NOVI, Mich., July 28, 2010 /PRNewswire via COMTEX News Network/ --
Highlights
(in thousands, except
per share data) Three months ended Six months ended
------------------ ----------------
June 30, June 30,
-------- --------
2010 2009 2010 2009
---- ---- ---- ----
OPERATING REVENUES $168,468 $157,238 $329,756 $313,179
NET INCOME $36,301 $30,793 $70,505 $59,518
DILUTED EPS $0.71 $0.61 $1.38 $1.17
ITC Holdings Corp. (NYSE: ITC) today announced its second quarter and year-to-date results for the period ended June 30, 2010. Net income for the quarter was $36.3 million, or $0.71 per diluted common share, compared to $30.8 million, or $0.61 per diluted common share for the second quarter of 2009. Net income for the six months ended June 30, 2010 was $70.5 million, or $1.38 per diluted common share, compared to $59.5 million, or $1.17 per diluted common share for the same period last year.
For the six months ended June 30, 2010, ITC invested $216.0 million in capital projects at its operating companies, including $29.3 million, $65.5 million, $114.1 million and $7.1 million at ITCTransmission, METC, ITC Midwest and ITC Great Plains, respectively.
"We are very pleased with both our fiscal and operational performance for the first half of 2010," said Joseph L. Welch, chairman, president and CEO of ITC. "ITC continues to deliver on our commitments to our customers and shareholders through the successful execution of our strategic plan. In addition, as we look to the future, we are encouraged by recent regulatory developments that suggest the necessary transmission reforms we have been advocating are beginning to advance, particularly in the areas of planning and cost allocation. We anticipate these regulatory initiatives will facilitate the development of more regional transmission infrastructure to improve energy delivery, reliability and efficiency, and allow for the interconnection of new renewable resources, consistent with our longer term strategic vision."
Reported net income for the second quarter of 2010 increased $5.5 million, or $0.10 per diluted common share, compared to the same period in 2009. For the six months ended June 30, 2010, net income increased $11.0 million, or $0.21 per diluted common share, compared to the same period in 2009. Key drivers that contributed to these results include:
EPS and Capital Expenditure Guidance
As a result of ITC's financial performance for the six months ended June 30, 2010, ITC is today raising its 2010 earnings per diluted common share guidance to a range of $2.70 to $2.75, from a previous range of $2.60 to $2.70.
ITC is also revising its capital investment guidance for 2010 to a range of $420 million to $460 million, from a range of $405 million to $460 million. The revised guidance reflects expected capital expenditures of $50 to $60 million, $130 to $140 million, $220 to $235 million and $20 to $25 million for ITCTransmission, METC, ITC Midwest and ITC Great Plains, respectively.
Second Quarter 2010 Financial Results Detail
ITC's operating revenues for the second quarter increased to $168.5 million from $157.2 million for the same period last year. This increase was a primarily due to higher network revenues attributable to higher rate base at our regulated operating subsidiaries. In addition, the increase resulted from higher regional cost sharing revenues in 2010, due primarily to capital projects placed in-service that have been identified by the Midwest Independent Transmission System Operator, Inc. (MISO) as eligible for regional cost sharing.
Operation and maintenance (O&M) expenses of $28.5 million were $6.6 million higher during the second quarter of 2010 compared to the same period in 2009. This increase was a result of higher vegetation management expenses, equipment and structure maintenance expenses and tower painting expenses.
General and administrative (G&A) expenses of $17.4 million were $2.8 million lower during the second quarter of 2010 compared to the same period in 2009. This decrease was a result of lower general business expenses primarily for information technology support, employee related expenses and professional advisory and consulting services. In addition, G&A expenses for the quarter include $1.5 million of development costs at ITC Grid Development and Green Power Express which were $0.6 million lower than the same period in 2009.
Depreciation and amortization expenses of $22.6 million decreased by $3.6 million during the second quarter of 2010 compared to the same period in 2009. This decrease was due to the implementation of new depreciation rates for ITCTransmission and METC in the third and fourth quarters of 2009, respectively, which served to lower depreciation expense for each of these operating companies. 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 of $35.3 million increased by $2.7 million for the second quarter of 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 second quarter of 2010 was 36.8 percent compared to 37.7 percent the same period last year.
Year-To-Date 2010 Financial Results Detail
ITC's operating revenues for the six months ended June 30, 2010 increased to $329.8 million from $313.2 million for the same period last year. This increase was primarily due to higher network revenues attributable to higher rate base at our regulated operating subsidiaries. In addition, the increase resulted from higher regional cost sharing revenues in 2010, due primarily to capital projects placed in-service that have been identified by MISO as eligible for regional cost sharing. Lastly, other revenues increased at METC due to incremental revenue recognized in 2010 for utilization of jointly owned transmission lines.
O&M expenses of $52.2 million were $6.6 million higher for the six months ended June 30, 2010 compared to the same period in 2009. This increase was a result of higher vegetation management expenses, equipment and structure maintenance expenses and tower painting expenses.
G&A expenses of $35.2 million for the six months ended June 30, 2010 were $5.0 million lower compared to the same period in 2009. This decrease was a result of lower general business expenses primarily for information technology support, employee related expenses and professional advisory and consulting services. In addition, G&A expenses for the six months ended June 30, 2010 include $3.9 million of development costs at ITC Grid Development and Green Power Express which were $1.2 million lower than the same period in 2009.
Depreciation and amortization expenses of $44.7 million decreased by $8.1 million during the six months ended June 30, 2010, compared to the same period in 2009. This decrease was due to the implementation of new depreciation rates for ITCTransmission and METC in the third and fourth quarters of 2009, respectively, which served to lower depreciation expense for each of these operating companies. 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 of $70.4 million increased $6.1 million in the first six months of 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 six months ended June 30, 2010 was 36.5 percent compared to 37.4 percent in 2009.
Second Quarter Conference Call
ITC will conduct a conference call to discuss second quarter and year-to-date 2010 earnings results at 11:00 a.m. ET on July 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 the 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 August 13, 2010, can be accessed by dialing toll-free (800) 642-1687 (domestic) or (706) 645-9291 (international), passcode 87281817. 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.
Other Available Information
More detail about the 2010 second quarter results and year-to-date 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 made available 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, expand access to markets, lower the overall cost of delivered energy and allow new generating resources to interconnect to its transmission systems. The largest independent electricity transmission company in the country, ITC operates high-voltage transmission systems in Michigan's Lower Peninsula and portions of Iowa, Minnesota, Illinois, Missouri and Kansas, serving a combined peak load in excess of 25,000 megawatts through its regulated operating subsidiaries, ITCTransmission, Michigan Electric Transmission Company (METC), ITC Midwest and ITC Great Plains. ITC also focuses on new areas where significant transmission system improvements are needed through ITC Grid Development and its subsidiaries. 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, Three
except per share months Six months
data) ended ended
June 30, June 30,
-------- --------
2010 2009 2010 2009
---- ---- ---- ----
OPERATING REVENUES $168,468 $157,238 $329,756 $313,179
OPERATING EXPENSES
Operation and
maintenance 28,494 21,919 52,223 45,660
General and
administrative 17,413 20,253 35,194 40,146
Depreciation and
amortization 22,567 26,187 44,682 52,735
Taxes other than
income taxes 11,626 10,612 23,934 21,710
Other operating
income and expense
- net (530) - (523) -
---- --- ---- ---
Total operating
expenses 79,570 78,971 155,510 160,251
------ ------ ------- -------
OPERATING INCOME 88,898 78,267 174,246 152,928
OTHER EXPENSES
(INCOME)
Interest expense 35,333 32,661 70,362 64,254
Allowance for
equity funds used
during
construction (3,435) (3,232) (6,578) (5,998)
Other income (1,154) (1,065) (1,672) (1,391)
Other expense 755 463 1,031 970
--- --- ----- ---
Total other
expenses (income) 31,499 28,827 63,143 57,835
------ ------ ------ ------
INCOME BEFORE
INCOME TAXES 57,399 49,440 111,103 95,093
INCOME TAX
PROVISION 21,098 18,647 40,598 35,575
------ ------ ------ ------
NET INCOME $36,301 $30,793 $70,505 $59,518
======= ======= ======= =======
Basic earnings per
common share $0.72 $0.62 $1.40 $1.19
Diluted earnings
per common share $0.71 $0.61 $1.38 $1.17
Dividends declared
per common share $0.320 $0.305 $0.640 $0.610
ITC HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
(in thousands, except share June December
data) 30, 31,
2010 2009
---- ----
ASSETS
Current assets
Cash and cash equivalents $81,439 $74,853
Accounts receivable 86,263 72,352
Inventory 39,117 36,834
Deferred income taxes 30,662 23,859
Regulatory assets - revenue
accrual (including accrued
interest of $1,843 and
$2,652, respectively) 54,214 82,871
Other 7,955 3,244
----- -----
Total current assets 299,650 294,013
Property, plant and
equipment (net of
accumulated depreciation
and 2,699,275 2,542,064
amortization of $1,085,126
and $1,051,045,
respectively)
Other assets
Goodwill 950,163 950,163
Intangible assets (net of
accumulated amortization of
$10,636 and $9,095, 50,525 51,987
respectively)
Regulatory assets - revenue
accrual (including accrued
interest 13,305 20,406
of $75 and $75,
respectively)
Other regulatory assets 134,448 134,924
Deferred financing fees (net
of accumulated amortization
of $10,417 and 21,200 21,672
$9,616, respectively)
Other 15,853 14,487
------ ------
Total other assets 1,185,494 1,193,639
TOTAL ASSETS $4,184,419 $4,029,716
========== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $67,834 $43,508
Accrued payroll 8,795 13,648
Accrued interest 44,519 39,099
Accrued taxes 26,427 21,188
Regulatory liabilities -
revenue deferral (including
accrued interest of $230) 6,854 -
Refundable deposits from
generators for transmission
network upgrades 33,841 25,891
Other 4,023 3,344
----- -----
Total current liabilities 192,293 146,678
Accrued pension and
postretirement liabilities 34,591 31,158
Deferred income taxes 301,329 255,516
Regulatory liabilities -
revenue deferral (including
interest of $230 and $186,
respectively) 14,302 10,238
Regulatory liabilities -
accrued asset removal costs 111,369 112,430
Refundable deposits from
generators for transmission
network upgrades 4,121 17,664
Other 11,596 10,111
Long-term debt 2,457,774 2,434,398
Commitments and contingent
liabilities
STOCKHOLDERS' EQUITY
Common stock, without par
value, 100,000,000 shares
authorized, 50,286,030 and
50,084,061 shares issued
and outstanding at June 30,
2010 and December 31,
2009, respectively 869,621 862,512
Retained earnings 188,156 149,776
Accumulated other
comprehensive loss (733) (765)
---- ----
Total stockholders' equity 1,057,044 1,011,523
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $4,184,419 $4,029,716
========== ==========
ITC HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six months
(in thousands) ended
June 30,
--------
2010 2009
---- ----
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income $70,505 $59,518
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization
expense 44,682 52,735
Revenue accrual and deferral -
including accrued interest 46,676 (4,817)
Deferred income tax expense 35,191 34,902
Allowance for equity funds used
during construction (6,578) (5,998)
Other 5,937 4,955
Changes in assets and
liabilities, exclusive of
changes shown separately:
Accounts receivable (13,911) (22,510)
Inventory (2,283) (6,822)
Other current assets (4,711) (1,425)
Accounts payable (1,410) (10,094)
Accrued payroll (3,421) (1,990)
Accrued interest 5,420 (86)
Accrued taxes 5,996 7,239
Other current liabilities 681 (3,353)
Other non-current assets and
liabilities, net 624 6,162
--- -----
Net cash provided by operating
activities 183,398 108,416
CASH FLOWS FROM INVESTING
ACTIVITIES
Expenditures for property,
plant and equipment (162,585) (213,927)
Proceeds from sale of
securities 14,576 697
Purchases of securities (14,587) (761)
Other (78) (225)
--- ----
Net cash used in investing
activities (162,674) (214,216)
CASH FLOWS FROM FINANCING
ACTIVITIES
Issuance of long-term debt 90,000 100,000
Borrowings under revolving
credit agreements 213,129 276,218
Repayments of revolving credit
agreements (279,985) (263,817)
Issuance of common stock 1,165 1,632
Dividends on common stock (32,121) (30,394)
Refundable deposits from
generators for transmission
network upgrades 11,439 29,633
Repayment of refundable
deposits from generators for
transmission network upgrades (16,778) (2,291)
Other (987) (1,909)
---- ------
Net cash (used in) provided by
financing activities (14,138) 109,072
------- -------
NET INCREASE IN CASH AND CASH
EQUIVALENTS 6,586 3,272
CASH AND CASH EQUIVALENTS -
Beginning of period 74,853 58,110
CASH AND CASH EQUIVALENTS - End
of period $81,439 $61,382
======= =======
SOURCE ITC Holdings Corp.
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