UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 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 26, 2015

 

ITC HOLDINGS CORP.

(Exact Name of Registrant as Specified in its Charter)

 

Commission File Number: 001-32576

 

Michigan

 

32-0058047

(State of Incorporation)

 

(IRS Employer Identification No.)

 

27175 Energy Way, Novi, Michigan 48377

(Address of principal executive offices) (zip code)

 

(248) 946-3000

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name or former address, if changed since last report)

 


 

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:

 

o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 



 

Item 2.02 Results of Operations and Financial Condition.

 

On February 26, 2015, ITC Holdings Corp. (the “Company”) issued a press release disclosing its financial results as of and for the fourth quarter and full year ended December 31, 2014.  The Company also reaffirmed guidance with respect to the Company’s operating earnings per diluted common share and capital investments for its operating subsidiaries for 2015.  The release is attached hereto as Exhibit 99.1.

 

Item 9.01 Financial Statements and Exhibits.

 

(d)         Exhibits.

 

99.1                        ITC Holdings Corp. Press Release dated February 26, 2015

 

2



 

SIGNATURES

 

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.

 

February 26, 2015

 

 

ITC HOLDINGS CORP.

 

 

 

By:

/s/ Christine Mason Soneral

 

 

Christine Mason Soneral

 

Its:

Vice President and General Counsel

 

3




Exhibit 99.1

 

 

ITC Reports Fourth Quarter and Year Ended 2014 Results

 

Highlights

 

·              Full-year 2014 operating earnings of $1.85 per diluted common share; full-year 2014 reported earnings of $1.54 per diluted common share

·              Fourth quarter 2014 operating earnings of $0.48 per diluted common share; fourth quarter 2014 reported earnings of $0.30 per diluted common share

·              Full-year 2014 capital investments of $794.0 million

·              Reaffirmed 2015 operating earnings per share guidance of $2.00 to $2.15 per diluted share and capital investment guidance of $710 to $810 million

 

 

 

Three months ended

 

Twelve months ended

 

 

 

December 31,

 

December 31,

 

(in thousands, except per share data)

 

2014

 

2013

 

2014

 

2013

 

OPERATING REVENUES

 

$

231,097

 

$

255,369

 

$

1,023,048

 

$

941,272

 

REPORTED NET INCOME

 

$

46,738

 

$

76,937

 

$

244,083

 

$

233,506

 

OPERATING EARNINGS

 

$

75,913

 

$

69,958

 

$

292,039

 

$

258,602

 

REPORTED DILUTED EPS

 

$

0.30

 

$

0.48

 

$

1.54

 

$

1.47

 

OPERATING DILUTED EPS

 

$

0.48

 

$

0.44

 

$

1.85

 

$

1.63

 

 

NOVI, Mich., February 26, 2015 - ITC Holdings Corp. (NYSE: ITC) announced today its results for the fourth quarter and year ended December 31, 2014.

 

Reported net income for the fourth quarter, measured in accordance with Generally Accepted Accounting Principles (GAAP), was $46.7 million, or $0.30 per diluted common share, compared to $76.9 million or $0.48 per diluted common share for the fourth quarter of 2013. For the year ended December 31, 2014, reported net income was $244.1 million, or $1.54 per diluted common share, compared to $233.5 million, or $1.47 per diluted common share for the same period last year.

 

Operating earnings for the fourth quarter were $75.9 million, or $0.48 per diluted common share, compared to operating earnings of $70.0 million, or $0.44 per diluted common share for the fourth quarter of 2013. For the year ended December 31, 2014, operating earnings were $292.0 million, or $1.85 per diluted common share, compared to operating earnings of $258.6 million, or $1.63 per diluted common share for the same period last year.

 

ITC invested $794.0 million in capital projects at its operating companies during the year ended December 31, 2014, including $252.3 million at ITCTransmission, $126.4 million at METC, $286.3 million at ITC Midwest, $128.5 million at ITC Great Plains and $0.5 million of Development.

 

1



 

“2014 was another year of solid execution for ITC as we continued to deliver reliable and consistent service to our customers and drive value for our investors,” said Joseph L. Welch, chairman, president and CEO of ITC. “We achieved another year of top tier system performance, double-digit annual operating earnings and dividend growth and we made significant strides in expanding and diversifying our development portfolio. Our recent reorganization increases focus on our core operations and development initiatives, and positions the company well to deliver on our five-year plan.”

 

Operating Earnings

 

Operating earnings are non-GAAP measures that exclude the impact of after-tax expenses associated with the following items:

 

1.              The Entergy Corporation transaction expenses of approximately $0.1 million for the fourth quarter of 2014 and a gain of $7.1 million, or $0.04 per diluted common share, for the fourth quarter of 2013 due primarily to the recognition of tax benefits for Entergy costs upon the termination of the merger in the fourth quarter of 2013 that were previously deemed non-deductible. These expenses total $0.7 million, or $0.01 per diluted common share, for the year ended December 31, 2014 and $24.8 million, or $0.16 per diluted common share, for the year ended December 31, 2013.

 

2.              Certain acquisition accounting adjustments for ITC Midwest, ITCTransmission, and METC resulting from the FERC audit order on ITC Midwest issued in May 2012 of approximately $0.1 million for the fourth quarter of 2013. These expenses totaled approximately $0.1 million and $0.3 million for the year ended December 31, 2014 and 2013, respectively.

 

3.              Loss on extinguishment of debt associated with the cash tender offer and consent solicitation transaction for select bonds at ITC Holdings that we completed in the second quarter of 2014. The impact of this item totaled $0.2 million for the fourth quarter of 2014 and $18.2 million, or $0.12 per diluted common share, for the year ended December 31, 2014.

 

4.              Refund liability associated with the MISO regional base ROE rate of approximately $28.9 million, or $0.18 per diluted common share, for the fourth quarter and year ended December 31, 2014. The refund liability reflects the estimated refund obligation for the period of November 12, 2013 through December 31, 2014 associated with the MISO regional base ROE rate 206 complaint filed in November 2013.

 

Operating earnings for the fourth quarter and for the year ended December 31, 2014 increased by $6.0 million, or $0.04 per diluted common share, and $33.4 million, or $0.22 per diluted common share, compared with the same periods last year. The increases in both periods were largely attributable to higher income associated with increased rate base at our operating companies, partially offset by higher non-recoverable expenses associated with development initiatives.

 

Share Repurchase

 

In April 2014, the Board of Directors authorized a share repurchase program for up to $250.0 million, which expires in December 2015. On June 20, 2014, ITC announced an accelerated share repurchase of up to $150 million (minimum of $130 million), which was finalized on December 22, 2014. In total, ITC repurchased $130 million of shares, or approximately 3.6 million shares at a volume weighted average price of $36.56.

 

2



 

Balance Sheet Activities

 

On November 26, 2014, ITC Great Plains issued $150.0 million of 4.16% First Mortgage Bonds, Series A, due November 26, 2044. The proceeds were used to repay the $100.0 million borrowed under the ITC Great Plains’ term loan credit agreement and for general corporate purposes, including the repayment of borrowings under the ITC Great Plains’ revolving credit agreement. ITC Great Plains’ first mortgage bonds are issued under its first mortgage and deed of trust and secured by a first mortgage lien on substantially all of its property.

 

On December 17, 2014, METC issued $150.0 million of 4.19% Senior Secured Notes, due December 15, 2044. The proceeds were used to repay the $50.0 million of 6.63% Senior Secured Notes due December 18, 2014 and the $50.0 million borrowed under METC’s term loan credit agreement and for general corporate purposes, including the repayment of borrowings under METC’s revolving credit agreement. The METC Senior Secured Notes are issued under its first mortgage indenture and secured by a first mortgage lien on substantially all of its real property and tangible personal property.

 

2015 EPS and Capital Investment Guidance

 

For 2015, ITC is reaffirming its full year operating earnings per share guidance of $2.00 to $2.15. ITC is also reaffirming its 2015 capital investment guidance range of $710 to $810 million, which includes $170 to $200 million for ITCTransmission, $150 to $170 million for METC, $380 to $405 million for ITC Midwest, $10 to $25 million for ITC Great Plains and up to $10 million of Development.

 

Fourth Quarter 2014 Operating Earnings Financial Results Detail

 

ITC’s operating revenues for the fourth quarter of 2014 increased to $278.0 million compared to $255.4 million for the fourth quarter of 2013. Amounts reported for the fourth quarter of 2014 exclude approximately $46.9 million in reduced pre-tax revenues associated with the MISO regional base ROE rate refund liability. This increase was primarily due to higher revenue requirements attributable to higher rate base at our regulated operating subsidiaries, as well as an increase in regional cost sharing revenues resulting from additional capital projects being placed in-service that have been identified by the Midcontinent ISO (MISO) as eligible for regional cost sharing.

 

Operation and maintenance (O&M) expenses of $31.9 million were $3.0 million higher than the same period in 2013. This increase was primarily due to higher vegetation management requirements for the quarter.

 

General and administrative (G&A) expenses of $27.9 million were $1.5 million lower compared to the same period in 2013. Amounts reported for the fourth quarter 2013 exclude $8.9 million of pre-tax expenses related to the Entergy transaction. This decrease was primarily due to lower incentive-based compensation partially offset by higher professional services such as legal, advisory and financial services fees for various development initiatives.

 

Depreciation and amortization expenses of $33.4 million increased by $2.4 million compared to the same period in 2013 due to a higher depreciable base resulting from property, plant and equipment additions.

 

3



 

Taxes other than income taxes of $19.1 million were $2.8 million higher than the same period in 2013. This increase was due to 2013 capital additions at our regulated operating subsidiaries, which are included in the tax base for 2014 personal property tax calculations.

 

Interest expense of $47.2 million increased by $4.4 million compared to the same period in 2013. Amounts reported for the fourth quarter 2014 and 2013 exclude pre-tax expenses related to the adjustments to operating earnings of $0.9 million and $2.0 million, respectively. The increase was due primarily to higher borrowing levels to finance capital investments.

 

The effective income tax rate for the fourth quarter of 2014 was 39.0 percent compared to 37.2 percent for the same period last year. Amounts reported for the fourth quarter of 2014 and 2013 exclude approximately $18.8 million and $17.9 million, respectively, associated with adjustments to operating earnings.

 

Year End 2014 Operating Earnings Financial Results Detail

 

ITC’s operating revenues for the year ended December 31, 2014 increased to $1,070.0 million compared to $941.3 million from the same period last year. Amounts reported for the year ended December 31, 2014 exclude approximately $46.9 million in reduced pre-tax revenues associated with the MISO regional base ROE rate refund liability. This increase was primarily due to higher revenue requirements attributable to higher rate base at our regulated operating subsidiaries, as well as an increase in regional cost sharing revenues due to additional capital projects being placed in-service that have been identified by MISO as eligible for regional cost sharing.

 

O&M expenses of $111.6 million were $1.2 million lower for the year ended December 31, 2014 compared to the same period in 2013. This decrease was primarily due to lower vegetation management requirements for the full year period.

 

G&A expenses of $113.9 million were $15.7 million higher compared to the same period in 2013. Amounts reported for the year ended December 31, 2014 and 2013 exclude approximately $1.1 million and $50.9 million, respectively, of pre-tax expenses associated with the Entergy transaction. This increase was primarily due to higher professional services such as legal, advisory and financial services fees for various development initiatives along with higher compensation expenses associated with personnel additions.

 

Depreciation and amortization expenses of $128.0 million increased by $9.4 million for the year ended December 31, 2014 compared to the same period in 2013. This increase was primarily due to a higher depreciable base resulting from property, plant and equipment additions.

 

Taxes other than income taxes of $76.5 million were $10.7 million higher compared to the same period in 2013. This increase was due to capital additions made at our regulated operating subsidiaries, which are included in the tax base for 2014 personal property taxes.

 

Interest expense of $185.6 million was $21.0 million higher compared to the same period in 2013. Amounts reported for the year ended December 31, 2014 and 2013 exclude approximately $1.0 million and $3.7 million, respectively, of pre-tax expenses associated with the adjustments to operating earnings noted previously. This increase was due primarily to higher borrowing levels to finance capital investments.

 

The effective income tax rate for the year ended December 31, 2014 was 38.2 percent compared to 36.5 percent for the same period in 2013. Amounts reported for the year ended December 31,

 

4



 

2014 and 2013 exclude income taxes of $30.4 million and $29.5 million, respectively, associated with adjustments to operating earnings noted previously.

 

Fourth Quarter Conference Call and Webcast

 

Joseph L. Welch, chairman, president and CEO and Rejji P. Hayes, senior vice president, CFO and treasurer will discuss the fourth quarter results in a conference call at 11 a.m. Eastern on Thursday, February 26, 2015. Individuals wishing to participate in the conference call may dial toll-free 877-644-1296 (domestic) or 914-495-8555 (international); there is no passcode. A listen-only live webcast of the conference call, including accompanying slides and the earnings release, will be available on the company’s investor information page. The conference call replay, available through March 3, 2015, and can be accessed by dialing 855-859-2056 (toll free) or 404-537-3406, passcode 80946022. The webcast will be archived on the ITC website.

 

Other Available Information

 

More detail about the year ended 2014 results may be found in ITC’s Form 10-K filing. Once filed with the Securities and Exchange Commission, an electronic copy of our 10-K can be found at our website, http://investor.itc-holdings.com. Paper copies can also be made available by contacting us through our website.

 

About ITC Holdings Corp.

 

ITC Holdings Corp. (NYSE: ITC) is the nation’s largest independent electric transmission company. Based in Novi, Michigan, ITC invests in the electric transmission grid to improve reliability, expand access to markets, lower the overall cost of delivered energy and allow new generating resources to interconnect to its transmission systems. Through its regulated operating subsidiaries ITCTransmission, Michigan Electric Transmission Company, ITC Midwest and ITC Great Plains, ITC owns and operates high-voltage transmission facilities in Michigan, Iowa, Minnesota, Illinois, Missouri, Kansas and Oklahoma, serving a combined peak load exceeding 26,000 megawatts along approximately 15,600 circuit miles of transmission line. ITC’s grid development focus includes growth through regulated infrastructure investment as well as domestic and international expansion through merchant and other commercial development opportunities. For more information, please visit ITC’s website at www.itc-holdings.com (ITC-itc-F).

 

GAAP v. Non-GAAP Measures

 

ITC’s reported earnings are prepared in accordance with GAAP and represent earnings as reported to the Securities and Exchange Commission. ITC’s management believes that operating earnings, or GAAP earnings adjusted for specific items as described in the release that are generally not indicative of our core operations, provides additional information that is useful to investors in understanding ITC’s underlying performance, business and performance trends, and helps facilitate period to period comparisons. However, non-GAAP financial measures are not required to be uniformly applied, are not audited and should not be considered in isolation or as substitutes for results prepared in accordance with GAAP.

 

5



 

Safe Harbor Statement

 

This press release contains certain statements that describe our management’s beliefs concerning future business conditions, plans and prospects, growth opportunities and the outlook for our business and the electricity transmission industry based upon information currently available. Such statements are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Wherever possible, we have identified these forward-looking statements by words such as “will,” “may,” “anticipates,” “believes,” “intends,” “estimates,” “expects,” “projects” and similar phrases. These forward-looking statements are based upon assumptions our management believes are reasonable. Such forward looking statements are subject to risks and uncertainties which could cause our actual results, performance and achievements to differ materially from those expressed in, or implied by, these statements, including, among others, the risks and uncertainties disclosed in our annual reports on Form 10-K, quarterly reports on Form 10-Q and other filings made with the Securities and Exchange Commission.

 

Because our forward-looking statements are based on estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond our control or are subject to change, actual results could be materially different and any or all of our forward-looking statements may turn out to be wrong. Forward-looking statements speak only as of the date made and can be affected by assumptions we might make or by known or unknown risks and uncertainties. Many factors mentioned in our discussion in this release and in our annual and quarterly reports will be important in determining future results. Consequently, we cannot assure you that our expectations or forecasts expressed in such forward-looking statements will be achieved. Except as required by law, we undertake no obligation to publicly update any of our forward-looking or other statements, whether as a result of new information, future events, or otherwise.

 

Investor/Analyst contact: Gretchen Holloway, 248-946-3595; gholloway@itctransco.com

 

Media contact: Robert Doetsch, 248-946-3493; rdoetsch@itctransco.com

 

6



 

ITC HOLDINGS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

Three months ended

 

Twelve months ended

 

 

 

December 31,

 

December 31,

 

(in thousands, except per share data)

 

2014

 

2013

 

2014

 

2013

 

OPERATING REVENUES

 

$

231,097

 

$

255,369

 

$

1,023,048

 

$

941,272

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

Operation and maintenance

 

31,888

 

28,915

 

111,623

 

112,821

 

General and administrative

 

27,949

 

38,342

 

115,031

 

149,109

 

Depreciation and amortization

 

33,427

 

31,013

 

128,036

 

118,596

 

Taxes other than income taxes

 

19,060

 

16,332

 

76,534

 

65,824

 

Other operating income and expense — net

 

(255

)

(597

)

(1,005

)

(1,139

)

Total operating expenses

 

112,069

 

114,005

 

430,219

 

445,211

 

OPERATING INCOME

 

119,028

 

141,364

 

592,829

 

496,061

 

OTHER EXPENSES (INCOME)

 

 

 

 

 

 

 

 

 

Interest expense — net

 

48,145

 

44,792

 

186,636

 

168,319

 

Allowance for equity funds used during construction

 

(5,960

)

(4,844

)

(20,825

)

(30,159

)

Loss on extinguishment of debt

 

131

 

 

29,205

 

 

Other income

 

(462

)

270

 

(1,103

)

(1,038

)

Other expense

 

792

 

699

 

4,511

 

6,571

 

Total other expenses (income)

 

42,646

 

40,917

 

198,424

 

143,693

 

INCOME BEFORE INCOME TAXES

 

76,382

 

100,447

 

394,405

 

352,368

 

INCOME TAX PROVISION

 

29,644

 

23,510

 

150,322

 

118,862

 

NET INCOME

 

$

46,738

 

$

76,937

 

$

244,083

 

$

233,506

 

Basic earnings per common share

 

$

0.30

 

$

0.49

 

$

1.56

 

$

1.49

 

Reported diluted earnings per common share

 

$

0.30

 

$

0.48

 

$

1.54

 

$

1.47

 

Operating diluted earnings per common share

 

$

0.48

 

$

0.44

 

$

1.85

 

$

1.63

 

Dividends declared per common share

 

$

0.163

 

$

0.142

 

$

0.610

 

$

0.535

 

 

RECONCILIATION OF REPORTED NET INCOME (GAAP) TO OPERATING EARNINGS (NON-GAAP MEASURE) - UNAUDITED

 

 

 

Three months ended

 

Twelve months ended

 

 

 

December 31,

 

December 31,

 

 

 

2014

 

2013

 

2014

 

2013

 

Reported net income (GAAP)

 

$

46,738

 

$

76,937

 

$

244,083

 

$

233,506

 

After-tax Entergy transaction related expenses

 

113

 

(7,061

)

714

 

24,823

 

After-tax liability for audit related refunds

 

2

 

82

 

134

 

273

 

After-tax debt extinguishment & consent solicitation fees

 

157

 

 

18,205

 

 

After-tax MISO regional base ROE rate refund liability

 

28,903

 

 

28,903

 

 

Operating earnings (non-GAAP)

 

$

75,913

 

$

69,958

 

$

292,039

 

$

258,602

 

 

RECONCILIATION OF REPORTED DILUTED EPS (GAAP) TO OPERATING DILUTED EPS (NON-GAAP MEASURE) - UNAUDITED

 

 

 

Three months ended

 

Twelve months ended

 

 

 

December 31,

 

December 31,

 

 

 

2014

 

2013

 

2014

 

2013

 

Reported diluted EPS (GAAP)

 

$

0.30

 

$

0.48

 

$

1.54

 

$

1.47

 

After-tax Entergy transaction related expenses

 

 

(0.04

)

0.01

 

0.16

 

After-tax liability for audit related refunds

 

 

 

 

 

After-tax debt extinguishment & consent solicitation fees

 

 

 

0.12

 

 

After-tax MISO regional base ROE rate refund liability

 

0.18

 

 

0.18

 

 

Operating diluted EPS (non-GAAP)

 

$

0.48

 

$

0.44

 

$

1.85

 

$

1.63

 

 

7



 

ITC HOLDINGS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

 

 

 

December 31,

 

December 31,

 

(in thousands, except share data)

 

2014

 

2013

 

ASSETS

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

 

$

27,741

 

$

34,275

 

Accounts receivable

 

100,998

 

89,348

 

Inventory

 

30,892

 

31,986

 

Deferred income taxes

 

14,511

 

17,225

 

Regulatory assets

 

5,393

 

6,334

 

Prepaid and other current assets

 

7,281

 

12,370

 

Total current assets

 

186,816

 

191,538

 

Property, plant and equipment (net of accumulated depreciation and amortization of $1,388,217 and $1,330,094, respectively)

 

5,496,875

 

4,846,526

 

Other assets

 

 

 

 

 

Goodwill

 

950,163

 

950,163

 

Intangible assets (net of accumulated amortization of $24,917 and $21,616, respectively)

 

48,794

 

49,328

 

Regulatory assets

 

223,712

 

182,105

 

Deferred financing fees (net of accumulated amortization of $15,972 and $15,261, respectively)

 

30,311

 

25,585

 

Other

 

37,418

 

36,998

 

Total other assets

 

1,290,398

 

1,244,179

 

TOTAL ASSETS

 

$

6,974,089

 

$

6,282,243

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable

 

$

107,969

 

$

111,145

 

Accrued payroll

 

23,502

 

21,930

 

Accrued interest

 

50,538

 

53,049

 

Accrued taxes

 

41,614

 

29,805

 

Regulatory liabilities

 

39,972

 

46,187

 

Refundable deposits from generators for transmission network upgrades

 

10,376

 

23,283

 

Debt maturing within one year

 

175,000

 

200,000

 

Other

 

14,043

 

13,980

 

Total current liabilities

 

463,014

 

499,379

 

Accrued pension and postretirement liabilities

 

69,562

 

53,704

 

Deferred income taxes

 

656,562

 

562,938

 

Regulatory liabilities

 

160,070

 

106,986

 

Refundable deposits from generators for transmission network upgrades

 

9,384

 

19,328

 

Other

 

17,354

 

14,064

 

Long-term debt

 

3,928,586

 

3,412,112

 

Commitments and contingent liabilities (Notes 4 and 16)

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

Common stock, without par value, 300,000,000 shares authorized, 155,140,967 and 157,500,795 shares issued and outstanding at December 31, 2014 and 2013, respectively

 

923,191

 

1,014,435

 

Retained earnings

 

741,550

 

592,970

 

Accumulated other comprehensive income

 

4,816

 

6,327

 

Total stockholders’ equity

 

1,669,557

 

1,613,732

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

6,974,089

 

$

6,282,243

 

 

8



 

ITC HOLDINGS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOW

 

 

 

Twelve months ended

 

 

 

December 31,

 

(in thousands)

 

2014

 

2013

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

Net income

 

$

244,083

 

$

233,506

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization expense

 

128,036

 

118,596

 

Recognition of and refund and collection of revenue accruals and deferrals — including accrued interest

 

(4,093

)

(11,972

)

Deferred income tax expense

 

90,373

 

76,703

 

Allowance for equity funds used during construction

 

(20,825

)

(30,159

)

Loss on extinguishment of debt

 

29,205

 

 

Other

 

17,697

 

17,864

 

Changes in assets and liabilities, exclusive of changes shown separately:

 

 

 

 

 

Accounts receivable

 

(11,869

)

(16,312

)

Inventory

 

1,094

 

5,371

 

Prepaid and other current assets

 

5,089

 

16,891

 

Accounts payable

 

(19,061

)

17,638

 

Accrued payroll

 

525

 

1,619

 

Accrued interest

 

(2,511

)

8,341

 

Accrued taxes

 

19,756

 

6,113

 

Tax benefit on the excess tax deduction of share-based compensation

 

(7,767

)

(4,302

)

Other current liabilities

 

(2,314

)

1,630

 

Other non-current assets and liabilities, net

 

34,083

 

7,669

 

Net cash provided by operating activities

 

501,501

 

449,196

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

Expenditures for property, plant and equipment

 

(733,145

)

(821,588

)

Proceeds from sale of marketable securities

 

495

 

20,844

 

Purchases of marketable securities

 

(6,091

)

(22,250

)

Other

 

4,040

 

(3,294

)

Net cash used in investing activities

 

(734,701

)

(826,288

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

Issuance of long-term debt

 

798,664

 

933,025

 

Borrowings under revolving credit agreements

 

1,660,000

 

1,090,100

 

Borrowings under term loan credit agreements

 

110,000

 

675,000

 

Retirement of long-term debt - including extinguishment of debt costs

 

(298,625

)

(452,000

)

Repayments of revolving credit agreements

 

(1,618,400

)

(1,146,700

)

Repayments of term loan credit agreements

 

(189,000

)

(635,000

)

Issuance of common stock

 

20,713

 

10,042

 

Dividends on common and restricted stock

 

(95,595

)

(84,129

)

Refundable deposits from generators for transmission network upgrades

 

5,833

 

32,281

 

Repayment of refundable deposits from generators for transmission network upgrades

 

(28,683

)

(38,236

)

Repurchase and retirement of common stock

 

(134,284

)

(4,885

)

Tax benefit on the excess tax deduction of share-based compensation

 

7,767

 

4,302

 

Advance for forward contract of accelerated share repurchase program

 

(20,000

)

 

Return of unused advance for forward contract of accelerated share repurchase program

 

20,000

 

 

Other

 

(11,724

)

1,380

 

Net cash provided by financing activities

 

226,666

 

385,180

 

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

 

(6,534

)

8,088

 

CASH AND CASH EQUIVALENTS — Beginning of period

 

34,275

 

26,187

 

CASH AND CASH EQUIVALENTS — End of period

 

$

27,741

 

$

34,275

 

 

9


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