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 28, 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.
ITEM 5. Other Events.
Second Quarter Net Income
The Company had consolidated net income of $0.39 per share in the second
quarter ended June 30, 1998, an increase of 14 cents or 56 percent over
second-quarter 1997 earnings of $0.25 per share.
Nonutility earnings increased to 30 cents per share, compared to
20 cents in the second quarter of 1997. Utility earnings increased to 9 cents
per share from 5 cents per share in the same quarter of 1997.
The telecommunications operations had an earnings improvement of
14 cents a share compared to the same quarter in 1997 along with improvements
in coal and independent power operations. Telecommunication increases were
driven by capacity sales of lit fiber and dark fiber sales on the fiber-optic
network in service and under construction. Coal operations benefited from an
increase in sales volumes to the Colstrip units, and the independent power
operation's investments produced higher earnings.
Oil and natural gas earnings were below year-earlier figures primarily
because of a one-time gain in 1997 from the sale of non-strategic properties.
Although commodity prices are lower than expected, completion of a plant
expansion at Fort Lupton, Colorado, increases processing capacity, to allow
handling of additional volumes resulting from an acquisition last year. The
plant is handling 50 million cubic feet of natural gas and 5,000 barrels of
liquids daily.
Increase in Utility earnings reflected increased sales volumes of
electricity, higher rates, reduced maintenance expenses compared to 1997, and
a 19 percent increase in steam-generated electricity. Weather was 7 percent
warmer than normal, based on degree days, and natural gas volumes decreased by
26 percent.
Second-quarter performance nearly offset first-quarter results that were
adversely affected by warm weather during prime winter-heating months, lower
prices for gas and oil, and the impact of a seasonal power-purchase contract.
Year-to-date earnings were $1.03, or five cents less than the comparable
period of 1997, with Nonutility earnings of 59 cents a share in 1998 compared
to 52 cents last year, and Utility earnings of 44 cents compared to 56 cents
in the first six months of 1997.
Over the past 12 months, earnings are $2.23 per share, compared to a
year-earlier $2.18. Nonutility earnings are $1.27 compared to $1.10 a year
earlier; Utility earnings are 96 cents a share compared to $1.08 a year
earlier.
For comparative purposes, the following table shows the breakdown of
consolidated basic net income per share by principal business segment:
Quarter Ended
June 30, June 30,
1998 1997
Utility Operations $ 0.09 $ 0.05
Nonutility Operations 0.30 0.20
Consolidated $ 0.39 $ 0.25
Six Months Ended
June 30, June 30
1998 1997
Utility Operations $ 0.44 $ 0.56
Nonutility Operations 0.59 0.52
Consolidated $ 1.03 $ 1.08
Twelve Months Ended
June 30, June 30,
1998 1997
Utility Operations $ 0.96 $ 1.08
Nonutility Operations 1.27 1.10
Consolidated $ 2.23 $ 2.18
ITEM 7. Exhibits.
99a Preliminary Consolidated Statements of Income for the Quarters Ended
June 30, 1998 and 1997, Six Months Ended June 30, 1998 and 1997, and for
the Twelve Months Ended June 30, 1998 and 1997.
99b Preliminary Utility Operations Schedule of Revenues and Expenses for the
Quarters Ended June 30, 1998 and 1997, Six Months Ended June 30, 1998 and
1997, and for the Twelve Months Ended June 30, 1998 and 1997.
99c Preliminary Nonutility Operations Schedule of Revenues and Expenses for
the Quarters Ended June 30, 1998 and 1997, Six Months Ended June 30, 1998
and 1997, and for the Twelve Months Ended June 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
J. P. Pederson
Vice President and Chief
Financial Officer
Dated: July 28, 1998
Exhibit Index
Exhibit Page
99a Preliminary Consolidated Statements of Income for the Quarters
Ended June 30, 1998 and 1997, Six Months Ended June 30, 1998 and
1997, and for the Twelve Months Ended June 30, 1998 and 1997. 6
99b Preliminary Utility Operations Schedule of Revenues and Expenses
for the Quarters Ended June 30, 1998 and 1997, Six Months Ended
June 30, 1998 and 1997, and for the Twelve Months Ended June 30,
1998 and 1997. 7
99c Preliminary Nonutility Operations Schedule of Revenues and
Expenses for the Quarters Ended June 30, 1998 and 1997, Six
Months Ended June 30, 1998 and 1997, and for the Twelve Months
Ended June 30, 1998 and 1997. 8-9
99d Preliminary Operating Statistics 10
Exhibit 99a
<TABLE>
<CAPTION>
PRELIMINARY CONSOLIDATED STATEMENT OF INCOME
The Montana Power Company and Subsidiaries
Quarter Ended Six Months Ended 12 Months Ended
June 30, June 30, June 30,
1998 1997 1998 1997 1998 1997
Thousands of Dollars
<S> <C> <C> <C> <C> <C> <C>
REVENUES $260,566 $216,051 $544,870 $497,421 $1,071,046 $1,008,305
EXPENSES:
Operations 104,309 88,283 222,990 192,058 449,985 387,254
Maintenance 20,204 22,142 39,986 41,417 80,097 81,452
Selling, general and
administrative 33,571 28,395 62,937 56,227 122,598 111,098
Taxes other than income taxes 24,802 23,746 50,326 48,824 96,789 93,429
Depreciation, depletion and
amortization 27,701 22,378 54,787 44,421 105,709 92,557
210,587 184,944 431,026 382,947 855,178 765,790
INCOME FROM OPERATIONS 49,979 31,107 113,844 114,474 215,868 242,515
INTEREST EXPENSE AND OTHER:
Interest 14,397 12,873 28,901 25,436 58,128 50,527
Distributions on company obligated
mandatorily redeemable preferred
securities of subsidiary trust 1,373 1,373 2,746 2,746 5,496 2,746
Other (income) deductions - net (119) (7,687) (1,847) (12,504) (23,502) (14,497)
15,651 6,559 29,800 15,678 40,122 38,776
INCOME TAXES 11,777 9,795 25,625 37,840 49,655 77,996
NET INCOME 22,551 14,753 58,419 60,956 126,091 125,743
DIVIDENDS ON PREFERRED STOCK 923 923 1,845 1,845 3,690 6,589
NET INCOME AVAILABLE FOR
COMMON STOCK $ 21,628 $ 13,830 $ 56,574 $ 59,111 $ 122,401 $ 119,154
AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING (000) 54,983 54,630 54,929 54,632 54,797 54,632
BASIC NET INCOME PER SHARE OF
COMMON STOCK $ 0.39 $ 0.25 $ 1.03 $ 1.08 $ 2.23 $ 2.18
FULLY DILUTED EARNINGS PER SHARE OF
COMMON STOCK $ 0.39 $ 0.25 $ 1.03 $ 1.08 $ 2.23 $ 2.18
</TABLE>
Exhibit 99b
<TABLE>
<CAPTION>
PRELIMINARY UTILITY OPERATIONS
Quarter Ended Six Months Ended 12 Months Ended
June 30, June 30, June 30,
1998 1997 1998 1997 1998 1997
Thousands of Dollars
ELECTRIC UTILITY:
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Revenues $102,716 $ 95,509 $219,235 $217,517 $437,703 $442,391
Intersegment revenues 1,178 926 2,454 2,263 4,876 4,542
103,894 96,435 221,689 219,780 442,579 446,933
EXPENSES:
Power supply 29,198 30,639 69,163 66,483 145,170 136,940
Transmission and distribution 8,539 9,486 17,123 18,802 35,715 37,185
Selling, general and
administrative 14,124 12,303 27,440 25,825 52,434 51,796
Taxes other than income taxes 12,075 13,010 24,172 25,828 45,636 48,228
Depreciation and amortization 13,185 12,790 26,369 25,547 52,497 51,847
77,121 78,228 164,267 162,485 331,452 325,996
INCOME FROM ELECTRIC OPERATIONS 26,773 18,207 57,422 57,295 111,127 120,937
NATURAL GAS UTILITY:
REVENUES:
Revenues (other than including
gas supply cost revenues) 13,407 19,934 40,034 60,162 85,091 110,744
Gas supply cost revenues 5,937 3,082 20,316 9,934 27,517 16,700
Intersegment revenues 155 93 352 326 615 617
19,499 23,109 60,702 70,422 113,223 128,061
EXPENSES:
Gas supply costs 5,937 3,082 20,316 9,934 27,517 16,700
Other production, gathering and
exploration 485 2,153 1,159 4,513 4,309 9,504
Transmission and distribution 3,805 3,565 7,440 7,215 14,842 13,960
Selling, general and
administrative 5,533 4,194 10,091 8,469 19,398 17,042
Taxes other than income taxes 3,330 4,278 6,702 8,529 13,991 16,419
Depreciation, depletion and
amortization 2,203 3,119 4,407 6,248 10,099 12,792
21,293 20,391 50,115 44,908 90,156 86,417
INCOME FROM GAS OPERATIONS (1,794) 2,718 10,587 25,514 23,067 41,644
INTEREST EXPENSE AND OTHER:
Interest 13,680 12,428 27,125 24,566 54,749 48,178
Distributions on company obligated
mandatorily redeemable preferred
securities of subsidiary trust 1,373 1,373 2,746 2,746 5,496 2,746
Other (income) deductions - net (680) 400 (795) (354) (7,571) 703
14,373 14,201 29,076 26,958 52,674 51,627
INCOME BEFORE INCOME TAXES 10,606 6,724 38,933 55,851 81,520 110,954
INCOME TAXES 4,661 3,258 13,119 23,468 25,294 45,397
DIVIDENDS ON PREFERRED STOCK 923 923 1,845 1,845 3,690 6,589
UTILITY NET INCOME AVAILABLE FOR
COMMON STOCK $ 5,022 $ 2,543 $ 23,969 $ 30,538 $ 52,536 $ 58,968
</TABLE>
Exhibit 99c
<TABLE>
<CAPTION>
PRELIMINARY NONUTILITY OPERATIONS
Quarter Ended Six Months Ended 12 Months Ended
June 30, June 30, June 30,
1998 1997 1998 1997 1998 1997
Thousands of Dollars
COAL:
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Revenues $45,053 $35,750 $88,478 $78,121 $177,980 $172,314
Intersegment revenues 9,657 6,570 19,856 14,649 39,371 33,064
54,710 42,320 108,334 92,770 217,351 205,378
EXPENSES:
Operations and maintenance 32,427 25,228 64,191 54,936 128,339 117,966
Selling, general and
administrative 4,369 5,487 9,421 10,426 20,350 21,245
Taxes other than income taxes 6,424 4,419 13,112 10,238 26,329 22,280
Depreciation, depletion and
amortization 2,531 1,253 5,267 2,419 11,893 5,849
45,751 36,387 91,991 78,019 186,911 167,340
INCOME FROM COAL
OPERATIONS 8,959 5,933 16,343 14,751 30,440 38,038
OIL AND NATURAL GAS:
REVENUES:
Revenues 44,278 34,452 87,513 76,808 174,360 142,871
Intersegment revenues 4,887 89 9,633 195 12,558 321
49,165 34,541 97,146 77,003 186,918 143,192
EXPENSES:
Operations and maintenance 35,705 23,469 69,120 47,938 139,448 89,461
Selling, general and
administrative 5,643 2,756 10,005 5,006 15,722 10,227
Taxes other than income taxes 961 1,093 2,312 2,653 4,214 3,826
Depreciation, depletion and
amortization 5,471 4,135 10,848 8,435 19,334 16,927
47,780 31,453 92,285 64,032 178,718 120,441
INCOME FROM OIL AND NATURAL
GAS OPERATIONS 1,385 3,088 4,861 12,971 8,200 22,751
INDEPENDENT POWER:
REVENUES:
Revenues 17,803 17,020 36,379 34,218 73,093 71,539
Earnings from unconsolidated
investments 6,798 1,647 8,351 4,672 18,659 19,987
Intersegment Revenues 612 397 1,181 1,214 1,787 2,219
25,213 19,064 45,911 40,104 93,539 93,745
EXPENSES:
Operations and maintenance 17,167 14,756 35,841 30,660 69,018 63,447
Selling, general and
administrative 1,181 1,107 2,155 2,196 4,249 5,553
Taxes other than income taxes 434 751 899 1,246 1,521 2,147
Depreciation, depletion and
amortization 1,453 661 2,372 966 4,180 3,191
20,235 17,275 41,267 35,068 78,968 74,338
INCOME FROM INDEPENDENT POWER
OPERATIONS 4,978 1,789 4,644 5,036 14,571 19,407
</TABLE>
Exhibit 99c
<TABLE>
<CAPTION>
PRELIMINARY NONUTILITY OPERATIONS (continued)
Quarter Ended Six Months Ended 12 Months Ended
June 30, June 30, June 30,
1998 1997 1998 1997 1998 1997
Thousands of Dollars
TELECOMMUNICATIONS:
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Revenues $21,273 $ 8,056 $41,655 $15,036 $71,082 $29,771
Earnings from unconsolidated
investments 3,564 15 5,644 38 6,041 66
Intersegment Revenues 252 204 503 386 915 518
25,089 8,275 47,802 15,460 78,038 30,355
EXPENSES:
Operations and maintenance 6,519 5,529 12,466 10,364 23,013 20,181
Selling, general and
administrative 2,876 1,891 5,084 3,526 9,400 6,302
Taxes other than income taxes 1,313 193 2,559 329 4,522 528
Depreciation, depletion and
amortization 1,698 287 3,230 541 5,145 1,016
12,406 7,900 23,339 14,760 42,080 28,027
INCOME FROM TELECOMMUNICATIONS
OPERATIONS 12,683 375 24,463 700 35,958 2,328
OTHER OPERATIONS:
REVENUES:
Revenues 3,186 453 4,669 705 6,068 1,362
Intersegment revenues 416 825 760 1,114 3,570 1,487
3,602 1,278 5,429 1,819 9,638 2,849
EXPENSES:
Operations and maintenance 3,949 477 5,704 695 7,404 1,345
Selling, general and
administrative 1,234 1,669 1,337 2,649 6,591 3,487
Taxes other than income taxes 265 570 576
Depreciation, depletion and
amortization 1,163 133 2,294 266 2,561 607
6,611 2,279 9,905 3,610 17,132 5,439
LOSS FROM OTHER OPERATIONS (3,009) (1,001) (4,476) (1,791) (7,494) (2,590)
INTEREST EXPENSE AND OTHER:
Interest 2,360 1,787 4,589 2,899 8,295 5,750
Other (income) deductions - net (1,085) (9,426) (3,865) (14,177) (20,846) (18,601)
1,275 (7,639) 724 (11,278) (12,551) (12,851)
INCOME BEFORE INCOME TAXES 23,721 17,823 45,111 42,945 94,226 92,785
INCOME TAXES 7,115 6,536 12,506 14,372 24,361 32,599
NONUTILITY NET INCOME AVAILABLE
FOR COMMON STOCK $16,606 $ 11,287 $32,605 $28,573 $69,865 $ 60,186
</TABLE>
Exhibit 99d
<TABLE>
<CAPTION>
PRELIMINARY OPERATING STATISTICS
Quarter Ended Six Months Ended
June 30, June 30,
1998 1997 Change % 1998 1997 Change %
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ELECTRIC UTILITY GENERATON (Mwhs):
Hydroelectric 1,040,746 1,032,836 7,910 1% 1,858,735 2,116,350 (257,615) (12%)
Coal Fired 983,636 830,201 153,435 18% 2,005,456 1,869,827 135,629 7%
Total 2,024,382 1,863,037 161,345 9% 3,864,191 3,986,177 (121,986) (3%)
HEATING DEGREE DAYS: 1,253 1,352 (99) (7%) 4,500 4,780 (280) (6%)
Normal 4,711
COAL SALES (thousand of tons):
Montana 2,308 1,669 639 38% 5,050 3,866 1,184 31%
Texas 1,970 2,049 (79) (4%) 3,865 4,476 (611) (14%)
Total 4,278 3,718 560 15% 8,915 8,342 573 7%
NONUTILITY OIL & GAS PRODUCTION SALES VOLUMES:
Oil (Bbls) 158,580 255,886 (97,306) (38%) 322,498 556,108 (233,610) (42%)
Natural Gas (Mcfs) 6,582,650 3,205,129 3,377,521 105% 12,884,283 6,813,896 6,070,387 89%
N G Liquids (Bbls) 152,266 100,328 51,938 52% 313,515 210,879 102,636 49%
</TABLE>
2
