NEWS RELEASE
Vectren Corporation
P.O. Box 209
Evansville, IN 47702-0209
July 25, 2001
FOR IMMEDIATE RELEASE
Vectren Corporation
Reports Second Quarter Results; Dividend Unchanged
Evansville, Indiana - Today, Vectren Corporation (NYSE:VVC) announced 2001
second quarter income from operations of $3.9 million, or $.06 per share,
compared to $14.2 million, or $.23 per share, for the same quarter a year ago.
Operating results for the current quarter were negatively impacted by
significantly warmer weather this year and the impact of increased gas prices.
The reported net loss for the quarter was $(17.7) million, or $(.26) per share,
compared to net income of $8.3 million, or $.14 per share, for the same period a
year ago. The current quarter loss reflects the impact of restructuring costs
incurred in the continuing organizational alignment following the 2000 merger.
The current loss also includes the extraordinary loss associated with the
disposition of certain leveraged lease assets and the negative impact of market
price swings as a result of marking power contracts to market under the
accounting standard, FAS 133. Income from operations has been adjusted by these
items.
Reported net income for the six months ended June 30, 2001 was $26.7 million, or
$.40 per share, compared to $30.4 million, or $.50 per share, for the same
period in 2000. Income from operations for the six months ended June 30, 2001
was $43.2 million, or $.65 per share, as compared to $50.6 million, or $.83 per
share a year ago.
"The reported results include nonrecurring merger and integration costs,
restructuring charges and an extraordinary loss on the disposition of assets,"
said Niel C. Ellerbrook, Vectren's Chairman and Chief Executive Officer. Mr.
Ellerbrook added, "The recognition of these nonrecurring charges substantially
completes our efforts to eliminate duplicate corporate and administrative
programs, promote greater efficiencies in operations and business processes and
realign our business units, both regulated and nonregulated in a manner that
compliments our core purpose and long term growth strategy. We fully expect to
begin realizing these benefits during the remainder of 2001."
Specific second quarter and year to date items include:
* A restructuring charge of $7.3 million net of tax and additional merger costs
(accelerated depreciation) of $1.7 million net of tax, a total of $.13 per
share, was reflected during the quarter as a continuation of the organization
alignment following the merger. For the year, combined merger and restructuring
costs total $11.2 million net of tax, or $.17 per share.
* Leveraged lease assets were sold during the quarter resulting in an
extraordinary loss of $7.7 million, or $.12 per share. Cash proceeds from the
transaction of $46 million were used to reduce debt outstanding.
-more-
* The impact of the adoption of FAS 133 by the regulated wholesale power group,
requiring mark to market accounting for certain power contracts, was an
unfavorable $4.9 million net of tax, or $.07 per share. The impact for the year
is a favorable $2.4 million net of tax, or $.04 per share.
* For the quarter and year to date, warmer than normal weather negatively
impacted results by $.11 per share.
* Gas cost increases continue to adversely impact results due to decreased
consumption, higher uncollectibles and other expenses. Results for the quarter
were lower by approximately $.05 per share and, for the full year, by $.18 per
share.
The board of directors of Vectren today also declared a cash dividend of 25 1/2
cents per share of common stock. This is unchanged from the previous quarter.
The dividend is payable September 1, 2001 to shareholders of record as of August
15, 2001.
Please SEE ATTACHED unaudited schedules for additional financial information.
In conjunction with Vectren Corporation's first quarter earnings release, you
are invited to listen in real-time to its conference call on July 26 at 10:00
a.m. EDT. The call will also be available for replay. A link to the live
broadcast and replay will be available on Vectren's Web site at
http://www.vectren.com.
Vectren Corporation is an energy and applied technology holding company
headquartered in Evansville, Indiana. Vectren's energy delivery subsidiaries
provide gas and/or electricity to nearly one million customers in adjoining
service territories that cover nearly two-thirds of Indiana and west central
Ohio. Vectren's non-regulated subsidiaries and affiliates currently offer
energy-related products and services and utility related services including coal
production and sales, underground pipeline construction and repair, facilities
locating and meter reading services, materials management, debt collections, and
broadband communication services to customers throughout the surrounding region.
To learn more about Vectren, visit www.vectren.com.
NOTE: Net income for the three and six-month periods ended June 30 is not
indicative of net income for an annual period due to seasonal sales of gas and
electric for space heating and cooling purposes.
This press release may contain forward-looking statements. Vectren wishes to
caution readers that actual results could differ materially from those that will
be projected in our discussions. Additional detailed information concerning a
number of factors that could cause actual results to differ materially from the
information that is provided to you is readily available in our report Form 10-K
filed with the Securities and Exchange Commission on March 30, 2001.
Investor Contact: Steven M. Schein, (812) 491-4209, sschein@vectren.com
Media Contact: Jeffrey W. Whiteside, (812) 491-4205, jwhiteside@vectren.com
###
VECTREN CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except for share amounts)
(Unaudited)
Three Months Six Months
Ended June 30 Ended June 30
-------------------- ---------------------
2001 2000 2001 2000
- -------------------------------------- ---------- --------- -------- ---------
OPERATING REVENUE:
Gas utility $ 153,798 $ 100,485 $ 676,687 $ 301,330
Electric utility 95,020 78,289 183,229 151,279
Energy services and other 183,456 84,584 455,446 170,312
---------- ---------- ---------- ----------
Total operating revenues 432,274 263,358 1,315,362 622,921
---------- ---------- ---------- ----------
OPERATING EXPENSES:
Cost of gas sold 94,800 55,898 498,872 174,425
Fuel for electric generation 17,857 18,772 35,842 35,465
Purchased electric energy 33,662 9,159 46,815 12,636
Cost of energy services and other 177,015 76,959 438,795 158,681
Other operating 58,974 49,564 120,606 95,987
Merger and integration costs - 3,261 762 30,442
Restructuring costs 11,802 - 11,802 -
Depreciation and amortization 31,794 26,031 63,265 48,693
Taxes other than income taxes 11,053 7,456 30,596 16,056
---------- ---------- ---------- --------
Total operating expenses 436,957 247,100 1,247,355 572,385
---------- ---------- ---------- --------
OPERATING INCOME (4,683) 16,258 68,007 50,536
OTHER INCOME:
Equity in earnings of unconsolidated
investments 6,051 2,313 13,901 14,007
Other - net 4,052 7,020 5,735 10,219
---------- ---------- ---------- ---------
Total other income 10,103 9,333 19,636 24,226
---------- ---------- ---------- ---------
INTEREST EXPENSE 20,937 12,319 43,756 24,592
---------- ---------- ---------- ---------
INCOME (LOSS) BEFORE INCOME TAXES (15,517) 13,272 43,887 50,170
INCOME TAXES (5,659) 4,293 13,116 18,656
MINORITY INTEREST IN SUBSIDIARY (149) (171) 439 581
PREFERRED DIVIDEND REQUIREMENTS OF
SUBSIDIARY 242 266 480 535
---------- ---------- ---------- --------
NET INCOME BEFORE EXTRAORDINARY
LOSS AND CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE, NET $ (9,951) $ 8,274 $ 30,462 $ 30,398
EXTRAORDINARY LOSS, NET (7,706) - (7,706) -
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE, NET - - 3,938 -
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ (17,657) $ 8,274 $ 26,694 $ 30,398
AVERAGE COMMON SHARES OUTSTANDING 67,710 61,227 66,165 61,266
DILUTED COMMON SHARES OUTSTANDING 67,710 61,317 66,295 61,338
EARNINGS (LOSS) PER SHARE OF
COMMON STOCK
BASIC:
NET INCOME BEFORE EXTRAORDINARY
LOSS AND CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING
PRINCIPLE, NET $ (0.15) $ 0.14 $ 0.46 $ 0.50
EXTRAORDINARY LOSS, NET (0.11) - (0.12) -
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE, NET - - 0.06 -
---------- ---------- ---------- ---------
EARNINGS (LOSS) PER SHARE OF
COMMON STOCK $ (0.26) $ 0.14 $ 0.40 $ 0.50
DILUTED:
NET INCOME BEFORE EXTRAORDINARY
LOSS AND CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING
PRINCIPLE, NET $ (0.15) $ 0.13 $ 0.46 $ 0.50
EXTRAORDINARY LOSS, NET (0.11) - (0.12) -
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE, NET - - 0.06 -
---------- ---------- ---------- ---------
EARNINGS (LOSS) PER SHARE OF
COMMON STOCK $ (0.26) $ 0.13 $ 0.40 $ 0.50
VECTREN CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except for share amounts)
(Unaudited)
Twelve Months
Ended June 30
---------------------------
2001 2000
------------ -----------
OPERATING REVENUE:
Gas utility $ 1,194,110 $ 527,074
Electric utility 368,359 314,059
Energy services and other 778,662 322,130
----------- -----------
Total operating revenues 2,341,131 1,163,263
----------- -----------
OPERATING EXPENSES:
Cost of gas sold 876,987 298,738
Fuel for electric generation 71,547 70,411
Purchased electric energy 70,573 23,102
Cost of energy services and other 753,372 301,637
Other operating 224,046 194,842
Merger and integration costs 11,465 30,442
Restructuring costs 11,802 -
Depreciation and amortization 120,233 92,672
Taxes other than income taxes 52,550 31,189
----------- -----------
Total operating expenses 2,192,575 1,043,033
----------- -----------
OPERATING INCOME 148,556 120,230
OTHER INCOME:
Equity in earnings of unconsolidated
investments 17,448 19,110
Other - net 12,303 16,120
----------- -----------
Total other income 29,751 35,230
----------- -----------
INTEREST EXPENSE 76,297 47,457
----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES 102,010 108,003
INCOME TAXES 28,692 36,850
MINORITY INTEREST IN SUBSIDIARY 252 1,210
PREFERRED DIVIDEND REQUIREMENTS OF
SUBSIDIARY 962 1,074
----------- -----------
NET INCOME BEFORE EXTRAORDINARY LOSS AND CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE, NET $ 72,104 $ 68,869
EXTRAORDINARY LOSS, NET (7,706) -
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE, NET 3,938 -
----------- -----------
NET INCOME (LOSS) $ 68,336 $ 68,869
AVERAGE COMMON SHARES OUTSTANDING 63,708 61,281
DILUTED COMMON SHARES OUTSTANDING 63,820 61,362
EARNINGS (LOSS) PER SHARE OF
COMMON STOCK
BASIC:
NET INCOME BEFORE EXTRAORDINARY
LOSS AND CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE, NET $ 1.13 $ 1.12
EXTRAORDINARY LOSS, NET (0.12) -
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE, NET 0.06 -
---------- ----------
EARNINGS (LOSS) PER SHARE OF
COMMON STOCK $ 1.07 $ 1.12
DILUTED:
NET INCOME BEFORE EXTRAORDINARY
LOSS AND CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE, NET $ 1.13 $ 1.12
EXTRAORDINARY LOSS, NET (0.12) -
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE, NET 0.06 -
----------- -----------
EARNINGS (LOSS) PER SHARE OF
COMMON STOCK $ 1.07 $ 1.12
VECTREN CORPORATION 3 Months 6 Months
HIGHLIGHTS Ended June 30 Ended June 30
------------- -------------
(Unaudited) 2001 2000 2001 2000
------------ --------- -------- --------
Basic and Diluted Earnings Per
Average Share:
Utility Group $ (0.19) $ 0.05 $ 0.35 $ 0.26
Non-regulated Group
Communications (0.01) (0.01) (0.02) 0.08
Energy Services 0.02 0.05 0.10 0.08
Utility Services 0.02 0.01 0.02 0.01
Corporate and Other (0.10) 0.04 (0.05) 0.07
------- -------- -------- --------
Total Non-regulated (0.07) 0.09 0.05 0.24
-------- -------- -------- --------
Total Earnings per Average Share ** $ (0.26) $ 0.14 $ 0.40 $ 0.50
-------- -------- -------- --------
Restructuring Costs 0.11 - 0.11 -
Merger and Integration Costs 0.02 0.09 0.06 0.41
Extraordinary Loss on Disposition of
Assets 0.12 - 0.12 -
Impact of FAS 133-Accounting for
Derivatives 0.07 - (0.04) -
Prior Year One-Time Gain - - - (0.08)
-------- -------- -------- --------
Income from Operations $ 0.06 $ 0.23 $ 0.65 $ 0.83
-------- -------- -------- --------
Summary of Impact of Restructuring
Costs and Merger and Integration Costs:
(millions, except per share data)
Restructuring Costs $ 11.8 $ - $ 11.8 $ -
Merger and Integration Costs - 3.3 0.8 30.4
Depreciation 2.7 3.3 5.5 3.3
Income Taxes (5.5) (0.7) (6.9) (8.6)
-------- -------- -------- --------
Total $ 9.0 $ 5.9 $ 11.2 $ 25.1
-------- -------- -------- --------
EPS Impact of Restructuring Costs and
Merger and Integration Costs $ 0.13 $ 0.09 $ 0.17 $ 0.41
-------- -------- -------- --------
Utility Group $ 0.12 $ 0.09 $ 0.16 $ 0.40
Non-regulated Group $ 0.01 $ - $ 0.01 $ 0.01
EBITDA (millions)
Utility Group $ 21.8 $ 36.1 $ 119.5 $ 90.1
Non-regulated Group 7.6 14.8 27.3 32.2
-------- -------- ------- --------
Total $ 29.4 $ 50.9 $ 146.8 $ 122.3
-------- -------- -------- --------
Restructuring Costs 11.8 - 11.8 -
Merger and Integration Costs - 3.3 0.8 30.4
Extraordinary Loss on Disposition of
Assets 12.4 - 12.4 -
Impact of FAS 133-Accounting for
Derivatives 7.9 - (3.9) -
Prior Year One-Time Gain - - - (8.0)
-------- -------- -------- --------
EBITDA from Operations $ 61.5 $ 54.2 $ 167.9 $ 144.7
-------- -------- -------- --------
VECTREN CORPORATION 12 Months
HIGHLIGHTS Ended June 30
-------------
(Unaudited) 2001 2000
------------ -----------
Basic and Diluted Earnings Per Average Share:
Utility Group $ 0.94 $ 0.76
Non-regulated Group
Communications (0.02) 0.08
Energy Services 0.13 0.09
Utility Services 0.04 0.04
Corporate and Other (0.02) 0.15
------- ------
Total Non-regulated 0.13 0.36
------- ------
Total Earnings per Average Share ** $ 1.07 $ 1.12
------- -------
Restructuring Costs 0.11 -
Merger and Integration Costs 0.25 0.41
Extraordinary Loss on Disposition of Assets 0.12 -
Impact of FAS 133-Accounting for Derivatives (0.04) -
Prior Year One-Time Gain - (0.08)
------- -------
Income from Operations $ 1.51 $ 1.45
------- -------
Summary of Impact of Restructuring Costs and Merger
and Integration Costs:
(millions, except per share data)
Restructuring Costs $ 11.8 $ -
Merger and Integration Costs 11.5 30.4
Depreciation 13.6 3.3
Income Taxes (13.9) (8.6)
------- -----
Total $ 23.0 $ 25.1
------- -----
EPS Impact of Restructuring Costs and Merger
and Integration Costs $ 0.36 $ 0.41
------- -----
Utility Group $ 0.28 $ 0.40
Non-regulated Group $ 0.08 $ 0.01
BITDA (millions)
Utility Group $ 245.3 $ 197.0
Non-regulated Group 48.3 48.8
------- -------
Total $ 293.6 $ 245.8
------- -------
Restructuring Costs 11.8 -
Merger and Integration Costs 11.5 30.4
Extraordinary Loss on Disposition of Assets 12.4 -
Impact of FAS 133-Accounting for Derivatives (3.9) -
Prior Year One-Time Gain - (8.0)
------- -------
EBITDA from Operations $ 325.4 $ 268.2
------- -------
Dividends Paid (per common share,
12 months) $ 1.02 $ 0.96
Annualized Dividend $ 1.02 $ 0.97
Dividend Yield (at close) 4.9% 5.6%
Dividend Payout Ratio 95.3% 85.7%
Dividend to Book Value 8.2% 8.4%
Return on Average Shareholder Equity 8.8% 9.8%
Book Value Per Share $ 12.41 $ 11.58
Market to Book Value (at close) 167% 149%
Common Stock Prices (VVC - NYSE)
High (during second quarter) $ 23.90 $ 21.38
Low (during second quarter) $ 20.38 $ 15.75
Close $ 20.70 $ 17.25
Price/Earnings Ratio (trailing) 19.3 15.4
Percent Internally Generated Funds -
Utility Group 70% 54%
Ratio of Earnings to Fixed Charges -
SEC Method
Consolidated 4.1 3.1
Utility Group 5.3 2.9
* Selected highlights for the twelve months ended June 30, 2001, include eight
months of operations resulting from the acquisition of the Ohio operations on
October 31, 2000.
** Diluted earnings per share for the three months ended June 30, 2000, are
$0.13. Basic and diluted earnings per share for all other periods are equal.
SELECTED UTILITY 3 Months 6 Months
OPERATING STATISTICS Ended June 30 Ended June 30
---------------------- -----------------------
(Unaudited) 2001 2000 2001 2000
- ---------------------------------- ----------- ---------- ----------- -----------
WEATHER AS A PERCENT OF NORMAL:
Heating Degree Days 70% 92% 94% 88%
Cooling Degree Days 105% 86% 105% 90%
GAS MARGIN (Thousands):
Operating Revenues $ 153,798 $ 100,485 $ 676,687 $ 301,330
Cost of Gas 94,800 55,898 498,872 174,425
---------- ---------- ---------- ----------
Margin $ 58,998 $ 44,587 $ 177,815 $ 126,905
========== ========== ========== ==========
ELECTRIC MARGIN (Thousands):
Operating Revenues $ 95,020 $ 78,289 $ 183,229 $ 151,279
Cost of Fuel & Purchased Power 51,519 27,931 82,657 48,101
---------- ---------- ---------- ----------
Margin $ 43,501 $ 50,358 $ 100,572 $ 103,178
========== ========== ========== ==========
GAS SOLD & TRANSPORTED (MDth)*:
Residential 8,974 6,541 47,034 30,231
Commercial 3,442 2,673 17,950 12,202
Contract 21,259 18,266 51,368 41,591
---------- ---------- ---------- ----------
33,675 27,480 116,352 84,024
========== ========== ========== ==========
ELECTRICITY SOLD (MWh):
Residential 294,404 279,646 645,811 595,680
Commercial 332,976 324,278 634,841 614,895
Industrial 626,458 638,418 1,202,748 1,236,818
Miscellaneous Sales 3,985 3,964 9,272 9,234
---------- ---------- ---------- ----------
Total Retail 1,257,823 1,246,306 2,492,672 2,456,627
Wholesale 940,831 461,329 1,859,667 1,000,577
---------- ---------- ---------- ----------
2,198,654 1,707,635 4,352,339 3,457,204
========== ========== ========== ==========
SELECTED UTILITY 12 Months
OPERATING STATISTICS Ended June 30
-------------------------
(Unaudited) 2001 2000
- -------------------------------------- -----------------------
WEATHER AS A PERCENT OF NORMAL:
Heating Degree Days 103% 87%
Cooling Degree Days 96% 94%
GAS MARGIN (Thousands):
Operating Revenues $1,194,110 $ 527,074
Cost of Gas 876,987 298,738
---------- ----------
Margin $ 317,123 $ 228,336
========== ==========
ELECTRIC MARGIN (Thousands):
Operating Revenues $ 368,359 $ 314,059
Cost of Fuel & Purchased Power 142,120 93,513
---------- ----------
Margin $ 226,239 $ 220,546
========== ==========
GAS SOLD & TRANSPORTED (MDth)*:
Residential 82,528 49,662
Commercial 31,699 19,639
Contract 99,340 79,897
---------- ----------
213,567 149,198
========== ==========
ELECTRICITY SOLD (MWh):
Residential 1,433,294 1,330,433
Commercial 1,355,993 1,305,655
Industrial 2,457,902 2,477,156
Miscellaneous Sales 19,270 19,174
---------- ----------
Total Retail 5,266,459 5,132,418
Wholesale 3,153,376 1,844,921
---------- ----------
8,419,835 6,977,339
========== ==========
* Gas operating statistics for the twelve months ended June 30, 2001 include
eight months of operations from the acquisition of the Ohio operations on
October 31, 2000.
SELECTED UTILITY 3 Months 6 Months
OPERATING STATISTICS Ended June 30 Ended June 30
--------------------- --------------------
(Unaudited) 2001 2000 2001 2000
- --------------------------------------- ---------- --------- -------- -------
GAS OPERATING REVENUES (Thousands):
Residential $100,959 $ 56,430 $452,478 $196,251
Commercial 36,227 18,550 163,333 69,491
Contract 13,554 10,422 50,344 25,531
Miscellaneous Revenue 3,058 15,083 10,532 10,057
-------- -------- -------- --------
$153,798 $100,485 $676,687 $301,330
======== ======== ======== ========
ELECTRIC OPERATING REVENUES (Thousands):
Residential $ 20,640 $ 19,533 $ 43,131 $ 39,768
Commercial 17,925 17,399 34,819 33,280
Industrial 21,987 20,996 40,932 40,365
Miscellaneous Revenue 2,499 2,934 2,358 4,343
-------- -------- -------- --------
Total Retail 63,051 60,862 121,240 117,756
Wholesale 31,970 17,427 61,990 33,523
-------- -------- -------- --------
$ 95,021 $ 78,289 $183,230 $151,279
======== ======== ======== ========
AVERAGE GAS CUSTOMERS**:
Residential 859,531 565,803 862,286 567,739
Commercial 79,808 56,726 80,041 56,988
Contract 3,723 1,248 3,732 1,253
-------- -------- -------- --------
943,062 623,777 946,059 625,980
======== ======== ======== ========
AVERAGE ELECTRIC CUSTOMERS:
Residential 114,889 110,702 114,957 110,496
Commercial 17,353 16,687 17,285 16,570
Industrial 166 167 165 169
-------- -------- -------- --------
132,408 127,556 132,407 127,235
======== ======== ======== ========
SELECTED UTILITY 12 Months
OPERATING STATISTICS Ended June 30
---------------------
(Unaudited) 2001 2000
- ------------------------------------------ ---------------------
GAS OPERATING REVENUES (Thousands):
Residential $ 790,033 $ 335,523
Commercial 282,532 114,044
Contract 109,674 48,148
Miscellaneous Revenue 11,871 29,359
---------- ----------
$1,194,110 $ 527,074
========== ==========
ELECTRIC OPERATING REVENUES (Thousands):
Residential $ 96,178 $ 88,673
Commercial 75,134 69,343
Industrial 83,201 81,469
Miscellaneous Revenue 6,697 9,167
---------- ----------
Total Retail 261,210 248,652
Wholesale 107,150 65,407
---------- ----------
$ 368,360 $ 314,059
========== ==========
AVERAGE GAS CUSTOMERS**:
Residential 856,579 560,432
Commercial 79,612 56,365
Contract 3,741 1,248
---------- ----------
939,932 618,045
========== ==========
AVERAGE ELECTRIC CUSTOMERS:
Residential 114,356 109,956
Commercial 17,191 16,338
Industrial 165 171
---------- ----------
131,712 126,465
========== ==========
* Gas operating statistics for the twelve months ended June 30, 2001 include
eight months of operations from the acquisition of the Ohio operations on
October 31, 2000.
** Average gas customers for the three, six and twelve months ended June 30,
2001 include 311,781; 311,752; and 311,265, respectively, for the Ohio
operations.