TransAlta achieves annual availability targets for 2012, announces fourth quarter, and files year end disclosure documents

Wed Feb 27, 2013 7:45am EST

* Reuters is not responsible for the content in this press release.



--  Adjusted fleet availability was in line with our annual target of 89 to
    90 per cent at 89.4 per cent for the quarter and 90.0(1) per cent for
    the year 
--  Comparable EBITDA(2,3,4) increased to $310 million for the quarter, up
    $43 million from the same period in 2011 driven by solid results from
    generation and a full quarter contribution from the Solomon acquisition;
    Comparable EBITDA for the full year was $1,014 million 
--  Operations Maintenance and Administration ("OM&A") declined 10 per cent
    year over year, or $52 million, compared to our target reduction of 5
    per cent 
--  Energy Trading delivered $13 million of gross margin in the fourth
    quarter, and $3 million for the year 
--  Funds From Operations(3,4) increased to $205 million for the quarter, up
    $16 million from the same period in 2011; Funds From Operations for the
    full year were $776 million

    TransAlta Corporation ("TransAlta") (TSX:TA) (NYSE:TAC) today reported
2012 fourth quarter comparable earnings of $54 million ($0.21 per share),
up from $29 million ($0.13 per share) in the fourth quarter of 2011. Net
earnings attributable to common shareholders for the fourth quarter of
2012 were $38 million ($0.15 per share). 

    The increase in comparable earnings for 2012 was driven by strong fleet
availability, the addition of the Solomon acquisition and lower OM&A
costs, partially offset by higher planned outages at the Alberta coal
Power Purchase Arrangement ("PPA") facilities, Genesee Unit 3 and lower
Energy Trading results. Fourth quarter 2012 net earnings were lower than
comparable earnings primarily due to the impact of de-designation of
hedges and corporate realignment charges incurred to reposition TransAlta
for strategic growth.

    "TransAlta's fourth quarter has shown promising gains," said Dawn
Farrell, TransAlta President and CEO. "This return to more normalized
results is a positive step in the right direction and a good starting
point for 2013. 2012 marked a year of substantial progress for TransAlta.
We have stayed the course and completed what we said we would do,
including setting the fleet up for end of life and realigning the company
to ensure continuous focus on operational excellence and growth. These
efforts will carry forward into the future and are expected to reduce
costs by approximately $25 to $30 million on an annualized basis by the
end of 2013."

    (1) Adjusted for economic dispatching at Centralia.

    (2) EBITDA refers to Earnings before interest, taxes, depreciation and

    (3) Comparable earnings (loss), comparable earnings (loss) per share,
comparable EBITDA, and funds from operations, are not defined under
International Financial Reporting Standards ("IFRS"). Presenting these
measures from period to period provides supplemental information to help
management and shareholders evaluate earnings' trends in comparison with
prior periods' results. Refer to the Non-IFRS Measures section of the
Management's Discussion and Analysis ("MD&A") for further discussion of
these items, including, where applicable, reconciliations to net earnings
(loss) attributable to common shareholders, operating income (loss), and
cash flow from operating activities.

    (4) Comparable EBITDA and funds from operations are key supplemental
performance measures for TransAlta which provide additional information
regarding the company's ability to cover its capital requirements and
dividends as well as strengthen its balance sheet and finance growth.

    Consistent strength maintained in Generation performance

    Fleet availability for the quarter remained strong at 89.4 per cent
compared to 90.3 per cent in the fourth quarter of 2011. The marginal
decrease in availability is primarily attributable to higher planned
outages at the Alberta coal PPA facilities and Genesee Unit 3, partially
offset by lower unplanned outages at the Alberta coal PPA facilities and
Genesee Unit 3.

    Improvement in EBITDA and cash flow in the quarter

    Comparable EBITDA improved $43 million in the fourth quarter to $310
million, compared to $267 million for the same period in 2011. Funds from
operations increased $16 million in the fourth quarter to $205 million,
compared to $189 million for the same period in 2011. These increases
were driven by solid results in Generation, the addition of Solomon to
the fleet, and lower OM&A costs, which more than offset lower trading


    TransAlta reported full year comparable earnings of $118 million ($0.50
per share) versus $230 million ($1.04 per share) in 2011. Comparable
results for the year were driven by strong availability across the fleet,
but were more than offset by significantly lower Energy Trading gross
margins, which were down $134 million from 2011, as well as higher
planned outages at the Alberta coal PPA facilities and Genesee Unit 3.

    The net loss attributable to common shareholders for the year was $614
million ($2.61 per share) compared to net earnings of $290 million ($1.31
per share) in 2011. This loss is largely due to asset impairment charges
of $226 million incurred from writing down the carrying value of the
Centralia Plant under IFRS, a write off of $169 million of deferred tax
assets, and the one-time impact of $189 million based on the Alberta
arbitration panel's decision on Sundance Units 1 and 2, outlined in our
press release of July 23, 2012.

    Strong Generation performance; TransAlta delivers on its fleet
availability goal of 89 - 90 per cent for the year

    Adjusted fleet availability for the full year was 90.0 per cent, up from
88.2 per cent in 2011, in spite of six major planned coal outages to
complete the three-year investment program. Adjusted fleet availability
increased as a result of lower planned and unplanned outages at the
Centralia Plant and lower unplanned outages at the Alberta coal PPA
facilities and at Genesee Unit 3, partially offset by higher planned
outages at the Alberta coal PPA facilities and Genesee Unit 3.

    TransAlta maintains stable cash flow for the year 

    Funds from operations for the year were $776 million versus $809 million
in 2011, down due to lower cash earnings which can be largely attributed
to the decrease in Energy Trading gross margins, partially offset by an
increase in Generation gross margins, after excluding the impact of the
Sundance Units 1 and 2 arbitration from earnings. 

    Highlights - 2012


--  Comparable EBITDA of $1,014 million

--  Funds from operations of $776 million or $3.30 per share

--  Comparable earnings of $118 million or $0.50 per share

--  Dividends paid of $1.16 per share to common shareholders 

--  Approximately 70 per cent participation in our dividend reinvestment
    plan, resulting in an estimated annualized cash savings of approximately
    $210 million


--  Coal: Comparable gross margins from TransAlta's coal fleet increased $20
    million year-over-year despite higher planned outages

--  Gas: Comparable gross margins from TransAlta's gas fleet increased $21
    million year-over-year as a result of strong availability and reduced
    gas input costs 

--  Renewables: Comparable gross margins increased $4 million year-over-year
    primarily due to strong hydro generation outpacing lower prices in
    Alberta and lower wind volumes in Western and Eastern Canada

--  Energy Trading: Gross margins decreased $134 million year-over-year due
    to unfavorable market conditions relative to trading positions held

    Major maintenance 

--  TransAlta completed its three-year intensive major maintenance program
    for its coal fleet. Completion of this capital investment program sets
    up these coal units to operate to end of life


--  Acquisition of the 125 megawatt ("MW") dual-fuel Solomon power station
    for U.S. $318 million, which is fully contracted with Fortescue Metals
    Group Ltd 

--  TransAlta and MidAmerican Energy Holdings Company entered into a new
    strategic partnership through which the two companies will work together
    to develop, build, and operate new natural gas-fired electricity
    generation projects in Canada

--  Construction of the 68 MW contracted New Richmond wind farm in Quebec is
    on track to be commissioned in the first quarter of 2013

--  Realignment of resources as part of an ongoing strategy to continuously
    improve operational excellence and accelerate growth, resulting in $25 -
    $30 million cost savings per year by the end of 2013

    Significant Events

    Sundance Unit 3

    On November 23, 2012, TransAlta reported that the independent arbitration
panel granted TransAlta force majeure relief for derates and outages in
2012 and 2011 related to the mechanical failure of critical generator
components on Sundance Unit 3. This decision validates that the
mechanical failure was beyond TransAlta's reasonable control.

    Federal Greenhouse gas regulations

    As a result of amendments to Canadian federal regulations requiring
coal-fired plants be shut down after a maximum of 50 years of operation,
TransAlta has reviewed the useful lives of the Alberta coal generating
facilities and related coal mining assets, and where permitted under the
regulations, extended the useful lives to a maximum of 50 years. 

    Sundance Units 1 and 2

    On July 23, 2012, TransAlta reported the independent arbitration panel
considering TransAlta's decision in December 2010 to shut down two units
at its Sundance generating station had allowed the company's claim of
force majeure. This decision validates TransAlta's belief the units
failed due to issues beyond its control. 

    TransAlta also sought to have the PPA terminated for economic reasons, as
provided for under the legislation. The panel did not agree with this
claim. The cost to repair the units is estimated at approximately $190
million. This investment is expected to start generating cash flow in the
fourth quarter of 2013. 

    Net penalties of $189 million from the arbitration panel's decision were
recorded in the second quarter of 2012. Additionally, TransAlta wrote
down its Sundance Units 1 and 2 by $43 million in the second quarter.
This impairment was reversed by $41 million in the third quarter as a
result of additional years of merchant operations expected to be realized
due to the amendments to Canadian federal regulations. 

    TransAlta files year end disclosure documents

    TransAlta also announced today it has filed its Annual Information Form,
Audited Consolidated Financial Statements and accompanying notes, as well
as the MD&A. These documents are available through TransAlta's website at or through Sedar at 

    TransAlta has also filed its 40-F with the U.S. Securities and Exchange
Commission. The form is available through their website at
Paper copies of all documents are available to shareholders free of
charge upon request.

    A complete copy of TransAlta's fourth quarter extended news release is
available in the Investors Centre section of our website:

    TransAlta will hold a conference call and live webcast and presentation
at 9 a.m. MT (11 a.m. ET) today to discuss results. The call will begin
with a short address by Dawn Farrell, President and CEO, and Brett
Gellner, Chief Financial Officer, followed by a question and answer
period for investment analysts, investors, and other interested parties.
A question and answer period for the media will immediately follow. 

    Please contact the conference operator five minutes prior to the call,
noting "TransAlta Corporation" as the company and "Brent Ward" as

    Fourth Quarter and 12 Months Ended Dec. 31 2012 Highlights:

                                3 months    3 months  12 months    12 months
In millions, unless           ended Dec.  ended Dec. ended Dec.   ended Dec.
 otherwise stated               31, 2012    31, 2011   31, 2012     31, 2011
Availability adjusted for                                                   
 Centralia (%)                      89.4        90.3       90.0         88.2
Production (GWh)                  10,880      11,662     38,750       41,012
Revenue                              661         701      2,262        2,663
Gross margin(1)                      398         409      1,453        1,716
Operating income(1)                  132         122         42          645
Net earnings (loss)                                                         
 attributable to common                                                     
 shareholders                         38          24       (614)         290
Comparable earnings(2)                54          29        118          230
Basic and diluted earnings                                                  
 (loss) per common share            0.15        0.11      (2.61)        1.31
Comparable earnings per                                                     
 share(2)                           0.21        0.13       0.50         1.04
Comparable EBITDA(2)                 310         267      1,014        1,045
Funds from operations(2)             205         189        776          809
Funds from operations per                                                   
 share(2)                           0.80        0.84       3.30         3.64
Cash flow from operations            245         187        520          690

    (1) Gross margin and operating income are Additional IFRS measures. Refer
to the Additional IFRS measures section of the MD&A.

    (2) Comparable earnings, comparable earnings per share, comparable
EBITDA, funds from operations, and funds from operations per share are
not defined under IFRS. Refer to the Non-IFRS financial measures section
of the MD&A for an explanation and, where applicable, reconciliations to
net earnings(loss) attributable to common shareholders, operating income
(loss) and cash flow from operating activities.

    Dial-in numbers:  

    Toll-free North American participants call: 1-800-319-4610

    Outside of Canada & USA call: 1-604-638-5340

    A link to the live webcast will be available on the Investor Centre
section of TransAlta's website at
e/events-presentations/webcasts-conference-calls.If you are unable to
participate in the call, the instant replay is
accessible at 1-604-638-9010 with TransAlta pass code 2231 followed by
the # sign. A transcript of the broadcast will be posted on TransAlta's
website once it becomes available.

    Note: If using a hands-free phone, lift the handset and press one to ask
a question.

    TransAlta is a power generation and wholesale marketing company focused
on creating long-term shareholder value. TransAlta maintains a
low-to-moderate risk profile by operating a highly contracted portfolio
of assets in Canada, the United States and Australia. TransAlta's focus
is to efficiently operate geothermal, wind, hydro, natural gas and coal
facilities in order to provide customers with a reliable, low-cost source
of power. For over 100 years, TransAlta has been a responsible operator
and a proud contributor to the communities in which it works and lives.
TransAlta has been selected by Jantzi-Sustainalytics as one of Canada's
Top 50 Socially Responsible Companies since 2009 and is recognized
globally for its leadership on sustainability and corporate
responsibility standards by FTSE4Good. TransAlta is Canada's largest
investor-owned renewable energy provider.

    This news release may contain forward looking statements, including
statements regarding the business and anticipated financial performance
of TransAlta Corporation. These statements are based on TransAlta
Corporation's belief and assumptions based on information available at
the time the assumption was made. These statements are subject to a
number of risks and uncertainties that may cause actual results to differ
materially from those contemplated by the forward-looking statements.
Some of the factors that could cause such differences include legislative
or regulatory developments, competition, global capital markets activity,
changes in prevailing interest rates, currency exchange rates, inflation
levels and general economic conditions in geographic areas where
TransAlta Corporation operates.

    Note: All financial figures are in Canadian dollars unless noted

TransAlta Corporation - Investor inquiries:
Brent Ward
Director, Corporate Finance and Investor Relations
Phone: 1-800-387-3598 in Canada and U.S.

TransAlta Corporation - Media inquiries:
Stacey Hatcher
Senior Corporate Relations Advisor
Cell: 587-216-2242
Toll-free media number: 1-855-255-9184
Alternate local number: 403-267-2540

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