Eversource 2004 Annual Report Download - page 82

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Accumulated other comprehensive income/(loss) fair value adjustments
of NU’s qualified cash flow hedging instruments are as follows:
At December 31,
(Millions of Dollars, Net of Tax) 2004 2003
Balance at beginning of year $24.8 $15.5
Hedged transactions
recognized into earnings (57.8) (5.3)
Change in fair value 25.0 5.0
Cash flow transactions entered
into for the period 4.5 9.6
Net change associated with the current
period hedging transactions (28.3) 9.3
Total fair value adjustments included in
accumulated other comprehensive income $ (3.5) $24.8
13. Earnings Per Share
EPS is computed based upon the weighted-average number of common
shares outstanding, excluding unallocated ESOP shares, during each
year. Diluted EPS is computed on the basis of the weighted-average
number of common shares outstanding plus the potential dilutive effect
if certain securities are converted into common stock. In 2004, 2003 and
2002, 696,994 options, 355,153 options and 2,968,933 options, respectively,
were excluded from the following table as these options were antidilutive.
The following table sets forth the components of basic and diluted EPS.
(Millions of Dollars, except share information) 2004 2003 2002
Income before cumulative effect of accounting change $116.6 $121.1 $152.1
Cumulative effect of accounting change, net of tax benefit —(4.7) —
Net income $116.6 $116.4 $152.1
Basic EPS common shares outstanding (average) 128,245,860 127,114,743 129,150,549
Dilutive effect of employee stock options 150,216 125,981 190,811
Fully diluted EPS common shares outstanding (average) 128,396,076 127,240,724 129,341,360
Basic and fully diluted EPS:
Income before cumulative effect of accounting change $ 0.91 $ 0.95 $ 1.18
Cumulative effect of accounting change, net of tax benefit —(0.04) —
Net income $ 0.91 $ 0.91 $ 1.18
14. Nuclear Generation Asset Divestitures
Seabrook: On November 1, 2002, CL&P and NAEC consummated the sale
of their 40.04 percent combined ownership interest in Seabrook to a
subsidiary of FPL. CL&P, NAEC and certain other of the joint owners
collectively sold 88.2 percent of Seabrook to FPL. NU received approxi-
mately $367 million of total cash proceeds from the sale of Seabrook
and another approximately $17 million from Baycorp Holdings, Ltd.
(Baycorp), as a result of the sale of its interest in Seabrook. A portion of
this cash was used to repay all $90 million of NAEC’s outstanding debt
and other short-term debt, to return a portion of NAEC’s equity to NU
and was used to pay approximately $93 million in taxes. The remaining
proceeds received by NAEC were refunded to PSNH through the Seabrook
Power Contracts. As part of the sale, FPL assumed responsibility for
decommissioning Seabrook. NAEC and CL&P recorded a gain on the
sale in the amount of approximately $187 million, which was primarily
used to offset stranded costs.
In the third quarter of 2002, CL&P and NAEC received regulatory
approvals for the sale of Seabrook from the DPUC and the NHPUC. As a
result of these approvals, CL&P and NAEC eliminated $0.6 million and
$13.9 million, respectively, on an after-tax basis, of reserves related to
their respective ownership shares of certain Seabrook assets.
On October 10, 2000, NU reached an agreement with Baycorp, a 15 percent
joint owner of Seabrook, under which NU guaranteed a minimum sale
price and NU and Baycorp would share the excess proceeds if the sale
of Seabrook resulted in proceeds of more than $87.2 million related to
the sale of Baycorp’s 15 percent ownership interest. The agreement
also limited any accelerated decommissioning funding required to be
funded by Baycorp for decommissioning as part of the sale process.
NU received approximately $17 million in 2002 in connection with this
agreement. This amount is included in the $38.7 million of pre-tax
Seabrook-related gains included in other income/(loss).
VYNPC: On July 31, 2002, VYNPC consummated the sale of its nuclear
generating plant to a subsidiary of Entergy Corporation (Entergy) for
approximately $180 million. As part of the sale, Entergy assumed
responsibility for decommissioning VYNPC’s nuclear generating unit.
In 2003, CL&P, PSNH and WMECO sold their collective 17 percent
ownership interest in VYNPC. CL&P, PSNH and WMECO will continue to
buy approximately 16 percent of the plant’s output through March 2012
at a range of fixed prices.
15. Segment Information
NU is organized between the Utility Group and NU Enterprises businesses
based on a combination of factors, including the characteristics of each
business’ products and services, the sources of operating revenues and
expenses and the regulatory environment in which they operate. Based
on different information that is reviewed by NU’s new chief operating
decision maker on January 1, 2004, separate detailed information regarding
the Utility Group’s transmission businesses and NU Enterprises’ merchant
energy business is now included in the following segment information.
Segment information for all periods has been restated to conform to the
current presentation except for total asset information for the transmission
business segment as this information is not available.