Exhibit 99.1
Cascade Natural Gas Corporation Announces Fiscal Year 2004 Third Quarter and
Year-to-Date Results
SEATTLE--(BUSINESS WIRE)--July 27, 2004--Cascade Natural Gas Corporation
(NYSE:CGC) reported a loss of $666,000 or $0.06 per share for the fiscal third
quarter ended June 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 (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 valuation for a fixed price swap and cap
supporting gas sales to a group of industrial customers.
Cost of Operations (operating expense, 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 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 prescription drug subsidy, 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 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 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 and January 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
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 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 meter-reading project started in July of 2003. This year $9.2 million
has been expended 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 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 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, natural
gas prices, performance issues with key natural gas suppliers and upstream
pipelines, the capital-intensive nature of the Company's business, regulatory
issues, including the need for adequate and timely rate relief to recover
capital and operating costs 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 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%)
CONTACT: Cascade Natural Gas Corporation
J. D. Wessling, 206-624-3900