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                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                             ----------------------

                                    FORM 10-Q

(MARK ONE)

[  X  ]/X/              QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                        THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31,JUNE 30, 1999

                                       OR

[     ]/ /              TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                        THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM ___________ TO _____________

                           COMMISSION FILE NO. 33-7591

                             -----------------------

                          OGLETHORPE POWER CORPORATION
                      (AN ELECTRIC MEMBERSHIP CORPORATION)

             (Exact name of registrant as specified in its charter)

                GEORGIA                               58-1211925
      (State or other jurisdiction of              (I.R.S. employer
      incorporation or organization)               identification no.)

          POST OFFICE BOX 1349
        2100 EAST EXCHANGE PLACE
             TUCKER, GEORGIA                          30085-1349
(Address of principal executive offices)              (Zip Code)

Registrant's telephone number, including area code   (770) 270-7600


Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X/X/ NO / /

            Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest practicable date. THE
REGISTRANT IS A MEMBERSHIP CORPORATION AND HAS NO AUTHORIZED OR OUTSTANDING
EQUITY SECURITIES.


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                          OGLETHORPE POWER CORPORATION

                     INDEX TO QUARTERLY REPORT ON FORM 10-Q
                       FOR THE QUARTER ENDED MARCH 31,JUNE 30, 1999

PAGE NO. PART I - FINANCIAL INFORMATION Item 1. Financial Statements Condensed Balance Sheets as of March 31,June 30, 1999 (Unaudited) and December 31, 1998 3 Condensed Statements of Revenues and Expenses and Comprehensive Margin (Unaudited) for the Three Months Ended March 31,and Six Months ended June 30, 1999 and 1998 5 Condensed Statements of Cash Flows (Unaudited) for the ThreeSix Months Ended March 31,June 30, 1999 and 1998 6 Notes to the Condensed Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Item 3. Quantitative and Qualitative Disclosures About Market Risk 1716 PART II - OTHER INFORMATION Item 5. Other Information 18 Item 6. Exhibits and Reports on Form 8-K 1817 SIGNATURES 1918
2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS
OGLETHORPE POWER CORPORATION CONDENSED BALANCE SHEETS MARCH 31, 1999 AND DECEMBER 31, 1998 - --------------------------------------------------------------------------------------------------------OGLETHORPE POWER CORPORATION CONDENSED BALANCE SHEETS JUNE 30, 1999 AND DECEMBER 31, 1998 - -------------------------------------------------------------------------------- (dollars in thousands)
1999 1998 ASSETS (Unaudited) ------------------------------------------------- ------------------------------------- ELECTRIC PLANT, AT ORIGINAL COST: In service $4,856,328$4,861,487 $4,856,174 Less: Accumulated provision for depreciation (1,541,274)(1,571,082) (1,510,888) ------------------- ------------------ 3,315,054-------------- -------------- 3,290,405 3,345,286 Nuclear fuel, at amortized cost 86,91888,933 84,418 Construction work in progress 25,36522,983 20,948 ------------------- ------------------ 3,427,337-------------- -------------- 3,402,321 3,450,652 ------------------- -------------------------------- -------------- INVESTMENTS AND FUNDS: Decommissioning fund, at market 122,287131,252 122,094 Deposit on Rocky Mountain transactions, at cost 56,69557,635 55,755 Bond, reserve and construction funds, at market 32,22932,160 32,909 Investment in associated organizations, at cost 16,093 16,231 Other, at cost 3,302 3,326 ------------------- ------------------ 230,606-------------- -------------- 240,442 230,315 ------------------- -------------------------------- -------------- CURRENT ASSETS: Cash and temporary cash investments, at cost 88,76686,706 106,235 Other short-term investments, at market 74,22774,177 73,356 Customer receivables 104,030125,833 110,919 Notes and interim financing receivable 93,850115,171 45,151 Inventories, at average cost 83,45992,419 76,783 Prepayments and other current assets 26,29118,982 21,395 ------------------- ------------------ 470,623-------------- -------------- 513,288 433,839 ------------------- -------------------------------- -------------- DEFERRED CHARGES: Premium and loss on reacquired debt, being amortized 208,766203,794 206,729 Deferred amortization of Scherer leasehold 99,807100,318 99,297 Discontinued projects, being amortized 34,15732,111 36,203 Deferred debt expense, being amortized 15,57315,333 15,825 Other 38,79539,615 33,405 ------------------- ------------------ 397,098-------------- -------------- 391,171 391,459 ------------------- ------------------ $4,525,664-------------- -------------- $4,547,222 $4,506,265 ------------------- ------------------ ------------------- -------------------------------- -------------- -------------- --------------
The accompanying notes are an integral part of these condensed financial statements. 3
OGLETHORPE POWER CORPORATION CONDENSED BALANCE SHEETS MARCH 31, 1999 AND DECEMBER 31, 1998 - -------------------------------------------------------------------------------------------------------------------------------OGLETHORPE POWER CORPORATION CONDENSED BALANCE SHEETS JUNE 30, 1999 AND DECEMBER 31, 1998 - -------------------------------------------------------------------------------- (dollars in thousands)
1999 1998 EQUITY AND LIABILITIES (Unaudited) ---------------------------------------------------------------------------------- CAPITALIZATION: CAPITALIZATION: Patronage capital and membership fees (including unrealized gainloss of $231$663 at March 31,June 30, 1999 and $1,006 at December 31, 1998 on available-for-sale securities) $360,025$363,614 $352,701 Long-term debt 3,138,8213,118,375 3,177,883 Obligation under capital leases 280,530278,761 282,299 Obligation under Rocky Mountain transactions 56,69557,635 55,755 ----------------- ----------------- 3,836,071-------------- -------------- 3,818,385 3,868,638 ----------------- ------------------------------- -------------- CURRENT LIABILITIES: Long-term debt and capital leases due within one year 102,921104,463 97,475 Accounts payable 57,73661,376 46,676 Notes payable 90,884109,342 50,986 Accrued interest 14,40515,609 10,074 Accrued and withheld taxes 6,48412,954 214 Other current liabilities 6,3438,271 17,901 ----------------- ----------------- 278,773-------------- -------------- 312,015 223,326 ----------------- ------------------------------- -------------- DEFERRED CREDITS AND OTHER LIABILITIES: Gain on sale of plant, being amortized 57,66357,044 58,282 Net benefit of sale of income tax benefits, being amortized 24,02822,026 26,030 Net benefit of Rocky Mountain transactions, being amortized 88,39387,597 89,189 Accumulated deferred income taxes 63,203 63,203 Decommissioning reserve 155,795164,522 156,021 Other 21,73822,430 21,576 ----------------- ----------------- 410,820-------------- -------------- 416,822 414,301 ----------------- ----------------- $4,525,664-------------- -------------- $4,547,222 $4,506,265 ----------------- ----------------- ----------------- ------------------------------- -------------- -------------- --------------
The accompanying notes are an integral part of these condensed financial statements. 4
OGLETHORPE POWER CORPORATION CONDENSED STATEMENTS OF REVENUES AND EXPENSES AND COMPREHENSIVE MARGIN (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998 - ------------------------------------------------------------------------------------------------------------------OGLETHORPE POWER CORPORATION CONDENSED STATEMENTS OF REVENUES AND EXPENSES AND COMPREHENSIVE MARGIN (UNAUDITED) FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998 - -------------------------------------------------------------------------------- (dollars in thousands)
Three Months Ended June 30, Six Months Ended June 30, 1999 1998 ------------------------------------------------------1999 1998 ------------------------- ------------------------- OPERATING REVENUES: OPERATING REVENUES: Sales to Members $245,043 $231,943$262,540 $297,014 $507,583 $528,957 Sales to non-Members 5,721 3,324 --------------- ---------------11,377 19,713 17,099 23,037 ----------- ----------- ----------- ----------- TOTAL OPERATING REVENUES 250,764 235,267 --------------- ---------------273,917 316,727 524,682 551,994 ----------- ----------- ----------- ----------- OPERATING EXPENSES: Fuel 41,535 39,86746,606 48,978 88,141 88,845 Production 50,311 46,93252,559 48,486 102,847 95,417 Purchased power 63,006 54,56482,729 130,141 145,735 184,705 Depreciation and amortization 33,619 31,123 --------------- ---------------33,681 31,077 67,300 62,199 ----------- ----------- ----------- ----------- TOTAL OPERATING EXPENSES 188,471 172,486 --------------- ---------------215,575 258,682 404,023 431,166 ----------- ----------- ----------- ----------- OPERATING MARGIN 62,293 62,781 --------------- ---------------58,342 58,045 120,659 120,828 ----------- ----------- ----------- ----------- OTHER INCOME (EXPENSE): InterestInvestment income 7,455 7,84010,610 8,273 18,064 16,113 Amortization of net benefit of sale of income tax benefits 2,799 2,7982,799 5,597 5,596 Allowance for equity funds used during construction 27 2219 9 46 31 Other 810 125 --------------- ---------------1,017 788 1,804 913 ----------- ----------- ----------- ----------- TOTAL OTHER INCOME 11,091 10,785 --------------- ---------------14,445 11,869 25,511 22,653 ----------- ----------- ----------- ----------- INTEREST CHARGES: Interest on long-term debt and other obligations 65,745 66,14568,242 68,397 133,987 134,541 Allowance for debt funds used during construction (460) (205) --------------- ---------------62 (73) (398) (278) ----------- ----------- ----------- ----------- NET INTEREST CHARGES 65,285 65,940 --------------- ---------------68,304 68,324 133,589 134,263 ----------- ----------- ----------- ----------- NET MARGIN 8,099 7,6264,483 1,590 12,581 9,218 Net change in unrealized (loss) gain on available-for saleavailable-for-sale securities (775) 229 --------------- ---------------(894) 367 (1,668) 596 ----------- ----------- ----------- ----------- COMPREHENSIVE MARGIN $7,324 $7,855 --------------- --------------- --------------- ---------------$3,589 $1,957 $10,913 $9,814 ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
The accompanying notes are an integral part of these condensed financial statements. 5
OGLETHORPE POWER CORPORATION CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998 - -------------------------------------------------------------------------------------------------------------------------------OGLETHORPE POWER CORPORATION CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 - -------------------------------------------------------------------------------- (dollars in thousands)
1999 1998 ----------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net margin $ 8,09912,581 $ 7,626 ------------ -----------------9,218 -------------- -------------- ADJUSTMENTS TO RECONCILE NET MARGIN TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Depreciation and amortization 36,186 43,55484,167 85,413 Allowance for equity funds used during construction (27) (22)(46) (31) Amortization of deferred gains (619) (619)(1,237) (1,237) Amortization of net benefit of sale of income tax benefits (2,799) (2,798)(5,597) (5,596) Other 3,269 4,2068,624 8,501 CHANGE IN NET CURRENT ASSETS, EXCLUDING LONG-TERM DEBT AND CAPITAL LEASES DUE WITHIN ONE YEAR AND NOTES PAYABLE: Customer receivables (14,914) (76,872) Notes receivable 209 (115) Receivables 6,889 11,333415 (293) Inventories (6,676) (10,849)(15,636) (9,009) Prepayments and other current assets (4,896) 8312,413 (2,195) Accounts payable 11,060 (17,700)14,700 73,780 Accrued interest 4,331 1,3715,535 (3,176) Accrued and withheld taxes 6,270 4,79112,740 10,682 Other current liabilities (11,558) (2,291) ------------ -----------------(9,630) (4,493) -------------- -------------- TOTAL ADJUSTMENTS 41,639 31,692 ------------ -----------------81,534 75,474 -------------- -------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 49,738 39,318 ------------ -----------------94,115 84,692 -------------- -------------- CASH FLOWS FROM INVESTING ACTIVITIES: Property additions (16,710) (8,085)(32,454) (15,786) Net proceeds from bond, reserve and construction funds 330 93892 572 Decrease in investment in associated organizations 138 231272 Increase in other short-term investments (1,296) (1,293)(1,832) (3,015) Increase in decommissioning fund (4,467) (3,808) ------------ -----------------(10,868) (7,631) -------------- -------------- NET CASH USED IN INVESTING ACTIVITIES (22,005) (12,017) ------------ -----------------(44,924) (25,588) -------------- -------------- CASH FLOWS FROM FINANCING ACTIVITIES: Long-term debt proceeds, net (2,597) (2,198)(4,667) (24,133) Long-term debt payments (33,825) (30,820)(52,938) (51,224) Increase in notes payable 39,89858,356 - Increase in notes receivable under interim financing agreement (48,908)(70,435) - Other 230 1,017 ------------ -----------------964 1,236 -------------- -------------- NET CASH USED IN FINANCING ACTIVITIES (45,202) (32,001) ------------ -----------------(68,720) (74,121) -------------- -------------- NET DECREASE IN CASH AND TEMPORARY CASH INVESTMENTS (17,469) (4,700)(19,529) (15,017) CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF PERIOD 106,235 63,215 ------------ ------------------------------- -------------- CASH AND TEMPORARY CASH INVESTMENTS AT END OF PERIOD $ 88,76686,706 $ 58,515 ------------ ----------------- ------------ -----------------48,198 -------------- -------------- -------------- -------------- CASH PAID FOR: Interest (net of amounts capitalized) $ 52,415108,936 $ 58,026123,020 Income taxes - -
The accompanying notes are an integral part of these condensed financial statements. 6 OGLETHORPE POWER CORPORATION NOTES TO CONDENSED FINANCIAL STATEMENTS MARCH 31,JUNE 30, 1999 AND 1998 (A) The condensed financial statements included herein have been prepared by Oglethorpe Power Corporation (Oglethorpe), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). In the opinion of management, the information furnished herein reflects all adjustments (which include only normal recurring adjustments) and estimates necessary to present fairly, in all material respects, the results for the periods ended March 31,June 30, 1999 and 1998. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such SEC rules and regulations, although Oglethorpe believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in Oglethorpe's latest Annual Report on Form 10-K, as filed with the SEC. Certain amounts for 1998 have been reclassified to conform with the current period presentation. (B) In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities." The standard requires that all derivative instruments be recognized as assets or liabilities and be measured at fair value. Oglethorpe is required to adopt SFAS No. 133 by January 1, 2000.2001. Oglethorpe is currently assessing the impact that adoption of SFAS No. 133 will have on results of operations and financial condition and is undecided as to the date the standard will be adopted.condition. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL FUTUREPOWER PURCHASES FROM GPC Oglethorpe entered into an agreement with Georgia Power Company (GPC) effective April 1, 1999 to purchase capacity and associated energy on a take-or-pay basis. In connection with this agreement, the Block Power Sale Agreement (BPSA) between Oglethorpe and GPC was terminated. Under the new agreement, Oglethorpe will purchase capacity and associated energy as follows: 750 megawatt (MW) through May 31, 2000, 500 MW from June 1, 2000 to August 31, 2000, 375 MW from September 1, 2000 to August 31, 2001, and 250 MW from September 1, 2001 to March 31, 2006. DOYLE POWER PURCHASE Oglethorpe has entered into an agreement with Doyle I, LLC, a limited liability company to be owned by an affiliate of Enron Capital & Trade Resources Corp. and one member of Oglethorpe, to purchase approximately 325 MW of peaking capacity over a 15-year term. Delivery is anticipated to commence by June 1, 2000, subject to the generating units underlying the purchase being ready for commercial operation. MEMBER POWER RESOURCES Under the Wholesale Power Contracts, Oglethorpe's 39 retail electric distribution cooperative members (the Members) may choose to supply all or a portion of their future requirements with purchases from suppliers other than Oglethorpe. A new entity, Smarr EMC, was formed in 1998 by 36 of the Members to own a two-unit, 217 megawatt (MW)MW combustion turbine (CT) facility, (CT One)Smarr Energy Facility (Smarr CT). CommercialSmarr CT was declared in commercial operation of this facility is scheduled forin June 1999. Construction andOglethorpe is providing operation management services as well as construction financing, are currently being provided by Oglethorpe.for this facility. Smarr EMC, or similar entities, may also own future generation facilities on behalf of Members who may decide to participate in such projects. OneSewell Creek Energy Facility (Sewell Creek CT) is one such project currently under construction in which 31 Members are participating. Sewell Creek CT is a four-unit, 492 MW CT facility (CT Two) currently under consideration by the Members, which is scheduled for commercial operation by the summer of 2000. Oglethorpe is providing construction management services and interim financing for this facility and anticipates that it will provide operation management services as well. In addition, two Members have formed an entity which is constructingthat constructed 90 MW of CT capacity, forwhich began commercial operation byin the summer of 1999. All of these CTs are currently anticipated to be dispatched in the Oglethorpe pool of generation resources. POWER PURCHASES FROM GPC Oglethorpe has entered into an agreement with Georgia Power Company (GPC) effective April 1, 1999 to purchase capacity and associated energy on a take-or-pay basis. Under the agreement, Oglethorpe has committed to purchase 250resources, except for 50 MW of capacity and associated energy through March 31, 2006 and an additional 250the 90 MW for a one-year period beginning June 1, 1999. In addition to these amounts, Oglethorpe may elect, prior to May 26, 1999, to purchase up to 250 MW through March 31, 2003. If Oglethorpe does not make the election, it will purchase the additional 250 MW through August 31, 2000, will reduce this amount to 125 MW from September 1, 2000 to August 31, 2001, and will not purchase any additional amount after August 31, 2001. Upon the effectiveness of this agreement, the Block Power Sale Agreement (BPSA) between Oglethorpe and GPC was terminated. The BPSA had provided for Oglethorpe to purchase 500 MW of capacity and associated energy through December 31, 2003. Unlike under the BPSA, Oglethorpe has no right (other than as described above) to reduce its purchase obligations under the new agreement prior to its expiration.owned by two Members. 8 RESULTS OF OPERATIONS FOR THE THREE MONTHS AND SIX MONTHS ENDED MARCH 31,JUNE 30, 1999 AND 1998 OPERATING REVENUES Revenues from sales to Members for the three months and six months ended March 31,June 30, 1999 were 5.6% higher11.6% and 4.0% lower than the same periodperiods of 1998 and megawatt-hour1998. Megawatt-hour (MWh) sales to Members were 11.8%1.5% and 6.2% higher forin the current period. This resulted in a 5.5% decrease inthree-month and six-month periods compared to the same periods of 1998. The average revenue per MWh from sales to Members was 12.9% and 9.6% less for the current periodperiods compared to the same periodperiods of 1998. The components of Member revenues for the three months and six months ended March 31,June 30, 1999 and 1998 were as follows:
Three Months Six Months Ended March 31, --------------------------June 30, Ended June 30, -------------- -------------- 1999 1998 -------- ---------1999 1998 ---- ---- ---- ---- (dollars in thousands) Capacity revenues $155,213 $155,820$155,210 $155,862 $310,424 $311,683 Energy revenues 89,830 76,123107,330 141,152 197,159 217,274 -------- -------- -------- -------- Total $245,043 $231,943$262,540 $297,014 $507,583 $528,957 -------- -------- -------- -------- -------- -------- -------- --------
While capacity revenues from Members for the three months and six months ended March 31,June 30, 1999 compared to 1998 were virtually unchanged, energy revenues were 18.0% higher24.0% and 9.3% lower for the current periods compared to the same periods of 1998. The decrease in energy revenues in 1999 was due to the pass-through in 1998 of significant price increases for purchased power in the wholesale electricity markets (see "OPERATING EXPENSES" below). Oglethorpe's average energy revenue per MWh from sales to Members for the three-month and six-month periods were 25.1% and 14.5% lower in 1999 compared to 1998. As noted above, MWh sales to Members increased during the current quarter compared to the same period of 1998. The higher MWh sales to Members discussed above were primarily1998 due to continued sales growth in the Members' service territories. In addition, Oglethorpe provided the Members with additional energy to offset lower delivery of hydroelectric power from Southeastern Power Administration (SEPA) due to lower than normal rainfall. Oglethorpe's average energy revenue per MWh from sales to Members for the three-month period was 5.6% higher in 1999 compared to 1998. This increase resulted primarily from higher purchased power energy costs as discussed below under "OPERATING EXPENSES." Sales to non-Members were primarily from energy sales to other utilities and power marketers. The following table summarizes the amounts of non-Member revenues from these sources for the three months and six months ended March 31,June 30, 1999 and 1998: 9
Three Months Six Months Ended March 31, --------------------June 30, Ended June 30, -------------- -------------- 1999 1998 1999 1998 ---- ---- ---- ---- (dollars in thousands) Sales to other utilities $3,826 $2,225$ 8,878 $11,189 $12,705 $13,414 Sales to power marketers 1,895 1,099 ------ ------2,499 8,524 4,394 9,623 -------- -------- -------- -------- Total $5,721 $3,324 ------ ------ ------ ------$11,377 $19,713 $17,099 $23,037 -------- -------- -------- -------- -------- -------- -------- --------
Sales to other utilities represent sales made directly by Oglethorpe. Oglethorpe sells for its own account any energy available from the portion of its resources dedicated to Morgan Stanley Capital Group Inc. (Morgan Stanley) that is not scheduled by Morgan Stanley pursuant to its power marketer 9 arrangement. Sales to other utilities were higher for the three-month period of 1999 compared to 1998 primarily due to capacity revenues received under an agreement entered into with Alabama Electric Cooperative to sell 100 MW of capacity for the period June 1998 through December 2005. Under the LG&E Energy Marketing Inc. (LEM) and Morgan Stanley power marketer arrangements, sales to the power marketers representedrepresent the net energy transmitted on behalf of LEM and Morgan Stanley off-system on a daily basis from Oglethorpe's total resources. Such energy was sold to LEM at Oglethorpe's cost, subject to certain limitations, and to Morgan Stanley at a contractually fixed price. The volume of sales to power marketers depends primarily on the power marketers' decisions for servicing their load requirements. OPERATING EXPENSES Operating expenses for the three months and six months ended March 31,June 30, 1999 were 9.3% higher16.7% and 6.3% lower compared to the same periods of 1998. This decrease was primarily due to the 36.4% and 21.1% decline in total purchased power costs for the current three-month and six-month periods compared to the same periods of 1998. Oglethorpe purchased 28.1% and 11.1% less MWhs in the three months and six months ended June 30, 1999 than in the same periods of 1998. The average cost per MWh of total purchased power was 11.6% and 11.2% less in 1999 compared to the comparable periods of 1998. The lower volume of purchased MWhs was due to milder weather in the current quarter compared to the same period of 1998. This increase was primarily due to 15.5% higher total purchased power costs for the current quarter compared to the same quarter of 1998. Oglethorpe purchased 22.3% more MWhs in the three months ended March 31, 1999 than in the same period of 1998. ThisThe milder weather also resulted in a decrease of 5.6% in the average cost per MWh of total purchased power. The higher volume of purchased MWhs relates primarilylower sales to the portion of increased Member load not contractually provided by theother utilities and power marketers. Purchased power costs arewere as follows:
Three Months Six Months Ended March 31, -------------------------June 30, Ended June 30, -------------- -------------- 1999 1998 -------- --------1999 1998 ---- ---- ---- ---- (dollars in thousands) Capacity costs $25,408 $30,174$26,941 $32,055 $52,349 $62,229 Energy costs 37,598 24,390 -------cost 55,788 98,086 93,386 122,476 -------- -------- -------- -------- Total $63,006 $54,564 -------$82,729 $130,141 $145,735 $184,705 -------- --------------- -------- -------- -------- -------- -------- --------
Purchased power capacity cost for the three months and six months ended March 31,June 30, 1999 was 15.8%approximately 16.0% and 15.9% lower than the same periodcomparable periods of 1998. These savings were primarily a result of the elimination, effective September 1, 1998, of a 250 MW component block 10 under the BPSA between Oglethorpe and GPC. Purchased power energy costs for the three-month periodand six-month periods of 1999 were 54.2% higher43.1% and 23.8% lower compared to the same periodperiods of 1998 as a result of higher volumes of purchased MWhs and higher prices experienced in the wholesale electricity markets.markets during the second quarter of 1998 compared to the current quarter. These factors resulted in a 26.0% increase20.9% and 14.2% decrease in the average cost of purchased power energy per MWh for the three-month periodand six-month periods of 1999 compared to 1998. This increasedecrease in the average cost of purchased power energy was primarily responsible for an increasethe decrease in the average MWh cost of energy to the Members. OTHER INCOME Investment income was higher in the current quarter compared to the same period of 1998 partly due to higher earnings from the decommissioning fund and partly due to interest earnings on the notes and interim financing receivable for Smarr CT and Sewell Creek CT. See "General--MEMBER POWER RESOURCES" for a further discussion of these projects. NET MARGIN AND COMPREHENSIVE MARGIN Oglethorpe's net margin for the three months and six months ended March 31,June 30, 1999 was $8.1$4.5 million and $12.6 million, respectively, compared to $7.6$1.6 million and $9.2 million for the same periodperiods of 1998. The higher net margin resulted primarily from lower than budgeted fixed operations and maintenance (O&M) expenses and from lower than budgeted interest rates on the variable portion of long-term debt. Comprehensive margin for Oglethorpe is net margin adjusted for the net change in unrealized gains and losses on investments in available-for-sale securities. 10 FINANCIAL CONDITION Total assets and total equity plus liabilities as of March 31,June 30, 1999 were $4.5 billion, which was $20$41.0 million more than the total at December 31, 1998 due primarily to an increase in the notes and interim financing receivable for construction of Smarr CT One and Sewell Creek CT, Two, offset by depreciation of plant. These CT projects are being financed on an interim basis by Oglethorpe through the issuance of commercial paper. On July 8, 1999, Oglethorpe expectswas reimbursed $56.3 million for Smarr CT project costs funded by Oglethorpe through May 31, 1999. Oglethorpe used these funds to be reimbursed for the costs relatingretire $53.2 million in outstanding commercial paper that was issued to fund the construction of these projects at the time each facility becomes commercially operable, which Oglethorpe anticipates will be June 1999Smarr CT. See "General--MEMBER POWER RESOURCES" for CT One and the summer of 2000 for CT Two. For a further discussion of these projects, see "General--FUTURE POWER RESOURCES."projects. ASSETS Property additions for the threesix months ended March 31,June 30, 1999 totaled $16.7$32.5 million primarily for purchases of nuclear fuel and for additions, replacements and improvements to existing generation facilities. The decrease in cash is a result of cash used in financing and investing activities, including property additions noted above and debt principal repayments, exceeding cash provided from operations. The increase in receivables resulted from significantly higher energy costs billed to Members at June 30, 1999 compared to the receivable balance from the Members at December 31, 1998. 11 The increase in notes and interim financing receivable resulted primarily from use of funds in the interim financing activities related to the construction of Smarr CT units being constructed.and Sewell Creek CT. Included in notes and interim financing receivable as of March 31,June 30, 1999 is $54.4$57.2 million relating to the construction of Smarr CT One and $38.9$57.5 million relating to the construction of Sewell Creek CT. As noted above, the note related to Smarr CT Two.was repaid in July 1999. Inventories of fossil fuel were greater at June 30, 1999 than at December 31, 1998 as a result of normal seasonal increases in anticipation of higher demand for electricity during the summer season. In addition, inventories were greater because Oglethorpe's fossil fuel plants have been utilized less than projected due to decisions made by LEM and Morgan Stanley under the power marketer arrangements. Prepayments and other current assets increaseddecreased primarily due to the estimated payments to GPC for Plant Hatch operations and maintenance (O&M)O&M costs for AprilJuly 1999 compared to the estimate for January 1999. The increase in O&M is related to nuclear fuel purchases and costs to increase the actual and licensed thermal output of Hatch Units No. 1 and No. 2. The increase in other deferred charges is related to 1999 refueling outages for Vogtle Unit No.1 and Hatch Unit No.1. Such costs will be amortized to expense over the 18-month operating cycle of each unit. EQUITY AND LIABILITIES Notes payable represent commercial paper issued by Oglethorpe as interim financing for costs incurred in the construction of Smarr CT One and Sewell Creek CT. In July 1999, Oglethorpe was reimbursed $56.3 million for Smarr CT Two.project costs funded by Oglethorpe willthrough May 31, 1999. Oglethorpe used these funds to retire $53.2 million in outstanding commercial paper which was issued to fund the construction of Smarr CT. Oglethorpe expects to be reimbursed by the respective projects' owners for all construction costs incurred prior to transfer of ownership, and accordingly, has recorded all expenditures as a receivable. As of March 31, 1999, notes payable consisted of $52.2 million relating to the financingconstruction of Sewell Creek CT One and $38.7 million relating toshortly after it is placed into commercial operation, which Oglethorpe anticipates will be by the financingsummer of CT Two.2000. Accounts payable increased due primarily to the Hatch Unit No. 1 refueling outage. This outage resultedvolume of purchased power activity in higher than normal charges for nuclear fuel and O&M.June 1999 compared to December 1998. Accrued interest increased as a result of the accrual for the July 1 interest payment due for the Scherer Unit No. 2 lease obligation. 11 Accrued and withheld taxes increased as a result of the normal monthly accruals for property taxes, which are generally paid in the fourth quarter of the year. The decrease in other current liabilities primarily resulted from $8.2 million improvement in negative book cash balances at June 30, 1999 compared to 1998 year-end. 12 MISCELLANEOUS COMPETITION The electric utility industry in the United States is undergoing fundamental change and is becoming increasingly competitive. This change is promoted by the Energy Policy Act of 1992, recently adopted and proposed policies from the Federal Energy Regulatory Commission (FERC) regarding mergers, transmission access and pricing, federal and state deregulation initiatives, increased consolidation and mergers of electric utilities, the proliferation of power marketers and independent power producers, generation surpluses and deficits and transmission constraints in certain regional markets and other factors. Several states are in the process of implementing varying forms of "retail wheeling" (the transmission of power for a third party directly to a retail customer) and most others are in the various stages of considering retail competition. Proposed federal legislation could mandate retail wheeling in every state and otherwise deregulate the industry. No legislation related to retail wheeling has yet been enacted in Georgia, and no bill is currently pending in the Georgia legislature which would amend the Georgia Territorial Electric Service Act (the Territorial Act) or otherwise affect the exclusive right of the Members to supply power to their current service territories. In 1997, the staff of the Georgia Public Service Commission (GPSC) conducted a series of workshops to solicit views from the various parties impacted by electric industry restructuring and to discuss potential resolutions of these issues, including "stranded costs" which would result from assets having unrecovered costs in excess of their economically realizable value. The GPSC issued a report identifying electric industry restructuring issues, potential resolutions and the views of the parties who participated in the workshops. The GPSC's order in the 1998 GPC rate case provides that there will be a docket opened to address the mechanics of how stranded costs and stranded benefits should be calculated, the estimated range of GPC's stranded costs and benefits, the proper level of stranded cost recovery through rate surcharges, and the proper disposition of any stranded benefits. The GPSC does not have the authority under Georgia law to order retail wheeling or amend the Territorial Act. Oglethorpe and the Members participated in the GPSC staff workshops and are actively monitoring and studying the GPSC proceedings and legislative initiatives in Congress and in other states to take advantage of the experiences of cooperatives and other utilities in other states to protect their interests in any future legislative activities in Georgia. Under current Georgia law, the Members generally have the exclusive right to provide retail electric service in their respective territories. Since 1973, however, the Territorial Act has permitted limited competition among electric utilities located in Georgia for sales of electricity to certain large commercial or industrial customers. The owner of any new facility may receive electric service from the power supplier of its choice if the facility is located outside of municipal limits and has a connected demand upon initial full operation of 900 kilowatts or more. The Members, with Oglethorpe's support, are actively engaged in competition with other retail electric suppliers for these new commercial and industrial loads. While the competition for 900-kilowatt loads represents only limited competition in Georgia, this competition has given Oglethorpe and the Members the opportunity to develop resources and strategies to operate in an increasingly competitive market. 12 Oglethorpe cannot predict at this time the outcome of the various developments that may lead to increasedFor information about competition in the electric utility industry orand the effect of such developments on Oglethorpe or the Members. Nonetheless, Oglethorpe has taken several steps to prepare foractions and adapt to the fundamental changes that have occurred or are likely to occur in the electric utility industry. In 1997, Oglethorpe completed the Corporate Restructuring and divided itself into separate generation, transmission and system operations companies in order to better serve its Members in a deregulated and competitive environment. Since 1992, Oglethorpe also has pursued an interest cost reduction program, which has included refinancings and prepayments of various debt issues, and that has provided significant cost savings. Oglethorpe has also entered into arrangements with power marketers to obtain the value that can be brought by power marketers and to provide for future load requirements without taking all the risk associated with traditional supply sources. (See Oglethorpe's 1998 Annual report on Form 10-K in "General--Corporate Restructuring", "Financial Condition--Refinancing Transactions" and "Results of Operations--Power Marketer Arrangements" in Item 7.)potential actions Oglethorpe and the Members continue to considerhave taken and evaluate a wide array of other potential actionsare considering and evaluating to reduce costs and to enhance their competitiveness in anticipation of future competition. Oglethorpe regularly considers industry developments and trends to evaluate the challenges and opportunities they may present for Oglethorpe. Among the alternatives subject to such consideration by Oglethorpe are: additional power marketing arrangements or other alliance arrangements; whether power supply requirements will continue to be met by the current mix of ownership and purchase arrangements; whether power supply resources will be owned by Oglethorpe or by separate entities; the effects of proliferation of services offered by electric utilities; whether disposition of assets or asset classes would enhance value; the effects of nuclear license extensions; and other regulatory and business changes that may affect relative values of generation classes or have impactsincreased competition, see Oglethorpe's Quarterly Report on the electric industry. These activities on the part of Oglethorpe and the Members are in various stages of study or preliminary consideration. Such studies and consideration necessarily take account of and are subject to the legal, regulatory and contractual (including financing and plant co-ownership arrangements) environment applicable to Oglethorpe. Many Members are now providing or considering proposals to provide non-traditional products and services such as telecommunications and other services. Depending on the nature of future competition in Georgia, there could be reasonsForm 10-Q for the Members to separate their physical distribution business from their energy business, or otherwise restructure their current businesses to operate effectively under retail competition. Likewise, there could be reasons for Oglethorpe to evaluate the disposition of generation assets, separating different segments of its generation assets or business or other restructurings of its business to operate more effectively under increasing competition. Recent dispositions of fossil generation units throughout the country are being evaluated by Oglethorpe, and the recent announcements relating to sales of nuclear generation units and applications for nuclear license extensions are of particular interest to Oglethorpe because of its substantial investment in nuclear generation. These and other developments in the industry have resulted in the Rural Utilities Service (RUS) exploring the possibility of pursuing nationwide measures for RUS and its borrowers that own nuclear generation units. This exploration by RUS has included discussions with Oglethorpe and others. Oglethorpe intends to pursue its discussions with RUS to determine if 13 there are feasible measures that Oglethorpe could take to enhance the value of its assets or further its efforts to lower costs and increase its competitiveness. Oglethorpe's ongoing consideration of industry trends and developments may present opportunities for Oglethorpe to enhance the value of its system or otherwise to respond more effectively to increasing competition. However, Oglethorpe cannot predict the results of its evaluation of these matters, including discussions with RUS, or any action Oglethorpe might take based thereon.quarterly period ended March 31, 1999. YEAR 2000 BACKGROUND. The Year 2000 issue, which is common to most corporations, concerns the ability of certain hardware, software, databases and other devices that use microprocessors to properly recognize date sensitive information related to the Year 2000 and thereafter. Oglethorpe is heavily dependent upon complex computer systems for all phases of power supply operations. Oglethorpe's operations include both information technology (IT) systems, such as billing systems, financial accounting systems, and human resource/payroll systems, as well as non-IT systems that may have embedded microprocessors, such as those relating to operations of the Rocky Mountain Pumped Storage Hydroelectric Facility (Rocky Mountain), generation substations and Oglethorpe's headquarters facilities. Management recognizes the seriousness of the Year 2000 issue and believes it has dedicated adequate resources to address the issue. Oglethorpe's Senior Vice President and Chief Financial Officer is in charge of its Year 2000 program, and he reports directly to Oglethorpe's President and Chief Executive Officer. As part of its business alliance with Oglethorpe, Intellisource is providingassisting in the administration of Oglethorpe's Year 2000 program. Oglethorpe's Board of Directors and its audit committee are monitoring this issue through periodic updates from project management. PROJECT PHASES. Oglethorpe has developed and is implementing a detailed strategy to prevent any material disruption to operations. Phase I began in April 1997 and included an inventory and assessment of potential Year 2000 problems in its systems. Substantially all IT and non-IT systems have beenwere inventoried and assessed. Phase II began in the fall of 1997 and includes remediation and testing of all inventoried IT and non-IT systems. Remediation and testing efforts for all inventoried internally developed systems applications are complete. Financial accounting systems, procurement and materials management systems and human resource/payroll systems are externally developed and supported. Currently, only the financial accounting systems are not Year 2000 ready. Oglethorpe has completed an inventoryis replacing most of its financial accounting system modules and assessment onis retaining and upgrading one module. Oglethorpe expects its computer and embedded chipfinancial accounting systems at Rocky Mountain.to be Year 2000 ready by the fourth quarter of 1999. The financial accounting systems project is approximately 60% complete. Critical computer systems required to operate the Rocky Mountain control room have been upgraded. The computer system required to manage maintenance activities and purchase materials for Rocky Mountain will be upgraded by the third quarter of 1999. Phase IIIII began in the fallspring of 1997 and includes remediation and testing1999 with a verification of all inventoried IT and non-IT systems. Remediation and testing efforts for all inventoried internally developed systems applications have been completed. Oglethorpe is currently in the process of reassessing the completeness of the original inventory. Financial accounting systems procurement and materials management systems and human resource/payroll systems are externally developed and supported. None of these systems is Year 2000 ready. Oglethorpe is replacing most of its financial accounting system modules and is retaining and upgrading one module. Oglethorpe expects its financial accounting systems to be Year 2000 ready by the fourth quarter of 1999. Oglethorpe is replacing its procurement and materials management systems and expects to complete this remediation in the second quarter of 1999. Oglethorpe is upgrading its human resource/payroll systems and expects to complete this remediation in the third quarter of 1999. Remediation and testing efforts for systems at Rocky Mountain are 1413 expected to be completed by the third quarter of 1999.inventory. Phase III began recently andalso includes contingency planning, an assessment of Year 2000 readiness of material third parties and verification that all material systems wereare being properly inventoried, remediated and tested in Phases I and II.tested. This phase will be on-going throughout 1999. RELATIONSHIPS WITH THIRD PARTIES. Georgia Transmission Corporation (GTC) and Georgia System Operations Corporation (GSOC) have implemented detailed strategies to ensure Year 2000 readiness of the systems utilized in their transmission and systems control operations. The Year 2000 readiness plans for Oglethorpe, GTC and GSOC were jointly developed and are being implemented on the same schedule, as described above. Oglethorpe has gathered information from the Members regarding their Year 2000 readiness. Based on this information, Oglethorpe will implementis conducting a follow-up program to monitor the Members' Year 2000 readiness and will further assess any impact on Oglethorpe's risks and contingency planning. Oglethorpe expects to complete the information gathering process from the Members by September 30, 1999. All of Oglethorpe's co-owned generating plants, except Rocky Mountain, are operated by GPC on behalf of itself as a co-owner and as agent for the other co-owners. Year 2000 remediation and testing on all generation plants which are operated by GPC are being performed by GPC's parent company, The Southern Company (Southern). SouthernOglethorpe estimates that total costs related to this project at the GPC-operated plantsapproximately $4.3 million will be approximately $38 million, of which approximately $4.5 million is expected to be billed to Oglethorpeby Southern based on its ownership share of thesethe co-owned generation plants. To date, Oglethorpeplants, of which approximately $4.0 million has paid approximately $3.8 million for this project.been paid. Remaining costs will be expensed primarily in 1999. Southern reports that its Year 2000 program for the Georgia-based generating plants is scheduledwas completed on schedule in June 1999. Southern also reports that its Year 2000 program will continue to be completed by June 1999.monitor the affected computer systems, devices and applications into the Year 2000. Southern is subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and, in accordance therewith, files reports and other information with the SEC. During Phase III of its program, Oglethorpe plans to assessis in the process of assessing the Year 2000 readiness of other significant third parties, including power marketers (such as LEM and Morgan Stanley), other utilities and vendors of materials and services. Oglethorpe has identified over 4001,200 such third parties, and is in the process of prioritizing the parties from which approximately 60 are deemed to be material. Oglethorpe will require Year 2000 information. Oglethorpe expects to begin requestinghas requested information from these third parties in the second quarter ofand expects to complete this process by September 30, 1999. This information will allow Oglethorpe to perform contingency planning, including assessing the need to identify alternative vendors. Oglethorpe may not be able to identify all third parties' Year 2000 problems, and may not be able to develop adequate contingency plans if third parties do not correct their Year 2000 problems. PROJECT COSTS. In addition to the $4.5$4.3 million expected to be paid to GPC,Southern, Oglethorpe currently estimates project costs of approximately $370,000$5.1 million. These costs are being incurred to upgrade its internal systems, including those relating to Rocky Mountain. To date, Oglethorpe has spent approximately $270,000 of the estimated $370,000 on this effort. In addition, Oglethorpe is upgradingMountain, and to upgrade or replacingreplace its externally developed financial accounting, procurement and materials management and human resource/payroll systemssystems. These costs are also being incurred to improve functionality and to avoid Year 2000 remediation efforts on those systems, at an estimated cost of approximately $4.0 million, of which $745,000 has been spent. Oglethorpe's policy is to expense as incurred the maintenance and modification costs of existing software, including those associated with 15 the Year 2000 project, and to capitalize and amortize over its useful life the cost of new software. Oglethorpe also estimates that approximately $770,000 will be incurred for Phase III, including costs associated with performingperform a management evaluation of the Phase I and Phase II activities, and to perform the contingency planning and the preparedness evaluation of key business relationships. Oglethorpe's policy is to expense as incurred the maintenance and modification costs of existing software, including those associated with the Year 2000 project, and to capitalize and amortize over 14 its useful life the cost of new software. To date, Oglethorpe has spent approximately $1.8 million of the $5.1 million on these efforts. These costs are estimates, and actual costs could be higher. Oglethorpe plans to pay for Year 2000 costs with general corporate funds. Year 2000 costs are being recovered from the Members through Oglethorpe's rates. RISK ASSESSMENT. Oglethorpe has implemented a detailed process to minimize the possibility of power supply interruptions related to Year 2000 challenges and expects its IT and non-IT systems to be Year 2000 ready by December 31, 1999. The most reasonably likely worst case scenario would be service interruptions to Oglethorpe's Members or the Members' retail consumers. These scenarios include the loss of a generating unit or a source of purchased power, or a disruption in transmission or distribution services by GTC or the Members. Because Oglethorpe is taking prudent steps to prepare for the Year 2000 challenges, it expects any interruptions in power supply to be isolated and short in duration. However, because of material relationships with third parties, Oglethorpe may not be able to fully assess the possibility of service interruptions to the ultimate retail consumers. There is also risk to the Members of billing and other business system failures and of some reduction in net margin caused by interruptions in service and reduced electrical demand by consumers because of their Year 2000 issues. Oglethorpe has not fully assessed the impact of these risks on its financial condition or results of operations. Actual results, costs, risks, or worst case scenarios related to Year 2000 issues may materially differ from those that Oglethorpe expects or estimates. Factors that might cause material differences include, but are not limited to, Oglethorpe's ability to locate and correct all microprocessors that are not Year 2000 ready, the readiness of third parties, and Oglethorpe's ability to develop adequate contingency plans to respond to foreseen or unforeseen Year 2000 problems. CONTINGENCY PLANNING. Oglethorpe recently began developinghas developed contingency plans for its IT and non-IT systems. To assist Oglethorpe in this effort,systems with the assistance of the consulting firm KPMG has been engaged to provide leadership and expertise to the Oglethorpe staff developing the contingency plans.KPMG. The contingency plans were completed as of July 31, 1999 and will continue to be evaluated, tested and implemented throughout 1999. The contingency plans also focus on non-compliance by material third parties and assess the need to identify alternative vendors and the need to increase inventory of materials and supplies. The contingency plans are expected to be in place by June 30, 1999 and will continue to be evaluated and tested throughout 1999. The goal of the contingency planning process is to keep any service interruptions to a minimum and of short duration and to avoid disruptions in its billing or other management processes. Oglethorpe may incur additional costs as a result of implementing its contingency plans. FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS This Quarterly Report on Form 10-Q contains forward-looking statements, including statements regarding, among other items, (i) anticipated trends in Oglethorpe's business, (ii) Oglethorpe's future power supply resources and arrangements and (iii) other management issues such as the Year 2000 issue. These forward-looking statements are based largely on Oglethorpe's current expectations and are subject to a number of risks and uncertainties, certain of which are beyond Oglethorpe's control. 16 For certain factors that could cause actual results to differ materially from those anticipated by these forward-looking statements, see "COMPETITION" and "YEAR 2000" herein, "Miscellaneous--COMPETITION" in Item 2 of Oglethorpe's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1999 and 15 "CERTAIN FACTORS AFFECTING THE ELECTRIC UTILITY INDUSTRY" in Item 1 of Oglethorpe's 1998 Annual Report on Form 10-K. In light of these risks and uncertainties, there can be no assurance that events anticipated by the forward-looking statements contained in this Quarterly Report will in fact transpire. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Oglethorpe's market risks have not changed materially from the market risks reported in theOglethorpe's 1998 Annual Report on Form 10-K. 1716 PART II - OTHER INFORMATION ITEM 5. OTHER INFORMATION Larry N. Chadwick, Sammy M. Jenkins, Ashley C. Brown and John S. Ranson, whose initial terms as Directors expired in March 1999, were each elected for an additional term of three years ending March 2002. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS Number Description - --------- ------------- 10.27 Long Term Transaction Service Agreement Under Southern Companies' Federal Energy Regulatory Commission Electric Tariff Volume No. 4 Market-Based Rate Tariff, between Georgia Power Company and Oglethorpe, dated as of February 26, 1999.NUMBER DESCRIPTION ------ ----------- 27.1 Financial Data Schedule (for SEC use only). (b) REPORTS ON FORM 8-K No reports on Form 8-K were filed by Oglethorpe for the quarter ended March 31,June 30, 1999. 1817 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Oglethorpe Power Corporation (An Electric Membership Corporation) Date: May 14,August 13, 1999 By: /S//s/ JACK L. KING ----------------------------------------------------------------------------------------- Jack L. King President and Chief Executive Officer (Principal Executive Officer) Date: May 14,August 13, 1999 /S//s/ MAC F. OGLESBY ----------------------------------------------------------------------------------------- Mac F. Oglesby Treasurer (Principal Financial Officer) Date: May 14,August 13, 1999 /S//s/ THOMAS A. SMITH ----------------------------------------------------------------------------------------- Thomas A. Smith Senior Vice President and Chief Financial Officer (Principal Financial Officer) Date: May 14,August 13, 1999 /S//s/ WILLIE B. COLLINS ----------------------------------------------------------------------------------------- Willie B. Collins Controller (Chief Accounting Officer) 1918