News Release
Vectren Corporation
P.O. Box 209
Evansville, IN 47702-0209
July 23, 2002
FOR IMMEDIATE RELEASE
Vectren Corporation
Reports 2nd Quarter 2002 Results
Evansville, Indiana - Today, Vectren Corporation (NYSE:VVC) reported 2002 second
quarter earnings of $14.3 million, or $.21 per share. These results are in line
with expectations and compare to a net loss of $(17.7) million, or $(.26) per
share, for the June 30 quarter 2001. The 3 months ending June 30, 2001 included
nonrecurring merger, integration, and restructuring costs and the extraordinary
loss associated with the disposition of certain leveraged lease assets, all
totaling $16.7 million.
"The strong second quarter results from our utility group reflect the benefit of
better than normal weather for our gas and electric operations and the continued
integration of our regulated business. Our efforts to position our regulated
operations as a premier low cost provider are continuing to materialize," said
Niel C. Ellerbrook, Vectren's Chairman and CEO. "Although earnings from our non-
regulated group are down slightly as compared to last year, our energy marketing
group, which owns and manages mid-stream natural gas assets and provides both
demand and supply side energy management services continued to deliver solid
results," added Ellerbrook.
Specific highlights for the quarter include:
o Net income attributed to utility operations for the second quarter of
2002 was $9.1 million. This compares to a loss of $(4.5) million before
nonrecurring items for the same period in 2001. Improvement in the 2002
second quarter results reflect better than normal weather, the catch up
accrual of carrying costs on the Company's demand side management programs
consistent with an existing Indiana Utility Regulatory Commission rate
order and continued benefit from merger synergies. During April and May,
weather impacting heating sales was approximately 10% colder than normal.
During June, the weather impacting cooling sales was approximately 16%
warmer than normal.
o Net income attributed to nonregulated operations was $4.0 million for
the second quarter 2002 as compared to $5.5 million before nonrecurring
items for the same period last year. The increase of approximately $1.9
million in the Energy Marketing and Services Group was more than offset by
decreased interest and leveraged lease income due to the divestiture of
notes receivable and leveraged lease investments in 2001. In addition,
earnings decreased due to a change in Indiana tax laws, enacted in June
2002, resulting from the recalculation of deferred tax assets and
liabilities.
Please SEE ATTACHED unaudited schedules for additional financial information.
Live Webcast and Replay:
Vectren Corporation will provide more detail on second quarter results on a
conference call for analysts scheduled at 10:00 a.m. ET (9:00 a.m. CT),
Thursday, July 25, 2002. You are invited to listen to the live Webcast and view
the supporting slides by accessing the Investor Relations link on Vectren's Web
site at www.vectren.com. Interested parties may also view the slide presentation
and listen to the Webcast replay via Vectren's Web site beginning two hours
after the conclusion of the Webcast. A tape-recorded replay of the call will be
available two hours after completion of the conference through Thursday, August
1, 2002. To access the replay dial 719-457-0820 and enter the conference
identification number 439245.
Vectren Corporation is an energy and applied technology holding company head-
quartered in Evansville, Indiana. Vectren's energy delivery subsidiaries provide
gas and/or electricity to approximately 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 include gas marketing and related services; coal production and
sales; utility infrastructure services; and broadband communication services. To
learn more about Vectren, visit www.vectren.com.
NOTE: Net income for the three and six-month periods ended June 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.
Safe Harbor for Forward Looking Statements:
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 this news release and subsequent 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-K filed with the Securities and Exchange
Commission on March 29, 2002.
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 Six Months Twelve Months
Ended June 30 Ended June 30 Ended June 30
---------------------- ---------------------- ------------------------
2002 2001 2002 2001 2002 2001
----------- --------- ---------- ---------- ----------- -----------
OPERATING REVENUE:
Gas utility $ 139,797 $ 154,657 $ 496,901 $ 678,314 $ 850,106 $ 1,195,737
Electric utility 158,924 95,020 285,724 183,229 481,361 368,359
Energy services and other 88,254 183,456 239,542 455,446 543,722 778,662
----------- --------- ---------- ---------- ----------- -----------
Total operating revenues 386,975 433,133 1,022,167 1,316,989 1,875,189 2,342,758
----------- --------- ---------- ---------- ----------- -----------
OPERATING EXPENSES:
Cost of gas sold 81,824 94,800 311,860 498,949 521,212 877,064
Fuel for electric generation 19,069 17,857 36,859 35,842 75,418 76,077
Purchased electric energy 87,013 33,662 146,836 46,815 191,687 70,573
Cost of energy services and other 79,171 177,015 218,523 438,795 499,891 748,842
Other operating 57,450 58,974 114,028 120,529 230,339 223,969
Merger and integration costs - - - 762 2,046 11,465
Restructuring costs - 11,802 - 11,802 7,246 11,802
Depreciation and amortization 28,714 31,794 57,788 63,265 118,198 120,233
Taxes other than income taxes 10,241 11,053 28,498 30,596 51,454 52,550
----------- --------- ---------- ---------- ----------- -----------
Total operating expenses 363,482 436,957 914,392 1,247,355 1,697,491 2,192,575
----------- --------- ---------- ---------- ----------- -----------
OPERATING INCOME 23,493 (3,824) 107,775 69,634 177,698 150,183
OTHER INCOME:
Equity in earnings of unconsolidated investments 3,729 4,152 6,077 10,084 10,097 9,806
Other - net 7,751 5,092 9,143 7,925 17,476 17,534
----------- --------- ---------- ---------- ----------- -----------
Total other income 11,480 9,244 15,220 18,009 27,573 27,340
----------- --------- ---------- ---------- ----------- -----------
INTEREST EXPENSE 19,307 20,937 39,151 43,756 77,974 75,513
----------- --------- ---------- ---------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES 15,666 (15,517) 83,844 43,887 127,297 102,010
INCOME TAXES 1,450 (5,659) 24,186 13,116 29,687 28,692
MINORITY INTEREST IN SUBSIDIARY (38) (149) (247) (171) 544 252
PREFERRED DIVIDEND REQUIREMENTS OF SUBSIDIARY 2 242 10 480 288 962
----------- --------- ---------- ---------- ----------- -----------
NET INCOME BEFORE EXTRAORDINARY LOSS AND CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE, NET $ 14,252 $ (9,951)$ 59,895 $ 30,462 $ 96,778 $ 72,104
EXTRAORDINARY LOSS, NET - (7,706) - (7,706) - (7,706)
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE, NET - - - 3,938 - 3,938
----------- --------- ---------- ---------- ----------- -----------
NET INCOME (LOSS) $ 14,252 $ (17,657)$ 59,895 $ 26,694 $ 96,778 $ 68,336
=========== ========= ========== ========== =========== ===========
AVERAGE COMMON SHARES OUTSTANDING 67,578 67,710 67,557 66,165 67,539 63,708
DILUTED COMMON SHARES OUTSTANDING 67,866 67,710 67,849 66,295 67,749 63,820
EARNINGS (LOSS) PER SHARE OF COMMON STOCK
BASIC:
NET INCOME BEFORE EXTRAORDINARY LOSS AND
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE, NET $ 0.21 $ (0.15)$ 0.89 $ 0.46 $ 1.43 $ 1.13
EXTRAORDINARY LOSS, NET - (0.11) - (0.12) - (0.12)
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE, NET - - - 0.06 - 0.06
----------- ---------- ---------- ---------- ----------- -----------
EARNINGS (LOSS) PER SHARE OF COMMON STOCK $ 0.21 $ (0.26)$ 0.89 $ 0.40 $ 1.43 $ 1.07
DILUTED:
NET INCOME BEFORE EXTRAORDINARY LOSS AND
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE, NET $ 0.21 $ (0.15)$ 0.88 $ 0.46 $ 1.43 $ 1.13
EXTRAORDINARY LOSS, NET - (0.11) - (0.12) - (0.12)
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE, NET - - - 0.06 - 0.06
----------- ---------- ---------- ---------- ----------- -----------
EARNINGS (LOSS) PER SHARE OF COMMON STOCK $ 0.21 $ (0.26)$ 0.88 $ 0.40 $ 1.43 $ 1.07
=========== ========== ========== ========== =========== ===========
VECTREN UTILITY HOLDINGS
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except for share amounts)
(Unaudited)
Three Months Six Months Twelve Months
Ended June 30 Ended June 30 Ended June 30
------------------------- ------------------------ --------------------------
2002 2001 2002 2001 2002 2001
OPERATING REVENUE:
Gas utility $ 139,797 $ 154,657 $ 496,901 $ 678,314 $ 850,106 $ 1,195,737
Electric utility 158,924 95,020 285,724 183,229 481,361 368,359
----------- ---------- ---------- ---------- ------------ ------------
Total operating revenues 298,721 249,677 782,625 861,543 1,331,467 1,564,096
----------- ---------- ---------- ---------- ------------ ------------
OPERATING EXPENSES:
Cost of gas sold 82,126 94,800 312,478 498,949 521,829 877,064
Fuel for electric generation 19,069 17,857 36,859 35,842 75,418 76,077
Purchased electric energy 87,013 33,662 146,836 46,815 191,687 70,573
Other operating 55,266 61,029 111,060 122,771 222,924 234,952
Merger and integration costs - - - 709 2,086 4,367
Restructuring costs - 10,805 - 10,805 4,205 10,805
Depreciation and amortization 23,933 24,758 47,536 49,527 94,895 91,606
Income Taxes 3,616 (7,333) 25,915 10,475 38,120 31,115
Taxes other than income taxes 10,202 10,615 28,125 29,751 49,698 51,005
------------ ---------- ----------- ---------- ------------ ------------
Total operating expenses 281,225 246,193 708,809 805,644 1,200,862 1,447,564
------------ ---------- ----------- ---------- ------------ ------------
OPERATING INCOME 17,496 3,484 73,816 55,899 130,605 116,532
OTHER INCOME:
Equity in earnings of unconsolidated affiliates (404) - (979) - (979) -
Other - net 8,396 1,136 10,121 177 14,911 3,073
------------ ---------- ----------- ---------- ------------ ------------
Total other income 7,992 1,136 9,142 177 13,932 3,073
------------ ---------- ----------- ---------- ------------ ------------
INTEREST EXPENSE 16,354 17,252 33,236 36,735 66,660 63,170
------------ ---------- ----------- ---------- ------------ ------------
PREFERRED DIVIDEND REQUIREMENTS OF SUBSIDIARY 2 242 10 480 288 961
------------ ---------- ----------- ---------- ------------ ------------
INCOME BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE, NET $ 9,132 $ (12,874) $ 49,712 $ 18,861 $ 77,589 $ 55,474
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE, NET - - - 3,938 - 3,938
------------ ---------- ----------- ---------- ------------ ------------
NET INCOME $ 9,132 $ (12,874) $ 49,712 $ 22,799 $ 77,589 $ 59,412
============ ========== =========== ========== ============ ============
VECTREN CORPORATION 3 Months 6 Months 12 Months
HIGHLIGHTS Ended June 30 Ended June 30 Ended June 30
--------------------------------------------------------------
(millions, except per share amounts)
(Unaudited) 2002 2001 2002 2001 2002 * 2001
- ------------------------------------------------------------------------------------------------------
Reported Earnings:
Utility Group $ 9.1 $ (12.9) $ 49.7 $ 22.8 $ 77.6 $ 59.4
Non-regulated Group 4.0 (2.6) 9.0 4.9 16.4 13.6
Corporate and Other 1.2 (2.2) 1.2 (1.0) 2.8 (4.7)
---------- ---------- --------- --------- -------- ---------
Vectren Consolidated $ 14.3 $ (17.7) $ 59.9 $ 26.7 $ 96.8 $ 68.3
Merger, Integration and Restructuring Costs:
Utility Group $ 0.0 $ 8.4 $ 0.0 $ 10.7 $ 6.3 $ 18.0
Non-regulated Group 0.0 0.4 0.0 0.4 1.8 0.6
Corporate and Other 0.0 0.2 0.0 0.2 0.4 4.3
---------- ---------- --------- --------- -------- ---------
Total 0.0 9.0 0.0 11.3 8.5 22.9
Other Non-Recurring Items:
Utility Group-Cumulative Effect
of Adoption of FAS 133 $ - $ - $ - $ 3.9 $ - $ 3.9
Non-regulated Group-Extraordinary
Loss in 2001 - (7.7) - (7.7) - (7.7)
---------- ---------- --------- --------- -------- ---------
Income From Operations:
Utility Group $ 9.1 $ (4.5) $ 49.7 $ 29.6 $ 83.9 $ 73.5
Non-regulated Group
Energy Marketing and Services 3.6 1.7 8.0 6.7 13.3 8.8
Coal Mining 2.9 3.3 5.8 5.2 14.0 8.1
Utility Infrastructure Services - (0.2) (0.5) (0.9) (0.2) (0.8)
Broadband - - 0.1 (0.1) - (0.1)
Other Businesses (2.5) 0.7 (4.4) 2.1 (8.9) 5.9
---------- ---------- --------- --------- -------- ---------
Total Non-regulated Group 4.0 5.5 9.0 13.0 18.2 21.9
Corporate and Other 1.2 (2.0) 1.2 (0.8) 3.2 (0.4)
---------- ---------- --------- --------- -------- ---------
Vectren Consolidated $ 14.3 $ (1.0) $ 59.9 $ 41.8 $105.3 $ 95.0
========== ========== ========= ========= ======== =========
Vectren Selected Highlights
12 months 12 months
Ended Ended
June 30 June 30
2002 2001
-------- --------
Dividends Paid
(per common share, 12 months) $ 1.05 $ 1.02
Annualized Dividend $ 1.06 $ 1.02
Dividend Yield (at close) 4.2% 4.9%
Dividend Payout Ratio 73.4% 95.3%
Dividend to Book Value 8.2% 8.2%
Return on Average Sharehold1er 11.3% 8.8%
Equity
Book Value Per Share $ 12.89 $ 12.41
Market to Book Value (at close) 195% 167%
Common Stock Prices (VVC - NYSE)
High $ 26.10 $ 26.50
Low $ 19.76 $ 17.31
Close $ 25.10 $ 20.70
Price/Earnings Ratio (trailing) 17.6 19.3
Percent Internally Generated
Funds - Utility Group 74% 70%
Ratio of Earnings to Fixed
Charges - SEC Method
Consolidated 2.6 4.1
Utility Group 2.7 5.3
* Selected highlights for the twelve months ended June 30, 2001, include eight
months of operations resulting from the acquisition of the Ohio operations
on October 31, 2000.
VECTREN CORPORATION
SELECTED GAS DISTRIBUTION 3 Months 6 Months 12 Months
OPERATING STATISTICS Ended June 30 Ended June 30 Ended June 30
--------------------- ------------------ ----------------------
(Unaudited) 2002 2001 2002 2001 2002 * 2001
- ------------------------------------------------- ---------- --------- -------- ---------- -----------
GAS OPERATING REVENUES (Thousands):
Residential $ 91,842 $ 100,959 $ 336,978 $452,478 $ 565,356 $ 790,033
Commercial 31,832 36,227 113,895 163,333 194,741 282,532
Contract 15,386 13,554 43,778 50,344 91,656 109,675
Miscellaneous Revenue 737 3,917 2,250 12,159 (1,647) 13,497
---------- ---------- ---------- -------- ---------- -----------
$ 139,797 154,657 $ 496,901 $678,314 $ 850,106 $ 1,195,737
========== ========== ========== ======== ========== ===========
GAS MARGIN (Thousands):
Operating Revenues $ 139,797 $ 154,657 $ 496,901 $678,314 $ 850,106 $ 1,195,737
Cost of Gas 82,126 94,800 312,478 498,949 521,829 877,064
---------- ---------- ---------- -------- ---------- -----------
Margin $ 57,671 $ 59,857 $ 184,423 $179,365 $ 328,277 $ 318,673
========== ========== ========== ======== ========== ===========
GAS SOLD & TRANSPORTED (MDth):
Residential 11,108 8,974 47,172 47,034 74,475 82,528
Commercial 4,180 3,442 17,321 17,950 27,934 31,699
Contract 20,228 21,259 48,920 51,368 94,413 99,340
---------- ---------- --------- ------- -------- ---------
35,516 33,675 113,413 116,352 196,822 213,567
========== ========== ========= ======= ======== =========
AVERAGE GAS CUSTOMERS:
Residential 869,359 859,531 871,982 862,286 863,637 856,579
Commercial 79,623 79,808 80,072 80,041 79,719 79,612
Contract 4,164 3,723 4,220 3,732 4,261 3,741
---------- ---------- --------- ------- ---------- ---------
953,146 943,062 956,274 946,059 947,617 939,932
========== ========== ========= ======= ========== =========
WEATHER AS A PERCENT OF NORMAL:
Heating Degree Days 110% 70% 91% 94% 89% 103%
* Gas operating statistics for the twelve months ended June 30, 2001
include eight months of operations from the acquisition of the Ohio
operations on October 31, 2000.
SELECTED ELECTRIC 3 Months 6 Months 12 Months
OPERATING STATISTICS Ended June 30 Ended June 30 Ended June 30
-------------------- ------------------- ----------- ----------
(Unaudited) 2002 2001 2002 2001 2002 2001
- ---------------------------------------- ----------- -------- --------- --------- ----------- ----------
ELECTRIC OPERATING REVENUES (Thousands):
Residential $ 23,343 $ 20,640 $ 46,503 $ 43,131 $ 99,866 $ 96,178
Commercial 20,053 17,925 37,691 34,819 77,079 75,134
Industrial 22,898 21,987 43,047 40,932 84,138 83,201
Miscellaneous Revenue 1,558 2,499 2,491 2,358 4,858 6,697
--------- --------- --------- --------- --------- -----------
Total Retail 67,852 63,051 129,732 121,240 265,941 261,210
Wholesale 91,072 31,969 155,992 61,989 215,420 107,149
---------- -------- --------- --------- --------- -----------
$ 158,924 $ 95,020 $ 285,724 $ 183,229 $ 481,361 $ 368,359
========= ======== ========= ========= ========= ===========
ELECTRIC MARGIN (Thousands):
Operating Revenues $ 158,924 $ 95,020 $ 285,724 $ 183,229 $ 481,361 $ 368,359
Cost of Fuel & Purchased Power 106,082 51,519 183,695 82,657 267,105 146,650
---------- ---------- --------- --------- --------- ----------
Margin $ 52,842 $ 43,501 $ 102,029 $ 100,572 $ 214,256 $ 221,709
========== ========== ========= ========= ========= ===========
ELECTRICITY SOLD (MWh):
Residential 327,042 294,404 680,281 645,811 1,445,732 1,433,294
Commercial 360,309 332,976 682,146 634,841 1,430,660 1,355,993
Industrial 647,983 626,458 1,228,674 1,202,748 2,452,682 2,457,902
Miscellaneous Sales 3,661 3,985 8,468 9,272 18,362 19,270
---------- ---------- --------- --------- --------- -----------
Total Retail 1,338,995 1,257,823 2,599,569 2,492,672 5,347,436 5,266,459
Wholesale 3,323,894 940,831 5,926,498 1,859,667 7,965,062 3,153,376
---------- ---------- ---------- --------- ---------- -----------
4,662,889 2,198,654 8,526,067 4,352,339 13,312,498 8,419,835
========== ========== ========== ========= ========== ===========
AVERAGE ELECTRIC CUSTOMERS:
Residential 115,898 114,889 115,902 114,957 115,617 114,356
Commercial 17,304 17,353 17,326 17,285 17,347 17,191
Industrial 175 166 175 165 173 165
All Others 23 23 23 23 23 24
---------- --------- --------- --------- ---------- ----------
133,400 132,431 133,426 132,430 133,160 131,736
========== ========= ========= ========= ========== ==========
WEATHER AS A PERCENT OF NORMAL:
Heating Degree Days 110% 70% 91% 94% 89% 103%
Cooling Degree Days 116% 105% 115% 105% 101% 96%