NWEC Northwestern (MM)

Declares Dividend of 33 Cents per Share SIOUX FALLS, S.D., Oct. 31 /PRNewswire-FirstCall/ -- NorthWestern Corporation d/b/a NorthWestern Energy (NASDAQ:NWEC) today reported financial results for the quarter ended September 30, 2007. Highlights for the quarter: -- Net income for the third quarter of 2007 improved 15.6% or $.04/share over the same period in 2006. Year-to-date net income improved by 15.9% or $.12/share over the same period in 2006. -- Operating income for the third quarter of 2007 was $33.2 million. Year-to-date operating income improved by 14% to $95.8 million over the same period in 2006. -- Earnings for 2007 expected to be in the range of $1.45 -- $1.55 per share. -- Quarterly dividend declared for 33 cents per share for shareholders of record on Dec. 15, 2007. -- Electric and natural gas rate case is pending in Montana requesting a combined revenue increase of approximately $41.9 million, the first rate increase request since 2000. -- The long-term corporate credit rating outlook from Standard and Poor's Rating Group improved to positive from stable. "The financial results of the quarter reflect the Company's continued operational focus," said Michael J. Hanson, President and Chief Executive Officer. "In addition, our strong balance sheet and improving operational cash flow allow us to continue increasing our capital investment reflecting our growing service territory and commitment to reliable service." Consolidated net income for the quarter ended Sept. 30, 2007 was $13.2 million, compared with $11.4 million for the quarter of 2006. This improvement was primarily related to higher margins in the regulated electric and regulated natural gas segments and lower income tax expense, offset by increased property tax and depreciation expenses. Consolidated net income for the nine months ended Sept. 30, 2007 was $34.8 million, an increase of $4.8 million over for the same period in 2006. This improvement was primarily related to higher margins, decreased operating, general and administrative expenses, offset by increased property taxes and depreciation expenses and a reduction in other income. Consolidated gross margin for the three months ended Sept. 30, 2007 was $126.8 million, an increase of $3.1 million or 2.5%, as compared with consolidated gross margin of $123.7 million in the third quarter of 2006. -- Gross margin in the regulated electric segment increased $5.8 million due to volume increases driven by customer growth, warmer summer weather and implementation of interim transmission rates of approximately $0.6 million (subject to refund). -- Gross margin in the regulated natural gas segment increased $1.6 million primarily due to the transfer of certain unregulated customers and a pipeline from the unregulated business into the regulated natural gas segment. -- Gross margin in the unregulated electric segment decreased $3.4 million primarily due to lower average contracted prices, offset by higher volumes. Consolidated gross margin for the nine months ended Sept. 30, 2007 was $392.5 million, an increase of $12.5 million, or 3.3%, over consolidated gross margin in the first nine months of 2006. Consolidated operating, general and administrative expenses were $52.5 million for the three months ended Sept. 30, 2007 as compared with $52.4 million in the third quarter of 2006. Compared to 2006, the Company realized a reduction of transaction-related costs pursuant to the terminated Babcock and Brown Infrastructure, Limited ("BBI") acquisition by approximately $5.6 million and lease expense decreased by $3.1 million mainly due to our purchase of the owner participant interest in a portion of the Colstrip Unit 4 generating facility in March 2007. These improvements were offset by a $9.3 million insurance settlement received in the third quarter of 2006. Consolidated operating, general and administrative expenses were $173.6 million for the nine months ended Sept. 30, 2007 as compared with $182.4 million in same period of 2006. This decrease was primarily due to $11.7 million in lower transaction-related costs for the terminated BBI acquisition. Property taxes increased by $1.4 million and depreciation increased $1.9 million for the three months ended Sept. 30, 2007, as compared with the third quarter of 2006. For the nine months ended Sept. 30, 2007, property taxes increased by $4.5 million and depreciation increased $5.0 million, as compared with the same period of 2006, due to increasing plant assets and the Colstrip Unit 4 lease buyout. Consolidated operating income for the three months ended Sept. 30, 2007 was $33.2 million, as compared with $33.5 million for the third quarter of 2006. Consolidated operating income for the nine months ended Sept. 30, 2007 was $95.8 million, as compared with $84.0 million for the same period of 2006. Dividend Declared NorthWestern's Board of Directors declared a quarterly common stock dividend of 33 cents per share, payable on Dec. 31, 2007, to common shareholders of record as of Dec. 15, 2007. 2007 Earnings Outlook NorthWestern estimates its basic earnings for 2007 to be between $1.45 -- $1.55 per share. The upper range has been revised down $.05 per share because interim rate increases have yet to be approved in our state jurisdictions. The guidance assumes normal weather in the Company's electric and natural gas service areas for the rest of 2007. Company Hosting Investor Conference Call NorthWestern will host an investor conference call on Friday, Nov. 2, 2007 at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) to review its financial results for the quarter ended Sept. 30, 2007. The conference call will be webcast live on the Internet at http://www.northwesternenergy.com/. 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 2:30 ET on Nov. 2, 2007, through Dec. 2, 2007, at 800-475-6701, access code 892085. About NorthWestern Energy NorthWestern Energy is one of the largest providers of electricity and natural gas in the Upper Midwest and Northwest, serving approximately 640,000 customers in Montana, South Dakota and Nebraska. More information on NorthWestern Energy is available on the Company's Web site at http://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. 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: -- our ability to avoid or mitigate adverse rulings or judgments against us in our pending litigation; -- unanticipated changes in availability of trade credit, 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 would adversely affect our liquidity; -- 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; -- adverse changes in general economic and competitive conditions in our service territories; and -- potential additional adverse federal, state, or local legislation or regulation or adverse determinations by regulators could have a material adverse effect on our liquidity, results of operations and financial condition. 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. NORTHWESTERN CORPORATION CONSOLIDATED BALANCE SHEETS (in thousands) September 30, December 31, 2007 2006 (Unaudited) ASSETS Current Assets 252,406 268,474 Property, Plant, and Equipment, Net 1,597,404 1,491,855 Goodwill 355,128 435,076 Regulatory Assets 143,748 159,715 Other Noncurrent Assets 37,022 40,817 Total Assets $2,385,708 $2,395,937 LIABILITIES AND SHAREHOLDERS' EQUITY Current Maturities of Long-term Debt and Capital Leases $ 12,499 $ 7,693 Current Liabilities 287,684 271,243 Long-term Capital Leases 38,338 40,383 Long-term Debt 671,607 699,041 Noncurrent Regulatory Liabilities 191,637 182,103 Deferred Income Taxes 74,425 113,355 Other Noncurrent Liabilities 336,407 339,348 Total Liabilities 1,612,597 1,653,166 Total Shareholders' Equity 773,111 742,771 Total Liabilities and Shareholders' Equity $2,385,708 $2,395,937 NORTHWESTERN CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (in thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, 2007 2006 2007 2006 OPERATING REVENUES $265,863 $234,637 $892,036 $828,305 COST OF SALES 139,021 110,914 499,555 448,312 GROSS MARGIN 126,842 123,723 392,481 379,993 OPERATING EXPENSES Operating, general and administrative 52,486 52,412 173,611 182,384 Property and other taxes 20,393 18,968 61,645 57,146 Depreciation 20,725 18,853 61,412 56,433 TOTAL OPERATING EXPENSES 93,604 90,233 296,668 295,963 OPERATING INCOME 33,238 33,490 95,813 84,030 Interest Expense (14,633) (13,777) (42,380) (42,835) Other Income (Expense) 909 (397) 1,646 8,020 Income From Continuing Operations Before Income Taxes 19,514 19,316 55,079 49,215 Income Tax Expense (6,337) (7,918) (20,326) (19,656) Income From Continuing Operations 13,177 11,398 34,753 29,559 Discontinued Operations, Net of Taxes - - - 418 Net Income $13,177 $11,398 $34,753 $29,977 Average Common Shares Outstanding 36,471 35,510 36,063 35,535 Basic Earnings per Average Common Share Continuing operations $0.36 $0.32 $0.96 $0.83 Discontinued operations 0.00 0.00 0.00 0.01 Basic $0.36 $0.32 $0.96 $0.84 Diluted Earnings per Average Common Share Continuing operations $0.35 $0.31 $0.93 $0.80 Discontinued operations 0.00 0.00 0.00 0.01 Diluted $0.35 $0.31 $0.93 $0.81 Dividends Declared per Average Common Share $0.33 $0.31 $0.95 $0.93 NORTHWESTERN CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Nine Months Ended September 30, 2007 2006 Operating Activities: Net Income $34,753 $29,977 Noncash Items 85,925 88,081 Changes in Operating Assets and Liabilities 53,193 17,429 Cash Provided by Continuing Operating Activities 173,871 135,487 Cash Used in Continuing Investing Activities (116,686) (46,727) Cash Used in Continuing Financing Activities (54,436) (97,461) Change in Net Assets of Discontinued Operations - 7,695 (Decrease) Increase in Cash and Cash Equivalents 2,749 (1,006) Cash and Cash Equivalents, beginning of period 1,930 2,691 Cash and Cash Equivalents, end of period $4,679 $1,685 NORTHWESTERN CORPORATION (Unaudited) (in millions) REGULATED ELECTRIC SEGMENT Three Months Ended September 30, 2007 2006 Change % Change (in millions) Electric supply revenue $106.3 $83.9 $22.4 26.7% Transmission & distribution revenue 78.5 74.1 4.4 5.9 Rate schedule revenue 184.8 158.0 26.8 17.0 Transmission 13.0 10.8 2.2 20.4 Wholesale 2.2 2.4 (0.2) (8.3) Miscellaneous 2.1 2.0 0.1 5.0 Total Revenues 202.1 173.2 28.9 16.7% Supply costs 105.5 83.8 21.7 25.9 Wholesale 0.7 0.9 (0.2) (22.2) Other cost of sales 3.7 2.1 1.6 76.2 Total Cost of Sales 109.9 86.8 23.1 26.6% Gross Margin $92.2 $86.4 $5.8 6.7% % GM/Rev 45.6% 49.9% Nine Months Ended September 30, 2007 2006 Change % Change (in millions) Electric supply revenue $282.5 $234.5 $48.0 20.5% Transmission & distribution revenue 221.5 210.2 11.3 5.4 Rate schedule revenue 504.0 444.7 59.3 13.3 Transmission 36.8 34.6 2.2 6.4 Wholesale 4.5 6.8 (2.3) (33.8) Miscellaneous 5.9 6.2 (0.3) (4.8) Total Revenues 551.2 492.3 58.9 12.0% Supply costs 279.2 237.0 42.2 17.8 Wholesale 1.5 2.4 (0.9) (37.5) Other cost of sales 9.9 8.0 1.9 23.8 Total Cost of Sales 290.6 247.4 43.2 17.5% Gross Margin $ 260.6 $244.9 $15.7 6.4% % GM/Rev 47.3% 49.7% Volumes MWH 2007 2006 Change % Change (in thousands) Retail Electric Residential 2,046 1,964 82 4.2% Commercial 3,040 2,935 105 3.6 Industrial 2,250 2,273 (23) (1.0) Other 164 167 (3) (1.8) Total Retail Electric 7,500 7,339 161 2.2% Wholesale Electric 119 176 (57) (32.4)% 2007 as compared to: Cooling Degree-Days 2006 Historic Average Montana 17% Warmer 74% Warmer South Dakota 15% Warmer 56% Warmer REGULATED NATURAL GAS SEGMENT Three Months Ended September 30, 2007 2006 Change % Change (in millions) Gas supply revenue $14.3 $14.2 $0.1 0.7% Transportation, distribution & storage revenue 13.7 13.0 0.7 5.4 Rate schedule revenue 28.0 27.2 0.8 2.9 Transportation & storage 6.0 5.0 1.0 20.0 Wholesale revenue 1.6 2.1 (0.5) (23.8) Miscellaneous 1.5 1.5 - - Total Revenues 37.1 35.8 1.3 3.6% Supply costs 14.3 14.2 0.1 0.7 Wholesale supply costs 1.6 2.1 (0.5) (23.8) Other cost of sales 0.4 0.3 0.1 33.3 Total Cost of Sales 16.3 16.6 (0.3) (1.8)% Gross Margin $20.8 $19.2 $1.6 8.3% % GM/Rev 56.1% 53.6% Nine Months Ended September 30, 2007 2006 Change % Change (in millions) Gas supply revenue $148.1 $161.3 $(13.2) (8.2)% Transportation, distribution & storage revenue 69.6 63.6 6.0 9.4 Rate schedule revenue 217.7 224.9 (7.2) (3.2) Transportation & storage 17.5 14.9 2.6 17.4 Wholesale revenue 18.1 8.0 10.1 126.3 Miscellaneous 4.0 5.7 (1.7) (29.8) Total Revenues 257.3 253.5 3.8 1.5% Supply costs 148.1 161.3 (13.2) (8.2) Wholesale supply costs 18.1 8.0 10.1 126.3 Other cost of sales 2.2 2.1 0.1 4.8 Total Cost of Sales 168.4 171.4 (3.0) (1.8)% Gross Margin $88.9 $82.1 $6.8 8.3% % GM/Rev 34.6% 32.4% Volumes Dekatherms 2007 2006 Change % Change (in thousands) Retail Gas Residential 11,951 11,163 788 7.1% Commercial 7,859 7,237 622 8.6 Industrial 111 101 10 9.9 Other 114 116 (2) (1.7) Total Retail Gas 20,035 18,617 1,418 7.6% 2007 as compared to: Heating Degree-Days 2006 Historic Average Montana 1% Colder 10% Warmer South Dakota 15% Colder 3% Warmer Nebraska 17% Colder 5% Warmer NORTHWESTERN CORPORATION UNREGULATED ELECTRIC SEGMENT (Unaudited) (in millions) Three Months Ended September 30, 2007 2006 Change % Change Total Revenues $18.8 22.7 (3.9) (17.2)% Total Cost of Sales 5.2 5.7 (0.5) (8.8) Gross Margin $13.6 $17.0 $(3.4) (20.0)% % Gross Margin/Revenue 72.3% 74.9% Nine Months Ended September 30, 2007 2006 Change % Change Total Revenues $55.7 61.2 (5.5) (9.0)% Total Cost of Sales 13.7 12.1 1.6 13.2 Gross Margin $42.0 $49.1 $(7.1) (14.5)% % Gross Margin/Revenue 75.4% 80.2% Volumes MWH 2007 2006 Change % Change (in thousands) Wholesale Electric 1,189 1,076 113 10.5% DATASOURCE: NorthWestern Corporation CONTACT: Media, Claudia Rapkoch, 1-866-622-8081, , or Investor Relations, Dan Rausch, +1-605-978-2902, , both of NorthWestern Corporation Web site: http://www.northwesternenergy.com/

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