UNITED STATES SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
(Mark One)
| x |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED September 30, 2003 |
OR
| o |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO |
| Registrant, Address of | ||||||
| Commission File | Principal Executive Offices and Telephone | State of | I.R.S. employer | |||
| Number | Number | Incorporation | Identification Number | |||
| 1-08788 | SIERRA PACIFIC RESOURCES | Nevada | 88-0198358 | |||
| P.O. Box 10100 | ||||||
| (6100 Neil Road) | ||||||
| Reno, Nevada 89520-0400 (89511) | ||||||
| (775) 834-4011 | ||||||
| 2-28348 | NEVADA POWER COMPANY | Nevada | 88-0420104 | |||
| 6226 West Sahara Avenue | ||||||
| Las Vegas, Nevada 89146 | ||||||
| (702) 367-5000 | ||||||
| 0-00508 | SIERRA PACIFIC POWER COMPANY | Nevada | 88-0044418 | |||
| P.O. Box 10100 | ||||||
| (6100 Neil Road) | ||||||
| Reno, Nevada 89520-0400 (89511) | ||||||
| (775) 834-4011 |
Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No o
Indicate by check mark whether any registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Sierra Pacific Resources Yes x No o;
Nevada Power Company Yes o No x; Sierra Pacific Power Company Yes o No x
Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date.
| Class | Outstanding at November 10, 2003 | |
| Common Stock, $1.00 par value | 117,181,075 Shares | |
| of Sierra Pacific Resources |
Sierra Pacific Resources is the sole holder of the 1,000 shares of outstanding
Common Stock, $1.00 stated value, of Nevada Power Company.
Sierra Pacific Resources is the sole holder of the 1,000 shares of outstanding
Common Stock, $3.75 stated value, of Sierra Pacific Power Company.
This combined Quarterly Report on Form 10-Q is separately filed by Sierra Pacific Resources, Nevada Power Company and Sierra Pacific Power Company. Information contained in this document relating to Nevada Power Company is filed by Sierra Pacific Resources and separately by Nevada Power Company on its own behalf. Nevada Power Company makes no representation as to information relating to Sierra Pacific Resources or its subsidiaries, except as it may relate to Nevada Power Company. Information contained in this document relating to Sierra Pacific Power Company is filed by Sierra Pacific Resources and separately by Sierra Pacific Power Company on its own behalf. Sierra Pacific Power Company makes no representation as to information relating to Sierra Pacific Resources or its subsidiaries, except as it may relate to Sierra Pacific Power Company.
SIERRA PACIFIC RESOURCES
NEVADA POWER COMPANY
SIERRA PACIFIC POWER COMPANY
QUARTERLY REPORTS ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2003
CONTENTS
PART I - FINANCIAL INFORMATION |
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| ITEM 1. | Financial Statements |
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Sierra Pacific Resources - |
||||||||||||
Consolidated Balance Sheets – September 30, 2003 and December 31, 2002 |
3 | |||||||||||
Consolidated Statements of Operations – Three Months and Nine Months
Ended September 30, 2003 and 2002 |
4 | |||||||||||
Consolidated Statements of Cash Flows – Nine Months Ended September 30,
2003 and 2002 |
5 | |||||||||||
Nevada Power Company - |
||||||||||||
Consolidated Balance Sheets – September 30, 2003 and December 31, 2002 |
6 | |||||||||||
Consolidated Statements of Operations – Three Months and Nine Months
Ended September 30, 2003 and 2002 |
7 | |||||||||||
Consolidated Statements of Cash Flows – Nine Months Ended September 30,
2003 and 2002 |
8 | |||||||||||
Sierra Pacific Power Company - |
||||||||||||
Consolidated Balance Sheets – September 30, 2003 and December 31, 2002 |
9 | |||||||||||
Consolidated Statements of Operations – Three Months and Nine Months
Ended September 30, 2003 and 2002 |
10 | |||||||||||
Consolidated Statements of Cash Flows – Nine Months Ended September 30,
2003 and 2002 |
11 | |||||||||||
Condensed Notes to Consolidated Financial Statements |
12 | |||||||||||
| ITEM 2. | Management’s Discussion and Analysis of Financial Condition and
Results of Operations |
34 | ||||||||||
Sierra Pacific Resources |
45 | |||||||||||
Nevada Power Company |
50 | |||||||||||
Sierra Pacific Power Company |
58 | |||||||||||
| ITEM 3. | Quantitative and Qualitative Disclosures about Market Risk |
74 | ||||||||||
| ITEM 4. | Controls and Procedures |
76 | ||||||||||
PART II - OTHER INFORMATION |
||||||||||||
| ITEM 1. | Legal Proceedings |
77 | ||||||||||
| ITEM 4. | Submission of Matters to a Vote of Security Holders |
79 | ||||||||||
| ITEM 5. | Other Information |
79 | ||||||||||
| ITEM 6. | Exhibits and Reports on Form 8-K |
79 | ||||||||||
| Signature Page | 81 | |||||||||||
2
SIERRA PACIFIC RESOURCES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
| September 30, | December 31, | ||||||||||
| 2003 | 2002 | ||||||||||
| (unaudited) | |||||||||||
ASSETS |
|||||||||||
Utility Plant at Original Cost: |
|||||||||||
Plant in service |
$ | 6,292,119 | $ | 5,989,701 | |||||||
Less accumulated provision for depreciation |
2,084,049 | 1,944,351 | |||||||||
| 4,208,070 | 4,045,350 | ||||||||||
Construction work-in-progress |
221,334 | 263,346 | |||||||||
| 4,429,404 | 4,308,696 | ||||||||||
Investments and other property, net |
106,634 | 124,580 | |||||||||
Current Assets: |
|||||||||||
Cash and cash equivalents |
192,372 | 192,064 | |||||||||
Restricted cash |
63,412 | 13,705 | |||||||||
Accounts receivable less provision for uncollectible accounts: |
|||||||||||
2003-$39,394 ; 2002-$42,001 |
395,578 | 358,972 | |||||||||
Deferred energy costs - electric |
294,057 | 268,979 | |||||||||
Deferred energy costs - gas |
3,446 | 17,045 | |||||||||
Materials, supplies and fuel, at average cost |
78,972 | 87,348 | |||||||||
Risk management assets (Note 10) |
37,231 | 29,570 | |||||||||
Other |
65,531 | 48,898 | |||||||||
| 1,130,599 | 1,016,581 | ||||||||||
Deferred Charges and Other Assets: |
|||||||||||
Goodwill |
309,971 | 309,971 | |||||||||
Deferred energy costs - electric |
545,823 | 685,875 | |||||||||
Regulatory tax asset |
159,501 | 163,889 | |||||||||
Other regulatory assets |
142,289 | 136,933 | |||||||||
Risk management assets (Note 10) |
137 | 368 | |||||||||
Risk management regulatory assets - net (Note 10) |
31,693 | 44,970 | |||||||||
Other |
96,640 | 92,250 | |||||||||
| 1,286,054 | 1,434,256 | ||||||||||
Assets of Business Sold (Note 8) |
— | 12,862 | |||||||||
| $ | 6,952,691 | $ | 6,896,975 | ||||||||
CAPITALIZATION AND LIABILITIES |
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Capitalization: |
|||||||||||
Common shareholders’ equity |
$ | 1,457,272 | $ | 1,327,166 | |||||||
Preferred stock |
50,000 | 50,000 | |||||||||
NPC obligated mandatorily redeemable preferred trust securities (Note 4) |
— | 188,872 | |||||||||
Long-term debt |
3,572,344 | 3,062,815 | |||||||||
| 5,079,616 | 4,628,853 | ||||||||||
Current Liabilities: |
|||||||||||
Current maturities of long-term debt |
256,838 | 672,963 | |||||||||
Accounts payable |
189,057 | 232,424 | |||||||||
Accrued interest |
99,099 | 50,308 | |||||||||
Dividends declared |
1,046 | 1,045 | |||||||||
Accrued salaries and benefits |
28,556 | 20,798 | |||||||||
Deferred taxes |
154,622 | 123,507 | |||||||||
Risk management liabilities (Note 10) |
40,461 | 69,953 | |||||||||
Contract termination reserves (Note 11) |
35,280 | — | |||||||||
Other current liabilities |
33,246 | 46,719 | |||||||||
| 838,205 | 1,217,717 | ||||||||||
Commitments & Contingencies (Note 11) |
|||||||||||
Deferred Credits and Other Liabilities: |
|||||||||||
Deferred federal income taxes |
250,917 | 336,875 | |||||||||
Deferred investment tax credit |
45,903 | 48,492 | |||||||||
Regulatory tax liability |
39,730 | 42,718 | |||||||||
Customer advances for construction |
126,790 | 116,032 | |||||||||
Accrued retirement benefits |
107,417 | 107,580 | |||||||||
Risk management liabilities (Note 10) |
717 | 3,917 | |||||||||
Contract termination reserves (Note 11) |
348,179 | 312,594 | |||||||||
Other |
115,217 | 81,410 | |||||||||
| 1,034,870 | 1,049,618 | ||||||||||
Liabilities of Business Sold (Note 8) |
— | 787 | |||||||||
| $ | 6,952,691 | $ | 6,896,975 | ||||||||
The accompanying notes are an integral part of the financial statements.
3
SIERRA PACIFIC RESOURCES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Share and Per Share Amounts) (Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | ||||||||||||||||
OPERATING REVENUES: |
|||||||||||||||||||
Electric |
$ | 890,138 | $ | 998,256 | $ | 2,057,781 | $ | 2,253,425 | |||||||||||
Gas |
13,930 | 18,473 | 114,421 | 99,139 | |||||||||||||||
Other |
809 | 642 | 2,111 | 2,264 | |||||||||||||||
| 904,877 | 1,017,371 | 2,174,313 | 2,354,828 | ||||||||||||||||
OPERATING EXPENSES: |
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Operation: |
|||||||||||||||||||
Purchased power |
423,446 | 604,683 | 905,327 | 1,546,394 | |||||||||||||||
Fuel for power generation |
192,825 | 120,668 | 393,864 | 356,084 | |||||||||||||||
Gas purchased for resale |
7,133 | 9,884 | 77,332 | 61,585 | |||||||||||||||
Deferred energy costs disallowed |
— | — | 90,964 | 487,224 | |||||||||||||||
Deferral of energy costs - electric - net |
(58,141 | ) | (41,425 | ) | 44,729 | (309,203 | ) | ||||||||||||
Deferral of energy costs - gas - net |
2,200 | 4,281 | 14,023 | 14,649 | |||||||||||||||
Impairment of subsidiary assets (Note 8) |
— | — | 32,911 | — | |||||||||||||||
Other |
74,065 | 68,142 | 233,673 | 200,265 | |||||||||||||||
Maintenance |
13,972 | 12,904 | 54,799 | 46,826 | |||||||||||||||
Depreciation and amortization |
49,552 | 43,661 | 142,236 | 130,012 | |||||||||||||||
Taxes: |
|||||||||||||||||||
Income taxes |
23,288 | 41,044 | (46,602 | ) | (145,565 | ) | |||||||||||||
Other than income |
11,093 | 10,257 | 33,715 | 33,508 | |||||||||||||||
| 739,433 | 874,099 | 1,976,971 | 2,421,779 | ||||||||||||||||
OPERATING INCOME (LOSS) |
165,444 | 143,272 | 197,342 | (66,951 | ) | ||||||||||||||
OTHER INCOME (EXPENSE): |
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Allowance for other funds used during construction |
1,039 | (272 | ) | 3,883 | 382 | ||||||||||||||
Interest accrued on deferred energy |
6,684 | 10,712 | 21,142 | 11,644 | |||||||||||||||
Other income |
7,151 | 4,882 | 20,127 | 12,774 | |||||||||||||||
Other expense |
(3,751 | ) | (4,031 | ) | (10,750 | ) | (15,825 | ) | |||||||||||
Income taxes |
(24,619 | ) | (3,553 | ) | 6,956 | (2,121 | ) | ||||||||||||
Unrealized gain (loss) on derivative instrument ( Note 10) |
61,513 | — | (46,065 | ) | — | ||||||||||||||
| 48,017 | 7,738 | (4,707 | ) | 6,854 | |||||||||||||||
Total Income (Loss) Before Interest Charges |
213,461 | 151,010 | 192,635 | (60,097 | ) | ||||||||||||||
INTEREST CHARGES: |
|||||||||||||||||||
Long-term debt |
75,818 | 56,696 | 219,344 | 170,935 | |||||||||||||||
Other |
50,823 | 11,060 | 70,531 | 23,827 | |||||||||||||||
Allowance for borrowed funds used during construction |
(1,481 | ) | (902 | ) | (4,368 | ) | (3,483 | ) | |||||||||||
| 125,160 | 66,854 | 285,507 | 191,279 | ||||||||||||||||
Dividend requirements of NPC obligated mandatorily
redeemable preferred trust securities (Note 4) | |||||||||||||||||||