Eversource 2013 Annual Report Download - page 31

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Our goodwill is valued and recorded at an amount that, if impaired and written down, could adversely affect our future
operating results and total capitalization.
We have a significant amount of goodwill on our consolidated balance sheet. The carrying value of goodwill represents the fair value of
an acquired business in excess of identifiable assets and liabilities as of the acquisition date. As of December 31, 2013, goodwill
totaled $3.5 billion, of which $3.2 billion was attributable to the acquisition of NSTAR in April 2012. Total goodwill represented
approximately 36 percent of our $9.6 billion of shareholders’ equity and approximately 13 percent of our total assets of $27.8 billion.
We test our goodwill balances for impairment on an annual basis or whenever events occur or circumstances change that would
indicate a potential for impairment. A determination that goodwill is deemed to be impaired would result in a non-cash charge that
could materially adversely affect our results of operations and total capitalization. The annual goodwill impairment test in 2013 resulted
in a conclusion that goodwill is not impaired.
Severe storms could cause significant damage to our electrical facilities requiring extensive expenditures, the recovery for
which is subject to approval by regulators.
Severe weather, such as ice and snow storms, hurricanes and other natural disasters, may cause outages and property damage, which
may require us to incur additional costs that may not be recoverable from customers. The cost of repairing damage to our operating
subsidiaries' facilities and the potential disruption of their operations due to storms, natural disasters or other catastrophic events could
be substantial, particularly as customers demand better and quicker response times to outages. If, upon review, any of our state
regulatory authorities finds that our actions were imprudent, some of those restoration costs may not be recoverable from customers.
The inability to recover a significant amount of such costs could have an adverse effect on our financial position, results of operations
and cash flows.
NU and its utility subsidiaries are exposed to significant reputational risks, which make them vulnerable to increased
regulatory oversight or other sanctions.
Because utility companies, including our electric and natural gas utility subsidiaries, have large consumer customer bases, they are
subject to adverse publicity focused on the reliability of their distribution services and the speed with which they are able to respond to
electric outages, natural gas leaks and similar interruptions caused by storm damage or other unanticipated events. Adverse publicity
of this nature could harm the reputations of NU and its subsidiaries, and may make state legislatures, utility commissions and other
regulatory authorities less likely to view NU and its subsidiaries in a favorable light, and may cause NU and its subsidiaries to be subject
to less favorable legislative and regulatory outcomes or increased regulatory oversight. Unfavorable regulatory outcomes can include
more stringent laws and regulations governing our operations, such as reliability and customer service quality standards or vegetation
management requirements, as well as fines, penalties or other sanctions or requirements. The imposition of any of the foregoing could
have a material adverse effect on business, results of operations, cash flow and financial condition of NU and each of its utility
subsidiaries.
The Merger may present certain material risks to the Company’s business and operations.
The Merger, described in Item 1, Business, may present certain risks to our business and operations including, among other things,
risks that:
• We may be unable to successfully integrate the businesses and workforces of NSTAR with our businesses and workforces;
• Conditions, terms, obligations or restrictions relating to the Merger imposed on us by regulatory authorities may adversely
affect our business and operations;
• We may be unable to avoid potential liabilities and unforeseen increased expenses or delays associated with integration plans;
• We may be unable to successfully manage the complex integration of systems, technology, networks and other assets in a
manner that minimizes any adverse impact on customers, vendors, suppliers, employees and other constituencies;
• We may experience inconsistencies in each companies’ standards, controls, procedures and policies.
Accordingly, there can be no assurance that the Merger will result in the realization of the full benefits of synergies, innovation and
operational efficiencies that we currently expect, that these benefits will be achieved within the anticipated timeframe or that we will be
able to fully and accurately measure any such synergies.
The actions of regulators can significantly affect our earnings, liquidity and business activities.
The rates that our Regulated companies charge their respective retail and wholesale customers are determined by their state utility
commissions and by FERC. These commissions also regulate the companies’ accounting, operations, the issuance of certain
securities and certain other matters. FERC also regulates their transmission of electric energy, the sale of electric energy at wholesale,
accounting, issuance of certain securities and certain other matters. The commissions’ policies and regulatory actions could have a
material impact on the Regulated companies’ financial position, results of operations and cash flows.