-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, JTGPg2oUKGRwREd00MAuf13VSF0MYxgaTVLDyUCQA4IADIekt656KtmoYR9hxlbU xrZRyeF/Mux/9bihY7A7eg== 0000075129-94-000016.txt : 19940516 0000075129-94-000016.hdr.sgml : 19940516 ACCESSION NUMBER: 0000075129-94-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OTTER TAIL POWER CO CENTRAL INDEX KEY: 0000075129 STANDARD INDUSTRIAL CLASSIFICATION: 4911 IRS NUMBER: 410462685 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-00368 FILM NUMBER: 94527722 BUSINESS ADDRESS: STREET 1: 215 S CASCADE ST STREET 2: PO BOX 496 CITY: FERGUS FALLS STATE: MN ZIP: 56538-0496 BUSINESS PHONE: 2187398200 10-Q 1 10-Q 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, 1994 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 number 0-368 OTTER TAIL POWER COMPANY (Exact name of registrant as specified in its charter) Minnesota 41-0462685 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 215 South Cascade Street, Box 496, Fergus Falls, Minnesota 56538-0496 (Address of principal executive offices) (Zip Code) 218-739-8200 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report.) 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. YES X NO Indicate the number of shares outstanding of each of the issuer's classes of Common Stock, as of the latest practicable date: May 1, 1994 - 11,180,136 Common Shares ($5 par value) OTTER TAIL POWER COMPANY INDEX Page No. Part I. Financial Information Item 1. Financial Statements Consolidated Balance Sheets - March 31, 1994 and December 31, 1993 (Unaudited) 2 & 3 Consolidated Statements of Income - Three Months Ended March 31, 1994 and 1993 (Unaudited) 4 Consolidated Statements of Cash Flows - Three Months Ended March 31, 1994 and 1993 (Unaudited) 5 Notes to Consolidated Financial Statements (Unaudited) 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6, 7 & 8 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K 8 Signatures 8
PART I. FINANCIAL INFORMATION Item 1. Financial Statements OTTER TAIL POWER COMPANY CONSOLIDATED BALANCE SHEETS (Unaudited) - ASSETS - March 31, December 31, 1994 1993 ------------ ------------ (Thousands of Dollars) Plant Electric Plant in Service $681,667 $679,282 Other 35,022 34,626 --------- --------- Total 716,689 713,908 Less Accumulated Depreciation and Amortization 275,762 270,385 --------- --------- 440,927 443,523 Construction Work in Progress 10,423 8,341 --------- --------- Net Plant 451,350 451,864 --------- --------- Investments and Other Assets: 43,822 43,853 --------- --------- Current Assets: Cash and Cash Equivalents 7,762 3,808 Temporary Cash Investments 433 451 Accounts Receivable: Trade - Net 22,456 19,531 Other 2,772 3,361 Materials and Supplies Fuel 3,838 3,667 Inventory, Materials and Operating Supplies 15,889 14,552 Deferred Income Taxes 4,565 4,482 Accrued Utility Revenues 3,836 4,368 Other 2,542 2,477 --------- --------- Total Current Assets 64,093 56,697 --------- --------- Deferred Debits: Unamortized Debt Expense and Reacquisition Premiums 5,528 5,611 Other 6,040 5,880 --------- --------- Total Deferred Debits 11,568 11,491 --------- --------- TOTAL $570,833 $563,905 ========= ========= See Accompanying Notes to Consolidated Financial Statements - 2 -
OTTER TAIL POWER COMPANY CONSOLIDATED BALANCE SHEETS (Unaudited) -LIABILITIES- March 31, December 31, 1994 1993 ------------ ------------ (Thousands of Dollars) Capitalization: Common Shares, Par Value $5 Per Share - Authorized 15,000,000 Shares; Outstanding 1994 and 1993, 11,180,136 Shares $55,901 $55,901 Premium on Common Shares 30,335 30,336 Retained Earnings 88,168 84,209 --------- --------- Total 174,404 170,446 Cumulative Preferred Shares - Authorized 1,500,000 Shares Without Par Value; Outstanding 1994 and 1993, 388,311 Shares: Subject to Mandatory Redemption 18,000 18,000 Other 20,831 20,831 Cumulative Preference Shares - Authorized 1,000,000 Shares Without Par Value; Outstanding - None -- -- Long-Term Debt 165,816 166,563 --------- --------- Total Capitalization 379,051 375,840 --------- --------- Current Liabilities: Sinking Fund Requirements and Current Maturities 7,749 9,356 Accounts Payable 17,159 15,987 Federal and State Income Taxes Accrued 5,138 -- Other Taxes Accrued 11,876 11,187 Interest Accrued 1,828 3,522 Other 4,508 5,687 --------- --------- Total Current Liabilities 48,258 45,739 --------- --------- Noncurrent Liabilities: 6,932 5,690 --------- --------- Deferred Credits: Accumulated Deferred Income Taxes 93,511 92,940 Accumulated Deferred Investment Tax Credit 23,210 23,518 Regulatory Liability 16,305 16,046 Other 3,566 4,132 --------- --------- Total Deferred Credits 136,592 136,636 --------- --------- TOTAL $570,833 $563,905 ========= ========= See Accompanying Notes to Consolidated Financial Statements - 3 -
OTTER TAIL POWER COMPANY CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended March 31, 1994 1993 Restated -------- -------- (Thousands of Dollars) Operating Revenues Electric $54,889 $53,817 Health Services 10,920 1,053 Diversified Operations 7,627 3,844 -------- -------- Total Operating Revenues 73,436 58,714 Operating Expenses Production Fuel 8,658 7,870 Purchased Power 6,713 7,728 Electric Operation Expenses 11,703 11,190 Electric Maintenance 3,037 2,760 Cost of Health Services Sold 7,423 -- Other Health Services Expenses 2,784 980 Diversified Cost of Goods Sold 4,803 1,968 Other Diversified Expenses 1,999 1,316 Depreciation and Amortization 5,233 4,778 Property Taxes 2,982 2,869 Income Taxes 5,754 4,998 -------- -------- Total Operating Expenses 61,089 46,457 -------- -------- Operating Income 12,347 12,257 Allowance For Equity (Other) Funds Used During Construction 31 13 Other Income and Deductions and Applicable Taxes 312 (41) -------- -------- Income Before Interest Charges 12,690 12,229 Interest Charges 3,348 3,246 Allowance For Borrowed Funds Used During Construction - Credit (14) (7) -------- -------- Net Income 9,356 8,990 Preferred Dividend Requirements 590 617 -------- -------- Earnings Available for Common Shares $8,766 $8,373 ======== ======== Earnings Per Average Common Share $0.78 $0.75 ======== ======== Average Number of Common Shares Outstanding 11,180,136 11,180,136 Dividends Per Common Share $0.43 $0.42 See Accompanying Notes to Consolidated Financial Statements - 4 -
OTTER TAIL POWER COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31, 1994 1993 Restated -------- -------- (Thousands of Dollars) Cash Flows From Operating Activities: Net Income $9,356 $8,990 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and Amortization 6,427 5,538 Deferred Investment Tax Credit - Net (308) (306) Deferred Income Taxes 928 892 Change in Deferred Debits and Other Assets 395 (24) Change in Noncurrent Liabilities and Deferred Credits 376 5,001 Allowance for Equity (Other) Funds Used During Construction (31) (14) Loss on Disposal of Noncurrent Assets 20 260 Cash Provided by (Used for) Current Assets and Current Liabilities: Change in Receivables, Materials and Supplies (3,360) 1,658 Change in Other Current Assets 496 (4,129) Change in Payables and Other Current Liabilities 1,086 (2,225) Change in Interest and Income Taxes Payable 3,442 2,168 --------- --------- Net Cash Provided by Operating Activities 18,827 17,809 Cash Flows From Investing Activities: Gross Capital Expenditures (6,573) (5,495) Proceeds from Disposal of Noncurrent Assets 494 69 Purchase of Subsidiaries, Net of Cash Acquired (574) (3,964) Change in Temporary Cash Investments 18 (4,976) Change in Marketable Securities (381) (1,792) --------- --------- Net Cash Used in Investing Activities (7,016) (16,158) Cash Flows From Financing Activities: Proceeds from Issuance of Long-Term Debt 678 1,898 Payments for Retirement of Long-Term Debt (3,082) (763) Payments for Debt Issuance Expenses (56) -- Dividends Paid (5,397) (5,313) --------- --------- Net Cash Used in Financing Activities (7,857) (4,178) Net Change in Cash and Cash Equivalents 3,954 (2,527) Cash and Cash Equivalents at Beginning of Year 3,808 8,369 --------- --------- Cash and Cash Equivalents at March 31 $7,762 $5,842 ========= ========= Supplemental Cash Flow Information Cash Paid for Interest and Income Taxes: Interest $4,816 $5,062 Income Taxes $552 $420 See Accompanying Notes to Consolidated Financial Statements - 5 -
OTTER TAIL POWER COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) The Company, in its opinion, has included all adjustments (including normal recurring accruals) necessary for a fair presentation of the results of operations for the periods. The financial statements for 1994 are subject to adjustment at the end of the year when they will be audited by independent accountants. The financial statements and notes thereto should be read in conjunction with the financial statements and notes for the years ended December 31, 1993, 1992 and 1991 included in the Company's 1993 Annual Report to the Securities and Exchange Commission on Form 10-K. Effective January 1, 1994, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 112 - Employers' Accounting for Postemployment Benefits and SFAS No. 115 - Accounting for Certain Investments in Debt and Equity Securities. SFAS No. 112 establishes standards of financial accounting and reporting for the estimated cost of benefits provided by an employer to former or inactive employees after employment but before retirement. SFAS No. 115 establishes standards of financial accounting and reporting for investments in equity securities that have readily determinable fair values and for all investments in debt securities. The adoption of SFAS No. 112 and SFAS No. 115 did not have a material impact on the Company's financial statements. On September 22, 1993, the North Dakota Public Service Commission entered an Order approving an Agreement for Incentive Regulation for 1993. As part of the Order, the Company is required to accrue the North Dakota portion of unbilled revenue as of January 1, 1993, ($4.4 million) and to amortize it over a 36-month period beginning in January 1993. The Company's financial statements for the three months ended March 31, 1993, have been restated to reflect this change. The effects of the restatement are considered immaterial. Because of seasonal and other factors, the earnings for the three-month period ended March 31, 1994, should not be taken as an indication of earnings for all or any part of the balance of the year. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Material Changes in Financial Position Cash provided by operating activities of $18,827,000 as shown on the Consolidated Statement of Cash Flows for the three months ended March 31, 1994, allowed the Company to finance its construction program, pay dividends, retire long-term debt, and invest in an additional nonutility business. At March 31, 1994, the Company had $8,195,000 in Cash, Cash Equivalents and Temporary Cash Investments. In addition, the Company had $17,145,000 in marketable securities included in Investments and Other Assets which could be used to supplement cash needs. The Company estimates that funds internally generated, combined with funds on hand, will be sufficient to provide for all of its 1994-1998 electric construction program expenditures (including allowance for funds used during construction) and to meet all sinking fund payments for First Mortgage Bonds in the next five years. Additional short or long-term financing will be required in the period 1994-1998 in connection with the maturity of First Mortgage Bonds and a Long-Term Lease Obligation ($21,000,000), in the event the Company decides to refund or retire early any of its presently outstanding debt or cumulative preferred shares, to complete its common stock repurchase program or for other corporate purposes. The increases in Construction Work in Progress reflects new construction related to electric utility operations, principally in production, transmission, and distribution plant. The increase in Cash and Cash Equivalents is because the cash provided from operating activities exceeded what was used in investing and financing activities. Normal changes in seasonal demand for electricity and increased activity at one of the Company's Health Services subsidiaries caused the increase in Trade Accounts Receivable. The increases in the current liability for Federal and State Income Taxes Accrued and Other Taxes Accrued were caused by the timing of tax payments. The reduction in Interest Accrued reflects the fact that interest payments for the majority of the Company's bonds were made in February. Payment of an employee incentive plan liability accrued at December 31, 1993, caused the balance in Other Current Liabilities to decrease. Noncurrent Liabilities increased due primarily to the accrual of postretirement benefits other than pensions costs. The increase in Inventory, Materials and Operating Supplies, and Accounts Payable, and the decrease in Sinking Fund Requirements and Current Maturities are due to increased activity at one of the Company's Health Services subsidiaries. The increase in Accounts Payable was offset, to a smaller extent, by a seasonal decline in the Accounts Payable of the electric utility. Material Changes in Results of Operations The 2% increase in Electric Operating Revenues for the quarter ended March 31, 1994, as compared to the quarter ended March 31, 1993, is due primarily to a 4.6% increase in retail revenue offset by a 27% decrease in power pool sales. Retail revenue increased because of a 5.9% increase in kwh sales. The colder weather experienced in the first quarter of 1994 (average system heating degree days increased by 5.3% over 1993) contributed to the increase in kwh sales. Power pool sales decreased for the quarter due to a 32.6% decrease in kwh sales, as the Company utilized generation to serve its own retail customers. The increase in Production Fuel for the quarter ended March 31, 1994, as compared to the quarter ended March 31, 1993, is due primarily to a 9.3% increase in generation, which relates to the increase in retail kwh sold. The decrease in Purchased Power for the three months ended March 31, 1994, as compared to the same period in 1993, is due to a 38.6% decrease in kwh purchases for resale, which corresponds to the decrease in power pool sales. The increase in Health Services Operating Revenues, Cost of Health Services Sold, and Other Health Services Expenses for the quarter ended March 31, 1994, as compared to the same period in 1993, is principally due to including the results of a new Health Services subsidiary acquired by the Company toward the end of the first quarter of 1993. The increase in Diversified Operations Operating Revenues, Diversified Cost of Goods Sold, and Other Diversified Expenses in the first quarter of 1994, as compared to the same period in 1993, was primarily caused by including three months of subsidiary operations in the first quarter of 1994, as compared to only two months in 1993. The increase in Income Taxes for the three months ended March 31, 1994, as compared to the same period in 1993, is primarily due to higher taxable income, the Federal tax rate change, and a SFAS 109 adjustment made in 1993. The increase in Other Income and Deductions and Applicable Taxes in the quarter ended March 31, 1994, as compared to the same period in 1993, is due to higher investment income. Item 6. Exhibits and Reports on Form 8-K. a) Exhibits: None b) Report on Form 8-K. No reports on Form 8-K were filed during the fiscal quarter ended March 31, 1994. 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. OTTER TAIL POWER COMPANY By: Andrew E. Anderson Andrew E. Anderson Controller/Chief Accounting Officer Authorized Officer Dated: May 11, 1994 -----END PRIVACY-ENHANCED MESSAGE-----