- Net income after dividends on preferred stock reported under GAAP
was $388 million, or $1.02 per share. - On a non-GAAP basis,
earnings from operations were $315 million, or $0.83 per share. -
Guidance for earnings from operations is reaffirmed for 2009, 2010,
and 2011. SAN FRANCISCO, Aug. 5 /PRNewswire-FirstCall/ -- PG&E
Corporation's (NYSE: PCG) net income after dividends on preferred
stock (also called "income available for common shareholders") was
$388 million, or $1.02 per share, in the second quarter ended June
30, 2009, as reported in accordance with generally accepted
accounting principles (GAAP). The second quarter included a $0.15
per share item relating to a tax refund and a $0.07 per share item
relating to the recovery of costs incurred in prior years. On a
non-GAAP basis, PG&E Corporation's earnings from operations
were $315 million, or $0.83 per share, in the second quarter of
2009. In the same period last year, net income after dividends on
preferred stock and earnings from operations were both $293
million, or $0.80 per share. The quarter-over-quarter increase in
earnings from operations primarily reflects higher authorized
revenues associated with additional capital investments in Pacific
Gas and Electric Company's (Utility) core infrastructure, partially
offset by expenses for environmental remediation activities. "We
continue to focus on strengthening our operations, investing in our
energy infrastructure, and providing excellent customer service,"
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 11.45 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 ranges provided at the company's February
2009 Investor Conference. Guidance for 2009 excludes three items
impacting comparability forecasted to total between $0.06 and $0.08
per share for the year. Two of these items - prior year tax refunds
approved by the Internal Revenue Service, and the recovery of costs
previously incurred in connection with California Public Utilities
Commission (CPUC)-mandated efforts to determine the market value of
the Utility's hydroelectric generation facilities in 2000 and 2001
- have been recognized in the second quarter, as noted above. The
third item consists of the Utility's projected costs of
accelerating natural gas system integrity surveys and associated
maintenance work. When added to earnings per share guidance on an
earnings from operations basis, the net effect of these items
impacting comparability results in 2009 GAAP guidance of $3.21 to
$3.33 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 Second Quarter Results: -- Today's call at
10:30 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 August 12, 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; -- the effect of
weather, storms, earthquakes, floods, disease, other natural
disasters, explosions, fires, accidents, mechanical breakdowns,
disruption of information technology and computer systems, acts of
terrorism, and other events or hazards on the Utility's facilities
and operations, its customers, and 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 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
Federal Energy Regulatory Commission-ordered changes 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 -- the 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) PG&E
CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
----------- Three Months Ended Six Months Ended June 30, June 30,
-------- -------- 2009 2008 2009 2008 ---- ---- ---- ---- Operating
Revenues Electric $2,554 $2,645 $4,980 $5,159 Natural gas 640 933
1,645 2,152 --- --- ----- ----- Total operating revenues 3,194
3,578 6,625 7,311 ----- ----- ----- ----- Operating Expenses Cost
of electricity 883 1,097 1,766 2,124 Cost of natural gas 188 487
745 1,262 Operating and maintenance 1,038 991 2,097 2,027
Depreciation, amortization, and decommissioning 429 419 848 821 ---
--- --- --- Total operating expenses 2,538 2,994 5,456 6,234 -----
----- ----- ----- Operating Income 656 584 1,169 1,077 Interest
income 17 33 26 59 Interest expense (178) (185) (359) (372) Other
income, net 22 5 40 10 --- --- --- --- Income Before Income Taxes
517 437 876 774 Income tax provision 125 140 240 250 --- --- ---
--- Net Income 392 297 636 524 Preferred stock dividend requirement
of subsidiary 4 4 7 7 --- --- --- --- Income Available for Common
Shareholders $388 $293 $629 $517 ==== ==== ==== ==== Weighted
Average Common Shares Outstanding, Basic 368 356 366 355 === ===
=== === Weighted Average Common Shares Outstanding, Diluted 369 357
367 356 === === === === Net Earnings Per Common Share, Basic $1.03
$0.80 $1.68 $1.42 ===== ===== ===== ===== Net Earnings Per Common
Share, Diluted $1.02 $0.80 $1.67 $1.42 ===== ===== ===== =====
Dividends Declared Per Common Share $0.42 $0.39 $0.84 $0.78 =====
===== ===== ===== Reconciliation of PG&E Corporation's Earnings
from Operations to Consolidated Income Available for Common
Shareholders in Accordance with Generally Accepted Accounting
Principles (GAAP) Second Quarter and Year-to-Date, 2009 vs. 2008
(in millions, except per share amounts) Three months Six months
ended June 30, ended June 30, -------------- --------------
Earnings Earnings per Common per Common Share Share Earnings
(Diluted) Earnings (Diluted) ---------- ----------- ----------
----------- 2009 2008 2009 2008 2009 2008 2009 2008 ---- ---- ----
---- ---- ---- ---- ---- PG&E Corporation Earnings from
Operations (1) $315 $293 $0.83 $0.80 $561 $517 $1.49 $1.42 Items
Impacting Comparability: (2) Tax refund (3) 56 - 0.15 - 56 - 0.15 -
Recovery of Hydro divestiture 28 - 0.07 - 28 - 0.07 - costs (4)
Accelerated work on gas system (5) (11) - (0.03) - (16) - (0.04) -
---- --- ------ --- ---- --- ------ --- PG&E Corporation
Earnings on a GAAP basis $388 $293 $1.02 $0.80 $629 $517 $1.67
$1.42 ==== ==== ===== ===== ==== ==== ===== ===== 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 three and six months
ended June 30, 2009, PG&E Corporation recognized $56 million,
after-tax, for the interest 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 three and six months ended June 30, 2009,
PG&E Corporation recognized $28 million, after-tax, related to
the California Public Utilities Commission's ("CPUC") authorized
recovery of costs incurred in connection with efforts to determine
the market value of hydroelectric generation facilities in
2000-2001. 5. For the three and six months ended June 30, 2009,
PG&E Corporation incurred $11 million and $16 million,
respectively, after-tax, for costs to perform accelerated
system-wide natural gas integrity surveys and associated remedial
work. Reconciliation of Pacific Gas and Electric Company's Earnings
from Operations to Consolidated Income Available for Common Stock
in Accordance with GAAP Second Quarter and Year-to-Date, 2009 vs.
2008 (in millions) Three months Six months ended June 30, ended
June 30, -------------- -------------- Earnings Earnings --------
-------- 2009 2008 2009 2008 ---- ---- ---- ---- Pacific Gas and
Electric Company Earnings from Operations (1) $314 $309 $555 $542
Items Impacting Comparability: (2) Tax Refund (3) 56 - 56 -
Recovery of hydro divestiture costs (4) 28 - 28 - Accelerated work
on gas system (5) (11) - (16) - ---- --- ---- --- Pacific Gas and
Electric Company Earnings on a GAAP basis $387 $309 $623 $542 ====
==== ==== ==== 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 three and six months ended June 30, 2009, Pacific
Gas and Electric Company recognized $56 million, after-tax, for the
interest 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 three
and six months ended June 30, 2009, Pacific Gas and Electric
Company recognized $28 million, after-tax, related to the CPUC's
authorized recovery of costs incurred in connection with efforts to
determine the market value of hydroelectric generation facilities
in 2000-2001. 5. For the three and six months ended June 30, 2009,
Pacific Gas and Electric Company incurred $11 million and $16
million, respectively, after-tax, for costs to perform accelerated
system-wide natural gas integrity surveys and associated remedial
work. PG&E Corporation Earnings per Common Share ("EPS") from
Operations Second Quarter and Year-to-Date, 2009 vs. 2008 ($/Share,
Diluted) Q2 2008 EPS from Operations (1) $0.80 Increase in rate
base revenues 0.06 Miscellaneous items 0.02 Environmental
remediation (0.02) Increase in shares outstanding (0.03) -----
$0.83 Q2 2009 EPS from Operations (1) ===== Q2 2008 YTD EPS from
Operations (1) $1.42 Increase in rate base revenues 0.13 Storm and
outage expenses (2) 0.07 Severance (0.01) Environmental remediation
(0.02) Uncollectibles expense, net (0.02) Increase in shares
outstanding (0.04) Miscellaneous items (0.04) ----- $1.49 Q2 2009
YTD EPS from Operations (1) ===== 1. For a reconciliation of EPS
from operations to EPS on a GAAP basis, see table titled
Reconciliation of PG&E Corporation's Earnings From Operations
to Consolidated Income Available for Common Shareholders in
Accordance with GAAP. 2. Costs incurred due to storms and outages
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 refunds (2) 0.15 0.15 Recovery of
hydro divestiture costs (3) 0.07 0.07 Accelerated work on gas
system (4) (0.16) (0.14) ----- ----- Estimated EPS on a GAAP Basis
$3.21 $3.33 ===== ===== 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 benefit related to the federal tax refund.
3. On April 16, 2009, the CPUC authorized recovery of costs
incurred in connection with efforts to determine the market value
of hydroelectric generation facilities. 4. Forecast costs to
perform accelerated system-wide gas integrity surveys and
associated remedial work. 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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