NorthWestern Energy Group Inc (NWE) 2005 Q4 法說會逐字稿

Welcome to the NorthWestern 2005 year end results conference. [OPERATOR INSTRUCTIONS] As a reminder this conference is being recorded. I would now like to turn the conference over to Dan Rausch, Director, Investor Relations. Please go ahead, sir.

Good morning and welcome to NorthWestern Corporation's December 31, 2005, year end financial results conference call and webcast. Our collections results were released this morning and the release is available on our website at www.northwesternenergy.com. In addition we plan to file our Form 10-K with the SEC in the near future. That report will also be available on our website. Joining us today from our offices in Sioux Falls are Mike Hanson, President and CEO; Brian Bird, Vice President and CFO; Tom Knapp, Vice President and General Counsel; and Kendall Kliewer, Corporate Controller.

This presentation today contains forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based upon our current expectations and speak only as of this date. Our actual results may differ materially and adversely from those expressed in our forward-looking statements as a result of various factors and uncertainties including those listed in our annual report on Form 10-K, recent and forthcoming 10-Qs, recent Form 8-Ks and other filings with the SEC. We undertake no obligation to revise or publicly update our forward-looking statements for any reason.

Following our presentation those joining us by teleconference will be able to ask questions. However, due to time limitations we would like to limit each person to one question at a time with one follow-up question. A replay of today's call will be available beginning at 2:30 Eastern time today through March 31, 2006. To access the replay dial 800-475-6701, access code 819510. A replay of the webcast can also be accessed from our website. I will now turn it over to President and CEO, Mike Hanson.

Thank you, Dan. On our call today we would like to discuss our financial results for 2005, other recent accomplishments and our outlook for the future. But let me start by saying we are very pleased with our financial results for the year ended December 31, 2005. Our revenues and gross margin increased by 12.2% and 10.3% respectively during 2005 over 2004. Our gross margin increased in 2005 for all four of our operating segments. Our net income from continuing operations was $61.5 million or $1.73 per basic share and $1.71 per fully diluted share this year. Brian Bird, our CFO will discuss the financial results in more detail later on in the call.

I'd like to point out some of our nonfinancial accomplishments for the year. During 2005 the Netexit bankruptcy progressed and is nearly finalized. We have received distributions of approximately $47 million since the bankruptcy filing. We don't expect any material future distributions from Netexit. During 2005, BlueDot also sold its final operating location. We received distributions of $11 million from BlueDot since 2004. We don't expect any material future distributions from BlueDot. And lastly in January of 2006 we finalized the sale of our Montana First Megawatts generating assets for $20 million. These developments effectively complete the divestiture of our noncore assets allowing us to completely focus on our core energy operations going forward.

During 2005 we also reached settlement with PPL to resolve all claims and counterclaims pending in the case in U.S. District Court in Montana as well PPLs claims filed in NorthWestern's bankruptcy proceeding. The Company has settled claims with nearly all other claimants in the bankruptcy reorganization case. Magten, is the only remaining significant bankruptcy claimant. For the second year in a row NorthWestern has been awarded the ServiceOne award for exceptional customer care for PA Consulting Group which is one of the nations leading utility benchmarking and management consulting firms. In addition to NorthWestern, only three other utilities in the United States received the ServiceOne award. This is a strong testament to the success of our 24 by 7 customer care program and I am grateful to all of our employees for their continued hard work.

Now, I'd like to turn our attention to our strategic process. NorthWestern emerged from bankruptcy in November of 2004 and started 2005 with a strategic goal of generating consistent operating and financial performance to maximize shareholder value. Before completion of 12 months of operation however, we received unsolicited offers from two parties and demands by certain shareholders to sell the Company. During the fourth quarter of 2005 NorthWestern commenced a comprehensive review of strategic alternatives. Based on that review we will determine how to maximize value for all shareholders. We have entered into confidentiality agreements with a number of parties who have expressed interest in participating in this process. We are fully aware of some shareholders’ expressed interest in holding a more public process. However, completing the process confidentially with interested parties is the best way to maximize value for all shareholders. We expect to continue the strategic review process in a confidential manner.

The Board has received a number of expressions of interest to date and due diligence has commenced. The Board will make its determination following completion of due diligence and confirmation of interest by the parties. The Board has not made a decision to sell the Company or to pursue any specific strategic alternative. There is no guarantee that a transaction of any kind will take place. I can say, however, that whatever decision we reach will be based upon a thorough exploration and review and evaluation of all strategic alternatives.

It will likewise include the advice of our financial and legal advisers and a good faith determination by our Independent Board of Directors that the selected alternative is in the best interest of all of our shareholders after taking into account the interest of our customers, employees, and the communities we serve. Our goal is to have this completed by the early portion of the second quarter but the ultimate completion could be delayed due to a number of factors that are beyond our control. We will continue to update the market on the strategic review process when it is appropriate to do so. Let me now introduce Brian Bird, our Vice President, Chief Financial Officer to discuss the 2005 results in more detail.

Thanks, Mike. Regarding our consolidated operations as Mike mentioned our consolidated revenues for the year increased by 12.2% over 2004. Because a significant portion of our revenues are a function of energy supply costs which are passed through to customers we focus on gross margin as an important metric for the Company. Our consolidated gross margin for 2005 was 524 million, an increase of 48.8 million or 10.3% over 2004. Again, all four of our operating segments saw increased gross margin year-over-year. Margin in the regulated electric segment increased 25.9 million primarily due to higher volume sales and decreases in out of market costs associated with the QF contracts as compared with the year ended 2004.

Margin in the regulated gas segment increased 12.7 million primarily due to the recovery of previously disallowed gas costs and increased natural gas volumes compared with the year ended 2004. Our unregulated electric segment margins increased 7.8 million primarily due to higher market prices and increased volumes.

Finally our unregulated natural gas segment margin increased 2.5 million due to losses recorded during 2004 on fixed price sales contracts. The Company reported consolidated operating income of 144.5 million for 2005 as compared with 638.1 million in 2004. The operating income in 2004, however, included approximately 533 million in reorganization gains driven primarily by cancellation of indebtedness income. The operating income in 2005 included approximately 7 million in reorganization costs driven primarily by litigation expenses.

When excluding the effects of these bankruptcy reorganization items in 2004 and 2005 consolidated operating income increased approximately 46.5 million in 2005. Again, primarily due to increased gross margin of $48.8 million discussed earlier. The Company reported consolidated income from continuing operations of 61.5 million for 2005 compared with 542.4 million in 2004. Again, when excluding the effects of our bankruptcy reorganization items in 2004 and 2005 consolidated operating income increased approximately 59.2 million in 2005. In addition to the improvement of $46.5 million in operating income I just mentioned our interest expense decreased 22.0 -million due to our debt reductions and lower interest rates.

Our loss on debt extinguishment expense decreased 20.8 million due a writeoff of financing costs associated with our former $390 million senior secured term loan facility at the time of emergence from bankruptcy in 2004. In addition our investment in other income increased 14.3 million due to the PPL settlement and the sale of the SO2 allowances. And finally all of these improvements were partially offset by an increase in income taxes of 44.8 million. Now, a little more detail on our core operating segments financial results.

First, our regulated electric operations provided approximately 54% of consolidated revenues of the Company and 62% of the consolidated gross margin during 2005. For the year ended December 31, 2005 gross margin from regulated electric utility operations was $325.2 million compared with $299.3 million in the same period in 2004. Regulated retail electric volumes increased by 4% in 2005 over 2004 driven by warmer summer weather in our service territories and customer growth of 1.6%. The gross margin increased by approximately 25.9 million for the year ended 2005 over 2004 due primarily to an increase of 14.4 million higher volume sales to our T&D customers. If addition we experienced a 9.1 million decrease in out of market costs associated with our QF contracts.

Operating income from regulated electric utility operations was 93.7 million in 2005 compared with 84.6 million in 2004. The operating income increased year-over-year due to margin increase being offset by higher property tax costs, a broad based stock grant to employees and an increase in pension costs. Regulated wholesale electric volumes in 2005 decreased 46% from 2004. Regulated wholesale electric volumes decreased during 2005 resulting from increased retail demands due to warmer summer weather and lower generation of plant availability due to scheduled maintenance. The gross margin impacts of the decreased wholesale electric volumes was minimal, however, due to higher average prices, largely offset by the decrease in volumes sold in the secondary markets.

Now, let's turn our attention to our regulated natural gas operations which contributed approximately 31% of our consolidated revenues and 23% of our consolidated gross margin in 2005. Our regulated gas margin for 2005 was $119.2 million compared with $106.5 million for 2004 primarily due to the 4.6 million recovery of previously disallowed gas costs and higher transmission distribution and storage revenue. Regulated retail natural gas volumes increased slightly from 2004 due primarily to customer growth and slightly colder weather in Montana compared with 2004.

Our regulated gas operating income for 2005 was 21.6 million compared with 23.0 million for 2004. The operating income and regulated gas decreased slightly for 2004 due to margin increase being offset by the increased property tax costs, the broad based stock branch to employees, and the increase in pension costs mentioned earlier.

As for our unregulated electric operations, which mainly consist of the Company's lease of a 30% share of Colstrip Unit 4, a 750 megawatt capacity coal fired power plant located in southeastern, Montana. Sales of power from Colstrip 4 contributed approximately 8% of our consolidated revenues and 13% of our consolidated gross margin in 2005. Unregulated electric gross margin was 69.6 million for 2005, compared with 61.8 for 2004. The volumes for this segment increased by 13.5% from 2004. The 2005 increase in volumes was due primarily to increased generation plant availability with less due time for scheduled maintenance. Gross margin increased $7.8 million due primarily to higher prices on increased sales volumes in 2004.

Unregulated electric operating income was 33.3 million for 2005 compared with 7.2 million for 2004. Operating income improved over last year due to the combination of higher gross margin mentioned previously and the restructuring of the operating lease at the Colstrip facility. Our unregulated natural gas operations which consist of our marketing of gas supply to large volume customers primarily in South Dakota, and the operation of 87.5-miles of intrastate natural gas pipeline in eastern, South Dakota. We also run a small unregulated retail propane operation in Montana. The unregulated natural gas operations contributed approximately 13% of our consolidated revenues and 2% of our consolidated gross margin. Gross margin was 11.3 million for 2005 compared with 8.8 million for 2004. The increase is primarily due to 2.3 million loss reported on out of market fixed price sales contract in 2004. Operating income of 8.1 million for 2005 compared with 5.5 million for 2004. Unregulated wholesale natural gas volumes increased by about 6.2% from 2004. The increase in volumes in the third quarter of 2005 is due primarily to increased sales to ethanol facilities in South Dakota.

Now, let's move our attention to the balance sheet as of December 31, 2005. Unrestricted cash at December 31, 2005 was $2.7 million as compared with $17.1 million at year end 2004. Long-term debt including the current portion of $156.4 million at December 31, 2005 was 743 million compared with 836.9 million at year end 2004. Our long-term debt to total capitalization ratio is approximately 50% as of December 31, 2005.

Regarding our cash flow statement for the year ending December 31, 2005, cash provided by continuing operations totaled 150.5 million during 2005 compared with 137.1 million during 2004. This improvement in operating cash flows is due to improved operating income primarily offset by increased pension and other post retirement benefits funding of 19.3 million and an increase in natural gas and electric trackers under collections of approximately 26.3 million. Uses of the cash flow provided by continuing operations were for capital spending of 80.9 million for 2005 compared with 80.1 during 2004. A paydown of 94.3 million in debt in 2005. And a payment of dividends of approximately 35.6 million during the year. The common stock repurchase program announced during the fourth quarter of 2005 allows us to repurchase up to 75 million of common stock. We have repurchased approximately $2.8 million of common stock as of December 31, 2005.

Now, let me discuss our capital resources. We have an unsecured 200 million senior revolving line of credit. We have revolver availability of 91.4 million as of December 31, 2005 and approximately 118 million as of February 24, 2006. We anticipate refinancing our 150 million, 7.3% first mortgage bonds set to mature on December 1, 2006. In addition, we are contemplating refinancing 170 million of our Montana pollution control bonds. These two refinancing activities should reduce our annual cash interest expense by approximately $5 million.

Now, let's turn our attention to earnings guidance. First of all, for 2005, the Company had previously placed guidance for basic EPS for GAAP purposes at between $1.30 to $1.45 per share for 2005 on continuing operations and we said in the fourth quarter that we expected to be on the high end of that range. While we were reporting income per basic share of $1.73 from continuing operations we experienced a few significant items that we had not factored into our 2005 guidance and do not anticipate occurring in 2006. After considering those items our basic EPS from continuing operations would have been $1.44 in 2005. That is in line with the guidance estimate for EPS from continuing operations that we provided to the market during 2005.

In our press release today, we provided a reconciliation of the most significant items not factored into our 2005 earnings guidance to our consolidated basic income per share for 2005. Those items related to the settlement of previously disallowed natural gas procurement costs, a settlement with PPL in bankruptcy claims and a sale of excess sulfur dioxide emission allowances. For the exact amounts of those items refer to our press release today and we can discuss or we can discuss in the Q&A after our remarks.

For 2006 guidance we are reaffirming the range of basic EPS guidance to be from $1.70 to $1.90 from continuing operations. We expect cash flow provided from continuing operations for 2006 to be in the range of 175 million to 200 million. Key bridges from the normalized 2005 to the 2006 guidance for basic EPS from continuing operations are the following. First, we expect lower interest expense in 2006 due to lower debt levels and lower rates on refinancing. We also expect improvements to come from improved margins in 2006 as well.

Unless Colstrip Unit 4 experiences unplanned outages we expect our margins to increase due to forward contracts locking in higher prices in 2006. Also regarding margins we expect continued customer growth in our regulated segments. Another bridge -- we do not anticipate our reorganization items to be as high in 2006. We expect all other OA&G expenses to remain essentially flat for 2006 compared with 2005. All of these improvements I just mentioned will be partially offset by an increase in income taxes in 2006 compared with 2005.

Let me point out that the guidance assumes normal weather in the Company's electric and natural gas service area and excludes any potential impact from nonordinary course litigation and costs related to the strategic review process. Also our guidance estimates for 2006 do not include the impact of the $75 million share repurchase program. Let me now turn it back over to Mike to discuss our growth prospects.

Thanks, Brian. Let me take just a minute to discuss our future growth opportunities within the business. Our company will continue to create free cash flow while providing a competitive dividend relative to our industry. We also have several opportunities to use our excess cash flow to the benefit of our shareholders. Let me highlight some of these key opportunities.

First, we will continue to evaluate the most prudent uses of the cash including reducing our QF liability and potentially buying out our Colstrip 4 lease. Beyond 2006 we will continue to focus on generating and enhancing free cash flow by reducing operating costs and investing in additional utility transmission and distribution assets. NorthWestern's transmission assets are well positioned to take advantage of a desire by many to move electricity from the resource rich region in which we serve to the energy starved west and southwest parts of the country. In the past we have publicly discussed a number of transmission paths and the fact that there are more than a dozen points of interconnection with major players in the northwest.

One such path is from Montana to Idaho which we believe to have a very high market interest. We have conducted an open season on the Montana to Idaho path and have commitments from interested parties for 850 megawatts along this path which these commitments have been backed up by $2.9 million in deposits. We are working to develop a project specific rate structure that we will propose to the Federal Energy Regulatory Commission that would help support the project development. Studies are also underway to determine the appropriate size of the facility based on the amount of committed business.

In addition to that project, the Company is evaluating an upgrade to the 500 KB transmission line to increase transmission capacity to the western United States. The Company believes that an upgrade to the 500 KB line would provide an attractive return on investment. This upgrade would involve some equipment additions, but would not require a new line to be built, but it would increase capacity to the Pacific Northwest. Currently we are working with the other 500 KB transmission system partners on the project development. We are also exploring a number of transmission opportunities throughout our footprint beyond the two that I have mentioned but those items are not sufficiently developed to discuss at this time.

Potential exists for future expansion and investment in the natural gas arena as well. The Company has already benefited from the growth in ethanol plants in and around our service territory. We are currently providing natural gas to many plants through our pipeline system and we're well positioned to take advantage of the growth in the ethanol industry. This year we will be making a $2.6 million pipeline investment to an ethanol plant in Mitchell, South Dakota. Additional opportunities are expected in South Dakota and Nebraska. We plan to continue to take advantage of our strong cash flow position to invest in other energy related opportunities that may present themselves.

So in conclusion before we move on to Q&A let me just summarize. Since emerging from Chapter 11 we have focused on improvement in cash flow and earnings, our balance sheet and the performance of our four remaining business segments. We are very proud of our recent accomplishments, as a result of our strong cash flow we have reduced debt significantly since emergence from bankruptcy and we have achieved our targeted capital structure. We have concluded the disposition of the unregulated telecommunications and HVAC businesses and have sold the equipment related to the MFN project in Montana. We have concluded nearly all of the litigation left over from bankruptcy including the settlement with PPL and received Federal Court approval of our Milltown Dam Superfund settlement.

In short our restructuring effort is complete. As I mentioned earlier we are committed to completing our review of strategic alternatives to maximize value for all shareholders and we are committed to updating the market when it is appropriate to do so. Under the terms of our confidentiality agreement with participants the identities of the interested parties will not be disclosed. While this process continues we will continue our longstanding commitment to the communities we serve and to provide safe and reliable service to our customers. With that I'll turn it over to the operator to give some instructions for questions.

Thank you. [OPERATOR INSTRUCTIONS] We'll go first to the line of Steve Delgot with Cafe Financial. Please go ahead.

Thank you. A couple of questions. Mike, I was hoping you could talk a little bit about the open season, what type of capital spending might be required there and over what period of time? And then the second question has to do with, I know Brian talked about some of the factors that take you from the $1.44 kind of continuing operations EPS number up to your guidance for 2006, but I'm just wondering on a longer term basis are there things going out into 2007 that may constrain earnings?

Okay. Well, let's start, Steve, with your questions about the open season and the Montana to Idaho pathway. I will tell you this, the capital spending is going to depend on the size of the facility to be built. We have an existing 230 KB line, alternatives are to put a parallel line to increase that to a 345 KB line or possibly even a 500 KB line and that all depends on the amount of committed business at the end. And so I don't mean to avoid your question, it is just that it is such a wide range of possibilities at this time that I can't give you a very accurate projection of capital. The other main variable is how much of that NorthWestern would invest on its own versus perhaps with one or more partners. I can say that it is -- potential exists anyway for that to be several hundred million but again, until we get it sized I really can't tell you what that is going to be.

The timing question you asked is likely to -- the way these projects work, the initial phase is the final engineering design and right away acquisition and then you go into project construction that would take place over a 3 to 4 year period. We would expect whatever is done to be online sometime in the 2008, 9, 10 time frame depending on when a final go decision is made. I hope that is somewhat helpful to you in just understanding conceptually what we are talking about for development.

Okay. And then the other question really just had to do with whether or not there are things out in -- beyond 2006 that may constrain earnings going forward?

Well, let me respond this way, Steve. The guidance that we are giving is for '06. We are not including guidance for '07 and beyond and so I really can't point to any specific developments in the business or anticipated problems or anything other than to tie you to our continued growth and the drivers of that in the guidance that we have given for '06.

Okay.

Is that all, Mr. Delgot?

Yes, thank you.

Thank you. [OPERATOR INSTRUCTIONS] We will go to James Valessa with D.A. Davidson and Company.

Good morning.

Good morning, Jim.

The earnings guidance that you've given, $1.70 to $1.90 for 2007 assumes normal weather. However, I don't believe January was normal. I think it was one of the warmest ever. How much impact might that have been -- might that month have been in your results and yet you were able to maintain your guidance?

The response I'd give you to that, Jim, is as you know, weather does vary month to month. We don't give detailed breakdowns month by month but in our quarterly reports we will show impacts of weather. You are aware of U.S. weather service reports for January, I'd just point you to different results for February and what you really have to do is just add them up on the season. Likewise, it is yet to be seen what the summer, you know, may bring as well as the latter part of the year so that again I don't mean to avoid your question, but accepting your observation it frankly is just too early in the year to assess what weather may or may not do and at this point in time we are simply reaffirming the guidance that we have given and pointing out that it does assume normal weather over the 12 month period.

The -- there is a threat of a strike at a mine in Montana, a coal mine that feeds the Colstrip power plants. What vulnerability might you have if that strike were to occur? What risk would you face if there is a strike at that mine?

That plant, Jim, as well as, about every coal plant in the country have a certain level of stockpiled fuel and are able to continue to operate if there is a disruption in supply for some period of time. And I would just tell you at this point while we are certainly monitoring the situation it is premature to know whether or not there will be a strike and if there will be a strike to what extent that is going to disrupt supply or erode the stockpile. There is a contingency plan in place and at this point we have no reason to -- well, to forecast any disruption in operation from the plant.

Your contract with PPL, I believe, expires in 2007. Is it mid 2007? And if that is the case what are your plans to replace that contract?

It expires in -- on June 30, of 2007. I would first point you, Jim, to the fact that we have put in place a long-term power contract from a wind supplier. We have put in a power contract for some peaking resource as you are aware the Basin Creek project, a couple of other small ones. We continue to have availability of the supply out of the qualifying facilities and there is a commitment into default supply of 90 megawatts out of Colstrip Unit 4. To answer your question between now and then our supply people are working to develop contracts with suppliers to meet the need from the expiration of that contract going forward. And those -- as we do indeed enter into supply contracts of course, we will announce that at that time.

Can you give us a relative size of that contract? And you have said that there was a number of replacement alternatives that you have put into place. What is the size after those new resources have been put into place?

The existing contracts are for 300 megawatts of base load power which is 24 hours a day, 7 days a week. And 150 megawatts of what we refer to as heavy load which is 6 days a week, 16 hours a day. The replacement opportunities, obviously PPL has an opportunity to bid in to additional contracts as well as there are several other projects that are -- have been announced that are either under construction or proposed in Montana and then finally the ability to purchase in the marketplace in the northwest region effectively supply from the market so those are our alternatives.

Are you getting any pressure by the Montana Commission to get that contract in place?

The Montana commission as we, are very interested in finalizing the supply agreements and they do, indeed, talk to us about that frequently but, of course, that process, it takes a certain amount of time and we are going to continue to work through it and expect to have contracts in place before that PPL agreement expires.

And you indicated there was 300 base load megawatts and 150 of a different type of load. And how much have you come in and replaced or have these new contracts and other sources that you have talked about like the Wind Power project?

The -- well, just stacking through the contracted resources, we have about 100 megawatts that we get from the qualifying facilities. There's 90 megawatts out of Colstrip 4 that I just mentioned committed into -- the Wind contract I believe is 135 megawatts. The Basin Creek is a more intermittent or peeking type facility but is I believe 48 or 50 megawatts and there are two other small Thomson River, Tiber, I don't recall off the top of my head but in the vicinity of 10 megawatts in the aggregate that are already under contract.

And did you say that wind power was 135 megawatts of capacity?

That's right.

And so I should divide that by a third or so to be able to get how much average megawatt capacity you might have there?

You trying to get the average capacity or calculate the energy output then there is roughly a third or I believe somewhere around 35% average megawatts.

Jim, it's Brian. I just want to give you a head's up. We just received something here that apparently the miners reached a tentative deal at Colstrip.

Okay. Thank you very much.

Thank you, Jim.

Our next question is from Vinny Muscolino with Babson Capital. Go ahead, please.

I was wondering if you could help me better understand the value of the NOLs and how transferable they would be to potential interested parties? Secondly, I don't know if you can add any color on, I was maybe a little bit surprised by the use of the word gratifying in the strategic update press release, I was just curious about that as well.

Well, first of all, regarding the NOLs, our 10-K which we expect to come out here the close of business on Friday or before the open of business on Monday has additional disclosure regarding NOLs and I invite you to take a look at that and if you have any questions to call us. Regarding the transferability of those, my understanding is in terms if there were a stock sale the NOLs would be transferable. There could potentially be some limitations associated with that. And then asset sale they would not be.

Okay.

To your latter question, Denny, I think the word we used at the Board is gratified with the interest that had been expressed. We are simply indicating that there are a number of parties that have expressed interest to date. The Board is gratified by that response because it enables us to have a robust and meaningful process. I can't add any more description to it than that.

And have you guys had any color to -- Black Hills announced their confidentiality agreement signing after you guys had put that release out. Does that mean that it was separate from what you guys had already referenced in your press release?

I'm not sure I understand the question. I think in close proximity both ourselves and Black Hills made the reference to their signing SC and entering the process.

I guess what I'm saying is presumably Black Hills was included in your list of interested parties in your press release?

Yes, they are.

Okay. Thank you.

[OPERATOR INSTRUCTIONS] We do have a follow-up from Steve Delgot. Please go ahead.

Yes, I was just hoping to get an update on any other asset sales that still are planned to be consummated? I'm not sure of exactly what is still in process or put on hold, but I believe there were a couple asset sales at least that were still needed to be consummated.

No, Steve, actually, we focused on Netexit, BlueDot, and the MFM project as our major asset sales and all of those have been completed. And we don't expect any material distributions from any of those on a going forward basis. From our perspective the asset sales process has been completed and we are focused now on our four remaining business segments.

Okay. Thank you.

We now have a question from John Ali with Zimmer Lucas. Please go ahead.

Good morning, guys. Just had a quick question regarding your unregulated operations for 2006. Can you talk about how much you expect of your total guidance to be the [unreg] contribution to total guidance?

I'm not going to -- we provided some breakout in terms of the bridge. I'm not going to breakout in terms of the guidance by our business segments.

Okay. That's fine. Does your guidance include any benefit from the Colstrip lease buyout or QF buyout?

It does not include any benefit from the Colstrip buyout. And there is no gain associated with any contract improvement in terms of buying down the QF liability.

Okay. What share count do you guys assume in the guidance?

I'm not sure of the exact number off hand. We can provide that to you.

Great. And just kind of a general question. When I'm looking at Colstrip for your uncontracted sales kind of spot sales, should I use the mid C pricing index? And kind of what is the correct basis differential to be using there?

I'm not going to comment on the correct basis differential but I think mid C would be appropriate.

Can you ballpark that basis differential?

I would rather not do that.

Okay. Thank you very much.

We also have a follow-up from Vinny Muscolino. Go ahead, please.

Yes, pardon if I missed this earlier but free cash flow for 2006? A rough range for that?

Well, we provided -- I want to be specific to what we talked about.

Or EBITDA, I guess.

We provide guidance on cash flow from operations. 175 million to 200 million. Have to work from that to come up with any other cash flow measures.

So you do not give a CapEx number?

We provide an estimate of CapEx in our 10-K.

Right. Okay. Thank you.

And we have no further questions. Please go ahead with any closing remarks.

I'll just thanks for your participation. If you have additional questions or questions you didn't think got answered to your satisfaction we look forward to hearing from you in the future.

Ladies and gentlemen, this conference will be available for replay after 1:30 p.m. today through midnight Friday, March 31. You may access the AT&T executive playback service at any time by dialing 1-800-475-6701 and entering the access code 819510. That does conclude our conference for today. Thank you for your participation and choosing AT&T executive teleconference. You may now disconnect.