Note 1 -
Basis of presentation
The accompanying consolidated interim financial statements were prepared in conformity with the basis of presentation reflected in the consolidated financial statements included in the Company's
2016
Annual Report, and the standards of accounting measurement set forth in the interim reporting guidance in the ASC and any amendments thereto adopted by the FASB. Interim financial statements do not include all disclosures provided in annual financial statements and, accordingly, these financial statements should be read in conjunction with those appearing in the
2016
Annual Report. The information is unaudited but includes all adjustments that are, in the opinion of management, necessary for a fair presentation of the accompanying consolidated interim financial statements and are of a normal recurring nature. Depreciation, depletion and amortization expense is reported separately on the Consolidated Statements of Income and therefore is excluded from the other line items within operating expenses. Management has also evaluated the impact of events occurring after
March 31, 2017
, up to the date of issuance of these consolidated interim financial statements.
The assets and liabilities for the Company's discontinued operations have been classified as held for sale and the results of operations are shown in income (loss) from discontinued operations, other than certain general and administrative costs and interest expense which do not meet the criteria for income (loss) from discontinued operations. The Company's consolidated financial statements and accompanying notes for current and prior periods have been restated. At the time the assets were classified as held for sale, depreciation, depletion and amortization expense was no longer recorded. Unless otherwise indicated, the amounts presented in the accompanying notes to the consolidated financial statements relate to the Company's continuing operations. For more information on the Company's discontinued operations, see Note
8
.
Note
2
- Seasonality of operations
Some of the Company's operations are highly seasonal and revenues from, and certain expenses for, such operations may fluctuate significantly among quarterly periods. Accordingly, the interim results for particular businesses, and for the Company as a whole, may not be indicative of results for the full fiscal year.
Note
3
- Accounts receivable and allowance for doubtful accounts
Accounts receivable consist primarily of trade receivables from the sale of goods and services which are recorded at the invoiced amount net of allowance for doubtful accounts, and costs and estimated earnings in excess of billings on uncompleted contracts. The total balance of receivables past due 90 days or more was
$26.3 million
,
$30.5 million
and
$29.2 million
at
March 31, 2017
and
2016
, and
December 31, 2016
, respectively.
The allowance for doubtful accounts is determined through a review of past due balances and other specific account data. Account balances are written off when management determines the amounts to be uncollectible. The Company's allowance for doubtful accounts at
March 31, 2017
and
2016
, and
December 31, 2016
, was
$10.9 million
,
$11.1 million
and
$10.5 million
, respectively.
Note
4
- Inventories and natural gas in storage
Natural gas in storage for the Company's regulated operations is generally carried at lower of cost or net realizable value, or cost using the last-in, first-out method. All other inventories are stated at the lower of cost or net realizable value. The portion of the cost of natural gas in storage expected to be used within one year is included in inventories. Inventories consisted of:
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
|
March 31, 2016
|
|
December 31, 2016
|
|
|
(In thousands)
|
Aggregates held for resale
|
$
|
120,392
|
|
$
|
127,101
|
|
$
|
115,471
|
|
Asphalt oil
|
50,538
|
|
52,065
|
|
29,103
|
|
Materials and supplies
|
22,074
|
|
21,645
|
|
18,372
|
|
Merchandise for resale
|
16,546
|
|
17,441
|
|
16,437
|
|
Natural gas in storage (current)
|
11,282
|
|
11,305
|
|
25,761
|
|
Other
|
29,777
|
|
30,199
|
|
33,129
|
|
Total
|
$
|
250,609
|
|
$
|
259,756
|
|
$
|
238,273
|
|
The remainder of natural gas in storage, which largely represents the cost of gas required to maintain pressure levels for normal operating purposes, was included in deferred charges and other assets - other and was $
49.5 million
, $
49.1 million
and $
49.5 million
at
March 31, 2017
and
2016
, and
December 31, 2016
, respectively.
Note
5
- Earnings per common share
Basic earnings per common share were computed by dividing earnings on common stock by the weighted average number of shares of common stock outstanding during the applicable period. Diluted earnings per common share were computed by dividing earnings on common stock by the total of the weighted average number of shares of common stock outstanding during the applicable period, plus the effect of outstanding performance share awards. Common stock outstanding includes issued shares less shares held in treasury. Net income was the same for both the basic and diluted earnings per share calculations. A reconciliation of the weighted average common shares outstanding used in the basic and diluted earnings per share calculations was as follows:
|
|
|
|
|
|
|
Three Months Ended
|
|
March 31,
|
|
2017
|
|
2016
|
|
|
(In thousands)
|
Weighted average common shares outstanding - basic
|
195,304
|
|
195,284
|
|
Effect of dilutive performance share awards
|
719
|
|
—
|
|
Weighted average common shares outstanding - diluted
|
196,023
|
|
195,284
|
|
Shares excluded from the calculation of diluted earnings per share
|
—
|
|
—
|
|
Note
6
- New accounting standards
Revenue from Contracts with Customers
In May 2014, the FASB issued guidance on accounting for revenue from contracts with customers. The guidance provides for a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry specific guidance. This guidance was to be effective for the Company on January 1, 2017. In August 2015, the FASB issued guidance deferring the effective date of the revenue guidance one year and allowing entities to early adopt. With this decision, the guidance will be effective for the Company on January 1, 2018. Entities will have the option of using either a full retrospective or modified retrospective approach to adopting the guidance. Under the modified approach, an entity would recognize the cumulative effect of initially applying the guidance with an adjustment to the opening balance of retained earnings in the period of adoption. In addition, the modified approach will require additional disclosures. The Company is planning to adopt the guidance using the modified retrospective approach. The guidance will require expanded disclosures, both quantitative and qualitative, related to the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company continues to evaluate the effects the guidance will have on its results of operations, financial position and cash flows.
Simplifying the Measurement of Inventory
In July 2015, the FASB issued guidance regarding inventory that is measured using the first-in, first-out or average cost method. The guidance does not apply to inventory measured using the last-in, first-out or the retail inventory method. The guidance requires inventory within its scope to be measured at the lower of cost or net realizable value, which is the estimated selling price in the normal course of business less reasonably predictable costs of completion, disposal and transportation. These amendments more closely align GAAP with IFRS. The Company implemented the guidance on January 1, 2017, on a prospective basis. The guidance did not have a material effect on the Company's results of operations, financial position, cash flows or disclosures.
Balance Sheet Classification of Deferred Taxes
In November 2015, the FASB issued guidance regarding the classification of deferred taxes on the balance sheet. The guidance requires all deferred tax assets and liabilities to be classified as noncurrent. These amendments will align GAAP with IFRS. Entities had the option to apply the guidance prospectively, for all deferred tax assets and liabilities, or retrospectively. The Company adopted the guidance in the fourth quarter of 2016 and applied the retrospective method of adoption. The guidance required a reclassification of current deferred income taxes to noncurrent deferred income taxes on the Consolidated Balance Sheets, but did not impact the Company's results of operations or cash flows. As a result of the retrospective application of this change in accounting principle, the Company reclassified deferred income taxes of
$34.2 million
from current assets - deferred income taxes to deferred credits and other liabilities - deferred income taxes on its Consolidated Balance Sheet at March 31, 2016.
Recognition and Measurement of Financial Assets and Financial Liabilities
In January 2016, the FASB issued guidance regarding the classification and measurement of financial instruments. The guidance revises the way an entity classifies and measures investments in equity securities, the presentation of certain fair value changes for financial liabilities measured at fair value and amends certain disclosure requirements related to the fair value of financial instruments. This guidance will be effective for the Company on January 1, 2018, with early adoption of certain amendments permitted. The guidance should be applied using a modified retrospective approach with the exception of equity securities without readily determinable fair values which will be applied prospectively. The Company is evaluating the effects the adoption of the new guidance will have on its results of operations, financial position, cash flows and disclosures.
Leases
In February 2016, the FASB issued guidance regarding leases. The guidance requires lessees to recognize a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term on the statement of financial position for leases with terms of more than 12 months. The guidance also requires additional disclosures, both quantitative and qualitative, related to operating and finance leases for the lessee and sales-type, direct financing and operating
leases for the lessor. This guidance will be effective for the Company on January 1, 2019, and should be applied using a modified retrospective approach with early adoption permitted. There are a number of industry-specific implementation issues that are still unresolved and the final resolution of these issues could significantly impact the number of contracts that would be considered a lease for the Company under the new guidance. The Company is evaluating the effects the adoption of the new guidance will have on its results of operations, financial position, cash flows and disclosures.
Improvements to Employee Share-Based Payment Accounting
In March 2016, the FASB issued guidance regarding simplification of several aspects of the accounting for share-based payment transactions. The guidance affects the income tax consequences, classification of awards as either equity or liabilities, classification on the statement of cash flows and calculation of dilutive shares. Certain amendments of this guidance were to be applied retrospectively and others prospectively. The Company adopted the guidance on January 1, 2017. All amendments in the guidance that apply to the Company were adopted on a prospective basis resulting in no adjustments being made to retained earnings. The adoption of the guidance impacted the Consolidated Statements of Income and the Consolidated Balance Sheets due to the taxes related to the stock-based compensation award that vested in February 2017 being recognized as income tax expense as compared to a reduction to additional paid-in capital under the previous guidance. Adoption of the guidance also increased the number of shares included in the diluted earnings per share calculation due to the exclusion of tax benefits in the incremental shares calculation. The change in the weighted average common shares outstanding - diluted did not result in a material effect on the earnings per common share - diluted.
Classification of Certain Cash Receipts and Cash Payments
In August 2016, the FASB issued guidance to clarify the classification of certain cash receipts and payments in the statement of cash flows. The guidance is intended to standardize the presentation and classification of certain transactions, including cash payments for debt prepayment or extinguishment, proceeds from insurance claim settlements and distributions from equity method investments. In addition, the guidance clarifies how to classify transactions that have characteristics of more than one class of cash flows. This guidance will be effective for the Company on January 1, 2018, with early adoption permitted. An entity that elects early adoption must adopt all the amendments in the same period and apply any adjustments as of the beginning of the fiscal year. Entities must apply the guidance retrospectively unless it is impracticable to do so, in which case they may apply it prospectively as of the earliest date practicable. The Company is evaluating the effects the adoption of the new guidance will have on its cash flows and disclosures.
Clarifying the Definition of a Business
In January 2017, the FASB issued guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The guidance provides a screen to determine when an integrated set of assets and activities is not a business. The guidance will also affect other aspects of accounting, such as determining reporting units for goodwill testing and whether an entity has acquired or sold a business. The guidance will be effective for the Company on January 1, 2018, and should be applied on a prospective basis with early adoption permitted for transactions that occur before the issuance or effective date of the amendments and only when the transactions have not been reported in the financial statements or made available for issuance. The Company is evaluating the effects the adoption of the new guidance will have on its results of operations, financial position, cash flows and disclosures.
Simplifying the Test for Goodwill Impairment
In January 2017, the FASB issued guidance on simplifying the test for goodwill impairment by eliminating Step 2, which required an entity to measure the amount of impairment loss by comparing the implied fair value of reporting unit goodwill with the carrying amount of such goodwill. This guidance requires entities to perform a quantitative impairment test, previously Step 1, to identify both the existence of impairment and the amount of impairment loss by comparing the fair value of a reporting unit to its carrying amount. Entities will continue to have the option of performing a qualitative assessment to determine if the quantitative impairment test is necessary. The guidance also requires additional disclosures if an entity has one or more reporting units with zero or negative carrying amounts of net assets. The guidance will be effective for the Company on January 1, 2020, and should be applied on a prospective basis with early adoption permitted. The Company is evaluating the effects the adoption of the new guidance will have on its results of operations, financial position, cash flows and disclosures.
Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost
In March 2017, the FASB issued guidance to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost. The guidance requires the service cost component to be presented in the income statement in the same line item or items as other compensation costs arising from services performed during the period. Other components of net benefit cost shall be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. The guidance also only allows the service cost component to be capitalized. The guidance will be effective for the Company on January 1, 2018, including interim periods, with early adoption permitted as of the beginning of an annual period for which the financial statements have not been issued. The guidance shall be applied on a retrospective basis for the financial statement presentation and on a prospective basis for the capitalization of the service cost component. The Company is evaluating the effects the adoption of the new guidance will have on its results of operations, financial position, cash flows and disclosures.
Note
7
- Comprehensive income (loss)
The after-tax changes in the components of accumulated other comprehensive loss were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2017
|
Net Unrealized Gain (Loss) on Derivative
Instruments
Qualifying as Hedges
|
|
Postretirement
Liability Adjustment
|
|
Foreign
Currency Translation Adjustment
|
|
Net Unrealized
Gain (Loss) on
Available-for-sale
Investments
|
|
Total
Accumulated
Other
Comprehensive
Loss
|
|
|
(In thousands)
|
Balance at beginning of period
|
$
|
(2,300
|
)
|
$
|
(33,221
|
)
|
$
|
(149
|
)
|
$
|
(63
|
)
|
$
|
(35,733
|
)
|
Other comprehensive income (loss) before reclassifications
|
—
|
|
—
|
|
9
|
|
(27
|
)
|
(18
|
)
|
Amounts reclassified from accumulated other comprehensive loss
|
91
|
|
357
|
|
—
|
|
35
|
|
483
|
|
Amounts reclassified to accumulated other comprehensive loss from a regulatory asset
|
—
|
|
(917
|
)
|
—
|
|
—
|
|
(917
|
)
|
Net current-period other comprehensive income (loss)
|
91
|
|
(560
|
)
|
9
|
|
8
|
|
(452
|
)
|
Balance at end of period
|
$
|
(2,209
|
)
|
$
|
(33,781
|
)
|
$
|
(140
|
)
|
$
|
(55
|
)
|
$
|
(36,185
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2016
|
Net Unrealized Gain (Loss) on Derivative
Instruments
Qualifying as Hedges
|
|
Postretirement
Liability Adjustment
|
|
Foreign
Currency Translation Adjustment
|
|
Net Unrealized
Gain (Loss) on
Available-for-sale
Investments
|
|
Total
Accumulated
Other
Comprehensive
Loss
|
|
|
(In thousands)
|
Balance at beginning of period
|
$
|
(2,667
|
)
|
$
|
(34,257
|
)
|
$
|
(200
|
)
|
$
|
(24
|
)
|
$
|
(37,148
|
)
|
Other comprehensive income before reclassifications
|
—
|
|
—
|
|
25
|
|
8
|
|
33
|
|
Amounts reclassified from accumulated other comprehensive loss
|
92
|
|
(1,595
|
)
|
—
|
|
36
|
|
(1,467
|
)
|
Net current-period other comprehensive income (loss)
|
92
|
|
(1,595
|
)
|
25
|
|
44
|
|
(1,434
|
)
|
Balance at end of period
|
$
|
(2,575
|
)
|
$
|
(35,852
|
)
|
$
|
(175
|
)
|
$
|
20
|
|
$
|
(38,582
|
)
|
Reclassifications out of accumulated other comprehensive loss were as follows:
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
Location on Consolidated Statements of
Income
|
|
March 31,
|
|
2017
|
2016
|
|
(In thousands)
|
|
Reclassification adjustment for loss on derivative instruments included in net income
|
$
|
(147
|
)
|
$
|
(149
|
)
|
Interest expense
|
|
56
|
|
57
|
|
Income taxes
|
|
(91
|
)
|
(92
|
)
|
|
Amortization of postretirement liability gains (losses) included in net periodic benefit cost
|
(574
|
)
|
2,564
|
|
(a)
|
|
217
|
|
(969
|
)
|
Income taxes
|
|
(357
|
)
|
1,595
|
|
|
Reclassification adjustment for loss on available-for-sale investments included in net income
|
(54
|
)
|
(55
|
)
|
Other income
|
|
19
|
|
19
|
|
Income taxes
|
|
(35
|
)
|
(36
|
)
|
|
Total reclassifications
|
$
|
(483
|
)
|
$
|
1,467
|
|
|
(a) Included in net periodic benefit cost. For more information, see Note
14
.
Note
8
- Assets held for sale and discontinued operations
Assets held for sale
The assets and liabilities of Pronghorn were classified as held for sale in the fourth quarter of 2016. Pronghorn's results of operations for 2016 were included in the pipeline and midstream segment.
Pronghorn
On November 21, 2016, WBI Energy Midstream announced it had entered into a purchase and sale agreement to sell its
50
percent non-operating ownership interest in Pronghorn to Tesoro Logistics. The transaction closed on January 1, 2017, which generated approximately
$100 million
of proceeds for the Company. The sale of Pronghorn further reduces the Company's risk exposure to commodity prices.
The carrying amounts of the major classes of assets and liabilities that were classified as held for sale associated with Pronghorn on the Company's Consolidated Balance Sheets were as follows:
|
|
|
|
|
|
December 31, 2016
|
|
|
(In thousands)
|
Assets
|
|
Current assets:
|
|
Prepayments and other current assets
|
$
|
68
|
|
Total current assets held for sale
|
68
|
|
Noncurrent assets:
|
|
Net property, plant and equipment
|
93,424
|
|
Goodwill
|
9,737
|
|
Less allowance for impairment of assets held for sale
|
2,311
|
|
Total noncurrent assets held for sale
|
100,850
|
|
Total assets held for sale
|
$
|
100,918
|
|
Discontinued operations
The assets and liabilities of the Company's discontinued operations have been classified as held for sale and the results of operations are shown in income (loss) from discontinued operations, other than certain general and administrative costs and interest expense which do not meet the criteria for income (loss) from discontinued operations. The Company's consolidated financial statements and accompanying notes for current and prior periods have been restated. At the time the assets were classified as held for sale, depreciation, depletion and amortization expense was no longer recorded.
Dakota Prairie Refining
On June 24, 2016, WBI Energy entered into a membership interest purchase agreement with Tesoro to sell all of the outstanding membership interests in Dakota Prairie Refining to Tesoro. WBI Energy and Calumet each previously owned
50
percent of the Dakota Prairie Refining membership interests and were equal members in building and operating Dakota Prairie Refinery. To effectuate the sale, WBI Energy acquired Calumet’s
50
percent membership interest in Dakota Prairie Refining on June 27, 2016. The sale of the membership interests to Tesoro closed on June 27, 2016. The sale of Dakota Prairie Refining reduces the Company’s risk by decreasing exposure to commodity prices.
The Company retained certain liabilities of Dakota Prairie Refining which were reflected in current liabilities held for sale on the Consolidated Balance Sheets. Centennial continues to guarantee certain debt obligations of Dakota Prairie Refining; however, Tesoro has agreed to indemnify Centennial for any losses and litigation expenses arising from the guarantee. For more information related to the guarantee, see Note
16
.
The carrying amounts of the major classes of assets and liabilities that are classified as held for sale related to the operations of and activity associated with Dakota Prairie Refining on the Company's Consolidated Balance Sheets were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
|
March 31, 2016
|
|
December 31, 2016
|
|
|
(In thousands)
|
Assets
|
|
|
|
Current assets:
|
|
|
|
Cash and cash equivalents
|
$
|
—
|
|
$
|
365
|
|
$
|
—
|
|
Receivables, net
|
—
|
|
11,169
|
|
—
|
|
Inventories
|
—
|
|
17,056
|
|
—
|
|
Income taxes receivable
|
11,756
|
|
7,077
|
|
13,987
|
|
Prepayments and other current assets
|
—
|
|
6,124
|
|
—
|
|
Total current assets held for sale
|
11,756
|
|
41,791
|
|
13,987
|
|
Noncurrent assets:
|
|
|
|
Net property, plant and equipment
|
—
|
|
407,247
|
|
—
|
|
Other
|
—
|
|
8,846
|
|
—
|
|
Total noncurrent assets held for sale
|
—
|
|
416,093
|
|
—
|
|
Total assets held for sale
|
$
|
11,756
|
|
$
|
457,884
|
|
$
|
13,987
|
|
Liabilities
|
|
|
|
Current liabilities:
|
|
|
|
Short-term borrowings
|
$
|
—
|
|
$
|
61,525
|
|
$
|
—
|
|
Long-term debt due within one year
|
—
|
|
6,375
|
|
—
|
|
Accounts payable
|
16
|
|
27,454
|
|
7,425
|
|
Taxes payable
|
—
|
|
1,001
|
|
—
|
|
Accrued compensation
|
—
|
|
717
|
|
—
|
|
Other accrued liabilities
|
—
|
|
7,155
|
|
—
|
|
Total current liabilities held for sale
|
16
|
|
104,227
|
|
7,425
|
|
Noncurrent liabilities:
|
|
|
|
Long-term debt
|
—
|
|
62,625
|
|
—
|
|
Deferred income taxes (a)
|
55
|
|
24,137
|
|
14
|
|
Total noncurrent liabilities held for sale
|
55
|
|
86,762
|
|
14
|
|
Total liabilities held for sale
|
$
|
71
|
|
$
|
190,989
|
|
$
|
7,439
|
|
|
|
(a)
|
On the Company's Consolidated Balance Sheets, these amounts were reclassified to noncurrent deferred income tax assets and are
|
reflected in noncurrent assets held for sale.
In the first quarter of 2017, the Company recorded a reversal of a previously accrued liability of
$7.0 million
(
$4.3 million
after tax) due to the resolution of a legal matter. At March 31, 2017, Dakota Prairie Refining had not incurred any material exit and disposal costs, and does not expect to incur any material exit and disposal costs.
Fidelity
In the second quarter of 2015, the Company began the marketing and sale process of Fidelity with an anticipated sale to occur within one year. Between September 2015 and March 2016, the Company entered into purchase and sale agreements to sell all of Fidelity's oil and natural gas assets. The completion of these sales occurred between October 2015 and April 2016. The sale of Fidelity was part of the Company's strategic plan to grow its capital investments in the remaining business segments and to focus on creating a greater long-term value.
The carrying amounts of the major classes of assets and liabilities that are classified as held for sale related to the operations of Fidelity on the Company's Consolidated Balance Sheets were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
|
|
March 31, 2016
|
|
December 31, 2016
|
|
|
|
(In thousands)
|
|
Assets
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Receivables, net
|
$
|
266
|
|
|
$
|
3,619
|
|
$
|
355
|
|
|
Inventories
|
—
|
|
|
1,308
|
|
—
|
|
|
Income taxes receivable
|
—
|
|
|
50,478
|
|
—
|
|
|
Prepayments and other current assets
|
—
|
|
|
2,348
|
|
—
|
|
|
Total current assets held for sale
|
266
|
|
|
57,753
|
|
355
|
|
|
Noncurrent assets:
|
|
|
|
|
|
Investments
|
—
|
|
|
37
|
|
—
|
|
|
Net property, plant and equipment
|
4,515
|
|
|
9,363
|
|
5,507
|
|
|
Deferred income taxes
|
91,098
|
|
|
82,994
|
|
91,098
|
|
|
Other
|
161
|
|
|
161
|
|
161
|
|
|
Less allowance for impairment of assets held for sale
|
—
|
|
|
(1,374
|
)
|
938
|
|
|
Total noncurrent assets held for sale
|
95,774
|
|
|
93,929
|
|
95,828
|
|
|
Total assets held for sale
|
$
|
96,040
|
|
|
$
|
151,682
|
|
$
|
96,183
|
|
|
Liabilities
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
$
|
67
|
|
|
$
|
7,963
|
|
$
|
141
|
|
|
Taxes payable
|
4,732
|
|
(a)
|
35
|
|
19
|
|
(a)
|
Accrued compensation
|
—
|
|
|
761
|
|
—
|
|
|
Other accrued liabilities
|
2,311
|
|
|
4,791
|
|
2,358
|
|
|
Total current liabilities held for sale
|
7,110
|
|
|
13,550
|
|
2,518
|
|
|
Total liabilities held for sale
|
$
|
7,110
|
|
|
$
|
13,550
|
|
$
|
2,518
|
|
|
|
|
(a)
|
On the Company's Consolidated Balance Sheets, these amounts were reclassified to prepayments and other current assets and are reflected
|
in current assets held for sale.
The Company performed a fair value assessment of the assets and liabilities classified as held for sale. In the first quarter of 2016, the fair value assessment was determined using the market approach largely based on a purchase and sale agreement. The estimated fair value exceeded the carrying value and the Company recorded an impairment reversal of
$1.4 million
(
$900,000
after tax) in the first quarter of 2016. The impairment reversal was included in operating expenses from discontinued operations. The estimated fair value of Fidelity's assets has been categorized as Level 3 in the fair value hierarchy.
The Company incurred transaction costs of approximately
$300,000
in the first quarter of 2016. In addition to the transaction costs, and due in part to the change in plans to sell the assets of Fidelity rather than sell Fidelity as a company, Fidelity incurred and expensed approximately
$1.8 million
of exit and disposal costs for the three months ended March 31, 2016, and has incurred
$10.5 million
of exit and disposal costs to date. Fidelity incurred
no
exit and disposal costs for the three months ended March 31, 2017, and the Company does not expect to incur any additional material exit and disposal costs. The exit and disposal costs are associated with severance and other related matters and exclude the office lease expiration discussed in the following paragraph.
Fidelity vacated its office space in Denver, Colorado in 2016. The Company incurred lease payments of approximately
$500,000
in the first quarter of 2016.
Dakota Prairie Refining and Fidelity
The reconciliation of the major classes of income and expense constituting pretax income (loss) from discontinued operations, which includes Dakota Prairie Refining and Fidelity, to the after-tax income (loss) from discontinued operations on the Company's Consolidated Statements of Income was as follows:
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
March 31,
|
|
2017
|
|
2016
|
|
|
(In thousands)
|
Operating revenues
|
$
|
105
|
|
$
|
47,976
|
|
Operating expenses
|
(6,577
|
)
|
69,769
|
|
Operating income (loss)
|
6,682
|
|
(21,793
|
)
|
Other income (expense)
|
(15
|
)
|
204
|
|
Interest expense
|
—
|
|
922
|
|
Income (loss) from discontinued operations before income taxes
|
6,667
|
|
(22,511
|
)
|
Income taxes
|
4,980
|
|
(4,475
|
)
|
Income (loss) from discontinued operations
|
1,687
|
|
(18,036
|
)
|
Loss from discontinued operations attributable to noncontrolling interest
|
—
|
|
(11,040
|
)
|
Income (loss) from discontinued operations attributable to the Company
|
$
|
1,687
|
|
$
|
(6,996
|
)
|
The pretax income (loss) from discontinued operations attributable to the Company, related to the operations of and activity associated with Dakota Prairie Refining, was
$6.9 million
and
$(9.9) million
for the three months ended March 31, 2017 and 2016, respectively.
Note
9
- Goodwill and other intangible assets
The changes in the carrying amount of goodwill were as follows:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2017
|
Balance at January 1, 2017
|
|
Goodwill Acquired
During the Year
|
|
Balance at March 31, 2017
|
|
|
(In thousands)
|
Natural gas distribution
|
$
|
345,736
|
|
$
|
—
|
|
$
|
345,736
|
|
Construction materials and contracting
|
176,290
|
|
—
|
|
176,290
|
|
Construction services
|
109,765
|
|
—
|
|
109,765
|
|
Total
|
$
|
631,791
|
|
$
|
—
|
|
$
|
631,791
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2016
|
Balance at January 1, 2016
|
|
*
|
Goodwill Acquired
During the Year
|
|
Balance at March 31, 2016
|
|
*
|
|
(In thousands)
|
Natural gas distribution
|
$
|
345,736
|
|
|
$
|
—
|
|
$
|
345,736
|
|
|
Pipeline and midstream
|
9,737
|
|
|
—
|
|
9,737
|
|
|
Construction materials and contracting
|
176,290
|
|
|
—
|
|
176,290
|
|
|
Construction services
|
103,441
|
|
|
6,323
|
|
109,764
|
|
|
Total
|
$
|
635,204
|
|
|
$
|
6,323
|
|
$
|
641,527
|
|
|
* Balance is presented net of accumulated impairment of
$12.3 million
at the pipeline and midstream segment, which occurred in prior periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2016
|
Balance at January 1, 2016
|
|
*
|
Goodwill Acquired
During the Year
|
|
Held for Sale
|
|
Balance at December 31, 2016
|
|
|
(In thousands)
|
Natural gas distribution
|
$
|
345,736
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
345,736
|
|
Pipeline and midstream
|
9,737
|
|
|
—
|
|
(9,737
|
)
|
—
|
|
Construction materials and contracting
|
176,290
|
|
|
—
|
|
—
|
|
176,290
|
|
Construction services
|
103,441
|
|
|
6,324
|
|
—
|
|
109,765
|
|
Total
|
$
|
635,204
|
|
|
$
|
6,324
|
|
$
|
(9,737
|
)
|
$
|
631,791
|
|
* Balance is presented net of accumulated impairment of
$12.3 million
at the pipeline and midstream segment, which occurred in prior periods.
Other amortizable intangible assets were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
|
March 31, 2016
|
|
December 31, 2016
|
|
|
(In thousands)
|
Customer relationships
|
$
|
15,745
|
|
$
|
17,145
|
|
$
|
17,145
|
|
Less accumulated amortization
|
12,910
|
|
12,680
|
|
13,917
|
|
|
2,835
|
|
4,465
|
|
3,228
|
|
Noncompete agreements
|
2,430
|
|
2,430
|
|
2,430
|
|
Less accumulated amortization
|
1,695
|
|
1,548
|
|
1,658
|
|
|
735
|
|
882
|
|
772
|
|
Other
|
7,086
|
|
7,764
|
|
7,768
|
|
Less accumulated amortization
|
5,309
|
|
5,308
|
|
5,843
|
|
|
1,777
|
|
2,456
|
|
1,925
|
|
Total
|
$
|
5,347
|
|
$
|
7,803
|
|
$
|
5,925
|
|
Amortization expense for amortizable intangible assets for the
three
months ended
March 31, 2017
and 2016, was
$600,000
and
$600,000
, respectively. Estimated amortization expense for amortizable intangible assets is
$2.2 million
in
2017
,
$1.2 million
in
2018
,
$1.0 million
in
2019
,
$500,000
in
2020
,
$200,000
in
2021
and
$800,000
thereafter.
Note
10
- Fair value measurements
The Company measures its investments in certain fixed-income and equity securities at fair value with changes in fair value recognized in income. The Company anticipates using these investments, which consist of an insurance contract, to satisfy its obligations under its unfunded, nonqualified benefit plans for executive officers and certain key management employees, and invests in these fixed-income and equity securities for the purpose of earning investment returns and capital appreciation. These investments, which totaled
$73.8 million
,
$69.1 million
and
$70.9 million
, at
March 31, 2017
and
2016
, and
December 31, 2016
, respectively, are classified as investments on the Consolidated Balance Sheets. The net unrealized gains on these investments were
$2.9 million
and
$1.6 million
for the
three
months ended
March 31, 2017
and 2016, respectively. The change in fair value, which is considered part of the cost of the plan, is classified in operation and maintenance expense on the Consolidated Statements of Income.
The Company did not elect the fair value option, which records gains and losses in income, for its available-for-sale securities, which include mortgage-backed securities and U.S. Treasury securities. These available-for-sale securities are recorded at fair value and are classified as investments on the Consolidated Balance Sheets. Unrealized gains or losses are recorded in accumulated other comprehensive income (loss). Details of available-for-sale securities were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
|
(In thousands)
|
Mortgage-backed securities
|
$
|
9,971
|
|
$
|
8
|
|
$
|
(94
|
)
|
$
|
9,885
|
|
U.S. Treasury securities
|
412
|
|
1
|
|
—
|
|
413
|
|
Total
|
$
|
10,383
|
|
$
|
9
|
|
$
|
(94
|
)
|
$
|
10,298
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
|
(In thousands)
|
Mortgage-backed securities
|
$
|
10,467
|
|
$
|
46
|
|
$
|
(14
|
)
|
$
|
10,499
|
|
Total
|
$
|
10,467
|
|
$
|
46
|
|
$
|
(14
|
)
|
$
|
10,499
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
|
(In thousands)
|
Mortgage-backed securities
|
$
|
10,546
|
|
$
|
8
|
|
$
|
(105
|
)
|
$
|
10,449
|
|
Total
|
$
|
10,546
|
|
$
|
8
|
|
$
|
(105
|
)
|
$
|
10,449
|
|
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The ASC establishes a hierarchy for grouping assets and liabilities, based on the significance of inputs.
The estimated fair values of the Company's assets and liabilities measured on a recurring basis are determined using the market approach.
The Company's Level 2 money market funds are valued at the net asset value of shares held at the end of the quarter, based on published market quotations on active markets, or using other known sources including pricing from outside sources.
The estimated fair value of the Company's Level 2 mortgage-backed securities and U.S. Treasury securities are based on comparable market transactions, other observable inputs or other sources, including pricing from outside sources.
The estimated fair value of the Company's Level 2 insurance contract is based on contractual cash surrender values that are determined primarily by investments in managed separate accounts of the insurer. These amounts approximate fair value. The managed separate accounts are valued based on other observable inputs or corroborated market data.
Though the Company believes the methods used to estimate fair value are consistent with those used by other market participants, the use of other methods or assumptions could result in a different estimate of fair value. For the
three
months ended
March 31, 2017
and
2016
, there were no transfers between Levels 1 and 2.
The Company's assets and liabilities measured at fair value on a recurring basis were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at March 31, 2017, Using
|
|
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Balance at March 31, 2017
|
|
|
(In thousands)
|
Assets:
|
|
|
|
|
Money market funds
|
$
|
—
|
|
$
|
2,551
|
|
$
|
—
|
|
$
|
2,551
|
|
Insurance contract*
|
—
|
|
73,775
|
|
—
|
|
73,775
|
|
Available-for-sale securities:
|
|
|
|
|
Mortgage-backed securities
|
—
|
|
9,885
|
|
—
|
|
9,885
|
|
U.S. Treasury securities
|
—
|
|
413
|
|
—
|
|
413
|
|
Total assets measured at fair value
|
$
|
—
|
|
$
|
86,624
|
|
$
|
—
|
|
$
|
86,624
|
|
* The insurance contract invests approximately
51
percent in fixed-income investments,
22
percent in common stock of large-cap companies,
13
percent in common stock of mid-cap companies,
11
percent in common stock of small-cap companies,
2
percent in target date investments and
1
percent in cash equivalents.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at March 31, 2016, Using
|
|
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Balance at March 31, 2016
|
|
|
(In thousands)
|
Assets:
|
|
|
|
|
Money market funds
|
$
|
—
|
|
$
|
1,442
|
|
$
|
—
|
|
$
|
1,442
|
|
Insurance contract*
|
—
|
|
69,110
|
|
—
|
|
69,110
|
|
Available-for-sale securities:
|
|
|
|
|
Mortgage-backed securities
|
—
|
|
10,499
|
|
—
|
|
10,499
|
|
Total assets measured at fair value
|
$
|
—
|
|
$
|
81,051
|
|
$
|
—
|
|
$
|
81,051
|
|
* The insurance contract invests approximately
65
percent in fixed-income investments,
18
percent in common stock of large-cap companies,
9
percent in common stock of mid-cap companies,
6
percent in common stock of small-cap companies,
1
percent in target date investments and
1
percent in cash equivalents.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at December 31, 2016, Using
|
|
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Balance at December 31, 2016
|
|
|
(In thousands)
|
Assets:
|
|
|
|
|
Money market funds
|
$
|
—
|
|
$
|
1,602
|
|
$
|
—
|
|
$
|
1,602
|
|
Insurance contract*
|
—
|
|
70,921
|
|
—
|
|
70,921
|
|
Available-for-sale securities:
|
|
|
|
|
Mortgage-backed securities
|
—
|
|
10,449
|
|
—
|
|
10,449
|
|
Total assets measured at fair value
|
$
|
—
|
|
$
|
82,972
|
|
$
|
—
|
|
$
|
82,972
|
|
* The insurance contract invests approximately
52
percent in fixed-income investments,
22
percent in common stock of large-cap companies,
13
percent in common stock of mid-cap companies,
10
percent in common stock of small-cap companies,
1
percent in target date investments and
2
percent in cash equivalents.
For information about fair value assessments of assets and liabilities classified as held for sale, see Note
8
.
The Company's long-term debt is not measured at fair value on the Consolidated Balance Sheets and the fair value is being provided for disclosure purposes only. The fair value was based on discounted future cash flows using current market interest rates. The estimated fair value of the Company's Level 2 long-term debt was as follows:
|
|
|
|
|
|
|
|
|
Carrying
Amount
|
|
Fair
Value
|
|
|
(In thousands)
|
Long-term debt at March 31, 2017
|
$
|
1,703,006
|
|
$
|
1,784,588
|
|
Long-term debt at March 31, 2016
|
$
|
1,858,054
|
|
$
|
1,928,150
|
|
Long-term debt at December 31, 2016
|
$
|
1,790,159
|
|
$
|
1,841,885
|
|
The carrying amounts of the Company's remaining financial instruments included in current assets and current liabilities approximate their fair values
.
Note
11
- Equity
A summary of the changes in equity was as follows:
|
|
|
|
|
Three Months Ended March 31, 2017
|
Total
Equity
|
|
|
(In thousands)
|
Balance at December 31, 2016
|
$
|
2,316,244
|
|
Net income
|
37,325
|
|
Other comprehensive loss
|
(452
|
)
|
Dividends declared on preferred stocks
|
(171
|
)
|
Dividends declared on common stock
|
(37,596
|
)
|
Stock-based compensation
|
996
|
|
Repurchase of common stock
|
(1,684
|
)
|
Issuance of common stock upon vesting of stock-based compensation, net of shares used for tax withholdings
|
(757
|
)
|
Balance at March 31, 2017
|
$
|
2,313,905
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2016
|
Total Stockholders' Equity
|
|
Noncontrolling Interest
|
|
Total
Equity
|
|
|
(In thousands)
|
Balance at December 31, 2015
|
$
|
2,396,505
|
|
$
|
124,043
|
|
$
|
2,520,548
|
|
Net income (loss)
|
24,869
|
|
(11,040
|
)
|
13,829
|
|
Other comprehensive loss
|
(1,434
|
)
|
—
|
|
(1,434
|
)
|
Dividends declared on preferred stocks
|
(171
|
)
|
—
|
|
(171
|
)
|
Dividends declared on common stock
|
(36,620
|
)
|
—
|
|
(36,620
|
)
|
Stock-based compensation
|
1,065
|
|
—
|
|
1,065
|
|
Issuance of common stock upon vesting of stock-based compensation, net of shares used for tax withholdings
|
(316
|
)
|
—
|
|
(316
|
)
|
Net tax deficit on stock-based compensation
|
(1,517
|
)
|
—
|
|
(1,517
|
)
|
Balance at March 31, 2016
|
$
|
2,382,381
|
|
$
|
113,003
|
|
$
|
2,495,384
|
|
Note
12
- Cash flow information
Cash expenditures for interest and income taxes were as follows:
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
March 31,
|
|
2017
|
|
2016
|
|
|
(In thousands)
|
Interest, net of amount capitalized and AFUDC - borrowed of $196 and $260 in 2017 and 2016, respectively
|
$
|
17,546
|
|
$
|
23,109
|
|
Income taxes refunded, net*
|
$
|
(2,762
|
)
|
$
|
(1,429
|
)
|
|
|
*
|
Income taxes refunded, net of discontinued operations, were $
(7.2)
million and $
(1.4)
million for the three months ended March 31, 2017 and 2016, respectively.
|
Noncash investing transactions were as follows:
|
|
|
|
|
|
|
|
|
March 31,
|
|
2017
|
|
2016
|
|
|
(In thousands)
|
Property, plant and equipment additions in accounts payable
|
$
|
5,212
|
|
$
|
23,277
|
|
Note
13
- Business segment data
The Company's reportable segments are those that are based on the Company's method of internal reporting, which generally segregates the strategic business units due to differences in products, services and regulation. The internal reporting of these operating segments is defined based on the reporting and review process used by the Company's chief executive officer. The vast majority of the Company's operations are located within the United States.
The electric segment generates, transmits and distributes electricity in Montana, North Dakota, South Dakota and Wyoming. The natural gas distribution segment distributes natural gas in those states as well as in Idaho, Minnesota, Oregon and Washington. These operations also supply related value-added services.
The pipeline and midstream segment provides natural gas transportation, underground storage and gathering services through regulated and nonregulated pipeline systems primarily in the Rocky Mountain and northern Great Plains regions of the United States. This segment also provides cathodic protection and other energy-related services. For information on the Company's natural gas and oil gathering and processing facility sold on January 1, 2017, see Note 8.
The construction materials and contracting segment mines aggregates and markets crushed stone, sand, gravel and related construction materials, including ready-mixed concrete, cement, asphalt, liquid asphalt and other value-added products. It also performs integrated contracting services. This segment operates in the central, southern and western United States and Alaska and Hawaii.
The construction services segment provides utility construction services specializing in constructing and maintaining electric and communication lines, gas pipelines, fire suppression systems, and external lighting and traffic signalization. This segment also provides utility excavation and inside electrical and mechanical services, and manufactures and distributes transmission line construction equipment and other supplies.
The Other category includes the activities of Centennial Capital, which insures various types of risks as a captive insurer for certain of the Company's subsidiaries. The function of the captive insurer is to fund the deductible layers of the insured companies' general liability, automobile liability, pollution liability and other coverages. Centennial Capital also owns certain real and personal property. The Other category also includes certain general and administrative costs (reflected in operation and maintenance expense) and interest expense which were previously allocated to the refining business and Fidelity and do not meet the criteria for income (loss) from discontinued operations. The Other category also includes Centennial Resources' former investment in Brazil.
Discontinued operations includes the results and supporting activities of Dakota Prairie Refining and Fidelity other than certain general and administrative costs and interest expense as described above. Dakota Prairie Refining refined crude oil and produced and sold diesel fuel, naphtha, ATBs and other by-products of the production process. In the second quarter of 2016, the Company sold all of the outstanding membership interests in Dakota Prairie Refining. Fidelity engaged in oil and natural gas development and production activities in the Rocky Mountain and Mid-Continent/Gulf States regions of the United States. Between September 2015 and March 2016, the Company entered into purchase and sale agreements to sell all of Fidelity's oil and natural gas assets. The completion of these sales occurred between October 2015 and April 2016. For more information on discontinued operations, see Note
8
.
The information below follows the same accounting policies as described in Note 1 of the Company's Notes to Consolidated Financial Statements in the
2016
Annual Report. Information on the Company's businesses was as follows:
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
March 31,
|
|
2017
|
|
2016
|
|
|
(In thousands)
|
External operating revenues:
|
|
|
Regulated operations:
|
|
|
Electric
|
$
|
88,225
|
|
$
|
82,923
|
|
Natural gas distribution
|
342,519
|
|
299,395
|
|
Pipeline and midstream
|
2,870
|
|
3,547
|
|
|
433,614
|
|
385,865
|
|
Nonregulated operations:
|
|
|
Pipeline and midstream
|
3,643
|
|
8,697
|
|
Construction materials and contracting
|
200,776
|
|
209,852
|
|
Construction services
|
299,572
|
|
255,500
|
|
Other
|
320
|
|
300
|
|
|
504,311
|
|
474,349
|
|
Total external operating revenues
|
$
|
937,925
|
|
$
|
860,214
|
|
|
|
|
Intersegment operating revenues:
|
|
|
|
|
Regulated operations:
|
|
|
Electric
|
$
|
—
|
|
$
|
—
|
|
Natural gas distribution
|
—
|
|
—
|
|
Pipeline and midstream
|
21,489
|
|
21,098
|
|
|
21,489
|
|
21,098
|
|
Nonregulated operations:
|
|
|
Pipeline and midstream
|
34
|
|
84
|
|
Construction materials and contracting
|
86
|
|
118
|
|
Construction services
|
6
|
|
462
|
|
Other
|
1,743
|
|
1,669
|
|
|
1,869
|
|
2,333
|
|
Intersegment eliminations
|
(23,358
|
)
|
(23,431
|
)
|
Total intersegment operating revenues
|
$
|
—
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
March 31,
|
|
2017
|
|
2016
|
|
|
(In thousands)
|
Earnings on common stock:
|
|
|
|
|
Regulated operations:
|
|
|
Electric
|
$
|
14,333
|
|
$
|
11,119
|
|
Natural gas distribution
|
27,861
|
|
25,241
|
|
Pipeline and midstream
|
4,557
|
|
5,288
|
|
|
46,751
|
|
41,648
|
|
Nonregulated operations:
|
|
|
Pipeline and midstream
|
(628
|
)
|
1
|
|
Construction materials and contracting
|
(19,912
|
)
|
(14,471
|
)
|
Construction services
|
7,362
|
|
5,974
|
|
Other
|
(279
|
)
|
(1,458
|
)
|
|
(13,457
|
)
|
(9,954
|
)
|
Intersegment eliminations*
|
2,173
|
|
—
|
|
Earnings on common stock before income (loss) from
discontinued operations
|
35,467
|
|
31,694
|
|
Income (loss) from discontinued operations, net of tax*
|
1,687
|
|
(18,036
|
)
|
Loss from discontinued operations attributable to noncontrolling interest
|
—
|
|
(11,040
|
)
|
Total earnings on common stock
|
$
|
37,154
|
|
$
|
24,698
|
|
* Includes an elimination for the presentation of income tax adjustments between continuing and
discontinued operations.
Note
14
- Employee benefit plans
Pension and other postretirement plans
The Company has noncontributory defined benefit pension plans and other postretirement benefit plans for certain eligible employees. Components of net periodic benefit cost for the Company's pension and other postretirement benefit plans were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
Other
Postretirement Benefits
|
Three Months Ended March 31,
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
(In thousands)
|
Components of net periodic benefit cost:
|
|
|
|
|
Service cost
|
$
|
—
|
|
$
|
—
|
|
$
|
447
|
|
$
|
450
|
|
Interest cost
|
4,014
|
|
4,390
|
|
808
|
|
949
|
|
Expected return on assets
|
(5,029
|
)
|
(5,280
|
)
|
(1,145
|
)
|
(1,149
|
)
|
Amortization of prior service credit
|
—
|
|
—
|
|
(343
|
)
|
(343
|
)
|
Amortization of net actuarial loss
|
1,793
|
|
1,593
|
|
336
|
|
448
|
|
Net periodic benefit cost, including amount capitalized
|
778
|
|
703
|
|
103
|
|
355
|
|
Less amount capitalized
|
107
|
|
81
|
|
(39
|
)
|
34
|
|
Net periodic benefit cost
|
$
|
671
|
|
$
|
622
|
|
$
|
142
|
|
$
|
321
|
|
Nonqualified benefit plans
In addition to the qualified plan defined pension benefits reflected in the table, the Company also has unfunded, nonqualified benefit plans for executive officers and certain key management employees that generally provide for defined benefit payments at age 65 following the employee's retirement or, upon death, to their beneficiaries for a 15-year period. In February 2016, the Company froze the unfunded, nonqualified defined benefit plans to new participants and eliminated benefit increases. Vesting for participants not fully vested was retained. The Company's net periodic benefit cost for these plans for the three months ended
March 31, 2017
, was
$1.2 million
. The Company's net periodic benefit credit for these plans for the three months ended
March 31, 2016
,
was
$1.9 million
, which reflects a curtailment gain of
$3.3 million
.
Note
15
- Regulatory matters
On September 30, 2015, Great Plains filed an application for a natural gas rate increase with the MNPUC. Great Plains requested a total increase of approximately
$1.6 million
annually or approximately
6.4
percent above current rates to recover increased operating expenses along with increased investment in facilities, including the related depreciation expense and taxes. An interim increase of approximately
$1.5 million
or approximately
6.4
percent, subject to refund, was effective with service rendered on and after January 1, 2016. The MNPUC issued an order on September 6, 2016, authorizing an increase of approximately
$1.1 million
annually or approximately
5.2
percent with the requirement that Great Plains submit a compliance filing within 30 days. On September 22, 2016, Great Plains submitted the required compliance filing which included a refund plan to return the amount of interim revenues collected above the final rates. On December 22, 2016, the MNPUC issued an order approving the rates which were effective January 1, 2017. Great Plains issued refunds to customers on February 24, 2017.
On April 29, 2016, Cascade filed an application with the OPUC for a natural gas rate increase of approximately
$1.9 million
annually or approximately
2.8
percent above current rates. The request includes rate recovery associated with pipeline replacement and improvement projects to ensure the integrity of Cascade's system. On October 6, 2016, Cascade, staff of the OPUC and the interveners in the case filed a stipulation and settlement agreement reflecting an annual increase of approximately
$754,000
effective March 1, 2017. The OPUC issued an order approving the stipulation and settlement agreement on December 12, 2016.
On June 10, 2016, Montana-Dakota filed an application for an increase in electric rates with the WYPSC. Montana-Dakota requested an increase of approximately
$3.2 million
annually or approximately
13.1
percent above current rates to recover Montana-Dakota's increased investment in facilities along with additional depreciation, operation and maintenance expenses including increased fuel costs, and taxes associated with the increases in investment. On December 28, 2016, Montana-Dakota and the interveners of the case filed a stipulation and agreement reflecting an increase of approximately
$2.7 million
annually or approximately
11.1
percent above current rates. On April 6, 2017, the WYPSC issued a final order approving the stipulation and agreement with rates effective with service rendered on and after March 1, 2017.
On August 12, 2016, Intermountain filed an application with the IPUC for a natural gas rate increase of approximately
$10.2 million
annually or approximately
4.1
percent above current rates. The request includes rate recovery associated with increased investment in facilities and increased operating expenses. On January 17, 2017, Intermountain provided the IPUC with an updated revenue request of approximately
$9.4 million
. A hearing was held March 1-3, 2017. On April 28, 2017, the IPUC issued an order approving an increase of approximately
$4.1 million
or approximately
1.6
percent above current rates based on a
9.5
percent return on equity effective with service rendered on and after May 1, 2017. Intermountain is reviewing the final order.
On September 1, 2016, and as amended on January 10, 2017, Montana-Dakota submitted an update to its transmission formula rate under the MISO tariff including a revenue requirement for the Company's multivalue project along with a true-up of prior year expenditures of
$11.1 million
, which was effective January 1, 2017.
On December 2, 2016, Montana-Dakota filed an application with the MTPSC requesting authority to implement gas and electric tax tracking adjustments for Montana state and local taxes and fees that reflect the changes in state and local property taxes applicable to natural gas and electric utilities pursuant to Montana law. The requested tax tracking adjustments would result in an increase in revenues of approximately
$814,000
. On January 17, 2017, the MTPSC issued an order on the tax tracking adjustments. The gas tracking adjustment was approved as an increase to revenues of approximately
$474,000
effective January 1, 2017. The electric tax tracking adjustment was approved as an increase to revenues of approximately
$251,000
effective May 15, 2017. Montana-Dakota filed a motion for reconsideration of the electric tax tracking adjustment on January 27, 2017. The motion for reconsideration is pending before the MTPSC.
On December 21, 2016, Great Plains filed an application with the MNPUC requesting authority to implement a natural gas utility infrastructure cost tariff of approximately
$456,000
annually effective beginning with service rendered May 20, 2017. The tariff will allow Great Plains to recover infrastructure investments, not previously included in rates, mandated by federal or state agencies associated with Great Plains' pipeline integrity programs. This matter is pending before the MNPUC.
On April 1, 2017, Montana-Dakota implemented Phase 2 of the electric rate case approved by the MTPSC on March 25, 2016. The annual increase of
$4.7 million
is effective with service rendered on and after April 1, 2017.
Montana-Dakota previously filed an application with the NDPSC on October 14, 2016, for an electric rate increase which also included a requested return on equity to be used in the determination of applications previously filed by Montana-Dakota for a renewable resource cost adjustment rider, an electric generation resource recovery rider, and a transmission cost adjustment rider. On April 7, 2017, Montana-Dakota, the NDPSC Advocacy Staff and the interveners in the case filed a settlement agreement resolving all issues in the general rate case. The settlement agreement included a net increase of approximately
$7.5 million
or
3.7
percent above previously approved final rates and a true-up of the return on equity used in the interim renewable resource cost adjustment, the electric generation resource recovery and transmission cost adjustment riders of
9.45
percent; a return on equity of
9.65
percent for base rates and the renewable resource cost adjustment rider on a go-forward basis; and a return on equity of
9.45
percent through December 31, 2019, for the natural gas-fired internal combustion engines and associated facilities included in the electric generation resource recovery rider. If the settlement agreement is approved by the NDPSC, final
rates will be less than the interim rates currently in effect. Therefore, Montana-Dakota will refund the difference to customers, which is approximately
19
percent of the amount collected from the general rate case interim increase, along with refunds, if any, to reflect true-ups for the various riders. The amount of refunds, less amounts previously accrued, are not expected to be material to the consolidated financial statements. A hearing on the settlement was held on April 10, 2017. This matter is pending before the NDPSC. The background information related to the settlement and related applications are discussed in the following paragraphs.
On October 26, 2015, Montana-Dakota filed an application with the NDPSC requesting a renewable resource cost adjustment rider for the recovery of the Thunder Spirit Wind project. On January 5, 2016, the NDPSC approved the rider to be effective January 7, 2016, resulting in an annual increase on an interim basis, subject to refund, of
$15.1 million
based upon a
10.5
percent return on equity. The interim rate is pending the determination of the return on equity in the general rate case application filed October 14, 2016, as discussed in this note.
On October 26, 2015, Montana-Dakota filed an application with the NDPSC for an update to the electric generation resource recovery rider. On March 9, 2016, the NDPSC approved the rider to be effective with service rendered on and after March 15, 2016, which resulted in interim rates, subject to refund, of
$9.7 million
based upon a
10.5
percent return on equity. The interim rates include recovery of Montana-Dakota's investment in the 88-MW simple-cycle natural gas turbine and associated facilities near Mandan, North Dakota, and the 19 MW of new generation from natural gas-fired internal combustion engines and associated facilities near Sidney, Montana. The net investment authorized for the natural gas-fired internal combustion engines and the return on equity on both investments are pending the general rate case application filed October 14, 2016, as discussed in this note.
On November 25, 2015, Montana-Dakota filed an application with the NDPSC for an update of its transmission cost adjustment rider for recovery of MISO-related charges and two transmission projects in North Dakota. On February 10, 2016, the NDPSC approved the transmission cost adjustment effective with service rendered on and after February 12, 2016, resulting in an annual increase on an interim basis, subject to refund, of
$6.8 million
based upon a
10.5
percent return on equity. The interim rate is pending the determination of the return on equity in the general rate case application filed October 14, 2016, as discussed in this note.
On October 14, 2016, Montana-Dakota filed an application with the NDPSC for an electric rate increase of approximately
$13.4 million
annually or
6.6
percent above current rates. The request includes rate recovery associated with increased investment in facilities, along with the related depreciation, operation and maintenance expenses and taxes associated with the increased investment. Montana-Dakota requested an interim increase of approximately
$13.0 million
or approximately
6.5
percent, subject to refund, to be effective within 60 days of the filing. On November 21, 2016, Montana-Dakota filed and on November 30, 2016, the NDPSC approved a revised interim increase of approximately
$11.7 million
, based on adjustments accepted by the NDPSC, or approximately
5.8
percent above current rates, subject to refund, effective with service rendered on or after December 13, 2016. This matter is pending the approval of the settlement agreement by the NDPSC, as previously discussed.
Note
16
- Contingencies
The Company is party to claims and lawsuits arising out of its business and that of its consolidated subsidiaries. The Company accrues a liability for those contingencies when the incurrence of a loss is probable and the amount can be reasonably estimated. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. The Company does not accrue liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated or when the liability is believed to be only reasonably possible or remote. For contingencies where an unfavorable outcome is probable or reasonably possible and which are material, the Company discloses the nature of the contingency and, in some circumstances, an estimate of the possible loss. The Company had accrued liabilities of
$29.1 million
,
$19.0 million
and
$31.8 million
, which include liabilities held for sale, for contingencies, including litigation, production taxes, royalty claims and environmental matters at
March 31, 2017
and
2016
, and
December 31, 2016
, respectively, including amounts that may have been accrued for matters discussed in Litigation and Environmental matters within this note.
Litigation
Natural Gas Gathering Operations
Omimex filed a complaint against WBI Energy Midstream in Montana Seventeenth Judicial District Court in July 2010 alleging WBI Energy Midstream breached a gathering contract with Omimex as a result of the increased operating pressures demanded by a third party on a natural gas gathering system in Montana. In December 2011, Omimex filed an amended complaint alleging WBI Energy Midstream breached obligations to operate its gathering system as a common carrier under United States and Montana law. WBI Energy Midstream removed the action to the United States District Court for the District of Montana. The parties subsequently settled the breach of contract claim and, subject to final determination on liability, stipulated to the damages on the common carrier claim, for amounts that are not material. A trial on the common carrier claim was held during July 2013. On December 9, 2014, the United States District Court for the District of Montana issued an order determining WBI Energy Midstream breached its obligations as a common carrier and ordered judgment in favor of Omimex for the amount of the stipulated damages. WBI Energy Midstream filed an appeal from the United States
District Court for the District of Montana's order and judgment. The parties reached a settlement of the matter in March 2017. The settlement provides for a payment by WBI Energy Midstream of an amount that is not material to the Company.
The Company also is subject to other litigation, and actual and potential claims in the ordinary course of its business which may include, but are not limited to, matters involving property damage, personal injury, and environmental, contractual, statutory and regulatory obligations. Accruals are based on the best information available but actual losses in future periods are affected by various factors making them uncertain. After taking into account liabilities accrued for the foregoing matters, management believes that the outcomes with respect to the above issues and other probable and reasonably possible losses in excess of the amounts accrued, while uncertain, will not have a material effect upon the Company's financial position, results of operations or cash flows.
Environmental matters
Portland Harbor Site
In December 2000, Knife River - Northwest was named by the EPA as a PRP in connection with the cleanup of a riverbed site adjacent to a commercial property site acquired by Knife River - Northwest from Georgia-Pacific West, Inc. in 1999. The riverbed site is part of the Portland, Oregon, Harbor Superfund Site. The EPA wants responsible parties to share in the cleanup of sediment contamination in the Willamette River. To date, costs of the overall remedial investigation and feasibility study of the harbor site are being recorded, and initially paid, through an administrative consent order by the LWG, a group of several entities, which does not include Knife River - Northwest or Georgia-Pacific West, Inc. Investigative costs are indicated to be in excess of
$100 million
. On January 6, 2017, Region 10 of the EPA issued a ROD with its selected remedy for cleanup of the in-river portion of the site. Implementation of the remedy is expected to take up to 13 years with a present value cost estimate of approximately
$1 billion
. Corrective action will not be taken until remedial design/remedial action plans are approved by the EPA. Knife River - Northwest also received notice in January 2008 that the Portland Harbor Natural Resource Trustee Council intends to perform an injury assessment to natural resources resulting from the release of hazardous substances at the Harbor Superfund Site. The Portland Harbor Natural Resource Trustee Council indicates the injury determination is appropriate to facilitate early settlement of damages and restoration for natural resource injuries. It is not possible to estimate the costs of natural resource damages until an assessment is completed and allocations are undertaken.
Based upon a review of the Portland Harbor sediment contamination evaluation by the Oregon DEQ and other information available, Knife River - Northwest does not believe it is a responsible party. In addition, Knife River - Northwest has notified Georgia-Pacific West, Inc., that it intends to seek indemnity for liabilities incurred in relation to the above matters pursuant to the terms of their sale agreement. Knife River - Northwest has entered into an agreement tolling the statute of limitations in connection with the LWG's potential claim for contribution to the costs of the remedial investigation and feasibility study. By letter in March 2009, LWG stated its intent to file suit against Knife River - Northwest and others to recover LWG's investigation costs to the extent Knife River - Northwest cannot demonstrate its non-liability for the contamination or is unwilling to participate in an alternative dispute resolution process that has been established to address the matter. At this time, Knife River - Northwest has agreed to participate in the alternative dispute resolution process.
The Company believes it is not probable that it will incur any material environmental remediation costs or damages in relation to the above referenced matter.
Manufactured Gas Plant Sites
There are three claims against Cascade for cleanup of environmental contamination at manufactured gas plant sites operated by Cascade's predecessors.
The first claim is for contamination at a site in Eugene, Oregon which was received in 1995. There are PRPs in addition to Cascade that may be liable for cleanup of the contamination. Some of these PRPs have shared in the investigation costs. It is expected that these and other PRPs will share in the cleanup costs. Several alternatives for cleanup have been identified, with preliminary cost estimates ranging from approximately
$500,000
to
$11.0 million
. The Oregon DEQ released a ROD in January 2015 that selected a remediation alternative for the site as recommended in an earlier staff report. It is not known at this time what share of the cleanup costs will actually be borne by Cascade; however, Cascade anticipates its proportional share could be approximately
50
percent. Cascade has accrued
$1.6 million
for remediation of this site. In January 2013, the OPUC approved Cascade's application to defer environmental remediation costs at the Eugene site for a period of 12 months starting November 30, 2012. Cascade received orders reauthorizing the deferred accounting for the 12-month periods starting November 30, 2013, December 1, 2014, and December 1, 2015. Cascade has requested authority to defer accounting for the 12-month period starting December 1, 2016, which is pending before the OPUC.
The second claim is for contamination at a site in Bremerton, Washington which was received in 1997. A preliminary investigation has found soil and groundwater at the site contain contaminants requiring further investigation and cleanup. The EPA conducted a Targeted Brownfields Assessment of the site and released a report summarizing the results of that assessment in August 2009. The assessment confirms that contaminants have affected soil and groundwater at the site, as well as sediments in the adjacent Port Washington Narrows. Alternative remediation options have been identified with preliminary cost estimates ranging from
$340,000
to
$6.4 million
. Data developed through the assessment and previous investigations indicates the contamination likely derived from multiple, different sources and multiple current and former owners of properties and businesses in the vicinity of the site may be responsible for the contamination. In April 2010, the Washington DOE issued notice it considered Cascade a PRP for hazardous substances at the site. In May 2012, the EPA added the site to the National Priorities List of Superfund sites. Cascade has entered into an administrative settlement agreement and consent order with the EPA regarding the scope and schedule for a
remedial investigation and feasibility study for the site. Cascade has accrued
$12.4 million
for the remedial investigation, feasibility study and remediation of this site. In April 2010, Cascade filed a petition with the WUTC for authority to defer the costs, which are included in other noncurrent assets, incurred in relation to the environmental remediation of this site. The WUTC approved the petition in September 2010, subject to conditions set forth in the order.
The third claim is for contamination at a site in Bellingham, Washington. Cascade received notice from a party in May 2008 that Cascade may be a PRP, along with other parties, for contamination from a manufactured gas plant owned by Cascade and its predecessor from about 1946 to 1962. The notice indicates that current estimates to complete investigation and cleanup of the site exceed
$8.0 million
. Other PRPs have reached an agreed order and work plan with the Washington DOE for completion of a remedial investigation and feasibility study for the site. A report documenting the initial phase of the remedial investigation was completed in June 2011. There is currently not enough information available to estimate the potential liability to Cascade associated with this claim although Cascade believes its proportional share of any liability will be relatively small in comparison to other PRPs. The plant manufactured gas from coal between approximately 1890 and 1946. In 1946, shortly after Cascade's predecessor acquired the plant, it converted the plant to a propane-air gas facility. There are no documented wastes or by-products resulting from the mixing or distribution of propane-air gas.
Cascade has received notices from and entered into agreement with certain of its insurance carriers that they will participate in defense of Cascade for these contamination claims subject to full and complete reservations of rights and defenses to insurance coverage. To the extent these claims are not covered by insurance, Cascade intends to seek recovery through the OPUC and WUTC of remediation costs in its natural gas rates charged to customers. The accruals related to these matters are reflected in regulatory assets.
Guarantees
In June 2016, WBI Energy sold all of the outstanding membership interests in Dakota Prairie Refining. In connection with the sale, Centennial agreed to continue to guarantee certain debt obligations of Dakota Prairie Refining which totaled
$62.6 million
at
March 31, 2017
, and are expected to mature by 2023. Tesoro agreed to indemnify Centennial for any losses and litigation expenses arising from the guarantee. The estimated fair values of the indemnity asset and guarantee liability are reflected in deferred charges and other assets - other and deferred credits and other liabilities - other, respectively, on the Consolidated Balance Sheets. Continuation of the guarantee was required as a condition to the sale of Dakota Prairie Refining.
In March 2016, a sale agreement was signed to sell Fidelity's assets in the Paradox Basin. In connection with the sale, Centennial agreed to guarantee Fidelity's indemnity obligations associated with the Paradox assets. The guarantee was required by the buyer as a condition to the sale of the Paradox Basin assets.
In 2009, multiple sale agreements were signed to sell the Company's ownership interests in the Brazilian Transmission Lines. In connection with the sale, Centennial agreed to guarantee payment of any indemnity obligations of certain of the Company's indirect wholly owned subsidiaries who were the sellers in three purchase and sale agreements for periods ranging up to 10 years from the date of sale. The guarantees were required by the buyers as a condition to the sale of the Brazilian Transmission Lines.
Certain subsidiaries of the Company have outstanding guarantees to third parties that guarantee the performance of other subsidiaries of the Company. These guarantees are related to construction contracts, insurance deductibles and loss limits, and certain other guarantees. At
March 31, 2017
, the fixed maximum amounts guaranteed under these agreements aggregated
$92.8 million
. The amounts of scheduled expiration of the maximum amounts guaranteed under these agreements aggregate
$8.3 million
in
2017
;
$26.2 million
in
2018
;
$54.3 million
in
2019
; and
$4.0 million
, which has no scheduled maturity date. There were
no
amounts outstanding under the above guarantees at
March 31, 2017
. In the event of default under these guarantee obligations, the subsidiary issuing the guarantee for that particular obligation would be required to make payments under its guarantee.
Certain subsidiaries have outstanding letters of credit to third parties related to insurance policies and other agreements, some of which are guaranteed by other subsidiaries of the Company. At
March 31, 2017
, the fixed maximum amounts guaranteed under these letters of credit aggregated
$31.0 million
. The amounts of scheduled expiration of the maximum amounts guaranteed under these letters of credit aggregate
$30.3 million
in 2017 and
$700,000
in 2018. There were
no
amounts outstanding under the above letters of credit at
March 31, 2017
. In the event of default under these letter of credit obligations, the subsidiary issuing the letter of credit for that particular obligation would be required to make payments under its letter of credit.
In addition, Centennial, Knife River and MDU Construction Services have issued guarantees to third parties related to the routine purchase of maintenance items, materials and lease obligations for which no fixed maximum amounts have been specified. These guarantees have no scheduled maturity date. In the event a subsidiary of the Company defaults under these obligations, Centennial, Knife River or MDU Construction Services would be required to make payments under these guarantees. Any amounts outstanding by subsidiaries of the Company for these guarantees were reflected on the Consolidated Balance Sheet at
March 31, 2017
.
In the normal course of business, Centennial has surety bonds related to construction contracts and reclamation obligations of its subsidiaries. In the event a subsidiary of Centennial does not fulfill a bonded obligation, Centennial would be responsible to the surety bond company for completion of the bonded contract or obligation. A large portion of the surety bonds is expected to expire
within the next 12 months; however, Centennial will likely continue to enter into surety bonds for its subsidiaries in the future. At
March 31, 2017
, approximately
$744.0 million
of surety bonds were outstanding, which were not reflected on the Consolidated Balance Sheet.
Variable interest entities
The Company evaluates its arrangements and contracts with other entities to determine if they are VIEs and if so, if the Company is the primary beneficiary.
Dakota Prairie Refining, LLC
On February 7, 2013, WBI Energy and Calumet formed a limited liability company, Dakota Prairie Refining, and entered into an operating agreement to develop, build and operate Dakota Prairie Refinery in southwestern North Dakota. WBI Energy and Calumet each had a
50
percent ownership interest in Dakota Prairie Refining. WBI Energy's and Calumet's capital commitments, based on a total project cost of
$300 million
, under the agreement were
$150 million
and
$75 million
, respectively. Capital commitments in excess of
$300 million
were shared equally between WBI Energy and Calumet. Dakota Prairie Refining entered into a term loan for project debt financing of
$75 million
on April 22, 2013. The operating agreement provided for allocation of profits and losses consistent with ownership interests; however, deductions attributable to project financing debt was allocated to Calumet. Calumet's cash distributions from Dakota Prairie Refining were decreased by the principal and interest paid on the project debt, while the cash distributions to WBI Energy were not decreased. Pursuant to the operating agreement, Centennial agreed to guarantee Dakota Prairie Refining's obligation under the term loan. The net loss attributable to noncontrolling interest on the Consolidated Statements of Income is pretax as Dakota Prairie Refining was a limited liability company. For more information related to the guarantee, see Guarantees in this note.
Dakota Prairie Refining was determined to be a VIE, and the Company had determined that it was the primary beneficiary as it had an obligation to absorb losses that could have been potentially significant to the VIE through WBI Energy's equity investment and Centennial's guarantee of the third-party term loan. Accordingly, the Company consolidated Dakota Prairie Refining in its financial statements and recorded a noncontrolling interest for Calumet's ownership interest.
On June 24, 2016, WBI Energy entered into a membership interest purchase agreement with Tesoro to sell all of the outstanding membership interests in Dakota Prairie Refining to Tesoro. To effectuate the sale, WBI Energy acquired Calumet’s
50
percent membership interest in Dakota Prairie Refining on June 27, 2016. The sale of the membership interests to Tesoro closed on June 27, 2016. For more information on the Company's discontinued operations, see Note
8
.
Dakota Prairie Refinery commenced operations in May 2015. The assets of Dakota Prairie Refining were used solely for the benefit of Dakota Prairie Refining. The total assets and liabilities of Dakota Prairie Refining were as follows:
|
|
|
|
|
|
March 31, 2016
|
|
|
(In thousands)
|
Assets
|
|
Current assets:
|
|
Cash and cash equivalents
|
$
|
478
|
|
Accounts receivable
|
11,169
|
|
Inventories
|
17,056
|
|
Prepayments and other current assets
|
6,124
|
|
Total current assets
|
34,827
|
|
Net property, plant and equipment
|
419,492
|
|
Deferred charges and other assets:
|
|
Other
|
8,941
|
|
Total deferred charges and other assets
|
8,941
|
|
Total assets
|
$
|
463,260
|
|
Liabilities
|
|
Current liabilities:
|
|
Short-term borrowings
|
$
|
63,200
|
|
Long-term debt due within one year
|
6,375
|
|
Accounts payable
|
27,697
|
|
Taxes payable
|
1,001
|
|
Accrued compensation
|
717
|
|
Other accrued liabilities
|
7,155
|
|
Total current liabilities
|
106,145
|
|
Long-term debt
|
62,625
|
|
Total liabilities
|
$
|
168,770
|
|
Fuel Contract
Coyote Station entered into a coal supply agreement with Coyote Creek that provides for the purchase of coal necessary to supply the coal requirements of the Coyote Station for the period May 2016 through December 2040. Coal purchased under the coal supply agreement is reflected in inventories on the Company's Consolidated Balance Sheets and is recovered from customers as a component of fuel and purchased power.
The coal supply agreement creates a variable interest in Coyote Creek due to the transfer of all operating and economic risk to the Coyote Station owners, as the agreement is structured so the price of the coal will cover all costs of operations as well as future reclamation costs. The Coyote Station owners are also providing a guarantee of the value of the assets of Coyote Creek as they would be required to buy the assets at book value should they terminate the contract prior to the end of the contract term and are providing a guarantee of the value of the equity of Coyote Creek in that they are required to buy the entity at the end of the contract term at equity value. Although the Company has determined that Coyote Creek is a VIE, the Company has concluded that it is not the primary beneficiary of Coyote Creek because the authority to direct the activities of the entity is shared by the four unrelated owners of the Coyote Station, with no primary beneficiary existing. As a result, Coyote Creek is not required to be consolidated in the Company's financial statements.
At
March 31, 2017
, the Company's exposure to loss as a result of the Company's involvement with the VIE, based on the Company's ownership percentage, was
$42.7 million
.
Note
17
- Subsequent events
On March 1, 2017, the Company provided notice of its intent to redeem all outstanding shares of its preferred stock. Effective April 1, 2017, all outstanding preferred stock was redeemed for a repurchase price of approximately
$15.9 million
. The redemption of the preferred stock was funded with borrowings from the Company's commercial paper program and cash on hand.
On April 25, 2017, Cascade amended its revolving credit agreement to increase the borrowing limit to
$75.0 million
and extend the termination date to April 24, 2020.
On April 25, 2017, Intermountain amended its revolving credit agreement to increase the borrowing limit to
$85.0 million
and extend the termination date to April 24, 2020.