Puget Energy Reports First Quarter 2005 Earnings; Company's Financial Results on Target.BELLEVUE Bellevue (bĕl`vy  ).1 City (1990 pop. 30,982), Sarpy co., E Nebr., a suburb of Omaha, on the Missouri River; inc. 1855. , Wash. -- Puget For the explorer of Puget Sound, see Peter Puget. Puget is a commune of the Vaucluse département in southern France. Coordinates: Energy (NYSE NYSE See: New York Stock Exchange :PSD (tool) PSD - Portable Scheme Debugger. ) today reported first quarter 2005 net income of $71.1 million, or 71 cents per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with $66.4 million, or 67 cents per diluted share, in the first quarter of 2004. Puget Energy's regulated electric and gas utility subsidiary, Puget Sound Energy Puget Sound Energy (PSE) is an energy company providing electrical power and natural gas in the Puget Sound region of the northwest United States. It serves electrical power to over 1 million customers in Island, Jefferson, King, Kitsap, Kittitas, Pierce, Skagit, Thurston, and (PSE PSE 1. pale soft exudative pork. 2. portosystemic encephalopathy. ), reported first quarter 2005 net income of $72.2 million or 72 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. . Puget Energy reported a net loss of $1.0 million or 1 cent per share for its construction services subsidiary, InfrastruX Group (InfrastruX), which has been reflected as discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . "Our first quarter performance met our expectations despite warmer than average weather during the quarter," said Steve v. t. 1. To pack or stow, as cargo in a ship's hold. See Steeve. Reynolds, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Puget Energy. "The first quarter is a very important quarter for us from a service and earnings standpoint The Standpoint is a newspaper published in the British Virgin Islands. It was originally published under the name Pennysaver, largely as a shopping-coupon promotional newspaper, but since emerged as one of the most influential sources of journalism in the ," added Reynolds. "The quarter drives a significant portion of our annual earnings as well as our weather related operating challenges. A reduction in storm related outage out·age n. 1. A quantity or portion of something lacking after delivery or storage. 2. A temporary suspension of operation, especially of electric power. expenses largely offset warmer than normal temperatures in the region. We reiterate re·it·er·ate tr.v. re·it·er·at·ed, re·it·er·at·ing, re·it·er·ates To say or do again or repeatedly. See Synonyms at repeat. re·it our calendar year earnings guidance provided on March 10, 2005 of $1.30 to $1.40 per share from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the ."
Summary
(in millions except per share data) First Quarter ended March 31,
----------------------------------
2005 2004
----------------------------------
Revenues $741.7 $668.7
Operating Income 110.5 108.7
Income from Continuing Operations 72.1 66.7
Loss from Discontinued Operations (1.0) (0.4)
Net Income $71.1 $66.4
Earnings per share (diluted) $0.71 $0.67
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First Quarter 2005 Summary for Puget Sound Energy (PSE) During the first quarter 2005, PSE's net income was $72.2 million or 72 cents per share, an increase of $5.3 million or 5 cents per share from $66.9 million or 67 cents per share for the first quarter 2004. PSE's financial performance improved in the first quarter 2005 over the first quarter 2004 in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite a decline in natural gas therm therm (therm) a unit of heat. The word has been used as equivalent to (a) large calorie; (b) small calorie; (c) 1000 large calories; (d) 100,000 British thermal units. sales resulting from warmer temperatures and higher costs incurred to provide electric and natural gas service to PSE's growing customer base. The improvement in PSE's first quarter 2005 financial performance reflects the partial recovery of a previously reported PSE regulatory disallowance dis·al·low tr.v. dis·al·lowed, dis·al·low·ing, dis·al·lows 1. To refuse to allow: "[The government] , resolution of PSE's general rate case, lower storm related restoration costs and lower interest expense. Summarized below are items that impacted PSE's first quarter 2005 results as compared with 2004. All items discussed are pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta unless otherwise noted and all share amounts are presented on a diluted basis. --As of March 31, 2005, PSE provided service to approximately 1,007,000 electric customers and 679,000 natural gas customers, representing a 2 percent and 3 percent increase, respectively, from March 31, 2004. --Effective March 4, 2005 the Washington Utilities and Transportation Commission The Washington Utilities and Transportation Commission (UTC) is a three-member board appointed by the Governor of Washington and confirmed by the Washington State Senate to six year terms. (WUTC WUTC Washington Utilities and Transportation Commission ) granted PSE a general rate increase for electric customers of $57.7 million or 4.1 percent and $26.3 million or 3.5 percent, for natural gas customers, on an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. basis. --The number of heating degree-days in the first quarter of 2005 as measured at the Seattle-Tacoma Airport was 93 percent of normal due to warmer temperatures compared with 96 percent of normal in the first quarter of 2004.
Month Heating Degree Heating Degree
Ending Days Days
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2005 Normal 2005 2004
----------------------------------------------------------------------
January 702 747 702 757
February 622 613 622 589
March 487 582 487 530
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First Quarter 1,811 1,942 1,811 1,876
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--Warmer than normal temperatures in PSE's service territory resulted in fewer heating-degree days during the first quarter 2005 compared with the first quarter 2004. Consequently, PSE's natural-gas sales volumes declined 3.5 percent in the first quarter 2005. The adverse impact of warmer temperatures on natural-gas sales volumes was partially offset by an increase in customer rates effective March 4, 2005. --PSE's electric margin increased by $7.4 million in the first quarter of 2005 as compared with the same period in 2004. Of the $7.4 million increase in electric margin, $6.0 million was the result of a WUTC order issued on February February: see month. 23, 2005, establishing a final disallowance amount related to the Tenaska gas supply regulatory asset. This one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. , $6.0 million increase to electric margin was partially offset by the Tenaska disallowance for the first quarter of 2005 of $2.8 million already reflected in rates. PSE recovered power costs incurred in both the first quarters of 2005 and 2004 through its Power Cost Adjustment Mechanism (PCA (tool, programming) PCA - A dynamic analyser from DEC giving information on run-time performance and code use. ). --PSE's operations and maintenance expenses for the first quarter of 2005 totaled $75.5 million, an increase of $1.7 million as compared with the same period a year ago. Operations and maintenance expenses in the first quarter 2005 include storm damage restoration costs of $1.1 million as compared with $6.2 million in the first quarter 2004. --PSE's financial results in the first quarter 2005 benefited from a decrease in interest expense of $2.5 million or 2 cents per share compared with the same period in 2004. The decrease in interest expense was primarily the result of initiatives to reduce debt and refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. higher cost securities. --PSE's depreciation and amortization expense increased by $2.2 million or 2 cents per share, as a result of energy delivery infrastructure additions. This trend is likely to accelerate in 2005 and beyond as PSE invests in its energy delivery and generation infrastructure to support service territory growth. --On March 24, 2005, PSE amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. and restated its $350 million Credit Agreement. The amended and restated credit agreement provides for borrowings of up to $500 million and extends the expiration date Expiration Date The day on which an options or futures contract is no longer valid and, therefore, ceases to exist. Notes: The expiration date for all listed stock options in the U.S. from June June: see month. 15, 2007 to April 2, 2010. Table 1 below summarizes the items that impacted first quarter 2005 results for PSE.
Table 1
Fully Diluted Per Share
-----------------------
PSE Q1 2004 Reported Earnings $0.67
Increase in Electric Margin 0.05
Increase in Depreciation and Amortization
Expense (0.02)
Decrease in Interest Expense 0.02
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PSE Q1 2005 Reported Earnings $0.72
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InfrastruX Group (InfrastruX) Puget Energy reported a net loss of $1.0 million or 1 cent per share for its construction services subsidiary, InfrastruX, in the first quarter of 2005 compared with a loss of $0.4 million (less than 1 cent per share), in the first quarter of 2004. As previously announced, Puget Energy intends to monetize Monetize 1. To convert into money. 2. To convert from securities into currency that can be used to purchase goods and services. Notes: For example, you'll often hear Internet marketers talk about "monetizing website visitors. its interest in InfrastruX through a sale in 2005 and to invest the proceeds in its regulated utility subsidiary, PSE. Puget Energy's net investment in InfrastruX at March 31, 2005 was $34.3 million. Puget Energy has presented the financial results of InfrastruX as discontinued operations on a net of tax basis on Puget Energy's financial statements beginning in the first quarter of 2005, as well as for the first quarter of 2004. 2005 Outlook Puget Energy anticipates its 2005 financial results from continuing operations to be within the range of $1.30 to $1.40 per share, which is unchanged from previous earnings guidance provided on March 10, 2005. PSE is affected by various seasonal weather patterns throughout the year. Utility revenues and associated expenses are not generated evenly during the year. Variations in energy usage by customers occur from season to season and from month to month within a season, primarily as a result of weather conditions. PSE normally experiences its highest retail energy sales in the first and fourth quarters of the year. PSE expects its 2005 earnings to be minimally impacted if variable power costs incurred to provide electricity fall outside the baseline The horizontal line to which the bottoms of lowercase characters (without descenders) are aligned. See typeface. baseline - released version level established in the electric tariff tariff, tax on imported and, more rarely, exported goods. It is also called a customs duty. Tariffs may be distinguished from other taxes in that their predominant purpose is not financial but economic—not to increase a nation's revenue but to protect domestic rate charged to customers. Under the PCA mechanism, any further increases in variable power costs through June 2006 would be apportioned ap·por·tion tr.v. ap·por·tioned, ap·por·tion·ing, ap·por·tions To divide and assign according to a plan; allot: "The tendency persists to apportion blame as suits the circumstances" 99 percent to customers and 1 percent to PSE. First Quarter 2004 Earnings Analyst Teleconference A conference call for analysts to discuss with management the first quarter results and the outlook for future performance is scheduled at 10 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT (7 a.m. PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT ) Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , April 29, 2005. The conference call will be broadcast live through a Web cast at www.pse.com by accessing the Investors section of the Web site. The Web cast will be archived and available for replay following the live conference call. A recorded replay of the conference call also will be available two hours after completion on April 29 through midnight (EDT) Friday, May 13, 2005. To access the recording, dial 888-286-8010, and enter the conference I.D. number 23350088. Puget Energy is an energy services holding company that conducts all of its operations through its subsidiaries, PSE and InfrastruX Group. PSE is a regulated utility company that generates, purchases and sells electricity; and purchases, transports and sells natural gas. The service territory of PSE covers approximately 6,000 square miles A square mil is a unit of area, equal to the area of a square with sides of length one mil. A mil is one thousandth of an international inch. This unit of area is usually used in specifying the area of the cross section of a wire or cable. , principally in the Puget Sound Puget Sound (py `jĕt), arm of the Pacific Ocean, NW Wash., connected with the Pacific by Juan de Fuca Strait, entered through the Admiralty Inlet and extending in two arms c. region of Washington Washington, town, EnglandWashington, town (1991 pop. 48,856), Sunderland metropolitan district, NE England. Washington was designated one of the new towns in 1964 to alleviate overpopulation in the Tyneside-Wearside area. state. InfrastruX specializes in contracting services to other gas and electric utilities primarily in the Midwest Midwest or Middle West, region of the United States centered on the western Great Lakes and the upper-middle Mississippi valley. It is a somewhat imprecise term that has been applied to the northern section of the land between the Appalachians , Texas, and the south-central and eastern United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. regions. CAUTIONARY STATEMENT: Certain statements contained in this press release are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, among which include Puget Energy's plans with respect to InfrastruX and any proceeds from its possible sale or monetization Monetization The securitization of the gross revenues of a contract. , Puget Energy's anticipated 2005 financial results, including its earnings guidance, and PSE's expectations regarding the impact on its 2005 earnings of variable power costs. Forward-looking statements are based on the opinions and estimates of management at the time the statements are made and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that could affect actual results include, among others, governmental policies and regulatory actions, including those of the WUTC, and weather conditions. More information about these and other factors that potentially could affect the company's financial results is included in Puget Energy's and PSE's most recent annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , quarterly report on Form 10-Q Form 10-Q See 10-Q. and in their other public filings filed with the Securities and Exchange Commission. Except as required by law, Puget Energy and PSE undertake no obligation to update any forward-looking statements.
PUGET ENERGY -- SUMMARY INCOME STATEMENT
----------------------------------------
(In thousands, except per-share amounts)
Unaudited
Three months ended
3/31(1)
------------------------
2005 2004
----------- -----------
Operating revenues
Electric $ 420,090 $ 392,495
Gas 321,129 275,692
Other 434 527
---------- -----------
Total operating revenues 741,653 668,714
---------- -----------
Operating expenses
Purchased electricity 208,178 196,367
Electric generation fuel 20,448 13,988
Residential exchange (55,046) (54,423)
Purchased gas 201,744 162,407
Unrealized (gain) loss on derivative
instruments 509 (87)
Utility operations & maintenance 75,522 73,855
Other operations & maintenance 741 484
Depreciation & amortization 58,077 55,870
Conservation amortization 5,162 8,190
Taxes other than income taxes 69,700 64,224
Income taxes 46,084 39,097
---------- -----------
Total operating expenses 631,119 559,972
---------- -----------
Operating income 110,534 108,742
Other income (deductions):
Other income 1,164 68
Interest Charges:
AFUDC 1,462 1,078
Interest expense (41,044) (43,121)
Mandatorily redeemable securities interest
expense (23) (23)
---------- -----------
Income from continuing operations 72,093 66,744
Loss from discontinued operations, net of tax (1,018) (379)
---------- -----------
Net Income $ 71,075 $ 66,365
========== ===========
Common shares outstanding 99,953 99,169
Diluted shares outstanding 100,446 99,637
---------- -----------
Basic and diluted earnings per common share
from continuing operations $ 0.72 $ 0.67
Basic and diluted earnings from discontinued
operations (0.01) ---
---------- -----------
Basic and diluted earnings per common
share(2) $ 0.71 $ 0.67
========== ===========
(1) Partial-year results may not accurately predict full-year
performance, as earnings are significantly affected by weather.
(2) Diluted earnings per common share include the dilutive effect of
securities related to employee compensation plans.
PUGET SOUND ENERGY -- UTILITY OPERATING DATA
--------------------------------------------
Three months ended 3/31
-----------------------
2005 2004
----------- ----------
Energy sales revenues ($ in thousands;
unaudited)
Electricity
Residential $ 211,840 $ 204,398
Commercial 157,892 153,607
Industrial 22,079 22,374
Other retail sales, including change in
unbilled (4,767) (12,881)
---------- ----------
Subtotal, retail sales 387,044 367,498
Transportation, including change in
unbilled 2,668 2,253
Sales to other utilities & marketers 16,321 11,487
Other(1) 14,057 11,257
---------- ----------
Total electricity sales 420,090 392,495
Gas
Residential 208,656 180,761
Commercial 91,248 77,463
Industrial 12,993 11,126
---------- ----------
Subtotal, retail sales 312,897 269,350
Transportation 3,397 3,432
Other 4,835 2,910
---------- ----------
Total gas sales 321,129 275,692
---------- ----------
Total energy sales revenues $ 741,219 $ 668,187
----------------------------------------------------------------------
Energy sales volumes (Unaudited)
Electricity (in mWh)
Residential 3,280,893 3,289,191
Commercial 2,181,608 2,195,290
Industrial 324,169 328,025
Other, including change in unbilled (156,343) (210,510)
---------- ----------
Subtotal, retail sales 5,630,327 5,601,996
Transportation, including change in
unbilled 522,026 483,702
Sales to other utilities & marketers 345,784 269,610
---------- ----------
Total mWh 6,498,137 6,355,308
Gas (in 000's of therms)
Residential 199,051 203,749
Commercial 95,241 99,740
Industrial 13,911 14,849
Transportation 53,126 56,182
---------- ----------
Total gas volumes 361,329 374,520
----------------------------------------------------------------------
Margins(2)($ in thousands; unaudited)
Electric $ 201,519 $ 194,134
Gas 87,617 87,124
----------------------------------------------------------------------
Customers served(3)(Unaudited)
Electricity
Residential 887,964 871,410
Commercial 110,807 108,103
Industrial 3,927 4,023
Other 2,342 2,117
Transportation 17 17
---------- ----------
Total electricity customers 1,005,057 985,670
Gas
Residential 623,748 603,703
Commercial 50,442 49,327
Industrial 2,706 2,741
Transportation 129 129
---------- ----------
Total gas customers 677,025 655,900
----------------------------------------------------------------------
Weather (Unaudited)
Actual heating degree days 1,811 1,876
Normal heating degree days(4) 1,942 1,963
(1) Includes sales of non-core gas supplies.
(2) Electric margin is electric sales to retail and transportation
customers less the cost of generating and purchasing electric
energy sold to customers, including transmission costs, to bring
electric energy to PSE's service territory. Gas margin is gas
sales to retail and transportation customers less the cost of gas
purchased, including gas transportation costs, to bring gas to
PSE's service territory.
(3) Customers represents average served during the period.
(4) Seattle-Tacoma Airport statistics reported by NOAA which are based
on a 30-year average, 1971-2000. Heating degree days measure how
far the daily average temperature falls below 65 degrees. Heating
degree days in 2004 are adjusted for leap year by adding the
February 28th heating degree day amount.
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