2001 Earnings Exceed Expectations for UIL Holdings Corporation.Business Editors NEW HAVEN New Haven, city (1990 pop. 130,474), New Haven co., S Conn., a port of entry where the Quinnipiac and other small rivers enter Long Island Sound; inc. 1784. Firearms and ammunition, clocks and watches, tools, rubber and paper products, and textiles are among the many , Conn.--(BUSINESS WIRE)--Jan. 28, 2002 UIL UIL - User Interface Language Holdings Corporation (UIL) today reported net income for 2001 of $59.4 million or $4.21 per share, exceeding earnings expectations for the year. Compared to 2000, net income decreased $1.4 million or $.11 per share. The Corporation had anticipated an earnings decline in 2001 due primarily to increased costs at the utility associated with industry restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and the impact of a depressed Depressed A description of a market, security, or product that is experiencing weak demand and lowering prices. Notes: A depressed market, security, or product implies that prices and volume are low. There are many reasons for a depressed market, security, or product. economy on the non-utility business units. Net income for the fourth quarter of 2001 was $9.7 million or $.69 per share, an increase of $.23 per share from earnings of $.46 per share in the fourth quarter of 2000. The increase was due primarily to improved nuclear generation performance and better than expected earnings at the non-utility businesses. The individual components of annual and quarterly earnings per share are detailed on the attached table. The United Illuminating The United Illuminating Holdings Corporation (UI) is an electricity distributor for southern Connecticut. It currently serves roughly 320,000 customers in 17 municipalities in the Greater Bridgeport, New Haven, and Lower Naugatuck Valley regions. Company (UI), UIL's regulated reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. utility business, contributed $4.05 per share in 2001, compared to $4.31 per share in 2000. The decrease can be attributed primarily to two factors: increased amortization of regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. assets, as mandated by UI's current rate plan, and a decrease in pension fund earnings as a result of deteriorating de·te·ri·o·rate v. de·te·ri·o·rat·ed, de·te·ri·o·rat·ing, de·te·ri·o·rates v.tr. To diminish or impair in quality, character, or value: financial market conditions over the past 21 months. These factors were partially offset by aggressive cost controls at the utility, including process redesign re·de·sign tr.v. re·de·signed, re·de·sign·ing, re·de·signs To make a revision in the appearance or function of. re and reorganization The process of carrying out, through agreements and legal proceedings, a business plan for winding up the affairs of, or foreclosing a mortgage upon, the property of a corporation that has become insolvent. efforts. "We anticipated the decline in earnings at the utility and have planned for it. Industry restructuring mandated the increased amortization at the utility and our strategy has been to replace the utility earnings with earnings from our non-utility business units," said UIL's Chairman and Chief Executive Officer Nathaniel D. Woodson Woodson may refer to: People
As previously disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). , UI, effective January January: see month. 1, 2002, has contracted with a unit of Dominion Resources Dominion NYSE: D (formerly Dominion Resources) is a power and energy company headquartered in Richmond, Virginia, USA, that supplies electricity, natural gas, or other energy services to homes in Virginia, West Virginia, Ohio, Pennsylvania, and eastern North Carolina. to supply its "standard offer" generation service needs through 2003. The contract removes Enron Enron A U.S. energy-trading and utilities company that housed one of the biggest accounting frauds in history. Enron's executives employed accounting practices that falsely inflated the company's revenues, which, at the height of the scandal, made the firm become the seventh as UI's supplier and replaces them with Dominion dominion, power to rule, or that which is subject to rule. Before 1949 the term was used officially to describe the self-governing countries of the Commonwealth of Nations—e.g., Canada, Australia, or India. . The change to Dominion will be transparent (1) Refers to a change in hardware or software that, after installation, causes no noticeable change in operation. Also known as "feature transparency." Contrast with "seamless integration," which means that an additional component to the system can be added without incurring any to UI's customers. There will be no change in customer rates for the remainder of the standard offer period due to this change and, as before, UI will continue to operate and service the transmission and distribution system that brings electricity to its customers. The non-utility business units of United Resources, Inc. (URI Uri, in the Bible Uri (y  `rī), in the Bible.1 Father of Bezaleel (1.) 2 Father of Geber (2.) 3 Porter. ) contributed $.16 per share for 2001 compared to $.01 per share in 2000. Xcelecom and American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Payment Systems (APS) are the operating business units under URI. Xcelecom, a specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. contracting and voice-data-video systems integration business, acquired five companies in 2001, increasing revenues by more than $85 million. Xcelecom contributed earnings of $.44 per share in 2001. APS, a walk-in walk-in A new brokerage customer who simply walks into the office. Although walk-ins are generally assigned to brokers, they have the right to specify a preferred broker. bill payment and financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. company, made strategic investments in its financial services distribution business to enhance future growth, increasing sales by 55%. "Our long term strategy has always been to grow our operating non-utility businesses," said Woodson. "Xcelecom's strategy of acquiring companies that are immediately accretive to earnings is already resulting in earnings growth for UIL. Xcelecom's earnings increased by $.29 per share in 2001. And our investments in APS are expected to add significant earnings to UIL in the next several years," added Woodson. The passive investment business units under URI, (United Capital Investments and United Bridgeport Bridgeport, city (1990 pop. 141,686), Fairfield co., SW Conn., on Long Island Sound; inc. 1836. Long a chief industrial city in Connecticut, it makes electrical appliances, transportation equipment, clothing, ammunition, metal products, wiring devices, machinery, Energy), reversed prior year gains, due primarily to investment performance reflecting the negative financial market conditions in 2001, resulting in a loss for the year of $.27 per share. This also includes the financing and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. associated with URI. "The economy has had a negative impact on most businesses in 2001, but our strategy to invest in businesses that are in diversified diversified (di·verˑ·s markets and seek out diversified passive investments has protected us from a material negative impact on earnings," said Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. L. Fiscus fiscus (Latin; “basket”) Treasury of the Roman emperor, so-called because the money was stored in baskets. Funds were also stored in the public treasury, the aerarium. , UIL's Vice Chairman and Chief Financial Officer. Looking at 2002 Cash flow will continue to remain strong in 2002 and beyond. "Our underlying strategy is to continue investing in the non-utility businesses to enhance growth, allowing these businesses to increase earnings," said Woodson. "We have the right people in place, the plans to accomplish our goals and the cash flow to execute To run a program, which causes the computer to carry out its instructions. See executable code, instruction and EXE file. execute - execution our growth strategy, while fully supporting the current dividend level." The earnings contribution from the non-utility business units becomes more important in 2002 as various factors affect the uncertainty of the level of UI's earnings. In 2001, the Connecticut Connecticut, state, United States Connecticut (kənĕt`ĭkət), southernmost of the New England states of the NE United States. It is bordered by Massachusetts (N), Rhode Island (E), Long Island Sound (S), and New York (W). Department of Public Utility Control (DPUC DPUC Department of Public Utility Control (Connecticut) ) ordered a full rate review and UI submitted a standard rate filing in November November: see month. 2001. UI cannot predict the outcome of the rate case, but strongly supports a rate plan that is similar to the plan that is presently in place. "We are currently in the middle of a rate proceeding at the DPUC and we maintain our position that the current plan has served the customers, employees and shareowners of UI well over the last five years," said Fiscus. "Any earnings above the allowed return are shared with customers, rates charged to customers are stable and there is predictability for UI's earnings. In this economy, stability and predictability are important to our customers as well as to UI." UIL Holdings Corporation estimates that its earnings for 2002 will be $4.10-$4.25 per share. However, the earnings mix between the utility and the non-utility businesses is expected to change. The utility is expected to contribute $3.75 - $3.90 per share in 2002 and the non-utility businesses are expected to contribute $.30 - $.40 per share. The above estimate assumes the rate proceeding will result in a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. rate plan, the utility will continue to be allowed to earn an 11.5% return on equity and that the weak economy will not further deteriorate de·te·ri·o·rate v. 1. To grow worse in function or condition. 2. To weaken or disintegrate. the earnings of the utility or the non-utility businesses. UIL Holdings Corporation is the holding company for The United Illuminating Company and United Resources, Inc. UI is a New Haven-based regional distribution utility and URI is the umbrella umbrella, a small canopy used as a protection against the sun in China, Egypt, and elsewhere in remote antiquity. It was often an emblem of rank. During the Middle Ages the umbrella became almost extinct in Europe; its usefulness was not rediscovered until the late for UIL Holdings' non-utility business units, including Xcelecom, American Payment Systems, United Capital Investments and United Bridgeport Energy. UIL Holdings World Wide Web address is www.uil.com and UIL's common stock is traded on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. under the symbol UIL. Certain statements contained herein, regarding matters that are not historical facts, are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. (as defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995). Such forward-looking statements include risks and uncertainties; consequently, actual results may differ materially from those expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. thereby, including, but not limited to general economic conditions, legislative and regulatory changes, demand for electricity and other products and services, changes in accounting principles, policies or guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. , and other economic, competitive, governmental, and technological factors affecting the operations, markets, products, services and prices of the subsidiaries. Forward-looking statements included herein speak only as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" and the company undertakes no obligation to revise or update such statements to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date hereof or to reflect the occurrence of unanticipated events or circumstances.
UIL HOLDINGS CORPORATION
Earnings Per Share
4th Quarter 2001 Compared to 4th Quarter 2000
4th Quarter 4th Quarter
2001 2000 Difference
---- ---- ----------
Operating Businesses
United Illuminating $ 0.58 $ 0.37 $ 0.21
United Resources (URI)
Operating Businesses:
Xcelecom 0.15 0.10 0.05
American Payment Systems (0.01) 0.02 (0.03)
----- ------ -----
Subtotal URI Operating
Businesses 0.14 0.12 0.02
URI Passive Investments
United Capital Investments (0.07) 0.03 (0.10)
United Bridgeport Energy 0.11 0.01 0.10
URI Headquarters (0.07) (0.07) -
---- ----- -----
Subtotal URI Passive (0.03) (0.03) -
---- ----- -----
Earnings Per Share
from Operations 0.69 0.46 0.23
One Time Items - - -
Total Earnings Per Share $ 0.69 $ 0.46 $ 0.23
Twelve Months Ended December 31, 2001 Compared to December 31, 2000
Twelve Months Twelve Months
Ended Ended
12/31/2001 12/31/2000 Difference
------------- ------------- ----------
Operating Businesses
United Illuminating $ 4.05 $ 4.25 $ (0.20)
United Resources (URI)
Operating Businesses:
Xcelecom 0.44 0.15 0.29
American Payment Systems (0.01) 0.15 (0.16)
---- ----- -----
Subtotal URI
Operating Businesses 0.43 0.30 0.13
URI Passive
United Capital Investments (0.28) 0.11 (0.39)
United Bridgeport Energy 0.26 (0.19) 0.45
URI Headquarters (0.25) (0.21) (0.04)
---- ----- -----
Subtotal URI Passive (0.27) (0.29) 0.02
---- ----- ----
Earnings Per Share
from Operations 4.21 4.26 (0.05)
One Time Items - UI - 0.06 (0.06)
---- ---- -----
Total Earnings Per Share $ 4.21 $ 4.32 $ (0.11)
UIL HOLDINGS CORPORATION
Consolidated Income Statement Detail (Unaudited)
(Thousands except per share amounts)
Quarter Ended Twelve Months Ended
December 31, December 31,
2001 2000 2001 2000
---- ---- ---- ----
Operating revenues
Retail $ 142,922 $ 144,650 $ 627,178 $ 602,347
Wholesale 16,581 8,907 61,570 67,990
Proceeds from Millstone
Unit 3 settlement 0 0 0 14,960
Non-regulated
businesses 101,532 76,182 371,028 176,164
Other 6,491 5,018 26,070 19,394
---------- ---------- ---------- ----------
Total operating
revenues 267,526 234,757 1,085,846 880,855
---------- ---------- ---------- ----------
Operating expenses
Fuel and energy: retail 55,795 63,539 252,576 262,252
4,926 4,111 19,331 19,901
wholesale
Gross earnings tax 6,227 5,680 26,661 23,715
Purchased capacity 1,138 1,095 3,296 4,682
Operation & maintenance 140,972 117,130 524,867 330,996
Other taxes 4,778 4,027 18,282 19,650
Depreciation 9,435 8,711 37,267 33,278
Amortization of
regulatory assets 18,790 11,968 58,861 36,435
Income taxes 9,393 4,724 52,368 52,298
-------- -------- -------- --------
Total operating
expenses 251,454 220,985 993,509 783,207
-------- -------- -------- --------
Operating income 16,072 13,772 92,337 97,648
-------- -------- -------- --------
Other income
(deductions)
AFUDC 538 749 1,913 2,609
Other net 147 2,985 4,475 4,291
Impairment loss from
property-after tax 0 0 0 (2,141)
Other income tax
(expense) benefits 3,342 1,285 4,177 2,849
-------- -------- -------- --------
Total other income
(deductions) 4,027 5,019 10,565 7,608
-------- -------- -------- --------
Interest charges
Long-term debt 10,899 9,540 42,848 38,199
Interest on UI
owned bonds (1,580) (1,617) (6,319) (6,470)
Short-term debt 165 1,861 2,507 3,078
Other 346 340 2,347 2,175
-------- -------- -------- --------
Subtotal 9,830 10,124 41,383 36,982
Amortization: debt
expense, redemption
premiums 531 2,278 2,156 3,988
-------- -------- -------- --------
Net interest charges 10,361 12,402 43,539 40,970
-------- -------- -------- --------
Dividend requirement-
mandatorily redeemable
securities 0 0 0 3,529
-------- -------- -------- --------
Net income and earnings
for common stock $ 9,738 $ 6,389 $ 59,363 $ 60,757
Earnings per share
- Basic $ 0.69 $ 0.46 $ 4.21 $ 4.32
------ ------ ----- -----
Earnings per share
- Diluted $ 0.69 $ 0.46 $ 4.19 $ 4.31
------ ------ ----- -----
Book value per share $ 35.45 $ 34.03
Average number of shares
outstanding-Basic (000's) 14,112 14,077 14,097 14,073
Average number of shares
outstanding-Diluted (000's) 14,183 14,129 14,159 14,098
UIL Holdings Corporation RESULTS OF OPERATIONS As a result of the formation of UIL Holdings Corporation, all subsidiary results are consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: . All periods reported herein have been reclassified for consolidated reporting, with no impact on earnings. Fourth Quarter 2001 vs. Fourth Quarter 2000 UIL Holdings Corporation Results: Fourth Quarter 2001 vs. Fourth Quarter 2000 ------------------------------------------- Earnings for UIL Holdings Corporation (UIL) for the fourth quarter of 2001 were $9.7 million in 2001, or $0.69 per share. This exceeded the top of the estimated fourth quarter 2001 range of $0.55 - $0.65 reported in UIL's earnings release dated October October: see month. 22, 2001. UIL's utility subsidiary, United Illuminating (UI), hit the top of its range and UIL's non-utility subsidiary, United Resources (URI), exceeded its top range despite the poorer than expected performance of passive investments reflecting poor financial market conditions. URI's Xcelecom subsidiary exceeded expectations in the fourth quarter, offsetting URI's passive investment performance. Compared to the fourth quarter of 2000, UIL's fourth quarter of 2001 results reflected an increase in earnings of $3.3 million, or $0.23 per share. The increase was due to the operations of UI's nuclear division, reflecting normal operations Generally and collectively, the broad functions that a combatant commander undertakes when assigned responsibility for a given geographic or functional area. Except as otherwise qualified in certain unified command plan paragraphs that relate to particular commands, "normal operations" of in the fourth quarter of 2001 compared to an extended outage out·age n. 1. A quantity or portion of something lacking after delivery or storage. 2. A temporary suspension of operation, especially of electric power. during the fourth quarter of 2000. Earnings also improved slightly at UIL's non-utility businesses. The non-utility improvement was driven mainly by accretive earnings from Xcelecom's acquisition strategy. These gains were partly offset by higher amortization of regulatory assets as mandated for 2001 in UI's rate plan, and to a decrease in UI's pension fund earnings resulting from poor financial market conditions during 2001.
Quarter Quarter 2001 more (less)
Ended Ended than 2000
Dec. 31, Dec. 31, Amount Percent
2001 2000
----------------------------------------------------------------------
Net Income
UI from operations $6,017 $7,697 $(1,680) (21.8)%
Nuclear Operations Division 2,242 (2,626) 4,868 --
United Resources (Non-Utility) 1,479 1,319 160 12.1%
Total Net Income from Operations 9,738 6,389 3,349 52.4%
Earnings per Share
UI from Operations $0.42 $0.56 $(0.14) (25.0)%
Nuclear Operations Division 0.16 (0.19) 0.35 --
United Resources (Non-Utility) 0.11 0.09 0.02 22.2%
Total EPS - Basic $0.69 $0.46 $0.23 50.0%
Total EPS - Diluted $0.69 $0.46 $0.23 50.0%
The following is a line-by-line tabular summary of some lines of
UIL's income statement, including comparisons between the fourth
quarter of 2001 and the fourth quarter of 2000 by subsidiary.
Significant variances are explained in the individual subsidiary
sections that follow.
Quarter Quarter 2001 more (less)
Ended Ended than 2000
----------------------------------------------------------------------
($000 except percents) Dec. 31, Dec. 31, Amount Percent
2001 2000
----------------------------------------------------------------------
Operating Revenue
UI from operations,
before sharing 155,115 155,105 9 0.0%
UI sharing from
operations (2,648) (2,443) (205) 8.4%
UI one-time items 0 0 0 0.0%
Nuclear 13,527 5,913 7,614 128.8%
URI 101,532 76,182 25,351 33.3%
-------- ------- -------
Total 267,526 234,757 32,769 14.0%
Fuel and energy
expense
UI from operations 58,845 66,729 (7,884) (11.8%)
Nuclear 1,876 921 955 103.7%
------ ---- ----
Total 60,721 67,650 (6,929) (10.2%)
Purchased capacity and
Operation & maintenance expense
UI 39,522 37,883 1,639 4.3%
Nuclear 6,704 9,528 (2,823) (29.6%)
URI 95,885 70,815 25,070 35.4%
------- ------- -------
Total 142,111 118,225 23,886 20.2%
Other taxes
UI 4,000 3,070 930 30.3%
Nuclear 297 329 (32) (9.7%)
URI 480 628 (148) (23.5%)
---- ---- -----
Total 4,778 4,027 750 18.6%
Depreciation
UI 6,740 6,624 116 1.7%
Nuclear 360 428 (68) (15.8%)
URI 2,335 1,659 676 40.8%
------ ------ ----
Total 9,435 8,711 724 8.3%
Income Taxes
UI 6,754 7,036 (282) (4.0%)
Nuclear 1,566 (3,230) 4,795 --
URI 1,074 917 157 17.1%
------ ---- ----
Total 9,393 4,724 4,670 98.9%
Interest charges
UI 7,576 8,607 (1,031) (12.0%)
Nuclear 412 497 (84) (17.0%)
URI 2,372 3,298 (926) (28.1%)
------ ------ -----
Total UIL 10,361 12,402 (2,041) (16.5%)
United Illuminating Results of Operations: Fourth Quarter 2001 vs.
Fourth Quarter 2000
Earnings for the fourth quarter of 2001 for UI, excluding the
nuclear division, decreased by $0.14 per share compared to the fourth
quarter of 2000. The nuclear division earned $0.16 per share in 2001,
an increase of $0.35 per share compared to 2000.
Quarter Quarter 2001 more (less)
Ended Ended than 2000
Dec. 31, Dec. 31, Amount Percent
2001 2000
----------------------------------------------------------------------
EPS from operations (Basic)
UI excluding Nuclear
Division and Sharing $0.63 $0.76 $(0.13) (17.1)%
Sharing (0.21) (0.20) (0.01) (5.0)%
Subtotal UI excluding
Nuclear 0.42 0.56 (0.14) (25.0)%
Nuclear Division 0.16 (0.19) 0.35 --
---- ----- ----
Total UI EPS from
operations $0.58 $0.37 $0.21 56.8%
Retail GWH Sales
(thousands of MWH) 1,357 1,398 (42) (2.9)%
----------------------------------------------------------------------
UI excluding the Nuclear Division Excluding the nuclear division, UI's earnings from operations were $0.42 per share in the fourth quarter of 2001 compared to $0.56 per share in the fourth quarter of 2000. The $0.14 per share decrease was due primarily to the $1.7 million after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. increase in accelerated amortization expense that went into effect on January 1, 2001 as part of the Rate Plan, and to a $2.8 million decrease in the pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta earnings ($1.7 million after-tax) of UI's employees' pension fund. These increased costs were partly offset by savings in other operations and maintenance expenses. In 2001, earnings for the distribution division that exceeded 11.5%, on an annual basis, were "shared," one-third for customer bill surcredits, one-third to increase amortization of regulatory assets, and one-third retained as earnings. Sharing resulted in an additional $0.01 per share decrease in the fourth quarter of 2001 compared to the fourth quarter of 2000. The details below explain the variances for all of UI excluding the nuclear division. It should be noted that changes to income and expense items in the distribution division had an immediate net income impact in 2001, while changes to those items in "other unbundled utility divisions" did not. Those divisions include the Competitive Transition Assessment (CTA An abbreviation for cum testamento annexo, Latin for "with the will annexed." ) and the Systems Benefits Charge (SBC (1) (SBC Communications Inc., San Antonio, TX, www.sbc.com) A large, national telecommunications company that grew from a multitude of local and regional companies, including Southwestern Bell, Pacific Bell and Nevada Bell, into a single, unified brand by 2002. ), both of which earned an 11.5% return on the equity portion of their respective rate bases. That return was achieved by either accruing additional amortization expenses, or by deferring such expenses as required. Amortization expenses in those divisions impacted earnings indirectly through changes to rate base. The "other unbundled utility divisions" also include the Generation Service Charge (GSC GSC gas-solid chromatography. ), the Conservation and Load Management (C&LM) charge, and the Renewables renewables npl → erneuerbare Energien pl charge. Those were pass-through pass-through n. 1. An opening between two rooms, especially a shelved space between a kitchen and dining room that is used for passing food. 2. A route through which something is permitted to pass. 3. charges. Except for a small management fee earned in the C&LM division, expenses were either accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. or deferred such that there was no net income associated with those divisions. Overall, UI's total revenue, net of sharing, decreased by $0.2 million in the fourth quarter of 2001, from $152.7 million in the fourth quarter of 2000 to $152.5 million in the fourth quarter of 2001. Details of the change in revenue are:
$ millions
----------------------------------------------------------------------
From From
Retail Revenue Increase/(Decrease) Operations One-Time Items Total
----------------------------------------------------------------------
Revenue from Distribution Division:
Estimate of operating
Distribution Division
component of "weather
corrected" retail
sales growth, (0.5)% (0.3) (0.3)
Estimate of operating
Distribution Division
component of weather
effect on retail
sales, (2.4)% (1.3) (1.3)
Impact of mix of sales on
average price and other 1.8 1.8
Sharing revenues (0.2) (0.2)
Total Retail Revenue from
Distribution Division 0.0 0.0
Revenue from other unbundled
utility divisions (1.7) (1.7)
Total UI Retail Revenue (1.7) (1.7)
Other Operating Revenue
Increase (Decrease)
NEPOOL transmission revenues 1.6 1.6
Other transmission 0.1 0.1
Other (0.2) (0.2)
Total UI Other Operating
Revenues 1.5 1.5
Total UI Revenues (0.2) (0.2)
Retail fuel and energy expense decreased by $7.9 million in the fourth quarter of 2001 compared to the fourth quarter of 2000. UI receives, and will receive through 2003, electricity to satisfy its standard offer retail customer service requirements through fixed-price purchased power agreements. These costs are recovered through the GSC portion of UI's unbundled retail customer rates. It should be noted that a small number of customers have selected alternate alternate /al·ter·nate/ (awl´ter-nit) 1. following in turns. 2. pertaining to every other one in a series. 3. occurring in place of another; acting as a substitute. suppliers to provide generation services, but this has no effect on UI's financial results. UI's operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for operation, maintenance and purchased capacity (O&M and Capacity) increased by $1.6 million, from $37.9 million in the fourth quarter of 2000 to $39.5 million in the fourth quarter of 2001. The principal components of these expense changes included:
$ millions
----------------------------------------------------------------------
Increase/
Operating Distribution Division: (Decrease)
Pension fund earnings (Note A) 2.8
NEPOOL transmission expense 1.3
Severance costs 1.5
Other (4.3)
Total Operating Distribution Division 1.3
O&M and Capacity from other
unbundled utility divisions 0.3
Total O&M expense 1.6
Note A: This cost increase reflects the deteriorating conditions
in the financial markets over the past twenty-one months.
Amortization of regulatory assets increased in the fourth quarter
of 2001 compared to the fourth quarter of 2000 by $6.8 million ($4.5
million after-tax). The principal components of this change were:
$ millions
----------------------------------------------------------------------
Amortization of regulatory assets: As Booked After-tax
----------------------------------------------------------------------
Distribution Division:
Accelerated amortization 2.0 1.7
"Sharing" from operations 0.2 0.1
Total Distribution Division 2.2 1.8
Amortization in CTA and SBC 4.6 2.7
Total amortization of
regulatory assets 6.8 4.5
Nuclear Division The nuclear division contributed $0.16 per share in the fourth quarter of 2001 compared to a loss of $0.19 per share in the fourth quarter of 2000. The $0.35 per share earnings improvement was driven by a $6.7 million improvement in wholesale sales margin. Because of an extended refueling and repair outage at the Seabrook Seabrook may refer to: Australian locations
Either of two flat, round stones used for grinding grain to make flour. The stationary bottom stone is carved with shallow grooved channels that radiate from the centre. The upper stone rotates horizontally, and has a central hole through which grain is poured. Unit 3 generating unit on March 31, 2001. O&M expense reductions in the fourth quarter of 2001 compared to the fourth quarter of 2000 of $0.4 million at Seabrook and $1.4 million from the Millstone sale also contributed to the improvement in earnings for the nuclear division.
United Resources Results of Operations:
Fourth Quarter of 2001 vs. Fourth Quarter of 2000
-------------------------------------------------
Quarter Quarter 2001 more (less)
Ended Ended than 2000
Dec. 31, Dec. 31, Amount Percent
2001 2000
----------------------------------------------------------------------
EPS from operations (Basic and Diluted)
Operating Businesses
American Payment Systems,
Inc. (APS) $(0.01) $0.02 $(0.03) (150.0)%
Xcelecom, Inc. $0.15 $0.10 $0.05 50.0%
----- ----- -----
Subtotal Operating Businesses $0.14 $0.12 $0.02 16.7%
Passive Investments
United Bridgeport Energy,
Inc. (UBE) $0.11 $0.01 $0.10 1000.0%
United Capital Investments,
Inc. (UCI) $(0.07) $0.03 $(0.10) (333.3)%
------- ----- ------
Subtotal Passive Investments $0.04 $0.04 $0.00 0.0%
URI Headquarters (Note A) $(0.07) $(0.07) $0.00 0.0%
------- ------ -----
Total Non-Regulated EPS from
Operations $0.11 $0.09 $0.02 22.2%
Note (A): Includes financial leveraging, strategic and administrative costs of the non-regulated business units. Overall, the consolidated non-utility businesses operating under the parent, URI, earned approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $1.5 million, or $0.11 per share in the fourth quarter of 2001 compared to about $1.3 million, or $0.09 per share in the fourth quarter of 2000. Operating revenue operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. for the URI businesses increased by $25.4 million, or 33%, from $76.2 million in the fourth quarter of 2000 to $101.5 million in the fourth quarter of 2001. Expenses for the URI businesses, including cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold , selling and administrative expenses, increased by $25.0 million. Operating revenue and expense increases were due primarily to acquiring other companies. The results of each of the subsidiaries of URI for the fourth quarter of 2001, as presented below, reflect the allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as of debt costs from the parent based on a capital structure, including an equity component, and an interest rate deemed to be appropriate for that type of business. The targeted capital structures for each of URI's subsidiaries are: 100% equity for APS and UCI UCI University of California, Irvine UCI Union Cycliste Internationale (International Cycling Union) UCI Unidad de Cuidados Intensivos UCI United Cinemas International (UK) , 65% equity and 35% debt for Xcelecom, and 30% equity and 70% debt for UBE Ube ( `bā), city (1990 pop. 175,053), Yamaguchi prefecture, SW Honshu, Japan, on the Inland Sea. It has a modern harbor and an important chemical industry. . URI absorbs interest
charges on the equity portion of its investments in its subsidiaries to
the extent those investments are financed with debt. URI may incur To become subject to and liable for; to have liabilities imposed by act or operation of law.Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. other expenses necessary to manage its investments from time to time. The following is a detailed explanation of these variances by URI subsidiary. URI Operating Businesses American Payment Systems, Inc. APS lost $0.01 per share in the fourth quarter of 2001 compared to earnings of $0.02 per share in the fourth quarter of 2000. Earnings decreased due to higher business development and selling expenses associated primarily with the implementation of APS's strategic growth plans. Xcelecom, Inc. Xcelecom earned $0.15 per share in the fourth quarter of 2001 compared to $0.10 per share in the fourth quarter of 2000. The increase was due to acquisitions made by Xcelecom during 2001 and an overall improvement in profitability from 2.6% to 3.1% of sales. Operating revenue increased by $16 million from $67 million in the fourth quarter of 2000 to $83 million in the fourth quarter of 2001, due to $28 million in revenues from 2001 acquisitions, offset by a $12 million decrease in same store sales Same Store Sales A statistic used in retail industry analysis. It compares sales of stores that have been open for a year or more. Notes: This statistic allows investors to determine what portion of new sales has come from sales growth and what portion from the opening of . URI Passive Investments United Bridgeport Energy, Inc. UBE contributed $0.11 per share in the fourth quarter of 2001 compared to $0.01 per share in the fourth quarter of 2000. In 2001, UBE took steps to reduce the operating and margin risks that occurred in 2000, resulting in the improved performance. See the "Looking Forward" section for more information on issues involving Installed Capacity revenues. United Capital Investments, Inc. UCI lost $0.07 per share in the fourth quarter of 2001 compared to earnings of $0.03 per share in 2000. The loss in 2001 was due primarily to valuation losses on passive investments. The earnings in 2000 were due to unrealized gains Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. on passive investments. URI Headquarters URI Headquarters incurred after-tax expenses of $0.9 million, or $0.07 per share, in the fourth quarter of 2001. This was the same result experienced in the fourth quarter of 2000. The results of each of the subsidiaries of URI, as presented above, reflect interest expense on allocated debt from URI, based on a capital structure, including an equity component, and an interest rate deemed to be appropriate for that type of business. Some financial leveraging, and strategic and administrative costs for the subsidiaries of URI, are retained by the parent URI. Twelve Months 2001 vs. Twelve Months 2000 UIL Holdings Corporation Results: Twelve Months 2001 vs. Twelve Months 2000 ----------------------------------------- Earnings for UIL Holdings Corporation (UIL) were $59.4 million in 2001, or $4.21 per share. This was above the top of the estimated 2001 range of $4.05 - $4.15 reported in UIL's earnings release dated July July: see month. 23, 2001 and reaffirmed in its earnings release dated October 22, 2001. UIL's utility subsidiary, United Illuminating (UI), hit the top of its range and UIL's non-utility subsidiary, United Resources (URI), exceeded its top range despite the poorer than expected performance of passive investments reflecting poor financial market conditions. URI's Xcelecom subsidiary exceeded expectations in 2001, offsetting the negative passive investment performance. Compared to 2000, UIL's results reflected a decrease in earnings of $1.4 million, or $0.11 per share. The reduction was due primarily to the absence of one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. gains of $0.9 million, or $0.06 per share recorded in 2000, to higher amortization of regulatory assets as mandated for 2001 in UI's rate plan, and to a decrease in UI's pension fund earnings resulting from poor financial market conditions. These reductions were mostly offset by improved Nuclear Division performance due to an extended outage in 2000, and to an improvement at the non-utility businesses to more than eleven times the income earned in 2000. The non-utility improvement was driven by Xcelecom's acquisition strategy, which had to overcome losses in passive financial investments. The total impact of poor financial market performance on the Company's 2001 earnings was about $0.50 per share. Absent those factors, UIL Holdings would have earned about $4.71 per share in 2001, or a 9% increase over 2000 earnings.
Year Ended Year Ended 2001 more (less)
($000 except Earnings Dec. Dec. than 2000
per Share (EPS)) 31, 2001 31, 2000 Amount Percent
----------------------------------------------------------------------
Net Income
UI from Operations $48,036 $53,370 $(5,334) (10.0)%
Nuclear Operations Division 9,003 6,347 2,656 41.8%
United Resources (Non-Utility) 2,324 182 2,142 1176.9%
Total Net Income from
Operations 59,363 59,899 (536) (0.9)%
United Illuminating from
One-time Items 0 858 (858) (100.0)%
Total Net Income $59,363 $60,757 $(1,394) (2.3)%
Earnings per Share
UI from Operations $3.41 $3.80 $(0.39) (10.3)%
Nuclear Operations Division 0.64 0.45 0.19 42.2%
United Resources (Non-Utility) 0.16 0.01 0.15 1500.0%
Total EPS from Operations 4.21 4.26 (0.05) (1.2)%
United Illuminating from
One-time Items 0.00 0.06 (0.06) (100.0)%
Total EPS - Basic $4.21 $4.32 $(0.11) (2.5)%
Total EPS - Diluted $4.19 $4.31 $(0.12) (2.8)%
The following is a line-by-line tabular summary of some lines of
UIL's income statement, including comparisons between 2001 and 2000 by
subsidiary. Significant variances are explained in the individual
subsidiary sections that follow.
($000 except percents) Year Ended Year Ended 2001 more (less)
than 2000
Dec. 31, Dec. 31, Amount Percent
2001 2000
-----------------------------------------
Operating Revenue
UI from operations,
before sharing 669,476 651,136 18,340 2.8%
UI sharing from operations (3,864) (12,701) 8,837 (69.6%)
UI one-time items 0 9,642 (9,642) (100.0%)
Nuclear 49,206 56,614 (7,408) (13.1%)
URI 371,028 176,164 194,864 110.6%
--------- --------- -------- --------
Total 1,085,846 880,855 204,991 23.3%
Fuel and energy expense
UI from operations 264,954 273,979 (9,025) (3.3%)
Nuclear 6,953 8,174 (1,221) (14.9%)
--------- --------- -------- --------
Total 271,907 282,153 (10,246) (3.6%)
Purchased capacity
and Operation &
maintenance expense
UI 154,460 139,390 15,070 10.8%
Nuclear 22,699 32,980 (10,280) (31.2%)
URI 351,003 163,308 187,695 114.9%
--------- --------- -------- --------
Total 528,163 335,678 192,485 57.3%
Other taxes
UI 15,440 16,896 (1,457) (8.6%)
Nuclear 1,222 1,409 (186) (13.2%)
URI 1,620 1,345 275 20.4%
--------- --------- -------- --------
Total 18,282 19,650 (1,368) (7.0%)
Depreciation
UI 27,448 26,847 601 2.2%
Nuclear 1,485 1,714 (229) (13.3%)
URI 8,334 4,717 3,617 76.7%
--------- --------- -------- --------
Total 37,267 33,278 3,989 12.0%
Income Taxes
UI 44,188 47,685 (3,497) (7.3%)
Nuclear 6,091 4,173 1,918 46.0%
URI 2,089 440 1,648 374.3%
--------- --------- -------- --------
Total 52,368 52,298 70 0.1%
Interest charges
including dividends
on mandatorily
redeemable securities
UI 31,033 31,661 (627) (2.0%)
Nuclear 1,777 2,111 (334) (15.8%)
URI 10,728 10,727 2 0.0%
--------- --------- -------- --------
Total 43,539 44,499 (960) (2.2%)
United Illuminating Results of Operations: 2001 vs. 2000
Results for 2001 for UI, excluding the nuclear division and
one-time items, decreased by $0.39 per share compared to 2000. The
nuclear division earned $0.64 per share in 2001, an increase of $0.19
per share compared to 2000.
Year Year
Ended Ended 2001 more (less)
($000 except Earnings Dec. 31, Dec. 30, than 2000
Per Share (EPS)) 2001 2000 Amount Percent
----------------------------------------------------------------------
EPS from operations (Basic)
UI excluding Nuclear
Division and Sharing $3.72 $4.81 $(1.09) (22.7)%
Sharing (0.31) (1.01) 0.70 --
Subtotal UI excluding Nuclear 3.41 3.80 (0.39) (10.3)%
Nuclear Division 0.64 0.45 0.19 42.2%
---- ---- ----
Total UI EPS from operations $4.05 $4.25 $(0.20) (4.7)%
Retail GWH Sales (thousands of MWH) 5,724 5,654 112 1.3%
UI excluding the Nuclear Division Excluding the nuclear division, UI's earnings from operations were $3.41 per share in 2001 compared to $3.80 per share in 2000. The $0.39 per share decrease was due primarily to the $8.0 million increase on a pre-tax basis ($6.8 million after-tax) in accelerated amortization expense that went into effect on January 1, 2001 as part of the Rate Plan, and to a $13.1 million decrease in the pre-tax earnings ($7.7 million after-tax) of UI's pension fund. These increased costs caused almost all of UI's pre-sharing earnings reduction in 2001 compared to 2000, and were partly offset by an attendant ATTENDANT. One who owes a duty or service to another, or in some sort depends upon him. Termes de la Ley, h.t. As to attendant terms, see Powell on Morts. Index, tit. Attendant term; Park on Dower, c. 1 7. $0.70 per share reduction in sharing. In 2001, earnings for the distribution division that exceeded 11.5%, on an annual basis, were "shared," one-third for customer bill surcredits, one-third to increase amortization of regulatory assets, and one-third retained as earnings. The details below explain the variances for all of UI excluding the nuclear division. It should be noted that changes to income and expense items in the distribution division had an immediate net income impact in 2001, while changes to those items in "other unbundled utility divisions" did not. Those divisions include the Competitive Transition Assessment (CTA) and the Systems Benefits Charge (SBC), both of which earned an 11.5% return on the equity portion of their respective rate bases. That return was achieved by either accruing additional amortization expenses, or by deferring such expenses as required. Amortization expenses in those divisions impacted earnings indirectly through changes to rate base. The "other unbundled utility divisions" also include the Generation Service Charge (GSC), the Conservation and Load Management (C&LM) charge, and the Renewables charge. Those were pass-through charges. Except for a small management fee earned in the C&LM division, expenses were either accrued or deferred such that there was no net income associated with those divisions. Overall, UI's total revenue increased by $17.5 million in 2001, from $648.1 million in 2000 to $665.6 million in 2001. Details of the change in revenue are:
$ millions
----------------------------------------------------------------------
From From
Retail Revenue Increase/(Decrease) Operations One-Time Items Total
Revenue from Distribution Division:
Estimate of operating
Distribution Division
component of "weather
corrected" retail sales
growth, 0.2% 0.5 0.5
Estimate of operating
Distribution Division
component of weather effect
on retail sales, 1.4% 4.1 4.1
Impact of Leap Year 2000, (0.3)% (0.8) (0.8)
Impact of mix of sales
on average price and other 0.3 0.3
Sharing revenues 8.8 5.3 14.1
Total Retail Revenue from
Distribution Division 12.9 5.3 18.2
Revenue from other
unbundled utility divisions 6.6 -- 6.6
Total UI Retail Revenue 19.5 5.3 24.8
Other Operating Revenue
Increase (Decrease)
NEPOOL transmission revenues 6.3 6.3
Other transmission 1.0 1.0
One-time item in 2000 (15.0) (15.0)
Other (0.5) (0.5)
Total UI Other Operating Revenues (8.2) (8.2)
UI Wholesale Pass-through
Revenue Increase
(Decrease) - CTA 0.9 0.9
Total UI Revenues 12.2 5.3 17.5
Retail fuel and energy expense decreased by $9.7 million in 2001 compared to 2000. UI receives, and will receive through 2003, electricity to satisfy its standard offer retail customer service requirements through fixed-price purchased power agreements. These costs are recovered through the GSC portion of UI's unbundled retail customer rates. It should be noted that a small number of customers have selected alternate suppliers to provide generation services, but this has no effect on UI's financial results. UI's wholesale energy expense increased by $1.0 million, but these costs are passed through the CTA. UI's operating expenses for operation, maintenance and purchased capacity (O&M and Capacity) increased by $15.1 million, from $139.4 million in 2000 to $154.5 million in 2001. The principal components of these expense changes included:
$ millions
Increase/
Operating Distribution Division: (Decrease)
Pension fund earnings (Note A) 13.1
NEPOOL transmission expense 4.5
Severance costs 4.5
Other (1.4)
Total Operating Distribution
Division 20.7
O&M and Capacity from other
unbundled utility divisions (5.6)
Total O&M expense 15.1
Note A: This cost increase reflects the deteriorating conditions
in the financial markets over the past twenty-one months.
Amortization of regulatory assets increased in 2001 compared to
2000 by $22.4 million ($12.7 million after-tax). The principal
components of this change were:
$ millions
Amortization of regulatory assets: As Booked After-tax
Distribution Division:
Accelerated amortization 8.0 6.8
"Sharing" from operations (5.7) (4.9)
Total Distribution Division 2.3 1.9
Amortization in CTA and SBC 23.5 13.8
Amortization of regulatory assets excl./ one-time 25.8 15.7
One-time "Sharing" amortization (3.4) (3.0)
Total amortization of regulatory assets 22.4 12.7
Nuclear Division The nuclear division contributed $0.64 per share 2001 compared to $0.45 per share in 2000. The earnings improvement was driven by O&M expense reductions of $10.3 million in 2001 compared to 2000. About $3.5 million of the reduction occurred at the Seabrook nuclear generating unit primarily due to the absence of major outage costs incurred at the end of 2000, and $6.8 million of the reduction occurred at the Millstone Unit 3 nuclear generating unit, primarily due to the sale of that unit on March 31, 2001. Wholesale sales margin (revenues less energy expense) decreased by $6.2 million in 2001 compared to 2000. Wholesale sales revenues decreased by about $7.4 million in 2001 compared 2000. Revenues for the Seabrook generating unit increased by $3.1 million but revenues for the Millstone Unit 3 generating unit decreased by $10.4 million as a result of the sale. Energy expense decreased by $1.2 million due to a $1.5 million decrease at Millstone partly offset by a $0.3 million increase at Seabrook. UI's share of the Millstone 3 nuclear generating unit was sold on March 31, 2001. There was no direct impact on financial results in 2001, and net-of-tax proceeds from the sale that were in excess of the market value of the plant, as set by the DPUC, were credited to the CTA plant balances and rate base. That amount was approximately $15.8 million and is subject to true-up.
United Resources Results of Operations:
Twelve Months of 2001 vs. Twelve Months of 2000
-----------------------------------------------
Year Year 2001 more (less)
Ended Ended than 2000
Dec. 31, Dec. 31,
2001 2000 Amount Percent
----------------------------------------------------------------------
EPS from operations (Basic and Diluted)
Operating Businesses
American Payment Systems,
Inc. (APS) $(0.01) $0.15 $(0.16) (107)%
Xcelecom, Inc. $0.44 $0.15 $0.29 193%
----- ----- -----
Subtotal Operating Businesses $0.43 $0.30 $0.13 43%
Passive Investments
United Bridgeport Energy,
Inc. (UBE) $0.26 $(0.19) $0.45 --
United Capital Investments,
Inc. (UCI) $(0.28) $0.11 $(0.39) (355)%
------- ----- ------
Subtotal Passive Investments $(0.02) $(0.08) $0.06 --
URI Headquarters (Note A) $(0.25) $(0.21) $(0.04) (19)%
------- ------ ------
Total Non-Regulated EPS
from Operations $0.16 $0.01 $0.15 1500%
Note (A): Includes financial leveraging, strategic and administrative costs of the non-regulated business units. Overall, the consolidated non-utility businesses operating under the parent, URI, earned approximately $2.3 million, or $0.16 per share in 2001 compared to about $0.2 million, or $0.01 per share in 2000. Operating revenue for the URI businesses increased by $194.9 million, or 111%, from $176.1 million in 2000 to $371.0 million in 2001. Expenses for the URI businesses, including cost of goods sold, selling and administrative expenses, increased by $187.7 million in 2001 compared to 2000. Operating revenue and expense increases were due primarily to acquiring other companies. The results of each of the subsidiaries of URI for 2001, as presented below, reflect the allocation of debt costs from the parent based on a capital structure, including an equity component, and an interest rate deemed to be appropriate for that type of business. The targeted capital structures for each of URI's subsidiaries are: 100% equity for APS and UCI, 65% equity and 35% debt for Xcelecom, and 30% equity and 70% debt for UBE. URI absorbs interest charges on the equity portion of its investments in its subsidiaries to the extent those investments are financed with debt. URI may incur other expenses necessary to manage its investments from time to time. The following is a detailed explanation of these variances by URI subsidiary. URI Operating Businesses American Payment Systems, Inc. APS lost $0.01 per share in 2001 compared to earnings of $0.15 per share in 2000. Earnings at the core business improved by $0.04 per share year-over-year, to $0.19 per share, but earnings decreased due to higher business development and selling expenses, including the marketing, sales and information technology staffing and infrastructure associated primarily with the implementation of APS's strategic growth plans. Overall, the number of transactions processed by APS increased by five percent in 2001 compared to 2000, and revenues increased by 55%, validating val·i·date tr.v. val·i·dat·ed, val·i·dat·ing, val·i·dates 1. To declare or make legally valid. 2. To mark with an indication of official sanction. 3. APS' growth strategy. Xcelecom, Inc. Xcelecom earned $0.44 per share in 2001 compared to $0.15 per share in 2000. The increase was due primarily to acquisitions made by Xcelecom during 2001 and an overall improvement in profitability from 1.6% to 2% of sales. Operating revenue increased by $174 million from $138 million in 2000 to $312 million in 2001, due primarily to acquisitions but also to a 14.8% growth in same store sales. URI Passive Investments United Bridgeport Energy, Inc. UBE contributed $0.26 per share in 2001 compared to a loss of $0.19 per share in 2000. The loss in 2000 was due to mild weather that depressed energy sales prices, high gas prices that further reduced margins, an extended shutdown shut·down n. A cessation of operations or activity, as at a factory. shutdown Noun the closing of a factory, shop, or other business Verb shut down throughout the first half of the year, and a contract termination Defense procurement: the cessation or cancellation, in whole or in part, of work under a prime contract or a subcontract thereunder for the convenience of, or at the option of, the government, or due to failure of the contractor to perform in accordance with the terms of the contract (default). charge. In 2001, UBE took steps to reduce the operating and margin risks that occurred in 2000, resulting in the improved performance. See the "Looking Forward" section for more information on issues involving Installed Capacity revenues. United Capital Investments, Inc. UCI lost $0.28 per share in 2001 compared to earnings of $0.11 per share in 2000. The loss in 2001 was due primarily to valuation losses on passive investments. The earnings in 2000 were due to unrealized gains on passive investments. URI Headquarters URI Headquarters incurred after-tax expenses of $3.4 million, or $0.25 per share, in 2001 compared to a loss of $2.8 million or $0.21 per share in 2000. The results of each of the subsidiaries of URI, as presented above, reflect interest expense on allocated debt from URI, based on a capital structure, including an equity component, and an interest rate deemed to be appropriate for that type of business. Some financial leveraging, and strategic and administrative costs for the subsidiaries of URI, are retained by the parent URI. The earnings decrease at URI Headquarters reflects additional administrative expenses incurred for managing investments. LOOKING FORWARD Certain statements contained herein, regarding matters that are not historical facts, are forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995). Such forward-looking statements include risks and uncertainties; consequently, actual results may differ materially from those expressed or implied thereby, due to important factors including, but not limited to, general economic conditions, legislative and regulatory changes, demand for electricity and other products and services, changes in accounting principles, policies or guidelines, and other economic, competitive, governmental, and technological factors affecting the operations, markets, products, services and prices of the subsidiaries of UIL Holdings Corporation (UIL). Forward-looking statements included herein speak only as of the date hereof, and UIL Holdings undertakes no obligation to revise or update such statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events or circumstances. A Look at 2002 UIL Holdings' Earnings UIL expects that its 2002 earnings will be $4.10-$4.25 per share. This reflects lower earnings estimates for the utility business, the effects of the slowing economy, and lowered results and expectations from passive investments at United Resources (URI). See below for further details. UIL Holdings' Cash Flow UIL Holdings' cash flow available for dividends, investment and reduction of capital is expected to remain strong in 2002. UIL Holdings has a balanced approach of maintaining its strong dividend yield while prudently pru·dent adj. 1. Wise in handling practical matters; exercising good judgment or common sense. 2. Careful in regard to one's own interests; provident. 3. Careful about one's conduct; circumspect. investing internally generated cash in growth potential businesses or, if such investment opportunities are not available, in reducing its capital costs. The United Illuminating Company (UI) Rate-Related Regulatory Proceedings On October 31, 2001, the DPUC issued a final decision in UI's overearnings docket holding that as a result of the earnings sharing mechanism embedded Inserted into. See embedded system. in UI's rate plan, UI's customers have directly benefited when UI has earned more than its 11.5% authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: return on regulated common equity during the rate plan period. The DPUC's decision also found that UI's earnings are not expected to exceed 11.5% in 2002, but that just and reasonable rates for UI at this time can only be determined in the full Rate Case proceeding. Accordingly, the DPUC ordered UI to file rate case schedules with the DPUC by November 15, 2001. Because the earnings sharing mechanism was scheduled to end with the rate plan on December December: see month. 31, 2001, the DPUC also ordered that the earnings sharing mechanism be extended, effective January 1, 2002, until the conclusion of the Rate Case proceeding. UI did file rate case schedules on November 15, 2001, together with supporting pre-filed sworn written testimony Oral evidence offered by a competent witness under oath, which is used to establish some fact or set of facts. Testimony is distinguishable from evidence that is acquired through the use of written sources, such as documents. testimony n. . UI anticipates a final decision in the rate case proceeding within 180 days of this filing. UI cannot predict the outcome of the rate case, but strongly supports a rate plan that is similar to the plan that is presently in place. UI's earnings guidance for 2002 assumes that retail rates will not change as a result of the Rate Case proceeding, and that UI will be allowed to earn an 11.5% return on the common equity portion of its rate base, the same return it was allowed in 2001. Current earnings estimates for UIL anticipate that UI will earn the allowed return. UI also currently estimates that it will not exceed that return in 2002 and that there will be no sharing in 2002. UI Earnings Estimates for 2002 Overall, UI, including the nuclear division, is expected to contribute $3.75-$3.90 to UIL Holdings' earnings per share in 2002. This reflects projections presented by UI in its Rate Case filing. If UI were to earn an 11.5% return on regulated utility common equity, excluding the nuclear division, that level of earnings would generate $3.30-$3.40 per share. Under the current rate plan, UI is allowed to earn an 11.5% return on the equity portions of CTA and the Systems Benefits Charge (SBC) rate base (the latter is minimal), no more and no less. Amortization of the regulatory assets that are being recovered in the CTA includes several parts: straight-line straight-line adj. 1. Lying in a straight line. 2. Relating to a device whose linkage produces or copies motion in straight lines. 3. amortization of generation regulatory assets based on what would be the remaining normal book lives of those assets, amortization of other regulatory assets as prescribed pre·scribe v. pre·scribed, pre·scrib·ing, pre·scribes v.tr. 1. To set down as a rule or guide; enjoin. See Synonyms at dictate. 2. To order the use of (a medicine or other treatment). by the DPUC, any accelerated amortization and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. sharing amortization incurred by the distribution division, and a "true-up" amount of amortization. This true-up, comprised of deferred accounting or accelerated amortization, occurs if CTA revenues and expenses, including amortization expense, would produce a return more or less than the allowed return. In either case, the true-up amortization impacts the rate base, keeping it higher than it would be otherwise in the case of a shortfall Shortfall The amount by which the capital required to fulfill a financial obligation exceeds available capital. Notes: Shortfall risk is often combated with an efficient hedging strategy created by a fund, group, institution, or individual. in return, and reducing it in the case that the return would be higher than 11.5%. The true-up also adjusts for sales volume fluctuations as well as pricing factors. A similar adjustment, on a much less significant scale, applies to the SBC component. In the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. , the amortization and other expenses associated with these regulatory assets continue only until all of the regulatory assets are recovered. The generation service, conservation and renewables charges are pass-through charges, based on retail rates that were set by the DPUC for the standard offer period through 2003. In the case of generation service, UI has contracted with a unit of Dominion Resources for all of UI's retail customer standard offer service requirements through 2003, on a fixed-price basis. This arrangement protects UIL Holdings' shareowners and UI's retail customers from the type of market and pricing volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the that has been experienced in California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). , regardless of demand and volume requirements. The only retail electricity sales volume fluctuations that directly impact UI's net income are those that apply to the operating distribution division component of rates. Thus, a 1% sales volume increase would produce additional sales margin of about $2.4 million, $2.1 million after gross earnings tax, in 2002. Nuclear Division Earnings Estimates for 2001 The nuclear division contributed $0.64 per share to UIL Holdings' results for 2001. A refueling outage is scheduled for the second quarter of 2002 at the Seabrook nuclear generating unit. Assuming the unit operates normally for the remainder of the year, the contribution to earnings in 2002 of the unit should be about $0.45-$0.50 per share. It is possible for earnings to improve slightly from the estimated level if the unit operates at near full capacity. The 2002 estimate assumes that UI's share of the Seabrook Unit 1 nuclear generating unit will be sold around the end of 2002. There will be no direct impact on financial results at the time of sale. As with the Millstone Unit 3 sale, net-of-tax proceeds from the sale that are in excess of the market value of the plant, as set by the DPUC, will be credited to the CTA plant balances and rate base. United Resources, Inc. (URI) Earnings Estimates UIL Holdings' non-regulated businesses, under the parent URI, are expected to earn $0.30-$0.40 per share in 2002. American Payments Systems, Inc. (APS) APS is expected to earn between $(0.05) and $0.00 per share in 2002. The expected results reflects anticipated strategic expenses designed to produce future earnings enhancements in the non-contracted payment and financial services segments of its business. Management's experience with Xcelecom, Inc. indicates that incurring in·cur tr.v. in·curred, in·cur·ring, in·curs 1. To acquire or come into (something usually undesirable); sustain: incurred substantial losses during the stock market crash. 2. short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. strategic expenses to build an appropriate management team and processes that are necessary to grow through acquisitions and product and service enhancements will increase shareowner share·own·er n. See shareholder. Noun 1. shareowner - someone who holds shares of stock in a corporation shareholder, stockholder investor - someone who commits capital in order to gain financial returns value in the longer term. Management believes that experience will be equally applicable to APS. APS has made acquisitions in 2001, giving APS the ability to both grow its agent base and to further diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. its products and services. APS' transaction volume grew by five percent in 2001 compared to 2000, a sign that its strategy is working. Xcelecom, Inc. Earnings for Xcelecom are expected to grow to approximately $0.60-$0.65 per share in 2002 from the $0.44 per share earned in 2001. This estimate reflects a $0.15 per share increase due to the change in accounting for goodwill mandated by Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 142, "Goodwill and Other Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. ." It also reflects the impact of the slowing economy on the construction and systems integration industry, and the completion of several large, non-recurring contracts in 2001. Backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. in Xcelecom's construction units, which comprise To embrace, cover, or include; to confine within; to consist of. In the law governing patents—grants of an exclusive right or privilege to make, use, or sell an invention or product for a term of years—the term comprise approximately 85% of expected 2002 sales, amounted to $106 million at December 31, 2001. In the course of operations, the Xcelecom is subject to certain risk factors, including but not limited to: exposure to downturns in the economy, risks related to its acquisition strategy, risks related to management of internal growth, availability of qualified employees, competition, seasonality, risks associated with contracts, significant fluctuations in quarterly results, recoverability of goodwill, collectibility of receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed , dependence on key personnel, and risks associated with the availability of capital and with debt service. URI Passive Investments Earnings from URI's passive investments, offset by its headquarters' costs, are expected to be $(0.20)-$(0.30) per share in 2002. This estimate incorporates no investment income at UCI. URI's investments also include United Bridgeport Energy, Inc. (UBE), which is expected to earn about $0.05-$0.10 per share in 2002. UBE's expected contribution assumes the realization (specification) realization - A UML semantic relationship between a classifier that specifies a contract and another classifier that guarantees to carry it out. [Handout by Mr. David Gillibrand]. of UBE's 33 1/3% portion of the revenues of Bridgeport Energy LLP LLP - Lower Layer Protocol (BE) related to the market value of the Installed Capacity (ICAP (1) (Internet Content Adaptation Protocol) A high-level protocol for requesting services from an Internet-based server. iCAP provides a common format for requesting services using standard HTTP messaging. ) of its merchant wholesale electric generating facility in Bridgeport, Connecticut “Bridgeport” redirects here. For other uses, see Bridgeport (disambiguation). Bridgeport is the most populous city in the U.S. state of Connecticut, and the fifth-largest city in New England. . BE's ICAP customer is currently disputing its contract with BE. The Federal Energy Regulatory Commission The Federal Energy Regulatory Commission (FERC) is the United States federal agency with jurisdiction over electricity sales, wholesale electric rates, hydroelectric licensing, natural gas pricing, and oil pipeline rates. (FERC FERC Federal Energy Regulatory Commission FERC FEMA Emergency Response Capability ), in an order issued August 28, 2001 re-affirmed the value of the ICAP market in New England New England, name applied to the region comprising six states of the NE United States—Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut. The region is thought to have been so named by Capt. as a necessary reliability function. The FERC order also set a deficiency A shortage or insufficiency. The amount by which federal Income Tax due exceeds the amount reported by the taxpayer on his or her return; also, the amount owed by a taxpayer who has not filed a return. charge price for ICAP at a level that supports BE's contract price. Management is confident that UBE will prevail on this issue although there can be no assurance that it will. BE is continuing to record ICAP revenues pursuant to the existing terms of the ICAP contract. UBE's agreement with Duke Energy Trading and Marketing that mitigated mit·i·gate v. mit·i·gat·ed, mit·i·gat·ing, mit·i·gates v.tr. To moderate (a quality or condition) in force or intensity; alleviate. See Synonyms at relieve. v.intr. To become milder. UBE's exposure to operating and margin risk in 2001 expired ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. at the end of the year. Another agreement is currently being negotiated for 2002. However, if an agreement is not reached, UBE will have increased exposure to the risks described above. Quarterly Earnings Pattern for 2002 The 2002 quarterly earnings pattern for UIL is somewhat different from the 2001 pattern. A Seabrook Unit 1 nuclear generating unit outage scheduled for the second quarter of 2002, and an outage at UBE's generating investment beginning in March 2002 are expected to reduce second quarter earnings compared to the second quarter of 2001. The elimination of sharing in the third and fourth quarters of 2002 are expected to enhance earnings compared to the comparable quarters of 2001. Actual 2002 results may vary from estimates depending on changes due to weather, economic conditions, sales mix sales mix See product mix. (the usage pattern of the UI distribution division's retail customers), the ability to control expenses, and other unanticipated events. These factors can change from quarter to quarter. UIL's current overall estimate of earnings per share from operations for 2002 is $4.10-$4.25, and the estimates of quarterly results are as follows:
Earnings per share from operations:
Estimated Actual
Quarter 2002 Range(a) 2001
------- ---------- ----
1 $0.65 - $0.70 $0.67
2 $0.55 - $0.65 $1.08
3 $1.85 - $1.95 $1.77
4 $0.95 - $1.05 $0.69
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$4.21
(a) Quarterly range estimates are not additive additive In foods, any of various chemical substances added to produce desirable effects. Additives include such substances as artificial or natural colourings and flavourings; stabilizers, emulsifiers, and thickeners; preservatives and humectants (moisture-retainers); and , that is, adding the quarterly low range numbers produces a result that is lower than UIL Holdings' low estimate for the year, and adding the high range numbers produces a result that is higher than UIL Holdings' high estimate for the year. The sums of the low and high range values should not be construed to represent any estimate other than UIL Holdings' annual estimate of $4.10-$4.25 per share. The quarterly range estimates do not add to the total UIL Holdings' range for the year because impacts in one quarter can affect the results of other quarters through the sharing mechanism and through timing of activities. |
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