Eversource 2015 Annual Report Download - page 110

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The amortization expense of actuarial gains and losses and prior service cost on the defined benefit plans is amortized from AOCI into Operations
and Maintenance over the average future employee service period, and is reflected in amounts reclassified from AOCI.
Defined benefit plan OCI amounts before reclassifications relate to actuarial gains and losses that arose during the year and were recognized in
AOCI. The related tax effects recognized in AOCI during 2015 and 2013 were net deferred tax liabilities of $2 million in 2015 and $11.4 million in
2013, respectively, and net deferred tax assets of $22.3 million in 2014.
The following table sets forth the amounts reclassified from AOCI by component and the impacted line item on the statements of income:
Amounts Reclassified from AOCI
Eversource For the Years Ended December 31, Statements of Income
(Millions of Dollars) 2015
2014 2013 Line Item Impacted
Qualified Cash Flow Hedging Instruments $ (3.5) $ (3.4) $ (3.4) Interest Expense
Tax Effect 1.4 1.4 1.4 Income Tax Expense
Qualified Cash Flow Hedging Instruments, Net of Tax $ (2.1) $ (2.0) $ (2.0)
Defined Benefit Plan Costs:
Amortization of Actuarial Losses $ (6.6) $ (6.2) $ (10.5) Operations and Maintenance
(1)
Amortization of Prior Service Cost (0.2) (0.2) (0.2) Operations and Maintenance
(1)
Total Defined Benefit Plan Costs (6.8) (6.4) (10.7)
Tax Effect 2.6 2.5 4.3 Income Tax Expense
Defined Benefit Plan Costs, Net of Tax $ (4.2) $ (3.9) $ (6.4)
Total Amounts Reclassified from AOCI, Net of Tax $ (6.3) $ (5.9) $ (8.4)
(1)
These amounts are included in the computation of net periodic Pension, SERP and PBOP costs. See Note 9A, “Employee Benefits - Pension
Benefits and Postretirement Benefits Other Than Pensions,” for further information.
As of December 31, 2015, it was estimated that a pre-tax amount of $3.6 million (including $0.7 million for CL&P, $2 million for PSNH and $0.7
million for WMECO) will be reclassified from AOCI as a decrease to Net Income over the next 12 months as a result of the amortization of the
interest rate swap agreements which have been settled. In addition, it is estimated that a pre-tax amount of $6 million will be reclassified from AOCI
as a decrease to Net Income over the next 12 months as a result of the amortization of Pension, SERP and PBOP costs.
15. DIVIDEND RESTRICTIONS
Eversource parent’s ability to pay dividends may be affected by certain state statutes, the ability of its subsidiaries to pay common dividends and the
leverage restriction tied to its consolidated total debt to total capitalization ratio requirement in its revolving credit agreement.
CL&P, NSTAR Electric, PSNH and WMECO are subject to Section 305 of the Federal Power Act that makes it unlawful for a public utility to make
or pay a dividend from any funds “properly included in its capital account.” Management believes that this Federal Power Act restriction, as applied
to CL&P, NSTAR Electric, PSNH and WMECO, would not be construed or applied by the FERC to prohibit the payment of dividends from retained
earnings for lawful and legitimate business purposes. In addition, certain state statutes may impose additional limitations on such companies and on
Yankee Gas and NSTAR Gas. Such state law restrictions do not restrict the payment of dividends from retained earnings or net income. Pursuant to
the joint revolving credit agreement of Eversource, CL&P, PSNH, WMECO, Yankee Gas and NSTAR Gas, and to the NSTAR Electric revolving
credit agreement, each company is required to maintain consolidated total debt to total capitalization ratio of no greater than 65 percent at the end of
each fiscal quarter. As of December 31, 2015, all companies were in compliance with such covenant. The Retained Earnings balances subject to
these restrictions were $2.8 billion for Eversource, $1.2 billion for CL&P, $1.6 billion for NSTAR Electric, $494.9 million for PSNH and $198.1
million for WMECO as of December 31, 2015. As of December 31, 2015, Eversource, CL&P, NSTAR Electric, PSNH, WMECO, Yankee Gas and
NSTAR Gas were in compliance with all such provisions of the revolving credit agreements that may restrict the payment of dividends. PSNH is
further required to reserve an additional amount under its FERC hydroelectric license conditions. As of December 31, 2015, $13.4 million of
PSNH’s Retained Earnings was subject to restriction under its FERC hydroelectric license conditions and PSNH was in compliance with this
provision.
16. COMMON SHARES
The following table sets forth the Eversource parent common shares and those of CL&P, NSTAR Electric, PSNH and WMECO that were authorized
and issued as well as the respective per share par values:
Shares
Authorized Issued
Per Share as of December 31, as of December 31,
Par Value 2015 and 2014 2015 2014
Eversource $ 5 380,000,000 333,862,615 333,359,172
CL&P $ 10 24,500,000 6,035,205 6,035,205
NSTAR Electric
$ 1 100,000,000 100 100
PSNH $ 1 100,000,000 301 301
WMECO $ 25 1,072,471 434,653 434,653