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) January 28, 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.
Fourth Quarter Net Income
Net income for the year ended December 31, 1996 was $2.03 per share,
compared with 92 cents per share in 1995. Included in 1995 consolidated
earnings were charges of 90 cents per share resulting from the adoption of a
new accounting standard, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of" (SFAS No. 121), the closing of
the Colorado coal mine and the outcome of a coal arbitration decision.
Utility earnings for the year ended 1996 were positively impacted by
higher revenues resulting from increased rates, weather 12 percent colder than
1995, three percent overall customer growth and reduced power supply expenses
due to the availability of low-cost regional hydroelectric energy. After tax
charges of approximately $3,800,000 were recorded in the fourth quarter of
1996 related to permanent employee reductions and the refinancing of preferred
stock. These charges will result in future cost savings.
Non-utility earnings for the year increased primarily due to the closure
of the Colorado coal mine, which had sustained operating losses of
approximately 18 cents per share in 1995, and growth in earnings from
independent power investments throughout this year including a gain on the
sale of a portion of an asset in the fourth quarter. Partially offsetting
these positives were reduced coal sales to the Colstrip thermal plants due to
the availability of low-cost hydroelectric power. Coal volumes also decreased
due to the expiration of a coal supply contract with a Midwestern customer at
the end of 1995.
Non-utility fourth quarter 1995 earnings included an 85 cent per share
charge related to the accounting standard adoption and the Colorado coal mine
closure. Non-utility earnings were positively impacted by growth in
independent power earnings. Utility earnings were adversely impacted by the
$3,800,000 charge discussed above.
For comparative purposes, the following table shows the breakdown of
consolidated net income per share:
Quarter Ended
December 31,
1996 1995
Utility Operations $ 0.45 $ 0.56
Non-utility Operations 0.35 (0.61)
Consolidated $ 0.80 $ (0.05)
Year Ended
December 31,
1996 1995
Utility Operations $ 1.13 $ 1.22
Non-utility Operations 0.90 (0.30)
Consolidated $ 2.03 $ 0.92
ITEM 7. Exhibits.
99a Preliminary Consolidated Statements of Income for the Quarters Ended
December 31, 1996 and 1995, and for the Years Ended December 31, 1996 and
1995.
99b Preliminary Utility Operations Schedule of Revenues and Expenses for the
Quarters Ended December 31, 1996 and 1995, and for the Years Ended
December 31, 1996 and 1995.
99c Preliminary Non-utility Operations Schedule of Revenues and Expenses for
the Quarters Ended December 31, 1996 and 1995, and for the Years Ended
December 31, 1996 and 1995.
Exhibit Index
Exhibit Page
99a Preliminary Consolidated Statements of Income for the
Quarters Ended December 31, 1996 and 1995, and for the
Years Ended December 31, 1996 and 1995. 5
99b Preliminary Utility Operations Schedule of Revenues and
Expenses for the Quarters Ended December 31, 1996 and 1995,
and for the Years Ended December 31, 1996 and 1995. 6
99c Preliminary Non-utility Operations Schedule of Revenues and
Expenses for the Quarters Ended December 31, 1996 and 1995,
and for the Years Ended December 31, 1996 and 1995. 7-8
<TABLE>
<CAPTION>
Exhibit 99a
THE MONTANA POWER COMPANY AND SUBSIDIARIES
PRELIMINARY CONSOLIDATED STATEMENT OF INCOME
Quarter Ended Year Ended
December 31, December 31,
1996 1995 1996 1995
Thousands of Dollars
<S> <C> <C> <C> <C>
REVENUES $292,478 $269,877 $970,875 $953,224
EXPENSES:
Operations 101,745 111,086 381,456 420,472
Maintenance 18,371 15,364 65,390 68,286
Selling, general and
administrative 36,115 26,367 111,144 101,872
Taxes other than income taxes 23,342 20,218 87,903 89,858
Depreciation, depletion and
amortization 23,606 20,597 88,744 86,976
Writedowns of long-lived assets 74,297 74,297
203,179 267,929 734,637 841,761
INCOME FROM OPERATIONS 89,299 1,948 236,238 111,463
INTEREST EXPENSE AND OTHER INCOME:
Interest 12,332 11,021 48,770 43,656
Other (income) deductions - net 253 (4,124) (3,893) (10,704)
12,585 6,897 44,877 32,952
INCOME TAXES 30,158 (3,833) 71,975 21,574
NET INCOME 46,556 (1,116) 119,386 56,937
DIVIDENDS ON PREFERRED STOCK 2,938 1,807 8,358 7,227
NET INCOME AVAILABLE FOR
COMMON STOCK $ 43,618 $ (2,923) $111,028 $ 49,710
AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING (000) 54,631 54,528 54,634 54,121
NET INCOME PER SHARE OF
COMMON STOCK $ 0.80 $ (0.05) $ 2.03 $ 0.92
</TABLE>
<TABLE>
<CAPTION>
Exhibit 99b
PRELIMINARY UTILITY OPERATIONS
Quarter Ended Year Ended
December 31, December 31,
1996 1995 1996 1995
Thousands of Dollars
ELECTRIC UTILITY:
<S> <C> <C> <C> <C>
REVENUES:
Revenues $122,825 $125,597 $427,838 $421,999
Intersegment revenues 1,267 1,376 5,793 5,813
124,092 126,973 433,631 427,812
EXPENSES:
Power supply 34,758 45,534 134,484 148,240
Transmission and distribution 6,895 6,304 30,263 26,916
Selling, general and
administrative 20,086 10,728 52,091 41,932
Taxes other than income taxes 11,313 8,495 46,191 43,302
Depreciation and amortization 12,665 10,628 48,479 42,506
85,717 81,689 311,508 302,896
INCOME FROM ELECTRIC OPERATIONS 38,375 45,284 122,123 124,916
NATURAL GAS UTILITY:
REVENUES:
Revenues (other than gas supply
cost revenues) 37,369 31,759 107,782 93,453
Gas supply cost revenues 5,277 6,354 20,746 21,660
Intersegment revenues 186 194 649 852
42,832 38,307 129,177 115,965
EXPENSES:
Gas supply costs 5,277 6,354 20,746 21,660
Other production, gathering and
exploration 2,414 2,504 9,335 9,643
Transmission and distribution 2,800 2,751 11,711 10,934
Selling, general and
administrative 6,190 4,126 18,684 17,161
Taxes other than income taxes 4,343 3,943 15,722 14,841
Depreciation, depletion and
amortization 3,154 2,700 12,149 10,793
24,178 22,378 88,347 85,032
INCOME FROM GAS
OPERATIONS 18,654 15,929 40,830 30,933
INTEREST EXPENSE AND OTHER INCOME:
Interest 11,572 10,955 46,663 44,031
Other (income) deductions - net 1,200 (1,187) (402) (5,419)
12,772 9,768 46,261 38,612
INCOME BEFORE INCOME TAXES 44,257 51,445 116,692 117,237
INCOME TAXES 16,727 19,241 46,687 44,047
UTILITY NET INCOME $ 27,530 $ 32,204 $ 70,005 $ 73,190
</TABLE>
Exhibit 99c
<TABLE>
<CAPTION>
PRELIMINARY NON-UTILITY OPERATIONS
Quarter Ended Year Ended
December 31, December 31,
1996 1995 1996 1995
Thousands of Dollars
<S> <C> <C> <C> <C>
COAL:
REVENUES:
Revenues $ 50,251 $ 50,240 $163,901 $207,451
Intersegment revenues 9,499 10,644 31,448 25,659
59,750 60,884 195,349 233,110
EXPENSES:
Operations and maintenance 33,176 34,834 115,859 155,149
Selling, general and
administrative 5,207 6,904 21,373 28,211
Taxes other than income taxes 6,588 7,000 20,883 27,210
Depreciation, depletion and
amortization 1,739 1,868 5,653 11,187
Writedowns of long-lived assets 55,103 55,103
46,710 105,709 163,768 276,860
INCOME (LOSS) FROM COAL OPERATIONS 13,040 (44,825) 31,581 (43,750)
OIL AND NATURAL GAS:
REVENUES:
Revenues 37,400 27,189 124,553 100,030
Intersegment revenues 80 76 272 409
37,480 27,265 124,825 100,439
EXPENSES:
Operations and maintenance 23,603 17,384 76,975 60,526
Selling, general and
administrative 2,673 2,509 10,152 9,320
Taxes other than income taxes 557 348 2,931 2,334
Depreciation, depletion and
amortization 4,254 3,959 17,080 17,569
Writedowns of long-lived assets 19,194 19,194
31,087 43,394 107,138 108,943
INCOME (LOSS) FROM OIL AND NATURAL
GAS OPERATIONS 6,393 (16,129) 17,687 (8,504)
INDEPENDENT POWER:
REVENUES:
Revenues 18,549 19,614 75,322 79,095
Earnings from unconsolidated
Investments 12,183 1,543 21,174 2,622
Intersegment Revenues 692 87 1,426 796
31,424 21,244 97,922 82,513
EXPENSES:
Operations and maintenance 16,413 17,744 64,274 68,300
Selling, general and
administrative 1,418 1,092 5,223 3,557
Taxes other than income taxes 421 337 1,783 1,831
Depreciation, depletion and
amortization 1,384 958 3,793 3,176
19,636 20,131 75,073 76,864
INCOME FROM INDEPENDENT
POWER OPERATIONS $ 11,788 $ 1,113 $ 22,849 $ 5,649
Exhibit 99c
PRELIMINARY NON-UTILITY OPERATIONS (continued)
Quarter Ended Year Ended
December 31, December 31,
1996 1995 1996 1995
Thousands of Dollars
TELECOMMUNICATIONS:
REVENUES:
Revenues $ 8,172 $ 6,553 $ 27,341 $ 23,247
Intersegment Revenues 137 131 433 377
8,309 6,684 27,774 23,624
EXPENSES:
Operations and maintenance 5,347 4,106 18,316 15,520
Selling, general and
administrative 1,487 1,264 5,499 4,688
Taxes other than income taxes 120 98 392 343
Depreciation, depletion and
amortization 238 218 911 803
7,192 5,686 25,118 21,354
INCOME FROM TELECOMMUNICATIONS
OPERATIONS 1,117 998 2,656 2,270
OTHER OPERATIONS:
REVENUES:
Revenues 254 721 1,185 2,647
Intersegment revenues 204 197 782 699
458 918 1,967 3,346
EXPENSES:
Operations and maintenance 337 414 1,206 1,607
Selling, general and
administrative 16 662 1,569 849
Depreciation, depletion and
amortization 172 266 679 942
525 1,342 3,454 3,398
INCOME (LOSS) FROM OTHER OPERATIONS (67) (424) (1,487) (52)
INTEREST EXPENSE AND OTHER INCOME:
Interest 1,302 715 4,810 4,494
Other (income) deductions - net (1,489) (3,588) (6,193) (10,155)
(187) (2,873) (1,383) (5,661)
INCOME (LOSS) BEFORE INCOME TAXES 32,458 (56,394) 74,669 (38,726)
INCOME TAXES 13,432 (23,074) 25,288 (22,473)
NON-UTILITY NET INCOME (LOSS) $ 19,026 $(33,320) $ 49,381 $(16,253)
</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: January 28, 1997
9
