KEYSPAN ANNOUNCES RECORD SECOND QUARTER EARNINGS;
ANTICIPATES 30-35% INCREASE IN 2000 EARNINGS OVER 1999
BROOKLYN, N.Y. JULY 26, 2000 -- KeySpan Corporation (NYSE:KSE) reported
today that its second-quarter earnings for the three-month period ended June 30,
2000 were $47.1 million, or $.35 per share, up from $14.3 million, or $.10 per
share for the same period a year ago. For the six-months to date, earnings were
$210.6 million or $1.57 per share, compared to $148.8 million, or $1.05 per
share for the same period last year.
The significant increase in quarterly earnings was attributable to the
solid performances of all operating units. The primary contributors to the
favorable results were the electric and energy services segments, highlighted by
the Ravenswood electric generating plant, as well as the exploration and
production business. In addition, gas- distribution operations reflected strong
growth in converting customers from oil to gas during this period.
"We are pleased with the continuing strong results from our core
businesses. These results reflect an excellent balance of gas and electric
operations and reinforces our investment in generating assets in the Northeast,"
said Robert B. Catell, chairman and chief executive officer, KeySpan. "The solid
and sustained performance by our major business segments confirms our
customer-focused strategy and provides an excellent platform for continued
growth. At this time, we are optimistic that earnings for 2000 could be 30-35%
higher than the earnings in 1999 based on these strong first-half results. This
estimate does not reflect any impact of the acquisition of Eastern Enterprises,"
Mr. Catell said.
The major highlights of the second-quarter and year-to-date results were:
The gas-distribution businesses serving New York City and Long
Island had earnings in the second quarter of $2.3 million, or $.02 per
share, compared to $1.2 million, or $.01 per share in last year's
second quarter. For the six-month period, earnings were $129.1 million
or $.96 per share, up from $121.9 million or $.86 per share last year.
The increase in earnings reflects significant gas sales growth and
favorable pricing in commercial and industrial markets. Conversions to
natural gas are up more than 60% compared to last year.
The electric-services segment consists of the 2,168-megawatt
Ravenswood generating plant, 4,000 megawatts of generation on Long
Island, and our transmission and distribution contract with the Long
Island Power Authority. Electric services contributed $28.8 million or
$.22 to consolidated earnings per share for the quarter versus $15.0
5
million or $.11 per share last year. For the six-month period,
electric earnings were $71.5 million or $.53 per share, well ahead of
1999's income of $31.6 million or $.22 per share. This increase is due
to the acquisition of the Ravenswood plant in June 1999 and
opportunities created in the deregulated electric market.
Gas exploration and production results reflect both significantly
improved performance and the increase in KeySpan's ownership interest
of Houston Exploration Company (NYSE:THX) to 70% from 64% last year.
During the quarter, the exploration and production segment added $10.5
million, or $.08 per share, compared to $3.3 million, or $.02 per
share in the second quarter of last year. Houston Exploration
benefited significantly from a 47% increase in commodity prices and an
11% increase in production volumes. Year-to-date, earnings were $16.0
million or $.12 per share versus $3.8 million or $.03 per share in
1999.
Our energy-related services segment reported a profit of $17.2 million or $.13
per share versus a loss of $0.9 million or $.01 last year, primarily due to the
fuel-management services provided to Ravenswood. For the six month period,
earnings were $15.6 million or $.12 per share as opposed to a net loss of $2.5
million or $.02 per share last year. During the quarter, the shareholders of
Eastern Enterprises and Energy North approved their acquisitions, and regulatory
approval was received in New Hampshire. Securities and Exchange Commission
approval is pending, but is expected in the fourth quarter of this year,
followed by the closing of the transaction.
KeySpan is a holding company including two utilities that distribute
natural gas under the KeySpan Energy Delivery name to 1.6 million customers in
New York City and on Long Island. KeySpan and Eastern Enterprises [NYSE: EFU]
announced in November 1999 that the companies signed a definitive merger
agreement under which KeySpan will acquire all of the common stock of Eastern
Enterprises, and, as a result, all of the common stock of EnergyNorth [NYSE:EI]
The merger would make KeySpan the largest natural-gas distribution company in
the Northeast with 2.4 million customers. Other KeySpan companies market a
portfolio of unregulated energy-related services in the Northeast, operate
electric-generation plants on Long Island and in New York City, and provide
operating and customer services to one million electric customers of the Long
Island Power Authority. KeySpan also has investments in 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. For more information, visit KeySpan's web site at:
www.keyspanenergy.com.
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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
6
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.
7
KeySpan Energy
Consolidated Summary of Earnings
(In Thousands of Dollars, Except Per Share Amounts)
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Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, 2000 June 30, 1999 June 30, 2000 June 30, 1999
- -----------------------------------------------------------------------------------------------------------------------------------
Revenues
Gas Distribution $ 361,540 $ 281,384 $ 1,166,243 $ 999,682
Gas Exploration and Production 388,695 190,435 723,099 365,293
Electric Services 57,842 35,021 107,218 61,541
Energy Related Services and Other 139,511 36,686 267,641 78,118
- -----------------------------------------------------------------------------------------------------------------------------
Total Revenues 947,588 543,526 2,264,201 1,504,634
- -----------------------------------------------------------------------------------------------------------------------------
Operating Expenses
Purchased gas 197,378 106,145 609,125 430,414
Purchased fuel 72,772 - 140,649 -
Operations and maintenance 378,986 239,642 734,465 472,177
Depreciation, depletion and amortization 73,810 59,383 143,391 117,568
Operating taxes 91,118 77,145 206,541 181,038
- -----------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses 814,064 482,315 1,834,171 1,201,197
- -----------------------------------------------------------------------------------------------------------------------------
Operating Income 133,524 61,211 430,030 303,437
Other Income 8,023 9,424 10,902 26,384
- -----------------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges and Income Taxes 141,547 70,635 440,932 329,821
Interest Charges 42,256 34,893 77,325 70,779
Income Taxes 45,925 12,753 137,997 92,832
- -----------------------------------------------------------------------------------------------------------------------------
Net Income 53,366 22,989 225,610 166,210
Preferred stock dividend requirements 6,286 8,690 14,977 17,379
- -----------------------------------------------------------------------------------------------------------------------------
Earnings for Common Stock $ 47,080 $ 14,299 $ 210,633 $ 148,831
Foreign Currency Adjustment (9,082) 2,425 (9,430) 5,735
- -----------------------------------------------------------------------------------------------------------------------------
Comprehensive Income $ 37,998 $ 16,724 $ 201,203 $ 154,566
- -----------------------------------------------------------------------------------------------------------------------------
Average Common Shares Outstanding (000) 133,889 140,749 133,881 141,865
- -----------------------------------------------------------------------------------------------------------------------------
Basic and Diluted Earnings Per Common Share $ 0.35 $ 0.10 $ 1.57 $ 1.05
- -----------------------------------------------------------------------------------------------------------------------------
***** PRELIMINARY *****PRELIMINARY ***** PRELIMINARY ***** PRELIMINARY ***** PRELIMINARY *****
SIX MONTHS ENDED JUNE 30, 2000 (IN THOUSANDS OF DOLLARS)
- ------------------------------------------------------------------------------------------------------------------------------------
Gas Electric Gas Energy Energy
Exploration Related Related
Distribution Services and Production Services Investments Other Eliminations Total
- ------------------------------------------------------------------------------------------------------------------------------------
Unaffiliate Revenue 1,166,243 723,099 107,218 264,640 3,001 - 2,264,201
Intersegment Revenue - - - 32,774 - - (32,774) -
Total Revenue 1,166,243 723,099 107,218 297,414 3,001 - (32,774) 2,264,201
Cost of Gas 530,629 140,649 - 78,496 - - 749,774
Operations and
Maintenance 213,989 326,554 21,648 182,028 4,854 18,166 (32,774) 734,465
Depreciation,Depletion &
Amortization 57,368 24,561 43,249 4,585 1,008 12,620 143,391
Operating Taxes 124,490 77,185 792 - 192 3,882 206,541
Intercompany
Billings 5,537 22,323 - - - (27,860) -
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Total Expense before FIT 932,013 591,272 65,689 265,109 6,054 6,808 (32,774) 1,834,171
- -----------------------------------------------------------------------------------------------------------------------------------
Operating Income before FIT 234,230 131,827 41,529 32,305 (3,053) (6,808) - 430,030
===================================================================================================================================
Earnings for Common Stock 129,058 71,520 15,963 15,585 5,190 (26,683) - 210,633
===================================================================================================================================
Basic and Diluted Earnings
Per Share 0.96 0.53 0.12 0.12 0.04 (0.20) 1.57
===================================================================================================================================
SIX MONTHS ENDED JUNE 30, 1999 (IN THOUSANDS OF DOLLARS)
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Gas Electric Gas Energy Energy
Exploration Related Related
Distribution Services and Production Services Investments Other Total
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Revenue 999,682 365,293 61,541 77,069 1,049 - 1,504,634
Cost of Gas 408,073 - - 22,341 - - 430,414
Operations and
Maintenance 193,599 203,287 12,285 57,847 3,036 2,123 472,177
Depreciation,Depletion & Amortization 48,605 20,265 35,029 1,370 720 11,579 117,568
Operating Taxes 118,289 57,438 146 3 8 5,154 181,038
Intercompany
Billings 3,916 21,043 - - - (24,959) -
- ----------------------------------------------------------------------------------------------------------------------------------
Total Expense 772,482 302,033 47,460 81,561 3,764 (6,103) 1,201,197
- ----------------------------------------------------------------------------------------------------------------------------------
Operating Income 227,200 63,260 14,081 (4,492) (2,715) 6,103 303,437
==================================================================================================================================
Earnings for Common Stock 121,910 31,622 3,804 (2,500) 3,116 (9,121) 148,831
==================================================================================================================================
Basic and Diluted Earnings Per Share 0.86 0.22 0.03 (0.02) 0.02 (0.06) 1.05
====================================================================================================================================
***** PRELIMINARY *****PRELIMINARY ***** PRELIMINARY ***** PRELIMINARY ***** PRELIMINARY *****
THREE MONTHS ENDED JUNE 30, 2000 (IN THOUSANDS OF DOLLARS)
- ------------------------------------------------------------------------------------------------------------------------------------
Gas Electric Gas Energy Energy
Exploration Related Related
Distribution Services and Production Services Investments Other Eliminations Total
- ------------------------------------------------------------------------------------------------------------------------------------
Unaffiliated Revenue 361,540 388,695 57,842 138,021 1,490 - 947,588
Intersegment Revenue - - - 32,158 - - (32,158) -
Total Revenue 361,540 388,695 57,842 170,179 1,490 - (32,158) 947,588
Cost of Gas 155,997 72,772 - 41,381 - - 270,150
Operations and
Maintenance 101,768 192,276 10,169 92,687 3,197 11,047 (32,158) 378,986
Depreciation,Depletion &
Amortization 30,072 12,296 22,246 2,399 624 6,173 73,810
Operating Taxes 48,994 37,695 254 - 187 3,988 91,118
Intercompany
Billings 2,940 11,441 - - - (14,381) -
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Total Expense 339,771 326,480 32,669 136,467 4,008 6,827 (32,158) 814,064
- ------------------------------------------------------------------------------------------------------------------------------------
Operating Income 21,769 62,215 25,173 33,712 (2,518) (6,827) - 133,524
====================================================================================================================================
Earnings for Common Stock 2,279 28,841 10,465 17,155 1,543 (13,203) - 47,080
====================================================================================================================================
Basic and Diluted Earnings Per
Share 0.02 0.22 0.08 0.13 0.01 (0.11) 0.35
====================================================================================================================================
THREE MONTHS ENDED JUNE 30, 1999 (IN THOUSANDS OF DOLLARS)
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Gas Electric Gas Energy Energy
Exploration Related Related
Distribution Services and Production Services Investments Other Total
- ------------------------------------------------------------------------------------------------------------------------------------
Revenue 281,384 190,435 35,021 36,235 451 - 543,526
Cost of Gas 96,819 - - 9,326 - - 106,145
Operations and
Maintenance 92,050 111,120 6,326 27,817 1,764 565 239,642
Depreciation,Depletion & Amortization 24,351 10,337 17,972 653 336 5,734 59,383
Operating Taxes 45,836 28,447 113 - 1 2,748 77,145
Intercompany
Billings 867 10,398 - - - (11,265) -
- ------------------------------------------------------------------------------------------------------------------------------------
Total Expense 259,923 160,302 24,411 37,796 2,101 (2,218) 482,315
- ------------------------------------------------------------------------------------------------------------------------------------
Operating Income 21,461 30,133 10,610 (1,561) (1,650) 2,218 61,211
====================================================================================================================================
Earnings for Common Stock 1,220 15,037 3,326 (851) 2,605 (7,038) 14,299
====================================================================================================================================
Basic and Diluted Earnings Per Share 0.01 0.11 0.02 (0.01) 0.02 (0.05) 0.10
====================================================================================================================================