THE CONSOLIDATED 10-Q FOR AMERICAN ELECTRIC POWER CO., INC, AND
SUBSIDIARIES IS REQUESTED TO BE INCLUDED AS PART OF THE FILING.
<PAGE>
<TABLE>
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 March 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Transition Period from to
<CAPTION>
Commission Registrant; State of Incorporation; I. R. S. Employer
File Number Address; and Telephone Number Identification No.
<C> <S> <C>
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 (540) 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 (800) 572-1141
1-6543 OHIO POWER COMPANY (An Ohio Corporation) 31-4271000
301 Cleveland Avenue S.W., Canton, Ohio 44702
Telephone (330) 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 such
reports), 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 April 30, 1997 was 188,710,000.
/TABLE
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AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
FORM 10-Q
For The Quarter Ended March 31, 1997
INDEX
<CAPTION>
Page
Part I. FINANCIAL INFORMATION
<S> <C>
American Electric Power Company, Inc. and Subsidiary Companies:
Consolidated Statements of Income and
Consolidated Statements of Retained Earnings . . . . . . . A-1
Consolidated Balance Sheets. . . . . . . . . . . . . . . . . A-2 - A-3
Consolidated Statements of Cash Flows. . . . . . . . . . . . A-4
Notes to Consolidated Financial Statements . . . . . . . . . A-5 - A-6
Management's Discussion and Analysis of Results of
Operations and Financial Condition . . . . . . . . . . . . A-7 - A-9
AEP Generating Company:
Statements of Income and Statements of Retained Earnings . . B-1
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . B-2 - B-3
Statements of Cash Flows . . . . . . . . . . . . . . . . . . B-4
Notes to Financial Statements. . . . . . . . . . . . . . . . B-5
Management's Narrative Analysis of Results of Operations . . B-5 - B-6
Appalachian Power Company and Subsidiaries:
Consolidated Statements of Income and
Consolidated Statements of Retained Earnings . . . . . . . C-1
Consolidated Balance Sheets. . . . . . . . . . . . . . . . . C-2 - C-3
Consolidated Statements of Cash Flows. . . . . . . . . . . . C-4
Notes to Consolidated Financial Statements . . . . . . . . . C-5
Management's Discussion and Analysis of Results of
Operations and Financial Condition . . . . . . . . . . . . C-6 - C-7
Columbus Southern Power Company and Subsidiaries:
Consolidated Statements of Income and
Consolidated Statements of Retained Earnings . . . . . . . D-1
Consolidated Balance Sheets. . . . . . . . . . . . . . . . . D-2 - D-3
Consolidated Statements of Cash Flows. . . . . . . . . . . . D-4
Notes to Consolidated Financial Statements . . . . . . . . . D-5
Management's Narrative Analysis of Results of Operations . . D-6 - D-8
Indiana Michigan Power Company and Subsidiaries:
Consolidated Statements of Income and
Consolidated Statements of Retained Earnings . . . . . . . E-1
Consolidated Balance Sheets. . . . . . . . . . . . . . . . . E-2 - E-3
Consolidated Statements of Cash Flows. . . . . . . . . . . . E-4
Notes to Consolidated Financial Statements . . . . . . . . . E-5
Management's Discussion and Analysis of Results of
Operations and Financial Condition . . . . . . . . . . . . E-6 - E-7
Kentucky Power Company:
Statements of Income and Statements of Retained Earnings . . F-1
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . F-2 - F-3
Statements of Cash Flows . . . . . . . . . . . . . . . . . . F-4
Notes to Financial Statements. . . . . . . . . . . . . . . . F-5
Management's Narrative Analysis of Results of Operations . . F-6 - F-7
<PAGE>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
FORM 10-Q
For The Quarter Ended March 31, 1997
INDEX
Page
Ohio Power Company and Subsidiaries:
Consolidated Statements of Income and
Consolidated Statements of Retained Earnings . . . . . . G-1
Consolidated Balance Sheets. . . . . . . . . . . . . . . . G-2 - G-3
Consolidated Statements of Cash Flows. . . . . . . . . . . G-4
Notes to Consolidated Financial Statements . . . . . . . . G-5 - G-6
Management's Discussion and Analysis of Results of
Operations and Financial Condition . . . . . . . . . . . G-7 - G-8
Part II. OTHER INFORMATION
Item 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
Item 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2
Item 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-3
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 contained 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.
</TABLE>
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AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per-share amounts)
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
1997 1996
<S> <C> <C>
OPERATING REVENUES . . . . . . . . . . . . . . . . . . . . $1,492,069 $1,517,781
OPERATING EXPENSES:
Fuel and Purchased Power . . . . . . . . . . . . . . . . 434,697 440,977
Other Operation. . . . . . . . . . . . . . . . . . . . . 302,280 303,708
Maintenance. . . . . . . . . . . . . . . . . . . . . . . 99,385 105,423
Depreciation and Amortization. . . . . . . . . . . . . . 151,952 149,114
Taxes Other Than Federal Income Taxes. . . . . . . . . . 126,614 127,626
Federal Income Taxes . . . . . . . . . . . . . . . . . . 105,163 98,811
TOTAL OPERATING EXPENSES. . . . . . . . . . . . . 1,220,091 1,225,659
OPERATING INCOME . . . . . . . . . . . . . . . . . . . . . 271,978 292,122
NONOPERATING INCOME (LOSS) . . . . . . . . . . . . . . . . 4,509 (1,127)
INCOME BEFORE INTEREST CHARGES AND PREFERRED DIVIDENDS . . 276,487 290,995
INTEREST CHARGES . . . . . . . . . . . . . . . . . . . . . 93,822 100,025
PREFERRED STOCK DIVIDEND REQUIREMENTS OF SUBSIDIARIES. . . 10,103 10,958
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . $ 172,562 $ 180,012
AVERAGE NUMBER OF SHARES OUTSTANDING . . . . . . . . . . . 188,347 186,723
EARNINGS PER SHARE . . . . . . . . . . . . . . . . . . . . $0.92 $0.96
CASH DIVIDENDS PAID PER SHARE. . . . . . . . . . . . . . . $0.60 $0.60
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
1997 1996
(in thousands)
<S> <C> <C>
BALANCE AT BEGINNING OF PERIOD . . . . . . . . . . . . . . $1,547,746 $1,409,645
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . 172,562 180,012
DEDUCTIONS:
Cash Dividends Declared. . . . . . . . . . . . . . . . . 112,943 111,983
Other. . . . . . . . . . . . . . . . . . . . . . . . . . (411) (178)
BALANCE AT END OF PERIOD . . . . . . . . . . . . . . . . . $1,607,776 $1,477,852
See Notes to Consolidated Financial Statements.
/TABLE
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AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
March 31, December 31,
1997 1996
(in thousands)
ASSETS
<S> <C> <C>
ELECTRIC UTILITY PLANT:
Production . . . . . . . . . . . . . . . . . . . . . $ 9,353,218 $ 9,341,849
Transmission . . . . . . . . . . . . . . . . . . . . 3,379,638 3,380,258
Distribution . . . . . . . . . . . . . . . . . . . . 4,432,353 4,402,449
General (including mining assets and nuclear fuel) . 1,506,921 1,491,781
Construction Work in Progress. . . . . . . . . . . . 395,070 353,832
Total Electric Utility Plant . . . . . . . . 19,067,200 18,970,169
Accumulated Depreciation and Amortization. . . . . . 7,650,991 7,549,798
NET ELECTRIC UTILITY PLANT . . . . . . . . . 11,416,209 11,420,371
OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . . 917,497 892,674
CURRENT ASSETS:
Cash and Cash Equivalents. . . . . . . . . . . . . . 86,083 57,539
Accounts Receivable. . . . . . . . . . . . . . . . . 584,514 535,024
Allowance for Uncollectible Accounts . . . . . . . . (7,437) (3,692)
Fuel . . . . . . . . . . . . . . . . . . . . . . . . 215,067 235,257
Materials and Supplies . . . . . . . . . . . . . . . 246,168 251,896
Accrued Utility Revenues . . . . . . . . . . . . . . 153,941 174,966
Prepayments. . . . . . . . . . . . . . . . . . . . . 129,444 103,891
TOTAL CURRENT ASSETS . . . . . . . . . . . . 1,407,780 1,354,881
REGULATORY ASSETS. . . . . . . . . . . . . . . . . . . 1,871,497 1,889,482
DEFERRED CHARGES . . . . . . . . . . . . . . . . . . . 292,707 328,139
TOTAL. . . . . . . . . . . . . . . . . . . $15,905,690 $15,885,547
See Notes to Consolidated Financial Statements.
</TABLE>
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<TABLE>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
March 31, December 31,
1997 1996
(in thousands)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
CAPITALIZATION:
Common Stock-Par Value $6.50:
1997 1996
Shares Authorized . . . .300,000,000 300,000,000
Shares Issued . . . . . .197,709,992 197,234,992
(8,999,992 shares were held in treasury) . . . . . $ 1,285,115 $ 1,282,027
Paid-in Capital. . . . . . . . . . . . . . . . . . . 1,731,695 1,715,554
Retained Earnings. . . . . . . . . . . . . . . . . . 1,607,776 1,547,746
Total Common Shareholders' Equity. . . . . . 4,624,586 4,545,327
Cumulative Preferred Stocks of Subsidiaries:
Not Subject to Mandatory Redemption. . . . . . . . 46,933 90,323
Subject to Mandatory Redemption. . . . . . . . . . 127,605 509,900
Long-term Debt . . . . . . . . . . . . . . . . . . . 4,786,636 4,796,768
TOTAL CAPITALIZATION . . . . . . . . . . . . 9,585,760 9,942,318
OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . . 1,065,046 1,002,208
CURRENT LIABILITIES:
Preferred Stock and Long-term Debt
Due Within One Year. . . . . . . . . . . . . . . . 344,039 86,942
Short-term Debt. . . . . . . . . . . . . . . . . . . 334,318 319,695
Accounts Payable . . . . . . . . . . . . . . . . . . 158,749 206,227
Taxes Accrued. . . . . . . . . . . . . . . . . . . . 476,480 414,173
Interest Accrued . . . . . . . . . . . . . . . . . . 111,530 75,124
Obligations Under Capital Leases . . . . . . . . . . 83,827 89,553
Other. . . . . . . . . . . . . . . . . . . . . . . . 328,069 304,323
TOTAL CURRENT LIABILITIES. . . . . . . . . . 1,837,012 1,496,037
DEFERRED INCOME TAXES. . . . . . . . . . . . . . . . . 2,621,692 2,643,143
DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . . 398,168 404,050
DEFERRED GAIN ON SALE AND LEASEBACK -
ROCKPORT PLANT UNIT 2. . . . . . . . . . . . . . . . 238,278 240,598
DEFERRED CREDITS . . . . . . . . . . . . . . . . . . . 159,734 157,193
CONTINGENCIES (Note 4)
TOTAL. . . . . . . . . . . . . . . . . . . $15,905,690 $15,885,547
See Notes to Consolidated Financial Statements.
</TABLE>
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<TABLE>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
1997 1996
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . $ 172,562 $ 180,012
Adjustments for Noncash Items:
Depreciation and Amortization. . . . . . . . . . . . . . 151,716 146,776
Deferred Federal Income Taxes. . . . . . . . . . . . . . (8,192) (8,519)
Deferred Investment Tax Credits. . . . . . . . . . . . . (5,836) (5,878)
Amortization of Operating Expenses and
Carrying Charges (net) . . . . . . . . . . . . . . . . 1,295 15,411
Changes in Certain Current Assets and Liabilities:
Accounts Receivable (net). . . . . . . . . . . . . . . . (45,745) (53,764)
Fuel, Materials and Supplies . . . . . . . . . . . . . . 25,918 28,818
Accrued Utility Revenues . . . . . . . . . . . . . . . . 21,025 44,386
Prepayments. . . . . . . . . . . . . . . . . . . . . . . (25,553) (51,954)
Accounts Payable . . . . . . . . . . . . . . . . . . . . (47,478) (34,617)
Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . 62,307 50,842
Interest Accrued . . . . . . . . . . . . . . . . . . . . 36,406 43,992
Rent Accrued - Rockport Plant Unit 2 . . . . . . . . . . 39,928 36,928
Other (net). . . . . . . . . . . . . . . . . . . . . . . . 38,658 20,742
Net Cash Flows From Operating Activities . . . . . . 417,011 413,175
INVESTING ACTIVITIES:
Construction Expenditures. . . . . . . . . . . . . . . . . (125,687) (90,517)
Proceeds from Sale of Property and Other . . . . . . . . . 1,048 2,788
Net Cash Flows Used For Investing Activities . . . . (124,639) (87,729)
FINANCING ACTIVITIES:
Issuance of Common Stock . . . . . . . . . . . . . . . . . 19,572 14,573
Issuance of Long-term Debt . . . . . . . . . . . . . . . . 274,352 256,845
Change in Short-term Debt (net). . . . . . . . . . . . . . 14,623 (199,949)
Retirement of Cumulative Preferred Stock . . . . . . . . . (382,932) (7,500)
Retirement of Long-term Debt . . . . . . . . . . . . . . . (76,500) (167,966)
Dividends Paid on Common Stock . . . . . . . . . . . . . . (112,943) (111,983)
Net Cash Flows Used For Financing Activities . . . . (263,828) (215,980)
Net Increase in Cash and Cash Equivalents. . . . . . . . . . 28,544 109,466
Cash and Cash Equivalents at Beginning of Period . . . . . . 57,539 79,955
Cash and Cash Equivalents at End of Period . . . . . . . . . $ 86,083 $ 189,421
Supplemental Disclosure:
Cash paid for interest net of capitalized amounts was $54,005,000 and $52,763,000
and for income taxes was $3,839,000 and $9,074,000 in 1997 and 1996, respectively.
Noncash acquisitions under capital leases were $56,916,000 and $50,899,000 in 1997
and 1996, respectively.
See Notes to Consolidated Financial Statements.
/TABLE
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AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
1. GENERAL
The accompanying unaudited consolidated financial state-ments should
be read in conjunction with the 1996 Annual
Report as incorporated in and filed with the Form 10-K.
2. FINANCING AND RELATED ACTIVITIES
During the first three months of 1997, subsidiaries
issued two series of first mortgage bonds totaling $96
million at 6.35% and 6.4% due in 2000 and $180 million of
junior subordinated deferrable interest debentures at 7.92%
and 8% due in 2027.
The proceeds were used during the first quarter to
retire: two series of first mortgage bonds totaling $56
million with interest rates ranging from 8.75% to 9.35% and
due dates ranging from 2021 to 2022 and a $20 million term
loan with an interest rate of 7.19% at maturity. Two
subsidiaries redeemed cumulative preferred stock at a total
cost of $54 million: the entire 500,000 shares of 7-7/8%
series and 16,263 shares of 4.56% series.
In March 1997 the Company, as part of a tender offer for
certain subsidiaries' preferred stock, reacquired and
retired the following number of shares at the range of
prices listed plus an amount equal to accrued dividends:
Number Total
of Shares Reacquisition
Series Retired Price Range Price
(in thousands)
4.08%-4.56% 417,644 $ 62.31-$ 69.94 $ 28,192
5.90%-5.92% 1,515,900 101.83- 103.20 156,074
6.02%-6-7/8% 1,307,050 103.71- 107.26 137,071
7.80% 22,500 105.50 2,374
In April 1997, a subsidiary issued $300 million of
adjustable interest rate debt under a revolving credit
agreement which expires in June 1999. The initial rate is
5.93% for two months. A subsidiary redeemed 478,133 shares
of cumulative preferred stock for approximately $50 million
in April and May 1997.
In April 1997, two subsidiaries each called their entire
$50 million outstanding balance of 8.75% Series First
Mortgage Bonds due in 2022 for early redemption in the
second quarter of 1997. Consequently the bonds are
classified as a current liability on the balance sheet.
<PAGE>
<PAGE>
3. YORKSHIRE ACQUISITION
The tender offer for all of the outstanding shares of
Yorkshire Electricity Group plc, a distribution company in
the United Kingdom, by the Company and Public Service
Company of Colorado through an equally owned joint venture
was declared wholly unconditional in April 1997. Total
consideration to be paid was estimated to be $2.4 billion
which was financed by a combination of equity and non-recourse debt.
The investment in the joint venture is not shown in these statements.
4. CONTINGENCIES
As discussed in Note 9, "Federal Income Taxes" of the
Notes to Consolidated Financial Statements in the 1996
Annual Report, the Internal Revenue Service agents auditing
the federal income tax returns for the years 1991 through
1993 requested a ruling from their National Office that
certain interest deductions relating to corporate owned life
insurance (COLI) claimed by the Company for 1991 through
1993 should not be allowed. The COLI program was
established in 1990 as part of the Company's strategy to
fund and reduce the cost of medical benefits for retired
employees. The Company filed a brief with the IRS National
Office refuting the agents' position. Although no
adjustments have been proposed, a disallowance of the COLI
interest deductions through March 31, 1997 would reduce
earnings by approximately $260 million (including interest).
Management believes it will ultimately prevail on this issue
and will vigorously contest any adjustments that may be
assessed.
The Company continues to be involved in certain other
matters discussed in the 1996 Annual Report.
<PAGE>
<PAGE>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
FIRST QUARTER 1997 vs. FIRST QUARTER 1996
RESULTS OF OPERATIONS
Net income decreased 4% or $7.45 million due primarily to a
3% weather-related decline in retail energy sales, partially
offset by increased nonoperating income, lower interest charges
and lower preferred stock dividends.
Income statement lines which changed significantly were:
Increase (Decrease)
(in millions) %
Operating Revenues . . . . . . . . . . $(25.7) (2)
Fuel and Purchased Power Expense . . . (6.3) (1)
Maintenance Expense. . . . . . . . . . (6.0) (6)
Federal Income Taxes . . . . . . . . . 6.4 6
Nonoperating Income. . . . . . . . . . 5.6 N.M.
Interest Charges . . . . . . . . . . . (6.2) (6)
N.M. = Not Meaningful
The decrease in operating revenues was predominantly due to
the 3% decrease in energy sales to retail customers resulting
from the milder winter weather in 1997. Sales to weather-sensitive residential
and commercial customers decreased 8% and 1%, respectively, and
industrial sales were flat.
Revenues from wholesale customers were flat while sales
increased 10% due to a lower average wholesale price per
kilowatt. The wholesale kilowatt sales increase is primarily due
to increased coal conversion service sales and related
transmission service sales. Coal conversion service sales are
from the conversion of customers' coal to electricity. The
substantial increase in coal conversion service sales
demonstrates the acceptance of this new service by customers who
are able to obtain low cost spot market coal.
The decrease in fuel and purchased power expense is
primarily due to reduced generation resulting from lower energy
demand offset in part by increased purchases from an unaffiliated
utility with favorably priced power.
<PAGE>
<PAGE>
Maintenance expense declined due to lower expenditures for
maintenance of transmission and distribution facilities.
The increase in federal income tax expense attributable to
operations was primarily due to changes in certain book/tax
differences accounted for on a flow-through basis for rate-making
purposes, including recent federal legislation limiting corporate
owned life insurance tax benefits, partially offset by a decrease
in pre-tax operating income.
Nonoperating income increased due to the effect of losses in
1996 for deferred demand side management program costs and the
clean-up of underground storage tanks at one of the Company's
facilities.
The decline in interest charges is primarily due to the
reduction in outstanding balances of long-term debt and
refinancings at lower interest rates on both long-term and short-term
borrowings.
FINANCIAL CONDITION
Total plant and property additions including capital leases
for the current period were $183 million.
During the quarter subsidiaries issued $277 million
principal amount of long-term debt at interest rates ranging from
6.35% to 8%, retired $76 million principal amount of long-term
debt at interest rates ranging from 7.19% to 9.35%, redeemed
3,779,357 shares of cumulative preferred stock at a total cost of
$383 million and increased short-term debt by $15 million. In
April and May 1997, a subsidiary redeemed 478,133 shares of
cumulative preferred stock for approximately $50 million.
In April 1997, a subsidiary issued $300 million adjustable
rate debt under a revolving credit agreement with an initial rate
of 5.93% for two months as part of the funding for the
acquisition of Yorkshire Electricity Group plc. Two subsidiaries
each called $50 million of outstanding 8.75% Series First
Mortgage Bonds due in 2022 for early redemption in the second
quarter of 1997. Consequently the bonds are classified as a
current liability on the balance sheet.
<PAGE>
<PAGE>
YORKSHIRE ACQUISITION
The tender offer for all of the outstanding shares of
Yorkshire Electricity Group plc (Yorkshire Electricity) a
distribution company in the United Kingdom, by Yorkshire Holdings
plc (YH), a wholly owned subsidiary of Yorkshire Power Group
Limited (YPG), an equally owned joint venture of the Company and
Public Service Company of Colorado (PSCo), was declared wholly
unconditional in all respects on April 1, 1997. YH is committed
to purchase all the outstanding shares of Yorkshire Electricity.
As of April 9, 1997, valid acceptance of the offer to
purchase shares of Yorkshire Electricity had been received
representing over 90% of Yorkshire Electricity's issued share
capital. Under the provisions of the United Kingdom's Companies
Act 1985, YH has exercised its rights to acquire, under the terms
of the offer, the remaining shares in Yorkshire Electricity for
which acceptances of the offer have not been received.
Total consideration to be paid by the joint venture partners
was estimated to be approximately $2.4 billion. The acquisition
was financed through a combination of approximately 25% equity
and 75% debt, including the assumption of the existing debt of
Yorkshire Electricity. The funds for the acquisition will be
obtained from the Company's and PSCo's investment in YPG, the
joint venture, of approximately $360 million each, and the
issuance by YPG of non-recourse debt. The investment in the
joint venture is not shown in these statements.
<PAGE>
<PAGE>
<TABLE>
AEP GENERATING COMPANY
STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
1997 1996
(in thousands)
<S> <C> <C>
OPERATING REVENUES . . . . . . . . . . . . . . . . . . . . . . $59,096 $57,484
OPERATING EXPENSES:
Fuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,350 23,532
Rent - Rockport Plant Unit 2 . . . . . . . . . . . . . . . . 17,071 17,077
Other Operation. . . . . . . . . . . . . . . . . . . . . . . 3,130 3,149
Maintenance. . . . . . . . . . . . . . . . . . . . . . . . . 2,386 3,493
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . 5,395 5,413
Taxes Other Than Federal Income Taxes. . . . . . . . . . . . 879 975
Federal Income Taxes . . . . . . . . . . . . . . . . . . . . 757 1,051
TOTAL OPERATING EXPENSES . . . . . . . . . . . . . . 56,968 54,690
OPERATING INCOME . . . . . . . . . . . . . . . . . . . . . . . 2,128 2,794
NONOPERATING INCOME. . . . . . . . . . . . . . . . . . . . . . 850 790
INCOME BEFORE INTEREST CHARGES . . . . . . . . . . . . . . . . 2,978 3,584
INTEREST CHARGES . . . . . . . . . . . . . . . . . . . . . . . 941 1,086
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,037 $ 2,498
</TABLE>
<TABLE>
STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
1997 1996
(in thousands)
<S> <C> <C>
BALANCE AT BEGINNING OF PERIOD . . . . . . . . . . . . . . . . $1,886 $1,955
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . 2,037 2,498
CASH DIVIDENDS DECLARED. . . . . . . . . . . . . . . . . . . . 1,286 2,500
BALANCE AT END OF PERIOD . . . . . . . . . . . . . . . . . . . $2,637 $1,953
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>
March 31, December 31,
1997 1996
(in thousands)
ASSETS
<S> <C> <C>
ELECTRIC UTILITY PLANT:
Production. . . . . . . . . . . . . . . . . . . . . . . . $627,666 $627,926
General . . . . . . . . . . . . . . . . . . . . . . . . . 2,923 2,931
Construction Work in Progress . . . . . . . . . . . . . . 1,657 1,400
Total Electric Utility Plant. . . . . . . . . . . 632,246 632,257
Accumulated Depreciation. . . . . . . . . . . . . . . . . 243,710 238,532
NET ELECTRIC UTILITY PLANT. . . . . . . . . . . . 388,536 393,725
CURRENT ASSETS:
Cash and Cash Equivalents . . . . . . . . . . . . . . . . 10,333 139
Accounts Receivable . . . . . . . . . . . . . . . . . . . 20,789 18,879
Fuel. . . . . . . . . . . . . . . . . . . . . . . . . . . 10,575 17,792
Materials and Supplies. . . . . . . . . . . . . . . . . . 4,266 4,266
Prepayments . . . . . . . . . . . . . . . . . . . . . . . 697 804
TOTAL CURRENT ASSETS. . . . . . . . . . . . . . . 46,660 41,880
REGULATORY ASSETS . . . . . . . . . . . . . . . . . . . . . 5,803 5,857
DEFERRED CHARGES. . . . . . . . . . . . . . . . . . . . . . 3,716 1,449
TOTAL . . . . . . . . . . . . . . . . . . . . . $444,715 $442,911
See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
AEP GENERATING COMPANY
BALANCE SHEETS
(UNAUDITED)
<CAPTION>
March 31, December 31,
1997 1996
(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 . . . . . . . . . . . . . . . . . . . . . 42,235 44,235
Retained Earnings . . . . . . . . . . . . . . . . . . . . 2,637 1,886
Total Common Shareholder's Equity . . . . . . . . 45,872 47,121
Long-term Debt. . . . . . . . . . . . . . . . . . . . . . 89,558 89,554
TOTAL CAPITALIZATION. . . . . . . . . . . . . . . 135,430 136,675
OTHER NONCURRENT LIABILITIES. . . . . . . . . . . . . . . . 1,496 1,613
CURRENT LIABILITIES:
Short-term Debt - Notes Payable . . . . . . . . . . . . . - 9,575
Accounts Payable. . . . . . . . . . . . . . . . . . . . . 3,025 7,510
Taxes Accrued . . . . . . . . . . . . . . . . . . . . . . 5,373 2,903
Rent Accrued - Rockport Plant Unit 2. . . . . . . . . . . 23,427 4,963
Other . . . . . . . . . . . . . . . . . . . . . . . . . . 1,239 3,932
TOTAL CURRENT LIABILITIES . . . . . . . . . . . . 33,064 28,883
DEFERRED GAIN ON SALE AND LEASEBACK -
ROCKPORT PLANT UNIT 2 . . . . . . . . . . . . . . . . . . 143,079 144,472
REGULATORY LIABILITIES:
Deferred Investment Tax Credits . . . . . . . . . . . . . 72,618 73,460
Amounts Due to Customers for Income Taxes . . . . . . . . 33,557 33,893
Other . . . . . . . . . . . . . . . . . . . . . . . . . . 28 66
TOTAL REGULATORY LIABILITIES. . . . . . . . . . . 106,203 107,419
DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . . . . 25,443 23,849
TOTAL . . . . . . . . . . . . . . . . . . . . . $444,715 $442,911
See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
AEP GENERATING COMPANY
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
1997 1996
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . $ 2,037 $ 2,498
Adjustments for Noncash Items:
Depreciation . . . . . . . . . . . . . . . . . . . . . . 5,395 5,413
Deferred Federal Income Taxes. . . . . . . . . . . . . . 1,258 1,234
Deferred Investment Tax Credits. . . . . . . . . . . . . (842) (844)
Amortization of Deferred Gain on Sale and Leaseback -
Rockport Plant Unit 2. . . . . . . . . . . . . . . . . (1,393) (1,393)
Deferred Property Taxes. . . . . . . . . . . . . . . . . (2,217) (2,356)
Changes in Certain Current Assets and Liabilities:
Accounts Receivable. . . . . . . . . . . . . . . . . . . (1,910) 638
Fuel, Materials and Supplies . . . . . . . . . . . . . . 7,217 (2,500)
Accounts Payable . . . . . . . . . . . . . . . . . . . . (4,485) 215
Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . 2,470 3,455
Rent Accrued - Rockport Plant Unit 2 . . . . . . . . . . 18,464 18,464
Other (net). . . . . . . . . . . . . . . . . . . . . . . . (2,625) 76
Net Cash Flows From Operating Activities . . . . . . 23,369 24,900
INVESTING ACTIVITIES - Construction Expenditures . . . . . . (314) (359)
FINANCING ACTIVITIES:
Return of Capital to Parent Company. . . . . . . . . . . . (2,000) (500)
Change in Short-term Debt (net). . . . . . . . . . . . . . (9,575) (21,550)
Dividends Paid . . . . . . . . . . . . . . . . . . . . . . (1,286) (2,500)
Net Cash Flows Used For Financing Activities . . . . (12,861) (24,550)
Net Increase in Cash and Cash Equivalents. . . . . . . . . . 10,194 (9)
Cash and Cash Equivalents at Beginning of Period . . . . . . 139 22
Cash and Cash Equivalents at End of Period . . . . . . . . . $ 10,333 $ 13
Supplemental Disclosure:
Cash paid (received) for interest net of capitalized amounts was $889,000 and
$1,095,000 and for income taxes was $2,000 and ($491,000) in 1997 and 1996,
respectively.
See Notes to Financial Statements.
/TABLE
<PAGE>
<PAGE>
AEP GENERATING COMPANY
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
The accompanying unaudited financial statements should be read in
conjunction with the 1996 Annual Report as incorporated in and filed with
the Form 10-K.
AEP GENERATING COMPANY
MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS
FIRST QUARTER 1997 vs. FIRST QUARTER 1996
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 a
return on other capital net of temporary cash investments.
Net income decreased $.5 million or 18% in the period as a result of
a decrease in the return on common equity due to a return of capital to the
parent company and a decrease in the return on other capital. These
decreases are partly offset by income earned on temporary cash investments
and lower financing costs.
Income statement items which changed significantly were:
Increase(Decrease)
(in millions) %
Operating Revenues 1.6 3
Fuel Expense 3.8 16
Maintenance Expense (1.1) (32)
Taxes Other Than Federal Income Taxes (.1) (10)
Federal Income Taxes (.3) (28)
Nonoperating Income .1 8
Interest Charges (.1) (13)
<PAGE>
<PAGE>
The increase in operating revenues reflects recovery of increased fuel
expenses partly offset by the decreased returns previously mentioned.
The increase in fuel expense was due to an increase in the average
cost of coal consumed and higher generation this year as Rockport Plant
Unit 2 was out-of-service in the first quarter of 1996 for planned general
boiler inspection and repair. Reduced maintenance work on Rockport Plant
Unit 2 during 1997 compared with 1996 when the unit was out of service
caused the decrease in maintenance expense.
Taxes other than federal income taxes decreased due to a reduction in
the Indiana supplemental net income tax accrual resulting from lower pre-tax
income. Federal income taxes attributable to operations decreased due
to lower pre-tax operating income.
The increase in nonoperating income reflects interest income earned on
higher balances of temporary cash investments in 1997.
Interest charges declined due to reduced outstanding short-term debt
balances.
<PAGE>
<PAGE>
<TABLE>
APPALACHIAN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
1997 1996
(in thousands)
<S> <C> <C>
OPERATING REVENUES . . . . . . . . . . . . . . . . . . . . $416,450 $440,972
OPERATING EXPENSES:
Fuel . . . . . . . . . . . . . . . . . . . . . . . . . . 94,904 89,596
Purchased Power. . . . . . . . . . . . . . . . . . . . . 85,540 91,127
Other Operation. . . . . . . . . . . . . . . . . . . . . 63,840 62,743
Maintenance. . . . . . . . . . . . . . . . . . . . . . . 22,810 23,151
Depreciation and Amortization. . . . . . . . . . . . . . 33,975 32,873
Taxes Other Than Federal Income Taxes. . . . . . . . . . 30,273 31,302
Federal Income Taxes . . . . . . . . . . . . . . . . . . 20,774 26,543
TOTAL OPERATING EXPENSES . . . . . . . . . . . . 352,116 357,335
OPERATING INCOME . . . . . . . . . . . . . . . . . . . . . 64,334 83,637
NONOPERATING INCOME. . . . . . . . . . . . . . . . . . . . 244 597
INCOME BEFORE INTEREST CHARGES . . . . . . . . . . . . . . 64,578 84,234
INTEREST CHARGES . . . . . . . . . . . . . . . . . . . . . 28,094 28,610
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . 36,484 55,624
PREFERRED STOCK DIVIDEND REQUIREMENTS. . . . . . . . . . . 4,965 4,101
EARNINGS APPLICABLE TO COMMON STOCK. . . . . . . . . . . . $ 31,519 $ 51,523
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
1997 1996
(in thousands)
<S> <C> <C>
BALANCE AT BEGINNING OF PERIOD . . . . . . . . . . . . . . $208,472 $199,021
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . 36,484 55,624
DEDUCTIONS:
Cash Dividends Declared:
Common Stock . . . . . . . . . . . . . . . . . . . . . 28,609 27,075
Cumulative Preferred Stock . . . . . . . . . . . . . . 1,504 3,917
Capital Stock Expense. . . . . . . . . . . . . . . . . . 3,461 184
BALANCE AT END OF PERIOD . . . . . . . . . . . . . . . . . $211,382 $223,469
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>
March 31, December 31,
1997 1996
(in thousands)
ASSETS
<S> <C> <C>
ELECTRIC UTILITY PLANT:
Production . . . . . . . . . . . . . . . . . . . . . $1,891,997 $1,883,271
Transmission . . . . . . . . . . . . . . . . . . . . 1,058,130 1,054,207
Distribution . . . . . . . . . . . . . . . . . . . . 1,515,757 1,495,445
General. . . . . . . . . . . . . . . . . . . . . . . 194,924 188,740
Construction Work in Progress. . . . . . . . . . . . 90,506 95,469
Total Electric Utility Plant . . . . . . . . 4,751,314 4,717,132
Accumulated Depreciation and Amortization. . . . . . 1,805,653 1,782,017
NET ELECTRIC UTILITY PLANT . . . . . . . . . 2,945,661 2,935,115
OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . . 29,233 29,621
CURRENT ASSETS:
Cash and Cash Equivalents. . . . . . . . . . . . . . 9,618 7,260
Accounts Receivable. . . . . . . . . . . . . . . . . 166,306 160,021
Allowance for Uncollectible Accounts . . . . . . . . (2,163) (687)
Fuel . . . . . . . . . . . . . . . . . . . . . . . . 49,923 52,605
Materials and Supplies . . . . . . . . . . . . . . . 55,024 56,605
Accrued Utility Revenues . . . . . . . . . . . . . . 32,268 51,843
Prepayments. . . . . . . . . . . . . . . . . . . . . 16,783 10,797
TOTAL CURRENT ASSETS . . . . . . . . . . . . 327,759 338,444
REGULATORY ASSETS. . . . . . . . . . . . . . . . . . . 446,571 451,272
DEFERRED CHARGES . . . . . . . . . . . . . . . . . . . 65,583 56,928
TOTAL. . . . . . . . . . . . . . . . . . . $3,814,807 $3,811,380
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
APPALACHIAN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
March 31, December 31,
1997 1996
(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. . . . . . . . . . . . . . . . . . 575,197 575,380
Retained Earnings. . . . . . . . . . . . . . . . . 211,382 208,472
Total Common Shareholder's Equity. . . . . 1,047,037 1,044,310
Cumulative Preferred Stock:
Not Subject to Mandatory Redemption. . . . . . . 19,859 29,815
Subject to Mandatory Redemption. . . . . . . . . 22,310 190,000
Long-term Debt . . . . . . . . . . . . . . . . . . 1,445,630 1,365,834
TOTAL CAPITALIZATION . . . . . . . . . . . 2,534,836 2,629,959
OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . 122,891 109,203
CURRENT LIABILITIES:
Cumulative Preferred Stock and Long-term Debt
Due Within One Year. . . . . . . . . . . . . . . 47,763 8
Short-term Debt. . . . . . . . . . . . . . . . . . 76,450 60,700
Accounts Payable . . . . . . . . . . . . . . . . . 85,918 85,892
Taxes Accrued. . . . . . . . . . . . . . . . . . . 65,415 40,935
Customer Deposits. . . . . . . . . . . . . . . . . 13,736 13,750
Interest Accrued . . . . . . . . . . . . . . . . . 30,676 20,938
Other. . . . . . . . . . . . . . . . . . . . . . . 70,369 80,352
TOTAL CURRENT LIABILITIES. . . . . . . . . 390,327 302,575
DEFERRED INCOME TAXES. . . . . . . . . . . . . . . . 664,899 669,964
DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . 81,939 83,320
DEFERRED CREDITS . . . . . . . . . . . . . . . . . . 19,915 16,359
CONTINGENCIES (Note 3)
TOTAL. . . . . . . . . . . . . . . . . . $3,814,807 $3,811,380
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
APPALACHIAN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
1997 1996
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . $ 36,484 $ 55,624
Adjustments for Noncash Items:
Depreciation and Amortization. . . . . . . . . . . . . 34,301 33,199
Deferred Federal Income Taxes. . . . . . . . . . . . . (2,832) (2,689)
Deferred Investment Tax Credits. . . . . . . . . . . . (1,190) (1,205)
Deferred Power Supply Costs (net). . . . . . . . . . . 5,230 (207)
Provision for Rate Refunds . . . . . . . . . . . . . . 33 15,869
Storm Damage Expense Amortization (Deferrals). . . . . 612 (7,303)
Changes in Certain Current Assets and Liabilities:
Accounts Receivable (net). . . . . . . . . . . . . . . (4,809) (31,024)
Fuel, Materials and Supplies . . . . . . . . . . . . . 4,263 11,776
Accrued Utility Revenues . . . . . . . . . . . . . . . 19,575 10,019
Prepayments. . . . . . . . . . . . . . . . . . . . . . (5,986) (10,299)
Accounts Payable . . . . . . . . . . . . . . . . . . . 26 9,027
Taxes Accrued. . . . . . . . . . . . . . . . . . . . . 24,480 32,869
Interest Accrued . . . . . . . . . . . . . . . . . . . 9,738 15,965
Other (net). . . . . . . . . . . . . . . . . . . . . . . (8,967) (26,267)
Net Cash Flows From Operating Activities . . . . . 110,958 105,354
INVESTING ACTIVITIES:
Construction Expenditures. . . . . . . . . . . . . . . . (38,924) (29,164)
Proceeds from Sale of Property . . . . . . . . . . . . . 931 95
Net Cash Flows Used For Investing Activities . . . (37,993) (29,069)
FINANCING ACTIVITIES:
Issuance of Long-term Debt . . . . . . . . . . . . . . . 135,575 198,266
Change in Short-term Debt (net). . . . . . . . . . . . . 15,750 (125,525)
Retirement of Cumulative Preferred Stock . . . . . . . . (133,541) -
Retirement of Long-term Debt . . . . . . . . . . . . . . (56,332) (23,560)
Dividends Paid on Common Stock . . . . . . . . . . . . . (28,609) (27,075)
Dividends Paid on Cumulative Preferred Stock . . . . . . (3,450) (3,917)
Net Cash Flows From (Used For) Financing
Activities . . . . . . . . . . . . . . . . . . . (70,607) 18,189
Net Increase in Cash and Cash Equivalents. . . . . . . . . 2,358 94,474
Cash and Cash Equivalents at Beginning of Period . . . . . 7,260 8,664
Cash and Cash Equivalents at End of Period . . . . . . . . $ 9,618 $ 103,138
Supplemental Disclosure:
Cash paid (received) for interest net of capitalized amounts was $17,490,000 and
$11,902,000 and for income taxes was $1,325,000 and $(506,000) in 1997 and 1996,
respectively. Noncash acquisitions under capital leases were $6,170,000 and
$2,699,000 in 1997 and 1996, respectively.
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
APPALACHIAN POWER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
1. GENERAL
The accompanying unaudited consolidated financial
statements should be read in conjunction with the 1996 Annual
Report as incorporated in and filed with the Form 10-K.
2. FINANCING ACTIVITIES
In February 1997, the Company issued $48 million of 6.35%
First Mortgage Bonds due in 2000 and in March 1997 $90
million of 8% Series Junior Subordinated Deferrable Interest
Debentures due in 2027.
In March 1997, the Company redeemed $56 million of first
mortgage bonds with interest rates of 8.75% and 9.35%. As
part of a tender offer, the following number of shares of
Cumulative Preferred Stock were reacquired and retired at the
prices listed plus an amount equal to accrued dividends:
Number Price Total
of Shares Paid Per Reacquisition
Series Retired Share Price
(in thousands)
4-1/2% 99,563 $ 69.02 $ 6,872
5.90% 422,900 103.17 43,631
5.92% 538,500 103.20 55,573
6.85% 215,500 107.26 23,114
7.80% 22,500 105.50 2,374
3. CONTINGENCIES
As discussed in Note 9, "Federal Income Taxes" of the
Notes to Consolidated Financial Statements in the 1996 Annual
Report, the Internal Revenue Service agents auditing the
federal income tax returns for the years 1991 through 1993
requested a ruling from their National Office that certain
interest deductions relating to corporate owned life
insurance (COLI) claimed by the Company for 1991 through 1993
should not be allowed. The COLI program was established in
1990 as part of the Company's strategy to fund and reduce the
cost of medical benefits for retired employees. AEP filed a
brief with the IRS National Office refuting the agents'
position. Although no adjustments have been proposed, a
disallowance of the COLI interest deductions through March
31, 1997 would reduce earnings by approximately $65 million
(including interest). Management believes it will ultimately
prevail on this issue and will vigorously contest any
adjustments that may be assessed.
The Company continues to be involved in certain other
matters discussed in its 1996 Annual Report.
<PAGE>
<PAGE>
APPALACHIAN POWER COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
FIRST QUARTER 1997 vs. FIRST QUARTER 1996
RESULTS OF OPERATIONS
Net income decreased $19 million or 34% as a result of milder
winter weather. Income statement line items which changed
significantly were:
Increase (Decrease)
(in millions) %
Operating Revenues. . . . . . . . . . $(24.5) (6)
Fuel Expense. . . . . . . . . . . . . 5.3 6
Purchased Power Expense . . . . . . . (5.6) (6)
Federal Income Taxes. . . . . . . . . (5.8) (22)
Both retail and wholesale revenues declined. The reduction
in retail revenues resulted from the milder winter weather which
decreased sales to weather-sensitive residential and commercial
customers by 14% and 5%, respectively. Revenues from wholesale
customers decreased 6% while wholesale sales increased 2%. The
decrease in revenues largely resulted from a decrease in the
average price per kilowatt sold. While sales to unaffiliated
utilties declined 15%, coal conversion service sales and related
transmission services more than doubled. Coal conversion service
sales are from the conversion of customers' coal to electricity.
The substantial increase in coal conversion service reflects the
utilization of this service as customers obtained low cost spot
market coal. The reduction in sales to unaffiliated utilities
resulted from the effects of milder winter weather and the
competitive nature of the wholesale power markets.
Fuel expense increased primarily due to the operation of the
West Virginia power supply cost recovery mechanism as over-collections of fuel
cost were deferred in accordance with a rate order.
Purchased power expense declined as lower demand led to
reduced purchases of energy from the AEP System Power Pool (Power
Pool), partly offset by an increase in Power Pool capacity
charges. An increase in the Company's prior twelve-month peak
demand relative to the total peak demand of all Power Pool
members caused the increase in Power Pool capacity charges.
<PAGE>
<PAGE>
The decrease in federal income tax expense attributable to
operations was primarily due to a decrease in pre-tax operating
income offset in part by changes in certain book/tax differences
accounted for on a flow-through basis for rate-making purposes.
FINANCIAL CONDITION
Total plant and property additions including capital leases
for the first three months of 1997 were $45 million.
In February 1997, the Company issued $48 million of 6.35%
First Mortgage Bonds due in 2000 and in March 1997 $90 million
of 8% Junior Subordinated Deferrable Interest Debentures due in
2027. In March 1997, the Company redeemed $56 million of first
mortgage bonds with interest rates of 8.75% and 9.35%. Short-term debt
increased by $16 million during the quarter.
As part of a January 1997 tender offer for all of the
Company's outstanding preferred stock that was announced in
conjunction with a special meeting of shareholders, 1,298,963
shares of $100 stated value preferred stocks were reacquired.
The total cost of the stock reacquisition was $134 million. At
the special meeting of shareholders held on February 28, 1997,
the Company's articles of incorporation were amended to remove
certain capitalization ratio requirements which restricted the
Company's ability to issue debt. As a result unsecured
borrowings are now limited only by the Public Utility Holding
Company Act of 1935 and the Virginia State Corporation Commission
with the current limitation set at $250 million for unsecured
short-term borrowings. In April 1997, all remaining shares of
the 7.80% Series of Preferred Stock were reacquired for $50
million.
<PAGE>
<PAGE>
<TABLE>
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
1997 1996
(in thousands)
<S> <C> <C>
OPERATING REVENUES . . . . . . . . . . . . . . . . . . . . . . $265,007 $271,040
OPERATING EXPENSES:
Fuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,800 47,506
Purchased Power. . . . . . . . . . . . . . . . . . . . . . . 38,515 43,469
Other Operation. . . . . . . . . . . . . . . . . . . . . . . 42,130 44,164
Maintenance. . . . . . . . . . . . . . . . . . . . . . . . . 13,324 13,923
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . 22,447 21,791
Amortization of Zimmer Plant Phase-in Costs. . . . . . . . . 8,407 8,448
Taxes Other Than Federal Income Taxes. . . . . . . . . . . . 29,969 28,107
Federal Income Taxes . . . . . . . . . . . . . . . . . . . . 17,985 15,206
TOTAL OPERATING EXPENSES. . . . . . . . . . . . . . . 217,577 222,614
OPERATING INCOME . . . . . . . . . . . . . . . . . . . . . . . 47,430 48,426
NONOPERATING INCOME (LOSS) . . . . . . . . . . . . . . . . . . 1,036 (2,905)
INCOME BEFORE INTEREST CHARGES . . . . . . . . . . . . . . . . 48,466 45,521
INTEREST CHARGES . . . . . . . . . . . . . . . . . . . . . . . 19,142 20,395
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . 29,324 25,126
PREFERRED STOCK DIVIDEND REQUIREMENTS. . . . . . . . . . . . . 1,493 1,670
EARNINGS APPLICABLE TO COMMON STOCK. . . . . . . . . . . . . . $ 27,831 $ 23,456
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
1997 1996
(in thousands)
<S> <C> <C>
BALANCE AT BEGINNING OF PERIOD . . . . . . . . . . . . . . . . $ 99,582 $74,320
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . 29,324 25,126
DEDUCTIONS:
Cash Dividends Declared:
Common Stock . . . . . . . . . . . . . . . . . . . . . . . 19,671 18,969
Cumulative Preferred Stock . . . . . . . . . . . . . . . . 437 1,422
Capital Stock Expense. . . . . . . . . . . . . . . . . . . . 71 71
BALANCE AT END OF PERIOD . . . . . . . . . . . . . . . . . . . $108,727 $78,984
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>
March 31, December 31,
1997 1996
(in thousands)
ASSETS
<S> <C> <C>
ELECTRIC UTILITY PLANT:
Production . . . . . . . . . . . . . . . . . . . . . $1,505,580 $1,503,371
Transmission . . . . . . . . . . . . . . . . . . . . 322,115 326,247
Distribution . . . . . . . . . . . . . . . . . . . . 898,195 885,267
General. . . . . . . . . . . . . . . . . . . . . . . 134,104 130,946
Construction Work in Progress. . . . . . . . . . . . 58,658 54,062
Total Electric Utility Plant . . . . . . . . 2,918,652 2,899,893
Accumulated Depreciation . . . . . . . . . . . . . . 1,036,138 1,016,909
NET ELECTRIC UTILITY PLANT . . . . . . . . . 1,882,514 1,882,984
OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . . 23,900 24,069
CURRENT ASSETS:
Cash and Cash Equivalents. . . . . . . . . . . . . . 12,783 9,134
Accounts Receivable (net). . . . . . . . . . . . . . 95,646 63,003
Fuel . . . . . . . . . . . . . . . . . . . . . . . . 19,160 18,278
Materials and Supplies . . . . . . . . . . . . . . . 23,929 23,999
Accrued Utility Revenues . . . . . . . . . . . . . . 42,658 31,826
Prepayments. . . . . . . . . . . . . . . . . . . . . 25,723 32,330
TOTAL CURRENT ASSETS . . . . . . . . . . . . 219,899 178,570
REGULATORY ASSETS. . . . . . . . . . . . . . . . . . . 371,991 385,689
DEFERRED CHARGES . . . . . . . . . . . . . . . . . . . 54,000 70,274
TOTAL. . . . . . . . . . . . . . . . . . . $2,552,304 $2,541,586
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
March 31, December 31,
1997 1996
(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. . . . . . . . . . . . . . . . . . . 571,826 574,709
Retained Earnings. . . . . . . . . . . . . . . . . . 108,727 99,582
Total Common Shareholder's Equity. . . . . . 721,579 715,317
Cumulative Preferred Stock - Subject to
Mandatory Redemption . . . . . . . . . . . . . . . 25,000 25,000
Long-term Debt . . . . . . . . . . . . . . . . . . . 864,498 882,641
TOTAL CAPITALIZATION . . . . . . . . . . . . 1,611,077 1,622,958
OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . . 42,203 40,068
CURRENT LIABILITIES:
Preferred Stock Due Within One Year. . . . . . . . . - 50,000
Long-term Debt Due Within One Year . . . . . . . . . 71,640 14,640
Short-term Debt. . . . . . . . . . . . . . . . . . . 99,217 51,800
Accounts Payable . . . . . . . . . . . . . . . . . . 34,864 54,828
Taxes Accrued. . . . . . . . . . . . . . . . . . . . 117,903 129,429
Interest Accrued . . . . . . . . . . . . . . . . . . 26,296 13,605
Other. . . . . . . . . . . . . . . . . . . . . . . . 26,309 32,314
TOTAL CURRENT LIABILITIES. . . . . . . . . . 376,229 346,616
DEFERRED INCOME TAXES. . . . . . . . . . . . . . . . . 438,853 441,477
DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . . 56,201 57,101
DEFERRED CREDITS . . . . . . . . . . . . . . . . . . . 27,741 33,366
CONTINGENCIES (Note 3)
TOTAL. . . . . . . . . . . . . . . . . . . $2,552,304 $2,541,586
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
1997 1996
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . $ 29,324 $ 25,126
Adjustments for Noncash Items:
Depreciation . . . . . . . . . . . . . . . . . . . . . . 22,506 21,697
Deferred Federal Income Taxes. . . . . . . . . . . . . . 632 (1,988)
Deferred Investment Tax Credits. . . . . . . . . . . . . (900) (912)
Deferred Fuel Costs (net). . . . . . . . . . . . . . . . (5,391) (838)
Amortization of Zimmer Plant Operating
Expenses and Carrying Charges. . . . . . . . . . . . . 8,349 7,776
Changes in Certain Current Assets and Liabilities:
Accounts Receivable (net). . . . . . . . . . . . . . . . (32,643) (765)
Fuel, Materials and Supplies . . . . . . . . . . . . . . (812) 3,524
Accrued Utility Revenues . . . . . . . . . . . . . . . . (10,832) 8,688
Prepayments. . . . . . . . . . . . . . . . . . . . . . . 6,607 (9,125)
Accounts Payable . . . . . . . . . . . . . . . . . . . . (19,964) (12,308)
Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . (11,526) (10,244)
Interest Accrued . . . . . . . . . . . . . . . . . . . . 12,691 12,708
Other (net). . . . . . . . . . . . . . . . . . . . . . . . 12,979 15,741
Net Cash Flows From Operating Activities . . . . . . 11,020 59,080
INVESTING ACTIVITIES:
Construction Expenditures. . . . . . . . . . . . . . . . . (20,302) (15,127)
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . 986 955
Net Cash Flows Used For Investing Activities . . . . (19,316) (14,172)
FINANCING ACTIVITIES:
Issuance of Long-term Debt . . . . . . . . . . . . . . . . 38,574 -
Change in Short-term Debt (net). . . . . . . . . . . . . . 47,417 (16,050)
Retirement of Cumulative Preferred Stock . . . . . . . . . (52,953) (7,500)
Dividends Paid on Common Stock . . . . . . . . . . . . . . (19,671) (18,969)
Dividends Paid on Cumulative Preferred Stock . . . . . . . (1,422) (1,600)
Net Cash Flows From (Used For) Financing Activities. 11,945 (44,119)
Net Increase in Cash and Cash Equivalents. . . . . . . . . . 3,649 789
Cash and Cash Equivalents at Beginning of Period . . . . . . 9,134 10,577
Cash and Cash Equivalents at End of Period . . . . . . . . . $ 12,783 $ 11,366
Supplemental Disclosure:
Cash paid (received) for interest net of capitalized amounts was $5,453,000 and
$6,717,000 and for income taxes was $89,000 and $(2,110,000) in 1997 and 1996,
respectively. Noncash acquisitions under capital leases were $2,942,000 and
$1,723,000 in 1997 and 1996, respectively.
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
1. GENERAL
The accompanying unaudited consolidated financial statements should
be read in conjunction with the 1996 Annual Report as incorporated in
and filed with the Form 10-K.
2. FINANCING ACTIVITIES
Termination of Sales of Receivables Agreement - In January 1997, the
Company terminated an agreement under which $50 million of undivided
interests in designated pools of accounts receivable and accrued
utility revenues were sold with limited recourse.
In March 1997 the Company redeemed the entire 500,000 shares
outstanding of its 7-7/8% Series of Cumulative Preferred Stock, par
value $100, at the regular redemption price of $105.25 per share and
issued $40 million of 7.92% Junior Subordinated Deferrable Interest
Debentures due in 2027.
3. CONTINGENCIES
As discussed in Note 8, "Federal Income Taxes" of the Notes to
Consolidated Financial Statements in the 1996 Annual Report, the
Internal Revenue Service agents auditing the federal income tax returns
for the years 1991 through 1993 requested a ruling from their National
Office that certain interest deductions relating to corporate owned
life insurance (COLI) claimed by the Company for 1991 through 1993
should not be allowed. The COLI program was established in 1990 as
part of the Company's strategy to fund and reduce the cost of medical
benefits for retired employees. AEP filed a brief with the IRS
National Office refuting the agents' position. Although no adjustments
have been proposed, a disallowance of the COLI interest deductions
through March 31, 1997 would reduce earnings by approximately $35
million (including interest). Management believes it will ultimately
prevail on this issue and will vigorously contest any adjustments that
may be assessed.
The Company continues to be involved in other matters discussed in
its 1996 Annual Report.
<PAGE>
<PAGE>
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS
FIRST QUARTER 1997 vs. FIRST QUARTER 1996
Net income increased $4.2 million or 17% in the first quarter of 1997
mainly due to an increase in nonoperating income and decreased interest
charges. Nonoperating income increased primarily due to the effect of
losses recorded in the first quarter of 1996 for certain demand side
management program deferrals and for environmental clean-up costs.
Interest charges declined reflecting the retirement and partial replacement
of high cost long-term debt with lower cost short-term debt. A 2% decrease
in operating expenses was more than offset by a 2% decline in operating
revenues which caused operating income to decline slightly in the first
quarter of 1997.
Both retail and wholesale revenues declined. The 2% reduction in
retail revenues resulted from milder winter weather and reduced fuel clause
revenues. Retail sales to weather-sensitive residential customers
decreased 5%. The decrease in fuel clause revenues did not affect net
income since it corresponds to changes in fuel expense.
Revenues from wholesale customers decreased 3% while wholesale sales
increased 10%. The decrease in revenues largely resulted from a decrease
in the average price per kilowatt sold. While sales to unaffiliated
utilities declined 19%, coal conversion service sales and related
transmission service revenues more than doubled. Coal conversion service
sales are from the conversion of customers' coal to electricity. The
substantial increase in revenues from this new service reflects the cost
effectiveness of this service to customers who can obtain low cost spot
market coal. The reduction in sales to unaffiliated utilities resulted
from the effects of milder winter weather and the competitive nature of the
wholesale power markets.
Income statement lines which changed significantly were as follows:
Increase (Decrease)
(in millions) %
Fuel Expense . . . . . . . . . . . . . . $(2.7) (6)
Purchased Power Expense. . . . . . . . . (5.0) (11)
Other Operation. . . . . . . . . . . . . (2.0) (5)
Taxes Other Than Federal Income Taxes. . 1.9 7
Federal Income Taxes . . . . . . . . . . 2.8 18
Nonoperating Income. . . . . . . . . . . 3.9 N.M.
Interest Charges . . . . . . . . . . . . (1.3) (6)
N.M. = Not Meaningful
<PAGE>
<PAGE>
The decline in fuel expense was due to the operation of the fuel clause
adjustment mechanism which caused a deferral of underrecovered fuel
expenses this period compared to the accrual of overrecovered fuel expenses
last period. This reduction in fuel expense caused by the fuel clause
adjustment merchanism was partly offset by the effect of increased
generation. The rise in generation during the first quarter of 1997
resulted in reduced energy purchases from the AEP System Power Pool.
The main reason for the decrease in other operation expense was a gain
on the sale of emission allowances.
The increase in taxes other than federal income taxes was due primarily
to increased property taxes, as a result of increases in assessed property
values and tax rates, and higher gross receipts taxes, as a result of the
effect of a tax credit recorded in 1996 and increased revenues during the
assessment period.
Federal income taxes attributable to operations increased primarily due
to an increase in pre-tax operating income and changes in certain book/tax
differences accounted for on a flow-through basis for rate-making purposes.
Nonoperating income increased due to losses recorded in the first
quarter of 1996 regarding certain deferred demand side management program
costs and clean-up of underground storage tanks at one of the Company's
facilities.
Interest charges declined due to a reduction in the average amount of
long-term debt outstanding partially offset by increased interest on
short-term debt reflecting an increase in the average balance of
short-term debt outstanding.
<PAGE>
<PAGE>
<TABLE>
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
1997 1996
(in thousands)
<S> <C> <C>
OPERATING REVENUES . . . . . . . . . . . . . . . . . . . . $341,313 $329,883
OPERATING EXPENSES:
Fuel . . . . . . . . . . . . . . . . . . . . . . . . . . 60,250 60,023
Purchased Power. . . . . . . . . . . . . . . . . . . . . 35,996 34,663
Other Operation. . . . . . . . . . . . . . . . . . . . . 78,611 78,810
Maintenance. . . . . . . . . . . . . . . . . . . . . . . 25,236 26,442
Depreciation and Amortization. . . . . . . . . . . . . . 35,018 34,892
Amortization of Rockport Plant Unit 1
Phase-in Plan Deferrals. . . . . . . . . . . . . . . . 3,911 3,911
Taxes Other Than Federal Income Taxes. . . . . . . . . . 18,285 19,921
Federal Income Taxes . . . . . . . . . . . . . . . . . . 24,112 18,203
TOTAL OPERATING EXPENSES . . . . . . . . . . . . 281,419 276,865
OPERATING INCOME . . . . . . . . . . . . . . . . . . . . . 59,894 53,018
NONOPERATING INCOME (LOSS) . . . . . . . . . . . . . . . . 468 (637)
INCOME BEFORE INTEREST CHARGES . . . . . . . . . . . . . . 60,362 52,381
INTEREST CHARGES . . . . . . . . . . . . . . . . . . . . . 16,103 16,614
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . 44,259 35,767
PREFERRED STOCK DIVIDEND REQUIREMENTS. . . . . . . . . . . 2,108 2,948
EARNINGS APPLICABLE TO COMMON STOCK. . . . . . . . . . . . $ 42,151 $ 32,819
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
1997 1996
(in thousands)
<S> <C> <C>
BALANCE AT BEGINNING OF PERIOD . . . . . . . . . . . . . . $269,071 $235,107
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . 44,259 35,767
DEDUCTIONS:
Cash Dividends Declared:
Common Stock . . . . . . . . . . . . . . . . . . . . . 29,065 28,127
Cumulative Preferred Stock . . . . . . . . . . . . . . 1,203 2,890
Capital Stock Expense. . . . . . . . . . . . . . . . . . 905 58
BALANCE AT END OF PERIOD . . . . . . . . . . . . . . . . . $282,157 $239,799
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>
March 31, December 31,
1997 1996
(in thousands)
ASSETS
<S> <C> <C>
ELECTRIC UTILITY PLANT:
Production . . . . . . . . . . . . . . . . . . . . . $2,521,750 $2,525,969
Transmission . . . . . . . . . . . . . . . . . . . . 879,878 881,407
Distribution . . . . . . . . . . . . . . . . . . . . 700,627 696,069
General (including nuclear fuel) . . . . . . . . . . 206,527 189,619
Construction Work in Progress. . . . . . . . . . . . 95,209 84,605
Total Electric Utility Plant . . . . . . . . 4,403,991 4,377,669
Accumulated Depreciation and Amortization. . . . . . 1,889,534 1,861,893
NET ELECTRIC UTILITY PLANT . . . . . . . . . 2,514,457 2,515,776
NUCLEAR DECOMMISSIONING AND SPENT NUCLEAR FUEL
DISPOSAL TRUST FUNDS . . . . . . . . . . . . . . . . 509,946 490,778
OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . . 149,944 154,265
CURRENT ASSETS:
Cash and Cash Equivalents. . . . . . . . . . . . . . 8,700 8,233
Accounts Receivable. . . . . . . . . . . . . . . . . 125,468 125,822
Allowance for Uncollectible Accounts . . . . . . . . (1,481) (156)
Fuel . . . . . . . . . . . . . . . . . . . . . . . . 16,129 23,977
Materials and Supplies . . . . . . . . . . . . . . . 75,809 77,074
Accrued Utility Revenues . . . . . . . . . . . . . . 34,292 38,295
Prepayments. . . . . . . . . . . . . . . . . . . . . 16,760 10,271
TOTAL CURRENT ASSETS . . . . . . . . . . . . 275,677 283,516
REGULATORY ASSETS. . . . . . . . . . . . . . . . . . . 426,005 421,692
DEFERRED CHARGES . . . . . . . . . . . . . . . . . . . 40,559 31,457
TOTAL. . . . . . . . . . . . . . . . . . . $3,916,588 $3,897,484
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
March 31, December 31,
1997 1996
(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. . . . . . . . . . . . . . . . . . . 732,372 731,272
Retained Earnings. . . . . . . . . . . . . . . . . . 282,157 269,071
Total Common Shareholder's Equity. . . . . . 1,071,113 1,056,927
Cumulative Preferred Stock:
Not Subject to Mandatory Redemption. . . . . . . . 9,499 21,977
Subject to Mandatory Redemption. . . . . . . . . . 68,445 135,000
Long-term Debt . . . . . . . . . . . . . . . . . . . 1,042,289 1,042,104
TOTAL CAPITALIZATION . . . . . . . . . . . . 2,191,346 2,256,008
OTHER NONCURRENT LIABILITIES:
Nuclear Decommissioning. . . . . . . . . . . . . . . 330,353 313,845
Other. . . . . . . . . . . . . . . . . . . . . . . . 196,112 174,903
TOTAL OTHER NONCURRENT LIABILITIES . . . . . 526,465 488,748
CURRENT LIABILITIES:
Long-term Debt Due Within One Year . . . . . . . . . 50,000 -
Short-term Debt. . . . . . . . . . . . . . . . . . . 13,675 43,500
Accounts Payable . . . . . . . . . . . . . . . . . . 47,134 61,892
Taxes Accrued. . . . . . . . . . . . . . . . . . . . 100,914 65,400
Interest Accrued . . . . . . . . . . . . . . . . . . 18,921 15,281
Rent Accrued - Rockport Plant Unit 2 . . . . . . . . 23,427 4,963
Obligations Under Capital Leases . . . . . . . . . . 26,513 29,740
Other. . . . . . . . . . . . . . . . . . . . . . . . 55,515 61,473
TOTAL CURRENT LIABILITIES. . . . . . . . . . 336,099 282,249
DEFERRED INCOME TAXES. . . . . . . . . . . . . . . . . 589,300 594,879
DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . . 144,504 146,473
DEFERRED GAIN ON SALE AND LEASEBACK -
ROCKPORT PLANT UNIT 2. . . . . . . . . . . . . . . . 95,199 96,125
DEFERRED CREDITS . . . . . . . . . . . . . . . . . . . 33,675 33,002
CONTINGENCIES (Note 3)
TOTAL. . . . . . . . . . . . . . . . . . . $3,916,588 $3,897,484
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
1997 1996
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . $ 44,259 $ 35,767
Adjustments for Noncash Items:
Depreciation and Amortization. . . . . . . . . . . . . . 36,922 36,813
Amortization of Incremental Nuclear
Refueling Outage Expenses (net). . . . . . . . . . . . (10,965) 3,724
Deferred Federal Income Taxes. . . . . . . . . . . . . . (2,151) (6,607)
Deferred Investment Tax Credits. . . . . . . . . . . . . (1,969) (1,982)
Deferred Property Taxes. . . . . . . . . . . . . . . . . (11,793) (12,323)
Changes in Certain Current Assets and Liabilities:
Accounts Receivable (net). . . . . . . . . . . . . . . . 1,679 (4,888)
Fuel, Materials and Supplies . . . . . . . . . . . . . . 9,113 (647)
Accrued Utility Revenues . . . . . . . . . . . . . . . . 4,003 13,825
Prepayments. . . . . . . . . . . . . . . . . . . . . . . (6,489) (7,313)
Accounts Payable . . . . . . . . . . . . . . . . . . . . (14,758) (15,991)
Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . 35,514 29,652
Rent Accrued - Rockport Plant Unit 2 . . . . . . . . . . 18,464 18,464
Other (net). . . . . . . . . . . . . . . . . . . . . . . . 7,797 20,352
Net Cash Flows From Operating Activities . . . . . . 109,626 108,846
INVESTING ACTIVITIES - Construction Expenditures . . . . . . (16,800) (17,961)
FINANCING ACTIVITIES:
Issuance of Long-term Debt . . . . . . . . . . . . . . . . 47,728 38,579
Retirement of Long-term Debt . . . . . . . . . . . . . . . - (6,091)
Change in Short-term Debt (net). . . . . . . . . . . . . . (29,825) (89,975)
Retirement of Cumulative Preferred Stock . . . . . . . . . (78,838) -
Dividends Paid on Common Stock . . . . . . . . . . . . . . (29,065) (28,127)
Dividends Paid on Cumulative Preferred Stock . . . . . . . (2,359) (2,890)
Net Cash Flows Used For Financing Activities . . . . (92,359) (88,504)
Net Increase in Cash and Cash Equivalents. . . . . . . . . . 467 2,381
Cash and Cash Equivalents at Beginning of Period . . . . . . 8,233 13,723
Cash and Cash Equivalents at End of Period . . . . . . . . . $ 8,700 $ 16,104
Supplemental Disclosure:
Cash paid for interest net of capitalized amounts was $11,765,000 and $11,859,000
and for income taxes was $125,000 and $6,817,000 in 1997 and 1996, respectively.
Noncash acquisitions under capital leases were $34,342,000 and $31,719,000 in 1997
and 1996, respectively.
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
1. GENERAL
The accompanying unaudited consolidated financial statements
should be read in conjunction with the 1996 Annual Report as
incorporated in and filed with the Form 10-K.
2. FINANCING ACTIVITIES
In February 1997 the Company issued $48 million of 6.40%
First Mortgage Bonds due 2000.
In March 1997 the Company, as part of a tender offer,
reacquired and retired the following number of shares of
Cumulative Preferred Stock at the prices listed plus an amount
equal to accrued dividends:
Number Price Total
of Shares Paid Per Reacquisition
Series Retired Share Price
(in thousands)
4.12% 20,669 $ 64.17 $ 1,326
4-1/8% 59,325 62.31 3,697
4.56% 28,525 69.94 1,995
5.90% 233,000 101.83 23,726
6-1/4% 97,500 103.79 10,120
6.30% 217,550 103.71 22,562
6-7/8% 117,500 106.45 12,508
The Company called for redemption in May 1997, $50 million of
its 8.75% First Mortgage Bonds due 2022. Therefore, the bonds
were classified as a current liability on the balance sheet.
3. CONTINGENCIES
As discussed in Note 7, "Federal Income Taxes" of the Notes
to Consolidated Financial Statements in the 1996 Annual Report,
the Internal Revenue Service agents auditing the federal income
tax returns for the years 1991 through 1993 requested a ruling
from their National Office that certain interest deductions
relating to corporate owned life insurance (COLI) claimed by the
Company for 1991 through 1993 should not be allowed. The COLI
program was established in 1990 as part of the Company's strategy
to fund and reduce the cost of medical benefits for retired
employees. AEP filed a brief with the IRS National Office
refuting the agents' position. Although no adjustments have been
proposed, a disallowance of the COLI interest deductions through
March 31, 1997 would reduce earnings by approximately $53 million
(including interest). Management believes it will ultimately
prevail on this issue and will vigorously contest any adjustments
that may be assessed.
The Company continues to be involved in other matters
discussed in its 1996 Annual Report.
<PAGE>
<PAGE>
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
FIRST QUARTER 1997 vs. FIRST QUARTER 1996
RESULTS OF OPERATIONS
Net income increased 24% or $8.5 million due to increased
retail revenues and cost reduction efforts.
Operating revenues increased 3% primarily due to a 3%
increase in retail sales partly offset by an 8% decrease in
wholesale sales. The increase in retail sales is mainly
attributable to increased industrial customer usage. The
increase in retail revenues also reflects an increase in fuel
clause recoveries. Under the fuel clause recovery mechanism
unrecovered fuel costs are deferred in both of the Company's
retail jurisdictions and for replacement power costs in the
Michigan jurisdiction until approved for billing and recovery.
Wholesale sales to affiliates decreased this period as a
result of Unit 1 of the Cook nuclear plant being removed from
service on March 1 for scheduled refueling, inspection and
general maintenance. The reduction in the availability of
nuclear generation resulted in decreased deliveries to the AEP
System Power Pool (Power Pool). Partly offsetting this decline
in wholesale revenues were additional Power Pool sales to
unaffiliated companies for coal conversion service sales and
related transmission services. Coal conversion service sales are
from the conversion of customers' coal to electricity. The
increase in coal conversion service sales reflects acceptance of
this new service by customers which allows customers to obtain
low cost spot market coal.
Other income statement line items which changed significantly
were:
Increase (Decrease)
(in millions) %
Maintenance Expense . . . . . . . . . . . $(1.2) (5)
Taxes Other Than Federal Income Taxes . . (1.6) (8)
Federal Income Taxes. . . . . . . . . . . 5.9 32
Nonoperating Income . . . . . . . . . . . 1.1 N.M.
N.M. = Not Meaningful
The decrease in maintenance expense is the result of cost-cutting
measures in transmission and distribution functions.
<PAGE>
<PAGE>
The decrease in taxes other than federal income taxes was the
result of lower Indiana real and personal property tax accruals.
Federal income taxes attributable to operations increased due
to an increase in pretax operating income and changes in certain
book/tax timing differences accounted for on a flow-through basis
for rate-making purposes.
Nonoperating income increased as a result of a loss in 1996
on the sale of a western coal property.
FINANCIAL CONDITION
Total plant and property additions including capital leases
for the period were $52 million. During the first three months
of 1997 short-term debt outstanding decreased by $30 million.
In February 1997, the Company issued $48 million of 6.40%
First Mortgage Bonds due 2000.
As part of a January 1997 tender offer for all of the
Company's outstanding preferred stock that was announced in
conjunction with a special meeting of shareholders, 774,069
shares of $100 stated value preferred stocks were reacquired.
The total cost of the stock reacquisition was $78 million. At
the special meeting of shareholders held on February 28, 1997,
the Company's articles of incorporation were amended to remove
certain capitalization ratio requirements which restricted the
Company's ability to issue unsecured debt. As a result unsecured
borrowings are now limited only by the Public Utility Holding
Company Act of 1935 with the current limitation set at $175
million for unsecured short-term borrowings.
<PAGE>
<PAGE>
<TABLE>
KENTUCKY POWER COMPANY
STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
1997 1996
(in thousands)
<S> <C> <C>
OPERATING REVENUES . . . . . . . . . . . . . . . . . $88,580 $88,589
OPERATING EXPENSES:
Fuel . . . . . . . . . . . . . . . . . . . . . . . 19,164 21,680
Purchased Power. . . . . . . . . . . . . . . . . . 23,230 22,519
Other Operation. . . . . . . . . . . . . . . . . . 12,009 12,356
Maintenance. . . . . . . . . . . . . . . . . . . . 5,107 7,720
Depreciation and Amortization. . . . . . . . . . . 6,540 6,254
Taxes Other Than Federal Income Taxes. . . . . . . 2,794 2,374
Federal Income Taxes . . . . . . . . . . . . . . . 4,496 2,528
TOTAL OPERATING EXPENSES . . . . . . . . . 73,340 75,431
OPERATING INCOME . . . . . . . . . . . . . . . . . . 15,240 13,158
NONOPERATING LOSS. . . . . . . . . . . . . . . . . . (141) (334)
INCOME BEFORE INTEREST CHARGES . . . . . . . . . . . 15,099 12,824
INTEREST CHARGES . . . . . . . . . . . . . . . . . . 5,968 6,068
NET INCOME . . . . . . . . . . . . . . . . . . . . . $ 9,131 $ 6,756
</TABLE>
<TABLE>
STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
1997 1996
(in thousands)
<S> <C> <C>
BALANCE AT BEGINNING OF PERIOD . . . . . . . . . . . $84,090 $91,381
NET INCOME . . . . . . . . . . . . . . . . . . . . . 9,131 6,756
CASH DIVIDENDS DECLARED. . . . . . . . . . . . . . . 6,690 6,066
BALANCE AT END OF PERIOD . . . . . . . . . . . . . . $86,531 $92,071
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>
March 31, December 31,
1997 1996
(in thousands)
ASSETS
<S> <C> <C>
ELECTRIC UTILITY PLANT:
Production . . . . . . . . . . . . . . . . . $240,703 $244,805
Transmission . . . . . . . . . . . . . . . . 264,638 264,563
Distribution . . . . . . . . . . . . . . . . 324,569 329,184
General. . . . . . . . . . . . . . . . . . . 65,124 64,650
Construction Work in Progress. . . . . . . . 63,652 48,400
Total Electric Utility Plant . . . . 958,686 951,602
Accumulated Depreciation and Amortization. . 286,702 286,640
NET ELECTRIC UTILITY PLANT . . . . . 671,984 664,962
OTHER PROPERTY AND INVESTMENTS . . . . . . . . 6,439 6,452
CURRENT ASSETS:
Cash and Cash Equivalents. . . . . . . . . . 3,503 1,106
Accounts Receivable. . . . . . . . . . . . . 31,686 28,589
Allowance for Uncollectible Accounts . . . . (553) (272)
Fuel . . . . . . . . . . . . . . . . . . . . 9,997 9,244
Materials and Supplies . . . . . . . . . . . 13,108 13,175
Accrued Utility Revenues . . . . . . . . . . 5,073 8,175
Prepayments. . . . . . . . . . . . . . . . . 1,403 2,011
TOTAL CURRENT ASSETS . . . . . . . . 64,217 62,028
REGULATORY ASSETS. . . . . . . . . . . . . . . 88,992 88,776
DEFERRED CHARGES . . . . . . . . . . . . . . . 10,783 11,361
TOTAL. . . . . . . . . . . . . . . $842,415 $833,579
See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
KENTUCKY POWER COMPANY
BALANCE SHEETS
(UNAUDITED)
<CAPTION>
March 31, December 31,
1997 1996
(in thousands)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
CAPITALIZATION:
Common Stock - Par Value $50:
Authorized - 2,000,000 Shares
Outstanding - 1,009,000 Shares . . . . . . $ 50,450 $ 50,450
Paid-in Capital. . . . . . . . . . . . . . . 108,750 108,750
Retained Earnings. . . . . . . . . . . . . . 86,531 84,090
Total Common Shareholder's Equity. . 245,731 243,290
First Mortgage Bonds. . . . . . . . . . . . . 179,331 179,305
Notes Payable . . . . . . . . . . . . . . . . 75,000 75,000
Subordinated Debentures . . . . . . . . . . . 38,903 38,893
TOTAL CAPITALIZATION . . . . . . . . 538,965 536,488
OTHER NONCURRENT LIABILITIES . . . . . . . . . 20,644 19,467
CURRENT LIABILITIES:
Short-term Debt. . . . . . . . . . . . . . . 59,150 51,675
Accounts Payable . . . . . . . . . . . . . . 23,212 31,057
Customer Deposits. . . . . . . . . . . . . . 3,334 3,409
Taxes Accrued. . . . . . . . . . . . . . . . 9,387 5,064
Interest Accrued . . . . . . . . . . . . . . 6,355 5,217
Other. . . . . . . . . . . . . . . . . . . . 10,181 9,199
TOTAL CURRENT LIABILITIES. . . . . . 111,619 105,621
DEFERRED INCOME TAXES. . . . . . . . . . . . . 154,160 153,538
DEFERRED INVESTMENT TAX CREDITS. . . . . . . . 16,699 17,007
DEFERRED CREDITS . . . . . . . . . . . . . . . 328 1,458
CONTINGENCIES (Note 2)
TOTAL. . . . . . . . . . . . . . . $842,415 $833,579
See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
KENTUCKY POWER COMPANY
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
1997 1996
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . $ 9,131 $ 6,756
Adjustments for Noncash Items:
Depreciation and Amortization. . . . . . . . . . 6,543 6,273
Deferred Federal Income Taxes. . . . . . . . . . 521 (148)
Deferred Investment Tax Credits. . . . . . . . . (308) (311)
Changes in Certain Current Assets and Liabilities:
Accounts Receivable (net). . . . . . . . . . . . (2,816) (2,212)
Fuel, Materials and Supplies . . . . . . . . . . (686) (2,664)
Accrued Utility Revenues . . . . . . . . . . . . 3,102 5,184
Accounts Payable . . . . . . . . . . . . . . . . (7,845) (2,102)
Taxes Accrued. . . . . . . . . . . . . . . . . . 4,323 1,314
Other (net). . . . . . . . . . . . . . . . . . . . 3,183 506
Net Cash Flows From Operating Activities . . 15,148 12,596
INVESTING ACTIVITIES:
Construction Expenditures. . . . . . . . . . . . . (13,536) (8,614)
Proceeds from Sales of Property. . . . . . . . . . - 250
Net Cash Flows Used For Investing Activities (13,536) (8,364)
FINANCING ACTIVITIES:
Capital Contributions from Parent Company. . . . . - 10,000
Change in Short-term Debt (net). . . . . . . . . . 7,475 21,200
Retirement of Long-term Debt . . . . . . . . . . . - (29,436)
Dividends Paid . . . . . . . . . . . . . . . . . . (6,690) (6,066)
Net Cash Flows From (Used For)
Financing Activities . . . . . . . . . . . 785 (4,302)
Net Increase (Decrease) in Cash and Cash Equivalents 2,397 (70)
Cash and Cash Equivalents at Beginning of Period . . 1,106 1,031
Cash and Cash Equivalents at End of Period . . . . . $ 3,503 $ 961
Supplemental Disclosure:
Cash paid for interest net of capitalized amounts was $4,755,000 and
$6,028,000 in 1997 and 1996, respectively, and for income taxes was
$1,152,000 in 1996. Noncash acquisitions under capital leases were
$822,000 and $1,054,000 in 1997 and 1996, respectively.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
KENTUCKY POWER COMPANY
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
1. GENERAL
The accompanying unaudited financial statements should be
read in conjunction with the 1996 Annual Report as
incorporated in and filed with the Form 10-K.
2. CONTINGENCIES
As discussed in Note 7, "Federal Income Taxes" of the
Notes to Financial Statements in the 1996 Annual Report, the
Internal Revenue Service agents auditing the federal income
tax returns for the years 1991 through 1993 requested a
ruling from their National Office that certain interest
deductions relating to corporate owned life insurance (COLI)
claimed by the Company for 1992 and 1993 should not be
allowed. The COLI program was established in 1992 as part of
the Company's strategy to fund and reduce the cost of medical
benefits for retired employees. AEP filed a brief with the
IRS National Office refuting the agents' position. Although
no adjustments have been proposed, a disallowance of the COLI
interest deductions through March 31, 1997 would reduce
earnings by approximately $5 million (including interest).
Management believes it will ultimately prevail on this issue
and will vigorously contest any adjustments that may be
assessed.
The Company continues to be involved in certain other
matters discussed in its 1996 Annual Report.
<PAGE>
<PAGE>
KENTUCKY POWER COMPANY
MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS
FIRST QUARTER 1997 vs. FIRST QUARTER 1996
Although operating revenues remained essentially unchanged,
net income increased $2.4 million or 35%. The rise in net income
was attributable to a decrease in fuel and maintenance expenses.
Income statement lines which changed significantly were:
Increase(Decrease)
(in millions) %
Fuel Expense. . . . . . . . . . . . . . $(2.5) (11.6)
Maintenance Expense . . . . . . . . . . (2.6) (33.8)
Taxes Other Than Federal Income Taxes . 0.4 17.7
Federal Income Taxes. . . . . . . . . . 2.0 77.8
Revenues remained relatively constant as decreased retail
revenues were offset by increased wholesale transactions.
Residential and commercial revenues declined 11% and 3%,
respectively, due to decreased customer usage as a result of
warmer winter weather. The rise in revenues from wholesale
transactions was due to increased energy sales to the AEP System
Power Pool reflecting outages at various affiliated generating
plants and increased coal conversion and transmission service
revenues.
The decrease in fuel expense is attributable to a decline in
the cost of fuel consumed and the operation of the fuel clause
adjustment mechanism. Under the fuel clause adjustment mechanism
the Company defers fuel expense to the extent it varies from the
allowed fuel rate until reflected in billings to customers in
subsequent months. The decrease in maintenance expense reflects
a decreased level of scheduled steam plant maintenance at the
Company's Big Sandy Plant and reduced overhead distribution line
maintenance expenditures.
Taxes other than federal income taxes increased primarily
due to increased state income taxes as a result of an increase
in pre-tax operating income.
The increase in federal income tax expense was primarily due
to an increase in pre-tax operating income and the completion of
the amortization of deferred federal income taxes in excess of
the statutory tax rate as ordered by the Kentucky Public Service
Commission.
<PAGE>
<TABLE>
OHIO POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
1997 1996
(in thousands)
<S> <C> <C>
OPERATING REVENUES . . . . . . . . . . . . . . . . . . . . . . . $484,300 $504,741
OPERATING EXPENSES:
Fuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162,002 178,326
Purchased Power. . . . . . . . . . . . . . . . . . . . . . . . 16,459 15,065
Other Operation. . . . . . . . . . . . . . . . . . . . . . . . 82,363 82,891
Maintenance. . . . . . . . . . . . . . . . . . . . . . . . . . 29,477 29,067
Depreciation and Amortization. . . . . . . . . . . . . . . . . 34,940 34,274
Taxes Other Than Federal Income Taxes. . . . . . . . . . . . . 41,913 42,203
Federal Income Taxes . . . . . . . . . . . . . . . . . . . . . 36,615 35,071
TOTAL OPERATING EXPENSES . . . . . . . . . . . . . . . 403,769 416,897
OPERATING INCOME . . . . . . . . . . . . . . . . . . . . . . . . 80,531 87,844
NONOPERATING INCOME. . . . . . . . . . . . . . . . . . . . . . . 4,970 2,134
INCOME BEFORE INTEREST CHARGES . . . . . . . . . . . . . . . . . 85,501 89,978
INTEREST CHARGES . . . . . . . . . . . . . . . . . . . . . . . . 19,910 23,442
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . 65,591 66,536
PREFERRED STOCK DIVIDEND REQUIREMENTS. . . . . . . . . . . . . . 1,538 2,240
EARNINGS APPLICABLE TO COMMON STOCK. . . . . . . . . . . . . . . $ 64,053 $ 64,296
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
1997 1996
(in thousands)
<S> <C> <C>
BALANCE AT BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . $584,015 $518,029
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . 65,591 66,536
DEDUCTIONS:
Cash Dividends Declared:
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . 37,562 35,714
Cumulative Preferred Stock . . . . . . . . . . . . . . . . . 2,089 2,194
Capital Stock Expense. . . . . . . . . . . . . . . . . . . . . 21 46
BALANCE AT END OF PERIOD . . . . . . . . . . . . . . . . . . . . $609,934 $546,611
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>
March 31, December 31,
1997 1996
(in thousands)
ASSETS
<S> <C> <C>
ELECTRIC UTILITY PLANT:
Production . . . . . . . . . . . . . . . . . . . . . $2,565,522 $2,556,507
Transmission . . . . . . . . . . . . . . . . . . . . 821,723 820,636
Distribution . . . . . . . . . . . . . . . . . . . . 869,175 872,936
General (including mining assets). . . . . . . . . . 682,686 680,443
Construction Work in Progress. . . . . . . . . . . . 80,875 66,099
Total Electric Utility Plant . . . . . . . . 5,019,981 4,996,621
Accumulated Depreciation and Amortization. . . . . . 2,255,313 2,216,534
NET ELECTRIC UTILITY PLANT . . . . . . . . . 2,764,668 2,780,087
OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . . 105,645 106,485
CURRENT ASSETS:
Cash and Cash Equivalents. . . . . . . . . . . . . . 29,528 24,003
Accounts Receivable. . . . . . . . . . . . . . . . . 218,268 232,734
Allowance for Uncollectible Accounts . . . . . . . . (2,081) (1,433)
Fuel . . . . . . . . . . . . . . . . . . . . . . . . 109,283 113,361
Materials and Supplies . . . . . . . . . . . . . . . 73,360 75,908
Accrued Utility Revenues . . . . . . . . . . . . . . 34,903 38,852
Prepayments. . . . . . . . . . . . . . . . . . . . . 60,466 44,203
TOTAL CURRENT ASSETS . . . . . . . . . . . . 523,727 527,628
REGULATORY ASSETS. . . . . . . . . . . . . . . . . . . 537,423 540,123
DEFERRED CHARGES . . . . . . . . . . . . . . . . . . . 102,844 137,843
TOTAL. . . . . . . . . . . . . . . . . . . $4,034,307 $4,092,166
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
OHIO POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
March 31, December 31,
1997 1996
(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. . . . . . . . . . . . . . . . . . . 462,285 460,662
Retained Earnings. . . . . . . . . . . . . . . . . . 609,934 584,015
Total Common Shareholder's Equity. . . . . . 1,393,420 1,365,878
Cumulative Preferred Stock:
Not Subject to Mandatory Redemption. . . . . . . . 17,575 38,532
Subject to Mandatory Redemption. . . . . . . . . . 11,850 109,900
Long-term Debt . . . . . . . . . . . . . . . . . . . 929,067 1,002,436
TOTAL CAPITALIZATION . . . . . . . . . . . . 2,351,912 2,516,746
OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . . 249,565 245,032
CURRENT LIABILITIES:
Long-term Debt Due Within One Year . . . . . . . . . 169,635 67,293
Short-term Debt. . . . . . . . . . . . . . . . . . . 35,400 41,302
Accounts Payable . . . . . . . . . . . . . . . . . . 81,269 89,399
Taxes Accrued. . . . . . . . . . . . . . . . . . . . 170,458 162,798
Interest Accrued . . . . . . . . . . . . . . . . . . 25,985 18,094
Obligations Under Capital Leases . . . . . . . . . . 26,648 24,153
Other. . . . . . . . . . . . . . . . . . . . . . . . 91,278 84,385
TOTAL CURRENT LIABILITIES. . . . . . . . . . 600,673 487,424
DEFERRED INCOME TAXES. . . . . . . . . . . . . . . . . 729,826 738,626
DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . . 45,463 46,308
DEFERRED CREDITS . . . . . . . . . . . . . . . . . . . 56,868 58,030
CONTINGENCIES (Note 3)
TOTAL. . . . . . . . . . . . . . . . . . . $4,034,307 $4,092,166
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
OHIO POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
1997 1996
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . $ 65,591 $ 66,536
Adjustments for Noncash Items:
Depreciation, Depletion and Amortization . . . . . . . . 43,728 41,119
Deferred Federal Income Taxes. . . . . . . . . . . . . . (4,363) 245
Amortization of Deferred Property Taxes. . . . . . . . . 18,739 19,656
Changes in Certain Current Assets and Liabilities:
Accounts Receivable (net). . . . . . . . . . . . . . . . 15,114 (17,229)
Fuel, Materials and Supplies . . . . . . . . . . . . . . 6,626 19,322
Accrued Utility Revenues . . . . . . . . . . . . . . . . 3,949 5,611
Prepayments. . . . . . . . . . . . . . . . . . . . . . . (16,263) (20,825)
Accounts Payable . . . . . . . . . . . . . . . . . . . . (8,130) (18,089)
Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . 7,660 (2,565)
Interest Accrued . . . . . . . . . . . . . . . . . . . . 7,891 9,409
Other (net). . . . . . . . . . . . . . . . . . . . . . . . 24,434 12,701
Net Cash Flows From Operating Activities . . . . . . 164,976 115,891
INVESTING ACTIVITIES:
Construction Expenditures. . . . . . . . . . . . . . . . . (25,701) (19,903)
Proceeds from Sale of Property and Other . . . . . . . . . 715 4,177
Net Cash Flows Used For Investing Activities . . . . (24,986) (15,726)
FINANCING ACTIVITIES:
Issuance of Long-term Debt . . . . . . . . . . . . . . . . 48,858 -
Change in Short-term Debt (net). . . . . . . . . . . . . . (5,902) 39,001
Retirement of Cumulative Preferred Stock . . . . . . . . . (117,601) -
Retirement of Long-term Debt . . . . . . . . . . . . . . . (20,169) (88,879)
Dividends Paid on Common Stock . . . . . . . . . . . . . . (37,562) (35,714)
Dividends Paid on Cumulative Preferred Stock . . . . . . . (2,089) (2,194)
Net Cash Flows Used For Financing Activities . . . . (134,465) (87,786)
Net Increase in Cash and Cash Equivalents. . . . . . . . . . 5,525 12,379
Cash and Cash Equivalents at Beginning of Period . . . . . . 24,003 44,000
Cash and Cash Equivalents at End of Period . . . . . . . . . $ 29,528 $ 56,379
Supplemental Disclosure:
Cash paid for interest net of capitalized amounts was $11,365,000 and $13,325,000
and for income taxes was $934,000 and $2,599,000 in 1997 and 1996, respectively.
Noncash acquisitions under capital leases were $8,023,000 and $8,933,000 in
1997 and 1996, respectively.
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
OHIO POWER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
1. GENERAL
The accompanying unaudited consolidated financial
statements should be read in conjunction with the 1996
Annual Report as incorporated in and filed with the Form
10-K.
2. FINANCING ACTIVITY
The Company issued $50 million of 7.92% Junior
Subordinated Deferrable Interest Debentures due 2027 in
March 1997. In January 1997 a subsidiary of the Company
retired $20 million of long-term debt at maturity. In March
1997 the Company, as part of a tender offer, reacquired and
retired the following number of shares of Cumulative
Preferred Stock at the prices listed plus an amount equal to
accrued dividends:
Number Price Total
of Shares Paid Per Reacquisition
Series Retired Share Price
(in thousands)
4.08% 27,182 $ 64.56 $ 1,755
4-1/2% 97,616 69.02 6,737
4.20% 28,875 66.46 1,919
4.40% 55,889 69.62 3,891
5.90% 321,500 103.09 33,143
6.02% 364,000 103.71 37,750
6.35% 295,000 105.14 31,016
In April 1997, the Company called the entire $50 million
outstanding balance of 8.75% Series First Mortgage Bonds due
in 2022 for early redemption in June 1997. Consequently the
bonds are classified as a current liability on the balance
sheet.
3. CONTINGENCIES
As discussed in Note 8, "Federal Income Taxes" of the
Notes to Consolidated Financial Statements in the 1996
Annual Report, the Internal Revenue Service agents auditing
the federal income tax returns for the years 1991 through
1993 requested a ruling from their National Office that
certain interest deductions relating to corporate owned life
insurance (COLI) claimed by the Company for 1991 through
1993 should not be allowed. The COLI program was
established in 1990 as part of the Company's strategy to
fund and reduce the cost of medical benefits for retired
employees. AEP filed a brief with the IRS National Office
refuting the agents' position. Although no adjustments have
been proposed, a disallowance of the COLI interest
deductions through March 31, 1997 would reduce earnings by
approximately $97 million (including interest). Management
believes it will ultimately prevail on this issue and will
<PAGE>
vigorously contest any adjustments that may be assessed.
The Company continues to be involved in certain other
matters discussed in the 1996 Annual Report.
<PAGE>
<PAGE>
OHIO POWER COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
FIRST QUARTER 1997 vs. FIRST QUARTER 1996
RESULTS OF OPERATIONS
Net income decreased 1% or $1 million primarily due to a 4%
decrease in retail energy sales the effect of which was partially
offset by reduced fuel costs and interest charges.
Income statement lines which changed significantly were:
Increase (Decrease)
(in millions) %
Operating Revenues. . . . . . . . . . . $(20.4) (4)
Fuel Expense. . . . . . . . . . . . . . (16.3) (9)
Purchased Power Expense . . . . . . . . 1.4 9
Interest Charges. . . . . . . . . . . . (3.5) (15)
Both retail and wholesale revenues declined. The reduction
in retail revenues resulted from milder weather, a labor strike
at a major industrial customer and a reduction in the contract
price for the sale of electricity to another major industrial
customer. Retail sales to weather-sensitive residential and
commercial customers decreased 7% and 2%, respectively, and
industrial sales declined 4%.
Revenues from wholesale customers decreased 7% while
wholesale sales increased 1%. The decrease in revenues largely
resulted from a decrease in the average price per kilowatt sold.
While sales to unaffiliated utilities declined 22%, coal
conversion service sales and related transmission service more
than doubled. Coal conversion service sales are from the
conversion of customers' coal to electricity. The substantial
increase in coal conversion service sales reflects the
utilization of this service as customers obtained low cost spot
market coal. The reduction in sales to unaffiliated utilities
resulted from the effects of milder winter weather and the
competitive nature of the wholesale power markets.
The decrease in fuel expense was due to a decline in
generation resulting from the reduced demand for energy and the
unavailability of certain generating units. Purchased power
expense increased due to increased purchases from an unaffiliated
utility reflecting favorable prices and outages at the Company's
generating units.
<PAGE>
Interest charges decreased due to lower outstanding balances
of long-term debt in 1997 reflecting debt retirements in the
first half of 1996 and reduced interest accruals on emission
allowances.
FINANCIAL CONDITION
Total plant and property additions including capital leases
for the current period were $34 million.
During the first quarter of 1997, the Company issued $50
million of 7.92% Junior Subordinated Deferrable Interest
Debentures due 2027 and a subsidiary of the Company retired $20
million principal amount of long-term debt with an interest rate
of 7.19%. Short-term debt decreased by $6 million from the
beginning of 1997.
As part of a January 1997 tender offer for all of the
Company's outstanding preferred stock that was announced in
conjunction with a special meeting of shareholders, 1,190,062
shares of $100 par value preferred stocks were reacquired. The
total cost of the stock reacquisition was $118 million. At the
special meeting of shareholders held on February 28, 1997 the
Company's articles of incorporation were amended to remove
certain capitalization ratio requirements which restricted the
Company's ability to issue unsecured debt. As a result unsecured
borrowings are now limited only by the Public Utility Holding
Company Act of 1935 with the current limitation set at $250
million for unsecured short-term borrowings.
In April 1997, the Company called the entire $50 million
outstanding balance of 8.75% Series First Mortgage Bonds due in
2022 for early redemption in June 1997. Consequently the bonds
are classified as a current liability on the balance sheet.
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
Appalachian Power Company ("APCo")
A special meeting of stockholders was held on February 28,
1997. The holders of shares entitled to vote at the meeting or
their proxies cast votes at the meeting with respect to the con-
sideration of an amendment to the Restated Articles of Incorpora-
tion of APCo to remove a provision of the Articles limiting
APCo's ability to issue debt, as indicated below:
Cumulative
Preferred Common
Stock Stock
Votes FOR 1,650,164 13,499,500
Votes AGAINST 34,012 0
Votes ABSTAINED 293 0
Indiana Michigan Power Company ("I&M")
A special meeting of stockholders was held on February 28,
1997. The holders of shares entitled to vote at the meeting or
their proxies cast votes at the meeting with respect to the con-
sideration of an amendment to the Amended Articles of Acceptance
of I&M to remove a provision of the Articles limiting I&M's
ability to issue unsecured debt, as indicated below:
Cumulative
Preferred Common
Stock Stock
Votes FOR 1,210,512 1,400,000
Votes AGAINST 93,188 0
Votes ABSTAINED 1,146 0
Ohio Power Company ("OPCo")
A special meeting of stockholders was held on February 28,
1997. The holders of shares entitled to vote at the meeting or
their proxies cast votes at the meeting with respect to the fol-
lowing matters, as indicated below:
1. Consideration of an amendment to the Amended Articles of
Incorporation of OPCo to remove a provision of the
Articles limiting OPCo's ability to issue unsecured
debt:
Cumulative
Preferred Common
Stock Stock
Votes FOR 1,222,428 27,952,473
Votes AGAINST 60,434 0
Votes ABSTAINED 2,530 0
II-1<PAGE>
<PAGE>
2. Consideration of an amendment to the Amended Articles of
Incorporation of OPCo to add a provision regarding the
scope of the authority of the Board of Directors to pur-
chase or otherwise acquire shares of OPCo's cumulative
preferred stock.
Cumulative
Preferred Common
Stock Stock
Votes FOR 1,222,428 27,952,473
Votes AGAINST 60,434 0
Votes ABSTAINED 2,530 0
Item 5. Other Information.
American Electric Power Company, Inc. ("AEP") and APCo
Reference is made to page 10 of the Annual Report on Form
10-K for the year ended December 31, 1996 for a discussion of the
investigation into electric industry restructuring in West
Virginia. On May 8, 1997, after holding a hearing, the Public
Service Commission of West Virginia issued an order establishing
a Task Force, including AEP among other parties, to study further
restructuring issues. The Task Force has been directed to file
its final report by October 15, 1997.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
APCo, Columbus Southern Power Company ("CSPCo"), I&M,
Kentucky Power Company ("KEPCo") and OPCo
Exhibit 12 - Statement re: Computation of Ratios.
AEP, AEP Generating Company ("AEGCo"), APCo, CSPCo, I&M,
KEPCo and OPCo
Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K:
Company Reporting Date of Report Items Reported
AEP, APCo, CSPCo, December 23, 1996 Item 5. Other Events
I&M, KEPCo and OPCo
AEP February 24, 1997 Item 5. Other Events
AEGCo
No reports on Form 8-K were filed during the quarter ended
March 31, 1997.
II-2<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.
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, Controller
and Secretary
AEP GENERATING COMPANY
G.P. Maloney P.J. DeMaria
G.P. Maloney, Vice President P.J. DeMaria, Vice President
and Controller
APPALACHIAN POWER COMPANY
G.P. Maloney P.J. DeMaria
G.P. Maloney, Vice President P.J. DeMaria, Vice President
and Controller
COLUMBUS SOUTHERN POWER COMPANY
G.P. Maloney P.J. DeMaria
G.P. Maloney, Vice President P.J. DeMaria, Vice President
and Controller
INDIANA MICHIGAN POWER COMPANY
G.P. Maloney P.J. DeMaria
G.P. Maloney, Vice President P.J. DeMaria, Vice President
and Controller
KENTUCKY POWER COMPANY
G.P. Maloney P.J. DeMaria
G.P. Maloney, Vice President P.J. DeMaria, Vice President
and Controller
OHIO POWER COMPANY
G.P. Maloney P.J. DeMaria
G.P. Maloney, Vice President P.J. DeMaria, Vice President
and Controller
Date: May 12, 1997
II-3
<TABLE>
EXHIBIT 12
OHIO POWER COMPANY
Computation of Consolidated Ratio of Earnings to Fixed Charges
(in thousands except ratio data)
<CAPTION>
Twelve
Months
Year Ended December 31, Ended
1992 1993 1994 1995 1996 3/31/97
<S> <C> <C> <C> <C> <C> <C>
Fixed Charges:
Interest on First Mortgage Bonds. . . . . . . . $ 83,572 $ 74,121 $ 63,805 $ 61,836 $ 52,147 $ 50,249
Interest on Other Long-term Debt. . . . . . . . 26,611 24,510 21,453 23,193 27,045 26,835
Interest on Short-term Debt . . . . . . . . . . 2,711 1,122 992 2,658 4,006 3,875
Miscellaneous Interest Charges. . . . . . . . . 2,800 2,958 5,140 7,126 3,705 2,516
Estimated Interest Element in Lease Rentals . . 22,800 15,300 13,900 50,700 53,200 53,200
Total Fixed Charges. . . . . . . . . . . . $138,494 $118,011 $105,290 $145,513 $140,103 $136,675
Earnings:
Net Income. . . . . . . . . . . . . . . . . . . $160,553 $185,770 $162,626 $189,447 $217,655 $216,710
Plus Federal Income Taxes . . . . . . . . . . . 75,783 64,244 74,822 93,699 117,243 120,913
Plus State Income Taxes . . . . . . . . . . . . 1,082 2,626 3,375 1,618 2,252 2,712
Plus Fixed Charges (as above) . . . . . . . . . 138,494 118,011 105,290 145,513 140,103 136,675
Total Earnings . . . . . . . . . . . . . . $375,912 $370,651 $346,113 $430,277 $477,253 $477,010
Ratio of Earnings to Fixed Charges. . . . . . . . 2.71 3.14 3.28 2.95 3.40 3.49
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<CIK> 0000073986
<NAME> OHIO POWER COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,764,668
<OTHER-PROPERTY-AND-INVEST> 105,645
<TOTAL-CURRENT-ASSETS> 523,727
<TOTAL-DEFERRED-CHARGES> 102,844
<OTHER-ASSETS> 537,423
<TOTAL-ASSETS> 4,034,307
<COMMON> 321,201
<CAPITAL-SURPLUS-PAID-IN> 462,285
<RETAINED-EARNINGS> 609,934
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,393,420
11,850
17,575
<LONG-TERM-DEBT-NET> 929,067
<SHORT-TERM-NOTES> 20,700
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 14,700
<LONG-TERM-DEBT-CURRENT-PORT> 169,635
0
<CAPITAL-LEASE-OBLIGATIONS> 104,257
<LEASES-CURRENT> 26,648
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,346,455
<TOT-CAPITALIZATION-AND-LIAB> 4,034,307
<GROSS-OPERATING-REVENUE> 484,300
<INCOME-TAX-EXPENSE> 37,380
<OTHER-OPERATING-EXPENSES> 366,389
<TOTAL-OPERATING-EXPENSES> 403,769
<OPERATING-INCOME-LOSS> 80,531
<OTHER-INCOME-NET> 4,970
<INCOME-BEFORE-INTEREST-EXPEN> 85,501
<TOTAL-INTEREST-EXPENSE> 19,910
<NET-INCOME> 65,591
1,538
<EARNINGS-AVAILABLE-FOR-COMM> 64,053
<COMMON-STOCK-DIVIDENDS> 37,562
<TOTAL-INTEREST-ON-BONDS> 12,293
<CASH-FLOW-OPERATIONS> 164,976
<EPS-PRIMARY> 0<F1>
<EPS-DILUTED> 0<F1>
<FN>
<F1> All common stock owned by parent company; no EPS required.
</FN>
</TABLE>
