EXHIBIT 99
UIL Holdings Corporation
157 Church Street
P.O. Box 1564
New Haven, CT 06506-0901
203.499.2812 Fax: 203.499.3626
NEWS RELEASE
May 3, 2007 | Media Contact: | Anita Steeves: | (203) 499-2901 |
| | Analyst Contact: | Susan Allen: | (203) 499-2409 |
| | | After Hours: | (203) 499-2812 |
UIL Holdings Corporation Announces First Quarter 2007 Results and Reaffirms 2007 Earnings Guidance
UIL Holdings Corporation (NYSE: UIL) today reports consolidated net income of $5.4 million, or $0.22 per share, for the first quarter of 2007, compared to a net loss of $37.8 million, or $1.55 per share, for the same period in 2006. The net loss in the first quarter of 2006 included an after-tax loss of $56.4 million, or $2.24 per share, mainly from a non-cash goodwill impairment charge in discontinued operations.
For the first quarter of 2007, net income from continuing operations is $5.4 million, or $0.22 per share, compared to $16.8 million, or $0.69 per share, for the same period in 2006. The decrease in earnings from continuing operations is mainly due to the absence of an after-tax gain of $10.6 million, or $0.43 per share, from the sale in the first quarter of 2006 of UIL’s minority ownership interest in the Cross-Sound Cable (CSC).
“With the divestiture of the non-regulated subsidiaries in 2006, UIL is now positioned as a pure transmission and distribution utility,” commented James P. Torgerson, UIL president and chief executive officer. “We are following through on our strategic plan announced in the spring of last year. We are investing in the regulated utility and the construction of the Middletown to Norwalk transmission project is well underway. We are focused on executing our capital program while earning our allowed returns.”
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The chart that follows details earnings per share for the first quarter 2007 versus the same period in 2006 for continuing operations and discontinued operations.
Continuing Operations
Amounts reported in continuing operations include results from The United Illuminating Company, UIL’s regulated electric utility, United Capital Investments, a wholly-owned subsidiary of UIL, and the unallocated corporate costs at UIL. In 2006, continuing operations also included the results from the operations and divestitures of UIL’s minority ownership interests in Bridgeport Energy (BE) and CSC.
For the first quarter of 2007, earnings from continuing operations were $5.4 million, or $0.22 per share, compared to $6.2 million, or $0.26 per share, in 2006, excluding the impact of the gain from the divestiture of CSC. The decrease in earnings is explained below.
The United Illuminating Company (UI)
Net income for UI totaled $5.5 million, or $0.22 per share, in first quarter of 2007, compared to net income of $7.6 million, or $0.31 per share, in the first quarter of 2006. The decrease in earnings per share was due to a revised estimate of transmission revenue requirements of $0.04 per share, an increase in depreciation expense of $0.04 per share, the elimination in 2007 of the power procurement fee of $0.02 per share and other various expenses of $0.03 per share, which were partially offset by higher retail kilowatt-hour (kWh) volume and increased pricing of $0.04 per share. Actual kWh consumption before adjusting for weather was 2.1% higher than the first quarter of 2006. After adjusting for the impact of weather, retail kWh consumption was 0.4% higher than the first quarter of 2006.
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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, offset by interest income. UIL Corporate incurred after-tax costs of $0.1 million in the first quarter of 2007, compared to costs of $1.3 million, or $0.05 per share, in the first quarter of 2006. The improvement in 2007 earnings was primarily due to lower general and administrative expenses and increased interest income earned on short-term investments, as well as $0.2 million, or $0.01 per share, from interest income earned on promissory notes related to the sale of the former Xcelecom businesses.
United Capital Investments, Inc. (UCI)
UCI, which holds two passive minority investments with a carrying value of $3.1 million, had minimal income in the first quarter of 2007, compared to a minimal loss in the first quarter of 2006.
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 first quarter of 2007. For the first quarter of 2006, the divested businesses in continuing operations earned $10.5 million, or $0.43 per share, primarily due to a net gain of $10.6 million on the sale of UIL’s minority interest in CSC.
Discontinued Operations
Xcelecom, Inc. (Xcelecom)
Xcelecom reported a minimal net loss in the first quarter of 2007, compared to a net loss of $54.6 million, or $2.24 per share, in the first quarter of 2006. Included in the 2006 results was a non-cash goodwill impairment charge of $50.5 million, after-tax, or $2.08 per share, which was recorded in the first quarter of 2006.
Looking Forward
UIL reaffirms the earnings guidance reported on February 21, 2007 as shown below.
2007 Earnings Expectations |
| | |
| UI | $1.85 - $2.05 |
| UIL Corporate | (0.10) - (0.05) |
Total Continuing Operations (1) | $1.75 - $1.95 |
(1) Expectations are not intended to be additive to derive consolidated expectations. Also, expectations do not include any earnings or losses from Xcelecom that would need to be included in continuing operations. Management will revise estimates for any significant changes.
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First Quarter Earnings Conference Call
In conjunction with this earnings release, UIL will conduct a web cast conference call with financial analysts tomorrow, Friday, May 4, 2007 beginning at 8:00 a.m. Eastern Standard Time. UIL's executive management will present an overview of the financial results followed by a question and answer session.
Interested parties, including analysts, investors and the media, may listen live via the internet by logging onto the Investors section of UIL’s website at http://www.uil.com. Institutional investors can access the call via Thomson Street Events (www.streetevents.com), a password-protected event management site.
A replay of the call will be available for 60 days. The dial-in information is (888) 286-8010, pass code 56359030.
Use of Non-GAAP Measures
UIL Holdings believes earnings per share (EPS) 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) 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 with GAAP, and applying UIL Holdings’ combined effective statutory federal and state tax rate and then dividing by the average number of shares of UIL Holdings common stock outstanding for the periods presented. 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 (as defined in the Private Securities Litigation Reform Act of 1995). These include statements regarding management’s intentions, plans, beliefs, expectations or forecasts for the future. Such forward-looking statements are based on UIL Holdings’ 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, unanticipated weather conditions, changes in accounting principles, policies or guidelines, and other economic, competitive, governmental, and technological factors affecting the operations, markets, products and services of UIL Holdings’ subsidiary, The United Illuminating Company. The foregoing and other factors
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are discussed and should be reviewed in UIL Holdings’ most recent Annual Report on Form 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 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.
The following are summaries of UIL Holdings’ unaudited consolidated and segmented financial information for the first quarter of 2007:
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UIL HOLDINGS CORPORATION | |
CONSOLIDATED STATEMENT OF INCOME (LOSS) | |
(In Thousands except per share amounts) | |
(Unaudited) | |
| | | Three Months Ended | |
| | | March 31, | |
| | | 2007 | | 2006 | |
| | | | | | |
Operating Revenues | | | | | | | |
| Utility | | $ | 274,563 | | $ | 200,285 | |
| Non-utility businesses | | | 4 | | | 4 | |
| Total Operating Revenues | | | 274,567 | | | 200,289 | |
Operating Expenses | | | | | | | |
| Operation | | | | | | | |
| Fuel and energy | | | 176,117 | | | 103,146 | |
| Operation and maintenance | | | 54,925 | | | 56,505 | |
| Depreciation and amortization | | | 19,590 | | | 16,474 | |
| Taxes - other than income taxes | | | 11,265 | | | 10,839 | |
| Total Operating Expenses | | | 261,897 | | | 186,964 | |
Operating Income | | | 12,670 | | | 13,325 | |
| | | | | | | | |
Other Income and (Deductions), net | | | 2,962 | | | 2,818 | |
| | | | | | | | |
Interest Charges, net | | | | | | | |
| Interest on long-term debt | | | 5,278 | | | 5,413 | |
| Other interest, net | | | 192 | | | 642 | |
| | | | 5,470 | | | 6,055 | |
| Amortization of debt expense and redemption premiums | | | 404 | | | 386 | |
| Total Interest Charges, net | | | 5,874 | | | 6,441 | |
| | | | | | | | |
Income Before Gain on Sale of Equity Investments, Income | | | | | | | |
Taxes, Equity Earnings and Discontinued Operations | | | 9,758 | | | 9,702 | |
| | | | | | | | |
Gain on Sale of Equity Investments | | | - | | | 18,908 | |
| | | | | | | | |
Income Before Income Taxes, Equity Earnings and | | | | | | | |
Discontinued Operations | | | 9,758 | | | 28,610 | |
| | | | | | | | |
Income Taxes | | | 4,422 | | | 12,331 | |
| | | | | | | | |
Income Before Equity Earnings and Discontinued Operations | | | 5,336 | | | 16,279 | |
Income (Loss) from Equity Investments | | | 87 | | | 541 | |
Income from Continuing Operations | | | 5,423 | | | 16,820 | |
Discontinued Operations, Net of Tax | | | (67 | ) | | (54,608 | ) |
| | | | | | | | |
Net Income (Loss) | | $ | 5,356 | | $ | (37,788 | ) |
| | | | | | | | |
Average Number of Common Shares Outstanding - Basic | | | 24,910 | | | 24,325 | |
Average Number of Common Shares Outstanding - Diluted | | | 25,230 | | | 24,530 | |
| | | | | | | | |
Earnings Per Share of Common Stock - Basic: | | | | | | | |
Continuing Operations | | $ | 0.22 | | $ | 0.69 | |
Discontinued Operations | | | - | | | (2.24 | ) |
Net Earnings (Loss) | | $ | 0.22 | | $ | (1.55 | ) |
| | | | | | | | |
Earnings Per Share of Common Stock - Diluted: | | | | | | | |
Continuing Operations | | $ | 0.21 | | $ | 0.69 | |
Discontinued Operations | | | - | | | (2.23 | ) |
Net Earnings (Loss) | | $ | 0.21 | | $ | (1.54 | ) |
| | | | | | | | |
Cash Dividends Declared per share of Common Stock | | $ | 0.432 | | $ | 0.432 | |
UIL HOLDINGS CORPORATION | |
CONDENSED CONSOLIDATED BALANCE SHEET | |
(Unaudited) | |
| | | | | | |
| | | | | | |
| | | March 31, | | December 31, | |
| (thousands of dollars) | | 2007 | | 2006 | |
ASSETS | | | | | | | |
| Current assets | | $ | 286,383 | | $ | 288,179 | |
| Current assets of discontinued operations held for sale | | | 11,559 | | | 10,406 | |
| Property, plant and equipment, net | | | 676,516 | | | 647,014 | |
| Regulatory assets | | | 648,298 | | | 660,174 | |
| Other long-term assets | | | 26,361 | | | 25,545 | |
| Long-term assets of discontinued operations held for sale | | | 411 | | | 175 | |
| Total Assets | | $ | 1,649,528 | | $ | 1,631,493 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
LIABILITIES AND CAPITALIZATION | | | | | | | |
| Current liabilities | | $ | 249,730 | | $ | 210,567 | |
| Current liabilities of discontinued operations held for sale | | | 14,342 | | | 19,284 | |
| Noncurrent liabilities | | | 145,526 | | | 151,980 | |
| Long-term liabilities of discontinued operations held for sale | | | 237 | | | 106 | |
| Deferred income taxes | | | 327,659 | | | 326,247 | |
| Regulatory liabilities | | | 54,179 | | | 54,125 | |
| Total Liabilities | | | 791,673 | | | 762,309 | |
| | | | | | | | |
| Net long-term debt | | | 404,317 | | | 408,603 | |
| Net common stock equity | | | 453,538 | | | 460,581 | |
| Total Capitalization | | | 857,855 | | | 869,184 | |
| | | | | | | | |
| Total Liabilities and Capitalization | | $ | 1,649,528 | | $ | 1,631,493 | |
UIL HOLDINGS CORPORATION | |
SEGMENTED CONSOLIDATED INCOME STATEMENT | |
| | | | | | |
| | | Quarter Ended | |
| | | March 31, | |
(In Millions - Unaudited) | | 2007 | | 2006 | |
Operating Revenue -UI | | $274.6 | | $200.3 | |
| | | | | | |
Fuel and energy expense - UI | | $ | 176.1 | | $ | 103.1 | |
| | | | | | | | |
Operation and maintenance expense | | | | | | | |
| UI | | $ | 54.8 | | $ | 53.9 | |
| Minority Interest Investment and Other (1) | | | 0.1 | | | 2.6 | |
Total | | $ | 54.9 | | $ | 56.5 | |
| | | | | | | | |
Depreciation and amortization | | | | | | | |
| UI | | $ | 9.6 | | $ | 7.8 | |
| Amortization of regulatory assets (UI) | | | 10.0 | | | 8.7 | |
Total depreciation and amortization | | $ | 19.6 | | $ | 16.5 | |
| | | | | | | | |
Taxes - other than income taxes | | | | | | | |
UI - State gross earnings tax | | $ | 6.6 | | $ | 6.5 | |
| UI - other | | | 4.7 | | | 4.4 | |
Total | | $ | 11.3 | | $ | 10.9 | |
| | | | | | | | |
Other Income (Deductions) | | | | | | | |
| UI - other | | $ | 1.9 | | $ | 2.5 | |
| Minority Interest Investment and Other (1) | | | 1.0 | | | 0.3 | |
Total | | $ | 2.9 | | $ | 2.8 | |
| | | | | | | | |
Interest Charges | | | | | | | |
| UI | | $ | 4.4 | | $ | 4.6 | |
| UI - Amortization: debt expense, redemption premiums | | | 0.4 | | | 0.4 | |
| Minority Interest Investment and Other (1) | | | 1.1 | | | 1.5 | |
Total | | $ | 5.9 | | $ | 6.5 | |
| | | | | | | | |
Gain on Sale of Equity Investments -Minority Interest Investment and Other (1) (2) | | $ | 0.0 | | $ | 18.9 | |
| | | | | | | | |
Income Taxes | | | | | | | |
| UI | | $ | 4.5 | | $ | 5.9 | |
| Minority Interest Investment and Other (1) | | | (0.1 | ) | | 6.4 | |
Total | | $ | 4.4 | | $ | 12.3 | |
| | | | | | | | |
Income (Losses) from Equity Investments | | | | | | | |
| UI | | $ | 0.1 | | $ | 0.1 | |
| Minority Interest Investment (2) | | | 0.0 | | | 0.5 | |
Total | | $ | 0.1 | | $ | 0.6 | |
| | | | | | | | |
Net Income | | | | | | | |
| UI | | $ | 5.5 | | $ | 7.6 | |
| Minority Interest Investment and Other (1) (2) | | | (0.1 | ) | | 9.2 | |
Subtotal Net Income from Continuing Operations | | | 5.4 | | | 16.8 | |
| Discontinued Operations | | | 0.0 | | | (54.6 | ) |
Total Net Income | | $ | 5.4 | | | ($37.8 | ) |
| | | | | | | | |
| (1) The category "Minority Interest Investment and Other" includes amounts recognized at the non-utility businesses in relation to their minority interest investments, |
| as well as unallocated holding company costs. |
| (2) Includes income (losses) recognized at the non-utility businesses in relation to their minority interest investments. |
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