Exhibit 99.1
P. O. Box 270
NU LOGO Northeast Hartford, CT 06141-0270
Utilities System 107 Selden Street
Berlin, CT 06037
(860)-665-5000
www.nu.com
News Release
CONTACTS: Jeffrey R. Kotkin Barbara Nieman
OFFICE: (860) 665-5154 (860) 665-3249
NU REPORTS THIRD QUARTER EARNINGS
BERLIN, Connecticut, October 25, 2004-Northeast Utilities (NU-
NYSE) today reported third quarter 2004 earnings of $39.1 million, or
$0.30 per share, compared with earnings of $39.2 million, or $0.31
per share, in the third quarter of 2003. Results for 2003 included a
charge of $4.7 million, or $0.04 per share, associated with NU's
former investment in a bill collection company.
For the first nine months of 2004, NU earned $129.4 million, or
$1.01 per share, compared with $126.3 million, or $0.99 per share,
after the $4.7 million charge, in the first nine months of 2003.
Charles W. Shivery, NU chairman, president, and chief executive
officer, said regulated company earnings rose modestly to $37.8
million in the third quarter of 2004 from $37.2 million in the same
period of 2003. That increase was more than offset by lower earnings
at NU's competitive businesses.
Shivery said the regulated companies benefited from continued
economic growth, lower income tax expense at Public Service Company
of New Hampshire (PSNH), and a positive regulatory decision affecting
The Connecticut Light and Power Company (CL&P). Those factors were
largely offset by cooler summer weather in 2004 than in 2003 and the
absence of revenue adjustments which added $5.7 million to earnings
in the third quarter of 2003. Retail electric sales, excluding the
effect of a positive adjustment to revenues in 2003, were virtually
unchanged in the third quarter of 2004, compared with 2003, but on a
weather-adjusted basis they were up 2.8 percent as a result of
improved economic conditions.
The following table reconciles third quarter and year-to-date
earnings on a reported and adjusted basis:
Third Year-to-Date
Quarter
2003 Reported EPS $0.31 $0.99
Cumulative effect $0.04 $0.04
of accounting
change
2003 Adjusted EPS $0.35 $1.03
Regulated results --- $0.06
Competitive ($0.02) $0.01
results
Other ($0.03) ($0.06)
2004 Adjusted EPS $0.30 $1.04
Investment --- ($0.03)
write-downs
2004 Reported EPS $0.30 $1.01
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NU's competitive energy businesses earned $4.0 million in the
third quarter of 2004, compared with $6.9 million in the same period
of 2003. Over the first nine months of 2004, those businesses earned
$25.7 million, compared with $24.0 million in the first nine months
of 2003. Shivery said lower third-quarter 2004 merchant energy
results were due to lower volumes and margins on wholesale electric
contracts, compared with the same period of 2003 and the first
quarter of 2004. Shivery said NU expected lower margins in the
latter quarters of 2004 due to the seasonal pricing of wholesale
contracts. Lower wholesale volumes were due to cooler summer
weather.
The following tables provide financial results for NU's utility
group and competitive business lines during the third quarter and
first nine months of 2004 and 2003:
Three months ended September 30, 2004
Third Third Increase
(in millions of Quarter Quarter 2003 (Decrease)
dollars) 2004
Merchant energy $3.3 $6.9 ($3.6)
Services and other $0.7 --- $0.7
NU Enterprises total $4.0 $6.9 ($2.9)
CL&P $21.7 $29.0 ($7.3)
PSNH $18.2 $12.6 $5.6
WMECO $1.5 $5.2 ($3.7)
Yankee Gas ($3.6) ($9.6) $6.0
Utility Group total $37.8 $37.2 $0.6
Cumulative effect of --- ($4.7) $4.7
accounting change
Parent and other ($2.7) ($0.2) ($2.5)
Reported Earnings $39.1 $39.2 ($0.1)
Nine Months Ended September 30, 2004
Nine Months Nine Months Increase
(in millions of 2004 2003 (Decrease)
dollars)
Merchant energy $27.0 $22.3 $4.7
Services and other ($ 1.3) $1.7 ($3.0)
NU Enterprises total $25.7 $24.0 $1.7
CL&P $65.1 $59.0 $6.1
PSNH $36.0 $34.5 $1.5
WMECO $8.7 $13.9 ($5.2)
Yankee Gas $8.5 $3.4 $5.1
Utility Group total $118.3 $110.8 $7.5
Investment write-downs ($3.9) --- ($3.9)
Cumulative effect of --- ($4.7) $4.7
accounting change
Parent and other ($10.7) ($3.8) ($6.9)
Reported Earnings $129.4 $126.3 $3.1
CL&P earnings declined in the third quarter of 2004, compared
with the same period of 2003. The absence of the positive 2003
adjustment to unbilled revenue and milder summer weather in 2004 more
than offset a $6 million after-tax benefit from an August 2004
regulatory decision modifying a December 2003 CL&P rate order. For
the year, CL&P earnings are higher due to retail rate increases that
took effect on January 1, 2004, as a result of the December 2003
order.
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Page 3 of 3
PSNH earnings were higher in the third quarter of 2004, compared
with the same period of 2003, primarily because of a lower effective
tax rate. The lower effective tax rate is due to adjustments to tax
reserves as a result of the filing of the 2003 tax return in
September and the allocation of certain parent company tax benefits
to PSNH in accordance with the NU tax allocation agreement. Under
the allocation agreement, more tax benefits were allocated from NU
parent to utility companies in 2004 than in 2003 resulting in a
higher NU parent company loss in 2004. For the year, PSNH's lower
effective tax rate was offset by higher operational costs, including
higher pension costs.
Western Massachusetts Electric Company earnings were lower in
the third quarter and year-to-date due in part to higher interest
expense and lower pension income. Yankee Gas Services Company's 2004
third-quarter losses were reduced, in comparison with the same period
of 2003, by the absence of a $5.1 million after-tax unbilled revenue
adjustment in 2004.
Shivery said NU has narrowed its forecasted earnings in 2004
from a range of $1.20 per share to $1.40 per share to a range of
$1.25 per share to $1.35 per share. That includes earnings of
between $0.91 per share and $0.95 per share at NU's regulated
distribution and generation businesses; between $0.22 per share and
$0.24 per share at NU's regulated transmission business; and between
$0.23 per share and $0.25 per share at NU's competitive businesses.
NU also anticipates parent and other expenses of between $0.09 per
share and $0.11 per share.
NU also has established an earnings range of between $1.35 per
share and $1.45 per share for 2005. That range reflects earnings of
between $0.96 and $1.00 per share at NU's regulated distribution and
generation businesses; between $0.26 and $0.30 per share at NU's
regulated transmission business; and between $0.26 per share and
$0.30 per share at NU's competitive businesses. The 2005 earnings
range also reflects between $0.13 per share and $0.15 per share of
parent company expenses, primarily related to interest expense. NU
has approximately 128 million common shares outstanding.
NU's regulated companies provide electric service to more than
1.8 million retail electric customers in Connecticut, New Hampshire,
and Massachusetts and natural gas service to 195,000 customers in
Connecticut.
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 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
websites at www.nu.com.
This news release includes statements concerning the Company's
expectations, plans, objectives, future financial performance and
other statements that are not historical facts. These statements are
"forward looking statements" within the meaning of the Private
Litigation Reform Act of 1995. In some cases the reader can identify
these forward looking statements by words such as "estimate",
"expect", "anticipate", "intend", "plan", "believe" "forecast",
"should", "could", and 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 by state and
federal regulatory bodies, competition and industry restructuring,
changes in economic conditions, changes in weather patterns, changes
in laws, expiration or initiation of significant energy supply
contracts, regulations or regulatory policy, levels of capital
expenditures, 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 our reports to
the Securities and Exchange Commission. We undertake no obligation
to update the information contained in any forward looking statements
to reflect developments or circumstances occurring after the
statement is made.
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NOTE: NU will webcast an investor meeting this morning at 10:30 a.m.
Eastern Daylight Time. The call can be accessed through NU's website
at www.nu.com.