EX-99 2 ex991.htm 2ND QUARTER EARNINGS RELEASE Exhibit 99.1

Exhibit 99.1

NEWS RELEASE

FOR IMMEDIATE RELEASE Contacts:
July 18, 2002 Media:   Grant Ringel
      Dorothy Bracken
      888-831-7250
  Analysts:   Don Gaines
      (425)462-3870


Puget Energy reports second-quarter 2002 results

     Bellevue, Wash. (July 18, 2002) — Puget Energy (NYSE: PSD) today reported 2002 second-quarter income for common stock of $29.4 million, or 34 cents per share, exceeding analysts’ expectations of 20-to-23 cents per share for the quarter.

     “Higher utility energy margins coupled with our steadfast employee efforts to manage utility costs have contributed to Puget Energy performing beyond expectations in the second quarter,” said Puget Energy President and CEO Stephen P. Reynolds. “Energy margins were helped by cooler temperatures that increased utility-customer energy consumption and by a return to normal hydroelectric conditions.”

     The second quarter’s results are compared to $17.4 million, or 20 cents per share in the same period a year ago. Twelve-month income for common stock for the period ended June 30, 2002 was $64.8 million, or 74 cents per share, compared to income of $171.3 million, or $1.99 per share, in the year-ago period. Twelve-month results include a nine-month under-recovery of net power costs for the company’s Puget Sound Energy (PSE) utility subsidiary; and an interim increase in electric rates that recovered net power costs in second quarter 2002.

     “In the second quarter, a $25 million interim increase in electric revenues allowed our utility to recoup increased power-supply costs, which has been a very positive step towards improving the company’s financial integrity,” said Reynolds.

     “Going forward, on July 1, electric customer rates increased 4.6 percent, following state regulatory approval of a settlement agreement in PSE’s electric-rate case,” Reynolds added. “The agreement includes a power cost adjustment mechanism that would be applied when PSE’s costs to provide customers’ electricity exceed a certain threshold.

     “The successful conclusion of the electric-rate settlement, and the expected late-summer Reynolds added “In the second quarter, InfrastruX contributed 3 cents per share.”

     “We remain comfortable with the earnings guidance we’ve previously communicated for Puget Energy for calendar 2002 and 2003,” said Reynolds.

Highlights from the second quarter

  • Improved energy margins for PSE resulted primarily from increased natural gas and electricity sales from cooler weather coupled with greater availability of low-cost hydroelectric generation. In second quarter 2001, margins were affected by a drought that adversely affected hydroelectric production, and by increased costs of purchased electricity and fuel for electric generation.

  • Lower operating revenues of $555.0 million, compared to $935.4 million for the second quarter 2001, were primarily due to lower wholesale market prices for electricity and natural gas.

  • Utility operations and maintenance expenses increased primarily because of higher operating costs for the company’s Colstrip generating plant.

  • A reduction of $4.7 million in federal income tax expense was realized from an Internal Revenue Service refund for taxes in calendar years 1998 and 1999.

  • Property sales by PSE’s real-estate subsidiary that initially were expected to be completed in third-quarter 2002 contributed 2 cents per share to second-quarter results.

  • InfrastruX Group, which provides construction and maintenance services primarily to gas and electric utilities, acquired its 10th company, Flowers Construction Company, a Texas-based utility contractor. This acquisition brings InfrastruX’s combined annual revenues to more than $320 million.

      Puget Energy will provide more detail on second-quarter results on a conference call for analysts scheduled at 10 a.m. ET (7 a.m. PT) tomorrow, Fri., July 19. The call will be broadcast live through a Web cast at www.pse.com by accessing the Investors section of the Web site. The Web cast will be archived and available for replay following the live call. A tape-recorded replay of the call will be available two hours after completion of the conference on July 19 through midnight (ET) Tue., July 23, 2002 by dialing 1-800-428-6051 and entering the conference identification number at 250100.

Certain statements contained in this news release are “forward-looking statements” within the meaning of the federal securities laws. Although Puget Energy and Puget Sound Energy believe that the expectations reflected in such statements are reasonable, there can be no assurance that the expected results will be achieved. For additional information concerning certain assumptions, risks, and uncertainties involved in the forward-looking statements contained herein, please refer to Puget Energy’s reports on file with the SEC.



PUGET ENERGY — SUMMARY INCOME STATEMENT
(In thousands, except per-share amounts, Unaudited)

  Three months ended 06/301   Twelve months ended 06/30
  2002   20012   2002   20012
Operating revenues  
   Electric $ 330,326    $ 719,694    $ 1,579,817    $ 3,380,549 
   Gas 144,384    163,013    806,663    776,107 
   Other 80,277 
   52,712 
   244,561 
   154,274 
      Total operating revenues 554,987 
   935,419 
   2,631,041 
   4,310,930 
Operating expenses  
   Purchased electricity 142,128    535,277    823,014    2,257,809 
   Purchased gas 88,520    104,184    509,955    499,333 
   Electric generation fuel 14,680    63,134    195,747    297,843 
   Residential exchange (30,964)   (10,304)   (122,530)   (46,773)
   FAS-133 unrealized (gain)/loss (252)   (41,527)   (7,870)   (15,061)
   Utility operations & maintenance 73,630    65,414    278,767    253,443 
   Other operations & maintenance 62,082    41,470    201,825    124,402 
   Depreciation & amortization 57,307    52,935    224,732    207,376 
   Conservation amortization 3,605    1,603    9,058    6,035 
   Other taxes 54,584    45,306    219,213    216,187 
   Federal income taxes 12,834 
   11,856 
   45,215 
   128,857 
      Total operating expenses 478,154 
   869,348 
   2,377,126 
   3,929,451 

Operating income 76,833    66,071    253,915    381,479 
Other income (net of tax) 3,441 
   1,568 
   14,840 
   (2,697)
Income before interest charges & minority interest 80,274    67,639    268,755    378,782 
Interest charges 48,682    48,174    195,530    184,000 
Minority interest 223 
   -- 
   302 
   -- 
Net income before cumulative effect of accounting change 31,369    19,465    72,923    194,782 
FAS-133 transition adjustment loss (net of tax) -- 
   -- 
   -- 
   14,749 
Net Income 31,369    19,465    72,923    180,033 
Less preferred stock dividend accruals 1,940 
   2,085 
   8,122 
   8,703 
Income for common stock $ 29,429 
   $ 17,380 
   $ 64,801 
   $ 171,330 

Common shares outstanding 87,448 
   86,303 
   87,013 
   85,903 

Basic and diluted earnings per common share before cumulative effect of accounting change
$ 0.34 		  
$ 0.20 		  
$ 0.74 		  
$ 2.16 
Cumulative effect of accounting change -- 
   -- 
   -- 
   (0.17)
Basic and diluted earnings per common share3 $ 0.34    $ 0.20    $ 0.74    $ 1.99 



1 Partial-year results may not accurately predict full-year performance, as earnings are significantly affected by weather.
2 Certain amounts previously reported have been reclassified to conform with current year presentations with no effect on net income.
3 Diluted earnings per common share include the dilutive effect of securities related to employee compensation plans.



PUGET SOUND ENERGY1 -- UTILITY OPERATING DATA


  Three months ended 06/30   Twelve months ended 06/30
  2002   20014   2002   20014
Energy sales revenues
($ in thousands, Unaudited)		  
  Electricity  
   Residential $ 148,341    $ 138,321    $ 610,805    $ 601,088 
   Commercial 127,151    128,373    511,553    524,646 
   Industrial 21,583    105,439    111,604    423,634 
   Other retail sales2 (3,740)
   (24,019)
   10,594 
   22,252 
     Subtotal, retail sales 293,335    348,114    1,244,556    1,571,620 
   Transportation 4,477    (15)   10,592    (15)
   Sales to other utilities 27,333    377,674    370,067    1,766,315 
   Other3 5,181    (6,079)   (45,398)   42,629 
     Total electricity sales 330,326    719,694    1,579,817    3,380,549 
  Gas  
   Residential 82,174    92,808    487,995    469,997 
   Commercial 46,360    52,469    250,134    238,687 
   Industrial 10,066 
   12,602 
   45,654 
   45,575 
     Subtotal, retail sales 138,600    157,879    783,783    754,259 
   Transportation 3,025    2,597    12,315    11,422 
   Other 2,759 
   2,537 
   10,565 
   10,426 
     Total gas sales
 144,384 
   163,013 
   806,663 
   776,107 
   Total gas sales revenue
 $ 474,710 
   $ 882,707 
   $ 2,386,480 
   $ 4,156,656 

Energy sales volumes
Electricity (in mWh)		  
   Residential 2,302,267    2,224,645    9,718,567    9,734,832 
   Commercial 1,883,185    1,963,621    7,836,074    7,980,282 
   Industrial 349,139    713,987    1,782,708    3,553,456 
   Other2 (150,211)
   (226,024)
   129,833 
   (101,694)
     Subtotal, retail sales 4,384,380    4,676,229    19,467,182    21,166,876 
   Transportation 516,882    --    1,378,818    -- 
   Sales to other utilities 1,436,526 
   2,024,045 
   6,430,509 
   13,760,927 
     Total mWh 6,337,788    6,700,274    27,276,509    34,927,803 
  Gas (in 000's of therms)  
   Residential 86,751    87,913    516,644    513,493 
   Commercial 58,533    58,856    302,063    298,865 
   Industrial 13,261    13,886    56,080    60,732 
   Transportation 49,013 
   44,181 
   198,802 
   189,121 
     Total gas volumes
 207,558 
   204,836 
   1,073,589 
   1,062,211 
Customers served5
Electricity		  
   Residential 839,979    825,223    834,012    818,536 
   Commercial 102,801    99,576    101,093    99,400 
   Industrial 3,920    4,024    3,964    4,054 
   Other 1,908    1,754    1,849    1,632 
   Transportation 15 
   -- 
   15 
   -- 
     Total electricity customer 948,623    930,577    940,933    923,622 

Gas		  
   Residential 563,909    548,247    556,411    540,869 
   Commercial 46,457    46,831    46,662    46,151 
   Industrial 2,774    2,836    2,804    2,903 
   Transportation 124 
   112 
   112 
   107 
     Total gas customer
 613,264 
   598,026 
   605,989 
   590,030 

Weather  
  Actual heating degree days 994    1,034    5,069    5,074 
  Normal 925    925    4,908    4,908 


1 Puget Sound Energy is the electric and natural gas utility subsidiary of Puget Energy.
2 Includes change in unbilled revenues.
3 Includes Conservation Trust collection and sales of non-core gas supply to generators.
4 Certain items previously reported have been reclassified to conform with current year presentations.
5 Quarterly data represents average served during June; 12-month data represents average for the 12 months ended.



PUGET ENERGY -- SEGMENT RESULTS
(In thousands, Unaudited)

Three months ended 06/30/02 Puget Sound Energy   InfrastruX   Other1
   Puget Energy Total
Revenues $ 474,710   $ 76,121   $ 4,156   $ 554,987
Depreciation and amortization 54,000   3,253   54   57,307
Federal income tax 9,538   1,824   1,472   12,834
Operating income 70,547   4,177   2,109   76,833
Interest charges, net of AFUDC 47,340   1,342   --   48,682
Net income 26,662   2,598   2,109   31,369
Total assets 5,039,624   317,212   125,600   5,482,436

Total assets at 12/31/01 5,178,601   229,125   139,251   5,546,977

Three months ended 06/30/01
  
Revenues $ 882,707   $ 45,469   $ 7,243   $ 935,419
Depreciation and amortization 51,513   1,418   4   52,935
Federal income tax 8,954   1,654   1,248   11,856
Operating income 59,211   4,480   2,380   66,071
Interest charges, net of AFUDC 46,731   1,336   107   48,174
Net income 14,956   2,228   2,281   19,465

Twelve months ended 06/30/02
  
Revenues $ 2,386,480   $ 236,660   $ 7,901   $ 2,631,041
Depreciation and amortization 213,382   11,284   66   224,732
Federal income tax 38,879   3,595   2,741   45,215
Operating income 241,735   9,940   2,240   253,915
Interest charges, net of AFUDC 190,860   4,609   61   195,530
Net income 57,042   4,381   11,500   72,923

Twelve months ended 06/30/01
  
Revenues $ 4,156,656   $ 119,007   $ 35,267   $ 4,310,930
Depreciation and amortization 202,031   5,329   16   207,376
Federal income tax 120,721   1,527   6,609   128,857
Operating income 360,969   5,790   14,720   381,479
Interest charges, net of AFUDC 181,330   1,633   1,037   184,000
Net income 176,625   1,118   2,290   180,033

1 Includes the non-regulated subsidiaries of Puget Sound Energy, principally Puget Western, Inc., a real estate company and miscellaneous holding company expenses.