<PAGE>
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 June 30, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
_____________________________
Commission File Number 1-4393
_____________________________
PUGET SOUND POWER & LIGHT COMPANY
(Exact name of registrant as specified in its charter)
Washington 91-0374630
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
411 - 108th Avenue N.E., Bellevue, Washington 98004-5515
(Address of principal executive offices)
(206) 454-6363
(Registrant's telephone number, including area code)
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 for such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes /X/ No / /
The number of shares of registrant's common stock outstanding at June 30,
1995 was 63,640,861.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Puget Sound Power & Light Company
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended June 30
1995 1994
------- -------
(Unaudited)
(Thousands except shares
and per share amounts)
OPERATING REVENUES $261,592 $263,612
------- -------
OPERATING EXPENSES:
Operation:
Purchased and interchanged power 87,415 86,494
Fuel 6,846 8,786
Other 42,082 53,826
Maintenance 13,743 13,744
Depreciation and amortization 26,983 30,230
Taxes other than federal income taxes 26,094 24,512
Federal income taxes 15,491 10,441
-------- -------
Total operating expenses 218,654 228,033
------- -------
OPERATING INCOME 42,938 35,579
------- -------
OTHER INCOME:
Allowance for funds used during construction -
equity portion 94 152
Miscellaneous - net of taxes 2,493 3,189
------- -------
Total other income 2,587 3,341
------- -------
INCOME BEFORE INTEREST CHARGES 45,525 38,920
------- ------
INTEREST CHARGES
Interest and amortization on long-term debt 21,115 20,881
Allowance for funds used during
construction - debt portion (1,185) (888)
Other 2,732 1,155
------- -------
Total interest charges 22,662 21,148
------- -------
NET INCOME 22,863 17,772
DEDUCT: ------- -------
Preferred stock dividend accrual 3,908 3,980
------- -------
INCOME FOR COMMON STOCK $ 18,955 $ 13,792
======= =======
COMMON SHARES OUTSTANDING -
WEIGHTED AVERAGE 63,640,861 63,629,416
EARNINGS PER COMMON SHARE (Note a) $0.30 $0.22
DIVIDENDS PAID PER COMMON SHARE $0.46 $0.46
<PAGE>
Puget Sound Power & Light Company
CONSOLIDATED STATEMENTS OF INCOME
Six Months Ended June 30
1995 1994
------- -------
(Unaudited)
(Thousands except shares
and per share amounts)
OPERATING REVENUES $599,937 $592,834
------- -------
OPERATING EXPENSES:
Operation:
Purchased and interchanged power 199,262 186,224
Fuel 13,235 21,080
Other 88,308 106,104
Maintenance 27,037 25,102
Depreciation and amortization 54,006 60,105
Taxes other than federal income taxes 56,785 54,045
Federal income taxes 48,006 40,704
------- -------
Total operating expenses 486,639 493,364
------- -------
OPERATING INCOME 113,298 99,470
------- -------
OTHER INCOME:
Allowance for funds used during construction -
equity portion 94 192
Miscellaneous - net of taxes 4,175 7,031
------- -------
Total other income 4,269 7,223
------- -------
INCOME BEFORE INTEREST CHARGES 117,567 106,693
------- -------
INTEREST CHARGES:
Interest and amortization on long-term debt 42,193 41,737
Allowance for funds used during
construction - debt portion (2,345) (1,611)
Other 6,109 2,267
------- -------
Total interest charges 45,957 42,393
------- -------
NET INCOME 71,610 64,300
------- -------
DEDUCT:
Preferred stock dividend accrual 7,871 7,808
------- -------
INCOME FOR COMMON STOCK $ 63,739 $ 56,492
======= =======
COMMON SHARES OUTSTANDING -
WEIGHTED AVERAGE 63,640,861 63,629,416
EARNINGS PER COMMON SHARE (Note a) $1.00 $0.89
DIVIDENDS PAID PER COMMON SHARE $0.92 $0.92
<PAGE>
Puget Sound Power & Light Company
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30 December 31
1995 1994
--------- ---------
(Unaudited)
(Thousands of Dollars)
UTILITY PLANT:
Electric Plant, at original cost
(including construction work in
progress of $100,023,000 and
$94,067,000 respectively) $3,348,598 $3,306,854
Less: Accumulated depreciation 1,076,593 1,039,943
--------- ---------
Net utility plant 2,272,005 2,266,911
--------- ---------
OTHER PROPERTY AND INVESTMENTS:
Investment in Bonneville Exchange Power
Contract (Note b) 97,823 101,309
Investments in and advances to subsidiaries 89,589 76,517
Energy conservation loans to customers 1,037 1,409
Other investments, at cost 11,365 12,203
--------- ---------
Total other property and investments 199,814 191,438
--------- ---------
CURRENT ASSETS:
Cash 4,483 5,284
Accounts receivable 104,987 107,588
Estimated unbilled revenue 45,321 86,745
PRAM accrued revenues 36,815 47,178
Materials and supplies, at average cost 50,513 49,543
Prepayments and Other 6,079 5,260
--------- ---------
Total current assets 248,198 301,598
--------- ---------
LONG-TERM ASSETS:
Regulatory asset for deferred income taxes 265,699 275,296
PRAM accrued revenues (net of current portion) 80,660 63,663
Unamortized debt expense 10,491 8,076
Unamortized energy conservation charges (Note c) 30,533 239,500
Other 114,420 117,288
--------- ---------
Total long-term assets 501,803 703,823
--------- ---------
TOTAL ASSETS $3,221,820 $3,463,770
========= =========
<PAGE>
Puget Sound Power & Light Company
CONSOLIDATED BALANCE SHEETS
CAPITALIZATION AND LIABILITIES
June 30 December 31
1995 1994
--------- ---------
(Unaudited)
(Thousands of Dollars)
CAPITALIZATION:
Shareholders' investment:
Common stock, $10 stated value,
80,000,000 shares authorized,
63,640,861 shares outstanding $ 636,409 $ 636,409
Additional paid-in capital 328,963 328,753
Earnings reinvested in the business 212,697 207,567
--------- ---------
Total common equity 1,178,069 1,172,729
Preferred stock not subject to
mandatory redemption 125,000 125,000
Preferred stock subject to
mandatory redemption 89,039 91,242
Long-term debt 928,366 963,298
--------- ---------
Total capitalization 2,320,474 2,352,269
--------- ---------
CURRENT LIABILITIES
Accounts payable 36,837 58,025
Short-term debt (Note c) 15,785 234,454
Current maturities of long-term debt 143,003 108,000
Accrued expenses:
Taxes 41,485 40,337
Salaries and wages 22,270 20,809
Interest 25,824 26,181
Other 14,708 25,018
--------- ---------
Total current liabilities 299,912 512,824
--------- ---------
DEFERRED INCOME TAXES:
Deferred income taxes 542,986 541,501
Investment tax credits 518 726
--------- ---------
Total deferred income taxes 543,504 542,227
--------- ---------
OTHER DEFERRED CREDITS:
Customer advances for construction 20,564 21,939
Other 37,366 34,511
--------- ---------
Total other deferred credits 57,930 56,450
--------- ---------
TOTAL CAPITALIZATION AND LIABILITIES $3,221,820 $3,463,770
========= =========
<PAGE>
Puget Sound Power & Light Company
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30
1995 1994
------- -------
(Unaudited)
(Thousands of Dollars)
OPERATING ACTIVITIES:
- --------------------
Net income $ 71,610 $ 64,300
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 54,006 60,105
Deferred income taxes and tax credits - net 10,874 9,170
AFUDC - equity portion (94) (192)
PRAM accrued revenues - net (6,634) (15,504)
Other 6,283 21,003
Change in certain current assets
and liabilities (Note d) 14,141 24,139
- -------------------------------------------------------------------------
Net Cash Provided by Operating Activities 150,186 163,021
- -------------------------------------------------------------------------
INVESTING ACTIVITIES:
- --------------------
Construction expenditures - excluding equity AFUDC (55,321) (67,109)
Additions to energy conservation program (7,061) (22,188)
Decrease in energy conservation loans 372 550
Cash received from subsidiary -- 30,136
Cash from sale of conservation assets 202,495 --
Other (including advances to subsidiaries) (1,626) (6,433)
- -------------------------------------------------------------------------
Net Cash Provided (Used) by
Investing Activities 138,859 (65,044)
- -------------------------------------------------------------------------
FINANCING ACTIVITIES:
- --------------------
Decrease in short-term debt (218,669) (54,998)
Dividends paid (66,479) (66,346)
Issuance of preferred stock -- 50,000
Issuance of bonds -- 85,000
Redemption of bonds and notes (2) (65,005)
Redemption of preferred stock (1,993) (41,849)
Issue costs of bonds and stock (2,703) (1,954)
- -------------------------------------------------------------------------
Net Cash Used by Financing Activities (289,846) (95,152)
- -------------------------------------------------------------------------
Increase (Decrease) in Cash (801) 2,825
Cash at Beginning of Period 5,284 3,445
- -------------------------------------------------------------------------
Cash at End of Period $ 4,483 $ 6,270
=========================================================================
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(a) Earnings Per Common Share
Earnings per common share for the three and six months ended June 30, 1995
and 1994 have been computed by dividing income for common stock by the
weighted average number of common shares outstanding.
(b) Investment in Bonneville Exchange Power Contract
The Company has a five percent interest, as a tenant in common with three
other investor-owned utilities and Washington Public Power Supply System
("WPPSS"), in the WPPSS Unit 3 project. The Unit 3 project is a partially
constructed 1,240,000 kilowatt nuclear generating plant at Satsop,
Washington, which was in a state of extended construction delay instituted
by the Bonneville Power Administration ("BPA") and WPPSS in 1983. Unit 3
was terminated by WPPSS and the other owners in 1994. Under the terms of a
settlement agreement (the "Settlement Agreement"), which includes a
Settlement Exchange Agreement ("Bonneville Exchange Power Contract") between
the Company and BPA dated September 17, 1985, the Company is receiving
electric power (the "Bonneville Exchange Power") from the federal power
system resources marketed by the BPA for a period of approximately 30.5
years which commenced January 1, 1987. The Settlement Agreement settled the
claims of the Company against WPPSS and BPA relating to the construction
delay of the WPPSS Unit 3 project.
In its general rate order issued on January 17, 1990, the Washington
Utilities and Transportation Commission (the "Washington Commission") found
that all of the Company's WPPSS Unit 3/Bonneville Exchange Power costs had
been prudently incurred. Under terms of the order, approximately two-thirds
or $97 million of the investment in Bonneville Exchange Power is included in
rate base and amortized on a straight-line basis over the remaining life of
the Bonneville Exchange Power Contract (amortization is included in
"Purchased and interchanged power"). The remainder of the Company's
investment is being recovered in rates over ten years, without a return
during the recovery period. The related amortization is included in
"Depreciation and amortization," pursuant to a Federal Energy Regulatory
Commission ("FERC") accounting directive.
Several issues in the litigation relating to WPPSS Unit 3, including claims
on behalf of WPPSS Unit 5 against the Company and the other Unit 3 owners
seeking recovery of certain common costs, were not settled by the Settlement
Agreement. The claims with respect to WPPSS Unit 3 and Unit 5 common costs,
made in the United States District Court for the Western District of
Washington, arise out of the fact that Unit 3 and Unit 5, which was also
terminated prior to completion, were being constructed adjacent to each
other and were planned to share certain costs. The Company and a number of
the litigants have signed, subject to various conditions, a memorandum of
understanding intended to result in a settlement and dismissal of the
claims. Pursuant to the memorandum of understanding, on July 6, 1995,
Chemical Bank was paid a total of $55 million to settle all bondholder
claims arising in the litigation. The Company's share of the settlement
amount was $500,000, an expense which was accrued by the Company in 1994.
<PAGE>
(c) Unamortized Energy Conservation Costs and Short-Term Debt
The Company's energy conservation expenditures have historically been
accumulated, included in rate base and amortized over a ten-year period at
the direction of the Washington Commission. In June 1995 the Company sold
approximately $202.4 million of its investment in customer-owned energy
conservation measures to a grantor trust, which, in turn, issued securities
backed by a Washington state statute enacted in 1994. The statute provides
that if certain conditions are met, securities could be issued, backed by a
statutory requirement that a portion of rate revenues be segregated to repay
those securities. The proceeds of the sale were used to pay down short-term
debt. The securities were issued in June 1995 and carry a coupon rate of
6.45 percent. The Company's remaining unamortized conservation balance at
June 30, 1995, was $31 million. The Company recognized no gain or loss on
the sale.
(d) Consolidated Statements of Cash Flows
For purposes of the Consolidated Statements of Cash Flows, the Company
considers all temporary investments to be cash equivalents. These temporary
cash investments are securities held for cash management purposes, having
maturities of three months or less at time of purchase. The net change in
current assets and current liabilities for purposes of the Statement of Cash
Flows excludes short-term debt, current maturities of long-term debt, and the
current portion of the Periodic Rate Adjustment Mechanism ("PRAM") accrued
revenues.
The following provides additional information concerning cash flow
activities:
Six Months Ended June 30
1995 1994
- --------------------------------------------------------------------------
(Thousands)
Changes in current assets and current liabilities:
Accounts receivable $ 2,601 $(5,890)
Unbilled revenues 41,424 42,566
Materials and supplies (969) (1,737)
Prepayments and Other 331 91
Accounts payable (21,188) (6,865)
Accrued expenses and Other (8,058) (4,026)
- --------------------------------------------------------------------------
Net change in current assets and current liabilities $14,141 $24,139
==========================================================================
Cash payments:
Interest (net of capitalized interest): $46,246 $40,915
Income taxes $34,200 $35,000
- --------------------------------------------------------------------------
(e) Other
On September 27, 1994, the Washington Commission issued a rate order relating
to the Company's annual rate increase under the PRAM. The Company had
requested a $55.5 million revenue increase and the Commission allowed $53.7
million. The items of revenue disallowed were $1.6 million related to two
purchased power contracts and $208,000 related to a $978,000 rate base
reduction that the Commission ordered in the Company's conservation program.
On May 31, 1995, the Company filed for a $62.8 million adjustment to rates
under the Washington Commission's Periodic Rate Adjustment Mechanism (PRAM).
A decision is expected by September 30, 1995, and, if approved, the increase
would be effective during the period from October 1, 1995 through September
30, 1996.
On October 1, 1989, the Company signed a contract with Montana Power under
which Montana Power provides, from its share of Colstrip Unit 4, to the
Company, 71 average MW of energy (94 MW of peak capacity) over a 21 year
period. On February 27, 1995, the Company delivered to Montana Power notice
of termination of the contract based on Montana Power's failure to arrange
for firm contractual transmission rights for such energy as required by the
contract. On February 28, 1995, Montana Power filed a lawsuit in a Montana
State Court and obtained a temporary restraining order regarding the
termination. The Company has filed a notice of removal of the Montana State
Court action to the Federal District Court in Montana. On March 7, 1995, the
Company filed a lawsuit in the United States District Court for the Western
District of Washington in response to Montana Power's failure to terminate
the contract as required and for failure to reimburse the Company for
approximately $39 million in power costs, which are due upon termination
under contract provisions.
In July 1995 the Bonneville Power Administration (BPA) announced a proposed
change in policy and rates that could significantly increase rates for the
Company's residential and small farm customers. While the proposal would not
necessitate the filing of increased rates by the Company, the proposal would
reduce the credits these customers receive on their power bill under the
Residential and Small Farm Exchange Program. The Program was established in
1980, under the Regional Power Act. The credit is designed to guarantee that
all electric users in the Pacific Northwest share in the cost benefits of
federally financed hydroelectric dams on the Columbia River. The reduction
in these credits would have no direct impact on the Company's earnings, since
the credits are passed through directly to customers on their monthly bills.
The proposal also calls for a substantial increase in the rates BPA charges
others, including the Company, to use its federally owned transmission
system. If approved by the Federal Energy Regulatory Commission, the new
rates would take effect October 1, 1996.
The financial statements contained in this Form 10-Q are unaudited; however,
in the opinion of the Company, they include all adjustments (consisting only
of normal recurring adjustments) necessary for a fair statement of the
results of operations for the periods shown.
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Net income for the three months ended June 30, 1995, was $22.9 million on
operating revenues of $261.6 million, compared with net income of $17.8
million on operating revenues of $263.6 million for the same period in 1994.
Income for common stock was $19.0 million for the second quarter of 1995 and
$13.8 million for the second quarter of 1994. Earnings per common share were
$0.30 for the second quarter of 1995 compared to $0.22 for the second quarter
of 1994 based on 63.6 million weighted average common shares outstanding for
both periods.
For the first six months of 1995, net income was $71.6 million on operating
revenues of $599.9 million, compared with net income of $64.3 million on
operating revenues of $592.8 million for the corresponding period in 1994.
Income for common stock was $63.7 million for the first half of 1995 and
$56.5 million for the same period in 1994. Earnings per common share were
$1.00 for the six months ended June 30, 1995 and $0.89 for the same period in
1994 based on 63.6 million weighted average common shares outstanding for
both periods.
The increase in net income for the three and six month periods reflects, in
part, non-recurring after-tax charges of $6.2 million and $10.7 million,
respectively, associated with the Company's two voluntary early retirement
and separation programs offered during 1994. These charges, recorded in
other operating expenses, represent decreases in earnings per common share of
$0.10 and $0.17 for the second quarter and first half of 1994, respectively.
Total kilowatt-hour sales were 4.9 billion, including 0.5 billion in sales to
other utilities, for the second quarter of 1995, compared to 5.1 billion,
including 0.9 billion in sales to other utilities, for the second quarter of
1994. For the six month periods ended June 30, 1995 and 1994, total kilowatt-
hour sales were 11.2 billion, including 1.4 billion in sales to other
utilities, and 10.8 billion, including 1.2 billion in sales to other
utilities, respectively.
The Company's operating revenues and associated expenses are not generated
evenly during the year. Variations in energy usage by consumers do occur
from season to season and from month to month within a season, primarily as a
result of weather conditions. The Company normally experiences its highest
energy sales in the first and fourth quarters of the year. Sales to other
utilities also vary by quarter and year depending principally upon water
conditions for the generation of hydroelectric power, customer usage and the
energy requirements of other utilities. With the implementation of the PRAM
in October 1991, earnings are no longer significantly influenced, up or down,
by sales of surplus electricity to other utilities or by weather or hydro
conditions.
Preferred stock dividends decreased $0.1 million and increased $0.1 million
for the three and six month periods ended June 30, 1995, respectively,
compared to the same periods in 1994.
<PAGE>
Comparative Periods Ending
June 30, 1995 vs June 30, 1994
------------------------------
Increase (Decrease)
Three Six
Month Month
Period Period
------ ------
(In Millions)
Operating revenue changes
PRAM surcharge billed $ 13.0 $ 28.4
Accrual of revenue under the PRAM - Net (2.6) (8.9)
BPA Residential Purchase & Sale Agreement (6.9) (15.7)
Sales to other utilities (10.5) (3.7)
Load and other changes 5.0 7.0
----- -----
Total operating revenue changes (2.0) 7.1
Operating expense changes
Purchased & interchanged power 0.9 13.0
Fuel (1.9) (7.8)
Other operation expenses (11.7) (17.8)
Maintenance 0.0 1.9
Depreciation and amortization (3.3) (6.1)
Taxes other than federal income taxes 1.6 2.8
Federal income taxes 5.0 7.3
----- -----
Total operating expense changes (9.4) (6.7)
Allowance for funds used during
construction (AFUDC) 0.2 0.6
Other income (0.7) (2.8)
Interest charges excluding AFUDC 1.8 4.3
----- -----
NET INCOME CHANGES $ 5.1 $ 7.3
===== =====
The following is additional information pertaining to the changes outlined in
the above table.
Operating revenues
Revenues since October 1, 1994 have increased as a result of rates
authorized by the Washington Commission in its PRAM order issued on
September 27, 1994. See discussion of the Periodic Rate Adjustment
Mechanism in "Other.").
Revenues in 1995 and 1994 were reduced because of the credit that the
Company received through the Residential Purchase and Sale Agreement with
the BPA. This agreement enables the Company's residential and small farm
customers to receive the benefits of lower-cost federal power. A
corresponding reduction is included in purchased and interchanged power
expenses.
Revenues from kilowatt-hour sales, excluding PRAM, were slightly higher in
the second quarter and the first half of 1995 as compared to the same
periods in 1994 due to continued growth in the number of customers.
Operating expenses
Purchased and interchanged power expenses increased $0.9 million for the
second quarter of 1995 and $13.0 million for the first half of 1995
compared to the same periods in 1994. Higher levels of purchased power,
which contributed increases of $7.8 million and $27.5 million, were due to
increased power purchases from energy cogeneration facilities. These
higher costs were partially offset by increased credits of $6.6 million
and $15.0 million, respectively, associated with the Residential Purchase
and Sale Agreement with the BPA. (See discussion of Residential Purchase
and Sale Agreement in "Operating revenues.")
Fuel expense decreased $1.9 million for the three month comparative period
and $7.8 million for the six month comparative period as the Company
purchased additional power from cogeneration facilities and other power
producers rather than run Company-owned facilities to generate
electricity. Additionally, an Arbitration Panels' decision of a dispute
involving the coal supply agreement at the Company's fifty percent-owned
Colstrip 1 and 2 plants resulted in a $4.6 million decrease to fuel
expense in the first quarter of 1995.
Other operating expenses decreased $11.7 million and $17.8 million for the
three and six month comparative periods, respectively. The decreases were
due primarily to non-recurring charges of $9.6 million and $16.4 million,
respectively, to reflect costs associated with the Company's two voluntary
early retirement and separation programs offered in 1994. Additional
decreases of $1.1 million and $2.3 million in transmission expenses for
the three and six month comparative periods, respectively, also
contributed to the decrease. The second quarter of 1995 also experienced
a decrease of $1.4 million in amortization expense associated with the
Company's conservation program. In June 1995 the company sold, to a
grantor trust, approximately $202.4 million of its investment in customer-
owned energy conservation measures. (See discussion of the conservation
financing in "Unamortized energy conservation costs.")
Maintenance expense for the second quarter of 1995 was unchanged from
levels experienced during the same period in 1994. Maintenance expense
for the six month comparative periods increased $1.9 million due primarily
to higher distribution maintenance expenses in the first quarter of 1995
resulting from increased winter storm damage to Company facilities.
Depreciation and amortization expense decreased $3.3 million and $6.1
million for the three and six month comparative periods, respectively.
Decreases of $4.3 million and $8.6 million, respectively, were due to the
completion of the 10 year amortization period related to two terminated
generating projects. These decreases were partially offset by the effects
of new plant placed into service during the past year.
Taxes other than federal income taxes increased $1.6 million and $2.8
million for three and six month comparative periods, due primarily to
higher municipal and state excise tax payments.
Federal income taxes on operations increased $5.0 million and $7.3 million
for the three and six month comparative periods, respectively. The
increases were due primarily to higher pre-tax operating income in the
respective periods.
AFUDC
AFUDC, which does not represent current cash income, is included partially
in other income and partially as an offset to interest expense.
Other income
Total other income decreased $0.7 million and $2.8 million for the three
and six month periods ended June 30, 1995, over the same periods a year
ago. The three month comparative period decrease is due primarily to a
$0.7 million decrease in Allowance for Funds Used to Conserve Energy
("AFUCE"). Also contributing to the six month comparative decrease was an
after-tax gain of $1.9 million in the first quarter of 1994 resulting from
the sale of a project by the Company's hydro development subsidiary.
Interest charges
Interest charges, which consist of interest and amortization on long-term
debt and other interest, increased $1.8 million and $4.3 million for the
three and six month periods ended June 30, 1995, respectively, compared to
the same periods in 1994.
Interest and amortization on long-term debt alone increased $0.2 million
for the three month comparative period and $0.5 million for the six month
comparative period. Other interest expense increased $1.6 million and
$3.8 million for the three and six month comparative periods,
respectively, due to higher amounts of outstanding short-term debt and
higher interest rates compared to the same periods in 1994.
Construction expenditures (excluding AFUDC and AFUCE) for the second quarter
of 1995 were $31.4 million, including $3.2 million of conservation
expenditures, compared to $39.5 million, including $8.8 million of
conservation expenditures, for the second quarter of 1994. Year-to-date
construction expenditures (excluding AFUDC and AFUCE) totaled $58.8 million,
including $5.9 million of conservation expenditures, compared to $85.3
million, including $19.8 million of conservation expenditures, for the same
period in 1994. Construction expenditures (excluding AFUDC and AFUCE) for
1995 and 1996 are expected to be $145 million and $187 million, respectively.
Cash provided by operations (net of dividends, AFUDC and AFUCE) as a
percentage of construction expenditures (excluding AFUDC and AFUCE) was 15%
and 59% for the second quarters of 1995 and 1994, respectively. Cash
provided by operations (net of dividends, AFUDC and AFUCE) as a percentage of
construction expenditures (excluding AFUDC and AFUCE) was 137% and 109% for
the six month periods ended June 30, 1995 and 1994, respectively. The
Company expects to fund an average of 85% of its estimated construction
expenditures (excluding AFUDC and AFUCE) in 1995 and 1996 from cash provided
by operations (net of dividends, AFUDC and AFUCE) with the balance being
funded through the sales of securities, the nature, amount and timing of
which will be subject to market conditions and other relevant factors.
Construction expenditure estimates are subject to periodic review and
adjustment.
On June 30, 1995 the Company had available $176.5 million in lines of credit
with various banks, which provide credit support for outstanding commercial
paper of $15.8 million, effectively reducing the unused available borrowing
capacity under these lines of credit to $160.7 million. In addition, the
Company has agreements with several banks to borrow on an uncommitted, as
available, basis at money-market rates quoted by the banks. There are no
costs, other than interest, for these arrangements.
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
For a description of legal proceedings relating to the Company's five
percent interest in WPPSS Unit No. 3, see Note (b) to the Financial
Statements.
Other contingencies, arising out of the normal course of the Company's
business, exist at June 30, 1995. The ultimate resolution of these issues
is not expected to have a material adverse impact on the financial
condition, results of operations or liquidity of the Company.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed herewith:
12-a Statement setting forth computation of ratios of earnings to
fixed charges (1990 through 1994 and twelve months ending
June 30, 1995).
12-b Statement setting forth computation of ratios of earnings to
combined fixed charges and preferred stock dividends (1990
through 1994 and twelve months ending June 30, 1995).
27 Financial Data Schedule
(b) Reports on Form 8-K
None
<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.
PUGET SOUND POWER & LIGHT COMPANY
William S. Weaver
-------------------------------
William S. Weaver
Executive Vice President and
Chief Financial Officer
Date: August 14, 1995 Principal financial officer and
officer duly authorized to sign this
report on behalf of the registrant.
<TABLE>
Exhibit 12a
PUGET SOUND POWER & LIGHT COMPANY
STATEMENT SETTING FORTH COMPUTATIONS OF
RATIOS OF EARNINGS TO FIXED CHARGES
(Dollars in Thousands)
<CAPTION>
Year Ended December 31
12 Months Ending ---------------------------------------------------
June 30, 1995 1994 1993 1992 1991 1990
---------------- ---------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EARNINGS AVAILABLE FOR FIXED CHARGES
Pre-tax income:
Net income per statement of income $127,369 $120,059 $138,327 $135,720 $132,777 $132,343
Federal income taxes 87,561 80,259 83,970 72,449 56,180 64,094
Federal income taxes charged to
other income - net 495 1,556 (382) (2,106) (2,267) 12
Undistributed (earnings) or losses
of less-than-fifty-percent-owned
entities -- -- -- (567) (16) (114)
------- ---------------------------------------------------
Total $215,425 $201,874 $221,915 $205,496 $186,674 $196,335
Fixed charges:
Interest on long-term debt $ 84,600 $ 84,144 $ 86,030 $ 89,509 $ 84,791 $ 81,766
Other interest 10,027 6,249 3,542 10,477 6,384 8,368
Portion of rentals representative
of the interest factor 4,204 4,218 3,937 4,474 4,463 4,388
------- ---------------------------------------------------
Total $ 98,831 $ 94,611 $ 93,509 $104,460 $ 95,638 $ 94,522
Earnings available for
fixed charges $314,256 $296,485 $315,424 $309,956 $282,312 $290,857
======= ===================================================
RATIO OF EARNINGS TO FIXED CHARGES 3.18x 3.13x 3.37x 2.97x 2.95x 3.08x
</TABLE>
<PAGE>
Exhibit 12b
Page 1
<TABLE>
PUGET SOUND POWER & LIGHT COMPANY
STATEMENT SETTING FORTH COMPUTATIONS OF RATIOS OF
EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(Dollars in Thousands)
<CAPTION>
Year Ended December 31
12 Months Ending ----------------------------------------------------
June 30, 1995 1994 1993 1992 1991 1990
----------------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EARNINGS AVAILABLE FOR COMBINED FIXED
CHARGES AND PREFERRED DIVIDEND REQUIREMENTS
Pretax Income:
Net Income per statement
of income $127,369 $120,059 $138,327 $135,720 $132,777 $132,343
Federal income taxes 87,561 80,259 83,970 72,449 56,180 64,094
Federal income taxes charged to
other income - net 495 1,556 (382) (2,106) (2,267) 12
------- ---------------------------------------------------
Subtotal $215,425 201,874 221,915 206,063 186,690 196,449
Undistributed (earnings) or losses
of less-than-fifty-percent-owned
entities -- -- -- (567) (16) (114)
------- ---------------------------------------------------
Total $215,425 $201,874 $221,915 $205,496 $186,674 $196,335
Fixed charges:
Interest on long-term debt $ 84,600 $ 84,144 $ 86,030 $ 89,509 $ 84,791 $ 81,766
Other interest 10,027 6,249 3,542 10,477 6,384 8,368
Portion of rentals representative
of the interest factor 4,204 4,218 3,937 4,474 4,463 4,388
------- ---------------------------------------------------
Total $ 98,831 $ 94,611 $ 93,509 $104,460 $ 95,638 $ 94,522
Earnings available for combined
fixed charges and preferred
dividend requirements $314,256 $296,485 $315,424 $309,956 $282,312 $290,857
======= ===================================================
</TABLE>
<PAGE>
Exhibit 12b
Page 2
<TABLE>
PUGET SOUND POWER & LIGHT COMPANY
STATEMENT SETTING FORTH COMPUTATIONS OF RATIOS OF
EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(Dollars in Thousands)
<CAPTION>
Year Ended December 31
12 Months Ending ----------------------------------------------------
June 30, 1995 1994 1993 1992 1991 1990
------------------ ----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
DIVIDEND REQUIREMENT:
Fixed charges above $ 98,831 $ 94,611 $ 93,509 $104,460 $ 95,638 $ 94,522
Preferred dividend requirements 26,713 26,451 26,377 21,080 14,115 18,399
------- ---------------------------------------------------
Total $125,544 $121,062 $119,886 $125,540 $109,753 $112,921
======= ===================================================
RATIO OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK DIVIDENDS 2.50x 2.45x 2.63x 2.47x 2.57x 2.58x
COMPUTATION OF PREFERRED DIVIDEND
REQUIREMENTS:
(a) Pre-tax income $215,425 $201,874 $221,915 $206,063 $186,690 $196,449
(b) Net income $127,369 $120,059 $138,327 $135,720 $132,777 $132,343
(c) Ratio of (a) to (b) 1.6913 1.6815 1.6043 1.5183 1.4060 1.4844
(d) Preferred dividends $ 15,794 $ 15,731 $ 16,442 $ 13,884 $ 10,039 $ 12,395
Preferred dividend requirements
[(d) multiplied by (c)] $ 26,713 $ 26,451 $ 26,377 $ 21,080 $ 14,115 $ 18,399
======= ===================================================
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<RESTATED>
<CIK> 0000081100
<NAME> PUGET SOUND POWER & LIGHT COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,272,005
<OTHER-PROPERTY-AND-INVEST> 199,814
<TOTAL-CURRENT-ASSETS> 248,198
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 501,803
<TOTAL-ASSETS> 3,221,820
<COMMON> 636,409
<CAPITAL-SURPLUS-PAID-IN> 328,963
<RETAINED-EARNINGS> 212,697
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,178,069
89,039
125,000
<LONG-TERM-DEBT-NET> 928,366
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 15,785
<LONG-TERM-DEBT-CURRENT-PORT> 143,003
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 742,558
<TOT-CAPITALIZATION-AND-LIAB> 3,221,820
<GROSS-OPERATING-REVENUE> 599,937
<INCOME-TAX-EXPENSE> 48,006
<OTHER-OPERATING-EXPENSES> 438,633
<TOTAL-OPERATING-EXPENSES> 486,639
<OPERATING-INCOME-LOSS> 113,298
<OTHER-INCOME-NET> 4,269
<INCOME-BEFORE-INTEREST-EXPEN> 117,567
<TOTAL-INTEREST-EXPENSE> 45,957
<NET-INCOME> 71,610
7,871
<EARNINGS-AVAILABLE-FOR-COMM> 63,739
<COMMON-STOCK-DIVIDENDS> 58,550
<TOTAL-INTEREST-ON-BONDS> 40,187
<CASH-FLOW-OPERATIONS> 150,186
<EPS-PRIMARY> 1.00
<EPS-DILUTED> 1.00
</TABLE>
