FORM 10-Q
Securities and Exchange Commission
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
-------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-4473
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ARIZONA PUBLIC SERVICE COMPANY
--------------------------------------------------------
(Exact name of registrant as specified in its charter)
Arizona 86-0011170
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 North Fifth Street, P.O. Box 53999, Phoenix, Arizona 85072-3999
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (602) 250-1000
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(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Number of shares of common stock, $2.50 par value,
outstanding as of November 13, 1995: 71,264,947
<PAGE>
Glossary
ACC - Arizona Corporation Commission
AFUDC - Allowance for funds used during construction
Company - Arizona Public Service Company
EPA - Environmental Protection Agency
EPEC - El Paso Electric Company
Four Corners - Four Corners Power Plant
ITC - Investment tax credit
June 10-Q - Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
1995
NGS - Navajo Generating Station
1994 10-K - Arizona Public Service Company Annual Report on Form 10-K for the
fiscal year ended December 31, 1994
Palo Verde - Palo Verde Nuclear Generating Station
Pinnacle West - Pinnacle West Capital Corporation
SEC - Securities and Exchange Commission
SFAS No. 71- Statement of Financial Accounting Standards No. 71, "Accounting
for the Effects of Certain Types of Regulation"
SFAS No. 121 - Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of"
Tribe - Navajo Tribe
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
Arizona Public Service Company:
We have reviewed the accompanying condensed balance sheet of Arizona Public
Service Company as of September 30, 1995 and the related condensed statements of
income for the three-month, nine-month and twelve-month periods ended September
30, 1995 and 1994 and cash flows for the nine-month periods ended September 30,
1995 and 1994. These condensed financial statements are the responsibility of
the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such condensed financial statements for them to be in conformity with
generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet of Arizona Public Service Company as of December
31, 1994 and the related statements of income, retained earnings, and cash flows
for the year then ended (not presented herein); and in our report dated March 3,
1995, we expressed an unqualified opinion on those financial statements. In our
opinion, the information set forth in the accompanying condensed balance sheet
as of December 31, 1994, is fairly stated, in all material respects, in relation
to the balance sheet from which it has been derived.
DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Phoenix, Arizona
November 2, 1995
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements
- ----------------------------
ARIZONA PUBLIC SERVICE COMPANY
CONDENSED STATEMENTS OF INCOME
------------------------------
(Unaudited)
Three Months
Ended September 30,
----------------------
1995 1994
--------- ---------
(Thousands of Dollars)
ELECTRIC OPERATING REVENUES .......................... $ 549,082 $ 540,883
--------- ---------
FUEL EXPENSES:
Fuel for electric generation ....................... 68,715 70,035
Purchased power .................................... 23,539 25,532
--------- ---------
Total ........................................... 92,254 95,567
--------- ---------
OPERATING REVENUES LESS FUEL EXPENSES ................ 456,828 445,316
--------- ---------
OTHER OPERATING EXPENSES:
Operations excluding fuel expenses ................. 75,807 77,555
Maintenance ........................................ 21,758 25,389
Depreciation and amortization ...................... 61,157 58,827
Income taxes - current ............................. 81,163 66,865
Income taxes - deferred ............................ 19,119 25,565
Other taxes ........................................ 35,222 36,000
--------- ---------
Total ........................................... 294,226 290,201
--------- ---------
OPERATING INCOME ..................................... 162,602 155,115
--------- ---------
OTHER INCOME (DEDUCTIONS):
AFUDC - equity ..................................... 1,111 1,014
Other - net ........................................ (14,393) (2,200)
Income taxes - current ............................. 2,727 2,978
Income taxes - deferred ............................ 18,578 1,911
--------- ---------
Total ........................................... 8,023 3,703
--------- ---------
INCOME BEFORE INTEREST DEDUCTIONS .................... 170,625 158,818
--------- ---------
INTEREST DEDUCTIONS:
Interest on long-term debt ......................... 39,063 40,169
Interest on short-term borrowings .................. 3,275 1,856
Debt discount, premium and expense ................. 2,072 1,927
AFUDC - debt ....................................... (2,130) (1,401)
--------- ---------
Total ........................................... 42,280 42,551
--------- ---------
NET INCOME ........................................... 128,345 116,267
PREFERRED STOCK DIVIDEND REQUIREMENTS ................ 4,775 5,908
--------- ---------
EARNINGS FOR COMMON STOCK ............................ $ 123,570 $ 110,359
========= =========
See Notes to Condensed Financial Statements.
<PAGE>
ARIZONA PUBLIC SERVICE COMPANY
CONDENSED STATEMENTS OF INCOME
------------------------------
(Unaudited)
Nine Months
Ended September 30,
---------------------------
1995 1994
---------------------------
(Thousands of Dollars)
ELECTRIC OPERATING REVENUES ...................... $ 1,266,228 $ 1,284,088
----------- -----------
FUEL EXPENSES:
Fuel for electric generation ................... 160,248 188,093
Purchased power ................................ 49,563 51,899
----------- -----------
Total ....................................... 209,811 239,992
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OPERATING REVENUES LESS FUEL EXPENSES ............ 1,056,417 1,044,096
----------- -----------
OTHER OPERATING EXPENSES:
Operations excluding fuel expenses ............. 207,167 219,998
Maintenance .................................... 76,081 89,011
Depreciation and amortization .................. 181,996 174,401
Income taxes - current ......................... 129,638 95,059
Income taxes - deferred ........................ 31,179 52,949
Other taxes .................................... 105,821 106,809
----------- -----------
Total ....................................... 731,882 738,227
----------- -----------
OPERATING INCOME ................................. 324,535 305,869
----------- -----------
OTHER INCOME (DEDUCTIONS):
AFUDC - equity ................................. 3,645 2,837
Palo Verde accretion income .................... -- 33,596
Other - net .................................... (10,862) 16,976
Income taxes - current ......................... 1,791 4,895
Income taxes - deferred ........................ 28,039 (15,506)
----------- -----------
Total ....................................... 22,613 42,798
----------- -----------
INCOME BEFORE INTEREST DEDUCTIONS ................ 347,148 348,667
----------- -----------
INTEREST DEDUCTIONS:
Interest on long-term debt ..................... 120,986 120,209
Interest on short-term borrowings .............. 6,932 4,990
Debt discount, premium and expense ............. 6,082 6,800
AFUDC - debt ................................... (6,481) (3,918)
----------- -----------
Total ....................................... 127,519 128,081
----------- -----------
NET INCOME ....................................... 219,629 220,586
PREFERRED STOCK DIVIDEND REQUIREMENTS ............ 14,358 20,390
----------- -----------
EARNINGS FOR COMMON STOCK ........................ $ 205,271 $ 200,196
=========== ===========
See Notes to Condensed Financial Statements.
<PAGE>
ARIZONA PUBLIC SERVICE COMPANY
CONDENSED STATEMENTS OF INCOME
------------------------------
(Unaudited)
Twelve Months
Ended September 30,
----------------------------
1995 1994
----------- -----------
(Thousands of Dollars)
ELECTRIC OPERATING REVENUES .................... $ 1,608,308 $ 1,647,457
----------- -----------
FUEL EXPENSES:
Fuel for electric generation ................. 209,258 242,319
Purchased power .............................. 61,250 65,595
----------- -----------
Total ..................................... 270,508 307,914
----------- -----------
OPERATING REVENUES LESS FUEL EXPENSES .......... 1,337,800 1,339,543
----------- -----------
OTHER OPERATING EXPENSES:
Operations excluding fuel expenses ........... 279,461 296,960
Maintenance .................................. 106,699 126,806
Depreciation and amortization ................ 243,703 230,111
Income taxes - current ....................... 141,228 105,047
Income taxes - deferred ...................... 39,783 65,634
Other taxes .................................. 139,827 140,972
----------- -----------
Total ..................................... 950,701 965,530
----------- -----------
OPERATING INCOME ............................... 387,099 374,013
----------- -----------
OTHER INCOME (DEDUCTIONS):
AFUDC - equity ............................... 4,749 3,069
Palo Verde accretion income .................. -- 53,058
Other - net .................................. (11,823) 16,417
Income taxes - current ....................... 2,826 5,824
Income taxes - deferred ...................... 28,573 (22,515)
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Total ..................................... 24,325 55,853
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INCOME BEFORE INTEREST DEDUCTIONS .............. 411,424 429,866
----------- -----------
INTEREST DEDUCTIONS:
Interest on long-term debt ................... 160,617 160,556
Interest on short-term borrowings ............ 8,147 5,918
Debt discount, premium and expense ........... 8,136 9,160
AFUDC - debt ................................. (8,005) (5,299)
----------- -----------
Total ..................................... 168,895 170,335
----------- -----------
NET INCOME ..................................... 242,529 259,531
PREFERRED STOCK DIVIDEND REQUIREMENTS .......... 19,242 28,399
----------- -----------
EARNINGS FOR COMMON STOCK ...................... $ 223,287 $ 231,132
=========== ===========
See Notes to Condensed Financial Statements.
<PAGE>
ARIZONA PUBLIC SERVICE COMPANY
CONDENSED BALANCE SHEETS
------------------------
ASSETS
(Unaudited)
September 30, December 31,
1995 1994
------------- ------------
(Thousands of Dollars)
UTILITY PLANT:
Electric plant in service
and held for future use ................. $ 6,596,545 $ 6,475,249
Less accumulated depreciation
and amortization ........................ 2,274,345 2,122,439
------------ ------------
Total ................................. 4,322,200 4,352,810
Construction work in progress ............ 246,515 224,312
Nuclear fuel, net of amortization ........ 59,138 46,951
------------ ------------
Utility plant - net ...................... 4,627,853 4,624,073
------------ ------------
INVESTMENTS AND OTHER ASSETS: .............. 89,968 90,105
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents ................ 23,188 6,532
Accounts receivable:
Service customers ..................... 141,818 103,711
Other ................................. 22,486 27,008
Allowance for doubtful accounts ....... (1,751) (2,176)
Accrued utility revenues ................. 78,851 55,432
Materials and supplies, at average cost .. 89,285 89,864
Fossil fuel, at average cost ............. 27,160 35,735
Deferred income taxes .................... 6,314 19,114
Other .................................... 15,893 14,162
------------ ------------
Total current assets .................. 403,244 349,382
------------ ------------
DEFERRED DEBITS:
Regulatory asset for income taxes ........ 544,080 557,049
Palo Verde Unit 3 cost deferral .......... 285,716 292,586
Palo Verde Unit 2 cost deferral .......... 167,389 171,936
Unamortized costs of reacquired debt ..... 62,720 60,942
Unamortized debt issue costs ............. 18,620 17,673
Other .................................... 192,816 184,515
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Total deferred debits ................. 1,271,341 1,284,701
------------ ------------
TOTAL ................................. $ 6,392,406 $ 6,348,261
============ ============
See Notes to Condensed Financial Statements.
<PAGE>
ARIZONA PUBLIC SERVICE COMPANY
CONDENSED BALANCE SHEETS
------------------------
LIABILITIES
(Unaudited)
September 30, December 31,
1995 1994
------------- ------------
(Thousands of Dollars)
CAPITALIZATION:
Common stock ..................................... $ 178,162 $ 178,162
Premiums and expense - net ....................... 1,039,546 1,039,303
Retained earnings ................................ 431,178 353,655
---------- ----------
Common stock equity ............................. 1,648,886 1,571,120
Non-redeemable preferred stock ................... 193,561 193,561
Redeemable preferred stock ....................... 75,000 75,000
Long-term debt less current maturities ........... 2,153,116 2,181,832
---------- ----------
Total capitalization .......................... 4,070,563 4,021,513
---------- ----------
CURRENT LIABILITIES:
Commercial paper ................................. 62,200 131,500
Current maturities of long-term debt ............. 3,385 3,428
Accounts payable ................................. 99,101 110,854
Accrued taxes .................................... 176,175 89,412
Accrued interest ................................. 31,613 45,170
Common dividends payable ......................... 15,000 --
Other ............................................ 68,847 50,487
---------- ----------
Total current liabilities ..................... 456,321 430,851
---------- ----------
DEFERRED CREDITS AND OTHER:
Deferred income taxes ............................ 1,438,024 1,436,184
Deferred investment tax credit ................... 118,525 142,994
Unamortized gain - sale of utility plant ......... 92,658 98,551
Customer advances for construction ............... 19,238 16,564
Other ............................................ 197,077 201,604
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Total deferred credits and other .............. 1,865,522 1,895,897
---------- ----------
COMMITMENTS AND CONTINGENCIES (Notes 6, 7 and 8)
TOTAL ......................................... $6,392,406 $6,348,261
========== ==========
See Notes to Condensed Financial Statements.
<PAGE>
ARIZONA PUBLIC SERVICE COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
----------------------------------
(Unaudited)
Nine Months
Ended September 30,
-----------------------
1995 1994
--------- ---------
(Thousands of Dollars)
Cash Flows from Operating Activities:
Net income ....................................... $ 219,629 $ 220,586
Items not requiring cash:
Depreciation and amortization .................. 181,996 174,401
Nuclear fuel amortization ...................... 24,354 23,226
AFUDC - equity ................................. (3,645) (2,837)
Deferred income taxes - net .................... 27,609 74,390
Deferred investment tax credit - net ........... (24,469) (5,935)
Revenue refund reversal ........................ -- (9,308)
Palo Verde accretion income .................... -- (33,596)
Changes in certain current assets and liabilities:
Accounts receivable - net ...................... (34,010) (28,219)
Accrued utility revenues ....................... (23,419) (23,641)
Materials, supplies and fossil fuel ............ 9,154 9,611
Other current assets ........................... (1,731) (1,595)
Accounts payable ............................... (65) 16,634
Accrued taxes .................................. 86,763 67,759
Accrued interest ............................... (13,557) (10,926)
Other current liabilities ...................... 18,360 19,353
Other - net ...................................... 11,999 (3,022)
--------- ---------
Net cash flow provided by operating activities 478,968 486,881
--------- ---------
Cash Flows from Investing Activities:
Capital expenditures ............................. (219,597) (179,836)
AFUDC - equity ................................... 3,645 2,837
Other ............................................ (13,354) (7,361)
--------- ---------
Net cash flow used for investing activities .. (229,306) (184,360)
--------- ---------
Cash Flows from Financing Activities:
Long-term debt ................................... 82,863 498,418
Short-term borrowings - net ...................... (69,300) (112,500)
Dividends paid on common stock ................... (112,500) (105,000)
Dividends paid on preferred stock ................ (14,358) (21,207)
Repayment of preferred stock ..................... (4) (104,096)
Repayment and reacquisition of long-term debt .... (119,707) (457,432)
--------- ---------
Net cash flow used for financing activities .. (233,006) (301,817)
--------- ---------
Net increase in cash and cash equivalents .......... 16,656 704
Cash and cash equivalents at beginning of period ... 6,532 7,557
--------- ---------
Cash and cash equivalents at end of period ......... $ 23,188 $ 8,261
========= =========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest (excluding capitalized interest) ...... $ 135,034 $ 132,050
Income taxes ................................... $ 84,599 $ 60,151
See Notes to Condensed Financial Statements.
<PAGE>
ARIZONA PUBLIC SERVICE COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying unaudited condensed financial
statements contain all adjustments (consisting of normal recurring accruals)
necessary to present fairly the financial position of the Company as of
September 30, 1995, the results of operations for the three months, nine months
and twelve months ended September 30, 1995 and 1994, and the cash flows for the
nine months ended September 30, 1995 and 1994. It is suggested that these
condensed financial statements and notes to condensed financial statements be
read in conjunction with the financial statements and notes to financial
statements included in the 1994 10-K. Consistent with the 1995 presentation,
prior year's electric operating revenues and other taxes have been restated to
exclude sales tax on electric revenues.
2. The Company's operations are subject to seasonal fluctuations, with
variations occurring in energy usage by customers from season to season and from
month to month within a season, primarily as a result of changing weather
conditions. For this and other reasons, the results of operations for interim
periods are not necessarily indicative of the results to be expected for the
full year.
3. All the outstanding shares of common stock of the Company are owned by
Pinnacle West. Pursuant to a Pledge Agreement, dated as of January 31, 1990, and
as part of a restructuring of substantially all of its outstanding indebtedness,
Pinnacle West granted certain of its lenders a security interest in all of the
Company's outstanding common stock.
4. See "Liquidity and Capital Resources" in Part I, Item 2 of this report for
changes in capitalization since December 31, 1994.
5. In May 1994, the ACC approved a retail rate settlement agreement which
provided for a net annual retail rate reduction of approximately $32.3 million
($19 million after tax), or 2.2% on average, effective June 1, 1994. As part of
the settlement, the Company reversed approximately $20 million of depreciation
($15 million after tax) related to a 1991 Palo Verde write-off. The 1994 rate
settlement also provided for the accelerated amortization of substantially all
deferred ITCs over a five-year period beginning in 1995. In addition, the 1994
rate settlement included a moratorium on filing for permanent rate changes,
except under certain circumstances, prior to the end of 1996 for both the
Company and the ACC staff, and an incentive rewarding reduction in fuel and
operating and maintenance cost per kilowatt-hour below established targets.
6. The Palo Verde participants have insurance for public liability payments
resulting from nuclear energy hazards to the full limit of liability under
federal law. This potential liability is covered by primary liability insurance
provided by commercial insurance carriers in the amount of $200 million and the
balance by an industry-wide retrospective assessment program. The maximum
assessment per reactor under the retrospective rating program for each nuclear
incident is approximately $79 million, subject to an annual limit of $10 million
per incident. Based upon the Company's 29.1% interest in the three Palo Verde
units, the Company's maximum potential assessment per incident is approximately
$69 million, with an annual payment limitation of approximately $9 million.
The Palo Verde participants maintain "all risk" (including nuclear hazards)
insurance for property damage to, and decontamination of, property at Palo Verde
in the aggregate amount of $2.78 billion, a substantial portion of which must
first be applied to stabilization and decontamination. The Company has also
secured insurance against portions of any increased cost of generation or
purchased power and business interruption resulting from a sudden and unforeseen
outage of any of the three units. The insurance coverage discussed in this and
the previous paragraph is subject to certain policy conditions and exclusions.
7. The Company has encountered tube cracking in the Palo Verde steam generators
and has taken, and will continue to take, remedial actions that it believes have
slowed the rate of tube degradation. The projected service life of the steam
generators is reassessed periodically in conjunction with inspections made
during scheduled outages of the Palo Verde units. The Company's ongoing analyses
indicate that it will be economically desirable for the Company to replace the
Unit 2 steam generators, which have been most affected by tube cracking, in five
to ten years. The Company expects that the steam generator replacement can be
accomplished within financial parameters established before replacement was a
consideration, and the Company estimates that its share of the replacement costs
(in 1995 dollars and including installation and replacement power costs) will be
between $30 million and $50 million, most of which will be incurred after the
year 2000. The Company expects that the replacement would be performed in
conjunction with a normal refueling outage in order to limit incremental outage
time to approximately 50 days. Based on the latest available data, the Company
estimates that the Unit 1 and Unit 3 steam generators should operate for 40
years (until 2025 and 2027, respectively), although the Company will continue
its normal periodic assessment of these steam generators.
8. El Paso Electric Company, one of the joint owners of Palo Verde and Four
Corners, has been operating under Chapter 11 of the Bankruptcy Code since 1992.
On September 29, 1995 EPEC filed with the bankruptcy court a revised plan
whereby, among other things, certain issues, including EPEC allegations against
the Company regarding the 1989-90 Palo Verde outages, will be resolved, and EPEC
will assume the joint facilities operating agreements. If the plan is not
approved, the Company does not expect that there would be a material adverse
effect on its operations or financial position.
<PAGE>
ARIZONA PUBLIC SERVICE COMPANY
Item 2. Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations.
- --------------
Operating Results
- -----------------
The following table summarizes the Company's revenues and earnings for the
three-month, nine-month and twelve-month periods ended September 30, 1995 and
1994:
Periods ended September 30
(Thousands of Dollars)
Three Months Nine Months Twelve Months
------------------ ---------------------- ----------------------
1995 1994 1995 1994 1995 1994
------------------ ---------------------- ---------------------
Operating
revenues $549,082 $540,883 $1,266,228 $1,284,088 $1,608,308 $1,647,457
Earnings for
common stock $123,570 $110,359 $ 205,271 $ 200,196 $ 223,287 $ 231,132
Operating Results - Three-month period ended September 30, 1995 compared
--------------------------------------------------------------------------
to three-month period ended September 30, 1994
----------------------------------------------
Earnings increased in the three-month period ended September 30, 1995
primarily due to the accelerated amortization of investment tax credits,
customer growth, and lower operations and maintenance expenses. The accelerated
investment tax credit amortization was a result of the 1994 rate settlement (see
Note 5 of Notes to Condensed Financial Statements in Part I, Item 1 of this
report and "Other Income" below) and is reflected as a decrease to income tax
expense. Operations and maintenance expenses decreased due to various cost
reductions. Partially offsetting these positive factors were the write-down of
an office building and milder weather.
Operating Results - Nine-month period ended September 30, 1995 compared to
--------------------------------------------------------------------------
nine-month period ended September 30, 1994
------------------------------------------
Earnings increased in the nine-month period ended September 30, 1995
primarily due to customer growth, accelerated investment tax credit
amortization, lower fuel costs, lower operations and maintenance expenses, lower
preferred stock dividends, and a gain recognized on the sale of a small
subsidiary. The accelerated investment tax credit amortization was a result of
the 1994 rate settlement (see Note 5 of Notes to Condensed Financial Statements
in Part I, Item 1 of this report and "Other Income" below) and is reflected as a
decrease to income tax expense. Fuel expense decreased due largely to lower fuel
prices and lower average fuel costs resulting from increased nuclear generation.
Operations and maintenance expenses were down due to improved nuclear
operations, employee severance costs incurred in 1994 and lower fossil plant
overhaul costs. Preferred stock dividends decreased due to less preferred stock
outstanding. Partially offsetting these positive factors were the absence of
non-cash accretion income and revenue refund reversals related to a 1991 rate
settlement (see Notes 1k and 1f of Notes to Financial Statements in Part II,
Item 8 of the 1994 10-K), milder weather, the reversal in 1994 of certain
previously-recorded depreciation related to Palo Verde, a retail rate reduction
which became effective June 1, 1994, and the write-down of an office building.
Operating Results - Twelve-month period ended September 30, 1995 compared
--------------------------------------------------------------------------
to twelve-month period ended September 30, 1994
-----------------------------------------------
Earnings decreased in the twelve-month period ended September 30, 1995
primarily due to the absence of non-cash accretion income and revenue refund
reversals related to a 1991 rate settlement (see Notes 1k and 1f of Notes to
Financial Statements in Part II, Item 8 of the 1994 10-K), milder weather, a
retail rate reduction which became effective June 1, 1994 (see Note 5 of Notes
to Condensed Financial Statements in Part I, Item 1 of this report), the
reversal in 1994 of certain previously-recorded depreciation related to Palo
Verde, increased depreciation expense, and the write-down of an office building.
Depreciation expense increased primarily due to higher plant balances and higher
depreciation rates. Partially offsetting these negative factors were lower
operations and maintenance expenses, lower fuel costs, customer growth,
accelerated investment tax credit amortization, and lower preferred stock
dividends. Operations and maintenance expenses decreased due to improved nuclear
operations and lower fossil plant overhaul costs. Fuel expense was down due
largely to lower average fuel costs resulting from increased nuclear generation
and lower fuel prices. The accelerated investment tax credit amortization was a
result of the 1994 rate settlement and is reflected as a decrease to income tax
expense (see "Other Income" below). Preferred stock dividends decreased due to
less preferred stock outstanding.
Other Income
------------
Other income reflects accounting practices required for regulated public
utilities and represents a composite of cash and non-cash items, including AFUDC
and accretion income on Palo Verde Unit 3, which the Company completed recording
in May 1994. See Note 1k of Notes to Financial Statements in Part II, Item 8 of
the 1994 10-K. For the three months ended September 30, 1995, other income
included approximately $11 million of accelerated ITC amortization. Other income
for the nine months and twelve months ended September 30, 1995 included
approximately $19 million of accelerated ITC amortization.
Liquidity and Capital Resources
- -------------------------------
For the nine months ended September 30, 1995, the Company incurred
approximately $200 million in construction expenditures, accounting for
approximately 71% of the most recently estimated 1995 construction expenditures.
The Company has estimated total construction expenditures for the years 1995,
1996 and 1997 to be approximately $280 million, $244 million, and $223 million,
respectively. These amounts include about $27 million each year for nuclear fuel
expenditures.
Since December 31, 1994, the Company has (i) issued $75 million of its
Junior Subordinated Deferrable Interest Debentures ("MIDS"), (ii) incurred
approximately $14 million of long-term debt in connection with a tax-exempt
financing, (iii) redeemed on March 2, 1995, $49.15 million of its First Mortgage
Bonds, 10.25% Series due 2000, (iv) repurchased approximately $23 million of its
First Mortgage Bonds, and (v) redeemed on May 1, 1995, $50 million of its First
Mortgage Bonds, 13 1/4% Series due 2007.
Refunding obligations for preferred stock and long-term debt, a
capitalized lease obligation, and certain actual and anticipated early
redemptions, including premiums thereon, are expected to total approximately
$130 million, $4 million, and $164 million for the years 1995, 1996, and 1997,
respectively. During the first nine months of 1995, the Company refunded
approximately $130 million (100%) of the estimated 1995 total.
Provisions in the Company's mortgage bond indenture and articles of
incorporation require certain coverage ratios to be met before the Company can
issue additional first mortgage bonds or preferred stock. In addition, the bond
indenture limits the amount of additional first mortgage bonds which may be
issued to a percentage of net property additions, to the amount of certain first
mortgage bonds that have been redeemed or retired, and/or to cash deposited with
the mortgage bond trustee. As of September 30, 1995, and adjusting for the
repurchase and incurrence of approximately $9 million and $4 million,
respectively, of long-term debt, the Company estimates that the mortgage bond
indenture and the articles of incorporation would have allowed the Company to
issue up to approximately $1.501 billion and $1.028 billion of additional first
mortgage bonds and preferred stock, respectively.
The ACC has authority over the Company with respect to the issuance of
long-term debt and equity securities. Existing ACC orders allow the Company to
have up to approximately $ 2.6 billion in long-term debt and approximately $501
million of preferred stock outstanding at any one time.
Management does not expect any of the foregoing restrictions to limit the
Company's ability to meet its capital requirements.
Accounting Issue
- ----------------
In March 1995 the Financial Accounting Standards Board issued SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," which is effective in 1996. This statement requires
that long-lived assets be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An
impairment loss would be recognized if the sum of the estimated future
undiscounted cash flows to be generated by an asset is less than its carrying
value. The amount of the loss would be based on a comparison of book value to
fair value. The standard also amends SFAS No. 71, "Accounting for the Effects of
Certain Types of Regulation," to require write-off of a regulatory asset if it
is no longer probable that future revenues will recover the cost of the asset.
This new standard does not impact the Company at this time; however, it will be
reviewed on an ongoing basis.
Competition
- -----------
A significant challenge for the Company will be how well it is able to
respond to increasingly competitive conditions in the electric utility industry,
while continuing to earn an acceptable return for its shareholders. Strategies
emphasize managing costs, stabilizing electric rates, negotiating long-term
contracts with large customers and capitalizing on the growth characteristics of
its service territory.
One of the issues that must be addressed responsibly is the recovery in a
more competitive environment of the carrying value of assets acquired or
recorded under the existing regulatory environment.
The 1994 rate settlement provided for a study by the Company and the ACC
staff to develop new procedures to address market conditions and increasing
competition in the electric utility industry. The Company anticipates filing
recommendations with the ACC in late 1995. A separate ACC proceeding on
competition was opened by the ACC in mid-1994 and is ongoing.
As the forces of competition continue to impact the industry, it will
become clearer as to what customer sectors and what regions will be most
affected and what strategies are best to deal with those forces.
<PAGE>
PART II - OTHER INFORMATION
---------------------------
ITEM 5. Other Information
- --------------------------
Palo Verde Nuclear Generating Station
-------------------------------------
See Note 7 of Notes to Condensed Financial Statements in Part I, Item 1 of
this report for a discussion of issues regarding the Palo Verde steam
generators.
Construction and Financing Programs
-----------------------------------
See "Liquidity and Capital Resources" in Part I, Item 2 of this report for a
discussion of the Company's construction and financing programs.
Navajo Nation
-------------
Four Corners Power Plant and Navajo Generating Station are located on the
Navajo Reservation and are held under easements granted by the federal
government as well as leases from the Navajo Tribe. The Company is the Four
Corners operating agent and owns a 100% interest in Four Corners Units 1, 2 and
3, and a 15% interest in Four Corners Units 4 and 5. The Company owns a 14%
interest in NGS Units 1, 2, and 3. In July 1995 the Navajo Nation enacted the
Navajo Nation Air Pollution Prevention and Control Act, the Navajo Nation Safe
Drinking Water Act, and the Navajo Nation Pesticide Act (collectively, the
"Acts"). See "Navajo Nation" in Part II, Item 5 of the June 10-Q. By separate
letters dated October 12 and October 13, 1995 the Four Corners participants and
the NGS participants requested the United States Secretary of the Interior to
resolve their dispute with the Tribe regarding whether or not the Acts apply to
operations of NGS and Four Corners. On October 17, 1995 the Four Corners
participants and the NGS participants each filed a lawsuit in the District Court
of the Navajo Nation, Window Rock District, seeking, among other things, a
declaratory judgment that (i) their respective leases and federal easements
preclude the application of the Acts to the operations of Four Corners and NGS,
and (ii) the Navajo Nation and its agencies and courts lack adjudicatory
jurisdiction to determine the enforceability of the Acts as applied to Four
Corners and NGS. On October 18, 1995, the Tribe and the Four Corners and NGS
participants agreed to indefinitely stay the proceedings referenced in the
preceding two sentences so that the parties may attempt to resolve the dispute
without litigation, and the parties have requested that the Secretary and the
Court stay these proceedings. The Company cannot currently predict the outcome
of this matter.
<PAGE>
ITEM 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits
Exhibit No. Description
- ----------- -----------
10.1 Letter Agreement dated July 28, 1995, between the Company
and Jaron B. Norberg regarding certain of Mr. Norberg's
retirement benefits
10.2 Second Amendment to Pinnacle West Capital Corporation,
Arizona Public Service Company, SunCor Development Company, and
El Dorado Investment Company Deferred Compensation Plan,
effective as of January 1, 1994
10.3 Amendment to Pinnacle West Capital Corporation, Arizona
Public Service Company, SunCor Development Company, and El
Dorado Investment Company Deferred Compensation Plan, effective
as of December 1, 1994
10.4 Amendment No. 4 to Pinnacle West Capital Corporation,
Arizona Public Service Company, SunCor Development Company, and
El Dorado Investment Company Deferred Compensation Plan,
effective as of May 17, 1995
15.1 Letter in Lieu of Consent Regarding Unaudited Interim
Financial Information
27.1 Financial Data Schedule
(b) Reports on Form 8-K
During the quarter ended September 30, 1995, and the period ended November
13, 1995, the Company filed the following report on Form 8-K:
Report filed October 24, 1995 regarding the resignation of Bank of America
National Trust and Savings Association as trustee under the Company's
Mortgage and Deed of Trust dated as of July 1, 1946, and the appointment of
The Bank of New York as the successor trustee.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ARIZONA PUBLIC SERVICE COMPANY
(Registrant)
Dated: November 13, 1995 By Jaron B. Norberg
----------------- ----------------
Jaron B. Norberg
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer
and Officer Duly Authorized
to sign this Report)
Exhibit 10.1
July 28, 1995
Jaron Norberg
400 N. 5th Street
Phoenix, AZ 85004
Dear Jaron,
During your years of employment, you have developed an intimate knowledge of the
Company and its operations which, together with your skills and experience, has
proven to be invaluable. We recognize that there are other business
opportunities available to you and that your departure would be detrimental to
the Company.
Therefore, the Company agrees to provide you, in consideration for your
continued employment, deferred compensation in excess of that which is provided
for under the Supplemental Excess Benefit Retirement Plan (SEBRP). The
additional deferred compensation is equal to the amount which you would have
been entitled under the terms of the SEBRP with four additional "years of
service".
Except as otherwise provided below, the deferred compensation payable under this
agreement shall be paid over the same period and in the same form and shall
commence on the same date as the benefit actually payable to you under the SEBRP
as a result of your status as an officer of the Company. The Company will
withhold all required federal and state taxes from such payments. You should
also be aware that you will incur additional FICA costs as a result of this
increase in benefits. The deferred compensation payable to you as a result of
this letter will be payable from the Company's general assets.
While you are an "at-will" employee this additional deferred compensation is
subject to revocation in the event your employment is terminated for "cause".
For "cause" to be determined in the sole and absolute discretion of the APS
Board of Directors.
With the assurances provided by this letter, we trust that we can look forward
to your continuing efforts on behalf of the Company.
Very truly yours,
William J. Post
William J. Post
Chief Operating Officer and Senior Vice President
Exhibit 10.2
SECOND AMENDMENT TO
PINNACLE WEST CAPITAL CORPORATION
ARIZONA PUBLIC SERVICE COMPANY
SUNCOR DEVELOPMENT COMPANY
AND
EL DORADO INVESTMENT COMPANY
DEFERRED COMPENSATION PLAN
Pinnacle West Capital Corporation ("Pinnacle West"), pursuant to
the power granted to it by Section 11.2 of the above-named plan (the "Plan"),
hereby amends the Plan, effective as of January 1, 1994, by making the following
deletions and additions:
I. Section 3.6 is deleted in its entirety and a new Section 3.6 is added
to read as follows:
"3.6 Installment Distributions. In the event a benefit is paid in
--------------------------
installments under Articles 5, 6, or 8, installment payment amounts
shall be determined in the following manner:
(a) Interest Rate. The interest rate to be used to calculate
---------------
installment payment amounts shall be a fixed interest rate that is
determined by averaging the Crediting Rates for the Plan Year in
which a Participant becomes eligible to receive a benefit and the
four (4) preceding Plan Years. If a Participant has completed fewer
than five (5) Plan Years, this average shall be determined using
the Crediting Rates for the Plan Years during which the Participant
participated in the Plan.
(b) Installment Payments. For purposes of calculating installment
---------------------
payment amounts, each annual installment payment, starting with the
first payment [which for this purpose is deemed to be paid as of
the date that the Participant becomes eligible to receive a benefit
under this Plan (the "Eligibility Date")] and continuing thereafter
for each additional year that starts on the anniversary of the
Eligibility Date until the Participant's Account Balance is paid in
full, shall be deemed to have been paid prior to the crediting of
interest for that year. (The result of this is that interest
crediting shall be made after taking into account the annual
installment payment for that year.)
(c) Amortization. Based on the interest rate determined in accordance
------------
with Section 3.6(b) above, the Participant's Account Balance shall
be amortized in equal installment payments over the term of the
specified payment period. The resulting number shall be the
installment payment that is to be paid each year."
II. The First Sentence of Section 5.2 is deleted in its entirety and a new
first sentence of Section 5.2 is added to read as follows:
"A Participant, in connection with his or her commencement of
participation in the Plan, shall elect on an Election Form to receive the
Retirement Benefit in a lump sum or in equal annual payments over a
period of 5, 10 or 15 years (the latter determined in accordance with
Section 3.5 above)."
III. Except as specifically provided herein, the remaining provisions of the
Plan, as previously amended, shall remain in full force and effect.
Pinnacle West has caused this Amendment to be signed by its duly
authorized officer as of January 1, 1994.
Pinnacle West Capital Corporation
By: Faye Widenmann
-------------------------------
Its: Vice President
-------------------------------
Exhibit 10.3
AMENDMENT
TO
PINNACLE WEST CAPITAL CORPORATION
ARIZONA PUBLIC SERVICE COMPANY
SUNCOR DEVELOPMENT COMPANY
AND
EL DORADO INVESTMENT COMPANY
DEFERRED COMPENSATION PLAN
Pinnacle West Capital Corporation ("Pinnacle"), pursuant to the
power granted to it by Section 11.2 of the above-named plan (the "Plan"), hereby
amends the Plan, effective as of December 1, 1994, by deleting Section 1.28 and
inserting in its place the following new Section 1.28:
"'Retirement' and 'Retires' shall mean, with respect to an employee,
severance from employment with all Employers for any reason other than a
leave of absence, death or Disability on or after the earlier of the
attainment of: (a) age sixty-five (65), (b) age sixty (60) with ten (10)
Years of Service, (c) age fifty-five (55) with twenty (20) Years of
Service or (d) if an employee is an Officer of an Employer at the time of
his or her severance from employment, age fifty-five (55) with ten (10)
Years of Service; and shall mean, with respect to a Director who is not an
employee, severance of his or her directorship(s) with all Employers on or
after the earlier of the attainment of: (x) age sixty-five (65) or (y) age
fifty-five (55) with ten (10) years of board service. If a Participant is
both an employee and a Director, Retirement shall not occur until he or
she Retires as both an employee and a Director; provided, however, that
such a Participant may elect, in accordance with the policies and
procedures established by the Committee, to Retire for purposes of this
Plan at the time he or she Retires as an employee of all Employers. For
purposes of this definition only, an "Officer of an Employer" shall mean a
person who the Board determines, in its sole discretion, to be an officer
of any Employer."
Pinnacle has caused this Amendment to be signed by its duly
authorized officer on December 16, 1994.
-----------
Pinnacle West Capital Corporation
By: Faye Widenmann
-------------------------
Its: Vice President
-------------------------
Exhibit 10.4
AMENDMENT NO. 4
TO
PINNACLE WEST CAPITAL CORPORATION
ARIZONA PUBLIC SERVICE COMPANY
SUNCOR DEVELOPMENT COMPANY
AND
EL DORADO INVESTMENT COMPANY
DEFERRED COMPENSATION PLAN
Pinnacle West Capital Corporation, pursuant to the power granted
to it by Section 11.2 of the above-named plan (the "Plan"), hereby amends the
Plan, effective as of May 17, 1995, by making the following deletions and
additions:
1. Section 1.28 is deleted in its entirety and the following new Section
1.28 is added:
"'Retirement' and 'Retires' shall mean, with respect to an employee,
severance from employment with all Employers for any reason other than a
leave of absence, death or Disability on or after the earlier of the
attainment of: (a) age sixty-five (65) with five (5) years of service or
(b) age fifty-five (55) with ten (10) years of Service; and shall mean,
with respect to a Director who is not an employee, severance of his or
her directorship(s) with all Employers on or after the earlier of the
attainment of: (x) age sixty-five (65) with five (5) years of service or
(y) age fifty-five (55) with ten (10) years of board service. If a
Participant is both an employee and a Director, Retirement shall not
occur until he or she Retires as both an employee and a Director;
provided, however, that such a Participant may elect, in accordance with
the policies and procedures established by the Committee, to Retire for
purposes of this Plan at the time he or she Retires as an employee of
all Employers."
2. Section 3.6(a) deleted in its entirety and a new Section 3.6(a) is added
to read as follows:
"3.6 Installment Distributions. In the event a benefit is paid in
--------------------------
installments under Articles 5, 6, 7 or 8, installment payment
amount shall be determined in the following manner:
(a) Interest Rate. The interest rate to be used to calculate
--------------
installment payment amounts shall be a fixed interest rate that
is determined by averaging the Preferred Rates for the Plan Year
in which a Participant becomes eligible to receive a benefit and
the four (4) preceding Plan Years. If a Participant has completed
fewer than five (5) Plan Years, this average shall be determined
using the Crediting Rates for the Plan Years during which the
Participant participated in the Plan. Despite the foregoing, if
the Terminated Participant elects installment distributions at
age 55, the applicable interest rate(s) to be used from the
termination date until age 55 shall be determined in accordance
with the table set forth in Section 7.1, by using the Crediting
Rate(s) or Preferred Rates, as the case may be."
3. Section 7.1 is deleted in its entirety and the following new section 7.1
is added:
"7.1 Termination Benefits. If the Participant experiences a
----------------------
Termination of Employment prior to his or her Retirement, death
or disability, the Participant shall receive a Termination
Benefit, which shall be equal to the Participant's Account
Balance as of the date of his or her Termination of Employment,
with interest credited in the manner provided in Section 3.5
above, but using the applicable interest rate set forth in the
following schedule:
Completion of Years of Plan Participation
Prior to Termination of Employment Applicable Rate
----------------------------------------- ---------------
Less than five years Crediting Rate
Five or more years Preferred Rate"
4. Section 7.2 is deleted in its entirety and the following new Section 7.2
is added:
Payment of Termination Benefit.
------------------------------
(a) Lump Sum or Installments. A Participant, in connection with
-------------------------
his or her commencement of participation in the Plan, shall
elect on an Election Form to receive the Termination Benefit
in a lump sum or in equal annual payments (the latter
determined in accordance with Section 3.6 above) over a period
of 5, 10 or 15 years. If a Participant elects a lump sum
payment, he or she shall specify whether the lump sum will be
paid within 60 days of (i) his or her Termination of
Employment or (ii) age 55. If the Participant elects
installment payments, they will begin within 60 days of the
Participant's 55th birthday. The Participant may change his or
her election to an allowable alternative pay out period by
submitting a new Election Form to the Committee, provided that
any such Election Form is submitted at least 3 years prior to
the Participant's Termination of Employment and is accepted by
the Committee in its sole discretion. Notwithstanding the
foregoing, upon adoption of this Section, each Participant in
the Plan shall be given an opportunity to make an election
with respect to his or her Termination Benefit, and such
election, if accepted by the Committee, shall be treated, for
purposes of this Section, as the initial election for the
payment of the Termination Benefit. Failure to make an
election will result in the Termination Benefit paid in a lump
sum at the time of your termination of employment.
(b) Commencement of Payments. Payment(s) of the Termination
--------------------------
Benefit shall commence within 60 days of the date elected by
the Participant in accordance with Section 7.2(a) above."
5. The following new Section 7.3 is added:
"7.3 Death Prior to Pay Out
---------------------
(a) Death Prior to Commencement of Payments. If a Participant
----------------------------------------
dies prior to the payout date that he or she elected for
his Termination Benefit, his or her Termination Benefit
shall be paid in a lump sum within 60 days of the date that
the Committee receives proof of the Participant's death.
(b) Death After Commencement. If a Participant dies after the
-------------------------
commencement of the payment of his or her Termination
Benefit, but before the Termination Benefit is paid in
full, the Participant's unpaid Termination Benefit payments
shall continue and shall be paid to the Participant's
Beneficiary over the remaining number of years and in the
same amounts as that benefit would have been paid to the
Participant had the Participant survived."
6. Except as specifically provided in this Amendment, the remaining
provisions of the Plan, as previously amended, shall remain in full
force and effect.
Pinnacle West Capital Corporation has caused this Amendment to
be signed by its duly authorized officer as of the date first written above.
Pinnacle West Capital Corporation
By: Faye Widenmann
-----------------------------
Its: Committe Member
-----------------------------
Exhibit 15.1
November 9, 1995
Arizona Public Service Company
Post Office Box 53999
Phoenix, Arizona 85072-3999
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of Arizona Public Service Company for the periods ended September
30, 1995 and 1994, as indicated in our report dated November 2, 1995; because
we did not perform an audit, we expressed no opinion on that information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended September 30, 1995, is
incorporated by reference in Registration Statement Nos. 33-51085, 33-57822,
33-61228, and 33-55473 on Form S-3.
We are also aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of the Act.
DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Phoenix, Arizona
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
PUBLIC UTILITY COMPANIES AND PUBLIC UTILITY HOLDING COMPANIES
(THOUSANDS OF DOLLARS)
FISCAL YEAR ENDED DECEMBER 31, 1995
FOR PERIOD JANUARY 1, 1995 THROUGH SEPTEMBER 30, 1995
NINE MONTHS ENDED
</LEGEND>
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<EXCHANGE-RATE> 1
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 4,627,853
<OTHER-PROPERTY-AND-INVEST> 89,968
<TOTAL-CURRENT-ASSETS> 403,244
<TOTAL-DEFERRED-CHARGES> 1,271,341
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 6,392,406
<COMMON> 178,162
<CAPITAL-SURPLUS-PAID-IN> 1,039,546
<RETAINED-EARNINGS> 431,178
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,648,886
75,000
193,561
<LONG-TERM-DEBT-NET> 2,153,116
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 62,200
<LONG-TERM-DEBT-CURRENT-PORT> 3,385
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 2,256,258
<TOT-CAPITALIZATION-AND-LIAB> 6,392,406
<GROSS-OPERATING-REVENUE> 1,266,228
<INCOME-TAX-EXPENSE> 160,817
<OTHER-OPERATING-EXPENSES> 780,876
<TOTAL-OPERATING-EXPENSES> 941,693
<OPERATING-INCOME-LOSS> 324,535
<OTHER-INCOME-NET> 22,613
<INCOME-BEFORE-INTEREST-EXPEN> 347,148
<TOTAL-INTEREST-EXPENSE> 127,519
<NET-INCOME> 219,629
14,358
<EARNINGS-AVAILABLE-FOR-COMM> 205,271
<COMMON-STOCK-DIVIDENDS> 127,500
<TOTAL-INTEREST-ON-BONDS> 117,103
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