Financial Results for 2012 ($000's)
Total revenues of $256,582 in 2012 increased by $12,081 or 5% compared to 2011. Rentals revenues decreased marginally by $236 to $186,288 in 2012, compared to 2011, primarily due to a reduction in installed assets, partially offset by a rental rate increase implemented in January 2012. Sub-metering revenues in 2012 were $69,837, an increase of $12,454 or 22% over the comparable period in 2011, as a result of increased commodity charges and billable units. Revenue includes pass through energy charges of $52,048 in 2012, an increase of $10,107 over 2011.
Investment income decreased by $137 in 2012 compared to 2011. The decrease in investment income was attributable to lower investment balances as a result of the repayment of the $60,000 6.20% 2009-1 Senior Unsecured Notes (the "2009-1 Notes") in April 2012, partially offset by the investment of the $250,000 4.30% 2012-1 Senior Unsecured Notes (the "2012 Notes") proceeds for approximately 30 days prior to the redemption of the $240,000 5.25% 2010-1 Senior Unsecured Notes (the "2010 Notes") in the fourth quarter of 2012.
Selling, General & Administrative ("SG&A") Expenses
Total SG&A expenses were $43,623 in 2012, an increase of $5,185 or 14% compared to 2011. Sub-metering SG&A expenses were $12,007 in 2012, $1,477 more than the same period in 2011, primarily as a result of increased wages and benefits of approximately $800 associated with the internalization of customer care and billing functions, bad debts and provisions of $700 and $400 in higher consulting fees, partially offset by $200 in both selling costs and reductions in cost of goods. Rentals and corporate expenses of $31,616 increased by $3,708 in 2012 over that in 2011, primarily due to increases of approximately $1,850 for claims and bad debts ($1,300 credit from DE in 2011), professional fees of $1,200, wages and benefits of $1,100, partially offset by reductions in billing and inventory management fees of $300 and selling expenses of $150.
Amortization expense decreased by $3,081 or 3% to $101,622 in 2012, primarily due to a smaller installed asset base in the rentals portfolio, partially offset by increased sub-metering capital investments, which are amortized over a shorter life than the rentals business.
Loss on Disposal of Equipment
In 2012, EnerCare reported a loss on disposal of equipment of $15,148, a reduction of $3,951 over 2011. The loss on disposal amount is influenced by the number of assets retired, proceeds on disposal of equipment, changes in the retirement asset mix and the age of the assets retired. Proceeds on disposal of equipment in 2012 were $5,379 or $1,447 greater than 2011, primarily as a result of higher buyout activity during the first and second quarters of 2012 reflecting the additional buyout transactions recorded earlier in the year, many of which were on account of older assets with low buyout fees.
Interest expense payable in cash decreased by $684 to $36,123 in 2012, compared to 2011. The decrease is primarily related to the conversion of convertible debentures to shares and the repayment of the 2009-1 Notes on April 30, 2012, partially offset by both a make-whole payment of approximately $1,920 associated with the 2010 Notes and $900 of additional interest created by the issuance on November 21, 2012 of the 2012 Notes, 30 days prior to the redemption of the 2010 Notes in December 2012. Amortization of other comprehensive income and financing costs for 2012 are lower than in 2011, primarily due to the declining outstanding balance of convertible debentures and reduced amortization with the repayment of the 2009-1 Notes in April 2012.
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