Eversource 2006 Annual Report Download - page 70

68 NU 2006 ANNUAL REPORT
exit the merchant energy businesses and the energy services businesses.
The amounts related to continuing operations are included as restructuring
and impairment charges on the consolidated statements of income/
(loss) with the remainder included in discontinued operations on the
accompanying consolidated statements of income/(loss). These charges
are included as part of the NU Enterprises reportable segment in Note
16, “Segment Information,” to the consolidated financial statements. A
summary of these pre-tax charges is as follows:
Years Ended December 31,
(Millions of Dollars) 2006 2005
Merchant Energy:
Wholesale Marketing:
Impairment charges $ — $9.7
Restructuring charges 0.3 6.7
Subtotal 0.3 16.4
Retail Marketing:
Impairment charges —9.2
Restructuring charges 6.6 —
Subtotal 6.6 9.2
Competitive Generation:
Impairment charges 0.3 1.5
Restructuring charges 15.8 —
Subtotal 16.1 1.5
Subtotal – Merchant Energy 23.0 27.1
Energy Services and Other:
Impairment charges —39.1
Restructuring charges 4.6 3.0
Subtotal – Energy Services and Other 4.6 42.1
Total restructuring and impairment charges 27.6 69.2
Restructuring and impairment charges
included in discontinued operations 17.3 25.1
Total restructuring and impairment charges
included in continuing operations $10.3 $44.1
For segment reporting purposes, $0.1 million of wholesale marketing
restructuring charges, $3.5 million of retail marketing restructuring
charges and $13.9 million of competitive generation restructuring
charges for the year ended December 31, 2006 included in the table
above are included in the NU Enterprises – Services and Other reportable
segment as these amounts were recorded by NU Enterprises parent,
primarily in connection with the sale of NU Enterprises’ subsidiary NGC.
Wholesale Marketing: In 2006, $0.3 million of restructuring charges
wererecorded in the wholesale marketing segment for consulting
fees, legal fees, employee-related and other costs.
In 2005, as a result of impairment analyses performed, $9.7 million of
impairment charges were recorded related to the impairment of plant
assets and the write-off of goodwill totaling $3.2 million related to
Select Energy New York, Inc. operations. Restructuring charges
totaling $6.7 were recorded in 2005 for consulting fees, legal fees,
employee-related and other costs.
Retail Marketing: On June 1, 2006, NU Enterprises completed the sale
of the retail marketing business to Hess. In 2006, NU Enterprises
recorded restructuring charges of $6.6 million in the retail marketing
segment for consulting fees, legal fees, employee-related costs and
other costs.
In 2005, an exclusivity agreement intangible asset related to the retail
marketing business totaling $7.2 million and a customer list asset
totaling $2 million were written off as a result of impairment analysis
performed. There were no restructuring charges recorded in 2005.
Competitive Generation: In 2006, $0.3 million of impairment charges
were recorded in the competitive generation segment related to certain
long-lived assets that were no longer recoverable. Restructuring
charges of $15.8 million were recorded for the year ended December
31, 2006 for consulting fees, legal fees, sale-related environmental
fees, employee-related and other costs.
In 2005, $1.5 million of impairment charges related to plant assets
were recorded as a result of an impairment analysis performed.
There were no restructuring charges recorded in 2005.
Energy Services and Other: In 2006, restructuring charges included
$3.6 million related to consulting fees, legal fees, employee-related
costs, and other costs as well as restructuring charges totaling
$1 million related to NU Parent’s guarantee of SESI’s performance
under government contracts. These guarantee-related charges
represent estimated purchase and refinancing costs for two projects’
contract payments. See Note 8H, “Commitments and Contingencies –
Guarantees and Indemnifications,” for further information.
In 2005, the company concluded that $29.1 million of goodwill associated
with the energy services businesses and $9.2 million of intangible
assets wereimpaired. Also in 2005, the energy services businesses
and NU Enterprises parent recorded an additional impairment charge
of $0.8 million due to the impairment of certain fixed assets resulting
in a total impairment charge of $39.1 million for 2005. Restructuring
charges totaling $3 million were recorded in 2005 for consulting fees,
employee-related costs, and other costs.
The amounts described above are included in the services and other
segment. See Note16, “Segment Information,” for further information.
The following tablesummarizes the liabilities related to restructuring
costs which are recorded in accounts payable and other current liabilities
on the accompanying consolidated balance sheets at December 31, 2006
and 2005:
Employee- Professional
Related and Other
(Millions of Dollars) Costs Fees Total
Restructuring liability
as of January 1, 2005 $—$ — $ —
Costs incurred 2.3 7.4 9.7
Cash payments and other
deductions/reversals (0.5) (3.2) (3.7)
Restructuring liability
as of December 31, 2005 1.8 4.2 6.0
Costs incurred 3.3 24.0 27.3
Cash payments and other
deductions/reversals (3.7) (25.9) (29.6)
Restructuring liability
as of December 31, 2006 $1.4 $ 2.3 $3.7
In addition tothe $1.2 million of severance costs included in restructuring
charges above, $5.8 million of merchant energy severance costs and
other employee benefits wererecorded in other operating expenses
on the accompanying consolidated statements of income/(loss) for the
year ended December 31, 2006 because these amounts are for severance
under an existing benefit arrangement. For further information,
see Note6F, “Employee Benefits – SeveranceBenefits.”