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UNITED STATES Washington, D. C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) February 23, 2005 CENTRAL VERMONT PUBLIC SERVICE CORPORATION Vermont 1-8222 03-0111290 77 Grove Street, Rutland, Vermont 05701 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (802) 773-2711 N/A Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) Item 2.02. Results of Operations and Financial Condition. Attached hereto as Exhibit 99.1 and incorporated herein by reference is the text of the registrant's news release issued on February 23, 2005 announcing its financial results for the fourth quarter and year ended December 31, 2004. As discussed in Exhibit 99.1, the news release contains forward-looking statements within the meaning of the federal securities laws. These statements are present expectations, and are subject to the limitations listed therein, and in Central Vermont's other filings with the Securities and Exchange Commission, including that actual events or results may differ materially from those in the forward-looking statements. The foregoing information (including Exhibit 99.1) is being furnished under "Item 2.02. Results of Operations and Financial Condition" and "Item 7.01. Regulation FD Disclosure." Such information (including Exhibit 99.1) is furnished and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934. An analyst conference call to review the fourth quarter year-end 2004 results will be held on Thursday, February 24, 2005 at 2:00 p.m. Eastern Time. A live audio web cast of the conference call will be available to the public on a listen-only basis. To listen to the web cast go to www.cvps.com and click on the web cast link. Central Vermont's news releases, current financial information, SEC filings, and Investor Relations presentations are accessible at the same web site. Item 7.01. Regulation FD Disclosure. See "Item 2.02. Results of Operations and Financial Condition" above. Item 9.01. Financial Statements and Exhibits. (c) Exhibits. 99.1 Central Vermont's news release dated February 23, 2005. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CENTRAL VERMONT PUBLIC SERVICE CORPORATION By /s/ Jean H. Gibson February 23, 2005 EXHIBIT INDEX Exhibit Number Description of Exhibit 99.1 Central Vermont's news release dated February 23, 2005. EXHIBIT 99.1 Central Vermont Public Service NEWS RELEASE For Immediate Release: February 23, 2005 Central Vermont reports strong 2004 earnings RUTLAND, VT - Central Vermont Public Service (NYSE: CV) reported consolidated 2004 earnings of $23.8 million today, or $1.90 per diluted share of common stock. This compares to 2003 earnings of $19.8 million, or $1.53 per diluted share of common stock. For the fourth quarter of 2004, CV reported earnings of $3.8 million, or 34 cents per diluted share of common stock, compared to fourth quarter 2003 earnings of $4.8 million, or 37 cents per diluted share of common stock. 2004 Highlights Both core utility operations and subsidiary Catamount Energy contributed positively to 2004 earnings. At the utility, purchased power costs were lower compared to 2003 due in large part to increased megawatt hours available to serve customers, or for resale, due to the termination of the power contract with subsidiary Connecticut Valley Electric Company ("CVEC"), whose assets were sold in the first quarter of 2004. The sale of the assets of CVEC also produced a significant one-time gain that was recorded as discontinued operations in the first quarter. The Company is also benefiting from lower interest expense due to second mortgage bond refinancing that occurred in August. Catamount continued to take advantage of opportunities to sell projects from its existing portfolio during 2004 while developing its wind energy business in the United States and United Kingdom. "Our plan for growth through unregulated subsidiaries, work process improvements and modest growth in the core business is on track," President Bob Young said. "We continue to see improvements and progress quarter by quarter. We are also focused on bringing our Rate Case to a successful conclusion in the first quarter of 2005, with a careful balancing of customer and investor needs." Rate Case Developments As previously reported, the Company's rates are the subject of Vermont Public Service Board ("PSB") Docket No. 6946, Investigation into the Rates of Central Vermont Public Service Corporation for the Rate Year 2004 beginning April 1, 2004, and Docket No. 6988, Rate Increase of 5.01 percent for the Rate Year 2005 effective April 1, 2005. These dockets are referred to as the Company's "Rate Case." On February 18, 2005, the PSB issued an Accounting Order that, among other things, allows the deferral of certain 2004 earnings of the Company. Specifically, the Accounting Order permits the Company to record any earnings achieved on its 2004 Vermont Electric Utility Operations in excess of an 11 percent Return on Equity ("ROE") as other regulatory liabilities. As required by the Accounting Order, the earnings to be deferred were calculated by the same method the Company used for determining and reporting over-earnings for 2001, 2002, and 2003 under a mandated earnings cap of 11 percent per a July 2001 PSB-approved rate order. Pursuant to the Accounting Order, the Company reduced 2004 Vermont utility earnings by $3.8 million pre-tax and recorded a related other regulatory liability for the same amount. This other regulatory liability shall be used or accounted for by the Company as the PSB shall determine in a final order in the Rate Case. A final decision from the PSB is expected on March 25, 2005. The Company has acknowledged that the issuance of the Accounting Order does not create any expectations, set any precedent, or in any other way impair the PSB's ability to rule on the contested issues in the Rate Case. The Company cannot predict the outcome of the Rate Case at this time. Yearly Performance Summary Utility Business - Continuing Operations Purchased power expense increased $12.7 million pre-tax, or 8.3 percent, due to the following factors: Other items affecting 2004 results compared to 2003 included: Non-utility Business Catamount's 2003 earnings were $0.7 million, including a $2.3 million reduction of income tax valuation allowances associated with previously recorded equity losses resulting from asset impairment for the Fibrothetford, Rupert and Glenns Ferry investments. The 2003 reduction in income tax valuation allowances resulted from a benefit in the consolidated federal income tax provision due to management's best estimate that the Company would receive capital gains treatment on the CVEC sale. Quarterly Performance Summary Utility Business - Continuing Operations Purchased power expense decreased $1.1 million pre-tax, or 2.9 percent, primarily due to lower output from Independent Power Producers. Other factors that favorably affected 2004 versus 2003 included: lower interest expense due to the August 2004 bond refinancing; lower service restoration costs due to fewer storms in 2004 versus 2003; and higher interest income from temporary cash investments. Other factors that unfavorably affected 2004 versus 2003 included: higher employee-related benefit costs such as pension, retiree medical and other compensation costs; lower equity earnings from Vermont Yankee; and higher professional service costs related to the Sarbanes-Oxley readiness project, the Rate Case and general legal expenses. Also, a reduction in the Vermont utility's earnings in excess of an 11 percent ROE as described above. Non-utility Business Discontinued Operations Cash proceeds from the January 1, 2004 asset sale totaled about $30 million, of which $9 million represented the net book value of CVEC's plant assets. On January 1, 2004, as a condition of the sale, CVEC paid the Company $21 million to terminate its long-term wholesale power contract. The sale and contract termination resolved all CVEC restructuring litigation in New Hampshire and the Company's stranded cost litigation at the Federal Energy Regulatory Commission. In 2004 discontinued operations contributed $12.3 million, or $1.00 per diluted share of common stock, to consolidated earnings. This reflects a $12.3 million after-tax gain on disposal of discontinued operations related to the January 1, 2004 sale. In 2003, discontinued operations contributed $1.4 million, or 12 cents per diluted share of common stock, to consolidated earnings. Discontinued operations resulted in a nominal loss in the fourth quarter of 2004 compared to fourth quarter 2003 earnings of $0.4 million, or 3 cents per diluted share of common stock. For accounting purposes, components of the CVEC transaction are recorded in both continuing and discontinued operations in the consolidated income statement. The gain on the asset sale, net of tax, totaled $12.3 million, but CV recorded a loss on power costs, net of tax, of $8.4 million relating to termination of the power contract between CV and CVEC. When the two accounting transactions are combined to assess the total impact of the transaction, the result is a gain of $3.8 million, or 31 cents per diluted share of common stock. 20 As a result of the Company's pending Rate Case, the outcome of which will have a significant impact on the Company's financial outlook in 2005, earnings guidance will be provided in the first quarter earnings release and conference call in April. About CV CV is Vermont's largest electric utility, serving about 150,000 customers statewide. The Company's two non-regulated subsidiaries include Catamount Energy Corporation and Eversant Corporation. Catamount invests in non-regulated energy generation projects in the United States and United Kingdom with a current focus on developing, owning and operating wind energy projects. Eversant sells and rents electric water heaters through a subsidiary, SmartEnergy Water Heating Services. Forward Looking Statements Statements contained in this report that are not historical fact are forward-looking statements intended to qualify for the safe-harbors from the liability established by the Private Securities Litigation Reform Act of 1995. Statements made that are not historical facts are forward-looking and, accordingly, involve estimates, assumptions, risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. Actual results will depend, among other things, upon the actions of regulators and the outcome of our pending Rate Case, performance of the Vermont Yankee nuclear power plant, effects of and changes in weather and economic conditions, volatility in wholesale electric markets, our ability to maintain our current credit ratings and performance of Catamount. These and other risk factors are detailed in the Company's Securities and Exchange Commission filings. The Company cannot predict the outcome of any of these matters; a
ccordingly, there can be no assurance that such indicated results will be realized. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date of this press release. CV does not undertake any obligation to publicly release any revision to these forward-looking statements to reflect events or circumstances after the date of this press release. Central Vermont Public Service Corporation Fourth quarter 2004 vs. fourth quarter 2003: 2003 Earnings per diluted share $.37 Year over Year Effects on Earnings: .15 .07 .05 .01 (.03) (.03) (.06) (.08) (.11) (.03) $.34 2004 Earnings per diluted share
SECURITIES AND EXCHANGE COMMISSION
(Exact name of registrant as specified in its charter)
(State of other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
(Former name or former address, if changed since last report)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
Jean H. Gibson, Senior Vice President,
Chief Financial Officer, and Treasurer
Catamount's 2004 earnings totaled $3.6 million, including $2.9 million of net income tax benefits and $1.5 million of after-tax gains associated with the sales of the Fibrothetford, Rupert and Glenns Ferry investment interests. Also included was a fee associated with Catamount's United Kingdom development effort. Additionally, year to date 2004 earnings as compared to the same period last year includes lower business development expenditures and interest expense on debt offset by lower equity earnings from several equity investments, interest income, realized foreign currency gains and a $0.2 million asset impairment related to Catamount's German wind project investments.
Catamount's fourth quarter 2004 earnings totaled $1.6 million primarily related to the realization of $2.5 million of income tax benefits associated with the sale of Catamount's ownership interest in Fibrothetford. Absent these income tax benefits, Catamount's operations resulted in a loss of $0.9 million compared to a loss of $0.2 million in the fourth quarter 2003 primarily due to lower equity earnings from several investments partially offset by lower business development expenses and the pre-tax gain on the sale of Catamount's ownership interest in Fibrothetford.
In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, CVEC is presented as discontinued operations for all periods presented. The Company began presenting CVEC as discontinued operations in the second quarter of 2003, when the sale became probable. For presentation purposes, 2003 results are restated to reflect CVEC as discontinued operations.
Earnings per Diluted Share Reconciliation
Twelve months ended 2004 vs. twelve months ended 2003: |
2003 Earnings per diluted share |
$1.53 |
|
Year over Year Effects on Earnings: |
||
|
.23 |
|
|
.18 |
|
|
.09 |
|
|
.09 |
|
|
.08 |
|
|
.04 |
|
|
.03 |
|
|
(.06) |
|
|
(.12) |
|
|
(.50) |
|
|
.06 |
|
|
||
|
1.00 |
|
|
(.69) |
|
|
.31 |
|
2004 Earnings per diluted share |
$1.90 |
Central Vermont Public Service Corporation - Consolidated |
|||||
Earnings Release (unaudited) |
|||||
(dollars in thousands, except per share amounts) |
|||||
Quarter Ended |
Year Ended |
||||
2004 |
2003 |
2004 |
2003 |
||
UTILITY OPERATING DATA |
|||||
Retail and firm sales (mWh) |
580,431 |
566,061 |
2,246,237 |
2,203,165 |
|
Operating revenues: |
|||||
Retail and firm sales |
$69,554 |
$68,179 |
$267,453 |
$263,654 |
|
Resale sales |
6,160 |
5,958 |
26,507 |
24,587 |
|
RS-2 power contract |
- |
2,330 |
- |
10,409 |
|
Other operating revenue |
1,997 |
2,644 |
8,240 |
7,364 |
|
Total operating revenues |
$77,711 |
$79,111 |
$302,200 |
$306,014 |
|
Operating expenses: |
|||||
Purchased power |
37,737 |
$38,865 |
$165,651 |
$152,994 |
|
Other operating expense |
36,249 |
34,773 |
123,670 |
129,001 |
|
Total operating expenses |
$73,986 |
$73,638 |
$289,321 |
$281,995 |
|
NET INCOME AND COMMON STOCK |
|||||
Income from continuing operations |
$3,850 |
$4,410 |
$11,415 |
$18,355 |
|
Income (loss) from discontinued operations, net of taxes |
(14) |
412 |
12,340 |
1,446 |
|
Net Income |
3,836 |
4,822 |
23,755 |
19,801 |
|
Preferred stock dividend requirements |
(407) |
299 |
368 |
1,198 |
|
Earnings available for common stock |
$4,243 |
$4,523 |
$23,387 |
$18,603 |
|
Average shares of common stock outstanding: |
|||||
Basic |
12,176,059 |
11,965,468 |
12,118,048 |
11,878,255 |
|
Diluted |
12,378,095 |
12,253,353 |
12,305,619 |
12,119,553 |
|
Earnings per share of common stock - basic: |
|||||
Continuing operations |
$.35 |
$.35 |
$.91 |
$1.45 |
|
Discontinued operations |
- |
.03 |
1.02 |
.12 |
|
Earnings per share |
$.35 |
$.38 |
$1.93 |
$1.57 |
|
Earnings per share of common stock - diluted: |
|||||
Continuing operations |
$.34 |
$.34 |
$.90 |
$1.41 |
|
Discontinued operations |
- |
.03 |
1.00 |
.12 |
|
Earnings per share |
$.34 |
$.37 |
$1.90 |
$1.53 |
|
Dividends per share of common stock |
$.23 |
$.22 |
$.92 |
$.88 |
|
NON-REGULATED BUSINESSES: |
|||||
Catamount Energy Corporation: |
|||||
Earnings per basic share of common stock |
$.13 |
$(.02) |
$.30 |
$.06 |
|
Earnings per diluted share of common stock |
$.13 |
$(.02) |
$.29 |
$.06 |
|
Eversant Corporation: |
|||||
Earnings per basic and diluted share of common stock |
$.00 |
$.01 |
$.03 |
$.04 |
Media Inquiries: |
Steve Costello, Director of Public Affairs |
Contact: |
Jean H. Gibson, Senior Vice President, Chief Financial Officer and Treasurer |