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Allegheny losses are far lower

January 24, 2004|by ANDREW SCHOTZ

andrews@herald-mail.com

Allegheny Energy's third-quarter losses were far lower in 2003 than in 2002, according to a summary released Friday.

For the period covering July, August and September 2003, Allegheny's consolidated net losses were $51 million, compared to $263 million for the same period the previous year, the company said.

Allegheny attributed much of the $212 million improvement to a decline in energy trading market losses. Net losses in energy trading decreased $243 million from 2002 to 2003, the company said.

Also, $104 million in work-force reduction expenses in the third quarter of 2002 dropped to zero in 2003.

On the other hand, interest charges rose $46 million because of more outstanding debt, the company said.

In a statement issued with the latest financial report, Allegheny Energy Chairman and Chief Executive Officer Paul J. Evanson said, "With our exit from the Western energy markets and a refocus of our trading business on asset optimization, our exposure to energy trading losses and the volatility of our financial results should be significantly reduced in the future. In addition to trading losses, we continue to experience high expenses for consulting, accounting and legal services and interest charges."

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Evanson said the company will continue to focus on refinancing debt in 2004.

In February 2003, after many months of struggling to meet credit deadlines and avoid bankruptcy, Allegheny and its energy trading subsidiary, Allegheny Energy Supply Co., negotiated $2.437 billion in secured and unsecured loans.

Most of that money will be used to refinance other loans, Allegheny said at the time.

Allegheny Energy and Allegheny Energy Supply have until April 18, 2005, to pay back $1.6 billion of those loans.

Allegheny received a cash boost in July 2003, when it reached an agreement to sell its 11-year California energy supply contract for $405 million.

However, exiting the Western energy trading markets resulted in a $102 million net loss in the third quarter of 2003, according to Allegheny.

In September 2003, Allegheny finally released its 2002 earnings report, which showed a $632 million loss for the year. Correcting errors in previous statements prompted the delay.

Besides announcing its 2003 third quarter earnings Friday, Allegheny filed two reports with the U.S. Securities and Exchange Commission - a Form 10-Q for the third quarter of 2002 and one for the third quarter of 2003.

A Form 10-Q is a more detailed version of a basic financial summary.

Allegheny Energy's stock closed at $13.49 Friday, up 14 cents.

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