(13)(A)
SIERRA PACIFIC RESOURCES
EMPLOYEES' STOCK OWNERSHIP PLAN
------------
FINANCIAL STATEMENTS AND
SUPPLEMENTAL SCHEDULE
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
SIERRA PACIFIC RESOURCES
EMPLOYEES' STOCK OWNERSHIP PLAN
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CONTENTS
PAGES
Independent Auditors' Reports.............................. 1
Financial Statements:
Statements of Net Assets Available for Plan
Benefits as of December 31, 1996 and 1995............. 3
Statements of Changes in Net Assets Available
for Plan Benefits for the years ended
December 31, 1996, 1995, and 1994..................... 4
Notes to Financial Statements............................ 5-8
Supplemental Schedule:
Item 27d - Schedule of Reportable Transactions for the
year ended December 31, 1996.......................... 9
Supplemental schedules other than the above are omitted because they are not
applicable or the required information is shown in the financial statements or
notes thereto.
1
INDEPENDENT AUDITORS' REPORT
- ----------------------------
To the Sierra Pacific Resources
Employees' Stock Ownership Plan Committee:
Reno, Nevada
We have audited the accompanying statement of net assets available for plan
benefits of the Sierra Pacific Resources Employees' Stock Ownership Plan (the
Plan) as of December 31, 1996, and the related statement of changes in net
assets available for plan benefits for the year then ended. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audit. The
statement of net assets available for plan benefits as of December 31, 1995 and
the related statements of changes in net assets available for plan benefits for
the two years ended December 31, 1995 were audited by other auditors whose
report, dated February 29, 1996, expressed an unqualified opinion on those
statements.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements audited by us present fairly, in all
material respects, the net assets available for plan benefits of the Plan as of
December 31, 1996, and the changes in net assets available for plan benefits for
the year then ended in conformity with generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental Schedule of Reportable
Transactions for the year ended December 31, 1996 is presented for the purpose
of additional analysis and is not a required part of the basic financial
statements, but is supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This schedule is the responsibility of
the Plan's management. Such schedule has been subjected to the auditing
procedures applied in our audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects when considered in relation
to the basic financial statements taken as a whole.
DELOITTE & TOUCHE, LLP
February 21, 1997
Reno, Nevada
2
INDEPENDENT AUDITORS' REPORT
To the Sierra Pacific Resources
Employees' Stock Ownership Plan Committee:
We have audited the Statement of Net Assets Available for Plan Benefits as of
December 31, 1995, of the Sierra Pacific Resources Employees' Stock Ownership
Plan (the Plan) and the Statements of Changes in Net Assets Available for Plan
Benefits for the two years ended December 31, 1995. These financial statements
are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements listed above present fairly, in all
material respects, the financial position of the Plan as of December 31, 1995,
and the changes in net assets available for plan benefits for the two years
ended December 31, 1995, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L. L. P.
San Francisco, California
February 14, 1997
3
SIERRA PACIFIC RESOURCES
EMPLOYEES' STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31
ASSETS 1996 1995
-------- -----------
Cash $62,974 $ 88,507
Investment in Company common shares, at - 16,007,822
market ------- -----------
62,974 16,096,329
LIABILITIES
Accrued expenses 62,974 9,584
------- -----------
Net assets available for plan benefits $ - $16,086,745
======= ===========
The accompanying notes are an integral part of these financial statements.
4
SIERRA PACIFIC RESOURCES
EMPLOYEES' STOCK OWNERSHIP PLAN
STATEMENTS OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31
------------
1996 1995 1994
------------- ----------- ------------
Increases:
Dividend and interest income $ 541,520 $ 840,130 $ 879,625
Net appreciation of investment in
the Company's common shares - 3,193,900 -
------------ ----------- -----------
Total increases $ 541,520 $ 4,034,030 $ 879,625
------------ ----------- -----------
Decreases:
Distributions to participants 12,946,420 2,247,892 1,961,655
Net depreciation of investment in
the Company's common shares 3,611,045 - 1,331,050
Plan administrative expenses 70,800 20,337 25,407
------------ ----------- -----------
Total decreases 16,628,265 2,268,229 3,318,112
------------ ----------- -----------
Net (decrease) increase during the
year (16,086,745) 1,765,801 (2,438,487)
Net assets available for plan benefits:
Beginning of year 16,086,745 14,320,944 16,759,431
------------ ----------- -----------
End of year $ - $16,086,745 $14,320,944
============ =========== ===========
The accompanying notes are an integral part of these financial statements.
5
SIERRA PACIFIC RESOURCES
EMPLOYEES' STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
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1. DESCRIPTION OF THE PLAN:
GENERAL:
Prior to termination effective August 3, 1995, the Sierra Pacific Resources
Employees' Stock Ownership Plan (the Plan) was a noncontributory, defined
contribution plan covering substantially all employees of Sierra Pacific
Resources and subsidiary companies (the Company). Established in 1976, the
Plan provided eligible employees of the Company with the opportunity to become
shareholders subject to certain provisions of the Employee Retirement Income
Security Act of 1974 as amended (ERISA). The plan was administered by an
Employee Stock Ownership Committee comprising not less than three persons
appointed by the Company's Board of Directors. The trust department of an
independent third-party bank was the Plan's Trustee. Each employee who had
attained age 21 and completed one year of service (as defined) was eligible to
become a participant.
Contributions to the Plan were only made by the Company and were made at the
discretion of the Board of Directors. Contributions were allocated to the
participants' accounts in proportion to the ratio of their earnings to the
total earnings of all participants' for the Plan year. Allocations to a
participant's account could not exceed certain limitations defined in the Plan
agreement. Any excess would have been eliminated under procedures described
in the Plan agreement. No contributions were made to the Plan for the fiscal
years ended December 31, 1996, 1995 and 1994.
When the Company issued additional common shares to fund its contribution to
the Plan, the value of the shares was based on the closing average price of
the recorded sales of Company shares on the New York Stock Exchange for the 20
consecutive trading days immediately preceding the date on which the
securities were contributed to the Plan.
PLAN DISTRIBUTIONS:
Under the Plan, participants had unforfeitable rights to all shares allocated
to their accounts. Full shares held in a participant's account at least seven
years after they were initially allocated, plus any full shares acquired from
reinvesting dividends on those shares, were available for distribution to the
participant at any time after the seven years. Fractional shares were
retained for future distribution. Participants could also designate
beneficiaries to receive their distributions. Participants who severed their
employment with the company through termination, retirement, disability, or
death were distributed the balance of their accounts in accordance with the
Plan as directed by the participant. Such participants also received any
shares to which they were entitled that had not been allocated to their
accounts by the Plan.
6
SIERRA PACIFIC RESOURCES
EMPLOYEES' STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
___________
1. DESCRIPTION OF THE PLAN, continued:
CASH DIVIDENDS AND ADMINISTRATIVE EXPENSES:
Cash dividends received on common shares held by the Plan were used to
reimburse the Company and Trustee for expenses incurred in administering the
Plan; however, this was limited to the lower of certain percentages of the
dividends so received or $100,000. Any expenses incurred in excess of this
limit was borne by the Company. The remaining cash dividends were reinvested
in common shares of the Company and allocated proportionally to each
participant's account in which the underlying common shares were held.
PLAN AMENDMENTS:
The Plan was amended from time to time provided that the amendment was for the
benefit of the participants and did not deprive any participant of rights to
any common shares accrued prior to the amendment unless required by
legislation. In 1988, the Plan adopted the provisions of the Tax Reform Act
of 1986 as amended by the Technical and Miscellaneous Revenue Act of 1988 (the
Act). Under certain conditions, the Act allows a participant to elect for the
distribution of a portion of their investment. A Resolution of the Board of
Directors of the Company adopted on May 15, 1995, amended the Plan to provide
for it's termination effective August 1, 1995.
TAX STATUS OF THE PLAN:
The Plan met the requirements of Section 401(a) of the Internal Revenue Code
regarding qualified trusts, Section 409(a) regarding tax credit employee stock
ownership plans, and Section 44G regarding employee stock ownership credit.
The Company made modifications or amendments to the Plan that were necessary
to maintain such qualifications. Company contributions and Plan earnings
became taxable to the participants at the date they were distributed to the
participants, unless they were rolled into a qualified tax deferred account.
The United States Treasury Department advised the Company that the Plan
constituted a qualified trust and was, therefore, exempt from federal income
taxes under provisions of Section 501(a). In 1995 the Company requested from
the Internal Revenue Service an advance determination as to whether the Plan
met the qualification requirements of Section 501(a) of the Internal Revenue
Code with respect to the Plan's termination. The company received a letter of
response from the Internal Revenue Service, dated August 22, 1996, determining
that the termination of the Plan did not adversely affect its qualification
for federal income tax purposes.
PLAN TERMINATION
Members and beneficiaries of the Plan were notified in July 1995 that the
company terminated the Plan effective as of August 1, 1995. A total of 1,666
persons were participants in or designated beneficiaries of the Plan at the
end of the Plan. All Plan assets were distributed to
7
SIERRA PACIFIC RESOURCES
EMPLOYEE'S STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
_____________
DESCRIPTION OF THE PLAN, continued:
participants and beneficiaries as of October 10, 1996. Plan accrued expenses
for 1996 totaled $62,974.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
INVESTMENTS:
The Plan provisions required that the funds contributed to the Plan be
invested principally in common shares of the Company. The investment in
Company shares is stated at market value based upon recorded closing sales on
the New York Stock Exchange on the valuation date. Transactions in Company
shares are recorded on the date of issuance if such shares were previously
unissued, the date of purchase or sale (trade date) for issued shares, or the
date of distribution to participants or designated beneficiaries.
The Plan presents in the statements of changes in net assets the net
appreciation (depreciation) in the fair value of its investments, which
consists of the realized gains (losses) and the unrealized appreciation
(depreciation) on those investments. Realized gains and losses on Company
share transactions are determined on a weighted average basis. Dividend
income is recognized on the ex-dividend date. Interest income is recognized
when earned.
8
SIERRA PACIFIC RESOURCES
EMPLOYEES' STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
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3. INVESTMENT IN COMPANY COMMON SHARES:
The investment in Company common shares consisted of the following:
DECEMBER 31,
------------
1996 1995
------------ -----------
Number of shares -- 684,827
Cost of shares -- $12,283,495
9
SIERRA PACIFIC RESOURCES
EMPLOYEES' STOCK OWNERSHIP PLAN
ITEM 27D - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
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TOTAL AGGREGATE
TYPE OF NUMBER OF DOLLAR VALUE OF
ISSUE (A) ISSUE TRANSACTIONS TRANSACTIONS
- ----------------------- --------- ------------- ---------------
Sierra Pacific Resources Common 3 $537,126
Shares
(A) The transactions with respect to these issues for the year ended December
31, 1996 are reportable under Section 2520.103-6(c)(1)(iii). The
information reported in this schedule is in accordance with the alternative
presentation allowed under Section 2520.103-6(d)(2).
10