GREAT FALLS, Mont., Feb. 14 /PRNewswire-FirstCall/ -- Energy West, Incorporated (NASDAQ:EWSTD), a natural gas and energy marketing company serving Montana, Wyoming, North Carolina and Maine, today filed its Form 10-Q for the second quarter ended December 31, 2007. The Company reported consolidated net earnings for the quarter of $7,868,349, or $1.83 per share, which is an improvement of approximately 520% when compared to the consolidated net earnings of $1,269,745, or $0.29 per share, for the second quarter ended December 31, 2006. The net income of approximately $7.9 million included an extraordinary gain of approximately $6.8 million. Earnings from continuing operations decreased to $1,049,167, or $0.24 per share during the second quarter of fiscal year 2008 from $1,112,373, or $0.25 per share during the second quarter of fiscal year 2007. Earnings from continuing operations for the first six months of fiscal year 2008 increased to $1,124,976 from $1,117,170 in the first six months of fiscal year 2007. Expenses in the current fiscal year included one-time management realignment costs of approximately $310,000 net of tax. The $6.8 million gain in the second quarter ended December 31, 2007 was the result of the recent acquisitions of Frontier Utilities of North Carolina (Frontier) and Penobscot Natural Gas Company in Maine (Penobscot), both of which were acquired from Sempra Energy, a California corporation. Through these acquisitions, Energy West obtained a substantial deferred tax asset. Frontier and Penobscot owned capital assets depreciable in the amount of $79 million. For income tax purposes, Energy West was permitted to succeed to the operations of these companies and thereby continue to depreciate the assets at their historical tax cost bases. This treatment results in a potential future federal and state income tax benefit of approximately $16.9 million over a 24-year period using applicable federal and state income tax rates. This asset was offset by a valuation allowance of approximately $5.3 million, resulting in a net deferred tax asset associated with the acquisitions of approximately $11.5 million. The excess of the net deferred tax assets received in the transactions over their respective purchase prices is reported as extraordinary gain of approximately $6.8 million in Energy West's income statements for this quarter. Richard Osborne, Chairman and CEO of Energy West, commented, "We are pleased to report that excluding the one-time management realignment expense and the positive deferred tax issue, our fundamental earnings were up from a year ago. We are also pleased with the initial results of our recent acquisitions in Maine and North Carolina. We look forward to continued success." Safe Harbor Regarding Forward-Looking Statements Energy West is including the following cautionary statement in the release to make applicable and to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf of Energy West. Forward-looking statements are all statements other than statements of historical fact, including without limitation those that are identified by the use of the words "anticipates," "estimates," "expects," "intends," "plans," "predicts," and similar expressions. Such statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those expressed. Factors that may affect forward-looking statements and the Company's business generally include but are not limited risks associated with contracts accounted for as derivatives, changes in the utility regulatory environment, wholesale and retail competition, weather conditions, litigation risk and various other matters, many of which are beyond Energy West's control, the risk factors and cautionary statements made in the Company's public filings with the Securities and Exchange Commission, and other factors that the Company is currently unable to identify or quantify, but may exist in the future. Energy West expressly undertakes no obligation to update or revise any forward-looking statement contained herein to reflect any change in Energy West's expectations with regard thereto or any change in events, conditions, or circumstances on which any such statement is based. Further, preparation of financial statements requires Energy West's management to make significant estimates. The deferred tax asset, valuation allowance and related extraordinary gain require a significant amount of judgment. Under federal tax laws, the estimate is based on projected future tax deductions, future taxable income, estimated limitations, the valuation allowance, and other assumptions. It is possible that this estimate could change and the change could be material. For additional information or clarification respecting Energy West, please contact: James W. Garrett, President and Chief Operating Officer at 1-440-205-1987. Our toll-free number is 1-800-570-5688. Our web address is http://www.energywest.com/. Our address is P.O. Box 2229, Great Falls, MT 59403-2229. DATASOURCE: Energy West, Incorporated CONTACT: James W. Garrett, President and Chief Operating Officer of Energy West, Incorporated, +1-440-205-1987 Web site: http://www.energywest.com/

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