NEWS RELEASE



      

800 Cabin Hill Drive, Greensburg, PA 15601-1650

 

Media contact:

David Neurhor

Director, External Communications

Phone: (724) 838-6020

Media Hotline: 1-888-233-3583

Investor contact:

Max Kuniansky

Executive Director, Investor Relations
and Corporate Communications

Phone: (724) 838-6895

Email: dneuroh@alleghenyenergy.com

E-mail: mkunian@alleghenyenergy.com

 

 

Allegheny Energy Reports Financial Results for Fourth Quarter, Full Year 2007

 

GREENSBURG, Pa., February 7, 2008

-- Allegheny Energy, Inc. (NYSE: AYE) today reported financial results for the three months and twelve months ended December 31, 2007.

 

 

 

 

 

 

$ millions

 

Per Share

Three Months Ended December 31

2007

2006

 

2007

2006

Consolidated net income-GAAP

$110.4

$64.6

 

$0.65

$0.38

Adjusted net income

78.6

61.8

 

0.46

0.37

 

 

 

 

 

 

Twelve Months Ended December 31

 

 

 

 

 

Consolidated net income-GAAP

$412.2

$319.3

 

$2.43

$1.89

Adjusted net income

384.8

307.8

 

2.26

1.83

 

Adjusted results for the fourth quarter of 2007 exclude $31.8 million of after-tax income related to a litigation settlement with Merrill Lynch & Co., Inc., primarily representing the reversal of accrued interest no longer required. Adjusted net income for the three months ended December 31, 2006 excludes results from discontinued operations.

 

Adjusted net income is a non-GAAP financial measure. For information on adjustments for both twelve-month periods, and the calculation of adjusted net income for all periods, see the attached reconciliation of non-GAAP financial measures.

 

“2007 was a year of strong financial performance for Allegheny. We increased earnings per share by over 20 percent, achieved an investment grade credit rating and reinstated our dividend,” said Paul J. Evanson, Chairman, President and Chief Executive Officer of Allegheny Energy.

 

“As we begin 2008, we remain focused on growing earnings and building shareholder value by improving power plant performance, expanding our transmission system and controlling costs. We are well positioned for strong earnings growth this year and beyond,” Evanson said.


Fourth Quarter Consolidated Results

 

Adjusted net income for the fourth quarter of 2007 increased by $16.8 million compared to the same period in 2006. Key factors contributing to the improved results include:

 

Operating revenues increased by $49.4 million compared to the fourth quarter of 2006, reflecting higher market prices, higher generation rates in Pennsylvania and increased retail sales, partially offset by lower generation output, reflecting unplanned outages at power plants.

 

Fuel expense increased by $20.5 million, reflecting higher coal prices.

.

Purchased power and transmission expense increased by $14.9 million, primarily due to increased purchases of energy and associated services from third parties and increased PURPA generation purchases.

 

Deferred energy cost decreased by $6.4 million, largely due to a change in Maryland PURPA generation costs and West Virginia fuel and energy costs that are recovered in rates.

 

Operations and maintenance expense increased by $2.8 million, primarily due to increased special maintenance expense at power plants.

 

Taxes other than income taxes increased by $9.9 million. Results for the fourth quarter of 2006 benefited from a decrease in reserves related to an audit settlement in 2006.

 

Income taxes, excluding the effects of the Merrill Lynch litigation settlement, decreased by $6.3 million, largely due to the effect of audit settlements associated with open tax positions in the fourth quarter of 2006.

 

 

Adjusted EBITDA for the fourth quarter of 2007 was $243.6 million, an increase of $8.9 million compared to adjusted EBITDA for the same quarter of the prior year. EBITDA is a non-GAAP financial measure. The calculation of EBITDA and a reconciliation of EBITDA to net income are attached to this release.

 

Fourth Quarter Segment Results

 

Three Months Ended December 31
($ millions)

 

2007

 

2006

Generation and Marketing:

 

 

 

Net income – GAAP

$84.4

 

$(1.3)

Adjusted net income (loss)

52.6

 

(5.1)

 

 

 

 

Delivery and Services:

 

 

 

Net income – GAAP

$26.0

 

$65.9

Adjusted net income

26.0

 

66.9

 

Adjusted results for the fourth quarter of 2007 for the Generation and Marketing segment exclude the impact of the Merrill Lynch litigation settlement. Adjusted results for 2006 for both segments exclude results from discontinued operations.

 

Generation and Marketing: Adjusted net income for the quarter increased $57.7 million compared to the adjusted net loss for the same period a year earlier. Key factors contributing to the improved results for the fourth quarter of 2007 include higher generation prices and a lower effective tax rate, partially offset by lower generation output and higher fuel costs. Results for the fourth quarter of 2006 were negatively impacted by an increase in reserves associated with an open tax position.

 

Delivery and Services: Net income for the quarter decreased by $40.9 million compared to adjusted net income for the same quarter of the prior year. Results were negatively impacted by the increased cost of purchasing power at market rates to serve customers in Virginia and a rate decrease in West Virginia, partially offset by increased revenues reflecting higher usage. Kilowatt-hour sales increased by 4.0 percent. Results for the fourth quarter of 2006 were favorably impacted by lower reserves for taxes other than income taxes.

 

Discontinued Operations: There were no results from discontinued operations for the fourth quarter of 2007, compared to income of $2.8 million (after-tax) from discontinued operations for the same period of the prior year. The prior-year results reflected adjustments associated with the sale of Midwest peaking units, including the December 2006 sale of the Gleason generating facility.

 

Twelve-Month Segment Results

 

Twelve Months Ended December 31
($ millions)

 

2007

 

2006

Generation and Marketing:

 

 

 

Net income – GAAP

$294.5

 

$139.9

Adjusted net income

267.1

 

126.5

 

 

 

 

Delivery and Services:

 

 

 

Net income – GAAP

$117.7

 

$179.4

Adjusted net income

117.7

 

181.4

 

Adjusted net income for 2007 in the Generation and Marketing segment excludes the impact of the Merrill Lynch settlement. There were no adjustments in the Delivery and Services segment for 2007. Adjusted net income for 2006 in both segments excludes 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 more complete 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 is 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 discuss these results in a live Internet broadcast at 8:30 a.m. Eastern Standard Time on Friday, February 8, 2008. To listen to the broadcast, visit www.alleghenyenergy.com. 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 over 1.5 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; regulatory 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: 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; 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; changes in PJM, including changes to participant rules and tariffs; the effect of accounting policies issued periodically by accounting standard-setting bodies; 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.

 

-###-

 

 

 

ALLEGHENY ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

 

 

 

 

 

 

 

(In thousands)

2007

 

2006

 

2007

 

2006

Operating revenues

$786,321

 

$736,963

 

$3,307,020

 

$3,121,489

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Fuel

221,730

 

201,182

 

930,788

 

842,661

Purchased power and transmission

99,586

 

84,689

 

393,182

 

382,990

Gain on sale of OVEC power agreement and shares

 

 

 

(6,124)

Deferred energy costs, net

(4,060)

 

2,359

 

(10,108)

 

7,584

Operations and maintenance

181,136

 

178,384

 

687,050

 

685,650

Depreciation and amortization

67,559

 

68,815

 

277,014

 

273,134

Taxes other than income taxes

53,552

 

43,644

 

211,806

 

203,274

Total operating expenses

619,503

 

579,073

 

2,489,732

 

2,389,169

 

 

 

 

 

 

 

 

Operating income

166,818

 

157,890

 

817,288

 

732,320

Other income and expenses, net

9,188

 

8,186

 

36,778

 

33,956

Interest expense and preferred dividends:

 

 

 

 

 

 

 

Interest expense

5,603

 

60,378

 

187,226

 

270,264

Preferred dividends of subsidiary

 

293

 

700

 

1,172

Total interest expense and preferred dividends

5,603

 

60,671

 

187,926

 

271,436

Income from continuing operations before income taxes and minority interest

170,403

 

105,405

 

666,140

 

494,840

Income tax expense

59,325

 

43,415

 

250,805

 

173,543

Minority interest in net income of subsidiaries

668

 

182

 

3,121

 

2,562

Income from continuing operations

110,410

 

61,808

 

412,214

 

318,735

Income from discontinued operations, net of tax

 

2,789

 

 

586

Net income

$110,410

 

$64,597

 

$412,214

 

$319,321

 

 

 

 

 

 

 

 

Common share data:

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

Basic

166,607

 

165,286

 

166,022

 

164,184

Diluted

169,752

 

168,932

 

169,468

 

168,676

 

 

 

 

 

 

 

 

Basic income (loss) per common share:

 

 

 

 

 

 

 

Income from continuing operations

$0.66

 

$0.37

 

$2.48

 

$1.94

Income from discontinued operations

 

0.02

 

 

Basic income per common share

$0.66

 

$0.39

 

$2.48

 

$1.94

 

 

 

 

 

 

 

 

Diluted income (loss) per common share:

 

 

 

 

 

 

 

Income from continuing operations

$0.65

 

$0.37

 

$2.43

 

$1.89

Income from discontinued operations, net of tax

 

0.01

 

 

Diluted income per common share

$0.65

 

$0.38

 

$2.43

 

$1.89

 

 

 

ALLEGHENY ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(unaudited)

 

 

As of December 31,

(In thousands)

2007

 

2006

ASSETS

 

 

 

Current Assets:

 

 

 

Cash and cash equivalents

$258,750

 

$114,138

Accounts receivable:
Customer

195,545

 

167,792

Unbilled utility revenue

110,569

 

117,977

Wholesale and other

57,626

 

63,894

Allowance for uncollectible accounts

(14,252)

 

(14,591)

Materials and supplies

103,075

 

96,117

Fuel

72,506

 

74,951

Deferred income taxes

286,440

 

127,531

Prepaid taxes

48,343

 

44,603

Collateral deposits

59,527

 

39,399

Derivative contracts

29

 

1,430

Restricted funds

47,501

 

12,923

Regulatory assets

73,299

 

39,128

Other

16,001

 

24,130

Total current assets

1,314,959

 

909,422

 

 

 

 

Property, Plant and Equipment, Net:

 

 

 

Generation

5,992,919

 

5,820,278

Transmission

1,126,657

 

1,056,759

Distribution

3,761,438

 

3,597,405

Other

452,525

 

412,894

Accumulated depreciation

(4,795,925)

 

(4,636,972)

Subtotal

6,537,614

 

6,250,364

Construction work in progress

658,966

 

262,529

Total property, plant and equipment, net

7,196,580

 

6,512,893

 

 

 

 

Investments and Other Assets:

 

 

 

Restricted funds – Fort Martin scrubber project

347,023

 

Goodwill

367,287

 

367,287

Investments in unconsolidated affiliates

27,875

 

28,259

Other

15,974

 

27,932

Total investments and other assets

758,159

 

423,478

 

 

 

 

Deferred Charges:

 

 

 

Regulatory assets

601,603

 

674,095

Other

35,288

 

32,558

Total deferred charges

636,891

 

706,653

Total Assets

9,906,589

 

$8,552,446

 

 

 

 

 

ALLEGHENY ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (continued)

(unaudited)

 

 

As of December 31,

(In thousands, except share amounts)

2007

 

2006

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current Liabilities:

 

 

 

Short-term debt

$10,000

 

$—

Long-term debt due within one year

95,367

 

201,189

Accounts payable

380,688

 

236,706

Accrued taxes

83,580

 

136,216

Derivative contracts

14,117

 

5,984

Accrued interest

65,583

 

99,854

Other

138,168

 

140,830

Total current liabilities

787,503

 

820,779

 

 

 

 

Long-term Debt

3,943,947

 

3,383,986

 

 

 

 

Deferred Credits and Other Liabilities:

 

 

 

Derivative contracts

12,815

 

17,982

Income taxes payable

68,050

 

13,851

Investment tax credit

69,353

 

72,938

Deferred income taxes

1,345,953

 

936,911

Obligations under capital leases

38,765

 

26,007

Regulatory liabilities

488,393

 

464,092

Adverse power purchase commitment

149,799

 

166,937

Other

453,418

 

533,855

Total deferred credits and other liabilities

2,626,546

 

2,232,573

 

 

 

 

Minority Interest

13,241

 

10,713

 

 

 

 

Preferred Stock of Subsidiary

 

24,000

 

 

 

 

Common Stockholders’ Equity:

 

 

 

Common stock—$1.25 par value per share, 260 million shares authorized and 167,273,069 and 165,409,908 shares issued at December 31, 2007 and 2006, respectively

209,091

 

206,762

Other paid-in capital

1,924,072

 

1,907,879

Retained earnings

444,177

 

74,698

Treasury stock at cost – 49,493 shares

(1,756)

 

(1,756)

Accumulated other comprehensive loss

(40,232)

 

(107,188)

Total common stockholders’ equity

2,535,352

 

2,080,395

Total Liabilities and Stockholders’ Equity

$9,906,589

 

$8,552,446

 

 

 

 

 

 

ALLEGHENY ENERGY, INC. AND SUBSIDIARIES

RESULTS BY BUSINESS SEGMENT

THREE MONTHS ENDED DECEMBER 31, 2007 and 2006

(unaudited)

 

 

 

2007 (In millions)

Delivery
and
Services

 

Generation
and
Marketing

 

 

 

Eliminations

 

 

 

Total

Operating revenues

$700.4

 

$510.4

 

$(424.5)

 

$786.3

Fuel

 

221.7

 

 

221.7

Purchased power and transmission

491.3

 

30.9

 

(422.6)

 

99.6

Deferred energy costs, net

(2.3)

 

(1.7)

 

 

(4.0)

Operations and maintenance

85.9

 

97.1

 

(1.9)

 

181.1

Depreciation and amortization

40.7

 

26.9

 

 

67.6

Taxes other than income taxes

34.5

 

19.0

 

 

53.5

Total operating expenses

650.1

 

393.9

 

(424.5)

 

619.5

Operating income

50.3

 

116.5

 

 

166.8

Other income and expenses, net

5.8

 

5.0

 

(1.6)

 

9.2

Interest expense and preferred dividends

18.6

 

(11.4)

 

(1.6)

 

5.6

Income before income taxes and minority interest

37.5

 

132.9

 

 

170.4

Income tax expense

11.5

 

47.8

 

 

59.3

Minority interest in net income of subsidiaries

 

0.7

 

 

0.7

 

 

 

 

 

 

 

 

Net income

$26.0

 

$84.4

 

$—

 

$110.4

 

 

 

 

 

 

 

 

 

 

2006 (In millions)

Delivery
and
Services

 

Generation
and
Marketing

 

 

 

Eliminations

 

 

 

Total

Operating revenues

$680.4

 

$424.6

 

$(368.0)

 

$737.0

Fuel

 

201.2

 

 

201.2

Purchased power and transmission

444.2

 

6.6

 

(366.1)

 

84.7

Deferred energy costs, net

2.4

 

 

 

2.4

Operations and maintenance

79.8

 

100.4

 

(1.9)

 

178.3

Depreciation and amortization

38.0

 

30.8

 

 

68.8

Taxes other than income taxes

23.3

 

20.4

 

 

43.7

Total operating expenses

587.7

 

359.4

 

(368.0)

 

579.1

Operating income

92.7

 

65.2

 

 

157.9

Other income and expenses, net

5.7

 

3.3

 

(0.8)

 

8.2

Interest expense and preferred dividends

19.0

 

42.5

 

(0.8)

 

60.7

Income from continuing operations before income taxes and minority interest

79.4

 

26.0

 

 

105.4

Income tax expense from continuing operations

12.5

 

30.9

 

 

43.4

Minority interest in net income of subsidiaries

 

0.2

 

 

0.2

Income (loss) from continuing operations

66.9

 

(5.1)

 

 

61.8

Income (loss) from discontinued operations, net of tax

(1.0)

 

3.8

 

 

2.8

 

 

 

 

 

 

 

 

Net income (loss)

$65.9

 

$(1.3)

 

$—

 

$64.6

 

 

 

 

 

 

ALLEGHENY ENERGY, INC. AND SUBSIDIARIES

RESULTS BY BUSINESS SEGMENT

YEAR ENDED DECEMBER 31, 2007 and 2006

(unaudited)

 

 

 

2007 (In millions)

Delivery
and
Services

 

Generation
and
Marketing

 

 

 

Eliminations

 

 

 

Total

Operating revenues

$2,829.2

 

$2,141.3

 

$(1,663.5)

 

$3,307.0

Fuel

 

930.8

 

 

930.8

Purchased power and transmission

1,939.2

 

108.1

 

(1,654.1)

 

393.2

Deferred energy costs, net

(2.8)

 

(7.3)

 

 

(10.1)

Operations and maintenance

342.5

 

353.9

 

(9.4)

 

687.0

Depreciation and amortization

162.4

 

114.6

 

 

277.0

Taxes other than income taxes

134.0

 

77.8

 

 

211.8

Total operating expenses

2,575.3

 

1,577.9

 

(1,663.5)

 

2,489.7

Operating income

253.9

 

563.4

 

 

817.3

Other income and expenses, net

16.2

 

26.8

 

(6.2)

 

36.8

Interest expense and preferred dividends

74.0

 

120.2

 

(6.2)

 

188.0

Income before income taxes and minority interest

196.1

 

470.0

 

 

666.1

Income tax expense

78.4

 

172.4

 

 

250.8

Minority interest in net income of subsidiaries

 

3.1

 

 

3.1

 

 

 

 

 

 

 

 

Net income

$117.7

 

$294.5

 

$—

 

$412.2

 

 

 

 

 

 

 

 

 

 

2006 (In millions)

Delivery
and
Services

 

Generation
and
Marketing

 

 

 

Eliminations

 

 

 

Total

Operating revenues

$2,717.7

 

$1,834.4

 

$(1,430.6)

 

$3,121.5

Fuel

 

842.7

 

 

842.7

Purchased power and transmission

1,773.0

 

33.2

 

(1,423.2)

 

383.0

Gain on sale of OVEC power agreement and shares

 

(6.1)

 

 

(6.1)

Deferred energy costs, net

7.6

 

 

 

7.6

Operations and maintenance

344.0

 

349.0

 

(7.4)

 

685.6

Depreciation and amortization

151.3

 

121.8

 

 

273.1

Taxes other than income taxes

122.0

 

81.3

 

 

203.3

Total operating expenses

2,397.9

 

1,421.9

 

(1,430.6)

 

2,389.2

Operating income

319.8

 

412.5

 

 

732.3

Other income and expenses, net

22.2

 

14.8

 

(3.0)

 

34.0

Interest expense and preferred dividends

81.4

 

193.1

 

(3.0)

 

271.5

Income from continuing operations before income taxes and minority interest

260.6

 

234.2

 

 

494.8

Income tax expense from continuing operations

80.2

 

93.3

 

 

173.5

Minority interest in net income of subsidiaries

 

2.6

 

 

2.6

Income from continuing operations

180.4

 

138.3

 

 

318.7

Income (loss) from discontinued operations, net of tax

(1.0)

 

1.6

 

 

0.6

 

 

 

 

 

 

 

 

Net income

$179.4

 

$139.9

 

$—

 

$319.3

 

 

 

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

CONSOLIDATED DATA FOR THE THREE MONTHS ENDED DECEMBER 31, 2007 AND 2006
(in millions, except per share data)
(unaudited)

 

THREE MONTHS ENDED
DECEMBER 31, 2007

INCOME BEFORE
INCOME TAXES AND MINORITY INTEREST

NET INCOME

DILUTED INCOME PER SHARE

 

 

 

 

Calculation of Adjusted Income:

 

 

 

Income - GAAP Basis

$170.4

$110.4

$0.65

 

 

 

 

Adjustments:

 

 

 

Merrill Lynch interest accrual reversal and minority
interest expense removal1

(54.7)

(31.8)

 

Adjusted Income

$115.7

$78.6

$0.46

 

 

 

 

Calculation of Adjusted EBITDA:

 

 

 

Net Income - GAAP basis

 

$110.4

 

Interest expense and preferred dividends

 

5.6

 

Income tax expense

 

59.3

 

Depreciation and amortization

 

67.6

 

EBITDA

 

242.9

 

Merrill Lynch minority interest expense removal

 

0.7

 

Adjusted EBITDA

 

$243.6

 

 

 

THREE MONTHS ENDED
DECEMBER 31, 2006

INCOME FROM
CONTINUING
OPERATIONS BEFORE
INCOME TAXES AND MINORITY INTEREST

NET INCOME

DILUTED INCOME PER SHARE

 

 

 

 

Calculation of Adjusted Income:

 

 

 

Income - GAAP Basis

$105.4

$64.6

$0.38

 

 

 

 

Adjustments:

 

 

 

Income from discontinued operations

 

(2.8)

 

Adjusted Income

$105.4

$61.8

$0.37

 

 

 

 

Calculation of Adjusted EBITDA:

 

 

 

Net Income - GAAP basis

 

$64.6

 

Loss from discontinued operations

 

(2.8)

 

Interest expense and preferred dividends

 

60.7

 

Income tax expense

 

43.4

 

Depreciation and amortization

 

68.8

 

EBITDA from continuing operations

 

234.7

 

No adjustments

 

--

 

Adjusted EBITDA from continuing operations

 

$234.7

 

 

 

 

See accompanying Notes to Reconciliations of Non-GAAP Financial Measures


RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

SEGMENT DATA FOR THE THREE MONTHS ENDED DECEMBER 31, 2007 AND 2006
(in millions)
(unaudited)

 

 

DELIVERY AND SERVICES

GENERATION AND MARKETING


THREE MONTHS ENDED
DECEMBER 31, 2007

INCOME BEFORE INCOME TAXES AND MINORITY INTEREST

NET
INCOME

INCOME BEFORE INCOME TAXES AND MINORITY INTEREST

NET
INCOME

 

 

 

 

 

Calculation of Adjusted Income:

 

 

 

 

Income - GAAP Basis

$37.5

$26.0

$132.9

$84.4

 

 

 

 

 

Adjustments:

 

 

 

 

Merrill Lynch interest accrual reversal and minority
interest expense removal1

--

--

(54.7)

(31.8)

Adjusted Income

$37.5

$26.0

$78.2

$52.6

 

 

DELIVERY AND SERVICES

GENERATION AND MARKETING


THREE MONTHS ENDED
DECEMBER 31, 2007

INCOME BEFORE INCOME TAXES AND MINORITY INTEREST

NET
INCOME

INCOME BEFORE INCOME TAXES AND MINORITY INTEREST

NET
INCOME

 

 

 

 

 

Calculation of Adjusted Income:

 

 

 

 

Income - GAAP Basis

$79.4

$65.9

$26.0

$(1.3)

 

 

 

 

 

Adjustments:

 

 

 

 

Loss (income) from discontinued operations

--

1.0

--

(3.8)

Adjusted Income

$79.4

$66.9

$26.0

$(5.1)

 

 

See accompanying Notes to Reconciliations of Non-GAAP Financial Measures


RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

CONSOLIDATED DATA FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
(in millions, except per share data)
(unaudited)

YEAR ENDED

DECEMBER 31, 2007

INCOME BEFORE
INCOME TAXES AND MINORITY INTEREST

NET INCOME

DILUTED INCOME PER SHARE

 

 

 

 

Calculation of Adjusted Income:

 

 

 

Income - GAAP Basis

$666.1

$412.2

$2.43

 

 

 

 

Adjustments:

 

 

 

Merrill Lynch net interest accrual reversal and minority interest expense removal2

(51.5)

(27.4)

 

Adjusted Income

$614.6

$384.8

$2.26

 

 

 

 

Calculation of Adjusted EBITDA:

 

 

 

Net Income - GAAP basis

 

$412.2

 

Interest expense and preferred dividends

 

188.0

 

Income tax expense

 

250.8

 

Depreciation and amortization

 

277.0

 

EBITDA

 

1,128.0

 

Merrill Lynch minority interest expense removal

 

3.1

 

Adjusted EBITDA

 

$1,131.1

 

 

YEAR ENDED

DECEMBER 31, 2006

INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES AND MINORITY INTEREST

NET INCOME

DILUTED INCOME PER SHARE

 

 

 

 

Calculation of Adjusted Income:

 

 

 

Income - GAAP Basis

$494.8

$319.3

$1.89

 

 

 

 

Adjustments:

 

 

 

Income from discontinued operations

 

(0.6)

 

Change in Pennsylvania state income tax law3

 

(16.7)

 

Write-off of prior deferred financing costs4

9.5

5.8

 

Adjusted Income

$504.3

$307.8

$1.83

 

 

 

 

Calculation of Adjusted EBITDA:

 

 

 

Net Income - GAAP basis

 

$319.3

 

Loss from discontinued operations

 

(0.6)

 

Interest expense and preferred dividends

 

271.5

 

Income tax expense

 

173.5

 

Depreciation and amortization

 

273.1

 

EBITDA from continuing operations

 

1,036.8

 

No adjustments

 

--

 

Adjusted EBITDA from continuing operations

 

$1,036.8

 

 

 

 

See accompanying Notes to Reconciliations of Non-GAAP Financial Measures


RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

SEGMENT DATA FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
(in millions)
(unaudited)

 

DELIVERY AND SERVICES

GENERATION AND MARKETING


YEAR ENDED

DECEMBER 31, 2007

INCOME BEFORE INCOME TAXES AND MINORITY INTEREST

NET
INCOME

INCOME BEFORE INCOME TAXES AND MINORITY INTEREST

NET
INCOME

 

 

 

 

 

Calculation of Adjusted Income:

 

 

 

 

Income - GAAP Basis

$196.1

$117.7

$470.0

$294.5

 

 

 

 

 

Adjustments:

 

 

 

 

Merrill Lynch net interest accrual reversal and minority interest expense removal2

--

--

(51.5)

(27.4)

Adjusted Income

$196.1

$117.7

$418.5

$267.1

 

 

DELIVERY AND SERVICES

GENERATION AND MARKETING


YEAR ENDED

DECEMBER 31, 2006

 

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST

NET
INCOME

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST

NET
INCOME

 

 

 

 

 

Calculation of Adjusted Income:

 

 

 

 

Income - GAAP Basis

$260.6

$179.4

$234.2

$139.9

 

 

 

 

 

Adjustments:

 

 

 

 

Loss (income) from discontinued operations

 

1.0

 

(1.6)

Change in Pennsylvania state income tax law2

 

--

 

(16.7)

Write-off of prior deferred financing costs4

1.6

1.0

7.9

4.9

Adjusted Income

$262.2

$181.4

$242.1

$126.5

 

 

 

See accompanying Notes to Reconciliations of Non-GAAP Financial Measures


 

 

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

FOR THE THREE MONTHS ENDED DECEMBER 31, 2007 AND 2006

(in millions)

(unaudited)

 

ADJUSTED EXPENSES

THREE MONTHS
ENDED DEC 31, 2007

THREE MONTHS
ENDED DEC 31, 2006

Interest expense and preferred dividends

 

 

As reported

$5.6

$60.7

 

 

 

Adjustments:

 

 

Merrill Lynch interest accrual reversal

54.7

--

Adjusted interest expense and preferred dividends

$60.3

$60.7

 

 

 

 

 

 

Income tax expense:

 

 

As reported

$59.3

$43.4

 

 

 

Adjustments:

 

 

Tax effect of Merrill Lynch interest accrual reversal

(22.2)

--

Adjusted income tax expense

$37.1

$43.4

 

 

 

 

 

 

Minority interest expense (after tax):

 

 

As reported

$0.7

$0.2

 

 

 

Adjustments:

 

 

Merrill Lynch interest expense removal

(0.7)

--

Adjusted minority interest expense

$--

$0.2

 

 

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

FOR THE THREE MONTHS ENDED DECEMBER 31, 2007 AND 2006

(in millions)

(unaudited)

ADJUSTED EXPENSES

THREE MONTHS
ENDED DEC 31, 2007

THREE MONTHS
ENDED DEC 31, 2006

Interest expense and preferred dividends

 

 

As reported

$187.9

$271.4

 

 

 

Adjustments:

 

 

Merrill Lynch net interest accrual reversal

51.5

--

Write-off of prior deferred financing costs

--

(9.5)

Adjusted interest expense and preferred dividends

$239.4

$261.9

 

 

 

 

 

 

Income tax expense:

 

 

As reported

$250.8

$173.5

 

 

 

Adjustments:

 

 

Tax effect of Merrill Lynch net interest accrual reversal

(21.0)

--

Change in Pennsylvania state income tax law

--

16.7

Tax effect of the write-off of prior deferred financing costs

--

3.7

Adjusted income tax expense

$229.8

$193.9

 

 

 

 

 

 

Minority interest expense (after tax):

 

 

As reported

$3.1

$2.6

 

 

 

Adjustments:

 

 

Merrill Lynch minority interest expense removal

(3.1)

--

Adjusted minority interest expense

$--

$2.6

 

 

 

 

 

 

 

 

Notes to Reconciliations of Non-GAAP Financial Measures:

 

 

(1)

Represents the reversal of all accrued interest related to the Merrill Lynch dispute and the removal of the 4th quarter minority interest expense associated with Merrill Lynch ownership in AE Supply. Included in interest expense and minority interest on the Consolidated Statements of Operations.

   

(2)

Represents the reversal of all interest accrued related to the Merrill Lynch dispute, net of interest expense recorded during the 1st and 2nd quarters of 2007 and the removal of the minority interest expense associated with Merrill Lynch ownership in AE Supply for the full year 2007 . Included in interest expense and minority interest on the Consolidated Statements of Operations.

   

(3)

Represents a change in Pennsylvania state income tax law. Included in income tax expense on the Consolidated Statements of Operations.

   

(4)

Represents the write-off of prior deferred financing costs. Included in interest expense on the Consolidated Statements of Operations.

 

 

 

 

Allegheny Energy, Inc. and Subsidiaries

Operating Statistics

(unaudited)

Three Months Ended December 31,

 

 

 

2007

 

2006

 

Change

Delivery and Services:

 

 

 

 

 

 

Retail electricity sales (million KWH)

 

11,361

 

10,921

 

4.0%

Usage per customer (KWH):

 

 

 

 

 

 

Residential

 

3,176

 

3,016

 

5.3%

Commercial

 

15,333

 

14,900

 

2.9%

Industrial

 

156,555

 

155,254

 

0.8%

Generation and Marketing:

 

 

 

 

 

 

Total generation (million KWH):

 

 

 

 

 

 

Supercritical coal

 

8,757

 

9,544

 

-8.2%

Other coal

 

1,366

 

1,452

 

-5.9%

Gas

 

98

 

72

 

36.1%

Hydro and other

 

524

 

488

 

7.4%

Total

 

10,745

 

11,556

 

-7.0%

Net capacity factor:

 

 

 

 

 

 

Supercritical coal

 

65%

 

71%

 

-6%

All coal

 

61%

 

66%

 

-5%

Equivalent availability factor:

 

 

 

 

 

 

Supercritical coal

 

77%

 

79%

 

-2%

All coal

 

77%

 

80%

 

-3%

Degree Days:

 

 

 

 

 

 

Heating

 

1,762

 

1,792

 

-1.7%

Cooling

 

63

 

3

 

NM*

 

 

*Not meaningful

Allegheny Energy, Inc. and Subsidiaries

Operating Statistics

(unaudited)

Twelve Months Ended December 31,

 

 

 

 

 

 

 

 

 

2007

 

2006

 

Change

Delivery and Services:

 

 

 

 

 

 

Retail electricity sales (million KWH)

 

44,901

 

43,178

 

4.0%

Usage per customer (KWH):

 

 

 

 

 

 

Residential

 

12,765

 

12,040

 

6.0%

Commercial

 

62,038

 

60,213

 

3.0%

Industrial

 

605,109

 

605,805

 

-0.1%

Generation and Marketing:

 

 

 

 

 

 

Total generation (million KWH):

 

 

 

 

 

 

Supercritical coal

 

39,042

 

39,813

 

-1.9%

Other coal

 

5,917

 

5,865

 

0.9%

Gas

 

956

 

473

 

102.1%

Hydro and other

 

2,320

 

2,455

 

-5.5%

Total

 

48,235

 

48,606

 

-0.8%

Net capacity factor:

 

 

 

 

 

 

Supercritical coal

 

74%

 

76%

 

-2%

All coal

 

69%

 

70%

 

-1%

Equivalent availability factor:

 

 

 

 

 

 

Supercritical coal

 

83%

 

84%

 

-1%

All coal

 

82%

 

85%

 

-3%

Degree days:

 

 

 

 

 

 

Heating

 

5,199

 

4,861

 

7.0%

Cooling

 

1,007

 

781

 

28.9%

           

 

 

 

 


The following information was filed by Allegheny Energy, Inc (AYE) on Friday, February 8, 2008 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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