-----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, Hb8fuJgHKb5zu7PoNoiAH8ajCF29SMaCXMRrbLi4geXE37IrNTOrzfJXuSqaX14w E7izuo8FRFtk0m0/yRgFDA== 0000051720-94-000008.txt : 19940511 0000051720-94-000008.hdr.sgml : 19940511 ACCESSION NUMBER: 0000051720-94-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940506 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERSTATE POWER CO CENTRAL INDEX KEY: 0000051720 STANDARD INDUSTRIAL CLASSIFICATION: 4931 IRS NUMBER: 420329500 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03632 FILM NUMBER: 94526514 BUSINESS ADDRESS: STREET 1: 1000 MAIN ST STREET 2: PO BOX 769 CITY: DUBUQUE STATE: IA ZIP: 52004-0769 BUSINESS PHONE: 3195825421 10-Q 1 FORM 10-Q REPORT FOR FIRST QUARTER 1994 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 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 March 31, 1994 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 Number 1-3632 INTERSTATE POWER COMPANY (Exact name of registrant as specified in its charter) DELAWARE 42-0329500 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1000 Main Street, P.O. Box 769, Dubuque, Iowa 52004-0769 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 319-582-5421 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. Shares Outstanding May 1, 1994 Common Stock Par Value $3.50 Per Share 9,442,139 Shares INTERSTATE POWER COMPANY STATEMENTS OF INCOME Three Months Ended March 31 1994 1993 (In Thousands) OPERATING REVENUES: Electric $ 62,375 $ 62,682 Gas 23,200 22,307 85,575 84,989 OPERATING EXPENSES: Operation: Fuel for electric generation 15,594 14,833 Power purchased 11,553 12,779 Cost of gas sold 13,011 12,727 Other operating expenses 12,206 12,303 Maintenance 3,528 4,002 Depreciation 6,861 6,647 Income taxes: Federal currently payable 3,506 3,827 State currently payable 1,040 1,184 Deferred taxes-net 1,171 154 Investment tax credit amortization (257) (257) Property and other taxes 4,311 4,373 Total operating expenses 72,524 72,572 OPERATING INCOME 13,051 12,417 OTHER INCOME AND DEDUCTIONS: Allowance for equity funds used during construction 7 4 Interest income 46 97 Miscellaneous 177 (70) Income taxes (92) (11) Total other income and deductions 138 20 INCOME BEFORE INTEREST CHARGES 13,189 12,437 INTEREST CHARGES: Long-term debt 3,843 3,917 Other interest charges 122 152 Allowance for borrowed funds used during construction (27) (21) Total interest charges 3,938 4,048 NET INCOME 9,251 8,389 PREFERRED AND PREFERENCE STOCK DIVIDENDS 613 729 NET INCOME AVAILABLE FOR COMMON STOCK $ 8,638 $ 7,660 AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 9,401 9,298 EARNINGS PER COMMON SHARE OUTSTANDING $ .91 $ .82 DIVIDENDS PAID PER COMMON SHARE $ .52 $ .52 The accompanying Notes to Financial Statements are an integral part of these statements. INTERSTATE POWER COMPANY BALANCE SHEETS ASSETS Mar. 31 Dec. 31 1994 1993 (In Thousands) UTILITY PLANT (at original cost) $851,239 $846,294 Less accumulated provision for depreciation 364,579 358,330 Utility plant - net 486,660 487,964 OTHER PROPERTY AND INVESTMENTS 709 825 CURRENT ASSETS: Cash and cash equivalents 1,872 3,083 Accounts receivable less reserve 27,627 26,060 Inventories - at average cost: Fuel 9,703 22,985 Materials and supplies 5,227 4,720 Prepaid income tax 7,932 7,994 Other prepayments and current assets 8,293 5,298 Total current assets 60,654 70,140 DEFERRED DEBITS: Regulatory assets for deferred income taxes 27,243 27,026 Deferred energy efficiency costs 10,443 9,666 Other 9,593 8,740 Total deferred debits 47,279 45,432 TOTAL $595,302 $604,361 The accompanying Notes to Financial Statements are an integral part of these statements. INTERSTATE POWER COMPANY BALANCE SHEETS CAPITALIZATION AND LIABILITIES Mar. 31 Dec. 31 1994 1993 (In Thousands) CAPITALIZATION: Common stock, par value $3.50 per share; Authorized - 30,000,000 shares; issued and outstanding - 9,435,925 in 1994 and 9,389,841 in 1993 $ 33,026 $ 32,865 Additional paid-in capital 100,676 99,547 Retained earnings 61,147 57,397 Total common equity 194,849 189,809 Preferred stock, par value $50 per share 34,679 34,656 Total stockholders' equity 229,528 224,465 Long-term debt 203,188 203,170 Total capitalization 432,716 427,635 CURRENT LIABILITIES: Commercial paper payable 2,500 20,100 Accounts payable 10,093 11,733 Payroll, interest and taxes accrued 26,810 21,857 Other 9,607 10,933 Total current liabilities 49,010 64,623 DEFERRED CREDITS AND OTHER NON-CURRENT LIABILITIES: Accumulated deferred income taxes 83,764 82,438 Accumulated deferred investment tax credits 19,840 20,097 Other 9,972 9,568 Total deferred credits and other non-current liabilities 113,576 112,103 TOTAL $595,302 $604,361 The accompanying Notes to Financial Statements are an integral part of these statements. INTERSTATE POWER COMPANY STATEMENTS OF CASH FLOWS Three Months Ended March 31 1994 1993 (In Thousands) RECONCILIATION OF NET INCOME TO CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 9,251 $ 8,389 Adjustment for non-cash items: Depreciation 6,861 6,647 Deferred income taxes 1,109 657 Investment tax credit amortization (257) (257) Allowance for equity funds used during construction (7) (4) Deferred pension cost 23 0 Changes in assets and liabilities: Accounts receivable - net (1,567) (1,756) Fuel 13,404 9,321 Materials and supplies (507) (355) Accounts payable and other current liabilities (2,289) 1,457 Accrued and prepaid taxes 2,496 1,607 Interest accrued 1,707 (342) Other prepayments and current assets (3,005) (1,882) Rate refund payable 0 (4,062) Deferred energy conservation costs (777) (582) Other operating activities 3 567 Cash flows from operating activities 26,445 19,405 CASH FLOWS FROM INVESTING ACTIVITIES: Additions to utility plant (5,778) (6,540) Allowance for borrowed funds used during construction (27) (21) Other (60) (240) Cash flows from investing activities (5,865) (6,801) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of common stock 1,299 0 Retirement of long-term debt (3) (3) Dividends on common, preferred and preference stock (5,487) (5,564) Sale of commercial paper - net (17,600) (7,800) Cash flows from financing activities (21,791) (13,367) NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS: $(1,211) $ (763) CASH AND CASH EQUIVALENTS: Beginning of period $ 3,083 $ 2,306 End of period $ 1 872 $ 1,543 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest (net of amount capitalized) $ 2,118 $ 4,520 Income taxes $ 90 $ 1,536 The accompanying Notes to Financial Statements are an integral part of these statements. INTERSTATE POWER COMPANY Summarized Financial Information The March 31, 1994 financial statements included herein have been prepared by the company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The accounting policies followed by the company are set forth in Note 1 to the company's financial statements in the 1993 Form 10-K. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the company's Form 10-K for the year ended December 31, 1993. In the opinion of the company, the financial statements reflect all adjustments, consisting only of normal recurring accruals, necessary to fairly state the results of operations. Notes to Financial Statements On August 4, 1993 the company refiled an application with the Iowa Utilities Board for an increase in electric rates in an annual amount of $11.5 million. Increased interim rates in an annual amount of $11.0 million were placed in effect on October 28, 1993. The interim rate increase totalling $4.3 million to date is being collected subject to refund upon final determination by the Board. A decision on the final rate increase is anticipated by the end of the second quarter of 1994. INTERSTATE POWER COMPANY PART I - FINANCIAL INFORMATION Item 2. Management's Discussion and Analysis EARNINGS PER SHARE for the first quarter of 1994 were $0.91 compared to $0.82 for the corresponding period in 1993. The increase in earnings is primarily attributable to improved gas margins and reduced maintenance expense. Three Months Ended March 31 ELECTRIC SALES (Mwh) 1994 1993 % Change Residential 279,483 269,120 3.9 Commercial 194,323 207,331 (6.3) Large Power & Light 713,782 668,980 6.7 Sales for Resale 81,972 62,561 31.0 Other 16,200 16,209 (0.1) Total Electric Sales 1,285,760 1,224,201 5.0 The increase in residential electric sales is primarily a result of colder temperatures in January and February of this year. Aggregate commercial and large power & light sales increased 3.6%. The reduction in commercial sales is mainly due to the switch from a commercial tariff to a large power & light tariff by approximately 164 customers. Sales for resale increased 31.0% primarily due to sales to other utilities during extremely cold weather in January 1994. ELECTRIC REVENUES for the first quarter of 1994 decreased 0.5% compared to the same period of 1993. Although the company implemented an $11.0 million annual Iowa electric rate increase in the fourth quarter of 1993, the impact of the rate increase was offset by the effect of seasonal electric tariffs implemented in August 1993. The seasonal tariffs provide for higher rates during the four summer cooling season months, and lower rates during the remainder of the year. While the seasonal tariffs are not expected to have a significant impact on total annual revenues, they do affect the comparability of quarterly revenue between 1994 and 1993. In Iowa, the company's fuel adjustment clause requires any margin on kilowatt-hour sales to other utilities to be returned to customers, therefore the increase noted above did not increase electric margins. The future level of kilowatt-hour sales will depend upon weather conditions, customer conservation efforts and the overall economy of the company's service area. Sales to industrial customers are also affected by the national economy. Also, issues facing the electric utility industry in general, such as deregulation, transmission access, increased competition and retention of large industrial customers could affect kilowatt-hour sales. Three Months Ended March 31 GAS DELIVERIES (MMcf) 1994 1993 % Change Residential 2,552 2,391 6.7 Commercial 1,435 1,391 3.2 Industrial 577 521 10.7 Other 4 17 Total Gas Sales 4,568 4,320 5.7 Gas Transportation 5,920 6,163 (3.9) Total Gas Deliveries 10,488 10,483 0.0 The increase in residential and commercial gas sales is mainly a result of colder temperatures in 1994. Overall industrial deliveries (retail and transportation) were down 2.9% compared to 1993. Three Months Ended March 31 GAS REVENUES (000's) 1994 1993 % Change Residential $13,403 $12,746 5.2 Commercial 6,875 6,675 3.0 Industrial 2,231 2,084 7.1 Other 47 83 Total Gas Sales Revenues 22,556 21,588 4.5 Gas Transportation 644 719 (10.4) Total Gas Revenues $23,200 $22,307 4.0 The increase in residential and commercial revenues is primarily a result of increased sales due to colder temperatures. Revenue from retail industrial sales increased mainly as a result of the increased sales. Although transportation volumes decreased 3.9%, revenue from transported volumes decreased 10.4%. This reduction in revenue resulted from the rates placed into effect in Iowa during the first quarter of 1993 which provided for lower commodity rates on transported volumes. THE COST OF GAS SOLD increased 2.2% during the first quarter of 1994 compared to the same period in 1993. The increase in gas costs is mainly a result of the 5.7% increase in sales as discussed above. A decline in the unit cost of gas purchased partially offset the impact of the increased volumes. There have been no significant developments concerning FERC Order 636 transition costs since the company's discussion of this matter in the 1993 Annual Report to Stockholders. PURCHASED POWER EXPENSE decreased $1.2 million, or 9.6%, during the first quarter of 1994 compared to 1993. This decrease is primarily a result of the 15.5% decrease in Kwh's purchased. Capacity charges included in purchased power expense were $5.8 million for both the first quarter of 1994 and the first quarter of 1993. FUEL FOR ELECTRIC GENERATION increased $2.6 million, or 18.8%, in the first quarter of 1994 compared to the same period in 1993. This increase resulted from a 14.1% increase in kilowatt-hours generated by the company. FUEL INVENTORIES declined from $22.9 million to $9.7 million during the first quarter of 1994. This is due to a normal seasonal variation and the planned draw down of the M. L. Kapp Power Plant inventory to facilitate reconstruction of the coal pile facilities. MAINTENANCE EXPENSE decreased 11.8% during the first quarter of 1994 compared to the same period in 1993. Maintenance expense for the first quarter of 1993 reflected turbine inspections, which are scheduled for 5 year intervals, at the Fox Lake and M. L. Kapp Power Plants. In addition, several maintenance projects scheduled for the first quarter of 1994 have been rescheduled for later in the year. FEDERAL AND STATE INCOME TAXES increased appproximately $0.6 million during the first quarter of 1994 compared to the first quarter of 1993. The increase is mainly due to higher income and the increase from 34% to 35% in the federal income tax rate. Recovery of additional income tax expense as a result of the tax rate change is pending in the Iowa electric rate case. PROPERTY AND OTHER TAXES decreased slightly during the first quarter of 1994 compared to the same period in 1993. The reduction in property taxes is primarily attributable to a reduced Iowa property assessed valuation. INTEREST ON LONG-TERM DEBT decreased approximately $74,000 during the first quarter of 1994 compared to the same period in 1993. This decrease is primarily due to the second quarter 1993 replacement of high interest rate issues with lower interest rate issues. INTEREST ON SHORT-TERM BORROWINGS was $91,000 for the first quarter of 1994 compared to $53,000 for the first quarter of 1993. The average outstanding balance of short-term borrowings during the first quarter of 1994 was $10.8 million compared to $5.8 million during the first quarter of 1993. Interest rates for the first quarter of 1994 averaged 3.34% compared to 3.63% in 1993. OTHER INCOME for the first quarter of 1994 includes $127,000 of energy efficiency carrying costs and curtailment credits compared to $62,000 for the same period in 1993. The increase is primarily due to an increase in the total amount of deferred energy efficiency costs ($10.4 million at March 31, 1994 compared to $5.2 million at March 31, 1993). AVERAGE TEMPORARY INVESTMENTS during the first quarter of 1994 were $4.2 million compared to $6.2 million in 1993. The average interest rate was 2.96% in the first quarter of 1994 compared to 3.03% in 1993. CONSTRUCTION EXPENDITURES during the first quarter of 1994 totaled $5.8 million compared to $6.5 million for the same period in 1993. Major 1994 construction projects include the installation of low nox burners at the company's M. L. Kapp generating station, reconstruction of a transmission line, and the development of a supervisory control and data acquisition system. Construction work in progress as of March 31, 1994 totalled $6.2 million compared to $5.5 million at March 31, 1993. The 1994 construction program is estimated to be $46 million. In the first quarter of 1993 the company adopted Statement of Financial Accounting Standards (SFAS) 106, "EMPLOYER'S ACCOUNTING FOR POSTRETIREMENT BENEFITS OTHER THAN PENSIONS". Under the provisions of SFAS 106, the estimated future cost of providing postretirement benefits will be accrued during the employees' service periods. The company is deferring the SFAS 106 costs in other jurisdictions until rate cases are filed to recover the costs. The Iowa Utilities Board has allowed the company to recover SFAS 106 costs in its Iowa gas rates effective May 1993 and Iowa electric rates effective October 1993. The status of the municipal wholesale customer Complaint and Request for Investigation and Hearing with FERC remains the same as discussed in the 1993 Annual Report to the Stockholders, and hearings are scheduled to begin in August 1994. The Iowa Utilities Board on May 2, 1994 issued its final order on the company's request to recover deferred energy efficiency costs. The company was granted recovery over a four-year period of energy efficiency costs incurred through December 31, 1992. In the first quarter of 1994 the Minnesota Environmental Protection Agency designated the company as a Potentially Responsible Party for former manufactured gas plant sites in New Ulm, Owatonna, and Austin, Minnesota. To-date, no investigative procedures have been undertaken. Investigative procedures are currently underway at sites in Savanna, Illinois and Clinton, Iowa. The results from the tests will not be available to the company until the second or third quarter of 1994. There has been no change during the first quarter of 1994 in the status of the former manufactured gas plant sites in: Mason City, Iowa; Galena, Illinois; Albert Lea and Rochester, Minnesota. In the first quarter of 1993, the company accrued $1.1 million for additional remediation costs at the Rochester site. The company did not accrue any additional liability for environmental costs in the first quarter of 1994, as it believes that the aggregate provision of $5.6 million at March 31, 1994 is adequate to cover the remaining investigative costs for sites that have been identified and the estimated remediation costs for those sites at which an investigative study has been completed. INTERSTATE POWER COMPANY PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Reference is made to the 1993 Form 10-K Item 3 for certain pending legal proceedings and proceedings. Reference is also made to the Management Discussion and Analysis included herein. Other than these items, there are no material pending legal proceedings, or proceedings known to be contemplated by governmental authorities, other than ordinary routine litigation incidental to the business, to which the company is a party or of which any of the company's property is the subject. ITEM 2. CHANGES IN SECURITIES The rights of holders of registered securities have not been materially modified, limited or qualified. ITEM 3. DEFAULTS UPON SENIOR SECURITIES No defaults upon senior securities. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) THE DATE OF THE MEETING AND WHETHER IT WAS AN ANNUAL OR SPECIAL MEETING. On May 3, 1994 the Annual Stockholders Meeting was held. (b) IF THE MEETING INVOLVED THE ELECTION OF DIRECTORS, THE NAME OF EACH DIRECTOR ELECTED AT THE MEETING AND THE NAME OF EACH OTHER DIRECTOR WHOSE TERM OF OFFICE AS A DIRECTOR CONTINUED AFTER THE MEETING. The three Class III members of the Board of Directors were re- elected, to hold office for terms as follows: Alan B. Arends term expiring in 1997 Nicholas J. Schrup term expiring in 1997 Wayne H. Stoppelmoor term expiring in 1997 Following are the Class I and II members of the Board of Directors whose terms continued after the meeting: Alfred D. Cordes term expiring in 1995 Joyce L. Hanes term expiring in 1995 James E. Byrns term expiring in 1996 Gerald L. Kopischke term expiring in 1996 (c) A BRIEF DESCRIPTION OF EACH OTHER MATTER VOTED UPON AT THE MEETING AND STATE THE NUMBER OF VOTES CAST FOR, AGAINST OR WITHHELD, AS WELL AS THE NUMBER OF ABSTENTIONS AND BROKER NON-VOTES, AS TO EACH SUCH MATTER, INCLUDING A SEPARATE TABULATION WITH RESPECT TO EACH NOMINEE FOR OFFICE. The election of three Class III directors, Alan B. Arends, Nicholas J. Schrup and Wayne H. Stoppelmoor, to hold office for a term of three years expiring at the annual meeting of stockholders of the company to be held in 1997. Votes cast were as follows: For Against Abstain Alan B. Arends 7,617,103 119,248 20,886 Nicholas J. Schrup 7,636,436 99,859 20,886 Wayne H. Stoppelmoor 7,648,064 88,232 20,886 ITEM 5. OTHER INFORMATION On March 11, 1993, the company filed a shelf registration with the Securities and Exchange Commission for $125 million of First Mortgage Bonds and 745,000 shares of $50 par value Preferred Stock. On May 26, 1993 the company issued $94 million of 7 5/8% Series First Mortgage Bonds due in 2023. The proceeds from the sale of the bonds were used to retire higher cost series bonds due in 1999, 2001, 2002 and 2008. Also, on May 26, 1993 the company issued 545,000 shares of 6.40% Preferred Stock. The proceeds from the issuance of the stock were used to redeem higher cost series Preferred and Preference Stock. Below is set forth the ratio of earnings to fixed charges for each of the years in the period 1989 through 1993 and for the 12 months ended March 31, 1994: December 31, 1989 3.69 December 31, 1990 3.84 December 31, 1991 3.77 December 31, 1992 2.69 December 31, 1993 2.68 March 31, 1994 2.78 Below is set forth the ratio of earnings to fixed charges and Preferred Stock dividends for each of the years in the period 1989 through 1993 and for the 12 months ended March 31, 1994: December 31, 1989 3.03 December 31, 1990 3.11 December 31, 1991 3.13 December 31, 1992 2.28 December 31, 1993 2.21 March 31, 1994 2.27 See Exhibit EX-12 for the computation of the above ratios. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits filed as a part of this report: EX-12 Computation of Ratio of Earnings to Fixed Charges and Computation of Ratio of Earnings to Fixed Charges and Preferred Dividennds. (b) No reports were filed on Form 8-K. 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. Interstate Power Company (Registrant) Date May 6, 1994 W. C. Troy /s/ W. C. Troy, Controller (Duly Authorized Officer and Principal Accounting Officer) EX-12 2 STATEMENT RE COMPUTATION OF RATIOS EX-12 Computation of Ratio of Earnings to Fixed Charges Twelve Months Ended Dec.31 Dec.31 Dec.31 Dec.31 Dec.31 Mar.31 1989 1990 1991 1992 1993 1994 (Thousands of Dollars) Fixed Charges: Interest on long-term debt $ 15,051 14,913 15,120 16,292 16,166 16,092 Other interest 2,301 860 1,605 586 596 565 Interest component of rents charged to operating expenses 274 262 232 214 183 177 Total Fixed Charges $ 17,626 16,035 16,957 17,092 16,945 16,834 Earnings: Net income $ 28,627 27,026 29,510 19,217 18,987 19,849 Income taxes 18,726 18,527 17,382 9,698 9,464 10,095 Fixed charges 17,626 16,035 16,957 17,092 16,945 16,834 Total Earnings $ 64,979 61,588 63,849 46,007 45,396 46,778 Earnings/Fixed Charges 3.69x 3.84x 3.77x 2.69x 2.68x 2.78x Computation of Ratio of Earnings to Fixed Charges & Preferred Dividends Twelve Months Ended Dec.31 Dec.31 Dec.31 Dec.31 Dec.31 Mar.31 1989 1990 1991 1992 1993 1994 Fixed Charges & (Thousands of Dollars) Preferred Dividends: Interest on long-term debt $ 15,051 14,913 15,120 16,292 16,166 16,092 Other interest 2,301 860 1,605 586 596 565 Interest component of rents charged to operating expenses 274 262 232 214 183 177 Total Fixed Charges $ 17,626 16,035 16,957 17,092 16,945 16,834 Preferred Dividends (a) 3,851 3,785 3,438 3,104 3,604 3,797 Total Fixed Charges & Preferred Dividends $ 21,477 19,820 20,395 20,196 20,549 20,631 Earnings: Net income $ 28,627 27,026 29,510 19,217 18,987 19,849 Income taxes 18,726 18,527 17,382 9,698 9,464 10,095 Fixed charges 17,626 16,035 16,957 17,092 16,945 16,834 Total Earnings $ 64,979 61,588 63,849 46,007 45,396 46,778 Earnings/Fixed Charges & Preferred Dividends 3.03x 3.11x 3.13x 2.28x 2.21x 2.27x (a) Preferred dividends, as defined (not including preference dividends), have been adjusted by multiplying the requirement by the ratio that income before income taxes bears to net income. Such ratios were as follows: 165% in 1989, 169% in 1990, 159% in 1991, 151% in 1992, 150% in 1993 and 151% in 1994. -----END PRIVACY-ENHANCED MESSAGE-----