<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to _____________
Commission File No. 33-7591
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Oglethorpe Power Corporation
(An Electric Membership Corporation)
(Exact name of registrant as specified in its charter)
Georgia 58-1211925
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Post Office Box 1349
2100 East Exchange Place
Tucker, Georgia 30085-1349
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 270-7600
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
------- -------
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date. The Registrant
is a membership corporation and has no authorized or outstanding equity
securities.
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<PAGE>
OGLETHORPE POWER CORPORATION
INDEX TO QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1997
Page No.
--------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets as of June 30, 1997 (Unaudited)
and December 31, 1996...................................... 3
Condensed Statements of Revenues and Expenses (Unaudited)
for the Three Months and Six Months Ended
June 30, 1997 and 1996..................................... 5
Condensed Statements of Cash Flows (Unaudited)
for the Six Months Ended June 30, 1997 and 1996............ 6
Notes to the Condensed Financial Statements................ 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations......... 8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings..................................... 15
Item 6. Exhibits and Reports on Form 8-K...................... 15
SIGNATURES.......................................................... 16
2
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PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OGLETHORPE POWER CORPORATION
CONDENSED BALANCE SHEETS
June 30, 1997 and December 31, 1996
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(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996
ASSETS (UNAUDITED)
------------ -----------
<S> <C> <C>
Electric plant, at original cost:
In service............................................ $4,904,500 $5,742,597
Less: Accumulated provision for depreciation.......... (1,350,645) (1,488,272)
------------ -------------
3,553,855 4,254,325
Nuclear fuel, at amortized cost....................... 86,793 86,722
Plant acquisition adjustments, at
amortized cost...................................... -- 4,153
Construction work in progress......................... 13,928 31,181
------------ -------------
3,654,576 4,376,381
------------ -------------
Investments and funds:
Bond, reserve and construction funds, at
market.............................................. 32,331 53,955
Decommissioning fund, at market....................... 94,782 86,269
Investment in associated organizations, at
cost................................................ 15,395 15,379
Deposit on Rocky Mountain transactions, at
cost................................................ 59,436 41,685
------------ -------------
201,944 197,288
------------ -------------
Current assets:
Cash and temporary cash investments, at
cost................................................ 41,532 132,783
Other short-term investments, at market............... 93,682 91,499
Receivables........................................... 120,105 113,289
Inventories, at average cost.......................... 85,907 89,825
Prepayments and other current assets.................. 12,133 14,625
------------ -------------
353,359 442,021
------------ -------------
Deferred charges:
Premium and loss on reacquired debt, being
amortized........................................... 191,153 201,007
Deferred amortization of Scherer
leasehold........................................... 93,460 90,717
Deferred debt expense, being amortized................ 12,748 21,703
Other................................................. 36,795 33,058
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334,156 346,485
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$4,544,035 $5,362,175
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------------ -------------
</TABLE>
The accompanying notes are an integral part of these condensed statements.
3
<PAGE>
OGLETHORPE POWER CORPORATION
CONDENSED BALANCE SHEETS
June 30, 1997 and December 31, 1996
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(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1997
EQUITY AND LIABILITIES (UNAUDITED) 1996
------------ -------------
<S> <C> <C>
Capitalization:
Patronage capital and membership fees (including
unrealized loss of ($1,302) at June 30, 1997 and
($844) at December 31, 1996 on available-for-sale
securities.......................................... $ 321,855 $ 356,229
Long-term debt........................................ 3,279,702 4,052,470
Obligations under capital leases...................... 291,111 293,682
Obligation under Rocky Mountain transactions.......... 59,436 41,685
------------ -------------
3,952,104 4,744,066
------------ -------------
Current liabilities:
Long-term debt and capital leases due
within one year..................................... 97,724 159,622
Accounts payable...................................... 49,733 42,891
Accrued interest...................................... 7,995 15,931
Accrued and withheld taxes............................ 14,160 4,940
Other current liabilities............................. 6,077 9,540
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175,689 232,924
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Deferred credits and other liabilities:
Gain on sale of plant, being amortized................ 61,993 58,527
Net benefit of sale of income tax benefits,
being amortized..................................... 38,044 42,049
Net benefit of Rocky Mountain transactions,
being amortized..................................... 93,967 70,701
Accumulated deferred income taxes..................... 60,325 61,985
Decommissioning reserve............................... 133,945 124,468
Other................................................. 27,968 27,455
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416,242 385,185
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$4,544,035 $5,362,175
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</TABLE>
The accompanying notes are an integral part of these condensed statements.
4
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OGLETHORPE POWER CORPORATION
CONDENSED STATEMENTS OF REVENUES AND EXPENSES (UNAUDITED)
For the Three and Six Months ended June 30, 1997 and 1996
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(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
---------------------- ----------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Operating revenues:
Sales to Members...................................... $230,180 $255,981 $487,211 $502,439
Sales to non-Members.................................. 12,696 19,247 27,150 43,478
---------- ---------- ---------- ----------
Total operating revenues................................ 242,876 275,228 514,361 545,917
---------- ---------- ---------- ----------
Operating expenses:
Fuel.................................................. 46,704 55,418 91,593 103,658
Production............................................ 33,948 31,628 69,544 61,997
Purchased power....................................... 62,321 58,162 120,311 122,226
Power delivery........................................ 101 4,206 3,979 7,864
Depreciation and amortization......................... 30,142 36,564 66,381 73,090
Taxes other than income taxes......................... 5,595 7,342 13,215 14,726
Other operating expenses.............................. 2,642 9,394 10,098 16,274
---------- ---------- ---------- ----------
Total operating expenses................................ 181,453 202,714 375,121 399,835
---------- ---------- ---------- ----------
Operating margin........................................ 61,423 72,514 139,240 146,082
---------- ---------- ---------- ----------
Other income (expense):
Interest income....................................... 6,320 4,680 13,755 8,740
Amortization of net benefit of sale of income
tax benefits........................................ 2,799 2,008 5,597 4,015
Amortization of deferred margins...................... -- 6,966 -- 17,154
Allowance for equity funds used during construction... (35) 43 49 90
Other................................................. 2,061 386 3,569 1,021
---------- ---------- ---------- ----------
Total other income...................................... 11,145 14,083 22,970 31,020
---------- ---------- ---------- ----------
Interest charges:
Interest on long-term debt and other obligations...... 67,251 82,329 147,808 164,360
Allowance for debt funds used during construction..... (193) (464) (545) (978)
---------- ---------- ---------- ----------
Net interest charges.................................... 67,058 81,865 147,263 163,382
---------- ---------- ---------- ----------
Net margin.............................................. $ 5,510 $ 4,732 $ 14,947 $ 13,720
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these condensed statements.
5
<PAGE>
OGLETHORPE POWER CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Six Months Ended June 30, 1997 and 1996
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(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net margin.................................................................................. $ 14,947 $ 13,720
---------- ----------
Adjustments to reconcile net margin to net cash provided by operating activities:
Depreciation and amortization............................................................. 99,558 88,441
Net benefit of Rocky Mountain transactions................................................ 23,266 --
Deferred gain from Corporate Restructuring................................................ 4,670 --
Allowance for equity funds used during construction....................................... (49) (90)
Amortization of deferred margins.......................................................... -- (17,154)
Amortization of net benefit of sale of income tax benefits................................ (5,597) (4,015)
Other..................................................................................... (1,556) 2,783
Change in net current assets, excluding long-term debt due within one year and deferred
margins to be refunded within one year:
Receivables............................................................................... (6,815) (10,157)
Inventories............................................................................... (5,063) (5,113)
Prepayments and other current assets...................................................... 2,062 (189)
Accounts payable.......................................................................... 7,495 (14,616)
Accrued interest.......................................................................... (7,816) (3,907)
Accrued and withheld taxes................................................................ 9,220 13,686
Other current liabilities................................................................. 2,869 (5,142)
---------- ----------
Total adjustments....................................................................... 122,244 44,527
---------- ----------
Net cash provided by operating activities................................................. 137,191 58,247
---------- ----------
Cash flows from investing activities:
Property additions.......................................................................... (39,386) (51,727)
Net proceeds from bond, reserve and construction funds...................................... 21,378 2,664
Decrease in investment in associated organizations.......................................... (16) 389
Increase in other short-term investments.................................................... (2,395) (9,984)
Increase in decommissioning fund............................................................ (4,521) (3,245)
Net assets sold in Corporate Restructuring.................................................. 717,907 --
Net liabilities extinguished in Corporate Restructuring..................................... (694,412) --
---------- ----------
Net cash used in investing activities..................................................... (1,445) (61,903)
---------- ----------
Cash flows from financing activities:
Debt proceeds, net.......................................................................... 111,306 397
Debt payments............................................................................... (286,397) (42,430)
Retirement of patronage capital............................................................. (48,863) --
Other....................................................................................... (3,043) (3,091)
---------- ----------
Net cash used in financing activities..................................................... (226,997) (45,124)
---------- ----------
Net decrease in cash and temporary cash investments........................................... (91,251) (48,780)
Cash and temporary cash investments at beginning of period.................................... 132,783 201,151
---------- ----------
Cash and temporary cash investments at end of period.......................................... $ 41,532 $ 152,371
---------- ----------
---------- ----------
Cash paid for:
Interest (net of amounts capitalized)....................................................... $ 145,392 $ 157,883
Income taxes................................................................................ $ 830 $ --
</TABLE>
The accompanying notes are an integral part of these condensed statements.
6
<PAGE>
Oglethorpe Power Corporation
Notes to Condensed Financial Statements
June 30, 1997 and 1996
(A) The condensed financial statements included herein have been prepared
by Oglethorpe Power Corporation (Oglethorpe), without audit, pursuant
to the rules and regulations of the Securities and Exchange Commission
(SEC). In the opinion of management, the information furnished herein
reflects all adjustments (which include only normal recurring
adjustments) necessary to present fairly, in all material respects,
the results for the periods ended June 30, 1997 and 1996. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such SEC rules
and regulations, although Oglethorpe believes that the disclosures are
adequate to make the information presented not misleading. It is
suggested that these condensed financial statements be read in
conjunction with the financial statements and the notes thereto
included in Oglethorpe's latest Annual Report on Form 10-K, as filed
with the SEC. Certain amounts for 1996 have been reclassified to
conform with the current period presentation.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
GENERAL
CORPORATE RESTRUCTURING
As reported in its Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, Oglethorpe and its 39 retail electric distribution
cooperative members (the Members) completed a corporate restructuring (the
Corporate Restructuring) on March 11, 1997. Pursuant to the Corporate
Restructuring, Oglethorpe was divided into three specialized operating
companies to respond to increasing competition and regulatory changes in the
electric industry. Oglethorpe's transmission business was transferred to,
and is now owned and operated by, Georgia Transmission Corporation (An
Electric Membership Corporation) (GTC), a recently formed Georgia electric
membership corporation. Oglethorpe's system operations business was
transferred to, and is now owned and operated by, Georgia System Operations
Corporation (GSOC), a recently formed Georgia nonprofit corporation.
Oglethorpe continues to operate its power supply business. Oglethorpe
retained all of its owned and leased generation assets. Oglethorpe also
continues to administer its power purchase contracts and provide marketing
support functions to the Members. Immediately after the Corporate
Restructuring, Oglethorpe's corporate name was changed from "Oglethorpe Power
Corporation (An Electric Membership Generation & Transmission Corporation)"
to "Oglethorpe Power Corporation (An Electric Membership Corporation)".
POWER MARKETER ARRANGEMENTS
Oglethorpe is utilizing long-term power marketer arrangements to reduce the
cost of power to the Members. Oglethorpe has entered into power marketer
agreements with LG&E Power Marketing Inc. (LPM) effective January 1, 1997,
for approximately 50% of the load requirements of the Members and with Morgan
Stanley Capital Group Inc. (Morgan Stanley) effective May 1, 1997, with
respect to 50% of the forecasted load requirements of the Members. Under
these power marketer agreements, Oglethorpe purchases energy at fixed prices
covering a portion of the costs of energy to its Members. LPM and Morgan
Stanley, in turn, have certain rights to market excess energy from the
Oglethorpe system. All of Oglethorpe's existing generating facilities and
power purchase arrangements are available for use by LPM and Morgan Stanley
for the term of the respective agreements. Oglethorpe continues to be
responsible for all the costs of its system resources but receives revenue
from LPM and Morgan Stanley for the use of the resources.
8
<PAGE>
Separate Dispatch of Plant Wansley
As discussed in its Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, the Plant Wansley ownership and operating agreements were
amended to allow each co-owner to dispatch separately its respective
ownership interest in conjunction with contracting separately for long-term
coal purchases procured by Georgia Power Company (GPC) and to procure
separately long-term coal purchases. Pursuant to the amendments, Oglethorpe
began separately dispatching Wansley Units No. 1 and No. 2 on May 1, 1997.
Oglethorpe continues to use GPC as its agent for fuel procurement.
Results of Operations
Corporate Restructuring
Oglethorpe and the Members completed the Corporate Restructuring on March 11,
1997. As of that date, Oglethorpe transferred its transmission business and
assets to GTC and reflected the transfer of its system operations assets to
GSOC. However, the Boards of Directors of Oglethorpe, GTC and GSOC
determined that for ratemaking purposes all revenues and expenses related to
operations of GTC and GSOC would remain with Oglethorpe until April 1, 1997.
Pursuant to this approach, all transmission-related and systems
operations-related revenues were assigned to Oglethorpe, and all
transmission-related and systems operations-related costs were paid or
reimbursed by Oglethorpe during the period March 11, 1997 through March 31,
1997. As a result, the Condensed Statements of Revenues and Expenses for the
six months ended June 30, 1997 reflect operations as a combined power supply,
transmission and system operations company through March 31, 1997, and
operations solely as a power supply company thereafter. Therefore, decreases
in operating revenues, power delivery expenses, depreciation and
amortization, taxes other than income taxes, operating margin, other
operating income and net interest charges from 1996 to 1997 are primarily
attributable to the Corporate Restructuring. See Oglethorpe's Annual Report
on Form 10-K for the fiscal year ended December 31, 1996 for a pro forma
presentation of the Statement of Revenues and Expenses reflecting the
exclusion of the transmission and system operations businesses, as though the
Corporate Restructuring had occurred at the beginning of 1996, for the year
ended December 31, 1996 (Note 11 of Notes to Financial Statements).
For the Three Months and Six Months Ended March 31, 1997 and 1996
Oglethorpe's net margin for the three months and six months ended June 30, 1997
was $5.5 million and $14.9 million, respectively, compared to $4.7 million and
$13.7 million for the same periods of 1996.
Operating Revenues
Revenues from sales to Members for the three months and six months ended June
30, 1997 were 10.1% and 3.0% lower compared to the same period of 1996. The
decrease in revenues from Members was attributable to reduced capacity revenues
relating to the transmission business, however, this decrease was offset
somewhat by an increase in energy revenues from sales to Members for the three
months and six months ended June 30, 1997 of 9.7% and 14.6% compared to the same
periods of 1996, respectively. Megawatt-hour (MWh) sales to the Members were
6.1% and
9
<PAGE>
3.5% lower in the current three-month and six-month periods compared to the
same periods of 1996. As a result, Oglethorpe's average energy revenue per
MWh from sales to Members for the three-month and six-month periods were
16.8% and 19.0% higher in 1997 compared to 1996, respectively, primarily due
to the expiration of the short-term power marketer arrangement with Enron
Power Marketing Inc. (EPMI) that had allowed Oglethorpe to passthrough
significant savings in the first six months of 1996. During the first eight
months of 1996, Oglethorpe had a power marketer arrangement with EPMI to
supply 100% of the load requirements of the Members. As noted under
"General--Power Marketer Arrangements" above, Oglethorpe has entered into
power marketer arrangements with LPM effective January 1, 1997 for
approximately 50% of the load requirements of the Members and with Morgan
Stanley effective May 1, 1997 with respect to 50% of the forecasted load
requirement of the Members.
Sales to non-Members were primarily made pursuant to contractual arrangements
with GPC and from energy sales to other non-Member utilities and power
marketers. The following table summarizes the amounts of non-Member revenues
from these sources for the three months and six months ended June 30, 1997 and
1996:
Three Months Six Months
Ended June 30, Ended June 30,
----------------- -------------------
1997 1996 1997 1996
------ ------ ------- -------
(dollars in thousands)
GPC-Power supply arrangements $4,763 $3,208 $12,565 $ 7,925
Sales to other utilities 5,629 10,517 9,663 22,799
Sales to power marketers 2,304 3,837 2,736 7,697
ITS transmission agreements -- 1,685 2,186 5,057
------ ------ ------- -------
Total $12,696 $19,247 $27,150 $43,478
------ ------ ------- -------
------ ------ ------- -------
The revenues from power supply arrangements with GPC were derived from energy
sales arising from dispatch situations whereby GPC caused Plant Wansley to be
operated when Oglethorpe's system did not require all of its contractual
entitlement to the generation. These revenues compensated Oglethorpe for its
costs because, under the operating agreement (before it was recently
amended), Oglethorpe was responsible for its share of fuel costs any time a
unit operated. Such sales to GPC were higher in 1997 compared to the same
periods of 1996. As noted under "General--Separate Dispatch of Plant
Wansley" above, with the commencement of the separate dispatch of Plant
Wansley as of May 1, 1997, this type of sale to GPC has ended.
Sales to other non-Member utilities in 1997 represent sales made directly by
Oglethorpe. Oglethorpe sells for its own account any energy available from
the portion of its resources dedicated to Morgan Stanley that is not
scheduled by Morgan Stanley pursuant to its power marketer arrangement. Such
sales during the first six months of 1996 were initiated by EPMI. Where EPMI
did not have a
10
<PAGE>
contractual relationship with the purchaser and Oglethorpe did, Oglethorpe
recorded the sale and credited the revenues to EPMI in its monthly billing.
Under the current LPM and Morgan Stanley power marketer arrangements, and
previously, under the EPMI power marketer arrangement, sales to the power
marketers represented the net energy transmitted on behalf of LPM, Morgan
Stanley and EPMI off-system on a daily basis from Oglethorpe's total
resources. Such energy was sold to LPM, Morgan Stanley and EPMI at
Oglethorpe's cost, subject to certain limitations. The volume of sales to
power marketers depends primarily on the power marketers' decisions for
servicing their load requirements.
Another source of non-Member revenues was payments received from GPC for use
of the Integrated Transmission System (ITS) and related transmission
interfaces. GPC compensated Oglethorpe to the extent that Oglethorpe's
percentage of investment in the ITS exceeded its percentage use of the
system. In such case, Oglethorpe was entitled to income as compensation for
the use of its investment by the other ITS participants. As a result of the
Corporate Restructuring, all of the revenues in this category have accrued to
GTC since April 1, 1997.
Operating Expenses
The overall decrease in operating expenses for the three months and six
months ended June 30, 1997 compared to the same periods of 1996 was primarily
attributable to the elimination of expenses relating to the transmission
business assumed by GTC in connection with the Corporate Restructuring.
However, the decrease in fuel expense and the increase in production
operations and maintenance costs were unaffected by the Corporate
Restructuring. Fuel costs decreased 15.7% and 11.6% from the same periods of
the prior year, respectively, even though total generation decreased only
9.1% and 5.7%, respectively. Such savings in average fuel costs resulted
from the difference in the mix of generation, with more nuclear and less
fossil generation in 1997. The decrease in fossil generation resulted
primarily from a maintenance outage during February and March 1997 at Plant
Scherer Unit No. 1. The higher nuclear generation during 1997 compared to
1996 was achieved as a result of having two refueling outages in the first
six months of 1996 compared to one in 1997. Conversely, the increase in
production operations and maintenance costs was primarily attributable to the
maintenance outage at Plant Scherer Unit No. 1. Effective January 1, 1996,
the costs of nuclear refueling outages are deferred and amortized over the
18-month period following the outage.
Purchased power cost for the six months ended June 30, 1997 compared to the
same period of 1996 was virtually unchanged. A total of 16.8% fewer MWhs
were purchased in 1997 compared to 1996, but average purchased power expense
increased by 18.4%. As noted under "Operating Revenues" above, significant
energy cost savings were derived in the first six months of 1996 from the
EPMI power supply arrangement.
The decrease in other operating expenses for 1997 compared to the same
periods of the prior year was due primarily to transfer of administrative and
general expenses relating to the transmission and system operations
businesses in connection with the Corporate Restructuring.
11
<PAGE>
Other Income
Other income for the three months and six months ended June 30, 1997
decreased compared to the same periods of 1996 primarily as a result of
Oglethorpe utilizing, as planned, all remaining amounts available under its
deferred margin rate mechanism during 1996. (For a discussion of deferred
margins, see Note 1 of Notes to Financial Statements in Oglethorpe's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996.) Interest
income was higher in the three-month and six-month periods of 1997 compared
to the same periods of 1996 partly due to higher earnings from the
decommissioning fund and partly due to income from the deposits from the
Rocky Mountain transactions. The deposits were made in December 1996 and
January 1997.
Financial Condition
Corporate Restructuring
As of March 11, 1997, Oglethorpe transferred its transmission business and
assets to GTC. Thereafter, the assets, liabilities and equity of GTC were no
longer a part of Oglethorpe. The purchase price for the transmission
business was based on an appraisal of the fair market value of such business,
as determined by an independent appraiser, and was approximately $708
million. The purchase price was paid primarily by GTC's assumption of a
portion (approximately 16.86%) of Oglethorpe's long-term secured debt in an
amount equal to approximately $686 million. Approximately $541 million of
this debt (payable to RUS, Federal Financing Bank (FFB) and CoBank, ABC
(CoBank)) became the sole obligation of GTC, and Oglethorpe was released from
all liability with regard to this indebtedness. The remaining debt assumed
by GTC in connection with the Corporate Restructuring, approximately $145
million, relates to Oglethorpe's pollution control revenue bonds (PCBs).
While GTC assumed and agreed to pay this $145 million of debt, Oglethorpe is
not legally released from its liability for this debt. The remainder of the
purchase price was paid by GTC from cash obtained through a borrowing from
National Rural Utilities Cooperative Finance Corporation (CFC) and the
assumption of approximately $1 million of other Oglethorpe liabilities.
Oglethorpe also made a special patronage capital distribution of
approximately $49 million to the Members which was used by the Members to
establish equity in and to provide initial working capital to GTC.
On October 1, 1996, Oglethorpe transferred to GSOC its system operations
assets, consisting of its system control center and related energy control
and revenue metering systems equipment. The purchase price of these assets
totaled approximately $9.4 million and was funded by GSOC's assumption of
Oglethorpe's obligations under an existing note held by the Rural Utilities
Service (RUS), by delivery of a purchase money note payable to Oglethorpe and
by the assumption of certain other liabilities of Oglethorpe. From October
1, 1996 to March 11, 1997, Oglethorpe was the sole member of GSOC; therefore,
the assets transferred to GSOC remained in the consolidated balance sheet of
Oglethorpe. The Members and GTC became members of GSOC on March 11, 1997;
and thereafter the assets, liabilities and equity of GSOC were no longer a
part of Oglethorpe.
Most of the remaining comparisons of the balance sheets as of June 30, 1997
and December 31, 1996 are in addition to the effects of the Corporate
Restructuring described above. See Oglethorpe's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996 for a pro forma
12
<PAGE>
presentation of the Balance Sheet of the post-restructuring Oglethorpe as of
December 31, 1996 (Note 11 of Notes to Financial Statements).
Total assets and total equity plus liabilities as of June 30, 1997 were $4.5
billion which, after adjustment for the Corporate Restructuring, was $85
million less than the comparable total at December 31, 1996 due to
depreciation of plant and due to the decrease in cash and temporary cash
investments.
Assets
Property additions for the six months ended June 30, 1997 totaled $39.4
million and included additions, replacements and improvements to transmission
and distribution facilities (subsequently sold to GTC) for the first three
months of 1997 and existing generation facilities.
All plant acquisition adjustments were related to transmission plant. As a
result of the Corporate Restructuring discussed above, Oglethorpe no longer has
any plant acquisition adjustments.
The decrease in construction work in progress resulted from the projects sold to
GTC and GSOC in the Corporate Restructuring.
The decrease in the bond, reserve and construction funds was attributable to the
utilization of available excess debt service reserve funds for debt service
payments.
The increase in the deposit on, the obligation under and net benefit of the
Rocky Mountain transactions resulted from the completion of the lease
transactions for the remainder of Oglethorpe's interest in Rocky Mountain in
January 1997. For a discussion of the Rocky Mountain transactions, see Notes 1
and 2 of Notes to Financial Statements in Oglethorpe's Annual Report on Form
10-K for the fiscal year ended December 31, 1996.
The decrease in cash and temporary cash investments was partly due to the
payment of the $49 million special patronage capital distribution made in
connection with the Corporate Restructuring discussed above and partly due to a
prepayment in 1997 of Federal Financing Bank (FFB) debt made from the proceeds
of the December 1996 and January 1997 Rocky Mountain transactions.
Prepayments and other current assets decreased due to a $1.1 million decrease in
the estimated payment made to GPC for Plant Hatch and Plant Wansley
operations and maintenance costs for July 1997 compared to the estimate paid for
January 1997.
The change in premium and loss on reacquired debt resulted partly from premiums
paid in connection with FFB debt prepayment and the Pollution Control Bond (PCB)
refunding, excluding the effect of the portion of these costs assumed by GTC in
the Corporate Restructuring.
The decrease in deferred debt expense resulted partly from unamortized issuance
cost related to the PCB refunding being converted to premium and loss on
reacquired debt and partly from the portion of these costs assumed by GTC in the
Corporate Restructuring.
13
<PAGE>
Equity and Liabilities
The decrease in patronage capital and membership fees is the result of the $49
million special patronage capital distribution made in connection with the
Corporate Restructuring, discussed above.
The decrease in long-term debt due within one year resulted primarily from the
prepayment of FFB debt, discussed above. In addition, the balance reflects the
impact of the Corporate Restructuring.
Accounts payable increased due to normal variations in the timing of payables
activity.
The decrease in accrued interest resulted partly from the portion of debt
assumed by GTC in the Corporate Restructuring and partly from other factors.
Accrued and withheld taxes increased as a result of the normal monthly accruals
of property taxes, which are generally paid in the fourth quarter of the year.
Other current liabilities decreased partly due to the year-end accrual for
employee incentive pay (subsequently paid in March 1997) and partly due to the
Corporate Restructuring.
14
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On June 17, 1997, PECO Energy Company--Power Team ("PECO") filed an
application with the Federal Energy Regulatory Commission ("FERC") pursuant
to Section 211 of the Federal Power Act requesting FERC to compel Oglethorpe
and/or GTC to provide PECO with 250 MW of firm point-to-point transmission
service from the Tennessee Valley Authority ("TVA")-Integrated Transmission
System ("ITS") interface to the Florida-ITS interface for an initial
three-year period, with an automatic roll-over provision. PECO also seeks
$10,000 per day in penalties from Oglethorpe and/or GTC, alleging bad faith
and delays in negotiations. In their FERC response, GTC and
Oglethorpe contend that they negotiated with PECO in good faith, and thus
there is no reasonable basis for imposing the penalties sought by PECO. GTC
also responded that it does not have firm "available transfer capability"
at the TVA-ITS interface to fulfill PECO's request, after taking into account
the need to protect system reliability, existing firm commitments, and use of
the TVA-ITS interface to serve "native load," in accordance with North
American Electric Reliability Council guidelines. In the event GTC is ordered
by FERC to provide the requested service, PECO would be required to
compensate GTC at rates set by FERC in the order. As a consequence of any
such order, power purchased by Oglethorpe for delivery through the TVA-ITS
interface would probably be curtailed, and could result in higher purchased
power cost than would otherwise be the case. Although FERC transmission
pricing policy is designed to ensure that a transmission provider is fully
compensated for the cost of providing transmission service, potentially
including opportunity cost, there can be no assurance that rates ordered by
FERC for service to PECO would fully compensate GTC, Oglethorpe and the
Members for the use of the transmission system and for any resulting increase
in the cost of power.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Number Description
- ----------- -----------
10.8.6 Supplemental Agreement to the Amended and Restated Wholesale
Power Contract, dated as of May 1, 1997 by and between
Oglethorpe and Altamaha Electric Membership Corporation,
together with a Schedule identifying 38 other
substantially identical Supplemental Agreements.
27.1 Financial Data Schedule (for SEC use only).
- ----------------------------
(b) Reports on Form 8-K
No reports on Form 8-K were filed by Oglethorpe for the quarter ended June 30,
1997.
15
<PAGE>
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.
Oglethorpe Power Corporation
(An Electric Membership Corporation)
Date: August 11, 1997 By: /s/ T. D. Kilgore
----------------------------------
T. D. Kilgore
President and Chief Executive Officer
(Principal Executive Officer)
Date: August 11, 1997 /s/ Mac F. Oglesby
----------------------------------
Mac F. Oglesby
Treasurer and Director
(Principal Financial Officer)
Date: August 11, 1997 /s/ Robert D. Steele
----------------------------------
Robert D. Steele
Controller
(Chief Accounting Officer)
16
<PAGE>
Exhibit 10.8.6
SUPPLEMENTAL AGREEMENT TO THE AMENDED
AND RESTATED WHOLESALE POWER CONTRACT
THIS SUPPLEMENTAL AGREEMENT TO THE AMENDED AND RESTATED WHOLESALE POWER
CONTRACT, dated as of May 1, 1997 (together with permitted amendments hereto,
this "Supplement"), is entered into by and between OGLETHORPE POWER CORPORATION
(AN ELECTRIC MEMBERSHIP CORPORATION), an electric membership corporation
organized and existing under the laws of the State of Georgia (the "Seller"),
and ALTAMAHA ELECTRIC MEMBERSHIP CORPORATION, an electric membership corporation
organized and existing under the laws of the State of Georgia (the "Member").
R E C I T A L S:
WHEREAS, the Seller and the Member have entered into that certain Amended
and Restated Wholesale Power Contract, dated as of August 1, 1996 (together with
permitted amendments thereto, the "Wholesale Power Contract"), under which the
Seller agrees to sell and the Member agrees to purchase certain quantities of
electric capacity and energy;
WHEREAS, for the benefit of the Member and the Participating Members, the
Seller has entered into that certain Power Purchase and Sale Agreement, dated as
of April 7, 1997, between Morgan Stanley Capital Group, Inc. ("MS") and the
Seller and amended by a letter agreement dated April 8, 1997 (as supplemented by
any arbitration, mediation, amendment, administrative procedure or other method
of implementing and administering such contract permitted under the provisions
of such contract, the "MS Contract");
WHEREAS, under the MS Contract the Seller will purchase electric capacity
and energy from MS for resale to the Participating Members for various terms as
set forth in Exhibit 1.62 to the MS Contract and has agreed to sell to MS
certain electric energy that MS schedules or is obligated to take; and
WHEREAS, to receive the benefits of the MS Contract, the Member wishes
during the Supplement Term to agree to certain terms and conditions as provided
herein.
NOW THEREFORE, in consideration of the premises and the mutual promises
herein contained, the Seller and the Member hereby agree as follows:
1. DEFINITIONS. All capitalized terms used herein that are defined in
the Wholesale Power Contract, as well as the term "member," shall have their
respective meanings set forth in the Wholesale Power Contract, unless the
context in which such term is used clearly requires otherwise. All other
capitalized terms used herein shall have the respective meanings set forth
below.
<PAGE>
"Confidential Information" shall have the meaning set forth in the MS
Contract.
"Customer Choice Customer" shall have the meaning set forth in the MS
Contract.
"Customer Choice Load" shall have the meaning set forth in the MS Contract.
"Electric Energy" shall have the meaning set forth in the MS Contract.
"Exhibit 5" is as defined in Section 3.1 (b).
"Exhibit 6" is as defined in Section 3.1 (b).
"Interval" shall have the meaning set forth in the MS Contract.
"Member's Supplement Term" has the meaning set forth in Section 2.
"MS" means Morgan Stanley Capital Group, Inc.
"MS Contract" is as defined in the Second Recital.
"MS Future Resource" is the Future Resource in which the Member is
allocated a PCR in Exhibit 6.
"MS Power Sale Resource" is the Power Sale Resource in which an allocation
is made to the Member in Exhibit 5.
"MS Schedule" shall have the meaning set forth in the MS Contract.
"Nominate" shall have the meaning set forth in the MS Contract.
"Participating Members" means those Members of Seller identified in
Exhibits 5 and 6, each of which has executed a Supplemental Agreement
substantially identical to this Agreement.
"Rate Schedule A" means Rate Schedule A to the Wholesale Power Contract.
"Schedule" shall have the meaning set forth in the MS Contract.
"Supplemental Agreement(s)," when used in reference to other Participating
Member(s), means that Supplemental Agreement(s) substantially identical to this
Supplement entered into between Seller and such other Participating Member(s).
"Supplement Schedule A" means Schedule A, Morgan Stanley Power Marketer
Supplement Formulary Rate Application, attached hereto.
2
<PAGE>
"Wholesale Power Contract" is as defined in the First Recital.
2. MEMBER'S SUPPLEMENT TERM. This Supplement shall be effective as of
the date on which the Administrator's approval of this Supplement is effective
and shall continue in effect until the termination of the MS Contract, whether
as the result of expiration, early termination, cancellation in the event of
default prior to the end of the fixed term, or otherwise (such period, the
"Member's Supplement Term"); provided, however, that (i) any Party's cost or
liability to the other Party hereunder, or as the result of the MS Contract,
that arises prior to such termination or results, in whole or in part, from
events or circumstances occurring prior to such termination, and (ii) the
representations and warranties made in Section 5 of this Supplement and the
provisions of 6.3 shall survive the Supplement Term.
3. FUTURE RESOURCE AND POWER SALES RESOURCE OBLIGATIONS.
3.1. New PCRs. (a) The MS Contract shall be a Future Resource for
purposes of the Seller's purchases thereunder and a Power Sales Resource for
purposes of the Seller's sales thereunder. All Participating Members, including
the Member, receive allocations in the MS Contract Power Sale Resource, as set
forth in Exhibit 5, and are assigned a PCR in the MS Future Resource, as set
forth in Exhibit 6.
(b) The Member hereby approves the MS Contract and confirms that the
requirements of Sections 3.2.1 and 3.4.2 of the Wholesale Power Contract have
been met with respect to the allocations to the Member set forth in Exhibits 5
and 6 to Appendix 1 to "Rate Schedule A" to the Wholesale Power Contract
("Exhibit 5" and "Exhibit 6" respectively).
(c) The Member hereby acknowledges that neither the MS Contract nor
this Supplement affects the Member's PCR with respect to any of the Existing
Resources or its allocation with respect to Power Sales Resources listed on
Exhibit 1 to Appendix 1 to "Rate Schedule A".
3.2 Cost Responsibility. The Member hereby approves the MS Contract,
including additional quantities purchased by Seller under the MS Contract
pursuant to Section 2.5(a) of the MS Contract, but excluding Customer Choice
Loads with an intitial connected demand exceeding ten (10) MW, for the purpose
of the requirement that it be approved by seventy-five percent (75%) of the
members of the Seller and acknowledges that the MS Contract constitutes a Future
Resource with respect to which all members of the Seller shall become liable for
a pro rata share upon a Payment Default as provided in Section 3.5.3 of the
Wholesale Power Contract. The Member acknowledges that "Rate Schedule A" shall
provide for recovery of net costs incurred by the Seller as the result of the
sales made under the MS Contract.
3
<PAGE>
4. RATES.
4.1 Application of Formula. Supplement Schedule A attached hereto and
incorporated herein by reference defines how the formulae contained in "Rate
Schedule A" are to be applied to the costs incurred and revenues received under
the MS Contract.
4.2 Limit on Changes. The Seller may modify the definitions in
Supplement Schedule A, but only to the extent necessary to ensure that all costs
and revenues under the MS Contract are recovered by and credited to those
Participating Members that are Participating Members at the time such costs and
revenues are incurred; provided, however, that during the Member's Supplement
Term, the Seller shall not enter into an amendment of the MS Contract which
modifies the Member's individual rates established under the MS Contract and set
forth in Supplement Schedule A unless any such amendment of the MS Contract is
negotiated to comply with the provisions of Sections 16.1 or 16.3 of the MS
Contract or is approved by seventy-five percent (75%) of the Participating
Members.
4.3 No Unilateral Filings. Notwithstanding Section 11.3.1 of the
Wholesale Power Contract, during the Member's Supplement Term, (i) the Seller
shall not unilaterally file an application for a change in any part of "Rate
Schedule A" that is expressly prohibited by Section 4.2 of this Supplement and
(ii) the Member shall not protest or make any unilateral filing complaining of a
change expressly permitted by Section 4.2 of this Supplement.
4.4 Continued Justness and Reasonableness of Rate. The Seller has
provided the Member with a copy of "Rate Schedule A", as amended through
February 24, 1997. The Member confirms that the rates, terms and conditions
established under the Wholesale Power Contract, including "Rate Schedule A" are
just and reasonable and not unduly discriminatory and remain fully consistent
with the provisions of Section 11.1 of the Wholesale Power Contract.
5. MEMBER'S REPRESENTATIONS AND WARRANTIES. The Member makes the
following representations and warranties to Seller and agrees to indemnify
Seller against all losses and damages resulting from a breach of same:
5.1 The Member warrants and represents that it will not, during the
term of the MS Contract, take any action, enter into any contracts or
otherwise incur obligations that could reasonably be anticipated to interfere
with or adversely affect Seller's ability to perform its obligations under
the MS Contract; and
5.2 The Member warrants and represents that it will not, during the
term of the MS Contract, take any action that could reasonably be anticipated
to cause either Seller or MS to lose their authority to sell power as
contemplated under the MS Contract.
4
<PAGE>
6. SCHEDULING MEMBER.
6.1 The Member hereby waives the right to become a Scheduling Member
with respect to its PCR share of the MS Future Resource, its allocation in the
MS Power Sale Resource, and the fifty percent (50%) of its allocation in the
underlying Existing Resources committed to the MS Power Sale Resource prior to
May 1, 1998.
6.2 In addition to the terms and conditions of the Wholesale Power
Contract, the Member's right to become and to act as a Scheduling Member after
May 1, 1998 shall be subject to (i) the terms and conditions of the MS Contract,
including the consent of MS pursuant to Section 3.11 of the MS Contract, (ii)
the Member's and its agents' agreement to abide by the terms of the MS Contract
governing the treatment of Confidential Information, and (iii) Member's
acknowledgment that no special consideration as to the timing for submittal of
schedules by the Member can be given due to the timing of Schedules submitted by
MS pursuant to the MS Contract.
6.3 Subject to Sections 6.1 and 6.2, until six (6) months following
expiration of the Supplement Term, the Member shall have the right to elect to
become a Scheduling Member with respect to the fifty percent (50%) of the
Member's allocation in the underlying Existing Resources committed to the MS
Power Sale Resource and to the Member's total energy requirements not subject to
separate scheduling pursuant to the LPM Supplemental Agreement without regard to
whether the Member is a Scheduling Member with respect to the remainder of the
Member's total energy requirements.
6.4 If a Member is a Scheduling Member pursuant to both this Section
6 and pursuant to Section 3.3 of the LPM Supplemental Agreement, Member shall be
a Scheduling Member with respect to one hundred percent (100%) of its resources
and energy requirements.
7. NO THIRD PARTY BENEFICIARIES. Subject to the provisions of Section 10
below, the Seller and the Member agree that no other Member of the Seller or any
other third party is an intended third-party beneficiary of this Supplement,
except as may be provided in a separate instrument executed by each of the
Seller and the Member.
8. RULES OF CONSTRUCTION.
8.1 Headings. The descriptive headings of the various articles,
sections and subsections of this Supplement and the Schedules attached hereto
have been inserted for convenience of reference only and shall not be construed
as to define, expand, or restrict the rights and obligations of the parties.
8.2 Including. Wherever the term "including" is used in this
Supplement and the Schedules attached hereto, such term shall not be construed
as limiting the generality of any statement, clause, phrase or term.
5
<PAGE>
8.3 Plural and Singular. The terms defined in this Agreement and the
Schedule attached hereto shall include the plural as well as the singular and
the singular as well as the plural.
9. ASSIGNMENT. This Supplement and the rights and obligations hereunder
are not assignable except when assigned by either Party (i) in an Assignment for
Security along with the Wholesale Power Contract or (ii) to any assignee or
transferee that succeeds to its rights and obligations under the Wholesale Power
Contract. In each such case, this Supplement shall be assigned with the
Wholesale Power Contract and such assignee or transferee shall agree in writing
to be bound by the terms hereof. Any attempted assignment other than to the
assignee of a Party's rights and obligations under the Wholesale Power Contract
shall be void and unenforceable. This Supplement shall be binding on and inure
to the benefit of the permitted successors and permitted assigns of the Parties.
10. RUS. This Supplement shall not be effective unless and until
approved in writing by the Administrator. This Supplement is subject to the
rights and obligations of the Parties under that certain Amended and Restated
Supplemental Agreement, dated as of August 1, 1996, among the Seller, the
Member, and the Government, acting through the Administrator, in the same
manner and to the same extent as the Wholesale Power Contract.
11. GOVERNING LAW. Except to the extent governed by applicable federal
law, this Supplement shall be governed by, and construed in accordance with, the
law of the State of Georgia.
12. WAIVER. No Party shall be deemed to waive any provisions of this
Supplement unless such waiver shall be in writing and signed by the Party
charged with the waiver. No waiver shall be deemed to be a continuing waiver
unless those stated in writing.
13. AMENDMENTS. Except as permitted in Section 4.2 of this Supplement, no
change, amendment or modification of this Supplement shall be valid or binding
upon the Parties unless such change, amendment or modification shall be in
writing and duly executed by the Parties.
14. SEVERABILITY. If any provisions of this Supplement is void or
enforceable, the remainder of this Supplement shall not be affected thereby.
[Signatures on the following page]
6
<PAGE>
IN WITNESS WHEREOF, the Seller and the Member have caused this Supplement
to be executed, attested, sealed and delivered by their respective duly
authorized officers as of the day and year first written above.
SELLER:
OGLETHORPE POWER CORPORATION
(AN ELECTRIC MEMBERSHIP CORPORATION)
[CORPORATE SEAL] By: /s/ T. D. Kilgore
---------------------------------
T.D. Kilgore, President and Chief
Executive Officer
ATTEST:
/s/ Patricia N. Nash
- --------------------------
Patricia N. Nash
Secretary
MEMBER:
ALTAMAHA ELECTRIC
MEMBERSHIP CORPORATION
[CORPORATE SEAL] By: /s/ Jmon Warnock
------------------------
Name: Jmon Warnock
--------------------
Title: President
--------------------
ATTEST:
/s/ Bernard Hart
-----------------------
7
<PAGE>
SCHEDULE TO EXHIBIT 10.8.6
SUPPLEMENTAL AGREEMENT TO THE
AMENDED AND RESTATED
WHOLESALE POWER CONTRACT
(MS)
The following is a list of substantially identical Supplemental Agreements
to the Amended and Restated Wholesale Power Contracts for the Electric
Membership Corporations, dated as of May 1, 1997:
1. Amicalola EMC 20. Middle Georgia EMC
2. Canoochee EMC 21. Mitchell EMC
3. Carroll EMC 22. Ocmulgee EMC
4. Central Georgia EMC 23. Oconee EMC
5. Coastal EMC 24. Okefenoke Rural EMC
6. Cobb EMC 25. Pataula EMC
7. Colquitt EMC 26. Planters EMC
8. Coweta-Fayette EMC 27. Rayle EMC
9. Excelsior EMC 28. Satilla Rural EMC
10. Flint EMC 29. Sawnee EMC
11. Grady EMC 30. Slash Pine EMC
12. Greystone Power Corporation, 31. Snapping Shoals EMC
an EMC 32. Sumter EMC
13. Habersham EMC 33. Three Notch EMC
14. Hart EMC 34. Tri-County EMC
15. Irwin EMC 35. Troup EMC
16. Jackson EMC 36. Upson EMC
17. Jefferson EMC 37. Walton EMC
18. Lamar EMC 38. Washington EMC
19. Little Ocmulgee EMC
The schedule to the Altamaha EMC Supplemental Agreement and certain
amendments to the Cobb EMC Supplemental Agreement and the Snapping Shoals EMC
Supplemental Agreement are not filed herewith; however, the Registrant
hereby agrees that such documents will be provided to the Commission upon
request.
8
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM OGLETHORPE
POWER CORPORATION'S CONDENSED BALANCE SHEET AS OF JUNE 30, 1997 AND RELATED
STATEMENTS OF REVENUES AND EXPENSES AND CASH FLOWS FOR THE PERIOD ENDED JUNE 30,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<BOOK-VALUE> PER-BOOK<F1>
<TOTAL-NET-UTILITY-PLANT> 3,654,576
<OTHER-PROPERTY-AND-INVEST> 201,944
<TOTAL-CURRENT-ASSETS> 353,359
<TOTAL-DEFERRED-CHARGES> 334,156
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 4,544,035
<COMMON> 0
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 321,855
<TOTAL-COMMON-STOCKHOLDERS-EQ> 0
0
0
<LONG-TERM-DEBT-NET> 3,279,702
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 10,003
<LONG-TERM-DEBT-CURRENT-PORT> 82,460
0
<CAPITAL-LEASE-OBLIGATIONS> 291,111
<LEASES-CURRENT> 5,261
<OTHER-ITEMS-CAPITAL-AND-LIAB> 553,643
<TOT-CAPITALIZATION-AND-LIAB> 4,544,035
<GROSS-OPERATING-REVENUE> 514,361
<INCOME-TAX-EXPENSE> 0
<OTHER-OPERATING-EXPENSES> 375,121
<TOTAL-OPERATING-EXPENSES> 375,121
<OPERATING-INCOME-LOSS> 139,240
<OTHER-INCOME-NET> 22,970
<INCOME-BEFORE-INTEREST-EXPEN> 162,210
<TOTAL-INTEREST-EXPENSE> 147,263
<NET-INCOME> 14,947
0
<EARNINGS-AVAILABLE-FOR-COMM> 0
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 41,484
<CASH-FLOW-OPERATIONS> 122,244
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>$321,855 REPRESENTS TOTAL RETAINED PATRONAGE CAPITAL. THE REGISTRANT IS A
MEMBERSHIP CORPORATION AND HAS NO AUTHORIZED OR OUTSTANDING EQUITY SECURITIES.
</FN>
</TABLE>
