Exhibit 99
KEYSPAN ENERGY REPORTS SIGNIFICANT IMPROVEMENT IN
RESULTS FOR 1999
Brooklyn, New York, January 27, 2000 --- For the year ended December 31,
1999, KeySpan Energy reported consolidated earnings of $223.9 million, or $1.62
per share, reflecting stronger-than-expected performance by all major business
segments.
For the fourth quarter of 1999, consolidated operations earned $74.7
million (56 cents per share), a 41% increase over the $53.0 million (36 cents
per share) earned in last year's fourth quarter before special charges. The
improvement in quarterly results largely reflects sales growth in our core
gas-distribution business, the acquisition of the Ravenswood generating station,
and an on-going program of cost reduction.
Robert B. Catell, Chairman and Chief Executive Officer, said, "The
improvement in earnings reflects unified teamwork throughout the company to grow
our energy businesses, achieve continued synergy gains and cost-reductions, and
make the KeySpan brand name synonymous with excellence in energy markets
throughout the Northeast."
"This solid performance is a result of the successful merger in 1998 of
Brooklyn Union and the Long Island Lighting Company, which together with our
anticipated acquisition of Eastern Enterprises, gives KeySpan access to two of
the prime expansion areas in the U.S. gas industry. Long Island and the Boston,
Massachusetts/New Hampshire corridor have gas penetration rates below 40%,
robust economies, and keen awareness of the benefits of natural gas. Recent
price spikes in world oil markets will drive even stronger demand for natural
gas and related services, confirming our customer-focused strategy."
The following is a review of the highlights of our 1999 results by
business segment:
The gas-distribution businesses serving New York City and Long Island had
earnings of $151.2 million ($1.09 per share), reflecting strong market demand
and rapid growth in the oil-to-gas conversion market on Long Island.
The electric services segment had earnings of $77.1 million (56 cents per
share), including 34 cents per share from the Ravenswood generating plant. This
acquisition in June 1999 gives KeySpan over 20% of the generating capacity in
the critical New York City load pocket.
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Gas exploration and production operations from our 64% share of Houston
Exploration Company (NYSE: THX) added $15.8 million (11 cents per share) to
KeySpan's consolidated results. Houston Exploration recently announced a 13%
increase in production for the year, a 4% increase in average realized gas
prices and a proved gas reserve base of 541 BCFe.
KeySpan has invested for future growth in the Canadian mid-stream gas processing
industry, in European gas distribution systems, and domestic and international
gas pipelines. Our energy related investment unit contributed $7.8 million (6
cents per share).
KeySpan continues to build its energy related services unit. This unit is
expanding KeySpan's innovative energy management and services business,
including the installation and servicing of commercial scale fuel cells. We also
are expanding our telecommunications fiber optic system on Long Island, which
links New York City to both Long Island and Europe, through undersea cable
connections. The energy related services business unit showed a loss of 1 cent
per share, reflecting the startup nature of its operations, and we plan to
achieve profitability in 2000.
This solid performance in 1999 confirms the growth ahead for natural gas on
Long Island and New York City, which provides an excellent platform for future
earnings growth. When combined with earnings from our other businesses, the
prospects are good for double-digit earnings growth in the foreseeable future.
This earnings announcement, following on the heels of yesterday's
announcement of our fuel cell arrangement with GE MicroGen, strengthens our
ability to grow our traditional markets, while using new technology to leverage
that growth. This includes the installation and service of commercial fuel
cells.
New Opportunities For 2000:
Our immediate objectives include the post-closing integration of the
business units of Eastern Enterprises within KeySpan, accelerating our marketing
and expansion efforts following the pattern of de-regulation, and developing a
strategic partnership for maximum realization of our fiber-optic capability. We
will also accelerate our existing fuel cells business arrangement with General
Electric.
As previously announced on November 4, 1999, KeySpan Energy and Eastern
Enterprises entered into a definitive merger agreement under which KeySpan
Energy will acquire all of the common stock of Eastern Enterprises for
approximately $2.5 billion ($1.7 billion in equity and $0.8 billion in assumed
debt and preferred stock). The transaction will be accounted for as a purchase
and will be immediately accretive to KeySpan Energy's cash earnings per share.
Various approvals are required to consummate the merger. Application for
approval is pending with the New Hampshire Public Utility Commission.
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"With40% of the U.S. population, and relatively low gas penetration,
KeySpan Energy estimates its new and expanding service territory now
contains over 1 million potential new gas customers", said Mr. Catell. "Our
opportunity is clear. Many customers are connected for cooking only. Others
are adjacent to our system, many are motivated by the environmental benefit
of gas, and many are aware of the reliability of gas supply, particularly
after a period of price volatility in the oil market."
On December 20, 1999, the Board of Directors declared a dividend of 44.5
cents per share, payable on February 1, 2000, to shareholders of record on
January 12, 2000. KeySpan's dividend for the year remains at $1.78. KeySpan
Energy is a holding company operating two utilities that distribute natural gas
to 1.6 million customers in New York City and on Long Island, making it the
fourth largest gas-distribution company in the United States. Other KeySpan
Energy companies market a portfolio of gas-marketing and energy-related services
in the Northeast area and operate electric-generation plants in New York City
and on Long Island, and provide operating and customer services to the 1.1
million electric customers of the Long Island Power Authority. KeySpan Energy's
unregulated energy activities focus on three principal lines of businesses: gas
exploration and development, primarily through The Houston Exploration Company
(NYSE: THX); domestic pipelines and storage; and international activities,
including gas processing in Canada, and gas pipelines and local distribution in
Northern Ireland.
Certain statements contained herein are forward-looking statements, which
reflect numerous assumptions and involve a number of risks and uncertainties.
Actual results may differ materially from those discussed in such statements.
Among the factors that could cause actual results to differ materially are:
available sources and cost of fuel; State and Federal regulatory initiatives
that increase competition, threaten cost and investment recovery, and impact
rate structures; the ability of the Company to successfully reduce its cost
structure; the ability of the Company to successfully integrate acquired
operations; the degree to which the Company develops non-regulated business
ventures; the effect of inflationary trends and increases in interest rates; and
risks detailed from time to time in reports and other documents filed by the
Company with the Securities and Exchange Commission.
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Financial Summary
KeySpan Energy
Three Months Ended Three Months
December 31, 1999 December 31, 1998 (a)
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Operating Revenues $ 911,509,000 $ 723,044,000
Net Income (Loss) $ 83,385,000 $ (186,527,000)
Income (Loss) Applicable to Common Stock $ 74,700,000 $ (195,221,000)
Average Shares Outstanding $ 133,866,000 $ 145,807,000
Basic and Diluted Earnings (Loss) Per Share $ 0.56 $ (1.34)
Twelve Months Ended Nine Months Ended
December 31, 1999 December 31, 1998 (a), (b)
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Operating Revenues $ 2,954,613,000 $ 1,728,481,000
Net Income (Loss) $ 258,611,000 $ (166,933,000)
Income (Loss) Applicable to Common Stock $ 223,859,000 $ (195,537,000)
Average Shares Outstanding $ 138,526,000 $ 145,767,000
Basic and Diluted Earnings (Loss) Per Share $ 1.62 $ (1.34)
(a) Reported results reflect after-tax charges related to the transaction with
the Long Island Power Authority of $97.6 million or $0.67 per share for the
quarter and $107.9 million or $0.74 per share for the nine months ended December
31, 1998. In addition, reported results for both periods reflect charges
associated with an early retirement program and the write-off of a customer
billing system that was in development for $83.5 million after-tax or $0.57 per
share. Further, results for both periods include the Company's share of a
non-cash impairment charge recorded by a Company subsidiary of $54.1 million or
$0.37 per share after-tax to reflect the effect of low wellhead prices on the
valuation of proved gas reserves and a $13.0 million or $0.09 per share
after-tax donation to establish the KeySpan Foundation.
(b) As required by purchase accounting rules, operating revenues include the
results of the former Long Island Lighting Company only for the period April 1,
1998 through May 28, 1998 and of the consolidated entity, KeySpan Energy, for
the period May 29, 1998 through December 31, 1998. Due to the change in the
Company's fiscal year-end from March 31 to December 31 these results exclude
revenues from the Company's prime gas-heating months of January, February and
March.
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