ITC Holdings Corp. Reports Third Quarter 2005 Results

Nov 01, 2005

ITC Holdings Corp. Reports Third Quarter 2005 Results

  • Net income for the third quarter of $13.5 million or $0.40 per diluted share
  • Net income for the nine months ended September 30, 2005 of $33.0 million, or $1.03 per diluted share
  • $88.2 million invested year to date in property, plant & equipment

NOVI, Mich., Nov. 1, 2005 -- ITC Holdings Corp. (NYSE: ITC) today announces net income for the third quarter of 2005 of $13.5 million or $0.40 per share on a diluted basis, compared with net income of $5.8 million, or $0.19 per share on a diluted basis for the third quarter of 2004. Net income for the nine months ended September 30, 2005 was $33.0 million, or $1.03 per share on a diluted basis compared with net income of $4.3 million or $0.14 per share on a diluted basis for the nine months ended September 30, 2004.

Operating revenues of $66.0 million for the third quarter 2005 increased by $27.8 million over the same period in 2004. The expiration of a rate freeze on December 31, 2004 for customers of International Transmission Company ("International Transmission"), ITC Holdings' operating subsidiary, accounts for $18.2 million of this increase. Operating revenues also increased by $6.8 million due to an increase in point-to-point revenues (net of refunded amounts) primarily due to International Transmission not being required to refund point-to-point revenues earned in 2005, as previously disclosed. In 2004 International Transmission was required to refund 75% of point-to-point revenues to DTE Energy Company ("DTE Energy") and other customers by orders of the Federal Energy Regulatory Commission ("FERC") approving the acquisition of ITC from DTE Energy in February 2003. Beginning June 1, 2005 point-to-point revenues that are not refunded reduce the network rate, thereby benefiting network customers.

For the nine months ended September 30, 2005 operating revenues of $159.2 million increased $61.3 million over the same period in 2004. Of this increase $43.9 million can be attributed to the expiration of the rate freeze on December 31, 2004 and $14.6 million to the increase in point-to-point revenues (net of refunded amounts) primarily because International Transmission is not required to refund point-to-point revenues earned in 2005 as it was in 2004.

Third quarter 2005 results include $6.7 million of expenses in connection with ITC's initial public offering completed on July 29 to terminate certain management contracts.

For the nine months ended September 30, 2005, International Transmission has invested approximately $88.2 million in property, plant and equipment. International Transmission expects approximately $110 million of capital investment in 2005, an increase of $10 million over our previous forecast.

Joseph Welch, President and Chief Executive Officer of ITC Holdings Corp. said, "We are pleased to report that we are continuing to increase the performance of the system."

International Transmission is a business regulated by the FERC and operates under an approved annual rate setting mechanism known as "Attachment O." Attachment O aids the Company in generating predictable revenues and income. Variability in such items as weather or operating costs can change earnings in any period compared to prior year, but we do not expect it to materially impact International Transmission over time because Attachment O adjusts for these effects in subsequent rate setting periods.

International Transmission is focused on best in class operations, maintenance, improving reliability and reducing congestion to lower the overall cost of delivered energy to end-use consumers

ITC will conduct a conference call to discuss third quarter 2005 earnings results at 11:00 a.m. EST Wednesday, November 2nd. Joseph L. Welch, president and CEO, will provide a business overview of the quarter and Edward M. Rahill, vice president and CFO, will provide a financial update. Individuals wishing to participate in the conference call may dial toll- free (888) 202-2422; there is no passcode. The conference call replay, available through November 9th, can be accessed by dialing toll-free (888) 203-1112, passcode 9444458. Investors, the news media and the public may listen to a live Internet broadcast of the meeting at http://investor.itc-holdings.com. The webcast also will be archived on the ITC website at http://investor.itc-holdings.com.

More detail about the results of the third quarter may be found in ITC Holdings Corp.'s Form 10Q filing. Once filed with the SEC, an electronic copy of the 10Q can be found at ITC Holdings Corp.'s website, http://investor.itc-holdings.com. Written copies can also be made available by contacting us either through our website or the phone listings below.

About ITC Holdings Corp.

ITC Holdings Corp.'s wholly-owned operating subsidiary, International Transmission Company, is the first independently owned and operated electricity transmission company in the United States. International Transmission owns, operates and maintains a fully-regulated, high-voltage system that transmits electricity to local electric distribution facilities from generating stations in Michigan, other Midwestern states and Ontario, Canada. The local distribution facilities connected to the International Transmission system serve an area comprised of 13 southeastern Michigan counties, including the Detroit metropolitan area. For more information on International Transmission, please visit http://www.itctransco.com. For more information on ITC Holdings, please visit http://www.itc-holdings.com.

Safe Harbor Statement

This press release contains certain statements that describe ITC Holdings Corp.'s and International Transmission's (collectively, the "Company") beliefs concerning future business conditions and prospects, growth opportunities and the outlook for the Company and the electric transmission industry based upon information currently available. Wherever possible, the Company has identified these forward-looking statements by words such as "anticipates," "believes," "intends," "estimates," "expects," "projects" and similar phrases. These forward-looking statements are based upon assumptions the Company believes are reasonable. Such forward-looking statements are subject to risks and uncertainties which could cause the Company's actual results, performance and achievements to differ materially from those expressed in, or implied by, these statements, including, among other things, the risk factors listed in ITC Holdings Corp.'s registration statement on Form S-1, as amended (File No. 333-123657), and the following: (i) the Company's ability to obtain regulatory approval for rate adjustments in response to changing circumstances and changes in laws or regulations affecting us, including whether the Attachment O rate setting mechanism used by International Transmission that has been approved by FERC through January 31, 2008 will be extended; (ii) restrictions imposed by laws, including the Federal Power Act of 1935 and the Energy Policy Act of 2005, or regulations affecting the Company; (iii) changes in the nature or the composition of the transmission grid in surrounding areas, location of generation assets within International Transmission's service territory and in surrounding regions and the impact of electricity flows on the transmission system; (iv) any changes in the Company's regulatory construct; (v) the stability of Detroit Edison, the Company's primary customer, or deregulation affecting Detroit Edison; (vi) protracted generation outages; (vii) potential environmental liabilities; (viii) hazards related to the Company's business; (ix) damage to the Company's assets or the Company's ability to serve the Company's customers, market disruptions and other economic effects as a result of terrorism, military activity or war and action by the United States and other governments in reaction thereto; (x) our ability to make capital investments, due to the impact of weather conditions, the price and availability materials, our ability to obtain any necessary financing for such expenditures, limitations on the amount of construction that can be undertaken on our system at any one time, the need for regulatory approvals for environmental, siting or regional planning issues or as a result of legal proceedings; (xi) higher property tax assessments from various municipalities; (xii) decrease in revenues due to lower monthly peak transmission loads; and (xiii) other risk factors discussed herein and listed from time to time in the Company's public filings with the Securities and Exchange Commission. New factors emerge from time to time. The Company cannot predict what factors may arise or how such factors may cause its results to differ materially from those contained in any forward-looking statement. Any forward-looking statement speaks only as of the date on which such statements are made. Except as required by law the Company assumes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Investor/Analyst contact: Don Hourican (248.374.7015 - IR hotline, dhourican@itctransco.com)

Media contact: Lisa Aragon (248.835.9300, laragon@itctransco.com)