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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
/x/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1999
or
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
ACT OF 1934
For the transition period from ___________ to __________
Commission File No. 0-692
NORTHWESTERN CORPORATION
VARIABLE INVESTMENT PLAN
(Full title of plan)
[LOGO]
(Issuer of Securities Held Pursuant to the Plan)
125 South Dakota Avenue
Sioux Falls, South Dakota 57104
(Address of principal office)
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NORTHWESTERN CORPORATION
VARIABLE INVESTMENT PLAN
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Date: September 19, 2000 /s/ David A. Monaghan
---------------------------
Controller and Treasurer
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<TABLE>
<CAPTION>
INDEX PAGE
<S> <C>
Report of independent public accountants 1
Statements of net assets available for benefits 2
Statements of changes in net assets available for benefits 3
Notes to financial statements 4
Schedule of assets held for investment purposes 7
</TABLE>
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator of
NorthWestern Corporation Variable Investment Plan:
We have audited the accompanying statements of net assets available for benefits
of NorthWestern Corporation Variable Investment Plan as of December 31, 1999 and
1998, and the related statements of changes in net assets available for benefits
for the years then ended. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the NorthWestern
Corporation Variable Investment Plan as of December 31, 1999 and 1998, and the
changes in net assets available for benefits for the years then ended, in
conformity with accounting principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes as of December 31, 1999 is presented for purposes of
additional analysis and is not a required part of the basic financial
statements, but is supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This supplemental schedule has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP
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Minneapolis, Minnesota,
June 9, 2000
1
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NORTHWESTERN CORPORATION VARIABLE INVESTMENT PLAN
Statements of net assets available for benefits
As of December 31
<TABLE>
<CAPTION>
1999 1998
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<S> <C> <C>
CASH AND CASH EQUIVALENTS $ 183,974 $ 160,329
ACCRUED INTEREST 1,462 59,707
INVESTMENTS:
At fair value-
Mutual funds 29,134,010 21,287,612
NorthWestern Corporation common stock 3,578,762 4,069,842
Loans to participants 1,153,002 1,226,495
At contract value-
Guaranteed annuity contract 2,567,493 4,811,192
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Total investments 36,433,267 31,395,141
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NET ASSETS AVAILABLE FOR BENEFITS $36,618,703 $31,615,177
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</TABLE>
The accompanying notes are an integral part of these statements.
2
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NORTHWESTERN CORPORATION VARIABLE INVESTMENT PLAN
Statements of changes in net assets available for benefits
For the years ended December 31
<TABLE>
<CAPTION>
1999 1998
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<S> <C> <C>
NET ASSETS AVAILABLE FOR BENEFITS, beginning of year $31,615,177 $27,246,854
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INVESTMENT INCOME:
Interest and dividends 679,173 922,284
Net realized gain on investments 1,300,762 545,615
Net unrealized appreciation in fair value of investments 1,802,292 2,189,099
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Total investment income 3,782,227 3,656,998
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CONTRIBUTIONS:
Employee 1,881,873 1,630,112
Employer 603,814 411,324
Rollover 169,022 104,641
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Total contributions 2,654,709 2,146,077
NET LOAN ACTIVITY (2,150) 36,587
BENEFIT DISTRIBUTIONS TO PARTICIPANTS (1,431,260) (1,471,339)
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Net increase 5,003,526 4,368,323
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NET ASSETS AVAILABLE FOR BENEFITS, end of year $36,618,703 $31,615,177
------------- -------------
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</TABLE>
The accompanying notes are an integral part of these statements.
3
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NORTHWESTERN CORPORATION VARIABLE INVESTMENT PLAN
Notes to financial statements
December 31, 1999 and 1998
1 PLAN DESCRIPTION
NorthWestern Corporation Variable Investment Plan (the Plan) is a voluntary
defined contribution plan under Section 401(k) of the Internal Revenue Code (the
Code), and is subject to the provisions of the Employee Retirement Income
Security Act of 1974. The following is not a comprehensive description of the
Plan and, therefore, does not include all situations and limitations covered by
the Plan. Participants should refer to the plan document for more complete
information.
GENERAL
NorthWestern Corporation (the Company) is the sponsor and administrator of the
Plan. The Company has appointed Wells Fargo, formerly Norwest Bank Minnesota,
N.A., as asset custodian and trustee. All plan expenses were paid by the Company
and totaled approximately $30,300 and $45,000 for the years ended December 31,
1999 and 1998.
CONTRIBUTIONS
Participating employees may contribute from 2 percent to 12 percent of their
compensation to the Plan, subject to certain limitations as defined in the plan
agreement. The Company contributes an amount equal to one-half of the
participant's contribution, up to a maximum of 3 percent of the participant's
defined compensation. Additionally, effective November 1998, upon commencement
of employment, 2 percent of each employee's compensation is automatically
contributed to the Plan until further notification by the employee.
ELIGIBILITY
Any employee who has attained age 21 is eligible for the Plan. Effective
November 1998, an employee of the Company is eligible for participation in the
Plan, either on the first day of the first month of employment, if the employee
begins employment on that day, or if the employee begins work after the first
day of the month, on the first day of the subsequent month.
VESTING
Participants are fully vested in the total value of their respective accounts at
all times.
PARTICIPANT LOANS
Participants may apply for loans from the Plan in amounts of up to one-half of
their account balances, subject to certain limitations. Loans must be paid back
over 5 years, or 10 years for the acquisition of a primary residence. Loan rates
ranged from 8.0 percent to 10.5 percent for the years ended December 31, 1999
and 1998.
DISTRIBUTIONS TO PARTICIPANTS
The full value of a participant's account is distributable upon the
participant's separation from service, disability, death, retirement, attainment
of age 59 1/2 or immediate financial hardship, as defined in the plan agreement.
Distributions may be received in a lump sum or in installments. Early
withdrawals are currently subject to an additional tax by the Internal Revenue
Service.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accompanying financial statements have been prepared on the accrual basis of
accounting.
4
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USE OF ESTIMATES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of net assets available for
benefits at the date of the financial statements and the reported amounts of
changes in net assets available for benefits during the reporting period.
Ultimate results could differ from those estimates.
INVESTMENT OPTIONS
Participants may direct their contributions and account balances into any of the
following seven options:
Fund Description
------------------------------ -------------------------------------------
Wells Fargo Stable Value Fund This fund seeks to provide principal
protection while exceeding returns of
shorter maturity instruments over time with
a more stable yield profile.
Wells Fargo Income Equity Fund This fund seeks to provide long-term capital
growth and current income by investing in
stock of large-sized companies.
Dodge & Cox Balanced Fund This fund seeks to provide income,
conservation of principal and long-term
growth of capital and income by investing in
stocks and bonds.
Wells Fargo Small Capital
Opportunities Fund This fund seeks to provide long-term growth
of capital by investing in stock of
small-sized growth companies at a reasonable
price.
MFS Emerging Growth Fund This fund seeks to provide long-term growth
of capital by investing in stock of small-
and medium-sized growth companies.
Templeton Foreign Fund This fund seeks to provide long-term capital
growth by investing in stock of companies
outside the United States that are typically
large in size and undervalued.
NorthWestern Corporation
common stock This fund seeks to provide long-term capital
growth and income through investments in the
Company's common stock.
John Hancock Guaranteed
Annuity Contract This contract is no longer an investment
option for participants. The balance in this
account is being paid out to the current
plan investment options over a five-year
period concluding in 2000.
INVESTMENT VALUATION
Investments are recorded at fair value, except for the John Hancock Guaranteed
Annuity Contract which is stated at contract value (see Note 4). Fair value is
determined by quoted market prices of the underlying securities in each of the
investment accounts.
Realized gains or losses on sales of investments are computed based on the
difference between the sales proceeds of investments sold and their market value
as of the beginning of the year, or cost if purchased during the year.
Unrealized appreciation or depreciation is computed based on changes in the fair
value of investments between years.
RECLASSIFICATIONS
Certain 1998 amounts have been reclassified to conform to the 1999 presentation.
These reclassifications had no effect on net assets available for benefits as
previously reported.
5
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3 INVESTMENTS
The following presents investments that represent 5 percent or more of the
Plan's net assets as of December 31:
<TABLE>
<CAPTION>
1999 1998
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<S> <C> <C>
John Hancock Guaranteed Annuity Contract $ 2,567,493 $4,811,192
Wells Fargo Stable Value Fund 6,991,731 4,221,785
Wells Fargo Income Equity Fund 11,140,312 9,610,904
Dodge & Cox Balanced Fund 2,654,657 2,137,270
MFS Emerging Growth Fund 7,064,252 4,503,064
NorthWestern Corporation common stock 3,578,762 4,069,842
</TABLE>
During 1999, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) appreciated (depreciated) in
value by $3,103,054 as follows:
<TABLE>
<CAPTION>
<S> <C>
Mutual funds $3,824,097
Common stock (721,043)
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$3,103,054
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</TABLE>
4 GUARANTEED ANNUITY CONTRACT
The Plan holds a guaranteed annuity contract with John Hancock Mutual Life
Insurance Company (John Hancock). The account is credited with earnings on the
underlying investments and charged for plan withdrawals and administrative
expenses. The contract is included in these financial statements at contract
value, which represents contributions made under the contract, plus earnings,
less withdrawals and administrative expenses. Participants may ordinarily direct
the withdrawal or transfer of all or a portion of their investment at contract
value.
There are no reserves against contract value for credit risk of the contract
issuer or otherwise. The fair value of the investment contract at December 31,
1999 and 1998 was $2,587,063 and $4,904,711 based on fair value discount rates
of approximately 6.2 percent and 5.3 percent at December 31, 1999 and 1998. The
crediting interest rate was approximately 6.7 percent at December 31, 1999 and
1998. The crediting interest rate is based on an agreed-upon formula with the
issuer, but cannot be less than zero.
5 PARTY-IN-INTEREST TRANSACTIONS
The investments managed by Wells Fargo and the Plan's purchase of the
NorthWestern Corporation common stock qualify as exempt party-in-interest
transactions.
6 TAX STATUS
The Internal Revenue Service has determined and informed the Company by a letter
dated January 5, 1996, that the Plan is in accordance with applicable sections
of the Code. The Plan has been amended since receiving the determination letter;
however, the plan administrator and the Plan's counsel believe that the Plan is
designed and is currently being operated in compliance with the applicable
provisions of the Code.
7 PLAN AMENDMENT AND TERMINATION
While it presently has expressed no intention to do so, the Company reserves the
right to amend or terminate the Plan at any time. In the event of termination,
the assets of the Plan will be distributed in accordance with the plan document.
6
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NORTHWESTERN CORPORATION VARIABLE INVESTMENT PLAN
Schedule of assets held for investment purposes
As of December 31, 1999
<TABLE>
<CAPTION>
Fund description Historical cost Fair value
----------------------------------------------------------------------------- --------------- ------------
<S> <C> <C>
John Hancock Guaranteed Annuity Contract ** $ 2,567,493
Wells Fargo Stable Value Fund* ** 6,991,731
Wells Fargo Income Equity Fund* ** 11,140,312
Dodge & Cox Balanced Fund ** 2,654,657
Wells Fargo Small Capital Opportunities Fund* ** 854,179
MFS Emerging Growth Fund ** 7,064,252
Templeton Foreign Fund ** 428,879
NorthWestern Corporation common stock* ** 3,578,762
Loans receivable from participants, interest rates ranging from 8.0 percent to
11.5 percent 1,153,002
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Total $36,433,267
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</TABLE>
*Denotes party in interest.
**Historical cost is omitted for participant-directed investments.
7
