Eversource 2009 Annual Report Download - page 35

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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our consolidated financial statements and related combined
notes included in this Annual Report on Form 10-K. References in this Annual Report to "NU," the “Company,” "we," "us" and "our"
refer to Northeast Utilities and its consolidated subsidiaries. All per share amounts are reported on a fully diluted basis.
The only common equity securities that are publicly traded are common shares of NU. The earnings and earnings per share (EPS) of
each business discussed below do not represent a direct legal interest in the assets and liabilities allocated to such business but rather
represent a direct interest in our assets and liabilities as a whole. EPS by business is a financial measure not recognized under
accounting principles generally accepted in the United States of America (GAAP) that is calculated by dividing the net income or loss
attributable to controlling interest of each business by the weighted average fully diluted NU common shares outstanding for the period.
We use this non-GAAP financial measure to evaluate earnings results and to provide details of earnings results and guidance by
business. We believe that this measurement is useful to investors to evaluate the actual and projected financial performance and
contribution of our businesses. This non-GAAP financial measure should not be considered as an alternative to our consolidated fully
diluted EPS determined in accordance with GAAP as an indicator of operating performance.
The discussion below also includes non-GAAP financial measures referencing our 2008 earnings and EPS excluding a significant
charge resulting from the settlement of litigation. We use these non-GAAP financial measures to more fully compare and explain the
2009, 2008 and 2007 results without including the impact of this settlement. Due to the nature and significance of the litigation
settlement charge to Net income, management believes that this non-GAAP presentation is more representative of our performance
and provides additional and useful information to readers of this report in analyzing historical and future performance. These non-
GAAP financial measures should not be considered as alternatives to reported Net income attributable to controlling interest or EPS
determined in accordance with GAAP as indicators of operating performance.
Reconciliations of the above non-GAAP financial measures to the most directly comparable GAAP measures of consolidated fully
diluted EPS and Net income attributable to controlling interest are included under "Financial Condition and Business Analysis-Overview-
Consolidated" and "Financial Condition and Business Analysis-Future Outlook" in Management's Discussion and Analysis, herein.
Financial Condition and Business Analysis
Executive Summary
The following items in this executive summary are explained in more detail in this Annual Report:
Results, Strategy and Outlook:
 We earned $330 million, or $1.91 per share, in 2009, compared with $260.8 million, or $1.67 per share, in 2008. Excluding the
after-tax charge of $29.8 million, or $0.19 per share, for the settlement of litigation, we earned $290.6 million, or $1.86 per share, in
2008. The increase in 2009 results was due primarily to a $34.4 million increase in earnings from our regulated distribution and
transmission segments. The EPS for 2009 reflected the issuance of approximately 19 million common shares on March 20, 2009.
 Our regulated companies, which consist of The Connecticut Light and Power Company (CL&P), Public Service Company of New
Hampshire (PSNH), Western Massachusetts Electric Company (WMECO), and Yankee Gas Services Company (Yankee Gas),
earned $323.5 million, or $1.87 per share, in 2009, compared with $289.1 million, or $1.85 per share, in 2008.
 Earnings at the distribution segments of our regulated companies (which also include Yankee Gas and the generation business of
PSNH) totaled $159.2 million in 2009, compared with $150.8 million in 2008. Earnings at the transmission segments of our
regulated companies totaled $164.3 million in 2009, compared with $138.3 million in 2008. The increase in distribution segment
results was due primarily to lower operating costs as a result of cost management efforts, lower storm costs, distribution rate
increases at CL&P and PSNH, higher generation-related earnings and the absence of a $3.5 million after-tax charge recorded in
2008 that related to the refund of the 2004 procurement incentive fee. The higher transmission segment results were due to an
increased investment in transmission infrastructure after the completion of major projects in 2008.
 Our competitive businesses, which are held by NU Enterprises, Inc. (NU Enterprises), earned $15.8 million, or $0.09 per share, in
2009, compared with $13.1 million, or $0.08 per share, in 2008. The after-tax mark-to-market gain on wholesale marketing
contracts increased by $2.7 million from $1.1 million in 2008 to $3.8 million in 2009. The 2008 mark-to-market included a net after-
tax charge of $3.2 million due to the implementation of fair value measurement accounting guidance.
 NU parent and other companies recorded net expenses of $9.3 million, or $0.05 per share, in 2009, compared with net expenses of
$41.4 million, or $0.26 per share, in 2008. Results for 2008 included the after-tax charge of $29.8 million, or $0.19 per share,
associated with the settlement of litigation.
 We project consolidated 2010 earnings of between $1.80 per share and $2.00 per share, including distribution segment earnings of
between $0.95 per share and $1.05 per share, transmission segment earnings of between $0.90 per share and $0.95 per share,
competitive business earnings of between zero and $0.05 per share, and net expenses at NU parent and other companies of
approximately $0.05 per share. PSNH filed a distribution rate case in June 2009 and CL&P filed a distribution rate case in January