- Utility Group 2009 earnings were $107.4 million, or $1.33 per share,
compared to $111.1 million, or $1.42 per share, in 2008. Utility Group
results were down only modestly in 2009, even after considering the impacts
of the recession; significant cost reductions helped offset those impacts
to a large degree. Fourth quarter Utility Group earnings were $35.9
million, or $0.44 per share, compared to $30.7 million, or $0.38 per share,
in the fourth quarter of 2008.
- Nonutility Group 2009 earnings, excluding the Liberty charge, were
$37.7 million, or $0.47 per share, compared to earnings of $18.9 million,
or $0.24 per share, in 2008. For the fourth quarter, Nonutility Group
earnings were $19.0 million, or $0.24 per share, compared to $6.8 million,
or $0.08 per share, in 2008.
Gas utility margins were $447.9 million for the year ended December 31, 2009 and $128.6 million for the fourth quarter of 2009. Following are reconciliations of the changes from 2008:
(millions) Year Quarter
------- -------
2008 Gas Utility Margin $ 449.6 $ 133.2
Regulatory initiatives, including the full impact of the
Vectren North base rate increase and the Vectren Ohio
base rate increase 8.4 -
Ohio weather (0.2) (0.6)
Recessionary impacts:
Large customer usage declines (4.4) (0.4)
Declining small customer count (1.7) (0.4)
Miscellaneous revenues (1.7) (0.8)
Costs directly recovered in margin and other (2.1) (2.4)
------- -------
Total change in Gas Utility Margin (1.7) (4.6)
2009 Gas Utility Margin $ 447.9 128.6
======= =======
Electric Utility MarginRetail
Electric retail utility margins were $313.6 million for the year ended December 31, 2009 and $75.6 million in the fourth quarter of 2009. Following are reconciliations of the changes from 2008:
(millions) Year Quarter
------- -------
2008 Retail Electric Margin $ 308.8 $ 71.9
Weather (5.2) (1.6)
Return on pollution control investments 4.5 1.3
Recovery of tracked MISO and pollution control related
costs 10.3 2.6
Large customer usage (4.9) 0.5
All other changes 0.1 0.9
------- -------
Total change in Retail Electric Margin 4.8 3.7
2009 Retail Electric Margin $ 313.6 $ 75.6
======= =======
Margin from Wholesale Electric ActivitiesIn 2009, wholesale margins were $20.7 million for the year and $5.4 million for the fourth quarter, representing decreases of ($11.8) million and ($4.9) million, respectively. Of the annual and quarterly decreases, ($17.1) million and ($5.5) 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 increase 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. These 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 $5.3 million, to $14.6 million in 2009 and during the fourth quarter increased $0.6 million to $3.6 million. Other Operating
Other operating expenses were $304.6 million for the year ended December 31, 2009 and $76.7 million in the fourth quarter of 2009. Following are reconciliations of the changes from 2008:
(millions) Year Quarter
------- -------
2008 Other Operating Expenses $ 300.3 $ 82.6
Operating costs recovered in margin, such as bad debt
cost recovery, conservation program cost recovery
and clean air related cost recovery 10.9 2.4
Cost reductions, including lower electric maintenance
costs and lower chemical costs (6.6) (8.3)
------- -------
Total Change in Other Operating Expenses 4.3 (5.9)
2009 Other Operating Expenses $ 304.6 $ 76.7
======= =======
Depreciation & AmortizationDepreciation expense was $180.9 million for 2009 and $46.1 million for the fourth quarter, an increase of $15.4 million and $3.8 million, respectively, compared to 2008. The increase in depreciation is due largely to plant additions. Plant additions include the approximate $100 million SO2 scrubber placed into service January 1, 2009, for which annual depreciation totaling $5.6 million is directly recovered in electric utility margin. Taxes Other Than Income Taxes
Taxes Other Than Income Taxes were $60.3 million for 2009 and $14.1 million for the fourth quarter, a decrease of $12.0 million and $6.4 million, respectively, compared to 2008. These taxes are primarily revenue-related taxes. The decreased taxes are due largely to lower revenues, driven by significantly lower gas costs. These tax expenses are recovered through revenue. Other Income - Net
Other Income-net reflects income of $7.8 million in 2009 compared to income of $4.0 million in 2008. Of the annual increase totaling $3.8 million, $2.6 million occurred in the fourth quarter. The increases primarily reflect increases in market values associated with investments related to benefit plans. Interest Expense
Interest expense of $79.2 million for 2009 and $20.3 for the quarter was relatively flat year over year and for the fourth quarter. Lower short-term interest rates and lower average short-term debt balances have favorably affected interest expense year over year and are reflective of lower gas prices and the issuance of new long-term debt. Offsetting the favorable impacts of lower rates and short term balances is the impact of two long-term financing transactions completed in 2009. The long term financing transactions include a second quarter issuance by Utility Holdings of $100 million in unsecured eleven year notes with an interest rate of 6.28 percent and a third quarter completion by SIGECO of a $22.3 million debt issuance of 31 year tax exempt first mortgage bonds with an interest rate of 5.4 percent. Income Taxes
Federal and state income taxes were $59.2 million in 2009 and $18.6 million for the fourth quarter, an annual decrease of ($8.4) million and a quarterly increase of $0.6 million compared to 2008. Both the annual and quarterly changes are impacted primarily by fluctuations in pre-tax income and a lower effective tax rate in 2009 as a result of more taxable income allocated to states with low, or no, state income taxes. Nonutility Group Discussion All amounts included in this section are after tax. Results reported by business group are net of nonutility group corporate expense. In 2009, Nonutility Group earnings were $37.7 million, excluding the Liberty charge (reported in the second quarter of 2009 and discussed below), which compares to net income of $18.9 million in 2008, an increase of $18.8 million year over year. Including the Liberty Charge, 2009 Nonutility Group earnings were $25.8 million. The 2009 improvement of $18.8 million compared to 2008 primarily reflects a $15.4 million increase in earnings from primary nonutility operations. Primary nonutility business groups are Energy Marketing and Services, Coal Mining, and Energy Infrastructure Services companies. Coal mining operations has shown improvement due to increased pricing effective January 1, 2009, increasing its contribution to earnings approximately $18.0 million. Retail gas marketing earnings are $4.5 million higher than the prior year, and performance contracting activity at Energy Systems Group (ESG) increased its earnings contribution $2.1 million compared to 2008. These increases were partially offset by lower earnings contributions from ProLiance and Miller Pipeline. Other nonutility businesses operated at a loss of ($2.5) million in 2009 compared to a loss of ($5.9) million in 2008. Other nonutility businesses are legacy investments, including investments in commercial real estate. The lower results in 2008 were driven primarily by a charge associated with commercial real estate investments. During the fourth quarter of 2009, the Nonutility Group contributed earnings of $19.0 million compared to $6.8 million in 2008. The $12.2 million increase is primarily related to coal mining earnings that were $9.0 million higher than last year and ProLiance's earnings that were $3.4 million higher than last year. Results were partially offset by lower Energy Infrastructure earnings. 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. Operating entities contributing to these results include Vectren Source and ProLiance. Results, inclusive of holding company costs but excluding the Liberty charge of $11.9 million after tax, from Energy Marketing and Services for the year ended December 31, 2009, were earnings of $16.0 million compared to $18.0 million in 2008. Fourth quarter 2009 earnings were $10.0 million compared to earnings of $5.6 million in 2008. During 2009, ProLiance's earnings contribution was $9.6 million compared to $19.3 million in 2008. The ($9.7) million decrease primarily reflects lower cash to NYMEX spreads compared to the prior year, particularly spreads existing in the third quarter of 2008 that had unprecedented price volatility and resulted in record quarterly earnings from ProLiance. In the fourth quarter, ProLiance's earnings contribution was $7.0 million compared to $3.6 million in 2008. The quarterly increase is due primarily to increased optimization margins resulting from more favorable spreads. ProLiance's storage capacity was 46 BCF at December 31, 2009 compared to 42 BCF at December 2008. Vectren Source, the company's retail gas marketer, earned approximately $6.4 million in 2009 compared to $1.9 million in 2008. The record earnings in 2009 resulted primarily from favorable market conditions over the course of 2009's first quarter as revenues on variable priced sales contracts fell more slowly than gas costs. In the fourth quarter, earnings were $2.4 million, an increase of $0.7 million compared to last year due primarily to higher customer count. Vectren Source's customer count at December 31, 2009, was approximately 189,000 customers compared to 170,000 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. (Vectren Fuels). Inclusive of holding company costs, Coal Mining earned $13.4 million in 2009 compared to a loss of ($4.6) million in 2008. During the fourth quarter Coal Mining earned approximately $6.0 million compared to a loss of ($3.0) million in 2008. Compared to 2008, Coal Mining earnings have increased based on new contract pricing effective January 1, 2009. The impact of higher revenues has been somewhat offset by increased costs per ton mined and the recession. The anticipated cost increase was reflective of efforts to reconfigure the mining operation at Prosperity mine in order to improve future productivity and meet Mine Safety and Health Administration (MSHA) requirements. During the second half of 2009, these improvements began to favorably impact production and operating costs. The continuing recession resulted in a decrease in the demand for, and market price of, Illinois Basin coal, and lower than anticipated earnings from coal mining operations. The lowered demand has caused some build up of coal inventory at most customer locations as well as at Vectren Fuels' mines. As a result of contracts with minimum delivery provisions, certain customers scaled back their deliveries within specified limits. This resulted in less 2009 mine production as Vectren Fuels reduced production to align with customer's needs. Further, Vectren Fuels is currently in a dispute with one customer regarding its purchase contract, and Vectren Fuels is working to resolve the dispute. Fuels sold 3.5 million tons in 2009 compared to 4.2 million tons in 2008. The original expectation for 2009 was to sell between 4.6 and 5.2 million tons. Further, the higher customer coal inventory levels will likely cause the current demand and supply imbalance to extend into 2010. Early 2010 has shown some decline in customer inventory levels, due largely to colder weather and the resulting increased demand. The first of two new underground mines located near Vincennes, Indiana, which began minor coal extraction in the latter half of 2009, is now operational. The second mine is currently expected to open 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 100 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 135 million tons at December 31, 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 Energy Systems Group (ESG). Inclusive of holding company costs, Energy Infrastructure Services contributed earnings of $10.8 million in 2009 compared to $11.4 million in 2008. In the fourth quarter of 2009, these operations contributed $3.2 million compared to $5.9 million in 2008. Miller's 2009 annual earnings were $3.1 million compared to its $6.2 million record earnings year in 2008. Of the annual ($3.1) million decrease, ($2.5) million occurred in the fourth quarter. The decreases primarily result from customer cut backs in spending as a result of the recession. In addition, startup costs associated with new contracts also negatively impacted year over year results. Lower interest rates partially offset the lower margins. As the country continues to replace its aging natural gas infrastructure and needs for shale gas infrastructure become more prevalent, Miller is positioned for future growth. ESG's annual earnings were $8.8 million in 2009 compared to $6.7 million in 2008. The increase is primarily a result of increased performance contracting revenues associated with the continued focus on renewable energy, energy conservation, and sustainability measures by ESG's customers. As part of ESG's ongoing renewable energy project development strategy, results in 2009 include the sale of a 3 MW self-developed landfill gas facility. With approval from the IURC, the facility was sold to Vectren South, as part of the utility's strategy to continue to build a renewable energy portfolio. ESG's results associated with this renewable project match the results of a similar land fill gas project completed near Atlanta, Georgia in 2008. In the fourth quarter ESG's earnings were $3.0 million compared to $3.8 million in 2008. At December 31, 2009, ESG's backlog was $70 million compared to $65 million at December 31, 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. Charge Related to ProLiance's Investment in Liberty Gas Storage Liberty Gas Storage, LLC (Liberty), a joint venture between a subsidiary of ProLiance and a subsidiary of Sempra Energy (SE), is a development project for salt-cavern natural gas storage facilities. ProLiance is the minority member with a 25 percent interest, which it accounts for using the equity method. As reported in the second quarter, SE determined that attempts at corrective measures had been unsuccessful in development of certain caverns. At June 30, 2009, Liberty recorded a charge of approximately $132 million to write off the caverns and certain related assets. As an equity investor in Liberty, ProLiance recorded its share of the charge, totaling $33 million at June 30, 2009. The company's share is $11.9 million after tax, or $0.15 per share, and is reflected in the 2009 financial statements. Impacts of Share Issuance in 2008 Annual 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. 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 in analyzing consolidated 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.
Year Ended December 31, 2009
--------------------------------
Exclude
GAAP- Liberty Non-GAAP
(In Millions, except EPS) Measure Charge Measure
---------- ---------- ----------
Consolidated
Net Income $ 133.1 11.9 $ 145.0
Basic EPS $ 1.65 0.15 $ 1.80
Nonutility Group Net Income $ 25.8 11.9 $ 37.7
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
informationLive Webcast on February 26, 2010
Vectren's financial analyst call will be at 10:30 a.m. (EST), February 26, 2010, at which time management will discuss financial results and 2010 earnings guidance. To participate in the call, analysts are asked to dial 1-888-818-6237and present the conference call ID# 54736749. 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. Catastrophic events such as fires, earthquakes, explosions, floods, ice storms, tornados, terrorist acts or other similar occurrences could adversely affect Vectren's facilities, operations, financial condition and results of operations. 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 recent 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; the ability to execute and negotiate new sales contracts and resolve contract interpretations; volatile coal market prices and demand; 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 2009 annual report on Form 10-K to be filed on or about February 26, 2010. 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 Twelve Months
Ended December 31 Ended December 31
----------------------- -----------------------
2009 2008 2009 2008
----------- ---------- ----------- -----------
OPERATING REVENUES:
Gas utility $ 306.1 $ 430.3 $ 1,066.0 $ 1,432.7
Electric utility 127.9 121.9 528.6 524.2
Nonutility revenues 134.6 155.1 494.3 527.8
----------- ---------- ----------- -----------
Total operating
revenues 568.6 707.3 2,088.9 2,484.7
----------- ---------- ----------- -----------
OPERATING EXPENSES:
Cost of gas sold 177.5 297.1 618.1 983.1
Cost of fuel and
purchased power 46.9 39.7 194.3 182.9
Cost of nonutility
revenues 53.8 83.8 207.5 282.2
Other operating 136.4 137.9 514.0 506.3
Depreciation and
amortization 53.6 49.8 211.9 192.3
Taxes other than income
taxes 15.0 20.6 63.0 74.5
----------- ---------- ----------- -----------
Total operating
expenses 483.2 628.9 1,808.8 2,221.3
----------- ---------- ----------- -----------
OPERATING INCOME 85.4 78.4 280.1 263.4
OTHER INCOME (EXPENSE):
Equity in earnings of
unconsolidated affiliates 14.7 8.4 3.4 37.4
Other income (loss)- net 3.1 (0.3) 13.7 2.1
----------- ---------- ----------- -----------
Total other income 17.8 8.1 17.1 39.5
----------- ---------- ----------- -----------
INTEREST EXPENSE 26.0 25.4 100.0 97.8
----------- ---------- ----------- -----------
INCOME BEFORE INCOME TAXES 77.2 61.1 197.2 205.1
INCOME TAXES 22.6 24.0 64.1 76.1
----------- ---------- ----------- -----------
NET INCOME $ 54.6 $ 37.1 $ 133.1 $ 129.0
=========== ========== =========== ===========
AVERAGE COMMON SHARES
OUTSTANDING 80.8 80.6 80.7 78.3
DILUTED COMMON SHARES
OUTSTANDING 81.0 80.8 81.0 78.7
EARNINGS PER SHARE OF
COMMON STOCK
BASIC $ 0.68 $ 0.46 $ 1.65 $ 1.65
=========== ========== =========== ===========
DILUTED $ 0.67 $ 0.46 $ 1.64 $ 1.63
=========== ========== =========== ===========
VECTREN UTILITY HOLDINGS
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(Millions)
(Unaudited)
Three Months Twelve Months
Ended December 31 Ended December 31
------------------- -------------------
2009 2008 2009 2008
--------- -------- --------- ---------
OPERATING REVENUES:
Gas utility $ 306.1 $ 430.3 $ 1,066.0 $ 1,432.7
Electric utility 127.9 121.9 528.6 524.2
Other 0.4 - 1.6 1.8
--------- -------- --------- ---------
Total operating revenues 434.4 552.2 1,596.2 1,958.7
--------- -------- --------- ---------
OPERATING EXPENSES:
Cost of gas sold 177.5 297.1 618.1 983.1
Cost of fuel and purchased power 46.9 39.7 194.3 182.9
Other operating 76.7 82.6 304.6 300.3
Depreciation and amortization 46.1 42.3 180.9 165.5
Taxes other than income taxes 14.1 20.5 60.3 72.3
--------- -------- --------- ---------
Total operating expenses 361.3 482.2 1,358.2 1,704.1
--------- -------- --------- ---------
OPERATING INCOME 73.1 70.0 238.0 254.6
OTHER INCOME - NET 1.7 (0.9) 7.8 4.0
INTEREST EXPENSE 20.3 20.4 79.2 79.9
--------- -------- --------- ---------
INCOME BEFORE INCOME TAXES 54.5 48.7 166.6 178.7
INCOME TAXES 18.6 18.0 59.2 67.6
--------- -------- --------- ---------
NET INCOME $ 35.9 $ 30.7 $ 107.4 $ 111.1
========= ======== ========= =========
VECTREN CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Millions - Unaudited)
December 31, December 31,
2009 2008
------------ ------------
ASSETS
Current Assets
Cash & cash equivalents $ 11.9 $ 93.2
Accounts receivable - less reserves of $5.2 &
$5.6, respectively 162.4 226.7
Accrued unbilled revenues 144.7 197.0
Inventories 167.8 131.0
Recoverable fuel & natural gas costs - 3.1
Prepayments & other current assets 95.1 124.6
------------ ------------
Total current assets 581.9 775.6
------------ ------------
Utility Plant
Original cost 4,601.4 4,335.3
Less: accumulated depreciation & amortization 1,722.6 1,615.0
------------ ------------
Net utility plant 2,878.8 2,720.3
------------ ------------
Investments in unconsolidated affiliates 186.2 179.1
Other utility and corporate investments 33.2 44.2
Other nonutility investments 46.2 27.4
Nonutility property - net 482.6 390.2
Goodwill - net 242.0 240.2
Regulatory assets 187.9 216.7
Other assets 33.0 39.2
------------ ------------
TOTAL ASSETS $ 4,671.8 $ 4,632.9
============ ============
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 183.8 $ 266.1
Accounts payable to affiliated companies 54.1 75.2
Refundable fuel & natural gas costs 22.3 4.1
Accrued liabilities 174.7 175.0
Short-term borrowings 213.5 519.5
Current maturities of long-term debt 48.0 0.4
Long-term debt subject to tender 51.3 80.0
------------ ------------
Total current liabilities 747.7 1,120.3
------------ ------------
Long-term Debt - Net of Current Maturities &
Debt Subject to Tender 1,540.5 1,247.9
Deferred Income Taxes & Other Liabilities
Deferred income taxes 458.7 353.4
Regulatory liabilities 322.1 315.1
Deferred credits & other liabilities 205.6 244.6
------------ ------------
Total deferred credits & other liabilities 986.4 913.1
------------ ------------
Common Shareholders' Equity
Common stock (no par value) - issued &
outstanding 81.1 and 81.0 shares, respectively 666.8 659.1
Retained earnings 737.2 712.8
Accumulated other comprehensive income (loss) (6.8) (20.3)
------------ ------------
Total common shareholders' equity 1,397.2 1,351.6
------------ ------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 4,671.8 $ 4,632.9
============ ============
VECTREN CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions - Unaudited)
For the Twelve months
ended
December 31,
--------------------------
2009 2008
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 133.1 $ 129.0
Adjustments to reconcile net income to cash
from operating activities:
Depreciation & amortization 211.9 192.3
Deferred income taxes & investment tax credits 84.9 79.6
Equity in earnings of unconsolidated affiliates (3.4) (37.4)
Provision for uncollectible accounts 15.1 16.9
Expense portion of pension & postretirement
periodic benefit cost 10.4 7.8
Other non-cash charges - net 13.3 25.4
Changes in working capital accounts:
Accounts receivable & accrued unbilled revenue 96.9 (83.0)
Inventories (36.1) 26.4
Recoverable/refundable fuel & natural gas costs 21.3 (26.2)
Prepayments & other current assets 43.1 9.8
Accounts payable, including to affiliated
companies (85.8) 65.7
Accrued liabilities 4.0 16.5
Unconsolidated affiliate dividends 12.6 15.5
Employer contributions to pension &
postretirement plans (38.5) (15.1)
Changes in noncurrent assets 0.2 19.6
Changes in noncurrent liabilities (33.4) (19.6)
------------ ------------
Net cash flows from operating activities 449.6 423.2
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from:
Long-term debt 312.5 171.4
Issuance of common stock - 124.9
Dividend reinvestment plan & other 5.8 0.9
Requirements for:
Dividends on common stock (108.6) (102.6)
Retirement of long-term debt (3.5) (104.9)
Other financing activities - (0.1)
Net change in short-term borrowings (306.0) (37.8)
------------ ------------
Net cash flows from financing activities (99.8) 51.8
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from:
Unconsolidated affiliate distributions 4.6 0.2
Other collections 1.5 6.4
Requirements for:
Capital expenditures, excluding AFUDC equity (432.0) (391.0)
Unconsolidated affiliate investments (0.2) (0.6)
Other investments (5.0) (17.4)
------------ ------------
Net cash flows from investing activities (431.1) (402.4)
------------ ------------
Net change in cash & cash equivalents (81.3) 72.6
Cash & cash equivalents at beginning of period 93.2 20.6
------------ ------------
Cash & cash equivalents at end of period $ 11.9 $ 93.2
============ ============
VECTREN CORPORATION
AND SUBSIDIARY COMPANIES
HIGHLIGHTS
(millions, except per share amounts)
(Unaudited)
Three Months Twelve Months
Ended December 31 Ended December 31
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
REPORTED EARNINGS:
Utility Group $ 35.9 $ 30.7 $ 107.4 $ 111.1
Non-utility Group
Energy Marketing and Services 10.0 5.6 16.0 18.0
Coal Mining 6.0 (3.0) 13.4 (4.6)
Energy Infrastructure
Services 3.2 5.9 10.8 11.4
Other Businesses (0.2) (1.7) (2.5) -
Commercial Real Estate
Impairment Charge - - - (5.9)
--------- --------- --------- ---------
Total Non-utility Operations 19.0 6.8 37.7 18.9
Corporate and Other (0.3) (0.4) (0.1) (1.0)
--------- --------- --------- ---------
Sub-Total Operations 54.6 37.1 145.0 129.0
Charge related to Liberty Gas
Storage Investment - - (11.9) -
--------- --------- --------- ---------
Vectren Consolidated $ 54.6 $ 37.1 $ 133.1 $ 129.0
========= ========= ========= =========
EARNINGS PER SHARE:
EPS FROM OPERATIONS $ 0.68 $ 0.46 $ 1.80 $ 1.65
Charge related to Liberty Gas
Storage Investment - - (0.15) -
--------- --------- --------- ---------
REPORTED EPS $ 0.68 $ 0.46 $ 1.65 $ 1.65
========= ========= ========= =========
VECTREN CORPORATION
AND SUBSIDIARY COMPANIES
SELECTED GAS DISTRIBUTION
OPERATING STATISTICS
(Unaudited)
Three Months Twelve Months
Ended Dec 31 Ended Dec 31
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
GAS OPERATING REVENUES
(Millions):
Residential $ 209.5 $ 295.5 $ 726.6 $ 959.2
Commercial 77.9 114.0 272.3 392.8
Industrial 16.8 18.9 55.9 68.8
Other Revenue 1.9 1.9 11.2 11.9
--------- --------- --------- ---------
$ 306.1 $ 430.3 $ 1,066.0 $ 1,432.7
========= ========= ========= =========
GAS MARGIN (Millions):
Residential $ 87.2 $ 89.5 $ 298.9 $ 292.5
Commercial 25.7 27.7 89.9 93.0
Industrial 13.4 14.0 46.8 51.2
Other 2.3 2.0 12.3 12.9
--------- --------- --------- ---------
$ 128.6 $ 133.2 $ 447.9 $ 449.6
========= ========= ========= =========
GAS SOLD & TRANSPORTED (MMDth):
Residential 24.1 26.5 73.3 79.2
Commercial 10.9 11.7 33.2 35.6
Industrial 22.9 24.0 78.0 91.5
--------- --------- --------- ---------
57.9 62.2 184.5 206.3
========= ========= ========= =========
AVERAGE GAS CUSTOMERS
Residential 900,977 904,163 896,516 901,131
Commercial 83,265 84,107 83,148 83,940
Industrial 1,618 1,622 1,621 1,614
--------- --------- --------- ---------
985,860 989,892 981,285 986,685
========= ========= ========= =========
YTD WEATHER AS A PERCENT OF
NORMAL:
Heating Degree Days (Ohio) 102% 105% 103% 102%
VECTREN CORPORATION
AND SUBSIDIARY COMPANIES
SELECTED ELECTRIC
OPERATING STATISTICS
(Unaudited)
Three Months Twelve Months
Ended Dec 31 Ended Dec 31
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
ELECTRIC OPERATING REVENUES
(Millions):
Residential $ 40.5 $ 37.2 $ 181.4 $ 171.0
Commercial 34.3 30.7 139.0 127.1
Industrial 41.5 33.1 165.1 150.5
Municipals - - - 1.0
Other Revenue 3.1 2.8 7.7 7.7
--------- --------- --------- ---------
Total Retail 119.4 103.8 493.2 457.3
Net Wholesale Revenues 8.5 18.1 35.4 66.9
--------- --------- --------- ---------
$ 127.9 $ 121.9 $ 528.6 $ 524.2
========= ========= ========= =========
ELECTRIC MARGIN (Millions):
Residential $ 29.0 $ 28.8 $ 129.7 $ 129.0
Commercial 22.8 22.0 92.2 89.6
Industrial 20.9 18.4 84.5 82.9
Municipals - - - -
Other 2.9 2.7 7.2 7.3
--------- --------- --------- ---------
Total Retail 75.6 71.9 313.6 308.8
Net Wholesale Margin 5.4 10.3 20.7 32.5
--------- --------- --------- ---------
$ 81.0 $ 82.2 $ 334.3 $ 341.3
========= ========= ========= =========
ELECTRICITY SOLD (GWh):
Residential 317.7 331.4 1,451.7 1,513.8
Commercial 321.0 323.5 1,309.1 1,336.7
Industrial 572.0 549.6 2,258.9 2,409.1
Municipals - - - 44.3
Other Sales - Street Lighting 5.9 5.5 20.0 19.5
--------- --------- --------- ---------
Total Retail 1,216.6 1,210.0 5,039.7 5,323.4
Wholesale 109.3 401.5 603.6 1,512.9
--------- --------- --------- ---------
1,325.9 1,611.5 5,643.3 6,836.3
========= ========= ========= =========
AVERAGE ELECTRIC CUSTOMERS
Residential 122,600 122,576 122,380 122,522
Commercial 18,347 18,385 18,357 18,422
Industrial 106 103 105 103
Other 33 34 33 34
--------- --------- --------- ---------
141,086 141,098 140,875 141,081
========= ========= ========= =========
YTD WEATHER AS A PERCENT OF
NORMAL:
Cooling Degree Days (Indiana) 90% 100%
Heating Degree Days (Indiana) 100% 104% 96% 102%
Contact Information: Investor Contact Steven M. Schein (812) 491-4209 Media Contact Jeffrey W. Whiteside (812) 491-4205