SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) May 18, 2001
------------
Sierra Pacific Power Company
----------------------------
(Exact name of registrant as specified in its charter)
NEVADA 0-508 88-0044418
--------------------------------- -------------- ---------------------
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
P.O. Box 10100 (6100 Neil Road), Reno, Nevada 89520-0400
- --------------------------------------------- -------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (775) 834-4011
--------------
None
--------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Item 7. Financial Statements and Exhibits
- -----------------------------------------
(a) Financial Statements of Businesses Acquired.
-------------------------------------------
Not required
(b) Pro forma financial information.
-------------------------------
The following unaudited pro forma condensed consolidated financial
information is included in this report on Form 8-K:
Sierra Pacific Power Company Pro Forma Condensed Consolidated
Balance Sheet at March 31, 2001.
Sierra Pacific Power Company Pro Forma Condensed Consolidated
Income Statement for the three months ended March 31, 2001.
Sierra Pacific Power Company Pro Forma Condensed Consolidated
Income Statement for the twelve months ended December 31,
2000.
Notes to Pro Forma Condensed Consolidated financial statements.
Pro Forma Condensed Consolidated Financial Statements
On January 15, 2001, the Board of Directors of Sierra Pacific
Resources, the parent of Sierra Pacific Power Company ("SPPC") and Nevada Power
Company, approved a definitive agreement to sell SPPC's water business to the
Truckee Meadows Water Authority for $350 million. Of the total purchase price,
$342 million is for the water business assets and $8 million is for associated
hydroelectric generation assets. The transactions are subject to various closing
conditions, including the release of the water business assets from the lien of
SPPC's first mortgage indenture.
The sale includes treatment facilities, distribution infrastructure,
surface and ground water rights, and storage rights. The total net book value of
the water business, including the hydroelectric assets, is approximately $262
million. Transfer of the hydroelectric facilities will require action by the
California Public Utilities Commission (the "CPUC"). The sale agreement
contemplates a second closing for the hydroelectric facilities to accommodate
the CPUC's review of the transaction. However, sale of the other water assets is
not contingent upon the sale of the hydroelectric facilities.
On April 5, 2001, the PUCN concluded that the proposed sale is in the
public interest. On April 27, 2001, the PUCN completed the Nevada regulatory
approval process by approving a stipulation regarding the gain on the sale of
the net assets of the water business. The stipulation provides that SPPC refund
to customers $21.5 million of the gain. The refund will be credited on the bills
of SPPC's electric customers over a fifteen-month period after the expected
close of the sale later in the second quarter of 2001.
The unaudited pro forma condensed consolidated financial statements
have been prepared from, and should be read in conjunction with, the historical
financial statements and related notes thereto of SPPC. The unaudited pro forma
condensed consolidated financial statements are not necessarily indicative of
the financial position or operating results that would have occurred had the
sale been consummated on the dates as of which, or at the beginning of the
periods for which, the sale is being given pro forma effect nor are they
necessarily indicative of future operating results or financial position. See
the SPPC Quarterly Report on Form 10-Q for the three months ended March 31,
2001, for additional information regarding the net assets included in this sale
and other related information.
The following unaudited pro forma condensed consolidated financial
statements of SPPC are presented as if the sale of its water business had
occurred as described in the following discussion and based on the assumptions
set forth in the notes to the unaudited pro forma condensed consolidated
financial statements. The unaudited pro forma condensed consolidated balance
sheet as of March 31, 2001, is presented as if the sale had occurred at the
balance sheet date. The unaudited pro forma condensed consolidated statements of
income for the three months ended March 31, 2001, and the year ended
December 31, 2000, assume that the sale occurred at the beginning of the periods
presented. SPPC's Quarterly Report on Form 10-Q for the three months ended March
31, 2001, and its Annual Report on Form 10-K for the year ended December 31,
2000, reported the water business as a discontinued operation and the
consolidated financial statements included in those reports separately reported
the net assets and operating results of the water business. The unaudited pro
forma condensed consolidated income statements, included herein, present only
the loss from continuing operations, in accordance with the Securities and
Exchange Commission Regulation S-X Rule 11.02, and do not include income from
discontinued operations.
SIERRA PACIFIC POWER COMPANY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AT MARCH 31, 2001
(Dollars in Thousands)
SIERRA
PACIFIC
POWER ADJUSTMENTS PRO FORMA
(audited) (unaudited) (unaudited)
------------- ----------- -------------
ASSETS
Utility Plant at Original Cost:
Plant in service $ 2,208,557 $ - $ 2,208,557
Less: accumulated provision for depreciation 793,856 793,856
------------- ----------- -------------
1,414,701 - 1,414,701
Construction work-in-progress 95,831 95,831
------------- ----------- -------------
1,510,532 - 1,510,532
------------- ----------- -------------
Investments in subsidiaries and other property, net 59,050 59,050
------------- ----------- -------------
Current Assets:
Cash and cash equivalents 10,809 1) 328,500 307,744
1) (5,300)
1) (26,265)
Accounts receivable less provision for uncollectible accounts ($5,231): 172,679 172,679
Materials, supplies and fuel, at average cost 40,399 40,399
Deferred energy costs 34,902 34,902
Other 41,374 41,374
------------- ----------- -------------
300,163 296,935 597,098
------------- ----------- -------------
Deferred Charges:
Regulatory tax asset 61,862 61,862
Other regulatory assets 62,338 62,338
Risk management assets 518,292 518,292
Other 14,110 14,110
------------- ----------- -------------
656,602 - 656,602
------------- ----------- -------------
Net assets of discontinued operations 261,745 (261,745) -
------------- ----------- ------------
$ 2,788,092 $ 35,190 $ 2,823,282
============= =========== ============
CAPITALIZATION AND LIABILITIES
Capitalization:
Common shareholders' equity $ 601,278 1) 35,190 $ 636,468
Preferred stock 50,000 50,000
SPPC obligated mandatorily redeemable preferred trust securities 48,500 48,500
Long-term debt 605,080 605,080
------------- ----------- ------------
1,304,858 35,190 1,340,048
------------- ----------- ------------
Current Liabilities:
Short-term borrowings 199,620 199,620
Current maturities of long-term debt 219,616 219,616
Accounts payable 120,483 120,483
Accrued interest 14,599 14,599
Dividends declared 22,999 22,999
Accrued salaries and benefits 10,236 10,236
Other current liabilities 2,789 2,789
------------- ----------- ------------
590,342 - 590,342
------------- ----------- ------------
Deferred Credits:
Deferred federal income taxes 190,278 190,278
Deferred investment tax credit 29,632 29,632
Regulatory tax liability 31,263 31,263
Accrued retirement benefits 42,655 42,655
Customer advances for construction 42,994 42,994
Deferred energy 7,296 7,296
Risk management liabilities 210,128 210,128
Risk management regulatory liabilities 308,164 308,164
Other 30,482 30,482
------------- ----------- ------------
892,892 - 892,892
------------- ----------- ------------
$ 2,788,092 $ 35,190 $ 2,823,282
============= =========== ============
The accompanying notes are an integral part of the financial statements
SIERRA PACIFIC POWER COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 31, 2001
(Dollars in thousands)
SIERRA
PACIFIC
POWER ADJUSTMENTS PRO FORMA
(unaudited) (unaudited) (unaudited)
----------- ----------- -----------
OPERATING REVENUES:
Electric $ 312,119 $ - $ 312,119
Gas 64,165 64,165
----------- ----------- -----------
376,284 376,284
----------- ----------- -----------
OPERATING EXPENSES:
Operation:
Purchased power 150,987 150,987
Fuel for power generation 102,553 102,553
Gas purchased for resale 70,543 70,543
Deferral of energy costs - net (11,123) (11,123)
Other 27,694 27,694
Maintenance 5,324 5,324
Depreciation and amortization 16,849 16,849
Taxes:
Income taxes (2,121) (2,121)
Other than income 4,394 4,394
----------- ----------- -----------
365,100 365,100
----------- ----------- -----------
OPERATING INCOME 11,184 11,184
----------- ----------- -----------
OTHER (EXPENSE) INCOME:
Allowance for other funds used during construction (184) (184)
Other (expense) income - net (486) (486)
----------- ----------- -----------
(670) (670)
----------- ----------- -----------
Total Income 10,514 10,514
----------- ----------- -----------
INTEREST CHARGES:
Long-term debt 10,571 10,571
Other 2,960 2,960
Allowance for borrowed funds used during construction and
capitalized interest 46 46
----------- ----------- -----------
13,577 13,577
----------- ----------- -----------
INCOME BEFORE SPPC OBLIGATED MANDATORILY
REDEEMABLE PREFERRED TRUST SECURITIES (3,063) (3,063)
Preferred dividend requirements of SPPC obligated
mandatorily redeemable preferred trust securities (936) (936)
----------- ----------- -----------
(LOSS) INCOME BEFORE PREFERRED DIVIDENDS (3,999) (3,999)
Preferred dividend requirements and premium paid on redemption (875) (875)
----------- ----------- -----------
NET (LOSS) INCOME FROM CONTINUING OPERATIONS $ (4,874) $ - $ (4,874)
=========== =========== ===========
The accompanying notes are an integral part of the financial statements
SIERRA PACIFIC POWER COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 2000
(Dollars in thousands)
SIERRA
PACIFIC ADJUSTMENTS PRO FORMA
POWER (audited) (unaudited) (unaudited)
-------------- ----------- -----------
OPERATING REVENUES:
Electric $ 893,782 $ - $ 893,782
Gas 100,803 100,803
-------------- ----------- -----------
994,585 994,585
-------------- ----------- -----------
OPERATING EXPENSES:
Operation:
Purchased power 444,979 444,979
Fuel for power generation 233,748 233,748
Gas purchased for resale 83,199 83,199
Deferral of energy costs - net (16,164) (16,164)
Other 96,438 96,438
Maintenance 18,420 18,420
Depreciation and amortization 69,350 69,350
Taxes:
Income taxes (672) (672)
Other than income 18,152 18,152
-------------- ----------- -----------
947,450 947,450
-------------- ----------- -----------
OPERATING INCOME 47,135 47,135
-------------- ----------- -----------
OTHER INCOME:
Allowance for other funds used during construction 357 357
Other (expense) income - net (2,429) (2,429)
-------------- ----------- -----------
(2,072) (2,072)
-------------- ----------- -----------
Total Income 45,063 45,063
-------------- ----------- -----------
INTEREST CHARGES:
Long-term debt 36,865 36,865
Other 11,312 11,312
Allowance for borrowed funds used during construction and
capitalized interest (2,779) (2,779)
-------------- ----------- -----------
45,398 45,398
-------------- ----------- -----------
INCOME BEFORE SPPC OBLIGATED MANDATORILY
REDEEMABLE PREFERRED TRUST SECURITIES (335) (335)
Preferred dividend requirements of SPPC obligated
mandatorily redeemable preferred trust securities (3,742) (3,742)
-------------- ----------- -----------
(LOSS) INCOME BEFORE PREFERRED DIVIDENDS (4,077) (4,077)
Preferred dividend requirements and premium paid on redemption (3,499) (3,499)
-------------- ----------- -----------
NET (LOSS) INCOME FROM CONTINUING OPERATIONS $ (7,576) $ - $ (7,576)
============== =========== ===========
The accompanying notes are an integral part of the financial statements
NOTES TO PROFORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. To recognize the sale of the water business. The schedule that follows
reflects a summary of the sales transaction. The schedule includes
estimates for costs to sell and taxes associated with the sale. Sales
proceeds have been reduced by the gain to be refunded to water
customers. The Company anticipates that the amount to be refunded will
be transferred to a third party administered trust reducing the net
proceeds available to SPPC.
Sales Price $ 350,000
Less customer refunds 21,500
-------------
Net sales price 328,500
Less estimated cost to sell 5,300
-------------
Cash Proceeds 323,200
Water business net book value 261,745
-------------
Gain before federal income taxes ("FIT") payable 61,455
Taxes:
FIT payable on assets sold 25,758
FIT payable for write-off of variable interest rate 507
-------------
Total taxes 26,265
After tax gain $ 35,190
=============
Federal income taxes payable on the sale of the water assets sold included in
the table above is based on the the following gain recognized for tax purposes
and assuming an effective tax rate of 35%:
Net sales price $ 328,500
Less cost to sell 5,300
-------------
Cash Proceeds 323,200
Plant tax basis 249,607
-------------
Taxable gain 73,593
Tax rate 35%
-------------
Taxes payable $ 25,758
=============
(c) Exhibits.
--------
None.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Sierra Pacific Power Company
Date: May 18, 2001 By: /s/ Mark A. Ruelle
------------ --------------------------
Mark A. Ruelle
Senior Vice President
Chief Financial Officer and Treasurer