Text

Arkansas Power & Light Co 1987 Annual Rept
	ML20195D114
Person / Time
Site:	Arkansas Nuclear
Issue date:	12/31/1987
From:	Langston N; ARKANSAS POWER & LIGHT CO.
To:	Dinitz I; NRC
References
	NUDOCS 8811040194
	Download: ML20195D114 (56)
	v • d • e

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Arkarv.as Power & Ught Ctxtpany PERFORMANG lilGIIUGIITS (AP&!.) owm electric facilities in 65 of Arkanm' 75 counties and in 13 of Miv g wiuri's 114 counties At December 31. 1987 19H6 Change 19H7, the Company furnhhed retail Total operating rornues (milliom) $1,405 51.389 1 electric senice in 328 Arkanm and Operati'n and nuintenance expenws (milliom) $1,143 51,145 -
Shwivri incorporated municipalitie' Allow ance for funds used during 1he Company also pnnkb pow cr at con truction(millions) $ 10 5 10 -
wholeule to eight Arkanm and two 5 125 Net income (millionM $ 141 13 Miw>uri municipalities and in Arkanm C.apitalization-end of 3rJr(milliom) $2,454 52,451 -
to two rural electric unoperatnes and l Comtruction expenditures ( rmiliom) $ 137 5 lit (5) one awiciation of rural electric cooper-
% Total utility plant-at ) car cod (millions) $4,077 53,949 3 APM L h a member of one d the I'lectric customers-at irar end $77,173 5?l,56 1 Gas customerw at ) ear end 62,673 62,553 -
largest imestor owurd public utihty holdmg companics in the L*nited States incrgnates to retail cmtomers I let tric (million kw h) 13,892 13,208 i Middle South I'tilitics, Inc. ( Mst').
Natural gn (million whic feet) 8,523 9,39' (9)
Ranked fourth in awets among the na- '
mp oyecwat year end 4,&18 s,039 (4) tion % elettric and gas utilities in 1987 the M%U Sntem h the leading clet tric Pe.tk demand (mcgawatts) 3,860 3,NW l rncrgnupplier to the Middle South, a Average residential use per customer (kwh) 10,2&& 10.001 3 region compriwd d Arkamas Iouhi,uu, M aage commerdal me tu cuuomer (k".h) 57,564 56ma 3 Miwiwippi and southeastern Miwiuri. As crage residential use per customer (mc0 83 W. (3)
^5 aMe commercial uw per customer (md) 309 33% (H)
Gas wnwe h prosided in New Oricam and portiom of Arkanw and Miwiuri Network Encompam Regkm
' " * * " " ' ' " '"'*E#P"I" tion of fin e milhon Table of Content.s lhe MsU System uws a vast, intrr- At the heart of the S)Mem are live MW ytrm Map inyJe front cinct connc(ted transmiwlon and dninht. tion opaating (ompanies working together: Aral MW s ne a c Arra- t network and a balanced sptem of fowil AP&I, Inuniana Pow er & Iight Com- Pertornunt c Hwhights i fuct and malcar generating plants to pany, Miwiwippi Pow cr & 1 igh' Com. I'rrud< nt Mew. ige 2 meet the clet tric netds of I 68 mills >n pany. Nos Oricam Pubhc es nke Inc Yedt in Htms and %)Mem I ncrgy Rnources. Inc. wha h MaAug 6 mstomers in the 91.000 w{uarc-mi l e C"""""'C"" 6 Mith!!c South area. cno>mpawing 1.WO h responuble for the management and
'"'"""n A Tonsnuwh en N opaatson of the Grand Gulf Nudear Repirt s 4 stanagt nrnt and
\udit O smnnure Icitrr 10 A(khtmal subsidiancs indude Managenwnt *lW uwh en A Anahm I OY ////l rWIR .t norbr shanfo/ ter M%l' %) stem Acnx cs Inc . w hi(h pri> linmW wnwnt. i,
/u t1906 of t/v F 'for,/ toner si&s urious tcc hnical. administrathe y,in to lin n ial sutentnis IM al,trhnaw Am roir ihie em./ a /9/ I and corporate scnx n that liendit all of woununt s opman e
/me onc at lync luuf/ /,it h /V=,to,smfa the M st's>vem (ompames in common. Ilocn s carW Progrew u A,%#ks of t/c /m/itge atit//mgfru %ptem i ta ls Inc., a tuch subsidiary, and th urd i 4 lhrt t fors t Miu rs 42 e/urtrig .tikanSu /bu tr 6 / /yhti l l(1 tet, Inc , a subsidian that markets W m ed u ural oas ,a the t omnwrt ial upabihtit s cywrtiw t hri o on m ute 6 L unct N suni o/of=mtrou.
and rno-urtn of the %)Mem o nupanin 1
. _ _ _ . _ _ _ _ _ _ _ _ _ _ . - _ _ __ _. _ .__ _ ~ ~, _ __ _ _ _ _ _ _ . _ _ , -
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. PRESIDENT'SMESSAGE .
T0 SHAREHOLDERS -
i 1
) Wir Comp.uty had a good operating to retail customen, excluding Re>nolds Marketing is Key ,
! Scar in 19M7. Wu will find tlut virtually Metah Company, boosted revenues fn>m f nery area of Arkanus Pim er & IJght these custon en by appnnimatcly 539 Our firuncial performance h direct.
( AP&l.) prodtkrd nurked impnnement. nullion Additiotully net income in. ly attributable, in large part, eo the f I am confident the rnomentum of 198? creawd 516.3 million to 5141.2 million maturing of our nurketing program l will continue in 1988. our 75thScar and our rate 04 return on common equity begun in 1985. We are concentrating of operation was ' 23 percent, compared to an al. mu(h of our clfort in the industrial sec- l Our bracon of(orporate direction lowed rate of 13 percent. tor becauw of the potential for ules and j for tlw past two Scan ha twen a strategv We implemented the third annual large returns from a relatively few cuv !
towarti atromphshment of ahe e giulv rate increase awociated with Ihe phaw. tomen and industrial % direct innuence Goal 1: Iktar the needfor any in of our portion of Grand Gulf I in on residential and commercial ules I
gnend rate (in masc by /wom. Miwiwippi. Mu(h of it w as othet, how. 'lhe industrial sector offen the greatest j ingincur rf/hicniark/hy rnarket- oct, because of a redn(tion in our al. rbk through low of sales alvt i
sng our/mluct lowcd return on common equity. Growth in our industria' ules
[
Goal .?: /fulld brilges to our Certain iwucs continue to confront ocluding Reynolds wm cight percent, j trastomerx the Company w hit h could has e an ad. pushing roenues fram these customen i lt b h 3doign, not coinciden(e, scrse impact. As diwuwed latcr in this up about t16 milhon ;
that our stratrgs b in absolute harmony repnt. an unfamrable ruling by the its. ;
with the sptemwide miwlon statement Suptcmc Court in Miwiwippi 15m cr & l of our parent compan), Middle south IJght Company % case could cauw a (
l'tilitin. Inc. ( Mst ') to guide our nest detcrioration of our Snancial heahh.
decade- likewise, if the Statement of 11'eent/ hcounc. and /c u1</dy Iinant tal Accounting Stan-m agni:cd at a custrana-or icntal darth No. 92 twuc k not sue- 7 se u ally ars/mn <ible, finanaally strong ccwfully resohett the Company % h j suct cu/u/ cran /rtitor in //v cr oiring financial pmition and results of e- i
~
chs tric enoxr busincu " olwrations could be nutcriall) s ,
At Al'&l, tb growne pursuit of and ads crwly affected -
l m r ow n sirategy tus ointnbuted thrc(tly 1
tow ard ac hining our giuk for cost con- .
L t.unment and (ustomcr rt lanons w hde Producth ity inacases at the umc time prosiding the opcrat-ing emironment to imprine our in crall We conduded the analysk of our (buix tal pcdornunce. Ior the o nuing work force oceds hegun in 19M5. the ,
) cars w cTe wt sinngent twalgetary giuh rnuit of whit h w as the climinatii>n of that wc intend to mcrt or surpaw $53 cmpi nec pmitions or a redtn-t6on As w e m< n c imo 198H. our strategi of about 1I percent. .

t will hink muc h the umc as it lus for the Our kc) generating umas including pet two ) cars becauw our dirts tion our twu tudcar units ucre among the af kl priontn's Jrc the right (4)ct liip jwth)rmers an)Mlwre in the o)Untry Jerry I . Maulden t Osw %K ctu tow ard atn>otng C.

ing it wuuld play a signincant Net Income tial nurket. retained, nov and expanded ro!c in attracting more students to these 8**"" industrial u c; rnidential including areas. It3eaar= **~^idtwram" ~ a a em. r ,.- replacement of space heating and water Relations with our customers mn- _ _ _ heating, and electric pnxtuct uln tinue to impnne due to our emphasis g through third party dealer and hvilder on a perunulired appnudi for custonwr awktance senice and a dramatic increaw in com- ___N in the 1983 to 1987 time perimt munity senke a(thitin. In 1985, fol- _ _ _ _ _ _ _ _ _ _ g _ APAl. increased annual retail tornues lowing the Grand Gulf alhication con-gg culuding Reynolds by approxinutely innrny, only alumt 25 percent of oct _R _ stonwn g.n e us famrabic marks. In 52M2 milliork 33 percent from increa ed ules and 67 percent frum rate increac our latnt sun cy in %cptemtwr 1987, the _ _ We expect to continue to increase ro e- number was 56 percent. We still luse a nun from retait ulo in 1988 by an oti- long way to go, but I belioc all our _ ^ nuted $ 67 million owr 1987; 59 percent l ograms And efforts form the cotrcct from increased ules and -61 percent strategy to accomplish Goal 7 _ "I "' "' from pri(c increaws Heritage, Future from Same Ideals 0)ncern for Major Issues As the ground ruin contirac to tw Customer Satisfaction determined, we behor n e Fase a pretty ^'"'d AP&L demorwtrato through pn> grams and outrex h its concern for the dear sision of how w e will ogwrate in IIIIIREHIS hae<M h%4 w~t important iwucs a!!nting the pcople of the future, if Joa base suctcwfully con- stan:ma < >#..m our wnice arcA I Iscwtwrc in this report, fnmted. as your Company has a large 3, n, - . wc divuu other elements of our nur- mergy uwr who wa almut to ,nstall a koting progrant int lothng our cu momic in4 s .ogeneration facility or one wcigh-dot k spment effort, Tc.unwuA Arkanus' ing npansion outside )our sen k e are.t. , Miw>un. We are stry cuited ainut you luse dealt healum with the "winds ; thev programs luth as they relate to o(dunge" that are and will omrinue to ,- w, _ n n,meoai l m,,nune. ,nd a, Imno om, iedes,n m , L dw)_,n,mm o e_ ana ,wem ,l_ mr _, _ _ ,_, ,. _ - mn.- wlm, ,, mkn ,e ge toe _ ur l , _l l_ ,u,,ce n a 7 4_ 3 i, cdee ,1 m, pm ,m )_ <_ ime an n,woa,o,e a t,_ie,un mi , - [uny annount cd a 10 point program of predictahdity \ luth of the 19 os and ) nluutic nul supp >rt dotto[ml w ith 1980s was a senn of pohth at and regu- _ L _ > ~ k.a L _ guidance from education ottidah it is latory luttlo ilut l< ft us and our induv primanly du n ted low ard nuttwnutin trv intertully onented Imlay. the mm-nl wicm e curra utums twcause Arkan- gwtitne marketpla e shapo our future us hkr most states has a probicm With 'S cars S of "liciping Ituild aura ting tww ten hers to thesc 6t id . Arkanus" as a guide. we mntinue to l~doution ottit ul opcdally ap follow the path of suu cw shown us h) plekd one t Ituwnt of our program- fmmdcr llancy roudt findmg it as pnintmg 51.%I w holarships to wilege benctit tal to our stare and Compan) stadt nis wbo wdi pledge to sgxnd a it u timb) as it w as in 1914 ) cars textung nuth or xirtar in Arkan-s , gj Arkanus Governor Bill Cinton joined in announcing the Teamwork Arkanudtissouri program. ( w - l CWOlUNITY I)EVEl,OIGIENT ( MOs NATIONAL CC 'DIUNICATIONS .; "u: I I AN1 WORK - ~' %[,,'> f f g ._c\RKANSAS eue . . \, \, $L. !, l . .i w$; _s v- , c, ~S +-
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' * " ( 11) \l'&I 's .5 5 fil .ini)in L rsJrs til l') IM l'inc illutt . inst liatcsulle put ini t t le- ' brat n ins ni a pprt t un in l< *r < >u r scnit t to the stair \ pal l'rr%!rni ( l lu nit ti in \1 is s t it fii is p on((I in llat.- ulfr <f \1nir% l1.irnt s ( tunes ( t t iiti ri an(I t t 's ( .ingrt s nun \\ ilbur l } \1tlh A succewful nurketing pnigram 48 companics nuny of them w orking tially increa ed the Gimpan>'s purduse must he able to addrew different situa- clowly with various aspects of the of local gomis and scrsices In additior. tions but the philosophy renuins un. Teamwork progrant built new facilitics to directly adding nuny millions of dungett l'w the skill, espertise and and another 73 companics announced (k>llars to the starc's co>nomy, these corporate supgwrt of AP&lls nurketing espansions.1 hew new facilitics and increawd puniuscs hee added an
and cu>nomic developmetit program to espansions totaled some 4%0 new ntinuted IM b>lw to state pa)n>lls
! increase our ules-lege and snull~ bilw. Many of these o>mpanics took While mut h of our at thiry is j and bring more and hetter > >bs to adcantage of AP&l3 b>h espane>n rate directed toward the industnal settor. j Arkanus and Niutheast Miw >uri. tlut pnnides inn ntisc rates for new or u e are aggerwist in the residential area, l Ilcre are two cumples tlut illuv cspandedloads as w cil. APal. helped organi/c the trate the umbrcita appnus h w e call largest heat pump drak ri aw wlation in Teasawork Atkanudhw>uri. America-37H dealenhips Ihc awicia-3/Ination One Hypotent/a/ nem Knowledge of Region Invaluable tion tus twen a signincant fauor in truhestry u ns hnptruits-a $15 M// lion, helping achier a 16 percent increde in highlr siph(st/catert in<histrialgas </c 1hc Teamwurk gn >up, o>mposed of home heating com er ions in 19C and t vlopmcritprucess that nun 4/ use 19 pnifesunuh who are as hkcly to mer a 40 pcreent intrede in comer. aboutfit c meganutts ofchs tricity show up at aucmbly lines as at tutional sion heat pump ules since its fornution urunt </ t/v clock De A/Of In</ustrial cc,rporare offices u e their knowledge two )can ago.1his program esemphfics slet clopencret tosin n urkal closely nith of the regioni nurketplace to help our the tuncept of pronioting alhes to t/v rompany's louhnb/p to sicr vlop an customen Dnd new w Jp to nurket and accomplish goah that are mutually hmor otit e "intemsptsh/c" rute //st/ met espand pnx!uct lines and customer lwnctitial thernn/w I s cht Incalmst nm/s but haw, as w cll a to help communitics peutccial1/v interrsts of.l/0/ amt trs do clop their potential for growth totaltt<stomeriste TIG hi<tustries uit/ l'or example, an aluminum pn>cew Grau Roots ' go on hne soon nith an ultra-m<=hrn ing faolity w a faced with pniduction fin yhty arting a nem srec(millin curtailnient and > >h byofis because of a It is not really all slut different from /t/j t/vr s//c, . tikaum an4Iot/vr nonhy lack :J raw nutcrial untd Tramwork put u ben llan cv Cotu h bnit ght in I astt rn markett the company in cont.wt with twc in- and fore.gn thunt ict in our early > cars %fnation Thu Osc ar fortjnm ran state supplict to learn first lund the advantages of pictiv enm h a one nknf openstion in I I cwhere, J metJh casting wm- AP&l Jnd ArkJnMV 'lhere Jrc many linnkhy. .likansas-t/ut is, nn.il /v pany was shown by a Tramwurk profn. industries oivrating totby that are cameface Infa< c nith the AIO/, tonn sional how a onmersion to clu tric monuments to his acthitin toward U=4tr Conjusrs /sn sLv cmplojrcs a t</ funuces u ould cut onts and impn n c "liciping fludd Arkanus" ontInn 15 nith A/Ot. to nyuir scruritt the qtuht) of its pnslut t Today tlut "Just hke llancv rota h." vid "tr/xhtu wta her"l/ghts for less Ilsnt /ulf o>mpan)'s encrgy onts are km and the Vice Prnidcnt for \larketing Kennah fiv o #st of n.m Orics arf 4/ fo/utnt ath/ Impnncd ytulity he, indeed resulted lirreden,"wc stJrted Jt the graw nauts nyuir stnytlixhtpolcs runjusrs 6 in inc reased uln huikling a pn > gram where w e w ork s cry a om/uny/me4/cs quahty nurk to Aho, Tramw ork pnnido an inipor- cimcly with lot al tummunitin and A/0/ #4 hele subting uit/ cal m*cjobsfor tant hnk in the rncanh Scid our ocr)tudy internted in etunomic do t I-his snarl / cornmunity aimpany he workcd with the l'niscr- opment and once agan n in Cotwh% i APa l. returded an eight twrcent sity of Arkanus to do clop tu hniqun day, AP&l. iuynonym us with o onomic increase in industriel uln in 1987 to use mit row av tu hnohig) in apph- dotiopm, r " wh>' Prinunty becauw dunng the 3 car catnins for poultry prmcwing Arkanus is the nation . sading gwultn pn shn or i AP& l lus inuituted an aggrcwn e l ~lby Arkanui pny,rJM llut nb Whstan ,, , N h 'sY - (: .. . t:N
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.y c i / g,'I .' ,t 4' ,' ,1 V . x' t x_ The clarly uninan, alonc and on reaching the ciderly and minority Oimpany is willing to scck non-tradi- ! 1 fqb/cnnt hy t/c nurst snore stonn in gniups tional ways to reach all its customers Arkanas' Nstory, slon ly < nut tvluct<mtly 1hc Company hnsught together m er a o/vnnt herfror./ r/oor to the stranger- dozen gniups including those who rmlr v/hr she tava musum/ hr t/c Inn k liigh Marks w cre considered traditiimal adser aries { n yth itsfamils sr logo /wrker/ outs /</c. AP&Ils position was simple Tell us turw t //c cxpla/tmd I/=#t he 1= t<t Iwn ashv/ ro lhere is good nets AP&lacorn w e can do a better job of sening yuu ( delit er vredictne her doctor said s/v stry high in its senice categorics in a and the people Suu represent Hegun l rhw4sf suncy at the end of last sumn.ct,9.4 prinurity as a ittic Rock or Central ! Nrot/OL uns not a deligivy scn percent of our untomen gn e the Com. Arkansas progrant it is twing espanded f ifcc, but fortunately this stonn htfaet- pany curlk11t nurks for reliable sen ice, into all of the Company's dhiricts i nary IWi /udn't damago/any //nes or 91 percent gne a positive rating for ofn/pinent so cmplemrs ucre usnig emergency rotoratiort Hi percent vid 6 t/vir t/ute to bc/ppmride cmergemy the Cnmguny had cuurteous and hcipful Iml Mmagement ! siviices to t/c c/dtv/r.1/v nam c.spla/mvl emplo)ces and H I pcrt ent thought l'nable to /lght /*n k the taux siv AP& L wm w cll-organlied and etlicient. lhe dhtricts themwhes are anoth-
//unhv/ himfor caring "We did not scure as u tilin another cr element of the Company % new out- !
l Incing there to hcip is part of our category t!ut we etnsider one of the reach attitude. A significant element of ; j traditiori nunt important-our customeri per. the wuruarce reduction and sulnc-l During the 1927 tiood, y hen the reption of whether w e care about thetn qucnt reorgani/ation was to sittually Miwiwippi Ristr oncred user 26JXx) as indisiduals" wid llurgew Only about renwne an entire loci of nunagement l
vguare miln in sesen states nothing 50 percent gnr the Company high betw een the corporate otlice and fick!
l o>ukt mm e escept AP&I. linemen who nurks in thk category. districts 1his nunn nunagement dcti- t i gutrulled lino on horwhack or boat. "We intend to maintain our high sions (loser to the customer and also l We also pnnitkd pimer to the refugcc ratings for wnice and to demonstrate gnes the h> cal team mon freedom to ; u nten sct up for ihe ion.Ou) reskicnts by our actions that we do. indeed, care do clop itum n programs
l l displaced by the lhx nt about our customen as indisiduals" 1hc Company i equally nimmitted
! Ilut in 19% a decade of pohtkal Iturgeu uid to nuintaining pn> grams that luse j and regulatory strife, coupled with .Sc wurknl wcllin the p.nt. Pn>ictt De ene, l omtnnt r y surneunding the a!kwatton begun in 19M2, continun to pn nide a ) of the Grand Gulf Nu(Icar 5tatkm in IJdedy/ Minority Outreach way for untomers to add a dollai to Miwiwippi, tud kft AP&l.with a (kxid their c!cctric bilh. whi(It coupks! w ith i APal. was ren11tly the mining fort e donations in an the Company % sto(L. n!!y "intenul perspct tb c" and the Company % pubhe rept rt card at an all. that led to the do clopment of a conwr. holders gun to Amcrican Red Cnns l time low. tium of utihtics and gm emnwntal group, ctupter in AP&lls wnice territory. li> , linday, tw morr, AP&l.Vice Prni- tlut pnnides enico to the cidctly. date, the Red Crow has adminhtcred j dont for notonrr 5ctuuw I oun Iturgew Addithwully, the Unmpan)'s minor. 20J a M) awhtance t hn ks totalhng in er I awnsn the situation thh w a) ity innmcw declopment progrant $1 millbn in akt "We're on the road lu(L. tu w e gnming out of a I air Sharc Agreement "I sincercly belics e the notomer f dim't for a nwmient minimite the ciul- ugned with the N WP. lus beumw wn a difference in our u>mpany and lengn facing us" widely rn ogoticd for its accomplish. our emplo)ces I sense in our empkiy-Ior the gu4 twu >can the O wnpany ments in the bl.n L o nununit). AP&l. ces a deep commitment to pnne to our tus launthnt a wore of pnigrann aimed has espanded its mmontv purt hae customen they are stry important to to at "buikhng bridgn" to ontomen 1he in>rn $200.tmm) a 3 car to an nrrage of as Mdidduals And. we'll continue t!ut criott h nurkcd by nun) non traditional mrr s i milhon a ) var. effort otr> da) with orry customer /' aspa ts and mchkw partioitar emplum Olwration O > operation, now in its vidIturgew cuni > car. h an cumpic of lu m the E ___ liutay, Iske et irr </ay, fini / ct inc. "It was a dollar and cents perfor- lludget Squeezed mu utu e stim torfe,r mn /nir o/uutions nunce for our customers and stock-made tu u isn/=,itant < hn ks em his lHilders" siid John Griffin, senior site lhe 1988 thrust of the pnn!uction <pth k r/ns e to n urk at. likansas Nru In te president of generation and Iransmiv area will be to coniinue the high lesd of one, s ire rif,t/0/.'s tu o niuInte uruts sion "liccause of thh estra generation. Imcr plant periornunce and to gise noir RuucIn1//c //c (/w ks ira //y our ceno per kilowatt hour nuclear added emphask to ont contre,1. "A large uvern't nn cwny hut ther alu ap made pnnluction cycnscs were 16 percent ponion of the Company's op tration and hintfnf gorul Alwiet/raf terInuing icw than they wuuld h.n c been at the nuintenance e spense is in ot. area and lorne, he u nt uh/c to uv //v sising 1986 generation lescl. If this estra tlut ynes us the op[wrtunity to ignifi-nipur//nenefinm t/c cordmy touve, [ww cr lud been prmfucett by out, our cantly impact the Compan)'s bottem /c//ing him em this < rd,/ /As can/wr fuel costs would lus e been some 90 line," said Grdlin "lic (hallenged cau nanining t/w/ t/uc tarTt mmh trin I million higher." of our departments to beat thcir bud-3 tining /foth tinits u cic operating gets by at least 10 pcrcent and I'm su/vth/y and unu/d hke/r omslude t/v omfident they will." mir u ith rn e,rd anulahd tr amtgen. Safety P.tramount As u ith any ont control pn> grant crating in on/t its succcw rcsts with indniduals lheir .I minute or In o !atcr. the we und the CompanyN nuclear pnigram is du rge- < /u k. . the a nu U/c andpop on his rar a nuture one and has .n hicsed high e liny on/r u lut is mjuirni nuho as /v prnsalunder t/c lan;c Irscis of opcrating and sifcty perfor- e /Jo on/r a eut is mrewny to get pr at er line I/ut < amal his pn =/m I nunce as wcil as ataJahility fat tors "% e //vfoh done auttrfrum the "fat fort"to customers rco >gm/c the special res\v snsihshty any e rsmstantly hmkfor n'ap to at run t/v state //v static inh efercru e nudcar operation ha" sud Gnflin. climinate inute nu5 mu sic to hn can et cry nninung "lhere are no shortcuts to be taken 1hc gcncration at. ansmiwion // rnas pn>/wh/r bene./ /. Iongsna wht n it apphes to nudcar safct). simply dep.irtment recently reorgani/cd to one of.t10/ 's /:ionnnny c/n toca/ put. )ou c.innot bn ome so focuwd on at hics e int reawd ettet ti enew and enginecrx fc/t u /vn the Sm//c trans- unt (utImg flut >ou lose sight of 3our more (learly defined accountability. sninion line /vplotto/ on foot /v/n ten rnponsihihty to nuintam the highest the rompanyW ork force reduc-1la/wrn and.Irkadc/phia c nu k/n/ to lest is of = ilty and regulatory res[w nd tion rcthnett the department byiner hfe. sciting Ilv stagefor the c/n Infica- sncnew." Jdded (iriffin "I hdnTe we M M) lN Wilit ms tion o/Llikanuit prm ed in 198' that p aid perfornun(c "Iti obsious w cT c lud to make //15 a uti e u or to stasI mur and o nt t ont rol can bc .n hics ed w hile wime stn tough du bions in the pr t mornmg still fuQ mn ting our uf tty and regula- suuple of ) cars hut, thtre n no tjucs-A nufor t ontnbutor to the < bm- ton rngwnsihditin " iion tlut we are now a Icancr. nutre pan)N abdity to *tahihic r un in 198' Al%I!* two o ut stations Whur fot uwd ( ompan) and w c are dedicated w as the pertornunt c of its prothection blutI and indcpcodent e, continued to at hicsing the put of stahdi/mg departnwnt their high fnd of pt riornunt c. athitsing u nts" plcdged Onf tin it w as a retordS car for Al%Ils as ad.sh.ht) tat fors and operating costs llan c) rout h and hn aw >t uto not Icar umts u hi( h hcgan generating ilut ranked ilwm anw>ng the top umts m also knew about cutting unts and (lu tot n) in 19'l .uxl 1980 t ' nits I and the nation "t nur oldcr ud and gas units focusing on rt alntic goals as thm 2 of Arkmus Ntwlear One rcrorded also nore llun caroni their w(ightf bniught the comt nirn(c and stf t t) of esullcnt pcrtornunus generating vid Unitin "1he acadahihty oflow ont clet tric cncrgs to \rkansis Now. those more tiun 11 nulhou na gawatt hours a natural gas pcruutted us to oiwrate umc pluh nophin are twing uwd to 12 partent inacaw mr 19% thec units at mot h higher cap.n n) du tnf> the cntire \liddic wth f at tors tiun anta spated and to make a ugndit ant numht r of ott sperm uits" addt d ( .n; tin M x . 3; . . s. Iis Record generation levels are ,ooted ""3 ma ,. h i;& y;;/:' in one,.to,1,.ioios. i . 3.g,sf).a<... 3 ,, y ~m,
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%.. p q$Li 91:gy .- a / ' > .O ... l Whrn Al'Al foundct llarm (ina h saw / ' . [i s hn first dct tric light at tha tin) old / p,w er piani ai onxten. ouipui w as . pl s l %a uY - y i lhe nunagement of Arkanus Power accountability program and a compre- other pnmlures as they deem rwcesury & IJght Company lus prepared and h hemive internal audit progrant to reach and exprew an opinion of the re pon ible for the firuncial statements lhe ikurd of Directors pur ucs its fairnew <4 the financial statements. and related financial infornution in- respon ibility for reported financial We heliew that these policies and (luded in thh anntul report lhe finan- infornution through its audit o>mmittee. procedures pr nide reawmable awurance cial statements are based on generally composed of outside directors. The t!ut our operations are carried out with accepted accounting principles. consiv atx!it committee meets perkw!ically a high standard of businew conduct tently applini liturwial infornution with nunagement, the intemal auditon included clwwhere in thh report k and the independent certified public comistent with the financial statements To nwet its re posibilitic with accountants to diwuw auditing ir.ternal control and firuncial reporting nutten 7 [ M/' rnpett to firuncial hifornutiott nuruge- and reports thereon to the ikurd of Jerry I. Maulden ment nuintaim and enforces a ytt m of Directors lhe independent certified President & Chief Executiw Otficer intenul a(o>unting controh which pro- public accountants have full and free sides reavinable awuran(c. on a cost accew to mcct with the audit commit-ct!ecthc tusis as to the integrity, ofice- tec at any time without memben of thity and reliability (4 the financial Company management being prnent. > roo>rth and as to the protection of awets lhe independent certified public A 1hh system in(hwie communication accountants pnnide an oficctiw awcw through written polkic and proce- ment of the degree to w hkh nusuge- Mictuel 11 liemis dures an organintional structure tlut ment meets its ressmsibihty for fairnew Exemtive Vice Pre ident, prinido for appropriate dnision of of financial reporting lhey regularly Operations & Secreury rop >nubihty, the wicction and training evaluate the Ptem of intenul aco)unt- (Chief Hnancial Officer of qtuhfied pervinnel, a perfornunce ing control and perform su(h te ts and to March I.1988) e( g::me p g ~y ny;~.. : 7 yyzy
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- ;e .. A< < i - . . u 11 . ' L': . 9 3 ,- - p. s.~' . . o *, The Arkanus Powcr & Iight ing. and finant ial controb are in esiv ent. to dixuw the resuhs of their cum-Comluny Audd Comnuttcc if the Ib urd tern e and are adcyturcly resiew ed by inations their esaluatium of the Com-of Dirn ton b osmpriwd of wsco pnigrams of internal and esternal ndits pany's intcmal controls and the m etall Dirnton who are not ottictn of the lhe Autht Committre diwuwod quahty of the ComlunyN financial Compam If alI If unter,Jr. ( luttnun, w uh the Company's intenul auditor and reporting the meetings alvi w cre de-rumm> lblinuit Dr Haymimd P Wilcr. the independent public a(countant signed to faahtate any prh ate commun-sr ; John J llake; Kancaster (fodges Jr., (Dcloine liaskin & sc lk) the mrrall ication uith the committre doired hs hxhon D Walker, and Wluct I: wope and spa tfic plans for their the internal auditor or mdepcodent Wdwin lhe onmmitt(c hck! four nwet- ropet the audits lhe aimmittee aho public accountant. ings donng 19H' diwuswd the Company % (onuihdated 1he Auths Comnuutc merwn th<- linantial ttatements and the adequan of /, Companyiluunual rt poriing pn w ns -e, . i,at- im rd m D _ nana the Company % interrut vintroh 1he e,mmmcc _ t w nh ,he romp-s [ j - proudo reasusuble aworaix e to the internal authtor and independent puhht Ital I llunf t r.Jr . Ikurd tlut suttkicn opt rating amiunt- atmuntant. wishout nunagement prev (luirnurt \udit Comnuttec i tn Financial Condition continue to be deferred In this amnec- ters" and "Commitments and Omtin-ti n, the Company has requested and gencies" respecthcly.) Net income in 1987 increawd obtained the appnnal of the f ederal 5163 million or 13.1 percent mer 1986 Liquidity and Capital Xesources and $31.1 million or 28 2 percent mer linergy Regulatory Commiwlon (FFRC) to o>ntinue deferrah of costs for pur- The O>mpany has adopted SF.e 1985. lhe Compan)'s fir:ancial impnn e, Iwnes of financial reporting to the IERC. Nn 95,"Statement of Cash Fkmw" and ment can be attributed prinunty to the In Febmary 1988, die Company filed accordingly ha presented Statements of reductkm in interest expense on king. with the Securities and Exchange Cadi ihms for the yean endu! Decem-term debt, w hich significantly cont rit> uted to incrra rd net income, and to Onntniwkm(SFC) an application for an twr 31,1987,1986 and 1985. (See Note order which wuuld permit the O)m- 12 to the Firuncial Statements "Cash redtwed opital requirements awociated with increawd current rectn cry of pany to omtinue dcferratus such onts and Cash 1:quivalents") in Anaxial statements filed wm the Net coh from operat;ng activitie Grand dulf 1 onts pursuant to the SFC l'nder the tramition pnnbionus in 1987 of 5230 8 million incres .cd Omtpan>'s settlemeta agreement l, SF,*.S Nn 92, application of that state- 572.1 million mer 1986 due pnnunty = (Arkanus $cttlement Agreement) with ment snay be dela)ed if the Onnpany to increased net income of $16.3 million the Arkartus Public Senice Conuniwlon ha filed or intends to file as soon as and reduced deferred purclused pmvr/ (AP5C) relating to Grand Gulf 1 (see practicable an app:lcation to amend its excen capadty of $ 45.7 milliott Mhile Nete 2 to the iinancial Statementw phaein plan and it h reasonably pos- 1987 deferred purchawd pmtr/excew "Ratr Statten") arid reduced o>mtruc-sible the regulator will amend the capacity decreased as oxnpared to 1986 tkin experxlitures phee in plan so that it will comply with primarily due to increned reoncry of 1he impanement in net inconw. the dtferral criteria of SFAS Nu 92. If Grand Gulf I ctwts under the Arkanus annhioed wkh the reduction in interest the Cornpany b ultinutely required to Settlement Agreement. sudi deferrah expeme, roultest in impnntments in comply with the pnnbiom of SF.b omtinued to dimini41 net cash from the Stostgage and Charter on trage Nn 92, it nuy seek, under temn of the operating acthities since actual collec- , raskvs Both cmerage ration are wet! Arkanus $cttlement Agreement, to tion of rnenun to reoner these cmts ahm e the minimum required for iwo-negotiate a mutually acceptable amend- v.ill not occur until the future Net ca41 ance of additlocul securities Without nxmt to modify the prmbkmud the from operating actnitin were 5126. 4 auewing long-term capital marketx in Arkanus Settlement Agreement so that milliott 5 600 0 million and 5321.9 1987 the Gimpany retired, four years Murah of costs wouhl comply with millum in 1987,1986 and 1985, respec-34>r to nuturity,580 millkm of 16% prmvions of St AS Nn 92. Iloworr. if thrly, prior to reductk>n for deferred percent Orst (nortgage limd* ( Bill) and ' the Company were to seek such modify- purclu ed pmtr ont/esccw capacity omtinued to fisunce deferrah under the ' ing ameiklment and not succeed in of 5195 6 million. 52 41.3 milhon and Arkamn Settlemott Agreement while obtaining a h mishncatium to it5 590 0 million for thme ropntive per-nuintainig significant leveh of temp >- phawin plan, the Arkansn Settienwnt kals hr a though deferral of Grand Gulf rary fmntments Statement ofIiruncial Accounting 4rcement wuuld tenninate, a writed I purttuwd pm er cosa and curw of prniously deferred cmn wuuld be capadty (Inth of winh are not wrrently 4 Standarth ($fAS) Nn 92,"Regulated required for financial reporting pur- reemered thn> ugh ratn) significantly i nicrprhew Accouming for Phac In pows furttwr dcferrals would not be increasn cash requirenxmis su(h defer-j Plam"(Si AS Nn 92) was luued by the permittrd, and the O>mpany's financial ral remenn the impxt fnw the ino>me i innandal Aouunting Standmh floard switien and rnults of operathms would Statement, cuhxhng the ponkm re- ! (FAS11)in Augu t 1987 and h effettive he nutniall) and athersely adectoilhe tained b) the Company ( Retained Sture) for ) cars twginning after December 15, Arianus $ctilement Agreement pnnides (See Notn I and 2 to the Iinandal 1987.1he Company's deferrah of cmt, that aH oats aWKiJttd w ith Grand Gulf Statement #Sumnury of significant under the Ark. anus $cttlenwn Agree, I whkh hne tren deferred by the Aco>unting IN>ticin" and Rate Wtten." nwnt do not nut t the tritena for O""P'"F Inior to any such termination respedhrly)
tkferral ntahlhhed by SI As Nu 92
' </the Arkan o kitlenwnt Agreement 1he O>mpany's imotmenn in con-Ihmnrr, the O nnpany belion slut wuuld be reo n cred in acturdan(c with strtn tion of utility plant /nudcar fud ! onts it tus Otinred in accordance with in penkkms lhe O>mpany b prewntly and other utthty propert) o(5139 3 l the Arkanus5ttilrment Agreement art unable to prednt the ultinute outcome milhon. 5109 6 nulik M1 and 516' O
protuble (4 fttture raust-ty and should of thew matten (See Notn 2 and 4 to nullion wcre 58 6 percent. 691 p;rtrnt thc lituncial StatementW Rate Wt-l
! !I I g , , - . 1 e t I t - and 72.0 percent of net cash available met 1986 and 51916 millkm mer 1985. 1987 was a decrease of $46.2 million as from operating acthities in 1987,1986 During 1987 and 1986 5225 millkm emnpared to ) car end 1986 as a result and 1985, respecthrly. Omstruction of I Mit, with interest rates ranging from of the net cash requirements dLeussed expenditures decreased 534.7 million 174 percent to 16% percent, wrre herein Shorsterm bornming authority during this three > car period retired at a owt of 5228 6 millkut in of up to 10 percent of capitallation has . 'the O)mpany is a party to two additkm, during the three >rar perk nl been authortied by the Sin subject to nuclear fuel leases which had pccmitted 19851987 the Company retired pursu- the anilability of credit rnources Such the Company to lease up to 5160 million ant to applicable sinking % C pnnisions simrt term bornming authority at 3rar in the aggregate. At December 31,1987, 520.5 millkm preferred uk including end 1987 was 523H.5 million At }rar , the unrecoscred ont tuses of both optional retirements of 54.5 million end 1987 and 1986, ropecthcly, the < leases aggregated 5143 6 million.1he 11rse retirernems w cre ofhet by the Onnpany lud available, but was not credit Poes supporting one of these twuance inJuly 1986 of 550 million, utiltiing $50.5 millkm and 561.6 inillion leaws luce terminuted Fuct presently 10% percent I Silk in Nmrmber 1986 of of Arkanus bank lines (See Note 7 to under this lease may continue to be 550 millkn H 52 percent preferred the Financial Statements"lino of leawd until September 1.1990, w hen samk and in December 1985 of 5120 Credit and Short Term ik>rrowingC the lease terminates, but two new fuct milli <xt installment purciuse contracts regarding lines of credit available to the nuy be leased under this arragement. for iI percent pollution control roe- Company.) 1hc secimd lease and supporting credit nue bonds (50 Notes 9 and 10 to Llw 1he Company has requested regut lines arc xheduled to tenninate Decem- l~inancial Statementw"Preferred and latory authorintion to sell up to 5270 ber 1,198H. To the extent slut the Ommwm Stak" and "Inng Term Dchi i million of l' Nill and $150 million of Company does twa lust supporting twuances and retirements of preferred preferred stock through February 1989. credit lino for both nuclear fuel leaws stock, Bln and installment purcluw SEC authorintion has twen dela>rd a(klitional cash requirements would contracts resulted in a net reducthm in tweause of the current Aliddle South result. (5cc Note i to the Iinancial cash of 556A million during the period $ptem pn>hlems awociated with Aliwis-StatementWCommitments and Om- 1985 1987 sippi Power and IJght OwnpanyN tinge:Rici) In 1987 the Osmpany met cash (SIP &L) reoncty of Grand Gulf 1 onts . Becauw of attu.d and potential requirernents relating to pa)1nent of 1*p m $1:C authorization, the proceeds atherv thuncial cimwquences related dhidends its omstruction program aad of any ules of securities during this time to the G:and Gulf Nuclear Sution (we rate pluse in pl. ins prinurity from ca41 peJml are expected to be applini to Note 4 :o the lin.mcial Statements- from operating acthities During the omstrtxtion expenditurn, firunce "Onumitments and Contingencie(), period 1988-1990 the Company expects Grand Gulf I purchawd power deferrals j the Company did not declare common subject to notingencio disctwwd in under the Arkanus %cttlement Agree- , stock dhidends twtwtrnJune 1985 and Note I to the l'inancial Statements nwnt, the pensible retirement of addi- 8 July IvH".1his interrupth m in pa) ment thoc ca41 requirements to be mct tkinal high ont dcht and other corpo- ; of ontmw m sta k disidends fasurably prinurily by cash from operating achi- rate purpnes affntal the unmpan>% liquidity pal- ties (sce Note 6 to the iinancial lhe Compan>% %Iortgage entrage tkwt Ontmmn sem k dhidends of 522 6 statementw"Gimmitments and Om- rath), whkh must be a minimum 4 2 0 e millho wcre declared in 1987, APal?s tingerwies") times the annual mortgage intere t preferred sim k dnidend requirements it is antkipated slut the Company requirements for the twuan(c of addi- , - during thh perim! wt re met with no nuy (home to refinance or retire, tiimal Dilk was 3 to at December 31, ; inwrruptiort Comnum and preferred ihniugh uw of internally or externally 1987, nimpared to 3 29 at ikctmber r stak dhidctwl pa)m(mts in 198?,19H6 generated funds high ont dcht and 31,19M6 and 2 H5 at December 31, 1 and 1985 annunted to 20 M percent, preferred stock in annunts that cannot 1985. while unfunded bondable prop-14 4 percent and 50 6 percent, respec- procntly be determined in addith m, the erty and retirements of profously twurd Ihcly, of nct cash anilable fnnn operat- Oimpany nuy enter into arrangenwnts Bill wcre anilable at Durmhcr 31, i ing a(thities As a reudt of not paying for the ule and leawtu(k of property in 19M", for twuance of up to 5615 millhm a mmum sta k dhidends for a parti < m w hk h the pn = ents from unh trarwac- additiorul I Nilk the 3 A0 ratio at Scar of 198* and all of 1986 and ofliw.rascJ ikins u>uld be uwd to retire debt at par. end 19M7 wuuld lure alkmed the not lawonw.19M7 ntained earnings of 1he Ownpan>% temporar) cash Outpany to sell onh an a(khthnul 5 4MI 52 6 i.O milhon Irwreawd 593 0 muhon imotments of 5 8
milhon at ) ear vnd milhon < 4 i \lli awuming an hitcrest rate 12
'g of 13 percent Operating tornues for 1987 Alaintenance expene in 1987 The Onnpany's Charter coverage increased mer 1986 and 1985,515.4 inacased 520.5 millkm ami 528.4 millke ratkA which must be a minimum of 1.5 million and 5-60.1 millkm, respecthrly. mrr 1986 and 1985, ropecthrly.1hese times the Company's annual interest Kull sales to retail customen, exclud- inacre were primarily due to increaso durges and preferred stock dnidend ing Rc)nolds Sletals O>mpany(Rc)* in nuclear maintenance of $18.5 million rtsluirements to allow the luuance of noldQ, increased 5.3 percent with and 525.6 milliort additional preferred stock, was 1.89 at awaciated tornues increasing 14 per. Redinrd purcluwd pmer deferrals December 31,1987,1.70 at December cent or 538 6 million mer 1986. Reve in 1987 were due to increawd current 31,1986, and 1.48 at December 31, nues from Reynolds in 1987 decreased collection of purclused power owt pur-1985.1hc l.89 ratio at )rar end 1987 520 8 million o>mpared to 1986 due to suant to the Arkansas Settler"ent Agree would lust alkswrd tlw Company to terminatkm of the demand durge pow- ment. As diwuwed in Note I tt, the issue an additkmal 5290 millkm of pre- er omtract with Re)nolds on December l'inancial Statenwntv- "Summary of Sig ferred stock anuming a diddend rate of 31,1986, Rnrnues from ules to the nificant Accounting Policies" deferring 13 perwnL Niiddle South pm er pool in 1987 in- purduwd pimer owts which are not 1he increases in the Q)mpan)'s creawd 532.0 million Sales to munici- currently recmcred through rates owerage ratios since December 31, palities and cooperathrs decreawd remenr> the impact of Graad Gulf i 1985, were due primanly to increawd 516.1 million and system sain to othen ctnts w hka are not being rectncred earnings and to decreased internt decreawd 512.5 million Rornues from mtrcntly on the income statement, requirements re uiting from the O)m- gn saln do reawd 51.3 million in 1987 escluding the ponion retained by the pan)'s early retirement of high etwa debt due to a mild winter and to the low of Company. as discuwed ahme, tornun from a large industrial ga 'M** mstomer. Mults of Operations Operation expene in 198? de- slajor facion in the Company's On October 22,1986, the Presi- creased $22.3 million as compared to mrrall fliundal imprintment during dent signed into law the Tas Reform Ao 1986 but increawd 5133.7 million as 1987 were omiinued redudkm of high of 1986 ( Act) The Act he not had a sig- o>mpanst to 19% in 198? as compared ont debt and an increase in the portion tificant effect on the O>mpany's results to 1986 there was a $23# mi!!i(m of Grand Gulf I expenses being rectn-of operattom or financ'al omdithm decreaw in charges to operating ex. ered currently, rattwr than being de-1 l since dunges under the Act luir twen penses due prinurity to 1986 pnnisiom ferred pursuant to the Arkamas Settle reflected in the Gimpan)'s rates with for e tinuted liabilities awociated with nwn: Agreenwnt.1hese reductknis in the AISCs appnwal. (#ce - Note 2 to the ceruin plannett future fowil generating internt espeme and cash requirements i j linandal Statements- "RJte statten") fadlities lloworr. this de(reaw wn can be exgwded to pnithrly a ntribute in Det ember 1987, the l'Asti re offset by an increase in mwicar resent to the O)mpany's firundal posithm in ' leased SIM Na <Xs, "Aco>unting for and deferrtti fuel onts of 5 ? 6 A mdliott the future. Ihm orr, the Company's l Income Tnn" SIM No 96 is not (%cc NtMe I to the Hnancial state future thundal onhthm muld be npected to lust a significant effect on mentdsumnurs of Sigmficant Ac- sigmficantly impaaed by the outcome the unnpan)'s rnults of operatk ms or munting Policw() Mhile the amount of the appeal pending twfe c the t *nited tirundal onlitkut (See Note 3 to the (K4 II) of pun tuwd pm er was approv Nate Supreme Oiurt regarding \tPalls litundas StatenwntWirwome TneC) imately the ume in 198? as in 1986, Grand Gulf I rate relief, t!w applicathm, lhe wrrent )eari net ino>me of punluwd pmer ont decreawd 522 8 if required, of St A. Nn 92, as wcll as 5141.2 millkm reprmnts an hwrease of nulik m primarily due to the uw of other mmmitnwet. and omtingendo appnnimately 516 3 millkm or 131 per- nu lear generating capadry pnnided by as dwuswd in Note 4 to tr.c Iinandal (ent mer 1986 ami an increaw of Grand Gulf 1, rather than the bu)mg of Statenwnt#Commitmmts and Om-apprtnimately 531.1 mdtka. at 2d 2 p mt r f rom outskle sounes, and lowtr iMgendo" pert ent onnpared to 1985 Detreae capadty ont related to Grand Gulf 1 in total:nternt tluryn in 198? as pmer. Increae in porthawd ruwrr of compared to 1986 and 1985 of 518.5 t136 ? milhon in 1986 ownpared to million and 513.1 mdlion, resgu th cly, 198% were due pnnur ty to Grand Gulf significantly omt nhuted to thew I bdlings not twginn:ng untilJuly 198% iixrea e inrwtino m w. w ben the unit was pired in mmnx t-cial olmration t4 \ l Arkansas 1%ver & Ught Company and Subsidiary, Decernber 31 1987 1986 (in thotacuuts) Amts Utility Plant (Nuc 4): . 1 lectric plant . _ _ . . _ _ _ . _ _ _ _ _ _ _ _ _ _ . _ _ _ _ . _ _ $3,663,417 $3,519.608 i l Property under capital leaws (Note 5) _ _ _ . . . _ . . . _ . _ . _ _ _ __._ _ ___ _ . 96,614 97.707 l Gas plant .._ _. _ . . _ _ __ . _ . _ _ . _ . _ _ _ . _ . _ _ _ _ _ _ _ _ . - _ _ _ 43,423 41,813 l Omstruction wurk in prtyrns _ . _ _ _ _ _ _ . _ _ - , . _ _ _ _ _ _ _ . _ _ _ _ _ _ . 103,416 127,337 i Nuclear fuel _ _ ___ _ _ _ _. . _ . _ _ . . _ _ _ . _ _ _ _ . . _ _ _ _ _ _ _ _ _ _ 26,380 15.127 Nudear fuel under capital leases (Notes 4 and 5) - _ _ .. _ -. . - _ _ - . . - _ 143,594 147.277 . l Tot al _. _ - _ _ _ __ . _ _ _ __ _ .. _ _ _ . .. _ . _ _ _ _ . . . . _ _ _ _ _ ._ 4,076,464 3,918.869 ; los--actumulated depredation and amortintion . _ _., . _ . _ _ . . . . _ _ 1,068,407 961.615 i l ~tihty plant-net . ._ . _ _ _ __ _ _ _- _ _._ ._. __ _ 3,003,437 2.987,254 ' Other Pnyerty and Investments: ; Imestments in awwiated companies, at equity (Ntetc 1) __ -. .__ ._. 38,&$2 38,846 l' Othct, at ont (lew acrumulated depreciation) _ .. _ . _ . _ . _ . _. - 176 181 Total - - _ _ _ _ _ 39,o d 39.027 Grrmt Aucts: ; Ceh and cch etiuh2fents (Note 12). ! Coh . _ 7,61 $ H,396 [ Temporary invntments, at cost w hit h appnninutes market (Note ') 78,735 121.90% l Tout 86,350 133,303 i Notn ret enable-nct 730 1,312 ! Accounts rrt en able: Aw w lated (ompanin 20,337 30M4 ( [ Customt r (lew alhm ance for doubtful a(counts -5 4.42 43NN) in 198* .id 1 i,32 6.tM N) in 1986) 63,346 &)9"O Other 2,427 2.999 5 lkferred fud ant (8,727) (3.759) I ud im entory, at as trage o nt 29,123 28,155 [ $laterials and supplus, at as trage o nt 46,982 40.024 f Prrpa)nx nts and other 15,1 N7 liN43 Total 25$,757 3I?908 i, l IkfermiIkbits: [ ikferred purtha cdi m(r onts (Notn 2 and I) 454,910 2H6.5 4 3 lhk rrod turw capas 6t) (Note 2) 72,002 ( 4 4 H29 1 t (Hho $9,129 62.132 : luul $ N6,241 393.504 f t voul s, w >,4s3 n 5 .rm i _ . . . . _ _ i r .%v %h'< fu i orovh< lits \liInarls talMalonails ( t f \s l f i 5 j y ,, Arkansas 1% er & Ught Company and Subsidiary, December 31 .1987 1986 i (in thmsavte%) Capitalization: . Comnym stock,5.01 par value in 1987 and $12.50 par vahr in 1986: l authorlied 325,000 000 durm imed ard outstanding, 5 4.9M0,196 shares in 19H7 and 1986 (Note 9) _ _ _ . _ _ _ . _ . . _ . . _ _ . _ _ . _ $ $$0 5 087,252 Paid in capital (Note 9) __-_... . _ _ _ __ _ . _ _ _ _ _ . _ _ _ _ 6')4,558 7,596 Retained earnings (Note H) _ . _ _ . . _ _ _ . . _ _ - . _ . . . - . , _ . _ _ . . _ . . . _ 244,025 151.f Wi.4 Tmal common diarchokler's equity _ _ _ . _ _ _ . _ _ . _ . _ . _ _ _ . _ . - . _ _ 939,133 844.911 Prr.fctred sitwk, net of premium and espenw. without sinking fund (Note 9) __ ._ 126,890 126.890 Preferred stock. net of premium and expenw. with sinking fund (Note 9) _ _ .._ . ._. l$1,255 165,009 tung ierm dcht ( Note 10 ) _ . _ . ._ _ - - ___.__. ., .. _ ___ . ___ - 1,236.223 1.313 604 Total.__--._...._____.___...._.~-. 2,453,501 2.451,414 Other Nonairrent Uabilities: Obligations under capital leecs (Note 5) __ _ _ . . . . . . . _ . _ _ 138,423 134,504 p Other (Note 1) _ _ . . . _ . . _ . _ _ _ _ . _ - _ _ ___ _ _ . _ _ _ _ 20,876 24.974 - Total ._a.___ _ _ . . . _ . , . . . _ _ 159,299 159,47H Ostront Uabilitics: Currently nuturing king term debt (Note 10) _ _ . . . _ . . _ . _ _ _ _ _ _. 3,223 2.955 Notes p.n able _. 667 - l _ _ Accounts payabic. Amelated o>mpanics _ . . - 33,342 29.115 l _ _ __. . . _ _ _ .. other _._ _ _ - 97,f31 95,796 Customer deposits . _ . _ _- 7,667 7.65N Tases ao nsed _ _ 66,$32 20,913 Anut'tutated dcfctred income W.cs (Note 3) _. (3,498) ( 1,?! l ) intercat wcrued 47,555 50.10s Dnidcod4 det tated (Note M) .- 6,261 6.02? $ Nuclear reftxting rewnr 16,432 2,52? (nownct aih arm i, Note 1) 26,306 2*,96H Obitgathins urxict capit.J leaws (Note 5) 101,785 110.950 Other 15,687 21.62? Telal _ 421,590 3?3.45? Deferred Credits and Other uabilitles: Accumulated dcfttred hicome tasc% Note 9) - 535,072 4*/4.395 Auumulated dcferred imtstment tas crnlite (Note 3) 186,699 182.509 itin 133,292 _,,'Xi.440 5 Total R55,063 753,316 Commitment and Continge-ocles (Notr$ 14 and 5) ligal $ 3,889,453 5 3.* 3 ~.69 3 \ec,%tes to (' n o,seMttuviIuwsd4 \t nemosets l l9 OONSOllDATED STATEM1NTS OF INCOME AND * . < RETAINED EARNINGS Arkarnas Power & Ught Company and Subsidiary, W ar s Ended D ternber 31 1987 1986 1985 (in tiumsamts) Staternents of Incor.e to Operating Revenues (Nr,tn 1,2 and 11): 1:lectric _ _ _ , . _ . . _ . . . . _ _ _ _ _ _ _ . _ _ _ - - . . . $1,365,080 $1,3 45,415 $1,316,797 Natural gas ..__, _ . _ _ _ . _ ~ _ _ _ . _ _ _ . . _ _ _ - . _ . _ . , 39,776 46.079 47,989 Total _. _ - _ _. _ ~ _ _ _ _ _ _ . . _ _ _ _ 1,4GL,856 1,389,494 1,364,786 Operating Expen+cs operation (Nr 11p. l'uct -. _. ._ _._ _ 332,687 331,993 328.088 l'urthawd pow r . _ _ __. a31,716 454,55M 317,821 Gas purchawd for rtvle __ . _ . . _ _ 26,000 31,592 35.816 Dcferred fuct and other . _ ._ _ 260,420 25i,970 235,358 Mainterunce _ _ _ _ _ _ .._ _ _ _ ._. 92,M8 71,509 6 M i86 1,cpreciation __ _ _ . _ _ ___ _ . . _ _ 119,1M i14,762 1UMiH6 lases other thrt mcome An .- _ _ _ _ . _ 39,466 39.080 37/03 (20,021) 58,540 Income tasn(Notc 3) _ _. _ . _ _ ___ .- . _ _ _ (10,684) Inte Dcferral Ikierred punhamt power (Notn 2 and 4) (167,956) (210.334) (76.016) Inmme tasn (Note 3) . ___ _ _ _ _ 73,170 103.527 37.4 li Total operating r? icnws 1,195,971 1,171.616 1,147,997 Operating Income __ _ _ _ _ 20R,885 217.M78 216,789 Othe-Incorne and Deductions Allowance for equity funth uwd during ctuwituction 5/45 5,735 5,998 Miwetlaneouwnot (Note 2) _ _ 69,264 63,059 40,330 r income tasn (Note 3 ; _ ._. _ _ _ _ (14,062) ( l 4.H 4 4) (l1,459) Total (4,907 53.999 36.869 t Interest Gargen: Internt on long tcrm debt 119,287 140. h 13M,752 Other internt-nct of dcht premium 1),410 10,853 7,310 Allim anse for horrim ed fute uwd du-ing comtructain _ (4,165) (4.363) (4.4?2) Total 1:8,532 1 *.0Vy 141,590 Net Inanme (Note 13) $ 141,160 5 I 2 4.H21, 5 110 06H Statements of Reta.ned ving Retained Earnings-Jan i $ 151,063 5 49zil? - 26,101 Add-Nr* income (Nc a, 141,160 12 4.M21 110.068 total 292,223 1*4.248 1 % 169 lblud-Cmh di Jerr. P tferred stak 24.554 23,i"5 22.920 Comnwin sim L 1Not , aa,o44 - 63.832 Total _ 48,198 2 ;.1
5 86*i2 Retained Eaminn-lbxn. < .1 i .
$ 244,025 5 i%I.twi3 > 49. 4 t ? W holes c .ast Iokuts kd %!cmsnit 16 I l d Arkansas Ibwer & Light Company and Subsidiary, ! , . Years Ended December 31 1987 1986 1985 ! I fin t&msands) > Statements of Cash flows l ! Operating Adh-ities: ' Net inounc _ $141,160 512 4,M21 5110.068 l Noncash items in(luded in net inoime: ! Deprniation ._ _. I 19,1(M 'II 4 '42 109.686 j Ocferred tan & imrstment tu crnlits - . ._ 63,050 lHOM 6 61,' O l Alk m ance for funds used during onmtruction (9,770) ( 10,14 H) ( lG,470) l prm hiom for ntimated lose (Note 13) (4,551) 13,978 5 2.'0' ! l>cferred purduwd pim er ont /cwcw capacity . . _ (195,612) (241,306) (N9.993 ) , Changes in working capital. ! l Recen ablo . - 14,921 21.015 (36 H51) ! Atwunts payable - -_ 8,0(A (l.079) 32dII {' l'uct im entory (970) 251 ' 8 8 26.055 ikferrni fuel ants 4,968 (292) (10,128) l Other working capital accounts 44 (12.212) (22,5H2) l ' Inn ant ord . - 45,618 (58.1il) 23.863 Other operatmg acthitin 44,776 ( 4.05*) f I 4.592 ) Net cah-operatin,1 a(thitin 230,802 148.'o4 231,922 investlng Adivities: Comtruc ion expend. turn (1}7,277) (l44 602) (172.013) ; 5 Nudcar furt espenditurn-nct . . _ (11,253) 20,M 6 (M,362) l Alhm ance for funds uwd during constnn tion (Note 1 ) 9,770 10.148 10,i'O Other pn>perty-nct 3,468 33 r> 2.M'O Net ceh-im nting adhuin (135,292) (109,W)) (16".035) [ ll T ! Financing Activities: E l lhmh fnwn ute of [ j l'rrferred sim L _ - 4 M,9 43 -
I irst nw>rtgage hinwh - 4K 43* -
[ l Instatlment ptmluse nintratts - 1.904 118.161 j j ftspa)nnmt of inst.s!!nx nt port h.N ointra( ts (837) (608) (1,153) ; ! long tr m ohhgatic ww-IK)l. _ 4,377 am' 4"3 l I Rettrement of firw nwirtgage bomb (84,959) (l46 066) (19,365) r ! lakierth pdd [ ! Comnwin stm L (22, 4 4) - (93.HI3) (25,321) l l'referrni stock (2;.2 0 (23.013)
Kniemptkwnd prcktenl *tm k (13,459) (6.152) (2.851)

l Oungo in 4wist term horrowing 667 f doner thunung at thWs-(285) (MOH) (325) [
, Nct ceh-fm.anung a thitn (142,461) (' t .sh') (l'.5H6) l j ( l Net increaw (dareue; in cuh and ceh equivalents $ (4951) 4 22.453) 5 4'.301 i f Ceh and cash equh alents at beginning of year _133,301 1 M's i I(M453 I Cch and cch equivalents at end of year ( Notn
and 12) 8 86,350 5144301 51 %.'s a l
I I W Nro to Outu u,latalliruno,d Statements i r e .-,v,-..,___.-- . .mm__ . . . , , _ _ _m, _ _ __ _ _ _ . _ ____ . u i R nuintenante and refuchng the asene F, luttetirement Benefits ~ - p . .: bears intcrest and is used to reduce fuct espcnse for furt adrustment purpim lhe O>mpany has postr tirement SUnBI'ARYOP f ' 24 dunng the shutdim n periisi plans on enng sutwtand.Uv aH of itum-pbnecs Uw pohn of the Company is to SIGNIFICANT .j s I '""d I *""" '""' '" '"urdsee w it h 1 pgg ? . ACCOUNTING . , N ' D. Utility Plant ar.d Depreciation o>ntnhution guidelines estabbshed b> the Tmplo)ce Retirenwnt income $ccurity Act l l 1he cost of addnions to unhty phnt c " 6 and to fund other entrctirement ) int ludt, uintramd w ork. direct labor and pian , tats as incurtni A. Prindples of Onnelidation ans e for the uimp nite ont of funds used dunng ovnsinatu m lhe unts of umts of G. Income Taxes .lhe a tumpanung u rwolub.cd fiiun-property retired are remined from unht) ( f at uatcms nts int hkic d.ic t.t oonts W plant and uth ants plus reminal ontt lhc Company joins its parent in filing trkanus l'im a r A i sp.o Company and in - km wh agc arc (turged to accumulatnl a o nsolatated i ntaal income in return w holh a m nnt sulnidun. Awit uted deprniation \lamtec.ance atxl repair of hwome ines are allocated to .hc Ccmpany Natural ( as Compam progwn) and rcplncment of ucnw deter. m proportion to its cocinhution to (onwl-murd to t- Irw than units of propet y are idated enable inomw Ocferred inasme thugni pnmanly Io operating cspenxs iau, are pnn ided for dttferenus tx tu ten IL Sptem of Anuunts Depru ution n armputed on the imk and taable mcome to the estent lhe auounts of the rompam are stra@t ne sn .a ratts hnt on tlw panuned bs the rm ton twh lor rate numt.unt d in auurdant c w nh the uniform ""'""'**'I"" *""*"#'*' " "N P"'I"' Inustnwnt in unins etcm of auounts past ntw d in the lot of Form n W mon w age ,Hota to We mpany arc Marn) and (rali ncrp Rcgidaton CommnEon prn c prolwns m a amonuni out the autage uwful hfe of amounted to approsmutch .4 4 penont the retatal ,,n trrty. twgmning with the c.n h ) car su twtantulty all the rompan)N ) car allow ct' in t he t onmlafated tn return utihty plant n suh t ett to the heu of its first C Rnenun and I.uct (. ants nwirigage tw nd indemurc the t ompa.n rnords rnenuts as ' ""#*
I"' I""d' Ud bdk d to as tuunnwrs on a ty Ic tuumg U"'i"E O '" '"" i""
F. Jointly-(h nul Generating Stations tum Rot nur is not Ju rord for..t nt rp 1o llw mnt dm We Mpany is not ik In t a d tot not lulled ' t Ihe t nd of ab . p ,; g The ( r.npam pomi1: ow ns tw o t oal- [wrmatn. by > > regulaton tu sin, to rco n-whstantulk an of .hc rate s hatuk, tu n! genmuy Manons ca w uh two a m turrent ratts dw caning unt d hums of the t ompam inthak adsntment tlauxs """' ""I#" " " # # "I '"' ' " *II""" " U"" N*I"*P"")C#Pb under w ha h ttu i s osts atu ne or txlow the n W n c c
ow nas an opnMes dw str m as an ap* vptbte uN of u0%
Ini k allow ni m the sanotn ratc w bcduk, Dons h Nu omxuta cPue plant an aHow sa e for funds uxM danng arc [vnnuted to tw bdini or reqtured to tw '""'"'"""**~ ""'*"I" "'"' "*'I""'"'" "I"O O ' " ' "I of us own up out nNs m dw Annadng and tuunted as pnnidnt in the regulaton t tubint ti t usta nors lhc t 'ompam h.n adopts d a ik f t rral mcd> id of au ounnog """ "" """ 9 """ " "u ou nk nda dusuub Dn en (cnupan s us u un Fame, omstnnuon uod m for do nc fut i u nts a ont r.ihte unik r fut t adjunnaut tlauws i nsk r dm nu thosi pt n un ow nt a Hw ncnt v pn ynw on dw Moce sht et h t tuW spu uu ni du sc staa nw nc We M and dw mt ome natunnu n (nMa n] for un h o nts arc (k it rn d to (bc month m n i It unc Mauon- approsun ur u>m;wnac micrcst ont of wtus h the rt latnt rot nucs are hdini t he tus I ahninx nt tas tor sontams an o and in& pen &ns c wam horrow nl runds and for a reasonaW nwn anwiunt for a not ic.tr rt w nc estmutt d to I u tm Don- 1 6 on dw ujud) k Ms uxV for omtnntton s p% n n n nut n to rcum in un o n t t ttw o nt of n pLa cnx ni t ncrgs u hen dw nu onw Matt nu nt dw t Mn t of the tug the omicar plant n dow n for w hutoted of hnant mg the ( onuna tion pnyram and 1m o .i rnuits in treating the Al DC charges h the ihm rttalacd 15 the O>mpany (Retainnt same manner as ontstrucikm latur and Share). Only those onts permanently re-nuterial onts As twmcash items thne tained and not reontred thniugh rato or credits to the (nomw Statement have no thniugh uln to third partin rnuit in a eff :t on cash ihnn frorn operating acthi- reductkm of rvt incume. Ikcauw the anual tits After the property is placed in senite tullectkm of rttenues to reonrr the de-the A11Xhha.;;cd to omstructhm onts is ferred annunts will not occur until the rennerable from tustomers through depre- future, the Gm1pany incurs cash rnlutre-clatolm prsniums induded in rain (harged mc uts in the annunt of thne deferrah and for utility wnire.1he eth cthr omtp nite at the same time reoirds a deferred awet AllX; rate for the Omipany w as 9.2 per- reprnenting the amount of the deferral. 4;cnt,9 0 percent and 9 0 pcrt ent for IWl?, lhe carrying durges awociated wi.h the 19% and 19M, ropecthrly, financing of the deferrah are reonrrni narrent'y from notomers See Note 4 to the l'inancial 5talcmentWCommit ments L Other Nonaarrent llabilities and Omtingendo" regarding the twuance of Statement ofItrundal Aconinting Nan-it h the p>lig of the Company to darth Na 92 w hich addrtw accounting pnn kle prostQms for uninsurni property for pluse in plans and criteria for deferring rids trrtain emplo>re lwncfits and daims onts irnurral under such plans for injurin and danuges through (turgo to operating expense on an accrual haA Act ruah for ihne pnnimns lust been alkm ni for ratenuking purpe J. Redaulficatiotis Certain rislawificatkms of promusty rep >rted amounts lust been nude to om-form with turrent dawificath m lhew retlaetficatkww tud no oficct on not ino mic. K. Rate Defeitals b6r the terms of the Arkanus $cttle-ment Agrrement,(we %te 2 to the iman. dal Jtatements-
Rate \ltiters") the Com-p.utv w ill varioudy rrtair( ddct and rtunrr difkTing porthms of the purduwd pmer onts amviated with its % per ent aihe catnl dure of the capadr3 and enctp trum Grarwl Gull l 11) dsferring Grand Gulf I puntuws! pm tr unts which are rut tur-temly rcuntred through rates the im{uct of Grand Gulf I onts whk h are not twing
- nunvnM surtrntly tus twen ron(nnt from the enumw statement, esduding the par-19 Grand Gulf Nudear Station at the time of ute. ctoromers of the Com- wtil be oser a to >rar period twginriing pany or thnsogh ulcs to the Compan>% July 1.1988 'lhe ( ompany b a parn to t orta n rt tail customers priced at the Compan>% lhe Arkanus %-ttlement Agreement ; agn enwnts and pn s ordmgs conu nung amided energ3 cint a portion of the Arkan- pnnidt, that should any other %ptem spirm I nt rp Resourtes Inc (si R1 L and us Cant ranging from 4 32 penent in irar ojwrating company enter into a settlement the bond bulf Nuticar %tation (tirand one to 92 penent in 3rar mne and all agrrement appnntd by the appropriate GulO of w ha h 90 pertent n owned b) surt reding 3 rars ( Retained sture) retail regulatort authority whith pn nides s1 Rf a see Note e to tlw I nuntia! statr- s 2 il tiranc eptember 9.19H%, and that any wwh mmpany would afworb a prt> nn nts-Tomnutmnits .ux! ( outingem ui termmating on A"gust 31.199%. the Cnny portionatcl) greater dure of the costs w nh tryu t to thcsc nutters ) pany d(fers a ponnm of the Arkansas Cost awwtated with Grand Gulf I than that ranging fnim 14 88 pcrtrot in ) car one to pnnidcd by the Arkanus %cttlement Agree-e 08 pcrt ont in 3rar ten lhe ano (k ferred nwnt. the share of Grand Gulf I unts to tv ; Arkansn-1981 Rate use (1m entorT%harr) w di not twgin to be absorbed by the Company w ill be were-rro nen d f rom the Company % Arkans.n spondingly increawd I)ormg 19x5 t ertain iwucs n laicd to retail (ustonu rs until septemix r 1.1995, lhe Arkans.b ktticment Agrcement a 19N1 \rkanus rate case wtre resobed. cu t pt under ucnain condioons lhe pnn kics the Company the right to attempt n sultmg m the ( ompany n t ordmg
4 2 ('ompany w dl bc [x mutted to reuner on a to renegotiate the agreement, if necesury. ;
nulhon m rornue and s1* milhon m current bans (1) the int trnwnral ont of to addrew an ads crse t hange in accounting interrst m lux % tinant ing the deferral and ( 2 ) the .nuided standards (Nrc Note 4 to the Iinancial o nt of energs from uk > from the Imen- St atements-"Comnutments and Contin-mt) share lieginning Neptember I,1995. gencies") Arkanm-Retail Settlement Agreement the ( ompam w di amortiec un h deferred in %ptember 1986. the Company unts on a k it I basn aixl tru n er them implcmented the first 3rarly rnision to the t >n % ntmtwr 9.19M L the (.umpan) through its rrtad rain oser the rentoning brand Gutt nder. int reasing the Company % hird an apphunon w nh the Arkanus deprrttable hte of Grand Gulf I or unh rornue requiremeat by Oi% mdhott Pubhc x n x e ( ummnw in ( UN J n qut^t- shonrr period of t me .n the AINC mas appbcable to the penod vptember I.1986, ing an annual ox rease in \rkanus rt tail subwquently dott nmne to be appropnate to August 31.198* 1hc setund annual ratn onludmg n untr) of uat aw s uitd 3 ) (in % pteralwr 9.1985. the Com- rnwion to the Grarxl Gulf nder, impic-w uh brand bull 1 t in %cptrmher 9.19NS. pam began nunen of a jwinion of the mented in the Company in %cptemtwr the AINC aa a ptul and adopte d a propmal %rkanus ( 'ost the portion on whk h 1983 increawd the ( ompany% rntnue ; by thc ( ompan), the \lN. statt. Ihr trkan- n un t r, began (( urrent Rronen- %harc) requirrments an additiotul M*
milhon us Attorno bentral other intentnors and rango f rom 16 Mn pcrt ont dunng > var one for the following twthe months Honokh \letah( ompam. mtrnded to to 2M 08 gwn ont m 3rar clorn aixt all lhe 8dNC onlet appnnmg tLe Arkanr rnohr all of the thsputtd nsuw Nus un u nhng 3 rats \\ ithm the Curtrnt us M trirmcnt Agirement is being cost
% t tlrment Agrrt ment i Rtuntn sharr, a poroon of numated first- total by plcadings fl.nl in separate dot krts 11w I ompami ohhganon for the non 3rv una a dtit trai t % pcnent m yte w uh tlw AINC in Nncmtwr 198% lhe ha i ponion of paunt nts to si RI lor Grand one. Ao prru nt m year two and 2%I wru nt Company and the AINC statt hast ansurrrd bum l n latul a harges n approxinuit h s2% in irar threrI and reuncrd in Scars sis and mint 1 to dnmiw thne complamts nuthon [x r nuntit I nsk r the it run of the through ten the rom,vm nuners on a lhese mattt rs are nendmg \f kJous % Idr10t m \grt t nwnl the ( ont t urrrnt b.nn the uRrtmental U WI oi lin.mc-pam uill s arwnh ret.an orft r .uid reuntT ing sut h ddrnnt aminma ahttrnng portoins of the a osts aw s utrd in aikhnon, the \rkanus N tdemt ni Arkanso-Rate Rilers v uh th W grrtrnt allis att d sture ut the \grt enwnt demni the ( ompam a turtrnt t apaut) and am rp trom Graad (iult I rrturn on 900 megawatb of generatmg i ricctnc n % prem!wr 1986 the Alv ( srkansn t iat1. as tia m s g }wru ntago up.a in t an ru ru (apat as adantnw nt) appn n t d a ( ompam proposn! tas adju+ show n are t i ert wt d as 2 lwrrrotage of but allow rd the ( ompam to urn a tuli nx nt ndt r ( Ridt r \148) Rak r \148. as si Kl
90 pc t a m slurr of Ur.uwl butt t ' ds k ned n turn on the imntment m un h nuhtent is domned to rtdose Arkanus 1 ? I(Sin r N ma mix r i 19% the up d4 At I b t mber 41.198 s'2 o rct.nl ratn bs appmsunatch 84 milbon to
( o%v% icrahr ; k nonits och through nulhon had bct n tk terral and as dat uwod rrtint the n dat hon m the corporate in-pi + A.* skw t , liu .I partin w ho are not. m Arkano-Ratt Rakrs h b t m. reu n tn oime tax rrr mihAled in the Tas Rt form N Act of 1986 ( ACT) and included a corre. include, among others (I) the justnew and speriding refund mrr a three >rar period of reawnublenew of the Compan)'s retum on appnnimately 575 millkm in reflect rtsluc- cyutty and ( 2) whether the Gimpany's tkms in certain acasmutated &ferred formula rates are reawmahle without an income tax aco>unts. npity reapener clauw which wuuld allow An disuwn!in Arkanuv-Retail Settle- an annual roiew of the Compan)'s retum ment Apment ahmr. the APSC lus on niuity. On Nmrmber 10.19H' the apprmrd the deferral and rectnery it s Company filed with the iI RC ft.r author- ; return tm imrstment ir alleged excess liathm to implement new formula rates capacity. Rkler hl39 was doigned to rtrins reproenting an annualincreaw in the er such defcernt amounts mrt a 10 >rar Q>mpany's wholeule ratn of 59.* raillka penm! trgint %ig July 1,19H7, later roiel, lhe ul>>lnale customers affected by the with the omse it of the umipany, to hegin u>mpan)'s rupt hase filed motkms to July 1.19HM. intentne with the ii RC. The Gwnpany has OnJuly 27. IvM, the Al'NC iwurd an rea(fxd an agreement in principle with all on!ct appnning an agreement between the parties which wuuld if filed and appnnut Ownpany, the APSC Staff. and the Arkansas wille all iwues in tuith procenlings lhew Attomey General whereby the Gimpany's matters are pending rates would be rnluced by approxinutely 526 nulbtn $22 H million tiwhk h retktted a reductkm in the Gimpan)'s retum on Missouri-1985 Rate Request ' equity froin 14.9 persrnt to 13 percent. On Starth 9.1988, tbe APNC appriant On Jtme 7.1985. the Gimpany filnl an a Gnnpany propined rniskm to the applicatkm with the Public Senice Own-esisttng Nuclear Dnwr.mtwioning Qwt miwson of Sliwoun { IM'Al) for an annual Rider %126 and a new Depsocuthm Rate increase in Sliwourt retail ratn of approsi-Reductiim Rk!ct 51it. The Riders are nurety 15 0 million and an aalithmal rate siwdulol for simultaneous implementa- rider to pnnide apprusinutely 512 2 'nillkn Ekm prior to AptfI 1,1988, and will rnluce for tints awictated with Grand Gulf I the Gimpan/s ratcs by appnntnutely S t." (Nihumrt Ont). On Apnl 24,1986, the mith<m annually, compiwed of a 57 6 PSCAl entered an order alkming the Gmv rmllm increase in dectmuniwinning ont pa ty to recmtr the Altwmti Owt if 59 0 and a 59 3 million derreaw in deprecialkm millkm, ofhet b) a rnluCIkm in nim-Grand ont.1hh order aho appnnrd the fundmg Gulf 1 relatniorts of 53 0 milliin for a of deownmluk ming nwts with estermi net annual increaw of apprtniinately 56 0 innts due to in incenthn pnni& d b) the milliott phawd in mer the 3rars On July in Reform Act of 1984. (See Note 4 to the 21.19C. after appeal by the Gunpany, the Ihunctal St atementv- *'uwnmitmems and \liwwrt Oxtrt ti Appeah twurd an opinkm Gmtingencits") whkh remantled the caw to the IN31 with directkms to hear nid.nce im nim-Grand Gulf I related hsues whkh lud been Arkansa.-Wholesale Settlement eschxled and then to twue a not order. Agreement On % larch II.198H. the IM31 iwued an order Apprming Stipulatkm arxl Agree-On June 26,19H' the ledet al I nergy ment and Tanff Sheets which rew>hnt all kegulatory Omumukm (II RC) iwurd an iwucs in this anxl a case relatal to the A(.T order whkh vt tot heanng the juvnew rnulting in runhange to the Ownpany. atxt reawwublenew of the Ownpany's unrrent rate lori escept the impicmenta fonnula rates with (vrtain (4 its whoinale tion d the turrent ) car phawits, nwit nen The suun to ir roiewn! 21 I, s e ,t: 1N ] , . . , . . . R Irxuwe tu expense (credit) comhts of the folkming M97 19H6 1985 (in Ihrnmmds) Current. , F dctal __ -. _ _ . _ . _ _ . - _ . . $13,331 $(75.022) 5 38,921 l l State . _ _ _ _ .. 167 (7.241) 6.744 Total ._ _ _ _ . _ . . _ _ _ . _ _ _ . - . . . _ _ _ _ ___ 13,498 (H2.2y) 49.665 Ik-ferred- rwt I lineraisied depreciation _ _ __ __ . _ . 28,419 39 07 22.012 Alfcrnathe minimum tu _ (19,7M) - - Amr rtintion of exctm deferred tn -. . - - _ ._ (16,008) (3,956) - Nudcar rc fucling espenws _ _ _ _ . _ _ _ - (10,813) 2,1
H ( 3,N'9)
Ik ferred rewnue and related intercst _ _ (8,810) 12,*44 - Nud ar resent and related interest .. _ (5,980) 1,'29 6.429 Pnnhion for cstinuted kne _ _ _ _ 3,017
422
, (25.943) Ikft rred purttuwd p m er cost - 78,659 102.093 36.835 t hferred escrss capacity omt ._ _ ll,M2 19,185 6.8'9 Other . _ (1,762) (6.2 4H) 6.818 Toul - _ $3,8(d) 1 0.546 49,1%1 Imtstment en urdit adsotments-nct 4,190 10.058 12.598 Returded income tn esgwn.: _ $76,548 $ 98.351 510*,414 t'harged to operations $62,486 5 H 4,W $ 95.955 Ourged (credited) to other inomr 14,062 14 H4i 11.449 Recorded 1.wone in eqwnw ._ 76,548 98.3'il 16',414 Irwome Inc. appheil against the det t compia ent of AllX: IR2 1.36' l.6 M hgal income tncs $76,730 $ o9 #)H S liN.0'M ?! 9 e Y Total income taxes dder from the amounts computed by applying the surutory federal income tn rate to income before taxer. 1he reasom for the differences are as folkms 1987 1986 1985 % of % of % of Artmunt Pre Tax Amount Pre Tax Arnount Pre Tax < (000) Income (000) Income (000) Income Computed at statutury rate $87,083 40,0 $102.659 46 0 $100.041 46.0 Increases (reductkim) in tax roulting from j Anurtlutkm of execss deferred tax __- _ (16,008) (7.4) (3,954) (1.7) - - $ tate inamic taxes net of federal income tax effect ___ _ __ 8,294 3.8 6,273 28 6,H99 32 l Pemnon expeme ._ . , _ _ _ 1,279 .6 (2.085) (10) 6,137 2M Other-net ._ . . _ _ _ (4,100) (1.8) (4.542) (2 01 (SNi3) , (2 6) Renerded inconw ta expense _ ______ 76,548 35.2 98,351 44.1 107,414 49.4 l Income taxes applied agaimt delx ctetptment of A11X' 182 - 1.347 06 1.664 0.4 l l Totalincome tan _ . _ _ _ . , _ $76,730 35.2 5 99.698 4 4.? $ 109.0?8 49 8 t'nused imrstment tax t redits at rany to continue prtniding deferred tan Nu 96 "Accounting for income Tnn" December 31,19H7, arnounted to $2M 4 on decimmiwkming onts of the nuclear (%FAs Nn 96), which h effecthe for >rars millkm after the 35% rductkm required try plant and pnnkks for continunt normal- tyginning after Decemtvr 15,19M8. SFAS the Tn Reform Act of 986. These creitts trathm of timing dt!ferenen whkh are Nn % retaim the requin ment to reord nuy be applint agaimt federal income in required by the Intenul Rornue Canic or deferred inconw taes fut temporary ditTer-ItaNiities in future 3 rats if not uwst they Sutr Law. In addithm, the APSC appnnrd ences that are reportrd in me }rar for wi 1 espire in 1992 thmugh 2002. 8 nomuliiatkm for deferrn' punhawd finandal reporting purpwca and a different The altertuthr minimum in ( AMT) pmer ont per the Ar'ansas Settlenwnt Scar for ta purpro l'nder the liability (Tnht at ikccmtwr 31,19M7 h $2.3 Agreenwnt. method a.lopted by SFAS Nn % dderrni rnillion This A%IT credit can be carried Cumulathe inamw in tuning dest- income t.it lutanen will roult from all hitward inkfinitely and umt against regular enco for whkh deferred inomw tax ntnts reficcted in ihe financialituenwnts income ta espense has not been pnnided are 5251.9 tused on enxted tax laws at tn t stn that Purwunt to an order ti the Arkamas millkm, $261.6 nullkm and 5233 5 nullion are espected to be in efftTt when the ton Public Senice Cor'minhm ( APSC) dated at Iktember 31,19M',1986 and l')M9, p>rary differences torry. The Congony March 1,19M2, the Company ceawd pn> respectnely. does not espnt implemenuthm titt,b skhng skferrnt tan on tertain timing in IXtember 198?. the iirunoal pontw n of sFA% Na 96 to hasr a nutsv.at ddlererwrs whkh wen pn%:udy nornul- Acuenting Standenh Ikurd iwurd State- effect on the Company's firuncial state irni llowner, the ' r requirn the Cun- ment of Ikuncial Acomoting Star.dards n wnts 23 l l -__ - _ _ _ _ _ _ - _ _ - _ _ _ _a ee 301 0 olu , )6 t's ' I H eil N ^ R Ginstruction a scrin of decisions the ll:RC denied all MP&l. and NOp51 1hne companin thus he Compani. wnstruction pn gram requots for rc hearing and took the posi- agreed to se vrally awume slurn of 100 3 o,ntemplatn o mstruction espenditurn ikin it don not ha e authonty to require a percent of the toponsihihties and obliga. (euluding AIDC and nudcar furt) of refund if the June 13 Decision tuntr- tkins of the Company with ropect to apprminutrl) 5135 million in 1988.514I tumed by the o>urts on appeal, unlew the Grand Gulf under the Anilability Agree-milluin in 1989 and 5143 millam in 1990 o>urt orders a refund Wrious parties me nt, w ith the Company reling:1 hing its " '"N # *I#"I #" 'II# '" "I' **'#"# '* Unit Ibwer Sales Agreement thne orden and w une partin filed momms Grand Gulf Ilowc tr, theJune 13 Deskm and New S) stem Agreement for a stay of these orden with the l'nited offeelistly superseded the Realkication On June I N.19M2, System I nergv Rcw surcn. Inc. (si RI) tendcred for rihng 'U*"' II" I"' # '""" ^N"* *#"' ## '#"'" w uh the i edcral I nergs Regulator) Com- "" '"" *"U #""' miwkm (11 RC). n an Mitial rate w hrdule, ary 6.198', a thrrtiudge pand of the D C Grand Gulf 2 nuit af rmed the dechion of the ii RC. perwhng a final re icw of the ont the l' nit pow or Salo Agreement under whith $1 RI would wil fnnu its 90 gwrton: #"*'I'"'" "I "N"C'" I"' #U"N allocation between Grand Gulf I and with the D C Ort uit and petitions for Grand Gulf 2. as of December 31,19H', wure of the Grand Gulf Nuticar Statkut
#* ' P*
(Graix!(Lulft l' nit I (Grand Gulf 1) and Si R1 otinuto 5N90 milhon w as im nted in I nit 2 (Grand Gulf 2 L t erta.n pen entaget m e n n!Mato upnTue s Coun Grand Gulf 2 (including approsinutely us uni the pcMons for t rniond albutie of capioty and energy to louist, $392 mdlion i4 AfDC). which w as approv er subsctguendy gundng rehening ana INmcr & Iight tumpam (11%11 inutely 34 pcrcent complete hoed im the on two twues nisal m theJanua@,19H' otinuted nun-houn needed to complete Miwiwippi power & Iight Compam ( %11%I ) and Ntw Orleans puhhc Nons e "" #" "i "" I""# 2 i' I 98 the unit. I rom late 19'9 until Sep.cmher n w nlan renun in put, tMune 19M%. only a limited amount of constnic-Inc. (Nol5h 1hc l'mt 15m er Salo Agree-De in nTons n uon o the mont, as apprmr.1 bs the !I RC on June 13. tion w as performed on Grand Gulf 2. nunnct in whnh the 11 RC alkuted the 198% (June 13 l>n neon) aad amtmed and Mrdne Srptember IM 1985, comtruction transtated in its order dated Nmemtwr 30 "I "I "" " " *C* "' adisitio on Grand Gulf 2 w cre suspended 19H', obligato the $) stem operating following an order of the Miwiwippi public (ompamn to purt hoc from si Rt. at si Rli I" I I""# I """ " " Nonice Conuniwion Since that time, %I RI full cost of w nk e . all of si Hli 90 gwrcent
C '" U ""C U'l""C U U" ""
bn conunued suspension of um.tructhm siure of the opa(ity and encrp from nous gun pcthnw for Mcanng on Grand Gulf 2 and tus hmited espende Grand Gulf 1 in atondaix r with the w the il K denied and ha e tilnl turn to on!) those actMtin whkh are following pertrntage alkwa6ons Al%1- pdnuw wuh dw K Onuu nyucstny absoletch necewar) for demobihntion and " "C" "I C II "'"" I 36 port vnt, IJ% l - 1 I [vn rut, Mi% I.- 3 3 susgwnsam in December 19x6. St RFs pJnent aint NOl'si-1' pencut The "I*"" # """ C ' I"*h"N Ibard of ihrtrton (w ith the Mitk!!c %iuth Companyi obbganon for die r> e fort por- Availability Agreement and l'tihues Inc luard of Dirrcton concurr-ikm of pay mena to St R1'or Cr md Gulf I. Realkwation Agreement ing) adopted the roo>mmendatum of a relatnlihugn is airrrnth aprrotunatel) The Company, together with the othcr s{vt tal gn rup of M kidle Niuth System 52% nullum pcr nvmdt S) stem opcraung o>mpann are snrrath otthials and outskic undultants that suv On Apnl 30.1982. the 5)Mrm operat- ohhgated Io si Rt undct the Autt.thiht) pensum of omstnation be omtmtwd and ing unnpamn tendcrtd for fihng with the Agrertikmt. n amctwint in atu>rdarx e that a further dectsnin t~ tiude by 1900 on 11 RC a mw agrrrment (Nm Suttm Apre- with stated pcrtentago ( Al%I, l'.I per. the future status of Grand Gulf 2. in hght of nu nti wtuth prmuks foi the oord nated tent IpAI,26 9 penent. Mi%l,314 altenutnn audable at that time. plannmg onwtnwtum aix! operation of its gwrt rut, and Nol'sl. 2 4 ' gwrtonD to nuke Dunng the pcrust of continued suv gencatu>n and trammtwkm huban Ibc pnuxmts or suturduuted 4th ant n ade- penum. Si RI's espenditurn on Grand June 13 Det ham a!*o askirtwed the New quate to ant r all of the opcratmg es. Gulf 2. n w ril a the increase in its system Ageroncnt and gt ncall) appnned penses induding dcpreruth at of Si R1 imotment m the umt. will be hmited n n tital with ct rtam muor moathatums lhe system oproung tumpames m. Imbng i urther. si RI does not intcod to nuke an un wn parun to toth pros rnhnp the ( ompam,in Nosember 1981 cntered apphcatkm to the Ii ht, during the renod nyunted n hearup ark! wm.e pntics mto a Rcalk ati m Agrrenxut whnh wou'd of suspension with rnped to reontry tnt hktng the Compam nyontni e sta) of har alhw ated the upaan and owrp through ratn of its imotment m Gr.uxi imp!-mcutaten of the June 13 th ku in audable tosi Rt f rom Gr.ux! Gull to i1%I, tsuif 2 In sww of the contnntrun mer 26 4 the Grand Gulf $tathm, in(luding the $ptem operating companies depending quired for financial reporting purpnes, atherse reactkm t4 s2rious rate regulatory upm, am<mg ot'.cr things, the timing of the further deferrals wuuld twa be permitted, tumiin tc allocation oi(Tats and regulatory realliathm if any wh kns and the Oxupany's financial pnithm arxl uncertaint es including ratemaking atten- 33g3 go,9) rouhu>f opnathans wuuM be nututany dant to a delay in the dechion as to d e Statement ofliruncial Accour' ting am use adeded De Arkanus kule-future of Grand Gulf 2, there can be no gggg g ment Agreement pnnido that all onts anurance that the full ctnt of Grand Gulf 2 Accounting for l' haw in planc (Si AS No. aw>cuted with Grand Gulf I whkh fuse will he reonvred or as to the timing of any twen unW the Ownpany prha to any 94 we hwinj by the Financial Accounting recme nt in additkm, during the period its such tenninathm tithe Arkanus Settle-standards ikurd in August 1987 and h 1990, certain twucs could cause a decrease ,g gg, gg g ment Agreement wut Id he reoncredin in the nluatkm of the imrstment in Grand xrordne with its pius hhes lhe , I)nember 15.1987.1he Osmpany's defer-Gulf 2. $1 RI betinrs twm orr, that it is rats of onts under the Arkanus Settlement pan prewm undde to pn the kstified in carning Grand Gulf 2 at its full , g, g ultimate outetune i4 thew nutters (see ulue twcause the prol crty surrently onn- , , cferral otabhshed by sFAE h 92. liow-me to the UnmWtatemenn/ Rate pri4ng Grand Gulf 2 h of the ume design nrr, the Company twhoo that onts it he "* I a that of Grand Gulf I and h being SFl dcferred in aco>rdance with the Arkanus properly nuintained and h thcrtfore suit- The Ownpany he a 35 percent internt Setdement Agreement are probable of able for sts intr 1x!cd purp nc, In this future rectnery and should contir ue to be in Sptcm Fuch, Inc. (St I). a pintly owmst omnnthm, the il RC iwurd an order in January 1988. whk h roiwd the il RC's Mdin%om MNOimm whMury of the Setem operating uim-tus restuoted and obtained the appnaal of panics $11 operates on a tum-pndit has policy regardmg reonrry of cancelled or the n RC to o>ntinue deferrah of onts for for the purpoc of pla sing and imple-aturxk>ncd plant onts and pnnidcd for menting programs for the pnicuremnit of pmp>ws of fttuncial repirting to the 50/50 sbring of wnh onts whkh w cre fuci supplin for the Sprem operating t t RC in t ehnury 198M, the O)mpany filut prudently irwurred betw ccn (mnets and w% dx wks W rsclunge Ownmiv omipanies its uno are pnnurtly rean* "'#P'I"" sion ($1 C) an applicathm for an order ernt ihnsugh thargn for fuel delhered in in omrwt1hm uith the ultinute dai- whkh wuuld po mit the Om1pany to ctm- umnnth m w ith certain of Si rs hirnming shm rtyardmg the future of Grand Gulf 2, arrangemcuts Si ro paroit onnpanics in. tinue detcrralud wh etnis in finarwial Si kl will, at an appropriate time, make a statenwnts fitnl u ith the SI C, l'exter the (fudmg the O mipany, har ontrunted and determirutkin as it, the reonery of in agreed, sorrally in acoirdance with tlwir kin pnnhamu4St AS h 92. imotme nt. Any acthm by $1 RI to wck ropectnr sharrs of ownership of Sil's applicatkm of that statenwnt mJi be ' tronen of Grand Gulf 2 own wuuld hkely delay.16f the Gimpan) he filed or ir.tersh omunon stwk, that they w ill take any and imuhr a filing w ith the il RC rtquoting to file as w a m as prx1kahic an applicathm all acion txrnun to kccp StI in a =>und unh rmnrry *ntr a penod id > cars to amend its phaw in plan and it h reaw m- financial owslithm and to place St I in a thnegh thargo to the %pton operating aNv p auNe the rtyulator will anwnd tlw pnithm to diwharge, arxl to cauw St I to onnpanlo and related filinp by the phaw in plan vi tlut h will comply with dnclurge. 6tuihhgathms utwict thew ar-Sptem operating ownpanin Nfore state h Menal critcria of SF AS h 92. If tlw rangements At I ctember 31,198*, the oi kwal rcgulatory authoritin to rcoynire Ownpany i ultimately requirtd to oimply total kun amun tnwnt umler thne arrange. ilw 11 RC alkswn! (turgo in retail rates menh amounted to $105 milkm, of whidi with the pnnbionuif %I AS h 92. it nuy Sush pnictethnp omid tw prutrxint and rk, under tr-mw of the Arkanuocitle- s9' mdth m u aumntandmg Alw A Sirs stumgly umtoted on urkus ground' ment Agrctnwnt. to twy>ttee a muttulty partmt ovnparun har nude similar on r-intludmg linenntets c. If ums ewiciaint aircptahic anwtwinwn: to nv shty the rums and agnrnwnh in omrwstam with with Grand Gulf 2 wcre allocatn! to tbc 4 the Manus %ctilenwnt k og-term leaws by %H of od storage and 04npany and a w e unable to reanct nwm u dut Caedom wouM Mmthng fxdmcs and cul hipper can At they owts from its notomers the Om> cinnply wuh pnnwons of $1 As b 92 thember 31,1985 the aggregate dw pan 3's firutwtal ochthe could bc nutert- thmocr,if the bungva) wrre to wck omnted ulue of thoc leaw arrangemenh ally and a(herwh atinted AlwN failure to nh nushhing amethbmmt and not wuent we >"3 5 milbon In omntrth m with slii 56 tam rate n bef for all or a udwtantial t obtaining un h mishficatum to in %0 mdhon snurrd ruuming of nut ear t pertkm(4 the own of Grand Gulf 2 omid phac in pim the Arkanuecttlenxmt fuelimentones the nimpany. IPaI and luw a nutettal ami asht rw ctten upm the Agrecment wuukt tcrmuute, a w tite ott of si RI her agrent to purttuw wn h imen-financial nexhikm of si Rt and Sliddle pWM ddened oNs uouM h m tonn nnard pursuant to thn agramwmt South t'sdnics Inc. (Sto ami pawb!) the B in the event that $11 is unable to fulfill its pany had huned Sil 88 6 millon under Securitics IVlur.gc Act of 193 4 and the ohhgathm under the horrowing arrange- tt e alwne and proious kun arrangements s<cuntics Act of 1933, common law fraud ment. At Det ember 31,1987, there w cre Notes nuture in 1992,2nO2 and 2nnH and common law negligent misreprewnta-no turnm ings outstanding under this under pnnishinut these b un agreements tion in u mncetion with tlw financial condi-arrangement $11 esecuted a omtract, as amended in tion of \lst! and prayed for compcnutory $11(untracted with a point venture for Nmcmhcr 19H2, for the purt h.de of hgnite and punitiw danugn legal onts and fees a supply of tual fnim a mine in W)uming to be uwd at a futun lignite furled pimer and other proper relief against \l51', whn h. based on estmuted rewrm, is plant in Arkansas on Ninember 2.10H', various other Sptcm comparJes, including presently espetted to proude the pne sll and the hgmte suppher entered into an the O nPpany, and certain otticen ( and )cticd requirenwnts of the Indcpendtnce agreement wherein Sil was rclincd of all former offit en) of certain Sptem compan-Stram I lett ric Statnm (Isl.$) for at least .40 abhgations and liabihtin undcr this o>n in and dirtuon of \lst', the Ownpany's > cars uhk h irgan in 1 M 6 1his omtract tract in atkhtiott im Nncmher 1,19H', outside audHon and tenain underw nt(rs has twcn awigned to the Gimpany with sii the ( ompany and the ligmte suppher of \lst' common stoc k. In Apnl 19H6, \lst' lusing no further ohhgath ms or im oh e- cset uted a Memoranduns of l'rxlentanding ext the ottwr defendants in(luding the nwnt under the omtrau ctitrthe Decent ( \lemorandum) wherch) the lignite sup. Company, filed a nwHion to dnnuss or, in twr .41,198'. I'nder the omtract with the pher dull hne t'.c rightlif fint rettnal to the altenutac, a motion for sumnut) joint senture, im estment in the minc for sutyh tuct for akhtonal generating rotuire- Judgment On January 12.198', the District leases plant and equipment is the respon- nwnts int the APal sptem undct a tun- O ort entered a Judgment granting defen-whihty of the hint scnture. In onlcr to hnut straint ttut the use af suth lignite would be danti notiord for sumnur) judgment and the point senturciimntment nghis and. the least unt a uptable ahenutne to the dnmiwed the suit On I c brtur) (t 19H' hetnc, the 2 mount to be pad to it as a Company for the generation i4 Cet trn :t) the plaintitls in the owwolidated adion tomponent of the prxe of out the Al LC prtnioud) notified the Company that filed a Notke of Appeal in the 13 Court of a ontrat panided Out Silimot am fuish it deured to participate in ou ner hip of Appeak for the iifth Cartuit Oral argte for plant and equipment in esccw of a ;ne plant Abo. Al( C prtnioud) awumed ment w as hcid on Nn rmtwr 5.19H'.1he spt ofwd amount 'the Ownpany, \lPal, 50 pcrtcut of siliohhg.ition to porthase defend mts intend to sigoniusly oppo c the Arkanus I let tric ( ooperath e Corporation hgnite undt r the tuntrat w hnh lus termi- appeal of the Dntn i O>urti decisiort ( %1( r) and the tity of Jon*4nntasor nated lhe \lemorandum o oindmonal W dk M k m % % b d ow ncrs in pa ' of ist s (owning % % tul- upon retopt of regulatory approuh for y ,yggg j let incly ) prcuou h agrecd to nukt the dw o wtruction it the plant. ( crtain of the other Sptcm operating unntnwnts rathcr than 4 I ax! x u>rdingh, lhe Onnpany has agrced to purt haw. t mpan ci retal rate orders wuh ropect , renuhurvd si I tor im t sinwnn prtw ush mer appnnmutt h a 24) car penod wtuth Io tlx ir athwated o nts far Grmd (.ulf I nudt At DesemN r 41.198', the Compam irgan in 19% luo milla m tons of out for capaut3 and cncrgs are soll being dul-lud a twt imotmcnt of $14 % nulh,o in uw m the White lilutt sicam iIct tnc lengul and reumsidcred On Ithnury 2%. nunc fxihon and it latrd upaaheed awets st at.on gyg. MPWs rate a rder w as rewrwd on lhc ( ompan) has nude the ropred Stodbolden' Suit appeal hs the Miutwtppi supreme O>urt tm ninwnts on N tulf of dw odwr toow n- g,, urt un ottwr \bddic Nouth and l's %upreme Unurt rtmew of th.it crs of ist % ( ownmg 3 % (ollet in t I)) and g g; g gg n hilhng them nwmthh for the deprcua and itxhuduah w cre (k fendants in a e.19% the Counut of the Ot) of Ntv tam and utrung una of thew imcunwnt' purlurtrd tunsohdated law action smt Oricans adopted a rnolution rcqumng a Re parent ouupannwt 4 I lud the maiA oi@mt eIWd m gni dne.mc ed wraM M Mel W a agrcut to nuke 1,uns to Sil ta finans e its pg g ,gqq,4 W i enc 4 m 4 % ndlm m Wb tta l supply tens under a b un agrconent to trprewnt a tlaw that purthawd Mst' dctcrred (irand L.ulf I cyne tuwd on dated Jantun 1, lux t as anwnded lanuan autgcd imprtxicnt c en e W M bte mMn 1.19M', w hk h pn uded for 4 I to turrow omplants fik d hs Mst' durtinlders m % ithout a'eqtute rato to rconcr up to el nu'if am from as ;urcnt tompan aM Wh6 (.ruW C ult I durgn. MPA!. and Ntihl aw timiugh Detanhcr 4.1981 lhn h un gg g g. g g g agrt 01wnt was not anwiwled in IM and de Wd m a M pd W pc h Mnu(e W kIae h tW umscquently. twi f ature buns nu) bc nude I a mlulated anx nded and unable to nwt t tht ir o ntrx tual obl%i to 41 trom the parrnt ownpamo at ihn tinw b ot 1)n cmbcr 31.19M', thc ('om-An W m @ a W uolanons iniiw to st K1 in trTt tt to (. rand (.ul! I t thc dnt hnurc requirements of the and soukt he rendcruiinwhent Imlure of
o
any 5ptem operariag n>mparr/ to maintain nude, it must be rnugnitetL in light of the ships betw een and among varkius Middle its arrent rate structure ta to rnert its thks discuued herein, that future ntnts South $ptem onmpanin would be signifb omtractaal obligatkins to 51 RI in npret either singly of in ownhirutkm, may roult cantly altered or whether the Middle South to Grand Gulf ruukt under certain agree- in such athene clunges in businew cir- 5ptem wuukt omrinue to nht in its rnents relating io SI RTs Indebtednew (but mmstances or such a decrease in liquidity present funn after bankruptcy of tr 7 or only upm furthes actkm by the requbite as to nuke it prudent for one or more of nw>re Mkk!!c k>uth Sptem o>mpanin l percentage of StRrs creditors), lead to ac- the affected Mkidle knith 5ptem ownpanin Unit Ibwer Purchaw Ag cement celeruhm of unh indebtednew unins to file a petiske for reorganlutkm under #' "" ""I'"I ** "## E# (l) wahrn were obtained,(2) the debt Clupter i1. Many of thne future ntnis are *
was rntructured or (3) other arrange- hepmd the contn>l of the Middle Niuth , g[
ments muld be negotiateu in atklitkm in Sptem # I'" E#"#"' ' the ab%cnce of such wahrrs debt rntruc- 1he effects of a bankruptg pniceto capacity and energy from l'mt 2 of IslA turing or other negotbted arrangements ing imuhingone or more Middle south an'eleratkm of such indebtednew could Spacm mmpanies and the extent it juri, Nuclear Fuel occur if a 5ptem operating company were dicti<m of the M C under the llokiing Om> 1he Ownpany he agreements for the renterniinsohutt as a roult of a rnkn1km pany Act arut (4other interal and state purtluw anti fabricathm of fuct awembhes 1 in ratn Ghrn the mbstantial amount of regulatory twidin mrt the bankrupt entity for its nuclear plant, Arkanus Nuclear one. J M RFs debt, it woukt mit be ahic to tuctt its or entities arti mrt any other Middle South The O mpany he agreed to purthee inun obhptkms if acceleratnil'ndet SFRTs Sptem oimpanies not in bankruptg cannot Kert MWee Nuclear Girt arathm o 630 ' financing agreemerits the Sptem operating tw predictai In any nent, security holders milhon kg of uranium thniugh vptember mmpanin w ould mit tw rnponsible for and crediton of the Ownpany or ownpanin 30. l'M 1he Gwapany aho has agree-the pa) ment of $1RTs accelerated obliga- Imuhed in tunkrupty procredmgs andd ments with llatwink & Wilon O>mpany a tkms if $1 Kl oiuld twit treet thein Mst', be significantly affected by such prucced. and Gunbusikm I ngineering O >mpany f< < w (th it s financial roouren currently lim- ings The proceedings could last for )rars ttw fabricathm of fuel ammblin uvxl at - ited, u oukt not at thh ume be in a paithm and there are nuny umrrtainties as to how the plant to uthfy M RTs obhptkms if aurierateti prmbhms of the law miuld be apphert 1he Gmtpany h a party to twu nutlear Alm cettain of Mi s financing agree- Rights atul remedies of security lukien and fuel leen whn h lud pennitted it to leec. ments awlleen nuy trqutre pa)nwnts by crnliton nuy be altered, denini or limited m the aggrepte, up to a nusinmm of $ 160 the Ownpany and the other spiem operat- uruler uwh lan 1he obhytknw of Mst! milhon is nmlear fuct 1he crnht hnn ing mmpanies Mst' or M RI in the ntnt and the ptem operating oimpanin unt'er awociatn! with the ci millkm nu(lear fuel M rs obhptke under wwh documents are the Capst l'unds Agreement (betw een lede haw terminutni if new itnn it aurierated as a restit of tlw inwhrney of a STRI and Mst') amt the Avaitahthry Agree, (Tntit are not obtainnt fuel prewmh Sptcm operating ownpany and $11 o ment, rest. sthcly, and the awignments "mkr lene (en o millk m at lkremtwr 31, unable to nwet etw se obbpth>ra or other- theroif. onald alw be httptnl and posibly 19M') nuy ctmtinue to tw leawd unt I ube to utnfy itew obliptkm$ through redtned or climirutni (See atunt dtwuv Septrmtwr 1, t990 when etw leaw termb tlw ule of the milateral wmring un h skms of the 5ptem operating ownpanin' tutes but no new ftwl nuy be lea ed utwier l ohhptkm a in the cent of any of the roptrtnr obhpth ms to nuke payments or thn arrany,enwnt 41rn tlw leaw termF 1 foregoing atherw dcwlopments the om- otherwiw support M RI under certain tutes the Gimpany will tw rapirnt to tinuing eabahty of ttw Spiem muld be agnwnwtus inchxhng the Acailabtht) Agrre- repurchee any mm lear tuelemanced under pixtd in impard), and it anild be diffimit nwns and the Realkicatkm Agreenwnti tlw leaw that he not been bumni up prior to a und a tunkrupto fiting by one or more lhete couhl be no awurance that any to that date lhe crnht kneuupporting of the Mkkik Nunh Spiem omipanin crnhton u ouki be able to reoner the full the Ownpanyi sMi nuthon nu(lear fuel in ihn ouvwak>rt Mst'. MPAL and anwnmt of tlwir tlairns and wcuritks and leee whk h were whntuksi to termuute stoc k with inferkir rights could be sutwti. Ihrember 1.19x', tuw bece ntemkd to M R1 har exh retaim d indepemient special o >unwl operiemrd in hankrusq tuted for thow wuh pnonties Iurther, thremher 1 t9xx 1he relmed fuelleaw 6 nutten av ha e tren stuthing the rehti hoklers of equity wouritin nu) not tw able aho whatuksi to temunate ihmnher 1. ami protectbm that might tw avadahic to to rntner any substantial annunt im their 1988 Toe Gimpany anticipato wt kmg them under (hapter 11 of the t'nitol Stain imotnwnt Wrunct,it h unuttun ornht knn to supp>rt t ath notlear fuel tiankruptcy Oste while tu dwtshww wnh whether the hankrupt entity or entit n kan To the nient that thn okin tut regard to hankrupto tihngs tuw )ct been cook! be sucu wfully rmrpniint in their oaur additunul cash rupiremems would roult 11w untronernt owt bees of tutt, prwns fonn whether ttw wrrent relation. l' I leases at December 31,1987, aggregated to approxmutely 5686 mi!! ion (tw these deconuminath>n (perathms that are $143.6 millkn twu urdts. (See Note 2 to the !inancial ordered by the NRC pn>perty imurance StatementWRate Ntatters") proceeds subect to the decontaminathw-Wdar hl W !>mmmlasioning Outs Nudcar Insurance E""'T "" I* E'FhI# '" 8 '9"# l'*' , ntablished for the sole purpne of paying l'nder the termu/N nuclear fuel The Q>mpany 6 a member imurnt of nmnolin decontaminaung the leasn, the Company is respeible ftw the Nuc! car Flectric insurarwr 11mited (NI IL), reador ami renn g acer detwh dhp nal of spent nuc! car fuct 1he u>m- an industry mutual insurer tiut pnnides its 1 The NRC further requires that the dene pany etwwiden all onts inwrred or to be memters wtth insurance entrage for cer-faminatkm priority and tnnt requirements trorred in the use and dispwal of ntx tear tain ctwtud repbcement pmtr incurred set 6)nh in me nguinnm te inoirporated fuel eo be pn sper componentud noctear due to certain pruimged ouugn <d rwxicar fuel npeme and pnnishns to recinrr units (NEIL I), in addithm, the Company b '" '# I"i#"I #" N# '"""# a member imured tmder NfIt II, an ncew pohcies ma lata thaWm>ba L WMH and , stxh onts hne been appnnrd by vartuus regulatory ownmiwkMu Sil. On behalf of pnperty imurance program, utiich pro- "IEI I "*I""" '" "U "N" ' pnpeny danuge imurance Whcies hw the umipany, has exemted a contract w hh sides m5 millkm of onrrage for pnipeny , danuge smtained by the imured in e ceu car pian plats r the Department of Energy (1x)r) whereby the IX)E w i!I furnbh dnewal senice for of $500 millnm camed by radioacthe no # O*"E'"I' I"**"## #*"I#" , r annouxed that, effectheJanuary 1, the G>mpany's spent nuclear fuel at a ont taminathm or othe speofted danuge.1he of one mill per kilowatt hour of net gener> Gimpany has an additkwul 5120 millnm of '## """"' i#")
***"d"#'N" **E### I"#*""
thin on or after Apnl 7.19N3, plu a one- e cru property and deomtamiruikm irwur-available for nuclear generating plants will time fee for proiously dncturgest fuel arnt ance with American Nuclear Irrurers lacore torned fuel prk r to that date.1hc ( AN1), and Stutual Atomic Energy liability nease, ce turnge an ahtnr me Gampany tuock cted an opthm male l'nderwriters a pul of private imurance '"** "Y" '
available by the IX)E to pay the one time carriers thus ghing the Gmpany a total of aside for reactor stabihution and (leanup fee. pita internt au mn! until date of 5H95 millkm nceu pnpetty and deon l payment, whkh w til not be carhet than taminatho imurance abine the 5%o0 millhe Gunpany h uruhle o predwt wtut effect 199N 1hc Gimpany had reo>rdnt approv primary amount.1he Company's prinury RG new apukin mapar at dw imately 571 milhors im ludmg an rued pnpetty and deomtamiruthm danuge internt at Det emh : 31, IM, nanur) imurance h pnnklet!IW ANI As a member *
"'"# "h#" "#*""# E"#"h ""id h# nude naitahic to it or the I krst \tortgage for payment to the DOE for the dispwal of imured w ith thne hwimtry mutual imurers all spent mxicar fuel on fund at Aptd 6. the Company b subject to awewm ,*nts if ^" #" "h' 19N3 f nws eurni the accumubtol(tuxh avail-able to the imurer.1hc prewnt nudmum ^" "'"" ^" " "I "" P" in askhtkm to the rtuner) of onts haMny of a hcemcc <4 a notlear pow a ; asxntatetl w1th tir dnp nal of spent awewment for inci.icotwecurring dunny a nuslear fuet tw G>mgunv h rionenng a polm 3rar h appnninutety $10 M nuukm IO"' '" "" N *
U# ""#** !
ttCal of apprusinutti) 5160 milinm for for the Owngum " * *h ' 'i#"N" #"# desenmtwkming onts for its twu nuclear I.flatbe Odotwr 9.198?, the NutIcar twuni by the NRC. Imurance for this ' units These odlnthe hne not txrn Regubtory Ownmtwkm (NRC) amended expowe h pnnsted by private insurance pix ed in segunte fumh either within the its regulathww to requir ? ntwicar omer
""'* "N #N*#"** * *
+ Qwnpan) or in outskle tru a atu>unts plant hwmen io obtain pnperty bwur xe < Nise nutIrar pbnt dctummiwkwung onts owerage ,n the mammum anuunt of il 06
"" '# 8 #P" d'"' " '
w< re prutected to be in ncout this balan 1he regubtium further pnnide that the pristydut thn imurarwr sfull tr uwd "" "N ""I """" "' 'I ananmt. the Omgunt rtyuestn!in an apphcathm to the Mk rnmery (d oti- to tirst owure ttut the hanwd textor b in ' " "' "'#' "I """"N## nutn! un reawd onts and ruthoruatum to a ufe and stable owshtum and can be ##"' *h# E '* "' # #" "" E'I "* *E" # #""*'"'"' "E '" ' fod prob arti future collectkxw in nutntained in ttut c<mdnkm so as to nteriut trots Nich request w as appnned prnent an) Lgmfucant rbk to sfr pubhc " "E" #"" ' #* t3 t!w Mmm \lm h 9,198M, uuh health and uftty Any property hwurantr
"' " "E"#*#' "' "E #" "

I" trwreawd nuntry wheduled to be unple- pnsrnh ma alreash opended to plaw mentn! PrW to Apnl I, IVMM to increase the rmtur in a ufe and stable Oakhthm npany hatt tau humed nacm O,n-the Ownpany's total rtunes) is stxh o nts nwn be used first to n>mplete thow {
t M l i ! i i l l 1 i ? j tain prtniesm of the Act espired in Augu a to b nh the white illutT and Indcpcmknce tmnen of the white liluff amlIndegwm j j 19M7, and 0:ngrew is o>midcring wscrat Stath>nGhc May 1119M? deci4m awardetl dence Statisms and the Compan>N cuv ( 3 proposak to amend and cstrnd the Aa. the Ownpany appnninutclv 522 million in tomen u ill dure in the pn x reds l
l'ntil a hill b adopted tw h >th the Senate rail tanff reparatium onering the >ran N h M M %' l l and flouw of Reprewnt atim and ogswd 19H2 thnmgh 19H 4, pim appnnimairly 59 .g , g g ,
t into law by dw preskkut, the pnnisiom of million in init rot as a roult of the eserv i hem W ('gan " j, the Att whkh espired August I,19M*, will sne transportatk m t harges the Gimpan) g g3 g g g omtinue to apply to all currently licenwd was retruirnt to pay for cual Miipments gg Q g. m for dw e reacton (ux ltaling dw Girnp.ui)'s reactors) fnun %)unniig to Artuwas lhe reparaturts positk o of the O>mpanfs internt in its lhe Gimpany b unable to predia wlut w ere ordered to lw paid by the !)orhngton edkoM MghW h4 aanm Cengrns might ultinutely take Northern Railnud O>mpany arxl the Miv (.as Canpam-( %NG), by mearn of a t' ash rrg2nhng the Ad and utut eticct such w ori Paafic Railroad Company.1he O mi-nwrpt of ANG into Arkamas %ntem lhe j actbm might hJsc on the Omigun>N pany and the tw o railnuds tuse reachnt a caA - IM w di N O'l j potendal liabihty settlement whit h pnnido for paynwntwf millaut with Arkamas Wntern awoming 5 nuumn to the Company in dure ) Intentate Commerte Commluion Dtsen appnnf marty 64 2 milhon of outstandmg i On May 13, ISM *, the Intentate 8"""'I I*U*C" d'C 'I I"'I"Eh "" long tenu debt of AN(.1he tranuction avriwd by Al'&l.to October 29,19H' wtuch b subret to appnral by carious f Oimmerce Gimmiwkm twurd a deci4>n in pnwerdmgs to determine fair railnud Since the dispute imuhrd alkged in tr' regulAq Nidh b cyard N be com-rat. s and omditiom for tramgurting ctut (turgo W past coal dupnwnts the & picted in the setund quarter of 1988 1 112SES - l in accordance with statenwns of uimmitments as du mn in Table % A '.ahic to ilw f irun(tal statrmentw Gimmit-luutwial Accounting standards No 'l the % A rstlialcs tiotit ar tutl obhg.iti< ms rtlat- tm nt and O ctingrix in") Reducturi ot Comgun) rtwrded on the balame 4rrt ing to Llw untrantral tut baw a Jw itxw ohhg.u n os for nus trar itwl h tuwd ] the opital leaws roterrd inta prior la O unpanyN two leaws u hkh at Iks unhcr upon nta lear fin i uuge
19M L lhe 1986 lutarse dwet has tun 31.19C, ucre 5143 6 nullmn (sce Note a f rntaf ul to ghe itied to dx%C cJpitJI Cap j ug gyggng Iran Recording oi sta h leaws don not leaws ()[ lea *n afiro amounts rt ported as ottwr espenw (tn t/=mwndo or not hxww.
Tab!c 5A Minimum Rental Commitments ! Rt nial espenw for opstal and ogwrat- 19MM 5 l ',26' 5
36%
ing Icae ( ru halmg nus lear furt leaws) 89M9 M 4 41 '.126 1990 l '.W 6,71 M amounted to apprusinutch 51M 3 nullan 522 9 millum arst $22 4 millam in 19M*, 1991 1 %.%M 4 6.13' 1986 and 19hi. ropa tns h Nin Icar ftwl 1992 13.20a % 62i esprow, culusoe ad negatnc sahage. of Ior )ran therratter 12 i G e 22 MQ S't I milhie in 19M', W3 nullam in Toul S206 bl* A 109 ~ 19M6, and M4 3 nulla n) in 19M% w as Amotuu Represouing intant i10 014 tturgn! to operations At ikwrmire 31,19x', there w cre Prnent \ ahic of Net \1minum ! notwam vllabic team with mimmum rrntal lease pa)nwsts _s 96 61 t-i s k) 9 4 L 4 Ihc Comp.in) tus unous tw nirrtirn procnt utur of the proic(ted benefit en are provided through uriota means rnent plans (ou nng subsonnally an of us oNigation w cre 9 01 and % 6" , respec- int luding payments of prcmiums to an emplop n Hem tits are Nd on } cars of to t l) lhe esivt ted long term rate of insuran(c company and or au ruah for self wn a e and the ce plogci tumpenunon return on plan mts w e H 5% Transinon insurant c pohcies nunagcd by an incan(r donng the let ter, p ars of unploy ment awets are twmg amortiit d user 1% > cars uimpany Ihr unt of prosidmg thnc 1hc O nnpann tunJmg lmhg is to f und the Compan) .ilso pn nido t criain Scnctits for retired employen is not penuon o nts a at conlance w ith contnho heatch care and hfe Insurant c bent fits for wparable from the ont of pnnidmg tton guidchon ntabbshed try the i mpk sp c retired emplo)t es Sutniantully all t m- twnctih for the at tne employrn 1he total I (titt nwnt locome Net unty A t of 19'e. plo)ces nu) become t hgiNe for those un' of prin khng uxwe trnctits and the the penuon plans are adounistered by twnt fits if the) reath retiremen' age wlule astrage number of at the and renrrd a tnistt c w ho n rnponuble for pension still a orkmg for the Contpan) Ihne bene- cmplo>tn for the let three Scars are pa>mt ots to rtirred cmpioen Einous lits and unular benetih for acthe employ stuw n in lable bC un niment nun.c;crs lus c res[w insihiht) for mJnagt incnt of the plani asst ts in Jahhbon, an hicpt ndent at tuJr) [X rtorms the nn nun at stunal uluanons for the Th M (innpan>% plan' st nh c u nt-tw nctits e arnni during the penod 56K5 l'otal gwnuon esprow of the ( om Imunt >4 on prop tnl bent fit obhgation IiWI pany for 198',1980 andtoM% w e At tual return on plan awets (0 332) % 259 oi o. % A l %.n M and m A l'JM O. Net amornianon and ik terra (1IW) rnlu t h t ly - 5 .,6bb sutenwnt of Iinanual kununung Nct lwnuon (int NuntLirds No H' "I nipl. n cri At t nuntmg for penu. qw" bn ame eff a t n e and w as (in th wwm/O adopted b) the Conigun) in los- Table 611 lhe uimpont oh of 198' penuon \ctturial procnt ulue of at cumulated wnsion I plan twnctits unt e sk tcrnuno! by the at nun aw Voted 612529' show n in 1 abic 6. ( Nomorn! 9Mie lhe en n of the plan unNst pnminl) h umuhted ICK fit ohhgJhon 51 MJ tI of ( ommon and prt terrt-d so s Ls tiu tl oxumc snennn and tnsurant c u mtrai b EF"" '"I I*"' b " N3d"" ' "2 N"I # #" 'II "I"C I9I 9 0 lhe futhk tl stalus of the plan at Ikt t mtwr 31.198', o show n in 1 atdc 616 l'Lin ewo in c scos id prop tcd twnt fit ohhganon (21.593) At Jantun I, !h the at tuarut pri wn Untnugnant prvt wn a e unt - l 'urtwgm/ul t ranuo. ui ew t s 29, e o s utoc of soint md nonusicd .n uimulated 1x nuon pl.m twn( tin e ok tt rmined in I'nrcuignant not ( gam) b ns 150%I an ordance w nh Al e No M w cre 5110 ' Au nwd ]wouon ew t ( hahibf3) *2686] nuthon and m H nulhott roptt tht h aixi fut en ts auilahic for [wnsa)Ivnt tih 198* IVSh 19M5 r wcre 51*6 8 :ntlhiwt 'the esunwd rate td Table 6C - n turn uwd in ik tt rouning the 19N6 atit r l local (int of health (are aiki Itte siNuarn anal prt wnt s alue of at tumulatal plan lxiu fih w e 9 pt fit nt t m t/= w w m.b r $ 7,716 5".042 mx44 , 1he wt shttd au rage dntount rair Au rage numtvr of at tnt t mpknen 4.922 4,1 % I 5.3 e9 aiwl rate of tos rease in futurc u wnix nutu o btrage num!wt of retirni cmpkaco 1,214 l.l M 1.1 N P uwd in (k hmumng the l'** .ntuanal ! 5 k i ! ! l l The Company has recched authortia- In additkm. the Company had appnal- term krms to other companies in the l tkm from the $cturities and Eschinge mately R(>7/XX1 in other 4) ort term twirs Aliddle South $) stem hasing short term l 2 Omimbskm under the Public l'tility lloki- rowinp at Ikcember 31,19M7. At Decem- N>rrowing requirements lhe Gimpany ; ing Onnpany Act of 1935 to have ountand- ber 31,19M6, there wrre no other hirt- nuy N>rrow from these sources subject l ,l ing at any one time 4x>rt. term horrowit s i term h>rnminp outsta.. ding only to its m.tsimum authoriied lesel of l l aggregating nni rrx>re than 10 percent of Addetkmally. the Gimpany participates 4x>rt. term horrowinp. At December 31, E i the Company's capitalliatiort Such 4WFt- with certain other companies of the Nikk!!c 19M7 the Osmpan) had lO 5 million of term twarnming authortry at trar end 1987 South 5)sem in a mo wy pool (%loney temporary imruments in the Slonty I'tx>L f was $23M S millksrt See Table 7 A for short' pool) s trangement whereby those com. At December 31.1986 there w cre no ; . term twirruwinp and the appliable internt imestments in the Stoney pool t panic wth availabk funds nuke sN>rt-l rates (determined by dniding applier.ble { l Internt expense by the average amount l t=>rnm ed) for .hc G>mpany. 1987 1986 1985 l 1he netpany hat 550 5 miitum and un thoso.mds) I 561.6 nullion in lines of ordit with Arkan. Table 7 A _ _. sas tunks at Decce aber 31,1987, and 1966 Staximum mteth end N>rruwing ._ $667 51.000 55'.0tX) ropectist!y. The 03npey had no out- Year end h>rrtming _ %7 - - standtng tu srnm Inp under thoc knos of Astrage t='rnming- ; credit at lear etkl 198' and 1986 The liank kuns _ _ _ _ _ _ _ _ _ . $361 59.025 523Rio i Gimpany u til be renegotiating the 1987 Awiciatni o)mpanics _ _ . __
tunk lines pnor to their eypirathm in the Aserage interest rate during the ptchwi setund yturter 198N in tir csens of future dork prnent of(crtain atherse nents M M6% 9m A* "I C'""P'"I#' - ~~ ~
discuswd in Note 4 to the Iinancial State-nuuWnimnevnents and GinungnsW WhC# -- - 8M - - to whk h referene h hereby nude, thew Oxupciwating and working tulanco negotiatkww o nild he adstrwly irtipacteti at end of perkid _ ._. e ,. r - u { B [ ~ E. ' RETAINEf f - .M H NINGS , g 1he 6ndsnture triating to ibc Com- detids on contn> m stin k As sif t u rnh r quarter of tim % until,luly 10M'. Gimnwm gun 3% kuy tonn debe and pnnois ww 44 the 31. loM'. all retairwd rarmnp w cre frer um k dowlends were dnlared for the thirs" arth km i f toug}wratiim relating to ifw inwr. A th rntrktwnw yturttr arxl fourth quarter of 198' for &npami prsictrui stis k pn n n!c hit 1he t o wnpany dwi nos dularc an) lu3 ment to %!st 'in thc anwiunt of il0 9 l rntrictions im the payman of cash dov a enmon stW L do skwh trom the snend nulhon and s1I ' millum. re pcctnt-h. l I l r I { 4[ l in I)rt crutwr 198*, Al%l. rnlut ed the gwr Qure to 5 oi per Qure.1his adiust. (apital of appnnimately 5686 udMM) and par uluc of all(ommon sunL fnim 512 %o nwnt resulted in an inc reaw in paid-in a corrnimding (kuraw in cornne m
st, l
1987 1986 1985 (hangn in Shares Outstanding (nmon stin k Qurn sohl - - - Prtkrred stis L Qurn soki(retk1 med) 5100 par uluc (38,555) 462.428 (! 4.350)
2% par s a'ur (391,325) (lMAWMl) (72.100) 1987 1986 im tin ottumsis) l' referred Susk at 1)cccmber 31 M ithout sinking fund stated at sit w> a aure $101.550 5101,350 stated at $2% a Murr 25,000 2 % ix M)
Premium and espense, nt t $40 560 Ioral prt ferrrd sti n k w ithout sinking fund $126,84,0 5126.M90 % ith sinki..g innd statt d at $11M) a Murr $ 83,1.M i 86.989 statnl at 525 a durr 69,095 "M.H"9 Pit mium and rslwnse nt t _ (974) (H59) t otal pri tt rrt d stis L w ith unking fund $151,25? $ 16% (M P) l l l 42 , 4 d w i Grrent Shares Shares Outstanding CallIWe Authorized 1987 1966 IVr Share Preferred Shares Outstanding at December 31 - Gmulathc, $100 Par Value: Without sinking fund 4.32% wrin _ . _ . . . _ _ _ _ _ _ _ _ _ _ . _ _ _ _ _ _ . 70,000 70,000 70fxM) 5103 M7 4.72% wrin _ . _ _ . _ _ . . _ _ _ _ _..__. _ _ .-___._ _ 93,500 93,$(v) 93,500 10'.tx) 4.%% wrio .. _ . . . . _ _ . _ . . _ . . . _ _ *i tu x) 75,000 ?$.(M10 102H3 4.%% 1969 series . . . . , _ . . _ . _ _ . . . _ _ _ _ _ _ - . . __ 75.(XX) 73,000 75,tu k) 1 I 41 6 ON% wrin _ . . _ _ _ _ _ . .- . _ . . . . _ . ._ . 100JKX) 100,000 10tuxx) 102.M3 732% wrics _ . _ _ _ _ _ . _ . _ _. l(x),000 100,000 100fM10 10317 7 N0% wrin .._. .__ -._ _-... _ ___ _ l 30.0'X) I$0,000 150.00t) 103 24 7AO% wrin . . . _ __ . _ _ _ . . . _ , . _ _ . _ 2(M)ft)0 200,000 2tWUK10 102No 7.MM% werin .. ._ .. _ _ _ .._..._ _ . . _ . _ . _ . _ _ . . 19uxx) 150,000 150.tx wl 10197 Ttwal .. . _ _ . . . _ . . _. ..__z_. _ _ _ _ 1.013,HN) 1,013,500 1.013,500 With sinking fuml*: 10 (d r% series .._ _ . __ _ _ _ __. __ _ _. ___ _ _ _.. . _ _ . . I16,012 116,012 129,892 106.74 11.0 6 % series ._ _ - __ _ _. . . _ . . _ _ _ . . _ _ _ . _ _ ._ 21$329 213.323 240fulo 107,02 8 9 2% wrics _. , . __.. _ _ _ . _ _ _ _ _ _ . . 9XMM)O $00,000 HNUN)O 10M92 Total _ _ . __ ._ _ _ _ _ _ _ _ __ . . _ . . . . M31337 831,337 N>9.M92 16 wucd . ... ._ . ~ _ _ _ ~ _ _ _ . _ . . _ . . _ lx%HN) Total. 5100 Par Value . - . _ _ _ _ -. . .- - 3.731337 Gmulathe, $2$ Par Yahw: Wittuut sinking fumi H Mi% wrk s . . . ~ __. _ . . _ _ _ _ . . _ _ . _ . . _ . 400.000 400,000 4(MUkl0 27.1l 10 6trk scTks _._ . - .. _ . .__ . . _ _ _ _ . _ 600.(DM) (410,000 (d kl.000 27.95 Total . . . _ _ _ _ . _ l JmuMD W) 1,000,000 l .tu u t tu m) Wi:h wnLing fund *: 9 92% series ___ __ . . _ _ _ 1,246,52l 1,246,$21 1,H' 921 27.56 13 2ws wrin __ .. _ _ _ . _ . __ __ . _ . ._ 1,5l'.401 1,$17,301 1. 97.626 29 0s Total . _ _ _. . _ . - . . - 2.L3,H22 2,763,822 3,159.14? iw,-i _ - ._. _. __- - .__ __ s+.) ,,u , ibtal. N4 l'ar Value _ _ 7163.H22 l l l
IIA'T ht(18% NT O IT ftttfTd Wt M MM thr igTfats45 si WOWM Ihr 9 92% 4fW% IO t'ul% Wrtsg lI 04 % Aftr4 shj $ 3 23f'% 48ftti aff hrity fuhYfftCd f ah wM at iht l f3W id PJtR El ](11410 2Lbh5) grgl ItallAO thefts ftphoth %Wnt>M%.nT9d'tf I. lWI. Ihr 8 i?% taTit4 44 M hr Ink 1ftrd at the falt 14 24 (B El th. Aft % this yTM la ah.htag ihr hergum has the skenlutamt sguhat t4 enktm an aahamvtal hke armuant ii unt thats cah war
.\.\ 6,... , ,, , .. . l l 1987 1986 (in thrmsands) long-term Debt at December 31 -- l First Mo tgage Bonds &l/2% wrics duc 1988 . . _ . _ _ . _ _ _ _ . . _ _ _ _ _ . _ _ _ _ _ _ _ _ _ _ _ _ $ 283 $ 32M OS/H% seric, duc 1990 . _ . _ . _ _ _ _ _ _ . _ _ _ _ _ _ _ _ . _ _ _ _ . _ _ 700 800 4 7/n wrics due 1991 . , _ _ . _ _ _ . . . _ _ . _ _ _ . . .. _ _ - . _ .._ _ _ . _ _ , _ . _ _ _ _ 12,000 12.000 IG1/2% scrics duc 1941 _ _ . . _ _ _ _ _ _ _ _ _ _ _ . _ _ _ _ . . . , . _ _ _ _ _ _ _ _ _ _ _ _ _ . _ - 80.000 4 3 / % sc rics duc 1993 __- ._ _ _.__. ._ ___ _ _._._. __._ ___ _ . . _ _ _ _ _ _ 15,000 15,000 9 3 / n scr6cs duc 1993 _ -._ ._ _ __. ._ _. _ _._ _ .__ _ __ _-. ____ _ _ _ _ _ _ _ . _ - 4,200 4,620 4 5/M% wrics duc 1995 _ _ _ _ _ _ _ _ - _ - . _ . _ _ . . ._ _ . _.-__._ _ _-___ _ _ _ 25,000 25,000 5 3/4% wrics due 1996 _ _ _ . _ _ -. _ _ . _ _ . _ - . _ _ _ _ _ _ _ - . _ _ _ . - . - _ 25,000 25.000 Gl/4% scrics duc 1996 . _ _ . . . . _ . _ _ _ _ . _ . . . _ _ _ _ . _ _ _ _ . _ _ . . _ _ _ _ . _ . _ . ~ 2,160 2,360 's 7/n series duc 1997 _ _ _ _ . _ . _ . _ . _ ._. _ . . . _ .. _ . _ _ 30,000 30.000 R3/4% wrics due 199H _ _ . _ _ _ ._ _ _ _ _ _ _ _ . . _ _ _ - . _ _ . . . _ . _ _ _ . _ 7,000 7,400
3/H% wries due l'198 _ _ _ _ .
_ _ _ _ . _ _ _ _ . , . - _ .-_ . . _ ._ __ 15,000 15.000 9 l/4% wrics duc 1999 _ _ _ _ ._ _ _ . _ _ _ ___...___._ _ 25,000 25.000 1 9-5/n series due 2000 ._____-_ _-__.._-..___ _ _ _ _ - _ _ . _ _ - - _ - _ _ _ . 25,000 25.000 9 3/4% wrics due 2000 _- _ _ . _ _ _ _ _ _ . _ _ . . . _ _ . _ . _ _ . 3,200 3,400 ; 7 5/HT scre duc 2001 ._. _ . _ ._ . _ _ . . . _ _ .__ 30,000 30,000 l M s wrics duc 2001 ._ . _ . . _ _ _ _ . . . . _ _ . _ _ _ . . . _ _ 30,000 30.000 7 3/4% wrc duc 2002 _ . _ _ _ _ _ _ . _ 35,000 35J00
l /2% wr6cs duc 2002
__ _ _ _ __ . . _ _ _ _ . __ _ __ _ 15,000 15Jkx) M % wrics duc 24 x13 _ _ _ . . . - . _ _ _ _ _ _. 40,000 40J)00 , 'l-1/n scries duc 2003 ._ _ _ _ . _ . . _ _ . _ _ _ _ _ _ _ 40,000 40.oix) I(>l/2% scr6cs due 2006 _. _ __. . . _ _ . . . . _ _ ._ . _ . . _ 40,000 40.000 l(> l/M% wrics due 2005 . _ . . . _ _ __ _ _ . . . _ _ _ . 40,000 40.000 9-I /n series duc 200* _ _. . _ . . _. . _ . _ . _ . . _ 75,000 75JnM 9 */n wrics duc 2008 _ _._ _ __ . _ _ , _ _ _ _ _ . 75,000 75.000 l(F l / 4% wncs duc 2009 _ _. _ _ _ . _ ~ _ _. _ _ _ _ . _. 60,006 60.000 13 3, % wrtes duc 2012 _ _ . _ _ _ _ . _ _ _ _ . 75,000 7*,000 13 I /4% sce.cs duc 2013 . ._ _ 25,000 25JMM i 4-1/ M% series duc 2014 _ _ . . . . . . . _ _ 100,000 100.(MM) lik I / 4% wr6cs duc 2016 _ _ _ _.__ _ 50,000 50 (MR) 1otalItrst Mortgage ikwsh _ ._. _ . _ _ 919,543 1.000,90H Installment Ibrshaw Gntracts: Npe Gonty. Artamas due 1988 to 2015 at ratc rangmg fnet 71/ 4% to 11%' 140,645 140,'05 Js tierwin Gmnty, Arkanus due 1988 to 200N at rates r*nging inwn 41i n to 10% 69,175 69.950 Irwk pa ndcrwe Gunty. Arkanus duc 2013 at rate of Il 1 e n 45,000 4 5.(t x) haal Imt altnwnt I'urstuw Guurats 254,820 2 %,6 % tong Term Obligaton-Ikpartment of Energy (Note 4) 71,106 66,?29 Unamurtlied Premium and Dncount on Ikht-Net (6,023) (6 '3 4) hit d 1,239,446 1.316.M9 less: Grrently Marudng Ibrtion 3,223 2.9 % Inng-Term ikbt Euludicg Amount Ike Within One Year $1.236,223 51.313 606 ,imm m,ms_ _ _ _ _ ,-..,.is _ ,,.. - ,,,,,am.,_, ~ m 34 s ss I i o f i At December 31,1987, the sinking Ca41 fund requirements and tauturttics for long. $htking lund sinking rund* Ntaturities" ] term debt for the Stars 19M8 through 1992 (in ibrun.mds) I are illustrated in the table to the right. 1988 ___ _ _., __ $ 1320 $ 6,8MM $ t,148 l 1989 - . _._- -.. . _ i320 6 MMM 925 1990 -..,_ _ _ _., __ 1,390 6.8MH 1AJi 1991 ___.__-________ _ l.290 6,768 13,13% 1992 -. ___ l.290 6.768 1,229 % ann,us. 4 ,suna m e remem.nu3 he mes b, ten & sam.4 pnvern aume.ai rue.4 in us untimprrmrnes l **These nururuers ei not reorst en *6 rmas a p 41ute e snnen4 rewnue h nh othh are mdy1 to trJempthm at the tipene .4 the is>Urrs e d um h h ak at a mirmptom pna e ad 1t8F4 i 1 4 l ' 1RANSA( ~ll()NS WI111. ASS ( M 1 alt.1) l A. (1)MPANIES lhe Company txtp fnwn and sells Culf Nutlear Stathm,l' nit 1. In addatkm, ing to f 252 0 millkm in 19M',5220 0 l clntricity to the operating companin of the Company purthac fuct fnwn $ptem mith<m in 1986 and 5262.? millkin in 1985. l $1kkile South l'tilitics Inc. (Nt%ll under i ucts inc, and rn ehts trt hnkal and operating espone include sturges fnim
rate schedules filed with the Interal athistry wrsien Inmi itst! Sprem Ser- affiliatn for fuct a nt. purduwd pim cr, j i nergy Rcyulatory Commiwitn The Cnny sit es Inc. and inhnical and athtv>ry wisim totaling pany alwi purt hases capacity and encryy Operating tornues include rnenues $3M3 ? milhon in 198',5392.5 rmlhon in fnim $pttw I'nergy Reviuttcs inels Grand fnim salo to awictated aunpanes anwunt. 1986 and 12 4 6.3 milhon in lued I
i l i 1 I I I lirundl.1 Anienting Starx!ards Ikunt's ending afterJuly 19,1988, I arly adoption ment of Cash flows tlw Gunpany considets (lA%II) statenwnt ofIinancial Anuunting was enosuraged b) the i Asit lhe Oxupany a!! highty liquid detx hdtruments purthawd starstards No 95,' Statement of Cash has adopted SIAs No. 95 and accuri',ngly with a nuturity of three (nonths or Icw to llowC (si As No 95) requirn replacement has prnented the Statenwntud C#h ih ms be cadi equivaknts The following supple-of the Statenwnt of Oungn in Iinaixial for the 3ran ended Ikx emtwr 31,19M*, nwntal disclinurn are required by $1.0 luition w tth the Statement of Ceh flows 1986, and 19HS. Ior purparo of the State- No 95-for financial 44tenwnts with fiscal3car ; I 1987 1986 1985 i fin tlunnanah) l t I Cash Paid During the Yean l Internt $120,444 5142,131 5135,164 i Inoirne ines $ (30,243) 5(23,331) 5 23,774 l Noncash Im esting and Financing: Capital lease ohhgations incurral(Note 5)* $ 61,479 5 65,ilM S 5' 299 % u u no.wso urrensk.e l l l (1)NS()I II)ATT.1) l REST 'I 'l3 f 'Q 13 (Ql'AR11RIY l 'N At Dl'II.1 h { l Operating routts for alw four (purtrrud 19H' and 1986 w cre as folk ms un t/wmum h> f \lart h Junc Nptemhcr Det ember 1987: Op rating Rnniue 5326.619 53,R380 5641,2'6 5301.5MI ; Op-rating !no mw 6',612 44,221 86,499 30,553 Not trKonw 2',6* M 29,I " rd.'6 % 1%,540 19 4: l Op rating Rnenue 5342,4*5 531',14M 5426.8 M $313.tm' Operating trwume %2,120 49,4 kl N1,%OH 3 %. MOO Not inwtne 2' 51H 2%,586 94 N6 l',914 , lhe busumud alw Gunpany h sut> for any three nw with perkd should not tw b nud 513 9 mdhon aweated wift the ja t to scmul thwtuatnuw with the peak omsicred as a twh for estinuling the engint ering and (k sign ontund c ttmated p rs d ouvrrmg during ttw sumnwr results for a fullScar habihticuwicuted with certain planned nuntiw Aavrdmgl% carmngs infomutkm lhe fourth quarter of 1986 itsludes an future fowl generating fauhties operating espcuse pnnbkm for otimated 4 Deloitte Haskins+ Sells III Center Street Uttte Hock kkansas 72201 Arkanus 1%m er A light Gmipany: We h.ne cumined the conwlidated in out opinion, the atune mentioned balance dwetu d Arkanus Powrr & Iight omvilidated financial statements prtvnt Onnpany and its sutwidiary as <d ikccmtwr fairly the financial penition of the Company 31,19H7 and 19% and the related omw>li- and its sulwidury at ikccmber 31,198* dated statement s it income and it retainnt and 19% and the rewlts of their cpera-ca.1ungs and itt ash flows for ca(h is the tions and their cash flows for cath ot '5e three 3can in the per>>d cnded Ikccmhcr three ) cars in the period ended ikccmher 31,19M7. Our curainations w cre nude in 31.19Mi, in omformity w ith generally accordance with generally aa epted audit- accepted accounting principk, applied <m ing standards and, accordingly. included a consistent bash sut h tes'ud the auuunting rea rrds and stx h other atahting pra rdures as we owwk!ctni necewart in the (ircvmstances $ hk Nf ichnury n.iuss h* i Arbamas Ibwer & Ug,ht Company and Sutnidiary 1987 1986 i I ein thousm<ts ofatollan) Capitalliatkm and Capitall/ation Raths Selected l'inancial Data: i 8 V4-u Operating rnenues _ _ _ _ $1,401,856 S I,3M9,49 s , Net income 141,160 121.82I s $ %,C## Total awets' - 3,889,453 3.'3' 693 I e % r. , m. long term dcht . - 1,2K223 1,313.604 l ., Prderved simk. with sinking fund 151,255 165.009 i ., Capitalliation (end of period): i ., ., Prcierred setwk and premium'espense, net _ . . _ _ . $ 278.145 5 291.N99 l ,g - - - - - - - I
Gimnion sitwk and p tid in capital 695,108 69 4.8 4 H p h Retained earnire -
244,025 til 063 i ___._____ q ]r g - Total 1,217/178 1.13".H 10 ,
" u i C N% l ong term dcht i
i trst nw.rtgage la odd _ 911,917 992.M 10 ] g i g g" g % - Inwallnxnt port tuw tuntractd. 253,200 25 4.tkA ' g iong-tcrm ohhptions-Ix)I
71,106 66.*29 Tot 21 1,2 % 223 1.313.604 i Total upitahiathm $ 2,453,501 52.451.414 6
- n 9 no a t x2 84 8 4 ns Mr. n- ^""" 'I **" ' " " I* l Internt on Iirst nwirtpge tumds $ 88,756 5 102.031 in tallment purc tuw cuntracts 24,565 21460 Dnklendum preferred stot k _ 25,039 26A65 Utility I'lant (end of perkid)- Plant o m1pleted' $ 3,803,454 $ 5.6%9.12M Omstruction wurk in progros 103,416 127,337 Nu(icar fucl' 169,9'74 162.404 lotal utihty ptant 4,076,M4 3,9 4 H H69 , Icw-anumulated deprts (atam 1,044,407 961.61i Net utthty plant $3,00R 437 8 2.9H'.25 4 l Income Statement l Operating roenues $1,404,856 11 #).494 Operating espensts , I uti 332/47 33 l *N) l Purt tused p m cr 431,716 4 % 4,5 %c4 l Dcferred purt tused pm er (167,956) (210.334) l Tasn-&ferrest pun tused pimer 73,170 103.%2' , 6as port tused for resale 26,000 31,592 ; soir s Pntoll-operation and numtenarse 115,765 ' 110.9 % s o, p w, i s ei wo. n o,o iv., Otix nipcratk e and nuintenance 2 % 703 21%.924 i o w. .. #ms m < .. w, o. .,., n . ,n . , Deprnlathm i19,1N 114.'i2 [ p.,g i tav 3 . ut.N m uu nn. rec tiv i.,ns Tascs 28,782 19.0%9 i p.. . #, s e t %.v 4 Nm nunnif . ,%. o...a summ um v uv rw u en.ur,n.a Total 1*195'971 1 I't.616 ! \ .* i umun # # uos .go.ama u Am.-, s , Opcratmg irwome 2N.M5 21".H'N [ mud im i%,s /.n mn .g., tW e #,.d" a rmi, g. < ..a. . .cu au ' Other intume and dedudams-net ' (culuding A11x?) 55,202 4 M.2 l i e a u su.as . m.v. %u.mnc n.r.. Internt and odwr tlurgts . 4 = v -orwmer.e# ./ 7 = m interest on long tcrm &tu 119,287 740,%66 l tinum.cvs s 90#..c u ma ,s.w 3 ' 13,410 auwsswn., niw %,wwnuawse Othrr intcrest-nct of dehe premium 10.M53 i u aA u t w n,s n u,sw 3.< novas. Total (cwluding Al1xh 132,697 1i1.419 i %a 9=.ca .=t4 =m hw naf Inwme friwr, rnenues 131,390 e * + a7 114.6'3 ' Noncash income frum A11x? 9,770 10.14 H e, or s 2.a <,un.r y n. r ..,1.ow,ny.mm i Net hwonic $ 141,160 5 12 4.M21 m l I 4 4 5 1985 1984 1983 1982 1981 19MO 1979 197M 1977 ' $1361,786 $1,307/m3 51,206,149 51,046,143 $1,019,561 5 750,497 $ $M2,010 $ 553,605 $ 535,298 Ilo.0 M 143367 126.M96 107,372 96,140 65,230 M2,406 M6,014 69305 < 3307,MM2 3ffo,M17 2.M$9,517 J/69,417 2,474,249 2,147,983 1,940,643 1,693,906 1,562,999 1334,994 . l.2M6,907 1,195,73M 1.127,540 993,163 &6M.667 M19,*l6 749,262 (47,484 120,M12 124,170 133,931 141,13M 144,120 147,065 100,51H M,063 60J63 5 267,702 4 251/4 0 $ 260.M21 $ 26R028 6 271#10 S 273,955 5 22*,408 $ 171,772 5 171,772 695,764 69630% 693,297 627,709 547,181 4 %M,569 427,960 397,960 3H2,960 0 49,417 26.101 2RiiM 3336% 43,134 54,700 86,333 7K462 54,261 _ 991.MH 4 971,466 982,2'6 929.102__ 861329 7M7,22 4 741,701 64K194 (o8,993 1,019342 1,093 465 1.084,797 IS00,259 M49,58% 765.430 763,549 709,549 642,979 252,971 135,934 131,541 127,2Mi 143,$7H M3,237 $6,167 39,713 24.505 62141 97,90M 49,400 - - - - - - 1,334.994 1,2M6.507 1,4 99,'3M l.127,940 993,163 M4Hf67 M19,716 749,262 667,486 52,426 M77 52,257.973 52,17M 014 32.0 % 642 St M94.492 $ 1.635.H91 $1,%1,417 $ 1,397,4 % 51,276,477
$ 128,7'2 $ 122,494 5 108,727 5 105,$M i M2,986 4 73,591 5 62,436 5 56,$36 $ 49364 24,704 11,995 114mM 10386 14.016 6,993 4,9MO 4.980 4,103 22.M64 23,222 24,366 25.131 25.4 % 29,7?M 19,$ 6M 14,020 14,020
$3,4?K274 53,307,908 52,910,4*O S2,623319 52,946,066 $2.133,?ot $ 1,231,M32 $1,178foi 51,139,511 92,%3 104,762 34 % , 9 8 3M,292 295,46M 2H2,376 980,094 7Mitel 610,M7 39.M 3 2?3 21 2/.,979 16.869 10,214
151 12 *4?
3fD6,520 3,440,991 3,2 4 ',M 47 3JM)6,4 40 2.Mll,'2H 2,423,231 2.211,MM6 1,964,2M% 1,762.M15 M(.0.226 '(4,937 6 N232 foi,404 532.261 41",43% 364.447 331,231 29',464 ' $2 '46.296 526?4,494 52, % 2.619 52,399.0 % S2.2*9,467 52D04.796 S t .M 67.4 39 51 633.054 $1,4M351 51364,'86 51307fd3 11.20((141 $1,046,14 % $1,015,961 5 750.49? $ $M2.610 $ SMfoi 5 939.29M 3280M8 33M,429 322.65M 262/04 30',213 J37,3 46 I?4f47 16*fel 169,M90 ! 317,821 133,964 l(e.12 % l'M.M l l 141316 194,126 171,429 120.806 144,225 ('6.016) - - - - - 3?,41i - - 35,H16 44.894 44,150 40,9M6 30,637 - - - ~ r 102.h32 9'.6%9 M?,210 " ,966 6?,89' 49," 4 40 607 35,100 29.448 l 196,28? 191.M25 150,459 109,900 132,M62 100,?00 90,996 M,4*H 53,014 ; 109.6M6 - 97,491 92.621 M 6,194 ",923 59,4*4 39,70M 3K36% 36,*6M i %% 44 ' 161.279 131/>44 101,146 90,930 $ 4.0M 3 4.9 4H M 693 62,?i3 i 1,14? 997 1,0M,49? 996Me Mil.M37 M4K3?H 6%,M 3 512.349 473.421 4(n09M
l 216, 'H9 242.186 211.2 191.306 167,lM S 94.964 70,261 NO,lM4 69.200 l
2M M*l 11,204 14.4 %? 12fM* 17,497 l'.4(W 2462' 16,9H6 12.466 f i 13M *i2 1 16,9'4 119,466 10M M' 90,7 % 6',036 6'M91 % 949 49.04? l 7310 73'6 ?,192 I l.2?2 21.03M I*.649 10,296 4,469 3.980 l It6fM2 1RMO 126.61 M 119.829 111,*93 M 4fdi ** 3M7 61,41 M 49.02' l 99 5';;; 119A>to 99,116 M 6,ls 72 MM? 2','2' 16,501 35,792 32.639 i 10.4'O 243 2?,*HO 23.208 23.293 3',503 69.903 90,262 %Ne j s tio.txa 5 ic36? s 126.896 , 1073 2 5 mi40 5 6u30 s 82.4 m s M60i t 5 6930% l \ t 39 ! I __ --- _ _ _ _ _ _ __ __ _ . _ . , _ , . . _ _ _ . _ ._ ._ t Arkanus I\m er & Ught O)mpany 1987 1986 Aserage Annual Kihm att-llour Use Dett:ic Operating Revenues (. w>usandud th>llan): ' Rnidential Gstomen Roldentui $ 406,130 $ 391,064 , twms. . Af s st Oimnwrcial _ 230,M2 223,597 ! rs mtw. , industrial-aluminum proccuing _ 4,407 25.226 Industrial-other 266,168 250,401 5 W * ~"_ _ . - . . ^ ~ ~ ~ ( nrrnment and municipal - 17,9M 17.403 Total from rrtail customen 925,431 907,6'l [ _ 409,347 405,8M2 ~g C' 1%hbc utihtics ~' , g,, .- [ O Sitwellancous n,rnues . __ _ _ _ 30,282 31.862 : Total electnc operating rescnues $1,565,080 51345,415 ' -gg 'r, ,,~ Dcctric Sales (milhons 4 Lihmat houn): Rnklential 5,091 4,903 . . Osmnwrcial _ 3,500 3,363 d" j Industrial-aluminum prise, sing 96 101 ; j Industrial-other 4,921 4,5N1 ! W Gmerrmeni and municipal _ 2M 2Mt 1 Total to retail mstomen 13,892 13.208 j ~ ~ - -- n 9 no ni 82 m M e e w x, Ithlic utihtin . . _ _ _ ._ _ 15,509 14.398 l-l Total energy w>ld . _ _ 29,401 2'.606 l Generation Ily I uel(Extluding flydm) Ims "I A u ## Nur berof Customers (endi43 rar): Rnklontial 497,878 493,569 : Cl e ..d TI w ea 1N ua E'* Oimmend 61,125 60.224 l
,i ,,
~- q' Induurtal-aluminum pra rwing i 1, n i Industrial-other _ 16,M4 16423 t (knemment and munkipal 1,212 1,142 ! q j' _ 5?l,559
2. , o
} i Total retail custiunen 1%hhc utihties . . _ 577,160 15 17{ H i Total custinnen _ 177,175 571,5'6 "" p f kt ~~ h f ? p , l h "3 kil 1 ft ll Untric Enern (milhons il Lihm att houn): I soo j )j j [j l Sl' f .I EM 3Od d!P"'II'M1 j E , I I (scncrJted-not station output. .J Gial 10,299 11,5.5 i 'h#*((]i] 4hvj j !I.l {' klj ' f al g, Gas 3,132 2,752 , l'" '2,IEE i oil _ 10 ' ,hicar 11.3(6 H.H'9 _y Ef f n ng: a il iinin, ii6 i50 -- . m n i ,e m . ,a m - 4,,g - g,, ,, , Purtha cd . _ 3,986 5,974 u , r,3 , , . , , , , _ Nct inten hange __ _ _ (47) (4) ; s w u. s ,. uw j.m . ,, , s ,,, Total 30,855 29,2'6 l 2 n. ,,,, i e i tr_u... a , m s , ..n , ,o , w , v , Icw O>mpany uws, hmes , . . . . u, n o m ,.. .. .,,,f. .m,,,u,,, and unaccounted for _ _ _. 1A54 1.6'O a . a ,, , ., e, ,, n -, w, c .s a on an . .. ., 29 M 2' m . + .un >,n , p . a ,. , o a r ,. uw ..s . .m , s TM m wld . ~ 4#8 hDe *,, 4d*/ b 4 6 8 afe[q .'4TI b e 4, ( , (U@ $f W)('{% ) l i I 4o , I _,.___~__.____! e t 1985 19M4 1983 1982 1981 1930 19'9 19'8 19 " 5 3%6,492 5 334,693 5 315,960 52H 2,2&4 52 %?,M01 5212.M 43 $ 160.992 5164,224 5154,403 202,H56 I M',59 % 169.36' 153.393 14H.938 128,4 " 100 '41 98.293 92.999 69.l ? ! 65.861 43,9'2 40,4 M 2 %6,930 9 4.W % 629 %O,l
5 69,52' 183.9'5 l'9,331 140,422 112.51% 104,940 102,264 242.247 224.392 2(M t 296 19.213 23.2M8 20.989 19.081 14.*H' I2.826 11,44" 11.236 10.46M H?* ?38 N6 4,03 5 ~63.2 41 6 MMH 2M 6 0,384 563,*27 451. % 6 422.653 400 616 405,'67 3 *9,59H 299,*24 298,"N I 1 M i 6">O 125,980 124,653 12M,1 '4 364.%81 33.292 I M.9MI 6 052 %,$'2 5,569 5 120 90*4 6.299 6.50M 51.316,*97 51.247.59" 51.14H H91 5994.124 59' t ,73 4 5'50.49' $ 582,610 5%3fwi 5 % 3 5.29M 4M4 4612 4,914 4,418 4.4 % 4,062 .iH38 4.'42 3.MM 4 3,O'9 2,92* 2.H'O 2.Hl9 21M 2 2,444 2,4'2 2.353 3.269
,' 6*6 3.060 2.$'I 2,0N I 3.O(>4 3,411 3,349 2 6H6 2,59' 4,548 4,% I 1 4.251 4,240 .311 35'i 3fMI 3,545 3.443 328 405 394 410 272 426 334 325 _3 _12 15,"19 14.7 % 14,121 14,924 14,540 I? '84 13,099 12,%6 14.563 11,999 M.91 M 8,965 ',3M8 8.3 %M 9,445 4.M4 1,475 5,l'O 26,562 24.63' 23,"20 21.%O9 2 3.2H2 19.9H 5 l '.MM8 17,5'4 1* *26 4 M7,27% 4 MO.133 471.508 462,753 4 %H 9 41 405,"17 4(Mi 290 396,766 3 M',4 98 59,%46 %M.OMO $',141 56,"O9 %',13 3 49,444 49f M P) 4M.4 2 4 4 *,5 M0 1 1 1 1 1 1 I I I 16,465 14,H11 14,161 13.528 13.929 12.234 12,151 11,'24 11,1 H2 1,13' 2.652 2.4 H 1 2.3'2 1.548 1,617 1.%'3 1,% I 9 ~2.342 $. e , ,, , , . . l' l' 17 IM 24 19 19 19 25 suu . i 55%.694 545.w; 53s.3Hi s3i.9s9 460 0:3 4640M- 4%6 507 44y,2 I l ia H53 .i9i .u- sun a93 <m - - - 4H' l 92' 2.111 2,9'N 2N4 4 '2' 4,* 41 2.46H 4'O 6 3 3% '2 3M9 IM3 4.0%O 6 *41 6,9' 3 l 9,8N9 l O,O * %M3 ",463 9,l
3 ' H 41
, 4.101 S.220 5.0M % 20' '4% 201 l'6 140 103 2%) __ 141 98 21 MM2 20,31O 1 td,03 4 15,%9% IH *22 A " b. 10.H'O I2.%62 12.643 6.24? 5.440 ',402 ',241 %,980 *
40 6,162 6133 94 16% 100 H2 12 t W)) 296 _
M (6%) , O . , .e % i g lf61 1,T H 1.H 16 1.409 1,442 1.194 1.O l M 1,1 %M 9M5 26 %62 2463' 24'20 21,509 23 2H2 19.98% l ',MMM l ',%' 4 1* *26 h i 41 o j Ikard memben llunter(' rom left), 6 Ilitiman, Gemert, Cunningham and Maulden. Ikurd members 4%on (from icfr), lierget, Cooper,Ibgh, Wke and il<4cs. l Al'Ai!* mults t.dcottxt h urti of diru tors f.wuws its cyx rtte on a wide rangt <J %dy t t*~ trom .ign IMNDOM In liklusl$ bl dlr Jrte as il t huts she t ov11parn
dirrt ti in IbArd nx mhers lupbtigtr (from icfth
,, Walker, Lim, Murphy, Miller and ~ WAlton. Hoard %!!iarn C NobnJr. John st (,nmn .ittorthy %' unor \ hr 14ni. lent. (ocruvatson & lohn A Goper)r liikruula .trhansas ins vnstunon l>rshlent, Ceufnr Cornrnurntu's. frtc lientornille, .tihansas Rohcrt D Puch ' t c W'. RJ xtfl ihunrkut 1%rtlanti tutti %1nor \ h s'I%% lent. IIrkins e O Cathy Cunnnnghatn Ceonsfrony . \.lonttutratsort. ( inc)lInaru kd t >llIs er Raull state lkulojonv Ibril.ukt .trhan sts .tuutant fontrurns c. tuntant %1rriary lieferkt .tr han.sts %n nlv m D M alker ( harics L stccl* John)IlaLc .4ttronuT l.teuttne \ bccl>nklent & L bref 9%b/w thurvkut iLake & O>rn/way Iartle Rt n k .trkan as .4]latrsI>]Ik w little Ros k .trkan us (.us 11 4' alton Jr Cnil L Alcutwirr Wtrin L C,ctnert l\trtrur, Ibe fratvi \ h e 1%rsul.'nt, irrot ssnns<1st Re lattorss l'rrshlent .trkansas Ikutnkan i ornfanty lot!!a* Ro n k .4rkan s n ILatest fl!c. ,trkansas Kenn<,th R lirculen NtahactL %ilwen i h e etnktent. .\larb ttng Ris hard P. llerget Jr. (lutniksn an4/ iiveflxtus ti! c offii er, .11arktgtng thrn tor. lav Wd>on 3 Onnl<any Ioun % lsurgem .\tanh & .\fr lenrksat inc u hisorL .trkan un \ h e 14 OLient. L 'u storner %,, ss es I.Ittle Rtx k. . Arkansas T recnc ( amptwil Tomrn) Ihllnun Adn.ory thrmtn \ h e lirudent. Auc hur i4rshie18L WInnas k jannt inc. I Wl'"'d"Y" 'I' M '"V'"Ul & the s'Annrkut Rurlarkflorals gggg, JohnJ llarton Gulule, . tt hin uss pyug g gwn,n og gg,9n,,,4 g o,n ,,st sd \ h e l%nklent if rkinstal %v1 h et %rou, rut ilank and iv ples %usnp & lnor 1rnutterr & . tut < tant %1re tarY Kancaster ils migrs Jr 4 ' " " 'd" '"
k " # *" ( . lurk, L Ktliv
.4ttom.T 6 f onner I.' \ %vustur .%it f u ort. . t r 68 n uts g g , g ,,.,, , I h e l%ul<nt, o af n eute ( uninuous att, nu l l% t 1%ru.kwst. Ru e l.Ind la rh Rs-tvrul grn trgart teta"=" Wrslull L Pcturgraw j llat 1. Ilunter Jr i . t tlunuT ( .o iryr ( L tw n \ ts e ltnklent loud t 6(erations Aete \f.klon<l \fuensri p,,,,, y ,,, ., p , & Irurunnutort f artstime s!k 4tnw ei I dw m icptwrger \t 4 (PtIc) Ra c ilmamkul 14nutent arullkon tor. Vt ' \ R 'h h'c \ ss e l%ulent wtern ituvung. ^"' '" # "'""l"*' 'I "' .\ft.Llle % etelh l 'idstk1 /nc t e anjsun. Retuul Asu'thrksu n todaskirk3 lanteRak.troan w 4 Illic RJ) N 'uthern' \ h e 1%ulent & . t utstant to tiv itosdemt JtTr) L Wukicn Dr Wnhall ! %tu l ityskle n! arkt t inef f Aet stru e t )))ir er t%f 1*tuk n'. Ih'"dm ( oikv Kenml c q yY CiarnjtutI nne li:nli (stanus lhr 1%%/ent 1%enenna' O ( ontn J isttle Ros k .Ubonsu g ( an Ihk nts f t r Raymotst P Wilcr sr. \1 D .tuntant %octa,y I'In us knL little Nt n k Intemd Ictn 1 Wul&n \feda rne ( 2nns- , , . . slurin \ liunicr isttle Ros k. .trkanuu tuutant %xn tas, \1n fut I il ikmn 1 k s u a niias ias n on na ni un i Roy L \1urph) O'"' #" " I .""# '"# "i"d"""' s t% tiu Inun 41 im al wa m ( Aumk4n 61%w/ cot. .\it.1 was.th ' k ' *' % '
i nytnasing i t uttfran Y f b ml \l titty .41kansts 44
l n 4 e ?' 1hc 3 car 19C w n a good one for Merger Agreement Signed ikk A. 3 Gunter Awwiated Natural Gn Compan: ( A%) AU/ifdst!In munf in many w a> s-int rened carmngs re- in 1971 the Munocund lulunge dut ed gn o nt ior the stomen, rcten- Comntiwain ( Si C) ordered Arkanuv ' '""W "" .1tsiuart! Atvrtary tion .it industrial tustomers and progrns Miwiuri Pow cr Dimpany, t he part nt in the nurit ting depanment compri3, io t%nt all of its gn pnipct- l Ratc mt renn appnned tw the tin In early 19C our parent compan). Diredon Arkanse and \limun pubhc senke APA1, prepared a hnic intornution Paul C. Ilughn comminia na in the fourth yiurtet of document and u >ught proyah for the firshlent dn*/ Cl*C/1.m u tn v O//h er t h w cre in cita t for the entire 3 car. acquaition of A% On %cptember I, li'""'T5 bl #""' I"'P #df#"" 198. an agreement w n signni for the luy tl=19llc, Arkarw n suhing in int reawd camings and a , i rt turn on in niment that appnut hed nwrger of 60 into Arkanw Wnteni 11218. Ilunter 1r i the rcturn allowed hs the comnuunnw Gn Comp ay a subsidun of southw n- Anonn n //ur$tm" 1/aruer-l>ue to regularon clungo at the tcrn i nerp Compan) Xcn 3fa4/n.l ifamun fedcral and state lo cls p.ptline sup Appbcations hac been filed with phers t it ett d to pn nide for the tranv the Arkansa and \bw>uri pubhc senice jern' l. \lauklen portation of gn common!) rt ferred to u nnmiwions the St C and the ledcrel (hmmus of t/m thmt unnlottathl(/vcf n ' open au rw" w hit h enabled A% I nerp Rgulaton Commiwiort In addi- I""d" C U//k'* "1 'N I"*/"'"J to nuke pair (haws on the spit nurkct tion pursuant to law. noti (c of the pn* Ra let the tompany port tuse iner si p md dormituin he been gncn to the R ben C.\ m nes l gmnt of its saln solume at pnt n f ederal1rade ( ommmion Prc enth. rfcc f,v4ufcyf bt low the o nt of gn purdused from its appnn al b anticipated from thew agen- ifill.mcr Afonuments hhtorit supptw rs roultmg m a redutcd un and the merger nu) be (ompktcd 10 tivrt!/c. Arkamas ! cost to its customcrs of alnust $13 md- in the sc t und yturtet of 19W4 hon incs auw of the and other t ump tF Aftcr the imtial shisk of the dn nti. I rnot L \lt Kcn/ic /m ntn e Utc Onaloa dwrf q=ratmx tion in the encrp nurict, our mtomm ture. the emphntn all of whom hae Ot/sur. %t rrtary sthl linnunt of fly p.nd mne pcts cut !cu for gn ttun in becn nsurt d of omtinued employ ment. (omfmotr IWi 1hne s.mngs wcrc pnwd dircuh are kioking fonurd to the at nul ulc '" 16 tim!/c Arkanu , to mtomen sia the purt het d gn tho on begm operations a Awwutcd [ adrustment (lause approsed in both Natural Gn Compam, a dntwn of I lhurtM 6padden statc u nnnuwons Arkansa V e crn bn ( ompany /WIlinklent orut(>ve/ o/iratmg O//iar Aw w utul s fargcr mJust rul t uv of t/v(ompmy. /&rtrnt tiimcts aho o ndd oint rx i ts ir gn on I rnt st 1. W Ken /ic ID IIW'E Ad*'" the spot nurket and lusc a pipt hne /m ntiw I'n c Druelou Arnneth ! Atorc) oimpam and Aws utcd tran pon the Orsalent on4/ ( /=cf /m ntn c 4 2//for gn thniugh thor ropesinc pipt hnn loost(aant \nj=r U.u h It /HL th thn t ttort Aw s uted w n ahic to UN" Wrort Un'"on numtain all of its industrul t ustomm krn L Maukten ( Jwoman ofliv thent nonl<,nt athi thniugh d:rn t oln or transpirtation gy y u gc7 ( // utu r DM - ( mytt ! and did not L we any gn hud to aherna- ' g g ,g g ) tne sourso of cnt rp dunng the Scar, a i rnc t 1. W At nne I pra tis e ointran to pri it scars f an nta c l'n c ignutent. (lvc/ t)/=mfurg \\t e t ontmord the nurkcring pm ( 8Uh at \a ntan arhiIronhnv gram inuuted m iWi and Aled appn n. R.dph M V .ulcr ulutch
Ao (ustomt n e a rouh of 6 84 e hns/ cut (1/=vut in 5 the it wnu rting to natural p f rom MlcinJte ticJting s(4trt t % 4,g g g g q.g, tor.t.mt Inumrir I
l 44 l l l i? , , a jf 'Or 4 l l l f @ imide)% e .. _ Transfer Agents for Preferred Stock l'nhn Nati<rulItank of lattle Rcxk g,&L Obsenes 75th Annhcrury then APAl tus twen an operating wl> 11'nkm Natkmal Plan 4 diary of a parent company. Lnsmn ljitle Rock Arkanus 72201 llan y C O>uctt a scif made busi- today as \bddic Niuth t'tthtks Inc. l'irst Ginuncrcial llank nosnun who became knim n as the OnJanuan 1.1981. APAlaont pint Odice ihn 1471 "nuster buikicr" becauw of his contri- plcted a long planncd espansion ty little Rock Arkanus 72203 butions tow ard die desclopment of omwilklating with the Arkansav\itwort Arkanus and a group of awxiates INmer Company, alvi a \lkkile Niuth Registree of Preferred Stock organized the Arkano Pimer 0>mpany ogwrating company, sening parts of f irst O)mmercial liank on Nmember 20.19131hc nest tear wiuihcast \liw vri and northeast I wt Otlke Ikn 1471 the) incorporatal the firm as the kkan- Arkanus little R<xt Arkanus ?2203 us I.ight & Powcr Company Rather than build a snull p m er Certified Public Aaountants plant in ex h oimmunit) sennt, Gius h Deloitte flaskin & $clk skrided to budd one large generating M[ $ 11I Center $treet facility and sene the wrrounding area by interconnectcd Iransmiwion lines Helpmg bund Akanus sance itit 1Jttle Rock Atlanus '2201 lie acquired the system at Arka. Executhe Offices delphia, bought a snull plant operated 4 cTc been o>nsistentlpm the util-Arkanus Ptmtr & light u nmpany in an old tha* fxtor) at \tahern, in- it) irklustry's leading nige inhnolog-425 W. Capitol st2Hed nov generaton and constrtxted kally omstnxth n of one of the first little Rock Arkanus ?2201 a 22 nule transmiwh>nline of 223M10 nwwk rn h>dn>cintne dams in the suits to air.nnt the two towm 1920s creatb >n by our enguwers a d a (501) 3?N000 With that, the pattern w as set to more economical pmcr hoc that nude Awociated N atural Gas Compam " merge the nun) snu!L indcpenk nt scning rtm >tc rural tustomers prxtwal 401 u.nt Park Street ckttric sprems into the intero mon ted sksign and interomnntion of cstra litythen.tle Arkanus *2315 netwurk that is today's \hddle N >uth high uiltage transmiwion linn in tir ( 401 ) ?(>2 .We UXdh. intn Akxtk e of kul nurugement l'tilitics Splcm 1he generating units in the okt duir bs use of rimgcly o>ntrolled air omth-Annual Meeting fxtor) tunwd pm cr plant omsnted of th nung and irrigath m swutin and cart) Third 4 edneslay of \la) one %Likm att unit and a 4' i Lilim ati athucaq of furt dncr#, cation ihniugh unit, a numumental c>ntrast to Arkanus s ur nu ne from to:al relunce on unstable Mk Irar One, the mudcru stram cln tric w mrt n i(t ui and gas to nucicar and 1he Mkk!!c South l'tilitin Sptem% station whkh has ime unit gowratmg oiat 198? Annual Report to the Scwntin Iolkmmg Ilann routit wtwi N Wood Lik m atts and anigher getwrat-and thhange O.wnmiwion to Iorm x nnt until 19 4I, AP&l. tus had tol) sis ing N \M iW 10 kilow atts ll)K, wtwh in(ludn the rcpirt (4 the in the 1920s sen n o>mpanws prnalents ( ohcr llamilton \ lows Compam. is available to any stot Lholdct wrnlwted to builJ p mer ettms to 194142 Ridx rt i sin Ritt hic.194 2-upon requot, wittu ut t harge w ne AP&l,s gentral arca \lr Guth IWt \laH Atoher 1962. Paul tY\tal Sto(Lholden can oNain a upy bs ' ' and sidnes /. \litt hclI. hcad of I la trx ranada) 1900 62. Mmn i sin Rittluc. writing to Ibnd & Qure. reattwd an agretmcm Dxi2?6 \rt h P Pcttit.19%'9 and Shtricy A iluntcr that ksi to a merger i4 thc scu n into .lcrn 1. \taukkn 19'9 to prcx nt Awistant secretan Arkanus l\m cr & light ( ompam in-Arkanus Ptmer & Iight O un[un) otr}urated on i A tohcr 2 1920 sinsc hwt Otlite Ikn %%I little Rotk Arkanus *2203 e Arkansas Power & Light Company Post Office Ilox 551 Uttle Rock, Arkansas 72203 bE & Ha*A bed kham since 1911 I o . t . s t . ARKAh5A5 PONER & LIGHT COMPAhY* BALANCE SHEETS September 30, 1988 and December 31, 1987 1988 (Unaudited) 1987 (In Thousands) ASSETS Utility Plant Electric................................................ $ 3,757,908 $ 3,663,417 Property under capital 1 eases........................... 97,615 96,614 Natural gas (Note 1).................................... - 43,423 Construction work in progress........................... 92.816 103,416 Nuclear fue1............................................ 47,008 26,380 Nuclear fuel under capital 1 eases....................... 126,888 ___143,594 Tota 1................................................. 4,122,235 4,076,844 Less - Accumulated depreciation and amortiration........ 1,099,956 1,068,407 Utility plant - net................................... 3,022.279 3,008,437 Other Property and Investments: Investment in subsidiary c3mpanies-at equity............................................. 38,842 38,842 Other - at cost (less accumulated depreciation)......... _ _ , , 149 176 Tota 1............................................... 38.991 39,018 Current Assets: Cash and special deposits............................... 8,590 7,615 Temporary investments - at cost, which approximates market Associated companies................................ 1,300 7,200 0ther............................................... 16,700 71,335 Notes receivable - net.................................. 1,970 730 Accounts receivables Customer and other (less allowance for doubtful accounts of (in thousands) $4,290 in 1988 and $4,324 in 1987)..................................... 77.583 67,773 Associated companies.................................. 22,246 20,337 Fuel inventory - at average cost........................ 21.151 29,125 Materials and supplies - at average cost................ 49,411 46,982 Prepayments and other................................... 8.144 13.187 Tota 1............................................... 207,104 264.484 Deferred Debits: Deferred purchased power cost........................... 552,530 454,910 Deferred excess capacity return......................... 82,305 72,002 0ther................................................... 55,519 59,329 Tota 1.................................. ........... 690,354 586.241 TOTAL.................................... ......... $ 3.958,728 $ 3,898,180 CS:e Note 1 for information on disposition of ANG. . l
j i
t . l ARKANSAS POW.R & LIGH*r COMPANY
BALANCE SHEETS Septenber 30, 1988 and December 31, 1987 1988 (Unaudited) 1987 l (In Thousands) ,
CAPITALIZATION AND LIABILITIES 1 C pitalization: Common stock, $0.01 par value, authorized 325,000,000 shares issued and outstanding 54,980,196 shares...... $ 550 $ 550 Paid-in capita 1......................................... 695,245 694,558 Retained earnings....................................... 313.97,L_ 244,025 Total common shareholder's equity................... 1,009,712 939,133 Preferred stock without sinking fund.................... 126,890 126,890 Preferred stock with sinking fund....................... 139,633 151,255 Long-term debt.......................................... 1.234,844 1.236.223 Tota 1................. ............................. 2,511.139 2,453,501 Other Noncurrent Liabilities: Obligations under capital leases.. ..................... 92,320 138,423 0ther................................................... 21,805 20,876 Tota 1............................................... 114.125 159.299 - Current Liabilities: Currently maturing long-term debt....................... 2,520 3,223 Notes payable........................................... 667 667 Accounts payable: Associated companies.................................. 27,412 35,342 , 0ther................................................. 96,712 97,631 ! Deferred fuel cost...................................... 1,898 8.727 Customer deposits....................................... 7,478 7,667 t Taxes accrued........................................... 87,462 66,532 Accumulated deferred income taxes....................... (412) (3,498) Interest arcrued........................................ 55,601 47,555 Dividends declared...................................... 5,925 6,261 Nuclear refueling reserve............................... 13,436 16,432 Fuel inventory advances, co-owners...................... 26,087 26,306 Obligations under capital 1 eases........................ 132,184 101,785 0ther................................................... 15.140 15,687 Tota 1............................................... 472,110 430,317 Deferred Credits: Accumulated deferred incoce taxes....................... 560,540 535,072 Accumulated deferred investment tax credits............. 186.341 186,699 0ther................................................... 114.473 133.292 Tota 1............................................... 861,354 855,063,_ i Commitments and Contingencies - - t TOTI.L............................................... $ 3.958.728_ $ 3.898,180 CS:e Note 1 for information on disposition of ANG. ARKANSAS POWR & LIGHT COMPEM*
STATEMENTS OF INCOME ~,
For the Three Months and Nine Months Ended September 30, 1988 and 1987 (Unaudited) Three Months Nine Months 1988 1987 __ 1938 1987 Operating Revenue: Electric............... .......................... $ 424,867 $ 436,657 $ 1.037,050 $ 1,072,816 N:tural gas (Note 1).............................. - 4,619 - 30,459 Tota 1........................................... 424,867 441,276 1,037,050 1,103,275 Opereting Expenses: Operation: Fuel for electric generation.................... 86,505 102,344 226,075 260,953 Purchased power ................................ 116,810 107.658 326,227 325.655 Gas purchased for resale........................ - 2.303 - 20,258 Deferred fuel and other......................... 75,108 79.465 205,683 209,336 Maintenance....................................... 24,258 21.954 63,445 63,956 Depreciation...................................... 30,443 29.765 89,679 88,540 Taxes other than income taxes..................... 8.912 9,693 28,187 29,836 Income taxes...................................... 14.489 23,564 (8,415) (151) Rate deferral Deferred purchased power........ . ............. (31,691) (38,938) (97,063) (130,166) Income taxes.................................... 12.021 16,969 36,816 56,726 Totil operating expenses........................ 336,855 354,777 870,634 924,943 Operating 1ncome.................................... 88,012 86,499 166,416 178,332 Other Income: Allowance for equity funds used during construction.................................... 1,502 1,306 4,829 4,018 Miscellaneous income and deductions - net (Note 1) 15,006 20,193 65,185 56,493 Income taxes - credit (debit)..................... (5,384) (6,031) (18,502) (15,299) Tota 1........................................... 10,924 15,468 51,512 45,212 Interest and Other Charges: Int e rest on long-te rm debt . . . . . . . . . . . . . . . . . . . . . . . . 29,351 29,479 88,099 89,472 Other ir.terest - net.............................. 3.274 4,745 9,986 11,464 Allowance for borrowed funds used during construction.................................... (1,129) (1,022) (3,673) (3,012) Tota 1........................................... 31,696 33,202 94,412 97,924 Net Income.......................................... $ 67,240 $ 68,765 $ 123,516 $ 125,620
See Note 1 for information on disposition of ANG.
s s ARKANSAS POWER f LIGHT COMPANYC STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 1988 and 1987 (Unaudited) 1988** 1987 (In Thousands) Operating Activities: Net income.............................................. $ 123,516 $ 125,620 Noncash items included in net incomes Depreciation.......................................... 84,844 88,540 Deferred taxes and investment tax credits............. 28,855 52,336 Allowance for fur s used during construction. . . . . . . . . . (8,502) (7,030) Provision for estimated 1osses........................ (6.840) 461 Deferred purchased power cost / excess capacity......... (107,924) (151,311) Net gain on sale of ANG (Note 1)...................... (5,350) - Changes in working capital: Receivables......................................... (11,685) (12,984) Accounts payable.................................... (8.849) 1,526 Fuel inventory...................................... 7,974 12,584 Deferred fuel costs................................. (6.829) 9,331 Other working capital accounts...................... (11,841) 17,583 Taxes accrued....................................... 20,931 50,451 Othe r opera ting ac tivit ie s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.017) 26,667 Net cash flow provided by operating activities.... 89.283 213.774 Investing Activities: Const ruct ion expenditure s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (102.082) (99,082) , Proceeds received from sale of ANG (Note 1)............. 27,095 - l Nuclear fuel expenditures - net......................... (20,628) (22,218) Allowance for fur.ds used during construction. . . . . . . . . . . . 8,502 7,030 l Other property - net.................................... 1.417 2.604 ', Net cash flow used by investing activities........ (85.696) (111.666) Financing Activities: Long term obligations - D0E............................. 3,155 3,003 Retirement of first mortgage bonds...................... (1,603) (84,959) Dividends paid Common stock.......................................... (35,589) (10,896) Preferred stock....................................... (18.311) (18,962) Redemption of preferred stock........................... (10,901) (10,404) Proceeds from short-term borroring...................... - 667 Other financing activities.............................. (98) (255) Net cash flow used by financing activities.......... (63,347) (121.806) Net decrease in cash and cash equivalents................. (59,760) (19,698) Ccsh and cash equivalents at beginning of period.......... __ 86.350 133.301 Cash and cash equivalents at end of period.......... $ 26.590 _ $ 113.603 Supplemental Disclosures of Cash Flow Information: Cash paid during the period: Interest.............................................. $ 81,386 $ 81,957 Income taxes (net of refunds)......................... (456) (22,409) Supplemental Schedule of Noncash Investing and Financing Activities: Capital lease obligation incurred....................... $ 24,498 $ 44,718 First mortgage bonds assumed in sale of ANJ (Note 1).... (3,7PJ) - CSee Note 1 for information on disposition of ANG. CCSee Note 2. s l ARKANSAS POWER & LIGHT COMPANY i STATEMENT OF CASH FLOWS l FOR LAST THREE MONTHS OF 1988 AND THE FIRST NINE MONTHS OF 1989 (Unaudited) FULL YEAR FORECAST (In Thousands) Operating Activities: Net Income.............................................. $ 92,339 Noncash items included in net incomo Depreciation.......................................... 115.038 Deferred taxes and investment tax credits............. 43,881 Allowance for funds used during cor.st ruction. . . . . . . . . . (6.925) Provision for estimated losses........................ - Deferred purchased power cost / excess capacity......... (90,325) Changes in working capital Receivables......................................... 14,584 Accounts payable.................................... (12,741) Fuel inventory................. .................... (2,282) Deferred fuel costs................................. 4,578 Other working capital accounts...................... 6.116 Ta x e s a c c ru e d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (33,933) Other operating activities.............................. 30.388 Net cash flow provided bv operatin2 activities.... ,, 160.718 Investing Activities: Construction expenditures............................... (154,277) Nuclear fuel expenditures - net......................... 47,008 Allowance for funds used during construction............ 6,925 Other property - net.................................... _ (10.707) Not cash flow used by investing activities........ (111,051) Financing Activities: Sale of first mortgage bonds............................ 125,000 Lo n g t e rm o b l i g a t i ons - D0 E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,218 Retirement of first mortgage bonds...................... (100,000) Retirement of pollution control bonds................... (865) Dividends paid Common stock.......................................... (25,442) Preferred stock....................................... (22,910) Redemption of preferred stock........................... (12,000) Proceeds from short-term borrowing...................... (667) Other financing activities............................... 53 Net cr ah flow used by financ'c.g activities. . . . . . . . . . (32.61II Net increasa in cash and cash equiva16nts................. 17,054 Cash and cash equivalents at beginning of period.......... 26.590 Cash and cash equivalents at end of period.......... $ 43.644 . o o o
ARKANSAS POWER & LIGHT COMPANY NOTES TO FINANCIAL STATEMENTS '
f NOTE 1: On June 1, 1988, AP&L disposed cf its interest in its wholly-owned subsidiary, Associated Natural Gas Co. ( ANG) by means of a cash merger of ANG with and into Arkansas Western Gas Company (Arkansas Western) a subsidiary of Southwestern Energy Company. The cash merger consideration was approximate 4y $27.1 million i with Arkansas Western assuming approximately $3.8 million of outstanding long-term ; debt of ANG. AP&L realized an $8.2 million gain on the merger, with a tax effect of $2.8 million, resulting in a not gain of $5.4 million. l Financial data shown for 1987 has not been restated for the disposition of i ANG since the effect of consolidation is immaterial. ; i NOTE 2: Net change in cash flows is calculated using a December 31, 1987 consolidated ; balance compared to a September 30, 1988 unconsolidated balance. [ r , ) 4 l k L i 4 3 x r 1 I \ I I r i . I t I i ) _D NARRATIVE STATDfENT In the event of a nuclear incident. Arkansas Power & Light Company will meet its 1989 guarantec requirements under the Price-Anderson Act by reducing its 1989 construction expenditures projected at $140.6 million (excluding AFUDC) by twenty million dollars and/or by selling First Mortgage Bonds. E E ' Joh@J.(firton Vice, President. Treasurer 4 Asst. Secretary t L _ . _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ . . _ _ _ _ . . _ _ . _ _ s ARKANSAS POWER & LIGHT COMPANY POST OFFICE BOX 551 U rTLE ROCK. ARKANSAS 72203 (501) 377-4000 October 27, 1988 Mr. Ira Dinitz Insurance Indemnity Analyst office of State Program United States Nucicar Regulatory Commission Washington, D.C. 20555
Subject:

Price-Anderson Act (10 CFR Section 140.21 (e))
File: 0220, 2-0220 Dear Mr. Dinitzt Arkansas Power 6 1.ight Ccmpany has chosen to meet its current guarantee requirements relative to the Price-Anderson Act by Alternative e, an annual financial statement and cash flow projection. Accordingly, enclosed are AP&l.'s:

1) Certified 1987 Annual Report providing financial statements for the most recent year preceding October 31, 1988.

2) September 1988 year-to-date financial statements for the last three gur.cers preceding October 31, 1988.

3) A one year internal cash f1cv projection (Statement of C1sh Flows).

4) A narrative statement ensuring that retrospective premiums up to $20 million wou.'d be available for payment.

Very truly yours,
)] cui,, 'l 5r n;$
Nathan E. Langston Controller NEL/SD/ alt D1 closures veveen n=co,e sovvw utov>ss sustav

ML20195D114

Text

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