SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File No. 0-692
NORTHWESTERN PUBLIC SERVICE COMPANY
A Delaware Corporation
IRS Employer Identification No. 46-0172280
33 Third Street SE
Huron, South Dakota 57350-1318
Telephone - 605-352-8411
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. [ X ] Yes [ ] No
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date:
Common Stock, Par Value $3.50
7,677,232 shares outstanding at May 6, 1994
<PAGE>
INDEX
Page
Part I. Financial Information
Consolidated Balance Sheet -
March 31, 1994 and December 31, 1993 1
Consolidated Statement of Income -
Three months ended March 31, 1994 and 1993 2
Consolidated Statement of Cash Flows
Three months ended March 31, 1994 and 1993 3
Notes to Consolidated Financial Statements 4
Management's Discussion of Financial Condition
and Results of Operations 5
Part II. Other Information 8
Signatures 9
<PAGE>1
NORTHWESTERN PUBLIC SERVICE COMPANY
CONSOLIDATED BALANCE SHEET
March 31 December 31,
1994 1993
ASSETS (unaudited)
-------------- --------------
UTILITY PLANT, at original cost:
Electric $ 294,274,630 $ 292,508,996
Gas 55,870,816 53,414,571
Common 15,976,754 15,788,899
-------------- --------------
Utility plant in service 366,122,200 361,712,466
Less-Accumulated depreciation 132,958,915 130,610,474
-------------- --------------
233,163,285 231,101,992
Construction work in progress 5,624,633 7,393,129
-------------- --------------
238,787,918 238,495,121
-------------- --------------
CURRENT ASSETS:
Cash and cash equivalents 7,903,452 3,099,093
Accounts receivable, net 13,895,359 11,197,920
Fuel, at average cost 2,864,587 4,040,170
Inventories, materials and supplies 9,713,139 9,150,841
Deferred gas costs 2,865,760 4,121,591
Other 2,033,436 2,343,183
-------------- --------------
39,275,733 33,952,798
-------------- --------------
OTHER ASSETS:
Investments 61,462,587 44,851,734
Deferred charges and other 26,808,215 26,274,440
-------------- --------------
88,270,802 71,126,174
-------------- --------------
$ 366,334,453 $ 343,574,093
============== ==============
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common stock equity-
Common stock $ 26,870,312 $ 26,870,312
Additional paid-in capital 29,922,847 29,922,847
Retained earnings 57,674,542 52,873,772
Unrealized gain on investments, net 9,301,602 -
-------------- --------------
123,769,303 109,666,931
Cumulative preferred stock-
Nonredeemable 2,600,000 2,600,000
Redeemable 70,000 70,000
Long-term debt 127,000,000 126,600,000
-------------- --------------
253,439,303 238,936,931
-------------- --------------
CURRENT LIABILITIES:
Long-term debt due within one year 600,000 600,000
Accounts payable 10,412,948 10,440,263
Accrued taxes 13,095,834 8,227,610
Accrued interest 1,654,578 2,946,075
Other 5,716,663 5,617,740
-------------- --------------
31,480,023 27,831,688
-------------- --------------
DEFERRED CREDITS:
Accumulated deferred income taxes 41,203,500 35,683,509
Unamortized investment tax credits 11,007,431 11,149,631
Other 29,204,196 29,972,334
-------------- --------------
81,415,127 76,805,474
-------------- --------------
$ 366,334,453 $ 343,574,093
============== ==============
The accompanying notes to consolidated financial statements are
an integral part of this balance sheet.
<PAGE>2
NORTHWESTERN PUBLIC SERVICE COMPANY
CONSOLIDATED STATEMENT OF INCOME
(unaudited)
Three Months Ended
March 31
1994 1993
------------- -------------
OPERATING REVENUES:
Electric $ 19,264,108 $ 18,267,337
Gas 30,310,820 29,007,008
Other 5,888,771 3,863,100
------------- -------------
55,463,699 51,137,445
------------- -------------
OPERATING EXPENSES:
Fuel for electric generation 3,898,895 3,456,519
Purchased power 345,667 404,993
Purchased gas sold 20,085,469 20,887,414
Other operating expenses 5,748,218 5,346,596
Manufacturing costs 5,285,229 3,649,255
Maintenance 1,405,291 1,453,918
Depreciation 2,991,328 2,868,839
Income taxes 4,245,245 3,283,519
Property and other taxes 1,599,997 1,574,936
------------- -------------
45,605,339 42,925,989
------------- -------------
OPERATING INCOME 9,858,360 8,211,456
ALLOWANCE FOR EQUITY FUNDS
USED DURING CONSTRUCTION 2,378 2,678
INVESTMENT INCOME AND OTHER,
net of taxes 546,060 556,597
------------- -------------
INCOME BEFORE INTEREST CHARGES 10,406,798 8,770,731
INTEREST EXPENSE (2,395,358) (2,201,061)
ALLOWANCE FOR BORROWED FUNDS
USED DURING CONSTRUCTION 5,550 4,188
------------- -------------
NET INCOME 8,016,990 6,573,858
DIVIDENDS ON CUMULATIVE
PREFERRED STOCK (30,168) (30,564)
------------- -------------
NET INCOME AVAILABLE FOR
COMMON STOCK $ 7,986,822 $ 6,543,294
============= =============
EARNINGS PER AVERAGE COMMON SHARE
based on 7,677,232 shares $ 1.04 $ 0.85
============= =============
DIVIDENDS PER SHARE OF COMMON STOCK $ 0.415 $ 0.405
============= =============
The accompanying notes to consolidated financial statements are
an integral part of this statement.
<PAGE>3
NORTHWESTERN PUBLIC SERVICE COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
Three Months Ended
March 31
1994 1993
------------- -------------
OPERATING ACTIVITIES:
Net income $ 8,016,990 $ 6,573,858
Items not requiring cash:
Depreciation 2,991,328 2,868,839
Deferred income taxes, net 74,562 (27,489)
Investment tax credit (142,200) (141,000)
Changes in current assets and liabilities:
Accounts receivable (2,697,439) (1,983,918)
Inventories 613,285 189,317
Other current assets 1,565,578 1,657,483
Accounts payable (27,315) (1,700,455)
Accrued taxes 4,868,224 4,637,462
Accrued interest (1,291,497) (958,729)
Other current liabilities 98,923 432,236
Other, net (968,381) (930,921)
------------- -------------
Cash flows from operating activities 13,102,058 10,616,683
------------- -------------
INVESTMENT ACTIVITIES:
Additions to utility plant (3,180,784) (2,089,271)
Purchase of noncurrent investments, net (2,300,696) (6,078,692)
------------- -------------
Cash flows for investment activities (5,481,480) (8,167,963)
------------- -------------
FINANCING ACTIVITIES:
Common and preferred stock dividends paid (3,216,219) (3,139,843)
Issuance of long-term debt 400,000 100,000
Retirement of long-term debt - (150,000)
Commercial paper borrowings - 3,000,000
------------- -------------
Cash flows for financing activities (2,816,219) (189,843)
------------- -------------
INCREASE IN CASH AND CASH EQUIVALENTS 4,804,359 2,258,877
Cash and Cash Equivalents, beginning of period 3,099,093 3,695,563
------------- -------------
CASH AND CASH EQUIVALENTS, end of period $ 7,903,452 $ 5,954,440
============= =============
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year for:
Income taxes $ 316,000 $ 10,500
Interest 3,472,989 3,028,417
The accompanying notes to consolidated financial statements are
an integral part of this statement.
<PAGE>4
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Reference is made to Notes to Financial Statements
included in the Company's Annual Report)
(1) Management's Statement -
The financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of the Company, all
adjustments necessary for a fair presentation of the results of operations
for the interim periods have been included. It is suggested that these
financial statements be read in conjunction with the financial statements
and the notes thereto included in the Company's latest annual report to
stockholders.
(2) Subsidiaries and Principles of Consolidation -
The consolidated financial statements include the accounts of all
wholly owned subsidiaries. All significant intercompany transactions have
been eliminated.
(3) Adoption of SFAS 115 -
On January 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115 (SFAS 115), "Accounting for Certain
Investments in Debt and Equity Securities." Adoption of SFAS 115 resulted
in no cumulative or current period effect on the Company's operating
results.
(4) Reclassifications -
Certain 1993 amounts have been reclassified to conform to the 1994
presentation. Such reclassifications had no impact on net income and
common stock equity as previously reported.
<PAGE>5
MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FINANCIAL CONDITION:
Liquidity and Capital Resources -
The Company has a high degree of liquidity through the generation of
significant cash flows, the availability of substantial cash reserves, and
a sound capital structure. In addition, the Company has adequate capacity
for additional financing.
The Company has generated significant operating cash flows while
continuing to maintain substantial cash reserves in the form of marketable
securities. Cash flows from operating activities during the three months
ended March 31, 1994 and 1993 were $13.1 million and $10.6 million,
respectively. Cash equivalents and marketable securities totaled $46.3
million and $28.1 million at March 31, 1994 and 1993, respectively,
including net unrealized appreciation in accordance with SFAS 115 recorded
in 1994.
Financial resources are also provided by unused lines of credit, which
are generally used to support commercial paper borrowings, a primary source
of short-term financing. At March 31, 1994, unused short-term lines of
credit totaled $12 million.
Capital Requirements -
The Company's primary capital requirements include the funding of its
utility construction and expansion programs, the funding of debt and
preferred stock retirements and sinking fund requirements, and the funding
of its investment activities.
The emphasis of the Company's construction activities is to undertake
those projects that most efficiently serve the expanding needs of its
customer base, enhance energy delivery and reliability capabilities through
system replacement, expand its current customer base, and provide for the
reliability of energy supply. Expenditures for construction activities
during the three months ended March 31, 1994 and 1993 were $3.2 million and
$2.1 million, respectively, and the Company estimates construction
expenditures will be $17.9 million in 1994. Over half of these projected
expenditures will be spent on enhancements of the electric distribution
system. The company also projects spending modest amounts on the Company's
continuing gas expansion program. Estimated construction expenditures for
the years 1994 through 1998 are estimated to be $72 million.
Capital requirements for the mandatory retirement of long-term debt
and mandatory preferred stock sinking fund redemptions totaled $180,000
during the year ended March 31, 1994, and it is expected that such
mandatory retirements will be $630,000 in 1994 and 1995, $610,000 in 1996,
$600,000 in 1997, and $20.6 million in 1998.
<PAGE>6
The Company anticipates that future capital requirements will be met
by both internally generated cash flows and available external financing.
RESULTS OF OPERATIONS:
Earnings Comparisons -
Earnings per share for the quarter ended March 31, 1994 were $1.04 compared
to $.85 for the quarter ended March 31, 1993. The increase in earnings was
primarily due to favorable weather patterns which increased revenue and
improved profitability from nonregulated operations.
Operating Revenues -
The following tables summarize the factors affecting the variations in
electric and gas revenues between years:
Variation from
Prior Year
Three Months
Ended March 31
------- -------
1994 1993
------- -------
Electric Revenue:
Variation in kwh sales $ 1,002 $ 1,935
Changes in rates, fuel cost
recovery, and other (5) (539)
------- -------
$ 997 $ 1,396
======= =======
Gas Revenue:
Variation in mcf sales $ 401 $ 7,472
Changes in rates, gas cost
recovery, and other 903 1,366
------- -------
$ 1,304 $ 8,838
======= =======
Operating Expenses -
The favorable weather patterns in 1994 resulted in comparable
increases in electric fuel-related costs. Although gas revenues increased
in 1994, gas costs decreased slightly due to several factors including
lower commodity and demand costs and a lag in the purchased gas adjustment
clause.
Other operating expenses increased primarily due to the use of
internal gas peaking production units to supplement the purchase of natural
gas supplies. Depreciation increases can be attributed to an increase in
construction activity, while taxes increased as a result of higher taxable
income. The increase in interest charges is due to the issuance of
additional mortgage bonds in August 1993.
<PAGE>7
NONUTILITY OPERATIONS:
In addition to the Company's investment portfolio of preferred stock
investments, the Company holds interests in two nonutility businesses. At
March 31, 1994, Northwestern Networks, Inc. (NNI), one of the Company's
wholly owned subsidiaries, held 1.1 million shares of LodgeNet
Entertainment Corporation (LEC) common stock (which trades on the NASDAQ
national market). NNI also has an additional investment in LEC in the form
of a $6,000,000 subordinated note, bearing interest at 7.125%.
Northwestern Systems, Inc. (NSI), one of the Company's wholly owned
subsidiaries, owns Lucht, Inc., a firm that develops, manufactures, and
markets multi-image photographic printers and other related equipment.
Manufacturing revenues increased 52% for the quarter ended March 31, 1994
as compared to the quarter ended March 31, 1993. Manufacturing costs
increased comparably.
<PAGE>8
NORTHWESTERN PUBLIC SERVICE COMPANY
PART II
ITEM 1. LEGAL PROCEEDINGS
The Company is not currently involved in any pending major litigation.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The election of three Directors to Class III of the Board of Directors was
submitted to stockholders in the Company's proxy statement. At the annual
meeting of stockholders held on May 4, 1994, the three nominees were
elected, receiving the following votes: Aelred J. Kurtenbach, 6,465,315;
M. D. Lewis, 6,478,312; and R. A. Wilkens, 6,469,437.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - None
(b) Reports on Form 8-K - None
<PAGE>9
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.
NORTHWESTERN PUBLIC SERVICE COMPANY
-----------------------------------
(Registrant)
Date: May 9, 1994 /s/ R. R. Hylland
------------------------------------
Vice President-Finance and Corporate
Development and Treasurer
Date: May 9, 1994 /s/ A. D. Dietrich
-----------------------------------
Vice President-Legal, Corporate
Secretary and Assistant Treasurer
