Quantcast
Last updated on April 19, 2014 at 5:20 EDT

NorthWestern Reports Third Quarter 2012 Financial Results

October 24, 2012

SIOUX FALLS, S.D., Oct. 24, 2012 /PRNewswire/ — NorthWestern Corporation, d/b/a NorthWestern Energy, (NYSE: NWE), reported financial results for the quarter ended September 30, 2012. Net loss was $3.8 million, or $(0.10) per fully diluted share, for the quarter ended September 30, 2012, compared with net income of $14.9 million, or $0.41 per fully diluted share, for the quarter ended September 30, 2011.

“Our core business continues to perform to expectations. However, we recorded a quarterly loss as a result of two previously-disclosed items: our decision to shelve the Mountain States Transmission Intertie project and the unfavorable, although non-binding, decision by a FERC administrative law judge regarding the allocation of costs at our Dave Gates Generating Station,” said Bob Rowe. “We are disappointed with these items’ effect on our quarterly results. Our focus is to remain committed to funding our distribution improvement plan and transmission infrastructure improvements while we seek additional regulated energy supply resources to provide our customers long-term price stability and resource adequacy.”

Significant items during third quarter of 2012

  • A pre-tax charge of approximately $24 million in the third quarter of 2012 for the impairment of substantially all of the capitalized preliminary survey and investigative costs associated with the Mountain States Transmission Intertie (MSTI) project.
  • Received a non-binding initial decision made by a FERC Administrative Law Judge (ALJ) concerning the allocation of costs at our Dave Gates Generating Station (DGGS), which concluded that NorthWestern should recover only approximately 4.4% of revenues from FERC jurisdictional customers, resulting in a deferral of $11.4 million of revenues. NorthWestern plans to appeal this decision through customary channels.
  • Closed on $90 million of First Mortgage Bonds at 4.15% and $60 million of First Mortgage Bonds at 4.30%, maturing in 2042 and 2052, respectively.
  • Completed the purchase of natural gas production interests in northern Montana’s Bear Paw Basin for approximately $19.5 million. The purchase also includes a 75% interest in the Lodge Creek and Willow Creek Gas Gathering Systems.
  • Filed with the Montana Public Service Commission a request to increase natural gas rates by $15.7 million to account for investments in its natural gas transmission, distribution and storage systems and to implement pipeline integrity and infrastructure improvements, as well as cover increased expenses.
    Summary Financial Results
    The following table reconciles the primary changes from 2011 to 2012:

                                                                         Three Months Ended                                       Nine Months Ended
                                                                         ------------------                                       -----------------
                                                          Pre-tax      Net        EPS                 Pre-tax     Net      EPS
                                                          Income    Income(1)   Diluted               Income   Income(1) Diluted
                                                          ------    --------    -------               ------   --------  -------

             2011 reported                                             $15.5                           $14.9                        $0.41                            $67.7          $58.4 $1.60

    Gross Margin
             DGGS                                            (9.6)                 (5.9)               (0.16)                        (4.6)             (2.8)        (0.08)
             Natural gas retail volumes                      (0.3)                 (0.2)               (0.01)                        (6.3)             (3.9)        (0.11)
             Electric retail volumes                          3.8                   2.3                 0.06                         (0.4)             (0.2)        (0.01)
              Operating expenses recovered in
              trackers                                        1.4                   0.9                 0.02                          1.4               0.9           0.02
             Montana property tax tracker                     1.4                   0.9                 0.02                          2.4               1.5           0.04
             South Dakota natural gas rate increase           0.3                   0.2                 0.01                          1.3               0.8           0.02
             Gas production                                                -                      -                         (0.8)               (0.5)        (0.01)
             DSM lost revenues                                             -                      -                          5.1                 3.1          0.08
             Transmission capacity                                         -                      -                          1.4                 0.9          0.02
             Other                                           (0.1)                 (0.1)                   -                         (1.4)             (0.9)        (0.02)
                                                            -----
                 Subtotal - Gross Margin                     (3.1)                 (1.9)               (0.06)                        (1.9)             (1.1)        (0.05)
    OG&A Expense
             Operating and maintenance                          -                     -                    -                          2.3               1.4           0.04
             Insurance settlements and recoveries             2.3                   1.4                 0.04                          1.4               0.9           0.02
             Labor                                            1.6                   1.0                 0.03                          1.1               0.7           0.02
             Abandoned gas transmission project               0.8                   0.5                 0.01                          0.8               0.5           0.01
             Bad debt expense                                   -                     -                    -                          1.0               0.6           0.02
             Plant operator costs                               -                     -                    -                          0.7               0.4           0.01
              Operating expenses recovered in energy
              supply trackers                                (1.4)                 (0.9)               (0.02)                           -                 -              -
             Other                                           (0.1)                 (0.1)                   -                          0.3               0.2           0.01
                                                            -----
                 Subtotal - OG&A Expense                      3.2                   1.9                 0.06                          7.6               4.7           0.13
    Other
             MSTI impairment                                  (24)                (14.8)                (0.4)                         (24)            (14.8)          (0.4)
             Depreciation expense                            (1.3)                 (0.8)               (0.02)                        (3.8)             (2.3)        (0.06)
             Property and other taxes                        (2.2)                 (1.4)               (0.04)                        (5.8)             (3.6)          (0.1)
             Interest Expense                                  (1)                 (0.6)               (0.02)                         1.1               0.7           0.02
             Other Income                                     0.6                   0.4                 0.01                          0.9               0.6           0.02
    Items related to income tax
              Prior year permanent return to accrual
              adjustments                                                1.9                   0.05                                   4.5              0.12
             Flow-through repairs deductions                            (1.4)                 (0.04)                                  0.8              0.02
              Flow-through of state bonus
              depreciation deduction                                    (0.9)                 (0.02)                                 (2.3)            (0.06)
              Recognition of state net operating loss
              benefit/valuation allowance release                        0.1                      -                                  (2.3)            (0.06)
             State income tax and other, net                            (0.2)                 (0.01)                                 (2.5)            (0.07)
             All other, net                                  (0.1)                   (1)                         $(0.02)                        (0.1)         (1.1)         $(0.03)
                                                            -----

                 Total EPS impact of above items                                  (0.51)                                            (0.52)

             2012 reported                                            $(12.4)                          $(3.8)                       $(0.1)                           $41.7          $39.7 $1.08
                                                              ===

    (1) Income Tax Benefit (Expense) calculation on reconciling items assumes normal effective tax rate of 38.5%.

For more information see http://www.northwesternenergy.com/documents/investor/Q312.pdf.

Significant Drivers

Gross Margin

Consolidated gross margin for the third quarter of 2012 was $142.9 million compared with $146.0 million for same period of 2011. Consolidated gross margin decreased $3.1 million primarily due to the $11.4 million deferral of DGGS FERC related revenue, offset in part by higher DGGS retail revenues due to the regulatory treatment of bonus depreciation by the Montana Public Service Commission.

This decrease was partly offset by the following improvements:

  • Warmer summer weather increasing electric customer usage for cooling during the third quarter of 2012;
  • Higher revenues for operating expenses recovered in trackers, primarily related to customer efficiency programs and environmental remediation costs; and
  • An increase in Montana property taxes included in a tracker as compared to the same period in 2011.

Consolidated gross margin for the nine months ended September 30, 2012 was $461.6 million compared with $463.5 million for same period of 2011.

Operating, General and Administrative Expenses

Consolidated operating, general and administrative expenses were $63.1 million for the quarter ended September 30, 2012 as compared with $66.3 million during the same period of 2011. The decrease in operating, general and administrative expenses of $3.2 million was primarily due to lower insurance settlements as 2011 results included an increase of $2.3 million related to a settlement with a former employee and the write-off of an abandoned gas transmission project due to the pursuit of a more cost effective solution, as well as decreased labor costs primarily due to a lower incentive accrual, offset in part by compensation increases and a higher number of employees.

These decreases were offset in part by higher operating expenses primarily related to costs incurred for customer efficiency programs, which are recovered from customers through supply trackers and have no impact on operating income.

Consolidated operating, general and administrative expenses were $195.7 million for the nine months ended September 30, 2012 as compared with $203.3 million during the same period of 2011.

MSTI

We recorded a pre-tax charge of approximately $24 million in the third quarter of 2012 for the impairment of substantially all of the capitalized preliminary survey and investigative costs associated with MSTI.

Property and Other Taxes

Consolidated property and other taxes were $24.8 million for the quarter ended September 30, 2012 as compared with $22.6 million during the same period of 2011. This increase was due primarily to higher assessed property valuations in Montana and plant additions. The higher assessed property valuations are primarily due to a lower capitalization rate used by the Montana Department of Revenue.

Consolidated property and other taxes were $74.4 million for the nine months ended September 30, 2012 as compared with $68.5 million during the same period of 2011.

Depreciation Expense

Consolidated depreciation expense was $26.5 million for the three months ended September 30, 2012 as compared with $25.2 million during the same period of 2011. This increase was due primarily to plant additions.

Consolidated depreciation expense was $79.4 million for the nine months ended September 30, 2012 as compared with $75.6 million during the same period of 2011.

Interest Expense

Consolidated interest expense was $17.7 million for the quarter ended September 30, 2012 as compared with $16.7 million during the same period of 2011. This increase was primarily due to an increase in debt outstanding and interest accrued on DGGS deferred revenues, partially offset by higher capitalization of AFUDC.

Consolidated interest expense was $49.6 million for the nine months ended September 30, 2012 as compared with $50.7 million during the same period of 2011.

Income Tax Expense

Consolidated income tax benefit in the third quarter of 2012 was $8.6 million as compared with $0.6 million income tax expense in same period of 2011. The effective tax rate for the three months ended September 30, 2012 was (69.5)% (a tax benefit) as compared with 4.1% for the same period of 2011. The decrease in income tax expense for the third quarter of 2012 was primarily due to lower taxable income. The effective tax rate differs from the federal statutory tax rate of 35.0% primarily due to repairs and state tax bonus depreciation deductions.

Consolidated income tax expense for the nine months ended September 30, 2012 was $2.0 million as compared with $9.3 million in same period of 2011. The effective tax rate for the nine months ended September 30, 2012 was 4.8% as compared with 13.7% for the same period of 2011.

The following table summarizes the significant differences from the Federal statutory rate, which result in reduced income tax expense:

                       Three Months Ended Nine Months Ended
                          September 30,     September 30,
                         (in millions)
                         2012              2011       2012   2011
                         ----              ----       ----   ----
    Income Before
     Income Taxes       (12.4)                  15.5         41.7   67.7
                        -----                   ----         ----   ----

    Income tax
     calculated at 35%
     federal statutory
     rate                 4.3                   (5.4)       (14.6) (23.7)

    Permanent or flow
     through
     adjustments:
    -----------------
    Prior year
     permanent return
     to accrual
     adjustments          1.9                      -          1.9   (2.6)
    Flow-through
     repairs
     deductions           1.8                    3.2          9.5    8.7
    Flow-through of
     state bonus
     depreciation
     deduction            0.3                    1.2          2.2    4.5
    Recognition of
     state net
     operating loss
     benefit/
     valuation
     allowance release    0.1                      -          0.1    2.4
    State income tax
     and other, net       0.2                    0.4         (1.1)   1.4
                          ---                    ---         ----    ---
                          4.3                    4.8         12.6   14.4
                          ---                    ---         ----   ----

    Income tax benefit
     (expense)            8.6                   (0.6)        (2.0)  (9.3)
                          ===                   ====         ====   ====

Regulated Operations

In the regulated operations for the three months ended September 30, 2012, electric gross margin declined by $2.7 million, due primarily to the revenue deferral related to the initial decision of the FERC ALJ concerning DGGS cost allocation offset in part by higher DGGS retail revenues due to regulatory treatment of bonus depreciation and higher volumes due to warmer summer weather. Natural gas gross margin declined by $0.4 million, due primarily to reduced volumes driven by lower customer usage.

For the nine months ended September 30, 2012, in the regulated operations, electric gross margin improved by $5.4 million, and natural gas gross margin declined by $7.2 million.

Liquidity and Capital Resources

As of September 30, 2012, cash and cash equivalents were $18.2 million compared with $5.9 million at December 31, 2011. The Company had $294.0 million available from its revolving credit facility at September 30, 2012, compared with $130.1 million at December 31, 2011.

Dividend Declaration

NorthWestern’s Board of Directors declared a quarterly common stock dividend of $0.37 per share, payable December 31, 2012, to common shareholders of record as of December 14, 2012.

Significant Items Not Contemplated in 2012 Guidance

A reconciliation of items not factored into our 2012 earnings guidance of $2.30 to $2.40 per fully diluted earnings per share is as follows (net of tax). The amount calculated below represents a non-GAAP measure that may provide users of this financial information with additional meaningful information regarding the impact of certain items on the Company’s expected earnings. The Company believes the following presentation is more representative of our ongoing earnings than the estimated GAAP EPS, also represented below. Non-GAAP financial measures should be viewed in addition to, and not as an alternative to, the reported operating results or cash flows from operations or any other measure of performance prepared in accordance with GAAP. In addition, the presentation of these measures may not be comparable to similarly titled measures other companies use.

                  2012 Actual    Actual   Actual  est. low est. high  Low  High
                       Q1 2012   Q2 2012 Q3 2012   Q4 2012   Q4 2012   2012  2012
                       -------   ------- -------   -------   -------   ----  ----

    Reported EPS                   $0.88              $0.31          $(0.10)          $0.71         $0.81 $1.80 $1.90

    Non-GAAP
     Adjustments:
    -------------

    Weather                0.09              0.05     (0.06)              -         -        0.08    0.08
    Release of DGGS
     deferral             (0.05)                -         -               -         -       (0.05) (0.05)
    Lost revenue
     recovery related
     to 2010/2011             -             (0.05)        -               -         -       (0.05) (0.05)
    FERC ALJ Decision
     related to 2011          -                 -      0.12               -         -        0.12    0.12
    MSTI write-off            -                 -      0.40               -         -        0.40    0.40
                            ---               ---      ----             ---       ---        ----    ----
    Adjusted EPS                   $0.92              $0.31           $0.36           $0.71         $0.81 $2.30 $2.40
                                   =====              =====           =====           =====         ===== ===== =====

2012 Earnings Outlook

NorthWestern expects its 2012 earnings, as adjusted above, for 2012 to be $2.30 – $2.40 per fully diluted share.

Basic assumptions include the following expectations:

  • DGGS cost allocation methodology consistent with the Initial Decision, excluding the 2011 effect of the Initial Decision;
  • Excludes any potential effect of an arbitration decision in the Colstrip Energy Limited Partnership (CELP) matter, which is expected in the fourth quarter of 2012. The Company currently estimates that, if CELP prevailed entirely, we could be required to increase our QF liability by approximately $30 million. If we prevailed entirely, we could reduce our QF liability by up to $52 million.
  • Fully diluted average shares outstanding of 37.1 million for 2012; and
  • Normal weather in the Company’s electric and natural gas service territories for the fourth quarter of 2012.

Company Hosting Investor Conference Call

NorthWestern will host an investor conference call today at 4:00 pm Eastern Time to review its financial results for the quarter and the nine months ended September 30, 2012.

The conference call will be webcast live on the Internet at http://www.northwesternenergy.com under the “Investor Information” heading. To listen, please go to the site at least 10 minutes in advance of the call to register. An archived webcast will be available shortly after the call.

A telephonic replay of the call will be available beginning at 6:00 p.m. ET on October 24, 2012, through November 23, 2012, at (888) 203-1112 access code 3754155.

About NorthWestern Energy

NorthWestern Energy is one of the largest providers of electricity and natural gas in the Upper Midwest and Northwest, serving approximately 668,300 customers in Montana, South Dakota and Nebraska. More information on NorthWestern Energy is available on the Company’s Web site at www.northwesternenergy.com.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including, without limitation, the information under “2012 Earnings Outlook”. Forward-looking statements often address our expected future business and financial performance, and often contain words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” or “will.” These statements are based upon our current expectations and speak only as of the date hereof. Our actual future business and financial performance may differ materially and adversely from those expressed in any forward-looking statements as a result of various factors and uncertainties, including, but not limited to:

  • potential adverse federal, state, or local legislation or regulation or adverse determinations by regulators could have a material effect on our liquidity, results of operations and financial condition;
  • changes in availability of trade credit, creditworthiness of counterparties, usage, commodity prices, fuel supply costs or availability due to higher demand, shortages, weather conditions, transportation problems or other developments, may reduce revenues or may increase operating costs, each of which could adversely affect our liquidity and results of operations;
  • unscheduled generation outages or forced reductions in output, maintenance or repairs, which may reduce revenues and increase cost of sales or may require additional capital expenditures or other increased operating costs; and
  • adverse changes in general economic and competitive conditions in the U.S. financial markets and in our service territories.

Our Annual Report on Form 10-K, recent and forthcoming Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K and other Securities and Exchange Commission filings discuss some of the important risk factors that may affect our business, results of operations and financial condition.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measure

This press release includes financial information prepared in accordance with GAAP, as well as other financial measures, Gross Margin, and adjusted EPS, that is considered a “non-GAAP financial measure.” Generally, a non-GAAP financial measure is a numerical measure of a company’s financial performance, financial position or cash flows that exclude (or include) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP. Gross Margin (Revenues less Cost of Sales) is a non-GAAP financial measure due to the exclusion of depreciation from the measure. The presentation of Gross Margin is intended to supplement investors’ understanding of our operating performance. Gross Margin is used by us to determine whether we are collecting the appropriate amount of energy costs from customers to allow recovery of operating costs. Our Gross Margin measure may not be comparable to other companies’ Gross Margin measure. Furthermore, this measure is not intended to replace operating income as determined in accordance with GAAP as an indicator of operating performance.

                                                                       NORTHWESTERN CORPORATION
                                                          CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME
                                                                             (Unaudited)
                                                               (in thousands, except per share amounts)

                                Three Months Ended September 30,                    Nine Months Ended September 30,
                                2012                  2011                  2012                  2011
                                ----                  ----                  ----                  ----
    Revenues
    Electric                           $202,485                                    $206,613                         $605,716  $602,024
    Gas                       32,965                          37,067                           182,812               230,971
    Other                        416                             361                             1,041                 1,112
                                 ---                             ---                             -----                 -----
    Total Revenues           235,866                         244,041                           789,569               834,107
                             -------                         -------                           -------               -------
    Operating Expenses
    Cost of sales             93,061                          98,045                           327,884               370,523
    Operating, general and
     administrative           63,056                          66,332                           195,725               203,254
    Mountain States
     Transmission Intertie
     impairment               24,039                               -                            24,039                     -
    Property and other taxes  24,796                          22,605                            74,395                68,551
    Depreciation              26,505                          25,181                            79,364                75,562
                              ------                          ------                            ------                ------
    Total Operating Expenses 231,457                         212,163                           701,407               717,890
                             -------                         -------                           -------               -------
    Operating Income           4,409                          31,878                            88,162               116,217
    Interest Expense, net    (17,743)                       (16,694)                           (49,598)              (50,737)
    Other Income                 974                             346                             3,134                 2,257
                                 ---                             ---                             -----                 -----
    (Loss) Income Before
     Income Taxes            (12,360)                         15,530                            41,698                67,737
    Income Tax Benefit
     (Expense)                 8,588                            (635)                           (1,989)               (9,297)
                               -----                            ----                            ------                ------
    Net (Loss) Income                   $(3,772)                                    $14,895                          $39,709   $58,440
    Average Common Shares
     Outstanding              37,201                          36,262                            36,723                36,254
                              ------                          ------                            ------                ------
    Basic (Loss) Earnings
     per Average Common
     Share                               $(0.10)                                      $0.41                            $1.09     $1.61
    Diluted (Loss) Earnings
     per Average Common
     Share                               $(0.10)                                      $0.41                            $1.08     $1.60
    Dividends Declared per
     Average Common Share                 $0.37                                       $0.36                            $1.11     $1.08
                                          -----                                       -----                            -----     -----

                       NORTHWESTERN CORPORATION
                     CONSOLIDATED BALANCE SHEETS
                             (Unaudited)
                            (in thousands)

                          September 30,             December 31,
                                   2012                       2011
                                   ----                       ----

    ASSETS
    Current Assets                         $287,124                  $290,199
    Property, Plant,
     and Equipment,
     Net                      2,319,173                  2,213,267
    Goodwill                    355,128                    355,128
    Regulatory
     Assets                     320,956                    308,804
    Other Noncurrent
     Assets                      24,565                     43,040
                                 ------                     ------
    Total Assets                         $3,306,946                $3,210,438
                                         ==========                ==========
    LIABILITIES AND
     SHAREHOLDERS'
     EQUITY
    Current
     Maturities of
     Long-term Debt
     and Capital
     Leases                                  $1,585                    $5,162
    Commercial Paper                  -                    166,934
    Current
     Liabilities                320,131                    303,858
    Long-term
     Capital Leases              31,979                     32,918
    Long-term Debt            1,055,067                    905,049
    Noncurrent
     Regulatory
     Liabilities                273,744                    265,987
    Deferred Income
     Taxes                      339,851                    282,406
    Other Noncurrent
     Liabilities                395,770                    389,012
                                -------                    -------
    Total
     Liabilities              2,418,127                  2,351,326
                              ---------                  ---------
    Total
     Shareholders'
     Equity                     888,819                    859,112
                                -------                    -------
    Total
     Liabilities and
     Shareholders'
     Equity                              $3,306,946                $3,210,438
                                         ==========                ==========

                           NORTHWESTERN CORPORATION
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (in thousands)

                         Nine Months Ended September 30,
                              2012                 2011
                              ----                 ----
    Operating
     Activities
    Net income                       $39,709                        $58,440
    Non-cash items         123,995                         109,325
    Changes in
     operating
     assets and
     liabilities            58,924                          42,740
                            ------                          ------
    Cash Provided by
     Operating
     Activities            222,628                         210,505

    Cash Used in
     Investing
     Activities           (175,981)                      (124,275)

    Cash Used In
     Financing
     Activities            (34,379)                        (86,470)

    Net Increase
     (Decrease) in
     Cash and Cash
     Equivalents            12,268                            (240)
                            ------                            ----
    Cash and Cash
     Equivalents,
     beginning of
     period                  5,928                           6,234
                             -----                           -----
    Cash and Cash
     Equivalents,
     end of period                   $18,196                         $5,994
                                     =======                         ======

                                                 NORTHWESTERN CORPORATION
                                                REGULATED ELECTRIC SEGMENT
                                             Three Months Ended September 30,
                                                        (Unaudited)

                                       Results
                                       -------
                       2012         2011                 Change               % Change
                       ----         ----                 ------               --------
                                      (dollars in millions)
    Retail revenues          $203.3                                   $189.2               $14.1    7.5%
    Regulatory
     amortization      (5.2)                     2.0                               (7.2) (360.0)%
                       ----                      ---                               ----  -------
         Total retail
          revenues    198.1                    191.2                                6.9      3.6%
    Transmission       11.6                     11.5                                0.1      0.9%
    Ancillary
     services          (9.2)                     2.2                              (11.4) (518.2)%
    Wholesale           0.8                      0.4                                0.4    100.0%
    Other               1.2                      1.3                               (0.1)   (7.7)%
                        ---                      ---                               ----    -----
    Total Revenues           $202.5                                   $206.6               $(4.1) (2.0)%
    Total Cost of
     Sales             83.8                     85.2                               (1.4)   (1.6)%
                       ----                     ----                               ----    -----
    Gross Margin             $118.7                                   $121.4               $(2.7) (2.2)%
                             ------                                   ------               -----  -----

                                         Revenues                   Megawatt Hours
                                                                      (MWH)                       Avg. Customer Counts
                                                  --------          --------------                --------------------
                                2012                2011           2012            2011        2012             2011
                                ----                ----           ----            ----        ----             ----
                                                           (in thousands)
    Retail Electric
    Montana                           $63,951                   $58,531                   587                    552          273,130         271,073
    South Dakota              13,947              12,858                    158                 150                    48,940          48,664
                              ------              ------                    ---                 ---                    ------          ------
       Residential            77,898              71,389                    745                 702                   322,070         319,737
                              ------              ------                    ---                 ---                   -------         -------
    Montana                   83,605              79,634                    867                 840                    62,179          61,623
    South Dakota              19,643              18,076                    259                 250                    12,235          12,054
                              ------              ------                    ---                 ---                    ------          ------
    Commercial               103,248              97,710                  1,126               1,090                    74,414          73,677
                             -------              ------                  -----               -----                    ------          ------
    Industrial                10,011               8,961                    806                 718                        74              73
    Other                     12,148              11,179                    103                  92                     7,816           7,627
                              ------              ------                    ---                 ---                     -----           -----
    Total Retail Electric            $203,305                  $189,239                 2,780                  2,602          404,374         401,114
                                     ========                  ========                 =====                  =====          =======         =======
    Total Wholesale Electric             $781                      $378                    41                     15                -               -
                                         ====                      ====                   ===                    ===              ===             ===

                  Degree Days       2012 as compared with:
                  -----------       ----------------------
     Heating
     Degree-
     Days    2012         2011     Historic                          2011    Historic
                                    Average                                  Average
                                    -------                                  -------
    Montana   244              235              367        4% colder      34% warmer
     South
     Dakota    65               70               83        7% warmer      22% warmer

                                                 NORTHWESTERN CORPORATION
                                                REGULATED ELECTRIC SEGMENT
                                             Nine Months Ended September 30,
                                                       (Unaudited)

                                             Results
                                             -------
                       2012         2011                 Change              % Change
                       ----         ----                 ------              --------
                                      (dollars in millions)
    Retail revenues          $561.9                                   $552.4               $9.5  1.7%
    Regulatory
     amortization      10.8                      6.0                               4.8     80.0%
         Total retail
          revenues    572.7                    558.4                              14.3      2.6%
    Transmission       33.7                     32.3                               1.4      4.3%
    Ancillary
     services          (6.5)                     5.3                             (11.8) (222.6)%
    Wholesale           2.4                      1.5                               0.9     60.0%
    Regulatory
     amortization and
     other              3.4                      4.5                              (1.1)  (24.4)%
                        ---                      ---                              ----   ------
    Total Revenues           $605.7                                   $602.0               $3.7  0.6%
    Total Cost of
     Sales            244.9                    246.6                              (1.7)   (0.7)%
                      -----                    -----                              ----    -----
    Gross Margin             $360.8                                   $355.4               $5.4  1.5%
                             ------                                   ------               ----  ---

                                         Revenues              Megawatt Hours
                                                                  (MWH)                      Avg. Customer Counts
                                                  --------     --------------               --------------------
                                2012                 2011      2012           2011        2012             2011
                                ----                 ----      ----           ----        ----             ----
                                                              (in thousands)
    Retail Electric
    Montana                          $188,768              $187,856                1,749                  1,786          273,711         271,975
    South Dakota              36,993               36,556               424                448                    48,887          48,660
                              ------               ------               ---                ---                    ------          ------
       Residential           225,761              224,412             2,173              2,234                   322,598         320,635
                             -------              -------             -----              -----                   -------         -------
    Montana                  230,498              228,556             2,416              2,407                    62,046          61,516
    South Dakota              52,887               49,748               712                702                    12,116          11,938
                              ------               ------               ---                ---                    ------          ------
    Commercial               283,385              278,304             3,128              3,109                    74,162          73,454
                             -------              -------             -----              -----                    ------          ------
    Industrial                28,185               27,723             2,217              2,113                        74              72
    Other                     24,600               21,936               178                150                     6,101           5,953
                              ------               ------               ---                ---                     -----           -----
    Total Retail Electric            $561,931              $552,375                7,696                  7,606          402,935         400,114
                                     ========              ========                =====                  =====          =======         =======
    Total Wholesale Electric           $2,382                $1,507                  137                     88                -               -
                                       ======                ======                  ===                    ===              ===             ===

                   Degree Days                 2012 as compared with:
                   -----------                 ----------------------
     Heating
     Degree-
     Days     2012         2011 Historic                      2011     Historic
                                Average                                Average
                                -------                                -------
    Montana  4,488        5,235          5,007         14% warmer     10% warmer
     South
     Dakota  4,375        6,211          5,683         30% warmer     23% warmer

                                               NORTHWESTERN CORPORATION
                                            REGULATED NATURAL GAS SEGMENT
                                           Three Months Ended September 30,
                                                     (Unaudited)

                                         Results
                                         -------
                      2012       2011                 Change              % Change
                      ----       ----                 ------              --------
                                  (dollars in millions)
    Retail revenues        $19.9                                   $23.7              $(3.8) (16.0)%
    Regulatory
     amortization      5.1                    5.2                              (0.1)   (1.9)
                       ---                    ---                              ----    ----
         Total retail
          revenues    25.0                   28.9                              (3.9)  (13.5)
    Wholesale and
     other             8.0                    8.1                              (0.1)   (1.2)
                       ---                    ---                              ----    ----
    Total Revenues    33.0                   37.0                              (4.0)  (10.8)
    Total Cost of
     Sales             9.2                   12.8                             (3.60   (28.1)
                       ---                   ----                             -----   -----
    Gross Margin           $23.8                                   $24.2             $(0.40)  (1.7)%
                           -----                                   -----             ------   -----

                                Revenues            Dekatherms (Dkt)                 Avg. Customer Counts
                                --------             ---------------                 --------------------
                       2012                2011     2012             2011        2012             2011
                       ----                ----     ----             ----        ----             ----
                                                (in thousands)
    Retail Gas
    Montana                  $8,795              $10,151                    758                    790           158,524         157,491
    South Dakota      1,757               1,717               113                 121                     37,551          37,167
    Nebraska          1,887               2,204               149                 155                     36,222          36,175
                      -----               -----               ---                 ---                     ------          ------
    Residential      12,439              14,072             1,020               1,066                    232,297         230,833
                     ------              ------             -----               -----                    -------         -------
    Montana           5,171               6,020               515                 525                     22,181          22,024
    South Dakota      1,130               1,462               171                 199                      5,931           5,854
    Nebraska            985               1,883               187                 289                      4,517           4,528
                        ---               -----               ---                 ---                      -----           -----
    Commercial        7,286               9,365               873               1,013                     32,629          32,406
                      -----               -----               ---               -----                     ------          ------
    Industrial           93                 136                10                  13                        269             275
    Other                68                  82                 8                   8                        150             147
                        ---                 ---               ---                 ---                        ---             ---
    Total Retail Gas        $19,886              $23,655                  1,911                  2,100           265,345         263,661
                            =======              =======                  =====                  =====           =======         =======

                  Degree Days     2012 as compared with:
                  -----------     ----------------------
     Heating
     Degree-
     Days    2012        2011     Historic                          2011           Historic
                                   Average                                         Average
                                   -------                                         -------
    Montana       244         235             367        4% colder       34% warmer
     South
     Dakota        65          70              83        7% warmer       22% warmer
    Nebraska       27          49              46        45% warmer      41% warmer

                                                   NORTHWESTERN CORPORATION
                                                REGULATED NATURAL GAS SEGMENT
                                               Nine Months Ended September 30,
                                                         (Unaudited)

                                             Results
                                             -------
                       2012        2011                 Change                 % Change
                       ----        ----                 ------                 --------
                                      (dollars in millions)
    Retail revenues         $150.0                                   $199.4                  $(49.4) (24.8)%
    Regulatory
     amortization       7.3                    (0.8)                                 8.1  (1,012.5)
                        ---                    ----                                  ---   --------
         Total retail
          revenues    157.3                   198.6                                (41.3)     (20.8)
    Wholesale and
     other             25.5                    32.3                                 (6.8)     (21.1)
                       ----                    ----                                 ----      -----
    Total Revenues    182.8                   230.9                                (48.1)     (20.8)
    Total Cost of
     Sales             83.0                   123.9                                (40.9)     (33.0)
                       ----                   -----                                -----      -----
    Gross Margin             $99.8                                   $107.0                   $(7.2)  (6.7)%
                             -----                                   ------                   -----   -----

                                Revenue            Dekatherms (Dkt)                 Avg. Customer
                                                                                     Counts
                                         -------    ---------------                 -------------
                       2012                2011      2012           2011        2012                 2011
                       ----                ----      ----           ----        ----                 ----
                                                   (in thousands)
    Retail Gas
    Montana                  $67,049              $85,553                 7,656           8,883           159,316 158,457
    South Dakota     15,447              20,589             1,709         2,333                    37,792  37,388
    Nebraska         14,234              18,571             1,578         2,038                    36,520  36,525
                     ------              ------             -----         -----                    ------  ------
    Residential      96,730             124,713            10,943        13,254                   233,628 232,370
                     ------             -------            ------        ------                   ------- -------
    Montana          34,409              44,543             4,004         4,667                    22,329  22,188
    South Dakota      9,656              14,742             1,545         2,107                     5,961   5,899
    Nebraska          7,880              13,591             1,279         2,143                     4,571   4,577
                      -----              ------             -----         -----                     -----   -----
    Commercial       51,945              72,876             6,828         8,917                    32,861  32,664
                     ------              ------             -----         -----                    ------  ------
    Industrial          672               1,055                80           115                       273     279
    Other               641                 763                85            93                       150     146
                        ---                 ---               ---           ---                       ---     ---
    Total Retail Gas        $149,988             $199,407                17,936          22,379           266,912 265,459
                            ========             ========                ======          ======           ======= =======

                   Degree Days             2012 as compared with:
                   -----------             ----------------------
    Heating
     Degree-
     Days    2012          2011       Historic                               2011           Historic
                                       Average                                              Average
                                       -------                                              -------
    Montana       4,488         5,235            5,007            14% warmer      10% warmer
    South
     Dakota       4,375         6,211            5,683            30% warmer      23% warmer
    Nebraska      3,611         4,847            4,684            26% warmer      23% warmer

                                                                           NORTHWESTERN CORPORATION
                                                                        THIRD QUARTER SEGMENT RESULTS
                                                                                 (Unaudited)
                                                                                (in thousands)

    Three Months Ended
    September 30, 2012  Electric            Gas         Other          Eliminations                   Total
                        --------            ---         -----          ------------                   -----
    Operating revenues             $202,485                   $32,965                                       $416        $    - $235,866
    Cost of sales          83,814                9,247                            -                            -   93,061
                           ------                -----                          ---                          ---   ------
    Gross margin          118,671               23,718                          416                            -  142,805
                          -------               ------                          ---                          ---  -------
    Operating, general
     and administrative    44,711               17,452                          893                            -   63,056
    MSTI impairment        24,039                    -                            -                            -   24,039
    Property and other
     taxes                 18,621                6,172                            3                            -   24,796
    Depreciation           21,636                4,860                            9                            -   26,505
                           ------                -----                          ---                          ---   ------
    Operating income
     (loss)                 9,664               (4,766)                        (489)                           -    4,409
                            -----               ------                         ----                          ---    -----
    Interest expense      (15,181)              (2,363)                        (199)                           -  (17,743)
    Other income              405                  541                           28                            -      974
    Income tax benefit
     (expense)              5,762               3,102)                         (276)                           -    8,588
                            -----                -----                         ----                          ---    -----
    Net income (loss)                  $650                   $(3,486)                                     $(936)       $    -  $(3,772)
                                       ----                   -------                                      -----      ---  ---  -------

    Three Months Ended
    September 30, 2011   Electric            Gas         Other          Eliminations  Total
                         --------            ---         -----          ------------  -----
    Operating revenues              $206,613                   $37,067                      $361        $    - $244,041
    Cost of sales           85,221               12,824                            -           -   98,045
                            ------               ------                          ---         ---   ------
    Gross margin           121,392               24,243                          361           -  145,996
                           -------               ------                          ---         ---  -------
    Operating, general
     and administrative     45,607               19,979                          746           -   66,332
    Property and other
     taxes                  16,894                5,708                            3           -   22,605
    Depreciation            20,465                4,708                            8           -   25,181
                            ------                -----                          ---         ---   ------
    Operating income
     (loss)                 38,426               (6,152)                        (396)          -   31,878
                            ------               ------                         ----         ---   ------
    Interest expense       (13,661)              (2,711)                        (322)          -  (16,694)
    Other income                86                  232                           28           -      346
    Income tax (expense)
     benefit                (3,407)               3,016                         (244)          -     (635)
                            ------                -----                         ----         ---     ----
    Net income (loss)                $21,444                   $(5,615)                    $(934)       $    -  $14,895
                                     -------                   -------                     -----      ---  ---  -------

    Nine Months Ended
    September 30, 2012   Electric            Gas         Other          Eliminations  Total
                         --------            ---         -----          ------------  -----
    Operating revenues              $605,716                   $182,812                      $1,041        $    - $789,569
    Cost of sales          244,902               82,982                            -              -  327,884
                           -------               ------                          ---            ---  -------
    Gross margin           360,814               99,830                        1,041              -  461,685
                           -------               ------                        -----            ---  -------
    Operating, general
     and administrative    137,753               55,397                        2,575              -  195,725
    MSTI impairment         24,039                    -                            -              -   24,039
    Property and other
     taxes                  55,628               18,759                            8              -   74,395
    Depreciation            64,770               14,569                           25              -   79,364
                            ------               ------                          ---            ---   ------
    Operating income
     (loss)                 78,624               11,105                       (1,567)             -   88,162
                            ------               ------                       ------            ---   ------
    Interest expense       (42,257)              (6,660)                        (681)             -  (49,598)
    Other income             1,818                1,235                           81              -    3,134
    Income tax (expense)
     benefit                (3,322)                 522                          811              -   (1,989)
                            ------                  ---                          ---            ---   ------
    Net income (loss)                $34,863                     $6,202                     $(1,356)       $    -  $39,709
                                     -------                     ------                     -------      ---  ---  -------

    Nine Months Ended
    September 30, 2011   Electric            Gas          Other          Eliminations  Total
                         --------            ---          -----          ------------  -----
    Operating revenues              $602,024                    $230,971                     $1,112        $    - $834,107
    Cost of sales          246,592               123,931                            -             -  370,523
                           -------               -------                          ---           ---  -------
    Gross margin           355,432               107,040                        1,112             -  463,584
                           -------               -------                        -----           ---  -------
    Operating, general
     and administrative    140,267                60,651                        2,336             -  203,254
    Property and other
     taxes                  50,937                17,606                            8             -   68,551
    Depreciation            61,205                14,332                           25             -   75,562
                            ------                ------                          ---           ---   ------
    Operating income
     (loss)                103,023                14,451                       (1,257)            -  116,217
                           -------                ------                       ------           ---  -------
    Interest expense       (40,877)               (8,105)                      (1,755)            -  (50,737)
    Other income             1,425                   751                           81             -    2,257
    Income tax (expense)
     benefit               (10,998)               (1,228)                       2,929             -   (9,297)
                           -------                ------                        -----           ---   ------
    Net income (loss)                $52,573                      $5,869                        $(2)       $    -  $58,440
                                     -------                      ------                        ---      ---  ---  -------

SOURCE NorthWestern Corporation


Source: PR Newswire