Puget Energy Reports First Quarter 2006 Financial Results; Continued Focus on Strengthening Core Utility Business.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. ): --First quarter 2006 income of 79 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 including 16 cents from the discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. of InfrastruX Group --First quarter 2006 income from 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. ) of 64 cents per diluted share --InfrastruX sold for $275 million --Reaffirm full-year 2006 guidance of $1.40 to $1.55 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 Puget Energy (NYSE: PSD) today reported net income of $92.6 million, or 79 cents per diluted share, for the first quarter 2006 compared to $71.1 million, or 71 cents per diluted share, in the first quarter 2005. Puget Energy's first quarter 2006 results reflect $18.9 million, or 16 cents per diluted share, from its former utility construction services subsidiary, InfrastruX Group (InfrastruX). These results include $7.3 million related to the reversal reversal n. the decision of a court of appeal ruling that the judgment of a lower court was incorrect and is reversed. The result is that the lower court which tried the case is instructed to dismiss the original action, retry the case, or is ordered to change its of a carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. adjustment recorded in 2005 as well as $10 million related to the anticipated realization (specification) realization - A UML semantic relationship between a classifier that specifies a contract and another classifier that guarantees to carry it out. [Handout by Mr. David Gillibrand]. of a deferred tax asset associated with the sale of the business. "This was an important quarter for Puget Energy," said Steve v. t. 1. To pack or stow, as cargo in a ship's hold. See Steeve. Reynolds, Chairman, 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 sale of InfrastruX successfully concludes an initiative aimed at improving the financial position of our core business -- Puget Sound Energy. Another financial initiative launched this quarter was the filing of a new General Rate Case with 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. , expected to be concluded by January January: see month. 1, 2007." "Puget Sound Energy also performed well this quarter," Reynolds added. "For the first time in several years, our region was repeatedly hit by severe storms -- nine in all -- during the first quarter, with gale-force winds knocking out power to hundreds of thousands of our utility customers. Our employees and crews worked around the clock to restore power, continuing on our unwavering commitment to our customers." Net income from Puget Energy's regulated reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. electric and gas utility subsidiary, Puget Sound Energy, was $73.8 million, or 64 cents per diluted share, in the first quarter 2006, compared to $72.2 million, or 72 cents per diluted share, in the first quarter 2005. PSE's first quarter 2006 financial results reflect higher energy margins as a result of increased sales volumes and an increase in customer rates effective March 4, 2005. These results were partially offset by electric service restoration costs related to storm damage of $8.2 million (pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta ), or 5 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. , compared to $1.1 million, or 1 cent per share, for the same period in 2005. First quarter 2005 financial results also benefited from the partial recovery of a prior regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. disallowance dis·al·low tr.v. dis·al·lowed, dis·al·low·ing, dis·al·lows 1. To refuse to allow: "[The government] of $6.0 million (pre-tax), or 4 cents per share.
Table 1: Puget Energy reported earnings
First Quarter
-------------
Net Income (Loss) in millions of dollars 2006 2005
---------------------------------------- ---- ----
Continuing Operations $ 73.6 $ 72.1
Discontinued Operations (InfrastruX) 18.9 (1.0)
Cumulative effect of accounting change 0.1 0.0
---- ----
Puget Energy $ 92.6 $ 71.1
==== ====
Earnings per Fully Diluted Share
--------------------------------
Continuing Operations $ 0.63 $ 0.72
Discontinued Operations (InfrastruX) 0.16 (0.01)
---- ----
Puget Energy 0.79 0.71
==== ====
Fully diluted common shares outstanding (millions) 116.2 100.4
For details on Puget Energy's sale of InfrastruX and income recorded on discontinued operations in the first quarter of 2006, please refer to the company's Forms 8-K and 10-Q filed with the Securities and Exchange Commission on May 2, 2006 and May 4, 2006, respectively. Both forms are available on www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. or the Company's web site at www.pugetenergy.com. Puget Energy First Quarter 2006 Continuing Operations summary: Table 2 below summarizes the primary items that impacted first quarter 2006 financial results from continuing operations for Puget Energy: First quarter 2006 vs. first quarter 2005 Cents per EPS reconciliation for Continuing Operations diluted share ---------------------------------------------------------------------- Puget Energy's 2005 earnings from continuing operations $0.72 Impact of dilution from higher common shares outstanding (0.10) Benefit from favorable rate decision on regulatory disallowance in 2005 (0.04) Increase in electric margin 0.06 Increase in gas margin 0.07 Increase in operations and maintenance expense - storm related (0.04) Increase in operations and maintenance expense - other than storm related (0.03) Increase in depreciation and amortization expense (0.03) Increase in other items, net 0.02 ---------------------------------------------------------------------- Puget Energy's 2006 earnings from continuing operations $0.63 --------------------------------------------------------------------- Puget Sound Energy (PSE) First Quarter 2006 Highlights: PSE's first quarter 2006 net income increased by $1.6 million to $73.8 million from $72.2 million in the first quarter 2005. Fully diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of , however, declined by 10 cents in the first quarter 2006 due to a 16 percent increase in the number of common shares outstanding between the periods. All items outlined below are pre-tax unless otherwise noted. --As of March 31, 2006, PSE provided service to 1,019,600 electric customers and 699,100 natural gas customers, representing a 1.3 percent and 3.0 percent increase, respectively, in the last 12 months. --PSE's retail sales volumes of electricity and natural gas increased by 4.4 percent and 8.5 percent, respectively, despite an overall decline in heating degree days Heating degree day (HDD) and cooling degree day (CDD) are quantitative indices demonstrated to reflect demand for energy to heat or cool houses and businesses. These indices are derived from daily temperature observations and power demand. primarily due to warmer temperatures in the Pacific Northwest For names and places containing the slightly longer word 'northwestern' (or variants), see . Northwest or north west is the ordinal direction halfway between north and west on a compass. It is the opposite of southeast. during the month of January. Heating degree days in the first quarter 2006 declined by 9 percent and 2 percent, respectively, compared to historic averages and the first quarter 2005. --PSE's electric margin in the first quarter of 2006 increased by $4.4 million, primarily due to a 4.4 percent increase in retail sales volumes. PSE's 2005 electric margin benefited from the partial recovery in power costs of $6.0 million or 4 cents per share related to a prior regulatory disallowance. PSE's electric margin represents electric sales, net of revenue based taxes, to retail and transportation customers less the cost of generating, purchasing and wheeling electricity. --PSE's natural gas margin increased by $12.7 million primarily as a result of an 8.5 percent increase in retail sales volumes and a 3.5 percent rate increase effective March 4, 2005. Gas margin is natural gas sales to retail and transportation customers, net of revenue based taxes, less the cost of purchasing and transporting natural gas. --PSE incurred a total of $15.2 million in electric distribution system restoration costs in the first quarter 2006. Of the $15.2 million, $7.0 million was deferred for future recovery in electric rates in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the Washington Washington, town, England Washington, 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. Utilities and Transportation Commission's (WUTC WUTC Washington Utilities and Transportation Commission ) regulatory guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. . PSE anticipates that the majority of additional costs related to severe storm events during the balance of 2006 will also be deferred. --PSE's 2006 utility operations and maintenance expense, excluding electric storm damage expenses, increased by $4.7 million in the first quarter of 2006. The increase was primarily the result of higher operations and maintenance expenses of PSE's electric generating facilities and maintenance of electric and gas distribution systems. --PSE's depreciation and amortization expense increased by $5.8 million due to additional utility plant placed in service during the last twelve months, including $2.0 million related to the 150-megawatt Hopkins Hopkins, city (1990 pop. 16,534), Hennepin co., SE Minn., a suburb of Minneapolis; inc. as West Minneapolis 1893, name changed 1928. The city manufactures machinery, computer and electronic parts, steel products, air pollution equipment, ophthalmic lenses, tools, Ridge ridge (rij) a linear projection or projecting structure; a crest. dental ridge any linear elevation on the crown of a tooth. dermal ridges cristae cutis. wind-powered electric generating facility that became operational in November November: see month. 2005. --The average number of fully diluted common shares outstanding in the first quarter 2006 increased to 116.2 million compared to 100.4 million during the same period in 2005. The increase was primarily the result of a secondary offering of 15 million shares completed in October October: see month. 2005. The impact of dilution Dilution A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities. Notes: Adding to the number of shares outstanding reduces the value of holdings of existing shareholders. as a result of the higher shares outstanding resulted in an earnings per share reduction of 10 cents in the first quarter 2006. Puget Energy 2006 Outlook: Puget Energy anticipates its 2006 financial results from continuing operations to be within the previously disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). range of $1.40 to $1.55 per diluted share. Conference Call: Puget Energy will provide additional information regarding its first quarter 2006 results during a conference call for analysts scheduled at 10:00 a.m. ET (7:00 a.m. PT) on Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , May 5, 2006. The call will be broadcast live through a Web cast at www.pugetenergy.com. The Web cast will be archived and available for replay following the call. A tape-recorded tape-re·cord tr.v. tape-re·cord·ed, tape-re·cord·ing, tape-re·cords To record on magnetic tape. Adj. 1. tape-recorded - recorded on tape taped replay of the call will be available two hours after completion of the conference call on May 5, 2006 through midnight (ET) on May 19, 2006 by dialing 1-888-286-8010 and entering the conference identification number at 75350805. Form 10-Q Form 10-Q See 10-Q. Quarterly Report for the First Quarter of 2006 Puget Energy today filed its Form 10-Q for the first quarter 2006 with the Securities and Exchange Commission (SEC), a copy of which will be available through the SEC's website at www.sec.gov or the Company's website at www.pugetenergy.com. Investors are encouraged to read the financial statements and disclosures that will be contained in the Form 10-Q filing. 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 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. Energy's plans relating to relating to relate prep → concernantrelating to relate prep → bezüglich +gen, mit Bezug auf +acc utility plant additions and expenses, and factors that could impact Puget Energy's earnings guidance for the year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2006. 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 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)
-------------------
2006 2005
--------- --------
Operating revenues
Electric $467,424 $420,090
Gas 406,588 321,129
Other 3,723 434
-------- --------
Total operating revenues 877,735 741,653
-------- --------
Operating expenses
Purchased electricity 252,125 208,178
Electric generation fuel 21,584 20,448
Residential exchange (56,633) (55,046)
Purchased gas 266,679 201,744
Unrealized net loss on derivative
instruments 975 509
Utility operations & maintenance 87,364 75,522
Other operations & maintenance 855 741
Depreciation & amortization 63,884 58,077
Conservation amortization 8,048 5,162
Taxes other than income taxes 79,732 69,700
Income taxes 40,345 46,084
-------- --------
Total operating expenses 764,958 631,119
-------- --------
Operating income 112,777 110,534
Other income (deductions):
Other income 2,339 1,164
Interest Charges:
AFUDC 2,022 1,462
Interest expense (43,542) (41,044)
Mandatorily redeemable securities interest
expense (23) (23)
-------- --------
Net income from continuing operations 73,573 72,093
Income (loss) from discontinued operations, net of
tax 18,947 (1,018)
-------- --------
Net income before cumulative effect of
accounting change 92,520 71,075
Cumulative effect of accounting change (89) ---
-------- --------
Net Income $ 92,609 $ 71,075
======== ========
Common shares outstanding 115,725 99,953
Diluted shares outstanding 116,190 100,446
-------- --------
Basic earnings per common share from
continuing operations $ 0.64 $ 0.72
Basic earnings from discontinued operations 0.16 (0.01)
Cumulative effect from accounting change ---- ---
-------- --------
Basic earnings per common share $ 0.80 $ 0.71
======== ========
Diluted earnings per common share from
continuing operations $ 0.63 $ 0.72
Diluted earnings from discontinued operations 0.16 (0.01)
Cumulative effect from accounting change ---- ---
-------- --------
Diluted earnings per common share(2) $ 0.79 $ 0.71
======== ========
(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
-----------------------
2006 2005
----------- ----------
Energy sales revenues ($ in thousands;
unaudited)
Electricity
Residential $ 241,934 $ 211,840
Commercial 182,763 157,892
Industrial 26,278 22,079
Other retail sales, including change in
unbilled (15,765) (4,767)
---------- ----------
Subtotal, retail sales 435,210 387,044
Transportation, including change in
unbilled 2,711 2,668
Sales to other utilities & marketers 15,803 16,321
Other(1) 13,700 14,057
---------- ----------
Total electricity sales 467,424 420,090
Gas
Residential 265,092 208,656
Commercial 116,808 91,248
Industrial 16,814 12,993
---------- ----------
Subtotal, retail sales 398,714 312,897
Transportation 3,614 3,397
Other 4,260 4,835
---------- ----------
Total gas sales 406,588 321,129
---------- ----------
Total energy sales revenues $ 874,012 $ 741,219
----------------------------------------------------------------------
Energy sales volumes (unaudited)
Electricity (in mWh)
Residential 3,427,969 3,280,893
Commercial 2,339,475 2,181,608
Industrial 345,823 324,169
Other, including change in unbilled (236,303) (156,343)
---------- ----------
Subtotal, retail sales 5,876,964 5,630,327
Transportation, including change in
unbilled 526,418 522,026
Sales to other utilities & marketers 319,907 345,784
---------- ----------
Total mWh 6,723,289 6,498,137
Gas (in 000's of therms)
Residential 215,677 199,051
Commercial 105,749 95,241
Industrial 15,629 13,911
Transportation 54,828 53,126
---------- ----------
Total gas volumes 391,883 361,329
----------------------------------------------------------------------
Margins(2)($ in thousands; unaudited)
Electric $ 205,902 $ 201,519
Gas 100,307 87,617
----------------------------------------------------------------------
Weather (unaudited)
Actual heating degree days 1,767 1,811
Normal heating degree days(3) 1,942 1,942
----------------------------------------------- ----------- ----------
Customers served at March 31(4)(unaudited)
Electricity
Residential 904,824 889,355
Commercial 108,610 111,042
Industrial 3,595 3,918
Other 2,508 2,371
Transportation 17 17
---------- ----------
Total electricity customers 1,019,554 1,006,703
Gas
Residential 645,215 625,294
Commercial 51,078 50,520
Industrial 2,639 2,706
Transportation 122 129
---------- ----------
Total gas customers 699,054 678,649
(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) 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.
(4) Customers represents average served at month end.
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