Attached files
file | filename |
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8-K - FORM 8-K DATED FEBRUARY 19, 2010 - PG&E Corp | final4q09eps.htm |
EX-99.2 - ADDITIONAL SUPPLEMENTAL INFORMATION - PG&E Corp | ex9902.htm |
Corporate
Affairs
One
Market, Spear Tower
Suite
2400
San
Francisco, CA 94105
1-800-743-6397
|
Exhibit 99.1 |
FOR
IMMEDIATE RELEASE
|
February
19, 2010
|
PG&E
CORPORATION REPORTS 2009 RESULTS; REAFFIRMS 2010, 2011 GUIDANCE
·
|
Net
income after dividends on preferred stock reported under GAAP for 2009 was
$3.20 per share. Net income for the fourth quarter was $0.71
per share.
|
·
|
On
a non-GAAP basis, earnings from operations for 2009 were $3.21 per share,
and for the fourth quarter were $0.80 per
share.
|
·
|
Guidance
for earnings from operations is reaffirmed for 2010 and
2011.
|
·
|
PG&E
Corporation is raising its quarterly common stock dividend from $0.42 per
share to $0.455 per share.
|
(San
Francisco) – PG&E Corporation’s (NYSE:PCG) consolidated net income after
dividends on preferred stock (also called “income available for common
shareholders”) for 2009 was $1.22 billion, or $3.20 per share, as reported in
accordance with generally accepted accounting principles (GAAP). This compares
with 2008 results of $1.34 billion, or $3.63 per share, which included the
one-time benefits of a settlement of federal tax audits for years 2001-2004
which totaled $257 million, or $0.68 per share.
On a
non-GAAP basis, PG&E Corporation’s earnings from operations were $3.21 per
share for 2009, compared with $2.95 per share in 2008 (which excludes the
benefits of the tax settlement). Earnings from operations for 2009 exclude the
impact of several one-time items -- tax refunds for years 1998-1999, the
recovery of previously incurred costs related to the Utility’s hydroelectric
generation assets, costs to perform accelerated work on the natural gas system,
and certain employee severance costs. The net impact of these items for 2009 was
($0.01) per share.
For the
fourth quarter of 2009, PG&E Corporation’s consolidated net income was $273
million, or $0.71 cents per share, compared with $517 million, or $1.37 per
share, in the same quarter of 2008 when the benefits of the tax settlement were
recognized. On a non-GAAP earnings from operations basis, PG&E Corporation’s
results in the fourth quarter of 2009 were $0.80 per share, compared with $0.70
per share in the fourth quarter of 2008.
The
majority of the higher year-over-year earnings from operations results from
additional revenues generated by new capital investments in the Utility’s
infrastructure. The Utility’s capital expenditures totaled $3.9 billion for the
year, increasing the asset base on which the Utility is allowed to earn its
authorized return. In addition to higher revenues from new capital investments,
fourth quarter earnings from operations reflect a number of smaller, positive
items for recovery of previously incurred costs and improved operational
performance.
“We
posted solid earnings for 2009, reflecting an ongoing commitment to invest in
our systems and our people for the benefit of PG&E’s customers, communities
and shareholders,” said Peter A. Darbee, Chairman, CEO and President of PG&E
Corporation. “We will continue these initiatives in 2010 with the goal of always
delivering better, faster more cost-effective service and showing leadership on
the environment, including efforts to address climate change.”
Earnings Guidance
PG&E
Corporation reaffirms its previous guidance for 2010 earnings from operations in
the range of $3.35-$3.50 per share and $3.65-$3.85 per share for
2011.
Guidance
is based on various assumptions, including that the Utility maintains a
ratemaking capital structure of 52 percent equity and an authorized return on
equity of 11.35 percent, while growing its asset base, earning incentive
revenues for energy efficiency achievements, and realizing operational
efficiencies in amounts consistent with low and high case earnings
ranges.
Guidance
for 2010 earnings from operations excludes forecasted costs to support a
state-wide ballot initiative requiring local governments to gain voter support
before using taxpayer money to establish electric service. This one-time item
reflects activities outside of PG&E’s regular utility operations and is
expected to impact total GAAP earnings between $0.06 and $0.09 per share for the
year. Guidance for 2010 earnings from operations does not exclude normal ongoing
costs related to competitive issues.
PG&E
Corporation discloses historical financial results and bases guidance on
“earnings from operations” in order to provide a measure that allows investors
to compare the underlying financial performance of the business from one period
to another, exclusive of items that management believes do not reflect the
normal course of operations. Earnings from operations are not a substitute or
alternative for consolidated net income presented in accordance with GAAP (see
the accompanying financial tables for a reconciliation of results and guidance
based on earnings from operations to results and guidance based on consolidated
net income in accordance with GAAP).
Common
Stock and Preferred Stock Dividends
PG&E
Corporation is raising its quarterly common stock dividend to $0.455 per share
from $0.42 cents per share, beginning with the first quarter 2010
payment. The dividend is payable on April 15, 2010, to shareholders
of record on March 31, 2010. This increases the annual dividend rate
to $1.82 from the previous $1.68 level.
In
addition, the Utility declared dividends on all outstanding series of its
preferred stock for the three months ending April 30, 2010, payable on May 15,
2010, to shareholders of record on April 30, 2010.
In order
to be considered a shareholder of record for the common and preferred dividend
payments, you must have purchased the stock at least three trading days before
the applicable record date.
The
Utility will pay dividends on its eight series of preferred stock as
follows:
First Preferred Stock, $25 Par Value | Quarterly Dividend to be Paid Per Share |
Redeemable | |
5.00% | $0.31250 |
5.00% Series A | $0.31250 |
4.80% | $0.30000 |
4.50% | $0.28125 |
4.36% | $0.27250 |
Non-Redeemable | |
6.00%
|
$0.37500 |
5.50% | $0.34375 |
5.00% | $0.31250 |
Supplemental
Financial Information:
·
|
In
addition to the financial information accompanying this release, an
expanded package of supplemental financial material will be furnished to
the Securities and Exchange Commission and also will be available shortly
on PG&E Corporation’s website
(www.pgecorp.com).
|
March
1 Analyst Conference
·
|
PG&E
Corporation senior management will provide an overview of the business and
discuss the company’s strategic focus, capital spending needs and
financial outlook at its upcoming Investor Conference with members of the
financial community on Monday, March 1, 2010, in New York City. The
information to be provided at the conference underlies the 2010 and 2011
guidance that is reaffirmed today. The public may listen to the
event via simultaneous webcast beginning at 2:00 p.m. EST at (www.pgecorp.com/investors/investor
info/conference/index.shtml). Because the meeting so closely
follows today’s earnings announcement, PG&E Corporation will not hold
its regular quarterly conference
call.
|
This
press release contains forward-looking statements regarding management’s
guidance for PG&E Corporation’s 2010 and 2011 earnings per share from
operations that are based on current expectations and various assumptions
that management believes are reasonable. These statements and assumptions
are necessarily subject to various risks and uncertainties, the
realization or resolution of which may be outside of management's control.
Actual results may differ materially. Factors that could cause actual
results to differ materially include:
· the
Utility’s ability to manage capital expenditures and its operating and
maintenance expenses within authorized levels
· the
outcome of pending and future regulatory proceedings and whether the
Utility is able to timely recover its costs through rates;
· the
adequacy and price of electricity and natural gas supplies, and the
ability of the Utility to manage and respond to the volatility of the
electricity and natural gas markets, including the ability of the Utility
and its counterparties
to post or return collateral;
· explosions,
fires, accidents, mechanical breakdowns, the disruption of information
technology and systems, and similar events that can cause unplanned
outages, reduce generating output, damage the Utility’s assets
or
operations, subject the Utility to third-party claims for property damage
or personal injury, or result in the imposition of civil, criminal, or
regulatory fines or penalties on the Utility;
· the
impact of storms, earthquakes, floods, drought, wildfires, disease and
similar natural disasters, or acts of terrorism or vandalism, that affect
customer demand, or that damage or disrupt the facilities, operations, or
information
technology and systems owned by the Utility, its customers, or third
parties on which the Utility relies;
· the
potential impacts of climate change on the Utility’s electricity and
natural gas businesses;
· changes
in customer demand for electricity and natural gas resulting from
unanticipated population growth or decline, general economic and financial
market conditions, changes in technology that include the development
of alternative technologies that enable customers to increase their
reliance on self-generation, or other reasons;
· the
occurrence of unplanned outages at the Utility’s two nuclear generating
units at Diablo Canyon, the availability of nuclear fuel, the
outcome of the Utility’s application to renew the operating licenses for
Diablo Canyon,
and potential changes in laws or regulations with respect to the storage
of spent nuclear fuel, security, safety or other matters associated with
the operations at Diablo Canyon;
· whether
the Utility can maintain the cost savings it has recognized from operating
efficiencies it has achieved and identify and successfully implement
additional sustainable cost-saving measures;
· whether
the Utility earns incentive revenues or incurs obligations under incentive
ratemaking mechanisms;
· the
impact of federal or state laws, or their interpretation, on energy policy
and the regulation of utilities and their holding companies;
· whether
the new wholesale electricity markets in California will
continue to function effectively and whether the Utility can successfully
implement “dynamic pricing” for its electricity customers;
· how
the CPUC administers the conditions imposed on PG&E Corporation when
it became the Utility’s holding company;
· the
extent to which PG&E Corporation or the Utility incurs costs and
liabilities in connection with litigation that are not recoverable through
rates, from insurance, or from other third parties;
· the
ability of PG&E Corporation, the Utility, and counterparties to access
capital markets and other sources of credit in a timely manner on
acceptable terms;
· the
impact of environmental laws and regulations and the costs of compliance
and remediation;
· the
effect of municipalization, direct access, community choice aggregation,
or other forms of bypass;
· the
outcome of federal or state tax audits and the impact of changes in
federal or state tax laws, policies, or regulations; and
· other
factors and risks discussed in PG&E Corporation’s and the Utility’s
2009 Annual Report on Form 10-K and other reports filed with the
Securities and Exchange Commission.
|
PG&E
Corporation
Consolidated
Statements of Income
(in
millions, except per share amounts)
Year
ended December 31,
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
Operating
Revenues
|
||||||||||||
Electric
|
$ | 10,257 | $ | 10,738 | $ | 9,480 | ||||||
Natural
gas
|
3,142 | 3,890 | 3,757 | |||||||||
Total
operating revenues
|
13,399 | 14,628 | 13,237 | |||||||||
Operating
Expenses
|
||||||||||||
Cost
of electricity
|
3,711 | 4,425 | 3,437 | |||||||||
Cost
of natural gas
|
1,291 | 2,090 | 2,035 | |||||||||
Operating
and maintenance
|
4,346 | 4,201 | 3,881 | |||||||||
Depreciation,
amortization, and decommissioning
|
1,752 | 1,651 | 1,770 | |||||||||
Total
operating expenses
|
11,100 | 12,367 | 11,123 | |||||||||
Operating
Income
|
2,299 | 2,261 | 2,114 | |||||||||
Interest
income
|
33 | 94 | 164 | |||||||||
Interest
expense
|
(705 | ) | (728 | ) | (762 | ) | ||||||
Other
income (expense), net
|
67 | (4 | ) | 43 | ||||||||
Income
Before Income Taxes
|
1,694 | 1,623 | 1,559 | |||||||||
Income
tax provision
|
460 | 425 | 539 | |||||||||
Income
From Continuing Operations
|
1,234 | 1,198 | 1,020 | |||||||||
Discontinued
Operations
|
||||||||||||
NEGT
income tax benefit
|
- | 154 | - | |||||||||
Net
Income
|
1,234 | 1,352 | 1,020 | |||||||||
Preferred
stock dividend requirement of subsidiary
|
14 | 14 | 14 | |||||||||
Income
Available for Common Shareholders
|
$ | 1,220 | $ | 1,338 | $ | 1,006 | ||||||
Weighted
Average Common Shares Outstanding, Basic
|
368 | 357 | 351 | |||||||||
Weighted
Average Common Shares Outstanding, Diluted
|
386 | 358 | 353 | |||||||||
Earnings
Per Common Share from Continuing Operations, Basic
|
$ | 3.25 | $ | 3.23 | $ | 2.79 | ||||||
Net
Earnings Per Common Share, Basic
|
$ | 3.25 | $ | 3.64 | $ | 2.79 | ||||||
Earnings
Per Common Share from Continuing Operations, Diluted
|
$ | 3.20 | $ | 3.22 | $ | 2.78 | ||||||
Net
Earnings Per Common Share, Diluted
|
$ | 3.20 | $ | 3.63 | $ | 2.78 | ||||||
Dividends
Declared Per Common Share
|
$ | 1.68 | $ | 1.56 | $ | 1.44 |
Reconciliation
of PG&E Corporation’s Earnings from Operations to Consolidated Income
Available for Common Shareholders in Accordance with Generally Accepted
Accounting Principles (“GAAP”)
Fourth
Quarter and Year-to-Date, 2009 vs. 2008
(in
millions, except per share amounts)
|
Three
months ended December 31,
|
Twelve
months ended December 31,
|
||||||||||||||||||||||||||||||
Earnings
|
Earnings
per Common Share (Diluted)
|
Earnings
|
Earnings
per Common
Share
(Diluted)
|
|||||||||||||||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
||||||||||||||||||||||||
PG&E
Corporation Earnings from Operations
(1)
|
$ | 304 | $ | 260 | $ | 0.80 | $ | 0.70 | $ | 1,223 | $ | 1,081 | $ | 3.21 | $ | 2.95 | ||||||||||||||||
Items
Impacting Comparability: (2)
|
||||||||||||||||||||||||||||||||
Tax
benefit (3)
|
- | - | - | - | 66 | - | 0.18 | - | ||||||||||||||||||||||||
Recovery
of hydro divestiture costs (4)
|
- | - | - | - | 28 | - | 0.07 | - | ||||||||||||||||||||||||
Accelerated
work on gas system
(5)
|
(27 | ) | - | (0.08 | ) | - | (59 | ) | - | (0.16 | ) | - | ||||||||||||||||||||
Severance
costs (6)
|
(4 | ) | - | (0.01 | ) | - | (38 | ) | - | (0.10 | ) | - | ||||||||||||||||||||
Tax
settlement (7)
|
- | 257 | - | 0.67 | - | 257 | - | 0.68 | ||||||||||||||||||||||||
PG&E
Corporation Earnings on a GAAP basis
|
$ | 273 | $ | 517 | $ | 0.71 | $ | 1.37 | $ | 1,220 | $ | 1,338 | $ | 3.20 | $ | 3.63 |
1.
|
“Earnings
from operations” is not calculated in accordance with GAAP and excludes
items impacting comparability as described in Note (2)
below.
|
|
2.
|
Items
impacting comparability reconcile earnings from operations with
Consolidated Income Available for Common Shareholders as reported in
accordance with GAAP.
|
|
3.
|
For
the twelve months ended December 31, 2009, PG&E Corporation recognized
$66 million,
after-tax, for the interest and state tax benefit associated with a
federal tax refund, for 1998 and 1999.
|
|
4.
|
For
the twelve months ended December 31, 2009, PG&E Corporation recognized
$28 million, after-tax, following the California Public Utilities
Commission’s (“CPUC”) decision authorizing PG&E Corporation’s
subsidiary, Pacific Gas and Electric Company (“Utility”), to recover costs
previously incurred in connection with its hydroelectric generation
facilities.
|
|
5.
|
For
the three and twelve months ended December 31, 2009, PG&E Corporation
incurred $27 million and $59 million, after-tax, respectively, of costs
the Utility incurred to perform accelerated system-wide natural gas
integrity surveys and associated remedial work.
|
|
6.
|
For
the three and twelve months ended December 31, 2009, PG&E Corporation
accrued $4 million and $38 million, after-tax, respectively, of severance
costs related to the elimination of approximately 2% percent of the
Utility’s workforce.
|
|
7.
|
For
the three and twelve months ended December 31, 2008, PG&E Corporation
recognized $257 million of net income resulting from a settlement of tax
audits for tax years 2001 through 2004. Of this amount, $154
million was related to PG&E Corporation’s former subsidiary, National
Energy & Gas Transmission, Inc., and was recorded as income from
discontinued operations.
|
Reconciliation
of Pacific Gas and Electric Company’s Earnings from Operations to Consolidated
Income Available for Common Stock in Accordance with GAAP
Fourth
Quarter and Year-to-Date, 2009 vs. 2008
(in
millions)
Three
months ended December 31,
|
Twelve
months ended December 31,
|
|||||||||||||||
|
Earnings
|
Earnings
|
||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
Pacific
Gas and Electric Company Earnings from Operations (1)
|
$ | 294 | $ | 265 | $ | 1,239 | $ | 1,125 | ||||||||
Items
Impacting Comparability: (2)
|
||||||||||||||||
Tax
benefit (3)
|
- | - | 66 | - | ||||||||||||
Recovery
of hydro divestiture costs (4)
|
- | 28 | - | |||||||||||||
Accelerated
work on gas system
(5)
|
(27 | ) | - | (59 | ) | - | ||||||||||
Severance
costs (6)
|
(4 | ) | - | (38 | ) | - | ||||||||||
Tax
settlement (7)
|
- | 60 | - | 60 | ||||||||||||
Pacific
Gas and Electric Company Earnings on a GAAP basis
|
$ | 263 | $ | 325 | $ | 1,236 | $ | 1,185 |
1.
|
“Earnings
from operations” is not calculated in accordance with GAAP and excludes
items impacting comparability as described in Note (2)
below.
|
|
2.
|
Items
impacting comparability reconcile earnings from operations with
consolidated net income as reported in accordance with
GAAP.
|
|
3.
|
For
the twelve months ended December 31, 2009, the Utility recognized $66 million,
after-tax, for the interest and state tax benefit associated with a
federal tax refund, for 1998 and 1999.
|
|
4.
|
For
the twelve months ended December 31, 2009, the Utility recognized $28
million, after-tax, following the CPUC’s decision authorizing the Utility
to recover costs previously incurred in connection with its hydroelectric
generation facilities.
|
|
5.
|
For
the three and twelve months ended December 31, 2009, the Utility incurred
$27 million and $59 million, after-tax, respectively, of costs to perform
accelerated system-wide natural gas integrity surveys and associated
remedial work.
|
|
6.
|
For
the three and twelve months ended December 31, 2009, the Utility accrued
$4 million and $38 million, after-tax, respectively, of severance costs
related to the elimination of approximately 2% percent of the Utility’s
workforce.
|
|
7.
|
For
the three and twelve months ended December 31, 2008, the Utility
recognized net income of $60 million, a portion of the $257 million in net
income recognized by PG&E Corporation resulting from a settlement of
tax audits for tax years 2001 through
2004.
|
Key
Drivers of PG&E Corporation Earnings per Common Share from
Operations
Fourth
Quarter and Year-to-Date, 2009 vs. 2008
($/Share,
Diluted)
Q4
2008 EPS from Operations (1)
|
$ | 0.70 | ||
Increase
in rate base revenues
|
0.05 | |||
Recovery
of wholesale electric market design costs
|
0.02 | |||
Lower
long-term disability claims rate
|
0.02 | |||
Expenses
for statewide and local initiatives (2)
|
0.01 | |||
Uncollectibles
expense, net
|
0.01 | |||
Recovery
of 2008 wildfire expenses
|
0.01 | |||
Gas
transmission revenues
|
0.01 | |||
Miscellaneous
items
|
0.04 | |||
Energy
efficiency incentive revenues
|
(0.01 | ) | ||
Increase
in shares outstanding
|
(0.02 | ) | ||
Nuclear
refueling outage (3)
|
(0.04 | ) | ||
Q4
2009 EPS from Operations (1)
|
$ | 0.80 |
2008
YTD EPS from Operations (1)
|
$ | 2.95 | ||
Increase
in rate base revenues
|
0.24 | |||
Storm
and outage expenses (2)
|
0.07 | |||
Expenses
for statewide and local initiatives (2)
|
0.04 | |||
Recovery
of wholesale electric market design costs
|
0.02 | |||
Lower
long-term disability claims rate
|
0.01 | |||
Recovery
of 2008 wildfire expenses
|
0.01 | |||
Gas
transmission revenues
|
0.01 | |||
Environmental
remediation
|
(0.01 | ) | ||
Energy
efficiency incentive revenues
|
(0.01 | ) | ||
Increase
in shares outstanding
|
(0.10 | ) | ||
Miscellaneous
items
|
(0.02 | ) | ||
2009
YTD EPS from Operations (1)
|
$ | 3.21 |
1.
|
See
Table 2 for a reconciliation of EPS from operations to EPS on a GAAP
basis.
|
2.
|
Costs
incurred in 2008 with no similar costs in 2009.
|
3.
|
Dual
refueling outage year with extra revenues collected each quarter to offset
the expense of the second
refueling.
|
PG&E
Corporation EPS Guidance
2010
EPS Guidance
|
Low
|
High
|
||||||
EPS
Guidance on an Earnings from Operations Basis
|
$ | 3.35 | $ | 3.50 | ||||
Estimated
Items Impacting Comparability
|
- | - | ||||||
Taxpayer
Right to Vote (1)
|
(0.09 | ) | (0.06 | ) | ||||
Estimated
EPS on a GAAP Basis
|
$ | 3.26 | $ | 3.44 | ||||
2011
EPS Guidance
|
Low
|
High
|
||||||
EPS
Guidance on an Earnings from Operations Basis
|
$ | 3.65 | $ | 3.85 | ||||
Estimated
Items Impacting Comparability
|
- | - | ||||||
Estimated
EPS on a GAAP Basis
|
$ | 3.65 | $ | 3.85 | ||||
1.
|
Expenses
related to the California Taxpayers’ Right to Vote
Act.
|
Management’s
guidance for PG&E Corporation’s 2010 and 2011 EPS from operations constitute
forward-looking statements that are based on current expectations and various
assumptions which management believes are reasonable. These statements and
assumptions are necessarily subject to various risk and uncertainties, the
realization or resolution of which may be outside of management’s control.
Actual results may differ materially. For a discussion of the factors that could
cause actual results to differ materially see the factors listed in the attached
press release and the discussion of risk factors in PG&E Corporation and
Pacific Gas and Electric Company’s 2009 Annual Report on Form 10-K and other
reports filed with the Securities and Exchange Commission.