10-KPeriod: FY2011

EVERSOURCE ENERGY Annual Report, Year Ended Dec 31, 2011

Filed February 24, 2012For Securities:ES

Summary

Northeast Utilities (NU), operating as Eversource Energy (ES), filed its 2011 10-K Annual Report detailing its financial performance and strategic initiatives. The company reported net income attributable to controlling interests of $394.7 million, or $2.22 per share, a slight increase from the previous year. Key drivers for the improved results included favorable electric distribution rate case decisions and higher investments in transmission infrastructure. However, the report highlights significant storm-related restoration costs totaling $354.1 million, most of which is deferred for future recovery from customers, though $30 million was expensed by CL&P as a storm fund reserve. The most significant strategic development is the pending merger with NSTAR, which was extended to April 16, 2012, and awaited regulatory approvals from PURA and the DPU. The company's capital expenditures in 2011 were approximately $1.2 billion, primarily focused on maintaining and expanding its regulated electric transmission, distribution, and natural gas systems, with substantial investments planned for major transmission projects like NEEWS and Northern Pass.

Financial Highlights

46 data points
Beta

Revenue

$4.47B

Net Income

$400.51M

9.0% Net Margin

EPS (Diluted)

$2.22

Total Assets

$15.65B

Cash & Equivalents

$6.56M

Free Cash Flow

-$106.34M

Financial Statements
Beta
Revenue$4.47B
Operating Expenses$3.67B
Operating Income$794.18M
Interest Expense$250.43M
Net Income$400.51M
EPS (Basic)$2.22
EPS (Diluted)$2.22
Shares Outstanding (Basic)177.41M
Shares Outstanding (Diluted)177.80M

Key Highlights

  • 1Northeast Utilities (NU) reported net income of $394.7 million ($2.22/share) for 2011, up from $387.9 million ($2.19/share) in 2010, driven by rate case decisions and transmission investments.
  • 2The company incurred $354.1 million in storm restoration costs from Tropical Storm Irene and an unprecedented October snowstorm, with $311.7 million deferred for future regulatory recovery.
  • 3The significant event of 2011 was the pending merger with NSTAR, subject to regulatory approvals from PURA and DPU, with an expected closing date of April 16, 2012.
  • 4Capital expenditures in 2011 totaled $1.2 billion, with a focus on grid modernization and expansion, including major transmission projects like NEEWS ($1.3 billion) and Northern Pass ($1.1 billion).
  • 5NU's regulated utility operations form the core of its business, with the distribution segment contributing approximately 53% of earnings and the electric transmission segment approximately 47%.
  • 6The company's liquidity remained sound, with cash and cash equivalents totaling $6.6 million at year-end 2011, and robust operating cash flows of $901.1 million.
  • 7Regulatory developments included rate case decisions impacting CL&P, PSNH, and WMECO, and a pending FERC proceeding challenging the base ROE for New England transmission projects.

Frequently Asked Questions

Northeast Utilities reported net income attributable to controlling interests of $394.7 million, or $2.22 per share, for 2011, an increase from $387.9 million, or $2.19 per share, in 2010. Excluding merger-related costs and a storm fund reserve charge, adjusted net income was $423.9 million, or $2.38 per share.

Northeast Utilities incurred significant restoration costs of $354.1 million from Tropical Storm Irene and an October snowstorm. While most of these costs ($311.7 million) were deferred for future recovery from customers, CL&P recorded a $30 million pre-tax storm fund reserve that was not recovered in rates. The company believes its storm response was prudent and expects most deferred costs to be recoverable.

The merger with NSTAR was pending throughout 2011, with the termination date extended to April 16, 2012. It required regulatory approvals from PURA (Connecticut) and DPU (Massachusetts), with decisions expected in early April 2012. If approvals are granted, the merger was expected to close by April 16, 2012.

In 2011, NU's capital expenditures totaled $1.2 billion. Key future investments include the NEEWS transmission project ($1.3 billion aggregate cost for CL&P and WMECO) and the Northern Pass transmission line project (NU's 75% share estimated at $830 million). The company also plans significant investments in its electric distribution and natural gas infrastructure.