EX-99.01 3 dex9901.htm PRESS RELEASE Press Release

 

Exhibit 99.01

 

El Paso Electric

 

LOGO

 

 

NEWS RELEASE

 

For Immediate Release

  

Contact:

    

Date: April 29, 2003

  

Media

  

Analyst

   

Teresa Souza

915/543-5823

  

Cynthia Gamez

915/543-2213

 

El Paso Electric Announces First Quarter Financial Results

 

El Paso Electric (NYSE: EE) today reported net income before the cumulative effect of a change in accounting principle for the quarter ended March 31, 2003 of $2.1 million, or $0.04 basic and diluted income per share. Net income for the same period last year was $5.9 million, or $0.12 basic and diluted earnings per share. Net income for the quarter ended March 31, 2003 includes a cumulative effect of a change in accounting principle related to the adoption of SFAS No. 143 “Accounting for Asset Retirement Obligations” on January 1, 2003. SFAS No. 143 provides guidance on the recognition and measurement of liabilities associated with the retirement of tangible long-lived assets. SFAS No. 143 affected the accounting for the decommissioning of EE’s Palo Verde and Four Corners Stations and changed the method used to report the decommissioning obligation. For the quarter ended March 31, 2003, the cumulative effect of this change in accounting principle, net of related income taxes, was $39.6 million, or $0.81 and $0.80 basic and diluted earnings per share, respectively. Net income for the quarter ended March 31, 2003 including the cumulative effect of a change in accounting principle was $41.7 million, or $0.85 and $0.84 basic and diluted earnings per share, respectively.

 

The decrease in earnings prior to the application of SFAS No. 143 for the quarter ended March 31, 2003 when compared to the quarter ended March 31, 2002 resulted primarily from decreased wholesale sales revenue related to the expiration of two long-term contracts, increased maintenance expense at local plants and increased pensions and benefits expense. These decreases in earnings were partially offset by increased margins on economy sales and a loss on extinguishment of debt recorded in the prior year without any offsetting amounts in the current year.

 

“We are encouraged that expired long-term wholesale sales to two former customers have been replaced, in part, by sales on the economy market,” said Gary Hedrick, President and CEO, “and our core business remains strong as reflected in the growth in our customer base. On the expense side, we are committed to controlling our costs and expect to mitigate unexpected first quarter expenses through cost containment in the final three quarters of 2003.”

 

During the quarter EE repurchased 0.4 million shares of common stock in the open market in accordance with the previously approved stock repurchase programs which in total permit the repurchase of 15 million shares. To date, almost 13.4 million shares have been repurchased for approximately $151.5 million, including

 

Page 1 of 8

El Paso Electric  ·  P.O. Box 982  ·  El Paso, Texas 79960

 

commissions. EE may continue making purchases of its stock at open market prices and may engage in private transactions, where appropriate.

 

EE has repurchased $550.5 million of first mortgage bonds with internally generated cash since inception of its deleveraging program in 1996. During the first quarter of 2003, EE repurchased or retired $39.4 million of the Series C First Mortgage Bonds which matured in the first quarter of 2003. Common stock equity as a percentage of capitalization, including current portion of long-term debt and financing obligations, was approximately 44% as of March 31, 2003 as compared to 19% in February 1996.

 

EBITDA

 

The change in earnings before interest, income taxes, depreciation and amortization (“EBITDA”) for the three month period ended March 31, 2003, compared to the same periods in 2002, is as follows (in thousands):

 

March 31, 2002

   

$

46,438

 

Changes in:

         

Decreased wholesale sales

   

 

(11,578

)

Increased local maintenance

   

 

(3,703

)

Increased pensions and benefits

   

 

(1,342

)

Increased Palo Verde expense

   

 

(909

)

Increased regulatory expense

   

 

(843

)

Increased outside services

   

 

(666

)

Increased insurance costs

   

 

(625

)

Increased economy sales margins

   

 

6,633

 

Loss on extinguishment of debt

   

 

3,310

 

Other

   

 

(451

)

    

March 31, 2003

   

$

36,264

 

    

 

EBITDA should not be considered an alternative to net income as an indicator of operating performance. Additionally, EBITDA should not be considered an alternative to cash flows from operating activities as a measure of liquidity.

 

Conference Call

 

A conference call to discuss first quarter 2003 earnings and earnings guidance is scheduled for 4 p.m. Eastern Time April 29, 2003. The dial-in number is 888-928-9122 with a passcode of 2003. A replay will run through May 14, 2003. The dial-in number is 888-568-0029, and a passcode is not required for the replay. The conference call will be webcast live on EE’s website found at http://www.epelectric.com and streetevents.com. A replay of the webcast will be available shortly after the call.

 

Safe Harbor

 

This news release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. This information may involve risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, increased prices for fuel and purchased power, the costs associated with unexpected local plant maintenance, the replacement of Palo Verde steam generators, the costs of unscheduled outages, the expenses associated with regulatory proceedings and other factors detailed by EE in its public filings with the Securities and Exchange Commission.

 

Page 2 of 8

El Paso Electric  ·  P.O. Box 982  ·  El Paso, Texas 79960

 

 

El Paso Electric Company’s consolidated results of operations for the three months ended March 31, 2003 and 2002 and consolidated pro forma results of operations for the three months ended March 31, 2002 which reflect the application of SFAS No. 143 on a retroactive basis are summarized as follows (In thousands except for share data):

 

    

Three Months Ended March 31,

  
    

2003

     

2002

     

Pro forma 2002

  

Electric utility operating revenues, net of energy expenses

   

$

102,203

 

   

$

105,115

 

   

$

105,115

 

Energy services operating income (loss)

   

 

(11

)

   

 

(129

)

   

 

(129

)

Other electric utility operating expenses

   

 

86,658

 

   

 

77,919

 

   

 

78,097

 

Other income (deductions)

   

 

(632

)

   

 

(3,195

)

   

 

(3,195

)

Interest charges

   

 

11,879

 

   

 

14,958

 

   

 

12,894

 

Income tax expense

   

 

907

 

   

 

3,063

 

   

 

3,793

 

    
  
  

Income before cumulative effect

   

 

2,116

 

   

 

5,851

 

   

 

7,007

 

Cumulative effect of a change in accounting principle (1)

   

 

39,635

 

   

 

—  

 

   

 

—  

 

    
  
  

Net income

   

$

41,751

 

   

$

5,851

 

   

$

7,007

 

    
  
  

Basic earnings per share:

                           

Income before cumulative effect

   

$

0.04

 

   

$

0.12

 

   

$

0.14

 

Cumulative effect of a change in accounting principle, net

   

 

0.81

 

   

 

—  

 

   

 

—  

 

    
  
  

Net income

   

$

0.85

 

   

$

0.12

 

   

$

0.14

 

    
  
  

Weighted average number of common shares outstanding

   

 

49,306,844

 

   

 

49,996,059

 

   

 

49,996,059

 

    
  
  

Diluted earnings per share:

                           

Income before cumulative effect

   

$

0.04

 

   

$

0.12

 

   

$

0.14

 

Cumulative effect of a change in accounting principle, net

   

 

0.80

 

   

 

—  

 

   

 

—  

 

    
  
  

Net income

   

$

0.84

 

   

$

0.12

 

   

$

0.14

 

    
  
  

Weighted average number of common shares and common share equivalents outstanding

   

 

49,620,276

 

   

 

50,631,542

 

   

 

50,631,542

 

    
  
  
    

Three Months Ended March 31,

  
    

2003

     

2002

     

Pro forma 2002

  

Reconciliation of EBITDA to Net Income:

                           

EBITDA

   

$

 36,264

 

   

$

46,438

 

   

$

45,346

 

Less:

                           

Depreciation and amortization

   

 

21,362

 

   

 

22,566

 

   

 

21,652

 

Net interest expense

   

 

11,879

 

   

 

14,958

 

   

 

12,894

 

Income taxes

   

 

907

 

   

 

3,063

 

   

 

3,793

 

Add:

                           

Cumulative effect of a change in accounting principle (1)

   

 

39,635

 

   

 

—  

 

   

 

—  

 

    
  
  

Net Income

   

$

41,751

 

   

$

5,851

 

   

$

7,007

 

    
  
  
(1)   Net of income tax expense of approximately $25.0 million.

 

Page 3 of 8

El Paso Electric  ·  P.O. Box 982  ·  El Paso, Texas 79960

 

 

El Paso Electric Company’s consolidated results of operations for the twelve months ended March 31, 2003 and 2002 are summarized as follows (In thousands except for share data):

 

    

Twelve Months Ended March 31,

  
    

2003

     

2002

  

Electric utility operating revenues, net of energy expenses

   

$

452,377

 

   

$

463,277

 

Energy services operating income (loss)

   

 

(3,577

)

   

 

(480

)

FERC settlements

   

 

15,500

 

   

 

—  

 

Other electric utility operating expenses

   

 

334,225

 

   

 

315,884

 

Other income (deductions)

   

 

(4,032

)

   

 

(6,213

)

Interest charges

   

 

55,275

 

   

 

63,517

 

Income tax expense

   

 

14,535

 

   

 

26,271

 

    
  

Income before cumulative effect

   

 

25,233

 

   

 

50,912

 

Cumulative effect of a change in accounting principle (1)

   

 

39,635

 

   

 

—  

 

    
  

Net income

   

$

64,868

 

   

$

50,912

 

    
  

Basic earnings per share:

                  

Income before cumulative effect

   

$

0.51

 

   

$

1.01

 

Cumulative effect of a change in accounting principle, net

   

 

0.80

 

   

 

—  

 

    
  

Net income

   

$

1.31

 

   

$

1.01

 

    
  

Weighted average number of common shares outstanding

   

 

49,692,437

 

   

 

50,605,241

 

    
  

Diluted earnings per share:

                  

Income before cumulative effect

   

$

0.50

 

   

$

0.99

 

Cumulative effect of a change in accounting principle, net

   

 

0.79

 

   

 

—  

 

    
  

Net income

   

$

1.29

 

   

$

0.99

 

    
  

Weighted average number of common shares and common share equivalents outstanding

   

 

50,129,975

 

   

 

51,422,028

 

    
  
    

Twelve Months Ended March 31,

  
    

2003

     

2002

  

Reconciliation of EBITDA to Net Income:

                  

EBITDA

   

$

183,421

 

   

$

230,576

 

Less:

                  

Depreciation and amortization

   

 

88,378

 

   

 

89,876

 

Net interest expense

   

 

55,275

 

   

 

63,517

 

Income taxes

   

 

14,535

 

   

 

26,271

 

Add:

                  

Cumulative effect of a change in accounting principle (1)

   

 

39,635

 

   

 

—  

 

    
  

Net Income

   

$

64,868

 

   

$

50,912

 

    
  
(1)   Net of income tax expense of approximately $25.0 million.

 

Page 4 of 8

El Paso Electric  ·  P.O. Box 982  ·  El Paso, Texas 79960

 

 

El Paso Electric Company’s pro forma consolidated results of operations which reflects the application of SFAS No 143 on a retroactive basis for the twelve months ended March 31, 2003 and 2002 are summarized as follows (In thousands except for share data):

 

    

Twelve Months Ended March 31,

  
    

Pro forma

2003

     

Pro forma

2002

  

Electric utility operating revenues, net of energy expenses

   

$

452,377

 

   

$

463,277

 

Energy services operating income (loss)

   

 

(3,577

)

   

 

(480

)

FERC settlements

   

 

15,500

 

   

 

—  

 

Other electric utility operating expenses

   

 

334,761

 

   

 

316,367

 

Other income (deductions)

   

 

(4,032

)

   

 

(6,213

)

Interest charges

   

 

49,082

 

   

 

55,686

 

Income tax expense

   

 

16,725

 

   

 

29,115

 

    
  

Net income

   

$

28,700

 

   

$

55,416

 

    
  

Basic earnings per share

   

$

0.58

 

   

$

1.10

 

    
  

Weighted average number of common shares outstanding

   

 

49,692,437

 

   

 

50,605,241

 

    
  

Diluted earnings per share

   

$

0.57

 

   

$

1.08

 

    
  

Weighted average number of common shares and common share equivalents outstanding

   

 

50,129,975

 

   

 

51,422,028

 

    
  
    

Twelve Months Ended March 31,

  
    

Pro forma

2003

     

Pro forma

2002

  

Reconciliation of EBITDA to Net Income:

                  

EBITDA

   

$

180,144

 

   

$

226,491

 

Less:

                  

Depreciation and amortization

   

 

85,637

 

   

 

86,274

 

Net interest expense

   

 

49,082

 

   

 

55,686

 

Income taxes

   

 

16,725

 

   

 

29,115

 

    
  

Net Income

   

$

28,700

 

   

$

55,416

 

    
  

 

Page 5 of 8

El Paso Electric  ·  P.O. Box 982  ·  El Paso, Texas 79960

 

 

Three Months Ended March 31, 2003 and 2002 (In thousands):

 

    

2003

   

2002

     

Increase (Decrease)

  

Electric kWh sales:

                       

Retail:

                       

Residential

   

 

431,202

   

 

432,657

 

   

(0.3

%)

Commercial and industrial, small

   

 

437,563

   

 

431,129

 

   

1.5

%

Commercial and industrial, large

   

 

264,741

   

 

261,992

 

   

1.0

%

Sales to public authorities

   

 

257,505

   

 

261,409

 

   

(1.5

%)

Wholesale:

                       

Sales for resale

   

 

9,893

   

 

348,485

 

   

(97.2

%)(1)

Economy sales

   

 

615,688

   

 

113,166

 

   

444.1

%  (2)

    
  
      

Total

   

 

2,016,592

   

 

1,848,838

 

   

9.1

%

    
  
      

Electric utility operating revenues:

                       

Base revenues

                       

Retail:

                       

Residential

   

$

37,383

   

$

37,803

 

   

(1.1

%)

Commercial and industrial, small

   

 

35,705

   

 

35,097

 

   

1.7

%

Commercial and industrial, large

   

 

9,886

   

 

9,841

 

   

0.5

%

Sales to public authorities

   

 

15,889

   

 

15,725

 

   

1.0

%

Wholesale:

                       

Sales for resale

   

 

390

   

 

11,968

 

   

(96.7

%)(1)

    
  
      

Total base revenues

   

 

99,253

   

 

110,434

 

   

(10.1

%)

Fuel revenues

   

 

21,497

   

 

32,477

 

   

(33.8

%)(3)

Economy sales

   

 

25,031

   

 

2,773

 

   

802.7

%  (2)

Other (4)

   

 

1,549

   

 

1,923

 

   

(19.4

%)

    
  
      

Total electric utility operating revenues

   

$

147,330

   

$

147,607

 

   

(0.2

%)

    
  
      

Capital Expenditures

   

$

12,767

   

$

15,702

 

       

Cash Interest Payments

   

$

14,260

   

$

16,427

 

       

Depreciation and Amortization

   

$

21,362

   

$

22,566

(5)

       

EBITDA

   

$

36,264

   

$

46,438

(6)

       

 

(1)   Primarily due to the expiration of wholesale power contracts with IID on April 30, 2002 and TNP on December 31, 2002
(2)   Primarily due to increased available power as a result of the expiration of the wholesale contracts mentioned above and a more robust market.
(3)   Primarily due to the expiration of the wholesale contracts with IID and TNP and decreased energy expenses passed through to Texas customers.
(4)   Represents revenues with no related kWh sales.
(5)   Pro forma depreciation and amortization would be $21,652 assuming SFAS No. 143 had been applied on a retroactive basis.
(6)   Pro forma EBITDA would be $45,346 assuming SFAS No. 143 had been applied on a retroactive basis.

 

Page 6 of 8

El Paso Electric  ·  P.O. Box 982  ·  El Paso, Texas 79960

 

 

Twelve Months Ended March 31, 2003 and 2002 (In thousands):

 

    

2003

   

2002

   

Increase (Decrease)

  

Electric kWh sales:

                     

Retail:

                     

Residential

   

 

1,869,476

   

 

1,798,050

   

4.0

%

Commercial and industrial, small

   

 

2,083,192

   

 

2,049,707

   

1.6

%

Commercial and industrial, large

   

 

1,164,564

   

 

1,134,530

   

2.6

%

Sales to public authorities

   

 

1,208,276

   

 

1,180,725

   

2.3

%

Wholesale:

                     

Sales for resale

   

 

647,541

   

 

1,486,448

   

(56.4

%)(1)

Economy sales

   

 

1,985,987

   

 

688,121

   

188.6

%(2)

    
  
      

Total

   

 

8,959,036

   

 

8,337,581

   

7.5

%

    
  
      

Electric utility operating revenues:

                     

Base revenues

                     

Retail:

                     

Residential

   

$

165,899

   

$

159,868

   

3.8

%

Commercial and industrial, small

   

 

164,161

   

 

160,929

   

2.0

%

Commercial and industrial, large

   

 

43,465

   

 

42,753

   

1.7

%

Sales to public authorities

   

 

70,966

   

 

69,883

   

1.5

%

Wholesale:

                     

Sales for resale

   

 

20,648

   

 

55,523

   

(62.8

%)(1)

    
  
      

Total base revenues

   

 

465,139

   

 

488,956

   

(4.9

%)

Fuel revenues

   

 

147,671

   

 

165,327

   

(10.7

%)(3)

Economy sales

   

 

65,914

   

 

47,723

   

38.1

%(2)

Other (4)

   

 

6,526

   

 

8,735

   

(25.3

%)

    
  
      

Total electric utility operating revenues

   

$

685,250

   

$

710,741

   

(3.6

%)

    
  
      

Capital Expenditures

   

$

62,130

   

$

68,649

       

Cash Interest Payments

   

$

53,618

   

$

62,420

       

Depreciation and Amortization (5)

   

$

88,378

   

$

89,876

       

EBITDA (6)

   

$

183,421

   

$

230,576

       

 

(1)   Primarily due to the expiration of wholesale power contracts with IID on April 30, 2002 and TNP on December 31, 2002.
(2)   Primarily due to increased available power as a result of the expiration of the wholesale contracts mentioned above and a more robust market.
(3)   Primarily due to the expiration of the wholesale contracts with IID and TNP and decreased energy expenses passed through to Texas customers.
(4)   Represents revenues with no related kWh sales.
(5)   Pro forma depreciation and amortization would be $85,637 and $86,274, respectively, assuming SFAS No. 143 had been applied on a retroactive basis
(6)   Pro forma EBITDA would be $180,144 and $226,491, respectively, assuming SFAS No. 143 had been applied on a retroactive basis.

 

Page 7 of 8

El Paso Electric  ·  P.O. Box 982  ·  El Paso, Texas 79960

 

 

At March 31, 2003 and 2002 (In thousands):

 

    

2003

   

2002

Cash and Temporary Investments

   

$

44,300

   

$

24,903

    
  

Common Stock Equity

   

$

493,541

   

$

457,606

Long-term Debt, Net of Current Portion

   

 

588,621

   

 

518,537

Financing Obligations, Net of Current Portion

   

 

23,377

   

 

26,698

    
  

Total Capitalization

   

$

1,105,539

   

$

1,002,841

    
  

Current Portion of Long-Term Debt and Financing Obligations

   

$

21,833

   

$

132,588

    
  

Book Value Per Common Share

   

$

10.04

   

$

9.08

    
  

 

Page 8 of 8

El Paso Electric  ·  P.O. Box 982  ·  El Paso, Texas 79960