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 (Date of earliest event reported) April 21, 1997
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 4.
ITEM 5. Other Events
First Quarter Net Income
Net income for the quarter ended March 31, 1997 was 83 cents per share,
a 19% increase over the first quarter 1996.
Nonutility earnings increased 11 cents per share due primarily to
significantly higher market prices for oil and natural gas in the U.S. and
Canada and increased production. Oil production increased nearly 9% due in
part to waterflood injection projects initiated in 1996 and a 45% increase in
average oil prices. Natural gas sales volumes increased 6% and average
natural gas prices increased 32%. These increases and a $2,200,000 gain on
property dispositions boosted net income approximately $6,300,000. The
decrease in coal prices due to the settlement with Puget Sound Energy was more
than offset by increased sales volumes from the Rosebud and Jewett Mines
resulting in a slight increase in earnings in coal operations.
Utility earnings for the first quarter increased slightly over 1996
primarily due to increased natural gas revenues resulting from higher rates
and customer growth, increased electric power brokering activities and reduced
power supply expenses due to the availability of low-cost electricity in the
region. These positives were largely offset by reduced retail electric and
natural gas volumes sold due to weather 10% warmer than 1996 and costs related
to permanent employee reductions.
Net income for the twelve months ended March 31, 1997 was $2.16 compared
with $1.02 for the same period last year. The $1.14 increase is principally
due to the absence of the writedown of the investment in the Colorado coal
mine and its related 1995 operating losses, and the adoption of SFAS No. 121
"Accounting for the Impairment of Long-Lived Assets and Assets to be Disposed
Of" recorded in the fourth quarter of 1995. Nonutility earnings for the
period benefited from the oil and natural gas improvements discussed above,
continued growth in earnings from investments in power projects and a gain
realized on the partial sale of an independent power investment during the
fourth quarter of 1996. These increases were partially offset by decreases in
income from coal operations due to reduced sales to the Colstrip plants and
the expiration of a coal-supply contract with a Midwestern customer at the end
of 1995. Utility earnings remained relatively unchanged as increases from
higher rates, customer growth and decreased power supply costs were offset by
higher costs associated with permanent employee reductions, property taxes and
financing costs.
For comparative purposes, the following table shows the breakdown of
consolidated net income per share by principal business segment.
Quarter Ended
March 31, March 31,
1997 1996
Utility Operations $ 0.52 $ 0.50
Nonutility Operations 0.31 0.20
Consolidated $ 0.83 $ 0.70
Twelve Months Ended
March 31, March 31,
1997 1996
Utility Operations $ 1.14 $ 1.17
Nonutility Operations 1.02 (0.15)
Consolidated $ 2.16 $ 1.02
ITEM 7. Exhibits
99a Consolidated Statements of Income for the Quarters Ended March 31, 1997
and 1996 and for the Twelve Months Ended March 31, 1997 and 1996.
99b Utility Operations Schedule of Revenues and Expenses for the Quarters
Ended March 31, 1997 and 1996 and for the Twelve Months Ended March 31,
1997 and 1996.
99c Nonutility Operations Schedule of Revenues and Expenses for the Quarters
Ended March 31, 1997 and 1996 and for the Twelve Months Ended March 31,
1997 and 1996.
Exhibit Index
Exhibit Page
99a Consolidated Statement of Income for the Quarters Ended
March 31, 1997 and 1996 and for the Twelve Months Ended
March 31, 1997 and 1996. 5
99b Utility Operations Schedule of Revenues and Expenses for the
Quarters Ended March 31, 1997 and 1996 and for the Twelve
Months Ended March 31, 1997 and 1996. 6
99c Nonutility Operations Schedule of Revenues and Expenses for
the Quarters Ended March 31, 1997 and 1996 and for the Twelve
Months Ended March 31, 1997 and 1996. 7-8
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF INCOME Exhibit 99a
The Montana Power Company and Subsidiaries
Quarter Ended Twelve Months Ended
March 31, March 31,
1997 1996 1997 1996
Thousands of Dollars
<S> <C> <C> <C> <C>
REVENUES $ 281,052 $ 264,405 $ 989,855 $ 955,332
EXPENSES:
Operations 104,342 109,470 378,6651 416,139
Maintenance 17,964 11,654 71,700 64,600
Selling, general and administrative 27,123 24,484 113,783 98,820
Taxes other than income taxes 25,298 22,680 90,521 90,618
Depreciation, depletion and amortization 22,956 20,755 90,945 85,038
Writedowns of long-lived assets 74,297
197,683 189,043 745,610 829,512
INCOME FROM OPERATIONS 83,369 75,362 244,245 125,820
INTEREST EXPENSE AND OTHER INCOME:
Interest 12,563 11,986 49,347 44,687
Other (income) deductions - net (4,817) (741) (7,969) (9,887)
7,746 11,245 41,378 34,800
INCOME TAXES 28,045 23,802 76,218 28,100
NET INCOME 47,578 40,315 126,649 62,920
DIVIDENDS ON PREFERRED STOCK 2,296 1,807 8,847 7,227
NET INCOME AVAILABLE FOR COMMON STOCK $ 45,282 $ 38,508 $ 117,802 $ 55,693
AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING (000) 54,634 54,639 54,632 54,346
NET INCOME PER SHARE OF COMMON STOCK $ 0.83 $ 0.70 $ 2.16 $ 1.02
</TABLE>
<TABLE>
<CAPTION>
UTILITY OPERATIONS Exhibit 99b
Quarter Ended Twelve Months Ended
March 31, March 31,
1997 1996 1997 1996
Thousands of Dollars
<S> <C> <C> <C> <C>
ELECTRIC UTILITY:
REVENUES:
Revenues $ 121,690 $ 119,887 $ 431,974 $ 424,702
Intersegment revenues 1,337 2,028 5,102 6,268
123,027 121,915 437,076 430,970
EXPENSES:
Power supply 35,566 41,746 130,637 154,639
Transmission and distribution 7,975 7,459 30,779 27,945
Selling, general and administrative 14,205 11,313 54,983 41,198
Taxes other than incomes taxes 12,979 11,938 47,232 43,635
Depreciation and amortization 13,214 11,547 50,146 43,433
83,939 84,003 313,777 310,850
INCOME FROM ELECTRIC OPERATIONS 39,088 37,912 123,299 120,120
NATURAL GAS UTILITY:
REVENUES:
Revenues (other than gas supply cost revenues) 40,228 37,888 110,122 99,248
Gas supply cost revenues 6,852 10,076 17,522 22,839
Intersegment revenues 233 207 675 701
47,313 48,171 128,319 122,788
EXPENSES:
Gas supply costs 6,852 10,076 17,522 22,839
Other production, gathering and exploration 2,467 2,366 9,436 9,397
Transmission and distribution 2,876 3,070 11,517 11,423
Selling, general and administrative 4,757 4,348 19,093 17,121
Taxes other than income taxes 4,309 4,012 16,019 15,308
Depreciation, depletion and amortization 3,256 2,931 12,474 11,026
24,517 26,803 86,061 87,114
INCOME FROM GAS OPERATIONS 22,796 21,368 42,258 35,674
INTEREST EXPENSE AND OTHER INCOME:
Interest 12,138 11,740 47,061 44,676
Other (income) deductions - net (755) (495) (662) (3,826)
11,383 11,245 46,399 40,850
INCOME BEFORE INCOME TAXES 50,501 48,035 119,158 114,944
INCOME TAXES 20,209 19,027 47,869 43,713
UTILITY NET INCOME $ 30,292 $ 29,008 $ 71,289 $ 71,231
</TABLE>
<TABLE>
<CAPTION>
NONUTILTY OPERATIONS Exhibit 99c
Quarter Ended Twelve Months Ended
March 31, March 31,
1997 1996 1997 1996
Thousands of Dollars
<S> <C> <C> <C> <C>
COAL:
REVENUES:
Revenues $ 42,574 $ 38,390 $ 168,085 $ 192,757
Intersegment revenues 7,876 8,197 31,127 33,559
50,450 46,587 199,212 226,316
EXPENSES:
Operations and maintenance 29,708 27,536 118,031 142,245
Selling, general and administrative 4,611 5,135 20,849 25,532
Taxes other than income taxes 5,819 5,375 21,327 27,045
Depreciation, depletion and amortization 1,494 1,143 6,004 8,587
Writedowns of long-lived assets 55,103
41,632 39,189 166,211 258,512
INCOME (LOSS) FROM COAL OPERATIONS 8,818 7,398 33,001 (32,196)
OIL AND NATURAL GAS:
REVENUES:
Revenues 42,356 29,063 137,846 105,824
Intersegment revenues 106 99 279 375
42,462 29,162 138,125 106,199
EXPENSES:
Operations and maintenance 24,469 17,649 83,795 65,313
Selling, general and administrative 2,250 2,426 9,976 9,503
Taxes other than income taxes 1,560 834 3,657 2,537
Depreciation, depletion and amortization 4,300 3,953 17,427 17,033
Writedowns of long-lived assets 19,194
32,579 24,862 114,855 113,580
INCOME (LOSS) FROM OIL AND NATURAL GAS
OPERATIONS 9,883 4,300 23,270 (7,381)
INDPENDENT POWER GROUP:
REVENUES:
Revenues 17,198 19,717 72,803 78,788
Earnings from unconsolidated investments 3,025 2,709 21,490 4,154
Intersegment revenues 817 69 2,174 530
21,040 22,495 96,467 83,472
EXPENSES:
Operations and maintenance 15,904 16,612 63,566 67,636
Selling, general and administrative 1,089 822 5,490 3,565
Taxes other than income taxes 495 431 1,847 1,741
Depreciation, depletion and amortization 305 784 3,314 3,221
17,793 18,649 74,217 76,163
INCOME FROM INDEPENDENT POWER OPERATIONS $ 3,247 $ 3,846 $ 22,250 $ 7,309
NONUTILITY OPERATIONS Exhibit 99c
Quarter Ended Twelve Months Ended
March 31, March 31,
1997 1996 1997 1996
Thousands of Dollars
TELECOMMUNICATIONS:
REVENUES:
Revenues $ 7,004 $ 6,315 $ 28,030 $ 23,751
Intersegment revenues 181 614 377
7,185 6,315 28,644 24,128
EXPENSES:
Operations and maintenance 4,835 4,164 18,987 15,732
Selling, general and administrative 1,635 1,295 5,839 4,888
Taxes other than income taxes 136 91 437 354
Depreciation, depletion and amortization 254 223 942 840
6,860 5,773 26,205 21,814
INCOME FROM TELECOMMUNICATIONS OPERATIONS 325 542 2,439 2,314
OTHER OPERATIONS:
REVENUES:
Revenues 162 235 1,112 2,409
Intersegment revenues 290 136 936 549
452 371 2,048 2,958
EXPENSES:
Operations and maintenance 1,698 264 2,640 1,466
Selling, general and administrative (590) (64) 1,043 609
Depreciation, depletion and amortization 133 174 638 900
1,241 374 4,321 2,975
INCOME (LOSS) FROM OTHER GAS OPERATIONS (789) (3) (2,273) (17)
INTEREST EXPENSE AND OTHER INCOME:
Interest 1,112 929 4,993 3,075
Other (income) deductions - net (4,750) (929) (10,014) (9,122)
(3,638) 0 (5,021) (6,047)
INCOME (LOSS) BEFORE INCOME TAXES 25,122 16,083 83,708 (23,924)
INCOME TAXES 7,836 4,776 28,348 (15,613)
NONUTILITY NET INCOME (LOSS) $ 17,286 $ 11,307 $ 55,360 $ (8,311)
</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 thereunto duly authorized.
THE MONTANA POWER COMPANY
(Registrant)
By /s/ J. P. Pederson
J. P. Pederson
Vice President and Chief
Financial and Information
Officer
Dated: April 21, 1997
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