Avista Corp. Reports Q3 2003 Earnings
SPOKANE, Wash., Oct 24, 2003 /PRNewswire-FirstCall via COMTEX/ -- Avista Corp. (NYSE: AVA) today reported third-quarter 2003 consolidated revenues of $224.4 million and earnings of $0.09 per diluted share.
Results for third quarter and year-to-date 2003:
($ millions except
per-share data) Q3 2003 Q3 2002 YTD 2003 YTD 2002
Consolidated Revenues $224.4 $200.0 $754.7 $746.2
Income from Operations $28.1 $23.6 $127.2 $114.7
Net Income (Loss)
Available for
Common Stock $4.3 ($2.2) $28.3 $18.0
Business Segments:
(Earnings per
diluted share)
Avista Utilities $0.02 ($0.02) $0.39 $0.48
Energy Marketing &
Resource Management $0.10 $0.05 $0.44 $0.41
Avista Advantage ($0.01) ($0.02) ($0.03) ($0.07)
Other ($0.02) ($0.01) ($0.09) ($0.22)
SUBTOTAL (continuing
operations) $0.09 -- $0.71 $0.60
Avista Labs & Avista
Communications(*)
(discontinued operations) -- ($0.05) ($0.10) ($0.13)
SUBTOTAL (before
cumulative effect
of accounting change) $0.09 ($0.05) $0.61 $0.47
Cumulative effect of
accounting change -- -- ($0.03)(**) ($0.09)
TOTAL -- (Earnings per
diluted share) $0.09 ($0.05) $0.58 $0.38
* Avista Communications is only included in 2002 amounts
** Represents a charge of $1.2 million (net of tax) for Avista Energy's
adoption of SFAS No. 133
"While the third quarter is historically challenging for Avista because we are typically a winter-peaking company, we are pleased that during third quarter 2003 we have performed better than our internal targets and continue to make progress toward our financial recovery," said Avista Chairman, President and Chief Executive Officer Gary G. Ely. "Avista Utilities' positive performance, as compared to the same period last year, is reflective of the numerous financial and operational goals we are successfully achieving."
(Logo: http://www.newscom.com/cgi-bin/prnh/19990629/AVALOGO )
Highlights:
-- Regulatory: In Oregon, Avista received regulatory approval of a 10
percent general rate increase, which is designed to produce
approximately $6.3 million of additional annual revenue effective
Oct. 1, 2003. It provides for an overall rate of return of 8.88
percent and a return on equity of 10.25 percent. To recover the cost
of natural gas provided to customers above that which already exists
in rates, Purchased Gas Cost Adjustments (PGAs) were approved in each
of the four states in which Avista provides natural gas services,
ranging from 2.4 percent to 15 percent. In Idaho, the staff of the
Public Utilities Commission recommended a 60-day continuation of
Avista's 19.4 percent electric surcharge, to give the commission
additional time to fully consider the company's application. At issue
is approximately $5.9 million in Power Cost Adjustment (PCA) deferred
costs of fuel purchased for thermal generation. Avista does not agree
with the staff's recommendation and has requested that this issue be
addressed in the general rate case the company anticipates filing in
the first quarter of 2004. We expect the IPUC to act on our request
shortly.
-- Avista Utilities and Infrastructure Investment: The 2003 end-of year
hydro forecast calls for stream flows to be approximately 85 percent
of normal and hydro production to be 500 average megawatts, or 90
percent of normal. Earlier this year Avista was predicting 93 percent
of normal hydro production. Work has begun on a number of transmission
system upgrade projects that primarily impact areas of eastern
Washington and northern Idaho. Planning began last year in conjunction
with Bonneville Power Administration for this infrastructure
enhancement, including building approximately 100 miles of new 230
kilovolt (kV) lines, several new substations, and upgrading of other
transmission facilities. This five-year undertaking, costing roughly
$100 million, is included in Avista's capital expenditure projections.
These projects will reinforce the electric transmission grid
throughout eastern Washington and northern Idaho, as well as help meet
existing and future demands for electricity throughout Avista's
service territory.
-- Corporate Financing and Dividends: Avista Corp. issued $45 million of
first mortgage bonds in September, the proceeds of which were used to
repay a portion of the borrowings under our line of credit that were
used on an interim basis to fund maturing debt. Avista has reduced its
debt and associated interest expense by repurchasing approximately $52
million to date in 2003 and has reduced its debt ratio (not including
preferred trust securities and preferred stock) to 53.8 percent.
Avista continues to make significant contributions to its pension
plan. By Sept. 30, Avista had paid into the pension plan approximately
$12 million in 2003, and it expects to make additional cash
contributions totaling approximately $15 million over the next 12
months. Our goal is to have the pension plan's current obligation
fully funded by 2006. In August, the board of directors increased the
common stock dividend by four percent. Payment of dividends is subject
to declaration and approval by the board each quarter.
-- Avista Energy: The company's unregulated energy business continues to
perform well, with positive earnings for the 14th consecutive quarter.
Avista Energy's position as an experienced performer in western energy
markets is supported by its disciplined approach to risk management.
Avista Energy offers its customers a portfolio of integrated resources
and services while maintaining a liquid trading book which, at
the end of the quarter, was 48 percent convertible to cash within one
year and 95 percent convertible to cash within three years.
-- Avista Advantage: Year-to-date 2003, Avista Advantage, a leading
business process outsourcer for the evaluation and payment of utility
bills and other invoices, continued to increase the number of
customers billed with the addition of national customers including
Lowes Home Improvement Stores. The number of customers billed
increased by 19 percent and revenues by 21 percent over the same
period in 2002. A 26 percent reduction in the total-cost-per-account
was noted in the first nine months of this year as compared to the
same period last year.
-- Avista Labs: During the quarter, AVLB (Avista Labs) added an
additional equity partner, yielding an additional $5 million in
capital for the fuel cell company. This relieves Avista Corp. of its
$1.5 million loan guarantee and brings Avista Corp.'s ownership in
AVLB to approximately 17.5 percent.
Outlook and Earnings Guidance:
Avista reaffirms its 2003 consolidated corporate earnings outlook of between $0.85 and $1.05 per diluted share, in line with the historically robust fourth quarter performance of Avista Utilities. For 2004, the company anticipates consolidated diluted earnings in the range of $1.00 to $1.20 per diluted share, with the outlook for Avista Utilities in the range of $0.75 to $0.90 per diluted share and for the Energy Marketing and Resource Management segment in a range of $0.25 to $0.35 per diluted share. It is anticipated that Avista Advantage will be break-even to slightly positive for earnings, and in the "Other" segment, the company anticipates lower earnings drag than in 2003.
Avista Corp. is an energy company involved in the production, transmission and distribution of energy as well as other energy-related businesses. Avista Utilities is a company operating division that provides electric and natural gas service to customers in four western states. Avista's non-regulated subsidiaries include Avista Advantage and Avista Energy. Avista Corp.'s stock is traded under the ticker symbol "AVA" and its Internet address is www.avistacorp.com.
NOTE: Avista Corp. and the Avista Corp. logo are trademarks of Avista Corporation. All other trademarks mentioned in this document are the property of their respective owners.
This news release contains forward-looking statements regarding the company's current expectations. Forward-looking statements are all statements other than historical facts. Such statements speak only as of the date of the news release and are subject to a variety of risks and uncertainties, many of which are beyond the company's control, and which could cause actual results to differ materially from the expectations. These risks and uncertainties include, in addition to those discussed herein, all of the factors discussed in the company's Annual Report on Form 10-K for the year ended Dec. 31, 2002, and on Form 10-Q for the second quarter ended June 30, 2003.
NOTE: Avista Corp. will host an investor conference and webcast call on Oct. 24, 2003, at 10:30 a.m. EDT. To participate, call 800-884-5695 approximately five minutes in advance to ensure you are connected. The passcode is 52628568.
A replay of the conference call will be available from 12:30 p.m.; EDT Oct. 24 through Oct. 27. Call 888-286-8010, passcode 23007369 to listen to the replay.
A webcast of this investor conference call will occur simultaneously. To register for the webcast, please go to www.avistacorp.com. A webcast replay will be archived at www.avistacorp.com.
The attached income statement, financial and operating highlights, and balance sheet are an integral part of this earnings release.
AVISTA CORPORATION
CONSOLIDATED COMPARATIVE STATEMENTS OF INCOME (UNAUDITED)
(Dollars in Thousands except Per Share Amounts)
Nine Months Ended
Third Quarter September 30,
2003 2002 2003 2002
OPERATING REVENUES $224,377 $199,976 $754,651 $746,209
OPERATING EXPENSES:
Resource costs 108,218 91,099 351,090 356,407
Operations and maintenance 31,722 31,799 98,504 93,727
Administrative and general 22,780 22,039 73,327 78,225
Depreciation and amortization 20,114 17,440 57,960 52,930
Taxes other than income taxes 13,424 13,991 46,552 50,198
Total operating expenses 196,258 176,368 627,433 631,487
INCOME FROM OPERATIONS 28,119 23,608 127,218 114,722
OTHER INCOME (EXPENSE):
Interest expense (22,934) (24,870) (69,605) (80,369)
Capitalized interest 318 3,148 677 7,538
Net interest expense (22,616) (21,722) (68,928) (72,831)
Other income -- net 2,173 3,018 4,387 14,631
Total other income
(expense) -- net (20,443) (18,704) (64,541) (58,200)
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES 7,676 4,904 62,677 56,522
INCOME TAXES 3,290 4,040 27,136 26,390
INCOME FROM CONTINUING
OPERATIONS 4,386 864 35,541 30,132
LOSS FROM DISCONTINUED
OPERATIONS (Note A) (66) (2,479) (4,930) (6,154)
NET INCOME (LOSS) BEFORE
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE 4,320 (1,615) 30,611 23,978
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE
(net of tax) (Note B) -- -- (1,190) (4,148)
NET INCOME (LOSS) 4,320 (1,615) 29,421 19,830
DEDUCT -- Preferred stock
dividend requirements -- 608 1,125 1,824
INCOME (LOSS) AVAILABLE
FOR COMMON STOCK $4,320 $(2,223) $28,296 $18,006
Weighted-average common
shares outstanding
(thousands), Basic 48,281 47,866 48,202 47,771
Weighted-average common
shares outstanding
(thousands), Diluted 48,691 47,866 48,514 47,842
EARNINGS PER COMMON SHARE, BASIC:
Earnings per common share
from continuing operations $0.09 $0.00 $0.72 $0.60
Loss per common
share from discontinued
operations (Note A) -- (0.05) (0.10) (0.13)
Earnings (loss) per
common share before
cumulative effect of
accounting change 0.09 (0.05) 0.62 0.47
Loss per common share
from cumulative effect
of accounting change (Note B) -- -- (0.03) (0.09)
Total earnings (loss)
per common share, basic $0.09 $(0.05) $0.59 $0.38
EARNINGS PER COMMON SHARE, DILUTED:
Earnings per common
share from
continuing operations $0.09 $0.00 $0.71 $0.60
Loss per common share
from discontinued
operations (Note A) -- (0.05) (0.10) (0.13)
Earnings (loss) per common
share before cumulative
effect of
accounting change 0.09 (0.05) 0.61 0.47
Loss per common share
from cumulative effect
of accounting change (Note B) -- -- (0.03) (0.09)
Total earnings (loss)
per common share,
diluted $0.09 $(0.05) $0.58 $0.38
Dividends paid
per common share $0.125 $0.12 $0.365 $0.36
Note A. In July 2003, Avista Corp. announced an investment by a group of
private equity investors in a new entity, AVLB, Inc., which
acquired the assets previously held by Avista Corp.'s fuel cell
manufacturing and development subsidiary, Avista Labs.
In September 2003, AVLB Inc. (doing business under the name
Avista Labs) received an additional investment by private equity
investors of $5.0 million. This investment relieved Avista
Corp. of its commitment to provide additional funding of up to
$1.5 million to AVLB, Inc. Avista Corp. has an ownership
interest of approximately 17.5 percent in AVLB, Inc.
Note B. Amount for the nine months ended September 30, 2003 represents
Avista Energy's transition from Emerging Issues Task Force Issue
No. 98-10, "Accounting for Contracts Involved in Energy Trading
and Risk Management Activities" to Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities." Amount for the nine months
ended September 30, 2002 represents the transitional adjustment
related to the Company's adoption of an accounting standard for
goodwill.
AVISTA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in Thousands)
September 30, December 31,
2003 2002
Assets
Cash and cash equivalents $187,184 $186,269
Securities held for trading 18,884 --
Accounts and notes receivable 261,799 320,836
Current energy commodity assets 198,711 365,477
Other current assets 110,198 101,083
Total net utility property 1,685,070 1,563,704
Investment in exchange power -- net 38,996 40,833
Non-utility properties and
investments -- net 93,607 199,579
Non-current energy commodity assets 284,204 348,309
Other property and investments -- net 15,036 12,702
Regulatory assets for deferred income taxes 132,104 139,138
Other regulatory assets 26,868 29,735
Utility energy commodity derivative assets 52,397 60,322
Power and natural gas deferrals 176,299 166,782
Other deferred charges 80,051 79,364
Total Assets $3,361,408 $3,614,133
Liabilities and Stockholders' Equity
Accounts payable $281,639 $339,637
Current energy commodity liabilities 160,067 304,781
Current portion of long-term debt 16,283 71,896
Short-term borrowings 85,530 30,000
Other current liabilities 232,473 194,516
Non-current energy commodity liabilities 241,155 314,204
Utility energy commodity
derivative liabilities 43,594 50,058
Deferred income taxes 438,110 454,147
Long-term debt 899,048 902,635
Other non-current liabilities and
other deferred credits 102,700 106,218
Preferred trust securities 100,000 100,000
Preferred stock 31,500 33,250
Common stock -- net (48,310,886 and
48,044,208 outstanding shares) 612,319 607,018
Retained earnings and
other comprehensive loss 116,990 105,773
Total Liabilities and
Stockholders' Equity $3,361,408 $3,614,133
AVISTA CORPORATION
FINANCIAL AND OPERATING HIGHLIGHTS
(Dollars in Thousands)
Nine Months Ended
Third Quarter September 30,
2003 2002 2003 2002
Avista Utilities
Retail electric
revenues $120,363 $108,806 $355,410 $340,267
Retail kWh sales
(in millions) 2,025 1,791 5,799 5,582
Retail electric customers
at end of period 321,908 317,065 321,908 317,065
Wholesale electric
revenues $18,673 $17,329 $60,139 $51,470
Wholesale kWh sales
(in millions) 330 637 1,740 1,869
Other electric revenues $24,974 $15,858 $68,577 $37,438
Total natural gas
revenues $26,978 $29,533 $173,224 $218,982
Total therm sales
(in thousands) 58,512 63,645 323,698 357,322
Retail natural gas
customers at end
of period 291,869 284,636 291,869 284,636
Income from operations
(pre-tax) $22,503 $21,958 $100,402 $108,348
Net income (loss) $907 $(461) $19,944 $24,788
Energy Marketing and Resource Management
Gross margin (operating
revenues less
resource costs) $12,774 $9,763 $51,271 $44,114
Income from operations
(pre-tax) $6,898 $3,870 $31,319 $25,299
Net income $4,844 $2,732 $21,089(A) $19,418
Electric sales
(millions of kWhs) 10,647 10,655 31,654 30,626
Natural gas sales
(thousands of
dekatherms) 56,774 55,816 165,411 169,707
Avista Advantage
Revenues $5,002 $4,419 $14,736 $12,182
Loss from operations
(pre-tax) $(202) $(1,152) $(1,303) $(5,462)
Net loss $(265) $(905) $(1,230) $(3,551)
Other
Revenues $2,959 $3,985 $10,674 $10,365
Loss from
operations (pre-tax) $(1,080) $(1,068) $(3,200) $(13,463)
Net loss $(1,100) $(502) $(4,262) $(10,523)(B)
(A) Excludes $1.2 million cumulative effect of accounting change for the
nine months ended September 30, 2003 related to
Avista Energy's transition from Emerging Issues Task Force Issue No.
98-10, "Accounting for Contracts Involved in
Energy Trading and Risk Management Activities" to Statement of
Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities."
(B) Excludes $4.1 million cumulative effect of accounting change for the
nine months ended September 30, 2002 related to the
transitional adjustment for the adoption of an accounting standard
for goodwill.
SOURCE Avista Corp.
media, Hugh Imhof, +1-509-495-4264, or hugh.imhof@avistacorp.com, or investors, Angela Teed, +1-509-495-2930, or angela.teed@avistacorp.com, both of Avista Corp. /Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/19990629/AVALOGO AP Archive: http://photoarchive.ap.org PRN Photo Desk, 1-888-776-6555 or +1-212-782-2840
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