NU Nu Holdings Ltd

Northeast Utilities (NYSE: NU) today reported first quarter 2010 earnings of $86.2 million, or $0.49 per share, compared with earnings of $97.7 million, or $0.60 per share, in the first quarter of 2009.

Charles W. Shivery, NU chairman, president and chief executive officer, attributed the lower results primarily to lower electric and natural gas sales, reduced earnings at NU’s competitive businesses due to the absence of mark-to-market gains, and higher employee benefit costs, due in part to the enactment of national health care legislation. NU recorded $3 million in after-tax charges in the first quarter of 2010 associated with the health care legislation. In addition, earnings per share were impacted by the sale of nearly 19 million NU shares in March 2009.

Distribution segment earnings of NU’s four utilities totaled $47.9 million in the first quarter of 2010, compared with $59.2 million in the first quarter of 2009. “Our electric operating companies provide critical infrastructure for nearly 2 million customers, and we continue to invest heavily to maintain reliable systems, but economic conditions continue to weigh on the returns of their distribution businesses,” Shivery said.

In the first three months of 2010, NU’s capital expenditures totaled $182.7 million, including $84 million on its electric and natural gas distribution systems.

2010 earnings guidance

NU today affirmed its 2010 consolidated earnings guidance of between $1.80 per share and $2.00 per share. NU continues to project earnings from its regulated electric and natural gas distribution and electric generation segment of between $0.95 per share and $1.05 per share1 and between $0.90 per share and $0.95 per share1 for its transmission segment. It projects earnings of between $0.00 and $0.05 per share1 at its competitive businesses and net expenses of approximately $0.05 per share1 at NU parent and other companies.

Regulated company results

NU’s transmission earnings were $40.1 million, or $0.23 per share1, in the first quarter of 2010, compared with $35.4 million, or $0.22 per share1, in the first quarter of 2009. Shivery said the improved results primarily reflected a higher level of transmission investment.

The Connecticut Light and Power Company’s (CL&P) distribution earnings were $14.3 million in the first quarter of 2010, compared with $21.6 million in the first quarter of 2009. The lower results were due to a 4.9 percent decline in retail sales owing to much warmer weather and a continued economic slowdown in Connecticut, as well as higher pension and other operating costs.

Public Service Company of New Hampshire’s (PSNH) distribution and generation earnings were $11.1 million in the first quarter of 2010, compared with $13.5 million in the first quarter of 2009. PSNH benefited from a temporary rate increase that took effect August 1, 2009, but that revenue was more than offset by a 5.3 percent decline in retail sales and $1 million of charges related to the new health care legislation.

Western Massachusetts Electric Company’s (WMECO) distribution earnings were $2.9 million in the first quarter of 2010, compared with $4.8 million in the first quarter of 2009. Lower results in 2010 were primarily due to a 4.4 percent decline in retail sales in the first quarter of 2010, compared with the first quarter of 2009.

Overall, NU’s retail electric sales were down 4.9 percent in the first quarter of 2010 compared with the first quarter of 2009. They were down 2.5 percent on a weather-adjusted basis.

Shivery said the first-quarter sales decline reflects a number of factors, including a much milder New England winter in 2010. “Our electric sales results also reflect the very significant ongoing investment in energy conservation measures our customers continue to make, the region’s slow recovery from the economic downturn, and our Connecticut customers’ installation of distributed generation,” Shivery said.

Yankee Gas Services Company earned $19.6 million in the first quarter of 2010, compared with $19.3 million in the first quarter of 2009. Lower interest expense was partially offset by a 3.5 percent decline in firm natural gas sales, driven by a 13.5 percent reduction in year-over-year heating degree days in Connecticut. Firm natural gas sales rose 6.4 percent on a weather-adjusted basis.

Competitive businesses

NU’s remaining competitive energy businesses earned $2.3 million in the first quarter of 2010, compared with $5.8 million in the first quarter of 2009. The decline was primarily due to reduced benefits from marking to market the remaining wholesale obligations of NU Enterprises, Inc. (NUEI). NUEI recorded after-tax mark-to-market losses of $0.4 million in the first quarter of 2010, compared with after-tax gains of $3.2 million in the first quarter of 2009. NU’s wholesale marketing business continues to wind down, with the last contracts ending in 2013.

Parent and other affiliates

NU parent and other companies recorded net expenses of $4.1 million in the first quarter of 2010, compared with net expenses of $2.7 million in the first quarter of 2009. First quarter 2010 results included a charge of $0.6 million related to the new health care legislation.

The following table reconciles 2010 and 2009 first-quarter results:

        First Quarter           2009   Reported EPS   $0.60     Higher transmission earnings in 2010   $0.02     Lower regulated distribution and generation earnings in 2010  

($0.06)

    Lower competitive business earnings in 2010  

($0.03)

    Dilutive impact of 2009 share issuance   ($0.04) 2010   Reported EPS   $0.49

Financial results for the first quarters of 2010 and 2009 for NU’s regulated and competitive segments and parent and other companies are noted below:

Three months ended:

(in millions, except EPS)

 

March 31, 2010

 

March 31, 2009

  Increase

(Decrease)

 

2010 EPS1

CL&P Distribution   $14.3   $21.6   ($7.3)   $0.08 PSNH Distribution/Generation   $11.1   $13.5   ($2.4)   $0.06 WMECO Distribution   $2.9   $4.8   ($1.9)   $0.02 Yankee Gas   $19.6   $19.3   $0.3   $0.11 Total--Distribution/Generation   $47.9   $59.2   ($11.3)   $0.27 CL&P Transmission   $32.7   $30.1   $2.6   $0.19 PSNH Transmission   $4.7   $4.0   $0.7   $0.03 WMECO Transmission   $2.7   $1.3   $1.4   $0.01 Total—Transmission   $40.1   $35.4   $4.7   $0.23 Total—Competitive   $2.3   $5.8   ($3.5)   $0.01 NU Parent and Other Companies   ($4.1)   ($2.7)   ($1.4)   ($0.02) Reported Earnings   $86.2   $97.7   ($11.5)   $0.49

Retail sales data:

Gwh for three months ended   March 31, 2010   March 31, 2009   % Change

Actual

  % Change

Weather Norm.

CL&P   5,591   5,880   -4.9%   -2.3% PSNH   1,932   2,040   -5.3%   -3.0% WMECO   930   972   -4.4%   -2.3% Total NU   8,448   8,888   -4.9%   -2.5% Yankee Gas firm volumes in mmcf for three months ended  

16,443

 

17,034

 

-3.5%

 

6.4%

NU has approximately 176 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.

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 NUEI’s remaining competitive electricity positions; 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.

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. 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.

Note: NU will webcast a discussion concerning its first quarter 2010 results tomorrow, May 6, 2010, at 1 p.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)     March 31, December 31, (Thousands of Dollars)   2010   2009  

ASSETS

  Current Assets: Cash and Cash Equivalents $ 30,012 $ 26,952 Receivables, Net 570,870 512,770 Unbilled Revenues 161,872 229,326 Fuel, Materials and Supplies 229,837 277,085 Marketable Securities 81,960 66,236 Derivative Assets 17,379 31,785 Prepayments and Other Current Assets   151,641   123,700 Total Current Assets   1,243,571   1,267,854   Property, Plant and Equipment, Net   8,957,713   8,839,965   Deferred Debits and Other Assets: Regulatory Assets 3,207,971 3,244,931 Goodwill 287,591 287,591 Marketable Securities 41,763 54,905 Derivative Assets 153,651 189,751 Other Long-Term Assets   213,186   172,682 Total Deferred Debits and Other Assets   3,904,162   3,949,860       Total Assets $ 14,105,446 $ 14,057,679    

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)     March 31, December 31, (Thousands of Dollars)   2010   2009  

LIABILITIES & CAPITALIZATION

  Current Liabilities: Notes Payable to Banks $ 100,313 $ 100,313 Long-Term Debt - Current Portion 66,286 66,286 Accounts Payable 385,181 457,582 Accrued Taxes 64,236 50,246 Accrued Interest 92,879 83,763 Derivative Liabilities 44,208 37,617 Other Current Liabilities   166,138     183,605   Total Current Liabilities   919,241     979,412     Rate Reduction Bonds   375,866     442,436     Deferred Credits and Other Liabilities: Accumulated Deferred Income Taxes 1,450,931 1,380,143 Accumulated Deferred Investment Tax Credits 21,466 22,145 Regulatory Liabilities 426,687 485,706 Derivative Liabilities 972,041 955,646 Accrued Pension 786,195 781,431 Other Long-Term Liabilities   822,759     823,723   Total Deferred Credits and Other Liabilities   4,480,079     4,448,794     Capitalization: Long-Term Debt   4,588,862     4,492,935     Noncontrolling Interest in Consolidated Subsidiary: Preferred Stock Not Subject to Mandatory Redemption   116,200     116,200     Common Shareholders' Equity: Common Shares 978,381 977,276 Capital Surplus, Paid In 1,763,894 1,762,097 Deferred Contribution Plan (67 ) (2,944 ) Retained Earnings 1,287,271 1,246,543 Accumulated Other Comprehensive Loss (42,740 ) (43,467 ) Treasury Stock   (361,541 )   (361,603 ) Common Shareholders' Equity   3,625,198     3,577,902   Total Capitalization   8,330,260     8,187,037         Total Liabilities and Capitalization $ 14,105,446   $ 14,057,679      

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) March Year to Date     Three Months Ended March 31, (Thousands of Dollars, Except Share Information)   2010   2009   Operating Revenues $ 1,339,420   $ 1,593,483   Operating Expenses: Fuel, Purchased and Net Interchange Power 603,349 838,920 Other Operating Expenses 248,273 247,445 Maintenance 45,637 48,836 Depreciation 78,656 76,983 Amortization of Regulatory (Liabilities)/Assets, Net (8,327 ) 21,691 Amortization of Rate Reduction Bonds 59,570 55,897 Taxes Other than Income Taxes   85,599     86,429 Total Operating Expenses   1,112,757     1,376,201 Operating Income 226,663 217,282   Interest Expense: Interest on Long-Term Debt 57,270 55,684 Interest on Rate Reduction Bonds 6,690 10,625 Other Interest   3,302     4,668 Interest Expense 67,262 70,977 Other Income, Net   8,057     4,182 Income Before Income Tax Expense 167,458 150,487 Income Tax Expense   79,857     51,423 Net Income 87,601 99,064 Net Income Attributable to Noncontrolling Interests: Preferred Dividends of Subsidiary   1,390     1,390 Net Income Attributable to Controlling Interests $ 86,211   $ 97,674   Basic and Fully Diluted Earnings Per Common Share $ 0.49   $ 0.60   Dividends Declared per Common Share $ 0.26   $ 0.24   Weighted Average Common Shares Outstanding: Basic   176,349,762     162,340,475 Fully Diluted   176,537,472     162,925,167    

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)     Three Months Ended March 31, (Thousands of Dollars)   2010   2009   Operating Activities: Net Income $ 87,601 $ 99,064 Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: Bad Debt Expense 9,556 9,507 Depreciation 78,656 76,983 Deferred Income Taxes 33,248 17,178 Pension and PBOP Expense, Net of Capitalized Portion and PBOP Contributions 23,331 6,703 Regulatory Overrecoveries/(Underrecoveries), Net 6,066 (14,694 ) Amortization of Regulatory (Liabilities)/Assets, Net (8,327 ) 21,691 Amortization of Rate Reduction Bonds 59,570 55,897 Deferred Contractual Obligations (6,274 ) (8,666 ) Derivative Assets and Liabilities (2,594 ) (14,769 ) Other (35,160 ) (3,450 ) Changes in Current Assets and Liabilities: Receivables and Unbilled Revenues, Net (7,258 ) 10,483 Fuel, Materials and Supplies 48,431 51,171 Taxes Receivable/Accrued 4,639 43,270 Other Current Assets (279 ) (1,541 ) Accounts Payable (46,188 ) (174,497 ) Counterparty Deposits and Margin Special Deposits (12,946 ) (10,582 ) Other Current Liabilities   (6,369 )   (23,795 ) Net Cash Flows Provided by Operating Activities   225,703     139,953     Investing Activities: Investments in Property and Plant (202,487 ) (208,896 ) Proceeds from Sales of Marketable Securities 21,331 52,933 Purchases of Marketable Securities (21,825 ) (54,557 ) Rate Reduction Bond Escrow and Other Deposits (322 ) (1,480 ) Other Investing Activities   (156 )   2,853   Net Cash Flows Used in Investing Activities   (203,459 )   (209,147 )   Financing Activities: Issuance of Common Shares - 387,350 Cash Dividends on Common Shares (45,088 ) (37,207 ) Cash Dividends on Preferred Stock (1,390 ) (1,390 ) Decrease in Short-Term Debt - (124,909 ) Issuance of Long-Term Debt 95,000 250,000 Retirements of Rate Reduction Bonds (66,569 ) (62,451 ) Financing Fees (1,124 ) (15,205 ) Other Financing Activities   (13 )   18   Net Cash Flows (Used in)/Provided by Financing Activities   (19,184 )   396,206   Net Increase in Cash and Cash Equivalents 3,060 327,012 Cash and Cash Equivalents - Beginning of Period   26,952     89,816   Cash and Cash Equivalents - End of Period $ 30,012   $ 416,828    

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.