Exhibit 99.1
800 Cabin Hill Drive, Greensburg, PA 15601-1650
| | | | |
| Media contact: | | | | Investor contact: |
| David Neurohr | | | | Max Kuniansky |
| Director, External Communications | | | | Executive Director, Investor Relations and Corporate Communications |
| Phone: (724) 838-6020 | | | |
| Media Hotline: 1-888-233-3583 | | | | Phone: (724) 838-6895 |
| E-mail:dneuroh@alleghenyenergy.com | | | | E-mail:mkunian@alleghenyenergy.com |
FOR IMMEDIATE RELEASE
Allegheny Energy Reports Third Quarter 2009 Results
GREENSBURG, Pa., October 29, 2009 — Allegheny Energy, Inc.(NYSE: AYE) today reported financial results for the third quarter of 2009.
Consolidated Net Income Attributable to Allegheny Energy, Inc.
| | | | | | | | | | | | |
| | | $ millions | | Per share |
| | | 2009 | | 2008 | | 2009 | | 2008 |
| | | | |
Three Months Ended September 30 | | | | | | | | | | | | |
GAAP | | $ | 77.0 | | $ | 89.0 | | $ | 0.45 | | $ | 0.52 |
Adjusted | | | 100.1 | | | 91.4 | | | 0.59 | | | 0.54 |
| | | | |
Nine Months Ended September 30 | | | | | | | | | | | | |
GAAP | | $ | 283.5 | | $ | 379.2 | | $ | 1.67 | | $ | 2.23 |
Adjusted | | | 283.9 | | | 304.0 | | | 1.67 | | | 1.79 |
Adjusted net income for the third quarter of 2009 excludes $19.3 million of pre-tax interest expense related to a debt tender offer and net unrealized pre-tax losses of $18.3 million on economic hedges that do not qualify for hedge accounting. Adjusted net income for the third quarter of 2008 excludes $4.0 million of unrealized pre-tax losses on economic hedges.
Adjusted net income is a non-GAAP financial measure. For information on the calculation of adjusted net income for all periods, see the attached reconciliations of non-GAAP financial measures.
“Adjusted earnings grew in the third quarter due to improved results in our regulated delivery and transmission business,” said Paul J. Evanson, Chairman, President and Chief Executive Officer of Allegheny Energy. “However, the weak economy and low power prices reduced earnings in our generation business. We recently completed several financings which improved our liquidity and financial flexibility, and we continue to focus on cost control. We believe Allegheny is well-positioned to benefit from an economic recovery.”
Third Quarter Consolidated Results
Adjusted net income for the third quarter of 2009 increased by $8.7 million compared with the same period in 2008. Key factors contributing to the results include:
| | • | | Adjusted operating revenues decreased by $41.6 million, reflecting reduced generation volume, largely due to weak demand and lower power prices, as well as planned outages to complete the installation of scrubbers at the Hatfield’s Ferry power plant. Factors benefiting revenues included higher rates in Pennsylvania, increased cost recovery in Virginia, hedging activity, increased revenue from transmission expansion and increased sales to third parties. |
| | • | | Fuel expense decreased by $111.2 million, primarily due to reduced generation volume and lower gas prices, partially offset by higher coal prices. |
| | • | | Purchased power costs were higher by $26.1 million, primarily due to increased purchases from third parties to serve Maryland customers. |
| | • | | Deferred energy expense increased by $4.4 million due to a fuel and energy cost recovery clause in West Virginia. |
| | • | | Operations and maintenance costs decreased by $1.1 million. |
| | • | | Depreciation increased $3.9 million, primarily due to placing some scrubber equipment in service at the Hatfield’s Ferry power plant. |
| | • | | Adjusted interest expense increased $7.9 million, primarily due to higher debt balances and lower capitalized interest. |
| | • | | Adjusted income tax expense increased by $13.9 million due to a higher effective tax rate and an increase in adjusted pre-tax income. |
Adjusted EBITDA for the third quarter of 2009 was $297.0 million, an increase of $34.4 million compared to the same quarter of the prior year. EBITDA and adjusted EBITDA are non-GAAP financial measures. Details on the calculation of EBITDA and adjusted EBITDA, as well as reconciliations of these financial measures to net income, are attached to this release.
Segment Results
Net Income Attributable to Allegheny Energy, Inc.
Three Months Ended September 30
($ millions)
| | | | | | | | | | |
| | | 2009 | | 2008 | | Increase
(Decrease) | |
Generation and Marketing: | | | | | | | | | | |
GAAP | | $ | 45.5 | | $ | 84.7 | | $ | (39.2 | ) |
Adjusted | | | 68.6 | | | 87.1 | | | (18.5 | ) |
| | | |
Delivery and Services: | | | | | | | | | | |
GAAP | | $ | 31.5 | | $ | 4.3 | | $ | 27.2 | |
Adjusted | �� | | 31.5 | | | 4.3 | | | 27.2 | |
Adjusted net income for the Generation and Marketing segment in both the third quarter of 2009 and 2008 excludes net unrealized pre-tax losses previously discussed, and the 2009 third quarter adjusted results also exclude expense related to a debt tender offer. There were no adjustments in the Delivery and Services segment for the third quarter of either year.
Generation and Marketing:Adjusted net income for the quarter decreased by $18.5 million compared to the same period a year earlier. Results were adversely impacted by lower generation volume and power prices, as well as the scrubber tie-in work at Hatfield’s Ferry and the elimination of an intercompany transfer payment, partially offset by higher generation rates in Pennsylvania, the benefit of hedging activity, lower fuel costs and lower income taxes.
Delivery and Services:Net income for the quarter increased by $27.2 million compared to the same period a year earlier. Key factors contributing to the improved results include increased cost recovery in Virginia, the elimination of an intercompany transfer payment and higher revenues from transmission expansion. These benefits were partially offset by lower retail electricity sales and higher income taxes, primarily due to an increase in pre-tax income.
Nine-Month Consolidated Results
Adjusted net income for the nine months ended September 30, 2009 decreased by $20.1 million compared to the same period in 2008. Adjusted EBITDA for the nine months ended September 30, 2009 increased by $38.5 million compared to the same period of the prior year. Details on the calculation of EBITDA and adjusted EBITDA, as well as reconciliations of these financial measures to net income, are attached to this release.
Segment Results
Net Income Attributable to Allegheny Energy, Inc.
Nine Months Ended September 30
($ millions)
| | | | | | | | | | |
| | | 2009 | | 2008 | | Increase
(Decrease) | |
| | | |
Generation and Marketing: | | | | | | | | | | |
GAAP | | $ | 178.2 | | $ | 336.7 | | $ | (158.5 | ) |
Adjusted | | | 178.6 | | | 261.5 | | | (82.9 | ) |
| | | |
Delivery and Services: | | | | | | | | | | |
GAAP | | $ | 105.3 | | $ | 42.5 | | $ | 62.8 | |
Adjusted | | $ | 105.3 | | $ | 42.5 | | $ | 62.8 | |
Adjusted net income for the Generation and Marketing segment for the nine-month period of 2009 and 2008 excludes net unrealized pre-tax gains associated with economic hedges that do not qualify for hedge accounting and the 2009 nine-month results also exclude interest expense related to the debt tender offer previously discussed. There were no adjustments in the Delivery and Services segment for the nine-month period of either year.
Reconciliation of Non-GAAP Financial Measures
This news release includes presentation of financial information in accordance with generally accepted accounting principles (GAAP), and also includes adjusted net income, EBITDA, adjusted EBITDA and other non-GAAP financial measures as defined in the Securities and Exchange Commission’s Regulation G.
Management believes that presenting these additional financial measures 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. These financial measures should not be considered in isolation or viewed as a substitute for, or superior to, net income or other data prepared in accordance with GAAP as a measure of operating performance or liquidity.
Pursuant to the requirements of Regulation G, tables are attached that reconcile non-GAAP financial measures in this release to the most directly comparable GAAP measure.
Investor Conference Call
Allegheny Energy will discuss these results in a live Internet broadcast at 1:00 p.m. Eastern Daylight Time on Thursday, October 29, 2009. To listen, visitwww.alleghenyenergy.com. Slides to be used in the Webcast presentation will be available atwww.alleghenyenergy.com at approximately 9:30 a.m. Eastern Daylight Time on Thursday, October 29. 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 1.6 million customers in Pennsylvania, West Virginia, Maryland and Virginia. For more information, visit the company’s Web site atwww.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; and regulatory matters. 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 and actions of rating agencies; 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; inflationary and interest rate trends changes in market rules, including changes to PJM participant rules and tariffs; the effect of accounting pronouncements issued periodically by accounting standard-setting bodies and accounting issues facing our organization; 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. These forward-looking statements speak only as of the date of this document. Allegheny Energy undertakes no obligation to update its forward-looking statements to reflect events or circumstances after the date of this release.
-###-
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
September 30, | | | Nine Months Ended
September 30, | |
(In millions, except per share amounts) | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
Operating revenues | | $ | 793.7 | | | $ | 849.6 | | | $ | 2,565.7 | | | $ | 2,678.1 | |
Operating expenses: | | | | | | | | | | | | | | | | |
Fuel | | | 188.0 | | | | 299.2 | | | | 663.8 | | | | 794.2 | |
Purchased power and transmission | | | 134.2 | | | | 108.1 | | | | 380.4 | | | | 302.7 | |
Deferred energy costs, net | | | (14.3 | ) | | | (18.7 | ) | | | (38.9 | ) | | | (28.1 | ) |
Operations and maintenance | | | 151.2 | | | | 152.3 | | | | 518.9 | | | | 511.0 | |
Depreciation and amortization | | | 71.3 | | | | 67.4 | | | | 207.0 | | | | 206.5 | |
Taxes other than income taxes | | | 57.4 | | | | 54.4 | | | | 159.7 | | | | 159.7 | |
| | | | | | | | | | | | | | | | |
Total operating expenses | | | 587.8 | | | | 662.7 | | | | 1,890.9 | | | | 1,946.0 | |
| | | | | | | | | | | | | | | | |
Operating income | | | 205.9 | | | | 186.9 | | | | 674.8 | | | | 732.1 | |
Other income (expense), net | | | 1.9 | | | | 4.5 | | | | 6.1 | | | | 15.3 | |
Interest expense | | | 85.1 | | | | 57.9 | | | | 201.5 | | | | 175.0 | |
| | | | | | | | | | | | | | | | |
Income before income taxes | | | 122.7 | | | | 133.5 | | | | 479.4 | | | | 572.4 | |
Income tax expense | | | 45.3 | | | | 44.3 | | | | 195.1 | | | | 192.5 | |
| | | | | | | | | | | | | | | | |
Net income | | | 77.4 | | | | 89.2 | | | | 284.3 | | | | 379.9 | |
Less net income attributable to noncontrolling interest | | | (0.4 | ) | | | (0.2 | ) | | | (0.8 | ) | | | (0.7 | ) |
| | | | | | | | | | | | | | | | |
Net income attributable to Allegheny Energy, Inc. | | $ | 77.0 | | | $ | 89.0 | | | $ | 283.5 | | | $ | 379.2 | |
| | | | | | | | | | | | | | | | |
| | | | |
Earnings per share attributable to Allegheny Energy, Inc.: | | | | | | | | | | | | | | | | |
Basic | | $ | 0.45 | | | $ | 0.53 | | | $ | 1.67 | | | $ | 2.25 | |
Diluted | | $ | 0.45 | | | $ | 0.52 | | | $ | 1.67 | | | $ | 2.23 | |
| | | | |
Average shares outstanding: | | | | | | | | | | | | | | | | |
Basic | | | 169.6 | | | | 168.9 | | | | 169.5 | | | | 168.2 | |
Diluted | | | 170.0 | | | | 170.0 | | | | 169.9 | | | | 170.0 | |
| | | | |
Dividends per share | | $ | 0.15 | | | $ | 0.15 | | | $ | 0.45 | | | $ | 0.45 | |
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
| | | | | | | | |
(In millions) | | September 30,
2009 | | | December 31,
2008 | |
ASSETS | | | | | | | | |
Current Assets: | | | | | | | | |
Cash and cash equivalents | | $ | 278.3 | | | $ | 362.1 | |
Accounts receivable: | | | | | | | | |
Customer | | | 180.2 | | | | 188.3 | |
Unbilled utility revenue | | | 87.8 | | | | 122.7 | |
Wholesale and other | | | 59.3 | | | | 61.5 | |
Allowance for uncollectible accounts | | | (13.3 | ) | | | (13.3 | ) |
Materials and supplies | | | 109.8 | | | | 115.1 | |
Fuel | | | 218.0 | | | | 128.2 | |
Deferred income taxes | | | 22.5 | | | | 69.6 | |
Prepaid taxes | | | 56.9 | | | | 44.8 | |
Collateral deposits | | | 24.7 | | | | 33.5 | |
Derivative assets | | | 40.4 | | | | 113.1 | |
Regulatory assets | | | 153.0 | | | | 158.8 | |
Assets held for sale | | | 30.4 | | | | — | |
Other | | | 124.6 | | | | 111.3 | |
| | | | | | | | |
Total current assets | | | 1,372.6 | | | | 1,495.7 | |
| | | | | | | | |
| | |
Property, Plant and Equipment: | | | | | | | | |
Generation | | | 6,641.1 | | | | 6,107.3 | |
Transmission | | | 1,239.3 | | | | 1,171.7 | |
Distribution | | | 3,732.4 | | | | 3,944.1 | |
Other | | | 461.4 | | | | 463.4 | |
Accumulated depreciation | | | (5,048.9 | ) | | | (4,994.1 | ) |
| | | | | | | | |
Subtotal | | | 7,025.3 | | | | 6,692.4 | |
Construction work in progress | | | 1,447.2 | | | | 1,309.8 | |
Property, plant and equipment held for sale, net | | | 250.1 | | | | — | |
| | | | | | | | |
Total property, plant and equipment, net | | | 8,722.6 | | | | 8,002.2 | |
| | | | | | | | |
Other Noncurrent Assets: | | | | | | | | |
Regulatory assets | | | 659.3 | | | | 687.7 | |
Goodwill | | | 367.3 | | | | 367.3 | |
Restricted funds — Fort Martin scrubber project | | | — | | | | 133.3 | |
Investments in unconsolidated affiliates | | | 27.2 | | | | 28.0 | |
Derivative assets | | | 0.7 | | | | 9.8 | |
Other | | | 113.4 | | | | 87.0 | |
| | | | | | | | |
Total other noncurrent assets | | | 1,167.9 | | | | 1,313.1 | |
| | | | | | | | |
Total Assets | | $ | 11,263.1 | | | $ | 10,811.0 | |
| | | | | | | | |
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
(unaudited)
| | | | | | | | |
(In millions, except share amounts) | | September 30,
2009 | | | December 31,
2008 | |
LIABILITIES AND EQUITY | | | | | | | | |
Current Liabilities: | | | | | | | | |
Long-term debt due within one year | | $ | 160.7 | | | $ | 93.9 | |
Accounts payable | | | 346.1 | | | | 374.2 | |
Accrued taxes | | | 69.6 | | | | 119.4 | |
Payable to PJM for FTRs | | | 80.9 | | | | 110.8 | |
Derivative liabilities | | | 13.7 | | | | 22.2 | |
Regulatory liabilities | | | 39.3 | | | | 69.2 | |
Accrued interest | | | 67.1 | | | | 58.1 | |
Security deposits | | | 48.8 | | | | 46.2 | |
Liabilities associated with assets held for sale | | | 9.3 | | | | — | |
Other | | | 116.5 | | | | 109.6 | |
| | | | | | | | |
Total current liabilities | | | 952.0 | | | | 1,003.6 | |
| | | | | | | | |
Long-term Debt, Excluding Amounts Due Within One Year | | | 4,327.4 | | | | 4,115.9 | |
Deferred Credits and Other Liabilities: | | | | | | | | |
Derivative liabilities | | | 19.2 | | | | 11.9 | |
Income taxes payable | | | 84.7 | | | | 75.7 | |
Investment tax credit | | | 62.8 | | | | 65.8 | |
Deferred income taxes | | | 1,397.6 | | | | 1,277.4 | |
Regulatory liabilities | | | 469.8 | | | | 528.9 | |
Pension and other postretirement employee benefit plan liabilities | | | 559.4 | | | | 578.4 | |
Adverse power purchase commitment | | | 118.9 | | | | 132.3 | |
Liabilities associated with assets held for sale | | | 53.1 | | | | — | |
Other | | | 157.2 | | | | 165.4 | |
| | | | | | | | |
Total deferred credits and other liabilities | | | 2,922.7 | | | | 2,835.8 | |
| | | | | | | | |
Equity: | | | | | | | | |
Common stock — $1.25 par value per share, 260 million shares authorized and 169,571,717 and 169,413,887 shares issued at September 30, 2009 and December 31, 2008, respectively | | | 211.9 | | | | 211.8 | |
Other paid-in capital | | | 1,965.9 | | | | 1,952.5 | |
Retained earnings | | | 938.9 | | | | 731.6 | |
Treasury stock at cost - 49,493 shares | | | (1.8 | ) | | | (1.8 | ) |
Accumulated other comprehensive loss | | | (66.5 | ) | | | (43.3 | ) |
| | | | | | | | |
Total Allegheny Energy, Inc. common stockholders’ equity | | | 3,048.4 | | | | 2,850.8 | |
Noncontrolling interest | | | 12.6 | | | | 4.9 | |
| | | | | | | | |
Total equity | | | 3,061.0 | | | | 2,855.7 | |
| | | | | | | | |
Total Liabilities and Equity | | $ | 11,263.1 | | | $ | 10,811.0 | |
| | | | | | | | |
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
SEGMENT STATEMENTS OF INCOME
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended
September 30, 2009 | | | Three Months Ended
September 30, 2008 | |
(In millions) | | Delivery
and
Services | | | Generation
and
Marketing | | | Eliminations | | | Total | | | Delivery
and
Services | | | Generation
and
Marketing | | | Eliminations | | | Total | |
Operating revenues | | $ | 783.5 | | | $ | 450.0 | | | $ | (439.8 | ) | | $ | 793.7 | | | $ | 692.7 | | | $ | 589.3 | | | $ | (432.4 | ) | | $ | 849.6 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Fuel | | | — | | | | 188.0 | | | | — | | | | 188.0 | | | | — | | | | 299.2 | | | | — | | | | 299.2 | |
Purchased power and transmission | | | 545.1 | | | | 26.8 | | | | (437.7 | ) | | | 134.2 | | | | 512.9 | | | | 25.7 | | | | (430.5 | ) | | | 108.1 | |
Deferred energy costs, net | | | (5.0 | ) | | | (9.3 | ) | | | — | | | | (14.3 | ) | | | 1.5 | | | | (20.2 | ) | | | — | | | | (18.7 | ) |
Operations and maintenance | | | 85.3 | | | | 68.0 | | | | (2.1 | ) | | | 151.2 | | | | 83.6 | | | | 70.6 | | | | (1.9 | ) | | | 152.3 | |
Depreciation and amortization | | | 38.0 | | | | 33.3 | | | | — | | | | 71.3 | | | | 39.2 | | | | 28.2 | | | | — | | | | 67.4 | |
Taxes other than income taxes | | | 39.4 | | | | 18.0 | | | | — | | | | 57.4 | | | | 35.0 | | | | 19.4 | | | | — | | | | 54.4 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total operating expenses | | | 702.8 | | | | 324.8 | | | | (439.8 | ) | | | 587.8 | | | | 672.2 | | | | 422.9 | | | | (432.4 | ) | | | 662.7 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating income | | | 80.7 | | | | 125.2 | | | | — | | | | 205.9 | | | | 20.5 | | | | 166.4 | | | | — | | | | 186.9 | |
Other income (expense), net | | | 1.4 | | | | 0.5 | | | | — | | | | 1.9 | | | | 3.1 | | | | 1.6 | | | | (0.2 | ) | | | 4.5 | |
Interest expense | | | 25.9 | | | | 59.2 | | | | — | | | | 85.1 | | | | 24.8 | | | | 33.3 | | | | (0.2 | ) | | | 57.9 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) before income taxes | | | 56.2 | | | | 66.5 | | | | — | | | | 122.7 | | | | (1.2 | ) | | | 134.7 | | | | — | | | | 133.5 | |
Income tax expense (benefit) | | | 24.3 | | | | 21.0 | | | | — | | | | 45.3 | | | | (5.7 | ) | | | 50.0 | | | | — | | | | 44.3 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income | | | 31.9 | | | | 45.5 | | | | — | | | | 77.4 | | | | 4.5 | | | | 84.7 | | | | — | | | | 89.2 | |
Less: net income attributable to noncontrolling interest | | | (0.4 | ) | | | — | | | | — | | | | (0.4 | ) | | | (0.2 | ) | | | — | | | | — | | | | (0.2 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income attributable to Allegheny Energy, Inc. | | $ | 31.5 | | | $ | 45.5 | | | $ | — | | | $ | 77.0 | | | $ | 4.3 | | | $ | 84.7 | | | $ | — | | | $ | 89.0 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Nine Months Ended
September 30, 2009 | | | Nine Months Ended
September 30, 2008 | |
(In millions) | | Delivery
and
Services | | | Generation
and
Marketing | | | Eliminations | | | Total | | | Delivery
and
Services | | | Generation
and
Marketing | | | Eliminations | | | Total | |
Operating revenues | | $ | 2,417.6 | | | $ | 1,531.5 | | | $ | (1,383.4 | ) | | $ | 2,565.7 | | | $ | 2,139.6 | | | $ | 1,842.0 | | | $ | (1,303.5 | ) | | $ | 2,678.1 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Fuel | | | — | | | | 663.8 | | | | — | | | | 663.8 | | | | — | | | | 794.2 | | | | — | | | | 794.2 | |
Purchased power and transmission | | | 1,671.2 | | | | 86.8 | | | | (1,377.6 | ) | | | 380.4 | | | | 1,522.5 | | | | 77.7 | | | | (1,297.5 | ) | | | 302.7 | |
Deferred energy costs, net | | | (5.9 | ) | | | (33.0 | ) | | | — | | | | (38.9 | ) | | | 7.8 | | | | (35.9 | ) | | | — | | | | (28.1 | ) |
Operations and maintenance | | | 263.1 | | | | 261.6 | | | | (5.8 | ) | | | 518.9 | | | | 267.4 | | | | 249.6 | | | | (6.0 | ) | | | 511.0 | |
Depreciation and amortization | | | 116.4 | | | | 90.6 | | | | — | | | | 207.0 | | | | 122.6 | | | | 83.9 | | | | — | | | | 206.5 | |
Taxes other than income taxes | | | 113.1 | | | | 46.6 | | | | — | | | | 159.7 | | | | 105.5 | | | | 54.2 | | | | — | | | | 159.7 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total operating expenses | | | 2,157.9 | | | | 1,116.4 | | | | (1,383.4 | ) | | | 1,890.9 | | | | 2,025.8 | | | | 1,223.7 | | | | (1,303.5 | ) | | | 1,946.0 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating income | | | 259.7 | | | | 415.1 | | | | — | | | | 674.8 | | | | 113.8 | | | | 618.3 | | | | — | | | | 732.1 | |
Other income (expense), net | | | 4.0 | | | | 2.1 | | | | — | | | | 6.1 | | | | 10.1 | | | | 7.6 | | | | (2.4 | ) | | | 15.3 | |
Interest expense | | | 78.6 | | | | 122.9 | | | | — | | | | 201.5 | | | | 70.7 | | | | 106.7 | | | | (2.4 | ) | | | 175.0 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Income before income taxes | | | 185.1 | | | | 294.3 | | | | — | | | | 479.4 | | | | 53.2 | | | | 519.2 | | | | — | | | | 572.4 | |
Income tax expense | | | 79.0 | | | | 116.1 | | | | — | | | | 195.1 | | | | 10.0 | | | | 182.5 | | | | — | | | | 192.5 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income | | | 106.1 | | | | 178.2 | | | | — | | | | 284.3 | | | | 43.2 | | | | 336.7 | | | | — | | | | 379.9 | |
Less: net income attributable to noncontrolling interest | | | (0.8 | ) | | | — | | | | — | | | | (0.8 | ) | | | (0.7 | ) | | | — | | | | — | | | | (0.7 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income attributable to Allegheny Energy, Inc. | | $ | 105.3 | | | $ | 178.2 | | | $ | — | | | $ | 283.5 | | | $ | 42.5 | | | $ | 336.7 | | | $ | — | | | $ | 379.2 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
CONSOLIDATED DATA FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(in millions, except per share data)
(unaudited)
| | | | | | | | | |
| THREE MONTHS ENDED SEPTEMBER 30, 2009 | | INCOME BEFORE INCOME TAXES | | NET INCOME ATTRIBUTABLE TO ALLEGHENY ENERGY, INC. | | DILUTED EARNINGS PER SHARE |
| | | |
Calculation of Adjusted Income: | | | | | | | | | |
| | | | | | | | | |
Income - GAAP Basis | | $ | 122.7 | | $ | 77.0 | | $ | 0.45 |
| | | | | | | | | |
| | | |
Adjustments: | | | | | | | | | |
Net unrealized loss associated with economic hedges1 | | | 18.3 | | | 11.2 | | | |
| Expense associated with Allegheny Energy Supply’s purchase of outstanding notes2 | | | 19.3 | | | 11.9 | | | |
| |
Adjusted Income | | $ | 160.3 | | $ | 100.1 | | $ | 0.59 |
| |
| | | |
Calculation of Adjusted EBITDA: | | | | | | | | | |
Net Income attributable to Allegheny Energy, Inc. - GAAP basis | | | | | $ | 77.0 | | | |
Interest expense | | | | | | 85.1 | | | |
Income tax expense | | | | | | 45.3 | | | |
Depreciation and amortization | | | | | | 71.3 | | | |
| | | | |
EBITDA | | | | | | 278.7 | | | |
Net unrealized loss associated with economic hedges1 | | | | | | 18.3 | | | |
| | | | |
Adjusted EBITDA | | | | | $ | 297.0 | | | |
| | | | |
| | | |
| THREE MONTHS ENDED SEPTEMBER 30, 2008 | | INCOME BEFORE
INCOME TAXES | | NET INCOME
ATTRIBUTABLE TO
ALLEGHENY
ENERGY, INC. | | DILUTED EARNINGS PER SHARE |
| | | |
Calculation of Adjusted Income: | | | | | | | | | |
| | | | | | | | | |
Income - GAAP Basis | | $ | 133.5 | | $ | 89.0 | | $ | 0.52 |
| | | | | | | | | |
| | | |
Adjustments: | | | | | | | | | |
| Net unrealized loss associated with economic hedges1 | | | 4.0 | | | 2.4 | | | |
| |
Adjusted Income | | $ | 137.5 | | $ | 91.4 | | $ | 0.54 |
| |
| | | |
Calculation of Adjusted EBITDA: | | | | | | | | | |
Net Income attributable to Allegheny Energy, Inc. - GAAP basis | | | | | $ | 89.0 | | | |
Interest expense | | | | | | 57.9 | | | |
Income tax expense | | | | | | 44.3 | | | |
Depreciation and amortization | | | | | | 67.4 | | | |
| | | | |
EBITDA | | | | | | 258.6 | | | |
Net unrealized loss associated with economic hedges1 | | | | | | 4.0 | | | |
| | | | |
Adjusted EBITDA | | | | | $ | 262.6 | | | |
| | | | |
See accompanying Notes to Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
SEGMENT DATA FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(in millions)
(unaudited)
| | | | | | | | | | | | | |
| | | DELIVERY AND SERVICES | | GENERATION AND MARKETING |
| THREE MONTHS ENDED SEPTEMBER 30, 2009 | | INCOME BEFORE
INCOME TAXES | | | NET INCOME
ATTRIBUTABLE TO ALLEGHENY
ENERGY, INC. | | INCOME BEFORE
INCOME TAXES | | NET INCOME ATTRIBUTABLE TO ALLEGHENY
ENERGY, INC. |
| | | | |
Calculation of Adjusted Income: | | | | | | | | | | | | | |
Income - GAAP Basis | | $ | 56.2 | | | $ | 31.5 | | $ | 66.5 | | $ | 45.5 |
| | | | |
Adjustments: | | | | | | | | | | | | | |
| Net unrealized loss associated with economic hedges1 | | | — | | | | — | | | 18.3 | | | 11.2 |
| Expense associated with Allegheny Energy Supply’s purchase of outstanding notes2 | | | — | | | | — | | | 19.3 | | | 11.9 |
| |
Adjusted Income | | $ | 56.2 | | | $ | 31.5 | | $ | 104.1 | | $ | 68.6 |
| |
| | |
| | | DELIVERY AND SERVICES | | GENERATION AND MARKETING |
| THREE MONTHS ENDED SEPTEMBER 30, 2008 | | INCOME
BEFORE
INCOME TAXES | | | NET INCOME
ATTRIBUTABLE
TO ALLEGHENY
ENERGY, INC. | | INCOME BEFORE
INCOME TAXES | | NET INCOME
ATTRIBUTABLE
TO ALLEGHENY
ENERGY, INC. |
Calculation of Adjusted Income: | | | | | | | | | | | | | |
Income - GAAP Basis | | ($ | 1.2 | ) | | $ | 4.3 | | $ | 134.7 | | $ | 84.7 |
| | | | |
Adjustments: | | | | | | | | | | | | | |
| Net unrealized loss associated with economic hedges1 | | | — | | | | — | | | 4.0 | | | 2.4 |
| |
Adjusted Income | | ($ | 1.2 | ) | | $ | 4.3 | | $ | 138.7 | | $ | 87.1 |
| |
See accompanying Notes to Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
CONSOLIDATED DATA FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(in millions, except per share data)
(unaudited)
| | | | | | | | | | | |
| NINE MONTHS ENDED SEPTEMBER 30, 2009 | | INCOME BEFORE
INCOME TAXES | | | NET INCOME
ATTRIBUTABLE TO
ALLEGHENY
ENERGY, INC. | | | DILUTED
EARNINGS PER
SHARE |
| | | |
Calculation of Adjusted Income: | | | | | | | | | | | |
| | | | | | | | | | | |
Income - GAAP Basis | | $ | 479.4 | | | $ | 283.5 | | | $ | 1.67 |
| | | | | | | | | | | |
| | | |
Adjustments: | | | | | | | | | | | |
Net unrealized gain associated with economic hedges1 | | | (18.7 | ) | | | (11.5 | ) | | | |
| Expense associated with Allegheny Energy Supply’s purchase of outstanding notes2 | | | 19.3 | | | | 11.9 | | | | |
| |
Adjusted Income | | $ | 480.0 | | | $ | 283.9 | | | $ | 1.67 |
| |
| | | |
Calculation of Adjusted EBITDA: | | | | | | | | | | | |
| Net Income attributable to Allegheny Energy, Inc. - GAAP basis | | | | | | $ | 283.5 | | | | |
Interest expense | | | | | | | 201.5 | | | | |
Income tax expense | | | | | | | 195.1 | | | | |
Depreciation and amortization | | | | | | | 207.0 | | | | |
| | | | | |
EBITDA | | | | | | | 887.1 | | | | |
Net unrealized gain associated with economic hedges1 | | | | | | | (18.7 | ) | | | |
| | | | | |
Adjusted EBITDA | | | | | | $ | 868.4 | | | | |
| | | | | |
| | | |
| NINE MONTHS ENDED SEPTEMBER 30, 2008 | | INCOME BEFORE
INCOME TAXES | | | NET INCOME
ATTRIBUTABLE TO
ALLEGHENY
ENERGY, INC. | | | DILUTED
EARNINGS PER
SHARE |
| | | |
Calculation of Adjusted Income: | | | | | | | | | | | |
| | | | | | | | | | | |
Income - GAAP Basis | | $ | 572.4 | | | $ | 379.2 | | | $ | 2.23 |
| | | | | | | | | | | |
| | | |
Adjustments: | | | | | | | | | | | |
Net unrealized gain associated with economic hedges1 | | | (123.3 | ) | | | (75.2 | ) | | | |
| |
Adjusted Income | | $ | 449.1 | | | $ | 304.0 | | | $ | 1.79 |
| |
| | | |
Calculation of Adjusted EBITDA: | | | | | | | | | | | |
| Net Income attributable to Allegheny Energy, Inc. - GAAP basis | | | | | | $ | 379.2 | | | | |
Interest expense | | | | | | | 175.0 | | | | |
Income tax expense | | | | | | | 192.5 | | | | |
Depreciation and amortization | | | | | | | 206.5 | | | | |
| | | | | |
EBITDA | | | | | | | 953.2 | | | | |
Net unrealized gain associated with economic hedges1 | | | | | | | (123.3 | ) | | | |
| | | | | |
Adjusted EBITDA | | | | | | $ | 829.9 | | | | |
| | | | | |
See accompanying Notes to Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
SEGMENT DATA FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(in millions)
(unaudited)
| | | | | | | | | | | | | | |
| | | DELIVERY AND SERVICES | | GENERATION AND MARKETING | |
| NINE MONTHS ENDED SEPTEMBER 30, 2009 | | INCOME BEFORE INCOME TAXES | | NET INCOME ATTRIBUTABLE TO ALLEGHENY
ENERGY, INC. | | INCOME BEFORE
INCOME TAXES | | | NET INCOME ATTRIBUTABLE
TO ALLEGHENY
ENERGY, INC. | |
| | | | |
Calculation of Adjusted Income: | | | | | | | | | | | | | | |
Income - GAAP Basis | | $ | 185.1 | | $ | 105.3 | | $ | 294.3 | | | $ | 178.2 | |
| | | | |
Adjustments: | | | | | | | | | | | | | | |
| Net unrealized gain associated with economic hedges1 | | | — | | | — | | | (18.7 | ) | | | (11.5 | ) |
| Expense associated with Allegheny Energy Supply’s purchase of outstanding notes2 | | | — | | | — | | | 19.3 | | | | 11.9 | |
| | |
Adjusted Income | | $ | 185.1 | | $ | 105.3 | | $ | 294.9 | | | $ | 178.6 | |
| | |
| | |
| | | DELIVERY AND SERVICES | | GENERATION AND MARKETING | |
| NINE MONTHS ENDED SEPTEMBER 30, 2008 | | INCOME BEFORE INCOME TAXES | | NET INCOME
ATTRIBUTABLE
TO ALLEGHENY
ENERGY, INC. | | INCOME BEFORE
INCOME TAXES | | | NET INCOME
ATTRIBUTABLE
TO ALLEGHENY
ENERGY, INC. | |
| | | | |
Calculation of Adjusted Income: | | | | | | | | | | | | | | |
Income - GAAP Basis | | $ | 53.2 | | $ | 42.5 | | $ | 519.2 | | | $ | 336.7 | |
| | | | |
Adjustments: | | | | | | | | | | | | | | |
| Net unrealized gain associated with economic hedges1 | | | — | | | — | | | (123.3 | ) | | | (75.2 | ) |
| | |
Adjusted Income | | $ | 53.2 | | $ | 42.5 | | $ | 395.9 | | | $ | 261.5 | |
| | |
See accompanying Notes to Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in millions)
(unaudited)
| | | | | | | |
| ADJUSTED OPERATING REVENUE | | THREE MONTHS ENDED SEPT 30, 2009 | | | THREE MONTHS
ENDED SEPT 30, 2008 |
Operating revenue: | | | | | | | |
As reported | | $ | 793.7 | | | $ | 849.6 |
| | |
| Net unrealized loss associated with economic hedges1 | | | 18.3 | | | | 4.0 |
| |
As Adjusted | | $ | 812.0 | | | $ | 853.6 |
| |
| | |
| ADJUSTED INTEREST EXPENSE | | THREE MONTHS
ENDED SEPT 30, 2009 | | | THREE MONTHS
ENDED SEPT 30, 2008 |
| Interest expense: | | | | | | | |
As reported | | $ | 85.1 | | | $ | 57.9 |
| | |
| Expense associated with Allegheny Energy Supply’s purchase of outstanding notes2 | | | (19.3 | ) | | | — |
| |
As Adjusted | | $ | 65.8 | | | $ | 57.9 |
| |
| | |
| ADJUSTED INCOME TAXES | | THREE MONTHS
ENDED SEPT 30, 2009 | | | THREE MONTHS
ENDED SEPT 30, 2008 |
| Income taxes: | | | | | | | |
As reported | | $ | 45.3 | | | $ | 44.3 |
| | |
| Income taxes related to net unrealized loss associated with economic hedges1 | | | 7.1 | | | | 1.6 |
| Expense associated with Allegheny Energy Supply’s purchase of outstanding notes2 | | | 7.4 | | | | — |
| |
As Adjusted | | $ | 59.8 | | | $ | 45.9 |
| |
See accompanying Notes to Reconciliation of Non-GAAP Financial Measures
Notes to Reconciliation of Non-GAAP Financial Measures:
| (1) | Adjustments relating to certain unrealized gains/(losses) included in GAAP operating revenues: |
| | | | | | | | |
| | | THREE MONTHS ENDED SEPT 30, 2009 | | | THREE MONTHS ENDED SEPT 30, 2008 | |
| Financial transmission rights | | ($ | 6.2 | ) | | ($ | 106.6 | ) |
| Power hedges | | | (5.3 | ) | | | 81.1 | |
| Hedging strategy relating to a natural gas transportation contract | | | (6.8 | ) | | | 21.5 | |
| | |
Total adjustments | | ($ | 18.3 | ) | | ($ | 4.0 | ) |
| | |
| | |
| | | NINE MONTHS
ENDED SEPT 30, 2009 | | | NINE MONTHS
ENDED SEPT 30, 2008 | |
Financial transmission rights | | $ | 21.3 | | | $ | 90.0 | |
Power hedges | | | (13.8 | ) | | | 24.9 | |
| Hedging strategy relating to a natural gas transportation contract | | | 11.2 | | | | 8.4 | |
| | |
Total Adjustments | | $ | 18.7 | | | $ | 123.3 | |
| | |
| (2) | In September, 2009, Allegheny Energy Supply purchased its outstanding 7.80% Notes due 2011 and its 8.25% Notes due 2012 in the aggregate principal amount of $244.3 million, pursuant to a cash tender offer. The costs associated with this purchase in the amount of $19.3 million were charged to interest expense in the GAAP basis consolidated statement of income. |
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
OPERATING STATISTICS
(unaudited)
Three Months Ended September 30,
| | | | | | | | | |
| | | 2009 | | | 2008 | | | Change | |
DELIVERY AND SERVICES: | | | | | | | | | |
Retail electricity sales (thousand MWh): | | | | | | | | | |
Residential | | 3,837 | | | 3,986 | | | -3.7 | % |
Commercial | | 2,903 | | | 2,894 | | | 0.3 | % |
Industrial and other | | 3,537 | | | 3,869 | | | -8.6 | % |
Total | | 10,277 | | | 10,749 | | | -4.4 | % |
Usage per customer (KWh): | | | | | | | | | |
Residential | | 2,808 | | | 2,928 | | | -4.1 | % |
Commercial | | 15,585 | | | 15,669 | | | -0.5 | % |
Industrial | | 128,509 | | | 142,160 | | | -9.6 | % |
GENERATION AND MARKETING: | | | | | | | | | |
Generation (thousand MWh): | | | | | | | | | |
Supercritical coal | | 5,791 | | | 10,115 | | | -42.7 | % |
Other coal | | 377 | | | 1,191 | | | -68.3 | % |
Gas | | 331 | | | 137 | | | 141.6 | % |
Hydro and other | | 509 | | | 461 | | | 10.4 | % |
Total | | 7,008 | | | 11,904 | | | -41.1 | % |
Net capacity factor: | | | | | | | | | |
Supercritical coal | | 44 | % | | 77 | % | | -33 | % |
All coal | | 38 | % | | 70 | % | | -32 | % |
Equivalent availability factor: | | | | | | | | | |
Supercritical coal | | 89 | % | | 90 | % | | -1 | % |
All coal | | 89 | % | | 89 | % | | — | |
DEGREE DAYS: | | | | | | | | | |
Heating | | 54 | | | 37 | | | 45.9 | % |
Cooling | | 549 | | | 537 | | | 2.2 | % |
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
OPERATING STATISTICS
(unaudited)
Nine Months Ended September 30,
| | | | | | | | | |
| | | 2009 | | | 2008 | | | Change | |
DELIVERY AND SERVICES: | | | | | | | | | |
Retail electricity sales (thousand MWh): | | | | | | | | | |
Residential | | 12,609 | | | 12,639 | | | -0.2 | % |
Commercial | | 8,450 | | | 8,378 | | | 0.9 | % |
Industrial and other | | 10,473 | | | 12,006 | | | -12.8 | % |
Total | | 31,532 | | | 33,023 | | | -4.5 | % |
Usage per customer (KWh): | | | | | | | | | |
Residential | | 9,227 | | | 9,285 | | | -0.6 | % |
Commercial | | 45,446 | | | 45,508 | | | -0.1 | % |
Industrial | | 381,793 | | | 442,296 | | | -13.7 | % |
GENERATION AND MARKETING: | | | | | | | | | |
Generation (thousand MWh): | | | | | | | | | |
Supercritical coal | | 22,231 | | | 29,303 | | | -24.1 | % |
Other coal | | 1,308 | | | 3,959 | | | -67.0 | % |
Gas | | 507 | | | 275 | | | 84.4 | % |
Hydro and other | | 1,371 | | | 1,512 | | | -9.3 | % |
Total | | 25,417 | | | 35,049 | | | -27.5 | % |
Net capacity factor: | | | | | | | | | |
Supercritical coal | | 56 | % | | 74 | % | | -18 | % |
All coal | | 48 | % | | 68 | % | | -20 | % |
Equivalent availability factor: | | | | | | | | | |
Supercritical coal | | 81 | % | | 86 | % | | -5 | % |
All coal | | 82 | % | | 85 | % | | -3 | % |
DEGREE DAYS: | | | | | | | | | |
Heating | | 3,343 | | | 3,292 | | | 1.5 | % |
Cooling | | 813 | | | 767 | | | 6.0 | % |
