NU Reports Year-End 2012 Results

BOSTON & HARTFORD, Conn.--(BUSINESS WIRE)--Northeast Utilities (NYSE: NU) today reported full-year 2012 earnings of $525.9 million, or $1.89 per share, compared with earnings of $394.7 million in 2011. Excluding costs related to the April 2012 merger of NU and NSTAR and related settlement costs, NU earned $633.5 million in 2012, or $2.28 per share¹. Excluding merger-related costs and a storm fund reserve, NU earned $423.9 million in 2011. NSTAR’s earnings are included in NU’s results of operations, effective as of April 2012.

“We continue to identify and implement the best practices of our legacy companies”

In the fourth quarter of 2012, NU earned $174.7 million, or $0.55 per share, compared with earnings of $113.3 million in the fourth quarter of 2011. Results in the fourth quarter of 2012 include after-tax merger-related costs of $2.1 million, or $0.01 per share. Results in the fourth quarter of 2011 include $19.1 million of after-tax merger-related costs and a storm fund reserve.

Thomas J. May, NU president and chief executive officer, said, “These full-year financial results are consistent with our previously announced 2012 recurring earnings guidance of between $2.25 and $2.30 per share¹ and cap a very successful year for our newly merged company.”

May said NU’s efforts to build a premier New-England-based, highly customer-focused organization are well under way. “We continue to identify and implement the best practices of our legacy companies,” May said. “Our 9,000 employees come to work each day, with a singular focus on delivering superior service to our 3.5 million electric and natural gas customers, which will allow us to continue to provide attractive returns and dividend growth for our shareholders.”

2013 Earnings Guidance Affirmed

Also today, NU affirmed its 2013 earnings guidance of between $2.40 per share and $2.60 per share, as well as its longer term earnings per share growth rate of 6 percent to 9 percent, using the $2.28 per share earned in 2012 as the base year.

Electric Transmission

NU’s transmission segment earned $249.7 million for the full year of 2012 and $68.6 million in the fourth quarter of 2012, compared with earnings of $199.6 million for the full year of 2011 and $71.2 million in the fourth quarter of 2011. The earnings improvement for the full year primarily represents continued investment in NU’s transmission system, including the $718 million Greater Springfield Reliability Project (GSRP), as well as the addition of NSTAR Electric Company transmission results as of April 2012. Lower fourth quarter results primarily reflect a higher effective tax rate in 2012 than in 2011.

Electric Distribution and Generation

NU’s electric distribution and generation segment earned $343.4 million for the full year of 2012, excluding merger and related settlement costs, compared with $207 million for the full year of 2011, excluding a $17.9 million after-tax storm fund reserve at The Connecticut Light and Power Company (CL&P). In the fourth quarter of 2012, the electric distribution and generation segment earned $80.3 million, compared with earnings of $54.2 million in the fourth quarter of 2011. Fourth quarter 2011 results exclude the aforementioned CL&P storm reserve.

The distribution and generation segment results benefited in the fourth quarter and full-year 2012 from the addition of NSTAR Electric distribution results, effective in April 2012.

Earnings of Electric Utility Subsidiaries (net of preferred dividends)

CL&P earned $242.6 million for the full year of 2012, excluding $38.4 million of after-tax merger and related settlement costs, and $72.5 million in the fourth quarter of 2012. It earned $262.5 million for the full year of 2011 and $83.1 million in the fourth quarter of 2011, excluding the $17.9 million storm fund reserve. Lower results reflect a higher effective tax rate and higher pension, tree trimming and system maintenance costs, partially offset by a higher transmission rate base.

NSTAR Electric earned $195.7 million for the last three quarters of 2012 and $33.7 million in the fourth quarter of 2012. Results for the last three quarters of 2012 exclude $10.9 million of after-tax merger and related settlement costs.

Public Service Company of New Hampshire earned $96.9 million for the full year of 2012 and $27.2 million in the fourth quarter of 2012, compared with $100.3 million for the full year of 2011 and $25.5 million in the fourth quarter of 2011. Lower full-year 2012 results were due primarily to higher depreciation, property tax and income tax expense, while higher fourth quarter 2012 results were due in part to higher transmission investment levels and a change in distribution rates effective in the second half of 2012.

Western Massachusetts Electric Company (WMECO) earned $56.3 million for the full year of 2012 and $15.1 million in the fourth quarter of 2012, compared with earnings of $43.1 million for the full year of 2012 and $16.5 million in the fourth quarter of 2011. Full-year 2012 results exclude $1.8 million of after-tax merger and related settlement costs. WMECO’s 2012 results improved largely as a result of higher transmission earnings, which were primarily related to GSRP. The project is being built primarily in the WMECO service territory and was approximately 93 percent complete as of the end of 2012.

Natural Gas Distribution

NU’s natural gas distribution segment, which now includes both Yankee Gas Services Company and NSTAR Gas Company, earned $32.9 million for the full year of 2012 and $22.5 million in the fourth quarter of 2012. In 2011, Yankee Gas earned $31.7 million for the full year and $11 million in the fourth quarter. NSTAR Gas results are reflected from the date of the merger. Improved fourth quarter results reflect the addition of NSTAR Gas, as well as colder weather in the fourth quarter of 2012, compared with the fourth quarter of 2011.

NU parent and other companies

Excluding $54.4 million of after-tax merger and related settlement costs, NU parent and other companies earned $7.5 million for the full year of 2012, compared with net expenses of $14.4 million for the full year of 2011, excluding $11.3 million of merger-related costs. In the fourth quarter of 2012, NU parent and other companies earned $5.4 million, excluding $2 million of after-tax merger-related costs. In the fourth quarter of 2011, NU parent and other companies recorded net expenses of $4 million, excluding $1.2 million of after-tax merger-related costs. The improvements were driven by a number of factors, including the addition of earnings from NSTAR Communications, Inc. from the date of the merger, as well as lower interest expense.

The following table reconciles earnings per share for the fourth-quarter and year ended December 31, 2012 and 2011.

		Fourth Quarter	Full Year
2011	Reported EPS	$0.64	$2.22
	2011 merger-related charges	$0.00	$0.06
	2011 CL&P storm fund	$0.10	$0.10
	2011 EPS before merger and storm charges	$0.74	$2.38
	Higher outstanding common shares	($0.33)	($0.87)
	Higher/(lower) NU legacy transmission earnings in 2012	($0.10)	$0.03
	Higher/(lower) NU legacy electric sales in 2012	$0.00	($0.03)
	Higher/(lower) NU legacy firm natural gas sales in 2012	$0.02	($0.01)
	Higher legacy NU O&M, depreciation and property taxes	($0.06)	($0.15)
	NSTAR earnings in 2012; higher NU Parent and Other in 2012	$0.29	$0.93
	2012 EPS before merger-related settlements and other merger-related charges	$0.56	$2.28
	2012 merger and related settlement charges	($0.01)	($0.39)
2012	Reported EPS	$0.55	$1.89

Financial results for the fourth quarter and full-year period ended December 31, 2012 and 2011 are noted below:

Three months ended:

(in millions, except EPS)	December 31, 2012			December 31, 2011			Increase/ (Decrease)			2012 EPS^1
Electric Distribution/Generation	$	80.3		$	54.2		$	26.1		$	0.25
Natural Gas Distribution	$	22.5		$	11.0		$	11.5		$	0.07
Electric Transmission	$	68.6		$	71.2			($2.6	)	$	0.22
NU Parent and Other Companies, ex. merger expenses	$	5.4			($4.0	)	$	9.4		$	0.02
Earnings, ex. merger impacts	$	176.8		$	132.4		$	44.4		$	0.56
Merger impacts		($2.1	)		($1.2	)		($0.9	)		($0.01	)
CL&P storm fund		---			($17.9	)	$	17.9			---
Reported Earnings	$	174.7		$	113.3		$	61.4		$	0.55

12 months ended:

(in millions, except EPS)	December 31, 2012			December 31, 2011			Increase/ (Decrease)			2012 EPS^1
Electric Distribution/Generation, ex. rate credits and storm costs write-down	$	343.4		$	207.0		$	136.4		$	1.23
Natural Gas Distribution, ex. rate Credits	$	32.9		$	31.7		$	1.2		$	0.12
Electric Transmission	$	249.7		$	199.6		$	50.1		$	0.90
NU Parent and Other Companies, ex. merger costs	$	7.5			($14.4	)	$	21.9		$	0.03
Earnings, ex. merger impacts	$	633.5		$	423.9		$	209.6		$	2.28
Merger impacts		($107.6	)		($11.3	)		($96.3	)		($0.39	)
CL&P storm fund		---			($17.9	)	$	17.9			---
Reported Earnings	$	525.9		$	394.7		$	131.2		$	1.89

Retail sales data:

	December 31, 2012	December 31, 2011	% Change Actual		% Change Weather Norm.
Electric distribution
Gwh for three months ended*	13,111	12,958	1.2	%	0.0	%
Gwh for 12 months ended*	54,808	55,314	(0.9	%)	(0.2	%)
Natural Gas Distribution
Firm volumes in mmcf for three months ended**	27,492	24,955	10.2	%	2.4	%
Firm volumes in mmcf for 12 months ended**	87,527	92,363	(5.2	%)	2.7	%

* Pre-merger sales data for NSTAR Electric are included for illustrative purposes.

** Pre-merger sales data for NSTAR Gas are included for illustrative purposes.

NU has approximately 314 million common shares outstanding. It operates New England’s largest energy delivery system, serving more than 3.5 million customers in Connecticut, Massachusetts and New Hampshire.

Note: NU will webcast a conference call with senior management on February 20, 2013, beginning at 9 a.m. Eastern Time. The webcast can be accessed through NU’s website at www.nu.com.

¹ All per share amounts in this news release are reported on a diluted basis. The only common equity securities that are publicly traded are common shares of NU parent. The earnings and EPS of each business do not represent a direct legal interest in the assets and liabilities allocated to such business, but rather represent a direct interest in NU's assets and liabilities as a whole. EPS by business is a non-GAAP (not determined using generally accepted accounting principles) measure that is calculated by dividing the net income or loss attributable to controlling interests of each business by the weighted average diluted NU parent common shares outstanding for the period. In addition, fourth quarter and full year 2012 earnings and EPS excluding certain charges related to the April 10, 2012 closing of the merger between NU and NSTAR are non-GAAP financial measures. Management uses these non-GAAP financial measures to evaluate earnings results and to provide details of earnings results by business and to more fully compare and explain our fourth quarter and full year 2012 and 2011 results without including the impact of the non-recurring merger and related settlement costs. Management believes that this measurement is useful to investors to evaluate the actual and projected financial performance and contribution of NU’s businesses. Non-GAAP financial measures should not be considered as alternatives to NU consolidated net income attributable to controlling interests or EPS determined in accordance with GAAP as indicators of NU’s operating performance.

This news release includes statements concerning NU’s expectations, beliefs, plans, objectives, goals, strategies, assumptions of future events, future financial performance or growth and other statements that are not historical facts. These statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, readers can identify these forward-looking statements through the use of words or phrases such as “estimate, “expect,” “anticipate,” “intend,” “plan,” “project,” “believe,” “forecast,” “should,” “could,” and other 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 or inaction of local, state and federal regulatory and taxing bodies; changes in business and economic conditions, including their impact on interest rates, bad debt expense and demand for NU’s products and services; changes in weather patterns; changes in laws, regulations or regulatory policy; changes in levels or timing of capital expenditures; disruptions in the capital markets or other events that make NU’s access to necessary capital more difficult or costly; developments in legal or public policy doctrines; technological developments; changes in accounting standards and financial reporting regulations; fluctuations in the value of our remaining competitive contracts; actions of rating agencies; the possibility that expected merger synergies will not be realized or will not be realized within the expected time period; and other presently unknown or unforeseen factors. Other risk factors are detailed from time to time in NU’s and NSTAR’s reports filed with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which such statement is made, and NU undertakes no obligation to update the information contained in any forward-looking statements to reflect developments or circumstances occurring after the statement is made or to reflect the occurrence of unanticipated events.

NORTHEAST UTILITIES AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
	As of December 31,
(Thousands of Dollars)	2012		2011
ASSETS
Current Assets:
Cash and Cash Equivalents	$	45,748	$	6,559
Receivables, Net		792,822		488,002
Unbilled Revenues		216,040		175,207
Fuel, Materials and Supplies		267,713		248,958
Regulatory Assets		705,025		255,144
Marketable Securities		91,975		70,970
Prepayments and Other Current Assets		107,972		112,632
Total Current Assets		2,227,295		1,357,472
Property, Plant and Equipment, Net		16,605,010		10,403,065
Deferred Debits and Other Assets:
Regulatory Assets		5,132,411		3,267,710
Goodwill		3,519,401		287,591
Marketable Securities		400,329		60,311
Derivative Assets		90,612		98,357
Other Long-Term Assets		327,766		172,560
Total Deferred Debits and Other Assets		9,470,519		3,886,529
Total Assets	$	28,302,824	$	15,647,066

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 Northeast Utilities and Subsidiaries and is not a representation, prospectus or intended for use in connection with any purchase or sale of securities.

NORTHEAST UTILITIES AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
	As of December 31,
(Thousands of Dollars)	2012			2011
LIABILITIES AND CAPITALIZATION
Current Liabilities:
Notes Payable	$	1,120,196		$	317,000
Long-Term Debt - Current Portion		763,338			331,582
Accounts Payable		764,350			633,282
Regulatory Liabilities		134,115			167,844
Derivative Liabilities		117,194			107,558
Other Current Liabilities		744,497			390,416
Total Current Liabilities		3,643,690			1,947,682
Rate Reduction Bonds		82,139			112,260
Deferred Credits and Other Liabilities:
Accumulated Deferred Income Taxes		3,463,347			1,868,316
Regulatory Liabilities		540,162			266,145
Derivative Liabilities		882,654			959,876
Accrued Pension, SERP and PBOP		2,130,497			1,326,037
Other Long-Term Liabilities		967,561			420,011
Total Deferred Credits and Other Liabilities		7,984,221			4,840,385
Capitalization:
Long-Term Debt		7,200,156			4,614,913
Noncontrolling Interest - Preferred Stock of Subsidiaries		155,568			116,200
Equity:
Common Shareholders' Equity:
Common Shares		1,662,547			980,264
Capital Surplus, Paid In		6,183,267			1,797,884
Retained Earnings		1,802,714			1,651,875
Accumulated Other Comprehensive Loss		(72,854	)		(70,686	)
Treasury Stock		(338,624	)		(346,667	)
Common Shareholders' Equity		9,237,050			4,012,670
Noncontrolling Interests		-			2,956
Total Equity		9,237,050			4,015,626
Total Capitalization		16,592,774			8,746,739
Total Liabilities and Capitalization	$	28,302,824		$	15,647,066

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 Northeast Utilities and Subsidiaries and is not a representation, prospectus or intended for use in connection with any purchase or sale of securities.

NORTHEAST UTILITIES AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
	For the Three Months Ended December 31,
(Thousands of Dollars, Except Share Information)	2012			2011
Operating Revenues	$	1,683,952		$	1,068,033
Operating Expenses:
Purchased Power, Fuel and Transmission		544,254			372,431
Operations and Maintenance		395,600			306,484
Depreciation		149,212			79,408
Amortization of Regulatory Assets, Net		4,910			4,427
Amortization of Rate Reduction Bonds		39,875			17,865
Energy Efficiency Programs		104,060			31,757
Taxes Other Than Income Taxes		114,648			70,792
Total Operating Expenses		1,352,559			883,164
Operating Income		331,393			184,869
Interest Expense:
Interest on Long-Term Debt		83,636			59,725
Interest on Rate Reduction Bonds		1,000			1,722
Other Interest		(547	)		4,262
Interest Expense		84,089			65,709
Other Income, Net		4,838			8,638
Income Before Income Tax Expense		252,142			127,798
Income Tax Expense		75,547			13,019
Net Income		176,595			114,779
Net Income Attributable to Noncontrolling Interests		1,879			1,480
Net Income Attributable to Controlling Interest	$	174,716		$	113,299
Basic and Diluted Earnings Per Common Share	$	0.55		$	0.64
Dividends Declared Per Common Share	$	0.34		$	0.28
Weighted Average Common Shares Outstanding:
Basic		314,929,366			177,645,092
Diluted		315,914,389			178,093,879

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 Northeast Utilities and Subsidiaries and is not a representation, prospectus or intended for use in connection with any purchase or sale of securities.

NORTHEAST UTILITIES AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
	For the Years Ended December 31,
(Thousands of Dollars, Except Share Information)	2012		2011		2010
Operating Revenues	$	6,273,787	$	4,465,657	$	4,898,167
Operating Expenses:
Purchased Power, Fuel and Transmission		2,084,364		1,657,914		2,034,501
Operations and Maintenance		1,583,070		1,095,358		1,001,349
Depreciation		519,010		302,192		300,737
Amortization of Regulatory Assets, Net		79,762		91,080		90,054
Amortization of Rate Reduction Bonds		142,019		69,912		232,871
Energy Efficiency Programs		313,149		131,415		124,023
Taxes Other Than Income Taxes		434,207		323,610		314,741
Total Operating Expenses		5,155,581		3,671,481		4,098,276
Operating Income		1,118,206		794,176		799,891
Interest Expense:
Interest on Long-Term Debt		316,987		231,630		231,089
Interest on Rate Reduction Bonds		6,168		8,611		20,573
Other Interest		6,790		10,184		(14,371	)
Interest Expense		329,945		250,425		237,291
Other Income, Net		19,742		27,715		41,916
Income Before Income Tax Expense		808,003		571,466		604,516
Income Tax Expense		274,926		170,953		210,409
Net Income		533,077		400,513		394,107
Net Income Attributable to Noncontrolling Interests		7,132		5,820		6,158
Net Income Attributable to Controlling Interest	$	525,945	$	394,693	$	387,949
Basic Earnings Per Common Share	$	1.90	$	2.22	$	2.20
Diluted Earnings Per Common Share	$	1.89	$	2.22	$	2.19
Weighted Average Common Shares Outstanding:
Basic		277,209,819		177,410,167		176,636,086
Diluted		277,993,631		177,804,568		176,885,387

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 Northeast Utilities and Subsidiaries and is not a representation, prospectus or intended for use in connection with any purchase or sale of securities.

NORTHEAST UTILITIES AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
	For the Years Ended December 31,
(Thousands of Dollars)	2012			2011			2010
Operating Activities:
Net Income	$	533,077		$	400,513		$	394,107
Adjustments to Reconcile Net Income to Net Cash Flows
Provided by Operating Activities:
Bad Debt Expense		36,275			16,420			31,352
Depreciation		519,010			302,192			300,737
Deferred Income Taxes		292,000			196,761			210,939
Pension, SERP and PBOP Expense		218,540			133,000			103,861
Pension and PBOP Contributions		(295,028	)		(191,101	)		(90,633	)
Regulatory (Under)/Over Recoveries, Net		(259,853	)		(70,863	)		26,289
Amortization of Regulatory Assets, Net		79,762			91,080			90,054
Amortization of Rate Reduction Bonds		142,019			69,912			232,871
Derivative Assets and Liabilities		(10,455	)		(35,441	)		(11,812	)
Other		17,032			(29,751	)		(72,151	)
Changes in Current Assets and Liabilities:
Receivables and Unbilled Revenues, Net		(20,214	)		17,570			(51,285	)
Fuel, Materials and Supplies		34,321			(11,033	)		38,126
Taxes Receivable/Accrued, Net		(5,450	)		49,642			(82,103	)
Accounts Payable		(128,339	)		18,916			(44,355	)
Other Current Assets and Liabilities, Net		8,532			12,569			17,466
Net Cash Flows Provided by Operating Activities		1,161,229			970,386			1,093,463
Investing Activities:
Investments in Property, Plant and Equipment		(1,472,272	)		(1,076,730	)		(954,472	)
Proceeds from Sales of Marketable Securities		317,294			149,441			174,865
Purchases of Marketable Securities		(348,629	)		(151,972	)		(177,204	)
Proceeds from Sale of Assets		-			46,841			-
Other Investing Activities		35,683			13,833			(1,157	)
Net Cash Flows Used in Investing Activities		(1,467,924	)		(1,018,587	)		(957,968	)
Financing Activities:
Cash Dividends on Common Shares		(375,047	)		(194,555	)		(180,542	)
Cash Dividends on Preferred Stock		(7,029	)		(5,559	)		(5,559	)
Increase in Short-Term Debt		825,000			50,000			166,687
Issuance of Long-Term Debt		850,000			627,500			145,000
Retirements of Long-Term Debt		(839,136	)		(369,586	)		(4,286	)
Retirements of Rate Reduction Bonds		(114,433	)		(69,312	)		(260,864	)
Other Financing Activities		6,529			(7,123	)		512
Net Cash Flows Provided by/(Used in) Financing Activities		345,884			31,365			(139,052	)
Net Increase/(Decrease) in Cash and Cash Equivalents		39,189			(16,836	)		(3,557	)
Cash and Cash Equivalents - Beginning of Year		6,559			23,395			26,952
Cash and Cash Equivalents - End of Year	$	45,748		$	6,559		$	23,395

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 Northeast Utilities and Subsidiaries and is not a representation, prospectus or intended for use in connection with any purchase or sale of securities.