- Net income after dividends on preferred stock reported under GAAP
for 2009 was $3.20 per share. Net income for the fourth quarter was
$0.71 per share. - On a non-GAAP basis, earnings from operations
for 2009 were $3.21 per share, and for the fourth quarter were
$0.80 per share. - Guidance for earnings from operations is
reaffirmed for 2010 and 2011. - PG&E Corporation is raising its
quarterly common stock dividend from $0.42 per share to $0.455 per
share. SAN FRANCISCO, Feb. 19 /PRNewswire-FirstCall/ -- PG&E
Corporation's (NYSE: PCG) consolidated net income after dividends
on preferred stock (also called "income available for common
shareholders") for 2009 was $1.22 billion, or $3.20 per share, as
reported in accordance with generally accepted accounting
principles (GAAP). This compares with 2008 results of $1.34
billion, or $3.63 per share, which included the one-time benefits
of a settlement of federal tax audits for years 2001-2004 which
totaled $257 million, or $0.68 per share. On a non-GAAP basis,
PG&E Corporation's earnings from operations were $3.21 per
share for 2009, compared with $2.95 per share in 2008 (which
excludes the benefits of the tax settlement). Earnings from
operations for 2009 exclude the impact of several one-time items --
tax refunds for years 1998-1999, the recovery of previously
incurred costs related to the Utility's hydroelectric generation
assets, costs to perform accelerated work on the natural gas
system, and certain employee severance costs. The net impact of
these items for 2009 was ($0.01) per share. For the fourth quarter
of 2009, PG&E Corporation's consolidated net income was $273
million, or $0.71 cents per share, compared with $517 million, or
$1.37 per share, in the same quarter of 2008 when the benefits of
the tax settlement were recognized. On a non-GAAP earnings from
operations basis, PG&E Corporation's results in the fourth
quarter of 2009 were $0.80 per share, compared with $0.70 per share
in the fourth quarter of 2008. The majority of the higher
year-over-year earnings from operations results from additional
revenues generated by new capital investments in the Utility's
infrastructure. The Utility's capital expenditures totaled $3.9
billion for the year, increasing the asset base on which the
Utility is allowed to earn its authorized return. In addition to
higher revenues from new capital investments, fourth quarter
earnings from operations reflect a number of smaller, positive
items for recovery of previously incurred costs and improved
operational performance. "We posted solid earnings for 2009,
reflecting an ongoing commitment to invest in our systems and our
people for the benefit of PG&E's customers, communities and
shareholders," said Peter A. Darbee, Chairman, CEO and President of
PG&E Corporation. "We will continue these initiatives in 2010
with the goal of always delivering better, faster more
cost-effective service and showing leadership on the environment,
including efforts to address climate change." Earnings Guidance
PG&E Corporation reaffirms its previous guidance for 2010
earnings from operations in the range of $3.35-$3.50 per share 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 operational efficiencies in amounts consistent with low
and high case earnings ranges. Guidance for 2010 earnings from
operations excludes forecasted costs to support a state-wide ballot
initiative requiring local governments to gain voter support before
using taxpayer money to establish electric service. This one-time
item reflects activities outside of PG&E's regular utility
operations and is expected to impact total GAAP earnings between
$0.06 and $0.09 per share for the year. Guidance for 2010 earnings
from operations does not exclude normal ongoing costs related to
competitive issues. PG&E Corporation discloses historical
financial results and bases guidance on "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 management believes do not reflect
the normal course of operations. Earnings from operations are not a
substitute or alternative for consolidated net income 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 based on consolidated net income
in accordance with GAAP). Common Stock and Preferred Stock
Dividends PG&E Corporation is raising its quarterly common
stock dividend to $0.455 per share from $0.42 cents per share,
beginning with the first quarter 2010 payment. The dividend is
payable on April 15, 2010, to shareholders of record on March 31,
2010. This increases the annual dividend rate to $1.82 from the
previous $1.68 level. In addition, the Utility declared dividends
on all outstanding series of its preferred stock for the three
months ending April 30, 2010, payable on May 15, 2010, to
shareholders of record on April 30, 2010. In order to be considered
a shareholder of record for the common and preferred dividend
payments, you must have purchased the stock at least three trading
days before the applicable record date. The Utility will pay
dividends on its eight series of preferred stock as follows: First
Preferred Stock, $25 Par Quarterly Dividend to be Paid Per Value
Share ------------------------------
--------------------------------- Redeemable 5.00% $0.31250 5.00%
Series A $0.31250 4.80% $0.30000 4.50% $0.28125 4.36% $0.27250
Non-Redeemable 6.00% $0.37500 5.50% $0.34375 5.00% $0.31250
Supplemental Financial Information: -- In addition to the financial
information accompanying this release, an expanded package of
supplemental financial material 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/). March 1
Analyst Conference -- PG&E Corporation senior management will
provide an overview of the business and discuss the company's
strategic focus, capital spending needs and financial outlook at
its upcoming Investor Conference with members of the financial
community on Monday, March 1, 2010, in New York City. The
information to be provided at the conference underlies the 2010 and
2011 guidance that is reaffirmed today. The public may listen to
the event via simultaneous webcast beginning at 2:00 p.m. EST at
(http://www.pgecorp.com/investors/investor_info/conference/index.shtml).
Because the meeting so closely follows today's earnings
announcement, PG&E Corporation will not hold its regular
quarterly conference call. This press release contains
forward-looking statements regarding management's guidance for
PG&E Corporation's 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 systems, and similar events 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 or vandalism,
that affect customer demand, or that damage or disrupt the
facilities, operations, or information technology and 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 that include the
development of alternative technologies that enable customers to
increase their reliance on self-generation, or other reasons; --
the occurrence of unplanned outages at the Utility's two nuclear
generating units at Diablo Canyon, the availability of nuclear
fuel, the outcome of the Utility's application to renew the
operating licenses for Diablo Canyon, and potential changes in laws
or regulations with respect to the storage of spent nuclear fuel,
security, safety or other matters associated with the operations at
Diablo Canyon; -- whether the Utility can maintain the cost savings
it has recognized from operating efficiencies it has achieved and
identify and successfully implement additional sustainable
cost-saving measures; -- whether the Utility earns incentive
revenues or incurs obligations under incentive ratemaking
mechanisms; -- the impact of federal or state laws, or their
interpretation, on energy policy and the regulation of utilities
and their holding companies; -- whether the new wholesale
electricity markets in California will continue to function
effectively and whether the Utility can successfully implement
"dynamic pricing" for its electricity customers; -- 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 2009 Annual
Report on Form 10-K and other reports filed with the Securities and
Exchange Commission. PG&E Corporation Consolidated Statements
of Income (in millions, except per share amounts) Year ended
December 31, ---------------------------------- 2009 2008 2007 ----
---- ---- Operating Revenues Electric $10,257 $10,738 $9,480
Natural gas 3,142 3,890 3,757 ------ ------ ------ Total operating
revenues 13,399 14,628 13,237 ------ ------ ------ Operating
Expenses Cost of electricity 3,711 4,425 3,437 Cost of natural gas
1,291 2,090 2,035 Operating and maintenance 4,346 4,201 3,881
Depreciation, amortization, and decommissioning 1,752 1,651 1,770
------ ------ ------ Total operating expenses 11,100 12,367 11,123
------ ------ ------ Operating Income 2,299 2,261 2,114 Interest
income 33 94 164 Interest expense (705) (728) (762) Other income
(expense), net 67 (4) 43 --- --- --- Income Before Income Taxes
1,694 1,623 1,559 Income tax provision 460 425 539 --- --- ---
Income From Continuing Operations 1,234 1,198 1,020 Discontinued
Operations NEGT income tax benefit - 154 - --- --- --- Net Income
1,234 1,352 1,020 Preferred stock dividend requirement of
subsidiary 14 14 14 --- --- --- Income Available for Common
Shareholders $1,220 $1,338 $1,006 ====== ====== ====== Weighted
Average Common Shares Outstanding, Basic 368 357 351 === === ===
Weighted Average Common Shares Outstanding, Diluted 386 358 353 ===
=== === Earnings Per Common Share from Continuing Operations, Basic
$3.25 $3.23 $2.79 ===== ===== ===== Net Earnings Per Common Share,
Basic $3.25 $3.64 $2.79 ===== ===== ===== Earnings Per Common Share
from Continuing Operations, Diluted $3.20 $3.22 $2.78 ===== =====
===== Net Earnings Per Common Share, Diluted $3.20 $3.63 $2.78
===== ===== ===== Dividends Declared Per Common Share $1.68 $1.56
$1.44 ===== ===== ===== Reconciliation of PG&E Corporation's
Earnings from Operations to Consolidated Income Available for
Common Shareholders in Accordance with Generally Accepted
Accounting Principles ("GAAP") Fourth Quarter and Year-to-Date,
2009 vs. 2008 (in millions, except per share amounts) Three months
ended Twelve months ended December 31, December 31,
------------------------------------------------------ Earnings
Earnings per per Common Common Share Share Earnings (Diluted)
Earnings (Diluted) 2009 2008 2009 2008 2009 2008 2009 2008 ----
---- ---- ---- ---- ---- ---- ---- PG&E Corporation Earnings
from Operations (1) $304 $260 $0.80 $0.70 $1,223 $1,081 $3.21 $2.95
Items Impacting Comparability: (2) Tax benefit (3) - - - - 66 -
0.18 - Recovery of hydro divestiture costs (4) - - - - 28 - 0.07 -
Accelerated work on gas system (5) (27) - (0.08) - (59) - (0.16) -
Severance costs (6) (4) - (0.01) - (38) - (0.10) - Tax settlement
(7) - 257 - 0.67 - 257 - 0.68 ---- ---- ----- ----- ------ ------
----- ----- PG&E Corporation Earnings on a GAAP basis $273 $517
$0.71 $1.37 $1,220 $1,338 $3.20 $3.63 ==== ==== ===== ===== ======
====== ===== ===== 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 twelve months ended December 31, 2009, PG&E
Corporation recognized $66 million, after-tax, for the interest and
state tax benefit associated with a federal tax refund, for 1998
and 1999. 4. For the twelve months ended December 31, 2009,
PG&E Corporation recognized $28 million, after-tax, following
the California Public Utilities Commission's ("CPUC") decision
authorizing PG&E Corporation's subsidiary, Pacific Gas and
Electric Company ("Utility"), to recover costs previously incurred
in connection with its hydroelectric generation facilities. 5. For
the three and twelve months ended December 31, 2009, PG&E
Corporation incurred $27 million and $59 million, after-tax,
respectively, of costs the Utility incurred to perform accelerated
system-wide natural gas integrity surveys and associated remedial
work. 6. For the three and twelve months ended December 31, 2009,
PG&E Corporation accrued $4 million and $38 million, after-tax,
respectively, of severance costs related to the elimination of
approximately 2% percent of the Utility's workforce. 7. For the
three and twelve months ended December 31, 2008, PG&E
Corporation recognized $257 million of net income resulting from a
settlement of tax audits for tax years 2001 through 2004. Of this
amount, $154 million was related to PG&E Corporation's former
subsidiary, National Energy & Gas Transmission, Inc., and was
recorded as income from discontinued operations. Reconciliation of
Pacific Gas and Electric Company's Earnings from Operations to
Consolidated Income Available for Common Stock in Accordance with
GAAP Fourth Quarter and Year-to-Date, 2009 vs. 2008 (in millions)
Three months ended Twelve months ended December 31, December 31,
------------------ ------------------- Earnings Earnings --------
-------- 2009 2008 2009 2008 ---- ---- ---- ---- Pacific Gas and
Electric Company Earnings from Operations (1) $294 $265 $1,239
$1,125 Items Impacting Comparability: (2) Tax benefit (3) - - 66 -
Recovery of hydro divestiture costs (4) - 28 - Accelerated work on
gas system (5) (27) - (59) - Severance costs (6) (4) - (38) - Tax
settlement (7) - 60 - 60 ---- ---- ------ ------ Pacific Gas and
Electric Company Earnings on a GAAP basis $263 $325 $1,236 $1,185
==== ==== ====== ====== 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
net income as reported in accordance with GAAP. 3. For the twelve
months ended December 31, 2009, the Utility recognized $66 million,
after-tax, for the interest and state tax benefit associated with a
federal tax refund, for 1998 and 1999. 4. For the twelve months
ended December 31, 2009, the Utility recognized $28 million,
after-tax, following the CPUC's decision authorizing the Utility to
recover costs previously incurred in connection with its
hydroelectric generation facilities. 5. For the three and twelve
months ended December 31, 2009, the Utility incurred $27 million
and $59 million, after-tax, respectively, of costs to perform
accelerated system-wide natural gas integrity surveys and
associated remedial work. 6. For the three and twelve months ended
December 31, 2009, the Utility accrued $4 million and $38 million,
after-tax, respectively, of severance costs related to the
elimination of approximately 2% percent of the Utility's workforce.
7. For the three and twelve months ended December 31, 2008, the
Utility recognized net income of $60 million, a portion of the $257
million in net income recognized by PG&E Corporation resulting
from a settlement of tax audits for tax years 2001 through 2004.
Key Drivers of PG&E Corporation Earnings per Common Share from
Operations Fourth Quarter and Year-to-Date, 2009 vs. 2008 ($/Share,
Diluted) Q4 2008 EPS from Operations (1) $0.70 Increase in rate
base revenues 0.05 Recovery of wholesale electric market design
costs 0.02 Lower long-term disability claims rate 0.02 Expenses for
statewide and local initiatives (2) 0.01 Uncollectibles expense,
net 0.01 Recovery of 2008 wildfire expenses 0.01 Gas transmission
revenues 0.01 Miscellaneous items 0.04 Energy efficiency incentive
revenues (0.01) Increase in shares outstanding (0.02) Nuclear
refueling outage (3) (0.04) ----- Q4 2009 EPS from Operations (1)
$0.80 ===== 2008 YTD EPS from Operations (1) $2.95 Increase in rate
base revenues 0.24 Storm and outage expenses (2) 0.07 Expenses for
statewide and local initiatives (2) 0.04 Recovery of wholesale
electric market design costs 0.02 Lower long-term disability claims
rate 0.01 Recovery of 2008 wildfire expenses 0.01 Gas transmission
revenues 0.01 Environmental remediation (0.01) Energy efficiency
incentive revenues (0.01) Increase in shares outstanding (0.10)
Miscellaneous items (0.02) ----- 2009 YTD EPS from Operations (1)
$3.21 ===== 1. See Table 2 for a reconciliation of EPS from
operations to EPS on a GAAP basis. 2. Costs incurred in 2008 with
no similar costs in 2009. 3. Dual refueling outage year with extra
revenues collected each quarter to offset the expense of the second
refueling. PG&E Corporation EPS Guidance 2010 EPS Guidance Low
High --- ---- EPS Guidance on an Earnings from Operations Basis
$3.35 $3.50 Estimated Items Impacting Comparability - - Taxpayer
Right to Vote (1) (0.09) (0.06) ----- ----- Estimated EPS on a GAAP
Basis $3.26 $3.44 ===== ===== 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. Expenses related to
the California Taxpayers' Right to Vote Act. Management's guidance
for PG&E Corporation's 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 2009 Annual Report on Form 10-K and other reports filed
with the Securities and Exchange Commission. DATASOURCE: PG&E
Corporation CONTACT: Corporate Affairs of PG&E Corporation,
1-800-743-6391 Web Site: http://www.pgecorp.com/
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