NEWS RELEASE
800 Cabin Hill Drive, Greensburg, PA 15601-1689
Media contact: | Investor contact: | |
Fred Solomon | Max Kuniansky | |
Manager, Corporate Communications | Executive Director, Investor Relations |
Phone: (724) 838-6650 | and Corporate Communications | |
Media Hotline: 1-888-233-3583 | Phone: (724) 838-6895 | |
E-Mail: fsolomo@alleghenyenergy.com | E-Mail: mkunian@alleghenyenergy.com | |
| | | | | | | | |
Allegheny Energy Reports Fourth-Quarter and Full-Year 2005 Results
GREENSBURG, Pa., February 9, 2006 -- Allegheny Energy, Inc. (NYSE: AYE) today announced consolidated net income of $3.1 million, or $0.02 per diluted share, for the fourth quarter of 2005, compared with net income of $72.4 million, or $0.48 per share, for the same period in 2004.
Net income from continuing operations was $3.4 million, or $0.02 per share, for the fourth quarter of 2005, excluding income from discontinued operations of $5.7 million (after-tax) and a charge of $5.9 million (after-tax) due to changes in accounting in accordance with FASB Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations.
To provide a better understanding of core results and trends, Allegheny Energy also reports adjusted financial results, which are non-GAAP financial measures. There were no adjustments for the fourth quarter of 2005. For the fourth quarter of 2004, adjusted net income from continuing operations was $30.0 million, or $0.22 per share. The 2004 adjusted results exclude a $94.8 million (pre-tax) gain on the sale of Allegheny’s interest in the Ohio Valley Electric Corporation (OVEC), a $9.2 million (pre-tax) charge for the write-off of deferred financing costs and a $3.9 million (pre-tax) charge for employee severance costs.
For the twelve months ended December 31, 2005, consolidated net income was $0.40 per diluted share, compared to a net loss of $1.83 per share for 2004. Adjusted net income from continuing operations for 2005 was $0.94 per diluted share, compared to $0.47 per share for 2004, excluding items described in the attached reconciliation. A reconciliation of non-GAAP financial measures to results reported in accordance with GAAP is attached to this release.
“Unplanned power plant outages during a period of heavy customer demand and exceptionally high power prices in early December hurt fourth quarter results,” said Paul J. Evanson, Chairman, President and Chief Executive Officer of Allegheny Energy. “While the fourth quarter was disappointing, results for the full year demonstrated solid progress. Our earnings growth outlook remains intact. The transition to market-based rates, together with lower interest expense, continued cost reduction and better plant performance, should enable us to deliver superior growth in 2006 and beyond.”
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Fourth Quarter Results
Income from continuing operations before income taxes and minority interest was $13.2 million for the fourth quarter of 2005, a decrease of $44.8 million as compared with adjusted results for the same period in 2004. Key factors contributing to the results include the following:
• | Operating revenues increased by $35.6 million, reflecting higher revenues from the inception of market-based rates in Maryland, customer growth and increased customer usage, partially offset by the adverse effect of outages at power stations as described below. |
• | Fuel expense increased by $36.7 million, largely due to higher prices paid for coal and increased consumption at Allegheny’s smaller coal plants. |
• | Purchased power and transmission expense increased by $39.5 million, reflecting power purchases at market-based rates in Maryland and the increased cost of supplying power to Allegheny’s former Ohio service territory. |
• | Operations and maintenance expense increased by $21.4 million as compared to adjusted results for the same period in the prior year, largely due to a $19.4 million increase in special maintenance spending at power stations and approximately $9 million of service restoration costs associated with a severe snowstorm in October 2005, partially offset by a $6.3 million reduction in spending on outside services. |
• | Interest expense decreased by $20.4 million as compared to adjusted results for the same period in the prior year, due to a lower debt balance and reduced borrowing rates. |
Allegheny recorded a $6.9 million charge to income tax expense in the fourth quarter of 2005, which increased the effective tax rate. The charge was related to a reduction in tax benefits on deferred compensation due to changes in the timing of payments permitted under the American Jobs Creation Act of 2004.
Power Plant Outages
Three of Allegheny’s large supercritical generating units experienced unplanned outages in the first half of December 2005. The company’s Hatfield Unit 1 was also off-line for planned maintenance during that period. In addition, sales under capped-rate power supply (POLR) contracts were higher than normal due to unusually cold weather. As a result of these factors, the company was a net purchaser of power at prices that were among the highest recorded in the PJM marketplace for the year. The adverse impact is estimated at approximately $27 million (pre-tax) for the fourth quarter of 2005, consisting of lost revenues, net of fuel cost savings.
EBITDA
Adjusted earnings from continuing operations before interest, taxes, depreciation and amortization (adjusted EBITDA) for the fourth quarter of 2005 was $162.1 million, excluding the effect of the accounting change and income from discontinued operations. For the fourth quarter of 2004, adjusted EBITDA from continuing operations was $221.8 million, excluding the OVEC gain, severance payments and a loss from discontinued operations. EBITDA and adjusted EBITDA are non-GAAP financial measures. For a reconciliation of EBITDA to GAAP financial measures and details on the calculation of EBITDA, see the reconciliation of non-GAAP financial measures attached to this release.
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Fourth Quarter Segment Results
Delivery and Services: The Delivery and Services segment reported income from continuing operations of $34.8 million for the fourth quarter of 2005, an increase of $1.1 million as compared to $33.7 million for the same quarter of the prior year. Operating revenues increased by $16.9 million, largely due to the inception of market-based generation rates for certain Maryland customers and a 2.6 percent increase in kilowatt-hour sales due to customer growth and colder weather. Purchased power costs increased by $29.8 million, reflecting increased demand, power purchases at market-based rates in 2005 for certain Maryland customers and the increased cost of supplying power to Allegheny’s former Ohio service territory. Segment results benefited from a $3.0 million decrease in operations and maintenance expense, primarily due to reduced legal and insurance costs, partly offset by the cost of service restoration after the October 2005 snowstorm. Interest expense for the segment decreased by $10.8 million.
Generation and Marketing: The Generation and Marketing segment reported a loss from continuing operations of $31.5 million for the fourth quarter of 2005, as compared to net income from continuing operations of $47.6 million for the fourth quarter of 2004. Operating revenues increased by $7.1 million, reflecting higher revenues from increased power plant output, partly offset by the adverse impact of the outages previously described. Fuel expense increased by $36.7 million as a result of higher coal costs and increased output from Allegheny’s smaller, higher-cost coal units. Operations and maintenance expense increased by $20.4 million, largely due to special maintenance expenditures during planned outages. Interest expense decreased by $18.5 million, reflecting lower borrowing rates, lower debt outstanding and the 2004 charge for the write-off of financing fees. Results for the fourth quarter of 2004 reflect the $94.8 million OVEC gain.
Discontinued Operations: For the fourth quarter of 2005, Allegheny Energy reported income from discontinued operations of $5.7 million, compared to an $8.8 million loss in the same quarter of the prior year. The 2005 results reflect final adjustments associated with the sale of the West Virginia natural gas operations and an adjustment to the fair value estimate for the Gleason power station. The 2004 results reflect the operating results of the gas operations and Allegheny’s Midwest generating facilities. With the exception of Gleason, Allegheny has completed all of its announced asset sales.
Twelve-Month Consolidated Results
For the twelve months ended December 31, 2005, Allegheny Energy reported consolidated net income of $63.1 million, or $0.40 per diluted share, compared to a net loss of $310.6 million, or $1.83 per share, in 2004. The net loss for 2004 was due to losses from discontinued operations, consisting largely of asset impairment charges associated with the Midwest generating facilities and gas operations.
Adjusted net income from continuing operations for 2005 was $149.6 million, or $0.94 per diluted share, compared to $49.3 million, or $0.47 per share, for 2004. Adjusted net income from continuing operations is a non-GAAP financial measure, and excludes items mentioned above and other items described in the attached reconciliation of non-GAAP financial measures.
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Reconciliation of Non-GAAP Financial Measures
This news release and the attached table include non-GAAP financial measures as defined in the Securities and Exchange Commission’s Regulation G. Where noted, we present financial information on an adjusted basis to exclude the effect of certain items as described herein. By presenting adjusted results, management intends to provide investors with a better understanding of the core results and underlying trends from which to consider past performance and prospects for the future. We also present EBITDA as an additional measure of our operating performance.
Users of this financial information should consider the types of events and transactions for which adjustments have been made. Neither the adjusted information nor EBITDA should be considered in isolation or viewed as substitutes for or superior to net income or other data prepared in accordance with GAAP as measures of our operating performance or liquidity. In addition, neither the adjusted information nor EBITDA are necessarily comparable to similarly titled measures provided by other companies.
Pursuant to the requirements of Regulation G, we have attached tables that reconcile non-GAAP financial measures, including those presented in this release, to the most directly comparable GAAP measures.
Investor Conference Call
Allegheny Energy will comment further on these results in an investor conference call at 9:30 a.m. Eastern Time on Friday, February 10, 2006. To listen to a live Internet broadcast of the call, visit www.alleghenyenergy.com. A taped replay of the call will be available after the live broadcast.
Allegheny Energy
Headquartered in Greensburg, Pa., Allegheny Energy is an investor-owned utility consisting of two major businesses. Allegheny Energy Supply owns and operates electric generating facilities, and Allegheny Power delivers low-cost, reliable electric service to customers in Pennsylvania, West Virginia, Maryland and Virginia. For more information, visit our Web site at www.alleghenyenergy.com.
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Forward-Looking Statements
In addition to historical information, this release contains a number of “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Words such as anticipate, expect, project, intend, plan, believe, and words and terms of similar substance used in connection with any discussion of future plans, actions, or events identify forward-looking statements. These include statements with respect to: rate regulation and the status of retail generation service supply competition in states served by Allegheny Energy’s distribution business, Allegheny Power; financing plans; demand for energy and the cost and availability of raw materials, including coal; provider-of-last-resort and power supply contracts; results of litigation; results of operations; internal controls and procedures; capital expenditures; status and condition of plants and equipment; regulatory matters; and asset sales or transfers. Forward-looking statements involve estimates, expectations and projections and, as a result, are subject to risks and uncertainties. There can be no assurance that actual results will not materially differ from expectations. Actual results have varied materially and unpredictably from past expectations. Factors that could cause actual results to differ materially include, among others, the following: changes in the price of power and fuel for electric generation; general economic and business conditions; changes in access to capital markets; complications or other factors that render it difficult or impossible to obtain necessary lender consents or regulatory authorizations on a timely basis; environmental regulations; any failure to consummate, or delay in the consummation of, any contemplated asset sales or transfers; the results of regulatory proceedings, including proceedings related to rates; changes in industry capacity, development and other activities by Allegheny Energy’s competitors; changes in the weather and other natural phenomena; changes in the underlying inputs and assumptions, including market conditions used to estimate the fair values of commodity contracts; changes in laws and regulations applicable to Allegheny Energy, its markets or its activities; the loss of any significant customers or suppliers; dependence on other electric transmission and gas transportation systems and their constraints or availability; changes in PJM, including changes to participant rules and tariffs; the effect of accounting policies issued periodically by accounting standard-setting bodies and accounting issues facing our company; and the continuing effects of global instability, terrorism and war. Additional risks and uncertainties are identified and discussed in Allegheny Energy’s reports filed with the Securities and Exchange Commission.
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5
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
Consolidated Statements Of Operations
(in thousands, except per share amounts)
(unaudited)
| Three Months Ended | Year Ended |
| December 31, | December 31, |
| 2005 | 2004 | 2005 | 2004 |
Operating revenues | $724,143 | $688,497 | $3,037,887 | $2,756,121 |
| | | | |
Operating expenses: | | | | |
Fuel consumed in electric generation | 185,187 | 148,482 | 736,641 | 614,422 |
Purchased power and transmission | 121,130 | 81,605 | 458,306 | 328,421 |
Loss (gain) on sale of Ohio T&D assets | (1,244) | -- | 29,256 | -- |
Gain on sale of OVEC power agreement and shares | -- | (94,826) | -- | (94,826) |
Deferred energy costs, net | 3,272 | (231) | (1,528) | 204 |
Operations and maintenance | 212,068 | 194,579 | 757,746 | 818,434 |
Depreciation and amortization | 77,648 | 76,531 | 308,141 | 299,425 |
Taxes other than income taxes | 52,438 | 51,146 | 212,534 | 200,811 |
| | | | |
Total operating expenses | 650,499 | 457,286 | 2,501,096 | 2,166,891 |
| | | | |
Operating income | 73,644 | 231,211 | 536,791 | 589,230 |
| | | | |
Other income and expenses, net | 10,449 | 8,924 | 44,230 | 24,522 |
| | | | |
Interest expense and preferred dividends: | | | | |
Interest expense | 70,573 | 99,218 | 436,447 | 400,196 |
Preferred dividends of subsidiary | 293 | 1,259 | 4,071 | 5,037 |
| | | | |
Total interest expense and preferred dividends | 70,866 | 100,477 | 440,518 | 405,233 |
| | | | |
Income from continuing operations before income taxes and minority interest |
13,227
|
139,658
|
140,503
|
208,519
|
| | | | |
Income tax expense from continuing operations | 10,152 | 54,473 | 64,771 | 79,669 |
| | | | |
Minority interest in net income (loss) of subsidiaries | (313) | 3,922 | 587 | (882) |
| | | | |
Income from continuing operations | 3,388 | 81,263 | 75,145 | 129,732 |
| | | | |
Income (loss) from discontinued operations, net of tax | 5,670 | (8,841) | (6,152) | (440,330) |
| | | | |
Income (loss) before cumulative effect of accounting change |
9,058
|
72,422
|
68,993
|
(310,598)
|
| | | | |
Cumulative effect of accounting change, net of tax | (5,928) | -- | (5,928) | -- |
| | | | |
Net income (loss) | $3,130 | $72,422 | $63,065 | $(310,598) |
| | | | |
Common Shares Data: | | | | |
Weighted average common shares outstanding | | | | |
Basic | 162,842 | 136,830 | 155,016 | 129,486 |
Diluted | 166,941 | 164,709 | 158,634 | 156,492 |
| | | | |
Basic income (loss) per common share: | | | | |
Income from continuing operations | $0.02 | $0.59 | $0.48 | $1.00 |
Income (loss) from discontinued operations, net of tax | 0.04 | (0.06) | (0.04) | (3.40) |
Cumulative effect of accounting change, net of tax | (0.04) | -- | (0.04) | -- |
Net income (loss) per common share | $0.02 | $0.53 | $0.40 | $(2.40) |
| | | | |
Diluted income (loss) per common share: | | | | |
Income from continuing operations | $0.02 | $0.53 | $0.47 | $0.99 |
Income (loss) from discontinued operations, net of tax | 0.04 | (0.05) | (0.04) | (2.82) |
Cumulative effect of accounting change, net of tax | (0.04) | -- | (0.03) | -- |
Net income (loss) per common share | $0.02 | $0.48 | $0.40 | $(1.83) |
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ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(unaudited)
| As of December 31, |
(In thousands) | 2005 | 2004 |
ASSETS | | |
Current Assets: | | |
Cash and cash equivalents | $262,212 | $189,482 |
Accounts receivable: | | |
Customer | 179,634 | 165,000 |
Unbilled utility revenue | 129,111 | 126,612 |
Wholesale and other | 82,261 | 51,518 |
Allowance for uncollectible accounts | (16,778) | (19,854) |
Materials and supplies | 98,069 | 100,054 |
Fuel | 67,273 | 61,812 |
Deferred income taxes | 93,404 | 44,590 |
Prepaid taxes | 45,758 | 46,900 |
Assets held for sale | 1,521 | 150,031 |
Collateral deposits | 147,775 | 88,708 |
Commodity contracts | 9,325 | 13,523 |
Restricted funds | 21,589 | 228,857 |
Regulatory assets | 38,418 | 37,626 |
Other | 14,246 | 20,273 |
| | |
Total current assets | 1,173,818 | 1,305,132 |
| | |
Property, Plant and Equipment, Net: | | |
Generation | 5,751,077 | 5,695,851 |
Transmission | 1,028,323 | 1,015,751 |
Distribution | 3,448,350 | 3,366,217 |
Other | 429,108 | 463,515 |
Accumulated depreciation | (4,508,707) | (4,341,282) |
| | |
Subtotal | 6,148,151 | 6,200,052 |
Construction work in progress | 129,277 | 102,966 |
| | |
Total property, plant and equipment, net | 6,277,428 | 6,303,018 |
| | |
Investments and Other Assets: | | |
Non-current assets held for sale | 48,559 | 340,457 |
Goodwill | 367,287 | 367,287 |
Investments in unconsolidated affiliates | 28,555 | 29,991 |
Intangible assets | 27,396 | 33,215 |
Other | 49,413 | 46,628 |
| | |
Total investments and other assets | 521,210 | 817,578 |
| | |
Deferred Charges: | | |
Commodity contracts | -- | 3,667 |
Regulatory assets | 544,810 | 562,843 |
Other | 41,546 | 52,902 |
| | |
Total deferred charges | 586,356 | 619,412 |
| | |
Total Assets | $8,558,812 | $9,045,140 |
| | |
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ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (continued)
(unaudited)
| As of December 31, |
(In thousands) | 2005 | 2004 |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | |
Current Liabilities: | | |
Long-term debt due within one year | $477,217 | $385,142 |
Accounts payable | 316,713 | 223,584 |
Accrued taxes | 154,587 | 112,866 |
Commodity contracts | 92,934 | 40,835 |
Accrued interest | 91,433 | 61,726 |
Liabilities associated with assets held for sale | -- | 37,471 |
Other | 153,570 | 144,082 |
| | |
Total current liabilities | 1,286,454 | 1,005,706 |
| | |
| | |
Long-term Debt | 3,624,483 | 4,540,764 |
| | |
Deferred Credits and Other Liabilities: | | |
Commodity contracts | 22,994 | 56,501 |
Investment tax credit | 76,965 | 83,307 |
Deferred income taxes | 692,241 | 635,374 |
Obligations under capital leases | 16,427 | 23,788 |
Regulatory liabilities | 454,275 | 453,913 |
Adverse power purchase commitment | 184,224 | 201,377 |
Liabilities associated with assets held for sale | -- | 89,356 |
Other | 459,465 | 505,620 |
| | |
Total deferred credits and other liabilities | 1,906,591 | 2,049,236 |
| | |
| | |
Minority Interest | 21,989 | 21,618 |
| | |
Preferred Stock of Subsidiary | 24,000 | 74,000 |
| | |
Common Stockholders’ Equity: | | |
Common stock, $1.25 par value, 260 million shares authorized and 163,002,295 and 137,430,137 shares issued at December 31, 2005 and 2004, respectively | 203,753 | 171,788 |
Other paid-in capital | 1,880,644 | 1,600,215 |
Accumulated deficit | (244,625) | (307,690) |
Treasury stock at cost; 49,493 shares at December 31, 2005 and 2004 | (1,756) | (1,756) |
Accumulated other comprehensive loss | (142,721) | (108,741) |
| | |
Total common stockholders’ equity | 1,695,295 | 1,353,816 |
| | |
Total Liabilities and Stockholders’ Equity | $8,558,812 | $9,045,140 |
| | |
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ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
RESULTS BY BUSINESS SEGMENT
THREE MONTHS ENDED DECEMBER 31,
(unaudited)
(In millions) | | Delivery & | | Generation & | | | | |
2005 | | Services | | Marketing | | Eliminations | | Total |
Operating revenues | | $711.8 | | $385.4 | | $(373.2) | | $724.0 |
Fuel consumed in electric generation | | -- | | (185.2) | | -- | | (185.2) |
Purchased power and transmission | | (472.5) | | (19.4) | | 370.8 | | (121.1) |
Gain on sale of Ohio T&D assets | | 1.2 | | -- | | -- | | 1.2 |
Deferred energy costs, net | | (3.3) | | -- | | -- | | (3.3) |
Operations and maintenance | | (92.1) | | (122.3) | | 2.4 | | (212.0) |
Depreciation and amortization | | (38.3) | | (39.3) | | -- | | (77.6) |
Taxes other than income taxes | | (31.5) | | (20.9) | | -- | | (52.4) |
Operating income (loss) | | 75.3 | | (1.7) | | -- | | 73.6 |
Other income and expenses, net | | 7.3 | | 3.5 | | (0.4) | | 10.4 |
Interest expense and preferred dividends | | (21.4) | | (49.9) | | 0.4 | | (70.9) |
Income (loss) from continuing operations before income taxes and minority interest | | 61.2 | |
(48.1)
| | -- | | 13.1 |
Income tax benefit (expense) from continuing operations | | (26.4) | |
16.3
| | -- | | (10.1) |
Minority interest in net loss of subsidiaries | | -- | | 0.3 | | -- | | 0.3 |
Income (loss) from continuing operations | | 34.8 | | (31.5) | | -- | | 3.3 |
Income from discontinued operations, net of tax | | 3.5 | | 2.2 | | -- | | 5.7 |
Cumulative effect of accounting change, net of tax | | -- | | (5.9) | | -- | | (5.9) |
Net income (loss) | | $38.3 | | $(35.2) | | $-- | | $3.1 |
2004 | | | | | | | | |
Operating revenues | | $694.9 | | $378.3 | | $(384.7) | | $688.5 |
Fuel consumed in electric generation | | -- | | (148.5) | | -- | | (148.5) |
Purchased power and transmission | | (442.7) | | (21.2) | | 382.3 | | (81.6) |
Gain on sale of OVEC power agreement and shares | | -- | | 94.8 | | -- | | 94.8 |
Deferred energy costs, net | | 0.2 | | -- | | -- | | 0.2 |
Operations and maintenance | | (95.1) | | (101.9) | | 2.4 | | (194.6) |
Depreciation and amortization | | (37.6) | | (38.9) | | -- | | (76.5) |
Taxes other than income taxes | | (31.8) | | (19.2) | | -- | | (51.0) |
Operating income | | 87.9 | | 143.4 | | -- | | 231.3 |
Other income and expenses, net | | 8.8 | | 0.3 | | (0.2) | | 8.9 |
Interest expense and preferred dividends | | (32.2) | | (68.4) | | 0.1 | | (100.5) |
Income (loss) from continuing operations before income taxes and minority interest | | 64.5 | |
75.3
| | (0.1) | | 139.7 |
Income tax expense from continuing operations | | (30.8) | | (23.7) | | -- | | (54.5) |
Minority interest in net income of subsidiaries | | -- | | (4.0) | | -- | | (4.0) |
Income (loss) from continuing operations | | 33.7 | | 47.6 | | (0.1) | | 81.2 |
Income (loss) from discontinued operations, net of tax | | 1.4 | | (10.3) | | 0.1 | | (8.8) |
Net income | | $35.1 | | $37.3 | | $-- | | $72.4 |
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ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
RESULTS BY BUSINESS SEGMENT
YEAR ENDED DECEMBER 31,
(unaudited)
(In millions) | | Delivery & | | Generation & | | | | |
2005 | | Services | | Marketing | | Eliminations | | Total |
Operating revenues | | $2,845.5 | | $1,703.3 | | $(1,510.9) | | $3,037.9 |
Fuel consumed in electric generation | | -- | | (736.6) | | -- | | (736.6) |
Purchased power and transmission | | (1,878.7) | | (81.0) | | 1,501.4 | | (458.3) |
Loss on sale of Ohio T&D assets | | (29.3) | | -- | | -- | | (29.3) |
Deferred energy costs, net | | 1.5 | | -- | | -- | | 1.5 |
Operations and maintenance | | (388.5) | | (378.7) | | 9.5 | | (757.7) |
Depreciation and amortization | | (153.6) | | (154.6) | | -- | | (308.2) |
Taxes other than income taxes | | (130.4) | | (82.1) | | -- | | (212.5) |
Operating income | | 266.5 | | 270.3 | | -- | | 536.8 |
Other income and expenses, net | | 24.2 | | 21.1 | | (1.1) | | 44.2 |
Interest expense and preferred dividends | | (123.3) | | (318.2) | | 1.0 | | (440.5) |
Income (loss) from continuing operations before income taxes and minority interest | | 167.4 | |
(26.8)
| | (0.1) | | 140.5 |
Income tax expense from continuing operations | | (55.2) | | (9.6) | | -- | | (64.8) |
Minority interest in net income of subsidiaries | | -- | | (0.6) | | -- | | (0.6) |
Income (loss) from continuing operations | | 112.2 | | (37.0) | | (0.1) | | 75.1 |
Income (loss) from discontinued operations, net of tax | | 1.0 | | (7.2) | | 0.1 | | (6.1) |
Cumulative effect of accounting change, net of tax | | -- | | (5.9) | | -- | | (5.9) |
Net income (loss) | | $113.2 | | $(50.1) | | $-- | | $63.1 |
2004 | | | | | | | | |
Operating revenues | | $2,764.1 | | $1,538.7 | | $(1,546.7) | | $2,756.1 |
Fuel consumed in electric generation | | -- | | (614.4) | | -- | | (614.4) |
Purchased power and transmission | | (1,779.0) | | (86.2) | | 1,536.8 | | (328.4) |
Gain on sale of OVEC power agreement and shares | | -- | | 94.8 | | -- | | 94.8 |
Deferred energy costs, net | | (0.2) | | -- | | -- | | (0.2) |
Operations and maintenance | | (404.3) | | (424.1) | | 9.9 | | (818.5) |
Depreciation and amortization | | (148.8) | | (150.6) | | -- | | (299.4) |
Taxes other than income taxes | | (128.5) | | (72.3) | | -- | | (200.8) |
Operating income | | 303.3 | | 285.9 | | -- | | 589.2 |
Other income and expenses, net | | 23.1 | | 1.7 | | (0.3) | | 24.5 |
Interest expense and preferred dividends | | (129.2) | | (276.2) | | 0.2 | | (405.2) |
Income (loss) from continuing operations before income taxes and minority interest | | 197.2 | |
11.4
| | (0.1) | | 208.5 |
Income tax benefit (expense) from continuing operations | | (79.9) | |
0.2
| | -- | | (79.7) |
Minority interest in net loss of subsidiaries | | -- | | 0.9 | | -- | | 0.9 |
Income (loss) from continuing operations | | 117.3 | | 12.5 | | (0.1) | | 129.7 |
Income (loss) from discontinued operations, net of tax | | (14.0) | | (426.4) | | 0.1 | | (440.3) |
Net income (loss) | | $103.3 | | $(413.9) | | $-- | | $(310.6) |
10
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
(in millions, except per share data) (unaudited) |
| | | |
THREE MONTHS ENDED DECEMBER 31, 2005 | INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST | NET INCOME | DILUTED INCOME
PER SHARE |
Calculation of Adjusted Income: | | | |
Income - GAAP basis | $13.2 | $3.1 | $0.02 |
| | | |
Adjustments: | | | |
Income from discontinued operations | | (5.7) | |
Cumulative effect of an accounting change | | 5.9 | |
Rounding | | 0.1 | |
Adjusted Income | $13.2 | $3.4 | $0.02 |
| | | |
Calculation of Adjusted EBITDA: | | | |
Net Income - GAAP basis | | $3.1 | |
Income from discontinued operations | | (5.7) | |
Cumulative effect of an accounting change | | 5.9 | |
Interest expense and preferred dividends | | 70.9 | |
Income tax expense | | 10.2 | |
Depreciation and amortization | | 77.7 | |
EBITDA from continuing operations | | 162.1 | |
No adjustments | | -- | |
Adjusted EBITDA from continuing operations | | $162.1 | |
| | | |
| | | |
THREE MONTHS ENDED DECEMBER 31, 2004 | INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST | NET INCOME |
DILUTED
INCOME
PER SHARE |
Calculation of Adjusted Income: | | | |
Income - GAAP basis | $139.7 | $72.4 | $0.48 |
| | | |
Adjustments: | | | |
Loss from discontinued operations | | 8.8 | |
Gain on sale of OVEC power agreement and shares | (94.8) | (59.4) | |
Write-off of deferred financing costs1 | 9.2 | 5.8 | |
Severance accrual2 | 3.9 | 2.4 | |
Adjusted Income | $58.0 | $30.0 | $0.22 |
| | | |
Calculation of Adjusted EBITDA: | | | |
Net Income - GAAP basis | | $72.4 | |
Loss from discontinued operations | | 8.8 | |
Interest expense and preferred dividends | | 100.5 | |
Income tax expense | | 54.5 | |
Depreciation and amortization | | 76.5 | |
EBITDA from continuing operations | | 312.7 | |
Gain on sale of OVEC power agreement and shares | | (94.8) | |
Severance accrual | | 3.9 | |
Adjusted EBITDA from continuing operations | | $221.8 | |
| | | | |
FOOTNOTES:
1 This amount is included in interest expense on the Consolidated Statement of Operations.
2 This amount is included in operations and maintenance expense on the Consolidated Statement of Operations.
11
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
(in millions, except per share data) (unaudited) |
| | | |
YEAR ENDED DECEMBER 31, 2005 | INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST | NET INCOME | DILUTED INCOME
PER SHARE |
Calculation of Adjusted Income: | | | |
Income - GAAP basis | $140.5 | $63.1 | $0.40 |
| | | |
Adjustments: | | | |
Loss from discontinued operations | | 6.2 | |
Cumulative effect of an accounting change | | 5.9 | |
Interest expense related to Merrill Lynch summary judgment1 | 38.5 | 24.3 | |
Expense related to conversion of trust preferred securities2 | 47.2 | 29.8 | |
Cash receipt from former trading executive’s forfeited assets3 | (11.2) | (6.9) | |
Receipt of Hatfield power station insurance proceeds4 | (17.7) | (10.9) | |
Redemption costs of 10.25% and 13.0% Senior Notes2 | 32.6 | 20.1 | |
Impairment charge on Ohio T&D assets5 | 30.5 | 18.0 | |
Adjusted Income | $260.4 | $149.6 | $0.94 |
| | | |
Calculation of Adjusted EBITDA: | | | |
Net Income - GAAP basis | | $63.1 | |
Loss from discontinued operations | | 6.2 | |
Cumulative effect of an accounting change | | 5.9 | |
Interest expense and preferred dividends | | 440.5 | |
Income tax expense | | 64.8 | |
Depreciation and amortization | | 308.1 | |
EBITDA from continuing operations | | 888.6 | |
Cash receipt from former trading executive’s forfeited assets | | (11.2) | |
Receipt of Hatfield power station insurance proceeds | | (17.7) | |
Impairment charge on Ohio T&D assets | | 30.5 | |
Adjusted EBITDA from continuing operations | | $890.2 | |
| | | |
| | | |
| | | |
| | | |
YEAR ENDED DECEMBER 31, 2004 | INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST | NET INCOME (LOSS) |
DILUTED
INCOME (LOSS)
PER SHARE |
Calculation of Adjusted Income (Loss): | | | |
Income (Loss) - GAAP basis | $208.5 | $(310.6) | $(1.83) |
| | | |
Adjustments: | | | |
Loss from discontinued operations | | 440.3 | |
Gain on California contract escrow release6 | (68.1) | (42.7) | |
Write-off of 2003 financing costs2 | 23.3 | 14.6 | |
Gain on land sale, New York office space charge, net7 | (4.2) | (2.6) | |
Loss on release of gas pipeline capacity8 | 11.7 | 7.3 | |
Gain on sale of OVEC power agreement and shares | (94.8) | (59.4) | |
Severance accrual4 | 3.9 | 2.4 | |
Adjusted Income9 | $80.3 | $49.3 | $0.47 |
| | | |
| | | | |
12
Calculation of Adjusted EBITDA: | | | |
Net Loss - GAAP basis | | $(310.6) | |
Loss from discontinued operations | | 440.3 | |
Interest expense and preferred dividends | | 405.2 | |
Income tax expense | | 79.7 | |
Depreciation and amortization | | 299.4 | |
EBITDA from continuing operations | | 914.0 | |
Gain on California contract escrow release | | (68.1) | |
Gain on land sale, New York office space charge, net | | (4.2) | |
Loss on release of gas pipeline capacity | | 11.7 | |
Gain on sale of OVEC power agreement and shares | | (94.8) | |
Severance accrual | | 3.9 | |
Adjusted EBITDA from continuing operations9 | | $762.5 | |
FOOTNOTES:
1 This amount is included in interest expense on the Consolidated Statement of Operations. This amount represents the estimated interest owed to Merrill Lynch from March 16, 2001 thru March 31, 2005. It does not include interest accrued subsequent to March 31, 2005.
2 These amounts are included in interest expense on the Consolidated Statements of Operations.
3 This amount is included in other income and expenses, net, on the Consolidated Statement of Operations.
4 These amounts are included in operations and maintenance expense on the Consolidated Statements of Operations.
5 This amount is included in loss on sale of Ohio T&D assets on the Consolidated Statement of Operations.
6 This amount is included in operating revenues on the Consolidated Statement of Operations.
7 These amounts are included in other income and expenses, net, and operations and maintenance expense on the Consolidated Statement of Operations.
8 This amount is included in purchased power and transmission on the Consolidated Statement of Operations.
9 Not adjusted for $8.8 million of charges related to Allegheny Ventures for write-downs of inventory and discontinued product ($4.3 million), equity interests ($1.9 million) and adjustments in revenue recognition for a percentage of completion contract ($2.6 million).
13
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
(in millions) (unaudited) |
| | | |
| | | |
| | | |
| | | |
ADJUSTED EXPENSES | | THREE MONTHS ENDED DECEMBER 31, 2005 | THREE MONTHS ENDED DECEMBER 31, 2004 |
Operations and maintenance: | | | |
As reported | | $212.1 | $194.6 |
| | | |
Severance accrual | | -- | (3.9) |
As Adjusted | | $212.1 | $190.7 |
| | | |
Interest expense and preferred dividends: | | | |
As reported | | $70.9 | $100.5 |
| | | |
Write-off of deferred financing costs | | -- | (9.2) |
As Adjusted | | $70.9 | $91.3 |
| | | | |
| | | |
ADJUSTED EXPENSES | | YEAR ENDED DECEMBER 31, 2005 | YEAR ENDED DECEMBER 31, 2004 |
Operations and maintenance: | | | |
As reported | | $757.7 | $818.4 |
| | | |
Receipt of Hatfield power station insurance proceeds | | 17.7 | -- |
New York office space charge | | -- | (2.4) |
Severance accrual | | -- | (3.9) |
As Adjusted | | $775.4 | $812.1 |
| | | |
| | | | |
14
Allegheny Energy, Inc. and Subsidiaries | |
Operating Statistics | |
| | | | | | | |
Unaudited | |
Three Months Ended December 31, | |
| | | | | | | |
| | 2005 | | 2004 | | Change | |
Delivery and Services: | | | | | | | |
Electricity sales (million kWh, including wholesale) | | 12,159 | | 11,851 | | 2.6% | |
Usage per customer (kWh): | | | | | | | |
Residential | | 3,118 | | 2,974 | | 4.8% | |
Commercial | | 15,380 | | 14,572 | | 5.5% | |
Industrial | | 186,925 | | 193,632 | | -3.5% | |
| | | | | | |
| | | | | | | |
Generation and Marketing: | | | | | | | |
Generation (million kWh) | | 11,527 | | 11,233 | | 2.6% | |
| | | | | | | |
Unaudited | |
Year Ended December 31, | |
| | | | | | | |
| | 2005 | | 2004 | | Change | |
Delivery and Services: | | | | | | | |
Electricity sales (million kWh, including wholesale) | | 48,276 | | 47,222 | | 2.2% | |
Usage per customer (kWh): | | | | | | | |
Residential | | 12,538 | | 12,038 | | 4.2% | |
Commercial | | 61,458 | | 59,757 | | 2.8% | |
Industrial | | 739,892 | | 759,305 | | -2.6% | |
| | | | | | | |
Generation and Marketing: | | | | | | | |
Generation (million kWh) | | 48,100 | | 46,162 | | 4.2% | |
15
