SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(D) OF THE SECURITIES ACT OF 1934
For the transition period from ________ to _________
Commission File No. 0-692
NORTHWESTERN CORPORATION
(formerly known as
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 $1.75
17,842,524 shares outstanding at May 10, 1998
Company-Obligated Mandatorily Redeemable
Preferred Securities
of Subsidiary Trust, Liquidation Amount $25.00
1,300,000 shares outstanding at May 10, 1998
<PAGE>
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Consolidated Balance Sheets -
March 31, 1998 and December 31, 1997 .......................
Consolidated Statements of Income -
Three months ended
March 31, 1998 and 1997 ....................................
Consolidated Statements of Cash Flows
Three months ended
March 31, 1998 and 1997 ....................................
Notes to Consolidated Financial Statements
Management's Discussion of Financial Condition and Results of
Operations .................................................
PART II. OTHER INFORMATION
SIGNATURES .......................................................
<PAGE>
NORTHWESTERN CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
--------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 17,854 $ 14,309
Trade acounts receivable, net 73,434 90,749
Inventories 28,102 36,015
Other 13,896 15,335
----------- ----------
133,286 156,408
----------- ---------
PLANT AND EQUIPMENT:
Electric 357,367 356,836
Natural Gas 86,901 85,874
Propane 284,212 275,911
Manufacturing 2,316 2,270
----------- ---------
730,796 720,891
Less Accumulated depreciation (180,507) (175,269)
----------- ---------
550,289 545,622
----------- ---------
OTHER ASSETS:
Investments 131,621 121,587
Deferred charges and other 57,912 58,435
Goodwill and other intangibles, net 230,929 224,071
----------- ---------
420,462 404,093
----------- ---------
$1,104,037 $1,106,123
=========== =========
</TABLE>
CAPITALIZATION AND LIABILITIES
<TABLE>
<CAPTION>
CURRENT LIABILITIES:
<S> <C> <C>
Commerercial Paper Borrowing $ 14,000 $
Long-term debt due within one year 6,149 7,814
Accounts payable 54,655 89,064
Accrued expenses 16,982 12,899
Other 33,973 34,787
--------- ---------
125,759 144,564
--------- ---------
DEFERRED CREDITS:
Accumulated deferred income taxes 71,466 72,884
Unamortized investment tax credits 8,761 8,901
Other 49,210 51,925
--------- ---------
129,437 133,710
--------- ---------
CAPITALIZATION:
Common stock equity 170,953 166,596
Nonredeemable cumulative preferred stock 2,600 2,600
Redeemable cumulative preferred stock 1,150 1,150
Company obligated mandatorily redeemable
security of trust holding solely parent
debentures 32,500 32,500
Long term debt 156,350 156,350
--------- ---------
363,553 359,196
Minority interest in subsidiaries 246,191 199,722
Long-term debt of subsidiaries 239,097 268,931
--------- ---------
848,841 827,849
--------- ---------
$1,104,037 $1,106,123
========== ==========
</TABLE>
The accompanying notes to consolidated
financial statements are
an integral part of these statements.
<PAGE>
NORTHWESTERN CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended
March 31
---------
1998 1997
OPERATING REVENUES -------- --------
<S> <C> <C>
Propane $ 229,331 $ 220,754
Electric 18,963 20,419
Natural gas 30,021 37,391
Manufacturing 5,883 5,842
--------- ---------
284,198 284,406
--------- ---------
OPERATING EXPENSES
Propane costs 179,362 178,164
Fuel and purchased power 3,816 4,568
Purchased natural gas sold 22,297 28,044
Manufacturing cost of goods sold 3,675 3,309
Other operating expenses 34,154 31,825
Maintenance 1,350 1,486
Depreciation and amortization 8,514 7,333
Property and other taxes 1,696 1,745
--------- ---------
254,864 256,474
--------- ---------
OPERATING INCOME
Propane 19,782 15,107
Electric 5,689 6,984
Natural Gas 3,498 5,495
Manufacturing 365 346
-------- ---------
29,334 27,932
-------- ---------
Interest Expense, net (7,676) (7,910)
Investment Income and Other 3,383 1,669
-------- ---------
Income Before Income Taxes and Minority
Interest 25,041 21,691
--------- ---------
Income Taxes (4,476) (5,133)
--------- ---------
Income Before Minority Interest 20,565 16,558
Minority Interest (9,561) (6,035)
--------- ---------
Net Income 11,004 10,523
Minority Interest on Preferred
Securities
of Subsidiary Trust (660) (660)
Dividends on Preferred Stock (48) (69)
--------- ---------
Earnings on Common Stock $ 10,296 $ 9,794
========= ========
Average Shares Outstanding 17,843 17,842
========= ========
Basic and Diluted Earnings per Common
Share $0.58 $0.55
========= ========
Dividends Declared Per Common Share $0.24 $0.23
========= ========
</TABLE>
The accompanying notes to consolidated
financial statements are
an integral part of these statements.
<PAGE>
NORTHWESTERN CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended
March 31
----------------------
1998 1997
OPERATING ACTIVITIES: --------- ---------
<S> <C> <C>
Net Income $ 11,004 $ 10,523
Items not affecting cash:
Depreciation and amortization 8,514 7,333
Deferred income taxes (550) (341)
Minority interest in net income of
consolidated subsidiaries 9,561 6,035
Investment tax credits (140) (140)
Changes in current assets and
liabilities, net:
Accounts receivable 17,717 35,448
Inventories 7,979 14,504
Other current assets 1,439 (498)
Accounts payable (34,715) (57,147)
Accrued expenses 4,083 3,833
Other current liabilities (814) (1,490)
Other, net (2,390) (288)
--------- ---------
Cash flows provided by operating
activities 21,688 17,772
--------- ---------
INVESTMENT ACTIVITIES:
Property additions (5,420) (4,221)
Sale (Purchase) of noncurrent
investments, net (12,514) 7,088
Subsidiary acquisitions (10,403) -
--------- ---------
Cash flows provided by (used in)
investment activities (28,337) 2,867
--------- ---------
FINANCING ACTIVITIES:
Dividends on common and preferred stock (4,375) (4,174)
Subsidiary payment of common unit
distributions (7,067) -
Minority interest on preferred
securities of subsidiary trust (660) (660)
Redemption of preferred stock of
subsidiary - (2,687)
Repayment of long-term debt
and nonrecourse subsidiary debt (32,499 (11,650)
Repayment of long-term debt - (7,500)
Proceeds from subsidiary secondary
offering 40,795 -
Commercial paper issuances 14,000 -
--------- ---------
Cash flows for financing activities 10,194 (26,671)
--------- ---------
INCREASE(DECREASE) IN CASH AND CASH
EQUIVALENTS 3,545 (6,032)
Cash and Cash Equivalents, beginning of
period 14,309 36,790
--------- ---------
CASH AND CASH EQUIVALENTS, end of period $17,854 $30,758
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes $27 $1,792
Interest $6,465 $6,689
</TABLE>
The accompanying notes to consolidated
financial statements are
an integral part of these statements.
<PAGE>
NORTHWESTERN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 1998 and 1997
(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
Northwestern Corporation (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 accompanying consolidated financial statements include the
accounts of the Company and all wholly and majority owned or controlled
subsidiaries. All significant intercompany balances and transactions have
been eliminated from the consolidated financial statements.
(3) Comprehensive Income -
During June 1997, the Financial Accounting Standards Board released SFAS
No. 130, 'Reporting Comprehensive Income,' effective for fiscal year beginning
after December 15, 1997. SFAS No. 130 established standards for reporting
and display in the financial statements of total net income and components of
all other non-owner changes in equity, referred to as comprehensive income.
The Company's comprehensive income was not material for the quarters ended
March 31, 1998 and 1997.
<PAGE>
MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Northwestern Corporation is a nationwide diversified energy,
telecommunications and related services provider. A division of the Company
is engaged in the regulated energy business of production, purchase,
transmission, distribution and sale of electricity and the delivery of
natural gas. The Company generates and distributes electric energy to
56,000 customers in eastern South Dakota. It also purchases and distributes
natural gas to 79,000 customers in eastern South Dakota and central
Nebraska. To provide baseload electric power, the Company jointly owns
three coal-fired generating plants with other utilities. Through
Cornerstone Propane Partners, L.P. (Cornerstone), the Company is engaged in
retail and wholesale propane distribution business located throughout the
United States. Cornerstone is a publicly traded Delaware limited
partnership, formed to acquire and operate propane businesses and assets. A
wholly owned subsidiary of the Company serves as the general partner of
Cornerstone and manages and operates Cornerstone's business. In January 1998
Cornerstone sold an aggregate of 1,960,000 Common Units at $22.125 per unit
pursuant to an unwritten public offering. Net proceeds were approximately
$40.7 million. Cornerstone used approximately $10.0 million of the net
proceeds for general business purposes and the balance to repay amounts
outstanding under a credit facility. The Company owns a combined 34.8%
interest in Cornerstone after considering the secondary offering of additional
common units sold in January 1998. The Company's manufacturing operations are
comprised of Lucht Inc., a wholly owned subsidiary that develops, manufactures
and markets multi-image photographic printers and other related equipment.
In 1997, the Company formed ServiCenterUSA to acquire heating, ventilating,
air conditioning, plumbing and related services companies in the U.S.
The Company also formed Communication Systems USA to acquire and consolidate
companies providing telecommunications and data services to business customers.
Weather
Weather patterns have a material impact on the Company's operating
performance for all three segments of its energy business. This impact is
particularly relevant for natural gas and propane. Because propane and
natural gas are heavily used for residential and commercial heating, the
demand for these products depends heavily upon weather patterns throughout
the Company's market areas. With a larger proportion of its operations
related to seasonal propane and natural gas sales, a significantly greater
portion of the Company's operating income is recognized in the first and
fourth quarters related to higher revenues from the heating season.
<PAGE>
RESULTS OF OPERATIONS:
Consolidated Earnings Comparisons -
Earnings per share for the quarters ended March 31, 1998 and 1997,
were $.58 and $.55. The increase in earnings was due to increased operating
income from the propane operations resulting from acquired retail propane
distribution centers and increased investment income which were offset by
decreases due to significantly warmer than normal weather in the Company's
propane, natural gas and electric operating areas.
Propane -
Operating revenues from propane for the three months ended March 31
increased 4% from $220.8 million in 1997 to $229.3 million in 1998. Gross
margins increased from $42.5 million in 1997 to $50.0 million in 1998. Gallons
also increased from 155.4 million in 1997 to 276.5 million in 1998. The
increases are due to the acquisition of retail propane distributors in 1997
and internal growth combined with volume increases in the wholesale
operations. The propane operations in 1998 have been negatively affected by
weather that has been substantially warmer than normal. The majority of
propane revenues and operating income occur in the first and fourth quarters
when propane is heavily sold for residential and commercial heating as compared
to the second and third quarters which traditionally are operating loss periods
in the industry.
Electric -
Retail electric revenues decreased by 9% from $19.5 million to $17.8
million while retail volumes decreased by 5% for the three months ended
March 31 as compared to the same period of the prior year. Electric gross
margins decreased 4% from $15.9 million to $15.1 million as compared to the
prior year. Electric operations were impacted significantly by weather which
was both warmer than normal and warmer as compared to the same quarter of the
prior year.
Natural Gas -
Natural gas revenues decreased by 20% from $37.4 million to $30.0
million while volumes decreased by 14% for the three months ended March 31
as compared to the prior year. Gross margins decreased 17% from $9.3 million
to $7.7 million. Natural gas operations were negatively impacted significantly
by weather which was both warmer than normal and warmer as compared to the
same quarter of the prior year.
Manufacturing -
Weaker quarterly sales activity produced lower revenues for the first
quarter as compared to 1997. Revenues decreased 2% from $5.8 million to
$5.7 million while gross margins increased 8% from $478,000 to $514,000
compared to the same period of the prior year due to sales of higher margin
items.
Operating Expenses and Other Income Statement Items -
Other operating expenses for the three months ended March 31 increased
in 1998 as compared to 1997 primarily due to the acquisitions of retail
propane distribution centers in 1997 partially offset by a decrease in
propane related salaries and benefits of approximately $900,000. Investment
and other income increased during the three months ended March 31 due to higher
investment income in 1998 as compared to 1997 principally due to the
Company's increased preferred stock investments in ServiCenter USA and
Communication Systems USA and the sale of investments. The increase in
depreciation reflects the increase in depreciable propane assets when compared
to the same periods of the prior year. The decrease in interest expense is
primarily related to the redemption of the 8.9% series general mortgage bonds
of the $7.5 million in March 1997 and the redemption of the 8.824% series
general mortgage bonds of $15 million in July 1997. Income taxes decreased
because of increased minority interest.
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
marketable securities, and a sound capital structure. In addition, the
Company has adequate capacity for additional financing and has maintained
its liquidity position through favorable bond ratings.
The Company has generated significant operating cash flows while
continuing to maintain substantial cash and investment balances in the form
of marketable securities. Cash flows from operating activities during the
three months ended March 31, 1998 and 1997 were $21.7 million and $17.8
million. The increase is primarily due to increased cash flow from propane
operations. Cash equivalents and investment securities totaled $122.4
million and $162.2 million at March 31, 1998 and 1997. In March 1997 the
Company retired early the $7.5 million outstanding of the 8.9% series
general mortgage bonds. In July 1997 the company retired early the $15
million outstanding of the 8.824% series general mortgage bonds.
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 March 31, 1998,
available short term lines of credit totaled $18.0 million. In addition, the
Company's nonregulated subsidiaries maintain nonrecourse credit agreements
with various banks for revolving and term loans.
The Company will continue to review economics of retiring or refunding
remaining long-term debt and preferred stock to minimize long-term financing
costs. At March 31, 1998, the Company had invested $57.2 million in Servi-
Center USA and Communication Systems USA. The Company will continue to make
investments in these unconsolidated affiliates. Also, the Company may make
other significant acquisition investments in related industries that would
require the Company to raise additional equity and incur debt financing, which
are therefore subject to certain risks and uncertainties. The Company's
financial coverages are at levels in excess of those required for the
issuance of additional debt and preferred stock.
Capital Requirements -
The Company's primary capital requirements include the funding of its
energy business construction, maintenance and expansion programs, the
funding of debt and preferred stock retirements, 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 and reliability capabilities through
system replacement and provide for the reliability of energy supply. Capital
expenditure plans are subject to continual review and may be revised as a
result of changing economic conditions, variations in sales, environmental
requirements, investment opportunities and other ongoing considerations.
Expenditures for maintenance and construction activities during the three
months ended March 31, 1998 and 1997 were $5.4 and $4.2 million. Included
in such construction activities were nonregulated capital expenditures of
$3.0 million and $1.2 million during the three months ended March 31, 1998
and 1997 which includes both growth and maintenance capital expenditures.
Capital expenditures for 1998, excluding propane, are estimated to be $13.8
million with a large portion of expenditures to be spent on enhancements of
the electric and natural gas distribution systems. Electric and natural gas
related capital expenditures for the years 1998 through 2002 are estimated
to be $61.5 million. Nonregulated maintenance capital expenditures for 1998
are estimated to be $3.8 million. Estimated nonregulated maintenance
capital expenditures for the years 1998 through 2002 are estimated to be
$19.0 million.
Capital requirements for the mandatory retirement of long-term debt
including nonrecourse debt of subsidiaries will be $7.8 million in 1999,
$8.9 million in 2000, $8.5 million in 2001, and $8.3 million in 2002.
The Company anticipates that future capital requirements will be met by
existing investments and marketable securities, internally generated cash
flows and available external financing.
Competition and Business Risk -
Northwestern's strategy centers upon the development, acquisition and
expansions of operations offering integrated energy, telecommunications, and
related products and services within the Northwestern companies. In addition
to mainaining a strong competitive position in electric, natural gas and
propane distribution businesses, the Company intends to pursue development
and acquisitions that have long-term growth potential. While such investments
and acquisitions can involve risk in comparision to the Company's energy
distribution businesses, they offer the potential to enhance investment
returns.
PROPANE
Weather conditions have a significant impact on propane demand for both
heating and agricultural purposes. The majority of Cornerstone's customers
rely heavily on propane as a heating fuel. Actual weather conditions can vary
substantially from year to year, significantly affecting Cornerstone's
financial performance. Futhermore, variations in weather in one or more
regions in which Cornerstone operates can significatly affect the total volumes
sold by Cornerstone and the margins realized on such sales and, consequently,
Cornerstone's results of operations. These conditions may also impact
Cornerstone's ability to meet various debt covenant requirements and affect
Cornerstone's ability to pay common and subordinated unit distributions.
The retail propane business is a margin-based business in which gross
profits depend on the excess of sales prices over propane supply costs.
Consequently, Cornerstone's profitability will be sensitive to changes in
wholesale propane prices. Propane is a commodity, the market price of which
can be subject to volatile changes in response to changes in supply or other
market conditions. As it may not be possible to immediately pass on to
customers rapid increases in wholesale cost of propane, such increases could
reduce Cornerstone's gross profits.
Cornerstone's profitability is affected by the competition for customers
among all participants in the retail propane business. Some of Cornerstone's
competitors are larger or have greater financial resources than Cornerstone.
Should a competitor attempt to increase market share by reducing prices,
Cornerstone's financial condition and results of operations could be materially
adversely affected. In addition, propane competes with other sources of
energy, some of which may be less costly per equivalent energy value.
ELECTRIC AND NATURAL GAS
The electric and natural gas industries continue to undergo numerous
transformations and the Company is operating in an increasingly competitive
marketplace. The FERC, which regulates interstate and wholesale electric
transmissions, opened up transmission grids and mandated that utilities must
allow others equal access to utility transmission systems. Various state
regulatory bodies are supporting initiatives to redefine the electric energy
market and are experimenting with retail wheeling, which gives some retail
customers the ability to choose their supplier of electricity. Traditionally,
utilities have been vertically integrated, providing bundled energy services
to customers. The potential for continued unbundling of customer services
exists, allowing customers to buy their own electricity and natural gas on the
open market and having it delivered by the local utility.
The growing pace of competition in the energy industry has been a primary
focus of management over the last few years. The Company's future financial
performance will be dependent on the effective execution of operating
strategies to address a more competitive and changing energy marketplace.
Business strategies focus on enhancing the Company's competitive position, on
expanding energy sales and markets with new products and services for customers
and increasing shareholder value. The Company has realigned various areas of
its business to support customer services and marketing functions. A new
marketing plan, an expanded line of integrated customer products and services,
additional staff and new technologies are part of the Company's strategy for
providing responsive and superior customer service. To strenghen the
Company's competitive position, new technologies have and will be added that
enable employees to better serve customers. The Company is centralizing
activities to improve efficiency and customer responsiveness and business
processes are being reengineered to apply best-practices methodologies.
Long-term supply contracts have been renegotiated to lower customers' energy
costs and new alliances help reduce expenses and add innovative work
approaches.
As described in Note 1 to the consolidated financial statements, the
Company complies with the provision of Statement of Financial Accounting
Standards No. 71 (SFAS 71), "Accounting for the Effects of Certain Types of
Regulation." SFAS 71 provides for the financial reporting requirements of the
Company's regulated electric and natural gas operations which requires specific
accounting treatment of certain costs and expenses that are related to the
Company's regulated operations. Criteria that could give rise to the
discontinuance of SFAS 71 include 1) increasing competition that restricts the
Company's ability to establish prices to recover specific costs and 2) a
significant change in the manner in which rates are set by regulators from
cost-based regulation to another form of regulation. The Company periodically
reviews these criteria to ensure the continuing application of SFAS 71 is
appropiate. Based on a current evaluation of the various factors and
conditions that are expected to impact future cost recovery, the Company
believes that its regulatory assets, including those related to generation, are
probable of future recovery. This evaluation of recovery must be updated for
any change which might occur in the Company's current regulatory environment.
HVAC, TELECOMMUNICATIONS AND RELATED SERVICES
The markets served by ServiCenter USA for residental and commercial
heating, ventilating, air conditioning, plumbing and other related services are
highly competitive. The principal competitive factors in these segments of the
industry are 1) timeliness, reliability and quality of services provided, 2)
range of products and services provided, 3) name recognition and market share
and 4) pricing. Many of ServiCenter's competitors in the HVAC business are
small, owner-operated companies typically located and operated in a single
geographic area. There are only a small number of national companies engaged
in providing residental and commercial services in the service lines, which the
Company intends to focus. Future competition in both the residential and
commercial service lines may be encountered from other newly formed or existing
public or private service companies with aggressive acquistion programs, the
unregulated business segments of regulated gas and electric utilities or from
newly deregulated utilities in those industries entering into various service
areas.
The market served by Communications Systems USA in the telecommunications
and data services industry is also a highly competitive market. The Company
believes that 1) market acceptance of the Company's products and services, 2)
pending and future legislation affecting the telecommunications and data
industry, 3) name recognition and market share, 4) larger competitors and 5)
the Company's ability to provide integrated communication and data solutions
for customers in a dynamic industry are all factors that could affect the
Company's future operating results.
OTHER
The Company utilizes software and various technologies throughout its
business that will be affected by the date change in the year 2000. The
Company has assessed and is continuing to assess the impact of the year 2000
issue on its reporting systems and operations. The majority of the Company's
financial reporting and operationsl systems are year 2000 compliant. The cost
of the modifications of the remaining systems is not expected to be material.
This report contains forward looking statements within the meaning of the
securities laws. The Company cautions that, while it believes such statements
to be based on reasonable assumptions and makes such statements in good faith,
there can be no assurance that the actual results will not differ materially
from such assumptions or that the expectations set forth in the forward looking
statements derived from such assumptions will be realized. Investors should be
aware of important factors that could have a material impact on future results.
These factors include, but are not limited to, weather, the federal and state
regulatory environment, the economic climate, regional, commercial, industrial
and residental growth in the service territories served by the Company and its
subsidaries, customers' usage patterns and preferences, the speed and degree to
which competition enters the Company's industries, the timing and extent of
changes in commodity prices, changing conditions in the capital and equity
markets and other uncertainties, all of which are difficult to predict and many
of which are beyond the control of the Company.
<PAGE>
NORTHWESTERN CORPORATION
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 four directors to Class I of the Board of Directors
was submitted to stockholders in the Company's proxy statement.
At the annual meeting of common stockholders held on May 6, 1998,
the four nominees were elected, receiving the following votes:
Randy G. Darcy 15,504,208; Gary G. Drook 15,496,003;
Raymond M. Schutz 15,505,304; Bruce I. Smith 15,507,884. Also
submitted to the common and preferred stockholders were two
proposals. The results of the voting were as follows:
1. To amend the Company's Restated Certificate of Incorporation to
change the name of the Company to Northwestern Corporation.
14,615,611 For 672,244 Against 451,788 Abstain
2. To approve a Stock Option and Incentive Plan.
11,110,896 For 1,796,356 Against 799,436 Abstain
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(3) ARTICLES OF INCORPORATION AND BY-LAWS
Certificate of Amendment of Restated Certificate of
Incorporation dated May 6, 1998.
(10) MATERIAL CONTRACTS
Stock Option and Incentive Plan dated May 6, 1998
Exhibit 27 - Financial Data Schedule UT (SEC only)
(b) Reports on Form 8-K
None
<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 CORPORATION
---------------------------------
(Registrant)
Date: May 15, 1998 /s/ D. A. Monaghan
-----------------------------------
Controller and Treasurer
Date: May 15, 1998 /s/ A. D. Dietrich
----------------------------------
Vice President-Law
<PAGE>
CERTIFICATE OF AMENDMENT OF RESTATED CERTIFICATE OF
INCORPORATION OF NORTHWESTERN PUBLIC SERVICE COMPANY
Northwestern Public Service Company, a corporation
organized and existing under the laws of the State of Delaware
(hereinafter called the 'Company'), by its Chairman of the
Board of Directors, President & CEO and its Corporate
Secretary, does hereby certify as follows:
1. That the Board of Directors of the Company at a
meeting of said Board duly called, convened and held on
February 4, 1998, proposed an amendment to the Restated
Certificate of Incorporation of the Company, as previously
amended, which amendment affected Article FIRST, of said
Restated Certificate of Incorporation, and at said meeting
adopted a resolution setting forth the amendment proposed,
declaring its advisability, and directing that, at the Annual
Meeting of Stockholders to be held on May 6, 1998, the
amendment hereinafter set forth be submitted to the holders of
shares of Common Stock of the Company, being the only class of
stock of the Company having voting rights in respect of said
proposed amendment; and that the amendment so proposed and
declared advisable by the Board of Directors of the Company was
as follows:
That Article FIRST of the Restated Certificate of
Incorporation of the Company, as heretofore amended, is hereby
amended to read as follows:
'FIRST: The name of this corporation is NORTHWESTERN
CORPORATION.'
2. That thereafter pursuant to the aforesaid resolution
of its Board of Directors, at the Annual Meeting of
Stockholders of the Company duly held on May 6, 1998, holders
of the necessary number of shares of Common Stock, as required
by statute and the Restated Certificate of Incorporation of the
Company, as amended, voted in favor of the amendment
hereinbefore set forth.
3. That accordingly, the amendment of the Restated
Certificate of Incorporation of the Company, as hereinbefore
set out, has been duly adopted in accordance with the
provisions of Section 242 of Title 8 of the Delaware Code.
4. The capital of the Company will not be reduced under
or by reason of the amendment by subsequent action of the Board
of Directors.
IN WITNESS WHEREOF, said Northwestern Public Service
Company has caused its corporate seal to be hereunto affixed
and this certificate to be signed by M. D. Lewis, its Chairman
of the Board of Directors, President and Chief Executive
Officer, and attested by Alan D. Dietrich, its Corporate
Secretary, this 6th day of May, 1998.
NORTHWESTERN PUBLIC SERVICE COMPANY
By______________________________________
M. D. Lewis
Chairman, President & CEO
Attest:
______________________________
Alan D. Dietrich, Corporate Secretary
(Corporate Seal)
Northwestern Public Service Company
1923
Delaware
<PAGE>
ACKNOWLEDGMENT
STATE OF SOUTH DAKOTA )
) SS
COUNTY OF BEADLE )
On this the 6th day of May, 1998, before me, Sherry L.
Swanson, the undersigned notary public in and for the State of
South Dakota, personally appeared M. D. Lewis and Alan D.
Dietrich, known to me to be the Chairman of the Board,
President and Chief Executive Officer and the Corporate
Secretary, respectively, of Northwestern Public Service
Company, a Delaware corporation, and that they, as such
officers of the corporation being authorized to do so, executed
the foregoing Certificate of Amendment of Restated Certificate
of Incorporation of Northwestern Public Service Company for the
purposes therein contained, by signing and attesting the name
and seal of the corporation by themselves as Chairman of the
Board, President and Chief Executive Officer and Corporate
Secretary, respectively.
In witness whereof, I hereunto set my hand and official
seal.
_________________________________
Sherry L. Swanson
Notary Public
State of South Dakota
Commission expires:
5/17/02
NORTHWESTERN
STOCK OPTION AND INCENTIVE PLAN
Section 1. Purpose.
The purpose of the Northwestern Public Service Company Stock Option
and Incentive Plan (the 'Plan') is to benefit Northwestern Public Service
Company (the 'Company') and its Subsidiaries (as defined in Section 2) by
recognizing the contributions made to the Company by officers and other
key employees (including Directors of the Company who are also employees)
of the Company and its Subsidiaries, to provide such persons with
additional incentive to devote themselves to the future success of the
Company, and to improve the ability of the Company to attract, retain and
motivate individuals, by providing such persons with a favorable
opportunity to acquire or increase their proprietary interest in the
Company over a period of years through receipt of options to acquire
common stock of the Company. In addition, the Plan is intended as an
additional incentive to members of the Board of Directors of the Company
who are not employees of the Company ('Non-Employee Directors) to serve
on the Board of Directors of the Company (the 'Board') and to devote
themselves to the future success of the Company by providing them with a
favorable opportunity to acquire or increase their proprietary interest
in the Company through receipt of options to acquire common stock of the
Company.
The Company may grant stock options that constitute 'incentive stock
options' ('ISOs') within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the 'Code'), or stock options that do
not constitute ISOs ('NSOs') (ISOs and NSOs being hereinafter
collectively referred to as 'Options').
Section 2. Eligibility.
Non-Employee Directors shall participate in the Plan only in
accordance with the provisions of Section 5 of the Plan. The Committee
(as defined in Section 3) shall initially, and from time to time
thereafter, select those officers and other key employees (including
Directors of the Company who are also employees) (collectively referred
to herein as 'Key Employees') of the Company or any other entity of
which the Company is the direct or indirect beneficial owner of not less
than thirty-three and onethird percent (33-1/3%) of all issued and
outstanding equity interests ('Subsidiaries'), to participate in the Plan
on the basis of the special importance of their services in the
management, development and operations of the Company or its Subsidiaries
(each such Director and Key Employee receiving Options granted under the
Plan is referred to herein as an 'Optionee'); provided, however, that the
Committee may delegate, in writing and subject to terms and conditions
which it deems appropriate, to the Chief Executive Officer of the Company
the ability to award Options to Key Employees who are not officers of the
Company or its Subsidiaries.
Section 3. Administration.
3.1 The Committee. The Plan shall be administered by the
Nominating and Compensation Committee of the Board (the 'Committee').
3.2 Authority of the Committee. Except as provided in Section 2,
no person, other than members of the Committee, shall have any authority
concerning decisions regarding the Plan. Subject to the express
provisions of the Plan, including but not limited to Section 5, the
Committee (or the Chief Executive Officer, to the extent the Committee
delegates authority to him pursuant to Section 2) shall have sole
discretion concerning all matters relating to the Plan and Options
granted hereunder. The Committee (or the Chief Executive Officer, to the
extent the Committee delegates authority to him pursuant to Section 2) in
its sole discretion, shall determine the Key Employees of the Company and
its Subsidiaries to whom, and the time or times at which Options will be
granted, the number of shares to be subject to each Option, the expiration date
of each Option, the time or times within which the Option may be exercised, the
cancellation of the Option (with the consent of the holder thereof), and
the other terms and conditions of the grant of the Option. The terms and
conditions of the Options need not be the same with respect to each
Optionee or with respect to each Option.
The Committee may, subject to the provisions of the Plan, establish
such rules and regulations as it deems necessary or advisable for the
proper administration of the Plan, and may make determinations and may
take such other action in connection with or in relation to the Plan as
it deems necessary or advisable. Each determination or other action made
or taken pursuant to the Plan, including interpretation of the Plan and
the specific terms and conditions of the Options granted hereunder by the
Committee (or the Chief Executive Officer, to the extent the Committee
delegates authority to him pursuant to Section 2) shall be final and
conclusive for all purposes and upon all persons including, but without
limitation, the Company, its Subsidiaries, the Committee, the Board,
officers and the affected employees of the Company and/or its
Subsidiaries and their respective successors in interest.
No member of the Committee shall, in the absence of bad faith, be
liable for any act or omission with respect to service on the Committee.
Service on the Committee shall constitute service as a Director of the
Company so that members of the Committee shall be entitled to
indemnification pursuant to the Company's Certificate of Incorporation
and By-Laws.
Section 4. Shares of Common Stock Subject to Plan.
4.1 The total number of shares of common stock, par value $1.75 per
share, of the Company (the 'Common Stock'), that may be issued and sold
under the Plan initially shall be 1,338,189. The total number of shares
of Common Stock that may be available for Options under the Plan shall be
adjusted on January 1 of each calendar year, within the Applicable Period
(as defined below), so that the total number of shares of Common Stock
that may be issued and sold under the Plan as of January 1 of each
calendar year within the Applicable Period shall be equal to seven and
one-half percent (7.5%) of the outstanding shares of Common Stock of the
Company on such date; provided, however, that no such adjustment shall
reduce the total number of shares of Common Stock that may be issued and
sold under the Plan below 1,338,189. For purposes of the preceding
sentence, Applicable Period shall be the ten-year period commencing on
May 6, 1998 and ending May 5, 2008. The aforementioned total number of
shares of Common Stock shall be adjusted in accordance with the
provisions of Section 4.2 hereof. Any shares of Common Stock subject to
issuance upon exercise of Options but which are not issued because of a
surrender (other than pursuant to Section 7.2 or 7.3 of the Plan),
forfeiture, expiration, termination or cancellation of any such Option,
shall once again be available for issuance pursuant to subsequent
Options. If either the purchase price of the shares of Common Stock upon
exercise of any Option or the tax withholding requirement is satisfied by
tendering or withholding of shares of Common Stock or by tendering
exercisable Options, only the number of shares of Common Stock issued net
of the shares of Common Stock tendered or withheld shall be deemed
delivered for purposes of determining the number of shares of Common
Stock available for Options under the Plan.
4.2 The number of shares of Common Stock subject to the Plan and to
Options granted under the Plan shall be adjusted as follows: (a) in the
event that the number of outstanding shares of Common Stock is changed by
any stock dividend, stock split or combination of shares, the number of
shares subject to the Plan and to Options previously granted thereunder
shall be proportionately adjusted; (b) in the event of any merger,
consolidation or reorganization of the Company with any other corporation
or corporations, there shall be substituted on an equitable basis as
determined by the Board of Directors, in its sole discretion, for each
share of Common Stock then subject to the Plan and for each share of
Common Stock then subject to an Option granted under the Plan, the number
and kind of shares of stock, other securities, cash or other property to
which the holders of Common Stock of the Company are entitled pursuant to
the transaction; and (c) in the event of any other change in the
capitalization of the Company, the Committee, in its sole discretion,
shall provide for an equitable adjustment in the number of shares of
Common Stock then subject to the Plan and to each share of Common Stock
then subject to an Option granted under the Plan. In the event of any
such adjustment, the exercise price per share shall be proportionately
adjusted.
Section 5. Grant of Options to Non-Employee Directors.
5.1 Grants. Each individual who is a Non-Employee Director on the
effective date of the Plan shall be granted automatically a NSO to
purchase 1200 shares of Common Stock on the effective date on the Plan.
NonEmployee Directors shall also be eligible to receive discretionary
grants of NSOs as determined by the Committee from time to time.
5.2 Exercise Price and Period. Except as provided for in the next
sentence, the per share Option exercise price of each such NSO granted to
a Non-Employee Director shall be the 'Fair Market Value,' on the date on
which the Option is granted, of the Common Stock subject to the Option.
The Committee shall, in its sole discretion, have the right to establish
(in the Option Agreement described in Section 6.2) a per share Option
exercise price for each such NSO granted to a Non-Employee Director which
is more or less than Fair Market Value. For purposes of this Agreement,
'Fair Market Value' shall mean the average of the closing price for
Company Stock as reported on the New York Stock Exchange for the 20
business days ending on the third business day preceding the date with
respect to which such Company Stock is being valued, for which trades in
Company Stock were reported on the New York Stock Exchange. If no trades
occur on a certain day, the closing price for the last preceding day on
which trading occurred will be used as the closing price for that day.
In addition to the terms and conditions set forth in this Section 5,
NSOs also shall be subject to such terms and conditions applicable to
ISOs according to Sections 6.2, 6.3, 6.4 and 6.5, provided, however, such
additional terms and conditions are not inconsistent with the terms and
conditions set forth in Section 5 of this Plan.
Section 6. Grants of Options to Employees.
6.1 Grant. Subject to the terms of the Plan, the Committee (or the
Chief Executive Officer, to the extent the Committee delegates authority
to him pursuant to Section 2) may from time to time grant Options, which
may be ISOs or NSOs, to Key Employees of the Company or any of its
Subsidiaries. Unless otherwise expressly provided at the time of the
grant, Options granted under the Plan to Key Employees will be ISOs.
6.2 Option Agreement. Each Option shall be evidenced by a written
Option Agreement specifying the type of Option granted, the Option
exercise price, the terms for payment of the exercise price, the
expiration date of the Option, the number of shares of Common Stock to be
subject to each Option, the time frame in which an Option shall become
vested and exercisable, the circumstances under which an Option which has
not become vested and exercisable can be forfeited, the circumstances
under which an Option which has not become vested and exercisable can
become immediately vested and exercisable, and such other terms and
conditions established by the Committee, in its sole discretion, not
inconsistent with the Plan.
6.3 Expiration. Except to the extent otherwise provided in or
pursuant to Section 7, each Option shall expire, and all rights to
purchase shares of Common Stock shall expire, on the tenth anniversary of
the date on which the Option was granted.
6.4 Required Terms and Conditions of ISOs. Each ISO granted to a
Key Employee shall be in such form and subject to such restrictions and
other terms and conditions as the Committee (or the Chief Executive
Officer, to the extent the Committee delegates authority to him pursuant
to Section 2) may determine, in its sole discretion, at the time of
grant, subject to the general provisions of the Plan, the applicable
Option Agreement, and the following specific rules:
(a) Except as provided in Section 6.4(d), the per share
exercise price of each ISO shall be the Fair Market Value of the
shares of Common Stock on the date such ISO is granted.
(b) The aggregate Fair Market Value (determined with
respect to each ISO at the time such Option is granted) of the
shares of Common Stock with respect to which ISOs are
exercisable for the first time by an individual during any
calendar year (under all incentive stock option plans of the
Company and its parent and subsidiary corporations) shall not
exceed $100,000. If the aggregate Fair Market Value (determined
at the time of grant) of the Common Stock subject to an Option,
which first becomes exercisable in any calendar year exceeds
the limitation of this Section 6.4(b), so much of the Option
that does not exceed the applicable dollar limit shall be an
ISO and the remainder shall be a NSO; but in all other
respects, the original Option Agreement shall remain in full
force and effect.
(c) As used in this Section 6, the words `parent' and
'subsidiary' shall have the meanings given to them in Section
424(e) and 424(f) of the Code.
(d) Notwithstanding anything herein to the contrary, if
an ISO is granted to an individual who owns stock possessing
more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or of its parent or
subsidiary corporations, within the meaning of Section
422(b)(6) of the Code, (i) the purchase price of each share of
Common Stock subject to the ISO shall be not less than one
hundred ten percent (110%) of the Fair Market Value of the
Common Stock on the date the ISO is granted, and (ii) the ISO
shall expire and all rights to purchase shares thereunder shall
cease no later than the fifth anniversary of the date the ISO
was granted.
(e) No ISOs may be granted under the Plan after May 5,
2008.
6.5 Required Terms and Conditions of NSOs. Each NSO granted to Key
Employees shall be in such form and subject to such restrictions and
other terms and conditions as the Committee (or the Chief Executive
Officer, to the extent the Committee delegates authority to him pursuant
to Section 2) may determine, in its sole discretion, at the time of
grant, subject to the general provisions of the Plan and the applicable
Option Agreement; provided, however, that the per share exercise price of
each NSO shall be the Fair Market Value of the shares of Common Stock on
the date such NSO is granted.
Section 7. Exercise of Options.
7.1 Notice. A person entitled to exercise an Option may do so by
delivery of a written notice to that effect specifying the number of
shares of Common Stock with respect to which the Option is being
exercised and any other information the Committee may prescribe. The
notice shall be accompanied by payment as described in Section 7.2. The
notice of exercise shall be accompanied by the Optionee's copy of the
writing or writings evidencing the grant of the Option. All notices or
requests provided for herein shall be delivered to the Corporate
Secretary of the Company.
7.2 Exercise Price. Except as otherwise provided in the Plan or in
any Option Agreement, the Optionee shall pay the purchase price of the
shares of Common Stock upon exercise of any Option: (a) in cash; (b) in
cash received from a broker-dealer to whom the Optionee has submitted an
exercise notice consisting of a fully endorsed Option (however, in the
case of an Optionee subject to Section 16 of the 1934 Act, this payment
option shall only be available to the extent such insider complies with
Regulation T issued by the Federal Reserve Board); (c) by delivering
(either actual delivery or by attestation procedures established by the
Company) previously owned shares of Common Stock (which the Optionee has
held for at least six months prior to the delivery of such shares or
which the Optionee purchased on the open market and in each case for
which the Optionee has good title, free and clear of all liens and
encumbrances) having an aggregate Fair Market Value on the date of
exercise equal to the Option exercise price; (d) by directing the Company
to withhold such number of shares of Common Stock otherwise issuable upon
exercise of such Option having an aggregate Fair Market Value on the date
of exercise equal to the Option exercise price; (e) by agreeing to
surrender Options then exercisable valued at the excess of the aggregate
Fair Market Value of the shares of Common Stock subject to such Options
on the date of exercise over the aggregate option price of such shares;
(f) in the case of a Key Employee, by such other medium of payment as the
Committee, in its discretion, shall authorize at the time of grant; or
(g) by any combination of (a), (b), (c), (d) (e) and (f). In the case of
an election pursuant to (a) or (b) above, cash shall mean cash or a check
issued by a federally insured bank or savings and loan, and made payable
to the Company. The Company shall issue, in the name of the Optionee,
stock certificates representing the total number of shares of Common
Stock issuable pursuant to the exercise of any Option as soon as
reasonably practicable after such exercise, provided that any shares of
Common Stock purchased by an Optionee through a broker-dealer pursuant to
clause (b) above shall be delivered to such broker-dealer in accordance
with 12 C.F.R. 220.3(e)(4) or other applicable provision of law.
7.3 Taxes Generally. At the time of the exercise of any Option, as
a condition of the exercise of such Option, the Company may require the
Optionee to pay the Company an amount equal to the amount of the tax the
Company or any Subsidiary may be required to withhold to obtain a
deduction for federal and state income tax purposes as a result of the
exercise of such Option by the Optionee or to comply with applicable law.
7.4 Payment of Taxes. At any time when an Optionee is required to
pay an amount required to be withheld under applicable income tax or
other laws in connection with the exercise of an Option, the Optionee may
satisfy this obligation in whole or in part by: (a) directing the
Company to withhold such number of shares of Common Stock otherwise
issuable upon exercise of such Option having an aggregate Fair Market
Value on the date of exercise equal to the amount of tax required to be
withheld; or (b) delivering (either actual delivery or by attestation
procedures established by the Company) previously owned shares of Common
Stock (which the Optionee has held for at least six months prior to the
delivery of such shares or which the Optionee purchased on the open
market and in each case for which the Optionee has good title, free and
clear of all liens and encumbrances) having an aggregate Fair Market
Value equal to the amount of tax required to be withheld. The Committee
may disapprove any election or delivery or may suspend or terminate the
right to make elections or deliveries.
Section 8. Transferability of Options.
No Option granted pursuant to the Plan shall be transferable
otherwise than by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Code.
Notwithstanding the preceding sentence, an Option Agreement for NSOs may
provide that the Optionee, at any time prior to his death, may assign all
or any portion of an Option granted to him to (i) his spouse or lineal
descendant, (ii) the trustee of a trust for the primary benefit of his spouse
or lineal descendant, (iii) a partnership of which his spouse and lineal
descendants are the only partners, or (iv) a tax exempt organization as
described in Code Section 501(c)(3). In such event, the spouse, lineal
descendant, trustee, partnership or tax exempt organization will be
entitled to all of the rights of the Optionee with respect to the
assigned portion of such Option, and such portion of the Option will
continue to be subject to all of the terms, conditions and restrictions
applicable to the Option, as set forth herein and in the related Option
Agreement immediately prior to the effective date of the assignment. Any
such assignment will be permitted only if: (i) the Optionee does not
receive any consideration therefore; and (ii) the assignment is expressly
permitted by the applicable Agreement as approved by the Committee. Any
such assignment shall be evidenced by an appropriate written document
executed by the Optionee, and a copy thereof shall be delivered to the
Company on or prior to the executive date of the assignment.
Section 9. Rights as Shareholder.
An Optionee or a transferee of an Optionee pursuant to Section 8
shall have no rights as a shareholder with respect to any Common Stock
covered by an Option or receivable upon the exercise of an Option until
the Optionee or transferee shall have become the holder of record of such
Common Stock, and no adjustments shall be made for dividends in cash or
other property or other distributions or rights in respect to such Common
Stock for which the record date is prior to the date on which the
Optionee shall have in fact become the holder of record of the shares of
Common Stock acquired pursuant to the Option.
Section 10. Postponement of Exercise.
The Committee may postpone any exercise of an Option for such time
as the Committee in its sole discretion may deem necessary in order to
permit the Company (a) to effect, amend or maintain any necessary
registration of the Plan or the shares of Common Stock issuable upon the
exercise of an Option under the Securities Act of 1933, as amended, or
the securities laws of any applicable jurisdiction, (b) to permit any
action to be taken in order to (i) list such shares of Common Stock on a
stock exchange if shares of Common Stock are then listed on such exchange
or (ii) comply with restrictions or regulations incident to the
maintenance of a public market for its shares of Common Stock, including
any rules or regulations of any stock exchange on which the shares of
Common Stock are listed, or (c) to determine that such shares of Common
Stock and the Plan are exempt from such registration or that no action of
the kind referred to in (b)(ii) above needs to be taken; and the Company
shall not be obligated by virtue of any terms and conditions of any
Option or any provision of the Plan to recognize the exercise of an
Option or to sell or issue shares of Common Stock in violation of the
Securities Act of 1933 or the law of any government having jurisdiction
thereof. Any such postponement shall not extend the term of an Option
and neither the Company nor its directors or officers shall have any
obligation or liability to an Optionee, to the Optionee's successor or to
any other person with respect to any shares of Common Stock as to which
the Option shall lapse because of such postponement.
Section 11. Trust Agreement.
The Company may enter into a trust agreement ('Trust Agreement')
whereby the Company shall agree to contribute to a trust ('Trust') for the
purpose of accumulating shares of Common Stock to assist the Company in
fulfilling its obligations to Optionee hereunder. Such Trust Agreement
shall be substantially in the form of the model trust agreement set forth
in Internal Revenue Service Revenue Procedure 92-64, or any subsequent
Internal Revenue Service Revenue Procedure, and shall include provisions
required in such model trust agreement that all assets of the Trust shall
be subject to the creditors of the Company in the event of insolvency.
Section 12. Termination or Amendment of Plan.
The Committee may correct any defect or supply an omission or
reconcile any inconsistency in the Plan or in any Option granted
hereunder in the manner and to the extent it shall deem desirable, in its
sole discretion, to effectuate the Plan.
No amendment or termination of the Plan shall in any manner affect
any Option theretofore granted without the consent of the Optionee,
except that the Committee may amend the Plan in a manner that does affect
Options theretofore granted upon a finding by the Committee that such
amendments is in the best interest of holders of outstanding Options
affected thereby.
Section 13. Effective Date.
The Plan shall be effective upon the date of approval of the Plan by
an affirmative vote of a majority of the shares of the voting stock of
the Company entitled to be voted by the holders of stock represented at a
duly held shareholders' meeting, within 12 months after the date of
adoption of the Plan by the Board.
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 17,854
<SECURITIES> 0
<RECEIVABLES> 73,434
<ALLOWANCES> 0
<INVENTORY> 28,102
<CURRENT-ASSETS> 13,896
<PP&E> 730,796
<DEPRECIATION> 180,507
<TOTAL-ASSETS> 1,104,037
<CURRENT-LIABILITIES> 125,759
<BONDS> 395,447
<OTHER-SE> 170,953
<COMMON> 31,220
0
3,750
<TOTAL-LIABILITY-AND-EQUITY> 1,104,037
<SALES> 284,198
<TOTAL-REVENUES> 284,198
<CGS> 209,150
<TOTAL-COSTS> 209,150
<OTHER-EXPENSES> 55,275
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,676
<INCOME-PRETAX> 15,480
<INCOME-TAX> 4,476
<INCOME-CONTINUING> 11,004
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,004
<EPS-PRIMARY> .58
<EPS-DILUTED> .58
</TABLE>
