SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 22, 1997
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Commission File Number 1-5324
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NORTHEAST UTILITIES
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(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2147929
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
174 BRUSH HILL AVENUE, WEST SPRINGFIELD, MASSACHUSETTS 01090-0010
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(Address of principal executive offices) (Zip Code)
(413) 785-5871
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report)
Item 5. Other Events
1. Northeast Utilities, The Connecticut Light and Power Company and Western
Massachusetts Electric Company -- Second Quarter 1997 Losses
Set forth below is the text of a press release issued by Northeast
Utilities (NU) on July 22, 1997 relating to its second quarter 1997
consolidated financial results:
"NU REPORTS SECOND-QUARTER LOSS
HARTFORD, Connecticut, July 22, 1997 - Northeast Utilities (NU)
today reported a second-quarter loss of $64.4 million, or 50
cents a share, compared with earnings of $11.7 million, or 9
cents a share in the second quarter of 1996.
For the first half of 1997, NU lost $46.9 million, or 36
cents a share, compared with a profit of $77.2 million, or 60
cents a share in the first half of 1996. For the 12 months
ended June 30, 1997, NU lost $122.3 million, or 95 cents a
share, compared with earnings of $230.9 million, or $1.82 a
share for the 12 months ending June 30, 1996.
Bernard M. Fox, NU chairman and chief executive officer,
attributed NU's weak second-quarter performance to the
ongoing outages at the Millstone nuclear power station in
Waterford, Connecticut. All three units at Millstone Station
have been shut down for more than 15 months and will not
return to service until the Nuclear Regulatory Commission
formally approves a restart.
Primarily as a result of the Millstone outages, non-fuel
operation and maintenance costs increased to about $461
million in the second quarter of 1997 from approximately $390
million in the second quarter of 1996. Fox noted that the
second-quarter 1997 loss was worsened by a nearly $30 million
net increase in the company's reserve to cover nuclear
compliance costs that will actually be incurred in the second
half of 1997 and the first half of 1998.
Also, NU's fuel and purchased power costs were approximately
$278 million in the second quarter of 1997, compared with
about $200 million in the second quarter of 1996. While the
Millstone units were off line during the second quarters of
both 1996 and 1997, second-quarter 1996 fuel and purchased
power expenses were reduced by a $32 million reserve that was
established in the first quarter of 1996.
Second-quarter 1997 earnings also were hurt by a $6 million
increase in the cost of amortizing regulatory assets, a cost
primarily related to a rate settlement approved a year ago by
Connecticut regulators. Somewhat offsetting that increase
were somewhat higher revenues and a $6 million reduction in
interest charges, compared to the second quarter of 1996.
Revenues for the first six months of 1997 were down about $21
million from the same period of 1996, largely because of a
mild winter. Retail kilowatt-hour sales were down 2.3
percent for the first half of 1997, compared with the same
period of 1996. Retail kilowatt-hour sales were down 0.8
percent in the second quarter of 1997, compared with the same
period of 1996.
NU is New England's largest electric utility system, serving
1.7 million electric customers in Connecticut, New Hampshire
and Massachusetts."
NU's subsidiary The Connecticut Light and Power Company (CL&P) expects
to incur a loss in the range of $70 million to $80 million for the second
quarter of 1997. For the calendar year 1997, while all three Millstone units
are out of service, CL&P expects to continue operating at a loss.
Another NU subsidiary, Western Massachusetts Electric Company (WMECO),
expects to incur a loss in the range of $15 million to $20 million for the
second quarter of 1997. For the calendar year 1997, while all three Millstone
units are out of service, WMECO expects to operate on a roughly break even
basis.
2. Preliminary Settlement of Shareholder Derivative Claims
Set forth below is the text of a press release issued by NU on July 23,
1997 relating to the settlement of certain shareholder derivative claims:
"NU AGREES TO SETTLE SHAREHOLDER DERIVATIVE LITIGATION
HARTFORD, Connecticut, July 23, 1997 - Northeast Utilities (NU)
today announced that an agreement in principle has been reached to
settle seven derivative lawsuits and one demand letter filed by
shareholders. Under the agreement, insurers for certain of NU's
present and former officers and trustees will pay NU $25 million,
less attorneys' fees, and NU has agreed to certain corporate
governance enhancements.
The settlement was agreed to by NU and the officers, trustees and
their insurer to avoid the time, expense and distraction of
prolonged litigation and is an important component of NU's recovery
from difficulties experienced in the last year and a half in its
nuclear program.
The agreement was reached after more than eight months of mediation
conducted by retired U.S. District Court Judge Robert C. Zampano
and Professor Leonard Orland, of the University of Connecticut
School of Law. They endorsed the agreement and will recommend it to
the United States District Court for Connecticut for approval.
That process, which will include a determination of the attorneys
fees to be deducted from the $25 million payment to NU, may take
several months. The individual plaintiff shareholders who initiated
the litigation will receive no payment. All NU shareholders are
expected to receive formal notification later this summer.
The lawsuits and demand letter were filed by shareholders on behalf
of the company, and claimed that certain present and former NU
trustees and officers had failed to manage the affairs of the
company prudently and effectively, citing difficulties in NU's
nuclear power program. The settlement is in no way an admission of
liability on the part of the defendants.
This agreement has no impact on several potential class-action
lawsuits filed against NU and certain of its officers and trustees
by other shareholders claiming a lack of proper disclosure in the
company's regulatory filings.
The settlement recognizes that NU already has taken a number of
actions since commencement of the litigation to enhance the
structure, membership and function of its Board of Trustees and
executive management team, and agrees to a plan for future action
as well."
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NORTHEAST UTILITIES
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Registrant
Date July 24, 1997 By /s/John H. Forsgren
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John H. Forsgren
Executive Vice President
and Chief Financial Officer
