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NW Natural Reports Results For The Quarter & Nine Months Ended September 30, 2011

All forward-looking statements made in this report and all subsequent forward-looking statements, whether written or oral and whether made by or on behalf of the company, are expressly qualified by these cautionary statements. Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. 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 statements.

About NW Natural

NW Natural (NYSE:NWN) is headquartered in Portland, Ore., and provides safe, reliable, cost-effective natural gas service to about 672,000 residential, commercial, and industrial customers through 14,000 miles of mains and service lines in western Oregon and southwestern Washington. It is the largest independent natural gas utility in the Pacific Northwest. The company has approximately $2.6 billion in total assets. The company operates and owns 16 Bcf of underground storage capacity in Mist, Ore., and also operates the designed 20 Bcf Gill Ranch underground storage facility in California, in which it owns a 75 percent undivided interest. Together, NW Natural and its subsidiaries currently own and operate underground gas storage facilities with designed storage capacity of approximately 31 Bcf in Oregon and California. Additional information is available at www.nwnatural.com.

 
NORTHWEST NATURAL GAS COMPANY
Comparative Income Statement
(Consolidated - Unaudited)
                           
 
Three Months Ended

(Thousands, except per share amounts)

09/30/11 09/30/10 Change % Change
Gross Operating Revenues $ 93,313 $ 95,067 $ (1,754 ) (2 %)
Net Income $ (8,312 ) $ (7,420 ) $ (892 ) (12 %)
 
Diluted Average Shares of Common Stock Outstanding 26,686 26,606 80 -
Basic Earnings Per Share of Common Stock $ (0.31 ) $ (0.28 ) $ (0.03 ) (11 %)
Diluted Earnings Per Share of Common Stock $ (0.31 ) $ (0.28 ) $ (0.03 ) (11 %)
 
Nine Months Ended

(Thousands, except per share amounts)

09/30/11 09/30/10 Change % Change
Gross Operating Revenues $ 577,598 $ 543,961 $ 33,637 6 %
Net Income $ 34,654 $ 43,076 $ (8,422 ) (20 %)
 
Diluted Average Shares of Common Stock Outstanding 26,730 26,641 89 -
Basic Earnings Per Share of Common Stock $ 1.30 $ 1.62 $ (0.32 ) (20 %)
Diluted Earnings Per Share of Common Stock $ 1.30 $ 1.62 $ (0.32 ) (20 %)
 
Twelve Months Ended

(Thousands, except per share amounts)

09/30/11 09/30/10 Change % Change
Gross Operating Revenues $ 845,743 $ 853,403 $ (7,660 ) (1 %)
Net Income $ 64,245 $ 74,482 $ (10,237 ) (14 %)
 
Diluted Average Shares of Common Stock Outstanding 26,723 26,624 99 -
Basic Earnings Per Share of Common Stock $ 2.41 $ 2.80 $ (0.39 ) (14 %)
Diluted Earnings Per Share of Common Stock $ 2.40 $ 2.80 $ (0.39 ) (14 %)
 
           
NORTHWEST NATURAL GAS COMPANY                    
Consolidated Balance Sheets (unaudited) September 30, September 30,
Thousands       2011           2010
Assets:
Current assets:
  Cash and cash equivalents $ 25,862 $ 2,501
Restricted cash - 924
Accounts receivable 25,628 28,503
Accrued unbilled revenue 14,287 15,399
Allowance for uncollectible accounts (1,733 ) (1,736 )
Regulatory assets 76,734 83,545
Derivative instruments 3,932 1,864
Inventories:
  Gas 73,572 80,955
Materials and supplies 10,009 8,668
Gas reserves 2,366 -
Income taxes receivable 5,019 6,762
Other current assets   14,871     11,282  
Total current assets   250,547     238,667  
Non-current assets:
Property, plant and equipment 2,632,498 2,528,703
Less: Accumulated depreciation 756,592   711,046  
Total property, plant and equipment - net 1,875,906 1,817,657
Gas reserves 28,125 -
Regulatory assets 328,757 339,786
Derivative instruments 227 518
Other investments 69,022 68,851
Other non-current assets   15,256     15,898  
Total non-current assets   2,317,293     2,242,710  
Total assets $ 2,567,840   $ 2,481,377  
Capitalization and liabilities:
Capitalization:
Common stock $ 346,197 $ 342,271
Retained earnings 356,574 338,725
Accumulated other comprehensive income (loss)   (6,166 )   (5,675 )
Total common stock equity 696,605 675,321
Long-term debt   601,700     591,700  
Total capitalization   1,298,305     1,267,021  
Current liabilities:
Short-term debt 181,200 159,875
Current maturities of long-term debt 40,000 45,000
Accounts payable 50,117 79,629
Taxes accrued 11,117 10,601
Interest accrued 11,321 12,220
Regulatory liabilities 28,593 31,502
Derivative instruments 46,651 59,898
Other current liabilities   33,609     28,074  
Total current liabilities   402,608     426,799  
Deferred credits and other non-current liabilities:
Deferred tax liabilities 394,217 324,166
Regulatory liabilities 266,907 252,425
Pension and other postretirement benefit liabilities 129,669 121,686
Derivative instruments 7,429 27,211
Other non-current liabilities   68,705     62,069  
Total deferred credits and other non-current liabilities   866,927     787,557  
Total capitalization and liabilities $ 2,567,840   $ 2,481,377  
 
           
NORTHWEST NATURAL GAS COMPANY                    
Consolidated Statements of Cash Flows (unaudited)
Thousands (nine months ended September 30)       2011           2010
Operating activities:
Net income $ 34,654 $ 43,076
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization 52,304 47,930
Undistributed (earnings) losses from equity investments 354 (576 )
Non-cash expenses related to qualified defined benefit pension plans 5,491 5,758
Contributions to qualified defined benefit pension plans (19,245 ) (10,000 )
Deferred environmental costs (7,018 ) (5,153 )
Other (969 ) (1,863 )
Changes in assets and liabilities:
Receivables 92,840 103,377
Inventories (3,196 ) (8,666 )
Taxes accrued 36,585 (17,198 )
Accounts payable (33,369 ) (39,985 )
Interest accrued 6,139 6,785
Deferred gas costs 370 (22,582 )
Deferred tax liabilities 22,908 23,993
Other - net   3,440     (10,372 )
Cash provided by operating activities   191,288     114,524  
Investing activities:
Capital expenditures (70,036 ) (185,651 )
Utility gas reserves (30,917 ) -
Restricted cash 924 34,619
Other   (192 )   953  
Cash used in investing activities   (100,221 )   (150,079 )
Financing activities:
Common stock issued (purchased) - net, including common stock expense 1,320 4,129
Long-term debt issued 50,000 -
Long-term debt retired (10,000 ) -
Change in short-term debt (76,235 ) 57,875
Cash dividend payments on common stock (34,807 ) (33,063 )
Other   1,060     683  
Cash provided by (used in) financing activities   (68,662 )   29,624  
Increase (decrease) in cash and cash equivalents 22,405 (5,931 )
Cash and cash equivalents - beginning of period   3,457     8,432  
Cash and cash equivalents - end of period $ 25,862   $ 2,501  
                     
Supplemental disclosure of cash flow information:
Interest paid $ 24,817 $ 23,796
Income taxes paid     $ 1,522           $ 21,100  
 
 
NORTHWEST NATURAL GAS COMPANY
Financial Highlights
(Unaudited)
Third Quarter - 2011
                   
 
3 Months Ended 9 Months Ended 12 Months Ended
September 30, September 30, September 30,

(Thousands, except per share amounts)

2011 2010 Change 2011 2010 Change 2011 2010 Change
Gross Operating Revenues $ 93,313 $ 95,067 (2 %) $ 577,598 $ 543,961 6 % $ 845,743 $ 853,403 (1 %)
Cost of Sales 43,133 46,359 (7 %) 313,880 281,221 12 % 457,193 463,525 (1 %)
Revenue Taxes   2,397     2,497   (4 %)   14,195     13,410   6 %   20,776     20,845   -
Net Operating Revenues   47,783     46,211   3 %   249,523     249,330   -   367,774     369,033   -
Operating Expenses:
O&M 28,372 26,913 5 % 89,918 85,985 5 % 124,913 121,841 3 %
General Taxes 7,514 6,659 13 % 22,338 17,451 28 % 28,759 24,224 19 %
D&A   17,449     16,003   9 %   52,304     47,930   9 %   69,498     64,040   9 %
Total Operating Expenses   53,335     49,575   8 %   164,560     151,366   9 %   223,170     210,105   6 %
Income (Loss) from Operations (5,552 ) (3,364 ) (65 %) 84,963 97,964 (13 %) 144,604 158,928 (9 %)
Other Income and Expense - net 1,781 1,333 34 % 4,117 5,969 (31 %) 5,250 6,823 (23 %)
Interest Expense - net 10,241 10,632 (4 %) 30,956 31,738 (2 %) 41,796 42,327 (1 %)
Income Tax Expense   (5,700 )   (5,243 ) (9 %)   23,470     29,119   (19 %)   43,813     48,942   (10 %)
Net Income $ (8,312 ) $ (7,420 ) (12 %) $ 34,654   $ 43,076   (20 %) $ 64,245   $ 74,482   (14 %)
Common Shares Outstanding:
Average for Period - basic 26,686 26,606 26,676 26,571 26,668 26,558
Average for Period - diluted 26,686 26,606 26,730 26,641 26,723 26,624
End of Period 26,703 26,640 26,703 26,640 26,703 26,640
Earnings per Share:
Basic $ (0.31 ) $ (0.28 ) (11 %) $ 1.30 $ 1.62 (20 %) $ 2.41 $ 2.80 (14 %)
Diluted $ (0.31 ) $ (0.28 ) $ 1.30 $ 1.62 $ 2.40 $ 2.80
Dividends Declared Per Share $ 0.435 $ 0.415 $ 1.305 $ 1.245 $ 1.74 $ 1.66
Book Value Per Share - end of period $ 26.09 $ 25.35 $ 26.09 $ 25.35 $ 26.09 $ 25.35
Market Closing Price - end of period $ 44.10 $ 47.45 $ 44.10 $ 47.45 $ 44.10 $ 47.45
Balance Sheet Data - end of period:
Total Assets $ 2,567,840 $ 2,481,377 $ 2,567,840 $ 2,481,377 $ 2,567,840 $ 2,481,377
Common Stock Equity $ 696,605 $ 675,321 $ 696,605 $ 675,321 $ 696,605 $ 675,321
Long-Term Debt $ 641,700 $ 636,700 $ 641,700 $ 636,700 $ 641,700 $ 636,700
(including amounts due in one year)
Operating Statistics:
Total Customers - end of period 672,278 666,903 0.8 % 672,278 666,903 0.8 % 672,278 666,903 0.8 %
Gas Deliveries (therms)
Res. & Comm. Customers 54,259 56,210 459,141 388,857 669,162 621,608
Industrial Firm 7,843 8,079 26,956 26,857 37,184 37,519
Industrial Interruptible 11,815 12,124 43,573 42,372 59,588 59,395
Transportation   83,949     86,210     272,362     271,327     368,654     365,128  
Total 157,866 162,623 802,032 729,413 1,134,588 1,083,650
Gas Revenues
Res. & Comm. Customers $ 69,698 $ 71,864 $ 495,589 $ 449,676 $ 730,081 $ 718,397
Industrial Firm 6,631 6,934 21,969 22,334 30,465 32,527
Industrial Interruptible 7,138 7,709 25,648 26,286 35,526 39,061
Transportation 3,840 3,364 11,539 10,082 15,290 13,548
Regulatory adjustment for income taxes 3 956 (7,162 ) 4,974 (4,415 ) 7,088
Other Revenues   (762 )   (723 )   10,637     14,917     13,637     22,598  
Total $ 86,548 $ 90,104 $ 558,220 $ 528,269 $ 820,584 $ 833,219
Cost of Gas Sold - Utility $ 43,117 $ 46,349 $ 313,781 $ 281,189 $ 457,086 $ 463,474
Revenue Taxes $ 2,397 $ 2,497 $ 14,195 $ 13,410 $ 20,776 $ 20,845
Net Operating Revenues (Utility Margin) $ 41,034 $ 41,258 $ 230,244 $ 233,670 $ 342,722 $ 348,900
Degree Days
Average (25-year average) 102 102 2,651 2,651 4,265 4,265
Actual 50 110 2,968 2,594 4,545 4,318
Colder (warmer) than Average (51 %) 8 % 12 % (2 %) 7 % 1 %
 




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