10-QPeriod: Q1 FY2002

EVERSOURCE ENERGY Quarterly Report for Q1 Ended Mar 31, 2002

Filed May 13, 2002For Securities:ES

Summary

Eversource Energy (ES), formerly Northeast Utilities, reported first quarter 2002 net income of $18.6 million, or $0.14 per share, a significant decrease from $112.2 million, or $0.78 per share, in the same period of 2001. This decline was largely driven by non-recurring items in both periods, including a gain on the sale of Millstone nuclear units in Q1 2001 and an investment write-down in Q1 2002. Excluding these items, adjusted earnings were $0.22 per share in Q1 2002, down from $0.36 in Q1 2001. Revenues increased to $1.9 billion, primarily due to higher sales at competitive energy subsidiaries. However, earnings were negatively impacted by milder weather, industry restructuring effects, particularly in New Hampshire, and a decline in natural gas volumes at Yankee Energy System. The company anticipates full-year 2002 earnings in the range of $1.40 to $1.65 per share, excluding non-recurring items, contingent on expense control, seasonal weather, and improved performance in competitive businesses. A significant event is the proposed sale of NU's stake in the Seabrook nuclear unit, expected to close by year-end 2002, which is anticipated to generate substantial after-tax gains.

Key Highlights

  • 1Net income for Q1 2002 was $18.6 million, down from $112.2 million in Q1 2001, primarily due to non-recurring items in both periods.
  • 2Excluding non-recurring items, adjusted earnings per share decreased to $0.22 in Q1 2002 from $0.36 in Q1 2001.
  • 3Total revenues increased by 6% to $1.9 billion, driven by higher sales at competitive energy subsidiaries.
  • 4Milder weather and industry restructuring negatively impacted earnings, particularly at the regulated electric operating companies in Connecticut and New Hampshire.
  • 5The company expects full-year 2002 earnings to be between $1.40 and $1.65 per share, excluding certain items.
  • 6Eversource Energy (formerly Northeast Utilities) is proceeding with the sale of its interest in the Seabrook nuclear unit, with an expected closing by year-end 2002.
  • 7The company reported a $10 million after-tax charge in Q1 2002 related to the write-down of its investment in NEON Communications and another investment.

Frequently Asked Questions

The significant decrease in net income was primarily due to the impact of non-recurring items in both periods. In Q1 2001, there was a substantial after-tax gain from the sale of the Millstone nuclear units. In Q1 2002, there was an after-tax charge for the write-down of investments, including NEON Communications. Excluding these items, adjusted earnings also declined.

The company anticipates full-year 2002 earnings to be in the range of $1.40 to $1.65 per share, excluding certain non-recurring items such as the investment write-down and anticipated gains from the sale of the Seabrook nuclear unit. Achieving this range is contingent on continued expense control, more seasonal weather patterns, and improved performance at its competitive businesses.

An agreement was reached on April 15, 2002, to sell approximately 88.2 percent of the Seabrook nuclear unit to a subsidiary of FPL Group. The transaction is expected to close around the end of 2002, subject to regulatory approvals. The sale is anticipated to generate consolidated after-tax gains of between $25 million and $30 million.

The competitive energy subsidiaries reported a loss of $21.6 million in Q1 2002, compared to a loss of $4.2 million (before accounting changes) in Q1 2001. Despite increased revenues primarily due to higher trading volumes and the acquisition of Select Energy New York, Inc., performance was negatively impacted by mild weather leading to lower sales, reduced hydroelectric production, and increased natural gas prices.