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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
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 GENERATION & TRANSMISSION 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 of
such filing requirements for the past 90 days. YES X NO
----- -----
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date. THE REGISTRANT
IS A MEMBERSHIP CORPORATION AND HAS NO AUTHORIZED OR OUTSTANDING EQUITY
SECURITIES.
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OGLETHORPE POWER CORPORATION
INDEX TO QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1996
PAGE NO.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets as of March 31, 1996 (Unaudited)
and December 31, 1995 3
Condensed Statements of Revenues and Expenses (Unaudited)
for the Three Months Ended March 31, 1996 and 1995 5
Condensed Statements of Cash Flows (Unaudited)
for the Three Months Ended March 31, 1996 and 1995 6
Notes to the Condensed Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OGLETHORPE POWER CORPORATION
CONDENSED BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
- -------------------------------------------------------------------------------------
(dollars in thousands)
1996 1995
ASSETS (Unaudited)
--------------------------
ELECTRIC PLANT, AT ORIGINAL COST:
In service $5,696,887 $5,699,213
Less: Accumulated provision for depreciation (1,389,588) (1,362,431)
---------- ----------
4,307,299 4,336,782
Nuclear fuel, at amortized cost 96,075 94,013
Plant acquisition adjustments, at amortized cost 4,949 5,214
Construction work in progress 41,617 35,753
---------- ----------
4,449,940 4,471,762
---------- ----------
INVESTMENTS AND FUNDS:
Bond, reserve and construction funds, at market 53,079 56,511
Decommissioning fund, at market 75,652 74,492
Investment in associated organizations, at cost 15,502 15,853
---------- ----------
144,233 146,856
---------- ----------
CURRENT ASSETS:
Cash and temporary cash investments, at cost 148,146 201,151
Other short-term investments, at market 89,118 79,165
Receivables 100,927 99,559
Inventories, at average cost 86,086 82,949
Prepayments and other current assets 17,325 14,325
---------- ----------
441,602 477,149
---------- ----------
DEFERRED CHARGES:
Premium and loss on reacquired debt, being amortized 207,663 200,794
Deferred amortization of Scherer leasehold 87,994 87,134
Discontinued projects, being amortized 23,795 24,305
Deferred debt expense, being amortized 20,905 21,135
Other 15,772 9,361
---------- ----------
356,129 342,729
---------- ----------
$5,391,904 $5,438,496
---------- ----------
---------- ----------
The accompanying notes are an integral part of these condensed statements.
3
OGLETHORPE POWER CORPORATION
CONDENSED BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
- -------------------------------------------------------------------------------------
(dollars in thousands)
1996 1995
EQUITIES AND LIABILITIES (Unaudited)
-------------------------
CAPITALIZATION:
Patronage capital and membership fees (including
unrealized gains of $2,488 at March 31, 1996 and
$3,570 at December 31, 1995 on available-for-sale
securities) $346,797 $338,891
Long-term debt 4,181,779 4,207,320
Obligations under capital leases 295,779 296,478
---------- ----------
4,824,355 4,842,689
---------- ----------
CURRENT LIABILITIES:
Long-term debt and capital leases due within one year 98,485 89,675
Deferred margins to be refunded within one year 21,859 32,047
Accounts payable 39,759 48,855
Accrued interest 72,433 91,096
Accrued and withheld taxes 8,165 1,785
Other current liabilities 12,775 18,007
---------- ----------
253,476 281,465
---------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES:
Gain on sale of plant, being amortized 60,283 60,868
Sale of income tax benefits, being amortized 48,186 50,194
Accumulated deferred income taxes 65,510 65,510
Decommissioning reserve 115,688 114,049
Other 24,406 23,721
---------- ----------
314,073 314,342
---------- ----------
$5,391,904 $5,438,496
---------- ----------
---------- ----------
The accompanying notes are an integral part of these condensed statements.
4
OGLETHORPE POWER CORPORATION
CONDENSED STATEMENTS OF REVENUES AND EXPENSES (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
- -------------------------------------------------------------------------------------
(dollars in thousands)
1996 1995
------------------------------
OPERATING REVENUES:
Sales to Members $ 246,458 $ 227,849
Sales to non-Members 29,243 29,698
--------- ---------
TOTAL OPERATING REVENUES 275,701 257,547
--------- ---------
OPERATING EXPENSES:
Fuel 48,240 47,517
Production 30,369 32,243
Purchased power 69,076 59,947
Power delivery 3,658 3,921
Depreciation and amortization 36,526 32,884
Taxes other than income taxes 7,384 5,891
Other operating expenses 6,880 6,462
--------- ---------
TOTAL OPERATING EXPENSES 202,133 188,865
--------- ---------
OPERATING MARGIN 73,568 68,682
--------- ---------
OTHER INCOME (EXPENSE):
Interest income 4,060 3,312
Amortization of deferred margins 10,188 6,462
Allowance for equity funds used during construction 47 761
Other 2,642 2,834
--------- ---------
TOTAL OTHER INCOME 16,937 13,369
--------- ---------
INTEREST CHARGES:
Interest on long-term-debt and other obligations 82,031 83,008
Allowance for debt funds used during construction (514) (9,419)
--------- ---------
NET INTEREST CHARGES 81,517 73,589
--------- ---------
NET MARGIN $ 8,988 $ 8,462
--------- ---------
--------- ---------
The accompanying notes are an integral part of these condensed statements.
5
OGLETHORPE POWER CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
- -------------------------------------------------------------------------------------
(dollars in thousands)
1996 1995
-----------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net margin $ 8,988 $ 8,462
-------- --------
ADJUSTMENTS TO RECONCILE NET MARGIN TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Depreciation and amortization 39,425 47,704
Amortization of deferred margins (10,188) (6,462)
Allowance for equity funds used during construction (47) (761)
Other (859) (843)
CHANGE IN NET CURRENT ASSETS, EXCLUDING
LONG-TERM DEBT DUE WITHIN ONE YEAR AND DEFERRED MARGINS
TO BE REFUNDED WITHIN ONE YEAR:
Receivables (1,368) (1,484)
Inventories (3,137) (8,291)
Prepayments and other current assets (3,000) 3,465
Accounts payable (9,096) (11,099)
Accrued interest 6,380 6,235
Accrued and withheld taxes (18,663) (79,781)
Other current liabilities (5,232) (7,260)
-------- --------
TOTAL ADJUSTMENTS (5,785) (58,577)
-------- --------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 3,203 (50,115)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions (24,824) (36,086)
Net proceeds from bond, reserve and construction funds 2,397 11,712
Decrease in investment in associated organizations 351 636
Increase in other short-term investments (10,000) (17,107)
Increase (decrease) in decommissioning fund 729 (1,041)
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (31,347) (41,886)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt proceeds, net - 88,545
Debt payments (25,366) (124,534)
Other 505 (412)
-------- --------
NET CASH USED IN FINANCING ACTIVITIES (24,861) (36,401)
-------- --------
NET DECREASE IN CASH AND TEMPORARY CASH INVESTMENTS (53,005) (128,402)
CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF PERIOD 201,151 190,642
-------- --------
CASH AND TEMPORARY CASH INVESTMENTS AT END OF PERIOD $148,146 $ 62,240
======== ========
CASH PAID FOR:
Interest (net of amounts capitalized) $96,769 $149,265
Income taxes - -
The accompanying notes are an integral part of these condensed statements.
6
OGLETHORPE POWER CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1996 AND 1995
(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 included only normal recurring
adjustments) necessary to present fairly, in all material respects, the
results for the periods ended March 31, 1996 and 1995. 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.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
As a means of reducing the cost of power provided to the Members, on January
3, 1996, Oglethorpe entered into a power supply swap agreement with Enron
Power Marketing, Inc. (EPMI). The agreement, effective January 4, 1996
through April 30, 1996, required EPMI to sell to Oglethorpe at a favorable
fixed rate all the energy necessary to meet the Members' requirements.
Pursuant to the agreement, Oglethorpe was required to sell to EPMI at cost,
subject to certain limitations, upon request all energy available from
Oglethorpe's total power resources. Under the agreement, Oglethorpe
maintained the responsibility of operating the power supply system and
continued to dispatch the generating resources to ensure system reliability.
See "OPERATING REVENUES" and "OPERATING EXPENSES" below for a discussion of
the impact of the power supply swap agreement on first quarter 1996 results
of operations. On April 30, 1996, Oglethorpe and EPMI entered into an
agreement which extended the term of this power supply swap agreement, with
certain modifications, from May 1, 1996 through August 31, 1996.
On February 7, 1996, Oglethorpe issued a Request for Proposals (RFP) to
selected bidders for a long-term power supply arrangement. This RFP did not
seek a specific amount of power; instead, it requested proposals for meeting
the combined power needs of the Members with term options ranging from two to
15 years. Currently, discussions are focused on proposals from EPMI, LG&E
Power Marketing Inc. and a joint proposal from Duke/Louis Dreyfus LLC &
Georgia Power Company (GPC). The current four-month agreement with EPMI will
provide the energy needed to serve the Members while Oglethorpe finalizes a
long-term power supply arrangement.
RESULTS OF OPERATIONS
Oglethorpe's net margin for the quarter ended March 31, 1996 was $9.0 million
compared to $8.5 million for the first quarter of 1995.
OPERATING REVENUES
The increase in Member revenues for the three months ended March 31, 1996
compared to the same period of 1995 was due to the recovery of additional
fixed costs of the Rocky Mountain Project (Rocky Mountain) and the increased
fixed cost responsibility resulting from the scheduled end of Sell-back
revenues from GPC under the plant operating agreements (discussed below).
Energy revenues from sales to Members for the three-month period of 1996 were
virtually unchanged from the same period of the prior year despite the fact
that megawatt-hour (MWh) sales increased 15.5% due to prolonged colder than
normal weather. Oglethorpe achieved substantial savings in energy costs in
the first quarter under the power supply swap agreement with EPMI which were
passed through to the Members. Oglethorpe's average energy revenue per MWh
for the first quarter of 1996 was 14% less than the same period of 1995.
8
Sales to non-Members were primarily made pursuant to three different types of
contractual arrangements with GPC and from energy sales to other non-Member
utilities. The following table summarizes the amounts of non-Member revenues
from these sources for the three months ended March 31, 1996 and 1995:
Three Months Ended March 31,
1996 1995
--------------------------
(dollars in thousands)
Plant operating agreements $ - $ 5,892
Power supply arrangements 4,718 7,316
Transmission agreements 3,372 2,995
Other utilities 21,153 13,495
------- -------
Total $29,243 $29,698
======= =======
While total revenues from non-Members were virtually the same, revenues from
sales to utilities other than GPC increased significantly and revenues from
the plant operating agreements and power supply arrangements with GPC were
significantly lower.
Under the plant operating agreements, GPC purchased capacity and energy from
Oglethorpe on a declining scale in the early years of operation of certain
co-owned generating units. As scheduled, effective June 1, 1995, revenues
from GPC pursuant to the plant operating agreements ended.
The second source of non-Member revenues is derived pursuant to power supply
arrangements with GPC. These revenues are derived from energy sales arising
from dispatch situations whereby GPC causes Plant Wansley to be operated when
Oglethorpe's system does not require all of its contractual entitlement to
the generation. These revenues compensate Oglethorpe for its costs since,
under the operating agreements, Oglethorpe is responsible for its share of
fuel costs any time a unit operates. Such sales were significantly lower in
the first quarter of 1996 compared to the same period of 1995.
Revenues from sales to non-Member utilities (other than GPC) increased
substantially due to a 12.5% increase in MWh sales in the three months ended
March 31, 1996 compared to the same period of 1995. As discussed under
"General" above, this increase was due to EPMI marketing available energy
from Oglethorpe's total power resources. Under the power supply swap
agreement, sales to non-Member utilities are effectively transacted with EPMI
while in 1995 these sales were made by Oglethorpe directly with the
non-Member utilities. All profits on sales made by EPMI to other utilities
from Oglethorpe's resources accrue to EPMI.
OPERATING EXPENSES
The increase in operating expenses for the three months ended March 31, 1996
compared to the same period of 1995 was primarily attributable to an increase
in purchased power. In 1996, purchased power energy costs and MWhs increased
by 42% and 39%, respectively, as EPMI utilized purchased resources to provide
Oglethorpe's Member load and for increased sales to other utilities.
9
Depreciation and amortization and taxes other than income taxes (property
taxes) increased due to the commercial operation of Rocky Mountain in June
1995.
OTHER INCOME
Other income for the first quarter of 1996 increased compared to the same
period of 1995 primarily as a result of higher income from amortization of
deferred margins. Oglethorpe's Board of Directors authorizes the amount of
deferred margins to be returned to the Members each year. For 1996, the
remaining amount of $32 million was authorized as compared to $16 million for
1995. Interest income increased due to higher average cash balances during
the first quarter of 1996 compared to the same period of 1995.
INTEREST CHARGES
The increase in net interest charges for the three months ended March 31,
1996 compared to 1995 resulted from Rocky Mountain becoming commercially
operable in June 1995.
FINANCIAL CONDITION
Total assets and total equity plus liabilities as of March 31, 1996 were $5.4
billion which was $47 million less than the total at December 31, 1995.
ASSETS
Property additions for the three months ended March 31, 1996 totaled $25
million and included additions, replacements and improvements to transmission
and distribution facilities and existing generation facilities.
The decrease in cash and temporary cash investments was partly due to
property additions funded from cash, premiums paid on refinanced debt and
scheduled debt service payments.
Other short-term investments represent investments whose maturity periods
exceed Oglethorpe's policy of three months for classification as cash
equivalents. During the first quarter of 1996, an additional $10 million was
transferred into investments with maturities of more than three months.
Prepayments and other current assets increased primarily due to a $3 million
increase in the payment made to GPC for estimates of Plant Hatch and Plant
Wansley operations and maintenance costs for April 1996 compared to the
estimate paid for January 1996.
The increase in other deferred charges primarily resulted from the deferral
of $6.3 million of nuclear refueling outage costs related to Vogtle Unit No.
1 and Hatch Unit No. 1 which will be recovered through rates over a period of
eighteen months.
10
EQUITY AND LIABILITIES
Deferred margins to be refunded within one year decreased by $10.2 million
which is the amount that was refunded to the Members for the first three
months of 1996.
Accounts payable declined as of March 31, 1996 as a result of normal
variations in the timing of payables activity.
Accrued interest decreased primarily due to normal payments and accruals of
interest.
Accrued and withheld taxes increased as a result of the normal monthly
accruals of property taxes, which are generally paid in the fourth quarter of
the year.
Other current liabilities decreased partly due to the year-end accrual for
employee incentive pay (subsequently paid in March 1996) and partly due to
normal activity.
11
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
Number Description
- ----------- -----------
*10.27(a) Extension and Modification Agreement between Enron Power
Marketing, Inc. and Oglethorpe, dated as of April 30, 1996.
27.1 Financial Data Schedule (for SEC use only).
_______________________
* Certain portions of this document have been omitted as confidential and
filed separately with the SEC.
(B) REPORTS ON FORM 8-K
No reports on Form 8-K were filed by Oglethorpe for the quarter ended March
31, 1996.
12
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
Generation & Transmission
Corporation)
Date: May 14, 1996 By: /s/ T. D. Kilgore
---------------------------------
T. D. Kilgore
President and Chief Executive Officer
(Principal Executive Officer)
Date: May 14, 1996 /s/ Gary M. Bullock
---------------------------------
Gary M. Bullock
Secretary-Treasurer
(Principal Financial Officer)
Date: May 14, 1996 /s/ Eugen Heckl
---------------------------------
Eugen Heckl
Senior Vice President and Chief
Financial Officer (Principal Financial
Officer)
13