NWN
$57.35
Northwest Natural Gas
$.35
.61%
Earnings Details
3rd Quarter September 2016
Wednesday, November 02, 2016 6:00:25 AM
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Summary

Northwest Natural Gas Reaffirms

Northwest Natural Gas (NWN) reported a 3rd Quarter September 2016 loss of $0.29 per share on revenue of $87.7 million. The consensus estimate was a loss of $0.29 per share. Revenue fell 5.8% compared to the same quarter a year ago.

The company said it continues to expect 2016 earnings of $2.05 to $2.25 per share. The current consensus earnings estimate is $2.19 per share for the year ending December 31, 2016.

Northwest Natural Gas along with its subsidiaries distributes natural gas in Oregon, Washington and California. The Company has two business segments: Utility segment and Gas Storage segment.

Results
Reported Earnings
($0.29)
Earnings Whisper
-
Consensus Estimate
($0.29)
Reported Revenue
$87.7 Mil
Revenue Estimate
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

NW Natural Reports Results for the Three and Nine Months Ended September 30, 2016

Reported consolidated net loss of $8.0 million, or $0.29 per share, for the third quarter of 2016, compared to a net loss of $6.7 million, or $0.24 per share, for 2015.

Received Notice to Proceed (NTP) for the North Mist gas storage expansion project allowing the Company to move the project forward with construction to begin this fall. Project costs are estimated to be $128 million with a target in-service date during the winter of 2018-19.

Continued our legacy of excellent customer service with the highest customer satisfaction score among large utilities in the West and the second highest score in the nation in the 2016 J.D. Power Gas Utility Residential Customer Satisfaction study.

Reduced residential rates to the lowest level in 15 years with a credit of $19.4 million to customers in June and an additional rate reduction effective Nov. 1, 2016 in both Oregon and Washington.

Increased the customer growth rate to 1.6% at Sept. 30, 2016 with over 11,500 customers added in the last 12 months.

Delivered increasing dividends for the 61st consecutive year. The Company’s current annual dividend rate is $1.88 per share.

Reaffirmed earnings guidance for 2016, at $1.98 to $2.18 per share or $2.05 to $2.25 per share adjusted to exclude the effects of the pre-tax charge of $3.3 million, or $0.07 per share after-tax, related to the final environmental implementation order received in January 2016 as described below.

Northwest Natural Gas Company, dba NW Natural (NWN), reported a consolidated net loss of $8.0 million, or $0.29 per share for the third quarter of 2016, compared to a loss of $6.7 million, or $0.24 per share, for the same period of 2015. The Company’s results typically reflect a loss during the third quarter due to the impact of decreased heating requirements during the summer months. Results included higher operations and maintenance (O&M) expense in 2016 as costs moved to more sustainable levels after implementing savings initiatives in 2015, partially offset by higher revenues from the gas storage segment.

Consolidated net income was $30.6 million, or $1.11 per share, for the first nine months of 2016, compared to net income of $24.0 million, or $0.88 per share, for the same period of 2015. Results for the nine month periods were affected by non-cash charges related to the Company’s environmental regulatory proceeding in 2015 and 2016. The first quarter of 2016 included a $3.3 million pre-tax, or $0.07 per share after-tax disallowance, from the OPUC’s 2016 Order (2016 Order), which was related to the Company’s compliance filing under the environmental mechanism. The first quarter of 2015 included a $15.0 million pre-tax charge or $0.33 per share after-tax disallowance from the February 2015 OPUC Order (2015 Order) in the environmental docket.

Excluding these charges, consolidated net income was $32.6 million, or $1.18 per share for the first nine months of 2016, compared to $1.21 per share on net income of $33.1 million for 2015. The decrease in net income was primarily due to lower other income and higher O&M expense almost entirely offset by strong utility margin and gas storage revenues.

Earnings per share (EPS) calculation based on average diluted shares outstanding of 27.6 million and an income tax rate of 39.5%.

See tabular reconciliation of non-GAAP measures in Consolidated Results section below.

North Mist Gas Storage Expansion Project Moves Forward

The North Mist gas storage expansion project is designed to provide long-term, no-notice underground gas storage to support electric generating plants, which are integrating more wind power into the generation mix. Through our no-notice storage service, the local electric company will be able to draw on our North Mist gas storage facility to meet its fueling needs and rapidly respond to changing conditions in wind generation. Natural gas storage enables electric generation to adjust quickly when renewable energy - like wind and solar - rise and fall with natural variability. The reliability and flexibility of supporting resources like natural gas are vital to the region as we move toward 50% renewable electricity by 2040.

The estimated cost of the expansion is $128 million with a targeted in-service date during the winter of 2018-19. As of Sept. 30, 2016, the Company has invested $14 million in the expansion and expects to spend an additional $8 million to $10 million in the fourth quarter of 2016 as the Company begins construction and procuring materials. The majority of capital expenditures are anticipated in 2017 with injections and testing planned in early 2018 to meet the targeted in-service date. The expansion will be included in rates under an established tariff when it is placed into service.

Consolidated Results

For the three months ended Sept. 30, 2016, NW Natural’s consolidated net loss was $0.05 per share or $1.4 million higher compared to the same period in 2015. Results were driven by a $2.8 million increase in O&M expense as well as a $0.7 million decrease in utility margin as a result of lower contributions from our gas reserve investments, which decreased due to regular amortization, offset by customer growth. These factors were partially offset by a $1.7 million increase in gas storage revenues from higher asset management revenues predominately at the Mist storage facility and slightly higher firm storage pricing at the Gill Ranch facility.

The third quarter results are summarized in the table below:

Three Months Ended September 30,
2016
2015
In thousands, except per share data Amount
Per Share
Amount
Per Share
Change
Net income (loss):
Utility segment
$
(9,511 )
$
(0.35 )
$
(7,529 )
$
(0.28 )
$
(1,982 )
Gas storage segment
1,813
0.06
799
0.04
1,014
Other
(342
)
--
45
--
(387
)
Consolidated net income (loss)
$
(8,040 )
$
(0.29 )
$
(6,685 )
$
(0.24 )
$
(1,355 )
Utility margin
$
50,923
$
51,619
$
(696
)
Gas storage operating revenues
7,293
5,596
1,697

For the nine months ended Sept. 30, 2016, NW Natural net income increased $0.23 per share or $6.6 million compared to 2015. The increase was largely due to the non-cash charges related to the 2015 and 2016 Orders. Excluding these charges on a non-GAAP basis, net income decreased $0.5 million primarily due to several large offsetting factors including a $5.5 million decrease in other income related to the recognition of equity earnings on deferred regulatory assets and a $3.7 million increase in O&M expense. These factors were almost entirely offset by a $4.0 million increase in utility margin attributable to customer growth and gains from gas cost incentive sharing and a $3.4 million increase in gas storage revenues from the same drivers noted for the quarter. In addition, interest expense was lower by $1.8 million due to the redemption of debt for both the utility and Gill Ranch in 2015.

The nine month results are summarized in the table below:

Nine Months Ended September 30,
2016
2015
In thousands, except per share data
Amount
Per Share
Amount
Per Share
Change
Net income (loss):
Utility segment
$
26,848
$
0.97
$
23,051
$
0.84
$
3,797
Gas storage segment
3,988
0.14
827
0.04
3,161
Other
(216
)
--
120
--
(336
)
Consolidated net income
$
30,620
$
1.11
$
23,998
$
0.88
$
6,622
Adjustments:
Regulatory environmental disallowance, net of taxes ($1,304 and $5,925) 1,996
0.07
9,075
0.33
(7,079
)
Adjusted consolidated net income
$
32,616
$
1.18
$
33,073
$
1.21
$
(457
)
Utility margin
$
256,958
$
252,935
$
4,023
Gas storage operating revenues
19,654
16,232
3,422

Regulatory environmental disallowance of $3.3 million in 2016 is recorded in utility other income and expense, net ($2.8 million) and utility O&M expense ($0.5 million). Regulatory environmental disallowance of $15.0 million in 2015 is recorded in utility O&M expense. Adjusted EPS and net income are non-GAAP financial measures based on the after-tax disallowance. EPS is calculated using the combined federal and state statutory tax rate of 39.5% and 27.6 million and 27.4 million diluted shares for the nine months ended September 30, 2016 and 2015, respectively.

Utility Results

For the three months ended Sept. 30, 2016, utility segment net loss increased $2.0 million or $0.07 per share compared to the same period in 2015 due to a $1.6 million increase in O&M expense and a $0.7 million decrease in utility margin primarily reflecting lower contributions from our gas reserve investments, which decreased due to regular amortization, offset by strong customer growth.

For the three months ended Sept. 30, 2016, total gas sales and transportation deliveries increased 5% compared to the same period last year primarily due to greater customer usage and growth. As the third quarter is not a primary heating quarter, weather did not significantly affect volumes.

For the nine months ended Sept. 30, 2016, utility segment net income increased $3.8 million or $0.13 per share compared to the same period in 2015 due to a $4.0 million increase in utility margin reflecting customer growth and an increase in gas cost incentive sharing gains, as well as a $12.2 million decrease in O&M expense primarily due to the $15.0 million regulatory disallowance as a result of the 2015 Order offset by higher non-payroll costs. These positive factors were offset by an $8.3 million decrease in other income due to the recognition of $5.3 million of equity earnings on deferred regulatory assets as a result of the 2015 Order and a $2.8 million interest write-off as a result of the 2016 Order.

Although weather for the nine months ended Sept. 30, 2016 was comparable to the prior year, deliveries increased 5% due to comparatively colder weather in the first quarter of 2016 during our peak heating season. Temperatures for the first nine months of 2015 and 2016 were 22% warmer than average.

Customer Growth. NW Natural achieved a customer growth rate for the trailing 12-month period ended Sept. 30, 2016 of 1.6%, with the Company serving over 718,000 customers at quarter end.

Utility Volume and Margin. The following table presents key utility margin metrics:

Three Months Ended September 30,
Nine Months Ended September 30,
Favorable/(Unfavorable)Change
Favorable/(Unfavorable) % Change
(Dollars and therms in thousands)
2016
2015
2016
2015
QTD
YTD
QTD
YTD
Gas sales and transportation deliveries
162,205
154,664
727,687
692,527
7,541
35,160
5
%
5
%
Weather (in heating degree days)
78
75
2,066
2,068
3
(2
)
4
--
Utility operating revenues
$
80,378
$
87,475
$
422,617
$
476,672
$
(7,097 )
$
(54,055 )
(8
)
(11
)
Less: Cost of gas
28,264
35,856
157,546
223,737
7,592
66,191
21
30
Environmental remediation expense
1,191
--
8,113
--
(1,191
)
(8,113
)
--
--
Utility margin
$
50,923
$
51,619
$
256,958
$
252,935
$
(696
)
$
4,023
(1
)%
2
%

In November 2015 the Company began collecting revenues from customers through the environmental mechanism. These collections are included in utility operating revenues and are offset by the amortization of environmental liabilities presented in the environmental remediation expense line in the operating expense section of the income statement. Utility margin provides a key metric in assessing the performance of the utility segment.

Gas Storage Results

For the three and nine months ended Sept. 30, 2016, the Company’s gas storage segment net income increased $1.0 million or $0.02 per share and $3.2 million or $0.10 per share, respectively, compared to the same periods in 2015. Results reflected an increase in revenues from our asset management agreements at both facilities but predominately our Mist storage facility. Additionally, slightly higher firm pricing at Gill Ranch for the 2016-17 gas storage year also increased revenues. Lower operating costs for the 2016 year-to-date period and lower interest expense for both the 2016 quarter and year-to-date periods at the Gill Ranch facility also contributed to the improved results.

Consolidated Operations

For the three months ended Sept. 30, 2016, consolidated O&M expense increased $2.8 million compared to the same period in 2015 due to higher non-payroll costs primarily from contract work as utility operational expenses increased mainly from the timing of system integrity work and other maintenance expense. Overall expense levels were elevated in the third quarter and are also expected to be comparatively higher in the fourth quarter as costs move to more sustainable levels in 2016 after implementing cost savings initiatives in the second half of 2015.

For the nine months ended Sept. 30, 2016 consolidated O&M expense decreased $11.7 million compared to the same period in 2015 primarily due to the $15.0 million pre-tax charge from the 2015 Order offset by higher costs primarily related to similar trends noted for the third quarter above.

For the three months ended Sept. 30, 2016, other income was comparable to the same period in 2015. For the nine months ended Sept. 30, 2016 other income decreased $8.1 million compared to the same period in 2015 due to the recognition of $5.3 million of equity earnings from deferred environmental expenses in the first quarter of 2015 as a result of the 2015 Order. In addition, the 2016 Order resulted in a write-off of $2.8 million of interest in the first quarter of 2016.

Cash Flows

Cash provided by operations increased $33.7 million to $206.4 million for the first nine months of 2016 due to historically low natural gas prices decreasing payables, higher collections under regulatory mechanisms and the first year of collections from our environmental mechanism. In addition, the enactment of bonus depreciation resulted in a federal tax refund in 2016 and an increase in deferred tax liabilities. These in flows were partially offset by a decrease in cash from the early credit of gas cost savings to customers in June 2016.

Cash out flows from investing activities increased $7.0 million to $95.2 million primarily due to higher capital expenditures from projects such as infrastructure upgrades in Clark County, Washington to support customer growth, the refurbishment of our liquefied natural gas facility in Newport, Oregon, the North Mist expansion, and our on-going investment in technology.

Cash out flows from financing activities increased $20.3 million to $109.1 million primarily due to reducing short-term debt and commercial paper balances with cash flows from operations.

2016 Earnings Guidance

The Company reaffirmed earnings guidance today in the range of $1.98 to $2.18 per share including the effects of the pre-tax charge of $3.3 million or $0.07 per share after-tax, related to the 2016 Order. Excluding the charge on a non-GAAP basis, earnings guidance is $2.05 to $2.25 per share. The Company’s 2016 earnings guidance assumes customer growth from the utility segment, average weather conditions, sustainable operations and maintenance expense levels and normal inflationary increases, slow recovery of the gas storage market, the impact of the five-year extension of bonus depreciation resulting from the enactment of the Federal PATH Act of 2015, and no significant changes in prevailing legislative and regulatory policies, mechanisms, or outcomes.

EPS calculation based on average diluted shares outstanding of 27.6 million and an income tax rate of 39.5%.

Dividend Declaration

The board of directors of NW Natural declared a quarterly dividend of 47 cents per share on the Company’s common stock. The dividends will be paid on Nov. 15, 2016 to shareholders of record on Oct. 31, 2016. The Company’s indicated annual dividend rate is $1.88 per share.

Presentation of Results

In addition to presenting the results of operations and earnings amounts in total, certain financial measures are expressed in cents per share or exclude the after-tax regulatory charges related to the Orders implementing the SRRM in 2015 and 2016, which are non-GAAP financial measures. The Company presents net income and EPS excluding the regulatory disallowance along with the GAAP measures to illustrate the magnitude of this disallowance on ongoing business and operational results. Although the excluded amounts are properly included in the determination of these items under GAAP, the Company believes the amount and nature of such disallowance make period to period comparisons of operations difficult or potentially confusing. Financial measures are expressed in cents per share as these amounts reflect factors that directly impact earnings, including income taxes. All references in this section to EPS are on the basis of diluted shares. The Company uses such non-GAAP financial measures to analyze its financial performance because it believes they provide useful information to its investors and creditors in evaluating its financial condition and results of operations.

Conference Call Arrangements

As previously reported, NW Natural will conduct a conference call and webcast starting at 8 a.m. Pacific Time (11 a.m. Eastern Time) on Nov. 2, 2016 to review the Company’s financial and operating results for the three and nine months ended Sept. 30, 2016.

To hear the conference call live, please dial 1-866-267-6789 within the United States and 1-855-669-9657 from Canada. International callers can dial 1-412-902-4110. To access the conference replay, please call 1-877-344-7529 and enter the conference identification pass code 10094048. To hear the replay from Canada, please dial 1-855-669-9658 and from international locations, please dial 1-412-317-0088.

To hear the conference by webcast, log on to NW Natural’s corporate website at nwnatural.com.

Forward-Looking Statements

This report, and other presentations made by NW Natural from time to time, may contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "anticipates," "assumes," "intends," "plans," "seeks," "believes," "estimates," "expects" and similar references to future periods. Examples of forward-looking statements include, but are not limited to, statements regarding the following: plans, objectives, goals, strategies, future events, the economy, investments, customer growth, weather and its impacts, environmental remediation cost recoveries, levels and pricing of gas storage contracts, gas storage development or costs, events or timing related thereto, financial results and positions, operation and maintenance expense, capital expenditures, free cash flow levels, revenues and earnings and the timing thereof, dividends, effects of regulatory disallowance, performance, support of renewable energy, effects of legislative policies, including bonus depreciation, timing or effects of future regulatory proceedings or future regulatory approvals, regulatory prudence reviews, effects of and recoveries under regulatory mechanisms, including, but not limited to, SRRM, and other statements that are other than statements of historical facts.

Forward-looking statements are based on the Company’s current expectations and assumptions regarding its business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. The Company’s actual results may differ materially from those contemplated by the forward-looking statements. The Company cautions you therefore against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future operational or financial performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements are discussed by reference to the factors described in Part I, Item 1A "Risk Factors", and Part II, Item 7 and Item 7A "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and "Quantitative and Qualitative Disclosure about Market Risk" in the Company’s most recent Annual Report on Form 10-K and in Part I, Items 2 and 3 "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and "Quantitative and Qualitative Disclosures About Market Risk", and Part II, Item 1A, "Risk Factors", in the Company’s quarterly reports filed thereafter.

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 the Company undertakes 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 (NWN) is headquartered in Portland, Ore., and provides natural gas service to more than 718,000 residential, commercial, and industrial customers through approximately 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 with $3.0 billion in total assets. NW Natural and its subsidiaries currently own and operate underground gas storage facilities with storage capacity of approximately 31 Bcf in Oregon and California. Additional information is available at nwnatural.com.

NORTHWEST NATURAL GAS COMPANY
Financial Highlights (Unaudited)
Third Quarter - 2016
Three Months Ended
Nine Months Ended
Twelve Months Ended
In thousands, except per share amounts, customer, and degree day data
September 30,
September 30,
September 30,
2016
2015
Change
2016
2015
Change
2016
2015
Change
Operating revenues
$ 87,727
$
93,128
(6
)% $ 442,439
$
493,073
(10
)% $ 673,157
$
733,356
(8
)%
Operating expenses:
Cost of gas
28,264
35,856
(21 )
157,546
223,737
(30
)
261,114
343,519
(24
)
Operations and maintenance
34,870
32,031
9
109,771
121,458
(10
)
145,834
155,355
(6
)
Environmental remediation
1,191
--
100
8,113
--
100
11,626
--
100
General taxes
7,211
6,772
6
23,333
23,153
1
30,461
30,052
1
Depreciation and amortization
20,628
20,342
1
61,435
60,683
1
81,675
80,640
1
Total operating expenses
92,164
95,001
(3
)
360,198
429,031
(16
)
530,710
609,566
(13
)
Income (loss) from operations
(4,437
)
(1,873
)
137
82,241
64,042
28
142,447
123,790
15
Other income (expense), net
652
746
(13 )
(1,144
)
6,930
(117 )
(327
)
6,811
(105 )
Interest expense, net
9,729
10,111
(4
)
29,183
31,030
(6
)
40,692
41,569
(2
)
Income (loss) before income taxes
(13,514 )
(11,238 )
20
51,914
39,942
30
101,428
89,032
14
Income tax expense
(5,474
)
(4,553
)
20
21,294
15,944
34
41,103
36,564
12
Net income (loss)
$ (8,040
)
$
(6,685
)
20
30,620
23,998
28
$ 60,325
$
52,468
15
Common shares outstanding:
Average diluted for period
27,554
27,363
27,629
27,399
27,590
27,370
End of period
27,558
27,367
27,558
27,367
27,558
27,367
Per share information:
Diluted earnings (loss) per share
$ (0.29
)
$
(0.24
)
$ 1.11
$
0.88
$ 2.19
$
1.92
Dividends declared per share of common stock
0.4700
0.4650
1.4025
1.3950
1.8680
1.8600
Book value per share, end of period
28.27
27.74
28.27
27.74
28.27
27.74
Market closing price, end of period
60.11
45.84
60.11
45.84
60.11
45.84
Capital structure, end of period:
Common stock equity
49.6
%
47.5
%
49.6
%
47.5
%
49.6
%
47.5
%
Long-term debt
33.8
38.4
33.8
38.4
33.8
38.4
Short-term debt (including amounts due in one year)
16.6
14.1
16.6
14.1
16.6
14.1
Total
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Operating statistics:
Customers - end of period
718,139
706,566
1.6 %
718,139
706,566
1.6
%
718,139
706,566
1.6
%
Utility volumes - therms:
Residential and commercial sales
55,610
53,662
381,109
357,545
594,292
557,916
Industrial sales and transportation
106,595
101,002
346,578
334,982
469,480
460,902
Total utility volumes sold and delivered
162,205
154,664
727,687
692,527
1,063,772
1,018,818
Utility operating revenues:
Residential and commercial sales
$ 68,508
$
73,236
$ 388,689
$
432,067
$ 601,457
$
652,950
Industrial sales and transportation
13,412
15,959
42,048
53,623
59,920
73,660
Other revenues
619
651
3,132
3,188
3,858
3,926
Less: Revenue taxes
2,161
2,371
11,252
12,206
17,080
18,217
Total utility operating revenues
80,378
87,475
422,617
476,672
648,155
712,319
Less: Cost of gas
28,264
35,856
157,546
223,737
261,114
343,519
Environmental remediation expense
1,191
--
8,113
--
11,626
--
Utility margin, net
$ 50,923
$
51,619
256,958
$
252,935
$ 375,415
$
368,800
Degree days:
Average (25-year average)
95
95
2,657
2,641
4,256
4,240
Actual
78
75
4
%
2,066
2,068
--%
3,456
3,422
1
%
Percent colder (warmer) than average weather
(18
)%
(21
)%
(22
)%
(22
)%
(19
)%
(19
)%
NORTHWEST NATURAL GAS COMPANY
Consolidated Balance Sheets (Unaudited)
September 30,
September 30,
In thousands
2016
2015
Assets:
Current assets:
Cash and cash equivalents
$ 6,230
$ 5,227
Accounts receivable
25,506
29,800
Accrued unbilled revenue
15,537
15,752
Allowance for uncollectible accounts
(289
)
(308
)
Regulatory assets
55,280
82,712
Derivative instruments
4,857
2,956
Inventories
67,470
80,974
Gas reserves
16,257
17,822
Income taxes receivable
2,257
--
Deferred tax assets
--
15,663
Other current taxes
17,480
25,972
Total current assets
210,585
276,570
Non-current assets:
Property, plant, and equipment
3,177,196
3,072,998
Less: Accumulated depreciation
943,334
905,137
Total property, plant, and equipment, net
2,233,862
2,167,861
Gas reserves
103,976
117,784
Regulatory assets
341,188
333,953
Derivative instruments
1,151
299
Other investments
67,853
68,503
Restricted cash
--
4,500
Other non-current assets
1,269
1,248
Total non-current assets
2,749,299
2,694,148
Total assets
$ 2,959,884
$ 2,970,718
Liabilities and equity:
Current liabilities:
Short-term debt
$ 194,900
$ 225,200
Current maturities of long-term debt
64,994
--
Accounts payable
55,933
54,425
Taxes accrued
11,954
11,854
Interest accrued
9,671
9,800
Regulatory liabilities
27,921
34,127
Derivative instruments
5,334
21,949
Other current liabilities
31,997
27,924
Total current liabilities
402,704
385,279
Long-term debt
530,219
614,053
Deferred credits and other non-current liabilities:
Deferred tax liabilities
544,575
527,336
Regulatory liabilities
342,143
334,490
Pension and other postretirement benefit liabilities
216,909
228,861
Derivative instruments
1,682
3,540
Other non-current liabilities
142,450
117,950
Total deferred credits and other non-current liabilities
1,247,759
1,212,177
Equity:
Common stock
389,834
380,208
Retained earnings
396,938
388,082
Accumulated other comprehensive loss
(7,570
)
(9,081
)
Total equity
779,202
759,209
Total liabilities and equity
$ 2,959,884
$ 2,970,718
NORTHWEST NATURAL GAS COMPANY
Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended September 30,
In thousands
2016
2015
Operating activities:
Net income
$ 30,620
$ 23,998
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization
61,435
60,683
Regulatory amortization of gas reserves
11,403
13,606
Deferred tax liabilities, net
17,810
7,153
Qualified defined benefit pension plan expense
3,989
4,238
Contributions to qualified defined benefit pension plans
(11,250
)
(11,780 )
Deferred environmental expenditures
(8,302
)
(8,063
)
Regulatory disallowance of prior environmental cost deferrals
3,287
15,000
Interest income on deferred environmental expenses
--
(5,322
)
Amortization of environmental remediation
8,113
--
Other
4,817
669
Changes in assets and liabilities:
Receivables
83,377
82,586
Inventories
3,226
(3,142
)
Taxes accrued
7,170
2,823
Accounts payable
(17,612
)
(36,230 )
Interest accrued
3,798
3,721
Deferred gas costs
(10,470
)
27,042
Other, net
14,988
(4,237
)
Cash provided by operating activities
206,399
172,745
Investing activities:
Capital expenditures
(98,111
)
(86,923 )
Restricted cash
--
(1,500
)
Other
2,868
181
Cash used in investing activities
(95,243
)
(88,242 )
Financing activities:
Common stock issued, net
4,832
1,252
Long-term debt retired
--
(40,000 )
Change in short-term debt
(75,135
)
(9,500
)
Cash dividend payments on common stock
(38,556
)
(38,122 )
Other
(278
)
(2,440
)
Cash used in financing activities
(109,137 )
(88,810 )
Increase (decrease) in cash and cash equivalents
2,019
(4,307
)
Cash and cash equivalents, beginning of period
4,211
9,534
Cash and cash equivalents, end of period
$ 6,230
$ 5,227
Supplemental disclosure of cash flow information:
Interest paid, net of capitalization
$ 23,271
$ 25,264
Income taxes paid (refunded)
(6,900
)
10,631
Investor Contact:
Nikki Sparley
Phone: 503-721-2530
Email: nikki.sparley@nwnatural.com
Media Contact:
Melissa Moore
Phone: 503-220-2436
Email: melissa.moore@nwnatural.com

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