ML17326A449

Annual Financial Rept 1978

ML17326A449
Person / Time
Site:	Cook
Issue date:	02/19/1979
From:	INDIANA MICHIGAN POWER CO., INDIANA MICHIGAN POWER CO. (FORMERLY INDIANA & MICHIG
To:
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ML17326A448	List: ML17326A447 ML17326A449
References
NUDOCS 8001040660
Download: ML17326A449 (28)

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ANNUALREPORT1978AMERICANELECTRICPONERSYSTEM TheCompany's AnnualReport(Form10-K)totheSecurities andExchangeCommission willbeavailable onoraboutMarch31,1979toshareowners upontheirwrittenrequestandatnocost.Pleaseaddresssuchrequeststo:Mr.H.D.PostAssistant Treasurer AmericanElectricPowerServiceCorporation 2BroadwayNewYork,N.Y.10004TransferAgentofCumulative Preferred StockMorganGuarantyTrustCompanyofiVewYork30WestBroadway, NewYork,N.Y.10007Registrar ofCumulative Preferred StockIrvingTrustCompany1WallStreet,NewYork,N.Y.10015 INDIANAMICHIGANELECTRICCOMPANY210ISpj%unAvenue,FortWayne,Indiana46801ContentsBackground oftheCompanyConsolidated SummaryofOperations

.Management's CommentsonConsolidated SummaryofAuditors'pinion Consolidated Statement ofIncomeConsolidated BalanceSheetConsolidated Statement ofSourcesofFundsforPlantandPropertyAdditions

.Consolidated Statement ofRetainedEarningsNotestoConsolidated Financial Statements Operating Statistics andBalanceSheetDataDirectors andOEcersoftheCompany.PriceRangeofCumulative Preferred Stock.4Operations

.....6-7~~~910-11121314-2324-2526~~~~27 INDIANA&MICHI~<ELECTRICCOMPANY2101SpyRunAve~FortWayne,Indiana46801Background oftheCompanyINDIANAScMtcHIGANELEGTRIcCoMPANY(theCompany)isasubsidiary ofAmericanElectricPowerCompany,Inc.(AEP)andisengagedinthegeneration,

purchase, transmission, anddistribu-tionofelectricpower.TheCompanywas.organized underthelawsofIndianaonFebruary21,1925,andisalsoauthorized totransactbusinessinMichiganandWestVirginia.

Itsprincipal executive officesareinFortWayne,Indiana.Indiana&MichiganPowerCompany,thegenerating subsidiary oftheCompany,wasformedin1971toown,completetheconstruction of,andoperatetheDonaldC.CookNuclearPlant(theNuclearPlant).UnitNo.1oftheNuclearPlantwasplacedincommercial operation onAugust23,1975.UnitNo.2wasplacedincommercial operation onJuly1,1978.Thesubsidiary sellsalloftheplant'sgeneration totheparentfordistribution tothelatter'scustomers.

TheCompanyserves231communities andapproximately 437,000customers ina7,740-square-mile areaofnorthernandeasternIndianaandaportionofsouthwestern Michigan.

Thisareahasanestimated population of1,566,000.

Amongtheprincipal industries servedaremanufacturers ofautomobiles, trucks,automotive parts,aircraftparts,steel,ferrousandnonferrous

castings, farmmachinery, machinetools,electricmotors,electrictransformers, electricwireandcable,glass,textiles, rubberproducts, foodproductsandelectronic components.

Inaddition, theCompanysupplieswholesale electricpowertootherelectricutilities, municipalities, andcooperatives.

TheCompany's generating plantsandimportant loadcentersareinterconnected byahigh-voltagetransmission network.Thisnetworkinturnisinterconnected eitherdirectlyorindirectly withthefollowing otherAEPSystemcompanies toformasinglemajorintegrated powersystem:Appalachian PowerCompany,KentuckyPowerCompany,Kingsport PowerCompany,MichiganPowerCompany,OhioPowerCompany,andWheelingElectricCompany.TheCompanyisalsointerconnected withthefollowing otherutilities:

CentralIllinoisPublicServiceCompany,TheCincinnati Gas8cElectricCompany,Consumers PowerCompany,Commonwealth EdisonCom-pany,IllinoisPowerCompany,Indiana-Kentucky ElectricCorporation (asubsidiary ofOhioValleyElectricCorporation),

Indianapolis PowerScLightCompany,NorthernIndianaPublicServiceCompany,andPublicServiceCompanyofIndiana,Inc.

INDIANA&MIANELECTRICCOMPANYANGENERATING SUBSIDIARY Consolidated SummaryofOperations OPERATING REVENUES-ELECTRICYearEndedDecember31,19741978197719761975(InThousands)

...$603,480$512,824$416,193$363,355$287,606OPERATING EXPENSES:

Operation:

FuelforElectricGeneration

............

Purchased andInterchange Power(Net)...Other.Maintenance Depreciation Taxes,OtherThanIncomeTaxes..........

FederalandStateIncomeTaxesTotalOperating Expenses........OPERATING INCOME1259277116@0860900132,72459984426,43223,06074,052144,83344,70628,45248)82423,40818,14970,127126,71240,25120,14047,85218,920(8,625)443,646382,424315,377159)834130,400100,81655,775121,19437,80017,07832,73414,0156,026284,62278,73355,216111,16127,95917,74724,85310,956(3,086)244,80642,80028,874(a) 45,482(a) 59,454(a)-

1)0409521,53745,617188)848158,241130,408103,79196,64880,772(22,627)(19,651)70,82276,53470,82253,5288,151OTHERINCOMEANDDEDUCTIONS:

Allowance forFu'ndsUsedDuringConstruction Allowance forOtherFundsUsedDuringCon-struction..................

27,97426,889Miscellaneous Nonoperating IncomeLessDe-ductions.718135TotalOtherIncomeandDeductions 29,01427,84129,59260,991INCOMEBEFOREINTERESTCHARGES124,350INTERESTCHARGES:TotalInterestCharges76,534Allowance forBorrowedFundsUsedDuringConstruction (Credit)NetInterestCharges............

74,02161,121CONSOLIDATED INCOMEBEFORECUMULATIVE EFFEGTQFAccoUNTING CHANGEs........114)82797,12053,874NON-RECURRING CUMULATIVE EFFECTOFAC-coUNTINGCHANGEs(Netof$603,000Appli-cableTaxes)CoitsoLIDATED NETINcoME................

$114)827$97,120$53,874$53,528$41,554(a)Notreclassified intodebtandequitycomponents sinceallocation basedonthenexistingcapitalstructure wouldnotnecessarily becomparable toallocation undertheFERCformulausedafter1976.

Management's CommentsonConsolidated SummaryofOperations TheamountsshownintheConsolidated SummaryofOperations anddiscussed belowreflectonlytheresultsofpastoperations andarenotintendedasanyrepresentation astotheresultsofoperations foranyfutureperiod.Reference ismadetotheconsolidated financial statements, relatednotes,andOperating Statistics andBalanceSheetDataforadditional infor-mationconcerning resultsofoperations.

Operating Revenues-ElectricElectricoperating revenuesincreased by$96,631,000 (23%)in1977over1976andby$90,656,000 (18%)in1978over1977.Factorsassociated withthein-creasesandrelatedestimated amountsareasfollows:CostofFuelConsumed..Generation LevelandFuelMix.............

OverallIncrease(Decrease)

CostofFuelConsumed..Generation LevelandFuelMix.............

OverallIncrease........Increase(Decrcasc) 1977vs.1976(InMillions)

CoalOilNuclearTotal$5.1$4.1$2.4$11.6(2.8)1.0(5.9)(7.7)$2.3$5.1$(3.5)$3.91978vs.1977(InMillions)

CoalOilNuclearTotal$23.7$4.4$3.3$31.4(2.2)5.716.319.8$21.5$10.1$19.6$51.2Increase(Dccreasc) 1977vs.,19761978vs.1977(InMillions)

BaseRatesandFuelCostAdjust-ments$109.3$53.8SalesVolume...................

(21.2)51.1SalesMix8.2(14.2)OtherOperating Revenues.......0.3OverallIncrease...$96.6$90.7Theincreaseinoperating revenuesin1977over1976wasprimarily attributable torateincreases placedineffectduring1976and1977andtotherecoveryofincreased fuelcostspursuanttotheCompany's fuel-adjustment clauses.Growthinoperating revenuesdur-ing1977waslimitedduetoa17%%uodecreaseinkilowatt-hoursalesforresale.Theincreaseinoperating reven-uesin.1978over1977reflected a29%increaseinkilowatt-hour salesforresale,therecoveryofincreased fuelcosts,andrateincreases placedineffectduring1977and1978.Conservation measuresbysomecus-tomershavetendedtolimitthegrowthofoperating revenuesinboth1977and1978.Operating ExpensesFuelforelectricgeneration increased in1977over1976by$3,925,000 (6%)andin1978over1977by$51,225,000 (69%).Factorsrelatingtotheseincreases andtherelatedestimated amountsareshownbelow:Thecostoffossilfuelconsumedincreased signifi-cantlyin1977and1978.Theincreasein1977wasaffectedbytherehavingbeenarefundofapproximately

$4,000,000 totheCompanyinsettlement oflitigation withasupplieroffueloil.(Suchamountwasrecordedasareduction tofuelforelectricgeneration for1976andisreflected intheincreaseshownaboveinthecostofoilin1977from1976.)Adecreaseinthequantityofnuclearfuelconsumedin1977wasrelatedtotheplannedoutageofUnitNo.1oftheNuclearPlantforrefueling.

Theincreasein1978alsoreflected theplacingofUnitNo.2oftheNuclearPlantincom-mercialoperation duringJuly.Theutilization oftherelatively moreexpensive fueloil(toconservecoalsupplies) togenerateelectricity duringthecoalminers'trike whichendedinMarch1978contributed totheincreasein1978over1977.Thepurchased andinterchange powerincreaseof$18,121,000 (14%)in1977anddecreaseof$28,525,000 (20%)in1978primarily reflecttheutilization oftheNuclearPlantasdescribed above.Otheroperation expenseincreased by$15,295,000 (34%)in1978over1977mainlyduetohighercostsoflabor,materials,

supplies, andservices, andwasalsoaffectedbytestgeneration priorto,andincreased generation dueto,placingofUnitNo.2oftheNuclearPlantintocommercial operation.

Theincreaseinmaintenance expensein1977over1976of$8,312,000 (41%)wasassociated withcer-IIVDIAIVA 4MlrlIVELECTRICCOMPANYAIVGEIVERATIBG SUBSIDlr!RY MANAGEMENT'S COMMENTSONCONSOLIDATED SUMMARYOFOPERATIONS (Concluded) tainincreased maintenance activityin1977whichhadpreviously beendeferredandwithhigher"laborcostandincreased costsofmaterials,

supplies, andservicesasregardspowerproduction maintenance.

Maintenance expenseincreased by$4,272,000 (15%)in1978over1977largelybecauseofincreasing costlevelsandincreased powerplant,transmission anddistribution maintenance activities.

Theincreaseindepreciation expensein1978over1977of$11,020,000 (23%)waschieflyduetotheplacingofUnitNo.2oftheNuclearPlantandcertainenvironmental protection facilities attheCompany's TannersCreekPlantincommercial operation.

Taxes,otherthanincometaxesincreased by$4,488,000 (24%)in1977.Thiswasduetoincreases inutilityplantinserviceandthecompletion in1976oftheamortization (approximating

$3,000,000 forthatyear)ofcertaindeferredcreditsassociated withpropertytaxeswhichhadbeendeferredpursuanttoregulatory authorization.

Theincreaseintaxes,otherthanincometaxesin1978over1977of$3,024,000 (13%)waslargelyattributable toincreased IndianaPropertyTaxresulting fromgreaterassessedvaluation ofproperty, increased IndianaGrossIncomeTaxat-tributable toincreased applicable

revenues, andtoMichiganSingleBusinessTaxpertaining totheGen-eratingSubsidiary.

Information concerning Federalincometaxes(in-cludingareconciliation ofactualFederalincometaxestosuchtaxescomputedatstatutory rates)isshowninNote3ofNotestoConsolidated Financial statements.

Allowance forFundsUsedDuringConstruction Theallowance forfundsusedduringconstruction (AFUDC),including theportionshownasacredittointerestcharges,increased by$17,666,000 (61%)in1977.Thisincreasewasrelatedtoanincreased amountinvestedinconstruction (including UnitNo.2oftheNuclearPlantandprecipitator installation projectsattwooftheCompany's plants)andtotheetfectofthe,Generating Subsidiary's compounding AFUDCbegin-ningin1977.InterestChargesIn1978,totalinterestchargesincreased by$15,876,000 (20%)over1977;thiswasrelatedtoad-ditionallong-term debtoutstanding.

'(

Auditors'pinion TotheShareowners andtheBoardofDirectors ofIndiana&MichiganElectricCompanyAVehaveexaminedthebalancesheetsofIndiana&MichiganElectricCompanyanditsgen-eratingsubsidiary, Indiana&MichiganPowerCompany,consolidated, asofDecember31,1978and1977andtherelatedstatements ofconsolidated income,retainedearnirigs andsourcesoffundsforplantandpropertyadditions fortherespective yearsthenended.Ourexaminations weremadeinaccordance withgenerally acceptedauditingstandards and,accordingly, includedsuchtestsoftheaccounting recordsandsuchotherauditingprocedures asweconsidered necessary inthecircumstances.

Asdiscussed inparagraphs threeandfiveofNote2ofNotestoConsolidated Financial State-ments,theCompanyiscollecting certainwholesale revenuessubjecttopossiblerefundandhasbeenincurring chargesforinterchange powersubjecttorefundbyitsaffiliated interchange powersuppliers.

Aninitialdecisionintheinterchange powerproceeding inFebruary1978,could,ifsustained, resultinsubstantial refundstotheCompany.Inaddition, theCompanyisinvolvedinantitrust mattersdiscussed inparagraphs threeandfiveofNote10of¹testoConsolidated Financial Statements.

Inouropinion,subjecttotheeffectonthefinancial statements identified aboveofsuchadjust-ments,ifany,asmighthavebeenrequiredhadtheoutcomeoftherateandantitrust mattersreferredtointhepreceding paragraph beenknown,suchfinancial statements presentfairlythefinancial positionoftheabovecompanies, consolidated, asofDecember31,1978and1977andtheresultsoftheiroperations andtheirsourcesoffundsforplantandpropertyadditions fortheyearsthenended,inconformity withgenerally acceptedaccounting principles appliedonaconsistent basis.NewYork,NewYorkFebruary19,1979(March2,1979astoparagraph fiveofNote10ofNotestoConsolidated Financial Statements)

INDIANAdcMICHIGANTRICCOMPANYANDGENERATING SUBSIDIARY Consolidated Statement ofIncomeOPERATING REYENUEs-ELEGTRIc(Notes1and2)...........

YearEndedDecember31,29781977(InThousands)

$603,480$312,824OPERATING EXPENSES:

Operation:

FuelforElectricGeneration Purchased andInterchange Power(Net)(Notes2and9).0ther~~~~0\~~0~~~~~Maintenance (Note1)Depreciation (Note1)Taxes,OtherThanIncomeTaxes(Note9)StateIncomeTaxesFederalIncomeTaxes(Notes1and3)..TotalOperating Expenses~OPERATING INCOME125,277116,30860,00132,72459784426,432(378)23,438443,646159,83474,052144,83344,70628,45248,82423,40870417,445382,424130,400OTHERINcoMEANDDEDUcTIGNs (Notes1and3);Allowance forOtherFundsUsedDuring,Construction

......Miscellaneous Nonoperating IncomeLessDeductions

......TotalOtherIncomeandDeductions

............

INCOMEBEFOREINTERESTCHARGES.INTERESTCHARGES:InterestonLong-term Debt.InterestonShort-term Debt.Miscellaneous InterestCharges(Note1)TotalInterestChargesAllowance forBorrowedFundsUsedDuringConstruction (Credit)(Note1)...NetInterestChargesCONSOLIDATED NETINCOME27,9741,04029101426,88995227,841188,848158,24189,3975,9641,28796,648(22,627)74,02173,1886,69788780,772(19,651)61,121$1147827$97,120SeeNotestoConsolidated Financial Statements.

Consolidated BalanceSheetASSETSANDOTHERDEBITSDecember31,19781977(InThousands)

ELEGTRIcUTILITYPLANT(Note1):Production Transmission Distribution GeneralandMiscellaneous (includes NuclearFuel).........

Construction WorkinProgressTotalElectricUtilityPlantLessAccumulated Provision forDepreciation

~.........,....

ElectricUtilityPlant,LessProvision

......~......OTHERPRQPERTYANDINVEsTMENTs (Notes1and4)$1@45,070421,644257,18668,209305,1362,397,245 410,5201,986,725 170,299$864,902401,562244,10340,965555,5002,107,032 358,8261,748,206 137,421CURRENTAssBTs:Cash(Note8)SpecialDepositsandWorkingFundsTemporary CashInvestments (atcost,whichapproximates market)AccountsReceivable:

Customers Associated Companies Mtscellaneous Accumulated Provision forUncollectible Accounts........Materials andSupplies(ataveragecostorless):Construction andOperation Materials andSupplies.FuelAccruedUtilityRevenuesPrepayments andOtherCurrentAssetsTotalCurrentAssets21,2646,75046,2777,5114,498(299)12,78316,11213,8113,467132,17454,73524,0658,49438,0529,3824,968(221)11,46817,32018,1494,322190,734DEFERREDDEBITS:Unamortized DebtExpense(Note1)PropertyTaxesDeferredCollection ofFuelCosts(Note2)......OtherWorkinProgress.OtherDeferredDebits.~.....................

TotalDeferredDebits3,1431,4221,5849,01045,60660,7652,1721,4501,6554,78036,52146,578Total.$2,349,963

$2,122,939 SeeNotestoConsolidated Financial Statements.

10 INDIANA&MICHIGAiV ELECCOMPANYANDGENERATIN SUBSIDIARY LIABILITIES ANDOTHERCREDITSCAPITALIZATION:

December31,19781977(InThousands)

CommonStock-iNoParValue(Note5):Authorized

-2,500,000 SharesOutstanding

-1,400,000 Shares.PremiumonCapitalStock(Note5)OtherPaid-inCapital(Note5)RetainedEarnings(Note6).TotalCommonShareowner's Equity...........

Cumulative Preferred Stock(Note7)Long-term Debt(lessportionduewithinoneyear)(Note8)TotalCapitalization (lesslong-term debtduewithinoneyear).CURRENTLIABILITIES:

Long-term DebtDuewithinOneYear(Note8)............

Short-term Debt(Note8):NotesPayabletoBanks.Commercial PaperAccountsPayable:General.Associated Companies Dividends Declared:

CommonStockCumulative Preferred StockCustomerDepositsTaxesAccruedInterestAccruedOtherCurrentLiabilities TotalCurrentLiabilities

.CoMMITMENTs ANDCQNTINGENcIEs (iNote10)DEFERREDCREDITsANDOPERATING REsERVEs:

S56,5&4381470,228136,829664,022227,0001,043,090 1,934,112 7,53669,49055,45050,46015,30514,2524,7541,90920,00518,33816,439273,938S56,584381410,228104,566571,759187,000977,0621,735,821 61,42149,65052)20019,65016,30611,3603,8541,73918,80419,04116,653270,678DeferredIncomeTaxes(iNote1)..DeferredInvestment TaxCredits(NotesIand3)...........

OtherDeferredCreditsandOperating Reserves.............

TotalDeferredCreditsandOperating Reserves.....Total120,9218,50312,489141,913102,14310,7853,512116,440$2)349)963

$2,122,939

'IConsolidated Statement ofSourcesofFundsforPlantandPropertyAdditions YearEndedDecember31,19781977(InThousands)

FUNDSFROMOPERATIONS:

Cohsolidated NetIncomePrincipal Non-fundCharges(Credits) toIncome:Depreciation

.Provision forDeferredIncomeTaxes(Net)............

DeferredInvestment TaxCredits(Net)Allowance forOtherFundsUsedDuringConstruction

....Other(Net).TotalFundsfromOperations

.FUNDSFROMFINANCINGS:

Issuances andContributions:

Long-term Debt.Cumulative Preferred StockCapitalContributions fromParentCompany............"

Short-term Debt(Net)Total.Les~Retirements:

Long-term Debt.Short-term Debt(Net)NetFundsfromFinancings

.DIVIDENDS ONCOMMONSTOCKDIVIDENDS ONCUMULATIVE PREFERRED STOCK..............

SALEsoFPRoPERTYOTHERCHANGES(NET)DEGREAsE(INGREAsE)

INWQRKINGCAPITAL(Excluding Short-termDebtandLong-term DebtDueWithinOneYear)(a)~~.TotalPLANTANDPROPERTYADDITIONS:

GrossAdditions toUtilityPlant.GrossOtherAdditions

.TotalGrossAdditions

.Allowance forOtherFundsUsedDuringConstruction

......Total(a)Represented bydecrease(increase) asfollows:CashandCashItemsAccountsReceivable Materials andSupplies.AccountsPayableTaxesAccruedOther(Net)$114,82759,85318,7793,423(27,974)506169,414369,83938,48660,00023,090'491,415" 357,877133,538(62,692)(18,357)42,416(13,675)92,615$343,259$340,20931,024371,233(27,974)$343,259$59,280(5,806)(107)29,809172018,238$92,615$97,12048,83713,5355,038(26,889)72137,713135,39138,12058,000231,51110,87346,163174,475(52,920)(14,041)97,311(4,523)(61,061)$276,954$272,43331,410303,843(26,889)$276,954$(30,020)(3,534)(5,851)(11,096)(1,087)(9,473)$(61,061)SeeNotestoConsolidated Financial Statements.

12 liVDIAIVA

&MICHIGAIV EW"RICCOMPAIVYAIVDGEIVERATTJVG SUIISIDIARY Consolidated Statement ofRetainedEarningsBalanceatBeginning ofYearConsolidated NetIncome.TotalDecember31,19781977(InThousands)

$104,566$76,286114,82797,120219,393173,406Deductions:

CashDividends Declared:

CommonStockCumulative Preferred Stock:4~/s%Series4.56%Series4.12%Series.7.08%Series7.76%Series.8.68%Series.12%Series.$2.15Series$2.25SeriesTotalCashDividends Declared...............

CapitalStockExpenseTotalDeductions BalanceatEndofYear(Note6).62,6924952731652,1242,7162,6043,6003,4402,94081,0491,51582i564$136,82952,9204952731652,1242,7162,6043,6002,06466,9611,87968,840$104,566SeeIVoiesioConsolidated Financial Stasements.

NotestoConsolidated Financial Statements 1.Significant Accounting Policies:

ThecommonstockoftheCompanyiswhollyownedbyAmericanElectricPowerCompany,Inc.(AEP).Theconsolidated financial statements includetheac-countsoftheCompanyanditswhollyownedsubsidiary Indiana&MichiganPowerCompany(theGenerating Subsidiary).

TheGenerating Subsidiary was.formed toown,completeconstruction ofandoperatetheDonaldC.CookNuclearPlant,thefirstunitofwhichhasbeenincommercial operation since1975andthesecondunitofwhichwasplacedincommercial operation duringJuly1978.Significant intercompany itemshavebeeneliminated inconsolidation.

Aminorinactivesubsidiary hasnotbeenconsolidated.

Theaccounting andratesoftheCompanyandtheGenerating Subsidiary aresubjectincertainrespectstotherequirements ofstateregulatory bodiesandincer-tainrespectstotherequirements oftheFederalEnergyRegulatory Commission (FERC).Theconsolidated financial statements havebeenprepared, withfullres-ervationoflegalrights,onthebasisoftheaccountswhicharemaintained forFERCpurposes.

4.0%3.1%3.3%3.5%UtilityPlant,OtherPropertyandInvestments andDepreciation Electricutilityplantisstatedatoriginalcost.Gen-erally,theplantoftheCompanyandtheGenerating Subsidiary issubjecttofirstmortgageliens.Thecompanies capitalize, asaconstruction cost,an.allowance forfundsusedduringconstruction, anitemnotrepresenting cashincome,whichisdefinedintheapplicable regulatory systemsofaccountsasthenetcostofborrowedfundsusedforconstruction purposesandareasonable rateonotherfundswhensoused.Therespective composite ratesusedbytheCompanyandtheGenerating Subsidiary wereincreased to10.5%and10.2%,respectively, during1978(effective Janu-ary1)from8.5%usedbybothcompanies in1977,(appliedbytheCompanyonanannualbasisandbytheGenerating Subsidiary onasemiannual compoundbasis).Thecompanies providefordepreciation onastraight-linebasisovertheestimated usefullivesoftheproperty.

Thecurrentprovisions aredetermined largelywiththeuseoffunctional composite ratesasfollows:Functional Composite ClassofAnnual~PIOCllRateProduction:

Steam-Nuclear.Steam-Fossil.firedTransmission

...........

Distribution

.GeneralIncomeischargedwiththecostsoflabor,materials, supervision, andothercostsincurredinmaintaining theproperties.

Propertyaccountsarechargedwithcostsofbetterments andmajorreplacements ofproperty, andtheaccumulated provisions fordepreciation arechargedwithretirements, togetherwithremovalcostslesssalvage.Nonutility

property, otherpropertyinvestments, andotherinvestments aregenerally statedatcost.'ncomeTaxe'sDeferredFederalincometaxes,reducedwhereap-plicablebyinvestment taxcredits,areprovidedbytheCompanyandtheGenerating Subsidiary generally totheextentthatsuchamountsareallowedforrate-makingpurposes.

OnOctober1,1978,theCompanyanditsGenerating Subsidiary expandeddeferredtaxaccounting toadditional timingdifferences pursuanttoanorderofthePublicServiceCommission ofIndiana.TheCompanyandtheGenerating Subsidiary prac-ticedeferralaccounting fortheeffectoftaxreductions resulting fromtheapplication ofinvestment taxcreditstoprovisions forcurrentandcertaindeferredFederalincometaxes.Thedeferredinvestment taxcreditap-plicabletocurrentFederalincometaxespayableisamortized over30years.PensionPlanTheCompanyandtheGenerating Subsidiary par-ticipatewithothercompanies intheAEPSysteminatrusteedplantoprovidepensionsforallemployees, subjecttocertaineligibility requirements.

Theplanwaspreviously contributory onthepartofemployees, butasofJanuary1,1978,requiredemployeecontributions wereeliminated astosubstantially allemployees.

ThepensionplanconformstotheEmployeeRetirement IncomeSecurityActof1974(ERISA).PensioncostsfortheyearsendedDecember31,1978and1977wereapproximately

$2,624,000 and$2,170,000, respectively, representing thecostofcur-rentlyaccruingbenefits.

TherewerenounfundedpriorservicecostsasofDecember31,1978.Effective Janu-ary1,1979,benefitsoftheplanweremodified.

Thechangeresultedinunfundedpriorservicecostsofapproximately

$1,970,000, whichwillbeamortized over30years.Theplanmaybemodifiedorterminated atanytime,subjecttolimitations oflaboragreements.

Employees SavingsPlanTheCompanyandtheGenerating Subsidiary par-ticipatewithotherAEPSystemcompanies inatrusteedsavingsplanwhichbecameeffective January1,1978andisavailable toemployees whohavemeteligibility requirements.

Thesavingsplanconformstotheappli-cableprovisions ofERISA.Eachemployercontributes If>tDIAt>tA

>itM~GAt>tELECTRICCOMPANYA%VGEHERATlt>tG SVBSIDIARY totheplananamountequalto50%ofitsemployee-participants'ontributions upto6%oftheirregularcompensation.

Benefitstoparticipating employees arebasedsolelyuponamountscontributed tothepartici-pants'ccounts.

Byitsnaturetheplanis<fullyfundedatalltimes.ThecostoftheplanfortheyearendedDecember31,1978totaled$607,000.OtherTheCompanyaccruesunbilledrevenuesforservicesrenderedsubsequent tothelastbillingcyclethroughmonth-end.

miscellaneous nonoperating incomefortheyearsendedDecember31,1978and1977includesgainsamounting to$261,000and$306,000,respectively, oncertainlong-term debtreacquired.

Debtdiscountorpremiumanddebtexpensearebeingamortized overthelivesoftherelateddebtissuesandtheamortization thereofisincludedwithinmiscel-laneousinterestcharges.2.Operating RevenuesandOperating Expenses:

TheCompanyhascollected retailrevenuesunderfinalordersofthePublicServiceCommission ofIndi-anawhichbecameeffective inFebruary1977andSeptember 1978.The1977orderhasbeenappealedtoacourtofappealsandcertainpartieshaveinitiated proceedings lookingtowardanappealfromthe1978order.InSeptember 1978,FERCorderedthattheCom-panyrefundapproximately

$3,000,000 toamunicipal customer.

TheCompanyrecordedtherefundinthethirdquarterof1978.Theeffectofsuchrefundonpriorperiodswasnotmaterial.

Revenuescollected bytheCompanyfromwholesale rateincreases placedintoeffectsubjecttopossiblerefund(exclusive oftheamountrefundedasdescribed above)areestimated asfollows:(InThousands) 1978...............

S24>9811977.27,968Priorto1977.50,368Total3103,317OnFebruary23,1978,anadministrative lawjudgeofFERCissuedaninitialdecisionorderingoneoftheafiiliated interchange powersuppliers tomakecertainrefunds,afterrecomputing interchange chargesfortheperiodsubsequent toJune1975onthebasisoftheinterconnection agreement ineffectpriortothatdate,butexcluding fromsuchcalculations asmemberca-pacity,inthecaseoftheCompany,thecapacityownedbytheGenerating Subsidiary and,inthecaseofan-othermemberoftheSystem,thecapacityownedbyitsgenerating subsidiary.

IfthechangeisfinallyorderedbyFERC,theCompanycouldbecomeentitledtore--fundsinasubstantial amount.Certainintervenors haveurgedthatchangesbemadeintheinterconnection agreement, whichwouldhavetheoppositeeffect,in-creasingtheamountspayablebytheCompany.'he AEPSystemsubsidiaries, including theCompany,havefiledabriefwhichurgesthattheactionoftheadmin-istrative lawjudgeberevisedsoastosustaintheorigi-nalamountscharged,'but cannotpredictthefinalout-comeoftheproceeding ortheeffectthereofontheCompany.Operating revenuesderivedfromdomesticgovern-mentalentitiesrepresent approximately 8%and10%oftotaloperating revenuesfor1978and1977,respec-tively.Operating revenuesderivedfromacertainwholesale customerrepresent approximately 12%and7%oftotaloperating revenuesfor1978and1977,respectively.

In1978theCompanyreceivedapprovalofthePublicServiceCommission ofIndianatocollect,overafive-year periodendingin1983,substantially allofitsdeferredfuelcosts.19781977Priorto1977Total(InThousands)

$20,77716,4395,224$42,4403.FederalIncoineTaxes:ThedetailsofFederalincometaxesareasfollows:YearEndedDecember31,19781977SeeNote10forinformation withrespecttoananti-trustdecisionenjoining theCompanyfromchargingcertainwholesale rates.Commencing inJune1975,operating expensesin-cludetheeffectofchangesinrateschargedforinter-changepowertransactions betweentheCompanyandothercompanies intheAEPSystem.TheeffectofsuchchangeswastoincreasethechargestotheCom-pany,subjecttopossiblerefundbyitsinterchange powersuppliers, bythefollowing estimated amounts:S(1,128)13,5355,03817,445Charged(Credited) toOperating (InThousands)

Expenses:

CurrentFederalIncomeTaxes(Net)$1,357DeferredFederalIncomeTaxes(Net)18,658DeferredInvestment TaxCreditsTotal....................

23,438ChargedtoOtherIncomeandDeductions

............

936(a)537TotalFederalIncomeTaxesS24,374S17,982(a)Includesdeferredincometaxesof$121,000.15 NOTESTOCONSOLIDATED FINANCIAL STATEMENTS (Continued)

Theconsolidated effective Federalincometaxrateswerelessthanthestatutory ratesfortheyears1978and1977.Thefollowing isareconciliation ofthedifferences betweentheamountofFederalincometaxexpensereportedintheConsolidated Statement ofIncomeandtheamountofFederalincometaxescomputedbymultiplying consolidated netincomebeforeFederalincometaxesbythestatutory taxrate.Consolidated NetIncomeFederalIncomeTaxes.Pre-TaxBookIncome.FederalIncomeTaxonPrc-TaxBookIncomeatStatutory Rateof48%.Increase(Decrease) inFederalIncomeTaxesResulting from:ExcessofTaxoverBookDcprcciation Allowance forFundsUsedDuringConstruction andItemsCapitalized ontheBooksbutDeductedforTaxPurposes.MineDevelopment andExploration ExpenseProvision forRevenueRefunds.Amortization ofPollution ControlFacilities

.Miscellaneous ItemsFederalIncomeTaxonCurrent-Year TaxableIncome(Separate-Return Basis)Reduction DuetoSystemConsolidation

.MinimumTaxonPreference ItemsCurrently PayableAdjustments ofPrior-Year Accruals(Net)Adjustments forTaxLosses(a):FederalIncomeTaxesInvestment TaxCreditCurrentFederalIncomeTaxes(Net).DeferredFederalIncomeTaxes(NetofAmortization)

Resulting fromtheFollowing TimingDifferences:

Depreciation (Liberalized andAssetDepreciation Range)..~.UnbiliedRevenue.Accelerated Amortization ofEmergency Facilities (Amortization ofPrior-Year Provisions)

........Provision forRevenueRefundsOtherInvestmcnt TaxCreditApplicable toDeferredFederalIncomeTaxesonCertainTimingDifferences DeferredFederalIncomeTaxes(Net)DeferredInvestment TaxCredits(Net).TotalFederalIncomeTaxes(19,691)(25,853)(4,680)(888)(4,080)10911,733(11,733)650650(276)(16,080)(24,005)(1,962)(2,912)(1,609)(5,633)3,048(3,048)1818(774)7,503(5,705)2,1726897(591)17,439(1,221)(1,848)2,1882,22118.7793,423(c)$24,37413,9313,315(1,882)2,2131,154(5,196)13,5355,038'17,982YearEndedDecember31,19781977(InThousands)

$114,827$97,12024,37417,9828139,2018113,102866,816833,249(a)TheAEPSystemallocates Federalincometaxescurrently payableinaccordance withSECregulations, whichrequirethatthebenefitoftaxlossesbeallocated totheAEPSystemcompanies withtaxableincome.Thebenefitsofthesetaxlosses,withoutaffecting taxespayable,arereallocated totheAEPSystemcompanies givingrisetosuchlosses,asitisexpectedthattheselosseswouldbeusableinsubsequent yearstoreducetaxespayableofthelosscompanies.

16 INDIANA4MlANELECTRICCOMPANYANDGENERATING SUBSIDIARY (b)Inaccordance withanorderoftheSECunderthePublicUtilityHoldingCompanyActof1935,ataxlossoftheGenerating Subsidiary istobefirstappliedtoreducethetaxableincomeoftheCompanyandanyunusedamountistobeallocated amongtheotherSystemcompanies includedintheconsolidated Federalincometaxreturn,butwiththeprovision thatanylossessoallocated tootherSystemcompanies shallbereallocated totheCompanyifusablebyitinsubsequent years.Theeffectoftaxlossesallocated toothercompanies wouldbeincludedinthereallocation referredtoin(a)above.(c)TheSystemconsolidated Federalincometaxreturnfor1977,filedin1978,showedataxableincomewhichwaslessthanthatestimated fortheyear-endaccrual.Thedecreasewasprincipally attributable toadditional percentage repairallowance deductions oftheCompanyandaffiliated companies andminedevelopment expensedeductions oftheCompanyclaimedovertheestimated amountsutilizedinpre-paringthe1977year-endaccrual.Thesedifferences hadnosignificant effectontheamountofincometaxespayablefor1977becauseoftheeffectofinvestment taxcredits;however,.total SystemFederalincometaxesfor1977wouldhavebeenreducedduetotherelatedreversalofdeferredinvestment taxcredits,Theincreaseinincome($3,194,000) resulting fromthesedifferences inestimates wasrecordedbytheCompanyinthethirdquarterof1978.TheCompanyjoinsinthefiling.ofaconsolidated Federalincometaxreturnwithitsaffiliated companies intheAEPSystem.UnusedSysteminvestmcnt taxcreditsatDecember31,1978aggregated approximately

$201,000,000, ofwhichapproximately

$21,300,000 maybecarriedforward=through1981,$52,800,000 through1982,$20,500,000 through1983,$27,400,000 through1984,and$79,000,000 through1985.Oftheseamounts,approximately

$26,000,000 hadbeenappliedasareduction ofdeferredincometaxespriortoDecember31,1978andwillnotbereflected innetincomewhenrealizedinfutureyears exceptasaf-fectedbychangesindeferredincometaxes.TheSystemconsolidated Federalincometaxre-turnsfortheyearspriorto1965havebeensettled.Thereturnsfortheyears1965through1969togetherwithcertainunrecorded refundclaimsrelatingtotheyears1965,1966and1967arecurrently beingsettledonthebasisofanetrefundfortheperiod,theamountofwhichtheSystemcompanies deemimmaterial.

Thereturnsfortheyears1970through1973havebeenreviewedbytheInternalRevenueServiceandaddi-tionaltaxesforthoseyearshavebeenproposed, someofwhichtheSystemcompanies haveprotested.

IntheopinionoftheSystemcompanies, adequateprovision hasbeenmadeforsuchadditional taxes.4.OtherPropertyandInvestments:

Thefollowing isananalysisofotherpropertyandinvestments:

December31,19781977(InThousands)

Nonutility PropertyandOtherPropertyInvestments:

westernCoalLandsAcquiredasSourceofLow4ulfur Fuel...OtherCoalProperties andFuel-HandlingFacilities

..........

Miscellaneous (Net)...........

Subtotal................

OhioValleyElectricCorporation Sub-ordinated Notes..................

OtherInvestments

..................

TotalOtherPropertyandInvestments

...............

$149,713$120,7994,9463,6921549512674170,154"137,16556200145$170,299$137,4215.CommonStock,PremiumonCapitalStock,andOtherPaid-inCapitalsTherewerenocommonstocktransactions andnotransactions affecting premiumoncapitalstockduringtheyears1978and1977.TheCompanyreceivedfromitsparentcashcapitalcontributions of$60,000,000 in1978and$58,000,000 in1977;suchcontributions werecreditedtootherpaid-incapital.6.RetainedEarnings:

Variousrestrictions ontheuseofretainedearningsforcashdividends oncommonstockandotherpur--posesarecontained inorresultfromcovenants inmortgageindentures, debenture andbankloanagree-ments,charterprovisions, andordersofregulatory authorities.

Approximately

$48,500,000 atDecember31,1978wassorestricted.

17 NOTESTOCONSOLIDATED FINANCIAL STATEMENTS (Continued) 7.Cumulative Preferred StodcThefollowing isananalysisofcumulative preferred stock:Redemption CurrentRestricted CallPrice(a).PriortoAmountDecember31.ParValueSharesOutstanding Series19781977(InThousands)

$12,000$12,0006,0006,0004,0004,00030,00030,00035,00035,00030,00030,00030,00030,00040,00040,00040,000$227,000$187,000dividends.

Thcinvoluntary liquidation preference 120,00060,00040,000300,000350,000300,000300,0001,600,000 1,600,000 orbeforeOctober1ofeachyear,beginning inofsuchseries.TheCompanyhastheright,onallsinkingfundprovisions havebeenmet,no4Vs%'106.125$1004.56%102.0001004.12%102.7281007.08%106.4501007.76%107.3201008.68%107.44010012112.000(b) 9/1/80100$2.1527.1505/1/8225$2.2527.2503/1/8325TotalCumulative Preferred Stock(a)CallableattheoptionoftheCompany,atthepriceindicated plusaccruedisparvalue.(b)Asinkingfundforthe12%seriesrequirestheCompanytoprovide,on1980,forthcpurchase, orredemption at$100ashare,of15,000shareseachsinkingfunddate,toredeemanadditional 15,000shares.Unlessdistribution maybemadeonthecommonstock.In1976shareowners authorized theissuanceofupto4,000,000 sharesof$25parvaluecumulative preferred stock(whichranksequallywiththe$100parvaluecumulative preferred stock)andin1978increased theauthori-zationto7,200,000 shares.In1977theCompanyissuedandsold1,600,000 sharesofthe$2.15seriesandin1978theCompanyissuedandsold1,600,000 sharesofthe$2.25series.AtDecember31,1978,authorized sharesofcumulative preferred stockwereasfollows:SharesParValue,Authorized

$100...2.250,000 25.7,200,000 FirstMortgageBonds..............

SinkingFundDebentures

...........

NotesPayabletoBanks,duc1980..Installment PurchaseContracts

......OtherLong-term Debt.............

Total(lessportionduewithinoneyear)$1,043,090

$977,062Firstmortgagebondsoutstanding wereasfollows:December31,Due19781977(InThousands) 1978(a)....................

$-$30,0001978(b)....................

-24,1731980....18,01518,0151982.........

16,04616,0461982..........

70,00070,0001983..........13,76213,7621983..............

60,00060,0001984.....15,08215,0821984(c)(d)(e)

...'............

66,00070,5001985(e)....................

13,50014,2501988......22,97422,9741988'.....1755717557199342,90242,902Series"6'o32%%3Vs%10Vs%3Ys%113Ys%10zs%10.%3ss%4%duo4%%S.Long-term Debt,Short-term Debt,LinesofCredit,andCompensating Balances:

Long-term debtbymajorcategorywasoutstanding asfollows(lessportionduewithinone'year):December31.19781977(InThousands)

$832,286$482,82624,08325,26082,000360,00099,84199,7504,8809,226SeriesDueDcccmber31.19781977(InThousands)

$35,000$35,00050,00050,00040,00040,000255,000100,0007%19988Fs%20008Ys%20039'%003(c) 9'A%%uo2008Unamortized DebtDiscount-Net(552)(262)835,286539,9993,00057,173$832,286$482.826InJanuary1979,theCompanyissued$80,000,000 of10N%firstmortgagebondsduein1987.TheLessPortiondueivithinOne.Year..Total(a)RetiredFebruary1,1978.(b)RetiredSeptember 1,1978.(c)Guaranteed byAmericanElectricPowerCompany,Inc.(d)Thesebondsareobligations oftheGenerating Subsidiary.

Theunamortized discountamountedto$189,000and$221.000atDecember31,1978and1977,respectively.

(e)Sinkingfundpaymentsarerequiredasfollows:10%seriesdue1985-$750,000annuallyonMarch1.107/s%seriesdue1984-$2,250,000 annuallyonDecem-ber1,through1983,withthenoncumulative electiontoredeemanadditional

$2,250,000 ineachyear.9'%eriesdue2003-$11,500,000 annuallyonJune1,1980through1991and$13.500,000 annuallyonJunc1,1992through2002withthenoncumulative optiontoredeemanadditional amountineachofthespecified yearsfromaminimumof$100,000toamaximumequaltothescheduled requirement foreachyear,butwithamaximumootionalredemption, astoallyearsintheaggregate, of$75,000,000.

18 INDIANAckMlANELECTRICCohfPANYANDGENERATING SUBSIDIARY Installment purchasecontracts oftheCompanywereasfollows:December31,CityofLawrenceburg, Indiana:8ViÃoSeriesdue2006......7%Seriesdue2006........67ie%Seriesdue2006......CityofSullivan, Indiana:6ss%Seriesdue2006......Unamortized DebtDiscount...Total19781977(InThousands)

$25,00040,00012,000$25,00040,00012,00025,000(2,159)$99,84125,000(2,250)$99,750Underthetermsofcertaininstallment purchasecon-tracts,theCompanyisrequiredtopaypurchasepriceinstallments inamountssufficient toenablethecitiestopayinterestonandtheprincipal (atstatedmaturi-tiesanduponmandatory redemption) ofrelatedpol-lutioncontrolrevenuebondsissuedtofinancethecon-struction ofpollution controlfacilities attheCompany's TannersCreekandBreedPlants.Otherlong-term debtoftheCompanyoutstanding consisted of:December31,19781977(InThousands)

Coalrcscrveobligations

-payableinequalannualinstallments through1980withinterestat8%..........

Notespayable-due1978through1985,6%-7%OtherLessportionduewithinoneyear..Total'I$8,252$12,3779022629,4164,536$4,88093416213,4734,247$9,226Generating Subsidiary hasadelayed-delivery contracttosellanadditional

$45,000,000 ofitsfirstmortgagebonds,9th%Seriesdue2003,onMarch1,1979.Theindentures relatingtothefirstmortgagebonds'>'containimprovement, maintenance andreplacement provisions requiring thedepositofcashorbondswiththetrustee,orinlieuthereof,certification ofunfundedpropertyadditions.

TheCompanyhaselectedto'useunfundedpropertyadditions tomeettheseprovisions inthepast.Sinkingfunddebentures oftheCompanyoutstanding wereasfollows:December31,19781977(InThousands) 5Vs%Due1986$12,076$12,491714%Due1998......11,94112,694Unamortized DebtPremium...........

6675Total$24,083$25,26019791980198119821983LaterYearsTotal(InThousands)

$71536118,85915,032101,30489,035721.505$1,053,271 AtDecember31,1978and1977,theprincipal amountsofdebentures reacquired inanticipation ofsinkingfundrequirements were$2,183,000 and$1,815,000, respectively.

Thecompanies maymakeadditional debenture orfirstmortgagebondsinkingfundpaymentsofupto$3,050,000 annually($2,250,000 relatingtoGenerating Subsidiary).

Theinterestrateonthelong-term notespayableto.banks(anaverageof12.2%atDecember31,1978and8.4%atDecember31,1977)dependsontheprimecommercial rateplusafractional percentage.

TheGenerating Subsidiary hasinformalarrangements withthebankstomaintainaveragecompensating bankbalancesequaltoapproximately 15%ofcertainofthenotesoutstanding'on.

anaveragebasisorsuchsmalleramountasthebanksconsiderappropriate inviewofotherbankingrelationships or,inlieuthereof,topayafeeonanydraw-down ofthecompensating balancesbasedontheapproximate effective interestcostoftherelatednotes,assumingthefullcompensating balanceshadbeenmaintained; AtDecember31,1978and1977,thecompensating balancesunderthearrangements wereapproximately

$9,800,000 and$34,100,000, re-spectively.

Theeffective interestrate,representing theactualinterestratesonthenotesoutstanding adjustedfortheeffectofthecompensating balancerequire-ments,averaged13.9%atDecember31,1978andwasapproximately 9.6%atDecember31,1977.Short-term debtandinterestratesthereonwereasfollows:19781977(DollarsinThousands)

Weightedaverageinterestratesfordebtoutstanding atendofyear:NotesPayabletoBanks............

Commercial Paper..................

Maximumamountofdebtoutstanding atanymonthwndduringtheyear:NotesPayabletoBanks............

Commercial Paper..................

10.9%7.8%11.2%7.4%$69,490$87,400$55,450$76,042Consolidated long-term debtoutstanding atDecem-ber31,1978isdueasfollows:Principal Amount19 NOTESTOCONSOLIDATED FINANCIAL STATEMENTS (Continued)

TheCompanyhadunusedshort-term banklinesofcreditofapproximately

$144,000,000 and$208,000,-

000atDecember31,1978and1977,respectively, underwhichnotescouldbeissuedwithnomaturitymorethan270daysafterdateofissue.Theavailable linesofcreditaresubjecttowithdrawal atthebanks'ption, and$135,000,000 and$200,000,000, respec-tively,ofsuchlinesaresharedwithotherAEPSystemcompanies.

Inaccordance withinformalagreements withthebanks,compensating balancesofupto10%or,incertaininstances, equivalent feesarerequiredtontaintain thelinesofcredit,and,onanyamountsactuallyborrowed, generally eitheradditional compen-satingbalancesofupto10%aremaintained oradjust-mcntsininterestratesaremade.Substantially allbankbalancesaremaintained bytheCompanytocompensate thebanksforservicesandforbothusedandavailable linesofcredit.9.Supplemental IncomeStatement Information andRelated-Party Transactions:

Electricoperating revenuesshownintheConsoli-datedStatement ofIncomeincludesalesofenergytoAEPSystemcompanies ofapproximately

$17,500,000 and$14,500,000 fortheyearsendedDecember31,1978and1977,respectively.

Operating expensesshownintheConsolidated State-mentofIncomeincludecertainitemsnotshownsepa-rately,asfollows:YearEndedDecember31,19781977(InThousands)

$6,241$2,965Purchased Power(a)...........

Interchange Power(Net):AEPSystemElectricUtilities

.OtherCompanies (b).........

140,957911$144,83380,04330,024$116,30819781977(DollarsinThousands)

Weightedaverageintcrcstrateofdebtoutstanding duringtheyear(a):NotesPayabletoBanks............

94%6.6%Commercial Paper..................

9.1%6.6%Average.amountofdebtoutstanding duringthcyear:NotesPayablctoBanks............

$31,862'39,457Commercial Paper..................

$36,211$58,716(a)Averageinterestratesaredetermined bydividinginter-estexpensedfortheyearbyaveragemonth-end debt.Taxes,OtherThanIncomeTaxes:RealandPersonalPropertyTaxes..StateGrossSales,ExciseandFran-chiseTaxes,andMiscellaneous StateandLocalTaxes..........

SocialSecurityTaxes-FederalandStateYearEndedDecember31,19781977(InThousands)

$14,617$13,6099,8421,973$26,4328,0781,721$23.40810.Commitments andContingencies:

Theconstruction budgetoftheCompanyandtheGenerating Subsidiary fortheyear1979isestimated at$241,000,000 and,inconnection therewith, com-mitmentshavebeenmade.TheCompanyparticipates withitsparent,twoasso-ciatedutilitycompanies, severalunaffiliated utilitycompanies, andOhioValleyElectricCorporation (OVEC)insupplying theU.S.Department ofEnergy(POE)withthepowerrequirements ofitsplantnearPortsmouth, Ohio.TheproceedsfromthesalesofpowerbyOVECaredesignedtobesufficient forOVECtomeetitsopeiating expensesandfixedcosts,including amortization oflong-term debtcapital(bal-anceapproximately

$43,300,000 asofDecember31,1978),overaperiodendingin1982,andtoprovideforanannualreturnonitsequitycapital.TheCom-pany,asaparticipant, isentitledtoreceivefromOVEC,andisobligated topayfor,7.6%ofthepowernotrequiredbyDOE.Thepoweragreement terminates (a)Includespowerpurchased fromOVECofapproximately

$1,558,000 in1978and$476,000in1977.(b)Includesinterchange powersoldtoOVECofapproxi-mately$908,000in1978and$956,000in1977.Chargestoincomeforroyalties andadvertising arelessthan1%ofgrossrevenuesineachcase.Salesandpurchases ofenergyandinterchange powertransactions areregulated bythevariouscommissions havingjurisdiction.

AmericanElectricPowerServiceCorporation pro-videscertainservicestotheCompanyandtheaffiliated companies intheAEPSystem.Thecostsoftheser-vicesaredetermined bytheservicecompanyonadirectwhargc basistotheextentpracticable andonreasonable basesofproration forindirectcosts.Thechargesforservicesaremadeonacostbasisbutin-cludenocompensation fortheuseofequitycapital,allofwhichisfurnished totheservicecompanybyAEP.Theservicecompanyissubjecttotheregulation oftheSecurities andExchangeCommission underthePublicUtilityHoldingCompanyAct'of1935.20 INDIANA&,MlGAiVELECTRICCOAfPANYANDGENERATING SUBSIDIARY in1979butDOEhasnotifiedOVECofitsdesiretonegotiate anextension to1992.In1978,threecourtproceedings brought,inrecentyearsbycertainmunicipalities inIndianaandMichigan,,

allwholesale customers oftheCompany,werecom-binedintoasingleconsolidated caseinaU.S.DistrictCourtandafourthactionwascommenced inthesamecourt.Atrialoftheconsolidated casewasheldand.inJanuary1979thecourtruledfortheplaintiffs thattheCompany,itsparent,andAmericanElectricPowerServiceCorporation haveviolatedtheantitrust laws,awardedthemunicipalities damagesofapproximately

$12,100,000 whentrebled,placedlimitations ontheCompany's puttingintoeffectorchargingwholesale ratestotheplaintiffs andenjoinedtheCompanyfromcertainpractices.

Thefinancial statements atDecember31,1978donotincludeanyprovision forsuchdam-ages.Thecompanies areappealing thedecisionandprovisions ofthejudgmentawardingmonetarydam-ageshavebeenstayed.Inanotherproceeding, theCompanyisawaitingde-cisiononitsappealtoFERC,filedin1977,withre-specttoarulingbyanadministrative lawjudgeonacomplaint madetothecommission bythesamegroupofmunicipalities.

Thatcomplaint, allegingthatthemunicipal electricsystemshadbeenthreatened withtermination ofwholesale electricservice,hadearlierbeenupheldbytheFERCjudge.InMarch1979,twoothermunicipal customers broughtaseparateactionagainsttheCompany,itsparentandtheServiceCorporation allegingviolations oftheantitrust lawsandseekingdamagesofatleast$7,000,000 beforetreblingandotherremedies.

Certainissuesinthecomplaint aresimilartothosetriedintheconsolidated casediscussed inthesecondpreceding paragraph.

Aspreviously

reported, theSecurities andExchangeCommission (SEC)hadcommenced aninvestigation, throughitsstaff,intocertainaspectsoftheAEPSys-tem'soperations, including itspromotion ofall-electric housingduringthe1960'sandtheacquisition andoperation ofcertaincoalandtransportation properties.

TheSECstaffhadmaintained thatcommission au-thorization shouldhavebeenobtainedforsomeofthetransactions.

TheAEPSystemcompanies disagreed butdidagreetoanegotiated settlement inordertoavoidlonglitigation withtheSEC.Asaresult,theAEPSystemcompanies agreedtoaconsentorderinaU.S.DistrictCourtinwhichtheyneitheradmittednordeniedtheallegations.

Aspartoftheagreement, aspecialauditorwasappointed toreviewintercompany chargesandcostsassociated withtheprogramsandtransactions involvedintheinvestigation; theauditor's reportwasfiledinDecember1978.TheAEPSystemcompanies areengagedinacontinuing program'fortheorderlyandeconomicdivestment ofalimitedamountofrealestate,acquiredinconnection withthehousingandindustrial development

programs, thatwassubjecttoquestion.

ln1975,aninvestigation wascommenced undertheFederalPowerActconcerning thereasonableness andprudenceofthecoal-purchasing policiesandpractices ofmembersoftheAEPSystem,themannerinwhichwholesale fuel-adjustment clausesareimplemented bySystemmembers,andrelatedmatters.In1978theFERCstaffissuedapreliminary reportwhichallegedovercharges ofapproximately

$10,000,000 onthepartoftheentireAEPSystem,ofwhichonlyarelatively smallportionrelatestotheCompany's operations.

Thereportalsoquestioned certainaspectsoftheAEPSystem'sfuelpositions andpolicies.

TheAEPSystemcompanies arepreparing aresponsetotheseallegations.

In1976acable-television organization filedananti-trustsuitinaU.S.DistrictCourtallegingthattheCompany,withfivetelephone companies namedasco-conspirators, hadattempted tomonopolize com-munications byterminating contracts andincreasing chargesfortherentalofutilitypoles,andsoughtdam-ageswhichwhentrebledwouldaggregate morethan$150,000,000.

Inearly1979,thecourtenteredajudgmentdenyingdamagesandinjunctive relief.Thecompanies aresubjecttocertaindeveloping lawsandregulations withrespecttoairandwaterquality,landuse,andotherenvironmental matters.IVhilethecompanies areunabletopredicttheultimateeffectofsuchlawsandregulations, itispossiblethattheymayberequiredtopaypenalties forfailuretocomplyduringcertainperiodsorthatcompliance there-withmayrequirethecompanies toincursubstantial additional coststomodifyorreplaceexistingandpro-posedequipment andfacilities.

Otherhighlycomplexlitigation relatestotheDonaldC.CookNuclearPlant'sfuel-supply contracts.

Twocontractors, UnitedNuclearCorporation andGeneralAtomicCompany(GAC),arevariously obligated tosupplyuraniumconcentrates andsixfabricated nuclear-fuelreloadstotheCompany.Eachcontractor claims,amongotherthings,thatitisnotormaynotbeobli-gatedtomakedeliveries ofuraniumconcentrates orfab-ricatednuclear-fuel reloadsandthatitisentitledtoapricehigherthancontracted.

TheCompanyreceivedthefirsttworeloadsandassureddeliveryoftheremain-ingfourreloadsthroughrights-reserved agreements withGAC,whichwereincorporated intoinjunctive 21 NOTESTOCONSOLIDATED FINANCIAL STATEMENTS (Concluded) ordersofthecourt.Undertheagreements, pendingthecourt'sjudgmentandwithoutprejudice totheultimaterightsoftheparties,thereloads,weretobesuppliedatahigherprovisional costtotheCompany.In1978,aU.S.DistrictCourtenteredjudgmentorderingGACtopaytheCompanydamagesofapproximately

$16,000,000 andtodelivertheremaining reloadsatthepricespecified inthecontract.

GAChasappealedthejudgment.

Astayofthemonetaryportionofthejudgmenthasbeengranted,butmotionstostaythespecific-performance portionofthejudgmenthavebeendenied.Thecompanies intendtoapplytoregulatory com-missionstoprovide,throughfutureincreased rates,forthecoststhatwillbeincurredtostorespentnuclearfuelandtodecommission theNuclearPlantattheendofitsservicelife.Thecompanies plantoeffectmodifi-cationstoincreasethepresentspent-fuel storageca-pacityoftheNuclearPlanttopermitnormaloperations throughtheearly1990's,atacostwhichisnotex-pectedtocauseamaterialincreaseintheconstruction budget.Thecompanies arealsostudyingalternative methodsofdecommissioning theNuclearPlantbutcannotreasonably

estimate, atthistime,thefuturecoststhatwillbeincurred.

ThePrice-Anderson Actlimitedthepublicliability ofalicenseeofanuclearplantto$560,000,000 forasinglenuclearincident, tobecoveredinpartbypri-vateinsurance withthebalancetobecoveredbyagree-mentsofindemnity withtheNuclearRegulatory Com-mission.TheGenerating Subsidiary haspurchased privateinsurance inthemaximumavailable amountof$140,000,000.

Intheeventofanuclearincidentin-volvinganycommercial nuclearfacilityin.thecountry,theGenerating Subsidiary, togetherwithotherlicensees, couldbeindividually assessed$5,000,000 perincidentforeachreactorowned(subjecttoamaximumof$10,000,000 inanyyearforeachreactorownedintheeventofmorethanoneincident).

ThePrice-Anderson indemnities havebeendecreased bytheaggregate amountwhichisassessable againstexistinglicensees andwillcontinuetodecreaseasnewoperating unitsarelicensed.

TheGenerating Subsidiary hasprocuredpropertyinsurance inthemaximumavailable amountof$220,-000,000fordamagetothenuclearplantfacilities andisaself-insurer foranypropertylossinexcessofthatamount.11.Leases:Thecompanies, aspartoftheiroperations, leaseproperty, plant,andequipment underleasesranginginlengthfrom2to35years.Mostoftheleasesrequirethecompanies topayrelatedpropertytaxes,mainte-nancecosts,andothercostsofoperation.

Thecom-paniesexpectthatinthenormalcourseofbusiness, leaseswillgenerally berenewedorreplacedbyotherleases.Thegreatestpartoftherentalsisunderleaseshavingpurchaseoptionsorhavingrenewaloptionsforsubstantially alloftheeconomiclivesoftheproperties.

Rentalsareanalyzedasfollows:YearEndedDecember31,19781977(InThousands)

$60,000$32,000GrossRentalsLessRentalRecoveries (including SublcascRentals)(a)............

NctRentals(b)(a)Includesamountspaidfororcompanies.

(b)Classified as:Operating Expcnscs............

ClearingandMiscellaneous Accounts(portions ofwhichachargedtoincome)1,000$59,0001,000$31,000reimbursed byassociated

$51,000$26,0008,0005,000$59,000$31,000Futureminimumleasepayments, byyearandintheaggregate, underthecompanies'apital leasesandnoncancelable operating leasesconsisted ofthefollow-ingatDecember31,1978:CapitalOperating Lcascs(a)

Leases(InThousands)

$6000$70006,0007,0006,0007,0006,0007,0005,0007,00074,00074,000$42,0001979.1980.1981.19821983.LaterYears.TotalFutureMinimumLeasePayments103,000$109,000LessEstimated InterestElementIncludedThcrcin(b)..............

61,000Estimated PresentValueofFutureMinimumLeasePayments.........

(a)Excludesleasesofnuclearfuel,allofwhicharccapitalleases.Nuclearfuelrentalscomprisethcunamortized balanceofthclessor'scost(approximately

$99,000,000 atDcccmbcr31,1978and$93,000,000 atDcccmbcr31,1977),lesssalvage,value,ifany,tobepaidoverthcperiodofusageinproportion toheatproduced, andcarryingchargesonthelessor'sunrccov-crcdcost.Itiscontemplated thatportionsofthepresently leasedmaterialwillbereplenished byadditional leasedmaterial.

(b)Interestratesusedrangefrom4.9%to12.1%.~22 IIVDIA¹tdtlhflGAiVELECTRICCOhfPAIVY AIVDGEIVERATIIVG SUBSIDIARY NuclearFuelt978l977(InThnnnnndn)

$143,000$132,000Coal-Mining andCoal-Transportation Equipment RealEstateElectricDistribution SystemPropertyOtherGrossProperties underCapitalLeasesLessAccumulated Provision forAmortization NetProperties underCapitalLeases..Obligations underCapitalLeases(a)..15,00013,00012,00011,000194,00058,000$136,000$141,00017,00013,00012,00010,000184,00053,000$131,000$136,000(a)Including anestimated

$37,000,000 and$31,000,000, re-spectively, duewithinoneyear.Thefollowing isaproformaanalysisofleasedprop-ertiesundercapitalleasesandrelatedobligations, assumingthatsuchleaseswerecapitalized:,

d'.d',gPDecember31,Operating Operating NetRevenuesIncomeIncome(InThousands)

Quarterly PeriodsEnded1978-Mar.31.................

$145,106$41,553$32,196June30.................

157,95840,18334,491(a)

Sept.30.................

152,21840,74922,739(b)

Dec.31.................

148,19837,34925,401(a) 1977-Mar.31.................

128,25831,82123,191June30.................

118,07030,69822,871Sept.30.................

133,01633,81225,817Dec.31.................

133,48034,06925,241(a)Includesincreases inAFUDCofapproximately

$1,567,000 recordedinthcsecondquarterand$3,372,000 recordedinthefourthquarterrelatingtochangesinAFUDCrates,appliedineachcaseeifecuveasofJanuary1,1978.(b)Includestheeffectofarevenuerefund(seeNote2),andachangeintaxestimate(secNote3).12.Unaudited Quarterly Financial Informationt Thefollowing consolidated quarterly financial in-formation isunaudited but,intheopinionoftheCompany,includesalladjustments (consisting ofonlynormalrecurring accruals) necessary forafairpres-entationoftheamountsshown:Hadcapitalleasesbeencapitalized, anyadditional netexpensewouldhavebeeninsignificant.

Theproformadatadonotgiverecognition tooffsetting ad-justments inallowable revenuesthatthecompanies believewouldnormallybeexpectedtooccurthroughtheregulatory rate-making process,iftherelatedleaseshadbeencapitalized.

Includedintheaboveanalysesoffutureminimumleasepaymentsandofproperties undercapitalleasesandrelatedobligations arecertainleasesastowhichportionsoftherelatedrentalsarepaidfororreim-bursedbyassociated companies intheAEPSystembasedontheirusageoftheleasedproperty.

TheCom-panycannotpredicttheextenttowhichorproportion inwhichtileassociated companies willutilizetheproperties undersuchleasesinthefuture.13.Unaudited Replacement-Cost Information:

Estimated replacement-cost andrelatedamountspertaining todepreciation, asofandfortheyearsendedDecember31,1978and1977,ofproductive capacity(asrepresented bypropertyinservice,ex-cludingnondepreciable itemssuchaslandandexclud-ingotheramountsforwhichreplacement-cost dataarenotrequiredtobecomputed) areconsiderably greaterthantherelatedoriginal~ost amountsreportedintheconsolidated financial statements.

Aquantitative analy-sisofsuchunaudited replacement-cost information isincludedintheCompany's 1978AnnualReport(Form10-K)totheSecurities andExchangeCommis-sion.Reference ismadeelsewhere hereinforinforma-tionwithregardtoobtaining acopyoftheCompany's Form10-Kfortheyear1978.23 Operating Statistics andBalanceSheetData19781977197619751974OPERATING STATISTICS ELEGTRIcOPERATING REYENUEs(Thousands):

FromKilowatt-hour Sales:Residential:

WithoutElectricHeating............

WithElectricHeating............'...

TotalResidential

...............

Commercial

.Industrial SalesforResale:Municipalities Cooperatives OtherElectricUtilities

..............

TotalSalesforResale...........

Miscellaneous TotalfromKilowatt-hour Sales....OtherOperating Revenues...............

TotalElectricOperating Revenues..

150,69196,370121,346137,78192,312109,35744,09115,619103,51739,12117/732166,441163,227223,2946,0627,729508,7394,085599,4304,050$603,480$512,824$96,624$90,8335406746,948$71,88837,447109,33572,52780,23326,84110,491110,382147,7142,573412,3823,811$416,193$69,43833,493102,93169,17675,16722,5519,17875,887107,6164.650359,5403,815$363,355$53,26527,08080,34550,55463,31423,4937,54855,99487,0353,389284,6372,969$287,606SoURGEsANDSALEsoFENERGY(Millions ofKilowatt-hours):

Sources:NetGenerated

-Steam:FossilFuelNuclearFuel.NetGenerated

-Hydroelectric

..........

NetGenerated

-Other................

SubtotalPurchased NetInterchange

.TotalSourcesLess:Losses,CompanyUse,Etc........

NetSources.7,23110,101(a) 7517>407301447522,1831,340208437,3174,7866812,1711827,92220,2751,27019,0057,7016,8097214,5822326,52321,3371,29020,04711,8023686,77818,9481,30517,6438,9026948,45118,0471,33516,7127,2558,8154,458(a)897314Sales:Residential:

WithoutElectricHeating....WithElectricHeating~....TotalResidential

.....Commercial Industrial

.SalesforResale:Municipalities Cooperatives OtherElectricUtilities

....TotalSalesforResale.Miscellaneous TotalSales2,35216223,974249843191,58581474689,867185208432,4561,6054,0612,6714,4731,6427865,1957,62317719,0052,3841,5773,9612,5794,2091,5277546,8499,13016820,0472,3741,4513,8252,4643,8351,5226905,1527,36415517,6432,1811,4133,5942,1924,1341,847651"4,1666,66412816,712(a)Includes691millionkilowatt-hours in1978and2,309millionkilowatt-hours in1975astestgeneration.

Thefuelcostassociated withsuchgeneration ischargedtootheroperation expense.24 IlVDIAJVA 4MICHIGAIV ELECTRICCOMPAIVYAIVDGElVERATIlVG SUBSIDIARY

~'ESIDENTIAL SERVICE-AVERAGES:

AnnualKwhUseperCustomer-TotalWithElectricHeating....AnnualElectricBill-TotalWithElectricHeating....PriceperKwh(Cents)-TotalWithElectricHeating....AvERAGECosToFFUELCGNsUMED(a):CentsperMillionBtu:CoalFuelOil........NuclearOverall.CentsperKilowatt-hour Generated:

CoalFuelOilNuclearOverall.1978109.68229.6834.6571.161.112.40.38.7510,26022)067$389$7363.793.34197774.96168.8029.7259.12.731.88.33.6110,64122,830$361$6683.392.93197665.8976.72(b)26.3446.47(b).63.84(b).28.47(b)10,43923,200$288$5512.762.37197556.09190.4427.8365.56.542.11.30.5310,30522,153$277$5112.692.31197451.68.187.3869.51.491.85.6710,52523,239$234$4392.221.89NUMBERoFELEGTRIGCUsToMERs

-Year-End:

Residential:

WithoutElectricHeating.............

WithElectricHeating...............

TotalResidential

...............

Commercial Industrial SalesforResale:Municipalities Cooperatives OtherElectricUtilities

...............

TotalSalesforResale...........

Miscellaneous,

.TotalElectricCustomers

.........

315,47274900390,37242,1062,6892364201071,331436605313,08572,059385,14441,9072,5002361161001,304430,95523225958151897981,2591,280426,980422,996312,211310,95369,23766,812381,448377,76541,70341,4562,4522,418281,90464,233346,13737,5932,41623586871,167387,40,0BALANCE.SHEETDATA-Year-End(Millions)

UtilityPlantAccumulated Provision forDepreciation

.......NetUtilityPlant.TotalAssetsandOtherDebits...............

CommonStock,PremiumonCapitalStock,andOtherPaid-inCapitalRetainedEarningsCumulative Preferred Stock.Long-term Debt(c).$2,3974101,9872,3505271372271,051$2,1073591,7482,1234671051871,038$1,9333171,6161,91440976147914$1,7712751,496-1,76436780147895$1,6302491,3811,54531871117739(a)Excludeseffectofdeferredcollection offuelcosts.(b)Includeseffectofrefundreceivedfromsupplierof-fueloilresulting fromsettlement oflitigation concerning pricing.Withoutsuchrefund,theaveragecostoffueloilfor1976wouldhavebeen173.27centspermillionBtuand1.91centsperkilowatt-hour generated, andtheoverallcostoffuelwouldhavebeen49.33centspermillionBtuand0.50centsperkilowatt-hour generated.

(c)Including PortionDueWithinOn>>Year.25 INDIANA4MICHIGANELECTOMPANYDirectors FRANKN.BIENW.A.BLACK(f)LAWRENCER.BRUNKERICHARDE.DISBROWJ.LEEFLANAGANE.W.HBRMANSBN G.E.LEMASTERS GERALDP.MALONEY(a)RICHARDC.MENGEJ.F.STARKJOHNTILLINGHAST (m)..W.S.WHITE,JR.RORERT0.WHITMAN(b)OfficersW.S.WHITE,JR.President J.F.STARK(g)Executive VicePresident W.A.BLACK(f)Ezectttive VicePresident J.F.STARK(h)SeniorVicePresident

.,FRANKN.BIENVicePresident RICHARDE.DISBROWVicePresident JOHNE.DOLAN(I)VicePresident A.JOSEFHDOWDVicePresident GERALDP.MALONEY'VicePresident RICHARDC.MENGEVicePresident JoHNTILLINGHAsT (m)VicePresident JOHNR.BURTONSecretary RGBERTO.WHITMAN(c)-Treasurer PETERJ.DEMARIA(d)Treasurer H.D.ANDERSON, JR.Assistant Secretary andAssistant Treasurer ALLENH.STUHLMANN Assistant Secretary andAssistant Treasurer JOHNF.DILORENZO, JR.Assistant Secretary CEDRICL.MAST(j)Assistant Secretary WARRENO.KBLTNER(k)Assistant Secretary WILLIAME.OLSONAssistant Secretary PETERJ.DEMARIA(c)Assistant Treasurer WILLIAMN.D'ONOFRIO (I)Assistant Treasurer GERALDR.KNORR(i)Assistant Treasurer Titeprincipal occupation ofeachoftheabovedirectors andofficersofIndiana*MichiganElectricCompany,withtcnexceptions, isasanofficerofAmericanElectricPowerServiceCorporation ofNcwYork,N.Y.Theexcep-tionsaretheMessrs.IIr.A.Black,LawrenceR.Brunke,J.LceFlanagan, E.IV.Hcrmanscn, IVarrcnO.Kcltncr,G.ELeMasters, I.F.Stark,RichardC.Menge,AllenH.Stuhlmann, andCedricLMastwhoseprincipal occupations areasofficersofIndiana&MichiganElectricCompany,asindicated.

(a)ElectedApril25,1978(b)ResignedApril25,1978(c)ResignedApril27,1978(d)ElectedApril27,1978(c)ResignedApril27,1978(I)ElectedJulyI,1978(g)ResignedJulyI,1978(h)ElectedJuly1,1978(i)ElectedJulyI,1978(j)ResignedJanuary1,1979(k)ElectedJanuaryI,1979(1)ElectedMarchI,1979(m)ResignedMarch29,197926 INDIANA&MICHIGANELECTRICCOMPANYPriceRangeofCumulative Preferred StockByQuarters(I978andI977)1978-Quarters1977-QuartersCumulative Preferred Stock1st2nd3rd4th1st2nd31'd4th($100ParValue)4Vs%SeriesDividends PaidPerShareMarketPrice-$PerShare(OTC)Ask(high/low)

Bid(high/low) 4,56%SeriesDividends PaidPerShareMarketPrice-SPerShare(OTC)Ask(high/low)

Bid(high/low) 4.12%SeriesDividends PaidPerShareMarketPrice-SPerShare(OTC)Ask(high/low)

Bid(high/low) 7.08%SeriesDividends PaidPerShareMarketPrice-$PerShare(NYSE)-High-Low7.76%SeriesDividends PaidPerShareMarketPrice-$PerShare(NYSE)-High-Low8.68%SeriesDividends PaidPerSharcMarketPrice-SPerShare(NYSE)-High-Low12%SeriesDividends PaidPerShareMarketPrice-$PerShare(NYSE)-High-Low($25ParValue)$2.15Series'ividends PaidPerShareMarketPrice-$PerShare(NYSE)-High-Low$2.25Series"Dividends PaidPerShareMarketPrice-SPerShare(NYSE)-High-Low40/4043'h/43Vt

$1.14$1.14$1.14$1.14$1.14$1.14$1~14$1.1446/45$1.03$1.03.$1.03$1.03$1.03$1.03$1.03$1.0346/4645/4543/43$1.77$1.77$1.77$1.77$1.7745/4545/44$1.77$1.'77$1.7779th7476697/s77th69th77Vi64V48176th81s/s77Vs83'h7780th75$1.94$1.94$1.94$1.94$1.94$1.94$1.94$1.948580~/s84N75867/s7682748982ih89th84th9186%8984$2.17$2.17$2.17$2.17$2.17$2.17$2.17$2.179891ih9382987/s83th94th829994'9s/491101'h96997/s94$3.00$3.00$3.00$3.00$3.00$3.00$3.00$3.00116111ih113109113%108V4112%103123117120Fs117123V~118'21113V4S.5375$.5375$.537523%22%227/s20V423th21V4S.53751227/s19'.215S.5375$.537525s/42524Vs23V~S.7125~~~$.5625$.56252421'4'/s21%24i/s20Vs$1.03125$1.03125$1.03125$1.03125$1.03125$1.03125$1.03125$1.03125OTC-Over-the-Counter NYSE-NewYorkStockExchange'ssuedinMay1977~~Issuedin~ifarch1978"~Includespartialdividendforfirstquarter.Note-Theabovequotations bidandaskedrepresent pricesbetweendealersanddonotrepresent actualtransactions.

Marketquotations providedbyNationalQuotation Bureau,Inc.-Dashindicates quotation notavailable.

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