Exhibit 99
CONTACT: Jeffrey R. Kotkin
Office: (860) 665-5154
NU REPORTS LOWER FIRST-QUARTER RESULTS
HARTFORD, Connecticut, April 23, 2002-Northeast
Utilities (NYSE-NU) today reported first-quarter 2002
earnings of $18.6 million, or $0.14 per share, compared with
earnings of $112.2 million, or $0.78 per share, in the first
quarter of 2001.
The 2002 results include an after-tax charge of $8.5
million, or $0.07 per share, reflecting a write-down of NU's
investment in NEON Communications, Inc. (NEON), a
Massachusetts-based provider of high-bandwidth fiber optic
telecommunications services. As of December 31, 2001, NU
had a $4.6 million equity investment in NEON and held $15
million of NEON's subordinated notes.
The 2001 results incorporated a number of nonrecurring
adjustments, including an after-tax gain of $124.8 million,
or $0.87 per share, from the sale of the Millstone Nuclear
Station; an after-tax charge of $43.4 million, or $0.30 per
share, related to the forward repurchase of NU common
shares; and an after-tax charge of $22.4 million, or $0.15
per share, from the adoption of Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities," as amended.
Excluding the adjustments noted above, NU earned $27.1
million, or $0.21 per share, in the first quarter of 2002
and $53.2 million, or $0.36 per share, in the first quarter
of 2001. Revenues in the first quarter of 2002 increased to
$1.9 billion from $1.8 billion in the same period of 2001,
primarily due to higher sales at NU's competitive
businesses.
Michael G. Morris, NU chairman, president and chief
executive officer, attributed the decline in recurring net
income primarily to exceptionally mild weather in the first
quarter of 2002, which impacted both NU's regulated and
competitive business units. Heating degree days totaled
2,583 at Bradley International Airport in Windsor Locks,
Connecticut in the first quarter of 2002, compared with
3,151 heating degree days during the same period of 2001 and
a 20-year average of 2,984. As a result, regulated retail
electric sales were down 4.0 percent compared with the first
quarter of 2001 and firm gas volumes were down 17.5 percent.
Overall, as a result of the mild dry weather, earnings at NU
regulated and competitive businesses were lower by an
estimated $15 million in the first quarter of 2002, or
approximately $0.12 per share, compared with the first
quarter of 2001.
Due to the combination of weak sales comparisons,
industry restructuring, and nonrecurring gains associated
with the Millstone sale in March 2001, earnings at three of
NU's regulated operating companies declined, compared with
the first quarter of 2001. Earnings for common at The
Connecticut Light and Power Company (CL&P) totaled $20.3
million in the first quarter of 2002, compared with $36.9
million in the first quarter of 2001. Earnings at Public
Service Company of New Hampshire (PSNH) declined to $11.7
million in 2002 from $27.7 million in the first quarter of
2001. Earnings at Yankee Energy System, Inc. totaled $12.6
million in the first quarter of 2002, compared with $15.6
million in the same period of 2001. Earnings at Western
Massachusetts Electric Company (WMECO) rose to
$6.9 million in the first quarter of 2002 from $2.6 million
in the same period of 2001, primarily because of the costs
WMECO incurred in 2001 related to an extended refueling
outage at Millstone 3.
Losses at NU's competitive energy businesses totaled
$21.6 million in the first three months of 2002, compared
with losses of $4.2 million in the same period of 2001,
excluding the accounting charge. Morris attributed the
weaker performance at the competitive energy businesses
primarily to mild dry weather, which caused a decline in
expected wholesale and retail electric and natural gas sales
and a decline in conventional hydroelectric production, and
to a steep increase in natural gas prices in March 2002.
Partially offsetting those factors was a significant
decline in NU's outstanding shares. NU repurchased
approximately 10 percent of its outstanding shares in 2001
and bought back another 850,000 shares in the first quarter
of 2002. The company can repurchase approximately 10
million additional shares by July 2003, under its existing
board authorization.
Also helping to offset the mild weather were lower
operation and maintenance costs unrelated to fuel and
purchased power, primarily due to the sale of Millstone
Station. Those costs fell to $250.3 million in 2002,
compared with $307.6 million in the first three months of
2001.
Morris said earnings were significantly below budget in
the first quarter, but he said NU believes it can recover
from that shortfall over the balance of the year because of
continued expense control, more seasonal weather patterns,
and improved performance at NU's competitive businesses. As
a result, NU will maintain its full year 2002 earnings
guidance of between $1.40 per share and $1.65 per share.
Morris said NU expects to record after-tax earnings of
between $25 million and $30 million later in 2002 in
connection with the proposed sale of the system's 40.04
percent interest in the Seabrook nuclear station in
Seabrook, New Hampshire to a subsidiary of FPL Group. These
earnings relate to a gain on the sale of an unaffiliated
company's share of Seabrook and to certain dismantlement
accruals previously set aside for the abandoned Seabrook 2
nuclear unit. Under the sale agreement, FPL will be
responsible for the dismantlement of Seabrook 2. The sale
is subject to a number of contingencies, including
regulatory approvals.
The vast majority of the approximately $400 million of
proceeds the NU System expects to receive from the sale will
be used to reduce PSNH and CL&P stranded costs and to pay
taxes. After-tax proceeds will be used in part to repay all
$90 million of outstanding debt of North Atlantic Energy
Corporation, an NU subsidiary which owns nearly 36 percent
of Seabrook, and to return all of NAEC's equity to NU.
NAEC, which has a power sales contract with PSNH, had
$35.9 million of common equity as of March 31, 2002.
Additional proceeds will be used primarily to reduce PSNH's
capitalization, fund CL&P's capital needs, and meet some
modest decommissioning obligations associated with the NU
system's interest in Seabrook.
NU operates New England's largest utility system,
serving nearly 1.8 million electric customers in
Connecticut, New Hampshire, and Massachusetts and 191,000
natural gas customers in Connecticut. It is also one of the
leading energy marketing firms in New England.
This press release includes forward-looking statements
within the meaning of the Private Securities Litigation
Reform Act of 1995, which are statements of future
expectations and not facts. Actual results or developments
might differ materially from those included in the forward-
looking statements because of factors such as competition
and industry restructuring, changes in economic conditions,
changes in historical weather patterns, changes in laws,
regulations or regulatory policies, developments in legal or
public policy doctrines, technological developments and
other presently unknown or unforeseen factors. Other risk
factors are detailed from time to time in NU's reports to
the Securities and Exchange Commission.
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