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 27, 1998
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.
<PAGE>
ITEM 5. Other Events.
Third Quarter Net Income
The Montana Power Company reported consolidated net income of $0.65 per
share for the third quarter ended September 30, 1998 -- an increase of 37
cents, or 132 percent over third-quarter 1997 earnings of $0.28 per share.
Growth in telecommunications continues to lead the improvement in the
Company's consolidated earnings. Coupled with the impact of events in the
independent power operations, Nonutility operations earned 45 cents per share
in the third quarter, compared to 23 cents in the third quarter of 1997.
The Touch America telecommunications unit had an earnings improvement of
10 cents a share, reflecting operations on the in-service segments of the
company's 10,000-mile fiber-optic network.
Earnings from the independent power operations increased by 19 cents,
largely as a result of two transactions: settlement of a contractual dispute
on a project in New York state, and the return of amounts expensed earlier in
1998 on a Texas project now under construction.
Coal volumes were up by 9 percent, but the retroactive impact of charges
for the previously announced settlement of a contract dispute and amendments
to coal supply and transportation agreements resulted in a reduction of income
by 3 cents a share. Oil and gas income was down, reflecting both lower prices
and lower oil volumes.
The significant increase in Utility earnings, to 20 cents per share,
compared to 5 cents in the third quarter of 1997 resulted primarily from
customer growth, generation increases from the hydroelectric plants and
increased rates for electricity, as well as reduced maintenance expenses, and
an increase in gas revenues.
Year to date consolidated earnings, through September 30, are $1.68 per
share, compared to $1.36 in the same period of 1997. Telecommunications
earnings, the third-quarter independent power activities previously discussed
and increased revenues from other independent power projects are the main
reasons for Nonutility earnings increase, to $1.05 for nine months compared to
75 cents in the same period of 1997. The 1997 results included approximately
12 cents per share for gains on the sales of non-strategic properties. For
the year, coal volumes are up by 7 percent, more than offsetting the contract
settlement impacts mentioned related to third-quarter performance.
Utility earnings year to date are up slightly, to 63 cents per share
compared to 61 cents for the same period a year earlier, reflecting both
customer growth and higher rates.
This Form 8-K may contain forward-looking statements within the meaning
of Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements should be read with the cautionary statements and important factors
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997 at Item 7, "Management's Discussion and Analysis of
Financial Conditions and Results of Operations - Safe Harbor for Forward-
Looking Statements." Forward-looking statements are all statements other than
statements of historical fact, including without limitation those that are
identified by the use of the words "expects," "believes," "anticipate" and
similar expressions.
<PAGE>
For comparative purposes, the following table shows the breakdown of
consolidated basic net income per share by principal business segment:
Quarter Ended
September 30, September 30,
1998 1997
Utility Operations $ 0.20 $ 0.05
Nonutility Operations 0.45 0.23
Consolidated $ 0.65 $ 0.28
Nine Months Ended
September 30, September 30,
1998 1997
Utility Operations $ 0.63 $ 0.61
Nonutility Operations 1.05 0.75
Consolidated $ 1.68 $ 1.36
Twelve Months Ended
September 30, September 30,
1998 1997
Utility Operations $ 1.10 $ 1.06
Nonutility Operations 1.50 1.10
Consolidated $ 2.60 $ 2.16
<PAGE>
ITEM 7. Exhibits.
99a Preliminary Consolidated Statements of Income for the Quarters Ended
September 30, 1998 and 1997, Nine Months Ended September 30, 1998 and
1997, and for the Twelve Months Ended September 30, 1998 and 1997.
99b Preliminary Utility Operations Schedule of Revenues and Expenses for the
Quarters Ended September 30, 1998 and 1997, Nine Months Ended
September 30, 1998 and 1997, and for the Twelve Months Ended
September 30, 1998 and 1997.
99c Preliminary Nonutility Operations Schedule of Revenues and Expenses for
the Quarters Ended September 30, 1998 and 1997, Nine Months Ended
September 30, 1998 and 1997, and for the Twelve Months Ended
September 30, 1998 and 1997.
99d Preliminary Operating Statistics
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: October 27, 1998
<PAGE>
Exhibit Index
Exhibit Page
99a Preliminary Consolidated Statements of Income for the Quarters
Ended September 30, 1998 and 1997, Nine Months Ended
September 30, 1998 and 1997, and for the Twelve Months Ended
September 30, 1998 and 1997. 6
99b Preliminary Utility Operations Schedule of Revenues and Expenses
for the Quarters Ended September 30, 1998 and 1997, Nine Months
Ended September 30, 1998 and 1997, and for the Twelve Months
Ended September 30, 1998 and 1997. 7
99c Preliminary Nonutility Operations Schedule of Revenues and
Expenses for the Quarters Ended September 30, 1998 and 1997,
Nine Months Ended September 30, 1998 and 1997, and for the
Twelve Months Ended September 30, 1998 and 1997. 8-9
99d Preliminary Operating Statistics 10
Exhibit 99a
<PAGE>
<TABLE>
<CAPTION>
PRELIMINARY CONSOLIDATED STATEMENT OF INCOME
The Montana Power Company and Subsidiaries
Quarter Ended Nine Months Ended 12 Months Ended
September 30, September 30, September 30,
1998 1997 1998 1997 1998 1997
Thousands of Dollars
<S> <C> <C> <C> <C> <C> <C>
REVENUES $315,215 $234,240 $873,926 $731,661 $ 1,165,863 $1,026,472
EXPENSES:
Operations 141,805 98,967 378,637 291,040 506,665 396,403
Maintenance 20,738 23,552 60,724 64,967 77,273 85,208
Selling, general and
administrative 26,284 26,046 89,221 82,260 122,866 114,683
Taxes other than income taxes 22,256 24,527 72,582 73,350 94,499 96,432
Depreciation, depletion and
amortization 31,285 24,356 86,072 68,777 112,637 93,723
242,368 197,448 687,236 580,394 913,940 786,449
INCOME FROM OPERATIONS 72,847 36,792 186,690 151,267 251,923 240,023
INTEREST EXPENSE AND OTHER:
Interest 14,662 13,958 43,563 39,394 58,836 51,679
Distributions on company obligated
mandatorily redeemable preferred
securities of subsidiary trust 1,373 1,373 4,119 4,119 5,492 4,122
Other (income) deductions - net (1,179) (1,238) (3,026) (13,742) (23,443) (13,991)
14,856 14,093 44,656 29,771 40,885 41,810
INCOME TAXES 21,188 6,458 46,813 44,298 64,386 74,455
NET INCOME 36,803 16,241 95,221 77,198 146,652 123,758
DIVIDENDS ON PREFERRED STOCK 923 923 2,768 2,768 3,690 5,705
NET INCOME AVAILABLE FOR
COMMON STOCK $ 35,880 $ 15,318 $ 92,453 $ 74,430 $ 142,962 $ 118,053
AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING (000) 55,013 54,645 54,957 54,636 54,889 54,635
BASIC NET INCOME PER SHARE OF
COMMON STOCK $ 0.65 $ 0.28 $ 1.68 $ 1.36 $ 2.60 $ 2.16
FULLY DILUTED EARNINGS PER SHARE OF
COMMON STOCK $ 0.65 $ 0.28 $ 1.68 $ 1.36 $ 2.60 $ 2.16
</TABLE>
Exhibit 99b
<PAGE>
<TABLE>
<CAPTION>
PRELIMINARY UTILITY OPERATIONS
Quarter Ended Nine Months Ended 12 Months Ended
September 30, September 30, September 30,
1998 1997 1998 1997 1998 1997
Thousands of Dollars
<S> <C> <C> <C> <C> <C> <C>
ELECTRIC UTILITY:
REVENUES:
Revenues $108,585 $ 106,118 $327,820 $323,635 $440,169 $448,793
Intersegment revenues 2,258 1,140 4,712 3,403 5,995 4,670
110,843 107,258 332,532 327,038 446,164 453,463
EXPENSES:
Power supply 28,242 33,649 97,405 100,130 139,877 137,391
Transmission and distribution 9,913 9,274 27,036 28,075 36,208 36,886
Selling, general and
administrative 10,953 12,004 38,393 37,833 51,428 54,669
Taxes other than income taxes 11,764 12,689 35,936 38,517 44,698 49,615
Depreciation and amortization 13,185 13,067 39,554 38,613 52,615 52,652
74,057 80,683 238,324 243,168 324,826 331,213
INCOME FROM ELECTRIC OPERATIONS 36,786 26,575 94,208 83,870 121,338 122,250
NATURAL GAS UTILITY:
REVENUES:
Revenues (other than including
gas supply cost revenues) 11,331 12,342 51,364 72,504 84,080 109,873
Gas supply cost revenues 2,447 1,201 22,763 11,135 28,763 16,413
Intersegment revenues 184 113 531 439 680 625
13,962 13,656 74,658 84,078 113,523 126,911
EXPENSES:
Gas supply costs 2,447 1,201 22,763 11,135 28,763 16,413
Other production, gathering and
exploration 404 1,923 1,557 6,443 2,799 9,222
Transmission and distribution 3,651 3,560 11,091 10,786 14,942 13,739
Selling, general and
administrative 4,786 4,281 14,877 12,734 19,886 18,066
Taxes other than income taxes 3,251 4,099 9,953 12,627 13,137 16,924
Depreciation, depletion and
amortization 2,207 3,120 6,614 9,367 9,186 12,903
16,746 18,184 66,855 63,092 88,713 87,267
INCOME FROM GAS OPERATIONS (2,784) (4,528) 7,803 20,986 24,810 39,644
INTEREST EXPENSE AND OTHER:
Interest 13,570 13,541 40,695 38,107 54,778 49,676
Distributions on company obligated
mandatorily redeemable preferred
securities of subsidiary trust 1,373 1,373 4,119 4,119 5,492 4,122
Other (income) deductions - net (1,138) (29) (1,932) (384) (8,676) 824
13,805 14,885 42,882 41,842 51,594 54,622
INCOME BEFORE INCOME TAXES 20,197 7,162 59,129 63,014 94,554 107,272
INCOME TAXES 8,344 3,227 21,462 26,695 30,411 43,421
DIVIDENDS ON PREFERRED STOCK 923 923 2,768 2,768 3,690 5,705
UTILITY NET INCOME AVAILABLE FOR
COMMON STOCK $ 10,930 $ 3,012 $ 34,899 $ 33,551 $ 60,453 $ 58,146
</TABLE>
Exhibit 99c
<PAGE>
<TABLE>
<CAPTION>
PRELIMINARY NONUTILITY OPERATIONS
Quarter Ended Nine Months Ended 12 Months Ended
September 30, September 30, September 30,
1998 1997 1998 1997 1998 1997
Thousands of Dollars
<S> <S> <S> <S> <S> <S> <S>
COAL:
REVENUES:
Revenues $ 40,391 $44,131 $ 128,869 $122,252 $174,240 $172,504
Intersegment revenues 8,645 9,223 28,501 23,872 38,793 33,371
49,036 53,354 157,370 146,124 213,033 205,875
EXPENSES:
Operations and maintenance 32,839 31,838 97,030 86,774 129,340 119,951
Selling, general and
administrative 3,663 4,767 13,085 15,193 19,246 20,815
Taxes other than income taxes 3,894 6,367 17,007 16,605 23,857 23,194
Depreciation, depletion and
amortization 1,995 2,282 7,262 4,701 11,604 6,025
42,391 45,254 134,384 123,273 184,047 169,985
INCOME FROM COAL
OPERATIONS 6,645 8,100 22,986 22,851 28,986 35,890
OIL AND NATURAL GAS:
REVENUES:
Revenues 55,396 39,306 142,909 116,114 190,451 153,493
Intersegment revenues 5,927 35 15,560 230 18,450 331
61,323 39,341 158,469 116,344 208,901 153,824
EXPENSES:
Operations and maintenance 46,380 28,974 115,500 76,912 156,854 100,516
Selling, general and
administrative 4,378 2,515 14,382 7,521 17,585 10,194
Taxes other than income taxes 1,300 909 3,613 3,562 4,605 4,120
Depreciation, depletion and
amortization 5,080 4,334 15,928 12,769 20,081 17,022
57,138 36,732 149,423 100,764 199,125 131,852
INCOME FROM OIL AND NATURAL
GAS OPERATIONS 4,185 2,609 9,046 15,580 9,776 21,972
INDEPENDENT POWER:
REVENUES:
Revenues 18,154 18,007 54,533 52,225 73,241 70,773
Earnings from unconsolidated
investments 20,829 3,266 29,180 7,938 36,221 20,121
Intersegment Revenues 444 358 1,625 1,572 1,872 2,265
39,427 21,631 85,338 61,735 111,334 93,159
EXPENSES:
Operations and maintenance 12,068 16,615 47,909 47,275 64,472 63,687
Selling, general and
administrative 873 896 3,028 3,092 4,226 4,510
Taxes other than income taxes 464 222 1,363 1,468 1,763 1,888
Depreciation, depletion and
amortization 5,857 948 8,229 1,914 9,089 3,299
19,262 18,681 60,529 53,749 79,550 73,384
INCOME FROM INDEPENDENT POWER
OPERATIONS 20,165 2,950 24,809 7,986 31,784 19,775
<PAGE>
Exhibit 99c
PRELIMINARY NONUTILITY OPERATIONS (continued)
Quarter Ended Nine Months Ended 12 Months Ended
September 30, September 30, September 30,
1998 1997 1998 1997 1998 1997
Thousands of Dollars
TELECOMMUNICATIONS:
REVENUES:
Revenues $ 21,394 $ 8,807 $ 63,049 $ 23,844 $83,669 $31,968
Earnings from unconsolidated
investments 1,229 17 6,873 54 7,253 54
Intersegment Revenues 297 201 800 587 1,011 720
22,920 9,025 70,722 24,485 91,933 32,742
EXPENSES:
Operations and maintenance 6,779 5,204 19,245 15,568 24,588 20,915
Selling, general and
administrative 2,234 1,401 7,318 4,927 10,234 6,414
Taxes other than income taxes 1,315 241 3,874 570 5,597 689
Depreciation, depletion and
amortization 2,026 472 5,255 1,013 6,698 1,250
12,354 7,318 35,692 22,078 47,117 29,268
INCOME FROM TELECOMMUNICATIONS
OPERATIONS 10,566 1,707 35,030 2,407 44,816 3,474
OTHER OPERATIONS:
REVENUES:
Revenues 24,930 985 29,599 1,690 30,015 2,012
Intersegment revenues 265 917 1,025 2,031 2,917 2,236
25,195 1,902 30,624 3,721 32,932 4,248
EXPENSES:
Operations and maintenance 26,124 1,159 31,829 1,854 32,368 2,191
Selling, general and
administrative 584 1,232 1,921 3,881 5,945 4,465
Taxes other than income taxes 266 835 842
Depreciation, depletion and
amortization 937 133 3,231 399 3,364 572
27,911 2,524 37,816 6,134 42,519 7,228
LOSS FROM OTHER OPERATIONS (2,716) (622) (7,192) (2,413) (9,587) (2,980)
INTEREST EXPENSE AND OTHER:
Interest 2,447 1,335 7,036 4,234 9,407 5,558
Other (income) deductions - net (1,397) (2,128) (5,261) (16,305) (20,116) (18,368)
1,050 (793) 1,775 (12,071) (10,709) (12,810)
INCOME BEFORE INCOME TAXES 37,795 15,537 82,904 58,482 116,484 90,941
INCOME TAXES 12,845 3,231 25,350 17,603 33,975 31,034
NONUTILITY NET INCOME AVAILABLE
FOR COMMON STOCK $24,950 $ 12,306 $57,554 $40,879 $ 82,509 $59,907
</TABLE>
<PAGE>
Exhibit 99d
<TABLE>
<CAPTION>
PRELIMINARY OPERATING STATISTICS
Quarter Ended Nine Months Ended
September 30, September 30,
1998 1997 Change % 1998 1997 Change %
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ELECTRIC UTILITY GENERATON (Mwhs):
Hydroelectric 1,019,814 978,677 41,137 4% 2,878,549 3,095,026 (216,477) (7%)
Coal Fired 1,257,906 1,227,377 _30,529 2% 3,263,362 3,097,203 166,159 5%
Total 2,277,720 2,206,054 71,666 3% 6,141,911 6,192,229 (50,318) (1%)
HEATING DEGREE DAYS: 193 350 (157) (45%) 4,693 5,130 (437) (9%)
Normal 5,120
COAL SALES (thousand of tons):
Montana 2,769 2,561 208 8% 7,819 6,427 1,392 22%
Texas 2,530 2,321 209 9% ___6,395 ____6,797 (402) (6%)
Total 5,299 4,882 417 9% 14,214 13,224 990 7%
NONUTILITY OIL & GAS PRODUCTION SALES VOLUMES:
Oil (Bbls) 139,442 271,346 (131,904) (49%) 461,940 827,454 (365,514) (44%)
Natural Gas (Mcfs) 6,249,030 3,451,858 2,797,172 81% 19,133,313 10,265,754 8,867,559 86%
N G Liquids (Bbls) 147,674 116,223 31,451 27% 461,189 327,102 134,087 41%
</TABLE>
