<PAGE>
HOUSTON INDUSTRIES INCORPORATED
FORM U-3A-2
FOR CALENDAR YEAR 1996
This report consists of 36 consecutively numbered pages.
<PAGE>
FILE NO. 1-7629
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.
FORM U-3A-2
STATEMENT BY HOLDING COMPANY CLAIMING
EXEMPTION UNDER RULE U-3A-2 FROM THE
PROVISIONS OF THE PUBLIC UTILITY
HOLDING COMPANY ACT OF 1935
TO BE FILED ANNUALLY PRIOR TO MARCH 1
HOUSTON INDUSTRIES INCORPORATED
(NAME OF COMPANY)
hereby files with the Securities and Exchange Commission, pursuant to Rule 2,
its statement claiming exemption as a holding company from the provisions of the
Public Utility Holding Company Act of 1935 (1935 Act), and submits the following
information:
1. NAME, STATE OF ORGANIZATION, LOCATION AND NATURE OF BUSINESS OF
CLAIMANT AND EVERY SUBSIDIARY THEREOF, OTHER THAN ANY EXEMPT WHOLESALE GENERATOR
(EWG) OR FOREIGN UTILITY COMPANY IN WHICH CLAIMANT DIRECTLY OR INDIRECTLY HOLDS
AN INTEREST.
Houston Industries Incorporated. Claimant is Houston Industries
Incorporated, a Texas corporation having its principal place of
business at 1111 Louisiana, Houston, Texas 77002. Claimant's business
is the holding of the stocks of its subsidiaries and performance of
financial, administrative and other support services in connection
with the operations of such subsidiaries. Reference is made to the
Annual Report on Form 10-K for the year ended December 31, 1996, to be
available after March 31, 1997, for additional information concerning
the Claimant.
On December 17, 1996, shareholders of the Claimant approved and
adopted an Agreement and Plan of Merger (the "Merger Agreement") among
the Claimant, its subsidiaries HL&P and HI Merger, Inc. (Merger Sub),
and NorAm Energy Corp. (NorAm). Pursuant to the Merger Agreement, the
Claimant will merge into HL&P, as a result of which, each outstanding
share of the Claimant's common stock will be converted into one share
of common stock of the surviving corporation, which will be renamed
"Houston Industries Incorporated" (Houston) and will continue to
conduct HL&P's electric utility business under HL&P's name; and NorAm
will merge into Merger Sub, as a result of which, NorAm will become a
wholly-owned subsidiary of Houston. The Merger Agreement provides for
alternate merger structures under certain circumstances. Unless
otherwise stated, the information presented in this Form U-3A-2
relates solely to the Claimant and its subsidiaries without giving
effect to the Merger. For
2
<PAGE>
additional information regarding the Merger and the Claimant's and
HL&P's application for an exemption under Section 3(a)(2) of the 1935
Act, reference is made to the Form U-1 Application under the 1935 Act
(File No. 070-089071) filed by Claimant on September 5, 1996, as
amended by Amendment No. 1 thereto filed on January 15, 1997.
The Claimant has the following active subsidiaries, all of which are
located at 1111 Louisiana, Houston, Texas 77002 unless otherwise
noted:
(a) Houston Lighting & Power Company. Houston Lighting & Power Company
(HL&P), a Texas corporation and Claimant's principal operating
subsidiary, is engaged in the generation, transmission, distribution
and sale of electric energy and serves customers in a 5,000 square
mile area on the Texas Gulf Coast, including Houston. HL&P is the only
subsidiary of Claimant that is a public utility as defined under
Sections 2(a)(5) and 33(a) of the 1935 Act.
HL&P has the following subsidiaries:
(i) HL&P Receivables, Inc. HL&P Receivables, Inc., a Delaware
corporation and a subsidiary of HL&P, holds an interest in a
trust for railroad settlement payments received by HL&P.
(ii) HL&P Capital Trusts. HL&P owns all of the common securities of
HL&P Capital Trust I and HL&P Capital Trust II and all of the
undivided beneficial interests in the assets of HL&P Capital
Trust III and HL&P Capital Trust IV, each of which is treated as
a subsidiary of HL&P for financial reporting purposes, and is a
Delaware business trust (collectively, the Trusts). The Trusts
were established in January 1997 and exist for the sole purpose
of issuing securities and investing the proceeds thereof in
subordinated debentures issued by HL&P. The business address of
the Delaware Trustee of each of the Trusts is The Bank of New
York (Delaware), White Clay Center, Route 273, Newark, Delaware
19711.
(b) Houston Industries Energy, Inc. Houston Industries Energy, Inc. (HI
Energy), a Delaware corporation, invests primarily in foreign power
generation projects and the privatization of foreign electric utility
systems.
HI Energy has the following direct subsidiaries:
(i) HIE Light, Inc. HIE Light, Inc. (HIE Light), a wholly-owned
subsidiary of HI Energy, is a Delaware corporation, the principal
assets of which are the shares of two Cayman Islands
corporations, HIE Cayman Holdings, Inc. and HIE Cayman
Investments, Inc. The sole asset of the two Cayman Islands
corporations is the shares of Houston Industries Energy - Cayman,
Inc. (HIE Cayman), a Cayman Islands corporation, which in turn
has as its sole asset 11.35 percent
3
<PAGE>
of the common nominative shares of Light Servicos de Eletricidade
S.A., a Brazilian electric utility (Light).
(ii) Houston Argentina S.A. Houston Argentina S.A. (Houston
Argentina), a wholly-owned subsidiary of HI Energy, is an
Argentine corporation located in Buenos Aires, Argentina, the
principal assets of which are (i) a 100 percent beneficial
ownership interest in HIE Argener, S.A. (HIE Argener), a wholly-
owned Argentine corporation, formed to develop, own and operate a
160 MW cogeneration project located at a steel plant near San
Nicolas, Argentina; (ii) a 100 percent beneficial ownership
interest in HIE Opco S.A. (HIE Opco), a wholly-owned Argentine
corporation, formed to operate and manage HIE Argener's
cogeneration project and the adjacent existing electric
generation facilities of a privately held Argentine steel plant;
(iii) a 32.5 percent ownership interest in Compania de
Inversiones en Electricidad S.A., an Argentine holding company
(COINELEC), which, in turn, owns a 51 percent controlling
interest in (a) Empresa Distribuidora La Plata S.A. (EDELAP), an
Argentine electric utility serving the City of La Plata and
surrounding areas and (b) Central Dique S.A. (Dique), an
Argentine company holding certain generation assets of EDELAP;
and (iv) an additional 32 percent ownership interest in EDELAP,
which ownership interest is held directly by Houston Argentina.
(iii) Industrias Electricas de Houston S.A. Industrias Electricas de
Houston S.A. (Industrias), a wholly-owned subsidiary of HI
Energy, is an Argentine corporation located in Buenos Aires,
Argentina, the principal asset of which is a 90 percent
beneficial ownership interest in Empresa Distribuidora de
Electricidad de Santiago del Estero S.A. (EDESE), an Argentine
electric utility in the Province of Santiago del Estero in
northern Argentina.
(iv) Houston Industries Energy - India, Inc. Houston Industries
Energy - India, Inc. (HIE India), a wholly-owned subsidiary of HI
Energy, is a Mauritius corporation that has a 100 percent
beneficial ownership interest in Houston Industries Energy -Rain,
Inc. (HIE Rain), a Mauritius corporation. HIE Rain, a wholly-
owned subsidiary of HIE India, owns 36 percent of the voting
stock of Rain Calcining Limited (Rain), an Indian company formed
to manufacture calcined petroleum coke and to generate
electricity for sale at retail and wholesale in the State of
Andhra Pradesh, India. HI Energy provides management and
technical services to Rain. Subject to the completion of a public
offering (and associated allotment) of shares, it is anticipated
that HIE Rain's ownership interest in Rain will be reduced to 20
percent.
(v) HIE Ford Heights, Inc. HIE Ford Heights, Inc. (HIE Ford Heights),
a wholly-owned subsidiary of HI Energy, is a Delaware corporation
that owns a 20 percent interest in CGE
4
<PAGE>
Ford Heights, L.L.C. (CGE Ford Heights), a Delaware limited
liability company formed (1) to develop, own, construct and
operate a waste tire processing facility and a tire combustion
facility and (2) to construct and operate an adjacent recycling
facility, all located in Ford Heights, Illinois. HIE Ford Heights
is also a subordinated lender to CGE Ford Heights.
(vi) HIE Fulton, Inc. HIE Fulton, Inc., a wholly-owned subsidiary of
HI Energy, is a Delaware corporation that is a lender to CGE
Fulton, L.L.C., a Delaware limited liability corporation formed
to own, construct and operate a waste tire processing facility
and tire combustion facility located in Fulton, Illinois.
Construction of this facility has been suspended.
(vii) Houston Industries Energy - Deer Park, Inc. Houston Industries
Energy - Deer Park, Inc. (HIE Deer Park), a wholly-owned
subsidiary of HI Energy, is a Delaware corporation that manages a
cogeneration facility of Shell Oil Company in Deer Park, Texas.
The principal business office of HIE Deer Park is located at 5700
Hwy 225 Cogen Gate, Deer Park, Texas 77536.
(c) Other Active Subsidiaries. Claimant has eight additional, active
subsidiaries, none of which is material and all of which (except as
otherwise noted) are located at 1111 Louisiana, Houston, Texas 77002:
(i) HL&P Energy Services Company. HL&P Energy Services Company, a
Delaware corporation organized in May 1996, engages in the non-
utility energy services business, marketing non-regulated energy-
related products and services and ancillary products such as home
appliance warranty services.
(ii) Development Ventures, Inc. Development Ventures, Inc., a Delaware
corporation that has principally provided financing to small,
emerging businesses located in or near HL&P's service area.
(iii) Primary Fuels, Inc. Primary Fuels, Inc., a Texas corporation that
was engaged in oil and gas exploration, development and
production activities until 1989 when all of its oil and gas
assets were sold.
(iv) Houston Industries Products, Inc. Houston Industries Products,
Inc., a Delaware corporation organized to develop and market
inventions, technology and other intellectual property owned by
Claimant and Claimant's other subsidiaries.
(v) Houston Industries (Delaware) Incorporated. Houston Industries
(Delaware) Incorporated, a Delaware corporation located at 200
West Ninth Street, Wilmington, Delaware
5
<PAGE>
19801, the only assets of which are shares of non-voting class B
common stock of HL&P.
(vi) Houston Industries Building, Inc. Houston Industries Building,
Inc., a Delaware corporation, owns a parking garage in downtown
Houston, Texas adjacent to Claimant's corporate headquarters.
(vii) Utility Rail Services, Inc. Utility Rail Services, Inc., a
Delaware corporation that owns 100 percent of UFI Services, Inc.,
a Delaware subsidiary which owns a 50 percent interest in a
Nebraska-based joint venture that constructs, repairs, stores and
maintains rail cars. The assets of the joint venture were sold in
December 1995.
(viii) HI Merger, Inc. HI Merger, Inc. (Merger Sub), a Delaware
corporation, was organized in August 1996 for purposes of the
Merger. Merger Sub engages in no other business.
For information regarding the Claimant's investments in "EWG(s)",
and "foreign utility companies" as defined under the 1935 Act,
see Item 4 below.
2. A BRIEF DESCRIPTION OF THE PROPERTIES OF CLAIMANT AND EACH OF ITS
SUBSIDIARY PUBLIC UTILITY COMPANIES USED FOR THE GENERATION, TRANSMISSION, AND
DISTRIBUTION OF ELECTRIC ENERGY FOR SALE, OR FOR THE PRODUCTION, TRANSMISSION,
AND DISTRIBUTION OF NATURAL OR MANUFACTURED GAS, INDICATING THE LOCATION OF
PRINCIPAL GENERATING PLANTS, TRANSMISSION LINES, PRODUCING FIELDS, GAS
MANUFACTURING PLANTS, AND ELECTRIC AND GAS DISTRIBUTION FACILITIES, INCLUDING
ALL SUCH PROPERTIES WHICH ARE OUTSIDE THE STATE IN WHICH CLAIMANT AND ITS
SUBSIDIARIES ARE ORGANIZED AND ALL TRANSMISSION OR PIPELINES WHICH DELIVER OR
RECEIVE ELECTRIC ENERGY OR GAS AT THE BORDERS OF SUCH STATE.
The only properties to which this item is applicable are the electric
utility properties of HL&P. Such properties are located in the
Counties of Anderson, Austin, Brazoria, Chambers, Colorado, Fort Bend,
Freestone, Galveston, Grimes, Harris, Henderson, Leon, Liberty,
Limestone, Madison, Matagorda, Montgomery, Robertson, Titus, Waller
and Wharton in the State of Texas. As of December 31, 1996, HL&P owned
and operated 62 generating units located at 12 generating stations in
the Counties of Chambers, Fort Bend, Galveston, Harris, Limestone and
Matagorda having an aggregate turbine nameplate rating of 13,544,608
kilowatts.
Approximately 32 percent of HL&P's energy requirements during 1996 was
met with natural gas, 40 percent with coal and lignite, and 9 percent
with nuclear. The remaining 19 percent was met principally with
purchased power.
HL&P operates 25,003 pole miles of overhead distribution lines and
3,606 circuit miles of overhead transmission lines including 474
circuit miles operated at 69,000 volts, 2,035 circuit miles operated
at
6
<PAGE>
138,000 volts and 1,097 circuit miles operated at 345,000 volts. HL&P
operates 9,636 circuit miles of underground distribution lines and
12.6 circuit miles of underground transmission lines, including 4.5
circuit miles operated at 69,000 volts and 8.1 circuit miles operated
at 138,000 volts. These lines have been constructed in, or adjoin, the
communities and municipalities served by HL&P. In addition, HL&P owns
and operates switching and transformer stations at its generating
plants and at various points on its system. All such facilities are
located within the State of Texas.
HL&P has no properties and furnishes no service outside of, or at the
state line of, the State of Texas.
3. THE FOLLOWING INFORMATION FOR THE LAST CALENDAR YEAR WITH RESPECT TO
CLAIMANT AND EACH OF ITS SUBSIDIARY PUBLIC UTILITY COMPANIES:
(a) NUMBER OF KWH OF ELECTRIC ENERGY SOLD (AT RETAIL OR WHOLESALE), AND
MCF OF NATURAL OR MANUFACTURED GAS DISTRIBUTED AT RETAIL.
During calendar year 1996, HL&P sold 64,362,099,186 kwh of electric
energy as follows:
Energy Sales
kwh (1)
------------
Residential 19,048,237,780
Commercial 14,640,762,156
Industrial 29,285,622,148
Other Utilities 1,268,138,063
Public Authorities 119,339,039
(1) Excludes unbilled energy sales.
HL&P distributed no natural or manufactured gas during 1996.
(b) NUMBER OF KWH OF ELECTRIC ENERGY AND MCF OF NATURAL OR MANUFACTURED
GAS DISTRIBUTED AT RETAIL OUTSIDE THE STATE IN WHICH EACH SUCH COMPANY IS
ORGANIZED.
None
(c) NUMBER OF KWH OF ELECTRIC ENERGY AND MCF OF NATURAL OR MANUFACTURED
GAS SOLD AT WHOLESALE OUTSIDE THE STATE IN WHICH EACH SUCH COMPANY IS ORGANIZED
OR AT THE STATE LINE.
None
(d) NUMBER OF KWH OF ELECTRIC ENERGY AND MCF OF NATURAL OR MANUFACTURED GAS
PURCHASED OUTSIDE THE STATE IN WHICH EACH SUCH COMPANY IS ORGANIZED OR AT THE
STATE LINE.
None
7
<PAGE>
4. THE FOLLOWING INFORMATION FOR THE REPORTING PERIOD WITH RESPECT TO
CLAIMANT AND EACH INTEREST IT HOLDS DIRECTLY OR INDIRECTLY IN AN EWG OR A
FOREIGN UTILITY COMPANY, STATING MONETARY AMOUNTS IN UNITED STATES DOLLARS:
(A) NAME, LOCATION, BUSINESS ADDRESS AND DESCRIPTION OF THE FACILITIES
USED BY THE EWG OR FOREIGN UTILITY COMPANY FOR THE GENERATION, TRANSMISSION AND
DISTRIBUTION OF ELECTRIC ENERGY FOR SALE OR FOR THE DISTRIBUTION AT RETAIL OF
NATURAL OR MANUFACTURED GAS.
(i) EWGs. The Claimant has an indirect interest in HIE Argener and HIE
Opco; each of which is an EWG as defined in Section 32 of the
1935 Act. The business address of HIE Argener and HIE Opco is Av.
Leandro N. Alem 690 - 14th Floor, 1001 Capital Federal (Buenos
Aires), Argentina.
HIE Argener owns a cogeneration facility (Facility) under
construction and located near San Nicolas, Argentina. HIE Argener
intends to sell the electric energy produced by the Facility in
the Argentine wholesale electric market. The Facility will
consist of one natural gas-fired turbine generator, one heat
recovery steam generator with a maximum net power production
capacity of approximately 160 MW, one 8 kilometer 220 KV, one-
circuit overhead transmission line interconnecting the Facility
to the Ramallo substation on the Argentine national grid, a one
bay 220 KV substation at the Facility, one incoming bay at the
Ramallo substation and associated transformers, circuit breakers
and related equipment.
HIE Opco, which currently provides operation and maintenance
services for the generation facility of a privately owned steel
plant, will operate the Facility. HIE Opco has no material
physical assets.
(ii) Foreign Utility Companies.
(a) Light. The Claimant has an indirect ownership interest in
11.35 percent of the common nominative shares of Light, a
foreign utility company located in Rio de Janeiro, Brazil.
The business address of Light is Avenida President Vargas,
642, 16th to 19th Floors, Rio de Janeiro, Brazil.
Light operates electric power generation, transmission and
distribution services in the state of Rio de Janerio,
Brazil. As of December 31, 1996, Light had a total nominal
installed generation capacity of approximately 719 MW.
Light's transmission system is composed of 230 Kv and 138 Kv
tension lines having a total length of approximately 2,200
Km. Light's distribution system covers a 10,970 sq. Km area.
As of
8
<PAGE>
December 31, 1996, Light served a total of approximately
2,700,000 customers.
(b) EDELAP. The Claimant has an indirect ownership interest in
48.6 percent of the capital stock of EDELAP, a foreign
utility company located in the city of La Plata, the
province of Buenos Aires, Argentina. The business address of
EDELAP is Calle 50, No. 543, (1900), La Plata, Argentina.
EDELAP distributes electricity to approximately 250,000
customers in La Plata, Argentina and its environs. Maximum
demand on its system is approximately 250 megawatts. EDELAP
has one substation and 1,499 kilometers of distribution
lines operated at 13,200 volts. Substantially all of the
power sold by EDELAP is transmitted through the Argentine
national grid.
(c) Central Dique. The Claimant has an indirect ownership
interest in Central Dique, a foreign utility company located
in the city of La Plata, the province of Buenos Aires,
Argentina. The business address of Central Dique is Calle
50, No. 543, (1900), La Plata, Argentina.
Central Dique owns the Central Dique Power Plant, which has
five gas turbines with a combined capacity of 84 megawatts.
Electric power generated by Central Dique is sold at retail
under short-term power contracts and at wholesale in the
Argentine wholesale electric market.
(d) EDESE. The Claimant has an indirect interest in EDESE, an
Argentine foreign utility company located in the city of
Santiago del Estero, the province of Santiago del Estero,
Argentina. The business address of EDESE is Avenida Roca (S)
214, 4200 Santiago del Estero, Argentina.
EDESE distributes electricity to approximately 100,000
customers in the province of Santiago del Estero. Maximum
demand on its system is approximately 65 megawatts. EDESE
has 2,260 circuit kilometers of primary distribution voltage
circuitry and 3,450 circuit-kilometers of secondary
distribution voltage circuitry operated at 13,200 volts.
Substantially all of the power sold by EDESE is transmitted
through the Argentine national grid.
(e) Rain. The Claimant has an indirect interest in Rain, an
Indian foreign utility company located in the city of
Hyderabad, the state of Andhra Pradesh, India. The business
address of Rain is 6-3-57 1/2, 2nd Floor,
9
<PAGE>
"Rockvista" Rockdale Estate, Somajiguda, Hyderabad 500 082,
India.
Rain is developing a petroleum coke calcining facility that
includes a power generation facility capable of generating
an annual average of approximately 41 megawatts of energy
available for sale. Electric power generated by Rain will be
sold at retail to industrial consumers and at wholesale to
the Andhra Pradesh State Electricity Board.
(B) NAME OF EACH SYSTEM COMPANY THAT HOLDS AN INTEREST IN SUCH EWG OR
FOREIGN UTILITY COMPANY; AND DESCRIPTION OF THE INTEREST HELD.
(i) EWGs.
Houston Argentina. Houston Argentina has a 100 percent beneficial
ownership interest in the capital stock of HIE Argener. Houston
Argentina also has a 100 percent beneficial ownership interest in
the capital stock of HIE Opco.
(ii) Foreign Utility Companies.
(a) HIE Cayman. HIE Cayman, a Cayman Islands corporation, owns
11.35 percent of the common nominative shares of Light.
(b) Houston Argentina. Houston Argentina owns 32.5 percent of
the capital stock of COINELEC, which owns as its sole asset
all the issued and outstanding shares of Class A stock of
each of EDELAP and Central Dique. The Class A shares held by
COINELEC represent 51 percent of the capital stock of each
of EDELAP and Central Dique.
On May 2, 1996, Houston Argentina purchased for
approximately $55 million the Class B Shares of EDELAP
formerly held by the Argentine government. After giving
effect to the subsequent sale of a portion of the Class B
Shares to a third party for approximately $10 million, the
Class B Shares owned by Houston Argentina represent 32
percent of the capital stock of EDELAP.
(c) Industrias. Industrias owns 90 percent of the capital stock
of EDESE.
(d) HIE Rain. HIE Rain owns 36 percent of the voting stock of
Rain. It is anticipated that HIE Rain's ownership interest
in Rain will be reduced to 20 percent upon completion of
a public offering (and associated allotment) of shares.
10
<PAGE>
(C) TYPE AND AMOUNT OF CAPITAL INVESTED, DIRECTLY OR INDIRECTLY, BY
THE HOLDING COMPANY CLAIMING EXEMPTION; ANY DIRECT OR INDIRECT GUARANTEE OF THE
SECURITY OF THE EWG OR FOREIGN UTILITY COMPANY BY THE HOLDING COMPANY CLAIMING
EXEMPTION; AND ANY DEBT OR OTHER FINANCIAL OBLIGATION FOR WHICH THERE IS
RECOURSE, DIRECTLY OR INDIRECTLY, TO THE HOLDING COMPANY CLAIMING EXEMPTION OR
ANOTHER SYSTEM COMPANY, OTHER THAN THE EWG OR THE FOREIGN UTILITY COMPANY.
(a) The following information summarizes the type and amount of
capital invested in EWGs or Foreign Utility Companies. "Capital
invested" amounts include (i) all amounts contributed by Claimant
to HI Energy or its subsidiaries and that are invested in EWGs
and Foreign Utility Companies (less amount distributed to
Claimant from HI Energy as a result of such investments),
(ii) development costs (such as costs incurred in preparing a
bid, conducting due diligence examinations and engaging in
preliminary discussions) that culminate in the acquisition of the
EWG or Foreign Utility Company, and (iii) the amount of any
guarantee or other funding commitment that is recourse to the
Claimant.
(i) Light. HI Energy acquired 11.35 percent of the common shares
of Light in May 1996 as a bidder in the government-sponsored
auction of 60 percent of Light's outstanding shares. As of
December 31, 1996, the Claimant had invested $393 million
(U.S. dollars) in Light.
(ii) EDELAP and Central Dique. In May 1996, the Claimant invested
$45 million (U.S. dollars) in the acquisition of Class B
shares of EDELAP representing approximately 32 percent of
the capital stock of EDELAP. As of December 31, 1996, the
Claimant had invested a total of $84 million (U.S. dollars)
in the Class A and Class B shares of EDELAP and Central
Dique.
(iii) EDESE. As of December 31, 1996, the Claimant had invested
$16 million (U.S. dollars) in the Class A and Class B shares
of EDESE.
(iv) HIE Argener and HIE Opco. As of December 31, 1996, the
Claimant had invested $50 million (U.S. dollars) in HIE
Argener and HIE Opco.
(v) Rain. As of December 31, 1996, the Claimant had invested $14
million (U.S. dollars) in Rain. This investment includes $5
million (U.S. dollars) in contingent obligations under the
terms of a support agreement entered into by HII in favor of
Citibank.
(b) Except as described below, there are no direct or indirect
guarantees by the Claimant of any security of Light, COINELEC,
EDELAP, Central Dique, EDESE, HIE Argener, HIE Opco, HIE Rain or
Rain.
11
<PAGE>
HI Energy has entered into a support agreement in favor of the
International Finance Corporation (IFC) under the terms of which
HI Energy has agreed to provide HIE Rain with sufficient funds to
meet certain funding obligations of HIE Rain under agreements
with the IFC relating to Rain. The maximum aggregate funding
commitment of HI Energy under this support agreement is
approximately $18 million, of which approximately $16 million is
to support contingent obligations of HIE Rain and the balance of
which is additional equity to be contributed to Rain.
In August 1996, the Claimant entered into an agreement (Support
Agreement) with Citibank, N.A. (Citibank) in connection with its
issuance of a US$5,334,008 letter of credit on behalf of Rain.
The letter of credit is intended to facilitate payments by Rain
to one of its construction contractors. Under the Support
Agreement, the Claimant has agreed to (i) continue to own,
directly or indirectly, 100 percent of the stock of HIE Rain and
(ii) to provide or cause to be provided to HIE Rain such funds as
may be necessary to enable HIE Rain to perform its obligations to
Citibank in respect of the letter of credit (US$5,334,008 plus
accrued interest, if any). The Support Agreement will terminate
upon the later of the expiration of the letter of credit or the
satisfaction of the obligations of HIE Rain to Citibank with
respect to the letter of credit.
(D) CAPITALIZATION AND EARNINGS OF THE EWG OR FOREIGN UTILITY COMPANY
DURING THE REPORTING PERIOD.
(i) Light. At December 31, 1996, the capitalization of Light was
approximately $2.9 billion (calculated on the basis of an
exchange ratio on December 31, 1996 of 1.0391 Brazilian reais to
one U.S. dollar) based on the book value of its assets in
accordance with generally accepted accounting principles in the
U.S.
During the twelve-month period ended December 31, 1996, Light had
earnings of approximately $224 million (calculated on the basis
of an exchange ratio of 1.0219 Brazilian reais to one U.S.
dollar, the average exchange ratio during the year ended
December 31, 1996).
(ii) EDELAP and Central Dique. At December 31, 1996, the combined
capitalization of EDELAP and Central Dique was approximately $218
million (calculated on the basis of an exchange ratio of one
Argentine peso to one U.S. dollar) based on the combined book
value of their assets in accordance with generally accepted
accounting principles in the U.S.
During the twelve-month period ended December 31, 1996, EDELAP
and Central Dique had combined earnings of approximately $1
million (calculated on the basis of an exchange ratio of one
Argentine peso to one U.S. dollar).
12
<PAGE>
(iii) EDESE. At December 31, 1996, the capitalization of EDESE was
approximately $18.5 million (calculated on the basis of an
exchange ratio of one Argentine peso to one U.S. dollar).
During the twelve-month period ended December 31, 1996, EDESE had
earnings of approximately $2 million (calculated on the basis of
an exchange ratio of one Argentine peso to one U.S. dollar) in
accordance with generally accepted accounting principles in the
U.S.
(iv) HIE Argener and HIE Opco. At December 31, 1996, the combined
capitalization of HIE Argener and HIE Opco was approximately $49
million (calculated on the basis of an exchange ratio of one
Argentine peso to one U.S. dollar). During the twelve-month
period ended December 31, 1996, neither HIE Argener nor HIE Opco
had any earnings because the project was still under
construction.
(v) Rain. At December 31, 1996, the capitalization of Rain was
approximately $23 million. During the twelve-month period ended
December 31, 1996, Rain was engaged in development and
construction activities and had no earnings.
(E) IDENTIFY ANY SERVICE, SALES OR CONSTRUCTION CONTRACT(S) BETWEEN THE
EWG OR FOREIGN UTILITY COMPANY AND A SYSTEM COMPANY, AND DESCRIBE THE SERVICES
TO BE RENDERED OR GOODS SOLD AND FEES OR REVENUES UNDER SUCH AGREEMENT(S).
(i) There are no "sales contracts" or "construction contract(s)" (as
such terms are defined in Section 2(a) of the 1935 Act), between
any EWG or foreign utility company and the Claimant or any system
company.
(ii) Houston Argentina is a party to a management assistance agreement
(the "Management Assistance Agreement") with EDELAP and Central
Dique. Under the Management Assistance Agreement, Houston
Argentina provides certain technical and managerial assistance
services to EDELAP and Central Dique, including advising and
assisting in the management of the facilities and training the
technicians and operating and managing personnel. The Management
Assistance Agreement expires in December 2002.
The fee under the Management Assistance Agreement, which is
shared by Houston Argentina with other shareholders of COINELEC,
is 2.7% of the gross receipts of EDELAP and Central Dique (net of
taxes) plus an additional $500,000 per year. The management fee
is payable quarterly in U.S. dollars. The Management Assistance
Agreement also provides that EDELAP and Central Dique will
reimburse Houston Argentina for certain costs associated with the
temporary assignment of persons employed by the Claimant
13
<PAGE>
or by subsidiaries of the Claimant to perform services on behalf
of EDELAP and Central Dique.
In addition, HI Energy is a party to a technical assistance
agreement (the "Technical Assistance Agreement") with Rain. Under
the Technical Assistance Agreement, HI Energy provides technical
and managerial services to Rain with respect to the design,
engineering, construction, operation and maintenance of Rain's
power generation facility. The Technical Assistance Agreement
expires upon the earlier to occur of (i) the fifth anniversary of
the commencement of operations, or (ii) the date HI Energy's
equity interest in Rain falls below ten percent.
HI Energy's base fee under the Technical Assistance Agreement is
$200,000 per year during construction. HI Energy is entitled to a
bonus payment (not to exceed $200,000) in the event electric
production upon completion of construction is greater than 47.5
megawatts. During operation, HI Energy will receive fees and
bonuses in an amount not to exceed 1-1/2% of Rain's electric
sales revenue. All fees and bonuses are payable in U.S. dollars.
The Technical Assistance Agreement also provides that HI Energy
will be reimbursed for reasonable costs and expenses incurred in
connection with rendering services under the Technical Assistance
Agreement.
14
<PAGE>
EXHIBIT A
A CONSOLIDATING STATEMENT OF INCOME AND SURPLUS OF THE CLAIMANT AND ITS
SUBSIDIARY COMPANIES FOR THE LAST CALENDAR YEAR, TOGETHER WITH A CONSOLIDATING
BALANCE SHEET OF CLAIMANT AND ITS SUBSIDIARY COMPANIES AS OF THE CLOSE OF SUCH
CALENDAR YEAR.
See Exhibits A-1 and A-2, respectively.
EXHIBIT B
FINANCIAL DATA SCHEDULE OF CLAIMANT.
EXHIBIT C
AN ORGANIZATIONAL CHART SHOWING THE RELATIONSHIP OF EACH EWG OR FOREIGN
UTILITY COMPANY TO ASSOCIATE COMPANIES IN THE HOLDING-COMPANY SYSTEM.
The above-named Claimant has caused this statement to be duly executed on
its behalf by its authorized officer on this 28th day of February, 1997.
HOUSTON INDUSTRIES INCORPORATED
By:/s/ Mary P. Ricciardello
------------------------
Mary P. Ricciardello
Vice President and Comptroller
CORPORATE SEAL
ATTEST:
/s/ R. E. Smith
- -----------------------------
Assistant Corporate Secretary
NAME, TITLE AND ADDRESS OF OFFICER TO WHOM NOTICES AND CORRESPONDENCE
CONCERNING THIS STATEMENT SHOULD BE ADDRESSED:
Mary P. Ricciardello
Vice President and Comptroller
Houston Industries Incorporated
1111 Louisiana, 47th Floor
Houston, TX 77002
15
<PAGE>
EXHIBIT A - 1
HOUSTON INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF INCOME AND RETAINED EARNINGS
TWELVE MONTHS ENDED DECEMBER 31, 1996
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
HII HL&P DVI HIEI HIBI ESC HIDI
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES:
ELECTRIC UTILITY $ 4,025,027
OTHER $ 47,628 $ 5,442 $ 2,590
--------------------------------------------------------------------------------------------
0 4,025,027 0 47,628 5,442 2,590 0
--------------------------------------------------------------------------------------------
OPERATING EXPENSES:
ELECTRIC:
FUEL 1,024,945
PURCHASED POWER 322,263
OPERATION AND MAINTENANCE 888,699
TAXES OTHER THAN INCOME TAXES 246,288
DEPRECIATION & AMORTIZATION 588 545,685 (4,786) 647 2
OTHER OPERATING EXPENSES 8,044 88 68,722 2,143 3,718 39
--------------------------------------------------------------------------------------------
TOTAL 8,632 3,027,880 88 63,936 2,790 3,720 39
--------------------------------------------------------------------------------------------
OPERATING INCOME (LOSS) (8,632) 997,147 (88) (16,308) 2,652 (1,130) (39)
--------------------------------------------------------------------------------------------
OTHER INCOME (EXPENSE):
LITIGATION SETTLEMENTS (61,750)
ALLOWANCE FOR OTHER FUNDS USED
DURING CONSTRUCTION 4,124
DIVIDEND INCOME 41,610 329,000
INTEREST INCOME 270 6,998 18 988 21
OTHER - NET (44) (19,412) (1,637) 25,270
INTEREST INCOME FROM SUBSIDIARIES 15,917
--------------------------------------------------------------------------------------------
TOTAL OTHER INCOME (EXPENSE) 57,753 (70,040) (1,619) 26,258 0 21 329,000
--------------------------------------------------------------------------------------------
INTEREST AND OTHER CHARGES:
INTEREST ON LONG-TERM DEBT 45,317 221,865
OTHER INTEREST 28,492 12,764 7,551 2,937
ALLOWANCE FOR BORROWED FUNDS USED DURING
CONSTRUCTION (CREDIT) (2,598)
PREFERRED DIVIDENDS OF SUBSIDIARY
--------------------------------------------------------------------------------------------
TOTAL INTEREST AND OTHER CHARGES 73,809 232,031 0 7,551 2,937 0 0
--------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES (24,688) 695,076 (1,707) 2,398 (285) (1,109) 328,961
INCOME TAXES (24,673) 265,658 (719) 2,228 (202) (388) (14)
--------------------------------------------------------------------------------------------
NET INCOME (LOSS) (15) 429,418 (988) 170 (83) (721) 328,975
DIVIDENDS ON PREFERRED STOCK 22,563
--------------------------------------------------------------------------------------------
NET INCOME (LOSS) FOR COMMON STOCK (15) 406,855 (988) 170 (83) (721) 328,975
EQUITY IN EARNINGS OF SUBSIDIARIES 404,907
CASH DIVIDENDS ON COMMON STOCK 361,126 329,000 328,975
--------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN RETAINED
EARNINGS 43,766 77,855 (988) 170 (83) (721) 0
RETAINED EARNINGS (DEFICIT) AT
BEGINNING OF PERIOD 1,953,722 2,150,086 (10,398) (40,628) (2,321) 0 16
ADJUSTMENT TO ADDITIONAL PAID-IN
CAPITAL
FOREIGN TRANSLATION GAIN/LOSS (363)
--------------------------------------------------------------------------------------------
RETAINED EARNINGS (DEFICIT) AT END
OF PERIOD $1,997,488 $ 2,227,941 $ (11,386) $ (40,821) $ (2,404) $ (721) $ 16
============================================================================================
EARNINGS (LOSS) PER COMMON SHARE (1) $ (0.00) $ 1.66 $ (0.00) $ 0.00 $ 0.00 $ 0.00 $0.00
(1) BASED ON WEIGHTED AVERAGE COMMON LEGEND OF SUBSIDIARY NAMES:
SHARES OUTSTANDING OF HOUSTON ---------------------------
INDUSTRIES INCORPORATED (000) - 244,443 HII - HOUSTON INDUSTRIES INCORPORATED
HL&P - HOUSTON LIGHTING & POWER COMPANY
DVI - DEVELOPMENT VENTURES, INC.
HIEI - HOUSTON INDUSTRIES ENERGY, INC.
HIBI - HOUSTON INDUSTRIES BUILDING, INC.
ESC - HL&P ENERGY SERVICES COMPANY
HIDI - HOUSTON INDUSTRIES (DELAWARE) INCORPORATED
</TABLE>
16
<PAGE>
EXHIBIT A-1
HOUSTON INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF INCOME AND RETAINED EARNINGS
TWELVE MONTHS ENDED DECEMBER 31, 1996
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
ELIMINATIONS/
HIPI URS HIM PFI RECLASSES CONSOLIDATED
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
ELECTRIC UTILITY $4,025,027
OTHER $ 159 $ 14,431 70,250
------------------------------------------------------------------------------------------------
159 0 0 0 14,431 4,095,277
------------------------------------------------------------------------------------------------
OPERATING EXPENSES:
ELECTRIC
FUEL 1,024,945
PURCHASED POWER 322,263
OPERATION AND MAINTENANCE 888,699
TAXES OTHER THAN INCOME TAXES 246,288
DEPRECIATION & AMORTIZATION 26 7,876 550,038
OTHER OPERATING EXPENSES 428 $ 10 (10,614) 72,578
------------------------------------------------------------------------------------------------
TOTAL 454 10 0 0 (2,738) 3,104,811
------------------------------------------------------------------------------------------------
OPERATING INCOME (LOSS) (295) (10) 0 0 17,169 990,466
------------------------------------------------------------------------------------------------
OTHER INCOME (EXPENSE):
LITIGATION SETTLEMENTS (33,250) (95,000)
ALLOWANCE FOR OTHER FUNDS USED
DURING CONSTRUCTION 4,124
DIVIDEND INCOME (329,000) 41,610
INTEREST INCOME (2,049) 6,246
OTHER - NET 42 (16,611) (12,392)
INTEREST INCOME FROM SUBSIDIARIES (15,917)
------------------------------------------------------------------------------------------------
TOTAL OTHER INCOME (EXPENSE) 0 42 0 0 (396,827) (55,412)
------------------------------------------------------------------------------------------------
INTEREST AND OTHER CHARGES:
INTEREST ON LONG-TERM DEBT 9,060 276,242
OTHER INTEREST 15 (18,020) 33,738
ALLOWANCE FOR BORROWED FUNDS USED
DURING CONSTRUCTION (CREDIT) (2,598)
PREFERRED DIVIDENDS OF SUBSIDIARY 22,563 22,563
------------------------------------------------------------------------------------------------
TOTAL INTEREST AND OTHER CHARGES 0 15 0 0 13,603 329,945
------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES (295) 17 0 (393,261) 605,109
INCOME TAXES (113) 138 0 (41,750) 200,165
------------------------------------------------------------------------------------------------
NET INCOME (LOSS) (182) (121) 0 0 (351,511) 404,944
DIVIDENDS ON PREFERRED STOCK (22,563)
------------------------------------------------------------------------------------------------
NET INCOME (LOSS) FOR COMMON STOCK (182) (121) 0 0 (328,948) 404,944
EQUITY IN EARNINGS OF SUBSIDIARIES (404,907)
CASH DIVIDENDS ON COMMON STOCK (657,975) 361,126
------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN RETAINED
EARNINGS (182) (121) 0 0 (75,880) 43,819
RETAINED EARNINGS (DEFICIT) AT
BEGINNING OF PERIOD (591) (5,486) 0 (4,343) (2,086,385) 1,953,672
ADJUSTMENT TO ADDITIONAL PAID-IN
CAPITAL 3 (3) 0
FOREIGN TRANSLATION GAIN/LOSS
------------------------------------------------------------------------------------------------
RETAINED EARNINGS (DEFICIT) AT
END OF PERIOD $ (773) $(5,607) $ 0 $ (4,340) $ (2,162,268) $1,997,490
------------------------------------------------------------------------------------------------
EARNINGS (LOSS) PER COMMON
SHARE (1) $ 0.00 $ (0.00) $0.00 $ 0.00 $ 1.66
------------------------------------------------------------------------------------------------
(1) BASED ON WEIGHTED AVERAGE COMMON LEGEND OF SUBSIDIARY NAMES:
SHARES OUTSTANDING OF HOUSTON ---------------------------
INDUSTRIES INCORPORATED (000)- 244,443 HIPI - HOUSTON INDUSTRIES PRODUCTS, INC.
URS - UTILITY RAIL SERVICES, INC.
HIM - HOUSTON INDUSTRIES MERGER, INC.
PFI - PRIMARY FUELS, INC.
</TABLE>
17
<PAGE>
EXHIBIT A - 2
HOUSTON INDUSTRIES INCORPORATED & SUBSIDIARIES
CONSOLIDATING BALANCE SHEET - ASSETS
DECEMBER 31, 1996
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
HII HL&P (1) DVI HIEI HIBI ESC HIDI
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
PROPERTY, PLANT, AND EQUIPMENT,
AT COST:
ELECTRIC PLANT $ 12,687,503
NUCLEAR FUEL 241,001
OTHER PROPERTY $ 9,582 $ 65,378 $ 12,377 $ 100
--------------------------------------------------------------------------------------------
TOTAL PROPERTY, PLANT
AND EQUIPMENT 9,582 12,928,504 0 65,378 12,377 100 0
LESS: ACCUMULATED DEPRECIATION
AND AMORTIZATION 5,753 4,252,745 164 453 2
--------------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT -
NET 3,829 8,675,759 0 65,214 11,924 98 0
--------------------------------------------------------------------------------------------
INVESTMENT IN ASSOCIATED COMPANIES 4,323,533 $ 150,978
--------------------------------------------------------------------------------------------
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS 58 643 46 6,550 133 $ 123 33
SPECIAL DEPOSITS 10
ACCOUNTS RECEIVABLE - OTHER 5,785 16,996 12,855 223 338
ACCRUED UNBILLED REVENUES 77,853
ACCOUNTS RECEIVABLE FROM ASSOCIATED
COMPANIES 15,000 1,493 1 (121) 994 41
NOTES RECEIVABLE FROM ASSOCIATED
COMPANIES 196,963 100
DIVIDEND RECEIVABLE 10,313
FUEL STOCK 61,795
MATERIALS & SUPPLIES, AT
AVERAGE COST 130,281
OTHER 5,326 10,770 3,198
--------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 233,445 299,841 147 22,482 1,350 502 33
--------------------------------------------------------------------------------------------
OTHER ASSETS:
INVESTMENT IN EQUITY SECURITIES 1,027,500
DEFERRED PLANT COSTS - NET 587,352
DEFERRED DEBITS 44,253 354,816 10,296 3,333 1,793 285
UNAMORTIZED DEBT EXPENSE AND
PREMIUM ON REACQUIRED DEBT 1,298 152,524
EQUITY INVESTMENTS IN AND ADVANCES
TO FOREIGN AND NON-REGULATED
AFFILIATES 501,991
REGULATORY TAX ASSET - NET 362,310
RECOVERABLE PROJECT COSTS - NET 163,630
--------------------------------------------------------------------------------------------
TOTAL OTHER ASSETS 1,073,051 1,620,632 10,296 505,324 1,793 285 0
--------------------------------------------------------------------------------------------
TOTAL $5,633,858 $ 10,596,232 $ 10,443 $ 593,020 $ 15,067 $ 885 $ 151,011
============================================================================================
</TABLE>
(1) INCLUDES THE CONSOLIDATION OF HL&P RECEIVABLES, INC. THE ONLY
ACTIVITY WAS A $1,000 EQUITY CONTRIBUTION BY HL&P.
18
<PAGE>
EXHIBIT A-2
HOUSTON INDUSTRIES INCORPORATED & SUBSIDIARIES
CONSOLIDATING BALANCE SHEET - ASSETS
DECEMBER 31, 1996
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
ELIMINATIONS/
HIPI URS HIM PFI RECLASSES CONSOLIDATED
---- ----- ----- ----- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
PROPERTY, PLANT, AND EQUIPMENT, AT COST
ELECTRIC PLANT $12,687,503
NUCLEAR FUEL 241,001
OTHER PROPERTY $ 2 $ (470) 86,969
---------------------------------------------------------
TOTAL PROPERTY, PLANT AND EQUIPMENT 2 0 0 0 (470) 13,015,473
LESS: ACCUMULATED DEPRECIATION AND AMORTIZATION 85 (152) 4,259,050
---------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT - NET (83) 0 0 0 (318) 8,756,423
---------------------------------------------------------
INVESTMENT IN ASSOCIATED COMPANIES (4,474,511)
---------------------------------------------------------
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS 43 $369 $ 1 2 8,001
SPECIAL DEPOSITS 10
ACCOUNTS RECEIVABLE - OTHER 81 (1) 36,277
ACCRUED UNBILLED REVENUES 77,853
ACCOUNTS RECEIVABLE FROM ASSOCIATED COMPANIES (17,408)
NOTES RECEIVABLE FROM ASSOCIATED COMPANIES (197,063)
DIVIDEND RECEIVABLE 10,313
FUEL STOCK 61,795
MATERIALS & SUPPLIES, AT AVERAGE COST 99 130,380
OTHER (3) 19,291
---------------------------------------------------------
TOTAL CURRENT ASSETS 220 369 1 0 (214,470) 343,920
---------------------------------------------------------
OTHER ASSETS:
INVESTMENTS IN EQUITY SECURITIES 1,027,500
DEFERRED PLANT COSTS - NET 587,352
DEFERRED DEBITS 412 (24,280) 390,908
UNAMORTIZED DEBT EXPENSE AND PREMIUM ON REACQUIRED DEBT 1 153,823
EQUITY INVESTMENTS IN AND ADVANCES TO FOREIGN AND
NON-REGULATED AFFILIATES 501,991
REGULATORY TAX ASSET - NET 362,310
RECOVERABLE PROJECT COSTS - NET 163,630
---------------------------------------------------------
TOTAL OTHER ASSETS 412 0 0 0 (24,279) 3,187,514
---------------------------------------------------------
TOTAL $549 $369 $ 1 $ 0 $(4,713,578) $12,287,857
=========================================================
</TABLE>
19
<PAGE>
EXHIBIT A - 2
HOUSTON INDUSTRIES INCORPORATED & SUBSIDIARIES
CONSOLIDATING BALANCE SHEET - LIABILITIES
DECEMBER 31, 1996
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
HII HL&P DVI HIEI HIBI ESC HIDI
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY:
SHAREHOLDERS' EQUITY:
COMMON STOCK $ 2,446,754 $ 1,675,927 $ 23,867 $ 455,199 $ 1 $ 1 $ 151,002
TREASURY STOCK (361,196)
UNEARNED ESOP SHARES (251,350)
UNREALIZED GAIN/LOSS ON EQUITY
SECURITIES (3,738)
RETAINED EARNINGS 1,997,488 2,227,941 (11,386) (40,821) (2,404) (721) 16
PREFERRED STOCK 135,179
--------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 3,827,958 4,039,047 12,481 414,378 (2,403) (720) 151,019
--------------------------------------------------------------------------------------------
LONG-TERM DEBT:
FIRST MORTGAGE BONDS 2,670,041
OTHER LONG-TERM DEBT - NET 349,098 6,511
--------------------------------------------------------------------------------------------
TOTAL LONG-TERM DEBT 349,098 2,676,552 0 0 0 0 0
--------------------------------------------------------------------------------------------
TOTAL CAPITALIZATION 4,177,056 6,715,599 12,481 414,378 (2,403) (720) 151,019
--------------------------------------------------------------------------------------------
CURRENT LIABILITIES:
NOTES PAYABLE 1,097,646 234,665 5,561
NOTES PAYABLE TO ASSOCIATED
COMPANIES 100 19,600 162,100 15,263
ACCOUNTS PAYABLE 7,354 142,439 7,397 362 130 0
ACCOUNTS PAYABLE TO ASSOCIATED
COMPANIES 274 5,744 4,730 1,400 1,756
TAXES ACCRUED (29,271) 196,444 (1,613) 1,300 517 (313) (8)
INTEREST ACCRUED 7,473 60,234
DIVIDENDS ACCRUED 92,515
ACCRUED LIABILITIES TO
MUNICIPALITIES 23,228
CURRENT PORTION OF LONG-TERM
DEBT AND PREFERRED STOCK 254,463
OTHER 887 115,679 2,387 (3) (8)
--------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 1,176,978 1,052,496 (1,613) 183,475 17,539 1,565 (8)
--------------------------------------------------------------------------------------------
DEFERRED CREDITS:
ACCUMULATED DEFERRED INCOME TAXES 201,833 2,124,567 (651) (12,903) (87)
UNAMORTIZED INVESTMENT TAX CREDIT 373,749
OTHER 77,991 329,821 226 8,070 18 40
--------------------------------------------------------------------------------------------
TOTAL DEFERRED CREDITS 279,824 2,828,137 (425) (4,833) (69) 40 0
--------------------------------------------------------------------------------------------
TOTAL $ 5,633,858 $10,596,232 $ 10,443 $ 593,020 $15,067 $ 885 $ 151,011
============================================================================================
</TABLE>
20
<PAGE>
EXHIBIT A-2
HOUSTON INDUSTRIES INCORPORATED & SUBSIDIARIES
CONSOLIDATING BALANCE SHEETS - LIABILITIES
DECEMBER 31, 1996
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
ELIMINATIONS/
HIPI URS HIM PFI RECLASSES CONSOLIDATED
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY:
SHAREHOLDERS' EQUITY:
COMMON STOCK $ 441 $ 6,160 $1 $ 5 $(2,312,604) $ 2,446,754
TREASURY STOCK (361,196)
UNEARNED ESOP SHARES (251,350)
UNREALIZED GAIN/LOSS ON EQUITY SECURITIES (3,737)
RETAINED EARNINGS (773) (5,607) (4,340) (2,161,903) 1,997,490
PREFERRED STOCK 135,179
-----------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY (332) 553 1 (4,335) (4,474,507) 3,963,140
-----------------------------------------------------------------------------
LONG-TERM DEBT:
FIRST MORTGAGE BONDS 2,670,041
OTHER LONG-TERM DEBT - NET 355,609
-----------------------------------------------------------------------------
TOTAL LONG-TERM DEBT 0 0 0 0 3,025,650
-----------------------------------------------------------------------------
TOTAL CAPITALIZATION (332) 553 1 (4,335) (4,474,507) 6,988,790
-----------------------------------------------------------------------------
CURRENT LIABILITIES:
NOTES PAYABLE 1,377,872
NOTES PAYABLE TO ASSOCIATED COMPANIES (197,063)
ACCOUNTS PAYABLE 157,682
ACCOUNTS PAYABLE TO ASSOCIATED COMPANIES 950 (14,854)
TAXES ACRUED (72) (184) 2,487 21,724 191,011
INTEREST ACCRUED 67,707
DIVIDENDS ACCRUED 92,515
ACCRUED LIABILITIES TO MUNICIPALITIES 23,228
CURRENT PORTION OF LONG-TERM DEBT AND PREFERRED
STOCK 254,463
OTHER 11 1,392 (702) 119,643
-----------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 889 (184) 0 3,879 (190,895) 2,244,121
-----------------------------------------------------------------------------
DEFERRED CREDITS:
ACCUMULATED DEFERRED INCOME TAXES (8) 456 (48,176) 2,265,031
UNAMORTIZED INVESTMENT TAX CREDIT 373,749
OTHER 416,166
-----------------------------------------------------------------------------
TOTAL DEFERRED CREDITS (8) 0 0 456 (48,176) 3,054,946
-----------------------------------------------------------------------------
TOTAL $ 549 $ 369 $1 $ 0 $(4,713,578) $ 12,287,857
=============================================================================
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
HOUSTON INDUSTRIES ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF INCOME AND RETAINED EARNINGS
TWELVE MONTHS ENDED DECEMBER 31, 1996
(THOUSANDS OF DOLLARS)
HOUSTON HOUSTON
HOUSTON INDUSTRIES INDUSTRIAS INDUSTRIES
INDUSTRIES ENERGY - HIE FORD HOUSTON ELECTRICAS DE ENERGY -
ENERGY, INC. DEER PARK, INC. HEIGHTS, INC. ARGENTINA S.A. HOUSTON S.A. INDIA, INC
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES (1) 1,969 13 1,397 41,647 3
OPERATING EXPENSES:
GENERAL & ADMINISTRATIVE 20,858 816 760 35,528 275
DEPRECIATION & AMORTIZATION 496 1,424 10
--------------------------------------------------------------------------------------------
TOTAL 21,355 0 816 760 36,953 286
--------------------------------------------------------------------------------------------
OPERATING INCOME (LOSS) (21,356) 1,969 (803) 637 4,694 (282)
--------------------------------------------------------------------------------------------
OTHER INCOME (EXPENSE) - NET (5,834) 127 (1,004) 3
FIXED CHARGES:
OTHER INTEREST
--------------------------------------------------------------------------------------------
TOTAL FIXED CHARGES 0 0 0 0 0 0
--------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES (27,190) 1,969 (803) 764 3,690 (279)
INCOME TAXES (9,119) 710 (253) 213 1,186 (62)
--------------------------------------------------------------------------------------------
NET INCOME (LOSS) (18,071) 1,259 (550) 552 2,504 (220)
--------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN RETAINED
EARNINGS (18,071) 1,259 (550) 552 2,504 (220)
RETAINED EARNINGS (DEFICIT) AT BEGINNING
OF PERIOD (39,073) 649 638 913 (3,550) (204)
FOREIGN TRANSLATION GAIN/(LOSS) (363)
--------------------------------------------------------------------------------------------
RETAINED EARNINGS (DEFICIT) AT END
OF PERIOD (57,145) 1,908 87 1,465 (1,046) (787)
--------------------------------------------------------------------------------------------
EARNINGS (LOSS) PER COMMON SHARE (1) (0.07) 0.01 (0.00) 0.00 0.01 (0.00)
============================================================================================
</TABLE>
<TABLE>
<CAPTION>
HOUSTON HOUSTON
INDUSTRIES INDUSTRIES
ENERGY - ENERGY - ELIMINATIONS/
BRAZIL CAYMAN RECLASSIFICATION CONSOLIDATED
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING REVENUES
2,600 47,628
OPERATING EXPENSES:
GENERAL & ADMINISTRATIVE 66 37 10,381 68,722
DEPRECIATION & AMORTIZATION 1,064 (7,781) (4,786)
--------------------------------------------------------------------------------------------
TOTAL 66 1,101 2,600 63,936
--------------------------------------------------------------------------------------------
OPERATING INCOME (LOSS) (66) (1,101) 0 (16,308)
--------------------------------------------------------------------------------------------
OTHER INCOME (EXPENSE) - NET 16,917 16,049 26,258
FIXED CHARGES:
OTHER INTEREST 7,551 7,551
--------------------------------------------------------------------------------------------
TOTAL FIXED CHARGES 0 0 7,551 7,551
--------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES (66) 15,816 (8,500) 2,398
INCOME TAXES 1,053 8,500 2,228
--------------------------------------------------------------------------------------------
NET INCOME (LOSS) (66) 14,763 0 170
--------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN RETAINED
EARNINGS (66) 14,763 170
RETAINED EARNINGS (DEFICIT) AT BEGINNING
OF PERIOD (40,628)
FOREIGN TRANSLATION GAIN/(LOSS) (363)
--------------------------------------------------------------------------------------------
RETAINED EARNINGS (DEFICIT) AT END
OF PERIOD (66) 14,763 (40,821)
--------------------------------------------------------------------------------------------
EARNINGS (LOSS) PER COMMON SHARE (1) (0.00) 0.06 0.00
============================================================================================
</TABLE>
(1) BASED ON WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING OF HOUSTON
INDUSTRIES INCORPORATED (000)- 244,443
22
<PAGE>
HOUSTON INDUSTRIES ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET - ASSETS
DECEMBER 31, 1996
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
HOUSTON
HOUSTON INDUSTRIES INDUSTRIAS
INDUSTRIES ENERGY - HIE FORD HOUSTON ELECTRICAS DE
ENERGY, INC. DEER PARK, INC. HEIGHTS, INC. ARGENTINA S.A. HOUSTON S.A.
ASSETS: ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PROPERTY, PLANT, AND EQUIPMENT, AT COST: 942 45 14,793
OTHER PROPERTY 49,534
----------------------------------------------------------------------------------
TOTAL PROPERTY, PLANT AND EQUIPMENT 942 0 0 49,579 14,793
----------------------------------------------------------------------------------
LESS: ACCUMULATED DEPRECIATION
AND AMORTIZATION 164
----------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT - NET 779 0 0 49,579 14,793
----------------------------------------------------------------------------------
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS (2,625) 629 916 2,711 2,560
ACCOUNTS RECEIVABLE - CUSTOMERS 3,614 (74) 28,699 10,472
ACCOUNTS RECEIVABLE - OTHER 19
ACCOUNTS RECEIVABLE FROM ASSOCIATED COMPANIES 951
NOTES RECEIVABLE FROM ASSOCIATED COMPANIES
OTHER 1,418 260 1,204
----------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 1,959 1,973 916 31,670 14,236
----------------------------------------------------------------------------------
OTHER ASSETS:
DEFERRED DEBITS 1,802 1,418 317 1,095
EQUITY INVESTMENT IN CGE-L.L.C. 738
EQUITY INVESTMENT IN FOREIGN ELECTRIC
UTILITY 555,280 69,725
----------------------------------------------------------------------------------
TOTAL OTHER ASSETS 557,820 1,418 0 70,042 1,095
----------------------------------------------------------------------------------
TOTAL 560,558 3,391 916 151,291 30,123
==================================================================================
</TABLE>
<TABLE>
<CAPTION>
HOUSTON
INDUSTRIES
ENERGY - HIE HIE ELIMINATIONS/
INDIA, INC. BRAZIL CAYMAN RECLASSIFICATION CONSOLIDATED
ASSETS: ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PROPERTY, PLANT, AND EQUIPMENT, AT COST: 63 15,844
OTHER PROPERTY 49,534
----------------------------------------------------------------------------------
TOTAL PROPERTY, PLANT AND EQUIPMENT 63 0 0 0 65,378
----------------------------------------------------------------------------------
LESS: ACCUMULATED DEPRECIATION
AND AMORTIZATION 164
PROPERTY, PLANT AND EQUIPMENT - NET 63 0 0 0 65,214
----------------------------------------------------------------------------------
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS 152 200 2,022 (13) 6,550
ACCOUNTS RECEIVABLE - CUSTOMERS (42,711)
ACCOUNTS RECEIVABLE - OTHER 12,835 12,855
ACCOUNTS RECEIVABLE FROM ASSOCIATED COMPANIES (1,072) (121)
NOTES RECEIVABLE FROM ASSOCIATED COMPANIES
OTHER 316 3,198
----------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 468 200 2,022 (30,961) 22,482
----------------------------------------------------------------------------------
OTHER ASSETS:
DEFERRED DEBITS 119 (1,417) 3,333
EQUITY INVESTMENT IN CGE-L.L.C. (738)
EQUITY INVESTMENT IN FOREIGN ELECTRIC
UTILITY 6,321 417,513 (546,849) 501,991
----------------------------------------------------------------------------------
TOTAL OTHER ASSETS 6,440 0 417,513 (549,004) 505,324
----------------------------------------------------------------------------------
TOTAL 6,971 200 419,535 (579,965) 593,020
==================================================================================
</TABLE>
23
<PAGE>
HOUSTON INDUSTRIES ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET - LIABILITIES
DECEMBER 31, 1996
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
HOUSTON
HOUSTON INDUSTRIES INDUSTRIAS
IDUSTRIES ENERGY - HIE FORD HOUSTON ELECTRICAS DE
ENERGY, INC. DEER PARK, INC. HEIGHTS, INC. ARGENTINA S.A. HOUSTON S.A.
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY:
SHAREHOLDERS' EQUITY:
COMMON STOCK 455,187 1 738 149,645 15,967
RETAINED EARNINGS (56,384) 1,148 87 1,465 (1,046)
-----------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 398,803 1,149 825 151,110 14,921
-----------------------------------------------------------------------------------------
CURRENT LIABILITIES:
NOTES PAYABLE - OUTSIDE 561
NOTES PAYABLE TO ASSOCIATED
COMPANIES 162,100 3,798
ACCOUNTS PAYABLE 145 856 193 4,988
ACCOUNTS PAYABLE TO ASSOCIATED
COMPANIES 5,438 32 9 189
TAXES ACCRUED (1,504) 734 229 (21) 2,497
INTEREST ACCRUED
OTHER
-----------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 166,180 2,184 229 181 11,472
-----------------------------------------------------------------------------------------
DEFERRED CREDITS:
ACCUMULATED DEFERRED INCOME TAXES (13,846) (139)
OTHER 9,422 59 0 3,730
-----------------------------------------------------------------------------------------
TOTAL DEFERRED CREDITS (4,424) 59 (139) 0 3,730
-----------------------------------------------------------------------------------------
TOTAL 560,558 3,391 916 151,291 30,123
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
HOUSTON
INDUSTRIES
ENERGY - HIE HIE ELIMINATIONS/
INDIA, INC. BRAZIL CAYMAN RECLASSIFICATION CONSOLIDATED
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY:
SHAREHOLDERS' EQUITY:
COMMON STOCK 7,713 266 393,118 (567,436) 455,199
RETAINED EARNINGS (787) (66) 14,763 (40,821)
-----------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 6,926 200 407,881 (567,436) 414,378
-----------------------------------------------------------------------------------------
CURRENT LIABILITIES:
NOTES PAYABLE - OUTSIDE 5,000 5,561
NOTES PAYABLE TO ASSOCIATED
COMPANIES (3,798) 162,100
ACCOUNTS PAYABLE 44 42 1,127 7,397
ACCOUNTS PAYABLE TO ASSOCIATED
COMPANIES (938) 4,730
TAXES ACCRUED (28) (608) 1,300
INTEREST ACCRUED
OTHER
0 2,387 2,387
-----------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 44 0 5,014 (1,830) 183,475
-----------------------------------------------------------------------------------------
DEFERRED CREDITS:
ACCUMULATED DEFERRED INCOME TAXES 9,581 (8,500) (12,903)
OTHER (2,941) (2,199) 8,070
-----------------------------------------------------------------------------------------
TOTAL DEFERRED CREDITS 0 0 6,640 (10,699) (4,833)
-----------------------------------------------------------------------------------------
TOTAL 6,971 200 419,535 (579,965) 593,020
=========================================================================================
</TABLE>
24
<PAGE>
HOUSTON ARGENTINA S.A. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF INCOME AND RETAINED EARNINGS
TWELVE MONTHS ENDED DECEMBER 31, 1996
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
HOUSTON HIE HIE ELIMINATIONS/
ARGENTINA S.A. ARGENER S.A. OPCO S.A. RECLASSIFICATION CONSOLIDATED
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES 1,049 0 2,646 (2,299) 1,397
OPERATING EXPENSES:
GENERAL AND ADMINISTRATIVE 922 7 2,638 (2,807) 760
DEPRECIATION & AMORTIZATION
-------------------------------------------------------------------------------------
TOTAL 922 7 2,638 (2,807) 760
-------------------------------------------------------------------------------------
OPERATING INCOME (LOSS) 127 (7) 8 508 637
-------------------------------------------------------------------------------------
OTHER INCOME (EXPENSE) - NET 126 203 (201) 127
FIXED CHARGES:
OTHER INTEREST
-------------------------------------------------------------------------------------
TOTAL FIXED CHARGES 0 0 0 0 0
-------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES 253 196 8 307 764
-------------------------------------------------------------------------------------
INCOME TAXES 151 59 3 213
-------------------------------------------------------------------------------------
NET INCOME (LOSS) 102 137 5 307 552
-------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN RETAINED EARNINGS 102 137 5 307 552
RETAINED EARNINGS (DEFICIT) AT BEGINNING
OF PERIOD 12,169 (143) (21) (11,092) 913
-------------------------------------------------------------------------------------
RETAINED EARNINGS (DEFICIT) AT END
OF PERIOD 12,271 (6) (16) (10,785) 1,465
-------------------------------------------------------------------------------------
EARNINGS (LOSS) PER COMMON SHARE (1) 0.00 0.00 0.00 0.00
=====================================================================================
</TABLE>
(1) BASED ON WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING OF HOUSTON
INDUSTRIES INCORPORATED (000)- 244,443
25
<PAGE>
<TABLE>
<CAPTION>
HOUSTON ARGENTINA S.A. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET - ASSETS
DECEMBER 31, 1996
(THOUSANDS OF DOLLARS)
HOUSTON HIE HIE ELIMINATIONS/
ARGENTINA S.A. ARGENER S.A. OPCO S.A. RECLASSIFICATION CONSOLIDATED
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS:
PROPERTY, PLANT, AND EQUIPMENT, AT COST: 130,564 49,643 32 (180,194) 45
OTHER PROPERTY 49,534 49,534
--------------------------------------------------------------------------------
TOTAL PROPERTY, PLANT AND EQUIPMENT 130,564 49,643 32 (130,660) 49,579
--------------------------------------------------------------------------------
LESS: ACCUMULATED DEPRECIATION
AND AMORTIZATION --------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT - NET 130,564 49,643 32 (130,660) 49,579
--------------------------------------------------------------------------------
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS 2,470 85 155 2,711
ACCOUNTS RECEIVABLE - CUSTOMERS 0 32 28,667 28,699
ACCOUNTS RECEIVABLE - OTHER
ACCOUNTS RECEIVABLE FROM ASSOCIATED COMPANIES 28,674 13 27 (28,713)
NOTES RECEIVABLE FROM ASSOCIATED COMPANIES
OTHER 248 0 12 260
--------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 31,391 99 226 (46) 31,670
--------------------------------------------------------------------------------
OTHER ASSETS:
DEFERRED DEBITS 73 130 9 104 317
EQUITY INVESTMENT IN CGE-L.L.C.
EQUITY INVESTMENT IN FOREIGN ELECTRIC UTILITY 69,725 69,725
--------------------------------------------------------------------------------
TOTAL OTHER ASSETS 73 130 9 69,829 70,042
--------------------------------------------------------------------------------
TOTAL 162,029 49,873 267 (60,877) 151,291
================================================================================
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
HOUSTON ARGENTINA S.A. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET - LIABILITIES
DECEMBER 31, 1996
(THOUSANDS OF DOLLARS)
HOUSTON HIE HIE ELIMINATIONS/
ARGENTINA S.A. ARGENER S.A. OPCO S.A. RECLASSIFICATION CONSOLIDATED
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY:
SHAREHOLDERS' EQUITY:
COMMON STOCK 56,000 12 12 93,621 149,645
RETAINED EARNINGS 105,843 49,850 (16) (154,212) 1,465
------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 161,843 49,862 (4) (60,591) 151,110
------------------------------------------------------------------------------
CURRENT LIABILITIES:
NOTES PAYABLE TO ASSOCIATED COMPANIES
ACCOUNTS PAYABLE 217 36 5 (65) 193
ACCOUNTS PAYABLE TO ASSOCIATED COMPANIES 9 18 203 (221) 9
TAXES ACCRUED (40) (44) 63 (21)
INTEREST ACCRUED
------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 186 11 271 (286) 181
------------------------------------------------------------------------------
DEFERRED CREDITS:
ACCUMULATED DEFERRED INCOME TAXES
OTHER ------------------------------------------------------------------------------
TOTAL DEFERRED CREDITS 0 0 0 0 0
------------------------------------------------------------------------------
TOTAL 162,029 49,873 267 (60,877) 151,291
==============================================================================
</TABLE>
27
<PAGE>
INDUSTRIAS ELECTRICAS DE HOUSTON S.A. AND SUBSIDIARY
CONSOLIDATING STATEMENT OF INCOME AND RETAINED EARNINGS
TWELVE MONTHS ENDED DECEMBER 31, 1996
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
EMPRESA
DISTRIBUIDORA
INDUSTRIAS DE ELECTRICIDAD
ELECTRICAS DE DE SANTIAGO DEL ELIMINATIONS/
HOUSTON S.A. ESTERO S.A. RECLASSIFICATION CONSOLIDATED
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING REVENUES 41,647 41,647
OPERATING EXPENSES:
GENERAL AND ADMINISTRATIVE 35,528 35,528
DEPRECIATION & AMORTIZATION 1,424 1,424
---------------------------------------------------------------------------
TOTAL 0 36,953 0 36,953
---------------------------------------------------------------------------
OPERATING INCOME (LOSS) 0 4,694 0 4,694
---------------------------------------------------------------------------
OTHER INCOME (EXPENSE) - NET (1,004) (1,004)
FIXED CHARGES:
OTHER INTEREST
---------------------------------------------------------------------------
TOTAL FIXED CHARGES 0 0 0 0
---------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES 0 3,690 0 3,690
---------------------------------------------------------------------------
INCOME TAXES 1,186 1,186
---------------------------------------------------------------------------
NET INCOME (LOSS) 0 2,504 0 2,504
---------------------------------------------------------------------------
NET INCREASE (DECREASE) IN RETAINED EARNINGS 0 2,504 0 2,504
RETAINED EARNINGS (DEFICIT) AT BEGINNING OF PERIOD (3,550) (3,550) 3,550 (3,550)
---------------------------------------------------------------------------
RETAINED EARNINGS (DEFICIT) AT END OF PERIOD (3,550) (1,046) 3,550 (1,046)
---------------------------------------------------------------------------
EARNINGS (LOSS) PER COMMON SHARE (1) 0.00 0.01 0.01
===========================================================================
</TABLE>
(1) BASED ON WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING OF HOUSTON
INDUSTRIES INCORPORATED (000)- 244,443
28
<PAGE>
INDUSTRIAS ELECTRICAS DE HOUSTON S.A. AND SUBSIDIARY
CONSOLIDATING BALANCE SHEET - ASSETS
DECEMBER 31, 1996
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
EMPRESA
DISTRIBUIDORA
INDUSTRIAS DE ELECTRICIDAD
ELECTRICAS DE DE SANTIAGO DEL ELIMINATIONS/
HOUSTON S.A. ESTERO S.A. RECLASSIFICATION CONSOLIDATED
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
PROPERTY, PLANT, AND EQUIPMENT, AT COST: 14,793 14,793
OTHER PROPERTY
----------------------------------------------------------------------
TOTAL PROPERTY, PLANT AND EQUIPMENT 0 14,793 0 14,793
----------------------------------------------------------------------
LESS: ACCUMULATED DEPRECIATION
AND AMORTIZATION
----------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT - NET 0 14,793 0 14,793
----------------------------------------------------------------------
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS 2,560 2,560
ACCOUNTS RECEIVABLE - CUSTOMERS 10,472 10,472
ACCOUNTS RECEIVABLE - OTHER
ACCOUNTS RECEIVABLE FROM ASSOCIATED COMPANIES
NOTES RECEIVABLE FROM ASSOCIATED COMPANIES 0
OTHER 1,204 1,204
----------------------------------------------------------------------
TOTAL CURRENT ASSETS 0 14,236 0 14,236
----------------------------------------------------------------------
OTHER ASSETS:
DEFERRED DEBITS 1,095 1,095
EQUITY INVESTMENT IN CGE-L.L.C.
EQUITY INVESTMENT IN FOREIGN ELECTRIC UTILITY 16,228 (16,228)
----------------------------------------------------------------------
TOTAL OTHER ASSETS 16,228 1,095 (16,228) 1,095
----------------------------------------------------------------------
TOTAL 16,228 30,123 (16,228) 30,123
======================================================================
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
INDUSTRIAS ELECTRICAS DE HOUSTON S.A. AND SUBSIDIARY
CONSOLIDATING BALANCE SHEET - LIABILITIES
DECEMBER 31, 1996
(THOUSANDS OF DOLLARS)
EMPRESA
DISTRIBUIDORA
INDUSTRIAS DE ELECTRICIDAD
ELECTRICAS DE DE SANTIAGO DEL ELIMINATIONS/
HOUSTON S.A. ESTERO S.A. RECLASSIFICATION CONSOLIDATED
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY:
SHAREHOLDERS' EQUITY:
COMMON STOCK 17,406 15,967 (17,406) 15,967
RETAINED EARNINGS (1,178) 562 (430) (1,046)
---------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 16,228 16,529 (17,836) 14,921
---------------------------------------------------------------------------
CURRENT LIABILITIES:
NOTES PAYABLE TO ASSOCIATED COMPANIES 3,798 0 3,798
ACCOUNTS PAYABLE 5,550 (562) 4,988
ACCOUNTS PAYABLE TO ASSOCIATED COMPANIES 189 189
TAXES ACCRUED 2,328 169 2,497
INTEREST ACCRUED 189 (189)
---------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 0 11,864 (392) 11,472
---------------------------------------------------------------------------
DEFERRED CREDITS:
ACCUMULATED DEFERRED INCOME TAXES
OTHER 1,730 2,000 3,730
---------------------------------------------------------------------------
TOTAL DEFERRED CREDITS 0 1,730 2,000 3,730
---------------------------------------------------------------------------
TOTAL 16,228 30,123 (16,228) 30,123
===========================================================================
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
HOUSTON INDUSTRIES ENERGY - INDIA, INC. AND SUBSIDIARY
CONSOLIDATING STATEMENT OF INCOME AND RETAINED EARNINGS
TWELVE MONTHS ENDED DECEMBER 31, 1996
(THOUSANDS OF DOLLARS)
HOUSTON HOUSTON
INDUSTRIES INDUSTRIES
ENERGY - ENERGY - ELIMINATIONS/
INDIA, INC. RAIN, INC. RECLASSIFICATION CONSOLIDATED
------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING REVENUES 3 3
OPERATING EXPENSES:
GENERAL AND ADMINISTRATIVE 275 0 275
DEPRECIATION & AMORTIZATION 10 10
------------------------------------------------------------------
TOTAL 285 0 0 286
------------------------------------------------------------------
OPERATING INCOME (LOSS) (285) 3 0 (282)
------------------------------------------------------------------
OTHER INCOME (EXPENSE) - NET 3 3
FIXED CHARGES:
OTHER INTEREST
------------------------------------------------------------------
TOTAL FIXED CHARGES 0 0 0 0
------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES (285) 6 (279)
INCOME TAXES (62) (62)
------------------------------------------------------------------
NET INCOME (LOSS) (223) 6 0 (220)
------------------------------------------------------------------
NET INCREASE (DECREASE) IN RETAINED EARNINGS (223) 6 (220)
RETAINED EARNINGS (DEFICIT) AT BEGINNING OF PERIOD (200) (4) (204)
FOREIGN TRANSLATION GAIN /(LOSS) (363)
------------------------------------------------------------------
RETAINED EARNINGS (DEFICIT) AT END OF PERIOD (423) 2 0 (787)
------------------------------------------------------------------
EARNINGS (LOSS) PER COMMON SHARE (1) (0.00) 0.00 (0.00)
==================================================================
</TABLE>
(1) BASED ON WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING OF HOUSTON
INDUSTRIES INCORPORATED (000) - 244,443
31
<PAGE>
<TABLE>
<CAPTION>
HOUSTON INDUSTRIES ENERGY - INDIA, INC. AND SUBSIDIARY
CONSOLIDATING BALANCE SHEET - ASSETS
DECEMBER 31, 1996
(THOUSANDS OF DOLLARS)
HOUSTON HOUSTON
INDUSTRIES INDUSTRIES
ENERGY - ENERGY - ELIMINATIONS/
INDIA, INC. RAIN, INC. RECLASS CONSOLIDATED
------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
PROPERTY, PLANT, AND EQUIPMENT, AT COST: 63 63
OTHER PROPERTY
------------------------------------------------------------------
------------------------------------------------------------------
TOTAL PROPERTY, PLANT AND EQUIPMENT 63 0 0 63
------------------------------------------------------------------
LESS: ACCUMULATED DEPRECIATION
AND AMORTIZATION
------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT - NET 63 0 0 63
------------------------------------------------------------------
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS 106 45 152
ACCOUNTS RECEIVABLE - CUSTOMERS
ACCOUNTS RECEIVABLE - OTHER
ACCOUNTS RECEIVABLE FROM ASSOCIATED COMPANIES
NOTES RECEIVABLE FROM ASSOCIATED COMPANIES
OTHER 317 (1) 316
------------------------------------------------------------------
TOTAL CURRENT ASSETS 424 45 (1) 468
------------------------------------------------------------------
OTHER ASSETS:
DEFERRED DEBITS 119 119
EQUITY INVESTMENT IN CGE-L.L.C.
EQUITY INVESTMENT IN FOREIGN ELECTRIC UTILITY 6,405 6,321 (6,405) 6,321
------------------------------------------------------------------
TOTAL OTHER ASSETS 6,405 6,321 (6,286) 6,440
------------------------------------------------------------------
TOTAL 6,892 6,366 (6,287) 6,971
==================================================================
</TABLE>
32
<PAGE>
HOUSTON INDUSTRIES ENERGY - INDIA, INC. AND SUBSIDIARY
CONSOLIDATING BALANCE SHEET - LIABILITIES
DECEMBER 31, 1996
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
HOUSTON HOUSTON
INDUSTRIES INDUSTRIES
ENERGY - ENERGY - ELIMINATIONS/
INDIA, INC. RAIN, INC. RECLASSIFICATION CONSOLIDATED
------------------------------------------------------------------
<S> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY:
SHAREHOLDERS' EQUITY:
COMMON STOCK 2 6,375 1,336 7,713
RETAINED EARNINGS 6,886 (49) (7,624) (787)
------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 6,888 6,326 (6,288) 6,926
------------------------------------------------------------------
CURRENT LIABILITIES:
NOTES PAYABLE TO ASSOCIATED COMPANIES
ACCOUNTS PAYABLE 6 40 (1) 44
ACCOUNTS PAYABLE TO ASSOCIATED COMPANIES
TAXES ACCRUED
INTEREST ACCRUED
------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 6 40 (1) 44
------------------------------------------------------------------
DEFERRED CREDITS:
ACCUMULATED DEFERRED INCOME TAXES
OTHER
------------------------------------------------------------------
TOTAL DEFERRED CREDITS 0 0 0 0
------------------------------------------------------------------
TOTAL 6,894 6,366 (6,287) 6,971
==================================================================
</TABLE>
33
<PAGE>
EXHIBIT B
Financial Data Schedule
Houston Industries Incorporated
December 31, 1996
(Thousands of Dollars)
Consolidated Total Assets $12,287,857
Consolidated Total Operating Revenues $ 4,095,277
Consolidated Net Income $ 404,944
34
<PAGE>
EXHIBIT C
Organizational Chart of System Companies
Houston Industries Incorporated (a Texas corporation, "Claimant")
Houston Industries Energy, Inc. (100% owned by Claimant), (a Delaware
corporation, "HI Energy")
HIE Light, Inc. (100% owned by HI Energy), (a Delaware corporation, "HIE
Light")
HIE Cayman Holdings, Inc. (100% owned by HIE Light), (a Cayman Islands
corporation, "HIE Holdings")
HIE Cayman Investments, Inc. (100% owned by HIE Light), (a Cayman Islands
corporation, "HIE Investments")
Houston Industries Energy - Cayman, Inc. (99% owned by HIE Holdings and
1% owned by HIE Investments), (a Cayman Islands corporation, "HIE
Cayman")
Light - Servicos de Eletricidade S.A. (11.35% beneficially owned by
HIE Cayman)
Houston Argentina S.A. (100% owned by HI Energy), (an Argentine corporation,
"HI Argentina")
HIE Argener S.A. (100% owned by HI Argentina), (an Argentine corporation,
"HIE Argener")
HIE Opco S.A. (100% owned by HI Argentina), (an Argentine corporation,
"HIE Opco")
Compania de Inversiones en Electricidad S.A. (32.5% owned by HI Argentina
and 30.381% owned by HI Argentina), (an Argentine corporation, "COINELEC")
Empresa Distribuidora La Plata S.A. (51% owned by COINELEC), (an
Argentine corporation,"EDELAP")
Central Dique S.A. (51% owned by COINELEC), (an Argentine corporation,
"Central Dique")
Industrias Electricas de Houston S.A. (100% beneficially owned by HI
Energy), (an Argentine corporation, "Industrias")
Empresa Distribuidora de Electricidad de Santiago del Estero S.A.
(90% owned by Industrias), (an Argentine corporation, "EDESE")
Houston Industries Energy - India, Inc. (100% owned by HI Energy), (a
Mauritius corporation, "HIE India")
Houston Industries Energy - Rain, Inc. (100% owned by HIE India), (a
Mauritius corporation, "HIE Rain")
35
<PAGE>
Rain Calcining Limited (36% owned by HIE Rain), (an Indian corporation,
"Rain")
36
<TABLE> <S> <C>
<PAGE>
<ARTICLE> OPUR3
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-ASSETS> 12,287,857
<TOTAL-OPERATING-REVENUES> 4,095,277
<NET-INCOME> 404,944
</TABLE>
