Eversource 2015 Annual Report Download - page 83

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Trading Securities: Eversource has elected to record certain equity securities as trading securities, with the changes in fair values recorded in Other
Income, Net on the statements of income. As of December 31, 2015 and 2014, these securities were classified as Level 1 in the fair value hierarchy
and totaled $14.2 million and $85.1 million, respectively. For the years ended December 31, 2015, 2014 and 2013, net gains on these securities of $2
million, $1.9 million and $10.2 million, respectively, were recorded in Other Income, Net on the statements of income. Dividend income is recorded
in Other Income, Net when dividends are declared. In 2015, certain of the securities classified as trading securities were sold and the proceeds were
re-invested in equity securities designated as available-for-sale securities.
Available-for-Sale Securities: The following is a summary of available-for-sale securities, which are recorded at fair value and are included in
current and long-term Marketable Securities on the balance sheets.
As of December 31,
2015 2014
Pre-Tax Pre-Tax Pre-Tax Pre-Tax
Amortized Unrealized Unrealized Amortized Unrealized Unrealized
(Millions of Dollars)
Cost Gains Losses Fair Value Cost Gains Losses Fair Value
Eversource
Debt Securities
(1) (2)
$ 256.5 $ 4.5 $ (0.6) $ 260.4 $ 313.0 $ 7.5 $
(0.3)
$ 320.2
Equity Securities
(1)
215.3 59.2 (3.4) 271.1 160.6 73.3 - 233.9
WMECO
Debt Securities
(2)
- - - - 58.2 -
(0.1)
58.1
(1)
Amounts include CYAPC’s and YAEC’s marketable securities held in nuclear decommissioning trusts of $436.9 million and $450.8 million as
of December 31, 2015 and 2014, respectively. Unrealized gains and losses for the nuclear decommissioning trusts are recorded in Marketable
Securities with the corresponding offset to Other Long-Term Liabilities on the balance sheets, with no impact on the statements of income.
(2)
Unrealized gains and losses on debt securities held by WMECO were recorded in Marketable Securities with the corresponding offset to Other
Long-Term Assets on the balance sheets.
Unrealized Losses and Other-than-Temporary Impairment: There have been no significant unrealized losses, other-than-temporary impairments or
credit losses in 2015 or 2014. Factors considered in determining whether a credit loss exists include the duration and severity of the impairment,
adverse conditions specifically affecting the issuer, and the payment history, ratings and rating changes of the security. For asset-backed debt
securities, underlying collateral and expected future cash flows are also evaluated.
Realized Gains and Losses: Realized gains and losses on available-for-sale securities are recorded in Other Income, Net for Eversource’s benefit
trust and are offset in Other Long-Term Liabilities for CYAPC and YAEC. Eversource utilizes the specific identification basis method for the
Eversource benefit trust and the average cost basis method for the CYAPC and YAEC nuclear decommissioning trusts to compute the realized gains
and losses on the sale of available-for-sale securities.
Contractual Maturities: As of December 31, 2015, the contractual maturities of available-for-sale debt securities were as follows:
Eversource Amortized Fair
(Millions of Dollars)
Cost Value
Less than one year
(1)
$ 33.3 $ 33.2
One to five years 50.2 50.7
Six to ten years 56.6 57.2
Greater than ten years 116.4 119.3
Total Debt Securities $ 256.5 $ 260.4
(1)
Amounts in the Less than one year category include securities in the CYAPC and YAEC nuclear decommissioning trusts, which are restricted
and are classified in long-term Marketable Securities on the balance sheets.
Fair Value Measurements: The following table presents the marketable securities recorded at fair value on a recurring basis by the level in which
they are classified within the fair value hierarchy:
Eversource As of December 31,
(Millions of Dollars)
2015 2014
Level 1:
Mutual Funds and Equities $ 285.3 $ 319.0
Money Market Funds 26.9 24.9
Total Level 1 $ 312.2 $ 343.9
Level 2:
U.S. Government Issued Debt Securities
(Agency and Treasury) $ 46.6 $ 51.3
Corporate Debt Securities 43.9 49.1
Asset-Backed Debt Securities 20.0 54.1
Municipal Bonds 111.4 116.3
Other Fixed Income Securities 11.6 24.5
Total Level 2 $ 233.5 $ 295.3
Total Marketable Securities $ 545.7 $ 639.2