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 June 30, 1995
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 August 4, 1995
<PAGE>
INDEX
Part I. Financial Information
Consolidated Balance Sheet -
June 30, 1995 and December 31, 1994
Consolidated Statement of Income -
Three months and six months
ended June 30, 1995 and 1994
Consolidated Statement of Cash Flows
Three months and six months
ended June 30, 1995 and 1994
Notes to Consolidated Financial Statements
Management's Discussion of Financial Condition
and Results of Operations
Part II. Other Information
Signatures
<PAGE>
NORTHWESTERN PUBLIC SERVICE COMPANY
CONSOLIDATED BALANCE SHEET
June 30, December 31,
1995 1994
ASSETS (unaudited)
-------------- --------------
PROPERTY:
Electric $ 327,170,356 $ 321,153,724
Gas 70,229,087 67,213,487
Manufacturing 1,846,046 1,558,484
-------------- --------------
399,245,489 389,925,695
Less-Accumulated depreciation 143,977,577 139,381,075
-------------- --------------
255,267,912 250,544,620
-------------- --------------
CURRENT ASSETS:
Cash and cash equivalents 1,991,361 2,552,612
Accounts receivable, net 11,727,325 12,255,483
Fuel, at average cost 2,368,825 4,886,572
Inventories, materials and supplies 5,215,433 4,686,771
Manufacturing inventories 5,481,257 5,064,859
Deferred gas costs 865,262 3,029,688
Other 4,297,878 3,694,912
-------------- --------------
31,947,341 36,170,897
-------------- --------------
OTHER ASSETS:
Investments 50,190,379 46,237,912
Deferred charges and other 28,741,989 26,112,211
-------------- --------------
78,932,368 72,350,123
-------------- --------------
$ 366,147,621 $ 359,065,640
============== ==============
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 58,939,290 55,373,112
Unrealized gain on investments, net 5,109,919 2,538,669
-------------- --------------
120,842,368 114,704,940
Cumulative preferred stock-
Nonredeemable 2,600,000 2,600,000
Redeemable 10,000 40,000
Long-term debt 128,625,000 127,052,500
-------------- --------------
252,077,368 244,397,440
-------------- --------------
CURRENT LIABILITIES:
Commercial paper 10,000,000 9,800,000
Long-term debt due within one year 570,000 570,000
Accounts payable 7,680,040 13,139,557
Accrued taxes 8,561,617 6,740,035
Accrued interest 2,923,561 2,915,084
Other 6,713,907 6,039,430
-------------- --------------
36,449,125 39,204,106
-------------- --------------
DEFERRED CREDITS:
Accumulated deferred income taxes 38,908,694 37,328,539
Unamortized investment tax credits 10,302,230 10,584,830
Other 28,410,204 27,550,725
-------------- --------------
77,621,128 75,464,094
-------------- --------------
$ 366,147,621 $ 359,065,640
============== ==============
The accompanying notes to consolidated financial statements are
an integral part of these balance sheets.
<PAGE>
<TABLE>
NORTHWESTERN PUBLIC SERVICE COMPANY
CONSOLIDATED STATEMENT OF INCOME
(unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Electric $ 17,162,168 $ 16,832,875 $ 35,745,717 $ 36,096,983
Gas 14,382,253 11,325,668 40,846,472 41,636,488
Manufacturing 8,562,801 5,598,734 14,269,448 11,487,505
------------- ------------- ------------- -------------
40,107,222 33,757,277 90,861,637 89,220,976
------------- ------------- ------------- -------------
OPERATING EXPENSES:
Fuel for electric generation 2,769,237 2,958,766 6,512,662 6,857,661
Purchased power 345,704 138,932 401,619 484,599
Purchased gas sold 10,698,806 9,344,035 27,920,824 29,429,504
Other operating expenses 5,855,080 5,034,727 11,357,140 10,782,945
Manufacturing costs 7,395,248 5,054,720 12,558,258 10,339,949
Maintenance 1,597,713 1,802,530 2,900,273 3,207,821
Depreciation 3,223,406 3,028,458 6,432,935 6,019,786
Property and other taxes 1,666,032 1,611,350 3,339,674 3,211,347
------------- ------------- ------------- -------------
33,551,226 28,973,518 71,423,385 70,333,612
------------- ------------- ------------- -------------
OPERATING INCOME:
Electric 5,410,884 5,349,026 12,086,417 12,141,673
Gas 69,446 (1,109,281) 5,814,144 5,598,135
Manufacturing 1,075,666 544,014 1,537,691 1,147,556
------------- ------------- ------------- -------------
6,555,996 4,783,759 19,438,252 18,887,364
INVESTMENT INCOME AND OTHER 749,431 917,838 1,314,343 1,563,029
INTEREST EXPENSE, net (2,491,547) (2,441,449) (5,081,827) (4,831,257)
------------- ------------- ------------- -------------
INCOME BEFORE INCOME TAXES 4,813,880 3,260,148 15,670,768 15,619,136
INCOME TAXES (1,765,137) (1,016,593) (5,519,391) (5,358,591)
------------- ------------- ------------- -------------
NET INCOME 3,048,743 2,243,555 10,151,377 10,260,545
DIVIDENDS ON CUMULATIVE
PREFERRED STOCK (29,775) (30,168) (59,550) (60,336)
------------- ------------- ------------- -------------
EARNINGS ON COMMON STOCK $ 3,018,968 $ 2,213,387 $ 10,091,827 $ 10,200,209
============= ============= ============= =============
EARNINGS PER AVERAGE COMMON SHARE
based on 7,677,232 shares $ 0.39 $ 0.29 $ 1.31 $ 1.33
============= ============= ============= =============
DIVIDENDS PER SHARE OF COMMON STOCK $ 0.425 $ 0.415 $ 0.85 $ 0.83
============= ============= ============= =============
The accompanying notes to consolidated financial statements are
an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
NORTHWESTERN PUBLIC SERVICE COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 3,048,743 $ 2,243,555 $ 10,151,377 $ 10,260,545
Items not requiring cash:
Depreciation 3,223,406 3,028,458 6,432,935 6,019,786
Deferred income taxes, net 128,206 64,573 195,636 139,135
Investment tax credit (141,300) (142,200) (282,600) (284,400)
Changes in current assets and liabilities:
Accounts receivable 2,162,497 3,863,393 528,158 1,165,954
Inventories 266,388 (1,395,458) 1,572,687 (782,173)
Other current assets 601,520 862,433 1,561,460 2,428,011
Accounts payable (2,432,045) (1,764,373) (5,459,517) (1,791,688)
Accrued taxes (2,924,011) (3,730,107) 1,821,582 1,138,117
Accrued interest 1,257,238 1,246,971 8,477 (44,526)
Other current liabilities 278,727 (185,098) 674,477 (86,175)
Other, net 603,193 (716,568) 1,764,088 (1,684,949)
------------- ------------- -------------- --------------
Cash flows from operating activities 6,072,562 3,375,579 18,968,760 16,477,637
------------- ------------- -------------- --------------
INVESTMENT ACTIVITIES:
Additions to utility plant (5,757,800) (4,505,358) (10,734,845) (7,686,142)
Purchase of noncurrent investments, net (1,646,475) (813,104) (3,952,467) (3,113,800)
------------- ------------- -------------- --------------
Cash flows for investment activities (7,404,275) (5,318,462) (14,687,312) (10,799,942)
------------- ------------- -------------- --------------
FINANCING ACTIVITIES:
Common and preferred stock dividends paid (3,292,600) (3,216,221) (6,585,199) (6,432,440)
Issuance of long-term debt - - 2,265,000 400,000
Repayment of long-term debt (692,500) (435,000) (692,500) (435,000)
Retirement of preferred stock (30,000) - (30,000) -
Commercial paper issuances 7,800,000 - 4,000,000 -
Commercial paper repayments (3,800,000) - (3,800,000) -
------------- ------------- -------------- --------------
Cash flows for financing activities (15,100) (3,651,221) (4,842,699) (6,467,440)
------------- ------------- -------------- --------------
DECREASE IN CASH AND CASH EQUIVALENTS (1,346,813) (5,594,104) (561,251) (789,745)
Cash and Cash Equivalents, beginning of period 3,338,174 7,903,452 2,552,612 3,099,093
------------- ------------- -------------- --------------
CASH AND CASH EQUIVALENTS, end of period $ 1,991,361 $ 2,309,348 $ 1,991,361 $ 2,309,348
============= ============= ============== ==============
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year for:
Income taxes $ 3,510,900 $ 3,960,703 $ 3,511,200 $ 4,276,703
Interest 865,903 978,727 4,260,730 4,451,716
The accompanying notes to consolidated financial statements are
an integral part of this statement.
</TABLE>
<PAGE>
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) Allowance for Funds Used During Construction -
The allowance for funds used during construction includes the costs of
equity and borrowed funds used to finance construction which are
capitalized in accordance with rules prescribed by the FERC. For the
quarters ended June 30, 1995 and 1994, allowance for equity funds was
$27,852 and $3,395. For the six months ended June 30, 1995 and 1994,
allowance for equity funds was $48,109 and $5,774. Allowance for borrowed
funds for 1995 and 1994 was $75,305 and $7,922 for the quarters ended June
30, 1995 and 1994, and $130,071 and $13,472 for the six months ended June
30, 1995 and 1994.
(4) Synergy Acquisition -
On May 17, 1995, Northwestern Public Service Company through its
wholly owned subsidiary, Northwestern Growth Corporation (NGC), entered
into agreements to acquire Synergy Group, Inc., a retail distributor of
propane serving approximately 200,000 customers in the Northeast, Mid-
Atlantic, Southeast and South Central regions of the United States. NGC
has also entered into agreements with Empire Gas Corporation for the
management of the properties acquired.
On July 27, 1995 the Company announced that SYN, Inc., the entity
created to acquire Synergy Group, Inc. had, on July 25, 1995, entered into
an agreement to sell assets related to 62 retail propane outlets from the
acquired assets of Synergy.
(5) Reclassifications -
Certain 1994 amounts have been reclassified to conform to the 1995
presentation. Such reclassifications had no impact on net income and
common stock equity as previously reported.
<PAGE>
MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FINANCIAL CONDITION:
Liquidity and Capital Resources -
The Company has a high degree of long-term liquidity through the
generation of operating cash flows, the availability of substantial cash
reserves, and a sound capital structure. In addition, the Company has
adequate capacity for additional financing and has maintained its liquidity
position through favorable bond and commercial paper ratings.
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 June 30, 1995 and 1994 were $6.1 million and $3.4 million, and $19.0
and $16.5 million for the six months ended June 30, 1995 and 1994. Cash
equivalents and investment securities totaled $40.4 million and $40.0
million at June 30, 1995 and 1994.
Working capital and other financial resources are also provided by
lines of credit, which are generally used to support commercial paper
borrowings, a primary source of short-term financing. At June 30, 1995,
unused short-term lines of credit totaled $14 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 corporate development and 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 capabilities, expand its current
customer base, and provide for the reliability of energy supply.
Expenditures for construction activities during the three months and for
the six months ended June 30, 1995 and 1994 were $5.8 million and $4.5
million and $10.7 million and $7.7 million, respectively. Capital
expenditures for 1995, excluding the Synergy acquisition, are estimated to
be $19.3 million with a large portion of expenditures to be spent on
enhancements of the electric and gas distribution systems and completion of
the operations center. Electric and natural gas related capital
expenditures for the years 1995 through 1999 are estimated to be $69
million.
Capital requirements for the mandatory retirement of long-term debt
and mandatory preferred stock sinking fund redemptions totaled $600,000
during the year ended June 30, 1995, and it is expected that such mandatory
retirements will be $1,080,000 in 1996, $570,000 in 1997, $20.6 million in
1998, and $13.5 million in 1999.
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 June 30, 1995 were $.39
compared to $.29 for the quarter ended June 30, 1994. The increase in
earnings was primarily due to favorable weather patterns which resulted in
increased electric and gas revenues. Gas revenues were also impacted by
modest increases in gas rates. Also impacting earnings was an increase in
sales and operating income from nonregulated manufacturing operations.
Earnings per share for the year to date ended June 30, 1995 were $1.31
compared to $1.33 for the six months ended June 30, 1994. The decrease in
earnings was primarily due to unfavorable weather patterns in the first
quarter of 1995 which reduced electric and gas revenues, higher interest
expense, and a smaller contribution from investment income. Offsetting the
decrease in earnings was higher revenues and operating income from
nonregulated manufacturing operations.
Electric and Gas Revenues -
The following tables summarize the factors affecting the variations in
electric and gas revenues between years:
Variation from Variation from
Prior Year Prior Year
Three Months Six Months
Ended June 30 Ended June 30
------- ------- ------- -------
1995 1994 1995 1994
------- ------- ------- -------
(thousands of dollars)
Electric Revenue:
Variation in kwh sales $ 528 $ 592 $ (3) $ 1,594
Changes in rates, fuel cost
recovery, and other (199) (54) (348) (59)
------- ------- ------- -------
$ 329 $ 538 $ (351) $ 1,535
======= ======= ======= =======
Gas Revenue:
Variation in mcf sales $ 2,738 $(1,371) $ (483) $ (971)
Changes in rates, gas cost
recovery, and other 319 145 (307) 1,048
------- ------- ------- -------
$ 3,057 $(1,226) $ (790) $ 77
======= ======= ======= =======
Operating Expenses -
For the quarter ended June 30, 1995, changes in electric fuel-related
costs were comparable to changes in electric revenues and gas costs
increased due to increased sales. Other operating expenses increased due
to higher administrative and customer service expenses. Maintenance
decreases are primarily related to lower expenditures at the base-load
generating plants, while depreciation increases can be attributed to an
increase in utility plant. Higher income taxes are related to higher
taxable income.
For the six months ended June 30, 1995, the unfavorable first quarter
weather pattern impact on electric and gas revenue resulted in comparable
decreases in electric fuel-related and purchased gas costs. Other operating
expenses increased due to higher administrative and customer service
expenses. Lower maintenance is primarily related to less base-load
generating plant cost, while higher depreciation is related to an increase
in utility plant. Investment income decreased slightly while interest
expense increased due to higher levels of commercial paper outstanding.
NONREGULATED OPERATIONS:
In addition to the Company's investment portfolio of preferred stock
investments, the Company holds interest in two nonregulated businesses. At
June 30, 1995, 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).
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 $2,964,000 for the three months ended June
1995 and $2,782,000 for the six months ended June 1995 as compared to the
same periods in 1994. Manufacturing income increased comparably.
<PAGE>
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 I of the Board of Directors
was submitted to stockholders in the Company's proxy statement. At the
annual meeting of stockholders held on May 3, 1995, the three nominees were
elected, receiving the following votes: Herman Lerdal, 6,353,374; Raymond
M. Schutz, 6,361,291; and Bruce I. Smith, 6,384,277.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule UT (SEC only)
(b) Reports on Form 8-K
The Company filed a report on Form 8-K on May 26, 1995 to announce
that Northwestern Public Service Company through its wholly-owned
subsidiary, Northwestern Growth Corporation (NGC), entered into agreements
on May 17, 1995 to acquire Synergy Group, Inc., a retail distributor of
propane serving approximately 200,000 customers in the Northeast, Mid-
Atlantic, Southeast and South Central regions of the United States. NGC
has also entered into agreements with Empire Gas Corporation for the
management of the properties acquired.
The Company also filed a report on Form 8-K on July 27, 1995 to
announce that SYN, Inc., the entity created to acquire Synergy Group, Inc.
had, on July 25, 1995, entered into an agreement to sell assets related to
62 retail propane outlets from the acquired assets of Synergy.
<PAGE>
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: August 4, 1995 /s/ R. A. Thaden
------------------------------------
Treasurer
Date: August 4, 1995 /s/ A. D. Dietrich
-----------------------------------
Vice President-Corporate Services
and Corporate Secretary
<TABLE> <S> <C>
<ARTICLE> UT
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 255,267,912
<OTHER-PROPERTY-AND-INVEST> 50,190,379
<TOTAL-CURRENT-ASSETS> 31,947,341
<TOTAL-DEFERRED-CHARGES> 28,741,989
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 366,147,621
<COMMON> 26,870,312
<CAPITAL-SURPLUS-PAID-IN> 29,922,847
<RETAINED-EARNINGS> 58,939,290
<TOTAL-COMMON-STOCKHOLDERS-EQ> 120,842,368
0
2,610,000
<LONG-TERM-DEBT-NET> 128,625,000
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 10,000,000
<LONG-TERM-DEBT-CURRENT-PORT> 570,000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 103,500,253
<TOT-CAPITALIZATION-AND-LIAB> 366,147,621
<GROSS-OPERATING-REVENUE> 90,861,637
<INCOME-TAX-EXPENSE> 5,406,852
<OTHER-OPERATING-EXPENSES> 71,423,385
<TOTAL-OPERATING-EXPENSES> 76,830,237
<OPERATING-INCOME-LOSS> 14,031,400
<OTHER-INCOME-NET> 1,201,804
<INCOME-BEFORE-INTEREST-EXPEN> 15,233,204
<TOTAL-INTEREST-EXPENSE> 5,081,827
<NET-INCOME> 10,151,377
59,550
<EARNINGS-AVAILABLE-FOR-COMM> 10,091,827
<COMMON-STOCK-DIVIDENDS> 6,525,647
<TOTAL-INTEREST-ON-BONDS> 4,442,237
<CASH-FLOW-OPERATIONS> 18,968,760
<EPS-PRIMARY> 1.31
<EPS-DILUTED> 0
</TABLE>