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Energy East Corporation Announces Second Quarter 2007 Financial Results

Posted on: Thursday, 2 August 2007, 18:16 CDT

PORTLAND, Maine, Aug. 2 /PRNewswire-FirstCall/ -- Energy East Corporation today announced its second quarter 2007 financial results. Earnings per basic share for the second quarter 2007 were $0.12 compared to $0.19 per share earned in the second quarter 2006.

For the 12 months ended June 30, 2007, earnings per basic share were $1.68 per share consistent with $1.68 per share for the 12 months ended June 30, 2006.

The primary factors driving year-over-year results in the second quarter were:

Impacts from the August 2006 NYSEG Rate Order -- Exclusive of increased deliveries, electric margins declined 17 cents per share primarily driven by the impacts of the August 2006 NYSEG electric rate order. This rate order resulted in lower delivery rates and changes to NYSEG's "Voice Your Choice" program. Increased Electric and Natural Gas Margins -- Electric margins increased by 5 cents per share versus 2006, driven by a 5% increase in total retail sales. This improvement was due in part to favorable weather compared to last year. Residential and industrial deliveries increased 7% and 12% respectively. -- Natural gas margins increased by 4 cents per share versus 2006. This was driven by a 1% increase in retail deliveries and the impact of the Connecticut Natural Gas rate settlement that was effective on April 1, 2007. Operation & Maintenance Costs -- During April, two severe storms hit Central Maine Power's service territory resulting in significant customer outages and increased maintenance and repair costs. The increased storm costs negatively impacted earnings by 3 cents per share. -- During the quarter the company incurred costs of 3 cents per share associated with the proposed merger with Iberdrola, which is discussed below. Other -- Interest costs declined by 3 cents per share on a year-over-year basis driven by lower carrying costs on regulatory liabilities and savings from debt refinancings completed in 2006. -- In March 2007, Energy East issued 10 million shares of common stock to finance previously announced infrastructure investments. This increase in shares outstanding produced a negative impact of 1 cent per share for the quarter. -- In addition, there were approximately 3 cents of other impacts that positively affected earnings, including a reduction in bad debt expense Recent Developments Iberdrola Merger -- On June 25, 2007, the company announced that it had entered into a merger agreement with Iberdrola. Under the terms of the agreement Iberdrola would pay $28.50 for each share of outstanding Energy East common stock. Iberdrola is one of the world's largest energy companies and is a leading owner and operator of renewable energy facilities, including the largest wind generation portfolio in the world. The consummation of the merger, which is expected to be completed by the third quarter of 2008, is subject to various customary closing conditions and regulatory approvals. On August 1, 2007, the company made many of the required state and federal regulatory filings. The remaining filings are expected to be made over the next several weeks. Joint Proposal for NYSEG's Supply Service Filing -- On July 10, 2007, the New York Public Service Commission (NYPSC) staff and other interested parties submitted a joint proposal resolving all issues related to NYSEG's Supply Service proposal, which was originally filed in April 2007. The proposal provides customers the option to continue to receive a fixed price for electricity from NYSEG. Central Maine Power Alternative Rate Plan -- On May 1, 2007, Central Maine Power filed an Alternative Rate Plan proposal to replace the current rate plan that expires on December 31, 2007. This proposal retains the basic structure of the current rate plan and incorporates the incremental investment of $90 million in advanced metering infrastructure.

Further details on all of these recent developments as well as additional supplemental financial information regarding second quarter results are available in the Financial Information section of the Energy East website at http://www.energyeast.com/. In addition, the company will file its Form 10-Q today, which contains further details on second quarter and year-to-date results.

FORWARD LOOKING STATEMENTS

This communication contains forward-looking information and statements about Energy East. Forward-looking statements are statements that are not historical facts. These statements may include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, products and services, and statements regarding future performance. Forward-looking statements are generally identified by the words "expects,""anticipates,""believes,""intends,""estimates" and similar expressions. Although the management of Energy East Corporation believes that the expectations reflected in such forward- looking statements are reasonable, investors and holders of Energy East Corporation shares are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of Energy East Corporation, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward- looking information and statements. These risks and uncertainties include those discussed or identified in the public documents sent by Energy East to their regulators and under "Risk Factors" in their annual and quarterly reports filed with the SEC. Except as required by applicable law, Energy East undertakes no obligation to update any forward-looking information or statements.

In connection with the proposed transaction with Iberdrola, S.A., Energy East will file a proxy statement with the Securities and Exchange Commission. Before making any voting or investment decision, investors and security holders of Energy East are urged to carefully read the entire proxy statement, when it becomes available, and any other relevant documents filed with the Securities and Exchange Commission, as well as any amendments or supplements to those documents, because they will contain important information about the proposed transaction. A definitive proxy statement will be sent to the shareholders of Energy East in connection with the proposed transaction. Investors and security holders may obtain a free copy of the proxy statement (when available) and other documents filed by Energy East at the Securities and Exchange Commission's Web site at http://www.sec.gov/. The proxy statement and such other documents may also be obtained for free from Energy East by directing such request to Energy East, 52 Farm View Drive, New Gloucester, ME 04260, Attention Marc Siwak.

Energy East, its directors, executive officers and other members of its management, employees, and certain other persons may be deemed to be participants in the solicitation of proxies from Energy East shareholders in connection with the proposed transaction. Information about the interests of Energy East's participants in the solicitation is set forth in Energy East's proxy statements and Annual Reports on Form 10-K, previously filed with the Securities and Exchange Commission, and in the proxy statement relating to the transaction when it becomes available

About Energy East:

Energy East is a respected super-regional energy services and delivery company serving about 3 million customers throughout upstate New York and New England. By providing outstanding customer service and meeting customers' energy requirements in an environmentally friendly manner, Energy East will continue to be a valuable asset to the communities we serve.

Energy East Corporation Condensed Consolidated Statements of Income - (Unaudited) Three Months Twelve Months Periods ended June 30, 2007 2006 2007 2006 (Thousands, except per share amounts) Operating Revenues Utility $977,006 $1,000,898 $4,718,605 $4,836,613 Other 112,020 111,927 506,387 549,489 Total Operating Revenues 1,089,026 1,112,825 5,224,992 5,386,102 Operating Expenses Electricity purchased and fuel used in generation Utility 351,412 354,208 1,472,205 1,475,770 Other 85,164 84,237 353,791 373,803 Natural gas purchased Utility 174,232 172,663 1,110,286 1,201,206 Other 12,120 9,560 80,632 103,252 Other operating expenses 203,503 202,174 801,295 814,562 Maintenance 48,809 43,750 216,855 199,857 Depreciation and amortization 68,273 70,061 280,176 280,640 Other taxes 58,787 58,265 252,204 250,627 Total Operating Expenses 1,002,300 994,918 4,567,444 4,699,717 Operating Income 86,726 117,907 657,548 686,385 Other (Income) (10,752) (6,910) (48,523) (39,765) Other Deductions 1,423 4,131 21,085 14,419 Interest Charges, Net 67,855 75,142 291,217 300,741 Preferred Stock Dividends of Subsidiaries 282 283 1,129 1,130 Income Before Income Taxes 27,918 45,261 392,640 409,860 Income Taxes 8,427 16,976 141,549 163,232 Net Income $19,491 $28,285 $251,091 $246,628 Earnings per Share, basic $.12 $.19 $1.68 $1.68 Earnings per Share, diluted $.12 $.19 $1.67 $1.67 Dividends Declared per Share $.30 $.29 $1.19 $1.145 Average Common Shares Outstanding, basic 157,112 146,903 149,627 147,022 Average Common Shares Outstanding, diluted 158,122 147,678 150,500 147,665 Energy East Corporation Energy Delivery Statistics - (Unaudited) Electricity Deliveries (MWh) Natural Gas Deliveries (Dth) Three months ended June 30, 2007 2006 Change 2007 2006 Change (Thousands) Residential 2,784 2,609 7% 11,493 11,139 3% Commercial 2,470 2,433 2% 4,234 3,848 10% Industrial 1,945 1,740 12% 539 547 (1%) Other 545 591 (8%) 2,698 2,982 (10%) Transportation of customer-owned natural gas NA NA NA 16,885 17,121 (1%) Total Retail 7,744 7,373 5% 35,849 35,637 1% Wholesale 1,783 2,485 (28%) 267 45 493% Total Deliveries 9,527 9,858 (3%) 36,116 35,682 1% Electricity Deliveries (MWh) Natural Gas Deliveries (Dth) 12 months ended June 30, 2007 2006 Change 2007 2006 Change (Thousands) Residential 12,428 12,125 2% 75,846 70,636 7% Commercial 9,887 9,630 3% 25,567 23,904 7% Industrial 7,167 7,149 NA 3,564 3,529 1% Other 2,249 2,229 1% 13,494 12,892 5% Transportation of customer-owned natural gas NA NA NA 77,955 77,318 1% Total Retail 31,731 31,133 2% 196,426 188,279 4% Wholesale 8,050 9,317 (14%) 638 111 475% Total Deliveries 39,781 40,450 (2%) 197,064 188,390 5% Energy East Corporation Weather Statistics - (Unaudited) Three Months Periods ended June 30, 2007 2006 Normal New York Total heating degree days 910 846 957 Colder than prior year 8% (Warmer) than normal (5%) New England Total heating degree days 824 728 835 Colder than prior year 13% (Warmer) than normal (1%)

Energy East Corporation

CONTACT: Marc Siwak, Director, Investor Relations for Energy East,+1-207-688-4336

Web site: http://www.energyeast.com/

Source: PRNewswire-FirstCall

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