ACQUISITION

6 Months Ended

Jun. 30, 2011

ACQUISITION [Abstract]

ACQUISITION

(N) ACQUISITION

On November 16, 2010, UIL Holdings completed its acquisition (the Acquisition) from Iberdrola USA, Inc. of the Gas Companies.  PURA approved the Acquisition and on May 5, 2011, the petition from the Massachusetts Attorney General for the DPU to reconsider its ruling that it would not review UIL Holdings’ acquisition of Berkshire was denied.  The Gas Companies contributed $130.6 million and $493.4 million in operating revenues and ($1.5) million and $35.9 million in net income (loss) to UIL Holdings’ results of operations for the three and six month periods ended June 30, 2011, respectively.

Upon completion of the final indebtedness and working capital adjustment of $11.2 million in May 2011, the net purchase price amounted to $906.7 million.  UIL Holdings accounted for the Acquisition in accordance with ASC 805 “Business Combinations,” whereby the purchase price paid was allocated to tangible assets acquired and

liabilities assumed as well as goodwill based upon their fair values as of the closing date of the Acquisition.  UIL Holdings determined that the historical book value of the assets and liabilities of the Gas Companies approximates their fair value given the regulation under which they operate in the states of Connecticut and Massachusetts.  Additional adjustments to the values of assets and liabilities recognized in the Acquisition may occur as the allocation of the consideration transferred is finalized during 2011.  Under business combination accounting guidance, UIL Holdings has up to one year from the closing date of the Acquisition to finalize the allocation of consideration transferred.  The following table summarizes the allocation of the purchase price:

	Amount
	(In Millions)
Current assets	$	310.8
Noncurrent assets		1,418.9
Current liabilities		(167.9	)
Long-term debt		(397.4	)
Other noncurrent liabilities		(559.1	)
Preferred stock		(0.8	)
Total identifiable net assets		604.5
Goodwill		302.2
Total Purchase Price, Net	$	906.7

Goodwill is calculated as the excess of the purchase price over the value of the net assets acquired and the contributing factors to the amount recorded include expected future cash flows, potential operational synergies, the utilization of technology and cost savings opportunities in the delivery of certain shared administrative and other services.  As of June 30, 2011, goodwill is $302.2 million, an increase of $3.3 million over the December 31, 2010 balance.  The increase is a result of $1.6 million due to the working capital adjustment noted above and $1.7 million due to adjustments to the values of assets and liabilities recognized in the Acquisition.

The estimated fair values of assets acquired and liabilities assumed are based upon the information that was available as of the closing date of the Acquisition, which management believes provides a reasonable basis for the estimated values.  Management is analyzing additional data necessary to finalize these fair values, and therefore they remain subject to change.  While such changes could be significant, management does not expect them to be based upon the information provided to date.  The valuation, and thus the purchase price allocation, is expected to be completed as soon as practicable but no later than one year from the closing date of the Acquisition.

Supplemental Pro Forma Data (unaudited)

The supplemental pro forma data below has been presented for illustrative purposes only and is not necessarily indicative of results of operations that would have been achieved had the pro forma events taken place on the dates indicated, or the future consolidated results of operations of the combined company.

	Three Months Ended			Six Months Ended
	June 30, 2010			June 30, 2010
	(Thousands, except per share amounts)
Pro forma operating revenues	$	321,237		$	874,429
Pro forma operating expenses	$	551,216		$	1,008,264
Pro forma net income (loss)	$	(257,271	)	$	(209,707	)
Pro forma earnings per share of common stock - basic	$	(5.09	)	$	(4.15	)

For the six month period ended June 30, 2010, excluding goodwill impairment charges, pro forma net income and earnings per share would have been $61.5 million and $1.22, respectively. For the three month period ended June 30, 2010 such pro forma net income and earnings per share would have been $13.9 million and $0.28, respectively.