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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 27, 2006 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 27, 2006 announcing its financial results for the fourth quarter and year ended December 31, 2005. 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 2005 results will be held on Tuesday, February 28, 2006 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. (d) Exhibits. Exhibit Number Description of Exhibit 99.1 Central Vermont's news release dated February 27, 2006. 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 Edmund F. Ryan February 27, 2006 EXHIBIT INDEX Exhibit Number Description of Exhibit 99.1 Central Vermont's news release dated February 27, 2006. EXHIBIT 99.1 Central Vermont Public Service NEWS RELEASE For Immediate Release: Feb. 27, 2006 Central Vermont Reports Fourth-Quarter Earnings RUTLAND, VT - Central Vermont Public Service (NYSE: CV) today reported consolidated 2005 earnings of $5.4 million, or 41 cents per diluted share of common stock. This compares to 2004 earnings of $23.8 million, or $1.90 per diluted share of common stock. For the fourth quarter of 2005, CV reported consolidated earnings of $5.3 million, or 42 cents per diluted share of common stock. This compares to fourth-quarter 2004 earnings of $3.8 million, or 34 cents per diluted share of common stock. Earnings from discontinued operations were $4.9 million in 2005, or 40 cents per diluted share of common stock, and $5.4 million, or 43 cents per diluted share of common stock, in the quarter. This compares to earnings from discontinued operations of $16.3 million, or $1.32 per diluted share of common stock, and $1.6 million, or 13 cents per diluted share of common stock, for the respective periods in 2004. Earnings from continuing operations were $0.5 million in 2005, or 1 cent per diluted share of common stock, and a loss of $0.1 million, or a 1 cent loss per diluted share of common stock, in the quarter. This compares to earnings from continuing operations of $7.5 million, or 58 cents per diluted share of common stock, and $2.2 million, or 21 cents per diluted share of common stock, for the respective periods in 2004. 2005 Highlights In addition to the gain on sale, our share of Catamount's 2005 losses through the sale date amounted to $0.7 million, or a 5 cent loss per diluted share of common stock. Our share of Catamount's fourth-quarter 2005 losses through the sale date amounted to $0.2 million, or a 2 cent loss per diluted share of common stock. The results of discontinued operations are described in more detail below. CV's 2005 results also include a $21.8 million pre-tax charge to earnings in the first quarter related to a March 29, 2005 Rate Order ("Rate Order"). The effects of the Rate Order are described in more detail below. "The past year was a difficult one, but we have a solid plan to restore CV to a position of financial strength, which is critical to customers and shareholders alike," CV President Bob Young said. That plan includes: Quarterly Performance Summary Purchased power expense increased $14.0 million, pre-tax, compared to the same period in 2004, due to the following factors: Other operating costs decreased $3.8 million, pre-tax, primarily due to the following factors: Non-utility Business In the fourth quarter of 2005, Eversant impaired its $1.4 million investment, resulting in a $0.8 million after-tax charge to earnings. Eversant determined that its investment was impaired based on HSS's current financial information and slower-than-expected growth experience. Further, Eversant determined that the impairment was other-than-temporary. HSS is accreting preferred stock dividends of 15 percent annually to the senior series of preferred stock. HSS's current revenue growth experience will not exceed this current preferred dividend rate to a level that would provide any return to HSS's junior preferred shareholders. Year-To-Date Performance Summary Utility Business - continuing operations Purchased Power costs increased $3.6 million, pre-tax, excluding first-quarter 2005 effects of the Rate Order, compared to the same period in 2004 due to the following factors: Other operating costs decreased $0.5 million, pre-tax, compared to the same period in 2004, primarily due to the following factors: Other factors affecting 2005 results compared to the same period in 2004 included: Utility Business - Rate Order Income Statement Line Item Non-utility Business Discontinued Operations year-over-year variances (dollars in millions) Diluted earnings per share Fourth quarter Year-to-date Fourth quarter Year-to-date Gain on Dec. 20, 2005 Catamount sale $5.6 $5.6 $.45 $.45 Catamount results of operations (1.9) (4.6) (.15) (.37) Gain on Jan. 1, 2004 CVEC sale - (12.3) - (1.00) $3.7 $(11.3) $.30 (.92) 2005 Catamount Sale 2004 CVEC Asset Sale For accounting purposes, components of the CVEC transaction were recorded in both continuing and discontinued operations on the consolidated 2004 income statement. In addition to the gain, CV recorded a loss on power costs of $8.4 million, after-tax, relating to termination of the power contract between CV and CVEC. Combining the two accounting transactions to assess the total impact of the transaction resulted in a first-quarter 2004 after-tax gain of $3.9 million, or 31 cents per diluted share of common stock. 2006 Financial Guidance Because the stock buyback will have a direct effect on earnings per share, and is still under way, it is impossible to provide an accurate range of guidance for EPS at this time. However, CV's 2006 earnings available for common stock are expected to be in the range of $12.3 million to $13.3 million. CV also expects to make capital expenditures of about $18 million and to invest $22.5 million into Vermont Electric Power Company, Inc. Webcast Interested parties may listen to the conference call live on the Internet by selecting the "Q4 2005 Central Vermont Public Service Earnings Conference Call" link on CV's homepage at www.cvps.com. An audio archive of the call will be available at approximately 4:30 p.m. EST at the same location or by dialing 1-888-286-8010 and entering passcode 67710577. About CV Forward Looking Statements Central Vermont Public Service Corporation Fourth quarter 2005 versus fourth quarter 2004: Year-over-Year Effects on Earnings 2004 Earnings per diluted share $.34
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))
Acting Chief Financial Officer and Treasurer
CV's fourth quarter and year-end 2005 results include the favorable effect of a gain on the sale of all of its interest in Catamount Energy Corporation ("Catamount") to Diamond Castle, a New York-based private equity investment firm. CV announced its decision to sell Catamount on November 21, 2005 and the sale was consummated on December 20, 2005. CV received cash proceeds of $59.25 million resulting in an after-tax gain of $5.6 million, or 45 cents per diluted share of common stock. For accounting purposes, Catamount's results of operations, including the gain on sale, are reported as discontinued operations in the Company's financial statements.
Utility Business
Operating revenues increased $7.9 million, pre-tax, compared to the same period in 2004, due to the following factors:
Eversant, CV's wholly owned subsidiary, had a $1.4 million investment in The Home Service Store, Inc. ("HSS") at December 31, 2004. HSS has established a network of affiliate contractors who perform home maintenance repair and improvements for its members. Eversant's investment is comprised of shares of HSS junior cumulative convertible preferred stock and common stock. Eversant's voting interest is about 13 percent, accordingly, Eversant accounts for this investment on the cost basis.
The analysis of year-over-year earnings for the utility business is discussed in two parts: recurring earnings from continuing operations and impacts of the first-quarter 2005 charge to earnings related to the Rate Order.
Operating revenues increased $15.4 million, pre-tax, excluding first-quarter 2005 effects of the Rate Order, compared to the same period in 2004, due to the following factors:
On March 29, 2005, the PSB issued its Order on the rate investigation and CV's request for a rate increase. For accounting purposes, the Rate Order resulted in a $21.8 million pre-tax charge to utility earnings in March 2005, or a 91 cent loss per diluted share of common stock. The primary components of the charge to earnings included: 1) a revised calculation of overearnings for the period 2001 - 2003; 2) application of the gain resulting from the CVEC sale to reduce costs; 3) a customer refund for over-collections for the period April 7, 2004 through March 31, 2005; and 4) amortization of costs and other adjustments required in the Rate Order. The table below summarizes the unfavorable pre-tax effects of the Rate Order on specific income statement line items for 2005 (in millions):
Purchased Power
Other Operations
Other Income
Other Deductions
Other Interest
Total Rate Order Impact
$(6.2)
(2.5)
(10.7)
(0.8)
(0.4)
(1.2)
$(21.8)
In 2005, earnings from discontinued operations amounted to $4.9 million or 40 cents per diluted share of common stock, and $5.4 million in the fourth quarter, or 43 cents per diluted share of common stock. This compares to earnings from discontinued operations of $16.3 million in 2004, or $1.32 per diluted share of common stock, and $1.6 million, or 13 cents per diluted share of common stock, in the fourth quarter. The components of the year-over-year variances for discontinued operations are shown below.
On February 7, 2006, the Company announced that its Board of Directors approved using about $50.0 million in proceeds from the December 20, 2005 sale of Catamount to buy back shares of its common stock in a reverse Dutch auction tender offer. The tender offer commenced on February 14, 2006 and is scheduled to expire on March 15, 2006, unless extended by the Company. Under the procedures of the tender offer, shareholders may offer to sell some or all of their stock to the company at a target price in a range from $20.50 to $22.50 per share. Upon expiration of the tender offer, the company will select the lowest-bid price that will allow it to buy up to 2,250,000 shares, which represents about 18.3 percent of the Company's outstanding common stock.
CV will host a conference call and webcast on February. 28, beginning at 2 p.m. EST. At that time, CV President and CEO Robert Young will discuss recent corporate developments, 2006 financial guidance and the company's strategic outlook. Acting Chief Financial Officer Ed Ryan will explain CV's year-end results.
CV is Vermont's largest electric utility, serving more than 150,000 customers statewide. CV's non-regulated subsidiary, Eversant Corporation, sells and rents electric water heaters through a subsidiary, SmartEnergy Water Heating Services.
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, performance of the Vermont Yankee nuclear power plant, effects of and changes in weather and economic conditions, volatility in wholesale electric markets and our ability to maintain our current credit ratings. These and other risk factors are detailed in CV's Securities and Exchange Commission filings. CV cannot predict the outcome of any of these matters; accordingly, there can be no assurance that such indicated results will be realized. Read
ers 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.
Earnings per Diluted Share Reconciliation
Continuing Operations:
Vermont utility 11 percent allowed rate of return in 2004
Eversant - HSS write-off
Lower retail revenue
Higher distribution costs
Higher purchased power costs
Other
Sub-total
Discontinued Operations:
Gain on December 20, 2005 Catamount sale
Results of discontinued operations (excluding gain on sale)
Sub-total
2005 Earnings per diluted share
..43
..18
(.06)
(.06)
(.11)
(.67)
.07
..45
(.15)
(.22)
.30
$.42
Twelve months 2005 versus twelve months 2004: |
Year-over-Year Effects on Earnings |
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2004 Earnings per diluted share SFAS No. 5 loss accrual - termination of CVEC power contract in 2004 Vermont utility 11 percent allowed rate of return in 2004 Higher retail revenue (a) Eversant - HSS write-off IRS tax settlement received in 2004 Higher transmission and distribution costs Higher purchased power costs (b) Other Sub-total Net impact of March 29, 2005 Rate Order recorded in the first quarter of 2005 Discontinued Operations: Gain on December 20, 2005 Catamount sale Gain on January 1, 2004 CVEC sale Results of discontinued operations (excluding gains on sales) Sub-total 2005 Earnings per diluted share (a) excludes effect of Rate Order charge recorded in the first quarter of 2005 (b) excludes effect of Rate Order charge recorded in the first quarter of 2005 and 2004 SFAS No. 5 loss accrual |
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$1.90 |
Earnings Release (unaudited) (dollars in thousands, except per share amounts) |
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Three Months Ended December 31, |
Twelve Months Ended December 31, |
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Utility Operating Data Retail and firm sales (mWh) |
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Operating revenues: |
$85,650 |
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Operating expenses: |
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Consolidated Net Income and Common Stock (Loss) Income from continuing operations Income from discontinued operations, net of taxes Net Income Preferred stock dividend requirements Earnings available for common stock |
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Average shares of common stock outstanding: |
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(Loss) earnings per share of common stock - basic: |
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(Loss) earnings per share of common stock - diluted: |
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Non-regulated Business (Loss) earnings per basic and diluted common share |
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Media Inquiries: |
Steve Costello, Director of Public Affairs |
Contact: |
Ed Ryan, Acting Chief Financial Officer and Treasurer |
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