SPOKANE, Wash., Oct. 31 /PRNewswire-FirstCall/ -- Avista Corp.
(NYSE:AVA) today reported a net loss of $3.9 million, or $0.07 per
diluted share, for the third quarter of 2007, as compared to net
income of $10.1 million, or $0.20 per diluted share, for the third
quarter of 2006. For the nine months ended Sept. 30, 2007, Avista
Corp.'s net income was $24.4 million, or $0.45 per diluted share, a
decrease compared to net income of $55.1 million, or $1.11 per
diluted share, for the nine months ended Sept. 30, 2006. (Logo:
http://www.newscom.com/cgi-bin/prnh/20040128/SFW031LOGO) On Oct.
30, 2007, Avista Corp. reached an all-party settlement that
resolves all issues in its general rate case that was filed with
the Washington Utilities and Transportation Commission (WUTC) in
April 2007. The settlement is subject to final approval by the
WUTC. "Overall, we are very pleased with the settlement. This
should allow for significant improvement in our results for 2008 as
compared to 2007," said Avista Chairman and Chief Executive Officer
Gary G. Ely. "The third quarter is generally the lowest earnings
quarter for our utility due to seasonally low hydroelectric
generation and absorption of higher power supply costs, as well as
low natural gas loads. Results for the third quarter of 2007 for
our utility were lower than expected primarily due to the
disallowance of debt repurchase costs in our Washington general
rate case settlement and the write-down of a turbine," said Ely.
Results for the third quarter of 2007 and the nine months ended
Sept. 30, 2007 (YTD), as compared to the respective periods of
2006: ($ in thousands, except Q3 2007 Q3 2006 YTD 2007 YTD 2006
per-share data) Operating Revenues $267,662 $293,001 $1,030,854
$1,079,597 Income from Operations $15,736 $34,091 $94,891 $147,607
Net Income (Loss) $(3,875) $10,073 $24,402 $55,104 Net Income
(Loss) by Business Segment: Avista Utilities $(5,574) $480 $31,610
$43,531 Energy Marketing & Resource Management $(243) $8,773
$(11,804) $9,209 Advantage IQ $2,077 $1,918 $4,971 $4,903 Other
$(135) $(1,098) $(375) $(2,539) Contribution to earnings (loss) per
diluted share by Business Segment: Avista Utilities $(0.11) $0.01
$0.59 $0.88 Energy Marketing & Resource Management $ -- $0.17
$(0.22) $0.18 Advantage IQ $0.04 $0.04 $0.09 $0.10 Other $ --
$(0.02) $(0.01) $(0.05) Total earnings (loss) per diluted share
$(0.07) $0.20 $0.45 $1.11 Third Quarter and Year-to-date 2007
Highlights Avista Utilities: As agreed to in the Washington general
rate case settlement, electric rates for our Washington customers
will increase by an average of 9.4 percent, which is intended to
increase annual revenues by $30.2 million. As part of this general
rate increase, the base level of power supply costs used in the
Energy Recovery Mechanism (ERM) calculations will be updated.
Natural gas rates will increase by an average of 1.7 percent, which
is intended to increase annual revenues by $3.3 million. The new
electric and natural gas rates will become effective on Jan. 1,
2008. The settlement is based on a rate of return of 8.2 percent,
with a common equity ratio of 46 percent and a 10.2 percent return
on equity. We will not establish a Power Cost Only Rate Case
(PCORC) mechanism at this time as we had originally requested;
however, the parties have agreed to meet and further discuss a
PCORC prior to our next general rate case filing. In addition, we
have agreed to write-off $3.8 million of unamortized debt
repurchase costs effective Sept. 30, 2007. These costs were for
premiums paid to repurchase higher coupon debt prior to its
scheduled maturity as part of an effort to reduce interest expense.
In October 2007, we filed a natural gas general rate case in Oregon
requesting rate increases averaging 2.3 percent, which is designed
to increase annual revenues by $3.0 million. The decrease in third
quarter 2007 results over the third quarter of 2006 was primarily
due to an increase in other operating expenses and the disallowance
of unamortized debt repurchase costs. The increase in other
operating expenses included a pre-tax charge of $2.3 million to
reduce the carrying value of a turbine, which we are no longer
planning to use in our utility operations, to its estimated fair
value. Also contributing to the decline in results was an increase
in depreciation and amortization due to additions to utility plant
not yet covered in rates. On a year-to-date basis, utility earnings
decreased as compared to the same period in 2006. This was
primarily due to a decrease in gross margin (operating revenues
less resource costs), an increase in other operating expenses and
the disallowance of unamortized debt repurchase costs. The decline
in gross margin was primarily due to the difference in electric
resource costs as compared to the amount included in base retail
rates. On a year-to-date basis, we recognized an expense of $7.6
million under the ERM compared to a benefit of $3.4 million under
the ERM for the same period in 2006. The increase in electric
resource costs for 2007 (as compared to the amount included in base
rates) was primarily due to lower hydroelectric generation (second
and third quarters), higher fuel costs and greater use of our
thermal generating resources. We are expecting to absorb
approximately $8 million of costs under the ERM for the full year
of 2007. Advantage IQ: Net income from Advantage IQ for the third
quarter and year-to-date 2007 was slightly higher than the prior
year. Earnings growth for Advantage IQ has been limited in 2007 due
to expenses incurred for consulting services during the second and
third quarters. We are implementing certain strategic investments
at Advantage IQ aimed at creating long-term value that will
increase operating and capitalized costs in the short-term. These
investments are designed to enhance the long-term profit potential
of this business. Energy Marketing and Resource Management: On June
30, 2007, Avista Energy completed the sale of substantially all of
its contracts and ongoing operations to Coral Energy Holding, L.P.
(Coral Energy), a subsidiary of Shell, and certain of Coral
Energy's subsidiaries. Completion of this transaction ends
substantially all of the operations of this business segment. As
previously reported, results from the segment prior to the sale
were below our expectations. Other: Results from our other
businesses improved as compared to 2006. This was primarily due to
net gains on certain long-term venture fund investments in 2007
compared to net losses in 2006, as well as certain tax adjustments
recorded in 2006. Liquidity and Capital Resources: In September
2007, Avista Energy paid a cash dividend of $169 million to Avista
Capital representing the cash consideration for the net assets sold
to Coral Energy and liquidation of the net current assets of Avista
Energy not sold to Coral Energy. Avista Capital then paid a cash
dividend of $155 million to Avista Corp. The remaining funds were
utilized by Avista Capital to repay outstanding borrowings due to
Avista Corp. and the extension of an intercompany loan to Avista
Corp. For the remainder of 2007, we expect net cash flows from
operating activities, proceeds from the Avista Energy transaction
and our committed line of credit to provide adequate resources to
fund capital expenditures, maturing long-term debt, dividends and
other contractual commitments. We have long-term debt maturities of
$14 million in the fourth quarter of 2007 and $318 million in 2008.
While proceeds from the Avista Energy transaction should reduce our
funding needs, our forecasts indicate that we will need to issue
new debt securities to fund a portion of these requirements in
2008. Utility capital expenditures were $149 million for the nine
months ended Sept. 30, 2007. We expect utility capital expenditures
to be between $190 and $200 million in 2007 and 2008, and over $200
million in each of 2009 and 2010. In August 2007, our credit
ratings were upgraded by Fitch, Inc. In September 2007, our "Senior
Secured Debt" credit rating was upgraded to "BBB+" from "BBB-" by
Standard & Poor's. Earnings Guidance and Outlook At this time,
we are revising our guidance for 2007 consolidated earnings to a
range of $0.73 to $0.83 per diluted share. Our guidance for Avista
Utilities has been revised downward to a range of $0.85 to $0.95
per diluted share for 2007. The outlook for Avista Utilities
assumes that during the fourth quarter of the year we will have
normal precipitation, temperatures and hydroelectric generation.
The 2007 outlook for our Energy Marketing and Resource Management
segment is a loss of $0.22 per diluted share. The loss from this
segment reflects the operating loss for the nine months ended Sept.
30, 2007 and the loss on the sale of substantially all of Avista
Energy contracts and ongoing operations. Our guidance for Advantage
IQ is a contribution range of $0.11 to $0.13 per diluted share. We
expect our other businesses to lose $0.02 per diluted share. We are
confirming our 2008 guidance for consolidated earnings to be in the
range of $1.35 to $1.55 per diluted share. We expect Avista
Utilities to contribute in the range of $1.20 to $1.40 per diluted
share for 2008. Our outlook for Avista Utilities assumes, among
other variables, the implementation of a revenue increase from the
Washington general rate case as designed in the settlement
agreement effective Jan. 1, 2008, as well as normal precipitation,
temperatures and hydroelectric generation. We expect Advantage IQ
to contribute in a range of $0.13 to $0.15 per diluted share and
the other businesses to be between break-even and a loss of $0.03
per diluted share. NOTE: We will host a conference call with
financial analysts and investors on Oct. 31, 2007, at 10:30 a.m.
EDT to discuss this news release. The call is available at (866)
271-6130, passcode: 49624266. A replay of the conference call will
be available through Wednesday, Nov. 7, 2007. Call (888) 286-8010,
passcode 80080717 to listen to the replay. A simultaneous Webcast
of the call is available on our website,
http://www.avistacorp.com/. 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 service to 348,000 electric and
305,000 natural gas customers in three Western states. Avista's
primary, non-regulated subsidiary is Advantage IQ. Our stock is
traded under the ticker symbol "AVA." For more information about
Avista, please visit http://www.avistacorp.com/. Avista Corp. and
the Avista Corp. logo are trademarks of Avista Corporation. 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
our current expectations for future financial performance and cash
flows, capital expenditures, our 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 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, 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 needed to purchase electricity, natural gas for
our retail customers and natural gas fuel for electric generation,
and the value of surplus energy sold, as well as the market value
of derivative assets and liabilities; 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 our ability to recover
costs and/or earn a reasonable return including, but not limited
to, the disallowance of costs that we have deferred; the potential
effects of any legislation or administrative rulemaking passed into
law, including the possible adoption of national, regional, or
state laws requiring resources to meet certain standards and
placing restrictions on greenhouse gas emissions to mitigate
concerns over global warming; the outcome of pending regulatory and
legal proceedings arising out of the "western energy crisis" of
2000 and 2001, and including possible retroactive price caps and
resulting refunds; the outcome of legal proceedings and other
contingencies concerning us or affecting directly or indirectly our
operations; changes in, and compliance with, environmental and
endangered species laws, regulations, decisions and policies,
including present and potential environmental remediation costs;
the potential impact of changes to electric transmission ownership,
operation and governance, such as the formation of one or more
regional transmission organizations or similar entities; wholesale
and retail competition including, but not limited to, electric
retail wheeling and transmission costs; the ability to relicense
and maintain licenses for our hydroelectric generating facilities
at cost-effective levels with reasonable terms and conditions;
unplanned outages at any of our generating facilities or the
inability of facilities to operate as intended; unanticipated
delays or changes in construction costs, as well as our ability to
obtain required operating permits for present or prospective
facilities; natural disasters that can disrupt energy production or
delivery, as well as the availability and costs of materials and
supplies and support services; blackouts or disruptions of
interconnected transmission systems; the potential for future
terrorist attacks or other malicious acts, particularly with
respect to our utility assets; changes in the long-term climate of
the Pacific Northwest, which can affect, among other things,
customer demand patterns and the volume and timing of streamflows
to our hydroelectric resources; changes in future economic
conditions in our service territory and the United States in
general, including inflation or deflation and monetary policy;
changes in industrial, commercial and residential growth and
demographic patterns in our service territory; the loss of
significant customers and/or suppliers; failure to deliver on the
part of any parties from which we purchase and/or sell capacity or
energy; changes in the creditworthiness of our customers and energy
trading counterparties; 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; the effect of any change in our
credit ratings; changes in actuarial assumptions, the interest rate
environment and the actual return on plan assets for our pension
plan, which can affect future funding obligations, costs and
pension plan liabilities; increasing health care costs and the
resulting effect on health insurance premiums paid for our
employees and retirees; increasing costs of insurance, changes in
coverage terms and our 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
our ability to recruit and retain employees; the potential effects
of negative publicity regarding business practices, whether true or
not, which could result in, among other things, costly litigation
and a decline in our common stock price; changes in technologies,
possibly making some of the current technology quickly obsolete;
changes in tax rates and/or policies; and changes in our strategic
business plans and/or our subsidiaries, which may be affected by
any or all of the foregoing, including the entry into new
businesses and/or the exit from existing businesses. 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, 2006 and Quarterly Report on Form 10-Q for the
quarter ended June 30, 2007. 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) Nine
Months Ended Third Quarter September 30, 2007 2006 2007 2006
Operating revenues $267,662 $293,001 $1,030,854 $1,079,597
Operating expenses: Resource costs 150,318 159,044 611,937 621,058
Other operating expenses 63,991 63,082 202,531 189,907 Depreciation
and amortization 22,605 21,614 67,438 65,466 Utility taxes other
than income taxes 15,012 15,170 54,057 55,559 Total operating
expenses 251,926 258,910 935,963 931,990 Income from operations
15,736 34,091 94,891 147,607 Other income (expense): Interest
expense, net of capitalized interest (20,057) (23,444) (61,917)
(70,097) Regulatory disallowance of unamortized debt repurchase
costs (3,850) - (3,850) - Other income - net 2,156 2,736 9,414
7,289 Total other income (expense) - net (21,751) (20,708) (56,353)
(62,808) Income (loss) before income taxes (6,015) 13,383 38,538
84,799 Income taxes (2,140) 3,310 14,136 29,695 Net income (loss)
$(3,875) $10,073 $24,402 $55,104 Weighted-average common shares
outstanding (thousands), basic 52,834 49,098 52,769 48,951
Weighted-average common shares outstanding (thousands), diluted
52,834 49,902 53,267 49,633 Total earnings (loss) per common share,
basic $(0.07) $0.21 $0.46 $1.13 Total earnings (loss) per common
share, diluted $(0.07) $0.20 $0.45 $1.11 Dividends paid per common
share $0.150 $0.145 $0.445 $0.425 Issued October 31, 2007 AVISTA
CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in Thousands) September 30, December 31, 2007 2006 Assets
Cash and cash equivalents $5,190 $28,242 Restricted cash 1,318
29,903 Accounts and notes receivable 112,718 286,150 Current energy
commodity derivative assets - 343,726 Other current assets 242,990
344,253 Total net utility property 2,305,795 2,215,037 Non-utility
properties and investments-net 57,881 60,301 Non-current energy
commodity derivative assets - 313,300 Other property and
investments-net 59,892 60,030 Regulatory assets for deferred income
taxes 112,336 105,935 Regulatory assets for pensions and other
postretirement benefits 52,124 54,192 Other regulatory assets
36,927 31,752 Non-current utility energy commodity derivative
assets 42,531 25,575 Power and natural gas deferrals 87,486 97,792
Unamortized debt expense 37,972 46,554 Other deferred charges 4,962
13,766 Total Assets $3,160,122 $4,056,508 Liabilities and
Stockholders' Equity Accounts payable $75,083 $286,099 Current
energy commodity derivative liabilities - 313,499 Current portion
of long-term debt 307,608 26,605 Current portion of preferred stock
(subject to mandatory redemption) - 26,250 Short-term borrowings -
4,000 Other current liabilities 248,360 288,756 Long-term debt
655,207 949,854 Long-term debt to affiliated trusts 113,403 113,403
Non-current energy commodity derivative liabilities - 309,990
Regulatory liability for utility plant retirement costs 205,974
197,712 Pensions and other postretirement benefits 93,705 103,604
Deferred income taxes 440,008 459,756 Other non-current liabilities
and deferred credits 107,878 62,455 Total Liabilities 2,247,226
3,141,983 Common stock - net (52,858,878 and 52,514,326 outstanding
shares) 723,054 715,620 Retained earnings and accumulated other
comprehensive loss 189,842 198,905 Total Stockholders' Equity
912,896 914,525 Total Liabilities and Stockholders' Equity
$3,160,122 $4,056,508 Issued October 31, 2007 AVISTA CORPORATION
FINANCIAL AND OPERATING HIGHLIGHTS (Dollars in Thousands) Nine
Months Ended Third Quarter September 30, 2007 2006 2007 2006 Avista
Utilities Retail electric revenues $140,491 $135,151 $418,963
$406,939 Retail kWh sales (in millions) 2,162 2,143 6,538 6,446
Retail electric customers at end of period 347,717 341,337 347,717
341,337 Wholesale electric revenues $23,664 $26,542 $82,762 $98,971
Wholesale kWh sales (in millions) 303 411 1,322 1,815 Sales of fuel
$3,459 $5,776 $11,608 $45,023 Other electric revenues $4,429 $4,272
$12,687 $15,310 Retail natural gas revenues $39,487 $37,039
$280,624 $267,019 Wholesale natural gas revenues $29,941 $18,129
$111,232 $69,026 Transportation and other natural gas revenues
$2,327 $2,426 $8,185 $8,413 Total therms delivered (in thousands)
114,456 91,944 498,247 434,717 Retail natural gas customers at end
of period 305,155 298,582 305,155 298,582 Income from operations
(pre-tax) $13,050 $18,661 $109,142 $130,911 Net income (loss)
$(5,574) $480 $31,610 $43,531 Energy Marketing and Resource
Management Gross margin (operating revenues less resource costs)
$55 $17,913 $(7,251) $25,447 Realized gross margin $55 $6,534
$17,343 $24,007 Unrealized gross margin - $11,379 $(24,594) $1,440
Income (loss) from operations (pre-tax) $(924) $12,220 $(21,996)
$9,634 Net income (loss) $(243) $8,773 $(11,804) $9,209 Advantage
IQ Revenues $12,193 $10,389 $34,607 $29,011 Income from
operations(pre-tax) $3,439 $3,256 $8,201 $8,218 Net income $2,077
$1,918 $4,971 $4,903 Other Revenues $5,357 $5,566 $15,065 $16,317
Income (loss) from operations (pre-tax) $171 $(46) $(456) $(1,156)
Net loss $(135) $(1,098) $(375) $(2,539) Issued October 31, 2007
http://www.newscom.com/cgi-bin/prnh/20040128/SFW031LOGO
http://photoarchive.ap.org/ DATASOURCE: Avista Corp. CONTACT:
Media, Jessie Wuerst, +1-509-495-8578, , or Investors, Jason Lang,
+1-509-495-2930, , both of Avista Corp.; or Avista 24-7 Media
Access, +1-509-495-4174 Web site: http://www.avistacorp.com/
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