Eversource 2012 Annual Report Download - page 32

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Item 1A. Risk Factors
In addition to the matters set forth under “Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995” included
immediately prior to Item 1, Business, above, we are subject to a variety of significant risks. Our susceptibility to certain risks, including
those discussed in detail below, could exacerbate other risks. These risk factors should be considered carefully in evaluating our risk
profile.
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.
Cyber breaches, acts of war or terrorism, or grid disturbances could negatively impact our business.
Cyber intrusions targeting our information systems could impair our ability to properly manage our data, networks, systems and
programs, adversely affect our business operations or lead to release of confidential customer information or critical operating
information. While we have implemented measures designed to prevent cyber-attacks and mitigate their effects should they occur, our
systems are vulnerable to unauthorized access and cyber intrusions. We cannot discount the possibility that a security breach may
occur or quantify the potential impact of such an event.
Acts of war or terrorism could target our generation, transmission and distribution facilities or our data management systems. Such
actions could impair our ability to manage these facilities or operate our system effectively, resulting in loss of service to customers.
Because our generation and transmission facilities are part of an interconnected regional grid, we face the risk of blackout due to a
disruption on a neighboring interconnected system.
Any such cyber breaches, acts of war or terrorism, or grid disturbances could result in a significant decrease in revenues, significant
expense to repair system damage or security breaches, and liability claims, which could have a material adverse impact on our financial
position, results of operations or cash flows.
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, 2012, goodwill
totaled $3.5 billion, of which $3.2 billion was attributable to the acquisition of NSTAR in April 2012. Total goodwill represented
approximately 38 percent of our $9.2 billion of shareholders’ equity and approximately 12 percent of our total assets of $28.3 billion.
We perform an analysis of our goodwill balances to test 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.
Severe storms could cause significant damage to our electrical facilities requiring extensive capital expenditures, the
recovery for which is subject to approval by regulators.
Severe weather, such as Tropical Storm Irene in August 2011, the October 29, 2011 snowstorm, Hurricane Sandy in October 2012, and
the February 2013 blizzard, and other such major natural disasters, could cause widespread damage to our transmission and
distribution facilities. The resulting cost of repairing damage to our facilities and the potential disruption of our operations could exceed
our financial reserves and insurance.
Tropical Storm Irene, the October 29, 2011 snowstorm, and Hurricane Sandy caused significant damage to our transmission and
distribution systems. As a result, along with previously deferred costs from other storms, we have recorded approximately $548 million