SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 11-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition period from __________ to __________
Commission file number 0-994
NORTHWEST NATURAL GAS COMPANY
RETIREMENT K SAVINGS PLAN
------------------------------
(Full Title of Plan)
NORTHWEST NATURAL GAS COMPANY
220 N. W. Second Avenue
Portland, Oregon 97209
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(Name of issuer of the securities held pursuant to the
plan and the address of its principal executive office)
ITEM 4. FINANCIAL STATEMENTS
Page
----
Financial Statements
Report of Independent Accountants 1
Statement of Net Assets Available for Benefits,
December 31, 1997 and 1996 2
Statement of Changes in Net Assets Available for
Benefits, Years Ended December 31, 1997 and 1996 3
Notes to Financial Statements, Years Ended
December 31, 1997 and 1996 4
Supplemental Information Required by ERISA,
Year Ended December 31, 1997
Schedule 1 - Schedule of Assets Held
for Investment Purposes 9
Schedule 2 - Schedule of Reportable Transactions 10
All other schedules have been omitted because the information
required is included in the financial statements or the notes thereto or the
requirements for submission of the schedules are not present.
SIGNATURE 11
EXHIBIT
23 Consent of Independent Accountants
NORTHWEST NATURAL GAS
COMPANY RETIREMENT K
SAVINGS PLAN
FINANCIAL STATEMENTS AND
SUPPLEMENTAL SCHEDULES
DECEMBER 31, 1997 AND 1996
Price Waterhouse LLP 121 S.W. Morrison Street Telephone 503 224 9040
Suite 1800 Facsimile 503 223 9081
Portland, Oregon 97204
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Price Waterhouse
REPORT OF INDEPENDENT ACCOUNTANTS
May 1, 1998
To the Participants and Administrator of the
Northwest Natural Gas Company
Retirement K Savings Plan
In our opinion, the accompanying statement of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Northwest Natural Gas Company Retirement K Savings Plan at December 31,
1997 and 1996, and the changes in net assets available for benefits for the
years then ended, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the plan's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information included in
schedules 1 and 2 is presented for purposes of additional analysis and is not a
required part of the basic financial statements but is additional information
required by ERISA. The Fund Information in the statement of net assets available
for benefits and in Note 8 is presented for purposes of additional analysis
rather than to present the net assets available for plan benefits and changes in
net assets available for benefits of each fund. Schedules 1 and 2 and the Fund
Information have been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
PRICE WATERHOUSE LLP
NORTHWEST NATURAL GAS COMPANY
RETIREMENT K SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
FOR DECEMBER 31, 1997 AND 1996
================================================================================
1997 1996
Investments - at fair value: ---- ----
Columbia Trust Company Collective Investment
Plan and Trust:
Cash Investment Fund $ 40,068 $ 10,934
Fixed Income Investment Fund 629,066 445,822
Balanced Investment Fund 14,638,317 11,701,970
Bank and Government Investment Fund 3,509,759 2,926,042
Common Stock Investment Fund 21,842,937 16,313,347
Columbia Special Fund 7,114,101 5,911,756
Northwest Natural Gas Company Common Stock 13,878,400 9,172,895
Participant loans 452,510 343,679
----------- -----------
Net assets available for benefits $62,105,158 $46,826,445
=========== ===========
The accompanying notes are an integral part of this statement.
NORTHWEST NATURAL GAS COMPANY
RETIREMENT K SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR YEAR ENDED DECEMBER 31, 1997 AND 1996
================================================================================
1997 1996
---- ----
Additions:
Investment income $ 1,196,798 $ 1,505,686
Net appreciation (depreciation) in fair value
of investments (Note 7) 10,022,985 4,435,568
------------ -----------
Net investment income (Note 8) 11,219,783 5,941,254
------------ -----------
Contributions:
Elective and rollovers (Note 8) 4,958,649 4,713,368
Employer (Note 8) 1,034,538 920,583
----------- ------------
Total contributions 5,993,187 5,633,951
----------- ------------
Total additions 17,212,970 11,575,205
----------- ------------
Deductions:
Withdrawals (Note 8) (1,642,952) (2,089,243)
Trustee fees and expenses (291,305) (246,076)
----------- -----------
Total deductions (1,934,257) (2,335,319)
----------- -----------
Net increase in net assets available for benefits 15,278,713 9,239,886
Net assets available for benefits, beginning of year 46,826,445 37,586,559
----------- -----------
Net assets available for benefits, end of year $62,105,158 $46,826,445
=========== ===========
The accompanying notes are an integral part of this statement.
NORTHWEST NATURAL GAS COMPANY
RETIREMENT K SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
================================================================================
1. DESCRIPTION OF PLAN
The following description of the Northwest Natural Gas Company Retirement K
Savings Plan (the "Plan") provides only general information. Participants
should refer to the Plan document for a more comprehensive description of
the Plan's provisions.
GENERAL
The Plan is a defined contribution plan covering substantially all
employees who have completed 90 days of service with at least 250 hours
credited or have 1,000 hours of service credited in their initial
employment year or any plan year of service. At December 31, 1997, the Plan
had 1,269 participants of which 1,155 were active.
CONTRIBUTIONS AND WITHDRAWALS
Under the Plan, participants may elect to contribute, subject to Internal
Revenue Code limitations, up to 15% of gross pay to the Plan through salary
deferral. The Company contributes 50% of the first 4% contributed by each
employee. The maximum match is 2% of gross pay. Under the hardship
withdrawal provisions of the Plan, participants may withdraw salary
deferral amounts while still employed by the Company.
INVESTMENT OPTIONS
Participants may direct contributions in any of six investment options
(four options represent collective investment funds managed by Columbia
Trust Company).
FIXED INCOME INVESTMENT FUND - a pooled investment fund which invests
in a diversified portfolio of investment-grade fixed income securities.
BALANCED INVESTMENT FUND - invests in the Fixed Income Investment Fund,
the Common Stock Investment Fund, and the Cash Investment Fund (a
pooled investment fund of money market instruments and/or money market
funds with maturities of less than one year).
BANK AND GOVERNMENT INVESTMENT FUND - a pooled investment fund which
invests in bank investment contracts that are insured by the Federal
Deposit Insurance Corporation, government money market funds and
short-term direct obligations of the U.S. Government.
COMMON STOCK INVESTMENT FUND - a pooled investment fund which invests
principally in equities and equity equivalents (convertible preferred
stock, convertible bonds, etc.).
COLUMBIA SPECIAL FUND - a publicly-traded mutual fund which invests in
securities considered more aggressive than the market as a whole.
NORTHWEST NATURAL GAS COMPANY STOCK - Funds are invested in common
stock of Northwest Natural Gas Company.
VESTING
All contributions to participant accounts are fully vested and
nonforfeitable at all times.
PARTICIPANT LOANS
The Plan provides for participant loans under certain guidelines.
Participant loans are repaid through payroll deductions and participants'
remaining account balances are used as collateral for the loan. Interest
charged on the loans will equal the current U.S. National Bank of Oregon
prime rate plus 1%.
PAYMENT OF BENEFITS
On termination of service due to death, disability or retirement, a
participant may receive the value of his or her account as a lump-sum
distribution.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed in
preparation of the Plan's financial statements.
BASIS OF ACCOUNTING
The financial statements are prepared using the accrual basis of
accounting.
VALUATION OF INVESTMENTS
Net asset values of the Columbia Trust Company collective investment funds
and the Columbia Special Fund are determined by the trustee on a daily
basis. Investments in the Company's common stock are valued at the closing
price on the last day of the year as quoted on the Nasdaq National Market
tier of the Nasdaq Stock Market.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are recorded on the date the securities are
purchased or sold. Interest income is recorded as earned. The cost of
securities sold is determined by the average cost method.
PAYMENT OF BENEFITS
Benefits are recorded when paid.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
3. TERMINATION PROVISIONS
In the event of any total or partial termination or discontinuance of the
Plan, the accounts of all participants shall remain fully vested and
nonforfeitable. The Company may continue the trust to pay benefits as they
mature, or liquidate and distribute the net assets of the trust among
participants and beneficiaries in proportion to their interests.
4. TRUSTEE FEES AND OTHER EXPENSES
Certain expenses of administration and servicing of the Plan, including
equipment, supplies and payroll expenses of administrative and clerical
personnel, are provided by the Company without charge to the Plan.
Trustee expenses and investment manager fees are paid by the Plan.
5. RELATED-PARTY TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by Columbia
Trust Company which is the trustee as defined by the Plan. There were
purchases of Northwest Natural Gas Company stock during the years ended
December 31, 1997 and 1996 of 77,421 shares for $1,929,143 and 56,244
shares for $1,608,418, respectively.
6. FEDERAL INCOME TAX STATUS
The Plan obtained its latest determination letter dated June 1, 1995, in
which the Internal Revenue Service stated that the Plan, as then designed,
was in compliance with the applicable requirements of the Internal Revenue
Code. Therefore, no provision for income taxes has been included in the
Plan's financial statements.
7. NET APPRECIATION (DEPRECIATION) IN FAIR VALUE OF INVESTMENTS
During 1997 and 1996, the Plan's investments (including investments bought
or sold, as well as held during the period) appreciated (depreciated) in
value as follows:
1997 1996
---- ----
Columbia Trust Company Collective
Investment Plan and Trust:
Fixed Income Investment Fund $ 57,093 $ 19,199
Balanced Investment Fund 2,133,390 1,260,173
Bank and Government Investment Fund 190,473 169,806
Common Stock Investment Fund 4,460,162 2,774,640
Columbia Special Fund 129,126 (473,904)
Northwest Natural Gas Company Common Stock 3,052,741 685,654
----------- ----------
Total $10,022,985 $4,435,568
=========== ==========
8. FUND INFORMATION
Net investment income, elective and rollover contributions, employer
contributions, and withdrawals are as follows for the years ended
December 31, 1997 and 1996:
1997 1996
---- ----
Net Investment Income:
Cash Investment Fund $ 1,585 $ 1,381
Fixed Income Investment Fund 57,093 19,199
Balanced Investment Fund 2,133,390 1,260,173
Bank and Government Investment Fund 190,473 169,806
Common Stock Investment Fund 4,460,162 2,774,640
Columbia Special Fund 795,003 590,444
Northwest Natural Gas Common Stock 3,548,084 1,096,511
Participant loans 33,993 29,100
----------- ----------
Total $11,219,783 $5,941,254
=========== ==========
Elective and Rollover Contributions:
Fixed Income Investment Fund $ 78,584 $ 74,777
Balanced Investment Fund 1,110,725 1,192,003
Bank and Government Investment Fund 210,419 205,812
Common Stock Investment Fund 1,700,759 1,375,873
Columbia Special Fund 1,019,345 897,113
Northwest Natural Gas Common Stock 838,817 967,790
----------- ----------
Total $ 4,958,649 $4,713,368
=========== ==========
Employer Contributions:
Fixed Income Investment Fund $ 19,601 $ 17,952
Balanced Investment Fund 224,753 209,340
Bank and Government Investment Fund 51,162 49,219
Common Stock Investment Fund 335,621 282,800
Columbia Special Fund 213,543 188,320
Northwest Natural Gas Company
Common Stock 189,858 172,952
----------- ----------
Total $ 1,034,538 $ 920,583
=========== ==========
Withdrawals:
Fixed Income Investment Fund $ 5,264 $ 49,322
Balanced Investment Fund 573,504 435,683
Bank and Government Investment Fund 79,891 356,271
Common Stock Investment Fund 452,482 679,242
Columbia Special Fund 211,624 138,275
Northwest Natural Gas Common Stock 314,274 425,593
Participant loans 5,913 4,857
----------- ----------
Total $ 1,642,952 $2,089,243
=========== ==========
9. CONCENTRATION OF RISK
The Plan's assets consist primarily of financial instruments including
cash, the Company's common stock, mutual and collective funds, and
participant loans. The financial instruments may subject the Plan to
concentrations of risk, as the market value of securities is dependent on
the ability of the issuer to honor its contractual commitments, and
investments in common stock are subject to changes in market values of the
stock.
NORTHWEST NATURAL GAS COMPANY
RETIREMENT K SAVINGS PLAN
SCHEDULE 1
LINE 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
================================================================================
Identity of issue, borrower, Number Market
lessor or similar party of shares Cost value
- ------------------------------------------ --------- ----------- -----------
* Columbia Trust Company Collective
Investment Plan and Trust:
Cash Investment Fund 28,491 $ 40,068 $ 40,068
Fixed Income Investment Fund 97,808 526,774 629,066
Balanced Investment Fund 1,367,339 8,684,052 14,638,317
Bank and Government Investment Fund 2,286,533 2,853,113 3,509,759
Common Stock Investment Fund 1,260,359 10,521,943 21,842,937
Columbia Special Fund 351,140 7,309,903 7,114,101
* Northwest Natural Gas Company Common
Stock 447,690 8,742,114 13,878,400
----------- ----------
38,677,967 61,652,648
Participant loans (interest rates
from 7% - 10%, maturities from
1/98 - 8/02) 452,510 452,510
----------- ----------
Total investments $39,130,477 62,105,158
=========== ==========
* Represents identification of known party in interest of the Plan.
NORTHWEST NATURAL GAS COMPANY
RETIREMENT K SAVINGS PLAN
SCHEDULE 2
LINE 27d - SCHEDULE OF REPORTABLE TRANSACTIONS - SERIES
FOR THE YEAR ENDED DECEMBER 31, 1997
================================================================================
<TABLE>
<CAPTION>
Current
Expenses value of
incurred asset on
with transaction
Purchase Selling Lease trans- Cost date
Identity of party involved price price rental action of asset involved Net gain
- ---------------------------------------- --------- --------- ------- ------- --------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Columbia Trust Company Collective
Investment Plan and Trust
Cash Investment Fund $1,738,527 $1,710,978 $ - $ - $1,709,393 $1,710,978 $ 1,585
Fixed Income Investment Fund 165,422 39,272 - - 33,686 39,272 5,586
Balanced Investment Fund 1,735,934 902,977 - - 554,685 902,977 348,292
Bank and Government Investment Fund 702,686 309,444 - - 254,872 309,444 54,572
Common Stock Investment Fund 2,297,827 1,227,395 - - 600,308 1,227,395 627,087
Columbia Special Fund 1,938,123 864,904 - - 829,031 864,904 35,873
Northwest Natural Gas Company
Common Stock 1,929,143 280,306 - - 227,816 280,306 52,490
</TABLE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Northwest Natural Gas Company Retirement K Savings Plan Administrative Committee
has duly caused this annual report to be signed on its behalf by the undersigned
thereunto duly authorized.
NORTHWEST NATURAL GAS COMPANY
RETIREMENT K SAVINGS PLAN
By /s/ C. J. Rue
------------------------------
C. J. Rue, Chairman,
Retirement K Savings Plan
Administrative Committee
Date: June 5, 1998
NORTHWEST NATURAL GAS COMPANY
EXHIBIT INDEX
to
Annual Report on Form 11-K
For Year Ended
December 31, 1997
Exhibit
Document Number
- --------- -------
Consent of Independent Accountants 23
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 of Northwest Natural Gas Company (Nos. 33-63017 and
333-48919, Post-Effective Amendment No. 1 to Registration Statement No. 2-76276,
and Post-Effective Amendment No. 2 to Registration Statement No. 2-77195) and in
the Registration Statements on Form S-3 of Northwest Natural Gas Company (Nos.
33-53795 and 333-32989, Amendment No. 1 to Registration Statement No. 333-15323,
and Post-Effective Amendment No. 1 to Registration Statement Nos. 33-1304 and
33-20384) of our report dated May 1, 1998 relating to the financial statements
of the Northwest Natural Gas Company Retirement K Savings Plan which appear as
an attachment to this Form 11-K.
PRICE WATERHOUSE LLP
Portland, Oregon
June 5, 1998
