-----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, YZMwbTPMb3OMwFg/NCo4nIy7TkM8UeVPyvQIIPNTvsZXjqyKC0/Aa59se/RUl9DZ WPU5Z7oNmqMDh56fGxxk4w== 0000004904-94-000070.txt : 19940815 0000004904-94-000070.hdr.sgml : 19940815 ACCESSION NUMBER: 0000004904-94-000070 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940812 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN ELECTRIC POWER COMPANY INC CENTRAL INDEX KEY: 0000004904 STANDARD INDUSTRIAL CLASSIFICATION: 4911 IRS NUMBER: 134922640 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03525 FILM NUMBER: 94543729 BUSINESS ADDRESS: STREET 1: 1 RIVERSIDE PLZ CITY: COLUMBUS STATE: OH ZIP: 43215 BUSINESS PHONE: 6142231000 FORMER COMPANY: FORMER CONFORMED NAME: KINGSPORT UTILITIES INC DATE OF NAME CHANGE: 19660906 FILER: COMPANY DATA: COMPANY CONFORMED NAME: APPALACHIAN POWER CO CENTRAL INDEX KEY: 0000006879 STANDARD INDUSTRIAL CLASSIFICATION: 4911 IRS NUMBER: 540124790 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03457 FILM NUMBER: 94543730 BUSINESS ADDRESS: STREET 1: 40 FRANKLIN RD SW CITY: ROANOKE STATE: VA ZIP: 24011 BUSINESS PHONE: 7039852300 MAIL ADDRESS: STREET 1: 1 RIVERSIDE PLAZA CITY: COLUMBUS STATE: OH ZIP: 43215 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COLUMBUS SOUTHERN POWER CO /OH/ CENTRAL INDEX KEY: 0000022198 STANDARD INDUSTRIAL CLASSIFICATION: 4911 IRS NUMBER: 314154203 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-02680 FILM NUMBER: 94543731 BUSINESS ADDRESS: STREET 1: 215 N FRONT ST CITY: COLUMBUS STATE: OH ZIP: 43215 BUSINESS PHONE: 6144647700 MAIL ADDRESS: STREET 1: 1 RIVERSIDE PLAZA CITY: COLUMBUS STATE: OH ZIP: 43215 FORMER COMPANY: FORMER CONFORMED NAME: COLUMBUS & SOUTHERN OHIO ELECTRIC CO DATE OF NAME CHANGE: 19871115 FORMER COMPANY: FORMER CONFORMED NAME: COLUMBUS RAILWAY POWER & LIGHT CO DATE OF NAME CHANGE: 19600201 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INDIANA MICHIGAN POWER CO CENTRAL INDEX KEY: 0000050172 STANDARD INDUSTRIAL CLASSIFICATION: 4911 IRS NUMBER: 350410455 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03570 FILM NUMBER: 94543732 BUSINESS ADDRESS: STREET 1: ONE SUMMIT SQ STREET 2: P O BOX 60 CITY: FORT WAYNE STATE: IN ZIP: 46801 BUSINESS PHONE: 2194252111 MAIL ADDRESS: STREET 1: 1 RIVERSIDE PLAZA CITY: COLUMBUS STATE: OH ZIP: 43215 FORMER COMPANY: FORMER CONFORMED NAME: INDIANA MICHIGAN ELECTRIC CO/IN DATE OF NAME CHANGE: 19871104 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KENTUCKY POWER CO CENTRAL INDEX KEY: 0000055373 STANDARD INDUSTRIAL CLASSIFICATION: 4931 IRS NUMBER: 610247775 STATE OF INCORPORATION: KY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06858 FILM NUMBER: 94543733 BUSINESS ADDRESS: STREET 1: 1701 CENTRAL AVE CITY: ASHLAND STATE: KY ZIP: 41101 BUSINESS PHONE: 6063271111 MAIL ADDRESS: STREET 1: 1 RIVERSIDE PLAZA CITY: CPLUMBUS STATE: OH ZIP: 43215 FORMER COMPANY: FORMER CONFORMED NAME: KENTUCKY WEST VIRGINIA GAS CO DATE OF NAME CHANGE: 19660829 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OHIO POWER CO CENTRAL INDEX KEY: 0000073986 STANDARD INDUSTRIAL CLASSIFICATION: 4911 IRS NUMBER: 314271000 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06543 FILM NUMBER: 94543734 BUSINESS ADDRESS: STREET 1: 301 CLEVELAND AVE S W CITY: COLUMBUS STATE: OH ZIP: 44702 BUSINESS PHONE: 6142231000 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AEP GENERATING CO /OH/ CENTRAL INDEX KEY: 0000857571 STANDARD INDUSTRIAL CLASSIFICATION: 4911 IRS NUMBER: 311033833 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-18135 FILM NUMBER: 94543735 BUSINESS ADDRESS: STREET 1: 1 RIVERSIDE PLZ CITY: COLUMBUS STATE: OH ZIP: 43215 BUSINESS PHONE: 6142231000 10-Q 1 ALL AEP COS 10Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Quarterly Period Ended June 30, 1994 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Transition Period from to Commission Registrant; State of Incorporation; I. R. S. Employer File Number Address; and Telephone Number Identification No. 1-3525 AMERICAN ELECTRIC POWER COMPANY, INC. 13-4922640 (A New York Corporation) 1 Riverside Plaza, Columbus, Ohio 43215 Telephone (614) 223-1000 0-18135 AEP GENERATING COMPANY (An Ohio Corporation) 31-1033833 1 Riverside Plaza, Columbus, Ohio 43215 Telephone (614) 223-1000 1-3457 APPALACHIAN POWER COMPANY (A Virginia Corporation) 54-0124790 40 Franklin Road, Roanoke, Virginia 24011 Telephone (703) 985-2300 1-2680 COLUMBUS SOUTHERN POWER COMPANY (An Ohio Corporation) 31-4154203 215 North Front Street, Columbus, Ohio 43215 Telephone (614) 464-7700 1-3570 INDIANA MICHIGAN POWER COMPANY (An Indiana Corporation) 35-0410455 One Summit Square P.O. Box 60, Fort Wayne, Indiana 46801 Telephone (219) 425-2111 1-6858 KENTUCKY POWER COMPANY (A Kentucky Corporation) 61-0247775 1701 Central Avenue, Ashland, Kentucky 41101 Telephone (606) 327-1111 1-6543 OHIO POWER COMPANY (An Ohio Corporation) 31-4271000 301 Cleveland Avenue S.W., Canton, Ohio 44702 Telephone (216) 456-8173 AEP Generating Company, Columbus Southern Power Company and Kentucky Power Company meet the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and are therefore filing this Form 10-Q with the reduced disclosure format specified in General Instruction H(2) to Form 10-Q. Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file and (2) have been subject to such filing requirements for the past 90 days. Yes X No The number of shares outstanding of American Electric Power Company, Inc. Common Stock, par value $6.50, at July 31, 1994 was 184,535,000. AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES FORM 10-Q For The Quarter Ended June 30, 1994 INDEX Part I. FINANCIAL INFORMATION American Electric Power Company, Inc. and Subsidiary Companies: Consolidated Statements of Income and Consolidated Statements of Retained Earnings . . . . . Consolidated Balance Sheets . . . . . . . . . . . . . . Consolidated Statements of Cash Flows . . . . . . . . . Notes to Consolidated Financial Statements. . . . . . . Management's Discussion and Analysis of Results of Operations and Financial Condition. . . . . . . . . . AEP Generating Company: Statements of Income and Statements of Retained Earnings . . . . . . . . . . . . . . . . . . . . . . Balance Sheets . . . . . . . . . . . . . . . . . . . . Statements of Cash Flows . . . . . . . . . . . . . . . Notes to Financial Statements. . . . . . . . . . . . . Management's Narrative Analysis of Results of Operations . . . . . . . . . . . . . . . . . . . . Appalachian Power Company and Subsidiaries: Consolidated Statements of Income and Consolidated Statements of Retained Earnings . . . . Consolidated Balance Sheets. . . . . . . . . . . . . . Consolidated Statements of Cash Flows. . . . . . . . . Notes to Consolidated Financial Statements . . . . . . Management's Discussion and Analysis of Results of Operations and Financial Condition.. . . . . . . . . Columbus Southern Power Company and Subsidiaries: Consolidated Statements of Income and Consolidated Statements of Retained Earnings . . . . Consolidated Balance Sheets. . . . . . . . . . . . . . Consolidated Statements of Cash Flows. . . . . . . . . Notes to Consolidated Financial Statements . . . . . . Management's Narrative Analysis of Results of Operations . . . . . . . . . . . . . . . . . . . . . Indiana Michigan Power Company and Subsidiaries: Consolidated Statements of Income and Consolidated Statements of Retained Earnings . . . . Consolidated Balance Sheets. . . . . . . . . . . . . . Consolidated Statements of Cash Flows. . . . . . . . . Notes to Consolidated Financial Statements . . . . . . Management's Discussion and Analysis of Results of Operations and Financial Condition . . . . . . . . . Kentucky Power Company: Statements of Income and Statements of Retained Earnings . . . . . . . . . . . . . . . . . . . . . . Balance Sheets . . . . . . . . . . . . . . . . . . . . Statements of Cash Flows . . . . . . . . . . . . . . . Notes to Financial Statements. . . . . . . . . . . . . Management's Narrative Analysis of Results of Operations . . . . . . . . . . . . . . . . . . . . . Ohio Power Company and Subsidiaries: Consolidated Statements of Income and Consolidated Statements of Retained Earnings . . . . Consolidated Balance Sheets. . . . . . . . . . . . . . Consolidated Statements of Cash Flows. . . . . . . . . Notes to Consolidated Financial Statements . . . . . . Management's Discussion and Analysis of Results of Operations and Financial Condition . . . . . . . . . AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES FORM 10-Q For The Quarter Ended June 30, 1994 INDEX Part II. OTHER INFORMATION Item 1 . . . . . . . . . . . . . . . . . . . . Item 4 . . . . . . . . . . . . . . . . . . . . Item 5 . . . . . . . . . . . . . . . . . . . . Item 6 . . . . . . . . . . . . . . . . . . . . SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . This combined Form 10-Q is separately filed by American Electric Power Company, Inc., AEP Generating Company, Appalachian Power Company, Columbus Southern Power Company, Indiana Michigan Power Company, Kentucky Power Company and Ohio Power Company. Information contain herein relating to any individual registrant is filed by such registrant on its own behalf. Each registrant makes no representation as to information relating to the other registrants. AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per-share amounts) (UNAUDITED)
Three Months Ended Six Months Ended June 30, June 30, 1994 1993 1994 1993 OPERATING REVENUES . . . . . . . . . . . $1,348,563 $1,210,398 $2,836,747 $2,531,847 OPERATING EXPENSES: Fuel and Purchased Power . . . . . . . 430,823 366,345 932,392 778,703 Other Operation. . . . . . . . . . . . 244,398 236,417 490,730 468,308 Maintenance. . . . . . . . . . . . . . 132,165 134,132 275,527 263,496 Depreciation and Amortization. . . . . 142,611 132,183 281,442 262,732 Taxes Other Than Federal Income Taxes. 121,963 114,211 250,183 235,304 Federal Income Taxes . . . . . . . . . 57,176 31,914 129,597 87,143 TOTAL OPERATING EXPENSES . . . 1,129,136 1,015,202 2,359,871 2,095,686 OPERATING INCOME . . . . . . . . . . . . 219,427 195,196 476,876 436,161 NONOPERATING INCOME (LOSS): Deferred Zimmer Plant Carrying Charges (net of tax) . . . . . . . . 1,139 6,649 3,558 15,943 Other. . . . . . . . . . . . . . . . . (7,422) 4,453 (2,601) 11,122 TOTAL NONOPERATING INCOME (LOSS) . . . . . . . . . . . (6,283) 11,102 957 27,065 INCOME BEFORE INTEREST CHARGES AND PREFERRED DIVIDENDS. . . . . . . . . . 213,144 206,298 477,833 463,226 INTEREST CHARGES . . . . . . . . . . . . 96,036 105,308 194,607 214,089 PREFERRED STOCK DIVIDEND REQUIREMENTS OF SUBSIDIARIES. . . . . . . . . . . . 13,315 14,771 26,478 29,860 NET INCOME . . . . . . . . . . . . . . . $ 103,793 $ 86,219 $ 256,748 $ 219,277 AVERAGE NUMBER OF SHARES OUTSTANDING . . 184,535 184,535 184,535 184,535 EARNINGS PER SHARE . . . . . . . . . . . $0.56 $0.47 $1.39 $1.19 CASH DIVIDENDS PAID PER SHARE. . . . . . $0.60 $0.60 $1.20 $1.20 CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (UNAUDITED) Three Months Ended Six Months Ended June 30, June 30, 1994 1993 1994 1993 (in thousands) BALANCE AT BEGINNING OF PERIOD . . . . . $1,311,401 $1,381,096 $1,269,283 $1,358,800 NET INCOME . . . . . . . . . . . . . . . 103,793 86,219 256,748 219,277 DEDUCTIONS: Cash Dividends Declared. . . . . . . . 110,722 110,722 221,445 221,445 Other. . . . . . . . . . . . . . . . . 436 63 550 102 BALANCE AT END OF PERIOD . . . . . . . . $1,304,036 $1,356,530 $1,304,036 $1,356,530 See Notes to Consolidated Financial Statements. /TABLE AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 30, December 31, 1994 1993 (in thousands) ASSETS ELECTRIC UTILITY PLANT: Production . . . . . . . . . . . . . . . . . . . . . $ 9,026,405 $ 9,079,130 Transmission . . . . . . . . . . . . . . . . . . . . 3,207,212 3,169,347 Distribution . . . . . . . . . . . . . . . . . . . . 3,825,289 3,743,047 General (including mining assets and nuclear fuel) . 1,482,872 1,406,159 Construction Work in Progress. . . . . . . . . . . . 317,102 314,489 Total Electric Utility Plant . . . . . . . . 17,858,880 17,712,172 Accumulated Depreciation and Amortization. . . . . . 6,648,087 6,612,131 NET ELECTRIC UTILITY PLANT . . . . . . . . . 11,210,793 11,100,041 OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . . 732,069 724,373 CURRENT ASSETS: Cash and Cash Equivalents. . . . . . . . . . . . . . 32,346 42,561 Accounts Receivable. . . . . . . . . . . . . . . . . 480,156 467,813 Allowance for Uncollectible Accounts . . . . . . . . (5,103) (4,048) Fuel . . . . . . . . . . . . . . . . . . . . . . . . 285,041 314,441 Materials and Supplies . . . . . . . . . . . . . . . 207,799 207,373 Accrued Utility Revenues . . . . . . . . . . . . . . 152,843 169,905 Prepayments and Other. . . . . . . . . . . . . . . . 132,069 98,958 TOTAL CURRENT ASSETS . . . . . . . . . . . . 1,285,151 1,297,003 REGULATORY ASSETS: Amounts Due From Customers For Future Federal Income Taxes. . . . . . . . . . . . 1,360,858 1,363,802 Other. . . . . . . . . . . . . . . . . . . . . . . . 924,952 856,182 TOTAL REGULATORY ASSETS. . . . . . . . . . . 2,285,810 2,219,984 TOTAL. . . . . . . . . . . . . . . . . . . $15,513,823 $15,341,401 See Notes to Consolidated Financial Statements.
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 30, December 31, 1994 1993 (in thousands) CAPITALIZATION AND LIABILITIES CAPITALIZATION: Common Stock-Par Value $6.50; Shares Authorized - 300,000,000; Shares Issued - 193,534,992, of which 8,999,992 were held in the treasury. . . . . $ 1,257,977 $ 1,257,977 Paid-in Capital. . . . . . . . . . . . . . . . . . . 1,623,782 1,625,068 Retained Earnings. . . . . . . . . . . . . . . . . . 1,304,036 1,269,283 Total Common Shareowners' Equity . . . . . . 4,185,795 4,152,328 Cumulative Preferred Stocks of Subsidiaries: Not Subject to Mandatory Redemption. . . . . . . . 233,240 268,240 Subject to Mandatory Redemption. . . . . . . . . . 590,450 500,450 Long-term Debt . . . . . . . . . . . . . . . . . . . 4,849,189 4,964,060 TOTAL CAPITALIZATION . . . . . . . . . . . . 9,858,674 9,885,078 OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . . 613,664 509,317 CURRENT LIABILITIES: Long-term Debt Due Within One Year . . . . . . . . . 55,584 31,141 Short-term Debt. . . . . . . . . . . . . . . . . . . 367,303 278,976 Accounts Payable . . . . . . . . . . . . . . . . . . 245,400 259,145 Taxes Accrued. . . . . . . . . . . . . . . . . . . . 325,747 409,198 Interest Accrued . . . . . . . . . . . . . . . . . . 85,534 91,161 Obligations Under Capital Leases . . . . . . . . . . 83,324 62,215 Other. . . . . . . . . . . . . . . . . . . . . . . . 372,984 338,988 TOTAL CURRENT LIABILITIES. . . . . . . . . . 1,535,876 1,470,824 DEFERRED FEDERAL INCOME TAXES. . . . . . . . . . . . . 2,461,642 2,468,015 DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . . 471,107 487,501 DEFERRED GAIN ON SALE AND LEASEBACK - ROCKPORT PLANT UNIT 2. . . . . . . . . . . . . . . . 422,659 430,091 DEFERRED CREDITS . . . . . . . . . . . . . . . . . . . 150,201 90,575 CONTINGENCIES (Note 5) TOTAL. . . . . . . . . . . . . . . . . . . $15,513,823 $15,341,401 See Notes to Consolidated Financial Statements.
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended June 30, 1994 1993 (in thousands) OPERATING ACTIVITIES: Net Income . . . . . . . . . . . . . . . . . . . . . . . . $ 256,748 $ 219,277 Adjustments for Noncash Items: Depreciation and Amortization. . . . . . . . . . . . . . 278,790 279,052 Deferred Federal Income Taxes. . . . . . . . . . . . . . (3,429) (37,265) Deferred Investment Tax Credits. . . . . . . . . . . . . (16,302) (12,585) Amortization of Deferred Property Taxes. . . . . . . . . 59,910 61,324 Changes in Certain Current Assets and Liabilities: Special Deposits - Restricted Funds. . . . . . . . . . . - 16,316 Accounts Receivable (net). . . . . . . . . . . . . . . . (11,288) 9,399 Fuel, Materials and Supplies . . . . . . . . . . . . . . 28,974 (5,193) Accrued Utility Revenues . . . . . . . . . . . . . . . . 17,062 65,296 Prepayments and Other Current Assets . . . . . . . . . . (33,111) (39,687) Accounts Payable . . . . . . . . . . . . . . . . . . . . (13,745) (34,617) Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . (83,451) (22,116) Other (net). . . . . . . . . . . . . . . . . . . . . . . . (50,802) 19,490 Net Cash Flows From Operating Activities . . . . . . 429,356 518,691 INVESTING ACTIVITIES: Construction Expenditures. . . . . . . . . . . . . . . . . (292,509) (248,657) Proceeds from Sale of Property and Other . . . . . . . . . 37,608 (1,476) Net Cash Flows Used For Investing Activities . . . . (254,901) (250,133) FINANCING ACTIVITIES: Issuance of Cumulative Preferred Stock . . . . . . . . . . 88,787 59,095 Issuance of Long-term Debt . . . . . . . . . . . . . . . . 335,771 578,252 Change in Short-term Debt (net). . . . . . . . . . . . . . 88,327 74,221 Retirement of Cumulative Preferred Stock . . . . . . . . . (35,800) (63,952) Retirement of Long-term Debt . . . . . . . . . . . . . . . (440,310) (739,398) Dividends Paid on Common Stock . . . . . . . . . . . . . . (221,445) (221,445) Net Cash Flows Used For Financing Activities . . . . (184,670) (313,227) Net Decrease in Cash and Cash Equivalents. . . . . . . . . . (10,215) (44,669) Cash and Cash Equivalents at Beginning of Period . . . . . . 42,561 128,896 Cash and Cash Equivalents at End of Period . . . . . . . . . $ 32,346 $ 84,227 Supplemental Disclosure: Cash paid for interest net of capitalized amounts was $194,515,000 and $213,479,000 and for income taxes was $146,597,000 and $94,970,000 in 1994 and 1993, respectively. Noncash acquisitions under capital leases were $116,161,000 and $21,720,000 in 1994 and 1993, respectively. See Notes to Consolidated Financial Statements. /TABLE AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1994 (UNAUDITED) 1. GENERAL The accompanying unaudited consolidated financial state- ments should be read in conjunction with the 1993 Annual Report as incorporated in and filed with the Form 10-K. Certain prior-period amounts have been reclassified to conform to current-period presentation. 2. RATE MATTERS Rate Activity On June 27, 1994, the Virginia State Corporation Commission issued a final order granting Appalachian Power Company (APCo) an annual increase in revenues of $17.9 million. APCo had requested to increase its Virginia retail rates by $31.4 million annually and on May 4, 1993, implemented the rates, subject to refund, based on an interim order. As a result of the final order, APCo will make a revenue refund to its customers by September 1, 1994 of $15.8 million. The refund will not impact future results of operations. On July 6, 1994, Ohio Power Company (OPCo) filed an application to increase base retail rates with the Public Utilities Commission of Ohio (PUCO) seeking a $152.5 million or 13.8% increase in annual revenues. More than half of the increase reflects recovery of costs associated with Gavin Plant's flue gas desulfurization system and other costs associated with meeting environmental restrictions imposed by the Clean Air Act Amendments of 1990 (CAAA). The remainder of the request seeks to recover increased service costs since the last base rate increase in July 1986; an increase in depreciation rates which includes recovery on a remaining life basis of the cost of plant and equipment and the cost of removal of plant and equipment; and recovery of costs associated with pressurized fluidized bed combustion research and development as well as energy conservation demand-side management programs. Recovery of Fuel Costs In May 1994 the PUCO issued an order to OPCo related to fuel costs included in the electric fuel component (EFC) rate for retail customers for the period beginning December 1, 1992 through November 30, 1993. As part of the EFC review, the PUCO ruled that a 1993 dragline lease buyout by a subsidiary, Central Ohio Coal Company (COCCo), was a proper coal expense to be passed through the EFC. However, the PUCO denied recovery of the buyout as a component of affiliated coal cost during the fuel period under review. The PUCO ruled that the cost should have been included in fuel costs in 1991 when the dragline was idled. However, the cost would not have been recovered since OPCo's fuel costs in 1991 were already in excess of a PUCO ordered price cap. As a result a fuel cost disallowance was recorded in June 1994 resulting in an adverse impact on net income of $4.3 million net of taxes. The PUCO also reviewed the 1992 sale of OPCo's Martinka mining operation and a 20-year coal supply contract with an affiliate of the buyer. Although the PUCO auditor found that the sale of the Martinka mine was reasonable, the PUCO stated that its responsibility is not to approve such transactions but to determine if fuel acquisition and delivery costs are fair and reasonable during the audit period. The PUCO found that the cost of the coal contract was reasonable during the fuel period under review. The PUCO strongly recommended that another subsidiary, Windsor Coal Company, not supply coal to OPCo's Cardinal Unit 1 after the January 1995 commencement of Phase I of the CAAA. AEP's systemwide PUCO approved CAAA Phase I compliance plan includes continued use of Windsor coal at Cardinal Unit 1 until the commencement of Phase II of the CAAA in January 2000. The PUCO also recommended that OPCo commence negotiations with customers regarding the recovery of its investment in the affiliated Windsor and COCCo mines. Unless the cost of affiliated mine closures can be recovered from customers, results of operations and financial condition would be adversely affected. 3. FINANCING AND RELATED ACTIVITIES In June 1994 subsidiaries issued a $40 million series of 7.63% First Mortgage Bonds due in 2001 and two series of Cumulative Preferred Stock, $30 million at 6.85% and $25 million at 7%. 4. VALUATION OF SECURITIES On January 1, 1994, the Company adopted Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities, (SFAS 115) which requires fair value accounting for investments in equity securities with readily determinable market values and investments in debt securities except those that the reporting enterprise has the positive intent and ability to hold to maturity. Debt securities not classified as held- to-maturity, shall be classified as trading or available- for-sale. Investments held in trust for decommissioning nuclear facilities and for disposal of spent nuclear fuel were classified as available-for-sale under SFAS 115. SFAS 115 requires that unrealized gains and losses on investments classified as available-for-sale should be reported as a separate component of shareholder's equity. However, due to the rate-making process, SFAS 115 adjustments for unrealized gains and losses to the carrying value of investments held in the trusts will result in corresponding adjustments to the nuclear decommissioning liability and the regulatory asset for future recovery of spent nuclear fuel disposal costs. The cumulative effect of adopting SFAS 115 on January 1, 1994 resulted in an increase in the decommissioning and spent nuclear fuel trust fund assets of $20.4 million comprised of an unrealized holding gain of $21.4 million and an unrealized holding loss of $1 million, with no effect on net income and/or shareholder's equity. In accordance with SFAS 115, prior year amounts were not restated. The trust investments reported in other property and investments had a fair value of $321 million at January 1, 1994 and consist primarily of long-term tax-exempt municipal bonds. At January 1, 1994, the maturities of investments in debt securities ranged from 1994 to 2024. 5. CONTINGENCIES Kammer Plant On August 4, 1994, the United States Environmental Protection Agency (Federal EPA) issued a Notice of Violation (NOV) to OPCo alleging that the Kammer Plant has been operating in violation of applicable federally enforceable air pollution control requirements since January 1, 1989. The Clean Air Act provides that Federal EPA may, after the expiration of 30 days following the issuance of the NOV, commence a civil action for injunctive relief and/or civil penalties of up to $25,000 per day for each day of violation. OPCo is entering into discussions with Federal EPA in an effort to resolve the issue of the appropriate sulfur dioxide emission limits for the Kammer Plant. At this time management is unable to determine the ultimate impact of this matter on results of operations and financial condition. Proposed Changes in Regulation The Public Utility Holding Company Act of 1935 (1935 Act) is being reviewed by the Securities and Exchange Commission (SEC) and Congress for possible revision. Amendments being considered could alter the policy for pricing affiliated transactions under the 1935 Act and result in the application of a lower of cost or market test to determine the allowed price for affiliated company trans- actions. Included in provisions being considered in the legislation is a grandfathering feature that would exempt contracts between affiliates entered into before the passage of the legislation. Unless the Company's affiliated coal mining contracts are exempted, passage of such legislation or revisions of the SEC regulations under the 1935 Act could negatively impact the Company's ability to recover its cost of affiliated coal mining operations. The inability to recover such costs including any shutdown costs would adversely affect results of operations and possibly financial condition. Other The Company continues to be involved in certain other matters discussed in the 1993 Annual Report. AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION SECOND QUARTER 1994 vs. SECOND QUARTER 1993 AND YEAR-TO-DATE 1994 vs. YEAR-TO-DATE 1993 RESULTS OF OPERATIONS Net income increased 20% or $17.6 million in the second quarter and 17% or $37.5 million in the year-to-date period primarily due to increased sales; rate increases in several jurisdictions; and decreased interest expense due to the refinancing of debt at lower interest rates. The favorable effect on net income of the weather and rate increases was partly offset by excessive winter storm damage of $46 million of which $23.5 million was deferred in the Virginia jurisdiction for future recovery; a fuel cost disallowance of $4.3 million after tax related to the idling of the affiliated Big Muskie dragline; the inability to recover the cost of idling a second affiliated dragline under certain major industrial contracts which do not provide for the direct recovery of such costs; and a $8.2 million after tax provision for loss recorded in the second quarter of 1994 for a demand side management investment. Income statement lines which changed significantly were: Increase (Decrease) Second Quarter Year-to-Date (in millions) % (in millions) % Operating Revenues. . . . . . . $138.2 11 $304.9 12 Fuel and Purchased Power Expense . . . . . . . . 64.5 18 153.7 20 Depreciation and Amortization Expense. . . . . 10.4 8 18.7 7 Taxes Other Than Federal Income Taxes. . . . . 7.8 7 14.9 6 Federal Income Taxes. . . . . . 25.3 79 42.5 49 Deferred Zimmer Plant Carrying Charges (net of tax). . . . . (5.5) (83) (12.4) (78) Other Nonoperating Income . . . (11.9) N.M. (13.7) N.M. Interest Charges. . . . . . . . (9.3) (9) (19.5) (9) N.M. = Not Meaningful The substantial increase in operating revenues in both periods was due to retail rate increases, increased energy usage reflecting severe weather and growth in industrial energy requirements. The AEP System set an all-time peak demand for energy as a result of the unseasonably hot weather in June 1994 and a new winter peak demand for energy in January 1994 as a result of the extremely cold winter weather. The retail rate increases were in the Indiana, Michigan, Ohio and Virginia jurisdictions. As a result of the severe winter weather and hot June, energy sales to residential and commercial customers increased 4% and 6%, respectively, in the quarter and 7% and 5%, respectively, in the year-to-date period. Growth in the number of customers and increased energy usage accounted for the increase in industrial sales. Wholesale energy sales volume increased 11% in the quarter and 18% for the year-to-date period due to increased sales to unaffiliated utilities by the AEP System Power Pool resulting from the unseasonable weather and forced outages at unaffiliated generating units. In both periods fuel and purchased power expense increased significantly due to the weather-related increase in energy consumption which increased generation and energy purchases from unaffiliated utilities for immediate pass-through sales to other unaffiliated utilities. Also contributing to the rise in fuel expense during both periods was the cost of idling two affiliated draglines and increased utilization of coal-fired generation due to a reduction in low-cost nuclear generation resulting from a refueling outage at one nuclear unit and a maintenance outage at the other nuclear unit. The increase in depreciation and amortization expense was primarily due to the amortization of Zimmer Plant phase-in costs which increased sharply due to a court ordered cessation of phase-in plan deferrals in February 1994 and their subsequent amortization, commensurate with their recovery. The increase in taxes other than federal income tax expense was primarily due to increased West Virginia business and occupation tax on generation reflecting the increase in generation at West Virginia power plants and an increase in Ohio real and personal property taxes due to an increase in valuation and tax rates. Federal income tax expense attributable to operations increased primarily due to an increase in pre-tax operating income. Deferred Zimmer Plant carrying charges declined from the prior year since the carrying charges in 1994 were accrued on the unamortized phase-in plan deferral balance while the 1993 carrying charges were accrued on the larger Zimmer Plant investment not yet phased into rates. The decrease in the quarter and year-to-date periods in other nonoperating income was mainly due to a subsidiary, AEP Investments, Inc., recording a provision for loss of $8.2 million after tax in June 1994 on a demand side management investment. Also contributing to the decrease in the year-to-date period was the effect of interest income recorded in March 1993 on tax refunds received from the Internal Revenue Service in connection with the settlement of audits of prior years' tax returns. Refinancing programs of several major subsidiaries during 1993 reduced the average interest rate on outstanding long-term debt in 1994 and also decreased the principal amount of long-term debt outstanding resulting in the decline in interest expense in both periods. FINANCIAL CONDITION Total plant and property additions including capital leases for the first six months of 1994 were $411 million. During the first six months subsidiaries issued $335 million principal amount of long-term debt at interest rates ranging from 3.725% (variable) to 7.63% and three series of cumulative preferred stock: $35 million at 6.30%, $30 million at 6.85% and $25 million at 7%. Subsidiaries retired $432 million principal amount of long-term debt with interest rates ranging from 5-1/8% to 9-7/8%; redeemed $35 million of $100 par value 7.76% cumulative preferred stock; and increased short-term debt by $88 million since the beginning of the year. RECOVERY OF FUEL COSTS In May 1994 the Public Utilities Commission of Ohio (PUCO) issued an order to Ohio Power Company (OPCo) related to fuel costs included in the electric fuel component (EFC) rate for retail customers for the period beginning December 1, 1992 through November 30, 1993. As part of the EFC review, the PUCO ruled that a 1993 dragline lease buyout by a subsidiary, Central Ohio Coal Company (COCCo), was a proper coal expense to be passed through the EFC. However, the PUCO denied recovery of the buyout as a component of affiliated coal cost during the fuel period under review. The PUCO ruled that the cost should have been included in fuel costs in 1991 when the dragline was idled. However, the cost would not have been recovered since OPCo's fuel costs in 1991 were already in excess of a PUCO ordered price cap. As a result a fuel cost disallowance was recorded in June 1994 resulting in an adverse impact on net income of $4.3 million net of taxes. In June 1994 COCCo idled another leased dragline and shovel and bought out the lease. Management concluded that this mining equipment would no longer be needed due to the Muskingum River Plant's Clean Air Act Amendments of 1990 (CAAA) compliance plan to use low sulfur coal from unaffiliated sources. The idling of this equipment and related lease buyout are not expected to have a material effect on future results of operations. The PUCO also reviewed the 1992 sale of OPCo's Martinka mining operation and a 20-year coal supply contract with an affiliate of the buyer. Although the PUCO auditor found that the sale of the Martinka mine was reasonable, the PUCO stated that its responsibility is not to approve such transactions but to determine if fuel acquisition and delivery costs are fair and reasonable during the audit period. The PUCO found that the cost of the coal contract was reasonable during the fuel period under review. The PUCO strongly recommended that another subsidiary, Windsor Coal Company, not supply coal to OPCo's Cardinal Unit 1 after the January 1995 commencement of Phase I of the CAAA. AEP's systemwide PUCO approved CAAA Phase I compliance plan includes continued use of Windsor coal at Cardinal Unit 1 until the commencement of Phase II of the CAAA in January 2000. The PUCO also recommended that OPCo commence negotiations with customers regarding the recovery of its investment in the affiliated Windsor and COCCo mines. Unless the cost of affiliated mine closures can be recovered from customers, results of operations and financial condition would be adversely affected. RATE ACTIVITY On July 6, 1994, OPCo filed with the PUCO for an annual revenue increase of $152.5 million. More than half of the requested rate increase is to recover costs associated with Gavin Plant's flue gas desulfurization system (scrubbers) and other costs resulting from complying with CAAA. The remainder of the increase is to recover the additional cost of providing service to customers since the last base rate increase in July of 1986; increased depreciation rates for investment in plant and equip- ment based on a remaining life method and recovery of site specific removal costs; and recovery of costs associated with pressurized fluidized bed combustion research and development and energy conservation demand-side management programs. NOTICE OF VIOLATION - KAMMER PLANT On August 4, 1994, the United States Environmental Protection Agency (Federal EPA) issued a Notice of Violation (NOV) to OPCo alleging that the Kammer Plant has been operating in violation of applicable federally enforceable air pollution control requirements since January 1, 1989. By law the Federal EPA may seek penalties of up to $25,000 per day for each day of violation. OPCo is entering into discussions with Federal EPA in an effort to resolve the issue of the appropriate sulfur dioxide emission limits for the Kammer Plant. At this time management is unable to determine the ultimate impact of this matter on results of operations and financial condition. PROPOSED CHANGES IN REGULATION Congress is considering amendments to the Public Utility Holding Company Act of 1935 (1935 Act) and the Securities and Exchange Commission is considering amending its rules promulgated under the 1935 Act. These amendments could alter the policy for pricing affiliated transactions under the 1935 Act and result in the application of a lower of cost or market test to determine the allowed price for affiliated company transactions. Pro- visions in the legislation being considered may create a grandfathering feature that would exempt contracts between affiliates entered into before the passage of the legislation. The adoption of any new policy regarding pricing of affiliated transactions could affect the Company's ability to recover the costs of its affiliated mining operations. NUCLEAR DECOMMISSIONING The Financial Accounting Standards Board (FASB), on June 15, 1994, added Accounting for Nuclear Decommissioning Liabilities to its agenda. Among the topics to be studied is the question of when future decommissioning liabilities should be recognized. The Company and the electric utility industry accrue such costs over the service life of its facilities. Should the FASB decide to require that the liability for such costs be recorded in full, it is expected that the Company will be able to record a related asset. As a result it is not expected that the FASB project will materially affect results of operations or financial position. FOREIGN PROJECTS On June 27, 1994, AEP Resources International, LTD. (AEPRI) signed an agreement of intent which could lead to a joint venture with the Northeast China Electric Power Group Corporation (NEPG) to finance, construct and operate two 1300-megawatt coal-fired generating units (the Project) in Suizhong, Liaoning Province, People's Republic of China (PRC). Based on the agreement, if the decision is made to construct the plants, the total investment by the joint venture in the Project is currently estimated to be $2 billion U.S. dollars. Each party to the joint venture will have an equity interest and may represent other parties having equity interests in the joint venture. It is intended that the aggregate equity interest by NEPG and their parties to the joint venture will be 51% and that the aggregate equity interest in the joint venture by AEPRI and its parties to the joint venture will be 49%. AEPRI has filed at the Federal Energy Regulatory Commission (FERC) for authority to be an exempt wholesale generator to operate and own an interest in the Project. American Electric Power Company, Inc. and AEP Resources, Inc., the parent of AEPRI, have filed with SEC under the 1935 Act for authority to raise up to $300 million of debt or equity which may be invested in the Project and other independent power projects. The Project will build the largest coal-fired generating units in Asia. Construction could begin within two years with operation expected shortly after 2000. AEP GENERATING COMPANY STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Six Months Ended June 30, June 30, 1994 1993 1994 1993 (in thousands) OPERATING REVENUES . . . . . . . . . . . $59,530 $54,138 $119,431 $112,902 OPERATING EXPENSES: Fuel . . . . . . . . . . . . . . . . . 25,709 19,555 51,739 42,730 Rent - Rockport Plant Unit 2 . . . . . 16,574 16,574 33,152 33,188 Other Operation. . . . . . . . . . . . 2,680 2,838 5,283 5,498 Maintenance. . . . . . . . . . . . . . 2,790 3,335 5,575 6,673 Depreciation . . . . . . . . . . . . . 5,408 5,382 10,816 10,838 Taxes Other Than Federal Income Taxes. 1,403 1,359 2,492 2,971 Federal Income Taxes . . . . . . . . . 1,166 1,074 2,475 2,449 TOTAL OPERATING EXPENSES . . . 55,730 50,117 111,532 104,347 OPERATING INCOME . . . . . . . . . . . . 3,800 4,021 7,899 8,555 NONOPERATING INCOME. . . . . . . . . . . 868 1,121 1,685 2,520 INCOME BEFORE INTEREST CHARGES . . . . . 4,668 5,142 9,584 11,075 INTEREST CHARGES . . . . . . . . . . . . 2,392 2,747 4,817 5,424 NET INCOME . . . . . . . . . . . . . . . $ 2,276 $ 2,395 $ 4,767 $ 5,651 STATEMENTS OF RETAINED EARNINGS (UNAUDITED) Three Months Ended Six Months Ended June 30, June 30, 1994 1993 1994 1993 (in thousands) BALANCE AT BEGINNING OF PERIOD . . . . . $1,269 $19,232 $1,339 $23,173 NET INCOME . . . . . . . . . . . . . . . 2,276 2,395 4,767 5,651 CASH DIVIDENDS DECLARED. . . . . . . . . 2,360 7,197 4,921 14,394 BALANCE AT END OF PERIOD . . . . . . . . $1,185 $14,430 $1,185 $14,430 The common stock of the Company is wholly owned by American Electric Power Company, Inc. See Notes to Financial Statements. /TABLE AEP GENERATING COMPANY BALANCE SHEETS (UNAUDITED)
June 30, December 31, 1994 1993 (in thousands) ASSETS ELECTRIC UTILITY PLANT: Production. . . . . . . . . . . . . . . . . . . . . . . . $625,816 $627,502 General . . . . . . . . . . . . . . . . . . . . . . . . . 2,702 1,757 Construction Work in Progress . . . . . . . . . . . . . . 2,223 1,773 Total Electric Utility Plant. . . . . . . . . . . 630,741 631,032 Accumulated Depreciation. . . . . . . . . . . . . . . . . 189,455 181,587 NET ELECTRIC UTILITY PLANT. . . . . . . . . . . . 441,286 449,445 CURRENT ASSETS: Cash and Cash Equivalents . . . . . . . . . . . . . . . . 24 3 Accounts Receivable . . . . . . . . . . . . . . . . . . . 18,614 18,729 Fuel. . . . . . . . . . . . . . . . . . . . . . . . . . . 15,264 12,867 Materials and Supplies. . . . . . . . . . . . . . . . . . 4,242 4,121 Prepayments . . . . . . . . . . . . . . . . . . . . . . . 579 731 TOTAL CURRENT ASSETS. . . . . . . . . . . . . . . 38,723 36,451 DEFERRED FEDERAL INCOME TAX ASSETS. . . . . . . . . . . . . 7,256 10,975 REGULATORY ASSETS . . . . . . . . . . . . . . . . . . . . . 32,010 30,536 TOTAL . . . . . . . . . . . . . . . . . . . . . $519,275 $527,407 See Notes to Financial Statements. /TABLE AEP GENERATING COMPANY BALANCE SHEETS (UNAUDITED)
June 30, December 31, 1994 1993 (in thousands) CAPITALIZATION AND LIABILITIES CAPITALIZATION: Common Stock - Par Value $1,000: Authorized and Outstanding - 1,000 Shares . . . . . . . $ 1,000 $ 1,000 Paid-in Capital . . . . . . . . . . . . . . . . . . . . . 50,335 54,435 Retained Earnings . . . . . . . . . . . . . . . . . . . . 1,185 1,339 Total Common Shareowner's Equity. . . . . . . . . 52,520 56,774 Long-term Debt. . . . . . . . . . . . . . . . . . . . . . 108,264 108,188 TOTAL CAPITALIZATION. . . . . . . . . . . . . . . 160,784 164,962 OTHER NONCURRENT LIABILITIES. . . . . . . . . . . . . . . . 2,181 1,736 CURRENT LIABILITIES: Short-term Debt - Notes Payable . . . . . . . . . . . . . 10,250 15,250 Accounts Payable. . . . . . . . . . . . . . . . . . . . . 10,619 8,809 Taxes Accrued . . . . . . . . . . . . . . . . . . . . . . 6,476 3,697 Interest Accrued. . . . . . . . . . . . . . . . . . . . . 2,955 2,963 Rent Accrued - Rockport Plant Unit 2. . . . . . . . . . . 5,588 5,588 Other . . . . . . . . . . . . . . . . . . . . . . . . . . 2,336 1,063 TOTAL CURRENT LIABILITIES . . . . . . . . . . . . 38,224 37,370 DEFERRED GAIN ON SALE AND LEASEBACK - ROCKPORT PLANT UNIT 2 . . . . . . . . . . . . . . . . . . 214,867 218,646 DEFERRED INVESTMENT TAX CREDITS . . . . . . . . . . . . . . 82,209 83,901 DEFERRED AMOUNTS DUE TO CUSTOMERS FOR FEDERAL INCOME TAXES. . . . . . . . . . . . . . . . . . . 20,019 20,792 DEFERRED CREDITS. . . . . . . . . . . . . . . . . . . . . . 991 - CONTINGENCIES (Note 2) TOTAL . . . . . . . . . . . . . . . . . . . . . $519,275 $527,407 See Notes to Financial Statements.
AEP GENERATING COMPANY STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended June 30, 1994 1993 (in thousands) OPERATING ACTIVITIES: Net Income . . . . . . . . . . . . . . . . . . . . . . . . $ 4,767 $ 5,651 Adjustments for Noncash Items: Depreciation . . . . . . . . . . . . . . . . . . . . . . 10,816 10,838 Deferred Federal Income Taxes. . . . . . . . . . . . . . 2,945 1,899 Deferred Investment Tax Credits. . . . . . . . . . . . . (1,692) (1,695) Amortization of Deferred Gain on Sale and Leaseback - Rockport Plant Unit 2. . . . . . . . . (3,779) (3,779) Changes in Certain Current Assets and Liabilities: Accounts Receivable. . . . . . . . . . . . . . . . . . . 115 1,031 Fuel, Materials and Supplies . . . . . . . . . . . . . . (2,518) 2,408 Accounts Payable . . . . . . . . . . . . . . . . . . . . 1,810 393 Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . 2,779 12,878 Other (net). . . . . . . . . . . . . . . . . . . . . . . . 849 (1,138) Net Cash Flows From Operating Activities . . . . . . 16,092 28,486 INVESTING ACTIVITIES - Construction Expenditures . . . . . . (2,050) (1,291) FINANCING ACTIVITIES: Capital Contributions Returned to Parent Company . . . . . (4,100) - Change in Short-term Debt (net). . . . . . . . . . . . . . (5,000) - Dividends Paid . . . . . . . . . . . . . . . . . . . . . . (4,921) (14,394) Net Cash Flows Used For Financing Activities . . . . (14,021) (14,394) Net Increase in Cash and Cash Equivalents. . . . . . . . . . 21 12,801 Cash and Cash Equivalents at Beginning of Period . . . . . . 3 27,974 Cash and Cash Equivalents at End of Period . . . . . . . . . $ 24 $ 40,775 Supplemental Disclosure: Cash paid (received) for interest net of capitalized amounts was $4,659,000 and $5,294,000 and for income taxes was $(986,000) and $(9,550,000) in 1994 and 1993, respectively. See Notes to Financial Statements.
AEP GENERATING COMPANY NOTES TO FINANCIAL STATEMENTS JUNE 30, 1994 (UNAUDITED) 1. GENERAL The accompanying unaudited financial statements should be read in conjunction with the 1993 Annual Report as incorporated in and filed with the Form 10-K. 2. CONTINGENCIES The Company continues to be involved in certain matters discussed in its 1993 Annual Report. AEP GENERATING COMPANY MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS SECOND QUARTER 1994 vs. SECOND QUARTER 1993 AND YEAR-TO-DATE 1994 vs. YEAR-TO-DATE 1993 Operating revenues are derived from the sale of Rockport Plant energy and capacity to two affiliated companies and one unaffiliated utility pursuant to Federal Energy Regulatory Commission (FERC) approved long-term unit power agreements. The unit power agreements provide for recovery of costs including a FERC approved rate of return on common equity and a return on other capital net of temporary cash investments. Net income declined $0.1 million or 5% in the second quarter and $0.9 million or 16% in the year-to-date period reflecting a reduction in common equity on which a return is earned and lower interest income, offset in part by an increase in the return on other capital due to significantly lower temporary cash investments during 1994. The reduction in common equity resulted from the payment of dividends in excess of net income as well as returns of capital to the parent company. Income statement items which changed significantly were as follows: Increase (Decrease) Second Quarter Year-to-Date (in millions) % (in millions) % Operating Revenues . . . . . $ 5.4 10 $ 6.5 6 Fuel Expense . . . . . . . . 6.2 31 9.0 21 Other Operation Expense. . . (0.2) (6) (0.2) (4) Maintenance Expense. . . . . (0.5) (16) (1.1) (16) Taxes Other Than Federal Income Taxes . . . . . . . - - (0.5) (16) Federal Income Taxes . . . . 0.1 9 - - Nonoperating Income. . . . . (0.3) (23) (0.8) (33) Interest Charges . . . . . . (0.4) (13) (0.6) (11) The increase in operating revenues reflects the recovery of increased fuel costs. Fuel expense increased as generation increased 29% in the second quarter and 9% in the year-to-date period. Generation was lower in 1993 due to Rockport Plant Unit 2 being out-of-service for routine maintenance in April and May of 1993. The effect of a coal transportation cost refund received in the first quarter of 1993 also contributed to the increase in comparative fuel expense during the year-to-date period. Other operation expenses decreased due to lower administrative and general costs. Higher maintenance expense in 1993 due to planned boiler inspections and repairs at both Rockport Plant units resulted in the decrease in maintenance expense in 1994 as only one unit is scheduled for maintenance during the current year. Taxes other than federal income taxes decreased in the year-to-date period as a result of an over accrual adjustment for Indiana property taxes recorded in 1993 and a reduction in Indiana supplemental net income taxes reflecting reduced taxable income for state tax purposes. The increase in federal income tax expense attributable to operations in the second quarter was primarily due to an increase in pre-tax operating income. Nonoperating income decreased in both periods due to a significant reduction in interest income as well as related tax reflecting reduced temporary cash investments in 1994 as compared to 1993. The reduction in year-to-date nonoperating income was also caused by interest income recorded in March 1993 on prior years' income tax refunds from the Internal Revenue Service. The redemption of a $55 million installment purchase contract in December 1993 accounted for the decline in interest charges. APPALACHIAN POWER COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Six Months Ended June 30, June 30, 1994 1993 1994 1993 (in thousands) OPERATING REVENUES . . . . . . . . . . . $369,862 $340,617 $807,957 $733,653 OPERATING EXPENSES: Fuel . . . . . . . . . . . . . . . . . 95,156 84,602 206,694 168,611 Purchased Power. . . . . . . . . . . . 76,741 71,540 171,604 163,294 Other Operation. . . . . . . . . . . . 45,875 47,878 94,467 93,078 Maintenance. . . . . . . . . . . . . . 30,419 29,557 70,996 57,793 Depreciation and Amortization. . . . . 31,670 30,583 63,182 61,090 Taxes Other Than Federal Income Taxes. 29,356 24,417 62,405 51,656 Federal Income Taxes . . . . . . . . . 11,983 7,167 30,005 25,511 TOTAL OPERATING EXPENSES . . . 321,200 295,744 699,353 621,033 OPERATING INCOME . . . . . . . . . . . . 48,662 44,873 108,604 112,620 NONOPERATING LOSS. . . . . . . . . . . . (853) (1,349) (3,543) (2,437) INCOME BEFORE INTEREST CHARGES . . . . . 47,809 43,524 105,061 110,183 INTEREST CHARGES . . . . . . . . . . . . 23,801 25,096 48,521 50,201 NET INCOME . . . . . . . . . . . . . . . 24,008 18,428 56,540 59,982 PREFERRED STOCK DIVIDEND REQUIREMENTS. . 3,688 4,216 7,280 8,455 EARNINGS APPLICABLE TO COMMON STOCK. . . $ 20,320 $ 14,212 $ 49,260 $ 51,527 CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (UNAUDITED) Three Months Ended Six Months Ended June 30, June 30, 1994 1993 1994 1993 (in thousands) BALANCE AT BEGINNING OF PERIOD . . . . . $229,721 $240,507 $227,816 $229,920 NET INCOME . . . . . . . . . . . . . . . 24,008 18,428 56,540 59,982 DEDUCTIONS: Cash Dividends Declared: Common Stock . . . . . . . . . . . . 27,035 26,729 54,070 53,458 Cumulative Preferred Stock . . . . . 3,674 4,100 7,081 8,222 Capital Stock Expense. . . . . . . . . 185 117 370 233 BALANCE AT END OF PERIOD . . . . . . . . $222,835 $227,989 $222,835 $227,989 The common stock of the Company is wholly owned by American Electric Power Company, Inc. See Notes to Consolidated Financial Statements. /TABLE APPALACHIAN POWER COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 30, December 31, 1994 1993 (in thousands) ASSETS ELECTRIC UTILITY PLANT: Production . . . . . . . . . . . . . . . . . . . . . $1,811,296 $1,781,005 Transmission . . . . . . . . . . . . . . . . . . . . 994,139 987,147 Distribution . . . . . . . . . . . . . . . . . . . . 1,260,602 1,225,436 General. . . . . . . . . . . . . . . . . . . . . . . 154,322 140,942 Construction Work in Progress. . . . . . . . . . . . 69,310 59,170 Total Electric Utility Plant . . . . . . . . 4,289,669 4,193,700 Accumulated Depreciation and Amortization. . . . . . 1,592,104 1,550,855 NET ELECTRIC UTILITY PLANT . . . . . . . . . 2,697,565 2,642,845 OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . . 49,718 51,551 CURRENT ASSETS: Cash and Cash Equivalents. . . . . . . . . . . . . . 3,894 4,626 Accounts Receivable (net). . . . . . . . . . . . . . 136,275 130,862 Fuel . . . . . . . . . . . . . . . . . . . . . . . . 56,397 46,881 Materials and Supplies . . . . . . . . . . . . . . . 45,186 43,351 Accrued Utility Revenues . . . . . . . . . . . . . . 43,895 58,294 Prepayments. . . . . . . . . . . . . . . . . . . . . 14,993 7,430 TOTAL CURRENT ASSETS . . . . . . . . . . . . 300,640 291,444 REGULATORY ASSETS: Amounts Due From Customers For Future Federal Income Taxes . . . . . . . . . . . . . . . 316,712 320,160 Other. . . . . . . . . . . . . . . . . . . . . . . . 146,414 122,367 TOTAL REGULATORY ASSETS. . . . . . . . . . . 463,126 442,527 TOTAL. . . . . . . . . . . . . . . . . . . $3,511,049 $3,428,367 See Notes to Consolidated Financial Statements.
APPALACHIAN POWER COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 30, December 31, 1994 1993 (in thousands) CAPITALIZATION AND LIABILITIES CAPITALIZATION: Common Stock - No Par Value: Authorized - 30,000,000 Shares Outstanding - 13,499,500 Shares. . . . . . . . . . $ 260,458 $ 260,458 Paid-in Capital. . . . . . . . . . . . . . . . . . . 494,408 494,834 Retained Earnings. . . . . . . . . . . . . . . . . . 222,835 227,816 Total Common Shareowner's Equity . . . . . . 977,701 983,108 Cumulative Preferred Stock: Not Subject to Mandatory Redemption. . . . . . . . 55,000 55,000 Subject to Mandatory Redemption. . . . . . . . . . 190,450 160,450 Long-term Debt . . . . . . . . . . . . . . . . . . . 1,158,048 1,215,124 TOTAL CAPITALIZATION . . . . . . . . . . . . 2,381,199 2,413,682 OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . . 60,722 55,865 CURRENT LIABILITIES: Short-term Debt. . . . . . . . . . . . . . . . . . . 115,150 39,500 Accounts Payable . . . . . . . . . . . . . . . . . . 94,586 68,158 Taxes Accrued. . . . . . . . . . . . . . . . . . . . 39,452 52,128 Customer Deposits. . . . . . . . . . . . . . . . . . 13,761 13,670 Interest Accrued . . . . . . . . . . . . . . . . . . 16,405 18,212 Revenue Refunds Accrued. . . . . . . . . . . . . . . 15,846 - Other. . . . . . . . . . . . . . . . . . . . . . . . 65,032 71,259 TOTAL CURRENT LIABILITIES. . . . . . . . . . 360,232 262,927 DEFERRED FEDERAL INCOME TAXES. . . . . . . . . . . . . 588,016 578,948 DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . . 80,722 82,987 REGULATORY LIABILITIES AND DEFERRED CREDITS. . . . . . 40,158 33,958 CONTINGENCIES (Note 4) TOTAL. . . . . . . . . . . . . . . . . . . $3,511,049 $3,428,367 See Notes to Consolidated Financial Statements. /TABLE APPALACHIAN POWER COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended June 30, 1994 1993 (in thousands) OPERATING ACTIVITIES: Net Income . . . . . . . . . . . . . . . . . . . . . . . . $ 56,540 $ 59,982 Adjustments for Noncash Items: Depreciation and Amortization. . . . . . . . . . . . . . 64,453 62,308 Deferred Federal Income Taxes. . . . . . . . . . . . . . 12,492 (3,490) Deferred Investment Tax Credits. . . . . . . . . . . . . (2,448) (2,463) Deferred Power Supply Costs (net). . . . . . . . . . . . 5,959 15,213 Storm Damage Expense Deferrals (net) . . . . . . . . . . (22,803) (2,347) Changes in Certain Current Assets and Liabilities: Accounts Receivable (net). . . . . . . . . . . . . . . . (5,413) (6,088) Fuel, Materials and Supplies . . . . . . . . . . . . . . (11,351) (10,701) Accrued Utility Revenues . . . . . . . . . . . . . . . . 14,399 14,489 Accounts Payable . . . . . . . . . . . . . . . . . . . . 26,428 (12,437) Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . (12,676) 1,668 Other (net). . . . . . . . . . . . . . . . . . . . . . . . (9,467) 7,470 Net Cash Flows From Operating Activities . . . . . . 116,113 123,604 INVESTING ACTIVITIES - Construction Expenditures . . . . . . (102,812) (80,614) FINANCING ACTIVITIES: Issuance of Cumulative Preferred Stock . . . . . . . . . . 29,574 - Issuance of Long-term Debt . . . . . . . . . . . . . . . . - 138,737 Change in Short-term Debt (net). . . . . . . . . . . . . . 75,650 1,900 Retirement of Long-term Debt . . . . . . . . . . . . . . . (58,221) (126,663) Dividends Paid on Common Stock . . . . . . . . . . . . . . (54,070) (53,458) Dividends Paid on Cumulative Preferred Stock . . . . . . . (6,966) (8,244) Net Cash Flows Used For Financing Activities . . . . (14,033) (47,728) Net Decrease in Cash and Cash Equivalents. . . . . . . . . . (732) (4,738) Cash and Cash Equivalents at Beginning of Period . . . . . . 4,626 9,501 Cash and Cash Equivalents at End of Period . . . . . . . . . $ 3,894 $ 4,763 Supplemental Disclosure: Cash paid for interest net of capitalized amounts was $49,161,000 and $51,556,000 and for income taxes was $27,781,000 and $27,937,000 in 1994 and 1993, respectively. Noncash acquisitions under capital leases were $13,773,000 and $5,460,000 in 1994 and 1993, respectively. See Notes to Consolidated Financial Statements. /TABLE APPALACHIAN POWER COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1994 (UNAUDITED) 1. GENERAL The accompanying unaudited consolidated financial state- ments should be read in conjunction with the 1993 Annual Report as incorporated in and filed with the Form 10-K. Certain prior-period amounts have been reclassified to conform to current-period presentation. 2. RATE MATTERS On June 27, 1994, the Virginia State Corporation Commission issued a final order granting the Company an annual increase in revenues of $17.9 million. The Company had requested to increase its Virginia retail rates by $31.4 million annually and on May 4, 1993, implemented the rates, subject to refund, based on an interim order. As a result of the final order, the Company will make a revenue refund to its customers by September 1, 1994 of $15.8 million. The refund will not impact future results of operations. 3. FINANCING ACTIVITIES In June 1994, the Company issued $30 million of $100 stated value 6.85% cumulative preferred stock. 4. CONTINGENCIES The Company continues to be involved in certain matters discussed in its 1993 Annual Report. APPALACHIAN POWER COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION SECOND QUARTER 1994 vs. SECOND QUARTER 1993 AND YEAR-TO-DATE 1994 vs. YEAR-TO-DATE 1993 RESULTS OF OPERATIONS Net income increased $5.6 million or 30% in the quarter due to unseasonable weather and the favorable resolution of a rate proceeding in the Virginia retail jurisdiction. Although severe winter weather caused energy sales to increase substantially and retail rates were increased in the Virginia jurisdiction, year- to-date net income decreased $3.4 million or 6% primarily due to excessive winter storm damage. In both periods the favorable impact of the unseasonable weather on energy sales was partly offset by increased capacity costs from the AEP System Power Pool (Power Pool) and an increase in West Virginia business and occupation taxes on generation reflecting a weather-related increase in generation. Income statement lines which changed significantly were: Increase (Decrease) Second Quarter Year-to-Date (in millions) % (in millions) % Operating Revenues . . . . $29.2 9 $74.3 10 Fuel Expense . . . . . . . 10.6 12 38.1 23 Purchased Power Expense. . 5.2 7 8.3 5 Maintenance Expense. . . . 0.9 3 13.2 23 Taxes Other Than Federal Income Taxes . . . . . . 4.9 20 10.7 21 Federal Income Taxes . . . 4.8 67 4.5 18 Nonoperating Loss. . . . . (0.5) (37) 1.1 45 Interest Charges . . . . . (1.3) (5) (1.7) (3) The significant increase in operating revenues in both periods was primarily due to increased energy demand by retail and wholesale customers as a result of unseasonable weather (severe winter weather in the first quarter of 1994 and unseasonably hot weather in June 1994) and the effects of the retail rate increase. Residential energy sales increased 1% in the quarter and 6% in the year-to-date period; sales to commercial customers rose 5% in both periods; and industrial sales increased 3% in the quarter and 2% in the year-to-date period. Wholesale energy sales increased as sales to unaffiliated utilities, including the Company's share of sales to unaffiliated utilities made by the Power Pool, increased as a result of the unseasonable weather and outages at unaffiliated generating units. Fuel expense increased in both periods primarily due to an increase in coal-fired generation reflecting the increased demand for retail and wholesale energy and fewer maintenance outages offset in part by a reduction in the average cost of fuel burned. Increased energy purchases from unaffiliated utilities for pass-through sales to other unaffiliated utilities resulted in the increase in purchased power expense in both periods reflecting the impact of severe winter weather in the first quarter of 1994, hot weather in the second quarter and outages at unaffiliated generating units on demand for wholesale energy. Increased Power Pool capacity charges also contributed to increased purchased power expense. The Power Pool allocates capacity costs to its members based on their relative peak demands in the prior twelve months. As a result of a new all- time internal peak demand experienced in January 1994, the Company is charged with a greater portion of the Power Pool's capacity charges which are recorded as purchased power expense. Until the Company is able to recover from its ratepayers the increase in capacity charges, currently estimated to be $27 million for 1994 when compared to 1993, results of operations will be adversely affected. The Company's ability to timely recover the additional Power Pool capacity charges above those currently in rates is affected by the time required to file and receive a base rate increase in Virginia and the three-year rate change moratorium in West Virginia ending October 31, 1996. A January 1994 snow storm, primarily in the West Virginia service territory, two major ice storms in February and March 1994, mainly in the Virginia service territory, and several other smaller storms significantly increased year-to-date maintenance expense. Storm damage expenditures from these storms in 1994 were $43 million of which $23.5 million of Virginia jurisdictional incremental expenses were deferred for future recovery as a regulatory asset in accordance with a prior precedent. Should the Company be unable to recover such deferrals in its next Virginia rate case, results of operations would be adversely impacted. The storm-related increases in maintenance expense were partly offset by reduced generating plant maintenance. Taxes other than federal income taxes increased primarily due to the generation based West Virginia business and occupation tax reflecting increased generation at West Virginia power plants to meet the increase in demand. The increase in federal income tax expense in both periods was primarily due to an increase in pre-tax operating income and changes in certain book/tax differences which are accounted for on a flow-through basis for rate-making purposes. Under SFAS 109, Accounting for Income Taxes, deferred taxes associated with book/tax differences flowed through to affect cost of service for rate-making purposes are recorded on the balance sheet with a corresponding regulatory asset or liability however, the current effect of such items is reflected in the income statement. The implementation of SFAS 112 Employers' Accounting for Postemployment Benefits by the Company's subsidiaries which were formerly engaged in coal-mining and the recordation of increased retiree benefits expense by these subsidiaries resulted in the year-to-date increase in nonoperating loss. Interest expense decreased primarily as a result of refinancing long-term debt at lower interest rates partly offset by the effect of an increase in short-term debt and the accrual of interest on the revenue refund. FINANCIAL CONDITION Total plant and property additions including capital leases for the first six months of 1994 were $117 million, a 35% increase. In March 1994, the Company redeemed the remaining $56.7 million outstanding balance of 8-3/4% Series First Mortgage Bonds due in 2017. In June 1994, the Company issued $30 million of $100 stated value 6.85% cumulative preferred stock. Outstanding short-term debt increased $75.7 million from year-end levels. COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Six Months Ended June 30, June 30, 1994 1993 1994 1993 (in thousands) OPERATING REVENUES . . . . . . . . . . . $256,754 $219,820 $512,583 $439,695 OPERATING EXPENSES: Fuel . . . . . . . . . . . . . . . . . 48,022 32,648 101,654 82,778 Purchased Power. . . . . . . . . . . . 35,249 44,695 74,645 78,285 Other Operation. . . . . . . . . . . . 44,318 40,038 86,862 80,756 Maintenance. . . . . . . . . . . . . . 16,780 17,288 32,608 33,795 Depreciation . . . . . . . . . . . . . 20,728 21,469 41,318 42,831 Amortization (Deferral) of Zimmer Plant Phase-in Costs . . . . . . . . 7,466 (2,325) 10,851 (5,917) Taxes Other Than Federal Income Taxes. 26,148 25,180 51,444 50,267 Federal Income Taxes . . . . . . . . . 13,520 7,691 25,210 13,804 TOTAL OPERATING EXPENSES . . . 212,231 186,684 424,592 376,599 OPERATING INCOME . . . . . . . . . . . . 44,523 33,136 87,991 63,096 NONOPERATING INCOME: Deferred Zimmer Plant Carrying Charges (net of tax). . . . . . . . . 1,139 6,649 3,558 15,943 Other. . . . . . . . . . . . . . . . . 317 1,416 998 2,490 TOTAL NONOPERATING INCOME. . . 1,456 8,065 4,556 18,433 INCOME BEFORE INTEREST CHARGES . . . . . 45,979 41,201 92,547 81,529 INTEREST CHARGES . . . . . . . . . . . . 20,737 22,551 42,653 44,649 NET INCOME . . . . . . . . . . . . . . . 25,242 18,650 49,894 36,880 PREFERRED STOCK DIVIDEND REQUIREMENTS. . 2,911 2,765 5,677 5,531 EARNINGS APPLICABLE TO COMMON STOCK. . . $ 22,331 $ 15,885 $ 44,217 $ 31,349 CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (UNAUDITED) Three Months Ended Six Months Ended June 30, June 30, 1994 1993 1994 1993 (in thousands) BALANCE AT BEGINNING OF PERIOD . . . . . $22,942 $122,806 $18,288 $127,562 NET INCOME . . . . . . . . . . . . . . . 25,242 18,650 49,894 36,880 DEDUCTIONS: Cash Dividends Declared: Common Stock . . . . . . . . . . . . 17,197 5,251 34,394 25,436 Cumulative Preferred Stock . . . . . 3,057 2,765 5,823 5,531 Capital Stock Expense. . . . . . . . . 35 35 70 70 BALANCE AT END OF PERIOD . . . . . . . . $27,895 $133,405 $27,895 $133,405 The common stock of the Company is wholly owned by American Electric Power Company, Inc. See Notes to Consolidated Financial Statements. /TABLE COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 30, December 31, 1994 1993 (in thousands) ASSETS ELECTRIC UTILITY PLANT: Production . . . . . . . . . . . . . . . . . . . . . $1,454,650 $1,443,506 Transmission . . . . . . . . . . . . . . . . . . . . 298,078 295,539 Distribution . . . . . . . . . . . . . . . . . . . . 776,281 755,342 General. . . . . . . . . . . . . . . . . . . . . . . 101,954 97,874 Construction Work in Progress. . . . . . . . . . . . 49,341 52,794 Total Electric Utility Plant . . . . . . . . 2,680,304 2,645,055 Accumulated Depreciation . . . . . . . . . . . . . . 847,539 811,817 NET ELECTRIC UTILITY PLANT . . . . . . . . . 1,832,765 1,833,238 OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . . 32,379 34,558 CURRENT ASSETS: Cash and Cash Equivalents. . . . . . . . . . . . . . 9,169 6,633 Accounts Receivable. . . . . . . . . . . . . . . . . 52,222 52,088 Allowance for Uncollectible Accounts . . . . . . . . (1,310) (991) Fuel . . . . . . . . . . . . . . . . . . . . . . . . 23,793 32,257 Materials and Supplies . . . . . . . . . . . . . . . 26,456 25,772 Accrued Utility Revenues . . . . . . . . . . . . . . 34,647 28,889 Prepayments. . . . . . . . . . . . . . . . . . . . . 36,647 28,372 Other. . . . . . . . . . . . . . . . . . . . . . . . 839 1,863 TOTAL CURRENT ASSETS . . . . . . . . . . . . 182,463 174,883 REGULATORY ASSETS: Amounts Due From Customers For Future Federal Income Taxes . . . . . . . . . . . . . . . 286,886 290,644 Other. . . . . . . . . . . . . . . . . . . . . . . . 231,506 249,348 TOTAL REGULATORY ASSETS. . . . . . . . . . . 518,392 539,992 TOTAL. . . . . . . . . . . . . . . . . . . $2,565,999 $2,582,671 See Notes to Consolidated Financial Statements.
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 30, December 31, 1994 1993 (in thousands) CAPITALIZATION AND LIABILITIES CAPITALIZATION: Common Stock - No Par Value: Authorized - 24,000,000 Shares Outstanding - 16,410,426 Shares. . . . . . . . . . $ 41,026 $ 41,026 Paid-in Capital. . . . . . . . . . . . . . . . . . . 565,642 566,046 Retained Earnings. . . . . . . . . . . . . . . . . . 27,895 18,288 Total Common Shareowner's Equity . . . . . . 634,563 625,360 Cumulative Preferred Stock - Subject to Mandatory Redemption . . . . . . . . . . . . . . . 150,000 125,000 Long-term Debt . . . . . . . . . . . . . . . . . . . 947,379 997,013 TOTAL CAPITALIZATION . . . . . . . . . . . . 1,731,942 1,747,373 OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . . 24,564 17,189 CURRENT LIABILITIES: Long-term Debt Due Within One Year . . . . . . . . . 50,000 20,700 Short-term Debt. . . . . . . . . . . . . . . . . . . 42,625 25,225 Accounts Payable . . . . . . . . . . . . . . . . . . 40,823 50,547 Taxes Accrued. . . . . . . . . . . . . . . . . . . . 72,776 114,233 Interest Accrued . . . . . . . . . . . . . . . . . . 18,881 23,245 Other. . . . . . . . . . . . . . . . . . . . . . . . 33,108 22,189 TOTAL CURRENT LIABILITIES. . . . . . . . . . 258,213 256,139 DEFERRED FEDERAL INCOME TAXES. . . . . . . . . . . . . 476,648 474,290 DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . . 66,686 68,533 DEFERRED CREDITS . . . . . . . . . . . . . . . . . . . 7,946 19,147 CONTINGENCIES (Note 3) TOTAL. . . . . . . . . . . . . . . . . . . $2,565,999 $2,582,671 See Notes to Consolidated Financial Statements.
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended June 30, 1994 1993 (in thousands) OPERATING ACTIVITIES: Net Income . . . . . . . . . . . . . . . . . . . . . . . . $ 49,894 $ 36,880 Adjustments for Noncash Items: Depreciation . . . . . . . . . . . . . . . . . . . . . . 41,125 44,559 Deferred Federal Income Taxes. . . . . . . . . . . . . . 6,115 10,864 Deferred Investment Tax Credits. . . . . . . . . . . . . (1,843) (1,883) Deferred Fuel Costs (net). . . . . . . . . . . . . . . . (5,895) 4,783 Deferred Zimmer Plant Operating Expenses and Carrying Charges . . . . . . . . . . . . . . . . . . . 5,698 (29,337) Changes in Certain Current Assets and Liabilities: Accounts Receivable (net). . . . . . . . . . . . . . . . 185 (1,180) Fuel, Materials and Supplies . . . . . . . . . . . . . . 7,780 (5,608) Accrued Utility Revenues . . . . . . . . . . . . . . . . (5,758) (8,791) Prepayments. . . . . . . . . . . . . . . . . . . . . . . (8,275) (12,187) Accounts Payable . . . . . . . . . . . . . . . . . . . . (9,724) (3,874) Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . (41,457) (47,694) Other (net). . . . . . . . . . . . . . . . . . . . . . . . 22,744 33,598 Net Cash Flows From Operating Activities . . . . . . 60,589 20,130 INVESTING ACTIVITIES - Construction Expenditures . . . . . . (32,587) (39,577) FINANCING ACTIVITIES: Issuance of Cumulative Preferred Stock . . . . . . . . . . 24,596 - Issuance of Long-term Debt . . . . . . . . . . . . . . . . 198,298 98,586 Change in Short-term Debt (net). . . . . . . . . . . . . . 17,400 (3,494) Retirement of Long-term Debt . . . . . . . . . . . . . . . (225,835) (44,647) Dividends Paid on Common Stock . . . . . . . . . . . . . . (34,394) (25,436) Dividends Paid on Cumulative Preferred Stock . . . . . . . (5,531) (5,531) Net Cash Flows From (Used For) Financing Activities. (25,466) 19,478 Net Increase in Cash and Cash Equivalents. . . . . . . . . . 2,536 31 Cash and Cash Equivalents at Beginning of Period . . . . . . 6,633 8,322 Cash and Cash Equivalents at End of Period . . . . . . . . . $ 9,169 $ 8,353 Supplemental Disclosure: Cash paid for interest net of capitalized amounts was $45,017,000 and $39,594,000 and for income taxes was $23,295,000 and $18,338,000 in 1994 and 1993, respectively. Noncash acquisitions under capital leases were $6,801,000 and $2,705,000 in 1994 and 1993, respectively. See Notes to Consolidated Financial Statements. /TABLE COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1994 (UNAUDITED) 1. GENERAL The accompanying unaudited consolidated financial statements should be read in conjunction with the 1993 Annual Report as incorporated in and filed with the Form 10- K. Certain prior-period amounts have been reclassified to conform to current-period presentation. 2. FINANCING ACTIVITIES In June 1994, the Company issued 250,000 shares of 7% cumulative preferred stock at $100 par value. The proceeds are to be used to fund its construction program or to repay short-term indebtedness incurred to fund its construction program. 3. CONTINGENCIES The Company continues to be involved in certain matters discussed in its 1993 Annual Report. COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS SECOND QUARTER 1994 vs. SECOND QUARTER 1993 AND YEAR-TO-DATE 1994 vs. YEAR-TO-DATE 1993 Net income increased 35% in both the second quarter and year-to-date periods reflecting increased energy sales due to unseasonable weather. Retail revenues increased $28.4 million or 14% for the second quarter and $52.2 million or 13% for the year-to-date period due to the weather and a rate increase. The Public Utilities Commission of Ohio (PUCO) granted a 7.11% increase in rates effective February 1, 1994 as a result of a November 1993 Ohio Supreme Court ruling that the PUCO did not have authority under state law to order a rate phase-in for the Zimmer Plant. The increase includes a 3.72% base rate increase, which represents the acceleration of the final step of the court rejected rate phase-in plan, and a 3.39% surcharge, which provides for recovery of the $96.9 million of previous deferrals under the phase-in plan and a return thereon, to be collected over a period that is not expected to exceed four and one-half years. The rate increase has no effect on net income since it is offset by the amortization of prior year phase-in plan deferrals and the cessation of current year deferrals which would have occurred had the phase-in plan continued in effect. Wholesale revenues increased $8.3 million or 63% for the quarter and $20.1 million or 70% for the year-to-date period primarily due to the Company's share of increased sales to unaffiliated utilities by the AEP System Power Pool (Power Pool) resulting from severe winter weather in the first quarter of 1994, unseasonably warm weather during the late spring and early summer and forced outages at unaffiliated generating units. Other income statement lines which changed significantly were as follows: Increase (Decrease) Second Quarter Year-to-Date (in millions) % (in millions) % Fuel Expense. . . . . . . . $15.4 47.1 $18.9 22.8 Purchased Power Expense . . (9.4) (21.1) (3.6) (4.6) Other Operation Expense . . 4.3 10.7 6.1 7.6 Amortization (Deferral) of Zimmer Plant Phase-in Costs . . . . . . . . . . 9.8 N.M. 16.8 N.M. Federal Income Taxes. . . . 5.8 75.8 11.4 82.6 Deferred Zimmer Plant Carrying Charges (net of tax). . . . . . . (5.5) (82.9) (12.4) (77.7) Interest Charges. . . . . . (1.8) (8.0) (2.0) (4.5) N.M. = Not Meaningful The significant increase in fuel expense was due to an increase in net generation as three units returned to service after being out for scheduled maintenance in the second quarter of 1993 partially offset by the amortization of previously over collected fuel costs through the operation of a fuel clause adjustment mechanism. Under the fuel clause adjustment mechanism the Company defers fuel expense to the extent it varies from the allowed electric fuel component rate. Such cost variance deferrals are amortized to fuel expense commensurate with their inclusion in fuel rates. The decrease in purchased power expense during the second quarter resulted mainly from the increase in net generation. Other operation expense increased reflecting the increased generation and an increase in the provision for uncollectible accounts due to higher write-offs of bad debts. The amortization of Zimmer Plant phase-in costs increased sharply due to a discontinuance of phase-in plan deferrals in February 1994 and the subsequent amortization, commensurate with the commencement of recovery of the previously deferred balance. Federal income tax expense attributable to operations increased substantially primarily due to the increase in pre-tax operating income. Deferred Zimmer Plant carrying charges declined from the prior year since the carrying charges in 1994 were accrued on the unamortized phase-in plan deferral balance while the 1993 carrying charges were accrued on the larger Zimmer investment not yet phased into rates. Interest charges were reduced primarily due to the refinancing of long-term debt at lower rates. INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Six Months Ended June 30, June 30, 1994 1993 1994 1993 (in thousands) OPERATING REVENUES . . . . . . . . . . . $310,104 $278,100 $648,025 $581,068 OPERATING EXPENSES: Fuel . . . . . . . . . . . . . . . . . 46,885 52,535 99,943 111,012 Purchased Power. . . . . . . . . . . . 35,324 22,039 80,230 47,470 Other Operation. . . . . . . . . . . . 69,702 64,760 143,880 127,864 Maintenance. . . . . . . . . . . . . . 36,076 39,570 73,007 78,035 Depreciation and Amortization. . . . . 33,695 34,465 68,140 68,804 Amortization of Rockport Plant Unit 1 Phase-in Plan Deferrals. . . . . . . 3,911 3,911 7,822 7,822 Taxes Other Than Federal Income Taxes. 16,701 18,213 36,162 36,717 Federal Income Taxes . . . . . . . . . 13,178 1,885 25,394 9,353 TOTAL OPERATING EXPENSES . . . 255,472 237,378 534,578 487,077 OPERATING INCOME . . . . . . . . . . . . 54,632 40,722 113,447 93,991 NONOPERATING INCOME (LOSS) . . . . . . . 314 657 4,749 (2,347) INCOME BEFORE INTEREST CHARGES . . . . . 54,946 41,379 118,196 91,644 INTEREST CHARGES . . . . . . . . . . . . 17,672 19,982 35,954 41,725 NET INCOME . . . . . . . . . . . . . . . 37,274 21,397 82,242 49,919 PREFERRED STOCK DIVIDEND REQUIREMENTS. . 2,890 3,470 5,870 7,276 EARNINGS APPLICABLE TO COMMON STOCK. . . $ 34,384 $ 17,927 $ 76,372 $ 42,643 CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (UNAUDITED) Three Months Ended Six Months Ended June 30, June 30, 1994 1993 1994 1993 (in thousands) BALANCE AT BEGINNING OF PERIOD . . . . . $192,929 $169,784 $177,638 $171,309 NET INCOME . . . . . . . . . . . . . . . 37,274 21,397 82,242 49,919 DEDUCTIONS: Cash Dividends Declared: Common Stock . . . . . . . . . . . . 26,652 26,236 53,304 52,472 Cumulative Preferred Stock . . . . . 2,890 3,470 5,870 7,276 Capital Stock Expense. . . . . . . . . 50 15 95 20 BALANCE AT END OF PERIOD . . . . . . . . $200,611 $161,460 $200,611 $161,460 The common stock of the Company is wholly owned by American Electric Power Company, Inc. See Notes to Consolidated Financial Statements. /TABLE INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 30, December 31, 1994 1993 (in thousands) ASSETS ELECTRIC UTILITY PLANT: Production . . . . . . . . . . . . . . . . . . . . . $2,464,335 $2,602,527 Transmission . . . . . . . . . . . . . . . . . . . . 844,349 839,198 Distribution . . . . . . . . . . . . . . . . . . . . 620,304 608,752 General (including nuclear fuel) . . . . . . . . . . 179,640 152,470 Construction Work in Progress. . . . . . . . . . . . 97,613 88,010 Total Electric Utility Plant . . . . . . . . 4,206,241 4,290,957 Accumulated Depreciation and Amortization. . . . . . 1,617,738 1,714,829 NET ELECTRIC UTILITY PLANT . . . . . . . . . 2,588,503 2,576,128 OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . . 461,687 432,459 CURRENT ASSETS: Cash and Cash Equivalents. . . . . . . . . . . . . . 7,935 3,752 Accounts Receivable. . . . . . . . . . . . . . . . . 130,200 121,840 Allowance for Uncollectible Accounts . . . . . . . . (633) (504) Fuel . . . . . . . . . . . . . . . . . . . . . . . . 25,705 34,476 Materials and Supplies . . . . . . . . . . . . . . . 58,700 57,800 Accrued Utility Revenues . . . . . . . . . . . . . . 38,339 34,642 Prepayments. . . . . . . . . . . . . . . . . . . . . 12,000 12,043 TOTAL CURRENT ASSETS . . . . . . . . . . . . 272,246 264,049 REGULATORY ASSETS: Amounts Due From Customers For Future Federal Income Taxes . . . . . . . . . . . . . . . 297,570 286,948 Other. . . . . . . . . . . . . . . . . . . . . . . . 248,467 205,874 TOTAL REGULATORY ASSETS. . . . . . . . . . . 546,037 492,822 TOTAL. . . . . . . . . . . . . . . . . . . $3,868,473 $3,765,458 See Notes to Consolidated Financial Statements. /TABLE INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 30, December 31, 1994 1993 (in thousands) CAPITALIZATION AND LIABILITIES CAPITALIZATION: Common Stock - No Par Value: Authorized - 2,500,000 Shares Outstanding - 1,400,000 Shares . . . . . . . . . . $ 56,584 $ 56,584 Paid-in Capital. . . . . . . . . . . . . . . . . . . 734,477 734,933 Retained Earnings. . . . . . . . . . . . . . . . . . 200,611 177,638 Total Common Shareowner's Equity . . . . . . 991,672 969,155 Cumulative Preferred Stock: Not Subject to Mandatory Redemption. . . . . . . . 52,000 87,000 Subject to Mandatory Redemption. . . . . . . . . . 135,000 100,000 Long-term Debt . . . . . . . . . . . . . . . . . . . 1,066,051 1,073,154 TOTAL CAPITALIZATION . . . . . . . . . . . . 2,244,723 2,229,309 OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . . 350,050 288,197 CURRENT LIABILITIES: Short-term Debt - Commercial Paper . . . . . . . . . 76,150 50,075 Accounts Payable . . . . . . . . . . . . . . . . . . 46,489 57,918 Taxes Accrued. . . . . . . . . . . . . . . . . . . . 46,525 54,473 Interest Accrued . . . . . . . . . . . . . . . . . . 17,954 18,894 Obligations Under Capital Leases . . . . . . . . . . 30,204 20,585 Other. . . . . . . . . . . . . . . . . . . . . . . . 80,174 79,367 TOTAL CURRENT LIABILITIES. . . . . . . . . . 297,496 281,312 DEFERRED FEDERAL INCOME TAXES. . . . . . . . . . . . . 566,026 553,920 DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . . 177,615 186,032 DEFERRED GAIN ON SALE AND LEASEBACK - ROCKPORT PLANT UNIT 2. . . . . . . . . . . . . . . . 207,792 211,446 DEFERRED CREDITS . . . . . . . . . . . . . . . . . . . 24,771 15,242 CONTINGENCIES (Note 4) TOTAL. . . . . . . . . . . . . . . . . . . $3,868,473 $3,765,458 See Notes to Consolidated Financial Statements. /TABLE INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended June 30, 1994 1993 (in thousands) OPERATING ACTIVITIES: Net Income . . . . . . . . . . . . . . . . . . . . . . . . $ 82,242 $ 49,919 Adjustments for Noncash Items: Depreciation and Amortization. . . . . . . . . . . . . . 73,938 73,368 Amortization of Rockport Plant Unit 1 Phase-in Plan Deferrals. . . . . . . . . . . . . . . . 7,822 7,822 Amortization (Deferral) of Incremental Nuclear Refueling Outage Expenses (net). . . . . . . . . . . . (9,712) 17,921 Deferred Federal Income Taxes. . . . . . . . . . . . . . 1,484 (31,815) Deferred Investment Tax Credits. . . . . . . . . . . . . (8,184) (4,159) Deferred Property Taxes. . . . . . . . . . . . . . . . . (11,857) (10,960) Changes in Certain Current Assets and Liabilities: Accounts Receivable (net). . . . . . . . . . . . . . . . (8,231) 2,965 Fuel, Materials and Supplies . . . . . . . . . . . . . . 7,871 4,019 Accrued Utility Revenues . . . . . . . . . . . . . . . . (3,697) 49,842 Accounts Payable . . . . . . . . . . . . . . . . . . . . (11,429) (15,111) Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . (7,948) 47,686 Other (net). . . . . . . . . . . . . . . . . . . . . . . . (13,582) 5,231 Net Cash Flows From Operating Activities . . . . . . 98,717 196,728 INVESTING ACTIVITIES: Construction Expenditures. . . . . . . . . . . . . . . . . (49,032) (48,394) Proceeds from Sales of Property. . . . . . . . . . . . . . 993 - Net Cash Flows Used For Investing Activities . . . . (48,039) (48,394) FINANCING ACTIVITIES: Issuance of Cumulative Preferred Stock . . . . . . . . . . 34,618 29,541 Issuance of Long-term Debt . . . . . . . . . . . . . . . . 89,221 39,599 Change in Short-term Debt (net). . . . . . . . . . . . . . 26,075 (8,725) Retirement of Cumulative Preferred Stock . . . . . . . . . (35,798) (40,896) Retirement of Long-term Debt . . . . . . . . . . . . . . . (101,833) (109,625) Dividends Paid on Common Stock . . . . . . . . . . . . . . (53,304) (52,472) Dividends Paid on Cumulative Preferred Stock . . . . . . . (5,474) (7,660) Net Cash Flows Used For Financing Activities . . . . (46,495) (150,238) Net Increase (Decrease) in Cash and Cash Equivalents . . . . 4,183 (1,904) Cash and Cash Equivalents at Beginning of Period . . . . . . 3,752 7,459 Cash and Cash Equivalents at End of Period . . . . . . . . . $ 7,935 $ 5,555 Supplemental Disclosure: Cash paid for interest net of capitalized amounts was $35,936,000 and $43,885,000 and for income taxes was $43,560,000 and $13,502,000 in 1994 and 1993, respectively. Noncash acquisitions under capital leases were $44,662,000 and $2,770,000 in 1994 and 1993, respectively. See Notes to Consolidated Financial Statements. /TABLE INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1994 (UNAUDITED) 1. GENERAL The accompanying unaudited consolidated financial state- ments should be read in conjunction with the 1993 Annual Report as incorporated in and filed with the Form 10-K. Certain prior-period amounts have been reclassified to conform to current-period presentation. 2. FINANCING ACTIVITIES In June 1994, the Company issued $40 million of 7.63% First Mortgage Bonds due in 2001. 3. VALUATION OF SECURITIES On January 1, 1994, the Company adopted Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities, (SFAS 115) which requires fair value accounting for investments in equity securities with readily determinable market values and investments in debt securities except those that the reporting enterprise has the positive intent and ability to hold to maturity. Debt securities not classified as held- to-maturity, shall be classified as trading or available- for-sale. Investments held in trust for decommissioning nuclear facilities and for disposal of spent nuclear fuel were classified as available-for-sale under SFAS 115. SFAS 115 requires that unrealized gains and losses on investments classified as available-for-sale should be reported as a separate component of shareholder's equity. However, due to the rate-making process, SFAS 115 adjustments for unrealized gains and losses to the carrying value of investments held in the trusts will result in corresponding adjustments to the nuclear decommissioning liability and the regulatory asset for future recovery of spent nuclear fuel disposal costs. The cumulative effect of adopting SFAS 115 on January 1, 1994 resulted in an increase in the decommissioning and spent nuclear fuel trust fund assets of $20.4 million comprised of an unrealized holding gain of $21.4 million and an unrealized holding loss of $1 million, with no effect on net income and/or shareholder's equity. In accordance with SFAS 115, prior year amounts were not restated. The trust investments reported in other property and investments had a fair value of $321 million at January 1, 1994 and consist primarily of long-term tax-exempt municipal bonds. At January 1, 1994, the maturities of investments in debt securities ranged from 1994 to 2024. 4. CONTINGENCIES The Company continues to be involved in certain matters discussed in its 1993 Annual Report. INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION SECOND QUARTER 1994 vs. SECOND QUARTER 1993 AND YEAR-TO-DATE 1994 vs. YEAR-TO-DATE 1993 RESULTS OF OPERATIONS Net income increased $15.9 million or 74% for the quarter and $32.3 million or 65% for the year-to-date period as a result of increased retail sales due to unseasonable weather and growth in the demand from industrial customers, a retail rate increase and reduced interest expense from a refinancing program. In the year-to-date period certain nonoperating federal income tax adjustments contributed to the increased earnings. Income statement items which changed significantly were: Increase (Decrease) Second Quarter Year-to-Date (in millions) % (in millions) % Operating Revenues. . . . . $32.0 12 $ 67.0 12 Fuel Expense. . . . . . . . (5.7) (11) (11.1) (10) Purchased Power Expense . . 13.3 60 32.8 69 Other Operation Expense . . 4.9 8 16.0 13 Maintenance Expense . . . . (3.5) (9) (5.0) (6) Federal Income Taxes. . . . 11.3 599 16.0 172 Nonoperating Income (Loss). (0.3) (52) 7.1 N.M. Interest Charges. . . . . . (2.3) (12) (5.8) (14) N.M. = Not Meaningful Operating revenues increased due to increased retail sales reflecting colder winter weather, hot weather in the late spring and early summer as well as increased industrial demand in 1994, and a rate increase in the Indiana retail jurisdiction effective November 1993 partly offset by reduced wholesale revenues. Energy sales to both weather sensitive residential and commercial customers increased 9% for the quarter and 7% for the year-to- date period. Industrial energy sales rose 8% for the quarter and year-to-date periods reflecting an increase in the number of industrial customers as well as an increase in customer demand. Wholesale sales declined for both periods as a result of outages of both units of the Company's nuclear plant in 1994 which reduced the amount of energy supplied to the AEP System Power Pool (Power Pool) partially offset by increased sales to directly-supplied unaffiliated wholesale customers and the Company's share of increased sales made by the Power Pool. In both periods the reduction in fuel expense reflects a decrease in generation due to a scheduled refueling outage at one of the nuclear units and an unscheduled maintenance outage at the other unit. The refueling outage was from mid-February to the end of May 1994 and the maintenance outage occurred from late- February to late-April 1994. Purchased power expense increased due to the acquisition of additional power from the Power Pool in 1994 reflecting the increased demand for energy and the decrease in generation; increased energy purchases from unaffiliated utilities for pass- through sales to other unaffiliated utilities; and additional purchases from AEP Generating Company, an affiliate, which had one unit out-of-service for maintenance in the second quarter of 1993. The increase in other operation expense for both periods was due to the accrual of additional nuclear decommissioning expense and increased accruals for other postretirement benefits in the Indiana jurisdiction commensurate with increased rate recovery. Prior to recovery granted in the November 1993 rate order the Indiana jurisdictional portion of accruals for other post- retirement benefits were deferred. The increase in the year-to- date period also included a provision for the disposal of inventory and for employee severance benefits resulting from the closing of Breed Plant. Maintenance expense, exclusive of the maintenance performed during the nuclear plant refueling outage which is deferred and amortized over the period of approximately 18 months until the start of the next refueling outage in accordance with rate-making commission approval, decreased in both periods. Federal income taxes attributable to operations increased primarily due to increased pre-tax operating income during both periods. The increase in nonoperating income for the year-to-date period reflects the favorable federal income tax effects of the Breed Plant closing and the negative effect of adopting Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes, in January 1993 for nonutility assets and liabilities. Interest charges declined due to a refinancing program. Subsequent to June 1993 the Company retired $83 million of long- term debt, and refinanced at lower rates $200 million of long- term debt and $97 million of installment purchase contracts. FINANCIAL CONDITION Total plant and property additions including capital leases for the first half of 1994 were $94.5 million. During the first six months of 1994 short-term debt outstanding increased $26.1 million from year-end levels. During February 1994 the Company redeemed $35 million of 7.76% Cumulative Preferred Stock and issued $35 million of 6.30% Cumulative Preferred Stock. In March the Company retired $100 million of 8-3/4% First Mortgage Bonds and issued two $25 million series of First Mortgage Bonds at 6.55% due in 2004 and 7.50% due in 2024. In June the Company issued $40 million of 7.63% First Mortgage Bonds due in 2001. NUCLEAR DECOMMISSIONING The Financial Accounting Standards Board (FASB), on June 15, 1994, added Accounting for Nuclear Decommissioning Liabilities to its agenda. Among the topics to be studied is the question of when future decommissioning liabilities should be recognized. The Company and the electric utility industry accrue such costs over the service life of its facilities. Should the FASB decide to require that the liability for such costs be recorded in full, it is expected that the Company will be able to record a related asset. As a result it is not expected that the FASB project will materially affect results of operations or financial position. BREED PLANT RETIREMENT In the first quarter of 1994 the 325-megawatt Breed Plant, with an original cost of $153 million, was retired without materially affecting results of operations or financial condition. In accordance with the Federal Energy Regulatory Commission Uniform System of Accounts the investment in the Breed Plant was charged to the accumulated reserve for depreciation and will increase future depreciation rates. The Breed Plant, which began commercial operation in 1960, had been operated on a restricted basis since 1992 when plans to close the plant were announced. NEW ACCOUNTING STANDARD On January 1, 1994, the Company implemented SFAS 115, Accounting for Certain Investments in Debt and Equity Securities, which required that the Company adopt fair value accounting for nuclear decommissioning and spent nuclear fuel disposal trust fund investments. SFAS 115 requires that unrealized gains and losses on investments classified as available-for-sale should be included as a separate component of shareholder's equity. However, due to the rate-making process, adjustments to the fair value of the investments held in the trusts resulted in corresponding adjustments to the nuclear decommissioning liability and the regulatory asset for future recovery of spent nuclear fuel disposal costs. The cumulative effect of adopting SFAS 115 resulted in recognizing an unrealized holding gain of $21.4 million and an unrealized holding loss of $1 million with no effect on net income. KENTUCKY POWER COMPANY STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Six Months Ended June 30, June 30, 1994 1993 1994 1993 (in thousands) OPERATING REVENUES . . . . . . . . . . . . $76,656 $60,160 $163,113 $140,335 OPERATING EXPENSES: Fuel . . . . . . . . . . . . . . . . . . 18,231 3,499 38,420 23,049 Purchased Power. . . . . . . . . . . . . 22,762 26,435 47,009 49,065 Other Operation. . . . . . . . . . . . . 9,830 10,240 18,841 19,132 Maintenance. . . . . . . . . . . . . . . 7,691 7,484 17,508 13,904 Depreciation and Amortization. . . . . . 5,738 5,531 11,453 11,052 Taxes Other Than Federal Income Taxes. . 1,863 1,416 4,268 4,098 Federal Income Tax Expense (Credit). . . 534 (1,311) 2,627 509 TOTAL OPERATING EXPENSES. . . . . 66,649 53,294 140,126 120,809 OPERATING INCOME . . . . . . . . . . . . . 10,007 6,866 22,987 19,526 NONOPERATING LOSS. . . . . . . . . . . . . (90) (64) (125) (116) INCOME BEFORE INTEREST CHARGES . . . . . . 9,917 6,802 22,862 19,410 INTEREST CHARGES . . . . . . . . . . . . . 5,132 4,978 10,274 10,325 NET INCOME . . . . . . . . . . . . . . . . $ 4,785 $ 1,824 $ 12,588 $ 9,085 STATEMENTS OF RETAINED EARNINGS (UNAUDITED) Three Months Ended Six Months Ended June 30, June 30, 1994 1993 1994 1993 (in thousands) BALANCE AT BEGINNING OF PERIOD . . . . . . $87,750 $91,739 $85,296 $89,957 NET INCOME . . . . . . . . . . . . . . . . 4,785 1,824 12,588 9,085 CASH DIVIDENDS DECLARED. . . . . . . . . . 5,349 5,478 10,698 10,957 BALANCE AT END OF PERIOD . . . . . . . . . $87,186 $88,085 $87,186 $88,085 The common stock of the Company is wholly owned by American Electric Power Company, Inc. See Notes to Financial Statements. /TABLE KENTUCKY POWER COMPANY BALANCE SHEETS (UNAUDITED)
June 30, December 31, 1994 1993 (in thousands) ASSETS ELECTRIC UTILITY PLANT: Production . . . . . . . . . . . . . . . . . . . . . $212,127 $211,617 Transmission . . . . . . . . . . . . . . . . . . . . 252,239 249,966 Distribution . . . . . . . . . . . . . . . . . . . . 282,987 281,834 General. . . . . . . . . . . . . . . . . . . . . . . 56,130 54,637 Construction Work in Progress. . . . . . . . . . . . 24,530 9,374 Total Electric Utility Plant . . . . . . . . 828,013 807,428 Accumulated Depreciation and Amortization. . . . . . 257,363 248,673 NET ELECTRIC UTILITY PLANT . . . . . . . . . 570,650 558,755 OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . . 5,940 6,763 CURRENT ASSETS: Cash and Cash Equivalents. . . . . . . . . . . . . . 746 858 Accounts Receivable. . . . . . . . . . . . . . . . . 24,308 24,346 Allowance for Uncollectible Accounts . . . . . . . . (302) (208) Fuel . . . . . . . . . . . . . . . . . . . . . . . . 8,692 8,405 Materials and Supplies . . . . . . . . . . . . . . . 9,002 8,804 Accrued Utility Revenues . . . . . . . . . . . . . . 5,475 10,476 Prepayments. . . . . . . . . . . . . . . . . . . . . 2,420 1,367 TOTAL CURRENT ASSETS . . . . . . . . . . . . 50,341 54,048 REGULATORY ASSETS: Amounts Due From Customers For Future Federal Income Taxes . . . . . . . . . . . . . . . 41,274 37,910 Other. . . . . . . . . . . . . . . . . . . . . . . . 12,321 12,903 TOTAL REGULATORY ASSETS. . . . . . . . . . . 53,595 50,813 TOTAL. . . . . . . . . . . . . . . . . . . $680,526 $670,379 See Notes to Financial Statements.
KENTUCKY POWER COMPANY BALANCE SHEETS (UNAUDITED)
June 30, December 31, 1994 1993 (in thousands) CAPITALIZATION AND LIABILITIES CAPITALIZATION: Common Stock - $50 Par Value: Authorized - 2,000,000 Shares Outstanding - 1,009,000 Shares . . . . . . . . . . $ 50,450 $ 50,450 Paid-in Capital. . . . . . . . . . . . . . . . . . . 58,750 58,750 Retained Earnings. . . . . . . . . . . . . . . . . . 87,186 85,296 Total Common Shareowner's Equity . . . . . . 196,386 194,496 Long-term Debt . . . . . . . . . . . . . . . . . . . 253,539 253,495 TOTAL CAPITALIZATION . . . . . . . . . . . . 449,925 447,991 OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . . 11,974 7,678 CURRENT LIABILITIES: Short-term Debt. . . . . . . . . . . . . . . . . . . 36,175 38,150 Accounts Payable . . . . . . . . . . . . . . . . . . 20,681 18,456 Customer Deposits. . . . . . . . . . . . . . . . . . 4,445 4,621 Taxes Accrued. . . . . . . . . . . . . . . . . . . . 7,508 6,767 Interest Accrued . . . . . . . . . . . . . . . . . . 5,775 5,905 Other. . . . . . . . . . . . . . . . . . . . . . . . 10,917 8,186 TOTAL CURRENT LIABILITIES. . . . . . . . . . 85,501 82,085 DEFERRED FEDERAL INCOME TAXES. . . . . . . . . . . . . 111,591 108,966 DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . . 15,963 16,454 DEFERRED CREDITS . . . . . . . . . . . . . . . . . . . 5,572 7,205 CONTINGENCIES (Note 2) TOTAL. . . . . . . . . . . . . . . . . . . $680,526 $670,379 See Notes to Financial Statements.
KENTUCKY POWER COMPANY STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended June 30, 1994 1993 (in thousands) OPERATING ACTIVITIES: Net Income . . . . . . . . . . . . . . . . . . . . . . . . $ 12,588 $ 9,085 Adjustments for Noncash Items: Depreciation and Amortization. . . . . . . . . . . . . . 11,474 11,094 Deferred Federal Income Taxes. . . . . . . . . . . . . . (739) (858) Deferred Investment Tax Credits. . . . . . . . . . . . . (634) (641) Changes in Certain Current Assets and Liabilities: Accounts Receivable (net). . . . . . . . . . . . . . . . 132 4,842 Fuel, Materials and Supplies . . . . . . . . . . . . . . (485) (3,441) Accrued Utility Revenues . . . . . . . . . . . . . . . . 5,001 1,506 Accounts Payable . . . . . . . . . . . . . . . . . . . . 2,225 1,377 Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . 741 (4,200) Other (net). . . . . . . . . . . . . . . . . . . . . . . . 3,077 (2,024) Net Cash Flows From Operating Activities . . . . . . 33,380 16,740 INVESTING ACTIVITIES: Construction Expenditures. . . . . . . . . . . . . . . . . (21,682) (18,281) Proceeds from Sales of Property. . . . . . . . . . . . . . 863 904 Net Cash Flows Used For Investing Activities . . . . (20,819) (17,377) FINANCING ACTIVITIES: Issuance of Long-term Debt . . . . . . . . . . . . . . . . - 84,115 Change in Short-term Debt (net). . . . . . . . . . . . . . (1,975) 13,050 Retirement of Long-term Debt . . . . . . . . . . . . . . . - (85,886) Dividends Paid . . . . . . . . . . . . . . . . . . . . . . (10,698) (10,957) Net Cash Flows From (Used For) Financing Activities. (12,673) 322 Net Decrease in Cash and Cash Equivalents. . . . . . . . . . (112) (315) Cash and Cash Equivalents at Beginning of Period . . . . . . 858 1,070 Cash and Cash Equivalents at End of Period . . . . . . . . . $ 746 $ 755 Supplemental Disclosure: Cash paid for interest net of capitalized amounts was $10,293,000 and $10,684,000 and for income taxes was $3,015,000 and $6,235,000 in 1994 and 1993, respectively. Noncash acquisitions under capital leases were $2,612,000 and $844,000 in 1994 and 1993, respectively. See Notes to Financial Statements.
KENTUCKY POWER COMPANY NOTES TO FINANCIAL STATEMENTS JUNE 30, 1994 (UNAUDITED) 1. GENERAL The accompanying unaudited financial statements should be read in conjunction with the 1993 Annual Report as incorporated in and filed with the Form 10-K. 2. CONTINGENCIES The Company continues to be involved in certain matters discussed in its 1993 Annual Report. KENTUCKY POWER COMPANY MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS SECOND QUARTER 1994 vs. SECOND QUARTER 1993 AND YEAR-TO-DATE 1994 vs. YEAR-TO-DATE 1993 Net income increased 162% to $4.8 million in the quarter and 39% to $12.6 million in the year-to-date period primarily reflecting increased energy sales due to unseasonable weather. The favorable impact on year-to-date net income of unseasonable weather was partially offset by storm damage expenses. Income statement items which changed significantly were as follows: Increase (Decrease) Second Quarter Year-to-Date (in millions) % (in millions) % Operating Revenues . . . . . $16.5 27 $22.8 16 Fuel Expense . . . . . . . . 14.7 421 15.4 67 Purchased Power Expense. . . (3.7) (14) (2.1) (4) Maintenance Expense. . . . . 0.2 3 3.6 26 Federal Income Taxes . . . . 1.8 N.M. 2.1 416 N.M. - Not Meaningful Operating revenues increased significantly reflecting increased wholesale energy sales to the AEP System Power Pool (Power Pool), resulting from the increased availability of the Big Sandy Plant Unit 2 in 1994 and an increase in sales to retail and unaffiliated wholesale customers due to the unseasonable weather and for wholesale sales, forced generating unit outages. Big Sandy Unit 2 was out of service the entire second quarter of 1993 for scheduled maintenance and boiler repair. Its avail- ability in 1994 enabled the Company to make energy sales to the Power Pool. Retail energy sales increased 4% in both the quarter and year-to-date periods as sales to weather sensitive residential and commercial customers increased due to the severe weather in the winter of 1994 and in June of 1994. The weather- related demand for energy and forced outages at unaffiliated generating units caused an increase in sales to unaffiliated wholesale customers. The substantial increase in fuel expense in both periods is attributable to increased generation reflecting the increased availability of Big Sandy Unit 2 and the weather related increase in demand for energy. The decrease in purchased power expense in the second quarter resulted from the increased availability of Big Sandy Unit 2. Storm damage to distribution lines caused by severe winter storms in January and February 1994 increased year- to-date maintenance expense. The substantial increase in federal income taxes in both periods was primarily due to an increase in pre-tax operating income. OHIO POWER COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Six Months Ended June 30, June 30, 1994 1993 1994 1993 (in thousands) OPERATING REVENUES . . . . . . . . . . . $417,352 $410,923 $904,393 $841,081 OPERATING EXPENSES: Fuel . . . . . . . . . . . . . . . . . 159,960 158,933 360,589 321,034 Purchased Power. . . . . . . . . . . . 17,648 12,757 38,158 27,982 Other Operation. . . . . . . . . . . . 52,803 51,291 102,706 104,658 Maintenance. . . . . . . . . . . . . . 36,935 35,338 73,080 70,577 Depreciation and Amortization. . . . . 32,852 32,059 65,582 64,007 Taxes Other Than Federal Income Taxes. 44,399 41,536 88,891 85,193 Federal Income Taxes . . . . . . . . . 17,000 16,110 44,772 35,766 TOTAL OPERATING EXPENSES . . . 361,597 348,024 773,778 709,217 OPERATING INCOME . . . . . . . . . . . . 55,755 62,899 130,615 131,864 NONOPERATING INCOME. . . . . . . . . . . 555 2,647 2,196 10,908 INCOME BEFORE INTEREST CHARGES . . . . . 56,310 65,546 132,811 142,772 INTEREST CHARGES . . . . . . . . . . . . 22,334 26,047 44,600 53,986 NET INCOME . . . . . . . . . . . . . . . 33,976 39,499 88,211 88,786 PREFERRED STOCK DIVIDEND REQUIREMENTS. . 3,825 4,319 7,650 8,598 EARNINGS APPLICABLE TO COMMON STOCK. . . $ 30,151 $ 35,180 $ 80,561 $ 80,188 CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (UNAUDITED) Three Months Ended Six Months Ended June 30, June 30, 1994 1993 1994 1993 (in thousands) BALANCE AT BEGINNING OF PERIOD . . . . . $490,259 $457,141 $474,500 $445,955 NET INCOME . . . . . . . . . . . . . . . 33,976 39,499 88,211 88,786 DEDUCTIONS: Cash Dividends Declared: Common Stock . . . . . . . . . . . . 34,617 33,823 69,234 67,645 Cumulative Preferred Stock . . . . . 3,825 4,324 7,650 8,603 Capital Stock Expense. . . . . . . . . 34 6 68 6 BALANCE AT END OF PERIOD . . . . . . . . $485,759 $458,487 $485,759 $458,487 The common stock of the Company is wholly owned by American Electric Power Company, Inc. See Notes to Consolidated Financial Statements. /TABLE OHIO POWER COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 30, December 31, 1994 1993 (in thousands) ASSETS ELECTRIC UTILITY PLANT: Production . . . . . . . . . . . . . . . . . . . . . $2,458,181 $2,412,973 Transmission . . . . . . . . . . . . . . . . . . . . 787,991 767,548 Distribution . . . . . . . . . . . . . . . . . . . . 778,545 766,639 General (including mining assets). . . . . . . . . . 779,391 754,347 Construction Work in Progress. . . . . . . . . . . . 70,591 100,820 Total Electric Utility Plant . . . . . . . . 4,874,699 4,802,327 Accumulated Depreciation and Amortization. . . . . . 2,031,275 1,992,082 NET ELECTRIC UTILITY PLANT . . . . . . . . . 2,843,424 2,810,245 OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . . 119,337 138,224 CURRENT ASSETS: Cash and Cash Equivalents. . . . . . . . . . . . . . 11,145 20,803 Accounts Receivable. . . . . . . . . . . . . . . . . 175,072 180,135 Allowance for Uncollectible Accounts . . . . . . . . (1,231) (960) Fuel . . . . . . . . . . . . . . . . . . . . . . . . 155,191 179,554 Materials and Supplies . . . . . . . . . . . . . . . 63,460 66,791 Accrued Utility Revenues . . . . . . . . . . . . . . 26,383 32,234 Prepayments. . . . . . . . . . . . . . . . . . . . . 58,975 43,907 TOTAL CURRENT ASSETS . . . . . . . . . . . . 488,995 522,464 REGULATORY ASSETS: Amounts Due From Customers For Future Federal Income Taxes . . . . . . . . . . . . . . . 423,887 433,822 Other. . . . . . . . . . . . . . . . . . . . . . . . 227,371 211,550 TOTAL REGULATORY ASSETS. . . . . . . . . . . 651,258 645,372 TOTAL. . . . . . . . . . . . . . . . . . . $4,103,014 $4,116,305 See Notes to Consolidated Financial Statements.
OHIO POWER COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 30, December 31, 1994 1993 (in thousands) CAPITALIZATION AND LIABILITIES CAPITALIZATION: Common Stock - No Par Value: Authorized - 40,000,000 Shares Outstanding - 27,952,473 Shares. . . . . . . . . . $ 321,201 $ 321,201 Paid-in Capital. . . . . . . . . . . . . . . . . . . 463,100 463,100 Retained Earnings. . . . . . . . . . . . . . . . . . 485,759 474,500 Total Common Shareowner's Equity . . . . . . 1,270,060 1,258,801 Cumulative Preferred Stock: Not Subject to Mandatory Redemption. . . . . . . . 126,240 126,240 Subject to Mandatory Redemption. . . . . . . . . . 115,000 115,000 Long-term Debt . . . . . . . . . . . . . . . . . . . 1,187,908 1,189,086 TOTAL CAPITALIZATION . . . . . . . . . . . . 2,699,208 2,689,127 OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . . 123,975 104,172 CURRENT LIABILITIES: Long-term Debt Due Within One Year . . . . . . . . . 567 5,397 Short-term Debt. . . . . . . . . . . . . . . . . . . 23,503 40,250 Accounts Payable . . . . . . . . . . . . . . . . . . 115,296 140,089 Taxes Accrued. . . . . . . . . . . . . . . . . . . . 147,164 168,095 Interest Accrued . . . . . . . . . . . . . . . . . . 22,459 20,862 Obligations Under Capital Leases . . . . . . . . . . 25,711 21,916 Other. . . . . . . . . . . . . . . . . . . . . . . . 118,818 107,592 TOTAL CURRENT LIABILITIES. . . . . . . . . . 453,518 504,201 DEFERRED FEDERAL INCOME TAXES. . . . . . . . . . . . . 694,773 725,283 DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . . 44,353 45,795 REGULATORY LIABILITIES AND DEFERRED CREDITS. . . . . . 87,187 47,727 CONTINGENCIES (Note 3) TOTAL. . . . . . . . . . . . . . . . . . . $4,103,014 $4,116,305 See Notes to Consolidated Financial Statements.
OHIO POWER COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended June 30, 1994 1993 (in thousands) OPERATING ACTIVITIES: Net Income . . . . . . . . . . . . . . . . . . . . . . . . $ 88,211 $ 88,786 Adjustments for Noncash Items: Depreciation, Depletion and Amortization . . . . . . . . 72,693 72,609 Deferred Federal Income Taxes. . . . . . . . . . . . . . (20,633) (19,479) Deferred Investment Tax Credits. . . . . . . . . . . . . (1,773) (1,996) Deferred Fuel Costs (net). . . . . . . . . . . . . . . . 4,189 (845) Changes in Certain Current Assets and Liabilities: Accounts Receivable (net). . . . . . . . . . . . . . . . 5,334 4,923 Fuel, Materials and Supplies . . . . . . . . . . . . . . 27,694 8,122 Accrued Utility Revenues . . . . . . . . . . . . . . . . 5,851 6,426 Prepayments. . . . . . . . . . . . . . . . . . . . . . . (15,068) (17,354) Accounts Payable . . . . . . . . . . . . . . . . . . . . (24,793) 7,981 Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . (20,931) (25,016) Other (net). . . . . . . . . . . . . . . . . . . . . . . . 14,054 37,065 Net Cash Flows From Operating Activities . . . . . . 134,828 161,222 INVESTING ACTIVITIES: Construction Expenditures. . . . . . . . . . . . . . . . . (80,601) (57,385) Proceeds from Sale of Property and Other . . . . . . . . . 35,920 231 Net Cash Flows Used For Investing Activities . . . . (44,681) (57,154) FINANCING ACTIVITIES: Issuance of Cumulative Preferred Stock . . . . . . . . . . - 29,554 Issuance of Long-term Debt . . . . . . . . . . . . . . . . 48,251 217,213 Change in Short-term Debt (net). . . . . . . . . . . . . . (16,747) 70,700 Retirement of Cumulative Preferred Stock . . . . . . . . . - (22,233) Retirement of Long-term Debt . . . . . . . . . . . . . . . (54,425) (373,400) Dividends Paid on Common Stock . . . . . . . . . . . . . . (69,234) (67,645) Dividends Paid on Cumulative Preferred Stock . . . . . . . (7,650) (8,603) Net Cash Flows Used For Financing Activities . . . . (99,805) (154,414) Net Decrease in Cash and Cash Equivalents. . . . . . . . . . (9,658) (50,346) Cash and Cash Equivalents at Beginning of Period . . . . . . 20,803 71,056 Cash and Cash Equivalents at End of Period . . . . . . . . . $ 11,145 $ 20,710 Supplemental Disclosure: Cash paid for interest net of capitalized amounts was $41,687,000 and $54,993,000 and for income taxes was $46,274,000 and $39,125,000 in 1994 and 1993, respectively. Noncash acquisitions under capital leases were $27,189,000 and $7,503,000 in 1994 and 1993, respectively. See Notes to Consolidated Financial Statements.
OHIO POWER COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1994 (UNAUDITED) 1. GENERAL The accompanying unaudited consolidated financial state- ments should be read in conjunction with the 1993 Annual Report as incorporated in and filed with the Form 10-K. 2. RATE MATTERS Rate Request On July 6, 1994 an application to increase base retail rates was filed with the Public Utilities Commission of Ohio (PUCO) seeking a $152.5 million or 13.8% increase in annual revenues. More than half of the increase reflects recovery of costs associated with Gavin Plant's flue gas desulfurization system and other costs associated with meeting environmental restrictions imposed by the Clean Air Act Amendments of 1990 (CAAA). The remainder of the request seeks to recover increased service costs since the last base rate increase in July 1986; an increase in depreciation rates which includes recovery on a remaining life basis of the cost of plant and equipment and the cost of removal of plant and equipment; and recovery of costs associated with pressurized fluidized bed combustion research and develop- ment as well as energy conservation demand-side management programs. Recovery of Fuel Costs In May 1994 the PUCO issued an order related to fuel costs included in the electric fuel component (EFC) rate for retail customers for the period beginning December 1, 1992 through November 30, 1993. As part of the EFC review, the PUCO ruled that a 1993 dragline lease buyout by a subsidiary, Central Ohio Coal Company (COCCo), was a proper coal expense to be passed through the EFC. However, the PUCO denied recovery of the buyout as a component of affiliated coal cost during the fuel period under review. The PUCO ruled that the cost should have been included in fuel costs in 1991 when the dragline was idled. However, the cost would not have been recovered since the Company's fuel costs in 1991 were already in excess of a PUCO ordered price cap. As a result a fuel cost disallowance was recorded in June 1994 resulting in an adverse impact on net income of $4.3 million net of taxes. The PUCO also reviewed the 1992 sale of the affiliated Martinka mining operation and a 20-year coal supply contract with an affiliate of the buyer. Although the PUCO auditor found that the sale of the Martinka mine was reasonable, the PUCO stated that its responsibility is not to approve such transactions but to determine if fuel acquisition and delivery costs are fair and reasonable during the audit period. The PUCO found that the cost of the coal contract was reasonable during the fuel period under review. The PUCO strongly recommended that another subsidiary, Windsor Coal Company, not supply coal to the Company's Cardinal Unit 1 after the January 1995 commencement of Phase I of the CAAA. AEP's systemwide PUCO approved CAAA Phase I compliance plan includes continued use of Windsor coal at Cardinal Unit 1 until the commencement of Phase II of the CAAA in January 2000. The PUCO also recommended that the Company commence negotiations with customers regarding the recovery of its investment in the affiliated Windsor and COCCo mines. Unless the cost of affiliated mine closures can be recovered from customers, results of operations and financial condition would be adversely affected. 3. CONTINGENCIES Meigs Mine Litigation In April 1994 the U.S. Court of Appeals for the Sixth Circuit reversed the judgement of the U.S. District Court for the Southern District of Ohio which had granted a preliminary injunction to Southern Ohio Coal Company (SOCCo), a mining subsidiary, preventing the United States Environmental Protection Agency (Federal EPA) and the Federal Office of Surface Mining, Reclamation and Enforcement from interfering with the removal of water from SOCCo's Meigs 31 mine. SOCCo sought and received a stay of the Court of Appeals' mandate and on July 15, 1994 filed a petition with the U.S. Supreme Court for a writ of certiorari seeking a review of the Court of Appeals Order. As a result of the West Virginia Division of Environmental Protection proposing to fine SOCCo for alleged violations from the release of mine water into the Ohio River, SOCCo filed an action on June 1, 1994 in the U.S. District Court for the Southern District of West Virginia seeking a determination that the state of West Virginia has no jurisdiction to impose penalties with respect to the Meigs mine water discharges. On July 27, 1994 West Virginia filed an answer to SOCCo's complaint disputing SOCCo's entitlement to a declaratory judgement and asserting a counterclaim seeking an award of $2.55 million in civil penalties, reimbursement of monitoring costs and compen- sation for unspecified natural resources damage. The resolution of these legal actions is not expected to have a material adverse impact on results of operations or financial condition. Note 3 in the 1993 Annual Report discusses the Meigs mine litigation in detail. Kammer Plant On August 4, 1994, the Federal EPA issued a Notice of Violation (NOV) to the Company alleging that the Kammer Plant has been operating in violation of applicable federally enforceable air pollution control requirements since January 1, 1989. The Clean Air Act provides that Federal EPA may, after the expiration of 30 days following the issuance of the NOV, commence a civil action for injunctive relief and/or civil penalties of up to $25,000 per day for each day of violation. The Company is entering into discussions with Federal EPA in an effort to resolve the issue of the appropriate sulfur dioxide emission limits for the Kammer Plant. At this time management is unable to determine the ultimate impact of this matter on results of operations and financial condition. Proposed Changes in Regulation The Public Utility Holding Company Act of 1935 (1935 Act) is being reviewed by the Securities and Exchange Commission (SEC) and Congress for possible revision. Amendments being considered could alter the policy for pricing affiliated transactions under the 1935 Act and result in the application of a lower of cost or market test to determine the allowed price for affiliated company transactions. Included in provisions being considered in the legislation is a grandfathering feature that would exempt contracts between affiliates entered into before the passage of the legislation. Unless the Company's affiliated coal mining contracts are exempted, passage of such legislation or revisions of the SEC regulations under the 1935 Act could negatively impact the Company's ability to recover its cost of affiliated coal mining operations. The inability to recover such costs including any shutdown costs would adversely affect results of operations and possibly financial condition. Other The Company continues to be involved in certain other matters discussed in the 1993 Annual Report. OHIO POWER COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION SECOND QUARTER 1994 vs. SECOND QUARTER 1993 AND YEAR-TO-DATE 1994 vs. YEAR-TO-DATE 1993 RESULTS OF OPERATIONS Although demand for energy increased due to unseasonable weather, net income decreased $5.5 million or 14% in the quarter and was essentially unchanged in the year-to-date period. The decrease in second quarter comparative net income was mainly due to the unfavorable effect of a fuel cost disallowance recorded in June 1994, an increase in West Virginia business and occupation taxes on generation and a reduction in nonoperating income. In the year-to-date period the favorable effect of the severe winter weather and the hot weather in the late spring and early summer was offset by the fuel cost disallowance related to the idling of the Big Muskie Dragline at the Company's affiliated Central Ohio Coal Company (COCCo) (see "Recovery Of Fuel Costs" below), the lack of full recovery of the cost of idling another COCCo dragline under major industrial contracts which do not provide for the direct recovery of such costs and an increase in federal income tax expense not related to the increased revenues. Income statement lines which changed significantly were: Increase (Decrease) Second Quarter Year-to-Date (in millions) % (in millions) % Operating Revenues . . . . $ 6.4 2 $63.3 8 Fuel Expense . . . . . . . 1.0 1 39.6 12 Purchased Power Expense. . 4.9 38 10.2 36 Taxes Other Than Federal Income Taxes . . . . . . 2.9 7 3.7 4 Federal Income Taxes . . . 0.9 6 9.0 25 Nonoperating Income. . . . (2.1) (79) (8.7) (80) Interest Charges . . . . . (3.7) (14) (9.4) (17) The significant increase in operating revenues in the year- to-date period was primarily due to increased energy demand as a result of unseasonably cold winter weather and unseasonably hot weather in June 1994. Residential energy sales increased 7% in the year-to-date period while sales to commercial and industrial customers increased 5% and 2%, respectively. Wholesale energy sales increased 2% as sales to unaffiliated utilities, including the Company's share of sales to non-affiliates made by the Power Pool, increased as a result of the unseasonable weather and forced outages at unaffiliated generating units. Year-to-date fuel expenses increased primarily due to the increase in weather-related retail energy demand, the fuel cost disallowance, the abandonment of the COCCo dragline and a higher average cost of fuel consumed. Increased energy purchases from unaffiliated utilities for pass-through sales to other unaffiliated utilities resulted in the significant increase in purchased power expense reflecting the impact of severe winter weather on demand for wholesale energy in the first quarter of 1994 and outages at unaffiliated generating units. The increase in taxes other than federal income tax expense was due to increased West Virginia business and occupation taxes on generation reflecting the increase in generation at West Virginia power plants and an increase in Ohio real and personal property taxes due to an increase in valuation and tax rates. The increase in federal income tax expense in both periods was due to changes in certain book/tax differences which are accounted for on a flow-through basis for rate-making purposes and the increase in the corporate tax rate effective in August 1993. Under Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes (SFAS 109), deferred taxes associated with book/tax differences flowed-through to affect cost of service for rate-making purposes are recorded on the balance sheet with a corresponding regulatory asset or liability however, the current effect of such items is reflected in the income statement. The increase in pre-tax operating income also contributed to the year-to-date increase. Nonoperating income decreased in the quarter primarily due to a loss recorded in 1994 for the termination of a capital lease on surplus mining equipment and interest income recorded in 1993 on a court ordered reversal of a prior refund in the Company's Federal Energy Regulatory Commission jurisdiction. In the year- to-date period nonoperating income also declined as a result of the favorable effects of adopting SFAS 109 in January 1993 and interest income recorded in March of 1993 on tax refunds received from the Internal Revenue Service in connection with the settlement of audits of prior years' tax returns. Interest expense decreased primarily as a result of the refinancing of debt at lower interest rates. FINANCIAL CONDITION Total plant and property additions including capital leases for the first six months of 1994 were $109 million. In January 1994 a coal mining subsidiary, Southern Ohio Coal Company (SOCCo), entered into three loan agreements due January 2001 totaling $30 million with 6.20% fixed interest rates and one $15 million variable interest rate term loan agreement due in January 1999 with a 3.725% initial rate through July 1994. The proceeds of the loan were used in January 1994 to pay at maturity two fixed interest rate term loans of $20 million at 8% and $25 million at 8.01%. Also during January 1994 another mining subsidiary, Windsor Coal Company, retired at maturity a $5 million term loan with an interest rate of 8%. RECOVERY OF FUEL COSTS In May 1994 the Public Utilities Commission of Ohio (PUCO) issued an order related to fuel costs included in the electric fuel component (EFC) rate for retail customers for the period beginning December 1, 1992 through November 30, 1993. As part of the EFC review, the PUCO ruled that a 1993 dragline lease buyout by COCCo, was a proper coal expense to be passed through the EFC. However, the PUCO denied recovery of the buyout as a component of affiliated coal cost during the fuel period under review. The PUCO ruled that the cost should have been included in fuel costs in 1991 when the dragline was idled. However, the cost would not have been recovered since the Company's fuel costs in 1991 were already in excess of a PUCO ordered price cap. As a result a fuel cost disallowance was recorded in June 1994 resulting in an adverse impact on net income of $4.3 million net of taxes. In June 1994 COCCo idled another leased dragline and shovel and bought out the lease. Management concluded that this mining equipment would no longer be needed due to the Muskingum River Plant's Clean Air Act Amendments of 1990 (CAAA) compliance plan to use low sulfur coal from unaffiliated sources. The idling of this equipment and related lease buyout are not expected to have a material effect on future results of operations. The PUCO also reviewed the 1992 sale of the affiliated Martinka mining operation and 20-year coal supply contract with an affiliate of the buyer. Although the PUCO auditor found that the sale of the Martinka mine was reasonable, the PUCO stated that its responsibility is not to approve such transactions but to determine if fuel acquisition and delivery costs are fair and reasonable during the audit period. The PUCO found that the cost of the coal contract was reasonable during the fuel period under review. The PUCO strongly recommended that another subsidiary, Windsor Coal Company, not supply coal to the Company's Cardinal Unit 1 after the January 1995 commencement of Phase I of the CAAA. AEP's systemwide PUCO approved CAAA Phase I compliance plan includes continued use of Windsor coal at Cardinal Unit 1 until the commencement of Phase II of the CAAA in January 2000. The PUCO also recommended that the Company commence negotiations with customers regarding the recovery of its investment in the affiliated Windsor and COCCo mines. Unless the cost of affiliated mine closures can be recovered from customers, results of operations and financial condition would be adversely affected. RATE ACTIVITY On July 6, 1994, the Company filed with the PUCO for an annual revenue increase of $152.5 million. More than half of the requested retail base rate increase is to recover costs associated with Gavin Plant's flue gas desulfurization system (scrubbers) and other costs resulting from complying with CAAA. The remainder of the increase is to recover the additional cost of providing service to customers since the last base rate increase in July 1986; increased depreciation rates for investment in plant and equipment based on a remaining life method and recovery of removal costs; and recovery of costs associated with pressurized fluidized bed combustion research and development and energy conservation demand-side management programs. NOTICE OF VIOLATION - KAMMER PLANT On August 4, 1994, the United States Environmental Protection Agency (Federal EPA) issued a Notice of Violation (NOV) to the Company alleging that the Kammer Plant has been operating in violation of applicable federally enforceable air pollution control requirements since January 1, 1989. By law the Federal EPA may seek penalties of up to $25,000 per day for each day of violation. The Company is entering into discussions with Federal EPA in an effort to resolve the issue of the appropriate sulfur dioxide emission limits for the Kammer Plant. At this time management is unable to determine the ultimate impact of this matter on results of operations and financial condition. MEIGS MINE LITIGATION On July 15, 1994, SOCCo filed a petition seeking review by the U.S. Supreme Court of an Order of the U.S. Court of Appeals for the Sixth Circuit which held that the injunction granted to SOCCo by the U.S. District Court for the Southern District of Ohio was not supported by law. The District Court had granted a preliminary injunction to SOCCo preventing the Federal EPA and the Federal Office of Surface Mining, Reclamation and Enforcement from interfering with the removal of water from SOCCo's Meigs 31 mine. On June 1, 1994, SOCCo filed an action in the U.S. District Court for the Southern District of West Virginia seeking a determination that the state of West Virginia has no jurisdiction to impose penalties upon SOCCo as a result of the Meigs mine water discharges. On July 27, 1994 West Virginia filed an answer to SOCCo's complaint disputing SOCCo's entitlement to a declaratory judgement and asserting a counterclaim seeking an award of $2.55 million in civil penalties, reimbursement of monitoring costs and compensation for unspecified natural resources damage. The resolution of this Meigs mine litigation is not expected to have a material adverse impact on results of operations or financial condition. Note 3 in the 1993 Annual Report discusses this litigation in detail. PROPOSED CHANGES IN REGULATION Congress is considering amendments to the Public Utility Holding Company Act of 1935 (1935 Act) and the Securities and Exchange Commission is considering amending its rules promulgated under the 1935 Act. These amendments could alter the policy for pricing affiliated transactions under the 1935 Act and result in the application of a lower of cost or market test to determine the allowed price for affiliated company transactions. Provisions in the legislation being considered may create a grandfathering feature that would exempt contracts between affiliates entered into before the passage of the legislation. The adoption of any new policy regarding pricing of affiliated transactions could affect the Company's ability to recover the costs of its affiliated mining operations. PART II. OTHER INFORMATION Item 1. Legal Proceedings. Columbus Southern Power Company ("CSPCo") Reference is made to page 42 of the Annual Report on Form 10-K for the year ended December 31, 1993 ("1993 10-K") for a discussion of a complaint issued by Region V, U.S. Environmental Protection Agency ("Federal EPA") which alleged violations by Conesville Plant of the Toxic Substances Control Act and proposed a penalty of $41,000. In June 1994, CSPCo paid a mitigated penalty of $12,750 to settle this action. Ohio Power Company ("OPCo") Reference is made to page 42 of the 1993 10-K for a discus- sion of a complaint issued by Region V, Federal EPA which alleged violations by OPCo's General Service Center (Canton, Ohio) of the Toxic Substances Control Act and proposed a penalty of $24,000. In July 1994, OPCo paid a mitigated penalty of $6,200 to settle this action. Item 4. Submission of Matters to a Vote of Security Holders. American Electric Power Company, Inc. ("AEP") The annual meeting of shareholders was held in Columbus, Ohio on April 27, 1994. The holders of shares entitled to vote at the meeting or their proxies cast votes at the meeting with respect to the following four matters, as indicated below: 1. Election of 12 directors to hold office until the next annual meeting and until their successors are duly elected. Each nominee for director was elected by a vote of the shareowners as follows: Number of Shares Number of Votes Nominee Voted For Withheld Peter J. DeMaria 136,172,389 2,117,722 A. Joseph Dowd 136,152,216 2,137,895 E. Linn Draper, Jr. 136,060,894 2,229,217 Robert M. Duncan 136,055,381 2,234,730 Arthur G. Hansen 135,890,055 2,400,056 Lester A. Hudson, Jr. 136,149,807 2,140,304 Gerald P. Maloney 136,171,605 2,118,506 Angus E. Peyton 136,100,126 2,189,985 Toy F. Reid 135,997,975 2,292,136 Linda Gillespie Stuntz 135,879,672 2,410,439 Morris Tanenbaum 135,988,660 2,301,451 Ann Haymond Zwinger 135,995,388 2,294,723 2. Approve the appointment by the Board of Directors of Deloitte & Touche as independent auditors of AEP for the year 1994. The proposal was approved by a vote of the shareowners as follows: Votes FOR 136,373,946 Votes AGAINST 853,781 Votes ABSTAINED 1,062,384 Broker NON-VOTES* 0 3. Approve the sale of new Common Stock for the Dividend Reinvestment and Stock Purchase Plan. The proposal was approved by a vote of the shareowners as follows: Votes FOR 110,039,842 Votes AGAINST 3,914,318 Votes ABSTAINED 2,050,373 Broker NON-VOTES* 22,285,578 4. Approve the AEP Performance Share Incentive Plan. The proposal was approved by a vote of the shareowners as follows: Votes FOR 123,924,689 Votes AGAINST 11,059,287 Votes ABSTAINED 3,306,135 Broker NON-VOTES* 0 *A non-vote occurs when a nominee holding shares for a beneficial owner votes on one proposal, but does not vote on another proposal because the nominee does not have discretionary voting power and has not received instructions from the beneficial owner. Appalachian Power Company ("APCo") The annual meeting of stockholders was held on April 26, 1994 at 1 Riverside Plaza, Columbus, Ohio. At the meeting, 13,499,500 votes were cast FOR each of the following eight persons for election as directors and there were no votes with- held and such persons were elected directors to hold office for one year or until their successors are elected and qualify: Peter J. DeMaria William J. Lhota A. Joseph Dowd G. P. Maloney E. Linn Draper, Jr. James J. Markowsky Luke M. Feck Joseph H. Vipperman No other business was transacted at the meeting. Indiana Michigan Power Company ("I&M") The annual meeting of stockholders was held on April 26, 1994 at the principal office of I&M in Fort Wayne, Indiana. At the meeting, 1,400,000 votes were cast FOR each of the following eleven persons for election as directors and there were no votes withheld and such persons were elected directors to hold office for one year or until their successors are elected and qualify: Mark A. Bailey Gerald P. Maloney Peter J. DeMaria Richard C. Menge W. N. D'Onofrio Albert H. Potter A. Joseph Dowd D. M. Trenary E. Linn Draper, Jr. W. E. Walters William J. Lhota No other business was transacted at the meeting. OPCo The annual meeting of shareholders was held on May 3, 1994 at the principal office of OPCo in Canton, Ohio. At the meeting, 27,952,473 votes were cast FOR each of the following eight persons for election as directors and there were no votes with- held and such persons were elected directors to hold office for one year or until their successors are elected and qualify: Peter J. DeMaria Henry W. Fayne A. Joseph Dowd William J. Lhota E. Linn Draper, Jr. G. P. Maloney Carl A. Erikson James J. Markowsky In addition, 27,952,473 votes were cast FOR an amendment to OPCo's Amended Articles of Incorporation to reclassify 1,050,000 authorized but unissued shares of OPCo's Cumulative Preferred Stock, par value $100 per share, to 1,050,000 authorized but unissued shares of OPCo's Cumulative Preferred Stock, Non-Voting par value $100 per share, and there were no votes against this proposal and no broker non-votes. No other business was transacted at the meeting. Item 5. Other Information. AEP, AEP Generating Company ("AEGCo"), APCo, CSPCo, I&M, Kentucky Power Company ("KEPCo") and OPCo Reference is made to pages 3, 7 and 8 of the 1993 10-K for a discussion of regulation and competition in the electric utility industry. Pursuant to a Federal Register notice of July 7, 1994, the Securities and Exchange Commission ("SEC") conducted a round- table discussion on July 18 and 19, 1994 with representatives of various industry and regulatory groups to inaugurate a comprehen- sive study of the Public Utility Holding Company Act of 1935 ("PUHCA"). The SEC has undertaken this study in response to changes in the utility industry, particularly the Energy Policy Act of 1992. This process is intended to culminate in recommen- dations to Congress for amendments to PUHCA. The SEC included the following topics in its agenda: the need for continued integration of a registered holding company system, limits on the ability to diversify, the criteria for exemption from registra- tion under PUHCA, and the question of foreign ownership of U.S. utilities. On June 29, 1994, the Federal Energy Regulatory Commission ("FERC") issued a proposed rulemaking to provide the regulatory framework for dealing with utility assets that are stranded as a result of the transition to a competitive electric industry. Stranded costs are those costs incurred by a utility when a customer stops buying power from the utility and, instead, purchases transmission services from that utility to obtain power purchased from another supplier. APCo Reference is made to page 16 of the 1993 10-K and page II-2 of the Quarterly Report on Form 10-Q for the quarter ended March 31, 1994 for a discussion of transmission service sought by certain municipal customers. On May 24, 1994, APCo appealed the February 10, 1994 order of the FERC to the U.S. Court of Appeals for the District of Columbia Circuit. On July 1, 1994, the FERC issued two orders. In the first, the FERC ordered the AEP System to provide transmission services for these municipal customers. In the other order, the FERC granted a complaint filed by the municipal customers regarding the pricing of such transmission services. On August 1, 1994, AEP System companies filed a petition for rehearing of these FERC orders. In addition, on August 1, 1994, the municipal customers began to obtain transmis- sion service from the AEP System for 40MW of power purchased from an unaffiliated utility, which had been previously supplied by APCo. AEP and I&M Reference is made to pages 25 and 26 of the 1993 10-K for a discussion of the disposal of nuclear waste from the D.C. Cook Nuclear Plant. On June 20, 1994, a group of 14 unaffiliated utilities owning and operating nuclear plants and a group of states each filed a petition for review in the U.S. Court of Appeals for the District of Columbia Circuit requesting that the court issue a declaration that the Nuclear Waste Policy Act of 1982 imposes on the U.S. Department of Energy ("DOE") an uncondi- tional obligation to begin acceptance of spent nuclear fuel and high level radioactive waste by January 31, 1998. DOE has indicated in its Notice of Inquiry of May 25, 1994 that its preliminary view is that it has no statutory obligation to begin to accept spent nuclear fuel beginning in 1998 in the absence of an operational repository. CSPCo and OPCo Reference is made to page 34 of the 1993 10-K. Effective June 1, 1994 thermal variances were issued for the Conesville and Muskingum River Plants. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: AEP, AEGCo, APCo, CSPCo, I&M, KEPCo and OPCo None (b) Reports on Form 8-K: AEP, AEGCo, APCo, CSPCo, I&M, KEPCo and OPCo No reports on Form 8-K were filed during the quarter ended June 30, 1994. In the opinion of the companies, the financial statements contained herein reflect all adjustments (consisting of only normal recurring accruals) which are necessary to a fair presen- tation of the results of operations for the interim periods, except for the adjustments resulting from the adoption of SFAS 115 an American Electric Power Company, Inc. and Indiana Michigan Power Company. 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. The signatures for each undersigned company shall be deemed to relate only to matters having reference to such company and any subsid- iaries thereof. AMERICAN ELECTRIC POWER COMPANY, INC. G.P. Maloney P.J. DeMaria G.P. Maloney, Vice President P.J. DeMaria, Treasurer AEP GENERATING COMPANY G.P. Maloney P.J. DeMaria G.P. Maloney, Vice President P.J. DeMaria, Vice President and Treasurer APPALACHIAN POWER COMPANY G.P. Maloney P.J. DeMaria G.P. Maloney, Vice President P.J. DeMaria, Vice President and Treasurer COLUMBUS SOUTHERN POWER COMPANY G.P. Maloney P.J. DeMaria G.P. Maloney, Vice President P.J. DeMaria, Vice President and Treasurer INDIANA MICHIGAN POWER COMPANY G.P. Maloney P.J. DeMaria G.P. Maloney, Vice President P.J. DeMaria, Vice President and Treasurer KENTUCKY POWER COMPANY G.P. Maloney P.J. DeMaria G.P. Maloney, Vice President P.J. DeMaria, Vice President and Treasurer OHIO POWER COMPANY G.P. Maloney P.J. DeMaria G.P. Maloney, Vice President P.J. DeMaria, Vice President and Treasurer Date: August 12, 1994 II-4 -----END PRIVACY-ENHANCED MESSAGE-----