8-K 1 ekmarch.htm FORM 8-K 8-K - March 5, 2001

SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549
________________________________________


FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): March 5, 2001

THE MONTANA POWER COMPANY

(Exact name of registrant as specified in its charter)

Montana
(State or other jurisdiction
of incorporation)

1-4566

(Commission
File Number)

81-0170530
(IRS Employer
Identification No.)
   

40 East Broadway, Butte, Montana

(Address of principal executive offices)

59701-9394
(Zip Code)

  


Registrant's telephone number, including area code (406) 497-3000
Exhibit Index is found on page 6.

ITEM 5.  Other Events.

Financial Results: Revised Gain on Sale of Discontinued Oil and Natural Gas Operations

This Form 8-K revises particular information presented in our preliminary consolidated statements of income for the quarter and year ended December 31, 2000 and should be read in conjunction with our Form 8-K dated January 30, 2001, which discussed fourth quarter and year-to-date 2000 earnings. We have not updated or corrected information contained in the January 30, 2001 Form 8-K to the extent that information contained therein is not affected by the revised gain discussed in this Form 8-K.

We have revised the gain resulting from the October 31, 2000 sale of our discontinued oil and natural gas operations, originally reported as approximately $83,200,000. Accumulated foreign currency translation adjustments, which previously had been reclassified to retained earnings, now have been included in the gain calculation in accordance with Statement of Financial Accounting Standards No. 52, "Foreign Currency Translation." This treatment increased the basis of the properties sold to PanCanadian Petroleum Limited and PanCanadian Energy, Inc. (collectively, PanCanadian), and consequently our reported gain decreased by approximately $21,200,000. The revised gain is approximately $62,000,000.

This income statement decrease has no effect on our cash flows, income from continuing operations, the proceeds that we received from PanCanadian, or the income taxes resulting from the sale. The reduction in gain on sale does reduce our earnings per share - on a quarterly and annual basis - by $0.20 per share, based on approximately 105,000,000 shares outstanding.

The information in the "Fourth Quarter 2000 Compared With Fourth Quarter 1999" section of our January 30, 2001 Form 8-K, including figures reflecting the gain in Exhibit 99a, "The Montana Power Company and Subsidiaries Preliminary Consolidated Statements of Income," is revised as follows:

FOURTH QUARTER 2000 COMPARED WITH FOURTH QUARTER 1999

Earnings per Share: The Montana Power Company's consolidated basic net income in the fourth quarter 2000 as compared with the fourth quarter 1999 increased approximately 73 percent, increasing from $0.56 per share to $0.97 per share. Earnings from continuing operations for the fourth quarter 2000 - consisting of telecommunications, utility, Continental Energy, and other operations - decreased $0.12 per share, from $0.43 per share to $0.31 per share. We have implemented discontinued operations accounting for our coal and former oil and natural gas operations. Earnings from these discontinued operations for the fourth quarter 2000 were $0.66 per share, an increase of $0.53 per share compared with the fourth quarter 1999 earnings of $0.13 per share. Included in the $0.66 per share figure is a gain of approximately $62,000,000, net of income taxes and a regulatory liability of approximately $32,500,000, relating to the fourth quarter 2000 sale of our oil and natural gas operations to PanCanadian. The $32,500,000 liability represents the portion of the proceeds from the sale of properties to PanCanadian attributable to assets previously in the natural gas utility's rate base. Based upon gas stipulation agreements addressing the removal of natural gas production properties from regulation, we have agreed to share this amount with our natural gas utility ratepayers.

The information in the "Discontinued Operations - Coal and Oil and Natural Gas/Exhibit 99c" subsection of the "Fourth Quarter 2000 Compared With Fourth Quarter 1999" section of our January 30, 2001 Form 8-K, including figures reflecting the gain in Exhibit 99c, "Preliminary Discontinued Operations," is revised as follows:

Discontinued Operations - Coal and Oil and Natural Gas/Exhibit 99c

As stated above, we have accounted for our coal and former oil and natural gas operations as discontinued operations. Income from these discontinued operations, net of income taxes and including the after-tax gain on the sale of our oil and natural gas operations to PanCanadian, increased approximately $55,200,000 compared to the fourth quarter 1999.

Oil and Natural Gas

Income from our discontinued oil and natural gas operations decreased primarily as a result of the October 31, 2000 sale of these properties to PanCanadian, which resulted in operations of only one month for the fourth quarter 2000. As a result of the sale, we recorded a gain of approximately $62,000,000, net of income taxes and a regulatory liability of approximately $32,500,000 that we have agreed to share with our natural gas utility ratepayers.

The information in the "Full Year 2000 Compared With Full Year 1999" section of our January 30, 2001 Form 8-K is revised as follows:

FULL YEAR 2000 COMPARED WITH FULL YEAR 1999

Earnings for 2000 were $1.82 per share, an increase of $0.48 per share, or approximately 36 percent, versus earnings for 1999 of $1.34 per share. 2000 earnings from continuing telecommunications, utility, Continental Energy, and other operations were $0.65 per share, down $0.21 per share when compared with $0.86 per share for 1999. Earnings from discontinued coal and oil and natural gas operations, including the fourth quarter 2000 gain on the sale of our oil and natural gas operations, increased $0.69 per share, from $0.48 per share for 1999 to $1.17 per share for 2000.

The information in the "Discontinued Operations - Coal and Oil and Natural Gas/Exhibit 99c" subsection of the "Full Year 2000 Compared With Full Year 1999" section of our January 30, 2001 Form 8-K is revised as follows:

Discontinued Operations - Coal and Oil and Natural Gas/Exhibit 99c

Income from discontinued operations, net of income taxes, increased approximately $71,400,000 compared to 1999. Income from discontinued coal operations decreased principally for the reasons mentioned in the discussion of the fourth quarter. Income from discontinued oil and natural gas operations increased, despite only ten months of operation in 2000, primarily because of higher commodity prices. As mentioned in the discussion of the fourth quarter, we also recorded a gain of approximately $62,000,000, net of income taxes and a regulatory liability of approximately $32,500,000, relating to the sale of our oil and natural gas properties.

 

ADDITIONAL INFORMATION

This Form 8-K may contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Forward-looking statements should be read with the cautionary statements and important factors included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. See Part I, "Warnings About Forward-Looking Statements." Forward-looking statements are all statements other than statements of historical fact, including, without limitation, those that are identified by the use of the words "expects," "believes," "anticipates," and similar expressions.

On June 22, 1999, the Board of Directors approved, effective August 6, 1999, a two-for-one split of the Company's outstanding common stock to all shareholders of record on July 16, 1999. We have adjusted all 1999 earnings-per-share and share information for the split.

For comparative purposes, the following table shows the breakdown of consolidated basic net income per share, including the effects of the revised gain on sale of our discontinued oil and gas operations discussed in this Form 8-K:

 

Quarter Ended

Year Ended
 

December 31,

December 31,

20001

20001

1999

20001

20001

1999
 

As
Originally
Reported


As
Revised

  

As
Originally
Reported


As
Revised

  
             

Continuing Operations

$ 0.31

$ 0.31

$ 0.43

$ 0.65

$ 0.65

$ 0.86

Discontinued Operations

0.86

0.66

0.13

1.37

1.17

0.48
             

Consolidated

$ 1.17

$ 0.97

$ 0.56

$ 2.02

$ 1.82

$ 1.34

1 2000 "Discontinued Operations" figures include gain on sale of oil and natural gas operations.

ITEM 7.  Financial Statements and Exhibits.

Exhibit

 
   

99a

Preliminary Consolidated Statements of Income for the Quarters Ended December 31, 2000 and 1999 and Years Ended December 31, 2000 and 1999.

   

99b

Preliminary Continuing Operations Schedule of Revenues and Expenses for the Quarters Ended December 31, 2000 and 1999 and Years Ended December 31, 2000 and 1999.

   

99c

Preliminary Discontinued Operations Listing of Income for the Quarters Ended December 31, 2000 and 1999 and Years Ended December 31, 2000 and 1999.

 

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.

 
 

THE MONTANA POWER COMPANY
 

(Registrant)
   
   
 

By

/s/ J.P. Pederson
   

J.P. Pederson
   

Vice Chairman and Chief
   

Financial Officer

 

 

Dated: March 5, 2001

 

 

Exhibit Index

Exhibit

 

Page
     

99a

Preliminary Consolidated Statements of Income for the Quarters Ended December 31, 2000 and 1999 and Years Ended December 31, 2000 and 1999.



7
     

99b

Preliminary Continuing Operations Schedule of Revenues and Expenses for the Quarters Ended December 31, 2000 and 1999 and Years Ended December 31, 2000 and 1999.



8-9
     

99c

Preliminary Discontinued Operations Listing of Income for the Quarters Ended December 31, 2000 and 1999 and Years Ended December 31, 2000 and 1999.



10

 

Exhibit 99a

THE MONTANA POWER COMPANY AND SUBSIDIARIES

PRELIMINARY CONSOLIDATED STATEMENTS OF INCOME

 

Quarter Ended

Year Ended
 

December 31,

December 31,
 

2000

2000

1999

2000

2000

1999
 

As
Originally
Reported


As
Revised

  

As
Originally
Reported


As
Revised

  
 

(Thousands of Dollars)

(except per-share amounts)

REVENUES

$ 369,308

$ 369,308

$ 223,607

$ 999,708

$ 999,708

$ 777,172

EXPENSES:

            

Operations and maintenance

239,476

239,476

109,497

608,417

608,417

370,870

Selling, general, and
administrative


53,037


53,037


36,559


171,373


171,373


116,864

Taxes other than income taxes

14,656

14,656

19,382

60,991

60,991

71,933

Depreciation, depletion,
and amortization


22,656


22,656


19,722


77,026


77,026


79,576

Provision for future losses
relating to long-term
contracts



-



-



-



10,000



10,000



-

329,825

329,825

185,160

927,807

927,807

639,243

INCOME FROM CONTINUING
OPERATIONS


39,483


39,483


38,447


71,901


71,901


137,929

INTEREST EXPENSE AND OTHER:

            

Interest

7,744

7,744

3,707

34,408

34,408

41,593

Distributions on company
obligated mandatorily
redeemable preferred
securities of subsidiary
trust





1,373





1,373





1,373





5,492





5,492





5,492

Other income - net

(8,423)

(8,423)

(7,590)

(72,085)

(72,085)

(38,407)
 

694

694

(2,510)

(32,185)

(32,185)

8,678

INCOME TAXES

5,474

5,474

(6,523)

31,351

31,351

30,830

NET INCOME FROM CONTINUING
OPERATIONS


33,315


33,315


47,480


72,735


72,735


98,421

DISCONTINUED OPERATIONS:

            

Income from discontinued
coal operations, net of
income taxes



8,115



8,115



9,836



31,897



31,897



37,400

Income (loss) from
discontinued oil and
natural gas operations,
net of income taxes



(326)



(326)



4,745



29,395



29,395



14,525

Gain on sale of discontinued
oil and natural gas
operations, net of income
taxes




83,174




62,006




-




83,174




62,006




-

NET INCOME

124,278

103,110

62,061

217,201

196,033

150,346

DIVIDENDS ON PREFERRED STOCK

922

922

922

3,690

3,690

3,690

NET INCOME AVAILABLE FOR
COMMON STOCK


$ 123,356


$ 102,188


$ 61,139


$ 213,511


$ 192,343


$ 146,656

AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - BASIC (000)


105,027


105,027


108,647


105,451


105,451


109,795

BASIC EARNINGS PER SHARE OF
COMMON STOCK


$ 1.17


$ 0.97


$ 0.56


$ 2.02


$ 1.82


$ 1.34

AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - DILUTED (000)


105,245


105,245


109,343


106,353


106,353


110,553

DILUTED EARNINGS PER SHARE
OF COMMON STOCK


$ 1.17


$ 0.97


$ 0.56


$ 2.01


$ 1.81


$ 1.33

Exhibit 99b

PRELIMINARY CONTINUING OPERATIONS
 

Quarter Ended

Year Ended
 

December 31,

December 31,
 

2000

1999

2000

1999
 

(Thousands of Dollars)
         

TELECOMMUNICATIONS:

        
         

REVENUES:

        

Revenues

$ 146,512

$ 24,607

$ 322,952

$ 84,903

Intersegment revenues

-

373

334

1,012
 

146,512

24,980

323,286

85,915

EXPENSES:

        

Operations and maintenance

96,632

8,982

179,648

34,824

Selling, general, and
administrative


26,558


3,593


66,203


12,480

Taxes other than income
taxes


1,014


1,430


5,342


3,762

Depreciation and amortization

9,719

2,232

22,423

9,048
 

133,923

16,237

273,616

60,114
         

INCOME FROM TELECOMMUNICATIONS
OPERATIONS


12,589


8,743


49,670


25,801
         

ELECTRIC UTILITY:

        

REVENUES:

        

Revenues

$ 171,527

$ 150,845

$ 535,390

$ 531,883

Intersegment revenues

195

2,562

1,036

14,221

171,722

153,407

536,426

546,104

EXPENSES:

        

Power supply

113,626

56,689

337,803

203,790

Transmission and distribution

11,481

14,936

37,494

49,355

Selling, general, and
administrative


11,506


23,792


52,025


70,242

Taxes other than income
taxes


9,181


13,498


39,727


52,695

Depreciation and
amortization


9,025


13,521


39,559


56,282

Provision for future losses
relating to long-term
contracts



-



-



10,000



-
 

154,819

122,436

516,608

432,364
         

INCOME FROM ELECTRIC
OPERATIONS


16,903


30,971


19,818


113,740
         

NATURAL GAS UTILITY:

        
         

REVENUES:

        

Revenues (other than gas
supply cost revenues)

$ 33,678


$ 26,662


$ 91,457


$ 78,657

Gas supply cost revenues

13,292

8,839

37,916

32,759

Intersegment revenues

84

(117)

269

331
 

47,054

35,384

129,642

111,747

EXPENSES:

        

Gas supply costs

13,292

8,839

37,916

32,759

Operations and maintenance

4,008

4,814

17,021

16,973

Selling, general, and
administrative


9,680


6,323


30,891


21,944

Taxes other than income taxes

3,835

3,833

14,227

14,333

Depreciation, depletion,
and amortization


1,962

2,319


8,830


9,279
 

32,777

26,128

108,885

95,288
         

INCOME FROM NATURAL GAS
OPERATIONS


14,277


9,256


20,757


16,459

Exhibit 99b

PRELIMINARY CONTINUING OPERATIONS (continued)
 

Quarter Ended

Year Ended
 

December 31,

December 31,
 

2000

1999

2000

1999
 

(Thousands of Dollars)
         

CONTINENTAL ENERGY SERVICES:

        
         

REVENUES:

        

Revenues

$ 250

$ 559

$ 1,000

$ 1,310
         

EXPENSES:

        

Operations and maintenance

(42)

237

10

258

Selling, general, and
administrative


107


280


2,361


1,310

Taxes other than income taxes

31

-

1

2

Depreciation and amortization

102

103

480

414
 

198

620

2,852

1,984
         

INCOME (LOSS) FROM CONTINENTAL
ENERGY OPERATIONS


52


(61)


(1,852)


(674)
         

OTHER OPERATIONS:

        
         

REVENUES:

        

Revenues

$ 4,049

$ 12,095

$ 10,993

$ 47,660

Intersegment revenues

384

212

1,536

1,665
 

4,433

12,307

12,529

49,325

EXPENSES:

        

Operations and maintenance

1,142

18,030

1,700

50,140

Selling, general, and
administrative


5,186


2,571


19,893


10,888

Taxes other than income taxes

595

621

1,694

1,141

Depreciation and amortization

1,848

1,547

5,734

4,553
 

8,771

22,769

29,021

66,722
         

LOSS FROM OTHER OPERATIONS

(4,338)

(10,462)

(16,492)

(17,397)
         

INTEREST EXPENSE AND OTHER INCOME:

        

Interest

7,744

3,707

34,408

41,593

Distributions on company
obligated mandatorily
redeemable preferred
securities of subsidiary
trust





1,373





1,373





5,492





5,492

Other income - net

(8,423)

(7,590)

(72,085)

(38,407)
 

694

(2,510)

(32,185)

8,678
         

INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES


38,789


40,957


104,086


129,251
         

INCOME TAXES

5,474

(6,523)

31,351

30,830
         

DIVIDENDS ON PREFERRED STOCK

922

922

3,690

3,690
         

NET INCOME FROM CONTINUING
OPERATIONS AVAILABLE FOR
COMMON STOCK



$ 32,393



$ 46,558



$ 69,045



$ 94,731

Exhibit 99c

PRELIMINARY DISCONTINUED OPERATIONS

 

Quarter Ended

Year Ended
 

December 31,

December 31,
 

2000

2000

1999

2000

2000

1999
 

As
Originally
Reported


As
Revised

  

As
Originally
Reported


As
Revised

  
 

(Thousands of Dollars)
             

DISCONTINUED OPERATIONS:

            

Income from discontinued
coal operations, net of
income taxes



$ 8,115



$ 8,115



$ 9,836



$ 31,897



$ 31,897



$ 37,400

Income (loss) from
discontinued oil and
natural gas operations,
net of income taxes taxes




(326)



(326)




4,745




29,395




29,395




14,525

Gain on sale of discontinued
oil and natural gas
operations, net of income
taxes




$ 83,174




$ 62,006




$ -




$ 83,174




$ 62,006




$ -
             

NET INCOME FROM DISCONTINUED
OPERATIONS AVAILABLE
FOR COMMON STOCK



$ 90,963



$ 69,795



$ 14,581



$ 144,466



$ 123,298



$ 51,925