EXHIBIT NO. 99-1 NIAGARA MOHAWK HOLDINGS REPORTS STRONGER CASH FLOW IN SECOND QUARTER COMPANY PLANS TO RETIRE $1 BILLION IN DEBT THIS YEAR SYRACUSE, July 29 -- Niagara Mohawk Holdings, Inc. (NYSE: NMK) today reported that cash flow during the second quarter of 1999 continued to improve as a result of last year's Master Restructuring Agreement (MRA) with a group of Independent Power Producers (IPPs), and the POWERCHOICE agreement. Niagara Mohawk Holdings, Inc. is the parent company of Niagara Mohawk Power Corporation (Niagara Mohawk), a regulated energy delivery company with the largest service territory in New York State. Earnings before interest, income taxes, depreciation and amortization (EBITDA) for the 12 months ended June 30, 1999, were $1,297 million, an increase of approximately $500 million compared to the 12 months ended June 30, 1998. The significant improvement in EBITDA is due primarily to a reduction in payments to the IPPs. As expected, the company reported a loss in the second quarter of 1999. The reported loss was $36.0 million, or 19 cents per share, as compared to a loss of $150.6 million, or $1.04 per share, for the second quarter in 1998. Niagara Mohawk's lower aggregate fuel and purchased power costs, partly offset by increased interest charges, improved earnings by $38.3 million, or 20 cents per share, during the second quarter. However, the non-cash amortization of the MRA regulatory asset reduced earnings in the second quarter by $62.8 million, or 34 cents per share. Results in the second quarter of 1999 also reflect the cost of reacquiring approximately $151.7 million of first mortgage bond debt, which reduced earnings in the second quarter by $10.8 million, or 6 cents per share, and is reflected as an extraordinary item. The loss for the second quarter of 1998 reflects the impact of the one-time, non-cash POWERCHOICE charge of $171.1 million after-tax, or $1.18 per share. The company reported a loss of $3.2 million, or a loss of 2 cents per share, for the 12 months ended June 30, 1999, as compared to a loss of $118.5 million, or a loss of 82 cents per share, for the same period in 1998. The loss for the 12-month period ended June 30, 1999, reflects the ongoing impacts of the MRA and POWERCHOICE, while the loss for the 12-month period ended June 30, 1998, includes the impact of the one-time, non-cash POWERCHOICE charge. The increased cash flow from operations, together with the proceeds from the sale of its coal-fired electric generating stations, the expected proceeds from the sale of its remaining non-nuclear generating assets, and a cash refund from the Internal Revenue Service received earlier this year, will allow Niagara Mohawk to retire more than $1 billion in debt this year. "We are committed to follow through on our strategy to retire capital and rebuild shareholder value," said William E. Davis, Chairman and Chief Executive Officer of Niagara Mohawk Holdings. Electric revenues in the second quarter of 1999 were $747.9 million, down 4.5 percent from the second quarter of 1998, primarily due to POWERCHOICE rate reductions and lower wholesale sales. For the 12 months ended June 30, 1999, electric revenues were $3,212.3 million, down 1.9 percent compared to the same period in 1998. Natural gas revenues in the second quarter of 1999 were $122.6 million, down 4.0 percent from the second quarter of 1998, primarily as a result of decreased sales due to warmer weather during the second quarter of 1999. For the 12 months ended June 30, 1999, natural gas revenues were $571.2 million, down 3.5 percent compared to the same period in 1998. The Consolidated Statements of Income will be filed with the Securities and Exchange Commission on Form 8-K. NOTE: This release contains statements that constitute forward-looking information. Such statements are subject to certain risks, uncertainties and assumptions. All of these forward-looking statements are based on estimates and assumptions made by the company's management which, although believed by the company's management to be reasonable, are inherently uncertain. Such forward-looking statements are not guarantees of future performance or results and involve certain risks and uncertainties. Actual results or developments may differ materially from the forward-looking statements as a result of various factors. NIAGARA MOHAWK HOLDINGS, INC. ----------------------------- (Unaudited) EARNINGS REPORT --------------- (IN THOUSANDS OF DOLLARS) THREE MONTHS ENDED SIX MONTHS ENDED TWELVE MONTHS ENDED JUNE 30, JUNE 30, JUNE 30, 1999 1998 1999 1998 1999 1998 ---------- ----------- ----------- ----------- ----------- ----------- Operating Revenues. . . . . . . . . . $ 914,321 $ 944,684 $2,033,455 $2,108,581 $3,917,324 $4,062,806 Operating Income (Loss) . . . . . . . 81,153 (193,538) 333,001 (61,969) 556,007 127,217 Income (Loss) Before Extraordinary Item. . . . . . . . . (25,297) (150,579) 25,535 (139,439) 7,594 (118,464) Extraordinary Item for Loss from Extinguishment of Debt (Net) (10,750) -- (10,750) -- (10,750) -- Net Income (Loss) . . . . . . . . . . ($36,047) ($150,579) $ 14,785 ($139,439) ($3,156) ($118,464) Average Number of Shares of Common Stock Outstanding (in thousands). . . . . . . . . . . 187,365 144,891 187,365 144,657 187,365 144,537 Basic and Diluted Earnings (Loss) per Average Share of Common Stock . ($0.19) ($1.04) $ 0.08 ($0.96) ($0.02) ($0.82) EBITDA. . . . . . . . . . . . . . . . $ 226,656 -- $ 715,253 -- $1,296,646 -- Net Cash Interest . . . . . . . . . . $ 102,356 -- $ 212,006 -- $ 442,795 -- Ratio of EBITDA to Net Cash Interest 2.2 -- 3.4 -- 2.9 -- NOTE 1: The above information is not given in connection with any sale or offer to sell or buy any stock or security. NOTE 2: The company files periodic reports pursuant to the Securities Exchange Act of 1934. Accordingly, with respect to the financial information set forth above, you are requested to refer to such filings for more detailed information. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) In thousands of dollars Three Months Ended Six Months Ended Twelve Months Ended NIAGARA MOHAWK HOLDINGS, INC. June 30, June 30, June 30, 1999 1998* 1999 1998* 1999* 1998* ---------- ----------- ----------- ----------- ----------- ----------- OPERATING REVENUES: Electric. . . . . . . . . . . . . . . . . . . . . . $ 747,886 $ 783,282 $1,597,632 $1,646,451 $3,212,325 $3,273,986 Gas . . . . . . . . . . . . . . . . . . . . . . . . 122,575 127,624 368,850 362,859 571,220 592,198 Non-utility . . . . . . . . . . . . . . . . . . . . 43,860 33,778 66,973 99,271 133,779 196,622 - --------------------------------------------------- ---------- ----------- ----------- ----------- ----------- ----------- 914,321 944,684 2,033,455 2,108,581 3,917,324 4,062,806 ---------- ----------- ----------- ----------- ----------- ----------- OPERATING EXPENSES: Fuel for electric generation. . . . . . . . . . . . 47,010 51,190 104,104 98,388 245,698 205,186 Electricity purchased . . . . . . . . . . . . . . . 219,787 338,001 395,079 712,920 808,344 1,380,210 Gas purchased . . . . . . . . . . . . . . . . . . . 56,526 69,403 171,784 200,076 279,549 355,511 Other operation and maintenance expenses. . . . . . 219,947 214,128 426,290 478,447 896,757 913,017 POWERCHOICE charge. . . . . . . . . . . . . . . . . - 263,227 - 263,227 - 263,227 Amortization of MRA regulatory asset. . . . . . . . 96,624 - 193,249 - 322,082 - Depreciation and amortization . . . . . . . . . . . 94,109 87,951 188,925 176,010 368,834 347,004 Other taxes . . . . . . . . . . . . . . . . . . . . 99,165 114,322 221,023 241,482 440,053 471,434 - --------------------------------------------------- ---------- ----------- ----------- ----------- ----------- ----------- 833,168 1,138,222 1,700,454 2,170,550 3,361,317 3,935,589 ---------- ----------- ----------- ----------- ----------- ----------- OPERATING INCOME (LOSS) . . . . . . . . . . . . . . 81,153 (193,538) 333,001 (61,969) 556,007 127,217 Other income (deductions) . . . . . . . . . . . . . (2,011) 11,085 (3,414) 18,038 27,136 36,678 - --------------------------------------------------- ---------- ----------- ----------- ----------- ----------- ----------- INCOME (LOSS) BEFORE INTEREST CHARGES . . . . . . . 79,142 (182,453) 329,587 (43,931) 583,143 163,895 Interest charges. . . . . . . . . . . . . . . . . . 129,960 65,861 260,235 131,451 525,962 268,477 Preferred dividend requirement of subsidiary. . . . 9,024 9,171 18,048 18,394 36,209 36,983 - --------------------------------------------------- ---------- ----------- ----------- ----------- ----------- ----------- INCOME (LOSS) BEFORE FEDERAL. . . . . . . . . . . . (59,842) (257,485) 51,304 (193,776) 20,972 (141,565) & FOREIGN INCOME TAXES Federal & foreign income taxes. . . . . . . . . . . (34,545) (106,906) 25,769 (54,337) 13,378 (23,101) - --------------------------------------------------- ---------- ----------- ----------- ----------- ----------- ----------- INCOME (LOSS) BEFORE EXTRAORINDARY ITEM . . . . . . (25,297) (150,579) 25,535 (139,439) 7,594 (118,464) EXTRAORDINARY ITEM FOR THE LOSS FROM EXTINGUISHMENT OF DEBT, NET OF INCOME TAXES OF $5,789. . . . . . . . . . . . . . . . . (10,750) - (10,750) - (10,750) - - --------------------------------------------------- ---------- ----------- ----------- ----------- ----------- ----------- NET INCOME (LOSS) . . . . . . . . . . . . . . . . . ($36,047) ($150,579) $ 14,785 ($139,439) ($3,156) ($118,464) - --------------------------------------------------- ========== =========== =========== =========== =========== =========== AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING (IN THOUSANDS) . . . . . . . . 187,365 144,891 187,365 144,657 187,365 144,537 BASIC AND DILUTED EARNINGS (LOSS) PER AVERAGE SHARE OF COMMON STOCK BEFORE EXTRAORDINARY ITEM . . . . . . . . . . . ($0.13) ($1.04) $ 0.14 ($0.96) $ 0.04 ($0.82) EXTRAORDINARY ITEM. . . . . . . . . . . . . . . . . (0.06) - (0.06) - (0.06) - - --------------------------------------------------- ---------- ----------- ----------- ----------- ----------- ----------- BASIC AND DILUTED EARNINGS (LOSS) PER AVERAGE SHARE OF COMMON STOCK. . . . . . . . . . ($0.19) ($1.04) $ 0.08 ($0.96) ($0.02) ($0.82) - --------------------------------------------------- ========== =========== =========== ============ =========== =========== Other Operating Data: Earnings before interest charges, interest income, income taxes, depreciation and amortization, and other regulatory adjustments (EBITDA) . . . . . $ 226,656 - $ 715,253 - $1,296,646 - Net cash interest . . . . . . . . . . . . . . . . . $ 102,356 - $ 212,006 - $ 442,795 - Ratio of EBITDA to net cash interest. . . . . . . . 2.2 - 3.4 - 2.9 - NOTES: * Prior period consolidated financial statements have been prepared from Niagara Mohawk Power Corporation's prior period consolidated financial statements, except that accounts have been reclassified to reflect the Niagara Mohawk Holdings structure. - - The above information is not given in connection with any sale or offer to sell or buy any stock or security. - - The Company files periodic reports pursuant to the Securities Exchange Act of 1934. Accordingly, with respect to the financial information set forth above, you are requested to refer to such filings for more detailed information.