FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended June 30, 1997
Commission file number: 1-7196
CASCADE NATURAL GAS CORPORATION
(Exact name of registrant as specified in its charter)
Washington 91-0599090
---------- ----------
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
222 Fairview Avenue North, Seattle, WA 98109
---------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (206) 624-3900
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes ( X ) No ( )
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
Title Outstanding
----- -----------
Common Stock, Par Value $1 per Share 10,911,656 as of June 30, 1997
CASCADE NATURAL GAS CORPORATION
Index
Page No.
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Part I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Statements of Net Earnings
Available to Common Shareholders 3
Consolidated Condensed Balance Sheets 4
Consolidated Condensed Statements of Cash Flows 5
Notes to Consolidated Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
Item 3. Quantitative and Qualitative Disclosures about
Market Risk 10
Part II. Other Information
Item 2. Changes in Securities 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
Signature 12
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
CASCADE NATURAL GAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF NET EARNINGS
(unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------------- --------------------------
Jun 30, 1997 Jun 30, 1996 Jun 30, 1997 Jun 30, 1996
------------ ------------ ------------ ------------
(thousands except per share data)
Operating revenues $33,730 $33,461 $169,875 $157,989
Less: Gas purchases 17,003 18,720 91,335 87,741
Revenue taxes 2,314 2,314 10,890 10,169
------------ ------------ ------------ ------------
Operating margin 14,413 12,427 67,650 60,079
------------ ------------ ------------ ------------
Cost of operations:
Operating expenses 8,983 8,255 27,289 24,330
Depreciation and
amortization 3,445 3,128 9,954 9,212
Property and payroll
taxes 1,027 991 2,889 3,104
------------ ------------ ------------ ------------
13,455 12,374 40,132 36,646
------------ ------------ ------------ ------------
Earnings from operations 958 53 27,518 23,433
Less interest and other
deductions - net 2,241 2,524 6,821 7,444
------------ ------------ ------------ ------------
Earnings (loss) before
income taxes (1,283) (2,471) 20,697 15,989
Income taxes (274) (715) 7,659 5,776
------------ ------------ ------------ ------------
Net earnings (loss) (1,009) (1,756) 13,038 10,213
Preferred dividends 128 131 383 393
------------ ------------ ------------ ------------
Net earnings (loss)
available to common
shareholders $(1,137) $(1,887) $ 12,655 $ 9,820
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Common shares
outstanding:
Weighted average 10,883 9,218 10,828 9,148
End of period 10,912 9,250 10,912 9,250
Net earnings (loss) per
common share $ (0.10) $ (0.20) $ 1.17 $ 1.07
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Cash dividends per
share $ 0.24 $ 0.24 $ 0.72 $ 0.72
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
See Notes to Consolidated Financial Statements
3
CASCADE NATURAL GAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
Jun 30, 1997 Sep 30, 1996
------------ ------------
(Dollars in Thousands)
(Unaudited)
ASSETS
Utility Plant, net after accumulated depreciation
of $157,907 and $147,599 $253,395 $236,172
Construction work in progress 6,366 19,497
------------ ------------
259,761 255,669
------------ ------------
Other Assets:
Investments in non-utility property 668 667
Notes receivable, less current maturities 1,611 1,777
------------ ------------
2,279 2,444
------------ ------------
Current Assets:
Cash and cash equivalents 3,793 543
Accounts receivable, less allowance of $472 and
$439 for doubtful accounts 12,310 11,646
Current maturities of notes receivable 583 631
Materials, supplies and inventories 5,715 6,063
Prepaid expenses and other assets 3,518 5,723
------------ ------------
25,919 24,606
------------ ------------
Deferred Charges 12,387 13,662
------------ ------------
$300,346 $296,381
------------ ------------
------------ ------------
COMMON SHAREHOLDERS' EQUITY,
PREFERRED STOCKS AND LIABILITIES
Common Shareholders' Equity:
Common stock, par value $1 per share,
authorized 15,000,000 shares, issued and
outstanding 10,911,656 and 10,786,585 shares $ 10,912 $ 10,787
Additional paid-in capital 95,282 93,438
Retained earnings 9,727 4,901
------------ ------------
115,921 109,126
------------ ------------
Redeemable Preferred Stocks, aggregate redemption
amount of $6,845 and $7,097 6,630 6,851
------------ ------------
Long-term Debt 101,550 101,850
------------ ------------
Current Liabilities:
Notes payable and commercial paper 21,477 -
Accounts payable 8,685 17,599
Property, payroll and excise taxes 3,171 3,113
Dividends and interest payable 4,609 6,570
Other current liabilities 3,643 2,931
------------ ------------
41,585 30,213
------------ ------------
Deferred Credits:
Gas cost changes 8,211 21,578
Other 26,449 26,763
------------ ------------
34,660 48,341
------------ ------------
Commitments and Contingencies - -
$300,346 $296,381
------------ ------------
------------ ------------
See Notes to Consolidated Financial Statements
4
CASCADE NATURAL GAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
NINE MONTHS ENDED
--------------------------
Jun 30, 1997 Jun 30, 1996
------------ ------------
(dollars in thousands)
OPERATING ACTIVITIES:
Net earnings $ 13,038 $ 10,213
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation and amortization 9,954 9,317
Amortization of gas cost changes (2,202) 2,391
Write down of assets - 154
Increase (decrease) in deferred income taxes (1,364) 124
Decrease in deferred investment tax credits (194) (215)
Cash provided (used) by changes in operating
assets and liabilities:
Current assets and liabilities (8,382) 4,231
Gas cost changes (11,166) 15,780
Other deferrals and non-current liabilities 2,278 (3,219)
------------ ------------
Net cash provided by operating activities 1,962 38,776
------------ ------------
INVESTING ACTIVITIES:
Capital expenditures (20,162) (29,020)
Customer contributions in aid of construction 6,418 771
New consumer loans (858) (947)
Receipts on consumer loans 1,176 1,840
Purchase of securities available for sale - (2,294)
Proceeds from securities available for sale - 4,375
------------ ------------
Net cash used by investing activities (13,426) (25,275)
------------ ------------
FINANCING ACTIVITIES:
Issuance of common stock 1,112 1,560
Redemption of preferred stock (216) (345)
Proceeds from issuance of long-term debt - 2,100
Repayment of long-term debt (300) (5,000)
Changes in notes payable and commercial paper,
net 21,477 (2,501)
Dividends paid (7,359) (6,198)
Net cash provided (used) by financing activities 14,714 (10,384)
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 3,250 3,117
CASH AND CASH EQUIVALENTS:
Beginning of period 543 718
------------ ------------
End of period $ 3,793 $ 3,835
------------ ------------
------------ ------------
See Notes to Consolidated Condensed Financial Statements
5
CASCADE NATURAL GAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
THREE AND NINE MONTH PERIODS ENDED JUNE 30, 1997
The preceding statements were taken from the books and records of the
Company and reflect all adjustments which are, in the opinion of management,
necessary for a fair statement of the results for the interim periods. All
adjustments were of a normal and recurring nature.
Because of the highly seasonal nature of the business, earnings or loss for
any portion of the year are disproportionate in relation to the full year.
Reference is directed to the Notes to Consolidated Financial Statements
contained in the 1996 Transition Report on Form 10-K for the period January 1,
1996 to September 30, 1996, and comments included therein under "Management's
Discussion and Analysis of Financial Condition and Results of Operations".
NEW ACCOUNTING STANDARDS - In February, 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards (FAS) No.
128, entitled "EARNINGS PER SHARE" and FAS No. 129, entitled "DISCLOSURE OF
INFORMATION ABOUT CAPITAL STRUCTURE," which are effective for periods ending
after December 15, 1997.
FAS No. 128 prescribes the method of calculating and reporting earnings per
share (EPS) amounts. It replaces the presentation of primary EPS with a
presentation of basic EPS. For entities with other than a simple capital
structure, it requires the dual presentation of basic and diluted EPS on the
face of the income statement. The Company does not expect implementation of
this standard to have a material effect on reported earnings per share.
FAS No. 129 established standards for disclosing information about the
company's capital structure, including dividend and liquidation preferences,
participation rights, call prices and disclosure of the dates and the number of
shares issued upon conversion, exercise, or satisfaction of required conditions
during at least the most recent annual fiscal period and any subsequent interim
period presented. The Company does not expect implementation of this standard
to have a material effect on the reporting of the Company's capital structure.
In June, 1997, the Financial Accounting Standards Board issued FAS No.
130, entitled "REPORTING COMPREHENSIVE INCOME," and FAS No. 131, entitled
"DISCLOSURE ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION," which are
effective for fiscal years beginning after December 15, 1997.
FAS No. 130 requires companies to (a) classify items of other comprehensive
income by their nature in a financial statement and (b) display the accumulated
balance of other comprehensive income separately from retained earnings and
additional paid-in-capital in the equity section of a statement of financial
position. The Company is currently evaluating the impact of this standard on
the Company's financial position and results of operations.
FAS No. 131 requires public enterprises to report financial and descriptive
information on the basis that is used internally for evaluating segment
performance and deciding how to allocate resources to segments. The Company
does not expect implementation of this standard to have a material effect on the
reporting of its financial information.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION.
The following is management's assessment of the Company's financial
condition and a discussion of the principal factors that affected consolidated
results of operations and cash flows for the three and nine month periods ended
June 30, 1997 and June 30, 1996.
RESULTS OF OPERATIONS
The net loss to common shareholders for the third quarter of fiscal 1997
was $1,137,000, or $0.10 per share, compared to $1,887,000, or $0.20 per share,
for the quarter ended June 30, 1996. For the nine months ended June 30, 1997,
net earnings available to common shareholders were $12,655,000, or $1.17 per
share, compared to $9,820,000, or $1.07 per share, for the nine-month period
ended June 30, 1996. Per share earnings are affected by the 1,487,700 new shares
of common stock issued in August, 1996.
OPERATING MARGIN
RESIDENTIAL AND COMMERCIAL MARGIN. Operating margins derived from sales to
residential and commercial customers were as set forth in the following table:
Residential and Commercial Operating Margin
(dollars in thousands)
- --------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
June 30 June 30
1997 1996 1997 1996
---- ---- ---- ----
Degree Days 833 938 5,351 5,294
Average Number of Customers
Residential 135,659 127,929 134,909 127,057
Commercial 24,796 23,913 24,708 23,724
Therms per Customer
Residential 119 127 760 737
Commercial 689 738 3,921 3,905
Operating Margin
Residential $ 4,651 $ 4,413 $ 27,172 $ 23,540
Commercial $ 3,285 $ 3,355 $ 18,592 $ 17,674
- --------------------------------------------------------------------------------
Operating margin from sales to residential and commercial customers
increased by $169,000, or 2.2%, quarter to quarter. Factors contributing to this
increase were an increase of 8,613 in the average number of residential and
commercial customers, and new tariff rates charged to customers in the state of
Washington effective August 1, 1996. These factors resulted in margin increases
of approximately $397,000 and $760,000, respectively. Offsetting these increases
were three factors. First, there was $408,000 of gas cost increases absorbed in
the state of Oregon. Second, the number of therms used by the average customer
decreased by 7.2%, resulting in a margin decline of approximately $435,000.
Third, rates to Oregon customers were decreased to recognize decreased property
tax expense (see "Cost of Operations"), reducing margins by approximately
$123,000. The decrease in the per customer gas usage was largely attributable to
warmer weather, particularly in the early part of the quarter. Weather, as
measured by estimated degree days, was 11% warmer than last year and 15% warmer
than normal.
7
For the nine months ended June 30, 1997, margins from residential and
commercial customers increased by $4,550,000, or 11.0%. Factors contributing to
this increase were similar to the factors which caused the net improvement in
the quarterly period. The new tariff rates in Washington contributed
approximately $3,240,000, while the increase in the number of customers
contributed approximately $2,228,000. Therm consumption per customer increased
3.1% for residential and 0.4% for commercial over the nine months ended June 30,
1996, resulting in a margin increase of approximately $736,000. Consumption per
customer is driven by the mix of customers, particularly in the commercial
class, the number and type of appliances used, and by the weather. Weather for
the 1997 nine-month period was approximately 1.1% colder than the same period
last year, and had a normal number of degree days. The colder weather occurred
primarily in the quarter ended December 31, 1996. Partially offsetting these
margin increases were unrecovered gas costs in Oregon, and Oregon rate
reductions related to property tax decreases (see preceding paragraph) of
approximately $1,336,000 and $372,000, respectively.
INDUSTRIAL AND OTHER MARGIN. The comparison of operating margin from
industrial and other customers is affected by the charge of $1,253,000, related
to unrecovered gas cost, recorded in the June 1996 quarter. Other than the
effect of this charge, margins increased $564,000, or 9.5%, quarter to quarter,
and by $1,768,000, or 8.8%, for the nine-month period. These increases are
primarily due to the addition of fourteen new customers, including service to a
new cogeneration customer that began commercial operation in June, 1996.
COST OF OPERATIONS
Cost of operations for the quarter ended June 30, 1997, which consists of
operating expenses, depreciation and amortization, and property and payroll
taxes, increased $1,081,000 or 8.7% over the quarter ended June 30, 1996. For
the nine-month period, the increase was $3,486,000, or 9.5%.
OPERATING EXPENSES, which are primarily labor and benefits expenses,
increased by $728,000, or 8.8%, for the quarter, and $2,959,000, or 12.2%, for
the nine-month period. Of these increases, $435,000 and $1,252,000,
respectively, are attributable to increases in postretirement benefits other
than pensions (PBOP). From 1993 through July 1996, a portion of PBOP expenses
were deferred, in accordance with a policy statement issued by the Washington
Utilities and Transportation Commission in 1992. Concurrent with the settlement
of the Washington rate case, effective August 1, 1996, ongoing PBOP expenses are
no longer deferred, and amortization of the previously deferred amounts is also
included in operating expenses, resulting in the expense increase. Labor costs
increased by $391,000 for the quarter, and by $1,147,000 for the nine-month
period.
DEPRECIATION AND AMORTIZATION increased by $317,000, or 10.1%, for the
quarter, and by $742,000, or 8.1%, for the nine-month period. These increases
are attributable to increases in depreciable utility plant.
PROPERTY AND PAYROLL TAXES increased by $36,000, or 3.6%, for the quarter,
and decreased by $215,000, or 6.9%, for the nine-month period. For both periods,
normal property tax increases related to increases in assets are partially
offset by reductions in Oregon tax rates resulting from a voter referendum.
These Oregon rate reductions have no significant effect on net earnings because
the effect has been deferred in accordance with the policy established by the
Oregon Public Utility Commission. These deferrals are currently being amortized,
and rates charged to Oregon customers have been reduced accordingly (see
"Operating Margin").
INTEREST AND OTHER DEDUCTIONS
Interest and other deductions for the quarter decreased $283,000, or 11.2%,
from the quarter ended June 30, 1996. For the nine-month period, the reduction
was $623,000, or 8.4%. The reductions are due largely to decreases in the
average amount of outstanding debt. The debt reductions are attributed, in
8
part, to the proceeds of the common stock offering in August, 1996. In
addition, the quarter ended June 30, 1996 period included a charge of
$154,000 for the write down of a parcel of non-utility property to net
realizable value.
LIQUIDITY AND CAPITAL RESOURCES
The seasonal nature of the Company's business creates short-term cash
requirements to finance customer accounts receivable and construction
expenditures. To provide working capital for these requirements, the Company has
a five-year credit commitment for $40 million from three banks. The committed
lines also support a money market facility of a similar amount and a regional
commercial paper program. A subsidiary has a $5 million five-year revolving
credit facility used for non-regulated business, and at June 30, 1997, $1.55
million was outstanding. The Company also has $25 million of uncommitted lines
from three banks.
Longer term financing is provided by a Medium-Term Note program with $100
million outstanding at June 30, 1997, and $50 million registered under the
Securities Act of 1933 and available for issuance. Because of the availability
of short-term credit and the ability to issue long-term debt and additional
equity, management believes it has adequate financial flexibility to meet its
anticipated cash needs.
OPERATING ACTIVITIES
Net cash provided by operating activities was $1,962,000 for the nine
months ended June 30, 1997, compared to $38,776,000 for the nine months ended
June 30, 1996, primarily due to higher gas costs incurred during the 1996 - 1997
heating season. For the nine months ended June 30, 1997, the cost of gas
purchased exceeded the gas cost level established in the Company's sales
tariffs, resulting in a negative cash flow of $14,330,000. For the nine months
ended June 30, 1996, the cost of gas was less than the gas cost level
established in the Company's sales tariffs, resulting in a positive cash flow of
$18,398,000. This represents a difference of $32,728,000 between the two nine-
month periods. The effect of these differences in gas costs, except the Oregon
amounts absorbed by the Company, as discussed above under "Operating Margin",
has been deferred, and thus had no effect on net earnings. The Company will file
for recovery of these deferred amounts from customers through purchased gas rate
adjustments over future periods. By the end of the period, gas costs returned to
a level approximately equivalent to the base cost level established in the
Company's tariffs.
The decrease in cash flows from operating activities was also affected by
changes in current assets and liabilities. This resulted in a use of $8,382,000
for the nine months ended June 30, 1997, compared to a provision of funds of
$4,231,000 for the prior year period. This was primarily attributable to the
cash required to relieve the accounts payable balance at September 30, 1996.
This balance included amounts accrued for August, 1996 business which were not
settled until after the end of September. Such amounts are normally settled in
30 days or less.
INVESTING ACTIVITIES
Cash used by investing activities for the nine months ended June 30, 1997
was $13,426,000, compared to $25,275,000 for the prior year's nine-month period.
Capital expenditures for the current year period were approximately $8,858,000
lower than last year due to reduced levels of new plant construction. Net cash
used by investing activities was further reduced by $6,418,000 due to
contributions in aid of construction received from customers. This compares to
$771,000 for the prior year. Capital expenditures for fiscal 1997 are expected
to be approximately $24 million. The Company expects that fiscal 1997 capital
expenditures will be financed almost entirely by debt financing, because of low
operating cash flow.
9
FINANCING ACTIVITIES
The principal financing activity for the nine months ended June 30, 1997,
was the net increase in short term borrowing of $21,477,000 in the form of notes
payable and commercial paper. This was due primarily to the negative pressure on
operating cash flow resulting from the increased gas costs discussed above in
"Operating Activities".
REGULATORY MATTERS
The Company has consistently earned in excess of its allowed rate of return
in Oregon in recent years, and continued earnings improvement in that state
would likely result in a mandated general rate reduction under the current
regulatory system. The staff of the Oregon Public Utility Commission (OPUC) has
agreed to collaborate with the Company in exploring alternative incentive rate
mechanisms which would allow the Company and its customers to equitably share
earnings improvements resulting from improved efficiencies. These discussions
are not complete, and the outcome is uncertain. Approximately 21% of the
Company's pre-tax regulated operating income for the most recent twelve months
was derived from Oregon operations.
ENVIRONMENTAL MATTERS
As reported in the 10-Q report for the quarter ended March 31, 1997, the
Company has received notice of, and is investigating allegations of,
environmental contamination from a former manufactured gas plant site in
Washington previously operated by the Company. The Company has begun an
investigation, but has not yet determined the existence or extent of the alleged
contamination. To the extent the Company may be responsible for all or part of
the cost relating to such contamination, it expects to seek contribution from
other site owners and its insurers, and would seek appropriate rate relief to
the extent of remaining expense incurred.
FORWARD LOOKING STATEMENTS
Statements contained in this report which 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, performance issues with key natural gas
suppliers, 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable
10
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES.
Under the terms of its bank credit agreements, the Company is required to
maintain a minimum net worth of $84,386,000. Under the most restrictive of these
agreements, approximately $31,535,000 is available for the payment of dividends
as of June 30, 1997.
ITEM 5. OTHER INFORMATION.
Ratio of Earnings to Fixed Charges:
Twelve Months Ended
-------------------
6/30/97 9/30/96 12/31/95 12/31/94 12/31/93 12/31/92
------- ------- -------- -------- -------- --------
2.70 2.17 2.16 2.07 2.86 1.97
For purposes of this calculation, earnings include income before income
taxes, plus fixed charges. Fixed charges include interest expense and the
amortization of debt issuance expenses. Refer to Exhibit 12 for the calculation
of these ratios, as well as the ratio of earnings to fixed charges including
preferred dividends.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits:
NO. DESCRIPTION
--- -----------
12 Computation of Ratio of Earnings to Fixed Charges
27 Financial Data Schedule UT
b. Reports on Form 8-K:
No reports were filed on Form 8-K during the quarter ended June 30, 1997.
11
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CASCADE NATURAL GAS CORPORATION
(Registrant)
By: /S/ J. D. Wessling
----------------------------------------------------
J. D. Wessling
Vice President - Finance and Chief Financial Officer
(Principal Financial Officer)
Date: August 8, 1997
12
EXHIBIT 12
CASCADE NATURAL GAS CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED DIVIDEND REQUIREMENTS
Twelve Months Ended
----------- ------- -------- -------- -------- --------
6/30/97 9/30/96 12/31/95 12/31/94 12/31/93 12/31/92
----------- ------- -------- -------- -------- --------
(Unaudited)
(dollars in thousands)
Fixed charges, as defined:
Interest expense $ 9,492 10,101 9,938 8,090 7,038 $ 7,478
Amortization of debt
issuance expense 612 612 606 593 562 402
----------- ------- -------- -------- -------- --------
Total fixed charges $10,104 10,713 10,544 8,683 7,600 $ 7,880
----------- ------- -------- -------- -------- --------
Earnings, as defined:
Net earnings $11,036 8,211 7,732 5,760 9,103 $ 4,843
Add (deduct):
Income taxes 6,155 4,272 4,508 3,505 5,224 2,817
Cumulative effect of change
in accounting method - - - - (209) -
Fixed charges 10,104 10,713 10,544 8,683 7,600 7,880
----------- ------- -------- -------- -------- --------
Total earnings $27,295 23,196 22,784 17,948 21,718 $15,540
----------- ------- -------- -------- -------- --------
Ratio of earnings to fixed
charges 2.70 2.17 2.16 2.07 2.86 1.97
----------- ------- -------- -------- -------- --------
Fixed charges and preferred
dividend requirements:
Fixed charges $10,104 10,713 10,544 8,683 7,600 $ 7,880
Preferred dividend
requirements 801 819 853 898 913 941
----------- ------- -------- -------- -------- --------
Total $10,905 11,532 11,397 9,581 8,513 $ 8,821
----------- ------- -------- -------- -------- --------
Ratio of earnings to fixed
charges and preferred
dividend requirements 2.50 2.01 2.00 1.87 2.55 1.76
----------- ------- -------- -------- -------- --------
13