NU Reports Year-End 2012 Results

Northeast Utilities (NYSE: NU) today reported full-year 2012 earnings of $525.9 million, or $1.89 per share, compared with earnings of $394.7 million in 2011. Excluding costs related to the April 2012 merger of NU and NSTAR and related settlement costs, NU earned $633.5 million in 2012, or $2.28 per share 1. Excluding merger-related costs and a storm fund reserve, NU earned $423.9 million in 2011. NSTAR’s earnings are included in NU’s results of operations, effective as of April 2012.

In the fourth quarter of 2012, NU earned $174.7 million, or $0.55 per share, compared with earnings of $113.3 million in the fourth quarter of 2011. Results in the fourth quarter of 2012 include after-tax merger-related costs of $2.1 million, or $0.01 per share. Results in the fourth quarter of 2011 include $19.1 million of after-tax merger-related costs and a storm fund reserve.

Thomas J. May, NU president and chief executive officer, said, “These full-year financial results are consistent with our previously announced 2012 recurring earnings guidance of between $2.25 and $2.30 per share 1 and cap a very successful year for our newly merged company.”

May said NU’s efforts to build a premier New-England-based, highly customer-focused organization are well under way. “We continue to identify and implement the best practices of our legacy companies,” May said. “Our 9,000 employees come to work each day, with a singular focus on delivering superior service to our 3.5 million electric and natural gas customers, which will allow us to continue to provide attractive returns and dividend growth for our shareholders.”

2013 Earnings Guidance Affirmed

Also today, NU affirmed its 2013 earnings guidance of between $2.40 per share and $2.60 per share, as well as its longer term earnings per share growth rate of 6 percent to 9 percent, using the $2.28 per share earned in 2012 as the base year.

Electric Transmission

NU’s transmission segment earned $249.7 million for the full year of 2012 and $68.6 million in the fourth quarter of 2012, compared with earnings of $199.6 million for the full year of 2011 and $71.2 million in the fourth quarter of 2011. The earnings improvement for the full year primarily represents continued investment in NU’s transmission system, including the $718 million Greater Springfield Reliability Project (GSRP), as well as the addition of NSTAR Electric Company transmission results as of April 2012. Lower fourth quarter results primarily reflect a higher effective tax rate in 2012 than in 2011.

Electric Distribution and Generation

NU’s electric distribution and generation segment earned $343.4 million for the full year of 2012, excluding merger and related settlement costs, compared with $207 million for the full year of 2011, excluding a $17.9 million after-tax storm fund reserve at The Connecticut Light and Power Company (CL&P). In the fourth quarter of 2012, the electric distribution and generation segment earned $80.3 million, compared with earnings of $54.2 million in the fourth quarter of 2011. Fourth quarter 2011 results exclude the aforementioned CL&P storm reserve.

The distribution and generation segment results benefited in the fourth quarter and full-year 2012 from the addition of NSTAR Electric distribution results, effective in April 2012.

Earnings of Electric Utility Subsidiaries (net of preferred dividends)

CL&P earned $242.6 million for the full year of 2012, excluding $38.4 million of after-tax merger and related settlement costs, and $72.5 million in the fourth quarter of 2012. It earned $262.5 million for the full year of 2011 and $83.1 million in the fourth quarter of 2011, excluding the $17.9 million storm fund reserve. Lower results reflect a higher effective tax rate and higher pension, tree trimming and system maintenance costs, partially offset by a higher transmission rate base.

NSTAR Electric earned $195.7 million for the last three quarters of 2012 and $33.7 million in the fourth quarter of 2012. Results for the last three quarters of 2012 exclude $10.9 million of after-tax merger and related settlement costs.

Public Service Company of New Hampshire earned $96.9 million for the full year of 2012 and $27.2 million in the fourth quarter of 2012, compared with $100.3 million for the full year of 2011 and $25.5 million in the fourth quarter of 2011. Lower full-year 2012 results were due primarily to higher depreciation, property tax and income tax expense, while higher fourth quarter 2012 results were due in part to higher transmission investment levels and a change in distribution rates effective in the second half of 2012.

Western Massachusetts Electric Company (WMECO) earned $56.3 million for the full year of 2012 and $15.1 million in the fourth quarter of 2012, compared with earnings of $43.1 million for the full year of 2012 and $16.5 million in the fourth quarter of 2011. Full-year 2012 results exclude $1.8 million of after-tax merger and related settlement costs. WMECO’s 2012 results improved largely as a result of higher transmission earnings, which were primarily related to GSRP. The project is being built primarily in the WMECO service territory and was approximately 93 percent complete as of the end of 2012.

Natural Gas Distribution

NU’s natural gas distribution segment, which now includes both Yankee Gas Services Company and NSTAR Gas Company, earned $32.9 million for the full year of 2012 and $22.5 million in the fourth quarter of 2012. In 2011, Yankee Gas earned $31.7 million for the full year and $11 million in the fourth quarter. NSTAR Gas results are reflected from the date of the merger. Improved fourth quarter results reflect the addition of NSTAR Gas, as well as colder weather in the fourth quarter of 2012, compared with the fourth quarter of 2011.

NU parent and other companies

Excluding $54.4 million of after-tax merger and related settlement costs, NU parent and other companies earned $7.5 million for the full year of 2012, compared with net expenses of $14.4 million for the full year of 2011, excluding $11.3 million of merger-related costs. In the fourth quarter of 2012, NU parent and other companies earned $5.4 million, excluding $2 million of after-tax merger-related costs. In the fourth quarter of 2011, NU parent and other companies recorded net expenses of $4 million, excluding $1.2 million of after-tax merger-related costs. The improvements were driven by a number of factors, including the addition of earnings from NSTAR Communications, Inc. from the date of the merger, as well as lower interest expense.

The following table reconciles earnings per share for the fourth-quarter and year ended December 31, 2012 and 2011.
            Fourth Quarter     Full Year
2011     Reported EPS     $0.64     $2.22
      2011 merger-related charges     $0.00     $0.06
      2011 CL&P storm fund     $0.10     $0.10
      2011 EPS before merger and storm charges     $0.74     $2.38
      Higher outstanding common shares     ($0.33)     ($0.87)
      Higher/(lower) NU legacy transmission earnings

in 2012
   

($0.10)
   

$0.03
      Higher/(lower) NU legacy electric sales in 2012     $0.00     ($0.03)
      Higher/(lower) NU legacy firm natural gas sales

in 2012
   

$0.02
   

($0.01)
      Higher legacy NU O&M, depreciation and property taxes    

($0.06)
   

($0.15)
      NSTAR earnings in 2012; higher NU Parent

and Other in 2012
   

$0.29
   

$0.93
      2012 EPS before merger-related settlements

and other merger-related charges
   

$0.56
   

$2.28
      2012 merger and related settlement charges     ($0.01)     ($0.39)
2012     Reported EPS     $0.55     $1.89

Financial results for the fourth quarter and full-year period ended December 31, 2012 and 2011 are noted below:

Three months ended:

(in millions, except EPS)    

December 31,

2012
   

December 31, 2011
   

Increase/ (Decrease)
   

2012 EPS 1
Electric Distribution/Generation     $ 80.3       $ 54.2       $ 26.1       $ 0.25  
Natural Gas Distribution     $ 22.5       $ 11.0       $ 11.5       $ 0.07  
Electric Transmission     $ 68.6       $ 71.2         ($2.6 )     $ 0.22  
NU Parent and Other Companies,

ex. merger expenses
   

$

5.4
       

($4.0

)
   

$

9.4
     

$

0.02
 
Earnings, ex. merger impacts     $ 176.8       $ 132.4       $ 44.4       $ 0.56  
Merger impacts       ($2.1 )       ($1.2 )       ($0.9 )       ($0.01 )
CL&P storm fund       ---         ($17.9 )     $ 17.9         ---  
Reported Earnings     $ 174.7       $ 113.3       $ 61.4       $ 0.55  

12 months ended:
(in millions, except EPS)    

December 31, 2012
   

December 31, 2011
   

Increase/ (Decrease)
   

2012 EPS 1
Electric Distribution/Generation,

ex. rate credits and storm costs

write-down
   

 

$

 

343.4
     

 

$

 

207.0
     

 

$

 

136.4
     

 

$

 

1.23
 
Natural Gas Distribution, ex. rate

Credits
   

$

32.9
     

$

31.7
     

$

1.2
     

$

0.12
 
Electric Transmission     $ 249.7       $ 199.6       $ 50.1       $ 0.90  
NU Parent and Other Companies,

ex. merger costs
   

$

7.5
       

($14.4

)
   

$

21.9
     

$

0.03
 
Earnings, ex. merger impacts     $ 633.5       $ 423.9       $ 209.6       $ 2.28  
Merger impacts       ($107.6 )       ($11.3 )       ($96.3 )       ($0.39 )
CL&P storm fund       ---         ($17.9 )     $ 17.9         ---  
Reported Earnings     $ 525.9       $ 394.7       $ 131.2       $ 1.89  

Retail sales data:

 
   

December 31, 2012
   

December 31, 2011
   

% Change Actual
   

% Change Weather Norm.
Electric distribution                        
Gwh for three months ended*     13,111     12,958     1.2 %     0.0 %
Gwh for 12 months ended*     54,808     55,314     (0.9 %)     (0.2 %)
                         
Natural Gas Distribution                        
Firm volumes in mmcf for three

months ended**
   

27,492
   

24,955
   

10.2

%
   

2.4

%
Firm volumes in mmcf for 12

months ended**
   

87,527
   

92,363
   

(5.2

%)
   

2.7

%

* Pre-merger sales data for NSTAR Electric are included for illustrative purposes.

** Pre-merger sales data for 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 more than 3.5 million customers in Connecticut, Massachusetts and New Hampshire.

Note: NU will webcast a conference call with senior management on February 20, 2013, beginning at 9 a.m. Eastern Time. The webcast can be accessed through NU’s website at www.nu.com .

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, fourth quarter and full year 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 by business and to more fully compare and explain our fourth quarter and full year 2012 and 2011 results without including the impact of the non-recurring merger and related settlement 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 possibility that expected merger synergies will not be realized or will not be realized within the expected time period; 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.
 
 
NORTHEAST UTILITIES AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
             
As of December 31,
(Thousands of Dollars)         2012       2011
 

ASSETS
 
Current Assets:
Cash and Cash Equivalents $ 45,748 $ 6,559
Receivables, Net 792,822 488,002
Unbilled Revenues 216,040 175,207
Fuel, Materials and Supplies 267,713 248,958
Regulatory Assets 705,025 255,144
Marketable Securities 91,975 70,970
Prepayments and Other Current Assets   107,972   112,632
Total Current Assets   2,227,295   1,357,472
 
Property, Plant and Equipment, Net   16,605,010   10,403,065
 
Deferred Debits and Other Assets:
Regulatory Assets 5,132,411 3,267,710
Goodwill 3,519,401 287,591
Marketable Securities 400,329 60,311
Derivative Assets 90,612 98,357
Other Long-Term Assets   327,766   172,560
Total Deferred Debits and Other Assets   9,470,519   3,886,529
 
 
Total Assets $ 28,302,824 $ 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
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
        As of December 31,
(Thousands of Dollars)         2012       2011
     

LIABILITIES AND CAPITALIZATION
 
Current Liabilities:
Notes Payable $ 1,120,196 $ 317,000
Long-Term Debt - Current Portion 763,338 331,582
Accounts Payable 764,350 633,282
Regulatory Liabilities 134,115 167,844
Derivative Liabilities 117,194 107,558
Other Current Liabilities   744,497     390,416  
Total Current Liabilities   3,643,690     1,947,682  
 
Rate Reduction Bonds   82,139     112,260  
 
Deferred Credits and Other Liabilities:
Accumulated Deferred Income Taxes 3,463,347 1,868,316
Regulatory Liabilities 540,162 266,145
Derivative Liabilities 882,654 959,876
Accrued Pension, SERP and PBOP 2,130,497 1,326,037
Other Long-Term Liabilities   967,561     420,011  
Total Deferred Credits and Other Liabilities   7,984,221     4,840,385  
 
Capitalization:
Long-Term Debt   7,200,156     4,614,913  
 
Noncontrolling Interest - Preferred Stock of Subsidiaries   155,568     116,200  
 
Equity:
Common Shareholders' Equity:
Common Shares 1,662,547 980,264
Capital Surplus, Paid In 6,183,267 1,797,884
Retained Earnings 1,802,714 1,651,875
Accumulated Other Comprehensive Loss (72,854 ) (70,686 )
Treasury Stock   (338,624 )   (346,667 )
Common Shareholders' Equity 9,237,050 4,012,670
Noncontrolling Interests   -     2,956  
Total Equity   9,237,050     4,015,626  
Total Capitalization   16,592,774     8,746,739  
 
 
Total Liabilities and Capitalization $ 28,302,824   $ 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

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)
       
For the Three Months Ended December 31,
(Thousands of Dollars, Except Share Information)         2012       2011
     
Operating Revenues $ 1,683,952   $ 1,068,033
 
Operating Expenses:
Purchased Power, Fuel and Transmission 544,254 372,431
Operations and Maintenance 395,600 306,484
Depreciation 149,212 79,408
Amortization of Regulatory Assets, Net 4,910 4,427
Amortization of Rate Reduction Bonds 39,875 17,865
Energy Efficiency Programs 104,060 31,757
Taxes Other Than Income Taxes   114,648     70,792
Total Operating Expenses   1,352,559     883,164
Operating Income 331,393 184,869
 
Interest Expense:
Interest on Long-Term Debt 83,636 59,725
Interest on Rate Reduction Bonds 1,000 1,722
Other Interest   (547 )   4,262
Interest Expense 84,089 65,709
Other Income, Net   4,838     8,638
Income Before Income Tax Expense 252,142 127,798
Income Tax Expense   75,547     13,019
Net Income 176,595 114,779
Net Income Attributable to Noncontrolling Interests   1,879     1,480
Net Income Attributable to Controlling Interest $ 174,716   $ 113,299
 
Basic and Diluted Earnings Per Common Share $ 0.55   $ 0.64
 
Dividends Declared Per Common Share $ 0.34   $ 0.28
 
Weighted Average Common Shares Outstanding:
Basic   314,929,366     177,645,092
Diluted   315,914,389     178,093,879
 

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
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
      For the Years Ended December 31,
(Thousands of Dollars, Except Share Information)       2012       2011       2010
           
Operating Revenues $ 6,273,787 $ 4,465,657 $ 4,898,167  
 
Operating Expenses:
Purchased Power, Fuel and Transmission 2,084,364 1,657,914 2,034,501
Operations and Maintenance 1,583,070 1,095,358 1,001,349
Depreciation 519,010 302,192 300,737
Amortization of Regulatory Assets, Net 79,762 91,080 90,054
Amortization of Rate Reduction Bonds 142,019 69,912 232,871
Energy Efficiency Programs 313,149 131,415 124,023
Taxes Other Than Income Taxes   434,207   323,610   314,741  
Total Operating Expenses   5,155,581   3,671,481   4,098,276  
Operating Income 1,118,206 794,176 799,891
 
Interest Expense:
Interest on Long-Term Debt 316,987 231,630 231,089
Interest on Rate Reduction Bonds 6,168 8,611 20,573
Other Interest   6,790   10,184   (14,371 )
Interest Expense 329,945 250,425 237,291
Other Income, Net   19,742   27,715   41,916  
Income Before Income Tax Expense 808,003 571,466 604,516
Income Tax Expense   274,926   170,953   210,409  
Net Income 533,077 400,513 394,107
Net Income Attributable to Noncontrolling Interests   7,132   5,820   6,158  
Net Income Attributable to Controlling Interest $ 525,945 $ 394,693 $ 387,949  
 
Basic Earnings Per Common Share $ 1.90 $ 2.22 $ 2.20  
 
Diluted Earnings Per Common Share $ 1.89 $ 2.22 $ 2.19  
 
Weighted Average Common Shares Outstanding:
Basic   277,209,819   177,410,167   176,636,086  
Diluted   277,993,631   177,804,568   176,885,387  
 

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
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
             
For the Years Ended December 31,
(Thousands of Dollars)       2012     2011     2010
 
Operating Activities:
Net Income $ 533,077 $ 400,513 $ 394,107
Adjustments to Reconcile Net Income to Net Cash Flows
Provided by Operating Activities:
Bad Debt Expense 36,275 16,420 31,352
Depreciation 519,010 302,192 300,737
Deferred Income Taxes 292,000 196,761 210,939
Pension, SERP and PBOP Expense 218,540 133,000 103,861
Pension and PBOP Contributions (295,028 ) (191,101 ) (90,633 )
Regulatory (Under)/Over Recoveries, Net (259,853 ) (70,863 ) 26,289
Amortization of Regulatory Assets, Net 79,762 91,080 90,054
Amortization of Rate Reduction Bonds 142,019 69,912 232,871
Derivative Assets and Liabilities (10,455 ) (35,441 ) (11,812 )
Other 17,032 (29,751 ) (72,151 )
Changes in Current Assets and Liabilities:
Receivables and Unbilled Revenues, Net (20,214 ) 17,570 (51,285 )
Fuel, Materials and Supplies 34,321 (11,033 ) 38,126
Taxes Receivable/Accrued, Net (5,450 ) 49,642 (82,103 )
Accounts Payable (128,339 ) 18,916 (44,355 )
Other Current Assets and Liabilities, Net   8,532     12,569     17,466  
Net Cash Flows Provided by Operating Activities   1,161,229     970,386     1,093,463  
 
Investing Activities:
Investments in Property, Plant and Equipment (1,472,272 ) (1,076,730 ) (954,472 )
Proceeds from Sales of Marketable Securities 317,294 149,441 174,865
Purchases of Marketable Securities (348,629 ) (151,972 ) (177,204 )
Proceeds from Sale of Assets - 46,841 -
Other Investing Activities   35,683     13,833     (1,157 )
Net Cash Flows Used in Investing Activities   (1,467,924 )   (1,018,587 )   (957,968 )
 
Financing Activities:
Cash Dividends on Common Shares (375,047 ) (194,555 ) (180,542 )
Cash Dividends on Preferred Stock (7,029 ) (5,559 ) (5,559 )
Increase in Short-Term Debt 825,000 50,000 166,687
Issuance of Long-Term Debt 850,000 627,500 145,000
Retirements of Long-Term Debt (839,136 ) (369,586 ) (4,286 )
Retirements of Rate Reduction Bonds (114,433 ) (69,312 ) (260,864 )
Other Financing Activities   6,529     (7,123 )   512  
Net Cash Flows Provided by/(Used in) Financing Activities   345,884     31,365     (139,052 )
Net Increase/(Decrease) in Cash and Cash Equivalents 39,189 (16,836 ) (3,557 )
Cash and Cash Equivalents - Beginning of Year   6,559     23,395     26,952  
Cash and Cash Equivalents - End of Year $ 45,748   $ 6,559   $ 23,395  
 

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.

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