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, 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 May 5, 1995
INDEX
Page
Part I. Financial Information
Consolidated Balance Sheet -
March 31, 1995 and December 31, 1994 1
Consolidated Statement of Income -
Three months ended March 31, 1995 and 1994 2
Consolidated Statement of Cash Flows
Three months ended March 31, 1995 and 1994 3
Notes to Consolidated Financial Statements 4
Management's Discussion of Financial Condition
and Results of Operations 5
Part II. Other Information 8
Signatures 9
NORTHWESTERN PUBLIC SERVICE COMPANY
CONSOLIDATED BALANCE SHEET
March 31 December 31,
1995 1994
ASSETS (unaudited)
-------------- --------------
PROPERTY:
Electric $ 323,769,010 $ 321,153,724
Gas 68,905,372 67,213,487
Manufacturing 1,719,527 1,558,484
-------------- --------------
394,393,909 389,925,695
Less-Accumulated depreciation 141,588,220 139,381,075
-------------- --------------
252,805,689 250,544,620
-------------- --------------
CURRENT ASSETS:
Cash and cash equivalents 3,338,174 2,552,612
Accounts receivable, net 13,889,822 12,255,483
Fuel, at average cost 3,507,435 4,886,572
Inventories, materials and supplies 4,777,051 4,686,771
Manufacturing inventories 5,047,417 5,064,859
Deferred gas costs 2,514,811 3,029,688
Other 3,249,849 3,694,912
-------------- --------------
36,324,559 36,170,897
-------------- --------------
OTHER ASSETS:
Investments 48,543,904 46,237,912
Deferred charges and other 25,757,645 26,112,211
-------------- --------------
74,301,549 72,350,123
-------------- --------------
$ 363,431,797 $ 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 59,183,147 55,373,112
Unrealized gain on investments, net 3,180,913 2,538,669
-------------- --------------
119,157,219 114,704,940
Cumulative preferred stock-
Nonredeemable 2,600,000 2,600,000
Redeemable 40,000 40,000
Long-term debt 129,317,500 127,052,500
-------------- --------------
251,114,719 244,397,440
-------------- --------------
CURRENT LIABILITIES:
Commercial paper 6,000,000 9,800,000
Long-term debt due within one year 570,000 570,000
Accounts payable 10,112,085 13,139,557
Accrued taxes 11,485,628 6,740,035
Accrued interest 1,666,323 2,915,084
Other 6,435,179 6,039,430
-------------- --------------
36,269,215 39,204,106
-------------- --------------
DEFERRED CREDITS:
Accumulated deferred income taxes 37,741,793 37,328,539
Unamortized investment tax credits 10,443,530 10,584,830
Other 27,862,540 27,550,725
-------------- --------------
76,047,863 75,464,094
-------------- --------------
$ 363,431,797 $ 359,065,640
============== ==============
The accompanying notes to consolidated financial statements are
an integral part of these balance sheets.
NORTHWESTERN PUBLIC SERVICE COMPANY
CONSOLIDATED STATEMENT OF INCOME
(unaudited)
Three Months Ended
March 31
1995 1994
------------- -------------
OPERATING REVENUES:
Electric $ 18,583,549 $ 19,264,108
Gas 26,464,219 30,310,820
Manufacturing 5,706,647 5,888,771
------------- -------------
50,754,415 55,463,699
------------- -------------
OPERATING EXPENSES:
Fuel for electric generation 3,743,425 3,898,895
Purchased power 55,915 345,667
Purchased gas sold 17,222,018 20,085,469
Other operating expenses 5,502,060 5,748,218
Manufacturing costs 5,163,010 5,285,229
Maintenance 1,302,560 1,405,291
Depreciation 3,209,529 2,991,328
Property and other taxes 1,673,642 1,599,997
------------- -------------
37,872,159 41,360,094
------------- -------------
OPERATING INCOME:
Electric 6,675,533 6,792,647
Gas 5,744,698 6,707,416
Manufacturing 462,025 603,542
------------- -------------
12,882,256 14,103,605
INVESTMENT INCOME AND OTHER 564,912 645,191
INTEREST EXPENSE, net (2,590,280) (2,389,808)
------------- -------------
INCOME BEFORE INCOME TAXES 10,856,888 12,358,988
INCOME TAXES (3,754,254) (4,341,998)
------------- -------------
NET INCOME 7,102,634 8,016,990
DIVIDENDS ON CUMULATIVE
PREFERRED STOCK (29,775) (30,168)
------------- -------------
EARNINGS ON COMMON STOCK $ 7,072,859 $ 7,986,822
============= =============
EARNINGS PER AVERAGE COMMON SHARE
based on 7,677,232 shares $ 0.92 $ 1.04
============= =============
DIVIDENDS PER SHARE OF COMMON STOCK $ 0.425 $ 0.415
============= =============
The accompanying notes to consolidated financial statements are
an integral part of these statements.
NORTHWESTERN PUBLIC SERVICE COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
Three Months Ended
March 31
1995 1994
------------- -------------
OPERATING ACTIVITIES:
Net income $ 7,102,634 $ 8,016,990
Items not requiring cash:
Depreciation 3,209,529 2,991,328
Deferred income taxes 67,430 74,562
Investment tax credit (141,300) (142,200)
Changes in current assets and liabilities:
Accounts receivable (1,634,339) (2,697,439)
Inventories 1,306,299 613,285
Other current assets 959,940 1,565,578
Accounts payable (3,027,472) (27,315)
Accrued taxes 4,745,593 4,868,224
Accrued interest (1,248,761) (1,291,497)
Other current liabilities 395,749 98,923
Other, net 1,160,896 (968,381)
------------- -------------
Cash flows from operating activities 12,896,198 13,102,058
------------- -------------
INVESTMENT ACTIVITIES:
Property additions (4,977,045) (3,180,784)
Purchase of noncurrent investments, net (2,305,992) (2,300,696)
------------- -------------
Cash flows for investment activities (7,283,037) (5,481,480)
------------- -------------
FINANCING ACTIVITIES:
Common and preferred stock dividends paid (3,292,599) (3,216,219)
Issuance of long-term debt 2,265,000 400,000
Commercial paper repayments (3,800,000) -
------------- -------------
Cash flows for financing activities (4,827,599) (2,816,219)
------------- -------------
INCREASE IN CASH AND CASH EQUIVALENTS 785,562 4,804,359
Cash and Cash Equivalents, beginning of period 2,552,612 3,099,093
------------- -------------
CASH AND CASH EQUIVALENTS, end of period $ 3,338,174 $ 7,903,452
============= =============
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes $ 300 $ 316,000
Interest 3,394,827 3,472,989
The accompanying notes to consolidated financial statements are
an integral part of these statements.
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 March 31, 1995 and 1994, allowance for equity funds was
$20,256 and $2,378. Allowance for borrowed funds for 1995 and 1994 was
$54,767 and $5,550.
(4) 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.
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 March 31, 1995 and 1994 were $12.9 million and $13.1 million. Cash
equivalents and investment securities totaled $41.4 million and $45.6
million at March 31, 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 March 31, 1995,
unused short-term lines of credit totaled $12 million.
Capital Requirements -
The Company's primary capital requirements include the funding of its
utility construction and expansion programs, the funding of debt and
preferred stock retirements and sinking fund requirements, and the funding
of its 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 ended
March 31, 1995 and 1994 were $5.0 million and $3.2 million. Construction
expenditures for 1995 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. Construction
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 March 31, 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 March 31, 1995 were $.92
compared to $1.04 for the quarter ended March 31, 1994. The decrease in
earnings was primarily due to less favorable weather patterns which
decreased electric and gas revenues, higher interest expense, and a smaller
contribution from nonregulated operations. As measured by degree days,
weather in South Dakota was 14% warmer in the first quarter of 1995
compared to the same period in 1994.
Operating Revenues -
The following tables summarize the factors affecting the variations in
electric and gas revenues between years:
Variation from
Prior Year
Three Months
Ended March 31
------- -------
1995 1994
------- -------
Electric Revenue:
Variation in kwh sales $ (531) $1,002
Changes in rates, fuel cost
recovery, and other (150) (5)
------- ------
$ (681) $ 997
======= ======
Gas Revenue:
Variation in mmbtu sales $(3,221) $ 401
Changes in rates, gas cost
recovery, and other (626) 903
------- ------
$(3,847) $1,304
======= ======
Operating Expenses -
The unfavorable weather impact on revenues in 1995 resulted in
comparable decreases in electric fuel-related costs and purchased gas
costs. Other operating expenses decreased as a result of less gas
production costs due to the mild winter and less need to supplement
purchased gas costs with internal peaking sources. Maintenance expense
decreased due to less maintenance at the Company's jointly owned steam
generating plants and less electric distribution expense. Depreciation
increases can be attributed to an increase in utility plant, 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
March 31, 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 decreased $182,000 for the quarter ended March 31,
1995 as compared to the quarter ended March 31, 1994. Manufacturing
operating income decreased $142,000 representing primarily lower sales.
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, 6,381,291; 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
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
NORTHWESTERN PUBLIC SERVICE COMPANY
-----------------------------------
(Registrant)
Date: May 5, 1995 /s/ R. A. Thaden
------------------------------------
Treasurer
Date: May 5, 1995 /s/ A. D. Dietrich
-----------------------------------
Vice President-Corporate Services
and Corporate Secretary