Allegheny Energy Reports Second Quarter 2006 Results.GREENSBURG Greensburg, city (1990 pop. 16,318), seat of Westmoreland co., SW Pa.; settled c.1770, inc. as a city 1928. Located in a coal area, the city manufactures concrete, chemicals, machinery, and metal products. Col. , Pa. -- 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 consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: net income of $31.1 million, or $0.18 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, for the second quarter of 2006, compared with a net loss of $18.4 million, or a loss of $0.12 per diluted share, for the same period in 2005. To provide a better understanding of core results and trends, Allegheny Energy also reports adjusted financial results, as shown in the table below:
Three Months Ended June 30
--------------------------
2006 2005
$ millions Per Share $ millions Per Share
---------- --------- ---------- ---------
Consolidated net income
(loss)-GAAP $31.1 $0.18 $(18.4) $(0.12)
Adjusted income
from continuing operations 37.8 0.22 12.7 0.08
Adjusted income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the for the second quarter of 2006 excludes a $9.5 million (pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta ) charge for the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of prior deferred financing costs, and a $0.9 million (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. ) loss from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . Adjusted income from continuing operations for the second quarter of 2005 excludes costs of $47.2 million (pre-tax) related to an April 2005 tender offer for the company's 11 7/8% convertible trust preferred securities, $11.2 million (pre-tax) received from a former trading executive's forfeited for·feit n. 1. Something surrendered or subject to surrender as punishment for a crime, an offense, an error, or a breach of contract. 2. Games a. assets and insurance proceeds of $6.7 million (pre-tax) related to the 2004 extended outage out·age n. 1. A quantity or portion of something lacking after delivery or storage. 2. A temporary suspension of operation, especially of electric power. at the Hatfield's Ferry ferry, vessel providing passage over a river, lake, or other body of water for passengers, vehicles, or freight; the term is also applied to the place where the crossing is made and, by extension, to overwater train or airplane transit. power station. Also excluded from second quarter 2005 adjusted results is a $12.3 million after-tax loss from discontinued operations. Adjusted results are non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to results reported in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). is attached to this release. "Better plant performance, higher 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 generation rates and lower depreciation, interest and taxes helped us deliver strong earnings growth in the second quarter," said Paul Paul, 1901–64, king of the Hellenes (1947–64), brother and successor of George II. He married (1938) Princess Frederika of Brunswick. During Paul's reign Greece followed a pro-Western policy, and the Cyprus question was temporarily resolved. J. Evanson, Chairman, President and Chief Executive Officer of Allegheny Energy. "Looking ahead, we remain focused on growing earnings, improving our environmental performance and expanding our transmission system." Second Quarter Consolidated Results Income from continuing operations before income taxes and minority interest, as adjusted, was $58.5 million for the second quarter of 2006, an increase of $25.4 million compared to adjusted results for the same period in 2005. Key factors contributing to the improved results include: --Operating revenues increased by $7.6 million, reflecting better performance and increased output at the power stations, higher generation rates in Pennsylvania and the expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created of a below-market contract with a 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). industrial customer. These benefits were partially offset by moderate weather, lower market prices and the expiration of a power purchase agreement with the Ohio Valley Electric Corporation (OVEC OVEC Ohio Valley Environmental Coalition (Huntington, WV) OVEC Ohio Valley Educational Cooperative OVEC Ohio Valley Electric Corporation OVEC Ohio Valley Electric Company ) and a transmission capacity sales contract Sales Contract Contract between a seller and buyer for the sale of goods, services, or both. . --Purchased power expense decreased by $13.1 million, resulting primarily from reduced purchases from OVEC. --Fuel expense increased by $20.0 million, primarily due to both higher prices paid for coal and increased coal consumption. --Operations and maintenance expense decreased by $1.7 million compared to adjusted expense for the same period of 2005, reflecting lower costs for outside legal services legal services n. the work performed by a lawyer for a client. , partly offset by information technology outsourcing Information Technology Outsoucing or ITO is a company's outsourcing of computer or Internet related work, such as programming, to other companies. It is used in refence to Business Process Outsourcing or BPO, which is the outsourcing of the work that does not require so much start-up Start-up The earliest stage of a new business venture. costs. Adjusted expense for the second quarter of 2005 excludes the insurance proceeds previously mentioned. --Depreciation expense decreased by $9.2 million, largely due to the previously reported extension of estimated depreciable depreciable Of, relating to, or being a long-term tangible asset that is subject to depreciation. lives of certain 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. power plants. --Interest expense, excluding the adjustments to both periods as previously noted, decreased by $15.1 million compared to adjusted results for the same period in 2005 due to a lower debt balance and more favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. borrowing rates. The effective tax rate for the second quarter of 2006 was 34 percent, well below the effective tax rate for the second quarter of 2005, which was affected by adjustments to deferred state income taxes. Earnings from continuing operations before interest, taxes, depreciation and amortization (EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ) for the quarter were $193.6 million, an increase of $0.9 million compared to adjusted EBITDA for the second quarter of 2005. EBITDA is a non-GAAP financial measure. Details on the calculation of EBITDA and a reconciliation of EBITDA to net income are attached to this release. Second Quarter Segment Results Delivery and Services: The segment reported income from continuing operations of $23.3 million for the second quarter of 2006, an increase of $6.4 million compared to the same quarter of the prior year. Operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. decreased by $30.7 million, and purchased power and transmission costs decreased by $21.1 million. Both revenues and purchased power decreased due to the Maryland contract expiration mentioned above, the 2005 sale of the Ohio service territory and moderate weather, partially offset by customer growth and higher generation rates in Pennsylvania and Maryland. Retail electric kilowatt hour Kil´o`watt` hour 1. (Elec.) A unit of work or energy equal to that done by one kilowatt acting for one hour; - approximately equal to 1.34 horse-power hour. Noun 1. sales decreased by 11.6 percent. The revenue decrease also reflects the expiration of a transmission capacity sales contract. Operations and maintenance expense decreased by $6.6 million. Interest expense decreased by $25.0 million, reflecting lower debt balances, lower borrowing rates and the 2005 tender offer costs, partially offset by the 2006 write-off of prior deferred financing costs. Income taxes increased by $12.4 million. Generation and Marketing: The segment reported income from continuing operations of $8.7 million for the second quarter of 2006. For the same period in the prior year, the segment reported a loss from continuing operations of $23.0 million. Operating revenues and kilowatt-hours generated increased by $9.6 million and 1.3 percent, respectively. The increase in revenues was primarily due to increased power plant output, increased Pennsylvania generation rates and reduced commitments to sell power under low-priced (POLR POLR Provider of Last Resort POLR Path of Least Resistance POLR Pokemon Online Revolution ) contracts pertaining per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. to a Maryland industrial customer and Allegheny's former Ohio service territory. These benefits were partly offset by lower market prices and the expiration of the OVEC agreement. Fuel costs increased by $20.0 million, reflecting both higher prices paid for coal and increased coal consumption. Purchased power and transmission decreased by $20.5 million, reflecting reduced purchases from OVEC. Operations and maintenance expenses increased by $11.2 million, reflecting the insurance proceeds received in 2005. Depreciation expense decreased by $8.1 million, largely due to the extension of the estimated lives of certain unregulated power plants, as mentioned above. Interest expense decreased by $27.0 million, reflecting lower debt outstanding, reduced borrowing costs and the 2005 tender offer costs, partially offset by the 2006 write-off of prior deferred financing costs. Other income decreased by $8.6 million, primarily as a result of the 2005 receipt of forfeited assets. Income taxes decreased by $5.4 million. Discontinued Operations: 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. reported a $0.9 million (after-tax) loss on discontinued operations, compared to a $12.3 million loss in the same quarter of the prior year. The 2006 results relate to the Gleason Glea·son , Herbert John Known as "Jackie." 1916-1987. American entertainer best remembered for his portrayal of Ralph Kramden on the television comedy The Honeymooners (1952-1957). generating facility. The 2005 results reflected a net impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charge of $8.9 million (after-tax) on the 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. natural gas operations and Allegheny Energy's Midwest Midwest or Middle West, region of the United States centered on the western Great Lakes and the upper-middle Mississippi valley. It is a somewhat imprecise term that has been applied to the northern section of the land between the Appalachians generating facilities, as well as the operating performance of those assets. Allegheny sold the gas operations and the Wheatland Wheatland can refer to several things: Places
Six-Month Consolidated Results For the first six months of 2006, Allegheny reported consolidated net income of $144.5 million, or $0.86 per diluted share, as compared to net income of $24.2 million, or $0.16 per diluted share, for the first six months of 2005. Adjusted net income from continuing operations was $152.0 million, or $0.90 per diluted share, for the first six months of 2006, compared to $71.4 million, or $0.48 per diluted share, for the same period of 2005. Adjusted net income from continuing operations is a non-GAAP financial measure, and excludes items mentioned above and other items described in the attached reconciliation of non-GAAP financial measures. Reconciliation of Non-GAAP Financial Measures This news release and the attached table include non-GAAP financial measures as defined in the Securities and Exchange Commission's Regulation G. Where noted, we present financial information on an adjusted basis to exclude the effect of certain items as described herein. By presenting adjusted results, management intends to provide investors with a better understanding of the core results and underlying trends from which to consider past performance and prospects for the future. We also present EBITDA as an additional measure of our operating performance. Users of this financial information should consider the types of events and transactions for which adjustments have been made. Neither the adjusted information nor EBITDA should be considered in isolation or viewed as substitutes for or superior to net income or other data prepared in accordance with GAAP as measures of our operating performance or liquidity. In addition, neither the adjusted information nor EBITDA are necessarily comparable to similarly titled measures provided by other companies. Pursuant to the requirements of Regulation G, we have attached tables that reconcile non-GAAP financial measures, including those presented in this release, to the most directly comparable GAAP measures. Investor Conference Call Allegheny Energy will comment further on these results in an investor conference call at 8:30 a.m. Eastern time on Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , July July: see month. 28, 2006. To listen to a live Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the broadcast of the call, visit www.alleghenyenergy.com. The slide presentation to be used during the conference call will be available on the company's Web site at 7:00 a.m. Eastern time on July 28. A taped replay of the call will be available after the live broadcast. Allegheny Energy Headquartered in Greensburg, Pa., Allegheny Energy is an investor-owned utility consisting of two major businesses. Allegheny Energy Supply owns and operates electric generating facilities, and Allegheny Power delivers low-cost, reliable electric service to customers in Pennsylvania, West Virginia, Maryland and 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). . For more information, visit our Web site at www.alleghenyenergy.com. 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. In addition to historical information, this release contains a number of "forward-looking statements" as defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Words such as anticipate, expect, project, intend, plan, believe, and words and terms of similar substance used in connection with any discussion of future plans, actions, or events identify forward-looking statements. These include statements with respect to: regulation and the status of retail generation service supply competition in states served by Allegheny Energy's distribution business, Allegheny Power; financing plans; demand for energy and the cost and availability of raw materials, including coal; provider-of-last-resort and power supply contracts; results of 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. ; results of operations; internal controls and procedures; capital expenditures; status and condition of plants and equipment; 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. matters; and accounting issues. Forward-looking statements involve estimates, expectations and projections and, as a result, are subject to risks and uncertainties. There can be no assurance that actual results will not materially differ from expectations. Actual results have varied materially and unpredictably from past expectations. Factors that could cause actual results to differ materially include, among others, the following: changes in the price of power and fuel for electric generation; general economic and business conditions; changes in access to capital markets; complications or other factors that render (1) To make visible; to draw. The term comes from the graphics world where a rendering is an artist's drawing of what a new structure would look like. In computer-aided design (CAD), a rendering is a particular view of a 3D model that has been converted into a realistic image. it difficult or impossible to obtain necessary lender LENDER, contracts. He from whom a thing is borrowed. 2. The contract of loan confers rights, and imposes duties on the lender. 1. The lender has the right to revoke the loan at his mere pleasure; 9 Cowen, R. 687; 8 Johns. Rep. 432; 1 T. R. 480; 2 Campb. Rep. consents or regulatory authorizations on a timely basis; environmental regulations; the results of regulatory proceedings, including proceedings related to rates; changes in industry capacity, development and other activities by Allegheny Energy's competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. ; changes in the weather and other natural phenomena; changes in the underlying inputs and assumptions, including market conditions used to estimate the fair values of commodity contracts; changes in laws and regulations applicable to Allegheny Energy, its markets or its activities; the loss of any significant customers or suppliers; dependence on other electric transmission and gas transportation systems and their constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. or availability; changes in PJM PJM Pacific Journal of Mathematics PJM Project Manager PJM Puerto Jimenez, Costa Rica (Airport code) PJM Pennsylvania New Jersey Maryland Interconnection LLC (Mid-Atlantic region power pool) , including changes to participant Participant A party of a funding. It usually refers to the lowest rank or smallest level of funding. rules and tariffs This is a list of tariffs and trade legislation:
detrusor instability , terrorism terrorism, the threat or use of violence, often against the civilian population, to achieve political or social ends, to intimidate opponents, or to publicize grievances. and war. Additional risks and uncertainties are identified and discussed in Allegheny Energy's reports filed with the Securities and Exchange Commission.
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -----------------------
(In thousands) 2006 2005 2006 2005
-------------------------- -------- -------- ---------- ----------
Operating revenues $722,235 $714,650 $1,567,881 $1,468,680
Operating expenses:
Fuel consumed in
electric generation 186,185 166,139 399,392 340,026
Purchased power and
transmission 95,097 108,243 196,329 213,065
Gain on sale of OVEC
power agreement and
shares (1,124) -- (6,124) --
Deferred energy costs,
net 413 (1,805) 5,406 (619)
Operations and
maintenance 205,871 200,906 367,734 363,583
Depreciation and
amortization 68,169 77,358 136,011 153,769
Taxes other than income
taxes 52,201 51,738 105,868 106,796
--------- --------- ----------- -----------
Total operating
expenses 606,812 602,579 1,204,616 1,176,620
--------- --------- ----------- -----------
Operating income 115,423 112,071 363,265 292,060
Other income and expenses,
net 10,258 21,234 17,929 26,487
Interest expense and
preferred dividends:
Interest expense 76,425 128,277 143,813 254,071
Preferred dividends of
subsidiary 293 1,260 586 2,519
--------- --------- ----------- -----------
Total interest
expense and
preferred
dividends 76,718 129,537 144,399 256,590
--------- --------- ----------- -----------
Income from continuing
operations before income
taxes and minority
interest 48,963 3,768 236,795 61,957
Income tax expense from
continuing operations 16,741 9,815 89,245 33,191
Minority interest in net
income of subsidiaries 191 52 1,369 467
--------- --------- ----------- -----------
Income (loss) from
continuing operations 32,031 (6,099) 146,181 28,299
Loss from discontinued
operations, net of tax (898) (12,308) (1,664) (4,064)
--------- --------- ----------- -----------
Net income (loss) $31,133 $(18,407) $144,517 $24,235
========= ========= =========== ===========
Common share data:
Weighted average common
shares outstanding
Basic 163,526 156,731 163,304 147,128
Diluted 168,608 156,731 168,557 150,276
Basic income (loss) per
common share:
Income (loss) from
continuing operations $0.20 $(0.04) $0.89 $0.19
Loss from discontinued
operations, net (0.01) (0.08) (0.01) (0.03)
--------- --------- ----------- -----------
Net income (loss) per
common share $0.19 $(0.12) $0.88 $0.16
========= ========= =========== ===========
Diluted income (loss) per
common share:
Income (loss) from
continuing operations $0.19 $(0.04) $0.87 $0.19
Loss from discontinued
operations, net (0.01) (0.08) (0.01) (0.03)
--------- --------- ----------- -----------
Net income (loss) per
common share $0.18 $(0.12) $0.86 $0.16
========= ========= =========== ===========
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
June 30, December 31,
(In thousands) 2006 2005
---------------------------------------------- ---------- ------------
ASSETS
Current Assets:
Cash and cash equivalents $205,269 $262,212
Accounts receivable:
Customer 170,807 179,634
Unbilled utility revenue 97,678 129,111
Wholesale and other 68,117 82,261
Allowance for uncollectible accounts (16,085) (16,778)
Materials and supplies 94,983 98,069
Fuel 91,556 67,273
Deferred income taxes 56,429 93,404
Prepaid taxes 53,354 45,758
Assets held for sale 921 1,521
Collateral deposits 60,646 147,775
Commodity contracts 4,651 9,325
Restricted funds 14,307 21,589
Regulatory assets 37,777 38,418
Other 12,365 14,246
------------ ------------
Total current assets 952,775 1,173,818
------------ ------------
Property, Plant and Equipment, Net:
Generation 5,759,004 5,751,077
Transmission 1,050,271 1,028,323
Distribution 3,521,355 3,448,350
Other 401,226 429,108
Accumulated depreciation (4,563,742) (4,508,707)
------------ ------------
Subtotal 6,168,114 6,148,151
Construction work in progress 182,436 129,277
------------ ------------
Total property, plant and equipment,
net 6,350,550 6,277,428
------------ ------------
Investments and Other Assets:
Non-current assets held for sale 21,179 48,559
Goodwill 367,287 367,287
Investments in unconsolidated affiliates 28,020 28,555
Intangible assets 27,396 27,396
Other 42,067 49,413
------------ ------------
Total investments and other assets 485,949 521,210
------------ ------------
Deferred Charges:
Commodity contracts 234 --
Regulatory assets 521,515 544,810
Other 30,918 41,546
------------ ------------
Total deferred charges 552,667 586,356
------------ ------------
Total Assets $8,341,941 $8,558,812
============ ============
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)
(unaudited)
June 30, December 31,
(In thousands) 2006 2005
---------------------------------------------- ---------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Long-term debt due within one year $494,889 $477,217
Accounts payable 211,734 316,713
Accrued taxes 138,534 154,587
Commodity contracts 32,732 92,934
Accrued interest 94,253 91,433
Other 149,821 153,570
----------- ------------
Total current liabilities 1,121,963 1,286,454
----------- ------------
Long-term Debt 3,404,112 3,624,483
Deferred Credits and Other Liabilities:
Commodity contracts 20,169 22,994
Investment tax credit 74,423 76,965
Deferred income taxes 755,960 692,241
Obligations under capital leases 13,918 16,427
Regulatory liabilities 456,055 454,275
Adverse power purchase commitment 175,581 184,224
Other 409,734 459,465
----------- ------------
Total deferred credits and other
liabilities 1,905,840 1,906,591
----------- ------------
Commitments and Contingencies
Minority Interest 9,520 21,989
Preferred Stock of Subsidiary 24,000 24,000
Common Stockholders' Equity:
Common stock--$1.25 par value per share,
260 million shares authorized and
164,223,364 and 163,002,295 shares issued
at June 30, 2006 and December 31, 2005 205,279 203,753
Other paid-in capital 1,891,907 1,880,644
Accumulated deficit (100,107) (244,625)
Treasury stock at cost; 49,493 shares (1,756) (1,756)
Accumulated other comprehensive loss (118,817) (142,721)
----------- ------------
Total common stockholders' equity 1,876,506 1,695,295
----------- ------------
Total Liabilities and Stockholders' Equity $8,341,941 $8,558,812
=========== ============
ALLEGHENY ENERGY, INC.--CONSOLIDATED RESULTS OF OPERATIONS BY SEGMENT
(unaudited)
Three Months Ended
June 30, 2006
----------------------------------------
Delivery Generation
and and
(In millions) Services Marketing Eliminations Total
----------------------------- -------- ---------- ------------ -------
Operating revenues $632.5 $414.1 $(324.3) $722.3
Fuel consumed in electric
generation -- 186.2 -- 186.2
Purchased power and
transmission 414.9 2.7 (322.5) 95.1
Gain on sale of OVEC power
agreement and shares -- (1.1) -- (1.1)
Deferred energy costs, net 0.4 -- -- 0.4
Operations and maintenance 93.1 114.5 (1.8) 205.8
Depreciation and amortization 37.9 30.3 -- 68.2
Taxes other than income taxes 31.9 20.3 -- 52.2
-------- ---------- ------------ -------
Total operating expenses 578.2 352.9 (324.3) 606.8
-------- ---------- ------------ -------
Operating income 54.3 61.2 -- 115.5
Other income and expenses, net 6.9 4.3 (1.0) 10.2
Interest expense and preferred
dividends 22.3 55.4 (1.0) 76.7
-------- ---------- ------------ -------
Income (loss) from continuing
operations before income
taxes and minority interest 38.9 10.1 -- 49.0
Income tax expense from
continuing operations 15.6 1.2 -- 16.8
Minority interest -- 0.2 -- 0.2
-------- ---------- ------------ -------
Income (loss) from continuing
operations 23.3 8.7 -- 32.0
Loss from discontinued
operations, net of tax -- (0.9) -- (0.9)
-------- ---------- ------------ -------
Net income (loss) $23.3 $7.8 $-- $31.1
======== ========== ============ =======
Three Months Ended
June 30, 2005
----------------------------------------
Delivery Generation
and and
(In millions) Services Marketing Eliminations Total
----------------------------- -------- ---------- ------------ -------
Operating revenues $663.2 $404.5 $(353.0) $714.7
Fuel consumed in electric
generation -- 166.1 -- 166.1
Purchased power and
transmission 436.0 23.2 (350.9) 108.3
Gain on sale of OVEC power
agreement and shares -- -- -- --
Deferred energy costs, net (1.8) -- -- (1.8)
Operations and maintenance 99.7 103.3 (2.1) 200.9
Depreciation and amortization 39.0 38.4 -- 77.4
Taxes other than income taxes 31.4 20.3 -- 51.7
-------- ---------- ------------ -------
Total operating expenses 604.3 351.3 (353.0) 602.6
-------- ---------- ------------ -------
Operating income 58.9 53.2 -- 112.1
Other income and expenses, net 8.5 12.9 (0.2) 21.2
Interest expense and preferred
dividends 47.3 82.4 (0.2) 129.5
-------- ---------- ------------ -------
Income (loss) from continuing
operations before income
taxes and minority interest 20.1 (16.3) -- 3.8
Income tax expense from
continuing operations 3.2 6.6 -- 9.8
Minority interest -- 0.1 -- 0.1
-------- ---------- ------------ -------
Income (loss) from continuing
operations 16.9 (23.0) -- (6.1)
Loss from discontinued
operations, net of tax (6.5) (5.8) -- (12.3)
-------- ---------- ------------ -------
Net income (loss) $10.4 $(28.8) $-- $(18.4)
======== ========== ============ =======
ALLEGHENY ENERGY, INC.--CONSOLIDATED RESULTS OF OPERATIONS BY SEGMENT
(continued)
(unaudited)
Six Months Ended
June 30, 2006
-------------------------------------------
Delivery Generation
and and
(In millions) Services Marketing Eliminations Total
-------------------------- -------- ----------- ------------ ---------
Operating revenues $1,335.1 $921.2 $(688.4) $1,567.9
Fuel consumed in electric
generation -- 399.4 -- 399.4
Purchased power and
transmission 862.6 18.4 (684.7) 196.3
Gain on sale of OVEC power
agreement and shares -- (6.1) -- (6.1)
Deferred energy costs, net 5.4 -- -- 5.4
Operations and maintenance 179.9 191.5 (3.7) 367.7
Depreciation and
amortization 75.6 60.4 -- 136.0
Taxes other than income
taxes 65.2 40.7 -- 105.9
--------- ---------- ------------ ---------
Total operating
expenses 1,188.7 704.3 (688.4) 1,204.6
--------- ---------- ------------ ---------
Operating income 146.4 216.9 -- 363.3
Other income and expenses,
net 11.2 8.1 (1.4) 17.9
Interest expense and
preferred dividends 42.2 103.6 (1.4) 144.4
--------- ---------- ------------ ---------
Income (loss) from
continuing operations
before income taxes and
minority interest 115.4 121.4 -- 236.8
Income tax expense from
continuing operations 45.7 43.5 -- 89.2
Minority interest -- 1.4 -- 1.4
--------- ---------- ------------ ---------
Income (loss) from
continuing operations 69.7 76.5 -- 146.2
Income (loss) from
discontinued operations,
net of tax -- (1.7) -- (1.7)
--------- ---------- ------------ ---------
Net income (loss) $69.7 $74.8 $-- $144.5
========= ========== ============ =========
Six Months Ended
June 30, 2005
-------------------------------------------
Delivery Generation
and and
(In millions) Services Marketing Eliminations Total
-------------------------- -------- ----------- ------------ ---------
Operating revenues $1,402.6 $821.4 $(755.3) $1,468.7
Fuel consumed in electric
generation -- 340.0 -- 340.0
Purchased power and
transmission 921.1 43.0 (751.0) 213.1
Gain on sale of OVEC power
agreement and shares -- -- -- --
Deferred energy costs, net (0.6) -- -- (0.6)
Operations and maintenance 184.2 183.6 (4.3) 363.5
Depreciation and
amortization 77.1 76.7 -- 153.8
Taxes other than income
taxes 66.0 40.8 -- 106.8
--------- ---------- ------------ ---------
Total operating
expenses 1,247.8 684.1 (755.3) 1,176.6
--------- ---------- ------------ ---------
Operating income 154.8 137.3 -- 292.1
Other income and expenses,
net 12.2 14.6 (0.3) 26.5
Interest expense and
preferred dividends 77.0 179.8 (0.2) 256.6
--------- ---------- ------------ ---------
Income (loss) from
continuing operations
before income taxes and
minority interest 90.0 (27.9) (0.1) 62.0
Income tax expense from
continuing operations 23.4 9.8 -- 33.2
Minority interest -- 0.5 -- 0.5
--------- ---------- ------------ ---------
Income (loss) from
continuing operations 66.6 (38.2) (0.1) 28.3
Income (loss) from
discontinued operations,
net of tax 4.3 (8.5) 0.1 (4.1)
--------- ---------- ------------ ---------
Net income (loss) $70.9 $(46.7) $-- $24.2
========= ========== ============ =========
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in millions, except per share data)
(unaudited)
INCOME FROM
CONTINUING
OPERATIONS BEFORE DILUTED
THREE MONTHS ENDED INCOME TAXES AND INCOME
JUNE 30, 2006 MINORITY INTEREST NET INCOME PER SHARE
----------------------------------------------------------------------
Calculation of Adjusted Income:
Income - GAAP basis $49.0 $31.1 $0.18
=========
Adjustments:
Loss from discontinued
operations 0.9
Write-off of prior deferred
financing costs(1) 9.5 5.8
-------------------------------------------------------------
Adjusted Income $58.5 $37.8 $0.22
======================================================================
Calculation of Adjusted EBITDA:
Net Income - GAAP basis $31.1
Loss from discontinued
operations 0.9
Interest expense and preferred
dividends 76.7
Income tax expense 16.7
Depreciation and amortization 68.2
-------------------------------------------------------------
EBITDA from continuing
operations 193.6
No adjustments --
-------------------------------------------------------------
Adjusted EBITDA from continuing
operations $193.6
=============================================================
INCOME FROM
CONTINUING DILUTED
OPERATIONS BEFORE INCOME
THREE MONTHS ENDED JUNE 30, INCOME TAXES AND NET INCOME (LOSS)
JUNE 30, 2005 MINORITY INTEREST (LOSS) PER SHARE
----------------------------------------------------------------------
Calculation of Adjusted Income:
Income (Loss) - GAAP basis $3.8 $(18.4) $(0.12)
=========
Adjustments:
Loss from discontinued
operations(2) 12.3
Expense related to conversion
of trust preferred
securities(1) 47.2 29.8
Cash receipt from former
trading executive's forfeited
assets(3) (11.2) (6.9)
Receipt of Hatfield power
station insurance proceeds(4) (6.7) (4.1)
-------------------------------------------------------------
Adjusted Income $33.1 $12.7 $0.08
======================================================================
Calculation of Adjusted EBITDA:
Net Loss - GAAP basis $(18.4)
Loss from discontinued
operations 12.3
Interest expense and preferred
dividends 129.5
Income tax expense 9.8
Depreciation and amortization 77.4
-------------------------------------------------------------
EBITDA from continuing
operations 210.6
Cash receipt from former
trading executive's forfeited
assets (11.2)
Receipt of Hatfield power
station insurance proceeds (6.7)
-------------------------------------------------------------
Adjusted EBITDA from continuing
operations $192.7
=============================================================
FOOTNOTES:
(1) These amounts are included in Interest expense on the Consolidated
Statements of Operations.
(2) This amount includes a net after-tax charge of $8.9 million
relating to adjustments to the carrying values of assets
held-for-sale.
(3) This amount is included in Other income on the Consolidated
Statement of Operations.
(4) This amount is included in Operations and maintenance expense on
the Consolidated Statement of Operations.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in millions, except per share data)
(unaudited)
INCOME FROM
CONTINUING
OPERATIONS BEFORE DILUTED
INCOME TAXES AND INCOME
SIX MONTHS ENDED JUNE 30, 2006 MINORITY INTEREST NET INCOME PER SHARE
----------------------------------------------------------------------
Calculation of Adjusted Income:
Income - GAAP basis $236.8 $144.5 $0.86
=========
Adjustments:
Loss from discontinued
operations 1.7
Write-off of prior deferred
financing costs(1) 9.5 5.8
-------------------------------------------------------------
Adjusted Income $246.3 $152.0 $0.90
======================================================================
Calculation of Adjusted EBITDA:
Net Income - GAAP basis $144.5
Loss from discontinued
operations 1.7
Interest expense and preferred
dividends 144.4
Income tax expense 89.2
Depreciation and amortization 136.0
-------------------------------------------------------------
EBITDA from continuing
operations 515.8
No adjustments --
-------------------------------------------------------------
Adjusted EBITDA from continuing
operations $515.8
=============================================================
INCOME FROM
CONTINUING
OPERATIONS BEFORE DILUTED
INCOME TAXES AND INCOME
SIX MONTHS ENDED JUNE 30, 2005 MINORITY INTEREST NET INCOME PER SHARE
----------------------------------------------------------------------
Calculation of Adjusted Income:
Income - GAAP basis $62.0 $24.2 $0.16
=========
Adjustments:
Loss from discontinued
operations(2) 4.1
Interest expense related to
Merrill Lynch summary
judgment(3) 38.5 24.3
Expense related to conversion
of trust preferred
securities(1) 47.2 29.8
Cash receipt from former
trading executive's forfeited
assets( 4) (11.2) (6.9)
Receipt of Hatfield power
station insurance proceeds(5) (6.7) (4.1)
-------------------------------------------------------------
Adjusted Income $129.8 $71.4 $0.48
======================================================================
Calculation of Adjusted EBITDA:
Net Income - GAAP basis $24.2
Loss from discontinued
operations 4.1
Interest expense and preferred
dividends 256.6
Income tax expense 33.2
Depreciation and amortization 153.8
-------------------------------------------------------------
EBITDA from continuing
operations 471.9
Cash receipt from former
trading executive's forfeited
assets (11.2)
Receipt of Hatfield power
station insurance proceeds (6.7)
-------------------------------------------------------------
Adjusted EBITDA from continuing
operations $454.0
=============================================================
FOOTNOTES:
(1) These amounts are included in Interest expense on the Consolidated
Statements of Operations.
(2) This amount includes a net after-tax charge of $9.5 million
relating to adjustments to the carrying values of assets
held-for-sale.
(3) This amount is included in Interest expense on the Consolidated
Statement of Operations. This amount represents the estimated
interest owed to Merrill Lynch from March 16, 2001 thru March 31,
2005. It does not include an additional $2.8 million of interest
accrued in the second quarter.
(4) This amount is included in Other income on the Consolidated
Statement of Operations.
(5) This amount is included in Operations and maintenance expense on
the Consolidated Statement of Operations.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in millions)
(unaudited)
THREE MONTHS THREE MONTHS
ENDED JUNE 30, ENDED JUNE 30,
ADJUSTED EXPENSES 2006 2005
----------------------------------------------------------------------
Operations and maintenance:
As reported $205.9 $200.9
Receipt of Hatfield power station
insurance proceeds -- 6.7
----------------------------------------------------------------------
As Adjusted $205.9 $207.6
======================================================================
Other income:
As reported $10.3 $21.2
Cash receipt from former trading
executive's forfeited assets -- (11.2)
----------------------------------------------------------------------
As Adjusted $10.3 $10.0
======================================================================
Interest expense and preferred
dividends of subsidiary:
As reported $76.7 $129.5
Write-off of prior deferred financing
costs (9.5) --
Expense related to conversion of trust
preferred securities -- (47.2)
----------------------------------------------------------------------
As Adjusted $67.2 $82.3
======================================================================
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
OPERATING STATISTICS
(Unaudited)
Three Months Ended June 30,
2006 2005 Change
----------------------------------------------------------------------
DELIVERY AND SERVICES:
Retail electricity sales (million KWH) 10,049 11,368 -11.6%
Usage per customer (KWH):
Residential 2,470 2,596 -4.9%
Commercial 14,481 14,738 -1.7%
Industrial 155,257(a) 190,797 -18.6%
GENERATION AND MARKETING:
Generation (million KWH) 11,234 11,089 1.3%
(Unaudited)
Six Months Ended June 30,
2006 2005 Change
----------------------------------------------------------------------
DELIVERY AND SERVICES:
Retail electricity sales (million KWH) 21,231 23,870 -11.1%
Usage per customer (KWH):
Residential 5,941 6,169 -3.7%
Commercial 29,118 29,678 -1.9%
Industrial 302,279(a) 374,899 -19.4%
GENERATION AND MARKETING:
Generation (million KWH) 24,251 23,386 3.7%
(a) Reflects the expiration of a below-market contract with a
Maryland industrial customer
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