NU Nu Holdings Ltd

Northeast Utilities (NYSE: NU) today reported first quarter 2012 earnings of $99.3 million, or $0.56 per share, compared with earnings of $114.2 million, or $0.64 per share, in the first quarter of 2011. NU results for the first quarter of 2012 do not incorporate the financial results of NSTAR and there were no material merger-related impacts in the quarter. NU’s merger with NSTAR closed on April 10, 2012.

Thomas J. May, NU president and chief executive officer, said that NU’s lower results in the first quarter of 2012 were expected given the exceptionally mild weather and higher pension costs. However, he noted that the merger should provide significant benefits to both customers and investors in the years ahead.

“I am extremely pleased that the merger has been completed, and we look forward to realizing the many benefits from this great business combination. With our resources now combined, our operating companies will be better positioned to implement the best practices of the two companies to achieve top-tier levels of customer service and reliability, while also reducing costs,” May said.

Transmission results

NU’s transmission earnings in the first quarter of 2012 were $46.3 million, or $0.26 per share1, compared with $44.7 million, or $0.25 per share1, in the first quarter of 2011. The improved results primarily reflected a higher level of investment in the Greater Springfield Reliability Project, now under construction in western Massachusetts and northern Connecticut.

Distribution and generation results

The Connecticut Light and Power Company’s (CL&P) distribution earnings were $20.8 million in the first quarter of 2012, compared with $28.5 million in the first quarter of 2011. Lower results reflect the impact of a 6 percent decline in retail sales in 2012, compared with the first quarter of 2011, and higher pension and health care costs, partially offset by a distribution rate increase that was effective July 1, 2011.

Public Service Company of New Hampshire’s (PSNH) distribution and generation earnings were $15.1 million in the first quarter of 2012, compared with $21.5 million in the first quarter of 2011. Lower results reflect the impact of a 2.4 percent decline in retail sales in 2012, compared with the first quarter of 2011, as well as higher pension and health care costs.

Western Massachusetts Electric Company’s (WMECO) distribution and generation earnings were $6.1 million in the first quarter of 2012, compared with $5.7 million in the first quarter of 2011. WMECO benefited from higher generation earnings as the second of its solar facilities came on line in late 2011. Also, since WMECO operates under a decoupling mechanism, it is not subject to the same weather-related fluctuations in distribution revenue as CL&P and PSNH.

Overall, NU’s retail electric sales were down 5 percent in the first quarter of 2012, compared with the first quarter of 2011. They were up 0.1 percent on a weather-adjusted basis.

Yankee Gas Services Company earned $14.7 million in the first quarter of 2012, compared with $22.5 million in the first quarter of 2011. The lower earnings primarily reflect a 13.2 percent reduction in firm natural gas sales in the first quarter of 2012 due to much milder weather in the first quarter of 2012, compared with the first quarter of 2011. First quarter firm natural gas sales were up 5 percent in 2012 on a weather-adjusted basis, compared with 2011.

Parent and other affiliates

NU parent and other companies recorded a loss of $3.7 million in the first quarter of 2012, compared with a loss of $8.7 million in the first quarter of 2011. This improvement reflected primarily lower merger-related expenses. In the first quarter of 2012, NU parent and other companies recorded after-tax, merger-related expenses of $1.1 million, compared with after-tax, merger-related expenses of $8.3 million in the first quarter of 2011.

The following table reconciles 2012 and 2011 first quarter results:

                          First Quarter 2011     Reported EPS     $0.64       Higher transmission earnings in 2012     $0.01       Lower distribution and generation earnings in 2012     ($0.12)      

Higher parent and other company expenses in 2012,excluding impact of merger

   

($0.02)

      Lower expenses in 2012 related to NSTAR merger     $0.05 2012     Reported EPS     $0.56        

Financial results for the first quarters of 2012 and 2011 for NU’s business segments and parent and other companies are noted below:

               

Three months ended:

                       

(in millions, except EPS)

   

March 31, 2012

   

March 31, 2011

   

Increase(Decrease)

   

2012 EPS1

CL&P Distribution     $20.8     $28.5     ($7.7)     $0.12 PSNH Distribution/Generation     $15.1     $21.5     ($6.4)     $0.09 WMECO Distribution/Generation     $6.1     $5.7     $0.4     $0.03 Yankee Gas     $14.7     $22.5     ($7.8)     $0.08 Total—Distribution/Generation     $56.7     $78.2     ($21.5)     $0.32 CL&P Transmission     $31.8     $34.4     ($2.6)     $0.18 PSNH Transmission     $6.2     $6.0     $0.2     $0.03 WMECO Transmission     $8.1     $4.2     $3.9     $0.05 NU Transmission Ventures     $0.2     $0.1     $0.1     --- Total—Transmission     $46.3     $44.7     $1.6     $0.26 Total—Operating Company Earnings     $103.0     $122.9     ($19.9)     $0.58

NU Parent and Other Companies,excluding merger expenses

   

($2.6)

   

($0.4)

   

($2.2)

   

($0.02)

Merger expenses     ($1.1)     ($8.3)     $7.2     --- Reported Earnings     $99.3     $114.2     ($14.9)     $0.56                          

Retail sales data:

                                  Gwh for three months ended       March 31, 2012       March 31, 2011      

% ChangeActual

     

% ChangeWeather Norm.

CL&P       5,427       5,776       (6.0)       (0.1) PSNH       1,937       1,984       (2.4)       0.5 WMECO       911       948       (4.0)       (0.1) Total NU       8,271       8,705       (5.0)       0.1

Yankee Gas firm volumes in mmcffor three months ended

     

16,819

     

19,384

     

(13.2)

     

5.0

 

NU completed its stock-for-stock merger with NSTAR on April 10, 2012. The combined entity operates New England’s largest energy delivery system, serving 3.5 million customers in Connecticut, New Hampshire and Massachusetts. NU now has approximately 314 million common shares outstanding.

1 All per share amounts in this news release are reported on a fully diluted basis as of March 31, 2012. 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.

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; the effects and outcomes of our merger with NSTAR; actions of rating agencies and other presently unknown or unforeseen factors. Other risk factors are detailed 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 first quarter 2012 results tomorrow, May 3, 2012, at 4 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)                                 (Thousands of Dollars)                 March 31,2012             December 31,2011  

ASSETS

  Current Assets: Cash and Cash Equivalents $ 283,379 $ 6,559 Receivables, Net 485,770 488,002 Unbilled Revenues 135,887 175,207 Fuel, Materials and Supplies 219,091 248,958 Regulatory Assets 241,902 255,144 Marketable Securities 62,700 70,970 Prepayments and Other Current Assets   94,737   112,632 Total Current Assets   1,523,466   1,357,472   Property, Plant and Equipment, Net   10,613,199   10,403,065   Deferred Debits and Other Assets: Regulatory Assets 3,214,208 3,267,710 Goodwill 287,591 287,591 Marketable Securities 74,050 60,311 Derivative Assets 94,258 98,357 Other Long-Term Assets   171,582   172,560 Total Deferred Debits and Other Assets   3,841,689   3,886,529       Total Assets $ 15,978,354 $ 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)                       (Thousands of Dollars)         March 31,2012           December 31,2011  

LIABILITIES AND CAPITALIZATION

  Current Liabilities: Notes Payable to Banks $ 660,000 $ 317,000 Long-Term Debt - Current Portion 267,286 331,582 Accounts Payable 412,884 633,282 Regulatory Liabilities 149,755 167,844 Derivative Liabilities 108,253 107,558 Other Current Liabilities   369,503     390,416   Total Current Liabilities   1,967,681     1,947,682     Rate Reduction Bonds   94,357     112,260     Deferred Credits and Other Liabilities: Accumulated Deferred Income Taxes 1,923,266 1,868,316 Regulatory Liabilities 248,314 266,145 Derivative Liabilities 924,308 959,876 Accrued Pension, SERP and PBOP 1,241,433 1,326,037 Other Long-Term Liabilities   414,004     420,011   Total Deferred Credits and Other Liabilities   4,751,325     4,840,385     Capitalization: Long-Term Debt   4,977,131     4,614,913     Noncontrolling Interest in Consolidated Subsidiary: Preferred Stock Not Subject to Mandatory Redemption   116,200     116,200     Equity: Common Shareholders' Equity: Common Shares 981,592 980,264 Capital Surplus, Paid In 1,801,752 1,797,884 Retained Earnings 1,698,553 1,651,875 Accumulated Other Comprehensive Loss (68,822 ) (70,686 ) Treasury Stock   (344,774 )   (346,667 ) Common Shareholders' Equity 4,068,301 4,012,670 Noncontrolling Interests   3,359     2,956   Total Equity   4,071,660     4,015,626   Total Capitalization   9,164,991     8,746,739       Total Liabilities and Capitalization $ 15,978,354   $ 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 March 31, (Thousands of Dollars, Except Share Information)           2012           2011             Operating Revenues $ 1,099,623 $ 1,235,251     Operating Expenses: Fuel, Purchased and Net Interchange Power 398,013 474,109 Other Operating Expenses 225,958 251,978 Maintenance 69,826 67,764 Depreciation 80,839 73,951 Amortization of Regulatory Assets, Net 6,209 34,407 Amortization of Rate Reduction Bonds 18,347 17,282 Taxes Other Than Income Taxes   86,038   88,403   Total Operating Expenses   885,230   1,007,894   Operating Income 214,393 227,357   Interest Expense: Interest on Long-Term Debt 59,968 57,399 Interest on Rate Reduction Bonds 1,431 2,578 Other Interest   5,048   (1,428 ) Interest Expense 66,447 58,549 Other Income, Net   8,773   10,313   Income Before Income Tax Expense 156,719 179,121 Income Tax Expense   55,964   63,537   Net Income 100,755 115,584 Net Income Attributable to Noncontrolling Interests   1,493   1,429   Net Income Attributable to Controlling Interests $ 99,262 $ 114,155     Basic and Diluted Earnings Per Common Share $ 0.56 $ 0.64     Dividends Declared Per Common Share $ 0.29 $ 0.28     Weighted Average Common Shares Outstanding: Basic   178,055,716   177,188,207   Diluted   178,437,453   177,480,996  

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)           2012             2011     Operating Activities: Net Income $ 100,755 $ 115,584 Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: Bad Debt Expense 3,657 4,947 Depreciation 80,839 73,951 Deferred Income Taxes 52,474 52,429 Pension, SERP and PBOP Expense 42,268 34,163 Pension and PBOP Contributions (98,910 ) (5,932 ) Regulatory (Under)/Over Recoveries, Net (28,352 ) 44,420 Amortization of Regulatory Assets, Net 6,209 34,407 Amortization of Rate Reduction Bonds 18,347 17,282 Derivative Assets and Liabilities (1,770 ) (3,651 ) Other (7,371 ) (1,776 ) Changes in Current Assets and Liabilities: Receivables and Unbilled Revenues, Net 29,276 8,199 Fuel, Materials and Supplies 30,108 42,990 Taxes Receivable/Accrued, Net 11,758 18,312 Accounts Payable (190,232 ) (29,278 ) Other Current Assets and Liabilities, Net   (40,240 )   (33,281 ) Net Cash Flows Provided by Operating Activities   8,816     372,766     Investing Activities: Investments in Property, Plant and Equipment (304,294 ) (236,689 ) Proceeds from Sales of Marketable Securities 40,947 38,646 Purchases of Marketable Securities (41,570 ) (39,230 ) Other Investing Activities   2,448     328   Net Cash Flows Used in Investing Activities   (302,469 )   (236,945 )   Financing Activities: Cash Dividends on Common Shares (52,104 ) (48,588 ) Cash Dividends on Preferred Stock (1,390 ) (1,390 ) Increase/(Decrease) in Short-Term Debt 343,000 (78,000 ) Issuance of Long-Term Debt 300,000 - Retirements of Rate Reduction Bonds (17,903 ) (16,868 ) Other Financing Activities   (1,130 )   989   Net Cash Flows Provided by/(Used in) Financing Activities   570,473     (143,857 ) Net Increase/(Decrease) in Cash and Cash Equivalents 276,820 (8,036 ) Cash and Cash Equivalents - Beginning of Period   6,559     23,395   Cash and Cash Equivalents - End of Period $ 283,379   $ 15,359  

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.