES. . . . . . . . . . 382,343 281,312
DEFERRED FEDERAL INCOME TAXES. . . . . . . . . . . . . 558,420 553,920
DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . . 175,474 186,032
DEFERRED GAIN ON SALE AND LEASEBACK -
ROCKPORT PLANT UNIT 2. . . . . . . . . . . . . . . . 205,965 211,446
DEFERRED CREDITS . . . . . . . . . . . . . . . . . . . 21,247 15,242
CONTINGENCIES (Note 3)
TOTAL. . . . . . . . . . . . . . . . . . . $3,874,765 $3,765,458
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Nine Months Ended
September 30,
1994 1993
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . $ 119,970 $ 83,577
Adjustments for Noncash Items:
Depreciation and Amortization. . . . . . . . . . . . . . 110,331 111,063
Amortization of Rockport Plant Unit 1
Phase-in Plan Deferrals. . . . . . . . . . . . . . . . 11,733 11,733
Amortization (Deferral) of Incremental Nuclear
Refueling Outage Expenses (net). . . . . . . . . . . . (10,881) 26,620
Deferred Federal Income Taxes. . . . . . . . . . . . . . (7,402) (38,979)
Deferred Investment Tax Credits. . . . . . . . . . . . . (10,208) (6,239)
Changes in Certain Current Assets and Liabilities:
Accounts Receivable (net). . . . . . . . . . . . . . . . 4,901 7,140
Fuel, Materials and Supplies . . . . . . . . . . . . . . 1,430 17,278
Accrued Utility Revenues . . . . . . . . . . . . . . . . (3,065) 51,091
Accounts Payable . . . . . . . . . . . . . . . . . . . . (8,722) (9,971)
Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . 5,073 44,651
Rent Accrued - Rockport Plant Unit 2 . . . . . . . . . . 19,290 18,464
Other (net). . . . . . . . . . . . . . . . . . . . . . . . (7,527) 414
Net Cash Flows From Operating Activities . . . . . . 224,923 316,842
INVESTING ACTIVITIES:
Construction Expenditures. . . . . . . . . . . . . . . . . (83,904) (76,922)
Proceeds from Sales of Property and Other. . . . . . . . . 1,207 -
Net Cash Flows Used For Investing Activities . . . . (82,697) (76,922)
FINANCING ACTIVITIES:
Issuance of Cumulative Preferred Stock . . . . . . . . . . 34,618 29,541
Issuance of Long-term Debt . . . . . . . . . . . . . . . . 89,221 174,095
Retirement of Cumulative Preferred Stock . . . . . . . . . (35,798) (40,896)
Retirement of Long-term Debt . . . . . . . . . . . . . . . (101,833) (300,911)
Change in Short-term Debt (net). . . . . . . . . . . . . . (38,375) (7,525)
Dividends Paid on Common Stock . . . . . . . . . . . . . . (79,956) (84,406)
Dividends Paid on Cumulative Preferred Stock . . . . . . . (8,364) (11,130)
Net Cash Flows Used For Financing Activities . . . . (140,487) (241,232)
Net Increase (Decrease) in Cash and Cash Equivalents . . . . 1,739 (1,312)
Cash and Cash Equivalents at Beginning of Period . . . . . . 3,752 7,459
Cash and Cash Equivalents at End of Period . . . . . . . . . $ 5,491 $ 6,147
Supplemental Disclosure:
Cash paid for interest net of capitalized amounts was $49,498,000 and $61,905,000 and
for income taxes was $66,249,000 and $41,003,000 in 1994 and 1993, respectively.
Noncash acquisitions under capital leases were $70,933,000 and $8,055,000 in 1994 and
1993, respectively.
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1994
(UNAUDITED)
1. GENERAL
The accompanying unaudited consolidated financial state-
ments should be read in conjunction with the 1993 Annual
Report as incorporated in and filed with the Form 10-K.
2. VALUATION OF SECURITIES
On January 1, 1994, the Company adopted Statement of
Financial Accounting Standards No. 115, Accounting for
Certain Investments in Debt and Equity Securities, (SFAS
115) which requires fair value accounting for investments in
equity securities with readily determinable market values
and investments in debt securities except those that the
reporting enterprise has the positive intent and ability to
hold to maturity. Debt securities not classified as held-
to-maturity, shall be classified as trading or available-
for-sale. Investments held in trust for decommissioning
nuclear facilities and for disposal of spent nuclear fuel
were classified as available-for-sale under SFAS 115. SFAS
115 requires that unrealized gains and losses on investments
classified as available-for-sale should be reported as a
separate component of shareholder's equity. However, due to
the rate-making process, SFAS 115 adjustments for unrealized
gains and losses to the carrying value of investments held
in the trusts will result in corresponding adjustments to
the nuclear decommissioning liability and the regulatory
asset for future recovery of spent nuclear fuel disposal
costs.
The cumulative effect of adopting SFAS 115 on January 1,
1994 resulted in an increase in the decommissioning and
spent nuclear fuel trust fund assets of $20.4 million
comprised of an unrealized holding gain of $21.4 million and
an unrealized holding loss of $1 million, with no effect on
net income and/or shareholder's equity due to a
corresponding net increase to the decommissioning liability
and a reduction to regulatory assets. As required by SFAS
115, prior year amounts were not restated.
The trust investments reported in other property and
investments had a fair value of $321 million at January 1,
1994 and consist primarily of long-term tax-exempt municipal
bonds. At January 1, 1994, the maturities of investments in
debt securities range from 1994 to 2024.
3. CONTINGENCIES
The Company continues to be involved in certain matters
discussed in its 1993 Annual Report.
<PAGE>
<PAGE>
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
THIRD QUARTER 1994 vs. THIRD QUARTER 1993
AND
YEAR-TO-DATE 1994 vs. YEAR-TO-DATE 1993
RESULTS OF OPERATIONS
Net income increased $4.1 million or 12% for the quarter and
$36.4 million or 43.5% for the year-to-date period primarily due
to a retail rate increase, growth in demand from industrial
customers and reduced interest expense from a refinancing
program. The year-to-date increase also reflects unseasonable
weather in the first and second quarters of 1994 and certain
nonoperating federal income tax adjustments.
Income statement line items which changed significantly
were:
Increase (Decrease)
Third Quarter Year-to-Date
(in millions) % (in millions) %
Operating Revenues. . . . $(3.3) (1) $ 63.6 7
Fuel Expense. . . . . . . (9.5) (16) (20.6) (12)
Purchased Power Expense . (2.3) (7) 30.4 38
Other Operation Expense . 7.3 11 23.3 12
Maintenance Expense . . . (3.7) (9) (8.7) (7)
Federal Income Taxes. . . 1.3 11 17.4 80
Nonoperating Income
(Loss). . . . . . . . . (0.2) (39) 6.9 N.M.
Interest Charges. . . . . (1.8) (9) (7.5) (12)
N.M. = Not Meaningful
Operating revenues declined in the third quarter due to a
20% decline in energy sales to wholesale customers attributable
to a refueling outage at the Company's nuclear plant, which
reduced the amount of energy supplied to affiliated members of
the AEP System Power Pool (Power Pool), and a decline in the
Company's share of Power Pool sales to unaffiliated utilities as
total Power Pool sales declined due to mild summer temperatures
in 1994. Although wholesale revenues decreased, retail revenues
increased during the third quarter due to a rate increase in the
Indiana retail jurisdiction effective in November 1993 as well as
increased commercial and industrial customer demand and an
increase in the number of industrial customers.
<PAGE>
<PAGE>
For the year-to-date period operating revenues increased
significantly mainly due to the rate increase in the Indiana
retail jurisdiction and increased energy requirements of retail
customers partly offset by reduced wholesale sales. Retail
energy sales increased due to colder winter weather, warmer
weather in May and June and growth in the number of industrial
customers and their usage. Wholesale sales declined as a result
of scheduled refueling and maintenance outages of both units of
the Company's nuclear plant in 1994 which reduced the amount of
energy supplied to the Power Pool, partially offset by increased
sales to directly-supplied unaffiliated wholesale customers.
The reduction in fuel expense reflects a lower average cost
of fuel consumed during the quarter and a decrease in generation
in both periods, due to the scheduled refueling and maintenance
outages at the nuclear units and a general boiler inspection and
repair outage at one coal-fired unit.
Purchased power expense declined in the third quarter
reflecting reduced purchases from the Power Pool due to the mild
summer weather in 1994. The increase in year-to-date purchased
power expense resulted from increased purchases for pass-through
sales to unaffiliated utilities in the first half of the year due
to the severe winter and the unseasonably hot spring weather;
lower internal generation due to the refueling and maintenance
outages; and increased purchases from AEP Generating Company, an
affiliated supplier, which had one unit out of service for
maintenance in the second quarter of 1993.
The accrual of additional nuclear decommissioning expense in
accordance with commission approvals, an increased accrual for
other postretirement benefits commensurate with rate recovery and
an increase in administrative and general expenses caused the
increase in other operation expense in both periods. The year-
to-date increase also includes a provision for the disposal of
inventory and for employee severance benefits resulting from the
closing of the Breed Plant.
Maintenance expense decreased in both periods as a result of
a reduction in overall planned levels of maintenance.
Incremental nuclear refueling maintenance performed during the
nuclear plant refueling outage is deferred and amortized over a
period of approximately eighteen months from the beginning of the
current refueling outage until the start of the next outage in
<PAGE>
accordance with rate-making commission approval.
Federal income taxes attributable to operations increased in
both periods primarily due to increased pre-tax operating income.
The increase in nonoperating income for the year-to-date
period reflects the favorable federal income tax effects of the
Breed Plant closing and the unfavorable effects of adopting
Statement of Financial Accounting Standards (SFAS) No. 109,
Accounting for Income Taxes, in January 1993 for nonutility
assets and liabilities.
Interest charges declined due to debt repayments during 1993
and a refinancing program which lowered interest rates.
Subsequent to September 1993 the Company retired $30 million of
long-term debt, and refinanced at lower rates $160 million of
long-term debt.
FINANCIAL CONDITION
Total plant and property additions including capital leases
for the first nine months of 1994 were $156 million. During the
same period short-term debt outstanding decreased $38 million
from year-end levels.
During February 1994 the Company redeemed $35 million of
7.76% Cumulative Preferred Stock and issued $35 million of 6.30%
Cumulative Preferred Stock. In March the Company retired $100
million of 8-3/4% First Mortgage Bonds and issued two $25 million
series of First Mortgage Bonds at 6.55% due in 2004 and 7.50% due
in 2024. In June the Company issued $40 million of 7.63% First
Mortgage Bonds due in 2001.
BREED PLANT RETIREMENT
In the first quarter of 1994 the 325-megawatt Breed Plant,
with an original cost of $153 million, was retired without
materially affecting results of operations or financial
condition. In accordance with the Federal Energy Regulatory
Commission Uniform System of Accounts the investment in the Breed
Plant was charged to the accumulated reserve for depreciation.
The Breed Plant, which began commercial operation in 1960, had
been operated on a restricted basis since 1992 when plans to
close the plant were announced.
NEW ACCOUNTING STANDARD
On January 1, 1994, the Company implemented SFAS 115,
Accounting for Certain Investments in Debt and Equity Securities,
which required that the Company adopt fair value accounting for
<PAGE>
nuclear decommissioning and spent nuclear fuel disposal trust
fund investments. SFAS 115 requires that unrealized gains and
losses on investments classified as available-for-sale should be
included as a separate component of shareholder's equity.
However, due to the rate-making process, adjustments to the fair
value of the investments held in the trusts resulted in
corresponding adjustments to the nuclear decommissioning
liability and the regulatory asset for future recovery of spent
nuclear fuel disposal costs. The cumulative effect of adopting
SFAS 115 resulted in recognizing an unrealized holding gain of
$21.4 million and an unrealized holding loss of $1 million with
no effect on net income due to a corresponding net increase in
the nuclear decommissioning liability and a reduction in
regulatory assets.
<PAGE>
<PAGE>
<TABLE>
KENTUCKY POWER COMPANY
STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
(in thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES . . . . . . . . . . . . $75,346 $76,443 $238,459 $216,778
OPERATING EXPENSES:
Fuel . . . . . . . . . . . . . . . . . . 16,151 16,742 54,571 39,791
Purchased Power. . . . . . . . . . . . . 23,346 26,202 70,355 75,267
Other Operation. . . . . . . . . . . . . 9,622 9,712 28,463 28,844
Maintenance. . . . . . . . . . . . . . . 7,204 7,614 24,712 21,518
Depreciation and Amortization. . . . . . 5,778 5,570 17,231 16,622
Taxes Other Than Federal Income Taxes. . 2,004 1,486 6,272 5,584
Federal Income Taxes . . . . . . . . . . 609 115 3,236 624
TOTAL OPERATING EXPENSES. . . . . 64,714 67,441 204,840 188,250
OPERATING INCOME . . . . . . . . . . . . . 10,632 9,002 33,619 28,528
NONOPERATING LOSS. . . . . . . . . . . . . (49) (2) (174) (118)
INCOME BEFORE INTEREST CHARGES . . . . . . 10,583 9,000 33,445 28,410
INTEREST CHARGES . . . . . . . . . . . . . 5,192 5,214 15,466 15,539
NET INCOME . . . . . . . . . . . . . . . . $ 5,391 $ 3,786 $ 17,979 $ 12,871
STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
(in thousands)
BALANCE AT BEGINNING OF PERIOD . . . . . . $87,186 $88,085 $85,296 $89,957
NET INCOME . . . . . . . . . . . . . . . . 5,391 3,786 17,979 12,871
CASH DIVIDENDS DECLARED. . . . . . . . . . 5,349 6,680 16,047 17,637
BALANCE AT END OF PERIOD . . . . . . . . . $87,228 $85,191 $87,228 $85,191
The common stock of the Company is wholly owned by
American Electric Power Company, Inc.
See Notes to Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
KENTUCKY POWER COMPANY
BALANCE SHEETS
(UNAUDITED)
<CAPTION>
September 30, December 31,
1994 1993
(in thousands)
ASSETS
<S> <C> <C>
ELECTRIC UTILITY PLANT:
Production . . . . . . . . . . . . . . . . . . . . . $213,424 $211,617
Transmission . . . . . . . . . . . . . . . . . . . . 252,234 249,966
Distribution . . . . . . . . . . . . . . . . . . . . 285,228 281,834
General. . . . . . . . . . . . . . . . . . . . . . . 56,422 54,637
Construction Work in Progress. . . . . . . . . . . . 31,142 9,374
Total Electric Utility Plant . . . . . . . . 838,450 807,428
Accumulated Depreciation and Amortization. . . . . . 261,634 248,673
NET ELECTRIC UTILITY PLANT . . . . . . . . . 576,816 558,755
OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . . 6,229 6,763
CURRENT ASSETS:
Cash and Cash Equivalents. . . . . . . . . . . . . . 1,080 858
Accounts Receivable. . . . . . . . . . . . . . . . . 18,961 24,346
Allowance for Uncollectible Accounts . . . . . . . . (306) (208)
Fuel . . . . . . . . . . . . . . . . . . . . . . . . 8,100 8,405
Materials and Supplies . . . . . . . . . . . . . . . 9,546 8,804
Accrued Utility Revenues . . . . . . . . . . . . . . 3,875 10,476
Prepayments. . . . . . . . . . . . . . . . . . . . . 2,030 1,367
TOTAL CURRENT ASSETS . . . . . . . . . . . . 43,286 54,048
REGULATORY ASSETS:
Amounts Due From Customers For Future
Federal Income Taxes . . . . . . . . . . . . . . . 42,884 37,910
Other. . . . . . . . . . . . . . . . . . . . . . . . 10,544 12,903
TOTAL REGULATORY ASSETS. . . . . . . . . . . 53,428 50,813
TOTAL. . . . . . . . . . . . . . . . . . . $679,759 $670,379
See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
KENTUCKY POWER COMPANY
BALANCE SHEETS
(UNAUDITED)
<CAPTION>
September 30, December 31,
1994 1993
(in thousands)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
CAPITALIZATION:
Common Stock - $50 Par Value:
Authorized - 2,000,000 Shares
Outstanding - 1,009,000 Shares . . . . . . . . . . $ 50,450 $ 50,450
Paid-in Capital. . . . . . . . . . . . . . . . . . . 68,750 58,750
Retained Earnings. . . . . . . . . . . . . . . . . . 87,228 85,296
Total Common Shareowner's Equity . . . . . . 206,428 194,496
Long-term Debt . . . . . . . . . . . . . . . . . . . 253,561 253,495
TOTAL CAPITALIZATION . . . . . . . . . . . . 459,989 447,991
OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . . 11,624 7,678
CURRENT LIABILITIES:
Short-term Debt. . . . . . . . . . . . . . . . . . . 32,725 38,150
Accounts Payable . . . . . . . . . . . . . . . . . . 14,100 18,456
Customer Deposits. . . . . . . . . . . . . . . . . . 4,398 4,621
Taxes Accrued. . . . . . . . . . . . . . . . . . . . 6,124 6,767
Interest Accrued . . . . . . . . . . . . . . . . . . 5,404 5,905
Other. . . . . . . . . . . . . . . . . . . . . . . . 11,201 8,186
TOTAL CURRENT LIABILITIES. . . . . . . . . . 73,952 82,085
DEFERRED FEDERAL INCOME TAXES. . . . . . . . . . . . . 112,860 108,966
DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . . 15,717 16,454
DEFERRED CREDITS . . . . . . . . . . . . . . . . . . . 5,617 7,205
CONTINGENCIES (Note 3)
TOTAL. . . . . . . . . . . . . . . . . . . $679,759 $670,379
See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
KENTUCKY POWER COMPANY
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Nine Months Ended
September 30,
1994 1993
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . $ 17,979 $ 12,871
Adjustments for Noncash Items:
Depreciation . . . . . . . . . . . . . . . . . . . . . . 17,255 16,684
Deferred Federal Income Taxes. . . . . . . . . . . . . . (1,080) (1,150)
Deferred Investment Tax Credits. . . . . . . . . . . . . (952) (962)
Changes in Certain Current Assets and Liabilities:
Accounts Receivable (net). . . . . . . . . . . . . . . . 5,483 (1,000)
Fuel, Materials and Supplies . . . . . . . . . . . . . . (437) (1,080)
Accrued Utility Revenues . . . . . . . . . . . . . . . . 6,601 3,963
Accounts Payable . . . . . . . . . . . . . . . . . . . . (4,356) (795)
Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . (643) (3,653)
Other (net). . . . . . . . . . . . . . . . . . . . . . . . 4,639 (782)
Net Cash Flows From Operating Activities . . . . . . 44,489 24,096
INVESTING ACTIVITIES:
Construction Expenditures. . . . . . . . . . . . . . . . . (33,786) (27,467)
Proceeds from Sales of Property. . . . . . . . . . . . . . 991 1,294
Net Cash Flows Used For Investing Activities . . . . (32,795) (26,173)
FINANCING ACTIVITIES:
Capital Contributions from Parent Company. . . . . . . . . 10,000 -
Issuance of Long-term Debt . . . . . . . . . . . . . . . . - 84,115
Change in Short-term Debt (net). . . . . . . . . . . . . . (5,425) 21,300
Retirement of Long-term Debt . . . . . . . . . . . . . . . - (85,885)
Dividends Paid . . . . . . . . . . . . . . . . . . . . . . (16,047) (17,637)
Net Cash Flows From (Used For) Financing Activities. (11,472) 1,893
Net Increase (Decrease) in Cash and Cash Equivalents . . . . 222 (184)
Cash and Cash Equivalents at Beginning of Period . . . . . . 858 1,070
Cash and Cash Equivalents at End of Period . . . . . . . . . $ 1,080 $ 886
Supplemental Disclosure:
Cash paid for interest net of capitalized amounts was $15,801,000 and $14,279,000
and for income taxes was $5,672,000 and $6,252,000 in 1994 and 1993, respectively.
Noncash acquisitions under capital leases were $3,093,000 and $1,681,000 in 1994
and 1993, respectively.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
KENTUCKY POWER COMPANY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1994
(UNAUDITED)
1. GENERAL
The accompanying unaudited financial statements should
be read in conjunction with the 1993 Annual Report as
incorporated in and filed with the Form 10-K.
2. CAPITAL CONTRIBUTION
The Company received from its parent a cash capital
contribution of $10 million in September 1994 which was
credited to paid-in capital.
3. CONTINGENCIES
The Company continues to be involved in certain matters
discussed in its 1993 Annual Report.
<PAGE>
<PAGE>
KENTUCKY POWER COMPANY
MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS
THIRD QUARTER 1994 vs. THIRD QUARTER 1993
AND
YEAR-TO-DATE 1994 vs. YEAR-TO-DATE 1993
Net income increased 42% or $1.6 million for the third
quarter and 40% or $5.1 million for the year-to-date period. The
increase for the quarter primarily reflects lower AEP System
Power Pool (Power Pool) capacity charges, due to a reduction in
the relative peak demand allocation ratio, and reduced overhead
line maintenance activity. Increased energy sales due to
unseasonable weather in the first six months of the year which
was partially offset by storm damage expenses accounted for the
favorable change in year-to-date net income.
Income statement items that changed significantly were:
Increase (Decrease)
Third Quarter Year-To-Date
(in millions) % (in millions) %
Operating Revenues . . . . . . $(1.1) (1) $21.7 10
Fuel Expense . . . . . . . . . (0.6) (4) 14.8 37
Purchased Power Expense. . . . (2.9) (11) (4.9) (7)
Maintenance Expense. . . . . . (0.4) (5) 3.2 15
Taxes Other Than Federal
Federal Income Taxes . . . . 0.5 35 0.7 12
Federal Income Taxes . . . . . 0.5 430 2.6 419
Operating revenues decreased slightly in the third quarter
as cooler summer weather reduced residential sales and lower
average fuel costs were passed on to customers. Operating
revenues increased significantly in the year-to-date period due
to increased energy sales to the Power Pool as a result of
increased availability of the Big Sandy Plant Unit 2 in 1994 and
an increase in sales to retail and unaffiliated wholesale
customers reflecting the unseasonable weather and forced outages
at unaffiliated generating units. Big Sandy Unit 2 was out of
service the entire second quarter of 1993 for scheduled
maintenance and boiler repair. Its availability in 1994 enabled
the Company to make energy sales to the Power Pool. Retail
energy sales increased 3% for the year-to-date period. Sales to
weather sensitive residential and commercial customers increased
because of the severe winter weather in 1994 and unseasonably
<PAGE>
warm weather in June 1994. The weather-related demand for energy
and forced outages at unaffiliated generating units caused the
increase in sales to unaffiliated wholesale customers.
The substantial increase in fuel expense in the year-to-date
period reflects increased generation, as a result of the
increased availability of Big Sandy Unit 2 and the weather
related increase in energy demand. The decrease in purchased
power expense in both periods was mainly due to decreased energy
purchases from the Power Pool reflecting the increase in
generation and a reduction in the Company's share of Power Pool
capacity charges. In the year-to-date period increased power
purchases from unaffiliated utilities for pass-through sales to
other unaffiliated utilities partly offset the effect of
decreased purchases from the Power Pool. Capacity costs are
allocated to Power Pool members based on their relative peak
demands. A decrease in the Company's prior twelve month peak
demand relative to the total peak demand of all Power Pool
members caused the decreased capacity charges from the Power
Pool.
Reduced overhead line maintenance resulted in decreased
maintenance expense for the quarter while storm damage to
distribution lines caused by severe winter storms in January and
February 1994 increased year-to-date maintenance expense.
The increase in taxes other than federal income taxes was
due to higher taxable income and in the year-to-date period the
effect of a favorable accrual adjustment for state income taxes
recorded in 1993.
The increase in federal income taxes for the quarter was
primarily due to increased pre-tax operating income offset in
part by changes in certain book/tax differences accounted for on
a flow-through basis and a retroactive 1% federal income tax rate
increase enacted in August 1993 and recorded in the third quarter
of 1993. The substantial increase in federal income taxes in the
year-to-date period was primarily due to an increase in pre-tax
operating income.
<PAGE>
<PAGE>
<TABLE>
OHIO POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
(in thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES . . . . . . . . . . . $429,496 $457,532 $1,333,889 $1,298,613
OPERATING EXPENSES:
Fuel . . . . . . . . . . . . . . . . . 167,530 181,051 528,119 502,085
Purchased Power. . . . . . . . . . . . 12,503 19,898 50,661 47,880
Other Operation. . . . . . . . . . . . 50,295 60,369 153,001 165,027
Maintenance. . . . . . . . . . . . . . 37,829 36,775 110,909 107,352
Depreciation and Amortization. . . . . 33,331 32,222 98,913 96,229
Taxes Other Than Federal Income Taxes. 44,804 41,085 133,695 126,278
Federal Income Taxes . . . . . . . . . 21,014 21,032 65,786 56,798
TOTAL OPERATING EXPENSES . . . 367,306 392,432 1,141,084 1,101,649
OPERATING INCOME . . . . . . . . . . . . 62,190 65,100 192,805 196,964
NONOPERATING INCOME. . . . . . . . . . . 2,624 2,153 4,820 13,061
INCOME BEFORE INTEREST CHARGES . . . . . 64,814 67,253 197,625 210,025
INTEREST CHARGES . . . . . . . . . . . . 22,416 23,610 67,016 77,596
NET INCOME . . . . . . . . . . . . . . . 42,398 43,643 130,609 132,429
PREFERRED STOCK DIVIDEND REQUIREMENTS. . 3,826 4,261 11,476 12,859
EARNINGS APPLICABLE TO COMMON STOCK. . . $ 38,572 $ 39,382 $ 119,133 $ 119,570
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
(in thousands)
BALANCE AT BEGINNING OF PERIOD . . . . . $485,759 $458,487 $474,500 $445,955
NET INCOME . . . . . . . . . . . . . . . 42,398 43,643 130,609 132,429
DEDUCTIONS:
Cash Dividends Declared:
Common Stock . . . . . . . . . . . . 34,617 41,090 103,851 108,735
Cumulative Preferred Stock . . . . . 3,826 4,262 11,476 12,865
Capital Stock Expense. . . . . . . . . 33 6 101 12
BALANCE AT END OF PERIOD . . . . . . . . $489,681 $456,772 $489,681 $456,772
The common stock of the Company is wholly owned by
American Electric Power Company, Inc.
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
OHIO POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
September 30, December 31,
1994 1993
(in thousands)
ASSETS
<S> <C> <C>
ELECTRIC UTILITY PLANT:
Production . . . . . . . . . . . . . . . . . . . . . $2,460,355 $2,412,973
Transmission . . . . . . . . . . . . . . . . . . . . 788,842 767,548
Distribution . . . . . . . . . . . . . . . . . . . . 775,799 766,639
General (including mining assets). . . . . . . . . . 785,110 754,347
Construction Work in Progress. . . . . . . . . . . . 89,947 100,820
Total Electric Utility Plant . . . . . . . . 4,900,053 4,802,327
Accumulated Depreciation and Amortization. . . . . . 2,063,471 1,992,082
NET ELECTRIC UTILITY PLANT . . . . . . . . . 2,836,582 2,810,245
OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . . 119,071 138,224
CURRENT ASSETS:
Cash and Cash Equivalents. . . . . . . . . . . . . . 10,894 20,803
Accounts Receivable (net). . . . . . . . . . . . . . 164,081 179,175
Fuel . . . . . . . . . . . . . . . . . . . . . . . . 134,373 179,554
Materials and Supplies . . . . . . . . . . . . . . . 63,553 66,791
Accrued Utility Revenues . . . . . . . . . . . . . . 23,552 32,234
Prepayments. . . . . . . . . . . . . . . . . . . . . 43,881 43,907
TOTAL CURRENT ASSETS . . . . . . . . . . . . 440,334 522,464
REGULATORY ASSETS:
Amounts Due From Customers For Future
Federal Income Taxes . . . . . . . . . . . . . . . 421,313 433,822
Other. . . . . . . . . . . . . . . . . . . . . . . . 200,442 211,550
TOTAL REGULATORY ASSETS. . . . . . . . . . . 621,755 645,372
TOTAL. . . . . . . . . . . . . . . . . . . $4,017,742 $4,116,305
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
OHIO POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
September 30, December 31,
1994 1993
(in thousands)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
CAPITALIZATION:
Common Stock - No Par Value:
Authorized - 40,000,000 Shares
Outstanding - 27,952,473 Shares. . . . . . . . . . $ 321,201 $ 321,201
Paid-in Capital. . . . . . . . . . . . . . . . . . . 463,100 463,100
Retained Earnings. . . . . . . . . . . . . . . . . . 489,681 474,500
Total Common Shareowner's Equity . . . . . . 1,273,982 1,258,801
Cumulative Preferred Stock:
Not Subject to Mandatory Redemption. . . . . . . . 126,240 126,240
Subject to Mandatory Redemption. . . . . . . . . . 115,000 115,000
Long-term Debt . . . . . . . . . . . . . . . . . . . 1,187,898 1,189,086
TOTAL CAPITALIZATION . . . . . . . . . . . . 2,703,120 2,689,127
OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . . 118,294 104,172
CURRENT LIABILITIES:
Long-term Debt Due Within One Year . . . . . . . . . 570 5,397
Short-term Debt. . . . . . . . . . . . . . . . . . . 2,104 40,250
Accounts Payable . . . . . . . . . . . . . . . . . . 87,291 140,089
Taxes Accrued. . . . . . . . . . . . . . . . . . . . 102,140 168,095
Interest Accrued . . . . . . . . . . . . . . . . . . 30,706 20,862
Obligations Under Capital Leases . . . . . . . . . . 25,216 21,916
Other. . . . . . . . . . . . . . . . . . . . . . . . 131,643 107,592
TOTAL CURRENT LIABILITIES. . . . . . . . . . 379,670 504,201
DEFERRED FEDERAL INCOME TAXES. . . . . . . . . . . . . 693,421 725,283
DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . . 43,686 45,795
DEFERRED CREDITS . . . . . . . . . . . . . . . . . . . 79,551 47,727
CONTINGENCIES (Note 3)
TOTAL. . . . . . . . . . . . . . . . . . . $4,017,742 $4,116,305
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
OHIO POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Nine Months Ended
September 30,
1994 1993
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . $ 130,609 $ 132,429
Adjustments for Noncash Items:
Depreciation, Depletion and Amortization . . . . . . . . 109,780 107,917
Deferred Federal Income Taxes. . . . . . . . . . . . . . (19,438) (23,393)
Deferred Investment Tax Credits. . . . . . . . . . . . . (2,606) (2,994)
Deferred Fuel Costs (net). . . . . . . . . . . . . . . . (4,351) 4,965
Amortization of Deferred Property Taxes. . . . . . . . . 50,808 48,386
Changes in Certain Current Assets and Liabilities:
Accounts Receivable (net). . . . . . . . . . . . . . . . 15,094 5,868
Fuel, Materials and Supplies . . . . . . . . . . . . . . 48,419 72,248
Accrued Utility Revenues . . . . . . . . . . . . . . . . 8,682 8,326
Accounts Payable . . . . . . . . . . . . . . . . . . . . (52,798) (1,034)
Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . (65,955) (49,858)
Interest Accrued . . . . . . . . . . . . . . . . . . . . 9,844 3,236
Other (net). . . . . . . . . . . . . . . . . . . . . . . . (4,293) (17,362)
Net Cash Flows From Operating Activities . . . . . . 223,795 288,734
INVESTING ACTIVITIES:
Construction Expenditures. . . . . . . . . . . . . . . . . (110,660) (103,416)
Proceeds from Sale of Property and Other . . . . . . . . . 36,693 3,647
Net Cash Flows Used For Investing Activities . . . . (73,967) (99,769)
FINANCING ACTIVITIES:
Issuance of Cumulative Preferred Stock . . . . . . . . . . - 29,554
Issuance of Long-term Debt . . . . . . . . . . . . . . . . 48,302 296,539
Change in Short-term Debt (net). . . . . . . . . . . . . . (38,146) 20,889
Retirement of Cumulative Preferred Stock . . . . . . . . . - (22,233)
Retirement of Long-term Debt . . . . . . . . . . . . . . . (54,566) (453,859)
Dividends Paid on Common Stock . . . . . . . . . . . . . . (103,851) (108,735)
Dividends Paid on Cumulative Preferred Stock . . . . . . . (11,476) (12,865)
Net Cash Flows Used For Financing Activities . . . . (159,737) (250,710)
Net Decrease in Cash and Cash Equivalents. . . . . . . . . . (9,909) (61,745)
Cash and Cash Equivalents at Beginning of Period . . . . . . 20,803 71,056
Cash and Cash Equivalents at End of Period . . . . . . . . . $ 10,894 $ 9,311
Supplemental Disclosure:
Cash paid for interest net of capitalized amounts was $55,187,000 and $72,965,000 and
for income taxes was $85,171,000 and $65,068,000 in 1994 and 1993, respectively.
Noncash acquisitions under capital leases were $31,837,000 and $11,845,000 in 1994 and
1993, respectively.
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
OHIO POWER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1994
(UNAUDITED)
1. GENERAL
The accompanying unaudited consolidated financial state-
ments should be read in conjunction with the 1993 Annual
Report as incorporated in and filed with the Form 10-K.
2. RATE MATTERS
Rate Request
On July 6, 1994 an application to increase base retail
rates was filed with the Public Utilities Commission of Ohio
(PUCO) seeking up to $152.5 million or a 13.8% increase in
annual revenues. More than half of the increase reflects
recovery of costs associated with the Gavin Plant's flue gas
desulfurization system and other costs associated with
meeting environmental restrictions imposed by the Clean Air
Act Amendments of 1990 (CAAA). The remainder of the request
seeks to recover increased costs of service since the last
base rate increase in 1986; an increase in depreciation
rates which includes recovery on a remaining life basis of
the cost of plant and equipment and the cost of removal of
plant and equipment; and deferred costs associated with
pressurized fluidized bed combustion (PFBC) research and
development as well as energy conservation demand-side
management (DSM) programs. Failure to recover these
deferred PFBC and DSM costs in cost of service would require
an immediate write-off of $15.6 million after tax.
3. CONTINGENCIES
Meigs Mine Litigation
In April 1994 the U.S. Court of Appeals for the Sixth
Circuit reversed the judgement of the U.S. District Court
for the Southern District of Ohio which had granted a
preliminary injunction to Southern Ohio Coal Company
(SOCCo), a mining subsidiary, preventing the United States
Environmental Protection Agency (Federal EPA) and the
Federal Office of Surface Mining, Reclamation and Enforce-
ment (OSM) from interfering with the removal of water from
SOCCo's Meigs 31 mine. On October 11, 1994, the U.S.
Supreme Court declined to review the U.S. Court of Appeals
decision. SOCCo is currently negotiating a resolution of
federal claims.
As a result of the West Virginia Division of Environ-
mental Protection proposing to fine SOCCo for alleged
violations from the release of mine water into the Ohio
River, SOCCo filed an action on June 1, 1994 in the U.S.
District Court for the Southern District of West Virginia
seeking a determination that the state of West Virginia has
no jurisdiction to impose penalties with respect to the
Meigs mine water discharges. On July 27, 1994 West Virginia
<PAGE>
filed an answer to SOCCo's complaint disputing SOCCo's
entitlement to a declaratory judgement and asserting a
counterclaim seeking an award of $2.55 million in civil
penalties, reimbursement of monitoring costs and compen-
sation for unspecified natural resources damage.
The resolution of these legal actions is not expected to
have a material adverse impact on results of operations or
financial condition.
Kammer Plant
On August 4, 1994, the Federal EPA issued a Notice of
Violation (NOV) to the Company alleging that the Kammer
Plant has been operating in violation of applicable
federally enforceable air pollution control requirements
since January 1, 1989. The Clean Air Act provides that
Federal EPA may, after the expiration of 30 days following
the issuance of the NOV, commence a civil action for
injunctive relief and/or civil penalties of up to $25,000
per day for each day of violation. On October 24, 1994,
following several months of negotiations, the Company
executed a Consent Decree which resolves that portion of the
August 4, 1994 NOV relating to compliance. The Decree has
been transmitted to the U.S. Department of Justice and
Federal EPA for their execution and lodging with the U.S.
District Court for the Northern District of West Virginia.
That portion of the NOV relating to penalties will be
addressed independently. At this time management is unable
to estimate the amount of any civil penalties that may be
imposed by the Federal EPA. It is not anticipated that the
ultimate resolution of this matter will have a material
adverse impact on financial condition.
Superfund Site
The Company was named as a third party defendant in a
cost recovery action involving a superfund site. There are
approximately two dozen parties involved in the litigation,
about half of which have active industrial operations
located at the site.
The Company and other parties are alleged to have sent
equipment containing PCBs to the site. PCBs have been
identified as one of the chemicals at the site warranting
remediation. The cost to date of site investigation and
negotiations with Federal EPA is approximately $24 million.
A report issued by an independent arbitrator in October 1994
allocated the investigation and negotiation costs to the
parties. The share allocated to the Company is not
significant.
Site remediation is presently estimated to be an
additional $40 million, although Federal EPA's 1986 Record
of Decision initially proposed a remedy which would cost in
excess of $60 million. The Company's ultimate share of the
total cost of the remediation cannot be estimated until an
allocation formula for this phase is established. If the
Company's share of the remediation cost is significant,
<PAGE>
results of operations would be adversely affected unless the
costs can be recovered through insurance proceeds and/or the
ratemaking process. It is not anticipated that the ultimate
resolution of this matter will have a material adverse
impact on financial condition.
Other
The Company continues to be involved in certain other
matters discussed in the 1993 Annual Report.
<PAGE>
<PAGE>
OHIO POWER COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
THIRD QUARTER 1994 vs. THIRD QUARTER 1993
AND
YEAR-TO-DATE 1994 vs. YEAR-TO-DATE 1993
RESULTS OF OPERATIONS
Net income decreased $1.2 million or 3% in the quarter
mainly from reduced demand for energy due to mild summer weather.
In the year-to-date period, net income declined $1.8 million or
1% as the favorable effect of severe winter weather in 1994 was
offset by a fuel cost disallowance recorded in 1994 related to
the Big Muskie Dragline as a result of a Public Utilities
Commission of Ohio order, the lack of full recovery of the cost
of idling another dragline under major industrial contracts which
do not provide for the direct recovery of such costs and a
reduction in nonoperating income. Income statement lines which
changed significantly were:
Increase (Decrease)
Third Quarter Year-To-Date
(in millions) % (in millions) %
Operating Revenues. . . . . . $(28.0) (6) $ 35.3 3
Fuel Expense. . . . . . . . . (13.5) (7) 26.0 5
Purchased Power Expense . . . (7.4) (37) 2.8 6
Other Operation Expense . . . (10.1) (17) (12.0) (7)
Taxes Other Than Federal
Income Taxes. . . . . . . . 3.7 9 7.4 6
Federal Income Taxes. . . . . - - 9.0 16
Nonoperating Income . . . . . 0.5 22 (8.2) (63)
Interest Charges. . . . . . . (1.2) (5) (10.6) (14)
Operating revenues declined in the third quarter primarily
due to decreased energy demand as a result of mild summer weather
and reduced fuel clause recoveries from retail customers. Energy
sales to weather sensitive residential and commercial customers
decreased 4% and 1%, respectively. Wholesale energy sales
decreased 36% reflecting the weather related decline in energy
requirements of affiliated members of the AEP System Power Pool
(Power Pool) and in the Company's share of sales to unaffiliated
utilities by the Power Pool.<PAGE>
<PAGE>
Operating revenues for the year-to-date period rose as the
severe winter weather increased the energy requirements of retail
customers and unaffiliated utilities. Energy sales to both
residential and commercial customers increased 3% in the first
nine months of 1994. Sales and the average revenue per
kilowatthour sold to unaffiliated utilities, including the
Company's share of sales to unaffiliated utilities made by the
Power Pool, increased as a result of the unseasonable winter
weather and forced outages at unaffiliated generating units.
Fuel expense and purchased power expense decreased in the
quarter reflecting the reduced energy requirements which caused a
decline in generation and energy purchases. Fuel expense was
also reduced in the quarter due to the operation of the fuel
clause adjustment mechanism whereby current expense in excess of
recoverable fuel cost was deferred and previous over-recoveries
were amortized. Year-to-date fuel expenses increased primarily
due to the fuel cost disallowance, the abandonment of the
dragline and a higher average cost of fuel consumed. Purchased
power expense increased in the year-to-date period due to
increased energy purchases from unaffiliated utilities for pass-
through sales to other unaffiliated utilities reflecting the
impact of the severe winter weather on demand for wholesale
energy in the first quarter of 1994 and outages at unaffiliated
generating units.
Other operation expense decreased in both periods primarily
due to a reduction in the amortization of pressurized fluidized
bed combustion demonstration plant cost, which is described in
Note 2 in the 1993 Annual Report. Also reducing other operation
expense was the effect of a provision for reorganization costs
recorded in the third quarter of 1993.
The increase in taxes other than federal income tax expense
was due to increased West Virginia business and occupation taxes
on generation reflecting an increase in generation at West
Virginia power plants and an increase in Ohio real and personal
property taxes due to an increase in property valuation and tax
rates.
<PAGE>
<PAGE>
Year-to-date federal income tax expense increased primarily
due to an increase in pre-tax operating book income and changes
in certain book/tax differences accounted for on a flow-through
basis.
The comparative decrease in nonoperating income for the
year-to-date period was primarily due to the effects of interest
income recorded in 1993 on a court ordered reversal of a prior
refund in the Company's Federal Energy Regulatory Commission
jurisdiction and on tax refunds received from the Internal
Revenue Service in connection with the settlement of audits of
prior years' tax returns; and a loss which was recorded in the
second quarter of 1994 for the termination of a capital lease on
surplus mining equipment. Also reducing year-to-date comparative
nonoperating income was the favorable effects of adopting SFAS
109 recorded in January 1993. Interest charges decreased in both
periods primarily as a result of the refinancing of debt at lower
interest rates.
FINANCIAL CONDITION
Total plant and property additions including capital leases
for the first nine months of 1994 were $144 million.
In January 1994 a coal mining subsidiary, Southern Ohio Coal
Company (SOCCo), entered into three loan agreements due January
2001 totaling $30 million with 6.20% fixed interest rates and one
$15 million variable interest rate term loan agreement due in
January 1999 with a rate of 3.725% through July 1994 and 5.6625%
through January 1995. The proceeds of the loan were used in
January 1994 to pay at maturity two fixed interest rate term
loans of $20 million at 8% and $25 million at 8.01%. Also during
January 1994 another mining subsidiary, Windsor Coal Company,
retired at maturity a $5 million term loan with an interest rate
of 8%.
RATE ACTIVITY
On July 6, 1994, the Company filed with the PUCO for an
annual revenue increase of up to $152.5 million. More than half
of the requested retail base rate increase is to recover costs
associated with the Gavin Plant's flue gas desulfurization system
(scrubbers) and other costs resulting from complying with the
Clean Air Act Amendments of 1990. The remainder of the increase
is to recover the additional cost of providing service to
customers since the last base rate increase in 1986; increased
depreciation rates for investment in plant and equipment based on
a remaining life method and recovery of removal costs; and
deferred costs associated with pressurized fluidized bed
combustion (PFBC) research and development as well as energy
conservation demand-side management (DSM) programs. Failure to
recover these deferred PFBC and DSM costs in cost of service
would result in the immediate write-off of $15.6 million after
tax.
NOTICE OF VIOLATION - KAMMER PLANT
On August 4, 1994, the United States Environmental
Protection Agency (Federal EPA) issued a Notice of Violation
(NOV) to the Company alleging that the Kammer Plant has been
operating in violation of applicable federally enforceable air
pollution control requirements since January 1, 1989. By law the
Federal EPA may seek penalties of up to $25,000 per day for each
day of violation. On October 24, 1994, following several months
of negotiations, the Company executed a Consent Decree which
resolves that portion of the August 4, 1994 NOV relating to
compliance. The Decree has been transmitted to the government
for its execution and filing with the U.S. District Court for the
Northern District of West Virginia. That portion of the NOV
relating to penalties will be addressed independently. At this
time management is unable to estimate the amount of any civil
penalties that may be imposed by the Federal EPA. It is not
anticipated that the ultimate resolution of this matter will have
a material adverse impact on financial condition.
MEIGS MINE LITIGATION
On October 11, 1994, the U.S. Supreme Court declined to
review the U.S. Court of Appeals for the Sixth Circuit's decision
that the Federal District Court did not have jurisdiction to
prohibit Federal EPA and the Federal Office of Surface Mining,
Reclamation and Enforcement (OSM) from interfering with the
emergency removal of water from Meigs 31 Mine. On July 15, 1994,
SOCCo filed a petition seeking review by the U.S. Supreme Court
of an Order of the U.S. Court of Appeals which held that the
injunction granted to SOCCo by the U.S. District Court for the
Southern District of Ohio was not supported by law. SOCCo is
currently negotiating a resolution of federal claims.<PAGE>
<PAGE>
On June 1, 1994, SOCCo filed an action in the U.S. District
Court for the Southern District of West Virginia seeking a
determination that the state of West Virginia has no jurisdiction
to impose penalties upon SOCCo as a result of the Meigs mine
water discharges. On July 27, 1994 West Virginia filed an answer
to SOCCo's complaint disputing SOCCo's entitlement to a
declaratory judgement and asserting a counterclaim seeking an
award of $2.55 million in civil penalties, reimbursement of
monitoring costs and compensation for unspecified natural
resources damage.
The resolution of the Meigs mine litigation is not expected
to have a material adverse impact on results of operations or
financial condition.
SUPERFUND SITE
The Company was named as a third party defendant in a cost
recovery action involving a superfund site. There are
approximately two dozen parties involved in the litigation, about
half of which have active industrial operations located at the
site.
The Company and other parties are alleged to have sent
equipment containing PCBs to the site. PCBs have been identified
as one of the chemicals at the site warranting remediation. The
cost to date of site investigation and negotiations with Federal
EPA is approximately $24 million. A report issued by an
independent arbitrator in October 1994 allocated investigation
costs to the parties. The share of site investigation and
negotiation costs allocated to the Company is not significant.
Site remediation is presently estimated to be an additional
$40 million, although Federal EPA's 1986 Record of Decision
initially proposed a remedy which would cost in excess of $60
million. The Company's ultimate share of the total cost of the
remediation cannot be estimated until an allocation formula for
this phase is established. If the Company's share of the
remedial cost is significant, results of operations would be
adversely affected unless the costs can be recovered through
insurance proceeds and/or the ratemaking process. It is not
anticipated that the ultimate resolution of this matter will have
a material adverse impact on financial condition.
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
American Electric Power Company, Inc. ("AEP") and Appalachian
Power Company ("APCo")
On September 30, 1994, the U.S. Environmental Protection
Agency served APCo and Global Power Company, an independent
contractor retained by APCo, with a complaint alleging violations
of the Clean Air Act. The complaint is based on alleged
violations of the National Emission Standard for Asbestos related
to an asbestos abatement project at APCo's Kanawha River Plant.
The complaint seeks a civil administrative penalty of $167,500.
On October 27, 1994, APCo and Global jointly filed an answer to
this complaint and requested both a formal hearing and informal
settlement conference.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
AEP, AEP Generating Company ("AEGCo"), APCo, Columbus
Southern Power Company ("CSPCo"), Indiana Michigan Power
Company ("I&M"), Kentucky Power Company ("KEPCo") and
Ohio Power Company ("OPCo")
Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K:
AEP, AEGCo, APCo, CSPCo, I&M, KEPCo and OPCo
No reports on Form 8-K were filed during the quarter
ended September 30, 1994.
<PAGE>
<PAGE>
In the opinion of the companies, the financial statements
contained herein reflect all adjustments (consisting of only
normal recurring accruals) which are necessary to a fair
presentation of the results of operations for the interim
periods, except for the adjustments resulting from the adoption
of SFAS 115 on American Electric Power Company, Inc. and Indiana
Michigan Power Company.
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. The
signatures for each undersigned company shall be deemed to relate
only to matters having reference to such company and any
subsidiaries thereof.
AMERICAN ELECTRIC POWER COMPANY, INC.
G.P. Maloney P.J. DeMaria
G.P. Maloney, Vice President P.J. DeMaria, Treasurer
AEP GENERATING COMPANY
G.P. Maloney P.J. DeMaria
G.P. Maloney, Vice President P.J. DeMaria, Vice President
and Treasurer
APPALACHIAN POWER COMPANY
G.P. Maloney P.J. DeMaria
G.P. Maloney, Vice President P.J. DeMaria, Vice President
and Treasurer
COLUMBUS SOUTHERN POWER COMPANY
G.P. Maloney P.J. DeMaria
G.P. Maloney, Vice President P.J. DeMaria, Vice President
and Treasurer
INDIANA MICHIGAN POWER COMPANY
G.P. Maloney P.J. DeMaria
G.P. Maloney, Vice President P.J. DeMaria, Vice President
and Treasurer<PAGE>
KENTUCKY POWER COMPANY
G.P. Maloney P.J. DeMaria
G.P. Maloney, Vice President P.J. DeMaria, Vice President
and Treasurer
OHIO POWER COMPANY
G.P. Maloney P.J. DeMaria
G.P. Maloney, Vice President P.J. DeMaria, Vice President
and Treasurer
Date: November 10, 1994
II-2
[/TEXT]
[/DOCUMENT]
</DOCUMENT
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