Allegheny Energy, Inc. Second Quarter Earnings Per Share Up 25%.HAGERSTOWN, Md.--(BUSINESS WIRE)--July 27, 1999-- 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 that increased earnings from its nonutility energy supply business, including growing nonutility sales in competitive markets, led Allegheny to 1999 second quarter earnings per share which are 25 percent higher than earnings for the same quarter last year, before an extraordinary charge. Allegheny reported 1999 second quarter earnings of $64.5 million ($.55 per share), compared to a consolidated net loss in the second quarter of 1998 of $211.6 million ($1.73 per share). Included in the 1998 second quarter results is a previously reported extraordinary charge of $265.4 million ($2.17 per share), net of taxes, associated with the Company's 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). order in 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 . The 1999 earnings were up $10.6 million ($.11 per share), a 25 percent increase in earnings per share over 1998 second quarter earnings of $53.9 million ($.44 per share) when the 1998 extraordinary charge is excluded. This increase in earnings over the comparable period last year is primarily attributed to increased earnings from nonutility sales of electricity. "Allegheny Energy Supply, our energy supply business, is actively recruiting new customers in Pennsylvania using innovative tools like our Electric Choice Community Program, an aggregation program for residential customers and small businesses in Pennsylvania," said Michael P. Morrell, Senior Vice President and Chief Financial Officer. "Allegheny plans to open a sales office in New Jersey and we are expanding our presence in eastern Pennsylvania. We believe that being a low-cost supplier of electricity will help us attract new customers in Pennsylvania and elsewhere." Nearly half of Allegheny's 1.4 million customers are located in Pennsylvania, which is currently the only state in the Company's five-state service area where customers can choose their electric suppliers. Allegheny is preparing to gain new customers in Pennsylvania and beyond as more states open their energy markets to competition. Earnings for the six months ended June 30, 1999, were $162.3 million ($1.35 per share), compared to $132.1 million ($1.08 per share) for the same period in 1998 before the extraordinary charge. The increase in earnings for the period was attributed primarily to increased kilowatt-hour sales, including increased sales to residential customers due to winter weather that was 22 percent colder than the relatively warm winter of 1998. Nonutility sales also contributed to a year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. increase in earnings. Excluding Pennsylvania restructuring and settlement costs, earnings for the twelve months ended June 30, 1999, were $316.9 million ($2.61 per share), compared to $284.2 million ($2.32 per share) for the twelve months ended June 30, 1998. The increase in the twelve months ended earnings, which exclude the restructuring and settlement costs, was also primarily due to increased earnings from nonutility sales. Per share earnings for the comparable 1999 and 1998 periods are: -0-
6 Months 12 Months
Second Quarter Ended June Ended June
1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----
Earnings before
restructuring
and settlement
costs $ .55 $ .44 $1.35 $ 1.08 $2.61 $2.32
Pennsylvania
extraordinary
charges (2.17) (2.17) (.08) (2.17)
Pennsylvania
settlement
costs (.20) --
Reported
earnings $ .55 ($1.73) $1.35 ($1.09) $2.33 $ .15
===== ====== ===== ====== ===== =====
Allegheny Energy was quite active during the first half of 1999 on a variety of fronts. The following are some highlights: ACC See adaptive cruise control. Enters Marketing Alliance One of the cornerstones of the Company's growth strategy is to generate income through non-regulated ventures, such as telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. , using existing infrastructure. To that end, Allegheny Communications Connect, Inc. (ACC), the Company's telecommunications subsidiary, has entered into a marketing alliance with three neighboring neigh·bor n. 1. One who lives near or next to another. 2. A person, place, or thing adjacent to or located near another. 3. A fellow human. 4. Used as a form of familiar address. v. utilities, combining forces with their fiber optic networks. The resulting 2,000-mile fiber optic network is designed to carry advanced data, voice, and video communications from the Midwest to the Atlantic Ocean Atlantic Ocean [Lat.,=of Atlas], second largest ocean (c.31,800,000 sq mi/82,362,000 sq km; c.36,000,000 sq mi/93,240,000 sq km with marginal seas). Physical Geography Extent and Seas and from Florida to the Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. border. The Company plans to market this far-reaching network, which was completed in June, to communications carriers such as AT&T, MCI/Worldcom, Sprint, and Bell Atlantic. ACC is contributing positively to 1999 earnings. Building the Generation Fleet The Company is continuing to grow its new 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. generating company (Genco) - a key to its future success in a competitive marketplace. In July, Allegheny redeemed re·deem tr.v. re·deemed, re·deem·ing, re·deems 1. To recover ownership of by paying a specified sum. 2. To pay off (a promissory note, for example). 3. all outstanding shares of Pennsylvania subsidiary West Penn Power Company's preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. with a combined par value of about $80 million. This redemption is one step in West Penn's process of transferring approximately 3,700 megawatts (MW) of generating capacity to the Genco. Allegheny is also building new generating capacity. In August, crews will begin the installation of two 44-MW combustion combustion, rapid chemical reaction of two or more substances with a characteristic liberation of heat and light; it is commonly called burning. The burning of a fuel (e.g., wood, coal, oil, or natural gas) in air is a familiar example of combustion. turbine turbine, rotary engine that uses a continuous stream of fluid (gas or liquid) to turn a shaft that can drive machinery. A water, or hydraulic, turbine is used to drive electric generators in hydroelectric power stations. generators at its Springdale Power Station site near Pittsburgh, Pa. The units will be ready to generate power to sell on the open market by year's end. In addition, the Company continues to bid on generating facilities being auctioned by others. Attracting New Customers Allegheny Energy Supply, the Company's energy supply business, has teamed up with five Pittsburgh-area municipalities under the Electric Choice Community Program. This innovative program gives the Company the chance to gain more than 20,000 new residential customers. Through the program, municipalities help aggregate customers for the Company. Residents and small businesses who sign up with Allegheny Energy Supply receive savings on their electric bills. The Company hopes to gain many more Pennsylvania customers through this and similar programs. Stock Repurchase Plan stock repurchase plan 1. See buyback. 2. See self-tender. As a result of Allegheny Energy's open-market stock buyback Stock buyback A corporation's purchase of its own outstanding stock, usually in order to raise the company's earnings per share. stock buyback See buyback. program, the Company has bought back more than 5.8 million shares of its common stock. With the repurchases, the actual number of shares outstanding is 116.6 million at the end of June. The Company's Board of Directors has authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: the purchase of up to $500 million worth of common stock using in part the proceeds from the issuance of transition bonds related to the restructuring settlement in Pennsylvania. Allegheny plans to issue these bonds in the third quarter, pending regulatory approval. New Peak Set A record-breaking heat wave that brought hot, humid hu·mid adj. Containing or characterized by a high amount of water or water vapor: humid air; a humid evening. See Synonyms at wet. weather to 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. during the first week of July caused the demand for power to increase dramatically. As a result, Allegheny set a new control area peak of 7,788 MW on July 6 at 6 p.m. This new peak surpassed both the Company's previous summer peak of 7,314 MW and its previous winter peak of 7,500 MW, recorded on February 5, 1996. Allegheny's generation, transmission, and distribution systems performed well during the heat wave and experienced no major service interruptions or difficulties as a result of the increased demand. Y2K See Y2K problem and Y2K compliant. Y2K - Year 2000 Preparations On June 30, Allegheny Energy attained at·tain v. at·tained, at·tain·ing, at·tains v.tr. 1. To gain as an objective; achieve: attain a diploma by hard work. 2. Y2K-ready status for all systems that are critical to supplying power to its customers. This is an important milestone in the Company's plans to usher in Verb 1. usher in - be a precursor of; "The fall of the Berlin Wall ushered in the post-Cold War period" inaugurate, introduce commence, lead off, start, begin - set in motion, cause to start; "The U.S. the Year 2000 under bright lights and with all systems running smoothly. The Company is satisfied that these critical systems are ready, and it will continue testing vital equipment and refining refining, any of various processes for separating impurities from crude or semifinished materials. It includes the finer processes of metallurgy, the fractional distillation of petroleum into its commercial products, and the purifying of cane, beet, and maple sugar Y2K contingency plans A plan involving suitable backups, immediate actions and longer term measures for responding to computer emergencies such as attacks or accidental disasters. Contingency plans are part of business resumption planning. throughout the year. On New Year's Eve 1999 and January 1, 2000, Allegheny plans to have employees on the job at power stations, substations, and other crucial locations to handle any situation that might arise. Board Names Presidents, Approves Corporate Governance Corporate Governance The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law. Provisions In July, Allegheny's Board of Directors approved the appointment of three Presidents to manage and grow its principal businesses. Paul M. Barbas joined Allegheny as President of AYP AYP Adequate Yearly Progress (National Assessment of Educational Progress) AYP Anarchist Yellow Pages AYP American Youth Philharmonic Capital, Inc., the Company's wholly owned ventures subsidiary. Jay S. Pifer, a 34-year Company veteran, was named President of the Company's electricity delivery business, Allegheny Power. Peter J. Skrgic, a 35-year Company veteran, was named President of the Company's energy supply business, Allegheny Energy Supply. The Board also adopted two provisions, which are part of the recently passed 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). legislation affecting corporate governance of companies incorporated in the state. Adopted were a classified board, which creates three classes of directors of nearly even size, with the term of each director continuing for the full initial term of the class to which he or she is designated, and a provision that directors cannot be removed from the Board except by a two-thirds vote of all votes entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: to be cast by shareholders in an election, and that vacancies may be filled only by the Board and for the full remainder of the term. 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 to about three million people in parts of Maryland, Ohio, Pennsylvania, 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, which operates and markets competitive retail and wholesale electric generation and operates regulated electric generation for its affiliates; and AYP Capital, which actively invests in and develops energy-related and telecommunications projects. For more information about Allegheny Energy, Inc., visit our web site at www.alleghenyenergy.com. -0-
ALLEGHENY ENERGY EARNINGS
SECOND QUARTER 1999
Three months ended June 30 1999 1998
------------------------------ --------------------------
Sales to regular utility customers,
gigawatt-hours (Note 1) 10,324 10,087
Revenues ($000)
Regular Utility Customers $513,363 $521,750
Other Utility Revenues 20,828 42,255
Nonutility Revenues (2) 109,213 63,645
-------- --------
Total $643,404 $627,650
======== ========
Consolidated income before
extraordinary charge ($000) $64,514 $53,891
Extraordinary charge ($000) (Note 3) - (265,446)
-------- --------
Consolidated net income (loss) ($000) $64,514 ($211,555)
======== ========
Basic and diluted earnings per
average share (Note 4)
Before extraordinary charge $0.55 $0.44
Consolidated net (loss) income $0.55 ($1.73)
Average common shares outstanding (000) 118,152 122,436
Year to date June 30 1999 1998
------------------------------ -------------------------
Sales to regular utility customers,
gigawatt-hours (Note 1) 21,644 20,979
Revenues ($000)
Regular Utility Customers $1,089,176 $1,094,379
Other Utility Revenues 37,607 66,004
Nonutility Revenues (2) 206,608 112,739
---------- ----------
Total $1,333,391 $1,273,122
========== ==========
Consolidated income before
restructuring and settlement
costs ($000) $162,289 $132,128
Extraordinary charges ($000) (Note 3) - (265,446)
---------- ----------
Consolidated net income (loss) ($000) $162,289 ($133,318)
========== ==========
Basic and diluted earnings per
average share (Note 4)
Before extraordinary charge $1.35 $1.08
Consolidated net income (loss) $1.35 ($1.09)
Average common shares outstanding (000) 120,262 122,436
Twelve months ended June 30 1999 1998
------------------------------ -------------------------
Sales to regular utility customers,
gigawatt-hours (Note 1) 43,314 41,964
Revenues ($000)
Regular Utility Customers (Note 5) $2,199,236 $2,197,757
Other Utility Revenues 96,614 113,131
Nonutility Revenues (2) 340,857 173,995
---------- ----------
Total $2,636,707 $2,484,883
========== ==========
Consolidated income before
restructuring and settlement
costs ($000) $316,916 $284,150
Pennsylvania extraordinary
charges ($000) (Note 3) (9,980) (265,446)
Pennsylvania settlement costs ($000) (23,748) -
---------- ----------
Consolidated net income ($000) $283,188 $18,704
========== ==========
Basic and diluted earnings per
average share (Note 4)
Before restructuring and
settlement costs $2.61 $2.32
Pennsylvania extraordinary charges (0.08) (2.17)
Pennsylvania settlement costs (0.20) -
---------- ------------
Consolidated net income $2.33 $0.15
========== ============
Average common shares outstanding (000) 121,358 122,435
Note 1: Excludes bulk power transaction sales.
Note 2: Excludes intercompany sales between nonutility and utility.
Note 3: Costs after taxes, determined to be unrecoverable as a result
of deregulation proceedings in Pennsylvania.
Note 4: Basic and diluted earnings per share are the same.
Note 5: 1998 retail revenues are reduced by a 2.5% rate refund ($25.1
million) for Pennsylvania customers as a result of the 1998
settlement agreement.
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