January 22, 2002
NORTHEAST UTILITIES AND SUBSIDIARIES
FINANCIAL REPORT
<Table>
<Caption>
Three Months Ended
December 31,
-----------------------
2001 2000
---- ----
(Thousands of Dollars, Except Share Information)
Operating Revenues $ 1,766,164 $ 1,497,379
============ ============
Earnings/(loss) for Common Shares:
Before extraordinary loss and cumulative effect
of accounting change, net of tax benefits $ 49,984 $ 52,959
Extraordinary loss, net of tax benefit
of $169,562 - (233,881)
Cumulative effect of accounting change,
net of tax benefit of $14,908 - -
------------ ------------
Total Net Income/(Loss) $ 49,984 $ (180,922)
============ ============
Fully Diluted Earnings/(Loss) Per Common Share:
Before extraordinary loss and cumulative effect
of accounting change, net of tax benefits $ 0.38 $ 0.37
Extraordinary loss, net of tax benefit - (1.63)
Cumulative effect of accounting change,
net of tax benefit - -
------------ ------------
Total Fully Diluted Earnings/(Loss)
Per Common Share $ 0.38 $ (1.26)
============ ============
Common Shares Outstanding (fully diluted) 131,381,924 144,109,003
============ ============
</Table>
<Table>
<Caption>
Twelve Months Ended
December 31,
-----------------------
2001 2000
---- ----
Operating Revenues $ 6,873,896 $ 5,876,620
============ ============
Earnings/(Loss) for Common Shares:
Before extraordinary loss and cumulative effect
of accounting change, net of tax benefits $ 265,942 $ 205,295
Extraordinary loss, net of tax benefit
of $169,562 - (233,881)
Cumulative effect of accounting change,
net of tax benefit of $14,908 (22,432) -
------------ ------------
Total Net Income/(Loss) $ 243,510 $ (28,586)
============ ============
Fully Diluted Earnings/(Loss) Per Common Share:
Before extraordinary loss and cumulative effect
of accounting change, net of tax benefits $ 1.96 $ 1.45
Extraordinary loss, net of tax benefit - (1.65)
Cumulative effect of accounting change,
net of tax benefits (0.17) -
------------ ------------
Total Fully Diluted Earnings/(Loss)
Per Common Share $ 1.79 $ (0.20)
============ ============
Common Shares Outstanding (fully diluted) 137,917,423 141,967,216
============ ============
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 the
Northeast Utilitie System and is not a representation, prospectus, or intended for use in
connection with any purchase or sale of securities.
</Table>
Northeast Utilities and Subsidiaries
Consolidated Statements of Income
<Table>
<Caption>
Three Months Ended
December 31,
-----------------------
2001 2000
---- ----
(Thousands of Dollars, Except Share Information)
Operating Revenues $ 1,766,164 $ 1,497,379
------------ ------------
Operating Expenses:
Operation -
Fuel, purchased and net interchange power 1,222,335 812,099
Other 181,752 228,108
Maintenance 50,808 74,547
Depreciation 46,931 62,307
Amortization of regulatory assets, net 84,531 87,509
Taxes other than income taxes 48,458 59,730
Gain on sale of utility plant - -
------------ ------------
Total operating expenses 1,634,815 1,324,300
------------ ------------
Operating Income 131,349 173,079
Other (Loss)/Income, Net (2,803) (6,674)
------------ ------------
Income Before Interest and Income Tax Expense 128,546 166,405
------------ ------------
Interest Expense:
Interest on long-term debt 37,143 44,560
Interest on rate reduction bonds 29,913 -
Other interest 3,580 30,890
------------ ------------
Interest expense, net 70,636 75,450
------------ ------------
Income Before Income Tax Expense 57,910 90,955
Income Tax Expense 6,537 35,257
------------ ------------
Income Before Preferred Dividends of Subsidiaries 51,373 55,698
Preferred Dividends of Subsidiaries 1,389 2,739
------------ ------------
Income Before Extraordinary Loss and
Cumulative Effect of Accounting Change,
Net of Tax Benefits 49,984 52,959
Extraordinary loss, net of tax benefit
of $169,562 - (233,881)
Cumulative effect of accounting change, net
of tax benefits of $14,908 - -
------------ ------------
Net Income/(Loss) $ 49,984 $ (180,922)
============ ============
Fully Diluted Earnings/(Loss) Per Common Share:
Income Before Extraordinary Loss and
Cumulative Effect of Accounting Change,
Net of Tax Benefits $ 0.38 $ 0.37
Extraordinary loss, net of tax benefit - (1.63)
Cumulative effect of accounting change,
net of tax benefit - -
------------ ------------
Total Fully Diluted Earnings/(Loss)
Per Common Share $ 0.38 $ (1.26)
============ ============
Common Shares Outstanding (fully diluted) 131,381,924 144,109,003
============ ============
</Table>
<Table>
<Caption>
Twelve Months Ended
December 31,
-----------------------
2001 2000
---- ----
(Thousands of Dollars, Except Share Information)
Operating Revenues $ 6,873,896 $ 5,876,620
------------ ------------
Operating Expenses:
Operation -
Fuel, purchased and net interchange power 4,541,342 3,303,995
Other 774,509 866,742
Maintenance 258,960 255,884
Depreciation 201,013 239,798
Amortization of regulatory assets, net 983,037 276,821
Taxes other than income taxes 219,197 238,587
Gain on sale of utility plant (641,956) -
------------ ------------
Total operating expenses 6,336,102 5,181,827
------------ ------------
Operating Income 537,794 694,793
Other (Loss)/Income, Net 187,841 (14,309)
------------ ------------
Income Before Interest and Income Tax Expense 725,635 680,484
------------ ------------
Interest Expense:
Interest on long-term debt 147,049 200,697
Interest on rate reduction bonds 87,616 -
Other interest 44,993 98,605
------------ ------------
Interest expense, net 279,658 299,302
------------ ------------
Income Before Income Tax Expense 445,977 381,182
Income Tax Expense 172,501 161,725
------------ ------------
Income Before Preferred Dividends of Subsidiaries 273,476 219,457
Preferred Dividends of Subsidiaries 7,534 14,162
------------ ------------
Income Before Extraordinary Loss and
Cumulative Effect of Accounting Change,
Net of Tax Benefits 265,942 205,295
Extraordinary loss, net of tax benefit
of $169,562 - (233,881)
Cumulative effect of accounting change, net
of tax benefits of $14,908 (22,432) -
------------ ------------
Net Income/(Loss) $ 243,510 $ (28,586)
============ ============
Fully Diluted Earnings/(Loss) Per Common Share:
Income Before Extraordinary Loss and
Cumulative Effect of Accounting Change,
Net of Tax Benefits $ 1.96 $ 1.45
Extraordinary loss, net of tax benefit - (1.65)
Cumulative effect of accounting change,
net of tax benefit (0.17) -
------------ ------------
Total Fully Diluted Earnings/(Loss)
Per Common Share $ 1.79 $ (0.20)
============ ============
Common Shares Outstanding (fully diluted) 135,917,423 141,967,216
============ ============
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 the Northeast Utilities
System and is not a representation, prospectus, or intended for use in connection with any purchase
or sale of securities.
</Table>
Northeast Utilities and Subsidiaries
Consolidated Balance Sheets
<Table>
<Caption>
December 31,
-----------------------
2001 2000
(Thousands of Dollars)
ASSETS
Current Assets:
Cash and cash equivalents $ 96,658 $ 200,017
Investments in securitizable assets 36,367 98,146
Receivables, net 831,221 472,863
Unbilled revenues 126,398 121,090
Fuel, materials and supplies, at average cost 108,516 163,711
Special deposits 60,261 2,624
Prepayments and other 126,233 91,904
------------ ------------
1,385,654 1,150,355
------------ ------------
Property, Plant and Equipment:
Electric utility 5,743,575 9,003,298
Gas utility 634,884 608,153
Competitive energy 344,063 409,035
Other 195,741 211,417
------------ ------------
6,918,263 10,231,903
Less: Accumulated provision for depreciation 3,418,577 7,041,279
------------ ------------
3,499,686 3,190,624
Construction work in progress 289,889 228,330
Nuclear fuel, net 32,564 128,261
------------ ------------
Total net property, plant and equipment 3,822,139 3,547,215
------------ ------------
Deferred Debits and Other Assets:
Regulatory assets 3,956,925 3,910,801
Goodwill and other purchased intangible assets, net 322,600 324,389
Prepaid pension 232,398 139,546
Nuclear decommissioning trusts, at market 61,713 740,058
Other 459,930 404,785
------------ ------------
5,033,566 5,519,579
------------ ------------
Total Assets $ 10,241,359 $ 10,217,149
============ ============
</Table>
<Table>
<Caption>
December 31,
-----------------------
2001 2000
(Thousands of Dollars)
LIABILITIES AND CAPITALIZATION
Current Liabilities:
Notes payable to banks $ 290,500 $ 1,309,977
Long-term debt and preferred stock - current portion 24,462 340,041
Accounts payable 670,946 538,983
Accrued taxes 25,101 54,088
Accrued interest 35,659 41,131
Other 178,071 304,810
------------ ------------
1,226,739 2,589,030
------------ ------------
Rate Reduction Bonds 2,018,351 -
------------ ------------
Minority Interest in Consolidated Subsidiary - 100,000
------------ ------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 1,491,044 1,585,494
Accumulated deferred investment tax credits 120,071 153,155
Decommissioning obligation - Millstone 1 - 692,560
Deferred contractual obligations 216,566 244,608
Other 617,976 452,926
------------ ------------
2,445,657 3,128,743
------------ ------------
Capitalization:
Long-term debt 2,316,556 2,029,593
------------ ------------
Preferred Stock 116,200 151,200
------------ ------------
Common Shareholders' Equity:
Common shares, $5 par value - authorized
225,000,000 shares; 148,890,640 shares issued and
130,132,136 shares outstanding in 2001 and
148,781,861 shares issued and 143,820,405 shares
outstanding in 2002 744,453 743,909
Capital surplus, paid in 829,006 1,091,495
Deferred contribution plan - employee stock
ownership plan (101,809) (114,463)
Retained earnings 678,676 495,873
Accumulated other comprehensive (loss)/income (32,470) 1,769
----------- -----------
Common Shareholders' Equity 2,117,856 2,218,583
----------- -----------
Total Capitalization 4,550,612 4,399,376
----------- -----------
Total Liabilities and Capitalization $10,241,359 $10,217,149
=========== ===========
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 the Northeast Utilities
System and is not a representation, prospectus, or intended for use in connection with any
purchase or sale of securities.
</Table>