8-K 1 thirdqtrearnings.htm EARNINGS RELEASE - PD. ENDING 09/30/01 FORM 8﷓K






FORM 8-K


CURRENT REPORT


Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934


Date of Report (Date of earliest event reported): October 25, 2001


Allegheny Energy, Inc.

(Exact name of registrant as specified in its charter)

Maryland

1-267

13-5531602

(State or other jurisdiction of incorporation)

(Commission File Number)

(IRS Employer Identification Number)



10435 Downsville Pike

Hagerstown, Maryland 21740-1766



(Address of principal executive offices)


Registrant's telephone number,
Including area code:  (301) 790-3400

Item 1 - 8.  Not Applicable

Item 9.  Regulation FD Disclosure

Earnings Release

     On October 25, 2001 Allegheny Energy, Inc. (NYSE: AYE) reported a 93 percent increase in earnings per share to $1.33, compared to third quarter 2000 earnings per share of $.69. Net income increased 118 percent in the third quarter of 2001 to $165.7 million, compared to third quarter 2000 net income of $76.1 million.

     According to Alan J. Noia, Allegheny Energy Chairman, President, and Chief Executive Officer, the third quarter results reflect increased revenues and sales from regulated operations, higher net revenues from the Company's unregulated generation operations-including the energy trading activities of the recently acquired Allegheny Energy Global Markets-and the continued execution of the Company's growth strategy.

     "I am pleased with our solid performance during the quarter and year-to-date, which enabled us to again deliver on our promise to grow earnings and provide value to shareholders," said Noia. "Our strategically located, low-cost generating assets, combined with a world-class trading and marketing business and a financially strong energy delivery business, have helped us achieve top-line revenue and net income growth.

     "Allegheny Energy has consistently tackled the challenges of a changing energy industry," added Noia. "We have remained focused on our strategy despite downward movement in energy prices and continued change in our sector. Our performance in the third quarter and so far in 2001 puts us on a clear path toward delivering earnings within our guidance range of $3.80-$4.10 per share this year."

     Earnings for the nine months ended September 30, 2001, were $384.4 million ($3.24 per share), excluding the first quarter after-tax charge of $31.1 million ($.26 per share) associated with the cumulative effect of an accounting change due to the adoption of the Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities." Earnings for the nine months ended September 30, 2000, were $233.9 million ($2.12 per share), excluding a first quarter extraordinary charge of $70.5 million ($.64 per share) associated with electric utility restructuring orders. This 53 percent increase in comparable year-to-date earnings per share is attributed to our unregulated generation operations, including energy trading activities.

     Excluding the accounting change and extraordinary and other charges as shown on the following chart, earnings for the twelve months ended September 30, 2001, were $464.1 million ($3.99 per share), compared to $305.7 million ($2.77 per share) for the twelve months ended September 30, 2000. This 44 percent increase in comparable earnings per share was mainly due to higher net revenue.

     Per share earnings for comparable 2001 and 2000 periods were:
   

Third Quarter

9 Months Ended
September

12 Months Ended
September
 

2001

2000

2001

2000

2001

2000

Income before accounting change and
   extraordinary and other charges


$1.33


  $.69


  $3.24


$2.12


 $3.99


$2.77

Accounting change:
   adoption of SFAS 133

    


  (.26)

  


  (.27)

  

Extraordinary charges for electric
   Utility restructuring orders

 


  (.64)


  (.06)


  (.79)

Extraordinary charge for reacquired debt

         

  (.09)

Merger-related costs

          

  (.11)

Cancelled pumped-storage project costs

          

  (.09)

Refund of license fee for cancelled
   pumped-storage project


_ ___


__ __


__ __


_ ___


_ ___


   .02

      Earnings per share

$1.33

$.69

$2.98

$1.48

$3.66

 $1.71

      During the third quarter of 2001, Allegheny Energy actively pursued a number of opportunities aimed at providing shareholder value. The following are some of the quarter's milestones:

  • Allegheny Energy Supply is building 88 megawatts (MW) of natural gas-fired merchant generating capacity in south central Pennsylvania as part of its plan to own or control more than 14,500 MW of generating capacity by 2005. The new units will operate primarily at times of peak electrical demand and are expected to be in commercial operation by year's end, giving the Company further access to East Coast electricity markets and enhancing the region's power supply.

  • In the environmental arena, Allegheny Energy Supply dedicated its second biomass co-firing demonstration project at its coal-fired Albright Power Station in West Virginia. The project embraces the Company's environmental stewardship philosophy by reducing emissions from the generating facility and qualifying a portion of the output as a renewable generation source.

  • Allegheny Energy Supply also received the 2001 West Virginia Business Environmental Leadership Award for the Gypsum Processing Facility at its Pleasants Power Station. Recognized

in the Pollution Prevention category, the Gypsum Processing Facility converts waste slurry from the flue gas desulfurization (scrubber) system into synthetic gypsum that is then sold to make wallboard. More than 200,000 tons of synthetic gypsum have been produced and sold this year.

  • Allegheny Energy and its employees have donated $340,000 to aid in disaster relief efforts in the wake of the September 11 terrorist attacks. The contribution includes $240,000 in Company and employee cash contributions to the American Red Cross and $100,000 worth of portable generators for use by rescue workers in New York City.

     Allegheny Energy is continuing to work toward obtaining necessary regulatory approvals for a proposed initial public offering (IPO) of up to 18 percent of the common stock in a new holding company, which would own 100 percent of its unregulated generating subsidiary, Allegheny Energy Supply Company, LLC. Under current market conditions, however, the Company would not proceed with the IPO. The Company will remain integrated until market conditions are such that demonstrated value can and will be created for its shareholders.

     Allegheny Energy, Inc. is a diversified energy company headquartered in Hagerstown, Md. It has been named to the Fortune 500 list, the Standard and Poor's 500 index, and the Forbes "Platinum 400" list. The Allegheny Energy family includes Allegheny Power, which delivers electric energy and natural gas to about three million people in parts of Maryland, Ohio, Pennsylvania, Virginia, and West Virginia; Allegheny Energy Supply Company, LLC, which develops, owns, and operates electric generating facilities and supplies and trades energy and energy-related commodities in selected domestic retail and wholesale markets; and Allegheny Ventures, which invests in and develops telecommunications and energy-related projects. For more information, visit our web site at www.alleghenyenergy.com.

     Allegheny plans to hold its analyst conference call to discuss earnings results at 11:00 a.m. (Eastern Time) on October 26, 2001. Investors, the news media, and others may listen to a live internet broadcast of the call at www.alleghenyenergy.com or www.streetevents.com by clicking on an available audio link. The call will also be archived for replay purposes for 10 business days after the live broadcast on both of these web sites. Supporting financial data will also be available on the Company's web site for review.

     Certain statements contained herein constitute forward-looking statements with respect to Allegheny Energy, Inc., including as to the status of the IPO and development activities by Allegheny Energy Supply. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements of Allegheny Energy to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such factors may affect Allegheny Energy's operations, markets, products, services, prices, capital expenditures, development activities, and future plans. Such factors include, among others, the following: changes in general, economic, and business conditions; changes in the price of electricity and natural gas; changes in industry capacity; changes in technology; changes in financial and capital market conditions; changes in political and social conditions, deregulation activities and the movement toward competition in the states served by our operations; the effect of regulatory and legislative decisions; the consequences of the separation of the operations of Allegheny Energy; regulatory approvals and conditions; the loss of any significant customers; litigation; and changes in business strategy or business plans.

 

ALLEGHENY ENERGY EARNINGS

THIRD QUARTER 2001

Three months ended

September 30

2001

2000

Sales to regulated electric customers, gigawatt-hours (Note 1)

11,334

11,044

Revenues ($000) (Note 2)

Regulated Electric Revenues

$ 597,080

$ 559,406

Regulated Other Revenues

38,172

34,655

Regulated Gas Revenues

19,319

12,328

Unregulated Generation and Energy Marketing

3,017,814

450,445

Allegheny Ventures

9,643

1,624

Total ($000)

$ 3,682,028

$ 1,058,458

Consolidated income before extraordinary and other transactions ($000)

$ 165,734

$ 76,095

West Virginia extraordinary charges (Note 4)

-

-

Cumulative effect of accounting change (Note 5)

-

-

Consolidated net income ($000)

$ 165,734

$ 76,095

Basic and diluted earnings per average share

Basic consolidated earnings per share

$ 1.33

$ 0.69

West Virginia extraordinary charges (Note 4)

-

-

Cumulative effect of accounting change (Note 5)

-

-

Diluted consolidated earnings per share

$ 1.32

$ 0.69

Average common shares outstanding (000)

124,867

110,436

Year to date

September 30

2001

 

2000

Sales to regulated electric customers, gigawatt-hours (Note 1)

34,147

33,241

Revenues ($000) (Note 2)

Regulated Electric Revenues

$ 1,801,281

$ 1,710,499

Regulated Other Revenues

94,575

66,956

Regulated Gas Revenues

166,552

25,447

Unregulated Generation and Energy Marketing

6,219,644

977,998

Allegheny Ventures

33,726

9,671

Total ($000)

$ 8,315,778

$ 2,790,571

Consolidated income before extraordinary and other transactions ($000)

$ 384,355

$ 233,946

West Virginia extraordinary charges (Note 3)

-

(70,505)

Cumulative effect of accounting change (Note 4)

(31,147)

-

Consolidated net income ($000)

$ 353,208

$ 163,441

Basic earnings per average share

Before extraordinary and other transactions

$ 3.24

$ 2.12

West Virginia extraordinary charges (Note 3)

-

(0.64)

Cumulative effect of accounting change (Note 4)

(0.26)

-

Basic consolidated earnings per share

$ 2.98

$ 1.48

Diluted consolidated earnings per share

$ 2.97

$ 1.48

Average common shares outstanding (000)

118,435

110,436

Twelve months ended

September 30

2001

2000

Sales to regulated electric customers, gigawatt-hours (Note 1)

45,761

43,853

Revenues ($000) (Note 2)

Regulated Electric Revenues

$ 2,394,307

$ 2,258,014

Regulated Other Revenues

127,788

82,685

Regulated Gas Revenues

244,685

25,447

Unregulated Generation and Energy Marketing

6,723,937

1,139,441

Allegheny Ventures

46,342

18,675

Total ($000)

$ 9,537,059

$ 3,524,262

 

Consolidated income before extraordinary and other transactions ($000)

$ 464,061

$ 305,677

Reacquired debt extraordinary charge

-

(10,018)

Merger-related costs

-

(11,801)

Davis pumped-storage generation project costs

-

(9,998)

Refund of Davis license fee

-

1,838

Maryland, Ohio, Virginia, and West Virginia extraordinary charges (Note 3)

(6,518)

(87,455)

Cumulative effect of accounting change (Note 4)

(31,147)

-

Consolidated net income ($000)

$ 426,396

$ 188,243

 

Basic earnings per average share

Before extraordinary and other transactions

$ 3.99

$ 2.77

Reacquired debt extraordinary charge

-

(0.09)

Merger-related costs

-

(0.11)

Davis pumped-storage generation project costs

-

(0.09)

Refund of Davis license fee

-

0.02

Maryland, Ohio, Virginia, and West Virginia extraordinary charges (Note 3)

(0.06)

(0.79)

Cumulative effect of accounting change (Note 4)

(0.27)

-

Basic consolidated earnings per share

$ 3.66

$ 1.71

Diluted consolidated earnings per share

$ 3.65

$ 1.71

Average common shares outstanding (000)

116,419

110,436

Note 1: Excludes bulk power transaction sales.

Note 2: Excludes intercompany sales between regulated and unregulated.

Note 3: Costs after taxes determined to be unrecoverable as a result of deregulation proceedings in Maryland, Ohio,

Virginia, and West Virginia.

Note 4: Adoption of SFAS 133, Accounting for Derivative Instruments and Hedging Activities.

 

 

 

ALLEGHENY ENERGY HIGHLIGHTS

September 30, 2001

Third Quarter

2001

 

2000

 

Incr. (Decr.)

Revenue from Regulated Electric Customers ($ millions)

Residential

$ 241

$ 220

9.6%

Commercial

145

135

7.4%

Industrial

190

188

1.1%

Wholesale and Other

21

16

31.3%

Total Regulated Electric Transactions

$ 597

 

$ 559

 

6.8%

Revenue from Regulated Other Transactions ($ millions) (Note 1)

$ 38

$ 35

8.6%

Regulated Gas Revenues ($ millions)

$ 19

$ 12

58.3%

Unregulated Generation and Energy Marketing ($ millions) (Note 1)

$ 3,018

$ 450

570.7%

Allegheny Ventures ($ millions) (Note 1)

$ 10

 

$ 2

 

400.0%

Sales to Regulated Electric Customers (gigawatt-hours)

Residential

3,482

3,226

7.9%

Commercial

2,546

2,453

3.8%

Industrial

4,918

4,989

-1.4%

Wholesale and Other

388

376

3.2%

Total Regulated Electric Transactions

11,334

 

11,044

 

2.6%

Sales to Regulated Gas Customers (MCFs)

10,034

5,240

91.5%

Net Revenue ($ millions) *

$ 668

 

$ 419

59.4%

Other Operation and Maintenance ($ millions) **

$ 206

 

$ 140

47.1%

Year to Date

2001

 

2000

 

Incr. (Decr.)

Revenue from Regulated Electric Customers ($ millions)

Residential

$ 757

$ 712

6.3%

Commercial

416

396

5.1%

Industrial

576

555

3.8%

Wholesale and Other

52

47

10.6%

Total Regulated Electric Transactions

$ 1,801

 

$ 1,710

 

5.3%

Revenue from Regulated Other Transactions ($ millions) (Note 1)

$ 95

$ 67

41.8%

Regulated Gas Revenues ($ millions)

$ 167

$ 25

568.0%

Unregulated Generation and Energy Marketing ($ millions) (Note 1)

$ 6,220

$ 978

536.0%

Allegheny Ventures ($ millions) (Note 1)

$ 34

 

$ 10

 

240.0%

Sales to Regulated Electric Customers (gigawatt-hours)

Residential

10,927

10,297

6.1%

Commercial

7,262

6,999

3.8%

Industrial

14,805

14,809

0.0%

Wholesale and Other

1,153

1,136

1.5%

Total Regulated Electric Transactions

34,147

 

33,241

 

2.7%

Sales to Regulated Gas Customers (MCFs)

46,132

6,929

565.8%

Net Revenue ($ millions) *

$ 1,794

 

$ 1,295

38.5%

Other Operation and Maintenance ($ millions) **

$ 597

 

$ 430

38.8%

Twelve Months Ended

2001

 

2000

 

Incr. (Decr.)

Revenue from Regulated Electric Customers ($ millions)

Residential

$ 1,012

$ 938

7.9%

Commercial

549

521

5.4%

Industrial

773

742

4.2%

Wholesale and Other

60

57

20.0%

Total Regulated Electric Transactions

$ 2,394

 

$ 2,258

 

6.0%

Revenue from Regulated Other Transactions ($ millions) (Note 1)

$ 128

$ 83

54.2%

Regulated Gas Revenues ($ millions)

$ 245

$ 25

880.0%

Unregulated Generation and Energy Marketing ($ millions) (Note 1)

$ 6,724

$ 1,139

490.3%

Allegheny Ventures ($ millions) (Note 1)

$ 46

 

$ 19

 

142.1%

Sales to Regulated Electric Customers (gigawatt-hours)

Residential

14,687

13,545

8.4%

Commercial

9,659

9,144

5.6%

Industrial

19,867

19,664

1.0%

Wholesale and Other

1,548

1,500

3.2%

Total Regulated Electric Transactions

45,761

 

43,853

 

4.4%

Sales to Regulated Gas Customers (MCFs)

64,753

6,929

834.5%

Net Revenue ($ millions) *

$ 2,300

 

$ 1,712

34.3%

Other Operation and Maintenance ($ millions) **

$ 788

 

$ 616

27.9%

* Revenues less fuel, purchased power and gas, gas produced, deferred fuel, cost of goods sold, and transmission by others.

** Other operation and maintenance excludes fuel, purchased power, purchased gas, deferred fuel, cost of goods sold, and transmission by others.

Amounts for the twelve months ended September 2000 include $19.7 million for merger-related costs and $16.2 million related to the Davis pumped

storage generation project.

 

 

 

 

 

 

 

Note 1: Excludes intercompany sales between regulated and unregulated.

 

 

ALLEGHENY ENERGY EARNINGS COMPARISON

(Dollars per Share)

September 2001 versus September 2000

Quarter

Year-to-Date

2001

Earnings per share:

Regulated utility

$ 0.373

$  1.273

Unregulated generation

0.950

1.979

Other unregulated

0.004

(0.013)

Cumulative effect of accounting change

0.000

(0.263)

Reported EPS

1.327

2.976

2000

Earnings per share:

Regulated utility

0.553

1.652

Unregulated generation

0.132

0.452

Other unregulated

0.004

0.015

Extraordinary Charge

0.000

(0.638)

Reported EPS

0.689

1.481

Variance (2001 Reported EPS less 2000 Reported EPS)

$ 0.638

$ 1.495

Variance Reconciliation

Net Revenues:*

Regulated Sales and Deliveries

Number of Customers

$ 0.032

$ 0.073

Weather

0.065

0.110

Usage/Cost of Energy

(0.013)

0.155

Pennsylvania CTC True-Up Accrued

(0.003)

0.010

Regulated Generation

(0.121)

(0.831)

Mountaineer Gas Acquisition

0.023

0.335

Other Revenues

(0.013)

(0.021)

Unregulated Generation and Energy Marketing

1.455

3.032

Total Net Revenues Variance

1.425

2.863

Operation and Maintenance:

Production

(0.099)

(0.330)

Transmission and Distribution

(0.033)

(0.108)

Customer Accounting and Services

(0.006)

0.001

Administrative and General

(0.241)

(0.517)

Total Operation and Maintenance Variance

(0.379)

(0.954)

Other:

Depreciation and amortization

(0.118)

(0.204)

Taxes other than Income Taxes

0.014

(0.049)

Other Income

(0.043)

(0.047)

Interest Costs

(0.094)

(0.252)

Minority Interest

(0.021)

(0.021)

Issuance of Shares

(0.173)

(0.235)

Income Tax

0.035

0.057

All Other

(0.008)

(0.010)

Total Other Variance

(0.408)

(0.761)

Allegheny Ventures Variance

-

(0.028)

Total EPS Variance before Extraordinary Charge and Accounting Change

0.638

1.120

Extraordinary Charge and Accounting Change

-

0.375

Total EPS Variance

$ 0.638

$ 1.495

* Revenues less fuel, purchased power and gas, gas produced, deferred fuel, cost of goods sold, and

transmission by others.

 

 

ALLEGHENY ENERGY SALES COMPARISON

September 2001 versus September 2000

Third

Third

Year-to

Year-to

Quarter

Quarter

Date

Date

2001

2000

% Change

2001

2000

% Change

Gigawatt-Hours (Electricity)

Monongahela Power

2,941

2,942

0.0%

8,770

8,791

-0.2%

Potomac Edison

3,641

3,404

7.0%

11,059

10,500

5.3%

West Penn Power

4,752

4,698

1.1%

14,318

13,950

2.6%

Regulated Electric Transactions

11,334

11,044

2.6%

34,147

33,241

2.7%

Million Cubic Feet (Natural Gas)

Monongahela Power

10,034

5,240

91.5%

46,132

6,929

565.8%

Regulated Gas Transactions

10,034

5,240

91.5%

46,132

6,929

565.8%

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Allegheny Energy, Inc
 

/S/ BRUCE E. WALENCZYK
 

Name:  Bruce E. Walenczyk

Title:     Senior Vice President &

             Chief Financial Officer

 

 

Dated: October 26, 2001