(N) ACQUISITION

On November 16, 2010, UIL Holdings completed its acquisition (the Acquisition) of the Gas Companies from Iberdrola USA, Inc. The Gas Companies contributed $772.3 million in operating revenues and $43.8 million in net income to UIL Holdings' results of operations for the year ended December 31, 2011. The Gas Companies contributed $138.1 million in operating revenues and $12.9 million in net income to UIL Holdings' 2010 results of operations for the post-acquisition period of 45 days from November 17, 2010 to December 31, 2010.

Taking into account 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. 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		(523.7	)
Preferred stock		(0.8	)
Total identifiable net assets		639.9
Goodwill		266.8
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 included 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 December 31, 2011, goodwill is $266.8 million, a decrease of $32.1 million compared to the December 31, 2010 balance. The decrease was primarily attributable to $33.7 million of adjustments to the values of the assets and liabilities recognized in the Acquisition as a result of the finalization of the allocation of the consideration transferred, which UIL Holdings had up to one year from the date of the Acquisition to finalize under business combination accounting guidance. Such adjustments were primarily related to changes in deferred income tax balances which resulted from the finalization of certain income tax filings required to be included with UIL Holdings' 2010 federal income tax return as a result of the Acquisition. The decrease was partially offset by a $1.6 million adjustment due to the working capital adjustment noted above.

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.

	Year Ended
	December 31, 2010
	(Thousands, except per share amounts)

Pro forma operating revenues	$	1,605,904
Pro forma operating expenses
Pro forma goodwill impairment charge		271,175
Pro forma other		1,385,634
Pro forma total operating expenses		1,656,809
Pro forma net income (loss)	$	(181,746	)
Pro forma earnings per share of common stock - basic	$	(3.60	)

Excluding the goodwill impairment changes, pro forma net income and earnings per share would have been $89.4 million and $1.77, respectively.