Eversource 2006 Annual Report Download - page 46

44 NU 2006 ANNUAL REPORT
(Millions of Dollars) 2007 2008 2009 2010 2011 Thereafter Totals
Long-term debt maturities (a)(b) $ 4.9 $ 154.3 $54.3 $ 4.3 $ 4.3 $2,472.0 $ 2,694.1
Estimated interest payments on existing debt (c) 155.0 152.5 148.4 146.9 146.9 1,785.0 2,534.7
Capital leases (d)(e) 2.8 2.4 2.2 1.7 1.7 15.7 26.5
Operating leases (e)(f) 31.0 27.8 24.8 21.4 16.6 65.3 186.9
Required funding of other postretirement
benefit obligations (f) 39.8 36.7 33.9 31.3 28.9 N/A 170.6
Estimated future annual Utility Group costs (e)(f) 1,015.2 709.8 366.9 305.8 295.2 1,160.4 3,853.3
Estimated future annual NU Enterprises costs (e)(f) 689.8 212.3 29.7 32.1 31.3 20.6 1,015.8
Other purchase commitments (f)(g) 1,515.4 — — — — — 1,515.4
Totals $3,453.9 $1,295.8 $660.2 $543.5 $524.9 $5,519.0 $11,997.3
(a) Included in NU’s debt agreements are usual and customary positive, negative and financial covenants. Non-compliance with certain covenants, for example the timely
payment of principal and interest, may constitute an event of default, which could cause an acceleration of principal payments in the absence of receipt by the company
of a waiver or amendment. Such acceleration would change the obligations outlined in the table of contractual obligations and commercial commitments.
(b) Long-term debt excludes $280.8 million of fees and interest due for spent nuclear fuel disposal costs, a negative $6.5 million of net changes in fair value and $3.1 million
of net unamortized discounts as of December 31, 2006.
(c) Estimated interest payments on fixed-rate debt are calculated by multiplying the coupon rate on the debt by its scheduled notional amount outstanding for the period of
measurement. Estimated interest payments on floating-rate debt are calculated by multiplying the most recent floating-rate reset on the debt by its scheduled notional
amount outstanding for the period of measurement. This same rate is then assumed for the remaining life of the debt. Interest payments on debt that have an interest
rate swap in place are estimated using the effective cost of debt resulting from the swap rather than the underlying interest cost on the debt, subject to the fixed and
floating methodologies.
(d) The capital lease obligations include imputed interest of $12.1 million as of December 31, 2006.
(e) NU has no provisions in its capital or operating lease agreements or agreements related to the estimated future annual Utility Group or NU Enterprises costs that could
trigger a change in terms and conditions, such as acceleration of payment obligations.
(f) Amounts are not included on NU’s consolidated balance sheets.
(g) Amount represents open purchase orders, excluding those obligations that are included in the estimated future annual Utility Group costs and the estimated future
annual NU Enterprises costs. These payments are subject to change as certain purchase orders include estimates based on projected quantities of material and/or
services that areprovided on demand, the timing of which cannot be determined.
facts and applicable law. The matter is fully briefed and awaiting a
decision. At this time, NU cannot predict the outcome of this matter
or its ultimate effect on NU.
For further information regarding other commitments and contingencies,
see Note 8, “Commitments and Contingencies,” to the consolidated
financial statements.
Accounting Standards Issued But Not Yet Adopted:
A. Accounting for Servicing of Financial Assets: In March of 2006,
the FASB issued SFAS No. 156, “Accounting for Servicing of Financial
Assets – An Amendment of FASB Statement No. 140.” SFAS No. 156
requires an entity to recognize a servicing asset or liability at fair value
each time it undertakes an obligation to service a financial asset by
entering into a servicing contract in a transfer of the servicer’s financial
assets that meets the requirements for sale accounting and in other
circumstances. Servicing assets and liabilities may be subsequently
measured through either amortization or recognition of fair value
changes in earnings. SFAS No. 156 is required to be applied prospectively
to transactions beginning in the first quarter of 2007. Implementation
of SFAS No. 156 will not have an effect on the company’s consolidated
financial statements.
B. Uncertain Tax Positions: On July13, 2006, the FASB issued FIN 48.
FIN 48 addresses the methodology to be used in estimating and reporting
amounts associated with uncertain tax positions, including interest and
penalties. FIN 48 is required tobe implemented prospectively in the first
quarter of 2007 as a change in accounting principle with a cumulative
effect adjustment reflected in opening retained earnings. The company
is currently evaluating the potential impact of FIN 48 on its consolidated
financial statements.
C. Fair Value Measurements: On September 15, 2006, the FASB
issued SFAS No. 157, “Fair Value Measurements,” which establishes a
framework for identifying and measuring fair value and is required to
be implemented in the first quarter of 2008. SFAS No. 157 provides a
fair value hierarchy, giving the highest priority to quoted prices in active
markets, and is expected to be applied to fair value measurements of
derivative contracts that are subject to mark-to-market accounting and
other assets and liabilities reported at fair value. In most cases, SFAS
No. 157 is required to be implemented prospectively with adjustments to
fair value reflected as a cumulative effect adjustment to the opening
balance of retained earnings as of January 1, 2008. The company is
evaluating the potential impact of SFAS No. 157 on its consolidated
financial statements.
D. The Fair Value Option: On February 15, 2007, the FASB issued SFAS
No. 159, “The Fair Value Option for Financial Assets and Financial
Liabilities – including an amendment of FAS 115.” SFAS No. 159 allows
entities to choose, at specified election dates, to measure eligible
financial assets and liabilities at fair value that are not otherwise required
to be measured at fair value. If a company elects the fair value option
for an eligibleitem, changes in that item’s fair value in subsequent
reporting periods must be recognized in earnings. SFAS No. 159 is
effective for fiscal years beginning after November 15, 2007, with early
adoption permitted subject tospecific requirements. The company is
evaluating the measurement options available under the new standard.
Contractual Obligations and Commercial Commitments: Information
regarding NU’s contractual obligations and commercial commitments
at December 31, 2006 is summarized annually through 2011 and
thereafter as follows: