Upper Midwest combination utility NorthWestern Corp. revealed Tuesday that it will take about $880 million in special charges in 2002, which is $180 million more than previously announced. It expects to post a $900 million net loss for the year compared with net earnings of $37.5 million in 2001.

The company also is requesting a 15-day extension from the Securities and Exchange Commission for filing its annual report and said the delay would constitute a default under its secured term loan facility. It expects to file its Form 10-K and submit its audited financial statements to its lenders within the 30-day cure period provided for such defaults. NorthWestern also said it will conduct its annual shareholders meeting later in 2003 as a result of the delayed filing of financial results.

The massive writeoffs are mainly related to problems, both asset value declines and accounting issues, in the company’s communications and heating, ventilation and air conditioning businesses. The businesses’ financial troubles prompted Northwestern to suspend its dividend in February. It shares actually rose more than 4% Tuesday to $2.19. NOR shares had been as low as $1.41 last month, down from a 52-week high of $22.30 set in spring of 2002.

The company said the difference from its previously announced guidance is the result of a number of increased charges, including the following:

In addition, the company previously recorded $102 million in net charges related to the discontinued operations of CornerStone Propane and $13 million in net charges related to the retirement of an acquisition term loan.

NorthWestern said it is evaluating its internal accounting and financial controls and implementing a series of actions to address deficiencies. It has found numerous problems, particularly in the timely evaluation and substantiation of material account balances, the internal accounting controls related to Expanets’ enterprise software system, and the supervision, staffing and training of accounting personnel.

As a result of an ongoing evaluation and accounting review, NorthWestern said it expects to restate prior unaudited quarterly results for the first three quarters of 2002.

The company also said it has retained outside professional advisors to evaluate its internal controls and make improvements. It it focusing on restructuring its auditing and accounting operations, and said it would take “prompt disciplinary action, if necessary, to strengthen adherence to the company’s Sarbanes-Oxley compliance procedures.”

Related to these actions, NorthWestern hired Maurice C. Worsfold in the newly created position of vice president of audit and controls. He will have responsibility for assisting the company in enhancing its internal control environment. Worsfold was previously vice president and CFO of VimpelCom, a Russian telecommunications company, and he has 25 years of experience in various finance and operating roles with IBM.

NorthWestern provides electricity and natural gas to more than 595,000 customers in Montana, South Dakota and Nebraska.

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