Eversource 2009 Annual Report Download - page 40

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Future Outlook
EPS Guidance: A summary of our projected 2010 EPS by business, which also reconciles consolidated fully diluted EPS to the non-
GAAP financial measures of EPS by business, is as follows:
2010 EPS Range
(Approximate amounts) Low High
Fully Diluted EPS (GAAP) $ 1.80 $ 2.00
Regulated companies:
Distribution segment $ 0.95 $ 1.05
Transmission segment 0.90 0.95
Total regulated companies 1.85 2.00
Competitive businesses - 0.05
NU parent and other companies (0.05) (0.05)
Fully Diluted EPS (GAAP) $ 1.80 $ 2.00
We have included estimated impacts from current economic conditions in the assumptions that were used to develop our earnings
guidance. The 2010 distribution segment guidance reflects an assumed one percent annual decrease in total weather-normalized retail
electric sales, a decrease in Yankee Gas' uncollectibles expense, and uncertainty around the outcomes of the PSNH distribution rate
case that was filed in June 2009 and the CL&P distribution rate case filed in January 2010. Both the PSNH and CL&P rate case
decisions are expected in mid-2010.
A WMECO distribution rate case is expected to be filed in mid-2010 with a decision expected by the end of 2010. A Yankee Gas rate
case filing is also being considered. Additional earnings from the WMECO and Yankee Gas filings are not included in the above
projections.
In 2009, the NU effective tax rate was 34.9 percent. For 2010, we estimate that the effective tax rate for NU will be approximately 34
percent.
Long-Term Growth Rate: We project that we will achieve a compound average annual EPS growth rate for the five-year period from
2010 to 2014 of between 6 percent and 9 percent, using 2009 EPS of $1.91 as the base level. This EPS growth rate assumes
regulatory ROEs averaging approximately 12.25 percent for the transmission segment and an average of approximately 10 percent for
the distribution segment (including PSNH and WMECO generation). We believe this growth will be achieved if our capital program is
completed in accordance with our plans, distribution rate case orders enable us to earn the assumed level of regulatory ROEs, and
FERC's current transmission policies remain consistent and enable us to achieve projected transmission ROEs. In addition to the
assumptions above, there are certain items that will likely impact this earnings growth rate. These items include, but are not limited to,
sales levels; operating expense levels, including maintenance, pension and uncollectibles expense; and lower margins that NU
Enterprises expects to earn on Select Energy’s remaining contracts.
Liquidity
Consolidated: We had $27 million of cash and cash equivalents as of December 31, 2009, compared with $89.8 million as of December
31, 2008. The combined borrowings and letters of credit (LOCs) outstanding on our revolving credit facilities totaled $141.3 million as of
December 31, 2009, compared with approximately $706 million as of December 31, 2008. The decrease in short-term borrowings was
primarily a result of higher cash flows provided by operating activities, lower capital expenditures, the issuance of approximately 19
million common shares by NU on March 20, 2009, which yielded net proceeds of $370.8 million after offering expenses of $12.5 million,
and total 2009 debt issuances of $462 million.
On February 13, 2009, CL&P issued $250 million of first mortgage bonds due February 1, 2019 and carrying a coupon of 5.5 percent.
On December 14, 2009, PSNH issued $150 million of first mortgage bonds due December 1, 2019 and carrying a coupon of 4.5
percent. Proceeds from these issuances were used to repay short-term debt and fund capital expenditures.
On April 1, 2009, using funds borrowed from the NU Money Pool, Yankee Gas retired $50 million of first mortgage bonds carrying a
coupon of 6.2 percent that were issued in January 1999.
On April 2, 2009, CL&P remarketed $62 million of tax-exempt PCRBs it had elected to acquire in October 2008. The PCRBs, which
mature on May 1, 2031, carry a coupon of 5.25 percent during the current fixed-rate period that ends on the mandatory tender purchase
date of April 1, 2010, at which time CL&P expects to remarket the bonds with a new coupon rate set through an auction process.
Our planned financings for 2010 total approximately $145 million of new long-term debt to be issued in the first half of the year
comprised of $95 million at WMECO and $50 million at Yankee Gas. We have only annual sinking fund requirements of $4.3 million
continuing in 2010 through 2012, the mandatory tender of $62 million of PCRBs by CL&P in April 2010, and no debt maturities until April
1, 2012. The proceeds from our 2010 financings will be used primarily to repay short-term borrowings and fund our capital programs.