NORTHWESTERN PUBLIC SERVICE COMPANY
Huron, South Dakota
NOTICE OF
ANNUAL MEETING
AND PROXY STATEMENT
Annual Meeting
of Stockholders
May 3, 1995
NORTHWESTERN PUBLIC SERVICE COMPANY
Corporate Office
33 Third St. SE
P. O. Box 1318
Huron, South Dakota 57350-1318
March 15, 1995
Dear Stockholder:
You are invited to attend the Annual Meeting of Stockholders of
Northwestern Public Service Company, which will be held at the Crossroads
Convention Center, 100 Fourth Street S.W., in Huron, South Dakota on May 3,
1995, at 11:00 a.m., local time. Enclosed is a formal Notice of Annual
Meeting and Proxy Statement, together with a proxy and return envelope for
use of stockholders who are unable to be present in person at the meeting.
The formal Notice and Proxy Statement describe the matters scheduled
to be acted upon at the meeting. In addition to the election of directors
on which only the holders of the Common Stock of the Company will be
entitled to vote, four very important amendments to the Company's
Certificate of Incorporation will be considered and voted upon. Of the
four amendments, only the holders of the Common Stock of the Company will
be entitled to vote on the amendment to increase the authorized number of
shares of the Company's Preference Stock. The remaining three amendments
involve the Company's Cumulative Preferred Stock and the holders of the
Cumulative Preferred Stock, as well as the holders of the Common Stock,
will be entitled to vote on each of those amendments.
1-B Please note that if a white proxy card is enclosed, it is to be
used only by the holders of Common Stock. If a blue proxy card is
enclosed, it is to be used only by the holders of Cumulative Preferred
Stock. If you hold both Common Stock and Cumulative Preferred Stock, you
should sign, date and return BOTH proxy cards in order to vote your shares
of each of the two classes of stock.
It has been a number of years since there has been a matter to be
voted on by the holders of the Company's Cumulative Preferred Stock. At
this annual meeting, there will be three very important matters to be voted
on by the Cumulative Preferred Stock. Because the Cumulative Preferred
Stock will vote as a separate class at the Annual Meeting and because at
present the stock is held by relatively few holders, a special request is
made to each of the holders of the Cumulative Preferred Stock, regardless
of the size of your holdings, to date, sign and return their blue proxy
card to assure that there will be a quorum of the Cumulative Preferred
Stock present at the meeting to vote on the adoption of the three
amendments for which the approval of the Cumulative Preferred Stock must be
obtained.
Regardless of the size of your holdings, please make certain that your
shares are represented at the meeting, whether or not you are personally
able to attend. We will sincerely appreciate your signing, dating, and
returning the enclosed proxy card at this time. A postage-paid envelope is
enclosed for your convenience.
If, after returning your proxy, you find that you are able to attend
the meeting in person and wish to personally vote your shares, you may
revoke your proxy at that time and personally vote your shares at the
meeting. In either event, it is important that your shares are voted at
this Annual Meeting.
Very truly yours,
/s/ M. D. Lewis
M. D. Lewis
President and Chief Executive Officer
VOTING YOUR PROXY IS IMPORTANT
TO INSURE THAT YOUR SHARES ARE REPRESENTED AT THIS MEETING,
HOWEVER SMALL YOUR HOLDINGS, IT IS ESSENTIAL THAT YOU SIGN, DATE,
AND RETURN THE ENCLOSED PROXY CARD OR CARDS PROMPTLY. A white
proxy card is for use only by holders of Common Stock; a blue
proxy card is for use only by holders of Cumulative Preferred
Stock.
A self-addressed envelope, which requires no postage if
mailed in the United States, is enclosed for your convenience.
NORTHWESTERN PUBLIC SERVICE COMPANY
Corporate Office
33 Third St. SE
P. O. Box 1318
Huron, South Dakota 57350-1318
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO THE HOLDERS OF CUMULATIVE PREFERRED STOCK and
COMMON STOCK OF NORTHWESTERN PUBLIC SERVICE COMPANY:
The Annual Meeting of Stockholders of Northwestern Public Service
Company (the "Company") will be held at the Crossroads Convention Center,
100 Fourth Street S.W., Huron, South Dakota, on Wednesday, May 3, 1995, at
11:00 a.m., local time, for the following purposes:
(1) To elect three members of Class I of the Board of Directors of
the Company to hold office until the Annual Meeting of Stockholders in
1998, and until their successors are duly elected and have qualified.
(2) To consider and act upon a proposal to amend the Company's
Restated Certificate of Incorporation to increase to 1,000,0000 the number
of authorized shares of the Company's Preference Stock, par value $50 per
share;
(3) To consider and act separately on each of three proposals to
amend the Company's Restated Certificate of Incorporation as follows:
(i) A proposed amendment to increase to 1,000,000 the number of
authorized shares of the Company's Cumulative Preferred Stock, par
value $100 per share;
(ii) A proposed amendment to eliminate the so-called income
coverage requirement (subparagraph (c)(i) in subdivision 6-I, of
Division A of Article Fourth of the Company's Certificate of
Incorporation) which must be satisfied in order to issue additional
Cumulative Preferred Stock without obtaining approval by the holders
of two-thirds of the outstanding Cumulative Preferred Stock; and
(iii) A proposed amendment to eliminate the requirement (in
subparagraph (a) in subdivision 6-II of Division A of Article Fourth
of the Company's Certificate of Incorporation) that the approval of
the holders of a majority of the outstanding shares of Cumulative
Preferred Stock be obtained to issue or assume unsecured notes,
debentures or other securities representing unsecured indebtedness in
the aggregate exceeding 25% of the Company's capitalization (as
defined in such provision).
(4) To transact such other business as may properly come before the
meeting.
The Common Stockholders will be entitled to vote each of the foregoing
proposals. The Cumulative Preferred Stockholders, voting as a separate
class, will be entitled to vote only upon proposals 3(i), 3(ii), and 3(iii)
above.
The Board of Directors of the Company has fixed the close of business
on March 6, 1995, as the record date for determining the holders of
Cumulative Preferred Stock and Common Stock entitled to notice of and to
vote at the meeting or any adjournment thereof. The stock transfer books
of the Company will not be closed. A list of stockholders entitled to vote
at the meeting will be maintained at the corporate office of the Company,
and such list will be open to examination by stockholders for a period of
ten days prior to the meeting. Only the holders of Common Stock will be
entitled to vote upon the foregoing proposals.
You are encouraged to sign, date and return your proxy in the enclosed
self-addressed postage-paid envelope (a white card for Common Stock, a blue
card for Cumulative Preferred Stock). If you are able to attend the Annual
Meeting and wish to vote in person, you may do so whether or not you have
returned your proxy.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Alan D. Dietrich
ALAN D. DIETRICH
Vice President-Corporate Services
and Corporate Secretary
March 15, 1995
NORTHWESTERN PUBLIC SERVICE COMPANY
Corporate Office
33 Third St. SE
P. O. Box 1318
Huron, South Dakota 57350-1318
Proxy Statement for Annual Meeting of Stockholders
To be held May 3, 1995
This statement is expected to be mailed to stockholders on March 15,
1995, and is furnished in connection with the solicitation by the Board of
Directors of the Company of proxies to be voted at the Annual Meeting of
Stockholders to be held on May 3, 1995. The Company will bear all costs of
the solicitation. In addition to solicitation by mail, officers and
employees of the Company may solicit proxies by telephone or in person.
McCormick & Pryor, Ltd. has been retained by the Company to assist in the
solicitation of proxies at an anticipated cost to the Company of
$__________, plus out-of-pocket expenses. Also, the Company will, upon
request, reimburse brokers or other persons holding stock in their names or
in the names of their nominees for reasonable expenses in forwarding
proxies and proxy material to the beneficial owners of stock.
Holders of Common Stock of record at the close of business on March 6,
1995, will be entitled to one vote for each share of Common Stock held by
them on all matters to be voted upon at the meeting. As of March 6, 1995,
there were outstanding 7,677,232 shares of Common Stock.
Holders of Cumulative Preferred Stock of record at the close of
business on March 6, 1995, will be entitled to one vote for each share of
Cumulative Preferred Stock held by them on the three matters to be voted
upon at the meeting by such Cumulative Preferred Stockholders (i.e.,
proposals 3(i), 3(ii) and 3(iii) in the preceding Notice of Annual Meeting
of Stockholders). As of March 6, 1995, there were outstanding ___________
shares of Cumulative Preferred Stock.
Stockholders who execute proxies may revoke them at any time prior to
the exercise thereof by giving written notice of such revocation to the
Corporate Secretary of the Company or by filing another proxy with him.
The number of shares of Common Stock and Cumulative Preferred Stock
represented at the Annual Meeting by the holder in person or by their
proxies will be tabulated by the election inspectors appointed for the
meeting which will determine whether or not a quorum for each class of
stock is present. The election inspectors will also tabulate the votes
cast at the Annual Meeting for each matter voted upon by either the Common
Stock or the Cumulative Preferred Stock or both. The election inspectors
will treat shares of stock represented by proxies who have been instructed
to abstain from voting on a particular matter the shares on a particular
matter as being present for quorum purposes but as unvoted for purposes of
determining approval of the particular matter. If a broker holding shares
of either class of record indicates on its proxy card that it does not have
discretionary authority to vote on a particular matter, those shares will
not be considered as present and entitled to vote with respect to that
matter.
ELECTION OF DIRECTORS
In accordance with the Company's Restated Certificate of Incorporation
and By-laws, the Company's directors are elected to staggered terms on a
classified Board of Directors. At this Annual Meeting of Stockholders,
three directors will be elected to Class I of the Board of Directors, to
hold office for a term of three years, until the Annual Meeting of
Stockholders in 1998, and until their respective successors are duly
elected and have qualified. The election of each director is to be by a
plurality of the votes cast in each case by holders of Common Stock.
Proxies which the Company receives will be voted or the vote withheld as
directed on the proxy, and if no direction is given, proxies will be voted
for the election of the three nominees in Class I named below as directors.
In the event of the inability or unwillingness of one or more of these
nominees to serve as a director at the time of said meeting, or of any
adjournment thereof, the shares represented by the proxies may (in the
discretion of the holders of said proxies) be voted for other nominees not
named herein, in lieu of those unable or unwilling to serve. Each of the
nominees has consented to be named and to serve if elected. Management is
not aware that any of the nominees will be unable to serve.
All of the nominees as directors in Class I are presently serving as
directors and have done so for more than four years.
The following information, including principal occupation or
employment for the past five or more years, is furnished with respect to
each director whose term of office will continue after this Annual Meeting
and to the following nominees to Class I of the Board of Directors:
Period Age on
Principal Occupation Served as March 1,
Nominee or Employment Director 1995
- ------------------ ------------------------- ----------- --------
Herman Lerdal Banking and Business April 1975 66
Consultant; formerly to date
Banker and College
Development Officer,
Sioux Falls, South Dakota.
Raymond M. Schutz Attorney and partner in October 1990 65
the law firm of Siegel, to date
Barnett & Schutz since
1963, Aberdeen, South
Dakota.
Bruce I. Smith Attorney and partner in May 1989 53
the law firm of Luebs, to date
Leininger, Smith, Busick
& Johnson since 1978,
Grand Island, Nebraska.
The following information, including principal occupation or
employment for the past five or more years, is furnished with respect to
directors in Class II whose terms expire in 1996:
Period Age on
Principal Occupation Served as March 1,
Director or Employment Director 1995
- ------------------ ------------------------- ----------- --------
Larry F. Ness President and Chief August 1991 49
Executive Officer of to date
Dakota Financial Corp.
and Vice Chairman and
Chief Executive Officer
of First Dakota National
Bank, Yankton, South Dakota.
Jerry W. Johnson Dean of the School of May 1994 54
Business, University of to date
South Dakota, Vermillion,
South Dakota since 1990;
formerly Professor of
Economics of USD School of
Business.
W. W. Wood President of W/3 Company, April 1968 68
a diversified investment to date
firm, North Platte,
Nebraska.
The following information, including principal occupation or
employment for the past five or more years, is furnished with respect to
directors in Class III whose terms expire in 1997:
Period Age on
Principal Occupation Served as March 1,
Director or Employment Director 1995
- ------------------ ------------------------- ----------- --------
Aelred J. Kurtenbach President and Chief May 1994 61
Executive Officer of to date
Daktronics, Inc.,
manufacturer of large
computer programmable
displays, Brookings,
South Dakota.
M. D. Lewis President and Chief February 1993 47
Executive Officer since to date
February 1994; Formerly
Executive Vice President
from May 1993 to February
1994; Executive Vice
President-Corporate
Services from November
1992 to May 1993; Assistant
Secretary from May 1982 to
May 1993; Vice President-
Corporate Services from
1987 to 1992 of the Company,
Huron, South Dakota.
R. A. Wilkens Chairman since February May 1980 66
1994; Formerly President to date
and Chief Executive
Officer from December 1990
to February 1994; President
and Chief Operating Officer
from 1980 to 1990 of the
Company, Huron, South Dakota.
INFORMATION CONCERNING BOARD OF DIRECTORS
There is no family relationship among any of the directors, nominees
or executive officers of the Company.
The preceding information relative to the principal occupation or
employment of each of the nominees, as well as the information hereinafter
set forth as to beneficial ownership of securities of the Company by
directors, nominees and officers of the Company, is based on information
furnished to the Company by such persons.
Meetings of the Board of Directors
The Board of Directors held four regular meetings and two special
meetings during 1994. Each director attended more than 75 percent of the
aggregate of the meetings of the Board of Directors and the committee on
which he served.
Audit Committee
The Board of Directors has a standing Audit Committee which is
composed of not less than three directors who are not employees of the
Company. The present members of the Audit Committee are Herman Lerdal,
Jerry W. Johnson and Bruce I. Smith. The Audit Committee held two meetings
during 1993. The principal functions of the Audit Committee are to
recommend to the Board of Directors the appointment of independent public
accountants to conduct the annual audit of the Company's financial
statements, to review the scope of the annual audit, to approve services
performed by the independent public accountants, considering the possible
effect thereof on their independence, to review the report of the
independent public accountants relating to the annual audit, and to review
the Company's internal financial and accounting controls.
Nominating and Compensation Committee
The Board of Directors also has a standing Nominating and Compensation
Committee which is composed of not less than three directors who are not
employees of the Company. The present members of the Nominating and
Compensation Committee are Raymond M. Schutz, Aelred J. Kurtenbach, Larry
F. Ness and W. W. Wood. The Nominating and Compensation Committee held
four meetings during 1994. The function of the Nominating and Compensation
Committee is to recommend to the Board of Directors the nominees to be
presented by the Board of Directors to the stockholders for election to the
Company's Board of Directors, to recommend to the Board of Directors the
persons to be elected as officers of the Company, and to recommend
compensation of directors and officers of the Company. The Nominating and
Compensation Committee will consider nominees for directors recommended by
stockholders. Such recommendations may be addressed to the Committee, in
care of the corporate office of the Company.
SECURITIES OWNERSHIP BY MANAGEMENT
The following table sets forth information, as of January 1, 1995,
with respect to shares of the Common Stock owned by the directors, nominees
for director, certain executive officers of the Company and by all
directors and officers of the Company as a group:
Amount & Nature
of Beneficial Ownership (1)
---------------------------
Name of Percent of
Beneficial Owner Individual (2) Joint (3) Common Stock
- ---------------------- -------------- --------- ------------
Aelred J. Kurtenbach 206 *
Jerry W. Johnson 250 *
Herman Lerdal 751 *
Larry F. Ness 234 *
Raymond M. Schutz 847 *
Bruce I. Smith 1,108 *
W. W. Wood 2,258 *
R. A. Wilkens 8,422 3,845 *
M. D. Lewis 4,422 388 *
A. R. Donnell 4,182 (4) 3,563 *
R. F. Leyendecker 5,276 *
W. D. Craig 661 293 *
R. R. Hylland 281 *
------ ------
All directors &
executive officers 38,022 10,872 *
*Less than 1%.
(1) Shares shown represent both record and beneficial ownership. None of
such shares is subject only to a right to acquire beneficial
ownership.
(2) Shares held individually by employees include shares held by the
Trustee of the Company's Employee Stock Ownership Plan for the benefit
of participating employees.
(3) Shares held jointly owned with spouse or other family member(s).
(4) Included are 129 shares that Mr. Donnell holds as custodian for his
grandchildren.
With the exception of Thomas A. Gulbranson, Vice President of the
Company, none of the directors, nominees and executive officers of the
Company beneficially owns any of the Company's Cumulative Preferred Stock
($100 par value). Mr. Gulbranson, together with other family members,
jointly owns 13 shares (0.0005%) of the Company's 4 1/2% Cumulative
Preferred Stock.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Executive Management Compensation
The Nominating and Compensation Committee of the Board of Directors
consists of not less than three directors who are not officers or employees
of the Company. The Committee has overall responsibility to nominate
persons to serve as executive officers of the Company and to review and
recommend compensation for the members of the Board of Directors and for
the executive officers. The Committee also reviews and recommends to the
full Board of Directors any benefit plans for officers and employees and
any awards made under the Company's Performance Incentive Plan and Phantom
Stock Unit Plan.
The Nominating and Compensation Committee and the management of the
Company are committed to the principle that compensation should be
commensurate with performance. Base salary compensation is determined by
the potential impact the individual has on the Company, the skills and
experiences required by the job, and the performance and potential of the
incumbent in the job.
Mr. Lewis was paid $140,000 as a transitional base salary as the
incoming President and Chief Executive Officer of the Company. His base
salary was set at $184,000 in May 1994. In determining his base salary,
the Committee considered his individual performance as leader of the
Company and his contributions to the long-term success of the organization.
The Committee also compared his base salary to that of the other midwestern
utility companies used in the management incentive compensation plan.
The philosophy for incentive compensation is to provide rewards when
financial objectives are achieved, and provide reduced or no benefits when
the objectives are not achieved. These objectives are designed to increase
shareholder value. In February, 1989, the Board of Directors adopted the
Company's Performance Incentive Plan which is a management incentive
compensation plan involving certain eligible employees of the Company. The
purpose of the plan is to motivate and reward outstanding performance by
the executive officers and managers of the Company in meeting short-term
goals which support long-term objectives important to stockholders and
ratepayers. Awards under the plan are based upon three factors measuring
annual performance: (1) a ranking of the Company's performance in four
areas of measurement in relation to a pre-selected comparison group of ten
midwestern utilities in four statistical areas, (2) the Company's
achievement of two overall objectives established at the beginning of the
year by the Nominating and Compensation Committee, and (3) an individual
employee's achievement of management-established individual or department
goals. At the end of the year, a percentage is computed and totaled for
each eligible employee for each of the factors, with the first factor
carrying 50% of the weight, and the other factors each carrying 25%. If
the eligible employee's composite level is 25% or greater, a cash incentive
award varying from five to twenty-five percent of annual salary, will be
paid to the employee, unless employment with the Company has been
terminated for any reason other than death, disability or retirement at age
65 or such earlier date as the Board of Directors designates. Awards under
the management incentive compensation plan are made by the Board of
Directors, upon recommendation by the Nominating and Compensation
Committee, at the annual meeting in May of each year.
In August 1994, the Board of Directors adopted an incentive
compensation plan for the officers and directors of Northwestern Growth
Corporation ("NGC"), the Company's wholly owned subsidiary which manages
its nonutility investments. Under the plan, the NGC officers and directors
may receive incentive compensation awards based upon improvements in the
after-tax investment returns above the returns previously achieved in such
investments. Mr. Hylland as NGC President and Chief Operating Officer
shall be excluded from the Company's Performance Incentive Plan to the
extent awards are made under the NGC plan, and other NGC officers,
directors, or employees shall have any awards under the Company's
Performance Incentive Plan reduced by up to 50% for awards made under this
plan.
As a complement to the Company's Performance Incentive Plan, the Board
of Directors in 1989 also adopted a long-term incentive compensation plan
which is intended to create incentives for participants relating to the
long-term performance of the Company's Common Stock, to encourage continued
employment with the Company or service on the Board of Directors, and to
promote awareness of the performance of the Company's Common Stock. All
officers and directors of the Company are eligible to participate in the
long-term incentive plan. The Board of Directors determines the
recipients, if any, and the amount of the awards, upon the recommendation
of the Nominating and Compensation Committee. Under the long-term
incentive compensation plan, an annual award of performance units may be
made to any or all directors or officers. A performance unit is equal in
value to the fair market value of one share of the Company's Common Stock.
Because the value of the performance units at any point in time is
established by reference to the fair market value of the Company's Common
Stock, the performance units are sometimes referred to as "phantom stock
units." The annual award of the performance units is held in an account
for the participant for a period of five years, during which time units
equal in value to the dividends paid on the Company's Common Stock are
added to the account. At the end of each five-year rolling period, the
value of the matured account for one year is paid in cash to the recipient
if at that time an officer or director of the Company. If the recipient is
not an officer or director of the Company at the end of the five-year
period, the performance unit award is forfeited unless there has been
death, disability or retirement of the recipient. The value of the award
at maturity is determined by multiplying the accumulated performance units
which have matured by the average of the closing prices of the Company's
Common Stock for the ten days preceding such event. Individual annual
awards are set at 200 performance units for directors and for executive
officers are considered by the Board of Directors during their annual
meeting in May each year. Incentive compensation awards made in 1994 were
consistent with this philosophy and were based on 1993 results after
comparison with ten peer companies.
NOMINATING AND COMPENSATION COMMITTEE
Raymond M. Schutz, Chairman Aelred J. Kurtenbach
Larry F. Ness W. W. Wood
The following table sets forth the compensation paid by the Company
during the fiscal years indicated for services in all capacities to the two
officers who served as chief executive officer during 1994 and to the four
most highly compensated of the other executive officers whose total salary
and bonus exceeded $100,000:
Summary Compensation Table
Long- All
Annual Compensation(2) Term Other
---------------------- Compen- Compen-
Name and Salary Bonus(3) sation sation(6)
Position Year ($) ($) Payout(5) ($)
- --------------- ---- --------- ----------- --------- ----------
R. A. Wilkens 1994 23,375 (4) (7) 17,458
President & 1993 180,814 28,500 0 15,369
Chief Execu- 1992 166,717 0 0 16,594
tive Officer (1)
M. D. Lewis 1994 157,000 (4) 11,171 14,312
President & 1993 98,771 15,900 0 6,634
Chief Execu- 1992 82,412 0 0 6,667
tive Officer
A. R. Donnell 1994 99,829 (4) 16,757 13,380
Vice President- 1993 93,332 14,460 0 7,937
Energy 1992 89,208 0 0 6,652
Operations
R. R. Hylland 1994 95,242 (4) 0 5,516
Vice President- 1993 84,458 33,500 0 4,102
Finance & 1992 76,208 0 0 2,658
Corporate
Development
W. D. Craig 1994 94,667 (4) 16,757 7,295
Vice President 1993 89,979 11,100 0 6,125
1992 84,479 0 0 4,887
R.F. Leyendecker 1994 90,708 (4) 11,171 12,664
Vice President- 1993 86,215 23,850 0 8,616
Energy Services 1992 82,667 0 0 8,343
(1) Retired effective February 1, 1994.
(2) Certain employee benefits are not reported as compensation in this
table, when by reason of their nature or amount, they are not required
to be set forth herein under applicable rules of the Securities
Exchange Commission.
(3) The amounts in the bonus column for 1993 are cash awards pursuant to
the Company's Performance Incentive Plan, which is described under
Executive Management Compensation, and in addition, the Company
awarded special cash bonuses to Mr. Hylland and to Mr. Leyendecker of
$20,000 and $15,000, respectively, which sums are included in the 1993
total. No awards were made to executive officers for the 1992 plan
year.
(4) The award earned by the executives in 1994, if any is to be paid under
the Performance Incentive Plan, will be determined in May 1995.
(5) The amounts in this column represent the cash payout from the
Company's Long-Term Incentive Compensation Plan at the end of the five-
year period since the award was made in 1989.
(6) The amounts in this column include the Company's contributions to the
Employee Savings Plan (described below) for the executives and to the
Employee Stock Ownership Plan (described below) as well as the amounts
paid by the Company with respect to term life insurance for the
benefit of the executives. For the executives named in this table,
for 1994 such amounts under the Employee Savings Plan, ESOP Plan, and
life insurance respectively, were as follows: Mr. Wilkens: $561,
$13,382, and $3,515; Mr. Lewis: $4,620, $7,241, and $2,451; Mr.
Donnell: $2,995, $6,614, and $3,771; Mr. Hylland: $2,857, $1,298,
and $1,361; Mr. Craig: $2,840, $1,934, and $2,521; and Mr.
Leyendecker: $2,721, $8,229, and $1,714.
(7) The payout of Mr. Wilkens' accumulated performance units is discussed
below in Director Compensation.
Long-Term Incentive Plan
Performance or Other
Period Until
Name Number of Units* Maturation or Payout
- ----------------- --------------- --------------------
M. D. Lewis 1,250 5 years
A. R. Donnell 516 5 years
R. R. Hylland 482 5 years
W. D. Craig 496 5 years
R. F. Leyendecker 474 5 years
*The amounts in this column represent the phantom stock awards made
during 1994 pursuant to the Company's Long-Term Incentive Compensation
Plan, which is described under Executive Management Compensation.
No Stock Option or SAR Tables
Tables showing grants or exercises of stock option grants or stock
appreciation rights are not included in this report because the Company
does not provide these benefits as compensation to its directors or
executive officers.
Director Compensation
Directors who are not officers of the Company are paid $2,800 each
quarter for serving on the Board of Directors and an attendance fee of
$1,000 for attendance at each regular or special meeting of the Board of
Directors. Directors are also paid $700 for each meeting of the committee
on which such director serves and $300 for each quarter during which they
serve as chairman of a committee of the Board of Directors. Directors may
elect to defer receipt of their compensation as directors until they cease
to be directors. The deferred compensation may be invested in an account
which earns interest at the same rate as accounts in the employee savings
plan or in a deferred compensation unit account in which the deferred
compensation is converted into deferred compensation units on the basis
that each unit is at the time of investment equal in value to the fair
market value of one share of the Company's Common Stock, sometimes referred
to as "phantom stock units." Additional units based on the dividends paid
on the Company's Common Stock are added to the directors' deferred
compensation unit account. Following the director's retirement, the value
of the deferred compensation units is paid in cash in an amount determined
by multiplying the accumulated deferred compensation units by the average
of the closing prices of the Company's Common Stock for the ten days
preceding such event. Directors who are also officers are not separately
compensated for services as a director. Mr. R. A. Wilkens, as Chairman of
the Board, has been paid an annual fee of $50,000 payable monthly, in lieu
of the normal director's fees. Upon Mr. Wilkens' retirement as Chief
Executive Officer and Mr. Vaudrey's retirement as a director, they were
paid their accumulated performance units: $163,616 and $28,668,
respectively, under the Company's long-term incentive compensation plan.
In 1987, directors approved a retirement plan for outside (non-
employee) directors who have served as an outside director of the Company
for at least five years. Upon retiring as a director, the retired director
or that director's surviving spouse is entitled to receive retirement
benefits equal to the quarterly retainer fee then paid to active outside
directors of the Company for the same number of months as he served as a
director. If the outside director retires before reaching age sixty-five,
the retirement benefit to be paid upon retirement is reduced by five per
cent for each year of age less than age sixty-five at the time of
retirement. In no event is any retirement benefit paid to any retired
director prior to age sixty-five.
Employee Savings Plan
In 1984, the Company adopted and implemented an employee savings plan
which permits all employees to defer receipt of compensation as provided in
Section 401(k) of the Internal Revenue Code. Under the provisions of this
savings plan, any employee may elect to direct that up to twelve percent
(12%) of his or her gross compensation be paid to the plan administrator
for the employee's account. Any amount so deferred by the employee, up to
a present maximum of $9,240, is exempt from current federal income tax.
Directors who are not employees are not eligible to participate in this
plan. To encourage participation in this employee savings plan, the
Company contributes to the account of participating employees 50 cents for
each one dollar contributed by the employee, up to a maximum Company
contribution of three percent (3%) of the employee's gross compensation.
Upon retirement from the Company, employees may receive distributions from
their savings accounts held by the plan administrator.
Employee Stock Ownership Plan
In 1976, the Board of Directors adopted the Company's Employee Stock
Ownership Plan ("ESOP") pursuant to the provisions of the Tax Reduction Act
of 1975 and the Tax Reform Act of 1976. All full-time employees who are at
least 21 years old and have one year of service with the Company are
eligible to participate in the ESOP, but directors who are not also full-
time employees of the Company do not qualify to participate. The ESOP is
funded with federal income tax savings which result from tax laws
applicable to such employee benefit plans. Shares of stock acquired by the
ESOP are allocated to participants' accounts in proportion to the compensa
tion of employees during the particular year for which allocation is made.
Under the provisions of the ESOP, shares held for a participant's account
may be distributed to the participant or sold on behalf of the participant
upon retirement from employment with the Company. Prior to distribution,
dividends paid on shares in the participant's account are reinvested in
additional shares.
Pension Plan
The Company has a Pension Plan in which all employees 21 years of age
and over are eligible to participate after one year of service. Directors
who are not employees are not eligible to participate in the Pension Plan.
The Pension Plan is a non-contributory funded plan providing an annual
pension benefit upon normal retirement at age 62 or early retirement to
those employees meeting the eligibility requirements under the Pension
Plan. The amount of the annual pension is based upon average annual
earnings for the five consecutive highest paid calendar years during the 10
years immediately preceding retirement. Upon retirement on the normal
retirement date, the annual pension to which an eligible employee becomes
entitled under the present Pension Plan amounts to 1.34% of average annual
earnings up to the Covered Compensation base plus 1.75% of such earnings in
excess of the Covered Compensation base, multiplied by all years of
credited service. Covered Compensation is determined for each employee as
the average of the taxable wage bases for Social Security tax purposes in
each of the calendar years during the period beginning with the later of
the year in which the employee reached 30 or 1961 and ending with the
calendar year in which the employee reaches age 64. The annual pension
benefit is not subject to any deduction for Social Security Benefits or
other offset amounts.
Based upon average annual compensation and years of credited service
as illustrated in the table below, the annual pension commencing at normal
retirement for retirements processed in 1995 based on the provisions of the
Pension Plan as it existed on December 31, 1994, would be:
Average Years of Service
Annual ----------------------------------------------------------
Earnings 15 20 25 30 35 40
- -------- ------- ------- ------- -------- -------- --------
$ 25,000 $ 4,968 $ 6,625 $ 8,281 $ 9,937 $ 11,593 $ 13,249
50,000 11,531 15,375 19,218 23,062 26,905 30,749
75,000 18,093 24,125 30,156 36,187 42,218 48,249
100,000 24,656 32,875 41,093 49,312 57,530 65,749
125,000 31,218 41,625 52,031 62,437 72,843 83,249
150,000 37,781 50,375 62,968 75,562 88,155 100,749
175,000 44,343 59,125 73,906 88,687 103,468 118,249
200,000 50,906 67,875 84,843 101,812 118,780 135,749
225,000 57,468 76,625 95,781 114,937 134,093 153,249
250,000 64,031 85,375 106,718 128,062 149,405 170,749
The years of credited service under the Pension Plan for the executive
officers shown in the preceding summary compensation table are as follows:
M. D. Lewis, 19 years; A. R. Donnell, 24 years; R. R. Hylland, 5 years; W.
D. Craig, 11 1/2 years; R. F. Leyendecker, 20 years.
The Employee Retirement Income Security Act of 1974 ("ERISA"), as
amended, places limitations on the amount of the annual pension which can
be paid from a tax-qualified pension plan. Under certain circumstances,
the pension benefit to which an employee of the Company is entitled under
the Company's Pension Plan may exceed the limitations under ERISA. In
1987, the Board of Directors adopted a Pension Equalization Plan, as
permitted by ERISA, which provides for payment to retired employees of the
amount by which the normal pension benefit determined in accordance with
the formula provided in the Pension Plan exceeds the ERISA limitations. In
this manner, all employees are treated equally in accordance with the terms
of the Pension Plan.
In 1989, the Board of Directors agreed to assure Mr. Craig a pension
benefit equivalent to that which would be provided by the Company's Pension
Plan if he were given credit for his 5 1/2 years of prior service with
another utility company in addition to his years of service with the
Company. As a result, Mr. Craig presently has 11 1/2 years of credited
service for the purpose of determination of retirement benefits.
Salary Continuation Plan
In 1983, the Company implemented a non-qualified salary continuation
plan for directors and selected management employees. In 1994 a total of
66 directors and eligible employees participated in this plan. The plan
provides for certain amounts of salary continuation in the event of death
before or after retirement, or in the alternative, certain supplemental
retirement benefits in lieu of any death benefits after age 65. Generally,
death benefits will vary from 45% to 75% of salary for up to 15 years, and
supplemental retirement benefits from 25% to 40% of current salary. Life
insurance is carried on each plan participant in favor of the Company to
indirectly fund future benefit payments. Part of the cost of the life
insurance carried by the Company is allocated to participants in the plan.
The program is designed so that if assumptions made as to mortality
experience, policy dividends or credits, and other actuarial factors are
realized, the Company will more than recover its cost of this program.
Consequently, the cost of any one individual participant cannot be properly
allocated or determined because of the overall actuarial plan assumptions
and the cost recovery feature of the plan. Therefore, no amount
attributable to this plan has been included in the summary compensation
table above.
Termination Benefit Agreements
The Company has agreements with Messrs. Lewis, Donnell, Hylland,
Craig, Leyendecker, and five other officers which provide termination
benefits to those officers if their employment by the Company terminates
for any reason (other than death, disability, retirement at 65 or discharge
for gross misconduct in the performance of employment duties that
materially injures the Company) within one year after a change-of-control
event. A "change-of-control" event occurs either (i) if the Company is
acquired, or if 20% of its outstanding Common Stock is acquired, by a party
who does not obtain the approval of the Company's Board of Directors prior
to the transaction and prior to acquiring as much as 5% of the Company's
Common Stock or (ii) if such an acquisition occurs with the approval of the
Company's Board but only after some other party has acquired, or disclosed
its intention to attempt to acquire, at least 20% of the Company's Common
Stock without the Board's approval having been obtained before such other
party has acquired as much as 5% of the Company's Common Stock. As part of
the termination benefits, for 36 months following such termination, or, if
earlier, until the officer attains age 65 or dies, the Company must pay the
officer a cash amount per month equal to 1/12th of his or her highest
annual salary during the three years preceding the termination and must
provide the officer with health, disability and life insurance coverages in
amounts substantially equal to those he or she was receiving at the time of
the termination. Also, on the officer's normal retirement date, the
Company must pay the officer, or his or her estate in the event of death, a
lump sum amount equal to the actuarial equivalent of the additional
retirement benefits that would have been due under the Company's pension
plans, if employment had continued for the period for which the benefits
referred to in the preceding sentence are payable. All of the foregoing
benefits are subject to reduction to the extent necessary to avoid being
subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1954, as amended, with respect to excess "parachute payments" under
Section 180G of such Code. The termination benefits under each of the
agreements are to be provided regardless of whether the officer is able to
obtain other employment. Each agreement is in effect for a term of three
years, provided that another year is automatically added to the term on
each anniversary date unless either party has given the other notice that
it does not wish to extend the term. In each agreement, the officer agrees
not to voluntarily terminate his employment with the Company without giving
at least 60 days prior notice and to assist in training his successor
during such 60 days. Further, the officer agrees that, during the period
termination benefits are provided, he will hold in confidence confidential
Company information, consult with the Company on matters pertaining to the
Company's business, be a witness for the Company in litigation arising out
of pre-termination events and refrain from competition with any business in
which the Company or a subsidiary was engaged at the time of termination.
PERFORMANCE GRAPH
The following Stock Price Performance Graph compares the cumulative
total return* on the Company's Common Stock, the S&P Stock Index and an
Edison Electric Institute peer group index of 42 combination gas and
electric utility companies** for a five year period:
(GRAPH)
NWPS S&P 500 EEI Peer
---- ------- --------
Base 12/30/89 $100 $100 $100
1990 110.557 97 98.75
1991 147.702 126 128.05
1992 170.268 136 140.94
1993 184.288 150 157.45
1994 182.061 152 137.19
*Cumulative total return assumes quarterly reinvestment of dividends.
**Baltimore Gas & Electric Co., Central Hudson Gas & Elec. Corp., CILCORP
Inc., CINergy, Inc., CIPSCO Inc., CMS Energy Corp., Commonwealth Energy
System, Consolidated Edison Co. of N.Y., Delmarva Power & Light Co., DPL
Inc., IES Industries, Inc., Illinova Corp., Interstate Power Co., Iowa-
Illinois Gas & Elec. Co., LG&E Energy Corp., Long Island Lighting Co.,
Madison Gas & Electric Co., Midwest Resources Inc., Montana Power Co.,
New York State Elec. & Gas Corp., Niagara Mohawk Power Corp., NIPSCO
Industries, Inc., Northern States Power Co., Northwestern Public Service
Co., Orange & Rockland Utilities, Inc., Pacific Gas & Electric Co., PECO
Energy, Public Service Co. of Colo., Public Service Co. of New Mexico,
Public Service Enterprise Group, Inc., Rochester Gas & Electric Corp.,
San Diego Gas & Electric Co., Scana Corp., Sierra Pacific Resources,
Southern Indiana Gas & Elec. Co., St. Joseph Light & Power Co.,
Utilicorp United, Inc., Washington Water Power Co., Western Resources,
Inc., Wisconsin Energy Corp., WPS Resources, and WPL Holdings, Inc.
AMENDMENTS TO AUTHORIZE ADDITIONAL STOCK AND
TO MODIFY TERMS OF THE CUMULATIVE PREFERRED STOCK
Your Board of Directors has proposed and recommends the adoption of
four amendments to the Company's Restated Certificate of Incorporation.
These amendments will (1) increase from 300,000 to 1,000,000 the number of
authorized shares of the Company's Preference Stock, par value $50 per
share; (2) increase from 300,000 to 1,000,000 the number of authorized
shares of the Company's Cumulative Preferred Stock, par value $100 per
share; (3) eliminate the so-called income coverage requirement which
heretofore has had to be satisfied in order to issue additional Cumulative
Preferred Stock without obtaining approval by the holders of at least two-
thirds of the outstanding shares of Cumulative Preferred Stock; and (4)
eliminate the requirement that approval by the holders of a majority of the
Cumulative Preferred Stock be obtained in order for the Company to issue or
assume notes, debentures or other securities representing unsecured
indebtedness of the Company in excess of 25% of the Company's total
capitalization (as defined in the Restated Certificate of Incorporation).
The text of each of these amendments appears in Exhibit A to this Proxy
Statement.
The purpose of these amendments is to make additional shares of
capital stock available for financing the future business needs of the
Company and to increase the flexibility which the Board of Directors of the
Company will have in selecting the means of financing a particular need
when it arises.
If the additional shares of Preference Stock and Cumulative Preferred
Stock are authorized, they may be issued from time to time for such
consideration (not less than the par value thereof) and under such
circumstances as the Board of Directors of the Company may determine,
without further action by the stockholders. The terms of the Company's
Common Stock, Preference Stock and Cumulative Preferred Stock do not grant
to the holders of such stock preemptive rights to subscribe to or acquire
any additional stock which the Company may issue.
If the terms of the Cumulative Preferred Stock are modified as
proposed, additional shares of Cumulative Preferred Stock could be issued
from time to time as the Board of Directors of the Company may determine,
without further action by the stockholders, in excess of what would have
been permitted under the income coverage formula that will be deleted.
Similarly, securities evidencing unsecured indebtedness of the Company
could be issued from time to time as the Board of Directors of the Company
may determine, without further action by the stockholders, in excess of
what would have been permitted under the 25% of capitalization limitation
that will be deleted.
The Company does not now have any present plan to issue shares of
Preference Stock or additional shares of Cumulative Preferred Stock or to
issue securities evidencing unsecured indebtedness of the Company in excess
of 25% of the Company's total capitalization. Although the presently
authorized shares of Cumulative Preferred Stock and Preference Stock, and
the limitations on issuing additional shares of that class of stock or
securities evidencing unsecured indebtedness of the Company, which are
presently in the terms of the Cumulative Preferred Stock, have been
sufficient and adequate for the Company, the Board of Directors believes
that it is desirable to make the proposed changes so that the Board of
Directors of the Company will have the flexibility in raising capital for
the Company's possible future needs without further stockholder action.
The proposed amendments will enhance the flexibility in connection with
possible future actions, such as acquisitions of other businesses and
properties (whether in the public utility field or otherwise), funding
future construction programs of the Company and possible future business
development, activities, and funding stock repurchases if and when it
should become advisable to revise the capitalization structure of the
Company. With the proposed amendments, the Board of Directors of the
Company will determine whether, when and on what terms the issuance of
shares of Cumulative Preferred Stock and Preference Stock, and the issuance
of securities evidencing unsecured indebtedness, may be warranted in
connection with any of the foregoing purposes, and without the delay that
could be involved in seeking stockholder approval for the specific
issuances.
The availability for issuance of the additional shares of Cumulative
Preferred Stock and Preference Stock, and the greater flexibility for
issuing additional shares of Cumulative Preferred Stock and securities
evidencing unsecured indebtedness of the Company, could enable the Board of
Directors to render more difficult or discourage an attempt to obtain
control of the Company. The Company is not aware of any pending or
threatened efforts by any party to obtain control of the Company.
Proposed Amendment to Increase
Authorized Shares of Preference Stock
The first of the four proposed amendments to the Company's Restated
Certificate of Incorporation will increase to 1,000,000 the authorized
number of shares of the Company's Preference Stock, par value $50 per
share. See amendment proposal 1 in Exhibit A to this Proxy Statement. At
present, 200,000 shares are authorized, none of which have been issued.
Adoption of this proposed amendment requires the favorable vote of the
holders of a majority of the outstanding shares of Common Stock of the
Company. Proxies of the holders of such stock will be voted on this
amendment as specified thereon, but in the absence of such a specification,
the proxies will be voted in favor of the proposed amendment. The terms
and conditions of the Preference Stock are included as Exhibit B.
----------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THIS PROPOSED
AMENDMENT. UNLESS INDICATED OTHERWISE ON THE PROXY, THE SHARES OF
COMMON STOCK WILL BE VOTED FOR THIS AMENDMENT.
----------------------------------------------------------------------
Proposed Amendment to Increase Authorized
Shares of Cumulative Preferred Stock
The second of the proposed amendments to the Company's Restated
Certificate of Incorporation will increase to 1,000,000 the authorized
number of shares of the Company's Cumulative Preferred Stock, par value
$100 per share. See amendment proposal 2 in Exhibit A to this Proxy
Statement. At present, 300,000 shares of Cumulative Preferred Stock are
authorized, of which 26,400 shares are now issued and outstanding, leaving
273,600 shares currently available for future issuance.
Adoption of this proposed amendment requires the favorable vote of the
holders of a majority of the outstanding shares of Cumulative Preferred
Stock, voting as a separate class, and a majority of the outstanding shares
of Common Stock. Proxies of the holders of each such class of stock will
be voted on the amendment as specified thereon, but in the absence of such
specification, the proxies will be voted in favor of the proposed
amendment. The terms and conditions of the Cumulative Preferred Stock are
included as Exhibit C.
----------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THIS PROPOSED
AMENDMENT. UNLESS INDICATED OTHERWISE ON THE PROXY, THE SHARES OF
COMMON STOCK AND CUMULATIVE PREFERRED STOCK WILL BE VOTED FOR THIS
AMENDMENT.
----------------------------------------------------------------------
Proposed Amendment to Eliminate Income Coverage
Requirement For Issuance Of Cumulative Preferred Stock
The third of the proposed amendments to the Company's Restated
Certificate of Incorporation will eliminate the income coverage requirement
for issuing Cumulative Preferred Stock without obtaining approval of the
outstanding shares of Cumulative Preferred Stock. See amendment proposal 3
in Exhibit A to this Proxy Statement. This amendment would delete
subparagraph (c)(i) in subdivision 6-I of Division A of Article Fourth of
the Company's Restated Certificate of Incorporation which requires approval
by the holders of two-thirds of the outstanding shares of Cumulative
Preferred Stock, voting separately as a class, in order to authorize the
issuance of additional Cumulative Preferred Stock (or securities
convertible into such stock) whenever the Company's gross income for any 12
consecutive months period within the 15 calendar months preceding the month
of issuance (after deducting depreciation expense and taxes) available for
payment of interest shall not have been at least one and one-half times the
sum of (i) the interest expense on all interest bearing indebtedness of the
Company (including amortization of debt discount and expense or premium on
debt in such 12 month period) which will be outstanding at the date of
issue of such stock or convertible securities and (ii) the annual dividend
requirements on the Cumulative Preferred Stock that will be outstanding on
the date of issue, after giving effect to the shares or securities to be
issued. In the absence of such provision, the amount of Cumulative
Preferred Stock that could be issued by the Company at a given time will be
determined by the Board of Directors based on market conditions.
Adoption of this proposed amendment requires the affirmative vote of
the holders of two-thirds of the outstanding shares of Cumulative Preferred
Stock, voting as a separate class, and the holders of a majority of the
outstanding shares of Common Stock of the Company. Proxies of the holders
of each such class of stock will be voted on the amendment as specified
thereon, but in the absence of such specification, the proxies will be
voted in favor of the proposed amendment.
----------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THIS PROPOSED
AMENDMENT TO THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION.
UNLESS INDICATED OTHERWISE ON THE PROXY, THE SHARES OF COMMON STOCK
AND CUMULATIVE PREFERRED STOCK WILL BE VOTED FOR THIS AMENDMENT.
----------------------------------------------------------------------
Proposed Amendment to Eliminate Limit
On Unsecured Indebtedness Securities
The fourth of the proposed amendments to the Company's Restated
Certificate of Incorporation would eliminate the present requirement for
obtaining approval by the holders of a majority of the outstanding shares
of Cumulative Preferred Stock before the Company can issue or assume
unsecured indebtedness securities in excess of 25% of the Company's
aggregate capitalization. See amendment proposal 4 in Exhibit A to this
Proxy Statement.
Adoption of this proposed amendment requires the favorable vote of the
holders of at least a majority of the outstanding shares of Cumulative
Preferred Stock, voting as a separate class, and a majority of the
outstanding shares of Common Stock of the Company. Proxies of the holders
of each such class of stock will be voted as specified thereon, but in the
absence of such specification, the proxies will be voted in favor of the
proposed amendment.
As of January 31, 1995, the Company had outstanding $9,800,000 of
unsecured indebtedness securities, consisting of commercial paper.
Historically, the Company has utilized unsecured indebtedness financing as
an interim means of financing its business needs until it can be refunded
by funds generated by operations or funds obtained from longer-term
financings. The Company presently expects to continue such use of
unsecured indebtedness financing. However, the Board of Directors believes
such future use, in addition to the development in the financial markets of
other uses of unsecured indebtedness financing, makes it advisable to
provide more flexibility for such financing. For example, financing
techniques currently in use in the financial markets, such as for pollution
control financing, medium term note financing and monthly income preferred
securities, could broaden the need for unsecured borrowing authority. If
the proposed amendment is adopted and made effective, the use of unsecured
indebtedness financing would be determined by the Board of Directors, based
on market conditions and the needs of the Company from time to time.
----------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THIS PROPOSED
AMENDMENT TO THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION.
UNLESS INDICATED OTHERWISE ON THE PROXY, THE SHARES OF COMMON STOCK
AND CUMULATIVE PREFERRED STOCK WILL BE VOTED FOR THIS AMENDMENT.
----------------------------------------------------------------------
ANNUAL REPORT
A copy of the Company's Annual Report for the year ended December 31,
1994, has been sent to all stockholders of record as of March 6, 1995, the
record date for the determination of stockholders entitled to vote at the
Annual Meeting of Stockholders. Attention is directed to the financial
statements located on pages 16-24 and Management's Discussion and Analysis
on pages 12-14 in such Annual Report which are incorporated herein by this
reference.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has served as the Company's independent public
accountants continuously since 1932. Upon the recommendation of the Audit
Committee, the Board of Directors have selected Arthur Andersen LLP to
serve as the Company's independent public accountants during the current
year. Representatives of Arthur Andersen LLP will attend the Annual
Meeting of Stockholders and will have the opportunity to make a statement
if they desire to do so and to respond to appropriate questions.
During 1994, the Company also engaged Arthur Andersen LLP to render
certain non-audit professional services. The Audit Committee of the Board
of Directors approved the audit and non-audit services and considered the
possible effect of the non-audit services on the independence of the
accountants prior to the time the services were rendered.
SUBMISSION OF STOCKHOLDER PROPOSALS
Stockholders who wish to present proposals for consideration at the
1996 Annual Meeting of Stockholders must submit their proposals, together
with any supporting statements, to the Company on or before November 15,
1995. Proposals should be sent to the Corporate Secretary at the corporate
office of the Company.
OTHER MATTERS
The management does not know of any matter to be brought before the
meeting, other than the matters described in the Notice of Annual Meeting
accompanying this Proxy Statement. The persons named in the form of proxy
solicited by the Board of Directors will vote all proxies which have been
properly executed, and if any matters not set forth in the Notice of Annual
Meeting are properly brought before the meeting, such persons will vote
thereon in accordance with their best judgment.
By order of the Board of Directors
/s/ Alan D. Dietrich
ALAN D. DIETRICH
Vice President-Corporate Services
and Corporate Secretary
Northwestern Public Service Company
March 15, 1995
PLEASE COMPLETE, SIGN, AND RETURN PROMPTLY THE ENCLOSED PROXY SO THAT
YOUR STOCK MAY BE REPRESENTED AND VOTED AT THE ANNUAL MEETING.
MANAGEMENT HEREBY UNDERTAKES TO PROVIDE TO EACH STOCKHOLDER WHOSE
PROXY IS SOLICITED FOR THE 1995 ANNUAL MEETING, UPON WRITTEN REQUEST AND
WITHOUT CHARGE, A COPY OF THE COMPANY'S 1994 ANNUAL REPORT (FORM 10-K) TO
THE SECURITIES AND EXCHANGE COMMISSION. REQUESTS SHOULD BE DIRECTED TO
ALAN D. DIETRICH, VICE PRESIDENT-CORPORATE SERVICES AND CORPORATE
SECRETARY, NORTHWESTERN PUBLIC SERVICE COMPANY, 33 THIRD ST. SE, P. O. BOX
1318, HURON, SOUTH DAKOTA 57350-1318.
EXHIBIT A
PROPOSED AMENDMENTS TO
RESTATED CERTIFICATE OF INCORPORATION
OF NORTHWESTERN PUBLIC SERVICE COMPANY
AMENDMENT PROPOSAL 1: INCREASE IN AUTHORIZED CUMULATIVE PREFERRED STOCK
RESOLVED that the first paragraph of Article FOURTH of the Restated
Certificate of Incorporation of Northwestern Public Service Company (the
"Company"), as heretofore amended, is hereby amended to increase the total
authorized capital stock of the Company by increasing to 1,000,000 the
number of authorized shares of Cumulative Preferred Stock, of the par value
of $100 per share, of the Company (such Cumulative Preferred Stock being
also called "New Preferred Stock" in said Restated Certificate of
Incorporation).
AMENDMENT PROPOSAL 2: INCREASE IN AUTHORIZED PREFERENCE STOCK
RESOLVED that the first paragraph of Article FOURTH of the Restated
Certificate of Incorporation of Northwestern Public Service Company (the
"Company"), as heretofore amended, is hereby amended to increase the total
authorized capital stock of the Company by increasing to 1,000,000 the
number of authorized shares of Preference Stock, of the par value of $50
per share, of the Company.
AMENDMENT PROPOSAL 3: DELETION OF THE INCOME COVERAGE REQUIREMENT
RESOLVED that the Restated Certificate of Incorporation of
Northwestern Public Service Company, as heretofore amended, is hereby
amended by deleting therefrom in its entirety subparagraph (c)(i) in
subdivision 6-I of Division A of Article Fourth therein.
Note: The provision to be deleted is the italicized portion of the
following excerpt from the Company's Restated Certificate of Incorporation.
So long as any shares of New Preferred Stock are
outstanding, the Company shall not, without the affirmative vote
given at a stockholders meeting whereat the New Preferred Stock
shall vote separately as a class, or without the written consent,
of the record holders of two-thirds of the outstanding shares of
New Preferred Stock:
* * *
(c) Issue any shares of New Preferred Stock or shares of
any stock ranking pari passu with the New Preferred Stock as to
dividends or liquidation rights, or any securities convertible
into shares of New Preferred Stock or stock ranking pari passu
with the New Preferred Stock as to dividends or liquidation
rights, otherwise than in exchange for or for the purpose of
effecting the redemption or other retirement of, not less than an
equal number of shares of New Preferred Stock or shares of any
stock ranking pari passu with the New Preferred Stock as to
dividends or liquidation rights, at the time outstanding, unless
(i) the gross income of the Company for a period
of twelve consecutive calendar months within the
fifteen calendar months next preceding the month within
which such shares or convertible securities are issued,
determined in accordance with generally accepted
accounting principles (but in any event after deducting
the amount for said period mentioned above charged by
the Company in its income statements to depreciation
expense and taxes) to be available for the payment of
interest shall have been at least one and one-half
times the sum of (A) the interest requirements for a
twelve months' period on all interest bearing
indebtedness of the Company (including amortization of
debt discount and expense or of premium on debt, as the
case may be, applicable to the aforesaid twelve months'
period) which will be outstanding at the date of issue
of such shares or convertible securities and (B) the
dividend requirements for a twelve months' period upon
all shares of New Preferred Stock and on all other
shares of stock, if any, ranking prior to or pari passu
with the New Preferred Stock as to dividends or
liquidation rights, which will be outstanding after the
issue of the shares or convertible securities proposed
to be issued; provided that there may be excluded from
the foregoing computations interest charges on all
indebtedness and dividends on all shares which are to
be retired in connection with the issue of such
additional shares or convertible securities; and
provided, further, that where such additional shares or
convertible securities are to be issued in connection
with the acquisition of new property, the net earnings
of the property to be so acquired may be included on a
pro forma basis in the foregoing computations computed
on the same basis as net earnings of the Company; and
(ii) the Common Stock equity as defined in
subdivision 2 of Division B hereof shall be not less
than the aggregate par value of all shares of New
Preferred Stock and the aggregate par value or stated
value of all other shares of stock, if any, ranking
prior to or pari passu with the New Preferred Stock as
to dividends or liquidation rights, which will be
outstanding after the issue of the shares or
convertible securities proposed to be issued.
AMENDMENT PROPOSAL 4: DELETION OF THE UNSECURED INDEBTEDNESS SECURITIES
LIMITATION
RESOLVED that the Restated Certificate of Incorporation of
Northwestern Public Service Company, as heretofore amended, is hereby
amended by deleting therefrom in its entirety subparagraph (a) in
subdivision 6-II of Division A of Article Fourth.
Note: The provision to be deleted is the italicized portion of the
following excerpt from the Company's Restated Certificate of Incorporation.
So long as any shares of New Preferred Stock are
outstanding, the Company shall not, without the affirmative vote
given at a stockholders meeting whereat the New Preferred Stock
shall vote separately as a class, or without the written consent,
of the record holders of a majority of the outstanding shares of
New Preferred Stock:
(a) Issue or assume any unsecured notes,
debentures or other securities representing unsecured
indebtedness, other than for the purpose of refunding
secured or unsecured indebtedness theretofore created
or assumed by the Company and then outstanding, or
other than for the purpose of effecting the retirement,
by redemption or otherwise, of shares of New Preferred
Stock, or shares of a class of stock ranking prior to
or pari passu with the New Preferred Stock as to
dividend or liquidation rights, if immediately after
such issue or assumption, the total principal amount of
all unsecured notes, debentures or other securities
representing unsecured indebtedness issued or assumed
by the Company and then outstanding would exceed 25% of
the aggregate of (i) the total principal amount of all
bonds or other securities representing secured
indebtedness issued or assumed by the Company and then
outstanding, and (ii) the total of the capital stocks
and premiums thereon and the surplus (paid-in, earned
and other, if any) of the Company as then to be stated
on its books;
EXHIBIT B
By its terms, Preference Stock may be issued in one or more series as
the Board of Directors may determine. Regardless of series, the Preference
Stock will be junior to all of the Cumulative Preferred Stock (now or
hereafter issued) but senior to the Common Stock on matters such as
dividend and liquidation rights. Dividends on the Preference Stock will be
cumulative at a rate to be fixed by the Board of Directors when the
issuance of the shares is authorized.
The Preference Stock will be entitled to vote only in the limited
instances specified in the Restated Certificate of Incorporation or as may
be required by law. The Restated Certificate of Incorporation provides
that if the Company fails for four successive quarterly periods to pay the
full dividend on such stock, then, until the dividend arrearage is
eliminated, the Preference Stock, voting as a separate class, may elect two
of the directors which the Common Stock would otherwise be entitled to
elect. Further, approval by the holders of a majority of the Preference
Stock, voting as a separate class, will be required for certain other
transactions if provision has not been made to redeem the Preference Stock
then outstanding. Such transactions include (i) amendments of the
Company's Restated Certificate of Incorporation to authorize any stock
(other than Cumulative Preferred Stock) ranking prior to the Preference
Stock or convertible into such a prior-ranking stock; (ii) any proposal to
merge or consolidate the Company with one or more other corporations, or to
sell, lease or exchange all or substantially all of the Company's property
and assets; and (iii) any amendments of the terms of the Preference Stock
so as to affect the rights and preferences of such stock adversely,
provided that if less than all of the series then outstanding are so
affected adversely, then voting shall be by the series so affected.
Under provisions in the Restated Certificate of Incorporation, various
terms, including dividend rates, redemption prices, amounts payable upon
liquidation, conversion rights, if any, and sinking fund provisions, if
any, are to be determined by the Board of Directors for each series of
Preference Stock prior to the issuance thereof. Such determinations would
be made by the Board of Directors on the basis of market conditions
prevailing at the time.
EXHIBIT C
The Cumulative Preferred Stock is issuable in such series as the
Company's Board of Directors may determine. The dividend rates, redemption
prices, amounts of liquidation preferences, conversion privileges (if any),
sinking fund provisions (if any), and other rights, preferences,
privileges, limitations and restrictions for shares of each series are
fixed by the Board of Directors prior to the issuance of any shares of the
series. Such terms of each new series will depend largely upon market
conditions at the time of issuance.
The holders of Cumulative Preferred Stock of each series are entitled,
without priority among series, to receive, when declared, cumulative cash
dividends at the annual rates fixed for the respective series, payable
quarterly. No dividend or distribution (except those payable in shares of
Common Stock) may be declared or paid on any junior stock (i.e., the Common
Stock and, when issued, the Preference Stock), nor may any junior stock be
purchased, redeemed or otherwise acquired for value by the Company unless
all Cumulative Preferred Stock dividends for past and current periods have
been paid or provided for and all sinking fund requirements to that time
for particular series of Cumulative Preferred Stock have been satisfied.
No dividend shall be declared on the shares of any series of Cumulative
Preferred Stock for any quarterly period unless at the same time a like
proportionate dividend for the same period (ratably in proportion to the
respective annual dividend rates for the various series) shall be declared
for all shares of all series of the Cumulative Preferred Stock then
outstanding and entitled to dividends for that period.
Subject to certain limitations, the shares of any series of Cumulative
Preferred Stock may be redeemed, in whole or in part, upon not less than 30
days' notice, at a redemption price equal to the amount fixed by the Board
of Directors prior to issuance of the series, plus accrued dividends to the
date of redemption.
Sinking fund provisions for redemption or purchase of shares of any
series may be fixed by the Board of Directors prior to the issuance of that
series. If default is made in satisfying any sinking fund requirement in
full in any year, so long as such default continues no dividends (other
than dividends payable in Common Stock) or other distribution may be paid
on any stock ranking junior to the Cumulative Preferred Stock, and no such
junior stock may be purchased or otherwise acquired by the Company for
value.
In the event of liquidation (voluntary or involuntary) of the Company,
holders of any series of Cumulative Preferred Stock are entitled to receive
the amounts fixed by the Board of Directors prior to issuance of the
series, plus accrued dividends, before any distribution to holders of
junior stock.
The Cumulative Preferred Stock has voting rights only as specified in
the Restated Certificate of Incorporation or as required by law. The
holders of such stock are entitled to one vote per share on each matter
submitted for their vote except that in the instances in which the holders
of Cumulative Preferred Stock elect certain directors, cumulative voting
applies (which results in one vote per share multiplied by the number of
directors to be elected).
When dividends payable on the Cumulative Preferred Stock are in
default in an amount equivalent to four full quarter-yearly dividends
thereon, then, until all dividends accrued on the shares are paid, the
holders of the Cumulative Preferred Stock of all series, voting as a class,
are entitled to elect the smallest number of directors necessary to
constitute a majority of the Company's Board of Directors. In such event,
the holders of the Common Stock, voting as a class, are entitled to elect
the remaining directors except that the holders of the Preference Stock are
entitled to elect two of the directors who would otherwise be elected by
the holders of the Common Stock if there is a similar dividend arrearage on
the Preference Stock.
The affirmative vote (or written consent) of the holders of at least
two-thirds of the outstanding shares of Cumulative Preferred Stock of all
series, as a separate class, is required (i) to authorize any stock ranking
prior to the outstanding Cumulative Preferred Stock or any stock
convertible into such prior ranking stock, (ii) to change the terms and
provisions of the Cumulative Preferred Stock so as to affect adversely the
rights and preferences of the holders thereof (but if one or more, but not
all, of the series would be affected adversely, such vote or consent of the
holders of only those series is required), or (iii) to permit dividends on,
or acquisitions for value of, the Company's Common Stock in excess of the
restrictions hereinafter mentioned. Such two-thirds vote or consent is
also required to issue additional shares of Cumulative Preferred Stock, or
stock (or securities convertible into stock) ranking on a parity therewith
as to dividends or liquidation rights (except in exchange for or to redeem
or otherwise retire an equal number of shares of Cumulative Preferred Stock
or stock ranking on a parity therewith) unless certain gross income and
capital ratio requirements are met (with the gross income requirement being
the subject of another proposed amendment which will delete that
requirement).
The affirmative vote (or written consent) of the holders of a majority
of the outstanding shares of Cumulative Preferred Stock of all series, as a
separate class, is required by law to authorize an increase or decrease in
the number of authorized shares of Cumulative Preferred Stock, or a change
in the par value thereof; to merge or consolidate the Company with one or
more other corporations; or to sell, lease or exchange all, or
substantially all, of the Company's property and assets. Such a vote (or
consent) is also presently required by the Restated Certificate of
Incorporation to authorize unsecured indebtedness of the Company (except in
certain circumstances) if the amount thereof will exceed 25% of the
aggregate of the Company's secured indebtedness and the total of its
capital stocks, premium thereon and surplus (paid-in, earned and other, if
any), but this voting requirement would be eliminated if another proposed
amendment to do so is approved at the Annual Meeting.
None of the foregoing voting (or consent) requirements will apply if
at the time provision has been made for the redemption of the outstanding
Cumulative Preferred Stock.
So long as any shares of Cumulative Preferred Stock are outstanding,
the following limitations may not be exceeded unless authorized by the
holders of two-thirds of the outstanding shares of such stock. These
limitations are that dividends (other than dividends payable in Common
Stock) or other distributions on, or acquisitions for value of, Common
Stock of the Company (i) may not exceed 50% of the portion of the Company's
net income for a preceding 12 months' period which is available for
dividends on the Common Stock if the Common Stock equity of the Company is
less than 20% of total capitalization (all calculated as required by the
Restated Certificate of Incorporation), (ii) may not exceed 75% if such
capitalization ratio is 20% or more but less than 20%, and (iii) if such
capitalization ratio is 25% or more, such dividends, distributions or
acquisitions may not reduce such ratio to less than 25% except to the
extent permitted by the limitations mentioned in (i) and (ii).
IMPORTANT:
PLEASE SIGN AND
RETURN THE ENCLOSED
PROXY PROMPTLY.
(PROXY CARD)
COMMON STOCK
NORTHWESTERN PUBLIC SERVICE COMPANY
Huron, South Dakota 57350
PROXY FOR 1995 ANNUAL MEETING OF STOCKHOLDERS
Solicited on behalf of the Board of Directors
The undersigned hereby appoints R. A. Wilkens and M. D. Lewis, or
either of them, proxies of the undersigned, each with the power of
substitution, to represent and vote all shares of Common Stock of
Northwestern Public Service Company held of record by the undersigned on
March 6, 1995, at the Annual Meeting of the Stockholders of the Company to
be held on May 3, 1995, and at any adjournments thereof, in accordance with
the Notice and Proxy Statement received, as follows:
1. ELECTION OF CLASS I DIRECTORS
(Mark only one box) ( ) FOR all nominees listed below
(except as marked to the contrary)
( ) WITHHOLD AUTHORITY
to vote for all nominees listed below
Nominees: Herman Lerdal
Raymond M. Schutz
Bruce I. Smith
(Instruction: To withhold authority to vote for any individual
nominee, print that nominee's name on the line provided below.)
---------------------------------------------------------
2. Vote For ( ) Against ( ) Abstain ( ) on the proposal to amend
the Company's Restated Certificate of Incorporation to increase to
1,000,000 the number of authorized shares of the Company's Preference
Stock, par value $50 per share.
3. Vote For ( ) Against ( ) Abstain ( ) on the proposal to amend
the Company's Restated Certificate of Incorporation to increase to
1,000,000 the number of authorized shares of the Company's Cumulative
Preferred Stock, par value $100 per share.
4. Vote For ( ) Against ( ) Abstain ( ) on the proposal to amend
the Company's Restated Certificate of Incorporation to delete
subparagraph (c)(i) in subdivision 6-I of Division A of Article Fourth
therein to eliminate the so-called income coverage requirement which
must be satisfied to issue additional Cumulative Preferred Stock
without obtaining approval of the holders of at least two-thirds of the
outstanding Cumulative Preferred Stock; and
5. Vote For ( ) Against ( ) Abstain ( ) on the proposal to amend
the Company's Restated Certificate of Incorporation to delete
subparagraph (a) in subdivision 6-II of Division A of Article Fourth
therein to eliminate the requirement that the approval of the holders
of a majority of the outstanding Cumulative Preferred Stock be obtained
for the Company to issue or assume unsecured indebtedness securities in
an aggregate amount exceeding 25% of the Company's capitalization (as
defined in such provision).
6. Upon such other matters as may come before said meeting or any
adjournments thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL NOMINEES NAMED IN ITEM 1 AND FOR THE APPROVAL OF THE
AMENDMENTS IN ITEMS 2, 3, 4 and 5.
Dated , 1995
- ------------------------------ -----------------------------
(Signature) (Signature)
Please sign above exactly as your name appears on this card. Joint owners
should each sign personally. Corporation proxies should be signed by
authorized officer. Executors, administrators, trustees, etc., should so
indicate when signing.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
(PROXY CARD)
CUMULATIVE PREFERRED STOCK
NORTHWESTERN PUBLIC SERVICE COMPANY
Huron, South Dakota 57350
PROXY FOR 1995 ANNUAL MEETING OF STOCKHOLDERS
Solicited on behalf of the Board of Directors
The undersigned hereby appoints R. A. Wilkens and M. D. Lewis, or
either of them, proxies of the undersigned, each with the power of
substitution, to represent and vote all shares of Cumulative Preferred
Stock of Northwestern Public Service Company held of record by the
undersigned on March 6, 1995, at the Annual Meeting of the Stockholders of
the Company to be held on May 3, 1995, and at any adjournments thereof, in
accordance with the Notice and Proxy Statement received, as follows:
1. Vote For ( ) Against ( ) Abstain ( ) on the proposal to amend
the Company's Restated Certificate of Incorporation to increase to
1,000,000 the number of authorized shares of the Company's Cumulative
Preferred Stock, par value $100 per share.
2. Vote For ( ) Against ( ) Abstain ( ) on the proposal to amend
the Company's Restated Certificate of Incorporation to delete
subparagraph (c)(i) in subdivision 6-I of Division A of Article Fourth
therein to eliminate the so-called income coverage requirement which
must be satisfied to issue additional Cumulative Preferred Stock
without obtaining approval of the holders of at least two-thirds of
the outstanding Cumulative Preferred Stock; and
3. Vote For ( ) Against ( ) Abstain ( ) on the proposal to amend
the Company's Restated Certificate of Incorporation to delete
subparagraph (a) in subdivision 6-II of Division A of Article Fourth
therein to eliminate the requirement that the approval of the holders
of at least two-thirds of the outstanding Cumulative Preferred Stock
be obtained to issue or assume unsecured indebtedness securities in an
aggregate amount exceeding 25% of the Company's capitalization (as
defined in such provision).
(Please sign on reverse side)
(continued from other side)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE APPROVAL OF THE AMENDMENTS IN ITEMS 1, 2 and 3.
Dated , 1995
- ------------------------------- -----------------------------
(Signature) (Signature)
Please sign above exactly as your name appears on this card. Joint owners
should each sign personally. Corporation proxies should be signed by
authorized officer. Executors, administrators, trustees, etc., should so
indicate when signing.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
"FURNISHED for use of SEC only"
CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS
Years ended December 31
1994 1993 1992
------------ ------------ ------------
Operating Revenues:
Electric $ 73,077,431 $ 70,104,822 $ 65,627,621
Gas 62,141,382 65,017,964 52,216,333
Manufacturing 22,047,241 18,134,456 1,352,600
------------ ------------ ------------
157,266,054 153,257,242 119,196,554
------------ ------------ ------------
Operating Expenses:
Fuel for electric generation 13,399,170 12,731,558 12,072,833
Purchased power 1,153,467 1,229,748 841,356
Purchased gas sold 46,351,422 48,153,861 38,186,237
Other operating expenses 21,728,387 23,285,277 19,871,923
Manufacturing costs 19,552,720 16,296,738 1,345,966
Maintenance 6,169,895 6,368,346 5,889,310
Depreciation 12,438,501 11,805,763 11,061,520
Property and other taxes 6,103,903 6,139,613 5,118,469
------------ ------------ ------------
126,897,465 126,010,904 94,387,614
------------ ------------ ------------
Operating Income:
Electric 25,661,632 21,752,231 21,909,402
Gas 2,540,091 3,903,313 2,892,904
Manufacturing 2,166,866 1,590,794 6,634
------------ ------------ ------------
30,368,589 27,246,338 24,808,940
Investment Income and Other 2,610,791 4,457,438 2,690,294
Interest Expense, net (9,669,829) (8,944,584) (8,105,109)
------------ ------------ ------------
Income Before Income Taxes 23,309,551 22,759,192 19,394,125
Income Taxes (7,869,343) (7,568,119) (5,672,719)
------------ ------------ ------------
Net Income 15,440,208 15,191,073 13,721,406
Dividends on Cumulative
Preferred Stock (119,888) (121,463) (143,267)
------------ ------------ ------------
Earnings on Common Stock 15,320,320 15,069,610 13,578,139
Retained Earnings,
beginning of year 52,873,772 50,318,050 48,986,426
Dividends on Common Stock (12,820,980) (12,513,888) (12,206,799)
Premium on Preferred
Stock Retirement 0 0 (39,716)
------------ ------------ ------------
Retained Earnings, end of year $ 55,373,112 $ 52,873,772 $ 50,318,050
============ ============ ============
Earnings Per Average Common Share
based on 7,677,232 shares $ 2.00 $ 1.96 $ 1.77
============ ============ ============
Dividends Declared Per Common Share $ 1.67 $ 1.63 $ 1.59
============ ============ ============
See Notes to Consolidated Financial Statements
CONSOLIDATED STATEMENT OF CASH FLOWS
Years ended December 31
1994 1993 1992
------------ ------------ ------------
Operating Activities:
Net income $ 15,440,208 $ 15,191,073 $ 13,721,406
Items not requiring cash:
Depreciation 12,438,501 11,805,763 11,061,520
Deferred income taxes 1,509,619 (1,398,578) (47,328)
Investment tax credit (564,801) (566,498) (568,655)
Changes in current assets
and liabilities:
Accounts receivable (1,057,563) (2,145,693) (1,049,603)
Inventories (1,447,191) (111,703) 352,866
Other current assets (259,826) (1,056,726) (1,246,370)
Accounts payable 2,699,294 (1,565,245) 2,499,414
Accrued taxes (1,487,575) 2,393,850 (579,660)
Accrued interest (30,991) 193,772 143,992
Other current liabilities 421,690 898,638 424,523
Other, net (1,392,444) 624,146 (1,655,673)
Cash flows from ------------ ------------ ------------
operating activities 26,268,921 24,262,799 23,056,432
------------ ------------ ------------
Investment Activities:
Property additions (22,680,856) (19,974,072) (18,510,018)
Sale (purchase) of noncurrent
investments, net (1,386,178) (9,773,488) 3,872,766
Acquisition of net assets 0 0 (4,122,180)
------------ ------------ ------------
Cash flows for
investment activities (24,067,034) (29,747,560) (18,759,432)
------------ ------------ ------------
Financing Activities:
Common and preferred stock
dividends paid (12,940,868) (12,635,351) (12,350,066)
Issuance of long-term debt 1,100,000 76,453,842 26,072,200
Repayment of long-term debt (677,500) (58,900,200) (12,736,000)
Retirement of preferred stock (30,000) (30,000) (3,085,000)
Commercial paper borrowings
(repayments) 9,800,000 0 (2,000,000)
------------ ------------ ------------
Cash flows from (for)
financing activities (2,748,368) 4,888,291 (4,098,866)
------------ ------------ ------------
Increase (Decrease) in Cash and
Cash Equivalents (546,481) (596,470) 198,134
Cash and Cash Equivalents,
beginning of year 3,099,093 3,695,563 3,497,429
------------ ------------ ------------
Cash and Cash equivalents,
end of year $ 2,552,612 $ 3,099,093 $ 3,695,563
============ ============ ============
Supplemental Cash Flow Information:
Cash paid during the year for:
Income taxes $ 7,382,119 $ 6,338,293 $ 6,129,541
Interest 8,887,901 8,771,595 7,442,176
See Notes to Consolidated Financial Statements
CONSOLIDATED BALANCE SHEET
December 31
1994 1993
------------- -------------
ASSETS
Property:
Electric $ 321,153,724 $ 308,225,360
Gas 67,213,487 60,880,235
Manufacturing 1,558,484 1,864,751
------------- -------------
389,925,695 370,970,346
Less-Accumulated depreciation (139,381,075) (131,287,329)
------------- -------------
250,544,620 239,683,017
------------- -------------
Current Assets:
Cash and cash equivalents 2,552,612 3,099,093
Accounts receivable, net 12,255,483 11,197,920
Fuel, at average cost 4,886,572 4,040,170
Inventories, materials and supplies 4,686,771 5,109,966
Manufacturing inventories 5,064,859 4,040,875
Deferred gas costs 3,029,688 4,121,591
Other 3,694,912 2,343,183
------------- -------------
36,170,897 33,952,798
------------- -------------
Other Assets:
Investments 46,237,912 44,851,734
Deferred charges and other 26,112,211 25,086,544
------------- -------------
72,350,123 69,938,278
------------- -------------
$ 359,065,640 $ 343,574,093
============= =============
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock equity $ 114,704,940 $ 109,666,931
Nonredeemable cumulative preferred stock 2,600,000 2,600,000
Redeemable cumulative preferred stock 40,000 70,000
Long-term debt 127,052,500 126,600,000
------------- -------------
244,397,440 238,936,931
------------- -------------
Commitments and Contingencies (Notes 1,6,7,8) 0 0
Current Liabilities:
Commercial Paper 9,800,000 0
Long-term debt due within one year 570,000 600,000
Accounts payable 13,139,557 10,440,263
Accrued taxes 6,740,035 8,227,610
Accrued interest 2,915,084 2,946,075
Other 6,039,430 5,617,740
------------- -------------
39,204,106 27,831,688
------------- -------------
Deferred Credits:
Accumulated deferred income taxes 37,328,539 35,683,509
Unamortized investment tax credits 10,584,830 11,149,631
Other 27,550,725 29,972,334
------------- -------------
75,464,094 76,805,474
------------- -------------
$ 359,065,640 $ 343,574,093
============= =============
See Notes to Consolidated Financial Statements
CONSOLIDATED STATEMENT OF CAPITALIZATION
December 31
1994 1993
------------------- -------------------
Common Stock Equity:
Common stock, $3.50 par value,
20,000,000 shares authorized;
7,677,232 shares outstanding $ 26,870,312 $ 26,870,312
Additional paid-in capital 29,922,847 29,922,847
Retained earnings 55,373,112 52,873,772
Unrealized gain on investments, net 2,538,669 0
------------------- -------------------
114,704,940 47% 109,666,931 46%
------------------- -------------------
Cumulative Preferred Stock:
$100 par value, 300,000 shares
authorized; outstanding:
Nonredeemable, 4 1/2% Series 2,600,000 2,600,000
Redeemable, 5 1/4% Series 40,000 70,000
------------------- -------------------
2,640,000 1% 2,670,000 1%
------------------- -------------------
Long-Term Debt:
Series Due
- ------------------------------- -----
First mortgage bonds-
8.824% 1998 15,000,000 15,000,000
8.9% 1999 7,500,000 7,500,000
6.99% 2002 25,000,000 25,000,000
General mortgage bonds-
7% 2023 55,000,000 55,000,000
Pollution control obligations-
5.85%, Mercer Co., ND 2023 7,550,000 7,550,000
5.90%, Salix, IA 2023 4,000,000 4,000,000
5.90%, Grant Co., SD 2023 9,800,000 9,800,000
------------------- -------------------
123,850,000 123,850,000
Other long-term debt 3,772,500 3,350,000
Less-Due within one year (570,000) (600,000)
------------------- -------------------
127,052,500 52% 126,600,000 53%
------------------- -------------------
Total Capitalization $244,397,440 100% $238,936,931 100%
================== ==================
See Notes to Consolidated Financial Statements
QUARTERLY FINANCIAL DATA (UNAUDITED)
First Second Third Fourth
------- ------- ------- -------
(thousands except per share amounts)
1994: Operating revenues $55,464 $33,757 $30,195 $37,850
Operating income 14,104 4,784 3,752 7,729
Net income 8,017 2,244 1,330 3,849
Earnings per average
common share $1.04 $0.29 $0.17 $0.50
1993: Operating revenues $51,137 $33,783 $29,775 $38,562
Operating income 11,495 5,416 5,727 4,608
Net income 6,574 2,344 2,468 3,805
Earnings per average
common share $0.85 $0.30 $0.32 $0.49
