Cascade Natural Gas Corporation Announces Fiscal Year 2003 Second Quarter and Year-to-Date Earnings.Business Editors SEATTLE--(BUSINESS WIRE)--April 17, 2003 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 earnings of $6.8 million, or $0.62 per share for the fiscal second quarter ended March 31, 2003 compared to $9.5 million, or $0.86 per share for the second quarter ended March 31, 2002. Earnings were impacted by low residential and commercial consumption and a charge of $865,000 for claims arising out of the termination of gas supply contracts. Earnings for the six-month period were $13.5 million compared to $15.7 million for the six months ended March 31, 2002. Operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: (revenue minus gas costs and revenue taxes) were down $3.8 million for the quarter. -- Lower residential and commercial consumption depressed operating margins $4.1 million for the quarter due to average temperatures 13% warmer compared to the colder than average fiscal year 2002 second quarter. Slow economic growth, and customer conservation also affected consumption. On the positive side the addition of 8,122 more customers, a 4% growth rate, added $970,000 of operating margin. -- Electric generation margin was down for the quarter $462,000 or 16%. The decline can be attributed to the effects of the slow economy and weather conditions on electric demand, and on improved availability of hydroelectric resources in recent weeks. -- Operating margin from distribution services for industrial customers other than electric generators improved by $478,000 reflecting the operational startup (STARTing UP) "At startup" means when the computer is first turned on or when a program is first loaded. See Startup folder. of a new customer. Margin from gas management services also improved, up by $437,000 due primarily to an increase in the number of customers served from 52 to 61. These gains were offset by a charge related to the cancellation of contracts for gas supplies to serve certain industrial customers. During fiscal 2002, Cascade terminated two contracts for the purchase of gas from Enron Enron A U.S. energy-trading and utilities company that housed one of the biggest accounting frauds in history. Enron's executives employed accounting practices that falsely inflated the company's revenues, which, at the height of the scandal, made the firm become the seventh based upon Enron's insolvency insolvency Condition in which liabilities exceed assets so that creditors cannot be paid. It is a financial condition that often precedes bankruptcy. In the context of equity, insolvency is the inability to pay debts as they become due; insolvency under the balance-sheet and concerns about its ability to perform. Enron Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of , the supplier for one of the contracts, disputed the Company's position and claimed $3.4 million in termination charges. Recognizing the complexity of the issues and the uncertainties of potential litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. , the Company recorded a charge to earnings of $2.8 million in fiscal 2002. In December 2002, the bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most estate of Enron asserted a claim of $1.4 million as a termination payment for the second contract, of which Enron North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. was the supplier. Based upon an assessment of both Enron claims made after investigation of the Enron North America demands, Cascade recorded an additional charge of $865,000 against Fiscal 2003 2d Quarter earnings. Total Cost of Operations increased $467,000 for the quarter. Depreciation expense and property taxes were up a total of $245,000 tracking increases in assets. Other 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. and bad debt expense account for the remaining increase of $220,000. Year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. , total Cost of Operations increased $345,000, or 1%. Significantly, year-to-date benefit costs increased by $681,000. Cascade has completed a comprehensive study of its benefit programs and is in the process of implementing changes designed to provide competitive benefits at more reasonable, controllable costs. The initiative is expected to produce meaningful cost reductions beginning in fiscal 2004. Non-operating expense was lower for the quarter due to improved cash flow and lower short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. borrowing. Year-to-date non-operating expense was up $163,000 due to issuing $40 million of 7.50% 30-year debt in November 2001. The long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. replaced lower interest short-term debt Short-term debt Debt obligations, recorded as current liabilities, requiring payment within the year. . Second quarter net capital expenditures were $5.3 million and for the six months expenditures were $10.8 million out of a total budget for the fiscal year of $24.5 million. Ninety percent of expenditures were for general pipeline system expansion and reinforcement reinforcement /re·in·force·ment/ (-in-fors´ment) in behavioral science, the presentation of a stimulus following a response that increases the frequency of subsequent responses, whether positive to desirable events, or . Warm weather and the additional Enron charge contributed to disappointing second quarter earnings. As a result, earnings for full fiscal year 2003 are expected to be in the range of $0.80 to $0.90. Cascade's fundamentals remain sound. With the work being done to reduce benefit and other 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. and given weather closer to average, management currently projects fiscal 2004 earnings of $1.30 to $1.40 per share, consistent with published analyst expectations. The Company previously announced its declaration of a $0.24 per share quarterly dividend on common stock, payable May 15, 2003 to shareholders of record at the close of business May 1, 2003. Cascade Natural Gas Corporation is a local distribution company providing natural gas service to approximately 209,000 customers in the states of Washington and 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. . Statements contained in this report that are not historical in nature are 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. 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. Forward-looking statements are subject to risks and uncertainties that may cause actual future results to differ materially. Such risks and uncertainties with respect to the Company include, among others, its ability to successfully implement internal performance goals, competition from alternative forms of energy, consolidation in the energy industry, the failure or inability of key natural gas suppliers to honor As a verb, to accept a bill of exchange, or to pay a note, check, or accepted bill, at maturity. To pay or to accept and pay, or, where a credit so engages, to purchase or discount a draft complying with the terms of the draft. their commitments, the capital-intensive Capital-intensive Used to describe industries that require large investments in capital assets to produce their goods, such as the automobile industry. These firms require large profit margins and/or low costs of borrowing to survive. nature of the Company's business, regulatory issues, including the need for adequate and timely rate relief to recover increased capital and operating costs operating costs npl → gastos mpl operacionales resulting from customer growth and to sustain dividend levels, the weather, 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, 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, exposure to 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, and economic conditions, particularly in the Company's service area.
Cascade Natural Gas Corporation
Financial Highlights - (Thousands, except per share amounts)
Second Quarter Fiscal 2003
Fiscal Year 2003
--------------------------------------
Three Months Ended
---------------------------- Year-to
Date
Dec 31 Mar 31 Jun 30 Sep 30 Mar 31
--------------------------------------
Revenues $100,496 $109,286 $209,782
Operating
Margin 29,509 29,647 59,156
Cost of
Operations 15,789 15,749 31,538
----------------------------------------------
Operating
Income
(Loss) 13,720 13,898 0 0 27,618
Interest and
Other 3,199 3,112 6,311
Income Taxes 3,840 3,937 7,777
----------------------------------------------
Net Income
(Loss) $6,681 $6,849 $- $- $13,530
Common Shares
Outstanding:
End of Period 11,045 11,071 11,045
Average 11,045 11,057 11,045
Earnings
(Loss) Per Share
Basic $0.61 $0.62 $1.22
Diluted $0.60 $0.62 $1.22
Dividends
Paid per
share $0.24 $0.24 $0.48
Capital
Expenditures
(net) $5,524 $5,254 $10,778
Book Value
Per Share $10.70 $11.10 $11.10
Market
Closing
Price $20.00 $19.40 $19.40
Active
Customers
(End of
Period) 207 209 209
Gas
Deliveries
(Therms):
Residential
&
Commercial 79,638 84,967 164,605
Industrial
& Other 260,369 252,025 512,394
Degree Days
Normal 2,042 2,272 4,314
Actual 2,027 2,049 4,076
Colder
(warmer)
than 5-year
avg. (1%) (10%) (6%)
Fiscal Year 2002
---------------------------------------------------------
Three Months Ended Year Year-to
--------------------------------------
Ended Date
Dec 31 Mar 31 Jun 30 Sep 30 Sep 30 Mar 31
---------------------------------------------------------
Revenues $102,761 $122,361 $56,815 $39,041 $320,978 $225,122
Operating
Margin 28,643 33,456 14,253 14,150 90,502 62,099
Cost of
Operations 15,911 15,282 14,890 15,256 61,339 31,192
---------------------------------------------------------
Operating
Income
(Loss) 12,732 18,174 (637) (1,106) 29,163 30,907
Interest and
Other 2,901 3,247 3,224 3,248 12,620 6,148
Income Taxes 3,588 5,448 (1,409) (1,846) 5,781 9,037
---------------------------------------------------------
Net Income
(Loss) $6,243 $9,479 $(2,452) $(2,508) $10,762 $15,722
Common Shares
Outstanding:
End of
Period 11,045 11,045 11,045 11,045 11,045 11,045
Average 11,045 11,045 11,045 11,045 11,045 11,045
Earnings
(Loss) Per
Share
Basic $0.57 $0.86 $(0.22) $(0.23) $0.97 $1.42
Diluted $0.56 $0.86 $(0.22) $(0.23) $0.97 $1.42
Dividends
Paid per
share $0.24 $0.24 $0.24 $0.24 $0.96 $0.48
Capital
Expenditures
(net) $4,557 $5,240 $4,422 $6,515 $20,734 $9,798
Book Value
Per Share $11.34 $11.96 $11.48 $10.38 $10.38 $11.96
Market
Closing
Price $22.05 $21.22 $20.90 $19.70 $19.70 $21.22
Active
Customers
(End of
Period) 199 201 198 198 198 201
Gas
Deliveries
(Therms):
Residential
&
Commercial 79,412 98,713 36,655 21,709 236,489 178,126
Industrial
& Other 303,130 285,692 160,047 216,036 964,905 588,822
Degree Days
Normal 2,136 2,282 872 220 5,510 4,418
Actual 2,038 2,351 840 226 5,455 4,389
Colder
(warmer)
than 5-year
avg. (5%) 3% (4%) 3% (1%) (1%)
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