NEWS RELEASE
800 Cabin Hill Drive, Greensburg, PA 15601-1689
Media contact: | Investor contact: | |
David Neurohr | Max Kuniansky | |
Manager, External Communications | Executive Director, Investor Relations |
Phone: (724) 838-6020 | and Corporate Communications | |
Media Hotline: 1-888-233-3583 | Phone: (724) 838-6895 | |
E-mail: dneuroh@alleghenyenergy.com | E-mail: mkunian@alleghenyenergy.com | |
| | | | | | | | |
Allegheny Energy Reports Second Quarter 2006 Results
GREENSBURG, Pa., July 27, 2006 – Allegheny Energy, Inc. (NYSE: AYE) today reported consolidated net income of $31.1 million, or $0.18 per diluted share, for the second quarter of 2006, compared with a net loss of $18.4 million, or a loss of $0.12 per diluted share, for the same period in 2005.
To provide a better understanding of core results and trends, Allegheny Energy also reports adjusted financial results, as shown in the table below:
| Three Months Ended June 30 |
| 2006 | 2005 |
| $ millions | Per Share | $ millions | Per Share |
Consolidated net income (loss)-GAAP | $31.1 | $0.18 | $(18.4) | $(0.12) |
Adjusted income
from continuing operations | 37.8 | 0.22 | 12.7 | 0.08 |
Adjusted income from continuing operations for the second quarter of 2006 excludes a $9.5 million (pre-tax) charge for the write-off of prior deferred financing costs, and a $0.9 million (after-tax) loss from discontinued operations.
Adjusted income from continuing operations for the second quarter of 2005 excludes costs of $47.2 million (pre-tax) related to an April 2005 tender offer for the company’s 11 7/8% convertible trust preferred securities, $11.2 million (pre-tax) received from a former trading executive’s forfeited assets and insurance proceeds of $6.7 million (pre-tax) related to the 2004 extended outage at the Hatfield’s Ferry power station. Also excluded from second quarter 2005 adjusted results is a $12.3 million after-tax loss from discontinued operations. Adjusted results are non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to results reported in accordance with GAAP is attached to this release.
“Better plant performance, higher Pennsylvania generation rates and lower depreciation, interest and taxes helped us deliver strong earnings growth in the second quarter,” said Paul J. Evanson, Chairman, President and Chief Executive Officer of Allegheny Energy. “Looking ahead, we remain focused on growing earnings, improving our environmental performance and expanding our transmission system.”
1
Second Quarter Consolidated Results
Income from continuing operations before income taxes and minority interest, as adjusted, was $58.5 million for the second quarter of 2006, an increase of $25.4 million compared to adjusted results for the same period in 2005. Key factors contributing to the improved results include:
| • | Operating revenues increased by $7.6 million, reflecting better performance and increased output at the power stations, higher generation rates in Pennsylvania and the expiration of a below-market contract with a Maryland industrial customer. These benefits were partially offset by moderate weather, lower market prices and the expiration of a power purchase agreement with the Ohio Valley Electric Corporation (OVEC) and a transmission capacity sales contract. |
| • | Purchased power expense decreased by $13.1 million, resulting primarily from reduced purchases from OVEC. |
| • | Fuel expense increased by $20.0 million, primarily due to both higher prices paid for coal and increased coal consumption. |
| • | Operations and maintenance expense decreased by $1.7 million compared to adjusted expense for the same period of 2005, reflecting lower costs for outside legal services, partly offset by information technology outsourcing start-up costs. Adjusted expense for the second quarter of 2005 excludes the insurance proceeds previously mentioned. |
| • | Depreciation expense decreased by $9.2 million, largely due to the previously reported extension of estimated depreciable lives of certain unregulated power plants. |
| • | Interest expense, excluding the adjustments to both periods as previously noted, decreased by $15.1 million compared to adjusted results for the same period in 2005 due to a lower debt balance and more favorable borrowing rates. |
The effective tax rate for the second quarter of 2006 was 34 percent, well below the effective tax rate for the second quarter of 2005, which was affected by adjustments to deferred state income taxes.
Earnings from continuing operations before interest, taxes, depreciation and amortization (EBITDA) for the quarter were $193.6 million, an increase of $0.9 million compared to adjusted EBITDA for the second quarter of 2005. EBITDA is a non-GAAP financial measure. Details on the calculation of EBITDA and a reconciliation of EBITDA to net income are attached to this release.
Second Quarter Segment Results
Delivery and Services: The segment reported income from continuing operations of $23.3 million for the second quarter of 2006, an increase of $6.4 million compared to the same quarter of the prior year. Operating revenues decreased by $30.7 million, and purchased power and transmission costs decreased by $21.1 million. Both revenues and purchased power decreased due to the Maryland contract expiration mentioned above, the 2005 sale of the Ohio service territory and moderate weather, partially offset by customer growth and higher generation rates in Pennsylvania and Maryland. Retail electric kilowatt hour sales decreased by 11.6 percent. The revenue decrease also reflects the expiration of a transmission capacity sales contract. Operations and maintenance expense decreased by $6.6 million. Interest expense decreased by $25.0 million, reflecting lower debt balances, lower borrowing rates and the 2005 tender offer costs, partially offset by the 2006 write-off of prior deferred financing costs. Income taxes increased by $12.4 million.
2
Generation and Marketing: The segment reported income from continuing operations of $8.7 million for the second quarter of 2006. For the same period in the prior year, the segment reported a loss from continuing operations of $23.0 million. Operating revenues and kilowatt-hours generated increased by $9.6 million and 1.3 percent, respectively. The increase in revenues was primarily due to increased power plant output, increased Pennsylvania generation rates and reduced commitments to sell power under low-priced (POLR) contracts pertaining to a Maryland industrial customer and Allegheny’s former Ohio service territory. These benefits were partly offset by lower market prices and the expiration of the OVEC agreement. Fuel costs increased by $20.0 million, reflecting both higher prices paid for coal and increased coal consumption. Purchased power and transmission decreased by $20.5 million, reflecting reduced purchases from OVEC. Operations and maintenance expenses increased by $11.2 million, reflecting the insurance proceeds received in 2005. Depreciation expense decreased by $8.1 million, largely due to the extension of the estimated lives of certain unregulated power plants, as mentioned above. Interest expense decreased by $27.0 million, reflecting lower debt outstanding, reduced borrowing costs and the 2005 tender offer costs, partially offset by the 2006 write-off of prior deferred financing costs. Other income decreased by $8.6 million, primarily as a result of the 2005 receipt of forfeited assets. Income taxes decreased by $5.4 million.
Discontinued Operations: Allegheny reported a $0.9 million (after-tax) loss on discontinued operations, compared to a $12.3 million loss in the same quarter of the prior year. The 2006 results relate to the Gleason generating facility. The 2005 results reflected a net impairment charge of $8.9 million (after-tax) on the West Virginia natural gas operations and Allegheny Energy’s Midwest generating facilities, as well as the operating performance of those assets. Allegheny sold the gas operations and the Wheatland generating facility during 2005.
Six-Month Consolidated Results
For the first six months of 2006, Allegheny reported consolidated net income of $144.5 million, or $0.86 per diluted share, as compared to net income of $24.2 million, or $0.16 per diluted share, for the first six months of 2005.
Adjusted net income from continuing operations was $152.0 million, or $0.90 per diluted share, for the first six months of 2006, compared to $71.4 million, or $0.48 per diluted share, for the same period of 2005. 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.
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.
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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 8:30 a.m. Eastern Time on Friday, July 28, 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.
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: 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 accounting issues. 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; 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 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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4
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| Three Months Ended
June 30, | Six Months Ended June 30, |
(In thousands) | 2006 | 2005 | 2006 | 2005 |
| | | | |
Operating revenues | $722,235 | $714,650 | $1,567,881 | $1,468,680 |
| | | | |
Operating expenses: | | | | |
Fuel consumed in electric generation | 186,185 | 166,139 | 399,392 | 340,026 |
Purchased power and transmission | 95,097 | 108,243 | 196,329 | 213,065 |
Gain on sale of OVEC power agreement and shares | (1,124) | -- | (6,124) | -- |
Deferred energy costs, net | 413 | (1,805) | 5,406 | (619) |
Operations and maintenance | 205,871 | 200,906 | 367,734 | 363,583 |
Depreciation and amortization | 68,169 | 77,358 | 136,011 | 153,769 |
Taxes other than income taxes | 52,201 | 51,738 | 105,868 | 106,796 |
| | | | |
Total operating expenses | 606,812 | 602,579 | 1,204,616 | 1,176,620 |
| | | | |
Operating income | 115,423 | 112,071 | 363,265 | 292,060 |
| | | | |
Other income and expenses, net | 10,258 | 21,234 | 17,929 | 26,487 |
| | | | |
Interest expense and preferred dividends: | | | | |
Interest expense | 76,425 | 128,277 | 143,813 | 254,071 |
Preferred dividends of subsidiary | 293 | 1,260 | 586 | 2,519 |
| | | | |
Total interest expense and preferred dividends | 76,718 | 129,537 | 144,399 | 256,590 |
| | | | |
Income from continuing operations before income taxes and minority interest | 48,963 | 3,768 | 236,795 | 61,957 |
| | | | |
Income tax expense from continuing operations | 16,741 | 9,815 | 89,245 | 33,191 |
| | | | |
Minority interest in net income of subsidiaries | 191 | 52 | 1,369 | 467 |
| | | | |
Income (loss) from continuing operations | 32,031 | (6,099) | 146,181 | 28,299 |
| | | | |
Loss from discontinued operations, net of tax | (898) | (12,308) | (1,664) | (4,064) |
| | | | |
Net income (loss) | $31,133 | $(18,407) | $144,517 | $24,235 |
| | | | |
Common share data: | | | | |
Weighted average common shares outstanding | | | | |
Basic | 163,526 | 156,731 | 163,304 | 147,128 |
Diluted | 168,608 | 156,731 | 168,557 | 150,276 |
Basic income (loss) per common share: | | | | |
Income (loss) from continuing operations | $0.20 | $(0.04) | $0.89 | $0.19 |
Loss from discontinued operations, net | (0.01) | (0.08) | (0.01) | (0.03) |
| | | | |
Net income (loss) per common share | $0.19 | $(0.12) | $0.88 | $0.16 |
| | | | |
Diluted income (loss) per common share: | | | | |
Income (loss) from continuing operations | $0.19 | $(0.04) | $0.87 | $0.19 |
Loss from discontinued operations, net | (0.01) | (0.08) | (0.01) | (0.03) |
| | | | |
Net income (loss) per common share | $0.18 | $(0.12) | $0.86 | $0.16 |
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ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
(In thousands) | June 30,
2006 | December 31,
2005 |
ASSETS | | |
Current Assets: | | |
Cash and cash equivalents | $205,269 | $262,212 |
Accounts receivable: | | |
Customer | 170,807 | 179,634 |
Unbilled utility revenue | 97,678 | 129,111 |
Wholesale and other | 68,117 | 82,261 |
Allowance for uncollectible accounts | (16,085) | (16,778) |
Materials and supplies | 94,983 | 98,069 |
Fuel | 91,556 | 67,273 |
Deferred income taxes | 56,429 | 93,404 |
Prepaid taxes | 53,354 | 45,758 |
Assets held for sale | 921 | 1,521 |
Collateral deposits | 60,646 | 147,775 |
Commodity contracts | 4,651 | 9,325 |
Restricted funds | 14,307 | 21,589 |
Regulatory assets | 37,777 | 38,418 |
Other | 12,365 | 14,246 |
Total current assets | 952,775 | 1,173,818 |
| | |
Property, Plant and Equipment, Net: | | |
Generation | 5,759,004 | 5,751,077 |
Transmission | 1,050,271 | 1,028,323 |
Distribution | 3,521,355 | 3,448,350 |
Other | 401,226 | 429,108 |
Accumulated depreciation | (4,563,742) | (4,508,707) |
Subtotal | 6,168,114 | 6,148,151 |
Construction work in progress | 182,436 | 129,277 |
Total property, plant and equipment, net | 6,350,550 | 6,277,428 |
| | |
Investments and Other Assets: | | |
Non-current assets held for sale | 21,179 | 48,559 |
Goodwill | 367,287 | 367,287 |
Investments in unconsolidated affiliates | 28,020 | 28,555 |
Intangible assets | 27,396 | 27,396 |
Other | 42,067 | 49,413 |
Total investments and other assets | 485,949 | 521,210 |
| | |
Deferred Charges: | | |
Commodity contracts | 234 | -- |
Regulatory assets | 521,515 | 544,810 |
Other | 30,918 | 41,546 |
Total deferred charges | 552,667 | 586,356 |
| | |
Total Assets | $8,341,941 | $8,558,812 |
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ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)
(unaudited)
(In thousands) | June 30,
2006 | December 31,
2005 |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | |
Current Liabilities: | | |
Long-term debt due within one year | $494,889 | $477,217 |
Accounts payable | 211,734 | 316,713 |
Accrued taxes | 138,534 | 154,587 |
Commodity contracts | 32,732 | 92,934 |
Accrued interest | 94,253 | 91,433 |
Other | 149,821 | 153,570 |
Total current liabilities | 1,121,963 | 1,286,454 |
| | |
Long-term Debt | 3,404,112 | 3,624,483 |
| | |
Deferred Credits and Other Liabilities: | | |
Commodity contracts | 20,169 | 22,994 |
Investment tax credit | 74,423 | 76,965 |
Deferred income taxes | 755,960 | 692,241 |
Obligations under capital leases | 13,918 | 16,427 |
Regulatory liabilities | 456,055 | 454,275 |
Adverse power purchase commitment | 175,581 | 184,224 |
Other | 409,734 | 459,465 |
Total deferred credits and other liabilities | 1,905,840 | 1,906,591 |
| | |
Commitments and Contingencies | | |
| | |
Minority Interest | 9,520 | 21,989 |
| | |
Preferred Stock of Subsidiary | 24,000 | 24,000 |
| | |
Common Stockholders’ Equity: | | |
Common stock—$1.25 par value per share, 260 million shares authorized and 164,223,364 and 163,002,295 shares issued at June 30, 2006 and December 31, 2005 | 205,279 | 203,753 |
Other paid-in capital | 1,891,907 | 1,880,644 |
Accumulated deficit | (100,107) | (244,625) |
Treasury stock at cost; 49,493 shares | (1,756) | (1,756) |
Accumulated other comprehensive loss | (118,817) | (142,721) |
Total common stockholders’ equity | 1,876,506 | 1,695,295 |
| | |
Total Liabilities and Stockholders’ Equity | $8,341,941 | $8,558,812 |
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ALLEGHENY ENERGY, INC.—CONSOLIDATED RESULTS OF OPERATIONS BY SEGMENT
(unaudited)
| Three Months Ended
June 30, 2006 | Three Months Ended
June 30, 2005 |
(In millions) | Delivery
and
Services | Generation
and
Marketing | Eliminations | Total | Delivery
and
Services | Generation
and
Marketing | Eliminations | Total |
Operating revenues | $632.5 | $414.1 | $(324.3) | $722.3 | $663.2 | $404.5 | $(353.0) | $714.7 |
| | | | | | | | |
Fuel consumed in electric generation | -- | 186.2 | -- | 186.2 | -- | 166.1 | -- | 166.1 |
Purchased power and transmission | 414.9 | 2.7 | (322.5) | 95.1 | 436.0 | 23.2 | (350.9) | 108.3 |
Gain on sale of OVEC power agreement and shares | -- | (1.1) | -- | (1.1) | -- | -- | -- | -- |
Deferred energy costs, net | 0.4 | -- | -- | 0.4 | (1.8) | -- | -- | (1.8) |
Operations and maintenance | 93.1 | 114.5 | (1.8) | 205.8 | 99.7 | 103.3 | (2.1) | 200.9 |
Depreciation and amortization | 37.9 | 30.3 | -- | 68.2 | 39.0 | 38.4 | -- | 77.4 |
Taxes other than income taxes | 31.9 | 20.3 | -- | 52.2 | 31.4 | 20.3 | -- | 51.7 |
Total operating expenses | 578.2 | 352.9 | (324.3) | 606.8 | 604.3 | 351.3 | (353.0) | 602.6 |
Operating income | 54.3 | 61.2 | -- | 115.5 | 58.9 | 53.2 | -- | 112.1 |
Other income and expenses, net | 6.9 | 4.3 | (1.0) | 10.2 | 8.5 | 12.9 | (0.2) | 21.2 |
Interest expense and preferred dividends | 22.3 | 55.4 | (1.0) | 76.7 | 47.3 | 82.4 | (0.2) | 129.5 |
Income (loss) from continuing operations before income taxes and minority interest | 38.9 | 10.1 | -- | 49.0 | 20.1 | (16.3) | -- | 3.8 |
Income tax expense from continuing operations | 15.6 | 1.2 | -- | 16.8 | 3.2 | 6.6 | -- | 9.8 |
Minority interest | -- | 0.2 | -- | 0.2 | -- | 0.1 | -- | 0.1 |
Income (loss) from continuing operations | 23.3 | 8.7 | -- | 32.0 | 16.9 | (23.0) | -- | (6.1) |
Income (loss) from discontinued operations, net of tax | -- | (0.9) | -- | (0.9) | (6.5) | (5.8) | -- | (12.3) |
Net income (loss) | $23.3 | $7.8 | $-- | $31.1 | $10.4 | $(28.8) | $-- | $(18.4) |
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ALLEGHENY ENERGY, INC.—CONSOLIDATED RESULTS OF OPERATIONS BY SEGMENT (continued)
(unaudited)
| Six Months Ended
June 30, 2006 | Six Months Ended
June 30, 2005 |
(In millions) | Delivery
and
Services | Generation
and
Marketing | Eliminations | Total | Delivery
and
Services | Generation
and
Marketing | Eliminations | Total |
Operating revenues | $1,335.1 | $921.2 | $(688.4) | $1,567.9 | $1,402.6 | $821.4 | $(755.3) | $1,468.7 |
| | | | | | | | |
Fuel consumed in electric generation | -- | 399.4 | -- | 399.4 | -- | 340.0 | -- | 340.0 |
Purchased power and transmission | 862.6 | 18.4 | (684.7) | 196.3 | 921.1 | 43.0 | (751.0) | 213.1 |
Gain on sale of OVEC power agreement and shares | -- | (6.1) | -- | (6.1) | -- | -- | -- | -- |
Deferred energy costs, net | 5.4 | -- | -- | 5.4 | (0.6) | -- | -- | (0.6) |
Operations and maintenance | 179.9 | 191.5 | (3.7) | 367.7 | 184.2 | 183.6 | (4.3) | 363.5 |
Depreciation and amortization | 75.6 | 60.4 | -- | 136.0 | 77.1 | 76.7 | -- | 153.8 |
Taxes other than income taxes | 65.2 | 40.7 | -- | 105.9 | 66.0 | 40.8 | -- | 106.8 |
Total operating expenses | 1,188.7 | 704.3 | (688.4) | 1,204.6 | 1,247.8 | 684.1 | (755.3) | 1,176.6 |
Operating income | 146.4 | 216.9 | -- | 363.3 | 154.8 | 137.3 | -- | 292.1 |
Other income and expenses, net | 11.2 | 8.1 | (1.4) | 17.9 | 12.2 | 14.6 | (0.3) | 26.5 |
Interest expense and preferred dividends | 42.2 | 103.6 | (1.4) | 144.4 | 77.0 | 179.8 | (0.2) | 256.6 |
Income (loss) from continuing operations before income taxes and minority interest | 115.4 | 121.4 | -- | 236.8 | 90.0 | (27.9) | (0.1) | 62.0 |
Income tax expense from continuing operations | 45.7 | 43.5 | -- | 89.2 | 23.4 | 9.8 | -- | 33.2 |
Minority interest | -- | 1.4 | -- | 1.4 | -- | 0.5 | -- | 0.5 |
Income (loss) from continuing operations | 69.7 | 76.5 | -- | 146.2 | 66.6 | (38.2) | (0.1) | 28.3 |
Income (loss) from discontinued operations, net of tax | -- | (1.7) | -- | (1.7) | 4.3 | (8.5) | 0.1 | (4.1) |
Net income (loss) | $69.7 | $74.8 | $-- | $144.5 | $70.9 | $(46.7) | $-- | $24.2 |
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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in millions, except per share data)
(unaudited)
THREE MONTHS ENDED JUNE 30, 2006 | INCOME FROM
CONTINUING
OPERATIONS BEFORE
INCOME TAXES AND
MINORITY INTEREST | NET INCOME | DILUTED
INCOME
PER SHARE |
Calculation of Adjusted Income: | | | |
Income – GAAP basis | $49.0 | $31.1 | $0.18 |
| | | |
Adjustments: | | | |
Loss from discontinued operations | | 0.9 | |
Write-off of prior deferred financing costs1 | 9.5 | 5.8 | |
Adjusted Income | $58.5 | $37.8 | $0.22 |
| | | |
Calculation of Adjusted EBITDA: | | | |
Net Income – GAAP basis | | $31.1 | |
Loss from discontinued operations | | 0.9 | |
Interest expense and preferred dividends | | 76.7 | |
Income tax expense | | 16.7 | |
Depreciation and amortization | | 68.2 | |
EBITDA from continuing operations | | 193.6 | |
No adjustments | | -- | |
Adjusted EBITDA from continuing operations | | $193.6 | |
THREE MONTHS ENDED JUNE 30, 2005 |
INCOME FROM
CONTINUING
OPERATIONS BEFORE
INCOME TAXES AND
MINORITY INTEREST
| NET INCOME
(LOSS) | DILUTED
INCOME (LOSS)
PER SHARE |
Calculation of Adjusted Income: | | | |
Income (Loss) – GAAP basis | $3.8 | $(18.4) | $(0.12) |
| | | |
Adjustments: | | | |
Loss from discontinued operations2 | | 12.3 | |
Expense related to conversion of trust preferred securities1 | 47.2 | 29.8 | |
Cash receipt from former trading executive’s forfeited assets3 | (11.2) | (6.9) | |
Receipt of Hatfield power station insurance proceeds4 | (6.7) | (4.1) | |
Adjusted Income | $33.1 | $12.7 | $0.08 |
| | | |
Calculation of Adjusted EBITDA: | | | |
Net Loss – GAAP basis | | $(18.4) | |
Loss from discontinued operations | | 12.3 | |
Interest expense and preferred dividends | | 129.5 | |
Income tax expense | | 9.8 | |
Depreciation and amortization | | 77.4 | |
EBITDA from continuing operations | | 210.6 | |
Cash receipt from former trading executive’s forfeited assets | | (11.2) | |
Receipt of Hatfield power station insurance proceeds | | (6.7) | |
Adjusted EBITDA from continuing operations | | $192.7 | |
| FOOTNOTES: |
| 1 These amounts are included in Interest expense on the Consolidated Statement of Operations. |
| 2 This amount includes a net after-tax charge of $8.9 million relating to adjustments to the carrying values of assets held-for sale. |
| 3 This amount is included in Other income on the Consolidated Statement of Operations. |
| 4 This amount is included in Operations and maintenance expense on the Consolidated Statement of Operations. |
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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in millions, except per share data)
(unaudited)
SIX MONTHS ENDED JUNE 30, 2006 | INCOME FROM
CONTINUING
OPERATIONS BEFORE
INCOME TAXES AND
MINORITY INTEREST | NET INCOME | DILUTED
INCOME
PER SHARE |
Calculation of Adjusted Income: | | | |
Income – GAAP basis | $236.8 | $144.5 | $0.86 |
| | | |
Adjustments: | | | |
Loss from discontinued operations | | 1.7 | |
Write-off of prior deferred financing costs1 | 9.5 | 5.8 | |
Adjusted Income | $246.3 | $152.0 | $0.90 |
| | | |
Calculation of Adjusted EBITDA: | | | |
Net Income – GAAP basis | | $144.5 | |
Loss from discontinued operations | | 1.7 | |
Interest expense and preferred dividends | | 144.4 | |
Income tax expense | | 89.2 | |
Depreciation and amortization | | 136.0 | |
EBITDA from continuing operations | | 515.8 | |
No adjustments | | -- | |
Adjusted EBITDA from continuing operations | | $515.8 | |
SIX MONTHS ENDED JUNE 30, 2005 | INCOME FROM
CONTINUING
OPERATIONS BEFORE
INCOME TAXES AND
MINORITY INTEREST | NET INCOME | DILUTED
INCOME
PER SHARE |
Calculation of Adjusted Income: | | | |
Income – GAAP basis | $62.0 | $24.2 | $0.16 |
| | | |
Adjustments: | | | |
Loss from discontinued operations2 | | 4.1 | |
Interest expense related to Merrill Lynch summary judgment3 | 38.5 | 24.3 | |
Expense related to conversion of trust preferred securities1 | 47.2 | 29.8 | |
Cash receipt from former trading executive’s forfeited assets4 | (11.2) | (6.9) | |
Receipt of Hatfield power station insurance proceeds5 | (6.7) | (4.1) | |
Adjusted Income | $129.8 | $71.4 | $0.48 |
| | | |
Calculation of Adjusted EBITDA: | | | |
Net Income – GAAP basis | | $24.2 | |
Loss from discontinued operations | | 4.1 | |
Interest expense and preferred dividends | | 256.6 | |
Income tax expense | | 33.2 | |
Depreciation and amortization | | 153.8 | |
EBITDA from continuing operations | | 471.9 | |
Cash receipt from former trading executive’s forfeited assets | | (11.2) | |
Receipt of Hatfield power station insurance proceeds | | (6.7) | |
Adjusted EBITDA from continuing operations | | $454.0 | |
| FOOTNOTES: |
1 | These amounts are included in Interest expense on the Consolidated Statements of Operations. |
2 | This amount includes a net after-tax charge of $9.5 million relating to adjustments to the carrying values of assets held-for-sale. |
3 | 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 an additional $2.8 million of interest accrued in the second quarter. |
4 | This amount is included in Other income on the Consolidated Statement of Operations. |
5 | This amount is included in Operations and maintenance expense on the Consolidated Statement of Operations. |
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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in millions, except per share data)
(unaudited)
ADJUSTED EXPENSES | THREE MONTHS
ENDED JUNE 30,
2006 | THREE MONTHS
ENDED JUNE 30,
2005 |
Operations and maintenance: | | |
As reported | $205.9 | $200.9 |
| | |
Receipt of Hatfield power station insurance proceeds | -- | 6.7 |
As Adjusted | $205.9 | $207.6 |
| | |
Other Income: | | |
As reported | $10.3 | $21.2 |
| | |
Cash receipt from former trading executive’s forfeited assets | -- | (11.2) |
As Adjusted | $10.3 | $10.0 |
| | |
Interest expense and preferred dividends of subsidiary: | | |
As reported | $76.7 | $129.5 |
| | |
Write-off of prior deferred financing costs | (9.5) | -- |
Expense related to conversion of trust preferred securities | -- | (47.2) |
As Adjusted | $67.2 | $82.3 |
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ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
OPERATING STATISTICS
(Unaudited)
Three Months Ended June 30,
| | 2006 | | 2005 | | Change |
Delivery and Services: | | | | | | |
Retail electricity sales (million KWH) | | 10,049 | | 11,368 | | -11.6% |
Usage per customer (KWH): | | | | | | |
Residential | | 2,470 | | 2,596 | | -4.9% |
Commercial | | 14,481 | | 14,738 | | -1.7% |
Industrial | | 155,257* | | 190,797 | | -18.6% |
Generation and Marketing: | | | | | | |
Generation (million KWH) | | 11,234 | | 11,089 | | 1.3% |
(Unaudited)
Six Months Ended June 30,
| | 2006 | | 2005 | | Change |
Delivery and Services: | | | | | | |
Retail electricity sales (million KWH) | | 21,231 | | 23,870 | | -11.1% |
Usage per customer (KWH): | | | | | | |
Residential | | 5,941 | | 6,169 | | -3.7% |
Commercial | | 29,118 | | 29,678 | | -1.9% |
Industrial | | 302,279* | | 374,899 | | -19.4% |
Generation and Marketing: | | | | | | |
Generation (million KWH) | | 24,251 | | 23,386 | | 3.7% |
* Reflects the expiration of a below-market contract with a Maryland industrial customer
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