10-QPeriod: Q3 FY2003

EVERSOURCE ENERGY Quarterly Report for Q3 Ended Sep 30, 2003

Filed November 7, 2003For Securities:ES

Summary

Eversource Energy (ES), operating as Northeast Utilities (NU) in this report, reported a net income of $39.2 million, or $0.31 per share, for the third quarter of 2003. This figure reflects a $4.7 million after-tax cumulative effect of adopting FASB Interpretation No. 46 related to the consolidation of a bill collection company. Excluding this accounting change, net income was $44 million, or $0.35 per share. For the first nine months of 2003, NU's net income was $126.3 million, or $0.99 per share, a significant increase from the $96.1 million, or $0.74 per share, reported for the same period in 2002. This improvement was driven by a substantial recovery in earnings from NU Enterprises, which swung from a loss to a profit, and also benefited from higher revenues across the Utility Group, partly due to an adjustment in unbilled revenues and increased electric and natural gas sales. The company has narrowed its 2003 earnings forecast to $1.20-$1.30 per share and anticipates $1.20-$1.40 per share for 2004.

Key Highlights

  • 1Reported net income of $39.2 million ($0.31/share) for Q3 2003, including a $4.7 million accounting charge.
  • 2Nine-month net income increased to $126.3 million ($0.99/share) from $96.1 million ($0.74/share) in the prior year.
  • 3NU Enterprises showed significant improvement, moving from a loss to profitability, driven by better wholesale and retail contract performance.
  • 4Utility Group revenues increased due to higher retail sales and an adjustment to unbilled revenue estimates.
  • 5Company narrowed its 2003 full-year earnings per share forecast to $1.20-$1.30.
  • 6Anticipates 2004 full-year earnings per share in the range of $1.20-$1.40.
  • 7Cash and cash equivalents stood at $118.1 million as of September 30, 2003.

Frequently Asked Questions

In the third quarter of 2003, NU adopted FASB Interpretation No. 46 concerning the consolidation of variable interest entities. This led to the consolidation of R. M. Services, Inc. (RMS), resulting in a negative $4.7 million after-tax cumulative effect of an accounting change. Excluding this charge, net income was $44 million ($0.35/share) for Q3 2003.

NU Enterprises showed a significant turnaround, moving from a net loss of $38.7 million in the first nine months of 2002 to a net income of $24 million in the same period of 2003. This improvement was driven by better margins in wholesale and retail contracts, improved performance at Northeast Generation Company (NGC), and the absence of prior-year natural gas trading losses.

The Utility Group's net income decreased in the first nine months of 2003 compared to 2002 due to the absence of approximately $13 million in investment tax credits recognized in 2002 at Western Massachusetts Electric Company (WMECO). Additionally, lower pension income and the cessation of earnings from the Seabrook nuclear unit also negatively impacted results, contributing to a decrease of approximately $22 million in net income.

Eversource Energy (Northeast Utilities) has narrowed its 2003 earnings forecast to a range of $1.20 to $1.30 per share. For 2004, the company projects earnings per share to be between $1.20 and $1.40. These forecasts exclude potential losses related to a dispute over locational marginal pricing (LMP) costs estimated at $90 million.