-----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, Apl4/dXIACr4bgrODrUXvTE8hOhWp0x2p1ydHyTFbSWtwEbxNznr8O7XYwk9m1RA TqMlH9FdEbxPKEkTNgIWaw== 0000919607-01-500089.txt : 20010814 0000919607-01-500089.hdr.sgml : 20010814 ACCESSION NUMBER: 0000919607-01-500089 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OGLETHORPE POWER CORP CENTRAL INDEX KEY: 0000788816 STANDARD INDUSTRIAL CLASSIFICATION: COGENERATION SERVICES & SMALL POWER PRODUCERS [4991] IRS NUMBER: 581211925 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-07591 FILM NUMBER: 1707385 BUSINESS ADDRESS: STREET 1: 2100 EAST EXCHANGE PL STREET 2: P O BOX 1349 CITY: TUCKER STATE: GA ZIP: 30085-1349 BUSINESS PHONE: 4042707600 10-Q 1 ogle10q.txt INITIAL FILING ================================================================================ 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 June 30, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to _____________ Commission File No. 33-7591 --------------------- Oglethorpe Power Corporation (An Electric Membership Corporation) (Exact name of registrant as specified in its charter) Georgia 58-1211925 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Post Office Box 1349 2100 East Exchange Place Tucker, Georgia 30085-1349 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (770) 270-7600 Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. The Registrant is a membership corporation and has no authorized or outstanding equity securities. ================================================================================ OGLETHORPE POWER CORPORATION INDEX TO QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2001 Page No. -------- PART I - FINANCIAL INFORMATION Item 1. Financial Statements Condensed Balance Sheets as of June 30, 2001 (Unaudited) and December 31, 2000 3 Condensed Statements of Revenues and Expenses (Unaudited) for the Three Months and Six Months ended June 30, 2001 and 2000 5 Condensed Statements of Patronage Capital and Membership Fees and Accumulated Other Comprehensive Margin (Unaudited) for the Six Months ended June 30, 2001 and 2000 6 Condensed Statements of Cash Flows (Unaudited) for the Six Months ended June 30, 2001 and 2000 7 Notes to Condensed Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 3. Quantitative and Qualitative Disclosures About Market Risk 15 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 17 SIGNATURES 18 2 PART I - FINANCIAL INFORMATION Item 1. Financial Statements Oglethorpe Power Corporation Condensed Balance Sheets June 30, 2001 and December 31, 2000 - --------------------------------------------------------------------------------------------------------------------------- (dollars in thousands) 2001 2000 Assets (Unaudited) ------------------------------------------- Electric plant, at original cost: In service $4,889,887 $4,883,680 Less: Accumulated provision for depreciation (1,815,390) (1,752,176) ------------------- ----------------- 3,074,497 3,131,504 Nuclear fuel, at amortized cost 75,780 83,470 Construction work in progress 37,007 24,841 ------------------- ----------------- 3,187,284 3,239,815 ------------------- ----------------- Investments and funds: Decommissioning fund, at market 150,004 148,300 Deposit on Rocky Mountain transactions, at cost 65,812 63,665 Bond, reserve and construction funds, at market 29,076 29,167 Investment in associated organizations, at cost 20,474 19,997 Other, at cost 1,252 1,513 ------------------- ----------------- 266,618 262,642 ------------------- ----------------- Current assets: Cash and temporary cash investments, at cost 327,836 330,622 Other short-term investments, at market 84,929 81,715 Receivables 100,976 143,353 Notes and interim financing receivables 163,821 38,548 Inventories, at average cost 76,543 75,389 Prepayments and other current assets 39,215 59,824 ------------------- ----------------- 793,320 729,451 ------------------- ----------------- Deferred charges: Premium and loss on reacquired debt, being amortized 166,845 175,944 Deferred amortization of Scherer leasehold 103,007 102,753 Discontinued projects, being amortized 7,973 9,490 Deferred debt expense, being amortized 16,381 16,968 Other 27,512 31,107 ------------------- ----------------- 321,718 336,262 ------------------- ----------------- $4,568,940 $4,568,170 =================== =================
The accompanying notes are an integral part of these condensed financial statements. 3 Oglethorpe Power Corporation Condensed Balance Sheets June 30, 2001 and December 31, 2000 - -------------------------------------------------------------------------------------------------------------------------------- (dollars in thousands) 2001 2000 Equity and Liabilities (Unaudited) ------------------------------------------------- Capitalization: Patronage capital and membership fees and accumulated other comprehensive margin $371,255 $392,682 Long-term debt 2,953,571 3,019,019 Obligation under capital leases 263,177 267,449 Obligation under Rocky Mountain transactions 65,812 63,665 ---------------------- -------------------- 3,653,815 3,742,815 ---------------------- -------------------- Current liabilities: Long-term debt and capital leases due within one year 140,148 136,053 Accounts payable 80,909 114,964 Notes payable 182,621 78,482 Accrued interest 59,743 67,394 Accrued and withheld taxes 13,186 674 Other current liabilities 7,246 23,017 ---------------------- -------------------- 483,853 420,584 ---------------------- -------------------- Deferred credits and other liabilities: Gain on sale of plant, being amortized 52,095 53,332 Net benefit of sale of income tax benefits, being amortized 6,007 10,012 Net benefit of Rocky Mountain transactions, being amortized 81,226 82,819 Accumulated deferred income taxes 63,485 63,485 Decommissioning reserve 174,996 174,553 Interest rate swap arrangements 31,188 - Other 22,275 20,570 ---------------------- -------------------- 431,272 404,771 ---------------------- -------------------- $4,568,940 $4,568,170 ====================== ====================
The accompanying notes are an integral part of these condensed financial statements. 4 Oglethorpe Power Corporation Condensed Statements of Revenues and Expenses (Unaudited) For the Three and Six Months Ended June 30, 2001 and 2000 - ------------------------------------------------------------------------------------------------------------------------------------ (dollars in thousands) Three Months Six Months ------------------------- ------------------------- 2001 2000 2001 2000 ------------------------- ------------------------- Operating revenues: Sales to Members $ 258,571 $ 271,384 $ 555,077 $ 536,090 Sales to non-Members 21,340 13,642 31,441 23,820 --------- --------- --------- --------- Total operating revenues 279,911 285,026 586,518 559,910 --------- --------- --------- --------- Operating expenses: Fuel 56,949 55,597 101,129 104,709 Production 49,611 51,994 103,832 111,096 Purchased power 94,680 83,555 206,518 156,069 Depreciation and amortization 32,044 32,894 64,157 65,631 --------- --------- --------- --------- Total operating expenses 233,284 224,040 475,636 437,505 --------- --------- --------- --------- Operating margin 46,627 60,986 110,882 122,405 --------- --------- --------- --------- Other income (expense): Investment income 8,059 11,776 18,308 20,725 Amortization of deferred gains 618 619 1,237 1,237 Amortization of proceeds from sale of income tax benefits 2,798 2,799 5,597 5,597 Allowance for equity funds used during construction 44 16 68 28 Other 1,129 488 1,811 856 --------- --------- --------- --------- Total other income 12,648 15,698 27,021 28,443 --------- --------- --------- --------- Interest charges: Interest on long-term-debt and capital leases 53,335 55,476 106,893 110,713 Other interest 2,302 6,176 7,045 10,715 Allowance for debt funds used during construction (556) 34 (907) (65) Amortization of debt discount and expense 5,405 5,374 10,800 10,674 --------- --------- --------- --------- Net interest charges 60,486 67,060 123,831 132,037 --------- --------- --------- --------- Net margin (loss) ($ 1,211) $ 9,624 $ 14,072 $ 18,811 ========= ========= ========= =========
The accompanying notes are an integral part of these condensed financial statements. 5 Oglethorpe Power Corporation Condensed Statements of Patronage Capital and Membership Fees and Accumulated Other Comprehensive Margin (Unaudited) For the Six Months Ended June 30, 2001 and 2000 - ----------------------------------------------------------------------------------------------------------------------------------- (dollars in thousands) Patronage Accumulated Capital and Other Membership Comprehensive Fees Margin (Loss) Total ---------------------------------------------------- Balance at December 31, 1999 $371,634 ($1,609) $370,025 Components of comprehensive margin: Net margin 18,811 18,811 Unrealized gain on available-for-sale securities 417 417 ---------------- Total comprehensive margin 19,228 ---------------- ---------------------------------------------------- Balance at June 30, 2000 $390,445 ($1,192) $389,253 ==================================================== Balance at December 31, 2000 $391,611 $1,071 $392,682 Components of comprehensive margin: Net margin 14,072 14,072 Cumulative effect of accounting change to record unrealized loss on interest rate swap arrangements as of January 1, 2001 (33,515) (33,515) Unrealized gain on interest rate swap arrangements 2,327 2,327 Unrealized gain on available-for-sale securities 300 300 Unrealized loss on financial gas hedges (4,611) (4,611) ---------------- Total comprehensive margin (loss) (21,427) ---------------- ---------------------------------------------------- Balance at June 30, 2001 $405,683 ($34,428) $371,255 ====================================================
The accompanying notes are an integral part of these condensed financial statements. 6 Oglethorpe Power Corporation Condensed Statements of Cash Flows (Unaudited) For the Six Months Ended June 30, 2001 and 2000 - ------------------------------------------------------------------------------------------------------------------------------------ (dollars in thousands) 2001 2000 --------------------------------------------- Cash flows from operating activities: Net margin $14,072 $18,811 ---------------- --------------- Adjustments to reconcile net margin to net cash provided by operating activities: Depreciation and amortization 89,834 100,992 Allowance for equity funds used during construction (68) (28) Amortization of deferred gains (1,237) (1,237) Amortization of net benefit of sale of income tax benefits (5,597) (5,597) Deferred income taxes - 283 Other 4,089 7,801 Change in net current assets, excluding long-term debt and capital leases due within one year and notes payable: Notes receivable (42) (13) Receivables 42,377 (18,467) Inventories (1,154) 7,973 Prepayments and other current assets (55) 3,101 Accounts payable (34,055) (16,175) Accrued interest (7,651) (24,665) Accrued and withheld taxes 12,512 13,380 Other current liabilities (20,382) (5,427) ---------------- --------------- Total adjustments 78,571 61,921 ---------------- --------------- Net cash provided by operating activities 92,643 80,732 ---------------- --------------- Cash flows from investing activities: Property additions (28,398) (53,607) Net proceeds from bond, reserve and construction funds 397 2,964 (Increase) decrease in investment in associated organizations (477) 137 Increase in other short-term investments (3,221) (1,944) Increase in decommissioning fund (3,299) (6,673) Other-generation equipment deposits (13,064) - ---------------- --------------- Net cash used in investing activities (48,062) (59,123) ---------------- --------------- Cash flows from financing activities: Long-term debt proceeds, net 1,735 (1,710) Long-term debt payments (61,737) (81,014) Increase in notes payable 104,139 81,997 Increase in notes receivable under interim financing agreement (91,504) (56,790) ---------------- --------------- Net cash used in financing activities (47,367) (57,517) ---------------- --------------- Net decrease in cash and temporary cash investments (2,786) (35,908) Cash and temporary cash investments at beginning of period 330,622 222,814 ---------------- --------------- Cash and temporary cash investments at end of period $327,836 $186,906 ================ =============== Cash paid for: Interest (net of amounts capitalized) $120,682 $140,325 Income taxes - -
The accompanying notes are an integral part of these condensed financial statements. 7 Oglethorpe Power Corporation Notes to Condensed Financial Statements June 30, 2001 and 2000 (A) The condensed financial statements included in this report have been prepared by Oglethorpe Power Corporation (Oglethorpe), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). In the opinion of management, the information furnished in this report reflects all adjustments (which include only normal recurring adjustments) and estimates necessary to present fairly, in all material respects, the results for the periods ended June 30, 2001 and 2000. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to SEC rules and regulations, although Oglethorpe believes that the disclosures are adequate to make the information presented not misleading. These condensed financial statements should be read in conjunction with the financial statements and the notes thereto included in Oglethorpe's latest Annual Report on Form 10-K, as filed with the SEC. Certain amounts for 2000 have been reclassified to conform with the current period presentation. The results of operations for the three and six months periods ended June 30, 2001 are not necessarily indicative of results to be expected for the full year. (B) Effective January 1, 2001, Oglethorpe adopted Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities." The standard establishes accounting and reporting requirements for derivative instruments, including certain derivative instruments embedded in other contracts, and hedging activities. It requires the recognition of certain derivatives as assets or liabilities on Oglethorpe's balance sheet and measurement of those instruments at fair value. The accounting treatment of changes in fair value is dependent upon whether or not a derivative instrument is classified as a hedge and if so, the type of hedge. Oglethorpe has classified, pursuant to SFAS No. 133, two interest rate swap arrangements as cash flow hedges. Accordingly, as of January 1, 2001 Oglethorpe recorded as a cumulative effect adjustment an unrealized loss in comprehensive margin of $33.5 million and a corresponding increase in other liabilities. (For a discussion of the interest rate swap arrangements, see Note 2 of Notes to Financial Statements in Item 8 of Oglethorpe's Annual Report on Form 10-K.) The application of the new rules for SFAS No. 133 is still evolving and further guidance from the Financial Accounting Standards Board is expected which could further impact Oglethorpe's financial statements. In addition, Oglethorpe will continue to evaluate use of derivatives, including their effectiveness for hedging, and to apply appropriate procedures and methods for valuing them. (C) In July 2001, the Financial Accounting Standards Board (FASB) issued Statements of Financial Accounting Standards No. 141, "Business Combinations", and No. 142, "Goodwill and Other Intangible Assets". Under these new standards the FASB eliminated accounting for certain mergers and acquisitions as poolings of interests, eliminated amortization of goodwill and indefinite life intangible assets, and established new impairment measurement procedures for goodwill. For calendar-year reporting companies, 8 the standards become effective for all acquisitions completed on or after June 30, 2001. Changes in financial statement treatment for goodwill and intangible assets arising from mergers and acquisitions completed prior to June 30, 2001 become effective January 1, 2002. Oglethorpe's management does not believe the impact will be material. 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations For the Three Months and Six Months Ended June 30, 2001 and 2000 - ---------------------------------------------------------------- Net Margin Oglethorpe's net margin (loss) for the three months and six months ended June 30, 2001 were ($1.2) million and $14.1 million compared to $9.6 million and $18.8 million for the same periods of 2000. As a result of lower than budgeted fixed production expenses and lower interest costs for the six month period ended June 30, 2001, Oglethorpe's Board of Directors approved a $17.3 million reduction to revenue requirements. This was recorded as a $17.3 million reduction in Sales to Members in the second quarter of 2001. Year-to-date net margin, after this adjustment, is on target to meet the margin requirement under Oglethorpe's Indenture. Operating Revenues Revenues from sales to Oglethorpe's 39 retail electric distribution cooperative members (the Members) for the three months and six months ended June 30, 2001 were 4.7% lower and 3.5% higher than such revenues for the same periods of 2000. Megawatt-hour (MWh) sales to Members decreased 1.4% in the current quarter and increased 3.1% year-to-date compared to the same periods of 2000. The decrease in MWh sales to Members in the second quarter of 2001 compared to the same period of 2000 was primarily due to cooler weather in the current quarter. The year-to-date increase in MWh sales to Members was primarily due to continued sales growth in the Members' service territories. The average revenue per MWh from sales to Members decreased 3.4% during the second quarter and increased 0.4% year-to-date compared to the same periods of 2000. The components of Member revenues for the three months and six months ended June 30, 2001 and 2000 were as follows: Three Months Six Months Ended June 30, Ended June 30, -------------- -------------- 2001 2000 2001 2000 ---- ---- ---- ---- (dollars in thousands) Capacity revenues $142,898 $157,612 $301,376 $312,928 Energy revenues 115,673 113,772 253,701 223,162 ------- ------- ------- ------- Total $258,571 $271,384 $555,077 $536,090 ======== ======== ======== ======== Capacity revenues from Members for the three months and six months ended June 30, 2001 were 9.3% and 3.7% lower compared to the same periods of 2000. The decrease in capacity revenues was primarily due to lower fixed production expenses and lower interest costs. Energy revenues were 1.7% and 13.7% higher 10 for the current periods of 2001 compared to the same periods of 2000. The increase in energy revenues in 2001 was partly due to the pass-through of higher purchased power energy costs and partly due to an increase in the volume of purchased MWhs (see "Operating Expenses" below). Oglethorpe's average energy revenue per MWh from sales to Members was 3.1% and 10.2% higher in the current three-month and six-month periods compared to the same periods of 2000. Sales to non-Members were from energy sales to other utilities and power marketers. The following table summarizes the sources of non-Member revenues for the three months and six months ended June 30, 2001 and 2000: Three Months Six Months Ended June 30, Ended June 30, -------------- -------------- 2001 2000 2001 2000 ---- ---- ---- ---- (dollars in thousands) Sales to other utilities $19,798 $11,768 $27,954 $20,345 Sales to power marketers 1,542 1,874 3,487 3,475 ----- ----- ----- ----- Total $21,340 $13,642 $31,441 $23,820 ======= ======= ======= ======= Sales to other utilities represent sales made directly by Oglethorpe. Oglethorpe sells energy to non-Members from its available resources that is neither utilized to serve its Members nor contractually dedicated to the power marketers. The cooler weather and corresponding decrease in MWh sales to Members in the second quarter of 2001 resulted in an increase in energy available for sale to other utilities. In addition, Oglethorpe increased purchased MWhs for resale to other utilities. Sales to the power marketers represent the net energy transmitted on behalf of LG&E Energy Marketing Inc. (LEM) and Morgan Stanley Capital Group Inc. (Morgan Stanley) off-system on a daily basis from Oglethorpe's total resources under the LEM and Morgan Stanley power marketer arrangements. Oglethorpe sold this energy to LEM at Oglethorpe's cost, subject to certain limitations, and to Morgan Stanley at a contractually fixed price. The volume of sales to power marketers depends primarily on the power marketers' decisions for servicing their load requirements. Operating Expenses Operating expenses for the three-month and six-month periods of 2001 were 4.1% and 8.7% higher compared to the same periods of 2000. The increase was due to higher purchased power costs for the three-month and six-month periods ended June 30, 2001 compared to the same periods of 2000, offset somewhat by decreases in production costs for the current periods of 2001 compared to the same periods of 2000. Purchased power costs increased 13.3% and 32.3% in the current periods of 2001 compared to the same periods of 2000. This increase in purchased power costs resulted from a combination of increased purchased MWhs and higher average cost per MWh in 2001 compared to 2000. Purchased MWhs increased 2.4% and 17.6% in the three-month and six-month periods of 2001 compared to the same periods of 2000. The average cost per MWh of total purchased power increased 10.7% and 12.5% in 11 current quarter and year-to-date periods of 2001 compared to the comparable periods of 2000. Purchased power costs were as follows: Three Months Six Months Ended June 30, Ended June 30, -------------- -------------- 2001 2000 2001 2000 ---- ---- ---- ---- (dollars in thousands) Purchase power capacity costs $ 27,096 $ 24,446 $ 52,014 $ 46,057 Purchase power energy costs 67,584 59,109 154,504 110,012 ------ ------ ------- ------- Total $ 94,680 $ 83,555 $206,518 $156,069 ======== ======== ======== ======== Purchased power capacity costs for the three months and six months ended June 30, 2001 were 10.8% and 12.9% higher than the same periods of 2000. The higher capacity costs were primarily a result of capacity charges incurred for new power purchase agreements, including an agreement with Doyle I, LLC that commenced in May 2000. Purchased power energy costs for the three-month and six-month periods of 2001 were 14.3% and 40.4% higher compared to the same periods of 2000. This increase resulted partly from higher volume of purchased MWhs and partly from higher prices in the wholesale electricity markets. During the current periods of 2001 the average cost of purchased power energy increased 11.7% and 19.5% compared to the same periods of 2000. Production costs decreased 4.6% and 6.5% for the current quarter and year-to-date compared to the same periods of 2000. The lower production costs in 2001 resulted partly from lower operation and maintenance (O&M) expenses at Plants Scherer, Wansley and Hatch and partly from lower administrative and general costs. O&M expenses for Plant Scherer were higher in 2000 due to a $1.6 million true up for sharing of O&M expenses between the owners of Units No. 1 and 2 and the owners of Units No. 3 and 4 related to the burning of western coal. The lower O&M expenses in 2001 at Plant Wansley were due to lower maintenance outage costs at Unit No. 2 in the first quarter of 2001 compared to the same quarter of 2000. Variable O&M expenses at Plant Hatch were lower in 2001 compared to 2000. Administrative and general costs were lower in 2001 partly due to lower expenses incurred for support services provided by Georgia System Operations Corporation and partly due to expenses incurred in 2000 for special strategic projects. Other Income Investment income decreased 31.6% and 11.7% in the three months and six months ended June 30, 2001 compared to 2000 primarily due to lower earnings from the decommissioning fund. Interest Charges Other interest expense decreased 62.7% and 34.3% for the current periods compared to the same periods of 2000 primarily as a result of a decrease in interest earnings on decommissioning funds, which create an offsetting interest expense. 12 Financial Condition Capital Requirements and Liquidity and Sources of Capital - --------------------------------------------------------- Under the Wholesale Power Contracts, Members can elect on an annual basis whether to have Oglethorpe provide joint planning and resource management services. These services consist of bulk power supply planning, future resource procurement and bulk power sales for the Members. (See "OGLETHORPE'S POWER SUPPLY RESOURCES--Future Power Resources" in Item 1 of Oglethorpe's 2000 Annual Report on Form 10-K.) Oglethorpe is in the process of arranging the necessary power supply for Members that currently participate in joint planning and resource management services. In this regard, Oglethorpe has entered into agreements to acquire and construct six gas-fired combustion turbines designed to provide 618 MW of capacity and a gas-fired combined cycle facility designed to provide 468 MW of capacity. Four of the combustion turbines are scheduled for completion in 2002, with the other two to be completed in 2003. The combined cycle facility is scheduled for completion in 2003. Oglethorpe expects that these new generation facilities will ultimately be owned by two separate cooperatives to be incorporated in the near future. The new cooperatives will be owned by those Members participating in the respective facilities. Oglethorpe is currently providing interim financing for the construction of these facilities. As of June 30, $159.8 million of commercial paper was outstanding for this purpose. Oglethorpe expects to issue the maximum amount of its commercial paper ($260 million) by the fall of 2001 in conjunction with the interim financing of these new generation facilities. Oglethorpe has submitted loan applications to the Rural Utilities Service (RUS) to provide financing for these projects and expects a response from RUS later in 2001. The loan applications were made on behalf of any entity that may ultimately own these facilities. However, due to the anticipated timing of the loan approval and funding from the RUS, Oglethorpe will need and is seeking additional construction financing until permanent financing is obtained. Oglethorpe also continues to make payments under an agreement to purchase equipment for an additional gas-fired combined cycle facility. As of June 30, 2001, Oglethorpe had $22.8 million of commercial paper outstanding relating to payments under this agreement. Oglethorpe is pursuing a sale of this equipment, but will continue to make payments under the agreement until the equipment is sold. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS--Financial Condition--Capital Requirements" and "--Liquidity and Sources of Capital" in Item 7 of Oglethorpe's 2000 Annual Report on Form 10-K. General - ------- Total assets and total equity plus liabilities as of June 30, 2001 were $4.6 billion, which was $770,000 more than the total at December 31, 2000. The increase was due primarily to additions to construction work in progress and an increase in the interim financing receivable offset by depreciation of plant and a decrease in accounts receivable. 13 Assets Property additions for the six months ended June 30, 2001 totaled $28.4 million primarily for purchases of nuclear fuel and for additions, replacements, and improvements to existing generation facilities. The decrease in cash and temporary cash investments was a result of cash used in financing and investing activities, including debt principal repayments, exceeding cash provided from operations. The decrease in receivables was primarily due to a cold December, which resulted in higher energy charges billed to Members at December 31, 2000 than at June 30, 2001. The increase in notes and interim financing receivables was primarily due to the construction of new generating facilities as discussed above. These facilities will ultimately be owned by two separate cooperatives, as discussed above, which will be owned by those Members who participate in these facilities. These cooperatives will reimburse Oglethorpe for construction costs after permanent financing is obtained. The decrease in prepayments and other current assets was primarily due to the reclassification of $33.8 million in equipment to notes and interim financing receivables. The decrease in other deferred charges was due to the amortization of nuclear outage costs exceeding additional deferrals of nuclear outage costs. Equity and Liabilities Accounts payable decreased principally due to the accrual of lower off-system energy charges at June 30, 2001 as compared to December 31, 2000. Due to the cold weather in December, off-system energy purchases were significantly higher. In addition, accruals for Georgia Power Company charges were lower at June 30, 2001. The increase in notes payable was attributable to commercial paper issued by Oglethorpe as interim financing for costs incurred in the construction of the future generation facilities discussed above. (See "Capital Requirements and Liquidity and Sources of Capital" above for a discussion regarding financing of these projects.) The decrease in accrued interest primarily resulted from an interest payment associated with the lease of Plant Scherer Unit No. 2, and to a lesser extent, interest payments associated with certain Pollution Control Bonds. These payments were made January 2, 2001 for interest accrued during the previous six months. Accrued and withheld taxes increased as a result of the normal monthly accruals for property taxes, which are generally paid in the fourth quarter of the year. 14 The decrease in other current liabilities resulted primarily from lower negative cash balances, resulting from zero balance sweep accounts, at June 30, 2001 as compared to December 31, 2000, and for payment of year-end accruals. The interest rate swap arrangements represent an unrealized loss from adoption of SFAS No. 133. (For further discussion see Note B of Notes to Condensed Financial Statements.) New Accounting Pronouncements In July 2001, the Financial Accounting Standards Board (FASB) issued Statements of Financial Accounting Standards No. 141, "Business Combinations", and No. 142, "Goodwill and Other Intangible Assets". Under these new standards the FASB eliminated accounting for certain mergers and acquisitions as poolings of interests, eliminated amortization of goodwill and indefinite life assets, and established new impairment measurement procedures for goodwill. For calendar-year reporting companies, the standards become effective for all acquisitions completed on or after June 30, 2001. Changes in financial statement treatment for goodwill and intangible assets arising from mergers and acquisitions completed prior to June 30, 2001 become effective January 1, 2002. Oglethorpe's management does not believe the impact will be material. Forward-Looking Statements and Associated Risks This Quarterly Report on Form 10-Q contains forward-looking statements, including statements regarding, among other items, (i) anticipated trends in Oglethorpe's business and (ii) Oglethorpe's future capital requirements and sources of capital. These forward-looking statements are based largely on Oglethorpe's current expectations and are subject to a number of risks and uncertainties, certain of which are beyond Oglethorpe's control. (For factors that could cause actual results to differ materially from those anticipated by these forward-looking statements, see "OGLETHORPE'S POWER SUPPLY RESOURCES--Future Power Resources," FACTORS AFFECTING THE ELECTRIC UTILITY INDUSTRY" and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS--Miscellaneous--Competition" in Items 1 and 7 of Oglethorpe's 2000 Annual Report on Form 10-K.) In light of these risks and uncertainties, there can be no assurance that events anticipated by the forward-looking statements contained in this Quarterly Report will in fact transpire. Item 3. Quantitative and Qualitative Disclosures About Market Risk Changes in Risk Exposure Oglethorpe has entered into several natural gas swap agreements to hedge a portion of its exposure to variable energy charges under long-term power purchase contracts. Under these swap agreements, Oglethorpe pays the counterparty a fixed price for specified natural gas quantities and receives a payment for such quantities based on a market price index. These payment obligations are netted, such that if the market price index is lower than the fixed price, Oglethorpe will make a net payment, and if the market price index 15 is higher than the fixed price, Oglethorpe will receive a net payment. (See "Financial Condition--Capital Requirements and Liquidity and Sources of Capital" in Item 2 above and "QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK--Commodity Price Risk" in Item 7A of Oglethorpe's 2000 Annual Report on Form 10-K.) Oglethorpe's market price risk exposure on these agreements is not material. Oglethorpe's market risks have not changed materially from the market risks reported in Oglethorpe's 2000 Annual Report on Form 10-K. (For information regarding Oglethorpe's risk management policies, see Item 7A of Oglethorpe's Annual Report on Form 10-K.) 16 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Number Description ------ ----------- 10.29 Amendment to Employment Agreement, dated May 8, 2001, between Oglethorpe and Thomas A. Smith. 10.30 Amendment to Employment Agreement, dated May 8, 2001, between Oglethorpe and Elizabeth Higgins. (b) Reports on Form 8-K No reports on Form 8-K were filed by Oglethorpe for the quarter ended June 30, 2001. 17 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Oglethorpe Power Corporation (An Electric Membership Corporation) Date: August 13, 2001 By: /s/ Thomas A. Smith ------------------- Thomas A. Smith President and Chief Executive Officer (Principal Executive Officer) Date: August 13, 2001 /s/ Mac F. Oglesby ------------------ Mac F. Oglesby Treasurer (Principal Financial Officer) Date: August 13, 2001 /s/ W. Clayton Robbins ---------------------- W. Clayton Robbins Senior Vice President, Finance and Administration (Principal Financial Officer) Date: August 13, 2001 /s/ Willie B. Collins --------------------- Willie B. Collins Controller (Chief Accounting Officer) 18 EX-10 3 ex10-29.txt AMENDMENT TO EMPLOYMENT AGREEMENT EXHIBIT 10.29 AMENDMENT TO EMPLOYMENT AGREEMENT --------------------------------- This AMENDMENT (the "Amendment") is made, effective May 8, 2001, between Oglethorpe Power Corporation (the "Company" or "Employer") and Thomas A. Smith ("Employee"). In consideration for the Company's continued employment of the Employee and Employee's continued employment with the Company, the parties hereby mutually agree to amend their original September 15, 1999 Employment Agreement ("Agreement") as follows: Paragraph 7.4 shall be amended by replacing the last sentence of that paragraph with the following language: A resignation by Employee within one hundred eighty (180) days of any of the following events shall also be deemed a termination without cause and shall entitle Employee to all benefits available under this Agreement for termination without cause: (a) a material reduction or alteration of Employee's title or responsibilities in a manner that is inconsistent with Employee's position; (b) a change in the location of Employee's principal office by more than fifty (50) miles; or (c) a determination by Employee, in his sole discretion, that good reason exists for his resignation: provided that, in the event of a resignation pursuant to part (c) above, Employee must: (i) resign with an effective date during the period January 1, 2002 through December 31, 2003, and (ii) if requested by Employer, extend the resignation date for a maximum of six (6) additional thirty (30) day periods (assuming that the Agreement has been automatically renewed on December 31, 2001). IN WITNESS WHEREOF, the parties hereto have executed this Amendment: OGLETHORPE POWER COMPANY By: /s/ J. Calvin Earwood Date: 5/8/01 ------------------------------------------------------- Name: J. Calvin Earwood ------------------------------------------------------- Title: Chairman of the Board ------------------------------------------------------- /s/ Thomas A. Smith 5/9/01 ------------------------------------------------------- Thomas A. Smith Date EX-10 4 ex10-30.txt AMENDMENT TO EMPLOYMENT AGREEMENT EXHIBIT 10.30 AMENDMENT TO EMPLOYMENT AGREEMENT This AMENDMENT (the "Amendment") is made, effective May 8, 2001, between Oglethorpe Power Corporation (the "Company") and Elizabeth Bush Higgins ("Employee"). In consideration for the Company's continued employment of the Employee and Employee's continued employment with the Company, the parties hereby mutually agree to amend their original August 1, 2000 Employment Agreement ("Agreement") as follows: Paragraph 3 of the Agreement shall be amended by adding the following subparagraph (c): (c) Retention Bonus. In the event Employee remains employed with the Company through January 1, 2002, but resigns such employment (with notice as required by Paragraph 4(c) of the Agreement) effective at any time during the period January 2, 2002 through December 31, 2003, Employee shall receive severance pay equivalent to one (1) year of her then-current base salary, less applicable withholdings, payable in semi-monthly installments (or in such other manner as the parties mutually agree) during one-year period following her effective termination date. This severance payment, if applicable, shall be in lieu of any severance payment(s) due under Paragraph 4 of the Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Amendment: OGLETHORPE POWER COMPANY By: /s/ J. Calvin Earwood Date: 5/8/01 ------------------------------------------------------- Name: J. Calvin Earwood ------------------------------------------------------- Title: Chairman of the Board ------------------------------------------------------- /s/ Elizabeth Bush Higgins 5/9/01 ------------------------------------------------------- Elizabeth Bush Higgins Date -----END PRIVACY-ENHANCED MESSAGE-----