LAS VEGAS, Aug. 8 /PRNewswire-FirstCall/ -- 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, http://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 /. To listen to a
recording of the webcast by telephone, call 1-800-615-3210. Use conference ID
number 229667 to access the recording. The recording will be available
approximately two hours after the conclusion of the webcast.
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.
Financial Highlights:
Sierra Pacific Resources
Financial Highlights
(In thousands, except for
per share amounts)
Second
Quarter
2003 SPR NPC 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
SOURCE Sierra Pacific Resources
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Related links:
http://www.sierrapacificresources.com
CONTACT:
Analyst, Vicki Erickson, +1-775-834-5646, or
Media, Andrea Smith, +1-702-367-5683, both of Sierra Pacific
Resources
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