NSTAR/MA - 10-Q Quarterly Report

NSTAR
Form 10-Q - Quarterly Period Ended March 31, 2005

Table of Contents

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

			Condensed Consolidated Statements of Income	2

			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 - 15

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		15 - 25

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk		26

	Item 4.	Controls and Procedures		26

Part II. Other Information:

	Item 1.	Legal Proceedings		26

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		27

	Item 6.	Exhibits		27

	Signature			28


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, and a Board Governance and Nominating Committee. The Board also has a standing Executive Committee. The Board has 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 charters, guidelines and codes that 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
	March 31,
		2005			2004

Operating revenues	$	880,045		$	809,908

Operating expenses:
Purchased power and cost of gas sold		521,999			471,070
Operations and maintenance		120,083			106,495
Depreciation and amortization		74,743			65,539
Demand side management and renewable energy programs		17,669			17,470
Property and other taxes		29,620			28,757
Income taxes		29,799			33,070
Total operating expenses		793,913			722,401

Operating income		86,132			87,507

Other income (deductions):
Other income, net		909			1,067
Other deductions, net		(193	)		(248	)
Total other income, net		716			819

Interest charges:
Long-term debt		30,702			28,937
Transition property securitization		8,689			7,583
Short-term debt and other		1,242			1,928
Allowance for borrowed funds used during
construction (AFUDC)		(544	)		(328	)
Total interest charges		40,089			38,120

Preferred stock dividends of subsidiary		490			490
Net income	$	46,269 =====		$	49,716 =====

Weighted average common shares outstanding:
Basic		53,318 =====			53,033 =====
Diluted		53,930 =====			53,483 =====

Earnings per common share:
Basic	$	0.87 ====		$	0.94 ====
Diluted	$	0.86 ====		$	0.93 ====

Dividends declared per common share	$	0.58 ====		$	0.555 ====

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

NSTAR
Condensed Consolidated Statements of Retained Earnings
(Unaudited)
(in thousands)

		Three Months Ended
		March 31,
		2005			2004

Balance at the beginning of the period	$	518,252		$	449,114
Net income		46,269			49,716
Dividends declared:
Common shares		(30,940	)		(29,433	)
Balance at the end of the period	$	533,581 ======		$	469,397 ======

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

Table of Contents

NSTAR
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands)


						March 31,				December 31,
						2005				2004
Assets

Utility plant in service, at original cost				$		4,440,907	$		4,412,073
	Less: accumulated depreciation					1,098,792			1,090,924
						3,342,115			3,321,149
Construction work in progress						115,127			103,866
	Net utility plant					3,457,242				3,425,015

Non-utility property, net						152,329				154,963

Goodwill						423,807				426,870

Equity and other investments						74,607				72,983

Current assets:
	Cash and cash equivalents					14,328				12,497
	Restricted cash					14,928				10,254
	Accounts receivable, net and accrued unbilled revenues					400,425				355,946
	Regulatory assets					405,144				280,078
	Inventory, at average cost					47,504				86,397
	Income taxes					209,008				21,063
	Other					10,810				11,434
			Total current assets			1,102,147				777,669

Deferred debits:
		Regulatory assets - power contracts				768,542				1,269,651
		Regulatory assets - retiree benefit costs				13,246				11,897
		Regulatory assets - other				1,012,218				595,140
		Prepaid pension				293,126				297,746
		Other				85,960				85,295
		Total deferred debits				2,173,092				2,259,729

Total assets					$	7,383,224 ========		$		7,117,229 ========

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

Table of Contents

NSTAR
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands)


	March 31,	December 31,
	2005	2004
Capitalization and Liabilities

[X]		Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
		For the quarterly period ended March 31, 2005
		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)