Exhibit 99.1
News Release
CONTACT: Jeffrey R. Kotkin
PHONE: (860) 665-5154
NU ANNOUNCES 2003 RESULTS
BERLIN, Connecticut, January 27, 2004-Northeast Utilities
(NYSE-NU) today announced 2003 earnings of $117.4 million, or $0.92
per share on a fully diluted basis, compared with earnings of
$152.1 million, or $1.18 per share, in 2002. In the fourth quarter
of 2003, NU reported a loss of $8.9 million, or $0.07 per share on
a fully diluted basis, compared with earnings of $56.0 million, or
$0.44 per share, in the fourth quarter of 2002.
In the fourth quarters of both 2003 and 2002, NU recorded
significant items. In the fourth quarter of 2003, NU recorded an
after-tax reserve of $35.9 million, or $0.28 per share on a fully
diluted basis, associated with the anticipated resolution of a
wholesale power dispute described below. In the third quarter of
2003, NU recorded a negative cumulative effect of accounting change
of $4.7 million, or $0.04 per share.
Significant items in 2002 included gains related to the sale
of the Seabrook nuclear plant of $24.5 million, or $0.19 per share,
and 2002 write-downs of certain investments, totaling $11.0
million, or $0.09 per share. Absent those items, NU earned $138.6
million, or $1.08 per share, in 2002. In the fourth quarter of
2002, NU recorded an after-tax gain of $10.0 million, or $0.08 per
share, associated with the sale of the Seabrook nuclear power plant
to a subsidiary of FPL Group.
Excluding the items noted above, NU earned $27.0 million, or
$0.21 per share on a fully diluted basis, in the fourth quarter of
2003, compared with $47.0 million, or $0.37 per share, in the
fourth quarter of 2002. For 2003, NU earned $158.0 million, or
$1.24 per share, excluding the reserve and accounting change.
These results were consistent with the earnings range of $1.20 per
share to $1.30 per share that NU projected in October 2003.
Charles W. Shivery, interim NU president, said the company was
pleased with its overall results for the year. "Our earnings
excluding significant items were in the upper end of the $1.10 to
$1.30 per share range we had forecast in early 2003, and our
service reliability and operating performance were very strong. We
want to thank NU's 6,800 employees for delivering this kind of
performance to our customers and shareholders," Shivery said.
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The following table reconciles fourth quarter and year-end
earnings on a reported and adjusted basis:
Fourth Year End
Quarter
2002 Reported EPS $0.44 $1.18
Significant Investment write-downs $0.01 $0.09
items Seabrook items ($0.08) ($0.19)
2002 Adjusted EPS $0.37 $1.08
Lower regulated results ($0.34) ($0.59)
Reduced trading losses --- $0.14
Improved competitive $0.18 $0.52
results
Lower NU parent interest --- $0.04
cost-net
Lower share count --- $0.02
Other --- $0.03
2003 Adjusted EPS $0.21 $1.24
Significant R.M. Services accounting --- ($0.04)
items change
Reserve for wholesale ($0.28) ($0.28)
power dispute
2003 Reported EPS ($0.07) $0.92
Shivery attributed the improved 2003 operating results
primarily to much better performance at NU Enterprises (NUEI),
parent company of NU's competitive energy businesses. NUEI
benefited from strengthened margins, better performance of NUEI's
generation facilities, and the absence of natural gas trading
losses incurred in the first half of 2002. Excluding NUEI's
portion of the fourth-quarter 2003 reserve noted earlier, NU's
competitive energy businesses earned $8.2 million in the fourth
quarter of 2003 and $32.2 million for the full year, compared with
losses of $14.5 million in the fourth quarter of 2002 and $53.2
million for the full year.
The reserve relates to the estimated cost of settling a
dispute between The Connecticut Light and Power Company (CL&P) and
its 2003 standard offer power suppliers, which included Select
Energy, Inc., NU's energy marketing subsidiary. The dispute
involves the March 2003 implementation of Standard Market Design
(SMD) in New England and is now before the Federal Energy
Regulatory Commission (FERC). The portions of the $35.9 million
reserve attributable to NUEI and CL&P are subject to a
confidentiality agreement that will remain in place until a
definitive settlement agreement is filed with the FERC.
Shivery said earnings at NU's regulated utilities fell in the
fourth quarter of 2003 due to milder weather and the absence of the
positive regulatory decisions that were reflected in the fourth
quarter 2002 results. Regulated electric sales decreased 0.4
percent in the fourth quarter of 2003, compared with the same
period of 2002. Regulated firm natural gas sales decreased 6.2
percent in the fourth quarter of 2003, compared with the same
period of 2002. For the year, regulated electric sales increased
3.6 percent in 2003, compared with 2002, and regulated firm natural
gas sales decreased 0.6 percent. Regulated firm natural gas sales
decreased as a result of downward adjustments to estimates of
unbilled revenues. Electric sales benefited from positive
adjustments to unbilled revenues, all of which occurred in the
third quarter of 2003.
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Earnings at CL&P after payment of preferred dividends, but
before a reserve related to SMD were $5.6 million in the fourth
quarter of 2003 and $64.6 million for the full year, compared with
earnings of $21.8 million in the fourth quarter of 2002 and $80.1
million for the full year. Shivery attributed the weaker results
primarily to lower sales, higher operation and maintenance expense,
including lower pension income, and net after-tax write-offs of
approximately $5 million related to a distribution rate case that
was decided in December 2003.
Public Service Company of New Hampshire (PSNH) earned $11.1
million in the fourth quarter of 2003 and $45.6 million for the
full year, compared with earnings of $16.5 million in the fourth
quarter of 2002 and $62.9 million for the full year. The decline
in earnings related to a lower level of regulatory assets earning a
return, the positive resolution of certain contingencies related to
a regulatory proceeding decided in December 2002, and to higher
pension costs. Also, as a result of the sale of Seabrook, earnings
at North Atlantic Energy Corporation (NAEC) were essentially
eliminated in 2003, compared with earnings of $5.6 million in the
fourth quarter of 2002 and $26.3 million for all of 2002. NAEC, an
NU subsidiary, owned 36 percent of Seabrook.
Western Massachusetts Electric Company earned $2.4 million in
the fourth quarter of 2003 and $16.2 million for the full year,
compared with earnings of $10.7 million in the fourth quarter of
2002 and $37.7 million for the full year. The decline in earnings
related primarily to the recognition of $13 million of investment
tax credits in the second quarter of 2002 and to the positive
financial impact of an approval of a regulatory settlement in the
fourth quarter of 2002.
Yankee Gas Services Company earned $3.9 million in the fourth
quarter of 2003 and $7.3 million for the year, compared with $11.4
million in the fourth quarter of 2002 and $17.6 million for the
full year. Yankee Gas earnings were reduced by approximately $6.2
million in 2003 as a result of downward adjustments noted earlier
in estimated unbilled revenues.
Shivery said NU remains comfortable with its previously
announced 2004 earnings range of between $1.20 and $1.40 per share.
Realizing earnings within that range depends on the continued
success of NUEI's competitive businesses, the outcomes of pending
rate cases before the New Hampshire Public Utilities Commission and
the FERC, and other factors outside the company's control, such as
weather.
Shivery also said that NU projects cash capital expenditures
of approximately $730 million in 2004, compared with approximately
$550 million expended in 2003. The additional spending is
primarily focused on improving NU's regulated electric distribution
and transmission system.
NU's regulated companies provide service to more than 1.8
million retail electric customers in Connecticut, New Hampshire,
and Massachusetts and natural gas service to more than 192,000
customers in Connecticut.
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Northeast Utilities is a Fortune 500 diversified energy
company located in Connecticut with operations throughout the
Northeast. Through its competitive and regulated subsidiaries, NU
provides Energy for a Changing World with a full range of energy-
related products and services to millions of residential and
business customers from Maine to Maryland. From delivering
electricity and natural gas, to marketing energy commodities, to
operating and maintaining power plant facilities, NU is committed
to safety, reliability and expanding consumers' energy options.
For more information on Northeast Utilities and its subsidiaries,
visit the NU family of Web sites at www.nu.com.
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 weather patterns, changes in laws,
regulations or regulatory policies, developments in legal or public
policy doctrines, technological developments, volatility in
electric and natural gas commodity markets, 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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NOTE: NU will webcast an investor conference call this morning at
10 a.m. Eastern Standard Time. The call can be accessed through
NU's website at www.nu.com.