(B) CAPITALIZATION

Common Stock

UIL Holdings had 50,665,114 shares of its common stock, no par value, outstanding as of December 31, 2012 and 50,545,487 shares of its common stock, no par value, outstanding at December 31, 2011. Not included in such shares were 209,469 and 100,003 shares of restricted stock as of December 31, 2012 and 2011, respectively. These shares of restricted stock are, however, recognized as outstanding for purposes of calculating basic earnings per share because such shares represent the net of the amount of deferred vested restricted stock, less the amount of non-deferred unvested restricted stock.

Restricted Stock activity for 2012 is as follows:

	Number	Weighted Average
	of Shares	Grant Date Fair Value

Nonvested Balance – December 31, 2011	107,241		$	28.12
Granted	25,747			35.51
Forfeited	-			N/A
Vested	(58,857	)		27.48
Nonvested Balance – December 31, 2012	74,131		$	30.49

Performance share activity for 2012 is as follows:

	Number	Weighted Average
	of Performance Shares	Grant Date Fair Value

Nonvested Balance – December 31, 2011	324,601		$	27.43
Granted	122,302			34.20
Forfeited	(10,220	)		31.10
Vested	(110,795	)		22.90
Nonvested Balance – December 31, 2012	325,888		$	31.39

The weighted average grant date fair value of all restricted stock and performance shares granted during the year was $34.33, $33.33 and $28.43 for the years ended December 31, 2012, 2011, and 2010 respectively.

Stock option transactions for 2012, 2011 and 2010 are as follows:

						Average
	Number			Option Price		Exercise
	of Options			per Share		Price
Balance – December 31, 2009		168,501		$	21.68-$34.51	$	30.32
Granted		-			N/A		N/A
Forfeited		(3,202	)		N/A		N/A
Exercised		(30,305	)	$	21.68-$23.64		N/A
Balance – December 31, 2010		134,994		$	21.68-$34.51	$	31.70
Granted		-			N/A		N/A
Forfeited		(7,910	)		N/A		N/A
Exercised		(28,864	)	$	21.68-$31.25		N/A
Balance – December 31, 2011		98,220		$	21.68-$33.96	$	33.39
Granted		-			N/A		N/A
Forfeited		(38,000	)		N/A		N/A
Exercised		(56,887	)	$	31.25-$33.96		N/A
Balance – December 31, 2012		3,333		$	21.68	$	21.68


Exercisable at December 31, 2010		134,994		$	21.68-$34.51	$	31.70
Exercisable at December 31, 2011		98,220		$	21.68-$33.96	$	33.39
Exercisable at December 31, 2012		3,333	(1)	$	21.68	$	21.68

(1)	The intrinsic value of exercisable stock options at December 31, 2012 was $0.05 million.

As of December 31, 2012, 2011 and 2010, the weighted-average remaining contractual lives for those options outstanding was 0.3 years, 0.5 years, and 1.3 years, respectively.

As of December 31, 2012, total stock option compensation costs were zero, performance share costs were $2.4 million, and restricted stock costs related to non-vested awards not yet recognized were $0.7 million. The weighted-average period over which the stock option compensation costs, performance-share cost, and restricted stock cost will be recognized is zero months, 10 months, and 8 months, respectively.

Cash received from options exercised under all share-based payment arrangements for the years ended December 31, 2012, 2011 and 2010, was $1.9 million, $0.8 million, and $0.7 million, respectively. The actual tax benefit realized by UIL Holdings for the tax deductions from the exercises totaled $0.1 million for each of 2012, 2011 and 2010.

The shares issued to non-employee directors as well as employee performance shares and options are drawn from the 2008 Stock Plan.

Redeemable Preferred Stock of Subsidiaries, Noncontrolling Interests

The redeemable preferred stock of subsidiaries are noncontrolling interests because they contain a feature that allows the holders to elect a majority of the subsidiary's board of directors if preferred stock dividends are in default in an amount equivalent to four full quarterly dividends. Such a potential redemption-triggering event is not solely within the control of the subsidiary.

CNG has one 8.00% non-callable series of cumulative preferred stock authorized with a par value of $3.125 per share. As of December 31, 2012, there were 108,706 shares issued and outstanding with a value of approximately $0.3 million and 775,609 shares authorized but unissued.

CNG also has one 6.00% series of cumulative preferred stock authorized with a par value of $100 per share. Effective November 30, 2012, CNG redeemed all of its 6.00% series preferred stock, which had 4,104 shares issued and outstanding. As of December 31, 2012, CNG had 9,999,068 shares of $100 par value preferred stock authorized but unissued.

Long-Term Debt

	December 31,
	2012		2011
	(In Thousands)
UIL Holdings
4.625% Unsecured Senior Notes, due 2020	$	450,000	$	450,000

UI
Pollution Control Revenue Bonds:

5.75%, 1996 Series, due 2026 (1)		-		7,500
4.50% 2010 Series, due 2027		27,500		27,500
7.13%, 1997 Series, due 2027 (1)		-		71,000
6.88%, 2009 Series, due 2029 (1)		-		25,000
Auction Rate, 2003 Series, due 2033 (2)		64,460		64,460

Senior Unsecured Notes:

6.06% Senior Notes, Series A and B, due 2017		70,000		70,000
2.98% Senior Notes, Series A due 2019		31,000		-
3.61% Senior Notes, Series B and C and 6.26% Senior Notes, Series C and D, due 2022		162,500		77,000
6.51% Senior Notes, Series E and F due 2037		28,000		28,000
6.46% Senior Notes, Series A and 6.51%, Senior Notes, Series B, due 2018		100,000		100,000
6.61% Senior Notes, Series C, due 2020		50,000		50,000
5.61% Senior Notes, due 2025		50,000		50,000
6.09% Senior Notes, due 2040		100,000		100,000
4.89% Senior Notes, Series D and E, due 2042		87,000		-

Gas Companies
Senior Secured Notes:

3.88% - 7.50% Senior Secured Medium Term Note IV, due 2018 - 2041		100,000		100,000
5.77% - 6.38% Senior Secured Medium Term Notes III, due 2025 - 2037		85,000		85,000
6.88% - 7.95% Senior Secured Medium Term Notes I, due 2026 - 2028		29,000		29,000
10.06% First Mortgage Bond Series P, due 2019		10,000		10,000

Unsecured Notes:

4.76% - 9.60% Senior Unsecured Notes, due 2020 - 2021		21,090		22,545
6.85% - 9.10% Unsecured Medium Term Notes, Series A, due 2013 - 2017		50,000		55,000
6.50% Unsecured Medium Term Note, Series D, due 2013		20,000		20,000
8.12% - 8.49% Unsecured Medium Term Notes, Series B, due 2014 - 2024		10,000		10,000
5.63% - 6.66% Unsecured Medium Term Notes, Series C, due 2035 - 2037		65,000		65,000

Long-Term Debt		1,610,550		1,517,005
Less: Current portion of long-term debt (3)		48,296		13,712
Less: Unamortized discount		2,916		3,221
Plus: Unamortized premium		41,016		48,275
Net Long-Term Debt	$	1,600,354	$	1,548,347

(1)	The interest rates on these bonds were due to be remarketed on February 1, 2012; however such bonds were refinanced in January 2012, as discussed below.

(2)	The interest rate on these Bonds is reset through an auction held every 35 days. On January 18, 2013, the interest rate on the Bonds was 0.41%.

(3)	Includes the current portion of unamortized premium.

The amount of restricted net assets as of December 31, 2012 was approximately $578.9 million, of which approximately $124.7 million related to UI's equity investment in GenConn. Substantially all of the respective utility's properties are pledged as collateral for the applicable Senior Secured Medium Term Notes and First Mortgage Bonds.

The weighted-average remaining fixed rate period of outstanding long-term debt obligations of UIL Holdings and its subsidiaries as of December 31, 2012 was 12 years, at an average interest rate of 5.6%.

The fair value of UIL Holdings' long-term debt was $1.9 billion and $1.7 billion as of December 31, 2012 and 2011, respectively, which was estimated by UIL Holdings based on market conditions. The expenses to issue long-term debt are deferred and amortized over the life of the respective debt issue or the fixed interest-rate period in the case of pollution control revenue bonds.

Information regarding maturities and mandatory redemptions/repayments are set forth below:

	2013		2014		2015		2016		2017 & thereafter
(In Thousands)
Maturities	$	41,455	$	6,455	$	1,455	$	11,455	$	1,549,730

Due to conditions in the municipal bond market, UIL Holdings determined it was economically favorable to refinance multiple series of pollution control revenue bonds in the aggregate principal amount outstanding of $103.5 million with notes issued in the private placement market. On January 30, 2012, UI entered into a Note Purchase Agreement with a group of institutional accredited investors to issue $203.5 million principal amount of senior unsecured notes. On January 30, 2012, $103.5 million of such notes were issued as follows: 3.61%, Series B, due January 31, 2022, in the principal amount of $51.5 million and 4.89%, Series D, due January 30, 2042, in the principal amount of $52 million. On April 2, 2012, the remaining $100 million of such notes were issued as follows: 2.98%, Series A, due January 31, 2019, in the principal amount of $31 million, 3.61%, Series C, due January 31, 2022 in the principal amount of $34 million and 4.89%, Series E, due January 30, 2042, in the principal amount of $35 million.

In September 2011, SCG repaid, upon maturity, the outstanding balance of its 6.59% senior secured medium term notes totaling $30 million.

On August 29, 2011, SCG entered into a note purchase agreement with a group of institutional accredited investors providing for the sale to such investors of (1) secured 3.88% medium-term notes due September 22, 2021 (constituting a series of first mortgage bonds) in the principal amount of $25 million, and (2) secured 5.39% medium-term notes due September 22, 2041 (constituting a series of first mortgage bonds) in the principal amount of $25 million. SCG received $25 million, upon the issuance of such notes on September 22, 2011.

In July 2011, UI repaid, upon maturity, approximately $63 million of borrowings under its equity bridge loan (EBL) relating to GenConn. The EBL was used by UI to fund its commitments as a 50-50 joint venturer in GenConn.

In May 2011, Berkshire repaid, upon maturity, the outstanding balance of its 4.76% unsecured notes totaling $3.0 million.

In February 2011, UIL Holdings repaid, upon maturity, the outstanding balances of its 7.23% Series A Senior Notes totaling $4.3 million and its 7.38% Series B Senior Notes totaling $45 million.