IDACORP Reports Third Quarter 2002 Earnings
11/8/2002
BOISE — IDACORP, Inc. (NYSE:IDA) today reported third quarter earnings of 98 cents per share, a 7-cents-per-share increase over last year’s third quarter earnings of 91 cents per share. Year-to-date earnings per share are $1.72 or $1.08 per share less than earnings of $2.80 through the third quarter of 2001.
Net income for the third quarter 2002 was $37 million, $3 million more than the same period a year earlier. For the first nine months, net income was $65 million compared to $105 million through the same period last year.
Third quarter earnings benefited from a change in tax treatment that resulted in a one-time tax benefit of $31 million attributable to 2001 and prior years, and a $3 million reduction in 2002 tax expense recorded during the third quarter. This $34 million tax-related benefit contributed 90 cents per share in the quarter.
This gain was partially offset by expensing $12 million, or $0.20 cents per share after-tax, from irrigation revenues disallowed by the Idaho Public Utilities Commission (IPUC).
"Our financial results after consideration of these items are consistent with our expectations and prior guidance," said IDACORP President and CEO Jan Packwood. "As we indicated in July, our earnings this quarter were expected to get a lift from our tax method change, but the actual amounts came in higher than our original estimates."
Business Operations
Idaho Power Company
Idaho Power Company contributed $1.02 per share to the overall third quarter results and $1.93 per share year-to-date. This compares to a breakeven performance during 2001's third quarter and 52 cents-per-share during that year's first nine months. Results were positively impacted by the tax method change recorded in the third quarter and continued reductions in power supply expenses due to lower wholesale electricity prices.
In September 2002, Idaho Power filed its 2001 federal income tax return changing its tax accounting method for capitalized overhead costs. The new method decreased income tax expense by $34 million, or 90 cents per share for the third quarter and was reported consistent with prior regulatory treatment of similar items.
Also included in the recent third quarter results is the impact of expensing $12 million disallowed by the IPUC related to the revenue impacts associated with a load reduction program that targeted irrigation customers last year. On August 29, 2002, the IPUC denied Idaho Power's Petition for Reconsideration of its decision. Idaho Power is pursuing an Idaho Supreme Court review of the IPUC decision.
General business revenues increased nearly $31 million during the quarter. This is primarily because the company's Power Cost Adjustment-related rate increases were greater when compared to the same period in 2001. Also, this quarter's revenue increase reflects the expiration of the previously mentioned irrigation load reduction program in effect during 2001's third quarter. For the third quarter 2002, revenue from off-system sales fell by approximately $81 million, a reflection of both reduced volumes and lower wholesale electricity prices. Year-to-date off-system sales revenues declined nearly $164 million while general business revenues for the period increased nearly $115 million.
The company's hydroelectric production continues to be negatively impacted by drought. Through the first nine months of this year precipitation levels are 25 percent less than during the same period last year and nearly 57 percent below historic norms. Additionally, storage levels in selected reservoirs above Brownlee Reservoir the company's primary storage facility are 42 percent of average for this time of year. Despite these stream flow-related impacts, the regulated utility's financial performance has been bolstered by lower purchased power costs. This drove a $58 million reduction in total electric utility expenses for the quarter and $81 million year-to-date.
IDACORP Energy
IDACORP Energy recorded a gain of 2 cents per share for the quarter compared to a gain of 93 cents per share for the third quarter 2001. Year-to-date, IDACORP Energy has recorded a loss of 19 cents per share compared to a contribution of $2.38 per share for the same period last year.
In anticipation of new reporting requirements, and in accordance with the option allowed under EITF 98-10, IDACORP has elected to change its reporting of energy trading activities from a gross to net presentation. Prior periods have been reclassified to conform to this current presentation. The company's net financial position and results of operations were not affected by this change in presentation.
With the November 5, 2002 announcement that IDACORP Energy will exit the natural gas business, the company will be recording a restructuring charge in the 4th quarter of between $8 and $13 million or $0.13 and $0.20 cents per share. These charges relate to, among other matters, severance benefits, non-cancelable lease liabilities, and asset impairment.
The wind down of IDACORP Energy's power marketing is ahead of schedule as evidenced by several key metrics. These include a substantial decrease in working capital and liquidity requirements; reduction in average value-at-risk of 50 percent compared to last quarter; and staff cutbacks of 48 percent.
Other Subsidiaries
IDACORP Financial contributed 6 cents per share for the third quarter 2002, 1 cent per share more than last year's third quarter. For the nine months ended September 30, 2002, the earnings-per-share contribution was 17 cents, 5 cents per share greater than the same period last year.
Ida-West Energy recorded a 1-cent per share contribution for the third quarter this year as compared to 2 cents per share in last year's third quarter. Year-to-date, Ida-West recorded breakeven results, 6 cents per share less than a year ago.
IDACORP's other two operating subsidiaries, IdaTech and IDACOMM, recorded a loss of 7 cents per share for the quarter, compared to a 5 cents-per-share loss during the period last year. Year-to-date results are a loss of 16 cents per share, a 3 cents-per-share improvement over the same period last year.
Income Taxes
The financial results for the quarter and year-to-date reflect the favorable impacts of the Idaho Power tax method change and the settlement of prior year audit deficiencies. The Company's effective tax rate is below zero as a result of the method change, the audit settlement, and ongoing tax credits provided by IDACORP Financial.
Earnings Guidance
The Company anticipates that, based in part on the issues discussed above, earnings per share for 2002 should still be in the range of between $1.45 and $1.75. Idaho Power is expected to contribute between $2.15 and $2.25 per share; IDACORP Energy projects a loss of between $0.50 and $0.60 per share, including the impacts of restructuring; and all other entities expect to register between a break even performance and a $0.10 per share loss.
Conference Call
The Company will hold an analyst conference call today at 2:30 p.m. Mountain Time (4:30 p.m. Eastern Time). All parties interested in listening may do so through a live Web cast on the Internet. Details of the conference call logistics are posted on the Company's Web site (http://www.idacorpinc.com). A replay of the conference call will be available on the Company's Web site for a 15-day period beginning at the end of today.
Background Information
Boise, Idaho-based IDACORP, formed in 1998, is a holding company comprised of: Idaho Power, a regulated electric utility; Ida-West Energy, an independent power project management and development arm; IDACORP Energy, a marketer of energy and energy-related products and services; IDACORP Financial, an investment vehicle which makes investments primarily in affordable housing projects; IdaTech, a developer and producer of fully integrated fuel cell systems; and IDACOMM, a telecommunications subsidiary providing high-speed Internet access technologies.
Certain statements contained in this news release, including statements with respect to future earnings, are "forward-looking statements" within the meaning of the federal securities laws. Although IDACORP believes that the expectations and assumptions reflected in these forward-looking statements are reasonable, these statements involve a number of risks and uncertainties, and actual results may differ materially from the results discussed in the statements. Important factors that could cause actual results to differ materially from the forward-looking statements include: litigation resulting from the energy situation in the western United States; market demand and prices for energy, including structural market changes; capacity and fuel; weather variations affecting customer energy usage; operating performance of plants and other facilities; environmental conditions and requirements; and system conditions and operating costs. Any such forward-looking statements should be considered in light of such factors and others noted in Form 10-K for the year 2001, the Quarterly Report on Form 10-Q for the quarters ended March 31 and June 30, 2002, and other reports on file with the Securities and Exchange Commission.
- IDACORP, Inc. Consolidated Earnings Statements
- IDACORP, Inc. Statements of Cash Flows
- IDACORP, Inc. Consolidated Balance Sheets
- Idaho Power Company Supplemental Operating Statistics
- IDACORP Energy Unconsolidated Operating Statistics
| IDACORP, Inc. Summary Financial Information | ||||
| Three Months Ended | Year-To-Date | |||
|---|---|---|---|---|
| 9/30/02 | 9/30/01 | 9/30/02 | 9/30/01 | |
| Operating Revenues: | ||||
| Electric utility: | ||||
| General business | $ 216 | $ 186 | $ 590 | $ 475 |
| Off-system sales | 11 | 92 | 42 | 206 |
| Other revenues | 10 | 9 | 28 | 34 |
| Total electric utility revenue | 237 | 287 | 660 | 715 |
| Energy marketing: | ||||
| Energy commodities & services: | 19 | 105 | 37 | 307 |
| Other | 3 | 3 | 12 | 9 |
| Total Operating Revenues | 259 | 395 | 709 | 1,031 |
| Operating Expenses: | ||||
| Electric utility: | ||||
| Purchased power | 50 | 228 | 112 | 523 |
| Fuel expense | 27 | 26 | 76 | 74 |
| Power cost adjustment | 57 | (58) | 133 | (184) |
| Other operations & maintenance | 52 | 51 | 155 | 149 |
| Depreciation | 24 | 22 | 70 | 64 |
| Taxes other than income | 5 | 5 | 15 | 16 |
| Total electric utility operations | 215 | 274 | 561 | 642 |
| Energy marketing: | ||||
| Cost of energy commodities and services | 12 | 36 | 37 | 105 |
| Selling, administrative & general | 6 | 12 | 14 | 55 |
| Other | 9 | 8 | 25 | 23 |
| Total Operating Expenses | 242 | 330 | 637 | 825 |
| Operating Income (Loss): | ||||
| Electric utility | 22 | 13 | 99 | 73 |
| Energy marketing | 1 | 57 | (14) | 147 |
| Other | (6) | (5) | (13) | (14) |
| Total Operating Income | 17 | 65 | 72 | 206 |
| Other Income | (2) | 5 | 6 | 12 |
| Interest Expense and Other | ||||
| Interest on long-term debt | 12 | 14 | 38 | 42 |
| Other interest expense | 4 | 4 | 10 | 11 |
| Preferred dividends- Idaho Power Co. | 1 | 1 | 4 | 4 |
| Total Interest and Other | 17 | 19 | 52 | 57 |
| Income (Loss) Before Income Taxes | (2) | 51 | 26 | 161 |
| Income Taxes | (39) | 17 | (39) | 56 |
| Net Income | $ 37 | $ 34 | $ 65 | $ 105 |
| Avg. Common Shares Outstanding (000's) | 37,771 | 37,354 | 37,665 | 37,356 |
| Earnings per Share (Basic and Diluted) | $ 0.98 | $ 0.91 | $ 1.72 | $ 2.80 |
| IDACORP, Inc. Consolidated Statements of Cash Flows For Nine Months Ended September 30, 2002 and 2001 Summary Financial Information | ||||
| Nine Months Ended | ||||
|---|---|---|---|---|
| 9/30/02 | 9/30/01 | |||
| Operating Activities | ||||
| Net Income | $ 65 | $ 105 | ||
| Adjustment to reconcile net income to net cash provided by (used in) operating activities: | ||||
| Allowance for uncollectable accounts | - | 19 | ||
| Unrealized (gains) losses from energy marketing activities | 37 | (96) | ||
| Depreciation and amortization | 91 | 82 | ||
| Deferred taxes and investment credits | (92) | 115 | ||
| Accrued PCA costs | 128 | (188) | ||
| Change in: | ||||
| Receivables and prepayments | 43 | (86) | ||
| Accounts payable | (148) | 65 | ||
| Taxes receivable/accrued | 79 | (35) | ||
| Other | 40 | ___(10) | ||
| Net cash provided by (used in) operating activities | 243 | ___(29) | ||
| Investing Activities | (136) | _ (131) | ||
| Financing Activities | ||||
| Proceeds from issuance of long-term debt | - | 120 | ||
| Retirement of long-term debt | (62) | (144) | ||
| Increase in short-term borrowings | (50) | - | ||
| Dividends on common stock | (53) | (52) | ||
| Other | 8 | (13) | ||
| Net cash provided by (used in) financing activities | (104) | 115 | ||
| Net increase (decrease) in cash and cash equivalents | 3 | (45) | ||
| Cash and cash equivalents beginning of period | 67 | 107 | ||
| Cash and cash equivalents end of period | $ 70 | $ 62 | ||
| IDACORP, Inc. Summary Financial Information | ||||
| 9/30/02 | 12/31/01 | |||
|---|---|---|---|---|
| Assets | ||||
| Cash and cash equivalents | $ 70 | $ 67 | ||
| Receivables net of allowance | 135 | 178 | ||
| Energy marketing assets | 113 | 194 | ||
| Other current assets | 115 | 211 | ||
| Total current assets | 433 | 650 | ||
| Investments | 204 | 159 | ||
| Property, plant and equipment-net | 1,899 | 1,886 | ||
| Energy marketing assets- long-term | 163 | 204 | ||
| Regulatory assets | 522 | 544 | ||
| Other assets | 190 | 196 | ||
| Total other assets | 875 | 944 | ||
| Total Assets | $ 3,411 | $ 3,639 | ||
| Liabilities and Shareholders' Equity | ||||
| Current maturities of long-term debt | $ 116 | $ 36 | ||
| Notes payable | 416 | 363 | ||
| Accounts payable | 136 | 248 | ||
| Energy marketing liabilities | 89 | 125 | ||
| Derivative liabilities | - | 41 | ||
| Other current liabilities | 78 | 91 | ||
| Total current liabilities | 835 | 904 | ||
| Deferred income taxes | 628 | 590 | ||
| Energy marketing liabilities - long-term | 101 | 135 | ||
| Regulatory liabilities | 117 | 114 | ||
| Other liabilities | 82 | 78 | ||
| Total other liabilities | 928 | 917 | ||
| Long-term debt | 702 | 843 | ||
| Preferred stock of Idaho Power Co. | 54 | 104 | ||
| Shareholders' equity | 892 | 871 | ||
| Total Liabilities & Shareholders' Equity | $ 3,411 | $ 3,639 | ||
Idaho Power Company Supplemental Operating Statistics | ||||
| Three Months Ended | Year-To-Date | |||
|---|---|---|---|---|
| 9/30/02 | 9/30/01 | 9/30/02 | 9/30/01 | |
| Energy Use - MWh | ||||
| Residential | 965,502 | 956,350 | 3,209,036 | 3,139,899 |
| Commercial | 878,233 | 882,670 | 2,592,234 | 2,525,563 |
| Industrial | 847,637 | 938,812 | 2,411,696 | 3,000,952 |
| Irrigation | 1,047,491 | 769,290 | 1,716,661 | 1,342,044 |
| Total General Business | 3,738,863 | 3,547,122 | 9,929,627 | 10,008,458 |
| Off-System Sales | 387,594 | 743,629 | 1,640,578 | 1,773,499 |
| Total | 4,126,457 | 4,290,751 | 11,570,205 | 11,781,957 |
| Revenue ($000's) | ||||
| Residential | $ 68,098 | $ 60,593 | $ 223,200 | $ 180,739 |
| Commercial | 50,030 | 45,339 | 146,479 | 117,046 |
| Industrial | 45,888 | 40,921 | 132,537 | 109,491 |
| Irrigation | 52,436 | 38,977 | 87,920 | 67,882 |
| Total General Business | 216,452 | 185,830 | 590,136 | 475,158 |
| Off-System Sales | 10,859 | 91,654 | 41,994 | 205,552 |
| Total | $ 227,311 | $ 277,484 | $ 632,130 | $ 680,710 |
| Customers - Period End | ||||
| Residential | 341,784 | 332,885 | ||
| Commercial | 53,274 | 51,867 | ||
| Industrial | 116 | 116 | ||
| Irrigation | 15,917 | 15,854 | ||
| Total | _ 411,091 | 400,722 | ||
|
IDACORP Energy Unconsolidated Operating Statistics $(000)'s | ||||
| Value at Risk: | ||||
| End of period 95% confidence level | $ 550 | $ 926 | $ 550 | $ 926 |
| End of period 99% confidence level | $ 778 | $ 1,309 | $ 778 | $ 1,309 |
| Avg. over Period (95% confidence) | $ 687 | $ 1,637 | $ 1,188 | $ 4,718 |
| Settled Volume: | ||||
| Electricity (mwh's) | 7,807,449 | 11,356,327 | 34,327,433 | 24,553,359 |
| Natural Gas (mmbtu's) | 7,941,126 | 31,380,819 | 31,821,727 | 80,107,840 |
CONTACTS:
Darrel T. Anderson
Senior Vice President of Administrative Services and CFO, IDACORP, Inc. and Idaho Power
(208) 388-2650
DAnderson@IdahoPower.comDennis C. Gribble
Vice President and Treasurer, IDACORP, Inc. and Idaho Power
208-388-2684
208-388-6761 Fax
DGribble@IdahoPower.comLarry Spencer
IDACORP Director of Investor Relations
208-388-2664
208-388-6916 FAX
LSpencer@IdaCorpInc.com
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