-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H/kdsNLLiRRPo5lPcLD4qr8BslOO3/Bp7/H7oDkacB8m+TsKuRzK/VU3hE7SU6Xr JIQgtG0lZedAnedqreKLCw== 0000075129-96-000011.txt : 19960514 0000075129-96-000011.hdr.sgml : 19960514 ACCESSION NUMBER: 0000075129-96-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960513 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: OTTER TAIL POWER CO CENTRAL INDEX KEY: 0000075129 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [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: 96561880 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 MARCH 1996 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, 1996 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, 1996 - 11,180,136 Common Shares ($5 par value) OTTER TAIL POWER COMPANY INDEX Part I. Financial Information Page No. Item 1. Financial Statements Consolidated Balance Sheets - March 31, 1996 (Unaudited) and December 31, 1995 2 & 3 Consolidated Statements of Income - Three Months Ended March 31, 1996 and 1995 (Unaudited) 4 Consolidated Statements of Cash Flows - Three Months Ended March 31,1996 and 1995 (Unaudited) 5 Notes to Consolidated Financial Statements (Unaudited) 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7, 8 & 9 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K 9 Signatures 9
Part I. Financial Information Item 1. Financial Statements Otter Tail Power Company Consolidated Balance Sheets -Assets- March 31, December 31, 1996 1995 (Unaudited) (Thousands of dollars) Plant: Electric plant in service $716,908 $715,305 Subsidiary companies 56,967 54,266 ________ ________ Total 773,875 769,571 Less accumulated depreciation and amortization 315,014 308,174 ________ ________ 458,861 461,397 Construction work in progress 20,345 16,285 ________ ________ Net plant 479,206 477,682 ________ ________ Investments 16,250 12,716 ________ ________ Intangibles -- net 18,570 18,902 ________ ________ Other assets 7,647 7,732 ________ ________ Current assets: Cash and cash equivalents 4,769 1,867 Temporary cash investments 1,106 2,208 Accounts receivable: Trade - net 34,706 31,184 Other 5,453 8,276 Materials and supplies: Fuel 3,232 3,322 Inventory, materials and operating supplies 19,024 19,408 Deferred income taxes 3,913 3,754 Accrued utility revenues 4,167 4,328 Other 7,332 4,427 ________ ________ Total current assets 83,702 78,774 ________ ________ Deferred debits: Unamortized debt expense and reacquisition premiums 4,562 4,687 Regulatory assets 5,655 5,727 Other 1,852 2,976 ________ ________ Total deferred debits 12,069 13,390 ________ ________ Total $617,444 $609,196 ======== ======== See accompanying notes to consolidated financial statements
Otter Tail Power Company Consolidated Balance Sheets -Liabilities- March 31, December 31, 1996 1995 (Unaudited) (Thousands of dollars) Capitalization Common shares, par value $5 per share - authorized 25,000,000 shares; outstanding 1996 and 1995, 11,180,136 shares $55,901 $55,901 Premium on common shares 30,335 30,335 Retained earnings 102,418 98,006 ________ ________ Total 188,654 184,242 Cumulative preferred shares - authorized 1,500,000 shares without par value; outstanding 1996 and 1995, 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 170,428 168,261 ________ ________ Total capitalization 397,913 391,334 ________ ________ Current liabilities Short-term debt -- -- Sinking fund requirements and current maturities 19,643 13,733 Accounts payable 20,128 27,828 Accrued salaries and wages 2,689 3,703 Federal and state income taxes accrued 6,430 393 Other taxes accrued 12,030 11,356 Interest accrued 1,861 3,509 Other 6,699 6,752 ________ ________ Total current liabilities 69,480 67,274 ________ ________ Noncurrent liabilities 13,912 13,498 ________ ________ Deferred credits Accumulated deferred income taxes 99,088 99,398 Accumulated deferred investment tax credit 20,700 20,994 Regulatory liabilities 14,309 14,500 Other 2,042 2,198 ________ ________ Total deferred credits 136,139 137,090 ________ ________ Total $617,444 $609,196 ======== ======== See accompanying notes to consolidated financial statements
Otter Tail Power Company Consolidated Statements of Income (Unaudited) Three months ended March 31 1996 1995 (Thousands of dollars) Operating revenues Electric $57,031 $55,726 Health services 10,015 15,108 Manufacturing 14,350 7,810 Other business operations 6,994 5,319 ________ ________ Total operating revenues 88,390 83,963 Operating expenses Production fuel 8,592 9,212 Purchased power 7,107 7,780 Electric operation expenses 13,306 12,307 Electric maintenance 3,295 2,954 Cost of goods sold 21,662 17,560 Other nonelectric expenses 7,097 7,451 Depreciation and amortization 5,561 5,421 Property taxes 2,938 3,056 Income taxes 5,853 5,624 ________ ________ Total operating expenses 75,411 71,365 ________ ________ Operating income 12,979 12,598 Allowance for equity (other) funds used during construction 62 2 Other income and deductions and applicable taxes 682 (201) ________ ________ Income before interest charges 13,723 12,399 Interest charges 3,764 3,734 Allowance for borrowed funds used during construction - credit (73) (42) ________ ________ Net income 10,032 8,707 Preferred dividend requirements 590 589 ________ ________ Earnings available for common shares $9,442 $8,118 ======== ======== Earnings per average common share $0.84 $0.73 ======== ======== Average number of common shares outstanding 11,180,136 11,180,136 Dividends per common share $0.45 $0.44 See accompanying notes to consolidated financial statements
Otter Tail Power Company Consolidated Statements of Cash Flows (Unaudited) Three months ended March 31, 1996 1995 (Thousands of dollars) Cash flows from operating activities: Net income $10,032 $8,707 Adjustments to reconcile net income to net cash Provided by operating activities: Depreciation and amortization 7,583 7,020 Deferred investment tax credit - net (294) (294) Deferred income taxes (898) 232 Change in deferred debits and other assets 1,662 1,850 Change in noncurrent liabilities and deferred credits 248 1,966 Allowance for equity (other) funds used during construction (62) (2) Loss on disposal of noncurrent assets 11 713 Cash provided by (used for) current assets & current liabilities: Change in receivables, materials and supplies 420 (1,605) Change in other current assets (2,288) 57 Change in payables and other current liabilities (6,283) (2,835) Change in interest and income taxes payable 4,389 1,988 ________ ________ Net cash provided by operating activities 14,520 17,797 Cash flows from investing activities: Gross capital expenditures (11,812) (8,058) Proceeds from disposal of noncurrent assets 1,229 1,560 Purchase of businesses, net of cash acquired (221) (1,634) Change in temporary cash investments 1,102 35 Change in marketable securities and other investments (4,070) (2,401) ________ ________ Net cash used in investing activities (13,772) (10,498) Cash flows from financing activities: Change in short-term debt - net -- (1,950) Proceeds from issuance of long-term debt 24,572 4,570 Payments for retirement of long-term debt (16,797) (3,895) Dividends paid (5,621) (5,509) ________ ________ Net cash provided by (used in) financing activities 2,154 (6,784) Net change in cash and cash equivalents 2,902 515 Cash and cash equivalents at beginning of year 1,867 1,852 ________ ________ Cash and cash equivalents at March 31 $4,769 $2,367 ======== ======== Supplemental cash flow information Cash paid for interest and income taxes: Interest $5,217 $5,169 Income taxes $749 $1,182 See accompanying notes to consolidated financial statements
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 1996 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, 1995, 1994, and 1993 included in the Company's 1995 Annual Report to the Securities and Exchange Commission on Form 10-K. Because of seasonal and other factors, the earnings for the three-month period ended March 31, 1996, should not be taken as an indication of earnings for all or any part of the balance of the year. On February 1, 1996 a subsidiary of the Company acquired a Montana-based supplier of X-ray supplies and accessories. On April 1, 1996 a Company subsidiary closed on the purchase of a mobile medical diagnostic services company located in Bemidji, Minnesota. As of May 1, 1996 FCC approval of the acquisition of three radio stations in the Fargo, ND--Moorhead, MN market by a Company subsidiary was still pending. The completed and pending acquisitions will be accounted for under the purchase method of accounting. Quadrant Co. continues to serve its two industrial steam customers under agreements which can be terminated by either party to each agreement upon one year's prior written notice and thirty days notice, respectively. Quadrant also continues to burn municipal solid waste for five Minnesota counties under contracts which expire in September of 1996. Quadrant is in the process of negotiating new steam service and waste incineration contracts with these customers. As of May 1, 1996 new pollution rules for Minnesota municipal waste incinerators had not been published. Forward Looking Information - Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 In connection with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 (the "Act"), the Company has filed cautionary statements identifying important factors that could cause the Company's actual results to differ materially from those discussed in forward-looking statements made by or on behalf of the Company. When used in this Form 10-Q and in future filings by the Company with the Securities and Exchange Commission, in the Company's press releases and in oral statements, words such as "may", "will", "expect", "anticipate", "continue", "estimate", "project", "believes" or similar expressions are intended to identify forward-looking statements within the meaning of the Act. Factors that might cause such differences include, but are not limited to, the factors discussed under "Factors affecting future earnings" on pages 29-31 of the Company's 1995 Annual Report to Shareholders, which is incorporated by reference in the Company's Form 10-K for the fiscal year ended December 31, 1995. These factors are in addition to any other cautionary statements, written or oral, which may be made or referred to in connection with any such forward-looking statement or contained in any subsequent filings by the Company with the Securities and Exchange Commission. 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 $14,520,000 as shown on the Consolidated Statement of Cash Flows for the three months ended March 31, 1996, combined with funds on hand of $4,075,000 at December 31, 1995, allowed the Company to finance its construction program, pay dividends, and invest in an additional nonutility business. At March 31, 1996, the Company had $38,339,000 available in unused lines of credit which could be used to supplement cash needs. The Company estimates that funds internally generated, combined with funds on hand, will be sufficient to meet all sinking fund payments for First Mortgage Bonds in the next five years and to provide for the majority of its 1996-2000 construction program expenditures. Additional short-term or long-term financing will be required in the period 1996-2000 in connection with a portion of the Company's construction program, 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, or for other corporate purposes. Proceeds from the issuance of long-term debt net of payments for the retirement of long-term debt of $7,775,000, for the three months ended March 31, 1996, were used to finance equipment purchases at the Company's medical and manufacturing subsidiaries and also reflect increases in subsidiary credit line balances required to meet first quarter operating needs due to seasonal fluctuations in cash flows. The increase in construction work in progress is due to new construction and capital expenditures in all electric utility plant areas: production, transmission, distribution, and general. The net increase in cash, cash equivalents and temporary cash investments along with the increase in investments reflects the accumulation of funds and securities to be used in acquisitions pending on March 31, 1996. The increase in trade receivables is the result of increased electric sales by the utility due to colder than normal weather in March of 1996 as compared to December of 1995, and increased sales at the company's manufacturing subsidiaries. The decrease in other receivables is due to the timing of payments received from the Company's Big Stone Plant partners. The increase in other current assets reflects production and material costs incurred on construction and manufacturing jobs ahead of allowable billing schedules. The decrease in other deferred debits reflects increased allocation of deferred overhead costs to electric construction activity in the first quarter of 1996. The increase in sinking fund requirements and current maturities reflects financing of equipment purchases at the Company's medical and manufacturing subsidiaries along with increases in subsidiary credit line balances to meet first quarter operating needs. Accounts payable decreased due to a normal seasonal decline at the electric utility and payment for the medical equipment delivered in December 1995. Accrued salaries and wages decreased as a result of payment of 1995 accrued employee incentives. The increase in federal and state income taxes accrued resulted from the timing of first quarter estimated tax payments which are not due until April. The reduction in interest accrued was caused by the timing of bond interest payments, the majority of which are due in the first and third quarters. Material Changes in Results of Operations The 2.3% increase in electric operating revenues for the quarter ended March 31, 1996, as compared to the quarter ended March 31, 1995, was due to a 5.7% increase in retail sales offset by a 29% decrease in noncontractual power pool sales. Retail sales increased because of colder weather in 1996. Noncontractual power pool sales decreased because the Company had less energy to market due to the colder weather and its obligation to meet the needs of its retail customers. Lower plant availability in 1996 related to a scheduled outage for repairs at Hoot Lake Unit 3 in February and March also contributed to the decrease. Production fuel expense decreased 6.7%, while generation at the Company's plants increased by 2.7%, for the three months ended March 31, 1996, as compared to the same period a year ago, mainly as a result of Big Stone Plant switching from lignite to subbituminous coal in August of 1995. The decrease in purchased power for the quarter ended March 31, 1996, as compared to the same period in 1995, was due to a 32% decrease in kwh purchased for resale, offset by a 20% increase in kwh purchased for retail sales. The decrease in purchases for resale correlates to the decrease in noncontractual power pool sales. The increase in electric operation expenses for the three months ended March 31, 1996, as compared to the three months ended March 31, 1995, was due to expenses related to coal contract and freight negotiations and increased labor costs related to wage and compensation increases. The increase in electric maintenance expenses for the quarter ended March 31, 1996, as compared to the same period a year ago, was due to increased production plant maintenance expenses. Production plant maintenance expenses decreased significantly in fiscal 1995 from fiscal 1994 levels due to the timing of major overhauls and repairs. The breakdown of cost of goods sold and other nonelectric expenses by business segments other than electric are as follows: 3 months ended Cost of goods sold Other nonelectric expenses 1996 1995 1996 1995 (in thousands) Health services $6,038 $9,279 $3,288 $4,287 Manufacturing $10,967 $6,139 $1,553 $1,010 Other business operations $4,657 $2,142 $2,256 $2,154 ------- ------- ------ ------ Total $21,662 $17,560 $7,097 $7,451 The decrease in health services operating revenue for the quarter ended March 31, 1996, as compared to the same period a year ago, reflects the sale of three scanners in the first quarter of 1995 and increased deliveries of medical equipment in December of 1995 which resulted in reduced sales in the first quarter of 1996. The decrease in health services cost of goods sold and other nonelectric expenses was commensurate with the decrease in revenue. The increase in manufacturing operating revenue for the three months ended March 31, 1996, as compared to the three months ended March 31, 1995, was mainly due to the acquisition of Northern Pipe Products in October of 1995, supplemented by increased sales at another manufacturing subsidiary. The increases in manufacturing cost of goods sold and other nonelectric expenses were directly related to the increase in revenue. The increase in other business operations revenue for the quarter ended March 31, 1996, as compared to the quarter ended March 31, 1995, was mainly the result of material cost pass through billings by the Company's construction subsidiaries on material intensive jobs, offset by minor decreases in revenues from other businesses. The increased material costs billed are also reflected in increased cost of goods sold from other business operations for the comparable period. The increase in other income and deductions and applicable taxes for the quarter ended March 31, 1996, as compared to the quarter ended March 31, 1995, reflects increases in miscellaneous revenue from subsidiaries in 1996, and losses on marketable securities in 1995 related to the Company's preferred stock investment program which ended in October of 1995. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. a) Exhibits: 27 Financial Data Schedule b) Report on Form 8-K. No reports on Form 8-K were filed during the fiscal quarter ended March 31, 1996. 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: Jeff Legge Jeff Legge Controller (Chief Accounting Officer/Authorized Officer) Dated: May 13, 1996 EX-27 2
UT This schedule contains summary financial information extracted from the Consolidated Balance Sheet as of March 31, 1996, and the Consolidated Statement of Income for the three months ended March 31, 1996, and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS DEC-31-1996 MAR-31-1996 PER-BOOK 440,439 81,234 83,702 12,069 0 617,444 55,901 30,335 102,418 188,654 18,000 20,831 170,428 0 0 0 19,643 0 0 0 199,888 617,444 88,390 5,853 69,558 75,411 12,979 744 13,723 3,691 10,032 590 9,442 5,031 3,668 14,520 0.84 0.84
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