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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended March 31, 1996
Commission File Number 0-14688
ALLEGHENY GENERATING COMPANY
(Exact name of registrant as specified in its charter)
Virginia 13-3079675
(State of Incorporation) (I.R.S. Employer Identification No.)
12 East 49th Street, New York, New York 10017
Telephone Number - 212-752-2121
The registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months and (2) has been subject to such filing requirements
for the past 90 days.
At May 15, 1996, 1,000 shares of the Common Stock ($1.00 par value)
of the registrant were outstanding.
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ALLEGHENY GENERATING COMPANY
Form 10-Q for Quarter Ended March 31, 1996
Index
Page
No.
PART I--FINANCIAL INFORMATION:
Statement of income - Three months ended
March 31, 1996 and 1995 3
Balance sheet - March 31, 1996
and December 31, 1995 4
Statement of cash flows - Three months ended
March 31, 1996 and 1995 5
Notes to financial statements 6
Management's discussion and analysis of financial
condition and results of operations 7
PART II--OTHER INFORMATION 8
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<TABLE>
<CAPTION>
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ALLEGHENY GENERATING COMPANY
Statement of Income
Three Months Ended
March 31
1996 1995
(Thousands of Dollars)
<S> <C> <C>
ELECTRIC OPERATING REVENUES $ 20,909 $ 22,096
OPERATING EXPENSES:
Operation and maintenance expense 1,119 1,796
Depreciation 4,290 4,224
Taxes other than income taxes 1,210 1,299
Federal income taxes 3,344 3,223
Total Operating Expenses 9,963 10,542
Operating Income 10,946 11,554
OTHER INCOME AND DEDUCTIONS 3 -
Income Before Interest Charges 10,949 11,554
INTEREST CHARGES:
Interest on long-term debt 3,993 4,199
Other interest 235 786
Total Interest Charges 4,228 4,985
NET INCOME $ 6,721 $ 6,569
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
<CAPTION>
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ALLEGHENY GENERATING COMPANY
Balance Sheet
March 31 December 31
1996 1995
ASSETS: (Thousands of Dollars)
Property, Plant, and Equipment:
At original cost, including $466,000
<S> <C> <C>
and $412,000 under construction $ 836,931 $ 836,894
Accumulated depreciation (163,316) (159,037)
673,615 677,857
Current Assets:
Cash 95 31
Accounts receivable from parents 4,036 5,274
Materials and supplies - at average cost 2,130 2,049
Other 91 232
6,352 7,586
Deferred Charges:
Regulatory assets 14,617 14,617
Unamortized loss on reacquired debt 9,711 9,900
Other 313 327
24,641 24,844
Total Assets $ 704,608 $ 710,287
CAPITALIZATION AND LIABILITIES:
Capitalization:
Common stock - $1.00 par value per share,
authorized 5,000 shares, outstanding
1,000 shares $ 1 $ 1
Other paid-in capital 209,999 209,999
Retained earnings 1,649 4,153
211,649 214,153
Long-term debt:
Debentures, net 148,571 148,548
Commercial paper 19,182 30,561
Medium-term notes 70,000 70,600
Notes payable to affiliates 10,000 -
459,402 463,862
Current Liabilities:
Long-term debt due within one year 4,600 6,375
Accounts payable 95 16
Interest accrued 1,453 5,151
Taxes accrued 2,665 113
Other 134 237
8,947 11,892
Deferred Credits:
Unamortized investment credit 50,657 50,987
Deferred income taxes 158,147 156,091
Regulatory liabilities 27,455 27,455
236,259 234,533
Total Capitalization and Liabilities $ 704,608 $ 710,287
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
<CAPTION>
- 5 -
ALLEGHENY GENERATING COMPANY
Statement of Cash Flows
Three Months Ended
March 31
1996 1995
(Thousands of Dollars)
CASH FLOWS FROM OPERATIONS:
<S> <C> <C>
Net income $6,721 $6,569
Depreciation 4,290 4,224
Deferred investment credit and income taxes, net 1,725 1,740
Changes in certain current assets and
liabilities:
Accounts receivable 1,238 936
Materials and supplies (81) 117
Accounts payable 79 (31)
Taxes accrued 2,552 4,290
Interest accrued (3,698) (3,661)
Other, net 268 582
13,094 14,766
CASH FLOWS FROM INVESTING:
Construction expenditures (51) (1,537)
CASH FLOWS FROM FINANCING:
Retirement of long-term debt (3,754) (4,230)
Cash dividends on common stock (9,225) (8,950)
(12,979) (13,180)
NET CHANGE IN CASH 64 49
Cash at January 1 31 45
Cash at March 31 $ 95 $ 94
Supplemental cash flow information:
Cash paid during the period for:
Interest $ 7,693 $ 8,411
Income taxes 211 -
See accompanying notes to financial statements.
</TABLE>
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ALLEGHENY GENERATING COMPANY
Notes to Financial Statements
1. The Company's Notes to Financial Statements in the Allegheny
Power System companies' combined Annual Report on Form 10-K for
the year ended December 31, 1995, should be read with the
accompanying financial statements and the following notes.
With the exception of the December 31, 1995, balance sheet in
the aforementioned annual report on Form 10-K, the accompanying
financial statements appearing on pages 3 through 5 and these
notes to financial statements are unaudited. In the opinion of
the Company, such financial statements together with these
notes thereto contain all adjustments (which consist only of
normal recurring adjustments) necessary to present fairly the
Company's financial position as of March 31, 1996, and the
results of operations and cash flows for the three months ended
March 31, 1996 and 1995.
2. The Statement of Income reflects the results of past operations
and is not intended as any representation as to future results.
For purposes of the Balance Sheet and Statement of Cash Flows,
temporary cash investments with original maturities of three
months or less, generally in the form of repurchase agreements,
are considered to be the equivalent of cash.
3. Common stock dividends per share declared and paid during the
periods for which income statements are included are as
follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31
1996 1995
<S> <C> <C>
Number of Shares 1,000 1,000
Amount per Share $9,225 $8,950
</TABLE>
Earnings per share are not reported inasmuch as the common
stock of the Company is 100% owned by its parents, Monongahela
Power Company (27%), The Potomac Edison Company (28%), and West
Penn Power Company (45%).
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ALLEGHENY GENERATING COMPANY
Management's Discussion and Analysis of Financial Condition
and Results of Operations
COMPARISON OF FIRST QUARTER OF 1996 WITH FIRST QUARTER OF 1995
The changes in revenues and net income are primarily
due to a continuing reduction in the Company's net plant (the major
component of rate base).
The decrease in other interest was due to the prior
year reflecting interest paid on the revenue refund pursuant to the
settlement agreement described below.
LIQUIDITY AND CAPITAL REQUIREMENTS
The Company's discussion on Liquidity and Capital
Requirements and Results of Operations in the Allegheny Power System
companies' combined Annual Report on Form 10-K for the year ended December
31, 1995, should be read with the following information.
On December 21, 1995, the Company submitted a
negotiated settlement to the Federal Energy Regulatory Commission (FERC)
to address the Company's return on equity (ROE) effective after 1995.
Interested parties representing less than 2% of the Company's eventual
revenues filed exceptions. On February 20, 1996, the FERC accepted that
part of the settlement agreement related to a reduction in ROE from 11.2%
to 11% retroactive to January 1, 1996, stating that a further decrease
beyond the proposed rate level may be appropriate, and instituted an
investigation of the proposed rate. In taking this action the FERC denied
that part of the settlement agreement that would have set the ROE for 1997
and 1998 by formula. The Company negotiated and filed a new settlement
agreement on April 4, 1996 which fixes the ROE for 1996 at 11% as to the
parties representing about 98% of revenues. The remaining customers
representing about 2% of revenues would be free to pursue litigation of
the Company's ROE as it relates to those customers. The Company cannot
predict the FERC's response to this filing.
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ALLEGHENY GENERATING COMPANY
Part II - Other Information to Form 10-Q
for Quarter Ended March 31, 1996
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
1. (a) Date and Kind of Meeting:
The annual meeting of shareholders was held at New
York, New York, on March 7, 1996. No proxies were
solicited.
(b) Election of Directors:
The holders of all 1,000 shares of common stock voted
to elect the following Directors at the annual meeting
to hold office until the next annual meeting of
shareholders and until their successors are duly chosen
and qualified:
Klaus Bergman
Kenneth M. Jones
Alan J. Noia
Peter J. Skrgic
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) (27) Financial Data Schedule
(b) On March 13, 1996, the Company filed a Form 8-K
for the restructuring of its parents'
organization.
On April 11, 1996, the Company filed a Form 8-K
containing a Form of Change in Control Employment
Contract.
Signature
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ALLEGHENY GENERATING COMPANY
THOMAS J. KLOC
Thomas J. Kloc
(Chief Accounting Officer)
May 15, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 95
<SECURITIES> 0
<RECEIVABLES> 4,038
<ALLOWANCES> 0
<INVENTORY> 2,130
<CURRENT-ASSETS> 6,352
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<TOTAL-ASSETS> 704,608
<CURRENT-LIABILITIES> 8,947
<BONDS> 237,753
1
0
<COMMON> 0
<OTHER-SE> 211,648
<TOTAL-LIABILITY-AND-EQUITY> 704,608
<SALES> 20,909
<TOTAL-REVENUES> 20,909
<CGS> 1,119
<TOTAL-COSTS> 6,619
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,228
<INCOME-PRETAX> 10,065
<INCOME-TAX> 3,344
<INCOME-CONTINUING> 6,721
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,721
<EPS-PRIMARY> 0.00<F1>
<EPS-DILUTED> 0.00<F1>
<FN>
<F1>All common stock is owned by parent, no EPS required.
</FN>
</TABLE>
