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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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 June 30, 2004

OR

     
o
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
             
Commission File   Registrant, Address of   I.R.S. employer   State of
Number   Principal Executive Offices and Telephone Number   Identification Number   Incorporation
1-08788
  SIERRA PACIFIC RESOURCES   88-0198358   Nevada
  P.O. Box 10100        
  (6100 Neil Road)        
  Reno, Nevada 89520-0400 (89511)        
  (775) 834-4011        
 
            
2-28348
  NEVADA POWER COMPANY   88-0420104   Nevada
  6226 West Sahara Avenue        
  Las Vegas, Nevada 89146        
  (702) 367-5000        
 
            
0-00508
  SIERRA PACIFIC POWER COMPANY   88-0044418   Nevada
  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 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 August 6, 2004
Common Stock, $1.00 par value of Sierra Pacific Resources
  117,330,107 Shares

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 JUNE 30, 2004

CONTENTS

         
       
       
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    43  
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    87  
    87  
    88  
    90  

2

 

PART I — FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited)

SIERRA PACIFIC RESOURCES

CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
                 
    June 30,   December 31,
    2004
   2003
ASSETS
                
Utility Plant at Original Cost:
                
Plant in service
   $ 6,469,901     $ 6,353,399  
Less accumulated provision for depreciation
     2,003,397       1,953,271  
 
    
 		      
 		  
 
     4,466,504       4,400,128  
Construction work-in-progress
     149,423       242,522  
 
    
 		      
 		  
 
     4,615,927       4,642,650  
 
    
 		      
 		  
Investments and other property, net
     73,429       73,130  
 
    
 		      
 		  
Current Assets:
                
Cash and cash equivalents
     49,869       181,757  
Restricted cash and investments (Note 1)
     99,373       54,705  
Accounts receivable less allowance for uncollectible accounts:
                
2004-$45,054; 2003-$44,917
     368,828       301,322  
Deferred energy costs — electric (Note 1)
     93,655       295,677  
Deferred energy costs — gas (Note 1)
     1,408       1,358  
Materials, supplies and fuel, at average cost
     75,072       79,525  
Risk management assets
     26,846       22,099  
Accumulated deferred income tax
     3,822       —  
Deposits and prepayments for energy
     84,148       63,847  
Other
     27,066       33,016  
 
    
 		      
 		  
 
     830,087       1,033,306  
 
    
 		      
 		  
Deferred Charges and Other Assets:
                
Goodwill (Note 11)
     22,877       309,971  
Deferred energy costs — electric
     624,022       497,905  
Regulatory tax asset
     315,498       155,547  
Other regulatory assets (Note 1)
     493,880       142,507  
Risk management regulatory assets — net (Note 8)
     416       14,283  
Unamortized debt issuance expense
     62,924       50,842  
Other
     101,505       103,545  
 
    
 		      
 		  
 
     1,621,122       1,274,600  
 
    
 		      
 		  
Assets of Discontinued Operations (Note 12)
     36,552       40,072  
 
    
 		      
 		  
 
   $ 7,177,117     $ 7,063,758  
 
    
 		      
 		  
CAPITALIZATION AND LIABILITIES
                
Capitalization:
                
Common shareholders’ equity
   $ 1,346,671     $ 1,435,394  
Preferred stock
     50,000       50,000  
Long-term debt
     3,840,037       3,579,674  
 
    
 		      
 		  
 
     5,236,708       5,065,068  
 
    
 		      
 		  
Current Liabilities:
                
Short-term borrowings
     —       25,000  
Current maturities of long-term debt
     8,236       218,970  
Accounts payable
     182,892       165,936  
Accrued interest
     65,882       59,592  
Dividends declared
     973       968  
Accrued salaries and benefits
     29,062       24,444  
Deferred taxes
     —       106,478  
Risk management liabilities (Note 8)
     6,158       16,540  
Accrued income taxes
     7,147       8,077  
Contract termination liabilities (Note 9)
     340,839       338,704  
Other current liabilities
     39,537       29,088  
 
    
 		      
 		  
 
     680,726       993,797  
 
    
 		      
 		  
Commitments and Contingencies (Note 9) Deferred Credits and Other Liabilities:
                
Deferred federal income taxes
     531,072       298,457  
Deferred investment tax credit
     43,696       45,329  
Regulatory tax liability
     39,938       41,877  
Customer advances for construction
     134,517       126,506  
Accrued retirement benefits
     133,344       112,075  
Risk management regulatory liability — net (Note 8)
     7,345       —  
Contract termination liabilities (Note 9)
     36,291       45,766  
Regulatory liabilities (Note 1)
     223,379       218,158  
Other
     73,142       80,859  
 
    
 		      
 		  
 
     1,222,724       969,027  
 
    
 		      
 		  
Liabilities of Discontinued Operations (Note 12)
     36,959       35,866  
 
    
 		      
 		  
 
   $ 7,177,117     $ 7,063,758  
 
    
 		      
 		  

The accompanying notes are an integral part of the financial statements.

3

 

SIERRA PACIFIC RESOURCES

CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Amounts)
(Unaudited)
                                 
    Three Months Ended   Six Months Ended
    June 30,
   June 30,
    2004
   2003
   2004
   2003
            As Revised (Note 1)   As Revised (Note 1)
OPERATING REVENUES:
                                
Electric
   $ 652,350     $ 630,538     $ 1,180,724     $ 1,167,643  
Gas
     21,879       35,873       81,355       100,491  
Other
     3,191       (160 )     3,458       629  
 
    
 		      
 		      
 		      
 		  
 
     677,420       666,251       1,265,537       1,268,763  
 
    
 		      
 		      
 		      
 		  
OPERATING EXPENSES:
                                
Operation:
                                
Purchased power
     263,266       280,803       456,757       487,238  
Fuel for power generation
     114,109       115,469       217,266       195,682  
Gas purchased for resale
     14,482       27,865       62,399       70,199  
Deferred energy costs disallowed
     —       90,964       1,586       90,964  
Deferral of energy costs — electric — net
     38,942       18,683       86,831       102,870  
Deferral of energy costs — gas — net
     1,376       1,020       (31 )     11,823  
Impairment of goodwill
     —       —       11,695       —  
Other
     90,162       86,430       163,251       157,789  
Maintenance
     22,216       22,103       47,104       40,827  
Depreciation and amortization
     52,129       46,705       102,066       92,348  
Taxes:
                                
Income tax benefit
     (5,835 )     (41,550 )     (27,897 )     (56,604 )
Other than income
     11,839       11,566       23,690       22,611  
 
    
 		      
 		      
 		      
 		  
 
     602,686       660,058       1,144,717       1,215,747  
 
    
 		      
 		      
 		      
 		  
OPERATING INCOME
     74,734       6,193       120,820       53,016  
OTHER INCOME (EXPENSE):
                                
Allowance for other funds used during construction
     1,192       1,084       2,565       2,844  
Interest accrued on deferred energy
     5,981       6,823       12,530       14,458  
Disallowed merger costs
     —       —       (5,890 )     —  
Disallowed plant costs
     (47,092 )     —       (47,092 )     —  
Other income
     8,405       6,716       17,044       13,211  
Other expense
     (3,105 )     (3,268 )     (6,230 )     (6,999 )
Income (taxes) benefit
     12,356       (3,233 )     10,798       (6,077 )
Unrealized loss on derivative instrument
     —       (123,503 )     —       (107,578 )
 
    
 		      
 		      
 		      
 		  
 
     (22,263 )     (115,381 )     (16,275 )     (90,141 )
 
    
 		      
 		      
 		      
 		  
Total Income (Loss) Before Interest Charges
     52,471       (109,188 )     104,545       (37,125 )
INTEREST CHARGES:
                                
Long-term debt
     85,719       70,814       161,179       142,676  
Other
     9,361       9,439       30,948       19,704  
Allowance for borrowed funds used during construction
     (1,667 )     (1,131 )     (3,840 )     (2,887 )
 
    
 		      
 		      
 		      
 		  
 
     93,413       79,122       188,287       159,493  
 
    
 		      
 		      
 		      
 		  
LOSS FROM CONTINUING OPERATIONS
     (40,942 )     (188,310 )     (83,742 )     (196,618 )
DISCONTINUED OPERATIONS:
                                
Loss from discontinued operations (net of income taxes of $1,565, $15,248, $1,928 and $16,039, respectively)
     (2,967 )     (27,965 )     (3,642 )     (29,902 )
 
    
 		      
 		      
 		      
 		  
NET LOSS
     (43,909 )     (216,275 )     (87,384 )     (226,520 )
Preferred stock dividend requirements of subsidiary
     975       975       1,950       1,950  
 
    
 		      
 		      
 		      
 		  
LOSS APPLICABLE TO COMMON STOCK
   $ (44,884 )   $ (217,250 )   $ (89,334 )   $ (228,470 )
 
    
 		      
 		      
 		      
 		  
Amount per share — basic and diluted Loss from continuing operations
   $ (0.35 )   $ (1.61 )   $ (0.71 )   $ (1.72 )
Loss per share applicable to common stock
   $ (0.38 )   $ (1.85 )   $ (0.76 )   $ (2.00 )
Weighted Average Shares of Common Stock Outstanding
     117,279,506       117,144,486       117,259,726       114,337,776  
 
    
 		      
 		      
 		      
 		  

The accompanying notes are an integral part of the financial statements.

4

 

SIERRA PACIFIC RESOURCES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
                 
    Six Months Ended
    June 30,
    2004
   2003
CASH FLOWS FROM OPERATING ACTIVITIES:
                
Net Loss
   $ (87,384 )   $ (226,520 )
Non-cash items included in net loss:
                
Depreciation and amortization
     102,066       92,683  
Deferred taxes and deferred investment tax credit
     (41,032 )     (81,598 )
AFUDC and capitalized interest
     (6,405 )     (5,731 )
Amortization of deferred energy costs — electric
     124,122       105,835  
Amortization of deferred energy costs — gas
     2,692       9,547  
Deferred energy costs disallowed
     1,586       90,965  
Goodwill impairment
     11,695       —  
Unrealized loss on derivative instrument
     —       107,578  
Impairment of assets of discontinued operations
     —       32,911  
Loss on disposal of discontinued operations
     2,346       8,851  
Plant costs disallowed
     47,092       —  
Other non-cash
     (44,410 )     (7,389 )
Changes in certain assets and liabilities:
                
Accounts receivable
     (67,506 )     (18,365 )
Deferral of energy costs — electric
     (49,803 )     (1,333 )
Deferral of energy costs — gas
     (2,742 )     1,936  
Materials, supplies and fuel
     4,668       2,793  
Other current assets
     (14,353 )     (25,010 )
Accounts payable
     16,956       (54,098 )
Payment to terminating suppliers
     (60,351 )     —  
Other current liabilities
     20,251       18,808  
Other assets
     12,900       (24,938 )
Other liabilities
     8,396       23,782  
Net assets of discontinued operations
     2,267       (9,727 )
 
    
 		      
 		  
Net Cash from Operating Activities
     (16,949 )     40,980  
 
    
 		      
 		  
CASH FLOWS FROM INVESTING ACTIVITIES:
                
Additions to utility plant
     (184,615 )     (186,193 )
AFUDC and other charges to utility plant
     6,405       5,731  
Customer advances for construction
     8,011       5,857  
Contributions in aid of construction
     12,428       10,699  
 
    
 		      
 		  
Net cash used for utility plant
     (157,771 )     (163,906 )
Investments in subsidiaries and other property — net
     3,814       (11,775 )
 
    
 		      
 		  
Net Cash used by Investing Activities
     (153,957 )     (175,681 )
 
    
 		      
 		  
CASH FLOWS FROM FINANCING ACTIVITIES:
                
Increase /(Decrease) in short-term borrowings
     (25,000 )     20,000  
Change in restricted cash and investments
     15,684       (49,708 )
Proceeds from issuance of long-term debt
     575,000       300,000  
Retirement of long-term debt
     (525,371 )     (197,966 )
Sale of common stock, net of issuance cost
     650       (986 )
Dividends paid
     (1,945 )     (1,568 )
 
    
 		      
 		  
Net Cash from Financing Activities
     39,018       69,772  
 
    
 		      
 		  
Net Increase (Decrease) in Cash and Cash Equivalents
     (131,888 )     (64,929 )
Beginning Balance in Cash and Cash Equivalents
     181,757       192,064  
 
    
 		      
 		  
Ending Balance in Cash and Cash Equivalents
   $ 49,869     $ 127,135  
 
    
 		      
 		  
Supplemental Disclosures of Cash Flow Information:
                
Cash paid during period for:
                
Interest
   $ 183,908     $ 142,095  
Noncash Activities:
                
Exchange of Floating Rate Notes for SPR Common Stock
   $ —     $ 8,750  
Exchange of Premium Income Equity Securities for SPR Common Stock
   $ —     $ 104,782  
Transfer of Regulatory Asset (Note 11)
   $ 294,468     $ —  

The accompanying notes are an integral part of the financial statements

5

 

NEVADA POWER COMPANY

CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
                 
    June 30,   December 31,
    2004
   2003
ASSETS
                
Utility Plant at Original Cost:
                
Plant in service
   $ 3,941,810     $ 3,816,630  
Less accumulated provision for depreciation
     1,066,111       1,018,044  
 
    
 		      
 		  
 
     2,875,699       2,798,586  
Construction work-in-progress
     99,191       109,148  
 
    
 		      
 		  
 
     2,974,890       2,907,734  
 
    
 		      
 		  
Investments and other property, net
     36,667       36,312  
 
    
 		      
 		  
Current Assets:
                
Cash and cash equivalents
     13,449       144,897  
Restricted cash (Note 1)
     49,637       2,600  
Accounts receivable less allowance for uncollectible accounts:
                
2004-$39,775; 2003-$40,297
     255,136       167,296  
Accounts receivable, affiliate companies
     —       3,533  
Deferred energy costs — electric (Note 1)
     67,171       247,249  
Materials, supplies and fuel, at average cost
     41,826       41,076  
Risk management assets (Note 8)
     12,208       11,702  
Deposits and prepayments for energy
     50,901       39,794  
Other
     19,351       21,540  
 
    
 		      
 		  
 
     509,679       679,687  
 
    
 		      
 		  
Deferred Charges and Other Assets:
                
Deferred energy costs — electric (Note 1)
     477,864       371,305  
Regulatory tax asset
     201,146       102,282  
Other regulatory assets (Note 1)
     279,513       60,721  
Risk management regulatory assets — net (Note 8)
     416       3,109  
Unamortized debt issuance expense
     37,929       34,052  
Other
     15,510       15,557  
 
    
 		      
 		  
 
     1,012,378       587,026  
 
    
 		      
 		  
 
   $ 4,533,614     $ 4,210,759  
 
    
 		      
 		  
CAPITALIZATION AND LIABILITIES
                
Capitalization:
                
Common shareholder’s equity
   $ 1,350,686     $ 1,174,645  
Long-term debt
     2,038,140       1,899,709  
 
    
 		      
 		  
 
     3,388,826       3,074,354  
 
    
 		      
 		  
Current Liabilities:
                
Current maturities of long-term debt
     5,836       135,570  
Accounts payable
     129,727       107,812  
Acco