NEWS RELEASE
800 Cabin Hill Drive, Greensburg, PA 15601-1650
Media contact: David Neurhor Director, External Communications Phone: (724) 838-6020 Media Hotline: 1-888-233-3583 | Investor contact: Max Kuniansky Executive Director, Investor Relations
and Corporate Communications Phone: (724) 838-6895 |
Email: dneuroh@alleghenyenergy.com | E-mail: mkunian@alleghenyenergy.com |
Allegheny Energy Reports Financial Results for Fourth Quarter, Full Year 2007
GREENSBURG, Pa., February 7, 2008 -- Allegheny Energy, Inc. (NYSE: AYE) today reported financial results for the three months and twelve months ended December 31, 2007.
| | | |
| $ millions | | Per Share |
Three Months Ended December 31 | 2007 | 2006 | | 2007 | 2006 |
Consolidated net income-GAAP | $110.4 | $64.6 | | $0.65 | $0.38 |
Adjusted net income | 78.6 | 61.8 | | 0.46 | 0.37 |
| | | | | |
Twelve Months Ended December 31 | | | | | |
Consolidated net income-GAAP | $412.2 | $319.3 | | $2.43 | $1.89 |
Adjusted net income | 384.8 | 307.8 | | 2.26 | 1.83 |
Adjusted results for the fourth quarter of 2007 exclude $31.8 million of after-tax income related to a litigation settlement with Merrill Lynch & Co., Inc., primarily representing the reversal of accrued interest no longer required. Adjusted net income for the three months ended December 31, 2006 excludes results from discontinued operations.
Adjusted net income is a non-GAAP financial measure. For information on adjustments for both twelve-month periods, and the calculation of adjusted net income for all periods, see the attached reconciliation of non-GAAP financial measures.
“2007 was a year of strong financial performance for Allegheny. We increased earnings per share by over 20 percent, achieved an investment grade credit rating and reinstated our dividend,” said Paul J. Evanson, Chairman, President and Chief Executive Officer of Allegheny Energy.
“As we begin 2008, we remain focused on growing earnings and building shareholder value by improving power plant performance, expanding our transmission system and controlling costs. We are well positioned for strong earnings growth this year and beyond,” Evanson said.
Fourth Quarter Consolidated Results
Adjusted net income for the fourth quarter of 2007 increased by $16.8 million compared to the same period in 2006. Key factors contributing to the improved results include:
• | Operating revenues increased by $49.4 million compared to the fourth quarter of 2006, reflecting higher market prices, higher generation rates in Pennsylvania and increased retail sales, partially offset by lower generation output, reflecting unplanned outages at power plants. |
• | Fuel expense increased by $20.5 million, reflecting higher coal prices. |
• . | Purchased power and transmission expense increased by $14.9 million, primarily due to increased purchases of energy and associated services from third parties and increased PURPA generation purchases. |
• | Deferred energy cost decreased by $6.4 million, largely due to a change in Maryland PURPA generation costs and West Virginia fuel and energy costs that are recovered in rates. |
• | Operations and maintenance expense increased by $2.8 million, primarily due to increased special maintenance expense at power plants. |
• | Taxes other than income taxes increased by $9.9 million. Results for the fourth quarter of 2006 benefited from a decrease in reserves related to an audit settlement in 2006. |
• | Income taxes, excluding the effects of the Merrill Lynch litigation settlement, decreased by $6.3 million, largely due to the effect of audit settlements associated with open tax positions in the fourth quarter of 2006. |
Adjusted EBITDA for the fourth quarter of 2007 was $243.6 million, an increase of $8.9 million compared to adjusted EBITDA for the same quarter of the prior year. EBITDA is a non-GAAP financial measure. The calculation of EBITDA and a reconciliation of EBITDA to net income are attached to this release.
Fourth Quarter Segment Results
Three Months Ended December 31
($ millions) |
| 2007 | | 2006 |
Generation and Marketing: | | | |
Net income – GAAP | $84.4 | | $(1.3) |
Adjusted net income (loss) | 52.6 | | (5.1) |
| | | |
Delivery and Services: | | | |
Net income – GAAP | $26.0 | | $65.9 |
Adjusted net income | 26.0 | | 66.9 |
Adjusted results for the fourth quarter of 2007 for the Generation and Marketing segment exclude the impact of the Merrill Lynch litigation settlement. Adjusted results for 2006 for both segments exclude results from discontinued operations.
Generation and Marketing: Adjusted net income for the quarter increased $57.7 million compared to the adjusted net loss for the same period a year earlier. Key factors contributing to the improved results for the fourth quarter of 2007 include higher generation prices and a lower effective tax rate, partially offset by lower generation output and higher fuel costs. Results for the fourth quarter of 2006 were negatively impacted by an increase in reserves associated with an open tax position.
Delivery and Services: Net income for the quarter decreased by $40.9 million compared to adjusted net income for the same quarter of the prior year. Results were negatively impacted by the increased cost of purchasing power at market rates to serve customers in Virginia and a rate decrease in West Virginia, partially offset by increased revenues reflecting higher usage. Kilowatt-hour sales increased by 4.0 percent. Results for the fourth quarter of 2006 were favorably impacted by lower reserves for taxes other than income taxes.
Discontinued Operations: There were no results from discontinued operations for the fourth quarter of 2007, compared to income of $2.8 million (after-tax) from discontinued operations for the same period of the prior year. The prior-year results reflected adjustments associated with the sale of Midwest peaking units, including the December 2006 sale of the Gleason generating facility.
Twelve-Month Segment Results
Twelve Months Ended December 31
($ millions) |
| 2007 | | 2006 |
Generation and Marketing: | | | |
Net income – GAAP | $294.5 | | $139.9 |
Adjusted net income | 267.1 | | 126.5 |
| | | |
Delivery and Services: | | | |
Net income – GAAP | $117.7 | | $179.4 |
Adjusted net income | 117.7 | | 181.4 |
Adjusted net income for 2007 in the Generation and Marketing segment excludes the impact of the Merrill Lynch settlement. There were no adjustments in the Delivery and Services segment for 2007. Adjusted net income for 2006 in both segments excludes 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 more complete 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 is 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 discuss these results in a live Internet broadcast at 8:30 a.m. Eastern Standard Time on Friday, February 8, 2008. To listen to the broadcast, visit www.alleghenyenergy.com. A taped replay will be available after the live broadcast.
Allegheny Energy
Headquartered in Greensburg, Pa., Allegheny Energy is an investor-owned electric utility with total annual revenues of over $3 billion and more than 4,000 employees. The company owns and operates generating facilities and delivers low-cost, reliable electric service to over 1.5 million customers in Pennsylvania, West Virginia, Maryland and Virginia. For more information, visit the company’s Web site at www.alleghenyenergy.com.
Forward-Looking Statements
In addition to historical information, this release may contain 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; capacity purchase commitments; 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: plant performance and unplanned outages; 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 customer switching behavior and their resulting effects on existing and future load requirements; 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.
-###-
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (unaudited) |
| Three Months Ended
December 31, | | Year Ended
December 31, |
| | | | | | | |
(In thousands) | 2007 | | 2006 | | 2007 | | 2006 |
Operating revenues | $786,321 | | $736,963 | | $3,307,020 | | $3,121,489 |
| | | | | | | |
Operating expenses: | | | | | | | |
Fuel | 221,730 | | 201,182 | | 930,788 | | 842,661 |
Purchased power and transmission | 99,586 | | 84,689 | | 393,182 | | 382,990 |
Gain on sale of OVEC power agreement and shares | — | | — | | — | | (6,124) |
Deferred energy costs, net | (4,060) | | 2,359 | | (10,108) | | 7,584 |
Operations and maintenance | 181,136 | | 178,384 | | 687,050 | | 685,650 |
Depreciation and amortization | 67,559 | | 68,815 | | 277,014 | | 273,134 |
Taxes other than income taxes | 53,552 | | 43,644 | | 211,806 | | 203,274 |
Total operating expenses | 619,503 | | 579,073 | | 2,489,732 | | 2,389,169 |
| | | | | | | |
Operating income | 166,818 | | 157,890 | | 817,288 | | 732,320 |
Other income and expenses, net | 9,188 | | 8,186 | | 36,778 | | 33,956 |
Interest expense and preferred dividends: | | | | | | | |
Interest expense | 5,603 | | 60,378 | | 187,226 | | 270,264 |
Preferred dividends of subsidiary | — | | 293 | | 700 | | 1,172 |
Total interest expense and preferred dividends | 5,603 | | 60,671 | | 187,926 | | 271,436 |
Income from continuing operations before income taxes and minority interest | 170,403 | | 105,405 | | 666,140 | | 494,840 |
Income tax expense | 59,325 | | 43,415 | | 250,805 | | 173,543 |
Minority interest in net income of subsidiaries | 668 | | 182 | | 3,121 | | 2,562 |
Income from continuing operations | 110,410 | | 61,808 | | 412,214 | | 318,735 |
Income from discontinued operations, net of tax | — | | 2,789 | | — | | 586 |
Net income | $110,410 | | $64,597 | | $412,214 | | $319,321 |
| | | | | | | |
Common share data: | | | | | | | |
Weighted average common shares outstanding | | | | | | | |
Basic | 166,607 | | 165,286 | | 166,022 | | 164,184 |
Diluted | 169,752 | | 168,932 | | 169,468 | | 168,676 |
| | | | | | | |
Basic income (loss) per common share: | | | | | | | |
Income from continuing operations | $0.66 | | $0.37 | | $2.48 | | $1.94 |
Income from discontinued operations | — | | 0.02 | | — | | — |
Basic income per common share | $0.66 | | $0.39 | | $2.48 | | $1.94 |
| | | | | | | |
Diluted income (loss) per common share: | | | | | | | |
Income from continuing operations | $0.65 | | $0.37 | | $2.43 | | $1.89 |
Income from discontinued operations, net of tax | — | | 0.01 | | — | | — |
Diluted income per common share | $0.65 | | $0.38 | | $2.43 | | $1.89 |
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (unaudited) |
| As of December 31, |
(In thousands) | 2007 | | 2006 |
ASSETS | | | |
Current Assets: | | | |
Cash and cash equivalents | $258,750 | | $114,138 |
Accounts receivable:
Customer | 195,545 | | 167,792 |
Unbilled utility revenue | 110,569 | | 117,977 |
Wholesale and other | 57,626 | | 63,894 |
Allowance for uncollectible accounts | (14,252) | | (14,591) |
Materials and supplies | 103,075 | | 96,117 |
Fuel | 72,506 | | 74,951 |
Deferred income taxes | 286,440 | | 127,531 |
Prepaid taxes | 48,343 | | 44,603 |
Collateral deposits | 59,527 | | 39,399 |
Derivative contracts | 29 | | 1,430 |
Restricted funds | 47,501 | | 12,923 |
Regulatory assets | 73,299 | | 39,128 |
Other | 16,001 | | 24,130 |
Total current assets | 1,314,959 | | 909,422 |
| | | |
Property, Plant and Equipment, Net: | | | |
Generation | 5,992,919 | | 5,820,278 |
Transmission | 1,126,657 | | 1,056,759 |
Distribution | 3,761,438 | | 3,597,405 |
Other | 452,525 | | 412,894 |
Accumulated depreciation | (4,795,925) | | (4,636,972) |
Subtotal | 6,537,614 | | 6,250,364 |
Construction work in progress | 658,966 | | 262,529 |
Total property, plant and equipment, net | 7,196,580 | | 6,512,893 |
| | | |
Investments and Other Assets: | | | |
Restricted funds – Fort Martin scrubber project | 347,023 | | — |
Goodwill | 367,287 | | 367,287 |
Investments in unconsolidated affiliates | 27,875 | | 28,259 |
Other | 15,974 | | 27,932 |
Total investments and other assets | 758,159 | | 423,478 |
| | | |
Deferred Charges: | | | |
Regulatory assets | 601,603 | | 674,095 |
Other | 35,288 | | 32,558 |
Total deferred charges | 636,891 | | 706,653 |
Total Assets | 9,906,589 | | $8,552,446 |
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (continued) (unaudited) |
| As of December 31, |
(In thousands, except share amounts) | 2007 | | 2006 |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | |
Current Liabilities: | | | |
Short-term debt | $10,000 | | $— |
Long-term debt due within one year | 95,367 | | 201,189 |
Accounts payable | 380,688 | | 236,706 |
Accrued taxes | 83,580 | | 136,216 |
Derivative contracts | 14,117 | | 5,984 |
Accrued interest | 65,583 | | 99,854 |
Other | 138,168 | | 140,830 |
Total current liabilities | 787,503 | | 820,779 |
| | | |
Long-term Debt | 3,943,947 | | 3,383,986 |
| | | |
Deferred Credits and Other Liabilities: | | | |
Derivative contracts | 12,815 | | 17,982 |
Income taxes payable | 68,050 | | 13,851 |
Investment tax credit | 69,353 | | 72,938 |
Deferred income taxes | 1,345,953 | | 936,911 |
Obligations under capital leases | 38,765 | | 26,007 |
Regulatory liabilities | 488,393 | | 464,092 |
Adverse power purchase commitment | 149,799 | | 166,937 |
Other | 453,418 | | 533,855 |
Total deferred credits and other liabilities | 2,626,546 | | 2,232,573 |
| | | |
Minority Interest | 13,241 | | 10,713 |
| | | |
Preferred Stock of Subsidiary | — | | 24,000 |
| | | |
Common Stockholders’ Equity: | | | |
Common stock—$1.25 par value per share, 260 million shares authorized and 167,273,069 and 165,409,908 shares issued at December 31, 2007 and 2006, respectively | 209,091 | | 206,762 |
Other paid-in capital | 1,924,072 | | 1,907,879 |
Retained earnings | 444,177 | | 74,698 |
Treasury stock at cost – 49,493 shares | (1,756) | | (1,756) |
Accumulated other comprehensive loss | (40,232) | | (107,188) |
Total common stockholders’ equity | 2,535,352 | | 2,080,395 |
Total Liabilities and Stockholders’ Equity | $9,906,589 | | $8,552,446 |
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES RESULTS BY BUSINESS SEGMENT THREE MONTHS ENDED DECEMBER 31, 2007 and 2006 (unaudited) |
2007 (In millions) | Delivery
and
Services | | Generation
and
Marketing | | Eliminations | | Total |
Operating revenues | $700.4 | | $510.4 | | $(424.5) | | $786.3 |
Fuel | — | | 221.7 | | — | | 221.7 |
Purchased power and transmission | 491.3 | | 30.9 | | (422.6) | | 99.6 |
Deferred energy costs, net | (2.3) | | (1.7) | | — | | (4.0) |
Operations and maintenance | 85.9 | | 97.1 | | (1.9) | | 181.1 |
Depreciation and amortization | 40.7 | | 26.9 | | — | | 67.6 |
Taxes other than income taxes | 34.5 | | 19.0 | | — | | 53.5 |
Total operating expenses | 650.1 | | 393.9 | | (424.5) | | 619.5 |
Operating income | 50.3 | | 116.5 | | — | | 166.8 |
Other income and expenses, net | 5.8 | | 5.0 | | (1.6) | | 9.2 |
Interest expense and preferred dividends | 18.6 | | (11.4) | | (1.6) | | 5.6 |
Income before income taxes and minority interest | 37.5 | | 132.9 | | — | | 170.4 |
Income tax expense | 11.5 | | 47.8 | | — | | 59.3 |
Minority interest in net income of subsidiaries | — | | 0.7 | | — | | 0.7 |
| | | | | | | |
Net income | $26.0 | | $84.4 | | $— | | $110.4 |
| | | | | | | |
2006 (In millions) | Delivery
and
Services | | Generation
and
Marketing | | Eliminations | | Total |
Operating revenues | $680.4 | | $424.6 | | $(368.0) | | $737.0 |
Fuel | — | | 201.2 | | — | | 201.2 |
Purchased power and transmission | 444.2 | | 6.6 | | (366.1) | | 84.7 |
Deferred energy costs, net | 2.4 | | — | | — | | 2.4 |
Operations and maintenance | 79.8 | | 100.4 | | (1.9) | | 178.3 |
Depreciation and amortization | 38.0 | | 30.8 | | — | | 68.8 |
Taxes other than income taxes | 23.3 | | 20.4 | | — | | 43.7 |
Total operating expenses | 587.7 | | 359.4 | | (368.0) | | 579.1 |
Operating income | 92.7 | | 65.2 | | — | | 157.9 |
Other income and expenses, net | 5.7 | | 3.3 | | (0.8) | | 8.2 |
Interest expense and preferred dividends | 19.0 | | 42.5 | | (0.8) | | 60.7 |
Income from continuing operations before income taxes and minority interest | 79.4 | | 26.0 | | — | | 105.4 |
Income tax expense from continuing operations | 12.5 | | 30.9 | | — | | 43.4 |
Minority interest in net income of subsidiaries | — | | 0.2 | | — | | 0.2 |
Income (loss) from continuing operations | 66.9 | | (5.1) | | — | | 61.8 |
Income (loss) from discontinued operations, net of tax | (1.0) | | 3.8 | | — | | 2.8 |
| | | | | | | |
Net income (loss) | $65.9 | | $(1.3) | | $— | | $64.6 |
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES RESULTS BY BUSINESS SEGMENT YEAR ENDED DECEMBER 31, 2007 and 2006 (unaudited) |
2007 (In millions) | Delivery
and
Services | | Generation
and
Marketing | | Eliminations | | Total |
Operating revenues | $2,829.2 | | $2,141.3 | | $(1,663.5) | | $3,307.0 |
Fuel | — | | 930.8 | | — | | 930.8 |
Purchased power and transmission | 1,939.2 | | 108.1 | | (1,654.1) | | 393.2 |
Deferred energy costs, net | (2.8) | | (7.3) | | — | | (10.1) |
Operations and maintenance | 342.5 | | 353.9 | | (9.4) | | 687.0 |
Depreciation and amortization | 162.4 | | 114.6 | | — | | 277.0 |
Taxes other than income taxes | 134.0 | | 77.8 | | — | | 211.8 |
Total operating expenses | 2,575.3 | | 1,577.9 | | (1,663.5) | | 2,489.7 |
Operating income | 253.9 | | 563.4 | | — | | 817.3 |
Other income and expenses, net | 16.2 | | 26.8 | | (6.2) | | 36.8 |
Interest expense and preferred dividends | 74.0 | | 120.2 | | (6.2) | | 188.0 |
Income before income taxes and minority interest | 196.1 | | 470.0 | | — | | 666.1 |
Income tax expense | 78.4 | | 172.4 | | — | | 250.8 |
Minority interest in net income of subsidiaries | — | | 3.1 | | — | | 3.1 |
| | | | | | | |
Net income | $117.7 | | $294.5 | | $— | | $412.2 |
| | | | | | | |
2006 (In millions) | Delivery
and
Services | | Generation
and
Marketing | | Eliminations | | Total |
Operating revenues | $2,717.7 | | $1,834.4 | | $(1,430.6) | | $3,121.5 |
Fuel | — | | 842.7 | | — | | 842.7 |
Purchased power and transmission | 1,773.0 | | 33.2 | | (1,423.2) | | 383.0 |
Gain on sale of OVEC power agreement and shares | — | | (6.1) | | — | | (6.1) |
Deferred energy costs, net | 7.6 | | — | | — | | 7.6 |
Operations and maintenance | 344.0 | | 349.0 | | (7.4) | | 685.6 |
Depreciation and amortization | 151.3 | | 121.8 | | — | | 273.1 |
Taxes other than income taxes | 122.0 | | 81.3 | | — | | 203.3 |
Total operating expenses | 2,397.9 | | 1,421.9 | | (1,430.6) | | 2,389.2 |
Operating income | 319.8 | | 412.5 | | — | | 732.3 |
Other income and expenses, net | 22.2 | | 14.8 | | (3.0) | | 34.0 |
Interest expense and preferred dividends | 81.4 | | 193.1 | | (3.0) | | 271.5 |
Income from continuing operations before income taxes and minority interest | 260.6 | | 234.2 | | — | | 494.8 |
Income tax expense from continuing operations | 80.2 | | 93.3 | | — | | 173.5 |
Minority interest in net income of subsidiaries | — | | 2.6 | | — | | 2.6 |
Income from continuing operations | 180.4 | | 138.3 | | — | | 318.7 |
Income (loss) from discontinued operations, net of tax | (1.0) | | 1.6 | | — | | 0.6 |
| | | | | | | |
Net income | $179.4 | | $139.9 | | $— | | $319.3 |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES CONSOLIDATED DATA FOR THE THREE MONTHS ENDED DECEMBER 31, 2007 AND 2006
(in millions, except per share data)
(unaudited) |
THREE MONTHS ENDED
DECEMBER 31, 2007 | INCOME BEFORE
INCOME TAXES AND MINORITY INTEREST | NET INCOME | DILUTED INCOME PER SHARE |
| | | |
Calculation of Adjusted Income: | | | |
Income - GAAP Basis | $170.4 | $110.4 | $0.65 |
| | | |
Adjustments: | | | |
Merrill Lynch interest accrual reversal and minority
interest expense removal1 | (54.7) | (31.8) | |
Adjusted Income | $115.7 | $78.6 | $0.46 |
| | | |
Calculation of Adjusted EBITDA: | | | |
Net Income - GAAP basis | | $110.4 | |
Interest expense and preferred dividends | | 5.6 | |
Income tax expense | | 59.3 | |
Depreciation and amortization | | 67.6 | |
EBITDA | | 242.9 | |
Merrill Lynch minority interest expense removal | | 0.7 | |
Adjusted EBITDA | | $243.6 | |
THREE MONTHS ENDED
DECEMBER 31, 2006 | INCOME FROM
CONTINUING
OPERATIONS BEFORE
INCOME TAXES AND MINORITY INTEREST | NET INCOME | DILUTED INCOME PER SHARE |
| | | |
Calculation of Adjusted Income: | | | |
Income - GAAP Basis | $105.4 | $64.6 | $0.38 |
| | | |
Adjustments: | | | |
Income from discontinued operations | | (2.8) | |
Adjusted Income | $105.4 | $61.8 | $0.37 |
| | | |
Calculation of Adjusted EBITDA: | | | |
Net Income - GAAP basis | | $64.6 | |
Loss from discontinued operations | | (2.8) | |
Interest expense and preferred dividends | | 60.7 | |
Income tax expense | | 43.4 | |
Depreciation and amortization | | 68.8 | |
EBITDA from continuing operations | | 234.7 | |
No adjustments | | -- | |
Adjusted EBITDA from continuing operations | | $234.7 | |
See accompanying Notes to Reconciliations of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES SEGMENT DATA FOR THE THREE MONTHS ENDED DECEMBER 31, 2007 AND 2006
(in millions)
(unaudited) |
| DELIVERY AND SERVICES | GENERATION AND MARKETING |
THREE MONTHS ENDED
DECEMBER 31, 2007
| INCOME BEFORE INCOME TAXES AND MINORITY INTEREST | NET
INCOME | INCOME BEFORE INCOME TAXES AND MINORITY INTEREST | NET
INCOME |
| | | | |
Calculation of Adjusted Income: | | | | |
Income - GAAP Basis | $37.5 | $26.0 | $132.9 | $84.4 |
| | | | |
Adjustments: | | | | |
Merrill Lynch interest accrual reversal and minority
interest expense removal1 | -- | -- | (54.7) | (31.8) |
Adjusted Income | $37.5 | $26.0 | $78.2 | $52.6 |
| DELIVERY AND SERVICES | GENERATION AND MARKETING |
THREE MONTHS ENDED
DECEMBER 31, 2007
| INCOME BEFORE INCOME TAXES AND MINORITY INTEREST | NET
INCOME | INCOME BEFORE INCOME TAXES AND MINORITY INTEREST | NET
INCOME |
| | | | |
Calculation of Adjusted Income: | | | | |
Income - GAAP Basis | $79.4 | $65.9 | $26.0 | $(1.3) |
| | | | |
Adjustments: | | | | |
Loss (income) from discontinued operations | -- | 1.0 | -- | (3.8) |
Adjusted Income | $79.4 | $66.9 | $26.0 | $(5.1) |
See accompanying Notes to Reconciliations of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES CONSOLIDATED DATA FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
(in millions, except per share data)
(unaudited) |
YEAR ENDED DECEMBER 31, 2007 | INCOME BEFORE
INCOME TAXES AND MINORITY INTEREST | NET INCOME | DILUTED INCOME PER SHARE |
| | | |
Calculation of Adjusted Income: | | | |
Income - GAAP Basis | $666.1 | $412.2 | $2.43 |
| | | |
Adjustments: | | | |
Merrill Lynch net interest accrual reversal and minority interest expense removal2 | (51.5) | (27.4) | |
Adjusted Income | $614.6 | $384.8 | $2.26 |
| | | |
Calculation of Adjusted EBITDA: | | | |
Net Income - GAAP basis | | $412.2 | |
Interest expense and preferred dividends | | 188.0 | |
Income tax expense | | 250.8 | |
Depreciation and amortization | | 277.0 | |
EBITDA | | 1,128.0 | |
Merrill Lynch minority interest expense removal | | 3.1 | |
Adjusted EBITDA | | $1,131.1 | |
YEAR ENDED DECEMBER 31, 2006 | INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES AND MINORITY INTEREST | NET INCOME | DILUTED INCOME PER SHARE |
| | | |
Calculation of Adjusted Income: | | | |
Income - GAAP Basis | $494.8 | $319.3 | $1.89 |
| | | |
Adjustments: | | | |
Income from discontinued operations | | (0.6) | |
Change in Pennsylvania state income tax law3 | | (16.7) | |
Write-off of prior deferred financing costs4 | 9.5 | 5.8 | |
Adjusted Income | $504.3 | $307.8 | $1.83 |
| | | |
Calculation of Adjusted EBITDA: | | | |
Net Income - GAAP basis | | $319.3 | |
Loss from discontinued operations | | (0.6) | |
Interest expense and preferred dividends | | 271.5 | |
Income tax expense | | 173.5 | |
Depreciation and amortization | | 273.1 | |
EBITDA from continuing operations | | 1,036.8 | |
No adjustments | | -- | |
Adjusted EBITDA from continuing operations | | $1,036.8 | |
See accompanying Notes to Reconciliations of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES SEGMENT DATA FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
(in millions)
(unaudited)
|
| DELIVERY AND SERVICES | GENERATION AND MARKETING |
YEAR ENDED
DECEMBER 31, 2007 | INCOME BEFORE INCOME TAXES AND MINORITY INTEREST | NET
INCOME | INCOME BEFORE INCOME TAXES AND MINORITY INTEREST | NET
INCOME |
| | | | |
Calculation of Adjusted Income: | | | | |
Income - GAAP Basis | $196.1 | $117.7 | $470.0 | $294.5 |
| | | | |
Adjustments: | | | | |
Merrill Lynch net interest accrual reversal and minority interest expense removal2 | -- | -- | (51.5) | (27.4) |
Adjusted Income | $196.1 | $117.7 | $418.5 | $267.1 |
| DELIVERY AND SERVICES | GENERATION AND MARKETING |
YEAR ENDED
DECEMBER 31, 2006 | INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST | NET
INCOME | INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST | NET
INCOME |
| | | | |
Calculation of Adjusted Income: | | | | |
Income - GAAP Basis | $260.6 | $179.4 | $234.2 | $139.9 |
| | | | |
Adjustments: | | | | |
Loss (income) from discontinued operations | | 1.0 | | (1.6) |
Change in Pennsylvania state income tax law2 | | -- | | (16.7) |
Write-off of prior deferred financing costs4 | 1.6 | 1.0 | 7.9 | 4.9 |
Adjusted Income | $262.2 | $181.4 | $242.1 | $126.5 |
See accompanying Notes to Reconciliations of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES FOR THE THREE MONTHS ENDED DECEMBER 31, 2007 AND 2006 (in millions) (unaudited) |
ADJUSTED EXPENSES | THREE MONTHS
ENDED DEC 31, 2007 | THREE MONTHS
ENDED DEC 31, 2006 |
Interest expense and preferred dividends | | |
As reported | $5.6 | $60.7 |
| | |
Adjustments: | | |
Merrill Lynch interest accrual reversal | 54.7 | -- |
Adjusted interest expense and preferred dividends | $60.3 | $60.7 |
| | |
| | |
Income tax expense: | | |
As reported | $59.3 | $43.4 |
| | |
Adjustments: | | |
Tax effect of Merrill Lynch interest accrual reversal | (22.2) | -- |
Adjusted income tax expense | $37.1 | $43.4 |
| | |
| | |
Minority interest expense (after tax): | | |
As reported | $0.7 | $0.2 |
| | |
Adjustments: | | |
Merrill Lynch interest expense removal | (0.7) | -- |
Adjusted minority interest expense | $-- | $0.2 |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES FOR THE THREE MONTHS ENDED DECEMBER 31, 2007 AND 2006 (in millions) (unaudited) |
ADJUSTED EXPENSES | THREE MONTHS
ENDED DEC 31, 2007 | THREE MONTHS
ENDED DEC 31, 2006 |
Interest expense and preferred dividends | | |
As reported | $187.9 | $271.4 |
| | |
Adjustments: | | |
Merrill Lynch net interest accrual reversal | 51.5 | -- |
Write-off of prior deferred financing costs | -- | (9.5) |
Adjusted interest expense and preferred dividends | $239.4 | $261.9 |
| | |
| | |
Income tax expense: | | |
As reported | $250.8 | $173.5 |
| | |
Adjustments: | | |
Tax effect of Merrill Lynch net interest accrual reversal | (21.0) | -- |
Change in Pennsylvania state income tax law | -- | 16.7 |
Tax effect of the write-off of prior deferred financing costs | -- | 3.7 |
Adjusted income tax expense | $229.8 | $193.9 |
| | |
| | |
Minority interest expense (after tax): | | |
As reported | $3.1 | $2.6 |
| | |
Adjustments: | | |
Merrill Lynch minority interest expense removal | (3.1) | -- |
Adjusted minority interest expense | $-- | $2.6 |
Notes to Reconciliations of Non-GAAP Financial Measures:
(1) | Represents the reversal of all accrued interest related to the Merrill Lynch dispute and the removal of the 4th quarter minority interest expense associated with Merrill Lynch ownership in AE Supply. Included in interest expense and minority interest on the Consolidated Statements of Operations. |
(2) | Represents the reversal of all interest accrued related to the Merrill Lynch dispute, net of interest expense recorded during the 1st and 2nd quarters of 2007 and the removal of the minority interest expense associated with Merrill Lynch ownership in AE Supply for the full year 2007 . Included in interest expense and minority interest on the Consolidated Statements of Operations. |
(3) | Represents a change in Pennsylvania state income tax law. Included in income tax expense on the Consolidated Statements of Operations. |
(4) | Represents the write-off of prior deferred financing costs. Included in interest expense on the Consolidated Statements of Operations. |
Allegheny Energy, Inc. and Subsidiaries Operating Statistics (unaudited) Three Months Ended December 31, |
| | 2007 | | 2006 | | Change |
Delivery and Services: | | | | | | |
Retail electricity sales (million KWH) | | 11,361 | | 10,921 | | 4.0% |
Usage per customer (KWH): | | | | | | |
Residential | | 3,176 | | 3,016 | | 5.3% |
Commercial | | 15,333 | | 14,900 | | 2.9% |
Industrial | | 156,555 | | 155,254 | | 0.8% |
Generation and Marketing: | | | | | | |
Total generation (million KWH): | | | | | | |
Supercritical coal | | 8,757 | | 9,544 | | -8.2% |
Other coal | | 1,366 | | 1,452 | | -5.9% |
Gas | | 98 | | 72 | | 36.1% |
Hydro and other | | 524 | | 488 | | 7.4% |
Total | | 10,745 | | 11,556 | | -7.0% |
Net capacity factor: | | | | | | |
Supercritical coal | | 65% | | 71% | | -6% |
All coal | | 61% | | 66% | | -5% |
Equivalent availability factor: | | | | | | |
Supercritical coal | | 77% | | 79% | | -2% |
All coal | | 77% | | 80% | | -3% |
Degree Days: | | | | | | |
Heating | | 1,762 | | 1,792 | | -1.7% |
Cooling | | 63 | | 3 | | NM* |
Allegheny Energy, Inc. and Subsidiaries |
Operating Statistics |
(unaudited) |
Twelve Months Ended December 31, |
| | | | | | |
| | 2007 | | 2006 | | Change |
Delivery and Services: | | | | | | |
Retail electricity sales (million KWH) | | 44,901 | | 43,178 | | 4.0% |
Usage per customer (KWH): | | | | | | |
Residential | | 12,765 | | 12,040 | | 6.0% |
Commercial | | 62,038 | | 60,213 | | 3.0% |
Industrial | | 605,109 | | 605,805 | | -0.1% |
Generation and Marketing: | | | | | | |
Total generation (million KWH): | | | | | | |
Supercritical coal | | 39,042 | | 39,813 | | -1.9% |
Other coal | | 5,917 | | 5,865 | | 0.9% |
Gas | | 956 | | 473 | | 102.1% |
Hydro and other | | 2,320 | | 2,455 | | -5.5% |
Total | | 48,235 | | 48,606 | | -0.8% |
Net capacity factor: | | | | | | |
Supercritical coal | | 74% | | 76% | | -2% |
All coal | | 69% | | 70% | | -1% |
Equivalent availability factor: | | | | | | |
Supercritical coal | | 83% | | 84% | | -1% |
All coal | | 82% | | 85% | | -3% |
Degree days: | | | | | | |
Heating | | 5,199 | | 4,861 | | 7.0% |
Cooling | | 1,007 | | 781 | | 28.9% |
