Allegheny Energy, Inc. Reports Strong Third Quarter 2001 Earnings of $1.33 Per Share.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)--Oct. 25, 2001 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) ) today reported a 93 percent increase in earnings per share to $1.33, compared to third quarter 2000 earnings per share of $.69. Net income increased 118 percent in the third quarter of 2001 to $165.7 million, compared to third quarter 2000 net income of $76.1 million. 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. Alan A`lan´ n. 1. A wolfhound. J. Noia, Allegheny Energy Chairman, President, and Chief Executive Officer, the third quarter results reflect increased revenues and sales from regulated reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. operations, higher net revenues from the Company's 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. generation operations--including the energy trading activities of the recently acquired Allegheny Energy Global Markets--and the continued execution of the Company's growth strategy. "I am pleased with our solid performance during the quarter and year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. , which enabled us to again deliver on our promise to grow earnings and provide value to shareholders," said Noia. "Our strategically located, low-cost generating assets, combined with a world-class world-class adj. 1. Ranking among the foremost in the world; of an international standard of excellence; of the highest order: a world-class figure skater. 2. trading and marketing business and a financially strong energy delivery business, have helped us achieve top-line revenue and net income growth. "Allegheny Energy has consistently tackled the challenges of a changing energy industry," added Noia. "We have remained focused on our strategy despite downward movement in energy prices and continued change in our sector. Our performance in the third quarter and so far in 2001 puts us on a clear path toward delivering earnings within our guidance range of $3.80-$4.10 per share this year." Earnings for the nine months ended September September: see month. 30, 2001, were $384.4 million ($3.24 per share), excluding the first quarter after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. charge of $31.1 million ($.26 per share) associated with the cumulative effect of an accounting change due to the adoption of the Statement of Financial Accounting Standards (SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System ) No. 133, "Accounting for Derivative Instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. and Hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. Activities." Earnings for the nine months ended September 30, 2000, were $233.9 million ($2.12 per share), excluding a first quarter extraordinary charge of $70.5 million ($.64 per share) associated with electric utility 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). orders. This 53 percent increase in comparable year-to-date earnings per share is attributed to our unregulated generation operations, including energy trading activities. Excluding the accounting change and extraordinary and other charges as shown on the following chart, earnings for the twelve months ended September 30, 2001, were $464.1 million ($3.99 per share), compared to $305.7 million ($2.77 per share) for the twelve months ended September 30, 2000. This 44 percent increase in comparable earnings per share was mainly due to higher net revenue. Per share earnings for comparable 2001 and 2000 periods were:
Third 9 Months 12 Months
Quarter Ended Ended
September September
2001 2000 2001 2000 2001 2000
Income before accounting change and $1.33 $.69 $3.24 $2.12 $3.99 $2.77
extraordinary and other charges
Accounting change: (.26) (.27)
adoption of SFAS 133
Extraordinary charges for electric (.64) (.06) (.79)
Utility restructuring orders
Extraordinary charge for reacquired debt (.09)
Merger-related costs (.11)
Cancelled pumped-storage project costs (.09)
Refund of license fee for cancelled
pumped-storage project .02
-- ---
Earnings per share $1.33 $.69 $2.98 $1.48 $3.66 $1.71
During the third quarter of 2001, Allegheny Energy actively pursued a number of opportunities aimed at providing shareholder value. The following are some of the quarter's milestones: - Allegheny Energy Supply is building 88 megawatts (MW) of natural gas-fired merchant generating capacity in south central Pennsylvania as part of its plan to own or control more than 14,500 MW of generating capacity by 2005. The new units will operate primarily at times of peak electrical demand and are expected to be in commercial operation by year's end, giving the Company further access to East Coast electricity markets and enhancing the region's power supply. - In the environmental arena, Allegheny Energy Supply dedicated its second biomass co-firing demonstration project at its coal-fired Albright Power Station in West Virginia. The project embraces the Company's environmental stewardship philosophy by reducing emissions from the generating facility and qualifying a portion of the output as a renewable generation source. - Allegheny Energy Supply also received the 2001 West Virginia Business Environmental Leadership Award for the Gypsum Processing Facility at its Pleasants Power Station. Recognized in the Pollution Prevention category, the Gypsum Processing Facility converts waste slurry from the flue gas desulfurization (scrubber) system into synthetic gypsum that is then sold to make wallboard. More than 200,000 tons of synthetic gypsum have been produced and sold this year. - Allegheny Energy and its employees have donated $340,000 to aid in disaster relief efforts in the wake of the September 11 terrorist attacks. The contribution includes $240,000 in Company and employee cash contributions to the American Red Cross and $100,000 worth of portable generators for use by rescue workers in New York City. Allegheny Energy is continuing to work toward obtaining necessary regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. approvals for a proposed initial public offering (IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. ) of up to 18 percent of the common stock in a new holding company, which would own 100 percent of its unregulated generating subsidiary, Allegheny Energy Supply Company, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control . Under current market conditions, however, the Company would not proceed with the IPO. The Company will remain integrated until market conditions are such that demonstrated value can and will be created for its shareholders. Allegheny Energy, Inc. is a diversified diversified (di·verˑ·s energy company headquartered in Hagerstown, Md. It has been named to the Fortune 500 list, the Standard and Poor's Noun 1. Standard and Poor's - a broadly based stock market index Standard and Poor's Index 500 index, and the Forbes Forbes , B(ertie) C(harles) 1880-1954. American publisher and businessman who founded and edited (1916-1954) Forbes magazine. His son Malcolm Stevenson Forbes "Platinum platinum (plăt`ənəm), metallic chemical element; symbol Pt; at. no. 78; at. wt. 195.08; m.p. 1,772°C;; b.p. 3,827±100°C;; sp. gr. 21.45 at 20°C;; valence +2 or +4. 400" list. The Allegheny Energy family includes Allegheny Allegheny (ăl`əgā'nē, ăl`əgä'nē), river, 325 mi (523 km) long, rising in N central Pa., and flowing NW into N.Y., then SW through Pa. Power, which delivers electric energy and natural gas to about three million people in parts of 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). , Ohio, 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 , 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 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. ; Allegheny Energy Supply Company, LLC, which develops, owns, and operates electric generating facilities and supplies and trades energy and energy-related commodities in selected domestic retail and wholesale markets; and Allegheny Ventures, which invests in and develops telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. and energy-related projects. For more information, visit our web site at www.alleghenyenergy.com. Allegheny plans to hold its analyst conference call to discuss earnings results at 11:00 a.m. (Eastern Time) on October October: see month. 26, 2001. Investors, the news media, and others may listen to a live internet broadcast of the call at www.alleghenyenergy.com or www.streetevents.com by clicking on an available audio link. The call will also be archived for replay purposes for 10 business days after the live broadcast on both of these web sites. Supporting financial data will also be available on the Company's web site for review. Certain statements contained herein constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. with respect to Allegheny Energy, Inc., including as to the status of the IPO and development activities by Allegheny Energy Supply. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements of Allegheny Energy to be materially different from any future results, performance, or achievements expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by such forward-looking statements. Such factors may affect Allegheny Energy's operations, markets, products, services, prices, capital expenditures, development activities, and future plans. Such factors include, among others, the following: changes in general, economic, and business conditions; changes in the price of electricity and natural gas; changes in industry capacity; changes in technology; changes in financial and capital market conditions; changes in political and social conditions, 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. activities and the movement toward competition in the states served by our operations; the effect of regulatory and legislative decisions; the consequences of the separation of the operations of Allegheny Energy; regulatory approvals and conditions; the loss of any significant customers; litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ; and changes in business strategy or business plans.
ALLEGHENY ENERGY EARNINGS
THIRD QUARTER 2001
Three months ended September 30 2001 2000
----------------------------------------------------------------------
Sales to regulated electric
customers, gigawatt-hours (Note 1) 11,334 11,044
Revenues ($000) (Note 2)
Regulated Electric Revenues $ 597,080 $ 559,406
Regulated Other Revenues 38,172 34,655
Regulated Gas Revenues 19,319 12,328
Unregulated Generation and Energy
Marketing 3,017,814 450,445
Allegheny Ventures 9,643 1,624
-------------- -------------
Total ($000) $ 3,682,028 $ 1,058,458
============== =============
Consolidated income before
extraordinary and other
transactions ($000) $ 165,734 $ 76,095
-------------- -------------
Consolidated net income ($000) $ 165,734 $ 76,095
============== =============
Basic and diluted earnings per
average share
Basic consolidated earnings
per share $ 1.33 $ 0.69
-------------- -------------
Diluted consolidated earnings
per share $ 1.32 $ 0.69
============== =============
Average common shares
outstanding (000) 124,867 110,436
Year to date September 30 2001 2000
----------------------------------------------------------------------
Sales to regulated electric
customers, gigawatt-hours (Note 1) 34,147 33,241
Revenues ($000) (Note 2)
Regulated Electric Revenues $ 1,801,281 $ 1,710,499
Regulated Other Revenues 94,575 66,956
Regulated Gas Revenues 166,552 25,447
Unregulated Generation and Energy
Marketing 6,219,644 977,998
Allegheny Ventures 33,726 9,671
-------------- -------------
Total ($000) $ 8,315,778 $ 2,790,571
============== =============
Consolidated income before
extraordinary and other
transactions ($000) $ 384,355 $ 233,946
West Virginia extraordinary
charges (Note 3) - (70,505)
Cumulative effect of accounting
change (Note 4) (31,147) -
-------------- -------------
Consolidated net income ($000) $ 353,208 $ 163,441
============== =============
Basic earnings per average share
Before extraordinary and other
transactions $ 3.24 $ 2.12
West Virginia extraordinary
charges (Note 3) - (0.64)
Cumulative effect of accounting
change (Note 4) (0.26) -
-------------- -------------
Basic consolidated earnings
per share $ 2.98 $ 1.48
============== =============
Diluted consolidated earnings
per share $ 2.97 $ 1.48
============== =============
Average common shares
outstanding (000) 118,435 110,436
Twelve months ended September 30 2001 2000
----------------------------------------------------------------------
Sales to regulated electric
customers, gigawatt-hours (Note 1) 45,761 43,853
Revenues ($000) (Note 2)
Regulated Electric Revenues $ 2,394,307 $ 2,258,014
Regulated Other Revenues 127,788 82,685
Regulated Gas Revenues 244,685 25,447
Unregulated Generation and Energy
Marketing 6,723,937 1,139,441
Allegheny Ventures 46,342 18,675
-------------- -------------
Total ($000) $ 9,537,059 $ 3,524,262
============== =============
Consolidated income before
extraordinary and other
transactions ($000) $ 464,061 $ 305,677
Reacquired debt extraordinary charge - (10,018)
Merger-related costs - (11,801)
Davis pumped-storage generation
project costs - (9,998)
Refund of Davis license fee - 1,838
Maryland, Ohio, Virginia, and West
Virginia extraordinary
charges (Note 3) (6,518) (87,455)
Cumulative effect of accounting
change (Note 4) (31,147) -
-------------- -------------
Consolidated net income ($000) $ 426,396 $ 188,243
============== =============
Basic earnings per average share
Before extraordinary and other
transactions $ 3.99 $ 2.77
Reacquired debt extraordinary charge - (0.09)
Merger-related costs - (0.11)
Davis pumped-storage generation
project costs - (0.09)
Refund of Davis license fee - 0.02
Maryland, Ohio, Virginia, and West
Virginia extraordinary charges
(Note 3) (0.06) (0.79)
Cumulative effect of accounting
change (Note 4) (0.27) -
-------------- -------------
Basic consolidated earnings per
share $ 3.66 $ 1.71
=============== =============
Diluted consolidated earnings per
share $ 3.65 $ 1.71
============== =============
Average common shares outstanding (000) 116,419 110,436
Note 1: Excludes bulk power transaction sales.
Note 2: Excludes intercompany sales between regulated and unregulated.
Note 3: Costs after taxes determined to be unrecoverable as a result
of deregulation proceedings in Maryland, Ohio, Virginia, and West
Virginia.
Note 4: Adoption of SFAS 133, Accounting for Derivative Instruments
and Hedging Activities.
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