ML17334B195
| ML17334B195 | |
| Person / Time | |
|---|---|
| Site: | Cook  |
| Issue date: | 12/31/1987 |
| From: | Alexich M INDIANA MICHIGAN POWER CO. (FORMERLY INDIANA & MICHIG |
| To: | Murley T NRC, NRC OFFICE OF ADMINISTRATION & RESOURCES MANAGEMENT (ARM) |
| References | |
| AEP:NRC:0909D, AEP:NRC:909D, NUDOCS 8804200090 | |
| Download: ML17334B195 (34) | |
Text
XCCELERlTED DIPIBUTION DEMONSTRO'ION SYSTEM REGULATORY INFORMATXON DISTRIBUTION SYSTEM (RIDS)
ACCESSION NBR:8804200090 DOC.DATE: 88/04/13 NOTARIZED-NO DOCKET FACIL:50-315 Donald C.
Cook Nuclear Power Plant, Unit 1, Indiana 05000315 50-316 Donald C.
Cook Nuclear Power Plant, Unit 2, Indiana 05000316 AUTH.NAME AUTHOR AFFILIATION ALEXICH,M.P.
(formerly Indiana
& Michigan Ele RECIP.NAME RECIPIENT AFFILXATION Document Control Branch (Document Control Desk)
SUBJECT:
Forwards "1987 Annual Rept"
& 1988 projected cash flow for plant.
DISTRIBUTION CODE:
M004D COPIES RECEIVED:LTR
[
ENCL
(
SIZE:
TXTLE: 50.71(b)
Annual Financial Report NOTES:
RECIPIENT ID CODE/NAME PD3-3 PD COPIES LTTR ENCL 1
1 RECIPIENT ID CODE/NAME STANG,J COPIES LTTR ENCL 1
0 8
A INTERNAL: AEOD/DOA NRR/'PMAS/PTSB12 EXTERNAL: LPDR 1
1 1
1 1
1 DS TPAB REG F LE 01 NRC PDR 1
1 1
1 1
1 8
A TOTAL NUMBER OF COPXES REQUIRED:
LTTR 8
ENCL 7
n C2
'tlme7 AiillKMall IRpoODPR Indian~ Michigan Power Company g h SS04i3 050003i5
Contents Background of the Company Directors and Officers of the Company Selected Financial Data Management's Discussion and Analysis of Results of Operations and Financial Condition Consolidated Statements of Income Consolidated Balance Sheets Consolidated Statements of Sources and Applications of Funds Consolidated Statements of Retained Earnings Notes to Consolidated Financial Statements 6-8 10-11 12 13 14-24 Auditors'pinion Operating Statistics Dividends and Price Ranges of Cumulative Preferred Stock 26-27 28
IHDIAlVAMICHIGANPO1VER COMPANY
, One Swnwii Square,
. Box 60, Farl 1Vayne, Indiana 4680I r
Background of the Company INDIANA MIGHIGAN PowER CQMPANY (the Company),
a subsidiary of American Electric Power Company, Inc. (AEP), is engaged in the generation,
- purchase, transmission and distribution of electric power. The Company was organized under the laws of Indiana on February 21, 1925, and is also authorized to transact business in Michigan and West Virginia. Its principal executive offices are in Fort Wayne, Indiana.
The Company has two wholly owned subsidiaries; they are Blackhawk Coal Company and Price River Coal Company, which were formerly engaged in coal-mining operations.
The Company serves approximately 464,000 customers in northern and eastern Indiana and a portion of southwestern Michigan. Among the principal industries served are transportation equipment, primary metals, fabricated metal products, electrical and electronic machinery, and rubber and plastic products.
In addition, the Company supplies wholesale electric power to other electric utilities, municipalities and electric cooperatives.
The Company's generating plants and important load centers are interconnected by a high-voltage transmission network. This network in turn is interconnected either directly or indirectly with the following other AEP System companies to form a single integrated power system:
AEP Generating
- Company, Appalachian Power Company, Columbus Southern Power Company, Kentucky Power Company, Kings-port Power Company, Michigan Power Company, Ohio Power Company and Wheeling Power Company.
The Company is also interconnected with the following other utilities: Central Illinois Public Service Company, The Cincinnati Gas & Electric Company, Commonwealth Edison Company, Consumers Power Company, Illinois Power Company, Indiana-Kentucky Electric Corporation (a subsidiary of Ohio Valley Electric Corporation), Indianapolis Power & Light Company, Northern Indiana Public Service Company and Public Service Company of Indiana, Inc.
Directors J. M. ALLIsoN W. A. BLAcK RIcHARD E. DisBRow JOHN E. DOLAN (a)
WILLIAMN. D'ONOFRIO A. R. GLASSBURN (b)
M. R. HARRELL (C)
GERALD P. MALONEY RICHARD C. MENGE C. W. ROAHRIG (d)
J. F. STARK (e)
JOSEPH H. VIPPERMAN W. S. WHITE, JR.
DAVIDH. WILLIAMS,JR. (f)
Officers W. S. WHITE> JR.
Chairtnan ofthe Board and Chief Executive Oificer W. A. BLAcK President and Chief operating Offtcer J. F. STARK (e)
Senior Vice President MILTQNP. ALExlcH Vice President RICHARD E. DISBROtV Vice President JOHN E. DOLAN (a)
Vice President WILLIAMN. D'ONOFRIO Vice President A. JOSEPH DODD Vice President R[cHARD F. HERING Vice President GERALD P. MALONEY Vice President RICHARD C. MENGE Vice President JOSEPH H. VIPPERMAN Vice President DAVIDH. WILLIAMS,JR. (f)
Vice President PETER J. DEMARIA Treasurer JOHN R. BURTON (g)
Secretary JOHN F. DILORENZO, JR. (h)
Secretary ELIO BAFILE Assistant Secretary and Assistant Treasurer JEFFREY D. CROSS (i)
Assistant Secretary WILLIAMC. HARVEY(j)
Assistant Secretary CARL J. Moos Assistant Secretary JQHN B. SHINNocK Assistant Secretary JOAN ST. JAMES Assistant Secretary LEoNARD V. AssANTE Assistant Treasurer BRUCE M. BARBER Assistant Treasurer JAMES D. HUEBNER Assistatit Treasurer GERALD R. KNORR Assistant Treasurer The principal occupation ofeach ofthe above directors and officers ofIndiana hfichigan Po~ier Company, tvith ten exceptions, is as an employee ofAmerican Electric Potver Service Corporation. The exceptions are htessrs. Allison, Bafile, lllack, D'OnoPio, Glass-burn, Harrell, htenge, htoos, Roahrig and Stark n'hose principal occupations during 1987 ivere as officers or employees ofIndiana hticitigan Potver Company.
(a) Resigned February I, 1988 (b) Elected September 24, 1987 (c) Elected January 29, 1987 (d) Resigned September 24, 1987 (e) Resigned January 29, 1987 (I) Elected February I, 1988 (g) Resigned May I, 1987 (h) Elected May I, 1987 (i) Elected October I, 1987 (j) Resigned October I, 1987
4 Selected Financial Data IIIDIAIVAMICHIGANPOII'ER COhfPAIIY t
AIVDSUBSIDIARIES Year Ended December 31, 1987 1986 1985 (in thousands) 1984 1983 INCOME STATEMENTS DATA:
OPERATING REVENUES ELECTRIC..........
TOTAL OPERATING EXPENSES OPERATING INCOME TOTAL OTHER INCOME AND DEDUCTIONS INCOME BEFORE INTEREST CHARGES NET INTEREST CHARGES CONSOLIDATED NET INCOME before preferred stock dividend requirements PREFERRED STOCK DIVIDEND REQUIREMENTS EARNINGS APPLICABLE TO COMMON STOCK....
I
$1,017,268
$ 1,091,295
$ 1,078,793 794 222 900,151 886,904
$979,551 799,393
$896,104 713,361 223,046 56 828 279,874 113 508 191,144 66,905 258,049 105,568 191,889 76,879 268,768 122,667 180,158 53,044 233,202 91,017 182,743 53,629 236,372 96,496 166,366 20 955 152,481 26,256 146,101 27,056 142,185 27,705 139,876 28,384 145 411 126,225 119.045
$ 114.480
$ 111.492 1987 1986 December 31, 1985 (in thousands) 1984 1983 BALANCESHEETS DATA:
ELECIRIC UTILITY PLANT ACCUMULATEDPROVISIONS FOR DEPRECIATION AND AMORTIZATION NUCLEAR FUEL UNDER CAPITALLEASES (net of amortization)
NET ELECTRIC UTILITY PLANT TOTAL ASSETS COMMON STOCK) PREMIVMS ON CAPITALSTOCK AND OTHER PAID IN CAPITAL RETAINED EARNINGS TOTAL COMMON SHAREOWNER'S EQUITY......
CUMULATIVEPREFERRED STOCK:
NGT SUBJEcr To MANDAT0RYREDEMPTIQN SUBJEcT To MANDATQRY REDEMFTIQN (a)
LQNG-TERM DEBT (a) 3,035,027 3,956,563 2,961,367 3,849,208 3,144,856 3,763,595 3,072,814 3,658,647 3,100,136 3,538,165 828,347 828,347 145 302 113,123 973,649 941,470 828,347 828,344 100,130 94,317 807,925 95,616 928,477 922,661 903,541 197,000 197,000 197,000 32,030 79,030 86,030 1,591,768 1,421,523 1,442,070 197,000 93,197 1,347,623 197,000 99,497 1,445,704
$4,017,718
$3,832,796
$3,940,903
$3,790,123
$3,733,553 1,118,254 1,018,455 962,670 868,192 782,614 135 563 147,026 166,623 150,883 149,197 (a) Including portion due within one year.
NOTE: Certain prior-period amounts have been reclassified or restated as discussed in Note 1 of the Notes to Consolidated Financial Statements.
Management's Disc ssion and Analy'sis of Results of Operations and Financial Condition The following are the more significant factors bearing on the financial condition of Indiana Michigan Power Com-pany and its subsidiaries as refiected in the consolidated results of operations. This discussion refers to the consol-idated financial statements that follow.
Results of Operations Net Income Consolidated net income before preferred stock dividend requirements increased by 9.1% in 1987 and 4.4% in 1986.
The 1987 increase resulted primarily from a 16.7% increase in operating income which was partially offset by a 15.1%
decrease in other income and deductions and a 3.5% in-crease in total interest charges. The 1986 increase resulted mostly from lower fixed charges for interest and increased miscellaneous nonoperating income less deductions due predominantly to a decrease in certain costs associated with a subsidiary's Utah mining properties.
Outlook The Company has lost one major wholesale customer and received notice from another to terminate service. In the first instance the Company had a'ong-term contract that expired on December 31, 1987 to provide 400,000 kilowatts of energy (200,000 kilowatts after February 1,
1987) to an unaffiliated utility. This contract contributed approximately 7%, 12% and 12% of the Company's total operating revenues and 19%, 37% and 37% of the Com-pany's earnings applicable to common stock before ad-justment for AEP System intercompany transactions in 1987, 1986 and 1985, respectively.
In the second situation a wholesale customer has notified the Company that it plans to terminate purchasing energy from the Company and requested transmission wheeling
~
arrangements with the Company effective August 1, 1988.
Service by the Company to this customer was at an average level of 170,000 kilowatts in 1987 and contributed ap-proximately 4%, 3% and 3% of the Company's total op-erating revenues and 12%, 11% and 11% of the Company's earnings applicable to common stock before adjustment for AEP System intercompany transactions in 1987, 1986 and 1985, respectively. The Company is developing proposals to provide transmission wheeling service with and without partial load requirements service to this wholesale cus-tomer. The Company cannot predict the amount of reve-nues which may be realized from any such arrangements.
Ifthese contracts did not exist the Company would have been required to make payments in a lesser amount, or alternatively been entitled to more receipts, due to opera-tion of the AEP System Pool. After pro forma adjustment for AEP System intercompany transactions, the aggregate contribution of these contracts was approximately 20%,
21% and 19% of the Company's earnings applicable to common stock in 1987, 1986 and 1985, respectively.
As discussed in Note 2 of the Notes to Consolidated Financial Statements the Company has a regulatory pro-ceeding with the Federal Energy Regulatory Commission (FERC) regarding, among other things, modification to conform a rate phase-in plan for Rockport Plant Unit No.
1 (Rockport 1) to Statement of Financial Accounting Stand-ards No. 92 (SFAS 92). Unless the FERC issues a final order approving a phase-in plan to comply with SFAS 92, the Company would be required to write-off retroactively all non-complying deferred costs, totaling approximately
$43,900,000 net of income taxes at December 31, 1987.
The Company also has under construction a second unit at the Rockport Plant that is expected to be completed in 1989. The inclusion of Rockport 2 in rate base and the timing of such are dependent on the outcome of future regulatory proceedings.
Over the past several years, -in response to economic conditions, the Company has developed and implemented marketing strategies for each of its main market segments, retail and wholesale.
The "constructive marketing" pro-gram aimed at retail customers is designed both to increase sales and to encourage the efficient use of electricity. This program's primary focus is on the installation and use of high-efficiency electrical equipment.
Another part of the program promotes economic development to maintain and encourage the economic prosperity of the service area. The marketing effort directed toward sales to other utilities-i.e., sales through the AEP System Pool involves flex-ible pricing based on continual analysis of the competition with an emphasis on seeking the market share that promises the greatest profit margin.
Operating Revenues and Energy Sales Consolidated operating revenues decreased 6.8%
in 1987 from the previous year compared to a slight increase in 1986. The decrease in 1987 resulted primarily from an overall 14.1% decrease in sales of electric energy.
The increase in 1986 revenues was mostly due to additional rate relief and a small increase in kilowatt-hour (kwh) sales partially offset by reduced fuel clause revenues.
Revenues from retail customers (residential, commercial and industrial) rose 5.1% in 1987 following a 1.2% in-crease in 1986. The increase in 1987 refiects a 6.9% in-crease in kwh sales including increases in residential, commercial and, for the fifth consecutive year, industrial customers, indicating continued economic growth in the Company's service territory. The increase in 1986 revenues was mainly because of additional rate relief coupled with a slight increase in energy sales partially offset by lower fuel clause revenues.
INDIANAMICHIGANPOIVER COAfPAII'Y t
ANDSUBSIDIARIES Revenues from wholesale customers dropped 26.8%
during 1987 with a corresponding 35.2% decrease in kwh
- sales, whereas revenues remained virtually unchanged in 1986 despite a 5.2% rise in kwh sales. Although 1986 kwh sales exceeded 1985 sales, year-to-year revenues remained fiat because of lower average realization per kwh sold due to competition and price cutting in the wholesale market.
In 1987, however the kwh decrease was offset partially by an increase in the average wholesale realization as the Com-pany pursued sales with higher profit margins. The 1987 decline in energy sales was caused mainly by the reduction of a long-term contract with an unaffiliated utility (dis-cussed above) and by an increase in available energy supply from unaffiliated generating capacity that had been out of service for an extended time and the addition of new gen-erating units by unaffiliated utilities.
Operating Expenses Purchased and interchange power expense decreased by 43.2% in 1987 following a 20.6% decrease in 1986. The 1987 decrease was caused primarily by the assignment of certain rights to purchase power from AEP Generating
- Company, an affiliated company, to an unaffiliated com-pany. This decrease was partially offset by increased in-terchange power transactions, primarily with affiliated companies, in order to replace internal generation lost be-cause of outages. The decrease in 1986 was mostly caused by the return to service of the Cook Nuclear Plant Unit No.
1 (Cook 1) which had been unavailable during 1985 due to the 10-year anniversary service outage required by the Nuclear Regulatory Commission.
When Cook 1 was re-turned to service, the purchased and interchange power transactions were no longer needed to meet the Company's load requirements.
Fuel expense, the single largest expense of the Com-pany, decreased 10.4% in 1987 after an 8.7 % increase in 1986. The decrease in 1987 was due mainly to reduced levels of generation. In 1986 the consumption of fuel had increased as a result of a higher generation level mostly the result of Cook 1 being returned to service as explained above.
Changes in fuel costs generally are recovered in revenues through fuel-clause adjustment mechanisms and therefore do not have a significant effect on net income.
Maintenance expense increased '14.5% in 1987 follow-ing a slight decrease in 1986. Factors contributing to the 1987 increase were additional maintenance activities for nuclear plant and other maintenance activities.
Depreciation expense increased 10.8% in 1987 and 9.2%
in 1986. Both changes resulted largely from decreases in the net deferral of depreciation expense associated with the Rockport 1 phase-in plan.
Federal income tax expense decreased 21.4% in 1987 after a 31.4% increase in 1986. The decrease in 1987 was primarily due to the decrease in*the statutory Federal in-come tax rate as a result of the Tax Reform Act of 1986.
The 1986 increase was mostly due to an increase in pre-tax book operating income and changes in certain book/
tax timing differences, the tax effects of which are ac-counted for on a fiow-through basis.
Total interest charges increased in 1987 by 3.5% fol-lowing an 8.9% decrease in 1986. The increase in 1987 was primarily the result of the issuance of additional long-term debt during 1987 while the decrease in 1986 resulted from the Company's refinancing of high-interest bonds with bonds having lower interest rates.
Allowance For Funds Used Daring Construction and Deferred Relartt The proportion of allowance for funds used during con-struction (AFUDC) included in net income before preferred stock dividend requirements was 29.7% (24.6% net of in-come taxes) in 1987 compared to 34.1% (27.2% net of income taxes) in 1986.
The Company continued to record a deferred return on its investment in Rockport 1 under an approved phase-in plan during most of 1987. The deferred return as a propor-tion of net income was 18.9% (15.1% net of income taxes) in 1987 and 28.5% (21.8% net of income taxes) in 1986.
This decrease resulted largely from the cessation in the latter part of the year by the Company of deferrals in its Indiana jurisdiction as a result of a rate order that included the last component of plant investment in rate base.
Liquidityand Capital Resources Construction Program The Company's gross plant and property additions for 1987 amounted to $248 million, an 18.7% increase over 1986. Construction expenditures for the three-year period 1988-1990 are estimated at $638 million. This includes the completion of construction of the second 1.3 million-kilowatt generating unit at the Rockport Plant. In addition, the Company would be required to make substantial ad-ditional capital expenditures ifacid rain legislation similar to that currently proposed is enacted into law.
Debt and Preferred Stock Financing It is estimated that approximately 60% of the Company's projected construction expenditures for 1988-1990 will be financed with internally generated funds. The additional amounts needed in excess ofother available funds willhave to be raised externally, as in the past, through sales of securities, short-term borrowings and investments in the Company's common equity by AEP.
The Company generally issues short-term debt (com-mercial paper and bank loans) to provide interim financing of construction expenditures in excess of available inter-nally generated and other funds. The Company then pe-riodically reduces short-term debt with the proceeds from sales of long-term debt securities and preferred stock and with investments in its common equity by AEP. At De-cember 31, 1987, the Company had outstanding unused short-term lines of credit of approximately
$285 million which were shared with other System companies.
Cook Nuclear Plant The Cook Nuclear units are exhibiting indications of intergranular corrosion (IGC) in the steam generator tub-ing, a condition which has developed in other pressurized water reactors. This has led to a decision to operate Unit No. 2 at 80% power and Unit No.
1 at.90% power as a steam-generator life conservation measure.
It is presently planned to replace the Unit No. 2 steam generators in 1988, at an estimated cost of $ 160 million, to correct this con-,
dition. The IGC problem in the Unit No.
1 steam generators is occurring at a slower rate than in Unit No. 2, but it is possible that the Unit No.
1 steam generators may have to be replaced eventually. However, there are no present plans for such replacement. The Unit No. 2 replacement program will require an extended
- outage, estimated at 9 to 12 months. This is not expected to have a material adverse effect on the Company's operations or financial results.
Egect ofInflation Inflation continues to affect the Company, even though the inflation rate has been relatively low in recent years.
Since the rate-making process limits the Company to re-covery of the historical cost of assets, economic losses are experienced when the inflated value of the assets is not recovered.
However, such losses are offset partly by the economic gains that result from the repayment of long-term debt with inflated dollars.
Recently Issued Accounting Standards Over the past year and a half, the Financial Accounting Standards Board has issued several new accounting stand-ards that the Company will be required to adopt in the future. The potential impact, ifany, of the new standards is discussed in the Notes to Consolidated Financial Statements.
INDIANAMICHIGANPOIVER COMPANY ANDSUBSIDIARIES Consolidated Statements of Income Year Ended December 31, OPERATING REVENUES ELECfRIC 1987
$ 1 017 268 1986 (in thousands)
$ 1,091,295
$ 1,078,793 OPERATING EXPENSES:
Operation:
Fuel for Electric Generation Purchased and Interchange Power (net)
Other Maintenance Depreciation and Amortization Taxes Other Than Federal Income Taxes Federal Income Taxes Total Operating Expenses OPERATING INCOME f
OTHER INCOME AND DEDUCTIONS:
Allowance for Other Funds Used During Construction
'eferred Return Rockport Plant Miscellaneous Total Other Income and Deductions........
INCOME BEFORE INTEREST CHARGES 208,931 102,644 156,310 91,807 112,427 46,730 75 373 794 222 223 046 26,055 31,442
~669) 56 828 279 874 233,241 180,620 157,500 80,171 101,456 51,291 95,872 900,151 191,144 25,397 43,438
~1,930) 66,905 258,049 214,545 227,391 151,658 81,089 92,895 46,339 72,987 886,904
. 191,889 26,214 60,378
~9,713) 76,879 268,768 INTEREST CHARGES:
Long-term Debt Short-term Debt Miscellaneous Total Interest Charges Allowance for Borrowed Funds Used During Construction (credit)
Net Interest Charges 131,093 2,226 3 486 136,805 124,333 6,118 1,725 132,176 134,117 9,119 1,909 145,145 113 508 105,568 122,667
~23 297)
~26,608)
~22,478)
CoNsoLIDATED NET INcoME before preferred stock dividend requirements PREFERRED STOCK DIVIDEND REQUIREMENTS EARNINGS APPLICABLE TO COMMON STOCK 166,366 20 955 145 411 152,481 146,101 26,256 27,056 126,225 119,045 See Notes to Consolidated Financial Statements.
Consolidated Balance Sheets ASSETS December 31, 1987 1986 (in thousands)
ELECTRIC UTILITYPLANT:
Production Transmission Distribution General and Miscellaneous Construction Work in Progress Less Accumulated Provisions for Depreciation and Amortization Nuclear Fuel Under Capital Leases (net of amortization)
Electric Utility Plant Less Provisions.........
OTHER PROPERTY AND INVESTMENTS
$2,269,325 725,047 397,214 72,159 553 973 4,017,718 1 118 254 2I899,464 135 563 3 035 027 283 313
$2,242,972 713,398
,380,934 73,395 422,097 3,832,796 1,018,455 2,814,341 147,026 2,961,367 262,800 CURRENT ASSETS:
Cash Special Deposits and Working Funds Accounts Receivable:
Customers Associated Companies Miscellaneous Accumulated Provision for Uncollectible Accounts Materials and Supplies (at average cost or less):
Fuel Construction and Operation Materials and Supplies Accrued Utility Revenues Prepayments and Other Current Assets Total Current Assets 6,995 24)394 71)730 7,058 15)475 (634) 70)728 22)975 51)576 7 942 278 239 3,062 41,891 89,129 5,360 10,701 (609) 58,463 20,947 49,000 9,727 287,671 DEFERRED DEBITS:
Deferred Nuclear Fuel Disposal Costs Deferred Depreciation and Return Rockport Plant Other Deferred Debits Total Deferred Debits Total See Notes to Consolidated Financial Statements.
56,434 170,413 133 137 359 984 64,546 134,483 138,341 337,370
$3 956 563
$3,849,208 10
INDIANAhIICHIGANPOIVER COhIPANY ANDSUIISIDIARIES CAPITALIZATIONANDLIABILITIES December 31, 1987 1986 (in thousands)
CAPITALIZATION:
Common Stock No Par Value:
Authorized 2,500,000 Shares Outstanding 1,400,000 Shares Premiums on Capital Stock Other Paid-in Capital Retained Earnings Total Common Shareowner's Equity Cumulative Preferred Stock:
Not Subject to Mandatory Redemption Subject to Mandatory Redemption Long-term Debt Total Capitalization OTHER NONCURRENT LIABILITIES CURRENT LIABILITIES:
Cumulative Preferred Stock Due Within One Year Long-term Debt Due Within One Year Short-term Debt:
Notes Payable Commercial Paper Accounts Payable:
General Associated Companies Taxes Accrued Interest Accrued Obligations Under Capital Leases Other Current Liabilities Total Current Liabilities CGMMITMENTsAND CoNTINGENclEs (Note 9) 56,584 381 771,382 145 302 973,649 197,000 32,030 1 539 737 2 742 416 193 692 52,031 41,451 17,576 46,198 37,112 43,856 48 928 287 152 56,584 381 771,382 113,123 941,470 197,000 75,030 1,410,023 2,623,523 179,057 4,000 11,500 11,325 38,600 34,420 25,009 53,472 32,143 61,630 56,771 328,870 DEPERRED CREDITS:
Deferred Income Taxes Deferred Investment Tax Credits Other Deferred Credits Total Deferred Credits Total 542,298 171,559 19 446 733 303 525,044 180,306 12,408 717,758 83 956 563 33,849,208
Consolidated Statements of Sources and Applications of Funds 1987 Year Ended December 31, 1986 1985 (in thousands)
SQURcES QF FUNDS:
Funds from Operations:
Consolidated Net Income Principal Non-fund Charges (Credits) to Income:
Depreciation and Amortization Provision for Deferred Income Taxes (net)
Deferred Investment Tax Credits (net)
Amortization of Deferred Nuclear Fuel Disposal Costs Allowance for Other Funds Used During Construction..
Deferred Return Rockport Plant Other (net)
Total Funds from Operations Funds from Financings:
Financings:
Long-term Debt Short-term Debt (net)..........
Total Less Retirements of:
Cumulative Preferred Stock Long-term Debt Net Funds from Financings Funds from Nuclear Fuel Capital Lease Obligations........
Other Changes (net)
Total Sources of Funds APPLIcATIQNS oF FUNDS:
Plant and Property Additions:
Gross Additions to Utility Plant Gross Other Additions Total Gross Additions Allowance for Other Funds Used During Construction.......
Net Plant and Property Additions Dividends on Common Stock Dividends on Cumulative Preferred Stock Deferred Depreciation Rockport Plant Increase (Decrease) in Working Capital (a)
Total Applications of Funds (a) Excludes Cumulative Preferred Stock Due Within One Year, Long-term Debt Due Within One Year and Short-term Debt and is represented by increase (decrease) as follows:
Cash and Cash Items Accounts Receivable Materials and Supplies Accrued Utility Revenues Accourits Payable Taxes Accrued Revenue Refunds Accrued Obligations Under Capital Leases Other (net)
$166,366 1207310 13,597 (7,700) 12,207 (26,055)
(31,442) 2 900 250 183 376,811 149 925) 326,886 50,917 222 005 53 964 35 144 44 745
$384 036
$247,987 247,987
~26 055) 221,932 113,232 20I955 9,025 18 892
$384 036
$(13,564)
(10,952) 14I293 2,576 402 7,274 179774 1 089
$ 152,481
$ 146,101 107,915 24,219 25,328 13,247 (25,397)
(43,438) 4,585 258,940 93,460 82,163 46,571 9,206 (26,214)
(60,378) 3,789 294,698 197,681 49,925 247,606 7,000 228,432 12,174 29,929 144,660
~110,000) 34,660 7,165 73,182
~45,687 49,372 6,147
~)2,966
$307,190
$ 285,417
$204,942 3,933 208,875
~25,397) 183,478 113,232 26,256 12,765
~28,541)
$ 222,625 105 222,730
~26,214 196,516 113,232 27,056 16,652
~68,039)
$ (16,803) 3,636 9,361 (22,615) 10,571 (20,554) 18,625 (605)
~10,157
$ (81,479)
(5,497)
(22,402) 26,236 1,687 (6,096) 1,052 5,126 13,334
$307,190
$ 285,417 See Hates to Consolidated Financial Statements.
$ 18 892
~$ 28,541
~$
68,039) 12
INDIANAMICHIGANPOt VER COMPANY 1
ANDSUBSIDIARIES Consolidated Statements of Retained Earnings Year Ended December 31, Balance at Beginning of Year Consolidated Net Income Total 1987
$113,123 166 366 279 489 1986 (in thousands)
$ 100,130 152,481 252,611 1985
$ 94,317 146,101 240,418 Cash Dividends Declared:
Common Stock Cumulative Preferred Stock:
42/s%
Series 4.56%
Series 4.12%
Series 7.08%
Series 7.76%
Series 8.68%
Series 12%
Series
$2.15 Series
$2.25 Series
$2.75 Series
$3.63 Series Total Dividends Balance at End of Year See No7es to Consolidated Financial $7atemen7s.
1137232 495 273 165 2,124 2,716 2,604 1,558 3,440 3,600 2,673 1 307 134 187
$145 302 113,232 495 273 165 2,124 2,716 2,604 1,918 3,440 3,600 3,113 5,808 139,488
$ 113,123 113,232 495 273 165 2,124 2,716 2,604 2,278 3,440',600 3,553 5,808 140,288
$ 100,130 13
0 Notes to Consolidated Financial Statements
- 1. Significant Accounting Policies:
Effective September 10, 1987, the Company changed its name from Indiana & Michigan Electric Company to Indiana Michigan Power Company.
The common stock of the Company is wholly owned by American Electric Power Company, Inc. (AEP).
The accounting and rates of the Company are subject in certain respects to the requirements of state regulatory bod-ies and in certain respects to the requirements of the Federal Energy Regulatory Commission (FERC).
The consolidated financial statements include the ac-counts of the Company and its wholly owned subsidiaries.
Significant intercompany items have been eliminated in consolidation. The consolidated financial statements have been prepared on the basis of the accounts which are main-tained for FERC purposes.
4.0%
3.9%
2.1%
3.6%
3.0%
Electric UtilityPlant; Depreciation and Amortization; Otlier Property and Investments Electric utilityplant is stated at original cost. Generally, the plant of the Company is subject to first mortgage liens.
The Company capitalizes, as a construction cost, an al-lowance for funds used during construction (AFUDC), an item not representing cash income, which is defined in the applicable regulatory systems of accounts as the net cost of borrowed funds used for construction purposes and a reasonable rate on other funds when so used.
The com-posite rates used by the Company after compounding on a semi-annual basis were 11.5% in 1987 and 1986 and 12.55% in 1985.
The Company provides for depreciation on a straight-line basis over the estimated useful lives of the property.
The current provisions are determined largely with the use of functional composite rates as follows:
Functional Composite Class of Annual
~PM II Rates Production:
Steam Nuclear Steam Fossil. fired Transmission Distribution.
General Operating expenses are charged with the costs of labor, materials, supervision and other costs incurred in main-taining the properties. Property accounts are charged with costs of betterments and major replacements of property, and the accumulated provisions for depreciation are charged with retirements, together with removal costs less salvage.
Other property and investments are generally stated at cost.
Income Taxes Deferred Federal income taxes are provided to the extent that such amounts are reflected in revenue levels. The Com-pany normalizes the effect of tax reductions resulting from investment tax credits utilized in connection with current Federal income tax accruals consistent with rate-making policies.
The Company's consolidated coal subsidiaries generally use the fiow-through method of accounting for investment tax credits and practice deferred tax accounting for the effects of certain timing differences.
Pension Plans The companies participate with other companies in the AEP System in a trusteed, noncontributory defined benefit plan to provide pensions, subject to certain eligibility re-quirements, for all their employees.
Plan benefits are de-termined by a formula which considers each participant's highest average
- earnings, years of accredited service and social security benefits. The companies'unding policy is to make annual contributions to the plan equal to the amounts deductible for Federal income tax purposes.
The companies adopted Statement of Financial Account-ing Standards No. 87 (SFAS 87), "Employers'ccounting for Pensions" as of January 1, 1987. Previously, pension cost included the cost of currently accruing benefits and amortization of, and interest on, unfunded prior-service costs over periods of up to 30 years. Pension cost deter-mined under SFAS 87 is not significantly different. In ac-cordance with the provisions of SFAS 87, pension cost has not been restated for prior periods. Net pension cost for the defined benefit plan for the year ended December 31, 1987 was approximately $ 161,000. In 1986 and 1985, the companies recorded no pension cost.
In addition to providing pension benefits, the companies provide certain health care benefits for retired employees.
Substantially all of the companies'mployees may become eligible for these benefits ifthey have completed 10 years 14
INDIANAMICHIGANPO IVER COMPANY i
ANDSUBSIDIARIES of continuous service at retirement.
The cost of retiree health care benefits is recognized as expense when paid.
In 1987, 1986 and 1985, these costs totaled $ 1,327,000,
$ 1,061,000 and $780,000, respectively.
Operating Revenues The Company accrues unbilled revenues for electric service rendered subsequent to the last billingcycle through month-end.
Operating revenues derived from a certain wholesale customer represent approximately 7% of total operating revenues for 1987 and 12% for 1986 and 1985. The contract with this customer expired on December 31, 1987.
Other Certain prior-period amounts have been reclassified or restated to conform to current-period presentation includ-ing capital leases and certain interchange power transactions.
2, Rate Matters:
The Company has been engaged in rate proceedings for the inclusion in rate base of construction costs of Unit 1
of the Rockport Plant (Rockport 1).
Rockport 1
is a
1,300,000-kilowatt generating unit jointly owned by the Company and AEP Generating Company (AEGCo), also an AEP subsidiary. The unit began commercial operation on December 10, 1984.
In August 1987 the Financial Accounting Standards Board (FASB) issued SFAS 92 "Regulated Enterprises-Accounting for Phase-in Plans" which amends SFAS 71 "Accounting for the Effects of Certain Types of Regula-tion" by specifying the accounting for phase-in plans.
SFAS 92 requires, among other things, that costs may be deferred for future recovery under phase-in plans only if the phase-in plan meets certain criteria. Included in these criteria are the agreement to the plan by the regulator and the recovery of all costs deferred pursuant to the phase-in plan within 10 years of the date when the deferrals origi-nally began. SFAS 92 further provides transition guidelines for phase-in plans in existence prior to the first fiscal year beginning after December 15, 1987. These guidelines per-mit the delayed commencement of the 10-year recovery period ifcertain conditions are met.
The Company has phase-in plans in both its Indiana and FERC jurisdictions for Rockport
- 1. The Company has re-corded through December 31, 1987 and 1986 net deferred returns of $ 131,970,000 and $ 105,065,000, respectively, and net deferred depreciation of $38,443,000 and
$29,418,000, respectively, on Rockport 1.
In September 1987 the Indiana UtilityRegulatory Com-mission issued an order approving a Motion for Resolution which included compliance of the Company's Rockport 1
phase-in plan with the transition guidelines of SFAS 92, the effect of the Tax Reform Act of 1986 and other cost of service issues, resulting in a decrease in annual revenues of $5,000,000.
In December 1987 the FERC issued an interim order permitting the Company to increase its wholesale rates by approximately
$3,100,000
- annually, subject to refund.
These rates reflect completion of the Company's Rockport 1 phase-in including compliance with the SFAS 92 guide-lines, the effect of the Tax Reform Act of 1986 and other issues.
Unless the FERC issues a final order approving a phase-in plan to comply with SFAS 92, the Company would be required to write-off retroactively all non-com-plying deferred costs, totaling approximately $43,900,000 net of income taxes at DeCember 31, 1987. A final order is pending in this matter.
In October 1987 certain of the Company's wholesale customers filed a complaint with the FERC against the Company claiming that the rates charged by the Company to the complainants are excessive and that the Company should have ceased recording deferred return and deferred depreciation for its FERC jurisdiction as of December 31, 1986. The complaint has been consolidated with the Com-pany's wholesale rate applications discussed above and a final order is pending.
The Company and AEGCo are constructing a second unit at the Rockport Plant (Rockport 2). Completion is expected in 1989 at an estimated cost of $ 1.25 to $ 1.35 billion. The Company and AEGCo have expended
$896,300,000 on Rockport 2 through December 1987. The Company is committed to purchase 70% of AEGCo's share of Rockport 2 energy. The inclusion of Rockport 2 in rate base, the recovery of related purchased power and the tim-ing of such are dependent on the outcome of future regu-latory proceedings.
15
NOTES TO CONSOLIDATED FINANCIALSTATEMENTS (Continued)
- 3. Federal Income Taxes:
The details of Federal income taxes as reported are as follows:
1987 Year Ended December 31.
1986 (in thousands) 1985 Charged (Credited) to Operating Expenses:
Current (net)
Deferred (nct)
Dcfcrrcd Investment Tax Credits (net)
Total Charged (Credited) to Other Income and Deductions:
$63,543 19,533 (7,703) 75.373
$44,340 26,208 25,324 95.872
$(55,991) 82,407 46,571 72.987 Current 2,760 Deferred (net)
(5,936)
Deferred Investment Tax Credits (net) 3 Total (3.173)
Total Federal Income Taxes as Reported
$72,200 The following is a reconciliation of the difference between the amount of Federal income taxes book income before Federal income taxes by the statutory tax rate, and the amount of Federal the Consolidated Statements of Income.
(7,414)
(1,989) 4 (9;399)
$86,473 (7,706)
(244)
(7.950)
$ 65,037 computed by multiplying income taxes reported in Year Ended Dcccmber 31, Consolidated Nct Income Before Preferred Stock Dividend Requirements Federal Income Taxes Pre-tax Book Income Federal Income Taxes on Pre-Tax Book Income at Statutory Rate (40% in 1987 and 46% in 1986 and 1985)
Increase (Dccrcase) in Fcdcral Income Taxes Resulting From the Following Items on Which Deferred Taxes Are Not Provided:
Excess of Book Over Tax Depreciation Allowance for Funds Used During Construction and Miscellaneous Items Capitalized on the Books but Deducted for Tax Purposes Deferred Return Rockport Plant Amortization of Deferred Investment Tax Credits Other Total Federal. Income Taxes as Reported Effcctivc Federal Income Tax Rate 1987
$ 166,366 72,200
$238,566
$ 95,426 5,104 (13,965)
(5,447)
(7,334)
(1.584)
$ 72.200 1986 (in thousands)
$ 152,481 86.473
$238,954
$ 109,919 6,242 (15,529)
(9,228)
(4,530)
(401)
$ 86.473 36.2%
1985
$ 146, 101 65.037
$211,138
$ 97,123 4,930 (15,633)
(14,929)
(4,786)
(1,668)
$ 65.037 30.8%
IhfDIAPAItIICHIGAlIPOIVER COIMPAVY Ale SUBSIDIARIES The following are the principal components of Federal income taxes as reported:
1987 Year Ended December 31.
1986 1985 (in thousands)
Current:
Federal Income Taxes Investment Tax Credits Total Current Federal Income Taxes (net)
Deferred:
Depreciation (liberalized, ADR and ACRS)
Allowance for Borrowed Funds Used During Construction Unrecovered and Lcvelized Fuel Adjustments for Revcnuc Refunds Nuclear Fuel Lease Adjustments Spent Nuclear Fuel Fee Unbilled Revenue Deferred Return Rockport Plant Other Total Deferred Federal Income Taxes (net)
Total Deferred Invcstmcnt Tax Credits (net)
Total Federal Income Taxes as Reported (a) The Company was able to utilize investment tax credits companies with taxable income.
$65,918 385 66,303
$ 68,308 (31.382) 36.926 and Miscellaneous Items Capitalized 15,328 26,272 3,931 9,448 (9,327)
(2,466) 1,074 (638) 251 (7,845)
(2,839)
(4,247) 5,315 9,818 (136)
(6.123) 13,597 24,219 (7.700) 25,328
$ 72,200
$ 86,473 in excess of the statutory limitation as a result of the lack of available credits
$(11,824)
(51,873)(a)
(63,697) 33,099 6,511 14,506 9,052 9,530 (3,175) 6,804 12,791 (6,955) 82.163 46,571
$ 65.037 ofother System The companies join in the filingof a consolidated Federal income tax return with their affiliated companies in the AEP System. The allocation of the AEP System's consol-idated Federal income tax to the System companies is in accordance with SEC rules under the Public UtilityHolding Company Act of 1935. These rules permit the allocation of the benefit of current tax losses to the System companies giving rise to such losses in determining taxes currently payable. The tax loss of the System parent company, Amer-ican Electric Power Company, Inc., is allocated to its sub-sidiaries with taxable income. With the exception of the loss of the parent company, the method of allocation ap-proximates a separate return result for each company in the consolidated group.
Consolidated investment tax credits utilized are allocated to the System companies giving rise to them.
At December 31,=1987, the companies'umulative net amount of income tax timing differences on which deferred taxes have not been provided totaled $494,000,000.
The System reached a settlement with the Internal Rev-enue Service (IRS) for all issues from the audits of the consolidated Federal income tax returns for the years 1974-1980. Returns for the years 1981 and 1982 have been au-dited by the IRS, and additional taxes have been proposed, some of which the System companies have protested.
In the opinion of management, the final resolution of open matters will not have a material effect on the earnings of the Company.
In December 1987 the FASB issued SFAS 96 "Ac-counting for Income Taxes" effective for fiscal years be-ginning after December 15, 1988, which, among other
- things, requires that the companies adopt the liability method of accounting for income taxes. The Company has not yet determined when it will adopt SFAS 96 and its effect on the Company's financial statements, including what additional deferred taxes willhave to be provided on a restated basis.
4,'ommon Stock, Premiums on Capital Stock and Other Paid-in Capital:
In 1985 a credit to other paid-in capital of $3,000 rep-resented the excess of par value over cost of cumulative preferred stock reacquired by the Company to meet sinking fund requirements.
There were no other changes in any of the aforementioned accounts in 1987, 1986 or 1985.
17
NOTES TO CONSOLIDATED FINANCIALSTATEMENTS (Continued)
- 5. Retained Earnings:
Various restrictions on the use of retained earnings for cash dividends on common stock and other purposes are contained in or result from covenants in mortgage indentures, debenture and bank loan agreements, charter provisions, and orders of regulatory authorities. Approximately $45,900,000 at December 31, 1987, was so restricted.
- 6. Cumulative Preferred Stock:
At December 31, 1987, authorized shares of cumulative preferred stock were as follows:
Par Value Shares Authorized
$ 100
~
~ ~..........
2,250,000 25 11,200,000 December 31.
Par Value Shares
~Outtta dt 1987 1986 (in thousands)
$ 12,000
$ 12,000 6,000 6,000 4,000 4,000 30,000 30,000 35,000 35,000 30,000 30,000 40,000 40,000 40,000 40,000
$ 197.000
$ 197.000 Series
$ 106.125 102 102.728 102.91 103.44 105.27 26.08 26.69 4'/s%
4.56%..
4.12%..
7.08%..
7.76%..
8.68%..
$2.15
$2.25
$ 100 100 100 100 100 100 25 25 120,000 60,000 40,000 300,000 350,000 300,000 1,600,000 1,600,000 The cumulative preferred stock is callable at the option of the Company at the price indicated plus accrued dividends. The involuntary liquidation preference is par value. Unissued shares of the cumulative preferred stock may or may not possess mandatory redemption characteristics upon issuance.
A. Cumulative Preferred Stock Not Subject To Mandatory Redemption:
Number of Shares Redeemed Amount Year Ended December 31, Ca! I Price 1987 1986 1985 B. Cumulative Prcferrcd Stock Subject to Mandatory Redemption:
Series (a) 107,325 851,900
$ 106 27.07 Number of Shares Redeemed Amount par Year Ended December 31.
Shares December 31, Call Price Value 1987 1986 1985 Ouhtandinr 1987 1986 (in thousands)
$ 100 30,000 30,000 31,673
$ 10,733
$ 13,733 25 160,000 160,000 160,000 21,297 25,297 25 1,600,000 40.000 32,030 79,030 Less Portion Due Within One Year 4,000
$32,030
$75,030 (a) The sinking fund provisions of the series subject to mandatory redemption aggregate $232,500 in 1989, $2.797,500 in 1990, $3,500,000 in 1991 and 1992. Unless all sinking fund provisions have been met, no distribution may be made on the common stock.
(b) A sinking fund for the 12% series requires the Company to provide, on or before October I of each year, for the redemption of 15,000 shares of such series. This provision may be satisfied through shares previously purchased or by redemption at $ 100 a share. The Company has the right, on each sinking fund date, to redeem an additional 15,000 shares. At December 31, 1987, thc Company had reacquired 27,675 shares in anticipation of future sinking fund requirements.
(c) A cumulative sinking fund for the $2.75 series requires the Company to redeem 80,000 shares on or before October I, of each year. The Company has thc option to credit shares purchased or otherwise acquired in lieu of redccming shares for the sinking fund and has the noncumulative option to double thc number of shares to be redeemed in any year. At December 31, 1987, the Company had acquired 188,100 shares in anticipation of future sinking fund requirements.
18
IItIDIANAItfICHIGAIIP01VER COItfPAIiIY ANDSIJIISIDIARIES First Mortgage Bonds.......
Sinking Fund Debentures Notes Payable to Banks Installment Purchase Contracts Other Long.term Debt (a)....
Less Portion Due within One Year Total 1987 1986 (in thousands)
$ 1,092,684
$ 1,008,248 7,813 8,357 80,000 307,511 307,289 103,760 97,629 1,591,768 1,421,523 52,031 11.500
$ 1,539,737
$ 1,410,023 (a) Nuclear Fuel Disposal Costs. Scc Note 9.
First mortgage bonds outstanding were as follows:
December 31.
1987 1986 (in thousands)
% Rate 3'/s 4s/s 1 ls/s 15'/s 16i/2 4'/s 7'/s 9'/s 7
8r/s 9'/s 8'ls 91/2 l3'/s 9'/s 9'/s gs/s loi/s Unamortize Due 1988 February 1...
1988 November 1..
1990 June 1......
1991 November 1..
1992 April 1 1993 August 1
1997 February 1...
1997 July 1
1998 May 1......
2000 April 1 2003 June 1 (a) 2003 December 1
2008 March 1
2013 August 1
2015 October 1
2016 July 1......
2017 February 1...
2017 May 1......
d Discount (net).....
22,974 17,557 16,000 42,902 50,000 75,000 35,000 50,000 208,000 40,000 100,000 64,578 100,000 100,000 100,000 75,000 (4,327) 22,974 17,557 80,000 38,800 97,000 42,902 35,000 50,000 219,500 40,000 100,000 67,200 100,000 100,000 (2,685)
Less Portion Due Within Onc Year Total 1,092,684 52,031 1,008,248 11,500
$ 1.040,653 996,748 (a) The 9'/s%
series due 2003 requires sinking fund payments of
$ 11,500,000 annually on Junc 1, through 1991 and $ 13,500,000 annua! ly on June 1, 1992 through 2002 with the noncumulative option to redeem an additional amount in each of the specified years from a minimum of
$ 100,000 to a maximum equal to the scheduled requirement for each year, but with a maximum optional redemption, as to all years in the aggregate, of$75,000,000.
- 7. Long-term Debt, Lines of Credit, and Compensating Balances:
Long-term debt by major category was outstanding as follows:
December 31, 9.18% due 1990 9.12% due 1990 9.28% due 1991 Total (in thousands)
$20,000 20,000 40.000
$80,000 Installment purchase contracts have been entered into by the Company in connection with the issuance of pollution control revenue bonds by governmental authorities as follows:
December 31, 1987 1986 (in thousands)
% Rate Due City of Lawrenceburg, Indiana:
8'/s 2006 July 1
$ 25,000 7
2006 May 1.........
40,000 6'/s 2006 May 1.........
12,000 City of Rockport, Indiana:
9Vs 2005 June 1.........
6,500 9i/s 2010 June 1.........
33,500 9i/s 2014 August 1.......
50,000 7i/s (a) 2014 August I,......
50,000 (b) 2014 August 1.......
50,000 City of Sullivan, Indiana:
7s/s 2004 May 1.........
7,000 7,000 67/s 2006 May 1.........
25,000 25,000 7i/s 2009 May 1.........
13,000 '3,000 Unamortized Discount...........
(4,489)
(4,711)
Total
$307,511
$307.289 (a) Adjustable interest rate willchange August 1 ~ 1990 and every five years thereafter.
(b) Variable interest rate is determined wcckly. The average weighted interest was 5.5% for 1987 and 5.3% for 1986.
$ 25,000 40,000 12,000 6,500 33,500 50,000 50,000 50,000 The indentures relating to the first mortgage bonds con-tain improvement, maintenance and replacement provi-sions requiring the deposit ofcash or bonds with the trustee, or in lieu
- thereof, certification of unfunded property additions.
The sinking fund debentures are due May 1, 1998 at an interest rate of 7t/4%. At December 31, 1987 and 1986, the principal amounts of debentures reacquired in antici-pation of sinking fund requirements were $2,687,000 and
$2,443,000, respectively. In addition to the sinking fund requirements the Company may call additional debentures of up to $300,000 annually.
In November 1987 the Company entered into term loan agreements with several banks. The unsecured promissory notes payable at year-end under these agreements were as follows:
19
NOTES TO CONSOLIDATED FINANCIALSTATEMENTS (Continued)
Under the terms of certain installment purchase con-tr'acts, the Company is required to pay purchase price in-stallments in amounts sufficient to enable the cities to pay interest on and the principal (at stated maturities and upon mandatory redemption) of related pollution control revenue bonds issued to finance the construction ofpollution control facilities at certain generating plants of the Company. On certain series the principal will be payable at stated ma-turities or on the demand of the bondholders at periodic-interest adjustment dates.
Certain series are supported by letters of credit from a bank which expire in 1990 and 1992.
Portions of the proceeds of the installment purchase con-tracts are deposited with trustees and may be used only for specified construction expenditures.
Approximately
$ 17,928,000 and $35,743,000 of funds so deposited is included in special deposits and working funds at Decem-ber 31, 1987 and 1986, respectively.
Long-term debt, excluding premium or discount, out-standing at December 31, 1987 is due as follows:
(in thousands) 52,031 11,500 67,500 51,500 13,500 1,404.553
$ 1,600.584 The Company had unused short-term bank lines of credit of approximately
$285,000,000 and $269,000,000 at December 31, 1987 and 1986, respectively, under which notes could be issued with no maturity more than 270 days.
Available lines of credit are subject to withdrawal at the banks'ption, and such lines are shared with other AEP System companies.
In accordance with informal agree-ments with the banks, compensating balance deposits of up to 10% or equivalent fees are required to maintain the lines of credit. Substantially all bank balances are main-tained by the Company to compensate the banks for serv-ices and for the Company's share ofboth used and available lines of credit.
Purchased and Intcrchangc Power (net):
Purchased Power (a)....
Interchange Power (net):
AEP System Electric Utilities.........
Other Companies Total...........
1987 1986 1985 (in thousands)
$ 42,139
$ 170,047
$ 149,198 62,991 10,720 78,718 (2,486)
(147)
(525)
$ 102.644
$ 180.620
$227,391 Taxes Other Than Federal Income Taxes:
Real and Personal Property Taxes
~
~
~
~
~
~
~
~
~
~
~
~
~
State Gross Receipts, Excise and Franchise Taxes and Miscellaneous State and Local Taxes.........
State Income Taxes Social Security Taxes....
Total
$28,002
$27,795
$27,141 9,383 13,832 13,305 3,306 4,121 632 6.039 5.543 5.261
$46,730
$51,291
$46,339 (a) Includes power purchased from Ohio Valley Electric Corporation of approximately
$31,076,000 in 1987, $39,378,000 in 19&6 and
$6,733,000 in 1985. Also includes power purchased from AEGCo of ap-proximately $2,797,000 in 1987, $ 122,023,000 in 1986 and $ 119,952,000 in 1985.
Charges to operating expenses for royalties and for ad-vertising are less than 1% of gross revenues in each year.
American Electric Power Service Corporation (AEPSC) provides certain services to the Company and the affiliated companies in the AEP System. The costs of the services
- 8. Supplementary Income Statement Information and Related-party Transactions:
Electric operating revenues shown in the Consolidated Statements of Income include sales of energy to AEP Sys-tem companies of approximately
$ 35,000,000,
$33,000,000 and $32,000,000 for the years ended Decem-ber 31, 1987, 1986 and 1985, respectively.
Operating expenses shown in the Consolidated State-ments of Income include certain items not shown sepa-rately, as follows:
Year Ended December 31.
20
INDIANAMICHIGANPOPOVER COMPANY t
ANDSUBSIDIARIES are determined by the service company on a direct charge basis to the extent practicable and on reasonable bases of proration for indirect costs. The charges for services are made on a cost basis and include no compensation for the use ofequity capital, all of which is furnished to the service company by AEP. The service company is subject to the regulation of the SEC under the Public Utility Holding Company Act of 1935.
- 9. Commitmcnts and Contingencies:
Cotlslractl o)l The construction budget of the companies for the years 1988-1990 is estimated at $638,000,000 and; in connection therewith, commitments have been made.
Ohio Valley Electric Corporation AEP and Columbus Southern Power Company own 42.1% of Ohio Valley Electric Corporation (OVEC),
which supplies the U.S. Department of Energy (DOE) with the power requirements of its uranium enrichment project near Portsmouth, Ohio. Proceeds from the sales of power by OVEC, aggregating
$283,000,000 in 1987, are de-signed to be sufficient for OVEC to meet its operating expenses and fixed costs, and to provide for a return on its
~
equity capital. The Company, as a sponsoring company, is entitled to receive from OVEC, and is obligated to pay for, the power not required by DOE in proportion to its power participation ratio, which averaged 15.4% in 1987.
The DOE power agreement terminates in 1992.
Litigation The Company and AEPSC have been involved in liti-gation with Terre Haute Industries, Inc. (THI) over a con-tract for construction of an electrostatic precipitator at the Breed Plant. In January 1984, the court awarded compen-satory and punitive damages to THI in the amounts of
$4,934,000 and $ 12,000,000, respectively, exclusive of interest.
As a result of that judgment, the Company re-corded a liability in 1983, including interest, on its Con-solidated Balance Sheet for the compensatory damages.
In April 1987, the Court of Appeals of Indiana reversed part of the decision, reduced the award for compensatory dam-ages and dropped the award for punitive damages.
In July 1987, both the Company and THI filed petitions with the Supreme Court of Indiana seeking to transfer the case to this court forreview ofportions ofthe April 1987 decision.
Environmental Matters The companies are subject to regulation by Federal, state and local authorities with respect to air-and water-quality control and other environmental
- matters, and are subject to zoning and other regulation by local authorities. Al-though the cumulative, long-term effect of changing environmental requirements upon the companies cannot be estimated at present, compliance with such requirements may make it necessary, at costs which may be substantial, to retrofit existing facilities with additional air-pollution-control equipment; to change fuel supplies to lower sulfur content coal; to construct cooling towers or some other closed-cycle cooling systems; to undertake new measures in connection with the storage, transportation and disposal of by-products and wastes; to curtail or cease operations at existing facilities, and to delay the commercial operation of, or make design changes with respect to, facilities under construction.
Legislative proposals are pending before the United States Congress that expressly seek to control acid depo-sition in the eastern portion of the United States. Ifany of these bills become law, significant reductions in the emis-sion of sulfur dioxide from various existing Company gen-erating plants would be required. These reductions would entail very substantial capital and operating costs that, in turn, could necessitate substantial rate increases by the Company.
In addition, a number of states and environ-mental organizations have commenced proceedings under the Clean Air Act seeking substantial reductions in the emission of sulfur dioxide in certain midwestern states.
Further, the U.S. Environmental Protection Agency is contemplating a number of significant policy changes in its rules governing sulfur dioxide emissions.
Adoption of any of the contemplated policy changes could require sub-stantial reductions in sulfur dioxide emissions from the Company's coal-fired generating plants.
Transmission Agreement The Company participates with other AEP System com-panies in a Transmission Agreement. This agreement pools certain AEP System companies'nvestments in extra-high-voltage lines and shares among the parties the costs of ownership in proportion to the parties'espective demand ratios. The equalization of costs among the parties is being phased-in over the period 1985-1989. The agreement was permitted by the FERC to be implemented, effective Jan-uary 22, 1985, subject to refund.
'21
NOTES TO CONSOLIDATED FINANCIALSTATEMENTS (Continued)
Pursuant to the terms of the agreement, the Company recorded credits of $26,025,000,
$ 10,672,000 and
$5,338,000 for transmission services in other operation expense for the years ended December 31, 1987, 1986 and 1985, respectively.
Nuclear Insurance The Price-Anderson Act limits the public liability of a licensee of a nuclear plant for a single nuclear incident.
The current level is $720,000,000.
The Company has in-surance covering its two-unit Donald C. Cook Nuclear Plant (Cook Plant) in the maximum available amount of
$ 160,000,000, and the balance of $560,000,000 is covered by a mandatory program of deferred premiums that would be assessed, after a nuclear incident, against all owners of nuclear reactors.
In the event of a nuclear incident, the Company could be assessed
$5,000,000 per incident for each of its two nuclear generating units (subject to a max-imum of $ 10,000,000 per reactor in any year in the event of more than one incident). The Price-Anderson Act ex-pired in 1987, and Congress is considering its renewal.
Since the Cook Plant received its licenses before the ex-piration, it continues to be subject to the Act. Ifthe Act is renewed, it is likely that the limits of public liability will be increased.
The Company also has property insurance for damage to the Cook Plant facilities in the amount of $ 1.53 billion.
The primary layer of $500,000,000 is provided through nuclear insurance pools. The excess coverage above
$500,000,000 is provided through insurance pools
($250,000;000) and Nuclear Electric Insurance Limited (NEIL). NEIL's excess property insurance program pro-vides $775,000,000 in coverage.
The maximum assess-ment under this program could be $9,100,000 (seven and one-half times the annual premium on a 100% coverage basis).
NEIL's extra-expense program provides insurance to cover extra costs of replacement power resulting from a prolonged accidental outage of a nuclear unit. The Com-pany's policy insures against such increased costs up to approximately
$2,350,000 per week (starting 26 weeks after the outage) for one year and $ 1,175,000 per week for the second year, or 80% of those amounts per unit ifboth units are down for the same reason. The Company would be subject to a retrospective premium of up to $8,138,000 (five times annual premium) ifNEIL's losses exceeded its accumulated funds.
An incident at the Cook Plant could have a substantial adverse effect upon the Company.
Disposal ofSpent Nuclear Fuel and Nuclear Decommissioning The Nuclear Waste Policy Act establishes Federal re-sponsibility for the permanent disposal of spent nuclear fuel. Disposal costs are paid by fees assessed against own-ers of nuclear plants and deposited into the Nuclear Waste Fund created by the Act. For the disposal of nuclear fuel consumed after April6, 1983 by the Cook Plant, the Com-pany must pay to the fund a fee of one mill per kilowatt-hour, which the Company is currently recovering from its customers. In June 1983, the Company entered into a con-tract with DOE for the disposal of spent nuclear fuel. Under terms of the contract the Company must pay over a period of 10 years to the U.S. Treasury a fee estimated at ap-proximately $71,964,000, exclusive of interest, for the dis-posal of nuclear fuel consumed prior to April 7, 1983. The Company has deferred this amount plus accrued interest on its balance sheet and has received regulatory approval for the recovery of this amount and has begun to amortize the amount deferred as it is being recovered.
An independent consulting firm employed by the Com-pany has estimated that the cost of decommissioning the Cook Plant could range from $284,000,000 to
$321,000,000 in 1986 dollars. The Company has received regulatory approval in each of its jurisdictions for the re-covery of nuclear decommissioning costs'ssociated with the Cook Plant. The Company intends to reevaluate pe-riodically amounts collected for such costs and to seek regulatory approval to revise such amounts as necessary.
Funds recovered through the rate-making process for disposal of spent nuclear fuel consumed prior to April 7, 1983 and for nuclear decommissioning have been deposited in external funds for the future payment of such costs.
22
INDIANAMICHIGANPOWER COMPANY ANDSUDSIDIARIES Electric UtilityFiant:
Production Distribution General and Miscellaneous Less Accumulated Ptovision for Amortization Nuclear Fuel Under Capital Leases (net of amortization)..............
Net Electric UtilityPlant Other Property Less Accumulated Provision for Amortization Other Property Less Provision........
Net Properties under Capital Leases Obligations under Capital Leases (a)..
8,406 5,823 14,603 18,620 34,051 37.059 57,060 61,502 21,848 21,721 35,212 39,781 133.321 145,629 168,533 185,410 19,362 17.065 2,297
$ 170,830
$ 170,830 9,346 6,911 2,435
$ 187,845
$ 187,845 (a) Including an estimated $43,856,000 and $61,630,000 at December 31, 1987 and 1986, respectively, due within one year.
Payments made under capital leases include
$55,557,000,
$61,409,000 and
$45,073,000 of amorti-zation expense for the years ended December 31, 1987, 1986 and 1985, respectively.
- 10. Leases:
The companies, as part of their operations, lease prop-erty, plant and equipment under leases with terms up to 35 years.
Most of the leases require the companies to pay related property taxes, maintenance costs and other costs of operation.
The companies expect that, in the normal course of business, leases generally will be renewed or replaced by other leases. The majority ofthe various rentals have purchase options or renewal options for substantially all of the economic lives of the properties.
In accordance with the provisions of SFAS 71, the com-panies recorded retroactively in January 1987 the assets and related liabilities for all capital leases entered into prior to January 1, 1983. This increased total assets and total liabilities by $ 179,341,000 at December 31, 1986. This standard also requires the companies to record rental ex-pense in a manner consistent with rate-making treatment; therefore, there was no effect on the Consolidated State-ments of Income.
The following is an analysis of properties under capital leases and related obligations:
December 31, 1987 1986 (in thousands)
Future minimum lease
- payments, by year and in the aggregate, of the companies'apital leases and noncan-celable operating leases consisted of the following at December 31, 1987:
1988 1989 1990 1991 1992 Later Years Total Future Minimum Lease Payments Less Estimated Interest Element Included Therein Estimated Present Value of Future Minimum Lease Payments....
Capital Operating Leases (a)
Leases (in thousands)
$ 9,000 S 20,000 7,000 20,000 5,000 20,000 4,000 19,000 4,000 15,000 42,000 184.000 71,000
$278,000 33,000
$38.000 Gross Rentals Less Rental Recoveries (including sublease rentals) (a)........
Net Rentals (b) 1987
$ 18,000 2,000
$ 16.000 1986 (in thousands)
$20,000 3.000
$ 17,000 1985
$20,000 3,000
$ 17,000 (a) Includes amounts paid for or reimbursed by associated companies.
(b) Classified approximately as:
Operating Expenses.......
Clearing and Miscellaneous Accounts (portions of which are charged to income).....
Total
$ 11,000
$ 10,000
$ 10,000 7.000 7.000
$ 17,000
$ 17,000 Included in the above analysis of future minimum lease payments and of properties under capital leases and related obligations are certain leases as to which portions of the related rentals are paid for or reimbursed by associated companies in the AEP System based on their usage of the leased property. The companies cannot predict the extent to which or proportion in which the associated companies willutilize the properties under such leases in the future.
(a) Minimum payments do not include leases of nuclear fuel. Nuclear fuel rentals comprise thc unamortized balance of the lessor's cost (approx-imately $ 133,000,000) less salvage value, ifany, to be paid in proportion to heat produced and carrying charges on the lessor's unrecovered costs.
It is contemplated that ponions of the presently leased material will be replenished by additional leased material.
Rentals for all operating leases are classified approxi-mately as follows:
Year Ended December 31, 23
'OTES TO CONSOLIDATED FINANCIALSTATEMENTS (Concluded)
- 11. Unaudited Quarterly Financial Information:
The following consolidated quarterly financial information is unaudited but, in the opinion of the Company, includes all adjustments (consisting of only normal recurring accruals) necessary for a fair presentation of the amounts shown:
Quarterly Periods Operating Operating Net Quarterly Periods Operating Operating Nct Ended Revenues Income Income~
Ended Revenues Income Income~
(in thousands)
(in thousands) 1987 March 31...........
$253,638
$59,738 June 30............
241,653 48,999 September 30........
283,944 52,881 December 31........
238,033 61,428
~Before preferred stock dividend requirements.
$47,390 37,989 38,914 42,073 1986 March 31.....
June 30......
September 30..
December 31
$279,398
$54,720
$37,921 266,990 36,674 27,665 273,549 47,534 41,485 271,358 52,216 45,410 24
INDIANAMICHIGANP01VER COMPANY t
ANDSUBSIDIARIES Auditors'pinion 0818itte Haskills+38IIS 155 East Broad Street Cot umbus. Ohio 432154650 (614) 221 ~ 1000 ITT Telex: 4995627 To the Shareowners and the Board of Directors of Indiana Michigan Power Company:
We have ezamined the consolidated balance sheets of Indiana Michigan Power Company (formerly Indiana 5 Michigan Electric Company) and its subsidiaries as of December 31, 1987 and 1986 and the related consolidated statements of income, retained earnings and sources and applications of funds for each of the three years in the period ended December 31, 1987.
Our ezaminations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.
In our opinion, such consolidated financial statements present fairly the financial position of the Company and its subsidiaries at December 31, 1987 and 1986 and the results of their operations and their sources and applications of funds for each of the three years in the period ended December 31,
- 1987, in conformity with generally accepted accounting principles applied on a consistent basis.
February 23, 1988 25
Operating Statistics 1987 1986 1985 1984 1983 ELEcTRic OPERATING REYENUEs (in thousands):
From Kilowatt-hour Sales:
Retail:
Residential:
Without Electric Heating............
With Electric Heating...............
Total Residential.................
Commercial Industrial Miscellaneous Total Retail Wholesale (sales for resale) (a)...........
Total from Kilowatt-hour Sales.....
Provision for Revenue Refunds...........
Total Net of Provision for Revenue Refunds Other Operating Revenues.................
Total Electric Operating Revenues 186,418 174,550 175,534 90 261 90,881 90.949
$ 150,334 82,739
$ 144,370 70,851 276,679 191,352 235,470 11 533 715,034 293 379 265,431 184,276 219,344 11,171 680,222 400,779 266,483 181,240 213,161 11,234 672,118 396,980 233,073 150,733 173,986 9,666 567,458 414,390 215,221 137,616 154,751 8,696 516,284 370,551 1,008,413 1,081,001 1,069,098 541 ~)05) 981,848
~12,494) 886,835 1,008,413 8 855 1,081,542 9,753 1,068,993 9,800 969,354 10,197 886,835 9,269
$ 1 017 268
$ 1.091,295
$ 1,078,793
$979,551
$896,104 SQURcEs AND SALEs QF ENERGY (in millions of kilowatt-hours):
Sources:
Net Generated Steam:
Fossil Fuel Nuclear Fuel Net Generated Hydroelectric Subtotal Purchased (a)
Net Interchange (a)
Total Sources Less: Losses, Company Use, Etc..
Net Sources Sales:
Retail:
Residential:
Without Electric Heating..
With Electric Heating.....
Total Residential.......
Commercial Industrial Miscellaneous Total Retail Wholesale (sales for resale) (a)
Total Sales I
6,662 109060 62 16,784 2,558
~1947 21,289
~1456
~19 833 2,719
~1445 4,164 39142 4,834 221 125361
~7472
'19 833 8,187 10,986 79 19,252 4,941 542 24,735 1,645 23,090 2,536 1,442 3,978 3,007 4,371 212 11,568 11,522 23,090 7,933 7,800 74 15,807 3,248 4,948 24,003 1,542 22,461 2,557 1,481 4,038 2,968 4,282 216 11,504 10,957 22,461 7,071 12,913 68 20,052 4,913 1,353 26,318 1,508 24,810 2,534 1,561 4,095 2,870 4,201 209 11,375 13,435 24,810 5,684 12,301 55 18,040 4,891 1,847 24,778 1,441 23 337 2,596 1,458 4,054 2,807 3,941 204 11,006 12,331 23 337 (a) Prior-period amounts have been restated to conform to 1987 presentation.
26
1ÃDIAPIAI4IICHIGAhfPOIVER COIMPAIVY t
ANDSUBSIDIAR/ES OPERATING STATISTICS (Concluded)
AvERAGE CosT oF FUEL CoNsUMED (in cents):
Per MillionBtu:
Coal Nuclear Overall Per Kilowatt-hour Generated:
Coal Nuclear Overall 1987 190 75 117 1.87
.84 1.25 1986 185 74 118 1.82
.83 1.25 1985 194 80 136 1.97
.86 1.42 1984 189 65 103 1.83
.70 1.08 1983 184 54 92 1.76
.59
.96 RESIDEIKIALSERVICE AVERAGES:
Annual Kwh Use per Customer:
Total With Electric Heating Annual Electric Bill:
Total With Electric Heating Price per Kwh (in cents):
Total With Electric Heating NUMBER OF ELECrRIC CUSTOMERS:
Year-End:
Retail:
Residential:
Without Electric Heating...
With Electric Heating......
Total Residential........
Commercial Industrial Miscellaneous Total Retail Wholesale (sales for resale).....
Total Electric Customers 10,146 17,341
$674.13
$1,083.10 6,64 6.25 328,937 84 442 413,379 449207 4,345 1 946 463,877 105 463 982 9,813 17,716
$654.88
$ 1,116.86 6.67 6.30 325,623 82,324 407,947 43,689 3,882 1,846 457,364 106 457,470 10,050 18,486
$663.18
$ 1,135.42 6.60 6.14 322,922 80,734 403,656 43,017 3,701 1,852 452,226 104 452,330 10,249 19,771
$583.35
$ 1,048.27 5.69 5.30 321,286 79,823 401,109 42,912 3,415 1,584 449,020 105 449,125 10,187 18,780
$540.74
'912.31 5.31 4.86 320,655 78,311 398,966 42,552 3,253 1,571 446,342 106 446,448 27
Dividends and Price Ranges of Cumulative Preferred Stock By Quarters (1987 aud 1986)
Cumulative Pre erred Stock 1st 1987 uarters 2nd 3NI 4th 1st 1986 uarters 2nd 3rd 4th
($ 100 Par Value) 4'/s% Series Dividends Paid Per Share Market Price $ Per Share (MSE) High Low 4.56% Series Dividends Paid Per Share Market Price $ Per Share (OTC)
Ask (high/low)
Bid (high/low) 4.12% Series Dividends Paid Per Share Market Price $ Per Share
'OTC)
Ask (high/low)
Bid (high/low) 7.08% Series Dividends Paid Per Share Market Price $ Per Share (NYSE) High Low 7.76% Series Dividends Paid Per Share Market Price $ Per Share (NYSE) High Low 8.68 Io Series Dividends Paid Pcr Share Market Price $ Per Share (NYSE) High Low 12% Series Dividends Paid Per Share Market Price $ Per Share (NYSE) High Low
($25 Par Value)
$2.15 Series Dividends Paid Per Share Market Price $ Per Sltare (NYSE) High Low
$2.25 Series Dividends Paid Per Share Market Price $ Per Share (NYSE) High Low
$2.75 Series Dividends Paid Per Share Market Price $ Per Share (NYSE) High Low
$3.63 Series (a)
Dividends Paid Per Share Market Price $ Per Share (NYSE) High Low 437/s 43 417/s 41'/2
$ 1. 14
$ 1. 14 36'/
345/s
$ 1.14
$ 1.14
$ 1.14 36t/s 44 35 35t/s
$ 1.14
$ 1.14
$ 1.14
$ 1.03
$ 1.03
$ 1.03
$ 1.03
$ 1.03
$ 1.03
$ 1.03
$ 1.03
$ 1.77
$ 1.77
$ 1.77
$ 1.77
$ 1.77
$ 1.77
$ 1.77
$ 1.77 88 79 84'/4 70'Is 75'/4 67s/s 71 615/s 76 65 803/s 67'/~
80'Iz 70 88'/z 77
$ 1.94
$ 1.94
$ 1.94
$ 1.94
$ 1.94
$ 1.94
$ 1.94
$ 1.94 96'/z 85'ls 93'/z 80 82'/s 723/4 76 65 84 69'/4 89 75 87'/4 76 94'/2 83'/s
$2.17
$2.17
$2.17
$2.17
$2.17
$2.17
$2.17
$2.17 104/s 99'/4 102 90'Is 90s/s 87 85'/s 79s/8 93'Iz 78'/a 983/4 85'/
98'/s 88t/4 102'Iz 92'h
$3.00
$3.00
$3.00
$3.00
$3.00
$3.00
$3.00
$3.00 105'Iz 103 108 104 107'/2 103 106'/2 101'/4 107 99'/s 106 100'/t 106 102
$0.5375
$0.5375
$0.5375
$0.5375
$0.5375
$0.5375
$0.5375
$0.5375 26'/s 24 25'/4 21'/z 23'/4 197/s 22'/s 18'/t 25 21 24'/4 22'/~
25/z 23s/s
$0.5625
$0.5625
$0.5625
$0.5625
$0.5625
$0.5625
$0.5625
$0.5625 27 24'/4 267/s 23t/z 26 20'/s 24 20 24'/s 20'/s 25'/z 21s/s '5'/4 23t/s 26'/s 243/s
$0.6875
$0.6875
$0.6875
$0.6875
$0.6875
$0.6875
$0.6875
$0.6875 27t/4 263/~
26'/4 26 26'/s 253/s 27 25 29 26 27t/s 25 28 27 273/s 273/s
$0.9075
$0.9075
$0.9075
$0.9075
$0.9075 31 27t/4 3 1 t/z 283/4 30'/4 28s/s 31s/s 28t/s 30'/t 27
$ 1.03125
$ 1.03125
$ 1.03125
$ 1.03125
$ 1.03125
$ 1.03125
$ 1.03125
$ 1.03125 MSE Midwest Stock Exchange OTC Over-the-Counter NYSE New York Stock Exchange Note The above bid and asked quotations represent prices between dealers and do not represent actual transactions.
Market quotations provided by National Quotation Bureau, Inc.
Dash indicates quotation not available.
(a) Redeemed April 1987.
28
The Company's Annual Report (Form 10-K) to the Securities and Exchange Commission willbe available on or about March 31, 1988 to shareowners upon written request and at no cost.
Please address such requests to:
Mr. G. C. Dean American Electric Power Service Corporation I Riverside Plaza Columbus, Ohio 43215 Transfer Agent and Registrar of Cumulative Preferred Stock Morgan Shareholder Services Trust Company 30 West Broadway, New York, N.Y. 10007-2192
Indiana Michigan Power Company P.O. Box 16631
,. Columbus, OH 43216 8
AEP:NRC:0909D 10 CFR 50.71(b)
& 140.21(e)
Donald C.
Cook Nuclear Plant Unit Nos.
1 and 2
Docket Nos.
50-315 and 50-316 License Nos.
DPR-58 and DPR-74 FINANCIAL INFORMATION FOR INDIANA MICHIGAN POWER COMPANY U.S. Nuclear Regulatory Commission Attn:
Document Control Desk Washington, D.C.
20555 Attn:
T.
E. Murley April 13, 1988
Dear Dr. Murley:
Enclosure 1 contains the Indiana Michigan Power Company's (I&M) annual report for 1987.
Enclosure 2 contains a copy of I&M's projected cash flow for 1988.
These reports are submitted pursuant to 10 CFR 50.71(b) and 10 CFR 140.21(e).
This document has been prepared following Corporate procedures which incorporate a reasonable set of controls to ensure its accuracy and completeness prior to signature by the undersigned.
Sincerely, M. P. Alexzch Vice President eh Enclosures cc:
D. H. Williams (w/o enclosures)
W.
G. Smith, Jr.
- Bridgman (w/o enclosures)
R.
C. Callen (w/o enclosures)
G. Charnoff (w/o enclosures)
G. Bruchmann (w/o enclosures)
NRC Resident Inspector
- Bridgman A. B. Davis
- Region III 0pg
Enclosure 2 to AEP:NRC:0909D 1988 Internal Cash Flow Projection for Donald C.
Cook Nuclear Plant
($ Millions)
Actual 1987 Projected 1988 Net income after taxes Less dividends paid Retained earnings Adjustments:
Depreciation and amortization Deferred income taxes and investment tax credits AFUDC Total adjustments Internal cash flow Average quarterly cash flow Average cash balances and short-term investments 166.4 134.2 32.2 120.3 5.9 (49.4) 76.8 109.0
- 27. 2 38.0 129 133
(
4) 146
( 8)
(62) 76 72 18 20 Total 65.2 38
% Ownership in all operating nuclear units:
Unit 1 and Unit 2 100%
Maximum Total Contingent Liability $ 20.0 million (2 units)
c.
lijgo[6605~o.
poo0Ã 51%lkN) AM Cli0$ %i@ N0ii069lt860 m6$ llm li9oM?~
Loose ht I c brg a n MICHIGAN OHIO INDIANA WEST VIRGINIA KENTUCKY VIRGINIA LEGEND Indiana Michigan Power Co. Area D
Other AEP operating companies'reas 0
Major power pIant TENNESSEE