EX-99 3 pressrelease121903.htm PRESS RELEASE ANNOUNCING AE 1ST AND 2ND QUARTER 2003 FINANCIAL RESULTS

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NEWS RELEASE

For Media, contact:
Janice D. Lantz
Manager, Communications
800 Cabin Hill Drive
Greensburg, PA 15601-1689
Phone: (724) 838-6966
Media Hotline: 1-888-233-3583
E-Mail: jlantz@alleghenyenergy.com

                                                         

For Investor Relations, contact:
Gregory L. Fries
General Manager, Investor Relations
10435 Downsville Pike
Hagerstown, MD 21740-1766
Phone: (301) 665-2713
E-Mail: gfries@alleghenyenergy.com

FOR IMMEDIATE RELEASE

Allegheny Energy Reports First and Second Quarter 2003 Financial Results

     Hagerstown, Md., December 19, 2003 - Allegheny Energy, Inc. (NYSE: AYE) today announced financial results for the first and second quarters of 2003 and stated that it has filed the related quarterly financial reports on Form 10-Q with the Securities and Exchange Commission (SEC). Allegheny expects to file its third quarter financial reports in January.

     Paul J. Evanson, Chairman and CEO, said, "As expected, results for the first six months of 2003 reflect major losses in Allegheny's trading activities in the Western United States energy markets, including the write-down from renegotiating the California contract. By selling that contract in September and closing out other positions, we are now largely out of Western financial trading.

     "We remain on track in rebuilding Allegheny. The year 2004 will be a time of transition for the Company as we focus on becoming timely with our SEC filings, refinancing our debt, and creating a high-performance culture that will improve both quality and cost. I am confident that we are taking the right steps for long-term success," concluded Mr. Evanson.

Consolidated Financial Results

First Six Months

     Allegheny reported a consolidated loss for the first six months of 2003 of $290.3 million ($2.29 per share) compared with a consolidated loss of $87.9 million ($0.70 per share) for the first six months of 2002. Before cumulative effect of accounting changes, the consolidated loss for the first six months of 2003 was $269.6 million ($2.13 per share) compared with consolidated income of $42.6 million ($0.34 per share) for the first six months of 2002. Major items in the first six months of 2003 which affected earnings include:

·

A write-down in value of the renegotiated California Department of Water Resources (CDWR) power supply contract of $152.2 million ($89.8 million, net of income taxes). Allegheny sold the CDWR contract in September 2003 and has largely exited the Western energy markets;

1

·

Other unrealized losses and net realized losses for the first six months of 2003 of $198.5 million ($117.1 million, net of income taxes) and $37.3 million ($22.4 million, net of income taxes), respectively, as compared with unrealized gains of $128.1 million ($76.9 million, net of income taxes) and realized losses of $21.7 million ($13.0 million, net of income taxes) in the first six months of 2002, from Allegheny's trading business;

·

Recognition of a gain of $75.8 million ($56.7 million, net of income taxes) for the reapplication of Statement of Financial Accounting Standards (SFAS) No. 71, "Accounting for the Effects of Certain Types of Regulation," because of the reapplication of regulatory treatment to certain assets in West Virginia; and

·

Impairment charges of $28.5 million ($17.1 million, net of income taxes) for assets held for sale, including the Conemaugh Generating Station, which was sold in June 2003.

     Operation expenses for the first six months of 2003 increased by $80.8 million ($46.5 million, net of income taxes) as compared with the first six months of 2002, due, in part, to higher costs for employee benefits and outside services, as well as to the impairment charges described above. Interest charges for the first six months of 2003 increased $68.1 million ($39.2 million, net of income taxes) over the same period of 2002. The increase reflects both higher interest rates and the increase in average long-term debt outstanding, including debt incurred in connection with Allegheny's refinancing in February 2003.

Second Quarter

     Allegheny reported a consolidated loss for the second quarter of 2003 of $231.5 million ($1.82 per share) compared with a consolidated loss of $33.5 million ($0.27 per share) for the second quarter of 2002. The increase in consolidated loss of $198.0 million was due primarily to reduced net revenues in the Generation and Marketing segment resulting from continuing losses in its trading business and the continued price volatility in energy markets in the Western United States.

     Reported results for the second quarter reflect the write-down in value of the CDWR power supply contract of $152.2 million as described above and unrealized losses on commodity contracts of $153.3 million ($88.9 million, net of income taxes) offset, in part, by realized gains of $19.7 million ($11.6 million, net of income taxes) on trading operations, primarily from the sale of power purchase hedge agreements. In addition, interest charges increased $38.1 million ($22.3 million, net of income taxes) over the second quarter of 2002 for the reasons described above.

First Quarter

     Allegheny recorded a consolidated loss for the first quarter of 2003 of $58.8 million ($0.46 per share) compared with a consolidated loss of $54.4 million ($0.43 per share) for the first quarter of 2002. Results of operations for the first quarter were reduced by $12.1 million, net of income taxes, reflecting cumulative effect of an accounting change associated with the adoption of Emerging Issues Task Force (EITF) Issue No. 02-3, "Accounting for Contracts Involved in Energy Trading and Risk Management," and by $8.6 million, net of income taxes, reflecting cumulative effect of an accounting change associated with the adoption of SFAS No. 143, "Accounting for Asset Retirement Obligations." Before cumulative effect of accounting changes, the consolidated loss for the first quarter was $38.0 million ($0.30 per share) compared with consolidated income of $76.1 million ($0.61 per share) for the first quarter of 2002.

2

     The decrease in earnings (before cumulative effect of accounting changes) of $114.1 million was due primarily to reduced net revenues in the Generation and Marketing segment as a result of unrealized losses and realized losses on commodity contracts of $45.2 million ($27.6 million, net of income taxes) and of $72.6 million ($44.4 million, net of income taxes), respectively, in 2003 as described above in the results for the first six months. Earnings were also reduced by impairment charges on assets held for sale as described above. Interest charges increased $30.0 million ($15.3 million, net of income taxes) over the first quarter of 2002 for the reasons described above. These charges were offset, in part, by the recognition of a gain from the reapplication of SFAS No. 71 also as described above.

Generation and Marketing Segment

     For the first six months of 2003, the segment reported a consolidated loss (before cumulative effect of accounting changes) of $315.6 million as compared with a consolidated loss (before the cumulative effect of accounting changes) of $19.4 million in the first six months of 2002. Wholesale revenues for the first six months of 2003 decreased $512.0 million over the comparable period in 2002 due primarily to the factors described above in the consolidated results, including both unrealized and realized losses in trading operations.

     For the second quarter of 2003, the segment reported a consolidated loss of $240.2 million compared to a consolidated loss of $62.0 million in the second quarter of 2002. Wholesale revenues for the second quarter of 2003 decreased $298.5 million due primarily to the factors described above in the consolidated results. In the prior comparable period, the segment had recorded unrealized gains associated with its trading portfolio.

     For the first quarter of 2003, the segment reported a consolidated loss of $95.0 million compared with consolidated income of $42.6 million in the first quarter of 2002. Before cumulative effect of accounting changes, the loss for the segment was $75.4 million compared with income before cumulative effect of accounting changes of $42.6 million for the second quarter of 2002. Wholesale revenues for the first quarter decreased $213.5 million due primarily to the factors discussed above in the consolidated results. The losses were offset, in part, by unrealized gains from the trading operations and the recognition of a gain of $61.7 million ($48.1 million, net of income taxes) from the reapplication of SFAS No. 71 as discussed above in the consolidated financial results.

Delivery and Services Segment

     For the first six months of 2003, the segment reported consolidated income (before cumulative effect of accounting changes) of $53.7 million as compared with consolidated income of $65.1 million in the first six months of 2002. The segment's regulated electric revenues increased by $51.2 million and the segment's regulated natural gas revenues increased by $29.0 million over the same period in 2002. Both increases were due primarily to increased sales resulting from colder winter weather across Allegheny's service territories. During the first six months of 2003, the segment's unregulated services revenues decreased $258.0 million from the same period in 2002 due primarily to the sale of Alliance Energy Services on December 31, 2002.

     For the second quarter of 2003, the segment reported consolidated income of $4.3 million, compared with consolidated income of $25.9 million for the second quarter of 2002. The segment's regulated electric and natural gas revenues remained relatively consistent for the second quarter over the comparable period in 2002. During the second quarter of 2003, the segment's unregulated services revenues decreased $121.8 million from the same period in 2002 due primarily to the sale of Alliance Energy Services as described above.

3

     For the first quarter of 2003, the segment reported consolidated income (before cumulative effect of an accounting change) of $49.4 million compared with consolidated income of $39.2 million for the first quarter of 2002. The segment's regulated electric revenues increased $49.0 million and regulated natural gas revenues increased $29.6 million in 2003 compared with the first quarter 2002, resulting from colder winter weather as described above in the results for the first six months. The segment's unregulated revenues decreased $136.2 million to $14.1 million in the first quarter of 2003 due primarily to the sale of Alliance Energy Services as described above. In addition, the first quarter results of 2003 include a gain of $14.1 million ($8.6 million, net of income taxes) from the reapplication of SFAS No. 71 as discussed above in the consolidated financial results.

Analyst Conference Call

     Allegheny will comment further on these results during an analyst conference call on Monday, December 22, 2003, at 11:00 a.m. (Eastern Time). Investors, the news media, and others may listen to a live internet broadcast of the call at www.alleghenyenergy.com by clicking on an available audio link. The call will also be archived for replay purposes after the live broadcast. A news release on the earnings and supporting financial data will also be available on the Company's web site for review.

Allegheny Energy

     Allegheny Energy is an integrated energy company with a portfolio of businesses, including Allegheny Energy Supply, which owns and operates electric generating facilities; and Allegheny Power, which delivers low-cost, reliable electric and natural gas service to about four million people in Pennsylvania, West Virginia, Maryland, Virginia, and Ohio. More information about the Company is available at www.alleghenyenergy.com.

Forward-Looking Statements

     In addition to historical information, this release contains 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: regulation and the status of retail generation service supply competition in states served by the Distribution Companies; the closing of various agreements; execution of restructuring activity and liquidity enhancement plans; results of litigation; financing requirements and plans to meet those requirements; demand for energy and the cost and availability of inputs; demand for products and services; capacity purchase commitments; results of operations; capital expenditures; regulatory matters; internal controls and procedures and outstanding financial reporting obligations; and stockholder rights plans. 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: execution of restructuring activity and liquidity enhancement plans; complications or other factors that render it difficult or impossible to obtain necessary lender consents or regulatory authorizations on a timely basis; general economic and business conditions; changes in access to capital markets; the continuing effects of global instability, terrorism, and war; changes in industry capacity, development, and other activities by Allegheny's competitors; changes in the weather and other natural phenomena; changes in technology; changes in the price of power and fuel for electric generation; the results of regulatory proceedings, including those related to rates; changes in the underlying inputs, including market conditions, and assumptions used to estimate the fair values of commodity contracts; changes in laws and regulations applicable to Allegheny, its markets, or its activities; environmental regulations; the loss of any significant customers and suppliers; the effect of accounting policies issued periodically by accounting standard-setting bodies; additional collateral calls; and changes in business strategy, operations, or development plans. Additional risks and uncertainties are identified and discussed in Allegheny Energy's reports and registration statements filed with the Securities and Exchange Commission.

-###-

4
 
         

ALLEGHENY ENERGY, INC.

Consolidated Statements of Operations
 

Unaudited
Three Months Ended
               June 30,               

Unaudited
Six Months Ended
               June 30,               

(In thousands, except number of shares and per share data)

2003

2002
Restated

2003

2002
Restated
         

Total operating revenues

   $ 359,214 

    $784,591 

  $1,074,905 

  $1,789,698 
         

Cost of revenues:

        

  Fuel consumed for electric generation

     134,054 

     126,673 

     292,826 

     270,171 

  Purchased energy and transmission

      81,527 

     100,799 

     167,795 

     190,438 

  Natural gas purchases

      25,545 

     129,104 

     121,504 

     303,527 

  Deferred energy costs, net

      (6,965)

        (961)

     (20,624)

      14,583 

  Other

       8,413 

      13,585 

      20,186 

      39,980 

    Total cost of revenues

     242,574 

     369,200 

     581,687 

     818,699 

Net revenues

     116,640 

     415,391 

     493,218 

     970,999 
         

Other operating expenses:

        

  Operation expense

     275,454 

     255,756 

     576,182 

     495,380 

  Depreciation and amortization

      79,474 

      76,496 

     157,085 

     155,867 

  Taxes other than income taxes

      50,735 

      55,405 

     111,362 

     116,189 

    Total other operating expenses

     405,663 

     387,657 

     844,629 

     767,436 

Operating (loss) income

    (289,023)

      27,734 

    (351,411)

     203,563 
         

Other income and (expenses), net

       1,353 

      (3,966)

      81,613 

       7,023 
         

Interest charges and preferred
  dividends:

        

  Interest on debt and other

     122,471 

      78,187 

     223,648 

     147,993 

  Allowance for borrowed funds used
  during construction and interest
  capitalized

      (7,809)

      (1,638)

     (13,421)

      (5,875)

  Dividends on preferred stock of
  subsidiaries

       1,260 

       1,259 

       2,519 

       2,518 

    Total interest charges and preferred
    dividends

     115,922 

      77,808 

     212,746 

     144,636 

Consolidated (loss) income before
  income taxes, minority interest, and
  cumulative effect of accounting
  change

    (403,592)

     (54,040)

    (482,544)

      65,950 
         

Federal and state income tax
  (benefit) expense

    (167,378)

     (19,565)

    (205,396)

      23,320 
         

Minority interest

      (4,695)

      (1,014)

      (7,585)

          16 
         

Consolidated (loss) income before
  cumulative effect of accounting
  change

    (231,519)

     (33,461)

    (269,563)

      42,614 

Cumulative effect of accounting
  change, net of tax of $12,974 and
  $79,596, respectively

         ---

         ---  

     (20,765)

    (130,514)

Consolidated net loss

   $(231,519)

    $(33,461)

  $ (290,328)

  $  (87,900)
         

Average basic and diluted common
shares outstanding

 126,883,664 

 125,436,520 

 126,719,304

 125,343,220 
         

Basic and diluted earnings per share:

        

Consolidated (loss) income before
  cumulative effect of accounting change

   $   (1.82)

    $   (.27)

  $    (2.13)

  $      .34 

Cumulative effect of accounting change,
  net

         ---  

         ---  

        (.16)

       (1.04)

Consolidated net loss

   $   (1.82)

    $   (.27)

  $    (2.29)

  $     (.70)

 

ALLEGHENY ENERGY, INC.
Consolidated Statements of Cash Flows
 

Unaudited
Six Months Ended
               June 30,               

(In thousands)

2003

2002
Restated
     

Cash flows from operations:

    

  Consolidated net loss

$ (290,328)

$  (87,900)

  Cumulative effect of accounting change, net

    20,765 

   130,514 

  Consolidated (loss) income before cumulative
    effect of accounting change

  (269,563)

    42,614 

  Reapplication of SFAS No. 71

   (75,824)

       ---  

  Depreciation and amortization

   157,085 

   155,867 

  Amortization of adverse purchase power commitments

    (9,533)

   (11,563)

  Loss (gain) on disposal of assets, net

    30,917 

   (14,897)

  Minority interest

    (7,585)

        16 

  Deferred investment credit and income taxes, net

  (142,499)

    54,480 

  Deferred energy costs, net

   (20,624)

    14,583 

  Unrealized losses (gains) on
    commodity contracts, net

   380,710 

  (123,085)

  Impairment of generating assets

       ---  

    31,190 

  Changes in certain assets and liabilities:

    

    Accounts receivable, net

    39,809 

     6,988 

    Materials and supplies

   (31,351)

   (22,679)

    Prepaid taxes

    (9,721)

    (5,219)

    Taxes receivable/payable, net

    96,709 

    46,753 

    Accounts payable

   (29,761)

    (2,250)

    Benefit Plans' investments

     9,916 

    13,834 

    Accrued payroll

   (18,397)

   (31,362)

    Interest accrued

     4,672 

    10,898 

    Purchased options

    11,689 

    (9,595)

    Contract termination costs

   (47,706)

       ---  

  Other, net

    (7,690)

    10,662 
 

    61,253 

   167,235 
     

Cash flows (used in) investing:

    

  Acquisition of electric generating facility

  (318,435)

       ---  

  Construction expenditures

  (140,539)

  (188,480)

  Proceeds from sale of businesses and assets

    46,168 

    15,902 
 

  (412,806)

  (172,578)
     

Cash flows from financing:

    

  Proceeds from credit facilities, notes and bonds

 1,931,507 

   728,378 

  Restricted funds on deposit with trustee

   (15,467)

     1,606 

  Payments on credit facilities, notes and bonds

  (270,928)

  (245,970)

  Cash dividends paid on common stock

       ---  

   (97,634)

  Short-term debt, net

(1,122,181)

  (335,228)
 

   522,931 

    51,152 
     

Net change in cash and temporary cash investments

   171,378 

    45,809 

  Cash and temporary investments at January 1

   204,231 

    37,980 

  Cash and temporary investments at June 30

$  375,609 

$   83,789 
     
     

ALLEGHENY ENERGY, INC.
Consolidated Balance Sheets

               Unaudited               

(In thousands)

June 30,
2003

December 31,
2002

ASSETS

  Current assets:

    Cash and temporary cash investments

 $   375,609 

 $   204,231 

    Accounts receivable:

      Billed:

        Customer

     310,831 

     316,260 

        Energy trading and other

      98,159 

      93,700 

      Unbilled

     118,658 

     166,055 

      Allowance for uncollectible accounts

     (42,327)

     (29,645)

    Materials and supplies (at average cost):

      Operating and construction

     110,386 

     111,267 

      Fuel

     105,006 

      74,768 

    Taxes receivable

      50,739 

     185,691 

    Deferred income taxes

      56,625 

      46,102 

    Commodity contracts

     113,169 

     156,313 

    Prepaid taxes

      59,678 

      49,957 

    Assets held for sale

       8,000 

       9,259 

    Restricted funds

      22,818 

       2,351 

    Other, including current portion of regulatory assets

     123,659 

      77,563 

   1,511,010 

   1,463,872 

  Property, plant, and equipment:

    In service, at original cost

  11,233,210 

  10,976,166 

    Construction work in progress

     497,894 

     380,959 

  11,731,104 

  11,357,125 

    Accumulated depreciation

  (4,612,315)

  (4,474,551)

   7,118,789 

   6,882,574 

  Investments and other assets:

    Excess of cost over net assets acquired (Goodwill)

     367,287 

     367,287 

    Benefit plans' investments

      24,265 

      47,309 

    Unregulated investments

      54,356 

      56,393 

    Intangible assets

      38,648 

      38,648 

    Other

      35,756 

      22,685 

     520,312 

     532,322 

  Deferred charges:

    Commodity contracts

     637,121 

   1,055,160 

    Regulatory assets

     569,495 

     558,811 

    Other

     141,480 

     107,540 

   1,348,096 

   1,721,511 

Total assets

 $10,498,207 

 $10,600,279 

 

ALLEGHENY ENERGY, INC.
Consolidated Balance Sheets (Continued)
   
 

               Unaudited               

(In thousands)

June 30,
2003

December 31,
2002
     

LIABILITIES AND STOCKHOLDERS' EQUITY

    

  Current liabilities:

    

    Short-term debt

   $     9,785 

  $ 1,131,966 

    Long-term debt due within one year

       542,250 

      257,200 

    Debentures, notes, and bonds reclassified
      to current

     5,084,746 

    3,662,201 

    Accounts payable

       314,378 

      380,019 

    Taxes accrued - other

        58,807 

       97,049 

    Adverse power purchase commitments

        18,552 

       19,064 

    Commodity contracts

       154,360 

      191,186 

    Interest accrued

        67,283 

       62,611 

    Other, including current portion of
      regulatory liabilities

       126,725 

      189,537 
 

     6,376,886 

    5,990,833 
     

  Long-term debt

       115,954 

      115,944 
     

  Deferred credits and other liabilities:

    

    Commodity contracts

       578,328 

      590,546 

    Unamortized investment credit

        93,004 

       96,183 

    Deferred income taxes

       947,739 

    1,079,151 

    Obligation under capital leases

        37,242 

       39,054 

    Regulatory liabilities

        53,322 

      111,967 

    Adverse power purchase commitments

       227,126 

      236,147 

    Other

       338,632 

      313,106 
 

     2,275,393

    2,466,154 

  Minority interest

        12,889 

       21,841 

  Preferred stock of subsidiary

        74,000 

       74,000 
     

  Stockholders' equity:

    

    Common stock

       158,761 

      158,261 

    Other paid-in capital

     1,448,302 

    1,446,180 

    Retained earnings

        67,561 

      357,889 

    Treasury stock

        (1,179)

         (411)

    Accumulated other comprehensive loss

       (30,360)

      (30,412)
 

     1,643,085 

    1,931,507 
     

  Commitments and contingencies

   
     

Total liabilities and stockholders' equity

   $10,498,207 

  $10,600,279 

 

ALLEGHENY ENERGY, INC.

Results by Business Segment

 

Three Months Ended
June 30,

Six Months Ended
June 30,

(In millions)

2003

Restated
2002

2003

Restated
2002

Total operating revenues:

   Delivery and Services

$   665.5 

$   789.7 

$ 1,516.4 

$ 1,704.1 

   Generation and Marketing

     33.3 

    323.1 

    314.1 

    811.2 

   Eliminations

   (339.6)

   (328.2)

   (755.6)

   (725.6)

   Total

$   359.2 

$   784.6 

$ 1,074.9 

$ 1,789.7 

Operating (loss) income:

   Delivery and Services

$    39.6 

$    81.7 

$   133.6 

$   160.6 

   Generation and Marketing

   (335.7)

    (58.3)

   (472.6)

     48.0 

   Eliminations

      7.1 

      4.3 

    (12.4)

     (5.0)

   Total

$  (289.0)

$    27.7 

$  (351.4)

$   203.6 

Consolidated (loss) income before
cumulative effect of accounting change:

   Delivery and Services

$     4.3 

$    25.9 

$    53.7 

$    65.1 

   Generation and Marketing

   (240.2)

    (62.0)

   (315.6)

    (19.4)

   Eliminations

      4.4 

      2.6 

     (7.6)

     (3.1)

   Total

$  (231.5)

$   (33.5)

$  (269.5)

$    42.6 

Cumulative effect of accounting change,net:

   Delivery and Services

$     ---  

$     ---  

$    (1.3)

$  (130.5)

   Generation and Marketing

      ---  

      ---  

    (19.5)

      ---  

   Total

$     ---  

$     ---  

$   (20.8)

$  (130.5)

Consolidated net (loss) income:

   Delivery and Services

$     4.3 

$    25.9 

$    52.4 

$   (65.4)

   Generation and Marketing

   (240.2)

    (62.0)

   (335.1)

    (19.4)

   Eliminations

      4.4 

      2.6 

     (7.6)

     (3.1)

   Total

$  (231.5)

$   (33.5)

$  (290.3)

$   (87.9)

 

ALLEGHENY ENERGY, INC.
Consolidated Statements of Operations

 

 

Unaudited
Three Months Ended
             March 31,               

(In thousands, except number of shares
and per share data)

2003

2002
Restated

 

 

 

Total operating revenues

    $ 715,691 

  $ 1,005,107 

 

 

 

Cost of revenues:

 

 

  Fuel consumed for electric generation

     158,772 

     143,498 

  Purchased energy and transmission

      86,268 

      89,639 

  Natural gas purchases

      95,959 

     174,423 

  Deferred energy costs, net

       (13,659)

      15,544 

  Other

      11,773 

      26,395 

    Total cost of revenues

     339,113 

     449,499 

Net revenues

     376,578 

     555,608 

 

 

 

Other operating expenses:

 

 

  Operation expense

     300,728 

     239,624 

  Depreciation and amortization

      77,611 

      79,371 

  Taxes other than income taxes

      60,627 

      60,784 

    Total other operating expenses

     438,966 

     379,779 

Operating (loss) income

     (62,388)

     175,829 

 

 

 

Other income and (expenses), net

      80,260 

      10,989 

 

 

 

Interest charges and preferred dividends:

 

 

  Interest on debt and other

     101,177 

      69,806 

  Allowance for borrowed funds used during
    construction and interest capitalized


      (5,612)


      (4,237)

  Dividends on preferred stock of subsidiaries

       1,259 

       1,259 

    Total interest charges and preferred dividends

      96,824 

      66,828 
     

Consolidated (loss) income before income taxes,
  minority interest, and cumulative effect of 
  accounting change

     (78,952)

     119,990 

 

 

 

Federal and state income tax (benefit) expense

     (38,018)

      42,885 

 

 

 

Minority interest

      (2,890)

       1,030 

 

 

 

Consolidated (loss) income before cumulative
  effect of accounting change


     (38,044)


      76,075 

Cumulative effect of accounting change, net of tax
  of $12,974 and $79,596, respectively


     (20,765)


    (130,514)

Consolidated net loss

    $ (58,809)

  $  (54,439)

Average basic and diluted common shares outstanding

 

126,553,119 

 

125,248,884 

 

 

 

Basic and diluted earnings per share:

 

 

Consolidated (loss) income before cumulative
  effect of accounting change
Cumulative effect of accounting change, net


    $   (.30)
        (.16)


  $      .61 
       (1.04)

Consolidated net loss

    $   (.46)

  $     (.43)

 

 

 

ALLEGHENY ENERGY, INC.
Consolidated Statements of Cash Flows

 

 

Unaudited
Three Months Ended
                March 31,              

(In thousands)

2003

2002
Restated

Cash flows from operations:

 

 

  Consolidated net loss

$   (58,809)

$  (54,439)

  Cumulative effect of accounting change, net

     20,765 

   130,514 

  Consolidated (loss) income before cumulative
    effect of accounting change

(38,044)

76,075 

  Reapplication of SFAS No. 71

(75,823)

---  

  Depreciation and amortization

77,611 

79,371 

  Loss (gain) on assets held for sale and disposed, net

31,837 

(14,314)

  Minority interest

(2,890)

1,030 

  Deferred energy costs

(13,659)

15,544 

  Deferred investment credit and income taxes, net

(33,661)

23,640 

  Unrealized losses (gains) on
    commodity contracts, net

64,673 

(86,393)

  Changes in certain assets and liabilities:

 

 

    Accounts receivable, net

(18,398)

10,759 

Materials and supplies

1,611 

2,898 

Prepaid taxes

(32,295)

(20,273)

Taxes receivable/payable, net

156,113 

78,462 

Accounts payable and collateralized deposits

(17,183)

31,789 

Benefit Plans' investments

1,246 

7,810 

    Interest accrued

23,612 

1,372 

Contract termination cost

(47,652)

---  

    Purchased options

10,957 

4,993 

    Accrued payroll

(12,539)

(20,934)

Other, net

     12,332 

    13,819 

 

87,848 

205,648 

Cash flows (used in) investing:

 

 

  Acquisition of electric generating facility

(318,435)

---  

  Construction expenditures

(66,615)

(82,167)

  Proceeds from sale of businesses and assets

     333 

  15,902 

 

(384,717)

(66,265)

Cash flows from (used in) financing:

 

 

  Proceeds from credit facilities, notes and bonds

1,931,506 

---  

  Restricted funds on deposit with trustee

(135,531)

613 

  Payments on credit facilities, notes and bonds

(229,975)

(46,893)

  Cash dividends paid on common stock

---  

(48,374)

  Short-term debt, net

(1,121,966)

13,538 

 

444,034 

(81,116)

 

 

 

Net change in cash and temporary cash investments

147,165 

58,267 

  Cash and temporary investments at January 1

    204,231 

  37,980 

  Cash and temporary investments at March 31

$   351,396

$ 96,247 

 

 

 

 

ALLEGHENY ENERGY, INC.
Consolidated Balance Sheets

                  Unaudited                

(In thousands)

March 31,
2003

December 31,
2002

ASSETS

  Current assets:

    Cash and temporary cash investments

 $   351,396 

 $   204,231 

    Accounts receivable:

      Billed:

        Customer

     363,625 

     316,260 

        Energy trading and other

      80,907 

      93,700 

      Unbilled

     133,522 

     166,055 

      Allowance for uncollectible accounts

     (34,351)

     (29,645)

    Materials and supplies (at average cost):

      Operating and construction

     113,714 

     111,267 

      Fuel

      69,307 

      74,768 

    Taxes receivable

         --- 

     185,691 

    Deferred income taxes

      62,945 

      46,102 

    Commodity contracts

     154,039 

     156,313 

    Prepaid taxes
    Assets held for sale
    Restricted funds

      82,252 
      53,773 
     137,883 

      49,957 
       9,259 
       2,351 

    Other, including current portion of regulatory assets

      88,102 

      77,563 

   1,657,114 

   1,463,872 

  Property, plant, and equipment:

    In service, at original cost

  11,072,218 

  10,976,166 

    Construction work in progress

     594,334 

     380,959 

  11,666,552 

  11,357,125 

    Accumulated depreciation

  (4,543,171)

  (4,474,551)

   7,123,381 

   6,882,574 

  Investments and other assets:

    Excess of cost over net assets acquired (Goodwill)

     367,287 

     367,287 

    Benefit plans' investments

      41,884 

      47,309 

    Unregulated investments

      56,409 

      56,393 

    Intangible assets

      38,648 

      38,648 

    Other

      35,760 

      22,685 

     539,988 

     532,322 

  Deferred charges:

    Commodity contracts

     983,565 

   1,055,160 

    Regulatory assets

     575,191 

     558,811 

    Other

     149,975 

     107,540 

   1,708,731 

   1,721,511 

Total assets

 $11,029,214 

 $10,600,279 

 

ALLEGHENY ENERGY, INC.
Consolidated Balance Sheets (continued)

 

 

 

 

                 Unaudited                  

(In thousands)

March 31,
2003

December 31,
2002

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

  Current liabilities:

 

 

    Short-term debt

    $    10,000 

  $ 1,131,966 

    Long-term debt due within one year

        459,458 

      257,200 

    Debentures, notes, and bonds reclassified
      to current


      5,208,146 


    3,662,201 

    Accounts payable

        337,325 

      380,019 

    Taxes accrued - other

         67,471 

       97,049 

    Adverse power purchase commitments

         18,808 

       19,064 

    Commodity contracts

        203,001 

      191,186 

    Other, including current portion of
      regulatory liabilities


        204,684 


      252,148 

 

      6,508,893 

    5,990,833 

 

 

 

  Long-term debt

        115,944 

      115,944 

 

 

 

  Deferred credits and other liabilities:

 

 

    Commodity contracts

        600,231 

      590,546 

    Unamortized investment credit

         94,594 

       96,183 

    Deferred income taxes

      1,071,166 

    1,079,151 

    Obligation under capital leases

         40,135 

       39,054 

    Regulatory liabilities

         53,808 

      111,967 

    Adverse power purchase commitments

        231,637 

      236,147 

    Other

        346,189

      313,106 

 

      2,437,760

    2,466,154 

  Minority interest

         18,773 

       21,841 

  Preferred stock of subsidiary

         74,000 

       74,000 

 

 

 

  Stockholders' equity:

 

 

    Common stock

        158,665 

      158,261 

    Other paid-in capital

      1,447,664 

    1,446,180 

    Retained earnings

        299,080 

      357,889 

    Treasury stock

         (1,179)

         (411)

    Accumulated other comprehensive loss

        (30,386)

      (30,412)

 

      1,873,844 

    1,931,507 

 

 

 

  Commitments and contingencies

 

 

 

 

 

Total liabilities and stockholders' equity

    $11,029,214 

  $10,600,279 

 

ALLEGHENY ENERGY, INC.
Results by Business Segment

Three Months Ended
March 31,

(In millions)

2003

Restated
2002

Total operating revenues:

    Delivery and Services

$  850.9 

$  914.4 

    Generation and Marketing

   280.8 

   488.2 

    Eliminations

  (416.0)

  (397.5)

    Total

$  715.7 

$1,005.1 

Operating (loss) income:

    Delivery and Services

$   94.0 

$   78.8 

    Generation and Marketing

  (137.0)

   106.4 

    Eliminations

   (19.4)

    (9.4)

    Total

$  (62.4)

$  175.8 

Consolidated (loss) income before cumulative effect of accounting change:

    Delivery and Services

$   49.4 

$   39.2 

    Generation and Marketing

   (75.4)

    42.6 

    Eliminations

   (12.0)

    (5.7)

    Total

$  (38.0)

$   76.1 

Cumulative effect of accounting change, net:

    Delivery and Services

$   (1.3)

$ (130.5)

    Generation and Marketing

   (19.5)

     ---  

    Total

$  (20.8)

$ (130.5)

Consolidated net (loss) income:

    Delivery and Services

$   48.2 

$  (91.3)

    Generation and Marketing

   (95.0)

    42.6 

    Eliminations

   (12.0)

    (5.7)

    Total

$  (58.8)

$  (54.4)