Exhibit 99
UIL HOLDINGS CORPORATION
157 CHURCH STREET
P.O. BOX 1564
NEW HAVEN, CT 06506-0901
203.499.2812 FAX: 203.499.3626
UIL HOLDINGS CORPORATION
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NEWS RELEASE
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FEBRUARY 17, 2005 ANALYST CONTACT: SUSAN ALLEN 203-499-2409
MEDIA CONTACT: ANITA STEEVES 203-499-2901
AFTER HOURS 203-499-2812
UIL HOLDINGS CORPORATION ANNOUNCES 2004 EARNINGS AND PROVIDES EARNINGS GUIDANCE
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FOR 2005
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UIL Holdings Corporation (NYSE: UIL) today reported earnings from
continuing operations for 2004 of $36.9 million, or $2.57 per share, compared
to $29.5 million, or $2.07 per share in 2003. These results exclude both an
after-tax extraordinary gain of $0.2 million, or $0.01 per share, recognized at
Xcelecom in the fourth quarter of 2004 and the results of operations of
American Payment Systems (APS), which was sold to CheckFree Corporation
(CheckFree) in June 2004 and are therefore reported separately as discontinued
operations. The results of discontinued operations in 2004, including the gain
on the sale of APS, amounted to earnings of $49.8 million, or $3.46 per share,
compared to a net loss of $6.2 million, or $0.44 per share in 2003. Total
earnings for 2004, including extraordinary items and discontinued operations,
were $86.9 million, or $6.04 per share, compared to 2003 earnings of $23.3
million, or $1.63 per share.
For the fourth quarter of 2004, UIL reported net income of $4.5
million, or $0.32 per share from continuing operations, compared to $2.4
million, or $0.17 per share, in the fourth quarter of 2003.
"We are very pleased with our accomplishments during 2004," commented
Nathaniel D. Woodson, UIL's chief executive officer. "UI had a solid year, with
economic growth helping to increase kilowatt-hour consumption over the prior
year; Xcelecom returned to profitability; and significant progress was made
toward achieving permanent operation of the Cross-Sound cable. In fact, the
remediation work to bring the cable into compliance with the Connecticut
Department of Environmental Protection (CDEP) burial depth permit conditions
was completed in January 2005."
THE UNITED ILLUMINATING COMPANY (UI)
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Net income for UI totaled $46.5 million, or $3.23 per share in 2004,
compared to net income of $38.7 million, or $2.71 per share, for 2003. For the
fourth quarter of 2004, net income for UI was $7 million, or $0.48 per share,
compared to net income of $4.3 million, or $0.30 per share, for the same period
in 2003.
UI benefited from lower interest charges during 2004 as compared to
2003, due to the refinancing of certain debt issues late in 2003 at lower
interest rates. Also, the results for 2004 were improved as compared to 2003
due to an increase in kilowatt-hour volume consumption mainly attributable to
economic growth, producing a weather adjusted kilowatt-hour sales
1
increase of three percent by year end. The benefits of this growth were
mitigated by milder weather in 2004 as compared to 2003. The results of 2004
also included the following non-recurring items which had a net positive impact
on earnings of approximately $0.31 per share: (1) a change in the accounting
estimate for unbilled revenues resulting from the implementation of a new
customer information software package which provides a more precise estimate of
unbilled revenue, $0.07 per share positive impact, (2) a settlement by ISO-NE
related to a review of the allocation of New England Power Pool transmission
revenues to member companies, $0.08 per share positive impact, (3) the
resolution of post-closing issues and DPUC decisions related to UI's sale of
Seabrook Station, $0.11 per share positive impact, (4) a fourth quarter true-up
of insurance reserves, including worker's compensation and general liability
insurance, based on an analysis of claim activity by an independent actuary,
$0.06 per share positive impact, (5) the recovery of increased pension and
post-retirement benefits costs for the period from February 18, 2004 through
June 24, 2004, $0.08 per share positive impact, (6) the reversal of certain
reserves following the resolution of prior year Internal Revenue Service
audits, $0.06 per share positive impact, (7) the write-off of a net operating
loss receivable from the State of New Hampshire, $0.06 per share negative
impact, (8) costs associated with the previously announced restructuring of the
UIL and UI Finance organizations, $0.05 per share negative impact, and (9) an
increase to uncollectible reserves, $0.04 per share negative impact. These net
favorable variances were partially offset by higher operating expenses.
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REAL RETAIL KWH SALES EXCLUDING WEATHER, LEAP YEAR AND UNBILLED ADJUSTMENT
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Q4 2004 Q4 2003 % CHANGE
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Millions of kWh 1,435 1,380 4.0%
YTD 2004 YTD 2003 % CHANGE
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Millions of kWh 5,890 5,716 3.0%
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NON-UTILITY BUSINESSES
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UIL serves as the parent company for the operating business Xcelecom,
Inc. (Xcelecom), and two entities which hold minority ownership interests in
their respective passive investments, United Bridgeport Energy, Inc. (UBE) and
United Capital Investments, Inc. (UCI). UIL completed the sale of its other
non-utility operating business, APS, in June 2004. Results for APS are reported
as discontinued operations.
The non-utility businesses, including unallocated UIL Corporate costs,
reported a loss from continuing operations of $9.6 million, or $0.66 per share,
compared to a loss from continuing operations of $9.2 million, or $0.64 per
share in 2003. The non-utility businesses also reported an extraordinary gain
of $0.2 million, or $0.01 per share in 2004. Results from discontinued
operations for 2004, including the gain on the sale of APS, amounted to
earnings of $49.8 million, or $3.46 per share, compared to a loss of $6.2
million, or $0.44 per share in 2003.
For the fourth quarter of 2004, the non-utility businesses, including
unallocated UIL Corporate costs, reported a loss from continuing operations of
$2.5 million, or $0.16 per share, compared to a loss from continuing operations
of $1.9 million, or $0.13 per share, for the same period in 2003. The
non-utility businesses reported an extraordinary gain of $0.2 million, or $0.01
per share in the fourth quarter of 2004.
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XCELECOM, INC.
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Xcelecom, engaged in the specialty contracting and systems integration
businesses, reported net income from continuing operations of $0.5 million, or
$0.04 per share in 2004, compared to a net loss of $1.7 million, or $0.12 per
share in 2003. In the fourth quarter of 2004, Xcelecom reported net income from
continuing operations of $0.6 million, or $0.05 per share, compared to a net
loss of $0.2 million, or $0.02 per share, for the same period in 2003. The
improvement in earnings from 2003 was mainly due to increased revenues from all
geographic regions of the electrical contracting business, as well as the
absence of $0.08 per share of losses incurred on two large projects in the
prior year. These improvements were partially offset by the absence of income
recognized in the prior year related to the completion of a large contract. The
aforementioned results of 2004 exclude an extraordinary gain of $0.2 million,
or $0.01 per share, due to the determination of the actual amount of deferred
acquisition payments to be paid in connection with a prior acquisition.
During the fourth quarter of 2004, Xcelecom completed an acquisition
in its systems integration line of business for $0.5 million in cash and earn
out provisions over the next five year period. This acquisition had no material
effect on 2004 earnings. Although Xcelecom still does not intend to grow
materially though acquisitions in the near future, this acquisition supports
Xcelecom's strategy of expanding existing business platforms and capitalizing
on synergies among businesses to improve operating efficiencies.
Xcelecom's backlog of work to be completed as of December 31, 2004
amounted to $199 million, an increase of $51 million, or 35%, over comparable
year-end 2003 levels. While backlog has grown at virtually all of Xcelecom's
construction operating entities, the composition of this backlog is weighted
more towards larger, longer term projects than pre-recession levels, which have
historically produced lower margins than smaller, faster paced projects.
NON-UTILITY MINORITY INTEREST INVESTMENTS
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UNITED BRIDGEPORT ENERGY, INC.
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UBE holds a 33 1/3% ownership interest in Bridgeport Energy, LLC (BE).
UBE had a loss of $3.5 million, or $0.24 per share during 2004, compared to a
loss of $2.2 million, or $0.15 per share in 2003. Lower energy prices due to
mild weather, high natural gas prices and the absence of a viable capacity
market to provide incentive for generating plants to remain available,
continued to negatively impact results.
UBE lost $1 million, or $0.07 per share, in the fourth quarter of
2004, compared to a net loss of $0.6 million, or $0.04 per share, during the
same period in 2003.
Although energy and natural gas prices continue to hamper the results
of BE, the plant did not require any capital contributions from UBE during
2004.
UNITED CAPITAL INVESTMENTS, INC.
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UCI is a subsidiary of UIL which holds a number of passive and
minority investments, including a 25% interest in Cross-Sound Cable, LLC
(Cross-Sound), an entity that owns and operates a transmission line connecting
Connecticut to Long Island under the Long Island Sound. UCI lost $0.8 million,
or $0.05 per share, in 2004 compared to a net loss of $0.6 million, or $0.05
per share, in 2003. UCI reported a loss of $0.4 million, or $0.02 per share, in
the fourth quarter of
3
of 2004, compared to breakeven results in the fourth quarter of 2003. The
increased loss from the prior year, for both the fourth quarter and full year,
was primarily due to a loss incurred at Cross-Sound as a result of the
Cross-Sound cable being off-line for a significant portion of the fourth quarter
of 2004 while remediation work was being conducted in the New Haven harbor.
The remediation work was required to bring the Cross-Sound cable into
compliance with burial depth permit conditions set forth by the CDEP and was
completed in January 2005. The required remediation consisted of achieving the
originally required burial depth in those areas deemed as "soft spots," meaning
the obstructions which originally prevented achievement of such depth could
generally be removed without the use of techniques such as blasting. The permit
conditions did not require the original burial depth in the area where rock
ledge obstruction prevented meeting the original burial depth, until such time
that the United States Army Corp of Engineers is authorized to deepen the
federal navigation channel in the New Haven Harbor.
The impact of the loss at Cross-Sound was partially offset by lower
valuation losses from other passive investments.
Cross-Sound did not require additional capital funding from its owners
during 2004.
UIL CORPORATE
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UIL Holdings 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, strategic and
other administrative costs. UIL Corporate incurred unallocated after-tax costs
of $5.8 million, or $0.41 per share in 2004, compared to unallocated after-tax
costs of $4.7 million, or $0.32 per share in 2003. For the fourth quarter of
2004, UIL Holdings incurred unallocated after-tax costs of $1.7 million, or
$0.12 per share, compared to unallocated after-tax costs of $1.1 million, or
$0.07 per share for the same period in 2003. The increased costs for both the
quarter and the year were mainly due to increased administrative expenses such
as stock based compensation expense and costs associated with complying with
the federal Sarbanes Oxley Act, as well as the unallocated portion of costs
associated with the previously announced restructuring of UIL and UI Finance
organizations.
DISCONTINUED OPERATIONS
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On June 22, 2004, UIL completed the sale of APS to CheckFree, a
leading provider of financial electronic commerce services and products,
pursuant to the purchase agreement entered into between the parties on
December 16, 2003. APS, and its 51% ownership interest in CellCards of
Illinois, LLC (CCI) were classified as discontinued operations in the fourth
quarter of 2003. On February 13, 2004, CCI was sold to an independent third
party for book value, excluding transaction costs.
The results of discontinued operations for 2004, including the gain on
the sale of APS, amounted to earnings of $49.8 million, or $3.46 per share. The
overall after-tax gain on the sale, net of all transaction costs incurred, was
$46 million, or $3.20 per share. However, the after-tax effect of the sale, net
of transaction costs, for 2004 was $3.21 per share, as certain transaction
costs were incurred and expensed in the fourth quarter of 2003. Discontinued
operations reported a net loss of $6.2 million, or $0.44 per share, in 2003 and
a loss of $5.6 million, or $0.40 per share, in the fourth quarter of 2003.
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LOOKING FORWARD
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UIL HOLDINGS' CONSOLIDATED EARNINGS ESTIMATES FOR 2005 AND CASH FLOW DISCUSSION
UIL's estimate of earnings from continuing operations for 2005 is
$2.20 - $2.40 per share. This is a reduction of $0.17 - $0.37 per share from
the 2004 earnings from continuing operations of $2.57 per share. The
projections for 2005 are lower than 2004 earnings, as a number of non-recurring
items increased 2004 earnings by an aggregate amount of approximately $0.28 per
share. Excluding such items, UIL's 2004 earnings would have been approximately
$2.29 per share, which is the mid-point of UIL's 2005 earnings range estimate.
Details of the 2005 earnings estimate for each of UIL's business units are
explained below.
THE UNITED ILLUMINATING COMPANY
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UI's earnings range estimate for 2005 is $2.75 - $2.85 per share,
reflecting a decrease of $0.07 - $0.17 per share from UI's 2004 earnings of
$2.92 per share, excluding non-recurring items. The Distribution and
Transmission Divisions are expected to earn $1.65 - $1.75 per share in 2005,
reflecting a decrease of $0.08 - $0.18 per share from the 2004 level, excluding
non-recurring items. The CTA is expected to earn $0.89 per share in 2005,
reflecting a decrease of $0.05 per share due to an amortization related decline
in the stranded cost rate base, and other sources are expected to earn $0.21 in
2005 reflecting an increase of $0.06 per share for those components.
UI's 2005 earnings range estimate reflects anticipated sales growth of
approximately 1.7% from 2004 real kilowatt-hour sales (excluding the impacts of
weather, leap year and the unbilled revenue adjustment), increasing earnings by
an estimated $0.16 per share. Real kilowatt-hour sales growth in 2004 was 3%
greater than 2003, which was unusually high. Overall, however, the earnings of
the Distribution and Transmission Divisions are expected to decline due to
expense increases. Operation and maintenance expense for the divisions are
expected to increase by approximately $6 - $8 million, reducing earnings by an
estimated $0.25 - $0.33 per share. The expenses are expected to increase due to
annual wage and salary increases, increased benefits expenses (particularly
health insurance premiums) and workforce additions related to anticipated
retirements. Depreciation expense is also expected to increase from the 2004
level as a result of UI's capital expenditure program. These increases in
expenses and capital spending are necessary in order for UI to maintain and
improve its electrical delivery systems, improve reliability of the system and
provide superior customer service.
UI had approximately $36 million of cash and temporary cash
investments on hand at the end of 2004. UI is expected to continue to generate
strong cash flows from operations in 2005. Funds from operations are expected
to be in excess of $90 million, with roughly $30 million being generated by the
CTA. UI is expected to dividend an amount equal to its net income to UIL in
2005, currently projected to be $40 - $41 million. Funds from operations will
also be used to finance the capital expenditure program mentioned above. In the
event that funds from operations are not sufficient to finance the entire
capital expenditure program, existing cash on hand will be utilized.
A portion of UI's planned capital expenditure program relates to the
Middletown-to-Norwalk Transmission Line, which is projected at $10 million for
2005. Construction of this line has not yet received final siting approval. UI
is currently planning on a long-term commitment of approximately $180 million
(excluding the cost of financing the project, which is capitalized and known as
allowance for funds used during construction) for its portion of the line, to
be spent
5
through 2009, pending final siting approval. Funding for this project is
expected to come from internally generated funds in the early stages, and a
combination of internally generated funds and borrowings, either short or
long-term, for the later stages of the project. The details of funding will
ultimately depend on the approved design of the line, and the timing and cost
of construction. Current plans do not call for the issuance of any additional
equity securities to finance this project. UI will accrue allowance for funds
used during construction on project cost balances. Based on current
projections, upon completion of the project in 2009, UI's rate base would
increase approximately $230 million, at which time UI would begin to earn a
return on, and commence recovery of, its investment. UI may earn a premium
transmission return on its equity in the project.
XCELECOM
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Xcelecom's earnings estimate for 2005 is $0.20 - $0.30 per share. This
is an improvement of $0.16 - $0.26 per share from the 2004 earnings from
continuing operations of $0.04 per share, excluding the extraordinary gain of
$0.01 per share.
Xcelecom is expecting growth in revenues and a slight improvement in
operating margins in its northeast construction markets which have been lagging
in the economic recovery. Although revenue growth is not expected in the
southeast construction market, margins are expected to improve due to stronger
market demand and the absence of hurricane-related impacts suffered in 2004.
Overall, Xcelecom's construction backlog at the end of December 2004 was $199
million, an increase of $51 million, or 35% compared to the $147 million
backlog at the end of December 2003.
Xcelecom has taken numerous actions in 2004 to improve performance at
those construction subsidiaries that were performing below expectations. These
actions have included the closure of poorly performing offices and divisions,
management changes, merger of entities in contiguous geographic markets,
overhead cost reductions and a continued emphasis on training and improved
project selection and execution. While Xcelecom management believes that
additional improvement efforts are required in 2005, it also expects that those
actions already taken in 2004 will have a positive impact on 2005 results.
Xcelecom also expects improved results in the systems integration
segment, due to current growth in customer demand for related products and
services, particularly internet telephony, network security and storage
solutions. A small acquisition completed at the end of 2004 in this segment is
expected to provide additional revenues and income on a year-over-year basis.
Xcelecom has also recruited a new sales and management team at its one lagging
system integration company to take advantage of this growing market.
Xcelecom is expected to generate enough cash from operations in 2005
to fund its operations, pay for capital expenditures, and fund its contractual
obligations from prior acquisitions, but is not expected to make a cash
contribution to UIL in 2005. Xcelecom maintains a revolving credit facility
that may be utilized to meet short-term liquidity needs.
MINORITY INTEREST INVESTMENT & OTHER
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UNITED BRIDGEPORT ENERGY, INC.
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The 2005 estimate of losses for UBE is $0.50 - $0.40 per share,
compared to losses of $0.24 per share in 2004. The 2005 estimate is based on
expected operating performance similar
6
to 2004, with the projected increase in losses attributable to a major plant
overhaul planned for the first half of 2005. Results for UBE are the most
uncertain component of UIL's earnings estimates at this time. UBE continues to
be hampered by low energy prices (sales), high natural gas prices (costs), and
the absence of a viable capacity market, which keep both margins and revenues
low. These factors have negatively impacted results in 2004. The 2005 estimate
also reflects a continuation of depressed installed capability (ICAP) revenues.
UIL is actively reviewing with the majority owner and operator of the plant
alternatives to improve results of BE, but those results are highly dependent
upon energy prices and natural gas prices in Connecticut, which are volatile.
The majority owner of BE has proposed that BE file with the Federal
Energy Regulatory Commission (FERC) an application for "Reliability Must Run"
(RMR) status, which, if approved, could significantly increase BE's revenues in
2005. If RMR status is granted by the FERC beginning March 1, 2005, UIL
estimates that UBE's 2005 loss could be significantly reduced. UBE agrees with
the majority owner that RMR would be beneficial to BE, but objected because
certain aspects of proposed related transactions between the majority owner and
its affiliates are not in the best interests of BE. Therefore, in the first
quarter of 2005, UBE notified the majority owner that it will pursue its
contractual rights to sell its 33 1/3% interest to the majority owner at fair
market value. The majority owner of BE has responded to UBE's notice, asserting
that the contractual preconditions for such a sale have not been met. UBE and
the majority owner have commenced a dispute resolution process to resolve this
disagreement over the sale rights. The potential outcome of this action is not
known at this time, and therefore has not been incorporated into the 2005
earnings range estimate for UBE.
BE will require additional capital from UBE in 2005, amounting to as
much as $6 million, to cover costs related to a scheduled major plant overhaul.
UBE has committed to provide a capital contribution of $2 million in the first
quarter of 2005. UBE and the majority owner plan to fund the additional capital
requirements either through further capital contributions or through a secured
loan to the plant on terms comparable to the current market.
UNITED CAPITAL INVESTMENTS, INC.
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UCI earnings are expected to be between breakeven and $0.05 per share
in 2005. UCI's share of earnings from Cross-Sound is expected to be between
breakeven and $0.05 per share and the remainder of UCI's passive investments
are expected to breakeven in 2005. Cross-Sound cable is operating under an
interim agreement with the Long Island Power Authority that provides somewhat
lower revenues to Cross-Sound than the long-term agreement that goes into effect
in 2007. Burial remediation of the cable to the proper depths required by its
permit has been completed, which should reduce the uncertainty around the
operations and earnings impact of the cable on UIL in 2005. In addition, UIL
expects compliance with the construction permit will allow Cross-Sound to
pursue refinancing of UIL's $24 million loan to Cross-Sound with project
financing.
The remainder of UCI, which includes roughly $3.3 million of passive
investments in venture capital funds, and some lease income and administrative
costs, is expected to breakeven in 2005. UCI, including Cross-Sound, is
expected to be cash neutral in 2005.
UIL CORPORATE
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UIL Corporate reports unallocated corporate administrative costs and
unallocated interest charges. UIL Corporate is expected to incur unallocated
after-tax costs of $0.30 - $0.40 per share
7
in 2005, an improvement from the 2004 after-tax costs of $0.41 per share. The
improvement is due to lower interest charges resulting from the repayment of
short-term borrowings in mid-2004 after the sale of APS, and lower
administrative costs. On an annualized basis, the reorganization of the UIL and
UI Finance organizations is expected to yield consolidated after-tax cost
savings of approximately $0.04 per share, although the impact to 2005 earnings
will be somewhat lower due to the timing of employee departures.
UIL Corporate is entirely dependent on dividends from its subsidiaries
and external borrowings to provide the cash necessary to service its debt, pay
administrative costs, pay common dividends to UIL's shareholders and to meet
other contractual obligations not funded by UIL's subsidiaries. UIL Corporate
is expected to operate at a cash deficit in 2005. UIL Corporate will use cash
on hand, as well as short-term borrowings, to fund its operations. UIL
Corporate will also utilize short-term borrowings to fund UBE's capital
requirements related to the major plant overhaul scheduled at BE. UI's
dividends to UIL will fund virtually all, if not all, of UIL's dividends to
shareholders. If Cross-Sound secures external project financing, UIL should
receive repayment of its $24 million loan to Cross-Sound in 2005, which would
likely put UIL Corporate in a positive cash position.
UIL Holdings Corporation (NYSE:UIL), headquartered in New Haven,
Connecticut, is the holding company for a number of entities: The
United Illuminating Company, a regulated utility providing electricity
and energy related services to 320,000 customers in the Greater New
Haven and Bridgeport areas; Xcelecom Inc., a leading provider of
specialty contracting and voice-data-video systems integration; United
Capital Investments, Inc., which holds a number of passive, minority
investments, including a 25% interest in the Cross-Sound Cable Company,
LLC; and United Bridgeport Energy, Inc., which holds a 33% interest in
a gas-fired merchant wholesale electric generating facility. For more
information on UIL Holdings, visit us at http://www.uil.com.
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 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, UNANTICIPATED WEATHER CONDITIONS, CHANGES IN ACCOUNTING
PRINCIPLES, POLICIES OR GUIDELINES, AND OTHER ECONOMIC, COMPETITIVE,
GOVERNMENTAL, AND TECHNOLOGICAL FACTORS AFFECTING THE OPERATIONS, MARKETS,
PRODUCTS, SERVICES AND PRICES OF THE 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 AND OTHER SUBSEQUENT PERIODIC FILINGS
WITH THE SECURITIES AND EXCHANGE COMMISSION. FORWARD-LOOKING STATEMENTS
INCLUDED HEREIN SPEAK ONLY AS OF THE DATE HEREOF AND THE CORPORATION 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 fourth quarter and full year 2004:
##
8
UIL HOLDINGS CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended Twelve Months Ended
December 31, December 31,
2004 2003 2004 2003
---- ---- ---- ----
OPERATING REVENUES
Utility $ 175,170 $ 153,297 $ 764,027 $ 669,620
Non-utility businesses 92,535 75,817 337,260 294,057
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Total Operating Revenues 267,705 229,114 1,101,287 963,677
---------- ----------- ------------ -----------
OPERATING EXPENSES
Operation
Fuel and energy 88,891 66,431 377,905 272,673
Operation and maintenance 139,651 124,634 526,021 478,720
Depreciation and amortization 16,260 12,142 68,086 82,239
Taxes - other than income taxes 9,132 8,951 41,285 41,088
---------- ----------- ------------ -----------
Total Operating Expenses 253,934 212,158 1,013,297 874,720
---------- ----------- ------------ -----------
OPERATING INCOME FROM CONTINUING OPERATIONS 13,771 16,956 87,990 88,957
---------- ----------- ------------ -----------
OTHER INCOME AND (DEDUCTIONS), NET 285 1,362 8,591 5,383
---------- ----------- ------------ -----------
INTEREST CHARGES, NET
Interest on long-term debt 5,126 5,835 20,252 25,590
Other interest, net 416 941 1,049 2,403
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5,542 6,776 21,301 27,993
Amortization of debt expense and redemption premiums 400 326 1,490 1,267
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Total Interest Charges, net 5,942 7,102 22,791 29,260
---------- ----------- ------------ -----------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 8,114 11,216 73,790 65,080
INCOME TAXES 1,877 8,466 30,735 33,450
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INCOME FROM CONTINUING OPERATIONS OF CONSOLIDATED COMPANIES 6,237 2,750 43,055 31,630
INCOME (LOSSES) FROM EQUITY INVESTMENTS (1,696) (338) (6,137) (2,093)
---------- ----------- ------------ -----------
INCOME FROM CONTINUING OPERATIONS 4,541 2,412 36,918 29,537
DISCONTINUED OPERATIONS, NET OF TAX - (5,646) 49,824 (6,251)
EXTRAORDINARY GAIN, NET OF TAX 203 - 203 -
---------- ----------- ------------ -----------
NET INCOME $ 4,744 $ (3,234) $ 86,945 $ 23,286
========== =========== ============ ===========
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC 14,470 14,306 14,390 14,291
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED 14,558 14,333 14,473 14,304
EARNINGS PER SHARE OF COMMON STOCK - BASIC:
CONTINUING OPERATIONS $ 0.32 $ 0.17 $ 2.57 $ 2.07
DISCONTINUED OPERATIONS $ - $(0.40) $ 3.46 $(0.44)
EXTRAORDINARY GAIN $ 0.01 $ - $ 0.01 $ -
---------- ----------- ------------ -----------
NET EARNINGS $ 0.33 $(0.23) $ 6.04 $ 1.63
========== =========== ============ ===========
EARNINGS PER SHARE OF COMMON STOCK - DILUTED:
CONTINUING OPERATIONS $ 0.32 $ 0.17 $ 2.56 $ 2.07
DISCONTINUED OPERATIONS $ - $(0.40) $ 3.44 $(0.44)
EXTRAORDINARY GAIN $ 0.01 $ - $ 0.01 $ -
---------- ----------- ------------ -----------
NET EARNINGS $ 0.33 $(0.23) $ 6.01 $ 1.63
========== =========== ============ ===========
CASH DIVIDENDS DECLARED PER SHARE OF COMMON STOCK $ 0.72 $ 0.72 $ 2.88 $ 2.88
========== =========== ============ ===========
9
UIL HOLDINGS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
December 31, December 31,
(thousands of dollars) 2004 2003
-------------------------------------------------------------------------------------------------------------------
ASSETS
Current assets $ 258,078 $ 229,732
Current assets of discontinued operations held for sale - 103,697
Property, plant and equipment, net 563,852 548,794
Regulatory assets 696,356 736,808
Other long-term assets 269,322 261,205
Long-term assets of discontinued operations held for sale - 17,930
------------ ------------
Total Assets $1,787,608 $1,898,166
============ ============
LIABILITIES AND CAPITALIZATION
Current liabilities $ 197,624 $ 217,461
Current liabilities of discontinued operations held for sale - 94,267
Noncurrent liabilities 147,434 171,455
Noncurrent liabilities of discontinued operations held for sale - 921
Deferred income taxes 345,482 345,676
Regulatory liabilities 57,497 80,152
------------ ------------
Total Liabilities 748,037 909,932
Net long-term debt 491,174 495,460
Net common stock equity 548,397 492,774
------------ ------------
Total Capitalization 1,039,571 988,234
----------- ------------
Total Liabilities and Capitalization $1,787,608 $1,898,166
=========== ============
10
UIL HOLDINGS CORPORATION
SEGMENTED CONSOLIDATED INCOME STATEMENT
QUARTER ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
(In Millions - Unaudited) 2004 2003 2004 2003
- ------------------------- ---- ---- ---- ----
OPERATING REVENUE
UI from operations $175.2 $153.3 $764.1 $669.6
Xcelecom 92.5 75.8 337.2 294.0
Minority Interest Investment and Other 0.0 0.0 0.0 0.1
-------- -------- ---------- ----------
TOTAL $267.7 $229.1 $1,101.3 $963.7
======== ======== ========== ==========
FUEL AND ENERGY EXPENSE - UI $88.9 $66.5 $377.9 $272.7
======== ======== ========== ==========
OPERATION AND MAINTENANCE EXPENSE
UI $47.7 $49.7 $190.4 $185.5
Xcelecom 90.1 74.4 330.1 290.0
Minority Interest Investment and Other 1.8 0.5 5.5 3.2
-------- -------- ---------- ----------
TOTAL $139.6 $124.6 $526.0 $478.7
======== ======== ========== ==========
DEPRECIATION AND AMORTIZATION
UI $6.7 $7.2 $28.7 $28.3
Xcelecom 0.8 0.9 3.5 3.5
-------- -------- ---------- ----------
Subtotal depreciation 7.5 8.1 32.2 31.8
Amortization of regulatory assets (UI) 8.4 3.7 34.6 49.2
Amortization Xcelecom 0.4 0.2 1.3 1.2
-------- -------- ---------- ----------
TOTAL $16.3 $12.0 $68.1 $82.2
======== ======== ========== ==========
TAXES - OTHER THAN INCOME TAXES
UI - State gross earnings tax $5.7 $5.5 $25.3 $25.8
UI - other 3.1 3.0 14.2 13.5
Xcelecom 0.3 0.4 1.8 1.8
-------- -------- ---------- ----------
TOTAL $9.1 $8.9 $41.3 $41.1
======== ======== ========== ==========
OTHER INCOME (DEDUCTIONS)
UI - other ($0.2) $1.3 $6.6 $5.3
Xcelecom 0.3 0.0 0.9 0.5
Minority Interest Investment and Other 0.1 0.0 1.0 (0.4)
-------- -------- ---------- ----------
TOTAL $0.2 $1.3 $8.5 $5.4
======== ======== ========== ==========
INTEREST CHARGES
UI $3.9 $4.3 $14.2 $20.7
UI - Amortization: debt expense, redemption premiums 0.3 0.7 1.4 1.3
Xcelecom 0.2 0.2 0.6 0.6
Minority Interest Investment and Other 1.5 1.9 6.6 6.6
-------- -------- ---------- ----------
TOTAL $5.9 $7.1 $22.8 $29.2
======== ======== ========== ==========
INCOME TAXES
UI $3.2 $9.8 $37.8 $39.5
Xcelecom 0.4 (0.1) 0.3 (0.9)
Minority Interest Investment and Other (1.8) (1.1) (7.4) (5.1)
-------- -------- ---------- ----------
TOTAL $1.8 $8.6 $30.7 $33.5
======== ======== ========== ==========
INCOME (LOSSES) FROM EQUITY INVESTMENTS
UI $0.0 $0.1 $0.3 $0.3
Minority Interest Investment and Other (1.7) (0.4) (6.4) (2.4)
-------- -------- ---------- ----------
TOTAL ($1.7) ($0.3) ($6.1) ($2.1)
======== ======== ========== ==========
EXTRAORDINARY GAIN (LOSS), NET OF TAX - XCELECOM $0.2 $0.0 $0.2 $0.0
======== ======== ========== ==========
NET INCOME
UI $7.0 $4.3 $46.5 $38.7
Xcelecom 0.6 (0.2) 0.5 (1.7)
Minority Interest Investment and Other (3.1) (1.7) (10.1) (7.5)
-------- -------- ---------- ----------
SUBTOTAL INCOME FROM CONTINUING OPERATIONS 4.5 2.4 36.9 29.5
Discontinued Operations 0.0 (5.6) 49.8 (6.2)
Extraordinary Gain - Xcelecom 0.2 0.0 0.2 0.0
-------- -------- ---------- ----------
TOTAL NET INCOME $4.7 ($3.2) $86.9 $23.3
======== ======== ========== ==========
11
BUSINESS SEGMENT SUMMARY INFORMATION
(In Millions, except per share amounts)
(Unaudited)
- -------------------------------------------------------------------------------------------------------------------
UIL HOLDINGS CORPORATION
- -------------------------------------------------------------------------------------------------------------------
QUARTER ENDED QUARTER ENDED YEAR ENDED YEAR ENDED
DEC. 31, 2004 DEC. 31, 2003 DEC. 31, 2004 DEC. 31, 2003
------------- ------------- ------------- -------------
Income from Continuing Operations, net of tax $ 4.5 $ 2.4 $ 36.9 $ 29.5
Net Income $ 4.7 $ (3.2) $ 86.9 $ 23.3
Earnings per Share - basic $ 0.33 $(0.23) $ 6.04 $ 1.63
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
THE UNITED ILLUMINATING COMPANY
- -------------------------------------------------------------------------------------------------------------------
QUARTER ENDED QUARTER ENDED YEAR ENDED YEAR ENDED
DEC. 31, 2004 DEC. 31, 2003 DEC. 31, 2004 DEC. 31, 2003
------------- ------------- ------------- -------------
Net Income $ 7.0 $ 4.3 $ 46.5 $ 38.7
Earnings per Share - basic $ 0.48 $ 0.30 $ 3.23 $ 2.71
Retail Sales (millions of KWH) 1,423 1,373 5,952* 5,763
*Includes 46 million KWH non-recurring adjustment associated with a change in accounting estimate to unbilled revenue
recognized in Q1 2004.
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
NON-UTILITY BUSINESSES
- -------------------------------------------------------------------------------------------------------------------
QUARTER ENDED QUARTER ENDED YEAR ENDED YEAR ENDED
XCELECOM DEC. 31, 2004 DEC. 31, 2003 DEC. 31, 2004 DEC. 31, 2003
-------- ------------- ------------- ------------- -------------
Net Income $ 0.8 $ (0.2) $ 0.7 $ (1.7)
Earnings per Share - basic $ 0.06 $ (0.02) $ 0.05 $ (0.12)
MINORITY INTEREST INVESTMENT
AND OTHER
----------------------------
Net Income $ (3.1) $ (1.7) $ (10.1) $ (7.5)
Earnings per Share - basic $ (0.21) $ (0.11) $ (0.70) $ (0.52)
DISCONTINUED OPERATIONS
-----------------------
Net Income $ - $ (5.6) $ 49.8 $ (6.2)
Earnings per Share - basic $ - $ (0.40) $ 3.46 $ (0.44)
TOTAL NON-UTILITY BUSINESSES
----------------------------
Net Income $ (2.3) $ (7.5) $ 40.4 $ (15.4)
Earnings per Share - basic $ (0.15) $ (0.53) $ 2.81 $ (1.08)
- -------------------------------------------------------------------------------------------------------------------
12