UIL Holdings Corporation Announces 2006 Earnings and Provides Earnings Guidance for 2007.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. -- UIL UIL - User Interface Language Holdings Corporation (NYSE NYSE See: New York Stock Exchange : UIL) today reports a net loss for the year and fourth quarter, ended December 31, 2006, of $65.2 million, or $2.66 per share, and $42.2 million, or $1.71 per share, respectively. Net income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the was $58.6 million, or $2.40 per share, for the year ended December 31, 2006 and $1.9 million, or $0.08 per share, for the fourth quarter of 2006. Earnings from continuing operations was more than offset by losses incurred in the operations and sale of its electrical contracting business, Xcelecom, Inc., which is reported as discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . "During the past year we took significant steps to implement the change in our strategic focus toward the regulated utility," commented James P. Torgerson, UIL president and chief executive officer. "We completed the divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of essentially all of our non-utility businesses during the year, including our electrical contracting business, Xcelecom, and are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op on our future growth prospects through transmission investments and in maintenance and upgrades to our distribution infrastructure. These projects will benefit our customers by improving the electric infrastructure within our service territory and the region, as a whole." "The losses incurred as a result of our divestiture of Xcelecom were very disappointing," Torgerson continued. "However, the cash generated from all of the non-utility divestitures provides us with financial flexibility to support our utility capital investment program. The losses from Xcelecom will not impact our ability to execute our capital investment plans." The chart that follows details earnings per share for the fourth quarter and year ended 2006 versus the same periods in 2005 for continuing operations and discontinued operations.
[TABLE OMITTED]
Continuing Operations
Amounts reported in continuing operations include results from UI, UIL's regulated electric utility, United Capital Investments, a wholly-owned subsidiary of UIL, and the unallocated Corporate costs at UIL. Continuing operations also include the results from the operations and divestitures of UIL's minority ownership interests in Bridgeport Energy (BE) and Cross-Sound Cable (CSC (Card Security Code) A three- or four-digit number printed on the back of credit cards for security purposes. Called "Card Verification Value" (CVV) by Visa, "Card Validation Code" (CVC) by MasterCard and "Card Identification (CID) by American Express and Discover, ). For the fourth quarter of 2006, earnings from continuing operations were $1.9 million, or $0.08 per share, compared to $4.5 million, or $0.19 per share, for the fourth quarter of 2005. For the year, net income from continuing operations was $58.6 million, or $2.40 per share, compared to $33.4 million, or $1.38 per share, in 2005. BE and CSC were sold in the first quarter of 2006, therefore, no results were reported in the fourth quarter. Excluding minority ownership interests divested in the first quarter of 2006, earnings from continuing operations were $48.1 million, or $1.97 per share, for the year, compared to earnings of $39.7 million, or $1.64 per share, for the year 2005. The improvement for the year was mainly due to improved results at UI, the absence of losses from BE that were incurred in 2005 and a net gain of $10.6 million, or $0.43 per share, on the sale of UIL's minority ownership interest in CSC. 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) Net income for UI totaled $3.1 million, or $0.12 per share, in the fourth quarter, compared to net income of $7.8 million, or $0.32 per share, in the fourth quarter of 2005, a decrease of $0.20 per share. The decrease in earnings for the fourth quarter was primarily due to lower retail kilowatt-hours (kWh) volume and increases in outside services costs. For the year, net income for UI was $51.7 million, or $2.12 per share, compared to net income of $44.8 million, or $1.85 per share, for the same period in 2005, an increase of $0.27 per share. The increase in earnings was primarily due to the non-recurring earnings related to accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. deferred investment tax credits and excess deferred federal income taxes related to generation assets formerly owned by UI of $6.5 million, or $0.27 per share. The increase in earnings was also due to higher retail rates, which were partially offset by lower retail kWh volume, along with increases in outside services costs, payroll expenses, stock-based incentive costs and pension expense, as well as higher transmission expense. Actual kWh consumption was 3.1% lower than 2005, mainly due to the impact of milder weather in 2006 compared to 2005. On October 31, 2006, 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 ) issued a final decision authorizing a return on equity for owners of the ISO (1) See ISO speed. (2) (International Organization for Standardization, Geneva, Switzerland, www.iso.ch) An organization that sets international standards, founded in 1946. The U.S. member body is ANSI. 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. transmission grid, including an incentive rate to encourage transmission expansion and ensure grid reliability in the New England region. The FERC decision will result in customer refunds of $3.7 million, covering the period from February 1, 2005 through December 31, 2006. These refunds reduced net income by $2.2 million, or $0.09 per share, of which $1.9 million, or $0.08 per share, was recorded in the third quarter of 2006 and $0.3 million, or $0.01 per share, was recorded in the fourth quarter of 2006. UIL Corporate UIL retains certain costs at the holding company, or "corporate" level, which are not allocated to the various non-utility subsidiaries. These costs generally include interest charges and strategic and other administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. . UIL Corporate incurred unallocated after-tax costs of $0.8 million, or $0.03 per share, in the fourth quarter of 2006, compared to $1.1 million, or $0.04 per share, in the fourth quarter of 2005. For the year, UIL Corporate incurred unallocated after-tax costs of $3.2 million, or $0.13 per share, compared to $4.7 million, or $0.19 per share, for the same period in 2005. The decline in costs for the year was primarily due to increased interest income earned on short-term investments. United Capital Investments, Inc. (UCI UCI University of California, Irvine UCI Union Cycliste Internationale (International Cycling Union) UCI Unidad de Cuidados Intensivos UCI United Cinemas International (UK) ) UCI, which holds a number of passive minority investments that amount to $3.1 million, incurred a loss, of $0.4 million, or $0.01 per share, for the fourth quarter and a total loss of $0.4 million, or $0.02 per share, for the year ended 2006, compared to a minimal loss for the fourth quarter 2005 and a loss of $0.4 million, or $0.02 per share, for the year ended 2005. The results of CSC are included in Divested Minority Ownership Interests. Divested Minority Ownership Interests Due to the completion of the divestitures of UIL's interests in BE and CSC in the first quarter of 2006, no results were reported for divested businesses in continuing operations in the fourth quarter of 2006. Net losses of $2.2 million, or $0.09 per share, were incurred in the fourth quarter of 2005. For the year, divested businesses in continuing operations earned $10.5 million, or $0.43 per share, compared to a loss of $6.3 million, or $0.26 per share, in the same period of 2005. The 2006 results include a net gain of $10.6 million, or $0.43 per share, on the sale of UIL's minority interest in CSC. Excluding the gain on the sale of CSC, the increase in earnings from divested businesses in continuing operations for the fourth quarter and full year compared to last year was mainly due to the absence of losses from BE.
Discontinued Operations
Xcelecom, Inc. On December 29, 2006, Xcelecom entered into an agreement to sell all of the outstanding equity of McPhee Electric, Ltd., JBL JBL James Bullough Lansing (audio/speaker engineer) JBL Journal of Biblical Literature JBL John Bradshaw Leyfield (wrestler) JBL Jonathan Bell Lovelace (investment research) Electric, Inc. and JE Richards, Inc. to Phalcon, LTD. In the announcement of the sale on January 5, 2007, UIL reported a loss on the sale of $12.1 million, or $0.50 per share, after transaction costs Transaction Costs Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). and income taxes, subject to review of December financial results of operations. After further review, UIL reports a loss of $28.6 million, or $1.17 per share, after transaction costs and income taxes. The increased loss is primarily due to the impact of the December operations on the investment and a contingent earn-out payment by UIL to former owners of JE Richards that was not included in the previous estimate. On December 29, 2006, Xcelecom also entered into an agreement to sell all of the outstanding shares of stock of Allen/Briteway Electrical Contractors, Inc. to SAIDS SAIDS simian acquired immune deficiency syndrome. , LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control . In the announcement of the sale on January 5, 2007, UIL reported a loss on the sale of $0.7 million, or $0.03 per share, after transaction costs and income taxes, subject to review of December financial results of operations. After further review, UIL reports a loss on the sale of $7.4 million, or $0.30 per share, after transaction costs and income taxes. The increased loss is primarily due to the impact of the December operations on the investment and clarification of certain contract terms. These transactions resulted in combined net losses of $36.0 million, or $1.47 per share, rather than the previously reported net losses of $12.8 million, or $0.53 per share, of which $6.8 million, or $0.28 per share, was previously recorded in the third quarter as an impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charge. For the fourth quarter of 2006, Xcelecom incurred a loss of $44.1 million, or $1.79 per share, compared to earnings of $1.7 million, or $0.07 per share, in the fourth quarter of 2005. The decrease from the prior year was primarily due to an additional $37.7 million, or $1.54 per share, after-tax loss from divestiture sales and other divestiture-related costs. For the year, Xcelecom incurred a loss of $123.8 million, or $5.06 per share, compared to a loss of $2.1 million, or $0.08 per share, in 2005. The increase in losses from the prior year was primarily due to a $49.1 million, or $2.01 per share, after-tax loss from divestiture sales, a non-cash, after-tax goodwill impairment charge of $50.5 million, or $2.07 per share, recorded in the first quarter relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the value of Xcelecom, and other divestiture-related costs and project losses. Looking Forward UIL's Earnings Estimates for 2007 for Continuing Operations UIL's estimate of earnings from continuing operations for 2007 is $1.75-$1.95 per share. Compared to the 2006 earnings from continuing operations, adjusted for significant non-recurring items described below, the 2007 estimate is an increase of $0.05-$0.25 per share. The expected growth is primarily in the Transmission segment of the regulated utility which, in 2007, will begin to add significant amounts to rate base through capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. on the Middletown-to-Norwalk 345 kilo-Volt (kV) transmission project. Continuing operations for 2006 included the results from the divestitures of UIL's minority ownership interests in BE and CSC, which were divested in the first quarter of 2006. In 2006, UIL recognized earnings of $0.43 per share in continuing operations from these divestitures. In addition, the results from continuing operations for 2006 included non-recurring earnings at UI of $0.27 per share to recognize certain tax benefits relating to generating stations previously sold. Excluding the impact of these non-recurring items, earnings from continuing operations for 2006 was $1.70 per share. Details of the 2007 earnings estimate for continuing operations are summarized as follows and explained below: [TABLE OMITTED] Based upon the actual 2006 results, excluding the impact of the non-recurring tax benefit, and earnings projections for 2007, UIL expects to achieve a compound annual growth rate ranging between 5% and 8% for the period from 2007 through 2009. The United Illuminating Company UI's earnings estimate range for 2007 is $1.85-$2.05 per share. Expected earnings for Distribution are based upon the assumption that UI will manage to the 9.75% allowed return on equity (ROE A fictitious surname used for an unknown or anonymous person or for a hypothetical person in an illustration. A lawsuit is generally named for the persons who are parties to it. ). The 2007 expected earnings for distribution are lower than the 2006 earnings, primarily due to the absence of non-recurring credits recognized in 2006, including $0.27 per share for the tax benefits previously discussed. In October 2006, the FERC issued an order setting UI's base transmission ROE at 10.2%, with an additional 1.5% in potential ROE adders, along with a 0.7% adjustment to reflect updated U.S. Treasury U.S. Treasury Created in 1798, the United States Department of the Treasury is the government (Cabinet) department responsible for issuing all Treasury bonds, notes and bills. Some of the government branches operating under the U.S. Treasury umbrella include the IRS, U.S. Bond data. Since Transmission rates are subject to a semi-annual true-up, UI assumes that it will earn the allowed return based upon the current composition of its rate base and projected spending in 2007. UI is in the process of preparing an application for filing with the FERC for additional ROE incentives, along with an increase in construction-work-in-progress (CWIP CWIP Construction Work in Progress CWIP Current Work in Progress ) in rate base from the current 50% to 100% for its Middletown-to-Norwalk 345kV transmission project, but has not assumed either in its 2007 projections. The expected earnings for Transmission are higher than the 2006 earnings due to expected additional earnings on rate base. This is due to the inclusion of 50% of CWIP in rate base for the Middletown-to-Norwalk project, for which significant construction will occur in 2007. The Competitive Transition Assessment (CTA An abbreviation for cum testamento annexo, Latin for "with the will annexed." ) earnings forecast reflects the allowed return on equity of 9.75% and an allowed capital structure of 48% equity and 52% debt. CTA earnings are expected to be lower than the 2006 earnings, primarily due to the reduction in CTA rate base resulting from the annual amortization. Other UI is comprised of various incentives for power procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. and conservation programs. Earnings for 2007 are expected to be higher than 2006 earnings, reflecting the recognition of the Energy Independence Act incentives, along with certain prior year procurement incentives upon which the Department of Public Utility Control took no action during 2006. UIL Corporate UIL Corporate reports unallocated corporate administrative costs, unallocated interest charges and the results of the remaining passive investments held by UCI. UIL Corporate is expected to incur unallocated after-tax costs of $0.10-$0.05 per share in 2007. UCI does not expect to make additional investments in 2007. Xcelecom Throughout 2006, UIL divested substantially all of its interests in the Xcelecom companies. In 2007, UIL will maintain responsibility for the completion of certain jobs-in-progress, collecting certain accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying and pursuing outstanding claims. The resolution of these items is uncertain and, as such, can have positive or negative impacts on consolidated earnings and cash flow. UIL also has exposure to surety An individual who undertakes an obligation to pay a sum of money or to perform some duty or promise for another in the event that person fails to act. surety n. companies that have provided bonding to Xcelecom and to the buyers of the Xcelecom businesses in connection with indemnity obligations in the sale agreements. Results will thus be dependent on whether or not jobs-in-progress are completed within estimates, the extent to which retained receivables are collected, how successful UIL is in its pursuit of outstanding claims, and whether there are indemnification Indemnification Used in insurance policy agreements as to compensation for damage or loss. In the context of corporate governance, Director Indemnification uses the bylaws and/or charter to indemnify officers and directors from certain legal expenses and judgements resulting from claims. Xcelecom is also expected to generate additional administrative costs, comprising legal and consulting costs. Due to the uncertainty regarding the outcome of such efforts, UIL is not providing earnings guidance regarding Xcelecom. Pursuant to generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting , UIL may be required to record certain Xcelecom-related transactions as part of the results from continuing operations and some to discontinued operations in 2007. UIL will separately identify any such amounts in continuing operations and discontinued operations that are associated with Xcelecom. UIL Holdings Corporation (NYSE:UIL), headquartered in New Haven, Connecticut, is the holding company for The United Illuminating Company, a regulated utility providing electricity and energy related services to 320,000 customers in the Greater New Haven Greater New Haven is the metropolitan area whose extent includes those towns in the U.S. state of Connecticut that share an economic, social, political, and historical focus on the city of New Haven. It occupies the south-central portion of the state in a radius around New Haven. and Bridgeport. For more information on UIL Holdings, visit us at http://www.uil.com. Use of Non-GAAP Measures UIL Holdings believes earnings per share (EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. ) information by line of business is useful in understanding the fluctuations in EPS between the current and prior periods. The amounts presented show the EPS from continuing operations and discontinued operations. Continuing Operations is further displayed for clarity by continuing operations and divested minority owned businesses on an EPS basis. EPS is calculated by dividing the income from continuing operations, divested minority owned businesses and discontinued operations for each line of business by the average number of shares of UIL Holdings common stock outstanding for the periods presented. The EPS for all periods presented are calculated on the same basis and reconcile to the amounts presented on a generally accepted accounting principle's (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) basis. The earnings per share for each of continuing operations, discontinued operations and combined total EPS is a GAAP basis presentation. UIL Holdings also believes that a breakdown, presented on a per share basis, of how particular significant items contributed to the change in income from continuing operations, divested minority owned businesses and discontinued operations by line of business (Item Variance EPS Presentation) is useful in understanding the overall change in the consolidated results of operations for UIL Holdings from one reporting period to another. UIL Holdings presents such per share amounts by taking the dollar amount of the applicable change for the revenue or expense item, booked 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 GAAP, and applying UIL Holdings' combined effective statutory federal and state tax rate. Any amounts provided as Item Variance EPS Presentation are provided for informational purposes only and are not intended to be used to calculate "Pro-forma" amounts. 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). These include statements regarding management's intentions, plans, beliefs, expectations or forecasts for the future. Such forward-looking statements are based on the Corporation's expectations and involve risks and uncertainties; consequently, actual results may differ materially from those expressed or implied in the statements. Such risks and uncertainties include, but are not limited to, general economic conditions, legislative and regulatory changes, changes in demand for electricity and other products and services, timing factors, unanticipated weather conditions, 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 Corporation's subsidiaries. The foregoing and other factors are discussed and should be reviewed in the Corporation's most recent Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and other subsequent periodic filings with the Securities and Exchange Commission. 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 Corporation 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. The following are summaries of UIL Holdings' unaudited consolidated and segmented financial information for the fourth quarter and year end 2006: [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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