NU Reports Third Quarter Results

Northeast Utilities (NYSE: NU) today reported earnings of $209.5 million, or $0.66 per share, in the third quarter of 2013, compared with earnings of $207.6 million, or $0.66 per share, in the third quarter of 2012.

Third quarter 2013 results included approximately $7 million, or $0.03 per share, of after-tax integration charges related to the April 2012 merger between NU and NSTAR. Excluding those charges, NU earned $216.5 million, or $0.69 per share, in the third quarter of 2013. Third quarter 2012 results included approximately $12.9 million, or $0.04 per share, of after-tax charges related to the merger.

In the first nine months of 2013, NU earned $608.6 million, or $1.93 per share, compared with earnings of $351.2 million, or $1.32 per share, in the first nine months of 2012. Excluding integration costs of $10.6 million, or $0.03 per share, NU earned $619.2 million, or $1.96 per share, in the first nine months of 2013. In the first nine months of 2012, NU earned $456.7 million, or $1.72 per share, excluding merger and related regulatory settlement costs. Because the merger closed on April 10, 2012, NU’s nine-month results from last year exclude NSTAR’s first quarter 2012 earnings.

Thomas J. May, NU chairman, president and chief executive officer, said that NU’s operational and financial performance has been strong this year and that results for the first nine months of the year were consistent with NU’s expectations, illustrating the benefits of the merger. “Our reliability and customer service levels continue to be strong this year and our cost control efforts remain on target,” May said. “This reflects the success of our employees in adopting best practices as we integrate our operations and improve our customer service.”

Also today, NU affirmed its 2013 earnings guidance of $2.45 to $2.60 per share.

Electric Transmission

NU’s transmission segment earned $58.6 million in the third quarter of 2013 and $215.4 million in the first nine months of 2013, compared with $71.1 million in the third quarter of 2012 and $181.1 million in the first nine months of 2012. Third quarter 2013 results reflect an after-tax reserve of $14.3 million resulting from an August 2013 recommendation from a Federal Energy Regulatory Commission (FERC) administrative law judge in a matter that is now before the FERC. That recommendation, if accepted by the FERC, would lower the base return on equity earned by New England transmission owners from 11.14 percent to 10.6 percent for the 15-month period of October 1, 2011 through December 31, 2012. Excluding that reserve, transmission earnings rose in 2013, compared with 2012, due to continued investment in NU’s transmission system, as well as the absence of NSTAR Electric Company transmission results from first quarter 2012 consolidated earnings.

Electric Distribution and Generation

NU’s electric distribution and generation segment earned $156.9 million in the third quarter of 2013 and $347.5 million in the first nine months of 2013, compared with $150.7 million in the third quarter of 2012 and $263.1 million in the first nine months of 2012. Results for the first nine months of 2012 exclude $51 million of after-tax charges relating to the merger and related settlement costs, as well as the first quarter 2012 results of NSTAR Electric.

Earnings of Electric Utility Subsidiaries (net of preferred dividends)

The Connecticut Light and Power Company (CL&P) earned $64.9 million in the third quarter of 2013 and $215 million in the first nine months of 2013, compared with $73.5 million in the third quarter of 2012 and $170.1 million in the first nine months of 2012, excluding merger and related settlement costs. Lower third quarter results primarily resulted from the aforementioned transmission reserve. Improved year-to-date results were due primarily to CL&P’s increased transmission investment, lower operation and maintenance expense, and higher distribution revenues.

NSTAR Electric earned $106.5 million in the third quarter of 2013 and $211.5 million in the first nine months of 2013. In the third quarter of 2012, NSTAR Electric also earned $106.5 million.

Public Service Company of New Hampshire earned $28.4 million in the third quarter of 2013 and $84.5 million in the first nine months of 2013, compared with earnings of $27.2 million in the third quarter of 2012 and $69.8 million in the first nine months of 2012. Improved results reflect higher distribution revenue and higher generation earnings.

Western Massachusetts Electric Company (WMECO) earned $15 million in the third quarter of 2013 and $50 million in the first nine months of 2013, compared with $14.1 million in the third quarter of 2012 and $41.2 million in the first nine months of 2012, excluding merger and related settlement costs. WMECO’s 2013 results improved largely as a result of higher transmission earnings, primarily related to the nearly completed Greater Springfield Reliability Project, most of which has been built in the WMECO service territory.

Natural Gas Distribution

NU’s natural gas distribution segment, which includes both Yankee Gas Services Company and NSTAR Gas Company, lost $10.4 million in the third quarter of 2013, compared with losses of $4.4 million in the third quarter of 2012. It earned $34.1 million in the first nine months of 2013, compared with earnings of $10.4 million in the first nine months of 2012. Results for the first nine months of 2012 excluded NSTAR Gas earnings for the first quarter of 2012, as well as $2.1 million of merger and related settlement costs. Lower third quarter results were due primarily to the recognition of higher property tax and depreciation expense at NSTAR Gas. Improved year-to-date results were due primarily to the inclusion of NSTAR Gas first quarter results in 2013 and higher sales, due primarily to colder first quarter weather in 2013. Combined firm natural gas sales for NSTAR Gas and Yankee Gas were up 13.3 percent in the first nine months of 2013, compared with the first nine months of 2012.

NU Parent and Other Businesses

NU parent and other businesses earned $4.4 million in the third quarter of 2013 and $11.6 million in the first nine months of 2013. Excluding integration costs, NU parent and other businesses earned $11.4 million in the third quarter of 2013 and $22.2 million in the first nine months of 2013. In the third quarter of 2012, NU parent and other businesses earned $3.1 million, excluding $12.7 million of after-tax merger and related settlement costs. In the first nine months of 2012, NU parent and other businesses earned $2.1 million, excluding $52.4 million of merger and related settlement costs. Third quarter 2013 results benefited from a lower overall effective tax rate, compared with the same period of 2012.

The following table reconciles 2013 and 2012 third quarter and first nine months earnings per share:
                   
            Third Quarter     First Nine Months
2012     Reported EPS     $0.66     $1.32
      2012 merger and related settlement costs     $0.04     $0.40
     

2012 EPS before merger and related settlement costs
   

$0.70
   

$1.72
      Higher/(lower) transmission earnings in 2013     ($0.04)     $0.06
      Higher electric distribution revenues in 2013     $0.01     $0.06
      Higher firm natural gas sales in 2013     ---     $0.05
      (Higher)/lower non-tracked O&M in 2013     ($0.02)     $0.08
      Other, including NU Parent     $0.04     $0.11
      NSTAR first-quarter 2013 earnings     ---     $0.21
      Higher outstanding common shares     ---     ($0.33)
     

2013 EPS before integration and merger-related costs
    $0.69     $1.96
      2013 integration and merger-related costs     ($0.03)     ($0.03)
2013     Reported EPS     $0.66     $1.93
           

Financial results for the third quarter and first nine months of 2013 and 2012 are noted below:

Three months ended:
                       

(in millions, except EPS)
   

September 30, 2013
   

September 30, 2012
   

Increase/ (Decrease)
    2013 EPS 1
Electric Distribution/Generation*     $156 .9     $150 .7     $6 .2     $0 .50
Natural Gas Distribution*     ($10 .4)     ($4 .4)     ($6 .0)     ($0 .03)
Electric Transmission     $58 .6     $71 .1     ($12 .5)     $0 .18
NU Parent and Other Companies*     $11 .4     $3 .1     $8 .3     $0 .04
Earnings, ex. integration, merger impacts    

$216

.5
   

$220

.5
   

($4

.0)
   

$0

.69
Integration, merger impacts     ($7 .0)     ($12 .9)     $5 .9     ($0 .03)
Reported Earnings     $209 .5     $207 .6     $1 .9     $0 .66
               

Nine months ended:
                       

(in millions, except EPS)
   

September 30, 2013
   

September 30, 2012
   

Increase/ (Decrease)
    2013 EPS 1
Electric Distribution/Generation*     $347 .5     $263 .1     $84 .4     $1 .10
Natural Gas Distribution*     $34 .1     $10 .4     $23 .7     $0 .11
Electric Transmission     $215 .4     $181 .1     $34 .3     $0 .68
NU Parent and Other Companies*     $22 .2     $2 .1     $20 .1     $0 .07
Earnings, ex. integration, merger impacts    

$619

.2
   

$456

.7
   

$162

.5
   

$1

.96
Integration, merger impacts     ($10 .6)     ($105 .5)     $94 .9     ($0 .03)
Reported Earnings     $608 .6     $351 .2     $257 .4     $1 .93

* Excludes costs attributable to integration, merger and related settlement agreements.
 

Retail sales data:
                 

 
   

September 30, 2013
   

September 30, 2012
   

% Change Actual
Electric Distribution                  
Gwh for three months ended     15,247     15,501     (1.6)
Gwh for nine months ended*     41,954     41,697     0.6
                   
Natural Gas Distribution                  

Firm volumes in mmcf for three months ended
   

11,173
   

10,696
   

4.5

Firm volumes in mmcf for nine months ended**
   

68,046
   

60,035
   

13.3
           

* 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 315 million common shares outstanding. It operates New England’s largest energy delivery system, serving approximately 3.6 million customers in Connecticut, Massachusetts and New Hampshire.

Note: NU will webcast a conference call with senior management on November 1, 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, our third quarter and first nine months of 2013 and 2012 earnings and EPS excluding certain integration and merger 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 third quarter and first nine months of 2013 and 2012 results without including the impact of the non-recurring integration and 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, the possibility that expected merger synergies will not be realized or will not be realized within the expected time period; cyber breaches, acts of war or terrorism, or grid disturbances; 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; fluctuations 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; actions of rating agencies; 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.
NORTHEAST UTILITIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
         
 
September 30, December 31,
(Thousands of Dollars)     2013     2012
 

ASSETS
 
Current Assets:
Cash and Cash Equivalents $ 57,941 $ 45,748
Receivables, Net 784,498 792,822
Unbilled Revenues 174,097 216,040
Fuel, Materials and Supplies 304,698 267,713
Regulatory Assets 474,198 705,025
Prepayments and Other Current Assets   222,700   199,947
Total Current Assets   2,018,132   2,227,295
 
Property, Plant and Equipment, Net   17,187,896   16,605,010
 
Deferred Debits and Other Assets:
Regulatory Assets 4,882,381 5,132,411
Goodwill 3,519,401 3,519,401
Marketable Securities 468,094 400,329
Derivative Assets 88,887 90,612
Other Long-Term Assets   279,527   327,766
Total Deferred Debits and Other Assets   9,238,290   9,470,519
 
 
 
Total Assets $ 28,444,318 $ 28,302,824
 

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)     2013     2012
 

LIABILITIES AND CAPITALIZATION
 
Current Liabilities:
Notes Payable $ 1,343,000 $ 1,120,196
Long-Term Debt - Current Portion 608,346 763,338
Accounts Payable 554,010 764,350
Regulatory Liabilities 224,416 134,115
Other Current Liabilities   648,658   861,691
Total Current Liabilities   3,378,430   3,643,690
 
Rate Reduction Bonds   -   82,139
 
Deferred Credits and Other Liabilities:
Accumulated Deferred Income Taxes 3,954,246 3,463,347
Regulatory Liabilities 520,732 540,162
Derivative Liabilities 766,804 882,654
Accrued Pension, SERP and PBOP 1,808,896 2,130,497
Other Long-Term Liabilities   897,997   967,561
Total Deferred Credits and Other Liabilities   7,948,675   7,984,221
 
Capitalization:
Long-Term Debt   7,444,192   7,200,156
 
Noncontrolling Interest - Preferred Stock of Subsidiaries   155,568   155,568
 
Equity:

 

Common Shareholders' Equity:
Common Shares 1,665,098 1,662,547
Capital Surplus, Paid In 6,185,805 6,183,267
Retained Earnings 2,064,401 1,802,714
Accumulated Other Comprehensive Loss (67,387) (72,854)
Treasury Stock   (330,464)   (338,624)
Common Shareholders' Equity   9,517,453   9,237,050
Total Capitalization   17,117,213   16,592,774
 
Total Liabilities and Capitalization $ 28,444,318 $ 28,302,824
 

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)
                     
 
For the Three Months Ended September 30, For the Nine Months Ended September 30,
(Thousands of Dollars, Except Share Information)     2013     2012     2013     2012
 
Operating Revenues $ 1,892,590 $ 1,861,529 $ 5,523,475   $ 4,589,835
 
Operating Expenses:
Purchased Power, Fuel and Transmission 645,881 602,751 1,881,992 1,540,110
Operations and Maintenance 386,700 395,531 1,089,960 1,187,471
Depreciation 149,105 144,475 463,635 369,798
Amortization of Regulatory Assets, Net 70,046 43,835 178,668 74,851
Amortization of Rate Reduction Bonds - 43,044 42,581 102,144
Energy Efficiency Programs 106,097 98,326 306,010 209,089
Taxes Other Than Income Taxes   135,499   120,662   391,846     319,559
Total Operating Expenses   1,493,328   1,448,624   4,354,692     3,803,022
Operating Income 399,262 412,905 1,168,783 786,813
 
Interest Expense:
Interest on Long-Term Debt 84,911 86,459 256,205 233,352
Interest on Rate Reduction Bonds - 1,681 422 5,168
Other Interest   2,565   2,221   (6,044 )   7,336
Interest Expense 87,476 90,361 250,583 245,856
Other Income, Net   8,945   4,324   21,655     14,904
Income Before Income Tax Expense 320,731 326,868 939,855 555,861
Income Tax Expense   109,351   117,360   325,442     199,379
Net Income 211,380 209,508 614,413 356,482
Net Income Attributable to Noncontrolling Interests   1,879   1,880   5,803     5,253
Net Income Attributable to Controlling Interest $ 209,501 $ 207,628 $ 608,610   $ 351,229
 
Basic Earnings Per Common Share $ 0.66 $ 0.66 $ 1.93   $ 1.33
 
Diluted Earnings Per Common Share $ 0.66 $ 0.66 $ 1.93   $ 1.32
 
Dividends Declared Per Common Share $ 0.37 $ 0.34 $ 1.10   $ 0.97
 
Weighted Average Common Shares Outstanding:
Basic   315,291,346   314,806,441   315,191,752     264,636,636
Diluted   316,218,239   315,805,796   316,061,131     265,353,377
 

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)
 
           
 
For the Nine Months Ended September 30,
(Thousands of Dollars)     2013     2012
 
Operating Activities:
Net Income $ 614,413 $ 356,482
Adjustments to Reconcile Net Income to Net Cash Flows
Provided by Operating Activities:
Depreciation 463,635 369,798
Deferred Income Taxes 334,225 186,181
Pension, SERP and PBOP Expense 146,803 160,209
Pension and PBOP Contributions (338,301 ) (237,123 )
Regulatory Over/(Under) Recoveries, Net 66,239 (26,236 )
Amortization of Regulatory Assets, Net 178,668 74,851
Amortization of Rate Reduction Bonds 42,581 102,144
Other 3,158 6,640
Changes in Current Assets and Liabilities:
Receivables and Unbilled Revenues, Net (98,432 ) (27,677 )
Fuel, Materials and Supplies (13,134 ) 32,887
Taxes Receivable/Accrued, Net (28,609 ) 26,302
Accounts Payable (112,512 ) (208,308 )
Other Current Assets and Liabilities, Net   (81,766 )   (20,145 )
Net Cash Flows Provided by Operating Activities   1,176,968     796,005  
 
Investing Activities:
Investments in Property, Plant and Equipment (1,073,759 ) (1,081,750 )
Proceeds from Sales of Marketable Securities 487,729 232,911
Purchases of Marketable Securities (541,070 ) (252,762 )
Decrease in Special Deposits 69,259 6,199
Other Investing Activities   (1,137 )   34,066  
Net Cash Flows Used in Investing Activities   (1,058,978 )   (1,061,336 )
 
Financing Activities:
Cash Dividends on Common Shares (341,720 ) (267,356 )
Cash Dividends on Preferred Stock (5,802 ) (5,149 )
(Decrease)/Increase in Short-Term Debt (172,000 ) 654,250
Issuance of Long-Term Debt 1,350,000 300,000
Retirements of Long-Term Debt (840,600 ) (267,561 )
Retirements of Rate Reduction Bonds (82,139 ) (95,225 )
Other Financing Activities   (13,536 )   13,262  
Net Cash Flows (Used in)/Provided by Financing Activities   (105,797 )   332,221  
Net Increase in Cash and Cash Equivalents 12,193 66,890
Cash and Cash Equivalents - Beginning of Period   45,748     6,559  
Cash and Cash Equivalents - End of Period $ 57,941   $ 73,449  
 

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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