Eversource 2012 Annual Report Download - page 45

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our consolidated financial statements and related combined
notes included in this Annual Report on Form 10-K. References in this Annual Report to "NU," the "Company," "we," "us" and "our"
refer to Northeast Utilities and its subsidiaries. All per share amounts are reported on a diluted basis.
Refer to the Glossary of Terms included in this Annual Report on Form 10-K for abbreviations and acronyms used throughout this
Management's Discussion and Analysis of Financial Condition and Results of Operations.
The only common equity securities that are publicly traded are common shares of NU. The earnings and EPS of each business
discussed below do not represent a direct legal interest in the assets and liabilities allocated to such business but rather represent a
direct interest in our assets and liabilities as a whole. EPS by business is a financial measure not recognized under GAAP that is
calculated by dividing the Net Income Attributable to Controlling Interest of each business by the weighted average diluted NU common
shares outstanding for the period. The discussion below also includes non-GAAP financial measures referencing our 2012, 2011, and
2010 earnings and EPS excluding certain impacts related to NU's merger with NSTAR, a 2011 non-recurring charge at CL&P for the
establishment of a reserve to provide bill credits to its residential customers and donations to charitable organizations, and certain non-
recurring benefits from the settlement of tax issues in 2010. We use these non-GAAP financial measures to evaluate and to provide
details of earnings results by business and to more fully compare and explain our 2012, 2011 and 2010 results without including the
impact of these non-recurring items. Due to the nature and significance of these items on Net Income Attributable to Controlling
Interest, we believe that the non-GAAP presentation is more representative of our financial performance and provides additional and
useful information to readers of this report in analyzing historical and future performance by business. These non-GAAP financial
measures should not be considered as an alternative to reported Net Income Attributable to Controlling Interest or EPS determined in
accordance with GAAP as an indicator of operating performance.
Reconciliations of the above non-GAAP financial measures to the most directly comparable GAAP measures of consolidated diluted
EPS and Net Income Attributable to Controlling Interest are included under "Financial Condition and Business Analysis – Overview –
Consolidated" in Management's Discussion and Analysis, herein.
Financial Condition and Business Analysis
Merger with NSTAR:
On April 10, 2012, NU and NSTAR completed our merger. Pursuant to the terms and conditions of the Agreement and Plan of Merger,
as amended (the Merger Agreement), NSTAR merged into NSTAR LLC, becoming a wholly-owned subsidiary of NU. Unless otherwise
noted, the results of NSTAR LLC and its subsidiaries, hereinafter referred to as "NSTAR," are included from the date of merger,
April 10, 2012, through December 31, 2012 throughout this Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The transaction was structured as a merger of equals in a tax-free exchange of shares. Pursuant to the Merger Agreement, NU issued
to NSTAR shareholders 1.312 NU common shares for each issued and outstanding NSTAR common share. As a result, NU issued
approximately 136 million common shares to the NSTAR shareholders.
Executive Summary
The following items in this executive summary are explained in more detail in this Annual Report:
Results and Outlook:
 We earned $525.9 million, or $1.89 per share, in 2012, compared with $394.7 million, or $2.22 per share, in 2011. Excluding after-
tax merger-related costs of $107.6 million, or $0.39 per share, we earned $633.5 million, or $2.28 per share, in 2012. Excluding
after-tax merger-related costs of $11.3 million, or $0.06 per share, and a non-recurring charge at CL&P of $17.9 million, or $0.10
per share, we earned $423.9 million, or $2.38 per share, in 2011. The non-recurring 2011 charge at CL&P relates to the
establishment of a reserve to provide bill credits to its residential customers and donations to charitable organizations (storm fund
reserve). Improved earnings results in 2012 were due primarily to the inclusion of NSTAR effective April 10, 2012 as well as higher
transmission segment earnings as a result of increased investments in the transmission infrastructure.
 The addition of NSTAR effective April 10, 2012 provided an earnings contribution of $182.9 million in 2012. Due to the timing of
the merger closing, NSTAR results for the first three months of 2012 are not reflected in NU’s 2012 results.
 Our transmission segment earned $249.7 million, or $0.90 per share, in 2012, compared with $199.6 million, or $1.12 per share, in
2011.
 Our electric distribution segment, which includes generation, earned $292.3 million, or $1.04 per share, in 2012, compared with
$189.1 million, or $1.06 per share, in 2011. The 2012 results include $51.1 million, or $0.19 per share, of after-tax merger
settlement agreement costs and the 2011 results include the CL&P storm fund reserve.