NOVI, Mich., April 28, 2010 /PRNewswire via COMTEX News Network/ -- Highlights
ITC Holdings Corp. (NYSE: ITC) today announced its first quarter results for the period ended March 31, 2010. Net income for the quarter was $34.2 million, or $0.67 per diluted common share, compared to $28.7 million, or $0.57 per diluted common share for the first quarter of 2009.
For the three months ended March 31, 2010, ITC invested $99.5 million in capital projects at its operating companies, including $14.2 million, $31.2 million, $52.5 million and $1.6 million at ITCTransmission, METC, ITC Midwest and ITC Great Plains, respectively.
"We are very pleased to begin 2010 with another quarter of strong financial results," said Joseph L. Welch, chairman, president and CEO of ITC. "In this, the first year of our five year $3 billion capital investment program, we remain focused on delivering on the commitments we have made that will benefit our customers and shareholders. Our investment plan will improve energy delivery, reliability and efficiency, and allow for the interconnection of new renewable resources which is consistent with our strategic vision of leading the development of a 21st century transmission system in the United States."
Reported net income for the first quarter of 2010 increased $5.5 million, or $0.10 per diluted common share, compared to the same period in 2009.
Key drivers that contributed to these results include:
EPS and Capital Expenditure Guidance
For 2010, ITC is maintaining its earnings per diluted common share guidance of $2.60 to $2.70, as previously disclosed. Capital investment guidance for 2010 is also being maintained at approximately $405 to $460 million, including $50 to $60 million, $140 to $155 million, $205 to $225 million and $10 to $20 million for ITCTransmission, METC, ITC Midwest and ITC Great Plains, respectively.
First Quarter 2010 Financial Results Detail
ITC's operating revenues for the quarter increased to $161.3 million from $155.9 million last year. This increase was a result of higher network revenues mainly attributable to higher rate base at our regulated operating subsidiaries. Regional cost sharing revenues increased as well, due primarily to capital projects placed in-service that have been identified by the Midwest Independent Transmission System Operator, Inc. as eligible for regional cost sharing. In addition, other revenues increased at METC due to revenue recognized for utilization of jointly owned transmission lines.
Operation & maintenance expenses of $23.7 million were relatively flat as compared to the first quarter of 2009.
General and administrative expenses of $17.8 million were $2.1 million lower during the first quarter of 2010 compared to the same period in 2009 mainly due to lower professional advisory and consulting services and information technology support. These reductions were partially offset by higher expenses due to personnel additions.
Depreciation and amortization expenses decreased by $4.4 million during the first quarter of 2010 compared to the same period in 2009. This decrease was due primarily to the Federal Energy Regulatory Commission approval in September 2009 and December 2009 of depreciation studies for ITCTransmission and METC, respectively, which revised depreciation rates used to calculate depreciation expense for both operating companies. These changes were recorded in the third and fourth quarters of 2009, respectively. The effect of the changes in depreciation rates on net income and earnings per share amounts in the quarter is insignificant. Partially offsetting these reductions were increases in depreciation expense primarily related to a higher depreciable asset base resulting from property, plant and equipment additions.
Interest expense increased by $3.4 million for the three months ended March 31, 2010 compared to the same period in 2009 due primarily to higher borrowing levels to finance capital expenditures.
The effective income tax rate for the three months ended March 31, 2010 was 36.3 percent compared to 37.1 percent in the first quarter of 2009. The rate is lower mainly due to a reduction of income tax expense relating to the favorable resolution of an uncertain tax position in the first quarter of 2010 upon completion of the Internal Revenue Service audit of our 2006 tax year.
First quarter Conference Call
ITC will conduct a conference call to discuss 2010 first quarter earnings results at 11:00 a.m. ET on April 29, 2010. Joseph L. Welch, chairman, president and CEO, will provide a business overview and Cameron M. Bready, senior vice president, treasurer and CFO, will discuss first quarter financial results. Individuals wishing to participate in the conference call may dial toll-free (877) 644-1296 (domestic) or (914) 495-8555 (international); there is no passcode. The conference call replay, available through May 13, 2010 can be accessed by dialing toll-free (800) 642-1687 (domestic) or (706) 645-9291 (international), passcode 67791836. 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 will be archived on the ITC website at http://investor.itc-holdings.com.
Other Available Information
More detail about the 2010 first quarter results may be found in ITC's Form 10-Q filing. Once filed with the Securities and Exchange Commission, an electronic copy of our 10-Q can be found at our website, http://investor.itc-holdings.com. Written copies can also be obtained by contacting us either through our website or the phone listings below.
About ITC Holdings Corp.
ITC Holdings Corp. (NYSE: ITC) invests in the electricity transmission grid to improve electric reliability, improve access to markets, and lower the overall cost of delivered energy. ITC is the largest independent electricity transmission company in the country. Through its subsidiaries, International Transmission Company (dba ITCTransmission), Michigan Electric Transmission Company, LLC (METC) and ITC Midwest LLC, ITC operates contiguous, regulated, high-voltage transmission systems in Michigan's Lower Peninsula and portions of Iowa, Minnesota, Illinois and Missouri, serving a combined peak load in excess of 25,000 megawatts. ITC is also focused on new areas where significant transmission system improvements are needed through subsidiaries ITC Grid Development, LLC, ITC Great Plains, LLC and ITC Panhandle Transmission, LLC. For more information, please visit: http://www.itc-holdings.com. (itc-ITC)
Safe Harbor Statement
This press release contains certain statements that describe our management's beliefs concerning future business conditions, plans and prospects, growth opportunities and the outlook for our business and the electricity transmission industry based upon information currently available. Such statements are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. Wherever possible, we have identified these forward-looking statements by words such as "will," "may," "anticipates," "believes," "intends," "estimates," "expects," "projects" and similar phrases. These forward-looking statements are based upon assumptions our management believes are reasonable. Such forward looking statements are subject to risks and uncertainties which could cause our actual results, performance and achievements to differ materially from those expressed in, or implied by, these statements, including, among others, the risks and uncertainties disclosed in our annual report on Form 10-K and our quarterly reports on Form 10-Q filed with the Securities and Exchange Commission from time to time.
Because our forward-looking statements are based on estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond our control or are subject to change, actual results could be materially different and any or all of our forward-looking statements may turn out to be wrong. Forward-looking statements speak only as of the date made and can be affected by assumptions we might make or by known or unknown risks and uncertainties. Many factors mentioned in our discussion in this release and in our annual and quarterly reports will be important in determining future results. Consequently, we cannot assure you that our expectations or forecasts expressed in such forward-looking statements will be achieved. Actual future results may vary materially. Except as required by law, we undertake no obligation to publicly update any of our forward-looking or other statements, whether as a result of new information, future events, or otherwise.
ITC HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except Three months
per share data) ended
------------
March 31,
---------
2010 2009
---- ----
OPERATING REVENUES $161,288 $155,941
OPERATING EXPENSES
Operation and
maintenance 23,729 23,741
General and
administrative 17,781 19,893
Depreciation and
amortization 22,115 26,548
Taxes other than income
taxes 12,308 11,098
Other operating income
and expense - net 7 -
--- ---
Total operating
expenses 75,940 81,280
OPERATING INCOME 85,348 74,661
OTHER EXPENSES (INCOME)
Interest expense 35,029 31,593
Allowance for equity
funds used during
construction (3,143) (2,766)
Other income (626) (683)
Other expense 384 864
--- ---
Total other expenses
(income) 31,644 29,008
INCOME BEFORE INCOME
TAXES 53,704 45,653
INCOME TAX PROVISION 19,500 16,928
------ ------
NET INCOME $34,204 $28,725
======= =======
Basic earnings per
common share $0.68 $0.58
Diluted earnings per
common share $0.67 $0.57
Dividends declared per
common share $0 .320 $0.305
ITC HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
(in thousands, except
share data)
March December
31, 31,
ASSETS 2010 2009
---- ----
Current assets
Cash and cash equivalents $67,069 $74,853
Accounts receivable 67,577 72,352
Inventory 38,054 36,834
Deferred income taxes 26,261 23,859
Regulatory assets -
revenue accrual
(including accrued
interest of $2,238 and
$2,652, respectively) 68,533 82,871
Other 5,176 3,244
----- -----
Total current assets 272,670 294,013
Property, plant and
equipment (net of
accumulated depreciation
and amortization of
$1,070,403 and
$1,051,045, respectively) 2,608,977 2,542,064
Other assets
Goodwill 950,163 950,163
Intangible assets (net of
accumulated amortization
of $9,865 and $9,095,
respectively) 51,296 51,987
Regulatory assets -
revenue accrual
(including accrued
interest of $84 and $75,
respectively) 24,550 20,406
Other regulatory assets 134,853 134,924
Deferred financing fees
(net of accumulated
amortization of $9,759
and $9,616, respectively) 21,230 21,672
Other 13,854 14,487
------ ------
Total other assets 1,195,946 1,193,639
--------- ---------
TOTAL ASSETS $4,077,593 $4,029,716
========== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $47,571 $43,508
Accrued payroll 6,327 13,648
Accrued interest 23,979 39,099
Accrued taxes 16,012 21,188
Refundable deposits from
generators for
transmission network
upgrades 37,667 25,891
Other 6,518 3,344
----- -----
Total current liabilities 138,074 146,678
Accrued pension and
postretirement
liabilities 32,835 31,158
Deferred income taxes 277,457 255,516
Regulatory liabilities -
revenue deferral
(including accrued
interest of $215 and
$186, respectively) 10,238 10,238
Regulatory liabilities -
accrued asset removal
costs 112,096 112,430
Refundable deposits from
generators for
transmission network
upgrades 6,978 17,664
Other 11,470 10,111
Long-term debt 2,455,578 2,434,398
STOCKHOLDERS' EQUITY
Common stock, without par
value, 100,000,000 shares
authorized, 50,140,266
and 50,084,061 shares
issued and outstanding at
March 31, 2010 and
December 31, 2009,
respectively 865,672 862,512
Retained earnings 167,944 149,776
Accumulated other
comprehensive loss (749) (765)
---- ----
Total stockholders' equity 1,032,867 1,011,523
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $4,077,593 $4,029,716
========== ==========
ITC HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Three months
ended March
31,
CASH FLOWS FROM OPERATING
ACTIVITIES 2010 2009
Net income $34,204 $28,725
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization
expense 22,115 26,548
Revenue accrual and deferral
- including accrued interest 13,577 (6,376)
Deferred income tax expense 17,808 16,245
Allowance for equity funds
used during construction (3,143) (2,766)
Other 2,503 2,333
Changes in assets and
liabilities, exclusive of
changes shown separately:
Accounts receivable 4,775 (2,314)
Inventory (1,220) (4,345)
Other current assets (1,932) (2,447)
Accounts payable (7,093) (941)
Accrued
payroll (5,086) (4,588)
Accrued interest (15,120) (22,118)
Accrued taxes (4,971) (1,642)
Other current
liabilities (208) (2,537)
Other non-current assets and
liabilities, net 1,545 1,699
Net cash provided
by operating
activities 57,754 25,476
CASH FLOWS FROM INVESTING
ACTIVITIES
Expenditures for property,
plant and equipment (71,816) (104,687)
ITC Midwest's asset
acquisition direct fees (89) -
Net cash used in
investing
activities (71,905) (104,687)
CASH FLOWS FROM FINANCING
ACTIVITIES
Issuance of long-term debt 40,000 -
Borrowings under revolving
credit agreements 142,104 142,771
Repayments of revolving
credit agreements (161,041) (99,792)
Issuance of common stock 574 1,031
Dividends on common stock (16,034) (15,169)
Refundable deposits from
generators for transmission
network upgrades 3,957 21,516
Repayment of refundable
deposits from generators for
transmission network
upgrades (2,866) (2,291)
Other (327) (142)
Net cash provided
by financing
activities 6,367 47,924
NET DECREASE IN CASH AND CASH
EQUIVALENTS (7,784) (31,287)
CASH AND CASH EQUIVALENTS -
Beginning of period 74,853 58,110
CASH AND CASH EQUIVALENTS -
End of period $67,069 $26,823
SOURCE ITC Holdings Corp.
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