NSTAR/MA - 10-Q Quarterly Report

NSTAR
Form 10-Q - Quarterly Period Ended September 30, 2004

Table of Contents

Part I. Financial Information:				Page No.
	Item 1.	Financial Statements

			Condensed Consolidated Statements of Income	2

			Condensed Consolidated Statements of Comprehensive Income	3

			Condensed Consolidated Statements of Retained Earnings	3

			Condensed Consolidated Balance Sheets	4 - 5

			Condensed Consolidated Statements of Cash Flows	6

			Notes to Condensed Consolidated Financial Statements	7 - 16

	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		16 - 32

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk		33

	Item 4.	Controls and Procedures		33

Part II. Other Information:

	Item 1.	Legal Proceedings		33

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		34

	Item 6.	Exhibits		35

Signature				36


Important Shareholder Information

NSTAR files its Forms 10-K, 10-Q and 8-K reports, proxy statements and other information with the Securities and Exchange Commission (SEC). You may access materials NSTAR has filed with the SEC on the SEC's website at www.sec.gov. In addition, NSTAR's Board of Trustees has various committees, including an Audit, Finance and Risk Management Committee, an Executive Personnel Committee, a Board Governance and Nominating Committee and an Executive Committee. In 2003, the Board adopted the NSTAR Board of Trustees Corporate Guidelines on Significant Corporate Governance Issues, a Code of Ethics for the Principal Executive Officer, General Counsel, and Senior Financial Officers, and a Code of Ethics and Business Conduct for Directors, Officers and Employees. NSTAR's SEC filings and Corporate Governance documents, including charters, guidelines and codes, and any amendments to such codes which are applicable to NSTAR's executive officers, senior financial officers or trustees can be accessed free of charge on NSTAR's website at www.nstaronline.com. Copies of NSTAR's SEC filings may also be obtained by writing or calling NSTAR's Investor Relations Department at the address or phone number on the cover of this Form 10-Q.

Table of Contents

Part I. Financial Information
Item 1. Financial Statements

NSTAR
Condensed Consolidated Statements of Income
(Unaudited)
(in thousands, except earnings and dividends declared per share data)

	Three Months Ended							Nine Months Ended
		September 30,						September 30,
		2004			2003			2004			2003

Operating revenues	$	781,510		$	817,333		$	2,241,205		$	2,227,294

Operating expenses:
Purchased power and cost of gas sold		430,735			450,607			1,248,526			1,234,462
Operations and maintenance		103,182			122,512			312,833			337,306
Depreciation and amortization		60,075			56,674			186,671			176,277
Demand side management and renewable energy programs		18,165			17,805			51,233			50,079
Property and other taxes		24,904			24,063			78,677			73,197
Income taxes		43,181			43,373			101,083			95,812
Total operating expenses		680,242			715,034			1,979,023			1,967,133

Operating income		101,268			102,299			262,182			260,161

Other income (deductions):
Other income, net		1,668			1,094			5,842			8,764
Other deductions, net		-			(57	)		(417	)		(1,245	)
Total other income, net		1,668			1,037			5,425			7,519

Interest charges:
Long-term debt		30,332			29,890			88,621			91,226
Transition property securitization		6,845			8,131			21,602			25,036
Short-term debt and other		2,222			2,877			6,250			8,655
Allowance for borrowed funds used during
construction (AFUDC)/capitalized interest		(234	)		(1,714	)		(858	)		(3,861	)
Total interest charges		39,165			39,184			115,615			121,056

Preferred stock dividends of subsidiary		490			490			1,470			1,470
Net income	$	63,281 =====		$	63,662 =====		$	150,522 =====		$	145,154 ======

Weighted average common shares outstanding:
Basic		53,168 =====			53,033 =====			53,095 =====			53,033 =====
Diluted		53,698 =====			53,436 =====			53,589 =====			53,383 =====

Earnings per common share:
Basic	$	1.19 =====		$	1.20 =====		$	2.83 =====		$	2.74 =====
Diluted	$	1.18 =====		$	1.19 =====		$	2.81 =====		$	2.72 =====

Dividends declared per common share	$	0.555 =====		$	0.54 =====		$	1.665 =====		$	1.62 =====

The accompanying notes are an integral part of the condensed consolidated financial statements.
Table of Contents

NSTAR
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
(in thousands)

	Three Months Ended						Nine Months Ended
		September 30,					September 30,
		2004		2003			2004		2003

Net income	$	63,281	$	63,662		$	150,522	$	145,154

Other comprehensive income, net:
Unrealized (loss) gain on investments		-		(1,624	)		-		15,193
Comprehensive income	$	63,281 =====

[X]		Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
		For the quarterly period ended September 30, 2004
		or
[ ]		Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
		For the transition period from to


Massachusetts	04-3466300
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
800 Boylston Street, Boston, Massachusetts	02199
(Address of principal executive offices)	(Zip code)