Avista (AVA) Q4 2003 earnings summary

Executive summary

• FY03 net income was $44.5m vs $31.3m; income from continuing operations was $50.6m vs $42.2m, and diluted EPS was $0.89 vs $0.60, including a $1.2m after-tax cumulative accounting charge.

• Management prioritized higher earnings and operating cash flow, cost control, debt reduction and restoration of investment-grade credit.

Financial highlights

• Revenue rose to $1,123.4m from $1,062.9m; operating income increased to $171.7m from $157.1m.

• Continuing operating cash flow fell to $122.6m from $326.9m, reflecting working-capital movements, power and gas cost deferrals, and energy commodity assets and liabilities.

• Net loss from discontinued operations was $4.9m vs $6.7m; FY02 included $58.4m of Avista Communications impairment charges.

Outlook and guidance

• Avista Utilities expected FY04 net income to increase, assuming more normal hydro generation and weather, lower interest expense and general rate increases; hydro generation forecast at 95% of normal.

• Energy Marketing and Resource Management net income was expected to decline in FY04, reflecting FY03 accounting effects and the settlement of positions with Enron affiliates.

• Avista Advantage expected to break even or earn slightly positive net income; Other segment losses were expected to decrease.

• FY04 operating cash flow and committed credit were expected to fund capital spending, maturities and other commitments; additional long-term debt issuance remained possible.