Eversource 2005 Annual Report Download - page 57

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In the company’s consolidated balance sheet at December 31, 2004,
the company changed the classification of certain deposit amounts
totaling $17.8 million related to its rate reduction bonds. The company
previously presented these amounts on a gross basis in deferred debits
and other assets – other with an equal and offsetting amount in other
current liabilities. For the current year presentation, these amounts are
presented on a net basis in the company’s accompanying consolidated
balance sheet.
In the company’s consolidated statements of (loss)/income for the
years ended December 31, 2004 and 2003, the company changed the
classification of certain costs that were not recoverable from regulated
customers totaling $5.7 million and $10.5 million, respectively. The
company previously presented these amounts in other income, net.
For the current year presentation, these amounts are presented in
other operation expenses in the consolidated statements of (loss)/
income for the years ended December 31, 2004 and 2003.
In the company’s consolidated statements of cash flows for the years
ended December 31, 2004 and 2003, the company changed the classi-
fication of the change in restricted cash – locational marginal pricing
(LMP) costs balances to present that change as an investing activity.
The company previously presented that change as an operating activity
which resulted in a $93.6 million decrease in net cash flows used in
investing activities and a corresponding decrease in operating cash
flows from the amounts previously reported for the year ended
December 31, 2004 and a $93.6 million increase in net cash flows
used in investing activities and a corresponding increase in operating
cash flows from amounts previously reported for the year ended
December 31, 2003.
The consolidated statements of cash flows for the years ended
December 31, 2004 and 2003 have also been reclassified to exclude
from cash flows from operations the change in accounts payable related
to capital projects as well as excluding these amounts from investments
in property and plant in investing activities. These amounts totaled
uses of cash of $27.7 million and $5.5 million for the years ended
December 31, 2004 and 2003, respectively.
NU’s consolidated statements of (loss)/income for the years ended
December 31, 2005, 2004 and 2003 present the operations for the
following companies as discontinued operations as a result of meeting
certain criteria requiring this presentation:
• SESI and its wholly owned subsidiaries HEC/Tobyhanna Energy
Project, Inc. (HEC/Tobyhanna) and HEC/CJTS Energy Center LLC
(HEC/CJTS);
• SECI-NH (including Reeds Ferry), a division of SECI;
• Woods Network; and
• Woods Electrical.
At December 31, 2005, the assets and liabilities of SESI and Woods
Electrical have been reclassified to assets held for sale and liabilities of
assets held for sale on the accompanying consolidated balance sheet.
SECI-NH and Woods Network were sold in November of 2005. For
further information regarding these companies, see Note 4, “Assets
held for Sale and Discontinued Operations” to the consolidated
financial statements.
In the company’s consolidated statements of (loss)/income for the year
ended December 31, 2004, the company has reclassified a $5.8 million
loss associated with a construction contract from income/(loss) from
discontinued operations to (loss)/income from continuing operations.
The company had previously included this loss in (loss)/income from
discontinued operations in its Form 8-K dated November 22, 2005.
C. Accounting Standards Issued But Not Yet Adopted
Share-Based Payments: On December 16, 2004, the Financial Accounting
Standards Board (FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 123 (Revised 2004), “Share-Based Payments,”
(SFAS No. 123R), which amended SFAS No. 123, “Accounting for
Stock-Based Compensation.” Under the provisions of SFAS No. 123R,
NU will recognize compensation expense for the unvested portion of
previously granted awards outstanding beginning on January 1, 2006,
the effective date of SFAS No. 123R, and any new awards after that
date. The adoption of SFAS No. 123R is not expected to have a material
impact on NU’s consolidated financial statements. For information
regarding current accounting for equity-based compensation, see Note
1N, “Summary of Significant Accounting Policies – Equity-Based
Compensation,” to the consolidated financial statements.
Accounting Changes and Error Corrections: In May of 2005, the FASB issued
SFAS No. 154, “Accounting Changes and Error Corrections.” SFAS
No. 154 is effective beginning on January 1, 2006 for NU and requires
retrospective application to prior periods’ financial statements of voluntary
changes in accounting principles. It also applies to accounting changes
required by a new accounting pronouncement in the unusual instance
that the pronouncement does not include specific transition provisions.
SFAS No. 154 does not change previous guidance for reporting the
correction of an error in previously issued financial statements or a
change in accounting estimate. Implementation of SFAS No. 154 on
January 1, 2006 is not expected to affect NU’s consolidated financial
statements until such time that its provisions are required to be
applied as described above.
D. Guarantees
NU provides credit assurances on behalf of subsidiaries in the formof
guarantees and letters of credit (LOCs) in the normal course of business.
NU would be required to perform under these guarantees in the event
of non-performance by NU Enterprises, primarily Select Energy.At
December 31, 2005, the maximum level of exposure in accordance
with FASB Interpretation No. (FIN) 45, “Guarantor’sAccounting and
DisclosureRequirements for Guarantees, Including Indirect Guarantees
of Indebtedness of Others,” under guarantees by NU, primarily on
behalf of NU Enterprises, totaled $989.7 million. A majority of these
guarantees do not have established expiration dates, and some
guarantees have unlimited exposure to commodity price movements.
Additionally,NU had $253 million of LOCs issued, the majority of
which wereissued for the benefitof NU Enterprises at December 31,
2005. NU has no guarantees of the performance of third parties.
At December 31, 2005, NU had outstanding guarantees on behalf of
the Utility Group and Rocky River Realty (RRR) of $11 million and $10.7
million, respectively.These amounts areincluded in the total outstanding
NU guarantee exposure amount of $989.7 million. The guarantee amount
of $968 million for NU Enterprises includes $670 million for Select
Energy and $298 million for the energy services businesses. The $298