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114
16. DIVIDEND RESTRICTIONS
NU parent's ability to pay dividends may be affected by certain state statutes, the ability of its subsidiaries to pay common dividends
and the leverage restriction tied to its consolidated total debt to total capitalization ratio requirement in its revolving credit agreement.
CL&P, NSTAR Electric, PSNH and WMECO are subject to Section 305 of the Federal Power Act that makes it unlawful for a public
utility to make or pay a dividend from any funds "properly included in its capital account." Management believes that this Federal Power
Act restriction, as applied to CL&P, NSTAR Electric, PSNH and WMECO, would not be construed or applied by the FERC to prohibit
the payment of dividends for lawful and legitimate business purposes from retained earnings. In addition, certain state statutes may
impose additional limitations on such companies and on Yankee Gas and NSTAR Gas. Such state law restrictions do not restrict
payment of dividends from retained earnings or net income. Pursuant to the joint revolving credit agreement of NU, CL&P, PSNH,
WMECO, Yankee Gas and NSTAR Gas, and the NSTAR Electric revolving credit agreement, each company is required to maintain
consolidated total debt to total capitalization ratio of no greater than 65 percent at all times. As of December 31, 2013, all companies
were in compliance with such covenant. The Retained Earnings balances subject to these restrictions were $2.1 billion for NU, $961.5
million for CL&P, $1.4 billion for NSTAR Electric, $438.5 million for PSNH and $181 million for WMECO as of December 31, 2013. As
of December 31, 2013, NU, CL&P, NSTAR Electric, PSNH, WMECO, Yankee Gas and NSTAR Gas were in compliance with all such
provisions of the revolving credit agreements that may restrict the payment of dividends. PSNH is further required to reserve an
additional amount under its FERC hydroelectric license conditions. As of December 31, 2013, approximately $12.7 million of PSNH's
Retained Earnings was subject to restriction under its FERC hydroelectric license conditions and PSNH was in compliance with this
provision.
17. COMMON SHARES
The following table sets forth the NU common shares and the shares of common stock of CL&P, NSTAR Electric, PSNH and WMECO
that were authorized and issued and the respective per share par values:
Shares
Authorized
Issued
Per Share
As of December 31,
As of December 31,
Par Value
2013 and 2012
2013
2012
NU
$
5
380,000,000
333,113,492
332,509,383
CL&P
$
10
24,500,000
6,035,205
6,035,205
NSTAR Electric
$
1
100,000,000
100
100
PSNH
$
1
100,000,000
301
301
WMECO
$
25
1,072,471
434,653
434,653
As of December 31, 2013 and 2012, there were 17,796,672 and 18,455,749 NU common shares held as treasury shares, respectively.
As of December 31, 2013 and 2012, NU common shares outstanding were 315,273,559 and 314,053,634, respectively.
18. PREFERRED STOCK NOT SUBJECT TO MANDATORY REDEMPTION
The CL&P and NSTAR Electric preferred stock is not subject to mandatory redemption and is presented as a noncontrolling interest of
a subsidiary in NU’s financial statements.
CL&P Preferred Stock: CL&P's charter authorizes it to issue up to 9 million shares of preferred stock ($50 par value per share). CL&P
amended its charter on January 3, 2012 to remove references to various series of preferred stock, including the Class A preferred
stock, which were no longer outstanding. The issuance of additional preferred shares would be subject to PURA approval. Preferred
stockholders have liquidation rights equal to the par value of the preferred stock, which they would receive in preference to any
distributions to any junior stock. Were there to be a shortfall, all preferred stockholders would share ratably in available liquidation
assets.
NSTAR Electric Preferred Stock: NSTAR Electric is authorized to issue 2,890,000 shares ($100 par value per share). NSTAR Electric
has two outstanding series of cumulative preferred stock. Upon liquidation, holders of cumulative preferred stock are entitled to receive
a liquidation preference before any distribution to holders of common stock. The liquidation preference for each outstanding series of
cumulative preferred stock is equal to the par value, plus accrued and unpaid dividends. Were there to be a shortfall, holders of
cumulative preferred stock would share ratably in available liquidation assets.