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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, 1997
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.)
10435 Downsville Pike, Hagerstown, Maryland 21740-1766
Telephone Number - 301-790-3400
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 14, 1997, 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, 1997
Index
Page
No.
PART I--FINANCIAL INFORMATION:
Statement of income - Three months ended
March 31, 1997 and 1996 3
Balance sheet - March 31, 1997
and December 31, 1996 4
Statement of cash flows - Three months ended
March 31, 1997 and 1996 5
Notes to financial statements 6
Management's discussion and analysis of financial
condition and results of operations 7
PART II--OTHER INFORMATION 8-9
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ALLEGHENY GENERATING COMPANY
Statement of Income
<TABLE>
<CAPTION>
Three Months Ended
March 31
1997 1996
(Thousands of Dollars)
<S> <C> <C>
ELECTRIC OPERATING REVENUES $ 20,216 $ 20,909
OPERATING EXPENSES:
Operation and maintenance expense 1,285 1,119
Depreciation 4,284 4,290
Taxes other than income taxes 1,195 1,210
Federal income taxes 3,124 3,344
Total Operating Expenses 9,888 9,963
Operating Income 10,328 10,946
OTHER INCOME, NET - 3
Income Before Interest Charges 10,328 10,949
INTEREST CHARGES:
Interest on long-term debt 3,728 3,993
Other interest 232 235
Total Interest Charges 3,960 4,228
NET INCOME $ 6,368 $ 6,721
</TABLE>
See accompanying notes to financial statements.
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ALLEGHENY GENERATING COMPANY
Balance Sheet
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
<S> <C> <C>
ASSETS: (Thousands of Dollars)
Property, Plant, and Equipment:
At original cost, including $623,000
and $508,000 under construction $ 837,174 $ 837,050
Accumulated depreciation (180,461) (176,178)
656,713 660,872
Current Assets:
Cash 27 131
Accounts receivable from parents 932 1,337
Materials and supplies - at average cost 2,127 2,092
Prepaid taxes 2,315 3,860
Other 132 239
5,533 7,659
Deferred Charges:
Regulatory assets 8,971 14,475
Unamortized loss on reacquired debt 8,958 9,147
Other 241 255
18,170 23,877
Total Assets $ 680,416 $ 692,408
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 200,397 202,954
200,398 202,955
Long-term debt:
Debentures, net 148,665 148,642
Commercial paper - 19,992
Medium-term notes 10,000 60,000
Notes payable to affiliates 17,325 -
376,388 431,589
Current Liabilities:
Long-term debt due within one year 60,000 10,600
Accounts payable 98 222
Interest accrued 1,161 4,709
Taxes accrued 1,121 -
Other 215 -
62,595 15,531
Deferred Credits:
Unamortized investment credit 49,334 49,665
Deferred income taxes 164,644 168,168
Regulatory liabilities 27,455 27,455
241,433 245,288
Total Capitalization and Liabilities $ 680,416 $ 692,408
</TABLE>
See accompanying notes to financial statements.
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ALLEGHENY GENERATING COMPANY
Statement of Cash Flows
<TABLE>
<CAPTION>
Three Months Ended
March 31
1997 1996
(Thousands of Dollars)
<S> <C> <C>
CASH FLOWS FROM OPERATIONS:
Net income $6,368 $6,721
Depreciation 4,284 4,290
Deferred investment credit and income taxes, net 1,648 1,725
Changes in certain current assets and
liabilities:
Accounts receivable 405 1,238
Materials and supplies (35) (81)
Accounts payable (124) 79
Taxes accrued 1,121 2,552
Interest accrued (3,548) (3,698)
Other, net 2,093 268
12,212 13,094
CASH FLOWS FROM INVESTING:
Construction expenditures (124) (51)
CASH FLOWS FROM FINANCING:
Retirement of long-term debt (3,267) (3,754)
Cash dividends on common stock (8,925) (9,225)
(12,192) (12,979)
NET CHANGE IN CASH (104) 64
Cash at January 1 131 31
Cash at March 31 $ 27 $ 95
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $7,277 $7,693
Income taxes 21 211
</TABLE>
See accompanying notes to financial statements.
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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, 1996, should be read with the
accompanying financial statements and the following notes.
With the exception of the December 31, 1996, 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 contain all adjustments (which consist only of normal
recurring adjustments) necessary to present fairly the
Company's financial position as of March 31, 1997, and the
results of operations and cash flows for the three months ended
March 31, 1997 and 1996.
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. In September 1996, the Securities and Exchange Commission (SEC)
approved the Company's request to pay common dividends from
time to time through December 31, 2001, out of capital to the
extent permitted under applicable corporation law and any
applicable financing agreements which restrict distributions to
shareholders. The payment of dividends out of capital surplus
will not be detrimental to the financial integrity or working
capital of either the Company or its parents, nor will it
adversely affect the protections due debt security holders.
4. Other paid-in capital decreased $2,557,000 in the three months
ended March 31, 1997, representing the portion of common
dividends paid out of other paid-in capital. See also Note 3
above.
5. On April 7, 1997, Allegheny Power System, Inc. and DQE, Inc.,
parent company of Duquesne Light Company, announced that they
have agreed to merge in a tax-free, stock-for-stock
transaction. The combined company will be called Allegheny
Energy. It is expected that Allegheny Energy will continue to
be operated as an integrated electric utility holding company
and that the Company and its regulated electric utility
affiliates will continue to exist as separate legal entities.
The merger is conditioned, among other things, upon the
approval of each company's shareholders and the necessary
approvals of various state and federal regulatory agencies,
including the public utility commissions in Pennsylvania and
Maryland, the Securities and Exchange Commission, the Federal
Energy Regulatory Commission, and the Nuclear Regulatory
Commission. The companies are hopeful that the required
approvals can be obtained within 12 to 18 months.
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ALLEGHENY GENERATING COMPANY
Management's Discussion and Analysis of Financial Condition
and Results of Operations
COMPARISON OF FIRST QUARTER OF 1997 WITH FIRST QUARTER OF 1996
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 interest on long-term debt in 1997 was
primarily the result of a decrease in the average amount of long-term debt
outstanding.
LIQUIDITY AND CAPITAL REQUIREMENTS
The Company's discussion on Liquidity and Capital
Requirements and Review of Operations in the Allegheny Power System
companies' combined Annual Report on Form 10-K for the year ended December
31, 1996, should be read with the following information.
Pursuant to a settlement agreement filed April 4, 1996,
with the Federal Energy Regulatory Commission, the Company's return on
equity (ROE) was set at 11% for 1996 and will continue at that rate until
the time any affected party seeks renegotiation of the ROE. Notice of
such intent to seek a revision in ROE must be filed during a notice period
each year between November 1 and November 15. No requests for change were
filed during the 1996 notice period. Therefore, the Company's ROE will
remain at 11% for 1997.
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ALLEGHENY GENERATING COMPANY
Part II - Other Information to Form 10-Q
for Quarter Ended March 31, 1997
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
Hagerstown, Maryland, on February 25, 1997. 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:
Alan J. Noia
Thomas K. Henderson
Kenneth M. Jones
Michael P. Morrell
Peter J. Skrgic
ITEM 5. OTHER INFORMATION
On April 7, 1997, Allegheny Power System, Inc. and DQE,
Inc., parent company of Duquesne Light Company, announced that they have
agreed to merge in a tax-free, stock-for-stock transaction. The combined
company will be called Allegheny Energy. It is expected that Allegheny
Energy will continue to be operated as an integrated electric utility
holding company and that the Company and its regulated electric utility
affiliates will continue to exist as separate legal entities.
The merger is conditioned, among other things, upon the
approval of each company's shareholders and the necessary approvals of
various state and federal regulatory agencies, including the public
utility commissions in Pennsylvania and Maryland, the Securities and
Exchange Commission, the Federal Energy Regulatory Commission, and the
Nuclear Regulatory Commission. The companies are hopeful that the
required approvals can be obtained within 12 to 18 months.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) (27) Financial Data Schedule
(b) No reports on Form 8-K were filed on behalf of the
Company for the quarter ended March 31, 1997.
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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
/s/ THOMAS J. KLOC
Thomas J. Kloc
Controller
(Chief Accounting Officer)
May 14, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 27
<SECURITIES> 0
<RECEIVABLES> 932
<ALLOWANCES> 0
<INVENTORY> 2,127
<CURRENT-ASSETS> 5,533
<PP&E> 837,174
<DEPRECIATION> 180,461
<TOTAL-ASSETS> 680,416
<CURRENT-LIABILITIES> 62,595
<BONDS> 175,990
0
0
<COMMON> 1
<OTHER-SE> 200,397
<TOTAL-LIABILITY-AND-EQUITY> 680,416
<SALES> 20,216
<TOTAL-REVENUES> 20,216
<CGS> 1,285
<TOTAL-COSTS> 6,764
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,960
<INCOME-PRETAX> 9,492
<INCOME-TAX> 3,124
<INCOME-CONTINUING> 6,368
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,368
<EPS-PRIMARY> 0.00<F1>
<EPS-DILUTED> 0.00<F1>
<FN>
<F1>All common stock is owned by parent, no EPS required.
</FN>
</TABLE>
