NorthWestern Reports Second Quarter 2012 Financial Results

Reports earnings per share of $0.31 for quarter

Reaffirms guidance for 2012 of $2.35 - $2.50 per fully diluted share

Announced a quarterly dividend of $0.37 per share, payable September 30, 2012

Jul 24, 2012, 06:00 ET from NorthWestern Corporation

SIOUX FALLS, S.D., July 24, 2012 /PRNewswire/ -- NorthWestern Corporation d/b/a NorthWestern Energy (NYSE: NWE) reported financial results for the quarter ended June 30, 2012.  Net income was $11.4 million, or $0.31 per fully diluted share, for the quarter ended June 30, 2012, compared with net income of $11.0 million, or $0.30 per fully diluted share, for the quarter ended June 30, 2011.  

Income before income taxes for the quarter ended June 30, 2012, improved by $3.5 million, from $10.5 million to $14.0 million, compared with the quarter ended June 30, 2011.  However, income tax expense for the three months ended June 30, 2012, was $2.6 million, as compared with an income tax benefit of $0.5 million in the same period of 2011.  

"Our quarterly earnings of $.31/ share approximated our expectations," said Bob Rowe, President and CEO.  "We continue to focus on investments to serve our customers, while working with our employees to control costs.  This has allowed us to maintain our financial results despite an unseasonably mild spring in our service territories," added Rowe.

Highlights for second quarter of 2012

  • Entered into an Equity Distribution Agreement with UBS Securities LLC. Under this agreement we sold 687,285 shares of common stock at an average price of $35.40 per share; and
  • Priced $90 million of First Mortgage Bonds at 4.15% and $60 million of First Mortgage Bonds at 4.30%, which are expected to be issued in August 2012.

Summary Financial Results

The following table reconciles the primary changes from 2011 to 2012:

Three Months Ended

Six Months Ended

Pre-tax

Net

EPS

Pre-tax

Net

EPS

Income

Income(1)

Diluted

Income

Income(1)

Diluted

2011 reported

$

10.5

$

11.0

$

0.30

$

52.2

$

43.5

$

1.19

Gross Margin

Demand-side management (DSM) lost revenues

4.5

2.8

0.08

4.5

2.8

0.08

DGGS

0.5

0.3

0.01

5.0

3.1

0.08

Montana property tax tracker

2.3

1.4

0.04

1.0

0.6

0.02

Transmission capacity

1.1

0.7

0.02

1.3

0.8

0.02

South Dakota natural gas rate increase

0.4

0.2

0.01

1.0

0.6

0.02

Operating expenses recovered in trackers

0.2

0.1

Gas production

(0.8)

(0.5)

(0.01)

Electric retail volumes

(4.2)

(2.6)

(0.07)

Natural gas retail volumes

(2.4)

(1.5)

(0.04)

(6.0)

(3.7)

(0.10)

Other

0.2

0.1

(0.5)

(0.3)

(0.01)

Subtotal - Gross Margin

6.8

4.1

0.12

1.3

0.8

0.03

OG&A Expense

Operating and maintenance

0.6

0.4

0.01

2.4

1.5

0.04

Bad debt expense

1.3

0.8

0.02

1.2

0.7

0.02

Plant operator costs

0.5

0.3

0.01

0.6

0.4

0.01

Operating expenses recovered in energy supply trackers

(0.2)

(0.1)

Other

0.2

0.1

Subtotal - OG&A Expense

2.4

1.5

0.04

4.2

2.6

0.07

Other

Depreciation expense

(1.3)

(0.8)

(0.02)

(2.5)

(1.5)

(0.04)

Property and other taxes

(5.3)

(3.3)

(0.09)

(3.7)

(2.3)

(0.06)

Interest Expense

1.0

0.6

0.02

2.1

1.3

0.04

Other Income

0.1

0.1

0.3

0.2

0.01

Items related to income tax

Flow-through repairs deductions

0.6

0.02

2.2

0.06

Flow-through of state bonus depreciation deduction

(0.2)

(1.4)

(0.04)

Recognition of state net operating loss benefit/valuation allowance release

(1.6)

(0.04)

(2.4)

(0.07)

State income tax and other, net

(0.8)

(0.02)

0.3

0.01

All other, net

(0.2)

0.1

(0.02)

0.2

0.1

(0.01)

Total EPS impact of above items

0.01

2012 reported

$

14.0

$

11.4

$

0.31

$

54.1

$

43.5

$

1.19

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

 

For more information see www.northwesternenergy.com/documents/investor/Q212.pdf

Significant Drivers

Gross Margin

Consolidated gross margin for the second quarter of 2012 was $148.2 million compared with $141.4 million for same period of 2011.  The increase in gross margin includes the following:

  • An increase in demand side management ("DSM") lost revenues recovered through our electric supply tracker related to our DSM efficiency programs (DSM lost revenues described further below);
  • An increase in Montana property taxes included in a tracker as compared to the same period in 2011;
  • An increase in transmission capacity revenues due to higher demand to transmit energy for others across our lines;
  • Higher Dave Gates Generating Station ("DGGS") related revenues;
  • An increase in South Dakota natural gas rates; and
  • Higher revenues for operating expenses recovered in trackers, primarily related to customer efficiency programs and environmental remediation costs;
  • These increases were partly offset by a decrease in natural gas retail volumes due primarily to warmer spring weather.

DSM lost revenues - Base rates, including impacts of past DSM activities, are reset in general rate case filings.  As time passes between rate cases, more energy saving measures (primarily more efficient residential and commercial lighting) are implemented, causing an increase in DSM lost revenues.  During the second quarter of 2012, we recognized approximately $6.6 million of DSM lost revenues as compared with approximately $2.1 million during the second quarter of 2011.  The 2012 amount includes $3.3 million in DSM lost revenues for the July 2010 through June 2011 tracker period, which we recognized as revenue when we received MPSC approval in April 2012.

Consolidated gross margin for the six months ended June 30, 2012 was $318.9 million compared with $317.6 million for same period of 2011.

Operating, General and Administrative Expenses

Consolidated operating, general and administrative expenses were $67.1 million for the quarter ended June 30, 2012 as compared with $69.5 million during the same period of 2011.  The decrease in operating, general and administrative expenses was primarily due to lower bad debt expense based on higher collections from customers, a timing related decrease in proactive line maintenance and tree trimming as more time was spent on capital projects as compared with the same period in 2011, and lower plant operator costs at Colstrip Unit 4.  These decreases were partly offset by higher operating expenses primarily related to costs incurred for customer efficiency programs and environmental remediation costs, which are recovered from customers through trackers and have no impact on operating income.

Consolidated operating, general and administrative expenses were $132.7 million for the six months ended June 30, 2012 as compared with $136.9 million during the same period of 2011.

Property and Other Taxes

Consolidated property and other taxes were $25.9 million for the quarter ended June 30, 2012 as compared with $20.6 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 $49.6 million for six months ended June 30, 2012 as compared with $45.9 million during the same period of 2011.

Interest Expense

Consolidated interest expense was $15.9 million for the quarter ended June 30, 2012 as compared with $16.9 million during the same period of 2011.  This decrease was primarily due to lower interest rates on debt outstanding and higher capitalization of AFUDC.

Consolidated interest expense was $31.9 million for the six months ended June 30, 2012 as compared with $34.0 million during the same period of 2011.

Income Tax Expense

Consolidated income tax expense in the second quarter of 2012 was $2.6 million as compared with $0.5 million income tax benefit in same period of 2011.  The effective tax rate for the three months ended June 30, 2012 was 18.3% as compared with (4.9)% for the same period of 2011.  The increase in income tax expense for the second quarter of 2012 was primarily due to higher taxable income and the absence of a benefit during the second quarter of 2011 which released $1.6 million in state net operating loss (NOL) carryforward reserves.  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 six months ended June 30, 2012 was $10.6 million as compared with $8.7 million in same period of 2011.  The effective tax rate for the six months ended June 30, 2012 was 19.6% as compared with 16.6% 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 June 30,

Six Months Ended June 30,

(in millions)

2012

2011

2012

2011

Income Before Income Taxes

$

14,003

$

10,454

$

54,058

$

52,207

Income tax calculated at 35% federal statutory rate

(4,901)

(3,659)

(18,920)

(18,272)

Permanent or flow through adjustments:

Flow-through repairs deductions

2,168

1,520

7,739

5,502

Flow-through of state bonus depreciation deduction

512

679

1,883

3,282

Recognition of state NOL benefit/valuation allowance release

1,555

2,402

State income tax and other, net

(344)

421

(1,279)

(1,576)

$

2,336

$

4,175

$

8,343

$

9,610

Income tax expense

$

(2,565)

$

516

$

(10,577)

$

(8,662)

Regulated Operations

In the regulated operations for the three months ended June 30, 2012, electric net income improved $2.7 million, due primarily to an increase in DSM lost revenues recovered through our electric supply tracker, higher property taxes included in the tracker, and an increase in transmission revenues due to higher demand to transmit energy for others; offset by higher property and other tax expense and higher depreciation expense.  Natural gas net income declined $1.1 million, due primarily to a decrease in gross margins caused by warmer spring weather in our service territories and higher property taxes, offset in part by a reduction in interest expense and operating, general and other expenses. 

For the six months ended June 30, 2012, in the regulated operations, electric net income improved $3.1 million, and natural gas net income declined $1.8 million

Liquidity and Capital Resources

As of June 30, 2012, cash and cash equivalents were $8.1 million compared with $5.9 million at December 31, 2011.  The Company had $162.0 million available from its revolving credit facility at June 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 September 30, 2012, to common shareholders of record as of September 15, 2012. 

Update on DGGS Outage

As previously reported, DGGS was shut down on January 31, 2012 after problems were discovered in the power turbines of two of the generation units. Similar problems were subsequently found in the third unit.  There are two power turbines per unit, and as of June 30, 2012 five of the six turbines have been returned to service using a combination of the original turbines after servicing by their supplier Pratt & Whitney Power Systems (PWPS) and turbines on loan from PWPS.  Between February and April 2012, we acquired regulation service from third parties, which resulted in incremental costs of approximately $1.4 million, as compared to fully operating DGGS.  As of May 1, 2012, we had eliminated our contracted replacement services and are no longer incurring incremental costs.  We believe the incremental contracted costs for regulation service should be recoverable from customers through our normal course of business; however, there can be no assurance that the MPSC and/or FERC will allow us full recovery of such costs.

2012 Earnings Outlook

NorthWestern reaffirms its earnings for 2012 to be $2.35 - $2.50 per fully diluted share. 

Basic assumptions include the following expectations:

  • A consolidated income tax rate of approximately 16% - 18% of pre-tax income;
  • No scheduled maintenance at Colstrip Unit 4 and Big Stone Plants;
  • DGGS outage costs fully recovered;
  • That we have no impairment on the $23.5 million in preliminary survey and investigative costs related to our proposed Mountain States Transmission Intertie (MSTI) transmission project;
  • 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 remainder 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 six months ended June 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 July 24, 2012, through August 23, 2012, at (888) 203-1112 access code 3759413.

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;
  • we have capitalized approximately $23.5 million in preliminary survey and investigative costs related to our proposed MSTI transmission project.  If we abandon our efforts to pursue MSTI we may have to write-off all or a portion these costs, which could have a material effect on our results of operations;
  • 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 another financial measure, Gross Margin, 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 INCOME

(Unaudited)

(in thousands, except per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

2012

2011

2012

2011

Revenues

Electric

196,176

186,789

403,231

395,411

Gas

48,101

64,692

149,847

193,904

Other

326

325

625

751

Total Revenues

244,603

251,806

553,703

590,066

Operating Expenses

Cost of sales

96,427

110,407

234,823

272,478

Operating, general and administrative

67,096

69,539

132,669

136,922

Property and other taxes

25,934

20,550

49,599

45,946

Depreciation

26,426

25,066

52,859

50,381

Total Operating Expenses

215,883

225,562

469,950

505,727

Operating Income

28,720

26,244

83,753

84,339

Interest Expense, net

(15,893)

(16,896)

(31,855)

(34,043)

Other Income

1,176

1,106

2,160

1,911

Income Before Income Taxes

14,003

10,454

54,058

52,207

Income Tax (Expense) Benefit

(2,565)

516

(10,577)

(8,662)

Net Income

11,438

10,970

43,481

43,545

Other comprehensive (loss) income, net of tax:

Reclassification of net gains on derivative instruments

(191)

(297)

(374)

(594)

Postretirement medical liability adjustment

205

Foreign currency translation

46

18

(1)

69

Total Other Comprehensive Loss

(145)

(279)

(170)

(525)

Comprehensive Income

11,293

10,691

43,311

43,020

Average Common Shares Outstanding

36,635

36,258

36,482

36,250

Basic Earnings per Average Common Share

$

0.31

$

0.30

$

1.19

$

1.20

Diluted Earnings per Average Common Share

$

0.31

$

0.30

$

1.19

$

1.19

Dividends Declared per Average Common Share

$

0.37

$

0.36

$

0.74

$

0.72

 

NORTHWESTERN CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands)

June 30, 2012

December 31, 2011

ASSETS

Current Assets

233,607

290,199

Property, Plant, and Equipment, Net

2,266,196

2,213,267

Goodwill

355,128

355,128

Regulatory Assets

320,860

308,804

Other Noncurrent Assets

48,298

43,040

Total Assets

3,224,089

3,210,438

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Maturities of Long-term Debt and Capital Leases

1,561

5,162

Commercial Paper

129,968

166,934

Current Liabilities

263,162

303,858

Long-term Capital Leases

32,395

32,918

Long-term Debt

905,061

905,049

Noncurrent Regulatory Liabilities

270,219

265,987

Deferred Income Taxes

321,408

282,406

Other Noncurrent Liabilities

399,113

389,012

Total Liabilities

2,322,887

2,351,326

Total Shareholders' Equity

901,202

859,112

Total Liabilities and Shareholders' Equity

3,224,089

3,210,438

NORTHWESTERN CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Six Months Ended June 30,

2012

2011

Operating Activities

Net income

43,481

43,545

Non-cash items

79,791

77,237

Changes in operating assets and liabilities

21,795

42,678

Cash Provided by Operating Activities

145,067

163,460

Cash Used in Investing Activities

(97,663)

(71,648)

Cash Used In Financing Activities

(45,227)

(93,506)

Net Increase (Decrease) in Cash and Cash Equivalents

2,177

(1,694)

Cash and Cash Equivalents, beginning of period

5,928

6,234

Cash and Cash Equivalents, end of period

8,105

4,540

 

NORTHWESTERN CORPORATION

REGULATED ELECTRIC SEGMENT

Three Months Ended June 30,

(Unaudited)

Results

2012

2011

Change

% Change

Retail revenue

$

166.7

$

166.9

$

(0.2)

(0.1)

%

Transmission

11.0

9.9

1.1

11.1

%

Wholesale

0.7

0.8

(0.1)

(12.5)

%

Regulatory amortization and other

17.8

9.2

8.6

93.5

%

Total Revenues

$

196.2

$

186.8

$

9.4

5.0

%

Total Cost of Sales

78.1

76.9

1.2

1.6

%

Gross Margin

$

118.1

$

109.9

$

8.2

7.5

%

 

Revenue

Megawatt Hours (MWH)

Avg. Customer Counts

2012

2011

2012

2011

2012

2011

Retail Electric

Montana

52,681

53,662

491

503

273,840

272,328

South Dakota

10,060

10,305

106

119

48,883

48,611

   Residential 

62,741

63,967

597

622

322,723

320,939

Montana

71,197

71,789

756

747

61,948

61,465

South Dakota

16,328

15,363

217

213

12,160

11,971

Commercial

87,525

87,152

973

960

74,108

73,436

Industrial

8,537

9,579

682

704

74

72

Other

7,871

6,238

51

34

5,977

5,610

Total Retail Electric

166,674

166,936

2,303

2,320

402,882

400,057

Total Wholesale Electric

733

820

43

42

 

Degree Days

2012 as compared with:

Heating Degree-Days

2012

2011

Historic Average

2011

Historic Average

Montana

1,205

1,510

1,321

20% warmer

34% warmer

South Dakota

893

1,572

1,497

43% warmer

127% warmer

 

NORTHWESTERN CORPORATION

REGULATED ELECTRIC SEGMENT

Six Months Ended June 30,

(Unaudited)

Results

2012

2011

Change

% Change

Retail revenue

$

358.6

$

363.1

$

(4.5)

(1.2)

%

Transmission

22.1

20.8

1.3

6.3

%

Wholesale

1.6

1.2

0.4

33.3

%

Regulatory amortization and other

20.9

10.3

10.6

102.9

%

Total Revenues

$

403.2

$

395.4

$

7.8

2.0

%

Total Cost of Sales

161.1

161.4

(0.3)

(0.2)

%

Gross Margin

$

242.1

$

234.0

$

8.1

3.5

%

 

Revenue

Megawatt Hours (MWH)

Avg. Customer Counts

2012

2011

2012

2011

2012

2011

Retail Electric

Montana

124,818

129,325

1,162

1,233

274,003

272,426

South Dakota

23,046

23,698

266

298

48,861

48,658

   Residential 

147,864

153,023

1,428

1,531

322,864

321,084

Montana

146,893

148,922

1,549

1,567

61,980

61,462

South Dakota

33,244

31,672

453

452

12,057

11,880

Commercial

180,137

180,594

2,002

2,019

74,037

73,342

Industrial

18,174

18,762

1,411

1,396

73

72

Other

12,452

10,758

75

58

5,243

5,116

Total Retail Electric

358,627

363,137

4,916

5,004

402,217

399,614

Total Wholesale Electric

1,602

1,129

96

73

 

Degree Days

2012 as compared with:

Heating Degree-Days

2012

2011

Historic Average

2011

Historic Average

Montana

4,244

5,000

4,640

15% warmer

9% warmer

South Dakota

4,310

6,141

5,600

30% warmer

23% warmer

NORTHWESTERN CORPORATION

REGULATED NATURAL GAS SEGMENT

Three Months Ended June 30,

(Unaudited)

Results

2012

2011

Change

% Change

Retail revenue

$

34.5

$

54.7

$

(20.2)

(36.9)

%

Wholesale and other

13.6

10.0

3.6

36.0

%

Total Revenues

48.1

64.7

(16.6)

(25.7)

%

Total Cost of Sales

18.3

33.5

(15.2)

(45.4)

%

Gross Margin

$

29.8

$

31.2

$

(1.4)

(4.5)

%

 

Revenue

Dekatherms (Dkt)

Avg. Customer Counts

2012

2011

2012

2011

2012

2011

Retail Gas

Montana

16,415

24,302

1,915

2,455

159,539

158,851

South Dakota

3,327

5,565

341

613

37,727

37,223

Nebraska

2,926

4,882

287

500

36,420

36,452

Residential 

22,668

34,749

2,543

3,568

233,686

232,526

Montana

8,187

12,085

965

1,227

22,380

22,267

South Dakota

1,873

3,978

323

577

5,950

5,954

Nebraska

1,480

3,465

263

566

4,556

4,567

Commercial

11,540

19,528

1,551

2,370

32,886

32,788

Industrial

136

228

16

24

274

278

Other

178

231

24

28

150

145

Total Retail Gas

34,522

54,736

4,134

5,990

266,996

265,737

 

Degree Days

2012 as compared with:

Heating Degree-Days

2012

2011

Historic Average

2011

Historic Average

Montana

1,205

1,510

1,321

20% warmer

9% warmer

South Dakota

893

1,572

1,497

43% warmer

40% warmer

Nebraska

635

1,225

1,228

48% warmer

48% warmer

NORTHWESTERN CORPORATION

REGULATED NATURAL GAS SEGMENT

Six Months Ended June 30,

(Unaudited)

Results

2012

2011

Change

% Change

Retail revenue

$

130.1

$

175.8

$

(45.7)

(26.0)

%

Wholesale and other

19.8

18.1

1.7

9.4

%

Total Revenues

149.9

193.9

(44.0)

(22.7)

%

Total Cost of Sales

73.7

111.1

(37.4)

(33.7)

%

Gross Margin

$

76.2

$

82.8

$

(6.6)

(8.0)

%

 

Revenue

Dekatherms (Dkt)

Avg. Customer Counts

2012

2011

2012

2011

2012

2011

Retail Gas

Montana

58,254

75,402

6,898

8,093

159,712

158,940

South Dakota

13,690

18,871

1,597

2,212

37,913

37,467

Nebraska

12,347

16,367

1,429

1,882

36,669

36,700

Residential 

84,291

110,640

9,924

12,187

234,294

233,107

Montana

29,238

38,523

3,489

4,142

22,403

22,270

South Dakota

8,526

13,280

1,373

1,909

5,976

5,954

Nebraska

6,894

11,708

1,092

1,853

4,598

4,602

Commercial

44,658

63,511

5,954

7,904

32,977

32,826

Industrial

579

920

70

102

276

280

Other

573

680

77

86

150

145

Total Retail Gas

130,101

175,751

16,025

20,279

267,697

266,358

 

Degree Days

2012 as compared with:

Heating Degree-Days

2012

2011

Historic Average

2011

Historic Average

Montana

4,244

5,000

4,640

15% warmer

9% warmer

South Dakota

4,310

6,141

4,600

30% warmer

23% warmer

Nebraska

3,584

4,798

4,638

25% warmer

23% warmer

NORTHWESTERN CORPORATION

SECOND QUARTER SEGMENT RESULTS

(Unaudited)

(in thousands)

Three Months Ended

June 30, 2012

Electric

Gas

Other

Eliminations

Total

Operating revenues

$

196,176

$

48,101

$

326

$

$

244,603

Cost of sales

78,109

18,318

96,427

Gross margin

118,067

29,783

326

148,176

Operating, general and administrative

47,685

18,657

754

67,096

Property and other taxes

19,469

6,463

2

25,934

Depreciation

21,565

4,853

8

26,426

Operating income (loss)

29,348

(190)

(438)

28,720

Interest expense

(13,409)

(2,230)

(254)

(15,893)

Other income

801

349

26

1,176

Income tax (expense) benefit

(5,910)

1,010

2,335

(2,565)

Net income (loss)

$

10,830

$

(1,061)

$

1,669

$

$

11,438

Total assets

$

2,268,913

$

943,471

$

11,705

$

$

3,224,089

Capital expenditures

$

44,712

$

5,993

$

$

$

50,705

 

Three Months Ended

June 30, 2011

Electric

Gas

Other

Eliminations

Total

Operating revenues

$

186,789

$

64,692

$

325

$

$

251,806

Cost of sales

76,925

33,482

110,407

Gross margin

109,864

31,210

325

141,399

Operating, general and administrative

49,374

19,224

941

69,539

Property and other taxes

15,302

5,246

2

20,550

Depreciation

20,386

4,671

9

25,066

Operating income (loss)

24,802

2,069

(627)

26,244

Interest expense

(13,689)

(2,729)

(478)

(16,896)

Other income

724

355

27

1,106

Income tax (expense) benefit

(3,670)

326

3,860

516

Net income

$

8,167

$

21

$

2,782

$

$

10,970

Total assets

$

2,116,854

$

877,235

$

12,901

$

$

3,006,990

Capital expenditures

$

28,756

$

5,521

$

$

$

34,277

 

Six Months Ended

June 30, 2012

Electric

Gas

Other

Eliminations

Total

Operating revenues

$

403,231

$

149,847

$

625

$

$

553,703

Cost of sales

161,088

73,735

234,823

Gross margin

242,143

76,112

625

318,880

Operating, general and administrative

93,042

37,945

1,682

132,669

Property and other taxes

37,007

12,587

5

49,599

Depreciation

43,134

9,709

16

52,859

Operating income (loss)

68,960

15,871

(1,078)

83,753

Interest expense

(27,076)

(4,297)

(482)

(31,855)

Other income

1,413

694

53

2,160

Income tax (expense) benefit

(9,084)

(2,580)

1,087

(10,577)

Net income

$

34,213

$

9,688

$

(420)

$

$

43,481

Total assets

$

2,268,913

$

943,471

$

11,705

$

$

3,224,089

Capital expenditures

$

84,791

$

13,021

$

$

$

97,812

 

Six Months Ended

June 30, 2011

Electric

Gas

Other

Eliminations

Total

Operating revenues

$

395,411

$

193,904

$

751

$

$

590,066

Cost of sales

161,371

111,107

272,478

Gross margin

234,040

82,797

751

317,588

Operating, general and administrative

94,660

40,672

1,590

136,922

Property and other taxes

34,043

11,898

5

45,946

Depreciation

40,740

9,624

17

50,381

Operating income (loss)

64,597

20,603

(861)