Allegheny Energy Reports Third Quarter 2009 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 financial results for the third quarter of 2009. [TABLE OMITTED] Adjusted net income for the third quarter of 2009 excludes $19.3 million of pre-tax interest expense related to a debt tender offer and net unrealized pre-tax losses of $18.3 million on economic hedges that do not qualify for hedge accounting Why is hedge accounting necessary? Many financial institutions and corporate businesses (entities) use derivative financial instruments to hedge their exposure to different risks (eg interest rate risk, foreign exchange risk, commodity risk, etc). . Adjusted net income for the third quarter of 2008 excludes $4.0 million of unrealized pre-tax losses on economic hedges. Adjusted net income is a non-GAAP financial measure. For information on the calculation of adjusted net income for all periods, see the attached reconciliations of non-GAAP financial measures. "Adjusted earnings grew in the third quarter due to improved results in our regulated delivery and transmission business," said Paul J. Evanson, Chairman, President and Chief Executive Officer of Allegheny Energy. "However, the weak economy and low power prices reduced earnings in our generation business. We recently completed several financings which improved our liquidity and financial flexibility, and we continue to focus on cost control. We believe Allegheny is well-positioned to benefit from an economic recovery." Third Quarter Consolidated Results Adjusted net income for the third quarter of 2009 increased by $8.7 million compared with the same period in 2008. Key factors contributing to the results include: * Adjusted 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 $41.6 million, reflecting reduced generation volume, largely due to weak demand and lower power prices, as well as planned outages to complete the installation of scrubbers at the Hatfield's Ferry power plant. Factors benefiting revenues included higher rates 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 , increased cost recovery in 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). , hedging activity, increased revenue from transmission expansion and increased sales to third parties. * Fuel expense decreased by $111.2 million, primarily due to reduced generation volume and lower gas prices, partially offset by higher coal prices. * Purchased power costs were higher by $26.1 million, primarily due to increased purchases from third parties to serve 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). customers. * Deferred energy expense increased by $4.4 million due to a fuel and energy cost recovery clause in 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. . * Operations and maintenance costs decreased by $1.1 million. * Depreciation increased $3.9 million, primarily due to placing some scrubber equipment in service at the Hatfield's Ferry power plant. * Adjusted interest expense increased $7.9 million, primarily due to higher debt balances and lower capitalized interest Capitalized interest Interest that is not immediately expensed, but rather is considered as an asset and is then amortized through the income statement over time. In the context of project financing, interest that is paid by additional borrowing. . * Adjusted income tax expense increased by $13.9 million due to a higher effective tax rate and an increase in adjusted pre-tax income. Adjusted 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 third quarter of 2009 was $297.0 million, an increase of $34.4 million compared to the same quarter of the prior year. EBITDA and adjusted EBITDA are non-GAAP financial measures. Details on the calculation of EBITDA and adjusted EBITDA, as well as reconciliations of these financial measures to net income, are attached to this release. [TABLE OMITTED] Adjusted net income for the Generation and Marketing segment in both the third quarter of 2009 and 2008 excludes net unrealized pre-tax losses previously discussed, and the 2009 third quarter adjusted results also exclude expense related to a debt tender offer. There were no adjustments in the Delivery and Services segment for the third quarter of either year. Generation and Marketing: Adjusted net income for the quarter decreased by $18.5 million compared to the same period a year earlier. Results were adversely impacted by lower generation volume and power prices, as well as the scrubber tie-in work at Hatfield's Ferry and the elimination of an intercompany transfer payment, partially offset by higher generation rates in Pennsylvania, the benefit of hedging activity, lower fuel costs and lower income taxes. Delivery and Services: Net income for the quarter increased by $27.2 million compared to the same period a year earlier. Key factors contributing to the improved results include increased cost recovery in Virginia, the elimination of an intercompany transfer payment and higher revenues from transmission expansion. These benefits were partially offset by lower retail electricity sales and higher income taxes, primarily due to an increase in pre-tax income. Nine-Month Consolidated Results Adjusted net income for the nine months ended September 30, 2009 decreased by $20.1 million compared to the same period in 2008. Adjusted EBITDA for the nine months ended September 30, 2009 increased by $38.5 million compared to the same period of the prior year. Details on the calculation of EBITDA and adjusted EBITDA, as well as reconciliations of these financial measures to net income, are attached to this release. [TABLE OMITTED] Adjusted net income for the Generation and Marketing segment for the nine-month period of 2009 and 2008 excludes net unrealized pre-tax gains associated with economic hedges that do not qualify for hedge accounting and the 2009 nine-month results also exclude interest expense related to the debt tender offer previously discussed. There were no adjustments in the Delivery and Services segment for the nine-month period of either year. Reconciliation of Non-GAAP Financial Measures This news release includes presentation of financial information 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 generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ), and also includes adjusted net income, EBITDA, adjusted EBITDA and other non-GAAP financial measures as defined in the Securities and Exchange Commission's Regulation G. Management believes that presenting these additional financial measures provide investors with a more complete understanding of the core results and underlying trends from which to consider past performance and prospects for the future. These financial measures should not be considered in isolation or viewed as a substitute for, or superior to, net income or other data prepared in accordance with GAAP as a measure of operating performance or liquidity. Pursuant to the requirements of Regulation G, tables are attached that reconcile non-GAAP financial measures in this release to the most directly comparable GAAP measure. Investor Conference Call Allegheny Energy will discuss these results in 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 at 1:00 p.m. Eastern Daylight Time on Thursday, October 29, 2009. To listen, visit www.alleghenyenergy.com. Slides to be used in the Webcast presentation will be available at www.alleghenyenergy.com at approximately 9:30 a.m. Eastern Daylight Time on Thursday, October 29. A taped replay will be available after the live broadcast. Allegheny Energy Headquartered in Greensburg, Pa., Allegheny Energy is an investor-owned electric utility with total annual revenues of over $3 billion and more than 4,000 employees. The company owns and operates generating facilities and delivers low-cost, reliable electric service to 1.6 million customers in Pennsylvania, West Virginia, Maryland and Virginia. For more information, visit the company's 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 may contain 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: rate 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; capacity purchase commitments; and regulatory matters. 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: plant performance and unplanned outages; changes in the price of power and fuel for electric generation; general economic and business conditions; changes in access to capital markets and actions of rating agencies; complications or other factors that render it difficult or impossible to obtain necessary lender 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; changes in the weather and other natural phenomena; changes in customer switching behavior and their resulting effects on existing and future load requirements; 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; inflationary in·fla·tion·ar·y adj. Of, associated with, or tending to cause inflation: inflationary prices; inflationary policies. Adj. 1. and interest rate trends changes in market rules, including changes to 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) participant rules and tariffs This is a list of tariffs and trade legislation:
detrusor instability , terrorism and war. Additional risks and uncertainties are identified and discussed in Allegheny Energy's reports filed with the Securities and Exchange Commission. These forward-looking statements speak only as of the date of this document. Allegheny Energy undertakes no obligation to update its forward-looking statements to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date of this release. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] Notes to Reconciliation of Non-GAAP Financial Measures: (1) Adjustments relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc certain unrealized gains/(losses) included in GAAP operating revenues: [TABLE OMITTED] [TABLE OMITTED] (2) In September, 2009, Allegheny Energy Supply purchased its outstanding 7.80% Notes due 2011 and its 8.25% Notes due 2012 in the aggregate principal amount of $244.3 million, pursuant to a cash tender offer. The costs associated with this purchase in the amount of $19.3 million were charged to interest expense in the GAAP basis consolidated statement of income. [TABLE OMITTED] [TABLE OMITTED] |
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