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NorthWestern Corp. said Thursday that the U.S. Securities and Exchange Commission is looking into the power company's restatement of its finances for last year.

After redoing its books for the first nine months of 2002, NorthWestern stunned investors last month by announcing it lost $30.04 per share or nearly $900 million for 2002.

The company previously reported it expected to earn $1.53 per share.

"We are cooperating fully with the SEC in its inquiry and intend to provide information as quickly as possible," said spokesman Roger Schrum from headquarters in Sioux Falls, S.D.

No further information is available on the SEC probe. The commission only releases statements when it decides whether to launch a formal investigation, go to court, seek an administrative remedy or settle a case.

News of the SEC action was released along with the company's first quarter report for 2003 Thursday.

The utility that serves former Montana Power Co. customers reported earnings of 26 cents per common share or nearly $10 million for the first quarter.

But those earnings weren't due to making money.

They resulted from a business partner, Avaya, canceling $27 million in debt at Expanets, NorthWestern's communications subsidiary. The debt adjustment was negotiated by the two communications firms.

Gary Drook, who took over as chief executive in January, said without the debt cancellation, the company would have lost money during January, February and March.

"While cash and cash equivalents increased during the quarter due to financing activities, our operations continued to use more cash than they brought in," Drook said.

The company still is losing money at its two non-utility subsidiaries, which are for sale.

"The company continues to bleed money," said Jim Bellessa, a D.A. Davidson & Co. analyst in Great Falls.

NorthWestern also remains mired in debt of about $2.2 billion.

The troubled company is restructuring and is trying to concentrate on its core utility businesses.

Since January, five executives — including the first and second in command — have left the company.

Three new executives, including Drook, are trying to turn things around.

Bellessa said it isn't certain that the plan will succeed.

"They have to sell assets that may fetch less than the debt they owe," he said.

Bellessa said the company's losses have been so severe, that investors currently have negative equity.

He doesn't own stock in this company and he only follows NorthWestern informally because it does business in Montana.

Blue Dot, the heating, air conditioning and ventilation subsidiary, showed an operating loss of $1.4 million during the first quarter. Blue Dot lost $1.9 million during the first quarter of 2002.

It also sold 16 under-performing business centers this year for $1.8 million.

Expanets showed an operating loss of more than $5 million during the quarter due to a bad billing system and continued weakness in the telecommunications market. Losses for the quarter last year were $23.4 million.

In another sign of financial weakness, the company has announced that it won't be paying dividends to owners of trust preferred securities. These are similar to preferred shares of stock and act like a fixed income investment.

Meanwhile, the core utility business continued to do well.

NorthWestern Energy showed operating income of $53 million for the quarter, up from $42 million last year. The jump was due to higher electricity sales and the acquisition of the Montana customers.

On the natural gas side, NorthWestern reported higher sales in South Dakota and Nebraska due, in part, to colder weather.

In Montana, though, gas sales fell almost 4 percent over 2002. February and March of 2003 in Montana were a lot warmer than last year, which cut into profits.

Finally, NorthWestern's annual meeting traditionally held in May, has been re-scheduled for Aug. 26 in Sioux Falls.

Jan Falstad can be contacted at (406) 657-1306 or at