IDACORP
1221 W. Idaho Street
Boise, ID 83702
August 8, 2007
FOR IMMEDIATE RELEASE
Lawrence F. Spencer, Director of Investor Relations
Phone: (208) 388-2664
lspencer@idacorpinc.com
IDACORP Announces Second Quarter 2007 Results
Second Quarter 2007 Summary
• IDACORP diluted earnings per share of $0.42 versus $0.47 in 2006
o Warm and dry weather boosted retail energy sales
o Poor hydro conditions and increased operations and maintenance expenses reduced operating income
o Earnings comparability negatively impacted by significantly lower
SO2 emission allowance sales in 2007
BOISE--IDACORP, Inc. (NYSE:IDA) reports second quarter net income of $18.5 million as compared with $19.9 million in 2006. Second quarter diluted earnings per share decreased by $0.05 from the second quarter 2006 to $0.42 per share.
"Earnings are down from last year reflecting vastly different water conditions and the recognition of a large gain on the sale of emission allowances in last year's second quarter," said IDACORP President and Chief Executive Officer LaMont Keen. "Inflows into our largest storage reservoir, Brownlee Reservoir, were less than a third of what they were last year during the critical runoff period," Keen said. "Retail energy sales were up for the quarter reflecting unusually dry and warm weather conditions. Operating expenses also were up as a result of increased third party transmission expense required to import needed energy supplies, planned maintenance at company facilities, higher labor-related expenses and increased legal, regulatory and compliance expenses. Losses from discontinued businesses sold in the past year no longer adversely affect earnings and helped offset cost increases elsewhere."
Analysis of Earnings per Diluted Share
The following table summarizes diluted earnings (losses) per share from each business:
Earnings (Losses) From | Three Months Ended | | Six Months Ended |
Continuing Operations | 6/30/07 | | 6/30/06 | | 6/30/07 | | 6/30/06 | |
| Idaho Power Company (IPC) | $ 0.37 | | $ 0.51 | | $ 0.90 | | $ 1.10 |
| IDACORP Financial Services | 0.04 | | 0.05 | | 0.08 | | 0.10 |
| Ida-West Energy | | 0.02 | | 0.02 | | 0.02 | | 0.03 |
| Holding Company | | (0.01) | | (0.05) | | (0.02) | | (0.07) |
Earnings (Losses) From Discontinued Operations | - | | (0.06) | | - | | (0.10) |
Earnings Per Diluted Share | $ 0.42 | | $ 0.47 | | $ 0.98 | | $ 1.06 |
Second Quarter Performance Summary
The key components of the change in IDACORP's net income for the second quarter are:
- IPC's earnings decreased to $16.2 million, a $5.4 million or $0.14 per diluted share decrease from the prior year. The key factors affecting IPC's earnings include (amounts shown are net of income taxes):
- Increased retail sales contributed $7.1 million to gross margin (general business revenues and off-system sales less resource costs and rate-related amortizations). Warmer and drier conditions in the second quarter of 2007 led to higher irrigation loads as compared to the prior year. IPC continued to experience moderate customer growth, with the average number of general business customers increasing 12,819 over the same period in 2006, an increase of three percent.
- Increased costs to supply power, net of rate adjustments, decreased gross margin by $4.6 million. Poor hydroelectric generating conditions in the second quarter of 2007 increased IPC's reliance on typically more expensive thermal generation and purchased power, and reduced wholesale sales. IPC's hydroelectric generation contributed only 51 percent of total system generation for the second quarter of 2007, as compared to 71 percent for the same period in 2006.
- Increases in Other O&M expenses reduced earnings by $5.5 million compared to 2006. The increase is primarily the result of higher third-party transmission costs, higher labor-related expenses, higher maintenance expenses for IPC's coal-fired generation facilities and distribution facilities, and higher legal, regulatory and compliance expenses.
- Gain on sales of excess SO2 emission allowances was $0.5 million in 2007, compared to $4.7 million in 2006. IPC recorded a gain on the sale of 4,000 excess emission allowances in the second quarter of 2007, compared to 78,000 in the second quarter of 2006.
- Discontinued operations had no impact on earnings in the second quarter of 2007 as compared to a loss of $2.8 million (net of tax) in the second quarter of 2006, an increase of $0.06 per diluted share. Discontinued operations include the operations of ITI, which was sold in July 2006, and IDACOMM, which was sold in February 2007.
- Losses at the holding company decreased $1.9 million, an improvement of $0.04 per share, reflecting a reduction in operating expenses and the effect of intra-period tax allocations recorded at the holding company.
2007 Outlook
On August 1, the Northwest River Forecast Center (NWRFC) reported 2.8 million acre-feet (maf) of water flowed into Brownlee Reservoir during the April-through-July 2007 period. The NWRFC's 30-year average measured inflow into Brownlee is 6.3 maf during the period. In 2006, April-July inflows were 8.9 maf. Based on the actual inflows of 2.8 maf, the Company has revised its estimated hydroelectric generation range for 2007 to 6.0-6.5 million MWh.
On June 8, 2007, Idaho Power filed an application with the Idaho Public Utilities Commission (IPUC) requesting an average base rate increase of approximately 10.35 percent for its Idaho customers. The proposal would increase revenues $63.9 million annually. Idaho Power has requested that the rate increase become effective in January 2008. IPC is unable to predict what relief the IPUC will grant.
The outlook for key operating and financial metrics are:
| Current | Previous |
Key Operating & Financial Metrics | Estimates (1) | Estimate |
Idaho Power Company Operation & | | |
Maintenance Expense (Millions) (2) | No change | $270-$280 |
Idaho Power Company Capital | | |
Expenditures (Millions) (3) | No change | $290-$320 |
Idaho Power Company Hydroelectric | | |
Generation (Million MWh) | 6.0-6.5 | 5.5-7.0 |
Non-regulated Subsidiary Earnings Per | | |
Share from Continuing Operations (4) | No change | $0.10-$0.15 |
Effective Tax Rates: | | |
Idaho Power Company | No change | 32%-36% |
Consolidated - IDACORP (5) | No change | 15%-20% |
| | |
(1) Key operating and financial metrics will be updated quarterly.
(2) Excludes demand-side management expenses.
(3) 2007-2009 estimated total capital expenditures of $830 million, excluding new base load plant.
(4) Estimates include contributions from Ida-West Energy and IDACORP Financial netted against holding company expenses.
(5) For continuing operations.
Web Cast / Conference Call
The company will hold an analyst conference call today at 2:30 p.m. Mountain Time (4:30 p.m. Eastern Time). All parties interested in listening may do so through a live Web cast. Details of the conference call logistics are posted on the company's Web site (http://www.idacorpinc.com). A replay of the conference call will be available on the company's Web site for a period of 12 months.
Background Information / Safe Harbor Statement
Boise, Idaho-based IDACORP, formed in 1998, is a holding company comprised of Idaho Power Company, a regulated electric utility; IDACORP Financial, a holder of affordable housing projects and other real estate investments; and Ida-West Energy, an operator of small hydroelectric generation projects that satisfy the requirements of the Public Utility Regulatory Policies Act of 1978.
Certain statements contained in this news release, including statements with respect to future earnings, ongoing operations, and financial conditions, are "forward-looking statements" within the meaning of federal securities laws. Although IDACORP and Idaho Power believe that the expectations and assumptions reflected in these forward-looking statements are reasonable, these statements involve a number of risks and uncertainties, and actual results may differ materially from the results discussed in the statements. Factors that could cause actual results to differ materially from the forward-looking statements include: changes in and compliance with governmental policies, including new interpretations of existing policies, and regulatory actions and regulatory audits, including those of the Federal Energy Regulatory Commission, the Idaho Public Utilities Commission, the Oregon Public Utility Commission, and the Internal Revenue Service with respect to allowed rates of return, industry and rate structure, day-to-day business operations, acquisition and disposal of assets and facilities, operation and construction of plant facilities, provision of transmission services, relicensing of hydroelectric projects, recovery of purchased power expenses, recovery of other capital investments, present or prospective wholesale and retail competition (including but not limited to retail wheeling and transmission costs) and other refund proceedings; changes arising from the Energy Policy Act of 2005; litigation and regulatory proceedings, including those resulting from the energy situation in the western United States, and penalties and settlements that influence business and profitability; changes in and compliance with environmental, endangered species and safety laws and policies; weather variations affecting hydroelectric generating conditions and customer energy usage; over-appropriation of surface and groundwater in the Snake River Basin resulting in reduced generation at hydroelectric facilities; construction of power generating, transmission and distribution facilities including inability to obtain required governmental permits and approvals, and risks related to contracting, construction and start-up; operation of power generating facilities including breakdown or failure of equipment, performance below expected levels, competition, fuel supply, including availability, transportation and prices, and transmission; impacts from the potential formation of a regional transmission organization or the development of another transmission group; population growth rates and demographic patterns; market demand and prices for energy, including structural market changes; changes in operating expenses and capital expenditures and fluctuations in sources and uses of cash; results of financing efforts, including the ability to obtain financing on favorable terms, which can be affected by factors such as credit ratings and general economic conditions; actions by credit rating agencies, including changes in rating criteria and new interpretations of existing criteria; homeland security, natural disasters and other natural risks, such as earthquake, flood, drought, lightning, wind and fire, acts of war or terrorism; market conditions that could affect the operations and prospects of IDACORP's subsidiaries or their competitors; increasing health care costs and the resulting effect on medical benefits paid for employees; performance of the stock market and the changing interest rate environment, which affect the amount of required contributions to pension plans, as well as the reported costs of providing pension and other postretirement benefits; increasing costs of insurance, changes in coverage terms and the ability to obtain insurance; changes in tax rates or policies, interest rates or rates of inflation; adoption of or changes in critical accounting policies or estimates; and new accounting or Securities and Exchange Commission requirements, or new interpretation or application of existing requirements. Any such forward-looking statements should be considered in light of such factors and others noted in the companies' Annual Report on Form 10-K for the year ended December 31, 2006, and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2007, and other reports on file with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which such statement is made. New factors emerge from time to time and it is not possible for management to predict all such factors, nor can it assess the impact of any such factor on the business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement.
IDACORP, Inc.
Condensed Consolidated Statements of Income
For Periods Ended June 30, 2007 and 2006
Summary Financial Information
(unaudited)
(Thousands of Dollars, except per share amounts)
Three Months Ended Year-To-Date
6/30/07 6/30/06 6/30/07 6/30/06
Operating Revenues:
Electric Utility:
General business........................................ $ 162,212 $ 159,210 $ 299,463 $ 321,393
Off-system sales........................................ 37,177 75,598 95,016 179,839
Other revenues.......................................... 13,137 6,040 23,976 6,890
Total electric utility revenues.................. 212,526 240,848 418,455 508,122
Other.......................................................... 1,246 1,787 2,029 2,853
Total Operating Revenues..................... 213,772 242,635 420,484 510,975
Operating Expenses:
Electric Utility:
Purchased power...................................... 80,467 74,808 131,285 130,733
Fuel expense............................................. 27,520 21,954 58,432 48,923
Power cost adjustment.............................. (42,172) 4,600 (63,708) 48,067
Other operations & maintenance................ 78,888 69,840 146,715 131,513
Demand-side management......................... 2,548 - 4,663 -
Gain on sale of emission allowances........... (882) (8,126) (882) (8,235)
Depreciation............................................. 25,613 24,633 50,903 49,182
Taxes other than income taxes................... 4,636 6,329 9,554 11,900
Total electric utility operations............... 176,618 194,038 336,962 412,083
Other......................................................... �� 582 3,046 3,170 6,863
Total Operating Expenses..................... 177,200 197,084 340,132 418,946
Operating Income (Loss):
Electric Utility............................................. 35,908 46,810 81,493 96,039
Other......................................................... 664 (1,259) (1,141) (4,010)
Total Operating Income....................... 36,572 45,551 80,352 92,029
Other Income.............................................. 3,862 5,080 9,251 9,749
Losses of Unconsolidated
Equity-Method Investments..................... (1,551) (2,208) (2,877) (2,259)
Other Expenses.......................................... 1,571 2,655 4,782 4,076
Interest Expense:
Interest on long-term debt.......................... 13,896 14,200 27,444 28,284
Other interest expense............................... 1,514 1,175 3,118 2,204
............................. Total Interest expense 15,410 15,375 30,562 30,488
Income Before Income Taxes.................... 21,902 30,393 51,382 64,955
Income Tax Expense.................................. 3,437 7,720 8,336 15,327
Income from Continuing Operations.......... 18,465 22,673 43,046 49,628
Income (Losses) from Discontinued
Operations (net of tax)...................... - (2,817) 67 (4,296)
Net Income ................................................. $ 18,465 $ 19,856 $ 43,113 $ 45,332
Weighted Average Common Shares
Outstanding-Basic (000's)......................... 43,751 42,557 43,709 42,515
Weighted Average Common Shares
Outstanding-Diluted (000's)...................... 43,884 42,702 43,845 42,642
Earnings per Share of Common Stock (diluted):
Earnings per Share from Continuing Operations$ 0.42 $ 0.53 $ 0.98 $ 1.16
Earnings (Losses) - Discontinued Operations 0.00 (0.06) 0.00 (0.10)
Diluted Earnings per Share of Common Stock $ 0.42 $ 0.47 $ 0.98 $ 1.06
Dividends Paid per Share of Common Stock $ 0.30 $ 0.30 $ 0.60 $ 0.60
IDACORP, Inc.
Condensed Consolidated Statements of Cash Flows
For Six Months Ended June 30, 2007 and 2006
Summary Financial Information
(unaudited)
(Thousands of Dollars)
Six Months Ended
6/30/07 6/30/06
Operating Activities
Net Income................................................................. $ 43,113 $ 45,332
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization................................. 60,397 60,339
Deferred income taxes and investment tax credits.... 18,760 (35,056)
Changes in regulatory assets and liabilities.............. (65,257) 61,143
Undistributed earnings of subsidiaries...................... (2,922) (4,607)
Gain on sales of assets......................................... (2,687) (7,547)
Other non-cash adjustments to net income.............. 4,564 (1,957)
Change in:
Accounts receivable and prepayments.................. (3,001) 26,095
Accounts payable and other accrued liabilities...... (3,548) (10,470)
Taxes accrued................................................... (12,582) 14,317
Other................................................................. 4,626 (1,075)
Net cash provided by operating activities.................. 41,463 146,514
Investing Activities
Additions to property, plant and equipment.................... (122,179) (102,465)
Sale of IDACOMM...................................................... 7,283 -
Sale of emission allowances......................................... 2,685 10,865
Investments in unconsolidated affiliates......................... (3,600) (11,520)
Other.......................................................................... 3,029 1,772
Net cash used in investing activities........................ (112,782) (101,348)
Financing Activities
Issuance of common stock........................................... 12,451 4,816
Issuance of long-term debt........................................... 140,000 -
Retirement of long-term debt......................................... (7,650) (7,901)
Dividends on common stock......................................... (26,286) (25,521)
Change in short-term borrowings................................... (42,100) (14,900)
Other.......................................................................... (2,524) (145)
Net cash provided by (used in) financing activities..... 73,891 (43,651)
Net increase in cash and cash equivalents..................... 2,572 1,515
Cash and cash equivalents at beginning of period........... 9,892 52,356
Cash and cash equivalents at end of period.................... $ 12,464 $ 53,871
Page 6 of 8
IDACORP, Inc.
Condensed Consolidated Balance Sheets
As of June 30, 2007 and December 31, 2006
Summary Financial Information
(unaudited)
(Thousands of Dollars)
6/30/07 12/31/06
Assets
Cash and cash equivalents.................................. $ 12,464 $ 9,892
Receivables, net of allowance.............................. 112,866 111,721
Employee notes................................................. 2,338 2,569
Energy marketing assets.................................... 9,533 12,069
Other current assets........................................... 154,792 126,954
Assets held for sale............................................ - 3,326
Total current assets......................................... 291,993 266,531
Investments....................................................... 200,430 202,825
Property, plant and equipment-net........................ 2,501,591 2,419,080
Regulatory assets.............................................. 426,398 423,548
Employee notes - long-term................................ 2,310 2,411
Other assets...................................................... 109,594 109,659
Assets held for sale............................................ - 21,076
Total other assets............................................ 538,302 556,694
Total Assets................................................ $ 3,532,316 $ 3,445,130
Liabilities and Shareholders' Equity
Current maturities of long-term debt...................... $ 91,310 $ 95,125
Notes payable.................................................... 86,900 129,000
Accounts payable............................................... 85,602 86,440
Energy marketing liabilities.................................. 10,842 13,532
Other current liabilities..................................... 73,705 83,631
Liabilities held for sale......................................... - 2,606
Total current liabilities...................................... 348,359 410,334
Deferred income taxes........................................ 475,115 498,512
Regulatory liabilities............................................ 278,597 294,844
Other liabilities................................................ 196,148 179,836
Liabilities held for sale......................................... - - 8,773
Total other liabilities......................................... 949,860 981,965
Long-term debt................................................... 1,064,603 928,648
Shareholders' equity........................................... 1,169,494 1,124,183
Total Liabilities & Shareholders' Equity........... $ 3,532,316 $ 3,445,130
Idaho Power Company Supplemental Operating Statistics
Three Months Ended Year-To-Date
6/30/07 6/30/06 6/30/07 6/30/06
Energy Use - MWh
Residential.................................. 1,066,889 1,023,820 2,531,165 2,439,487
Commercial................................. 939,045 872,948 1,882,255 1,785,315
Industrial..................................... 835,446 845,475 1,706,661 1,721,206
Irrigation...................................... 814,609 593,246 819,835 606,529
Total General Business................ 3,655,989 3,335,489 6,939,916 6,552,537
Off-System Sales......................... 525,816 2,342,532 1,490,204 4,286,482
Total........................................ 4,181,805 5,678,021 8,430,120 10,839,019
Revenue ($000's)
Residential.................................. $ 62,886 $ 64,005 $ 141,468 $ 152,442
Commercial................................. 39,983 40,511 76,191 83,541
Industrial..................................... 23,294 27,006 45,393 56,893
Irrigation...................................... 36,049 27,688 36,411 28,517
Total General Business................ 162,212 159,210 299,463 321,393
Off-System Sales......................... 37,177 75,598 95,016 179,839
Total........................................ $ 199,389 $ 234,808 $ 394,479 $ 501,232
Customers - Period End
Residential.................................. 397,083 387,206
Commercial................................. 61,476 58,862
Industrial..................................... 127 132
Irrigation...................................... 18,112 18,197
Total........................................ 476,798 464,397
