UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report January 23, 1996
THE MONTANA POWER COMPANY
(Exact name of registrant as specified in its charter)
Montana 1-4566 81-0170530
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
40 East Broadway, Butte, Montana 59701
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (406) 723-5421
Exhibit Index is found on page 5.
ITEM 5. Other Events
Fourth Quarter Net Income
Net income for the year ended December 31, 1995 was 92 cents per share,
a decrease of $1.08 compared to the year 1994. The decrease was largely the
result of a previously announced decision to close an underground mine in
Colorado and to adopt a new financial accounting standard "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" -
SFAS No. 121. The impairments resulted in an after tax charge to income of
approximately $46,000,000 or 85 cents per share. The writedown of the
investment in the underground coal mine was $29,000,000 and the writedown of
certain other non-regulated coal, oil and gas properties was $17,000,000.
The Colorado mine will be closed by March 31, 1996. The mine incurred
after tax losses of approximately $9,500,000 in the first nine months of 1995
and approximately $7,800,000 during all of 1994.
Consolidated net income for 1995 was also adversely impacted by the
March 1995 arbitration decision that lowered the price of coal sold to
Colstrip Units 1 and 2. The lower price, retroactive to July 1991, benefited
the Utility 13 cents through lower fuel costs, while Entech's earnings
declined 18 cents.
Utility operations benefited from a 16% increase in low-cost
hydroelectric generation in 1995. Favorable hydroelectric conditions resulted
in low-cost power in the regional energy market, displacing higher cost
thermal energy. These conditions and the arbitration decision increased
Utility earnings. Entech's earnings for the year also were negatively impacted
by reduced coal volumes sold due to thermal displacement at the Colstrip units
and the loss of a Midwestern coal contract. Early 1996 reports forecast an
above average snow pack and at or above average streamflows for the run-off
season.
The Independent Power Group's earnings were lower in 1995, reflecting
the absence of development revenues. Increased income from operating projects
partially offset this expected decrease.
In the fourth quarter of 1995 consolidated earnings decreased by 87
cents per share due largely to the writedown of non-regulated assets.
For comparative purposes, the following table shows the breakdown of
consolidated net income per share by principal business segment.
Quarter Ended
1995 1994
Utility Operations $ 0.56 $ 0.49
Entech (0.62) 0.26
Independent Power Group 0.01 0.07
Consolidated $ (0.05) $ 0.82
Year Ended
1995 1994
Utility Operations $ 1.22 $ 0.91
Entech (0.38) 0.90
Independent Power Group 0.08 0.19
Consolidated $ 0.92 $ 2.00
ITEM 7. Exhibits
99a Preliminary Condensed Balance Sheet at December 31, 1995 and 1994.
99b Preliminary Consolidated Statements of Income for the Quarters Ended
December 31, 1995 and 1994 and for the Year Ended December 31, 1995 and
1994.
99c Preliminary Utility Operations Schedule of Revenues and Expenses for the
Quarters Ended December 31, 1995 and 1994 and for the Year Ended
December 31, 1995 and 1994.
99d Preliminary Entech Operations Schedule of Revenues and Expenses for the
Quarters Ended December 31, 1995 and 1994 and for the Year Ended
December 31, 1995 and 1994.
99e Preliminary Independent Power Group Operations Schedule of Revenues and
Expenses for the Quarters Ended December 31, 1995 and 1994 and for the
Year Ended December 31, 1995 and 1994.
Exhibit Index
Exhibit Page
99a Preliminary Condensed Balance Sheet at December 31, 1995 and
1994. 6
99b Preliminary Consolidated Statement of Income for the Quarters
Ended December 31, 1995 and 1994 and for the Year Ended
December 31, 1995 and 1994. 7
99c Preliminary Utility Operations Schedule of Revenues and
Expenses for the Quarters Ended December 31, 1995 and 1994
and for the Year Ended December 31, 1995 and 1994. 8
99d Preliminary Entech Operations Schedule of Revenues and
Expenses for the Quarters Ended December 31, 1995 and 1994
and for the Year Ended December 31, 1995 and 1994. 9
99e Preliminary Independent Power Group Operations Schedule of
Revenues and Expenses for the Quarters Ended December 31, 1995
and 1994 and for the Year Ended December 31, 1995 and 1994. 10
<TABLE>
<CAPTION>
Exhibit 99a
THE MONTANA POWER COMPANY AND SUBSIDIARIES
PRELIMINARY CONDENSED BALANCE SHEET
December 31, December 31,
1995 1994
Thousands of Dollars
<S> <C> <C>
ASSETS:
Utility and other plant $ 2,148,469 $ 1,992,239
Plant under construction 57,095 79,510
Less - accumulated depreciation and depletion 663,215 619,195
$ 1,542,349 $ 1,452,554
Entech property 540,502 530,167
Less - accumulated depreciation and depletion 213,727 189,926
326,775 340,241
Independent Power Group 72,452 70,253
Less - accumulated depreciation 19,666 17,560
52,786 52,693
Miscellaneous investments 103,115 104,110
Current assets 272,029 294,630
Deferred charges 289,037 268,469
$ 2,586,091 $ 2,512,697
LIABILITIES:
Common shareholders' equity $ 945,478 $ 955,520
Preferred stock 101,416 101,416
Long-term debt 625,004 588,876
$ 1,671,898 $ 1,645,812
Current liabilities 329,378 313,068
Deferred income taxes and credits 584,815 553,817
$ 2,586,091 $ 2,512,697
</TABLE>
<TABLE>
<CAPTION>
Exhibit 99b
PRELIMINARY CONSOLIDATED STATEMENT OF INCOME
The Montana Power Company and Subsidiaries
Quarter Ended Year Ended
December 31, December 31,
1995 1994 1995 1994
Thousands of Dollars
<S> <C> <C> <C> <C>
REVENUES $270,049 289,405 $ 953,539 $1,005,970
EXPENSES:
Operations 112,219 122,292 424,443 440,472
Maintenance 15,365 15,972 68,286 75,357
Selling, general and administrative 25,456 26,105 98,327 103,127
Taxes other than income taxes 20,219 25,539 89,858 99,200
Depreciation, depletion and amortization 20,595 21,682 86,976 86,711
Writedowns of Long-Lived Assets 74,297 0 74,297 0
268,151 211,590 842,187 804,867
INCOME FROM OPERATIONS 1,898 77,815 111,352 201,103
INTEREST EXPENSE AND OTHER INCOME:
Interest 11,019 10,485 43,788 42,817
Other (income) deductions - net (4,171) (2,278) (10,947) (10,532)
6,848 8,207 32,841 32,285
INCOME TAXES (3,833) 24,184 21,574 55,226
NET INCOME (1,117) 45,424 56,937 113,592
DIVIDENDS ON PREFERRED STOCK 1,807 1,807 7,227 7,227
NET INCOME AVAILABLE FOR COMMON STOCK $ (2,924) $ 43,617 $ 49,710 $ 106,365
AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING (000) 54,528 53,498 54,121 53,125
NET INCOME PER SHARE OF COMMON STOCK $ (0.05) $ 0.82 $ 0.92 $ 2.00
</TABLE>
<TABLE>
<CAPTION>
Exhibit 99c
UTILITY OPERATIONS (PRELIMINARY)
Quarter Ended Year Ended
December 31, December 31,
1995 1994 1995 1994
Thousands of Dollars
<S> <C> <C> <C> <C>
ELECTRIC UTILITY:
REVENUES:
Revenues $ 125,617 $ 126,853 $ 422,019 $ 427,686
Intersegment revenues 1,355 1,458 5,793 5,924
126,972 128,311 427,812 433,610
EXPENSES:
Power supply 45,534 51,135 148,240 178,927
Transmission and distribution 6,303 6,672 26,916 27,566
Selling, general and administrative 10,729 11,324 41,932 46,134
Taxes other than incomes taxes 8,495 10,455 43,302 42,214
Depreciation and amortization 10,628 10,175 42,506 40,699
81,689 89,761 302,896 335,540
INCOME FROM ELECTRIC OPERATIONS 45,283 38,550 124,916 98,070
NATURAL GAS UTILITY:
REVENUES:
Revenues (other than gas supply cost
revenues) 31,758 32,397 93,460 88,914
Gas supply cost revenues 6,354 5,730 21,660 18,191
Intersegment revenues 197 272 862 917
38,309 38,399 115,982 108,022
EXPENSES:
Gas supply costs 6,354 5,730 21,660 18,191
Other production, gathering and
exploration 2,509 2,417 9,662 8,882
Transmission and distribution 2,749 2,639 10,932 10,154
Selling, general and administrative 4,125 4,335 17,161 17,669
Taxes other than income taxes 3,942 3,773 14,841 13,708
Depreciation, depletion and amortization 2,700 2,510 10,793 9,842
22,379 21,404 85,049 78,446
INCOME FROM GAS OPERATIONS 15,930 16,995 30,933 29,576
INTEREST EXPENSE AND OTHER INCOME:
Interest 10,955 10,839 44,029 43,013
Other (income) deductions - net (1,187) (1,146) (5,417) (3,947)
9,768 9,693 38,612 39,066
INCOME BEFORE INCOME TAXES 51,445 45,852 117,237 88,580
INCOME TAXES 19,241 18,009 44,047 33,171
UTILITY NET INCOME $ 32,204 $ 27,843 $ 73,190 $ 55,409
</TABLE>
<TABLE>
<CAPTION>
Exhibit 99d
ENTECH OPERATIONS (PRELIMINARY)
Quarter Ended Year Ended
December 31, December 31,
1995 1994 1995 1994
Thousands of Dollars
<S> <C> <C> <C> <C>
COAL:
REVENUES:
Revenues $ 50,369 $ 65,812 $ 207,517 $ 252,507
Intersegment revenues 10,644 11,910 25,659 42,201
61,013 77,722 233,176 294,708
EXPENSES:
Cost of sales 35,013 45,427 155,829 169,259
Selling, general and administrative 6,904 7,979 27,711 29,463
Taxes other than incomes taxes 7,000 10,014 27,210 37,733
Depreciation, depletion and amortization 1,867 3,267 11,187 12,649
Writedown of Long-Lived Assets 55,102 0 55,102 0
105,886 66,687 277,039 249,104
INCOME FROM COAL OPERATIONS (44,873) 11,035 (43,863) 45,604
OIL AND NATURAL GAS:
REVENUES:
Revenues 27,195 24,802 100,198 97,994
Intersegment revenues 71 92 241 254
27,266 24,894 100,439 98,248
EXPENSES:
Cost of sales 17,384 13,458 60,526 54,283
Selling, general and administrative 2,509 2,192 9,320 8,514
Taxes other than income taxes 348 700 2,334 3,340
Depreciation, depletion and amortization 3,959 4,521 17,569 18,464
Writedown of Long-Lived Assets 19,194 0 19,194 0
43,394 20,871 108,943 84,601
INCOME FROM OIL AND NATURAL GAS OPERATIONS (16,128) 4,023 (8,504) 13,647
OTHER OPERATIONS:
REVENUES:
Revenues 7,418 6,567 26,308 24,164
Intersegment revenues 183 322 662 787
7,601 6,889 26,970 24,951
EXPENSES:
Cost of sales 4,521 4,514 17,127 16,787
Selling, general and administrative 1,926 1,160 5,537 4,717
Taxes other than income taxes 98 76 343 287
Depreciation, depletion and amortization 484 480 1,745 1,945
7,029 6,230 24,752 23,736
INCOME FROM OTHER OPERATIONS 572 659 2,218 1,215
INTEREST EXPENSE AND OTHER INCOME:
Interest 833 234 4,596 1,425
Other (income) deductions - net (2,878) (1,030) (6,978) (3,517)
(2,045) (796) (2,382) (2,092)
INCOME BEFORE INCOME TAXES (58,384) 16,513 (47,767) 62,558
INCOME TAXES (24,837) 2,618 (27,248) 14,670
ENTECH NET INCOME $ (33,547) $ 13,895 $ (20,519) 47,888
</TABLE>
<TABLE>
<CAPTION>
Exhibit 99e
INDEPENDENT POWER GROUP OPERATIONS (PRELIMINARY)
Quarter Ended Year Ended
December 31, December 31,
1995 1994 1995 1994
Thousands of Dollars
<S> <C> <C> <C> <C>
REVENUES:
Revenues $ 19,614 $ 26,321 $ 79,095 93,647
Earnings from unconsolidated investments 1,543 601 2,622 2,080
Intersegment revenues 87 148 796 1,461
21,244 27,070 82,513 97,188
EXPENSES:
Operation and maintenance 17,744 18,048 68,300 75,080
Selling, general and administrative 1,092 1,217 3,557 4,088
Taxes other than incomes taxes 337 521 1,831 1,916
Depreciation and amortization 958 729 3,176 3,112
20,131 20,515 76,864 84,196
INCOME (LOSS) FROM OPERATIONS 1,113 6,555 5,649 12,992
INTEREST EXPENSE AND OTHER INCOME:
Interest 5 7 21 22
Other (income) deductions - net (882) (696) (3,413) (4,711)
(877) (689) (3,392) (4,689)
INCOME BEFORE INCOME TAXES 1,990 7,244 9,041 17,681
INCOME TAXES 1,764 3,558 4,775 7,386
IPG NET INCOME $ 226 $ 3,686 $ 4,266 $ 10,295
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE MONTANA POWER COMPANY
(Registrant)
By:/s/ J. P. Pederson
J. P. Pederson
Vice President and Chief Financial Officer
Date: January 23, 1996
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