UtiliCorp Second-Quarter Earnings Per Share Rise 290 Percent; Aquila's Strong Results and IPO Drive Results

Business Wire, August 9, 2001

Business Editors

KANSAS CITY, Mo.--(BUSINESS WIRE)--Aug. 9, 2001

UtiliCorp United (NYSE: UCU) today announced that for the 2001 second quarter, earnings per fully diluted common share were $1.21, up 290 percent from $.31 in the 2000 second quarter.

The increase primarily reflects strong results in the Aquila, Inc. (NYSE: ILA) business and a gain on the sale of Aquila common stock in April 2001. UtiliCorp now owns about 80 percent of Aquila's outstanding common shares. UtiliCorp's earnings available for common shares in this year's second quarter were $143.2 million, about 389 percent more than the $29.3 million earned a year earlier.

Sales for the quarter were $10.4 billion, up 79 percent from $5.8 billion a year earlier. Sales for the 12 months ended June 30, 2001, were $41.2 billion, up 94 percent from $21.2 billion in the prior 12 months.

"We completed the initial public offering of our energy merchant and risk management business, Aquila, Inc., in April 2001," said Richard C. Green, Jr., UtiliCorp chairman and chief executive officer. "That business is continuing the very strong performance it demonstrated in the first quarter."

"Aquila's financial results for this year's first half already exceed its 2000 full-year earnings," said Robert K. Green, UtiliCorp president and chief operating officer and chairman of Aquila. "We are especially pleased that Aquila's growth is coming from all of its businesses, not just a single segment.

"UtiliCorp's domestic networks business continues on track for our targeted 3-5 percent growth," he said, "and our international networks continued to help fuel our growth in earnings before interest and taxes (EBIT), contributing a $17.3 million increase to second-quarter EBIT, after adjustment for the deconsolidation of our New Zealand investments in June 2000."

EBIT for the second quarter of 2001 was $334.0 million, up 221 percent from $103.9 million a year earlier.

Average diluted common shares outstanding in the 2001 second quarter were approximately 118.2 million versus 93.0 million in the same period of 2000. This increase resulted from the issuance of 6.6 million shares in connection with the St. Joseph Light & Power acquisition on December 31, 2000, and UtiliCorp's 11.5 million common share offering in March 2001.

The following discussion of results by business segment is based on EBIT:

Aquila

This year's second-quarter EBIT from Aquila operations was $283.9 million, up from $40.7 million a year earlier.

Wholesale Services -- Sound execution, combined with favorable market conditions, were key factors resulting in higher EBIT contributions from Wholesale Services. In addition, Aquila's structured products and services continued to post excellent EBIT growth -- up 91 percent in the 2001 second quarter compared to a year earlier, driven by a 21 percent increase in deal flow.

Capacity Services -- The increase in EBIT from Capacity Services is primarily due to earnings from new generation coming on line. Aquila's December 2000 acquisition of interests in six power plants through its purchase of GPU International has continued to provide stronger-than-expected operating results.

The initial public offering of 19,975,000 Class A Aquila common shares closed on April 27, 2001, resulting in a pre-tax gain for UtiliCorp of approximately $110.8 million, or $.50 per share. Of the 19,975,000 shares, UtiliCorp sold 5,750,000 and Aquila sold 14,225,000. Total net proceeds from the offering were about $446 million.

Networks

United States -- UtiliCorp's U.S. energy distribution networks had EBIT of $17.6 million in the second quarter of 2001 compared to $17.1 million in the 2000 period. The contribution of the St. Joseph Light & Power division was offset by charges for bad debts related to higher winter gas costs and general economic conditions in UtiliCorp's service territories.

International -- After adjustment for the June 2000 deconsolidation of UtiliCorp's New Zealand investments, EBIT from international networks increased $17.3 million or 50 percent compared to the 2000 second quarter. The purchase of an electric network in Alberta in August 2000 was the main reason for the increase. Australian and New Zealand properties continue to perform well in spite of unfavorable weather and setbacks in the Uecomm broadband networks business. Results from AlintaGas are exceeding expectations. UtiliCorp and its 34 percent-owned United Energy affiliate jointly acquired a 45 percent interest in AlintaGas in late 2000.

Services

UtiliCorp's Services segment includes its 35 percent interest in the contracting firm Quanta Services, Inc. (NYSE: PWR). The contribution of the Quanta investment to EBIT decreased compared to the prior year's second quarter as a result of eliminating UtiliCorp's management fee in the 2000 fourth quarter, and due to Quanta's recent earnings reports that indicate a continuing slowdown in its telecom-related business. The 2001 second-quarter contribution was offset by start-up costs associated with the build-out of UtiliCorp's broadband networks in two Kansas City suburbs. The dilutive impact of the broadband business has peaked and its results are expected to improve going forward.