-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, goQtXl4IsdKptqGNRIaAigUQ4UbAaxtWMSLf0NXmWV8v7UJHg9Jrfp7+aawqu06O aIHnVmMfAjLud2qu+42WEg== 0000950168-95-000658.txt : 19950814 0000950168-95-000658.hdr.sgml : 19950814 ACCESSION NUMBER: 0000950168-95-000658 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DUKE POWER CO /NC/ CENTRAL INDEX KEY: 0000030371 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 560205520 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04928 FILM NUMBER: 95561176 BUSINESS ADDRESS: STREET 1: 422 S CHURCH ST CITY: CHARLOTTE STATE: NC ZIP: 28242-0001 BUSINESS PHONE: 7045940887 MAIL ADDRESS: STREET 1: 422 S CHURCH ST CITY: CHARLOTTE STATE: NC ZIP: 28242 10-Q 1 DUKE POWER COMPANY 10Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended June 30, 1995 DUKE POWER COMPANY 422 South Church Street Charlotte, North Carolina 28242-0001 704-594-0887 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended June 30, 1995 Commission File Number 1-4928 DUKE POWER COMPANY (Exact name of registrant as specified in its charter) North Carolina 56-0205520 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 422 South Church Street, Charlotte, N.C. 28242-0001 (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code 704-594-0887 No Change (Former name, former address and former fiscal year, if changed since last report) 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 issuer's classes of common stock, as of the latest practicable date. Number of shares of Common Stock, without par value, outstanding at June 30, 1995.................................... 204,859,339 shares DUKE POWER COMPANY INDEX
PAGE PART I. FINANCIAL INFORMATION Consolidated Statements of Income for the Three and Six Months Ended June 30, 1995 and 1994 2 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1995 and 1994 3 Consolidated Balance Sheets - June 30, 1995 and December 31, 1994 4-5 Consolidated Statements of Capitalization - June 30, 1995 and December 31, 1994 6 Notes to Consolidated Financial Statements 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 8-9 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders 9 Item 6. Exhibits and Reports on Form 8-K 9 SIGNATURES 10
Part I. FINANCIAL INFORMATION Item 1. CONSOLIDATED FINANCIAL STATEMENTS DUKE POWER COMPANY CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in Thousands)
Three Months Ended Six Months Ended June 30 June 30 1995 1994 1995 1994 Operating revenues $1,052,403 $1,083,310 $2,163,468 $2,182,312 Operating expenses Fuel used in electric generation 167,408 183,030 336,776 352,076 Net interchange and purchased power 121,897 139,980 236,156 276,494 Other operation and maintenance 324,363 339,799 606,493 627,311 Depreciation and amortization 113,700 116,166 226,435 232,239 General taxes 61,159 61,916 124,318 125,189 Total operating expenses 788,527 840,891 1,530,178 1,613,309 Operating Income 263,876 242,419 633,290 569,003 Interest expense and other income Interest expense (72,685) (66,166) (145,208) (130,636) Allowance for funds used during construction and other deferred returns 32,711 25,819 64,308 50,971 Other, net 2,160 8,055 4,208 7,528 Total interest expense and other income (37,814) (32,292) (76,692) (72,137) Income before income taxes 226,062 210,127 556,598 496,866 Income taxes 88,539 82,125 217,799 195,247 Net Income 137,523 128,002 338,799 301,619 Preferred and preference stock requirements 12,677 12,385 25,412 24,707 Earnings for common stock $ 124,846 $ 115,617 $ 313,387 $ 276,912 Common stock data Average common shares outstanding (thousands) 204,859 204,859 204,859 204,859 Earnings per share $ 0.61 $ 0.56 $ 1.53 $ 1.35 Dividends per share $ 0.49 $ 0.47 $ 0.98 $ 0.94
See Notes to Consolidated Financial Statements 2 DUKE POWER COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in Thousands)
Six Months Ended June 30 1995 1994 Cash flows from operating activities Net Income $ 338,799 $ 301,619 Adjustments to reconcile net income to net cash provided by operating activities: Non-cash items Depreciation and amortization 332,291 314,974 Deferred income taxes and investment tax credit amortization 12,165 59,114 Allowance for equity funds used during construction (12,228) (11,881) Purchased capacity levelization (28,637) (124,366) Other, net 42,387 4,284 (Increase) Decrease in Accounts receivable 6,834 512 Inventory (31,294) (10,100) Prepayments 179 3,291 Increase (Decrease) in Accounts payable (81,323) (94,902) Taxes accrued (4,233) (16,508) Interest accrued and other liabilities (22,047) (10,858) Total adjustments 214,094 113,560 Net cash provided by operating activities 552,893 415,179 Cash flows from investing activities Construction expenditures and other property additions (375,915) (353,931) External funding for decommissioning (28,235) (26,262) Investment in nuclear fuel (17,416) (41,490) Investment in joint ventures (35,280) 1,505 Net change in investment securities 15,463 21,342 Net cash used in investing activities (441,383) (398,836) Cash flows from financing activities Proceeds from the issuance of First and refunding mortgage bonds 77,415 144,390 Short-term notes payable, net 138,000 54,400 Construction loans and other 18,250 6,192 Payments for the redemption of First and refunding mortgage bonds (116,976) - Preferred stock (2,926) (1,500) Construction loans and other (5,990) (2,051) Dividends paid (226,070) (217,692) Other (751) (3,606) Net cash used in financing activities (119,048) (19,867) Net increase (decrease) in cash (7,538) (3,524) Cash at beginning of period 37,430 33,812 Cash at end of period $ 29,892 $ 30,288
See Notes to Consolidated Financial Statements 3 DUKE POWER COMPANY CONSOLIDATED BALANCE SHEETS (Dollars in Thousands)
June 30 December 31 1995 1994 (Unaudited) ASSETS Current assets Cash $ 29,892 $ 37,430 Short-term investments 82,941 132,692 Receivables (less allowance for losses: 1995 - $6,402; 1994 - $6,637) 546,031 552,865 Inventory - at average cost 354,633 319,385 Prepayments and other 15,543 15,722 Total current assets 1,029,040 1,058,094 Investments and other Investments in joint ventures 143,610 108,330 Other investments, at cost or less 117,514 83,226 Nuclear decommissioning trust funds 223,980 172,390 Pre-funded pension cost 80,000 80,000 Total investments and other assets 565,104 443,946 Property, plant and equipment Electric plant in service (at original cost) Production 6,975,395 6,747,397 Transmission 1,453,222 1,439,435 Distribution 4,046,887 3,965,393 Other 1,037,701 1,020,192 Electric plant in service 13,513,205 13,172,417 Less accumulated depreciation and amortization 4,995,135 4,810,004 Electric plant in service, net 8,518,070 8,362,413 Nuclear fuel 750,395 757,983 Less accumulated amortization 463,579 415,560 Nuclear fuel, net 286,816 342,423 Construction work in progress (including nuclear fuel in process: 1995 - $32,361; 1994 - $52,273) 484,209 558,730 Total electric plant, net 9,289,095 9,263,566 Other property - at cost (less accumulated depreciation: 1995 - $26,566; 1994 - $24,137) 314,173 302,383 Total property, plant and equipment, net 9,603,268 9,565,949 Deferred debits Purchased capacity costs 960,961 932,324 Debt expense, primarily refinancing costs, being amortized over the terms of related debt 186,543 186,306 Regulatory asset related to income taxes 490,417 489,292 Regulatory asset related to DOE assessment fee 107,670 102,467 Other 90,318 83,850 Total deferred debits 1,835,909 1,794,239 Total assets $13,033,321 $12,862,228
See Notes to Consolidated Financial Statements 4 DUKE POWER COMPANY CONSOLIDATED BALANCE SHEETS (Dollars in Thousands)
June 30 December 31 1995 1994 (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 233,094 $ 343,688 Notes payable 245,100 107,100 Taxes accrued 25,765 29,999 Interest accrued 71,373 72,157 Current maturities of long-term debt and preferred stock 51,697 93,759 Other 100,422 121,539 Total current liabilities 727,451 768,242 Long-term debt (Note 4) 3,587,859 3,567,122 Accumulated deferred income taxes 2,369,673 2,348,631 Deferred credits and other liabilities Investment tax credit 266,976 272,594 DOE assesssment fee 107,670 102,467 Nuclear decommissioning costs externally funded 223,980 172,390 Other 326,299 318,453 Total deferred credits and other liabilities 924,925 865,904 Preferred and preference stock with sinking fund requirements (Note 4) 278,029 279,500 Preferred and preference stock without sinking fund requirements (Note 4) 500,000 500,000 Common stockholders' equity Common stock, no par 1,926,909 1,926,909 Retained earnings 2,718,475 2,605,920 Total common stockholders' equity 4,645,384 4,532,829 Total liabilities and stockholders' equity $13,033,321 $12,862,228
See Notes to Consolidated Financial Statements 5 DUKE POWER COMPANY CONSOLIDATED STATEMENTS OF CAPITALIZATION (Dollars in Thousands)
June 30 December 31 1995 1994 (Unaudited) Common Stock Equity Common stock, no par, 300,000,000 shares authorized; 204,859,339 shares outstanding for 1995 and 1994 $1,926,909 $1,926,909 Retained earnings 2,718,475 2,605,920 Total common stock equity 4,645,384 4,532,829 Preferred and preference stock (At June 30, 1995 and December 31, 1994 12,500,000 shares of preferred stock, 10,000,000 shares of preferred stock A, and 1,500,000 shares of preference stock were authorized with or without sinking fund requirements) Without sinking fund requirements 500,000 500,000 With sinking fund requirements 279,500 281,000 Less preferred shares reacquired for current sinking fund requirements (15,000 shares at cost) (1,471) - Less current sinking fund requirements - (1,500) Subtotal preferred and preference stock with sinking fund requirements 278,029 279,500 Total preferred and preference stock 778,029 779,500 Long-term debt First and refunding mortgage bonds 3,406,669 3,440,505 Capitalized leases 25,289 26,039 Other long-term debt 130,000 130,000 Unamortized debt discount and premium, net (60,417) (62,918) Current maturities of long-term debt (45,004) (81,926) Subtotal long-term debt 3,456,537 3,451,700 Subsidiary long-term debt Crescent Resources, Inc. 104,574 92,102 Nantahala Power and Light Company 33,440 33,653 Current maturities of long-term debt (6,692) (10,333) Subtotal subsidiary long-term debt 131,322 115,422 Total consolidated long-term debt 3,587,859 3,567,122 Total capitalization $ 9,011,272 $ 8,879,451
See Notes to Consolidated Financial Statements 6 DUKE POWER COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Total income taxes paid for the quarter ended June 30 were $207,499,000 and $116,598,000 for 1995 and 1994, respectively. For the six months ended June 30, 1995 and 1994, income taxes paid were $220,085,000 and $169,403,000, respectively. Interest paid, net of amounts capitalized, for the quarter ended June 30 was $61,979,000 and $47,712,000 for 1995 and 1994, respectively. For the six months ending June 30, 1995 and 1994, interest paid was $129,570,000 and $113,338,000, respectively. 2. The North Carolina Statute allowing rate adjustments for past over- or under- recovery of fuel costs was set to expire in 1997. The North Carolina legislature repealed this expiration provision in March 1995. 3. The Company is involved in legal, tax and regulatory proceedings before various courts, regulatory commissions and governmental agencies regarding matters arising in the ordinary course of business, some of which involve substantial amounts. Where appropriate, the Company has made accruals in accordance with Statement of Financial Accounting Standards No. 5 "Accounting for Contingencies," in order to provide for such matters. Management is of the opinion that the final disposition of these proceedings will not have a material adverse effect on the results of operations or the financial position of the Company. 4. The carrying amounts and estimated fair values of long-term debt and preferred stock are listed below in thousands of dollars. The majority of estimated fair value amounts were obtained from independent parties. Judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates determined as of June 30, 1995 and December 31, 1994, are not necessarily indicative of the amounts the Company could have realized in current market exchanges.
June 30, 1995 December 31, 1994 Carrying Amount Fair Value Carrying Amount Fair Value Long-term debt $ 3,674,683 $ 3,677,000 $ 3,696,260 $ 3,392,000 Preferred stock $ 778,029 $ 770,000 $ 781,000 $ 697,000
5. In the Consolidated Statements of Income and Consolidated Statements of Cash Flows, certain prior period information has been reclassified to conform with current classifications. 6. These are quarterly financial statements and the amounts reported in the Consolidated Statements of Income are not necessarily indicative of amounts expected for the respective years. These amounts may be affected by seasonal temperature variations, timing of scheduled and unscheduled maintenance of certain electric generating units, and the Company's policy of accruing estimates for certain other expenses ratably over twelve months until final amounts are determined. 7. In the opinion of the Company, the accompanying financial statements contain all adjustments necessary to present fairly the financial position of Duke Power Company as of the respective dates shown and the results of its operations for the respective periods then ended. 7 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES During the period January 1, 1995 through June 30, 1995, additions to property (including nuclear fuel) of $372 million and retirements of $99 million resulted in a net increase in gross plant of $273 million. The Company is building a combustion turbine facility in Lincoln County, North Carolina to provide capacity at periods of peak demand. During the first six months of 1995, four units of the Lincoln Combustion Turbine Station began commercial operation. An additional two units began commercial operation on July 18, 1995. Current plans call for another 6 units to begin commercial operation during 1995, with the remaining 4 units to come on line in 1996. The estimated total cost of the project is approximately $500 million. The Company normally experiences seasonal peak loads in the summer and winter which are relatively in balance. On July 25, 1995, the Company experienced a new all-time peak load of 16,139. The Company's peak load includes the load of the other joint owners of the Catawba Nuclear Station (the Other Catawba Joint Owners) and excludes the load of Nantahala Power and Light Company. Fixed charges coverage for the twelve months ended June 30, 1995, using the SEC method, was 474 times Internal cash generation for the twelve months ended June 30, 1995 was 69 percent. The Company is involved in legal, tax and regulatory proceedings before various courts, regulatory commissions and governmental agencies regarding matters arising in the ordinary course of business, some of which involve substantial amounts. Where appropriate, the Company has made accruals in accordance with Statement of Financial Accounting Standards No. 5 "Accounting for Contingencies," in order to provide for such matters. Management is of the opinion that the final disposition of these proceedings will not have a material adverse effect on the results of operations or the financial position of the Company. As a result of favorable market conditions, in April 1995 the Company issued $78 million in medium-term notes, the proceeds of which were used to refinance higher cost long-term debt. In addition, the Company reacquired 30,000 shares of its 7.12% Series Q Preferred Stock to satisfy sinking fund requirements, including 15,000 shares for current sinking fund requirements. RESULTS OF OPERATIONS Earnings per share for the second quarter and year-to-date June 1995 were $0.61 and $1.53, respectively, up 8.9% and 13.3% compared to the same periods in 1994. Revenues for second quarter and year-to-date June 1995 decreased by $30.9 and $18.8 million, respectively, when compared to the same periods in 1994. Total sales decreased 3.4% from the second quarter 1994 primarily due to lower sales to the Company's wholesale and other customers. This decrease was partially offset by increases in billed retail sales. For the second quarter, billed retail sales were up 3.3%. Residential sales were up 2.3% and general service sales were up 4.7%. Textile sales were up 1.2%, with overall industrial sales up 3%. For year-to-date June 1995, total revenues decreased primarily due to lower sales to the Company's wholesale and other customers. This decrease was partially offset by contributions from the Associated Enterprises Group business units. Fuel expense for second quarter and year-to-date June 1995 decreased by $15.6 and $15.3 million, respectively, compared to the same periods during 1994. These decreases were primarily due to higher levels of nuclear generation as a percentage of total generation. Net interchange and purchased power expense decreased $18.1 and $40.3 million for second quarter and year-to-date June 1995, respectively, compared to the same periods in 1994. These decreases were primarily due to decreases in purchased capacity from the Other Catawba Joint Owners. Operating and maintenance expenses decreased $15.4 million for the second quarter 1995 compared to the same period in 1994. This 4.5% decrease was primarily due to costs booked in the second quarter of 1994 associated with employees electing to terminate employment under the Company's Enhanced Voluntary Separation (EVS) program. A write-off of capitalized system development costs along with higher nuclear operating and maintenance expenses partially offset this decrease. Year-to-date June 1995 operating and maintenance expenses decreased $20.8 million compared to the same period in 1994. The 1994 EVS costs along with reduced fossil maintenance expenses contributed to this decrease. Costs incurred in connection with the increased activity of the Associated Enterprises Group business units partially offset this year-to-date decrease. Interest expense for second quarter and year-to-date June 1995 increased $6.5 and $14.6 million, respectively, compared to the same periods in 1994. These increases were primarily due to the issuance of additional long-term debt in 1994. Allowance for funds used during construction (AFUDC) and other deferred returns increased $6.9 and $13.3 million for the second quarter and year-to-date June 1995, respectively, compared to the same periods during 1994. These increases were largely due to the accrued return on the deferred purchased capacity costs along with additional AFUDC associated with the increased investment in the Lincoln Combustion Turbine project. PART II OTHER INFORMATION ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the Company's Annual Meeting of Shareholders on April 27, 1995, the shareholders of the Company elected Steve C. Griffith, Jr., Paul H. Henson, W.W. Johnson, Buck Mickel and Russell M. Robinson, II as Class I directors to serve until the Annual Meeting of Shareholders to be held in 1998, or until their successors are elected and qualified. The shareholders also voted to ratify the selection of Deloitte & Touche to act as independent auditors to make an examination of the Company's accounts for the year 1995. ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K (A) Exhibits (27) Financial Data Schedule (included in electronic filing only) (B) Reports on Form 8-K The Company filed no Form 8-K reports during the second quarter of 1995 9 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. DUKE POWER COMPANY Date: August 9, 1995 _________________________________________________ Richard J. Osborne Senior Vice President and Chief Financial Officer Date: August 9, 1995 _________________________________________________ Jeffrey L. Boyer Controller 10 EX-27 2 EXHIBIT 27
UT THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED STATEMENTS OF INCOME, CONSOLIDATED STATEMENTS OF CASH FLOWS, CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF CAPITALIZATION FOR THE 3 MONTHS ENDED 06/30/95 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000030371 DUKE POWER COMPANY 1000 YEAR DEC-31-1994 APR-01-1995 JUN-30-1995 PER-BOOK 9289095 879277 1029040 1835909 0 13033321 1926909 0 2718475 4645384 278029 500000 3587859 245100 0 0 51697 0 23585 1704 1355579 13033321 1052403 88539 788527 877066 263876 34871 210208 72685 137523 12677 124846 100380 57757 552893 .61 0
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