F I X E D I N C O M E R E S E A R C H
Jacob P. Mercer, CFASenior Research Analyst
Mark D. ChurchillAssociate Research Analyst
ELECTRIC & GAS UTILITY GUIDE
J A N U A R Y 2 0 0 4
Utility Cover 0104.qxd 1/23/04 8:06 AM Page 1
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I. Executive Summary ............................................................................................. 3II. Sector Themes ..................................................................................................... 4III. Methodology ....................................................................................................... 6IV. Company Report Overview.................................................................................. 8V. Company Reports .............................................................................................. 15
Avista Corp ................................................................................................... 16Black Hills Corp ........................................................................................... 20El Paso Electric ............................................................................................. 24Great Plains Energy ....................................................................................... 28IDACORP ..................................................................................................... 34MDU Resources Group .................................................................................. 40OGE Energy ................................................................................................. 44Portland General Electric ............................................................................... 50Puget Energy ................................................................................................. 54Vectren ......................................................................................................... 60Wisconsin Energy .......................................................................................... 66Xcel Energy .................................................................................................. 72
VI. Summary .......................................................................................................... 80VII. Appendix .......................................................................................................... 85VIII. Important Research Disclosures .......................................................................... 94
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As a guide for your journey, the Electric & Gas Utility Guide provides a road map throughthe current electric and gas utility environment. There are a myriad of factors that weanalyze when evaluating utility credits, including but not limited to regulatory environ-ment, service territory, customer growth rates, load growth, non regulated investments, andmanagement execution. This book will focus on the financial profiles of twelve electricand gas utility companies. Comparative results and summary tables appear in theSummary section.
We analyze twelve electric and gas utilities. The company analysis focuses on the uniquerisks and characteristics of each company. Our goal is to present an in depth analysis ofthe utility sector, providing a clear and concise picture of each utility and how it compareswith its peer group.
We forecast financial results to estimate potential changes in coverage and leverage. Thefoundation for our analysis is our financial models. When available, we provide a mini-mum of four years of financial statements for each operating utility and holding company.The model depends on multiple assumptions that could influence the actual outcome.Some of the key variables include weather, interest rates, and management decisions. Inaddition to our base case, we provide high and low margin estimates and the effect that ithas on leverage and coverage levels. The high and low margin are influenced by a num-ber of factors including weather, nonregulated businesses, and commodity prices.
Our model measures the changing financial profiles of companies and estimates the vulner-ability to a change in corporate credit rating by Standard & Poor’s. Through analysis ofthe publicly available Standard & Poor’s financial targets, and our financial forecasts, wemeasure the financial profile today and our expectations for 2004 to demonstrate thestrengths and weaknesses of each credit relative to its peer group. The forecasted financialprofile and the accompanying sensitivity analysis provides a structure with which to mea-sure each credit’s vulnerability to a change in corporate credit rating.
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Most companies are going “back to basics” and trying to improve on core competencies.In focusing on regulated operations, a number of companies in the sector are looking at in-creasing reliability in their service territories and using this as an earnings growth vehicle.Investments in nonregulated businesses have decreased dramatically for many companiesbased on investor criticism, rating agency pressure, and poor returns on invested capital.While this remains the theme in the sector, there are still a number of companies such asBlack Hills, MDU Resources, and Great Plains Energy that continue to invest heavily intheir nonregulated ventures.
Other events including the blackout in the Northeast and investor backlash after the crisisthat hit the industry in the second half of 2002 have pushed utilities to invest in core opera-tions. The blackout in the Northeast has demonstrated the importance of the nation’stransmission and distribution system. We believe the blackout should be a long-term cata-lyst for utilities to invest in regulated transmission and distribution assets. State utilitycommissions as well as federal politicians have an incentive to upgrade the electrical infra-structure of the United States.
Despite the fact that many areas of the country have generation overcapacity and weakwholesale prices, a number of companies are looking to increase their generation capacity.This has resulted in aggressive forward looking capital expenditure plans to build genera-tion facilities for Xcel Energy, Alliant Energy, and Wisconsin Energy. Oklahoma Gas &Electric and Puget Sound Energy decided that it was cheaper to buy the assets than buildand have already announced acquisitions within their service territories.
We view the return to core operations as a positive trend for the sector. Nonetheless, weexpect continued negative ratings actions in the near term, albeit at a slower pace than thelast couple of years. In 2002, S&P downgraded 182 holding companies and operatingsubsidiaries, compared to only 15 upgrades. For the first three quarters of 2003, therewere 102 downgrades compared to 11 upgrades. With this credit deterioration, the aver-age credit rating for the utility sector is now in the “BBB” category, down from the “A”category just a few years ago. Furthermore, S&P has stated that the prospects for creditquality remain “challenging,” as indicated by ratings outlooks, 40% of which are nega-tive.
We expect merger and acquisition activity to continue in 2004. Private equity funds andfinancial buyers continue to invest in the sector such as Kohlberg Kravis Roberts & Co’spurchase of Unisource, Goldman Sachs purchase of Cogentrix, and a group led by TexasPacific Group bidding on Portland General Electric. Asset sales were also notable asmany companies looked to unload assets to shore up liquidity and reduce maturing debt.We believe passage of the energy legislation with PUHCA repeal could be a catalyst formore activity in the future.
Operating costs are coming under pressure with increases in pension expense, employeebenefits, and insurance. Many companies, using assumed rates of return as high as 10%on pension assets, are being pressured by the SEC and auditors to reduce assumed rates tomore conservative levels. The revisions to assumed rates of return are increasing the pen-sion expense and consequently reducing the cash flows of companies. Operating costs arecoming under further pressure as employee benefits and insurance costs are rising at rates
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higher than previously anticipated. Some of the costs can be built in to future rate cases,but underfunded pensions and increasing operating expenses are negatives to credit quality.
High natural gas prices are once again an issue for utilities. The recent increase in naturalgas prices is a negative to credit quality for most gas utilities, despite the fact that most gasutilities pass on the costs of natural gas directly to their customers. High prices have led tolower gas consumption by consumers putting stress on gross margins and working capitalrequirements of many gas utilities. The large gas bills are also causing larger write-downsin accounts receivable. On the other side of the coin, the high price of gas is providing up-side for companies with exploration and production assets. Companies that have a largepercentage of their electric generation mix weighted toward coal or nuclear generation arealso benefiting.
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��������� ����������� Forecasts and stress scenarios in our model are based on forecasting earnings before inter-est, tax, depreciation, and amortization (EBITDA). Multiple scenarios are modeled to ar-rive at expected, high, and low EBITDA values through analyzing margins from previoustime periods. The expected scenario is our forecast based on our assumptions of earnings,dividend decisions, and expected financing. High and low margin values are representa-tive of the best and worst margins in the time period drawn upon for the forecast. We typi-cally use the last three years for the margin forecast, but lengthen or shorten the periodwith the availability of information. In the case of a company that has drastically changeddue to merger or divestiture, certain accommodations have been made to ensure the pastresults are indicative of future time periods. After arriving at our EBITDA scenarios, theassumptions of cash flows (interest expense, taxes, dividends, and capital expenditures) areapplied to arrive at free cash flows that determine the resulting credit metrics.
The foundation for our analysis is our financial models. We model the financial state-ments of each company, and the operating companies where applicable, to provide atminimum a four year horizon for analysis. The model depends on multiple assumptionsthat could influence the actual outcome. Key assumptions include operations that are con-sistent with past performance, cash flows that are consistent with company guidance whengiven or with recent history when no guidance is provided, and normal weather. Ouranalysis goes beyond company guidance to anticipate changes in dividend policy, equityissuance, asset sales, and other events that we anticipate may occur.
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Our forecast should provide insight into the direction of a company’s credit profile, whichshould be valuable to forecasting ratings changes. Because Standard & Poor’s makescredit risk profiles and financial targets publicly available we have applied our forecasts tothe benchmarks to identify changing financial profiles. Our model graphically representsthe strengths and weaknesses within a company’s financial profile and its sensitivity tovarying financial performance using four financial metrics: pretax interest coverage, fundsfrom operations (FFO) interest coverage, FFO to total debt, and total debt to capitalization.We use Standard & Poor’s financial targets to apply a rating to each metric for the currentand forecasted time periods. A change in the financial profile may signify a credit trend.Graphical representations of the credit profiles appear in each company presentation. Weassume the current business risk profile is held constant for our forecast (an explanation ofthe importance of business profile appears in the appendix).
A sample financial profile proxy graph (Figure 1) appears with captions to help explain thegraph. Each point on the graph represents the Standard & Poor’s rating for the credit met-ric. The corporate credit rating balances the current and forecasted strengths and weak-nesses in the metrics. Figure 1 demonstrates an improving credit by the nature of the fore-casted profile appearing closer to the center of the graph than the current profile (assumingthe risk profile of the company remains constant). On average, the credit metrics improvedapproximately two credit rating notches from the current profile to the forecasted profile.Credit quality improvement to this degree implies the credit may receive a rating upgradeif the expectations of our forecast are met. The graph also helps to identify strength in theFFO interest coverage and pretax interest coverage ratios relative to the FFO to total debtand total debt to total capitalization ratios.
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FFO/Total Debt
FFO Interest Coverage
Pretax Interest Coverage
Total Debt/Total Capital
Current Profile
Forecasted Profile
Current Pretax Coverage
metric corresponds to BB
Current FFO coverage
metric corresponds to BBB-
Current TD/TC metric
corresponds to BB+
Current FFO/TD metric
corresponds to B+
AA
A
BBB
BB
B
Forecasted FFO coverage metric
improves to A-
Forecasted FFO/TD metric
improves to BB-
Forecasted TD/TC metric
improves to BBB-
Forecasted Pretax Coverage
metric improves to BBB
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Figure 1
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������������ ������� The Performance Metrics displays key coverage and leverage ratios for historic and fore-casted time periods under high, expected, and low margin cases. The high and low casesare determined by stressing the company at the best and worst margins for recent time peri-ods (typically three years but varies on certain companies due to the reliability of the pastto serve as an indicator of the current structure of the company). A tighter spread on a ra-tio of one company relative to another indicates more stable results. Metric definitionsappear below.
EBITDA/Interest divides the EBITDA for the time period specified by the interest amountaccrued for that time period.
Total Debt/LTM EBITDA compares the total debt (short-term debt, long-term debt and pre-ferred stock) to the EBITDA for the last twelve months.
Return on Equity provides the earnings for the last twelve months based on the averagedollar amount of equity capital invested in the firm.
Dividend Payout compares the dividend and forecasts with the earnings for the last twelvemonths. The dividend assumption from our expected scenario is held constant for the highand low estimate. Therefore, the large variance on the estimates for some companies doesnot take into account that management would likely cut or increase the dividend from ourestimates if these scenarios occurred.
2002 6M03 9M03 2003E 6M04E 2004EEBITDA/Interest
High Margin 6.45x 4.71x 5.98xExpected 4.88x 4.98x 6.75x 6.15x 4.53x 5.62xLow Margin 5.96x 4.37x 5.37x
Total Debt/LTM EBITDAHigh Margin 2.67x 2.72x 2.86xExpected 3.14x 2.95x 2.71x 2.83x 2.98x 3.17xLow Margin 2.94x 3.18x 3.41x
Return on EquityHigh Margin 19.1% 17.7% 15.9%Expected 14.7% 18.9% 19.5% 17.6% 15.8% 14.4%Low Margin 16.7% 14.5% 13.6%
Dividend PayoutHigh Margin 63.0% 67.3% 71.9%Expected 86.3% 71.0% 66.6% 69.1% 76.9% 81.2%Low Margin 73.4% 84.8% 89.4%
Figure 2
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��������� ������������ As Figure 3 demonstrates, the Customer Distribution section provides a segmentation ofcustomers to demonstrate the diversification of the customer base. Customer segments indi-cate economic sensitivity and margins.
��������� ����� Figure 4, the Consumer Growth graph, provides the total number of customers at the regu-lated utility and the growth over a period of the last five years. Customer growth is an in-dicator of future capital expenditure requirements and the potential for growth in regulatedoperations.
Residential85%
Commercial & Industrial
12%
Public Authorities &
Other3%
450000
455000
460000
465000
470000
475000
480000
485000
490000
1998 1999 2000 2001
Cu
sto
mer
s
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%G
row
th R
ate
Figure 3
Figure 4
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�� ����� !������ The Revenue Sources section depicts segmented revenue streams to provide an idea of thediversification and importance of operating segments to a company.
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For electric utilities, the Consumer Revenue Distribution section visualizes the revenue fromcustomer segments of the regulated utility operations. Customer segments indicate eco-nomic sensitivity and margins.
0%
20%
40%
60%
80%
100%
2001 2002 6M03 3Q03
Electric Rev - KCP&L Electric Rev - Strategic Energy Other
Residential34%
Commercial39%
Wholesale10%
Industrial9%
Subsidiary6%
Other2%
Figure 5
Figure 6
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!������ ��������� The System Generation section shows the nameplate capacity in megawatts and breaksdown the generation mix of the regulated electric utility. System generation mix can beused to determine generation diversification and reliance on fuel types.
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Figure 7 depicts segmented operating income sources to provide an idea of the diversifica-tion and importance of operating segments to a company.
Other16%
Kansas City Power & Light
84%
Coal55%
Gas20%
Nuclear14%
Oil11%
Figure 7
Figure 8
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The Consolidated Debt Maturities graph highlights liquidity concerns by distributing thematuring issues of debt in annual time periods.
$0
$500
$1,000
$1,500
$2,000
$2,500
2004 2005 2006 2007 Beyond
(in
mill
ion
s)
Figure 10
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
4Q02 2Q03 4Q03E 2Q04E 4Q04E
Cap
italiz
atio
n (i
n m
illio
ns)
Long Term Debt Preferred Stock Common Equity
Figure 9
��#����� !�������� The Capital Structure section delineates the type and amount of the company’s sources ofcapital. Included in the capital structure are shareholders’ equity, preferred stock, minorityinterest, and long term debt.
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�%$&��� ��������� The EBITDA Estimate section visualizes quarterly EBITDA from the first quarter of 2001through our forecasts for the fourth quarter of 2004. The Total Debt/EBITDA ratio (usingthe last twelve months of EBITDA) is laid over the top to demonstrate how it changes withEBITDA over time.
$0
$50
$100
$150
$200
$250
1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03E 1Q04E 2Q04E 3Q04E 4Q04E
EB
ITD
A (
mill
ion
s)
0.00x
1.00x
2.00x
3.00x
4.00x
5.00x
6.00x
7.00x
To
tal D
ebt/
EB
ITD
A
EBITDA Total Debt/EBITDA
Figure 11
�� �����'(� ����� The Coverage/Leverage section displays the EBITDA/Interest coverage ratio and the TotalDebt/Capital leverage ratio for the same periods depicted in the EBITDA Estimates graph.
0.00x
2.00x
4.00x
6.00x
8.00x
10.00x
12.00x
1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03E 1Q04E 2Q04E 3Q04E 4Q04E
EB
ITD
A/In
tere
st
40.0%
45.0%
50.0%
55.0%
60.0%
65.0%
To
tal D
ebt/
Cap
ital
EBITDA/Interest Total Debt/Capital
Figure 12
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�������� ������ As shown in Figure 14, the Ratings Ranges section, provides the upper and lower bound ofthe Standard & Poor’s financial targets for each company, taking into account theCompany’s current business risk profile and corporate credit rating. The current and fore-casted ratios appear within the figure.
Figure 14
�������� !����� The Ratings Scales graphically represents the strengths and weaknesses of a credit usingStandard & Poor’s rating scale and credit metrics. The “Current S&P Financial ProfileProxy” graph shows the metrics from the last reported time period (third quarter 2003),and the “2004 Estimated S&P Financial Profile Proxy” shows the metrics at December 31,2004 using our forward forecast.
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FFO/Total Debt
FFO Interest Coverage
Pretax Interest Coverage
Total Debt/Total Capital AA
B
A
BBBB
FFO/Total Debt
FFO Interest Coverage
Pretax Interest Coverage
Total Debt/Total Capital AAA
BBBBB
B
Figure 15
S&P BBB Reported S&P BBB S&P BBB Estimated S&P BBBUpper Range 3Q03 Lower Range Upper Range 2004 Lower Range
FFO/Total Debt31.0% 25.3% 22.0% 31.0% 24.1% 22.0%
FFO Interest Coverage4.5x 5.3x 3.1x 4.5x 4.8x 3.1x
Pretax Interest Coverage4.0x 4.0x 2.6x 4.0x 3.8x 2.6x
Total Debt/Total Capital46.0% 49.5% 53.5% 46.0% 49.2% 53.5%
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Ba1/BB+ (Unsecured)
Electric & Gas Credit Trend: Improving
Performance Metrics Customer Distribution
2002 6M03 9M03 2003E 6M04E 2004E
EBITDA/Interest
High Margin 2.90x 2.99x 2.90xExpected 2.17x 2.89x 2.64x 2.72x 2.57x 2.68xLow Margin 2.41x 2.03x 2.26x
Total Debt/LTM EBITDA
High Margin 4.14x 4.09x 4.08xExpected 5.22x 4.18x 4.81x 4.45x 4.79x 4.56xLow Margin 5.13x 6.39x 5.65x
Return on Equity
High Margin 8.2% 9.5% 8.5%Expected 4.4% 5.4% 5.6% 6.5% 6.0% 6.8%Low Margin 4.0% 1.2% 3.4%
Dividend Payout
High Margin 40.9% 33.5% 37.2%Expected 88.1% 35.7% 64.0% 52.6% 53.3% 47.6%Low Margin 88.6% 281.9% 101.0%
Revenue Sources
Operating Income Sources Customer Growth
System Generation - 1511 MW Customer Growth
Gas Customer Distribution
Residential
89%
Commercial
11%
Other
0%
Electric Customer Distribution
Residential
88%
Commercial
11%
Other
1%
0%
20%
40%
60%
80%
100%
2001 2002 6M03 3Q03
Avista Utilities Energy Mktg and Trading Avista Advantage Other
Electric
290,000
295,000
300,000
305,000
310,000
315,000
320,000
1998 1999 2000 2001 2002
Cu
sto
me
rs
0.00%
0.50%
1.00%
1.50%
2.00%
Gro
wth
Ra
te
Gas
230,000
240,000
250,000
260,000
270,000
280,000
290,000
1998 1999 2000 2001 2002
Cu
sto
me
rs
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
Gro
wth
Ra
te
Themal
36%
Hydroelectric
64%
Avista Utilities
57%
Energy
Marketing and
Trading
43%
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Electric & Gas
EBITDA Estimates
Coverage/Leverage
Ratings Ranges S&P Corporate Credit Rating: BB+
S&P BB Reported S&P BB S&P BB Estimated S&P BBUpper Range 3Q03 Lower Range Upper Range 2004 Lower Range
FFO/Total Debt
20.5% 11.7% 15.0% 20.5% 13.1% 15.0%
FFO Interest Coverage
3.0x 2.4x 2.1x 3.0x 2.4x 2.1x
Pretax Interest Coverage
2.4x 1.7x 1.5x 2.4x 1.8x 1.5x
Total Debt/Total Capital
55.0% 53.9% 62.5% 55.0% 52.7% 62.5%
Ratings Scales
Current S&P Financial Profile Proxy
Total Debt/
Total Capital
FFO/Total Debt
Pretax Interest
Coverage
2004 Estimated S&P Financial Profile Proxy
FFO Interest
Coverage
Total Debt/
Total Capital
FFO/Total Debt
Pretax Interest
Coverage
-2.00x
0.00x
2.00x
4.00x
6.00x
8.00x
10.00x
1Q00
2Q00
3Q00
4Q00
1Q01
2Q01
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
E
1Q04
E
2Q04
E
3Q04
E
4Q04
E
EB
ITD
A/In
tere
st
40.0%
45.0%
50.0%
55.0%
60.0%
65.0%
To
tal D
eb
t/C
ap
ital
EBITDA/Interest Total Debt/Capital
-$20
$0
$20
$40
$60
$80
$100
$120
$140
$160
1Q00
2Q00
3Q00
4Q00
1Q01
2Q01
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
E
1Q04
E
2Q04
E
3Q04
E
4Q04
E
EB
ITD
A (
millio
ns)
0.00x
1.00x
2.00x
3.00x
4.00x
5.00x
6.00x
7.00x
8.00x
9.00x
To
tal D
eb
t/E
BIT
DA
EBITDA Total Debt/EBITDA
AA
A
BBB
BB
B
AA
A
BBB
BB
B
FFO Interest
Coverage
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Avista Corp. is an energy company engaged in the generation, transmission and distribution of energy as well as otherenergy-related businesses. The company is organized into four lines of business – Avista Utilities, Energy Trading andMarketing, Information and Technology, and Other. Avista Capital, a wholly owned subsidiary of Avista Corp., is theparent company of all the subsidiary companies engaged in the non-utility lines of business.
Avista Utilities, an operating division of Avista Corp. and not a separate entity, represents the regulated utility opera-tions. Avista Utilities generates, transmits and distributes electricity in parts of eastern Washington and northern Idaho.Avista Utilities also provides natural gas distribution service in parts of eastern Washington, northern Idaho, northeastand southwest Oregon and in the South Lake Tahoe region of California.
Capital Structure Consolidated Debt Maturities
$0
$100
$200
$300
$400
$500
$600
$700
$800
2004 2005 2006 2007 Beyond
(in
mill
ion
s)
0
500
1,000
1,500
2,000
4Q02 2Q03 4Q03E 2Q04E 4Q04E
Cap
ital
izat
ion
(in
mill
ion
s)
Long Term Debt Preferred Stock Common Equity
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Issuer Ticker Cusip Coupon Maturity Call Date Amount Issued Collateral RatingsAVISTA CORP AVA 05379BAC1 9.750 6/1/2008 400,000,000 SENIOR NOTES Ba1/BB+AVISTA CORP AVA 05379BAE7 7.750 1/1/2007 150,000,000 1ST MORTGAGE Baa3/BBB-AVISTA CAP II AVA 05379HAA2 FLOATER 6/1/2037 6/1/2007 50,000,000 CAPITAL SECURITIES Ba2/BB-AVISTA CORP AVA 05379BAF4 6.125 9/1/2013 45,000,000 1ST MORTGAGE Baa3/BBB-AVISTA CORP AVA 05379BAF4 6.125 8/9/2004 30,000,000 SENIOR NOTES Ba1/BB+
January 2004
Piper Jaffray Fixed Income Research ������������� ����������� | 19
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me
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20
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$2
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$6
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5
-
Inte
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99
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To
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Ass
ets
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04
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ng
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1,1
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98
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9
Pre
ferr
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1,2
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1,0
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97
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29
To
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Cap
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1,5
17
1,7
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2,1
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2,0
41
1,9
39
1,9
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1,8
51
1,8
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1,8
16
1,8
39
1,8
62
1,9
44
1,8
62
Ma
rgin
An
aly
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Oper
atin
g P
rofi
t M
argin
16
.8%
18
.7%
21
.5%
25
.9%
35
.2%
27
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28
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29
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29
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36
.0%
27
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24
.8%
30
.2%
EB
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arg
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7.3
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9.7
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7.7
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2.2
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3.2
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8.8
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%
EB
IT/E
BIT
DA
53
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77
.5%
70
.2%
72
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70
.8%
57
.5%
59
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66
.4%
73
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.0%
58
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64
.5%
66
.7%
Cap
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ue
8.8
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20
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6.4
%7
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11
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9.5
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12
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urn
on
Eq
uit
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/A1
6.4
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1.6
8%
-0.8
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-7.5
8%
1.6
7%
4.3
7%
4.3
7%
5.0
1%
5.3
9%
5.6
3%
1.6
7%
5.6
3%
Co
vera
ge/
Lev
era
ge
To
tal
Deb
t/L
TM
EB
ITD
A7
.68
x3
.65
x5
.75
x5
.92
x7
.00
x6
.12
x5
.22
x5
.22
x4
.83
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.18
x4
.81
x6
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.81
x
EB
ITD
A/I
nte
rest
1.7
2x
3.3
0x
2.4
5x
2.3
7x
2.4
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1.8
4x
1.9
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2.1
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3.0
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2.6
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2.1
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1.9
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2.4
6x
EB
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/In
tere
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x1
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x
EB
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nte
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0.9
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2.5
6x
1.7
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1.7
1x
1.7
1x
1.0
6x
1.1
7x
1.4
4x
2.2
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1.8
8x
1.2
4x
1.2
6x
1.6
4x
Ca
pit
al
Str
uct
ure
To
tal
Deb
t/T
ota
l C
apit
al4
7.1
%5
2.0
%5
9.4
%5
7.8
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5.3
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5.9
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4.3
%5
4.3
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2.8
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3.2
%5
3.9
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5.9
%5
3.9
%
Pre
ferr
ed S
tock
/Cap
ital
26
.9%
7.5
%6
.4%
6.6
%7
.0%
6.9
%7
.2%
7.2
%7
.2%
7.2
%7
.0%
6.9
%7
.0%
To
tal
Deb
t/E
qu
ity
28
5.4
%1
47
.4%
19
2.7
%1
80
.9%
16
5.1
%1
68
.4%
15
9.6
%1
59
.6%
15
0.5
%1
52
.1%
15
5.3
%1
68
.4%
15
5.3
%
ST
Deb
t/T
ota
l D
ebt
0.0
%2
3.7
%5
.5%
3.7
%7
.3%
13
.6%
9.0
%9
.0%
6.6
%8
.8%
9.1
%1
3.6
%9
.1%
Liq
uid
ity
An
aly
sis
Cu
rren
t R
atio
:1
.02
x1
.00
x1
.22
x1
.25
x1
.10
x1
.00
x1
.03
x1
.03
x1
.03
x1
.01
x1
.00
x1
.00
x1
.00
x
Qu
ick
Rat
io:
0.4
9x
0.1
2x
0.6
0x
0.7
2x
0.4
9x
0.5
5x
0.5
4x
0.5
4x
0.5
9x
0.5
3x
0.5
8x
0.5
5x
0.5
8x
Wo
rkin
g C
apit
al:
$2
9$
13
$2
05
$1
88
$8
5$
3$
33
$3
3$
25
$1
2($
1)
$3
($1
)
So
urc
e: C
om
pa
ny
Rep
ort
s, P
iper
Ja
ffra
y
January 2004
20 | ������������� ����������� Piper Jaffray Fixed Income Research
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Baa3/BBB- (Unsecured)
Electric Credit Trend: Declining
Performance Metrics Customer Growth
2002 6M03 9M03 2003E 6M04E 2004E
EBITDA/Interest
High Margin 4.38x 4.58x 4.27xExpected 4.77x 4.02x 4.24x 3.95x 3.95x 3.64xLow Margin 3.53x 3.21x 3.16x
Total Debt/LTM EBITDA
High Margin 3.26x 3.17x 3.01xExpected 4.56x 3.89x 3.31x 3.68x 3.93x 3.85xLow Margin 4.21x 5.17x 4.74x
Return on Equity
High Margin 12.5% 14.1% 13.4%Expected 11.6% 10.5% 11.3% 10.1% 9.9% 9.7%Low Margin 7.6% 5.4% 6.9%
Dividend Payout
High Margin 51.1% 42.6% 41.2%Expected 50.8% 51.9% 50.8% 64.2% 61.2% 59.6%Low Margin 86.6% 117.3% 90.9%
Revenue Sources Customer Revenue Distribution
Operating Income Sources System Generation - 435 MW
Capital Structure Consolidated Debt Maturities
Coal
57%
Gas
41%
Other
2%
Residential
82%
General and
Commercial
18%
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
2004 2005 2006 2007 Beyond
(in
mil
lio
ns)
0%
20%
40%
60%
80%
100%
2001 2002 6M03 3Q03
Electric Utility Power Generation Energy Marketing Other
0
500
1,000
1,500
2,000
4Q02 2Q03 4Q03E 2Q04E 4Q04E
Cap
itali
zati
on
(in
mil
lio
ns)
Long Term Debt Minority Interest
Preferred Stock Common Equity
Electric Utility
31%
Other
7%
Power
Generation
55%
Energy
Marketing
7%
Electric Utility
56,500
57,000
57,500
58,000
58,500
59,000
59,500
60,000
60,500
1998 1999 2000 2001 2002C
us
tom
ers
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
1.60%
1.80%
Gro
wth
Ra
te
January 2004
Piper Jaffray Fixed Income Research ������������� ����������� | 21
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Electric
EBITDA Estimates
Coverage/Leverage
Ratings Ranges S&P Corporate Credit Rating: BBB-
S&P BBB Reported S&P BBB S&P BBB Estimated S&P BBBUpper Range 3Q03 Lower Range Upper Range 2004 Lower Range
FFO/Total Debt
36.5% 29.8% 24.5% 36.5% 17.3% 24.5%
FFO Interest Coverage
5.1x 5.3x 3.3x 5.1x 3.2x 3.3x
Pretax Interest Coverage
4.7x 2.8x 2.8x 4.7x 2.4x 2.8x
Total Debt/Total Capital
45.0% 52.3% 52.5% 45.0% 57.5% 52.5%
Ratings Scales
Current S&P Financial Profile Proxy
Total Debt/
Total Capital
FFO/Total Debt
FFO Interest
Coverage
Pretax Interest
Coverage
2004 Estimated S&P Financial Profile Proxy
Total Debt/
Total Capital
FFO/Total Debt
FFO Interest
Coverage
Pretax Interest
Coverage
0.00x
1.00x
2.00x
3.00x
4.00x
5.00x
6.00x
7.00x
8.00x
1Q00
2Q00
3Q00
4Q00
1Q01
2Q01
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
E
1Q04
E
2Q04
E
3Q04
E
4Q04
E
EB
ITD
A/In
tere
st
40.0%
45.0%
50.0%
55.0%
60.0%
65.0%
To
tal D
eb
t/C
ap
ital
EBITDA/Interest Total Debt/Capital
$0
$10
$20
$30
$40
$50
$60
$70
$80
1Q00
2Q00
3Q00
4Q00
1Q01
2Q01
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
E
1Q04
E
2Q04
E
3Q04
E
4Q04
E
EB
ITD
A (
millio
ns)
0.00x
1.00x
2.00x
3.00x
4.00x
5.00x
6.00x
7.00x
To
tal D
eb
t/E
BIT
DA
EBITDA Total Debt/EBITDA
BB
B
BBB
A
AA AA
A
BBB
BB
B
January 2004
22 | ������������� ����������� Piper Jaffray Fixed Income Research
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Black Hills is a diversified energy holding company with regulated and unregulated operations. The Company’s inte-grated energy group produces and markets power and fuel and transports crude oil. The company produces and sellselectricity primarily in the western United States. It also produces coal, natural gas, and crude oil primarily in theRocky Mountain region, and markets fuel products primarily in the Rocky Mountain, western, and mid-continent re-gions of the United States and in Western Canada. The Company’s regulated electric utility, Black Hills Power, is en-gaged in the generation, transmission, and distribution of electricity. It serves approximately 60,000 electric customers,in a service area covering a 9,300 square mile area of western South Dakota, eastern Wyoming, and southeastern Mon-tana. Over 90 percent of the electric revenues are generated in South Dakota. The Company’s communications groupoffers broadband communication services to residential and business customers in Rapid City and the northern BlackHills region of South Dakota.
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Issuer Ticker Cusip Coupon Maturity Call Date Amount Issued Collateral RatingsBLACK HILLS CORP BKH 092113AE9 6.500 5/15/2013 250,000,000 SENIOR NOTES Baa3/BBB-BLACK HILLS POWER INC BKH 092114AA5 7.230 8/15/2032 75,000,000 1ST MORTGAGE Baa1/BBBBLACK HILLS CORP BKH 092113AA7 8.300 9/1/2024 9/1/2004 45,000,000 1ST MORTGAGE Baa1/BBBBLACK HILLS CORP BKH 092113D@5 9.350 5/29/2021 5/29/2010 35,000,000 1ST MORTGAGE NA/BBBBLACK HILLS CORP BKH 092113AB5 8.060 2/1/2010 30,000,000 1ST MORTGAGE Baa1/BBB
January 2004
Piper Jaffray Fixed Income Research ������������� ����������� | 23
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($ i
n m
illi
ons)
Ye
ar
en
de
d D
ece
mb
er
31
Inco
me
Sta
tem
ent
Su
mm
ary
1999
2000
2001
1Q
02
2Q
02
3Q
02
4Q
02
2002
1Q
03
2Q
03
3Q
03
LT
M 3
Q02
LT
M 3
Q03
Rev
enues
$792
$999
$1,1
46
$171
$261
$240
$673
$1,3
26
$299
$300
$297
$1,4
34
$1,5
50
EB
ITD
A87
128
209
47
49
50
66
198
59
59
62
158
233
EB
IT62
95
155
31
31
33
44
128
39
38
42
95
152
Net
Inco
me
37
53
88
14
14
17
16
61
14
17
22
50
69
Fre
e C
ash
Flo
w S
um
mary
EB
ITD
A:
$87
$128
$209
$47
$49
$50
$66
$198
$59
$59
$62
$158
$233
-
Inte
rest
Expen
se15
30
40
10
11
817
41
14
15
14
35
56
-
Div
iden
ds
23
24
29
88
88
31
810
10
31
35
-
Cap
ital
Exp.
102
135
378
58
52
65
58
233
25
22
31
112
136
Fre
e C
ash F
low
(53)
(61)
(238)
(28)
(22)
(32)
(17)
(108)
12
13
8(2
0)
6
Bala
nce
Sh
eet
Su
mm
ary
Cas
h &
Short
Ter
m I
nves
t.$24
$27
$34
$69
$54
$70
$76
$76
$69
$81
$271
$70
$271
Tota
l A
sset
s668
1,3
20
1,6
62
1,7
77
1,8
43
1,9
13
2,0
35
2,0
35
2,1
26
2,0
96
1,9
92
1,9
13
1,9
92
Short
Ter
m D
ebt
99
226
396
431
443
401
356
356
361
26
18
401
18
Long T
erm
Deb
t161
307
416
465
476
473
541
541
617
825
747
473
747
Pre
ferr
ed S
tock
04
66
66
66
66
66
6
Tota
l D
ebt
260
537
818
902
924
880
902
902
984
857
771
880
771
Tota
l N
et D
ebt
236
510
784
833
870
810
826
826
914
776
500
810
500
Shar
ehold
ers'
Equit
y217
316
529
541
546
540
530
530
556
681
693
540
693
Tota
l C
apit
al476
853
1,3
47
1,4
43
1,4
70
1,4
19
1,4
32
1,4
32
1,5
40
1,5
38
1,4
64
1,4
19
1,4
64
Marg
in A
naly
sis
Oper
atin
g P
rofi
t M
argin
12.6
%14.3
%20.2
%31.4
%20.9
%23.0
%10.2
%16.4
%22.4
%22.6
%23.2
%12.6
%16.7
%
EB
ITD
A M
argin
11.0
%12.8
%18.2
%27.7
%18.7
%20.7
%9.8
%14.9
%19.8
%19.8
%21.0
%11.0
%15.0
%
EB
IT/E
BIT
DA
71.2
%74.4
%74.2
%66.4
%63.1
%67.3
%66.4
%64.7
%65.4
%64.2
%67.7
%60.2
%65.1
%
Cap
ex/R
even
ue
12.9
%13.5
%33.0
%33.8
%20.0
%27.2
%8.6
%17.6
%8.4
%7.3
%10.4
%7.8
%8.8
%
Ret
urn
on E
quit
yN
/A19.8
3%
20.8
4%
16.0
5%
9.1
8%
9.4
0%
11.6
1%
11.6
1%
11.2
2%
10.5
0%
11.2
6%
9.4
0%
11.2
6%
Cove
rage/
Lev
erage
Tota
l D
ebt/
LT
M E
BIT
DA
2.9
9x
4.2
1x
3.9
2x
4.9
4x
5.9
0x
5.5
7x
4.5
6x
4.5
6x
4.6
9x
3.8
9x
3.3
1x
5.5
7x
3.3
1x
EB
ITD
A/I
nte
rest
5.6
2x
4.2
2x
5.2
2x
4.8
8x
4.6
0x
6.1
2x
3.8
9x
4.7
7x
4.1
9x
3.8
7x
4.5
2x
4.5
3x
4.1
3x
EB
ITD
A-C
AP
EX
/Inte
rest
-0.9
9x
-0.2
4x
-4.2
4x
-1.0
9x
-0.3
2x
-1.9
3x
0.4
7x
-0.8
5x
2.4
1x
2.4
5x
2.2
8x
1.3
2x
1.7
2x
EB
IT/I
nte
rest
4.0
0x
3.1
4x
3.8
7x
3.2
4x
2.9
1x
4.1
2x
2.5
8x
3.0
9x
2.7
4x
2.4
8x
3.0
6x
2.7
3x
2.6
9x
Capit
al
Str
uct
ure
Tota
l D
ebt/
Tota
l C
apit
al54.5
%62.5
%60.3
%62.1
%62.5
%61.6
%62.6
%62.6
%63.5
%55.4
%52.3
%61.6
%52.3
%
Pre
ferr
ed S
tock
/Cap
ital
0.0
%0.5
%0.4
%0.4
%0.4
%0.4
%0.4
%0.4
%0.4
%0.4
%0.4
%0.4
%0.4
%
Tota
l D
ebt/
Equit
y119.9
%169.7
%154.5
%166.6
%169.2
%163.1
%170.4
%170.4
%176.9
%125.9
%111.2
%163.1
%111.2
%
ST
Deb
t/T
ota
l D
ebt
38.1
%42.0
%48.5
%47.8
%47.9
%45.6
%39.4
%39.4
%36.7
%3.0
%2.3
%45.6
%2.3
%
Liq
uid
ity
An
aly
sis
Curr
ent
Rat
io:
0.8
9x
0.7
2x
0.3
9x
0.4
2x
0.4
4x
0.6
7x
0.7
4x
0.7
4x
0.5
7x
1.0
5x
1.4
1x
0.6
7x
1.4
1x
Quic
k R
atio
:0.7
8x
0.5
6x
0.2
4x
0.3
2x
0.3
0x
0.3
0x
0.3
7x
0.3
7x
0.4
8x
0.8
6x
1.1
9x
0.3
0x
1.1
9x
Work
ing C
apit
al:
($24)
($167)
($357)
($371)
($383)
($247)
($196)
($196)
($321)
$20
$161
($247)
$161
So
urc
e: C
om
pa
ny
Rep
ort
s, P
iper
Ja
ffra
y
January 2004
24 | ������������� ����������� Piper Jaffray Fixed Income Research
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Baa3/BBB- (FMB)
Electric Credit Trend: Improving
Performance Metrics Customer Growth
2002 6M03 9M03 2003E 6M04E 2004E
EBITDA/Interest
High Margin 4.04x 4.68x 4.77xExpected 3.70x 3.33x 4.19x 3.96x 4.30x 4.41xLow Margin 3.82x 3.59x 4.06x
Total Debt/LTM EBITDA
High Margin 3.36x 2.82x 2.83xExpected 3.13x 3.40x 3.44x 3.43x 3.03x 3.14xLow Margin 3.56x 3.54x 3.73x
Return on Equity
High Margin 13.2% 8.0% 9.2%Expected 6.4% 12.1% 10.0% 12.7% 6.3% 7.0%Low Margin 11.7% 3.4% 5.4%
Dividend Payout
High Margin 0% 0% 0%Expected 0% 0% 0% 0% 0% 0%Low Margin 0% 0% 0%
Revenue Sources Customer Revenue Distribution
Operating Income Sources System Generation - 1500 MW
Capital Structure Consolidated Debt Maturities
$0
$50
$100
$150
$200
$250
2004 2005 2006 Beyond
(in
mil
lio
ns)
0%
20%
40%
60%
80%
100%
2001 2002 6M03 3Q03
Electric Utility
0
200
400
600
800
1,000
1,200
4Q02 2Q03 4Q03E 2Q04E 4Q04E
Cap
italizati
on
(in
millio
ns)
Long Term Debt Common Equity
Electric Utility
275,000
280,000
285,000
290,000
295,000
300,000
305,000
310,000
315,000
320,000
1998 1999 2000 2001 2002C
us
tom
ers
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
Gro
wth
Ra
te
Electric Utility
100%
Total Retail
85%
Other
1%
Total
Wholesale
14%
Coal
7%
Natural
Gas/Oil
53%
Nuclear
40%
January 2004
Piper Jaffray Fixed Income Research ������������� ����������� | 25
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Electric
EBITDA Estimates
Coverage/Leverage
Ratings Ranges S&P Corporate Credit Rating: BBB-
S&P BBB Reported S&P BBB S&P BBB Estimated S&P BBBUpper Range 3Q03 Lower Range Upper Range 2004 Lower Range
FFO/Total Debt
31.0% 20.5% 22.0% 31.0% 19.9% 22.0%
FFO Interest Coverage
4.5x 3.8x 3.1x 4.5x 4.0x 3.1x
Pretax Interest Coverage
4.0x 1.9x 2.6x 4.0x 2.3x 2.6x
Total Debt/Total Capital
46.0% 55.7% 53.5% 46.0% 51.2% 53.5%
Ratings Scales
Current S&P Financial Profile Proxy
Pretax Interest
Coverage
FFO Interest
Coverage
FFO/Total Debt
Total Debt/
Total Capital
2004 Estimated S&P Financial Profile Proxy
Pretax Interest
Coverage
FFO Interest
Coverage
FFO/Total Debt
Total Debt/
Total Capital
0.00x0.50x1.00x1.50x2.00x2.50x3.00x3.50x4.00x4.50x
1Q00
2Q00
3Q00
4Q00
1Q01
2Q01
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
E
1Q04
E2Q
04E
3Q04
E
4Q04
E
EB
ITD
A/In
tere
st
40.0%
45.0%
50.0%
55.0%
60.0%
65.0%
70.0%
To
tal D
eb
t/C
ap
ital
EBITDA/Interest Total Debt/Capital
$0$10$20$30$40$50$60$70$80$90
1Q00
2Q00
3Q00
4Q00
1Q01
2Q01
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
E
1Q04
E
2Q04
E
3Q04
E
4Q04
E
EB
ITD
A (
millio
ns)
0.00x
0.50x
1.00x
1.50x
2.00x
2.50x
3.00x
3.50x
4.00x
To
tal D
eb
t/E
BIT
DA
EBITDA Total Debt/EBITDA
AA
A
BBB
BB
B
AA
A
BBB
BB
B
January 2004
26 | ������������� ����������� Piper Jaffray Fixed Income Research
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El Paso Electric Company is a public utility engaged in the generation, transmission and distribution of electricity in anarea of approximately 10,000 square miles in west Texas and southern New Mexico. The Company also serves whole-sale customers in the states of Texas and New Mexico and in the Republic of Mexico. The Company owns or hassignificant ownership interests in six electrical generating facilities providing it with a total capacity of 1,500 MW.
The Company serves approximately 316,000 residential, commercial, industrial and wholesale customers. TheCompany distributes electricity to retail customers principally in El Paso, Texas and Las Cruces, New Mexico (repre-senting approximately 57% and 8%, respectively, of the Company’s electric utility operating revenues for the yearended December 31, 2002).
Issuer Ticker Cusip Coupon Maturity Call Date Amount Issued Collateral RatingsEL PASO ELECTRIC CO EE 283677AT9 8.900 2/1/2006 236,000,000 1ST MORTGAGE Baa3/BBB-EL PASO ELECTRIC CO EE 283677AU6 9.400 5/1/2011 2/1/2006 285,900,000 1ST MORTGAGE Baa3/BBB-
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January 2004
Piper Jaffray Fixed Income Research ������������� ����������� | 27
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($ i
n m
illi
ons)
Ye
ar
en
de
d D
ece
mb
er
31
Inco
me
Sta
tem
ent
Su
mm
ary
1999
2000
2001
1Q
02
2Q
02
3Q
02
4Q
02
2002
1Q
03
2Q
03
3Q
03
LT
M 3
Q02
LT
M 3
Q03
Rev
enues
$5
68
$6
96
$7
55
$1
48
$1
80
$2
05
$1
53
$6
86
$1
47
$1
62
$1
97
$6
83
$6
60
EB
ITD
A2
50
25
82
57
50
58
71
37
21
63
74
16
82
27
18
3
EB
IT1
57
16
91
68
27
35
48
15
12
61
61
94
61
36
96
Net
Inco
me
40
58
64
61
22
0(9
)2
94
25
11
46
49
Fre
e C
ash
Flo
w S
um
mary
EB
ITD
A:
$2
50
$2
58
$2
57
$5
0$
58
$7
1$
37
$2
16
$3
7$
41
$6
8$
22
7$
18
3
-
Inte
rest
Expen
se9
37
16
61
51
41
41
55
81
21
21
15
95
0
-
Div
iden
ds
00
00
00
00
00
00
0
-
Cap
ital
Exp.
52
65
71
16
17
16
17
65
13
20
17
68
66
Fre
e C
ash F
low
10
51
22
12
01
92
74
16
92
12
10
40
10
06
7
Bala
nce
Sh
eet
Su
mm
ary
Cas
h &
Sh
ort
Ter
m I
nv
est.
$3
7$
11
$2
8$
25
$3
2$
62
$7
5$
75
$4
4$
33
$3
1$
62
$3
1
To
tal
Ass
ets
1,6
26
1,6
60
1,6
44
1,6
23
1,6
34
1,6
54
1,6
47
1,6
47
1,5
79
1,5
86
1,5
85
1,6
54
1,5
85
Sh
ort
Ter
m D
ebt
27
58
90
13
36
16
16
16
12
22
22
26
12
2
Lo
ng
Ter
m D
ebt
81
27
40
61
95
45
61
66
15
61
46
14
61
26
12
60
86
15
60
8
Pre
ferr
ed S
tock
00
00
00
00
00
00
0
To
tal
Deb
t8
39
79
87
10
67
86
77
67
66
75
67
56
34
63
46
30
67
66
30
To
tal
Net
Deb
t8
01
78
76
82
65
36
45
61
46
00
60
05
90
60
15
99
61
45
99
Sh
areh
old
ers'
Eq
uit
y4
21
41
24
50
45
84
63
47
94
57
45
74
94
49
05
02
47
95
02
To
tal
Cap
ital
1,2
60
1,2
10
1,1
60
1,1
35
1,1
39
1,1
55
1,1
32
1,1
32
1,1
27
1,1
24
1,1
33
1,1
55
1,1
33
Marg
in A
naly
sis
Oper
atin
g P
rofi
t M
argin
51
.3%
43
.2%
39
.8%
41
.0%
38
.4%
40
.1%
30
.6%
37
.8%
32
.6%
32
.1%
40
.5%
40
.1%
34
.4%
EB
ITD
A M
argin
44
.0%
37
.0%
34
.1%
33
.6%
32
.2%
34
.6%
24
.4%
31
.5%
25
.0%
25
.3%
34
.5%
33
.2%
27
.8%
EB
IT/E
BIT
DA
62
.9%
65
.6%
65
.2%
54
.5%
61
.2%
68
.0%
41
.3%
58
.5%
42
.1%
47
.0%
67
.8%
60
.2%
52
.6%
Cap
ex/R
even
ue
9.1
%9
.3%
9.4
%1
0.6
%9
.2%
7.7
%1
1.1
%9
.5%
8.7
%1
2.3
%8
.5%
9.9
%1
0.1
%
Ret
urn
on E
quit
yN
/A1
4.0
1%
14
.77
%1
1.5
9%
11
.35
%9
.93
%6
.39
%6
.39
%1
3.6
4%
12
.08
%1
0.0
5%
9.9
3%
10
.05
%
Cove
rage/
Lev
erage
To
tal
Deb
t/L
TM
EB
ITD
A3
.36
x3
.10
x2
.76
x2
.86
x2
.86
x2
.98
x3
.13
x3
.13
x3
.12
x3
.40
x3
.44
x2
.98
x3
.44
x
EB
ITD
A/I
nte
rest
2.6
8x
3.6
2x
3.8
8x
3.3
2x
4.0
4x
4.9
6x
2.5
3x
3.7
0x
3.1
1x
3.5
6x
5.9
5x
3.8
3x
3.7
0x
EB
ITD
A-C
AP
EX
/In
tere
st2
.12
x2
.71
x2
.82
x2
.27
x2
.88
x3
.85
x1
.38
x2
.58
x2
.03
x1
.83
x4
.48
x2
.69
x2
.36
x
EB
IT/I
nte
rest
1.6
9x
2.3
8x
2.5
3x
1.8
1x
2.4
7x
3.3
7x
1.0
4x
2.1
6x
1.3
1x
1.6
7x
4.0
4x
2.3
1x
1.9
4x
Capit
al
Str
uct
ure
To
tal
Deb
t/T
ota
l C
apit
al6
6.6
%6
5.9
%6
1.2
%5
9.7
%5
9.4
%5
8.6
%5
9.7
%5
9.7
%5
6.2
%5
6.4
%5
5.7
%5
8.6
%5
5.7
%
Pre
ferr
ed S
tock
/Cap
ital
0.0
%0
.0%
0.0
%0
.0%
0.0
%0
.0%
0.0
%0
.0%
0.0
%0
.0%
0.0
%0
.0%
0.0
%
To
tal
Deb
t/E
qu
ity
19
9.1
%1
93
.6%
15
7.6
%1
48
.1%
14
6.2
%1
41
.3%
14
7.9
%1
47
.9%
12
8.4
%1
29
.2%
12
5.5
%1
41
.3%
12
5.5
%
ST
Deb
t/T
ota
l D
ebt
3.2
%7
.2%
12
.7%
19
.6%
9.0
%9
.1%
9.0
%9
.0%
3.4
%3
.5%
3.5
%9
.1%
3.5
%
Liq
uid
ity
An
aly
sis
Cu
rren
t R
atio
:1
.16
x1
.40
x1
.21
x0
.92
x1
.50
x1
.58
x1
.37
x1
.37
x1
.56
x1
.48
x1
.87
x1
.58
x1
.87
x
Qu
ick
Rat
io:
0.8
6x
0.6
7x
0.6
1x
0.4
6x
0.8
0x
1.0
3x
0.9
1x
0.9
1x
0.9
0x
0.8
5x
0.9
9x
1.0
3x
0.9
9x
Wo
rkin
g C
apit
al:
$1
8$
58
$3
5($
17
)$
68
$8
1$
57
$5
7$
66
$6
0$
96
$8
1$
96
So
urc
e: C
om
pa
ny
Rep
ort
s, P
iper
Ja
ffra
y
January 2004
28 | ������������� ����������� Piper Jaffray Fixed Income Research
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KCP&L: A3/BBB (Unsecured)
Electric Credit Trend: Declining
Performance Metrics Customer Growth
2002 6M03 9M03 2003E 6M04E 2004E
EBITDA/Interest
High Margin 6.45x 4.69x 5.92xExpected 4.88x 4.98x 6.75x 6.15x 4.51x 5.57xLow Margin 5.96x 4.34x 5.32x
Total Debt/LTM EBITDA
High Margin 2.67x 2.74x 2.90xExpected 3.14x 2.95x 2.71x 2.83x 3.00x 3.20xLow Margin 2.94x 3.20x 3.45x
Return on Equity
High Margin 19.1% 17.7% 15.9%Expected 14.7% 18.9% 19.5% 17.6% 15.8% 14.4%Low Margin 16.7% 14.5% 13.6%
Dividend Payout
High Margin 63.0% 67.3% 71.9%Expected 86.3% 71.0% 66.6% 69.1% 76.9% 81.2%Low Margin 73.4% 84.8% 89.4%
Revenue Sources Customer Revenue Distribution
Operating Income Sources System Generation - 4043 MW
Capital Structure Consolidated Debt Maturities
Coal
55%
Gas
20%
Oil
11%
Nuclear
14%
$0
$100
$200
$300
$400
$500
2004 2005 2006 2007 Beyond
(in
millio
ns
)
0%
20%
40%
60%
80%
100%
2001 2002 6M03 3Q03
Electric Rev - KCP&L Electric Rev - Strategic Energy Other
0
500
1,000
1,500
2,000
2,500
4Q02 2Q03 4Q03E 2Q04E 4Q04E
Cap
itali
zati
on
(in
mil
lio
ns)
Long Term Debt Preferred Stock Common Equity
Electric Utility
430,000
440,000
450,000
460,000
470,000
480,000
490,000
1998 1999 2000 2001 2002C
us
tom
ers
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
Gro
wth
Ra
te
Other
16%
Kansas City
Power & Light
84%
Residential
34%
Commercial
39%
Wholesale
10%
Other
2%
Subsidiary
6%
Industrial
9%
January 2004
Piper Jaffray Fixed Income Research ������������� ����������� | 29
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Electric
EBITDA Estimates
Coverage/Leverage
Ratings Ranges S&P Corporate Credit Rating: BBB
S&P BBB Reported S&P BBB S&P BBB Estimated S&P BBBUpper Range 3Q03 Lower Range Upper Range 2004 Lower Range
FFO/Total Debt
31.0% 25.3% 22.0% 31.0% 24.1% 22.0%
FFO Interest Coverage
4.5x 5.3x 3.1x 4.5x 4.8x 3.1x
Pretax Interest Coverage
4.0x 4.0x 2.6x 4.0x 3.8x 2.6x
Total Debt/Total Capital
46.0% 49.5% 53.5% 46.0% 49.2% 53.5%
Ratings Scales
Current S&P Financial Profile Proxy
Total Debt/
Total Capital
FFO Interest
Coverage
FFO/Total Debt
Pretax Interest
Coverage
2004 Estimated S&P Financial Profile Proxy
0.00x
2.00x
4.00x
6.00x
8.00x
10.00x
12.00x
1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03E 1Q04E 2Q04E 3Q04E 4Q04E
EB
ITD
A/In
tere
st
40.0%
45.0%
50.0%
55.0%
60.0%
65.0%
To
tal D
eb
t/C
ap
ital
EBITDA/Interest Total Debt/Capital
$0
$50
$100
$150
$200
$250
1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03E 1Q04E 2Q04E 3Q04E 4Q04E
EB
ITD
A (
millio
ns)
0.00x
1.00x
2.00x
3.00x
4.00x
5.00x
6.00x
7.00x
To
tal D
eb
t/E
BIT
DA
EBITDA Total Debt/EBITDA
AA
A
BBB
BB
B
AA
A
BBB
BB
B
Total Debt/
Total Capital
FFO/Total Debt
FFO Interest
Coverage
Pretax Interest
Coverage
January 2004
30 | ������������� ����������� Piper Jaffray Fixed Income Research
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Great Plains Energy Inc. is a public utility holding company for its primary direct subsidiaries, Kansas City Power &Light, Strategic Energy, LLC and KLT Gas Inc. KCP&L is an integrated electric utility and a regulated provider of elec-tricity in the Midwest, serving approximately 485,000 retail customers in 24 counties of western Missouri and easternKansas. Strategic Energy, LLC (SEL) is an energy management company providing electricity load aggregation andpower supply coordination services nationally in markets offering retail choice. SEL manages electricity procurementfor commercial, institutional and government customers in California, Ohio, Pennsylvania, Michigan, New York, Mas-sachusetts and Texas. KLT Gas Inc. specializes in the acquisition and development of unconventional natural gas prop-erties, primarily coalbed methane. It focuses on extracting methane that is trapped in underground coal, exploring anddrilling wells to demonstrate production and reserve value.
Issuer Ticker Cusip Coupon Maturity Call Date Amount Issued Collateral RatingsKANSAS CITY POWER & LT GXP 485134BB5 7.125 12/15/2005 250,000,000 SENIOR NOTES A3/BBBKANSAS CITY POWER & LT GXP 485134BE9 6.000 3/15/2007 225,000,000 SENIOR NOTES A3/BBBKANSAS CITY POWER & LT GXP 485134BC3 6.500 11/15/2011 150,000,000 SENIOR NOTES A3/BBBKANSAS CITY POWER & LT GXP 48513HBE0 7.350 8/3/2004 20,500,000 1ST MORTGAGE A2/BBBKANSAS CITY POWER & LT GXP 48513HBC4 7.850 7/2/2004 7,500,000 1ST MORTGAGE A2/BBB
January 2004
Piper Jaffray Fixed Income Research ������������� ����������� | 31
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($ in m
illio
ns)
Ye
ar
en
de
d D
ece
mb
er
31
Inco
me
Sta
tem
ent
Su
mm
ary
20
00
20
01
1Q
02
2Q
02
3Q
02
4Q
02
20
02
1Q
03
2Q
03
3Q
03
LT
M 3
Q0
2L
TM
3Q
03
Rev
enu
es$1,1
16
$1,4
62
$359
$449
$569
$498
$1,8
62
$477
$503
$661
$1,7
18
$2,1
27
EB
ITD
A326
387
53
115
173
102
443
93
105
200
419
500
EB
IT193
229
15
78
136
61
292
57
69
164
266
352
Net
In
com
e159
(24)
(6)
36
69
27
126
15
51
84
(30)
176
Fre
e C
ash
Flo
w S
um
ma
ry
EB
ITD
A:
$326
$387
$53
$115
$173
$102
$443
$93
$105
$200
$419
$500
-
Inte
rest
Ex
pen
se77
105
21
24
23
24
91
20
20
19
92
83
-
Div
iden
ds
104
104
26
26
29
29
107
29
29
29
104
117
-
Cap
ital
Ex
p.
401
262
37
37
37
32
131
29
50
29
206
141
Fre
e C
ash
Flo
w(2
57)
(84)
(31)
29
85
17
114
14
6122
16
160
Ba
lan
ce S
hee
t S
um
ma
ry
Cas
h &
Sh
ort
Ter
m I
nv
est.
$35
$29
$23
$31
$25
$65
$65
$166
$166
$167
$25
$167
To
tal
Ass
ets
3,2
94
3,4
63
3,5
06
3,5
55
3,4
99
3,5
07
3,5
07
3,5
89
3,6
22
3,6
38
3,4
99
3,6
38
Sh
ort
Ter
m D
ebt
327
623
430
517
256
235
235
261
239
255
256
255
Lo
ng
Ter
m D
ebt
864
779
1,0
03
975
1,1
25
968
968
975
968
911
1,1
25
911
Pre
ferr
ed S
tock
189
189
189
189
189
189
189
189
189
189
189
189
To
tal
Deb
t1,3
80
1,5
90
1,6
23
1,6
81
1,5
70
1,3
92
1,3
92
1,4
24
1,3
95
1,3
55
1,5
70
1,3
55
To
tal
Net
Deb
t1,3
45
1,5
61
1,5
99
1,6
50
1,5
45
1,3
27
1,3
27
1,2
59
1,2
29
1,1
88
1,5
45
1,1
88
Sh
areh
old
ers'
Eq
uit
y921
779
756
764
808
939
939
928
946
999
808
999
To
tal
Cap
ital
2,3
02
2,3
69
2,3
78
2,4
45
2,3
78
2,3
32
2,3
32
2,3
53
2,3
42
2,3
53
2,3
78
2,3
53
Ma
rgin
An
aly
sis
Op
erat
ing
Pro
fit
Mar
gin
37.4
%33.2
%21.1
%30.6
%35.6
%25.5
%29.1
%24.7
%25.5
%34.6
%30.1
%28.3
%
EB
ITD
A M
arg
in29.2
%26.5
%14.7
%25.6
%30.5
%20.5
%23.8
%19.4
%20.8
%30.3
%24.4
%23.5
%
EB
IT/E
BIT
DA
59.3
%59.0
%29.0
%68.0
%78.6
%59.9
%65.8
%61.1
%66.1
%82.1
%63.6
%70.4
%
Cap
ex/R
even
ue
35.9
%17.9
%10.2
%8.2
%6.4
%6.5
%7.0
%6.1
%10.0
%4.4
%12.0
%6.6
%
Ret
urn
on
Eq
uit
yN
/A-2
.84%
-5.1
3%
-5.1
7%
-3.4
4%
14.6
9%
14.6
9%
17.4
2%
18.8
9%
19.5
4%
-3.4
4%
19.5
4%
Co
vera
ge/
Lev
era
ge
To
tal
Deb
t/L
TM
EB
ITD
A4.2
4x
4.1
0x
4.0
8x
4.0
3x
3.7
5x
3.1
4x
3.1
4x
2.9
5x
2.9
5x
2.7
1x
3.7
5x
2.7
1x
EB
ITD
A/I
nte
rest
4.2
1x
3.6
9x
2.4
9x
4.8
8x
7.5
8x
4.3
4x
4.8
8x
4.5
6x
5.2
9x
10.3
9x
4.5
3x
6.0
6x
EB
ITD
A-C
AP
EX
/In
tere
st-0
.98x
1.1
9x
0.7
6x
3.3
2x
5.9
8x
2.9
7x
3.4
4x
3.1
2x
2.7
5x
8.8
7x
2.3
0x
4.3
5x
EB
IT/I
nte
rest
2.5
0x
2.1
8x
0.7
2x
3.3
2x
5.9
6x
2.6
0x
3.2
1x
2.7
9x
3.4
9x
8.5
3x
2.8
8x
4.2
7x
Ca
pit
al
Str
uct
ure
To
tal
Deb
t/T
ota
l C
apit
al51.8
%59.1
%60.3
%61.0
%58.1
%51.6
%51.6
%52.5
%51.5
%49.5
%58.1
%49.5
%
Pre
ferr
ed S
tock
/Cap
ital
8.2
%8.0
%7.9
%7.7
%7.9
%8.1
%8.1
%8.0
%8.1
%8.0
%7.9
%8.0
%
To
tal
Deb
t/E
qu
ity
149.8
%204.2
%214.7
%220.1
%194.3
%148.2
%148.2
%153.4
%147.4
%135.7
%194.3
%135.7
%
ST
Deb
t/T
ota
l D
ebt
23.7
%39.2
%26.5
%30.8
%16.3
%16.9
%16.9
%18.3
%17.1
%18.8
%16.3
%18.8
%
Liq
uid
ity
An
aly
sis
Cu
rren
t R
atio
:0.4
5x
0.3
4x
0.4
5x
0.4
9x
0.6
3x
0.7
1x
0.7
1x
0.7
2x
0.7
9x
0.8
9x
0.6
3x
0.8
9x
Qu
ick
Rat
io:
0.2
7x
0.2
0x
0.2
5x
0.3
2x
0.4
8x
0.4
8x
0.4
8x
0.5
6x
0.6
0x
0.7
3x
0.4
8x
0.7
3x
Wo
rkin
g C
apit
al:
($306)
($590)
($399)
($406)
($200)
($158)
($158)
($169)
($134)
($68)
($200)
($68)
So
urc
e: C
om
pa
ny
Rep
ort
s, P
iper
Ja
ffra
y
January 2004
32 | ������������� ����������� Piper Jaffray Fixed Income Research
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Ka
ns
as
Cit
y P
ow
er
& L
igh
t
($ i
n m
illi
ons)
Year
ended D
ecem
ber
31
Inco
me
Sta
tem
ent
Su
mm
ary
19
99
20
00
20
01
1Q
02
2Q
02
3Q
02
4Q
02
20
02
1Q
03
2Q
03
3Q
03
LT
M 3
Q0
2L
TM
3Q
03
Rev
enu
e$921
$1,1
16
$1,3
51
$212
$264
$351
$243
$1,0
71
$247
$248
$351
$1,0
72
$1,0
77
EB
ITD
A310
326
386
43
104
162
87
397
77
89
183
386
437
EB
IT187
193
233
767
125
0249
42
54
148
239
295
Net
In
com
e78
157
119
(8)
27
62
17
96
12
14
78
94
131
Fre
e C
ash
Flo
w S
um
ma
ry
EB
ITD
A:
$310
$326
$386
$43
$104
$162
$87
$397
$77
$89
$183
$386
$437
-
Inte
rest
Ex
pen
se72
77
99
19
22
21
20
82
18
18
18
81
73
-
Div
iden
ds
107
104
104
26
10
57
13
106
13
20
65
118
111
-
Cap
ital
Ex
pen
dit
ure
s181
401
262
37
30
33
32
132
29
50
29
207
141
Fre
e C
ash
Flo
w
($49)
($257)
($79)
($38)
$42
$52
$21
$77
$17
$1
$72
($20)
$112
Ba
lan
ce S
hee
t S
um
ma
ry
Cas
h$13
$35
$1
$1
$1
$2
$0
$0
$16
$1
$51
$2
$51
Tota
l A
sset
s2,9
90
3,2
94
3,1
46
3,1
73
3,1
80
3,1
71
3,1
39
3,1
39
3,1
64
3,1
67
3,2
23
3,1
71
3,2
23
Short
Ter
m D
ebt
368
327
487
259
316
104
230
230
128
126
161
104
161
Long T
erm
Deb
t686
864
759
984
964
1,1
14
964
964
964
961
904
1,1
14
904
Pre
ferr
ed S
tock
189
189
150
150
150
150
150
150
150
150
150
150
150
Tota
l D
ebt
1,2
43
1,3
80
1,3
96
1,3
92
1,4
30
1,3
68
1,3
44
1,3
44
1,2
42
1,2
37
1,2
15
1,3
68
1,2
15
Tota
l N
et D
ebt
1,2
29
1,3
45
1,3
95
1,3
92
1,4
28
1,3
66
1,3
43
1,3
43
1,2
26
1,2
36
1,1
65
1,3
66
1,1
65
Shar
ehold
ers'
Equit
y865
921
744
747
761
766
745
745
845
839
852
766
852
Tota
l C
apit
al2,1
07
2,3
02
2,1
41
2,1
40
2,1
91
2,1
35
2,0
89
2,0
89
2,0
87
2,0
76
2,0
67
2,1
35
2,0
67
Ma
rgin
An
aly
sis
Op
erat
ing
Mar
gin
43.8
%37.4
%35.7
%31.2
%47.9
%54.4
%45.3
%46.1
%41.2
%45.2
%59.7
%45.1
%49.5
%
EB
ITD
A M
arg
in33.7
%29.2
%28.5
%20.5
%39.2
%46.2
%35.9
%37.0
%31.4
%35.9
%52.3
%36.0
%40.6
%
EB
IT/
EB
ITD
A60.3
%59.3
%60.3
%15.1
%64.4
%77.2
%0.4
%62.7
%54.3
%60.7
%80.9
%62.0
%67.6
%
Cap
ex/R
even
ue
19.6
%35.9
%19.4
%17.3
%11.3
%9.4
%13.3
%12.3
%11.9
%20.3
%8.4
%19.3
%13.1
%
Ret
urn
on
Eq
uit
yN
A17.6
%14.2
%11.8
%10.8
%11.4
%13.3
%12.9
%14.9
%23.7
%25.1
%11.4
%25.1
%
Co
vera
ge/
Lev
era
ge
Tota
l D
ebt/
LT
M E
BIT
DA
4.0
1x
4.2
4x
3.6
2x
3.6
0x
3.6
2x
3.5
5x
24.6
3x
3.3
9x
9.0
2x
8.3
8x
2.7
8x
3.5
5x
2.7
8x
EB
ITD
A/I
nte
rest
4.3
0x
4.2
1x
3.9
0x
2.2
4x
4.8
1x
7.8
8x
4.2
6x
4.8
4x
4.2
5x
5.0
5x
10.4
7x
4.7
9x
5.9
6x
EB
ITD
A-C
AP
EX
/Inte
rest
1.8
0x
-0.9
8x
1.2
5x
0.3
5x
3.4
2x
6.2
7x
2.6
8x
3.2
3x
2.6
4x
2.2
0x
8.8
0x
2.2
2x
4.0
3x
EB
IT/I
nte
rest
2.5
9x
2.5
0x
2.3
6x
0.3
4x
3.1
0x
6.0
8x
0.0
2x
3.0
3x
2.3
0x
3.0
7x
8.4
8x
2.9
7x
4.0
2x
Ca
pit
al
Str
uct
ure
Tota
l D
ebt/
Ass
ets
41.6
%41.9
%44.4
%43.9
%45.0
%43.2
%42.8
%42.8
%39.3
%39.1
%37.7
%43.2
%37.7
%
Tota
l D
ebt/
Cap
ital
59.0
%60.0
%65.2
%65.1
%65.3
%64.1
%64.3
%64.3
%59.5
%59.6
%58.8
%64.1
%58.8
%
Pre
ferr
ed S
tock
/Cap
ital
9.0
%8.2
%7.0
%7.0
%6.8
%7.0
%7.2
%7.2
%7.2
%7.2
%7.3
%7.0
%7.3
%
Tota
l D
ebt/
Equit
y143.7
%149.8
%187.6
%186.4
%187.9
%178.5
%180.3
%180.3
%147.1
%147.4
%142.7
%178.5
%142.7
%
ST
Deb
t/T
ota
l D
ebt
29.6
%23.7
%34.9
%18.6
%22.1
%7.6
%17.1
%17.1
%10.3
%10.2
%13.2
%7.6
%13.2
%
Liq
uid
ity
An
aly
sis
Curr
ent
Rat
io:
0.3
3x
0.4
5x
0.2
3x
0.3
4x
0.3
7x
0.5
7x
0.3
6x
0.3
6x
0.5
1x
0.5
6x
0.7
1x
0.5
7x
0.7
1x
Quic
k R
atio
:0.1
7x
0.2
7x
0.0
9x
0.1
1x
0.1
8x
0.3
1x
0.1
6x
0.1
6x
0.2
3x
0.2
4x
0.4
9x
0.3
1x
0.4
9x
Work
ing C
apit
al:
($331)
($306)
($525)
($304)
($297)
($132)
($277)
($277)
($158)
($143)
($120)
($132)
($120)
Sourc
e: C
om
pany
Rep
ort
s, P
iper
Jaff
ray
����������������� ����
January 2004
Piper Jaffray Fixed Income Research ������������� ����������� | 33
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N O T E S
January 2004
34 | ������������� ����������� Piper Jaffray Fixed Income Research
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IPC: A2/A (FMB)
Electric Credit Trend: Stable
Performance Metrics Customer Growth
2002 6M03 9M03 2003E 6M04E 2004E
EBITDA/Interest
High Margin 3.15x 5.25x 4.47xExpected 2.62x 2.35x 3.13x 3.00x 3.97x 3.87xLow Margin 2.89x 2.95x 3.35x
Total Debt/LTM EBITDA
High Margin 5.39x 3.52x 3.40xExpected 6.78x 7.61x 5.96x 5.65x 4.48x 4.39xLow Margin 5.86x 5.52x 5.30x
Return on Equity
High Margin 6.5% 15.1% 11.8%Expected 7.6% 3.9% 4.9% 5.8% 10.8% 8.7%Low Margin 5.2% 7.5% 6.0%
Dividend Payout
High Margin 121% 41% 45%Expected 114% 236% 178% 138% 58% 63%Low Margin 154% 87% 98%
Revenue Sources Customer Revenue Distribution
Operating Income Sources System Generation - 2912 MW
Capital Structure Consolidated Debt Maturities
$0
$100
$200
$300
$400
$500
$600
$700
$800
2004 2005 2006 2007 Beyond
(in
mil
lio
ns)
0%
20%
40%
60%
80%
100%
2001 2002 6M03 3Q03
Electric Utility Energy Marketing Other
0
500
1,000
1,500
2,000
2,500
4Q02 2Q03 4Q03E 2Q04E 4Q04E
Cap
italizati
on
(in
millio
ns)
Long Term Debt Preferred Stock Common Equity
Electric Utility
350,000
360,000
370,000
380,000
390,000
400,000
410,000
420,000
1998 1999 2000 2001 2002C
us
tom
ers
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
Gro
wth
Ra
te
Utility
Operations
100%
Residential
40%
Commercial
25%
Industrial
23%
Irrigation
12%
Hydro
59%
Diesel
0%
Gas
3%
Coal
38%
January 2004
Piper Jaffray Fixed Income Research ������������� ����������� | 35
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Electric
EBITDA Estimates
Coverage/Leverage
Ratings Ranges S&P Corporate Credit Rating: A-
S&P A Reported S&P A S&P A Estimated S&P AUpper Range 3Q03 Lower Range Upper Range 2004 Lower Range
FFO/Total Debt
30.5% 24.8% 24.5% 30.5% 15.4% 24.5%
FFO Interest Coverage
4.5x 5.7x 3.8x 4.5x 3.5x 3.8x
Pretax Interest Coverage
4.0x 1.3x 3.3x 4.0x 2.6x 3.3x
Total Debt/Total Capital
43.0% 54.6% 49.5% 43.0% 56.8% 49.5%
Ratings Scales
Current S&P Financial Profile Proxy
Total Debt/
Total Capital
Pretax Interest
Coverage
FFO Interest
Coverage
FFO/Total Debt
2004 Estimated S&P Financial Profile Proxy
Total Debt/
Total Capital
Pretax Interest
Coverage
FFO Interest
Coverage
FFO/Total Debt
0.00x
1.00x
2.00x
3.00x
4.00x
5.00x
6.00x
1Q00
2Q00
3Q00
4Q00
1Q01
2Q01
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
E
1Q04
E
2Q04
E
3Q04
E
4Q04
E
EB
ITD
A/In
tere
st
48.0%
50.0%
52.0%
54.0%
56.0%
58.0%
60.0%
To
tal D
eb
t/C
ap
ital
EBITDA/Interest Total Debt/Capital
$0
$20
$40
$60
$80
$100
$120
1Q00
2Q00
3Q00
4Q00
1Q01
2Q01
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
E
1Q04
E
2Q04
E
3Q04
E
4Q04
E
EB
ITD
A (
millio
ns)
0.00x1.00x2.00x3.00x4.00x5.00x6.00x7.00x8.00x9.00x
To
tal D
eb
t/E
BIT
DA
EBITDA Total Debt/EBITDA
AA
A
BBB
BB
B
AA
A
BBB
BB
B
January 2004
36 | ������������� ����������� Piper Jaffray Fixed Income Research
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IDACORP, Inc. is a holding company whose principal subsidiary is Idaho Power Company (IPC). IPC is a regulatedelectric utility engaged in the generation, transmission, distribution, sale and purchase of electric energy. IPC is the par-ent of Idaho Energy Resources Co., a joint venture in Bridger Coal Company, which supplies coal to the Jim Bridgergenerating plant owned in part by IPC.
Another subsidiary of IDACORP, IDACORP Energy, a marketer of electricity and natural gas is in the process of wind-ing down its operations. IDACORP’s other operating subsidiaries include Ida-West Energy, a developer and manager ofindependent power projects; IdaTech, a developer of integrated fuel cell systems; IDACORP Financial Services, Inc.,holds affordable housing and other real estate investments; Velocitus, a commercial and residential Internet service pro-vider; and IDACOMM, a provider of telecommunications services.
Issuer Ticker Cusip Coupon Maturity Call Date Amount Issued Collateral RatingsIDAHO POWER CORP IDA 45138LAJ2 6.600 3/2/2011 120,000,000 1ST MORTGAGE A2/AIDAHO POWER CORP IDA 45138LAK9 4.750 11/15/2012 100,000,000 1ST MORTGAGE A2/AIDAHO POWER CORP IDA 45138LAL7 6.000 11/15/2032 100,000,000 1ST MORTGAGE A2/AIDAHO POWER CORP IDA 45138LAG8 7.200 12/1/2009 80,000,000 1ST MORTGAGE A2/AIDAHO POWER CORP IDA 45138LAH6 7.380 12/1/2007 80,000,000 1ST MORTGAGE A2/A
January 2004
Piper Jaffray Fixed Income Research ������������� ����������� | 37
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($ i
n m
illi
on
s)
Ye
ar
en
de
d D
ece
mb
er
31
Inco
me
Sta
tem
ent
Su
mm
ary
1999
2000
2001
1Q
02
2Q
02
3Q
02
4Q
02
2002
1Q
03
2Q
03
3Q
03
0L
TM
3Q
02
LT
M 3
Q03
Rev
enues
$1,4
33
$1,0
50
$1,2
75
$240
$210
$260
$220
$929
$212
$200
$239
$953
$871
EB
ITD
A265
328
329
70
31
40
38
180
36
38
72
201
184
EB
IT187
247
242
47
817
14
86
11
14
48
108
88
Net
Inco
me
97
146
131
26
438
(2)
66
(2)
(0)
48
90
43
Fre
e C
ash
Flo
w S
um
mary
EB
ITD
A:
$265
$328
$329
$70
$31
$40
$38
$180
$36
$38
$72
$201
$184
-
Inte
rest
Ex
pen
se67
67
76
18
16
17
17
69
17
16
16
71
64
-
Div
iden
ds
70
70
70
17
18
18
18
70
18
18
18
70
71
-
Cap
ital
Ex
p.
111
140
179
27
29
33
98
187
25
33
40
130
195
Fre
e C
ash
Flo
w17
51
58
(32)
(27)
(94)
(146)
(24)
(28)
(1)
(70)
(145)
Bala
nce
Sh
eet
Su
mm
ary
Cas
h &
Sh
ort
Ter
m I
nv
est.
$111
$107
$67
$59
$47
$70
$43
$43
$42
$20
$26
$70
$26
To
tal
Ass
ets
2,6
40
4,0
40
3,6
42
3,3
99
3,3
79
3,4
11
3,2
49
3,2
49
3,1
26
3,0
37
2,9
48
3,4
11
2,9
48
Short
Ter
m D
ebt
109
161
399
422
525
532
266
266
247
182
95
532
95
Long T
erm
Deb
t822
864
843
791
706
702
899
899
869
924
952
702
952
Pre
ferr
ed S
tock
106
105
104
104
104
54
53
53
53
53
52
54
52
Tota
l D
ebt
1,0
36
1,1
30
1,3
46
1,3
17
1,3
35
1,2
88
1,2
18
1,2
18
1,1
69
1,1
58
1,1
00
1,2
88
1,1
00
To
tal
Net
Deb
t925
1,0
23
1,2
79
1,2
58
1,2
88
1,2
18
1,1
75
1,1
75
1,1
27
1,1
38
1,0
73
1,2
18
1,0
73
Sh
areh
old
ers'
Eq
uit
y753
821
871
882
870
892
875
875
856
841
869
892
869
To
tal
Cap
ital
1,7
89
1,9
51
2,2
17
2,1
99
2,2
05
2,1
80
2,0
93
2,0
93
2,0
25
1,9
99
1,9
69
2,1
80
1,9
69
Marg
in A
naly
sis
Op
erat
ing
Pro
fit
Mar
gin
20.0
%33.1
%27.4
%31.6
%17.2
%17.4
%19.4
%21.5
%19.2
%21.7
%32.4
%23.1
%23.5
%
EB
ITD
A M
argin
18.5
%31.2
%25.8
%29.4
%14.7
%15.5
%17.4
%19.3
%16.8
%19.1
%30.3
%21.1
%21.2
%
EB
IT/E
BIT
DA
70.6
%75.5
%73.6
%67.1
%25.0
%41.3
%37.9
%47.9
%32.1
%36.6
%66.3
%53.7
%47.7
%
Cap
ex/R
even
ue
7.7
%13.4
%14.0
%11.2
%14.0
%12.5
%44.5
%20.1
%11.8
%16.3
%16.7
%13.6
%22.4
%
Ret
urn
on E
quit
yN
/A18.5
3%
15.4
4%
13.9
9%
10.1
4%
10.2
3%
7.5
9%
7.5
9%
4.3
7%
3.9
3%
4.9
3%
10.2
3%
4.9
3%
Co
vera
ge/
Lev
era
ge
Tota
l D
ebt/
LT
M E
BIT
DA
3.9
1x
3.4
5x
4.0
9x
4.2
0x
5.3
5x
6.4
1x
6.7
8x
6.7
8x
8.0
7x
7.6
1x
5.9
6x
6.4
1x
5.9
6x
EB
ITD
A/I
nte
rest
3.9
6x
4.8
9x
4.3
5x
3.8
4x
1.8
8x
2.3
8x
2.2
8x
2.6
2x
2.0
8x
2.3
5x
4.5
8x
2.8
5x
2.9
0x
EB
ITD
A-C
AP
EX
/Inte
rest
2.3
0x
2.8
0x
1.9
8x
2.3
8x
0.0
9x
0.4
5x
-3.5
5x
-0.1
0x
0.6
2x
0.3
5x
2.0
5x
1.0
1x
-0.1
7x
EB
IT/I
nte
rest
2.7
9x
3.7
0x
3.2
0x
2.5
8x
0.4
7x
0.9
9x
0.8
6x
1.2
6x
0.6
7x
0.8
6x
3.0
3x
1.5
3x
1.3
8x
Ca
pit
al
Str
uct
ure
To
tal
Deb
t/T
ota
l C
apit
al55.3
%55.5
%58.8
%57.9
%58.6
%58.0
%57.1
%57.1
%56.6
%56.8
%54.6
%58.0
%54.6
%
Pre
ferr
ed S
tock
/Cap
ital
5.9
%5.4
%4.7
%4.7
%4.7
%2.5
%2.6
%2.6
%2.6
%2.6
%2.7
%2.5
%2.7
%
To
tal
Deb
t/E
qu
ity
137.6
%137.6
%154.5
%149.3
%153.4
%144.4
%139.2
%139.2
%136.5
%137.8
%126.5
%144.4
%126.5
%
ST
Deb
t/T
ota
l D
ebt
10.5
%14.2
%29.6
%32.0
%39.3
%41.3
%21.8
%21.8
%21.1
%15.7
%8.7
%41.3
%8.7
%
Liq
uid
ity
An
aly
sis
Cu
rren
t R
atio
:1.0
1x
0.9
7x
0.7
2x
0.5
8x
0.5
2x
0.5
2x
0.7
0x
0.7
0x
0.6
7x
0.7
1x
0.7
0x
0.5
2x
0.7
0x
Qu
ick
Rat
io:
0.6
5x
0.2
1x
0.2
5x
0.2
5x
0.2
2x
0.2
5x
0.3
4x
0.3
4x
0.3
3x
0.2
8x
0.3
9x
0.2
5x
0.3
9x
Work
ing C
apit
al:
$4
($41)
($254)
($329)
($399)
($402)
($175)
($175)
($171)
($124)
($92)
($402)
($92)
So
urc
e: C
om
pa
ny
Rep
ort
s, P
iper
Ja
ffra
y
January 2004
38 | ������������� ����������� Piper Jaffray Fixed Income Research
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Idah
o P
ow
er
Co
mp
an
y
($ i
n m
illi
on
s)
Ye
ar
en
de
d D
ece
mb
er
31
Inco
me
Sta
tem
ent
Su
mm
ary
19
99
20
00
20
01
1Q
02
2Q
02
3Q
02
4Q
02
20
02
1Q
03
2Q
03
3Q
03
LT
M 3
Q0
2L
TM
3Q
03
Rev
enu
e$
65
8$
83
6$
91
2$
21
5$
20
9$
23
7$
20
6$
86
7$
20
3$
19
7$
21
4$
85
9$
82
1
EB
ITD
A2
50
25
01
77
68
56
46
56
22
65
65
26
22
10
22
7
EB
IT1
72
17
09
04
53
32
23
31
33
32
27
32
11
71
30
Ear
nin
gs
on
Co
mm
on
Sto
ck9
21
32
73
22
13
38
12
84
14
12
15
75
52
Fre
e C
ash
Flo
w S
um
ma
ry
E
BIT
DA
:$
25
0$
25
0$
17
7$
68
$5
6$
46
$5
6$
22
6$
56
$5
2$
62
$2
10
$2
27
-
Inte
rest
Ex
pen
se6
86
47
21
71
61
61
66
51
71
61
56
76
4
-
Co
mm
on
Div
iden
ds
70
70
70
17
18
18
18
70
18
18
18
70
71
-
Cap
ital
Ex
pen
dit
ure
s1
08
13
21
57
23
29
29
47
12
82
53
22
41
17
12
8
Fre
e C
ash
Flo
w
$4
($1
5)
($1
21
)$
10
($6
)($
17
)($
25
)($
37
)($
3)
($1
4)
$5
($4
4)
($3
7)
Ba
lan
ce S
hee
t S
um
ma
ry
Cas
h$
11
1$
83
$4
3$
23
$8
$1
5$
13
$1
3$
29
$7
$5
$1
5$
5
To
tal
Ass
ets
2,6
37
2,6
17
2,8
60
2,7
80
2,7
17
2,7
54
2,7
38
2,7
38
2,6
89
2,6
59
2,6
66
2,7
54
2,6
66
Sh
ort
Ter
m D
ebt
10
99
43
16
32
03
50
34
19
19
11
31
59
64
34
16
4
Lo
ng
Ter
m D
ebt
82
28
09
80
27
52
67
26
72
87
18
71
82
18
81
88
16
72
88
1
Pre
ferr
ed S
tock
10
61
05
10
41
04
10
45
45
35
35
35
35
25
45
2
To
tal
Deb
t1
,04
61
,00
81
,22
31
,17
61
,12
71
,06
81
,01
51
,01
51
,00
49
92
99
71
,06
89
97
To
tal
Net
Deb
t9
35
92
51
,18
01
,15
41
,11
91
,05
21
,00
21
,00
29
75
98
59
92
1,0
52
99
2
Sh
areh
old
ers'
Eq
uit
y7
53
76
57
66
76
97
63
78
37
76
77
67
72
76
97
66
78
37
66
To
tal
Cap
ital
1,7
99
1,7
73
1,9
88
1,9
46
1,8
90
1,8
51
1,7
91
1,7
91
1,7
76
1,7
61
1,7
64
1,8
51
1,7
64
Ma
rgin
An
aly
sis
Op
erat
ing
Mar
gin
41
.3%
32
.3%
21
.6%
34
.3%
29
.2%
21
.4%
29
.5%
28
.4%
30
.4%
28
.8%
31
.4%
26
.7%
30
.1%
EB
ITD
A M
argin
38
.0%
29
.9%
19
.4%
31
.9%
26
.7%
19
.2%
27
.3%
26
.1%
27
.8%
26
.2%
29
.0%
24
.4%
27
.6%
EB
IT/E
BIT
DA
68
.9%
67
.9%
50
.8%
66
.1%
58
.5%
48
.3%
58
.0%
58
.6%
57
.3%
53
.0%
52
.0%
55
.8%
57
.4%
Cap
ex/R
even
ue
16
.5%
15
.8%
17
.2%
10
.9%
13
.7%
12
.2%
22
.9%
14
.8%
12
.2%
16
.3%
11
.3%
13
.6%
15
.6%
Ret
urn
on
Eq
uit
yN
A1
7.3
%9
.5%
7.4
%4
.7%
9.6
%1
0.9
%1
0.9
%9
.9%
9.9
%6
.8%
9.6
%6
.8%
Co
vera
ge/
Lev
era
ge
To
tal
Deb
t/L
TM
EB
ITD
A4
.18
x4
.03
x6
.90
x6
.13
x5
.68
x5
.09
x4
.49
x4
.49
x4
.69
x4
.72
x4
.40
x5
.09
x4
.40
x
EB
ITD
A/I
nte
rest
3.7
0x
3.9
2x
2.4
8x
3.9
8x
3.4
9x
2.9
3x
3.4
9x
3.4
8x
3.3
8x
3.2
9x
4.0
5x
3.1
3x
3.5
5x
EB
ITD
A-C
AP
EX
/In
tere
st2
.10
x1
.86
x0
.28
x2
.62
x1
.70
x1
.06
x0
.57
x1
.51
x1
.90
x1
.24
x2
.48
x1
.38
x1
.54
x
EB
IT/I
nte
rest
2.5
5x
2.6
6x
1.2
6x
2.6
3x
2.0
4x
1.4
2x
2.0
2x
2.0
4x
1.9
4x
1.7
4x
2.1
1x
1.7
5x
2.0
4x
Ca
pit
al
Str
uct
ure
To
tal
Deb
t/C
apit
al5
8.2
%5
6.8
%6
1.5
%6
0.5
%5
9.6
%5
7.7
%5
6.7
%5
6.7
%5
6.5
%5
6.4
%5
6.6
%5
7.7
%5
6.6
%
Pre
ferr
ed S
tock
/Cap
ital
5.9
%5
.9%
5.3
%5
.4%
5.5
%2
.9%
3.0
%3
.0%
3.0
%3
.0%
3.0
%2
.9%
3.0
%
To
tal
Deb
t/E
qu
ity
13
9.0
%1
31
.7%
15
9.7
%1
52
.9%
14
7.6
%1
36
.3%
13
0.7
%1
30
.7%
13
0.1
%1
29
.1%
13
0.2
%1
36
.3%
13
0.2
%
ST
Deb
t/T
ota
l D
ebt
10
.4%
9.3
%2
5.8
%2
7.2
%3
1.1
%3
2.0
%8
.9%
8.9
%1
3.0
%5
.9%
6.4
%3
2.0
%6
.4%
Liq
uid
ity
An
aly
sis
Cu
rren
t R
atio
:1
.01
x1
.00
x0
.67
x0
.61
x0
.52
x0
.48
x0
.79
x0
.79
x0
.74
x0
.91
x0
.74
x0
.48
x0
.74
x
Qu
ick
Rat
io:
0.6
5x
0.5
4x
0.3
2x
0.3
1x
0.2
7x
0.2
5x
0.3
9x
0.3
9x
0.4
0x
0.4
2x
0.3
8x
0.2
5x
0.3
8x
Wo
rkin
g C
apit
al:
$4
$1
($1
55
)($
17
5)
($2
34
)($
24
8)
($5
9)
($5
9)
($8
0)
($1
9)
($6
4)
($2
48
)($
64
)
So
urc
e: C
om
pa
ny
Rep
ort
s &
Pip
er J
aff
ray
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A2/A- (FMB)
Electric & Gas Credit Trend: Declining
Performance Metrics Customer Distribution
2002 6M03 9M03 2003E 6M04E 2004E
EBITDA/Interest
High Margin 9.66x 8.27x 8.87xExpected 9.27x 8.39x 9.59x 9.28x 7.46x 8.46xLow Margin 9.07x 6.49x 7.78x
Total Debt/LTM EBITDA
High Margin 2.08x 2.04x 2.09xExpected 2.07x 2.07x 2.01x 2.19x 2.28x 2.28xLow Margin 2.26x 2.54x 2.58x
Return on Equity
High Margin 13.7% 15.3% 13.9%Expected 12.4% 13.2% 13.4% 12.8% 13.0% 12.5%Low Margin 12.2% 11.1% 11.1%
Dividend Payout
High Margin 39.6% 36.0% 38.7%Expected 46.2% 43.8% 41.2% 42.9% 42.4% 42.4%Low Margin 44.9% 50.6% 50.7%
Revenue Sources
Operating Income Sources Customer Growth
System Generation - 393 MW Customer Growth
Gas Customer Distribution
Residential
89%
Commercial
11%
Industrial &
Other
0%
Electric Customer Distribution
Residential
83%
Commercial
15%
Other
2%
Industrial
0%
Pipeline and
Energy
Services
10%
Utility Services
3%
Natural Gas
Distribution
0%
Independent
Power
Production
and Other
22%
Construction
Materials and
Mining
29%
Natural Gas
and Oil
Production
27%
Electric
9%
0%
20%
40%
60%
80%
100%
2001 2002 6M03 3Q03
Montana-Dakota Utilities Centennial Energy Holdings
Coal
83%
Combustion-
Turbine
17%
Electric
113,000
113,500
114,000
114,500
115,000
115,500
116,000
116,500
1998 1999 2000 2001 2002
Cu
sto
me
rs
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%G
row
th R
ate
Gas
220,000
225,000
230,000
235,000
240,000
1998 1999 2000 2001 2002
Cu
sto
me
rs
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
Gro
wth
Ra
te
January 2004
Piper Jaffray Fixed Income Research ������������� ����������� | 41
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Electric & Gas
EBITDA Estimates
Coverage/Leverage
Ratings Ranges S&P Corporate Credit Rating: A-
S&P A Reported S&P A S&P A Estimated S&P AUpper Range 3Q03 Lower Range Upper Range 2004 Lower Range
FFO/Total Debt
47.0% 45.0% 36.5% 47.0% 38.0% 36.5%
FFO Interest Coverage
7.0x 9.2x 5.1x 7.0x 7.2x 5.1x
Pretax Interest Coverage
6.5x 6.6x 4.7x 6.5x 5.2x 4.7x
Total Debt/Total Capital
37.5% 41.3% 45.0% 37.5% 44.1% 45.0%
Ratings Scales
Current S&P Financial Profile Proxy
FFO/Total Debt
Pretax Interest
Coverage
Total Debt/
Total Capital
FFO Interest
Coverage
2004 Estimated S&P Financial Profile Proxy
FFO/Total Debt
Pretax Interest
Coverage
Total Debt/
Total Capital
FFO Interest
Coverage
0.00x
2.00x
4.00x
6.00x
8.00x
10.00x
12.00x
14.00x
1Q00 2Q00 3Q00 4Q00 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03E1Q04E2Q04E3Q04E4Q04E
EB
ITD
A/In
tere
st
30.0%
34.0%
38.0%
42.0%
46.0%
50.0%
To
tal D
eb
t/C
ap
ital
EBITDA/Interest Total Debt/Capital
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
1Q00 2Q00 3Q00 4Q00 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03E 1Q04E 2Q04E 3Q04E 4Q04E
EB
ITD
A (
millio
ns)
0.00x
0.50x
1.00x
1.50x
2.00x
2.50x
3.00x
To
tal D
eb
t/E
BIT
DA
EBITDA Total Debt/EBITDA
AA
A
BBB
BB
B
AA
A
BBB
BB
B
January 2004
42 | ������������� ����������� Piper Jaffray Fixed Income Research
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MDU Resources is a diversified natural resource company. Montana-Dakota Utilities Co., a public utility division ofthe Company, through the electric and natural gas distribution segments, generates, transmits and distributes natural gasin the northern Great Plains. Great Plains Natural Gas Co, another public utility division of the Company, distributesnatural gas in southeastern North Dakota and western Minnesota.
The Company, through its wholly owned subsidiary, Centennial Energy Holdings, Inc. owns WBI Holdings, Inc., KnifeRiver Corporation, Utility Services, Inc., Centennial Energy Resources LLC, and Centennial Holdings Capital LLC.WBI Holdings is comprised of the pipeline and energy services and the natural gas and oil production segments. KnifeRiver mines aggregates and markets crushed stone, sand, gravel and other related construction materials, includingready-mixed concrete, cement, asphalt and other value-added products, as well as performs integrated construction ser-vices in the north central and western United States and in the states of Alaska, Hawaii and Texas. Utility Services is adiversified infrastructure company specializing in electric, gas and telecommunication utility construction, as well as in-dustrial and commercial electrical, exterior lighting and traffic signalization throughout most of the United States. Cen-tennial Resources owns electric generating facilities in the United States and has an investment in an electric generatingfacility in Brazil. Centennial Capital insures and reinsures various types of risks as a captive insurer for certain of theCompany’s subsidiaries.
Capital Structure Consolidated Debt Maturities
$0
$100
$200
$300
$400
$500
2004 2005 2006 2007 Beyond
(in
mil
lio
ns)
0
500
1,000
1,500
2,000
2,500
3,000
4Q02 2Q03 4Q03E 2Q04E 4Q04E
Cap
ital
izat
ion
(in
mil
lio
ns)
Long Term Debt Preferred Stock Common Equity
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Issuer Ticker Cusip Coupon Maturity Call Date Amount Issued Collateral RatingsMDU RESOURCES GROUP INC MDU 55269QAF9 8.600 4/1/2012 35,000,000 1ST MORTGAGE A2/A-MDU RESOURCES GROUP INC MDU 552690AF6 5.980 12/15/2033 30,000,000 1ST MORTGAGE A2/A-MDU RESOURCES GROUP INC MDU 55269QAE2 8.250 4/1/2007 30,000,000 1ST MORTGAGE NA/A-MDU RESOURCES GROUP INC MDU 55269QAJ1 5.830 10/1/2008 15,000,000 1ST MORTGAGE A2/A-MDU RESOURCES GROUP INC MDU 55269QAH5 6.710 10/1/2009 15,000,000 1ST MORTGAGE A2/A-MDU RESOURCES GROUP INC MDU 55269QAG7 6.520 10/1/2004 15,000,000 1ST MORTGAGE A2/A-
January 2004
Piper Jaffray Fixed Income Research ������������� ����������� | 43
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($ i
n m
illi
ons)
Year
ended D
ecem
ber
31
Inco
me
Sta
tem
ent
Su
mm
ary
1999
2000
2001
1Q
02
2Q
02
3Q
02
4Q
02
2002
1Q
03
2Q
03
3Q
03
LT
M 3
Q02
LT
M 3
Q03
Rev
enues
$1,2
80
$1,8
74
$2,2
24
$382
$480
$612
$557
$2,0
32
$468
$548
$716
$1,9
59
$2,2
89
EB
ITD
A242
328
413
82
89
131
122
424
97
122
163
385
504
EB
IT160
217
273
46
51
90
79
266
53
75
116
233
322
Net
Inco
me
84
111
156
24
25
54
46
148
20
43
66
131
175
Fre
e C
ash
Flo
w S
um
mary
EB
ITD
A:
$242
$328
$413
$82
$89
$131
$122
$424
$97
$122
$163
$385
$504
-
Inte
rest
Expen
se37
49
47
11
11
12
12
46
13
13
14
46
52
-
Div
iden
ds
46
54
62
16
17
17
18
68
18
18
18
66
72
-
Cap
ital
Exp.
154
398
331
64
61
97
132
353
161
78
97
325
468
Fre
e C
ash F
low
5(1
73)
(26)
(9)
04
(39)
(43)
(95)
12
35
(52)
(87)
Bala
nce
Sh
eet
Su
mm
ary
Cas
h &
Short
Ter
m I
nves
t.$78
$37
$42
$50
$48
$43
$68
$68
$76
$66
$92
$43
$92
Tota
l A
sset
s1,7
66
2,3
13
2,6
23
2,6
33
2,7
75
2,8
70
2,9
37
2,9
37
3,0
58
3,1
38
3,3
33
2,8
70
3,3
33
Short
Ter
m D
ebt
19
28
11
11
20
33
42
42
35
23
833
8
Long T
erm
Deb
t564
728
784
765
835
833
820
820
896
939
989
833
989
Pre
ferr
ed S
tock
17
16
16
16
16
16
16
16
16
16
15
16
15
Tota
l D
ebt
599
772
811
792
871
881
878
878
947
978
1,0
12
881
1,0
12
Tota
l N
et D
ebt
522
736
769
741
823
839
810
810
871
912
920
839
920
Shar
ehold
ers'
Equit
y670
881
1,1
10
1,1
32
1,1
64
1,2
00
1,2
84
1,2
84
1,2
83
1,3
13
1,4
04
1,2
00
1,4
04
Tota
l C
apit
al1,2
69
1,6
53
1,9
21
1,9
23
2,0
36
2,0
81
2,1
62
2,1
62
2,2
31
2,2
91
2,4
15
2,0
81
2,4
15
Marg
in A
naly
sis
Oper
atin
g P
rofi
t M
argin
21.5
%19.9
%21.1
%25.3
%21.9
%24.1
%25.3
%24.1
%24.9
%25.7
%25.9
%22.8
%25.5
%
EB
ITD
A M
argin
18.9
%17.5
%18.6
%21.4
%18.5
%21.4
%22.0
%20.9
%20.7
%22.2
%22.8
%19.7
%22.0
%
EB
IT/E
BIT
DA
66.1
%66.2
%66.1
%55.9
%57.5
%69.0
%64.5
%62.8
%54.6
%61.4
%70.8
%60.6
%63.9
%
Cap
ex/R
even
ue
12.0
%21.2
%14.9
%16.7
%12.7
%15.9
%23.6
%17.4
%34.4
%14.2
%13.6
%16.6
%20.4
%
Ret
urn
on E
quit
yN
/A14.3
2%
15.6
6%
14.2
6%
11.7
7%
11.5
5%
12.4
0%
12.4
0%
11.9
9%
13.2
0%
13.4
5%
11.5
5%
13.4
5%
Cove
rage/
Lev
erage
Tota
l D
ebt/
LT
M E
BIT
DA
2.4
8x
2.3
6x
1.9
6x
1.9
8x
2.2
7x
2.2
9x
2.0
7x
2.0
7x
2.1
6x
2.0
7x
2.0
1x
2.2
9x
2.0
1x
EB
ITD
A/I
nte
rest
6.5
7x
6.7
2x
8.8
5x
7.6
3x
7.9
7x
10.9
7x
10.2
4x
9.2
7x
7.4
4x
9.3
5x
11.8
6x
8.4
2x
9.7
4x
EB
ITD
A-C
AP
EX
/Inte
rest
2.3
9x
-1.4
3x
1.7
7x
1.7
0x
2.5
1x
2.8
2x
-0.7
7x
1.5
5x
-4.9
0x
3.3
4x
4.8
1x
1.3
2x
0.7
1x
EB
IT/I
nte
rest
4.3
4x
4.4
5x
5.8
6x
4.2
7x
4.5
8x
7.5
6x
6.6
1x
5.8
1x
4.0
6x
5.7
4x
8.4
0x
5.1
0x
6.2
2x
Capit
al
Str
uct
ure
Tota
l D
ebt/
Tota
l C
apit
al45.9
%45.7
%41.4
%40.3
%42.0
%41.6
%39.9
%39.9
%41.7
%42.0
%41.3
%41.6
%41.3
%
Pre
ferr
ed S
tock
/Cap
ital
1.3
%1.0
%0.8
%0.8
%0.8
%0.8
%0.7
%0.7
%0.7
%0.7
%0.6
%0.8
%0.6
%
Tota
l D
ebt/
Equit
y89.5
%87.7
%73.1
%69.9
%74.8
%73.5
%68.4
%68.4
%73.8
%74.5
%72.1
%73.5
%72.1
%
ST
Deb
t/T
ota
l D
ebt
3.2
%3.6
%1.4
%1.4
%2.3
%3.7
%4.8
%4.8
%3.7
%2.4
%0.8
%3.7
%0.8
%
Liq
uid
ity
An
aly
sis
Curr
ent
Rat
io:
1.8
8x
1.6
9x
1.9
6x
1.8
4x
2.0
1x
1.7
5x
1.7
9x
1.7
9x
1.6
4x
1.7
8x
1.9
3x
1.7
5x
1.9
3x
Quic
k R
atio
:1.3
2x
1.3
3x
1.3
3x
1.2
4x
1.3
6x
1.2
7x
1.3
1x
1.3
1x
1.2
0x
1.2
9x
1.4
3x
1.2
7x
1.4
3x
Work
ing C
apit
al:
$164
$196
$236
$202
$268
$242
$238
$238
$208
$252
$327
$242
$327
Sourc
e: C
om
pany
Rep
ort
s, P
iper
Jaff
ray
January 2004
44 | ������������� ����������� Piper Jaffray Fixed Income Research
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OG&E: A2/BBB+ (Unsecured)
Electric Credit Trend: Stable
Performance Metrics Customer Growth
2002 6M03 9M03 2003E 6M04E 2004E
EBITDA/Interest
High Margin 5.11x 4.18x 5.11xExpected 4.29x 3.93x 5.77x 4.95x 3.47x 4.66xLow Margin 4.78x 2.95x 4.09x
Total Debt/LTM EBITDA
High Margin 3.24x 3.19x 3.06xExpected 3.84x 3.59x 3.25x 3.37x 3.60x 3.53xLow Margin 3.51x 4.04x 4.21x
Return on Equity
High Margin 12.8% 14.3% 13.3%Expected 9.0% 10.0% 8.8% 11.9% 11.4% 11.2%Low Margin 10.8% 8.5% 8.2%
Dividend Payout
High Margin 73.0% 71.0% 71.2%Expected 109.6% 94.8% 92.9% 79.1% 91.7% 88.0%Low Margin 87.2% 121.8% 125.4%
Revenue Sources Customer Revenue Distribution
Operating Income Sources System Generation - 5696 MW
Capital Structure Consolidated Debt Maturities
Residential
86%
Commercial
12%
Other
2%
$0
$200
$400
$600
$800
$1,000
$1,200
2004 2005 2006 2007 Beyond
(in
mil
lio
ns)
0%
20%
40%
60%
80%
100%
2001 2002 6M03 3Q03
Electric Utility Natural Gas Pipeline
0
500
1,000
1,500
2,000
2,500
3,000
4Q02 2Q03 4Q03E 2Q04E 4Q04E
Cap
itali
zati
on
(in
mil
lio
ns)
Long Term Debt Preferred Stock Common Equity
Electric Utility
680,000
685,000
690,000
695,000
700,000
705,000
710,000
715,000
720,000
725,000
1998 1999 2000 2001 2002C
us
tom
ers
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
Gro
wth
Ra
teGas
39%
Gas/Oil
16%
Gas/Jet Fuel
1%
Coal44%
Electric Utility
88%
Natural Gas
Pipeline
12%
January 2004
Piper Jaffray Fixed Income Research ������������� ����������� | 45
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Electric
EBITDA Estimates
Coverage/Leverage
Ratings Ranges S&P Corporate Credit Rating: BBB+
S&P BBB Reported S&P BBB S&P BBB Estimated S&P BBBUpper Range 3Q03 Lower Range Upper Range 2004 Lower Range
FFO/Total Debt
27.0% 27.4% 20.5% 27.0% 19.6% 20.5%
FFO Interest Coverage
4.0x 5.2x 3.0x 4.0x 4.1x 3.0x
Pretax Interest Coverage
3.5x 2.6x 2.4x 3.5x 2.9x 2.4x
Total Debt/Total Capital
47.0% 50.1% 55.0% 47.0% 58.2% 55.0%
Ratings Scales
Current S&P Financial Profile Proxy
FFO/Total Debt
Total Debt/
Total Capital
FFO Interest
Coverage
Pretax Interest
Coverage
2004 Estimated S&P Financial Profile Proxy
FFO/Total Debt
Total Debt/
Total Capital
FFO Interest
Coverage
Pretax Interest
Coverage
0.00x
2.00x
4.00x
6.00x
8.00x
10.00x
12.00x
1Q00
2Q00
3Q00
4Q00
1Q01
2Q01
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
E
1Q04
E
2Q04
E
3Q04
E
4Q04
E
EB
ITD
A/In
tere
st
44.0%
46.0%
48.0%
50.0%
52.0%
54.0%
56.0%
58.0%
60.0%
To
tal D
eb
t/C
ap
ital
EBITDA/Interest Total Debt/Capital
$0
$50
$100
$150
$200
$250
$300
1Q00
2Q00
3Q00
4Q00
1Q01
2Q01
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
E
1Q04
E
2Q04
E
3Q04
E
4Q04
E
EB
ITD
A (
millio
ns)
0.00x0.50x1.00x1.50x2.00x2.50x3.00x3.50x4.00x4.50x
To
tal D
eb
t/E
BIT
DA
EBITDA Total Debt/EBITDA
AA
A
BBB
BB
B
AA
A
BBB
BB
B
January 2004
46 | ������������� ����������� Piper Jaffray Fixed Income Research
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OGE Energy Corp. is an energy and energy services provider offering physical delivery and management of both elec-tricity and natural gas in the south central United States. The Company conducts these activities through two businesssegments, the Electric Utility and the Natural Gas Pipeline segments.
The Electric Utility segment generates, transmits, distributes and sells electric energy in Oklahoma and western Arkan-sas. Its operations are conducted through Oklahoma Gas and Electric Company (OG&E) and are subject to regulationby the Oklahoma Corporation Commission, the Arkansas Public Service Commission and the Federal Energy Regula-tory Commission. OG&E sold its retail gas business in 1928 and is no longer engaged in the gas distribution business.OG&E is the largest electric utility in Oklahoma and its franchised service territory includes the Fort Smith, Arkansasarea.
The Natural Gas Pipeline segment is conducted through Enogex Inc. and its subsidiaries and consists of three relatedbusinesses: (i) the transportation and storage of natural gas, (ii) the gathering and processing of natural gas and (iii) themarketing and trading of natural gas. The vast majority of Enogex’s natural gas gathering, processing, transportationand storage assets are located in the major gas producing basins of Oklahoma. Enogex also owns a controlling interestin the Ozark Gas Transmission System, a FERC regulated interstate pipeline that extends from southeast Oklahomathrough Arkansas to southeast Missouri.
Issuer Ticker Cusip Coupon Maturity Call Date Amount Issued Collateral RatingsENOGEX INC OGE 293489AA8 8.125 1/15/2010 400,000,000 SENIOR NOTES Baa3/BBB+OKLAHOMA GAS & ELECTRIC OGE 678858BB6 6.500 7/15/2017 125,000,000 SENIOR NOTES A2/BBB+OKLAHOMA GAS & ELECTRIC OGE 678858AZ4 6.650 7/15/2027 125,000,000 SENIOR NOTES A2/BBB+OKLAHOMA GAS & ELECTRIC OGE 678858BD2 7.125 10/15/2005 110,000,000 SENIOR NOTES A2/BBB+OKLAHOMA GAS & ELECTRIC OGE 678858BA8 7.300 10/15/2025 10/15/2005 110,000,000 SENIOR NOTES A2/BBB+
January 2004
Piper Jaffray Fixed Income Research ������������� ����������� | 47
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($ i
n m
illi
ons)
Ye
ar
en
de
d D
ece
mb
er
31
Inco
me
Sta
tem
ent
Su
mm
ary
19
99
20
00
20
01
1Q
02
2Q
02
3Q
02
4Q
02
20
02
1Q
03
2Q
03
3Q
03
LT
M 3
Q0
2L
TM
3Q
03
Rev
enu
es$
2,3
73
$3
,18
4$
3,0
64
$5
76
$7
31
$8
87
$8
30
$3
,02
4$
1,0
50
$8
53
$1
,06
0$
3,5
48
$3
,79
3
EB
ITD
A7
04
50
24
44
60
11
02
31
67
46
87
41
21
23
14
65
49
2
EB
IT5
39
33
52
71
15
64
18
62
12
86
28
78
18
72
85
31
4
Net
In
com
e3
52
14
71
01
(6)
28
99
(30
)9
16
32
99
11
51
01
Fre
e C
ash
Flo
w S
um
ma
ry
EB
ITD
A:
$7
04
$5
02
$4
44
$6
0$
11
0$
23
1$
67
$4
68
$7
4$
12
1$
23
1$
46
5$
49
2
-
Inte
rest
Expen
se9
71
29
12
32
82
72
82
71
09
25
25
24
10
91
01
-
Div
iden
ds
10
31
04
10
42
62
62
62
21
00
24
24
24
10
49
4
-
Cap
ital
Ex
p.
18
11
67
21
28
86
73
54
62
35
45
47
48
22
91
86
Fre
e C
ash
Flo
w3
22
10
15
(81
)(9
)1
43
(27
)2
5(1
9)
25
13
42
31
12
Ba
lan
ce S
hee
t S
um
ma
ry
Cas
h &
Sh
ort
Ter
m I
nv
est.
$7
$0
$3
3$
1$
3$
7$
44
$4
4$
21
$2
3$
29
$7
$2
9
To
tal
Ass
ets
3,9
21
4,3
20
3,9
97
4,0
10
4,1
14
4,2
53
4,2
51
4,2
51
4,2
40
4,2
88
4,3
45
4,2
53
4,3
45
Sh
ort
Ter
m D
ebt
75
82
86
23
02
12
32
03
00
29
62
96
20
62
88
15
83
00
15
8
Lo
ng
Ter
m D
ebt
94
11
,44
91
,32
61
,32
21
,33
61
,34
21
,30
21
,30
21
,29
01
,28
01
,24
11
,34
21
,24
1
Pre
ferr
ed S
tock
20
02
00
20
02
00
20
02
00
20
02
00
20
02
00
20
02
00
20
0
To
tal
Deb
t1
,89
91
,93
51
,75
61
,73
41
,85
61
,84
31
,79
81
,79
81
,69
61
,76
81
,59
91
,84
31
,59
9
To
tal
Net
Deb
t1
,89
11
,93
51
,72
41
,73
31
,85
31
,83
61
,75
41
,75
41
,67
51
,74
61
,56
91
,83
61
,56
9
Sh
areh
old
ers'
Eq
uit
y1
,01
91
,06
41
,04
11
,00
91
,01
11
,08
89
84
98
49
62
99
21
,19
51
,08
81
,19
5
To
tal
Cap
ital
2,9
18
2,9
99
2,7
97
2,7
43
2,8
67
2,9
31
2,7
82
2,7
82
2,6
58
2,7
60
2,7
93
2,9
31
2,7
93
Ma
rgin
An
aly
sis
Op
erat
ing
Pro
fit
Mar
gin
32
.0%
17
.7%
16
.6%
13
.4%
17
.3%
27
.8%
10
.0%
17
.6%
8.7
%1
6.1
%2
3.4
%1
4.9
%1
4.8
%
EB
ITD
A M
arg
in2
9.7
%1
5.8
%1
4.5
%1
0.5
%1
5.1
%2
6.1
%8
.0%
15
.5%
7.1
%1
4.1
%2
1.8
%1
3.1
%1
3.0
%
EB
IT/E
BIT
DA
76
.6%
66
.7%
61
.0%
25
.0%
58
.2%
80
.3%
31
.3%
61
.0%
37
.3%
64
.3%
81
.2%
61
.3%
63
.7%
Cap
ex/R
even
ue
7.6
%5
.3%
6.9
%1
5.2
%9
.1%
3.9
%5
.5%
7.8
%4
.3%
5.5
%4
.6%
6.5
%4
.9%
Ret
urn
on
Eq
uit
yN
/A1
4.1
1%
9.5
6%
10
.78
%1
1.1
1%
10
.54
%8
.97
%8
.97
%1
0.4
1%
10
.05
%8
.85
%1
0.5
4%
8.8
5%
Co
vera
ge/
Lev
era
ge
To
tal
Deb
t/L
TM
EB
ITD
A2
.70
x3
.86
x3
.96
x3
.83
x4
.15
x3
.96
x3
.84
x3
.84
x3
.52
x3
.59
x3
.25
x3
.96
x3
.25
x
EB
ITD
A/I
nte
rest
7.2
3x
3.8
8x
3.6
1x
2.1
5x
4.1
1x
8.4
1x
2.4
9x
4.2
9x
3.0
1x
4.8
2x
9.5
8x
4.2
5x
4.8
9x
EB
ITD
A-C
AP
EX
/In
tere
st5
.37
x2
.59
x1
.89
x-0
.98
x1
.62
x7
.16
x0
.78
x2
.14
x1
.19
x2
.95
x7
.57
x2
.16
x3
.05
x
EB
IT/I
nte
rest
5.5
3x
2.5
9x
2.2
0x
0.5
4x
2.3
9x
6.7
6x
0.7
8x
2.6
2x
1.1
2x
3.1
0x
7.7
7x
2.6
0x
3.1
2x
Ca
pit
al
Str
uct
ure
To
tal
Deb
t/T
ota
l C
apit
al5
8.2
%5
7.8
%5
5.6
%5
5.9
%5
7.8
%5
6.0
%5
7.4
%5
7.4
%5
6.3
%5
6.8
%5
0.1
%5
6.0
%5
0.1
%
Pre
ferr
ed S
tock
/Cap
ital
6.9
%6
.7%
7.2
%7
.3%
7.0
%6
.8%
7.2
%7
.2%
7.5
%7
.2%
7.2
%6
.8%
7.2
%
To
tal
Deb
t/E
qu
ity
18
6.3
%1
81
.8%
16
8.8
%1
71
.9%
18
3.5
%1
69
.3%
18
2.7
%1
82
.7%
17
6.3
%1
78
.3%
13
3.8
%1
69
.3%
13
3.8
%
ST
Deb
t/T
ota
l D
ebt
39
.9%
14
.8%
13
.1%
12
.2%
17
.2%
16
.3%
16
.5%
16
.5%
12
.1%
16
.3%
9.9
%1
6.3
%9
.9%
Liq
uid
ity
An
aly
sis
Cu
rren
t R
atio
:0
.47
x1
.07
x0
.81
x0
.76
x0
.69
x0
.77
x0
.81
x0
.81
x0
.84
x0
.86
x1
.21
x0
.77
x1
.21
x
Qu
ick
Rat
io:
0.2
6x
0.5
8x
0.4
1x
0.4
1x
0.3
6x
0.4
2x
0.4
6x
0.4
6x
0.5
1x
0.4
1x
0.6
3x
0.4
2x
0.6
3x
Wo
rkin
g C
apit
al:
($5
73
)$
54
($1
12
)($
14
7)
($2
13
)($
17
6)
($1
40
)($
14
0)
($1
28
)($
10
9)
$1
25
($1
76
)$
12
5
So
urc
e: C
om
pa
ny
Rep
ort
s, P
iper
Ja
ffra
y
January 2004
48 | ������������� ����������� Piper Jaffray Fixed Income Research
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as
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tric
($ i
n m
illi
on
s)
Ye
ar
en
de
d D
ece
mb
er
31
Inco
me
Sta
tem
ent
Su
mm
ary
19
99
20
00
20
01
1Q
02
2Q
02
3Q
02
4Q
02
20
02
1Q
03
2Q
03
3Q
03
LT
M 3
Q0
2L
TM
3Q
03
Rev
enu
e$
1,2
87
$1
,45
4$
1,4
57
$2
62
$3
52
$4
89
$2
85
$1
,38
8$
33
3$
35
8$
54
0$
1,3
66
$1
,51
6
EB
ITD
A3
89
38
83
56
18
87
20
13
83
62
35
84
19
13
54
34
7
EB
IT2
70
27
12
37
65
71
70
62
39
25
51
61
23
22
25
Net
In
com
e1
39
14
21
21
(1)
31
98
(2)
12
6(3
)2
89
51
22
11
8
Fre
e C
ash
Flo
w S
um
ma
ry
EB
ITD
A:
$3
89
$3
88
$3
56
$1
8$
87
$2
01
$3
8$
36
2$
35
$8
4$
19
1$
35
4$
34
7
-
Inte
rest
Ex
pen
se4
74
94
71
01
01
11
04
11
01
01
04
24
0
-
Div
iden
ds
10
31
04
10
42
62
62
62
61
04
26
26
26
10
41
05
-
Cap
ital
Ex
pen
dit
ure
s1
01
12
81
32
76
64
29
30
19
93
73
84
02
01
14
5
Fre
e C
ash
Flo
w
$1
37
$1
07
$7
4($
94
)($
13
)$
13
6($
29
)$
19
($3
8)
$1
0$
11
4$
8$
58
Ba
lan
ce S
hee
t S
um
ma
ry
Cas
h$
2$
0$
0$
0$
0$
1$
0$
0$
0$
0$
5$
1$
5
To
tal
Ass
ets
2,3
21
2,4
37
2,4
34
2,4
78
2,5
80
2,6
80
2,6
60
2,6
60
2,6
85
2,7
31
2,8
22
2,6
80
2,8
22
Sh
ort
Ter
m D
ebt
00
00
32
00
00
02
0
Lo
ng
Ter
m D
ebt
70
37
03
70
07
01
70
47
09
71
17
11
71
17
12
71
07
09
71
0
To
tal
Deb
t7
03
70
37
00
70
17
07
71
27
11
71
17
11
71
27
10
71
27
10
To
tal
Net
Deb
t7
01
70
27
00
70
07
07
71
17
10
71
07
11
71
27
05
71
17
05
Sh
areh
old
ers'
Eq
uit
y8
89
92
89
26
89
89
03
97
59
04
90
48
75
87
69
43
97
59
43
To
tal
Cap
ital
1,5
92
1,6
31
1,6
26
1,5
99
1,6
10
1,6
87
1,6
15
1,6
15
1,5
85
1,5
89
1,6
53
1,6
87
1,6
53
Ma
rgin
An
aly
sis
Op
erat
ing
Mar
gin
33
.7%
29
.8%
27
.7%
18
.5%
28
.0%
43
.5%
17
.3%
29
.5%
14
.0%
26
.9%
37
.5%
29
.4%
26
.1%
EB
ITD
A M
arg
in3
0.2
%2
6.7
%2
4.5
%6
.8%
24
.7%
41
.1%
13
.2%
26
.1%
10
.4%
23
.6%
35
.3%
25
.9%
22
.9%
EB
IT/E
BIT
DA
69
.4%
69
.8%
66
.4%
33
.1%
65
.2%
84
.6%
16
.8%
66
.0%
6.1
%6
5.5
%8
4.3
%6
5.5
%6
4.6
%
Cap
ex/R
even
ue
7.9
%8
.8%
9.1
%2
8.8
%1
8.1
%5
.9%
10
.7%
14
.3%
11
.0%
10
.5%
7.4
%1
4.7
%9
.6%
Ret
urn
on
Eq
uit
yN
A1
5.7
%1
3.1
%1
3.4
%1
3.7
%1
2.5
%1
3.8
%1
3.8
%1
4.0
%1
3.6
%1
2.3
%1
2.5
%1
2.3
%
Co
vera
ge/
Lev
era
ge
To
tal
Deb
t/L
TM
EB
ITD
A1
.81
x1
.81
x1
.97
x2
.09
x2
.00
x2
.01
x1
.96
x1
.96
x1
.87
x1
.99
x2
.04
x2
.01
x2
.04
x
EB
IT/I
nte
rest
5.7
8x
5.5
3x
5.0
7x
0.5
8x
5.4
6x
16
.06
x0
.64
x5
.82
x0
.21
x5
.37
x1
6.0
8x
5.5
7x
5.5
6x
EB
ITD
A/I
nte
rest
8.3
3x
7.9
2x
7.6
3x
1.7
5x
8.3
8x
18
.97
x3
.79
x8
.81
x3
.44
x8
.19
x1
9.0
7x
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EB
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/In
tere
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15
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.01
x
Ca
pit
al
Str
uct
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To
tal
Deb
t/A
sset
s3
0.3
%2
8.8
%2
8.8
%2
8.3
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7.4
%2
6.6
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6.7
%2
6.7
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6.5
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6.1
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5.1
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6.6
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5.1
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To
tal
Deb
t/C
apit
al4
4.2
%4
3.1
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3.1
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3.8
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3.9
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2.2
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4.0
%4
4.0
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4.8
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4.8
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2.9
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2.2
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2.9
%
To
tal
Deb
t/E
qu
ity
79
.1%
75
.7%
75
.7%
78
.0%
78
.3%
72
.9%
78
.6%
78
.6%
81
.3%
81
.3%
75
.3%
72
.9%
75
.3%
ST
Deb
t/T
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l D
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0.0
%0
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0.0
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0.5
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0.0
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Cu
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5x
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52
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63
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Baa2/BBB+ (FMB)
Electric Credit Trend: Developing
Performance Metrics Customer Growth
2002 6M03 9M03 2003E 6M04E 2004E
EBITDA/Interest
High Margin 6.11x 6.04x 5.85xExpected 4.99x 4.90x 4.50x 5.04x 5.15x 5.12xLow Margin 4.41x 3.64x 3.98x
Total Debt/LTM EBITDA
High Margin 2.18x 1.82x 2.08xExpected 2.87x 3.11x 2.95x 2.64x 2.44x 2.55xLow Margin 3.02x 3.46x 3.56x
Return on Equity
High Margin 10.6% 11.7% 7.0%Expected 5.9% 4.2% 2.6% 5.7% 5.1% 4.1%Low Margin 3.0% -0.6% -0.1%
Dividend Payout
High Margin 0% 0% 0%Expected 0% 0% 0% 0% 0% 0%Low Margin 0% 0% 0%
Revenue Sources Customer Revenue Distribution
Operating Income Sources System Generation - 1945 MW
Capital Structure Consolidated Debt Maturities
$0
$100
$200
$300
$400
$500
$600
$700
$800
2004 2005 2006 2007 Beyond
(in
mil
lio
ns)
0%
20%
40%
60%
80%
100%
2001 2002 6M03 3Q03
Electric Utility
0
500
1,000
1,500
2,000
2,500
4Q02 2Q03 4Q03E 2Q04E 4Q04E
Cap
italizati
on
(in
millio
ns)
Long Term Debt Preferred Stock Common Equity
Electric Utility
680,000
690,000
700,000
710,000
720,000
730,000
740,000
750,000
1998 1999 2000 2001 2002C
us
tom
ers
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
Gro
wth
Ra
te
Electric Utility
100%
Residential
39%
Commercial
37%
Industrial
18%
Other
6%
Coal
34%
Gas/Oil
40%
Hydro
26%
January 2004
Piper Jaffray Fixed Income Research ������������� ����������� | 51
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Electric
EBITDA Estimates
Coverage/Leverage
Ratings Ranges S&P Corporate Credit Rating: BBB+
S&P BBB Reported S&P BBB S&P BBB Estimated S&P BBBUpper Range 3Q03 Lower Range Upper Range 2004 Lower Range
FFO/Total Debt
24.5% 25.1% 17.5% 24.5% 28.5% 17.5%
FFO Interest Coverage
3.8x 4.2x 2.7x 3.8x 4.7x 2.7x
Pretax Interest Coverage
3.3x 1.8x 2.2x 3.3x 2.1x 2.2x
Total Debt/Total Capital
49.5% 46.3% 57.0% 49.5% 41.5% 57.0%
Ratings Scales
Current S&P Financial Profile Proxy
Total Debt/
Total Capital
FFO Interest
Coverage
Pretax Interest
Coverage
FFO/Total Debt
2004 Estimated S&P Financial Profile Proxy
Total Debt/
Total Capital
FFO Interest
Coverage
Pretax Interest
Coverage
FFO/Total Debt
-1.00x
0.00x
1.00x
2.00x
3.00x
4.00x
5.00x
1Q00
2Q00
3Q00
4Q00
1Q01
2Q01
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
E1Q
04E
2Q04
E3Q
04E
4Q04
E
EB
ITD
A/In
tere
st
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
To
tal D
eb
t/C
ap
ital
EBITDA/Interest Total Debt/Capital
$0
$20
$40
$60
$80
$100
$120
$140
1Q00
2Q00
3Q00
4Q00
1Q01
2Q01
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
E
1Q04
E
2Q04
E
3Q04
E
4Q04
E
EB
ITD
A (
millio
ns)
0.00x
0.50x
1.00x
1.50x
2.00x
2.50x
3.00x
3.50x
4.00x
To
tal D
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t/E
BIT
DA
EBITDA Total Debt/EBITDA
AA
A
BBB
BB
B
AA
A
BBB
BB
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January 2004
52 | ������������� ����������� Piper Jaffray Fixed Income Research
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Portland General Electric (PGE) is a single, integrated electric utility engaged in the generation, purchase, transmission,distribution, and retail sale of electricity in the State of Oregon. PGE also sells wholesale energy to utilities, brokers,and power marketers located throughout the western United States. PGE’s service area is located entirely within Oregonand covers 3,150 square miles. It includes 51 incorporated cities, of which Portland and Salem are the largest, within astate-approved service area allocation of 4,095 square miles. PGE estimates that at the end of 2002 its service areapopulation was approximately 1.5 million, comprising about 44% of the state’s population. The Company added ap-proximately 7,700 customers during 2002, and at December 31, 2002 served approximately 743,000 retail customers.
On July 2, 1997, Portland General Corporation, the former parent of PGE, merged with Enron Corp, with PGE operat-ing as a wholly owned subsidiary of Enron. On December 2, 2001, Enron, along with certain of its subsidiaries, filed toinitiate bankruptcy proceedings under Chapter 11 of the federal Bankruptcy code. PGE is not included in the filing.
During the bankruptcy process Enron put PGE up for sale and received and has accepted an offer from Oregon ElectricUtility Co. for $2.35 billion in cash and the assumption of debt. Oregon Electric is a newly-formed entity financiallybacked by investment funds from Texas Pacific Group, a private equity investment firm. The sale is subject to a biddingprocess before the bankruptcy court will allow the deal to close.
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Issuer Ticker Cusip Coupon Maturity Call Date Outstanding Collateral RatingsPORTLAND GEN ELECTRIC ENRNQ 736508BC5 7.875 3/15/2010 150,000,000 SENIOR NOTES Baa3/BBBPORTLAND GENERAL ELEC ENRNQ 736508BG6 8.125 2/1/2010 150,000,000 1ST MORTGAGE Baa2/BBB+PORTLAND GENERAL ELEC ENRNQ 736508BK7 5.279 4/1/2013 50,000,000 1ST MORTGAGE Aaa/AAAPORTLAND GENERAL ELEC ENRNQ 73651EAA6 5.625 8/1/2013 50,000,000 1ST MORTGAGE Baa2/BBB+PORTLAND GENERAL ELEC ENRNQ 73651EAB4 6.750 8/1/2023 50,000,000 1ST MORTGAGE Baa2/BBB+PORTLAND GENERAL ELEC ENRNQ 73651EAC2 6.875 8/1/2033 50,000,000 1ST MORTGAGE Baa2/BBB+PORTLAND GENERAL ELEC ENRNQ 73651HBL4 7.150 6/15/2007 50,000,000 1ST MORTGAGE Baa2/BBB+
January 2004
Piper Jaffray Fixed Income Research ������������� ����������� | 53
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2,0
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1,9
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2,2
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2,2
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fit
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35
.6%
28
.0%
16
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.4%
23
.9%
18
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26
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.0%
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EB
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arg
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1.1
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4.1
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EB
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BIT
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63
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64
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50
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56
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vera
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To
tal
Deb
t/L
TM
EB
ITD
A2
.40
x1
.93
x3
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x
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nte
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6.2
7x
4.6
2x
6.3
7x
5.2
4x
4.0
6x
4.2
5x
4.9
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5.2
0x
4.6
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3.7
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5.2
4x
4.4
4x
EB
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AP
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/In
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1.9
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pit
al
Str
uct
ure
To
tal
Deb
t/T
ota
l C
apit
al4
7.0
%4
1.9
%4
8.9
%4
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%4
6.3
%4
5.0
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5.5
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4.1
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6.1
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%4
5.0
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%
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ferr
ed S
tock
/Cap
ital
5.1
%5
.3%
4.7
%4
.6%
4.6
%4
.8%
4.7
%4
.7%
4.7
%4
.4%
2.2
%4
.8%
2.2
%
To
tal
Deb
t/E
qu
ity
98
.8%
81
.5%
10
5.1
%9
9.9
%9
5.2
%9
0.8
%9
2.6
%9
2.6
%8
7.7
%9
4.0
%9
0.6
%9
0.8
%9
0.6
%
ST
Deb
t/T
ota
l D
ebt
29
.0%
7.6
%3
0.4
%2
9.3
%4
0.2
%4
0.5
%1
8.4
%1
8.4
%1
5.3
%4
.6%
5.4
%4
0.5
%5
.4%
Liq
uid
ity
An
aly
sis
Cu
rren
t R
atio
:0
.55
x0
.99
x0
.89
x0
.96
x0
.82
x0
.77
x1
.06
x1
.06
x1
.13
x1
.76
x1
.53
x0
.77
x1
.53
x
Qu
ick
Rat
io:
0.2
9x
0.4
4x
0.3
2x
0.4
1x
0.3
4x
0.3
5x
0.5
2x
0.5
2x
0.5
3x
1.0
0x
0.9
0x
0.3
5x
0.9
0x
Wo
rkin
g C
apit
al:
($2
22
)($
9)
($9
5)
($2
7)
($1
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)($
18
1)
$3
2$
32
$6
6$
27
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22
2($
18
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$2
22
So
urc
e: C
om
pa
ny
Rep
ort
s, P
iper
Ja
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January 2004
54 | ������������� ����������� Piper Jaffray Fixed Income Research
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PSE: Baa2/BBB (FMB)
Electric & Gas Credit Trend: Improving
Performance Metrics Customer Distribution
2002 6M03 9M03 2003E 6M04E 2004E
EBITDA/Interest
High Margin 3.68x 5.00x 4.47xExpected 2.96x 3.34x 3.11x 3.40x 4.23x 4.16xLow Margin 3.24x 3.30x 3.62x
Total Debt/LTM EBITDA
High Margin 3.47x 2.95x 3.06xExpected 4.43x 4.27x 4.10x 3.80x 3.59x 3.41xLow Margin 4.04x 4.50x 4.25x
Return on Equity
High Margin 10.4% 14.5% 12.0%Expected 8.1% 8.6% 8.8% 8.3% 9.6% 9.9%Low Margin 6.8% 5.2% 7.1%
Dividend Payout
High Margin 54.0% 37.3% 42.7%Expected 88.4% 71.2% 70.7% 69.6% 56.8% 51.6%Low Margin 86.4% 114.6% 81.0%
Revenue Sources
Operating Income Sources Customer Growth
System Generation - 1801 MW Customer Growth
Electric Customer Distribution
Residential
89%
Commercial
11%
Industrial
0% Other
0%
Gas Customer Distribution
Residential
92%
Transport.
0%
Industrial
0%
Commercial
8%
0%
20%
40%
60%
80%
100%
2001 2002 6M03 3Q03
Electric segment Gas segment Other
Electric
840,000
860,000
880,000
900,000
920,000
940,000
960,000
980,000
1998 1999 2000 2001 2002
Cu
sto
me
rs
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%G
row
th R
ate
Gas
500,000
520,000
540,000
560,000
580,000
600,000
620,000
640,000
1998 1999 2000 2001 2002
Cu
sto
me
rs
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
Gro
wth
Ra
te
Regulated
Utility
96%
InfrastruX
3% Other
1%
Coal
39%
Oil/Gas
44%
Hydro Plants
17%
January 2004
Piper Jaffray Fixed Income Research ������������� ����������� | 55
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Electric & Gas
EBITDA Estimates
Coverage/Leverage
Ratings Ranges S&P Corporate Credit Rating: BBB-
S&P BBB Reported S&P BBB S&P BBB Estimated S&P BBBUpper Range 3Q03 Lower Range Upper Range 2004 Lower Range
FFO/Total Debt
27.0% 18.1% 20.5% 27.0% 22.5% 20.5%
FFO Interest Coverage
4.0x 3.3x 3.0x 4.0x 4.0x 3.0x
Pretax Interest Coverage
3.5x 2.0x 2.4x 3.5x 2.6x 2.4x
Total Debt/Total Capital
47.0% 54.6% 55.0% 47.0% 48.9% 55.0%
Ratings Scales
Current S&P Financial Profile Proxy
Total Debt/
Total Capital
Pretax Interest
Coverage
FFO Interest
Coverage
FFO/Total Debt
2004 Estimated S&P Financial Profile Proxy
Total Debt/
Total Capital
Pretax Interest
Coverage
FFO Interest
Coverage
FFO/Total Debt
0.00x
1.00x
2.00x
3.00x
4.00x
5.00x
6.00x
1Q00
2Q00
3Q00
4Q00
1Q01
2Q01
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
E
1Q04
E
2Q04
E
3Q04
E
4Q04
E
EB
ITD
A/In
tere
st
40.0%
45.0%
50.0%
55.0%
60.0%
65.0%
To
tal D
eb
t/C
ap
ital
EBITDA/Interest Total Debt/Capital
$0
$200
$400
$600
$800
1Q00
2Q00
3Q00
4Q00
1Q01
2Q01
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
E
1Q04
E
2Q04
E
3Q04
E
4Q04
E
EB
ITD
A (
millio
ns)
0.00x
1.00x
2.00x
3.00x
4.00x
5.00x
6.00x
7.00x
To
tal D
eb
t/E
BIT
DA
EBITDA Total Debt/EBITDA
AA
A
BBB
BB
B
AA
A
BBB
BB
B
January 2004
56 | ������������� ����������� Piper Jaffray Fixed Income Research
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Puget Energy, Inc. is an energy services holding company. All of its operations are conducted through its subsidiaries,Puget Sound Energy, a utility company and InfrastruX Group, Inc., a construction services company.
Puget Sound Energy is a public utility that furnishes electric and gas service in a territory covering approximately 6,000square miles, principally in the Puget Sound region of Washington State. At September 30, 2003, PSE had approxi-mately 972,000 electric customers, consisting of 857,000 residential, 109,000 commercial, and 3,900 industrialcustomers. At the same period, PSE had approximately 636,000 gas customers consisting of 586,000 residential, 47,500commercial, and 2,700 industrial customers. A small number of wholesale customers are covered by both the electricand gas segments.
InfrastruX is a non-regulated construction services business. InfrastruX is a national leader in providing infrastructureconstruction services to the electric and gas utility industries. InfrastruX has acquired eleven companies primarily inTexas and the north-central and eastern United States that are engaged in contracting services to gas and electricutilities.
Issuer Ticker Cusip Coupon Maturity Call Date Amount Issued Collateral RatingsPUGET SOUND ENERGY INC PSD 74531EAA0 7.020 12/1/2027 300,000,000 1ST MORTGAGE Baa2/BBBPUGET SOUND ENERGY INC PSD 74531EAG7 7.690 2/1/2011 260,000,000 1ST MORTGAGE Baa2/BBBPUGET SOUND ENERGY INC PSD 74531EAE2 7.960 2/22/2010 225,000,000 1ST MORTGAGE Baa2/BBBPUGET SOUND ENERGY INC PSD 74531EAB8 6.740 6/15/2018 200,000,000 1ST MORTGAGE Baa2/BBBPUGET SOUND ENERGY INC PSD 745332BS4 3.363 6/1/2008 150,000,000 1ST MORTGAGE Baa2/BBBPUGET SOUND ENERGY INC PSD 74531EAD4 6.460 3/9/2009 150,000,000 1ST MORTGAGE Baa2/BBB
Capital Structure Consolidated Debt Maturities
$0$200$400$600$800
$1,000$1,200$1,400$1,600$1,800
2004 2005 2006 2007 Beyond
(in
mill
ion
s)
0500
1,0001,5002,0002,5003,0003,5004,0004,500
4Q02 2Q03 4Q03E 2Q04E 4Q04E
Cap
ital
izat
ion
(in
mill
ion
s)
Long Term Debt Minority Interest
Preferred Stock Common Equity
January 2004
Piper Jaffray Fixed Income Research ������������� ����������� | 57
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($ i
n m
illi
ons)
Yea
r en
ded
Dec
emb
er 3
1
Inco
me
Sta
tem
ent
Su
mm
ary
1999
2000
2001
1Q
02
2Q
02
3Q
02
4Q
02
2002
1Q
03
2Q
03
3Q
03
LT
M 3
Q02
LT
M 3
Q03
Rev
enues
$2
,06
8$
3,3
02
$2
,88
7$
73
9$
54
1$
45
8$
65
4$
2,3
92
$6
76
$5
58
$5
16
$2
,41
1$
2,4
03
EB
ITD
A5
99
69
75
90
14
41
51
11
81
90
60
41
88
13
71
25
53
86
40
EB
IT4
16
49
43
66
86
90
57
12
53
57
12
27
15
52
98
37
3
Net
Inco
me
18
61
94
10
72
63
19
52
11
84
52
21
17
51
30
Fre
e C
ash
Flo
w S
um
mary
EB
ITD
A:
$5
99
$6
97
$5
90
$1
44
$1
51
$1
18
$1
90
$6
04
$1
88
$1
37
$1
25
$5
38
$6
40
-
Inte
rest
Expen
se1
61
18
41
98
52
51
50
51
20
45
04
84
72
05
19
5
-
Div
iden
ds
16
01
43
14
23
62
02
12
19
72
22
22
21
12
87
-
Cap
ital
Exp.
33
12
96
24
76
66
26
43
22
24
69
73
73
24
52
46
Fre
e C
ash F
low
(53
)7
42
(10
)1
8(1
7)
87
78
48
(6)
(17
)(2
4)
11
1
Bala
nce
Sh
eet
Su
mm
ary
Cas
h &
Short
Ter
m I
nves
t.$
66
$3
6$
92
$8
3$
97
$1
17
$1
96
$1
96
$1
93
$1
53
$3
2$
11
7$
32
Tota
l A
sset
s5
,14
65
,55
75
,54
75
,53
15
,48
15
,50
65
,65
75
,65
75
,64
65
,62
75
,53
15
,50
65
,53
1
Short
Ter
m D
ebt
65
23
97
34
91
57
21
22
26
12
11
21
17
53
23
27
42
26
27
4
Long T
erm
Deb
t1
,78
32
,17
12
,12
72
,18
62
,19
72
,16
32
,15
02
,15
02
,07
22
,00
72
,00
72
,16
32
,00
7
Pre
ferr
ed S
tock
22
62
18
41
14
03
40
34
03
40
34
03
37
63
76
34
24
03
34
2
Tota
l D
ebt
2,6
61
2,7
86
2,8
86
2,7
46
2,8
13
2,7
92
2,6
73
2,6
73
2,6
23
2,7
06
2,6
23
2,7
92
2,6
23
Tota
l N
et D
ebt
2,5
95
2,7
50
2,7
94
2,6
63
2,7
16
2,6
75
2,4
78
2,4
78
2,4
30
2,5
53
2,5
91
2,6
75
2,5
91
Shar
ehold
ers'
Equit
y1
,37
91
,42
71
,36
31
,38
81
,39
71
,39
01
,53
41
,53
41
,56
11
,56
71
,55
41
,39
01
,55
4
Tota
l C
apit
al4
,04
04
,21
34
,24
94
,13
44
,21
04
,18
24
,20
84
,20
84
,18
34
,27
34
,17
74
,18
24
,17
7
Marg
in A
naly
sis
Oper
atin
g P
rofi
t M
argin
37
.7%
27
.2%
27
.8%
28
.3%
37
.9%
34
.6%
37
.6%
34
.2%
36
.3%
32
.9%
32
.5%
31
.4%
35
.1%
EB
ITD
A M
argin
29
.0%
21
.1%
20
.4%
19
.5%
28
.0%
25
.7%
29
.1%
25
.2%
27
.8%
24
.5%
24
.2%
22
.3%
26
.6%
EB
IT/E
BIT
DA
69
.4%
70
.8%
62
.0%
59
.7%
59
.7%
47
.9%
65
.4%
59
.2%
65
.1%
52
.0%
44
.5%
55
.5%
58
.4%
Cap
ex/R
even
ue
16
.0%
9.0
%8
.6%
9.0
%1
1.4
%1
4.0
%4
.9%
9.4
%1
0.2
%1
3.0
%1
4.1
%1
0.1
%1
0.2
%
Ret
urn
on E
quit
yN
/A1
3.8
2%
7.6
6%
3.8
6%
5.1
3%
5.3
9%
8.1
4%
8.1
4%
9.2
3%
8.5
9%
8.8
0%
5.3
9%
8.8
0%
Cove
rage/
Lev
erage
Tota
l D
ebt/
LT
M E
BIT
DA
4.4
4x
4.0
0x
4.8
9x
5.8
7x
5.3
3x
5.1
9x
4.4
3x
4.4
3x
4.0
5x
4.2
7x
4.1
0x
5.1
9x
4.1
0x
EB
ITD
A/I
nte
rest
3.7
1x
3.7
9x
2.9
7x
2.7
5x
2.9
9x
2.3
4x
3.7
5x
2.9
6x
3.7
9x
2.8
6x
2.6
5x
2.6
2x
3.2
8x
EB
ITD
A-C
AP
EX
/Inte
rest
1.6
6x
2.1
8x
1.7
3x
1.4
9x
1.7
7x
1.0
7x
3.1
2x
1.8
6x
2.4
1x
1.3
4x
1.1
0x
1.4
3x
2.0
2x
EB
IT/I
nte
rest
2.5
8x
2.6
8x
1.8
4x
1.6
4x
1.7
8x
1.1
2x
2.4
5x
1.7
5x
2.4
7x
1.4
9x
1.1
8x
1.4
5x
1.9
1x
Capit
al
Str
uct
ure
Tota
l D
ebt/
Tota
l C
apit
al6
0.3
%6
1.0
%5
8.3
%5
6.7
%5
7.2
%5
7.1
%5
4.0
%5
4.0
%5
3.7
%5
4.5
%5
4.6
%5
7.1
%5
4.6
%
Pre
ferr
ed S
tock
/Cap
ital
5.6
%5
.2%
9.7
%9
.8%
9.6
%9
.6%
9.6
%9
.6%
9.0
%8
.8%
8.2
%9
.6%
8.2
%
Tota
l D
ebt/
Equit
y1
93
.0%
19
5.3
%2
11
.8%
19
7.9
%2
01
.3%
20
1.0
%1
74
.2%
17
4.2
%1
68
.1%
17
2.7
%1
68
.8%
20
1.0
%1
68
.8%
ST
Deb
t/T
ota
l D
ebt
24
.5%
14
.3%
12
.1%
5.7
%7
.5%
8.1
%4
.5%
4.5
%6
.7%
11
.9%
10
.4%
8.1
%1
0.4
%
Liq
uid
ity
An
aly
sis
Curr
ent
Rat
io:
0.5
2x
0.8
0x
0.7
8x
0.8
2x
0.8
1x
0.8
7x
1.1
8x
1.1
8x
1.0
4x
0.9
0x
0.7
8x
0.8
7x
0.7
8x
Quic
k R
atio
:0
.28
x0
.38
x0
.44
x0
.57
x0
.59
x0
.59
x0
.83
x0
.83
x0
.76
x0
.65
x0
.46
x0
.59
x0
.46
x
Work
ing C
apit
al:
($4
77
)($
20
2)
($1
84
)($
13
3)
($1
19
)($
79
)$
10
1$
10
1$
22
($6
2)
($1
32
)($
79
)($
13
2)
So
urc
e: C
om
pa
ny
Rep
ort
s, P
iper
Ja
ffra
y
January 2004
58 | ������������� ����������� Piper Jaffray Fixed Income Research
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Pu
get
So
un
d E
nerg
y
($ i
n m
illi
ons)
Yea
r en
ded
Dec
emb
er 3
1
Inco
me
Sta
tem
ent
Su
mm
ary
19
99
20
00
20
01
1Q
02
2Q
02
3Q
02
4Q
02
20
02
1Q
03
2Q
03
3Q
03
LT
M 3
Q0
2L
TM
3Q
03
Rev
enu
e$2,0
68
$3,3
02
$2,7
13
$678
$479
$366
$564
$2,0
73
$605
$466
$422
$2,1
35
$2,0
57
EB
ITD
A599
697
581
151
141
105
182
580
191
125
115
514
613
EB
IT416
494
365
95
84
48
121
347
128
64
50
288
363
Net
In
com
e175
185
96
24
27
348
101
46
18
860
120
Fre
e C
ash
Flo
w S
um
ma
ry
EB
ITD
A:
$599
$697
$581
$151
$141
$105
$182
$580
$191
$125
$115
$514
$613
-
Inte
rest
Expen
se161
184
195
51
49
49
49
199
48
47
45
200
189
-
Cap
ital
Ex
pen
dit
ure
s331
296
247
61
52
56
55
224
67
68
69
221
259
Fre
e C
ash
Flo
w
$107
$216
$138
$38
$40
$1
$78
$157
$76
$11
($0)
$93
$164
Ba
lan
ce S
hee
t S
um
ma
ry
Cas
h$66
$36
$83
$74
$74
$98
$180
$180
$181
$144
$22
$98
$22
Tota
l A
sset
s5,1
46
5,5
57
5,3
18
5,2
54
5,1
65
5,1
88
5,3
39
5,3
39
5,3
35
5,2
84
5,1
83
5,1
88
5,1
83
Short
Ter
m D
ebt
652
397
455
292
195
204
102
102
158
167
120
204
120
Long T
erm
Deb
t1,7
83
2,1
71
2,0
54
2,0
64
2,0
64
2,0
36
2,0
22
2,0
22
1,9
43
2,0
00
2,0
00
2,0
36
2,0
00
Pre
ferr
ed S
tock
226
218
411
403
403
403
403
403
376
376
342
403
342
Tota
l D
ebt
2,6
61
2,7
86
2,9
20
2,7
59
2,6
62
2,6
43
2,5
27
2,5
27
2,4
77
2,5
43
2,4
62
2,6
43
2,4
62
Tota
l N
et D
ebt
2,5
95
2,7
50
2,8
37
2,6
85
2,5
88
2,5
45
2,3
47
2,3
47
2,2
97
2,3
99
2,4
41
2,5
45
2,4
41
Shar
ehold
ers'
Equit
y1,3
79
1,4
27
1,2
68
1,2
90
1,2
96
1,2
83
1,4
26
1,4
26
1,4
56
1,4
58
1,4
44
1,2
83
1,4
44
Tota
l C
apit
al4,0
40
4,2
13
4,1
87
4,0
49
3,9
58
3,9
27
3,9
53
3,9
53
3,9
33
4,0
01
3,9
06
3,9
27
3,9
06
Ma
rgin
An
aly
sis
Op
erat
ing
Mar
gin
37.7
%27.2
%29.0
%31.6
%39.8
%39.0
%41.7
%37.8
%40.6
%36.2
%36.7
%33.6
%39.1
%
EB
ITD
A M
arg
in29.0
%21.1
%21.4
%22.2
%29.5
%28.8
%32.3
%28.0
%31.5
%26.9
%27.1
%24.1
%29.8
%
EB
IT/E
BIT
DA
69.4
%70.8
%62.9
%62.9
%59.2
%45.3
%66.2
%59.9
%67.3
%51.4
%43.4
%55.9
%59.2
%
Cap
ex/R
even
ue
16.0
%9.0
%9.1
%9.0
%10.8
%15.2
%9.8
%10.8
%11.0
%14.6
%16.4
%10.4
%12.6
%
Ret
urn
on
Eq
uit
yN
A13.2
%7.1
%3.3
%4.6
%4.7
%7.5
%7.5
%9.0
%8.3
%8.8
%4.7
%8.8
%
Co
vera
ge/
Lev
era
ge
Tota
l D
ebt/
LT
M E
BIT
DA
4.4
4x
4.0
0x
5.0
3x
5.5
9x
5.2
2x
5.1
4x
4.3
6x
4.3
6x
3.9
9x
4.2
1x
4.0
2x
5.2
2x
4.0
2x
EB
IT/I
nte
rest
2.5
8x
2.6
8x
1.8
8x
1.8
5x
1.7
0x
0.9
8x
2.4
5x
1.7
5x
2.6
6x
1.3
8x
1.1
0x
1.4
4x
1.9
2x
EB
ITD
A/I
nte
rest
3.7
1x
3.7
9x
2.9
8x
2.9
3x
2.8
7x
2.1
6x
3.7
0x
2.9
2x
3.9
6x
2.6
9x
2.5
3x
2.5
7x
3.2
4x
EB
ITD
A-C
AP
EX
/Inte
rest
1.6
6x
2.1
8x
1.7
1x
1.7
4x
1.8
2x
1.0
2x
2.5
8x
1.7
9x
2.5
8x
1.2
3x
1.0
0x
1.4
7x
1.8
7x
Ca
pit
al
Str
uct
ure
Tota
l D
ebt/
Ass
ets
51.7
%50.1
%54.9
%52.5
%51.5
%51.0
%47.3
%47.3
%46.4
%48.1
%47.5
%51.0
%47.5
%
Tota
l D
ebt/
Cap
ital
65.9
%66.1
%69.7
%68.1
%67.3
%67.3
%63.9
%63.9
%63.0
%63.6
%63.0
%67.3
%63.0
%
Pre
ferr
ed S
tock
/Cap
ital
5.6
%5.2
%9.8
%10.0
%10.2
%10.3
%10.2
%10.2
%9.6
%9.4
%8.8
%10.3
%8.8
%
Tota
l D
ebt/
Equit
y193.0
%195.3
%230.3
%213.9
%205.5
%206.0
%177.2
%177.2
%170.2
%174.4
%170.6
%206.0
%170.6
%
ST
Deb
t/T
ota
l D
ebt
24.5
%14.3
%15.6
%10.6
%7.3
%7.7
%4.0
%4.0
%6.4
%6.5
%4.9
%7.7
%4.9
%
Liq
uid
ity
An
aly
sis
Curr
ent
Rat
io:
0.5
2x
0.8
0x
0.7
5x
0.7
6x
0.7
2x
0.7
8x
1.1
1x
1.1
1x
0.9
6x
1.0
5x
0.8
8x
0.7
8x
0.8
8x
Quic
k R
atio
:0.2
8x
0.3
8x
0.4
0x
0.5
1x
0.4
9x
0.4
9x
0.7
5x
0.7
5x
0.6
9x
0.7
2x
0.4
5x
0.4
9x
0.4
5x
Work
ing C
apit
al:
($477)
($202)
($199)
($166)
($159)
($117)
$56
$56
($23)
$23
($46)
(117)
(46)
Sourc
e: C
om
pany
Rep
ort
s, P
iper
Jaff
ray
January 2004
Piper Jaffray Fixed Income Research ������������� ����������� | 59
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VUHI: Baa1/A- (Unsecured)
Electric & Gas Credit Trend: Stable
Performance Metrics Customer Distribution
2002 6M03 9M03 2003E 6M04E 2004E
EBITDA/Interest
High Margin 4.59x 5.96x 5.44xExpected 4.22x 4.74x 4.01x 4.32x 4.92x 4.91xLow Margin 4.00x 3.54x 3.90x
Total Debt/LTM EBITDA
High Margin 3.76x 2.93x 2.90xExpected 4.29x 4.03x 3.95x 4.04x 3.57x 3.37xLow Margin 4.42x 4.80x 4.49x
Return on Equity
High Margin 12.8% 15.2% 13.7%Expected 13.3% 13.0% 11.4% 11.2% 10.9% 11.1%Low Margin 9.4% 5.3% 6.1%
Dividend Payout
High Margin 61.8% 51.7% 52.3%Expected 63.4% 63.8% 69.7% 70.7% 73.2% 65.3%Low Margin 85.4% 156.4% 126.6%
Revenue Sources
Operating Income Sources Customer Growth
System Generation - 1528 MW Customer Growth
Gas Customer Distribution
Residential
92%
Commercial
8%
Industrial
0%
Electric Customer Distribution
Residential
87%
Commercial
13%
Industrial
0%
0%
20%
40%
60%
80%
100%
2001 2002 6M03 3Q03
Gas Utility Electric Utility Energy Services & other
Coal
78%
Oil/Gas-Fired
22%
Electric
118,000120,000122,000124,000126,000128,000130,000132,000134,000136,000
1998 1999 2000 2001 2002
Cu
sto
mers
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%G
row
th R
ate
Gas
880,000
900,000
920,000
940,000
960,000
980,000
1998 1999 2000 2001 2002
Cu
sto
mers
0.00%
0.50%
1.00%
1.50%
2.00%
Gro
wth
Rate
Regulated
99%
Unregulated
1%
January 2004
Piper Jaffray Fixed Income Research ������������� ����������� | 61
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Electric & Gas
EBITDA Estimates
Coverage/Leverage
Ratings Ranges S&P Corporate Credit Rating: A-
S&P A Reported S&P A S&P A Estimated S&P AUpper Range 3Q03 Lower Range Upper Range 2004 Lower Range
FFO/Total Debt
30.5% 17.2% 24.5% 30.5% 19.5% 24.5%
FFO Interest Coverage
4.5x 4.0x 3.8x 4.5x 4.4x 3.8x
Pretax Interest Coverage
4.0x 2.7x 3.3x 4.0x 3.1x 3.3x
Total Debt/Total Capital
43.0% 55.3% 49.5% 43.0% 53.4% 49.5%
Ratings Scales
Current S&P Financial Profile Proxy
Total Debt/
Total Capital
Pretax Interest
Coverage
FFO Interest
Coverage
FFO/Total Debt
2004 Estimated S&P Financial Profile Proxy
Total Debt/
Total Capital
Pretax Interest
Coverage
FFO Interest
Coverage
FFO/Total Debt
0.00x
1.00x
2.00x
3.00x
4.00x
5.00x
6.00x
7.00x
8.00x
1Q00
2Q00
3Q00
4Q00
1Q01
2Q01
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
E
1Q04
E
2Q04
E
3Q04
E
4Q04
E
EB
ITD
A/In
tere
st
40.0%
45.0%
50.0%
55.0%
60.0%
65.0%
70.0%
To
tal D
eb
t/C
ap
ital
EBITDA/Interest Total Debt/Capital
$0
$20
$40
$60
$80
$100
$120
$140
1Q00
2Q00
3Q00
4Q00
1Q01
2Q01
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
E
1Q04
E
2Q04
E
3Q04
E
4Q04
E
EB
ITD
A (
millio
ns)
0.00x
1.00x
2.00x
3.00x
4.00x
5.00x
6.00x
To
tal D
eb
t/E
BIT
DA
EBITDA Total Debt/EBITDA
AA
A
BBB
BB
B
AA
A
BBB
BB
B
January 2004
62 | ������������� ����������� Piper Jaffray Fixed Income Research
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Vectren Corp., is an energy and applied technology holding company headquartered in Evansville, Indiana. TheCompany’s wholly owned subsidiary, Vectren Utility Holdings, Inc. (VUHI), serves as the intermediate holding companyfor its three operating public utilities: Indiana Gas Company, Inc, Southern Indiana Gas and Electric Company(SIGECO), and the Ohio operations. VUHI also has other assets that provide information technology and other servicesto the three utilities.
Indiana Gas provides natural gas distribution and transportation services to a diversified customer base in 49 ofIndiana’s 92 counties. SIGECO provides electric generation, transmission, and distribution services to 8 counties insouthwestern Indiana, including counties surrounding Evansville, and participates in the wholesale power market.SIGECO also provides natural gas distribution and transportation services to 10 counties in southwestern Indiana, in-cluding counties surrounding Evansville. The Ohio operations, owned as a tenancy in common by Vectren Energy De-livery of Ohio, Inc.(VEDO), a wholly owned subsidiary, (53 % ownership) and Indiana Gas (47 % ownership), providenatural gas distribution and transportation services to 17 counties in west central Ohio, including counties surroundingDayton.
The Company is also involved in nonregulated activities in four primary business areas: Energy Marketing and Ser-vices, Coal Mining, Utility Infrastructure Services, and Broadband. Energy Marketing and Services markets natural gasand provides energy management services, including energy performance contracting services. Coal Mining mines andsells coal to the Company’s utility operations and to other parties and generates IRS Code Section 29 investment taxcredits relating to the production of coal-based synthetic fuels. Utility Infrastructure Services provides underground con-struction and repair, facilities locating, and meter reading services. Broadband invests in broadband communication ser-vices such as analog and digital cable television, high-speed Internet and data services, and advanced local and long dis-tance phone services. In addition, the nonregulated group has other businesses that provide utility services, municipalbroadband consulting, and retail products and services and that invest in energy-related opportunities, real estate, andleveraged leases.
Issuer Ticker Cusip Coupon Maturity Call Date Amount Issued Collateral RatingsVECTREN UTILITY HOLDINGS VVC 92239MAC5 6.625 12/1/2011 250,000,000 SENIOR NOTES Baa1/A-VECTREN UTILITY HOLDINGS VVC 92239MAD3 5.250 8/1/2013 100,000,000 SENIOR NOTES Baa1/A-VECTREN UTILITY HOLDINGS VVC 92239MAE1 5.750 8/1/2018 100,000,000 SENIOR NOTES Baa1/A-SOUTHERN INDIANA GAS & E VVC 843163AX4 6.720 8/1/2029 80,000,000 SENIOR NOTES A3/A-INDIANA GAS COMPANY VVC 454758AM5 7.450 12/16/2030 12/15/2005 50,000,000 SENIOR NOTES Aaa/AAA
Capital Structure Consolidated Debt Maturities
$0
$200
$400
$600
$800
$1,000
$1,200
2004 2005 2006 2007 Beyond
(in
mill
ion
s)
0
500
1,000
1,500
2,000
2,500
4Q02 2Q03 4Q03E 2Q04E 4Q04E
Cap
ital
izat
ion
(in
mill
ion
s)
Long Term Debt Minority Interest
Preferred Stock Common Equity
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Piper Jaffray Fixed Income Research ������������� ����������� | 63
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($ i
n m
illi
ons)
Year
ended D
ecem
ber
31
Inco
me
Sta
tem
ent
Su
mm
ary
1999
2000
2001
1Q
02
2Q
02
3Q
02
4Q
02
2002
1Q
03
2Q
03
3Q
03
LT
M 3
Q02
LT
M 3
Q03
Rev
enues
$1,0
68
$1,6
33
$2,0
82
$630
$380
$304
$490
$1,8
04
$663
$283
$279
$1,7
23
$1,7
14
EB
ITD
A248
279
274
112
54
62
103
331
126
50
51
303
330
EB
IT161
173
150
83
26
32
71
211
95
18
18
186
202
Net
Inco
me
92
72
53
46
13
14
42
114
56
47
92
110
Fre
e C
ash
Flo
w S
um
mary
EB
ITD
A:
$248
$279
$274
$112
$54
$62
$103
$331
$126
$50
$51
$303
$330
-
Inte
rest
Expen
se44
56
83
20
20
20
20
79
19
18
20
79
76
-
Div
iden
ds
57
60
70
18
18
18
19
72
19
19
20
72
76
-
Cap
ital
Exp.
136
164
235
40
53
57
69
219
44
56
51
243
219
Fre
e C
ash F
low
11
(2)
(114)
34
(36)
(32)
(4)
(39)
44
(43)
(40)
(91)
(42)
Bala
nce
Sh
eet
Su
mm
ary
Cas
h &
Short
Ter
m I
nves
t.$18
$15
$25
$20
$21
$19
$25
$25
$29
$16
$12
$19
$12
Tota
l A
sset
s1,9
80
2,9
26
2,8
79
2,7
77
2,7
20
2,7
68
2,9
27
2,9
27
2,8
95
2,8
20
2,9
32
2,7
68
2,9
32
Short
Ter
m D
ebt
262
814
396
273
278
331
466
466
383
391
211
331
211
Long T
erm
Deb
t487
632
1,0
14
1,0
13
1,0
03
1,0
03
954
954
981
981
1,0
92
1,0
03
1,0
92
Pre
ferr
ed S
tock
19
11
11
00
00
00
00
Tota
l D
ebt
768
1,4
47
1,4
11
1,2
87
1,2
83
1,3
35
1,4
20
1,4
20
1,3
64
1,3
72
1,3
03
1,3
35
1,3
03
Tota
l N
et D
ebt
750
1,4
32
1,3
86
1,2
67
1,2
61
1,3
16
1,3
95
1,3
95
1,3
35
1,3
55
1,2
91
1,3
16
1,2
91
Shar
ehold
ers'
Equit
y711
749
841
875
874
867
872
872
918
899
1,0
54
867
1,0
54
Tota
l C
apit
al1,4
79
2,1
96
2,2
51
2,1
62
2,1
57
2,2
02
2,2
92
2,2
92
2,2
82
2,2
71
2,3
57
2,2
02
2,3
57
Marg
in A
naly
sis
Oper
atin
g P
rofi
t M
argin
26.0
%19.4
%15.7
%20.7
%17.0
%23.6
%23.8
%21.2
%22.4
%21.5
%21.6
%20.6
%22.5
%
EB
ITD
A M
argin
23.2
%17.1
%13.2
%17.8
%14.3
%20.3
%21.0
%18.3
%19.0
%17.6
%18.3
%17.6
%19.2
%
EB
IT/E
BIT
DA
64.9
%62.0
%54.7
%74.1
%47.1
%50.9
%69.4
%63.9
%75.1
%35.1
%35.6
%61.5
%61.1
%
Cap
ex/R
even
ue
12.7
%10.1
%11.3
%6.4
%13.9
%18.7
%-1
4.0
%12.1
%6.7
%19.7
%18.2
%14.1
%12.8
%
Ret
urn
on E
quit
yN
/A9.8
7%
6.6
3%
6.0
6%
9.7
5%
10.9
5%
13.3
1%
13.3
1%
13.8
4%
13.0
5%
11.4
0%
10.9
5%
11.4
0%
Cove
rage/
Lev
erage
Tota
l D
ebt/
LT
M E
BIT
DA
3.1
0x
5.2
0x
5.1
5x
4.6
0x
4.3
6x
4.4
1x
4.2
9x
4.2
9x
3.9
5x
4.0
3x
3.9
5x
4.4
1x
3.9
5x
EB
ITD
A/I
nte
rest
5.6
3x
4.9
4x
3.2
9x
5.6
5x
2.7
8x
3.1
7x
5.2
2x
4.2
2x
6.6
7x
2.7
4x
2.6
1x
3.8
5x
4.3
2x
EB
ITD
A-C
AP
EX
/Inte
rest
2.5
4x
2.0
2x
0.4
6x
3.6
2x
0.0
7x
0.2
6x
1.7
4x
1.4
3x
4.3
3x
-0.3
2x
0.0
2x
0.7
5x
1.4
5x
EB
IT/I
nte
rest
3.6
5x
3.0
6x
1.8
0x
4.1
9x
1.3
1x
1.6
2x
3.6
2x
2.6
9x
5.0
1x
0.9
6x
0.9
3x
2.3
6x
2.6
4x
Capit
al
Str
uct
ure
Tota
l D
ebt/
Tota
l C
apit
al50.6
%65.8
%62.6
%59.5
%59.4
%60.6
%62.0
%62.0
%59.8
%60.4
%55.3
%60.6
%55.3
%
Pre
ferr
ed S
tock
/Cap
ital
1.3
%0.1
%0.0
%0.1
%0.1
%0.0
%0.0
%0.0
%0.0
%0.0
%0.0
%0.0
%0.0
%
Tota
l D
ebt/
Equit
y108.1
%193.3
%167.8
%147.1
%146.8
%154.0
%162.9
%162.9
%148.5
%152.5
%123.5
%154.0
%123.5
%
ST
Deb
t/T
ota
l D
ebt
34.1
%56.2
%28.1
%21.2
%21.7
%24.8
%32.8
%32.8
%28.1
%28.5
%16.2
%24.8
%16.2
%
Liq
uid
ity
An
aly
sis
Curr
ent
Rat
io:
0.6
5x
0.5
8x
0.8
3x
0.8
2x
0.6
6x
0.6
4x
0.6
1x
0.6
1x
0.6
1x
0.5
3x
0.9
3x
0.6
4x
0.9
3x
Quic
k R
atio
:0.3
0x
0.2
5x
0.3
3x
0.4
2x
0.2
6x
0.2
1x
0.2
3x
0.2
3x
0.3
6x
0.2
1x
0.2
3x
0.2
1x
0.2
3x
Work
ing C
apit
al:
($168)
($516)
($116)
($105)
($171)
($201)
($300)
($300)
($253)
($285)
($29)
($201)
($29)
Sourc
e: C
om
pany
Rep
ort
s, P
iper
Jaff
ray
January 2004
64 | ������������� ����������� Piper Jaffray Fixed Income Research
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Ve
ctr
en
Uti
lity
Ho
ldin
gs
($ in m
illio
ns)
Yea
r en
ded
Dec
ember
31
Inco
me
Sta
tem
ent
Su
mm
ary
2000
2001
1Q
02
2Q
02
3Q
02
4Q
02
2002
1Q
03
2Q
03
3Q
03
LT
M 3
Q02
LT
M 3
Q03
Rev
enu
e$1,1
55
$1,4
01
$485
$299
$278
$455
$1,5
17
$629
$256
$250
$1,4
01
$1,5
90
EB
ITD
A273
267
108
52
58
100
318
125
47
50
316
322
EB
IT169
149
81
26
30
71
208
96
17
19
191
203
Net
In
com
e56
45
42
99
37
97
47
12
82
89
Fre
e C
ash
Flo
w S
um
ma
ry
E
BIT
DA
:$273
$267
$108
$52
$58
$100
$318
$125
$47
$50
$316
$322
-
Inte
rest
Ex
pen
se47
72
18
17
17
17
69
17
16
17
70
67
-
Co
mm
on
Div
iden
ds
61
92
17
17
18
18
70
18
18
21
97
75
-
Cap
ital
Ex
pen
dit
ure
s119
203
39
43
47
89
217
49
54
50
245
243
Fre
e C
ash
Flo
w
$47
($99)
$34
($24)
($23)
($24)
($38)
$41
($41)
($38)
($96)
($62)
Ba
lan
ce S
hee
t S
um
ma
ry
Cas
h$2
$7
$13
$9
$13
$11
$11
$21
$9
$5
$13
$5
To
tal
Ass
ets
2,4
45
2,3
91
2,3
01
2,2
46
2,3
02
2,5
70
2,5
70
2,4
94
2,4
09
2,5
26
2,3
02
2,5
26
Sh
ort
Ter
m D
ebt
531
287
154
134
189
392
392
317
320
154
189
154
Lo
ng
Ter
m D
ebt
702
901
900
890
890
841
841
868
868
979
890
979
Pre
ferr
ed S
tock
17
10
00
00
00
00
0
To
tal
Deb
t1,2
50
1,1
88
1,0
54
1,0
24
1,0
79
1,2
34
1,2
34
1,1
85
1,1
88
1,1
33
1,0
79
1,1
33
To
tal
Net
Deb
t1,2
48
1,1
81
1,0
41
1,0
16
1,0
67
1,2
23
1,2
23
1,1
64
1,1
78
1,1
28
1,0
67
1,1
28
Sh
areh
old
ers'
Eq
uit
y572
713
736
727
718
769
769
798
781
930
718
930
To
tal
Cap
ital
1,8
22
1,9
01
1,7
89
1,7
51
1,7
97
2,0
03
2,0
03
1,9
83
1,9
69
2,0
62
1,7
97
2,0
62
Ma
rgin
An
aly
sis
Op
erat
ing
Mar
gin
26.8
%22.7
%10.6
%16.3
%24.3
%24.9
%24.3
%9.0
%21.1
%23.6
%26.2
%23.7
%
EB
ITD
A M
arg
in23.7
%19.1
%22.2
%17.5
%20.9
%22.1
%21.0
%19.8
%18.4
%19.9
%22.5
%20.2
%
EB
IT/E
BIT
DA
61.7
%55.9
%75.1
%49.7
%52.2
%70.3
%65.2
%76.9
%37.0
%39.0
%60.5
%63.1
%
Cap
ex/R
even
ue
10.3
%14.5
%8.0
%14.3
%16.8
%19.6
%14.3
%7.9
%21.1
%20.1
%17.5
%15.3
%
Ret
urn
on
Eq
uit
y19.6
%7.0
%13.9
%20.0
%11.9
%13.1
%13.1
%13.4
%12.6
%10.7
%11.9
%10.7
%
Co
vera
ge/
Lev
era
ge
To
tal
Deb
t/L
TM
EB
ITD
A4.5
7x
4.4
5x
3.7
8x
3.4
2x
3.4
2x
3.8
8x
3.8
8x
3.5
3x
3.6
0x
3.5
2x
3.4
2x
3.5
2x
EB
IT/I
nte
rest
3.5
6x
2.0
9x
4.5
9x
1.5
0x
1.7
9x
4.0
8x
3.0
1x
5.8
0x
1.0
9x
1.1
3x
2.7
2x
3.0
4x
EB
ITD
A/I
nte
rest
5.7
7x
3.7
4x
6.1
1x
3.0
2x
3.4
4x
5.8
0x
4.6
1x
7.5
5x
2.9
6x
2.9
1x
4.4
9x
4.8
2x
EB
ITD
A-C
AP
EX
/In
tere
st3.2
6x
0.9
0x
3.9
1x
0.5
5x
0.6
7x
0.6
5x
1.4
6x
4.5
5x
-0.4
3x
-0.0
3x
1.0
1x
1.1
8x
Ca
pit
al
Str
uct
ure
To
tal
Deb
t/A
sset
s51.1
%49.7
%45.8
%45.6
%46.9
%48.0
%48.0
%47.5
%49.3
%44.8
%46.9
%44.8
%
To
tal
Deb
t/C
apit
al68.6
%62.5
%58.9
%58.5
%60.1
%61.6
%61.6
%59.8
%60.3
%54.9
%60.1
%54.9
%
Pre
ferr
ed S
tock
/Cap
ital
0.9
%0.0
%0.0
%0.0
%0.0
%0.0
%0.0
%0.0
%0.0
%0.0
%0.0
%0.0
%
To
tal
Deb
t/E
qu
ity
218.6
%166.7
%143.2
%140.9
%150.4
%160.5
%160.5
%148.5
%152.1
%121.8
%150.4
%121.8
%
ST
Deb
t/T
ota
l D
ebt
42.5
%24.2
%14.6
%13.0
%17.5
%31.8
%31.8
%26.7
%26.9
%13.6
%17.5
%13.6
%
Liq
uid
ity
An
aly
sis
Cu
rren
t R
atio
:0.6
7x
0.9
7x
1.0
2x
0.9
0x
0.8
8x
0.6
7x
0.6
7x
0.6
7x
0.5
2x
1.0
3x
0.8
8x
1.0
3x
Qu
ick
Rat
io:
0.2
3x
0.3
7x
0.4
8x
0.3
2x
0.2
6x
0.2
8x
0.2
8x
0.4
0x
0.1
9x
0.2
3x
0.2
6x
0.2
3x
Wo
rkin
g C
apit
al:
($297)
($15)
$6
($34)
($51)
($230)
($230)
($187)
($237)
$12
($51)
$12
Sourc
e: C
om
pany
Rep
ort
s, P
iper
Jaff
ray
January 2004
Piper Jaffray Fixed Income Research ������������� ����������� | 65
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66 | ������������� ����������� Piper Jaffray Fixed Income Research
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A3/BBB+ (Unsecured)
Electric & Gas Credit Trend: Declining
Performance Metrics Customer Distribution
2002 6M03 9M03 2003E 6M04E 2004E
EBITDA/Interest
High Margin 4.40x 4.66x 4.65xExpected 4.01x 4.39x 4.03x 4.15x 4.32x 4.45xLow Margin 3.80x 4.04x 4.15x
Total Debt/LTM EBITDA
High Margin 4.54x 4.34x 4.25xExpected 3.89x 4.50x 4.75x 4.85x 4.84x 4.56xLow Margin 5.36x 5.58x 5.02x
Return on Equity
High Margin 12.6% 13.0% 13.0%Expected 8.0% 12.4% 11.3% 11.1% 10.3% 11.6%Low Margin 8.8% 7.4% 10.4%
Dividend Payout
High Margin 33.2% 31.3% 30.3%Expected 55.3% 34.7% 37.9% 38.1% 39.5% 33.6%Low Margin 48.4% 57.0% 40.3%
Revenue Sources
Operating Income Sources Customer Growth
System Generation - 5825 MW Customer Growth
Gas Customer Distribution
Residential
91%
Commercial &
Industrial
9%
Other
0%
Electric Customer Distribution
Residential90%
Commercial & Industrial
10%
Other0%
0%
20%
40%
60%
80%
100%
2001 2002 6M03 3Q03
Utility energy Non-utility energy Manufacturing Other
Electric
960,000
980,000
1,000,000
1,020,000
1,040,000
1,060,000
1,080,000
1998 1999 2000 2001 2002
Cu
sto
me
rs
0.00%
1.00%
2.00%
3.00%
4.00%
Gro
wth
Ra
te
Gas
860,000
880,000
900,000
920,000
940,000
960,000
980,000
1998 1999 2000 2001 2002
Cu
sto
me
rs
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
Gro
wth
Ra
te
Coal
62%
Gas/Oil
19%
Hydro
1%
Nuclear
18%
Energy
91%
Manufacturing
9%
January 2004
Piper Jaffray Fixed Income Research ������������� ����������� | 67
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Electric & Gas
EBITDA Estimates
Coverage/Leverage
Ratings Ranges S&P Corporate Credit Rating: BBB+
S&P BBB Reported S&P BBB S&P BBB Estimated S&P BBBUpper Range 3Q03 Lower Range Upper Range 2004 Lower Range
FFO/Total Debt
27.0% 18.6% 20.5% 27.0% 16.8% 20.5%
FFO Interest Coverage
4.0x 4.5x 3.0x 4.0x 3.9x 3.0x
Pretax Interest Coverage
3.5x 2.7x 2.4x 3.5x 2.8x 2.4x
Total Debt/Total Capital
47.0% 61.8% 55.0% 47.0% 60.7% 55.0%
Ratings Scales
Current S&P Financial Profile Proxy
Total Debt/
Total Capital
FFO/Total Debt
FFO Interest
Coverage
Pretax Interest
Coverage
2004 Estimated S&P Financial Profile Proxy
Total Debt/
Total Capital
FFO/Total Debt
FFO Interest
Coverage
Pretax Interest
Coverage
0.00x
1.00x
2.00x
3.00x
4.00x
5.00x
6.00x
1Q00
2Q00
3Q00
4Q00
1Q01
2Q01
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
E
1Q04
E
2Q04
E
3Q04
E
4Q04
E
EB
ITD
A/In
tere
st
40.0%
45.0%
50.0%
55.0%
60.0%
65.0%
70.0%
To
tal D
eb
t/C
ap
ital
EBITDA/Interest Total Debt/Capital
$0
$50
$100
$150
$200
$250
$300
1Q00
2Q00
3Q00
4Q00
1Q01
2Q01
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
E
1Q04
E
2Q04
E
3Q04
E
4Q04
E
EB
ITD
A (
millio
ns)
0.00x
1.00x
2.00x
3.00x
4.00x
5.00x
6.00x
7.00x
To
tal D
eb
t/E
BIT
DA
EBITDA Total Debt/EBITDA
AA
A
BBB
BB
B
AA
A
BBB
BB
B
January 2004
68 | ������������� ����������� Piper Jaffray Fixed Income Research
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Wisconsin Energy Corporation is a diversified holding company, which conducts it operations primarily in three operat-ing segments: a utility energy segment, a non-utility energy segment and a manufacturing segment.
The utility energy segment consists of: Wisconsin Electric, which serves electric customers in Wisconsin and the UpperPeninsula of Michigan, natural gas customers in Wisconsin and steam customers in metro Milwaukee, Wisconsin;Wisconsin Gas, which serves natural gas customers in Wisconsin and water customers in suburban Milwaukee,Wisconsin; and Edison Sault Electric Company, which serves electric customers in the Upper Peninsula of Michigan.Wisconsin Electric and Wisconsin Gas operate under the trade name “We Energies”.
The non-utility energy segment consists of: W.E. Power, LLC which is designing, constructing and will own the newgenerating capacity included in the Company’s Power the Future strategy; and Wisvest Corp., which ownsapproximately $231 million of non-utility energy assets.
The manufacturing segment consists of WICOR Industries, an intermediary holding company, and its three primary sub-sidiaries, Sta-Rite Industries, Inc., SHURflo Pump Manufacturing Co. and Hypro Corporation, which are manufacturersof pumps, water treatment products and fluid handling equipment with manufacturing, sales and distribution facilities inthe United States and several other countries.
Other non-utility operating subsidiaries of Wisconsin Energy include primarily Minergy Corp., which has approxi-mately $62 million of assets and develops and markets renewable energy and recycling technologies, and Wispark LLC,which has approximately $160 million of assets and develops and invests in real estate.
Issuer Ticker Cusip Coupon Maturity Call Date Amount Issued Collateral RatingsWISCONSIN ENERGY CORP WEC 976657AB2 5.875 4/1/2006 550,000,000 SENIOR NOTES A3/BBB+WISCONSIN ENERGY CORP WEC 976657AC0 6.500 4/1/2011 450,000,000 SENIOR NOTES A3/BBB+WISCONSIN ELECTRIC POWER WEC 976656BW7 5.625 5/15/2033 335,000,000 SENIOR NOTES A1/A-WISCONSIN ELECTRIC POWER WEC 976656BX5 4.500 5/15/2013 300,000,000 SENIOR NOTES A1/A-WISCONSIN ENERGY CORP WEC 976657AD8 5.500 12/1/2008 300,000,000 SENIOR NOTES A3/BBB+
Capital Structure Consolidated Debt Maturities
$0
$500
$1,000
$1,500
$2,000
$2,500
2004 2005 2006 2007 Beyond
(in
mil
lio
ns)
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
4Q02 2Q03 4Q03E 2Q04E 4Q04E
Cap
ital
izat
ion
(in
mil
lio
ns)
Long Term Debt Preferred Stock Common Equity
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($ i
n m
illi
ons)
Ye
ar
en
de
d D
ece
mb
er
31
Inco
me
Sta
tem
ent
Su
mm
ary
1999
2000
2001
1Q
02
2Q
02
3Q
02
4Q
02
2002
1Q
03
2Q
03
3Q
03
LT
M 3
Q02
LT
M 3
Q03
Rev
enues
$2
,27
3$
3,3
63
$3
,92
9$
98
6$
87
1$
87
0$
1,0
10
$3
,73
6$
1,2
29
$9
14
$8
79
$3
,61
1$
4,0
32
EB
ITD
A7
27
78
19
47
25
41
91
21
82
57
92
02
69
20
01
80
91
39
06
EB
IT4
76
44
56
05
17
61
12
13
71
74
60
01
88
11
69
55
92
57
4
Net
Inco
me
20
91
54
21
9(4
)4
55
27
41
67
92
49
31
13
12
46
Fre
e C
ash
Flo
w S
um
mary
EB
ITD
A:
$7
27
$7
81
$9
47
$2
54
$1
91
$2
18
$2
57
$9
20
$2
69
$2
00
$1
80
$9
13
$9
06
-
Inte
rest
Expen
se1
51
24
52
47
59
57
58
56
22
95
15
65
42
32
21
7
-
Div
iden
ds
18
21
65
94
23
23
23
23
92
23
23
23
92
93
-
Cap
ital
Exp.
51
86
11
67
31
13
14
31
38
16
35
57
13
91
88
17
56
37
66
5
Fre
e C
ash F
low
(12
4)
(24
0)
(66
)5
9(3
2)
01
44
25
5(6
7)
(73
)(4
9)
(70
)
Bala
nce
Sh
eet
Su
mm
ary
Cas
h &
Sh
ort
Ter
m I
nv
est.
$7
4$
41
$4
7$
33
$4
9$
37
$4
4$
44
$3
1$
38
$3
1$
37
$3
1
To
tal
Ass
ets
6,0
62
8,4
06
8,3
29
8,1
50
8,2
39
8,2
63
8,3
65
8,3
65
9,1
48
9,2
24
9,3
26
8,2
63
9,3
26
Sh
ort
Ter
m D
ebt
57
71
,44
21
,03
51
,05
61
,12
71
,08
23
18
31
87
09
64
78
50
1,0
82
85
0
Lo
ng
Ter
m D
ebt
2,1
35
2,7
33
3,2
37
3,0
07
3,0
18
3,0
37
3,0
31
3,0
31
3,2
21
3,3
71
3,2
22
3,0
37
3,2
22
Pre
ferr
ed S
tock
23
02
30
23
02
30
23
02
30
23
02
30
23
02
30
23
02
30
23
0
To
tal
Deb
t2
,94
24
,40
54
,50
24
,29
34
,37
54
,35
03
,57
93
,57
94
,16
04
,24
84
,30
24
,35
04
,30
2
To
tal
Net
Deb
t2
,86
84
,36
44
,45
54
,26
14
,32
74
,31
33
,53
53
,53
54
,12
94
,21
04
,27
14
,31
34
,27
1
Sh
areh
old
ers'
Eq
uit
y2
,00
82
,01
72
,05
62
,01
42
,03
62
,07
02
,13
92
,13
92
,21
52
,26
12
,28
22
,07
02
,28
2
To
tal
Cap
ital
4,9
49
6,4
21
6,5
59
6,3
08
6,4
11
6,4
19
5,7
18
5,7
18
6,3
75
6,5
09
6,5
84
6,4
19
6,5
84
Marg
in A
naly
sis
Oper
atin
g P
rofi
t M
argin
35
.3%
25
.6%
26
.3%
28
.1%
24
.5%
27
.7%
27
.5%
27
.0%
23
.6%
24
.1%
27
.1%
27
.7%
25
.4%
EB
ITD
A M
argin
32
.0%
23
.2%
24
.1%
25
.8%
22
.0%
25
.1%
25
.4%
24
.6%
21
.9%
21
.8%
20
.5%
25
.3%
22
.5%
EB
IT/E
BIT
DA
65
.5%
57
.0%
63
.9%
69
.2%
58
.7%
62
.7%
68
.0%
65
.2%
69
.8%
58
.2%
52
.7%
64
.9%
63
.4%
Cap
ex/R
even
ue
22
.8%
18
.2%
17
.1%
11
.5%
16
.4%
15
.8%
16
.2%
14
.9%
11
.3%
20
.5%
19
.9%
17
.6%
16
.5%
Ret
urn
on E
quit
yN
/A7
.66
%1
0.7
5%
6.2
6%
6.1
7%
6.3
2%
7.9
6%
7.9
6%
12
.45
%1
2.4
3%
11
.30
%6
.32
%1
1.3
0%
Cove
rage/
Lev
erage
To
tal
Deb
t/L
TM
EB
ITD
A4
.05
x5
.64
x4
.75
x4
.62
x4
.70
x4
.77
x3
.89
x3
.89
x4
.45
x4
.50
x4
.75
x4
.77
x4
.75
x
EB
ITD
A/I
nte
rest
4.8
3x
3.1
9x
3.8
4x
4.3
4x
3.3
3x
3.8
0x
4.6
0x
4.0
1x
5.2
4x
3.6
0x
3.3
2x
3.9
4x
4.1
7x
EB
ITD
A-C
AP
EX
/In
tere
st1
.39
x0
.70
x1
.11
x2
.41
x0
.84
x1
.41
x1
.67
x1
.59
x2
.53
x0
.22
x0
.09
x1
.19
x1
.11
x
EB
IT/I
nte
rest
3.1
6x
1.8
2x
2.4
5x
3.0
1x
1.9
6x
2.3
8x
3.1
3x
2.6
2x
3.6
6x
2.1
0x
1.7
5x
2.5
6x
2.6
4x
Capit
al
Str
uct
ure
To
tal
Deb
t/T
ota
l C
apit
al5
4.8
%6
5.0
%6
5.1
%6
4.4
%6
4.7
%6
4.2
%5
8.6
%5
8.6
%6
1.6
%6
1.7
%6
1.8
%6
4.2
%6
1.8
%
Pre
ferr
ed S
tock
/Cap
ital
4.7
%3
.6%
3.5
%3
.7%
3.6
%3
.6%
4.0
%4
.0%
3.6
%3
.5%
3.5
%3
.6%
3.5
%
To
tal
Deb
t/E
qu
ity
14
6.5
%2
18
.4%
21
9.0
%2
13
.1%
21
4.9
%2
10
.2%
16
7.3
%1
67
.3%
18
7.8
%1
87
.9%
18
8.6
%2
10
.2%
18
8.6
%
ST
Deb
t/T
ota
l D
ebt
19
.6%
32
.7%
23
.0%
24
.6%
25
.7%
24
.9%
8.9
%8
.9%
17
.0%
15
.2%
19
.7%
24
.9%
19
.7%
Liq
uid
ity
An
aly
sis
Cu
rren
t R
atio
:0
.94
x0
.84
x1
.07
x0
.89
x0
.90
x0
.88
x0
.82
x0
.82
x0
.93
x0
.98
x0
.87
x0
.88
x0
.87
x
Qu
ick
Rat
io:
0.3
6x
0.2
6x
0.3
7x
0.3
3x
0.3
0x
0.2
7x
0.3
2x
0.3
2x
0.4
6x
0.4
3x
0.3
2x
0.2
7x
0.3
2x
Wo
rkin
g C
apit
al:
($5
5)
($3
45
)$
10
8($
19
7)
($1
73
)($
21
0)
($2
86
)($
28
6)
($9
6)
($2
3)
($1
90
)($
21
0)
($1
90
)
So
urc
e: C
om
pa
ny
Rep
ort
s, P
iper
Ja
ffra
y
January 2004
70 | ������������� ����������� Piper Jaffray Fixed Income Research
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Wis
co
nsin
Ele
ctr
ic P
ow
er
($ i
n m
illi
on
s)
Ye
ar
en
de
d D
ece
mb
er
31
Inco
me
Sta
tem
ent
Su
mm
ary
19
99
20
00
20
01
1Q
02
2Q
02
3Q
02
4Q
02
20
02
1Q
03
2Q
03
3Q
03
LT
M 3
Q0
2L
TM
3Q
03
Rev
enu
e$
2,0
16
$2
,18
5$
2,3
19
$5
87
$5
34
$5
67
$6
09
$2
,29
6$
71
9$
56
5$
60
0$
2,2
29
$2
,49
2
EB
ITD
A6
81
66
77
40
19
41
59
19
52
06
75
32
00
16
21
96
75
47
63
EB
IT4
47
39
44
76
13
09
11
27
13
74
85
13
39
31
25
48
74
88
Net In
com
e F
or
Com
mon S
tock
21
21
64
24
56
64
76
97
62
58
75
49
68
25
72
68
Fre
e C
ash
Flo
w S
um
ma
ry
EB
ITD
A:
$6
81
$6
67
$7
40
$1
94
$1
59
$1
95
$2
06
$7
53
$2
00
$1
62
$1
96
$7
54
$7
63
-
Inte
rest
Ex
pen
se1
16
11
91
11
25
24
24
23
96
22
25
24
98
93
-
Co
mm
on
Div
iden
ds
18
01
79
13
04
54
54
54
51
80
45
45
45
16
71
80
-
Cap
ital
Ex
pen
dit
ure
s3
46
35
33
77
68
89
92
11
73
66
70
10
77
33
90
36
6
Fre
e C
ash
Flo
w
$3
9$
17
$1
22
$5
7$
1$
34
$2
1$
11
2$
63
($1
5)
$5
5$
98
$1
25
Ba
lan
ce S
hee
t S
um
ma
ry
Cas
h$
50
$1
1$
21
$1
2$
18
$6
$1
3$
13
$1
1$
7$
15
$6
$1
5
To
tal
Ass
ets
5,0
53
5,0
25
5,0
68
4,9
60
5,0
22
5,0
13
5,3
32
5,3
32
5,9
93
6,0
70
6,2
02
5,0
13
6,2
02
Sh
ort
Ter
m D
ebt
29
62
85
45
52
67
33
72
49
38
23
82
26
92
03
40
92
49
40
9
Lo
ng
Ter
m D
ebt
1,6
78
1,6
80
1,4
21
1,4
18
1,4
28
1,4
40
1,4
32
1,4
32
1,4
26
1,5
74
1,4
24
1,4
40
1,4
24
Pre
ferr
ed S
tock
30
30
30
30
30
30
30
30
30
30
30
30
30
To
tal
Deb
t2
,00
41
,99
51
,90
61
,71
41
,79
51
,72
01
,84
51
,84
51
,72
51
,80
81
,86
41
,72
01
,86
4
To
tal
Net
Deb
t1
,95
41
,98
51
,88
51
,70
21
,77
71
,71
41
,83
11
,83
11
,71
41
,80
11
,84
91
,71
41
,84
9
Sh
areh
old
ers'
Eq
uit
y1
,88
11
,86
51
,98
02
,00
02
,00
32
,02
82
,05
02
,05
02
,08
12
,08
52
,10
82
,02
82
,10
8
To
tal
Cap
ital
3,8
84
3,8
60
3,8
86
3,7
15
3,7
98
3,7
47
3,8
95
3,8
95
3,8
06
3,8
93
3,9
72
3,7
47
3,9
72
Ma
rgin
An
aly
sis
Op
erat
ing
Mar
gin
37
.1%
33
.5%
34
.9%
36
.2%
33
.1%
37
.4%
36
.8%
35
.9%
30
.4%
31
.8%
35
.7%
47
.0%
33
.5%
EB
ITD
A M
arg
in3
3.8
%3
0.5
%3
1.9
%3
3.0
%2
9.7
%3
4.4
%3
3.8
%3
2.8
%2
7.8
%2
8.7
%3
2.7
%3
3.8
%3
0.6
%
EB
IT/E
BIT
DA
65
.6%
59
.1%
64
.3%
66
.8%
57
.5%
65
.2%
66
.8%
64
.4%
66
.3%
57
.6%
63
.6%
64
.6%
63
.9%
Cap
ex/R
even
ue
17
.2%
16
.1%
16
.3%
11
.5%
16
.7%
16
.3%
19
.1%
15
.9%
9.8
%1
8.9
%1
2.1
%1
7.5
%1
4.7
%
Ret
urn
on
Eq
uit
yN
A8
.7%
12
.8%
12
.8%
13
.4%
13
.0%
12
.8%
12
.8%
13
.1%
13
.2%
13
.0%
13
.0%
13
.0%
Co
vera
ge/
Lev
era
ge
To
tal
Deb
t/L
TM
EB
ITD
A2
.94
x2
.99
x2
.57
x2
.30
x2
.36
x2
.28
x2
.45
x2
.45
x2
.27
x2
.37
x2
.44
x2
.28
x2
.44
x
EB
IT/I
nte
rest
3.8
6x
3.3
2x
4.2
9x
5.2
2x
3.8
2x
5.3
0x
5.8
7x
5.0
5x
6.0
5x
3.7
1x
5.2
8x
4.9
7x
5.2
5x
EB
ITD
A/I
nte
rest
5.8
8x
5.6
2x
6.6
8x
7.8
1x
6.6
4x
8.1
2x
8.7
9x
7.8
4x
9.1
2x
6.4
5x
8.3
0x
7.6
9x
8.2
3x
EB
ITD
A-C
AP
EX
/In
tere
st2
.89
x2
.65
x3
.28
x5
.09
x2
.91
x4
.27
x3
.81
x4
.03
x5
.92
x2
.20
x5
.22
x3
.71
x4
.28
x
Ca
pit
al
Str
uct
ure
To
tal
Deb
t/E
qu
ity
10
6.5
%1
07
.0%
96
.3%
85
.7%
89
.6%
84
.8%
90
.0%
90
.0%
82
.9%
86
.7%
88
.4%
84
.8%
88
.4%
To
tal
Deb
t/A
sset
s3
9.7
%3
9.7
%3
7.6
%3
4.6
%3
5.8
%3
4.3
%3
4.6
%3
4.6
%2
8.8
%2
9.8
%3
0.1
%3
4.3
%3
0.1
%
To
tal
Deb
t/C
apit
al5
1.6
%5
1.7
%4
9.0
%4
6.2
%4
7.3
%4
5.9
%4
7.4
%4
7.4
%4
5.3
%4
6.4
%4
6.9
%4
5.9
%4
6.9
%
Pre
ferr
ed S
tock
/Cap
ital
0.8
%0
.8%
0.8
%0
.8%
0.8
%0
.8%
0.8
%0
.8%
0.8
%0
.8%
0.8
%0
.8%
0.8
%
ST
Deb
t/T
ota
l D
ebt
14
.7%
14
.3%
23
.9%
15
.5%
18
.8%
14
.5%
20
.7%
20
.7%
15
.6%
11
.2%
22
.0%
14
.5%
22
.0%
Liq
uid
ity
An
aly
sis
Cu
rren
t R
atio
:1
.18
x1
.06
x0
.92
x0
.92
x0
.91
x0
.90
x0
.91
x0
.91
x0
.92
x1
.05
x0
.85
x0
.90
x0
.85
x
Qu
ick
Rat
io:
0.3
9x
0.3
6x
0.4
3x
0.3
6x
0.3
5x
0.3
3x
0.3
1x
0.3
1x
0.3
7x
0.3
7x
0.3
3x
0.3
3x
0.3
3x
Wo
rkin
g C
apit
al:
98
42
(68
)(6
0)
(71
)(7
7)
(73
)(7
3)
(65
)3
2(1
40
)(7
7)
(14
0)
So
urc
e: C
om
pa
ny
Rep
ort
s, P
iper
Ja
ffra
y
January 2004
Piper Jaffray Fixed Income Research ������������� ����������� | 71
���
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��
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Wis
co
nsin
Gas
($ i
n m
illi
on
s)
Year
ended D
ecem
ber
31
Inco
me
Sta
tem
ent
Su
mm
ary
19
99
20
00
20
01
1Q
02
2Q
02
3Q
02
4Q
02
20
02
1Q
03
2Q
03
3Q
03
LT
M 3
Q0
2L
TM
3Q
03
Rev
enu
e$
44
0$
55
4$
61
9$
18
8$
94
$5
7$
19
0$
53
0$
31
6$
12
2$
78
$4
69
$7
06
EB
ITD
A8
99
59
55
21
42
39
10
65
56
29
51
02
EB
IT5
45
95
34
15
(8)
29
68
45
(3)
(8)
56
64
Net
In
com
e F
or
Co
mm
on
Sto
ck2
61
51
12
32
(6)
15
33
27
(3)
(6)
24
33
Fre
e C
ash
Flo
w S
um
ma
ry
EB
ITD
A:
$8
9$
95
$9
5$
52
$1
4$
2$
39
$1
06
$5
5$
6$
2$
95
$1
02
-
Inte
rest
Ex
pen
se1
32
52
73
33
31
23
33
13
12
-
Co
mm
on
Div
iden
ds
26
21
00
00
00
00
00
0
-
Cap
ital
Ex
pen
dit
ure
s4
35
06
04
13
16
21
53
14
30
59
59
12
4
Fre
e C
ash
Flo
w
$8
($1
)$
8$
44
($2
)($
17
)$
15
$4
0$
38
($2
7)
($6
0)
$2
4($
34
)
Ba
lan
ce S
hee
t S
um
ma
ry
Cas
h$
11
$6
$4
$5
$6
$2
$1
$1
$1
$1
$0
$2
$0
To
tal
Ass
ets
67
11
,39
71
,31
11
,30
71
,26
31
,28
21
,37
91
,37
91
,42
11
,38
31
,45
11
,28
21
,45
1
Sh
ort
Ter
m D
ebt
90
43
51
29
87
48
97
14
21
42
10
31
28
18
19
71
81
Lo
ng
Ter
m D
ebt
15
81
48
14
91
51
15
01
51
15
11
51
15
11
52
15
21
51
15
2
Pre
ferr
ed S
tock
00
00
00
00
00
00
0
To
tal
Deb
t2
48
58
32
78
23
81
98
24
82
93
29
32
55
28
03
33
24
83
33
To
tal
Net
Deb
t2
37
57
72
75
23
31
92
24
62
92
29
22
54
27
93
33
24
63
33
Sh
areh
old
ers'
Eq
uit
y2
16
35
76
91
71
27
14
70
87
26
72
67
54
75
17
45
70
87
45
To
tal
Cap
ital
46
49
40
96
99
50
91
29
56
1,0
19
1,0
19
1,0
09
1,0
31
1,0
78
95
61
,07
8
Ma
rgin
An
aly
sis
Op
erat
ing
Mar
gin
21
.3%
19
.5%
18
.2%
28
.3%
16
.2%
5.6
%2
1.3
%2
1.2
%1
7.8
%6
.6%
3.7
%2
2.2
%1
5.3
%
EB
ITD
A M
arg
in2
0.3
%1
7.2
%1
5.3
%2
7.4
%1
4.4
%2
.8%
20
.4%
19
.9%
17
.4%
5.3
%2
.1%
20
.2%
14
.4%
EB
IT/E
BIT
DA
60
.1%
61
.4%
55
.9%
79
.1%
39
.0%
-48
7.5
%7
5.8
%6
4.1
%8
2.5
%-4
6.2
%-4
81
.3%
58
.8%
62
.9%
Cap
ex/R
even
ue
9.8
%9
.0%
9.7
%2
.2%
13
.3%
28
.2%
10
.8%
10
.0%
4.5
%2
5.0
%7
5.9
%1
2.5
%1
7.6
%
Ret
urn
on
Eq
uit
yN
A5
.3%
2.1
%2
.7%
4.1
%4
.5%
4.7
%4
.7%
5.1
%4
.4%
4.5
%4
.5%
4.5
%
Co
vera
ge/
Lev
era
ge
To
tal
Deb
t/L
TM
EB
ITD
A2
.78
x6
.11
x2
.94
x2
.54
x2
.05
x2
.62
x2
.77
x2
.77
x2
.34
x2
.75
x3
.28
x2
.62
x3
.28
x
EB
IT/I
nte
rest
4.2
5x
2.3
2x
1.9
6x
12
.39
x1
.83
x-2
.69
x9
.48
x5
.56
x1
5.6
2x
-1.0
7x
-2.7
5x
4.4
2x
5.5
2x
EB
ITD
A/I
nte
rest
7.0
8x
3.7
7x
3.5
1x
15
.67
x4
.69
x0
.55
x1
2.5
2x
8.6
6x
18
.93
x2
.32
x0
.57
x7
.52
x8
.78
x
EB
ITD
A-C
AP
EX
/In
tere
st3
.67
x1
.81
x1
.29
x1
4.4
2x
0.3
4x
-4.9
7x
5.9
0x
4.3
0x
14
.07
x-8
.54
x-2
0.4
6x
2.8
7x
-1.9
1x
Ca
pit
al
Str
uct
ure
To
tal
Deb
t/E
qu
ity
11
5.1
%1
63
.3%
40
.2%
33
.4%
27
.7%
35
.0%
40
.4%
40
.4%
33
.8%
37
.3%
44
.8%
35
.0%
44
.8%
To
tal
Deb
t/A
sset
s3
7.0
%4
1.7
%2
1.2
%1
8.2
%1
5.6
%1
9.3
%2
1.3
%2
1.3
%1
7.9
%2
0.2
%2
3.0
%1
9.3
%2
3.0
%
To
tal
Deb
t/C
apit
al5
3.5
%6
2.0
%2
8.7
%2
5.0
%2
1.7
%2
5.9
%2
8.8
%2
8.8
%2
5.2
%2
7.2
%3
0.9
%2
5.9
%3
0.9
%
Pre
ferr
ed S
tock
/Cap
ital
0.0
%0
.0%
0.0
%0
.0%
0.0
%0
.0%
0.0
%0
.0%
0.0
%0
.0%
0.0
%0
.0%
0.0
%
ST
Deb
t/T
ota
l D
ebt
36
.2%
74
.7%
46
.3%
36
.6%
24
.1%
39
.2%
48
.5%
48
.5%
40
.6%
45
.7%
54
.3%
39
.2%
54
.3%
Liq
uid
ity
An
aly
sis
Cu
rren
t R
atio
:0
.99
x0
.47
x0
.97
x1
.10
x1
.19
x0
.99
x1
.00
x1
.00
x1
.07
x0
.94
x0
.74
x0
.99
x0
.74
x
Qu
ick
Rat
io:
0.3
1x
0.1
6x
0.2
4x
0.5
9x
0.5
8x
0.2
9x
0.3
6x
0.3
6x
0.6
7x
0.5
0x
0.2
0x
0.2
9x
0.2
0x
Wo
rkin
g C
apit
al:
($1
)($
32
8)
($7
)$
17
$2
5($
2)
($0
)($
0)
$1
8($
14
)($
76
)($
2)
($7
6)
So
urc
e: C
om
pa
ny
Rep
ort
s, P
iper
Ja
ffra
y
January 2004
72 | ������������� ����������� Piper Jaffray Fixed Income Research
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Baa3/BBB- (Unsecured)
Electric & Gas Credit Trend: Improving
Performance Metrics Customer Distribution
2002 6M03 9M03 2003E 6M04E 2004E
EBITDA/Interest
High Margin 4.47x 4.74x 4.62xExpected 2.64x 3.76x 4.19x 4.13x 4.33x 4.44xLow Margin 3.94x 3.99x 4.21x
Total Debt/LTM EBITDA
High Margin 3.54x 3.22x 3.45xExpected 6.76x 3.16x 3.49x 3.89x 3.71x 3.70xLow Margin 4.11x 4.11x 3.99x
Return on Equity
High Margin 11.4% 15.2% 11.0%Expected -38.5% -43.1% -1.2% 9.5% 12.0% 10.1%Low Margin 8.1% 9.6% 9.1%
Dividend Payout
High Margin 54.1% 42.5% 57.6%Expected n/a n/a n/a 65.5% 54.6% 63.6%Low Margin 77.6% 70.1% 73.7%
Revenue Sources
Operating Income Sources Customer Growth
System Generation - 15,246 MW Customer Growth
Electric Customer Distribution
Residential
85%
Public
Authorities &
Other
3%
Commercial &
Industrial
12%
Gas Customer Distribution
Residential
91%
Commercial &
Industrial
9%
0%
20%
40%
60%
80%
100%
2001 2002 6M03 3Q03
Electric utility revenue Natural gas revenue
Nonregulated & other revenue Trading margin
Electric
3,050,000
3,100,000
3,150,000
3,200,000
3,250,000
1999 2000 2001 2002
Cu
sto
me
rs
0.00%
0.50%
1.00%
1.50%
2.00%G
row
th R
ate
Gas
1,500,000
1,550,000
1,600,000
1,650,000
1,700,000
1,750,000
1999 2000 2001 2002
Cu
sto
me
rs
2.00%
2.50%
3.00%
3.50%
4.00%
Gro
wth
Ra
teNSP-MN
33%
NSP-WI
9%
PSCo
43%
SPS
15%
Coal
52%
Natural Gas
30%
Nuclear
11%
Hydro & Other
7%
January 2004
Piper Jaffray Fixed Income Research ������������� ����������� | 73
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Electric & Gas
EBITDA Estimates
Coverage/Leverage
Ratings Ranges S&P Corporate Credit Rating: BBB
S&P BBB Reported S&P BBB S&P BBB Estimated S&P BBBUpper Range 3Q03 Lower Range Upper Range 2004 Lower Range
FFO/Total Debt
24.5% 10.5% 17.5% 24.5% 13.1% 17.5%
FFO Interest Coverage
3.8x 2.9x 2.7x 3.8x 4.0x 2.7x
Pretax Interest Coverage
3.3x 1.7x 2.2x 3.3x 2.7x 2.2x
Total Debt/Total Capital
49.5% 58.0% 57.0% 49.5% 56.8% 57.0%
Ratings Scales
Current S&P Financial Profile Proxy
FFO/Total Debt
Total Debt/
Total Capital
FFO Interest
Coverage
Pretax Interest
Coverage
2004 Estimated S&P Financial Profile Proxy
FFO/Total Debt
Total Debt/
Total Capital
FFO Interest
Coverage
Pretax Interest
Coverage
0.00x
1.00x
2.00x
3.00x
4.00x
5.00x
6.00x
1Q00
2Q00
3Q00
4Q00
1Q01
2Q01
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
E1Q
04E
2Q04
E
3Q04
E4Q
04E
EB
ITD
A/In
tere
st
40.0%
45.0%
50.0%
55.0%
60.0%
65.0%
70.0%
75.0%
80.0%
To
tal D
eb
t/C
ap
ital
EBITDA/Interest Total Debt/Capital
$0
$200
$400
$600
$800
$1,000
1Q00
2Q00
3Q00
4Q00
1Q01
2Q01
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
E
1Q04
E
2Q04
E
3Q04
E
4Q04
E
EB
ITD
A (
millio
ns)
0.00x
1.00x
2.00x
3.00x
4.00x
5.00x
6.00x
7.00x
8.00x
To
tal D
eb
t/E
BIT
DA
EBITDA Total Debt/EBITDA
AA
A
BBB
BB
B
AA
A
BBB
BB
B
January 2004
74 | ������������� ����������� Piper Jaffray Fixed Income Research
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Xcel Energy is a public utility holding company for five wholly owned subsidiaries that serve electric and natural gascustomers in 11 states. Their service territories include portions of Colorado, Kansas, Michigan, Minnesota, NewMexico, North Dakota, Oklahoma, South Dakota, Texas, Wisconsin and Wyoming.
Northern States Power Co., Minnesota (NSP-Minnesota) is an operating utility engaged in the generation, transmission,and distribution of electricity and the transportation, storage and distribution of natural gas. NSP-Minnesota performsoperations in Minnesota, North Dakota and South Dakota. NSP-Minnesota provides retail electricity utility service toapproximately 1.3 million customers and gas utility service to approximately 430,000 customers.
Northern States Power Co., Wisconsin (NSP-Wisconsin) is an operating utility engaged in the generation, transmission,and distribution of electricity to approximately 230,000 retail customers in northwestern Wisconsin and in the westernportion of the Upper Peninsula of Michigan. NSP-Wisconsin is also engaged in the distribution and sale of natural gasto approximately 90,000 customers in the same service territory. NSP-Wisconsin also own three direct subsidiaries,Chippewa and Flambeau Improvement Co., which operate hydro reserves; Clearwater Investments Inc., which owns in-terests in affordable housing; and NSP Lands, Inc., which holds real estate.
Public Service Colorado (PSCo) is an operating utility engaged primarily in the generation, purchase, transmission, dis-tribution, and sale of electricity and the purchase, transportation, distribution, and sale of natural gas. PSCo serves ap-proximately 1.3 million electric customers and approximately 1.2 million natural gas customers in Colorado. PSCoalso owns or holds a controlling interest in a number of subsidiaries.
Southwestern Public Service (SPS) is an operating utility engaged primarily in the generation, transmission, distribution,and sale of electricity, which serves approximately 390,000 electric customers in portions of Texas, New Mexico, Okla-homa, and Kansas. Wholesale customers account for approximately 36 percent of the total kilowatt-hour sales.
Capital Structure Consolidated Debt Maturities
$0
$2,000
$4,000
$6,000
$8,000
2004 2005 2006 2007 Beyond
(in
mill
ion
s)
0
4,000
8,000
12,000
16,000
4Q02 2Q03 4Q03E 2Q04E 4Q04ECap
ital
izat
ion
(in
mil
lio
ns)
Long Term Debt Minority Interest
Preferred Stock Common Equity
������� ���� �����
Issuer Ticker Cusip Coupon Maturity Call Date Amount Issued Collateral RatingsXCEL ENERGY INC XEL 98388MAA5 7.000 12/1/2010 600,000,000 SENIOR NOTES Baa3*+/BBB- *+PUBLIC SERV CO OF COLO XEL 744448BU4 7.875 10/1/2012 600,000,000 COLLATERAL TRUST Baa1*+/BBB+*+SOUTHWESTERN PUB SERVICE XEL 845743BG7 5.125 11/1/2006 500,000,000 SENIOR NOTES Baa1*+/BBB+*+NORTHERN STATE PWR-MINN XEL 665772BW8 8.000 8/28/2012 450,000,000 1ST MORTGAGE A3*+/BBB+*+PUBLIC SERV CO OF COLO XEL 744448BW0 4.375 10/1/2008 300,000,000 COLLATERAL TRUST Baa1*+/BBB+*+
January 2004
Piper Jaffray Fixed Income Research ������������� ����������� | 75
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($ i
n m
illi
on
s)
Yea
r en
ded
Dec
emb
er 3
1
Inco
me
Sta
tem
ent
Su
mm
ary
19
99
20
00
20
01
1Q
02
2Q
02
3Q
02
4Q
02
20
02
1Q
03
2Q
03
3Q
03
LT
M 3
Q0
2L
TM
3Q
03
Rev
enu
es$
7,7
25
$9
,04
1$
11
,11
6$
2,3
54
$2
,19
8$
2,4
45
$2
,45
5$
9,4
53
$2
,68
0$
1,7
71
$2
,05
8$
9,3
33
$8
,43
0
EB
ITD
A1
,80
42
,30
42
,61
05
45
60
87
24
55
62
,43
25
95
38
45
58
2,4
34
2,0
05
EB
IT1
,12
41
,53
81
,70
32
97
34
74
60
29
11
,39
53
31
17
43
64
1,4
28
1,1
42
Net
In
com
e5
71
52
77
95
10
48
7(2
,20
4)
(20
5)
(2,2
18
)1
40
(28
3)
28
7(1
,86
8)
(60
)
Fre
e C
ash
Flo
w S
um
ma
ry
EB
ITD
A:
$1
,80
4$
2,3
04
$2
,61
0$
54
5$
60
8$
72
4$
55
6$
2,4
32
$5
95
$3
84
$5
58
$2
,43
4$
2,0
05
-
Inte
rest
Ex
pen
se4
58
65
77
71
19
92
12
17
73
34
92
22
96
12
11
09
77
16
80
-
Div
iden
ds
49
24
95
51
91
31
14
01
50
76
49
67
67
67
65
51
30
3
-
Cap
ital
Ex
p.
2,7
99
3,1
81
5,3
66
60
37
32
80
52
69
2,4
09
22
32
17
19
92
,85
19
08
Fre
e C
ash
Flo
w(1
,94
6)
(2,0
29
)(4
,04
6)
(38
8)
(47
6)
(40
8)
(12
3)
(1,3
96
)0
(30
)1
74
(1,7
39
)1
14
Ba
lan
ce S
hee
t S
um
ma
ry
Cas
h &
Sh
ort
Ter
m I
nv
est.
$1
40
$2
29
$4
04
$6
22
$7
29
$1
,47
3$
1,2
07
$1
,20
7$
1,3
30
$4
29
$6
96
$1
,47
3$
69
6
To
tal
Ass
ets
18
,07
02
1,7
69
28
,75
42
9,3
34
30
,40
52
8,4
06
27
,25
82
7,2
58
27
,77
21
7,0
97
18
,26
42
8,4
06
18
,26
4
Sh
ort
Ter
m D
ebt
1,8
64
2,0
79
2,6
18
2,8
55
7,7
97
9,5
26
9,2
98
9,2
98
9,0
28
98
63
90
9,5
26
39
0
Lo
ng
Ter
m D
ebt
5,8
27
7,5
83
11
,55
61
2,2
06
8,3
36
6,8
89
6,5
50
6,5
50
6,6
07
5,4
72
6,4
12
6,8
89
6,4
12
Pre
ferr
ed S
tock
59
95
99
59
95
99
59
95
99
59
95
99
59
94
04
20
45
99
20
4
To
tal
Deb
t8
,29
11
0,2
61
14
,77
31
5,6
59
16
,73
31
7,0
15
16
,44
81
6,4
48
16
,23
46
,86
27
,00
61
7,0
15
7,0
06
To
tal
Net
Deb
t8
,15
11
0,0
33
14
,36
91
5,0
37
16
,00
41
5,5
41
15
,24
11
5,2
41
14
,90
46
,43
36
,31
01
5,5
41
6,3
10
Sh
areh
old
ers'
Eq
uit
y5
,30
55
,83
96
,80
97
,34
77
,45
05
,28
64
,70
04
,70
04
,80
04
,39
04
,72
05
,28
64
,72
0
To
tal
Cap
ital
13
,59
51
6,1
01
21
,58
22
3,0
07
24
,18
32
2,3
01
21
,14
82
1,1
48
21
,03
41
1,2
53
11
,72
62
2,3
01
11
,72
6
Ma
rgin
An
aly
sis
Op
erat
ing
Pro
fit
Mar
gin
28
.0%
29
.4%
26
.3%
26
.7%
31
.5%
33
.2%
25
.2%
29
.1%
25
.2%
26
.3%
31
.2%
29
.7%
27
.5%
EB
ITD
A M
arg
in2
3.4
%2
5.5
%2
3.5
%2
3.1
%2
7.6
%2
9.6
%2
2.6
%2
5.7
%2
2.2
%2
1.7
%2
7.1
%2
6.1
%2
3.8
%
EB
IT/E
BIT
DA
62
.3%
66
.7%
65
.3%
54
.5%
57
.2%
63
.5%
52
.3%
57
.3%
55
.7%
45
.2%
65
.3%
58
.6%
57
.0%
Cap
ex/R
even
ue
36
.2%
35
.2%
48
.3%
25
.6%
33
.3%
32
.9%
11
.0%
25
.5%
8.3
%1
2.3
%9
.7%
30
.5%
10
.8%
Ret
urn
on
Eq
uit
yN
/A9
.45
%1
2.5
7%
10
.03
%8
.66
%-3
0.7
7%
-38
.54
%-3
8.5
4%
-35
.92
%-4
3.1
0%
-1.2
0%
-30
.77
%-1
.20
%
Co
vera
ge/
Lev
era
ge
To
tal
Deb
t/L
TM
EB
ITD
AN
/A4
.45
x5
.66
x6
.33
x6
.79
x6
.99
x6
.76
x6
.76
x6
.54
x3
.16
x3
.49
x6
.99
x3
.49
x
EB
ITD
A/I
nte
rest
3.9
4x
3.5
1x
3.3
8x
2.7
3x
2.8
7x
4.0
9x
1.6
6x
2.6
4x
2.0
1x
3.1
8x
5.1
3x
3.1
6x
2.9
5x
EB
ITD
A-C
AP
EX
/In
tere
st-2
.17
x-1
.33
x-3
.57
x-0
.29
x-0
.59
x-0
.46
x0
.86
x0
.03
x1
.26
x1
.38
x3
.30
x-0
.54
x1
.61
x
EB
IT/I
nte
rest
2.4
5x
2.3
4x
2.2
1x
1.4
9x
1.6
4x
2.6
0x
0.8
7x
1.5
1x
1.1
2x
1.4
4x
3.3
5x
1.8
5x
1.6
8x
Ca
pit
al
Str
uct
ure
To
tal
Deb
t/T
ota
l C
apit
al5
6.6
%6
0.0
%6
5.7
%6
5.5
%6
6.7
%7
3.6
%7
4.9
%7
4.9
%7
4.3
%5
7.4
%5
8.0
%7
3.6
%5
8.0
%
Pre
ferr
ed S
tock
/Cap
ital
4.4
%3
.7%
2.8
%2
.6%
2.5
%2
.7%
2.8
%2
.8%
2.8
%3
.6%
1.7
%2
.7%
1.7
%
To
tal
Deb
t/E
qu
ity
15
6.3
%1
75
.7%
21
7.0
%2
13
.1%
22
4.6
%3
21
.9%
35
0.0
%3
50
.0%
33
8.2
%1
56
.3%
14
8.4
%3
21
.9%
14
8.4
%
ST
Deb
t/T
ota
l D
ebt
22
.5%
20
.3%
17
.7%
18
.2%
46
.6%
56
.0%
56
.5%
56
.5%
55
.6%
14
.4%
5.6
%5
6.0
%5
.6%
Liq
uid
ity
An
aly
sis
Cu
rren
t R
atio
:0
.59
x0
.67
x0
.61
x0
.65
x0
.35
x0
.34
x0
.30
x0
.30
x0
.34
x0
.64
x1
.12
x0
.34
x1
.12
x
Qu
ick
Rat
io:
0.2
7x
0.3
3x
0.2
7x
0.3
5x
0.1
8x
0.2
0x
0.1
8x
0.1
8x
0.2
2x
0.3
3x
0.5
0x
0.2
0x
0.5
0x
Wo
rkin
g C
apit
al:
($1
,42
2)
($1
,54
4)
($2
,13
9)
($1
,91
7)
($6
,60
6)
($8
,25
6)
($8
,61
2)
($8
,61
2)
($7
,78
5)
($1
,18
3)
$3
25
($8
,25
6)
$3
25
Sourc
e: C
om
pany
Rep
ort
s, P
iper
Jaff
ray
January 2004
76 | ������������� ����������� Piper Jaffray Fixed Income Research
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NS
P-M
inn
es
ota
($ i
n m
illi
ons)
Year
ended D
ecem
ber
31
Inco
me
Sta
tem
ent
Su
mm
ary
1999
2000
2001
1Q
02
2Q
02
3Q
02
4Q
02
2002
1Q
03
2Q
03
3Q
03
LT
M 3
Q02
LT
M 3
Q03
Rev
enue
$2,6
78
$3,0
00
$3,2
48
$735
$657
$752
$739
$2,8
83
$928
$667
$814
$2,8
25
$3,1
48
EB
ITD
A699
748
791
157
174
259
166
756
194
145
249
764
755
EB
IT388
424
451
72
86
169
74
402
103
45
155
411
378
Net
Inco
me
159
111
208
33
42
83
42
200
44
20
80
192
186
Fre
e C
ash
Flo
w S
um
mary
EB
ITD
A:
$699
$748
$791
$157
$174
$259
$166
$756
$194
$145
$249
$764
$755
-
Inte
rest
Expen
se121
142
101
22
21
35
37
115
36
34
32
101
140
-
Div
iden
ds
to P
aren
t511
240
167
44
48
51
52
196
52
54
53
188
211
-
Cap
ital
Expen
dit
ure
s356
392
484
88
113
79
103
384
91
90
37
464
321
Fre
e C
ash F
low
($
288)
($27)
$39
$3
($9)
$94
($26)
$62
$15
($33)
$127
$11
$83
Bala
nce
Sh
eet
Su
mm
ary
Cas
h$11
$12
$17
$39
$25
$408
$333
$333
$194
$49
$135
$408
$135
Tota
l A
sset
s5,1
68
5,3
60
5,4
57
5,4
83
5,4
27
5,8
19
5,8
11
5,8
11
6,5
75
6,4
47
6,6
95
5,8
19
6,6
95
Short
Ter
m D
ebt
676
663
534
528
572
332
227
227
119
133
18
332
18
Long T
erm
Deb
t1,1
87
1,0
49
1,0
39
1,0
34
1,0
34
1,5
79
1,5
70
1,5
70
1,5
70
1,5
70
1,7
43
1,5
79
1,7
43
Pre
ferr
ed S
tock
200
200
200
200
200
200
200
200
200
200
200
200
200
Tota
l D
ebt
2,0
62
1,9
12
1,7
74
1,7
63
1,8
05
2,1
11
1,9
96
1,9
96
1,8
89
1,9
03
1,9
61
2,1
11
1,9
61
Tota
l N
et D
ebt
2,0
51
1,9
00
1,7
56
1,7
24
1,7
81
1,7
03
1,6
63
1,6
63
1,6
95
1,8
54
1,8
26
1,7
03
1,8
26
Shar
ehold
ers'
Equit
y1,1
86
1,4
08
1,7
34
1,7
20
1,7
55
1,7
86
1,8
01
1,8
01
1,7
92
1,7
62
1,7
89
1,7
86
1,7
89
Tota
l C
apit
al3,2
49
3,3
20
3,5
08
3,4
83
3,5
60
3,8
97
3,7
97
3,7
97
3,6
81
3,6
66
3,7
50
3,8
97
3,7
50
Marg
in A
naly
sis
Oper
atin
g M
argin
33.7
%31.7
%29.7
%27.3
%32.9
%40.4
%27.6
%32.1
%25.7
%28.1
%36.4
%33.3
%29.4
%
EB
ITD
A M
argin
26.1
%24.9
%24.3
%21.4
%26.5
%34.4
%22.5
%26.2
%20.9
%21.7
%30.6
%27.0
%24.0
%
EB
IT/E
BIT
DA
55.6
%56.7
%57.1
%45.6
%49.6
%65.5
%44.7
%53.1
%53.0
%31.4
%62.2
%53.8
%50.1
%
Cap
ex/R
even
ue
13.3
%13.1
%14.9
%12.0
%17.2
%10.6
%14.0
%13.3
%9.8
%13.6
%4.6
%16.4
%10.2
%
Ret
urn
on E
quit
yN
A8.6
%13.2
%12.0
%11.0
%11.2
%11.3
%11.3
%12.1
%10.7
%10.4
%11.2
%10.4
%
Cove
rage/
Lev
erage
Tota
l D
ebt/
LT
M E
BIT
DA
2.9
5x
2.5
6x
2.2
4x
2.3
0x
2.4
3x
2.7
6x
2.6
4x
2.6
4x
2.3
8x
2.4
9x
2.6
0x
2.7
6x
2.6
0x
EB
IT/I
nte
rest
3.2
2x
2.9
8x
4.4
7x
3.3
3x
4.1
1x
4.8
8x
1.9
8x
3.5
0x
2.8
7x
1.3
4x
4.8
0x
4.0
8x
2.7
1x
EB
ITD
A/I
nte
rest
5.7
8x
5.2
5x
7.8
4x
7.3
0x
8.2
9x
7.4
5x
4.4
4x
6.5
9x
5.4
1x
4.2
8x
7.7
1x
7.5
8x
5.4
1x
EB
ITD
A-C
AP
EX
/Inte
rest
2.8
4x
2.5
0x
3.0
4x
3.2
1x
2.8
9x
5.1
6x
1.6
8x
3.2
4x
2.8
8x
1.6
1x
6.5
7x
2.9
7x
3.1
0x
Capit
al
Str
uct
ure
Tota
l D
ebt/
Equit
y173.9
%135.8
%102.3
%102.5
%102.9
%118.2
%110.9
%110.9
%105.4
%108.0
%109.6
%118.2
%109.6
%
Tota
l D
ebt/
Ass
ets
39.9
%35.7
%32.5
%32.2
%33.3
%36.3
%34.4
%34.4
%28.7
%29.5
%29.3
%36.3
%29.3
%
Tota
l D
ebt/
Cap
ital
63.5
%57.6
%50.6
%50.6
%50.7
%54.2
%52.6
%52.6
%51.3
%51.9
%52.3
%54.2
%5
2.3
%
Pre
ferr
ed S
tock
/Cap
ital
6.2
%6.0
%5.7
%5.7
%5.6
%5.1
%5.3
%5.3
%5.4
%5.5
%5.3
%5.1
%5.3
%
ST
Deb
t/T
ota
l D
ebt
32.8
%34.7
%30.1
%30.0
%31.7
%15.7
%11.3
%11.3
%6.3
%7.0
%0.9
%15.7
%0.9
%
Liq
uid
ity
An
aly
sis
Curr
ent
Rat
io:
0.5
6x
0.5
7x
0.5
5x
0.5
5x
0.5
3x
1.0
5x
1.0
7x
1.0
7x
1.0
7x
1.0
3x
1.5
2x
1.0
5x
1.5
2x
Quic
k R
atio
:0.2
9x
0.2
7x
0.2
5x
0.2
8x
0.2
3x
0.7
2x
0.7
0x
0.7
0x
0.6
7x
0.5
3x
0.8
3x
0.7
2x
0.8
3x
Work
ing C
apit
al:
($543)
($552)
($491)
($508)
($499)
$42
$61
$61
$54
$17
$258
$42
$258
So
urc
e: C
om
pa
ny
Rep
ort
s, P
iper
Ja
ffra
y
January 2004
Piper Jaffray Fixed Income Research ������������� ����������� | 77
��
��
��
��
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NS
P-W
isco
nsin
($ i
n m
illi
on
s)
Ye
ar
en
de
d D
ece
mb
er
31
Inco
me
Sta
tem
ent
Su
mm
ary
19
99
20
00
20
01
1Q
02
2Q
02
3Q
02
4Q
02
20
02
1Q
03
2Q
03
3Q
03
LT
M 3
Q0
2L
TM
3Q
03
Rev
enu
e$
49
4$
53
5$
57
5$
15
7$
12
9$
13
0$
14
5$
56
2$
18
5$
12
4$
13
8$
55
4$
59
3
EB
ITD
A1
22
12
31
23
46
36
39
38
15
95
02
53
81
57
15
1
EB
IT8
08
28
13
52
52
82
71
14
39
13
26
11
31
05
Net
In
com
e3
63
03
61
81
21
21
25
42
05
12
54
48
Fre
e C
ash
Flo
w S
um
ma
ry
EB
ITD
A:
$1
22
$1
23
$1
23
$4
6$
36
$3
9$
38
$1
59
$5
0$
25
$3
8$
15
7$
15
1
-
Inte
rest
Ex
pen
se1
91
92
26
66
62
31
21
72
32
32
3
-
Div
iden
ds
to P
aren
t2
72
73
21
11
11
21
24
72
23
54
74
55
0
-
Cap
ital
Ex
pen
dit
ure
s8
38
96
28
91
47
38
17
31
38
47
48
Fre
e C
ash
Flo
w
($6
)($
12
)$
6$
21
$1
0$
7$
12
$5
0($
1)
($5
8)
($7
1)
$4
1$
31
Ba
lan
ce S
hee
t S
um
ma
ry
Cas
h$
0$
0$
0$
0$
4$
15
$0
$0
$2
1$
14
$0
$1
5$
0
To
tal
Ass
ets
90
79
86
99
29
93
98
41
,00
71
,02
11
,02
11
,05
01
,02
21
,02
01
,00
71
,02
0
Sh
ort
Ter
m D
ebt
81
16
34
90
04
74
74
04
04
00
40
Lo
ng
Ter
m D
ebt
23
23
13
31
33
13
31
33
13
27
32
73
27
32
73
27
33
13
27
3
To
tal
Deb
t3
13
32
93
47
32
23
13
31
33
20
32
03
13
31
33
13
31
33
13
To
tal
Net
Deb
t3
13
32
93
47
32
23
09
29
83
20
32
02
92
29
93
13
29
83
13
Sh
areh
old
ers'
Eq
uit
y3
57
39
04
10
41
64
19
41
94
19
41
94
26
41
94
17
41
94
17
To
tal
Cap
ital
67
07
19
75
77
38
73
27
32
73
97
39
73
97
32
73
17
32
73
1
Ma
rgin
An
aly
sis
Op
erat
ing
Mar
gin
27
.6%
25
.8%
24
.2%
31
.8%
31
.1%
32
.9%
28
.7%
31
.1%
31
.5%
31
.9%
31
.1%
31
.3%
28
.2%
EB
ITD
A M
arg
in2
4.6
%2
2.9
%2
1.4
%2
9.2
%2
7.9
%2
9.9
%2
6.1
%2
8.2
%2
7.2
%2
0.1
%2
7.3
%2
8.4
%2
5.5
%
EB
IT/E
BIT
DA
65
.4%
67
.0%
66
.1%
76
.6%
69
.2%
70
.9%
70
.1%
72
.0%
77
.5%
52
.8%
68
.9%
72
.0%
69
.4%
Cap
ex/R
even
ue
16
.7%
16
.6%
10
.8%
5.1
%7
.2%
10
.6%
5.0
%6
.8%
9.3
%2
5.0
%2
7.7
%8
.5%
8.0
%
Ret
urn
on
Eq
uit
yN
A8
.1%
9.1
%1
0.2
%1
2.5
%1
3.1
%1
3.1
%1
3.1
%1
3.4
%1
1.6
%1
1.6
%1
3.1
%1
1.6
%
Co
vera
ge/
Lev
era
ge
To
tal
Deb
t/L
TM
EB
ITD
A2
.57
x2
.68
x2
.83
x2
.44
x2
.12
x1
.99
x2
.02
x2
.02
x1
.92
x2
.06
x2
.08
x1
.99
x2
.08
x
EB
IT/I
nte
rest
4.2
9x
4.2
7x
3.6
8x
6.0
3x
4.3
4x
4.7
8x
4.5
8x
4.9
4x
3.3
6x
0.7
6x
1.1
3x
4.9
1x
4.5
8x
EB
ITD
A/I
nte
rest
6.5
7x
6.3
7x
5.5
7x
7.8
8x
6.2
7x
6.7
5x
6.5
4x
6.8
6x
4.3
4x
1.4
4x
1.6
3x
6.8
2x
6.6
0x
EB
ITD
A-C
AP
EX
/In
tere
st2
.11
x1
.77
x2
.76
x6
.50
x4
.66
x4
.34
x5
.28
x5
.20
x2
.85
x-0
.35
x-0
.03
x4
.77
x4
.52
x
Ca
pit
al
Str
uct
ure
To
tal
Deb
t/E
qu
ity
87
.6%
84
.3%
84
.8%
77
.4%
74
.8%
74
.8%
76
.4%
76
.4%
73
.5%
74
.7%
75
.0%
74
.8%
75
.0%
To
tal
Deb
t/C
apit
al4
6.7
%4
5.7
%4
5.9
%4
3.6
%4
2.8
%4
2.8
%4
3.3
%4
3.3
%4
2.4
%4
2.8
%4
2.9
%4
2.8
%4
2.9
%
To
tal
Deb
t/A
sset
s3
4.5
%3
3.4
%3
5.0
%3
2.4
%3
1.8
%3
1.1
%3
1.3
%3
1.3
%2
9.8
%3
0.6
%3
0.7
%3
1.1
%3
0.7
%
ST
Deb
t/T
ota
l D
ebt
25
.8%
4.8
%9
.9%
2.7
%0
.0%
0.0
%1
4.7
%1
4.7
%1
2.8
%1
2.8
%1
2.8
%0
.0%
12
.8%
Liq
uid
ity
An
aly
sis
Cu
rren
t R
atio
:0
.63
x1
.14
x1
.06
x1
.18
x1
.24
x1
.18
x0
.92
x0
.92
x1
.08
x1
.02
x0
.93
x1
.18
x0
.93
x
Qu
ick
Rat
io:
0.2
7x
0.5
4x
0.4
2x
0.6
6x
0.6
2x
0.6
6x
0.4
5x
0.4
5x
0.6
5x
0.5
4x
0.3
5x
0.6
6x
0.3
5x
Wo
rkin
g C
apit
al:
($5
1)
$1
4$
5$
14
$1
5$
13
($9
)($
9)
$1
0$
2($
7)
$1
3($
7)
So
urc
e: C
om
pa
ny
Rep
ort
s, P
iper
Ja
ffra
y
January 2004
78 | ������������� ����������� Piper Jaffray Fixed Income Research
��
��
��
��
��
�
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Pu
bli
c S
erv
ice
Co
. o
f C
olo
rad
o
($ i
n m
illi
ons)
Year
ended D
ecem
ber
31
Inco
me
Sta
tem
ent
Su
mm
ary
1999
2000
2001
1Q
02
2Q
02
3Q
02
4Q
02
2002
1Q
03
2Q
03
3Q
03
LT
M 3
Q02
LT
M 3
Q03
Rev
enue
$2
,71
9$
2,8
54
$3
,65
0$
1,0
63
$1
,06
3$
59
4$
72
5$
2,6
52
$7
56
$6
61
$7
04
$2
,70
3$
2,8
46
EB
ITD
A6
39
73
78
11
19
81
98
19
61
97
78
82
06
14
71
78
78
17
28
EB
IT4
44
52
65
72
13
31
34
13
51
39
54
11
48
85
12
35
27
49
5
Net
Inco
me
20
41
96
27
36
76
26
76
92
65
70
34
57
24
72
30
Fre
e C
ash
Flo
w S
um
mary
EB
ITD
A:
$6
39
$7
37
$8
11
$1
98
$1
98
$1
96
$1
97
$7
88
$2
06
$1
47
$1
78
$7
81
$7
28
-
Inte
rest
Expen
se1
56
16
11
31
31
36
38
36
14
24
04
43
71
40
15
7
-
Div
iden
ds
to P
aren
t1
85
18
12
21
53
55
61
61
23
16
15
95
92
24
24
0
-
Cap
ital
Expen
dit
ure
s5
67
37
44
70
86
13
81
35
84
44
37
99
71
26
52
93
86
Fre
e C
ash F
low
($
27
0)
$2
1($
11
)$
27
($3
1)
($3
9)
$1
6($
28
)$
28
($5
2)
($4
5)
($1
13
)($
54
)
Bala
nce
Sh
eet
Su
mm
ary
Cas
h$
52
$1
6$
23
$2
7$
17
$1
11
$2
6$
26
$2
10
$3
7$
71
$1
11
$7
1
To
tal
Ass
ets
5,6
44
5,7
74
5,8
41
5,8
66
5,9
15
6,0
18
5,9
25
5,9
25
6,1
53
6,0
10
6,1
96
6,0
18
6,1
96
Sh
ort
Ter
m D
ebt
48
92
97
60
95
62
82
83
71
38
53
85
44
26
91
19
03
71
19
0
Lo
ng
Ter
m D
ebt
1,7
22
1,6
11
1,4
65
1,4
65
1,2
13
1,8
13
1,7
82
1,7
82
1,8
84
1,7
40
2,3
12
1,8
13
2,3
12
Pre
ferr
ed S
tock
19
41
94
19
41
94
19
41
94
19
41
94
19
40
01
94
0
To
tal
Deb
t2
,40
52
,10
22
,26
82
,22
12
,23
52
,37
82
,36
12
,36
12
,52
02
,43
12
,50
22
,37
82
,50
2
To
tal
Net
Deb
t2
,35
32
,08
62
,24
52
,19
42
,21
82
,26
62
,33
62
,33
62
,31
02
,39
42
,43
12
,26
62
,43
1
Sh
areh
old
ers'
Eq
uit
y1
,76
11
,92
31
,99
02
,05
92
,06
12
,06
81
,97
81
,97
81
,99
11
,96
51
,98
02
,06
81
,98
0
To
tal
Cap
ital
4,1
66
4,0
25
4,2
58
4,2
80
4,2
96
4,4
46
4,3
40
4,3
40
4,5
12
4,3
95
4,4
82
4,4
46
4,4
82
Marg
in A
naly
sis
Oper
atin
g M
argin
26
.6%
28
.5%
24
.2%
20
.7%
20
.6%
36
.1%
29
.3%
32
.6%
30
.0%
25
.8%
28
.3%
31
.8%
28
.4%
EB
ITD
A M
arg
in2
3.5
%2
5.8
%2
2.2
%1
8.6
%1
8.6
%3
3.0
%2
7.1
%2
9.7
%2
7.3
%2
2.3
%2
5.3
%2
8.9
%2
5.6
%
EB
IT/E
BIT
DA
69
.6%
71
.4%
70
.5%
67
.3%
67
.7%
68
.7%
70
.8%
68
.6%
71
.6%
57
.9%
69
.0%
67
.5%
68
.0%
Cap
ex/R
even
ue
20
.9%
13
.1%
12
.9%
8.1
%1
3.0
%2
2.8
%1
1.6
%1
6.7
%1
0.4
%1
4.6
%1
8.0
%1
9.6
%1
3.5
%
Ret
urn
on E
quit
yN
A1
0.6
%1
4.0
%1
1.5
%1
1.3
%1
2.2
%1
3.3
%1
3.3
%1
3.2
%1
1.9
%1
1.4
%1
2.2
%1
1.4
%
Cove
rage/
Lev
erage
To
tal
Deb
t/L
TM
EB
ITD
A3
.77
x2
.85
x2
.80
x2
.94
x3
.01
x3
.05
x3
.00
x3
.00
x3
.16
x3
.26
x3
.44
x3
.05
x3
.44
x
EB
IT/I
nte
rest
2.8
5x
3.2
6x
4.3
6x
4.2
3x
3.7
2x
3.5
0x
3.8
4x
3.8
0x
3.7
3x
1.9
3x
3.3
1x
3.7
7x
3.1
5x
EB
ITD
A/I
nte
rest
4.0
9x
4.5
7x
6.1
8x
6.2
8x
5.5
0x
5.1
0x
5.4
2x
5.5
4x
5.2
1x
3.3
2x
4.8
1x
5.5
9x
4.6
3x
EB
ITD
A-C
AP
EX
/In
tere
st0
.46
x2
.25
x2
.60
x3
.54
x1
.68
x1
.58
x3
.11
x2
.43
x3
.23
x1
.14
x1
.39
x1
.80
x2
.18
x
Capit
al
Str
uct
ure
To
tal
Deb
t/E
qu
ity
13
6.6
%1
09
.3%
11
3.9
%1
07
.9%
10
8.4
%1
15
.0%
11
9.4
%1
19
.4%
12
6.6
%1
23
.7%
12
6.4
%1
15
.0%
12
6.4
%
To
tal
Deb
t/A
sset
s4
2.6
%3
6.4
%3
8.8
%3
7.9
%3
7.8
%3
9.5
%3
9.9
%3
9.9
%4
1.0
%4
0.4
%4
0.4
%3
9.5
%4
0.4
%
To
tal
Deb
t/C
apit
al5
7.7
%5
2.2
%5
3.3
%5
1.9
%5
2.0
%5
3.5
%5
4.4
%5
4.4
%5
5.9
%5
5.3
%5
5.8
%5
3.5
%5
5.8
%
Pre
ferr
ed S
tock
/Cap
ital
4.7
%4
.8%
4.6
%4
.5%
4.5
%4
.4%
4.5
%4
.5%
4.3
%0
.0%
0.0
%4
.4%
0.0
%
ST
Deb
t/T
ota
l D
ebt
20
.3%
14
.1%
26
.8%
25
.3%
37
.0%
15
.6%
16
.3%
16
.3%
17
.5%
28
.4%
7.6
%1
5.6
%7
.6%
Liq
uid
ity
An
aly
sis
Cu
rren
t R
atio
:0
.64
x0
.73
x0
.54
x0
.60
x0
.47
x0
.66
x0
.63
x0
.63
x0
.78
x0
.51
x0
.94
x0
.66
x0
.94
x
Qu
ick
Rat
io:
0.2
3x
0.2
0x
0.1
7x
0.2
2x
0.1
2x
0.2
5x
0.2
2x
0.2
2x
0.4
1x
0.1
9x
0.3
4x
0.2
5x
0.3
4x
Wo
rkin
g C
apit
al:
($4
05
)($
32
8)
($6
13
)($
51
1)
($8
34
)($
37
3)
($3
60
)($
36
0)
($2
28
)($
62
0)
($5
1)
($3
73
)($
51
)
So
urc
e: C
om
pa
ny
Rep
ort
s, P
iper
Ja
ffra
y
January 2004
Piper Jaffray Fixed Income Research ������������� ����������� | 79
��
��
��
��
��
�
���
���
��
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So
uth
weste
rn P
ub
lic S
erv
ice C
o.
($ i
n m
illi
ons)
Ye
ar
en
de
d D
ece
mb
er
31
Inco
me
Sta
tem
ent
Su
mm
ary
1999
2000
2001
1Q
02
2Q
02
3Q
02
4Q
02
2002
1Q
03
2Q
03
3Q
03
LT
M 3
Q02
LT
M 3
Q03
Rev
enue
$9
26
$1
,08
0$
1,3
85
$2
12
$2
67
$2
92
$2
55
$1
,02
5$
24
5$
28
4$
38
0$
1,0
68
$1
,16
4
EB
ITD
A2
89
30
13
19
62
56
85
56
25
95
06
49
52
78
26
5
EB
IT2
13
22
32
35
40
35
62
33
17
02
84
27
31
90
17
7
Net
Inco
me
10
36
91
30
15
13
32
14
74
10
19
38
96
81
Fre
e C
ash
Flo
w S
um
mary
EB
ITD
A:
$2
89
$3
01
$3
19
$6
2$
56
$8
5$
56
$2
59
$5
0$
64
$9
5$
27
8$
26
5
-
Inte
rest
Expen
se6
16
25
31
31
31
41
45
41
41
31
35
35
3
-
Div
iden
ds
to P
aren
t8
37
88
56
10
82
49
32
12
82
48
99
8
-
Cap
ital
Expen
dit
ure
s1
19
10
41
17
62
01
21
95
72
42
72
76
29
7
Fre
e C
ash F
low
$
25
$5
7$
64
($1
8)
$2
3$
51
($1
)$
55
($9
)($
3)
$3
1$
73
$1
8
Bala
nce
Sh
eet
Su
mm
ary
Cas
h$
2$
11
$6
5$
30
$2
0$
78
$6
1$
61
$5
1$
7$
14
$7
8$
14
To
tal
Ass
ets
2,2
22
2,3
93
2,3
01
2,2
27
2,2
65
2,2
71
2,2
65
2,2
65
2,2
84
2,2
43
2,2
91
2,2
71
2,2
91
Sh
ort
Ter
m D
ebt
17
86
75
00
15
00
00
01
70
17
Lo
ng
Ter
m D
ebt
60
62
27
72
57
25
72
67
26
72
67
26
72
67
26
72
67
26
72
6
Pre
ferr
ed S
tock
10
01
00
10
01
00
10
01
00
10
01
00
10
01
00
10
01
00
10
0
To
tal
Deb
t8
84
1,0
01
82
58
25
84
18
26
82
68
26
82
68
26
84
38
26
84
3
To
tal
Net
Deb
t8
82
99
07
60
79
58
21
74
87
65
76
57
74
81
98
29
74
88
29
Sh
areh
old
ers'
Eq
uit
y7
61
75
28
46
82
18
28
83
48
29
82
98
15
78
37
97
83
47
97
To
tal
Cap
ital
1,6
45
1,7
53
1,6
71
1,6
46
1,6
68
1,6
60
1,6
54
1,6
54
1,6
40
1,6
09
1,6
40
1,6
60
1,6
40
Marg
in A
naly
sis
Oper
atin
g M
argin
36
.5%
32
.3%
26
.5%
35
.1%
26
.3%
33
.8%
27
.7%
30
.6%
25
.2%
26
.6%
28
.1%
0.0
%0
.0%
EB
ITD
A M
argin
31
.2%
27
.9%
23
.0%
29
.5%
21
.0%
29
.1%
22
.1%
25
.3%
20
.4%
22
.6%
25
.0%
26
.0%
22
.8%
EB
IT/E
BIT
DA
73
.7%
73
.9%
73
.7%
64
.8%
61
.9%
73
.5%
58
.6%
65
.6%
56
.8%
66
.0%
76
.7%
68
.2%
66
.5%
Cap
ex/R
even
ue
12
.8%
9.6
%8
.5%
3.1
%7
.3%
4.2
%7
.4%
5.6
%1
0.0
%9
.3%
7.1
%5
.8%
8.3
%
Ret
urn
on E
quit
yN
A9
.2%
16
.3%
15
.1%
14
.2%
11
.9%
8.8
%8
.8%
8.5
%9
.3%
9.9
%1
1.9
%9
.9%
Cove
rage/
Lev
erage
To
tal
Deb
t/L
TM
EB
ITD
A3
.06
x3
.32
x2
.59
x2
.68
x2
.80
x2
.97
x3
.18
x3
.18
x3
.35
x1
.68
x3
.18
x2
.97
x3
.18
x
EB
IT/I
nte
rest
3.4
6x
3.5
6x
4.4
4x
3.0
3x
2.5
8x
4.6
1x
2.4
2x
3.1
6x
2.0
7x
3.3
5x
5.6
8x
3.5
7x
3.3
5x
EB
ITD
A/I
nte
rest
4.7
0x
4.8
2x
6.0
3x
4.6
8x
4.1
7x
6.2
7x
4.1
4x
4.8
1x
3.6
4x
5.0
8x
7.4
0x
5.2
3x
5.0
3x
EB
ITD
A-C
AP
EX
/In
tere
st2
.77
x3
.16
x3
.81
x4
.19
x2
.72
x5
.37
x2
.75
x3
.75
x1
.86
x2
.98
x5
.31
x4
.06
x3
.20
x
Capit
al
Str
uct
ure
To
tal
Deb
t/E
qu
ity
11
6.1
%1
33
.2%
97
.6%
10
0.6
%1
01
.5%
99
.0%
99
.6%
99
.6%
10
1.4
%1
05
.5%
10
5.8
%9
9.0
%1
05
.8%
To
tal
Deb
t/A
sset
s3
9.8
%4
1.8
%3
5.9
%3
7.1
%3
7.1
%3
6.3
%3
6.4
%3
6.4
%3
6.2
%3
6.8
%3
6.8
%3
6.3
%3
6.8
%
To
tal
Deb
t/C
apit
al5
3.7
%5
7.1
%4
9.4
%5
0.1
%5
0.4
%4
9.7
%4
9.9
%4
9.9
%5
0.3
%5
1.3
%5
1.4
%4
9.7
%5
1.4
%
Pre
ferr
ed S
tock
/Cap
ital
6.1
%5
.7%
6.0
%6
.1%
6.0
%6
.0%
6.0
%6
.0%
6.1
%6
.2%
6.1
%6
.0%
6.1
%
ST
Deb
t/T
ota
l D
ebt
20
.1%
67
.4%
0.0
%0
.0%
1.8
%0
.0%
0.0
%0
.0%
0.0
%0
.0%
2.0
%0
.0%
2.0
%
Liq
uid
ity
An
aly
sis
Cu
rren
t R
atio
:0
.45
x0
.32
x1
.13
x1
.11
x1
.23
x1
.22
x1
.29
x1
.29
x1
.20
x1
.15
x1
.06
x1
.22
x1
.06
x
Qu
ick
Rat
io:
0.2
5x
0.1
0x
0.6
1x
0.6
6x
0.7
6x
0.8
1x
0.7
6x
0.7
6x
0.7
7x
0.4
6x
0.3
9x
0.8
1x
0.3
9x
Wo
rkin
g C
apit
al:
($1
92
)($
63
2)
$2
8$
18
$3
8$
41
$5
1$
51
$4
0$
27
$1
5$
41
$1
5
So
urc
e: C
om
pa
ny
Rep
ort
s, P
iper
Ja
ffra
y
January 2004
80 | ������������� ����������� Piper Jaffray Fixed Income Research
� � � � � � �
January 2004
Piper Jaffray Fixed Income Research ������������� ����������� | 81
Source: Piper Jaffray, Standard & Poor’s
Exhibit 1
������ ������
Exhibit 2
� �� ��� � � � ��� ���������� ����� �� � � ������� � ���� ��
AVA
MDU
PSD
VVC
WEC
XEL
BKH
EE
GXP
IDA OGE
ENRNQ
3Q03
4Q04
E
AAA AAA-AA+ B+BBBBB-BBB+
B+
BB
BBB-
BBB+
A
AA-
AA+
AAA
Declining Rating
Improving Rating
BB-
BB-
BB+
BB+BBB
BBB
A-
A-A+
A+
AA
AA
Company TickerPiper Jaffray Credit Trend
S&P Corporate Credit Rating
S&P Outlook
Avista AVA Improving BB+ StableBlack Hills BKH Declining BBB- Negative El Paso Electric EE Improving BBB- StableGreat Plains Energy GXP Declining BBB StableIDACORP IDA Stable A- StableMDU Resources MDU Declining A- Negative OGE Energy OGE Stable BBB+ StablePortland General Electric ENRNQ Developing BBB+ DevelopingPuget Energy PSD Improving BBB- PositiveVectren VVC Stable A- Negative Wisconsin Energy WEC Declining BBB+ StableXcel Energy XEL Improving BBB CreditWatch Positive
January 2004
82 | ������������� ����������� Piper Jaffray Fixed Income Research
Exhibit 3
������ � �� �� ���� � � � �� �� ��� ������ � ��������������� ��� �� � ��
Source: Piper Jaffray
Exhibit 4
� ���� ��� � �� � ��� � �� �������� � ������
Source: Company Reports, Piper Jaffray*Coefficient of Variation applied to 2004E EBITDA/Interest Expense. This ratio is a measure of volatility and is calculated as follows: Coefficient of Variation = Standard Deviation / Mean (applied to high, expected, and low 2004E EBITDA/Interest Expense)
Coefficient of Variation*
Dividend Payout
Total Debt
2003E 2004E 2004E 2003E 2004E 2003E 2004E 2004E 3Q03AAvista AVA 2.72x 2.68x 1.95% 4.45x 4.56x 6.49% 6.75% 52.6% $1,132Black Hills BKH 3.95x 3.64x 4.16% 3.68x 3.85x 10.08% 9.72% 64.2% $771El Paso Electric EE 3.96x 4.41x 1.21% 3.43x 3.14x 12.67% 7.02% 0.0% $630Great Plains Energy GXP 6.15x 5.57x 10.54% 2.83x 3.20x 17.60% 14.42% 69.1% $1,355IDACORP IDA 3.00x 3.87x 1.38% 5.65x 4.39x 5.78% 8.67% 138.4% $1,100MDU Resources MDU 9.28x 8.46x 6.30% 2.19x 2.28x 12.77% 12.51% 42.9% $1,012OGE Energy OGE 4.95x 4.66x 14.55% 3.37x 3.53x 11.89% 11.15% 79.1% $1,599Portland Gen Elec ENRNQ 5.04x 5.11x 0.34% 2.64x 2.55x 5.69% 4.11% 0.0% $1,046Puget Energy PSD 3.40x 4.16x 0.83% 3.80x 3.41x 8.28% 9.92% 69.6% $2,623Vectren VVC 4.32x 4.91x 0.08% 4.04x 3.37x 11.24% 11.10% 70.7% $1,303Wisconsin Energy WEC 4.15x 4.45x 1.56% 4.85x 4.56x 11.07% 11.57% 38.1% $4,302Xcel Energy XEL 4.13x 4.44x 1.31% 3.89x 3.70x 9.52% 10.12% 65.5% $7,006Universe Average 4.59x 4.70x 3.74x 3.55x 10.3% 9.8% 57.5% $1,990
EBITDA/Interest Exp Total Debt/EBITDA Return on EquityCompany
Variable Upgrade Downgrade Upgrade Downgrade Upgrade Downgrade
Black Hills Puget Energy Avista Vectren Great Plainsn/a Great Plains MDU Resources Great Plains Portland General IDACORP
El Paso Elec OGEPortland General
Black Hills Puget Energy Avista VectrenInterest Expense n/a Great Plains MDU Resources Great Plains n/a
El Paso Elec OGEPortland General
Portland General Great PlainsTotal Debt n/a n/a n/a n/a El Paso Elec
Pretax Interest Coverage FFO Interest Coverage FFO/Total Debt
Income from Continuing Ops
January 2004
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Exhibit 5
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Source: Company Reports, Piper Jaffray
TickerFFO/Total
DebtRank
FFO Interest Coverage
RankPretax Interest
CoverageRank
Total Debt/Total Capital
Rank
AVA 11.7% 11 2.42x 12 1.75x 10 53.9% 5BKH 29.8% 2 5.31x 4 2.83x 3 52.3% 4EE 20.5% 7 3.81x 9 1.94x 8 55.7% 9GXP 25.3% 3 5.31x 3 4.03x 2 49.5% 3IDA 24.8% 4 5.72x 2 1.35x 12 54.6% 7MDU 45.0% 1 9.17x 1 6.57x 1 41.3% 1OGE 24.2% 5 5.19x 5 2.61x 6 57.2% 10ENRNQ 23.9% 6 4.22x 7 1.81x 9 46.9% 2PSD 18.1% 9 3.31x 10 2.02x 7 54.6% 6VVC 17.2% 10 3.97x 8 2.66x 5 55.3% 8WEC 18.6% 8 4.52x 6 2.69x 4 61.8% 12XEL 10.5% 12 2.93x 11 1.71x 11 58.0% 11AVG 22.5% 4.66x 2.66x 53.4%
TickerFFO/Total
DebtRank
FFO Interest Coverage
RankPretax Interest
CoverageRank
Total Debt/Total Capital
Rank
AVA 13.1% 12 2.39x 12 1.78x 12 52.7% 7BKH 18.4% 7 3.37x 11 2.60x 8 56.4% 9EE 19.8% 5 3.98x 7 2.28x 10 51.8% 5GXP 24.2% 3 4.70x 3 3.72x 2 48.8% 3IDA 15.2% 10 3.63x 10 2.64x 7 58.4% 11MDU 38.0% 1 7.32x 1 5.28x 1 44.1% 1OGE 18.0% 8 4.19x 6 2.98x 4 58.2% 10ENRNQ 26.3% 2 4.73x 2 2.10x 11 44.1% 2PSD 21.6% 4 3.79x 9 2.46x 9 51.2% 4VVC 19.5% 6 4.40x 4 3.10x 3 53.4% 8WEC 16.8% 9 3.86x 8 2.83x 6 60.7% 12XEL 13.6% 11 4.26x 5 2.88x 5 52.6% 6AVG 20.4% 4.22x 2.89x 52.7%
January 2004
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Exhibit 6
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(Millions)
Exhibit 7
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Source: Company Reports, Piper Jaffray
Source: Company Reports, Piper Jaffray
Company TickerRegulated Generation
Capacity (MW)Avista AVA 1,511Black Hills BKH 435El Paso Electric EE 1,500Great Plains Energy GXP 4,043IDACORP IDA 2,912MDU Resources MDU 393OGE Energy OGE 5,696Portland Gen Elec ENRNQ 1,945Puget Energy PSD 1,801Vectren VVC 1,528Wisconsin Energy WEC 5,825Xcel Energy XEL 15,246
Company Ticker LTM 3Q03 2004EAvista AVA $25 $21Black Hills BKH $6 ($167)El Paso Electric EE $67 $66Great Plains Energy GXP $160 $67IDACORP IDA ($145) ($54)MDU Resources MDU ($87) ($42)OGE Energy OGE $112 $64Portland Gen Elec ENRNQ $111 $36Puget Energy PSD $128 $107Vectren VVC ($42) ($44)Wisconsin Energy WEC ($70) ($32)Xcel Energy XEL $114 ($513)
January 2004
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As discussed in our ratings analysis methodology, our method of forecasting the potential ratingschanges of Standard & Poor’s depends on simulating their methodology. In the interest of making theprocess transparent to investors we feel it will be helpful to give a brief synopsis of Standard & Poor’smethodology as we interpret it.
Standard & Poor’s focuses its ratings of power companies on two components: business profile (qualita-tive analysis of risk) and financial profile (quantitative analysis of risk). The analysis of the businessrisks makes the measurement of the financial metrics more meaningful in comparing credits. For ex-ample, the average regulated utility carries less business risk than the average Independent Power Pro-ducer (IPP). This is due to the more consistent and predictable cash flows inherent in operating a regu-lated utility. Therefore, the margin of financial safety an investor should require for a fully regulatedutility should be less than an investor should require for an IPP with a higher risk profile than the regu-lated utility. Comparing the financial metrics against differing business profiles allows two fundamen-tally different credits to be viewed on the same rating scale.
Standard & Poor’s assessment of business profile risk involves the analysis of:• Regulation• Markets• Operations• Competitiveness• Management
Each company is ranked on a scale of 1 to 10 (1 is low risk, 10 is high risk). The business profile ratingof each company represented in the book is shown below.
Using the business profile rating, each financial metric is measured using the Standard & Poor’s Finan-cial Targets (found in the appendix).
Company TickerBusiness
ProfileAvista Corp AVA 6Black Hills Corp BKH 7El Paso Electric EE 6Great Plains Energy GXP 6IDACORP IDA 4MDU Resources MDU 7OGE Energy OGE 5Portland General Electric ENRNQ 4Puget Energy PSD 5Vectren Corp VVC 4Wisconsin Energy WEC 5Xcel Energy XEL 4
Source: Standard & Poor’s
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On December 23, 2003, Standard & Poor’s Ratings Services lowered its corporate creditrating on FirstEnergy Corp to BBB- from BBB. The downgrade did not occur as a result ofweakening coverage or increasing leverage, but followed a revision in S&P’s assessment ofthe Company’s consolidated business risk profile and a change from 5 to 6 on the businessposition scale (1 equals low risk; 10 equals high risk). Standard & Poor’s is concerned theexisting operational and management challenges facing the company will more closelyrepresent a business risk profile of 6, where the rating criteria are more stringent.
As discussed in the “Standard & Poor’s Methodology: Business Profile” section of the ap-pendix, the change in business position adjusts the scale the financial profile is measuredagainst (see “Standard & Poor’s Financial Targets”). Because FirstEnergy has beendeemed by the Standard & Poor’s analyst to be a more risky credit than previouslythought, a healthier financial profile is required to receive the BBB corporate credit ratingFirstEnergy formerly held. A graphical representation of the rating under each profile isshown below.
The revision to the business position and subsequent ratings downgrade of FirstEnergyhighlights a potential change to the financial profile that is not captured in our graphicalrepresentation of the financial profile. Increases in operational or regulatory risk, as seenby FirstEnergy, or decisions by management to grow unregulated businesses are the mosttypical causes of increasing business risk and changing business profile of a company.Though the financial profile graphs do not take changing credit quality of earnings intoaccount, the Piper Jaffray credit trend analysis that appears on the first page of each com-pany report accounts for both the financial performance and changing business risk of eachcompany through our qualitative analysis.
S&P Financial Profile Proxy for FirstEnergy
under changing Business Profiles
FFO/Total Debt
FFO Interest Coverage
Pretax Interest Coverage
Total Debt/Total Capital
Business Position 5
Business Position 6
Pretax coverage drops from a BBB-
to BB+ as the business position is
revised from 5 to 6.
FFO coverage metric moves from the top
of the BB+ range in business position 5 to
the low end of the BB+ range in business
position 6.
AA
A
BBB
BB
B
Adjusting the business position from 5
to 6 moves the FFO/TD metric from
safely within the B+ range to the low
end of the B+ range.In business position 5 the
TD/TC is rated BB-, however,
the move to business position 6
changes the rating to B+
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FFO / TOTAL DEBT
Business Position AA A BBB BB B
1 20.0 16.5 16.5 12.5 12.5 7.0 < 7.0 - -
2 25.0 21.0 21.0 16.0 16.0 10.5 < 10.5 - -
3 31.5 26.0 26.0 20.0 20.0 14.0 14.0 9.5 9.5 4.0
4 36.5 30.5 30.5 24.5 24.5 17.5 17.5 12.0 12.0 6.0
5 40.0 33.0 33.0 27.0 27.0 20.5 20.5 15.0 15.0 7.5
6 47.0 39.0 39.0 31.0 31.0 22.0 22.0 16.0 16.0 8.5
7 56.0 47.0 47.0 36.5 36.5 24.5 24.5 17.0 17.0 9.5
8 66.0 55.0 55.0 42.5 42.5 27.5 27.5 18.5 18.5 11.0
9 - - 64.5 49.5 49.5 32.0 32.0 22.0 22.0 12.5
10 - - 78.0 60.5 60.5 39.0 39.0 28.0 28.0 17.5
FFO INTEREST COVERAGE
Business Position AA A BBB BB B
1 3.1 2.6 2.6 1.9 1.9 0.9 < 0.9 - -
2 3.9 3.3 3.3 2.5 2.5 1.5 < 1.5 - -
3 4.5 3.9 3.9 3.1 3.1 2.1 2.1 1.3 1.3 0.5
4 5.1 4.5 4.5 3.8 3.8 2.7 2.7 1.8 1.8 0.9
5 5.4 4.8 4.8 4.0 4.0 3.0 3.0 2.1 2.1 1.1
6 6.6 5.7 5.7 4.5 4.5 3.1 3.1 2.2 2.2 1.2
7 8.4 7.0 7.0 5.1 5.1 3.3 3.3 2.3 2.3 1.3
8 10.2 8.3 8.3 5.9 5.9 3.5 3.5 2.4 2.4 1.5
9 - - 9.5 7.1 7.1 4.3 4.3 2.9 2.9 1.8
10 - - 11.3 8.6 8.6 5.3 5.3 3.6 3.6 2.3
PRETAX INTEREST COVERAGE
Business Position AA A BBB BB B
1 2.8 2.4 2.4 1.8 1.8 0.8 < 0.8 - -
2 3.4 2.9 2.9 2.3 2.3 1.3 < 1.3 - -
3 4.0 3.4 3.4 2.8 2.8 1.8 1.8 1.1 1.1 0.3
4 4.6 4.0 4.0 3.3 3.3 2.2 2.2 1.3 1.3 0.5
5 5.0 4.3 4.3 3.5 3.5 2.4 2.4 1.5 1.5 0.6
6 6.2 5.2 5.2 4.0 4.0 2.6 2.6 1.6 1.6 0.7
7 8.0 6.5 6.5 4.7 4.7 2.8 2.8 1.8 1.8 0.9
8 9.9 8.0 8.0 5.5 5.5 3.0 3.0 2.0 2.0 1.1
9 - - 9.1 6.6 6.6 3.7 3.7 2.5 2.5 1.4
10 - - 11.1 8.4 8.4 5.0 5.0 3.3 3.3 1.8
TOTAL DEBT / TOTAL CAPITAL
Business Position AA A BBB BB B
1 50.5 55.0 55.0 60.5 60.5 67.5 > 67.5 - -
2 46.5 51.0 51.0 56.5 56.5 63.5 > 63.5 - -
3 42.0 47.5 47.5 53.0 53.0 61.0 61.0 67.0 67.0 74.0
4 37.5 43.0 43.0 49.5 49.5 57.0 57.0 64.0 64.0 72.5
5 36.0 41.5 41.5 47.0 47.0 55.0 55.0 62.5 62.5 71.0
6 32.5 39.5 39.5 46.0 46.0 53.5 53.5 60.5 60.5 69.0
7 30.5 37.5 37.5 45.0 45.0 52.5 52.5 59.5 59.5 68.0
8 28.0 35.0 35.0 43.0 43.0 51.5 51.5 58.0 58.0 66.0
9 - - 30.0 39.0 39.0 47.5 47.5 54.0 54.0 61.5
10 - - 24.0 33.0 33.0 40.5 40.5 46.0 46.0 53.0
Source: Standard & Poor's
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Pretax interest coverage Numerator Net income from continuing operationsAdjusted + Income taxes
+ Income adjustments (pretax)+ Subsidiary pfd & pref dividends+ Interest expense (net)+ Minority interest- AFDC - equity+ Interest on OBS debt
Denominator Interest expense (net)+ AFDC - debt+ Interest on OBS debt
Preferred dividend coverage Numerator Net income (continuing operations)Adjusted + Income taxes
+ Income adjustments+ Subsidiary pfd & pref dividends+ Interest expense (net)+ Minority interest- AFDC - equity+ Interest on OBS debt
Denominator Interest expense (net)+ AFDC - debt+ Preferred & preference stock dividends / (1-.35)+ Interest on OBS debt
ROE (nominal) Numerator Net income from continuing operations- Preferred & preference stock dividends- AFDC - debt- AFDC - equity
Denominator* Common equity+ Minority interest
*Avg. for two years
AFDC / common earnings Numerator AFDC - debt+ AFDC - equity
Denominator Net income (continuing operations)- Preferred & preference dividends
Common dividend payout Numerator Common dividends
Denominator Net income (continuing operations)- Preferred & preference dividends
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Short-term debt / capital Numerator Notes payable+ Current maturities+ Current capitalized lease obligation
Denominator Notes payable+ Current maturities+ Current capitalized lease obligation+ Long term debt+ Capitalized lease obligations+ Minority interest+ Total preferred & preference stock+ Common equity
Long-term debt / capital Numerator Long term debt+ Capitalized lease obligations
Denominator Notes payable+ Current maturities+ Current capitalized lease obligation+ Long term debt+ Capitalized lease obligations+ Minority interest+ Total preferred & preference stock+ Common equity
Preferred stock / capital Numerator Total preferred & preference stock
Denominator Notes payable+ Current maturities (LTD & pfd)+ Current capitalized lease obligation+ Long term debt+ Capitalized lease obligations+ Minority interest+ Total preferred & preference stock+ Common equity
Common equity / capital Numerator Common equity+ Minority interest
Denominator Notes payable+ Current maturities+ Current capitalized lease obligation+ Long term debt+ Capitalized lease obligations+ Minority interest+ Total preferred & preference stock+ Common equity
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Total debt / capital Numerator Notes payableAdjusted + Current maturities
+ Current capitalized lease oblig+ Long term debt+ Capitalized lease obligations+ Total OBS debt
Denominator Notes payable+ Current maturities (LTD & pfd)+ Current capitalized lease oblig+ Long term debt+ Capitalized lease obligations+ Minority interest+ Total preferred & pref stock+ Common equity+ Total OBS debt
Capex / average capital Numerator Capital expenditures (net)
Denominator* Notes payable+ Current maturities (LTD & pfd)+ Current capitalized lease oblig+ Long term debt+ Capitalized lease obligations+ Minority interest+ Total preferred & preference stock+ Common equity
*Avg. for two years
FFO interest coverage Numerator Funds from operations (FFO)Adjusted + Cash interest paid
+ Interest on OBS debt
Denominator Interest expense (net)+ AFDC - debt+ Interest on OBS debt
FFO / average total debt Numerator Funds from operations (FFO)Adjusted + Depreciation Adjustment for Operating Leases
Denominator* Notes payable+ Current maturities+ Current capitalized lease obligation+ Long term debt+ Capitalized lease obligations+ Total OBS debt
*Avg. for two years
January 2004
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NCF / capex Numerator Funds from operations (FFO)- Cash common dividends- Cash preferred & preference dividends
Denominator Capital expenditure (net)
EBITDA interest coverage Numerator Net income (continuing operations)Adjusted + Income taxes
+ Income adjustments (pretax)+ Subsidiary pfd & pref dividends+ Interest expense (net)+ Minority interest- AFDC - equity+ Interest on OBS debt+ Depreciation, depletion & amort+ Depreciation adjustment for operating leases
Denominator Interest expense (net)+ AFDC - debt+ Interest on OBS debt
Operating income / sales Numerator Operating revenues/net sales- Cost of goods sold- Maintenance expenses- Selling, general & admin.- Taxes other than income- Other operating expenses
Denominator Operating revenues/net sales
Average debt / EBITDA Numerator* Notes payableAdjusted + Current maturities
+ Current capitalized lease obligation+ Long term debt+ Capitalized lease obligations+ Total OBS debt
Denominator Net income (continuing operations)+ Income taxes+ Income adjustments (net)+ Subsidiary pfd dividends+ Interest expense (net)+ Minority interest- AFDC - equity+ Interest on OBS debt+ Depreciation, depletion & amort
*Avg. for two years
Depreciation reserve ratio Numerator Accumulated depreciation
Denominator Gross plant (PP&E)
January 2004
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N O T E S
January 2004
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