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 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 4.
ITEM 5. Other Events.
Fourth Quarter Financial Results
Net income for the quarter ended December 31, 1997 was 93 cents per
share, compared to 80 cents per share in 1996.
Earnings from Nonutility operations increased 11 cents per share. Net
gains from the sales of non-strategic oil, natural gas and coal properties and
the investment in a Brazilian gold mine contributed substantially to fourth
quarter Nonutility net income. Also, earnings from telecommunications
operations increased because the Company began receiving significant revenues
from its expanded fiber optic network late in the third quarter. Earnings from
coal operations decreased due to price reductions resulting primarily from a
settlement with Puget Sound Energy (Puget) and reduced sales to Colstrip Units
1 & 2 due to plant maintenance. Reduced oil revenues, due to the sale of oil
properties, adversely impacted earnings from oil and natural gas operations.
Earnings from independent power operations decreased primarily due to the
absence of a gain recognized in 1996 on the sale of a portion of an asset.
Utility earnings were adversely impacted by warm fourth quarter weather and a
settlement of a power supply contract dispute. The absence of employee
severance costs recorded in the fourth quarter last year partially offset these
impacts. Both Utility and Nonutility net income benefited from a settlement of
a long-standing income tax dispute with the IRS.
Consolidated net income for the year ended December 31, 1997 was $2.29
per share, an increase of 26 cents over last year. In addition to the items
mentioned above, gains on sales of non-strategic oil and natural gas properties
throughout the year contributed significantly to the increase in Nonutility
earnings. Increased earnings from coal operations resulting from higher sales
volumes to Colstrip Units 3 & 4 were mostly offset by the price decreases
previously discussed. Earnings from independent power operations also decreased
due to reduced long-term power sales revenues resulting from a settlement with
Puget. Utility earnings decreased five cents per share as weather related
reductions in general business revenues and higher power supply costs resulting
from increases in steam plant maintenance, power purchases from qualifying
facilities and the settlement of a power supply contract dispute were partially
offset by higher rates, customer growth and the expiration of two higher-priced
power purchase contracts in 1996.
Further details of the Company's results of operations will be provided
in the Annual Report on Form 10-K which will be filed in March.
For comparative purposes, the following table shows the breakdown of
primary consolidated net income per share:
Quarter Ended
December 31,
1997 1996
Utility Operations $ 0.47 $ 0.45
Nonutility Operations 0.46 0.35
Consolidated $ 0.93 $ 0.80
Year Ended
December 31,
1997 1996
Utility Operations $ 1.08 $ 1.13
Nonutility Operations 1.21 0.90
Consolidated $ 2.29 $ 2.03
ITEM 7. Exhibits.
99a Preliminary Consolidated Statements of Income for the Quarters Ended
December 31, 1997 and 1996, and for the Years Ended December 31, 1997 and
1996.
99b Preliminary Utility Operations Schedule of Revenues and Expenses for the
Quarters Ended December 31, 1997 and 1996, and for the Years Ended
December 31, 1997 and 1996.
99c Preliminary Nonutility Operations Schedule of Revenues and Expenses for
the Quarters Ended December 31, 1997 and 1996, and for the Years Ended
December 31, 1997 and 1996.
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 27, 1998
Exhibit Index
Exhibit Page
99a Preliminary Consolidated Statements of Income for the
Quarters Ended December 31, 1997 and 1996, and for the
Years Ended December 31, 1997 and 1996. 5
99b Preliminary Utility Operations Schedule of Revenues and
Expenses for the Quarters Ended December 31, 1997 and 1996,
and for the Years Ended December 31, 1997 and 1996. 6
99c Preliminary Nonutility Operations Schedule of Revenues and
Expenses for the Quarters Ended December 31, 1997 and 1996,
and for the Years Ended December 31, 1997 and 1996. 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,
1997 1996 1997 1996
Thousands of Dollars
<S> <C> <C> <C> <C>
REVENUES $291,936 $294,811 $1,023,597 $973,208
EXPENSES:
Operations 127,161 104,630 415,973 381,550
Maintenance 15,363 18,371 75,994 68,181
Selling, general and administrative 35,133 36,108 121,894 111,144
Taxes other than income taxes 22,141 23,342 96,214 87,903
Depreciation, depletion and
amortization 26,504 23,606 96,621 88,744
226,302 206,057 806,696 737,522
INCOME FROM OPERATIONS 65,634 88,754 216,901 235,686
INTEREST EXPENSE AND OTHER INCOME:
Interest 15,274 12,289 54,668 48,770
Distributions on mandatorily redeemable
preferred securities of subsidiary trust 1,373 5,492
Other (income) deductions - net (20,453) (249) (34,195) (4,445)
(3,806) 12,040 25,965 44,325
INCOME TAXES 18,006 30,158 62,304 71,975
NET INCOME 51,434 46,556 128,632 119,386
DIVIDENDS ON PREFERRED STOCK 922 2,938 3,690 8,358
NET INCOME AVAILABLE FOR COMMON STOCK $ 50,512 $ 43,618 $ 124,942 $ 111,028
AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING (000) 54,686 54,631 54,649 54,634
PRIMARY EARNINGS PER SHARE OF COMMON STOCK $ 0.93 $ 0.80 $ 2.29 $ 2.03
FULLY DILUTED EARNINGS PER SHARE OF
COMMON STOCK $ 0.92 $ 0.80 $ 2.28 $ 2.03
</TABLE>
<TABLE>
<CAPTION>
Exhibit 99b
PRELIMINARY UTILITY OPERATIONS
Quarter Ended Year Ended
December 31, December 31,
1997 1996 1997 1996
Thousands of Dollars
<S> <C> <C> <C> <C>
ELECTRIC UTILITY:
REVENUES:
Revenues $112,351 $125,158 $435,986 $430,171
Intersegment revenues 1,282 1,267 4,685 5,793
113,633 126,425 440,671 435,964
EXPENSES:
Power supply 42,439 37,091 142,193 136,817
Transmission and distribution 7,947 6,895 31,883 30,263
Selling, general and administrative 13,668 20,081 54,103 52,091
Taxes other than income taxes 8,928 11,313 47,985 46,191
Depreciation and amortization 13,519 12,665 53,505 48,479
86,501 88,045 329,669 313,841
INCOME FROM ELECTRIC OPERATIONS 27,132 38,380 111,002 122,123
NATURAL GAS UTILITY:
REVENUES:
Revenues (other than gas supply
cost revenues) 32,716 37,369 105,220 107,782
Gas supply cost revenues 6,000 5,277 17,135 20,746
Intersegment revenues 149 186 588 649
38,865 42,832 122,943 129,177
EXPENSES:
Gas supply costs 6,000 5,277 17,135 20,746
Other production, gathering and
exploration 1,347 2,414 8,128 9,335
Transmission and distribution 2,955 2,800 11,353 11,711
Selling, general and
administrative 5,656 6,188 19,873 18,684
Taxes other than income taxes 3,241 4,343 16,052 15,722
Depreciation, depletion and
amortization 2,658 3,154 12,408 12,149
21,857 24,176 84,949 88,347
INCOME FROM GAS OPERATIONS 17,008 18,656 37,994 40,830
INTEREST EXPENSE AND OTHER INCOME:
Interest 14,084 11,572 52,191 46,663
Distributions on company obligated
mandatorily redeemable preferred
securities of subsidiary trust 1,373 5,492
Other (income) deductions - net (6,744) 1,207 (7,128) (402)
8,713 12,779 50,555 46,261
INCOME BEFORE INCOME TAXES 35,427 44,257 98,441 116,692
INCOME TAXES 8,948 16,727 35,643 46,687
DIVIDENDS ON PREFERRED STOCK 922 2,938 3,690 8,358
UTILITY NET INCOME AVAILABLE FOR
COMMON STOCK $ 25,557 $ 24,592 $ 59,108 $ 61,647
</TABLE>
<TABLE>
<CAPTION>
Exhibit 99c
PRELIMINARY NONUTILITY OPERATIONS
Quarter Ended Year Ended
December 31, December 31,
1997 1996 1997 1996
Thousands of Dollars
<S> <C> <C> <C> <C>
COAL:
REVENUES:
Revenues $ 45,371 $ 50,251 $167,623 $163,901
Intersegment revenues 10,292 9,499 34,164 31,448
55,663 59,750 201,787 195,349
EXPENSES:
Operations and maintenance 32,306 33,176 119,080 115,859
Selling, general and administrative 6,371 5,207 21,979 21,373
Taxes other than income taxes 6,851 6,588 23,456 20,883
Depreciation, depletion and
amortization 3,739 1,739 8,025 5,653
49,267 46,710 172,540 163,768
INCOME FROM COAL OPERATIONS 6,396 13,040 29,247 31,581
OIL AND NATURAL GAS:
REVENUES:
Revenues 47,542 37,379 163,656 124,532
Intersegment revenues 2,890 101 3,120 293
50,432 37,480 166,776 124,825
EXPENSES:
Operations and maintenance 41,354 23,603 118,266 76,975
Selling, general and administrative 3,202 2,673 10,723 10,152
Taxes other than income taxes 993 557 4,555 2,931
Depreciation, depletion and
amortization 4,153 4,254 16,922 17,080
49,702 31,087 150,466 107,138
INCOME FROM OIL AND NATURAL
GAS OPERATIONS 730 6,393 16,310 17,687
INDEPENDENT POWER:
REVENUES:
Revenues 18,707 18,549 70,932 75,322
Earnings from unconsolidated
Investments 7,042 12,183 14,980 21,174
Intersegment Revenues 248 692 1,820 1,426
25,997 31,424 87,732 97,922
EXPENSES:
Operations and maintenance 16,562 16,413 63,837 64,274
Selling, general and administrative 1,198 1,418 4,290 5,223
Taxes other than income taxes 400 421 1,868 1,783
Depreciation, depletion and
amortization 860 1,384 2,774 3,793
19,020 19,636 72,769 75,073
INCOME FROM INDEPENDENT POWER OPERATIONS $ 6,977 $ 11,788 $ 14,963 $ 22,849
</TABLE>
<TABLE>
<CAPTION>
Exhibit 99c
PRELIMINARY NONUTILITY OPERATIONS (continued)
Quarter Ended Year Ended
December 31, December 31,
1997 1996 1997 1996
Thousands of Dollars
<S> <C> <C> <C> <C>
TELECOMMUNICATIONS:
REVENUES:
Revenues $ 21,001 $ 8,123 $ 44,899 $ 27,641
Intersegment Revenues 210 133 797 133
21,211 8,256 45,696 27,774
EXPENSES:
Operations and maintenance 5,343 5,347 20,911 18,316
Selling, general and
administrative 2,916 1,487 7,843 5,498
Taxes other than income taxes 1,723 120 2,293 392
Depreciation, depletion and
amortization 1,442 238 2,455 911
11,424 7,192 33,502 25,117
INCOME FROM TELECOMMUNICATIONS
OPERATIONS 9,787 1,064 12,194 2,657
OTHER OPERATIONS:
REVENUES:
Revenues 414 323 2,104 1,201
Intersegment revenues 1,893 204 3,924 782
2,307 527 6,028 1,983
EXPENSES:
Operations and maintenance 540 338 2,394 1,207
Selling, general and administrative 4,030 583 7,911 2,137
Depreciation, depletion and
amortization 133 172 532 679
4,703 1,093 10,837 4,023
LOSS FROM OTHER OPERATIONS (2,396) (566) (4,809) (2,040)
INTEREST EXPENSE AND OTHER INCOME:
Interest 2,371 1,325 6,605 4,829
Other (income) deductions - net (14,890) (2,064) (31,195) (6,764)
(12,519) (739) (24,590) (1,935)
INCOME BEFORE INCOME TAXES 34,013 32,458 92,495 74,669
INCOME TAXES 9,058 13,432 26,661 25,288
NONUTILITY NET INCOME AVAILABLE FOR
COMMON STOCK $ 24,955 $ 19,026 $ 65,834 $ 49,381
</TABLE>
