FOR IMMEDIATE RELEASE: April 23, 1999
CONTACT: Robert G. Seega 508-389-2178 (days)
(Investors) 508-949-1796 (evenings)
seega@neesnet.com (electronic mail)
Susan Stevens 508/389-3568 (days)
(Media) 508/389-4966 (evenings)
steves@neesnet.com (electronic mail)
New England Electric
Reports First Quarter Earnings/National Grid Shareholders Approve
Merger
Westborough, Mass . . . New England Electric System (NEES)
today reported first quarter 1999 earnings of $.74 per share on
59.5 million average diluted common shares, compared with $.88
per share on 64.6 million average diluted common shares for the
first quarter of 1998. The decrease in earnings reflects
significant revenue reductions due to the continuing impact of
the restructuring of the utility business and the effect of the
divestiture of NEES' nonnuclear generating business. The decrease
was partially offset by revenues from increased kilowatthour
(kWh) deliveries, improved results from investments in
unregulated ventures and the positive effects of a common share
repurchase program.
Industry restructuring continues to have a negative impact
on earnings. Rate reductions were implemented upon the
commencement of providing customer choice of electric supplier.
These initial rate reductions commenced for all customers in
Rhode Island, Massachusetts and New Hampshire on January 1, March
1, and July 1, 1998, respectively. Further rate reductions were
provided to customers following the sale of NEES' nonnuclear
generating business on September 1, 1998. The combined effect of
these events reduced first quarter revenues and operating
expenses by a net of approximately $.45 per share.
These decreases were partially offset by improved results
from NEES' unregulated businesses. Growth of these businesses
increased first quarter 1999 revenues by $70 million and
eliminated first quarter 1998 losses of approximately $.08 per
share. Earnings in the first quarter of 1999 were also
positively affected by: a) increased kWh deliveries of
approximately 2.8 percent in the first quarter of 1999 compared
with 1998 as a result of a continued strong economy and the
effect of weather (approximately $.03 per share) and b) reduced
interest expense and increased interest income due to the
reinvestment of the proceeds from the sale of the nonnuclear
generating business (approximately $.15 per share). NEES' 1998
common share repurchase program improved earnings in 1999 by
approximately $.04 per share.
In other news, on Thursday, April 22, 1999, shareholders of
the National Grid Group plc (National Grid) (LSE:NGG) approved
the company's proposed acquisition of NEES at National Grid's
Extraordinary General Meeting with more than 99% of votes in
favor, according to NEES President and Chief Executive Officer
Rick Sergel. The $3.2 billion merger was announced on December
14, 1998.
"This is very encouraging to have such a resounding vote of
approval from National Grid's shareholders. This bodes well for
customers, because the sooner this merger is completed, the
sooner our customers can begin enjoying the benefits," said
Sergel.
NEES and National Grid were granted early termination of the
Hart-Scott-Rodino waiting period on the proposed merger on April
9, 1999. The merger is subject to a number of additional
regulatory approvals. On April 21, 1999, the New Hampshire
Public Utilities Commission (NHPUC) issued an order finding that
the NEES/National Grid merger filing did not satisfy the
requirements for exemption from the NHPUC's formal review
process. A procedural schedule for the NHPUC's review is
expected to be established on May 4, 1999.
NEW ENGLAND ELECTRIC SYSTEM AND SUBSIDIARIES (CONSOLIDATED)
First Quarter Ended March 31,
1999 1998
Operating Revenue $ 657,502,000 $ 619,563,000
Net Income $ 44,153,000 $ 56,878,000
Average Common Shares - Basic 59,355,248 64,532,863
Average Common Shares - Diluted 59,502,829 64,616,568
Net Income per Share - Basic $.74 $.88
Net Income per Share - Diluted $.74 $.88
Twelve Months Ended March 31,
1999 1998
Operating Revenue $2,458,472,000 $2,484,007,000
Net Income $ 177,317,000 $ 215,096,000
Average Common Shares - Basic 61,082,450 64,791,620
Average Common Shares - Diluted 61,195,181 64,851,221
Net Income per Share - Basic $2.90 $3.32
Net Income per Share - Diluted $2.90 $3.32
New England Electric System (NEES) is a public utility holding company
headquartered in Westborough, Massachusetts. Its regulated subsidiaries are
engaged in the transmission, distribution, and sale of electricity. NEES'
electricity distribution subsidiaries serve 1.4 million customers in
Massachusetts, Rhode Island, and New Hampshire. Unregulated subsidiaries are
engaged in the marketing of energy commodities and services and the
construction and leasing of telecommunications infrastructure.