EXHIBIT 99.1 News Release
Vectren Corporation
P.O. Box 209
Evansville, IN 47702-0209
October 23, 2001
FOR IMMEDIATE RELEASE
Vectren Corporation
Reports Third Quarter Results
Evansville, Indiana - Today, Vectren Corporation (NYSE:VVC) announced 2001 third
quarter income from operations of $9.2 million, or $.14 per share, compared to
$18.1 million, or $.29 per share, for the same quarter a year ago. Results for
the current quarter reflect seasonal operating losses for the Ohio gas
distribution operations, which were not reflected in results for the same period
last year, and increased uncollectible accounts expense resulting from last
years increased gas prices.
Reported net income for the quarter was $4.5 million, or $.07 per share,
compared to net income of $15.5 million, or $.25 per share, for the same period
a year ago. The third quarter for both periods reflects the impact of
restructuring costs incurred in the continuing organizational alignment
following the 2000 merger. The current quarter also includes 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 nine months ended September 30, 2001 was $31.2
million, or $.47 per share, compared to $45.9 million, or $.75 per share, for
the same period in 2000. Income from operations for the nine months ended
September 30, 2001 was $52.3 million, or $.79 per share, as compared to $68.8
million, or $1.12 per share a year ago.
"The results for the third quarter of 2001 were consistent with our expectations
and have given us renewed confidence that we are positioned to produce solid
results for 2001 and for 2002 demonstrating the benefits of the business
integration process we have nearly completed," said Niel C. Ellerbrook,
Vectren's Chairman and CEO.
Specific third quarter and year to date items include:
o A restructuring charge of $1.6 million net of tax and additional merger
costs (accelerated depreciation) of $2.5 million net of tax, a total of
$.06 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 $15.2 million net of tax, or $.23 per share.
o Leveraged lease assets were sold during the second 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.
o 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 $.6 million net of tax, or $.01 per share for the quarter.
The impact for the year is a favorable $1.9 million net of tax, or $.03 per
share.
-more-
o Ohio operations which consists of 310,000 gas customers acquired November
1, 2000 resulted in a loss of $.10 in the 3rd quarter primarily due to the
seasonal nature of gas operations.
o Warmer than normal heating weather negatively impacted year to date results
by $.09 per share.
o 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 $.03 per share and, for the full year,
by $.21 per share.
Please SEE ATTACHED unaudited schedules for additional financial information.
In conjunction with Vectren Corporation's third quarter earnings release, you
are invited to listen in real-time to its conference call on October 24 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 to customers throughout the surrounding
region. These services include gas marketing; coal production and sales;
underground pipeline construction and repair; and broadband communication
services. To learn more about Vectren, visit www.vectren.com.
NOTE: Net income for the three and nine-month periods ended September 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-Q
filed with the Securities and Exchange Commission on August 15, 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 Nine Months Twelve Months
Ended September 30 Ended September 30 Ended September 30
------------------ ------------------ ------------------
2001 2000 2001 2000 2001 2000
------ ------ ------ ------ ------ ------
OPERATING REVENUE:
Gas utility $ 97,578 $ 90,156 $ 774,265 $ 391,486 $ 1,201,531 $ 548,972
Electric utility 104,335 97,936 287,564 249,215 374,757 317,824
Energy services and other 156,444 129,763 611,889 300,426 804,991 383,447
--------- -------- ----------- --------- ----------- ----------
Total operating revenues 358,357 317,855 1,673,718 941,127 2,381,279 1,250,243
--------- -------- ----------- --------- ----------- ----------
OPERATING EXPENSES:
Cost of gas sold 51,147 54,948 550,019 229,373 873,186 321,221
Fuel for electric generation 21,011 20,154 56,852 55,619 72,403 72,081
Purchased electric energy 22,565 12,449 69,379 25,085 80,688 27,145
Cost of energy services and other 143,733 123,345 582,527 282,310 773,475 359,613
Other operating 55,218 46,023 175,823 142,620 232,632 193,089
Merger and integration costs 1,326 864 2,088 31,306 11,927 31,306
Restructuring costs 2,580 - 14,382 - 14,382 -
Depreciation and amortization 32,321 26,315 95,586 75,008 126,239 97,190
Taxes other than income taxes 9,309 6,114 39,905 22,170 55,745 30,660
--------- -------- ----------- --------- ----------- ----------
Total operating expenses 339,210 290,212 1,586,561 863,491 2,240,677 1,132,305
--------- -------- ----------- --------- ----------- ----------
OPERATING INCOME 19,147 27,643 87,157 77,636 140,602 117,938
OTHER INCOME:
Equity in earnings of
unconsolidated investments 4,881 495 14,965 11,172 13,649 13,338
Other - net 1,961 6,181 11,512 20,274 15,726 22,522
--------- -------- ----------- --------- ----------- ----------
Total other income 6,842 6,676 26,477 31,446 29,375 35,860
--------- -------- ----------- --------- ----------- ----------
INTEREST EXPENSE 18,870 13,347 62,626 37,940 81,819 50,220
--------- -------- ----------- --------- ----------- ----------
INCOME BEFORE INCOME TAXES 7,119 20,972 51,008 71,142 88,158 103,578
INCOME TAXES 1,353 4,871 14,470 23,527 25,175 33,398
MINORITY INTEREST IN SUBSIDIARY 980 402 810 983 830 1,044
PREFERRED DIVIDEND REQUIREMENTS
OF SUBSIDIARY 268 241 748 776 989 1,045
--------- -------- ----------- --------- ----------- ----------
NET INCOME BEFORE EXTRAORDINARY
LOSS AND CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE, NET $ 4,518 $ 15,458 $ 34,980 $ 45,856 $ 61,164 $ 68,091
EXTRAORDINARY LOSS, NET - - (7,706) - (7,706) -
CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE, NET - - 3,938 - 3,938 -
--------- -------- ----------- --------- ----------- ----------
NET INCOME $ 4,518 $ 15,458 $ 31,212 $ 45,856 $ 57,396 $ 68,091
AVERAGE COMMON SHARES OUTSTANDING 67,512 61,219 66,470 61,257 65,138 61,269
DILUTED COMMON SHARES OUTSTANDING 67,654 61,302 66,616 61,332 65,402 61,345
EARNINGS PER SHARE OF COMMON STOCK
BASIC:
NET INCOME BEFORE EXTRAORDINARY
LOSS AND CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING
PRINCIPLE, NET $ 0.07 $ 0.25 $ 0.53 $ 0.75 $ 0.94 $ 1.11
EXTRAORDINARY LOSS, NET - - (0.12) - (0.12) -
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE, NET - - 0.06 - 0.06 -
-------- --------- ---------- --------- ----------- ----------
EARNINGS PER SHARE OF
COMMON STOCK $ 0.07 $ 0.25 $ 0.47 $ 0.75 $ 0.88 $ 1.11
DILUTED:
NET INCOME BEFORE EXTRAORDINARY
LOSS AND CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE,
NET $ 0.07 $ 0.25 $ 0.53 $ 0.75 $ 0.94 $ 1.11
EXTRAORDINARY LOSS, NET - - (0.12) - (0.12) -
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE, NET - - 0.06 - 0.06 -
--------- --------- ---------- --------- ----------- ----------
EARNINGS PER SHARE OF
COMMON STOCK $ 0.07 $ 0.25 $ 0.47 $ 0.75 $ 0.88 $ 1.11
VECTREN CORPORATION 3 Months 9 Months 12 Months
HIGHLIGHTS Ended Ended Ended
September 30 September 30 September 30
------------------ ---------------- -----------------
(Unaudited) 2001 2000 2001 2000 2001 * 2000
------ ------ ------ ------ ------ ------
Basic and Diluted Earnings Per Average Share:
Utility Group $ (0.01) $ 0.17 $ 0.33 $ 0.43 $ 0.75 $ 0.74
Non-regulated Group
Energy Services 0.05 0.03 0.14 0.11 0.15 0.09
Utility Services 0.03 - 0.05 0.02 0.07 0.03
Communications (0.03) - (0.05) 0.08 (0.06) 0.08
Corporate and Other 0.03 0.05 - 0.11 (0.03) 0.17
----- ----- ----- ----- ----- -----
Total Non-regulated 0.08 0.08 0.14 0.32 0.13 0.37
----- ----- ----- ----- ----- -----
Total Earnings per Average Share ** $ 0.07 $ 0.25 $ 0.47 $ 0.75 $ 0.88 $ 1.11
----- ----- ----- ----- ----- -----
Restructuring Costs 0.02 - 0.13 - 0.13 -
Merger and Integration Costs 0.04 0.04 0.10 0.45 0.24 0.45
Impact of FAS 133 - Accounting
for Derivatives 0.01 - (0.03) - (0.03) -
Extraordinary Loss on Disposition
of Assets - - 0.12 - 0.12 -
Prior Year One-Time Gain - - - (0.08) - (0.08)
----- ----- ----- ----- ----- -----
Income from Operations $ 0.14 $ 0.29 $ 0.79 $ 1.12 $ 1.34 $ 1.48
----- ----- ----- ----- ----- -----
Summary of Impact of Restructuring Costs and Merger and Integration Costs:
(millions, except per share data)
Restructuring Costs $ 2.6 $ - $14.4 $ - $14.4 $ -
Merger and Integration Costs 1.3 0.9 2.1 31.3 11.9 31.3
Depreciation 2.7 3.3 8.2 6.7 13.0 6.7
Taxes (2.5) (1.6) (9.4) (10.2) (15.0) (10.2)
------ ------ ----- ----- ------ -----
Total $ 4.1 $ 2.6 $ 15.3 $ 27.8 $ 24.3 $ 27.8
------ ------ ------- ------- ------- ------
EPS Impact of Restructuring Costs
and Merger and Integration Costs $ 0.06 $0.04 $ 0.23 $ 0.45 $ 0.37 $ 0.45
------- ------ ------- ------- ------- ------
Utility Group $ 0.05 $0.04 $ 0.21 $ 0.44 $ 0.28 $ 0.44
Non-regulated Group $ 0.01 $ - $0.02 $ 0.01 $ 0.09 $ 0.01
EBITDA (millions)
Utility Group $ 40.4 $45.7 $160.0 $ 135.8 $ 240.0 $ 195.0
Non-regulated Group 16.7 14.3 43.9 46.5 50.6 53.9
------ ----- ----- ------ ----- ------
Total $ 57.1 $60.0 $203.9 $ 182.3 $ 290.6 $ 248.9
------ ------ ------- ------- ------- -------
Restructuring Costs 2.6 - 14.4 - 14.4 -
Merger and Integration Costs 1.3 0.9 2.1 31.3 11.9 31.3
Impact of FAS 133-Accounting for
Derivatives 0.9 - (3.1) - (3.1) -
Extraordinary Loss on Disposition
of Assets - - 12.4 - 12.4 -
Prior Year One Time Gain - - - (8.0) - (8.0)
------- ------- ------ ----- ------- -----
EDITA from Operations $ 61.9 $60.9 $229.7 $ 205.6 $ 326.2 $ 272.2
------- ------ ------- ------- ------- -------
Dividends Paid (per common share,
12 months) $ 1.03 $ 0.96
Annualized Dividend $ 1.02 $ 0.97
Dividend Yield (at close) 4.6% 4.8%
Dividend Payout Ratio 117.0% 86.5%
Dividend to Book Value 8.4% 8.4%
Return on Average Shareholder Equity 7.5% 9.7%
Book Value Per Share $ 2.13 $11.59
Market to Book Value (at close) 185% 175%
Common Stock Prices (VVC - NYSE)
High (during second quarter) $ 22.46 $ 20.63
Low (during second quarter) $ 19.76 $ 17.31
Close $ 22.39 $20.31
Price/Earnings Ratio (trailing) 25.4 18.3
Percent Internally Generated Funds -
Utility Group 60% 57%
Ratio of Earnings to Fixed Charges - SEC Method
Consolidated 3.5 2.9
Utility Group 4.3 2.8
* Selected highlights for the twelve months ended September 30, 2001, include
eleven months of operations resulting from the acquisition of the Ohio
operations on October 31, 2000.
** Basic and diluted earnings per share for all periods are equal.
SELECTED UTILITY 3 Months 9 Months 12 Months
OPERATING STATISTICS Ended September 30 Ended September 30 Ended September 30
--------------------- ---------------------- ---------------------
(Unaudited) 2001 2000 2001 2000 2001 2000
--------- ---------- ---------- ---------- ---------- ---------
WEATHER AS A PERCENT OF NORMAL:
Heating Degree Days 124% 124% 95% 88% 103% 88%
Cooling Degree Days 96% 87% 98% 88% 100% 87%
GAS MARGIN (Thousands):
Operating Revenues $ 97,578 $ 90,156 $ 774,265 $ 391,486 $1,201,531 $ 548,972
Cost of Gas 51,147 54,948 550,019 229,373 873,186 321,221
---------- ---------- ---------- ---------- ---------- ----------
Margin $ 46,431 $ 35,208 $ 224,246 $ 162,113 $ 328,345 $ 227,751
========== ========== ========== ========== ========== ==========
ELECTRIC MARGIN (Thousands):
Operating Revenues $ 104,335 $ 97,936 $ 287,564 $ 249,215 $ 374,757 $ 317,824
Cost of Fuel & Purchased Power 43,576 32,603 126,231 80,704 153,091 99,226
---------- ---------- ---------- ---------- ---------- ----------
Margin $ 60,759 $ 65,333 $ 161,333 $ 168,511 $ 221,666 $ 218,598
========== ========== ========== ========== ========== ==========
GAS SOLD & TRANSPORTED (MDth)*:
Residential 3,974 3,166 51,008 33,398 83,335 49,781
Commercial 2,200 1,656 20,150 13,858 32,243 20,102
Contract 19,766 18,810 71,134 60,401 100,297 80,963
---------- ---------- ---------- ---------- ---------- ----------
25,940 23,632 142,292 107,657 215,875 150,846
========== ========== ========== ========== ========== ==========
ELECTRICITY SOLD (MWh):
Residential 476,310 455,105 1,122,121 1,049,165 1,456,119 1,310,814
Commercial 421,101 384,700 1,055,942 992,111 1,399,878 1,303,627
Industrial 662,635 628,457 1,865,383 1,872,225 2,485,130 2,493,436
Miscellaneous Sales 4,431 4,153 13,703 13,425 19,510 19,097
---------- ---------- ---------- ---------- ---------- ----------
Total Retail 1,564,477 1,472,415 4,057,149 3,926,926 5,360,637 5,126,974
Wholesale 909,512 561,478 2,769,179 1,564,209 3,499,256 1,964,098
---------- ---------- ---------- ---------- ---------- ----------
2,473,989 2,033,893 6,826,328 5,491,135 8,859,893 7,091,072
========== ========== ========== ========== ========== ==========
* Gas operating statistics for the twelve months ended September 30, 2001
include eleven months of operations from the acquisition of the Ohio
operations on October 31, 2000.
SELECTED UTILITY 3 Months 9 Months 12 Months
OPERATING STATISTICS Ended September 30 Ended September 30 Ended September 30
----------------------- ----------------------- -----------------------
(Unaudited) 2001 2000 2001 2000 2001 2000
---------- ----------- ---------- ---------- ---------- ----------
GAS OPERATING REVENUES (Thousands):
Residential $ 58,567 $ 54,238 $ 511,045 $ 256,742 $ 790,039 $ 364,166
Commercial 23,577 22,365 186,909 92,353 285,340 126,885
Contract 13,598 12,077 69,988 36,250 117,627 49,522
Miscellaneous Revenue 1,836 1,476 6,323 6,141 8,525 8,399
---------- ---------- ---------- ---------- ---------- ----------
$ 97,578 $ 90,156 $ 774,265 $ 391,486 $1,201,531 $ 548,972
========== ========== ========== ========== ========== ==========
ELECTRIC OPERATING REVENUES (Thousands):
Residential $ 32,493 $ 31,687 $ 75,624 $ 71,455 $ 96,984 $ 89,602
Commercial 21,087 20,472 55,906 53,752 75,749 70,773
Industrial 21,303 20,002 62,235 60,367 84,502 81,551
Miscellaneous Revenue 539 2,764 2,897 7,108 4,470 7,064
---------- ---------- ---------- ---------- ---------- ----------
Total Retail 75,422 74,925 196,662 192,682 261,705 248,990
Wholesale 28,913 23,011 90,902 56,533 113,052 68,834
---------- ---------- ---------- ---------- ---------- ----------
$ 104,335 $ 97,936 $ 287,564 $ 249,215 $ 374,757 $ 317,824
========== ========== ========== ========== ========== ==========
AVERAGE GAS CUSTOMERS**:
Residential 848,700 559,993 857,758 565,157 857,260 563,578
Commercial 78,934 56,024 79,673 56,666 79,627 56,533
Contract 3,732 1,246 3,731 1,250 3,732 1,247
---------- ---------- ---------- ---------- ---------- ----------
931,366 617,264 941,162 623,073 940,619 621,358
========== ========== ========== ========== ========== ==========
AVERAGE ELECTRIC CUSTOMERS:
Residential 115,169 112,873 115,028 111,288 114,930 110,893
Commercial 17,410 17,006 17,327 16,716 17,292 16,590
Industrial 169 164 166 167 166 169
---------- ---------- ---------- ---------- ---------- ----------
132,748 130,043 132,521 128,171 132,388 127,652
========== ========== ========== ========== ========== ==========
* Gas operating statistics for the twelve months ended September 30, 2001
include eleven 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
September 30, 2001 include 310,328; 311,277; and 311,009,
respectively,for the Ohio operations.