Cascade Natural Gas Corporation Announces Fiscal Year 2003 Third Quarter and Year-to-Date Earnings.Energy Editors/Business Editors SEATTLE--(BUSINESS WIRE)--July 18, 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 a loss of $2.0 million, or $0.18 per share for the 2003 fiscal third quarter, compared to a $2.5 million loss, or $0.22 per share for the third quarter ended June June: see month. 30, 2002. The 2003 reported loss was impacted by a before-tax charge of $1.5 million related to freezing freezing, change of a substance from the liquid to the solid state. The temperature at which freezing occurs for a pure crystalline solid is called the freezing point and is a characteristic of the particular substance. retirement plans. Fiscal year 2002 was affected by a $2.8 million before-tax charge related to the cancellation of a gas supply contract. Year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. earnings were $11.5 million, or $1.04 per share compared to $13.3 million, or $1.20 per share for the nine months ended June 30, 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 up $3.1 million for the quarterly comparison. A major factor in the comparison was the $2.8 million 2002 third quarter charge stemming from the cancellation of a gas supply contract with 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 . Year-to-date operating margins, excluding Enron cancellation charges, are lower than the prior year by $1.8 million. The decline is primarily due to lower residential and commercial consumption attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk , in large part, to the warm winter weather. During the fiscal 2003 third quarter, Cascade reached a settlement with Enron that fully resolved all claims and resulted in a satisfactory outcome for Cascade. Total Cost of Operations increased $2.4 million for the quarter. The primary reasons for the increase were: -- In order to reduce and control future benefit costs Cascade implemented significant changes to its benefit plans. One of those changes, freezing pension benefits for all salaried employees under the Company's defined benefit plan Defined benefit plan A pension plan obliging the sponsor to make specified dollar payments to qualifying employees at retirement. The pension obligations are effectively the debt obligation of the plan sponsor. Related: Defined contribution plan and supplementary executive retirement plan, required a $1.5 million charge to operating costs operating costs npl → gastos mpl operacionales to recognize unamortized prior plan enhancements. Along with phased changes to the 401(k) and medical plans for salaried employees and to the retiree medical plan, the pension plan amendments are expected to reduce benefits expense beginning in the fourth quarter. -- Consulting expense increased approximately $650,000 primarily attributable to the benefits changes study and a project to prepare the Company for compliance with certain new S.E.C. internal control documentation and reporting requirements. -- Depreciation expense and property taxes were up a total of $240,000, tracking increases in assets. Year-to-date total Cost of Operations increased $2.7 million. Third quarter net capital expenditures were $6.1 million and year-to-date expenditures were $16.8 million out of total expected expenditures for the fiscal year of $30 million. Expected expenditures are higher than the original budget of $24.5 million due to an 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 (AMR (1) (Adaptive Multi-Rate) A variable rate speech codec selected by the 3GPP for the 3G evolution of the GSM cellphone system (WCDMA). Using the Algebraic CELP (ACELP) compression technology, AMR provides toll quality sound at transmission rates from 4.75 to 12. ) project with expected expenditures of $15 million over the next two years. The project has an attractive return resulting from planned reductions in meter reading expense that will be fully phased in by the 2nd quarter of fiscal year 2005. Given lower than expected electric generation revenue to date, we expect full fiscal year earnings to be at the lower end of the $0.80 to $0.90 guidance previously released. With Cascade's sound fundamentals, changes to reduce benefits expense, the AMR project implementation, and given weather closer to average, management currently projects fiscal 2004 earnings of $1.30 to $1.40 per share. The Company previously announced its declaration of a $0.24 per share quarterly dividend on common stock, payable August 15, 2003 to shareholders of record at the close of business August 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 Washington, town, England Washington, town (1991 pop. 48,856), Sunderland metropolitan district, NE England. Washington was designated one of the new towns in 1964 to alleviate overpopulation in the Tyneside-Wearside area. 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 reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. issues, including the need for adequate and timely rate relief to recover increased capital and operating costs 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 In communications, to avoid the local telephone company by using satellites and microwave systems. " 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)
Third Quarter Fiscal 2003
Fiscal Year 2003
--------------------------------------------------------
Three Months Ended
--------------------------------------------- Year-to
Date
Dec 31 Mar 31 Jun 30 Sep 30 Jun 30
----------- ---------- ---------- ---------- -----------
Revenues $100,496 $109,286 $53,793 $263,575
Operating
Margin 29,509 29,647 17,328 76,484
Cost of
Operations 15,789 15,749 17,249 48,787
----------- ---------- ---------- ---------- -----------
Operating
Income
(Loss) 13,720 13,898 79 0 27,697
Interest and
Other 3,199 3,112 3,197 9,508
Income Taxes 3,840 3,937 (1,138) 6,639
----------- ---------- ---------- ---------- -----------
Net Income
(Loss) $6,681 $6,849 $(1,980) $- $11,550
Common Shares Outstanding:
End of Period 11,045 11,071 11,101 11,101
Average 11,045 11,057 11,086 11,063
Earnings (Loss) Per Share
Basic $0.61 $0.62 $(0.18) $1.04
Diluted $0.60 $0.62 $(0.18) $1.04
Dividends Paid
per share $0.24 $0.24 $0.24 $0.72
Capital
Expenditures
(net) $5,524 $5,254 $6,063 $16,841
Book Value
Per Share $10.70 $11.10 $10.70 $10.70
Market Closing
Price $20.00 $19.40 $19.10 $19.10
Active Customers
(End of Period) 207 209 207 207
Gas Deliveries (Therms):
Residential &
Commercial 79,638 84,967 37,465 202,070
Industrial
& Other 260,369 252,025 176,667 689,061
Degree Days
Normal 2,042 2,272 871 5,185
Actual 2,027 2,049 826 4,902
Colder (warmer)
than 5-year avg. (1%) (10%) (5%) (5%)
Fiscal Year 2002
---------------------------------------------------------
Three Months Ended
--------------------------------------- Year - Year-to
Ended Date
Dec 31 Mar 31 Jun 30 Sep 30 Sep 30 Jun 30
--------- --------- -------- -------- --------- --------
Revenues $102,761 $122,361 $56,815 $39,041 $320,978 $281,938
Operating
Margin 28,643 33,456 14,253 14,150 90,502 76,352
Cost of
Operations 15,911 15,282 14,890 15,256 61,339 46,082
--------- --------- -------- -------- --------- --------
Operating
Income
(Loss) 12,732 18,174 (637) (1,106) 29,163 30,270
Interest and
Other 2,901 3,247 3,224 3,248 12,620 9,372
Income Taxes 3,588 5,448 (1,409) (1,846) 5,781 7,628
--------- --------- -------- -------- --------- --------
Net Income
(Loss) $6,243 $9,479 $(2,452) $(2,508) $10,762 $13,270
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 $1.20
Diluted $0.56 $0.86 $(0.22) $(0.23) $0.97 $1.20
Dividends Paid
per share $0.24 $0.24 $0.24 $0.24 $0.96 $0.72
Capital
Expenditures
(net) $4,557 $5,240 $4,422 $6,515 $20,734 $14,219
Book Value
Per Share $11.34 $11.96 $11.49 $10.38 $10.38 $11.49
Market Closing
Price $22.05 $21.22 $20.90 $19.70 $19.70 $20.90
Active Customers
(End of Period) 199 201 198 198 198 198
Gas Deliveries (Therms):
Residential &
Commercial 79,413 98,714 36,655 21,709 236,491 214,782
Industrial
& Other 303,130 285,692 160,047 216,036 964,905 748,869
Degree Days
Normal 2,136 2,282 872 220 5,510 5,290
Actual 2,038 2,351 840 226 5,455 5,229
Colder (warmer)
than 5-year avg. (5%) 3% (4%) 3% (1%) (1%)
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