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GREENSBURG, Pa.--(BUSINESS WIRE)-- Allegheny Energy, Inc. (NYSE: AYE) today reported financial results for the third quarter of 2009.
Consolidated Net Income Attributable to Allegheny Energy, Inc.
$ millions Per share
Three Months Ended September 30 2009 2008 2009 2008
GAAP $77.0 $89.0 $0.45 $ 0.52
Adjusted 100.1 91.4 0.59 0.54
Nine Months Ended September 30
GAAP $283.5 $379.2 $1.67 $ 2.23
Adjusted 283.9 304.0 1.67 1.79
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. 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 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, increased cost recovery
in Virginia, 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 customers.
-- Deferred energy expense increased by $4.4 million due to a fuel and
energy cost recovery clause in West Virginia.
-- 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.
-- 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 for the third quarter of 2009 was $297.0 million, an increase of $34.4 million compared to the same quarter of the prior year. EBITDA and adjusted EBITDA are non-GAAP financial measures. Details on the calculation of EBITDA and adjusted EBITDA, as well as reconciliations of these financial measures to net income, are attached to this release.
Segment Results
Net Income Attributable to Allegheny Energy, Inc.
Three Months Ended September 30
($ millions)
Increase
2009 2008 (Decrease)
Generation and Marketing:
GAAP $45.5 $84.7 $(39.2)
Adjusted 68.6 87.1 (18.5)
Delivery and Services:
GAAP $31.5 $4.3 $27.2
Adjusted 31.5 4.3 27.2
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 $38.5 million compared to the same period of the prior year. Details on the calculation of EBITDA and adjusted EBITDA, as well as reconciliations of these financial measures to net income, are attached to this release.
Segment Results
Net Income Attributable to Allegheny Energy, Inc.
Nine Months Ended September 30
($ millions)
Increase
2009 2008 (Decrease)
Generation and Marketing:
GAAP $ 178.2 $336.7 $(158.5 )
Adjusted 178.6 261.5 (82.9 )
Delivery and Services:
GAAP $ 105.3 $ 42.5 $ 62.8
Adjusted $ 105.3 $ 42.5 $ 62.8
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 with 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 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
In addition to historical information, this release may contain a number of "forward-looking statements" as defined in the Private Securities Litigation Reform Act 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; 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 or availability; inflationary and interest rate trends changes in market rules, including changes to PJM participant rules and tariffs; the effect of accounting pronouncements issued periodically by accounting standard-setting bodies and accounting issues facing our organization; and the continuing effects of global 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 after the date of this release.
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
(In millions, except per share 2009 2008 2009 2008
amounts)
Operating revenues $793.7 $849.6 $2,565.7 $2,678.1
Operating expenses:
Fuel 188.0 299.2 663.8 794.2
Purchased power and transmission 134.2 108.1 380.4 302.7
Deferred energy costs, net (14.3 ) (18.7 ) (38.9 ) (28.1 )
Operations and maintenance 151.2 152.3 518.9 511.0
Depreciation and amortization 71.3 67.4 207.0 206.5
Taxes other than income taxes 57.4 54.4 159.7 159.7
Total operating expenses 587.8 662.7 1,890.9 1,946.0
Operating income 205.9 186.9 674.8 732.1
Other income (expense), net 1.9 4.5 6.1 15.3
Interest expense 85.1 57.9 201.5 175.0
Income before income taxes 122.7 133.5 479.4 572.4
Income tax expense 45.3 44.3 195.1 192.5
Net income 77.4 89.2 284.3 379.9
Less net income attributable to (0.4 ) (0.2 ) (0.8 ) (0.7 )
noncontrolling interest
Net income attributable to $77.0 $89.0 $283.5 $379.2
Allegheny Energy, Inc.
Earnings per share attributable to
Allegheny Energy, Inc.:
Basic $0.45 $0.53 $1.67 $2.25
Diluted $0.45 $0.52 $1.67 $2.23
Average shares outstanding:
Basic 169.6 168.9 169.5 168.2
Diluted 170.0 170.0 169.9 170.0
Dividends per share $0.15 $0.15 $0.45 $0.45
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
September 30, December 31,
(In millions)
2009 2008
ASSETS
Current Assets:
Cash and cash equivalents $278.3 $362.1
Accounts receivable:
Customer 180.2 188.3
Unbilled utility revenue 87.8 122.7
Wholesale and other 59.3 61.5
Allowance for uncollectible accounts (13.3 ) (13.3 )
Materials and supplies 109.8 115.1
Fuel 218.0 128.2
Deferred income taxes 22.5 69.6
Prepaid taxes 56.9 44.8
Collateral deposits 24.7 33.5
Derivative assets 40.4 113.1
Regulatory assets 153.0 158.8
Assets held for sale 30.4 --
Other 124.6 111.3
Total current assets 1,372.6 1,495.7
Property, Plant and Equipment:
Generation 6,641.1 6,107.3
Transmission 1,239.3 1,171.7
Distribution 3,732.4 3,944.1
Other 461.4 463.4
Accumulated depreciation (5,048.9 ) (4,994.1 )
Subtotal 7,025.3 6,692.4
Construction work in progress 1,447.2 1,309.8
Property, plant and equipment held for sale, net 250.1 --
Total property, plant and equipment, net 8,722.6 8,002.2
Other Noncurrent Assets:
Regulatory assets 659.3 687.7
Goodwill 367.3 367.3
Restricted funds -- Fort Martin scrubber project -- 133.3
Investments in unconsolidated affiliates 27.2 28.0
Derivative assets 0.7 9.8
Other 113.4 87.0
Total other noncurrent assets 1,167.9 1,313.1
Total Assets $11,263.1 $10,811.0
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
(unaudited)
September 30, December 31,
(In millions, except share amounts) 2009 2008
LIABILITIES AND EQUITY
Current Liabilities:
Long-term debt due within one year $160.7 $93.9
Accounts payable 346.1 374.2
Accrued taxes 69.6 119.4
Payable to PJM for FTRs 80.9 110.8
Derivative liabilities 13.7 22.2
Regulatory liabilities 39.3 69.2
Accrued interest 67.1 58.1
Security deposits 48.8 46.2
Liabilities associated with assets held for sale 9.3 --
Other 116.5 109.6
Total current liabilities 952.0 1,003.6
Long-term Debt, Excluding Amounts Due Within One 4,327.4 4,115.9
Year
Deferred Credits and Other Liabilities:
Derivative liabilities 19.2 11.9
Income taxes payable 84.7 75.7
Investment tax credit 62.8 65.8
Deferred income taxes 1,397.6 1,277.4
Regulatory liabilities 469.8 528.9
Pension and other postretirement employee benefit 559.4 578.4
plan liabilities
Adverse power purchase commitment 118.9 132.3
Liabilities associated with assets held for sale 53.1 --
Other 157.2 165.4
Total deferred credits and other liabilities 2,922.7 2,835.8
Equity:
Common stock -- $1.25 par value per share, 260
million shares authorized and 169,571,717 and 211.9 211.8
169,413,887 shares issued at September 30, 2009
and December 31, 2008, respectively
Other paid-in capital 1,965.9 1,952.5
Retained earnings 938.9 731.6
Treasury stock at cost - 49,493 shares (1.8 ) (1.8 )
Accumulated other comprehensive loss (66.5 ) (43.3 )
Total Allegheny Energy, Inc. common stockholders' 3,048.4 2,850.8
equity
Noncontrolling interest 12.6 4.9
Total equity 3,061.0 2,855.7
Total Liabilities and Equity $11,263.1 $10,811.0
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
SEGMENT STATEMENTS OF INCOME
(unaudited)
Three Months Ended Three Months Ended
September 30, 2009 September 30, 2008
Delivery Generation Delivery Generation
(In millions) and and Eliminations Total and and Eliminations Total
Services Marketing Services Marketing
Operating $783.5 $450.0 $ ) $793.7 $692.7 $589.3 $ ) $849.6
revenues (439.8 (432.4
Fuel -- 188.0 -- 188.0 -- 299.2 -- 299.2
Purchased
power and 545.1 26.8 (437.7 ) 134.2 512.9 25.7 (430.5 ) 108.1
transmission
Deferred
energy costs, (5.0 ) (9.3 ) -- (14.3 ) 1.5 (20.2 ) -- (18.7 )
net
Operations and 85.3 68.0 (2.1 ) 151.2 83.6 70.6 (1.9 ) 152.3
maintenance
Depreciation
and 38.0 33.3 -- 71.3 39.2 28.2 -- 67.4
amortization
Taxes other
than income 39.4 18.0 -- 57.4 35.0 19.4 -- 54.4
taxes
Total
operating 702.8 324.8 (439.8 ) 587.8 672.2 422.9 (432.4 ) 662.7
expenses
Operating 80.7 125.2 -- 205.9 20.5 166.4 -- 186.9
income
Other income 1.4 0.5 -- 1.9 3.1 1.6 (0.2 ) 4.5
(expense), net
Interest 25.9 59.2 -- 85.1 24.8 33.3 (0.2 ) 57.9
expense
Income (loss)
before income 56.2 66.5 -- 122.7 (1.2 ) 134.7 -- 133.5
taxes
Income tax
expense 24.3 21.0 -- 45.3 (5.7 ) 50.0 -- 44.3
(benefit)
Net income 31.9 45.5 -- 77.4 4.5 84.7 -- 89.2
Less: net
income
attributable
(0.4 ) -- -- (0.4 ) (0.2 ) -- -- (0.2 )
to
noncontrolling
interest
Net income
attributable
to $31.5 $45.5 $-- $77.0 $4.3 $84.7 $-- $89.0
Allegheny
Energy, Inc.
Nine Months Ended Nine Months Ended
September 30, 2009 September 30, 2008
Delivery Generation Delivery Generation
(In millions) and and Eliminations Total and and Eliminations Total
Services Marketing Services Marketing
Operating $2,417.6 $1,531.5 $ ) $2,565.7 $2,139.6 $1,842.0 $ ) $2,678.1
revenues (1,383.4 (1,303.5
Fuel -- 663.8 -- 663.8 -- 794.2 -- 794.2
Purchased
power and 1,671.2 86.8 (1,377.6 ) 380.4 1,522.5 77.7 (1,297.5 ) 302.7
transmission
Deferred
energy costs, (5.9 ) (33.0 ) -- (38.9 ) 7.8 (35.9 ) -- (28.1 )
net
Operations and 263.1 261.6 (5.8 ) 518.9 267.4 249.6 (6.0 ) 511.0
maintenance
Depreciation
and 116.4 90.6 -- 207.0 122.6 83.9 -- 206.5
amortization
Taxes other
than income 113.1 46.6 -- 159.7 105.5 54.2 -- 159.7
taxes
Total
operating 2,157.9 1,116.4 (1,383.4 ) 1,890.9 2,025.8 1,223.7 (1,303.5 ) 1,946.0
expenses
Operating 259.7 415.1 -- 674.8 113.8 618.3 -- 732.1
income
Other income 4.0 2.1 -- 6.1 10.1 7.6 (2.4 ) 15.3
(expense), net
Interest 78.6 122.9 -- 201.5 70.7 106.7 (2.4 ) 175.0
expense
Income before 185.1 294.3 -- 479.4 53.2 519.2 -- 572.4
income taxes
Income tax 79.0 116.1 -- 195.1 10.0 182.5 -- 192.5
expense
Net income 106.1 178.2 -- 284.3 43.2 336.7 -- 379.9
Less: net
income
attributable (0.8 ) -- -- (0.8 ) (0.7 ) -- -- (0.7 )
to
noncontrolling
interest
Net income
attributable
to $105.3 $178.2 $-- $283.5 $42.5 $336.7 $-- $379.2
Allegheny
Energy, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
CONSOLIDATED DATA FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(in millions, except per share data)
(unaudited)
NET INCOME
DILUTED
THREE MONTHS ENDED SEPTEMBER 30, INCOME BEFORE ATTRIBUTABLE
2009 EARNINGS
INCOME TAXES TO ALLEGHENY
PER SHARE
ENERGY, INC.
Calculation of Adjusted Income:
Income - GAAP Basis $122.7 $77.0 $0.45
Adjustments:
Net unrealized loss associated 18.3 11.2
with economic hedges1
Expense associated with Allegheny
Energy Supply's purchase of 19.3 11.9
outstanding notes2
Adjusted Income $160.3 $100.1 $0.59
Calculation of Adjusted EBITDA:
Net Income attributable to
Allegheny Energy, Inc. - GAAP $77.0
basis
Interest expense 85.1
Income tax expense 45.3
Depreciation and amortization 71.3
EBITDA 278.7
Net unrealized loss associated 18.3
with economic hedges1
Adjusted EBITDA $297.0
NET INCOME
DILUTED
THREE MONTHS ENDED SEPTEMBER 30, INCOME BEFORE ATTRIBUTABLE TO
2008 EARNINGS
INCOME TAXES ALLEGHENY
PER SHARE
ENERGY, INC.
Calculation of Adjusted Income:
Income - GAAP Basis $133.5 $89.0 $0.52
Adjustments:
Net unrealized loss associated 4.0 2.4
with economic hedges1
Adjusted Income $137.5 $91.4 $0.54
Calculation of Adjusted EBITDA:
Net Income attributable to
Allegheny Energy, Inc. - GAAP $89.0
basis
Interest expense 57.9
Income tax expense 44.3
Depreciation and amortization 67.4
EBITDA 258.6
Net unrealized loss associated 4.0
with economic hedges1
Adjusted EBITDA $262.6
See accompanying Notes to Reconciliation of Non-GAAP Financial
Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
SEGMENT DATA FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(in millions)
(unaudited)
DELIVERY AND SERVICES GENERATION AND MARKETING
NET INCOME NET INCOME
INCOME
ATTRIBUTABLE INCOME BEFORE ATTRIBUTABLE
THREE MONTHS ENDED BEFORE
SEPTEMBER 30, 2009 TO ALLEGHENY INCOME TAXES TO ALLEGHENY
INCOME TAXES
ENERGY, INC. ENERGY, INC.
Calculation of Adjusted
Income:
Income - GAAP Basis $56.2 $31.5 $66.5 $45.5
Adjustments:
Net unrealized loss
associated with -- -- 18.3 11.2
economic hedges1
Expense associated with
Allegheny Energy -- -- 19.3 11.9
Supply's purchase of
outstanding notes2
Adjusted Income $56.2 $31.5 $104.1 $68.6
DELIVERY AND SERVICES GENERATION AND MARKETING
NET INCOME NET INCOME
INCOME
ATTRIBUTABLE INCOME BEFORE ATTRIBUTABLE
THREE MONTHS ENDED BEFORE
SEPTEMBER 30, 2008 TO ALLEGHENY INCOME TAXES TO ALLEGHENY
INCOME TAXES
ENERGY, INC. ENERGY, INC.
Calculation of Adjusted
Income:
Income - GAAP Basis ($1.2 ) $4.3 $134.7 $84.7
Adjustments:
Net unrealized loss
associated with -- -- 4.0 2.4
economic hedges1
Adjusted Income ($1.2 ) $4.3 $138.7 $87.1
See accompanying Notes to Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
CONSOLIDATED DATA FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(in millions, except per share data)
(unaudited)
NET INCOME
DILUTED
NINE MONTHS ENDED SEPTEMBER INCOME BEFORE ATTRIBUTABLE TO
30, 2009 EARNINGS PER
INCOME TAXES ALLEGHENY
SHARE
ENERGY, INC.
Calculation of Adjusted
Income:
Income - GAAP Basis $479.4 $283.5 $1.67
Adjustments:
Net unrealized gain
associated with economic (18.7 ) (11.5 )
hedges1
Expense associated with
Allegheny Energy Supply's 19.3 11.9
purchase of outstanding
notes2
Adjusted Income $480.0 $283.9 $1.67
Calculation of Adjusted
EBITDA:
Net Income attributable to
Allegheny Energy, Inc. - $283.5
GAAP basis
Interest expense 201.5
Income tax expense 195.1
Depreciation and 207.0
amortization
EBITDA 887.1
Net unrealized gain
associated with economic (18.7 )
hedges1
Adjusted EBITDA $868.4
NET INCOME
DILUTED
NINE MONTHS ENDED SEPTEMBER INCOME BEFORE ATTRIBUTABLE TO
30, 2008 EARNINGS PER
INCOME TAXES ALLEGHENY
SHARE
ENERGY, INC.
Calculation of Adjusted
Income:
Income - GAAP Basis $572.4 $379.2 $2.23
Adjustments:
Net unrealized gain
associated with economic (123.3 ) (75.2 )
hedges1
Adjusted Income $449.1 $304.0 $1.79
Calculation of Adjusted
EBITDA:
Net Income attributable to
Allegheny Energy, Inc. - $379.2
GAAP basis
Interest expense 175.0
Income tax expense 192.5
Depreciation and 206.5
amortization
EBITDA 953.2
Net unrealized gain
associated with economic (123.3 )
hedges1
Adjusted EBITDA $829.9
See accompanying Notes to Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
SEGMENT DATA FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(in millions)
(unaudited)
DELIVERY AND SERVICES GENERATION AND MARKETING
NET INCOME NET INCOME
NINE MONTHS INCOME BEFORE ATTRIBUTABLE INCOME BEFORE ATTRIBUTABLE
ENDED
SEPTEMBER 30, INCOME TAXES TO ALLEGHENY INCOME TAXES TO ALLEGHENY
2009
ENERGY, INC. ENERGY, INC.
Calculation of
Adjusted
Income:
Income - GAAP $185.1 $105.3 $294.3 $178.2
Basis
Adjustments:
Net unrealized
gain
associated -- -- (18.7) (11.5)
with economic
hedges1
Expense
associated
with Allegheny
Energy -- -- 19.3 11.9
Supply's
purchase of
outstanding
notes2
Adjusted $185.1 $105.3 $294.9 $178.6
Income
DELIVERY AND SERVICES GENERATION AND MARKETING
NET INCOME NET INCOME
INCOME
NINE MONTHS ATTRIBUTABLE INCOME BEFORE ATTRIBUTABLE
ENDED SEPTEMBER BEFORE
30, 2008 TO ALLEGHENY INCOME TAXES TO ALLEGHENY
INCOME TAXES
ENERGY, INC. ENERGY, INC.
Calculation of
Adjusted
Income:
Income - GAAP $53.2 $42.5 $519.2 $336.7
Basis
Adjustments:
Net unrealized
gain associated -- -- (123.3 ) (75.2 )
with economic
hedges1
Adjusted Income $53.2 $42.5 $395.9 $261.5
See accompanying Notes to Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in millions)
(unaudited)
THREE MONTHS ENDED THREE MONTHS ENDED
ADJUSTED OPERATING REVENUE
SEPT 30, 2009 SEPT 30, 2008
Operating revenue:
As reported $793.7 $849.6
Net unrealized loss associated with 18.3 4.0
economic hedges1
As Adjusted $812.0 $853.6
THREE MONTHS THREE MONTHS
ADJUSTED INTEREST EXPENSE
ENDED SEPT 30, 2009 ENDED SEPT 30, 2008
Interest expense:
As reported $85.1 $57.9
Expense associated with Allegheny
Energy Supply's purchase of (19.3 ) --
outstanding notes2
As Adjusted $65.8 $57.9
THREE MONTHS THREE MONTHS
ADJUSTED INCOME TAXES
ENDED SEPT 30, 2009 ENDED SEPT 30, 2008
Income taxes:
As reported $45.3 $44.3
Income taxes related to net
unrealized loss associated with 7.1 1.6
economic hedges1
Expense associated with Allegheny
Energy Supply's purchase of 7.4 --
outstanding notes2
As Adjusted $59.8 $45.9
See accompanying Notes to Reconciliation of Non-GAAP Financial Measures
Notes to Reconciliation of Non-GAAP Financial Measures:
(1) Adjustments relating to certain unrealized gains/(losses) included in GAAP operating revenues:
THREE MONTHS THREE MONTHS
ENDED SEPT 30, 2009 ENDED SEPT 30, 2008
Financial transmission rights ($6.2 ) ($106.6 )
Power hedges (5.3 ) 81.1
Hedging strategy relating to a
natural gas transportation (6.8 ) 21.5
contract
Total adjustments ($18.3 ) ($4.0 )
NINE MONTHS NINE MONTHS
ENDED SEPT 30, 2009 ENDED SEPT 30, 2008
Financial transmission rights $21.3 $90.0
Power hedges (13.8 ) 24.9
Hedging strategy relating to a
natural gas transportation 11.2 8.4
contract
Total Adjustments $18.7 $123.3
(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.
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
OPERATING STATISTICS
(unaudited)
Three Months Ended September 30,
2009 2008 Change
DELIVERY AND SERVICES:
Retail electricity sales (thousand MWh):
Residential 3,837 3,986 -3.7 %
Commercial 2,903 2,894 0.3 %
Industrial and other 3,537 3,869 -8.6 %
Total 10,277 10,749 -4.4 %
Usage per customer (KWh):
Residential 2,808 2,928 -4.1 %
Commercial 15,585 15,669 -0.5 %
Industrial 128,509 142,160 -9.6 %
GENERATION AND MARKETING:
Generation (thousand MWh):
Supercritical coal 5,791 10,115 -42.7 %
Other coal 377 1,191 -68.3 %
Gas 331 137 141.6 %
Hydro and other 509 461 10.4 %
Total 7,008 11,904 -41.1 %
Net capacity factor:
Supercritical coal 44 % 77 % -33 %
All coal 38 % 70 % -32 %
Equivalent availability factor:
Supercritical coal 89 % 90 % -1 %
All coal 89 % 89 % --
DEGREE DAYS:
Heating 54 37 45.9 %
Cooling 549 537 2.2 %
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
OPERATING STATISTICS
(unaudited)
Nine Months Ended September 30,
2009 2008 Change
DELIVERY AND SERVICES:
Retail electricity sales (thousand MWh):
Residential 12,609 12,639 -0.2 %
Commercial 8,450 8,378 0.9 %
Industrial and other 10,473 12,006 -12.8 %
Total 31,532 33,023 -4.5 %
Usage per customer (KWh):
Residential 9,227 9,285 -0.6 %
Commercial 45,446 45,508 -0.1 %
Industrial 381,793 442,296 -13.7 %
GENERATION AND MARKETING:
Generation (thousand MWh):
Supercritical coal 22,231 29,303 -24.1 %
Other coal 1,308 3,959 -67.0 %
Gas 507 275 84.4 %
Hydro and other 1,371 1,512 -9.3 %
Total 25,417 35,049 -27.5 %
Net capacity factor:
Supercritical coal 56 % 74 % -18 %
All coal 48 % 68 % -20 %
Equivalent availability factor:
Supercritical coal 81 % 86 % -5 %
All coal 82 % 85 % -3 %
DEGREE DAYS:
Heating 3,343 3,292 1.5 %
Cooling 813 767 6.0 %
Source: Allegheny Energy, Inc.
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