* Net income for the third quarter of $13.5 million or $0.40 per diluted
share
* Net income for the nine months ended September 30, 2005 of $33.0
million, or $1.03 per diluted share
* $88.2 million invested year to date in property, plant & equipment
NOVI, Mich., Nov. 1 /PRNewswire-FirstCall/ -- ITC Holdings Corp.
(NYSE: ITC) today announces net income for the third quarter of 2005 of $13.5
million or $0.40 per share on a diluted basis, compared with net income of
$5.8 million, or $0.19 per share on a diluted basis for the third quarter of
2004. Net income for the nine months ended September 30, 2005 was $33.0
million, or $1.03 per share on a diluted basis compared with net income of
$4.3 million or $0.14 per share on a diluted basis for the nine months ended
September 30, 2004.
Operating revenues of $66.0 million for the third quarter 2005 increased
by $27.8 million over the same period in 2004. The expiration of a rate
freeze on December 31, 2004 for customers of International Transmission
Company ("International Transmission"), ITC Holdings' operating subsidiary,
accounts for $18.2 million of this increase. Operating revenues also
increased by $6.8 million due to an increase in point-to-point revenues (net
of refunded amounts) primarily due to International Transmission not being
required to refund point-to-point revenues earned in 2005, as previously
disclosed. In 2004 International Transmission was required to refund 75% of
point-to-point revenues to DTE Energy Company ("DTE Energy") and other
customers by orders of the Federal Energy Regulatory Commission ("FERC")
approving the acquisition of ITC from DTE Energy in February 2003. Beginning
June 1, 2005 point-to-point revenues that are not refunded reduce the network
rate, thereby benefiting network customers.
For the nine months ended September 30, 2005 operating revenues of $159.2
million increased $61.3 million over the same period in 2004. Of this
increase $43.9 million can be attributed to the expiration of the rate freeze
on December 31, 2004 and $14.6 million to the increase in point-to-point
revenues (net of refunded amounts) primarily because International
Transmission is not required to refund point-to-point revenues earned in 2005
as it was in 2004.
Third quarter 2005 results include $6.7 million of expenses in connection
with ITC's initial public offering completed on July 29 to terminate certain
management contracts.
For the nine months ended September 30, 2005, International Transmission
has invested approximately $88.2 million in property, plant and equipment.
International Transmission expects approximately $110 million of capital
investment in 2005, an increase of $10 million over our previous forecast.
Joseph Welch, President and Chief Executive Officer of ITC Holdings Corp.
said, "We are pleased to report that we are continuing to increase the
performance of the system."
International Transmission is a business regulated by the FERC and
operates under an approved annual rate setting mechanism known as "Attachment
O." Attachment O aids the Company in generating predictable revenues and
income. Variability in such items as weather or operating costs can change
earnings in any period compared to prior year, but we do not expect it to
materially impact International Transmission over time because Attachment O
adjusts for these effects in subsequent rate setting periods.
International Transmission is focused on best in class operations,
maintenance, improving reliability and reducing congestion to lower the
overall cost of delivered energy to end-use consumers
ITC will conduct a conference call to discuss third quarter 2005 earnings
results at 11:00 a.m. EST Wednesday, November 2nd. Joseph L. Welch, president
and CEO, will provide a business overview of the quarter and Edward M. Rahill,
vice president and CFO, will provide a financial update. Individuals wishing
to participate in the conference call may dial toll- free (888) 202-2422;
there is no passcode. The conference call replay, available through November
9th, can be accessed by dialing toll-free (888) 203-1112, passcode 9444458.
Investors, the news media and the public may listen to a live Internet
broadcast of the meeting at http://investor.itc-holdings.com. The webcast also
will be archived on the ITC website at http://investor.itc-holdings.com.
More detail about the results of the third quarter may be found in ITC
Holdings Corp.'s Form 10Q filing. Once filed with the SEC, an electronic copy
of the 10Q can be found at ITC Holdings Corp.'s website,
http://investor.itc-holdings.com. Written copies can also be made available
by contacting us either through our website or the phone listings below.
About ITC Holdings Corp.
ITC Holdings Corp.'s wholly-owned operating subsidiary, International
Transmission Company, is the first independently owned and operated
electricity transmission company in the United States. International
Transmission owns, operates and maintains a fully-regulated, high-voltage
system that transmits electricity to local electric distribution facilities
from generating stations in Michigan, other Midwestern states and Ontario,
Canada. The local distribution facilities connected to the International
Transmission system serve an area comprised of 13 southeastern Michigan
counties, including the Detroit metropolitan area. For more information on
International Transmission, please visit http://www.itctransco.com. For more
information on ITC Holdings, please visit http://www.itc-holdings.com.
Safe Harbor Statement
This press release contains certain statements that describe ITC Holdings
Corp.'s and International Transmission's (collectively, the "Company") beliefs
concerning future business conditions and prospects, growth opportunities and
the outlook for the Company and the electric transmission industry based upon
information currently available. Wherever possible, the Company has
identified these forward-looking statements by words such as "anticipates,"
"believes," "intends," "estimates," "expects," "projects" and similar phrases.
These forward-looking statements are based upon assumptions the Company
believes are reasonable. Such forward-looking statements are subject to risks
and uncertainties which could cause the Company's actual results, performance
and achievements to differ materially from those expressed in, or implied by,
these statements, including, among other things, the risk factors listed in
ITC Holdings Corp.'s registration statement on Form S-1, as amended (File No.
333-123657), and the following: (i) the Company's ability to obtain regulatory
approval for rate adjustments in response to changing circumstances and
changes in laws or regulations affecting us, including whether the Attachment
O rate setting mechanism used by International Transmission that has been
approved by FERC through January 31, 2008 will be extended; (ii) restrictions
imposed by laws, including the Federal Power Act of 1935 and the Energy Policy
Act of 2005, or regulations affecting the Company; (iii) changes in the nature
or the composition of the transmission grid in surrounding areas, location of
generation assets within International Transmission's service territory and in
surrounding regions and the impact of electricity flows on the transmission
system; (iv) any changes in the Company's regulatory construct; (v) the
stability of Detroit Edison, the Company's primary customer, or deregulation
affecting Detroit Edison; (vi) protracted generation outages; (vii) potential
environmental liabilities; (viii) hazards related to the Company's business;
(ix) damage to the Company's assets or the Company's ability to serve the
Company's customers, market disruptions and other economic effects as a result
of terrorism, military activity or war and action by the United States and
other governments in reaction thereto; (x) our ability to make capital
investments, due to the impact of weather conditions, the price and
availability materials, our ability to obtain any necessary financing for such
expenditures, limitations on the amount of construction that can be undertaken
on our system at any one time, the need for regulatory approvals for
environmental, siting or regional planning issues or as a result of legal
proceedings; (xi) higher property tax assessments from various municipalities;
(xii) decrease in revenues due to lower monthly peak transmission loads; and
(xiii) other risk factors discussed herein and listed from time to time in the
Company's public filings with the Securities and Exchange Commission. New
factors emerge from time to time. The Company cannot predict what factors may
arise or how such factors may cause its results to differ materially from
those contained in any forward-looking statement. Any forward-looking
statement speaks only as of the date on which such statements are made.
Except as required by law the Company assumes no obligation to update publicly
any forward-looking statements, whether as a result of new information, future
events or otherwise.
ITC HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
(in thousands, except share data)
ASSETS September 30, December 31,
Current assets 2005 2004
Cash and cash equivalents $29,717 $14,074
Accounts receivable 25,514 15,614
Inventory 19,364 13,785
Deferred income taxes 5,730
Other 3,466 954
Total current assets 83,791 44,427
Property, plant and equipment (net of
accumulated depreciation
and amortization of $411,579 and
$402,026, respectively) 581,555 513,684
Other assets
Goodwill 174,256 176,039
Regulatory assets- acquisition adjustment 52,774 55,047
Other regulatory assets 6,603 8,053
Deferred financing fees (net of
accumulated amortization of
$2,226 and $1,294, respectively) 5,798 6,058
Deferred income taxes 2,871
Other 1,373 2,668
Total other assets 240,804 250,736
TOTAL ASSETS $906,150 $808,847
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $30,105 $29,788
Accrued interest 5,032 10,294
Accrued taxes 5,290 12,831
Point-to-point revenue due to customers 12,903
Other 7,721 5,728
Total current liabilities 48,148 71,544
Accrued pension liability 3,458 3,783
Accrued postretirement liability 2,731 2,338
Deferred compensation liability 459 2,329
Deferred income taxes 19,756
Regulatory liabilities 50,005 43,941
Deferred payables 3,665 4,887
Long-term debt 508,482 483,423
STOCKHOLDERS' EQUITY
Common stock, without par value,
100,000,000 shares authorized,
33,195,238 and 30,679,240 shares issued
and outstanding at September 30, 2005
and December 31, 2004, respectively 252,058 203,459
Unearned compensation- restricted stock (1,432) (1,411)
Accumulated earnings (deficit) 18,820 (5,446)
Total stockholders' equity 269,446 196,602
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $906,150 $808,847
ITC HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except share
and per share data) Three months ended Nine months ended
September 30, September 30,
2005 2004 2005 2004
OPERATING REVENUES $66,047 $38,223 $159,225 $97,956
OPERATING EXPENSES
Operation and maintenance 14,891 6,710 31,282 18,916
General and administrative 6,723 4,659 16,734 17,522
Depreciation and
amortization 8,435 7,500 24,607 21,824
Taxes other than income
taxes 2,104 5,337 10,223 16,036
Total operating expenses 32,153 24,206 82,846 74,298
OPERATING INCOME 33,894 14,017 76,379 23,658
OTHER EXPENSES (INCOME)
Interest expense 7,006 6,388 21,014 19,084
Termination of management
agreements 6,725 6,725
Allowance for equity funds
used in construction (707) (645) (2,178) (1,348)
Other income (220) (730) (688) (1,001)
Other expense 223 41 481 125
Total other expenses
(income) 13,027 5,054 25,354 16,860
INCOME BEFORE INCOME TAXES 20,867 8,963 51,025 6,798
INCOME TAX PROVISION 7,374 3,187 18,046 2,475
NET INCOME $13,493 $5,776 $32,979 $4,323
Basic earnings per share $0.42 $0.19 $1.07 $0.14
Diluted earnings per share $0.40 $0.19 $1.03 $0.14
Weighted-average basic
shares 32,095,482 30,183,823 30,932,887 30,174,214
Weighted-average diluted
shares 33,375,482 31,170,680 32,132,161 30,694,051
Dividends declared per
common share $0.2625 - $0.2625 -
ITC HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands) Nine months ended
September 30,
2005 2004
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $32,979 $4,323
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization expense 24,607 21,824
Amortization of deferred financing fees and
discount 1,030 786
Stock-based compensation expense 1,084 716
Deferred income taxes 16,897 2,720
Other regulatory assets 1,450 1,450
Allowance for equity funds used in construction (2,178) (1,348)
Other (2,771) 381
Changes in current assets and
liabilities, exclusive of changes shown
separately (44,390) (3,093)
Net cash provided by
operating activities 28,708 27,759
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property, plant and
equipment (87,294) (52,561)
Insurance proceeds on property, plant and
equipment 4,900
Other 334 (96)
Net cash used in investing
activities (82,060) (52,657)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings under revolving credit facilities 65,500 42,500
Repayments of revolving credit facilities (40,500) (22,000)
Dividends paid (8,713)
Excess tax deductions for stock awards 1,013
Issuance of long-term debt 46
Repayment of long-term debt (46)
Debt issuance costs (672) (684)
Issuance of common stock 54,062 264
Common stock issuance costs (1,649)
Net cash provided by
financing activities 68,995 20,126
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 15,643 (4,772)
CASH AND CASH EQUIVALENTS - Beginning of period 14,074 8,139
CASH AND CASH EQUIVALENTS - End of period $29,717 $3,367
itc-ITC
SOURCE ITC Holdings Corp.
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Related links:
http://www.itc-holdings.com
CONTACT:
Investors - Don Hourican,
dhourican@itctransco.com, IR hotline - +1-248-374-7015, Media -
Lisa Aragon, +1-248-835-9300, laragon@itctransco.com, both of ITC
Holdings Corp.
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