Northeast Utilities System : NU Reports Third Quarter Results
11/04/2011| 07:05pm US/Eastern
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Northeast Utilities (NYSE: NU) today reported earnings of $90 million,
or $0.51 per share, in the third quarter of 2011, down from $100.5
million, or $0.57 per share, earned in the third quarter of 2010. Third
quarter results for 2011 reflect after-tax expenses of $0.6 million
associated with NU's pending merger with NSTAR. Excluding those
expenses, NU earned $90.6 million, or $0.51 per share1, in
the third quarter of 2011.
NU attributed the lower operating results in the third quarter of 2011
to several factors, including a 2.1 percent decline in retail electric
sales compared with the third quarter of 2010, which resulted from
milder weather in the third quarter of 2011 and the impact of Tropical
Storm Irene. Lower results also reflect higher pension and other
employee benefit costs in the third quarter of 2011, as well as a higher
effective tax rate in the third quarter of 2011, compared with the third
quarter of 2010.
Transmission
NU's transmission segment earned $41.5 million in the third quarter of
2011, compared with $45.2 million in the third quarter of 2010. Lower
third quarter 2011 earnings primarily reflect a higher effective tax
rate and certain higher employee benefit costs, partially offset by a
higher transmission rate base.
Distribution and Generation
NU's distribution and generation segment earned $55 million in the third
quarter of 2011, compared with $55.7 million in the third quarter of
2010. The Connecticut Light and Power Company's (CL&P) distribution
segment earned $34.6 million in the third quarter of 2011, compared with
$31.5 million in the third quarter of 2010. Public Service Company of
New Hampshire's (PSNH) distribution and generation segment earned $20.6
million in the third quarter of 2011, compared with $23.4 million in the
third quarter of 2010.
Western Massachusetts Electric Company's (WMECO) distribution and
generation segment earned $2.8 million in the third quarter of 2011,
compared with $3.7 million in the third quarter of 2010. Lower third
quarter 2011 results were due to a $3.2 million non-recurring charge to
establish a billing adjustment reserve, as well as higher depreciation
expense.
Yankee Gas Services Company lost $3 million in the third quarter of
2011, compared with a loss of $2.9 million in the third quarter of 2010.
On a weather-adjusted basis, Yankee Gas' firm natural gas sales in 2011
were up 5.2 percent in the third quarter, compared with the same period
of 2010. The sales increases were due in large part to more conversions
by commercial and industrial customers from interruptible to firm
service and increased use of distributed generation fueled by natural
gas.
NU parent and other companies
NU parent and other companies had net after-tax expenses of $6.5 million
in the third quarter of 2011, compared with after-tax expenses of $0.4
million in the third quarter of 2010. Third quarter 2011 results include
$0.6 million of after-tax expenses related to NU's pending merger with
NSTAR. Excluding merger expenses, NU parent and other companies recorded
net expenses of $5.9 million in the third quarter of 2011. No merger
expenses were recorded in the third quarter of 2010.
2011 earnings guidance
NU today reiterated its 2011 stand-alone full-year consolidated earnings
guidance of between $2.30 per share1 and $2.40 per share1,
excluding projected after-tax expenses of approximately $0.20 per share
related to the NSTAR merger. Including the merger expenses, NU projects
earnings of between $2.10 per share and $2.20 per share. Those estimates
reflect distribution and generation segment earnings guidance of between
$1.30 per share1 and $1.35 per share1,
transmission segment earnings guidance of between $1.05 per share1
and $1.10 per share1, and NU parent and other companies net
expenses of $0.05 per share1, excluding merger expenses.
The following table reconciles 2011 and 2010 third-quarter results.
Third Quarter
2010
Reported EPS
$0.57
Change in transmission earnings in 2011
($0.03
)
Change in distribution and generation earnings in 2011
---
Change in Parent/Other results in 2011, excluding merger
expenses
($0.03
)
Merger expenses
---
2011
Reported EPS
$0.51
Financial results for the third quarter and first nine months of 2011
and 2010 are noted below:
Three months ended:
(in millions, except EPS)
September 30, 2011
September 30, 2010
Increase/ (Decrease)
2011 EPS1
CL&P Distribution
$34.6
$31.5
$3.1
$0.19
PSNH Distribution/Generation
$20.6
$23.4
($2.8
)
$0.12
WMECO Distribution/Generation
$2.8
$3.7
($0.9
)
$0.02
Yankee Gas
($3.0
)
($2.9
)
($0.1
)
($0.02
)
Total--Distribution/Generation
$55.0
$55.7
($0.7
)
$0.31
CL&P Transmission
$30.5
$36.1
($5.6
)
$0.17
PSNH Transmission
$5.1
$5.3
($0.2
)
$0.03
WMECO Transmission
$5.6
$3.7
$1.9
$0.03
NU Transmission Ventures
$0.3
$0.1
$0.2
---
Total--Transmission
$41.5
$45.2
($3.7
)
$0.23
Total--Regulated
$96.5
$100.9
($4.4
)
$0.54
NU Parent and Other Companies, excluding merger expenses
($5.9
)
($0.4
)
($5.5
)
($0.03
)
Merger expenses
($0.6
)
---
($0.6
)
---
Reported Earnings
$90.0
$100.5
($10.5
)
$0.51
Nine months ended:
(in millions, except EPS)
September 30, 2011
September 30, 2010
Increase/ (Decrease)
2011 EPS1
CL&P Distribution
$82.2
$54.2
$28.0
$0.46
PSNH Distribution/Generation
$58.1
$51.5
$6.6
$0.33
WMECO Distribution/Generation
$12.5
$8.9
$3.6
$0.07
Yankee Gas
$20.7
$16.1
$4.6
$0.12
Total--Distribution/Generation
$173.5
$130.7
$42.8
$0.98
CL&P Transmission
$97.2
$103.1
($5.9
)
$0.55
PSNH Transmission
$16.6
$14.7
$1.9
$0.09
WMECO Transmission
$14.1
$9.4
$4.7
$0.08
NU Transmission Ventures
$0.5
$0.1
$0.4
---
Total--Transmission
$128.4
$127.3
$1.1
$0.72
Total--Regulated
$301.9
$258.0
$43.9
$1.70
NU Parent and Other Companies, excluding merger expenses
($10.4
)
$0.7
($11.1
)
($0.06
)
Merger expenses
($10.1
)
---
($10.1
)
($0.06
)
Reported Earnings
$281.4
$258.7
$22.7
$1.58
Retail sales data:
Gwh for three months ended
September 30, 2011
September 30, 2010
% Change Actual
% Change Weather Norm.
CL&P
6,159
6,293
(2.1
)
2.3
PSNH
2,091
2,147
(2.6
)
2.3
WMECO
999
1,009
(1.1
)
2.6
Total NU
9,246
9,444
(2.1
)
2.3
Gwh for nine months ended
CL&P
17,185
17,221
(0.2
)
0.4
PSNH
5,924
5,934
(0.2
)
0.6
WMECO
2,817
2,818
0.0
0.5
Total NU
25,917
25,961
(0.2
)
0.5
Yankee Gas firm volumes in mmcf for three months
ended
6,351
6,031
5.3
5.2
Yankee Gas firm volumes in mmcf for nine months
ended
34,215
29,560
15.7
6.3
NU has approximately 177 million common shares outstanding. It operates
New England's largest energy delivery system, serving more than 2
million customers in Connecticut, New Hampshire and Massachusetts.
1 All per share amounts in this news release are
reported on a fully diluted basis.The only common equity
securities that are publicly traded are common shares of NU parent.The
earnings and EPS of each business do not represent a direct legal
interest in the assets and liabilities allocated to such business, but
rather represent a direct interest in NU's assets and liabilities as a
whole.EPS by business is a non-GAAP (not determined using
generally accepted accounting principles) measure that is calculated by
dividing the net income or loss attributable to controlling interests of
each business by the weighted average fully diluted NU parent common
shares outstanding for the period.Management uses this non-GAAP
financial measure to evaluate earnings results and to provide details of
earnings results and guidance by business.In addition, earnings
per share excluding merger expenses is a non-GAAP measure.Management
believes that these measures are useful to investors to evaluate the
actual and projected financial performance and contribution of NU's
businesses.Non-GAAP financial measures should not be considered
as alternatives to NU consolidated net income attributable to
controlling interests or EPS determined in accordance with GAAP as
indicators of NU's operating performance.
This news release includes statements concerning NU's expectations,
beliefs, plans, objectives, goals, strategies, assumptions of future
events, future financial performance or growth and other statements that
are not historical facts.These statements are "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995.In some cases, readers can identify these
forward-looking statements through the use of words or phrases such as
"estimate", "expect", "anticipate", "intend", "plan", "project,"
"believe", "forecast", "should", "could", and other similar expressions.Forward-looking statements involve risks and uncertainties that may
cause actual results or outcomes to differ materially from those
included in the forward-looking statements.Factors that may
cause actual results to differ materially from those included in the
forward-looking statements include, but are not limited to, actions or
inaction of local, state and federal regulatory and taxing bodies;
changes in business and economic conditions, including their impact on
interest rates, bad debt expense and demand for NU's products and
services; changes in weather patterns; changes in laws, regulations or
regulatory policy; changes in levels or timing of capital expenditures;
disruptions in the capital markets or other events that make NU's access
to necessary capital more difficult or costly; developments in legal or
public policy doctrines; technological developments; changes in
accounting standards and financial reporting regulations; fluctuations
in the value of our remaining competitive contracts; actions of rating
agencies; the effects and outcome of our pending merger with NSTAR, and
other presently unknown or unforeseen factors. Other risk factors are
detailed from time to time in NU's reports filed with the Securities and
Exchange Commission.Any forward-looking statement speaks only as
of the date on which such statement is made, and NU undertakes no
obligation to update the information contained in any forward-looking
statements to reflect developments or circumstances occurring after the
statement is made or to reflect the occurrence of unanticipated events.
Note: NU will webcast a discussion concerning its third quarter 2011
results and other financial topics on Monday, November 7, 2011 at 7 a.m.
Eastern Time. The webcast can be accessed through NU's website at www.nu.com.
NORTHEAST UTILITIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30,
December 31,
(Thousands of Dollars)
2011
2010
ASSETS
Current Assets:
Cash and Cash Equivalents
$
16,721
$
23,395
Receivables, Net
494,552
523,644
Unbilled Revenues
138,110
208,834
Taxes Receivable
203
89,638
Fuel, Materials and Supplies
237,794
244,043
Regulatory Assets
235,460
238,699
Marketable Securities
74,525
78,306
Prepayments and Other Current Assets
130,010
100,441
Total Current Assets
1,327,375
1,507,000
Property, Plant and Equipment, Net
10,096,063
9,567,726
Deferred Debits and Other Assets:
Regulatory Assets
2,706,053
2,756,580
Goodwill
287,591
287,591
Marketable Securities
52,181
51,201
Derivative Assets
91,430
123,242
Other Long-Term Assets
168,024
179,261
Total Deferred Debits and Other Assets
3,305,279
3,397,875
Total Assets
$
14,728,717
$
14,472,601
The data contained in this report is preliminary and is unaudited.
This report is being submitted for the sole purpose of providing
information to present shareholders about Northeast Utilities and
Subsidiaries and is not a representation, prospectus, or intended
for use in connection with any purchase or sale of securities.
NORTHEAST UTILITIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30,
December 31,
(Thousands of Dollars)
2011
2010
LIABILITIES AND CAPITALIZATION
Current Liabilities:
Notes Payable to Banks
$
30,000
$
267,000
Long-Term Debt - Current Portion
334,327
66,286
Accounts Payable
476,214
417,285
Obligations to Third Party Suppliers
77,760
74,659
Accrued Taxes
115,285
107,067
Accrued Interest
77,319
74,740
Regulatory Liabilities
174,562
99,403
Derivative Liabilities
110,653
71,501
Other Current Liabilities
139,187
167,206
Total Current Liabilities
1,535,307
1,345,147
Rate Reduction Bonds
130,374
181,572
Deferred Credits and Other Liabilities:
Accumulated Deferred Income Taxes
1,814,976
1,636,750
Regulatory Liabilities
276,222
339,655
Derivative Liabilities
909,252
909,668
Accrued Pension
701,993
802,195
Other Long-Term Liabilities
671,046
695,915
Total Deferred Credits and Other Liabilities
4,373,489
4,384,183
Capitalization:
Long-Term Debt
4,614,697
4,632,866
Noncontrolling Interest in Consolidated Subsidiary:
Preferred Stock Not Subject to Mandatory Redemption
116,200
116,200
Equity:
Common Shareholders' Equity:
Common Shares
980,054
978,909
Capital Surplus, Paid In
1,792,593
1,777,592
Retained Earnings
1,587,528
1,452,777
Accumulated Other Comprehensive Loss
(55,214
)
(43,370
)
Treasury Stock
(348,764
)
(354,732
)
Common Shareholders' Equity
3,956,197
3,811,176
Noncontrolling Interests
2,453
1,457
Total Equity
3,958,650
3,812,633
Total Capitalization
8,689,547
8,561,699
Total Liabilities and Capitalization
$
14,728,717
$
14,472,601
The data contained in this report is preliminary and is unaudited.
This report is being submitted for the sole purpose of providing
information to present shareholders about Northeast Utilities and
Subsidiaries and is not a representation, prospectus, or intended
for use in connection with any purchase or sale of securities.
NORTHEAST UTILITIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
(Thousands of Dollars, Except Share Information)
2011
2010
2011
2010
Operating Revenues
$
1,114,892
$
1,243,337
$
3,397,624
$
3,694,182
Operating Expenses:
Fuel, Purchased and Net Interchange Power
399,941
494,125
1,214,350
1,539,703
Other Operating Expenses
237,576
233,472
752,372
688,409
Maintenance
58,949
49,951
205,538
162,405
Depreciation
75,196
70,954
222,784
228,685
Amortization of Regulatory Assets, Net
36,740
50,341
88,409
50,908
Amortization of Rate Reduction Bonds
17,680
60,434
52,047
175,000
Taxes Other Than Income Taxes
84,994
84,427
252,817
244,431
Total Operating Expenses
911,076
1,043,704
2,788,317
3,089,541
Operating Income
203,816
199,633
609,307
604,641
Interest Expense:
Interest on Long-Term Debt
57,461
57,802
171,905
173,594
Interest on Rate Reduction Bonds
2,018
4,661
6,889
16,985
Other Interest
4,453
3,435
5,922
9,778
Interest Expense
63,932
65,898
184,716
200,357
Other Income, Net
1,430
10,118
19,077
19,726
Income Before Income Tax Expense
141,314
143,853
443,668
424,010
Income Tax Expense
49,883
41,918
157,934
161,126
Net Income
91,431
101,935
285,734
262,884
Net Income Attributable to Noncontrolling Interests
1,470
1,411
4,340
4,204
Net Income Attributable to Controlling Interests
$
89,961
$
100,524
$
281,394
$
258,680
Basic Earnings Per Common Share
$
0.51
$
0.57
$
1.59
$
1.47
Diluted Earnings Per Common Share
$
0.51
$
0.57
$
1.58
$
1.46
Dividends Declared Per Common Share
$
0.28
$
0.26
$
0.83
$
0.77
Weighted Average Common Shares Outstanding:
Basic
177,497,862
176,752,714
177,344,481
176,557,889
Diluted
177,835,348
177,012,278
177,647,694
176,762,088
The data contained in this report is preliminary and is unaudited.
This report is being submitted for the sole purpose of providing
information to present shareholders about Northeast Utilities and
Subsidiaries and is not a representation, prospectus, or intended
for use in connection with any purchase or sale of securities.
NORTHEAST UTILITIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
(Thousands of Dollars)
2011
2010
Operating Activities:
Net Income
$
285,734
$
262,884
Adjustments to Reconcile Net Income to Net Cash Flows Provided by
Operating Activities:
Bad Debt Expense
12,435
24,632
Depreciation
222,784
228,685
Deferred Income Taxes
133,528
105,070
Pension and PBOP Expense
103,106
74,744
Pension and PBOP Contributions
(159,220
)
(78,035
)
Regulatory (Underrecoveries)/Overrecoveries, Net
(26,001
)
44,479
Amortization of Regulatory Assets, Net
88,409
50,908
Amortization of Rate Reduction Bonds
52,047
175,000
Derivative Assets and Liabilities
(33,767
)
(9,228
)
Other
(14,802
)
(46,190
)
Changes in Current Assets and Liabilities:
Receivables and Unbilled Revenues, Net
61,657
20,905
Fuel, Materials and Supplies
(4,072
)
33,337
Taxes Receivable/Accrued
109,410
(12,904
)
Accounts Payable
66,618
(59,601
)
Other Current Assets and Liabilities
(9,419
)
28,961
Net Cash Flows Provided by Operating Activities
888,447
843,647
Investing Activities:
Investments in Property, Plant and Equipment
(749,060
)
(677,579
)
Proceeds from Sales of Marketable Securities
116,463
146,305
Purchases of Marketable Securities
(118,251
)
(148,075
)
Proceeds from Sale of Assets
46,841
-
Other Investing Activities
(5,849
)
(10,412
)
Net Cash Flows Used in Investing Activities
(709,856
)
(689,761
)
Financing Activities:
Cash Dividends on Common Shares
(145,865
)
(135,349
)
Cash Dividends on Preferred Stock
(4,169
)
(4,169
)
(Decrease)/Increase in Short-Term Debt
(237,000
)
55,687
Issuance of Long-Term Debt
382,000
145,000
Retirements of Long-Term Debt
(124,086
)
(4,286
)
Retirements of Rate Reduction Bonds
(51,198
)
(195,724
)
Other Financing Activities
(4,947
)
(818
)
Net Cash Flows Used in Financing Activities
(185,265
)
(139,659
)
Net (Decrease)/Increase in Cash and Cash Equivalents
(6,674
)
14,227
Cash and Cash Equivalents - Beginning of Period
23,395
26,952
Cash and Cash Equivalents - End of Period
$
16,721
$
41,179
The data contained in this report is preliminary and is unaudited.
This report is being submitted for the sole purpose of providing
information to present shareholders about Northeast Utilities and
Subsidiaries and is not a representation, prospectus, or intended
for use in connection with any purchase or sale of securities.
Northeast Utilities Jeffrey R. Kotkin, 860-728-4650
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