CH Energy Group Reports Second-Quarter Earnings.POUGHKEEPSIE Poughkeepsie (pəkĭp`sē), city (1990 pop. 28,844), seat of Dutchess co., SE N.Y., on the Hudson River; settled 1687 by the Dutch, inc. as a city 1854. , N.Y. -- Earnings per share for the second quarter of 2006 for CH Energy Group, Inc. (NYSE NYSE See: New York Stock Exchange :CHG CHG Change CHG Charge CHG Changed CHG Chlorhexidine Gluconate (aka chloraprep) CHG Centre Hospitalier Général (French: general hospital) CHG Come Holy Ghost (Catholicism) ) were 26 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , versus the 41 cents per share posted during the second quarter of 2005. Increased operating and maintenance expenses, unseasonable un·sea·son·a·ble adj. 1. Not suitable to or appropriate for the season. 2. Not characteristic of the time of year: unseasonable weather. 3. Poorly timed; inopportune. weather, and 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. income tax adjustments that had been made in 2005 were among the primary drivers of the variation. Some of the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. offsetting developments of the quarter included gains from several 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. mechanisms within utility Central Hudson Hudson, towns, United States Hudson. 1 Industrial town (1990 pop. 17,233), Middlesex co., E central Mass., on the Assabet River, in an apple-growing region; settled c.1699, inc. 1866. Gas & Electric Corporation, the sale of property held by holding company CH Energy Group and an increase in income from Central Hudson Enterprises Corporation's interest in Cornhusker corn·husk·ing n. 1. The husking of corn. 2. A social gathering for husking corn. Also called husking bee. corn Energy Lexington Lexington. 1 City (1990 pop. 225,366), seat of Fayette co., N central Ky., in the heart of the bluegrass region; inc. 1832, made coextensive with Fayette co. 1974. , LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , a Nebraska Nebraska (nəbrăs`kə), Great Plains state of the central United States. It is bordered by Iowa and Missouri, across the Missouri R. (E), Kansas (S), Colorado (SW), Wyoming (NW), and South Dakota (N). ethanol ethanol (ĕth`ənōl') or ethyl alcohol, CH3CH2OH, a colorless liquid with characteristic odor and taste; commonly called grain alcohol or simply alcohol. plant. "These quarter-over-quarter results were anticipated, and our business remains fundamentally strong," said Steven Ste´ven n. 1. Voice; speech; language. Ye have as merry a steven As any angel hath that is in heaven. - Chaucer. 2. An outcry; a loud call; a clamor. To set steven to make an appointment. V. Lant, Chairman of the Board, President and Chief Executive Officer. "We continue to make progress on several 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. objectives. Within our 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, the terms of an Order - approved by the New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of State Public Service Commission on July July: see month. 19 and made public just yesterday - to increase energy delivery rates are being carefully reviewed. If we accept those terms, these increases in electric and natural gas delivery rates would be the first in more than 13 years, and would immediately improve cash flows. "Our regulated utility and our non-regulated fuel distribution business, meanwhile, also both continue to see growth in their customer base. In addition, we continue to make progress in our non-regulated investment portfolio, with the addition of our majority ownership of the Lyonsdale Biomass biomass Weight or total quantity of living organisms of one animal or plant species (species biomass) or of all the species in the community (community biomass), commonly referred to as a unit area or volume of the habitat. plant that was acquired in April," Lant said. Regulated Electric and Gas Business: Central Hudson earned 25 cents per share in the second quarter of 2006, compared to 37 cents during the same period of 2005. Reduced heating and cooling degree days decreased electric deliveries for residential and commercial customers by 7 and 3 percent, respectively, from the same quarter of the prior year; electric deliveries to industrial customers declined by 4 percent. Natural gas deliveries decreased by 10 percent overall as compared to the second quarter of 2005, with residential, commercial and industrial deliveries falling by 10, 9 and 19 percent, respectively. Vegetation vegetation /veg·e·ta·tion/ (vej?e-ta´shun) any plantlike fungoid neoplasm or growth; a luxuriant fungus-like growth of pathologic tissue. management, transmission line inspection and other electric infrastructure expenses contributed to an increase in 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. . Various regulatory mechanisms partially offset the impacts of reduced sales and increased operating expenses. Unregulated Adj. 1. unregulated - not regulated; not subject to rule or discipline; "unregulated off-shore fishing" regulated - controlled or governed according to rule or principle or law; "well regulated industries"; "houses with regulated temperature" 2. Fuel Distribution Businesses: Griffith Griffith, town (1990 pop. 17,916), Lake co., extreme NW Ind.; inc. 1904. It is primarily a residential town in the Chicago metropolitan area. Manufactures include metal products, chemicals, and electronic equipment. Energy Services lost 13 cents per share - compared to a 9-cent-per-share loss during the same period last year - during a quarter in which fuel distribution businesses typically report losses due to the nature of their seasonal delivery business. Increased operating expenses associated with the acquisition of several small "tuck-in" fuel distribution companies also contributed to this business segment's quarterly loss; however, these acquisitions are expected to add to Griffith's revenues in the heating season. Additional marketing expenses were also incurred in order to increase the residential customer base. Improved service profitability resulting from increased service contract revenue helped to offset the decline, as did an increase in margins for certain petroleum products. Unregulated - Other Businesses: Unregulated business units earned 14 cents during the quarter, compared to 13 cents in the second quarter of 2005. Central Hudson Enterprises Corporation's investment in the Cornhusker ethanol plant increased earnings by 4 cents per share during the quarter, while the sale of property held by the holding company increased quarterly results by 3 cents. Income taxes increased 8 cents compared to the second quarter of the prior year due to the absence of a one-time item related to the favorable settlement of a 2001 tax audit. About CH Energy Group With more than 450,000 customers CH Energy Group, Inc. is a family of companies seizing new opportunities in the energy marketplace through two primary subsidiaries: Central Hudson Gas & Electric Corporation is a regulated transmission and distribution utility serving approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 367,000 customers in eight counties of New York State's Mid-Hudson River Valley, and delivering natural gas and electricity in a 2,600-square-mile service territory that extends from the suburbs of metropolitan New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. north to the Capital District at Albany Albany, town, Australia Albany (ăl`bənē), town (1996 pop. 14,590), Western Australia, SW Australia. It is a port on Princess Royal Harbour of King George Sound. The town has woolen mills and fish canneries. . Central Hudson Enterprises Corporation, a non-regulated subsidiary, 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 a family of energy-related companies and investments focused primarily on fuel oil distribution and renewable energy Renewable energy utilizes natural resources such as sunlight, wind, tides and geothermal heat, which are naturally replenished. Renewable energy technologies range from solar power, wind power, and hydroelectricity to biomass and biofuels for transportation. . CHEC's fuel distribution business supplies energy products and services to more than 85,000 customers in seven states, stretching from 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). to the Washington Washington, town, England Washington, town (1991 pop. 48,856), Sunderland metropolitan district, NE England. Washington was designated one of the new towns in 1964 to alleviate overpopulation in the Tyneside-Wearside area. , D.C. area. CHEC CHEC Children's Health Environmental Coalition CHEC Christian Home Educators of Colorado CHEC Commonwealth Human Ecology Council (UK) CHEC Coffs Harbour Education Campus also has interests in a Lexington, Neb., ethanol plant, two wind power projects, and a biomass plant in upstate New York Upstate New York is the region of New York State north of the core of the New York metropolitan area. It has a population of 7,121,911 out of New York State's total 18,976,457. Were it an independent state, it would be ranked 13th by population. . Conference Call: Mr. Lant will conduct a conference call with investors to review financial results at 2:00 p.m. (ET) today, July 25, 2006. Dial-in: 1-800-611-1148; Conference Name: "CH Energy Group." A digitized replay of the call will be available from 7:15 p.m. (ET) on July 25, 2006, until 11:59 p.m. (ET) on August 1, 2006, by dialing 1-800-475-6701 and entering access code #836163. In addition, the call will be web cast on the Company's Web site at www.CHEnergyGroup.com., where consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge are also available. 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. Statements included in this news release, including documents incorporated by reference that are not historical in nature, are intended to be, and are hereby identified as, "forward-looking statements" for purposes of the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provided by Section 21E of the Securities Exchange Act of 1934, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. . Forward-looking statements may be identified by words including "anticipates," "believes," "projects," "intends," "estimates," "expects," "plans," "assumes," "seeks," and similar expressions. Forward-looking statements including, without limitation, those relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc CH Energy Group, Inc. and its subsidiaries' future business prospects, revenues, proceeds, working capital, liquidity, income and margins, are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated in the forward-looking statements, due to several important factors including those identified from time to time in the forward-looking statements. Those factors include, but are not limited to: weather; energy supply and demand; fuel prices; interest rates; potential future acquisitions; developments in the legislative, regulatory and competitive environment; market risks; electric and gas 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 cost recovery; the ability to obtain adequate and timely rate relief; changes in fuel supply or costs; the success of strategies to satisfy electricity requirements now that Central Hudson's This article is about the defunct chain of department stores. For the former parent company formed by the 1969 merger with Dayton's, see Target Corporation. Hudson's, or The J.L. major electric generation assets have been sold; future market prices for energy, capacity, and ancillary Subordinate; aiding. A legal proceeding that is not the primary dispute but which aids the judgment rendered in or the outcome of the main action. A descriptive term that denotes a legal claim, the existence of which is dependent upon or reasonably linked to a main claim. services; the outcome of pending litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. and certain environmental matters, particularly the status of inactive in·ac·tive adj. 1. Not active or tending to be active. 2. a. Not functioning or operating; out of use: inactive machinery. b. hazardous waste Hazardous waste Any solid, liquid, or gaseous waste materials that, if improperly managed or disposed of, may pose substantial hazards to human health and the environment. Every industrial country in the world has had problems with managing hazardous wastes. disposal sites and waste site remediation requirements; and certain presently unknown or unforeseen factors, including, but not limited to, acts of terrorism terrorism, the threat or use of violence, often against the civilian population, to achieve political or social ends, to intimidate opponents, or to publicize grievances. . CH Energy Group, Inc. and its subsidiaries undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Given these uncertainties, undue reliance should not be placed on the forward-looking statements.
APPENDIX
--------
Highlights Relative to Prior Year
---------------------------------
2006 More
3 Months Ended June 30: 2006(1) 2005(1) (Less) than 2005
------------ ------------ -----------------
Operating Revenues $213,891,000 $189,570,000 $ 24,321,000
Income Available for
Common Stock $ 4,068,000 $ 6,533,000 $ ( 2,465,000)
Earnings Per Share
of Common Stock (Basic) $ .26 $ .41 $ (.15)
Average Shares
Outstanding (Basic) 15,762,000 15,762,000
(1) Unaudited
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: basic earnings per share of CH Energy Group Inc. (CHEG), decreased $.15 per share due to the following: Regulated Electric and Natural Gas Businesses - Central Hudson Gas & Electric Corp.: - $ .12 --Down $.12 due to an increase in various operating expenses. This figure is net of $.08 from the recording of electric revenues to restore earnings to the allowed rate of return in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the provisions of Central Hudson's Settlement Agreement, which expired ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. June June: see month. 30, 2006. Expenses that increased included: electric distribution and line clearance CLEARANCE, com. law. The name of a certificate given by the collector of a port, in which is stated the master or commander (naming him) of a ship or vessel named and described, bound for a port, named, and having on board goods described, has entered and cleared his ship or vessel work ($.06), electric transmission line inspection ($.03), uncollectible accounts Uncollectible account An account which cannot be collected by a company because the customer is not able to pay or is unwilling to pay. ($.02), other electric transmission and distribution expenses ($.03), and other expenses (total of $.06). --Down $.03 due to a decrease in natural gas net operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. resulting from warmer weather in April and May, as compared to the same months last year. Residential heating degree-days for these two months decreased 9% over last year. Billed deliveries to firm natural gas customers decreased 10% and the number of customers increased 1%. Industrial deliveries, which are approximately 4% of total firm sales, decreased 19%. --Up $.01 from electric and natural gas regulatory mechanisms including a favorable reconciling adjustment (4 cents) related to Central Hudson's gas supply charge and a 1 cent change related to electric shared earnings. In 2005, the gas supply adjustment was recorded in the third quarter. These increases were partially offset by the absence in the current quarter of 4 cents related to a billing issue resolved by the New York Independent System Operator (NYISO NYISO New York Independent System Operator (operator of the New York electric power grid) ) in June 2005. --Up $.03 from an increase in electric net operating revenues. Though weather decreased earnings by approximately $.03 per share; this decrease was more than offset by the absence in the current quarter of a 5 cent change in earnings related to a weather-hedging contract in place for the second quarter of 2005. A weather-hedging contract was not in effect for the month of June 2006, but a contract is in effect for July and August. The increase in net revenues also includes an increase in finance charges. Despite modest customer growth, total billed electric deliveries decreased 3%, including a 4% decrease in deliveries to residential customers and a 2% reduction in deliveries to commercial customers, both attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to a decrease in usage resulting from weather. Residential cooling degree-days were 3% lower than last year and residential electric heating-degree days were 7% lower than last year. --Down $.01 due to the net effect of various other items including an increase in interest charges and payroll payroll a list of employees, their salary rates, tax deductions, amounts paid, payroll tax, long service leave entitlements. and use taxes, which was partially offset by a reduction in income taxes. The increase in interest charges results from the issuance of medium-term notes Medium-term note (MTN) A corporate debt instrument that is continuously offered to investors over a period of time by an agent of the issuer. Investors can select from maturity bands of: 9 months to 1 year, more than 1 year to 18 months, more than 18 months to 2 years, etc. in December December: see month. of 2005. Unregulated - Fuel Distribution Business: - $ .04 --Down $.06 due to an increase in operating expenses. The increase in operating expenses is due to an increase in marketing and other general and administrative expenses, as well as expenses associated with the acquisitions made in the fourth quarter and the first half of 2006. --Up $.02 due to an increase in service profitability resulting primarily from an increase in service contract revenue. Gross margin from the sale of petroleum products was flat. A decrease in volume and margin in heating oil was offset by an increase in margin in motor fuels. Unregulated - Other Businesses: + $ .01 --Up $.04 due to an increase in income from Central Hudson Enterprises Corp.'s (CHEC) other investment interests, primarily its interest in the Cornhusker fuel ethanol production plant in Nebraska. --Up $.03 from a gain on the sale of property held by Energy Group, the holding company. --Up $.02 due to a reduction in business development costs and injuries and damages expense. --Down $.08 due largely to the absence in the current quarter of favorable income tax adjustments recorded in the second quarter of 2005 related to the completion of a tax audit for 2001. Second Quarter Results of Operations Regulated Electric and Natural Gas Businesses - Central Hudson Gas & Electric Corp. Utility deliveries of electricity within Central Hudson's service territory decreased 3% in the second quarter of 2006 as compared to the same quarter in 2005. Deliveries to residential and commercial customers decreased 4% and 2%, respectively, resulting from a decrease in usage due to weather, which was partially offset by modest customer growth. Residential electric heating Electric heating Methods of converting electric energy to heat energy by resisting the free flow of electric current. Electric heating has several advantages: it can be precisely controlled to allow a uniformity of temperature within very narrow limits; it is degree-days decreased 7% compared to the prior year while residential cooling degree-days decreased 3%. Deliveries to industrial customers decreased 4%. Utility deliveries of natural gas to firm Central Hudson customers decreased 10% as compared to last year's delivery volume. Deliveries to residential and commercial customers, largely space heating Space heating is the heating of a space, usually enclosed, such as a house or room. A space heater keeps the air and surroundings at a comfortable temperature for people or animals, or even plants in a greenhouse. deliveries, decreased 10% and 9%, respectively, due to warmer weather in the months of April and May, and were partially offset by modest customer growth. Residential gas heating degree-days for these two months, as compared to last year, decreased 9%. Industrial deliveries, which represent approximately 4% of total firm deliveries, decreased 19%, while deliveries to interruptible customers increased 16% due to an increase in the delivery of natural gas for electric generation. Utility electric and natural gas operating revenues increased $6.6 million (4.8%) from $137.8 million in 2005 to $144.4 million in 2006. Electric revenues increased $1.3 million (1.2%) and natural gas revenues increased by $5.3 million (17.1%). Electric revenues increased due largely to revenues made available by Central Hudson's current Settlement Agreement after ratemaking rate·mak·ing n. The practice of establishing rates of payment, as for public transportation or utilities. rate operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. reached a certain level and also, due to a change in revenues recorded for weather-hedging contracts. These increases were partially offset by a decrease in sales for resale resale n. selling again, particularly at retail. In many states a "resale license" or "resale number" is required so that the state can monitor the collection of sales tax on retail sales. RESALE. revenues; a decrease in revenues related to the recovery of purchased electricity costs through Central Hudson's energy cost adjustment mechanism, and a decrease in revenues from deliveries. Gas revenues increased due primarily to an increase in sales of natural gas for electric generation. These resale revenues increased $8.3 million, which was partially offset by a decrease in revenues related to the recovery of natural gas supply costs and a decrease in revenues from deliveries. Total utility operating expenses, including income taxes, increased $7.8 million (6.0%) from $129.4 million in 2005 to $137.2 million in 2006. The increase in operating expenses results largely from an increase in purchased natural gas expense, which increased $4.6 million due to an increase in volumes purchased, most of which was sold for electric generation. The increase of $10.0 million for volumes purchased was partially offset by a reduction in the wholesale cost of natural gas of $1.3 million and a decrease of $4.1 million in amounts recorded related to the recovery of these costs through Central Hudson's gas cost adjustment mechanism. Other operating expenses, including income taxes, increased $4.5 million due to an increase in expenses for electric line clearance work, transmission line inspections and other electric transmission and distribution maintenance and operation functions; an increase in expense related to uncollectible accounts and injuries and damages; and increases in other general and administrative expenses. These increases were partially offset by a decrease in income taxes due to lower taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. and a decrease in purchased electricity expense. The latter is due to lower wholesale costs and a reduction in volumes purchased due to a decrease in electric deliveries. Other Income increased by $.4 million reflecting an increase in regulatory carrying charges Payments made to satisfy expenses incurred as a result of ownership of property, such as land taxes and mortgage payments. Disbursements paid to creditors, in addition to interest, for extending credit. Consumer Protection laws require full disclosure of all carrying charges. due from customers related to pension costs and the recording of favorable regulatory adjustments for the change in interest rates on Central Hudson's variable rate long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. . The latter adjustment offsets the increase in interest on the variable rate debt noted below. Interest Charges increased $1.2 million due to an increase in interest charges on long and short-term debt Short-term debt Debt obligations, recorded as current liabilities, requiring payment within the year. and an increase in regulatory carrying charges due to customers related to a prior year adjustment on deferred proceeds from the sale of emission EMISSION, med. jur. The act by which any matter whatever is thrown from the body; thus it is usual to say, emission of urine, emission of semen, &c. 2. allowances. Interest on long-term debt increased due to the issuance of medium-term notes in December of 2005 and increased interest on Central Hudson's variable rate debt. Additional short-term debt was required in the second quarter of 2006 for working capital needs. Unregulated - Fuel Distribution Business Sales of petroleum products for CHEC's fuel distribution business increased 0.7 million gallons (2.8%) to 26.3 million gallons in the second quarter of 2006 from 25.6 million gallons in the second quarter of 2005. Motor fuel sales increased 1.3 million gallons (6.8%) from 18.2 million gallons in 2005 to 19.5 million gallons in 2006 while sales of propane propane, CH3CH2CH3, colorless, gaseous alkane. It is readily liquefied by compression and cooling. It melts at −189.9°C; and boils at −42.2°C;. decreased slightly from 0.33 million gallons in 2005 to 0.32 million gallons in 2006. Motor fuel sales increased primarily from the gain of one large volume customer and a 2005 acquisition. The decrease in propane sales is largely attributable to the warmer weather in 2006. Sales of heating oil to residential customers declined from 7.0 million gallons in 2005 to 6.5 million in 2006. The decrease resulted from a reduction in residential sales due primarily to warmer weather in the second quarter of 2006 as compared to 2005, as evidenced by a 17% decrease in heating degree-days, adjusted for billing lags. The decrease in volume was partially offset by an increase in sales from acquisitions made in the fourth quarter of 2005 and the second quarter of 2006. Revenues increased $16.6 million (32.2%) from $51.6 million in 2005 to $68.2 million in 2006 due to a significant increase in the price of petroleum products. Revenues from petroleum products increased $15.6 million (33.2%) from $47.0 million in 2005 to $62.6 million in 2006. Motor fuel revenues increased $13.9 million (43.2%) from $32.3 million in 2005 to $46.2 million in 2006. Heating oil revenues also increased $1.5 million (10.8%) from $13.9 million in 2005 to $15.4 million in 2006. Other revenues related to service and installations and energy services increased $1.0 million. Operating expenses for CHEC's fuel distribution business increased $17.3 million (32.5%) from $53.2 million in 2005 to $70.5 million in 2006. The cost of petroleum increased $15.6 million or 39% due to higher wholesale market prices. Other operating expenses increased $1.7 million in 2006 due to acquisitions made in the fourth quarter of 2005 and the first half of 2006. Additionally marketing expense and other general and administrative expenses increased in 2006. Unregulated - Other Businesses Revenues and Operating Expenses On April 12, 2006, CHEC purchased a majority interest in Lyonsdale Biomass, LLC ("Lyonsdale") for $9.8 million from Catalyst catalyst, substance that can cause a change in the rate of a chemical reaction without itself being consumed in the reaction; the changing of the reaction rate by use of a catalyst is called catalysis. Renewables renewables npl → erneuerbare Energien pl Corporation. Lyonsdale owns and operates a 19-megawatt wood-fired Adj. 1. wood-fired - fueled by wood; "a wood-burning stove' wood-burning fueled - heated, driven, or produced by burning fuel electric generating plant. The financial statements of Lyonsdale have been fully consolidated into the financial statements of CHEC. Other Income Other income and income taxes, for Energy Group, the holding company, and CHEC's investment in partnerships and interests other than fuel distribution operations increased $.2 million as follows. Other income increased $2.1 million including $1.1 million of income realized by CHEC's investments, largely due to its interest in a fuel ethanol production plant in Nebraska; a $.7 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta gain on the sale of property held by Energy Group; and reductions in Energy Group business development expenses, and injuries and damages expense. Income taxes increased $1.9 million due to favorable adjustments recorded in the second quarter of 2005 related to the completion of a tax audit for 2001. CH Energy Group, Inc. Year-to-Date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. 2006 Relative to the Prior Year Consolidated basic earnings per share for the six months ended June 30, 2006, were $1.42 as compared to earnings of $1.70 for the six months ended June 30, 2005. The $.28 per share decrease in earnings is attributable to the following: --A $.25 per share decrease from Central Hudson, Energy Group's regulated business, due primarily to an increase in operating expenses and a decrease in deliveries of electricity and natural gas due to weather. Expenses that increased included storm restoration efforts, electric distribution and line clearance work, electric transmission line inspection, and other expenses. These reductions in earnings were partially offset by the recording of electric and natural gas revenues to restore earnings to the allowed rate of return in accordance with the provisions of Central Hudson's current Settlement Agreement; by favorable changes in earnings related to weather-hedging contracts and electric shared earnings; and by a favorable reconciling adjustment related to Central Hudson's gas supply charge. --A $.06 per share decrease from CHEC's unregulated fuel distribution business due to an increase in operating expenses including marketing and other general and administrative expenses, as well as expenses associated with acquisitions made in the fourth quarter of 2005 and in the first half of 2006. The increase in expenses was offset by an increase in service profitability resulting primarily from an increase in service contract revenue and improved margins. Earnings were reduced by a decrease in sales of petroleum products due to weather. --A $.03 per share increase from Energy Group's other unregulated businesses largely due to income realized by CHEC's interest in the Cornhusker fuel ethanol production plant and a gain realized from the sale of property held by Energy Group, the holding company. CH Energy Group, Inc. (consolidated) remains in a strong financial position. At June 30, 2006, CHEG had $37.0 million in cash and cash equivalents and $40.2 million of 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. investments. Its current obligations included $33.5 million of short-term debt outstanding and $33 million of current maturities of long-term debt maturing on March 28, 2007. Please note that this report plus the consolidated financial statements are available on the Company's website at www.chenergygroup.com.
CH ENERGY GROUP, INC.
CONSOLIDATED STATEMENT OF INCOME
(Unaudited) (Unaudited)
3 Months Ended 6 Months Ended
June 30, June 30,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Operating Revenues
Electric $107,930 $106,620 $243,977 $233,277
Natural Gas 36,458 31,142 107,267 94,571
Competitive Business
Subsidiaries 69,503 51,808 179,879 147,809
--------- --------- --------- ---------
Total Operating Revenues 213,891 189,570 531,123 475,657
--------- --------- --------- ---------
Operating Expenses
Operations - Purchased
Electricity and Fuel Used in
Electric Generation,
Purchased Natural Gas, and
Purchased Petroleum 144,450 124,925 366,875 317,944
Other Expenses of Operation -
Regulated Activities 29,985 24,129 58,480 48,859
Other Expenses of Operation -
Comp. Bus. Subsidiaries 15,023 12,184 30,693 26,707
Depreciation and Amortization 9,124 9,102 18,077 18,189
Taxes, Other Than Income Tax 8,517 8,850 16,121 16,765
--------- --------- --------- ---------
Total Operating Expenses 207,099 179,190 490,246 428,464
--------- --------- --------- ---------
Operating Income 6,792 10,380 40,877 47,193
--------- --------- --------- ---------
Other Income & Deductions
Interest and Investment
Income 2,909 2,353 5,603 4,720
Other - Net 1,597 (324) 1,110 (846)
--------- --------- --------- ---------
Total Other Income &
Deductions 4,506 2,029 6,713 3,874
--------- --------- --------- ---------
Interest Charges
Interest on Debt 4,071 3,519 8,024 6,766
Other Interest 946 262 1,983 1,318
--------- --------- --------- ---------
Total Interest Charges 5,017 3,781 10,007 8,084
--------- --------- --------- ---------
Income Before Income Taxes and
Preferred Dividends of
Subsidiary and Minority
Interest 6,281 8,628 37,583 42,983
Income Taxes 2,099 1,853 14,858 15,625
Minority Interest (128) - (128) -
--------- --------- --------- ---------
Income Before Preferred
Dividends of Subsidiary 4,310 6,775 22,853 27,358
Cumulative Preferred Stock
Dividends of Subsidiary 242 242 485 485
--------- --------- --------- ---------
Net Income 4,068 6,533 22,368 26,873
Dividends Declared on Common
Stock 8,512 8,511 17,023 17,023
--------- --------- --------- ---------
Amount Retained in the
Business ($4,444) ($1,978) $5,345 $9,850
========= ========= ========= =========
Avg. Shares of Common Stock
Outstanding - (Basic)
(000s) 15,762 15,762 15,762 15,762
Avg. Shares of Common Stock
Outstanding - (Diluted)
(000s) 15,775 15,769 15,776 15,770
Earnings Per Share - (Basic) $0.26 $0.41 $1.42 $1.70
Earnings Per Share - (Diluted) $0.26 $0.41 $1.41 $1.70
Dividends Declared Per Share $0.54 $0.54 $1.08 $1.08
CH ENERGY GROUP, INC.
CONSOLIDATED BALANCE SHEET
June 30, December 31,
2006 (1) 2005 (2)
------------ ------------
ASSETS (Thousands of Dollars)
UTILITY PLANT
Utility Plant $1,090,152 $1,074,215
Less Accumulated Depreciation 342,116 333,164
------------ ------------
748,037 741,051
Construction Work in Progress 49,434 38,460
------------ ------------
Net Utility Plant 797,471 779,511
------------ ------------
OTHER PROPERTY AND PLANT & EQUIPMENT 33,810 23,138
------------ ------------
CURRENT ASSETS
Cash and Cash Equivalents 36,968 49,410
Short-term Investments - available-for-sale
securities 40,200 42,100
Accounts Receivable from Customers 70,795 97,462
Materials & Supplies 29,239 28,350
Fair Value of Derivative Instruments 9 -
Regulatory Assets 18,719 30,764
Special Deposits and Prepayments 27,422 24,350
Accumulated Deferred Income Tax - Net 15,335 8,836
Other 11,434 15,660
------------ ------------
250,121 296,932
------------ ------------
DEFERRED CHARGES AND OTHER ASSETS 312,532 279,925
------------ ------------
TOTAL $1,393,934 $1,379,506
============ ============
CAPITALIZATION and LIABILITIES
CAPITALIZATION
Common Equity (3) $509,321 $503,833
Cumulative Preferred Stock:
Not subject to mandatory redemption 21,027 21,027
Long-term Debt 310,887 343,886
------------ ------------
841,235 868,746
------------ ------------
CURRENT LIABILITIES
Current Maturities of Long-Term Debt 33,000 -
Notes Payable 33,500 30,000
Accounts Payable 32,236 54,926
Accrued Interest 5,594 5,156
Dividends Payable 8,754 8,754
Accrued Taxes Payable 4,735 -
Regulatory Liabilities - 373
Fair Value of Derivative Instruments 2,245 335
Other 36,648 34,627
------------ ------------
156,712 134,171
------------ ------------
DEFERRED CREDITS AND OTHER LIABILITIES 253,014 242,805
------------ ------------
ACCUMULATED DEFERRED INCOME TAX (NET) 141,479 133,784
------------ ------------
MINORITY INTEREST 1,494 -
------------ ------------
TOTAL $1,393,934 $1,379,506
============ ============
(1) Unaudited.
(2) Subject to explanations contained in the Annual Report of the
Company for the Year 2005.
(3) Shares outstanding at June 30, 2006 = 15,762,000.
Shares outstanding at Dec. 31, 2005 = 15,762,000.
Selected Financial Information
------------------------------
3 Months Ended June 30,
----------------------------------
2006 2005 % Variation
----------- ---------- -----------
CENTRAL HUDSON GAS & ELECTRIC
CORP.
-------------------------------
Sales of Electricity (Mwh): *
Residential 420,555 438,318 (4)
Commercial 460,377 470,359 (2)
Industrial 368,010 384,064 (4)
Other 7,624 7,624 -
----------- ---------- -----------
Total Own Territory 1,256,566 1,300,365 (3)
=========== ========== ===========
Sales of Gas (Mcf.): *
Residential 898,695 1,002,286 (10)
Commercial 1,079,678 1,188,721 (9)
Industrial 78,337 96,312 (19)
Other 3,447 2,777 24
----------- ---------- -----------
Total Firm Sales 2,060,157 2,290,096 (10)
Interruptible Sales 897,233 770,864 16
----------- ---------- -----------
Total Own Territory 2,957,390 3,060,960 (3)
=========== ========== ===========
* Includes volumes related to
Electric or Gas Energy Delivery
Services.
Electric Cooling Degree Days:
Billing Cycle 62 64 (3)
Normal Biling Cycle 58 58 -
Actual in Period 177 240 (26)
Electric Heating Degree Days:
Billing Cycle 1,492 1,609 (7)
Normal Biling Cycle 1,596 1,596 -
Actual in Period 697 701 (1)
Gas Heating Degree Days:
Billing Cycle 1,618 1,755 (8)
Normal Biling Cycle 1,754 1,758 -
Actual in Period 699 682 2
Electric Output For Own Territory
(Mwh.):
Generated 27,845 19,477 43
Purchased 1,304,354 1,425,426 (8)
----------- ---------- -----------
Total 1,332,199 1,444,903 (8)
=========== ========== ===========
Gas Send-out Firm Customers
(Mcf.) 958,928 1,140,733 (16)
=========== ========== ===========
CH ENERGY GROUP, INC.
------------------------
Earnings Per Share - (Basic) $0.26 $0.41 (37)
Dividends Declared Per Share $0.54 $0.54 -
6 Months Ended June 30,
-----------------------------------
2006 2005 % Variation
----------- ----------- -----------
CENTRAL HUDSON GAS & ELECTRIC
CORP.
-------------------------------
Sales of Electricity (Mwh): *
Residential 976,110 1,043,716 (6)
Commercial 958,624 990,302 (3)
Industrial 709,923 724,232 (2)
Other 18,096 18,003 1
----------- ----------- -----------
Total Own Territory 2,662,753 2,776,253 (4)
=========== =========== ===========
Sales of Gas (Mcf.): *
Residential 3,320,212 3,793,825 (12)
Commercial 3,765,813 4,272,366 (12)
Industrial 269,329 363,934 (26)
Other 17,651 19,051 (7)
----------- ----------- -----------
Total Firm Sales 7,373,005 8,449,176 (13)
Interruptible Sales 2,013,755 1,951,432 3
----------- ----------- -----------
Total Own Territory 9,386,760 10,400,608 (10)
=========== =========== ===========
* Includes volumes related to
Electric or Gas Energy Delivery
Services.
Electric Cooling Degree Days:
Billing Cycle 62 64 (3)
Normal Biling Cycle 58 58 -
Actual in Period 177 240 (26)
Electric Heating Degree Days:
Billing Cycle 4,413 4,809 (8)
Normal Biling Cycle 4,824 4,824 -
Actual in Period 3,478 3,939 (12)
Gas Heating Degree Days:
Billing Cycle 4,493 4,907 (8)
Normal Biling Cycle 4,947 4,941 -
Actual in Period 3,412 3,885 (12)
Electric Output For Own Territory
(Mwh.):
Generated 62,174 55,001 13
Purchased 2,702,315 2,894,544 (7)
----------- ----------- -----------
Total 2,764,489 2,949,545 (6)
=========== =========== ===========
Gas Send-out Firm Customers
(Mcf.) 4,669,800 6,051,143 (23)
=========== =========== ===========
CH ENERGY GROUP, INC.
------------------------
Earnings Per Share - (Basic) $1.42 $1.70 (16)
Dividends Declared Per Share $1.08 $1.08 -
June 30, Dec. 31,
2006 2005 % Variation
--------- --------- -----------
Book Value Per Share $32.31 $31.97 1
Retained Earnings (000s) $203,362 $198,017 3
Common Equity Ratio (%) 56.1% 56.0% -
C H ENERGY GROUP, INC
Selected Financial Indices
12 Months Ended June 30, 2006 vs. Calendar Year 2005
12 Months Calendar
Ended Year
June 30, 2006 2005
------------- ---------
Earnings Per Share - (Basic) $2.52 $2.81
Earned Return on Common Equity (Per Books) 7.82% 8.77%
Pretax Coverage of Fixed Charges 3.95 x 4.51 x
Dividends Declared $2.16 $2.16
Pay-out Ratio 85.7% 76.9%
Common Equity Ratio 56.1% 56.0%
Retained Earnings ($000) $203,362 $198,017
Book Value Per Share (End of Period) $32.31 $31.97
CH Energy Group Segment Information - 6 Months Ended June 30, 2006
Regulated Unregulated
------------------- ----------------------
($000s Except Natural Fuel Oil
Earnings Per Share) Electric Gas Distribution Other
------------------ ------------------- ----------------------
Revenues from
external customers $243,977 $107,267 $178,059 $1,820
Intersegment revenues 6 239 - -
------------------- ----------------------
Total Revenues $243,983 $107,506 $178,059 $1,820
Earnings before income
taxes $16,221 $13,027 $3,789 $4,189
Net Income $9,307 $7,385 $2,274 $3,402
Earnings per share (basic) $0.59 $0.47 $0.14 $0.22(1)
Segment Assets @ 6/30/06 $847,814 $294,137 $146,805 $105,885
($000s Except
Earnings Per Share) Elim(s). Total
------------------- --------- -----------
Revenues from external customers - $531,123
Intersegment revenues ($245) -
--------- -----------
Total Revenues ($245) $531,123
Earnings before income taxes ($128)(2) $37,098
Net Income - $22,368
Earnings per share (basic) - $1.42
Segment Assets @ 6/30/06 ($707)(3) $1,393,934
(1) The amount of Unregulated EPS attributable to CHEC's other
business activities was $0.06 per share, with the balance of $.16
per share resulting primarily from interest income and business
development activity.
(2) Minority Interest related to Lyonsdale
(3) Includes minority interest related to Lyonsdale
CH Energy Group Segment Information - 6 Months Ended June 30, 2005
Regulated Unregulated
-------------------- --------------------------
($000s Except Natural Fuel Oil
Earnings Per Share) Electric Gas Distribution Other
------------------- -------------------- --------------------------
Revenues from external
customers $233,277 $94,571 $147,354 $455
Intersegment revenues 6 201 - -
-------------------- --------------------------
Total Revenues $233,283 $94,772 $147,354 $455
Earnings before income
taxes $20,696 $14,189 $5,284 $2,329
Net Income $12,347 $8,270 $3,171 $3,085
Earnings per share
(basic) $0.78 $0.53 $0.20 $0.19(1)
Segment Assets @
6/30/05 $789,180 $267,764 $136,065 $124,704
($000s Except
Earnings Per Share) Elim(s). Total
------------------- --------- -----------
Revenues from external customers - $475,657
Intersegment revenues ($207) -
-------- -----------
Total Revenues ($207) $475,657
Earnings before income taxes - $42,498
Net Income - $26,873
Earnings per share (basic) - $1.70
Segment Assets @ 6/30/05 ($1,230) $1,316,483
(1) The amount of unregulated EPS attributable to CHEC's other
business activities was $0.02 per share, with the balance of $0.17
per share resulting primarily from interest income and business
development activity and the recording of New York State income
tax benefits related to the completion of the Energy Group tax
audit.
CH Energy Group Segment Information - Quarter Ended June 30, 2006
Regulated Unregulated
------------------- ----------------------
($000s Except Natural Fuel
Earnings Per Share) Electric Gas Distribution Other
------------------- ------------------- ----------------------
Revenues from external
customers $107,930 $36,458 $68,224 $1,279
Intersegment revenues 3 34 - -
------------------- ----------------------
Total Revenues $107,933 $36,492 $68,224 $1,279
Earnings before income
taxes $4,821 $2,039 ($3,407) $2,714
Net Income $2,864 $1,017 ($2,044) $2,231
Earnings per share (basic) $0.18 $0.07 ($0.13) $0.14(1)
Segment Assets @ 6/30/06 $847,814 $294,137 $146,805 $105,885
($000s Except
Earnings Per Share) Elim(s). Total
------------------- --------- -----------
Revenues from external customers - $213,891
Intersegment revenues $(37) -
--------- -----------
Total Revenues $(37) $213,891
Earnings before income taxes (128)(2) $6,039
Net Income - $4,068
Earnings per share (basic) - $0.26
Segment Assets @ 6/30/06 $(707)(3) $1,393,934
(1) The amount of Unregulated EPS attributable to CHEC's other
business activities was $0.04 per share, with the balance of $.010
per share resulting primarily from interest income.
(2) Minority Interest related to Lyonsdale
(3) Includes minority interest related to Lyonsdale
CH Energy Group Segment Information - Quarter Ended June 30, 2005
Regulated Unregulated
------------------- -----------------------
($000s Except Natural Fuel
Earnings Per Share) Electric Gas Distribution Other
------------------- --------- --------- ------------ ----------
Revenues from external
customers $106,620 $31,142 $51,598 $210
Intersegment revenues 3 34 - -
--------- --------- ------------ ----------
Total Revenues $106,623 $31,176 $51,598 $210
Earnings before income
taxes $7,857 $1,950 ($2,486) $1,065
Net Income $4,854 $1,016 ($1,492) $2,155
Earnings per share (basic) $0.31 $0.06 ($0.09) $0.13(1)
Segment Assets @ 6/30/05 $789,180 $267,764 $136,065 $124,704
($000s Except
Earnings Per Share) Elim(s). Total
------------------- -------- -----------
Revenues from external customers - $189,570
Intersegment revenues $(37) -
-------- -----------
Total Revenues $(37) $189,570
Earnings before income taxes - $8,386
Net Income - $6,533
Earnings per share (basic) - $0.41
Segment Assets @ 6/30/05 $(1,230) $1,316,483
(1) The amount of Unregulated EPS attributable to CHEC's other
business activities was $0.01 per share, the balance of $.12
resulted primarily from the recording of a New York State income
tax benefit of $0.09 related to the completion of the Energy Group
tax audit and interest income and business development activitiy.
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