Eversource 2006 Annual Report Download - page 69

NU 2006 ANNUAL REPORT 67
S. Supplemental Cash Flow Information
For the Years Ended December 31,
(Millions of Dollars) 2006 2005 2004
Cash paid/(received) during the year for:
Interest, net of amounts capitalized $277.2 $276.7 $244.6
Income taxes $ 51.3 $ (56.1) $ 74.3
In 2005, NU Enterprises sold certain assets of SECI-NH. The sales
price included a note receivable of $0.3 million with interest only
payments due on the note for the first two years and the principle
amount due at the end of two years.
T. Marketable Securities
SERP, Non-SERP and Prior Spent Nuclear Fuel Trusts: NU’s
marketable securities are classified as available-for-sale, as defined
by SFAS No. 115, “Accounting for Certain Investments and Debt and
Equity Securities.” Unrealized gains and losses are reported as a
component of accumulated other comprehensive income on the
consolidated balance sheets and statements of shareholders’ equity.
NU currently maintains two trusts that hold marketable securities.
The trusts areused tofund NU’sSERP, non-SERP and WMECO’s
prior spent nuclear fuel liability.Realized gains and losses related to
the SERP and non-SERP assets are included in other income, net, on
the consolidated statements of income/(loss). Realized gains/(losses)
associated with the WMECO spent nuclear fuel trust are included in
fuel, purchased and net interchange power on the consolidated
statements of income/(loss).
Globix: In 2004, NEON Communications, Inc. (NEON) and Globix
Corporation (Globix) announced a merger agreement in which Globix,
an unaffiliated publicly owned entity, would acquire NEON for shares
of Globix common stock. Management calculated the estimated fair
value of its investment in NEON based on the Globix share price at
December 31, 2004 and the conversion factor.Results of the calculation
indicated that the fair value of NU’sinvestment in NEON was below the
carrying value at December 31, 2004 and was impaired. As a result,
NU recorded a pre-tax write-down of $2.2 million in 2004.
In connection with the merger, NU recorded a pre-tax write-down of
$0.2 million in 2005. After the merger, NU recognized unrealized losses
on its Globix investment in accumulated other comprehensive income.
Also during 2005, the value of Globix common stock declined and
management reviewed NU’s investment in Globix, considering the
length and severity of its decline in value, other factors about the
company, and management’s intentions with respect to holding this
investment. Based on these factors, management recorded an
additional pre-tax impairment charge of $5.9 million to reflect an
other-than-temporary impairment. NU’s investment in Globix totaled
$3.7 million at December 31, 2005.
On April 6, 2006, NU sold its investment in Globix. This sale resulted
in net proceeds of approximately $6.7 million and a pre-tax gain of
$3.1 million in the second quarter of 2006.
For information regarding marketable securities, see Note 10,
“Marketable Securities,” to the consolidated financial statements.
U. Counterparty Deposits
Balances collected from counterparties resulting from Select Energy’s
credit management activities totaled $0.1 million at December 31, 2006
and $28.9 million at December 31, 2005. These amounts are recorded
as current liabilities and included as counterparty deposits on the
accompanying consolidated balance sheets. To the extent Select
Energy requires collateral from counterparties, cash is received as a
part of the total collateral required. The right to receive such cash
collateral in an unrestricted manner is determined by the terms of
Select Energy’s agreements. Key factors affecting the unrestricted
status of a portion of this cash collateral include the financial standing
of Select Energy and of NU as its credit supporter.
V. Provision for Uncollectible Accounts
NU maintains a provision for uncollectible accounts to record its
receivables at an estimated net realizable value. This provision is
determined based upon a variety of factors, including applying an
estimated uncollectible account percentage to each receivable aging
category, historical collection and write-off experience and management’s
assessment of collectibility from individual customers. Management
reviews at least quarterly the collectibility of the receivables, and if
circumstances change, collectibility estimates are adjusted accordingly.
Receivablebalances are written-off against the provision for uncollectible
accounts when these balances are deemed to be uncollectible.
In November of 2006, the DPUC issued an order allowing CL&P and
Yankee Gas toaccelerate the recovery of uncollectible hardship
accounts receivable outstanding for greater than 90 days. In December
of 2006, CL&P and Yankee Gas established reserves in the amount of
$17 million and $8 million, respectively, with corresponding regulatory
assets as these amounts areprobable of recovery. Prior to the order,
any write-offs of these amounts were deferred for recovery at the time
of write-off.The CL&P reserveoffsets amounts sold toCRC by CL&P
but not sold tothe financial institution which are classified as
investments in securitizable assets on the accompanying consolidated
balance sheets. The Yankee Gas reserve offsets receivables.
2. Restructuring and Impairment Charges
The company evaluates long-lived assets such as property, plant and
equipment todetermine if these assets are impaired when events or
changes in circumstances occur such as the decision to exit all of the
NU Enterprises businesses.
When the company believes one of these events has occurred, the
determination needs to be made if a long-lived asset should be classified
as an asset to be held and used or if that asset should be classified
as held for sale. For assets classified as held and used, the company
estimates the undiscounted future cash flows associated with the
long-lived asset or asset group and an impairment loss is recognized
if the carrying amount of an asset is not recoverable and exceeds its
fair value. The carrying amount is not recoverable if it exceeds the sum
of the undiscounted futurecash flows expected to result from the use
and eventual disposition of the asset. For assets held for sale, a long-
lived asset or disposal group is measured at the lower of its carrying
amount or fair value less cost to sell.
NU Enterprises recorded charges of $27.6 million and $69.2 million
of pre-tax restructuring and impairment charges for the years ended
December 31, 2006 and 2005, respectively, related to the decision to