-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EWSmHxRxlOhKEung7n1EKl01Xcdf7VPgc6oEEZi4uflKhsiKPsLE0xun6dGiKzKG /wtBfgoSM8OUpayf0WMZng== /in/edgar/work/20000811/0000950120-00-000204/0000950120-00-000204.txt : 20000921 0000950120-00-000204.hdr.sgml : 20000921 ACCESSION NUMBER: 0000950120-00-000204 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTHWEST NATURAL GAS CO CENTRAL INDEX KEY: 0000073020 STANDARD INDUSTRIAL CLASSIFICATION: [4924 ] IRS NUMBER: 930256722 STATE OF INCORPORATION: OR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-15973 FILM NUMBER: 693738 BUSINESS ADDRESS: STREET 1: 220 NW SECOND AVE CITY: PORTLAND STATE: OR ZIP: 97209 BUSINESS PHONE: 5032264211 10-Q 1 0001.txt FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition period from to --------- --------- Commission File No. 0-994 [NORTHWEST NATURAL GAS COMPANY LOGO] NORTHWEST NATURAL GAS COMPANY (Exact name of registrant as specified in its charter) OREGON 93-0256722 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 220 N.W. SECOND AVENUE, PORTLAND, OREGON 97209 (Address of principal executive offices) (Zip Code) Registrant's Telephone Number, including area code: (503) 226-4211 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 [ ] At August 7, 2000, 25,188,747 shares of the registrant's Common Stock, $3-1/6 par value (the only class of Common Stock) were outstanding. 1 NORTHWEST NATURAL GAS COMPANY June 30, 2000 Summary of Information Reported The registrant submits herewith the following information: PART I. FINANCIAL INFORMATION Item 1. Financial Statements Page Number ------ (1) Consolidated Statements of Income for the three and six-month periods ended June 30, 2000 and 1999 3 (2) Consolidated Statements of Earnings Invested in the Business for the six-month periods ended June 30, 2000 and 1999 4 (3) Consolidated Balance Sheets at June 30, 2000 and 1999 and Dec. 31, 1999 5 (4) Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2000 and 1999 6 (5) Consolidated Statements of Capitalization at June 30, 2000 and 1999 and Dec. 31, 1999 7 (6) Notes to Consolidated Financial Statements 8 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 10 Item 3. Quantitative and Qualitative Disclosures About Market Risk 18 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders 19 Item 5. Other Information 19 Item 6. Exhibits and Reports on Form 8-K 20 Signature 21 2 NORTHWEST NATURAL GAS COMPANY PART I. FINANCIAL INFORMATION (1) Consolidated Statements of Income (Thousands, Except Per Share Amounts) (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, -------- -------- 2000 1999 2000 1999 ---- ---- ---- ---- Operating Revenues: Gross operating revenues $ 86,064 $ 94,252 $ 272,713 $ 262,125 Cost of sales 40,250 39,011 133,811 120,979 ---------- ---------- ----------- ----------- Net operating revenues 45,814 55,241 138,902 141,146 Operating Expenses: Operations and maintenance 18,521 16,254 37,527 36,917 Taxes other than income taxes 5,722 5,613 14,386 14,015 Depreciation, depletion and amortization 11,779 11,238 23,218 22,526 ---------- ---------- ----------- ----------- Total operating expenses 36,022 33,105 75,131 73,458 ---------- ---------- ----------- ---------- Income from Operations 9,792 22,136 63,771 67,688 Other Income 1,448 1,353 2,137 1,934 Interest Charges - net 7,936 6,591 16,501 14,678 ---------- ---------- ----------- ----------- Income Before Income Taxes 3,304 16,898 49,407 54,944 Income Taxes 806 6,369 17,717 20,231 ---------- ---------- ----------- ----------- Net Income from Continuing Operations 2,498 10,529 31,690 34,713 Discontinued Segment: Income from discontinued segment - net of tax - 255 - 114 Gain (loss) on sale of discontinued segment - net of tax (35) - 2,435 - ---------- ---------- ----------- ---------- Net Income 2,463 10,784 34,125 34,827 Redeemable Preferred and Preference Stock Dividend Requirements 622 633 1,244 1,270 ---------- ---------- ----------- ----------- Earnings Applicable to Common Stock $ 1,841 $ 10,151 $ 32,881 $ 33,557 ========== ========== =========== =========== Average Common Shares Outstanding 25,195 24,946 25,162 24,915 Basic Earnings Per Share of Common Stock: From continuing operations $ 0.07 $ 0.40 $ 1.21 $ 1.34 From discontinued segment - 0.01 - 0.01 From gain on sale of discontinued segment - - 0.10 - ---------- ---------- ----------- ---------- Total basic earnings per share $ 0.07 $ 0.41 $ 1.31 $ 1.35 ========== ========== =========== =========== Diluted Earnings Per Share of Common Stock: From continuing operations $ 0.07 $ 0.39 $ 1.19 $ 1.32 From discontinued segment - 0.01 - 0.01 From gain on sale of discontinued segment - - 0.10 - ---------- ---------- ----------- ----------- Total diluted earnings per share $ 0.07 $ 0.40 $ 1.29 $ 1.33 ========== ========== =========== =========== Dividends Per Share of Common Stock $ 0.31 $ 0.305 $ .62 $ .61
See Notes to Consolidated Financial Statements 3 NORTHWEST NATURAL GAS COMPANY PART I. FINANCIAL INFORMATION (2) Consolidated Statements of Earnings Invested in the Business (Thousands, Six Months Ended June 30) (Unaudited)
2000 1999 ---------------------- ---------------------- Earnings Invested in the Business: Balance at Beginning of Period $ 118,711 $ 106,513 Net Income 34,125 $ 34,125 34,827 $ 34,827 Dividends Paid: Redeemable preferred and preference stock (1,249) (1,281) Common stock (15,585) (15,183) Common Stock Repurchased (459) - ----------- ----------- Balance at End of Period $ 135,543 $ 124,876 =========== =========== Accumulated Other Comprehensive Income (Loss): Balance at Beginning of Period $ (3,181) $ (2,460) Other comprehensive income-net of tax: Unrealized gain on securities 37 37 - - Foreign currency translation adjustment - - (516) (516) Recognition of foreign currency translation adjustment included in gain on sale of discontinued segment 3,181 3,181 - - ----------- ---------- ----------- ---------- Comprehensive Income $ 37,343 $ 34,311 ========== ========== Balance at End of Period $ 37 $ (2,976) =========== ===========
See Notes to Consolidated Financial Statements 4 NORTHWEST NATURAL GAS COMPANY PART I. FINANCIAL INFORMATION (3) Consolidated Balance Sheets (Thousands of Dollars)
(Unaudited) (Unaudited) June 30, June 30, Dec. 31, 2000 1999 1999 -------- -------- ------ Assets: Plant and Property: Utility plant $ 1,367,202 $ 1,284,049 $ 1,331,415 Less accumulated depreciation 457,040 423,704 436,386 ------------- ------------- ------------- Utility plant - net 910,162 860,345 895,029 ------------- ------------- ------------- Non-utility property 8,532 84,577 8,548 Less accumulated depreciation and depletion 7,706 32,179 7,654 ------------- ------------- ------------- Non-utility property - net 826 52,398 894 ------------- ------------- ------------- Total plant and property 910,988 912,743 895,923 ------------- ------------- ------------- Investments and Other 15,716 15,515 16,557 Current Assets: Cash and cash equivalents 10,419 20,693 10,013 Accounts receivable - net 22,482 29,248 43,349 Accrued unbilled revenue 7,201 6,955 31,550 Inventories of gas, materials and supplies 29,121 19,283 33,919 Investment in discontinued segment - - 29,163 Property held for sale 17,286 12,293 16,712 Prepayments and other current assets 14,054 11,099 18,349 ------------- ------------- ------------- Total current assets 100,563 99,571 183,055 Regulatory Tax Assets 51,060 56,860 51,060 Deferred Gas Costs Receivable 17,520 19,744 20,950 Deferred Debits and Other 76,330 78,467 76,878 ------------- ------------- ------------- Total Assets $ 1,172,177 $ 1,182,900 $ 1,244,423 ============= ============= ============= Capitalization and Liabilities: Capitalization: Common stock $ 316,347 $ 311,247 $ 314,066 Earnings invested in the business 135,543 124,876 118,711 Accumulated other comprehensive income (loss) 37 (2,976) (3,181) ------------- ------------- ------------- Total common stock equity 451,927 433,147 429,596 Redeemable preference stock 25,000 25,000 25,000 Redeemable preferred stock 9,793 10,564 10,564 Long-term debt 396,080 366,607 396,379 ------------- ------------- ------------- Total capitalization 882,800 835,318 861,539 ------------- ------------- ------------- Minority Interest - 16,115 - ------------- ------------- ------------- Current Liabilities: Notes payable 10,307 55,646 94,149 Accounts payable 51,805 55,049 68,163 Long-term debt due within one year 10,000 - 10,000 Taxes accrued 5,380 11,076 4,101 Interest accrued 4,707 5,227 4,673 Other current and accrued liabilities 39,899 35,798 39,153 ------------- ------------- ------------- Total current liabilities 122,098 162,796 220,239 Deferred Investment Tax Credits 9,821 10,628 10,393 Deferred Income Taxes 140,828 139,676 136,150 Regulatory Liabilities and Other 16,630 18,367 16,102 Commitments and Contingencies - - - ------------- ------------- ------------- Total Capitalization and Liabilities $ 1,172,177 $ 1,182,900 $ 1,244,423 ============= ============= =============
See Notes to Consolidated Financial Statements 5 NORTHWEST NATURAL GAS COMPANY PART I. FINANCIAL INFORMATION (4) Consolidated Statements of Cash Flows (Thousands of Dollars) (Unaudited)
Six Months Ended June 30, --------------------- 2000 1999 ---------- ---------- Operating Activities: Net income from continuing operations $ 31,690 $ 34,713 Adjustments to reconcile net income to cash provided by operations: Depreciation, depletion and amortization 23,218 22,635 Deferred income taxes and investment tax credits 4,106 (1,254) Equity in (earnings) losses of investments 166 (103) Allowance for funds used during construction (251) (278) Deferred gas costs receivable 3,430 8,051 Regulatory accounts and other - net 1,076 (8,884) ---------- ---------- Cash from operations before working capital changes 63,435 54,880 Changes in operating assets and liabilities: Accounts receivable - net 20,867 18,173 Accrued unbilled revenue 24,349 27,303 Inventories of gas, materials and supplies 4,798 1,975 Accounts payable (16,358) 27 Accrued interest and taxes 1,313 2,613 Other current assets and liabilities 5,041 17,242 ---------- ---------- Cash Provided by Continuing Operating Activities 103,445 122,213 ---------- ---------- Cash Provided by Discontinued Segment - net 34,779 96 ---------- ---------- Investing Activities: Acquisition and construction of utility plant assets (38,005) (46,942) Investments in non-utility property (601) (6,293) Investments and other 675 1,416 ---------- ---------- Cash Used in Investing Activities (37,931) (51,819) ---------- ---------- Financing Activities: Common stock issued 2,544 2,765 Common stock repurchased (1,021) - Redeemable preferred stock retired (771) (935) Long-term debt retired - (10,000) Change in short-term debt (83,842) (32,546) Cash dividend payments: Redeemable preferred and preference stock (1,249) (1,281) Common stock (15,585) (15,183) Capital stock expense and other 37 - ---------- ---------- Cash Used in Financing Activities (99,887) (57,180) ---------- ---------- Increase in Cash and Cash Equivalents 406 13,310 Cash and Cash Equivalents - Beginning of Period 10,013 7,383 ---------- ---------- Cash and Cash Equivalents - End of Period $ 10,419 $ 20,693 ========== ========== ============================================================================================ Supplemental Disclosure of Cash Flow Information: Cash paid during the period for: Interest $ 16,607 $ 15,762 Income taxes $ 17,391 $ 17,300 ============================================================================================ Supplemental Disclosure of Non-cash Financing Activities: Conversion to common stock: 7-1/4% Series of Convertible Debentures $ 299 $ 131 ============================================================================================
See Notes to Consolidated Financial Statements 6 NORTHWEST NATURAL GAS COMPANY PART I. FINANCIAL INFORMATION (5) Consolidated Statements of Capitalization (Thousands, Except Per Share Amounts)
(Unaudited) (Unaudited) June 30, 2000 June 30, 1999 Dec. 31, 1999 ------------- ------------- ------------- Common Stock Equity: Common stock - par value $3-1/6 per share $ 79,750 $ 79,094 $ 79,458 Premium on common stock 236,597 232,153 234,608 Earnings invested in the business 135,543 124,876 118,711 Accumulated other comprehensive income (loss) 37 (2,976) (3,181) ---------- ---------- ---------- Total common stock equity 451,927 51% 433,147 52% 429,596 50% ---------- ----- ---------- ----- ---------- ----- Redeemable Preference Stock: $6.95 Series, stated value $100 per share 25,000 3% 25,000 3% 25,000 3% ---------- ----- ---------- ----- --------- ----- Redeemable Preferred Stock: Stated value $100 per share: $4.75 Series 43 64 64 $7.125 Series 9,750 10,500 10,500 ---------- ---------- ---------- Total redeemable preferred stock 9,793 1% 10,564 1% 10,564 1% ---------- ----- ---------- ----- ---------- ----- Long-Term Debt: First Mortgage Bonds -------------------- 9-3/4% Series due 2015 50,000 50,000 50,000 Medium-Term Notes ----------------- First Mortgage Bonds: 5.96% Series B due 2000 5,000 5,000 5,000 5.98% Series B due 2000 5,000 5,000 5,000 6.62% Series B due 2001 10,000 - 10,000 8.05% Series A due 2002 10,000 10,000 10,000 6.75% Series B due 2002 10,000 - 10,000 5.55% Series B due 2002 20,000 20,000 20,000 6.40% Series B due 2003 20,000 20,000 20,000 6.34% Series B due 2005 5,000 5,000 5,000 6.38% Series B due 2005 5,000 5,000 5,000 6.45% Series B due 2005 5,000 5,000 5,000 6.80% Series B due 2007 10,000 10,000 10,000 6.50% Series B due 2008 5,000 5,000 5,000 8.26% Series B due 2014 10,000 10,000 10,000 7.00% Series B due 2017 40,000 40,000 40,000 6.60% Series B due 2018 22,000 22,000 22,000 8.31% Series B due 2019 10,000 10,000 10,000 7.63% Series B due 2019 20,000 - 20,000 9.05% Series A due 2021 10,000 10,000 10,000 7.25% Series B due 2023 20,000 20,000 20,000 7.50% Series B due 2023 4,000 4,000 4,000 7.52% Series B due 2023 11,000 11,000 11,000 6.52% Series B due 2025 10,000 10,000 10,000 7.05% Series B due 2026 20,000 20,000 20,000 7.00% Series B due 2027 20,000 20,000 20,000 6.65% Series B due 2027 20,000 20,000 20,000 6.65% Series B due 2028 10,000 10,000 10,000 Unsecured: 8.47% Series A due 2001 10,000 10,000 10,000 Convertible Debentures ---------------------- 7-1/4% Series due 2012 9,080 9,607 9,379 ---------- ---------- ---------- 406,080 366,607 406,379 Less long-term debt due within one year 10,000 - 10,000 ---------- ---------- ---------- Total long-term debt 396,080 45% 366,607 44% 396,379 46% ---------- ----- ---------- ----- ---------- ----- Total Capitalization $ 882,800 100% $ 835,318 100% $ 861,539 100% ========== ===== ========== ===== ========== =====
See Notes to Consolidated Financial Statements 7 NORTHWEST NATURAL GAS COMPANY PART I. FINANCIAL INFORMATION (6) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Financial Statements The information presented in the consolidated financial statements is unaudited, but includes all adjustments, consisting of only normal recurring accruals, which the management of the Company considers necessary for a fair presentation of the results of such periods. These consolidated financial statements should be read in conjunction with the financial statements and related notes included in the Company's 1999 Annual Report on Form 10-K (1999 Form 10-K). A significant part of the business of the Company is of a seasonal nature; therefore, results of operations for the interim periods are not necessarily indicative of the results for a full year. Certain amounts from prior periods have been reclassified to conform with the 2000 presentation. 2. Segment Reporting The Company principally operates in a single line of business consisting of the distribution of natural gas, which constitutes the "utility" segment. The "other" segment consists primarily of investments in alternative energy projects in California, a discontinued natural gas and oil exploration business in Canada, a Boeing 737-300 aircraft which is leased to Continental Airlines and non-utility gas storage services. The following table presents information about reportable segments for the three and six months ended June 30, 2000 and 1999. Inter-segment transactions are insignificant.
Three Months Ended June 30, Six Months Ended June 30, --------------------------------- ---------------------------------- Thousands Utility Other Total Utility Other Total - --------------------------------- ----------- ---------- ----------- ------------ --------- ----------- 2000 Net operating revenues $ 45,724 $ 90 $ 45,814 $ 138,727 $ 175 $ 138,902 Income from operations 9,792 - 9,792 63,649 122 63,771 Loss from financial investments - (33) (33) - (111) (111) Net income (loss) from continuing operations 2,867 (369) 2,498 31,811 (121) 31,690 Net income (loss) from discontinued segment - (35) (35) - 2,435 2,435 Total Assets 1,151,221 20,956 1,172,177 1,151,221 20,956 1,172,177 1999 Net operating revenues $ 55,170 $ 71 $ 55,241 $ 140,972 $ 174 $ 141,146 Income (loss) from operations 22,201 (65) 22,136 67,726 (38) 67,688 Income (loss) from financial investments - 370 370 - (274) (274) Net income from continuing operations 10,157 372 10,529 34,566 147 34,713 Net income from discontinued segment - 255 255 - 114 114 Total Assets 1,103,831 79,069 1,182,900 1,103,831 79,069 1,182,900
8 3. Property Held for Sale Property held for sale is a new headquarters building which was constructed for the Port of Portland. This property has been classified as a current asset. 4. Discontinued Segment On Jan. 26, 2000, the Company sold its interest in Canor Energy Ltd. (Canor), an Alberta, Canada corporation engaged in natural gas and oil exploration, development and production in Alberta and Saskatchewan, Canada. The after-tax gain from the sale was $2.4 million, net of Canadian tax on dividends ($0.6 million) and U.S. income tax ($2.8 million). The consolidated financial statements of the Company have been restated to reflect the reclassification as a discontinued segment. Accordingly, Canor's operating revenues and expenses are included in net income from discontinued segment for 1999, and cash flows of this segment have been reported as "Cash Provided by Discontinued Segment - net" for all periods presented. 5. Other Comprehensive Income Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income," establishes guidelines for the reporting and display of comprehensive income and its components in financial statements. Comprehensive income includes unrealized gains or losses on debt and equity securities held and available for sale, with any resulting gain or loss included as a component of stockholders' equity. 6. Stock Repurchase Program In May 2000, the Company commenced a program to repurchase up to 2 million shares, or up to $35 million in value, of NW Natural's common stock through a repurchase program to extend through May 2001. The purchases will be made in the open market or through privately negotiated transactions. As of June 30, 2000, the Company had repurchased 45,000 shares of common stock at a total cost of $1.0 million. 7. Contingencies NW Natural owns property in Linnton, Oregon that is the site of a former gas manufacturing plant that was closed in 1956. The site has been under investigation by the Company in recent years under program oversight by the Oregon Department of Environmental Quality (ODEQ). During 1998, the ODEQ and the U.S. Environmental Protection Agency (EPA) completed a study of sediments in a 5.5 mile segment of the Willamette River (the Portland Harbor) that includes the area adjacent to the site. In March 2000, Region 10 of the EPA reported that it would recommend the Portland Harbor for listing as a Superfund site, and in July 2000, the governor of Oregon concurred with the EPA's proposal to move forward with the listing. Future remediation of NW Natural's Linnton site may be affected by any EPA management plan for the Portland Harbor. (See Part II, Item 8, Note 12, "Environmental Matters," in the 1999 Form 10-K.) 9 NORTHWEST NATURAL GAS COMPANY PART I. FINANCIAL INFORMATION Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The consolidated financial statements include: Regulated utility: Northwest Natural Gas Company (NW Natural) Non-regulated subsidiary businesses: NNG Financial Corporation (Financial Corporation), a wholly-owned subsidiary Canor Energy, Ltd. (Canor), a majority-owned subsidiary, reclassified as a discontinued segment in 1999 and sold in the first quarter of 2000 Together these businesses are referred to herein as the "Company" (see "Subsidiary Operations," below, and Part II, Item 8., Note 2, "Notes to Consolidated Financial Statements," in the Company's 1999 Annual Report on Form 10-K (1999 Form 10-K)). The following is management's assessment of the Company's financial condition including the principal factors that affect results of operations. The discussion refers to the consolidated activities of the Company for the three and six months ended June 30, 2000 and 1999. Earnings and Dividends - ---------------------- The Company's earnings applicable to common stock were $1.8 million, or 7 cents a diluted share, in the quarter ended June 30, 2000, down from $10.2 million, or 40 cents a diluted share, in the second quarter of 1999. NW Natural earned 9 cents a diluted share from utility operations in the second quarter of 2000, compared to 38 cents a diluted share in the same period in 1999. Weather during the three months ended June 30, 2000 was 8 percent warmer than average and 31 percent warmer than the second quarter of 1999. NW Natural estimates that the weather related decrease in net operating revenues (margin) from sales to residential and commercial customers during the second quarter of 2000 was equivalent to earnings of 9 cents a share compared to a similar period with average weather, and 20 cents a share compared to the same period in 1999. Results for the second quarter of 1999 included reductions to the litigation and interest reserves for the Chase Gardens case equivalent to 9 cents a share (see Part I, Item 3., "Legal Proceedings," in the 1999 Form 10-K). The Company earned $32.9 million, or $1.29 a diluted share, and $33.6 million, or $1.33 a diluted share, for the six months ended June 30, 2000 and 1999, respectively. Year-to-date, NW Natural earned $1.20 a share from utility operations compared to $1.32 a share in the same period in 1999. Weather in the first half of the year was 5 percent warmer in 2000 than in 1999, resulting in a decrease in margin from residential and commercial customers equivalent to an estimated 19 cents a share of earnings. 10 Financial Corporation incurred a loss of 2 cents a share during the second quarter of 2000, compared to income of 2 cents a share during the second quarter of 1999. For the six months ended June 30, 2000, Financial Corporation incurred a loss of 1 cent a share for 2000 compared to income of 1 cent a share for 1999. See "Subsidiary Operations," below. Dividends paid on common stock were 31 cents a share and 30.5 cents a share for the three-month periods ended June 30, 2000 and 1999, respectively. In July 2000, the Company's Board of Directors declared a quarterly dividend of 31 cents a share on the common stock, payable August 15, 2000, to shareholders of record on July 31, 2000. The current indicated annual dividend rate is $1.24 a share. Results of Operations - --------------------- Comparison of Gas Operations ---------------------------- The following table summarizes the composition of gas utility volumes and revenues:
Three Months Ended Six Months Ended June 30, June 30, ------------------------ ------------------------ 2000 1999 2000 1999 ----------- ----------- ------------ ----------- Gas Sales and Transportation Volumes - Therms (000's): Residential and commercial sales 114,246 134,629 382,334 402,533 Unbilled volumes (19,044) (16,545) (38,403) (46,999) ----------- ----------- ------------ ----------- Weather-sensitive volumes 95,202 118,084 343,931 355,534 Industrial firm sales 17,843 21,355 41,909 48,667 Industrial interruptible sales 12,950 13,210 28,520 27,701 ----------- ----------- ------------ ----------- Total gas sales 125,995 152,649 414,360 431,902 Transportation deliveries 109,829 110,399 237,660 217,409 ----------- ----------- ------------ ----------- Total volumes sold and delivered 235,824 263,048 652,020 649,311 =========== =========== =========== =========== Utility Operating Revenues - Dollars (000's): Residential and commercial sales $ 79,995 $ 85,032 $ 258,347 $ 248,888 Unbilled revenues (11,687) (9,167) (24,336) (26,443) ----------- ----------- ------------ ----------- Weather-sensitive revenues 68,308 75,865 234,011 222,445 Industrial firm sales 8,099 8,954 19,058 20,418 Industrial interruptible sales 4,861 3,989 10,694 8,656 ----------- ----------- ------------ ----------- Total gas sales 81,268 88,808 263,763 251,519 Transportation revenues 5,208 4,877 11,193 9,683 Other revenues (548) 456 (2,516) 669 ----------- ----------- ------------ ----------- Total utility operating revenues $ 85,928 $ 94,141 $ 272,440 $ 261,871 =========== =========== =========== =========== Cost of gas sold - Dollars (000's) $ 40,204 $ 38,971 $ 133,713 $ 120,899 =========== =========== =========== =========== Total number of customers (end of period) 508,795 487,516 508,795 487,516 =========== =========== =========== =========== Degree days: Actual 616 887 2,595 2,742 20-year average 673 658 2,508 2,506
Residential and Commercial -------------------------- Typically, 75 percent or more of NW Natural's annual operating revenues are derived from gas sales to weather-sensitive residential and commercial customers. Accordingly, variations in temperatures between periods 11 will affect volumes of gas sold to these customers. Average weather conditions are calculated from the most recent 20 years of temperature data measured by heating degree days. Weather conditions were 8 percent warmer than average in the second quarter of 2000 and 31 percent warmer than in the second quarter of 1999. For the first six months of 2000, weather was 3 percent colder than average but 5 percent warmer than the first six months of 1999. NW Natural continues to experience rapid customer growth, with 21,279 customers added since June 30, 1999 for a growth rate of 4.4 percent. In the three years ended Dec. 31, 1999, approximately 68,000 customers were added to the system, representing an average annual growth rate of 5 percent. Volumes of gas sold to residential and commercial customers were 22.9 million therms, or 19 percent, lower in the second quarter of 2000 than in the second quarter of 1999. Related revenues decreased $7.6 million, or 10 percent, due to the lower volumes, partially offset by rate increases effective during 1999. (See Part II, Item 7, "Results of Operations - Regulatory Matters," in the 1999 Form 10-K.) Customer growth in the residential and commercial segments since June 30, 1999, contributed an estimated $1.6 million of additional margin during the second quarter of 2000. Residential and commercial volumes were 11.6 million therms, or 3 percent, lower, while related revenues increased $11.6 million, or 5 percent, in the first six months of 2000 as compared to 1999. The effects on revenues of rate increases during 1999 more than offset the effects of decreased volumes due to warmer weather. In order to match revenues with related purchased gas costs, NW Natural records estimated unbilled revenues for gas delivered but not yet billed to customers through the end of the period. Industrial, Transportation and Other Revenues --------------------------------------------- Total volumes delivered to industrial firm, industrial interruptible, and transportation customers were 4.3 million therms, or 3 percent, lower in the second quarter of 2000 than in the same period of 1999. Margin from these customers decreased from $11.4 million in the second quarter of 1999 to $10.8 million in the second quarter of 2000. Transportation volumes decreased 0.6 million therms while gas sales to industrial firm and interrruptible customers decreased 3.7 million therms. For the current six-month period, total industrial sales and transportation volumes increased 14.3 million therms, or 5 percent, in 2000. Margin from these customers was $0.2 million, or 1 percent, higher than in the first six months of 1999. Other revenues, which relate primarily to accumulations or amortizations of regulatory accounts (see Part II, Item 8., Note 1, "Notes to Consolidated Financial Statements," in the 1999 Form 10-K), decreased $1.0 million during the second quarter of 2000 compared to the second quarter of 1999. Year-to-date other revenue decreased $3.2 million compared to the first six months of 1999. In 2000, other revenues consisted of regulatory adjustments totaling $3.7 million, including amortizations relating to Y2K costs ($0.7 million) and conservation program costs ($3.0 million) offset by customer fees ($0.8 million) and miscellaneous revenues ($0.4 million). Other revenue in the first six months of 1999 included customer fees ($0.6 million) and miscellaneous revenues ($0.4 million), offset by regulatory adjustments ($0.2 million). 12 Cost of Gas ----------- The cost per therm of gas sold was 25 percent higher during the second quarter of 2000 than in the second quarter of 1999, and was 15 percent higher year-to-date. The cost of gas sold includes current gas purchases, gas withdrawals from storage, system demand costs adjusted for seasonal volumes and regulatory deferrals. The cost of gas sold was reduced by non-regulated sales of $1.4 million and $0.7 million for the first six months of 2000 and 1999, respectively. Under an agreement with the Oregon Public Utility Commission (OPUC), net proceeds from these sales are treated as a reduction to cost of gas sold. The cost per therm of gas purchased was 45 percent higher in the second quarter of 2000 than in the second quarter of 1999, and was 27 percent higher year-to-date, due to higher prevailing prices in the natural gas commodity market. NW Natural was able to offset some of the negative earnings impact from higher gas prices through an active natural gas commodity hedge program. In the second quarter of 2000, NW Natural recorded a gain of $4.1 million from commodity swaps compared to a loss of $0.5 million in the same period of 1999. Gains (losses) from commodity hedges are recorded as reductions (increases) to the cost of gas. NW Natural has a Purchased Gas Adjustment (PGA) tariff in Oregon, under which its net income from Oregon operations is affected only within defined limits by changes in purchased gas costs. NW Natural recognizes 33 percent of the difference between actual and projected gas costs in current operating results while the remaining 67 percent is deferred for recovery from, or refund to, customers in future periods. NW Natural deferred $1.0 million of higher gas costs in the second quarter of 2000 and $1.5 million year-to-date, and expects to begin recovering these amounts from customers later this year. Accordingly, the Company absorbed $0.5 million of the higher gas costs in the second quarter and $0.8 million year-to-date, reducing earnings by 1 cent a share and 2 cents a share, respectively. Subsidiary Operations --------------------- The following table summarizes financial information for Financial Corporation:
Three Months Ended Six Months Ended June 30, June 30, --------------------- --------------------- 2000 1999 2000 1999 --------- --------- --------- --------- Consolidated Subsidiary (Thousands): Net Operating Revenues $ 90 $ 71 $ 175 $ 174 Operations and Maintenance Expense 17 80 (42) 134 Depreciation, Depletion and Amortization 73 56 95 78 --------- --------- --------- --------- Income from Operations - (65) 122 (38) Income (Loss) from Financial Investments (33) 370 (111) (274) Other Income - net 76 128 199 196 --------- --------- --------- --------- Income (Loss) Before Income Taxes 43 433 210 (116) Income Tax Expense (Benefit) 443 62 376 (219) --------- --------- --------- --------- Net Income (Loss) $ (400) $ 371 $ (166) $ 103 ========== ========= ========== =========
Results from Financial Corporation's operations in the second quarter of 2000 were a loss equivalent to 2 cents a share, compared to income of 2 cents a share for the second quarter of 1999. Results were weaker in the current year 13 primarily due to adjustments totaling $0.6 million to Financial Corporation's deferred income tax accounts recorded in the second quarter of 2000. For the six months ended June 30, 2000, Financial Corporation recorded a loss equivalent to 1 cent a share compared to income of 1 cent a share in the first six months of 1999. Financial Corporation's net assets at June 30, 2000, were $7.0 million, compared to $6.7 million at June 30, 1999. Discontinued Segment -------------------- In the fourth quarter of 1999, the Company decided to sell its interest in Canor with the effect that Canor was reclassified as a discontinued segment. The Company sold Canor in the first quarter of 2000 and reported a gain equivalent to 10 cents a share (see Part I, Note 4, above). Net income from the discontinued segment for the six months ended June 30, 1999, was $0.1 million, net of tax, equivalent to 1 cent a share. Operating Expenses ------------------ Operations and Maintenance -------------------------- Operations and maintenance expenses were $0.6 million, or 2 percent, higher in the first six months of 2000 compared to the same period in 1999. NW Natural's expenses increased $0.8 million, or 2 percent, primarily due to reductions to the litigation reserve in the second quarter of 1999 due to an appellate court decision in the Company's favor in the Chase Gardens case ($3.0 million), offset by lower bad debt accruals ($0.7 million), reduced bonus accruals ($0.3 million) and lower marketing costs ($1.2 million) in the first six months of 2000. Taxes Other than Income Taxes ----------------------------- Taxes other than income taxes increased $0.4 million, or 3 percent, in the first six months of 2000 compared to the first half of 1999. Property taxes increased $0.3 million and regulatory fees increased $0.1 million. Depreciation, Depletion and Amortization ---------------------------------------- The Company's depreciation, depletion and amortization expense increased $0.7 million, or 3 percent, compared to the first six months of 1999. NW Natural's depreciation expense increased by $0.7 million primarily due to the placement into service in December 1999 of additional Mist underground gas storage facilities. Other Income ------------ The Company's other income for the year-to-date was $0.2 million higher than in 1999. The increase was primarily due to a development fee relating to construction of the Port of Portland Building ($0.3 million); a gain on the sale of shares in an insurance company received as the result of a demutualization ($0.2 million); and a smaller subsidiary investment loss ($0.2 million); partially offset by a decrease in interest income from regulatory account balances ($0.6 million). 14 Interest Charges - net ---------------------- The Company's net interest expense increased $1.8 million, or 12 percent, in the first six months of 2000 compared to the same period in 1999. The increase was due to a $39.5 million increase in long-term debt outstanding, and an adjustment relating to the Chase Gardens case that reduced interest expense by $0.9 million in the first half of 1999. Income Taxes ------------ The effective corporate income tax rates from continuing operations during the six months ended June 30, 2000 and 1999, were 35.9 percent and 36.8 percent, respectively. Financial Condition - ------------------- Capital Structure ----------------- NW Natural's capital expenditures are primarily related to utility construction resulting from customer growth and system improvements. NW Natural finances these expenditures from cash provided by operations and from short-term borrowings which are periodically refinanced through the sale of long-term debt or equity securities. In addition to its capital expenditures, the weather-sensitive nature of revenue derived from gas usage by NW Natural's residential and commercial customers influences the Company's financing requirements from one quarter to the next. Short-term liquidity is satisfied primarily through the sale of commercial paper, which is supported by commercial bank lines of credit (see Part II, Item 8., Note 6, "Notes to Consolidated Financial Statements," in the 1999 Form 10-K). The Company's long-term goal is to maintain a capital structure comprised of 45 to 50 percent common stock equity, 5 to 10 percent preferred and preference stock and 45 to 50 percent short-term and long-term debt. When additional capital is required, the Company issues debt or equity securities depending upon both the target capital structure and market conditions. The Company also uses these sources to meet long-term debt and preferred stock redemption requirements (see Part II, Item 8., Notes 3 and 5, "Notes to Consolidated Financial Statements," in the 1999 Form 10-K). Cash Flows ---------- Operating Activities -------------------- Continuing operations provided net cash of $103.4 million in the six months ended June 30, 2000, a 15 percent decrease from $122.2 million in the first six months of 1999. An increase in cash from operations ($8.6 million) was offset by higher working capital requirements ($27.3 million). The increase in cash from continuing operations compared to the first six months of 1999 was primarily due to a decrease in regulatory account net debit balances in 2000 ($10.0 million), an increase in deferred income taxes ($5.4 million) and higher depreciation, depletion and amortization ($0.6 million), offset by a smaller decrease in deferred gas costs receivable ($4.6 million) and lower net income from continuing operations ($3.0 million). The increase in working capital requirements was due to a larger decrease in accounts payable ($16.3 million), a smaller increase in other current net liabilities ($12.2 million), a smaller decrease in unbilled revenue ($3.0 million) and a smaller increase in accrued 15 interest and taxes ($1.3 million); offset by a larger decrease in inventories ($2.8 million) and a larger reduction of accounts receivable ($2.7 million). The discontinued segment provided net cash of $34.8 million in the first six months of 2000, due to the sale of the Company's interest in Canor, compared to net cash provided by Canor of $0.1 million in the first six months of 1999. The Company has lease and purchase commitments relating to its operating activities which are financed with cash flows from operations (see Part II, Item 8., Note 12, "Notes to Consolidated Financial Statements," in the 1999 Form 10-K). Investing Activities -------------------- Cash requirements for year-to-date utility construction in 2000 totaled $38.0 million, down $8.9 million from the first six months of 1999. The decrease was primarily due to the completion of additional underground storage facilities in 1999. NW Natural's construction expenditures are estimated to total $82 million for 2000. Over the five-year period 2000 through 2004, these expenditures are estimated at between $450 million and $500 million. The level of capital expenditures over the next five years reflects projected high customer growth plus a major system reinforcement project and the development of additional underground gas storage facilities. An estimated 60 percent of the required funds is expected to be internally generated over the five-year period, with the remainder funded through a combination of long-term debt and equity securities with short-term debt providing liquidity and bridge financing. Investments in non-utility property in the first six months of 2000 consisted of final payments for the construction of the new headquarters building for the Port of Portland of $0.6 million, compared to $6.2 million invested in the Port of Portland Building during the first six months of 1999. The purchase and sale agreement between NW Natural and the Port of Portland provides for the Port to pay at closing an established purchase price for construction of the core and shell of the building plus NW Natural's costs for construction and tenant improvements. NW Natural anticipates that closing will occur during the current fiscal year. In June and August 1999, the Port made construction progress payments in advance of closing totaling $18.8 million, which were used to pay off the balance outstanding under a line of credit used for construction of the building. There were no new capital investments by Financial Corporation during the first six months of 2000 or 1999. Financing Activities -------------------- Internally generated cash, including cash from the sale of Canor, was used to reduce short-term debt by $83.8 million in the first six months of 2000, compared to a reduction of $32.5 million in the first six months of 1999. In May 2000, the Company commenced a program to repurchase up to 2 million shares, or up to $35 million in value, of NW Natural's common stock through a repurchase program to extend through May 2001. The purchases will be made in the open market or through privately negotiated transactions. As of June 30, 2000, the Company had repurchased 45,000 shares of common stock at a total cost of $1.0 million. 16 Commercial Paper ---------------- The Company's primary source of short-term funds is commercial paper. Both NW Natural and Financial Corporation issue commercial paper under agency agreements with a commercial bank. The commercial paper is supported by bank lines of credit (see "Lines of Credit," below). Financial Corporation's commercial paper is supported by the guaranty of NW Natural (see Part II, Item 8., Note 6, "Notes to Consolidated Financial Statements," in the 1999 Form 10-K). NW Natural had $10.3 million of commercial paper notes outstanding at June 30, 2000, compared to $48.9 million outstanding at June 30, 1999. Financial Corporation had no commercial paper notes outstanding at those dates. Lines of Credit --------------- NW Natural has available through Sept. 30, 2000, committed lines of credit with five commercial banks totaling $120 million which are used as backup lines for the commercial paper program. These credit lines consist of a primary fixed amount of $60 million plus an additional amount of up to $60 million available as needed, at NW Natural's option, on a monthly basis. In addition, Financial Corporation has available through Sept. 30, 2000, committed lines of credit with two commercial banks totaling $20 million. Financial Corporation's lines are supported by the guaranty of NW Natural. Under the terms of these lines of credit, NW Natural and Financial Corporation pay commitment fees but are not required to maintain compensating bank balances. The interest rates on borrowings are based on current market rates as negotiated. There were no outstanding balances on either the NW Natural or Financial Corporation lines of credit as of June 30, 2000 or 1999. Ratios of Earnings to Fixed Charges ----------------------------------- For the 6 months and 12 months ended June 30, 2000, and the 12 months ended Dec. 31, 1999, the Company's ratios of earnings to fixed charges, computed using the Securities and Exchange Commission method, were 3.95, 2.92 and 3.12, respectively. For this purpose, earnings consist of net income before taxes plus fixed charges, and fixed charges consist of interest on all indebtedness, the amortization of debt expense and discount or premium and the estimated interest portion of rentals charged to income. Contingent Liabilities - ---------------------- Environmental Matters --------------------- NW Natural owns property in Linnton, Oregon that is the site of a former gas manufacturing plant that was closed in 1956. The site has been under investigation by the Company in recent years under program oversight by the Oregon Department of Environmental Quality (ODEQ). During 1998, the ODEQ and the U.S. Environmental Protection Agency (EPA) completed a study of sediments in a 5.5 mile segment of the Willamette River (the Portland Harbor) that includes the area adjacent to the site. In March 2000, Region 10 of the EPA reported that it would recommend the Portland Harbor for listing as a Superfund site, and in July 2000 the governor of Oregon concurred with the EPA's proposal to move forward with the listing. Future remediation of NW Natural's Linnton site may be affected by any EPA management plan for the Portland Harbor. (See Part II, Item 8, Note 12, "Environmental Matters," in the 1999 Form 10-K.) 17 Forward-Looking Statements - -------------------------- This report and other presentations made by the Company from time to time may contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and other statements which are other than statements of historical facts. The Company's expectations, beliefs and projections are expressed in good faith and are believed by the Company to have a reasonable basis. However, each such forward-looking statement involves uncertainties and is qualified in its entirety by reference to the following important factors that could cause the actual results of the Company to differ materially from those projected in such forward-looking statements: (i) prevailing governmental policies and regulatory actions, including those of the Oregon Public Utility Commission (OPUC) and the Washington Utilities and Transportation Commission (WUTC), with respect to allowed rates of return, industry and rate structure, purchased gas and investment recovery, acquisitions and dispositions of assets and facilities, operation and construction of plant facilities, present or prospective wholesale and retail competition, changes in tax laws and policies and changes in and compliance with environmental and safety laws and policies; (ii) weather conditions and other natural phenomena; (iii) unanticipated population growth or decline and changes in market demand and demographic patterns; (iv) competition for retail and wholesale customers; (v) pricing of natural gas relative to other energy sources; (vi) unanticipated changes in interest or foreign currency exchange rates or in rates of inflation; (vii) unanticipated changes in operating expenses and capital expenditures; (viii) capital market conditions; (ix) competition for new energy development opportunities; and (x) legal and administrative proceedings and settlements. All subsequent forward-looking statements, whether written or oral and whether made by or on behalf of the Company, also are expressly qualified by these cautionary statements. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time and it is not possible for the Company to predict all such factors, nor can it assess the impact of each such factor or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There have been no material changes to the information provided in Part II, Item 7A., "Quantitative and Qualitative Disclosures About Market Risk," in the 1999 Form 10-K. 18 PART II. OTHER INFORMATION Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS NW Natural's Annual Meeting of Shareholders was held in Portland, Oregon on May 25, 2000. At the meeting, four Class I director-nominees were elected to three-year terms, as follows: Term Share Votes Share Votes Director-nominee Expiring For Withheld ------------------- ----------- --------------- ------------ Richard B. Keller 2003 22,671,947 294,988 Randall C. Pape 2003 22,688,833 278,102 Robert L. Ridgley 2003 22,665,250 301,685 Dwight A. Sangrey 2003 22,689,100 277,835 The other eight directors whose terms of office as directors continued after the annual meeting are: Mary Arnstad, Thomas E. Dewey, Jr., Tod R. Hamachek, Wayne D. Kuni, Richard G. Reiten, Melody C. Teppola, Russell F. Tromley and Benjamin R. Whiteley. The shareholders reapproved the 1985 Stock Option Plan by the following vote: 21,654,192 shares voted for; 881,645 shares voted against; and 431,098 shares abstained from voting. The shareholders also approved amendments to the Employee Stock Purchase Plan to increase the number of shares authorized to be issued under that Plan from 600,000 to 800,000 shares, and to reduce the offering price from 92 to 85 percent of the fair market value on the offering date. The vote on these amendments was as follows: 21,489,564 shares voted for; 989,072 shares voted against; and 488,299 shares abstained from voting on this matter. The shareholders also elected PricewaterhouseCoopers LLP, certified public accountants, as NW Natural's auditors for the year 2000 by the following vote: 22,673,074 shares voted for; 91,817 shares voted against; and 202,044 shares abstained. There were no broker non-votes on any of the items voted on at the 2000 annual meeting. Item 5. OTHER INFORMATION Regulatory Developments ----------------------- On July 31, 2000, the Washington Utilities and Transportation Commission approved, effective Aug. 1, 2000, a filing by NW Natural to increase rates by an average of 23 percent for the Company's Washington sales customers. The rate increases reflect increases in the cost of natural gas commodity 19 purchased under contracts with gas producers (see Part I, Item 2., Results of Operations, "Comparison of Gas Operations--Cost of Gas," above). NW Natural intends to file with the OPUC for approval of rate increases in Oregon reflecting similar increases in gas commodity costs. This filing will be pursuant to NW Natural's Oregon PGA tariff which permits filings for out-of-cycle rate adjustments if the Company's cost of gas changes by 10 percent or more. The rate increases for the Company's Oregon customers will be proposed to be effective on Oct. 1, 2000, rather than on the normal rate change date of Dec. 1, 2000. Even assuming the rates approved in Washington and to be filed for approval in Oregon, NW Natural expects to continue to enjoy a price advantage over competing fuels, including heating oil as well as electricity provided by the investor-owned electric utilities in its service territory. Stock Listing ------------- On July 27, 2000, the Company's Common Stock, $3-1/6 par value, and the Common Share Purchase Rights appurtenant thereto, began trading on the New York Stock Exchange, Inc. under the symbol "NWN." The stock previously traded on the Nasdaq National Market with the symbol NWNG. Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit 11 - Statement re: Computation of Per Share Earnings Exhibit 12 - Computation of Ratio of Earnings to Fixed Charges Exhibit 27 - Financial Data Schedule (b) Reports on Form 8-K On May 25, 2000, the Company filed its Current Report on Form 8-K relating to the listing of the Company's Common Stock on the New York Stock Exchange and announcing a share repurchase program. 20 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. NORTHWEST NATURAL GAS COMPANY (Registrant) Dated: August 11, 2000 /s/ Stephen P. Feltz --------------------------------------- Stephen P. Feltz Principal Accounting Officer Treasurer and Controller 21 NORTHWEST NATURAL GAS COMPANY EXHIBIT INDEX To Quarterly Report on Form 10-Q For Quarter Ended June 30, 2000 Exhibit Document Number - -------- ------- Statement re: Computation of Per Share Earnings 11 Computation of Ratios of Earnings to Fixed Charges 12 Financial Data Schedule 27 EX-11 2 0002.txt EXHIBIT 11 EXHIBIT 11 NORTHWEST NATURAL GAS COMPANY Statement re: Computation of Per Share Earnings (Thousands, except per share amounts) (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, -------------------- --------------------- 2000 1999 2000 1999 --------- ---------- ---------- ---------- Earnings Applicable to Common Stock $ 1,841 $ 10,151 $ 32,881 $ 33,557 Debenture Interest Less Taxes 100 106 201 212 --------- ---------- ---------- ---------- Net Income Available for Diluted Common Stock $ 1,941 $ 10,257 $ 33,082 $ 33,769 ========= ========== ========== ========== Average Common Shares Outstanding 25,195 24,946 25,162 24,915 Stock Options 9 16 3 17 Convertible Debentures 456 483 456 483 --------- ---------- ---------- ---------- Diluted Common Shares 25,660 25,445 25,621 25,415 ========= ========== ========== ========== Diluted Earnings per Share of Common Stock $ 0.07 $ 0.40 $ 1.29 $ 1.33 ========= ========== ========== ==========
EX-12 3 0003.txt EXHIBIT 12 EXHIBIT 12 NORTHWEST NATURAL GAS COMPANY Computation of Ratio of Earnings to Fixed Charges January 1, 1995 - June 30, 2000 (Thousands, except ratio amounts) (Unaudited)
Twelve Six Months Months Year Ended Dec. 31, Ended Ended ----------------------------------------------------- June 30, June 30, 1995 1996 1997 1998 1999 2000 2000* --------- --------- --------- --------- --------- --------- --------- Fixed Charges, as Defined: Interest on Long-Term Debt $ 23,141 $ 23,176 $ 24,904 $ 27,389 $ 27,728 $ 28,914 $ 14,920 Other Interest 2,252 3,448 4,500 4,909 2,778 3,380 1,470 Amortization of Debt Discount and Expense 882 865 730 714 699 707 362 Interest Portion of Rentals 1,764 1,798 2,111 1,986 1,707 1,707 814 --------- --------- --------- --------- --------- --------- --------- Total Fixed Charges, as defined $ 28,039 $ 29,287 $ 32,245 $ 34,998 $ 32,912 $ 34,708 $ 17,566 ========= ========= ========= ========= ========= ========= ========= Earnings, as defined: Net Income $ 38,065 $ 46,793 $ 43,059 $ 27,301 $ 45,296 $ 44,594 $ 34,125 Taxes on Income 22,120 27,347 21,034 14,604 24,591 22,077 17,717 Fixed Charges, as above 28,039 29,287 32,245 34,998 32,912 34,708 17,566 --------- --------- --------- --------- --------- --------- --------- Total Earnings, as defined $ 88,224 $ 103,427 $ 96,338 $ 76,903 $ 102,799 $ 101,379 $ 69,408 ========= ========= ========= ========= ========= ========= ========= Ratio of Earnings to Fixed Charges 3.15 3.53 2.99 2.20 3.12 2.92 3.95 ========= ========= ========= ========= ========= ========= =========
* A significant part of the business of the Company is of a seasonal nature; therefore, the ratio of earnings to fixed charges for the interim period is not necessarily indicative of the results for a full year. EX-27 4 0004.txt EXHIBIT 27
UT This schedule contains summary financial information extracted from the consolidated financial statements and is qualified in its entirety by reference to such financial statements. 0000073020 NORTHWEST NATURAL GAS COMPANY 6-MOS DEC-31-1999 JUN-30-2000 PER-BOOK 910,162 16,542 100,563 93,850 51,060 1,172,177 79,750 236,597 135,580 451,927 34,000 0 396,080 0 0 10,307 10,000 793 948 556 267,566 1,172,177 272,713 17,717 208,942 226,659 46,054 4,572 50,626 16,501 34,125 1,244 32,881 15,585 14,920 103,445 0.07 0.07
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