Allegheny Energy, Inc. Earnings Per Share Up 18% Over 1999 -- Record Earnings Reported.Business Editors HAGERSTOWN Hagerstown (hā`gərztoun'), city (1990 pop. 35,445), seat of Washington co., NW Md., on Antietam Creek near its junction with the Potomac River, in the fertile Cumberland Valley; inc. 1791. , Md.--(BUSINESS WIRE)--July 27, 2000 Allegheny Energy Allegheny Energy (NYSE: AYE) is a traditional public utility based in the Pittsburgh suburb of Greensburg. It services communities in Western Pennsylvania, Western Maryland, Northern West Virginia, Northwest Virginia. , Inc. (NYSE NYSE See: New York Stock Exchange :AYE AYE Allegheny Energy, Inc. (stock symbol) AYE Ayer Rajah Expressway AYE Amplifying Your Effectiveness (conference) ), led by the solid growth of its unregulated Adj. 1. unregulated - not regulated; not subject to rule or discipline; "unregulated off-shore fishing" regulated - controlled or governed according to rule or principle or law; "well regulated industries"; "houses with regulated temperature" 2. businesses, posted record operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before for the second quarter of 2000 and saw an increase of 18 percent in total earnings per share over the second quarter of 1999. Allegheny reported second quarter 2000 earnings of $71.5 million ($.65 per share), compared to 1999 second quarter earnings of $64.5 million ($.55 per share). Included in the second quarter 2000 earnings was income of $3.6 million ($.03 per share) related to insurance/litigation settlements. The second quarter of 1999 included a similar charge of $3.2 million ($.03 per share). According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Michael P. Morrell, Allegheny Energy's Senior Vice President and Chief Financial Officer, the Company's strategy of expanding its energy supply business (Allegheny Energy Supply) regionally and then nationally; growing its energy delivery business (Allegheny Power); and adding earnings through its new ventures business (Allegheny Ventures) is creating benefits for shareholders. "One of the quarter's success stories was an increase in earnings for Allegheny Energy Supply, including growth of unregulated sales in competitive markets," said Morrell. "In addition, Allegheny Power saw increased sales to regulated customers overall, including its newly purchased subsidiary, West Virginia Power The West Virginia Power are a minor league baseball team of the South Atlantic League and are the Single-A affiliate of the Milwaukee Brewers. They are located in Charleston, West Virginia and are named for a short lived electric utility in the southeastern part of the state, now . And Allegheny Ventures continues to advance its telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. business, adding to earnings growth. "This was a great quarter for Allegheny Energy," added Morrell. "We continue to execute a solid growth strategy and remain on track to meet earnings estimates for the year." Earnings for the six months ended June 30, 2000, were $154.3 million ($1.40 per share), excluding the first quarter extraordinary charge of $70.5 million ($.64 per share) and the second quarter income of $3.6 million ($.03 per share) related to insurance/litigation settlements. The earnings for the six months ended June 30, 1999, were $165.5 million ($1.38 per share), excluding the second quarter charge of $3.2 million ($.03 per share). The increase in earnings per share is primarily attributed to increased unregulated sales of electricity and the Company's 1999 stock repurchase plan stock repurchase plan 1. See buyback. 2. See self-tender. . Excluding the extraordinary charges and other transactions as shown on the following chart, earnings for the twelve months ended June 30, 2000, were $299.2 million ($2.69 per share), compared to $320.1 million ($2.64 per share) for the twelve months ended June 30, 1999. The increase in earnings per share was due to unregulated sales of electricity, the Company's 1999 stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program, and lower depreciation expense. Per share earnings for the comparable 2000 and 1999 periods are:
6 12
Second Months Months
Quarter Ended June Ended June
2000 1999 2000 1999 2000 1999
Earnings before extraordinary
and other transactions $.62 $.58 $1.40 $1.38 $2.69 $2.64
Extraordinary charges for Maryland,
Pennsylvania, and West Virginia
restructuring (.64) (.79) (.08)
Extraordinary charge for call premiums (.09)
Merger-related costs (.11)
Cancelled pumped-storage project costs (.07)
Pennsylvania settlement costs (.20)
Other transactions .03 (.03) .03 (.03) .02 (.03)
---- ---- ---- ---- ---- ----
Reported earnings $.65 $.55 $.79 $1.35 $1.65 $2.33
==== ==== ==== ===== ===== =====
The 2000 extraordinary charge of $70.5 million ($.64 per share), net of tax, reflects write-offs by two of the Company's subsidiaries, Monongahela Power Company and The Potomac Edison Company, as a result of West Virginia West Virginia, E central state of the United States. It is bordered by Pennsylvania and Maryland (N), Virginia (E and S), and Kentucky and, across the Ohio R., Ohio (W). Facts and Figures Area, 24,181 sq mi (62,629 sq km). Pop. restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). legislation. The 1999 extraordinary charges and the Pennsylvania Pennsylvania (pĕnsəlvā`nyə), one of the Middle Atlantic states of the United States. It is bordered by New Jersey, across the Delaware River (E), Delaware (SE), Maryland (S), West Virginia (SW), Ohio (W), and Lake Erie and New York settlement costs reflect write-offs by the Company's subsidiary, West Penn Power Company, of costs determined to be unrecoverable due to restructuring proceedings in Pennsylvania. Allegheny Energy remained active during the second quarter on a variety of fronts aimed at increasing revenue and adding to shareholder value. Some of the highlights of the quarter include: - Allegheny Stock Earns Buy Recommendations Allegheny Energy's growth strategy received a vote of confidence from Wall Street in July when Goldman Sachs The Goldman Sachs Group, Inc., or simply Goldman Sachs (NYSE: GS) is one of the world's largest global investment banks. Goldman Sachs was founded in 1869, and is headquartered in the Lower Manhattan area of New York City at 85 Broad Street. and Merrill Lynch Merrill Lynch & Co., Inc. (NYSE: MER TYO: 8675 ), through its subsidiaries and affiliates, provides capital markets services, investment banking and advisory services, wealth management, asset management, insurance, banking and related products and services on a global basis. added Allegheny Energy to their recommended lists of stocks to buy. Regulatory Research Associates, Inc. also assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. Allegheny Energy stock a buy recommendation in recent months. - Adding Another 83 MW to our Non-Regulated Fleet Allegheny Energy Supply Company, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , has signed a definitive agreement with Potomac Electric Potomac Electric corporation is a US manufacturer and repair provider of servo motors and servo drives. Potomac Electric was founded in 1992 by design and manufacturing engineers from Westamp, Baldor, EG&G Tourque Systems. Power Company to purchase 4.86 percent of the Conemaugh Power Station. The purchase will add 83 megawatts (MW) to our fleet at a cost of $76.25 million and gives us a stronger presence in the Pennsylvania-New Jersey-Maryland power market. We expect to complete regulatory approvals by the end of 2000, with the acquisition being accretive to earnings in the first full year. - Ranked Among the Nation's Top Companies For the second consecutive year, Allegheny Power has been ranked among the top electric utilities in a recent national residential customer satisfaction survey. Allegheny Power was ranked second in the eastern United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and 19th nationally. - Growing our Telecommunications Business In July, Allegheny Communications Connect (ACC See adaptive cruise control. ), our telecommunications subsidiary, sold its 50 percent ownership in Allegheny Hyperion Telecommunications, LLC, to Adelphia Business Solutions for 330,000 shares of Adelphia Business Solutions' Class A Common Stock. Allegheny Energy plans further expansion into the fast-growing telecommunications market, providing opportunities for increased earnings and added value Added value in financial analysis of shares is to be distinguished from value added. Used as a measure of shareholder value, calculated using the formula:
- Distributed Generation Distributed generation generates electricity from many small energy sources. It has also been called also called on-site generation, dispersed generation, embedded generation, decentralized generation, decentralized energy or - Moving Forward into New Growth Areas Allegheny Energy Solutions, our unregulated subsidiary that invests in the development and marketing of energy-related products and services, has formed a strategic alliance with Capstone Turbine Capstone Turbine Corporation NASDAQ: CPST, incorporated in 1988, is a California based gas turbine manufacturer that specializes in microturbine power and heat cogeneration systems. Capstone has sold and shipped more than 3,000 of these one-moving-part systems worldwide. Corporation, the world's leading manufacturer of microturbines. The alliance positions Allegheny Energy Solutions as a leading system integrator See systems integrator. for the Capstone MicroTurbine(TM) system in the Northeast. - Deregulation Deregulation The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry. Notes: Traditional areas that have been deregulated are the telephone and airline industries. Allows for Transfer of Assets The conveyance of something of value from one person, place, or situation to another. The law recognizes that persons are generally entitled to transfer their assets to whomever they wish and for whatever reason. The most common means of transfer are wills, trusts, and gifts. to Allegheny Energy Supply Allegheny Energy plans to transfer 2,100 MW of subsidiary Potomac Edison's Maryland Maryland (mâr`ələnd), one of the Middle Atlantic states of the United States. It is bounded by Delaware and the Atlantic Ocean (E), the District of Columbia (S), Virginia and West Virginia (S, W), and Pennsylvania (N). , Virginia Virginia, state, United States Virginia, state of the south-central United States. It is bordered by the Atlantic Ocean (E), North Carolina and Tennessee (S), Kentucky and West Virginia (W), and Maryland and the District of Columbia (N and NE). , and West Virginia jurisdictional generating assets to Allegheny Energy Supply at net book value, pending final regulatory approval. The addition of these assets will give Allegheny Energy Supply more than 6,200 MW of low-cost generating capacity to sell in deregulated markets, increasing opportunities for the Company to gain revenues from non-regulated energy sales. Allegheny Energy, Inc. is a diversified diversified (di·verˑ·s energy company headquartered in Hagerstown, Md. The Allegheny Energy family includes Allegheny Power, which delivers electric energy and natural gas to about three million people in parts of Maryland, Ohio, Pennsylvania, Virginia, and West Virginia; Allegheny Energy Supply Company, LLC, which operates and markets competitive retail and wholesale electric generation and operates regulated electric generation for its affiliates; and Allegheny Ventures, which actively invests in and develops telecommunications and energy-related projects. For more information, visit our web site at www.alleghenyenergy.com.
ALLEGHENY ENERGY EARNINGS
SECOND QUARTER 2000
Three months ended June 30 2000 1999
----------------------------------------------------------------------
Sales to regular utility
customers, gigawatt-hours (Note 1) 11,002 10,324
Revenues ($000) (Note 2)
Regular Utility Customers $558,126 $513,363
Other Utility Revenues 15,835 20,828
Nonutility Revenues 291,362 109,213
------------- ------------
Total ($000) $865,323 $643,404
============= ============
Consolidated income
before other transactions ($000) $67,903 $67,730
Insurance / litigation settlements 3,553 (3,216)
------------- ------------
Consolidated net income ($000) $71,456 $64,514
============= ============
Basic and diluted earnings
per average share (Note 3)
Before extraordinary
and other transactions $0.62 $0.58
Insurance / litigation settlements 0.03 (0.03)
------------- ------------
Consolidated earnings per share $0.65 $0.55
============= ============
Average common shares outstanding (000) 110,436 118,152
Year to date June 30 2000 1999
----------------------------------------------------------------------
Sales to regular utility
customers, gigawatt-hours (Note 1) 22,655 21,644
Revenues ($000) (Note 2)
Regular Utility Customers $1,164,170 $1,089,176
Other Utility Revenues 32,341 37,607
Nonutility Revenues 535,602 206,608
------------- ------------
Total ($000) $1,732,113 $1,333,391
============= ============
Consolidated income before
extraordinary and other
transactions ($000) $154,298 $165,505
Insurance / litigation settlements 3,553 (3,216)
West Virginia extraordinary charge (Note 4) (70,505) -
------------- ------------
Consolidated net income ($000) $87,346 $162,289
============= ============
Basic and diluted earnings
per average share (Note 3)
Before extraordinary and other transactions $1.40 $1.38
Insurance / litigation settlements 0.03 (0.03)
West Virginia extraordinary charge (Note 4) (0.64) -
------------- ------------
Consolidated earnings per share $0.79 $1.35
============= ============
Average common shares outstanding (000) 110,436 120,262
Twelve months ended June 30 2000 1999
----------------------------------------------------------------------
Sales to regular utility
customers, gigawatt-hours (Note 1) 44,852 43,314
Revenues ($000) (Note 2)
Regular Utility Customers $2,268,514 $2,199,236
Other Utility Revenues 74,941 96,614
Nonutility Revenues 863,708 340,857
------------- ------------
Total ($000) $3,207,163 $2,636,707
============= ============
Consolidated income before
extraordinary and other
transactions ($000) $299,197 $320,132
West Virginia, Maryland and
Pennsylvania extraordinary charges (Note 4) (87,455) (9,980)
Reacquired debt extraordinary charge (10,018) -
Merger-related costs (11,801) -
Davis pumped-storage generation project costs (8,160) -
Insurance / litigation settlements 1,715 (3,216)
Pennsylvania settlement costs - (23,748)
------------- ------------
Consolidated net income ($000) $183,478 $283,188
============= ============
Basic and diluted earnings
per average share (Note 3)
Before extraordinary and
other transactions $2.69 $2.64
West Virginia, Maryland and
Pennsylvania extraordinary charges (Note 4) (0.79) (0.08)
Reacquired debt extraordinary charge (0.09) -
Merger-related costs (0.11) -
Davis pumped-storage generation
project costs (0.07) -
Insurance / litigation settlements 0.02 (0.03)
Pennsylvania settlement costs - (0.20)
------------- ------------
Consolidated earnings per share $1.65 $2.33
============= ============
Average common shares outstanding (000) 111,354 121,358
Note 1: Excludes bulk power transaction sales. Note 2: Excludes intercompany sales between nonutility and utility. Note 3: Basic and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of are the same. Note 4: Costs after taxes determined to be unrecoverable as a result of deregulation proceedings in West Virginia, Maryland, and Pennsylvania. |
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