NU Nu Holdings Ltd

Northeast Utilities (NYSE:NU) today reported earnings for the third quarter of 2010 and raised its earnings guidance for the full year of 2010.

NU earned $100.5 million, or $0.57 per share, in the third quarter of 2010, compared with $64.8 million, or $0.37 per share, in the third quarter of 2009. NU earned $258.7 million, or $1.46 per share, in the first nine months of 2010, compared with $245.3 million, or $1.43 per share, in the first nine months of 2009.

Charles W. Shivery, NU chairman, president and chief executive officer, said the improvement in third quarter results was due to increased electric sales, driven by much warmer temperatures in the summer of 2010, the company’s continued success managing its costs, and the results of distribution rate cases that became effective July 1, 2010. NU results also benefited from its investment in New England’s high-voltage electric transmission grid, which continues to lower congestion costs to the benefit of customers.

2010 earnings guidance

NU today raised its earnings guidance for 2010. Primarily as a result of strong third quarter sales due to warmer than normal summer weather, the continued control of operating expenses, significant progress in reducing uncollectibles expense, and the settlement of various routine tax issues in the fourth quarter of 2010, NU now projects consolidated earnings of between $2.10 per share and $2.20 per share in 20101, excluding a non-recurring tax benefit and certain merger-related expenses that will affect NU Parent results in the fourth quarter of 2010. The revised guidance is reflected in a table shown later in this release.

2010 Results - Transmission

NU’s transmission segment earned $45.2 million in the third quarter of 2010 and $127.3 million in the first nine months of 2010, compared with $42.8 million in the third quarter of 2009 and $120 million in the first nine months of 2009. The increases in third quarter and nine months net income in 2010, compared with the same periods in 2009, primarily reflect NU’s higher level of investment in transmission facilities.

2010 Results - Distribution and Generation

NU’s distribution and generation segment earned $55.7 million in the third quarter of 2010 and $130.7 million in the first nine months of 2010, compared with $22.5 million in the third quarter of 2009 and $120 million in the first nine months of 2009.

The Connecticut Light and Power Company’s (CL&P) distribution segment earned $31.5 million in the third quarter of 2010 and $54.2 million in the first nine months of 2010, compared with $11.4 million in the third quarter of 2009 and $55 million in the first nine months of 2009. Higher third quarter results reflect increased weather-related electric sales, lower uncollectibles expense in the third quarter of 2010, and the impact of a distribution rate case that was effective July 1, 2010.

Public Service Company of New Hampshire’s (PSNH) distribution and generation segment earned $23.4 million in the third quarter of 2010 and $51.5 million in the first nine months of 2010, compared with $10.7 million in the third quarter of 2009 and $36.2 million in the first nine months of 2009. Improved third-quarter results reflect the impact of PSNH’s distribution rate case, which was decided in late June 2010. Third-quarter and year-to-date results also reflect higher generation-related earnings on an increased level of investment in generation assets.

Western Massachusetts Electric Company’s (WMECO) distribution segment earned $3.7 million in the third quarter of 2010 and $8.9 million in the first nine months of 2010, compared with $4.9 million in the third quarter of 2009 and $13.5 million in the first nine months of 2009. Lower results were due to higher storm restoration and other operating costs, and higher municipal property taxes, partially offset by a 2.5 percent increase in year-to-date electric sales.

NU’s retail electric sales were up 6.5 percent in the third quarter of 2010, compared with the same period of 2009, but were down 4.4 percent on a weather-adjusted basis. Over the first nine months of 2010, NU’s retail electric sales were up 2.3 percent compared with the same period in 2009, but down 2.1 percent on a weather-adjusted basis.

Yankee Gas Services Company lost $2.9 million in the third quarter of 2010, compared with a loss of $4.5 million in the third quarter of 2009. Yankee Gas earned $16.1 million in the first nine months of 2010, compared with earnings of $15.3 million in the first nine months of 2009. Improved third quarter results were due primarily to lower uncollectibles expense. Yankee Gas firm natural gas sales were up 9.9 percent in the third quarter of 2010, compared with the same period of 2009. During the first nine months of 2010, Yankee Gas firm natural gas sales were down 1.2 percent compared with the same period in 2009 but up 6.1 percent on a weather-adjusted basis.

2010 Results – Competitive businesses

NU Enterprises, Inc. (NUEI), the holding company for NU’s competitive businesses, earned $0.1 million in the third quarter of 2010 and $7.7 million in the first nine months of 2010, compared with $0.3 million in the third quarter of 2009 and $11.6 million in the first nine months of 2009. Lower 2010 results were primarily due to marking to market NUEI’s remaining wholesale obligations, which contributed $0.5 million to earnings in the first nine months of 2010, compared with $3.7 million in the first nine months of 2009.

2010 Results - NU Parent and other companies

NU Parent and other companies had net expenses of $0.5 million in the third quarter of 2010 and $7 million in the first nine months of 2010, compared with net expenses of $0.8 million in the third quarter of 2009 and $6.3 million in the first nine months of 2009.

The following table reflects the change in 2010 earnings per share guidance1.

             

August 2010 EarningsGuidance

 

October 2010 EarningsGuidance

          2010 Consolidated (GAAP)   $1.95-$2.05   $2.10-$2.20 Distribution/Generation   $1.00-$1.10   $1.10-$1.20 Transmission   $0.95   $1.00 Competitive business   $0.05   $0.05 Parent/Other   ($0.05)   ($0.05)* 2010 Consolidated (Non-GAAP)   $1.95-$2.05   $2.10-$2.20*

* Excludes non-recurring tax-related gains that will be recorded in the fourth quarter of 2010 ($0.09 per share) as well as expected expenses related to NU’s proposed merger of equals with NSTAR ($0.07 per share) that was announced on October 18, 2010.

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

                     

Third Quarter1

 

First Nine Months1

              2009   Reported EPS   $0.37   $1.43     Change in transmission earnings in 2010   $0.02   $0.02     Change in distribution/generation results in 2010   $0.18   $0.04     Change in competitive business results in 2010   $0.00   ($0.03) 2010   Reported EPS   $0.57   $1.46      

Financial results for the third quarter and first nine months of 2010 and 2009 are noted below.

       

Three months ended:

               

(in millions, except EPS)

 

September 30, 2010

 

September 30, 2009

 

Increase(Decrease)

 

2010 EPS1

CL&P Distribution   $31.5     $11.4     $20.1     $0.18   PSNH Distribution/Generation   $23.4     $10.7     $12.7     $0.13   WMECO Distribution   $3.7     $4.9     ($1.2 )   $0.02   Yankee Gas   ($2.9 )   ($4.5 )   $1.6     ($0.02 ) Total—Distribution/Generation   $55.7     $22.5     $33.2     $0.31   CL&P Transmission   $36.1     $33.7     $2.4     $0.21   PSNH Transmission   $5.3     $5.5     ($0.2 )   $0.03   WMECO Transmission   $3.7     $3.6     $0.1     $0.02   NU Transmission Ventures   $0.1     $0.0     $0.1     $0.00   Total—Transmission   $45.2     $42.8     $2.4     $0.26   NU parent and other companies   ($0.5 )   ($0.8 )   $0.3     $0.00   Competitive   $0.1     $0.3     ($0.2 )   $0.00   Reported Earnings   $100.5     $64.8     $35.7     $0.57          

Nine months ended:

               

(in millions, except EPS)

 

September 30, 2010

 

September 30, 2009

 

Increase(Decrease)

 

2010 EPS1

CL&P Distribution   $54.2     $55.0     ($0.8 )   $0.31   PSNH Distribution/Generation   $51.5     $36.2     $15.3     $0.29   WMECO Distribution   $8.9     $13.5     ($4.6 )   $0.05   Yankee Gas   $16.1     $15.3     $0.8     $0.09   Total—Distribution/Generation   $130.7     $120.0     $10.7     $0.74   CL&P Transmission   $103.1     $98.9     $4.2     $0.58   PSNH Transmission   $14.7     $14.1     $0.6     $0.09   WMECO Transmission   $9.4     $7.0     $2.4     $0.05   NU Transmission Ventures   $0.1     $0.0     $0.1     $0.00   Total—Transmission   $127.3     $120.0     $7.3     $0.72   NU Parent and Other companies   ($7.0 )   ($6.3 )   ($0.7 )   ($0.04 ) Competitive   $7.7     $11.6     ($3.9 )   $0.04   Reported Earnings   $258.7     $245.3     $13.4     $1.46    

Retail sales data:

                 

Gwh for three months ended

 

September 30,2010

 

September 30,2009

 

% ChangeActual

 

% ChangeWeather Norm.

CL&P   6,293   5,903   6.6     (4.6 ) PSNH   2,147   2,009   6.9     (3.9 ) WMECO   1,009  

957

  5.5     (3.9 ) Total NU   9,444   8,865   6.5     (4.4 )                   Gwh for nine months ended                 CL&P   17,221   16,814   2.4     (2.2 ) PSNH   5,934   5,822   1.9     (2.2 ) WMECO   2,818   2,749   2.5     (1.3 ) Total NU   25,961   25,374   2.3     (2.1 )                  

Yankee Gas firm volumes in mmcffor three months ended

 

6,031

 

5,486

 

9.9

   

10.4

 

Yankee Gas firm volumes in mmcffor nine months ended

 

29,406

 

29,762

 

(1.2

)

 

6.1

 

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 our remaining competitive contracts; 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. Our earnings guidance also excludes certain non-recurring charges as a result of various tax settlements in the fourth quarter of 2010 ($0.09 per share) and the expected amount of merger costs we will expense during the fourth quarter of 2010 (approximately $0.07 per share). 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 an investor presentation on Monday, November 1, 2010, at 10 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)     2010     2009  

ASSETS

  Current Assets: Cash and Cash Equivalents $ 41,179 $ 26,952 Receivables, Net 526,280 512,770 Unbilled Revenues 151,923 229,326 Fuel, Materials and Supplies 247,254 277,085 Marketable Securities 79,969 66,236 Derivative Assets 10,651 31,785 Prepayments and Other Current Assets   178,739   123,700 Total Current Assets   1,235,995   1,267,854   Property, Plant and Equipment, Net   9,318,017   8,839,965   Deferred Debits and Other Assets: Regulatory Assets 3,085,019 3,244,931 Goodwill 287,591 287,591 Marketable Securities 45,727 54,905 Derivative Assets 134,704 189,751 Other Long-Term Assets   190,535   172,682 Total Deferred Debits and Other Assets   3,743,576   3,949,860       Total Assets $ 14,297,588 $ 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)     September 30, December 31, (Thousands of Dollars)     2010       2009    

LIABILITIES AND CAPITALIZATION

  Current Liabilities: Notes Payable to Banks $ 156,000 $ 100,313 Long-Term Debt - Current Portion 66,286 66,286 Accounts Payable 379,184 457,582 Obligations to Third Party Suppliers 71,995 44,978 Accrued Taxes 69,870 50,246 Accrued Interest 107,828 83,763 Derivative Liabilities 61,317 37,617 Other Current Liabilities   144,668     138,627   Total Current Liabilities   1,057,148     979,412     Rate Reduction Bonds   246,711     442,436     Deferred Credits and Other Liabilities: Accumulated Deferred Income Taxes 1,546,255 1,380,143 Regulatory Liabilities 434,498 485,706 Derivative Liabilities 996,209 955,646 Accrued Pension 759,263 781,431 Other Long-Term Liabilities   781,246     845,868   Total Deferred Credits and Other Liabilities   4,517,471     4,448,794     Capitalization: Long-Term Debt   4,635,960     4,492,935     Noncontrolling Interest in Consolidated Subsidiary: Preferred Stock Not Subject to Mandatory Redemption   116,200     116,200     Equity: Common Shareholders' Equity: Common Shares 978,677 977,276 Capital Surplus, Paid In 1,772,959 1,762,097 Deferred Contribution Plan - (2,944 ) Retained Earnings 1,368,956 1,246,543 Accumulated Other Comprehensive Loss (40,979 ) (43,467 ) Treasury Stock   (356,950 )   (361,603 ) Common Shareholders' Equity 3,722,663 3,577,902 Noncontrolling Interest   1,435     -   Total Equity   3,724,098     3,577,902   Total Capitalization   8,476,258     8,187,037         Total Liabilities and Capitalization $ 14,297,588   $ 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)           Three Months Ended September 30, Nine Months Ended September 30, (Thousands of Dollars, Except Share Information)     2010     2009     2010     2009   Operating Revenues $ 1,243,337 $ 1,306,173 $ 3,694,182 $ 4,124,087   Operating Expenses: Fuel, Purchased and Net Interchange Power 494,125 611,632 1,539,703 2,034,151 Other Operating Expenses 233,472 250,296 688,409 732,562 Maintenance 49,951 61,609 162,405 166,812 Depreciation 70,954 77,074 228,685 231,825 Amortization of Regulatory Assets, Net 50,341 10,542 50,908 19,194 Amortization of Rate Reduction Bonds 60,434 56,669 175,000 163,871 Taxes Other Than Income Taxes   84,427   75,798   244,431   216,651 Total Operating Expenses   1,043,704   1,143,620   3,089,541   3,565,066 Operating Income 199,633 162,553 604,641 559,021   Interest Expense: Interest on Long-Term Debt 57,802 55,733 173,594 168,191 Interest on Rate Reduction Bonds 4,661 8,657 16,985 28,889 Other Interest   3,435   5,245   9,778   8,490 Interest Expense 65,898 69,635 200,357 205,570 Other Income, Net   10,118   9,490   19,726   26,081 Income Before Income Tax Expense 143,853 102,408 424,010 379,532 Income Tax Expense   41,918   36,230   161,126   130,047 Net Income 101,935 66,178 262,884 249,485 Net Income Attributable to Noncontrolling Interests   1,411   1,390   4,204   4,169 Net Income Attributable to Controlling Interests $ 100,524 $ 64,788 $ 258,680 $ 245,316   Basic Earnings Per Common Share $ 0.57 $ 0.37 $ 1.47 $ 1.43   Fully Diluted Earnings Per Common Share $ 0.57 $ 0.37 $ 1.46 $ 1.43   Dividends Declared Per Common Share $ 0.26 $ 0.24 $ 0.77 $ 0.71   Weighted Average Common Shares Outstanding: Basic   176,752,714   175,358,776   176,557,889   170,958,396 Fully Diluted   177,012,278   175,995,506   176,762,088   171,532,913    

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)     2010       2009     Operating Activities: Net Income $ 262,884 $ 249,485 Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: Bad Debt Expense 24,632 31,519 Depreciation 228,685 231,825 Deferred Income Taxes 105,070 77,617 Pension and PBOP Expense, Net of PBOP Contributions 41,709 10,197 Pension Contribution (45,000 ) - Regulatory Overrecoveries, Net 44,479 44,519 Amortization of Regulatory Assets, Net 50,908 19,194 Amortization of Rate Reduction Bonds 175,000 163,871 Allowance for Equity Funds Used During Construction (11,552 ) (6,162 ) Derivative Assets and Liabilities (9,228 ) (18,519 ) Other (34,638 ) (7,323 ) Changes in Current Assets and Liabilities: Receivables and Unbilled Revenues, Net 20,905 122,700 Fuel, Materials and Supplies 33,337 18,900 Taxes Receivable/(Accrued) (12,904 ) 59,641 Other Current Assets (6,379 ) (7,490 ) Accounts Payable (59,601 ) (242,179 ) Other Current Liabilities   35,340     13,335   Net Cash Flows Provided by Operating Activities   843,647     761,130     Investing Activities: Investments in Property and Plant (677,579 ) (634,446 ) Proceeds from Sales of Marketable Securities 146,305 182,131 Purchases of Marketable Securities (148,075 ) (183,814 ) Other Investing Activities   (10,412 )   4,298   Net Cash Flows Used in Investing Activities   (689,761 )   (631,831 )   Financing Activities: Issuance of Common Shares - 388,529 Cash Dividends on Common Shares (135,349 ) (120,647 ) Cash Dividends on Preferred Stock (4,169 ) (4,169 ) Increase/(Decrease) in Short-Term Debt 55,687 (293,663 ) Issuance of Long-Term Debt 145,000 312,000 Retirements of Long-Term Debt (4,286 ) (54,286 ) Retirements of Rate Reduction Bonds (195,724 ) (183,208 ) Other Financing Activities   (818 )   (14,694 ) Net Cash Flows (Used in)/Provided by Financing Activities   (139,659 )   29,862   Net Increase in Cash and Cash Equivalents 14,227 159,161 Cash and Cash Equivalents - Beginning of Period   26,952     89,816   Cash and Cash Equivalents - End of Period $ 41,179   $ 248,977      

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.