8-KEarnings & ResultsFinancial EventsExhibits & Filings

EVERSOURCE ENERGY 8-K Report, Financial Results (Jan 26, 2005)

Filed January 26, 2005For Securities:ES

Summary

Northeast Utilities (now Eversource Energy) filed this Form 8-K on January 26, 2005, to announce significant accounting changes impacting its 2004 financial results. The company determined that mark-to-market accounting, rather than accrual accounting, is the correct method for certain natural gas contracts used to hedge electricity purchases. This decision necessitates the restatement of its second and third quarter 2004 financial statements. Consequently, Northeast Utilities is also lowering its previously issued 2004 earnings guidance. Investors should note that this accounting change primarily affects the timing of earnings recognition for these specific derivative contracts. The company's independent auditor, Deloitte & Touche LLP, and the Audit Committee of the Board of Trustees have concurred with this decision.

Key Highlights

  • 1Northeast Utilities will restate its second and third quarter 2004 financial statements.
  • 2The company is lowering its previously issued 2004 earnings guidance.
  • 3The restatement is due to a change in accounting for certain natural gas contracts from accrual to mark-to-market.
  • 4Mark-to-market accounting recognizes changes in the fair value of these contracts in current earnings.
  • 5The accounting change affects contracts used to mitigate the risk of electricity purchased for wholesale electric load in New England.
  • 6The decision was made on January 24, 2005, with the concurrence of the independent auditor (Deloitte & Touche LLP) and the Audit Committee.

Frequently Asked Questions

Northeast Utilities is restating its second and third quarter 2004 financial statements because it determined that mark-to-market accounting is the appropriate method for certain natural gas contracts, instead of the accrual accounting previously used. This change impacts how the financial performance related to these contracts is recognized.

Under mark-to-market accounting, any changes in the fair value of the natural gas contracts are recorded directly in the company's earnings during the current period. This differs from accrual accounting, where the financial impact is recognized as the natural gas is delivered.

The company is lowering its previously issued 2004 earnings guidance as a direct result of this accounting change and the decision to restate prior periods. Investors should expect lower reported earnings for 2004 compared to initial guidance.

These specific natural gas contracts were established to mitigate the financial risk associated with purchasing electricity in anticipation of meeting certain levels of wholesale electric load in New England.