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) October 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.
Third Quarter Financial Results
Net income for the quarter ended September 30, 1997 was 28 cents per
share, compared to 30 cents per share for the third quarter 1996.
Third quarter earnings from Utility operations decreased two cents per
share as weather related decreases in electric and natural gas volumes and
increased expenses related to steam plant maintenance, interest costs, property
taxes and selling, general and administrative costs were not fully offset by
increased revenues resulting from higher electric and natural gas rates and
customer growth. Nonutility earnings were the same as last year. Earnings from
telecommunication operations increased slightly as the Company began receiving
revenue late in the quarter on its expanded fiber optic network. This positive
earnings trend is expected to accelerate during the fourth quarter. The
telecommunication increase was offset by lower earnings in coal, and oil and
natural gas operations.
Consolidated net income per share for the nine months ended September 30,
1997 was $1.36, an increase of 13 cents over the same period last year.
Earnings from Nonutility oil and natural gas operations contributed
significantly to the increase primarily due to considerably higher market
prices for oil and natural gas during the first quarter of 1997 and gains on
the sales of non-strategic properties as the Company focuses its efforts on
natural gas markets. During the second and third quarters, market prices
returned to levels nearer those that were experienced in 1996. Coal operations
earnings increased primarily due to increased sales to the Colstrip generating
units, moderated somewhat by decreased prices. The Colstrip units are
operating normally this year after being displaced in 1996 due to the
availability of low-cost power in the region. Earnings from independent power
operations decreased primarily due to a decrease in long-term power sales
revenue resulting from a settlement with Puget Sound Energy. Nine-month ended
Utility earnings decreased primarily for the same reasons as discussed for the
third quarter. The decreases were partially offset by the Utility realizing
better prices in electric wholesale activities in the first quarter and lower
purchased power costs.
Earnings for the twelve months ended September 30, 1997 increased 98
cents per share principally due to the absence of the 85 cent per share
writedown of the investment in the Colorado coal mine and 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
September 30,
1997 1996
Utility Operations $ 0.05 $ 0.07
Nonutility Operations 0.23 0.23
Consolidated $ 0.28 $ 0.30
Nine Months Ended
September 30,
1997 1996
Utility Operations $ 0.61 $ 0.68
Nonutility Operations 0.75 0.55
Consolidated $ 1.36 $ 1.23
Twelve Months Ended
September 30,
1997 1996
Utility Operations $ 1.06 $ 1.24
Nonutility Operations 1.10 (0.06)
Consolidated $ 2.16 $ 1.18
ITEM 7. Exhibits.
99a Consolidated Statements of Income for the Quarters Ended September 30,
1997 and 1996, Nine Months Ended September 30, 1997 and 1996, and for the
Twelve Months Ended September 30, 1997 and 1996.
99b Utility Operations Schedule of Revenues and Expenses for the Quarters
Ended September 30, 1997 and 1996, Nine Months Ended September 30, 1997
and 1996, and for the Twelve Months Ended September 30, 1997 and 1996.
99c Nonutility Operations Schedule of Revenues and Expenses for the Quarters
Ended September 30, 1997 and 1996, Nine Months Ended September 30, 1997
and 1996, and for the Twelve Months Ended September 30, 1997 and 1996.
Exhibit Index
Exhibit Page
99a Consolidated Statements of Income for the Quarters Ended
September 30, 1997 and 1996, Nine Months Ended September 30,
1997 and 1996, and for the Twelve Months Ended September 30,
1997 and 1996. 6
99b Utility Operations Schedule of Revenues and Expenses for the
Quarters Ended September 30, 1997 and 1996, Nine Months Ended
September 30, 1997 and 1996, and for the Twelve Months Ended
September 30, 1997 and 1996. 7
99c Nonutility Operations Schedule of Revenues and Expenses for the
Quarters Ended September 30, 1997 and 1996, Nine Months Ended
September 30, 1997 and 1996, and for the Twelve Months Ended
September 30, 1997 and 1996. 8-9
Exhibit 99a
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF INCOME
The Montana Power Company and Subsidiaries
Quarter Ended Nine Months Ended 12 Months Ended
September 30, September 30, September 30,
1997 1996 1997 1996 1997 1996
Thousands of Dollars
<S> <C> <C> <C> <C> <C> <C>
REVENUES $234,240 $216,073 $731,661 $678,397 $1,026,472 $948,274
EXPENSES:
Operations 98,455 89,058 288,812 276,920 393,441 388,006
Maintenance 22,073 18,360 60,631 49,810 79,002 65,174
Selling, general and
administrative 27,955 24,587 86,761 75,036 122,868 101,403
Taxes other than income
taxes 24,767 21,751 74,073 64,561 97,415 84,779
Depreciation, depletion and
amortization 24,198 23,032 70,117 65,138 93,723 85,736
Writedowns of long-lived
assets 0 74,297
197,448 176,788 580,394 531,465 786,449 799,395
INCOME FROM OPERATIONS 36,792 39,285 151,267 146,932 240,023 148,879
INTEREST EXPENSE AND OTHER:
Interest 13,958 12,803 39,394 36,481 51,679 47,502
Distributions on preferred
securities of subsidiary
trust 1,373 4,119 4,122
Other (income) deductions -
net (1,238) (1,745) (13,742) (4,196) (13,991) (8,320)
14,093 11,058 29,771 32,285 41,810 39,182
INCOME TAXES 6,458 9,998 44,298 41,817 74,455 37,984
NET INCOME 16,241 18,229 77,198 72,830 123,758 71,713
DIVIDENDS ON PREFERRED STOCK 923 1,807 2,768 5,420 5,705 7,227
NET INCOME AVAILABLE FOR
COMMON STOCK $ 15,318 $ 16,422 $ 74,430 $67,410 $ 118,053 $ 64,486
AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING (000) 54,645 54,632 54,636 54,634 54,635 54,608
NET INCOME PER SHARE OF
COMMON STOCK $ 0.28 $ 0.30 $ 1.36 $ 1.23 $ 2.16 $ 1.18
</TABLE>
<TABLE>
<CAPTION>
Exhibit 99b
UTILITY OPERATIONS
Quarter Ended Nine Months Ended 12 Months Ended
September 30, September 30, September 30,
1997 1996 1997 1996 1997 1996
Thousands of Dollars
<S> <C> <C> <C> <C> <C> <C>
ELECTRIC UTILITY:
REVENUES:
Revenues $106,118 $ 99,716 $323,635 $305,013 $448,793 $430,610
Intersegment revenues 1,140 1,011 3,403 4,526 4,670 5,902
107,258 100,727 327,038 309,539 453,463 436,512
EXPENSES:
Power supply 33,520 32,981 99,754 99,726 136,845 145,260
Transmission and
distribution 8,027 8,347 23,936 23,368 30,831 29,672
Selling, general and
administrative 12,742 9,955 40,435 32,010 60,516 42,738
Taxes other than income
taxes 12,870 11,462 39,057 34,878 50,369 43,373
Depreciation and
amortization 13,524 12,719 39,986 35,814 52,652 46,442
80,683 75,464 243,168 225,796 331,213 307,485
INCOME FROM ELECTRIC
OPERATIONS 26,575 25,263 83,870 83,743 122,250 129,027
NATURAL GAS UTILITY:
REVENUES:
Revenues (other than gas
supply cost revenues) 12,342 13,212 72,504 70,413 109,873 102,173
Gas supply cost revenues 1,201 1,489 11,135 15,469 16,413 21,822
Intersegment revenues 113 105 439 463 625 657
13,656 14,806 84,078 86,345 126,911 124,652
EXPENSES:
Gas supply costs 1,201 1,489 11,135 15,469 16,413 21,822
Other production, gathering
and exploration 2,106 2,230 6,781 6,921 9,195 9,426
Transmission and
distribution 2,762 3,004 8,398 8,911 11,198 11,662
Selling, general and
administrative 4,708 3,814 14,217 12,496 20,405 16,622
Taxes other than income
taxes 4,160 3,659 12,811 11,379 17,153 15,322
Depreciation, depletion and
amortization 3,247 3,135 9,750 8,995 12,903 11,695
18,184 17,331 63,092 64,171 87,267 86,549
INCOME (LOSS) FROM GAS
OPERATIONS (4,528) (2,525) 20,986 22,174 39,644 38,103
INTEREST EXPENSE AND OTHER:
Interest 13,541 12,040 38,107 35,091 49,676 46,046
Distributions on preferred
securities of subsidiary
trust 1,373 4,119 4,122
Other (income) deductions -
net (29) (148) (384) (1,609) 824 (2,796)
14,885 11,892 41,842 33,482 54,622 43,250
INCOME BEFORE INCOME TAXES AND
DIVIDENDS 7,162 10,846 63,014 72,435 107,272 123,880
INCOME TAXES 3,227 5,202 26,695 29,960 43,421 49,201
DIVIDENDS ON PREFERRED STOCK 923 1,807 2,768 5,420 5,705 7,227
UTILITY NET INCOME AVAILABLE FOR
COMMON STOCK $ 3,012 $ 3,837 $ 33,551 $ 37,055 $ 58,146 $ 67,452
</TABLE>
Exhibit 99c
<TABLE>
<CAPTION>
NONUTILITY OPERATIONS
Quarter Ended Nine Months Ended 12 Months Ended
September 30, September 30, September 30,
1997 1996 1997 1996 1997 1996
Thousands of Dollars
<S> <C> <C> <C> <C> <C> <C>
COAL:
REVENUES:
Revenues $44,131 $43,941 $122,252 $113,650 $172,504 $163,890
Intersegment revenues 9,223 8,916 23,872 21,949 33,371 32,593
53,354 52,857 146,124 135,599 205,875 196,483
EXPENSES:
Operations and maintenance 31,838 29,853 86,774 82,683 119,951 117,517
Selling, general and
administrative 5,510 5,611 15,608 16,166 20,815 23,070
Taxes other than income
taxes 6,367 5,453 16,605 14,295 23,194 21,295
Depreciation, depletion and
amortization 1,539 1,693 4,286 3,914 6,025 5,782
Writedowns of long-lived
assets 55,103
45,254 42,610 123,273 117,058 169,985 222,767
INCOME (LOSS) FROM COAL
OPERATIONS 8,100 10,247 22,851 18,541 35,890 (26,284)
OIL AND NATURAL GAS:
REVENUES:
Revenues 39,306 28,684 116,114 87,153 153,493 114,342
Intersegment revenues 35 26 230 192 331 268
39,341 28,710 116,344 87,345 153,824 114,610
EXPENSES:
Operations and maintenance 28,974 17,921 76,912 53,372 100,516 70,756
Selling, general and
administrative 2,515 2,547 7,521 7,479 10,194 9,988
Taxes other than income
taxes 909 616 3,562 2,374 4,120 2,722
Depreciation, depletion and
amortization 4,334 4,238 12,769 12,826 17,022 16,785
Writedowns of long-lived
assets 19,194
36,732 25,322 100,764 76,051 131,852 119,445
INCOME (LOSS) FROM OIL AND
NATURAL GAS OPERATIONS 2,609 3,388 15,580 11,294 21,972 (4,835)
INDEPENDENT POWER:
REVENUES:
Revenues 18,007 18,773 52,225 56,773 70,773 76,387
Earnings from unconsolidated
investments 3,266 3,132 7,938 8,991 20,121 10,534
Intersegment revenues 358 313 1,572 734 2,265 821
21,631 22,218 61,735 66,498 93,159 87,742
EXPENSES:
Operations and maintenance 16,615 16,375 47,275 47,861 63,687 65,605
Selling, general and
administrative 896 1,939 3,092 3,805 4,510 4,897
Taxes other than income
taxes 222 480 1,468 1,362 1,888 1,700
Depreciation, depletion and
amortization 948 841 1,914 2,409 3,299 3,367
18,681 19,635 53,749 55,437 73,384 75,569
INCOME FROM INDEPENDENT POWER
OPERATIONS $ 2,950 $ 2,583 $ 7,986 $ 11,061 $ 19,775 $ 12,173
Exhibit 99c
NONUTILITY OPERATIONS (continued)
Quarter Ended Nine Months Ended 12 Months Ended
September 30, September 30, September 30,
1997 1996 1997 1996 1997 1996
Thousands of Dollars
TELECOMMUNICATIONS:
REVENUES:
Revenues $ 8,824 $ 6,639 $ 23,898 $19,518 $32,022 $26,071
Intersegment revenues 201 587 720 131
9,025 6,639 24,485 19,518 32,742 26,202
EXPENSES:
Operations and maintenance 5,204 4,470 15,568 12,969 20,915 17,075
Selling, general and
administrative 1,401 1,289 4,927 4,011 6,414 5,275
Taxes other than income
taxes 241 80 570 272 689 370
Depreciation, depletion and
amortization 472 238 1,013 673 1,250 891
7,318 6,077 22,078 17,925 29,268 23,611
INCOME FROM TELECOMMUNICATIONS
OPERATIONS 1,707 562 2,407 1,593 3,474 2,591
OTHER OPERATIONS:
REVENUES:
Revenues 985 333 1,690 878 2,012 1,599
Intersegment revenues 917 169 2,031 578 2,236 775
1,902 502 3,721 1,456 4,248 2,374
EXPENSES:
Operations and maintenance 1,159 314 1,854 869 2,191 1,283
Selling, general and
administrative 1,232 253 3,881 1,554 4,465 2,216
Depreciation, depletion and
amortization 133 168 399 507 572 773
2,524 735 6,134 2,930 7,228 4,272
LOSS FROM OTHER OPERATIONS (622) (233) (2,413) (1,474) (2,980) (1,898)
INTEREST EXPENSE AND OTHER:
Interest 1,335 1,526 4,234 3,504 5,558 4,219
Other (income) deductions -
net (2,128) (2,359) (16,305) (4,700) (18,368) (8,288)
(793) (833) (12,071) (1,196) (12,810) (4,069)
INCOME (LOSS) BEFORE INCOME
TAXES 15,537 17,380 58,482 42,211 90,941 (14,184)
INCOME TAXES 3,231 4,795 17,603 11,856 31,034 (11,218)
NONUTILITY NET INCOME (LOSS)
AVAILABLE FOR COMMON STOCK $12,306 $12,585 $40,879 $30,355 $59,907 $(2,966)
</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: October 23, 1997
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