Form 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period to
---------------- ----------------
Commission file number 0-994
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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 November 8, 1996, 22,484,940 shares of the registrant's Common
Stock, $3-1/6 par value (the only class of Common Stock) were
outstanding.
NORTHWEST NATURAL GAS COMPANY
September 30, 1996
Summary of Information Reported
The registrant submits herewith the following information:
PART I. FINANCIAL INFORMATION
Page
Item 1. Financial Statements Number
------
(1) Consolidated Statements of Income for the
three and nine month periods ended
September 30, 1996 and 1995 and Consolidated
Statements of Earnings Invested in the
Business for the nine month periods ended
September 30, 1996 and 1995. 3
(2) Consolidated Balance Sheets at September 30,
1996 and 1995 and December 31, 1995. 4
(3) Consolidated Statements of Cash Flows for
the nine month periods ended September 30,
1996 and 1995. 6
(4) Consolidated Statements of Capitalization
at September 30, 1996 and 1995 and December 31,
1995. 7
(5) Notes to Consolidated Financial Statements. 8
Independent Accountants' Report 10
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition 11
PART II. OTHER INFORMATION
Item 3. Changes in Securities 23
Item 5. Other Information 23
Item 6. Exhibits and Reports on Form 8-K 24
Signature 24
NORTHWEST NATURAL GAS COMPANY
PART I. FINANCIAL INFORMATION
(1) Consolidated Statements of Income
(Thousands, Except Per Share Amounts)
Three Months Nine Months
Ended Ended
September 30, September 30,
----------------- ------------------
1996 1995 1996 1995
------- ------- -------- --------
Net Operating Revenues:
Operating revenues $50,585 $48,644 $260,030 $245,062
Cost of sales 16,007 20,613 95,765 101,381
------- ------- -------- --------
Net operating revenues 34,578 28,031 164,265 143,681
------- ------- -------- --------
Operating Expenses:
Operations and maintenance 17,326 16,953 55,440 53,084
Taxes other than income taxes 3,802 4,913 16,697 18,303
Depreciation, depletion and
amortization 8,736 10,377 32,170 30,066
------- ------- -------- --------
Total operating expenses 29,864 32,243 104,307 101,453
------- ------- -------- --------
Income (Loss) from Operations 4,714 (4,212) 59,958 42,228
------- ------- -------- --------
Other Income 1,949 3,542 6,955 6,722
------- ------- -------- --------
Interest Charges - net 6,617 6,298 19,389 19,221
------- ------- -------- --------
Income (Loss) Before Income Taxes 46 (6,968) 47,524 29,729
Income Taxes (209) (2,620) 18,405 11,517
------- ------- -------- --------
Net Income (Loss) 255 (4,348) 29,119 18,212
Preferred and preference stock
dividend requirements 673 690 2,049 2,115
------- ------- -------- --------
Earnings (Loss) Applicable to Common
Stock $ (418) $(5,038) $ 27,070 $ 16,097
======= ======= ======== ========
Average Common Shares Outstanding 22,435 22,141 22,351 21,688
Primary Earnings (Loss) Per Share of
Common Stock $(0.02) $ (0.23) $ 1.21 $ 0.74
Fully-Diluted Earnings Per Share
of Common Stock * * $ 1.20 $ 0.74
Dividends Per Share of Common Stock $ 0.30 $ 0.293 $ 0.90 $ 0.88
*Anti-dilutive
See accompanying Notes to Consolidated Financial Statements.
==============================================================================
Consolidated Statements of Earnings Invested in the Business
(Thousands, Nine Month Periods Ended September 30)
1996 1995
------- -------
Balance at Beginning of Period $105,651 $97,275
Net Income 29,119 18,212
Cash Dividends:
Preferred and preference stock (2,061) (2,146)
Common stock (20,091) (18,862)
Stock Dividend (23,704) -
Capital stock expense and other (614) (1,633)
------- -------
Balance at End of Period $ 88,300 $92,846
======== =======
See accompanying Notes to Consolidated Financial Statements.
NORTHWEST NATURAL GAS COMPANY
PART I. FINANCIAL INFORMATION
(2) Consolidated Balance Sheets
(Thousands of Dollars)
Sept. 30, Sept. 30, Dec. 31,
1996 1995 1995
-------- -------- -------
Assets:
Plant and Property in Service:
Utility plant in service $1,028,941 $952,435 $969,075
Less accumulated depreciation 329,997 302,528 308,702
-------- -------- --------
Utility plant - net 698,944 649,907 660,373
Non-utility property 44,259 49,669 53,807
Less accumulated depreciation
and depletion 15,493 23,077 16,997
-------- -------- --------
Non-utility property - net 28,766 26,592 36,810
-------- -------- --------
Total plant and property
in service 727,710 676,499 697,183
-------- -------- --------
Investments and Other:
Investments 32,764 36,618 34,126
Long-term notes receivable 1,684 3,722 3,756
-------- -------- --------
Total investments and other 34,448 40,340 37,882
-------- -------- --------
Current Assets:
Cash and cash equivalents 4,034 2,914 7,782
Accounts receivable - net 19,890 18,225 34,385
Notes Receivable 1,750 - -
Accrued unbilled revenue 6,549 5,996 21,493
Inventories of gas, materials
and supplies 16,778 17,138 14,254
Prepayments and other current assets 6,995 11,197 12,396
-------- -------- --------
Total current assets 55,996 55,470 90,310
-------- -------- --------
Regulatory Tax Assets 60,430 60,430 60,430
-------- -------- --------
Deferred Debits and Other 50,216 47,070 43,472
-------- -------- --------
Total Assets $928,800 $879,809 $929,277
======== ======== ========
See accompanying Notes to Consolidated Financial Statements.
NORTHWEST NATURAL GAS COMPANY
PART I. FINANCIAL INFORMATION
(2) Consolidated Balance Sheets
(Thousands of Dollars)
Sept. 30, Sept. 30, Dec. 31,
1996 1995 1995
-------- -------- --------
Capitalization and Liabilities:
Capitalization:
Common stock $246,570 $216,457 $217,901
Earnings invested in the business 88,300 92,846 105,651
-------- -------- --------
Total common stock equity 334,870 309,303 323,552
Redeemable preference stock 25,000 25,000 25,000
Redeemable preferred stock 13,749 14,840 14,840
Long-term debt 253,189 271,048 279,945
-------- -------- --------
Total capitalization 626,808 620,191 643,337
-------- -------- --------
Current Liabilities:
Notes payable 48,170 23,204 28,832
Accounts payable 27,469 30,191 41,784
Long-term debt due within one year 25,000 21,000 21,000
Taxes accrued 3,798 4,762 10,281
Interest accrued 7,255 7,473 4,617
Other current and accrued
liabilities 13,584 11,933 13,204
-------- -------- --------
Total current liabilities 125,276 98,563 119,718
-------- -------- --------
Deferred Investment Tax Credits 11,999 12,966 12,493
-------- -------- --------
Deferred Income Taxes 123,999 116,761 118,692
-------- -------- --------
Regulatory Balancing Accounts
and Other 40,718 31,328 35,037
-------- -------- --------
Contingent Liabilities (Note 4) - - -
-------- -------- --------
Total Capitalization and
Liabilities $928,800 $879,809 $929,277
======== ======== ========
See accompanying Notes to Consolidated Financial Statements.
NORTHWEST NATURAL GAS COMPANY
PART I. FINANCIAL INFORMATION
(3) Consolidated Statements of Cash Flows
(Thousands of Dollars)
Nine Months Ended
September 30,
-----------------
1996 1995
------- -------
Operating Activities:
Net income $29,119 $18,212
Adjustments to reconcile net income to net
cash provided by operations:
Depreciation, depletion and amortization 32,170 30,066
Gain on Sale of Assets (2,897) -
Deferred income taxes and investment tax credits 4,813 3,764
Equity in earnings of investments (1,257) (3,337)
Allowance for funds used during construction (1,138) (428)
Regulatory balancing accounts and other - net (1,063) (3,333)
------- -------
Cash from operations before working
capital changes 59,747 44,944
Changes in operating assets and liabilities:
Accounts receivable 14,495 23,927
Accrued unbilled revenue 14,944 14,324
Inventories of gas, materials and supplies (2,524) (2,180)
Accounts payable (14,315) (18,326)
Accrued interest and taxes (3,845) 1,081
Other current assets and liabilities 5,781 (980)
------- -------
Cash Provided by Operating Activities 74,283 62,790
------- -------
Investing Activities:
Acquisition and construction of utility plant assets (54,742) (47,543)
Investment in non-utility plant (3,920) (4,338)
Investments and other 2,941 94
------- -------
Cash Used in Investing Activities (55,721) (51,787)
------- -------
Financing Activities:
Common stock issued 4,209 38,228
Preference stock retired - (174)
Preferred stock retired (1,091) (1,110)
Long-term debt retired (26,000) (10)
Change in short-term debt 23,338 (30,450)
Cash dividend payments:
Preferred and preference stock (2,061) (2,146)
Common stock (20,091) (18,862)
Capital stock expense and other (614) (1,633)
------- -------
Cash Used for Financing Activities (22,310) (16,157)
------- -------
Increase (Decrease) in Cash and Cash Equivalents (3,748) (5,154)
Cash and Cash Equivalents - Beginning of Period 7,782 8,068
------- -------
Cash and Cash Equivalents - End of Period $ 4,034 $ 2,914
======= =======
================================================================================
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest $16,623 $16,087
Income Taxes $19,900 $15,819
================================================================================
Supplemental Disclosure of Noncash Financing Activities:
Conversion to common stock:
$2.375 Series of Convertible Preference Stock - $ 1,078
7-1/4 percent Series of Convertible Debentures $ 756 $ 18
================================================================================
See accompanying Notes to Consolidated Financial Statements.
<TABLE>
NORTHWEST NATURAL GAS COMPANY
PART I. FINANCIAL INFORMATION
(4) Consolidated Statements of Capitalization
(Thousands, except share amounts)
<CAPTION>
Sept. 30, Sept. 30, Dec. 31,
1996 1995 1995
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK EQUITY:
Common stock - par value
$3-1/6 per share $ 71,170 $ 46,806 $ 46,958
Premium on common stock 175,400 169,651 170,943
Earnings invested in the business 88,300 92,846 105,651
-------- -------- --------
Total common stock equity 334,870 53% 309,303 50% 323,552 50%
-------- ---- -------- ---- -------- ----
REDEEMABLE PREFERENCE STOCK:
$6.95 Series, stated value
$100 per share 25,000 25,000 25,000
-------- -------- --------
Total redeemable preference
stock 25,000 4% 25,000 4% 25,000 4%
-------- ---- -------- ---- -------- ----
REDEEMABLE PREFERRED STOCK,
stated value $100 per share:
$4.68 Series 391 552 552
$4.75 Series 608 788 788
$7.125 Series 12,750 13,500 13,500
-------- -------- --------
Total redeemable preferred stock 13,749 2% 14,840 2% 14,840 2%
-------- ---- -------- ---- -------- ----
LONG-TERM DEBT:
First Mortgage Bonds
--------------------
9-3/4% Series due 2015 50,000 50,000 50,000
9-1/8% Series due 2019 22,000 25,000 24,000
Medium-Term Notes
-----------------
First Mortgage Bonds:
4.80% Series A due 1996 - 5,000 5,000
7.38% Series A due 1997 20,000 20,000 20,000
7.69% Series A due 1999 10,000 10,000 10,000
5.96% Series B due 2000 5,000 5,000 5,000
5.98% Series B due 2000 5,000 5,000 5,000
8.05% Series A due 2002 10,000 10,000 10,000
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
6.50% Series B due 2008 5,000 5,000 5,000
8.26% Series B due 2014 10,000 10,000 10,000
8.31% Series B due 2019 10,000 10,000 10,000
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
Unsecured:
4.90% Series A due 1996 - 10,000 10,000
8.69% Series A due 1996 - 5,000 5,000
7.40% Series A due 1997 5,000 5,000 5,000
8.93% Series A due 1998 5,000 5,000 5,000
8.95% Series A due 1998 10,000 10,000 10,000
8.47% Series A due 2001 10,000 10,000 10,000
Convertible Debentures
----------------------
7-1/4% Series due 2012 11,189 12,048 11,945
-------- -------- --------
278,189 292,048 300,945
Less long-term debt due within
one year 25,000 21,000 21,000
-------- -------- --------
Total long-term debt 253,189 41% 271,048 44% 279,945 44%
-------- ---- -------- ---- -------- ----
TOTAL CAPITALIZATION $626,808 100% $620,191 100% $643,337 100%
======== ==== ======== ==== ======== ====
- ---------------------------------------------------------------------------------------
See accompanying Notes to Consolidated Financial Statements.
NORTHWEST NATURAL GAS COMPANY
(5) 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 1995 Annual Report on
Form 10-K. A significant part of the business of the Company is
of a seasonal nature. Therefore, results of operations for the
three and nine month periods ended September 30, 1996 and 1995
are not indicative of the results for a full year.
Certain amounts from the prior year have been
reclassified to conform with the 1996 presentation.
2. Common Stock Dividend
All share and per share data for prior periods have
been restated to reflect the three-for-two split of the Company's
Common Stock, effected in the form of a 50 percent stock
dividend, effective September 6, 1996.
3. Accounting Pronouncements
In the first quarter of 1996, the Company adopted
Statement of Financial Accounting Standards (SFAS) No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of." SFAS No. 121 requires that
long-lived assets and certain identifiable intangibles to be held
and used by an entity be reviewed for impairment whenever the
carrying amount of the asset may not be recoverable, and requires
that assets committed to be disposed of be recorded at the lower
of the carrying amount or fair value less cost to sell. As a
result of adopting SFAS No. 121, Oregon Natural Gas Development
Corporation (Oregon Natural), formerly a wholly-owned subsidiary
of the Company, recorded an impairment loss with respect to
producing wells of $1.3 million, equivalent to a loss of 4 cents
per share, during the first quarter of 1996. No impairment was
recorded for certain other operating wells held for sale because,
in the opinion of management, the fair value of this group of
wells is greater than the carrying amount. In addition, in
accordance with SFAS No. 19, "Financial Accounting and Reporting
by Oil and Gas Producing Companies," Oregon Natural recorded
write-downs of 3 cents per share.
In October 1995, the Financial Accounting Standards Board
issued SFAS No. 123, "Accounting for Stock-Based Compensation."
SFAS No. 123 requires expanded disclosures of stock-based
compensation arrangements with employees and encourages (but does
not require) compensation cost to be measured based on the fair
value of the equity instrument awarded. Companies are permitted,
however, to continue to apply Accounting Principles Board (APB)
Opinion No. 25, "Accounting for Stock Issued to Employees," which
recognizes compensation cost based on the intrinsic value of the
equity instrument awarded. The Company will continue to apply
APB Opinion No. 25 to its stock-based compensation awards to
employees and will disclose the required pro forma effect on net
income and earnings per share in its 1996 annual report.
4. Contingent Liabilities
See Part I, Item 2., "Environmental Matters" below, and
Part II, Item 7., "Contingent Liabilities" and "Environmental
Matters" in the Company's 1995 Annual Report on Form 10-K.
Deloitte & Touche LLP
------------------------------------------------------------
3900 US Bancorp Tower Telephone: (503) 222-1341
111 SW Fifth Avenue Facsimile: (503) 224-2172
Portland, OR 97204-3698
INDEPENDENT ACCOUNTANTS' REPORT
- -------------------------------
Northwest Natural Gas Company
Portland, Oregon
We have reviewed the accompanying consolidated balance sheets and
statements of capitalization of Northwest Natural Gas Company and
subsidiaries as of September 30, 1996 and 1995, and the related
consolidated statements of income for the three- and nine-month
periods ended September 30, 1996 and 1995, and consolidated
statements of earnings invested in the business and of cash flows
for the nine-month periods ended September 30, 1996 and 1995.
These financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly,
we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to such consolidated financial
statements for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet and statement
of capitalization of Northwest Natural Gas Company and
subsidiaries as of December 31, 1995, and the related
consolidated statements of income, earnings invested in the
business, and cash flows for the year then ended (not presented
herein); and in our report dated February 20, 1996, we expressed
an unqualified opinion on those consolidated financial statements
which includes an explanatory paragraph relating to the change in
the Company's method of accounting for income taxes and
postretirement benefits. In our opinion, the information set
forth in the accompanying consolidated balance sheet and
consolidated statement of capitalization as of December 31, 1995
is fairly stated, in all material respects, in relation to the
consolidated financial statements from which it has been derived.
DELOITTE & TOUCHE LLP
November 12, 1996<PAGE>
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 (Northwest Natural)
Non-regulated wholly-owned businesses:
Oregon Natural Gas Development Corporation (Oregon
Natural) - (merged with Northwest Natural during
the second quarter of 1996)
NNG Financial Corporation (Financial Corporation)
Canor Energy, Ltd. (Canor)
Two other subsidiaries, Pacific Square Corporation
(Pacific Square) and NNG Energy Systems, Inc.(Energy Systems)
were dissolved during 1995.
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 1995 Annual Report on Form 10-K).
The following is management's assessment of the
Company's financial condition including the principal factors
that impact results of operations. The discussion refers to the
consolidated activities of the Company for the three and nine
months ended September 30, 1996 and 1995.
Earnings and Dividends
- ----------------------
The Company incurred a loss of $0.4 million, or 2 cents
per share, for the third quarter ended September 30, 1996,
compared to a loss of $5.0 million, or 23 cents per share, in
last year's third quarter. Northwest Natural had a loss of 8
cents per share from utility operations in the third quarter of
1996, compared to a loss of 30 cents per share in the same period
in 1995. A third quarter loss is customary for Northwest
Natural, reflecting low summertime use of natural gas.
Compared to the previous year's third quarter,
operating margin (revenues less cost of gas) from residential
and commercial customers increased 12 percent while industrial
margin increased 8 percent. The Company estimates that cooler
weather conditions improved margin in the third quarter by 4
cents per share over 1995 results.
The Company's subsidiaries earned the equivalent of 6
cents per share in this year's third quarter, down from 7 cents
per share in last year's third quarter. Year-to-date earnings
from subsidiary operations for both 1996 and 1995 were equivalent
to 9 cents per share.
The Company earned $27.1 million, or $1.21 per share,
and $16.1 million, or 74 cents per share, for the nine months
ended September 30, 1996 and September 30, 1995, respectively.
Year-to-date, Northwest Natural earned $1.12 per share from
utility operations, compared to 65 cents per share in the same
period in 1995.
The weather in Northwest Natural's service territory
during the first nine months of 1996 was 5 percent cooler than
normal, and 17 percent cooler than the same period in 1995. The
cool weather contributed to increases in gas deliveries to, and
related margin from, weather-sensitive customers. The cooler
weather conditions improved year-to-date margin revenues by an
estimated 30 cents per share over last year's results.
The Board of Directors of the Company declared a
quarterly dividend on its Common Stock of 30 cents per share,
payable November 15, 1996, to shareholders of record on
October 31, 1996. The current indicated annual dividend rate is
$1.20 per share.
Results of Operations
- ---------------------
Comparison of Gas Utility Operations
------------------------------------
The following table summarizes the composition of gas
utility volumes and revenues:
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
1996 1995 1996 1995
Gas Sales and Transportation ---- ---- ---- ----
Volumes - Therms (000's):
Residential and commercial
sales 46,961 43,929 377,849 331,224
Unbilled volumes 3,653 362 (28,932) (26,380)
------- ------- ------- -------
Weather-sensitive
volumes 50,614 44,291 348,917 304,844
Industrial firm sales 19,094 17,767 68,763 61,491
Industrial interruptible
sales 12,087 18,369 48,606 62,113
------- ------- ------- -------
Total gas sales 81,795 80,427 466,286 428,448
Transportation deliveries 98,165 90,118 300,075 280,785
------- ------- ------- -------
Total volumes sold and
delivered 179,960 170,545 766,361 709,233
======= ======= ======= =======
Utility Operating Revenues
- Dollars (000's):
Residential and
commercial revenues $ 28,626 $ 28,725 $206,894 $194,802
Unbilled revenues 1,491 154 (14,943) (14,323)
-------- -------- -------- --------
Weather-sensitive
revenues 30,117 28,879 191,951 180,479
Industrial firm sales
revenues 6,335 6,685 23,229 23,376
Industrial interruptible
sales revenues 3,387 5,563 13,247 18,076
-------- -------- -------- --------
Total gas sales
revenues 39,839 41,127 228,427 221,931
Transportation revenues 5,703 4,241 16,539 12,018
Other revenues 2,777 999 7,973 5,159
-------- -------- -------- --------
Total utility operating
revenues $ 48,319 $ 46,367 $252,939 $239,108
======== ======== ======== ========
Cost of gas $ 15,969 $ 20,613 $ 95,727 $101,381
======== ======== ======== ========
Total number of customers
(end of period) 418,100 396,900 418,100 396,900
======== ======== ======== ========
Actual degree days 137 38 2,790 2,377
======== ======== ======== ========
20-year average degree days 104 108 2,647 2,671
======== ======== ======== ========
Residential and Commercial
--------------------------
Typically, 75 percent or more of Northwest Natural's
annual operating revenues are derived from gas sales to
weather-sensitive residential and commercial customers.
Accordingly, shifts in temperatures from one period to the next
will affect volumes of gas sold to these customers. Normal
weather conditions are based upon a 20-year average measured by
heating degree days.
Customer growth continues at a rapid rate relative to
others in the industry. The 21,186 customers added since
September 30, 1995 represent a growth rate of 5.3 percent. In
the three years ended December 31, 1995, almost 57,000 customers
were added to the system, representing an average growth rate of
5.1 percent.
Weather conditions were 32 percent cooler than average
for the third quarter of 1996 compared to 65 percent warmer than
average in the third quarter of 1995. Total volumes sold to
residential and commercial customers for the three-month period
ended September 30, 1996 increased 14 percent compared to the
same period in 1995, due to the cooler weather and sales to new
customers. Corresponding revenues increased only 4 percent due
to rate decreases reflecting lower gas costs effective in
December 1995 which averaged 6.7 percent in Oregon and 8.0
percent in Washington.
Year-to-date weather conditions in 1996 were 5 percent
cooler than average and 17 percent cooler than the comparable
1995 period. The 14 percent increase in year-to-date volumes
sold to residential and commercial customers in 1996 compared to
year-to-date volumes in 1995 primarily reflects added sales from
customer growth augmented by cooler weather. Related revenues
increased only 6 percent due to the rate decreases associated
with lower gas costs discussed above.
Unbilled revenues are a recognition of revenues for all
gas consumption by customers through the end of the period,
regardless of the meter reading date, in order to better match
revenues with related purchased gas costs.
Industrial, Transportation and Other
------------------------------------
Total volumes delivered to industrial firm, industrial
interruptible and transportation customers were 3.1 million
therms, or 2 percent, higher in the third quarter of 1996, and
13.1 million therms, or 3 percent, higher for the nine months
ended September 30, 1996, compared to the same periods in 1995.
The combined margin from industrial firm and
interruptible sales and transportation customers increased
8 percent, from $11.6 million in the third quarter of 1995 to
$12.5 million in the third quarter of 1996. For the current
nine-month period, margin from these customers increased 10
percent, from $36.3 million in 1995 to $40.1 million in 1996.
The margin increases were primarily due to more deliveries in the
higher margin-per-therm industrial firm customer category, and to
higher margins per therm in the Company's interruptible incentive
category where rates fluctuate with the price of residual oil.
Other revenues are primarily additions to or
amortizations of regulatory balancing accounts (see Part II,
Item 8., Note 1, "Notes to Consolidated Financial Statements", in
the Company's 1995 Annual Report on Form 10-K). In addition,
during the third quarter of 1996, other revenues included two
non-recurring gains. Northwest Natural recorded a gain
equivalent to 2 cents per share due to an increase, retroactive
to January 1994, in the amount it will be able to recover through
its rates for its costs and lost revenues in connection with an
energy conservation program approved by the Oregon Public Utility
Commission (OPUC). Northwest Natural also recorded a gain
equivalent to 2 cents per share due to a settlement with the OPUC
concerning amounts to be refunded to Oregon customers from
Northwest Natural's prior-year savings in property taxes and
Oregon income taxes (see Part II, Item 7., "Operating Expense -
Taxes Other Than Income" in the Company's 1995 Annual Report on
Form 10-K).
Cost of Gas
-----------
The cost of gas in the third quarter decreased $4.6
million, or 23 percent, from $20.6 million in 1995 to
$16.0 million in 1996, on total gas sales volumes that were
2 percent higher in 1996 than in 1995. The average cost of gas
per therm was 24 percent lower in the third quarter of 1996
compared to the same period during 1995.
Third quarter and year-to-date results reflect a
difference from 1995 in the timing of Northwest Natural's
recognition of expense during the year for demand charges paid to
interstate pipelines. Although Northwest Natural pays the demand
charges in levelized amounts each month, this year it recorded
the demand charges as expense in direct proportion to its
expected firm gas deliveries for each month of a year. The
current year's allocation of demand charges to the third quarter
and the first nine months were lower by amounts equivalent to 8
cents and 2 cents per share, respectively, improving net income
by the same amounts as compared to the third quarter and first
nine months of 1995. The timing differences affect only interim
results and will have no effect on net income for the entire
year.
The year-to-date cost of gas decreased $5.7 million, or
6 percent, from $101.4 million in 1995 to $95.7 million in 1996,
on total gas sales volumes that were 9 percent higher in 1996
than in 1995. The average cost of gas per therm was 13 percent
lower year-to-date in 1996 than during the same period in 1995.
Subsidiary Operations
---------------------
The following table summarizes financial information
for the Company's consolidated wholly-owned subsidiaries:
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ----------------
Consolidated Subsidiaries
(Thousands): 1996 1995 1996 1995
- ------------------------- ---- ---- ---- ----
Net Operating Revenues $2,228 $2,277 $7,053 $5,954
Operating Expenses 2,103 2,237 8,971 7,107
------ ------ ------ ------
Income(Loss) from Operations 125 40 (1,918) (1,153)
Income from Financial
Investments 1,548 3,772 1,220 3,278
Other Income(Expense) and
Interest Charges 121 (706) 3,633 1,670
------ ------ ------ ------
Income Before Income Taxes 1,794 3,106 2,935 3,795
Income Tax Expense 453 1,588 994 1,848
------ ------ ------ ------
Net Income $1,341 $1,518 $1,941 $1,947
====== ====== ====== ======
For the three months ended September 30, 1996 and 1995,
the consolidated subsidiaries contributed 6 cents per share and 7
cents per share, respectively, to net income. Results for the
individual subsidiaries for the third quarter of 1996 were net
income of $1.3 million for Financial Corporation, down from
$2.0 million last year, and net income of $80 thousand for Canor,
up from a loss of $0.3 million last year. Financial
Corporation's lower earnings in the third quarter were due to
weaker operating results from its investments in windpower energy
facilities in California.
Year-to-date for both 1996 and 1995, the consolidated
subsidiaries contributed 9 cents per share to net income. Year-to-date
1996 results for the individual subsidiaries were net
income of $1.3 million for Financial Corporation; a net loss of
$30 thousand for Canor; and net income of $0.7 million for Oregon
Natural. Oregon Natural was merged with and into Northwest
Natural at the end of the second quarter of 1996.
The following discussion summarizes operating expenses,
other income, interest charges - net, and income taxes.
Operating Expenses
------------------
Operations and Maintenance
--------------------------
Operations and maintenance expenses were $2.4 million,
or 4 percent, higher for the nine months ended September 30,
1996, than for the equivalent period in 1995. Northwest
Natural's expenses increased $2.9 million primarily due to work
related to cold weather and flood conditions ($0.6 million);
increased employee bonus accruals ($1.0 million); an accrual for
environmental investigation costs ($0.4 million); and increased
customer service costs related to customer growth ($0.3 million).
Subsidiary expenses decreased $0.5 million primarily due to a
decline in Oregon Natural's production costs.
Taxes Other Than Income Taxes
-----------------------------
Taxes other than income taxes declined $1.6 million, or
9 percent, in the first nine months of 1996, compared to the same
period in 1995, due to a reduction in property tax expense.
Accruals of property tax savings and associated
interest for refund to customers, which had been charged to other
taxes, ceased at the end of the second quarter when a permanent
rate reduction incorporating these savings took effect in Oregon.
This change resulted in a reduction to other taxes of
$1.0 million in the third quarter and for the year-to-date.
Northwest Natural recorded an adjustment in the second
quarter reducing property tax expense by $0.4 million,
representing the current year effect of refunds of property taxes
under the settlement of a property tax appeal in Oregon.
Depreciation, Depletion and Amortization
----------------------------------------
The Company's depreciation, depletion, and amortization
expense increased $2.1 million, or 7 percent, in the first nine
months of 1996 compared to the same period in 1995. This
increase was primarily due to impairment ($1.3 million) and
abandonment ($1.0 million) expenses recorded by Oregon Natural
pursuant to the adoption of SFAS No. 121, and the write-down of
unproven properties, respectively. Northwest Natural's
depreciation expense decreased $0.5 million. Revised
depreciation rates approved by the OPUC and the Washington
Utilities and Transportation Commission (WUTC) in the third
quarter, retroactive to January 1, 1996, reduced depreciation
expense by $1.4 million for the year to date. This reduction in
expense was offset by increased expense from additional utility
plant placed in service.
Other Income
------------
Other income increased $0.2 million, or 3 percent, in
the first nine months of 1996 compared to the same period in
1995. Oregon Natural recognized a $2.9 million gain in the first
quarter of 1996 from the sale of underground gas storage assets
to Northwest Natural. In accordance with SFAS No. 71,
"Accounting for the Effects of Certain Types of Regulation," the
profit from this sale, although intercompany in nature, was not
eliminated during consolidation since the sales price was
approved by the OPUC and the approximate sales price which
resulted in the intercompany gain is expected to be recovered
through rates as an allowable cost. Northwest Natural also
recorded a $0.8 million pre-tax gain in the second quarter of
1996 due to the prior year portion of refunds of property taxes
under the settlement of a property valuation appeal in Oregon.
Allowances for funds used during construction also increased $0.6
million in 1996. Other income also reflects a $2.0 million
reduction in Financial Corporation's investment income for
the nine month period ended September 30, 1996. Energy Systems
recorded a $2.0 million pre-tax gain in 1995 due to a final
distribution under the reorganization plan of its California subsidiary.
Income Taxes
------------
The effective corporate income tax rate for the nine
month periods ended September 30, 1996 and 1995 was 39 percent,
which approximates the Company's statutory tax rates for these
periods.
Financial Condition
- -------------------
Capital Structure
-----------------
Northwest Natural's capital expenditures are required
for utility construction resulting from customer growth and
system improvements. Northwest 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 gas usage
by Northwest Natural's residential and commercial customers
influences the Company's financial condition, including its
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 Company's 1995 Annual Report on 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 Company's 1995 Annual Report on Form 10-K).
Cash Flows
----------
Operating Activities
--------------------
Cash provided from operating activities was $11.5
million, or 18 percent, higher in the first nine months of 1996
compared to the same period in 1995. The increase was primarily
due to cooler weather during the first nine months of 1996 and
the resulting increases in gas deliveries and related margins
from weather-sensitive customers.
The Company has lease and purchase commitments related
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 Company's 1995 Annual
Report on Form 10-K).
Investing Activities
--------------------
Cash requirements in the first nine months of 1996,
primarily related to system improvements and customer growth,
totaled $54.7 million, up $7.2 million, or 15 percent, from the
first nine months of 1995. The increase included higher amounts
for gas distribution system investments in areas experiencing
significant growth ($3.8 million); development of a new customer
information system ($1.2 million); and remote data terminals
($1.4 million).
Northwest Natural's construction expenditures are
estimated at $92 million for 1996. Over the five-year period
1996 through 2000, these expenditures are estimated at between
$500 and $550 million. The increased level of capital
expenditures during the next five years reflects projected
customer growth plus the development of additional underground
storage facilities with related distribution system improvements.
It is anticipated that approximately 50 percent of the funds
required for these expenditures will be internally generated, and
that the remainder will be funded through short-term borrowings
which will be refinanced periodically through the sale of long-term
debt and equity securities.
During the first nine months of 1996 and 1995, non-utility
capital expenditures were primarily for exploration and
development by Canor of gas and oil properties in western Canada.
(See Part II, Item 7. Financial Condition, "Investing
Activities", in the Company's 1995 Annual Report on Form 10-K.)
Financing Activities
--------------------
Cash used for financing activities in the first nine
months of 1996 totaled $22.3 million, up $6.2 million, or 38
percent, from the first nine months of 1995. This increase was
due primarily to the retirement of $26.0 million of long-term
debt and an increase of $23.0 million in short-term debt during
the first nine months of 1996, compared to the repayment of
$30.0 million of short-term debt and the sale of $33.0 million of
Common Stock in 1995. Dividends paid on Common Stock increased
$1.2 million or 7 percent from the same period in 1995.
Lines of Credit
---------------
Northwest Natural has available through September 30,
1997, committed lines of credit with five commercial banks
totaling $100 million, consisting of a primary fixed amount of
$50 million plus an excess amount of up to $50 million, available
as needed, at Northwest Natural's option, on a monthly basis.
Financial Corporation has available through September 30, 1997,
committed lines of credit totaling $20 million, consisting of a
primary fixed amount of $15 million plus an excess amount of up
to $5 million, available as needed, at Financial Corporation's
option, on a monthly basis. Financial Corporation's lines are
supported by the guaranty of Northwest Natural.
Under the terms of these lines of credit, which are
used as backup lines for commercial paper programs, Northwest
Natural and Financial Corporation pay commitment fees but are not
required to maintain compensating bank balances. The interest
rates on borrowings under these lines of credit are based on
current market rates as negotiated. There were no outstanding
balances under either the Northwest Natural or the Financial
Corporation line of credit as of September 30, 1996 or
September 30, 1995.
Commercial Paper
----------------
The Company's primary source of short-term funds is
commercial paper. Both Northwest Natural and Financial
Corporation issue commercial paper, which is supported by the
bank lines discussed above, under agency agreements with a
commercial bank. Financial Corporation's commercial paper is
supported by the guaranty of Northwest Natural (see Part II,
Item 8., Note 6, "Notes to Consolidated Financial Statements", in
the Company's 1995 Annual Report on Form 10-K).
Ratio of Earnings to Fixed Charges
----------------------------------
For the 12 months ended September 30, 1996 and
December 31, 1995, the Company's ratio of earnings to fixed
charges, computed by the Securities and Exchange Commission
method, were 3.75 and 3.15, respectively. Earnings consist of
net income to which has been added taxes on income and fixed
charges. Fixed charges consist of interest on all indebtedness,
amortization of debt expense and discount or premium, and the
estimated interest portion of rentals charged to income.
Environmental Matters
---------------------
The Company previously reported that the City of Salem
had requested Northwest Natural's participation in its review of
an environmental assessment of riverfront property in Salem to be
developed as a park, including a block previously owned by
Northwest Natural which was the site of a former manufactured gas
plant. The City had determined that there is environmental
contamination on the site, and that a remediation process
involving Northwest Natural and other prior owners of the block
would be required.
In the second quarter of 1996, Northwest Natural agreed
to a settlement of the City's claim under which Northwest Natural
paid $170,000 to the City as a contribution toward development of
the park, in return for a release from any further liability for
costs incurred by the City for remediation of the site.
The Company also has reported that Northwest Natural
may be required to participate in environmental remediation
processes for another, currently-owned site in Linnton, Oregon,
and that in 1993, the Company recorded an expense of $0.5 million
for the estimated costs of consultants' fees in connection with
the voluntary investigation at that site. In the second quarter
of 1996, the Company recorded an additional $0.4 million of
expense for the estimated costs of the continuing investigation.
For further information concerning these and other
matters with respect to which there have been no material
developments during the first nine months of 1996, see Part II,
Item 7., "Environmental Matters," in the Company's 1995 Annual
Report on Form 10-K.
PART II. OTHER INFORMATION
Item 3. Changes in Securities
----------------------
Pursuant to the Rights Agreement, dated as of
February 27, 1996, between Northwest Natural and Boatmen's Trust
Company, the price of shares of the Common Stock purchased
pursuant to the exercise of a Right has been reduced by one-third,
from $10.00 to $6.67, to reflect a three-for-two split of
the Common Stock. The purchase price for each one-tenth of a
share of Common Stock shall be $6.67, subject to further
adjustment from time to time.
Pursuant to the Indenture, dated as of January 15,
1987, between Northwest Natural and Boatmen's Trust Company
(formerly Centerre Trust Company of St. Louis) with respect to
the Company's 7-1/4% Convertible Debentures Due 2012
(Debentures), effective August 23, 1996 the conversion price of
the Debentures was reduced by one-third, from $29.85 to $19.90,
to reflect a three-for-two split of the Common Stock. Holders of
Debentures who convert their Debentures after August 23, 1996
will receive 50-1/4 shares of Common Stock per $1,000 face amount
of Debentures converted, subject to further adjustment from time
to time. Northwest Natural will pay cash in lieu of any
fractional shares which result from any conversion.
Item 5. Other Information
-----------------
During the third quarter, the Company's Common Stock
was split three-for-two. One additional share of the Common
Stock was issued for every two shares outstanding effective
September 6, 1996, for shareholders of record on August 23, 1996.
All share and per share data for prior periods have been restated
to reflect this split.
Pursuant to its Medium-Term Note Program, in October
1996, Northwest Natural issued and sold $20 million of its
Secured Medium-Term Notes, Series B, with a coupon rate of 7.05
percent, to repay short-term debt incurred to finance 1996
utility construction activities. The notes are due in 2026 and
have a one-time put option in 2008 at a price of 96 percent of
par.
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 15 - Letter re: unaudited interim financial
information.
Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K
No Current Reports on Form 8-K were filed during the
quarter ended September 30, 1996.
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)
/s/ D. James Wilson
Dated: November 12, 1996 ---------------------------------
D. James Wilson
Principal Accounting Officer,
Corporate Controller and Treasurer
NORTHWEST NATURAL GAS COMPANY
EXHIBIT INDEX
to
Quarterly Report on Form 10-Q
For Quarter Ended
September 30, 1996
Exhibit
Document Number
- -------- -------
Statement Re: Computation of Per Share Earnings 11
Computation of Ratio of Earnings to Fixed Charges 12
Letter Re: Unaudited Interim Financial Information 15
Financial Data Schedule 27
</TABLE>
EXHIBIT 11
NORTHWEST NATURAL GAS COMPANY
Statement Re: Computation of Per Share Earnings
(Thousands, except per share amounts)
(Unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
------------------ ----------------
1996 1995 1996 1995
------- ------- ------- -------
Earnings (Loss) Applicable to
Common Stock $ (418) $(5,038) $27,070 $16,097
Debenture Interest Less Taxes 124 133 371 400
------- ------- ------- -------
Net Income (Loss) Available for
Fully-Diluted Common Stock $ (294) $(4,905) $27,441 $16,497
======= ======= ======= =======
Average Common Shares Outstanding 22,435 22,141 22,351 21,688
Stock Options 31 13 27 11
Convertible Debentures 562 605 562 605
------- ------- ------- -------
Fully-Diluted Common Shares 23,028 22,759 22,940 22,304
======= ======= ======= =======
Fully-Diluted Earnings (Loss)Per
Share of Common Stock $ (0.01)* $(0.22)* $ 1.20 $ 0.74
======= ======= ======= =======
*Anti-dilutive
Note: Primary earnings per share are computed on the weighted daily
average number of common shares outstanding each period. Outstanding
stock options are common stock equivalents but are excluded from
primary earnings per share computations due to immateriality.
EXHIBIT 12
NORTHWEST NATURAL GAS COMPANY
Computation of Ratio of Earnings to Fixed Charges
January 1, 1991 - September 30, 1996
($000)
Twelve
Months
Year Ended December 31 Ended
------------------------------------------ Sept.30,
1991 1992 1993 1994 1995 1996
------- ------- ------- ------- ------- --------
Fixed Charges, as
defined:
Interest on Long-
Term Debt $21,977 $23,001 $22,578 $21,921 $23,141 $ 23,136
Other Interest 4,266 3,223 1,906 2,473 2,252 2,528
Amortization of Debt
Discount and Expense 348 511 775 850 882 885
Interest Portion of
Rentals 1,485 1,439 1,701 1,697 1,764 1,764
------- ------- ------- ------- ------- -------
Total Fixed
Charges, as
defined $28,076 $28,174 $26,960 $26,941 $28,039 $28,313
======= ======= ======= ======= ======= =======
Earnings, as defined:
Net Income $14,377 $15,775 $37,647 $35,461 $38,065 $ 48,972
Taxes on Income 2,321 6,951 22,096 20,473 22,120 29,008
Fixed Charges,
as above 28,076 28,174 26,960 26,941 28,039 28,313
------- ------- ------- ------- ------- -------
Total Earnings,
as defined $44,774 $50,900 $86,703 $82,875 $88,224 $106,293
======= ======= ======= ======= ======= =======
Ratio of Earnings to
Fixed Charges 1.59 1.81 3.22 3.08 3.15 3.75
==== ==== ==== ==== ==== ====
EXHIBIT 15
DELOITTE & TOUCHE LLP
----------------------------------------------------
Suite 3900 Telephone: (503) 222-1341
111 SW Fifth Avenue Facsimile: (503) 224-2172
Portland, OR 97204-3698
November 12, 1996
Northwest Natural Gas Company
220 N.W. Second Avenue
Portland, Oregon 97209
We have made a review, in accordance with standards established
by the American Institute of Certified Public Accountants, of
the unaudited interim financial information of Northwest
Natural Gas Company and subsidiaries for the periods ended
September 30, 1996 and 1995, as indicated in our report dated
November 12, 1996; because we did not perform an audit, we
expressed no opinion on that information.
We are aware that our report referred to above, which is
included in your quarterly report on Form 10-Q for the quarter
ended September 30, 1996, is incorporated by reference in
Registration Statement Nos. 33-63017 and 33-63585, Post-
Effective Amendment No. 1 to Registration Statement No. 2-76276,
and Post-Effective Amendment No. 2 to Registration
Statement No. 2-77195 on Form S-8, and in Registration
Statement Nos. 33-64014, 33-51271, and 33-53795, and Post
Effective Amendments No. 1 to Registration Statement Nos. 33-1304
and 33-20384 on Form S-3.
We also are aware that the aforementioned report, pursuant to
Rule 436(c) under the Securities Act of 1933, is not considered
a part of the Registration Statement prepared or certified by
an accountant or a report prepared or certified by an
accountant within the meaning of Sections 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This section of the schedule contains summary financial information extracted
from the consolidated financial statements and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 698,944
<OTHER-PROPERTY-AND-INVEST> 63,214
<TOTAL-CURRENT-ASSETS> 55,996
<TOTAL-DEFERRED-CHARGES> 50,216
<OTHER-ASSETS> 60,430
<TOTAL-ASSETS> 928,800
<COMMON> 71,170
<CAPITAL-SURPLUS-PAID-IN> 175,400
<RETAINED-EARNINGS> 88,300
<TOTAL-COMMON-STOCKHOLDERS-EQ> 334,870
37,668
0
<LONG-TERM-DEBT-NET> 253,189
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 48,170
<LONG-TERM-DEBT-CURRENT-PORT> 25,000
1,081
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 228,822
<TOT-CAPITALIZATION-AND-LIAB> 928,800
<GROSS-OPERATING-REVENUE> 260,030
<INCOME-TAX-EXPENSE> 18,405
<OTHER-OPERATING-EXPENSES> 200,072
<TOTAL-OPERATING-EXPENSES> 218,477
<OPERATING-INCOME-LOSS> 41,553
<OTHER-INCOME-NET> 6,955
<INCOME-BEFORE-INTEREST-EXPEN> 48,508
<TOTAL-INTEREST-EXPENSE> 19,389
<NET-INCOME> 29,119
2,049
<EARNINGS-AVAILABLE-FOR-COMM> 27,070
<COMMON-STOCK-DIVIDENDS> 20,091
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 74,283
<EPS-PRIMARY> $1.21
<EPS-DILUTED> $1.20
</TABLE>
