0000073088-19-000119.txt : 20191030 0000073088-19-000119.hdr.sgml : 20191030 20191030092142 ACCESSION NUMBER: 0000073088-19-000119 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 60 CONFORMED PERIOD OF REPORT: 20190930 FILED AS OF DATE: 20191030 DATE AS OF CHANGE: 20191030 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTHWESTERN CORP CENTRAL INDEX KEY: 0000073088 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 460172280 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10499 FILM NUMBER: 191178015 BUSINESS ADDRESS: STREET 1: 3010 W 69TH STREET CITY: SIOUX FALLS STATE: SD ZIP: 57108 BUSINESS PHONE: 6059782908 MAIL ADDRESS: STREET 1: 3010 W 69TH STREET CITY: SIOUX FALLS STATE: SD ZIP: 57108 FORMER COMPANY: FORMER CONFORMED NAME: NORTHWESTERN PUBLIC SERVICE CO DATE OF NAME CHANGE: 19920703 10-Q 1 nwe-93019x10q.htm 10-Q Document
false--12-31Q3201900000730880.0120000000053996070504459692019-06-302019-09-302049-09-300.0150000000000 0000073088 2019-01-01 2019-09-30 0000073088 2019-10-25 0000073088 2018-01-01 2018-09-30 0000073088 2019-07-01 2019-09-30 0000073088 2018-07-01 2018-09-30 0000073088 2019-09-30 0000073088 2018-12-31 0000073088 2017-12-31 0000073088 2018-09-30 0000073088 us-gaap:CommonStockMember 2019-09-30 0000073088 us-gaap:CommonStockMember 2019-07-01 2019-09-30 0000073088 us-gaap:TreasuryStockMember 2018-07-01 2018-09-30 0000073088 us-gaap:TreasuryStockMember 2018-09-30 0000073088 us-gaap:RetainedEarningsMember 2018-07-01 2018-09-30 0000073088 us-gaap:CommonStockMember 2018-07-01 2018-09-30 0000073088 2019-06-30 0000073088 us-gaap:TreasuryStockMember 2019-09-30 0000073088 us-gaap:TreasuryStockMember 2018-06-30 0000073088 us-gaap:TreasuryStockMember 2019-06-30 0000073088 us-gaap:AdditionalPaidInCapitalMember 2019-07-01 2019-09-30 0000073088 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-09-30 0000073088 us-gaap:TreasuryStockMember 2019-07-01 2019-09-30 0000073088 us-gaap:RetainedEarningsMember 2019-09-30 0000073088 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-07-01 2018-09-30 0000073088 us-gaap:CommonStockMember 2019-06-30 0000073088 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-07-01 2019-09-30 0000073088 us-gaap:CommonStockMember 2018-06-30 0000073088 us-gaap:AdditionalPaidInCapitalMember 2018-07-01 2018-09-30 0000073088 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-09-30 0000073088 us-gaap:CommonStockMember 2018-09-30 0000073088 us-gaap:RetainedEarningsMember 2018-09-30 0000073088 us-gaap:RetainedEarningsMember 2019-07-01 2019-09-30 0000073088 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-06-30 0000073088 us-gaap:AdditionalPaidInCapitalMember 2018-09-30 0000073088 2018-06-30 0000073088 us-gaap:AdditionalPaidInCapitalMember 2018-06-30 0000073088 us-gaap:AdditionalPaidInCapitalMember 2019-09-30 0000073088 us-gaap:RetainedEarningsMember 2018-06-30 0000073088 us-gaap:RetainedEarningsMember 2019-06-30 0000073088 us-gaap:AdditionalPaidInCapitalMember 2019-06-30 0000073088 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-06-30 0000073088 us-gaap:AdditionalPaidInCapitalMember 2018-01-01 2018-09-30 0000073088 us-gaap:CommonStockMember 2018-12-31 0000073088 us-gaap:CommonStockMember 2017-12-31 0000073088 us-gaap:CommonStockMember 2018-01-01 2018-09-30 0000073088 us-gaap:RetainedEarningsMember 2019-01-01 2019-09-30 0000073088 us-gaap:TreasuryStockMember 2019-01-01 2019-09-30 0000073088 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-09-30 0000073088 us-gaap:TreasuryStockMember 2018-01-01 2018-09-30 0000073088 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-09-30 0000073088 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0000073088 us-gaap:TreasuryStockMember 2017-12-31 0000073088 us-gaap:TreasuryStockMember 2018-12-31 0000073088 us-gaap:CommonStockMember 2019-01-01 2019-09-30 0000073088 us-gaap:RetainedEarningsMember 2018-01-01 2018-09-30 0000073088 us-gaap:RetainedEarningsMember 2017-12-31 0000073088 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 2018-09-30 0000073088 us-gaap:RetainedEarningsMember 2018-12-31 0000073088 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0000073088 us-gaap:AdditionalPaidInCapitalMember 2017-12-31 0000073088 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-12-31 0000073088 us-gaap:AccountsPayableAndAccruedLiabilitiesMember 2019-09-30 0000073088 us-gaap:OtherNoncurrentAssetsMember 2019-09-30 0000073088 us-gaap:OtherNoncurrentLiabilitiesMember 2019-09-30 0000073088 nwe:ApprovedInterimRateIncreaseMontanaElectricRateFiling.Member 2019-01-01 2019-09-30 0000073088 nwe:PowercostandCreditAdjustmentMechanismPCCAMMember 2019-01-01 2019-09-30 0000073088 nwe:MontanaElectricRateFilingMember 2019-01-01 2019-09-30 0000073088 nwe:PowercostandCreditAdjustmentMechanismPCCAMMember 2019-09-30 0000073088 nwe:ApprovedInterimRateIncreaseMontanaElectricRateFiling.Member 2019-07-01 2019-09-30 0000073088 nwe:MontanaElectricRateFilingMember 2018-07-01 2018-09-30 0000073088 us-gaap:InternalRevenueServiceIRSMember 2019-01-01 2019-09-30 0000073088 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-09-30 0000073088 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2017-12-31 0000073088 us-gaap:ComprehensiveIncomeMember 2018-09-30 0000073088 us-gaap:ComprehensiveIncomeMember 2018-01-01 2018-09-30 0000073088 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2018-01-01 2018-09-30 0000073088 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-01-01 2018-09-30 0000073088 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2017-12-31 0000073088 us-gaap:ComprehensiveIncomeMember 2017-12-31 0000073088 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2018-09-30 0000073088 us-gaap:AccumulatedTranslationAdjustmentMember 2018-09-30 0000073088 us-gaap:AccumulatedTranslationAdjustmentMember 2017-12-31 0000073088 us-gaap:AccumulatedTranslationAdjustmentMember 2018-01-01 2018-09-30 0000073088 us-gaap:AccumulatedTranslationAdjustmentMember 2018-07-01 2018-09-30 0000073088 us-gaap:ComprehensiveIncomeMember 2018-07-01 2018-09-30 0000073088 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-07-01 2018-09-30 0000073088 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2018-07-01 2018-09-30 0000073088 us-gaap:AccumulatedTranslationAdjustmentMember 2018-06-30 0000073088 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-06-30 0000073088 us-gaap:ComprehensiveIncomeMember 2018-06-30 0000073088 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2018-06-30 0000073088 us-gaap:ComprehensiveIncomeMember 2019-07-01 2019-09-30 0000073088 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-09-30 0000073088 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2019-07-01 2019-09-30 0000073088 us-gaap:AccumulatedTranslationAdjustmentMember 2019-07-01 2019-09-30 0000073088 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2019-06-30 0000073088 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2019-09-30 0000073088 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-07-01 2019-09-30 0000073088 us-gaap:ComprehensiveIncomeMember 2019-09-30 0000073088 us-gaap:AccumulatedTranslationAdjustmentMember 2019-09-30 0000073088 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-06-30 0000073088 us-gaap:AccumulatedTranslationAdjustmentMember 2019-06-30 0000073088 us-gaap:ComprehensiveIncomeMember 2019-06-30 0000073088 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2019-01-01 2019-09-30 0000073088 us-gaap:ComprehensiveIncomeMember 2018-12-31 0000073088 us-gaap:AccumulatedTranslationAdjustmentMember 2019-01-01 2019-09-30 0000073088 us-gaap:ComprehensiveIncomeMember 2019-01-01 2019-09-30 0000073088 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-01-01 2019-09-30 0000073088 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-12-31 0000073088 us-gaap:AccumulatedTranslationAdjustmentMember 2018-12-31 0000073088 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2018-12-31 0000073088 nwe:SecuredDebtMontanaDue2049Member 2019-09-30 0000073088 nwe:SecuredDebtMontanaDueSeptember2049Member 2019-09-30 0000073088 nwe:SecuredDebtMontanaDueJune2049Member 2019-09-30 0000073088 nwe:SecuredDebtMontanaDueSeptember2049Member 2019-07-01 2019-09-30 0000073088 nwe:SecuredDebtMontanaDueJune2049Member 2019-07-01 2019-09-30 0000073088 nwe:SecuredDebtMontanaDue2049Member 2019-07-01 2019-09-30 0000073088 us-gaap:IntersegmentEliminationMember 2018-07-01 2018-09-30 0000073088 nwe:ElectricDomesticRegulatedMember 2018-07-01 2018-09-30 0000073088 nwe:GasDomesticRegulatedMember 2018-07-01 2018-09-30 0000073088 us-gaap:AllOtherSegmentsMember 2018-07-01 2018-09-30 0000073088 nwe:ElectricDomesticRegulatedMember 2018-09-30 0000073088 nwe:GasDomesticRegulatedMember 2018-09-30 0000073088 us-gaap:AllOtherSegmentsMember 2018-09-30 0000073088 us-gaap:IntersegmentEliminationMember 2018-09-30 0000073088 nwe:ElectricDomesticRegulatedMember 2019-01-01 2019-09-30 0000073088 us-gaap:AllOtherSegmentsMember 2019-01-01 2019-09-30 0000073088 us-gaap:IntersegmentEliminationMember 2019-09-30 0000073088 nwe:GasDomesticRegulatedMember 2019-01-01 2019-09-30 0000073088 us-gaap:IntersegmentEliminationMember 2019-01-01 2019-09-30 0000073088 us-gaap:AllOtherSegmentsMember 2019-09-30 0000073088 nwe:GasDomesticRegulatedMember 2019-09-30 0000073088 nwe:ElectricDomesticRegulatedMember 2019-09-30 0000073088 us-gaap:IntersegmentEliminationMember 2018-01-01 2018-09-30 0000073088 us-gaap:AllOtherSegmentsMember 2018-01-01 2018-09-30 0000073088 nwe:ElectricDomesticRegulatedMember 2018-01-01 2018-09-30 0000073088 nwe:GasDomesticRegulatedMember 2018-01-01 2018-09-30 0000073088 us-gaap:AllOtherSegmentsMember 2019-07-01 2019-09-30 0000073088 us-gaap:IntersegmentEliminationMember 2019-07-01 2019-09-30 0000073088 nwe:GasDomesticRegulatedMember 2019-07-01 2019-09-30 0000073088 nwe:ElectricDomesticRegulatedMember 2019-07-01 2019-09-30 0000073088 nwe:OtherCustomersMember nwe:ElectricDomesticRegulatedMember 2019-07-01 2019-09-30 0000073088 nwe:TotalRevenueMember nwe:GasDomesticRegulatedMember 2019-07-01 2019-09-30 0000073088 nwe:ResidentialCustomersMember stpr:MT nwe:GasDomesticRegulatedMember 2019-07-01 2019-09-30 0000073088 nwe:RegulatoryAmortizationMember nwe:GasDomesticRegulatedMember 2019-07-01 2019-09-30 0000073088 nwe:CommercialCustomersMember stpr:MT nwe:ElectricDomesticRegulatedMember 2019-07-01 2019-09-30 0000073088 nwe:TotalcustomerrevenueMember nwe:ElectricDomesticRegulatedMember 2018-07-01 2018-09-30 0000073088 nwe:IndustrialCustomersMember 2019-07-01 2019-09-30 0000073088 nwe:ResidentialCustomersMember stpr:NE nwe:GasDomesticRegulatedMember 2019-07-01 2019-09-30 0000073088 nwe:OtherTariffBasedRevenueMember 2019-07-01 2019-09-30 0000073088 nwe:CommercialCustomersMember stpr:SD nwe:ElectricDomesticRegulatedMember 2019-07-01 2019-09-30 0000073088 nwe:CommercialCustomersMember stpr:SD nwe:GasDomesticRegulatedMember 2018-07-01 2018-09-30 0000073088 nwe:CommercialCustomersMember nwe:GasDomesticRegulatedMember 2018-07-01 2018-09-30 0000073088 nwe:ResidentialCustomersMember nwe:GasDomesticRegulatedMember 2018-07-01 2018-09-30 0000073088 nwe:TotalcustomerrevenueMember nwe:ElectricDomesticRegulatedMember 2019-07-01 2019-09-30 0000073088 nwe:OtherTariffBasedRevenueMember nwe:ElectricDomesticRegulatedMember 2018-07-01 2018-09-30 0000073088 nwe:OtherTariffBasedRevenueMember 2018-07-01 2018-09-30 0000073088 nwe:ResidentialCustomersMember stpr:SD 2019-07-01 2019-09-30 0000073088 nwe:CommercialCustomersMember stpr:NE 2018-07-01 2018-09-30 0000073088 nwe:OtherCustomersMember nwe:GasDomesticRegulatedMember 2019-07-01 2019-09-30 0000073088 nwe:OtherCustomersMember nwe:ElectricDomesticRegulatedMember 2018-07-01 2018-09-30 0000073088 nwe:CommercialCustomersMember stpr:NE nwe:ElectricDomesticRegulatedMember 2019-07-01 2019-09-30 0000073088 nwe:ResidentialCustomersMember stpr:SD nwe:ElectricDomesticRegulatedMember 2018-07-01 2018-09-30 0000073088 nwe:ResidentialCustomersMember stpr:MT 2019-07-01 2019-09-30 0000073088 nwe:IndustrialCustomersMember nwe:GasDomesticRegulatedMember 2018-07-01 2018-09-30 0000073088 nwe:CommercialCustomersMember 2019-07-01 2019-09-30 0000073088 nwe:ResidentialCustomersMember stpr:NE 2019-07-01 2019-09-30 0000073088 nwe:CommercialCustomersMember stpr:MT nwe:ElectricDomesticRegulatedMember 2018-07-01 2018-09-30 0000073088 nwe:ResidentialCustomersMember stpr:MT 2018-07-01 2018-09-30 0000073088 nwe:TotalRevenueMember nwe:ElectricDomesticRegulatedMember 2019-07-01 2019-09-30 0000073088 nwe:ResidentialCustomersMember stpr:SD nwe:GasDomesticRegulatedMember 2018-07-01 2018-09-30 0000073088 nwe:RegulatoryAmortizationMember nwe:ElectricDomesticRegulatedMember 2019-07-01 2019-09-30 0000073088 nwe:ResidentialCustomersMember stpr:NE 2018-07-01 2018-09-30 0000073088 nwe:CommercialCustomersMember stpr:SD 2018-07-01 2018-09-30 0000073088 nwe:ResidentialCustomersMember stpr:NE nwe:ElectricDomesticRegulatedMember 2018-07-01 2018-09-30 0000073088 nwe:TotalRevenueMember 2019-07-01 2019-09-30 0000073088 nwe:ResidentialCustomersMember stpr:NE nwe:ElectricDomesticRegulatedMember 2019-07-01 2019-09-30 0000073088 nwe:CommercialCustomersMember stpr:NE 2019-07-01 2019-09-30 0000073088 nwe:TotalcustomerrevenueMember nwe:GasDomesticRegulatedMember 2018-07-01 2018-09-30 0000073088 nwe:CommercialCustomersMember stpr:MT nwe:GasDomesticRegulatedMember 2018-07-01 2018-09-30 0000073088 nwe:ResidentialCustomersMember stpr:SD nwe:ElectricDomesticRegulatedMember 2019-07-01 2019-09-30 0000073088 nwe:TotalRevenueMember 2018-07-01 2018-09-30 0000073088 nwe:CommercialCustomersMember nwe:ElectricDomesticRegulatedMember 2019-07-01 2019-09-30 0000073088 nwe:IndustrialCustomersMember nwe:ElectricDomesticRegulatedMember 2019-07-01 2019-09-30 0000073088 nwe:RegulatoryAmortizationMember nwe:ElectricDomesticRegulatedMember 2018-07-01 2018-09-30 0000073088 nwe:ResidentialCustomersMember 2018-07-01 2018-09-30 0000073088 nwe:ResidentialCustomersMember nwe:ElectricDomesticRegulatedMember 2018-07-01 2018-09-30 0000073088 nwe:ResidentialCustomersMember nwe:ElectricDomesticRegulatedMember 2019-07-01 2019-09-30 0000073088 nwe:CommercialCustomersMember stpr:MT nwe:GasDomesticRegulatedMember 2019-07-01 2019-09-30 0000073088 nwe:RegulatoryAmortizationMember nwe:GasDomesticRegulatedMember 2018-07-01 2018-09-30 0000073088 nwe:OtherTariffBasedRevenueMember nwe:ElectricDomesticRegulatedMember 2019-07-01 2019-09-30 0000073088 nwe:ResidentialCustomersMember stpr:NE nwe:GasDomesticRegulatedMember 2018-07-01 2018-09-30 0000073088 nwe:CommercialCustomersMember stpr:MT 2019-07-01 2019-09-30 0000073088 nwe:ResidentialCustomersMember stpr:MT nwe:GasDomesticRegulatedMember 2018-07-01 2018-09-30 0000073088 nwe:RegulatoryAmortizationMember 2018-07-01 2018-09-30 0000073088 nwe:CommercialCustomersMember stpr:NE nwe:ElectricDomesticRegulatedMember 2018-07-01 2018-09-30 0000073088 nwe:CommercialCustomersMember nwe:GasDomesticRegulatedMember 2019-07-01 2019-09-30 0000073088 nwe:CommercialCustomersMember stpr:NE nwe:GasDomesticRegulatedMember 2019-07-01 2019-09-30 0000073088 nwe:CommercialCustomersMember stpr:NE nwe:GasDomesticRegulatedMember 2018-07-01 2018-09-30 0000073088 nwe:TotalcustomerrevenueMember 2019-07-01 2019-09-30 0000073088 nwe:CommercialCustomersMember stpr:MT 2018-07-01 2018-09-30 0000073088 nwe:ResidentialCustomersMember stpr:MT nwe:ElectricDomesticRegulatedMember 2019-07-01 2019-09-30 0000073088 nwe:CommercialCustomersMember 2018-07-01 2018-09-30 0000073088 nwe:TotalcustomerrevenueMember 2018-07-01 2018-09-30 0000073088 nwe:ResidentialCustomersMember stpr:MT nwe:ElectricDomesticRegulatedMember 2018-07-01 2018-09-30 0000073088 nwe:CommercialCustomersMember stpr:SD 2019-07-01 2019-09-30 0000073088 nwe:ResidentialCustomersMember nwe:GasDomesticRegulatedMember 2019-07-01 2019-09-30 0000073088 nwe:TotalRevenueMember nwe:ElectricDomesticRegulatedMember 2018-07-01 2018-09-30 0000073088 nwe:OtherCustomersMember 2019-07-01 2019-09-30 0000073088 nwe:CommercialCustomersMember stpr:SD nwe:ElectricDomesticRegulatedMember 2018-07-01 2018-09-30 0000073088 nwe:ResidentialCustomersMember stpr:SD 2018-07-01 2018-09-30 0000073088 nwe:OtherTariffBasedRevenueMember nwe:GasDomesticRegulatedMember 2018-07-01 2018-09-30 0000073088 nwe:TotalcustomerrevenueMember nwe:GasDomesticRegulatedMember 2019-07-01 2019-09-30 0000073088 nwe:RegulatoryAmortizationMember 2019-07-01 2019-09-30 0000073088 nwe:ResidentialCustomersMember stpr:SD nwe:GasDomesticRegulatedMember 2019-07-01 2019-09-30 0000073088 nwe:OtherTariffBasedRevenueMember nwe:GasDomesticRegulatedMember 2019-07-01 2019-09-30 0000073088 nwe:TotalRevenueMember nwe:GasDomesticRegulatedMember 2018-07-01 2018-09-30 0000073088 nwe:IndustrialCustomersMember nwe:ElectricDomesticRegulatedMember 2018-07-01 2018-09-30 0000073088 nwe:ResidentialCustomersMember 2019-07-01 2019-09-30 0000073088 nwe:IndustrialCustomersMember 2018-07-01 2018-09-30 0000073088 nwe:OtherCustomersMember 2018-07-01 2018-09-30 0000073088 nwe:CommercialCustomersMember nwe:ElectricDomesticRegulatedMember 2018-07-01 2018-09-30 0000073088 nwe:IndustrialCustomersMember nwe:GasDomesticRegulatedMember 2019-07-01 2019-09-30 0000073088 nwe:OtherCustomersMember nwe:GasDomesticRegulatedMember 2018-07-01 2018-09-30 0000073088 nwe:CommercialCustomersMember stpr:SD nwe:GasDomesticRegulatedMember 2019-07-01 2019-09-30 0000073088 nwe:ResidentialCustomersMember stpr:MT nwe:ElectricDomesticRegulatedMember 2018-01-01 2018-09-30 0000073088 nwe:IndustrialCustomersMember 2019-01-01 2019-09-30 0000073088 nwe:ResidentialCustomersMember stpr:MT nwe:ElectricDomesticRegulatedMember 2019-01-01 2019-09-30 0000073088 nwe:CommercialCustomersMember stpr:MT nwe:GasDomesticRegulatedMember 2019-01-01 2019-09-30 0000073088 nwe:OtherCustomersMember nwe:GasDomesticRegulatedMember 2019-01-01 2019-09-30 0000073088 nwe:ResidentialCustomersMember nwe:GasDomesticRegulatedMember 2019-01-01 2019-09-30 0000073088 nwe:TotalRevenueMember 2018-01-01 2018-09-30 0000073088 nwe:CommercialCustomersMember stpr:SD 2019-01-01 2019-09-30 0000073088 nwe:OtherTariffBasedRevenueMember 2018-01-01 2018-09-30 0000073088 nwe:CommercialCustomersMember stpr:SD nwe:GasDomesticRegulatedMember 2018-01-01 2018-09-30 0000073088 nwe:CommercialCustomersMember stpr:NE nwe:ElectricDomesticRegulatedMember 2019-01-01 2019-09-30 0000073088 nwe:ResidentialCustomersMember nwe:ElectricDomesticRegulatedMember 2018-01-01 2018-09-30 0000073088 nwe:OtherCustomersMember nwe:GasDomesticRegulatedMember 2018-01-01 2018-09-30 0000073088 nwe:OtherTariffBasedRevenueMember nwe:ElectricDomesticRegulatedMember 2018-01-01 2018-09-30 0000073088 nwe:TotalcustomerrevenueMember nwe:GasDomesticRegulatedMember 2018-01-01 2018-09-30 0000073088 nwe:CommercialCustomersMember stpr:NE 2019-01-01 2019-09-30 0000073088 nwe:CommercialCustomersMember 2018-01-01 2018-09-30 0000073088 nwe:TotalRevenueMember 2019-01-01 2019-09-30 0000073088 nwe:IndustrialCustomersMember 2018-01-01 2018-09-30 0000073088 nwe:CommercialCustomersMember nwe:GasDomesticRegulatedMember 2018-01-01 2018-09-30 0000073088 nwe:ResidentialCustomersMember stpr:MT nwe:GasDomesticRegulatedMember 2019-01-01 2019-09-30 0000073088 nwe:CommercialCustomersMember stpr:SD 2018-01-01 2018-09-30 0000073088 nwe:ResidentialCustomersMember stpr:SD nwe:ElectricDomesticRegulatedMember 2019-01-01 2019-09-30 0000073088 nwe:ResidentialCustomersMember stpr:SD 2019-01-01 2019-09-30 0000073088 nwe:CommercialCustomersMember stpr:MT nwe:ElectricDomesticRegulatedMember 2018-01-01 2018-09-30 0000073088 nwe:TotalcustomerrevenueMember 2019-01-01 2019-09-30 0000073088 nwe:CommercialCustomersMember stpr:NE nwe:ElectricDomesticRegulatedMember 2018-01-01 2018-09-30 0000073088 nwe:ResidentialCustomersMember stpr:NE nwe:ElectricDomesticRegulatedMember 2019-01-01 2019-09-30 0000073088 nwe:CommercialCustomersMember stpr:NE 2018-01-01 2018-09-30 0000073088 nwe:OtherCustomersMember 2019-01-01 2019-09-30 0000073088 nwe:TotalRevenueMember nwe:ElectricDomesticRegulatedMember 2018-01-01 2018-09-30 0000073088 nwe:CommercialCustomersMember nwe:ElectricDomesticRegulatedMember 2019-01-01 2019-09-30 0000073088 nwe:IndustrialCustomersMember nwe:ElectricDomesticRegulatedMember 2018-01-01 2018-09-30 0000073088 nwe:TotalcustomerrevenueMember nwe:GasDomesticRegulatedMember 2019-01-01 2019-09-30 0000073088 nwe:CommercialCustomersMember stpr:MT 2019-01-01 2019-09-30 0000073088 nwe:TotalcustomerrevenueMember 2018-01-01 2018-09-30 0000073088 nwe:ResidentialCustomersMember stpr:NE nwe:ElectricDomesticRegulatedMember 2018-01-01 2018-09-30 0000073088 nwe:ResidentialCustomersMember stpr:SD nwe:GasDomesticRegulatedMember 2018-01-01 2018-09-30 0000073088 nwe:CommercialCustomersMember stpr:NE nwe:GasDomesticRegulatedMember 2018-01-01 2018-09-30 0000073088 nwe:OtherCustomersMember nwe:ElectricDomesticRegulatedMember 2019-01-01 2019-09-30 0000073088 nwe:TotalcustomerrevenueMember nwe:ElectricDomesticRegulatedMember 2019-01-01 2019-09-30 0000073088 nwe:RegulatoryAmortizationMember 2018-01-01 2018-09-30 0000073088 nwe:OtherTariffBasedRevenueMember nwe:GasDomesticRegulatedMember 2018-01-01 2018-09-30 0000073088 nwe:OtherTariffBasedRevenueMember nwe:ElectricDomesticRegulatedMember 2019-01-01 2019-09-30 0000073088 nwe:CommercialCustomersMember stpr:MT nwe:ElectricDomesticRegulatedMember 2019-01-01 2019-09-30 0000073088 nwe:ResidentialCustomersMember stpr:SD 2018-01-01 2018-09-30 0000073088 nwe:IndustrialCustomersMember nwe:ElectricDomesticRegulatedMember 2019-01-01 2019-09-30 0000073088 nwe:CommercialCustomersMember stpr:SD nwe:ElectricDomesticRegulatedMember 2018-01-01 2018-09-30 0000073088 nwe:CommercialCustomersMember 2019-01-01 2019-09-30 0000073088 nwe:ResidentialCustomersMember stpr:MT 2019-01-01 2019-09-30 0000073088 nwe:OtherCustomersMember 2018-01-01 2018-09-30 0000073088 nwe:CommercialCustomersMember stpr:SD nwe:ElectricDomesticRegulatedMember 2019-01-01 2019-09-30 0000073088 nwe:ResidentialCustomersMember stpr:NE 2018-01-01 2018-09-30 0000073088 nwe:ResidentialCustomersMember 2019-01-01 2019-09-30 0000073088 nwe:ResidentialCustomersMember stpr:SD nwe:ElectricDomesticRegulatedMember 2018-01-01 2018-09-30 0000073088 nwe:ResidentialCustomersMember stpr:MT 2018-01-01 2018-09-30 0000073088 nwe:RegulatoryAmortizationMember nwe:ElectricDomesticRegulatedMember 2018-01-01 2018-09-30 0000073088 nwe:TotalRevenueMember nwe:GasDomesticRegulatedMember 2019-01-01 2019-09-30 0000073088 nwe:CommercialCustomersMember stpr:MT 2018-01-01 2018-09-30 0000073088 nwe:CommercialCustomersMember stpr:MT nwe:GasDomesticRegulatedMember 2018-01-01 2018-09-30 0000073088 nwe:TotalRevenueMember nwe:GasDomesticRegulatedMember 2018-01-01 2018-09-30 0000073088 nwe:ResidentialCustomersMember nwe:ElectricDomesticRegulatedMember 2019-01-01 2019-09-30 0000073088 nwe:ResidentialCustomersMember stpr:NE nwe:GasDomesticRegulatedMember 2019-01-01 2019-09-30 0000073088 nwe:IndustrialCustomersMember nwe:GasDomesticRegulatedMember 2019-01-01 2019-09-30 0000073088 nwe:CommercialCustomersMember nwe:GasDomesticRegulatedMember 2019-01-01 2019-09-30 0000073088 nwe:OtherTariffBasedRevenueMember 2019-01-01 2019-09-30 0000073088 nwe:ResidentialCustomersMember stpr:NE nwe:GasDomesticRegulatedMember 2018-01-01 2018-09-30 0000073088 nwe:TotalcustomerrevenueMember nwe:ElectricDomesticRegulatedMember 2018-01-01 2018-09-30 0000073088 nwe:RegulatoryAmortizationMember nwe:ElectricDomesticRegulatedMember 2019-01-01 2019-09-30 0000073088 nwe:CommercialCustomersMember stpr:NE nwe:GasDomesticRegulatedMember 2019-01-01 2019-09-30 0000073088 nwe:ResidentialCustomersMember 2018-01-01 2018-09-30 0000073088 nwe:OtherTariffBasedRevenueMember nwe:GasDomesticRegulatedMember 2019-01-01 2019-09-30 0000073088 nwe:RegulatoryAmortizationMember nwe:GasDomesticRegulatedMember 2018-01-01 2018-09-30 0000073088 nwe:ResidentialCustomersMember stpr:MT nwe:GasDomesticRegulatedMember 2018-01-01 2018-09-30 0000073088 nwe:OtherCustomersMember nwe:ElectricDomesticRegulatedMember 2018-01-01 2018-09-30 0000073088 nwe:CommercialCustomersMember stpr:SD nwe:GasDomesticRegulatedMember 2019-01-01 2019-09-30 0000073088 nwe:ResidentialCustomersMember stpr:SD nwe:GasDomesticRegulatedMember 2019-01-01 2019-09-30 0000073088 nwe:ResidentialCustomersMember stpr:NE 2019-01-01 2019-09-30 0000073088 nwe:CommercialCustomersMember nwe:ElectricDomesticRegulatedMember 2018-01-01 2018-09-30 0000073088 nwe:TotalRevenueMember nwe:ElectricDomesticRegulatedMember 2019-01-01 2019-09-30 0000073088 nwe:ResidentialCustomersMember nwe:GasDomesticRegulatedMember 2018-01-01 2018-09-30 0000073088 nwe:IndustrialCustomersMember nwe:GasDomesticRegulatedMember 2018-01-01 2018-09-30 0000073088 nwe:RegulatoryAmortizationMember nwe:GasDomesticRegulatedMember 2019-01-01 2019-09-30 0000073088 nwe:RegulatoryAmortizationMember 2019-01-01 2019-09-30 0000073088 us-gaap:PensionPlansDefinedBenefitMember 2019-07-01 2019-09-30 0000073088 us-gaap:OtherPensionPlansPostretirementOrSupplementalPlansDefinedBenefitMember 2018-07-01 2018-09-30 0000073088 us-gaap:PensionPlansDefinedBenefitMember 2018-07-01 2018-09-30 0000073088 us-gaap:OtherPensionPlansPostretirementOrSupplementalPlansDefinedBenefitMember 2019-07-01 2019-09-30 0000073088 us-gaap:PensionPlansDefinedBenefitMember 2018-01-01 2018-09-30 0000073088 us-gaap:OtherPensionPlansPostretirementOrSupplementalPlansDefinedBenefitMember 2019-01-01 2019-09-30 0000073088 us-gaap:PensionPlansDefinedBenefitMember 2019-01-01 2019-09-30 0000073088 us-gaap:OtherPensionPlansPostretirementOrSupplementalPlansDefinedBenefitMember 2018-01-01 2018-09-30 0000073088 nwe:EnvironmentalRemediationObligationsMember 2019-09-30 0000073088 nwe:ManufacturedGasPlantsMember nwe:CombinedManufacturingSitesMember 2019-09-30 0000073088 nwe:ManufacturedGasPlantsMember nwe:AberdeenSouthDakotaSiteMember 2019-09-30 0000073088 nwe:RiverbedRentsMember 2019-01-01 2019-09-30 0000073088 nwe:PacificNorthwestSolarLLCPNWSMember 2019-01-01 2019-09-30 iso4217:USD xbrli:shares xbrli:shares nwe:watts nwe:customers xbrli:pure iso4217:USD


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q

(mark one)
 
 
 
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
 
For the quarterly period ended
September 30, 2019
 
 
 
 
OR
 
 
 
 
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from          to          

Commission File Number: 1-10499
logoa14.jpg
NORTHWESTERN CORP
(Exact name of registrant as specified in its charter)
Delaware
 
46-0172280
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
3010 W. 69th Street
Sioux Falls
South Dakota
 
57108
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: 605-978-2900

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock
NWE
NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non- accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
Accelerated Filer
Non-accelerated Filer
Smaller Reporting Company
Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Common Stock, Par Value $0.01, 50,446,835 shares outstanding at October 25, 2019

1



NORTHWESTERN CORPORATION
 
FORM 10-Q
 
INDEX

 
Page
 
 
 
 
 
 


2



SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

On one or more occasions, we may make statements in this Quarterly Report on Form 10-Q regarding our assumptions, projections, expectations, targets, intentions or beliefs about future events. All statements other than statements of historical facts, included or incorporated by reference in this Quarterly Report, relating to management's current expectations of future financial performance, continued growth, changes in economic conditions or capital markets and changes in customer usage patterns and preferences are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

Words or phrases such as “anticipates," “may," “will," “should," “believes," “estimates," “expects," “intends," “plans," “predicts," “projects," “targets," “will likely result," “will continue" or similar expressions identify forward-looking statements. Forward-looking statements involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed. We caution that while we make such statements in good faith and believe such statements are based on reasonable assumptions, including without limitation, management's examination of historical operating trends, data contained in records and other data available from third parties, we cannot assure you that we will achieve our projections. Factors that may cause such differences include, but are not limited to:

adverse determinations by regulators, as well as potential adverse federal, state, or local legislation or regulation, including costs of compliance with existing and future environmental requirements, 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.

We have attempted to identify, in context, certain of the factors that we believe may cause actual future experience and results to differ materially from our current expectation regarding the relevant matter or subject area. In addition to the items specifically discussed above, our business and results of operations are subject to the uncertainties described under the caption “Risk Factors” which is part of the disclosure included in Part II, Item 1A of this Quarterly Report on Form 10-Q.

From time to time, oral or written forward-looking statements are also included in our reports on Forms 10-K, 10-Q and 8-K, Proxy Statements on Schedule 14A, press releases, analyst and investor conference calls, and other communications released to the public. We believe that at the time made, the expectations reflected in all of these forward-looking statements are and will be reasonable. However, any or all of the forward-looking statements in this Quarterly Report on Form 10-Q, our reports on Forms 10-K and 8-K, our other reports on Form 10-Q, our Proxy Statements on Schedule 14A and any other public statements that are made by us may prove to be incorrect. This may occur as a result of assumptions, which turn out to be inaccurate, or as a consequence of known or unknown risks and uncertainties. Many factors discussed in this Quarterly Report on Form 10-Q, certain of which are beyond our control, will be important in determining our future performance. Consequently, actual results may differ materially from those that might be anticipated from forward-looking statements. In light of these and other uncertainties, you should not regard the inclusion of any of our forward-looking statements in this Quarterly Report on Form 10-Q or other public communications as a representation by us that our plans and objectives will be achieved, and you should not place undue reliance on such forward-looking statements.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is directed to any further disclosures made on related subjects in our subsequent reports filed with the Securities and Exchange Commission (SEC) on Forms 10-K, 10-Q and 8-K and Proxy Statements on Schedule 14A.

Unless the context requires otherwise, references to “we,” “us,” “our,” “NorthWestern Corporation,” “NorthWestern Energy,” and “NorthWestern” refer specifically to NorthWestern Corporation and its subsidiaries.


3



PART 1. FINANCIAL INFORMATION

 
ITEM 1.
FINANCIAL STATEMENTS (UNAUDITED)
 

NORTHWESTERN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 
(Unaudited)
 
(in thousands, except per share amounts)
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
Revenues
 
 
 
 
 
 
 
Electric
$
241,237

 
$
245,159

 
$
733,933

 
$
693,256

Gas
33,599

 
34,715

 
195,842

 
189,937

Total Revenues
274,836

 
279,874

 
929,775

 
883,193

Operating Expenses
 
 
 
 
 
 
 
Cost of sales
64,227

 
72,247

 
235,706

 
200,514

Operating, general and administrative
76,998

 
73,787

 
238,916

 
221,966

Property and other taxes
44,089

 
42,451

 
133,188

 
128,306

Depreciation and depletion
43,166

 
43,581

 
129,766

 
130,877

Total Operating Expenses
228,480

 
232,066

 
737,576

 
681,663

Operating Income
46,356

 
47,808

 
192,199

 
201,530

Interest Expense, net
(23,722
)
 
(22,035
)
 
(71,023
)
 
(68,202
)
Other (Expense) Income, net
(409
)
 
2,051

 
864

 
1,798

Income Before Income Taxes
22,225

 
27,824

 
122,040

 
135,126

Income Tax (Expense) Benefit
(555
)
 
358

 
20,098

 
(4,658
)
Net Income
$
21,670

 
$
28,182

 
$
142,138

 
$
130,468

 
 
 
 
 
 
 
 
Average Common Shares Outstanding
50,444

 
50,318

 
50,422

 
49,871

Basic Earnings per Average Common Share
$
0.43

 
$
0.56

 
$
2.82

 
$
2.62

Diluted Earnings per Average Common Share
$
0.42

 
$
0.56

 
$
2.80

 
$
2.61

Dividends Declared per Common Share
$
0.575

 
$
0.55

 
$
1.725

 
$
1.65



See Notes to Condensed Consolidated Financial Statements
 

4



NORTHWESTERN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
(Unaudited)
 
(in thousands)
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Net Income
$
21,670

 
$
28,182

 
$
142,138

 
$
130,468

Other comprehensive income, net of tax:
 
 
 
 
 
 
 
  Foreign currency translation
42

 
(68
)
 
18

 
113

Reclassification of net losses on derivative instruments
114

 
113

 
339

 
339

Total Other Comprehensive Income
156

 
45

 
357

 
452

Comprehensive Income
$
21,826

 
$
28,227

 
$
142,495

 
$
130,920


See Notes to Condensed Consolidated Financial Statements
 

5



NORTHWESTERN CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS
 
(Unaudited)

(in thousands, except share data)
 
September 30,
2019
 
December 31,
2018
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
5,046

 
$
7,860

Restricted cash
9,055

 
7,451

Accounts receivable, net
126,373

 
162,373

Inventories
55,168

 
50,815

Regulatory assets
56,093

 
38,431

Other
14,087

 
10,755

      Total current assets 
265,822

 
277,685

Property, plant, and equipment, net
4,650,951

 
4,521,318

Goodwill and other intangibles, net
357,986

 
357,586

Regulatory assets
470,781

 
437,581

Other noncurrent assets
64,640

 
50,206

      Total Assets 
$
5,810,180

 
$
5,644,376

LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
Current Liabilities:
 
 
 
Finance leases
$
2,430

 
$
2,298

Accounts payable
66,550

 
87,043

Accrued expenses and other
243,093

 
216,792

Regulatory liabilities
21,611

 
40,876

      Total current liabilities 
333,684

 
347,009

Long-term finance leases
18,081

 
19,915

Long-term debt
2,176,057

 
2,102,345

Deferred income taxes
431,832

 
394,618

Noncurrent regulatory liabilities
451,006

 
438,285

Other noncurrent liabilities
394,996

 
399,822

      Total Liabilities 
3,805,656

 
3,701,994

Commitments and Contingencies (Note 10)

 

Shareholders' Equity:
 
 
 
Common stock, par value $0.01; authorized 200,000,000 shares; issued and outstanding 53,996,070 and 50,445,969 shares, respectively; Preferred stock, par value $0.01; authorized 50,000,000 shares; none issued
540

 
539

Treasury stock at cost
(96,092
)
 
(95,546
)
Paid-in capital
1,505,605

 
1,499,070

Retained earnings
604,048

 
548,253

Accumulated other comprehensive loss
(9,577
)
 
(9,934
)
Total Shareholders' Equity 
2,004,524

 
1,942,382

Total Liabilities and Shareholders' Equity
$
5,810,180

 
$
5,644,376


See Notes to Condensed Consolidated Financial Statements

6



NORTHWESTERN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
 
Nine Months Ended September 30,
 
2019
 
2018
OPERATING ACTIVITIES:
 
 
 
Net income
$
142,138

 
$
130,468

Items not affecting cash:
 
 

Depreciation and depletion
129,766

 
130,877

Amortization of debt issue costs, discount and deferred hedge gain
3,482

 
3,488

Stock-based compensation costs
4,778

 
4,935

Equity portion of allowance for funds used during construction
(4,118
)
 
(2,737
)
Gain on disposition of assets
(176
)
 
(55
)
Deferred income taxes
(16,350
)
 
6,287

Changes in current assets and liabilities:
 
 
 
Accounts receivable
36,000

 
54,352

Inventories
(4,353
)
 
(306
)
Other current assets
(3,332
)
 
(904
)
Accounts payable
(13,942
)
 
(19,090
)
Accrued expenses
24,945

 
53,031

Regulatory assets
(17,662
)
 
(1,915
)
Regulatory liabilities
(19,265
)
 
6,955

Other noncurrent assets
(5,366
)
 
(8,031
)
Other noncurrent liabilities
(2,684
)
 
(10,937
)
Cash Provided by Operating Activities
253,861

 
346,418

INVESTING ACTIVITIES:
 
 
 
Property, plant, and equipment additions
(242,874
)
 
(193,405
)
Acquisitions

 
(18,504
)
Proceeds from sale of assets

 
72

Cash Used in Investing Activities
(242,874
)
 
(211,837
)
FINANCING ACTIVITIES:
 
 
 
Treasury stock activity
1,220

 
2,056

Proceeds from issuance of common stock, net

 
44,797

Dividends on common stock
(86,343
)
 
(81,723
)
Issuance of long-term debt
150,000

 

  Line of credit repayments, net
(76,000
)
 

Line of credit borrowings

 
1,433,000

Line of credit repayments

 
(1,211,000
)
Repayments of short-term borrowings, net

 
(319,556
)
Financing costs
(1,074
)
 
(91
)
Cash Used in Financing Activities
(12,197
)
 
(132,517
)
(Decrease) Increase in Cash, Cash Equivalents, and Restricted Cash
(1,210
)
 
2,064

Cash, Cash Equivalents, and Restricted Cash, beginning of period
15,311

 
12,029

Cash, Cash Equivalents, and Restricted Cash, end of period 
$
14,101

 
$
14,093

Supplemental Cash Flow Information:
 
 
 
Cash paid during the period for:
 
 
 
Income taxes
$
68

 
$
55

Interest
55,515

 
49,002

Significant non-cash transactions:
 
 
 
Capital expenditures included in accounts payable
15,508

 
11,893

See Notes to Condensed Consolidated Financial Statements

7




NORTHWESTERN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)

(in thousands, except per share data)


 
Three Months Ended September 30,
 
Number  of Common Shares
 
Number of Treasury Shares
 
Common Stock
 
Treasury Stock
 
Paid in Capital
 
Retained Earnings
 
Accumulated Other Comprehensive Loss 
 
Total Shareholders' Equity
Balance at June 30, 2018
53,889

 
3,574

 
$
539

 
$
(95,768
)
 
$
1,494,940

 
$
508,528

 
$
(10,508
)
 
$
1,897,731

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income

 

 

 

 

 
28,182

 

 
28,182

Foreign currency translation adjustment

 

 

 

 

 

 
(68
)
 
(68
)
Reclassification of net losses on derivative instruments from OCI to net income, net of tax

 

 

 

 

 

 
113

 
113

Stock-based compensation

 
42

 
(1
)
 
(56
)
 
1,186

 

 

 
1,129

Issuance of shares

 
(47
)
 
1

 
190

 
92

 

 

 
283

Dividends on common stock ($0.55 per share)

 

 

 

 

 
(27,470
)
 

 
(27,470
)
Balance at September 30, 2018
53,889

 
3,569

 
$
539

 
$
(95,634
)
 
$
1,496,218

 
$
509,240

 
$
(10,463
)
 
$
1,899,900

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2019
53,996

 
3,553

 
$
540

 
$
(96,178
)
 
$
1,504,290

 
$
611,159

 
$
(9,733
)
 
$
2,010,078

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income

 

 

 

 

 
21,670

 

 
21,670

Foreign currency translation adjustment

 

 

 

 

 

 
42

 
42

Reclassification of net losses on derivative instruments from OCI to net income, net of tax

 

 

 

 

 

 
114

 
114

Stock-based compensation

 

 

 

 
1,169

 

 

 
1,169

Issuance of shares

 
(3
)
 

 
86

 
146

 

 

 
232

Dividends on common stock ($0.575 per share)

 

 

 

 

 
(28,781
)
 

 
(28,781
)
Balance at September 30, 2019
53,996

 
3,550

 
$
540

 
$
(96,092
)
 
$
1,505,605

 
$
604,048

 
$
(9,577
)
 
$
2,004,524




8











 
Nine Months Ended September 30,
 
Number  of Common Shares
 
Number of Treasury Shares
 
Common Stock
 
Treasury Stock
 
Paid in Capital
 
Retained Earnings
 
Accumulated Other Comprehensive Loss 
 
Total Shareholders' Equity
Balance at December 31, 2017
52,981

 
3,609

 
$
530

 
$
(96,376
)
 
$
1,445,181

 
$
458,352

 
$
(8,772
)
 
$
1,798,915

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income

 

 

 

 

 
130,468

 

 
130,468

Foreign currency translation adjustment

 

 

 

 

 

 
113

 
113

Reclassification of net losses on derivative instruments from OCI to net income, net of tax

 

 

 

 

 

 
339

 
339

Reclassification of certain tax effects from AOCL

 

 

 

 

 
2,143

 
(2,143
)
 

Stock-based compensation
72

 
12

 

 
(668
)
 
4,903

 

 

 
4,235

Issuance of shares
836

 
(52
)
 
9

 
1,410

 
46,134

 

 

 
47,553

Dividends on common stock ($1.65 per share)

 

 

 

 

 
(81,723
)
 

 
(81,723
)
Balance at September 30, 2018
53,889

 
3,569

 
$
539

 
$
(95,634
)
 
$
1,496,218

 
$
509,240

 
$
(10,463
)
 
$
1,899,900

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2018
53,889

 
3,566

 
$
539

 
$
(95,546
)
 
$
1,499,070

 
$
548,253

 
$
(9,934
)
 
$
1,942,382

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income

 

 

 

 

 
142,138

 

 
142,138

Foreign currency translation adjustment

 

 

 

 

 

 
18

 
18

Reclassification of net losses on derivative instruments from OCI to net income, net of tax

 

 

 

 

 

 
339

 
339

Stock-based compensation
107

 
25

 

 
(1,646
)
 
4,744

 

 

 
3,098

Issuance of shares

 
(41
)
 
1

 
1,100

 
1,791

 

 

 
2,892

Dividends on common stock ($1.725 per share)

 

 

 

 

 
(86,343
)
 

 
(86,343
)
Balance at September 30, 2019
53,996

 
3,550

 
$
540

 
$
(96,092
)
 
$
1,505,605

 
$
604,048

 
$
(9,577
)
 
$
2,004,524




See Notes to Condensed Consolidated Financial Statements


9



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Reference is made to Notes to Financial Statements included in NorthWestern Corporation’s Annual Report)
(Unaudited)

(1) Nature of Operations and Basis of Consolidation
 
NorthWestern Corporation, doing business as NorthWestern Energy, provides electricity and/or natural gas to approximately 726,400 customers in Montana, South Dakota and Nebraska.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that may affect the reported amounts of assets, liabilities, revenues and expenses during the reporting period. Actual results could differ from those estimates. The unaudited Condensed Consolidated Financial Statements (Financial Statements) reflect all adjustments (which unless otherwise noted are normal and recurring in nature) that are, in the opinion of management, necessary to fairly present our financial position, results of operations and cash flows. The actual results for the interim periods are not necessarily indicative of the operating results to be expected for a full year or for other interim periods. Events occurring subsequent to September 30, 2019, have been evaluated as to their potential impact to the Financial Statements through the date of issuance.

The Financial Statements included herein have been prepared by NorthWestern, without audit, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations; however, management believes that the condensed disclosures provided are adequate to make the information presented not misleading. Management recommends that these Financial Statements be read in conjunction with the audited financial statements and related footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2018.

Variable Interest Entities

A reporting company is required to consolidate a variable interest entity (VIE) as its primary beneficiary, which means it has a controlling financial interest, when it has both the power to direct the activities of the VIE that most significantly impact the VIE's economic performance, and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. An entity is considered to be a VIE when its total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support, or its equity investors, as a group, lack the characteristics of having a controlling financial interest. The determination of whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and design and a company’s ability to direct the activities of the entity that most significantly impact the entity’s economic performance.

Certain long-term purchase power and tolling contracts may be considered variable interests. We have various long-term purchase power contracts with other utilities and certain qualifying co-generation facilities and qualifying small power production facilities (QF). We identified one QF contract that may constitute a VIE. We entered into a 40-year power purchase contract in 1984 with this 35 megawatt (MW) coal-fired QF to purchase substantially all of the facility's capacity and electrical output over a substantial portion of its estimated useful life. We absorb a portion of the facility's variability through annual changes to the price we pay per megawatt hour (MWH). After making exhaustive efforts, we have been unable to obtain the information from the facility necessary to determine whether the facility is a VIE or whether we are the primary beneficiary of the facility. The contract with the facility contains no provision which legally obligates the facility to release this information. We have accounted for this QF contract as an executory contract. Based on the current contract terms with this QF, our estimated gross contractual payments aggregate approximately $148.5 million through 2024.

Accounting Standards Adopted

Leases - In February 2016, the Financial Accounting Standards Board (FASB) issued revised guidance requiring substantially all leases to be recognized on the balance sheet as right-of-use assets and lease liabilities. Leases with a term of 12 months or less may be excluded from the balance sheet and continue to be reflected in the income statement. Recognition, measurement and presentation of expenses depends on classification as a finance or operating lease.

We adopted this standard on January 1, 2019, using the modified retrospective method of adoption. Adoption of this standard had minimal impact on our Financial Statements and disclosures. We elected a package of practical expedients that allow us to carry forward historical conclusions related to (1) whether any expired or existing contract is a lease or contains a lease, (2) the lease classification of any expired or existing leases and easements, and (3) the initial direct costs for any existing leases. In addition, as our easements are entered into in perpetuity, they do not meet the definition of a lease in accordance with

10



this guidance. We did not restate comparative periods upon adoption. We had one finance lease that was already included on our balance sheets prior to adoption of the lease standard, consistent with previous guidance for capital leases. We also lease office equipment and facilities under various long-term operating leases. The recognition of right-of-use assets and lease liabilities for operating leases increased our assets and liabilities by approximately $3.6 million and are classified in the Condensed Consolidated Balance Sheets as follows (in thousands):
 
Affected Line Item in the
Condensed Consolidated Balance Sheets
September 30, 2019
Operating lease assets
Other noncurrent assets
$
3,598

 
 
 
Operating lease liabilities, current
Accrued expenses and other
1,356

Operating lease liabilities, noncurrent
Other noncurrent liabilities
2,242

Total operating lease liabilities
 
$
3,598



Supplemental Cash Flow Information

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Condensed Consolidated Statements of Cash Flows (in thousands):
 
September 30,
December 31,
September 30,
December 31,
 
2019
2018
2018
2017
Cash and cash equivalents
$
5,046

$
7,860

$
6,912

$
8,473

Restricted cash
9,055

7,451

7,181

3,556

Total cash, cash equivalents, and restricted cash shown in the Condensed Consolidated Statements of Cash Flows
$
14,101

$
15,311

$
14,093

$
12,029


Goodwill

We completed our annual goodwill impairment test as of April 1, 2019 and no impairment was identified. We calculate the fair value of our reporting units by considering various factors, including valuation studies based primarily on a discounted cash flow analysis, with published industry valuations and market data as supporting information. Key assumptions in the determination of fair value include the use of an appropriate discount rate and estimated future cash flows. In estimating cash flows, we incorporate expected long-term growth rates in our service territory, regulatory stability, and commodity prices (where appropriate), as well as other factors that affect our revenue, expense and capital expenditure projections.

(2) Regulatory Matters

Montana General Electric Rate Case

In September 2018, we filed an electric rate case with the Montana Public Service Commission (MPSC) requesting an annual increase to electric rates of approximately $34.9 million. The MPSC issued an order approving an interim increase in revenue of approximately $10.5 million effective April 1, 2019, which remains in effect until the MPSC issues a final order. In May 2019, we reached a settlement with all parties who filed comprehensive revenue requirement, cost allocation, and rate design testimony in our Montana electric rate case. If the MPSC approves the settlement, it will result in an annual increase to electric revenue of approximately $6.5 million (based upon a 9.65% return on equity (ROE) and rate base and capital structure as filed) and an annual decrease in depreciation expense of approximately $9 million. A hearing was held in May 2019 and briefing was completed in late August 2019. In September 2019, the MPSC staff recommended that the MPSC approve and adopt the settlement as filed. We expect a final order from the MPSC during the fourth quarter of 2019.

During the three and nine months ended September 30, 2019, we recognized revenue of approximately $1.6 million and $2.8 million, respectively, and reduced depreciation expense by approximately $2.2 million and $6.7 million, respectively, in the Condensed Consolidated Statements of Income consistent with the proposed settlement above. As of September 30, 2019, we have deferred approximately $1.8 million of the interim revenues. Any difference between interim and final approved rates will be refunded to customers.


11



Federal Energy Regulatory Commission (FERC) Filing

In May 2019, we submitted a filing with the FERC for our Montana transmission assets. The revenue requirement associated with our Montana FERC assets is reflected in our Montana MPSC-jurisdictional rates as a credit to retail customers. We expect to submit a compliance filing with the MPSC upon resolution of our Montana FERC case adjusting the proposed credit in our Montana retail rates. In June 2019, the FERC issued an order accepting our filing, granting interim rates (subject to refund) effective July 1, 2019, establishing settlement procedures and terminating our related Tax Cuts and Jobs Act filing. A settlement judge has been appointed. We hosted a technical conference regarding the filing attended by intervenors, FERC and MPSC staff in September 2019. We expect to host an additional technical conference and engage in settlement discussions during the fourth quarter of 2019.

Cost Recovery Mechanisms - Montana

Each year we submit an electric and natural gas tracker filing for recovery of supply costs for the 12-month period ended June 30. The MPSC reviews such filings and makes its cost recovery determination based on whether or not our supply procurement activities were prudent. The MPSC approved our electric tracker filings for the 12-month periods ended June 30, 2016 and 2017, on an interim basis. In August 2019, the MPSC established a procedural schedule for adjudication of these dockets with a final order expected in the first quarter of 2020.

Montana Electric Tracker - In 2017, the Montana legislature revised the statute regarding our recovery of electric supply costs. In response, the MPSC approved a new design for our electric tracker in 2018, effective July 1, 2017. The revised electric tracker, or Power Costs and Credits Adjustment Mechanism (PCCAM), established a baseline of power supply costs and tracks the differences between the actual costs and revenues. Variances in supply costs above or below the baseline are allocated 90% to customers and 10% to shareholders, with an annual adjustment. From July 2017 to May 2019, the PCCAM also included a "deadband" which required us to absorb the variances within +/- $4.1 million from the base, with 90% of the variance above or below the deadband collected from or refunded to customers. In 2019, the Montana legislature revised the statute effective May 7, 2019, prohibiting a deadband, allowing 100% recovery of QF purchases, and maintaining the 90% / 10% sharing ratio for other purchases.

The Condensed Consolidated Statements of Income during the nine months ended September 30, 2019, include the recovery of approximately $4.6 million of electric supply costs consistent with the change in statute. Our cumulative under collection of electric supply costs is approximately $25.7 million as of September 30, 2019, and is reflected in regulatory assets in the Condensed Consolidated Balance Sheets. We submitted a filing in September 2019, requesting recovery of costs above the base for the period July 1, 2018 to June 30, 2019, with the under recovery collected over the next 12-month period. The MPSC has not established a procedural schedule in this docket.

Montana QF Power Purchase Cases

Under the Public Utility Regulatory Policies Act (PURPA), electric utilities are required, with certain exceptions, to purchase energy and capacity from independent power producers that are QFs. We track the costs of these purchases through our PCCAM. These purchases are also the subject of proceedings before the MPSC, whose orders are subject to judicial review by Montana state courts.

In May 2016, we filed our biennial update of standard rates for small QFs (3 MW or less). In November 2017, the PSC approved new, lower rates, reduced the maximum contract term from 25 to 15 years, and ordered that it would apply the same 15-year contract term to our future owned and contracted electric supply resources (Symmetry Finding). We sought judicial review with the Montana State District Court (District Court) of the Symmetry Finding. Cypress Creek Renewables, LLC, Vote Solar, and Montana Environmental Information Center, sought judicial review with the District Court of the rates and contract term.

The District Court reversed and modified the MPSC’s decisions on rates, contract term, and the Symmetry Finding. We appealed the District Court’s order regarding rates and contract term to the Montana Supreme Court. The MPSC did not appeal the District Court’s Symmetry Finding. The Montana Supreme Court granted our motion to stay the District Court’s decisions regarding rates and contract term. We expect briefing to be completed by the end of October 2019.

The MPSC also issued the same Symmetry Finding in another docket when setting the rates and contract term for a large QF - MT Sun, LLC (MTSun). We, as well as MTSun, sought judicial review of the MPSC’s order. The District Court reversed and modified the MPSC’s order regarding rates, contract length, and the Symmetry Finding. We appealed the District Court’s

12



order to the Montana Supreme Court on the issues of rates and contract length, and the MPSC did not appeal the District Court’s reversal of the Symmetry Finding. We expect briefing to be completed in November 2019.

(3) Income Taxes
 
We compute income tax expense for each quarter based on the estimated annual effective tax rate for the year, adjusted for certain discrete items. Our effective tax rate typically differs from the federal statutory tax rate due to the regulatory impact of flowing through the federal and state tax benefit of repairs deductions, state tax benefit of accelerated tax depreciation deductions (including bonus depreciation when applicable) and production tax credits. The regulatory accounting treatment of these deductions requires immediate income recognition for temporary tax differences of this type, which is referred to as the flow-through method. When the flow-through method of accounting for temporary differences is reflected in regulated revenues, we record deferred income taxes and establish related regulatory assets and liabilities.

The following table summarizes the significant differences in income tax expense based on the differences between our effective tax rate and the federal statutory rate (in thousands):
 
Three Months Ended September 30,
 
2019
 
2018
Income Before Income Taxes
$
22,225

 
 
 
$
27,824

 
 
 
 
 
 
 
 
 
 
Income tax calculated at federal statutory rate
4,667

 
21.0
 %
 
5,843

 
21.0
 %
 
 
 
 
 
 
 
 
Permanent or flow-through adjustments:
 
 
 
 
 
 
 
State income, net of federal provisions
65

 
0.3

 
638

 
2.3

Flow-through repairs deductions
(2,606
)
 
(11.7
)
 
(2,394
)
 
(8.6
)
Production tax credits
(1,414
)
 
(6.3
)
 
(1,656
)
 
(6.0
)
Amortization of excess deferred income tax
(374
)
 
(1.7
)
 
(418
)
 
(1.5
)
Plant and depreciation of flow-through items
(263
)
 
(1.2
)
 
(95
)
 
(0.3
)
Prior year permanent return to accrual adjustments
559

 
2.5

 
(2,978
)
 
(10.7
)
Other, net
(79
)
 
(0.4
)
 
702

 
2.5

 
(4,112
)
 
(18.5
)
 
(6,201
)
 
(22.3
)
 
 
 
 
 
 
 
 
Income tax expense (benefit)
$
555

 
2.5
 %
 
$
(358
)
 
(1.3
)%



13



 
Nine Months Ended September 30,
 
2019
 
2018
Income Before Income Taxes
$
122,040

 
 
 
$
135,126

 
 
 
 
 
 
 
 
 
 
Income tax calculated at federal statutory rate
25,628

 
21.0
 %
 
28,376

 
21.0
 %
 
 
 
 
 
 
 
 
Permanent or flow through adjustments:
 
 
 
 
 
 
 
State income, net of federal provisions
1,230

 
1.0

 
2,171

 
1.6

Release of unrecognized tax benefit
(22,825
)
 
(18.7
)
 

 

Flow-through repairs deductions
(12,694
)
 
(10.4
)
 
(13,075
)
 
(9.7
)
Production tax credits
(7,252
)
 
(5.9
)
 
(8,103
)
 
(6.0
)
Plant and depreciation of flow through items
(2,449
)
 
(2.0
)
 
(1,582
)
 
(1.2
)
Amortization of excess deferred income tax
(1,939
)
 
(1.6
)
 
(2,045
)
 
(1.5
)
Prior year permanent return to accrual adjustments
559

 
0.4

 
(2,978
)
 
(2.2
)
Share-based compensation
186

 
0.2

 
275

 
0.2

Other, net
(542
)
 
(0.5
)
 
1,619

 
1.2

 
(45,726
)
 
(37.5
)
 
(23,718
)
 
(17.6
)
 
 
 
 
 
 
 
 
Income tax (benefit) expense
$
(20,098
)
 
(16.5
)%
 
$
4,658

 
3.4
 %

The income tax benefit for the nine months ended September 30, 2019 reflects the release of approximately $22.8 million of unrecognized tax benefits, including approximately $2.7 million of accrued interest and penalties, net of tax, due to the lapse of statutes of limitation in the second quarter of 2019.

Uncertain Tax Positions

We recognize tax positions that meet the more-likely-than-not threshold as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. After the release above, we have unrecognized tax benefits of approximately $35.3 million as of September 30, 2019, including approximately $27.8 million that, if recognized, would impact our effective tax rate. We do not anticipate that total unrecognized tax benefits will significantly change due to the settlement of audits or the expiration of statutes of limitation within the next twelve months.

Our policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. As discussed above, during the nine months ended September 30, 2019, we released $2.7 million of accrued interest in the Condensed Consolidated Statements of Income. As of September 30, 2019, we do not have any amounts accrued for the payment of interest and penalties. During the nine months ended September 30, 2018, we recognized $0.9 million of expense for interest and penalties in the Condensed Consolidated Statements of Income. As of December 31, 2018, we had $2.7 million of interest accrued in the Condensed Consolidated Balance Sheets.

Our federal tax returns from 2000 forward remain subject to examination by the Internal Revenue Service.

(4) Comprehensive Income (Loss)

The following tables display the components of Other Comprehensive Income (Loss), after-tax, and the related tax effects (in thousands):

14



 
Three Months Ended
 
September 30, 2019
 
September 30, 2018
 
Before-Tax Amount
 
Tax Expense
 
Net-of-Tax Amount
 
Before-Tax Amount
 
Tax Expense