EVANSVILLE, IN--(Marketwire - October 29, 2009) - Vectren Corporation (NYSE: VVC) today
reported third quarter 2009 net income of $12.4 million, or $0.15 per
share, compared to net income of $23.2 million, or $0.29 per share, for the
same quarter last year. Net income for the nine months ended September 30,
2009, which excludes a charge related to an investment by ProLiance Energy,
LLC in Liberty Gas Storage, LLC, was $90.4 million, or $1.12 per share.
This compares to net income of $91.9 million, or $1.18 per share, in 2008.
Including the impacts of the charge recognized in the second quarter,
consolidated results for the nine months ended September 30, 2009 were
earnings of $78.5 million, or $0.97 per share. Net income excluding the
charge is a non-GAAP performance measure. See a discussion of this
non-GAAP performance measure later in this earnings release.
2009 Earnings Guidance Affirmed
The company affirmed 2009 consolidated earnings guidance in a range of
$1.60 to $1.80 per share. This range continues to exclude as a
nonrecurring charge the impact of the charge related to ProLiance's
investment in Liberty Gas Storage. This estimate includes projected
earnings from the Utility Group of $1.20 to $1.30 per share and from the
Nonutility Group of $0.40 to $0.50 per share. This guidance reflects
continued weakness in the economy including lower demand for electricity
and coal. Changes in these expectations or other circumstances could
materially impact earnings and result in earnings for 2009 significantly
above or below this guidance. These targeted ranges are subject to such
factors discussed below under "Forward-Looking Statements."
Summary Results
- Utility third quarter earnings were $8.7 million, or $0.11 per share,
in 2009 with ($0.04) per share related to unfavorable cooling weather,
compared to earnings of $13.6 million, or $0.17 per share, in 2008. Year
to date, utility earnings were $71.5 million, or $0.89 per share, with
($0.03) per share of unfavorable cooling weather, compared to utility
earnings of $80.4 million, or $1.04 per share, in 2008.
- Nonutility earnings were $3.3 million, or $0.04 per share, in the third
quarter of 2009, compared to earnings of $9.8 million, or $0.12 per share,
in 2008. The decline resulted from third quarter 2008 record earnings from
ProLiance, a period in which it benefited from unusually wide cash to NYMEX
spreads. Year to date, nonutility earnings, excluding the Liberty charge,
were $18.7 million, or $0.23 per share, compared to $12.1 million, or $0.15
per share, in 2008.
- Year to date 2009 reported earnings per share are ($0.04) per share
lower than 2008 due to the increased number of shares outstanding as a
result of the issuance of common shares in June 2008.
"Our year to date operating results of $90.4 million, before the Liberty
charge, achieved in a difficult economy, compare favorably to earnings of
$91.9 million in 2008. Consolidated results reflect lower electric demand
impacting our electric utility margins, including wholesale power sales, a
very cool summer, and lower coal sales. In spite of the decline in
ProLiance's quarterly earnings, the year to date results of the nonutility
businesses have increased over 50% compared to 2008," said Niel C.
Ellerbrook, Vectren's Chairman and CEO.
Ellerbrook added, "We expect the fourth quarter results of the utility
business to be similar to 2008 and the results of our nonutility
businesses, particularly Coal Mining and ProLiance, to be up as compared to
the 2008 fourth quarter. As a result, we are affirming our 2009 guidance
of $1.60 to $1.80."
Utility Group Discussion
The Utility Group's 2009 earnings for the quarter ended September 30, 2009
were $8.7 million, compared to $13.6 million in 2008 and $71.5 million for
the nine months ended September 30, 2009, compared to $80.4 million in
2008. The decreases reflect continued trends involving lower large
customer usage and lower wholesale power sales, both of which have been
impacted by the recession, as well as an expected increase in depreciation
expense. Management estimates third quarter cooling weather over 20
percent cooler than both normal and the prior year decreased earnings in
the quarter by $3.2 million. Management estimates the mild cooling weather
decreased earnings $2.1 million for the nine months compared to the prior
year period. Increased revenues associated with regulatory initiatives
partially offset these declines.
Gas Utility Margin
Gas utility margins were $65.4 million and $319.3 million for the three and
nine months ended September 30, 2009. Following are reconciliations of the
changes from 2008:
Year
Three to
(millions) Months Date
------- -------
2008 Gas Utility Margin $ 63.7 $ 316.4
Regulatory initiatives, including the full impact of the
Vectren North base rate increase and the Vectren Ohio
base rate increase 2.1 8.4
Ohio weather 0.8 0.4
Recessionary impacts:
Large customer margin decreases (0.7) (4.0)
Decreased small customer counts (0.2) (1.2)
Costs directly recovered in margin and other (0.3) (0.7)
------- -------
Total change in Gas Utility Margin 1.7 2.9
2009 Gas Utility Margin $ 65.4 319.3
======= =======
Electric Utility Margin
Retail & Firm Wholesale Margin
Electric retail utility margins were $87.3 million and $238.0 million for
the three and nine months ended September 30, 2009. Following are
reconciliations of the changes from 2008:
Year
Three to
(millions) Months Date
------- -------
2008 Retail Electric Margin $ 90.2 $ 236.9
Return on pollution control investments 1.4 3.2
Recovery of tracked MISO and pollution control related
costs 1.9 7.4
Weather (5.4) (3.6)
Recessionary driven large customer margin decreases (1.7) (5.4)
All other changes 0.9 (0.5)
------- -------
Total change in Retail Electric Margin (2.9) 1.1
2009 Retail Electric Margin $ 87.3 $ 238.0
======= =======
Margin from Wholesale Activities
For the three and nine months ended September 30, 2009, wholesale margins
were $5.6 million and $15.3 million, representing decreases of ($3.4)
million and ($6.9) million, compared to 2008.
Of the quarterly and year to date decreases ($4.3) million and ($11.5)
million, respectively, relate to lower margin retained by the company from
off-system sales. The company experienced lower wholesale power marketing
margins due primarily to lower demand and wholesale prices due to the
recession, coupled with increased coal costs. The base rate case effective
August 17, 2007, requires that wholesale margin from off-system sales
earned above or below $10.5 million be shared equally with customers as
measured on a fiscal year ending in August, and results reflect the impact
of that sharing. Decreases associated with off-system sales have been
partially offset by margins associated with transmission system operations.
Beginning in June 2008, the Company began earning a return on electric
transmission projects constructed by the company in its service territory
that meet the criteria of Midwest Independent System Operator's (MISO)
transmission expansion plans. Margin associated with these projects and
other transmission system operations increased $0.9 million, to $4.4
million for the three months ended September 30, 2009 and for the nine
months ended September 30, 2009, margin increased $4.6 million, to $11.0
million.
Other Operating
For the three and nine months ended September 30, 2009, other operating
expenses were $69.9 million and $227.9 million, which represent increases
of $0.7 million and $10.2 million, compared to 2008. Approximately $1.3
million and $8.3 million of the increases result from increased costs
directly recovered through utility margin. Examples of such tracked costs
include Ohio bad debts, Indiana gas pipeline integrity management costs,
costs to fund Indiana energy efficiency programs, and MISO transmission
revenues and costs, among others. Bad debt expense associated with the
Indiana service territory decreased $0.4 million in the quarter and
increased $2.3 million year to date. The gas cost portion of bad debt
expense in the Indiana service territory is recovered through gas cost
recovery mechanisms. All other operating expenses were approximately $0.2
million lower in the quarter and $0.4 million lower year to date.
Depreciation & Amortization
For the three and nine months ended September 30, 2009, depreciation
expense was $45.9 million and $134.8 million, which represents increases of
$4.3 million and $11.6 million, compared to 2008. Plant additions include
the approximate $100 million SO2 scrubber placed into service January 1,
2009 for which depreciation totaling $1.5 million in the quarter and $4.0
million year to date is directly recovered in electric utility margin.
Taxes Other Than Income Taxes
For the three and nine months ended September 30, 2009, taxes other than
income taxes were $10.8 million and $46.2 million, which represent
decreases of ($0.9) million for the quarter and ($5.6) million year to
date, compared to 2008. The decreases are attributable to lower utility
receipts, excise, and usage taxes caused principally by lower gas prices.
These expenses are tracked in revenues.
Other Income - Net
For the three and nine months ended September 30, 2009, other income - net
was $2.1 million and $6.1 million, which represents an increase of $1.4
million in the quarter and $1.2 million year to date compared to 2008. The
increases reflect increasing market values associated with investments
related to unqualified benefit plans.
Interest Expense
For the three and nine months ended September 30, 2009, interest expense
was $20.2 million and $58.9 million, which represents an increase of $0.6
million in the quarter and a decrease of ($0.6) million year to date,
compared to 2008. The increase in the quarter reflects the impact of two
long-term financing transactions completed in 2009. These transactions
involved the second quarter issuance by Vectren Utility Holdings, Inc.
(VUHI) of $100 million in unsecured eleven year notes with an interest rate
of 6.28 percent to institutional investors and the third quarter completion
by Southern Indiana Gas and Electric Company of a $22.3 million debt
issuance of 31 year tax exempt first mortgage bonds with an interest rate
of 5.4 percent. Both periods in 2009 reflect lower short-term interest
rates and lower average short-term debt balances that have been impacted
favorably by lower gas prices.
Income Taxes
For the three and nine months ended September 30, 2009, federal and state
income taxes were $5.3 million and $40.6 million, which represents
decreases of ($3.2) million and ($9.0) million, compared to 2008. The
lower taxes are primarily due to lower pretax income.
Nonutility Group Discussion
All amounts included in this section are after tax. Results reported by
business group are net of nonutility group corporate expense.
The Nonutility Group's earnings were $3.3 million in the third quarter of
2009, compared to $9.8 million in 2008. Year to date in 2009, Nonutility
Group earnings excluding the Liberty charge were $18.7 million compared to
earnings of $12.1 million in 2008. Inclusive of the Liberty charge, 2009
year to date Nonutility Group earnings were $6.8 million.
Energy Marketing and Services
Energy Marketing and Services is comprised of the company's gas marketing
operations, energy management services, and retail gas supply operations.
Results, inclusive of holding company costs, from Energy Marketing and
Services for the quarter ended September 30, 2009, were a loss of ($4.8)
million compared to earnings of $10.1 million in 2008. The year to date
income in 2009 was $6.0 million compared to earnings of $12.4 million in
2008. Operating entities contributing to these results include Vectren
Source and ProLiance. Results in the nine months ended September 30, 2009
exclude the Liberty charge of ($11.9) million after tax.
Vectren Source, the company's retail gas marketer, operated at a seasonal
loss of ($3.0) million in the third quarter of 2009, compared to a loss of
($0.6) million in 2008. The wider seasonal loss experienced during 2009 is
primarily due to increased storage costs due to the increasing number of
customers. The third quarter of 2008 also contains a $0.7 million gain
associated with the sale of its Georgia customer base as Vectren Source
exited that market in 2008. Year to date, Vectren Source earned
approximately $4.0 million, compared to $0.2 million in 2008. The higher
year to date earnings resulted primarily from favorable market conditions
over the course of the first quarter as revenues on variable priced sales
contracts fell more slowly than gas costs. Due to the seasonal nature of
the retail gas supply business and due to prices charged to customers more
fully reflecting the current lower gas prices, as expected such higher
first quarter earnings have not continued. Vectren Source's customer count
at September 30, 2009 was approximately 186,000 customers, compared to
130,000 customers at September 30, 2008.
During the three months ended September 30, 2009, ProLiance's operating
results were a loss of ($1.6) million, compared to earnings of $12.4
million in 2008. The third quarter of 2008 was a record quarter in terms
of earnings contribution for ProLiance, a period in which it significantly
benefited from wider cash to NYMEX spreads. As previously disclosed, the
level of ProLiance's 2008 third quarter earnings was not indicative of its
future operating results. During the quarter ended September 30, 2009,
ProLiance produced more typical third quarter operating results. During
the nine months ended September 30, 2009, ProLiance's earnings were
approximately $2.7 million compared to earnings of $15.7 million in 2008.
The 2009 year to date results exclude the impact of the Liberty charge.
The year to date decrease of ($13.0) million primarily reflects the third
quarter reduced earnings volatility. The current year heating season's
seasonal spreads are expected to improve over the prior year, and those
earnings will be realized in the fourth quarter of 2009 and the first
quarter of 2010. ProLiance's storage capacity is 46 BCF compared to 42
BCF at December 31, 2008.
Coal Mining
Coal Mining mines and sells coal to the company's utility operations and to
third parties through its wholly owned subsidiary Vectren Fuels, Inc.
(Fuels).
Coal Mining, inclusive of holding company costs, earned approximately $4.0
million in the third quarter of 2009, compared to a loss of ($0.5) million
in 2008. Year to date, Coal Mining earned $7.4 million compared to a loss
of ($1.6) million in 2008. Coal Mining earnings have increased based on
new pricing in contracts effective January 1, 2009. The impacts of higher
revenues have been somewhat offset by increased costs per ton mined. This
anticipated year to date increase in costs is reflective of efforts to
reconfigure the mining operation at Prosperity mine in order to improve
future productivity. During the current quarter, these improvements began
to favorably impact production and operating costs.
The continuing recession has resulted in a recent, but significant,
decrease in the demand for and market price of Illinois Basin coal. The
lowered demand is resulting in some build up of coal inventories at most
customer locations as well as at Vectren Fuels' mines as a result of
contracts with minimum delivery provisions, which enable the customers to
scale back their deliveries within specified limits. This is expected to
result in less 2009 mine production. Further, Vectren Fuels is currently
in a dispute with one customer regarding its purchase contract and Vectren
Fuels is working to resolve the dispute. The company began 2009 with a
limited amount of production that was unsold. Given the current market
conditions, as previously reported, expectations for full year 2009 sales
are 3.4 to 3.6 million tons, a reduction from the original expectation of
4.6 to 5.2 million tons. Further, the growing customer coal inventory
levels will likely cause the current demand and supply imbalance to extend
into 2010.
The first of two new underground mines located near Vincennes, Indiana is
nearing completion. For testing purposes and to build the initial coal
pile, minor coal extraction began early in the third quarter of 2009.
Vectren Fuels expects the initial mine to be in service during the first
quarter of 2010 with the second mine opening in 2011. However, Vectren
Fuels may continue to change this time table as it evaluates the impacts of
current market conditions. Reserves at the two mines are estimated at 98
million tons of recoverable number-five coal at 11,200 BTU (British thermal
units) and less than 6-pound sulfur dioxide. The reserves at these new
mines bring total coal reserves to approximately 129 million tons at
September 30, 2009. Once in production, the two new mines are capable of
producing about 5 million tons of coal per year.
Energy Infrastructure Services
Energy Infrastructure Services provides underground construction and repair
to utility infrastructure through Miller Pipeline Corporation (Miller) and
energy performance contracting and renewable energy services through ESG.
Inclusive of holding company costs, Energy Infrastructure Services
contributed earnings of $4.6 million in the third quarter of 2009, compared
to $6.0 million in 2008. Year to date earnings were $7.6 million in 2009,
compared to $5.5 million in 2008.
Miller's 2009 earnings were $2.3 million in the third quarter, compared to
$3.3 million in 2008. Miller earned approximately $3.1 million year to
date in 2009, compared to $3.6 million in 2008. The declines are primarily
due to recessionary impacts related to utility customer cut backs and some
third quarter start up costs associated with new contracts. Lower interest
rates and favorable weather conditions which allowed for more efficient
completion of first quarter projects partially offset the decreases.
ESG's 2009 earnings were $2.9 million in the third quarter and were
generally flat compared to the prior year. ESG earned approximately $5.9
million year to date in 2009, compared to $2.9 million in 2008. The
increase results from the second quarter 2009 sale of a 3.2 MW land fill
gas facility located in the company's electric service territory as part of
its ongoing renewable energy project development strategy. The sale to the
company's electric utility, as part of the utility's strategy to continue
to build a renewable energy portfolio, was approved by the Indiana Utility
Regulatory Commission.
At September 30, 2009, ESG's backlog was $76 million, compared to $54
million at September 30, 2008. The national focus on a comprehensive
energy strategy as evidenced by the Energy Independence and Security Act of
2007 and the American Recovery and Reinvestment Act of 2009 is likely to
create favorable conditions for ESG's growth and resulting earnings.
Other Businesses
Other nonutility businesses operated at a loss of ($0.5) million in the
third quarter of 2009 and a loss of ($2.3) million year to date in 2009,
compared to a loss of ($5.8) million in the third quarter of 2008 and a
loss of ($4.2) million year to date in 2008. Other nonutility businesses
include a variety of legacy investments, including investments in
commercial real estate. During the third quarter of 2008, the company
recorded an impairment charge associated with its commercial real estate
investments totaling $10.0 million, $5.9 million after tax, or $0.07 per
share. During the year to date period, the impact of this charge in 2008
was partially offset by favorable adjustments related to income tax
true-ups.
Use of Non-GAAP Measures
In this press release and related information, per share earnings
contributions of the Utility Group, Nonutility Group, and Corporate and
Other are presented. Such per share amounts are based on the earnings
contribution of each group included in Vectren's consolidated results
divided by Vectren's basic average shares outstanding during the period.
The earnings per share of the groups do not represent a direct legal
interest in the assets and liabilities allocated to the groups, but rather
represent a direct equity interest in Vectren Corporation's assets and
liabilities as a whole. These non-GAAP measures are used by management to
evaluate the performance of individual businesses. Accordingly management
believes these measures are useful to investors in understanding each
business' contribution to consolidated earnings per share and analyzing
period to period changes.
This press release also contains other non-GAAP financial measures that
exclude a charge related to ProLiance's investment in Liberty Gas Storage,
LLC (Liberty charge) recorded in the second quarter of 2009. Management
uses consolidated net income, consolidated earnings per share, and
Nonutility Group net income, excluding the Liberty charge, to evaluate its
results. Management believes analyzing underlying business trends is
aided by the removal of the Liberty charge due to the significant impact it
has on comparability between the periods reported. The rationale for using
such non-GAAP measures is that the charge in all cases substantially
decreases the performance measures, and the period to period changes do not
provide meaningful comparative information regarding typical operating
results.
A material limitation associated with the use of these measures excluding
the Liberty charge is that these measures excluding the Liberty charge do
not include all costs (i.e. the Liberty charge) recognized in accordance
with GAAP. Management compensates for this limitation by prominently
displaying a reconciliation of these non-GAAP performance measures to their
closest GAAP performance measures. This display also provides financial
statement users the option of analyzing results as management does or by
analyzing GAAP results.
The following table reconciles consolidated net income, consolidated basic
EPS, and Nonutility Group net income to those results excluding the Liberty
charge.
Nine Months Ended September 30, 2009
--------------------------------------
Exclude
GAAP Liberty Non-GAAP
(In Millions, except EPS) Measure Charge Measure
------------ ----------- ------------
Consolidated
Net Income $ 78.5 (11.9) $ 90.4
Basic EPS $ 0.97 (0.15) $ 1.12
Nonutility Group Net Income $ 6.8 (11.9) $ 18.7
The non-GAAP financial measures disclosed by the company should not be
considered a substitute for, or superior to, financial measures calculated
in accordance with GAAP, and the financial results calculated in accordance
with GAAP.
Please SEE ATTACHED unaudited schedules for additional financial
information
Live Webcast on October 30, 2009
Vectren's financial analyst call will be at 2:00 p.m. (EDT), October 30,
2009 at which time management will discuss financial results and 2009
earnings guidance. To participate in the call, analysts are asked to dial
1-888-818-6237 and present the conference call ID# 33717432. All
interested parties may listen to the live webcast accompanied by a slide
presentation at www.vectren.com. A replay of the webcast will be
made available at the same location approximately two hours following the
conclusion of the meeting.
About Vectren
Vectren Corporation is an energy holding company headquartered in
Evansville, Indiana. Vectren's energy delivery subsidiaries provide gas
and/or electricity to over one million customers in adjoining service
territories that cover nearly two-thirds of Indiana and west central
Ohio. Vectren's nonutility subsidiaries and affiliates currently offer
energy-related products and services to customers throughout the Midwest
and Southeast. These include gas marketing and related services; coal
production and sales and energy infrastructure services. To learn more
about Vectren, visit www.vectren.com.
Forward-Looking Statements
All statements other than statements of historical fact included in this
news release are forward-looking statements made in good faith by the
company and are intended to qualify for the safe harbor from liability
established by the Private Securities Litigation Reform Act of 1995. Such
statements are based on
management's beliefs, as well as assumptions made by and information
currently available to management and include such words as "believe,"
"anticipate," "endeavor," "estimate," "expect," "objective," "projection,"
"forecast," "goal," "likely," and similar expressions intended to identify
forward-looking statements. Vectren cautions readers that the assumptions
forming the basis for forward-looking statements include many factors that
are beyond Vectren's ability to control or estimate precisely and actual
results could differ materially from those contained in this document.
In addition to any assumptions and other factors referred to specifically
in connection with such forward-looking statements, factors that could
cause the company's actual results to differ materially from those
contemplated in any forward-looking statements include, among others, the
following:
Factors affecting utility operations such as unusual weather conditions;
catastrophic weather-related damage; unusual maintenance or repairs;
unanticipated changes to fossil fuel costs; unanticipated changes to gas
transportation and storage costs, or availability due to higher demand,
shortages, transportation problems or other developments; environmental or
pipeline incidents; transmission or distribution incidents; unanticipated
changes to electric energy supply costs, or availability due to demand,
shortages, transmission problems or other developments; or electric
transmission or gas pipeline system constraints. Increased competition in
the energy industry, including the effects of industry restructuring and
unbundling. Regulatory factors such as unanticipated changes in
rate-setting policies or procedures, recovery of investments and costs made
under traditional regulation, and the frequency and timing of rate
increases. Financial, regulatory or accounting principles or policies
imposed by the Financial Accounting Standards Board; the Securities and
Exchange Commission; the Federal Energy Regulatory Commission; state public
utility commissions; state entities which regulate electric and natural gas
transmission and distribution, natural gas gathering and processing,
electric power supply; and similar entities with regulatory oversight..
Economic conditions including the effects of an economic downturn,
inflation rates, commodity prices, and monetary fluctuations. Economic
conditions surrounding the current recession, which may be more prolonged
and more severe than cyclical downturns, including significantly lower
levels of economic activity; uncertainty regarding energy prices and the
capital and commodity markets; decreases in demand for natural gas,
electricity, coal, and other nonutility products and services; impacts on
both gas and electric large customers; lower residential and commercial
customer counts; higher operating expenses; and further reductions in the
value of certain nonutility real estate and other legacy investments.
Increased natural gas and coal commodity prices and the potential impact on
customer consumption, uncollectible accounts expense, unaccounted for gas
and interest expense. Changing market conditions and a variety of other
factors associated with physical energy and financial trading activities
including, but not limited to, price, basis, credit, liquidity, volatility,
capacity, interest rate, and warranty risks. Direct or indirect effects on
the Company's business, financial condition, liquidity and results of
operations resulting from changes in credit ratings, changes in interest
rates, and/or changes in market perceptions of the utility industry and
other energy-related industries. The performance of projects undertaken by
the Company's nonutility businesses and the success of efforts to invest in
and develop new opportunities, including but not limited to, the Company's
coal mining, gas marketing, and energy infrastructure strategies. Factors
affecting coal mining operations including MSHA guidelines and
interpretations of those guidelines; geologic, equipment, and operational
risks; sales contract negotiations and interpretations; volatile coal
market prices; supplier and contract miner performance; the availability
of key equipment, contract miners and commodities; availability of
transportation; and the ability to access/replace coal reserves. Employee
or contractor workforce factors including changes in key executives,
collective bargaining agreements with union employees, aging workforce
issues, work stoppages, or pandemic illness. Legal and regulatory delays
and other obstacles associated with mergers, acquisitions and investments
in joint ventures. Costs, fines, penalties and other effects of legal and
administrative proceedings, settlements, investigations, claims, including,
but not limited to, such matters involving compliance with state and
federal laws and interpretations of these laws. Changes in or additions to
federal, state or local legislative requirements, such as changes in or
additions to tax laws or rates, environmental laws, including laws
governing greenhouse gases, mandates of sources of renewable energy, and
other regulations.
More detailed information about these factors is set forth in Vectren's
filings with the Securities and Exchange Commission, including Vectren's
2008 annual report on Form 10-K filed on February 19, 2009. The company
undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of changes in actual results, changes in
assumptions, or other factors affecting such statements.
VECTREN CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(Millions, except per share amounts)
(Unaudited)
Three Months Nine Months
Ended September 30 Ended September 30
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- ---------
OPERATING REVENUES:
Gas utility $ 93.4 $ 143.9 $ 759.9 $ 1,002.4
Electric utility 143.0 147.9 400.7 402.3
Nonutility revenues 113.2 119.6 359.7 372.7
-------- -------- -------- ---------
Total operating revenues 349.6 411.4 1,520.3 1,777.4
-------- -------- -------- ---------
OPERATING EXPENSES:
Cost of gas sold 28.0 80.2 440.6 686.0
Cost of fuel and purchased power 50.1 48.7 147.4 143.2
Cost of nonutility revenues 36.2 51.0 153.7 198.4
Other operating 129.6 127.9 377.6 368.4
Depreciation and amortization 53.9 47.7 158.3 142.5
Taxes other than income taxes 11.3 12.7 48.0 53.9
-------- -------- -------- ---------
Total operating expenses 309.1 368.2 1,325.6 1,592.4
-------- -------- -------- ---------
OPERATING INCOME 40.5 43.2 194.7 185.0
OTHER INCOME (EXPENSE):
Equity in earnings (losses) of
unconsolidated affiliates (0.6) 21.5 (11.3) 29.0
Other income (loss) - net 4.1 (3.7) 10.6 2.4
-------- -------- -------- ---------
Total other income (expense) 3.5 17.8 (0.7) 31.4
-------- -------- -------- ---------
INTEREST EXPENSE 25.8 23.9 74.0 72.4
-------- -------- -------- ---------
INCOME BEFORE INCOME TAXES 18.2 37.1 120.0 144.0
INCOME TAXES 5.8 13.9 41.5 52.1
-------- -------- -------- ---------
NET INCOME $ 12.4 $ 23.2 $ 78.5 $ 91.9
======== ======== ======== =========
AVERAGE COMMON SHARES OUTSTANDING 80.8 80.6 80.7 77.6
DILUTED COMMON SHARES OUTSTANDING 81.1 80.9 81.0 78.0
EARNINGS PER SHARE OF COMMON STOCK
BASIC $ 0.15 $ 0.29 $ 0.97 $ 1.18
======== ======== ======== =========
DILUTED $ 0.15 $ 0.29 $ 0.97 $ 1.17
======== ======== ======== =========
VECTREN UTILITY HOLDINGS
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(Millions)
(Unaudited)
Three Months Nine Months
Ended September 30 Ended September 30
------------------- -------------------
2009 2008 2009 2008
--------- --------- --------- ---------
OPERATING REVENUES:
Gas utility $ 93.4 $ 143.9 $ 759.9 $ 1,002.4
Electric utility 143.0 147.9 400.7 402.3
Other 0.4 0.6 1.2 1.8
--------- --------- --------- ---------
Total operating revenues 236.8 292.4 1,161.8 1,406.5
--------- --------- --------- ---------
OPERATING EXPENSES:
Cost of gas sold 28.0 80.2 440.6 686.0
Cost of fuel and purchased power 50.1 48.7 147.4 143.2
Other operating 69.9 69.2 227.9 217.7
Depreciation and amortization 45.9 41.6 134.8 123.2
Taxes other than income taxes 10.8 11.7 46.2 51.8
--------- --------- --------- ---------
Total operating expenses 204.7 251.4 996.9 1,221.9
--------- --------- --------- ---------
OPERATING INCOME 32.1 41.0 164.9 184.6
OTHER INCOME - NET 2.1 0.7 6.1 4.9
INTEREST EXPENSE 20.2 19.6 58.9 59.5
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 14.0 22.1 112.1 130.0
INCOME TAXES 5.3 8.5 40.6 49.6
--------- --------- --------- ---------
NET INCOME $ 8.7 $ 13.6 $ 71.5 $ 80.4
========= ========= ========= =========
VECTREN CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Millions - Unaudited)
September 30, December 31,
2009 2008
------------- -------------
ASSETS
Current Assets
Cash & cash equivalents $ 15.3 $ 93.2
Accounts receivable - less reserves of
$6.0 & $5.6, respectively 126.8 226.7
Accrued unbilled revenues 46.8 197.0
Inventories 163.6 131.0
Recoverable fuel & natural gas costs - 3.1
Prepayments & other current assets 109.7 124.6
------------- -------------
Total current assets 462.2 775.6
------------- -------------
Utility Plant
Original cost 4,530.9 4,335.3
Less: accumulated depreciation &
amortization 1,689.4 1,615.0
------------- -------------
Net utility plant 2,841.5 2,720.3
------------- -------------
Investments in unconsolidated affiliates 172.9 179.1
Other utility and corporate investments 29.6 25.7
Other nonutility investments 46.1 45.9
Nonutility property - net 455.2 390.2
Goodwill - net 240.8 240.2
Regulatory assets 218.8 216.7
Other assets 33.7 39.2
------------- -------------
TOTAL ASSETS $ 4,500.8 $ 4,632.9
============= =============
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 135.4 $ 266.1
Accounts payable to affiliated companies 24.5 75.2
Refundable fuel & natural gas costs 34.1 4.1
Accrued liabilities 154.9 175.0
Short-term borrowings 161.4 519.5
Current maturities of long-term debt 0.3 0.4
Long-term debt subject to tender 10.0 80.0
------------- -------------
Total current liabilities 520.6 1,120.3
------------- -------------
Long-term Debt - Net of Current Maturities
& Debt Subject to Tender 1629.4 1247.9
Deferred Income Taxes & Other Liabilities
Deferred income taxes 432.6 353.4
Regulatory liabilities 322.1 315.1
Deferred credits & other liabilities 232.2 244.6
------------- -------------
Total deferred credits & other
liabilities 986.9 913.1
------------- -------------
Common Shareholders' Equity
Common stock (no par value) - issued &
outstanding 81.1 and 81.0 shares,
respectively 664.0 659.1
Retained earnings 710.1 712.8
Accumulated other comprehensive income
(loss) (10.2) (20.3)
------------- -------------
Total common shareholders' equity 1,363.9 1,351.6
------------- -------------
TOTAL LIABILITIES & SHAREHOLDERS'
EQUITY $ 4,500.8 $ 4,632.9
============= =============
VECTREN CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions - Unaudited)
For the nine
months ended
September 30,
----------------
2009 2008
------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 78.5 $ 91.9
Adjustments to reconcile net income to cash from
operating activities:
Depreciation & amortization 158.3 142.5
Deferred income taxes & investment tax credits 55.2 57.2
Equity in earnings (loss) of unconsolidated
affiliates 11.3 (29.0)
Provision for uncollectible accounts 15.3 12.9
Expense portion of pension & postretirement periodic
benefit cost 7.8 5.8
Other non-cash charges - net (1.0) 19.1
Changes in working capital accounts:
Accounts receivable & accrued unbilled revenue 234.0 148.7
Inventories (32.0) (77.3)
Recoverable/refundable fuel & natural gas costs 33.1 (49.0)
Prepayments & other current assets 30.6 (10.4)
Accounts payable, including to affiliated
companies (169.9) (30.9)
Accrued liabilities (17.4) 75.1
Unconsolidated affiliate dividends 11.3 9.3
Changes in noncurrent assets (6.9) 1.3
Changes in noncurrent liabilities (38.6) (23.5)
------- -------
Net cash flows from operating activities 369.6 343.7
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from:
Issuance of common stock - 124.9
Long-term debt 311.6 171.2
Dividend reinvestment plan & other 4.5 -
Requirements for:
Dividends on common stock (81.2) (75.6)
Retirement of long-term debt (2.7) (104.1)
Other financing activities - (0.1)
Net change in short-term borrowings (358.1) (202.9)
------- -------
Net cash flows from financing activities (125.9) (86.6)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from:
Other collections 1.2 6.1
Requirements for:
Capital expenditures, excluding AFUDC equity (321.8) (258.7)
Unconsolidated affiliate investments (0.2) (0.2)
Other investments (0.8) (10.8)
------- -------
Net cash flows from investing activities (321.6) (263.6)
------- -------
Net change in cash & cash equivalents (77.9) (6.5)
Cash & cash equivalents at beginning of period 93.2 20.6
------- -------
Cash & cash equivalents at end of period $ 15.3 $ 14.1
======= =======
VECTREN CORPORATION
AND SUBSIDIARY COMPANIES
HIGHLIGHTS
(millions, except per share amounts)
(Unaudited)
Three Months Nine Months
Ended September 30 Ended September 30
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
REPORTED EARNINGS (LOSSES):
Utility Group $ 8.7 $ 13.6 $ 71.5 $ 80.4
Non-utility Group
Energy Marketing and Services (4.8) 10.1 6.0 12.4
Coal Mining 4.0 (0.5) 7.4 (1.6)
Energy Infrastructure Services 4.6 6.0 7.6 5.5
Other Businesses (0.5) (5.8) (2.3) (4.2)
-------- -------- -------- --------
Total Non-utility Operations 3.3 9.8 18.7 12.1
Corporate and Other 0.4 (0.2) 0.2 (0.6)
-------- -------- -------- --------
Sub-Total Operations 12.4 23.2 90.4 91.9
Charge related to Liberty Gas
Storage Investment - - (11.9) -
-------- -------- -------- --------
Vectren Consolidated $ 12.4 $ 23.2 $ 78.5 $ 91.9
======== ======== ======== ========
EARNINGS PER SHARE:
EPS FROM OPERATIONS $ 0.15 $ 0.29 $ 1.12 $ 1.18
Charge related to Liberty Gas
Storage Investment - - (0.15) -
-------- -------- -------- --------
REPORTED EPS $ 0.15 $ 0.29 $ 0.97 $ 1.18
======== ======== ======== ========
VECTREN CORPORATION
AND SUBSIDIARY COMPANIES
SELECTED GAS DISTRIBUTION
OPERATING STATISTICS
(Unaudited)
Three Months Nine Months
Ended Sep 30 Ended Sep 30
--------------------- --------------------
2009 2008 2009 2008
---------- ---------- --------- ---------
GAS OPERATING REVENUES
(Millions):
Residential $ 59.9 $ 85.4 $ 517.1 $ 663.7
Commercial 22.0 43.9 194.4 278.8
Industrial 10.1 12.8 39.1 49.9
Other Revenue 1.4 1.8 9.3 10.0
---------- ---------- --------- ---------
$ 93.4 $ 143.9 $ 759.9 $ 1,002.4
========== ========== ========= =========
GAS MARGIN (Millions):
Residential $ 42.9 $ 39.2 $ 211.7 $ 203.0
Commercial 11.9 12.4 64.2 65.3
Industrial 9.0 9.9 33.4 37.2
Other 1.6 2.2 10.0 10.9
---------- ---------- --------- ---------
$ 65.4 $ 63.7 $ 319.3 $ 316.4
========== ========== ========= =========
GAS SOLD & TRANSPORTED (MMDth):
Residential 3.8 3.8 49.2 52.7
Commercial 2.5 2.5 22.3 23.9
Industrial 15.3 18.4 55.1 67.5
---------- ---------- --------- ---------
21.6 24.7 126.6 144.1
========== ========== ========= =========
AVERAGE GAS CUSTOMERS
Residential 882,860 887,185 895,030 900,122
Commercial 81,914 82,764 83,109 83,883
Industrial 1,622 1,610 1,622 1,610
---------- ---------- --------- ---------
966,396 971,559 979,761 985,615
========== ========== ========= =========
YTD WEATHER AS A PERCENT OF
NORMAL:
Heating Degree Days (Ohio) 104% 101%
VECTREN CORPORATION
AND SUBSIDIARY COMPANIES
SELECTED ELECTRIC
OPERATING STATISTICS
(Unaudited)
Three Months Nine Months
Ended Sep 30 Ended Sep 30
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
ELECTRIC OPERATING REVENUES
(Millions):
Residential $ 52.9 $ 53.7 $ 140.9 $ 133.8
Commercial 36.4 35.2 104.7 96.4
Industrial 44.9 40.3 123.6 117.4
Municipals - - - 1.0
Other Revenue 1.6 1.7 4.6 4.9
--------- --------- --------- ---------
Total Retail 135.8 130.9 373.8 353.5
Net Wholesale Revenues 7.2 17.0 26.9 48.8
--------- --------- --------- ---------
$ 143.0 $ 147.9 $ 400.7 $ 402.3
========= ========= ========= =========
ELECTRIC MARGIN (Millions):
Residential $ 38.3 $ 40.7 $ 100.7 $ 100.2
Commercial 24.2 24.9 69.4 67.6
Industrial 23.3 23.0 63.6 64.5
Municipals - - - -
Other 1.5 1.6 4.3 4.6
--------- --------- --------- ---------
Total Retail 87.3 90.2 238.0 236.9
--------- --------- --------- ---------
Net Wholesale Margin 5.6 9.0 15.3 22.2
--------- --------- --------- ---------
$ 92.9 $ 99.2 $ 253.3 $ 259.1
========= ========= ========= =========
ELECTRICITY SOLD (GWh):
Residential 421.4 462.4 1,134.0 1,182.4
Commercial 348.6 371.4 988.1 1,013.2
Industrial 620.5 619.0 1,686.9 1,859.5
Municipals - - - 44.3
Other Sales - Street Lighting 4.5 4.3 14.1 14.0
--------- --------- --------- ---------
Total Retail 1,395.0 1,457.1 3,823.1 4,113.4
Wholesale 87.9 371.1 494.3 1,111.4
--------- --------- --------- ---------
1,482.9 1,828.2 4,317.4 5,224.8
========= ========= ========= =========
AVERAGE ELECTRIC CUSTOMERS
Residential 122,222 122,373 122,307 122,505
Commercial 18,388 18,393 18,360 18,434
Industrial 106 103 105 102
Other 33 34 33 34
--------- --------- --------- ---------
140,749 140,903 140,805 141,075
========= ========= ========= =========
YTD WEATHER AS A PERCENT OF
NORMAL:
Cooling Degree Days (Indiana) 79% 100% 92% 99%
Heating Degree Days (Indiana) 93% 100%
Contact Information: Investor Contact
Steven M. Schein
(812) 491-4209
Media Contact
Jeffrey W. Whiteside
(812) 491-4205