Aquila Third-Quarter Earnings Per Share Rise 37%, Reflecting Strong Client Services and Capacity Services

Business Wire, Nov 5, 2001

Business Editors

KANSAS CITY, Mo.--(BUSINESS WIRE)--Nov. 5, 2001

Aquila, Inc. (NYSE:ILA) announced today third-quarter net income of $37.2 million, or $.37 per share, an increase of 37 percent over the prior year's third quarter earnings of $.27 per share, or $23 million of net income. Earnings before interest and taxes (EBIT) were $51.7 million, up 27 percent from $40.8 million a year earlier. Third-quarter sales increased 10 percent to $8.8 billion, up from $8.0 billion a year ago.

"Aquila has demonstrated its ability to continue creating shareholder value during a variety of market cycles," said Robert K. Green, chairman of Aquila and president and chief operating officer of UtiliCorp United (NYSE:UCU), which owns approximately 80 percent of Aquila's outstanding common shares.

"Our business model of partnering with clients continues to be validated through strong demand for our products," said Keith Stamm, Aquila's chief executive officer. "EBIT from our Client Services business increased 60 percent and the number of product sales increased by 48 percent. Outstanding execution, robust client demand and excellent asset management have been constant themes for us this year."

Wholesale Services

Aquila's Wholesale Services segment, consisting of the Commodity Services and Client Services businesses, had EBIT of $30.7 million, up $1.2 million from $29.5 million in last year's third quarter. The 2000 third quarter was the beginning of a robust, volatile commodity market that allowed Aquila to capture significant value within its Commodity Services business. As expected, gas and power commodity markets have settled down, clients have started to focus on how to minimize exposure to commodity risk and Aquila has seen an increase in its client-focused businesses. Commodity Services third-quarter EBIT declined $7.5 million to $7.4 million compared to $14.9 million in the 2000 third quarter. This decline was more than offset by the increased growth in Client Services, which saw EBIT increase 60 percent to $23.3 from $14.6 million in last year's period.

Capacity Services

Third-quarter EBIT from the Capacity Services segment was $21.0 million in 2001 compared to $11.3 million in 2000. Aquila acquired interests in six power plants in December 2000, when it purchased the assets of GPU International. Operating results from those projects have continued to be stronger than expected. Aquila's operating portfolio of generation is approximately two-thirds hedged for the next two years and 50-percent hedged through 2008.

In the 2001 quarter, Aquila acquired a high-performance, quick-cycle storage facility in Lodi, California. When completed late this year, the facility will be able to store up to about 12 billion cubic feet of natural gas. With a planned injection rate of 400 million cubic feet per day (MMcf/d) and withdrawal rate of 500 MMcf/d, the facility will be able to cycle its inventory up to six times a year. By comparison, most existing storage facilities located in California can cycle only one to two times annually. Lodi storage is expected to contribute to Capacity Services results in 2002.

Webcast

Aquila's chairman, chief executive officer and chief financial officer will discuss third-quarter results and full-year 2001 outlook on Monday, November 5, at 2:00 p.m. Eastern Time in a live webcast. To access the webcast via the Internet, go to Aquila's website at www.aquila.com and click on "Investor Relations" at the bottom of the screen, then click on "Webcasts" for the link to the live webcast. Listeners should allow five minutes to register and access the presentation. For those unable to listen to the live broadcast, replays will be available for two weeks, beginning approximately one hour after the presentation, using the same access method.

Based in Kansas City, Aquila is one of the top wholesalers of electricity and natural gas in North America, is an innovative provider of risk management products and services and owns and controls a diverse portfolio of merchant assets, including power plants, gas storage, pipeline, and processing facilities, and other complementary merchant infrastructure. Aquila also provides wholesale energy services in the United Kingdom, Scandinavia and Germany. Additional information is available at www.aquila.com. Aquila is an 80-percent-owned subsidiary of UtiliCorp United (NYSE:UCU), an international energy company with more than 4 million customers across the U.S. and in Canada, the U.K., New Zealand and Australia.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995

This press release contains forward-looking statements including statements about our future financial performance and our projected business results. Naturally, all forward-looking statements involve risk and uncertainty and actual results or events could be materially different. Although Aquila believes that its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved. Important factors that could cause actual results to differ include: unusual weather conditions; economic and financial market conditions, including changes in exchange rates, interest rates, and commodity prices; the success of our growth strategy; competition in the markets in which our businesses operate; and changes in applicable laws, regulations or rules governing energy, environmental, tax or accounting matters. In light of these risks, uncertainties, and assumptions, the forward-looking events discussed might not occur. Please review the company's registration statement on Form S-1, its latest quarterly report on Form 10-Q, any current reports on Form 8-K and recent press releases for other important factors that could cause results to differ materially from those in any such forward-looking statements. Information in these archived materials may not be current and may be superseded by more recent information published by Aquila.