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UNITED STATES
 
 
SECURITIES AND EXCHANGE COMMISSION
 
 
Washington D.C. 20549
 
 
 
 
 
FORM 8-K
 
 
 
 
 
CURRENT REPORT
 
 
 
 
 
PURSUANT TO SECTION 13 OR 15(d) OF
 
 
THE SECURITIES EXCHANGE ACT OF 1934
 
 
 
 
 
 
 
 
Date of Report (Date of earliest event reported): November 1, 2017
 
 
 
 
 
AVISTA CORPORATION
 
 
(Exact name of registrant as specified in its charter)
 
 
 
 
 
 
 
Washington
1-3701
91-0462470
(State of other jurisdiction of
incorporation)
(Commission
file number)
(I.R.S. Employer
Identification No.)
1411 East Mission Avenue, Spokane, Washington
 
99202-2600
(Address of principal executive offices)
 
(Zip Code)
Registrant's telephone number, including area code:
 
509-489-0500
Web site: http://www.avistacorp.com
 
 

 
(Former name or former address, if changed since last report)
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company ¨
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨




Section 2 – Financial Information

Item 2.02 Results of Operations and Financial Condition.

The information in this report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

On November 1, 2017, Avista Corporation (Avista Corp.) issued a press release reporting 2017 earnings for the third quarter and year-to-date. A copy of the press release is furnished as Exhibit 99.1.

Section 9 - Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(d)    Exhibits

99.1    Press release dated November 1, 2017, which is being furnished pursuant to Item 2.02.

Neither the furnishing of any press release as an exhibit to this Current Report nor the inclusion in such press releases of a reference to Avista Corp.'s Internet address shall, under any circumstances, be deemed to incorporate the information available at such Internet address into this Current Report. The information available at Avista Corp.'s Internet address is not part of this Current Report or any other report furnished or filed by Avista Corp. with the Securities and Exchange Commission.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


 
 
AVISTA CORPORATION
 
 
(Registrant)
 
 
 
 
 
 
Date:
October 31, 2017
/s/    Mark T. Thies        
 
 
Mark T. Thies
 
 
Senior Vice President,
 
 
Chief Financial Officer, and Treasurer



Exhibit


https://cdn.kscope.io/64196762a4de9cf408ffa71103c0ded1-avalogo73015a08.jpg
Contact:
Media: Casey Fielder (509) 495-4916 casey.fielder@avistacorp.com
Investors: Lauren Pendergraft (509) 495-2998 lauren.pendergraft@avistacorp.com
Avista 24/7 Media Access (509) 495-4174

Avista Corp. Reports Financial Results for Third Quarter and Year-to-Date 2017 and Revises 2017 Earnings Guidance

SPOKANE, Wash. – Nov. 1, 2017, 4:05 a.m. PDT: Avista Corp. (NYSE: AVA) today reported net income attributable to Avista Corp. shareholders of $4.5 million, or $0.07 per diluted share for the third quarter of 2017, compared to $12.2 million, or $0.19 per diluted share for the third quarter of 2016. For the nine months ended Sept. 30, 2017, net income attributable to Avista Corp. shareholders was $88.3 million, or $1.37 per diluted share, compared to $97.1 million, or $1.53 per diluted share for the nine months ended Sept. 30, 2016.

"Our 2017 consolidated earnings for the third quarter and year-to-date decreased compared to the same periods in 2016, due to acquisition costs, increased operating expenses, depreciation and interest expense. The decreases in earnings were partially offset by lower resource costs, general rate increases in Idaho and Oregon and customer growth," said Scott Morris, chairman, president and chief executive officer of Avista Corp.

"We are revising our consolidated earnings guidance range to $1.75 to $1.90 per diluted share from our previous range of $1.80 to $2.00 per diluted share. The revision is due to an estimated $0.20 to $0.25 of acquisition costs for 2017, which were not included in our previous range, partially offset by lower power supply costs, operating expenses and net financing expenses when compared to our original guidance range.

"During the third quarter, we filed certain regulatory applications requesting orders to approve the proposed acquisition by Hydro One. We also distributed our definitive proxy associated with a special meeting of Avista Corp. shareholders to vote on the transaction. We continue to work toward completing the transaction in the second half of 2018.

"We recently filed a settlement agreement related to our 2017 Idaho electric and natural gas general rate cases, which, if approved, will provide rate increases in 2018 and 2019. Also, the Oregon Public Utility Commission approved our settlement agreement to our 2016 general rate case, which provided rate increases on Oct. 1 and Nov. 1.

"Alaska Electric Light and Power Company (AEL&P) continues to have a solid year and is on-track to meet our original expectations. In addition, we recently filed a settlement agreement related to our 2016 electric general rate case, which, if approved, will make the interim rate increases permanent," Morris said.


1


Summary Results: Avista Corp.’s results for the third quarter of 2017 and the nine months ended Sept. 30, 2017 (year-to-date) as compared to the respective periods in 2016 are presented in the table below (dollars in thousands, except per-share data):
 
 
Third Quarter
 
Year-to-Date
 
 
2017
 
2016
 
2017
 
2016
Net Income (Loss) by Business Segment:
 
 
 
 
 
 
 
 
Avista Utilities
 
$
5,419

 
$
12,673

 
$
85,623

 
$
94,431

AEL&P
 
427

 
866

 
5,961

 
4,885

Other
 
(1,395
)
 
(1,305
)
 
(3,246
)
 
(2,179
)
Total net income attributable to Avista Corp. shareholders
 
$
4,451

 
$
12,234

 
$
88,338

 
$
97,137

 
Earnings (Loss) per Diluted Share by Business Segment:
 
 
 
 
 
 
 
 
Avista Utilities
 
$
0.08

 
$
0.20

 
$
1.33

 
$
1.49

AEL&P
 
0.01

 
0.01

 
0.09

 
0.08

Other
 
(0.02
)
 
(0.02
)
 
(0.05
)
 
(0.04
)
Total earnings per diluted share attributable to Avista Corp. shareholders
 
$
0.07

 
$
0.19

 
$
1.37

 
$
1.53


The table below presents the change in net income attributable to Avista Corp. shareholders and diluted earnings per share for the third quarter of 2017 and the nine months ended Sept. 30, 2017 as compared to the respective periods in 2016, as well as the various factors that caused such change (dollars in thousands, except per-share data):
 
 
Third Quarter
 
Year-to-Date
 
 
Net Income (a)
 
Earnings per Share
 
Net Income (a)
 
Earnings per Share
2016 consolidated earnings
 
$
12,234

 
$
0.19

 
$
97,137

 
$
1.53

 
 
 
 
 
 
 
 
 
Changes in net income and diluted earnings per share:
 
 
 
 
 
 
 
 
Avista Utilities
 
 
 
 
 
 
 
 
Electric gross margin (including intracompany) (b)
 
2,848

 
0.04

 
5,433

 
0.08

Natural gas gross margin (including intracompany) (c)
 
(128
)
 
—

 
5,486

 
0.09

Other operating expenses (d)
 
(1,264
)
 
(0.02
)
 
(1,493
)
 
(0.02
)
Acquisition costs (e)
 
(6,354
)
 
(0.10
)
 
(7,497
)
 
(0.12
)
Depreciation and amortization (f)
 
(1,651
)
 
(0.03
)
 
(5,143
)
 
(0.08
)
Interest expense (g)
 
(1,494
)
 
(0.02
)
 
(4,424
)
 
(0.07
)
Other (h)
 
84

 
—

 
(2,343
)
 
(0.04
)
Effective income tax rate (i)
 
705

 
0.01

 
1,173

 
0.02

Dilution on earnings
 
 n/a

 
—

 
 n/a

 
(0.02
)
Total Avista Utilities
 
(7,254
)
 
(0.12
)
 
(8,808
)
 
(0.16
)
 
 
 
 
 
 
 
 
 
AEL&P earnings (j)
 
(439
)
 
—

 
1,076

 
0.01

Other businesses earnings (k)
 
(90
)
 
—

 
(1,067
)
 
(0.01
)
 
 
 
 
 
 
 
 
 
2017 consolidated earnings
 
$
4,451

 
$
0.07

 
$
88,338

 
$
1.37


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Analysis of 2017 Consolidated Earnings

(a)
The tax impact of each line item, except acquisition costs, was calculated using Avista Corp.'s statutory tax rate (federal and state combined) of 36.69 percent. See items (e) and (i) below for further discussion of the acquisition costs and our effective tax rate.
(b)
Electric gross margin (operating revenues less resource costs) increased for both the third quarter and year-to-date, primarily due to the following:
•
An increase in retail electric rates due to a general rate increase in Idaho;
•
An increase in retail electric revenues compared to the prior year resulting from customer growth and an increase in non-decoupled electric revenues (industrial);
•
Recognition of decoupling revenue from prior years that had not met revenue recognition criteria until the current year; and
•
A decrease in electric resource costs primarily due to a decrease in purchased power and fuel for generation, which resulted from a decrease in thermal generation and an increase in hydroelectric generation. For the third quarter of 2017, we had a $1.0 million pre-tax expense under the ERM in Washington, compared to a $1.6 million pre-tax expense for the third quarter of 2016. For the nine months ended Sept. 30, 2017, we recognized a pre-tax benefit of $3.6 million under the ERM compared to a benefit of $2.7 million for the nine months ended Sept. 30, 2016.
(c)
Natural gas gross margin (operating revenues less resource costs) decreased for the third quarter but increased for the year-to-date. The fluctuations were primarily due to the following:
•
General rate increase in Oregon;
•
An increase in retail natural gas revenues compared to the prior year resulting from customer growth; and
•
Recognition of decoupling revenue from prior years that had not met revenue recognition criteria until the current year.
•
For the third quarter of 2017, the increases above were offset by a change in the provision for earnings sharing, which reduced natural gas gross margin when compared to the corresponding period in 2016.
(d)
Other operating expenses for the third quarter and year-to-date 2017 increased as a result of an increase in generation and distribution maintenance costs. The increases were partially offset by decreases in pension, other postretirement benefit and medical expenses.
(e)
Acquisition costs were $6.7 million for the third quarter of 2017 and $8.0 million for the year-to-date 2017 pre-tax, which are not being passed through to customers. However, the majority of acquisition costs, which reduce income before income taxes, are not deductible for tax purposes and thus do not reduce income tax expense. The amount included in this line includes the impact of the non-deductible portion of expenses.
(f)
Depreciation and amortization increased for the third quarter and year-to-date 2017 due to additions to utility plant.

3


(g)
Interest expense increased for the third quarter and year-to-date 2017 due to additional outstanding debt during 2017 as compared to 2016 and partially due to an increase in the overall interest rate.
(h)
Other for the year-to-date 2017 increased primarily due to an increase in revenue-related taxes.
(i)
Our effective tax rate was 53.6 percent for the third quarter of 2017, compared to 38.3 percent for the third quarter of 2016, and it was 36.9 percent for the nine months ended Sept. 30, 2017, compared to 36.0 percent for the nine months ended Sept. 30, 2016. The increase in the effective tax rate during 2017 is because the majority of acquisition costs are not deductible for tax purposes.
(j)
AEL&P earnings decreased for the third quarter of 2017, but increased for the year-to-date 2017. For both the third quarter and year-to-date, there was an increase in revenue due to an interim general rate increase, higher electric loads and a slight increase in residential and commercial customers. During the third quarter of 2017, there was a customer refund recorded related to a settlement agreement reached in AEL&P's electric general rate case, which mostly offset the revenue increase for the quarter. There was also an increase in operating expenses for both the third quarter and year-to-date 2017.
(k)
Losses at our other businesses for both the third quarter and year-to-date 2017 were due to renovation expenses and increased compliance costs at one of our subsidiaries and the recognition of our portion of net losses from our equity investments.
Non-Generally Accepted Accounting Principles (Non-GAAP) Financial Measures
The tables above and below include electric gross margin and natural gas gross margin, two financial measures that are considered “non-GAAP financial measures.” Generally, a non-GAAP financial measure is a numerical measure of a company's financial performance, financial position or cash flows that excludes (or includes) amounts that are included (or excluded) in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles (GAAP). The presentation of electric gross margin and natural gas gross margin for Avista Utilities is intended to supplement an investor's understanding of Avista Utilities' operating performance. We use these measures to determine whether the appropriate amount of revenue is being collected from customers to allow for the recovery of energy resource costs and operating costs, as well as to analyze how changes in loads (due to weather, economic or other conditions), rates, supply costs and other factors impact our results of operations. We present electric and natural gas gross margin separately since each business has different cost sources, cost recovery mechanisms and jurisdictions. These measures are not intended to replace income from operations as determined in accordance with GAAP as an indicator of operating performance. The calculations of electric and natural gas gross margins are presented below.

4


The following table presents Avista Utilities' operating revenues, resource costs and resulting gross margin (pre-tax and after-tax) for the three and nine months ended Sept. 30 (dollars in thousands):
 
Operating Revenues
 
Resource Costs
 
Gross Margin (Pre-Tax)
 
Income Taxes (a)
 
Gross Margin (Net of Tax)
For the three months ended Sept. 30, 2017:
 
 
 
 
 
 
 
 
 
Electric
$
231,419

 
$
79,598

 
$
151,821

 
$
55,703

 
$
96,118

Natural Gas
79,938

 
55,499

 
24,439

 
8,966

 
15,473

Less: Intracompany
(30,581
)
 
(30,581
)
 
—

 
—

 
—

Total
$
280,776

 
$
104,516

 
$
176,260

 
$
64,669

 
$
111,591

For the three months ended Sept. 30, 2016:
 
 
 
 
 
 
 
 
 
Electric
$
237,768

 
$
90,445

 
$
147,323

 
$
54,053

 
$
93,270

Natural Gas
83,335

 
58,693

 
24,642

 
9,041

 
15,601

Less: Intracompany
(33,910
)
 
(33,910
)
 
—

 
—

 
—

Total
$
287,193

 
$
115,228

 
$
171,965

 
$
63,094

 
$
108,871

For the nine months ended Sept. 30, 2017:
 
 
 
 
 
 
 
 
 
Electric
$
725,695

 
$
239,900

 
$
485,795

 
$
178,238

 
$
307,557

Natural Gas
330,580

 
190,061

 
140,519

 
51,556

 
88,963

Less: Intracompany
(63,371
)
 
(63,371
)
 
—

 
—

 
—

Total
$
992,904

 
$
366,590

 
$
626,314

 
$
229,794

 
$
396,520

For the nine months ended Sept. 30, 2016:
 
 
 
 
 
 
 
 
 
Electric
$
735,361

 
$
258,147

 
$
477,214

 
$
175,090

 
$
302,124

Natural Gas
319,700

 
187,846

 
131,854

 
48,377

 
83,477

Less: Intracompany
(65,080
)
 
(65,080
)
 
—

 
—

 
—

Total
$
989,981

 
$
380,913

 
$
609,068

 
$
223,467

 
$
385,601


(a)
Income taxes were calculated using Avista Corp.'s statutory tax rate (federal and state combined) of 36.69 percent.

Liquidity and Capital Resources

We have a $400.0 million committed line of credit that expires in April 2021. As of Sept. 30, 2017, we had $161.1 million of available liquidity under this line of credit. We also had $25.0 million of available liquidity under AEL&P's committed line of credit that expires in November 2019.
In September 2017, we entered into a bond purchase agreement to issue $90.0 million of first mortgage bonds in December 2017. No further long-term debt issuances are planned for 2017. In the fourth quarter, we expect to issue up to $70.0 million of common stock in order to fund planned capital expenditures and/or repay short-term debt incurred for such purpose. We have 2.2 million shares remaining to be issued under our sales agency agreements.
In addition, during the third quarter of 2017, we filed income tax refund claims for 2014 and 2015 to utilize net operating losses and investment tax credits, and we received an income tax refund of approximately $41.7 million during the fourth quarter of 2017.
Avista Utilities' capital expenditures were $283.1 million for the nine months ended Sept. 30, 2017, and we expect Avista Utilities' capital expenditures to total about $405.0 million in 2017.

5


AEL&P's capital expenditures were $4.8 million for the nine months ended Sept. 30, 2017, and we expect AEL&P's capital expenditures to total about $7.0 million in 2017.

2017 Earnings Guidance and Outlook

We are revising our consolidated earnings guidance range to $1.75 to $1.90 per diluted share from our previous range of $1.80 to $2.00 per diluted share. The revision is due to an estimated $0.20 to $0.25 of acquisition costs for 2017, which were not included in our previous range, partially offset by lower power supply costs, operating expenses and net financing expenses when compared to our original guidance range.

We expect Avista Utilities to contribute in the range of $1.71 to $1.80 per diluted share for 2017, including acquisition costs, which represents a change from our previous range of $1.71 to $1.85 per diluted share. The difference in our earnings guidance range is primarily due to the inclusion of $0.20 to $0.25 per diluted share of acquisition costs, partially offset by lower resource costs, operating expenses and net financing expenses. The midpoint of Avista Utilities' previous guidance range included $0.07 of expense under the ERM, which was within the 90 percent customers/10 percent shareholders sharing band. Our current expectation for the ERM is a benefit position within the $4 million deadband, which is an improvement of $0.07 to $0.09 per diluted share from our original guidance. Our outlook for Avista Utilities assumes, among other variables, normal precipitation, temperatures and hydroelectric generation for the remainder of the year.

For 2017, we continue to expect AEL&P to contribute in the range of $0.10 to $0.14 per diluted share. Our outlook for AEL&P assumes, among other variables, normal precipitation and hydroelectric generation for the remainder of the year.

We expect the other businesses to be between a loss of $0.06 and a loss of $0.04 per diluted share, which includes costs associated with exploring strategic opportunities. This represents a change from our previous range of a loss of $0.01 to a gain of $0.01 per diluted share. The change is due to renovation expenses at one of our subsidiaries and the recognition of our portion of net losses from our equity investments.

Our guidance generally includes only normal operating conditions and does not include unusual items such as settlement transactions or acquisitions/dispositions until the effects are known and certain.

NOTE: We will host a conference call with financial analysts and investors on Nov. 1, 2017, at 10:30 a.m. EDT to discuss this news release. The call will be available at (888) 771-4371, Confirmation number: 45765896. A simultaneous webcast of the call will be available on our website, www.avistacorp.com. A replay of the conference call will be available through Nov. 8, 2017. Call (888) 843-7419, confirmation number 45765896#, to listen to the replay.

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 our operating division that provides electric service to 379,000 customers and natural gas to 343,000 customers. Our service territory covers 30,000 square miles in eastern Washington, northern Idaho and parts of southern and eastern Oregon, with a population of 1.6 million. AERC is an Avista subsidiary that, through its subsidiary AEL&P, provides retail electric service to 16,000 customers in the city and

6


borough of Juneau, Alaska. Our stock is traded under the ticker symbol “AVA”. For more information about Avista, please visit www.avistacorp.com.

Avista Corp. and the Avista Corp. logo are trademarks of Avista Corporation.

This news release contains forward-looking statements, including statements regarding our current expectations for future financial performance and cash flows, capital expenditures, financing plans, our current plans or objectives for future operations and other factors, which may affect the company in the future. Such statements are subject to a variety of risks, uncertainties and other factors, most of which are beyond our control and many of which could have significant impact on our operations, results of operations, financial condition or cash flows and could cause actual results to differ materially from those anticipated in such statements.

The following are among the important factors that could cause actual results to differ materially from the forward-looking statements: weather conditions (temperatures, precipitation levels and wind patterns), which affect both energy demand and electric generating capability, including the effect of precipitation and temperature on hydroelectric resources, the effect of wind patterns on wind-generated power, weather-sensitive customer demand, and similar effects on supply and demand in the wholesale energy markets; our ability to obtain financing through the issuance of debt and/or equity securities, which can be affected by various factors including our credit ratings, interest rates and other capital market conditions and the global economy; changes in interest rates that affect borrowing costs, our ability to effectively hedge interest rates for anticipated debt issuances, variable interest rate borrowing and the extent to which we recover interest costs through retail rates collected from customers; changes in actuarial assumptions, interest rates and the actual return on plan assets for our pension and other postretirement benefit plans, which can affect future funding obligations, pension and other postretirement benefit expense and the related liabilities; deterioration in the creditworthiness of our customers; the outcome of legal proceedings and other contingencies; economic conditions in our service areas, including the economy's effects on customer demand for utility services; declining energy demand related to customer energy efficiency and/or conservation measures; changes in the long-term global and our utilities' service area climates, which can affect, among other things, customer demand patterns and the volume and timing of streamflows to our hydroelectric resources; state and federal regulatory decisions or related judicial decisions that affect our ability to recover costs and earn a reasonable return including, but not limited to, disallowance or delay in the recovery of capital investments, operating costs and commodity costs and discretion over allowed return on investment; possibility that our integrated resource plans for electric and natural gas will not be acknowledged by the state commissions, which could result in future resource acquisitions based on the integrated resource plans, which are later deemed imprudent; volatility and illiquidity in wholesale energy markets, including the availability of willing buyers and sellers, changes in wholesale energy prices that can affect operating income, cash requirements to purchase electricity and natural gas, value received for wholesale sales, collateral required of us by counterparties in wholesale energy transactions and credit risk to us from such transactions, and the market value of derivative assets and liabilities; default or nonperformance on the part of any parties from whom we purchase and/or sell capacity or energy; potential environmental regulations affecting our ability to utilize or resulting in the obsolescence of our power supply resources; severe weather or natural disasters, including, but not limited to, avalanches, wind storms, wildfires, earthquakes, snow and ice storms, that can disrupt energy generation, transmission and distribution, as well as the availability and costs of materials, equipment, supplies and support services; explosions, fires, accidents, mechanical breakdowns or other incidents that may impair assets and may disrupt operations of any of our generation facilities, transmission, and electric and natural gas distribution systems or other operations and may require us to purchase replacement power; wildfires caused by our electric transmission or distribution systems that may result in injuries to the public or property damage; injuries to the public or damage arising from or allegedly arising from our operations; blackouts or disruptions of interconnected transmission systems (the regional power grid); terrorist attacks, cyber attacks or other malicious acts that may disrupt or cause damage to our utility assets or to the national or regional economy in general, including any effects of terrorism, cyber attacks or vandalism that damage or disrupt information technology systems; work force issues, including changes in collective bargaining unit agreements, strikes, work stoppages, the loss of key executives, availability of workers in a variety of skill areas, and our ability to recruit and retain employees; increasing costs of insurance, more restrictive coverage terms and our ability to obtain insurance; delays or changes in construction costs, and/or our ability to obtain required permits and materials for present or prospective facilities; increasing health care costs and cost of health insurance provided to our employees and retirees; third party construction of buildings, billboard signs, towers or other structures within our rights of way, or placement of fuel receptacles within close proximity to our transformers or other equipment, including overbuild atop natural gas distribution lines; the loss of key suppliers for materials or services or disruptions to the supply chain; adverse impacts to our Alaska operations that could result from an extended outage of its hydroelectric generating resources or their inability to deliver energy, due to their lack of interconnectivity to any other electrical grids and the extensive cost of replacement power (diesel); changing river regulation at hydroelectric facilities not owned by us, which could impact our hydroelectric facilities downstream; compliance with extensive federal, state and local legislation and regulation, including numerous environmental, health, safety, infrastructure protection, reliability and other laws and regulations that affect our operations and costs; the ability to comply with the terms of the licenses and permits for our hydroelectric or thermal generating facilities at cost-effective levels; cyber attacks on us or our vendors or other potential lapses that result in unauthorized disclosure of private information, which could result in liabilities against us, costs to investigate, remediate and defend, and damage to our reputation; disruption to or breakdowns of information systems, automated controls and other technologies that we rely on for our operations, communications and customer service; changes in costs that impede our ability to effectively implement new information technology systems or to operate and maintain current production technology; changes in technologies, possibly making some of the current technology

7


we utilize obsolete or the introduction of new technology that may create new cyber security risk; insufficient technology skills, which could lead to the inability to develop, modify or maintain our information systems; growth or decline of our customer base and the extent to which new uses for our services may materialize or existing uses may decline, including, but not limited to, the effect of the trend toward distributed generation at customer sites; the potential effects of negative publicity regarding business practices, whether true or not, which could result in litigation or a decline in our common stock price; changes in our strategic business plans, which may be affected by any or all of the foregoing, including the entry into new businesses and/or the exit from existing businesses and the extent of our business development efforts where potential future business is uncertain; non-regulated activities may increase earnings volatility; failure to complete the proposed acquisition could negatively impact the market price of Avista Corp.'s common stock or result in termination fees that could have a material adverse effect on our results of operations, financial condition, and cash flows; the proposed acquisition of the Company by Hydro One has resulted in multiple shareholder class action lawsuits against the Company and its board of directors that could have a material adverse effect on our results of operations, financial condition, and cash flows and could delay or preclude consummation of the transaction; changes in environmental laws, regulations, decisions and policies, including present and potential environmental remediation costs and our compliance with these matters; the potential effects of initiatives, legislation or administrative rulemaking at the federal, state or local levels, including possible effects on our generating resources of restrictions on greenhouse gas emissions to mitigate concerns over global climate changes; political pressures or regulatory practices that could constrain or place additional cost burdens on our distribution systems through accelerated adoption of distributed generation or electric-powered transportation or on our energy supply sources, such as campaigns to halt coal-fired power generation and opposition to other thermal generation, wind turbines or hydroelectric facilities; wholesale and retail competition including alternative energy sources, growth in customer-owned power resource technologies that displace utility-supplied energy or that may be sold back to the utility, and alternative energy suppliers and delivery arrangements; failure to identify changes in legislation, taxation and regulatory issues which are detrimental or beneficial to our overall business; policy and/or legislative changes resulting from the new presidential administration in various regulated areas, including, but not limited to, potential tax reform, environmental regulation and healthcare regulations; and the risk of municipalization in any of our service territories.

For a further discussion of these factors and other important factors, please refer to our Quarterly Report on Form 10-Q for the quarter ended Sept. 30, 2017. The forward-looking statements contained in this news release speak only as of the date hereof. We undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances that occur after the date on which such statement is made or to reflect the occurrence of unanticipated events. New risks, uncertainties and other factors emerge from time to time, and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on our business or the extent to which any such factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement.

To unsubscribe from Avista’s news release distribution, send reply message to lena.funston@avistacorp.com.

Issued by: Avista Corporation

8


AVISTA CORPORATION
     CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
     (Dollars in Thousands except Per Share Amounts)
 
 
 
 
 
 
 
 
 
Third Quarter
 
Year-to-Date
 
2017
 
2016
 
2017
 
2016
Operating revenues
$
297,096

 
$
303,349

 
$
1,048,067

 
$
1,040,360

Operating expenses:
 
 
 
 
 
 
 
Utility resource costs
108,568

 
118,737

 
376,905

 
390,271

Other operating expenses
84,382

 
81,916

 
252,822

 
248,467

Acquisition costs
6,730

 
—

 
8,004

 
—

Depreciation and amortization
43,105

 
40,433

 
128,078

 
119,683

Utility taxes other than income taxes
23,269

 
22,669

 
79,733

 
74,669

Total operating expenses
266,054

 
263,755

 
845,542

 
833,090

Income from operations
31,042

 
39,594

 
202,525

 
207,270

Interest expense, net of capitalized interest
23,272

 
21,289

 
69,258

 
62,421

Other income - net
(1,841
)
 
(1,562
)
 
(6,598
)
 
(7,025
)
Income before income taxes
9,611

 
19,867

 
139,865

 
151,874

Income tax expense
5,153

 
7,606

 
51,548

 
54,661

Net income
4,458

 
12,261

 
88,317

 
97,213

Net loss (income) attributable to noncontrolling interests
(7
)
 
(27
)
 
21

 
(76
)
Net income attributable to Avista Corp. shareholders
$
4,451

 
$
12,234

 
$
88,338

 
$
97,137

Weighted-average common shares outstanding (thousands), basic
64,412

 
63,857

 
64,392

 
63,282

Weighted-average common shares outstanding (thousands), diluted
64,892

 
64,325

 
64,638

 
63,687

 
 
 
 
 
 
 
 
Earnings per common share attributable to Avista Corp. shareholders:
 
 
 
 
 
 
 
Basic
$
0.07

 
$
0.19

 
$
1.37

 
$
1.53

Diluted
$
0.07

 
$
0.19

 
$
1.37

 
$
1.53

Dividends declared per common share
$
0.3575

 
$
0.3425

 
$
1.0725

 
$
1.0275

Issued Nov. 1, 2017
 
 
 
 
 
 
 

9


AVISTA CORPORATION
     CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
     (Dollars in Thousands)
 
September 30,
 
December 31,
 
2017
 
2016
Assets
 
 
 
Cash and cash equivalents
$
14,716

 
$
8,507

Accounts and notes receivable
125,595

 
180,265

Other current assets
176,323

 
162,569

Total net utility property
4,303,164

 
4,147,500

Other non-current assets
149,241

 
141,443

Regulatory assets for deferred income taxes
123,449

 
109,853

Regulatory assets for pensions and other postretirement benefits
230,988

 
240,114

Regulatory asset for interest rate swaps
170,079

 
161,508

Other regulatory assets
145,483

 
152,670

Other deferred charges
13,194

 
5,326

Total Assets
$
5,452,232

 
$
5,309,755

Liabilities and Equity
 
 
 
Accounts payable
$
72,777

 
$
115,545

Current portion of long-term debt and capital leases
277,626

 
3,287

Short-term borrowings
106,298

 
120,000

Other current liabilities
216,550

 
168,696

Long-term debt and capital leases
1,491,789

 
1,678,717

Long-term debt to affiliated trusts
51,547

 
51,547

Regulatory liability for utility plant retirement costs
284,263

 
273,983

Pensions and other postretirement benefits
216,464

 
226,552

Deferred income taxes
903,943

 
840,928

Non-current unsettled interest rate swap derivative liabilities
1,330

 
28,705

Other non-current liabilities, regulatory liabilities and deferred credits
158,699

 
153,319

Total Liabilities
3,781,286

 
3,661,279

Equity
 
 
 
Avista Corporation Shareholders' Equity:
 
 
 
Common stock (64,414,572 and 64,187,934 outstanding shares)
1,077,215

 
1,075,281

Retained earnings and accumulated other comprehensive loss
593,112

 
573,446

Total Avista Corporation Shareholders' Equity
1,670,327

 
1,648,727

Noncontrolling interests
619

 
(251
)
Total Equity
1,670,946

 
1,648,476

Total Liabilities and Equity
$
5,452,232

 
$
5,309,755

Issued Nov. 1, 2017
 
 
 


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