News Releases
Sierra Pacific Resources Reports 2007 Earnings
PRNewswire-FirstCall
LAS VEGAS
Feb 11, 2008
5:00am
Sierra Pacific Resources (NYSE: SRP) today announced consolidated net income applicable to common stock of $197.3 million, or 89 cents per share, for the year ended December 31, 2007, compared with net income applicable to common stock of $277.5 million, or $1.33 per share, for 2006. Non-recurring items were the primary factors for the earnings decline. On a recurring basis, the company's adjusted consolidated net income applicable to common stock was $197.7 million, or 89 cents per share, for 2007, compared with an adjusted net income applicable to common stock of $120.3 million, or 58 cents per share, in 2006.
Fourth-quarter consolidated net income applicable to common stock totaled $3.7 million, or 2 cents per share, compared with $26.1 million, or 12 cents per share, in the same 2006 quarter. Non-recurring items were also responsible for the decline in the fourth-quarter comparisons.
The non-recurring factors in 2006 that impacted the 12-month comparisons included a court ruling that allowed Nevada Power Company, the company's southern Nevada utility, to recover approximately $116.2 million, after tax, for fuel and purchased power costs that had previously been disallowed by state regulators and a $40.9 million gain, after taxes, in the 2006 fourth quarter on the sale of Sierra Pacific Resources' partnership interest in the Tuscarora Gas Transmission Company.
The non-recurring factors leading to the lower 2007 fourth-quarter results, when compared with the 2006 fourth quarter, primarily included the $40.9 million after-tax gain from the Tuscarora sale. In addition, there was a deferred energy disallowance of $7.6 million, net of taxes, related to an application to recover legal and settlement costs associated with power supply contracts terminated during the Western Energy Crisis. This disallowance was incurred by Sierra Pacific Power Company, the company's utility in northern Nevada, in November 2007.
Michael Yackira, president and chief executive officer of Sierra Pacific Resources, said, "We are pleased with the company's solid financial and operating results for 2007. Our cash from operating revenues increased significantly. We invested approximately $1.2 billion during the year on capital expenditures that were dedicated to both executing our strategy of building new power plants in Nevada for Nevadans as well as improvements throughout our operations. Also in 2007, Moody's upgraded the utilities to investment grade resulting in three out of four nationally-recognized rating agencies now rating the senior secured debt of the utilities at investment grade. The fourth, Standard & Poor's, revised its outlook to positive during 2007. In addition, the restoration of shareholder common dividends in the 2007 third quarter was a major milestone for our company."
Yackira added, "Despite the nationwide economic downturn, Nevada is once again the nation's fastest-growing state, a position it has held for 20 of the last 21 years. While growth has slowed somewhat, we are still growing and we are focused on ensuring that our customers continue to enjoy reliable utility service at reasonable and predictable rates. We are aggressively pursuing a three-part strategy that calls for increasing energy conservation, expanding our investment in renewable energy, and constructing new traditional power plants that will provide a balanced energy portfolio and will ultimately make our state less susceptible to the volatility of the energy marketplace."
Nevada Power Company 2007 Results
Nevada Power Company reported net income of $165.7 million for 2007, compared with $224.5 million in 2006. The decrease in 2007 was principally the result of the reinstatement of $116.2 million, after taxes, in 2006 for previously disallowed fuel and purchased power costs. Partially offsetting the 2007 decrease was the first quarter reinstatement of interest on deferred energy of $7.2 million, after taxes, associated with the 2006 reinstatement.
For the fourth quarter of 2007, Nevada Power Company reported net income of $4.4 million compared with a net loss of $11.7 million for the same period a year earlier. Fourth quarter results were higher in 2007 primarily due to general rate increases resulting from the 2006 General Rate Case.
The number of residential, commercial and industrial electric customers served by Nevada Power increased by 2.7 percent, 4.6 percent and 4.6 percent, respectively, in 2007 compared with the previous year.
Sierra Pacific Power Company 2007 Results
Sierra Pacific Power reported earnings applicable to common stock of $65.7 million for 2007 compared with $55.4 million in 2006. The increase in 2007 was principally the result of decreased interest expense and increased Allowance for Funds Used During Construction due to the construction at the Tracy Generating Station.
For the fourth quarter of 2007, Sierra Pacific Power reported earnings applicable to common stock of $8.1 million compared with net income of $15.4 million for the same period a year earlier. Fourth quarter results were lower in 2007 primarily because the Public Utilities Commission of Nevada disallowed approximately $7.6 million, net of taxes, related to the utility's application to recover legal and settlement costs associated with power supply contracts terminated during the Western Energy Crisis.
The number of residential, commercial and industrial electric customers served by Sierra Pacific Power increased by 1.6 percent, 3 percent and 5.4 percent, respectively, in 2007 compared with the previous year.
Sierra Pacific Power's retail natural gas revenues decreased in 2007 compared with 2006 primarily due to warmer temperatures in 2007 and decreases in retail rates. The number of residential, commercial and industrial gas customers served by Sierra Pacific Power increased by 2.9 percent, 3.6 percent and 12.6 percent, respectively, in 2007 compared with the previous year.
Gross margin is presented by Nevada Power Company and Sierra Pacific Power Company in order to provide information by segment that management believes aids the reader in determining how profitable the electric and gas business is at the most fundamental level. Gross margin, which is a "non-GAAP financial measure" as defined in accordance with SEC rules, provides a measure of income available to support the other operating expenses of the business and is utilized by management in its analysis of its business.
Nevada Power Company and Sierra Pacific Power Company believe presenting gross margin allows the reader to assess the impact of regulatory treatment and their overall regulatory environment on a consistent basis. Gross margin, as a percentage of revenue, is primarily impacted by the fluctuations in regulated electric and natural gas supply costs versus the fixed rates collected from customers. While these fluctuating costs impact gross margin as a percentage of revenue, they only impact gross margin amounts if the costs cannot be passed through to customers. Gross margin, which Nevada Power Company and Sierra Pacific Power Company calculate as operating revenues less fuel and purchased power costs, provides a measure of income available to support the other operating expenses. Gross margin changes based on such factors as general base rate adjustments (which are required to be filed by statute every three years) and reflect Nevada Power Company and Sierra Pacific Power Company's strategy to increase internal power generation versus purchased power, which generates no gross margin. Reconciliations between GAAP operating revenues and gross margin are provided in tables herein. These non-GAAP measures should not be considered as substitutes for the GAAP measures.
In addition to net income applicable to common stock for Sierra Pacific Resources, net income for Nevada Power Company and earnings applicable to common stock for Sierra Pacific Power Company, the companies have provided supplementally adjusted net income applicable to common stock for Sierra Pacific Resources, adjusted net income for Nevada Power Company and adjusted earnings applicable to common stock for Sierra Pacific Power Company, all of which are non-GAAP financial measures, in order to provide information that management believes aids the reader in determining net income after taking into consideration the item that is primarily non-operational in nature.
Reconciliations between GAAP net income applicable to common stock and adjusted net income applicable to common stock for Sierra Pacific Resources, between GAAP net income and adjusted net income for Nevada Power Company and between GAAP earnings applicable to common stock and adjusted earnings applicable to common stock for Sierra Pacific Power Company are provided in the table below. These non-GAAP measures should not be considered as substitutes for the GAAP measures.
Since the years ended December 31, 2007, 2006 and 2005 are affected by items that are primarily non-operational in nature, management believes these non-GAAP financial measures are helpful to assure that they are taken into consideration accurately in assessing the financial performance for the years ended December 31, 2007, 2006 and 2005.
The companies expect to file their Form 10-Ks for the period ended December 31, 2007, with the Securities and Exchange Commission on or about February 25, 2008, at which time the 10-Ks will be available without charge through the EDGAR system at the SEC's website. The Form 10-K reports will also be posted on Sierra Pacific Resources' website, http://www.sierrapacificresources.com/.
Webcast Scheduled for 7 a.m. PST Today
Senior management of Sierra Pacific Resources (NYSE: SRP) will review the company's year-end 2007 financial results, regulatory issues and other matters during a conference call and live webcast today, Feb. 11, at 7 a.m. Pacific Standard Time.
The webcast will be accessible on the Sierra Pacific Resources website: http://www.sierrapacificresources.com/.
An archived version of the webcast will remain on the Sierra Pacific Resources' website for approximately one month following the live webcast. To listen to a recording of the call by telephone, call (800) 475-6701 and use the conference call ID number, 907378, to access the recording. International callers should dial (320) 365-3844.
Headquartered in Nevada, Sierra Pacific Resources is a holding company whose principal subsidiaries are Nevada Power Company, the electric utility for most of southern Nevada, and Sierra Pacific Power Company, the electric utility for most of northern Nevada and the Lake Tahoe area of California. Sierra Pacific Power Company also distributes natural gas in the Reno-Sparks area of northern Nevada.
This press release contains forward-looking statements regarding the future performance of Sierra Pacific Resources and its subsidiaries, Nevada Power Company and Sierra Pacific Power Company, within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from current expectations. For Sierra Pacific Resources, these risks and uncertainties include, but are not limited to, Sierra Pacific Resources' ability to maintain access to the capital markets, Sierra Pacific Resources' ability to receive dividends from its subsidiaries, the financial performance of Sierra Pacific Resources' subsidiaries, particularly Nevada Power Company and Sierra Pacific Power Company, and the discretion of Sierra Pacific Resources' Board of Directors with respect to the payment of future dividends based on its periodic review of factors that ordinarily affect dividend policy, such as current and prospective financial condition, earnings and liquidity, prospective business conditions, regulatory factors, and dividend restrictions in Sierra Pacific Resources' and its subsidiaries' financing agreements. For Nevada Power Company and Sierra Pacific Power Company, these risks and uncertainties include, but are not limited to, unfavorable rulings in their pending and future regulatory filings, their ability to maintain access to the capital markets for general corporate purposes and to finance construction projects, and their ability to purchase sufficient fuel, natural gas and power to meet their power demands and natural gas demands for Sierra Pacific Power Company. Additional cautionary statements regarding other risk factors that could have an effect on the future performance of Sierra Pacific Resources, Nevada Power Company and Sierra Pacific Power Company are contained in their Quarterly Reports on Form 10-Q for the quarters ended June 30, 2007 and September 30, 2007 and their Annual Reports on Form 10-K for the year ended December 31, 2006, each filed with the SEC. The Companies undertake no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Financial Highlights (Dollars in thousands, except per share amounts) (Unaudited) Sierra Pacific Resources Three Months Ended Year Ended December 31, December 31, 2007 2006 2007 2006 Operating revenues $3,600,960 $3,355,950 $786,585 $745,008 Other operating expenses $379,446 $367,198 $104,032 $102,586 Maintenance $99,035 $93,172 $21,349 $24,032 Depreciation and amortization $235,532 $228,875 $60,745 $58,763 Income taxes $75,155 $91,571 $(1,011) $(15,821) Taxes other than income $50,113 $48,086 $12,403 $11,346 Operating income $414,567 $488,797 $53,069 $54,744 Other income (expenses): Income taxes $(12,400) $(54,034) $8,230 $(28,829) Interest charges $279,788 $311,088 $69,751 $82,418 Preferred stock dividend requirements of subsidiary and premium on redemption $- $2,341 $- $- Net Income Applicable to Common Stock $197,295 $277,451 $3,712 $26,127 Amount per share basic and diluted - Net income applicable to common stock $0.89 $1.33 $0.02 $0.12 Weighted Average Shares of Common Stock Outstanding: Basic - 222,180,440 208,531,134 Diluted - 222,554,024 209,020,896 Capital Structure December 31, 2007 December 31, 2006 Current maturities of long-term debt $110,285 2% $8,348 0% Long-term debt 4,137,864 57% 4,001,542 60% Total Debt $4,248,149 59% $4,009,890 60% Common shareholders' equity $2,996,575 41% $2,622,297 40% Total Capitalization (including current maturities of long-term debt) $7,244,724 100% $6,632,187 100% Nevada Power Company Three Months Ended Year Ended December 31, December 31, 2007 2006 2007 2006 Operating revenues $2,356,620 $2,124,081 $469,121 $422,702 Other operating expenses $232,610 $218,120 $65,209 $61,355 Maintenance $67,482 $61,899 $13,339 $17,592 Depreciation and amortization $152,139 $141,585 $39,394 $37,509 Income taxes $61,108 $91,781 $(4,741) $(11,836) Taxes other than income $29,823 $28,118 $7,392 $6,831 Operating income $297,304 $351,272 $37,844 $18,670 Other income (expenses): Allowance for other funds used during construction $15,861 $11,755 $4,815 $1,615 Carrying charge for Lenzie $16,080 $33,440 $- $10,234 Reinstated interest on deferred energy $11,076 $- $- $- Income taxes $(17,244) $(25,729) $405 $(5,944) Interest charges $174,667 $176,612 $42,512 $42,549 Net Income $165,694 $224,540 $4,414 $(11,733) Capital Structure December 31, 2007 December 31, 2006 Current maturities of long- term debt $8,642 0% $5,948 0% Long-term debt 2,528,141 51% 2,380,139 52% Total Debt $2,536,783 52% $2,386,087 52% Common shareholder's equity $2,376,740 48% $2,172,198 48% Total Capitalization (including current maturities of long-term debt) $4,913,523 100% $4,558,285 100% Sierra Pacific Power Company Three Months Ended Year Ended December 31, December 31, 2007 2006 2007 2006 Operating revenues $1,244,297 $1,230,230 $317,746 $321,969 Other operating expenses $142,348 $141,350 $37,278 $39,937 Maintenance $31,553 $31,273 $8,010 $6,440 Depreciation and amortization $83,393 $87,279 $21,350 $21,242 Income taxes $29,991 $23,570 $9,120 $4,408 Taxes other than income $20,097 $19,796 $4,959 $4,485 Operating Income $105,957 $120,017 $11,715 $28,680 Other income (expenses): Allowance for other funds used during construction $15,948 $6,471 $4,601 $2,962 Income taxes $3,982 $(4,259) $7,579 $(1,172) Interest charges $60,735 $71,506 $15,536 $16,673 Preferred stock dividend requirements and premium on redemption $- $2,341 $- $- Earnings Applicable to Common Stock $65,667 $55,368 $8,139 $15,410 Capital Structure December 31, 2007 December 31, 2006 Current maturities of long- term debt $101,643 5% $2,400 0% Long-term debt 1,084,550 50% 1,070,858 55% Total Debt $1,186,193 54% $1,073,258 55% Common shareholder's equity $1,001,840 46% $884,737 45% Total Capitalization (including current maturities of long-term debt) $2,188,033 100% $1,957,995 100% RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Gross Margin (Dollars in thousands) (Unaudited) Nevada Power Company Year Ended December 31, 2007 2006 2005 Operating Revenues: Electric $2,356,620 $2,124,081 $1,883,267 Energy Costs: Purchased power $688,606 $764,850 $963,888 Fuel for power generation 594,382 552,959 277,083 Deferral of energy costs-net 233,166 92,322 (45,668) $1,516,154 $1,410,131 $1,195,303 Gross Margin $840,466 $713,950 $687,964 Reinstatement of deferred energy - (178,825) - Other 232,610 218,120 211,039 Maintenance 67,482 61,899 52,040 Depreciation 152,139 141,585 124,098 Taxes: Income taxes 61,108 91,781 46,425 Other than income 29,823 28,118 25,535 Operating Income $297,304 $351,272 $228,827 Sierra Pacific Power Company Year Ended December 31, 2007 2006 2005 Operating Revenues: Electric $1,038,867 $1,020,162 $967,427 Gas 205,430 210,068 178,270 $1,244,297 $1,230,230 $1,145,697 Energy Costs: Purchased power $348,299 $344,590 $352,098 Fuel for power generation 242,973 247,626 233,653 Deferral of energy costs-electric-net 63,873 47,043 8,110 Gas purchased for resale 150,879 160,739 140,850 Deferral of energy costs-gas-net 10,763 6,947 (749) $816,787 $806,945 $733,962 Energy Costs by Segment: Electric $655,145 $639,259 $593,861 Gas 161,642 167,686 140,101 $816,787 $806,945 $733,962 Gross Margin by Segment before Deferred Energy Costs Disallowed: Electric $383,722 $380,903 $373,566 Gas 43,788 42,382 38,169 $427,510 $423,285 $411,735 Deferral of energy costs disallowed 14,171 - - Gross Margin by Segment after Deferred Energy Costs Disallowed: Electric $369,551 $380,903 $373,566 Gas 43,788 42,382 38,169 $413,339 $423,285 $411,735 Other 142,348 141,350 131,901 Maintenance 31,553 31,273 26,690 Depreciation 83,393 87,279 90,569 Taxes: Income taxes 29,991 23,570 26,038 Other than income 20,097 19,796 20,233 Operating Income $105,957 $120,017 $116,304 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Adjusted Net Income Applicable to Common Stock, Adjusted Net Income (Dollars in thousands, except per share amounts) (Unaudited) Sierra Pacific Resources Year Ended December 31, 2007 2006 2005 Net Income Applicable to Common Stock $197,295 $277,451 $82,237 Reinstated interest on deferred energy, net of tax $(7,199) Deferred energy costs disallowed, net of tax $7,600 Reversal of interest on settled supplier disputes, net of tax $(13,585) Legal fees, net of tax $7,389 Early conversion fees, net of tax $35,100 Other financings costs and fees, net of tax $6,305 Reinstatement of deferred energy costs, net of tax $(116,236) Gain on sale of investment $(40,903) Adjusted Net Income Applicable to Common Stock $197,696 $120,312 $117,446 Adjusted Net Income Applicable to Common Stock - diluted $0.89 $0.58 $0.63 Weighted Average Shares of Common Stock Outstanding - diluted 222,554,024 209,020,896 185,932,504 Nevada Power Company Year Ended December 31, 2007 2006 2005 Net Income $165,694 $224,540 $132,734 Reinstated interest on deferred energy, net of tax $(7,199) Reversal of interest on settled supplier disputes, net of tax $(11,505) Legal fees, net of tax $5,695 Reinstatement of deferred energy costs, net of tax $(116,236) Adjusted Net Income $158,495 $108,304 $126,924 Sierra Pacific Power Company Year Ended December 31, 2007 2006 2005 Earnings Applicable to Common Stock $65,667 $55,368 $48,174 Deferred energy costs disallowed, net of tax $7,600 Reversal of interest on settled supplier disputes, net of tax $(2,080) Legal fees, net of tax $1,694 Adjusted Earnings Applicable to Common Stock $73,267 $55,368 $47,788
First Call Analyst:
FCMN Contact: kwalquist@sppc.com
SOURCE: Sierra Pacific Resources
CONTACT: Analyst, Britta Carlson, +1-702-367-5624, or Media, Karl
Walquist, +1-775-834-3891, both for Sierra Pacific Resources
Web site: http://www.sierrapacific.com/