Eversource 2014 Annual Report Download - page 115

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Pursuant to the merger, all of the NSTAR common shares were exchanged at the fixed exchange ratio of 1.312 NU common shares
for each NSTAR common share. The total consideration transferred in the merger was based on the closing price of NU common shares on April 9,
2012, the day prior to the date the merger was completed, and was calculated as follows:
NSTAR common shares outstanding as of April 9, 2012 (in t
housands)* 103,696
Exchange ratio 1.312
NU common shares issued for NSTAR common shares outstanding (in thousands)
136,049
Closing price of NU common shares on April 9, 2012 $36.79
Value of common shares issued (in millions) $5,005
Fair value of NU replacement stock-based compensation awards related to
pre-merger service (in millions) 33
Total purchase price (in millions) $5,038
* Included 109 thousand shares related to NSTAR stock-based compensation awards that vested immediately prior to the merger.
Certain of NSTAR's stock-based compensation awards, including deferred shares, performance shares and all outstanding stock options, were
replaced with NU awards using the exchange ratio upon consummation of the merger. In accordance with accounting guidance for business
combinations, the portion of the fair value of these awards attributable to service provided prior to the merger was included in the purchase price as it
represented consideration transferred in the merger. See Note 9C, "Employee Benefits –Share-Based Payments,"for further information.
 The allocation of the total purchase price to the estimated fair values of the assets acquired and liabilities assumed was
determined based on the accounting guidance for fair value measurements. The allocation of the total purchase price included adjustments to record
the fair value of NSTAR's unregulated telecommunications business, regulatory assets not earning a return, lease agreements, long-term debt and the
preferred stock of NSTAR Electric. The fair values of NSTAR's assets and liabilities were determined based on significant estimates and
assumptions, including Level 3 inputs, that were judgmental in nature. These estimates and assumptions included the timing and amounts of
projected future cash flows and discount rates reflecting risk inherent in future cash flows.
In accordance with accounting guidance for business combinations, the excess of the purchase price over the estimated fair values of the assets
acquired and liabilities assumed was recognized as goodwill.
The goodwill from the merger with NSTAR totaled $3.2 billion and was allocated to NU's reporting units based on their estimated fair values. See
Note 22, "Goodwill," for the allocation of goodwill to each reporting unit.
 The following unaudited pro forma financial information reflects the pro forma combined results of operations of
NU and NSTAR and reflects the amortization of purchase price adjustments assuming the merger had taken place on January 1, 2011. The unaudited
pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of the consolidated results of
operations that would have been achieved or the future consolidated results of operations of NU.
 For the Year Ended December 31, 2012
Operating Revenues $7,004
Net Income Attributable to Controlling Interest
630
Basic EPS 2.00
Diluted EPS 1.99
Pro forma net income does not include potential cost savings associated with the merger. Pro forma net income also excludes certain non-recurring
merger costs and costs related to the Connecticut and Massachusetts merger settlement agreements described below, with the following aggregate
after-tax impacts:
 For the Year Ended December 31, 2012
Transaction and Other Costs $32
Settlement Agreement Impacts 60
Total After-Tax Non-Recurring Costs Excluded from
Pro Forma Net Income Attributable to Controlling Interest $92
On February 15, 2012, NU and NSTAR reached comprehensive merger settlement agreements with the Massachusetts
Attorney General and the DOER. The Attorney General settlement agreement covered a variety of rate-making and rate design issues, including a
base distribution rate freeze through 2015 for NSTAR Electric, NSTAR Gas and WMECO and $15 million, $3 million and $3 million in the form of
rate credits to their respective customers. On April 4, 2012, the DPU approved the settlement agreements and the merger of NU and NSTAR.
On March 13, 2012, NU and NSTAR reached a comprehensive merger settlement agreement with both the Connecticut Attorney General and the
Connecticut Office of Consumer Counsel. The settlement agreement covered a variety of matters, including a $25 million rate credit to CL&P
customers, a CL&P base distribution rate freeze until December 1, 2014, and the establishment of a $15 million fund for energy efficiency and other
initiatives to be disbursed at the direction of the DEEP. In the agreement, CL&P agreed to forego rate recovery of $40 million of the deferred storm
restoration costs associated with restoration activities following Tropical Storm Irene and the October 2011 snowstorm. On April 2, 2012, the PURA
approved the settlement agreement and the merger of NU and NSTAR.