EX-99.1 3 a2086432zex-99_1.txt EXHIBIT 99.1 Exhibit 99.1 [NORTHWESTERN CORPORATION LOGO] NEWS RELEASE NYSE:NOR CONTACTS: INVESTORS/MEDIA: Roger Schrum 605-978-2848 roger.schrum@northwestern.com -------------------------------------------------------------------------------- NORTHWESTERN CORPORATION REPORTS SECOND QUARTER 2002 EPS OF 49 CENTS FROM CONTINUING OPERATIONS; OPERATING INCOME REACHES $83.5 MILLION -------------------------------------------------------------------------------- BOARD OF DIRECTORS DECLARES 31 3/4 CENTS DIVIDEND PER SHARE -------------------------------------------------------------------------------- SIOUX FALLS, S.D. - AUG. 8, 2002 - NORTHWESTERN CORPORATION (NYSE:NOR) TODAY REPORTED SECOND QUARTER 2002 NET INCOME FROM CONTINUING OPERATIONS OF $20.9 MILLION, OR 49 CENTS PER DILUTED SHARE BEFORE DISCONTINUED OPERATIONS, COMPARED WITH $12.8 MILLION, OR 47 CENTS PER DILUTED SHARE IN THE SECOND QUARTER OF 2001. FOR THE SIX MONTHS THAT ENDED JUNE 30, 2002, INCOME FROM CONTINUING OPERATIONS WAS $44.8 MILLION, OR $1.13 PER DILUTED SHARE BEFORE DISCONTINUED OPERATIONS, COMPARED WITH $26.0 MILLION, OR 95 CENTS PER DILUTED SHARE DURING THE PRIOR YEAR PERIOD. RESULTS FOR THE FIRST HALF OF 2002 WOULD HAVE INCREASED AN ADDITIONAL 23 CENTS PER SHARE WITH THE INCLUSION OF JANUARY 2002 RESULTS FROM THE ACQUIRED MONTANA ENERGY OPERATIONS. "Strong results from our energy businesses, which account for more than 70 percent of NorthWestern's operating income, coupled with outstanding performance from our communications business, led to solid second quarter and first half results," said Merle D. Lewis, NorthWestern's chairman and chief executive officer. "We are excited about the growth in cash flows from our continuing operations and remain on track to meet our previously announced full-year earnings target of $2.30 to $2.55 per share from continuing operations." Revenues from continuing operations for the second quarter of 2002 increased to $515.7 million, compared with $476.8 million in the same quarter in 2001. For the first half of 2002, revenues from continuing operations were $995.8 million, compared with $954.4 million in the first half of 2001. Revenues from continuing operations increased during the second quarter and the first half of 2002 because of the addition of NorthWestern Energy's operations in Montana. However, second quarter and first half revenues were impacted by lower energy commodity prices and decreased communications revenues stemming from efforts to focus on higher-margin recurring sales as well as continuing soft market conditions. - More - NorthWestern Reports Second Quarter 2002 EPS of 49 Cents Aug. 8, 2002 Page 2 NorthWestern's operating income for the second quarter of 2002 increased to $48.8 million, compared with an operating loss of $3.2 million in the second quarter of 2001. For the first half of 2002, operating income was $83.5 million, compared with an operating loss of $40.3 million in the first half of 2001. For the first six months of 2002, cash flows from continuing operations increased to $52.2 million, compared with cash flows from continuing operations of $37.5 million in the first half of 2001. "Our improvement in operating income and cash flows is attributable to our expanded energy operations, improvements in our communications business and our successful Operational Excellence initiatives. We are projected to generate further cash flow improvements going forward that are more than sufficient to support the funding of planned capital expenditures and dividends," Lewis said. In addition to strong cash flow generation capabilities, Lewis said that NorthWestern has access to a $280 million revolving credit facility, which reflected a drawn balance of $35 million on Aug. 7, 2002. Up to $225 million of the facility may be converted into a term loan on a non-revolving basis, maturing in February 2004. DIVIDEND DECLARATION NorthWestern's Board of Directors declared a quarterly dividend of 31 3/4 cents per share on the company's common stock, payable Sept. 1, 2002, to shareholders of record on Aug. 15, 2002. The company's dividend rate is currently $1.27 per share. "We believe strong cash flow from our energy and communications businesses provides a solid platform for generating increased earnings, funding operations and debt as well as paying dividends to our shareholders," Lewis said. CONTINUING BUSINESS SEGMENT RESULTS Northwestern Energy, the electric and natural gas business of NorthWestern, continued to show improved results in the second quarter of 2002, with operating income of $35.0 million and earnings before interest, taxes, depreciation and amortization (EBITDA) of $50.9 million, compared with operating income of $13.0 million and EBITDA of $17.0 million in the second quarter of 2001. For the first six months of 2002, operating income was $78.8 million and EBITDA was $107.4 million, compared with operating income of $31.2 million and EBITDA of $39.3 million in the same period of 2001. Revenues for the second quarter of 2002 were $175.1 million, compared with $59.7 million in the same period of 2001. Revenues for the first half of 2002 were $348.6 million, compared with $165.4 million in the first half of 2001. - More - NorthWestern Reports Second Quarter 2002 EPS of 49 Cents Aug. 8, 2002 Page 3 NorthWestern Energy's results during the second quarter of 2002 and for five months of the first half of 2002 include Montana energy operations, which were acquired in February 2002. "Our expanded energy operations continued to demonstrate strong results during the second quarter as the integration of our Montana energy operations are going smoothly and our South Dakota and Nebraska energy operations continued to perform strongly," said Richard R. Hylland, NorthWestern's president and chief operating officer. "As we enter the second half of 2002, NorthWestern Energy is well on track to meet our performance expectations of $225 to $235 million in EBITDA, which excludes $22 million in EBITDA from January 2002 results from our Montana operations. We are comfortable in targeting annualized EBITDA in excess of $250 million in 2003, while requiring about $65 million in maintenance capital expenditures." Second quarter 2002 results for Expanets, NorthWestern's communications services business, were significantly improved with $11.0 million in operating income and $24.9 million in EBITDA, compared with an operating loss of $14.6 million and negative EBITDA of $2.0 million in the same quarter in 2001. For the first half of 2002, Expanets had operating income of $8.3 million and EBITDA of $33.5 million, compared with an operating loss of $63.3 million and negative EBITDA of $39.7 million in the first half of 2001. Revenues for the second quarter of 2002 were $210.3 million, representing an increase of 4.1 percent over revenues in the first quarter of 2002. Revenues for the second quarter and first half of 2002 decreased $91 million and $157.9 million, respectively, in comparison with the same periods for 2001, reflecting Expanets' efforts to focus on building higher-margin sales and soft market conditions. "Expanets' outstanding performance during the first half of 2002 confirms the strength of our mid-market communications services business strategy. As the largest U.S. mid-market communications services and solutions company, Expanets has the flexibility to respond effectively to changing market conditions by transforming its cost structure. Expanets' cost structure improvement and increased sales focus on value-added services and applications improved gross margins as a percentage of revenues to 44.5 percent for the second quarter of 2002 and 41.4 percent for the first six months of 2002, compared with gross margins as a percentage of revenues of 38.0 percent in the second quarter and 34.6 percent of the first half of 2001," Hylland said. "Expanets successfully reduced sales, general and administrative (SG&A) expenses as a percentage of revenues in the second quarter of 2002 to 32.7 percent from 38.6 percent of revenues in the second quarter of 2001. Despite soft market conditions, we expect Expanets to continue a strong performance in the remaining two quarters of 2002, and - More - NorthWestern Reports Second Quarter 2002 EPS of 49 Cents Aug. 8, 2002 Page 4 we are comfortable with our previously announced full-year 2002 EBITDA target of $80 to $87 million and an annualized EBITDA run rate in excess of $100 million in 2003." Blue Dot, NorthWestern's energy-related heating, ventilation and air conditioning services provider, reported second quarter 2002 operating income of $2.4 million and EBITDA of $4.2 million, compared with operating income of $2.7 million and EBITDA of $6.8 million in the second quarter of 2001. Revenues for the second quarter of 2002 were $117.8 million, compared with $111.7 million in the second quarter of 2001. "Blue Dot had improved performance in June 2002 with $2.8 million in EBITDA as seasonal revenues picked up and we began to see improvement resulting from our Operational Excellence initiatives," Hylland said. "Despite the impact of soft economic conditions, we are targeting improvement for Blue Dot during the second half of 2002. To drive improved results, Blue Dot is developing and implementing initiatives to accelerate sales growth and build organizational effectiveness to improve the company's ability to integrate and execute its business plan." Hylland also said that NorthWestern's Operational Excellence initiatives have achieved $110 million in reduced expenses on a consolidated basis during the first half of 2002 which has resulted in the company's SG&A as a percent of revenues declining to 32.2 percent, compared with 36.0 percent in the first half of 2001. "The first phase of our operational excellence initiatives have included significant efficiency programs ranging from resizing our cost structure to shared support services between operations, leveraged purchasing and other business improvements. While these efforts have been extremely successful, we will be implementing a second phase of initiatives beginning in the third quarter that are focused on customer facing enhancements, operating processes and information system re-engineering which we believe will further improve our customer service capabilities, drive revenue growth and continue to reduce our cost structure," Hylland said. "Our efforts are now targeting up to $170 million in annualized SG&A reductions and we are focusing on reducing our SG&A as a percentage of revenues to below 30 percent by year end 2002." Kipp D. Orme, vice president and chief financial officer, said that the transition of independent auditors to Deloitte & Touche has gone smoothly since the firm was selected by NorthWestern's audit committee and the Board of Directors in May 2002. Deloitte & Touche has nearly completed its review of NorthWestern's second quarter results that will be filed on Form 10-Q on Aug. 14, 2002. As previously disclosed, NorthWestern implemented, effective Jan. 1, 2002, the new accounting standard, Statement of Financial Accounting Standards No. 142, - More - NorthWestern Reports Second Quarter 2002 EPS of 49 Cents Aug. 8, 2002 Page 5 Goodwill and Other Intangible Assets, which eliminates the requirement to amortize goodwill and limits amortization of other intangibles to instances where the assets have a finite determinable life. Orme said that an independent, third-party assessment has recently been completed and that NorthWestern believes that there will be no impairment to goodwill or other intangibles resulting from the adoption of SFAS No. 142. DISCONTINUED OPERATIONS NorthWestern's strategy is to focus on its growing energy and communications businesses. Consistent with this strategic focus, in the first quarter of 2002, NorthWestern adopted discontinued operations accounting for CornerStone Propane Partners LP and recorded a non-cash, after-tax charge of $40 million reflecting the change in the company's carrying value in the partnership. On Aug. 5, 2002, CornerStone reported that it had elected not to make an interest payment on third-party senior secured debt that was due on July 31 and that it was reviewing financial restructuring and strategic options, including the commencement of a Chapter 11 case under the United States Bankruptcy Code. As previously stated on July 31, 2002, NorthWestern is evaluating CornerStone's financial restructuring and the impact upon creditors of the partnership, including NorthWestern, and would expect to reflect any resulting financial implications in the third quarter of 2002. Including discontinued operations, NorthWestern's second quarter 2002 net income was $15.8 million, or 30 cents per diluted share, compared with $10.8 million or 38 cents per diluted share in the second quarter of 2001. Including discontinued operations and extraordinary charges in the first half, NorthWestern had a net loss of $13.7 million, or $1.01 per diluted share compared to net income of $29.2 million, or $1.08 per diluted share in the first half of 2001. CONFERENCE CALL As previously announced, NorthWestern will conduct a conference call with investors today at 10 a.m. Central time. The conference call will be webcast live via the NorthWestern Corporation Web site at WWW.NORTHWESTERN.COM or at WWW.COMPANYBOARDROOM.COM. ABOUT NORTHWESTERN NorthWestern Corporation, a FORTUNE 500 company, is a leading provider of services and solutions to more than 2 million customers across America in the energy and communications sectors. NorthWestern's partner businesses include NorthWestern Energy, a provider of electricity, natural gas and related services to customers in Montana, Nebraska and South Dakota; Expanets, the largest provider of networked - More - NorthWestern Reports Second Quarter 2002 EPS of 49 Cents Aug. 8, 2002 Page 6 communications solutions and services to mid-market businesses in the United States; and Blue Dot, a leading provider of air conditioning, heating, plumbing and related services. FORWARD-LOOKING STATEMENTS STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: ALL STATEMENTS CONTAINED HEREIN, AS WELL AS STATEMENTS MADE IN PRESS RELEASES AND ORAL STATEMENTS THAT MAY BE MADE BY US OR BY OFFICERS, DIRECTORS OR EMPLOYEES ACTING ON OUR BEHALF, THAT ARE NOT STATEMENTS OF HISTORICAL FACT CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT COULD CAUSE OUR ACTUAL RESULTS TO BE MATERIALLY DIFFERENT FROM HISTORICAL RESULTS OR FROM ANY FUTURE RESULTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. AMONG THE FACTORS THAT COULD CAUSE OUR ACTUAL RESULTS OR OUTCOMES TO DIFFER MATERIALLY ARE: THE ADVERSE IMPACT OF WEATHER CONDITIONS AND SEASONAL FLUCTUATIONS; UNSCHEDULED GENERATION OUTAGES; MAINTENANCE OR REPAIRS; UNANTICIPATED CHANGES TO FOSSIL FUEL OR GAS SUPPLY COSTS OR AVAILABILITY DUE TO HIGHER DEMAND, SHORTAGES, TRANSPORTATION PROBLEMS OR OTHER DEVELOPMENTS; DEVELOPMENTS IN THE FEDERAL AND STATE REGULATORY ENVIRONMENT AND THE TERMS ASSOCIATED WITH OBTAINING REGULATORY APPROVAL AND RATE ORDERS; COSTS ASSOCIATED WITH ENVIRONMENTAL LIABILITIES AND COMPLIANCE WITH ENVIRONMENTAL LAWS; THE RATE OF GROWTH AND ECONOMIC CONDITIONS IN OUR SERVICE TERRITORIES AND THOSE OF OUR SUBSIDIARIES; THE SPEED AND DEGREE TO WHICH COMPETITION ENTERS THE INDUSTRIES AND MARKETS IN WHICH OUR BUSINESSES OPERATE; THE TIMING AND EXTENT OF CHANGES IN INTEREST RATES AND FLUCTUATIONS IN ENERGY-RELATED COMMODITY PRICES; RISKS ASSOCIATED WITH ACQUISITIONS, TRANSITION AND INTEGRATION OF ACQUIRED COMPANIES, INCLUDING NORTHWESTERN ENERGY LLC AND THE GROWING AND EMERGING MARKETS DIVISION OF LUCENT TECHNOLOGIES, INC., AND THE IMPLEMENTATION OF INFORMATION SYSTEMS AND REALIZATION OF EFFICIENCIES IN EXCESS OF ANY RELATED RESTRUCTURING CHARGES; A LACK OF MINORITY INTEREST BASIS, WHICH REQUIRES US TO RECOGNIZE AN INCREASED SHARE OF OPERATING LOSSES AT CERTAIN OF OUR SUBSIDIARIES; OUR ABILITY TO RECOVER TRANSITION COSTS; DISALLOWANCE BY THE MONTANA PUBLIC SERVICE COMMISSION OF THE RECOVERY OF THE COSTS INCURRED IN ENTERING INTO OUR DEFAULT SUPPLY PORTFOLIO CONTRACTS WHILE WE ARE REQUIRED TO ACT AS THE "DEFAULT SUPPLIER"; DISRUPTIONS AND ADVERSE EFFECTS IN THE CAPITAL MARKET DUE TO THE CHANGING ECONOMIC ENVIRONMENT; OUR CREDIT RATINGS WITH MOODY'S, STANDARD & POOR'S AND FITCH; POTENTIAL DELAYS IN FINANCINGS OR SECURITIES AND EXCHANGE COMMISSION FILINGS BECAUSE WE CHANGED AUDITORS; OUR SUBSTANTIAL INDEBTEDNESS, WHICH COULD LIMIT OUR OPERATING FLEXIBILITY AND ABILITY TO BORROW ADDITIONAL FUNDS; OUR ABILITY TO OBTAIN ADDITIONAL CAPITAL TO REFINANCE OUR INDEBTEDNESS THAT IS SCHEDULED TO MATURE AND FOR WORKING CAPITAL PURPOSES; CHANGES IN CUSTOMER USAGE PATTERNS AND PREFERENCES; POSSIBLE FUTURE ACTIONS AND DEVELOPMENTS OF CORNERSTONE PROPANE PARTNERS LP; AND CHANGING CONDITIONS IN THE ECONOMY AND CAPITAL MARKETS AND OTHER FACTORS IDENTIFIED FROM TIME TO TIME IN OUR FILINGS WITH THE SEC. THIS NEWS RELEASE SHOULD BE READ IN CONJUNCTION WITH OUR ANNUAL REPORT ON FORM 10K FOR 2001, AND ANY SUBSEQUENT QUARTERLY REPORTS ON FORM 10-Q AND CURRENT REPORTS ON FORM 8-K, WHICH CAN BE LOCATED AT WWW.SEC.GOV OR REQUESTED FROM THE COMPANY. ANY FORWARD-LOOKING STATEMENT SPEAKS ONLY AS OF THE DATE ON WHICH SUCH STATEMENT IS MADE, AND, EXCEPT AS REQUIRED BY LAW, WE UNDERTAKE NO OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENT TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE ON WHICH SUCH STATEMENT IS MADE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS. NEW FACTORS EMERGE FROM TIME TO TIME, AND IT IS NOT POSSIBLE FOR MANAGEMENT TO PREDICT ALL SUCH FACTORS. ### NorthWestern Corporation Reports Second Quarter Results Aug. 8, 2002 Page 7 NORTHWESTERN CORPORATION CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30 JUNE 30 2002 2001 2002 2001 --------- --------- --------- --------- OPERATING REVENUES $ 515,652 $ 476,846 $ 995,765 $ 954,438 COST OF SALES 261,740 288,008 531,431 610,456 --------- --------- --------- --------- GROSS MARGIN 253,912 188,838 464,334 343,982 --------- --------- --------- --------- OPERATING EXPENSES: Selling, general and administrative 172,831 170,726 320,981 343,541 Depreciation 25,424 9,739 45,959 18,727 Amortization of intangibles 6,841 11,608 13,930 22,051 --------- --------- --------- --------- 205,096 192,073 380,870 384,319 --------- --------- --------- --------- OPERATING INCOME (LOSS) 48,816 (3,235) 83,464 (40,337) Interest Expense (31,063) (11,689) (52,749) (24,082) Investment Income and Other (2,497) 1,675 (1,803) 2,853 --------- --------- --------- --------- INCOME (LOSS) BEFORE INCOME TAXES AND MINORITY INTERESTS 15,256 (13,249) 28,912 (61,566) Benefit (Provision) for Income Taxes (2,466) (3,781) (7,077) 11,893 --------- --------- --------- --------- INCOME (LOSS) BEFORE MINORITY INTERESTS 12,790 (17,030) 21,835 (49,673) Minority Interests 8,100 29,857 23,014 75,693 --------- --------- --------- --------- INCOME FROM CONTINUING OPERATIONS 20,890 12,827 44,849 26,020 Discontinued Operations, Net of Tax and Minority Interests (5,086) (2,047) (45,086) 3,149 --------- --------- --------- --------- INCOME (LOSS) BEFORE EXTRAORDINARY ITEM 15,804 10,780 (237) 29,169 Extraordinary Item, Net of Tax of $7,241 -- -- (13,447) -- --------- --------- --------- --------- NET INCOME (LOSS) 15,804 10,780 (13,684) 29,169 Minority Interests on Preferred Securities of Subsidiary Trusts (7,474) (1,650) (13,699) (3,300) Dividends on Cumulative Preferred Stock (48) (48) (96) (96) --------- --------- --------- --------- EARNINGS (LOSS) ON COMMON STOCK $ 8,282 $ 9,082 $ (27,479) $ 25,773 ========= ========= ========= ========= AVERAGE COMMON SHARES OUTSTANDING 27,397 23,669 27,397 23,552 EARNINGS (LOSS) PER AVERAGE COMMON SHARE Continuing operations $ 0.49 $ 0.47 $ 1.13 $ 0.96 Discontinued operations (0.19) (0.09) (1.65) 0.13 Extraordinary item -- -- (0.49) -- --------- --------- --------- --------- Basic $ 0.30 $ 0.38 $ (1.01) $ 1.09 ========= ========= ========= ========= Continuing operations $ 0.49 $ 0.47 $ 1.13 $ 0.95 Discontinued operations (0.19) (0.09) (1.65) 0.13 Extraordinary item -- -- (0.49) -- --------- --------- --------- --------- Diluted $ 0.30 $ 0.38 $ (1.01) $ 1.08 ========= ========= ========= =========
NorthWestern Corporation Reports Second Quarter Results Aug. 8, 2002 Page 8 NORTHWESTERN CORPORATION CONSOLIDATED BALANCE SHEETS (In Thousands)
June 30, December 31, 2002 2001 ----------- ----------- (unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 79,717 $ 37,158 Accounts receivable, net 379,121 260,485 Inventories 75,058 79,719 Other 88,131 69,487 Current assets of discontinued operations 45,408 181,697 ----------- ----------- TOTAL CURRENT ASSETS 667,435 628,546 ----------- ----------- PROPERTY, PLANT AND EQUIPMENT, NET 1,782,676 496,241 GOODWILL AND OTHER INTANGIBLE ASSETS, NET 660,360 640,590 OTHER: Investments 93,499 62,959 Regulatory assets 94,433 20,415 Deferred tax asset 12,825 17,374 Other 104,836 73,413 Noncurrent assets of discontinued operations 673,461 695,197 ----------- ----------- TOTAL ASSETS $ 4,089,525 $ 2,634,735 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt $ 173,933 $ 155,000 Current maturities of long-term debt - nonrecourse 7,125 22,817 Short-term debt - nonrecourse 130,350 178,628 Accounts payable 99,048 122,266 Accrued expenses 413,848 216,345 Current liabilities of discontinued operations 87,321 230,070 ----------- ----------- TOTAL CURRENT LIABILITIES 911,625 925,126 ----------- ----------- LONG-TERM DEBT 1,396,914 373,350 LONG-TERM DEBT OF SUBSIDIARIES - NONRECOURSE 36,933 37,999 OTHER NONCURRENT LIABILITIES 369,132 75,040 NONCURRENT LIABILITIES & MINORITY INTERESTS OF DISCONTINUED OPERATIONS 632,481 605,325 ----------- ----------- TOTAL LIABILITIES 3,347,085 2,016,840 ----------- ----------- MINORITY INTERESTS 11,106 30,067 PREFERRED STOCK, PREFERENCE STOCK AND PREFERRED SECURITIES: Preferred stock - 4 1/2% series 2,600 2,600 Redeemable preferred stock - 6 1/2% series 1,150 1,150 Preference stock -- -- Corporation obligated mandatorily redeemable preferred securities of subsidiary trusts 370,250 187,500 ----------- ----------- TOTAL PREFERRED STOCK, PREFERENCE STOCK AND PREFERRED SECURITIES 374,000 191,250 ----------- ----------- SHAREHOLDERS' EQUITY: Common stock, par value $1.75; authorized 50,000,000 shares; issued and outstanding 27,396,762 47,942 47,942 Paid-in capital 240,891 240,797 Treasury stock, at cost (3,500) (3,681) Retained earnings 67,432 112,307 Accumulated other comprehensive income (loss) 4,569 (787) ----------- ----------- TOTAL SHAREHOLDERS' EQUITY 357,334 396,578 ----------- ----------- ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 4,089,525 $ 2,634,735 =========== ===========
NorthWestern Corporation Reports Second Quarter Results Aug. 8, 2002 Page 9 NORTHWESTERN CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In Thousands)
Six Months Ended June 30 2002 2001 --------- --------- OPERATING ACTIVITIES: Net income (loss) $ (13,684) $ 29,169 Items not affecting cash: Depreciation 45,959 18,727 Amortization 13,930 22,051 Loss on discontinued operations 40,000 -- Extraordinary item, net of taxes 13,447 -- Deferred income taxes 1,928 (87) Minority interests in net losses of consolidated subsidiaries (23,014) (75,693) Changes in operating assets and liabilities, net of acquisitions: Accounts receivable (37,079) 16,827 Inventories 21,733 8,964 Other current assets 9,762 (5,058) Accounts payable (46,311) 22,598 Accrued expenses 24,246 (4,238) Change in noncurrent assets 4,388 3,819 Change in noncurrent liabilities (15,394) 713 Other, net 12,273 (267) --------- --------- CASH FLOWS PROVIDED BY CONTINUING OPERATIONS 52,184 37,525 Change in net assets of discontinued operations 2,432 23,509 --------- --------- CASH FLOWS PROVIDED BY OPERATING ACTIVITIES 54,616 61,034 --------- --------- INVESTMENT ACTIVITIES: Property, plant and equipment additions (21,749) (20,486) Proceeds from sale of assets 22,441 -- Sale (purchase) of noncurrent investments and assets, net (12,641) (2,487) Acquisitions and growth expenditures, net of cash received (559,909) (40,368) --------- --------- CASH FLOWS USED IN INVESTING ACTIVITIES (571,858) (63,341) --------- --------- FINANCING ACTIVITIES: Dividends on common and preferred stock (17,492) (14,108) Minority interest on preferred securities of subsidiary trusts (13,699) (3,300) Issuance of long-term debt 719,118 -- Issuance of preferred securities of subsidiary trusts 117,750 -- Repayment of long-term debt (2,009) -- Line of credit (repayments) borrowings, net (132,000) 66,700 Financing costs (34,194) -- Subsidiary repurchase of minority interests (15,660) (13,368) Line of credit repayments of subsidiaries, net (12,951) (8,578) Issuance of nonrecourse subsidiary debt 179 597 Repayment of nonrecourse subsidiary debt (57,119) (11,078) Proceeds from termination of hedge 7,878 -- --------- --------- CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 559,801 16,865 --------- --------- INCREASE IN CASH AND CASH EQUIVALENTS 42,559 14,558 Cash and Cash Equivalents, beginning of period 37,158 43,385 --------- --------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 79,717 $ 57,943 ========= =========
NorthWestern Corporation Reports Second Quarter Results Aug. 8, 2002 Page 10
SIX MONTHS ENDED JUNE 30, 2002 PARENT COMPANY ----------------------------------------------------- TOTAL TOTAL NATURAL ELECTRIC & PARENT ELECTRIC GAS NATURAL GAS ALL OTHER COMPANY COMMUNICATIONS HVAC TOTAL -------- -------- ----------- --------- --------- -------------- --------- --------- Operating Revenues $216,742 $131,904 $ 348,646 $ 22,681 $ 371,327 $ 412,180 $ 212,258 $ 995,765 Cost of Sales 71,160 74,963 146,123 9,954 156,077 241,415 133,939 531,431 -------- -------- --------- --------- --------- --------- --------- --------- Gross Margin 145,582 56,941 202,523 12,727 215,250 170,765 78,319 464,334 Selling, general and administrative 71,525 23,631 95,156 13,635 108,791 137,220 74,970 320,981 Depreciation 22,903 5,645 28,548 1,434 29,982 11,569 4,408 45,959 Goodwill & intangibles amortization -- -- -- 18 18 13,686 226 13,930 -------- -------- --------- --------- --------- --------- --------- --------- Operating Income (Loss) $ 51,154 $ 27,665 78,819 (2,360) 76,459 8,290 (1,285) 83,464 ======== ======== Interest expense (32,307) (6,323) (38,630) (13,985) (134) (52,749) Investment income and other 1,125 (3,091) (1,966) 126 37 (1,803) --------- --------- --------- --------- --------- --------- Income (loss) before taxes and 47,637 (11,774) 35,863 (5,569) (1,382) 28,912 minority interests Benefit (Provision) for income taxes (17,423) 9,520 (7,903) 432 394 (7,077) --------- --------- --------- --------- --------- --------- Income (loss) before minority interests $ 30,214 $ (2,254) $ 27,960 $ (5,137) $ (988) $ 21,835 ========= ========= ========= ========= ========= ========= SIX MONTHS ENDED JUNE 30, 2001 PARENT COMPANY ----------------------------------------------------- TOTAL TOTAL NATURAL ELECTRIC & PARENT ELECTRIC GAS NATURAL GAS ALL OTHER COMPANY COMMUNICATIONS HVAC TOTAL -------- -------- ----------- --------- --------- -------------- --------- --------- Operating Revenues $ 59,530 $105,854 $ 165,384 $ 7,686 $ 173,070 $ 570,064 $ 211,304 $ 954,438 Cost of Sales 10,785 90,435 101,220 4,974 106,194 372,932 131,330 610,456 -------- -------- --------- --------- --------- --------- --------- --------- Gross Margin 48,745 15,419 64,164 2,712 66,876 197,132 79,974 343,982 Selling, general and administrative 16,904 7,939 24,843 10,885 35,728 236,860 70,953 343,541 Depreciation 6,424 1,707 8,131 929 9,060 5,206 4,461 18,727 Goodwill & intangibles amortization -- -- -- 140 140 18,409 3,502 22,051 Restructuring -- -- -- -- -- -- -- -- -------- -------- --------- --------- --------- --------- --------- --------- Operating Income (Loss) $ 25,417 $ 5,773 31,190 (9,242) 21,948 (63,343) 1,058 (40,337) ======== ======== Interest expense (4,357) (11,118) (15,475) (6,094) (2,513) (24,082) Investment income and other 166 2,251 2,417 301 135 2,853 --------- --------- --------- --------- --------- --------- Income (loss) before taxes and 26,999 (18,109) 8,890 (69,136) (1,320) (61,566) minority interests Benefit (Provision) for income taxes (9,223) 4,534 (4,689) 17,461 (879) 11,893 --------- --------- --------- --------- --------- --------- Income (loss) before minority interests $ 17,776 $ (13,575) $ 4,201 $ (51,675) $ (2,199) $ (49,673) ========= ========= ========= ========= ========= =========
NorthWestern Corporation Reports Second Quarter Results Aug. 8, 2002 Page 11
QUARTER ENDED JUNE 30, 2002 PARENT COMPANY ----------------------------------------------------- TOTAL TOTAL NATURAL ELECTRIC & PARENT ELECTRIC GAS NATURAL GAS ALL OTHER COMPANY COMMUNICATIONS HVAC TOTAL -------- -------- ----------- --------- --------- -------------- --------- --------- Operating Revenues $121,406 $53,660 $ 175,066 $ 12,536 $ 187,602 $ 210,275 $ 117,775 $ 515,652 Cost of Sales 39,544 27,000 66,544 4,335 70,879 116,665 74,196 261,740 -------- ------- --------- --------- --------- --------- --------- --------- Gross Margin 81,862 26,660 108,522 8,201 116,723 93,610 43,579 253,912 Selling, general and administrative 43,820 13,840 57,660 7,108 64,768 68,721 39,342 172,831 Depreciation 12,726 3,107 15,833 731 16,564 7,075 1,785 25,424 Goodwill & intangibles amortization -- -- -- 11 11 6,791 39 6,841 -------- ------- --------- --------- --------- --------- --------- --------- Operating Income (Loss) $ 25,316 $ 9,713 35,029 351 35,380 11,023 2,413 48,816 ======== ======= Interest expense (20,081) (2,938) (23,019) (8,011) (33) (31,063) Investment income and other 842 (3,490) (2,648) 127 24 (2,497) --------- --------- --------- --------- --------- --------- Income (loss) before taxes and 15,790 (6,077) 9,713 3,139 2,404 15,256 minority interests Benefit (Provision) for income taxes (5,621) 5,890 269 (1,775) (960) (2,466) --------- --------- --------- --------- --------- --------- Income (loss) before minority interests $ 10,169 $ (187) $ 9,982 $ 1,364 $ 1,444 $ 12,790 ========= ========= ========= ========= ========= ========= QUARTER ENDED JUNE 30, 2001 PARENT COMPANY ----------------------------------------------------- TOTAL TOTAL NATURAL ELECTRIC & PARENT ELECTRIC GAS NATURAL GAS ALL OTHER COMPANY COMMUNICATIONS HVAC TOTAL -------- -------- ----------- --------- --------- -------------- --------- --------- Operating Revenues $ 30,169 $29,535 $ 59,704 $ 4,202 $ 63,906 $ 301,267 $ 111,673 $ 476,846 Cost of Sales 5,461 24,120 29,581 2,682 32,263 186,924 68,821 288,008 -------- ------- --------- --------- --------- --------- --------- --------- Gross Margin 24,708 5,415 30,123 1,520 31,643 114,343 42,852 188,838 Selling, general and administrative 9,417 3,664 13,081 5,246 18,327 116,355 36,044 170,726 Depreciation 3,212 872 4,084 438 4,522 2,890 2,327 9,739 Goodwill & intangibles amortization -- -- -- 111 111 9,735 1,762 11,608 Restructuring -- -- -- -- -- -- -------- ------- --------- --------- --------- --------- --------- --------- Operating Income (Loss) $ 12,079 $ 879 12,958 (4,275) 8,683 (14,637) 2,719 (3,235) ======== ======= Interest expense (2,154) (4,642) (6,796) (3,736) (1,157) (11,689) Investment income and other 140 1,009 1,149 453 73 1,675 --------- --------- --------- --------- --------- --------- Income (loss) before taxes and 10,944 (7,908) 3,036 (17,920) 1,635 (13,249) minority interests Benefit (Provision) for income taxes (3,699) 1,246 (2,453) -- (1,328) (3,781) --------- --------- --------- --------- --------- --------- Income (loss) before minority interests $ 7,245 $ (6,662) $ 583 $ (17,920) $ 307 $ (17,030) ========= ========= ========= ========= ========= =========