News Releases
Sierra Pacific Resources Reports Second Quarter 2003 Financial Results
Aug 7, 2003
9:00pm
Contact: Andrea Smith
Phone: (702) 367-5683
For Immediate Release
Las Vegas, Nev.Â- Sierra Pacific Resources (NYSE: SRP) today reported an operating loss of $15 million for the second quarter of 2003, compared with operating income of $20 million in the same quarter of 2002. For the six months ended June 30, 2003, the company's operating income was $32 million, compared with an operating loss of $210 million for the first six months of 2002. The most recent quarter's operating loss was primarily due to a pre-tax charge of $91 million related to previously-reported rate case disallowances for the company's two utilities, Nevada Power Company and Sierra Pacific Power Company.
In addition to the deferred energy disallowances in the 2003 second quarter, the company booked: a one-time pre-tax write-off totaling $42 million from an anticipated sale and an impairment loss in the company's unregulated subsidiaries; and an unrealized pre-tax loss of $124 million related to a change in market value of the conversion option associated with $300 million in 7.25% convertible notes issued on Feb. 14, 2003.
Including the non-operating factors, the company's consolidated net loss was $173 million, or $(1.48) per share, for the second quarter of 2003, compared with a net loss of $42 million, or $(0.41) per share, in the same quarter of 2002. For the six months ended June 30, 2003, the loss applicable to common stock was $190 million, or $(1.66) per share, compared with a loss of $347 million, or $(3.40) per share for the same period in 2002.
Walter M. Higgins, chairman and chief executive officer of Sierra Pacific Resources, said,"While we are dissatisfied with the financial results for the second quarter, we believe the deferred energy decisions are the final step in putting the Western energy crisis behind us. Similarly, actions taken relative to the non-regulated operations are a key step in completing the company's repositioning as a fully regulated company. The write-down and sale involving our non-utility subsidiaries, for example, will reduce our exposure to risks associated with unregulated businesses and enable us to place greater focus on our core, regulated electric and gas businesses in Nevada and California."
Sierra Pacific Resources
The unrealized loss reflects the mark to market value related to the conversion option which is part of the convertible notes sold by the company in February. Shareholders will vote at a special meeting on Aug. 11, 2003, in Reno, Nevada, on whether to approve the potential issuance of up to 42.7 million additional shares of common stock that could be used by the company to satisfy the cash portion of the conversion price with shares of common stock. Proceeds from the convertible notes were used to refinance debt maturing in April 2003, to collateralize the first two and one half years of interest payments associated with the notes, to reduce the company's cash requirements, and to strengthen its balance sheet.
Non-regulated Businesses
In line with its concentration on core businesses and in anticipation of a sale in its unregulated businesses during the third quarter, Sierra Pacific Resources recorded a loss of $9 million, reflecting the estimated loss on the anticipated sale of its e.three subsidiary, an energy services group and a district cooling facility that serves customers in downtown Las Vegas. Additionally, the company took an impairment charge of $33 million for its subsidiary, Sierra Pacific Communications, in large part due to one of its major joint venture partners declaring bankruptcy.
Nevada Power Company
Nevada Power incurred a net loss of approximately $22 million for the second quarter of 2003. Excluding the deferred energy write-off, quarterly earnings would have been approximately $8 million. As previously reported, on May 13, 2003, the Public Utilities Commission of Nevada gave Nevada Power Company approval to recover $148 million of $196 million in deferred energy costs incurred by the company from Oct. 1, 2001, through Sept. 30, 2002 -- a pre-tax disallowance of $48 million (including carrying charges).
Interest charges for Nevada Power for the quarter increased $8 million over the year-earlier period, due primarily to higher interest rate on debt and interest expense on delayed or terminated energy supplier contracts.
Increased expenses for the quarter ended June 30, 2003, as compared to last year included increased reserves for uncollectibles, increased costs associated with billing and collection efforts and increased maintenance costs due to the timing of scheduled plant maintenance. Depreciation and amortization was also higher than last year due to an adjustment in depreciation rates and more plant in service in 2003.
Sierra Pacific Power Company
Sierra Pacific Power reported a net loss of approximately $29 million for the quarter. Excluding the electric deferred energy write- off, Sierra Pacific Power's contribution to quarterly earnings would have been approximately $500,000. As previously reported, on May 19, 2003, the Commission approved a stipulated agreement that resulted in a second quarter pre-tax write- off of $45 million in deferred energy costs. The stipulation agreement calls for an electric rate decrease of $9.9 million for customers of Sierra Pacific Power in northern Nevada, effective June 1, 2003, and an additional electric rate decrease of $19.7 million, effective June 1, 2004.
Interest charges for Sierra Pacific Power for the quarter increased approximately $2 million as compared to the same period in 2002, due to higher rate debt and interest expense on delayed or terminated energy supplier contracts.
A detailed discussion of Sierra Pacific Resources'second quarter 2003 financial results is contained in the company's Form 10-Q for the quarter ended June 30, 2003, which was filed with the Securities and Exchange Commission on August 8, 2003, and is available without charge through the EDGAR system at the SEC's website. The Form 10-Q report also will be posted on the Sierra Pacific Resources website, www.sierrapacificresources.com.
Webcast Scheduled
Senior management with Sierra Pacific Resources will discuss the second quarter financial results during a live webcast on Friday, August 8, 2003, 6:30 a.m. Pacific Daylight Time. Interested parties can access the webcast with the following link:http: //webcast.on24.com/clients/srp/030820.html.
The webcast will also be accessible on Sierra Pacific Resources'website at http://www.sierrapacificresources.com/investors/news/
About Sierra Pacific Resources
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. Other subsidiaries include the Tuscarora Gas Pipeline Company, which owns a 50 percent interest in an interstate natural gas transmission partnership.
Forward-Looking Statements: 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, Resources'ability to access the capital markets to refinance future debt maturities and for general corporate purposes, Resources'ability to receive dividends from its subsidiaries and the financial performance of the Company's subsidiaries, particularly Nevada Power Company and Sierra Pacific Power Company. For Nevada Power Company and Sierra Pacific Power Company, these risks and uncertainties include, but are not limited to, unfavorable rulings in future rate cases, their ability to access the capital markets to refinance debt and for general corporate purposes, their ability to purchase sufficient power to meet their power demands, whether terminated power suppliers will be successful in pursuing claims against Nevada Power and Sierra Pacific Power for liquidated damages under their terminated power contracts and weather conditions during the summer months of 2003 and beyond. 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 Report on Form 10-Q for the quarter ended June 30, 2003, 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
Sierra Pacific Resources Financial Highlights
(In thousands, except for per share amount)
| Second Quarter 2003 |  |  |  |  |  |  |
| SPR | SPR | NPC | NPC | SPP | SPP | |
|  | 2003 | 2002 | 2003 | 2002 | 2003 | 2002 |
| Revenues | $666,626 | $700,524 | $425,512 | $477,059 | $240,899 | $222,668 |
| Operating Expenses | 681,563 | 680,109 | 415,028 | 446,897 | 248,949 | 237,486 |
| Net Income (Loss) Available for Common | (173,420) | (41,916) | (22,192) | 5,655 | (28,930) | (34,926) |
| Net Income (Loss) Per Share | $(1.48) | $ (0.41) | - | - | - | - |
| Net Income (Loss) Contribution Per Share | - | - | $ ( 0.19) | $ 0.06 | $ ( 0.25) | $ (0.34) |
| SRP Weighted Average Shares Outstanding | 117,144 | 102,111 | 117,144 | 102,111 | 117,144 | 102,111 |
