Board of Directors Increases Common Stock Dividend by 10 Percent
SPOKANE, Wash., Feb. 20 /PRNewswire-FirstCall/ -- Avista Corp.
(NYSE:AVA) today reported net income of $14.1 million, or $0.26 per
diluted share, for the fourth quarter of 2007, a decrease compared
to net income of $17.8 million, or $0.35 per diluted share, for the
fourth quarter of 2006. For the year ended Dec. 31, 2007, Avista
Corp.'s net income was $38.5 million, or $0.72 per diluted share, a
decrease compared to net income of $72.9 million, or $1.46 per
diluted share, for the year ended Dec. 31, 2006. (Logo:
http://www.newscom.com/cgi-bin/prnh/20040128/SFW031LOGO) "While we
are disappointed with our financial results for 2007, we expect
significant improvement in our results for 2008. This is primarily
due to the implementation of a general rate increase in Washington
on January 1, the current outlook for improved hydroelectric
generation and the planned refinancing of high-cost debt," said
Avista Chairman, President and Chief Executive Officer Scott L.
Morris. The following table shows results for the fourth quarter of
2007 and the year ended Dec. 31, 2007, as compared to the
respective periods of 2006: ($ in thousands, Q4 2007 Q4 2006 Year
2007 Year 2006 except per-share data) Operating Revenues $386,903
$426,714 $1,417,757 $1,506,311 Income from Operations $43,538
$51,953 $138,429 $199,560 Net Income $14,073 $17,837 $38,475
$72,941 Net Income (Loss) by Business Segment: Avista Utilities
$12,212 $14,263 $43,822 $57,794 Energy Marketing & Resource
Management $(73) $2,358 $(11,877) $11,567 Advantage IQ $1,680
$1,352 $6,651 $6,255 Other $254 $(136) $(121) $(2,675) Contribution
to earnings per diluted share by Business Segment: Avista Utilities
$0.23 $0.28 $0.82 $1.16 Energy Marketing & Resource Management
$-- $0.04 $(0.22) $0.23 Advantage IQ $0.03 $0.03 $0.12 $0.12 Other
$-- $-- $-- $(0.05) Total earnings per diluted share $0.26 $0.35
$0.72 $1.46 Fourth Quarter and Fiscal Year 2007 Highlights Avista
Utilities: Utility earnings for the fourth quarter and full year of
2007 were lower than we originally forecasted. The decision of the
Washington Utilities and Transportation Commission (WUTC) in late
2006 to deny our request for more timely recovery of transmission
and generation investments presented a significant challenge for us
without the rate relief we had anticipated. Our challenge was
compounded by below normal hydroelectric generation and higher
electric resource costs as compared to the amount included in base
rates. This caused us to absorb $8.5 million of costs under the
Energy Recovery Mechanism (ERM) in Washington compared to a benefit
of $2.6 million under the ERM in 2006. Higher electric resource
costs decreased 2007 gross margin (operating revenues less resource
costs) for 2007 as compared to 2006. For the fourth quarter and
fiscal year 2007, we had higher other operating expenses as well as
increased depreciation and amortization for utility plant
investments not covered in 2007 rates. Also, as part of the
Washington rate case settlement described below, we agreed to
write-off $3.8 million of unamortized debt repurchase costs in
2007. We received needed rate relief beginning Jan. 1, 2008. The
Washington general rate case settlement approved by the WUTC in
December 2007 increased electric rates for our Washington customers
by an average of 9.4 percent, which is designed to increase annual
revenues by $30.2 million. Also, the base level of power supply
costs used in the ERM calculations was updated. Natural gas rates
for our Washington customers increased by an average of 1.7
percent, which is designed to increase annual revenues by $3.3
million. 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. Based on current snowpack conditions, we forecast
hydroelectric generation to be slightly above normal for 2008, an
improvement over 2007 when hydroelectric generation was 96 percent
of normal. Given the forecasted improvement in hydroelectric
generation and the resetting of the base level of power supply
costs used in the ERM calculations, we expect a benefit under the
ERM in 2008. This 2008 forecast of hydroelectric generation will be
revised based on precipitation, temperatures and other variables
during the year. In October 2007, we filed a natural gas general
rate case in Oregon requesting an overall rate increase of 2.3
percent, which is designed to increase annual revenues by $3.0
million. In December 2007, we entered into a settlement agreement
with all parties in the Oregon general rate case for the purpose of
resolving the cost of capital components. In the settlement, the
parties agreed to a rate of return of 8.21 percent with a common
equity ratio of 50 percent and a 10 percent return on equity. The
settlement agreement does not impact any other revenue requirement
or rate-related issues. We are currently in settlement discussions
related to the remaining issues in the case. Advantage IQ: Net
income from Advantage IQ for the fourth quarter and fiscal year
2007 increased as compared to the prior year. Earnings growth for
Advantage IQ was limited in 2007 due to expenses incurred for
consulting services during the second and third quarters. Advantage
IQ's annual revenues for 2007 increased 19 percent as compared to
the prior year and totaled $47.3 million. In 2007, Advantage IQ
processed bills totaling $12.5 billion, an increase of 16 percent,
as compared to 2006. Energy Marketing and Resource Management: On
June 30, 2007, Avista Energy completed the sale of substantially
all of its contracts and ongoing operations to Shell Energy North
America (U.S.), L.P. (Shell Energy), formerly known as Coral Energy
Holding, L.P., and certain of Shell 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 due in part to net gains on certain
long-term venture fund investments in 2007 compared to net losses
in 2006. Liquidity and Capital Resources: The majority of the $169
million of proceeds from the Avista Energy transaction were
deployed into our regulated utility operations. Moody's Investors
Service and Standard & Poor's recently upgraded our credit
ratings, which resulted in an investment grade rating for our
senior unsecured debt and corporate rating from each of these
agencies. These upgrades reflect several steps taken over the past
few years to lower our business risk profile and improve financial
metrics. The most recent significant steps were the sale of
substantially all of Avista Energy's contracts and ongoing
operations and our general rate case settlement in Washington. We
have long-term debt maturities of $318 million in 2008, the
majority of which is $273 million of 9.75 percent Senior Notes that
mature on June 1, 2008. We will issue new debt to fund a
significant portion of the maturing debt, and it should be at a
substantially lower interest rate. Utility capital expenditures
were $206 million for 2007. We expect utility capital expenditures
to be approximately $200 million in 2008 and over $200 million in
each of 2009 and 2010. Board of Directors Increases Common Stock
Dividend by 10 Percent On Feb. 15, 2008, Avista Corp.'s board of
directors declared a quarterly dividend of $0.165 per share on the
company's common stock, an increase of 10 percent or $0.015 per
share. The dividend is payable March 14, 2008, to shareholders of
record at the close of business on Feb. 28, 2008. Payment of
dividends is subject to declaration and approval by the board each
quarter. "This action is indicative of the significant progress
that our company has made and our positive outlook for the future,"
said Morris. "This progress was also recognized by the credit
rating agencies, which have all upgraded one or more components of
our debt over the past nine months. Management intends to recommend
that the board further review our dividend level during the second
half of 2008." Earnings Guidance and Outlook 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, normal precipitation and temperatures, as well as
slightly above normal hydroelectric generation. These factors,
combined with resetting the ERM in the Washington general rate, are
expected to result in a benefit under the ERM in 2008. We are
revising our guidance for Advantage IQ downward to a range of $0.10
to $0.12 per diluted share from a range of $0.13 to $0.15. This is
due to the recent decline in short-term interest rates, which will
decrease Advantage IQ's interest earnings on funds held for
customers. We expect 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 Feb. 20,
2008, at 10:30 a.m. EST to discuss this news release. The call is
available at (888) 713-4211, passcode: 82810283. A replay of the
conference call will be available through Wednesday, Feb. 27, 2008.
Call (888) 286-8010, passcode 49051478 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 352,000 electric and
311,000 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, dividends, 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, including the possible adoption of
national 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; changes in, and compliance with, environmental
and endangered species laws, regulations, decisions and policies,
including present and potential environmental remediation costs;
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; changes in
industrial, commercial and residential growth and demographic
patterns in our service territory; the loss of significant
customers and/or suppliers; default or nonperformance on the part
of any parties from which we purchase and/or sell capacity or
energy; deterioration in the creditworthiness of our customers and
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 provided to 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 obsolete; changes in
tax rates and/or policies; and changes in our strategic business
plans, 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 Sept. 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. Securities ratings are not
recommendations to buy, sell or hold securities. The ratings are
subject to change or withdrawal at any time by the respective
credit rating agencies. Each credit rating should be evaluated
independently of any other ratings. AVISTA CORPORATION CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (Dollars in Thousands
except Per Share Amounts) Year Ended Fourth Quarter December 31,
2007 2006 2007 2006 Operating revenues $386,903 $426,714 $1,417,757
$1,506,311 Operating expenses: Resource costs 237,737 274,725
849,674 895,783 Other operating expenses 64,030 64,096 266,561
254,003 Depreciation and amortization 23,212 21,617 90,650 87,083
Utility taxes other than income taxes 18,386 14,323 72,443 69,882
Total operating expenses 343,365 374,761 1,279,328 1,306,751 Income
from operations 43,538 51,953 138,429 199,560 Other income
(expense): Interest expense, net of capitalized interest (20,659)
(23,136) (82,576) (93,233) Regulatory disallowance of unamortized
debt repurchase costs - - (3,850) - Other income - net 1,392 1,311
10,806 8,600 Total other income (expense) - net (19,267) (21,825)
(75,620) (84,633) Income before income taxes 24,271 30,128 62,809
114,927 Income taxes 10,198 12,291 24,334 41,986 Net income $14,073
$17,837 $38,475 $72,941 Weighted-average common shares outstanding
(thousands), basic 52,877 49,788 52,796 49,162 Weighted-average
common shares outstanding (thousands), diluted 53,251 50,681 53,263
49,897 Total earnings per common share, basic $0.27 $0.36 $0.73
$1.48 Total earnings per common share, diluted $0.26 $0.35 $0.72
$1.46 Dividends paid per common share $0.150 $0.145 $0.595 $0.570
Issued February 20, 2008 AVISTA CORPORATION CONDENSED CONSOLIDATED
BALANCE SHEETS (UNAUDITED) (Dollars in Thousands) December 31,
December 31, 2007 2006 Assets Cash and cash equivalents $11,839
$28,242 Restricted cash 4,068 29,903 Accounts and notes receivable
105,440 286,150 Current energy commodity derivative assets -
343,726 Other current assets 210,838 344,253 Total net utility
property 2,347,758 2,215,037 Non-utility properties and
investments-net 56,084 60,301 Non-current energy commodity
derivative assets - 313,300 Other property and investments-net
60,073 60,030 Regulatory assets for deferred income taxes 117,461
105,935 Regulatory assets for pensions and other postretirement
benefits 51,006 54,192 Other regulatory assets 43,004 31,752
Non-current utility energy commodity derivative assets 55,313
25,575 Power and natural gas deferrals 85,885 97,792 Unamortized
debt expense 32,542 46,554 Other deferred charges 4,902 13,766
Total Assets $3,186,213 $4,056,508 Liabilities and Stockholders'
Equity Accounts payable $117,546 $286,099 Current energy commodity
derivative liabilities - 313,499 Current portion of long-term debt
427,344 26,605 Current portion of preferred stock (subject to
mandatory redemption) - 26,250 Short-term borrowings - 4,000 Other
current liabilities 218,759 288,756 Long-term debt 521,489 949,854
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 205,773 197,712
Pensions and other postretirement benefits 90,555 103,604 Deferred
income taxes 440,918 459,756 Other non-current liabilities and
deferred credits 136,460 62,455 Total Liabilities 2,272,247
3,141,983 Common stock - net (52,909,013 and 52,514,326 outstanding
shares) 726,933 715,620 Retained earnings and accumulated other
comprehensive loss 187,033 198,905 Total Stockholders' Equity
913,966 914,525 Total Liabilities and Stockholders' Equity
$3,186,213 $4,056,508 Issued February 20, 2008 AVISTA CORPORATION
FINANCIAL AND OPERATING HIGHLIGHTS (Dollars in Thousands) Year
Ended Fourth Quarter December 31, 2007 2006 2007 2006 Avista
Utilities Retail electric revenues $157,297 $147,197 $576,260
$554,136 Retail kWh sales (in millions) 2,374 2,329 8,912 8,775
Retail electric customers at end of period 351,512 345,450 351,512
345,450 Wholesale electric revenues $22,967 $27,237 $105,729
$126,208 Wholesale kWh sales (in millions) 272 302 1,594 2,117
Sales of fuel $1,302 $3,153 $12,910 $48,176 Other electric revenues
$3,544 $3,553 $16,231 $18,863 Retail natural gas revenues $143,622
$148,991 $424,246 $416,010 Wholesale natural gas revenues $30,935
$24,195 $142,167 $93,221 Transportation and other natural gas
revenues $2,635 $2,911 $10,820 $11,324 Total therms delivered (in
thousands) 202,186 195,190 700,433 629,906 Retail natural gas
customers at end of period 310,535 304,586 310,535 304,586 Income
from operations (pre-tax) $40,911 $46,138 $150,053 $177,049 Net
income $12,212 $14,263 $43,822 $57,794 Energy Marketing and
Resource Management Gross margin (operating revenues less resource
costs) $116 $7,965 $(7,135) $33,414 Realized gross margin $116
$7,897 $17,459 $31,904 Unrealized gross margin - $68 $(24,594)
$1,510 Income (loss) from operations (pre-tax) $(370) $3,605
$(22,366) $13,239 Net income (loss) $(73) $2,358 $(11,877) $11,567
Advantage IQ Revenues $12,648 $10,626 $47,255 $39,636 Income from
operations (pre-tax) $2,812 $2,261 $11,012 $10,479 Net income
$1,680 $1,352 $6,651 $6,255 Other Revenues $5,533 $4,869 $20,598
$21,186 Income (loss) from operations (pre-tax) $185 $(51) $(270)
$(1,207) Net income (loss) $254 $(136) $(121) $(2,675) Issued
February 20, 2008
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, , or Avista 24|7 Media Access, +1-509-495-4174,
all of Avista Corp. Web site: http://www.avistacorp.com/
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