Eversource 2003 Annual Report Download - page 45

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43
Other (Loss)/Income, Net
Other (loss)/income, net decreased $44 million primarily due to the 2002
elimination of certain reserves associated with NU’s ownership share of
Seabrook ($25 million), 2002 Seabrook related gains ($15 million), lower
equity in earnings from the Yankee companies in 2003 ($7 million), a
higher level of donations in 2003 ($5 million), RMS losses recorded in
2003 ($4 million) and lower 2003 conservation and load management
incentive income ($2 million), partially offset by 2002 investment
write-downs ($18 million).
Other (loss)/income, net decreased $144 million in 2002 primarily due
to the 2001 gain related to the Millstone sale ($202 million) and the
2002 investment write-downs ($18 million), partially offset by the 2002
Seabrook related gains ($39 million) and the 2001 loss on share repurchase
contracts ($35 million).
Income Tax Expense
The consolidated statement of income taxes provides a reconciliation of
actual and expected tax expense. The tax effect of temporary differences
is accounted for in accordance with the rate-making treatment of the
applicable regulatory commissions. In past years, this rate-making
treatment has required the company to provide the customers with a
portion of the tax benefits associated with accelerated tax depreciation
in the year it is generated (flow through depreciation). As these flow
through differences turn around, higher tax expense is recorded.
Income tax expense decreased by $22 million in 2003, primarily due to
lower taxable income.
Income tax expense decreased by $92 million in 2002, primarily due to
the recognition of WMECO ITC in the second quarter of 2002 and the
tax impacts of the Millstone sale in 2001, partially offset by tax impacts
of the sale of Seabrook in 2002.
Preferred Dividends of Subsidiaries
Preferred dividends decreased $2 million or 23 percent in 2002 primarily
due to a lower amount of preferred stock outstanding.
Cumulative Effect of Accounting Changes, Net of Tax Benefits
A cumulative effect of an accounting change, net of tax benefit ($5 million)
was recorded in the third quarter of 2003 in connection with the adoption
of FIN 46, which required NU to consolidate RMS into NU’s financial
statements and adjust its equity interest as a cumulative effect of an
accounting change.
The cumulative effect of an accounting change, net of tax benefit,
recorded in 2001, represents the effect of the adoption of SFAS No. 133,
as amended ($22 million).