Cascade Natural Gas Announces Fiscal Year 2005 Third Quarter and Year-to-Date Earnings.SEATTLE Seattle (sēăt`əl), city (1990 pop. 516,259), seat of King co., W Wash., built on seven hills, between Elliott Bay of Puget Sound and Lake Washington; inc. 1869. -- Cascade A connected series of devices or images. It often implies that the second and subsequent device takes over after the previous one is used up. For example, cascading tapes in a dual-tape backup system means the second tape is written after the first one is full. Natural Gas Corporation (NYSE NYSE See: New York Stock Exchange :CGC CGC Canine Good Citizen (AKC Dog Title) CGC Commission Géologique du Canada (Geological Survey of Canada) CGC Confédération Générale des Cadres (French labor union) ) reported a loss of $1.1 million, or $(0.10) per share, for the fiscal third quarter ended June June: see month. 30, 2005. This compares to a loss of $666,000, or $(0.06) per share, for the third quarter ended June 30, 2004. Earnings for the nine-month period were $12.9 million, or $1.14 per share, compared to $15.9 million, or $1.42 per share, for the nine months ended June 30, 2004. Financial and Operating Highlights Third Quarter Operating Margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: (revenue minus gas cost and revenue taxes) increased $1.0 million, or 6.2%, compared to the quarter ended June 30, 2004. This was driven by a $1.9 million increase in residential and commercial margins, $1.4 million of which is due to a 12% increase in per customer consumption. Consumption increases are attributed to cooler weather, principally in June, partially offset by conservation efforts and improved energy efficiency in buildings and appliances. Customer growth was 4.9% year-to-year and contributed $504,000 to these margins. Industrial operating margin was lower by $885,000 in the fiscal 2005 third quarter as compared to the same quarter last year. Gas Management Services accounted for $694,000 of the decline due to lost customers and lower margins. Changes in mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. (M-to-M) derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. valuations further reduced our Industrial sector margins by $115,000. Year-To-Date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. Operating Margin declined $2.0 million, or 2.6%. On a year-to-date basis, reductions in per (residential and commercial) customer consumption were offset by a 4.6% increase in new customers. Our contribution from Gas Management Services was down by $1.9 million, primarily due to lost customers and reduced margins. Over the last few years, increased competition has resulted in significant reductions to our margins in this business. Lower Industrial consumption further reduced our gas delivery margins by $851,000. Also reducing margins was $709,000 in M-to-M valuations for hedging contracts covering unregulated Adj. 1. unregulated - not regulated; not subject to rule or discipline; "unregulated off-shore fishing" regulated - controlled or governed according to rule or principle or law; "well regulated industries"; "houses with regulated temperature" 2. industrial gas sales. Year-to-date operating margin increased by $525,000 from the reversal of our estimated fiscal 2004 Oregon Oregon, city, United States Oregon, city (1990 pop. 18,334), Lucas co., NW Ohio, a suburb adjacent to Toledo, on Lake Erie; inc. 1958. It is a port with railroad-owned and -operated docks. The city has industries producing oil, chemicals, and metal products. earnings-sharing accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. , resulting in a $1.1 million improvement in reported margin year-to-year. Cost of Operations Third Quarter Cost of Operations (operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. , depreciation and amortization, and property and miscellaneous taxes) was up $1.7 million compared to the third quarter of fiscal year 2004. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. increased $1.2 million, primarily from executive transition costs ($434,000), bad debt ($317,000) and costs related to Sarbanes-Oxley Act See SOX. compliance ($200,000). Improvements include the benefits of the full operation of our consolidated call center in Bellingham Bellingham (bĕl`ĭnghăm'), city (1990 pop. 52,179), seat of Whatcom co., NW Wash., a port of entry on Bellingham Bay, one of the best harbors on the U.S. Pacific coast, near Canada; inc. 1904. , representing savings of $216,000 during the quarter. Depreciation and amortization increased $299,000 due to growth in plant-in-service, in addition property tax increases added $168,000 to costs. Year-To-Date Cost of Operations was up $2.9 million with $929,000 attributed to depreciation expense, $1.1 million to executive transition charges, $313,000 to costs of transitioning to the call center, and $441,000 to increased bad debt expense. Benefits expense was lower by $925,000 year-to-date. Capital Spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. Net capital spending in the quarter was $6.0 million compared to $9.6 million in the third quarter of fiscal year 2004. The $3.6 million decline reflects the September September: see month. 2004 completion of the automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. meter-reading project, in addition to spending reductions in most capital spending categories. For the nine months, capital spending was $21.6 million compared to $29.4 million in 2004 and a total fiscal year 2005 capital budget of $28.4 million. Full Year Guidance and Other Management is projecting earnings to be toward the lower end of our prior full year earnings guidance range of $0.92 to $0.97 per share. Projections do not include the effect of M-to-M valuations or executive transition costs. The Company previously announced its declaration of a $0.24 per share quarterly dividend on common stock, payable August 15, 2005 to shareholders of record at the close of business July 29, 2005. Cascade Natural Gas Corporation is a local distribution company providing natural gas service to approximately 227,000 customers in the states of Washington and Oregon. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. The Company's discussion in this report, or in any information incorporated herein by reference, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. All statements, other than statements of historical facts, are forward-looking statements, including statements concerning plans, objectives, goals, strategies, and future events or performance. When used in Company documents or oral presentations, the words "anticipate," "believe," "estimate," "expect," "objective," "projection," "forecast," "goal", or similar words are intended to identify forward-looking statements. These forward-looking statements reflect the Company's current expectations, beliefs and projections about future events that we believe may affect the Company's business, financial condition and results of operations, and are expressed in good faith and are believed to have a reasonable basis. However, each such forward-looking statement involves risks, uncertainties and assumptions, and is qualified in its entirety The whole, in contradistinction to a moiety or part only. When land is conveyed to Husband and Wife, they do not take by moieties, but both are seised of the entirety. by reference to the following important factors, among others, that could cause the Company's actual results to differ materially from those projected in such forward-looking statements: prevailing state and federal governmental policies and regulatory actions, including those of the Washington Utilities and Transportation Commission The Washington Utilities and Transportation Commission (UTC) is a three-member board appointed by the Governor of Washington and confirmed by the Washington State Senate to six year terms. , the Oregon Public Utility Commission, and the U.S. Department of Transportation's Office of Pipeline Safety, with respect to allowed rates of return, industry and rate structure, purchased gas cost and investment recovery, acquisitions and dispositions of assets and facilities, operation and construction of plant facilities, the maintenance of pipeline integrity, and present or prospective wholesale and retail competition; weather conditions and other natural phenomena; unanticipated population growth or decline, and changes in market demand caused by changes in demographic or customer consumption patterns; changes in and compliance with environmental and safety laws, regulations and policies, including environmental cleanup The process of removing solid, liquid, and hazardous wastes, except for unexploded ordnance, resulting from the joint operation of US forces to a condition that approaches the one existing prior to operation as determined by the environmental baseline survey, if one was conducted. requirements; competition from alternative forms of energy and other sellers of energy; increasing competition brought on by deregulation Deregulation The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry. Notes: Traditional areas that have been deregulated are the telephone and airline industries. initiatives at the federal and state regulatory levels, as well as consolidation in the energy industry; the potential loss of large volume industrial customers due to "bypass" or the shift by such customers to special competitive contracts at lower per-unit margins; risks, including creditworthiness Creditworthiness The condition in which the risk of default on a debt obligation by that entity is deemed low. Creditworthiness Eligibility of an individual or firm to borrow money. , relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc performance issues with customers and suppliers; risks resulting from uninsured damage to the Company's property, intentional in·ten·tion·al adj. 1. Done deliberately; intended: an intentional slight. See Synonyms at voluntary. 2. Having to do with intention. or otherwise, or from acts of terrorism; unanticipated changes that may affect the Company's liquidity or access to capital markets; the Company's ability to complete its assessment and, if necessary, remediation of internal controls over financial reporting in compliance with Section 404 of the Sarbanes-Oxley Act of 2002; unanticipated changes in interest rates or in rates of inflation; economic factors that could cause a severe downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. in certain key industries, thus affecting demand for natural gas; unanticipated changes in operating expenses and capital expenditures; unanticipated changes in capital market conditions, including their impact on future expenses and liabilities relating to employee benefit plans; potential inability to obtain permits, rights of way, easements EASEMENTS, estates. An easement is defined to be a liberty privilege or advantage, which one man may have in the lands of another, without profit; it may arise by deed or prescription. Vide 1 Serg. & Rawle 298; 5 Barn. & Cr. 221; 3 Barn. & Cr. 339; 3 Bing. R. 118; 3 McCord, R. , leases, or other interests or necessary authority to construct pipelines, or complete other system expansions; changes in the availability and price of natural gas; and legal and administrative proceedings An administrative proceeding is a non-judicial determination of fault or guilt and may include in some cases penalties of various forms. A "Captain's Mast", held by a commanding officer of a warship is one such proceeding. and settlements. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or discussed in this report, or in any information incorporated herein by reference, may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements. All subsequent forward-looking statements, whether written or oral and whether made by or on behalf of the Company, also are expressly qualified by these cautionary statements. Any forward-looking statement by the Company is made only as of the date on which such statement is made. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of any unanticipated events. New factors emerge from time-to-time, and the Company is not able to predict all such factors, nor can it assess the impact of each such factor or the extent to which such factors may cause results to differ materially from those contained in any forward-looking statement.
Cascade Natural Gas Corporation
Financial Highlights - (Thousands, except per share amounts)
Third Quarter Fiscal 2005
Fiscal Year 2005
-----------------------------------------------
Three Months Ended
------------------------------------ Year
to
Dec 31 Mar 31 Jun 30 Sep 30 Date
--------- --------- -------- ------- ----------
Revenues $104,613 $117,711 $56,315 $278,638
Operating Margin 28,922 30,842 17,674 77,437
Cost of Operations 15,584 16,245 16,412 48,240
--------- --------- -------- ------- ----------
Operating Income (Loss) 13,338 14,597 1,262 0 29,197
Interest and Other 2,894 2,976 2,891 8,761
Income Taxes 3,812 4,269 (502) 7,579
--------- --------- -------- ------- ----------
Net Income (Loss) $6,632 $7,352 $(1,127) $- $12,857
Common Shares
Outstanding:
End of Period 11,292 11,338 11,384 11,384
Average 11,279 11,312 11,367 11,319
Earnings (Loss) Per
Share
Basic $0.59 $0.65 $(0.10) $1.14
Diluted $0.59 $0.65 $(0.10) $1.14
Dividends Paid per
share $0.24 $0.24 $0.24 $0.72
Capital Expenditures
(net) $7,770 $7,759 $6,038 $21,567
Book Value Per Share $10.89 $11.32 $10.99 $10.99
Market Closing Price $21.20 $19.96 $20.50 $20.50
Active Customers (End
of Period) 225 228 225 225
Gas Deliveries (Therms):
Residential &
Commercial 82,643 92,637 39,632 214,912
Industrial & Other 227,779 228,890 176,178 632,847
Degree Days
5-Year Average 2,091 2,271 806 5,168
Actual 1,945 2,230 769 4,944
Colder (warmer) than
5-year avg. (7%) (2%) (5%) (4%)
Colder (warmer) than
prior year (8%) (1%) 16% (1%)
Fiscal Year 2004
---------------------------------------------------------
Three Months Ended
------------------------------------- Year Year
Ended to Date
Dec 31 Mar 31 Jun 30 Sep 30 Sep 30 Jun 30
--------- --------- -------- -------- --------- ---------
Revenues $104,884 $119,454 $52,077 $41,663 $318,078 $276,415
Operating
Margin 30,693 32,142 16,637 14,336 93,808 79,472
Cost of
Operations 15,129 15,460 14,696 15,276 60,561 45,285
--------- --------- -------- -------- --------- ---------
Operating
Income
(Loss) 15,564 16,682 1,941 (940) 33,247 34,187
Interest and
Other 3,116 3,121 3,099 3,050 12,386 9,336
Income Taxes 4,543 4,892 (492) (1,384) 7,559 8,943
--------- --------- -------- -------- --------- ---------
Net Income
(Loss) $7,905 $8,669 $(666) $(2,606) $13,302 $15,908
Common Shares
Outstanding:
End of
Period 11,181 11,210 11,241 11,268 11,268 11,241
Average 11,158 11,196 11,227 11,254 11,209 11,227
Earnings
(Loss) Per
Share
Basic $0.71 $0.77 $(0.06) $(0.23) $1.19 $1.42
Diluted $0.71 $0.77 $(0.06) $(0.23) $1.19 $1.42
Dividends
Paid per
share $0.24 $0.24 $0.24 $0.24 $0.96 $0.72
Capital
Expenditures
(net) $10,216 $9,672 $9,557 $9,575 $39,020 $29,445
Book Value
Per Share $10.61 $11.17 $10.89 $10.52 $10.52 $10.89
Market
Closing
Price $21.09 $21.79 $22.07 $21.23 $21.23 $22.07
Active
Customers
(End of
Period) 216 218 215 214 214 215
Gas
Deliveries
(Therms):
Residential
&
Commercial 86,070 96,038 33,746 21,900 237,754 215,854
Industrial
& Other 260,887 223,894 182,387 229,431 896,599 667,168
Degree Days
5-Year
Average 2,044 2,275 874 229 5,422 5,193
Actual 2,106 2,249 661 196 5,212 5,016
Colder
(warmer)
than 5-year
avg. 3% (1%) (24%) (14%) (4%) (3%)
Colder
(warmer)
than prior
year 4% 10% (20%) 40% 3% 2%
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