Cascade Natural Gas Corporation Announces Fiscal Year 2004 Third Quarter and Year-to-Date Results.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 $666,000 or $0.06 per share for the fiscal third quarter ended June June: see month. 30, 2004, compared to a loss of $2.0 million or $0.18 per share for the third quarter ended June 30, 2003. Year to date earnings were $15.9 million or $1.42 per share, compared to $11.6 million or $1.04 per share last year. Third Quarter Results Total 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 $691,000 from the quarter ended June 30, 2003. --Reductions in residential and commercial per-customer consumption attributable, in large part, to 20% warmer temperatures based on degree days, accounted for a $1.4 million decrease in quarter-to-quarter operating margins. --The Company had an average of 215,000 residential and commercial customers in the quarter compared to the fiscal 2003 third quarter, an increase of 8,093, or 3.9%, which added $406,000 in operating margin. --Distribution service margins from electric generation customers were up for the quarter $210,000 or 14%. --Operating margin from distribution services for industrial customers other than electric generators improved by $45,000. Margin from gas management and other services was up $71,000 net of a $117,000 negative mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. valuation for a fixed price swap and cap supporting gas sales to a group of industrial customers. 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 $2.7 million lower than the third quarter last year. In the 2003 third quarter there was a $1.5 million retirement plan curtailment Curtailment The act of contracting or reducing operations of a company in the hope of bringing it financial or operational stability. This management technique is often used when a company has grown too fast and is unable to effectively manage its operations. charge as part of changes made to benefit plans to lower costs. Re-measurement of Cascade's retiree medical expense, resulting from the recently enacted Medicare Medicare, national health insurance program in the United States for persons aged 65 and over and the disabled. It was established in 1965 with passage of the Social Security Amendments and is now run by the Centers for Medicare and Medicaid Services. prescription drug prescription drug Prescription medication Pharmacology An FDA-approved drug which must, by federal law or regulation, be dispensed only pursuant to a prescription–eg, finished dose form and active ingredients subject to the provisos of the Federal Food, Drug, subsidy subsidy, financial assistance granted by a government or philanthropic foundation to a person or association for the purpose of promoting an enterprise considered beneficial to the public welfare. , reduced fiscal year 2004 third quarter expense $158,000. Excluding the effect of the 2003 curtailment charge and the Medicare subsidy, benefits expense was $435,000 lower in the current year third quarter reflecting mainly improvements from benefit plans changes introduced in July July: see month. 2003. Consulting expenses were lower by $514,000 in the current quarter due to completion in 2003 of consulting projects related to benefits changes and installation of an internal control system for documentation and reporting. Depreciation expense increased $180,000 from the fiscal year 2003 third quarter. Year-to-Date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. Results Year-to-date operating margin was up $3.0 million over the fiscal 2003. Residential and commercial margin contributed $871,000 to the increase, due to higher per-customer consumption levels in December December: see month. and January January: see month. and $2.1 million due to the addition of customers. Electric generation margins were down $666,000 for the period stemming from lower deliveries to electric generation customers due, in part, to higher gas prices. There was also a $371,000 increase in industrial distribution margin and $295,000 higher gas management services and other operating margin including a $358,000 year-to-date favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. mark-to-market valuation for a fixed price swap and cap supporting gas sales to a group of industrial customers. Also affecting the gas management services comparison is the fiscal year 2003 $865,000 gas supply termination charge. On a year-to-date basis, total cost of operations was lower than fiscal 2003 by $3.5 million. The favorable result stems from benefit expense savings, lower project consulting expense, the Medicare prescription drug subsidy, and the retirement plan curtailment charge in fiscal year 2003. Cascade elected to implement the effect of the Medicare prescription subsidy on a retroactive Having reference to things that happened in the past, prior to the occurrence of the act in question. A retroactive or retrospective law is one that takes away or impairs vested rights acquired under existing laws, creates new obligations, imposes new duties, or attaches a basis to the second quarter resulting in a $158,000 reduction for the second quarter, $158,000 for the third quarter and prospectively $158,000 for the fourth quarter. Year-to-date expense is reduced $316,000 and for the full year the effect will be $474,000. Depreciation expense was up $415,000 for the year consistent with additions to plant. Capital Expenditures Third quarter net capital expenditures were $9.6 million and for the year-to-date expenditures were $29.4 million out of a total updated budget for the fiscal year of $38.0 million. The major expenditure continues to be 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 started in July of 2003. This year $9.2 million has been expended ex·pend tr.v. ex·pend·ed, ex·pend·ing, ex·pends 1. To lay out; spend: expending tax revenues on government operations. See Synonyms at spend. 2. installing the new features on customer meters, and project-to-date expenditures have been $12.8 million of a total project budget of $16 million. It is expected the project will be completed by September September: see month. 30, 2004. Full Fiscal Year Expectations The Company confirms its earlier fiscal year 2004 guidance of $1.05 to $1.15. The Company previously announced its declaration of a $0.24 per share quarterly dividend on common stock, payable August 13, 2004, to shareholders of record at the close of business July 30, 2004. Cascade Natural Gas Corporation is a local distribution company providing natural gas service to approximately 215,000 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, natural gas prices, performance issues with key natural gas suppliers and upstream From the consumer to the provider. See downstream. (networking) upstream - Fewer network hops away from a backbone or hub. For example, a small ISP that connects to the Internet through a larger ISP that has their own connection to the backbone is downstream from the larger pipelines, 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 capital and operating costs operating costs npl → gastos mpl operacionales 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)
Third Quarter Fiscal 2004
Fiscal Year 2004
----------------------------------------------
Three Months Ended Year
------------------------------------ to
Dec 31 Mar 31 Jun 30 Sep 30 Date
--------- --------- --------- ------ ---------
Revenues $104,884 $119,454 $ 52,077 $276,416
Operating Margin 30,693 32,142 16,637 79,473
Cost of Operations 15,129 15,460 14,696 45,286
-------- -------- -------- ------ --------
Operating Income (Loss) 15,564 16,682 1,941 34,187
Interest and Other 3,116 3,121 3,099 9,337
Income Taxes 4,543 4,892 (492) 8,943
-------- -------- -------- ------ --------
Net Income (Loss) $ 7,905 $ 8,669 $ (666) $ - $ 15,907
Common Shares
Outstanding:
End of Period 11,181 11,210 11,241 11,241
Average 11,158 11,196 11,227 11,193
Earnings (Loss) Per
Share
Basic $ 0.71 $ 0.77 $ (0.06) $ 1.42
Diluted $ 0.71 $ 0.77 $ (0.06) $ 1.42
Dividends Paid per
share $ 0.24 $ 0.24 $ 0.24 $ 0.72
Capital Expenditures
(net) $ 10,216 $ 9,672 $ 9,557 $ 29,444
Book Value Per Share $ 10.61 $ 11.15 $ 10.89 $ 10.89
Market Closing Price $ 21.09 $ 21.79 $ 22.07 $ 22.07
Active Customers (End
of Period) 216 218 215 215
Gas Deliveries
(Therms):
Residential &
Commercial 86,070 96,038 33,746 215,854
Industrial & Other 260,887 223,894 182,387 667,168
Degree Days
5-Year Average 2,084 2,264 876 5,224
Actual 2,106 2,249 661 5,016
Colder (warmer) than 5-
year avg. 1% (1%) (25%) (4%)
Colder (warmer) than
prior year 4% 10% (20%) 2%
Fiscal Year 2003
-----------------------------------------------
Three Months Ended
-----------------------------------------------
Dec 31 Mar 31 Jun 30 Sep 30
----------- ----------- -------------- --------
Revenues $100,496 $ 109,286 $ 53,793 $ 39,180
Operating Margin 29,509 29,647 17,328 14,191
Cost of Operations 15,789 15,749 17,249 15,597
-------- ---------- -------------- --------
Operating Income
(Loss) 13,720 13,898 79 (1,406)
Interest and Other 3,199 3,112 3,197 2,946
Income Taxes 3,840 3,937 (1,138) (1,906)
-------- ---------- -------------- --------
Net Income (Loss) $ 6,681 $ 6,849 $ (1,980) $ (2,446)
Common Shares
Outstanding:
End of Period 11,045 11,071 11,101 11,132
Average 11,045 11,057 11,086 11,114
Earnings (Loss) Per
Share
Basic $ 0.61 $ 0.62 $ (0.18) $ (0.22)
Diluted $ 0.60 $ 0.62 $ (0.18) $ (0.22)
Dividends Paid per
share $ 0.24 $ 0.24 $ 0.24 $ 0.24
Capital Expenditures
(net) $ 5,524 $ 5,254 $ 6,063 $ 10,852
Book Value Per Share $ 10.70 $ 11.10 $ 10.70 $ 10.11
Market Closing Price $ 20.00 $ 19.40 $ 19.10 $ 19.60
Active Customers (End
of Period) 207 209 207 206
Gas Deliveries
(Therms):
Residential &
Commercial 79,638 84,967 37,465 20,741
Industrial & Other 260,369 252,025 176,667 250,041
Degree Days
5-Year Average 2,066 2,275 838 236
Actual 2,027 2,049 826 140
Colder (warmer) than
5-year avg. (2%) (10%) (1%) (41%)
Colder (warmer) than
prior year (1%) (13%) (2%) (38%)
Fiscal Year 2003
------------------
Year Year
Ended to Date
Sep 30 Jun 30
-------- --------
Revenues $302,755 $263,575
Operating Margin 90,675 76,484
Cost of Operations 64,384 48,787
-------- --------
Operating Income
(Loss) 26,291 27,697
Interest and Other 12,454 9,508
Income Taxes 4,733 6,639
-------- --------
Net Income (Loss) $ 9,104 $ 11,550
Common Shares
Outstanding:
End of Period 11,132 11,101
Average 11,075 11,063
Earnings (Loss) Per
Share
Basic $ 0.82 $ 1.04
Diluted $ 0.82 $ 1.04
Dividends Paid per
share $ 0.96 $ 0.72
Capital Expenditures
(net) $ 27,693 $ 16,841
Book Value Per Share $ 10.11 $ 10.70
Market Closing Price $ 19.60 $ 19.10
Active Customers (End
of Period) 206 207
Gas Deliveries
(Therms):
Residential &
Commercial 222,811 202,070
Industrial & Other 939,102 689,061
Degree Days
5-Year Average 5,415 5,179
Actual 5,042 4,902
Colder (warmer)
than 5-year avg. (7%) (5%)
Colder (warmer)
than prior year (8%) (6%)
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