Northeast Utilities (NYSE: NU) today reported earnings of $44.3 million, or $0.15 per share, in the second quarter of 2012, compared with earnings of $77.3 million, or $0.44 per share, in the second quarter of 2011. Second quarter 2012 results included approximately $91.5 million, or $0.30 per share, of after-tax charges related to the April 10, 2012 closing of the merger between NU and NSTAR and various related regulatory settlements. Excluding those charges, NU earned $135.8 million, or $0.45 per share 1, in the second quarter of 2012. NSTAR’s results are included in NU’s second quarter 2012 results, but not in NU’s first quarter 2012 results.

In the first six months of 2012, NU earned $143.6 million, or $0.60 per share, compared with earnings of $191.4 million, or $1.08 per share, in the first half of 2011. Excluding merger and related settlement costs of $92.6 million, or $0.38 per share, NU earned $236.2 million, or $0.98 per share, in the first half of 2012.

Thomas J. May, NU president and chief executive officer, said he was extremely pleased with the integration work NU has undertaken since the merger was completed in April. “We continue to be highly confident that our merger will provide significant benefits to both the customers and communities we serve throughout Connecticut, Massachusetts and New Hampshire, as well as to investors. In fact, customers in Massachusetts and Connecticut have already realized $46 million of benefits from the merger in the form of rate credits in their bills in the second quarter,” May said.

May noted that NU’s second-quarter 2012 results before merger and related settlement costs were in line with the company’s expectations. He added that NU’s ongoing investment in needed transmission infrastructure will continue to bring significant benefits to customers of the region.

Electric Transmission

NU’s transmission segment earned $63.7 million in the second quarter of 2012 and $110 million in the first half of 2012, compared with $42.2 million in the second quarter of 2011 and $86.9 million in the first half of 2011. The increase in year-to-date earnings primarily reflects continued investment in NU’s transmission system, as well as the addition of NSTAR Electric Company transmission results in the second quarter of 2012.

Electric Distribution and Generation

NU’s electric distribution and generation segment earned $70.5 million in the second quarter of 2012 and $112.5 million in the first half of 2012, compared with $39.1 million in the second quarter of 2011 and $94.8 million in the first half of 2011. Those 2012 results exclude $50.8 million of second-quarter after-tax charges relating to the merger and related settlement agreements. Those charges include a total of $43 million of rate credits provided to customers of The Connecticut Light and Power Company (CL&P), NSTAR Electric, and Western Massachusetts Electric Company (WMECO), as well as $40 million of reduced storm cost recovery from CL&P customers as a result of the Connecticut settlement agreement.

The distribution and generation segment benefited in the second quarter and first half of 2012 from control of operating expenses which was offset by higher costs related to pension and health care benefits and higher depreciation and property taxes.

Excluding $38.4 million of after-tax merger settlement-related charges, which reflect $25 million of customer rate credits and the $40 million write-down of 2011 storm costs, CL&P’s distribution segment earned $10.5 million in the second quarter of 2012 and $31.3 million in the first half of 2012, compared with $19.1 million in the second quarter of 2011 and $47.6 million in the first half of 2011. Lower second quarter and first half 2012 results were due primarily to a weather-driven 3.8 percent reduction in retail electric sales in the first half of 2012 and higher pension, tree trimming and system maintenance costs.

Excluding $15 million of customer rate credits, which contributed to a $10.6 million after-tax charge, NSTAR Electric’s distribution segment earned $42 million in the second quarter of 2012.

Public Service Company of New Hampshire’s (PSNH) distribution and generation segment earned $14.8 million in the second quarter of 2012 and $29.9 million in the first half of 2012, compared with $16 million in the second quarter of 2011 and $37.5 million in the first half of 2011. Lower 2012 results were due in part to a 1.9 percent reduction in electric sales in the first half of 2012, compared with the first half of 2011, as well as higher depreciation, property tax, pension and health care costs.

Excluding $3 million of merger settlement-related customer rate credits, which resulted in a $1.8 million after-tax charge, WMECO’s distribution segment earned $3.2 million in the second quarter of 2012 and $9.3 million in the first half of 2012, compared with $4 million in the second quarter of 2011 and $9.7 million in the first half of 2011. Lower second quarter and first half 2012 results were due in part to higher depreciation, interest and tree trimming expense.

Natural Gas Distribution

Excluding $3 million of merger-related customer rate credits, which contributed to a $2 million after-tax charge, NSTAR Gas Company earned $0.1 million in the second quarter of 2012.

Yankee Gas Services Company lost $0.1 million in the second quarter of 2012 and earned $14.6 million in the first half of 2012, compared with earnings of $1.2 million in the second quarter of 2011 and $23.7 million in the first half of 2011. Yankee Gas’ second quarter 2012 results reflect a 5 percent decline in second-quarter firm natural gas sales due primarily to warmer weather in April and May of 2012, compared with the same period of 2011, which reduced customer space heating demand.

NU Parent and Other Businesses

Excluding $38.6 million of after-tax merger-related expenses, NU parent and unregulated businesses had net earnings of $1.6 million in the second quarter of 2012, an improvement of $5.6 million compared with after-tax expenses of $4 million in the second quarter of 2011. The improvement was driven by a number of factors, including the addition of earnings from NSTAR Communications and lower interest expense. The following table reconciles 2012 and 2011 second-quarter and first six months earnings per share.
             
        Second Quarter   First Six Months
2011   Reported EPS   $0.44   $1.08
    NSTAR earnings in 2012   $0.19   $0.23
    Higher transmission earnings in 2012   $0.05   $0.05
    Lower electric sales in 2012   ($0.01)   ($0.04)
    Lower firm natural gas sales in 2012   --   ($0.04)
   

Higher O&M, including untracked pension and health care costs in 2012
 

($0.02)
 

($0.01)
    Other, including higher interest costs   ($0.01)   ($0.02)
    Higher outstanding common shares   ($0.19)   ($0.26)
   

2012 EPS before merger-related settlements and other merger-related charges
 

$0.45
 

$0.98
    Customer rate credits   ($0.10)   ($0.12)
    Reduction of storm cost recovery from customers   ($0.08)   ($0.10)
    Funding of Connecticut energy initiatives   ($0.03)   ($0.04)
    Other merger-related costs   ($0.09)   ($0.12)
   

Total merger-related settlements and other merger-related charges
 

($0.30)
 

($0.38)
2012   Reported EPS   $0.15   $0.60
     

Financial results for the second quarter and first half of 2012 and 2011 are noted below:
 

Three months ended:

(in millions, except EPS)
 

June 30, 2012
 

June 30, 2011
 

Increase/(Decrease)
 

2012 EPS1

CL&P Distribution, ex. rate credits, storm cost write-down
 

$10.5
 

$19.1
 

($8.6)
 

$0.04

NSTAR Electric Distribution, ex. rate credits
 

$42.0
 

N/A
 

N/A
 

$0.13
PSNH Distribution/Generation   $14.8   $16.0   ($1.2)   $0.05

WMECO Distribution/Generation, ex. rate credits
 

$3.2
 

$4.0
 

($0.8)
 

$0.01

Total—Electric Distribution/Generation, ex. rate credits, storm cost write-down
 

$70.5
 

$39.1
 

$31.4
 

$0.23
NSTAR Gas, ex. rate credits   $0.1   N/A   N/A   $0.00
Yankee Gas   ($0.1)   $1.2   ($1.3)   $0.00

Total—Natural Gas Distribution, ex. rate credits
 

$0.0
 

$1.2
 

($1.2)
 

$0.00
CL&P Transmission   $33.5   $32.2   $1.3   $0.11
NSTAR Electric Transmission   $13.6   N/A   N/A   $0.05
PSNH Transmission   $6.5   $5.6   $0.9   $0.02
WMECO Transmission   $9.7   $4.2   $5.5   $0.03
NU Transmission Ventures   $0.4   $0.2   $0.2   $0.00
Total—Transmission   $63.7   $42.2   $21.5   $0.21

NU Parent and Other Companies, ex. merger, settlement expenses
 

$1.6
 

($4.0)
 

$5.6
 

$0.01
Earnings, ex. merger impacts   $135.8   $78.5   $57.3   $0.45
Merger, settlement impacts   ($91.5)   ($1.2)   ($90.3)   ($0.30)
Reported Earnings   $44.3   $77.3   ($33.0)   $0.15
       
 

Six months ended:

(in millions, except EPS)
 

June 30, 2012
 

June 30, 2011
 

Increase/(Decrease)
 

2012 EPS1

CL&P Distribution, ex. rate credits, storm cost write-down
 

$31.3
 

$47.6
 

($16.3)
 

$0.13

NSTAR Electric Distribution, ex. rate credits
 

$42.0
 

N/A
 

N/A
 

$0.17
PSNH Distribution/Generation   $29.9   $37.5   ($7.6)   $0.13

WMECO Distribution/Generation, ex. rate credits
 

$9.3
 

$9.7
 

($0.4)
 

$0.04

Total—Electric Distribution/Generation, ex. rate credits, storm cost write-down
 

$112.5
 

$94.8
 

$17.7
 

$0.47
NSTAR Gas, ex. rate credits   $0.1   N/A   N/A   $0.00
Yankee Gas   $14.6   $23.7   ($9.1)   $0.06

Total—Natural Gas Distribution, ex. rate credits
 

$14.7
 

$23.7
 

($9.0)
 

$0.06
CL&P Transmission   $65.3   $66.6   ($1.3)   $0.27
NSTAR Electric Transmission   $13.6   N/A   N/A   $0.06
PSNH Transmission   $12.6   $11.6   $1.0   $0.05
WMECO Transmission   $17.8   $8.4   $9.4   $0.07
NU Transmission Ventures   $0.7   $0.3   $0.4   $0.00
Total—Transmission   $110.0   $86.9   $23.1   $0.45

NU Parent and Other Companies, ex. merger settlement, expenses
 

($1.0)
 

($4.5)
 

$3.5
 

$0.00
Earnings, ex. merger impacts   $236.2   $200.9   $35.3   $0.98
Merger, settlement impacts   ($92.6)   ($9.5)   ($83.1)   ($0.38)
Reported Earnings   $143.6   $191.4   ($47.8)   $0.60
       
 

Retail sales data:

Gwh for three months ended
 

June 30, 2012
 

June 30, 2011
 

% ChangeActual
 

% ChangeWeather Norm.
CL&P   5,181   5,250   (1.3%)   (2.4%)
NSTAR Electric*   4,964   5,029   (1.3%)   (1.6%)
PSNH   1,824   1,849   (1.3%)   (1.8%)
WMECO  

870
 

871
 

(0.1%)
 

(1.0%)
Total*   12,835   12,995   (1.2%)   (1.9%)
                 
Gwh for six months ended                
CL&P   10,608   11,026   (3.8%)   (1.2%)
NSTAR Electric*   10,054   10,382   (3.2%)   (1.2%)
PSNH   3,761   3,833   (1.9%)   (0.6%)
WMECO  

1,781
  1,819   (2.1%)   (0.5%)
Total*   26,197   27,053   (3.2%)   (1.0%)
                 

Firm volumes in mmcf for three months ended
 

 
 

 
 

 
 

 
NSTAR Gas*   6,834   7,272   (6.0%)   1.2%
Yankee Gas   8,053   8,480   (5.0%)   (1.8%)
Total*   14,887   15,752   (5.5%)   (0.4%)
                 

Firm volumes in mmcf for six months ended
               
NSTAR Gas*   24,467   28,856   (15.2%)   4.0%
Yankee Gas   24,872   27,864   (10.7%)   2.9%
Total*   49,339   56,720   (13.0%)   3.5%
       

* Prior year sales data for NSTAR Electric and NSTAR Gas are included for illustrative purposes.

NU has approximately 314 million common shares outstanding. It operates New England’s largest energy delivery system, serving approximately 3.5 million customers in Connecticut, Massachusetts and New Hampshire.

1 All per share amounts in this news release are reported on a 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 diluted NU parent common shares outstanding for the period. In addition, the second quarter and first half 2012 earnings and EPS excluding certain charges related to the April 10, 2012 closing of the merger between NU and NSTAR are non-GAAP financial measures. Management uses these non-GAAP financial measures to evaluate earnings results and to provide details of earnings results and guidance by business and to more fully compare and explain our second quarter and first half 2012 and 2011 results without including the impact of the non-recurring merger-related costs. Management believes that this measurement is 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 outcome of our merger with NSTAR; and other presently unknown or unforeseen factors. Other risk factors are detailed from time to time in NU’s and NSTAR’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 second quarter 2012 results tomorrow, July 31, 2012, at 9 a.m. Eastern Daylight Time. The webcast can be accessed through NU’s website at www.nu.com .
NORTHEAST UTILITIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
     
June 30, December 31,
(Thousands of Dollars)   2012   2011
 

ASSETS
 
Current Assets:
Cash and Cash Equivalents $ 28,483 $ 6,559
Receivables, Net 661,910 488,002
Unbilled Revenues 202,262 175,207
Fuel, Materials and Supplies 262,562 248,958
Regulatory Assets 624,397 255,144
Marketable Securities 79,231 70,970
Prepayments and Other Current Assets   95,160   112,632
Total Current Assets   1,954,005   1,357,472
 
 
Property, Plant and Equipment, Net   16,054,913   10,403,065
 
Deferred Debits and Other Assets:
Regulatory Assets 5,201,154 3,267,710
Goodwill 3,518,454 287,591
Marketable Securities 372,302 60,311
Derivative Assets 93,616 98,357
Other Long-Term Assets   311,856   172,560
Total Deferred Debits and Other Assets   9,497,382   3,886,529
 
 
 
Total Assets $ 27,506,300 $ 15,647,066
 

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)
     
June 30, December 31,
(Thousands of Dollars)   2012   2011
 

LIABILITIES AND CAPITALIZATION
 
Current Liabilities:
Notes Payable to Banks $ 1,248,500 $ 317,000
Long-Term Debt - Current Portion 683,208 331,582
Accounts Payable 600,995 633,282
Regulatory Liabilities 203,767 167,844
Derivative Liabilities 113,188 107,558
Other Current Liabilities   640,809   390,416
Total Current Liabilities   3,490,467   1,947,682
 
Rate Reduction Bonds   160,133   112,260
 
Deferred Credits and Other Liabilities:
Accumulated Deferred Income Taxes 3,249,323 1,868,316
Regulatory Liabilities 551,690 266,145
Derivative Liabilities 946,621 959,876
Accrued Pension, SERP and PBOP 2,064,069 1,326,037
Other Long-Term Liabilities   884,317   420,011
Total Deferred Credits and Other Liabilities   7,696,020   4,840,385
 
Capitalization:
Long-Term Debt   6,936,473   4,614,913
 
Noncontrolling Interest - Preferred Stock of Subsidiaries   155,568   116,200
 
Equity:
Common Shareholders' Equity:
Common Shares 1,662,251 980,264
Capital Surplus, Paid In 6,178,698 1,797,884
Retained Earnings 1,635,709 1,651,875
Accumulated Other Comprehensive Loss (66,387) (70,686)
Treasury Stock   (342,632)   (346,667)
Common Shareholders' Equity 9,067,639 4,012,670
Noncontrolling Interests   -   2,956
Total Equity   9,067,639   4,015,626
Total Capitalization   16,159,680   8,746,739
 
 
 
Total Liabilities and Capitalization $ 27,506,300 $ 15,647,066
 

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 June 30, Six Months Ended June 30,
(Thousands of Dollars, Except Share Information)   2012   2011   2012   2011
 
Operating Revenues $ 1,628,684 $ 1,047,481 $ 2,728,307 $ 2,282,732
 
Operating Expenses:
Purchased Power, Fuel and Transmission 542,014 382,542 937,358 879,246
Operations and Maintenance 529,977 269,701 791,940 533,323
Depreciation 144,485 73,637 225,324 147,588
Amortization of Regulatory Assets, Net 25,590 16,992 31,016 50,491
Amortization of Rate Reduction Bonds 40,752 17,086 59,100 34,367
Energy Efficiency Programs 73,489 29,970 110,762 64,403
Taxes Other Than Income Taxes   112,862   79,419   198,899   167,823
Total Operating Expenses   1,469,169   869,347   2,354,399   1,877,241
Operating Income 159,515 178,134 373,908 405,491
 
Interest Expense:
Interest on Long-Term Debt 86,925 57,044 146,892 114,444
Interest on Rate Reduction Bonds 2,056 2,293 3,487 4,871
Other Interest   66   2,897   5,116   1,468
Interest Expense 89,047 62,234 155,495 120,783
Other Income, Net   1,806   7,334   10,580   17,647
Income Before Income Tax Expense 72,274 123,234 228,993 302,355
Income Tax Expense   26,055   44,515   82,019   108,052
Net Income 46,219 78,719 146,974 194,303
Net Income Attributable to Noncontrolling Interests   1,880   1,441   3,373   2,870
Net Income Attributable to Controlling Interest $ 44,339 $ 77,278 $ 143,601 $ 191,433
 
Basic and Diluted Earnings Per Common Share $ 0.15 $ 0.44 $ 0.60 $ 1.08
 
Dividends Declared Per Common Share $ 0.34 $ 0.28 $ 0.63 $ 0.55
 
Weighted Average Common Shares Outstanding:
Basic   301,047,753   177,347,374   239,551,735   177,267,791
Diluted   301,816,884   177,626,992   240,127,169   177,553,995
 

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)
       
 
Six Months Ended June 30,
(Thousands of Dollars)   2012   2011
 
Operating Activities:
Net Income $ 146,974 $ 194,303
Adjustments to Reconcile Net Income to Net Cash Flows
Provided by Operating Activities:
Bad Debt Expense 13,384 9,374
Depreciation 225,324 147,588
Deferred Income Taxes 59,509 95,293
Pension, SERP and PBOP Expense

105,974
69,654
Pension and PBOP Contributions (164,294) (37,530)
Regulatory (Under)/Over Recoveries, Net (53,806) 40,434
Amortization of Regulatory Assets, Net 31,016 50,491
Amortization of Rate Reduction Bonds 59,100 34,367
Derivative Assets and Liabilities (5,090) (9,272)
Other

10,541
(6,014)
Changes in Current Assets and Liabilities:
Receivables and Unbilled Revenues, Net 83,395 80,696
Fuel, Materials and Supplies 45,127 12,992
Taxes Receivable/Accrued, Net 15,854 48,933
Accounts Payable (188,259) (23,981)
Other Current Assets and Liabilities, Net   (64,346)   (20,633)
Net Cash Flows Provided by Operating Activities  

320,403
  686,695
 
Investing Activities:
Investments in Property, Plant and Equipment

(690,376)
(468,526)
Proceeds from Sales of Marketable Securities 132,580 72,369
Purchases of Marketable Securities (143,225) (73,564)
Proceeds from Sale of Assets - 46,841
Other Investing Activities   11,274   (4,828)
Net Cash Flows Used in Investing Activities  

(689,747)
  (427,708)
 
Financing Activities:
Cash Dividends on Common Shares (159,708) (97,207)
Cash Dividends on Preferred Stock (3,269) (2,779)
Increase/(Decrease) in Short-Term Debt 558,500 (130,000)
Issuance of Long-Term Debt 300,000 122,000
Retirements of Long-Term Debt (267,699) (124,086)
Retirements of Rate Reduction Bonds (36,439) (34,320)
Other Financing Activities   (117)   (883)
Net Cash Flows Provided by/(Used in) Financing Activities   391,268   (267,275)
Net Increase/(Decrease) in Cash and Cash Equivalents 21,924 (8,288)
Cash and Cash Equivalents - Beginning of Period   6,559   23,395
Cash and Cash Equivalents - End of Period $ 28,483 $ 15,107
 

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.

Copyright Business Wire 2010