Eversource 1999 Annual Report Download - page 54

or loss from this type of change in ownership interest in net
income. However, as a result of the startup nature of NEON’s
operations, this change in ownership interest was recognized
in additional paid in capital.
In conjunction with the IPO, Mode 1 sold 217,997 NEON
shares, resulting in a pretax gain of $1.7 million and further
reducing its ownership interest to 29.4 percent of the outstand-
ing common shares of NEON.
On November 23, 1999, NEON entered into two agreements
with unaffiliated companies. Under the agreements, NEON will
provide network transport and carrier services among the service
areas of NEON and the two unaffiliated companies and each
company will provide connectivity from the backbone system
to their respective local loops. Additionally, each company will
manage their local distribution into their respective end-users’
locations. NEON will also develop, operate and market the
combined telecommunications infrastructure created under the
two agreements.
As the agreements are implemented, the two unaffiliated com-
panies will ultimately obtain 10.75 percent and 9.25 percent
ownership interests, respectively, in NEON and will each
nominate one member to the NEON Board of Directors. The
agreements are subject to regulatory approvals, which are
expected by the spring of 2000.
14. SEGMENT INFORMATION
Effective January 1, 1999, the NU system companies adopted
SFAS No. 131, “Disclosures about Segments of an Enterprise
and Related Information.” The NU system is organized between
regulated utilities and unregulated energy services.
The regulated utilities segment represents 87 percent of the
NU system’s total revenue and is comprised of several business
units including generation, transmission and distribution.
The unregulated energy services segment in the following table
includes NGC, NGS, Select Energy and HEC.
Other in the following table includes the results for Mode 1.
Mode 1 had a net loss of $4.3 million for the year ended
December 31, 1999. Interest expense included in Other primarily
relates to the debt of NU parent. Inter-segment eliminations of
revenues and expenses are also included in Other.
Regulated utilities revenues primarily are derived from res-
idential, commercial and industrial customers and are not dependent
on any single customer. The unregulated energy services segment
has a major customer whose purchases represented 46 percent
of its total revenues for the year ended December 31, 1999.
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For the Year Ended December 31, 1999
Unregulated
Regulated Energy
(Millions of Dollars) Utilities Services Other Total
Operating revenues $ 3,888.7 $ 606.3 $(23.7) $ 4,471.3
Operating expenses (3,495.9) (646.7) 15.9 (4,126.7)
Operating income/(loss) 392.8 (40.4) (7.8) 344.6
Other (loss)/income (36.4) (1.2) 13.7 (23.9)
Interest expense (247.8) (1.0) (14.9) (263.7)
Preferred dividends (22.8) — — (22.8)
Net income/(loss) $ 85.8 $ (42.6) $ (9.0) $ 34.2
Total assets $ 9,388.3 $ 222.5 $ 77.3 $ 9,688.1
Prior to 1999, the NU system evaluated management per-
formance using a cost-based budget, therefore business segment
reporting on a comparative basis will not be available until the
year 2000.
15. MERGER AGREEMENT WITH CON EDISON
On October 13, 1999, NU and Con Edison announced that they
have agreed to a merger to combine the two companies. The
shareholders of NU will receive $25 per share in a combination
of cash and Con Edison common stock.
NU shareholders also have the right to receive an additional
$1 per share if a definitive agreement to sell its interests (other
than that now held by PSNH) in Millstone 2 and 3 is entered
into and recommended by the Utility Operations and Management
Unit of the DPUC on or prior to the later of December 31, 2000,
or the closing of the merger. Further, the value of the amount
of cash or common stock to be received by NU shareholders
is subject to increase by an amount of $0.0034 per share per
day for each day that the transaction does not close after
August 5, 2000.
Upon completion of the merger, NU will become a wholly
owned subsidiary of Con Edison. The purchase is subject to
the approval of the shareholders of both companies and several
regulatory agencies. The companies anticipate that these reg-
ulatory procedures will be completed by July 2000.