Eversource 2008 Annual Report Download - page 83

82
2008 2007
NU parent CL&P PSNH Yankee Gas CL&P CL&P WMECO
Long-term debt issued (in millions) $250 $300 $110 $100 $150 and $150 $100 and $100 $40
Date entered into swap transaction 12/3/07 12/5/07 12/4/07 12/4/07 2/22/07 7/16/07 7/17/07
Term 5-year 10-year 10-year 10-year 10-year and 30-year 10-year and 30-year 30-year
Termination date 6/2/08 5/19/08 3/24/08
(3) 9/23/08 (4) 3/27/07 9/10/07 8/15/07
Loaded LIBOR swap percentage 4.102
(1) 4.590 and 4.602 (2) 4.5575 and 4.147 (3) 4.635 and 4.5685 (4) 5.229 and 5.369 (7) 5.718 and 5.865
(9) 5.882
rate(s) (percentage)
Charge to accumulated other
comprehensive income (net of tax) (5) $0.1 $2.3 $0.9
(6) $0.7 $1.6 $4.7 (8) $0.6
(1) The interest rate swap was entered into with a notional amount of $200 million and had a
positive fair value of $0.6 million at December31, 2007.
(2) The two locked rates reflect two forward starting interest rate swap transactions, each with a
notional amount of $150 million and were recorded at a fair value of a positive $1.4 million at
December 2007.
(3) The first swap transaction had a fair value of a positive $0.6 million at December31, 2007. This
swap was replaced at its scheduled termination date on March 24, 2008 with a new swap to
extend the hedging relationship to the revised pricing date of the long-term debt to May 19,
2008.
(4) The first swap transaction had a positive fair value of $0.5 million at December 31, 2007 and was
replaced at its scheduled termination date of September 23, 2008 with a new swap to extend the
hedging relationship to the revised pricing date of the long-term debt on October 7, 2008. On
September 26, 2008, the debt was priced and the second swap was unwound.
(5) The charge to accumulated other comprehensive income will be amortized into earnings over the
terms of each respective long-term debt.
(6) The amount charged to accumulated other comprehensive income is net of ineectiveness of
$0.2 million related to the settlement of the March 2008 forward starting swap agreement.
(7) The two locked rates reflect two forward starting interest rate swap transactions, each with a
notional amount of $75 million.
(8) The amount charged to accumulated other comprehensive income is net of ineectiveness of
$67 thousand incurred upon termination of the hedge.
(9) The two locked rates reflect two forward starting interest rate swap transactions, each with a
notional amount of $50 million.
It is estimated that a charge of $0.2 million will be reclassified from accumulated other
comprehensive income as a decrease to earnings over the next 12 months as a result of
amortization of the interest rate swap agreements, which have been settled. At December
31, 2008, it is estimated that a pre-tax amount of $0.7 million included in the accumulated
other comprehensive income balance will be reclassified as a decrease to earnings
over the next 12 months related to Pension, SERP and other postretirement benefits
adjustments.
14. Restructuring and Impairment Charges and Discontinued Operations
Restructuring and Impairment Charges: NU Enterprises recorded $0.2 million and $27.6
million of pre-tax restructuring and impairment charges for the years ended December 31,
2007 and 2006, respectively, relating to the decision to exit NU Enterprises. There were
no restructuring and impairment charges recorded in 2008. These charges are included
as part of the NU Enterprises reportable segment in Note16, “Segment Information,” to
the consolidated financial statements.
In 2006, $22.7 million of restructuring charges and $0.3 million of impairment charges
were recorded related to Select Energy’s wholesale marketing, retail marketing and
competitive generation businesses. The restructuring charges were recorded for
consulting fees, legal fees, sale-related environmental fees and employee related
and other costs. The impairment costs related to the divestiture of the competitive
generation business. In addition, $4.6 million of restructuring charges were recorded
related to the remaining services businesses. Included in this amount are restructuring
charges of $1million related to the termination of NU parent’s guarantee of SESI’s
performance under government contracts. Of these amounts $19.1 million are included
in discontinued operations and $8.5 million are included as other operating expenses.
In 2007, $0.2 million of restructuring charges were recorded relating to the remaining
services businesses.
The following table summarizes the liabilities related to restructuring costs, which
are recorded in accounts payable and other current liabilities on the accompanying
consolidated balance sheets since the decision to exit NU Enterprises in 2005:
Employee- Professional
Related and Other
(Millions of Dollars) Costs Fees Total
Restructuring liability as of January 1, 2005 $ - $ - $ -
Costs incurred 2.3 7.4 9.7
Cash payments and other deductions/reversals (0.5) (3.2) (3.7)
Restructuring liability as of December 31, 2005 1.8 4.2 6.0
Costs incurred 3.3 24.0 27.3
Cash payments and other deductions/reversals (3.7) (25.9) (29.6)
Restructuring liability as of December 31, 2006 1.4 2.3 3.7
Costs incurred - 0.2 0.2
Cash payments and other deductions/reversals (1.4) (2.2) (3.6)
Restructuring liability as of
December 31, 2007 and 2008 $ - $ 0.3 $ 0.3
Hedged transactions recognized into earnings in the table on the previous page represent
amounts that were reclassified from accumulated other comprehensive income into
earnings in connection with the consummation of interest rate swap agreements and the
amortization of existing interest rate hedges. These amounts are net of income taxes of
approximately $0.2 million for the year ended December 31, 2008.
The following table provides the forward starting interest rate swap transactions
entered into by the company, CL&P, PSNH, WMECO and Yankee Gas to hedge interest
rate risk associated with their respective long-term debt issuances in 2008 and 2007: