Exhibit 99.1
KEYSPAN NEWS
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KeySpan Corporation For Immediate Release
Contacts: Investors Media Relations
George Laskaris 718.403.2503
718.403.2526
KeySpan Announces Strong 1st Quarter Results
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Excellent Gas Performance Drives Results
KeySpan/National Grid Transaction Moving Forward as Planned
Brooklyn, New York, April 27, 2007 - KeySpan Corporation (NYSE: KSE) announced
consolidated earnings of $213.4 million or $1.22 per share for the first quarter
of 2007, as compared to $208.0 million or $1.19 per share for the same period
last year. These first quarter favorable results were primarily driven by the
strong performance in the gas businesses of New York, Long Island and New
England as well as the Energy Services and Investments segments.
"We are extremely pleased with our strong first quarter results which
demonstrates the strength of our core gas heating business which benefited from
strong customer demand," said Robert B. Catell, Chairman and CEO. "In addition,
gas customer growth is ahead of plan, again demonstrating the organic growth
potential in our service territories. We are on track to achieve our goal of
adding approximately $50 million in new gross profit margin for 2007. Our
electric business reported lower results primarily due to increased competition
in New York City as well as lower hedging gains compared to last year. As a
result of our maintenance and upgrading programs, our gas and electric systems
performed very reliably during the winter heating season as we broke gas sendout
records in both our New York and Long Island service territories. In addition,
we continued to maintain our strong financial position with our debt to total
capitalization ratio remaining below 50%."
The previously announced acquisition of KeySpan by National Grid continues to
move forward as the required federal and state regulatory filings and approvals
are progressing. All federal and shareholder approvals have been received. The
New York and New Hampshire state regulatory approvals are the remaining two
necessary to close the transaction. In both these jurisdictions, procedural
schedules have been set and the cases are well underway. In New Hampshire the
parties have reached a settlement in principle, for approval of the transaction.
In addition, the companies have reached an agreement with the Long Island Power
Authority to continue to operate its transmission and distribution system once
the transaction is approved.
"I am very encouraged by the settlement reached in New Hampshire as well as the
recent agreement National Grid and KeySpan reached with LIPA," said Mr. Catell.
"The economies of scale and increased purchasing power of National Grid and
KeySpan will generate savings for gas and electric consumers in New Hampshire
and to LIPA's customers on Long Island as well as provide environmental benefit
through upgrades to our power plants. Our integration teams have also been busy
developing the strategies and organizational structures that will support the
combined Company. The process of selecting the senior management team is now
virtually complete. This transaction will deliver significant value to
shareholders and provide benefits to customers of both companies. I am looking
forward to KeySpan becoming an important part of one of the largest and foremost
energy companies in the world."
Segment Highlights
Results from continuing operations in 2007 and 2006 are reported on an Operating
Income basis as follows:
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Operating Income / (Loss) [$ millions] 1st Quarter 2007 1st Quarter 2006
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Gas Distribution 402.5 336.4
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Electric Services (1.5) 65.0
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Energy Investments 5.1 3.0
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Energy Services 1.4 (0.4)
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Total Operating Segments 407.5 404.0
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Other (8.0) (14.9)
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Total Operating Income 399.5 389.1
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Key Operating Income Drivers by Segment
o The Gas Distribution segment, which serves New York City, Long Island and
New England, reported operating income of $402.5 million in the quarter, an
increase of $66.1 million or 20%, compared to the same period last year.
These results benefited primarily from increased customer demand from the
colder weather, new customer additions and higher sales in our "large
volume" heating market. For the quarter, weather was 3% colder than normal
in all our territories, and 15% and 11% colder than last year in our New
York and New England territories, respectively. The company continued to
significantly add customers as KeySpan completed approximately 8,800 gas
installations during the quarter, adding approximately $9 million in new
gross profit margin. Net revenues for the quarter increased $71.7 million,
partially offset by increased operating expenses of $5.6 million, primarily
due to higher property taxes.
o The Electric Services segment owns and operates 6650 MW of generation in
the New York City and Long Island "load pockets" and manages the Long
Island Power Authority's transmission and distribution system under
long-term contracts. This segment reported an operating loss of $1.5
million for the first quarter, compared to operating income of $65 million
for the same period last year. This reduction in operating income reflects
lower net energy and capacity revenues of $53.8 million from the Ravenswood
generating plant, primarily from lower hedging gains in the energy market
and the addition of 1000 MW of new generation in the New York City market.
The energy margins in 2006 benefited from large oil to gas price
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differentials and the dual fuel nature of the Ravenswood plant. These
results also reflect an increase in operating expenses of approximately $8
million caused by higher generator overhaul costs. In addition, the segment
realized an expected loss of $9.9 million on the financial capacity swap.
KeySpan entered into a three year financial capacity swap with Morgan
Stanley in 2006, which settles on a monthly basis.
o The Energy Investments segment reported operating income of $5.1 million,
compared to $3 million for the same period in 2006. This segment includes
the Company's complementary assets in natural gas pipelines, storage and
other energy related investments as well as production and development
investments. These results reflect higher earnings from TransGas, the LNG
trucking operations, due to the colder first quarter weather.
o The Energy Services segment achieved operating income of $1.4 million
compared to a loss of $0.4 million last year. This enhanced performance
reflects higher profits in our services and communications businesses. This
segment includes companies that provide energy related services to homes
and businesses in the New York City and Boston metropolitan areas.
Financial Update
The Company was able to reduce interest expense by approximately $5 million for
the quarter compared to the same period last year. This reflects the success of
KeySpan's interest rate risk mitigation policy, where over 90% of our debt is
now fixed, limiting our exposure to rising interest rates.
At the end of the first quarter, the Company's debt to total capitalization
ratio improved to 48.6%, as compared to 48.9% for the same period last year,
reinforcing its "A" quality credit rating and low business risk profile.
The Company declared a quarterly common stock dividend of $0.475 per share,
payable May 1, 2007, to shareholders of record as of April 18, 2007. This
dividend payment reflects an annual increase of $0.04 per share, and is the 36th
consecutive period of paying a dividend as KeySpan. The new annual dividend rate
of $1.90 per share is supported by the Company's strong cash flows and provides
a yield to shareholders of approximately 4.5%.
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Investors are invited to listen to the KeySpan Corporation 2007 1st Quarter
Earnings Conference Call on:
Friday, April 27, 2007, at 10:30 AM (EST)
Live Dial-In Number: (800) 236-8506
International Dial Number: (719)457-2681
Replay will begin two hours after completion of the call until May 1, 2007
Replay Number: (888)203-1112
International Replay Number: (719)457-0820
Conference Call ID: 2244192
Audio webcast available at http://investor.keyspanenergy.com
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A member of the Standard & Poor's 500 Index, KeySpan Corporation (NYSE:KSE) is
the largest distributor of natural gas in the Northeast United States, operating
regulated gas utilities in New York, Massachusetts and New Hampshire, serving
2.6 million customers. These customer-focused businesses are complemented by a
portfolio of service companies which offer energy-related products, services and
solutions to homes and businesses.
KeySpan is also the largest electric generator in New York State. The Company
owns approximately 6,650 megawatts of generating capacity, providing power to
1.1 million customers of the Long Island Power Authority on Long Island and
supplying approximately 25 percent of New York City's capacity needs. In
addition to these assets, KeySpan has strategic investments in pipeline
transportation, distribution and storage. KeySpan has headquarters in Brooklyn,
New England and Long Island. For more information, visit KeySpan's web site at
www.keyspanenergy.com.
Certain statements contained herein are forward-looking statements, which
reflect numerous assumptions and estimates and involve a number of risks and
uncertainties. For these statements, we claim the protection of the safe harbor
for forward-looking statements provided by the Private Securities Litigation
Reform Act of 1995. There are possible developments that could cause our actual
results to differ materially from those forecasted or implied in the
forward-looking statements. You are cautioned not to place undue reliance on
these forward-looking statements, which are current only as of the date of this
filing. We disclaim any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. Among the factors that could cause actual results to differ
materially are: general economic conditions, especially in the Northeast United
States; available sources and costs of fuel; volatility of energy prices in a
deregulated market environment as well as in the source of natural gas and fuel
used to generate electricity; potential write-down of the carrying value of our
investment in certain unregulated subsidiaries and natural gas properties when
natural gas prices are depressed or if we have significant downward revisions in
our estimated proved gas reserves; federal and state regulatory initiatives that
increase competition, threaten cost and investment recovery and impact rate
structure; our ability to successfully reduce our cost structures;
implementation of new accounting standards; the degree to which we develop
unregulated business ventures, as well as federal and state regulatory policies
affecting our ability to retain and operate those business ventures; our ability
to identify and make complementary acquisitions, as well as the successful
integration of those acquisitions; inflationary trends and interest rates; and
risks detailed from time to time in reports and other documents filed by us with
the Securities and Exchange Commission.
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KeySpan Corporation
Consolidated Statement of Income
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Three Months Ended
March 31,
(In Millions of Dollars, Except Per Share Amounts) 2007 2006
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Revenues
Gas Distribution $ 2,415.5 $ 2,180.1
Electric Services 384.4 424.8
Energy Services 52.6 48.4
Energy Investments 10.0 7.8
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Total Revenues 2,862.5 2,661.1
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Operating Expenses
Purchased gas for resale 1,672.7 1,511.4
Fuel and purchased power 128.2 130.0
Operations and maintenance 430.9 406.0
Depreciation, depletion and amortization 112.3 110.3
Operating taxes 122.6 118.2
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Total Operating Expenses 2,466.7 2,275.9
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Income from equity investments 3.7 3.4
Gain on sale of property - 0.5
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Operating Income 399.5 389.1
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Other Income and (Deductions)
Interest charges (61.6) (66.2)
Other 8.2 11.4
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Total Other Income and (Deductions) (53.4) (54.8)
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Income Taxes
Current 177.2 159.4
Deferred (44.5) (33.1)
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Total Income Taxes 132.7 126.3
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Earnings for Common Stock $ 213.4 $ 208.0
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Basic Earnings Per Share $ 1.22 $ 1.19
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Diluted Earnings Per Share $ 1.21 $ 1.18
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Average Common Shares Outstanding (000) 175,600 174,704
Average Common Shares Outstanding - Diluted (000) 176,855 175,743
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KeySpan Corporation
Segment Information
Three Months Ended March 31, 2007
(In Millions of Dollars)
Total
Gas Electric Energy Energy Operating Recon- Total
Distribution Services Services Investments Segments ciliations Consolidation
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Unaffiliated Revenues 2,415.5 384.4 52.6 10.0 2,862.5 - 2,862.5
Intersegment Revenues - 3.9 2.1 1.3 7.3 (7.3) -
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2,415.5 388.3 54.7 11.3 2,869.8 (7.3) 2,862.5
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Operation Expenses
Purchased Gas 1,673.6 0.4 - - 1,674.0 (1.3) 1,672.7
Purchased Fuel - 131.9 - 0.1 132.0 (3.8) 128.2
Operations and Maintenance 191.2 185.3 50.8 6.3 433.6 (2.7) 430.9
Depreciation, Depletion and Amortization 79.9 25.1 2.1 2.2 109.3 3.0 112.3
Operating Taxes 68.3 47.1 0.4 1.3 117.1 5.5 122.6
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Total Operating Expenses 2,013.0 389.8 53.3 9.9 2,466.0 0.7 2,466.7
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Income From Equity Investments - - - 3.7 3.7 - 3.7
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Operating Income 402.5 (1.5) 1.4 5.1 407.5 (8.0) 399.5
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KeySpan Corporation
Segment Information
Three Months Ended March 31, 2006
(In Millions of Dollars)
Total
Gas Electric Energy Energy Operating Recon- Total
Distribution Services Services Investments Segments ciliations Consolidation
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Unaffiliated Revenues 2,180.1 424.8 48.4 7.8 2,661.1 - 2,661.1
Intersegment Revenues - - 2.5 1.3 3.8 (3.8) -
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2,180.1 424.8 50.9 9.1 2,664.9 (3.8) 2,661.1
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Operation Expenses
Purchased Gas 1,512.6 - - - 1,512.6 (1.2) 1,511.4
Purchased Fuel - 130.0 - - 130.0 - 130.0
Operations and Maintenance 190.4 155.3 48.9 6.7 401.3 4.7 406.0
Depreciation, Depletion and Amortization 75.9 27.1 2.0 1.7 106.7 3.6 110.3
Operating Taxes 64.8 47.4 0.4 1.3 113.9 4.3 118.2
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Total Operating Expenses 1,843.7 359.8 51.3 9.7 2,264.5 11.4 2,275.9
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Income From Equity Investments - - - 3.4 3.4 - 3.4
Gain on Sale of Property - - - 0.2 0.2 0.3 0.5
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Operating Income 336.4 65.0 (0.4) 3.0 404.0 (14.9) 389.1
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