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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM U-3A2
Statement by Holding Company Claiming Exemption under Rule U-3a-2 from the
provisions of the Public Utility Holding Company Act of 1935
To be filed Annually Prior to March 1
ALASKA POWER & TELEPHONE COMPANY
--------------------------------------------------------------------------------
(Name of Company)
hereby files with the Securities Exchange Commission, pursuant to Rule 2, its
statement claiming exemption as a holding company from the provisions of the
Public Utility Holding Company Act of 1935, and submits the following
information:
1. Name, State of organization, location and nature of business of claimant
and every subsidiary thereof, other than any exempt wholesale generator
(EWG) or foreign utility company in which claimant directly or indirectly
holds an interest.
2. A brief description of the properties of claimant and each of its
subsidiary public utility companies used for the generation,
transmission, and distribution of electric energy for sale, or for the
production, transmission and distribution of natural or manufactured gas,
indicating the location of principal generating plants, transmission
lines, producing fields, gas manufacturing plants, and electric and gas
distribution facilities, including all such properties which are outside
the State in which claimant and its subsidiaries are organized and all
transmission or pipelines which deliver or receive electric energy or gas
at the borders of such State.
3. The following information for the last calendar year with respect to
claimant and each of its subsidiary public utility companies:
(a) Number of kWh. Of electric energy sold (at retail or wholesale) and
Mcf. Of natural or manufactured gas distributed at retail.
(b) Number of kWh. of electric energy and Mfc. Of natural or manufactured
gas distributed at retail outside the State in which each company is
organized.
(c) Number of kWh. Of electric energy and MCF. OF NATURAL OR MANUFACTURED
AS SOLD AT WHOLESALE OUTSIDE THE State in which each such company is
organized, or at the State line.
(d) Number of kWh. Of electric energy and Mcf. Of natural or manufactured
gas purchased outside the State in which each such company is
organized or at the State line.
4. The following information for the reporting period with respect to
claimant and each interest it holds directly or indirectly in an EWG or a
foreign utility company, stating monetary amounts in United States
dollars:
1
(a) Name, location, business address and description of the facilities
used by the EWG or foreign utility company for the generation,
transmission and distribution of electric energy for sale or for the
distribution at retail of natural or manufactured gas.
(b) Name of each system company that holds an interest in such EWG or
foreign utility company; and description of the interest held.
(c) Type and amount of capital invested, directly or indirectly, by the
holding company claiming exemption; any direct or indirect guarantee
of the security of the EWG or foreign utility company by the holding
company claiming exemption; and any debt or other financial
obligation for which there is recourse, directly or indirectly, to
the holding company claiming exemption or another system company,
other than the EWG or foreign utility company.
Potential persons who are to respond to the collection of information contained
in this form are not required to respond unless the form displays a currently
valid OMB control number. SEC 1834 (2-97)
(d) Capitalization and earnings of the EWG or foreign utility company
during the reporting period.
(e) Identify any service, sales or construction contract(s) between
the EWG or foreign utility company and a system company, and describe
the services to be rendered or goods sold and fees or revenues under
such agreement(s).
EXHIBIT A
A consolidating statement of income and surplus of the claimant and its
subsidiary companies for the last calendar year, together with a consolidating
balance sheet of claimant and its subsidiary companies as of the close of such
calendar year.
The above-named claimant has caused this statement to be duly executed on its
behalf by its authorized officer on this 31st day of March, 2000.
ALASKA POWER & TELEPHONE COMPANY
--------------------------------------------------------------------------------
Name of claimant
By Russell A. Smith
------------------
(title) VP/CONTROLLER
--------------
CORPORATE SEAL
Attest: HOWARD GARNER , EXECUTIVE VICE PRESIDENT
-----------------------------------------
Name, title, and address of officer to whom notices and correspondence
concerning this statement should be addressed:
ALASKA POWER & TELEPHONE COMPANY RUSSELL A. SMITH, VP/CONTROLLER
-------------------------------- --------------------------------
(Name) (Title)
P.O. BOX 3222, PORT TOWNSEND, WASHINGTON 98368
2
EXHIBIT B Financial Data Schedule
If, at the time a report on this form is filed, the registrant is required to
submit this report and any amendments thereto electronically via EDGAR, the
registrant shall furnish a Financial Data Schedule. The Schedule shall set forth
the financial and other data specified below that are applicable to the
registrant on a consolidated basis.
Item No. Caption Heading
1 Total Assets
2 Total Operating Revenues
3 Net Income
EXHIBIT C
An organizational chart showing the relationship of each EWG or foreign utility
company to associate companies in the holding-company system.
3
ATTACHMENTS TO FORM U-3A-2
1. Name of claimant is Alaska Power & Telephone Company (AP&T). AP&T operates as
a regulated public utility providing electric and/or telephone service. AP&T is
fully regulated by the Regulatory Commission of Alaska (RCA). AP&T is a Holding
Company with the following subsidiaries:
Electric Operations
Alaska Power Company - Serving the following communities in Alaska: Skagway,
Haines, Tok, Dot Lake, Chistochina, Mentasta Lake, Tetlin, Tanacross, Healy
Lake, Bettles/Evansville, Northway, Northway Village, Allakaket/Alatna,
Eagle, Eagle Village, Craig, Hydaburg, Hollis, Coffman Cove, Klawock, and
Whale Pass. (Retail and wholesale electric generation and distribution).
BBL Hydro, Inc. - Prince of Wales Island (wholesale hydroelectric generation).
Goat Lake Hydro, Inc. - Skagway (wholesale hydroelectric generation).
Telecommunication Operations
Alaska Telephone Company - Serving the following communities in Alaska: Skagway,
Tok, Dot Lake, Dry Creek, Tetlin, Chisana, Healy Lake, Craig, Hydaburg,
Hollis, Naukati, Whale Pass, Myers Chuck, Edna Bay, Metlakatla, Petersburg,
Wrangell, and Haines.
Bettles Telephone, Inc. - Serving; Bettles, Evansville and Jim River Camp.
North Country Telephone, Inc. - Serving; Eagle and Eagle Village.
AP&T Wireless Inc. - Serving; Ketchikan, Juneau and the surrounding areas.
AP&T Long Distance Inc. - Serving; Alaska communities
2.All public utility operations of AP&T are conducted solely within Alaska.
There is no natural gas activity. Diesel-powered generators and or
hydroelectric generation systems generate the electric service in each
location. There is no intertie to other electric systems or generation
sources.
3. (a) Number of kWh sold (by individual subsidiary):
Alaska Power Company 60,593,632 kWh retail
2,549,400 kWh wholesale
(b) None sold or distributed out of the state of Alaska.
(c) None sold or distributed out of the state of Alaska.
(d) None sold or distributed out of the state of Alaska.
4. There are no holdings directly or indirectly in an EWG. The following
subsidiary of AP&T holds an interest in a foreign hydroelectric generation
company.
Nonregulated Operations
Hydro West Group, LLC. (HWG) - Located in Port Townsend, Washington and
providing engineering and consulting services, primarily related to small
hydroelectric power projects. HWG owns a 25% equity share of Inversiones
Pasabien, S.A.
(a) Inversiones Pasabien, S.A. is a Guatemalan corporation located at 15
Avenida 16-38 Zona 13 in Guatemala City, Guatemala, CA. The company is
a 12.5 MW wholesale hydroelectric generation facility with an average
annual generation of 60,000 MW hours. The company's main customer is
the Guatemalan government owned distribution company INDE.
(b) Other unrelated companies owning a equity share in Inversiones
Pasabien, S.A. are as follows:
a. Valores Mercantiles, S.A. 50%
b. Ghella Sogene, C.A. 25%
(c) HWG, LLC is a wholly owned subsidiary of AP&T. AP&T's investment in
members' equity was $2,504,872 at December 31, 2000. HWG has a
Long-Term note payable of $1,725,000 payable to Puget Sound Energy
related to the purchase.
(d) The company's operations first began during 2000 and there were no
material earnings to be reported.
(e) No contracts exist between the foreign company and any system company
as of 12/31/2000.
Exhibit A, attached is the consolidating financial statements.
ALASKA POWER & TELEPHONE CO.
Consolidated B/S
December 31, 2000
(Page 1 of 2)
APT ALD APC ATC ATW
--- --- --- --- ---
ASSETS
Utility Plant: Electric Plant 2,614,328 0 41,012,313 0
Telecommunications 0 0 0 28,439,641 807,654
Non-Utility Plant 485,751 0 0 0 0
------------- -------------- ------------- ------------- --------------
3,100,078 0 41,012,313 28,439,641 807,654
Less: Accum. Depreciation -1,536,356 0 -14,586,328 -10,982,414 -194,777
------------- -------------- ------------- ------------- --------------
1,563,723 0 26,425,985 17,457,227 612,877
Utility Plant Under Construction:
Short Term CWIP 444,775 0 1,553,650 166,549 41,776
------------- -------------- ------------- ------------- --------------
Total Utility Plant 2,008,497 0 27,979,635 17,623,776 654,654
------------- -------------- ------------- ------------- --------------
Other Assets:
Prelim Survey/Investigation Costs 22,873 0 610,523 0 0
Other Defered Debits 2,776,430 4,697 231,226 76,902 7,610
Rate Stabilization Asset 0 0 0 0 0
Intercompany 30,775,190 -117,369 -14,792,921 -16,747,470 -206,072
Goodwill, Net of Amortization 749,352 0 0 8,440,569 0
Special Funds - Restricted 0 0 0 0 0
------------- -------------- ------------- ------------- --------------
Total Other Assets 34,323,845 -112,672 -13,951,173 -8,229,998 -198,462
------------- -------------- ------------- ------------- --------------
Current Assets:
Cash 192,690 0 43,755 25,664 1,515
Trade Accounts Receivable -57 100 1,415,196 1,868,106 126,319
Other Receivables 207,807 0 75,049 0 -875
Contracts Receivable 4,256 0 0 0 0
Fuel, Supplies and Other Inv. 0 0 748,047 291,779 317,851
Income Taxes Recoverable 361,822 0 0 0 0
Prepaid Expenses and Other 351,382 0 0 9,504 0
Costs in Excess of Billings 385,793 0 0 0 0
------------- -------------- ------------- ------------- --------------
Total Current Assets 1,503,693 100 2,282,048 2,195,053 444,810
------------- -------------- ------------- ------------- --------------
Total Assets 37,836,036 -112,572 16,310,510 11,588,830 901,002
============= ============== ============= ============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Stockholders' Equity:
Common Stock 1,210,288 0 0 0 0
Additional Paid in Capital 6,160,221 0 0 0 0
Retained Earnings 12,790,743 0 0 0 0
Subsidiary Equity -27,360,635 -94,394 11,969,583 9,088,534 797,064
Net Income (Loss) -1,890,969 -18,178 1,667,228 938,455 -26,162
------------- -------------- ------------- ------------- --------------
Total Equity -9,090,351 -112,572 13,636,811 10,026,989 770,902
------------- -------------- ------------- ------------- --------------
Liabilities:
Long Term Debt 44,952,956 0 0 0 0
Other Liabilities:
L-T Deferred Income Taxes 237,661 0 2,074,726 1,326,629 88,228
Customer Advances for Const. 0 0 225,054 0 0
Deferred Credits 0 0 0 -201,176 32,619
------------- -------------- ------------- ------------- --------------
Total Other Liabilities 237,661 0 2,299,780 1,125,453 120,847
------------- -------------- ------------- ------------- --------------
Curent Liabilities:
Trade Accounts Payable 916,641 0 142,387 93,167 0
Accrued Taxes & Expenses 771,402 0 53,369 166,152 10,999
Custom Deposits/Advance Billings 0 0 74,193 158,793 0
Current Deferred Income Tax 47,728 0 103,970 18,275 -1,746
------------- -------------- ------------- ------------- --------------
Total Current Liabilities 1,735,771 0 373,919 436,388 9,253
------------- -------------- ------------- ------------- --------------
Total Liabilities and
Stockholders' Equity 37,836,036 -112,572 16,310,510 11,588,830 901,002
============= ============== ============= ============= ==============
ALASKA POWER & TELEPHONE CO.
Consolidated B/S
December 31, 2000
(Page 2 of 2)
BBL BTT GLH HDW NCT Total
--- --- --- --- --- -----
ASSETS
Utility Plant:
Electric Plant 10,361,242 0 16,964,245 0 0 70,952,127
Telecommunications 0 757,242 0 0 349,981 30,354,518
Non-Utility Plant 0 0 0 60,940 0 546,691
------------- -------------- ------------- ------------- ------------- -------------
10,361,242 757,242 16,964,245 60,940 349,981 101,853,337
Less: Accum. Depreciation -1,140,410 -419,836 -715,788 -55,280 -132,466 -29,763,655
------------- -------------- ------------- ------------- ------------- -------------
9,220,832 337,407 16,248,457 5,660 217,515 72,089,682
Utility Plant Under Construction:
Short Term CWIP 0 0 19,955 65,650 72 2,292,427
------------- -------------- ------------- ------------- ------------- -------------
Total Utility Plant 9,220,832 337,407 16,268,411 71,310 217,587 74,382,109
------------- -------------- ------------- ------------- ------------- -------------
Other Assets:
Prelim Survey/Investigation Costs 0 0 343,651 0 0 977,046
Other Defered Debits 130,878 0 491,390 2,509,186 0 6,228,320
Rate Stabilization Asset 0 0 760,718 0 0 760,718
Intercompany 565,237 -39,379 518,301 -90,723 135,208 0
Goodwill, Net of Amortization 0 0 0 0 0 9,189,921
Special Funds - Restricted 0 0 6,753,104 0 0 6,753,104
------------- -------------- ------------- ------------- ------------- -------------
Total Other Assets 696,115 -39,379 8,867,163 2,418,463 135,208 23,909,109
------------- -------------- ------------- ------------- ------------- -------------
Current Assets:
Cash 0 0 0 0 -6 263,618
Trade Accounts Receivable 0 18,879 0 24,000 34,693 3,487,236
Other Receivables 0 0 961,919 0 0 1,243,901
Contracts Receivable 0 0 0 0 0 4,256
Fuel, Supplies and Other Inv. 0 1,220 0 0 280 1,359,177
Income Taxes Recoverable 0 0 0 0 0 361,822
Prepaid Expenses and Other 0 0 0 0 0 360,886
Costs in Excess of Billings 0 0 0 0 0 385,793
------------- -------------- ------------- ------------- ------------- -------------
Total Current Assets 0 20,098 961,919 24,000 34,968 7,466,689
------------- -------------- ------------- ------------- ------------- -------------
Total Assets 9,916,947 318,126 26,097,494 2,513,772 387,763 105,757,907
============= ============== ============= ============= ============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Stockholders' Equity:
Common Stock 0 0 0 0 0 1,210,288
Additional Paid in Capital 0 0 0 0 0 6,160,221
Retained Earnings 0 0 0 0 0 12,790,743
Subsidiary Equity 674,725 242,174 1,891,734 2,504,872 286,341 0
Net Income (Loss) 145,752 30,373 463,088 0 53,466 1,363,052
------------- -------------- ------------- ------------- ------------- -------------
Total Equity 820,478 272,547 2,354,822 2,504,872 339,807 21,524,304
------------- -------------- ------------- ------------- ------------- -------------
Liabilities:
Long Term Debt 7,632,724 0 22,235,187 0 0 74,820,867
Other Liabilities:
L-T Deferred Income Taxes 1,388,603 38,399 1,499,737 0 42,585 6,696,568
Customer Advances for Const. 0 0 0 0 0 225,054
Deferred Credits 0 0 0 8,900 0 -159,657
------------- -------------- ------------- ------------- ------------- -------------
Total Other Liabilities 1,388,603 38,399 1,499,737 8,900 42,585 6,761,965
------------- -------------- ------------- ------------- ------------- -------------
Curent Liabilities:
Trade Accounts Payable 45,228 2,486 0 0 1,057 1,200,966
Accrued Taxes & Expenses 31,165 891 7,748 0 317 1,042,043
Custom Deposits/Advance Billings 0 3,905 0 0 4,027 240,918
Current Deferred Income Tax -1,251 -102 0 0 -30 166,844
------------- -------------- ------------- ------------- ------------- -------------
Total Current Liabilities 75,142 7,180 7,748 0 5,371 2,650,771
------------- -------------- ------------- ------------- ------------- -------------
Total Liabilities and
Stockholders' Equity 9,916,947 318,126 26,097,494 2,513,772 387,763 105,757,907
============= ============== ============= ============= ============= =============
ALASKA POWER & TELEPHONE CO.
Consolidated I/S
For the Twelve Months Ending December 31, 2000
(Page 1 of 2)
APT ALD APC ATC ATW BBL
--- --- --- --- --- ---
Revenues:
Electric - - 12,927,744 - - 1,419,426
Telecommunications - 508,249 - 8,272,524 582,485 -
------------- ------------- ------------- ------------- ------------- -------------
Total Revenues - 508,249 12,927,744 8,272,524 582,485 1,419,426
Expenses:
Electric 33,690 - 10,542,918 - - 655,672
Telecommunications - 534,449 - 6,919,926 620,192 -
------------- ------------- ------------- ------------- ------------- -------------
Total Expenses 33,690 534,449 10,542,918 6,919,926 620,192 655,672
------------- ------------- ------------- ------------- ------------- -------------
Operating Income (33,690) (26,200) 2,384,826 1,352,598 (37,707) 763,755
Other (Income) Expense:
Interest Expense 2,175,145 - 297 - - 572,847
Interest Income (3,032) - - - - -
Gross (Profit)/Loss on Contract Revenues 349,130 - - - - -
Gain on Sale of Non-Utility Plant (25,490) - - - - -
Miscellaneous 196,018 - - - - (19,167)
------------- ------------- ------------- ------------- ------------- -------------
2,691,772 - 297 - - 553,680
------------- ------------- ------------- ------------- ------------- -------------
Income before Income Taxes (2,725,462) (26,200) 2,384,529 1,352,598 (37,707) 210,074
Provision for Income Taxes (834,493) (8,022) 717,301 414,143 (11,545) 64,322
------------- ------------- ------------- ------------- ------------- -------------
Net Income (1,890,969) (18,178) 1,667,228 938,455 (26,162) 145,752
============= ============= ============= ============= ============= =============
AP&T Alaska Power & Telephone Company ALD AP&T Long Distancw APC Alaska Poer
Company ATC Alaska Telephone Company ATW AP&T Wireless, Inc
BBL BBL Hydro, Inc.
BTT Bettles Telephone, Inc.
GLH Goat Lake Hydro, Inc.
NCT North Country Telephone, Inc.
ALASKA POWER & TELEPHONE CO.
Consolidated I/S
For the Twelve Months Ending December 31, 2000
(Page 2 of 2)
BTT GLH NCT Combined Elimination Consolidated
--- --- --- -------- ----------- ------------
Revenues:
Electric - 2,124,683 - 16,471,853 (2,783,391) 13,688,462
Telecommunications 329,084 - 248,278 9,940,620 - 9,940,620
------------- ------------- ------------- ------------ ------------- -------------
Total Revenues 329,084 2,124,683 248,278 26,412,473 (2,783,391) 23,629,082
Expenses:
Electric - 623,207 - 11,855,487 (2,783,391) 9,072,096
Telecommunications 285,307 - 171,218 8,531,093 - 8,531,093
------------- ------------- ------------- ------------ ------------- -------------
Total Expenses 285,307 623,207 171,218 20,386,579 (2,783,391) 17,603,188
Operating Income 43,777 1,501,476 77,060 6,025,894 - 6,025,894
Other (Income) Expense:
Interest Expense - 1,383,299 - 4,131,588 - 4,131,588
Interest Income - (505,270) - (508,302) - (508,302)
Gross (Profit)/Loss on Contract Revenues - - - 349,130 - 349,130
Gain on Sale of Non-Utility Plant - - - (25,490) - (25,490)
Miscellaneous - (44,004) - 132,848 - 132,848
------------- ------------- ------------- ------------ ------------- -------------
- 834,025 - 4,079,775 - 4,079,775
------------- ------------- ------------- ------------ ------------- -------------
Income before Income Taxes 43,777 667,451 77,060 1,946,119 - 1,946,119
Provision for Income Taxes 13,404 204,363 23,594 583,067 - 583,067
------------- ------------- ------------- ------------ ------------- -------------
Net Income 30,373 463,088 53,466 1,363,052 - 1,363,052
============= ============= ============= ============ ============= =============
AP&T Alaska Power & Telephone Company ALD AP&T Long Distance APC Alaska Power
Company ATC Alaska Telephone Company ATW AP&T Wireless, Inc.
BBL BBL Hydro, Inc.
BTT Bettles Telephone, Inc.
GLH Goat Lake Hydro, Inc.
NCT North Country Telephone, Inc.
Alaska Power & Telephone Company
and Subsidiaries
Consolidated Financial Statements
Years Ended December 31, 2000 and 1999
with Report of Independent Auditors
Alaska Power & Telephone Company and Subsidiaries
Consolidated Financial Statements
Years Ended December 31, 2000 and 1999
Contents
Report of Independent Auditors........................................... 1
Audited Consolidated Financial Statements
Consolidated Balance Sheets......................................... 2
Consolidated Statements of Income................................... 4
Consolidated Statements of Stockholders' Equity..................... 5
Consolidated Statements of Cash Flows............................... 6
Notes to Consolidated Financial Statements.......................... 7
Report of Independent Auditors
The Board of Directors
Alaska Power & Telephone Company
We have audited the accompanying consolidated balance sheets of Alaska Power &
Telephone Company and subsidiaries as of December 31, 2000 and 1999, and the
related consolidated statements of income, stockholders' equity, and cash flows
for the years then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Alaska Power &
Telephone Company and subsidiaries at December 31, 2000 and 1999, and the
consolidated results of their operations and their cash flows for the years then
ended, in conformity with accounting principles generally accepted in the United
States.
February 26, 2001
1
Alaska Power & Telephone Company and Subsidiaries
Consolidated Balance Sheets
-----------------------------
December 31
2000 1999
ASSETS
Utility plant
Electric and non-utility $ 71,498,819 $ 67,862,147
Telecommunications 30,354,518 14,197,174
------------ ------------
101,853,337 82,059,321
Less accumulated depreciation 29,763,655 20,217,422
------------ ------------
72,089,682 61,841,899
Utility plant under construction 2,292,427 2,606,965
------------ ------------
Total utility plant, net 74,382,109 64,448,864
------------ ------------
Other assets
Preliminary survey and investigation costs 977,046 735,478
Investments and other assets (See Note 3) 6,989,038 3,833,593
Goodwill - net of accumulated amortization of
$218,332 in 2000, and $113,713 in 1999 (See Note 4) 9,189,921 783,041
Special Funds - Restricted (See Note 5 on Goat Lake) 6,753,104 6,753,104
------------ ------------
Total other assets 23,909,109 12,105,216
------------ ------------
Current assets
Cash 263,618 783,016
Accounts receivable, less allowance for
doubtful accounts of $29,441 in 2000, and
$22,508 in 1999 4,735,393 3,477,390
Contracts receivable 0 447,431
Fuel, supplies, and other inventory 1,359,177 1,199,544
Income taxes recoverable 361,822 347,894
Prepaid expenses 360,886 57,815
Costs and estimated earnings in excess of
billings on uncompleted contracts 385,793 297,708
------------ ------------
Total current assets 7,466,689 6,610,798
------------ ------------
$105,757,907 $ 83,164,878
============ ============
See accompanying notes.
2
Alaska Power & Telephone Company and Subsidiaries
Consolidated Balance Sheets
-----------------------------
December 31
2000 1999
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Stockholders' equity Common stock, $1 par value:
Authorized shares - 2,000,000
Issued and outstanding shares - 1,210,288 in 2000,
and 1,202,034 in 1999 $ 1,210,288 $ 1,202,034
Additional paid-in capital 6,160,221 6,027,600
Retained earnings 14,153,795 13,743,575
------------ ------------
Total stockholders' equity 21,524,304 20,973,209
------------ ------------
Long-term debt
Goat Lake Hydro, Inc. note payable (See Note 5) 22,235,187 22,453,769
Other notes payable, less current portion 50,540,775 30,450,020
------------ ------------
Total long-term debt 72,775,962 52,903,789
------------ ------------
Other liabilities
Deferred income taxes (See Note 8) 6,696,570 5,981,046
Customer advances for construction 225,054 207,910
------------ ------------
Total other liabilities 6,921,624 6,188,956
------------ ------------
Current liabilities
Accounts payable 1,041,309 779,159
Accrued taxes and expenses 1,042,043 917,236
Deferred income taxes (See Note 8) 166,842 97,704
Customer deposits and advance billings 240,918 171,223
Current portion of long-term debt 2,044,905 1,133,602
------------ ------------
Total current liabilities 4,536,017 3,098,924
------------ ------------
$105,757,907 $ 83,164,878
============ ============
See accompanying notes.
3
Alaska Power & Telephone Company and Subsidiaries
Consolidated Statements of Income
-----------------------------
Year Ended December 31
2000 1999
------------ ------------
Revenues
Electric $ 13,672,643 $11,667,136
Telecommunications 9,940,620 7,844,165
------------ ------------
Total revenues 23,613,263 19,511,301
------------ ------------
Expenses
Operations and maintenance - Electric 7,047,560 5,387,848
Depreciation and amortization - Electric 2,273,318 2,131,611
Interest expense, net - Electric 2,448,661 2,645,327
------------ ------------
Electric Expenses 11,769,539 10,164,786
------------ ------------
Operations and maintenance - Telecommunications 6,522,889 5,418,639
Depreciation - Telecommunications 1,750,868 1,169,377
Interest expense - Telecommunications 1,174,625 313,640
------------ ------------
Telecommunications Expenses 9,448,382 6,901,656
------------ ------------
------------ ------------
Operating income 2,395,342 2,444,859
------------ ------------
Other income
Gross profit (loss) on construction contract revenues (349,130) 957,155
Gain on sale of non-utility plant 25,490 65,904
Miscellaneous (125,583) (47,775)
------------ ------------
Income before income tax 1,946,119 3,420,143
------------ ------------
Provision for income taxes 583,067 1,168,455
------------ ------------
Net income $ 1,363,052 $ 2,251,688
============ ============
Basic earnings per share $ 1.13 $ 1.89
============ ============
Diluted earnings per share $ 1.11 $ 1.86
============ ============
See accompanying notes.
4
Alaska Power & Telephone Company and Subsidiaries
Consolidated Statements of Stockholders' Equity
---------------------------------------------------------------
Additional
Common Paid-In Retained
Stock Capital Earnings Total
------------ ---------- ----------- -----------
Balance at January 1, 1999 $1,177,534 $5,705,804 $12,688,063 $19,571,401
------------ ---------- ----------- -----------
Net income - - 2,251,688 2,251,688
Cash dividends - - (1,196,176) (1,196,176)
Sale of common stock to ESOP 35,484 780,657 - 816,141
Sale of common stock 3,242 71,324 - 74,566
Repurchase of common stock (31,726) (698,010) - (729,736)
Common stock options exercised 17,500 167,825 - 185,325
------------ ---------- ----------- -----------
Balance at December 31, 1999 1,202,034 6,027,600 13,743,575 20,973,209
------------ ---------- ----------- -----------
Net income - - 1,363,052 1,363,052
Cash dividends - - (952,832) (952,832)
Sale of common stock to ESOP 46,297 1,027,410 - 1,073,707
Sale of common stock 3,032 66,061 - 69,093
Repurchase of common stock (46,437) (1,064,376) - (1,110,813)
Common stock options exercised 5,362 103,526 - 108,888
------------ ---------- ----------- -----------
Balance at December 31, 2000 $1,210,288 $6,160,221 $14,153,795 $21,524,304
============ ========== =========== ===========
See accompanying notes.
5
Alaska Power & Telephone Company and Subsidiaries
Consolidated Statements of Cash Flows
----------------------------
Year Ended December 31
2000 1999
OPERATING ACTIVITIES
Net income $ 1,363,052 $ 2,251,688
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 4,024,186 3,300,988
Gain on sale of non-utility plant (25,490) (65,904)
Deferred income tax provision 784,662 1,159,939
Changes in operating activities:
Change in accounts receivable (904,184) (216,009)
Change in other; assets, liabilities, and receivables (407,496) (832,083)
Change in inventories (35,650) (52,897)
Change in income taxes recoverable (13,928) (339,295)
Change in accounts payable and accrued liabilities 378,940 (237,931)
----------- -----------
Net cash provided by operating activities 5,164,092 4,968,496
----------- -----------
INVESTING ACTIVITIES
Acquisitions of utility plant (6,222,146) (8,161,554)
Acquisition of GTE Alaska exchanges (15,621,634) (916,215)
Acquisition of Hydro West Group, LLC (2,509,186) 0
Other investments (1,060,475) (253,418)
Preliminary survey and investigation costs (241,568) (140,170)
----------- -----------
Net cash used in investing activities (25,655,009) (9,471,357)
----------- -----------
FINANCING ACTIVITIES
Proceeds from long-term debt 32,788,335 17,940,286
Payments on long-term debt (12,004,859) (12,584,439)
Payment of cash dividends (952,832) (1,196,176)
Proceeds from sale of common stock 1,251,688 1,076,032
Repurchase of common stock (1,110,813) (729,736)
----------- -----------
Net cash provided by financing activities 19,971,519 4,505,967
----------- -----------
Net increase (decrease) in cash (519,398) 3,106
CASH AT BEGINNING OF YEAR 783,016 779,910
----------- -----------
CASH AT END OF YEAR $ 263,618 $ 783,016
=========== ===========
NON-CASH INVESTING ACTIVITIES
Transfer of amount in other receivables to
investment in KEC $ 497,481 $ 0
=========== ===========
See accompanying notes.
6
Alaska Power & Telephone Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2000
1. The Company and Summary of Significant Accounting Policies
Alaska Power & Telephone Company and subsidiaries (AP&T) supplies electric and
telephone service to several communities in the state of Alaska and acts as the
general contractor on certain construction projects. AP&T is subject to
regulation by the Regulatory Commission of Alaska (RCA), the Federal
Communications Commission, and the Federal Energy Regulatory Commission (the
Commissions) with respect to rates for service and maintenance of its accounting
records. AP&T's accounting policies conform to generally accepted accounting
principles as applied to regulated public utilities and are in accordance with
the accounting requirements and rate-making practices of the Commissions.
Consolidation
The accompanying consolidated financial statements include the accounts of AP&T
and its wholly owned subsidiaries, after elimination of significant intercompany
transactions and balances.
Revenue and Cost Recognition
The Company recognizes revenues from fixed-price and modified fixed-price
construction contracts on the percentage-of-completion method, measured by the
percentage of cost incurred to date to estimated total cost for each contract.
This method is used because management considers total cost to be the best
available measure of progress on these contracts. Because of inherent
uncertainties in estimating costs and percentage of completion, actual results
could differ from those estimates.
Utility Plant and Depreciation
The cost of additions to and replacements of utility plant are capitalized. Cost
includes direct material, labor, and similar items and charges for such indirect
costs as engineering, supervision, payroll taxes, and pension benefits. AP&T
capitalizes, as an additional cost of electric utility plant, an allowance for
funds used during construction (AFUDC), which represents the allowed cost of
capital used to finance a portion of construction work in progress for projects
of more than one year in duration. AFUDC consists of debt and equity components
that, when capitalized, are credited as noncash items to other income and
interest charges. The cost of current repairs and maintenance is charged to
expense, while the cost of betterment is capitalized.
7
Alaska Power & Telephone Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2000
1. The Company and Summary of Significant Accounting Policies (continued)
The original cost of utility plant together with removal cost, less salvage is
charged to accumulated depreciation at such times as assets are retired and
removed from service. For financial statement purposes, depreciation is computed
on the straight-line method using rates based on average service lives. For
income tax purposes, AP&T computes depreciation using accelerated methods where
permitted.
Goodwill
Goodwill is amortized on a straight-line basis over periods ranging from 15 to
40 years.
Preliminary Survey and Investigation Costs
AP&T defers costs incurred for the preliminary survey and investigation of
proposed construction projects in accordance with the rules of the Commissions.
These deferred costs are capitalized into utility plant when the preliminary
survey and investigation projects are completed or are charged to expense in the
period that a proposed project is abandoned. These projects are in various
stages of licensing and development and as of December 31, 2000, management
believes no pending impairment exists.
Fuel, Supplies, and Other Inventory
Fuel, supplies, and other inventory are valued at the lower of cost or market on
a first-in, first-out basis. The supplies and other inventory are primarily held
for use in construction projects including repairs and maintenance of the
Company's delivery systems.
Income Taxes
AP&T uses the liability method in accounting for income taxes. Accordingly,
deferred income taxes result from temporary differences in the recognition of
income and expense for tax and financial reporting purposes. The differences are
primarily due to preliminary survey and investigation costs and depreciation
expense.
Customer Advances for Construction
Customer advances for construction of additions to the electric distribution
systems are deferred and amortized through discounted service billings to the
customer over a 60-month period. At the end of the amortization period, any
remaining balance is recorded as a reduction of the respective utility plant
accounts.
8
Alaska Power & Telephone Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2000
1. The Company and Summary of Significant Accounting Policies (continued)
Stock-Based Compensation
The Company has adopted the disclosure only provisions of FASB Statement No.
123, and applies Accounting Principles Board Opinion No. 25 and related
interpretation in accounting for its employee stock option plans. Accordingly,
the Company's stock-based compensation expense is recognized based on the
intrinsic value of the option on the date of grant. Disclosure in accordance
with Statement 123 is provided in Note 10.
Earnings per Share
The Company has calculated its basic earnings per share data according to the
method prescribed in FASB Statement No. 128 "Earnings per Share." Under this
Statement, basic earnings per share are based on the weighted-average number of
shares of common stock outstanding, excluding any potential dilution that could
occur if any outstanding options were exercised or any other contracts to issue
common stock were converted. Diluted earnings per share reflect the impact of
the dilution caused by outstanding stock options using the Treasury Stock
Method. FASB Statement No. 128 requires the dual presentation of basic and
diluted earnings per share. Average stock outstanding for purposes of
calculating diluted earnings per share was 1,228,137 in 2000, and 1,207,858 in
1999 (including the dilutive effect of stock options of 21,976, and 18,074
respectively).
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year
presentation.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
9
Alaska Power & Telephone Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2000
2. Utility Plant
Annual
Depreciation
2000 1999 Rate
----------- ----------- ------------
Electric plant:
Hydroelectric $19,546,158 $19,531,805 2%
Other generation 15,587,065 14,904,219 4% to 8%
Transmission and distribution 25,333,335 23,405,780 2.5% to 4%
Other 10,347,578 9,290,997 2.5% to 20%
Land 684,683 729,346 -
----------- -----------
Electric 71,498,819 67,862,147
----------- -----------
Telecommunications plant:
General support assets 6,012,853 3,199,389 2.5% to 20%
Central office assets 10,679,148 5,997,341 8% to13%
Cable and wire facilities 11,678,294 3,841,375 4% to 6%
Nonregulated investment 1,730,240 1,056,151 10% to 20%
Land 253,983 102,918 -
----------- -----------
Telecommunications 30,354,518 14,197,174
----------- -----------
Total utility plant $101,853,337 $82,059,321
=========== ===========
3. Investments and Other Assets
2000 1999
----------- -----------
Investment in CoBank $ 951,545 $ 794,148
Investment in Ketchikan Electric Company 1,405,487 908,006
Investment in Inversiones Pasabien Hydro Project 2,304,161 0
Investment in Cangrejal Hydro Project 205,025 0
Investment in Alaska Network Systems 234,998 234,998
Rate stabilization asset 760,718 0
Other assets 1,127,104 1,896,441
----------- -----------
$ 6,989,038 $ 3,833,593
=========== ===========
CoBank is organized similar to a cooperative and is owned by the customers it
serves. As such, a portion of CoBank's earnings is returned to its customers.
AP&T reinvests a portion of those earnings in additional stock of CoBank based
on a five-year average of the outstanding borrowings.
10
Alaska Power & Telephone Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2000
3. Investments and Other Assets (continued)
The Company owns a 50% share of Ketchikan Electric Company LLC (KEC). The
principal purpose and business of KEC is to construct, own, operate and manage a
hydroelectric power system in the Ketchikan Gateway Borough. The investment
represents capital contributions to KEC. As of December 31, 2000, management
believes no pending impairment exists. (See Note 7)
The Company is subject to the provisions of Statement of Financial Accounting
Standards No. 71, "Accounting for the Effects of Certain Types of Regulation"
(SFAS 71). SFAS 71 allows the establishment of regulatory assets for the
allowable revenue requirement or the capitalization of costs if those items are
expected to be recovered in future rates. As of December 31, 2000, the Company
has a regulatory asset of $760,718. The Company continues to meet the
requirements of SFAS 71 since the Company's rates are intended to recover the
cost of service plus a rate of return on the Company's investment, as well as
providing specific recovery of deferred items in prior periods.
4. Acquisitions
During 1999, AP&T entered into an agreement through ATEAC Inc. to purchase the
assets and assume the related liabilities of GTE Alaska, a subsidiary of the GTE
Corporation. The agreement is between GTE Corporation and ATEAC Inc., of which
AP&T is a 25% shareholder. The total purchase price of $43.35 million has been
allocated to the shareholders according to the book value, and any related
liabilities, of the particular exchanges each shareholder has agreed to
purchase. Other assets as of December 31, 1999, include $916,215, which
represented a down payment on the purchase. Closing on the sale was completed on
August 31, 2000, and AP&T's share of the purchase price was $16.53 million. The
related goodwill created by the purchase was $8.51 million, and will be
amortized on a straight-line basis over 40 years. Financing for the purchase has
been arranged through CoBank (See Note 5). The results of operations for the GTE
exchanges are included from the date of the purchase.
On September 7, 2000, AP&T entered into an agreement to purchase 100% of the
Members Equity in Hydro West Group LLC, (HWG) a subsidiary of Puget Sound
Energy, Inc (PSE). The total purchase price of $2.5 million has been allocated
to the assets. The principal assets of HWG are a 25% equity investment in the
Inversiones Pasabien Hydroelectric Project and a 30% equity investment in the
Cangrejal Hydroelectric Project and are accounted for under the Equity Method.
Both projects are in various stages of start up, and there are no material
transactions to report. Financing for the purchase has been arranged through
PSE. (See Note 5)
11
Alaska Power & Telephone Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2000
5. Long-Term Debt
Long-term debt consists of the following:
2000 1999
------------ ------------
Goat Lake Hydro, Inc., note payable to secure Power Revenue
Bonds series 1997. Face amount of $23,000,000 less the
original issue discount of $304,813, and the bond sinking
fund amount of $235,000, secured by the Power Sales
Agreement, a Construction Funding Agreement, and all
assets of Goat Lake Hydro, Inc. Interest rate average of
6% per year, principal due in annual installments from
2000 through 2032 $ 22,235,187 $ 22,453,769
Notes payable to National Bank for Cooperatives (CoBank):
Note payable, secured by BBL Hydro Inc., assets and
revenues, due in monthly installments through 2022, at
7.17% fixed interest rate through 2002 7,632,724 7,751,425
Note payable, secured by telephone assets, due in quarterly
installments through 2008, at 7.15% fixed interest rate 3,856,112 4,218,048
Note payable, secured by electric assets, due in quarterly
installments through 2014, at 7.28% fixed interest rate 3,461,375 3,631,882
Note payable, secured by electric assets, due in quarterly
installments through 2010, at 7.33% fixed interest rate 3,239,329 3,426,628
Note payable, secured by electric assets, due in
quarterly installments through 2012, variable interest
rate, 8.13% at December 31, 2000 5,662,785 5,891,908
Note payable, unsecured line of credit, due February
2002, variable interest rate, 7.99% at December 31, 2000 3,000,000 4,000,000
Note payable, secured by telephone assets, due in
quarterly installments through 2015, variable interest
rate, 8.13% at December 31, 2000 6,000,000 0
12
Alaska Power & Telephone Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2000
5. Long-Term Debt (continued)
2000 1999
------------ ------------
Note payable, secured by telephone assets and revenues,
due in monthly installments through 2015, at 8.13%
variable interest rate $ 15,719,875 $ 0
Note payable to commercial bank, unsecured line of credit. 0 1,300,000
Notes payable to State of Alaska, unsecured, with interest
rates ranging from 0% to 4.2%, maturing at various dates
2,053,536 1,109,005
Note payable to PSE, secured by all assets of HWG, LLC, due
in monthly installments beginning 2002, at 8.5% fixed
interest through July 2008
1,725,000 0
Other debt, unsecured, with interest rates ranging from 2%
to 11%, maturing at various dates
234,944 254,726
------------ ------------
74,820,867 54,037,391
Less current portion 2,044,905 1,133,602
------------ ------------
Total long-term debt $ 72,775,962 $ 52,903,789
============ ============
Annual maturities for the five years beginning January 1, 2001 are $2,044,905,
$5,626,628, $2,982,200, $3,220,018, and $3,474,642, respectively, and
$57,352,097, thereafter.
Note payable by GLH to secure the Power Revenue Bonds series 1997 is the result
of the issuance on December 31, 1997 of a series of tax-exempt bonds by the
Alaska Industrial Development and Export Authority (AIDEA). The proceeds are
restricted in use, for the purpose of financing the acquisition, purchase,
construction, improvement, and equipment of the project known as the Upper Lynn
Canal Regional Power Supply System. Of these restricted funds, $2 million is
required to remain in reserve for the term of the bonds. To secure payment of
bond principal and interest, AIDEA has assigned to U.S. Bank Trust National
Association all rights and interests in the note. The note is secured by all
assets and revenues of GLH and a Power Sales Agreement (PSA) between
13
Alaska Power & Telephone Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2000
5. Long-Term Debt (continued)
GLH and Alaska Power Co. (APC), both wholly owned subsidiaries of AP&T. The
Regulatory Commission of Alaska has approved the PSA for the life of the GLH
note. This approval allows APC to charge its customers the entire annual costs
as defined in the PSA, i.e., principal and interest due on the bonds, all
operating costs (excluding depreciation), general and administrative costs, and
the return on equity permitted by the Commission. A portion of these annual
costs is charged to the rate stabilization asset (See Note 3), representing the
amounts to be collected from customers in future years. The PSA requires all
GLH's production and sales of electricity be sold to and purchased by APC for
the life of the agreement.
As of December 31, 2000, the Company had unsecured lines of credit of $4,000,000
from CoBank and $10,000,000 from other commercial banks. This total of
$14,000,000, less the outstanding amount of $3,000,000, is available for general
and other corporate needs.
Interest paid on debt was $4,075,569 in 2000, and $3,373,242 in 1999.
6. Operating Lease Agreements
AP&T leases its administrative office and a portion of its utility plant under
noncancellable leases expiring through 2011. Rent expense was $301,560 and
$276,286 for 2000 and 1999, respectively. Certain of the leases include renewal
provisions at AP&T's option. Minimum rental commitments under noncancellable
operating leases, excluding hydroelectric operations, are $397,594. Minimum
annual rental commitments are $57,039 in each of the next five years. Additional
cancelable lease agreements have been secured for the use of the land for
hydroelectric operations. The term of the agreements extend for the life of the
hydroelectric license of 50 years. Rent expense for hydroelectric operations was
$158,892 in 2000, and $133,010 in 1999.
7. Construction Contract Commitments
The Company has signed a fixed price construction contract totaling $17.2
million with KEC (See Note 3) to build the Mahoney Lake Hydroelectric Project.
License requirements and permitting were performed during 1999 and 2000. The
detailed engineering work is scheduled for 2001 and the primary construction
efforts are expected to begin in the year 2002. A construction line of credit
from CoBank to KEC will supply the financing requirements for the Project.
Obtaining funding of the construction line of credit is subject to the
completion of a Power Sales Agreement between KEC and Ketchikan Public Utility,
and will be secured by the assets of KEC.
14
Alaska Power & Telephone Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2000
8. Income Taxes
The components of the consolidated provision for income taxes are as follows:
2000 1999
---------- ----------
Current:
Federal $ (185,316) $ 10,806
State (16,279) (2,290)
---------- ----------
(201,595) 8,516
Deferred 784,662 1,159,939
---------- ----------
Provision for income taxes $ 583,067 $1,168,455
========== ==========
Total tax expense differs from that computed at the statutory federal income tax
rate due to the following:
2000 1999
---------- ----------
Income tax provision at federal rate of 34% $ 661,680 $1,162,849
State income taxes, net of federal benefit 107,145 189,049
Amortization of deferred investment tax credits (12,804) (12,807)
Benefit of cash dividends paid to ESOP members (138,079) (173,408)
Other (34,875) 2,772
---------- ----------
Provision for income taxes $ 583,067 $1,168,455
========== ==========
The components of the deferred tax assets and liabilities as of December 31,
2000 and 1999 are as follows:
2000 1999
---------- ----------
Current:
Deferred tax assets $ (142,982) $ (109,761)
Deferred tax liabilities 309,824 207,465
---------- ----------
166,842 97,704
Long-term deferred tax liabilities 6,696,570 5,981,046
---------- ----------
Total net deferred tax liability $6,863,412 $6,078,750
========== ==========
Federal and state income taxes paid were $ 40,000 in 2000, and $650,000 in 1999.
15
Alaska Power & Telephone Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2000
9. Employee Stock Ownership Plan
AP&T maintains an employee stock ownership plan. All employees who have
completed one year of full-time service (1,000 hours) and have attained the age
of 21 are eligible to participate in the plan. Participants may elect to
contribute from 1% to 13.5% of their wages to the plan, which can be invested in
the common stock of AP&T or into other investment accounts. Employer
contributions match the participant's contributions up to the first 3% of the
participant's wages. Employer matching contributions were $157,429 and $136,719
in 2000 and 1999, respectively. Additional employer contributions are made
annually at 8% of the eligible employees' gross wages. These additional employer
contributions were $419,809 and $233,832 in 2000 and 1999, respectively.
Employer contributions are allocated to all plan participants as of December 31,
the end of the plan year. The plan provides that participants' interests in
employer-funded contributions become fully vested after five years of full-time
employment. ESOP shares outstanding are included in the earnings per share
calculations.
10. Stock Option Plan
In 1991, AP&T established a stock option plan. The plan provides for the grant
of incentive stock options. Stockholders have approved a total of 250,000 shares
to be reserved for the plan from the authorized and unissued common stock. These
options vest and become exercisable five years after the date of grant and
expire ten years after the date of grant. The effect on net income and earnings
per share of the fair value approach under FASB Statement No.123 is not
materially different from those amounts recorded under APB 25. A summary of the
activity related to the plan is as follows:
Weighted
Shares Average
Under Exercise
Option Price Per
Share
-------- ---------
Balance at December 31, 1998, unexercised 147,000 $ 18.29
Granted 38,500 23.00
Canceled (11,500) 17.81
Exercised (17,500) 10.59
--------
Balance at December 31, 1999, unexercised 156,500 20.34
--------
Granted 45,500 24.00
Canceled (11,000) 21.73
Exercised (3,000) 17.40
--------
Balance at December 31, 2000, unexercised 188,000 $ 21.19
========
16
Alaska Power & Telephone Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2000
11. Subsequent Events
On March 8, 2001, AP&T entered into an agreement to purchase 40% of the common
stock of Summit Alaska Inc (Summit). Summit is an Alaskan Corporation located in
Anchorage, Alaska. The principal purpose and business of Summit, is road
building and paving which is conducted primarily through fixed-price and
modified fixed-price construction contracts. The total purchase price of $1.1
million will be accounted for as an investment under the equity method.
Financing for the purchase has been made with the Company's available lines of
credit. (See Note 5)
17