- Net income after dividends on preferred stock reported under GAAP
was $318 million, or $0.83 per share. - On a non-GAAP basis,
earnings from operations were $358 million, or $0.93 per share. -
Guidance for earnings from operations is reaffirmed for 2009, 2010,
and 2011. SAN FRANCISCO, Oct. 29 /PRNewswire-FirstCall/ -- PG&E
Corporation's (NYSE: PCG) net income after dividends on preferred
stock (also called "income available for common shareholders") was
$318 million, or $0.83 per share, in the third quarter ended
September 30, 2009, as calculated in accordance with generally
accepted accounting principles (GAAP). The third quarter GAAP
results included a net charge of $0.10 per share, reflecting costs
for accelerated natural gas system survey and maintenance work and
a workforce reduction, partially offset by a prior year tax
benefit. On a non-GAAP basis, PG&E Corporation's earnings from
operations were $358 million, or $0.93 per share, in the third
quarter of 2009. In the same quarter last year, both GAAP and
non-GAAP earnings were $304 million, or $0.83 per share. The
majority of the higher year-over-year earnings from operations
resulted from additional revenues generated by new capital
investments in Pacific Gas and Electric Company's (Utility)
infrastructure. The Utility's year-to-date capital expenditures
have totaled $3 billion, increasing the value of the asset base on
which the company is allowed to earn its authorized return. "We
continue to report solid earnings despite a challenging economic
environment while moving ahead with the necessary investments to
ensure safe and reliable service for our customers," said Peter A.
Darbee, Chairman, CEO, and President of PG&E Corporation.
Earnings Guidance PG&E Corporation reaffirms its previous
guidance for earnings from operations in the range of $3.15-$3.25
per share for 2009, $3.35-$3.50 per share for 2010, 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 cost savings from
operational changes and efficiencies in amounts consistent with low
and high case earnings ranges. Throughout the year, the Utility has
sought to reduce costs and to align the work with business
priorities by proactively implementing programs that have tightened
employee-related expenses, reduced vendor and consultant costs, and
trimmed fleet-related expenditures. Consistent with these efforts
to achieve savings while continuing to provide safe and reliable
service, the Utility has also reduced its workforce by roughly two
percent. Guidance for 2009 earnings from operations excludes the
severance cost associated with the workforce reduction and three
other items impacting comparability. These four items are
forecasted to total between $(0.02) and $0.02 per share for the
year. When added to the guidance range for earnings per share from
operations, the net effect of these four items impacting
comparability results in 2009 GAAP guidance of $3.13 to $3.27 per
share. PG&E Corporation discloses historical financial results
and provides earnings per share guidance using "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 do not reflect the
normal course of operations. Earnings from operations are not a
substitute or alternative for net income after dividends on
preferred stock 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
calculated in accordance with GAAP). Supplemental Financial
Information: -- In addition to the financial information
accompanying this release, an expanded package of supplemental
financial and operational information for the quarter will be
furnished to the Securities and Exchange Commission and also will
be available shortly on PG&E Corporation's website
(http://www.pgecorp.com/). Conference Call with the Financial
Community to Discuss Third Quarter Results: -- Today's call at
11:30 a.m. Eastern time is open to the public on a listen-only
basis via webcast. Please visit http://www.pgecorp.com/ for more
information and instructions for accessing the webcast. The call
will be archived on the website. Also, a toll-free replay will be
accessible shortly after the live call through 9:00 p.m. Eastern
time, on November 5, 2009, by dialing 866-415-9493. International
callers may dial 585-419-6446. For both domestic and international
callers, a confirmation code 0805 will be required to access the
replay. This press release and the tables contain forward-looking
statements regarding management's guidance for PG&E
Corporation's 2009, 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 computer systems, and similar events that may occur
while operating and maintaining an electric and natural gas system
in a large service territory with varying geographic conditions,
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, that affect customer demand, or that damage or
disrupt the facilities, operations, or information technology and
computer 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 including the development of alternative energy
sources, or other reasons; -- operating performance of the
Utility's two nuclear generating units at the Diablo Canyon Power
Plant ("Diablo Canyon"), the availability of nuclear fuel, the
occurrence of unplanned outages at Diablo Canyon, or the temporary
or permanent cessation of operations at Diablo Canyon; -- whether
the Utility can maintain the cost savings that it has recognized
from operating efficiencies that it has achieved and identify and
successfully implement additional sustainable cost-saving measures;
-- whether the Utility incurs substantial expense to improve the
safety and reliability of its electric and natural gas systems; --
whether the Utility achieves the California Public Utilities
Commission's (CPUC) energy efficiency targets and recognizes any
incentives that the Utility may earn in a timely manner; -- the
impact of changes in federal or state laws, or their
interpretation, on energy policy and the regulation of utilities
and their holding companies; -- the impact of changing wholesale
electric or gas market rules, including the impact of future
changes ordered by the Federal Energy Regulatory Commission that
will be incorporated into the new day-ahead, hour-ahead, and
real-time wholesale electricity markets established by the
California Independent System Operator to restructure the
California wholesale electricity market; -- 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 2008 Annual
Report on Form 10-K and other reports filed with the Securities and
Exchange Commission. PG&E Corporation Condensed Consolidated
Statements of Income (in millions, except per share amounts)
(Unaudited) ----------- Three Months Ended Nine Months Ended
September 30, September 30, ------------- ------------- 2009 2008
2009 2008 ---- ---- ---- ---- Operating Revenues Electric $2,630
$2,880 $7,610 $8,039 Natural gas 605 794 2,250 2,946 --- --- -----
----- Total operating revenues 3,235 3,674 9,860 10,985 ----- -----
----- ------ Operating Expenses Cost of electricity 997 1,282 2,763
3,406 Cost of natural gas 134 351 879 1,613 Operating and
maintenance 1,047 983 3,144 3,010 Depreciation, amortization, and
decommissioning 450 419 1,298 1,240 --- --- ----- ----- Total
operating expenses 2,628 3,035 8,084 9,269 ----- ----- ----- -----
Operating Income 607 639 1,776 1,716 Interest income 1 23 27 82
Interest expense (174) (178) (533) (550) Other income (expense),
net 23 (14) 63 (4) --- --- --- --- Income Before Income Taxes 457
470 1,333 1,244 Income tax provision 136 163 376 413 --- --- ---
--- Net Income 321 307 957 831 Preferred stock dividend requirement
of subsidiary 3 3 10 10 --- --- --- --- Income Available for Common
Shareholders $318 $304 $947 $821 ==== ==== ==== ==== Weighted
Average Common Shares Outstanding, Basic 370 357 367 356 === ===
=== === Weighted Average Common Shares Outstanding, Diluted 388 358
386 357 === === === === Net Earnings Per Common Share, Basic $0.84
$0.83 $2.53 $2.25 ===== ===== ===== ===== Net Earnings Per Common
Share, Diluted $0.83 $0.83 $2.49 $2.24 ===== ===== ===== =====
Dividends Declared Per Common Share $0.42 $0.39 $1.26 $1.17 =====
===== ===== ===== Reconciliation of PG&E Corporation's Earnings
from Operations to Consolidated Income Available for Common
Shareholders in Accordance with Generally Accepted Accounting
Principles ("GAAP") Third Quarter and Year-to-Date, 2009 vs. 2008
(in millions, except per share amounts) Three months ended Nine
months ended September 30, September 30, ------------------------
------------------------ Earnings per Earnings per Common Share
Common Share Earnings (Diluted) Earnings (Diluted) ----------
----------- ---------- ----------- 2009 2008 2009 2008 2009 2008
2009 2008 ---- ---- ---- ---- ---- ---- ---- ---- PG&E
Corporation Earnings from Operations (1) $358 $304 $0.93 $0.83 $919
$821 $2.41 $2.24 Items Impacting Comparability: (2) Tax benefit (3)
10 - 0.03 - 66 - 0.18 - Recovery of hydro divestiture costs (4) - -
- - 28 - 0.07 - Accelerated work on gas system (5) (16) - (0.04) -
(32) - (0.08) - Severance costs (6) (34) - (0.09) - (34) - (0.09) -
--- --- ----- --- --- --- ----- --- PG&E Corporation Earnings
on a GAAP basis $318 $304 $0.83 $0.83 $947 $821 $2.49 $2.24 ====
==== ===== ===== ==== ==== ===== ===== 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 in
accordance with GAAP. 3. For the three and nine months ended
September 30, 2009, PG&E Corporation recognized $10 million and
$66 million, after-tax, respectively, for the interest and state
tax benefit related to the federal tax refund, as a result of the
approval by the Joint Committee of Taxation of deferred gain
treatment for power plant sales in 1998 and 1999. 4. For the nine
months ended September 30, 2009, PG&E Corporation recognized
$28 million, after-tax, related to the California Public Utilities
Commission's ("CPUC") authorized recovery of costs previously
incurred in connection with the Utility's hydroelectric generation
facilities. 5. For the three and nine months ended September 30,
2009, PG&E Corporation incurred $16 million and $32 million,
after-tax, respectively, for costs to perform accelerated
system-wide natural gas integrity surveys and associated remedial
work. 6. For the three and nine months ended September 30, 2009,
PG&E Corporation accrued $34 million, after-tax, of severance
costs related to the reduction of approximately 2% of the Utility's
workforce. Reconciliation of Pacific Gas and Electric Company's
Earnings from Operations to Consolidated Income Available for
Common Stock in Accordance with GAAP Third Quarter and
Year-to-Date, 2009 vs. 2008 (in millions) Three months Nine months
ended ended September 30, September 30, ------------- -------------
Earnings Earnings ------------- ------------- 2009 2008 2009 2008
---- ---- ---- ---- Pacific Gas and Electric Company Earnings from
Operations (1) $374 $318 $929 $860 Items Impacting Comparability:
(2) Tax benefit (3) 26 - 82 - Recovery of hydro divestiture costs
(4) - - 28 - Accelerated work on gas system (5) (16) - (32) -
Severance costs (6) (34) - (34) - --- --- --- --- Pacific Gas and
Electric Company Earnings on a GAAP basis $350 $318 $973 $860 ====
==== ==== ==== 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 in accordance with GAAP. 3. For
the three and nine months ended September 30, 2009, Pacific Gas and
Electric Company recognized $26 million and $82 million, after-tax,
respectively, for the interest and state tax benefit related to the
tax refund, as a result of the approval by the Joint Committee of
Taxation of deferred gain treatment for power plant sales in 1998
and 1999. 4. For the nine months ended September 30, 2009, Pacific
Gas and Electric Company recognized $28 million, after-tax, related
to the CPUC's authorized recovery of costs previously incurred in
connection with the Utility's hydroelectric generation facilities.
5. For the three and nine months ended September 30, 2009, Pacific
Gas and Electric Company incurred $16 million and $32 million,
after-tax, respectively, for costs to perform accelerated
system-wide natural gas integrity surveys and associated remedial
work. 6. For the three and nine months ended September 30, 2009,
Pacific Gas and Electric Company accrued $34 million, after-tax, of
severance costs related to the reduction of approximately 2% of the
Utility's workforce. Key Drivers of PG&E Corporation Earnings
per Common Share ("EPS") from Operations Third Quarter and
Year-to-Date, 2009 vs. 2008 ($/Share, Diluted) Q3 2008 EPS from
Operations (1) $0.83 Increase in rate base revenues 0.06 Expenses
for statewide and local initiatives (3) 0.03 Environmental
remediation 0.01 Uncollectibles expense, net 0.01 Core procurement
incentive mechanism 0.01 Miscellaneous items 0.02 Increase in
shares outstanding (0.04) ------ Q3 2009 EPS from Operations (1)
$0.93 ===== Q3 2008 YTD EPS from Operations (1) $2.24 Increase in
rate base revenues 0.19 Storm and outage expenses (2) 0.07 Expenses
for statewide and local initiatives (3) 0.03 Environmental
remediation (0.01) Uncollectibles expense, net (0.01) Increase in
shares outstanding (0.08) Miscellaneous items (0.02) ------ Q3 2009
YTD EPS from Operations (1) $2.41 ===== 1. See the preceding tables
for a reconciliation of EPS from operations to EPS on a GAAP basis.
2. Costs incurred due to storms and outages in 2008 with no similar
costs in 2009. 3. Costs incurred related to spending on statewide
and local ballot initiatives in 2008 with no similar costs in 2009.
PG&E Corporation EPS Guidance 2009 EPS Guidance Low High -----
----- EPS Guidance on an Earnings from Operations Basis $3.15 $3.25
Estimated Items Impacting Comparability (1) Tax benefit (2) 0.18
0.18 Recovery of hydro divestiture costs (3) 0.07 0.07 Accelerated
work on gas system (4) (0.16) (0.14) Severance costs (5) (0.11)
(0.09) ----- ----- Estimated EPS on a GAAP Basis $3.13 $3.27 =====
===== 2010 EPS Guidance Low High ----- ----- EPS Guidance on an
Earnings from Operations Basis $3.35 $3.50 Estimated Items
Impacting Comparability - - ----- ----- Estimated EPS on a GAAP
Basis $3.35 $3.50 ===== ===== 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. Items impacting
comparability reconcile earnings from operations with Consolidated
Income Available for Common Shareholders in accordance with GAAP.
2. In June 2009, the Joint Committee of Taxation approved deferred
gain treatment for power plant sales in 1998 and 1999. This amount
recognizes the interest and state tax benefit related to the tax
refund. 3. On April 16, 2009, the CPUC authorized recovery of costs
previously incurred in connection with the Utility's hydroelectric
generation facilities. 4. Costs to perform accelerated system-wide
gas integrity surveys and associated remedial work. 5. Severance
costs related to the reduction of approximately 2% of the Utility's
workforce. Management's guidance for PG&E Corporation's 2009,
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 2008 Annual
Report on Form 10-K and other reports filed with the Securities and
Exchange Commission. DATASOURCE: PG&E Corporation CONTACT:
Corporate Relations of PG&E Corporation, 1-800-743-6397 Web
Site: http://www.pgecorp.com/
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