SPOKANE, Wash., May 3 /PRNewswire-FirstCall/ -- Avista Corp.
(NYSE:AVA) today reported net income of $31.6 million, or $0.64 per
diluted share, for the first quarter of 2006, a significant
increase as compared to net income of $10.2 million, or $0.21 per
diluted share, for the first quarter of 2005. (Logo:
http://www.newscom.com/cgi-bin/prnh/20040128/SFW031LOGO) "We had a
strong first quarter due to increased net income for Avista
Utilities, the continued trend of earnings growth from Avista
Advantage and the return to positive results for Avista Energy,"
said Avista Chairman, President and Chief Executive Officer Gary G.
Ely. "After generally earning below our authorized return for the
past several years in our utility operations, we are currently
earning close to our authorized return of approximately 9 percent,"
Ely added. Results for the first quarter of 2006 as compared to the
first quarter of 2005: ($ in thousands, except per-share data) Q1
2006 Q1 2005 Operating Revenues $499,202 $362,664 Income from
Operations $70,938 $38,183 Net Income $31,572 $10,189 Net Income
(Loss) by Business Segment: Avista Utilities $26,172 $18,986 Energy
Marketing & Resource Management $5,046 $(8,358) Avista
Advantage $1,427 $808 Other $(1,073) $(1,247) Contribution to
earnings per diluted share by Business Segment: Avista Utilities
$0.53 $0.39 Energy Marketing & Resource Management $0.10
$(0.17) Avista Advantage $0.03 $0.02 Other $(0.02) $(0.03) Total
earnings per diluted share $0.64 $0.21 First Quarter 2006
Highlights Avista Utilities: The increase in Avista Utilities' net
income for the first quarter of 2006 as compared to the first
quarter of 2005 was due to several factors. Most significantly,
electric resource costs were lower than the amount included in base
retail rates. Electric resource costs were lower as a result of
improved hydroelectric generation from higher than normal
precipitation and warmer than normal temperatures during the first
quarter of 2006, as well as the impact of fuel costs that were
lower than expected. This resulted in Avista Utilities recognizing
a benefit of $5.2 million under the Washington Energy Recovery
Mechanism (ERM) deadband in the first quarter of 2006 as compared
to expensing $0.2 million under the ERM deadband in the first
quarter of 2005. It is important to note that if the ERM deadband
is reduced or eliminated later in 2006 through the pending filing
with the Washington Utilities and Transportation Commission (WUTC),
a portion of the benefit received during the first quarter of 2006
could be reversed resulting in a reduction to earnings. In the
December 2005 Washington general rate case order, Avista Utilities
was directed to make a filing with the WUTC to allow further review
of the ERM. In January 2006, the company made a filing with the
WUTC proposing that the ERM be continued for an indefinite period
of time and that the annual $9 million deadband be eliminated. The
company's goal is to modify the ERM to reduce the volatility of
Avista's earnings resulting from variations in hydroelectric
generation and prices for fuel and purchased power. The current
procedural schedule set by the WUTC would allow for an order on any
changes to the ERM (including any changes to the deadband) to be
issued in late July or in August 2006. The WUTC has previously
stated that any changes to the ERM would be effective for the full
year (beginning January 1, 2006). Also contributing to the increase
in net income was customer growth that was consistent with
expectations, the general rate increase implemented in Washington
on Jan. 1, 2006, and the sale of claims against Enron Corporation
and certain of its affiliates. During the first quarter of 2006,
Avista Utilities made good progress in reducing its power and
natural gas deferrals by $17.5 million. As of March 31, 2006,
deferred power costs were $95.3 million and deferred natural gas
costs were $34.8 million. Avista is currently forecasting
hydroelectric generation to be 104 percent of normal in 2006. This
forecast may be revised based on precipitation, temperatures and
other variables during the year. Energy Marketing and Resource
Management: This business segment had net income for the first
quarter of 2006 as compared to a net loss for the first quarter of
2005. The improved results were primarily due to Avista Energy's
asset management activities and positive results from its natural
gas end-user business and natural gas trading. The improved results
were also due to the difference between the economic management and
the required accounting for certain contracts and physical assets
under the management of Avista Energy. The operations of Avista
Energy are managed on an economic basis, reflecting contracts and
assets under management at estimated market value, consistent with
industry practices, which is different from the required accounting
for certain contracts and physical assets under management. These
differences primarily relate to Avista Energy's management of
natural gas inventory and its control of natural gas-fired
generation through a power purchase agreement, as well as certain
other agreements. These differences had a $2.6 million after-tax
positive effect on results for the first quarter of 2006 compared
to a $6.1 million after-tax negative effect on results for the
first quarter of 2005. A significant portion of the $2.6 million
difference between the economic management and the required
accounting for certain contracts and physical assets under
management for the first quarter of 2006 is expected to reverse in
future periods when the contracts are settled or realized. This
difference could also increase or decrease due to changes in
forward market prices. Part of this reversal is expected to occur
during the second quarter of 2006, which would reduce earnings in
what is typically a weak earnings quarter for Avista Energy. Avista
Advantage: The improvement at Avista Advantage for the first
quarter of 2006 as compared to the first quarter of 2005 was
primarily due to an increase in operating revenues from customer
growth. Avista Advantage's revenues increased by 25 percent for the
first quarter of 2006, as compared to the first quarter of 2005,
while the average cost of processing a bill decreased by 2 percent
for the same period. Avista Advantage has over 350 clients
representing approximately 182,000 billed sites in North America.
Other Business Segment: The net loss in the Other business segment
was less for the first quarter of 2006 as compared to the first
quarter of 2005, primarily due to the improved performance of
Advanced Manufacturing and Development (doing business as METALfx).
Liquidity and Capital Resources: Total debt outstanding decreased
approximately $40 million in the first quarter of 2006 primarily
due to operating cash flows in excess of utility capital
expenditures, dividends and other funding requirements. Utility
capital expenditures totaled approximately $30 million for the
first quarter of 2006. Avista's utility capital budget is
approximately $160 million for 2006, which includes the continued
enhancement of Avista Utilities' transmission system and upgrades
to generating facilities. Avista Utilities is committed to
investment in its generation, transmission and distribution systems
with a focus on increasing capacity and continuing to provide
reliable service to its customers. On April 6, 2006, Avista Corp.
amended its committed line of credit agreement, which was
originally entered into on Dec. 17, 2004. The amended line of
credit captures lower bank fees and borrowing costs. Amendments to
the committed line of credit include a reduction in the total
amount of the facility to $320 million from $350 million and an
extension of the expiration date to April 5, 2011, from Dec. 16,
2009. Avista Corp. chose to reduce the facility based on forecasted
liquidity needs. As of March 31, 2006, Avista Corp. had $23 million
outstanding on its committed line of credit. In March 2006, the
company renewed its accounts receivable sales financing facility
for an additional year, under which the company can sell up to $85
million of its accounts receivable. Potential Holding Company
Formation: In February 2006, the board of directors of Avista Corp.
made the decision to ask shareholders to approve a change in the
company's organization, which would result in the formation of a
holding company. The proposed holding company would become the
parent to the regulated utility, Avista Utilities, and to Avista
Capital, which is the parent to the company's non-utility
subsidiaries. The proposal for the formation of a holding company
is described in the Proxy Statement-Prospectus distributed to
Avista Corp. shareholders in connection with the annual meeting of
shareholders to be held on May 11, 2006. Avista Corp. received
approval from the Federal Energy Regulatory Commission on April 18,
2006, (conditioned on approval by the state regulatory agencies)
and has filed for approval from the utility regulators in
Washington, Idaho, Oregon and Montana, conditioned on approval by
shareholders. If shareholders approve the proposal, and if state
regulatory approvals are received, the holding company organization
could be implemented during the second half of 2006. Earnings
Guidance and Outlook For 2006, Avista Corp. is confirming its
guidance for consolidated earnings to be in the range of $1.30 to
$1.45 per diluted share. The company expects Avista Utilities to
contribute in the range of $1.00 to $1.15 per diluted share for
2006. The outlook for the utility assumes, among other variables,
near normal weather, temperatures and hydroelectric generation. The
2006 outlook for the Energy Marketing and Resource Management
segment is a contribution range of $0.20 to $0.30 per diluted
share, excluding any positive or negative effects related to the
required accounting for certain contracts and physical assets under
management. The company expects Avista Advantage to contribute in a
range of $0.10 to $0.12 per diluted share and the Other business
segment to lose $0.05 per diluted share. 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 service to
338,000 electric and 297,000 natural gas customers in three Western
states. Avista's non-regulated subsidiaries include Avista
Advantage and Avista Energy. Avista Corp.'s stock is traded under
the ticker symbol "AVA." For more information about Avista, please
visit http://www.avistacorp.com/. NOTE: Avista Corp. and the Avista
Corp. logo are trademarks of Avista Corporation. NOTE: Avista Corp.
will host a conference call on May 3, 2006, at 10:30 a.m. EDT to
discuss this report with financial analysts. Investors, news media
and other interested parties may listen to the simultaneous webcast
of this conference call. To register for the webcast, please go to
http://www.avistacorp.com/. A replay of the conference call will be
available until May 10, 2006. Call 888-286-8010, passcode 90726018
to listen to the replay. The webcast will be archived at
http://www.avistacorp.com/ for one year. The attached condensed
consolidated statements of income, condensed consolidated balance
sheets, and financial and operating highlights are integral parts
of this earnings release. This news release contains
forward-looking statements, including statements regarding the
company's current expectations for future financial performance and
cash flows, capital expenditures, the company's current plans or
objectives for future operations, future hydroelectric generation
projections 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 the
company's control and many of which could have significant impact
on the company's operations, results of operations, financial
condition or cash flows and could cause actual results to differ
materially from the 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, including the effect of precipitation and
temperatures on the availability of hydroelectric resources and the
effect of temperatures on customer demand; changes in wholesale
energy prices that can affect, among other things, cash
requirements to purchase electricity and natural gas for retail
customers, as well as the market value of derivative assets and
liabilities and unrealized gains and losses; volatility and
illiquidity in wholesale energy markets, including the availability
and prices of purchased energy and demand for energy sales; the
effect of state and federal regulatory decisions affecting the
ability of the company to recover its costs and/or earn a
reasonable return; the outcome of pending regulatory and legal
proceedings arising out of the "Western energy crisis" of 2001 and
2002, and including possible retroactive price caps and resulting
refunds; changes in the utility regulatory environment in the
individual states and provinces in which the company operates as
well as the United States and Canada in general; the outcome of
legal proceedings and other contingencies concerning the company or
affecting directly or indirectly its operations; the potential
effects of any legislation or administrative rulemaking passed into
law, including the Energy Policy Act of 2005 which was passed into
law in August 2005; the effect from the potential formation of a
Regional Transmission Organization; wholesale and retail
competition; changes in global energy markets; the ability to
relicense the Spokane River Project at a cost- effective level with
reasonable terms and conditions; unplanned outages at any
company-owned generating facilities; unanticipated delays or
changes in construction costs with respect to present or
prospective facilities; natural disasters that can disrupt energy
delivery as well as the availability and costs of materials and
supplies and support services; blackouts or large disruptions of
transmission systems; the potential for future terrorist attacks,
particularly with respect to utility plant assets; changes in the
long-term climate of the Pacific Northwest; changes in future
economic conditions in the company's service territory and the
United States in general; changes in industrial, commercial and
residential growth and demographic patterns in the company's
service territory; the loss of significant customers and/or
suppliers; failure to deliver on the part of any parties from which
the company purchases and/or sells capacity or energy; changes in
the creditworthiness of customers and energy trading
counterparties; the company's ability to obtain financing through
the issuance of debt and/or equity securities; the effect of any
potential change in the company's credit ratings; changes in
actuarial assumptions, the interest rate environment and the actual
return on plan assets with respect to the company's pension plan;
increasing health care costs and the resulting effect on health
insurance premiums paid for employees and on the obligation to
provide postretirement health care benefits; increasing costs of
insurance, changes in coverage terms and the ability to obtain
insurance; employee issues, including changes in collective
bargaining unit agreements, strikes, work stoppages or the loss of
key executives, as well as the ability to recruit and retain
employees; changes in rapidly advancing technologies, possibly
making some of the current technology quickly obsolete; changes in
tax rates and/or policies; and changes in, and compliance with,
environmental and endangered species laws, regulations, decisions
and policies, including present and potential environmental
remediation costs. For a further discussion of these factors and
other important factors, please refer to the company's Annual
Report on Form 10-K for the year ended Dec. 31, 2005. The
forward-looking statements contained in this news release speak
only as of the date hereof. The company undertakes 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 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 the company's 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. AVISTA CORPORATION CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (Dollars in Thousands
except Per Share Amounts) First Quarter 2006 2005 Operating
revenues $499,202 $362,664 Operating expenses: Resource costs
321,732 222,157 Other operating expenses 62,038 59,329 Depreciation
and amortization 22,428 22,706 Utility taxes other than income
taxes 22,066 20,289 Total operating expenses 428,264 324,481 Income
from operations 70,938 38,183 Other income (expense): Interest
expense, net of capitalized interest (23,324) (22,986) Other income
- net 2,475 1,822 Total other income (expense) - net (20,849)
(21,164) Income before income taxes 50,089 17,019 Income taxes
18,517 6,830 Net income $31,572 $10,189 Weighted-average common
shares outstanding (thousands), basic 48,795 48,478
Weighted-average common shares outstanding (thousands), diluted
49,305 48,901 Total earnings per common share, basic $0.65 $0.21
Total earnings per common share, diluted $0.64 $0.21 Dividends paid
per common share $0.140 $0.135 Issued May 3, 2006 AVISTA
CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in Thousands) March 31, December 31, 2006 2005 Assets Cash
and cash equivalents $71,090 $25,917 Restricted cash 23,761 25,634
Accounts and notes receivable 347,578 502,947 Current energy
commodity derivative assets 579,406 918,609 Other current assets
242,220 297,261 Total net utility property 2,128,602 2,126,417
Non-utility properties and investments-net 58,189 77,731
Non-current energy commodity derivative assets 409,132 511,280
Other property and investments-net 61,251 61,944 Regulatory assets
for deferred income taxes 109,969 114,109 Other regulatory assets
28,489 26,660 Non-current utility energy commodity derivative
assets 51,431 46,731 Power and natural gas deferrals 130,120
147,622 Unamortized debt expense 46,682 48,522 Other deferred
charges 18,517 17,110 Total Assets $4,306,437 $4,948,494
Liabilities and Stockholders' Equity Accounts payable $336,323
$511,427 Current energy commodity derivative liabilities 547,720
906,794 Current portion of long-term debt 201,476 39,524 Short-term
borrowings 23,490 63,494 Other current liabilities 204,658 208,649
Long-term debt 827,598 989,990 Long-term debt to affiliated trusts
113,403 113,403 Preferred stock (subject to mandatory redemption)
26,250 26,250 Non-current energy commodity derivative liabilities
398,032 488,644 Regulatory liability for utility plant retirement
costs 189,291 186,635 Deferred income taxes 481,531 488,934 Other
non-current liabilities and deferred credits 149,761 153,622 Total
Liabilities 3,499,533 4,177,366 Common stock - net (48,885,732 and
48,593,139 outstanding shares) 626,660 620,598 Retained earnings
and accumulated other comprehensive loss 180,244 150,530 Total
Stockholders' Equity 806,904 771,128 Total Liabilities and
Stockholders' Equity $4,306,437 $4,948,494 Issued May 3, 2006
AVISTA CORPORATION FINANCIAL AND OPERATING HIGHLIGHTS (Dollars in
Thousands) First Quarter 2006 2005 Avista Utilities Retail electric
revenues $145,394 $135,847 Retail kWh sales (in millions) 2,292
2,251 Retail electric customers at end of period 339,281 331,976
Wholesale electric revenues $39,152 $27,734 Wholesale kWh sales (in
millions) 474 498 Sales of fuel $30,937 $9,647 Other electric
revenues $6,525 $3,818 Retail natural gas revenues $166,961
$139,194 Wholesale natural gas revenues $31,215 $114 Transportation
and other natural gas revenues $3,106 $3,362 Total therms delivered
(in thousands) 221,623 183,081 Retail natural gas customers at end
of period 298,765 308,820 Income from operations (pre- tax) $62,912
$51,605 Net income $26,172 $18,986 Energy Marketing and Resource
Management Gross margin (operating revenues less resource costs)
$11,415 $(8,584) Realized gross margin $5,275 $8,928 Unrealized
gross margin $6,140 $(17,512) Income (loss) from operations
(pre-tax) $6,320 $(13,809) Net income (loss) $5,046 $(8,358)
Electric sales (millions of kWhs) 6,979 6,768 Natural gas sales
(thousands of dekatherms) 50,162 54,895 Avista Advantage Revenues
$9,076 $7,240 Income from operations (pre- tax) $2,398 $1,479 Net
income $1,427 $808 Other Revenues $5,294 $3,848 Loss from
operations (pre-tax) $(692) $(1,092) Net loss $(1,073) $(1,247)
Issued May 3, 2006
http://www.newscom.com/cgi-bin/prnh/20040128/SFW031LOGO
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media, Jessie Wuerst, +1-509-495-8578, or , or investors, Jason
Lang, +1-509-495-2930, or , or Avista 24/7 Media Access,
+1-509-495-4174, all of Avista Corp. Web site:
http://www.avistacorp.com/
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