EX-99.1 3 a03-1353_1ex991.htm EX-99.1

EXHIBIT 99.1

 

 

FISCAL YEAR 2003 THIRD QUARTER AND YEAR-TO-DATE EARNINGS

 

 

 

For Immediate Release

Contact:

 

J. D. Wessling

 

 

Cascade Natural Gas Corporation

 

 

206/624-3900

 

July 18, 2003 [Seattle] — Cascade Natural Gas Corporation (NYSE: CGC) 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 30, 2002. The 2003 reported loss was impacted by a before-tax charge of $1.5 million related to freezing 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 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 (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. 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, 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 and supplementary executive retirement plan, required a $1.5 million charge to operating costs 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 meter reading (AMR) 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 and Oregon.

 

 

Statements contained in this report that are not historical in nature are forward-looking statements within the meaning of the Private Securities Litigation Reform Act 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 their commitments, the capital-intensive nature of the Company’s business, regulatory 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 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 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

 

Fiscal Year 2002

 

 

Three Months Ended

 

Year-to
Date
Jun 30

 

Three Months Ended

 

Year
Ended
Sep 30

 

Year-to
Date
Jun 30

 

 

 

 

 

 

 

 

Dec 31

 

Mar 31

 

Jun 30

 

Sep 30

 

 

Dec 31

 

Mar 31

 

Jun 30

 

Sep 30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

100,496

 

$

109,286

 

$

53,793

 

 

 

$

263,575

 

$

102,761

 

$

122,361

 

$

56,815

 

$

39,041

 

$

320,978

 

$

281,938

 

Operating Margin

 

29,509

 

29,647

 

17,328

 

 

 

76,484

 

28,643

 

33,456

 

14,253

 

14,150

 

90,502

 

76,352

 

Cost of Operations

 

15,789

 

15,749

 

17,249

 

 

 

48,787

 

15,911

 

15,282

 

14,890

 

15,256

 

61,339

 

46,082

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income (Loss)

 

13,720

 

13,898

 

79

 

0

 

27,697

 

12,732

 

18,174

 

(637

)

(1,106

)

29,163

 

30,270

 

Interest and Other

 

3,199

 

3,112

 

3,197

 

 

 

9,508

 

2,901

 

3,247

 

3,224

 

3,248

 

12,620

 

9,372

 

Income Taxes

 

3,840

 

3,937

 

(1,138

)

 

 

6,639

 

3,588

 

5,448

 

(1,409

)

(1,846

)

5,781

 

7,628

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

$

6,681

 

$

6,849

 

$

(1,980

)

$

—

 

$

11,550

 

$

6,243

 

$

9,479

 

$

(2,452

)

$

(2,508

)

$

10,762

 

$

13,270

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares Outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

End of Period

 

11,045

 

11,071

 

11,101

 

 

 

11,101

 

11,045

 

11,045

 

11,045

 

11,045

 

11,045

 

11,045

 

Average

 

11,045

 

11,057

 

11,086

 

 

 

11,063

 

11,045

 

11,045

 

11,045

 

11,045

 

11,045

 

11,045

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (Loss) Per Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.61

 

$

0.62

 

$

(0.18

)

 

 

$

1.04

 

$

0.57

 

$

0.86

 

$

(0.22

)

$

(0.23

)

$

0.97

 

$

1.20

 

Diluted

 

$

0.60

 

$

0.62

 

$

(0.18

)

 

 

$

1.04

 

$

0.56

 

$

0.86

 

$

(0.22

)

$

(0.23

)

$

0.97

 

$

1.20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends Paid per share

 

$

0.24

 

$

0.24

 

$

0.24

 

 

 

$

0.72

 

$

0.24

 

$

0.24

 

$

0.24

 

$

0.24

 

$

0.96

 

$

0.72

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Expenditures (net)

 

$

5,524

 

$

5,254

 

$

6,063

 

 

 

$

16,841

 

$

4,557

 

$

5,240

 

$

4,422

 

$

6,515

 

$

20,734

 

$

14,219

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book Value Per Share

 

$

10.70

 

$

11.10

 

$

10.70

 

 

 

$

10.70

 

$

11.34

 

$

11.96

 

$

11.49

 

$

10.38

 

$

10.38

 

$

11.49

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Market Closing Price

 

$

20.00

 

$

19.40

 

$

19.10

 

 

 

$

19.10

 

$

22.05

 

$

21.22

 

$

20.90

 

$

19.70

 

$

19.70

 

$

20.90

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active Customers (End of Period)

 

207

 

209

 

207

 

 

 

207

 

199

 

201

 

198

 

198

 

198

 

198

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gas Deliveries (Therms):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential & Commercial

 

79,638

 

84,967

 

37,465

 

 

 

202,070

 

79,413

 

98,714

 

36,655

 

21,709

 

236,491

 

214,782

 

Industrial & Other

 

260,369

 

252,025

 

176,667

 

 

 

689,061

 

303,130

 

285,692

 

160,047

 

216,036

 

964,905

 

748,869

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Degree Days

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Normal

 

2,042

 

2,272

 

871

 

 

 

5,185

 

2,136

 

2,282

 

872

 

220

 

5,510

 

5,290

 

Actual

 

2,027

 

2,049

 

826

 

 

 

4,902

 

2,038

 

2,351

 

840

 

226

 

5,455

 

5,229

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Colder (warmer) than 5-year avg.

 

(1

)%

(10

)%

(5

)%

 

 

(5

)%

(5

)%

3

%

(4

)%

3

%

(1

)%

(1

)%

 

2