Oregon
|
93-0256722
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer
Identification
No.)
|
Large
accelerated filer [ X ]
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Accelerated filer [ ]
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Non-accelerated filer [ ]
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Smaller reporting company
[ ]
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PART
I. FINANCIAL INFORMATION
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Page Number
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1
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Item
1.
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3
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4
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6
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7
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Item
2.
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22
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Item
3.
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43
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Item
4.
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44
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PART
II. OTHER INFORMATION
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Item
1.
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45
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Item
1A.
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45
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Item
2.
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45
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Item
4.
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46
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Item
5.
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46
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Item
6.
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46
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47
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·
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prevailing
state and federal governmental policies and regulatory actions with
respect to allowed rates of return, industry and rate structure, timely
and adequate regulatory recovery of deferred costs, including, but not
limited to, purchased gas cost and investment recovery, acquisitions and
dispositions of assets and facilities, operation and construction of plant
facilities, present or prospective wholesale and retail competition,
changes in laws and regulations including but not limited to tax laws and
policies, changes in and compliance with environmental and safety laws,
regulations, policies and orders, and laws, regulations and orders with
respect to the maintenance of pipeline integrity, including regulatory
allowance or disallowance of costs based on regulatory prudency
reviews;
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·
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economic
factors that could cause a severe downturn in the economy, in particular
the economies of Oregon and Washington, thus affecting demand for natural
gas;
|
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·
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unanticipated
customer growth or decline and changes in market demand caused by changes
in demographic or customer consumption
patterns;
|
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·
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the
creditworthiness of customers, suppliers and financial derivative
counterparties;
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·
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market
conditions and pricing of natural gas relative to other energy
sources;
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·
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sufficiency
of our liquidity position and unanticipated changes that may affect our
liquidity or access to capital markets, including volatility in the credit
markets and financial services
sector;
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·
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capital
market conditions, including their effect on financing costs, the fair
value of pension assets and pension and other postretirement benefit
costs;
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·
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application
of the Oregon Public Utility Commission rules interpreting Oregon
legislation intended to ensure that utilities do not collect more income
taxes in rates than they actually pay to government
entities;
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·
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weather
conditions, natural phenomena including earthquakes or other geohazard
events, and other pandemic events;
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·
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competition
for retail and wholesale customers and our ability to remain price
competitive;
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·
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our
ability to access sufficient gas supplies and our dependence on a single
pipeline transportation company for natural gas
transmission;
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·
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property
damage associated with a pipeline safety incident, as well as risks
resulting from uninsured damage to our property, intentional or
otherwise;
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·
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financial
and operational risks, estimates and projections relating to business
development and investment activities, including the Gill Ranch
underground gas storage facility and Palomar
pipeline;
|
|
·
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unanticipated
changes in interest rates, foreign currency exchange rates or in rates of
inflation;
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·
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changes
in estimates of potential liabilities relating to environmental
contingencies or in timely and adequate regulatory or insurance recovery
for such liabilities;
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·
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unanticipated
changes in future liabilities and legislation relating to employee benefit
plans, including changes in key
assumptions;
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·
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our
ability to transfer knowledge of our aging workforce and maintain a
satisfactory relationship with the union that represents a majority of our
workers;
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·
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potential
inability to obtain permits, rights of way, easements, leases or other
interests or other necessary authority to construct pipelines, develop
storage or complete other system expansions and the timing of such
projects;
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·
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federal,
state or other regulatory actions related to climate change;
and
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·
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legal
and administrative proceedings and
settlements.
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Three
Months Ended
|
Six
Months Ended
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|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
Thousands,
except per share amounts
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
Operating
revenues:
|
||||||||||||||||
Gross
operating revenues
|
$ | 149,060 | $ | 191,254 | $ | 586,415 | $ | 578,948 | ||||||||
Less: Cost
of sales
|
79,388 | 124,010 | 363,562 | 369,930 | ||||||||||||
Revenue
taxes
|
3,753 | 4,672 | 14,295 | 14,023 | ||||||||||||
Net
operating revenues
|
65,919 | 62,572 | 208,558 | 194,995 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Operations
and maintenance
|
30,171 | 25,840 | 64,126 | 54,298 | ||||||||||||
General
taxes
|
6,572 | 6,722 | 15,063 | 14,856 | ||||||||||||
Depreciation
and amortization
|
15,365 | 17,957 | 30,887 | 35,662 | ||||||||||||
Total
operating expenses
|
52,108 | 50,519 | 110,076 | 104,816 | ||||||||||||
Income
from operations
|
13,811 | 12,053 | 98,482 | 90,179 | ||||||||||||
Other
income and expense - net
|
732 | 1,940 | 1,622 | 2,113 | ||||||||||||
Interest
charges - net of amounts capitalized
|
10,006 | 8,933 | 19,376 | 18,363 | ||||||||||||
Income
before income taxes
|
4,537 | 5,060 | 80,728 | 73,929 | ||||||||||||
Income
tax expense
|
1,451 | 1,763 | 30,279 | 27,464 | ||||||||||||
Net
income
|
$ | 3,086 | $ | 3,297 | $ | 50,449 | $ | 46,465 | ||||||||
Average
common shares outstanding:
|
||||||||||||||||
Basic
|
26,506 | 26,421 | 26,504 | 26,415 | ||||||||||||
Diluted
|
26,607 | 26,571 | 26,603 | 26,564 | ||||||||||||
Earnings
per share of common stock:
|
||||||||||||||||
Basic
|
$ | 0.12 | $ | 0.12 | $ | 1.90 | $ | 1.76 | ||||||||
Diluted
|
$ | 0.12 | $ | 0.12 | $ | 1.90 | $ | 1.75 |
June
30,
|
June
30,
|
Dec.
31,
|
||||||||||
Thousands
|
2009
|
2008
|
2008
|
|||||||||
Assets:
|
||||||||||||
Plant
and property:
|
||||||||||||
Utility
plant
|
$ | 2,178,629 | $ | 2,091,092 | $ | 2,142,988 | ||||||
Less
accumulated depreciation
|
670,128 | 637,680 | 659,123 | |||||||||
Utility
plant - net
|
1,508,501 | 1,453,412 | 1,483,865 | |||||||||
Non-utility
property
|
84,696 | 72,242 | 74,506 | |||||||||
Less
accumulated depreciation
|
9,849 | 8,537 | 9,314 | |||||||||
Non-utility
property - net
|
74,847 | 63,705 | 65,192 | |||||||||
Total
plant and property
|
1,583,348 | 1,517,117 | 1,549,057 | |||||||||
Current
assets:
|
||||||||||||
Cash
and cash equivalents
|
31,107 | 5,242 | 6,916 | |||||||||
Accounts
receivable
|
26,779 | 43,718 | 81,288 | |||||||||
Accrued
unbilled revenue
|
18,122 | 19,685 | 102,688 | |||||||||
Allowance
for uncollectible accounts
|
(3,520 | ) | (3,013 | ) | (2,927 | ) | ||||||
Regulatory
assets
|
89,179 | 5,748 | 147,319 | |||||||||
Fair
value of non-trading derivatives
|
5,293 | 54,867 | 4,592 | |||||||||
Inventories:
|
||||||||||||
Gas
|
69,183 | 32,910 | 86,134 | |||||||||
Materials
and supplies
|
9,681 | 9,959 | 9,933 | |||||||||
Income
taxes receivable
|
- | - | 20,811 | |||||||||
Prepayments
and other current assets
|
26,588 | 11,516 | 24,216 | |||||||||
Total
current assets
|
272,412 | 180,632 | 480,970 | |||||||||
Investments,
deferred charges and other assets:
|
||||||||||||
Regulatory
assets
|
270,044 | 173,321 | 288,470 | |||||||||
Fair
value of non-trading derivatives
|
289 | 9,218 | 146 | |||||||||
Other
investments
|
62,315 | 64,276 | 54,132 | |||||||||
Other
|
16,103 | 11,417 | 5,377 | |||||||||
Total
investments, deferred charges and other assets
|
348,751 | 258,232 | 348,125 | |||||||||
Total
assets
|
$ | 2,204,511 | $ | 1,955,981 | $ | 2,378,152 |
June
30,
|
June
30,
|
Dec.
31,
|
||||||||||
Thousands
|
2009
|
2008
|
2008
|
|||||||||
Capitalization
and liabilities:
|
||||||||||||
Capitalization:
|
||||||||||||
Common
stock
|
$ | 336,001 | $ | 333,619 | $ | 336,754 | ||||||
Earnings
invested in the business
|
325,506 | 293,313 | 296,005 | |||||||||
Accumulated
other comprehensive income (loss)
|
(4,260 | ) | (2,483 | ) | (4,386 | ) | ||||||
Total
common stock equity
|
657,247 | 624,449 | 628,373 | |||||||||
Long-term
debt
|
587,000 | 512,000 | 512,000 | |||||||||
Total
capitalization
|
1,244,247 | 1,136,449 | 1,140,373 | |||||||||
Current
liabilities:
|
||||||||||||
Notes
payable
|
90,610 | 67,700 | 248,000 | |||||||||
Long-term
debt due within one year
|
- | 5,000 | - | |||||||||
Accounts
payable
|
50,055 | 75,786 | 94,422 | |||||||||
Taxes
accrued
|
10,807 | 8,727 | 12,455 | |||||||||
Interest
accrued
|
3,876 | 2,837 | 2,785 | |||||||||
Regulatory
liabilities
|
30,789 | 84,370 | 20,456 | |||||||||
Fair
value of non-trading derivatives
|
70,052 | 2,792 | 136,735 | |||||||||
Other
current and accrued liabilities
|
33,343 | 32,251 | 36,467 | |||||||||
Total
current liabilities
|
289,532 | 279,463 | 551,320 | |||||||||
Deferred
credits and other liabilities:
|
||||||||||||
Deferred
income taxes and investment tax credits
|
273,384 | 221,266 | 257,831 | |||||||||
Regulatory
liabilities
|
238,264 | 227,076 | 228,157 | |||||||||
Pension
and other postretirement benefit liabilities
|
116,844 | 43,513 | 138,229 | |||||||||
Fair
value of non-trading derivatives
|
8,844 | 2,732 | 21,646 | |||||||||
Other
|
33,396 | 45,482 | 40,596 | |||||||||
Total
deferred credits and other liabilities
|
670,732 | 540,069 | 686,459 | |||||||||
Commitments
and contingencies (see Note 11)
|
- | - | - | |||||||||
Total
capitalization and liabilities
|
$ | 2,204,511 | $ | 1,955,981 | $ | 2,378,152 |
Six
Months Ended
|
||||||||
June
30,
|
||||||||
Thousands
|
2009
|
2008
|
||||||
Net
income
|
$ | 50,449 | $ | 46,465 | ||||
Adjustments
to reconcile net income to cash provided by operations:
|
||||||||
Depreciation
and amortization
|
30,887 | 35,662 | ||||||
Deferred
income taxes and investment tax credits
|
15,405 | 14,028 | ||||||
Undistributed
gains from equity investments
|
(734 | ) | (346 | ) | ||||
Deferred
gas savings - net
|
15,616 | (26,873 | ) | |||||
Gain
on sale of non-utility investments
|
- | (1,737 | ) | |||||
Non-cash
expenses related to qualified defined benefit pension
plans
|
4,848 | 1,530 | ||||||
Contributions
to qualified defined benefit pension plans
|
(25,000 | ) | - | |||||
Deferred
environmental costs
|
(5,227 | ) | (4,131 | ) | ||||
Income
from life insurance investments
|
(2,002 | ) | (978 | ) | ||||
Settlement
of interest rate hedge
|
(10,096 | ) | - | |||||
Deferred
regulatory and other
|
(14,123 | ) | (6,466 | ) | ||||
Changes
in working capital:
|
||||||||
Accounts
receivable and accrued unbilled revenue - net
|
141,173 | 84,224 | ||||||
Inventories
of gas, materials and supplies
|
17,203 | 37,075 | ||||||
Income
taxes receivable
|
20,811 | - | ||||||
Prepayments
and other current assets
|
8,428 | 7,083 | ||||||
Accounts
payable
|
(44,177 | ) | (45,684 | ) | ||||
Accrued
interest and taxes
|
(557 | ) | (4,400 | ) | ||||
Other
current and accrued liabilities
|
(3,091 | ) | 2,634 | |||||
Cash
provided by operating activities
|
199,813 | 138,086 | ||||||
Investing
activities:
|
||||||||
Investment
in utility plant
|
(44,098 | ) | (41,338 | ) | ||||
Investment
in non-utility property
|
(10,330 | ) | (5,110 | ) | ||||
Proceeds
from sale of non-utility investments
|
- | 6,845 | ||||||
Proceeds
from life insurance
|
761 | 208 | ||||||
Other
|
(4,977 | ) | (7,286 | ) | ||||
Cash
used in investing activities
|
(58,644 | ) | (46,681 | ) | ||||
Financing
activities:
|
||||||||
Common
stock issued (purchased) - net
|
(720 | ) | 2,589 | |||||
Long-term
debt issued
|
75,000 | - | ||||||
Change
in short-term debt
|
(170,241 | ) | (75,400 | ) | ||||
Cash
dividend payments on common stock
|
(20,937 | ) | (19,808 | ) | ||||
Other
|
(80 | ) | 349 | |||||
Cash
used in financing activities
|
(116,978 | ) | (92,270 | ) | ||||
Increase
(decrease) in cash and cash equivalents
|
24,191 | (865 | ) | |||||
Cash
and cash equivalents - beginning of period
|
6,916 | 6,107 | ||||||
Cash
and cash equivalents - end of period
|
$ | 31,107 | $ | 5,242 | ||||
Supplemental
disclosure of cash flow information:
|
||||||||
Interest
paid
|
$ | 17,828 | $ | 18,424 | ||||
Income
taxes paid
|
$ | 1,500 | $ | 14,800 |
1.
|
Basis
of Financial Statements and Accounting
Policies
|
·
|
how
and why we use derivative
instruments;
|
·
|
how
derivative instruments and related hedge items are accounted for under
SFAS No. 133, “Accounting for Derivative Instruments and Hedging
Activities,” and its related interpretations;
and
|
·
|
how
derivative instruments and related hedged items affect our financial
condition, results of operations and cash
flows.
|
·
|
how
investment allocation decisions are
made;
|
·
|
the
major categories of plan assets;
|
·
|
the
inputs and valuation techniques used to measure the fair value of plan
assets;
|
·
|
the
effect of fair value measurements using significant unobservable inputs
(Level 3 input from SFAS No. 157, “Fair Value Measurements”) on changes in
plan assets for the period; and
|
·
|
significant
concentration or risk within plan
assets.
|
·
|
power
to control the activities that most significantly impact the performance;
and
|
·
|
the
obligation to absorb losses or right to receive benefits from the entity
that could potentially be significant to the variable interest
entity.
|
2.
|
Segment
Information
|
Three
Months Ended June 30,
|
||||||||||||||||
Thousands
|
Utility
|
Gas
Storage
|
Other
|
Total
|
||||||||||||
2009
|
||||||||||||||||
Net
operating revenues
|
$ | 60,066 | $ | 5,825 | $ | 28 | $ | 65,919 | ||||||||
Depreciation
and amortization
|
15,029 | 336 | - | 15,365 | ||||||||||||
Income
from operations
|
8,955 | 4,852 | 4 | 13,811 | ||||||||||||
Net
income (loss)
|
439 | 2,734 | (87 | ) | 3,086 | |||||||||||
2008
|
||||||||||||||||
Net
operating revenues
|
$ | 57,183 | $ | 5,339 | $ | 50 | $ | 62,572 | ||||||||
Depreciation
and amortization
|
17,633 | 324 | - | 17,957 | ||||||||||||
Income
(loss) from operations
|
7,451 | 4,907 | (305 | ) | 12,053 | |||||||||||
Net
income (loss)
|
(743 | ) | 2,488 | 1,552 | 3,297 | |||||||||||
Six
Months Ended June 30,
|
||||||||||||||||
Thousands
|
Utility
|
Gas
Storage
|
Other
|
Total
|
||||||||||||
2009
|
||||||||||||||||
Net
operating revenues
|
$ | 198,160 | $ | 10,325 | $ | 73 | $ | 208,558 | ||||||||
Depreciation
and amortization
|
30,212 | 675 | - | 30,887 | ||||||||||||
Income
from operations
|
89,849 | 8,597 | 36 | 98,482 | ||||||||||||
Net
income (loss)
|
45,743 | 4,766 | (60 | ) | 50,449 | |||||||||||
Total
assets at June 30, 2009
|
2,092,788 | 96,711 | 15,012 | 2,204,511 | ||||||||||||
2008
|
||||||||||||||||
Net
operating revenues
|
$ | 184,562 | $ | 10,336 | $ | 97 | $ | 194,995 | ||||||||
Depreciation
and amortization
|
35,012 | 650 | - | 35,662 | ||||||||||||
Income
from operations
|
81,328 | 8,750 | 101 | 90,179 | ||||||||||||
Net
income
|
39,799 | 4,841 | 1,825 | 46,465 | ||||||||||||
Total
assets at June 30, 2008
|
1,877,199 | 67,198 | 11,584 | 1,955,981 | ||||||||||||
Total
assets at Dec. 31, 2008
|
2,289,601 | 72,073 | 16,478 | 2,378,152 |
·
|
Mist
gas storage (excluding amounts allocated to our utility) was $57.0 million
and $53.6 million, respectively;
|
·
|
Gill
Ranch storage was $23.9 million and $7.8 million,
respectively;
|
·
|
Palomar
was $10.6 million and $9.3 million, respectively;
and
|
·
|
Financial
Corporation was $1.0 million for both
periods.
|
3.
|
Capital
Stock
|
4.
|
Stock-Based
Compensation
|
Stock
price on valuation date
|
$41.15
|
|
Performance
term (in years)
|
3.0
|
|
Quarterly
dividends paid per share
|
$0.395
|
|
Expected
dividend yield
|
3.8%
|
|
Dividend
discount factor
|
0.8927
|
Risk-free
interest rate
|
2.0%
|
|
Expected
life (in years)
|
4.7
|
|
Expected
market price volatility factor
|
22.5%
|
|
Expected
dividend yield
|
3.8%
|
|
Forfeiture
rate
|
3.7%
|
5.
|
Cost
and Fair Value Basis of Long-Term
Debt
|
June
30,
|
June
30,
|
Dec.
31,
|
||||||||||
Thousands
|
2009
|
2008
|
2008
|
|||||||||
Medium-Term
Notes
|
||||||||||||
First
Mortgage Bonds:
|
||||||||||||
6.50 % Series B due
2008(1)
|
$ | - | $ | 5,000 | $ | - | ||||||
4.11
% Series B due 2010
|
10,000 | 10,000 | 10,000 | |||||||||
7.45
% Series B due 2010
|
25,000 | 25,000 | 25,000 | |||||||||
6.665%
Series B due 2011
|
10,000 | 10,000 | 10,000 | |||||||||
7.13
% Series B due 2012
|
40,000 | 40,000 | 40,000 | |||||||||
8.26
% Series B due 2014
|
10,000 | 10,000 | 10,000 | |||||||||
4.70
% Series B due 2015
|
40,000 | 40,000 | 40,000 | |||||||||
5.15
% Series B due 2016
|
25,000 | 25,000 | 25,000 | |||||||||
7.00
% Series B due 2017
|
40,000 | 40,000 | 40,000 | |||||||||
6.60
% Series B due 2018
|
22,000 | 22,000 | 22,000 | |||||||||
8.31
% Series B due 2019
|
10,000 | 10,000 | 10,000 | |||||||||
7.63
% Series B due 2019
|
20,000 | 20,000 | 20,000 | |||||||||
5.37 % Series B due
2020(2)
|
75,000 | - | - | |||||||||
9.05
% Series A due 2021
|
10,000 | 10,000 | 10,000 | |||||||||
5.62
% Series B due 2023
|
40,000 | 40,000 | 40,000 | |||||||||
7.72
% Series B due 2025
|
20,000 | 20,000 | 20,000 | |||||||||
6.52
% Series B due 2025
|
10,000 | 10,000 | 10,000 | |||||||||
7.05
% Series B due 2026
|
20,000 | 20,000 | 20,000 | |||||||||
7.00
% Series B due 2027
|
20,000 | 20,000 | 20,000 | |||||||||
6.65
% Series B due 2027
|
20,000 | 20,000 | 20,000 | |||||||||
6.65
% Series B due 2028
|
10,000 | 10,000 | 10,000 | |||||||||
7.74
% Series B due 2030
|
20,000 | 20,000 | 20,000 | |||||||||
7.85
% Series B due 2030
|
10,000 | 10,000 | 10,000 | |||||||||
5.82
% Series B due 2032
|
30,000 | 30,000 | 30,000 | |||||||||
5.66
% Series B due 2033
|
40,000 | 40,000 | 40,000 | |||||||||
5.25
% Series B due 2035
|
10,000 | 10,000 | 10,000 | |||||||||
587,000 | 517,000 | 512,000 | ||||||||||
Less
long-term debt due within one year
|
- | 5,000 | - | |||||||||
Total
long-term debt
|
$ | 587,000 | $ | 512,000 | $ | 512,000 |
June
30, 2009
|
Dec.
31, 2008
|
|||||||||||||||
Carrying
|
Estimated
|
Carrying
|
Estimated
|
|||||||||||||
Thousands
|
Amount
|
Fair
Value (1)
|
Amount
|
Fair
Value (1)
|
||||||||||||
Long-term
debt including amounts due
|
||||||||||||||||
within
one year
|
$ | 587,000 | $ | 612,931 | $ | 512,000 | $ | 505,828 |
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
Thousands,
except per share amounts
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
Net
income
|
$ | 3,086 | $ | 3,297 | $ | 50,449 | $ | 46,465 | ||||||||
Average
common shares outstanding - basic
|
26,506 | 26,421 | 26,504 | 26,415 | ||||||||||||
Additional
shares for stock-based compensation plans
|
101 | 150 | 99 | 149 | ||||||||||||
Average
common shares outstanding - diluted
|
26,607 | 26,571 | 26,603 | 26,564 | ||||||||||||
Earnings
per share of common stock - basic
|
$ | 0.12 | $ | 0.12 | $ | 1.90 | $ | 1.76 | ||||||||
Earnings
per share of common stock - diluted
|
$ | 0.12 | $ | 0.12 | $ | 1.90 | $ | 1.75 |
7.
|
Pension
and Other Postretirement
Benefits
|
Three
Months Ended June 30,
|
||||||||||||||||
Other
Postretirement
|
||||||||||||||||
Pension
Benefits
|
Benefits
|
|||||||||||||||
Thousands
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
Service
cost
|
$ | 1,664 | $ | 1,653 | $ | 148 | $ | 132 | ||||||||
Interest
cost
|
4,492 | 4,303 | 407 | 349 | ||||||||||||
Expected
return on plan assets
|
(3,994 | ) | (4,777 | ) | - | - | ||||||||||
Amortization
of loss
|
1,658 | 96 | 4 | - | ||||||||||||
Amortization
of prior service cost
|
305 | 313 | 49 | 50 | ||||||||||||
Amortization
of transition obligation
|
- | - | 103 | 103 | ||||||||||||
Net
periodic benefit cost
|
4,125 | 1,588 | 711 | 634 | ||||||||||||
Amount
allocated to construction
|
(1,178 | ) | (409 | ) | (232 | ) | (224 | ) | ||||||||
Net
amount charged to expense
|
$ | 2,947 | $ | 1,179 | $ | 479 | $ | 410 | ||||||||
Six
Months Ended June 30,
|
||||||||||||||||
Other
Postretirement
|
||||||||||||||||
Pension
Benefits
|
Benefits
|
|||||||||||||||
Thousands
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
Service
cost
|
$ | 3,327 | $ | 3,308 | $ | 295 | $ | 265 | ||||||||
Interest
cost
|
8,984 | 8,604 | 813 | 698 | ||||||||||||
Expected
return on plan assets
|
(7,989 | ) | (9,554 | ) | - | - | ||||||||||
Amortization
of loss
|
3,317 | 192 | 8 | - | ||||||||||||
Amortization
of prior service cost
|
611 | 627 | 98 | 99 | ||||||||||||
Amortization
of transition obligation
|
- | - | 206 | 206 | ||||||||||||
Net
periodic benefit cost
|
8,250 | 3,177 | 1,420 | 1,268 | ||||||||||||
Amount
allocated to construction
|
(2,356 | ) | (788 | ) | (464 | ) | (431 | ) | ||||||||
Net
amount charged to expense
|
$ | 5,894 | $ | 2,389 | $ | 956 | $ | 837 |
8.
|
Comprehensive
Income
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
Thousands
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
Net
income
|
$ | 3,086 | $ | 3,297 | $ | 50,449 | $ | 46,465 | ||||||||
Amortization
of employee benefit plan liability, net of tax
|
63 | 55 | 126 | 110 | ||||||||||||
Change
in unrealized loss from derivatives, net of tax
|
- | 304 | - | 908 | ||||||||||||
Total
comprehensive income
|
$ | 3,149 | $ | 3,656 | $ | 50,575 | $ | 47,483 |
9.
|
Fair
Value of Financial
Instruments
|
·
|
Level
1: Valuation is based upon quoted prices for identical instruments traded
in active markets;
|
·
|
Level
2: Valuation is based upon quoted prices for similar instruments in active
markets, quoted prices for identical or similar instruments in markets
that are not active, and model-based valuation techniques for which all
significant assumptions are observable in the market;
and
|
·
|
Level
3: Valuation is generated from model-based techniques that use significant
assumptions not observable in the market. These unobservable assumptions
reflect our own estimates of the assumptions we believe market
participants would use in valuing the asset or
liability.
|
June
30,
|
June
30,
|
Dec.
31,
|
|||||||||||
Thousands
|
Description
of Derivative Inputs
|
2009
|
2008
|
2008
|
|||||||||
Level
1
|
Quoted
prices in active markets
|
$ | - | $ | - | $ | - | ||||||
Level
2
|
Significant
other observable inputs
|
(73,314 | ) | 58,561 | (153,643 | ) | |||||||
Level
3
|
Significant
unobservable inputs
|
- | - | - | |||||||||
$ | (73,314 | ) | $ | 58,561 | $ | (153,643 | ) |
10.
|
Derivative Instruments
|
Fair
Value of Derivative Instruments
|
||||||||||||||||||||||||
June
30, 2009
|
June
30, 2008
|
Dec.
31, 2008
|
||||||||||||||||||||||
Thousands
|
Current
|
Non-Current
|
Current
|
Non-Current
|
Current
|
Non-Current
|
||||||||||||||||||
Assets: (1)
|
||||||||||||||||||||||||
Natural
gas commodity
|
$ | 5,293 | $ | 289 | $ | 54,867 | $ | 9,218 | $ | 4,592 | $ | 146 | ||||||||||||
Total
|
$ | 5,293 | $ | 289 | $ | 54,867 | $ | 9,218 | $ | 4,592 | $ | 146 | ||||||||||||
Liabilities: (2)
|
||||||||||||||||||||||||
Natural
gas commodity
|
$ | 69,999 | $ | 8,844 | $ | 2,755 | $ | 1,374 | $ | 136,290 | $ | 9,734 | ||||||||||||
Interest
rate
|
- | - | - | 1,358 | - | 11,912 | ||||||||||||||||||
Foreign
exchange
|
53 | - | 37 | - | 445 | - | ||||||||||||||||||
Total
|
$ | 70,052 | $ | 8,844 | $ | 2,792 | $ | 2,732 | $ | 136,735 | $ | 21,646 |
|
(1) Unrealized
fair value gains are classified under current- or non-current assets as
fair value of non-trading
derivatives.
|
|
(2) Unrealized
fair value losses are classified under current- or non-current liabilities
as fair value of non-trading
derivatives.
|
|
|
Three
Months Ended
|
||||||||||||||||||||
June
30, 2009
|
June 30, 2008 | |||||||||||||||||||
Thousands
|
Natural gas
commodity (1)
|
Foreign exchange
(3)
|
Natural gas
commodity (1)
|
Interest rate (2)
|
Foreign exchange
(3)
|
|||||||||||||||
Cost
of sales
|
$ | 44,446 | $ | - | $ | 28,398 | $ | - | $ | - | ||||||||||
Other
comprehensive income
|
- | 101 | (303 | ) | 2,255 | 71 | ||||||||||||||
Less:
|
||||||||||||||||||||
Amounts
deferred to regulatory accounts on balance sheet
|
(44,446 | ) | (101 | ) | (28,095 | ) | (2,255 | ) | (71 | ) | ||||||||||
Total
impact on earnings
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
Six
Months Ended
|
||||||||||||||||||||
June
30, 2009
|
June 30, 2008 | |||||||||||||||||||
Thousands
|
Natural gas
commodity (1)
|
Foreign exchange
(3)
|
Natural gas
commodity (1)
|
Interest rate (2)
|
Foreign exchange
(3)
|
|||||||||||||||
Cost
of sales
|
$ | (73,261 | ) | $ | - | $ | 60,823 | $ | - | $ | - | |||||||||
Other
comprehensive income
|
- | (53 | ) | (867 | ) | (1,358 | ) | (37 | ) | |||||||||||
Less:
|
||||||||||||||||||||
Amounts
deferred to regulatory accounts on balance sheet
|
73,261 | 53 | (59,956 | ) | 1,358 | 37 | ||||||||||||||
Total
impact on earnings
|
$ | - | $ | - | $ | - | $ | - | $ | - |
(1)
|
Unrealized
gain (loss) from natural gas commodity hedge contracts is recorded in cost
of sales and reclassified to regulatory deferral accounts on the balance
sheet in accordance with SFAS No.
71.
|
(2)
|
Unrealized
gain (loss) from interest rate hedge contracts is recorded in other
comprehensive income (loss) and reclassified to regulatory deferral
accounts on the balance sheet in accordance with SFAS No.
71.
|
(3)
|
Unrealized
gain (loss) from foreign exchange forward purchase contracts is recorded
in other comprehensive income, and reclassified to regulatory deferral
accounts on the balance sheet in accordance with SFAS No.
71.
|
Thousands
|
(Current
Ratings) A+/A3
|
BBB+/Baa1
|
BBB/Baa2
|
BBB-/Baa3
|
Speculative
|
|||||||||||||||
With
Adequate Assurance Calls
|
$ | - | $ | - | $ | 889 | $ | 13,679 | $ | 53,304 | ||||||||||
Without
Adequate Assurance Calls
|
$ | - | $ | - | $ | - | $ | 10,290 | $ | 44,915 |
11.
|
Commitments
and Contingencies
|
Current
Liabilities
|
Non-Current
Liabilities
|
|||||||||||||||||||||||
June
30,
|
June
30,
|
Dec.
31,
|
June
30,
|
June
30,
|
Dec.
31,
|
|||||||||||||||||||
Thousands
|
2009
|
2008
|
2008
|
2009
|
2008
|
2008
|
||||||||||||||||||
Gasco
site
|
$ | 11,373 | $ | 8,122 | $ | 6,012 | $ | 7,615 | $ | 12,406 | $ | 14,071 | ||||||||||||
Siltronic
site
|
722 | 1,211 | 682 | 179 | - | 332 | ||||||||||||||||||
Portland
Harbor site
|
- | 1,348 | 277 | 13,401 | 12,864 | 13,642 | ||||||||||||||||||
Central
Service Center site
|
- | - | - | 523 | 529 | 526 | ||||||||||||||||||
Front
Street site
|
221 | - | - | - | - | 294 | ||||||||||||||||||
Other
sites
|
- | - | - | 90 | 83 | 80 | ||||||||||||||||||
Total
|
$ | 12,316 | $ | 10,681 | $ | 6,971 | $ | 21,808 | $ | 25,882 | $ | 28,945 |
Non-Current
Regulatory Assets
|
||||||||||||
June
30,
|
June
30,
|
Dec.
31,
|
||||||||||
Thousands
|
2009
|
2008
|
2008
|
|||||||||
Gasco
site
|
$ | 32,688 | $ | 29,898 | $ | 30,707 | ||||||
Siltronic
site
|
2,367 | 2,247 | 2,327 | |||||||||
Portland
Harbor site
|
33,727 | 31,092 | 31,791 | |||||||||
Central
Service Center site
|
548 | 545 | 545 | |||||||||
Front
Street site
|
350 | 11 | 338 | |||||||||
Other
sites
|
371 | 366 | 396 | |||||||||
Total
|
$ | 70,051 |