10-KPeriod: FY2010

EVERSOURCE ENERGY Annual Report, Year Ended Dec 31, 2010

Filed February 25, 2011For Securities:ES

Summary

Eversource Energy (formerly Northeast Utilities) reported solid financial performance for the year ended December 31, 2010. The company's earnings saw a significant improvement compared to the previous year, driven by favorable rate case decisions for its Connecticut Light and Power (CL&P) and Public Service Company of New Hampshire (PSNH) subsidiaries, warmer weather boosting retail electric sales, and one-time benefits from tax settlements. These positive factors were partially offset by increased pension and storm-related expenses, as well as costs associated with the proposed merger with NSTAR. A key development for investors is the pending merger with NSTAR, announced in October 2010 and structured as a merger of equals. This combination is expected to create a larger, more integrated energy delivery company serving nearly 3.5 million customers across Connecticut, Massachusetts, and New Hampshire. Management anticipates closing the merger in the second half of 2011, subject to shareholder and regulatory approvals. The merger is expected to enhance EPS growth and is a significant strategic focus for the company.

Financial Highlights

46 data points
Beta

Revenue

$4.90B

Net Income

$387.95M

7.9% Net Margin

EPS (Diluted)

$2.19

Total Assets

$14.47B

Cash & Equivalents

$23.39M

Free Cash Flow

$138.99M

Financial Statements
Beta
Revenue$4.90B
Operating Expenses$4.10B
Operating Income$799.89M
Interest Expense$237.29M
Net Income$387.95M
EPS (Basic)$2.20
EPS (Diluted)$2.19
Shares Outstanding (Basic)176.64M
Shares Outstanding (Diluted)176.89M

Key Highlights

  • 1Eversource Energy (NU) reported net income attributable to controlling interests of $387.9 million, or $2.19 per diluted share, for 2010, an increase from $330.0 million, or $1.91 per diluted share, in 2009.
  • 2The company announced a proposed merger of equals with NSTAR in October 2010, which is expected to close in the second half of 2011, subject to regulatory and shareholder approvals.
  • 3Regulated operations contributed $384.0 million to net income, with the distribution segment earning $206.2 million and the transmission segment earning $177.8 million.
  • 4Capital expenditures for 2011 are projected at approximately $1.2 billion, with a five-year projection (2011-2015) of approximately $6.6 billion, primarily for maintaining, upgrading, and expanding existing systems.
  • 5The company's consolidated debt-to-total capitalization ratio remained strong at 55% for both 2010 and 2009, well within debt covenant limits.
  • 6Eversource Energy projects a compound average annual EPS growth rate of 6-9% through 2015, with the higher end of the range anticipated if the NSTAR merger is completed.
  • 7The company declared a quarterly dividend of $0.275 per share, payable in March 2011, reflecting an annualized dividend of $1.10 per share, with a potential increase to $1.30 per share annualized post-merger.

Frequently Asked Questions

In 2010, Eversource Energy (NU) reported a net income attributable to controlling interests of $387.9 million, or $2.19 per diluted share, an improvement from $330.0 million, or $1.91 per diluted share, in 2009. This growth was driven by rate case decisions, warmer weather impacting electric sales, and one-time tax benefits, partially offset by merger-related expenses and higher pension costs.

The most significant strategic initiative is the proposed merger with NSTAR, announced in October 2010. If completed, this merger would combine two major New England utilities, creating a larger entity serving approximately 3.5 million customers. The company is also undertaking substantial capital expenditures, projecting approximately $1.2 billion for 2011 and $6.6 billion over the next five years, focused on maintaining, upgrading, and expanding its electric and natural gas infrastructure, including significant investments in transmission projects like NEEWS and Northern Pass.

Eversource Energy maintains a strong financial position, with its consolidated debt-to-total capitalization ratio at 55% in both 2010 and 2009, remaining within its debt covenants. The company has access to significant revolving credit facilities totaling $900 million ($400 million for operating subsidiaries and $500 million for the parent company) and actively manages its long-term debt issuance to fund its capital expenditure program.

Excluding merger-related costs, the company projects 2011 earnings per share to be between $2.25 and $2.40. Looking ahead, Eversource Energy projects a compound average annual EPS growth rate of 6-9% through 2015, with the potential for higher growth if the NSTAR merger is completed. The company also anticipates increasing its quarterly dividend post-merger to approximately $0.325 per share, or $1.30 annualized, from its current $0.275 per share quarterly dividend ($1.10 annualized).