Eversource 2009 Annual Report Download - page 169

FS-84
As of December 31,
2009 2008
(Millions of Dollars, Net of Tax) CL&P PSNH WMECO CL&P PSNH WMECO
Balance at beginning of year $ (3.6) $ (0.8) $ 0.1 $ (0.3) $ 0.6 $ 0.2
Hedged transactions impacting Net income 0.4 0.1 (0.1) 0.4 0.2 (0.1)
Change in fair value of interest rate swap agreements - - - (3.7) (1.4) -
Cash flow transactions entered into for period - - - - (0.2) -
Net change associated with hedging transactions 0.4 0.1 (0.1) (3.3) (1.4) (0.1)
Total fair value adjustments included in
Accumulated other comprehensive income/(loss) $ (3.2) $ (0.7) $ - $ (3.6) $ (0.8) $ 0.1
Hedged transactions impacting Net income in the tables above represent amounts that were reclassified from Accumulated other
comprehensive income/(loss) into Net income in connection with the consummation of interest rate swap agreements and the
amortization of existing interest rate hedges.
The forward starting interest rate swap transactions settled by NU parent, CL&P, PSNH and Yankee Gas to hedge interest rate risk
associated with their respective long-term debt issuances in 2008 resulted in a net of tax charge to Accumulated other comprehensive
income/(loss) of $0.1 million, $2.3 million, $0.9 million and $0.7 million, respectively. The charge will be amortized into Net income over
the terms of each respective long-term debt.
It is estimated that a charge of $0.2 million will be reclassified from Accumulated other comprehensive loss as a decrease to earnings
over the next 12 months as a result of amortization of the interest rate swap agreements, which have been settled. Included in this
amount are estimated charges of $0.4 million and $0.1 million for CL&P and PSNH, respectively, and a benefit of $0.1 million for
WMECO. As of December 31, 2009, it is estimated that a pre-tax amount of $3.8 million included in the Accumulated other
comprehensive loss balance will be reclassified as a decrease to Net income over the next 12 months related to Pension, SERP and
PBOP adjustments for NU.
15. Earnings Per Share (NU)
Earnings per share (EPS) is computed based upon the monthly weighted average number of common shares outstanding, excluding
unallocated ESOP shares, during each year. Diluted EPS is computed on the basis of the monthly weighted average number of
common shares outstanding plus the potential dilutive effect if certain securities are converted into common stock. The computation of
diluted EPS excludes the effect of the potential exercise of share awards when the average market price of the common shares is lower
than the exercise price of the related awards during the period. These outstanding awards are not included in the computation of
diluted EPS because the effect would have been antidilutive. In 2009, there were 17,637 share awards excluded from the computation
as these awards were antidilutive. In 2008 and 2007, there were no antidilutive share awards outstanding.
The following table sets forth the components of basic and fully diluted EPS:
(Millions of Dollars, except share information) 2009 2008 2007
Net income attributable to controlling interest $ 330.0 $ 260.8 $ 246.5
Basic weighted average common shares outstanding 172,567,928 155,531,846 154,759,727
Dilutive effect 149,318 467,394 544,634
Fully diluted weighted average common shares outstanding 172,717,246 155,999,240 155,304,361
Basic EPS $ 1.91 $ 1.68 $ 1.59
Fully Diluted EPS $ 1.91 $ 1.67 $ 1.59
The basic and fully diluted EPS for income from discontinued operations for 2007 were below a reportable amount.
RSUs and performance shares are included in basic common shares outstanding as of the date that all necessary vesting conditions
have been satisfied. The dilutive effect of outstanding RSUs and performance shares is calculated using the treasury stock method.
Assumed proceeds of the units under the treasury stock method consist of the remaining compensation cost to be recognized and a
theoretical tax benefit. The theoretical tax benefit is calculated as the tax impact of the intrinsic value of the units (the difference
between the market value of the units using the average market price during the year and the grant date market value).
The dilutive effect of stock options is also calculated using the treasury stock method. Assumed proceeds for stock options consist of
remaining compensation cost to be recognized, cash proceeds that would be received upon exercise, and a theoretical tax benefit. The
theoretical tax benefit is calculated as the tax impact of the intrinsic value of the stock options (the difference between the market value
of the average stock options outstanding for the year using the average market price and the grant price).
Allocated ESOP shares are included in basic common shares outstanding in the above table.