f8ka110508.htm
 

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549


FORM 8-K/A


CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): November 5, 2008

 
Exact name of registrant as specified
I.R.S.
 
in its charter, state of incorporation,
Employer
Commission
address of principal executive offices,
Identification
File Number
Telephone
Number


1-16305
PUGET ENERGY, INC.
91-1969407
 
A Washington Corporation
  
 
10885 - N.E. 4th Street, Suite 1200
  
 
Bellevue, Washington 98004-5591
  
 
(425) 454-6363
  

 
1-4393
PUGET SOUND ENERGY, INC.
91-0374630
 
A Washington Corporation
  
 
10885 - N.E. 4th Street, Suite 1200
  
 
Bellevue, Washington 98004-5591
  
 
(425) 454-6363
  
 
___________
 
Check the appropriate box below if the Form 8−K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o
 
Soliciting material pursuant to Rule 14a−12 under the Exchange Act (17 CFR 240.14a−12)
 
o
 
Pre−commencement communications pursuant to Rule 14d−2(b) under the Exchange Act (17 CFR 240.14d−2(b))
 
o
 
Pre−commencement communications pursuant to Rule 13e−4(c) under the Exchange Act (17 CFR 240.13e−4(c))
 


 
 
 

Item 2.02 Results of Operations and Financial Condition

 
After distribution of Puget Energy’s quarterly earnings release and filing of the Form 8-K on November 5, 2008, the Company discovered the earnings release and Form 8-K mislabeled Puget Energy’s merger expenses, depreciation and amortization, and conservation amortization line items in the income statement for the three and nine months ended September 30, 2008 and 2007.  The following corrected press release was issued.

Puget Energy Reports Third-Quarter 2008 Financial Results
 
·
Third-quarter 2008 loss of 6 cents per diluted share from Puget Energy

·
Third-quarter 2008 loss of 6 cents per diluted share from Puget Sound Energy, Puget Energy’s core utility business

·
Year-to-date Sept. 30, 2008, income of 81 cents per diluted share from Puget Energy

·
Year-to-date Sept. 30, 2008, income of 87 cents per diluted share from PSE
 
BELLEVUE, Wash. — Puget Energy (NYSE:PSD) today reported a net loss of $8.2 million, or 6 cents per diluted share, for the third quarter of 2008 compared to net income of $11.4 million, or 10 cents per share, in the third quarter of 2007. For the first nine months of 2008, Puget Energy reported net income of $105.2 million, or 81 cents per share, as compared to $129.1 million, or $1.10 per share, for the same period of 2007.
“Our third-quarter results reflect the seasonal nature of utility operations in the Pacific Northwest,” said Stephen P. Reynolds, Puget Energy and Puget Sound Energy chairman, president and CEO. “PSE’s energy sales, and hence revenues, are typically at their lowest levels during the third quarter while construction and maintenance activities are at their highest.  Our financial results were consistent with our expectations.
“Economic activity in our region continues to be better than other parts of the country but even Western Washington is beginning to see the impact of a weakening economy and declining new home construction, which we anticipate will continue into 2009.  We are on schedule with all of our business initiatives and are particularly pleased with the receipt of a new 50-year license for our Baker River Hydroelectric Project and the announced acquisition of the Mint Farm natural gas-fired generating facility in Longview, Washington.”
         PSE’s financial results in the third quarter of 2008 reflect higher utility operating and maintenance costs, increased depreciation expense incurred as a result of new utility capital investments and the impact of true-ups related to federal income tax expense. Higher market prices for natural gas used for electric generation and unfavorable hydroelectric conditions also negatively impacted PSE’s financial results for the third quarter of 2008.
 
 Puget Energy Third-Quarter 2008 Summaries:
 
The following tables provide a summary of Puget Energy’s financial results for the third quarter of 2008 as compared to the same quarter a year ago.
 
Table 1: Puget Energy Third-Quarter Earnings Summary
  
Net Income (Loss) in millions of dollars
  
2008
    
2007
  
PSE
   $ (7.3 )   $ 12.0  
Puget Energy merger transaction expenses and other
     (0.9 )     (0.6 )
Puget Energy
   $ (8.2 )   $ 11.4  
                 
Earnings per Diluted Share (EPS)
                
PSE
   $ (0.06 )   $ 0.10  
Puget Energy merger transaction expenses and other
     --       --  
Puget Energy
   $ (0.06 )   $ 0.10  
                 
Diluted common shares outstanding (millions)
     130.0       117.4  
                 
 
Table 2: Puget Energy Third Quarter 2008 vs. Third Quarter 2007
EPS Reconciliation
  
Cents per
diluted share
  
Puget Energy’s third-quarter 2007 earnings from PSE
  
$
 0.10  
      Increase in natural gas margin
     0.01  
      Decrease in electric margin     (0.02 )
      Increase in utility operations and maintenance expense     (0.06 ) 
      Increase in utility depreciation and amortization expense
     (0.04 )
      Lower interest expense, net of AFDC
     0.01  
      Federal income tax differences between periods
     (0.06 )
Puget Energy’s third-quarter 2008 earnings from PSE
  
$
 (0.06 )
Puget Energy’s third-quarter merger transaction expenses and other
     --  
Puget Energy’s earnings for the third quarter 2008
  
$
 (0.06 )
 
Puget Sound Energy (PSE) Third-Quarter 2008 Highlights:
Key components of PSE’s third-quarter 2008 financial performance are highlighted below. All amounts are pre-tax unless otherwise noted.

·  
As of Sept. 30, 2008, PSE provided service to 1,066,200 electric customers and 739,400 natural gas customers, representing a 1.4 percent and 2 percent increase, respectively, in the last 12 months.

·  
Retail electric sales volumes decreased by 1 percent while natural gas sales volumes increased by 3.2 percent, compared to the third quarter of 2007. PSE’s energy sales volumes, in particular natural gas, are highly seasonal and dependent on weather conditions; the company’s lowest sales volumes typically occur during summer months. Average temperatures in the Pacific Northwest during the third quarter 2008 were slightly cooler, compared to normal and prior-year levels (third quarter 2007).

·  
Electric margin decreased by $4.6 million, reflecting a 1 percent decline in retail sales volumes, as well as higher power supply costs resulting from a reduction in hydroelectric energy production and an increase in natural gas fuel prices, compared to prior-year levels.

Electric margin represents electric sales, net of revenue-based taxes, to retail and transportation customers less the cost of generating, purchasing and wheeling electricity.

·  
Natural gas margin increased by $2.1 million over prior-year levels primarily due to the increase in sales volumes.

Natural gas margin represents natural gas sales to retail and transportation customers, net of revenue-based taxes, less the cost of purchasing and transporting natural gas.

·  
Utility operations and maintenance expense in the third quarter of 2008 increased by $11.6 million, reflecting higher costs related to operations and maintenance of PSE’s electric generating facilities, infrastructure maintenance (planned and unplanned) and customer service expenses, including an increase in bad-debt expenses. Additionally, insurance costs and self-insurance claim reserve expenses were approximately $3 million higher in the third quarter 2008, compared to prior-year levels.

·  
Depreciation and amortization expense in the third quarter of 2008 increased by $8.8 million over prior-year levels, including the $3.9 million benefit from the 2007 deferral of the Goldendale Generating Station, described below. Excluding the 2007 Goldendale deferral, depreciation and amortization expense increased $4.9 million in 2008, reflecting additional utility plant placed in service over the last 12 months.

·  
PSE’s third-quarter 2007 results reflect the benefit of deferral of certain ownership and operating costs totaling $3.9 million related to Goldendale, purchased in February 2007. A regulatory asset was established (following regulatory approval) to record the deferral, and a corresponding credit was reflected in the financial statements as a reduction to depreciation and amortization expense. Deferral of such costs ceased, effective Sept. 1, 2007, when PSE began to recover Goldendale ownership and operating costs in its electric-customer rates.
 
·  
Interest expenses, net of the debt portion of Allowance for Funds Used During Construction, declined by $2.7 million in the third quarter of 2008 as compared to the prior year primarily due to lower levels of debt outstanding. PSE’s average debt outstanding during the third quarter of 2008 was $3.1 billion as compared to $3.2 billion for the same period of 2007.

·  
PSE’s federal income tax expense in the third quarter of 2008 was impacted by an unfavorable true-up of its estimated 2007 federal income tax provision in the amount of $1.8 million following the company filing its consolidated 2007 federal income tax return in September 2008. In the third quarter of 2007, a similar true-up resulted in a benefit of $1.9 million for the company’s 2006 federal income tax provision. PSE’s third-quarter 2008 federal income tax expense also includes a true-up to reflect the estimated effective tax rate for the calendar year 2008.

·  
The average number of Puget Energy diluted common shares outstanding during the third quarter of 2008 increased by 10.8 percent, to 130 million, from 117.4 million during the third quarter of 2007. The increase was primarily the result of a sale of 12.5 million shares of newly issued Puget Energy common stock on Dec. 3, 2007, to a group of long-term infrastructure investors. The net proceeds of $293.3 million from this transaction were invested in PSE as additional equity to fund capital expenditures, debt redemption and working capital.

Year-to-date Sept. 30, 2008, Summary
For the nine months ended Sept. 30, 2008, Puget Energy’s net income was $105.2 million, or 81 cents per diluted share, compared to net income of $129.1 million, or $1.10 per diluted share, for the same period in 2007. During the nine months ended Sept. 30, 2008, Puget Energy incurred $8.3 million in costs related to the proposed merger announced on Oct. 26, 2007.
PSE’s net income for the nine months ended Sept. 30, 2008, was $112.7 million, or 87 cents per share, compared to net income of $129.2 million, or $1.10 per share, for the same period in 2007. PSE’s net income for the nine months ended Sept. 30, 2008, was positively impacted by increased electric and natural gas margins driven by higher energy-sales volumes in the first and second quarters of 2008, resulting primarily from cooler temperatures (relative to historic averages). The favorable impact on PSE’s electric margin was partially offset by increased power costs, largely due to lower hydroelectric energy production and higher fuel and utility operations and maintenance (O&M) costs from PSE’s natural gas-fired electric generating units. Additional utility plant placed into service increased depreciation and amortization costs for the nine months ended Sept. 30, 2008, which negatively impacted PSE’s net income for the period. An increase in utility O&M expense of $43.1 million, including a $10.5 million charge related to the settlement of a lawsuit, also negatively impacted PSE’s net income for the nine months ending Sept. 30, 2008.
 
Merger
                The consummation of the merger is subject to certain closing conditions, including regulatory approval from the Washington Utilities and Transportation Commission. A joint application was filed with the UTC on Dec. 17, 2007, by PSE and Puget Holdings LLC – long-term infrastructure investors, seeking approval of the merger. On July 21, 2008, PSE and Puget Holdings reached a settlement to resolve all issues with all but one of the parties involved in the merger proceeding. With all federal and shareholder approvals obtained, the merger transaction, if accepted, is expected to close during 2008, once all closing conditions have been met, including, as discussed above, approval from the UTC.

Form 10-Q Quarterly Report for the Third Quarter of 2008
Puget Energy will file its Form 10-Q for the third quarter of 2008 with the Securities and Exchange Commission by Nov. 5, 2008, a copy of which will be available through the SEC’s Web site at www.sec.gov or at www.pugetenergy.com. Investors are encouraged to read the financial statements and disclosures that will be contained in the Form 10-Q filing.
 
About Puget Energy
Puget Energy (NYSE:PSD) is the parent company of Puget Sound Energy, a regulated utility providing electric and natural gas service primarily to the growing Puget Sound region of Western Washington.
 
About Puget Sound Energy
Washington state’s oldest and largest energy utility, with a 6,000-square-mile service area stretching across 11 counties, Puget Sound Energy serves more than 1 million electric customers and 739,000 natural gas customers, primarily in Western Washington. PSE, a subsidiary of Puget Energy (NYSE:PSD), meets the energy needs of its growing customer base through incremental, cost-effective energy conservation, low-cost procurement of sustainable energy resources, and far-sighted investment in the energy-delivery infrastructure. PSE employees are dedicated to providing great customer service to deliver energy that is safe, reliable, reasonably priced, and environmentally responsible. For more information, visit PSE.com.

CAUTIONARY STATEMENT:  Certain statements contained in this news release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, among which include PSE’s plans relating to utility plant additions and expenses, Puget Energy’s expectations regarding the merger and factors that could impact Puget Energy’s earnings.  Forward-looking statements are based on the opinions and estimates of management at the time the statements are made and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements.  Factors that could affect actual results include, among others, governmental policies and regulatory actions, including those of the Washington Utilities and Transportation Commission, and weather conditions.  More information about these and other factors that potentially could affect the company’s financial results is included in Puget Energy's and PSE's most recent annual report on Form 10-K, quarterly report on Form 10-Q and in their other public filings filed with the Securities and Exchange Commission.  Except as required by law, Puget Energy and PSE undertake no obligation to update any forward-looking statements.
###

 
 
 
 

PUGET ENERGY -- SUMMARY INCOME STATEMENT
                
(In thousands, except per-share amounts)
                
         
Unaudited
    
Unaudited
         
Three months ended 09/30 1
    
Nine months ended 09/30 1
         
2008
  
2007
    
2008
  
2007
                         
Operating revenues
                
 
Electric
 $      467,355
  
 $      456,100
    
 $   1,551,528
  
 $   1,418,980
 
Gas
    
133,249
  
142,120
    
810,326
  
834,304
 
Non-utility operating revenue
5,558
  
3,460
    
7,646
  
13,439
   
Total operating revenues
606,162
  
601,680
    
2,369,500
  
2,266,723
Operating expenses
                
 
Purchased electricity
173,667
  
185,778
    
645,385
  
640,627
 
Electric generation fuel
64,899
  
43,528
    
144,599
  
93,312
 
Residential exchange
(170)
  
(384)
    
(20,475)
  
(52,424)
 
Purchased gas
70,125
  
80,914
    
484,038
  
530,616
 
Unrealized net (gain) on derivative instruments
3,516
  
5,276
    
1,240
  
1,031
 
Utility operations & maintenance
105,995
  
94,433
    
334,608
  
291,540
 
Non-utility expense and other
5,002
  
3,301
    
7,063
  
8,198
 
Merger expenses
1,271
  
---
    
8,320
  
---
 
Depreciation & amortization
77,678
  
68,909
    
229,366
  
204,351
 
Conservation amortization
13,832
  
8,530
    
42,723
  
27,608
 
Taxes other than income taxes
56,873
  
56,907
    
214,820
  
207,269
   
Total operating expenses
572,688
  
547,192
    
2,091,687
  
1,952,128
Operating income
33,474
  
54,488
    
277,813
  
314,595
Other income (deductions):
                
 
Other income
6,865
  
6,725
    
21,782
  
17,710
 
Other expense
(2,281)
  
(686)
    
(4,098)
  
(4,546)
Interest Charges:
                
 
AFUDC
2,167
  
3,554
    
6,378
  
8,915
 
Interest expense
(50,730)
  
(54,681)
    
(150,322)
  
(158,133)
Income from continuing operations before income taxes
(10,505)
  
9,400
    
151,553
  
178,541
Income taxes
(2,280)
  
(2,218)
    
46,310
  
49,262
Net Income from continuing operations
(8,225)
  
11,618
    
105,243
  
129,279
Income from discontinued operations, net of tax
---
  
(224)
    
---
  
(212)
Net Income
 $         (8,225)
  
 $         11,394
    
 $       105,243
  
 $       129,067
Common shares outstanding
129,447
  
116,821
    
129,433
  
116,650
Diluted shares outstanding
130,045
  
117,365
    
129,924
  
117,225
Basic earnings per common share before
                
 
   discontinued operations
 $            (0.06)
  
 $             0.10
    
 $              0.81
  
 $              1.11
Basic earnings from discontinued operations
---
  
---
    
---
  
---
Basic earnings per common share
 $            (0.06)
  
 $             0.10
    
 $              0.81
  
 $              1.11
Diluted earnings per common share before
                
 
   discontinued operations
 $            (0.06)
  
 $             0.10
    
 $              0.81
  
 $              1.10
Diluted earnings from discontinued operations
---
  
---
    
---
  
---
Diluted earnings per common share 2
 $            (0.06)
  
 $             0.10
    
 $              0.81
  
 $              1.10
 
1
  
Partial-year results may not accurately predict full-year performance, as earnings are significantly affected by weather.
2
  
Diluted earnings per common share include the dilutive effect of securities related to employee compensation plans.

 
 
 

PUGET SOUND ENERGY -- UTILITY OPERATING DATA
                
             
Three months ended 09/30
    
Nine months ended 09/30
             
2008
  
2007
    
2008
  
2007
Energy sales revenues ($ in thousands; unaudited)
                
 
Electricity
                  
   
Residential
 $        199,678
  
 $        184,238
    
 $        783,337
  
 $      675,685
   
Commercial
191,616
  
177,589
    
593,063
  
550,575
   
Industrial
25,663
  
25,526
    
79,225
  
77,784
   
Other retail sales, including change in unbilled
4,256
  
17,557
    
(28,077)
  
(14,005)
     
Subtotal, retail sales
421,213
  
404,910
    
1,427,548
  
1,290,039
   
Transportation, including change in unbilled
2,590
  
2,847
    
5,466
  
7,625
   
Sales to other utilities & marketers
27,643
  
45,257
    
70,085
  
91,536
   
Other1
  
15,909
  
3,086
    
48,429
  
29,780
     
Total electricity sales
467,355
  
456,100
    
1,551,528
  
1,418,980
 
Gas
                      
   
Residential
71,297
  
74,697
    
509,841
  
510,503
   
Commercial
46,289
  
49,310
    
246,238
  
257,245
   
Industrial
7,989
  
10,566
    
30,453
  
43,052
     
Subtotal, retail sales
125,575
  
134,573
    
786,532
  
810,800
   
Transportation
3,368
  
3,400
    
10,563
  
10,181
   
Other
    
4,306
  
4,147
    
13,231
  
13,323
     
Total gas sales
133,249
  
142,120
    
810,326
  
834,304
 
Total energy sales revenues
 $        600,604
  
 $        598,220
    
 $    2,361,854
  
 $   2,253,284
Energy sales volumes (unaudited)
                
 
Electricity (in mWh)
                
   
Residential
2,060,807
  
1,998,293
    
8,346,638
  
7,983,224
   
Commercial
2,335,168
  
2,261,412
    
7,106,554
  
6,892,028
   
Industrial
331,046
  
346,525
    
992,815
  
1,025,542
   
Other, including change in unbilled
(34,617)
  
132,036
    
(406,562)
  
(298,327)
     
Subtotal, retail sales
4,692,404
  
4,738,266
    
16,039,445
  
15,602,467
 
Transportation, including change in unbilled
544,454
  
577,170
    
1,575,397
  
1,626,600
 
Sales to other utilities & marketers
481,672
  
872,539
    
1,361,698
  
1,927,546
     
Total mWh
5,718,530
  
6,187,975
    
18,976,540
  
19,156,613
 
Gas (in 000's of therms)
                
   
Residential
47,506
  
44,264
    
405,419
  
354,818
   
Commercial
41,060
  
37,824
    
227,078
  
204,379
   
Industrial
7,730
  
8,875
    
28,947
  
36,051
   
Transportation
47,706
  
48,583
    
164,003
  
157,959
     
Total gas volumes
144,002
  
139,546
    
825,447
  
753,207
Margins2 ($ in thousands; unaudited)
                
 
Electric
    
 $        173,525
  
 $        178,088
    
 $        601,376
  
 $      581,443
 
Gas
      
             47,143
  
             44,994
    
           239,364
  
         216,297
Weather (unaudited)
                
 
Actual heating degree days
218
  
194
    
3,325
  
2,997
 
Normal heating degree days3
238
  
238
    
3,089
  
3,068
Customers served at September 30 4 (unaudited)
                
 
Electricity
                
   
Residential
941,027
  
928,832
          
   
Commercial
118,187
  
116,064
          
   
Industrial
  
3,742
  
3,757
          
   
Other
    
3,268
  
3,027
          
   
Transportation
17
  
18
          
     
Total electricity customers
1,066,241
  
1,051,698
          
 
Gas
                      
   
Residential
682,668
  
669,244
          
   
Commercial
54,001
  
52,577
          
   
Industrial
  
2,612
  
2,621
          
   
Transportation
128
  
125
          
     
Total gas customers
739,409
  
724,567
          
 
1
Includes sales of non-core gas supplies.
                
2
Electric margin is electric sales to retail and transportation customers less the cost of generating and purchasing electric energy sold to customers, including transmission costs, to bring electric energy to PSE's service territory.  Gas margin is gas sales to retail and transportation customers less the cost of gas purchased, including gas transportation costs, to bring gas to PSE's service territory.
3
Seattle-Tacoma Airport statistics reported by NOAA which are based on a 30-year average, 1971-2000. Heating degree days measure how far the daily average temperature falls below 65 degrees.  Heating degree days in 2008 are adjusted for leap year by adding the heating degree day for February 28th.
4
Customers represents average served at month end.
                

 
 
 


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized.
 
 
PUGET ENERGY, INC.
  
     
 
PUGET SOUND ENERGY, INC.
  
     
 
By: /s/ Eric M. Markell
  
 
 
Dated:  November 5, 2008
Eric M. Markell
Executive Vice President and
Chief Financial Officer