EX-99.1 2 b65303spexv99w1.htm EX-99.1 PRESS RELEASE DATED MAY 1, 2007 exv99w1
 

     
From: Sierra Pacific Resources
  To: PR Newswire, US1
Analyst Contact: Britta Carlson, (702) 367-5624
    
Media Contact: Karl Walquist, (775) 834-3891
    
May 1, 2007
Sierra Pacific Resources Reports 2007 First Quarter Earnings
     Las Vegas, Nev. — Sierra Pacific Resources (NYSE: SRP) today reported earnings applicable to common stock of $15.6 million, or 7 cents per share, for the three months ended March 31, 2007, compared with $1.2 million, or 1 cent per share, for the same period in 2006.
     The improvement in earnings was primarily driven by a settlement regarding carrying charges on Nevada Power Company’s 2001 deferred energy rate case, continued customer growth and lower interest expenses.
     Walter Higgins, chairman and chief executive officer of Sierra Pacific Resources, said, “Both of our utilities are benefiting from customer growth and we are continuing to see positive results from our back to basics strategy and organizational efficiencies implemented during the past two years. I’m also pleased to report that we are well positioned to serve our customers’ needs during the upcoming summer cooling season.
     “For the future,” Higgins added, “we are also making excellent progress in diversifying our energy portfolio by adding more efficient generating facilities as well as continuing to acquire power from renewable energy resources. Two new solar projects from which we will be acquiring power include the new 64-megawatt SolarOne facility south of Las Vegas that is scheduled to begin operations this month, and the photovoltaic solar installation now under construction at Nellis Air Force Base scheduled to begin operations by year end. Once both of these projects are on line, Nevada Power’s customers will utilize more solar electricity per capita than any utility in the nation. Plus, these projects will put our utilities well ahead of schedule to meet the state’s solar energy portfolio targets.”
Nevada Power Company First Quarter Results
     Nevada Power Company reported net income of $4.6 million for the first quarter of 2007, compared with a net loss of $3.3 million for the same period in 2006.
     Nevada Power’s quarterly retail electric revenues increased compared to the same quarter a year earlier due to increases in retail rates and customer growth. The number of residential, commercial and industrial customers increased by 3.3%, 4.9% and 6.4%, respectively.
     Interest on long-term debt was $3 million lower than in the first quarter of 2006 primarily due to refinancing activities. Maintenance expense increased for the quarter compared to the

1

 

same period in 2006 mainly due to higher maintenance costs for the Chuck Lenzie Generating Station and the timing of outages at the Reid Gardner Generating Station.
     Purchased power costs were lower compared to the first quarter of 2006 due to increased reliance on internal power generation.
Sierra Pacific Power Company First Quarter Results
     For the first quarter of 2007, Sierra Pacific Power reported earnings applicable to common stock of $22 million compared with $12.3 million for the same period a year earlier.
     Sierra Pacific Power’s retail electric revenues increased for the first quarter compared with the same period in 2006 primarily due to customer growth and rate increases. The number of residential, commercial and industrial customers increased by 2.2%, 4.1% and 3.4%, respectively, compared with the same quarter in 2006.
     Sierra Pacific Power’s retail natural gas revenues decreased during the first quarter compared with the same period in 2006 because of warmer temperatures and decreases in retail customer rates.
     Maintenance expenses were lower during the first quarter because of planned maintenance at the Tracy Generating Station in the first quarter of 2006 and economic temporary shutdown of two Tracy generating units during the first quarter 2007.
Webcast Scheduled for 7 a.m. PDT Today
     Senior management of Sierra Pacific Resources will review the company’s financial results, regulatory issues and other matters during a conference call and live webcast today, May 1, at 7 a.m. Pacific Daylight Time.
     The webcast will be accessible on the Sierra Pacific Resources web site:
     www.sierrapacificresources.com.
     An archived version of the webcast will remain on the Sierra Pacific Resources’ web site for approximately one month following the live webcast. To listen to a recording of the call by telephone, call (800) 475-6701 and use the conference call ID number, 870729, to access the recording. International callers should dial (320) 365-3844.
     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.

2

 

     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, Sierra Pacific Resources’ ability to maintain access to the capital markets, Sierra Pacific Resources’ ability to receive dividends from its subsidiaries and the financial performance of Sierra Pacific Resources’ 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 their pending and future rate cases, their ability to maintain access to the capital markets for general corporate purposes and to finance construction projects, and their ability to purchase sufficient fuel, natural gas and power to meet their power demands and natural gas demands for Sierra Pacific Power Company. 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 Annual Reports on Form 10-K for the year ended December 31, 2006, 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.
     Gross margin is presented by NPC and SPPC in order to provide information by segment that management believes aids the reader in determining how profitable the electric and gas business is at the most fundamental level. Gross margin, which is a “non-GAAP financial measure” as defined in accordance with SEC rules, provides a measure of income available to support the other operating expenses of the business and is utilized by management in its analysis of its business.
     NPC and SPPC believe presenting gross margin allows the reader to assess the impact of regulatory treatment and their overall regulatory environment on a consistent basis. Gross margin, as a percentage of revenue, is primarily impacted by the fluctuations in regulated electric and natural gas supply costs versus the fixed rates collected from customers. While these fluctuating costs impact gross margin as a percentage of revenue, they only impact gross margin amounts if the costs cannot be passed through to customers. Gross margin, which NPC and SPPC calculate as operating revenues less fuel and purchased power costs, provides a measure of income available to support the other operating expenses. Gross margin changes based on such factors as general base rate adjustments (which are required to be filed by statute every two years) and reflect NPC and SPPC’s strategy to increase internal power generation versus purchased power, which generates no gross margin. Reconciliations between GAAP operating revenues and gross margin are provided in tables herein. These non-GAAP measures should not be considered as substitutes for the GAAP measures.
     The companies expect to file their Forms 10-Q for the period ended March 31, 2007, with the Securities and Exchange Commission on or about May 8, 2007, at which time the 10-Q’s will be available without charge through the EDGAR system at the SEC’s website. The Form 10-Q reports will also be posted on Sierra Pacific Resources’ website, www.sierrapacificresources.com.

3

 

Financial Highlights
(Dollars in Thousands, Except Per Share Amounts)
(Unaudited)
Sierra Pacific Resources
                 
    Three Months Ended  
    March 31,  
    2007     2006  
Operating revenue
   $ 756,431     $ 707,056  
Other operating expenses
   $ 84,747     $ 90,276  
Maintenance
   $ 23,745     $ 21,930  
Depreciation & amortization
   $ 56,233     $ 57,461  
 
                
Operating income
   $ 61,930     $ 59,577  
 
            
 
                
Interest Charges
   $ 69,669     $ 72,599  
Preferred stock dividend requirements
   $ —     $ 975  
 
                
Net Income Applicable to Common Stock
   $ 15,607     $ 1,242  
 
                
Amount per share basic and diluted
                
Net Income Applicable to Common Stock
   $ 0.07     $ 0.01  
 
                
Weighted Average Shares of Common Stock Outstanding:
                
Basic -
     221,245,427       200,868,612  
 
            
Diluted -
     221,701,854       201,265,472  
 
            
                                 
Capital Structure   March 31, 2007     March 31, 2006  
Current maturities of long-term debt
   $ 8,625       0 %   $ 196,325       3 %
Long-term debt
     4,147,322       61 %     4,122,580       64 %
Preferred Stock
     —       —       50,000       1 %
 
                        
Total Debt
   $ 4,155,947       61 %   $ 4,368,905       68 %
Common Equity
     2,642,158       39 %     2,061,378       32 %
 
                        
Total Capitalization
   $ 6,798,105       100 %   $ 6,430,283       100 %
 
                        

4

 

Nevada Power Company
                 
    Three Months Ended  
    March 31,  
    2007     2006  
Operating revenue
   $ 418,165     $ 381,275  
Other operating expenses
   $ 50,839     $ 54,133  
Maintenance
   $ 17,464     $ 14,157  
Depreciation & amortization
   $ 35,761     $ 34,237  
 
                
Operating income
   $ 27,968     $ 25,663  
 
            
 
                
Allowance for other funds used during construction
   $ 3,098     $ 5,429  
Carrying charge on Lenzie
   $ 10,082     $ 4,031  
Reinstated interest on deferred energy
   $ 11,076     $ —  
Interest Charges
   $ 43,992     $ 41,194  
 
                
Net Income (loss)
   $ 4,582     $ (3,296 )
                                 
Capital Structure   March 31, 2007     March 31, 2006  
Current maturities of long-term debt
   $ 6,225       0 %   $ 163,925       4 %
Long-term Debt
     2,501,650       53 %     2,388,210       56 %
 
                        
Total Debt
   $ 2,507,875       54 %   $ 2,552,135       59 %
Common Equity
     2,176,988       46 %     1,741,843       41 %
 
                        
Total Capitalization
   $ 4,684,863       100 %   $ 4,293,978       100 %
 
                        

5

 

Sierra Pacific Power
                 
    Three Months Ended  
    March 31,  
    2007     2006  
Operating revenue
   $ 337,999     $ 325,497  
Other operating expenses
   $ 32,848     $ 34,175  
Maintenance
   $ 6,281     $ 7,773  
Depreciation & amortization
   $ 20,472     $ 23,224  
 
                
Operating Income
   $ 33,911     $ 29,991  
 
            
 
                
Allowance for other funds used during construction
   $ 3,469     $ 703  
Interest Charges
   $ 14,783     $ 18,156  
Dividend requirements of preferred stock
   $ —     $ 975  
Earnings Applicable to Common Stock
   $ 21,968     $ 12,297  
                                 
Capital Structure   March 31, 2007     March 31, 2006  
Current maturities of long-term debt
   $ 2,400       0 %   $ 32,400       2 %
Long-term debt
     1,095,180       55 %     1,073,197       57 %
Preferred Stock
     —       —       50,000       3 %
 
                        
Total Debt
   $ 1,097,580       55 %   $ 1,155,597       61 %
Common Equity
     906,987       45 %     731,438       39 %
 
                        
Total Capitalization
   $ 2,004,567       100 %   $ 1,887,035       100 %
 
                        

6

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Gross Margin
(Dollars in Thousands)
(Unaudited)
Nevada Power Company
                 
    Three Months Ended  
    March 31,  
    2007     2006  
Operating Revenue:
                
Electric
   $ 418,165     $ 381,275  
 
                
Energy Costs:
                
Purchased power
     95,594       161,596  
Fuel for power generation
     164,085       89,822  
Deferral of energy costs-net
     26,932       3,167  
 
            
Total Energy Costs
   $ 286,611     $ 254,585  
 
            
 
                
Gross Margin
   $ 131,554     $ 126,690  
 
            
Sierra Pacfic Power Company
                 
    Three Months Ended  
    March 31,  
    2007     2006  
Operating Revenues:
                
Electric
   $ 252,879     $ 238,772  
Gas
     85,120       86,725  
 
            
Total Revenue
   $ 337,999     $ 325,497  
 
                
Energy Costs:
                
Purchased power
   $ 83,310     $ 92,148  
Fuel for power generation
     64,069       53,287  
Gas purchased for resale
     71,646       67,396  
Deferral of energy costs-electric-net
     13,861       905  
Deferral of energy costs-gas-net
     (1,945 )     4,731  
 
            
 
   $ 230,941     $ 218,467  
 
            
 
                
Energy Costs by Segment:
                
Electric
   $ 161,240     $ 146,340  
Gas
     69,701       72,127  
 
            
 
   $ 230,941     $ 218,467  
 
            
 
                
Gross Margin by Segment:
                
Electric
   $ 91,639     $ 92,432  
Gas
     15,419       14,598  
 
            
 
   $ 107,058     $ 107,030  
 
            

7