-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SgtYmY171KHFMYOdGKPTUgcfegQtl9Pv/A8nrX5zMTl+GsFNk4tT63I2MQj4xpbE /DXcVvzAeOJUKb/5Act8Vw== 0000950168-95-001011.txt : 19951119 0000950168-95-001011.hdr.sgml : 19951119 ACCESSION NUMBER: 0000950168-95-001011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 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: 95590573 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 10-Q 40717 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 September 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 September 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 (check mark) 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 September 30, 1995 ..... 204,859,339 shares DUKE POWER COMPANY INDEX
PAGE PART I. FINANCIAL INFORMATION Consolidated Statements of Income for the Three and Nine Months Ended September 30, 1995 and 1994........ 2 Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 1995 and 1994............... 3 Consolidated Balance Sheets - September 30, 1995 and December 31, 1994................................... 4-5 Consolidated Statements of Capitalization - September 30, 1995 and December 31, 1994...................... 6 Notes to Consolidated Financial Statements............................................................... 7-8 Management's Discussion and Analysis of Financial Condition and Results of Operations.................... 9-11 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders.............................................. 11 Item 6. Exhibits and Reports on Form 8-K................................................................. 11 SIGNATURES............................................................................................... 12
Part 1. FINANCIAL INFORMATION Item 1. CONSOLIDATED FINANCIAL STATEMENTS DUKE POWER COMPANY CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in Thousands)
Three Months Ended Nine Months Ended September 30 September 30 1995 1994 1995 1994 Operating revenues $ 1,379,978 $ 1,272,525 $ 3,543,446 $ 3,454,837 Operating expenses Fuel used in electric generation 222,689 198,198 559,465 550,274 Net interchange and purchased power 122,287 146,373 358,443 422,867 Other operation and maintenance 348,307 317,180 954,800 944,491 Depreciation and amortization 115,055 115,903 341,490 348,142 General taxes 67,133 64,010 191,451 189,199 Total operating expenses 875,471 841,664 2,405,649 2,454,973 Operating Income 504,507 430,861 1,137,797 999,864 Interest expense and other income Interest expense (72,119) (68,959) (217,327) (199,595) Allowance for funds used during construction and other deferred returns 31,328 28,693 95,636 79,664 Other, net 3,426 4,191 7,634 11,719 Total interest expense and other income (37,365) (36,075) (114,057) (108,212) Income before income taxes 467,142 394,786 1,023,740 891,652 Income taxes 181,942 151,045 399,741 346,292 Net Income 285,200 243,741 623,999 545,360 Preferred and preference stock requirements 12,409 12,472 37,821 37,179 Earnings for common stock $ 272,791 $ 231,269 $ 586,178 $ 508,181 Common stock data Average common shares outstanding (thousands) 204,859 204,859 204 859 204,859 Earnings per share $ 1.33 $ 1.13 $ 2.86 $ 2.48 Dividends per share $ 0.51 $ 0.49 $ 1.49 $ 1.43 See Notes to Consolidated Financial Statements 2 DUKE POWER COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in Thousands)
Nine Months Ended September 30 1995 1994 Cash flows from operating activities Net Income $ 623,999 $ 545,360 Adjustments to reconcile net income to net cash provided by operating activities: Non-cash items Depreciation and amortization 499,998 480,562 Deferred income taxes and investment tax credit amortization 21,780 102,500 Allowance for equity funds used during construction (18,200) (19,062) Purchased capacity levelization (31,011) (140,968) Other, net 18,490 (1,325) (Increase) Decrease in Accounts receivable (70,988) 10,490 Inventory. 5,039 (13,955) Prepayments (2,279) 1,967 Increase (Decrease) in Accounts payable (65,313) (128,769) Taxes accrued 82,656 29,482 Interest accrued and other liabilities (24,028) (10,079) Total adjustments 416,144 310,843 Net cash provided by operating activities 1,040,143 856,203 Cash flows from investing activities Construction expenditures and other property additions (545,443) (553,992) External funding for decommissioning (42,353) (39,393) Investment in nuclear fuel (31,209) (67,674) Investment in joint ventures (43,645) (312) Net change in investment securities 25,626 3,190 Net cash used in investing activities (637,024) (658,181) Cash flows from financing activities Proceeds from the issuance of First and refunding mortgage bonds 173,839 144,390 Short-term notes payable, net (52,900) (12,900) Construction loans and other 30,983 27,205 Payments for the redemption of First and refunding mortgage bonds (117,065) (81) Preferred stock (100,516) (1,500) Construction loans and other (7,792) (9,013) Dividends paid (330,306) (330,550) Other (1,140) (3,960) Net cash used in financing activities (404,897) (186,409) Net increase (decrease) in cash (1,778) 11,613 Cash at beginning of period 37,430 33,812 Cash at end of period $ 35,652 $ 45,425 See Notes to Consolidated Financial Statements 3 DUKE POWER COMPANY CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in Thousands)
September 30 December 31 1995 1994 ASSETS Current assets Cash $ 35,652 $ 37,430 Short-term investments 100,422 132,692 Receivables (less allowance for losses: 1995 - $6,708;1994 - $6,637) 623,853 552,865 Inventory - at average cost 320,277 319,385 Prepayments and other 18,000 15,722 Total current assets 1,098,204 1,058,094 Investments and other assets Investments in joint ventures 151,975 108,330 Other investments, at cost or less 89,871 83,226 Nuclear decommissioning trust funds 248,346 172,390 Pre-funded pension cost 80,000 80,000 Total investments and other assets 570,192 443,946 Property, plant and equipment Electric plant in service (at original cost) Production 7,062,774 6,747,397 Transmission 1,483,778 1,439,435 Distribution 4,074,967 3,965,393 Other 1,036,097 1,020,192 Electric plant in service 13,657,616 13,172,417 Less accumulated depreciation and amortization 5,062,804 4,810,004 Electric plant in service, net 8,594,812 8,362,413 Nuclear fuel 704,769 757,983 Less accumulated amortization 458,362 415,560 Nuclear fuel, net 246,407 342,423 Construction work in progress (including nuclear fuel in process: 1995 - $38,977; 1994 - $52,273) 454,118 558,730 Total electric plant, net 9,295,337 9,263,566 Other property - at cost (less accumulated depreciation: 1995 - $27,854; 1994 - $24,137) 344,121 302,383 Total property, plant and equipment, net 9,639,458 9,565,949 Deferred debits Purchased capacity costs 963,335 932,324 Debt expense, primarily refinancing costs, being amortized over the terms of related debt 183,726 186,306 Regulatory asset related to income taxes 490,822 489,292 Regulatory asset related to DOE assessment fee 107,670 102,467 Other 123,544 83,850 Total deferred debits 1,869,097 1,794,239 Total assets $ 13,176,951 $ 12,862,228
See Notes to Consolidated Financial Statements 4 DUKE POWER COMPANY CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in Thousands)
September 30 December 31 1995 1994 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 251,295 $ 343,688 Notes payable 54,200 107,100 Taxes accrued 112,655 29,999 Interest accrued 70,887 72,157 Current maturities of long-term debt and preferred stock 52,565 93,759 Other 111,534 121,539 Total current liabilities 653,136 768,242 Long-term debt (Note 4) 3,695,018 3,567,122 Accumulated deferred income taxes 2,382,216 2,348,631 Deferred credits and other liabilities Investment tax credit 264,167 272,594 DOE assesssment fee 107,670 102,467 Nuclear decommissioning costs externally funded 248,346 172,390 Other 332,269 318,453 Total deferred credits and other liabilities 952,452 865,904 Preferred and preference stock with sinking fund requirements (Note 4) 234,000 279,500 Preferred and preference stock without sinking fund requirements (Note 4) 450,000 500,000 Common stockholders' equity Common stock, no par 1,926,909 1,926,909 Retained earnings 2,883,220 2,605,920 Total common stockholders' equity 4,810,129 4,532,829 Total liabilities and stockholders' equity $ 13,176,951 $ 12,862,228
See Notes to Consolidated Financial Statements 5 DUKE POWER COMPANY CONSOLIDATED STATEMENTS OF CAPITALIZATION (Unaudited) (Dollars in Thousands)
September 30 December 31 1995 1994 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 2,883,220 2,605,920 Total common stock equity 4,810,129 4,532,829 Preferred and preference stock (At September 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 450,000 500,000 With sinking fund requirements 234,000 281,000 Less current sinking fund requirements -- (1,500) Subtotal preferred and preference stock with sinking fund requirements 234,000 279,500 Total preferred and preference stock 684,000 779,500 Long-term debt First and refunding mortgage bonds 3,506,581 3,440,505 Capitalized leases 24,900 26,039 Other long-term debt 130,000 130,000 Unamortized debt discount and premium, net (62,843) (62,918) Current maturities of long-term debt (45,053) (81,926) Subtotal long-term debt 3,553,585 3,451,700 Subsidiary long-term debt Crescent Resources, Inc 115,507 92,102 Nantahala Power and Light Company 33,438 33,653 Current maturities of long-term debt (7,512) (10,333) Subtotal subsidiary long-term debt 141,433 115,422 Total consolidated long-term debt 3,695,018 3,567,122 Total capitalization $ 9,189,147 $ 8,879,451 6
See Notes to Consolidated Financial Statements DUKE POWER COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Total income taxes paid for the quarter ended September 30 were $116,370,000 and $91,706,000 for 1995 and 1994, respectively. For the nine months ended September 30, 1995 and 1994, income taxes paid were $336,456,000 and $261,109,000, respectively. Interest paid, net of amounts capitalized, for the quarter ended September 30 was $65,510,000 and $68,988,000 for 1995 and 1994, respectively. For the nine months ending September 30, 1995 and 1994, interest paid, net of amounts capitalized, was $195,080,000 and $182,326,000, 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 and North Carolina Municipal Power Agency Number 1 (NCMPA) and Piedmont Municipal Power Agency (PMPA), two of the four other joint owners of the Catawba Nuclear Station, entered into a settlement in September 1995 which, if approved by regulators, will resolve outstanding issues related to how certain calculations affecting bills under the Catawba joint ownership contractual agreements should be performed. As part of the settlement, the Company agreed to purchase additional megawatts (MW) of Catawba capacity during the period 1996 through 1999 and remove certain restrictions related to sales of surplus energy by these two joint owners. The additional capacity purchases are 215 MW in 1996, 165 MW in 1997, 120 MW in 1998 and 100 MW in 1999. If approved by regulators, the Company expects to recover a substantial portion of the costs associated with this settlement as part of the purchased capacity levelization consistent with prior orders of the retail regulatory commissions. Therefore, the Company believes the ultimate resolution of these matters should not have a material adverse effect on the results of operations or the financial position of the Company. 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 September 30, 1995 and December 31, 1994, are not necessarily indicative of the amounts the Company could have realized in current market exchanges.
September 30, 1995 December 31, 1994 Carrying Amount Fair Value Carrying Amount Fair Value Long-term debt $ 3,785,526 $ 3,774,000 $ 3,696,260 $ 3,392,000 Preferred stock $ 684,000 $ 682,000 $ 781,000 $ 697,000
7 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 adjustments of a normal recurring nature such that the financial statements present fairly the financial position of the Company as of the respective dates shown and the results of its operations for the respective periods then ended. 8 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 September 30, 1995, additions to property (including nuclear fuel) of $531 million and retirements of $158 million resulted in a net increase in gross plant of $373 million. The Company is building a combustion turbine facility in Lincoln County, North Carolina to provide capacity during periods of peak demand. During the first six months of 1995, four units of the Lincoln Combustion Turbine Station began commercial operation. An additional four units began commercial operation in the third quarter, two units on July 18, 1995 and two units on September 1, 1995. Current plans call for another four units to begin commercial operation during 1995, with the remaining four units to come on line in 1996. The estimated total cost of the project is approximately $500 million. The Company and North Carolina Municipal Power Agency Number 1 (NCMPA) and Piedmont Municipal Power Agency (PMPA), two of the four other joint owners of the Catawba Nuclear Station, entered into a settlement in September 1995 which, if approved by regulators, will resolve outstanding issues related to how certain calculations affecting bills under the Catawba joint ownership contractual agreements should be performed. As part of the settlement, the Company agreed to purchase additional megawatts (MW) of Catawba capacity during the period 1996 through 1999 and remove certain restrictions related to sales of surplus energy by these two joint owners. The additional capacity purchases are 215 MW in 1996, 165 MW in 1997, 120 MW in 1998 and 100 MW in 1999. If approved by regulators, the Company expects to recover a substantial portion of the costs associated with this settlement as part of the purchased capacity levelization consistent with prior orders of the retail regulatory commissions. Therefore, the Company believes the ultimate resolution of these matters should not have a material adverse effect on the results of operations or the financial position of the Company. 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. The Federal Energy Regulatory Commission (FERC) on October 6, 1995 issued an order accepting the Company's open access transmission tariff, ordering a hearing on the rates for transmission service under the tariff, and denying the application filed by both the Company and its affiliates for authorization to sell power at market-based rates, without prejudice to the later submittal of such applications. The FERC stated that the non-rate terms and conditions in the Company's proposed transmission tariff are not consistent with the pro forma tariff in the Open Access Notice of Proposed Rulemaking (NOPR). On October 17, 1995, the Company refiled the transmission tariff and applications for market-based rates. In addition, the Company requested a rehearing of the October 6, 1995 FERC order. The Company has announced that it will reduce its workforce by 900 to 1,000 employees. Such reduction represents approximately 5 percent of its 16,100 employees and will occur by the end of the first quarter of 1996. Termination benefits associated with the reduction will result in a charge of approximately $50 million, depending on the specific employees impacted, which will be recorded in the fourth quarter of 1995. 9 The Company normally experiences seasonal peak loads in the summer and winter which are relatively in balance. On August 14, 1995, the Company experienced a new all-time peak load of 16,706. 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 September 30, 1995, using the SEC method, was 4.93 times. Internal cash generation for the twelve months ended September 30, 1995 was 70 percent. The Company reacquired 30,000 shares of its 7.12% Series Q Preferred Stock to satisfy sinking fund requirements in January 1995, including 15,000 shares for current sinking fund requirements. As a result of favorable market conditions, the Company issued $78 million in April 1995 in medium-term notes, the proceeds of which were used to refinance higher cost long-term debt. In August 1995, the Company issued $100 million in long-term debt. Also in August 1995, the Company retired 440,000 shares of 7.50% Series Q Preferred Stock and 500,000 shares of Adjustable Rate Series A Preferred Stock. Results Of Operations Earnings per share for the third quarter and year-to-date September 1995 were $1.33 and $2.86, respectively, up 17.7% and 15.3% compared to the same periods in 1994. Revenues for third quarter and year-to-date September 1995 increased by $107.5 and $88.6 million, respectively, when compared to the same periods in 1994. Total sales increased 6.5% from the third quarter 1994 primarily due to higher sales to the Company's residential and general service customers. Residential sales were up 9.3%, and general service sales were up 6.2% resulting from warm summer weather. Textile sales were down 2.8%, with overall industrial sales up 1%. For year-to-date September 1995, total revenues increased primarily due to higher sales to the Company's residential, general service, textile, and other industrial customers. The Associated Enterprises Group business units also contributed to this increase, primarily due to increased land sales by the Company's real estate subsidiary, Crescent Resources, Inc. Fuel expense for third quarter and year-to-date September 1995 increased by $24.5 and $9.2 million, respectively, compared to the same periods during 1994. These increases were attributable to increased production. The year-to-date increase was partially offset by higher levels of nuclear generation as a percentage of total generation. Net interchange and purchased power expense decreased $24.1 and $64.4 million for third quarter and year-to-date September 1995, respectively, compared to the same periods in 1994. These decreases were primarily due to a decline in power purchased from the Other Catawba Joint Owners. Operating and maintenance expenses increased $31.1 million for the third quarter 1995 compared to the same period in 1994. This 9.8% increase was primarily due to increased distribution costs for right of way maintenance and service reliability and the timing of an annual payment to FERC. Year-to-date September 1995 operating and maintenance expenses increased $10.3 million compared to the same period in 1994. Higher distribution costs and costs incurred in connection with the increased activity of the Associated Enterprises Group business units also contributed to this year-to-date increase. Interest expense for third quarter and year-to-date September 1995 increased $3.2 and $17.7 million, respectively, compared to the same periods in 1994. These increases were primarily due to the issuance of additional long-term debt in 1994. 10 Allowance for funds used during construction (AFUDC) and other deferred returns increased $2.6 and $16.0 million for the third quarter and year-to-date September 1995, respectively, compared to the same periods during 1994. These increases were largely due to the accrued return on the deferred purchased capacity costs. PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of the security holders of the Company during the third quarter of 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 third quarter of 1995. 11 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: November 10, 1995 ______________________________________ Richard J. Osborne Senior Vice President and Chief Financial Officer Date: November 10, 1995 ______________________________________ Jeffrey L. Boyer Controller 12 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 09/30/95 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000030371 DUKE POWER COMPANY 1000 YEAR DEC-31-1994 JUL-01-1995 SEP-30-1995 PER-BOOK 9295337 914313 1098204 1869097 0 13176951 1926909 0 2883220 4810129 234000 450000 3695018 54200 0 0 52565 0 26653 1753 1498823 13176951 1379978 181942 875471 1057413 504507 34754 357319 72119 285200 12409 272791 104478 58116 1040143 1.33 0
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