SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
Amendment No. 1
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1936
Date of Report (date of earliest event reported): October 7, 1996
Northwestern Public Service Company
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-692 46-1072280
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(State of other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
33 Third Street S.E.
P.P. Box 1318
Huron, South Dakota 57350-1318
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 605-352-8411
<PAGE>
The Current Report on Form 8-K filed by the Registrant on October 21, 1996 is
hereby amended as follows:
Item 7. Financial Statement, Pro Forma Financial Information and Exhibits.
The text of Item 7(b) as previously filed is hereby amended in its entirety to
read as follows:
(b) Pro Forma Financial Information.
Unaudited Pro Forma Consolidated Financial Statements of Northwestern Public
Service Company (the "Company")
Set forth below are summary financial data extracted from the audited
consolidated statement of operations of the Northwestern Public Service
Company (the "Company") for the year ended December 31, 1995, the unaudited
consolidated financial statements of the Company as of June 30, 1996, and for
the six months then ended; the summary financial data extracted from the
unaudited statement of operations of Empire Energy Corporation ("Empire
Energy") for the 12 months ended December 31, 1995 and for the six months
ended June 30, 1996, and from the audited balance sheet of Empire Energy as of
June 30, 1996; and the unaudited pro forma financial information for the
Company ("the Pro Forma Financial Information") for the year ended December 31,
1995, for the six months ended June 30, 1996, and as of June 30, 1996,
based on such historical financial statements, to illustrate the effects of
the acquisition of Empire Energy (the "Acquisition").
The Acquisition will be accounted for using the purchase method of
accounting. The total purchase price of the Acquisition
will be allocated to Empire Energy's tangible and intangible assets and
liabilities based upon their respective fair values. The allocation of the
aggregate purchase price included in the Pro Forma Financial Information is
preliminary, but the final allocation of the purchase price is not expected to
differ materially from the preliminary allocation. The financing plan to be
executed for the funding of the Acquisition is expected to be as presented in
the Pro Forma Financial Information.
The pro forma statements of operations for the year ended December 31,
1995 and for the six months ended June 30, 1996, give effect to the
Acquisition, and the related transactions as if they had occurred on the first
day of the respective periods. The pro forma statement of operation for the
year ended December 31, 1995 has also been adjusted to give effect to the
acquisition of Synergy Group Incorporated ("Synergy") and related transactions
completed in August 1995 as if they had occurred on January 1, 1995. The pro
forma balance sheet as of June 30, 1996 has been prepared as if the
Acquisition had occurred on that date. The pro forma financial information
does not purport to present the financial position or results of operations of
the Company had the Acquisition actually been completed as of the dates
indicated. In addition, the pro forma financial information is not
necessarily indicative of future results of operations.
<PAGE>
<TABLE>
NORTHWESTERN PUBLIC SERVICE COMPANY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(In Thousands, Except Per Share Amounts)
<CAPTION>
Historical Amounts
--------------------------------
Synergy
Empire Jan 1 - Pro Forma
Company Energy Aug 14 Adjustments Pro Forma
---------- --------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
REVENUE $204,970 $72,716 $73,352 0 $351,038
COST OF SALES 96,425 34,840 35,557 0 166,822
---------- --------- --------- ----------- ----------
GROSS MARGIN 108,545 37,876 37,795 0 184,216
---------- --------- --------- ----------- ----------
EXPENSES
Operating, selling, general and administrative 49,209 26,746 31,883 (7,634) (A) 100,204
Property and other taxes 6,606 6,606
Depreciation and amortization 14,633 4,555 3,321 382 (B) 22,891
---------- --------- --------- ----------- ----------
70,448 31,301 35,204 (7,252) 129,701
---------- --------- --------- ----------- ----------
OPERATING INCOME 38,097 6,575 2,591 7,252 54,515
OTHER EXPENSE (INCOME)
Investment income and other (3,029) (164) 1,091 (1,262) (C) (3,364)
Interest expense 11,694 1,264 5,614 5,655 (D) 24,227
---------- --------- --------- ----------- ----------
8,665 1,100 6,705 4,393 20,863
---------- --------- --------- ----------- ----------
INCOME BEFORE INCOME TAXES 29,432 5,475 (4,114) 2,859 33,652
INCOME TAX PROVISION (BENEFIT) 10,127 2,280 (193) 1,086 (E) 13,300
---------- --------- --------- ----------- ----------
NET INCOME 19,305 3,195 (3,921) 1,773 20,352
Minority Interest on Preferred Securities of Subsidiary Trust 1,056 0 0 1,585 (F) 2,641
Dividends on Cumulative Preferred Stock 259 0 0 0 259
---------- --------- --------- ----------- ----------
$17,990 $3,195 ($3,921) $188 $17,452
========== ========= ========= =========== ==========
Net Income Per Share $2.21 $1.96
========== ==========
Weighted Average Shares Outstanding 8,131 8,920
========== ==========
The accompanying notes are an integral part of these pro forma consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
NORTHWESTERN PUBLIC SERVICE COMPANY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 1996
(In Thousands, Except Per Share Amounts)
<CAPTION>
Historical Amounts
--------------------
Empire Pro Forma
Company Energy Adjustments Pro Forma
--------- --------- ----------- ---------
<S> <C> <C> <C> <C>
REVENUE $153,900 $54,617 0 $208,517
COST OF SALES 72,950 28,873 0 101,823
--------- --------- ----------- ---------
GROSS MARGIN 80,950 25,744 0 106,694
--------- --------- ----------- ---------
EXPENSES
Operating, selling, general and administrative 38,287 18,476 (4,434) (H) 52,329
Property and other taxes 3,224 3,224
Depreciation and amortization 9,189 3,599 (589) (I) 12,199
--------- --------- ----------- ---------
50,700 22,075 (5,023) 67,752
--------- --------- ----------- ---------
OPERATING INCOME 30,250 3,669 5,023 38,942
OTHER EXPENSE (INCOME)
Investment income and other (2,657) 0 0 (2,657)
Interest expense 7,809 1,317 3,666 (J) 12,792
--------- --------- ----------- ---------
5,152 1,317 3,666 10,135
--------- --------- ----------- ---------
INCOME BEFORE INCOME TAXES 25,098 2,352 1,357 28,807
INCOME TAX PROVISION (BENEFIT) 8,436 1,650 (184) (K) 9,902
--------- --------- ----------- ---------
NET INCOME 16,662 702 1,541 18,905
Minority Interest on Preferred Securities of Subsidiary Trust 1,320 0 0 1,320
Dividends on Cumulative Preferred Stock 282 0 0 282
--------- --------- ----------- ---------
$15,060 $702 $1,541 $17,303
========= ========= =========== =========
Net Income Per Share $1.69 $1.94
========= =========
Weighted Average Shares Outstanding 8,920 8,920
========= =========
The accompanying notes are an integral part of these pro forma consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
NORTHWESTERN PUBLIC SERVICE COMPANY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1996
(In Thousands)
<CAPTION>
Historical Amounts
--------------------
Empire Pro Forma
Company Energy Adjustments Pro Forma
--------- --------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $3,397 $2,064 $800 (L) $6,261
Trade receivables 23,721 5,724 29,445
Receivables related to acquisition 41,742 7,978 (7,978) (M) 41,742
Inventories 18,615 6,702 25,317
Current deferred income tax assets 0 996 996
Other 6,242 560 6,802
--------- --------- ----------- ---------
93,717 24,024 (7,178) 110,563
--------- --------- ----------- ---------
PROPERTY, PLANT, AND EQUIPMENT, NET 343,551 79,534 29,580 452,665
--------- --------- ----------- ---------
OTHER ASSETS
Investments 54,119 0 54,119
Goodwill and other intangibles, net 50,979 3,033 27,334 (L) 81,346
Deferred charges and other 29,909 0 29,909
Debt acquisition costs 0 0 4,300 (L) 4,300
Other, net 0 511 (282) (L) 229
--------- --------- ----------- ---------
135,007 3,544 31,352 169,903
--------- --------- ----------- ---------
$572,275 $107,102 $53,754 $733,131
========= ========= =========== =========
The accompanying notes are an integral part of these pro forma
consolidated financial statements.
<PAGE>
</TABLE>
<TABLE>
NORTHWESTERN PUBLIC SERVICE COMPANY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1996
(In Thousands)
<CAPTION>
Historical Amounts
--------------------
Empire Pro Forma
Company Energy Adjustments Pro Forma
--------- --------- ----------- ---------
<S> <C> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
CURRENT LIABILITIES
Short term borrowings $3,000 0 $3,000
Current portion of long-term debt 570 6,019 (2,440) (L) 4,149
Trade accounts payable 9,314 3,368 12,682
Accrued liabilities 15,093 2,739 17,832
Acquisition liabilities 28,104 0 (7,978) (M) 20,126
Other 13,210 0 13,210
--------- --------- ----------- ---------
69,291 12,126 (10,418) 70,999
--------- --------- ----------- ---------
OTHER LIABILITIES
Deferred income taxes 41,278 16,877 11,080 (L) 69,235
Unamortized investment tax credits 9,740 0 9,740
Other 39,705 2,424 10,000 (L) 52,129
--------- --------- ----------- ---------
90,723 19,301 21,080 131,104
--------- --------- ----------- ---------
LONG-TERM DEBT 183,850 0 23,000 (L) 206,850
NON RECOURSE DEBT OF SUBSIDIARIES 28,610 25,442 70,325 (L) 124,377
--------- --------- ----------- ---------
STOCKHOLDERS EQUITY
Nonredeemable cumulative preferred stock 2,600 0 2,600
Redeemable cumulative preferred stock 3,650 0 3,650
Company obligated mandatorily redeemable
securities of trust holding solely
parent debentures 32,500 0 32,500
Common stock equity 161,051 50,233 (50,233) (L) 161,051
--------- --------- ----------- ---------
199,801 50,233 (50,233) 199,801
--------- --------- ----------- ---------
$572,275 $107,102 $53,754 $733,131
========= ========= =========== =========
The accompanying notes are an integral part of these pro forma
consolidated financial statements.
</TABLE>
<PAGE>
NOTES TO PRO FORMA FINANCIAL INFORMATION
(A) Reflects the full year effect of operating expense savings resulting from
the consolidation of certain operations that occurred subsequent to
January 1, 1995, as well as the elimination of certain specifically
identified operating, general and administrative expenses as
follows (in thousands):
Year
Ended
Dec 31, 1995
------------
Retail overlap consolidations $700
Nonrecurring expenses of former Empire Energy shareholder 2,303
Reduction in Synergy insurance expense 3,062
Addition of reversal of Synergy shareholder salaries which
were not paid (4,167)
Addition of reversal of Synergy vehicle lease expense which
was not paid (709)
Elimination of Synergy home office and employee related expenses 6,776
Addition of Empire Gas general and administrative charge (2,031)
Addition of Empire Gas management fee (313)
Corporate overhead consolidation 2,013
------------
$7,634
============
All general and administrative functions previously performed at Synergy
headquarters would have been undertaken by Empire Gas Corporation under a
management agreement governing the operation of the Synergy properties.
Under the terms of the management agreement, Empire Gas would have been
compensated through a general and administrative charge and management
fee arrangement. The Synergy adjustments above relate to the period prior
the to acquisition (January 1, 1995 to August 14, 1995).
(B) Reflects the additional depreciation and amortization expense due to the
increase in property and intangibles that result from applying the
purchase method of accounting to the Acquisition, offset by the decrease
in depreciation and amortization expense primarily due to depreciating
tanks over a 40 year useful life customary with industry practice.
(C) Reflects the elimination of non-recurring debt restructuring costs ($350
thousand), and excise tax liability ($912 thousand).
(D) Reflects the following adjustment to interest expense from the Acquisition
(in thousands):
Year
Ended
Dec 31, 1995
------------
Historical interest expense:
Company Consolidated $11,694
Empire Energy 1,264
Synergy (January 1, 1995 - August 14, 1995) 5,614
------------
$18,572
============
<PAGE>
Pro forma interest expense:
Acquisition financing:
Interest on assumption of $94,346 existing Empire Energy
debt, at an average rate of 8.4% $7,925
Interest expense attributable to $23,000 borrowed to
finance the Acquisition at an average rate 7.0% 1,610
Debt expense amortization based on $4,300 debt
issuance costs amortized over 10 years 430
Other:
Historical interest expense - Company Consolidated 11,694
Full year interet expense on debt issued for the Synergy
transaction (($60,000)(7.1%))-($1,692 historical actual) 2,568
------------
$24,227
============
Pro forma interest expense adjustment $5,655
============
(E) Reflects the provision for income taxes for all pro forma adjustments at
federal and state statutory rates.
(F) Reflects full year minority interest on preferred securities of subsidiary
trust issued in connection with the Synergy acquisition.
(G) Reflects the increase in average shares outstanding to give effect to the
1.2 million common shares issued in connection with the Synergy
transaction in August 1995 being outstanding for the entire period.
(H) Reflects the six months effect of operating expense savings resulting
from the consolidation of certain operations that occurred subsequent
to January 1, 1996, as well as the elimination of certain specifically
identified operating, general and administrative expenses as
follows (in thousands):
Period
Ended
June 30,1996
------------
Retail overlap consolidations $350
Nonrecurring expenses of former Empire Energy shareholder 1,151
Nonrecurring restructuring charges at Empire Energy 1,926
Corporate overhead consolidation 1,007
------------
$4,434
============
(I) Reflects the decrease in depreciation and amortization expense primarily
due to depreciating tanks over a 40 year useful life customary with
industry practice, offset by additional depreciation and amortization
expense due to the increase in property and intangibles that result from
applying the purchase method of accounting to the Acquisition.
<PAGE>
(J) Reflects the following adjustment to interest expense from the Acquisition
(in thousands):
Six Months
Ended
Jun 30, 1996
------------
Historical interest expense:
NPS Consolidated $7,809
Empire Energy 1,317
------------
$9,126
============
Pro forma interest expense:
Acquisition financing:
Interest on assumption of $94,346 existing Empire Energy
debt, at an average rate of 8.4% $3,963
Interest expense attributable to $23,000 borrowed to
finance the Acquisition at an average rate 7.0% 805
Debt expense amortization based on $4,300 debt
issuance costs amortized over 10 years 215
Other:
Historical interest expense - NPS Consolidated 7,809
------------
$12,792
============
Pro forma interest expense adjustment $3,666
============
(K) Reflects the provision for income taxes for all pro forma adjustments at
federal and state statutory rates, less $700,000 Empire Energy accrual on
June 30, 1996 for prior year tax audits.
(L) Represents various purchase accounting adjustments, reflecting the
purchase by Empire Energy management of Empire Energy and the related
issuance of new debt and the repayment of outstanding debt in connection
with such purchase, and the subsequent Acquisition and the assumption and
issuance of long-term debt to finance the Acquisition. The following is a
detailed allocation of the purchase price and sources of funds related to
the Acquisition (in thousands):
Purchase price $117,000
Debt, acquisition, and transition costs 5,000
------------
Total $122,000
============
<PAGE>
Allocation of purchase price:
Cash $2,864
Trade receivables 5,724
Receivables related to acquisition 7,978
Inventories 6,702
Prepaid expenses and other 560
Deferred income tax benefit 996
Property, plant, and equipment 109,114
Goodwill and other intangibles 30,367
Debt acquisition costs 4,300
Other assets 229
Current portion of long-term debt (179)
Accounts payable (3,368)
Accrued expenses (2,739)
Other liabilities (2,424)
Deferred income taxes (27,957)
Other purchase related liabilities (10,000)
Long-term debt (167)
------------
$122,000
============
Sources of funds, net:
Assumption of existing debt $94,000
Draw on acquisition line of credit 23,000
Draw on working capital line of credit payable to NPS 5,000
------------
$122,000
============
The Company is exploring a variety of alternative ownership structures for
its propane operations, including formation of a Master Limited
Partnership among others. While the final ownership structure is not yet
determined, the Company fully expects that a substantial portion of the
debt incurred to purchase Synergy and Empire Energy will be repaid and
that interest expense will be significantly reduced.
(M) Reflects the elimination of accounts receivable and claims by Empire
Energy arising in connection with the Empire Energy acquisition of certain
assets of Synergy Group Incorporated in August, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of the securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf of
the undersigned hereunto duly authorized.
NORTHWESTERN PUBLIC SERVICE COMPANY
By: /s/ Rogene A. Thaden
-----------------------------------
Rogene A. Thaden
Treasurer
By: /s/ Alan D. Dietrich
-----------------------------------
Alan A. Dietrich
Vice President - Corporate Services
& Corporate Secretary
Date: November 8, 1996
