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) July 23, 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 5.
ITEM 5. Other Events.
Second Quarter Net Income
Net income for the quarter ended June 30, 1997 was 25 cents per share, an
increase of two cents per share over the second quarter 1996
Nonutility earnings increased eight cents per share due primarily to
increased earnings from coal operations as the increase in coal volumes sold to
the Colstrip generating units more than offset the decrease in coal prices due
to the settlement of a dispute with Puget Sound Energy earlier this year. The
Colstrip units are operating normally this quarter after being displaced during
the second quarter of 1996 due to the availability of low-cost power in the
region. Nonutility earnings include an after-tax gain of $4,400,000 on the sale
of a Canadian oil property. The Company is focusing its attention on natural
gas markets. Net income from independent power operations decreased three cents
per share for the second quarter principally due to a decrease in long-term
power sales revenue resulting from the settlement with Puget Sound Energy.
Utility earnings for the second quarter of 1997 decreased six cents per share
primarily due to a $3,600,000 before-tax metering correction recorded in the
second quarter of 1996 and unanticipated 1997 maintenance costs at the Billings
steam plant.
Consolidated net income for the six months ended June 30, 1997 was $1.08,
a 16% increase over the same period last year. In addition to the Nonutility
items which impacted earnings discussed above, net income from oil and natural
gas operations increased nine cents per share due primarily to significantly
higher market prices for oil and natural gas in the U.S. and Canada and
increased production during the first quarter of 1997. Market prices returned
to more recent levels during the second quarter of 1997. Utility earnings for
the six months ended June 30, 1997 decreased over last year principally due to
the items mentioned previously. The decrease was partially offset by the
Utility realizing better margins on its first quarter electric wholesale
activities and a decline in purchased power costs primarily due to the
expiration of two higher-priced firm contracts in 1996. Warmer weather
experienced during the earlier months of this year reduced electric and natural
gas volumes sold.
Earnings for the twelve months ended June 30, 1997 increased $1.04 per
share principally due to the absence of the 85 cent per share writedown of the
investment in the Colorado coal mine and its related 1995 operating losses, the
adoption of SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets
and Long-Lived Assets to be Disposed Of" recorded in the fourth quarter of 1995
and those items previously discussed.
For comparative purposes, the following table shows the breakdown of
consolidated net income per share:
Quarter Ended
June 30, June 30,
1997 1996
Utility Operations $ 0.05 $ 0.11
Nonutility Operations 0.20 0.12
Consolidated $ 0.25 $ 0.23
Six Months Ended
June 30, June 30,
1997 1996
Utility Operations $ 0.56 $ 0.61
Nonutility Operations 0.52 0.32
Consolidated $ 1.08 $ 0.93
Twelve Months Ended
June 30, June 30,
1997 1996
Utility Operations $ 1.08 $ 1.25
Nonutility Operations 1.10 (0.11)
Consolidated $ 2.18 $ 1.14
ITEM 7. Exhibits.
99a Consolidated Statements of Income for the Quarters Ended June 30, 1997
and 1996, Six Months Ended June 30, 1997 and 1996, and for the Twelve
Months Ended June 30, 1997 and 1996.
99b Utility Operations Schedule of Revenues and Expenses for the Quarters
Ended June 30, 1997 and 1996, Six Months Ended June 30, 1997 and 1996,
and for the Twelve Months Ended June 30, 1997 and 1996.
99c Nonutility Operations Schedule of Revenues and Expenses for the Quarters
Ended June 30, 1997 and 1996, Six Months Ended June 30, 1997 and 1996,
and for the Twelve Months Ended June 30, 1997 and 1996.
Exhibit Index
Exhibit Page
99a Consolidated Statements of Income for the Quarters Ended
June 30, 1997 and 1996, Six Months Ended June 30, 1997 and 1996,
and for the Twelve Months Ended June 30, 1997 and 1996. 6
99b Utility Operations Schedule of Revenues and Expenses for the
Quarters Ended June 30, 1997 and 1996, Six Months Ended June 30,
1997 and 1996, and for the Twelve Months Ended June 30, 1997 and
1996. 7
99c Nonutility Operations Schedule of Revenues and Expenses for the
Quarters Ended June 30, 1997 and 1996, Six Months Ended June 30,
1997 and 1996, and for the Twelve Months Ended June 30, 1997 and
1996. 8-9
Exhibit 99a
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF INCOME
The Montana Power Company and Subsidiaries
Quarter Ended Six Months Ended 12 Months Ended
June 30, June 30, June 30,
1997 1996 1997 1996 1997 1996
Thousands of Dollars
<S> <C> <C> <C> <C> <C> <C>
REVENUES $216,369 $197,919 $497,421 $462,324 $1,008,305 $949,608
EXPENSES:
Operations 86,015 82,831 190,357 187,862 384,044 399,216
Maintenance 20,594 15,357 38,558 31,450 75,290 63,715
Selling, general and
administrative 31,683 25,965 58,806 50,449 119,500 101,153
Taxes other than income taxes 24,008 20,130 49,306 42,810 94,399 87,608
Depreciation, depletion and
amortization 22,963 21,351 45,919 42,106 92,557 84,659
Writedowns of long-lived assets 74,297
185,263 165,634 382,946 354,677 765,790 810,648
INCOME FROM OPERATIONS 31,106 32,285 114,475 107,647 242,515 138,960
INTEREST EXPENSE AND OTHER:
Interest 12,873 11,692 25,436 23,678 50,527 45,711
Distributions on company obligated
mandatorily redeemable preferred
securities of subsidiary trust 1,373 2,746 2,746
Other (income) deductions - net (7,687) (1,710) (12,504) (2,451) (14,497) (10,197)
6,559 9,982 15,678 21,227 38,776 35,514
INCOME TAXES 9,795 8,017 37,840 31,819 77,996 33,811
NET INCOME 14,752 14,286 60,957 54,601 125,743 69,635
DIVIDENDS ON PREFERRED STOCK 922 1,807 1,845 3,614 6,589 7,227
NET INCOME AVAILABLE FOR
COMMON STOCK $ 13,830 $ 12,479 $ 59,112 $ 50,987 $ 119,154 $ 62,408
AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING (000) 54,630 54,632 54,632 54,635 54,632 54,510
NET INCOME PER SHARE OF
COMMON STOCK $ 0.25 $ 0.23 $ 1.08 $ 0.93 $ 2.18 $ 1.14
</TABLE>
Exhibit 99b
<TABLE>
<CAPTION>
UTILITY OPERATIONS
Quarter Ended Six Months Ended 12 Months Ended
June 30, June 30, June 30,
1997 1996 1997 1996 1997 1996
Thousands of Dollars
ELECTRIC UTILITY:
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Revenues $ 95,827 $ 85,410 $217,517 $205,297 $442,391 $425,487
Intersegment revenues 926 1,487 2,263 3,515 4,542 6,100
96,753 86,897 219,780 208,812 446,933 431,587
EXPENSES:
Power supply 30,668 24,999 66,234 66,745 136,306 146,828
Transmission and distribution 7,934 7,562 15,909 15,021 31,151 28,803
Selling, general and
administrative 13,488 10,742 27,693 22,055 57,729 42,605
Taxes other than income taxes 13,208 11,478 26,187 23,416 48,963 43,443
Depreciation and amortization 13,248 11,548 26,462 23,095 51,847 44,350
78,546 66,329 162,485 150,332 325,996 306,029
INCOME FROM ELECTRIC OPERATIONS 18,207 20,568 57,295 58,480 120,937 125,558
NATURAL GAS UTILITY:
REVENUES:
Revenues (including gas supply
cost revenues) 23,016 23,217 70,096 71,181 127,444 123,622
Intersegment revenues 93 151 326 358 617 670
23,109 23,368 70,422 71,539 128,061 124,292
EXPENSES:
Gas supply costs 3,082 3,904 9,934 13,980 16,700 22,254
Other production, gathering and
exploration 2,208 2,325 4,675 4,691 9,320 9,144
Transmission and distribution 2,760 2,837 5,636 5,907 11,440 11,331
Selling, general and
administrative 4,752 4,334 9,509 8,682 19,512 16,970
Taxes other than income taxes 4,342 3,708 8,651 7,720 16,653 15,289
Depreciation, depletion and
amortization 3,247 2,929 6,503 5,860 12,792 11,252
20,391 20,037 44,908 46,840 86,417 86,240
INCOME FROM GAS OPERATIONS 2,718 3,331 25,514 24,699 41,644 38,052
INTEREST EXPENSE AND OTHER:
Interest 12,428 11,311 24,566 23,051 48,178 45,184
Distributions on company obligated
mandatorily redeemable preferred
securities of subsidiary trust 1,373 2,746 2,746
Other (income) deductions - net 400 (966) (355) (1,461) 703 (4,103)
14,201 10,345 26,957 21,590 51,627 41,081
INCOME BEFORE INCOME TAXES 6,724 13,554 55,852 61,589 110,954 122,529
INCOME TAXES 3,259 5,731 23,468 24,758 45,397 47,243
UTILITY NET INCOME $ 3,465 $ 7,823 $ 32,384 $ 36,831 $ 65,557 $ 75,286
</TABLE>
Exhibit 99c
<TABLE>
<CAPTION>
NONUTILITY OPERATIONS
Quarter Ended Six Months Ended 12 Months Ended
June 30, June 30, June 30,
1997 1996 1997 1996 1997 1996
Thousands of Dollars
COAL:
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Revenues $35,547 $31,319 $78,121 $69,709 $172,314 $175,044
Intersegment revenues 6,773 4,836 14,649 13,033 33,064 32,178
42,320 36,155 92,770 82,742 205,378 207,222
EXPENSES:
Operations and maintenance 25,228 25,294 54,936 52,830 117,966 128,263
Selling, general and
administrative 5,487 5,420 10,098 10,555 20,916 24,202
Taxes other than income taxes 4,419 3,467 10,238 8,842 22,280 23,999
Depreciation, depletion and
amortization 1,253 1,078 2,747 2,221 6,178 7,162
Writedowns of long-lived assets 55,103
36,387 35,259 78,019 74,448 167,340 238,729
INCOME (LOSS) FROM COAL
OPERATIONS 5,933 896 14,751 8,294 38,038 (31,507)
OIL AND NATURAL GAS:
REVENUES:
Revenues 34,452 29,406 76,808 58,469 142,871 111,021
Intersegment revenues 89 67 195 166 321 404
34,541 29,473 77,003 58,635 143,192 111,425
EXPENSES:
Operations and maintenance 23,469 17,802 47,938 35,451 89,461 68,254
Selling, general and
administrative 2,756 2,506 5,006 4,932 10,227 9,702
Taxes other than income taxes 1,093 924 2,653 1,758 3,826 2,778
Depreciation, depletion and
amortization 4,135 4,635 8,435 8,588 16,927 16,925
Writedowns of long-lived assets 19,194
31,453 25,867 64,032 50,729 120,441 116,853
INCOME (LOSS) FROM OIL AND NATURAL
GAS OPERATIONS 3,088 3,606 12,971 7,906 22,751 (5,428)
INDEPENDENT POWER:
REVENUES:
Revenues 17,020 18,283 34,218 38,000 71,539 77,784
Earnings from unconsolidated
investments 1,647 3,150 4,672 5,859 19,987 8,756
Intersegment Revenues 397 352 1,214 421 2,219 601
19,064 21,785 40,104 44,280 93,745 87,141
EXPENSES:
Operations and maintenance 14,756 14,874 30,660 31,486 63,447 66,563
Selling, general and
administrative 1,107 1,044 2,196 1,866 5,553 4,051
Taxes other than income taxes 751 451 1,246 882 2,147 1,730
Depreciation, depletion and
amortization 661 784 966 1,568 3,191 3,266
17,275 17,153 35,068 35,802 74,338 75,610
INCOME FROM INDEPENDENT POWER
OPERATIONS 1,789 4,632 5,036 8,478 19,407 11,531
Exhibit 99c
NONUTILITY OPERATIONS (continued)
Quarter Ended Six Months Ended 12 Months Ended
June 30, June 30, June 30,
1997 1996 1997 1996 1997 1996
Thousands of Dollars
TELECOMMUNICATIONS:
REVENUES:
Revenues $ 8,070 $ 6,564 $15,074 $12,879 $29,836 $25,386
Intersegment Revenues 205 386 519 208
8,275 6,564 15,460 12,879 30,355 25,594
EXPENSES:
Operations and maintenance 5,529 4,335 10,364 8,499 20,181 16,722
Selling, general and
administrative 1,891 1,427 3,526 2,722 6,302 5,134
Taxes other than income taxes 193 101 329 192 528 372
Depreciation, depletion and
amortization 287 212 541 435 1,016 861
7,900 6,075 14,760 11,848 28,027 23,089
INCOME FROM TELECOMMUNICATIONS
OPERATIONS 375 489 700 1,031 2,328 2,505
OTHER OPERATIONS:
REVENUES:
Revenues 543 310 705 545 1,362 1,610
Intersegment revenues 824 273 1,114 409 1,487 748
1,367 583 1,819 954 2,849 2,358
EXPENSES:
Operations and maintenance (1,003) 291 695 555 1,345 1,217
Selling, general and
administrative 3,239 1,365 2,649 1,301 3,487 2,050
Taxes other than income taxes
Depreciation, depletion and
amortization 133 165 266 339 607 843
2,369 1,821 3,610 2,195 5,439 4,110
LOSS FROM OTHER OPERATIONS (1,002) (1,238) (1,791) (1,241) (2,590) (1,752)
INTEREST EXPENSE AND OTHER:
Interest 1,787 1,049 2,899 1,978 5,750 3,737
Other (income) deductions - net (9,427) (1,412) (14,177) (2,341) (18,601) (9,305)
(7,640) (363) (11,278) (363) (12,851) (5,568)
INCOME (LOSS) BEFORE INCOME TAXES 17,823 8,748 42,945 24,831 92,785 (19,083)
INCOME TAXES 6,536 2,285 14,372 7,061 32,599 (13,432)
NONUTILITY NET INCOME (LOSS) $ 11,287 $ 6,463 $28,573 $17,770 $ 60,186 $ (5,651)
</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 Officer
Dated: July 23, 1997
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