NORTHWESTERN CORP [NWE] Filings

10-Q 1 nwe-20220331.htm 10-Q nwe-20220331

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		March 31, 2022

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

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

N/A

(Former name, former address and former fiscal year, if changed since last report)

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	Nasdaq Stock Market LLC

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, 54,138,852 shares outstanding at April 22, 2022

NORTHWESTERN CORPORATION

FORM 10-Q

INDEX


		Page
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS		3
PART I. FINANCIAL INFORMATION		5
Item 1.	Financial Statements	5
	Condensed Consolidated Statements of Income — Three Months Ende d March 31, 2022 and 20 21	5
	Condensed Consolidated Statements of Comprehensive Income — Three Months Ended Marc h 3 1 , 20 2 2 and 20 21	6
	Condensed Consolidated Balance Sheets — March 31 , 202 2 and December 31, 20 21	7
	Condensed Consolidated Statements of Cash Flows — Three Months Ended March 31 , 20 2 2 a nd 20 21	8
	Condensed Consolidated Statements of Shareholders ’ Equity — Three Months Ended March 31, 2022 and 20 21	9
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	39
PART II. OTHER INFORMATION		40
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 6.	Exhibits	50
SIGNATURES		51

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 our 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, our 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;

•the impact of extraordinary external events and natural disasters, such as the COVID-19 pandemic, geopolitical events, earthquake, flood, drought, lightning, weather, wind, and fire, on our liquidity, results of operations and financial condition;

•acts of terrorism, cybersecurity attacks, data security breaches, or other malicious acts that cause damage to our generation, transmission, or distribution facilities, information technology systems, or result in the release of confidential customer, employee, or Company information;

•supply chain constraints, recent high levels of inflation for product, services and labor costs, and their impact on capital expenditures, operating activities, and/or our ability to safely and reliably serve our customers;

•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 operating costs 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.

PART 1. FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS

NORTHWESTERN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(in thousands, except per share amounts)


	Three Months Ended March 31,
	2022		2021
Revenues
Electric	$	271,727	$	270,071
Gas	122,755		130,732
Total Revenues	394,482		400,803
Operating expenses
Fuel, purchased supply and direct transmission expense (exclusive of depreciation and depletion shown separately below)	135,073		144,513
Operating and maintenance	52,794		51,797
Administrative and general	31,644		29,055
Property and other taxes	46,850		47,478
Depreciation and depletion	48,905		46,975
Total Operating Expenses	315,266		319,818
Operating income	79,216		80,985
Interest expense, net	(23,716)		(23,510)
Other income, net	4,721		5,574
Income before income taxes	60,221		63,049
Income tax (expense) benefit	(1,111)		22
Net Income	$	59,110	$	63,071

Average Common Shares Outstanding	54,097		50,631
Basic Earnings per Average Common Share	$	1.09	$	1.25
Diluted Earnings per Average Common Share	$	1.08	$	1.24
Dividends Declared per Common Share	$	0.63	$	0.62

See Notes to Condensed Consolidated Financial Statements

NORTHWESTERN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(in thousands)


	Three Months Ended March 31,
	2022		2021
Net Income	$	59,110	$	63,071
Other comprehensive income, net of tax:
Foreign currency translation adjustment	(2)		(76)
Postretirement medical liability adjustment	(158)		(158)
Reclassification of net losses on derivative instruments	113		113
Total Other Comprehensive (Loss) Income	(47)		(121)
Comprehensive Income	$	59,063	$	62,950

See Notes to Condensed Consolidated Financial Statements

NORTHWESTERN CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share data)


	March 31, 2022		December 31, 2021
ASSETS
Current Assets:
Cash and cash equivalents	$	13,645	$	2,820
Restricted cash	17,253		15,942
Accounts receivable, net	173,735		198,671
Inventories	70,609		80,614
Regulatory assets	100,580		115,541
Prepaid expenses and other	23,027		24,207
Total current assets	398,849		437,795
Property, plant, and equipment, net	5,317,518		5,247,232
Goodwill	357,586		357,586
Regulatory assets	698,438		690,686
Other noncurrent assets	49,644		47,144
Total Assets	$	6,822,035	$	6,780,443
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current maturities of finance leases	$	2,928	$	2,875
Accounts payable	99,926		115,237
Accrued expenses and other	279,395		233,351
Regulatory liabilities	27,176		28,179
Total current liabilities	409,425		379,642
Long-term finance leases	11,151		11,897
Long-term debt	2,508,867		2,541,478
Deferred income taxes	509,039		499,634
Noncurrent regulatory liabilities	642,840		638,760
Other noncurrent liabilities	373,732		369,319
Total Liabilities	4,455,054		4,440,730
Commitments and Contingencies (Note 10)
Shareholders' Equity:
Common stock, par value $0.01; authorized 200,000,000 shares; issued and outstanding 57,692,048 and 54,136,509 shares, respectively; Preferred stock, par value 0.01; authorized 50,000,000 shares; none issued	577		576
Treasury stock at cost	(98,986)		(98,248)
Paid-in capital	1,719,070		1,716,227
Retained earnings	753,677		728,468
Accumulated other comprehensive loss	(7,357)		(7,310)
Total Shareholders' Equity	2,366,981		2,339,713
Total Liabilities and Shareholders' Equity	$	6,822,035	$	6,780,443

See Notes to Condensed Consolidated Financial Statements

NORTHWESTERN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)


	Three Months Ended March 31,
	2022		2021
OPERATING ACTIVITIES:
Net income	$	59,110	$	63,071
Items not affecting cash:
Depreciation and depletion	48,905		46,975
Amortization of debt issuance costs, discount and deferred hedge gain	1,270		1,303
Stock-based compensation costs	2,757		3,223
Equity portion of allowance for funds used during construction	(3,116)		(1,985)
Gain on disposition of assets	(1)		(57)
Deferred income taxes	(6,558)		(2,706)
Changes in current assets and liabilities:

Accounts receivable	24,936		5,230
Inventories	10,005		4,183
Other current assets	1,181		(455)
Accounts payable	(3,432)		(16,591)
Accrued expenses and other	46,119		63,169
Regulatory assets	14,961		(54,195)
Regulatory liabilities	(1,003)		(23,228)
Other noncurrent assets	7,153		(1,682)
Other noncurrent liabilities	(6,621)		(20,656)
Cash Provided by Operating Activities	195,666		65,599
INVESTING ACTIVITIES:
Property, plant, and equipment additions	(115,502)		(77,854)

Investment in equity securities	(567)		—
Cash Used in Investing Activities	(116,069)		(77,854)
FINANCING ACTIVITIES:
Dividends on common stock	(33,901)		(31,124)
Issuance of long-term debt, net	—		99,915
Line of credit (repayments) borrowings, net	(33,000)		49,000

Repayments of short-term borrowings	—		(100,000)
Other financing activities, net	(560)		(742)
Cash (Used in) Provided by Financing Activities	(67,461)		17,049
Increase in Cash, Cash Equivalents, and Restricted Cash	12,136		4,794
Cash, Cash Equivalents, and Restricted Cash, beginning of period	18,762		17,096
Cash, Cash Equivalents, and Restricted Cash, end of period	$	30,898	$	21,890
Supplemental Cash Flow Information:
Cash paid during the period for:

Interest	14,152		13,765
Significant non-cash transactions:
Capital expenditures included in accounts payable	17,156		18,089

See Notes to Condensed Consolidated Financial Statements

NORTHWESTERN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

(in thousands, except per share data)


	Three Months Ended March 31,
	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, 2020	54,145	3,558	$	541	$	(98,075)	$	1,513,787	$	670,111	$	(7,269)	$	2,079,095

Net income	—	—	—		—		—		63,071		—		63,071
Foreign currency translation adjustment, net of tax	—	—	—		—		—		—		(76)		(76)
Reclassification of net losses on derivative instruments from OCI to net income, net of tax	—	—	—		—		—		—		113		113
Postretirement medical liability adjustment, net of tax	—	—	—		—		—		—		(158)		(158)
Stock-based compensation	93	17	1		(970)		3,211		—				2,242
Issuance of shares	—	(12)	—		315		357		—		—		672
Dividends on common stock ($0.620 per share)	—	—	—		—		—		(31,124)		—		(31,124)
Balance at March 31, 2021	54,238	3,563	$	542	$	(98,730)	$	1,517,355	$	702,058	$	(7,390)	$	2,113,835

Balance at December 31, 2021	57,606	3,546	$	576	$	(98,248)	$	1,716,227	$	728,468	$	(7,310)	$	2,339,713

Net income	—	—	—		—		—		59,110		—		59,110
Foreign currency translation adjustment, net of tax	—	—	—		—		—		—		(2)		(2)
Reclassification of net losses on derivative instruments from OCI to net income, net of tax	—	—	—		—		—		—		113		113
Postretirement medical liability adjustment, net of tax	—	—	—		—		—		—		(158)		(158)
Stock-based compensation	87	16	1		(911)		2,746		—				1,836
Issuance of shares		(6)			173		97		—				270

Dividends on common stock ($0.630 per share)	—	—	—		—		—		(33,901)		—		(33,901)
Balance at March 31, 2022	57,693	3,556	$	577	$	(98,986)	$	1,719,070	$	753,677	$	(7,357)	$	2,366,981

See Notes to Condensed Consolidated Financial Statements

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 753,600 customers in Montana, South Dakota, Nebraska and Yellowstone National Park.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires us 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 our opinion, 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 March 31, 2022 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, we believe that the condensed disclosures provided are adequate to make the information presented not misleading. We recommend 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, 20 21.

Reclassification

In 2021, we renamed the line item "Cost of sales" as previously shown on the Consolidated Statements of Income, and used elsewhere within our filing, to "Fuel, purchased supply and direct transmission expense." Additionally, we disaggregated the line item "Operating, general and administrative" as previously shown on the Consolidated Statements of Income, and used elsewhere within our filing, to two line items, "Operating and maintenance" and "Administrative and general." These reclassifications were done in an effort to better convey the nature of these costs and did not impact reported operating income or net income.

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):


	March 31,		December 31,		March 31,		December 31,
	2022		2021		2021		2020
Cash and cash equivalents	$	13,645	$	2,820	$	8,925	$	5,811
Restricted cash	17,253		15,942		12,965		11,285
Total cash, cash equivalents, and restricted cash shown in the Condensed Consolidated Statements of Cash Flows	$	30,898	$	18,762	$	21,890	$	17,096

(2) Regulatory Matters

Federal Energy Regulatory Commission (FERC) Financial Audit

We are subject to FERC’s jurisdiction and regulations with respect to rates for electric transmission service in interstate commerce and electricity sold at wholesale rates, the issuance of certain securities, and incurrence of certain long-term debt, among other things. The Division of Audits and Accounting in the Office of Enforcement of FERC initiated a routine audit of NorthWestern Corporation for the period of January 1, 2018 to the present to evaluate our compliance with FERC accounting and financial reporting requirements. We responded to several sets of data requests as part of the audit process and in April

2022 received a draft audit report from FERC. Based on review of the draft report, we believe final resolution of the identified audit findings and recommendations will not have a material financial impact on us.

(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 differences between our effective tax rate and the federal statutory rate (in thousands):


	Three Months Ended March 31,
	2022				2021
Income before income taxes	$	60,221			$	63,049

Income tax calculated at federal statutory rate	12,646		21.0	%	13,240		21.0	%

Permanent or flow-through adjustments:
State income tax, net of federal provisions	400		0.7		55		0.1
Flow-through repairs deductions	(6,801)		(11.3)		(7,853)		(12.5)
Production tax credits	(3,824)		(6.4)		(4,307)		(6.8)
Amortization of excess deferred income tax	(411)		(0.7)		(265)		(0.4)
Plant and depreciation of flow-through items	(255)		(0.4)		(340)		(0.5)
Share-based compensation	(253)		(0.4)		(261)		(0.4)

Other, net	(391)		(0.7)		(291)		(0.5)
	(11,535)		(19.2)		(13,262)		(21.0)

Income tax expense (benefit)	$	1,111	1.8	%	$	(22)	0.0	%

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. We had unrecognized tax benefits of approximately $31.6 million as of March 31, 2022, including approximately $28.1 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 of March 31, 2022, we have accrued $0.7 million for the payment of interest and penalties on the Condensed Consolidated Balance Sheets. As of December 31, 2021, we had accrued $0.5 million for the payment of interest and penalties on the Condensed Consolidated Balance Sheets.

Tax years 2018 and forward remain subject to examination by the Internal Revenue Service and state taxing authorities.

(4) Comprehensive (Loss) Income

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


	Three Months Ended
	March 31, 2022						March 31, 2021
	Before-Tax Amount		Tax Expense		Net-of-Tax Amount		Before-Tax Amount		Tax Expense		Net-of-Tax Amount
Foreign currency translation adjustment	$	(2)	$	—	$	(2)	$	(76)	$	—	$	(76)
Reclassification of net income on derivative instruments	153		(40)		113		153		(40)		113
Postretirement medical liability adjustment	(212)		54		(158)		(212)		54		(158)
Other comprehensive (loss) income	$	(61)	$	14	$	(47)	$	(135)	$	14	$	(121)

Balances by classification included within accumulated other comprehensive loss (AOCL) on the Condensed Consolidated Balance Sheets are as follows, net of tax (in thousands):


	March 31, 2022		December 31, 2021
Foreign currency translation	$	1,441	$	1,443
Derivative instruments designated as cash flow hedges	(10,164)		(10,277)
Postretirement medical plans	1,366		1,524
Accumulated other comprehensive loss	$	(7,357)	$	(7,310)

The following tables display the changes in AOCL by component, net of tax (in thousands):


		Three Months Ended
		March 31, 2022
	Affected Line Item in the Condensed Consolidated Statements of Income	Interest Rate Derivative Instruments Designated as Cash Flow Hedges		Postretirement Medical Plans		Foreign Currency Translation		Total
Beginning balance		$	(10,277)	$	1,524	$	1,443	$	(7,310)
Other comprehensive income before reclassifications		—		—		(2)		(2)
Amounts reclassified from AOCL	Interest Expense	113		—		—		113
Amounts reclassified from AOCL		—		(158)		—		(158)
Net current-period other comprehensive income (loss)		113		(158)		(2)		(47)
Ending balance		$	(10,164)	$	1,366	$	1,441	$	(7,357)


		Three Months Ended
		March 31, 2021
	Affected Line Item in the Condensed Consolidated Statements of Income	Interest Rate Derivative Instruments Designated as Cash Flow Hedges		Postretirement Medical Plans		Foreign Currency Translation		Total
Beginning balance		$	(10,729)	$	1,960	$	1,500	$	(7,269)
Other comprehensive loss before reclassifications		—		—		(76)		(76)
Amounts reclassified from AOCL	Interest Expense	113		—		—		113
Amounts reclassified from AOCL		—		(158)		—		(158)
Net current-period other comprehensive income (loss)		113		(158)		(76)		(121)
Ending balance		$	(10,616)	$	1,802	$	1,424	$	(7,390)

(5) Financing Activities

On November 17, 2021, we announced a registered public offering of 6,074,767 shares of our common stock at a public offering price of $53.50 per share, for an issuance amount of $325.0 million. In conjunction with this offering, we granted the underwriters an option to purchase up to 911,215 additional shares, which was subsequently exercised in full, for an additional issuance amount of $48.8 million. Of the total 6,985,982 shares of common stock offered, we initially sold 1,401,869 shares, for $75.0 million in gross proceeds, directly to the underwriters in the offering, with cash proceeds received at closing. The remaining 5,584,113 shares were sold under forward sales agreements which provide for settlement on a settlement date or dates to be specified at our discretion, but which is expected to occur on or prior to February 28, 2023. The cumulative shares issued under the forward sales agreement is limited to one and one-half times the base number of shares within the agreement, or 8,376,170 shares.

The forward sales agreements will be physically settled with common shares issued by us, unless we elect to settle the agreements in cash or to net share settle the agreements, subject to certain conditions. On a settlement date or dates, if we decide to physically settle the forward sales agreement, we will issue shares of common stock to the forward purchaser at the then-applicable forward sale price and receive issuance proceeds at that time. The forward sale price will initially be $51.8950 per share, which is subject to adjustment based on a floating interest rate factor equal to the overnight bank funding rate less a spread of 75.00 basis points, and will be subject to decrease on certain dates specified in the forward sale agreement by amounts related to expected dividends on shares of common stock during the term of the forward sale agreement.

At March 31, 2022, the forward agreements could have been settled with physical delivery of 5,584,113 common shares to the banking counterparty in exchange for cash of $282.1 million. The forward instruments could have also been settled at March 31, 2022, with delivery of $41.2 million of cash or 705,342 shares of common stock to the counterparty, if we elected net cash or net share settlement, respectively.

(6) Segment Information

Our reportable business segments are primarily engaged in the electric and natural gas business. The remainder of our operations are presented as other, which primarily consists of unallocated corporate costs and unregulated activity.

We evaluate the performance of these segments based on utility margin. The accounting policies of the operating segments are the same as the parent except that the parent allocates some of its operating expenses to the operating segments according to a methodology designed by us for internal reporting purposes and involves estimates and assumptions.

Financial data for the business segments are as follows (in thousands):


Three Months Ended
March 31, 2022	Electric		Gas		Other		Eliminations		Total
Operating revenues	$	271,727	$	122,755	$	—	$	—	$	394,482
Fuel, purchased supply and direct transmission expense (exclusive of depreciation and depletion shown separately below)	77,623		57,450		—		—		135,073
Utility margin	194,104		65,305		—		—		259,409
Operating and maintenance	39,501		13,293		—		—		52,794
Administrative and general	22,737		8,652		255		—		31,644
Property and other taxes	36,425		10,423		2		—		46,850
Depreciation and depletion	40,424		8,481		—		—		48,905
Operating income (loss)	55,017		24,456		(257)		—		79,216
Interest expense, net	(18,969)		(3,390)		(1,357)		—		(23,716)
Other income, net	2,982		1,530		209		—		4,721
Income tax (expense) benefit	(994)		(1,382)		1,265		—		(1,111)
Net income (loss)	$	38,036	$	21,214	$	(140)	$	—	$	59,110
Total assets	$	5,523,726	$	1,291,946	$	6,363	$	—	$	6,822,035
Capital expenditures	$	98,609	$	16,893	$	—	$	—	$	115,502


Three Months Ended
March 31, 2021	Electric		Gas		Other		Eliminations		Total
Operating revenues	$	270,071	$	130,732	$	—	$	—	$	400,803
Fuel, purchased supply and direct transmission expense (exclusive of depreciation and depletion shown separately below)	80,188		64,325		—		—		144,513
Utility margin	189,883		66,407		—		—		256,290
Operating and maintenance	38,206		13,591		—		—		51,797
Administrative and general	19,549		7,588		1,918		—		29,055
Property and other taxes	37,027		10,449		2		—		47,478
Depreciation and depletion	38,684		8,291		—		—		46,975
Operating income (loss)	56,417		26,488		(1,920)		—		80,985
Interest expense, net	(20,729)		(1,488)		(1,293)		—		(23,510)
Other income, net	2,829		983		1,762		—		5,574
Income tax benefit (expense)	115		(2,022)		1,929		—		22
Net income	$	38,632	$	23,961	$	478	$	—	$	63,071
Total assets(1)	$	5,220,632	$	1,270,686	$	11,495	$	—	$	6,502,813
Capital expenditures	$	68,940	$	8,914	$	—	$	—	$	77,854

(1) Subsequent to the issuance of our Annual Report on Form 10-K for the year ended December 31, 2020, we determined that Total Assets - Electric and Total Assets - Gas had been incorrectly reported due to an error in the allocation methodology utilized to calculate assets by segment. As a result, the March 31, 2021 Total Assets - Electric and Total Assets - Gas amounts have been corrected from the amounts previously reported to reflect an increase of Total Assets - Electric and a decrease of Total Assets - Gas of $484.8 million. The correction had no impact on net income or the presentation of total assets on the condensed consolidated balance sheets and was determined not to be material.

(7) Revenue from Contracts with Customers

Nature of Goods and Services

We provide retail electric and natural gas services to three primary customer classes. Our residential customers include single private dwellings and individual apartments. Our commercial customers consist primarily of main street businesses, and our industrial customers consist primarily of manufacturing and processing businesses that turn raw materials into products.

Electric Segment - Our regulated electric utility business primarily provides generation, transmission, and distribution services to customers in our Montana and South Dakota jurisdictions. We recognize revenue when electricity is delivered to the customer. Payments on our tariff-based sales are generally due 20-30 days after the billing date.

Natural Gas Segment - Our regulated natural gas utility business primarily provides production, storage, transmission, and distribution services to customers in our Montana, South Dakota, and Nebraska jurisdictions. We recognize revenue when natural gas is delivered to the customer. Payments on our tariff-based sales are generally due 20-30 days after the billing date.

Disaggregation of Revenue

The following tables disaggregate our revenue by major source and customer class (in millions):


	Three Months Ended
	March 31, 2022						March 31, 2021
	Electric		Natural Gas		Total		Electric		Natural Gas		Total
Montana	$	97.0	$	52.3	$	149.3	$	96.0	$	47.0	$