SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM U5S
ANNUAL REPORT
For the Year ended December 31, 1999
Filed pursuant to the Public Utility Holding Company Act of 1935 by
Eastern Utilities Associates, P.O. Box 2333, Boston, Massachusetts 02107
04-1271872
(I.R.S. Employer Identification No.)
FORM U5S-ANNUAL REPORT
For the Calendar Year 1999
ITEMS
<TABLE>
FORM U5S-ANNUAL REPORT
For the Calendar Year 1999
ITEMS
ITEM 1. SYSTEM COMPANIES AND INVESTMENTS THEREIN AS OF DECEMBER 31, 1999
<CAPTION>
% of
Name of Company Number of Common Voting Issuer Owner's
(add abbreviation used herein) Shares Owned Power Book Value Book Value
<S> <C> <C> <C> <C>
Eastern Utilities Associates Publicly Owned (1) $358,028,883 $
(EUA or the Association)
EUA Service Corporation 100 100% (2) 2,658,003 2,658,003
(EUA Service)
Blackstone Valley Electric 184,062 100% (2) 44,605,387 44,605,387
Company (Blackstone)
Newport Electric Corporation 1,000,000 100% (2) 26,193,826 26,193,826
(Newport)
Eastern Edison Company 2,891,357 100% (2) 260,647,925 260,647,925
(Eastern Edison)
Montaup Electric Company 586,000 100% (3) 133,590,336 133,590,336
(Montaup)
Preferred Stock (3) 1,500,000 1,500,000
Debenture Bonds (Unsecured) (3) 60,575,000 60,575,000
Pollution Control
Bonds (Unsecured) - Net (3) 27,677,201 27,677,201
EUA Cogenex Corporation 1,000 100% (2) 42,008,241 42,008,241
(EUA Cogenex)
EUA Citizens Conservation
Services, Inc. 10,000 100% (4) 69,626 69,626
Northeast Energy Management, Inc. 10,000 100% (4) 8,290,997 8,290,997
(NEM)
EUA Cogenex West 10,000 100% (4) 4,183,098 4,183,098
(formerly EUA Highland Corporation)
</TABLE>
<TABLE>
ITEM 1. SYSTEM COMPANIES AND INVESTMENTS THEREIN AS OF DECEMBER 31, 1999
(Continued)
<CAPTION>
% of
Name of Company Number of Common Voting Issuer Owner's
(add abbreviation used herein) Shares Owned Power Book Value Book Value
<S> <C> <C> <C> <C>
APS Cogenex L.L.C. 50% (5) 187,409 187,409
EUA Cogenex-Canada Inc. 100 100% (4) $691,728 $691,728
(Cogenex Canada)
EUA Cogenex-Canada
Energy Services Inc. 100 100% (6)
EUA WestCoast L.P. 50% (7) 883,649 883,649
EUA Energy Capital and
Services I 50% (8) 10,868,116 10,868,116
EUA Energy Capital and
Services II 50% (8) 9,759,262 9,759,262
EUA FRC II Energy Associates 50% (8) 871 871
EUA Energy Investment Corporation 100 100% (2) (41,461,692) (41,461,692)
(EUA Energy)
EUA BIOTEN, Inc. 100 100% (9) 11,514,827 11,514,827
BIOTEN GPM (11) 2 100%(11)
BIOTEN Operations, Inc. (11) 1,000 100%(11) 1,020 1,020
Renova, L.L.C. (12) 100% (5) 83,582 83,582
EUA Ocean State Corporation 1 100% (2) 17,510,466 17,510,466
(EUA Ocean State)
Ocean State Power I 29.9% 29.9% (8) 27,163,259 27,163,259
Ocean State Power II 29.9% 29.9% (8) 21,331,798 21,331,798
</TABLE>
On April 19, 2000, EUA completed its merger with National Grid USA (formerly
New England Electric System or NEES). National Grid USA purchased all of the
outstanding common shares of EUA for $31.459 per share, or approximately $634
million.
On August 30, 1999, EUA TransCapacity, a wholly-owned subsidiary of EUA
Energy, sold all of its assets in TransCapacity L.P. and at the same time
dissolved the TransCapacity L.P. In addition, EUA Energy Services, Inc.
Eastern Unicord Corporation, EUA Compression Services, Inc., EUA
Telecommunications Corporation and Eastern Edison Electric Company were
dissolved in 1999.
________
(1) Cumulative Voting.
(2) Wholly-owned by EUA.
(3) Wholly-owned by Eastern Edison as of December 31, 1999. In February 2000,
the securities of Montaup were transferred from Eastern Edison to EUA.
(4) Wholly-owned by EUA Cogenex.
(5) Limited Liability Corporation.
(6) Wholly-owned by EUA Cogenex-Canada Inc.
(7) Limited Partnership.
(8) General Partnership.
(9) Wholly-owned by EUA Energy.
(10) Effective June 1, 1998, EUA BIOTEN, Inc. increased its profits and voting
interests in BIOTEN Partnership to 80%. The Partnership was dissolved on
February 25, 1999.
(11) Wholly-owned by EUA BIOTEN, Inc. BIOTEN General Partnership was dissolved
on February 25, 1999. BIOTEN GPM and BIOTEN Operations, Inc. are now
direct subsidiaries of EUA BIOTEN, Inc.
(12) On September 30, 1999, EUA Energy Investment sold certain of Renova L.L.C.
assets to its management. The dissolution of Renova L.L.C. is in
process.
ITEM 2. ACQUISITIONS OR SALES OF UTILITY ASSETS
Brief Description
Name of Company of Transaction Consideration Exemptions
(1) (2) (3) (4)
Montaup Electric Company Somerset Station $49,050,000 Section 32 (C)
Wyman Unit 4 1,885,000 Section 32 (C)
Seabrook Unit I 4,086,065 Section 32 (C)
ITEM 3. ISSUE, SALE, PLEDGE, GUARANTEE OR ASSUMPTION OF SYSTEM SECURITIES
Date and
Type of Form of
Name of Issuer Security Transaction Consideration Exemption
(1) (2) (3) (4) (5)
None.
The following refers to short-term borrowing by EUA system companies during
1999:
Highest Effective
Balance at Balance Date of Average
Year-end During Year Highest Interest Rate
(000's) (000's) Balance For Year
$143,955 $148,780 12/6/99 5.5%
EUA Cogenex is required under certain contracts with various government
entities and utility companies to maintain either a letter of credit or
performance bond to collateralize performance under the contract. These
contingent liabilities will only be drawn by the customer if EUA Cogenex fails
to perform under the construction contract. For the letters of credit, the
highest amount outstanding during 1999 was approximately $3.4 million and the
year end balance was zero. For the performance bonds, the highest amount
outstanding during 1999 and the year end balance was approximately $13.4
million.
<TABLE>
ITEM 4. ACQUISITION, REDEMPTION OR RETIREMENT OF SYSTEM SECURITIES
<CAPTION>
Name of Company
Acquiring,
Name of Issuer Redeeming Number of Shares or
and or Retiring Principal Amount
Title of Issue Securities Acquired, Redeemed, Consideration Authorization
(1) (2) or Retired (3) (4) (5)
<S> <C> <C> <C> <C>
Blackstone: Blackstone
First Mortgage Bonds:
9 1/2% due 2004 $1,500,000 $1,500,000 (a)
Eastern Edison: Eastern Edison
First Mortgage and
Collateral Trust Bonds:
6 7/8% due 2023 40,000,000 40,000,000 (a)
8% due 2023 40,000,000 40,000,000 (a)
6.35% due 2003 8,000,000 8,000,000 (a)
Secured Medium
Term Notes:
7.78% due 2002 35,000,000 35,000,000 (a)
Newport: Newport
First Mortgage Bonds:
8.95% due 2001 650,000 650,000 (a)
9.0% due 1999 1,386,000 1,386,000 (a)
8.95% due 1999 8,000,000 8,000,000 (a)
Small Business
Administration Loan:
6.5% due 2005 532,684 532,684 (a)
EUA Cogenex: EUA Cogenex
Unsecured Notes:
9.6% due 2001 3,200,000 3,200,000 (a)
10.56% due 2005 3,500,000 3,500,000 (a)
EUA Service: EUA Service
Secured Notes:
10.20% due 2008 1,100,000 1,100,000 (a)
EUA Ocean State: EUA Ocean State
Unsecured Notes:
9.59% due 2011 2,476,660 2,476,660 (a)
(a) Rule 42
</TABLE>
<TABLE>
ITEM 5. INVESTMENTS IN SECURITIES OF NONSYSTEM COMPANIES
<CAPTION>
% of Number of Shares
Voting or Principal Book
Name of Owner Name of Issuer Security Owned Power Amount Owned Value
(1) (2) (3) (4) (5) (6)
<S> <C> <C> <C> <C> <C>
Eastern Edison Massachusetts Capital Stock less than 1,040 shares $ 10,400
Business one
Development Corp.*
Montaup Yankee Atomic Capital Stock 4.5 6,903 shares 708,303
Electric Co. **
" " Conn. Yankee Capital Stock 4.5 15,750 shares 4,711,136
Atomic Power Co.**
" " Vermont Yankee Capital Stock 2.5 9,801 shares 1,306,653
Nuclear
Power Corp. **
" " Maine Yankee Capital Stock 4.0 20,000 shares 3,126,808
Atomic
Power Co. **
" " NE Hydro Trans. Capital Stock 3.3 102,197 shares 1,546,014
Electric Co. ***
" " NE Hydro Capital Stock 3.3 491 shares 878,843
Trans. Corp. ***
___________
* Development company.
** Regional nuclear generating company.
*** Owner of Transmission Facilities.
</TABLE>
<TABLE>
ITEM 6. OFFICERS AND DIRECTORS
Part I. As of December 31, 1999. Names of System Companies with which Connected
<CAPTION>
Blackstone
Eastern EUA Valley Newport Eastern Montaup
Utilities Service Electric Electric Edison Electric
Associates Corporation Company Corporation Company Company
<S> <C> <C> <C> <C> <C> <C>
Marc J. Aronson Boott Mills South
100 Foot of John Street
Lowell, MA 01852
Russell A. Boss One Albion Road TR
Lincoln, RI 02865
Richard Bower 37 Linden Terrace
Ottawa, Ontario,
Canada K1S1Z1
J. Thomas Brett 275 Slater St., Ste 1700
Ottawa, Ontario,
Canada K1P 5H9
John D. Carney P.O. Box 543 EVP D,EVP D,P D,P D,P D,EVP
W. Bridgewater, MA 02379
Paul J. Choquette, Jr. 7 Jackson Walkway TR
Providence, RI 02940
Peter S. Damon 41 Long Wharf Mall TR
Newport, RI 02840
Janice P. DeBarros Boott Mills South
100 Foot of John Street
Lowell, MA 01852
Peter B. Freeman 100 Alumni Drive TR
Providence, RI 02906
Barbara A. Hassan P.O. Box 543 D,VP VP VP VP
W. Bridgewater, MA 02379
Clifford J. Hebert, Jr. P.O. Box 543 T,S D,VP,T,S,C D,T,S D,T,S D,T,C T,C
W. Bridgewater, MA 02379
Michael J. Hirsh P.O. Box 543 VP VP VP VP
W. Bridgewater, MA 02379
Darcy L. Immerman 100 Foot of John Street
Lowell, MA 01852
Kevin A. Kirby P.O Box 543 D,VP VP VP VP D,VP
W. Bridgewater, MA 02379
Larry A. Liebenow 1082 Davol Street, 5th Fl. TR
Fall River, MA 02720
</TABLE>
<TABLE>
ITEM 6. OFFICERS AND DIRECTORS - Continued Names of System Companies with which Connected
Part I. As of December 31, 1999.
<CAPTION>
Blackstone
Eastern EUA Valley Newport Eastern Montaup
Utilities Service Electric Electric Edison Electric
Associates Corporation Company Corporation Company Company
<S> <C> <C> <C> <C> <C> <C>
Edward T. Liston Boott Mills South D, VP
100 Foot of John Street
Lowell, MA 01852
Marc F. Mahoney P.O. Box 543 VP VP VP VP
W. Bridgewater, MA 02379
Jacek Makowski One Center Plaza, Ste 360 TR
Boston, MA 02108
Wesley W. Marple, Jr. 413 Hayden Hall TR
360 Huntington Avenue
Northeastern University
Boston, MA 02115
Stephen Morgan Boott Mills South
100 Foot of John Street
Lowell, MA 01852
Donald G. Pardus P.O. Box 543 TR,CH,CEO D,CH D,CH D,CH D,CH D,CH
W. Bridgewater, MA 02379
Robert G. Powderly P.O. Box 543 EVP D,EVP D,EVP D,EVP D,EVP D,EVP
W. Bridgewater, MA 02379
Donald T. Sena P.O. Box 543 AS AT,AC,AS AT,AS AT,AS AT,AS AT,AC
W. Bridgewater, MA 02379
Dennis St. Pierre P.O. Box 543 VP
W. Bridgewater, MA 02379
Margaret M. Stapleton P.O. Box 111 TR
Boston, MA 02117
John R. Stevens P.O. Box 543 TR,COO,P D,P D,VCH D,VCH D,VCH D,P
W. Bridgewater, MA 02379
W. Nicholas Thorndike 10 Walnut Place TR
Brookline, MA 02445
Mark S. White Boott Mills South
100 Foot of John Street
Lowell, MA 01852
</TABLE>
<TABLE>
ITEM 6. OFFICERS AND DIRECTORS - Continued
Part I. As of December 31, 1999 Names of System Companies with which Connected
<CAPTION>
EUA EUA Energy EUA
Cogenex Investment Ocean State
Corporation Corporation Corporation
<S> <C> <C> <C>
Marc J. Aronson Boott Mills South VP
100 Foot of John Street
Lowell, MA 01852
Russell A. Boss One Albion Road
Lincoln, RI 02865
Richard Bower 37 Linden Terrace
Ottawa, Ontario,
Canada K1S1Z1
J. Thomas Brett 275 Slater St., Ste 1700
Ottawa, Ontario,
Canada K1P 5H9
John D. Carney P.O. Box 543 D,EVP D,EVP EVP
W. Bridgewater, MA 02379
Paul J. Choquette, Jr. 7 Jackson Walkway
Providence, RI 02940
Peter S. Damon 41 Long Wharf Mall
Newport, RI 02840
Janice P. DeBarros Boott Mills South
100 Foot of John Street
Lowell, MA 01852
Peter B. Freeman 100 Alumni Drive
Providence, RI 02960
Barbara A. Hassan P.O. Box 543
W. Bridgewater, MA 02379
Clifford J. Hebert, Jr. P.O. Box 543 D,T,C D,T,C T,S
W. Bridgewater, MA 02379
Michael J. Hirsh P.O. Box 543
W. Bridgewater, MA 02379
Darcy L. Immerman Boott Mills South VP
100 Foot of John Street
Lowell, MA 01852
Kevin A. Kirby P.O Box 543 D,VP
W. Bridgewater, MA 02379
Larry A. Liebenow 1082 Davol Street, 5th Fl.
Fall River, MA 02720
</TABLE>
<TABLE>
ITEM 6. OFFICERS AND DIRECTORS - Continued
Part I. As of December 31, 1999 Names of System Companies with which Connected
<CAPTION>
EUA EUA Energy EUA
Cogenex Investment Ocean State
Corporation Corporation Corporation
<S> <C> <C> <C>
Edward T. Liston Boott Mills South D,P
100 Foot of John Street
Lowell, MA 01852
Marc F. Mahoney P.O. Box 543
W. Bridgewater, MA 02379
Jacek Makowski One Center Plaza, Ste 270
Boston, MA 02108
Wesley W. Marple, Jr. 413 Hayden Hall
360 Huntington Avenue
Northeastern University
Boston, MA 02115
Stephen Morgan Boott Mills South
100 Foot of John Street
Lowell, MA 01852
Donald G. Pardus P.O. Box 543 D,CH D,CH D,CH
W. Bridgewater, MA 02379
Robert G. Powderly P.O. Box 543 D,EVP D,EVP D,EVP
W. Bridgewater, MA 02379
Donald T. Sena One Liberty Square AT,AC AT,AC AT,AS
Boston, MA 02109
Dennis St. Pierre P.O. Box 543
W. Bridgewater, MA 02379
Margaret M. Stapleton P.O. Box 111
Boston, MA 02117
John R. Stevens One Liberty Square D,VCH D,P D,P
Boston, MA 02109
W. Nicholas Thorndike 150 Dudley Street
Brookline, MA 02146
Mark S. White Boott Mills South EVP,ACM,AC
100 Foot of John Street
Lowell, MA 01852
</TABLE>
<TABLE>
ITEM 6. OFFICERS AND DIRECTORS - Continued
Part I. As of December 31, 1999 Names of System Companies with which Connected
<CAPTION>
EUA Northeast EUA Citizens EUA EUA
Cogenex- Energy Conservation Cogenex BIOTEN,
Canada Inc. Management, Inc. Services Corp. West Corp. Inc.
<S> <C> <C> <C> <C> <C>
Marc J. Aronson Boott Mills South VP
100 Foot of John Street
Lowell, MA 01852
Russell A. Boss One Albion Road
Lincoln, RI 02865
Richard Bower 37 Linden Terrace D
Ottawa, Ontario,
Canada K1S1Z1
J. Thomas Brett 275 Slater St. Ste 1700 D
Ottawa, Ontario,
Canada K1P5H9
John D. Carney P.O. Box 543 D, EVP
W. Bridgewater, MA 02379
Paul J. Choquette, Jr. 7 Jackson Walkway
Providence, RI 02940
Peter S. Damon 41 Long Wharf Mall
Newport, RI 02840
Janice P. DeBarros Boott Mills South VP
100 Foot of John Street
Lowell, MA 01852
Peter B. Freeman 100 Alumni Drive
Providence, RI 02906
Barbara A. Hassan P.O. Box 543
W. Bridgewater, MA 02379
Clifford J. Hebert, Jr. One Liberty Square T,S T,C T,C T,C D,T,C
Boston, MA 02109
Michael J. Hirsh P.O. Box 543
W. Bridgewater, MA 02379
Darcy L. Immerman Boott Mills South VP VP
100 Foot of John Street
Lowell, MA 01852
Kevin A. Kirby P.O Box 543
W. Bridgewater, MA 02379
Larry A. Liebenow 1082 Davol Street, 5th Fl.
Fall River, MA 02720
</TABLE>
<TABLE>
ITEM 6. OFFICERS AND DIRECTORS - Continued
Part I. As of December 31, 1999 Names of System Companies with which Connected
<CAPTION>
EUA Northeast EUA Citizens EUA EUA
Cogenex- Energy Conservation Cogenex BIOTEN,
Canada Inc. Management, Inc. Services Corp. West Corp. Inc.
<S> <C> <C> <C> <C> <C>
Edward T. Liston Boott Mills South D,P D,P D,EVP D,P
100 Foot of John Street
Lowell, MA 01852
Marc F. Mahoney P.O. Box 543
W. Bridgewater, MA 02379
Jacek Makowski One Center Plaza, Ste 270
Boston, MA 02108
Wesley W. Marple, Jr. 413 Hayden Hall
360 Huntington Avenue
Northeastern University
Boston, MA 02115
Stephen Morgan Boott Mills South P
100 Foot of John Street
Lowell, MA 01852
Donald G. Pardus P.O. Box 543 CH D,CH D D D,CH
W. Bridgewater, MA 02379
Robert G. Powderly P.O. Box 543 D,EVP
W. Bridgewater, MA 02379
Donald T. Sena P.O. Box 543 AT,AC AT,AC
W. Bridgewater, MA 02379
Dennis St. Pierre P.O. Box 543
W. Bridgewater, MA 02379
Margaret M. Stapleton P.O. Box 111
Boston, MA 02117
John R. Stevens P.O. Box 543 VCH D,VCH D D D,P
W. Bridgewater, MA 02379
W. Nicholas Thorndike 150 Dudley Street
Brookline, MA 02146
Mark S. White Boott Mills South EVP, EVP EVP, EVP,
100 Foot of John Street AT,ACM ACM,AC ACM,AC
Lowell, MA 01852
</TABLE>
ITEM 6. OFFICERS AND DIRECTORS - Continued
Part I. As of December 31, 1999.
KEY:
CH -Chairman of the Board T - Treasurer
VCH -Vice Chairman of the Board TR - Trustee
P - President CM - Comptroller
EVP - Executive Vice President AT - Assistant Treasurer
SVP - Senior Vice President S - Secretary
VP - Vice President AS - Assistant Secretary
C - Clerk
AC - Assistant Clerk
D - Director
CEO - Chief Executive Officer
COO - Chief Operating Officer
ACM - Assistant Comptroller
<TABLE>
ITEM 6. OFFICERS AND DIRECTORS (continued)
<CAPTION>
Part II. As of December 31, 1999.
Position Held
Name of Name and Location of in Financial Applicable
Officer or Director Financial Institution Institution Exemption Rule
(1) (2) (3) (4)
<S> <C> <C> <C>
Russell A. Boss Fleet Bank Director Rule 70(a)
Providence, RI
Paul J. Choquette, Jr. Fleet Financial Group Director Rule 70(a)
Providence, RI
Peter S. Damon Bank of Newport Trustee, Rule 70(a)
Newport, RI Vice Chairman
of Financial
Services
_____________________
(Note: In the answer to this Part II of Item 6, the phrase "financial
connection within the provisions of Section 17(C) of the Act" is
regarded as being limited by the definitions in Paragraph (h) of Rule
70 under the Act as in effect a t December 31, 1999).
</TABLE>
<TABLE>
ITEM 6. OFFICERS AND DIRECTORS (continued)
Part III.
(a) Information is set out below as to cash compensation paid by the
Association and its subsidiaries for the years 1999, 1998, and 1997 to
each of the five highest paid executive officers of each Company whose
annual salary and bonus for the year exceeded $100,000.
<CAPTION>
Long-Term All
Compensation Other
Name and Annual Compensation Restricted Compen-
Principal Fiscal Incentive Stock sation
Position Year Salary Bonus Other(1) Awards(2) (3)
<S> <C> <C> <C> <C> <C> <C>
EUA Service Corporation
Donald G. Pardus 1999 $461,265 $ - (4) $13,313 $ - $18,577
Chairman and Chief 1998 443,525 351,311 14,100 511,106 14,865
Executive Officer 1997 428,525 167,112 12,747 232,617 13,775
John R. Stevens 1999 $360,025 $ - (4) $12,743 $ - $14,305
President and Chief 1998 346,025 296,026 16,696 408,811 11,462
Operating Officer 1997 334,325 133,665 11,763 232,617 10,726
Robert G. Powderly 1999 $199,025 $64,492 $13,671 $ - $6,842
Executive Vice 1998 191,025 145,743 10,726 142,105 5.907
President 1997 184,025 51,249 10,240 116,322 5,560
John D. Carney 1999 $195,525 $64,492 $9,157 $- $6,961
Executive Vice 1998 187,525 145,743 11,302 142,105 6,085
President 1997 179,525 51,249 10,502 87,235 5,624
Clifford J. Hebert, Jr. 1999 $162,625 $53,774 $- $- $5,039
Treasurer and Secretary 1998 148,025 138,140 - 90,056 4,699
1997 136,025 28,417 - 116,322 4,078
</TABLE>
Blackstone, Eastern Edison and Newport Electric
The Chief Executive Officer and the four other most highly compensated
executive officers of Blackstone, Newport and Eastern Edison hold the same or
similar positions with EUA Service and are not paid directly by any of
Blackstone, Newport or Eastern Edison. The information required by this item
is the same as shown above under EUA Service Corporation.
<TABLE>
ITEM 6. OFFICERS AND DIRECTORS (continued)
<CAPTION>
Long-Term All
Compensation Other
Name and Annual Compensation Restricted Compen-
Principal Fiscal Incentive Stock sation
Position Year Salary Bonus Other(1) Awards(5) (3)
<S> <C> <C> <C> <C> <C> <C>
EUA Cogenex Corporation
Edward T. Liston 1999 $197,500 $75,600 $10,089 $ - $18,963
President 1998 180,000 - 11,146 - 12,586
1997 168,525 - 11,146 82,195 8,966
Mark S. White 1999 $146,669 $47,250 $10,526 $ - $10,622
Executive 1998 132,504 - 10,077 - 8,390
Vice President 1997 115,950 - 9,437 44,514 5,998
Mark J. Aronson 1999 $110,833 $77,400 $9,076 $ - $7,747
Vice President
Darcy L. Immerman 1999 $121,665 $- $9,131 $ - $9,668
Vice President 1998 110,000 - 9,458 - 6,826
1997 100,025 40,629 316 37,681 5,048
___________________
(1) Represents amounts reimbursed for tax liability accruing as a result of personal use of
company-owned automobiles.
(2) Aggregate amount and value (including the value reflected in the table under
"Restricted Stock Awards") of shares held under the Association's Restricted Stock Plan
to the officers listed above are as follows: Mr. Pardus, 43,841 shares, including 20,965
shares granted in 1998, 8,989 shares granted in 1997 and 13,887 shares granted in 1995,
$1,328,930; Mr. Stevens, 34,565 shares, including 16,769 shares granted in 1998, 8,989
shares granted in 1997 and 8,807 shares granted in 1995, $1,047,752; Mr. Powderly, 13,412
shares, including 5,829 shares granted in 1998, 4,495 shares granted in 1997 and 3,088
shares granted in 1995, $406,551; Mr. Carney, 12,363 shares, including 5,829 shares
granted in 1998, 3,371 shares granted in 1997 and 3,163 shares granted in 1995, $374,753;
and Mr. Hebert, 9,834 shares, including 3,694 shares granted in 1998, 4,495 shares granted
in 1997 and 1,645 shares granted in 1995, $298,093. Dividends are paid on these shares.
All of the restricted shares became immediately vested upon the completion of EUA's merger
with NEES.
(3) Contributions made under the Association's Employees' Savings Plan.
(4) The EUA Board voted to award Messrs. Pardus and Stevens a Merger Completion Bonus
to be paid on the closing of the EUA-NEES merger. This bonus is in lieu of an annual
incentive payment for 1999. The bonus payment to Messrs. Pardus and Stevens is $500,000
and $425,000, respectively.
(5) Aggregate amount and value (including the value reflected in the table under "Restricted
Stock Awards") of shares held under Cogenex's Restricted Stock Plan to the officers listed
above are as follows: Mr. Liston, 3,693 shares granted in 1997, $111,944; Mr. White,
2,000 shares granted in 1997, $60,625; Mr. Aronson, 1,271 shares granted in 1997,
$38,527; Ms. Immerman, 1,693 shares granted in 1997, $51,319. As of December 31, 1999,
1/3 of the shares of Restricted Stock granted in 1997 were held. All of the restricted
shares became immediately vested upon the completion of EUA's merger
with NEES.
Dividends are paid on these shares.
</TABLE>
<TABLE>
(b) Securities Interest
Common Shares of the Association
Beneficially Owned at January 1, 2000(1)
<CAPTION>
Executive
Employees Stock
Jointly Savings Grant
Individual Owned(2) Plan Plan Total
<S> <C> <C> <C> <C> <C>
Mark J. Aronson 280 - 1,380 423 2,083
Russell A. Boss 1,000 - - - 1,000
John D. Carney 5,846 - 2,287 8,992 17,125
Paul J. Choquette 4,255 - - - 4,255(3)
Peter S. Damon 400 409 - - 809(4)
Peter B. Freeman 2,500 - - - 2,500
Clifford J. Hebert, Jr. 3,386 3,042 2,906 5,339 14,673
Darcy L. Immerman - - 1,197 564 1,761
Larry A. Liebenow - 5,000 - - 5,000(5)
Edward T. Liston 8,145 - 3,072 1,231 12,448
Jacek Makowski 200 - - - 200
Wesley W. Marple 2,585 - - - 2,585(6)
Donald G. Pardus 8,989 21,028 6,931 34,852 71,800
Robert G. Powderly 9,320 310 2,863 8,917 21,410
Margaret M. Stapleton 1,781 - - - 1,781
John R. Stevens 4,952 139 3,006 25,576 33,673
W. Nicholas Thorndike 2,146 - - - 2,146
Mark S. White - - 2,267 666 2,933
Trustees and Executive
Officers as a Group 55,928 29,928 25,909 86,560 198,182(7)
(1) Unless otherwise indicated, beneficial ownership is based on sole investment and
voting power. Each individual's ownership represents less than four-tenths of
one percent of the outstanding common shares of the Association.
(2) Jointly owned with spouse.
(3) In addition, Mr. Choquette's spouse owns 150 EUA common shares. Mr. Choquette
disclaims any beneficial interest in such shares.
(4) Jointly owned with spouse, except for 400 shares held individually.
(5) In addition, Mr. Liebenow's spouse owns 500 common shares. Mr. Leibenow disclaims any
beneficial interest in these shares.
(6) In addition, Mr. Marple's spouse owns 363 EUA common shares. Mr. Marple disclaims any
beneficial interest in such shares.
(7) Represents approximately 1.0 percent of the outstanding common shares of the Association.
</TABLE>
ITEM 6. OFFICERS AND DIRECTORS (continued)
(C) Contracts and Transactions with System Companies
See Section (e) below regarding severance agreements.
(d) Indebtedness to System Companies
None.
(e) Participation in Bonus and Profit Sharing Arrangements.
The Employee's Retirement Plan of Eastern Utilities Associates and its
Affiliated Companies (the "Pension Plan") is a tax-qualified defined benefit
plan available to employees who have completed one year of service and have
attained the age of twenty-one. All of the officers referred to in the
preceding Summary Compensation Table participate in the Pension Plan. Trustees
who are not also employees of EUA and its subsidiaries (the "EUA System") are
not covered by the Pension Plan. The benefits of participants become fully
vested after five years of service. Annual lifetime benefits are determined
under formulas applicable to all employees, regardless of position, and the
amounts depend on length of credited service and salaries prior to
retirement. Benefits are equal to one and six-tenths percent of salaries
(averaged over the four years preceding retirement) for each year of credited
service up to thirty-five, reduced for each year by one and two-tenths percent
of the participants' estimated age sixty-five Social Security benefit, plus
seventy-five hundredths percent of salaries for each year of credited service
in excess of thirty-five years up to the Pension Plan maximum of forty years.
Any contributions to provide benefits under the Pension Plan are made by the
EUA System in amounts determined by the Pension Plan's actuaries to meet the
funding standards established by the Employee Retirement Income Security Act of
1974. Any contributions are actuarially determined and cannot appropriately be
allocated to individual participants. The annual benefits shown in the table
below straight life annuity amounts, without reduction for primary Social
Security benefits as described below. Federal law limits the annual benefits
payable from qualified pension plans in the form of a life annuity, after
reduction for Social Security benefits, to $130,000 for 1999 plus adjustments
for increases in the cost of living. The number of years of service credited at
present under the Pension Plan to Messrs. Pardus, Stevens, Carney, Powderly and
Hebert are thirty-seven, thirty-four, thirty-three, twenty and twenty-three,
respectively.
Pension Plan Table:
Years of Service
Average Annual Salary 15 20 25 30 35 40
$100,000 $24,000 $32,000 $40,000 $48,000 $56,000 $59,750
200,000 48,000 64,000 80,000 96,000 112,000 119,500
300,000 72,000 96,000 120,000 144,000 168,000 179,250
400,000 96,000 128,000 160,000 192,000 224,000 239,000
500,000 120,000 160,000 200,000 240,000 280,000 298,750
600,000 144,000 192,000 240,000 288,000 336,000 358,500
ITEM 6. OFFICERS AND DIRECTORS (continued)
EUA also has a Key Executive Plan for certain officers of EUA and its
subsidiaries. This plan provides for the annual payment of supplemental
retirement benefits equal to 25% of the officer's base salary when he retires
or EUA terminates the executive's employment without cause, for a period of
fifteen (15) years following the date of retirement. In addition, in the event
of the death of the participant prior to retirement an amount equal to 200% of
the officer's base salary at that time will be paid to his beneficiary. In
1999, EUA amended the Key Executive Plan to provide five (5) additional years
(from fifteen (15) to twenty (20) years) of benefits continuation for Messrs.
Pardus and Stevens.
EUA maintains Retirement Restoration Plans for Members of the Employees'
Retirement Plan of Eastern Utilities Associates and its Subsidiary Companies
and EUA Employees' Savings Plan (the "Restoration Plans") and the Supplemental
Retirement Plan for Certain Officers of EUA and its Affiliated Companies
("SERP") as unfunded retirement plans to restore benefits under the qualified
plans' formulas which are not covered under the qualified plan trusts due to
federal limitations on either earnings, contributions or benefits. Payments or
contributions which exceed the applicable federal limitations are made outside
the qualified plans in the same manner and under the same conditions as are
applicable to benefits payable from, or contributions payable to, the qualified
plans. A grantor trust has been established by EUA to help ensure the
performance of its payment obligations under these plans. Any amounts not
covered by trust payments or otherwise will be paid from funds available to the
EUA System. In 1999, EUA amended and restated the Restoration Plans and SERP
to provide for an increase in the benefit payable to Messrs. Pardus, Stevens,
Powderly, Carney and Hebert by adding five (5) additional years of age and
service when determining their retirement benefits under such plans. The
additional years of service used in such calculation for Mr. Pardus was limited
to a maximum for forty (40) years.
(f) Rights to Indemnity
Article 32 of EUA's Declaration of Trust, as set forth in Exhibit B-1(a) to
Form U5S of EUA for the year ended December 31, 1986, is incorporated herein by
reference.
ITEM 7. CONTRIBUTIONS AND PUBLIC RELATIONS
Accounts Charged
if any, Per Books
Name of Recipient of Disbursing
Name of Company or Beneficiary Purpose Company Amount
(1) (2) (3) (4) (5)
Blackstone United Way Donations 426.1 $21,000
Blackstone Miscellaneous Donations 426.1 50,297
donations less
than $10,000
Blackstone David Gulvin Lobbying 426.4 17,061
Blackstone Tillinghast, Collins Lobbying 426.4 19,250
& Graham Expenditures
Blackstone David Correira, Esq. Lobbying 426.4 $23,100
Expenditures
Blackstone Edison Electric Lobbying 426.4 18,504
Institute Expenditures
Eastern Edison United Way Donations 426.1 40,765
Eastern Edison YMCA Donations 426.1 12,955
Eastern Edison Good Neighbor Donations 426.1 10,813
Energy Fund
Eastern Edison Miscellaneous Donations 426.1 11,980
donations less
than $10,000
Eastern Edison Edison Electric Lobbying 426.4 38,701
Institute Expenditures
Eastern Edison Correy Associates Lobbying 426.4 50,000
Legislative Services Expenditures
Eastern Edison Miscellaneous Lobbying 426.4 3,060
donations less Expenditures
than $10,000
Newport United Way Donations 426.1 10,000
Newport Miscellaneous Donations 426.1 22,592
donations less
than $10,000
Newport Edison Electric Lobbying 426.4 7,507
Institute Expenditures
Newport Tillinghast, Collins Lobbying 426.4 8,250
& Graham Expenditures
Newport David Correira, Esq. Lobbying 426.4 9,900
Expenditures
Newport David Gulvin Lobbying 426.4 6,885
Expenditures
Montaup Miscellaneous Donations 426.1 6,867
donations less than
$10,000
Montaup Seabrook #1 Lobbying 426.4 1,209
Expenditures
Montaup Millstone #3 Lobbying 426.4 3,876
Expenditures
Montaup Edison Electric Lobbying 426.4 2,268
Institute Expenditures
ITEM 8. SERVICE, SALES AND CONSTRUCTION CONTRACTS
Part I.
None.
Part II.
No.
Part III.
No.
ITEM 9. WHOLESALE GENERATORS AND FOREIGN UTILITY COMPANIES
None.
ITEM 10. FINANCIAL STATEMENTS AND EXHIBITS (*Filed herewith)
The following financial statements and supplemental schedules are filed as a
part of this Annual Report.
FINANCIAL STATEMENTS
1 - Consolidating Balance Sheets - December 31, 1999 of Eastern
Utilities Associates and Subsidiary Companies, Eastern Edison
Company and Subsidiary, EUA Cogenex Corporation and Subsidiaries,
and EUA Energy Investment Corporation and Subsidiaries.
2 - Consolidating Statements of Capitalization - December 31, 1999 of
Eastern Utilities Associates and Subsidiary Companies, Eastern
Edison Company and Subsidiary, EUA Cogenex Corporation and
Subsidiaries, and EUA Energy Investment Corporation and
Subsidiaries.
3 - Consolidating Income Statements for the year ended December 31,
1999 of Eastern Utilities Associates and Subsidiary Companies,
Eastern Edison Company and Subsidiary, EUA Cogenex Corporation and
Subsidiaries, and EUA Energy Investment Corporation and
Subsidiaries.
4 - Consolidating Statements of Cash Flows for the year ended December
31, 1999 of Eastern Utilities Associates and Subsidiary Companies,
Eastern Edison Company and Subsidiary, EUA Cogenex Corporation and
Subsidiaries, and EUA Energy Investment Corporation and
Subsidiaries.
5 - Consolidating Statements of Retained Earnings and Other Paid-In
Capital for the year ended December 31, 1999 of Eastern Utilities
Associates and Subsidiary Companies, Eastern Edison Company and
Subsidiary, EUA Cogenex Corporation and Subsidiaries, and EUA
Energy Investment Corporation and Subsidiaries.
6 - Notes to Consolidated Financial Statements (page 53).
Exhibits
Exhibit A - (incorporated herein by reference)
A-1 Form 10-K of EUA for 1999 File No. 1-5366.
Exhibit B -
B-1 Declaration of Trust of EUA, dated April 2, 1928, as amended
(Exhibit A-3, File No. 70-3188; Exhibit 1 to EUA's 8-K reports for
April in each of the years 1957, 1962, 1966, 1968, 1972, and 1973,
File No. 1-5366; Exhibit A-1 (a), Amendment No. 2 to Form U-1, File
No. 70-5997, Exhibit 4-3, Registration No. 2-72589; Exhibit 1 to
Certificate of Notification, File No. 70-6713; Exhibit 1 to
Certificate of Notification, File No. 70-7084; Exhibit 3-2, Form
10-K of EUA for 1987, File No. 1-5366).
B-2 Charter of Blackstone (formerly Blackstone Valley Gas and Electric
Company), as amended (Exhibit (a)(1) and (a)(2), Form 1-A filed
March, 1957, File No. 24B-970; Exhibit A-2, Form U5S of EUA for the
year 1958, File No. 1-5366; Exhibit (1), Form 8-K for March, 1965
File No. 0-2602; Exhibit A-2, Form U5S of EUA for the year 1966,
File No. 1-5366 and Exhibit (1), Form 8-K for June 1976, File No.
0-2602; Exhibit (1), Form 10-Q for quarter ended June 30, 1988,
File No. 0-2602); Exhibit 3-3, Form 10-K of Blackstone for 1989,
File No. 0-2602).
B-3 By-Laws of Blackstone, (Exhibit A-2, Form U-1 filed October 16,
1990, File No. 70-7769).
B-4 Restated and Amended Articles of Organization of Eastern Edison,
(Exhibit B-4 to Form U5S of EUA for 1993).
B-5 By-Laws of Eastern Edison, as amended (Exhibit 3-2, Form 10-K of
Eastern Edison for 1980, File No. 0-8480).
B-6 Charter of Montaup Electric Company ("Montaup"), as amended
(Exhibits A-6(a), A-6(b) and A-6(c) to Post Effective Amendment No.
18 to Form U-1, File No. 70-5388; Exhibit 3, Form 10-K of EUA for
1977, File No. 1-5366; and Exhibit 6 to Form U5S of EUA for 1979).
B-7 By-Laws of Montaup, as amended (Exhibit 4, Form 10-K of EUA for
1977, File No. 1-5366).
B-8 Charter of EUA Service Corporation (Exhibit A-1, File No. 37-67).
B-9 By-Laws of EUA Service Corporation, as amended (Exhibit 2, Form 10-
K of EUA for 1977, File No. 1-5366).
B-10 Charter of EUA Cogenex Corporation, as amended (Exhibit A-1, File
No. 70-7287, Exhibit B-15 to Form U5S of EUA for 1986).
B-11 By-Laws of EUA Cogenex Corporation, as amended (Exhibit A-2, File
No. 70-7287, to Form U5S of EUA for 1986).
B-12 Agreement of Limited Partnership among Onsite Energy and EUA
Cogenex Corporation dated as of November 30, 1988 (Exhibit A-4 to
Post-Effective Amendment No. 3 of Form U-1, File No. 70-7825, dated
October 21, 1991).
B-13 EUA/FRCII Energy Associates Agreement of Limited Partnership dated
as of September 19, 1989 (Exhibit A-5 to Post-Effective Amendment
No. 3 of Form U-1, File No. 70-7825, dated October 21, 1991).
B-14 Micro Utility Partners of America, L.P., Agreement of Limited
Partnership dated as of December 20, 1988 (Exhibit A-6 to Post-
Effective Amendment No. 3 of Form U-1, File No. 70-7825, dated
October 21, 1991).
B-15 Energy Capital and Services I, LP, Agreement of Limited Partnership
dated as of April 10, 1990 (Exhibit A-7 to Post-Effective Amendment
No. 3 of Form U-1, File No. 70-7825, dated October 21, 1991).
B-16 EUA/SYCOM General Partnership Agreement dated as of September 20,
1989 (Exhibit A-9 to Post-Effective Amendment No. 3 of Form U-1,
File No. 70-7825, dated October 21, 1991).
B-17 Articles of Organization of EUA Energy Investment Corporation
(Exhibit B-14 to Form U5S of EUA for 1987).
B-18 By-Laws of EUA Energy Investment Corporation (Exhibit B-15 to Form
U5S of EUA for 1987).
B-19 Articles of Organization of EUA Ocean State Corporation (Exhibit B-
16 to Form U5S of EUA for 1988).
B-20 By-Laws of EUA Ocean State Corporation (Exhibit B-17 to Form U5S of
EUA for 1988).
B-21 Charter of Newport, as amended (Exhibit B-18 to Form U5S of EUA for
1990).
B-22 By-Laws of Newport (Exhibit B-19 to Form U5S of EUA for 1990).
B-23 Ocean State Power Amended and Restated General Partnership
Agreement among EUA Ocean State, Ocean State Power Company, TCPL
Power Ltd., Narragansett Energy Resources Company and NECO Power,
Inc. (collectively, the "OSP Partners") dated as of December 2,
1988, as amended March 27, 1989 (Exhibit 10-107, Form 10-K of EUA
for 1989, File No. 1-5366, Exhibits 10-3.12, 10-4.12 and 10-5.12,
Form 10-K of EUA for 1994, File No. 1-5366).
B-24 Ocean State Power II Amended and Restated General Partnership
Agreement among EUA Ocean State, JMC Ocean State Corporation,
Makowski Power, Inc., TCPL Power Ltd., Narragansett Energy
Resources Company and Newport Electric Power Corporation
(collectively, the "OSP II Partners") dated as of September 29,
1989 (Exhibit 10-110, Form 10-K of EUA for 1989, File No. 1-5366).
B-25 Articles of Incorporation of Cogenex Canada (Exhibit A-1 File No.
70-8441).
B-26 By-Law No.1 of Cogenex Canada (Exhibit A-2 File No. 70-8441).
B-27 Articles of Organization of NEM (Exhibit A-2 File No. 70-8255).
B-28 By-Laws of NEM (Exhibit A-3 File No. 70-8255).
B-29 Articles of Organization of EUA Highland (Exhibit A-2 File No. 70-
8523).
B-30 By-Laws of EUA Highland (Exhibit A-3 File No. 70-8523).
B-31 Articles of Organization of EUA Citizens Conservation Service, Inc.
(Exhibit A-1 File No. 70-8473).
B-32 By-Laws of EUA Citizens Conservation Services, Inc. (Exhibit A-2
File No. 70-8473).
B-33 Articles of Organization of EUA BIOTEN, Inc. (Exhibit A-1 File No.
70-8617).
B-34 By-Laws of EUA BIOTEN, Inc. (Exhibit A-2 File No. 70-8617).
B-35 Certificate of Formation of APS Cogenex, L.L.C. (Exhibit A-1 File
No. 70-8663).
B-36 Limited Liability Company Operating Agreement for APS Cogenex,
L.L.C. (Exhibit B-2 File No. 70-8663).
Exhibit C -
(a)
C-1 Form of 8% Debenture Bonds due 2000 of Montaup (Exhibit 4-10,
Registration File No. 2-41488).
C-2 Form of 8-1/4% Debenture Bonds due 2003 of Montaup (Exhibit B-3,
Form U5S of EUA for 1973).
C-3 Form of 10% Debenture Bonds due 2008 of Montaup (Exhibit 5-3,
Registration No. 2-65785).
C-4 Form of 10-1/8% Debenture Bonds due 2008 of Montaup (Exhibit 4-13,
Form 10-K of EUA for 1983, File No. 1-5366).
C-5 Form of 12-3/8% Debenture Bonds due 2013 of Montaup (Exhibit 4-13,
Form 10-K of EUA for 1983, File No. 1-5366).
C-6 Form of 9% Debenture Bonds due 2020 of Montaup (Exhibit 4-10, Form
10-K of Eastern Edison for 1990, File No. 0-8480).
C-7 Form of 9-3/8% Debenture Bonds due 2020 of Montaup (Exhibit 4-11,
Form 10-K of Eastern Edison for 1990, File No. 0-8480).
C-8 Indenture of First Mortgage and Deed of Trust dated as of September
1, 1948 of Eastern Edison (Exhibit 4-1, Registration No. 2-77468),
and twenty-seven supplements thereto (Exhibit A, File No. 70-3015;
Exhibit A-3, File No. 70-3371; Exhibit C to Certificate of
Notification, File No. 70-3371; Exhibit D to Certificate of
Notification, File No. 3619; Exhibit D to Certificate of
Notification, File No. 70-3798; Exhibit F to Certificate of
Notification, File No. 70-4164; Exhibit D to Certificate of
Notification, File No. 70-4748; Exhibit C to Certificate of
Notification, File No. 70-5195; Exhibit F to Certificate of
Notification, File No. 70-5379; Exhibit C to Certificate of
Notification, File No. 70-5719; Exhibit 5-24 Registration No. 2-
65785; Exhibit F to Certificate of Notification, File No. 70-6463;
Exhibit C to Certificate of Notification, File No. 70-6608; Exhibit
C to Certificate of Notification, File No. 70-6737; Exhibit F to
Certificate of Notification, File No. 70-6851; Exhibit 4-31, Form
10-K of EUA for 1984, File No. 1-5366; Exhibit F to Certificate of
Notification, File No. 70-7254; Exhibit C to Certificate of
Notification, File No. 70-7373; Exhibit C to Certificate of
Notification, File No. 70-7373; Exhibit C to Certificate of
Notification, File No. 70-7373; Exhibit F to Certificate of
Notification, File No. 20-7511; Exhibit 4-34, Form 10-K of Eastern
Edison for 1990, File No. 0-8480; Exhibit 4-24, Form 10-K of
Eastern Edison for 1992, File No. 0-8480; Exhibit 4-35, Form 10-K
of Eastern Edison for 1990, File No. 0-8480; Exhibit 4-36, Form
10-K of Eastern Edison for 1990, File No. 0-8480; Exhibit C-33 to
Form U5S of EUA for 1993; Exhibit C-34 to Form U5S of EUA for
1993; Exhibit 4-29.08, Form 10-K of Eastern Edison for 1994, File
No. 0-8480; Exhibit 4-1.09, Form 10-K of EUA for 1997, File 1-
5366).
C-9 First Mortgage Indenture and Deed of Trust dated as of December 1,
1980 of Blackstone (Exhibit A, Form 8-K of EUA dated January 14,
1981, File No. 1-5366).
C-10 First Supplemental Indenture dated as of August 1, 1989 of
Blackstone (Exhibit 4-33, Form 10-K of EUA for 1989, File 1-5366).
C-11 Second Supplemental Indenture dated as of November 26, 1990 of
Blackstone (Exhibit 4-3, Form 10-K of Blackstone Valley Electric
for 1990, File No. 0-2602).
C-12 Loan Agreement between Rhode Island Industrial Facilities
Corporation and Blackstone dated as of December 1, 1984 (Exhibit
10-72, Form 10-K of EUA for 1984, File No. 1-5366).
C-13 Note Purchase Agreement dated as of January 13, 1988 of Service
(Exhibit 4-38, Form 10-K of EUA for 1987, File No. 1-5366).
C-14 Note Agreement dated as of June 28, 1990 of EUA Cogenex with the
Prudential Insurance Company of America (Exhibit 4-46, Form 10-K of
EUA for 1990, File No. 1-5366).
C-15 Note Agreement dated as of October 29, 1991 between EUA Cogenex and
Prudential Insurance Company of America (Exhibit 4-55, Form 10-K of
EUA for 1991, File No. 1-5366).
C-16 Indenture dated September 1, 1993 between EUA Cogenex and the Bank
of New York as Trustee (Exhibit 4-4.10, Form 10-K of EUA for 1993,
File No. 1-5366).
C-17 Guaranty, dated June 28, 1990, made by Eastern Utilities Associates
in favor of The Prudential Insurance Company of America (Exhibit B-
2 to Form U-1, File No. 70-7655, dated June 14, 1990).
C-18 Indenture of First Mortgage dated as of June 1, 1954 of Newport, as
supplemented on August 1, 1959, April 1, 1962, October 1, 1964,
April 1, 1967, September 1, 1969, September 1, 1970, June 1, 1978,
October 1, 1978, May 1, 1986, December 1, 1987 and November 1, 1989
(Exhibit 4-49, Form 10-K of EUA for 1990, File No. 1-5366).
C-19 Indenture of Second Mortgage dated as of September 1, 1982 of
Newport, as supplemented on December 1, 1988 (Exhibit 4-51, Form
10-K of EUA for 1990, File No. 1-5366).
C-20 Note Purchase Agreement dated as of January 16, 1992 between EUA
Ocean State Corporation and John Hancock Mutual Life Insurance
Company (Exhibit 4-56, Form 10-K of EUA for 1991, File No. 1-5366).
C-21 Guaranty, dated January 16, 1992 made by EUA in favor of John
Hancock Mutual Life Insurance Company (Exhibit 10-125, Form 10-K of
EUA for 1991, File No. 1-5366).
C-22 Power Purchase Agreement entered into as of September 20, 1993 by
and between Meridian Middleboro Limited Partnership and Eastern
Edison Company (filed as Exhibit 10-3.08 to Eastern Edison's Form
10-K for 1993, File No. 0-8480).
C-23 Inducement Letter dated July 14, 1993 from Eastern Edison to the
Massachusetts Industrial Finance Agency and Goldman, Sachs &
Company and Citicorp Securities Markets, Inc. (filed as Exhibit 10-
4.08 to Eastern Edison's Form 10-K for 1993, File No. 0-8480).
C-24 Indenture dated September 1, 1993 between EUA Cogenex and the Bank
of New York as Trustee (filed as Exhibit 4-4.10 to EUA's Form 10-K
for 1993, File No. 1-5366).
C-25 Loan Agreement between the Rhode Island Port Authority and Economic
Development Corporation and Newport Electric Corporation dated as
of January 6, 1994 (filed as Exhibit 4-14.14 to EUA's Form 10-K for
1993, File No. 1-5366).
C-26 Trust Indenture between the Rhode Island Authority and Economic
Development Corporation and Newport Electric Corporation dated as
of January 1, 1994 (filed as Exhibit 4-5.14 to EUA's Form 10-K for
1993, File No. 1-5366).
C-27 Letter of Credit and Reimbursement Agreement among Newport and the
Canadian Imperial Bank of Commerce dated January 6, 1994 (filed as
Exhibit 4-6.14 to EUA's Form 10-K for 1993, File No. 1-5366).
(b) None.
*Exhibit D - Tax allocation agreement for 2000 pursuant to Rule 45(c).
Exhibit E - Other documents. None.
Exhibit F - Report of Independent Accountants (EUA 10-K for 1999, File No.
1-5366).
*Exhibit G - Financial Data Schedules. Filed electronically via EDGAR.
Exhibit H - None.
Exhibit I - None.
SIGNATURE
The undersigned system company has duly caused this annual report to be
signed on its behalf by the undersigned thereunto duly authorized, pursuant to
the requirements of the Public Utility Holding Company Act of 1935.
EASTERN UTILITIES ASSOCIATES
and Subsidiaries
By /s/ Clifford J. Hebert, Jr.
Clifford J. Hebert, Jr.
Treasurer
April 28, 2000
Financials Statements
<TABLE>
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEETS (1 of 2)
DECEMBER 31, 1999
<CAPTION>
Blackstone
Eastern EUA Valley Newport
EUA Utilities Service Electric Electric
ASSETS Consolidated Eliminations Associates Corporation Company Corporation
<S> <C> <C> <C> <C> <C> <C>
Utility plant and other investments:
Utility plant in service $735,943,433 $ $ $32,064,148 $143,769,662 $80,522,035
Less accumulated provision for depreciation
and amortization 290,962,408 14,373,908 63,517,768 26,671,262
Net utility plant in service 444,981,025 17,690,240 80,251,894 53,850,773
Construction work in progress 9,033,131 43,907 4,039,823 697,921
Net utility plant 454,014,156 17,734,147 84,291,717 54,548,694
Non-utility property 101,417,067 227,060
Less accumulated provision for deprec. 58,773,332 27,628
Net non-utility property 42,643,735 199,432
Investments in subsidiaries (at equity) 64,004,325 352,206,067 352,206,067
Excess of carrying values of investments
in subsidiaries 17,489 17,489
Other 44,352,404 1,000
Total Utility Plant and Other Investments 605,032,109 352,206,067 352,224,556 17,734,147 84,491,149 54,548,694
Current Assets:
Cash and temporary cash investments 7,479,751 90,889 762,084 99,297 59,541
Notes receivable 22,000,273 59,687,334 59,687,334
Accounts receivable - Net:
Customers 53,862,763 10,731,989 5,515,098
Accrued unbilled revenue 6,384,729 1,530,195 945,241
Others 24,713,965 8,427,165 239,536 1,102,022 391,931
Accounts receivable - associated companies 31,660,556 317,424 15,904,551 599,927 321,354
Materials and Supplies (at average cost):
Plant materials and operating supplies 3,997,185 54,699 1,000,747 821,608
Other current assets 5,256,235 828,813 847,461 139,486 478,726 333,548
Total Current Assets 123,694,901 100,603,868 60,943,108 17,100,356 15,542,903 8,388,321
Deferred Debits:
Unamortized debt expense 1,915,602 30,997 484,402 308,960
Unrecovered regulatory plant costs (Note A) 45,955,085
Other deferred debits 691,254,984 41,469,543 3,745,018 51,500,806 8,108,625
Total Deferred Debits 739,125,671 41,469,543 3,776,015 51,985,208 8,417,585
Total Assets $1,467,852,681 $452,809,935 $454,637,207 $38,610,518 $152,019,260 $71,354,600
* Companies dissolved in 1999.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEETS (2 of 2)
DECEMBER 31, 1999
<CAPTION>
EUA EUA
Eastern EUA Energy EUA EUA Telecomm-
Edison Cogenex Investment Energy Srvc. Ocean State unications
ASSETS Consolidated Consolidated Consolidated Corporation* Corporation Corporation*
<S> <C> <C> <C> <C> <C> <C>
Utility plant and other investments:
Utility plant in service $479,270,049 $ $317,539 $ $ $
Less accumulated provision for depreciation
and amortization 186,399,470
Net utility plant in service 292,870,579 317,539
Construction work in progress 4,251,480
Net utility plant 297,122,059 317,539
Non-utility property 2,388,393 84,016,674 14,784,940
Less accumulated provision for depreciation 9,697 44,463,015 14,272,992
Net non-utility property 2,378,696 39,553,659 511,948
Investments in subsidiaries (at equity) 12,277,169 188,654 3,043,446 48,495,056
Excess of carrying values of investments
in subsidiaries
Other 66,322 44,285,082
Total Utility Plant and Other Investments 311,844,246 84,027,395 3,872,933 48,495,056
Current Assets:
Cash and temporary cash investments 788,103 5,293,992 347,901 37,944
Notes receivable 17,160,690 4,839,583
Accounts receivable - Net:
Customers 30,091,670 7,492,379 31,627
Accrued unbilled revenue 3,909,293
Others 14,277,788 12,217,939 4,911,914
Accounts receivable - associated companies 14,510,577 1,269 5,454
Materials and Supplies (at average cost):
Plant materials and operating supplies 2,015,746 104,385
Other current assets 3,596,240 513,419 165,749 10,419
Total Current Assets 69,189,417 42,784,073 10,302,228 48,363
Deferred Debits:
Unamortized debt expense 590,255 165,285 335,703
Unrecovered regulatory plant costs (Note A) 45,955,085
Other deferred debits 583,547,161 1,959,796 924,035
Total Deferred Debits 630,092,501 2,125,081 924,035 335,703
Total Assets $1,011,126,164 $128,936,549 $15,099,196 $ $48,879,122 $
* Companies dissolved in 1999.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEET (1 of 2)
DECEMBER 31, 1999
<CAPTION>
Blackstone
Eastern EUA Valley Newport
EUA Utilities Service Electric Electric
LIABILITIES Consolidated Eliminations Associates Corporation Company Corporation
<S> <C> <C> <C> <C> <C> <C>
Capitalization:
Common equity $358,038,971 $352,206,068 $358,082,883 $2,658,003 $44,605,387 $26,193,826
Non-redeemable preferred stock of subs. 6,900,625 6,129,500 771,050
Redeemable preferred stock of
subsidiaries - net 29,664,502
Preferred stock redemption cost (1,305,448)
Long-term debt - net 104,235,236 4,000,000 30,500,000 8,575,000
Total Capitalization 497,533,886 352,206,068 358,082,883 6,658,003 81,234,887 35,539,876
Current Liabilities:
Long-term debt due within one year 83,126,660 1,100,000 1,500,000 650,000
Notes payable 143,955,100 59,687,334 90,830,000 1,740,000 990,000
Accounts payable 35,146,011 6,000 385,824 4,979,335 1,973,589
Accounts payable - associated companies 31,660,556 2,308,529 246,393 3,859,574 14,329,817
Customer deposits 2,391,613 736,846 538,808
Taxes accrued 2,564,784 8,427,165 2,408,793 228,963 4,173,585 2,047,790
Interest accrued 4,529,091 828,812 922,219 260,100 708,906 85,496
Dividends accrued 79,396 72,188 7,208
Purchased power contract buyout payable 75,697,865
Other current liabilities 58,265,210 620,519 2,098,371 2,872,575 1,908,720
Total Current Liabilities 405,755,730 100,603,867 97,096,060 4,319,651 20,643,009 22,531,428
Other Liabilities:
Unamortized investment credit 10,211,700 2,025,746 954,336
Other deferred credits and other liab. 408,041,231 881,292 26,420,936 35,714,412 2,463,996
Total Other Liabilities 418,252,931 881,292 26,420,936 37,740,158 3,418,332
Accumulated deferred taxes 146,310,134 (1,423,028) 1,211,928 12,401,206 9,864,964
Commitments and contingencies (Note J)
Total Liabilities and Capitalization $1,467,852,681 $452,809,935 $454,637,207 $38,610,518 $152,019,260 $71,354,600
( ) Denotes Contra
* Companies dissolved in 1999.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEET (2 of 2)
DECEMBER 31, 1999
<CAPTION>
EUA EUA
Eastern EUA Energy EUA EUA Telecomm-
Edison Cogenex Investment Energy Service Ocean State unications
LIABILITIES Consolidated Consolidated Consolidated Corporation* Corporation Corporation*
<S> <C> <C> <C> <C> <C> <C>
Capitalization:
Common equity $260,647,925 $42,008,241 ($41,461,692) $ $17,510,466 $
Non-redeemable preferred stock of sub. 75
Redeemable preferred stock of
subsidiaries - net 29,664,502
Preferred stock redemption cost (1,305,448)
Long-term debt - net 40,000,000 21,160,236
Total Capitalization 329,006,979 42,008,316 (41,461,692) 38,670,702
Current Liabilities:
Long-term debt due within one year 77,400,000 2,476,660
Notes payable 47,060,000 155,100 59,687,334 3,180,000
Accounts payable 24,480,091 3,225,701 94,071 1,400
Accounts payable - associated companies 10,300,648 86,321 511,501 17,773
Customer deposits 1,115,959
Taxes accrued 353,906 74,891 (11,607) 1,715,628
Interest accrued 1,233,017 1,123,244 828,813 196,108
Dividends accrued
Purchased power contract buyout payable 75,697,865
Other current liabilities 45,435,457 5,328,818 750
Total Current Liabilities 205,676,943 87,394,075 61,110,112 7,588,319
Other Liabilities:
Unamortized investment credit 7,231,618
Other deferred credits and other liab. 339,887,929 2,076,911 595,755
Total Other Liabilities 347,119,547 2,076,911 595,755
Accumulated deferred taxes 129,322,695 (2,542,753) (5,144,979) 2,620,101
Commitments and contingencies (Note J)
Total Liabilities and Capitalization $1,011,126,164 $128,936,549 $15,099,196 $ $48,879,122 $
( ) Denotes Contra
* Companies dissolved in 1999.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF CAPITALIZATION (1 of 2)
DECEMBER 31, 1999
<CAPTION>
Blackstone
Eastern EUA Valley Newport
EUA Utilities Service Electric Electric
Consolidated Eliminations Associates Corporation Company Corporation
<S> <C> <C> <C> <C> <C> <C>
Common Equity:
Common shares, $5 par value of Registrant (1) $102,179,985 $79,058,006 $102,179,985 $1,000 $9,203,100 $11,368,779
Other paid-in capital 220,694,395 163,812,579 220,694,395 2,000,000 17,907,931 9,000,000
Common share expense (3,930,679) (742,214) (3,886,767) (742,214)
Retained earnings 39,095,270 110,077,697 39,095,270 657,003 17,494,356 6,567,261
Total Common Equity 358,038,971 352,206,068 358,082,883 2,658,003 44,605,387 26,193,826
Non-Redeemable Preferred:
4.25%, $100 par value, 35,000 shares (2) 3,500,000 3,500,000
5.60%, $100 par value, 25,000 shares (2) 2,500,000 2,500,000
3.75%, $100 par value, 7,689 shares (2) 768,900 768,900
$.01 par value, 7,500 shares (3) 75
Premium, net of expense 131,650 129,500 2,150
Total Non-Redeemable 6,900,625 6,129,500 771,050
Redeemable Preferred:
6.625%, $100 par value, 300,000 shares (4) 30,000,000
Expense, net of premium (335,498)
Preferred stock redemption cost (1,305,448)
Total Redeemable 28,359,054
Long-Term Debt:
Secured Notes:
10.2% due 2008 5,100,000 5,100,000
Unsecured Notes:
9.59% due 2011 23,636,896
7% due 2000 50,000,000
9.6% due 2001 6,400,000
10.56% due 2005 21,000,000
Variable Rate Bonds:
Demand due 2014 (5) 6,500,000 6,500,000
Revenue Refunding due 2011 (5) 7,925,000 7,925,000
Pollution Control Revenue Bonds:
5.875% due 2008 40,000,000
First Mortgage Bonds:
9.5% due 2004 (Series B) 7,500,000 7,500,000
10.35% due 2010 (Series C) 18,000,000 18,000,000
8.95% due 2001 1,300,000 1,300,000
187,361,896 5,100,000 32,000,000 9,225,000
Less portion due within one year 83,126,660 1,100,000 1,500,000 650,000
Total Long-Term Debt 104,235,236 4,000,000 30,500,000 8,575,000
Total Capitalization $497,533,886 $352,206,068 $358,082,883 $6,658,003 $81,234,887 $35,539,876
(1) Authorized 36,000,000 shares, 20,435,997 shares outstanding.
(2) Authorized and Outstanding.
(3) The Preferred Stock shall be entitled to an annual dividend per share at a rate equal
to 33% of the net income of Citizens Conservation Services divided by 7,500.
(4) Authorized 400,000 shares, outstanding 300,000.
(5) Weighted average interest rate was 3.3% for 1999.
* Companies dissolved in 1999.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF CAPITALIZATION (2 of 2)
DECEMBER 31, 1999
<CAPTION>
EUA
Eastern EUA EUA EUA EUA Telecomm-
Edison Cogenex Energy Inv. Energy Service Ocean State unications
Consolidated Consolidated Consolidated Corporation* Corporation Corporation*
<S> <C> <C> <C> <C> <C> <C>
Common Equity:
Common shares, $5 par value of Registrant (1) $58,485,025 $100 $1 $ $1 $
Other paid-in capital 78,048,527 47,046,923 999 9,808,199
Common share expense (43,912)
Retained earnings 124,158,285 (5,038,782) (41,462,692) 7,702,266
Total Common Equity 260,647,925 42,008,241 (41,461,692) 17,510,466
Non-Redeemable Preferred:
4.25%, $100 par value, 35,000 shares (2)
5.60%, $100 par value, 25,000 shares (2)
3.75%, $100 par value, 7,689 shares (2)
$.01 par value, 7,500 shares (3) 75
Premium, net of expense
Total Non-Redeemable 75
Redeemable Preferred:
6.625%, $100 par value, 300,000 shares (4) 30,000,000
Expense, net of premium (335,498)
Preferred stock redemption cost (1,305,448)
Total Redeemable 28,359,054
Long-Term Debt:
Secured Notes:
10.2% due 2008
Unsecured Notes:
9.59% due 2011 23,636,896
7% due 2000 50,000,000
9.6% due 2001 6,400,000
10.56% due 2005 21,000,000
Variable Rate Bonds:
Demand due 2014 (5)
Revenue Refunding due 2011 (5)
Pollution Control Revenue Bonds:
5.875% due 2008 40,000,000
First Mortgage Bonds:
9.5% due 2004 (Series B)
10.35% due 2010 (Series C)
8.95% due 2001
40,000,000 77,400,000 23,636,896
Less portion due within one year 77,400,000 2,476,660
Total Long-Term Debt 40,000,000 21,160,236
Total Capitalization $329,006,979 $42,008,316 ($41,461,692) $ $38,670,702 $
(1) Authorized 36,000,000 shares, 20,435,997 shares outstanding.
(2) Authorized and Outstanding.
(3) The Preferred Stock shall be entitled to an annual dividend per share at a rate equal
to 33% of the net income of Citizens Conservation Services divided by 7,500.
(4) Authorized 400,000 shares, outstanding 300,000.
(5) Weighted average interest rate was 3.3% for 1999.
* Companies dissolved in 1999.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES
CONSOLIDATING INCOME STATEMENTS (1 of 2)
FOR THE YEAR ENDED DECEMBER 31, 1999
<CAPTION>
Blackstone
Eastern EUA Valley Newport
EUA Utilities Service Electric Electric
Consolidated Eliminations Associates Corporation Company Corporation
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues $553,766,589 $82,474,674 $ $ $127,081,842 $60,543,498
Operating Expenses:
Operation 394,427,131 136,028,966 1,765,926 53,906,529 96,445,973 42,546,392
Maintenance 19,192,597 1,173,033 1,957 1,173,729 3,182,885 2,124,273
Depreciation and amortization 44,509,707 1,364,479 2,545 1,367,615 6,492,512 2,872,989
Taxes Other than income 21,473,100 2,753,443 12,048 2,767,187 7,898,874 4,021,753
Income Taxes - Current (credit) 1,400,772 122,829 28 254,933 3,081,283 1,864,961
- Deferred (credit) 17,496,006 (93,104) (216,810) (50,048) 399,019 566,750
Total Operating Expenses 498,499,313 141,349,646 1,565,694 59,419,945 117,500,546 53,997,118
Operating Income 55,267,276 (58,874,972) (1,565,694) (59,419,945) 9,581,296 6,546,380
Other Income and Deductions:
Interest and dividend income 7,670,329 4,321,117 3,239,932 6,816 63,168 25,118
Energy Related Asset Adjustments (24,868,190)
Income Tax Impact of Energy
Related Asset Adjustments 8,210,261
Equity in earnings of jointly-
owned companies 9,232,740 16,230,136 16,230,136
Allowance for other funds used during
construction 276,406 97,951 10,072
Other (deductions) income - net 512,536 59,385,709 4,807,131 60,201,552 (146,889) 25,891
Total Other Income 1,034,082 79,936,962 24,277,199 60,208,368 14,230 61,081
Income Before Interest Charges 56,301,358 21,061,990 22,711,505 788,423 9,595,526 6,607,461
Interest Charges:
Interest on long-term debt 21,550,967 520,200 2,874,523 1,029,516
Amortization of debt expense and premium 1,308,699 11,398 82,024 71,136
Other interest expense (principally
short-term notes) 14,710,516 4,831,854 5,793,203 6,010 972,804 985,065
Allowance for borrowed funds used during
construction - (credit) (492,210) (76,496) (40,120)
Total Interest Charges 37,077,972 4,831,854 5,793,203 537,608 3,852,855 2,045,597
Net Income 19,223,386 16,230,136 16,918,302 250,815 5,742,671 4,561,864
Preferred Dividends Requirement 2,305,084 288,750 28,834
Earnings available for common shareholder $16,918,302 16,230,136 $16,918,302 $250,815 $5,453,921 $4,533,030
Earnings per EUA Common Share: 20,435,997
weighted average shares outstanding $0.83
( ) Denotes Contra
* Companies dissolved in 1999.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES
CONSOLIDATING INCOME STATEMENTS (2 of 2)
FOR THE YEAR ENDED DECEMBER 31, 1999
<CAPTION>
EUA
Eastern EUA EUA EUA EUA Telecomm-
Edison Cogenex Energy Inv. Energy Service Ocean State unications
Consolidated Consolidated Consolidated Corporation* Corporation Corporation*
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues $394,566,408 $49,398,567 $4,650,948 $ $ $
Operating Expenses:
Operation 288,490,019 39,339,954 7,682,466 8,502 265,185 5,151
Maintenance 12,743,813 1,130,029 4,049 355 4,356 184
Depreciation and amortization 24,374,553 10,349,954 328,890 71,807 3,300 10,021
Taxes Other than income 8,760,366 709,150 47,691 317 8,913 244
Income Taxes - Current (credit) 7,376,871 (4,213,598) (5,955,389) 433 (925,059) 39,138
- Deferred (credit) 14,422,489 1,409,832 879,706 (7,964) (72)
Total Operating Expenses 356,168,111 48,725,321 2,987,413 81,414 (651,269) 54,666
Operating Income 38,398,297 673,246 1,663,535 (81,414) 651,269 (54,666)
Other Income and Deductions:
Interest and dividend income 2,777,095 5,276,413 601,074 12 1,812 6
Energy Related Asset Adjustments (5,133,251) (19,734,939)
Income Tax Impact of Energy
Related Asset Adjustments 1,303,032 6,907,229
Equity in earnings of jointly-
owned companies 838,798 (266,664) 8,660,606
Allowance for other funds used during
construction 168,383
Other (deductions) income - net 1,877,419 (1,166,449) (3,223,273) 144,892 (2,819,306) 197,277
Total Other Income 5,661,695 279,745 (15,716,573) 144,904 5,843,112 197,283
Income Before Interest Charges 44,059,992 952,991 (14,053,038) 63,490 6,494,381 142,617
Interest Charges:
Interest on long-term debt 7,860,748 6,840,860 2,425,120
Amortization of debt expense and premium 1,116,166 27,975
Other interest expense (principally
short-term notes) 7,736,243 652,863 3,204,730 28,404 151,568 11,480
Allowance for borrowed funds used during
construction - (credit) (187,841) (187,753)
Total Interest Charges 16,525,316 7,305,970 3,204,730 28,404 2,604,663 11,480
Net Income 27,534,676 (6,352,979) (17,257,768) 35,086 3,889,718 131,137
Preferred Dividends Requirement 1,987,500
Earnings available for common shareholder $25,547,176 ($6,352,979) ($17,257,768) $35,086 $3,889,718 $131,137
Earnings per EUA Common Share:
weighted average shares outstanding
( ) Denotes Contra
* Companies dissolved in 1999.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (1 of 2)
FOR THE YEAR ENDED DECEMBER 31, 1999
<CAPTION>
Blackstone
Eastern EUA Valley Newport
EUA Utilities Service Electric Electric
Consolidated Eliminations Associates Corporation Company Corporation
<S> <C> <C> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income $19,223,386 $16,230,136 $16,918,302 $250,815 $5,742,671 $4,561,864
Adjustments to Reconcile Net Income
to Net Cash Provided by Operating Activities:
Depreciation and amortization 51,332,569 1,840,498 1,379,014 7,065,686 2,787,885
Amortization of nuclear fuel 3,667,114
Deferred taxes 8,616,537 (1,010,145) (50,048) 423,334 578,620
Non-cash expenses/(gains) on sales of investment
in energy savings projects 14,717,829
Energy related asset adjustments 22,765,478
Investment tax credit, net (6,179,053) (176,390) (84,618)
Allowance for other funds used during construc. (276,405) (97,950) (10,072)
Collections and sales of project notes and
leases receivable 7,932,991
Other - net (27,110,940) (1,554,337) (13,141,625) 492,415 (104,647) (1,250,026)
Changes in Operating Assets and Liabilities:
Accounts receivable (5,943,328) 843,780 1,962,520 (2,911,721) 1,003,264 998,562
Materials and supplies 8,737,678 1,104 (143,672) 12,094
Notes receivable 5,858,725 (7,211,213) (7,718,863)
Accounts payable 6,927,004 (3,615,171) 1,013,902 (142,711) (5,486,741) 7,381,151
Accrued taxes (11,639,751) 2,771,391 2,408,793 221,710 2,680,614 1,360,791
Regulatory asset - purchased power contract
buyout, Net (51,801,450)
Other - net 6,605,010 (1,003) (188,724) 496,263 (1,713,997) (481,552)
Net Cash Provided from (Used in) Operating Act. 53,433,394 7,463,583 2,084,658 (263,159) 9,192,172 15,854,699
CASH FLOW FROM INVESTING ACTIVITIES:
Construction expenditures (57,039,322) (146,884) (6,965,422) (3,010,114)
Collections on notes and lease receivables of
EUA Cogenex 14,732,529
Proceeds from the sale of generation assets 62,346,065 250,000 560,000
Proceeds from the sale of Day division 2,893,749
Investments in subsidiaries 216,274 (16,899,993) (16,899,993)
Net Cash Provided From (Used in) Investing Act. 23,149,295 (16,899,993) (16,899,993) (146,884) (6,715,422) (2,450,114)
CASH FLOW FROM FINANCING ACTIVITIES:
Redemptions of common stock (23,000,007)
Redemptions of long-term debt (145,345,345) (1,100,000) (1,500,000) (10,568,685)
Capital contribution from EUA Parent 40,000,000
EUA common share dividends paid (33,923,776)(14,774,796) (33,923,776) (150,000) (2,506,924) (1,660,000)
Subsidiary preferred dividends paid (2,305,083) (288,750) (28,833)
Net increase (decrease) in short-term debt 80,381,589 7,211,213 48,830,000 1,740,000 (1,230,000)
Net Cash (Used in) Provided from Financing Act. (101,192,615) 9,436,410 14,906,224 (1,250,000) (2,555,674) (13,487,518)
NET INCREASE (DECREASE) IN CASH (24,609,926) 90,889 (1,660,043) (78,924) (82,933)
Cash and temporary cash investments at beginning
of year 32,089,677 2,422,127 178,221 142,474
Cash and temporary cash investments at end of year $7,479,751 $ $90,889 $762,084 $99,297 $59,541
Cash paid during the year for:
Interest (net of amount Capitalized) $28,607,999 $3,039,822 $582,181 $2,932,655 $1,316,417
Income Taxes (Refund) $17,421,019 ($6,457,690) ($301,447) $218,956 $510,018
Conversion of investments in energy savings projects
to notes and leases receivable $1,922,000
( ) Denotes Contra
* Companies dissolved in 1999.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (2 of 2)
FOR THE YEAR ENDED DECEMBER 31, 1999
<CAPTION>
EUA EUA EUA
Eastern EUA Energy Energy EUA Telecomm-
Edison Cogenex Investment Services Ocean State unications
Consolidated Consolidated Consolidated Corporation* Corporation Corporation*
<S> <C> <C> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income $27,534,676 ($6,352,979)($17,257,768) $35,086 $3,889,718 $131,137
Adjustments to Reconcile Net Income
to Net Cash Provided by Operating Activities:
Depreciation and amortization 27,914,332 10,673,820 (352,737) 27,975 (3,904)
Amortization of nuclear fuel 3,667,114
Deferred taxes 11,493,365 1,780,693 (4,301,577) (297,633) (72)
Non-cash expenses/(gains) on sales of investment
in energy savings projects 14,717,829
Energy related asset adjustments 3,030,539 19,734,939
Investment tax credit, net (5,918,045)
Allowance for other funds used during construc. (168,383)
Collections and sales of project notes and
leases receivable 7,932,991
Other - net (25,372,786) 1,625,632 8,641,897 79,208 339,294 25,361
Changes in Operating Assets and Liabilities:
Accounts receivable (9,791,689) 4,409,834 (1,249,701) 433,207 46,176
Materials and supplies 7,948,639 23,798 895,715
Notes receivable 6,366,375
Accounts payable 291,257 1,473,234 (1,212,173) (3,558) 716 (3,244)
Accrued taxes (17,006,782) 15,792 (15,254) 1,465,976
Regulatory asset - purchased power contract
buyout, Net (51,801,450)
Other - net 26,655,907 1,222,177 (19,361,730) (5,982) (16,249) (2,106)
Net Cash Provided from (Used in) Operating Act. (4,553,845) 40,553,360 (8,112,014) 537,961 5,409,797 193,348
CASH FLOW FROM INVESTING ACTIVITIES:
Construction expenditures (13,902,173) (33,014,729)
Collections on notes and lease receivables of
EUA Cogenex 14,732,529
Proceeds from the sale of generation assets 61,536,065
Proceeds from the sale of Day division 2,893,749
Investments in subsidiaries 216,274
Net Cash Provided From (Used in) Investing Act. 47,850,166 (15,388,451)
CASH FLOW FROM FINANCING ACTIVITIES:
Redemptions of common stock (23,000,007)
Redemptions of long-term debt (123,000,000) (6,700,000) (2,476,660)
Capital contribution from EUA Parent 40,000,000
EUA common share dividends paid (7,532,872) (2,925,000)
Subsidiary preferred dividends paid (1,987,500)
Net increase (decrease) in short-term debt 47,060,000 (15,953,338) 7,907,898 (540,195) (10,000) (211,563)
Net Cash (Used in) Provided from Financing Act. (68,460,379) (22,653,338) 7,907,898 (540,195) (5,411,660) (211,563)
NET INCREASE (DECREASE) IN CASH (25,164,058) 2,511,571 (204,116) (2,234) (1,863) (18,215)
Cash and temporary cash investments at beginning
of year 25,952,161 2,782,421 552,017 2,234 39,807 18,215
Cash and temporary cash investments at end of year $788,103 $5,293,992 $347,901 $ $37,944 $
Cash paid during the year for:
Interest (net of amount capitalized) $11,427,088 $7,171,247 $1,881 $2,136,708
Income Taxes (Refund) $26,549,478 ($3,709,730) ($112,356) $706 $722,628 $456
Conversion of investments in energy savings projects
to notes and leases receivable $1,922,000
( ) Denotes Contra
* Companies dissolved in 1999.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF RETAINED EARNINGS AND OTHER PAID-IN CAPITAL (1 of 2)
December 31, 1999
<CAPTION>
Blackstone
Eastern EUA Valley Newport
EUA Utilities Service Electric Electric
Consolidated Eliminations Associates Corporation Company Corporation
<S> <C> <C> <C> <C> <C> <C>
Balance of Retained Earnings at Beginning
of year $56,465,505 $108,887,118 $56,465,505 $456,189 $14,547,359 $3,694,230
Additions:
Net Income (Loss) 19,223,386 16,230,136 16,918,302 250,815 5,742,671 4,561,864
Total 75,688,891 125,117,254 73,383,807 707,004 20,290,030 8,256,094
Deductions:
Dividends:
Preferred - subsidiaries 2,305,084 288,750 28,834
Common - subsidiaries 14,674,796 50,000 2,506,924 1,660,000
Common - registrant - $1.66 per share 33,923,776 33,923,776
Total Dividends 36,228,860 14,674,796 33,923,776 50,000 2,795,674 1,688,834
Other 364,761 364,761 364,761
Total Deductions 36,593,621 15,039,557 34,288,537 50,000 2,795,674 1,688,834
Balance of Retained Earnings at End of Period $39,095,270 $110,077,697 $39,095,270 $657,004 $17,494,356 $6,567,260
Other Paid-In Capital at Beginning of Year $218,959,339 $218,959,339
Additions:
Amortization restricted stock costs 1,642,164 1,642,164
Other 92,892 92,892
Other Paid-In Capital at End of Year $220,694,395 $220,694,395
( ) Denotes Contra
* Companies dissolved in 1999.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF RETAINED EARNINGS AND OTHER PAID-IN CAPITAL (2 of 2)
December 31, 1999
<CAPTION>
EUA EUA
Eastern EUA Energy EUA EUA Telecomm-
Edison Cogenex Investment Energy Service Ocean State unications
Consolidated Consolidated Consolidated Corporation* Corporation Corporation*
<S> <C> <C> <C> <C> <C> <C>
Balance of Retained Earnings at Beginning
of year $106,508,742 $1,314,197 ($24,204,924) ($35,086) $6,737,548 ($131,137)
Additions:
Net Income (Loss) 27,534,676 (6,352,979) (17,257,768) 35,086 3,889,718 131,137
Total 134,043,418 (5,038,782) (41,462,692) 10,627,266
Deductions:
Dividends:
Preferred - subsidiaries 1,987,500
Common - subsidiaries 7,532,872 2,925,000
Common - registrant - $1.66 per share
Total Dividends 9,520,372 2,925,000
Other 364,761
Total Deductions 9,885,133 2,925,000
Balance of Retained Earnings at End of Period $124,158,285 ($5,038,782) ($41,462,692) $ $7,702,266 $
Other Paid-In Capital at Beginning of Year
Additions:
Amortization restricted stock costs
Other
Other Paid-In Capital at End of Year
( ) Denotes Contra
* Companies dissolved in 1999.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EASTERN EDISON COMPANY AND SUBSIDIARY
CONSOLIDATING BALANCE SHEETS
December 31, 1999
<CAPTION>
Eastern Eastern Montaup
Edison Edison Electric
ASSETS Consolidated Eliminations Company Company
<S> <C> <C> <C> <C>
Utility plant and other investments:
Utility plant in service $479,270,049 $ $252,307,153 $226,962,896
Less accumulated provision for depreciation
and amortization 186,399,470 103,500,297 82,899,173
Net Utility plant in service 292,870,579 148,806,856 144,063,723
Construction work in progress 4,251,480 2,444,509 1,806,971
Net utility plant 297,122,059 151,251,365 145,870,694
Non-utility property 2,388,393 105,735 2,282,658
Less accumulated provision for depreciation 9,697 9,697
Net non-utility property 2,378,696 96,038 2,282,658
Investments in subsidiaries (at equity) 12,277,169 223,342,536 223,342,536 12,277,169
Other 66,322 10,405 55,917
Total Utility Plant and Other Investments 311,844,246 223,342,536 374,700,344 160,486,438
Current Assets:
Cash and temporary cash investments 788,103 244,271 543,832
Accounts receivable - Net:
Customers 30,091,670 21,002,013 9,089,657
Accrued unbilled revenue 3,909,293 3,031,538 877,755
Others 14,277,788 2,457,787 11,820,001
Accounts receivable - associated companies 14,510,577 10,023,042 2,990,672 21,542,947
Materials and supplies (at average cost):
Plant materials and operating supplies 2,015,746 1,793,099 222,647
Other current assets 3,596,240 843,771 2,752,469
Total Current Assets 69,189,417 10,023,042 32,363,151 46,849,308
Deferred Debits:
Unamortized debt expense 590,255 573,042 17,213
Unrecovered Regulatory Plant Costs (Note A) 45,955,085 45,955,085
Other deferred debits 583,547,161 35,377,058 548,170,103
Total Deferred Debits 630,092,501 35,950,100 594,142,401
Total assets $1,011,126,164 $233,365,578 $443,013,595 $801,478,147
( ) Denotes Contra
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EASTERN EDISON COMPANY AND SUBSIDIARY
CONSOLIDATING BALANCE SHEETS
December 31, 1999
<CAPTION>
Eastern Eastern Montaup
Edison Edison Electric
LIABILITIES Consolidated Eliminations Company Company
<S> <C> <C> <C> <C>
Capitalization:
Common equity $260,647,925 $133,590,335 $260,647,925 $133,590,335
Redeemable preferred stock - net 29,664,502 29,664,502
Redeemable preferred stock of subsidiaries- net 1,500,000 1,500,000
Preferred Stock Redemption Cost (1,305,448) (1,305,448)
Long-term debt - net 40,000,000 88,252,201 40,000,000 88,252,201
Total Capitalization 329,006,979 223,342,536 329,006,979 223,342,536
Current Liabilities:
Long-term debt due within one year
Notes payable 47,060,000 34,560,000 12,500,000
Accounts payable 24,480,091 11,131,030 13,349,061
Accounts payable - associated companies 10,300,648 7,625,917 16,211,995 1,714,570
Customer deposits 1,115,959 1,115,959
Taxes accrued 353,906 468,242 (114,336)
Interest accrued 1,233,017 2,397,125 1,158,755 2,471,387
Purchased power contract buyout payable 75,697,865 75,697,865
Other current liabilities 45,435,457 8,342,988 37,092,469
Total Current Liabilities 205,676,943 10,023,042 72,988,969 142,711,016
Other Liabilities:
Unamortized investment credit 7,231,618 3,008,025 4,223,593
Other deferred credits and other liabilities 339,887,929 16,044,862 323,843,067
Total Other Liabilities 347,119,547 19,052,887 328,066,660
Accumulated deferred taxes 129,322,695 21,964,760 107,357,935
Total liabilities and capitalization $1,011,126,164 $233,365,578 $443,013,595 $801,478,147
( ) Denotes Contra
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EASTERN EDISON COMPANY AND SUBSIDIARY
CONSOLIDATING STATEMENTS OF CAPITALIZATION
December 31, 1999
<CAPTION>
Eastern Eastern Montaup
Edison Edison Electric
Consolidated Eliminations Company Company
<S> <C> <C> <C> <C>
Common Equity:
Common shares $58,485,025 $42,140,000 $58,485,025 $42,140,000
Other paid-in capital 78,048,527 21,238,000 78,048,527 21,238,000
Common share expense (43,912) (43,912)
Retained earnings 124,158,285 70,212,336 124,158,285 70,212,336
Total Common Equity 260,647,925 133,590,336 260,647,925 133,590,336
Redeemable Preferred:
6.625%, $100 par value, 300,000 shares 30,000,000 30,000,000
Redeemable preferred stock of subsidiaries 1,500,000 1,500,000
Expense, net of premium (335,498) (335,498)
Preferred stock redemption cost (1,305,448) (1,305,448)
Total Redeemable 28,359,054 1,500,000 28,359,054 1,500,000
Long-Term Debt:
Pollution Control Revenue Bonds:
5.875% due 2008 40,000,000 40,000,000
Debenture Bonds:
8% due 2000 8,500,000 8,500,000
8.25% due 2003 12,800,000 12,800,000
10% due 2008 9,275,000 9,275,000
10.125% due 2008 27,677,200 27,677,200
9% due 2020 5,000,000 5,000,000
9.375% due 2020 25,000,000 25,000,000
Total Long-Term Debt 40,000,000 88,252,200 40,000,000 88,252,200
Total Capitalization $329,006,979 $223,342,536 $329,006,979 $223,342,536
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EASTERN EDISON COMPANY AND SUBSIDIARY
CONSOLIDATING INCOME STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1999
<CAPTION>
Eastern Eastern Montaup
Edison Edison Electric
Consolidated Eliminations Company Company
<S> <C> <C> <C> <C>
Operating Revenues $394,566,408 $122,604,836 $253,914,217 $263,257,027
Operating Expenses:
Operation 288,490,019 122,604,836 209,061,338 202,033,517
Maintenance 12,743,813 5,980,536 6,763,277
Depreciation and amortization 24,374,553 10,965,727 13,408,826
Taxes Other than income 8,760,366 4,787,093 3,973,273
Income Taxes - Current 7,376,871 5,723,643 1,653,228
- Deferred 14,422,489 3,656,635 10,765,854
Total Operating Expenses 356,168,111 122,604,836 240,174,972 238,597,975
Operating Income 38,398,297 13,739,245 24,659,052
Other Income and Deductions:
Interest and dividend income 2,777,095 12,436,120 11,491,522 3,721,693
Equity in earnings of jointly-owned companies 838,798 13,835,274 13,835,274 838,798
Allowance for other funds used during construction 168,383 168,383
Other (deductions) income - net 1,877,419 (129,479) 2,006,898
Total Other Income 5,661,695 26,271,394 25,197,317 6,735,772
Income Before Interest Charges 44,059,992 26,271,394 38,936,562 31,394,824
Interest Charges:
Interest on long-term debt 7,860,748 10,608,812 7,860,748 10,608,812
Amortization of debt expense and premium 1,116,166 17,659 1,098,507
Other interest expense (principally
short-term notes) 7,736,243 1,827,308 3,642,614 5,920,937
Allowance for borrowed funds used during
construction - (credit) (187,841) (119,134) (68,707)
Total Interest Charges 16,525,316 12,436,120 11,401,887 17,559,549
Net Income 27,534,676 13,835,274 27,534,675 13,835,275
Preferred Dividends Requirement 1,987,500 1,987,500
Earnings Available for Common Stockholders $25,547,176 $13,835,274 $25,547,175 $13,835,275
Weighted average shares outstanding 2,339,401
Earnings per share $10.92
( ) Denotes Contra
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EASTERN EDISON COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1999
<CAPTION>
Eastern Eastern Montaup
Edison Edison Electric
Consolidated Eliminations Company Company
<S> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income $27,534,676 $13,835,274 $27,534,675 $13,835,275
Adjustments to Reconcile Net Income
to Net Cash Provided by Operating Activities:
Depreciation and Amortization 27,914,332 10,897,590 17,016,742
Amortization of nuclear fuel 3,667,114 3,667,114
Deferred taxes 11,493,365 3,703,775 7,789,590
Investment tax credit, net (5,918,045) (301,776) (5,616,269)
Allowance for other funds used during construction (168,383) (168,383)
Other - Net (25,372,786) (11,593,709) (11,416,139) (25,550,356)
Changes in Operating Assets and Liabilities:
Accounts receivable (9,791,689) 54,869,727 17,844,889 27,233,149
Materials and supplies 7,948,639 159,694 7,788,945
Accounts payable 291,257 (52,156,981) (29,565,723) (22,300,001)
Accrued taxes (17,006,782) 2,698,685 (19,705,467)
Liability - Purchase Power Contract Buyout (51,801,450) (51,801,450)
Other - net 26,655,907 (2,712,746) (4,124,711) 28,067,872
Net Cash Provided from Operating Activities (4,553,845) 2,241,565 17,430,959 (19,743,239)
CASH FLOW FROM INVESTING ACTIVITIES:
Construction expenditures (13,902,173) (10,515,181) (3,386,992)
Proceeds from the Sale of Generation Assets 61,536,065 61,536,065
Decrease in Other Investments 216,274 54,750,000 54,750,000 216,274
Net Cash Used in Investing Activities 47,850,166 54,750,000 44,234,819 58,365,347
CASH FLOW FROM FINANCING ACTIVITIES:
Redemptions:
Common Stock (23,000,007) (24,750,000) (23,000,007) (24,750,000)
Long-term debt (123,000,000) (29,729,382) (123,000,000) (29,729,382)
Eastern Edison common share dividends paid (7,532,872) (2,449,480) (7,532,872) (2,449,480)
Preferred dividends paid (1,987,500) (62,699) (1,987,500) (62,699)
Capital Contribution from EUA Parent 40,000,000 40,000,000
Net Decrease in short-term debt 47,060,000 34,560,000 12,500,000
Net Cash (Used In) Financing Activitities (68,460,379) (56,991,561) (80,960,379) (44,491,561)
NET DECREASE IN CASH (25,164,058) (19,294,601) (5,869,457)
Cash and temporary cash investments
at beginning of year 25,952,161 25,798,213 153,948
Cash and temporary cash investments
at end of year $788,103 $ $6,503,612 ($5,715,509)
Cash paid during the year for:
Interest (Net of Accounts Capitalized) $11,427,088 $13,391,138 $11,095,770 $13,722,456
Income Taxes $26,549,478 $3,595,437 $22,954,041
( ) Denotes Contra
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EASTERN EDISON COMPANY AND SUBSIDIARY
CONSOLIDATING STATEMENTS OF RETAINED EARNINGS AND OTHER PAID-IN CAPITAL
December 31, 1999
<CAPTION>
Eastern Eastern Montaup
Edison Edison Electric
Consolidated Eliminations Company Company
<S> <C> <C> <C> <C>
Balance of retained earnings at begin. of year $106,508,742 $58,889,241 $106,508,742 $58,889,241
Additions:
Net Income 27,534,676 13,835,275 27,534,676 13,835,275
Total 134,043,418 72,724,516 134,043,418 72,724,516
Deductions:
Dividends:
Preferred 1,987,500 62,700 1,987,500 62,700
Common 7,532,872 2,449,480 7,532,872 2,449,480
Total Dividends 9,520,372 2,512,180 9,520,372 2,512,180
Other 364,761 364,761
Total Deductions 9,885,133 2,512,180 9,885,133 2,512,180
Balance of retained earnings at end of period $124,158,285 $70,212,336 $124,158,285 $70,212,336
( ) Denotes Contra
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEETS (1 of 2)
December 31, 1999
<CAPTION>
EUA
EUA EUA EUA Day Metrix
Cogenex Cogenex Day (fka Day I & II) NEM
ASSETS Consolidated Elimination (Division) (Division) (Division) Inc.
<S> <C> <C> <C> <C> <C> <C>
Utility Plant and Other Investments:
Non-utility property $84,016,674 $ $40,330,346 $ $ $7,554,950
Less accumulated provision for deprec. 44,463,015 23,517,499 3,535,345
Net non-utility property 39,553,659 16,812,847 4,019,605
Investments in subsidiaries (at equity) 188,654 34,826,048 35,014,702
Notes receivable 21,888,154 20,286,969
Leases receivable 13,610,720 9,492,622
Other 8,786,208 3,775,824
Total Utility Plant and Other Investments 84,027,395 34,826,048 85,382,964 4,019,605
Current Assets:
Cash and temporary cash investments 5,293,992 3,291,274 345,470 106,962
Notes receivable 14,733,923 8,931,731 23,393,994
Leases receivable 2,426,767 1,444,041
Accounts receivable - Net:
Customers 7,492,379 3,315,741 297,335
Others 12,217,939 (630,170) 9,274,200 (223,745)
Accounts receivable - associated companies 1,269 1,269
Materials and supplies (at cost):
Plant materials and operating supplies 104,385 15,354
Other current assets 513,419 47,477 472,607 2,160
Total Current Assets 42,784,073 8,349,038 41,208,480 345,470 182,712
Deferred Debits:
Unamortized debt expense 165,285 165,285
Other deferred debits 1,959,796 755,269 955,600
Total Deferred Debits 2,125,081 920,554 955,600
Total Assets $128,936,549 $43,175,086 $127,511,998 $345,470 $ $5,157,917
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEETS (2 of 2)
December 31, 1999
<CAPTION>
EUA
EUA EUA Cogenex EUA EUA EUA EUA EUA
Cogenex Citizens West MUPA WestCoast FRC II EC&S I EC&S II
ASSETS Canada Corporation Corporation (Partn.) (Partner.) (Partner.) (Partner.) (Partnership)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Utility Plant and Other Investments:
Non-utility property $9,795 $4,377,722 $1,763,267 $ $ $ $11,744,881 $18,235,713
Less accumulated provision for depr. 1,500 1,557,097 640,998 3,975,388 11,235,188
Net non-utility property 8,295 2,820,625 1,122,269 7,769,493 7,000,525
Investments in subsidiaries (at equity)
Notes receivable (71,606) 1,227,998 444,793
Leases receivable 526,289 1,182,396 993,132 1,416,281
Other 14,629 96,933 4,439,552 15,539 396,441 47,290
Total Utility Plant and Other Invest. 477,607 2,917,558 7,972,215 15,539 9,603,859 8,464,096
Current Assets:
Cash and temporary cash investments 31,946 452,987 53,682 871 298,848 711,952
Notes receivable 32,834 211,308 27,518
Leases receivable 39,840 390,340 100,480 452,066
Accounts receivable - Net:
Customers 317,827 920,278 1,288,534 978,443 374,221
Others 183,526 928,939 751,335 391,136 282,378
Accounts receivable - associated comp.
Materials and supplies
(at average cost):
Plant materials and operating
supplies 89,031
Other current assets 843 5,988 79,298
Total Current Assets 606,816 1,855,205 3,262,833 53,682 871 1,796,425 1,820,617
Deferred Debits:
Unamortized debt expense
Other deferred debits 5,759 181,132 62,036
Total Deferred Debits 5,759 181,132 62,036
Total Assets $1,090,182 $4,953,895 $11,297,084 $ $69,221 $871 $11,400,284 $10,284,713
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEETS (1 of 3)
December 31, 1999
<CAPTION>
EUA
EUA EUA EUA Day Matrix
Cogenex Cogenex Day (fka Day I & NEM
LIABILITIES Consolidated Elimination Corporation (Division (Division) Inc.
<S> <C> <C> <C> <C> <C> <C>
Capitalization:
Common equity $42,008,241 $13,324,150 $38,932,429 $3,164,513 $ $8,290,997
Redeemable preferred stock of
subsidiaries - net 75
Partnerships' capital 21,511,898
Long-term debt - net
Total Capitalization 42,008,316 34,836,048 38,932,429 3,164,513 8,290,997
Current Liabilities:
Long-term debt due within one year 77,400,000 77,400,000
Notes payable 155,100 8,931,731
Accounts payable 3,225,701 (630,170) 1,457,874 9,349
Accounts payable - associated comp. 86,321 99,791 (13,470)
Taxes accrued 74,891 8,035
Interest accrued 1,123,244 47,477 1,123,244
Other current liabilities 5,328,818 5,370,755 (2,819,043)
Total Current Liabilities 87,394,075 8,349,038 85,459,699 (2,819,043) (4,121)
Deferred Credits:
Other deferred credits 2,076,911 (10,000) 1,871,102
Total Deferred Credits 2,076,911 (10,000) 1,871,102
Accumulated deferred taxes (2,542,753) 1,248,768 (3,128,959)
Total Liabilities and Capitalization $128,936,549 $43,175,086 127,511,998 $345,470 $ $5,157,917
( ) Denotes Contra
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEETS (2 of 3)
December 31, 1999
<CAPTION>
EUA
EUA EUA Cogenex EUA EUA
Cogenex Citizens West MUPA WestCoast
LIABILITIES Canada Corporation Corporation (Partner.) (Partnership)
<S> <C> <C> <C> <C> <C>
Capitalization:
Common equity $691,728 $69,626 $4,183,098 $ $
Redeemable preferred stock of
subsidiaries - net 75
Partnerships' capital 883,649
Long-term debt - net
Total Capitalization 691,728 69,701 4,183,098 883,649
Current Liabilities:
Long-term debt due within one year
Notes payable 155,100 2,831,659 6,100,072
Accounts payable (116,911) 1,472,352 296,803 (834,428)
Accounts payable - associated comp.
Taxes accrued 66,836 20
Interest accrued 13,169 34,308
Other current liabilities 130,393 325,267 1,580,910 20,000
Total Current Liabilities 235,418 4,642,467 8,012,093 (814,428)
Deferred Credits:
Other deferred credits 169,218
Total Deferred Credits 169,218
Accumulated deferred taxes (6,182) 241,727 (898,107)
Total Liabilities and Capitalization $1,090,182 $4,953,895 $11,297,084 $ $69,221
( ) Denotes Contra
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEETS (3 of 3)
December 31, 1999
<CAPTION>
EUA EUA EUA
FRC II EC&S I EC&S II
LIABILITIES (Partner.) (Partner.) (Partnership)
<S> <C> <C> <C>
Capitalization:
Common equity $ $ $
Redeemable preferred stock of
subsidiaries - net
Partnerships' capital 871 10,868,116 9,759,262
Long-term debt - net
Total Capitalization 871 10,868,116 9,759,262
Current Liabilities:
Long-term debt due within one year
Notes payable
Accounts payable 347,088 (36,596)
Accounts payable - associated comp.
Taxes accrued
Interest accrued
Other current liabilities 185,080 535,456
Total Current Liabilities 532,168 498,860
Deferred Credits:
Other deferred credits 26,591
Total Deferred Credits 26,591
Accumulated deferred taxes
Total Liabilities and Capitalization $871 $11,400,284 $10,284,713
( ) Denotes Contra
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF CAPITALIZATION (1 of 3)
December 31, 1999
<CAPTION>
EUA
EUA EUA EUA Day Matrix
Cogenex Cogenex Day (fka Day I & NEM
Consolidated Elimination Corporation (Division) (Division) Inc.
<S> <C> <C> <C> <C> <C> <C>
Common Equity:
Common Shares, $.01 par value $100 $1,400 $100 $ $ $1,100
Other Paid-In Capital 47,046,923 9,774,016 44,213,315 2,833,608 4,252,050
Retained Earnings (5,038,782) 25,351,306 (1,803,060) 330,904 (3,477,928) 4,037,847
Total Common Equity 42,008,241 35,126,722 42,410,355 3,164,512 (3,477,928) 8,290,997
Non-Redeemable Preferred:
$.01 par value, 7,500 shares (1) 75
Total Non-Redeemable 75
Long-Term Debt:
Unsecured Notes:
7.00% due 2000 50,000,000 50,000,000
9.6% due 2001 6,400,000 6,400,000
10.56% due 2005 21,000,000 21,000,000
77,400,000 77,400,000
Less portion due within one year 77,400,000 77,400,000
Total Long-Term Debt
Total Capitalization $42,008,316 $35,126,722 $42,410,355 $3,164,512 ($3,477,928) $8,290,997
(The Preferred Stock shall be entitled to an annual dividend per share at a rate
to 33% of the net income of Citizens Conservation Services divided by 7,500.
</TABLE>
<TABLE>
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF CAPITALIZATION (2 of 3)
December 31, 1999
<CAPTION>
EUA
EUA EUA Cogenex EUA
Cogenex Citizens West MUPA
Canada Corporation Corporation (Partnership)
<S> <C> <C> <C> <C>
Common Equity:
Common Shares, $.01 par value $100 $100 $100 $
Other Paid-In Capital 5,521,966
Retained Earnings 982,302 69,526 (1,338,967)
Total Common Equity 982,402 69,626 4,183,099
Non-Redeemable Preferred:
$.01 par value, 7,500 shares (1) 75
Total Non-Redeemable 75
Long-Term Debt:
Unsecured Notes:
7.00% due 2000
9.6% due 2001
10.56% due 2005
Less portion due within one year
Total Long-Term Debt
Total Capitalization $982,402 $69,701 $4,183,099 $
(The Preferred Stock shall be entitled to an annual dividend per share at a rate
to 33% of the net income of Citizens Conservation Services divided by 7,500.
</TABLE>
<TABLE>
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF CAPITALIZATION (3 of 3)
December 31, 1999
<CAPTION>
EUA EUA EUA EUA
West Coast FRC II EC&S I EC &S II
(Partnership) (Partnership) (Partnership) (Partnership)
<S> <C> <C> <C> <C>
Common Equity:
Common Shares, $.01 par value $ $ $ $
Other Paid-In Capital
Retained Earnings 883,649 872 10,868,117 9,759,262
Total Common Equity 883,649 872 10,868,117 9,759,262
Non-Redeemable Preferred:
$.01 par value, 7,500 shares (1)
Total Non-Redeemable
Long-Term Debt:
Unsecured Notes:
7.00% due 2000
9.6% due 2001
10.56% due 2005
Less portion due within one year
Total Long-Term Debt
Total Capitalization $883,649 $872 $10,868,117 $9,759,262
(The Preferred Stock shall be entitled to an annual dividend per share at a rate
to 33% of the net income of Citizens Conservation Services divided by 7,500.
</TABLE>
The accompanying notes are an integral part of the financial statements.
<TABLE>
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING INCOME STATEMENTS (1 OF 3)
FOR THE TWELVE MONTHS ENDED December 31, 1999
<CAPTION>
EUA
EUA EUA EUA Day Matrix
Cogenex Cogenex Day (fka Day I & NEM
Consolidated Elimination Corporation (Division (Division) Inc.
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues $49,398,567 $ $15,367,438 $7,474,022 $45,156 $3,680,794
Operating Expenses:
Operation 39,339,954 13,891,829 7,541,898 849,401 178,503
Maintenance 1,130,029 482,591 12,722
Depreciation and amortization 10,349,954 5,321,758 244,539 115,004 564,272
Taxes - Other than income 709,149 320,463 218,153 27,370
- Income (credit) (4,213,598) (5,105,669) 643,065
- Deferred 1,409,833 1,029,578 325,562
Total Operating Expenses 48,725,321 15,940,550 8,004,590 991,775 1,724,124
Operating Income 673,246 (573,112) (530,568) (946,619) 1,956,670
Other Income and Deductions:
Interest and dividend income 5,276,413 831,719 5,196,275 156,487
Energy Related Assets Adjustment (5,133,251) (5,133,251)
Income Tax Impact of Energy
Related Assets Adjustments 1,303,032 1,303,032
Other (deductions) income - net (1,166,449) 3,033,271 1,845,091 264
Total Other Income 279,745 3,864,990 3,211,147 156,751
Income (Loss) Before Interest Charges 952,991 3,864,990 2,638,035 (373,817) (946,619) 1,956,670
Interest Charges:
Interest on long-term debt 6,840,860 6,840,860
Other interest expense (principally
short-term notes) 652,863 831,719 647,145 93,090 194,721
Allowance for borrowed funds used during
construction (credit) (187,753) (84,526) (20,712)
Total Interest Charges 7,305,970 831,719 7,403,479 72,378 194,721
Net (Loss) Income ($6,352,979) $3,033,271 ($4,765,444) ($446,195) ($1,141,340) $1,956,667
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING INCOME STATEMENTS (2 OF 3)
FOR THE TWELVE MONTHS ENDED December 31, 1999
<CAPTION>
EUA
EUA EUA Cogenex EUA
Cogenex Citizens West MUPA
Canada Corporation Corporation (Partner)
<S> <C> <C> <C> <C>
Operating Revenues $585,045 $12,722,048 $4,852,260 $
Operating Expenses:
Operation 574,348 11,286,969 4,477,703
Maintenance 53,549 (9,756) 54,068
Depreciation and amortization 8,849 585,559 564,165
Taxes - Other than income 2,971 91,965 48,227
- Income (credit) (7,467) 136,774 119,699
- Deferred (6,182) 92,118 (31,243)
Total Operating Expenses 626,068 12,183,629 5,232,619
Operating Income (41,023) 538,419 (380,359)
Other Income and Deductions:
Interest and dividend income 37,503 291,861
Energy Related Assets Adjustment
Income Tax Impact of Energy
Related Assets Adjustments
Other (deductions) income - net (8,800) (244) (60,372)
Total Other Income 28,703 (244) 231,489
Income (Loss) Before Interest charges (12,320) 538,175 (148,870)
Interest Charges:
Interest on long-term debt
Other interest expense (principally
short-term notes) 2,855 185,058 361,713
Allowance for borrowed funds used
construction (credit) (45,902) (36,613)
Total Interest Charges 2,855 139,156 325,100
Net (Loss) Income ($15,175) $399,019 ($473,970) $
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING INCOME STATEMENTS (3 OF 3)
FOR THE TWELVE MONTHS ENDED December 31, 1999
<CAPTION>
EUA EUA EUA EUA
WestCoast FRC II EC&S I EC&S II
(Partnership) (Partner.) (Partner.) (Partnership)
<S> <C> <C> <C> <C>
Operating Revenues $230,966 $ $1,912,535 $2,528,303
Operating Expenses:
Operation 21,881 38 421,186 96,198
Maintenance 20,479 146,315 370,061
Depreciation and amortization 113,918 800,500 2,031,390
Taxes - Other than income
- Income (credit)
- Deferred
Total Operating Expenses 156,278 38 1,368,001 2,497,649
Operating Income 74,688 (38) 544,534 30,654
Other Income and Deductions:
Interest and dividend income 111,134 141,971 172,901
Energy Related Assets Adjustment
Income Tax Impact of Energy
Related Assets Adjustments
Other (deductions) income - net (150) 124,393 (33,360)
Total Other Income 110,984 266,364 139,541
Income (Loss) Before Interest charges 185,672 (38) 810,898 170,195
Interest Charges:
Interest on long-term debt
Other interest expense (principally
short-term notes)
Allowance for borrowed funds used
construction (credit)
Total Interest Charges
Net (Loss) Income $185,672 ($38) $810,898 $170,195
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF CASH FLOWS (1 of 3)
FOR THE TWELVE MONTHS ENDED December 31, 1999
<CAPTION>
EUA
EUA EUA EUA Day Matrix
Cogenex Cogenex Day (fka Day I & NEM
Consolidated Elimination Corporation (Division) (Division) Inc
<S> <C> <C> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net (Loss) Income ($6,352,979) $3,033,271 ($4,765,444 ($446,195) ($1,141,340) $1,956,670
Adjustments to Reconcile Net (Loss) Income
to Net Cash Provided by Operating Activities:
Depreciation and amortization 10,673,820 5,645,623 244,539 115,004 564,268
Deferred taxes 1,780,693 1,400,438 325,562
Gains on sales of investments in energy
savings projects paid for with notes
leases receivable (2,240,282) (1,837,014)
Costs of energy savings cash sales
type projects 16,958,111 5,800,818
Loss on disposition of Day & DayMetrix
division assets 3,487,591 (9,673) 3,477,918
Undistributed Equity earnings of sub. (457,052) (3,033,271 (3,490,323)
Collections of prin port of project
notes and leases receivable 7,932,991 4,775,470
Other - net 1,625,632 4,482,915 3,919,235 1,776,314 12
Net Changes to Working Capital:
Accounts receivable 4,409,834 9,435,545 10,441,090 624,709
Materials and supplies 23,798 18,489 (33,037)
Accounts payable 1,473,234 (6,749,809 (2,464,447) (430,219)
Accrued taxes 15,792 2,351 (10,830)
Accrued interest (64,552) (1,116,780 (64,553)
Other - net 1,286,729 (2,264,187 (2,545,368) (2,160)
Net Cash Provided from (Used in) Oper.
Activities 40,553,360 3,778,011 20,295,794 1,582,317 (1,059,373) 3,038,842
CASH FLOW FROM INVESTING ACTIVITIES:
Expenditures for investments
in energy savings projects (33,800,076) (18,900,475 (2,643,326)
Collections on financing notes
and leases receivable 14,732,529 14,732,529
Proceeds from sale of Day division assets 2,893,749 (1,787,014) 47,362 1,059,373
Investments in subsidiaries 785,347 9,448,824 10,234,171
Net Cash (Used in) Provided from Invest.
Activities (15,388,451) 7,661,810 6,066,225 (2,595,964) 1,059,373
CASH FLOW FROM FINANCING ACTIVITIES:
Redemption of Long-term debt (6,700,000) (6,700,000)
Dividends declared (3,575,000) (2,800,000)
Partner's contribution (withdrawal) (5,873,821)
Net (decrease) increase in short-term
debt (15,953,338) (1,991,000 (16,160,000) (150,000)
Net Cash (Used in) Provided from
Financial Activities (22,653,338) (11,439,82 (22,860,000) (2,950,000)
NET (DECREASE) INCREASE IN CASH 2,511,571 3,502,019 (1,013,647) 88,842
Cash and temporary cash investments at
beginning of year 2,782,421 (210,746) 1,359,116 18,120
Cash and temporary cash investment at
end of year $5,293,992 $ $3,291,273 $345,469 $ $106,962
Cash paid during the year for:
Interest (net of amounts capitalized) $7,171,247 $7,171,247
Income Taxes ($3,709,730) ($3,874,172) $212,275
Conversion of investments in energy savings
projects to notes and leases receivable $1,922,492 $1,901,214
( ) Denotes contra
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF CASH FLOWS (2 of 3)
FOR THE TWELVE MONTHS ENDED December 31, 1999
<CAPTION>
EUA
EUA EUA Cogenex EUA
Cogenex Citizens West MUPA
Canada Corporation Corporation (Partnerhip)
<S> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net (Loss) Income ($15,175) $399,019 ($473,970) $
Adjustments to Reconcile Net (Loss) Income
to Net Cash Provided by Operating Activities:
Depreciation and amortization 8,852 585,558 564,166
Deferred taxes (6,182) 92,118 (31,243)
Gains on sales of investments in energy savings
projects paid for with note and leases rec. (191,903) (150,000)
Costs of energy savings cash sale type projects 393,136 7,427,833 2,997,391
Loss on disposition of Day & DayMetrix division assets
Undistributed Equity earnings of subsidiaries
Collections of prin port of project notes and leases rec. 64,661 2,358,415
Other - net 103,955 1,353 355,164 11,574
Net Changes to Working Capital:
Accounts receivable (199,519) 143,143 (481,653) (15,552)
Materials and supplies 38,346
Accounts payable 153,241 684,732 (1,021,440 3,949
Accrued taxes 32,663 (159) (8,233)
Accrued interest (437,444) (679,335)
Other - net (48,909) 106,006 1,415,631 23,749
Net Cash Provided from (Used in) Operating Activities 294,820 9,002,159 4,883,239 23,720
CASH FLOW FROM INVESTING ACTIVITIES:
Expenditures for investments in energy savings projects (787,337) (7,367,647 (3,633,283 )
Collections on financing notes and leases receivable
Proceeds from sale of Day division assets
Investments in subsidiaries
Net Cash (Used in) Provided from Investing Activities (787,337) (7,367,647 (3,633,283 )
CASH FLOW FROM FINANCING ACTIVITIES:
Redemption of Long-term debt
Dividends declared (775,000)
Partner's contribution (withdrawal) (23,720)
Net (decrease) increase in short-term debt 207,420 (887,000) (954,758)
Net Cash (Used in) Provided from Financing Activities 207,420 (1,662,000 (954,758) (23,720)
NET (DECREASE) INCREASE IN CASH (285,097) (27,488) 295,198
Cash and temporary cash investment at beginning of year 317,043 27,488 157,788
Cash and temporary cash investment at end of year $31,946 $ $452,986 $
Cash paid during the year for:
Interest (net of amounts capitalized)
Income Taxes $31,865 ($79,698)
Conversion of investments in energy savings projects
to notes and leases receivable ($227,826)
( ) Denotes contra
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF CASH FLOWS (3 of 3)
FOR THE TWELVE MONTHS ENDED December 31, 1999
<CAPTION>
EUA EUA EUA EUA
WestCoast FRC II EC&S I EC&S II
(Partnership) (Partner.) (Partner.) (Partnership)
<S> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net (Loss) Income $185,672 ($38) $810,898 $170,195
Adjustments to Reconcile Net (Loss) Income
to Net Cash Provided by Operating Activities
Depreciation and amortization 113,918 800,503 2,031,389
Deferred taxes
Gains on sales of investments in energy savings
projects paid for with notes and leases receivable (61,365)
Costs of energy savings cash sales type projects 134,968 203,965
Loss on disposition of Day & DayMetrix division assets
Undistributed Equity earnings of subsidiaries
Collections of prin port of project notes and leases rec. 117,526 160,759 456,160
Other - net 35,602 (84,668) (9,994)
Net Changes to Working Capital:
Accounts receivable 749,706 (35,602) 231,491 2,387,566
Materials and supplies
Accounts payable (1,080,823 (82,325) 147,519 (1,186,762)
Accrued taxes
Accrued interest
Other - net (3,817) (22,318) (51,108) 150,836
Net Cash Provided from (Used in) Operating Activities 82,182 (104,681 2,088,997 4,203,355
CASH FLOW FROM INVESTING ACTIVITIES
Expenditures for investments in energy savings project 202,740 82,325 (601,530) (151,543)
Collections on financing notes and leases receivable
Proceeds from sale of Day division assets
Investments in subsidiaries
Net Cash (Used in) Provided from Investing Activities 202,740 82,325 (601,530) (151,543)
CASH FLOW FROM FINANCING ACTIVITIES
Redemption of Long-term debt
Dividends declared
Partner's contribution (withdrawal) (320,419) (29,682) (1,750,000 (3,750,000)
Net (decrease) increase in short-term debt
Net Cash (Used in) Provided from financing Activities (320,419) (29,682) (1,750,000 (3,750,000)
NET (DECREASE) INCREASE IN CASH (35,497) (52,038) (262,533) 301,812
Cash and temporary cash investments at beginning of year 89,182 52,909 561,381 410,140
Cash and temporary cash investments at end of year $53,685 $871 $298,848 $711,952
Cash paid during the year for:
Interest (net of amounts capitalized)
Income Taxes
Conversion of investments in energy savings projects
to notes and leases receivable $249,104
( ) Denotes contra
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF RETAINED
EARNINGS AND OTHER PAID-IN CAPITAL (1 of 3)
December 31, 1999
<CAPTION>
EUA
EUA EUA EUA Day Matrix
Cogenex Cogenex Day (fka Day I & NEM
Consolidated Elimination Corporation (Division (Division) Inc.
<S> <C> <C> <C> <C> <C> <C>
Balance of retained earnings at beginning of year $1,314,197 $28,676,183 $2,962,384 $777,099 ($2,336,588) $2,081,178
Additions:
Net Income (Loss) ($6,352,979) 3,033,271 (4,765,444) (446,195) (1,141,340) 1,956,669
Other additions 290,673
Total (5,038,782) 32,000,127 (1,803,060) 330,904 (3,477,928) 4,037,847
Deductions:
Dividends 775,000
Partners withdrawals 5,873,821
Total 6,648,821
Balance of retained earnings at end of period (5,038,782) 25,351,306 (1,803,060) 330,904 (3,477,928) 4,037,847
Other Paid-In Capital at beginning of year 47,046,923 12,574,016 45,949,391 1,097,532 7,052,050
Additions:
Other (1,736,076) 1,736,076
Total 47,046,923 12,574,016 44,213,315 2,833,608 7,052,050
Deductions:
Return of Capital 2,800,000 2,800,000
Total 2,800,000 2,800,000
Other Paid-In Capital at end of period $47,046,923 $9,774,016 $44,213,315 $2,833,608 $4,252,050
( ) Denotes Contra
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF RETAINED
EARNINGS AND OTHER PAID-IN CAPITAL (2 of 3)
December 31, 1999
<CAPTION>
EUA
EUA EUA Cogenex EUA
Cogenex Citizens West MUPA
Canada Corporation Corporation (Partnership)
<S> <C> <C> <C> <C>
Balance of retained earnings at beginning of yr. $706,804 $445,507 ($864,998) $23,720
Additions:
Net Income (Loss) (15,175) 399,019 (473,969)
Other additions 290,673
Total 982,302 844,526 (1,338,967) 23,720
Deductions:
Dividends 775,000
Partners withdrawals 23,720
Total 775,000 23,720
Balance of retained earnings at end of period 982,302 69,526 (1,338,967)
Other Paid-In Capital at beginning of year 5,521,966
Additions:
Other
Total 5,521,966
Deductions:
Return of Capital
Total
Other Paid-In Capital at end of period $5,521,966
( ) Denotes Contra
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF RETAINED
EARNINGS AND OTHER PAID-IN CAPITAL (3 of 3)
December 31, 1999
<CAPTION>
EUA EUA EUA EUA
West Coast FRC II EC&S I EC &S II
(Partnership) (Partnerhip) (Partnership) (Partnership)
<S> <C> <C> <C> <C>
Balance of retained earnings at beginning of year $1,018,396 $30,592 $11,807,219 $13,339,067
Additions:
Net Income (Loss) 185,672 (38) 810,898 170,195
Other additions
Total 1,204,068 30,554 12,618,117 13,509,262
Deductions:
Dividends
Partners withdrawals 320,419 29,682 1,750,000 3,750,000
Total 320,419 29,682 1,750,000 3,750,000
Balance of retained earnings at end of period 883,649 872 10,868,117 9,759,262
Other Paid-In Capital at beginning of year
Additions:
Other
Total
Deductions:
Return of Capital
Total
Other Paid-In Capital at end of period
( ) Denotes Contra
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EUA ENERGY INVESTMENT AND SUBSIDIARY
CONSOLIDATING BALANCE SHEETS (1 of 2)
December 31, 1999
<CAPTION>
EUA EUA
Energy Energy Eastern
Investment Investment EUA Unicord
ASSETS Consolidated Eliminations Corporation Transcapacity* Corporation*
<S> <C> <C> <C> <C> <C>
Utility plant and other investments:
Utility plant in service $317,539 $ $317,539 $ $
Less accumulated provision for depreciation
and amortization
Net utility plant in service 317,539 317,539
Non-utility property 14,784,940
Less accumulated provision for depreciation 14,272,992
Net non-utility property 511,948
Investments in subsidiaries (at equity) 3,043,446 (11,431,245) (8,387,799)
Total Utility Plant and Other Investments 3,872,933 (11,431,245) (8,070,260)
Current Assets:
Cash and temporary cash investments 347,901 327,430
Notes receivable 4,839,583 14,584,543 19,324,126
Accounts receivable - Net 4,943,541 4,321,277
Accounts receivable - associated companies 5,454 891,848 897,302
Other current assets 165,749 1,029,586 1,186,316
Total Current Assets 10,302,228 16,505,977 26,056,451
Deferred Debits:
Other deferred debits 924,035 937,917
Total Deferred Debits 924,035 937,917
Total assets $15,099,196 $5,074,732 $18,924,108 $ $
( ) Denotes Contra
* Companies dissolved in 1999.
</TABLE>
<TABLE>
EUA ENERGY INVESTMENT AND SUBSIDIARY
CONSOLIDATING BALANCE SHEETS (2 of 2)
December 31, 1999
<CAPTION>
EUA
EUA Compression
ASSETS Bioten Renova Services*
<S> <C> <C> <C>
Utility plant and other investments:
Utility plant in service $ $ $
Less accumulated provision for depreciation
and amortization
Net utility plant in service
Non-utility property 14,784,940
Less accumulated provision for depreciation 14,272,992
Net non-utility property 511,948
Investments in subsidiaries (at equity)
Total Utility Plant and Other Investments 511,948
Current Assets:
Cash and temporary cash investments 20,471
Notes receivable 100,000
Accounts receivable - Net 372,264 250,000
Accounts receivable - associated companies
Other current assets 9,019
Total Current Assets 472,264 279,490
Deferred Debits:
Other deferred debits 22 (13,904)
Total Deferred Debits 22 (13,904)
Total assets $984,234 $265,586 $
( ) Denotes Contra
* Companies dissolved in 1999.
</TABLE>
<TABLE>
EUA ENERGY INVESTMENT AND SUBSIDIARY
CONSOLIDATING BALANCE SHEETS (1 of 2)
December 31, 1999
<CAPTION>
EUA EUA
Energy Energy Eastern
Investment Investment EUA Unicord
LIABILITIES Consolidated Eliminations Corporation Transcapacity* Corporation*
<S> <C> <C> <C> <C> <C>
Capitalization:
Common equity ($41,461,692) ($11,431,245) ($41,461,692) $ $
Total Capitalization (41,461,692) (11,431,245) (41,461,692)
Current Liabilities:
Notes Payable 59,687,334 14,584,543 59,687,334
Accounts payable 94,071 6,200
Accounts payable - associated companies 511,501 891,848 494,720
Taxes accrued (11,607)
Interest accrued 828,813 1,029,586 828,812
Total Current Liabilities 61,110,112 16,505,977 61,017,066
Deferred Credits:
Other deferred credits and other liabilities 595,755 406,000
Total Deferred Credits 595,755 406,000
Accumulated deferred taxes (5,144,979) (1,037,266)
Total liabilities and capitalization $15,099,196 $5,074,732 $18,924,108 $ $
( ) Denotes Contra
* Companies dissolved in 1999.
</TABLE>
<TABLE>
EUA ENERGY INVESTMENT AND SUBSIDIARY
CONSOLIDATING BALANCE SHEETS (2 of 2)
December 31, 1999
<CAPTION>
EUA
EUA Compression
LIABILITIES Bioten Renova Services*
<S> <C> <C> <C>
Capitalization:
Common equity ($11,514,827) $83,582 $
Total Capitalization (11,514,827) 83,582
Current Liabilities:
Notes Payable 14,584,543
Accounts payable 87,871
Accounts payable - associated companies 891,848 16,781
Taxes accrued (11,607)
Interest accrued 1,029,587
Total Current Liabilities 16,593,849 5,174
Deferred Credits:
Other deferred credits and other liabilities 189,755
Total Deferred Credits 189,755
Accumulated deferred taxes (4,094,788) (12,925)
Total liabilities and capitalization $984,234 $265,586 $
( ) Denotes Contra
* Companies dissolved in 1999.
</TABLE>
<TABLE>
EUA ENERGY INVESTMENT AND SUBSIDIARY
CONSOLIDATING STATEMENTS OF CAPITALIZATION (1 of 2)
December 31, 1999
<CAPTION>
EUA EUA
Energy Energy Eastern
Investment Investment EUA Unicord
Consolidated Eliminations Corporation Transcapacity* Corporation*
<S> <C> <C> <C> <C> <C>
Common Equity:
Common shares $1 $1 $1 $ $
Other paid-in capital 999 (2,135,708) (2,134,718)
Retained earnings (41,462,692) (9,295,538) (39,326,975)
Total Common Equity (41,461,692) (11,431,245) (41,461,692)
Total Capitalization ($41,461,692) ($11,431,245) ($41,461,692) $ $
* Companies dissolved in 1999.
</TABLE>
<TABLE>
EUA ENERGY INVESTMENT AND SUBSIDIARY
CONSOLIDATING STATEMENTS OF CAPITALIZATION (2 of 2)
December 31, 1999
<CAPTION>
EUA
EUA Compression
Bioten Renova Services*
<S> <C> <C> <C>
Common Equity:
Common shares $1 $ $
Other paid-in capital 9
Retained earnings (11,514,837) 83,582
Total Common Equity (11,514,827) 83,582
Total Capitalization ($11,514,827) $83,582 $
* Companies dissolved in 1999.
</TABLE>
<TABLE>
EUA ENERGY INVESTMENT AND SUBSIDIARY
CONSOLIDATING INCOME STATEMENTS (1 of 2)
FOR THE YEAR ENDED DECEMBER 31, 1999
<CAPTION>
EUA EUA
Energy Energy Eastern
Investment Investment EUA Unicord
Consolidated Eliminations Corporation Transcapacity* Corporation*
<S> <C> <C> <C> <C> <C>
Operating Revenues $4,650,948 $ $ $418,666 $
Operating Expenses:
Operation 7,682,466 241,408 2,234,184
Maintenance 4,049 1,756
Depreciation and amortization 328,890 39,861 175,738
Taxes - Other than income 47,691 9,603 532
Income Taxes - Current (credit) (5,955,389) (10,124,283) 4,168,644
- Deferred (credit) 879,706 795,527 (12,645)
Total Operating Expenses 2,987,413 (9,036,128) 6,566,453
Operating Income (Loss) 1,663,535 9,036,128 (6,147,787)
Other Income and Deductions:
Interest and dividend income 601,074 1,338,854 1,875,215 5,006
Energy related asset adjustments (19,734,939) (5,350,000)
Income tax impact of energy related
asset adjustments 6,907,229 1,872,500
Equity in earnings of jointly-owned company (266,664) 5,355,286 5,088,622
Allowance for other funds used during
construction
Other income (deductions) - net (3,223,273) (26,651,032) 16,491,238 1,841,592
Total Other Income (15,716,573) 6,694,140 (23,164,695) 16,496,244 1,841,592
Loss Before Interest Charges (14,053,038) 6,694,140 (14,128,567) 10,348,457 1,841,592
Interest Charges:
Other interest expense (principally
short-term notes) 3,204,730 1,338,854 3,129,199 483,613
Total Interest Charges 3,204,730 1,338,854 3,129,199 483,613
Net Income (Loss) (17,257,768) 5,355,286 (17,257,766) 9,864,844 1,841,592
Earnings (Loss) Available for Common
Shareholders ($17,257,768) $5,355,286 ($17,257,766) $9,864,844 $1,841,592
EUA Energy Common Shares outstanding 100
Loss per share ($172,577.68)
( ) Denotes Contra
* Companies dissolved in 1999.
</TABLE>
<TABLE>
EUA ENERGY INVESTMENT AND SUBSIDIARY
CONSOLIDATING INCOME STATEMENTS (2 of 2)
FOR THE YEAR ENDED DECEMBER 31, 1999
<CAPTION>
EUA
EUA Compression
Bioten Renova Services*
<S> <C> <C> <C>
Operating Revenues $ 4,232,282 $
Operating Expenses:
Operation 249,479 4,956,154 1,241
Maintenance 2,293
Depreciation and amortization 53,672 45,390 14,229
Taxes - Other than income 2,170 35,318 68
Income Taxes - Current (credit) 250
- Deferred (credit) 96,824
Total Operating Expenses 305,321 5,136,229 15,538
Operating Income (Loss) (305,321) (903,947) (15,538)
Other Income and Deductions:
Interest and dividend income 57,138 2,569
Energy related asset adjustments (14,384,939)
Income tax impact of energy related
asset adjustments 5,034,729
Equity in earnings of jointly-owned company
Allowance for other funds used during constr.
Other income (deductions) - net 394,298 4,411,487 289,144
Total Other Income (8,898,774) 4,414,056 289,144
Loss Before Interest Charges (9,204,095) 3,510,109 273,606
Interest Charges:
Other interest expense (principally
short-term notes) 798,033 114,860 17,879
Total Interest Charges 798,033 114,860 17,879
Net Income (Loss) (10,002,128) 3,395,249 255,727
Earnings (Loss) Available for Common
Shareholders ($10,002,128) $3,395,249 $255,727
EUA Energy Common Shares outstanding
Loss per share
( ) Denotes Contra
* Companies dissolved in 1999.
</TABLE>
<TABLE>
EUA ENERGY INVESTMENT AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (1 of 2)
FOR THE YEAR ENDED DECEMBER 31, 1999
<CAPTION>
EUA EUA
Energy Energy Eastern
Investment Investment EUA Unicord
Consolidated Eliminations Corporation Transcapacity* Corporation*
<S> <C> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net (Loss) Income ($17,257,768) $5,355,286 ($17,257,766) $9,864,844 $1,841,592
Adjustments to Reconcile Net Income (Loss)
to Net Cash Provided by Operating Activities:
Depreciation and Amortization (352,737) (221,888)
Deferred Taxes (4,301,577) 558,553 (12,645)
Energy Related Asset Adjustment 19,734,939
Other - Net 8,641,897 (5,355,266) (1,562,438) 969,305 424,672
Changes in Operating Assets and Liabilities:
Accounts receivable (1,249,701) (667,997) (4,794,049) 1,451,218 1,642
Material and supplies 895,715
Notes receivable 6,366,375 16,609,422 14,744,839
Accounts payable (1,212,173) 667,997 414,539 (42,937) (2,120)
Accrued taxes (15,254)
Other - net (19,361,730) (21) (40,620) (256,292) (20,690)
Net Cash (Used In) Provided from
Operating Activities (8,112,014) 16,609,421 (8,158,830) 11,973,493 2,245,096
CASH FLOW FROM FINANCING ACTIVITIES:
Net increase in short-term debt 7,907,898 (16,609,421) 8,470,621 (12,477,640) (2,245,096)
Net Cash Provided From Financing Activ. 7,907,898 (16,609,421) 8,470,621 (12,477,640) (2,245,096)
NET INCREASE IN CASH (204,116) 311,791 (504,147)
Cash and temporary cash investments
at beginning of year 552,017 15,641 504,147
Cash and temporary cash investments
at end of year $347,901 $ $327,432 $ $
Cash paid during the year for:
Interest (Net of Amounts Capitalized) $1,881 $1,881
Income Taxes (Refund) ($112,356) ($116,418) $716 $864
( ) Denotes Contra
* Companies dissolved in 1999.
</TABLE>
<TABLE>
EUA ENERGY INVESTMENT AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (2 of 2)
FOR THE YEAR ENDED DECEMBER 31, 1999
<CAPTION>
EUA
EUA Compression
Bioten Renova Services*
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net (Loss) Income ($10,002,128) $3,395,249 $255,727
Adjustments to Reconcile Net Income (Loss)
to Net Cash Provided by Operating Activities:
Depreciation and Amortization (125,235) (5,614)
Deferred Taxes (5,016,450) 96,823 72,142
Energy Related Asset Adjustment 14,384,939 5,350,000
Other - Net 3,274,586 160,663 19,843
Changes in Operating Assets and Liabilities:
Accounts receivable 224,573 1,141,832 57,086
Material and supplies 895,715
Notes receivable 8,158,000 72,958
Accounts payable 627,836 (1,498,348) (43,146)
Accrued taxes (15,254)
Other - net (12,258,121) (6,766,924) (19,104)
Net Cash (Used In) Provided from
Operating Activities (732,000) 2,832,714 336,934
CASH FLOW FROM FINANCING ACTIVITIES:
Net increase in short-term debt 732,000 (2,844,474) (336,934)
Net Cash Provided From Financing Activ. 732,000 (2,844,474) (336,934)
NET INCREASE IN CASH (11,760)
Cash and temporary cash investments
at beginning of year 32,229
Cash and temporary cash investments
at end of year $ $20,469 $
Cash paid during the year for:
Interest (Net of Amounts Capitalized)
Income Taxes (Refund) $2,026 $456
( ) Denotes Contra
* Companies dissolved in 1999.
</TABLE>
<TABLE>
EUA ENERGY INVESTMENT AND SUBSIDIARY
CONSOLIDATING STATEMENTS OF RETAINED
EARNINGS AND OTHER PAID-IN CAPITAL (1 of 2)
December 31, 1999
<CAPTION>
EUA EUA
Energy Energy Eastern
Investment Investment EUA Unicord
Consolidated Eliminations Corporation Transcapacity* Corporation*
<S> <C> <C> <C> <C> <C>
Balance of retained earnings at begin. of yr. ($24,204,924) ($16,786,541) ($24,204,924) ($9,864,843) ($1,841,592)
Additions:
Net Income (Loss) (17,257,769) 5,355,286 (17,257,769) 9,864,843 1,841,592
Balance of retained earnings at end of period ($41,462,693) ($11,431,255) ($41,462,693) $ $
( ) Denotes Contra
* Companies dissolved in 1999.
</TABLE>
<TABLE>
EUA ENERGY INVESTMENT AND SUBSIDIARY
CONSOLIDATING STATEMENTS OF RETAINED EARNINGS AND OTHER PAID-IN CAPITAL (2 of 2)
December 31, 1999
<CAPTION>
EUA
EUA Compression
Bioten Renova Services*
<S> <C> <C> <C>
Balance of retained earnings at begin. of yr. ($1,512,709) ($3,311,669) ($255,728)
Additions:
Net Income (Loss) (10,002,128) 3,395,251 255,728
Balance of retained earnings at end of period ($11,514,837) $83,582 $
( ) Denotes Contra
* Companies dissolved in 1999.
</TABLE>
Notes To Consolidated Financial Statements
December 31, 1999
(A) Nature of Operations and Summary of Significant Accounting Policies:
General: Eastern Utilities Associates (EUA) is a public utility holding
company headquartered in West Bridgewater, Massachusetts. Its subsidiaries are
principally engaged in the generation, transmission, distribution and sale of
electricity; energy related services such as energy management; and promoting
the conservation and efficient use of energy. See "Generation Divestiture"
below for a discussion of EUA's divestiture its of generating capacity. On
April 19, 2000, EUA completed its merger with National Grid USA (formerly New
England Electric System or NEES). National Grid USA purchased all of the
outstanding common shares of EUA for $31.459 per share, or approximately
$634 million.
Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Reclassifications: Certain prior period amounts on the financial statements
have been reclassified to conform with current presentation.
Basis of Consolidation: The consolidated financial statements include the
accounts of EUA and all subsidiaries. All material intercompany transactions
between the consolidated subsidiaries have been eliminated.
System of Accounts: The accounts of EUA and its consolidated subsidiaries are
maintained in accordance with the uniform system of accounts prescribed by the
regulatory bodies having jurisdiction.
Jointly Owned Companies: Montaup Electric Company (Montaup) follows the
equity method of accounting for its stock ownership investments in jointly
owned companies including four regional nuclear generating companies.
Montaup's investments in these nuclear generating companies range from 2.5% to
4.5%. Three of the four facilities, Yankee Atomic, Connecticut Yankee and
Maine Yankee, have been permanently shut down and are in the process of
decommissioning. Montaup's share of total estimated costs for the permanent
shutdown, decommissioning and recovery of the investment in Yankee Atomic,
Connecticut Yankee and Maine Yankee is $1.1 million, $19.3 million and $25.5
million, respectively. These amounts are included with Other Liabilities on
the Consolidated Balance Sheet as of December 31, 1999. Also, due to
anticipated recoverability, a regulatory asset has been recorded for the same
amount and is included with Other Assets. Montaup is currently entitled to
electricity produced from the remaining facility, Vermont Yankee, based on its
ownership interest and is billed for its entitlement pursuant to a contractual
agreement which is approved by the Federal Energy Regulatory Commission (FERC).
Vermont Yankee is under agreement to be sold to AmerGen Energy Company.
Montaup also has a stock ownership investment of 3.27% in each of two
companies which own and operate certain transmission facilities between the
Hydro Quebec electric system and New England. EUA Ocean State Corporation (EUA
Ocean State) follows the equity method of accounting for its 29.9% partnership
interest in the Ocean State Power Project (OSP). Also, EUA Energy Investment
Corporation (EUA Energy) follows the equity method of accounting for its 20%
stock ownership in Separation Technologies, Inc. This ownership interest and
Montaup's stock ownership investments are included in "Investments in Jointly
Owned Companies" on the Consolidated Balance Sheet.
Plant and Depreciation: Utility plant is stated at original cost. The cost
of additions to utility plant includes contracted work, direct labor and
material, allocable overhead, allowance for funds used during construction and
indirect charges for engineering and supervision. For financial statement
purposes, depreciation is computed on the straight-line method based on
estimated useful lives of the various classes of property. On a consolidated
basis, provisions for depreciation on utility plant were equivalent to a
composite rate of approximately 3.7% in 1999 based on the average depreciable
property balances at the beginning and end of each year. Beginning in 1998,
coincident with billing a contract termination charge (CTC) to its retail
affiliates, Montaup commenced recovery of its net investment in generation
related assets through the CTC over a twelve-year period. The difference
between the annual recovery and annual depreciation expense pursuant to
generally accepted accounting principles is being deferred. Non-utility
property and equipment of EUA Cogenex Corporation (EUA Cogenex) is stated at
original cost. For financial statement purposes, depreciation on office
furniture and equipment, computer equipment and real property is computed on
the straight-line method based on estimated useful lives ranging from five to
forty years. Project equipment is depreciated over the term of the applicable
contracts or based on the estimated useful lives, whichever is shorter,
ranging from five to fifteen years.
Allowance for Funds Used During Construction (AFUDC) and Capitalized Interest:
AFUDC represents the estimated cost of borrowed and equity funds used to
finance the EUA System's construction program. In accordance with regulatory
accounting, AFUDC is capitalized as a cost of utility plant in the same manner
as certain general and administrative costs. AFUDC is not an item of current
cash income but is recovered over the service life of utility plant in the form
of increased revenues collected as a result of higher depreciation expense.
The combined rate used in calculating AFUDC was 8.5% in 1999. The caption
"Allowance for Borrowed Funds Used During Construction" also includes interest
capitalized for non-regulated entities in accordance with FASB Statement No.
34.
Operating Revenues: Utility revenues are based on billing rates authorized by
applicable federal and state regulatory commissions. Eastern Edison Company
(Eastern Edison), Blackstone Valley Electric Company (Blackstone) and Newport
Electric Corporation (Newport) (collectively, the Retail Subsidiaries) accrue
the estimated amount of unbilled revenues at the end of each month to match
costs and revenues more closely. Montaup recognizes revenues when
billed. In 1998, Montaup and the Retail Subsidiaries also began recording
revenues in an amount management believes to be recoverable pursuant to
provisions of approved settlement agreements and enabling state legislation.
Provisions of the approved restructuring settlement agreements in conjunction
with accounting provisions of SFAS 71 allow Montaup and the retail
subsidiaries to accrue and/or defer revenue related to the future recovery of
certain items. Montaup has accrued revenues and recorded associated regulatory
assets and liabilities for certain items during 1999 commencing with the
implementation of the aforementioned settlement agreements and billing of the
Contract Termination Charge (CTC), January 1, 1998 in Rhode Island and March 1,
1998 in Massachusetts. Also, Montaup is normalizing the difference between GAAP
depreciation expense on generation plant assets prior to divestiture and the
recovery level included in the settlement agreements. Montaup normalizes for
the difference in actual versus estimated CTC variable components costs and
revenues. Montaup was authorized to accrue an amount of lost revenue equal to
the difference in revenues Montaup would have collected under its previously
approved rates and revenues collected pursuant to the settlement agreements.
As directed by the settlement agreements, Montaup ceased accruing lost
revenues, with the completion of the divestiture of its fossil generating
assets, which occurred with the sale of the Somerset generating plant on April
26, 1999. The settlements also provide Montaup with a nuclear PBR provision
under which Montaup normalizes expenses and revenues for 80% of going forward
operations of Montaup's nuclear interests. Montaup was also allowed to accrue
a return enhancement related to stranded investments charged to its Rhode
Island retail affiliates during the generation divestiture period as an
incentive to divest. Beginning in 1999, Montaup began accruing a similar
revenue enhancement related to standard investments charged to its
Massachusetts retail affiliate, Eastern Edison. Montaup has also accrued
revenue related to the two-month delay in implementing the Massachusetts
settlement agreement from January 1, 1998 to March 1, 1998. The retail
companies normalize the difference between revenue and expenses from energy
conservation programs. The retail companies normalize the difference between
amounts billed to customers and the costs for standard offer/default service.
The retail companies also normalize the difference between CTC revenue and
expenses. Montaup refunds to the retail companies previous over or under
recoveries related to the CTC rate mechanism. Montaup also accrues interest on
reconciliation account balances owed to the retail companies.
Settlement provisions and SFAS 71 also provide for Eastern Edison to
accrue revenue equal to the approved deferral of standard offer costs which
will be collected in the future.
The following table reflects the nature and amount of accrued and/or
deferred revenue and the associated balance sheet placement (000's).
1999 Balance Sheet Placement
Depr. Normalization
(GAAP vs. 12 year
Straight line) (6,635) Other Liabilities/Regulatory Liabilities
CTC Normalization (28,992) Other Liabilities/Regulatory Liabilities
Lost revenue 24,599 Other Assets/Accrued CTC Assets
Nuclear PBR 5,730 Other Assets/Other Regulatory Assets
R.I. Return True-up 3,652 Other Assets/Accrued CTC Assets
Mass. Mitigation Incentive 1,445 Other Assets/Accrued CTC Assets
Mass. Delay Credit 768 Other Assets/Accrued CTC Assets
CCA Normalization (5,019) Other Liabilities/Regulatory Liabilities
Standard Offer/Default
Service Deferral 13,917 Other Assets/Regulatory Assets
Retail CTC Differential 4,322 Other Assets/Regulatory Assets
Reconciliation Account Refund 7,141 Other Assets/Other Regulatory Assets
Interest on Reconciliation
Account (3,060) Other Liabilities/Regulatory Liabilities
EUA Cogenex's revenues are recognized based on financial arrangements
established by each individual contract. Under paid-from-savings contracts,
revenues are recognized as energy savings are realized by customers. Revenue
from the sale of energy savings projects and sales-type leases are recognized
when the sales are complete. Interest on the financing portion of the
contracts is recognized as earned at rates established at the outset of the
financing arrangement. All construction and installation costs are recognized
as contract expenses when the contract revenues are recorded. In circumstances
in which material uncertainties exist as to contract profitability, cost
recovery accounting is followed and revenues received under such contracts are
first accounted for as recovery of costs to the extent incurred.
Federal Income Taxes: EUA and its subsidiaries generally reflect in income
the estimated amount of taxes currently payable, and provide for deferred taxes
on certain items subject to temporary timing differences to the extent
permitted by the various regulatory agencies. EUA's rate-regulated
subsidiaries amortize previously deferred investment tax credits (ITC) over the
productive lives of the related assets. Beginning in 1998, Montaup is
amortizing previously deferred ITC related to generation investments
recoverable through the CTC over a twelve-year period. Unamortized ITC related
to the sales of generating units are reversed to Other Income on the
Consolidated Income Statement at the time of sale pursuant to IRS regulations.
Cash and Temporary Cash Investments: EUA considers all highly liquid
investments and temporary cash investments with a maturity of three months or
less when acquired to be cash equivalents.
Accounts Receivable: Accounts Receivable - Customers, Net includes an
allowance for doubtful accounts of approximately $1.1 million in 1999.
Other Assets: The components of Other Assets at December 31, 1999 are
detailed as follows:
($ in thousands) 1999
Regulatory Assets:
Unamortized losses on reacquired debt $11,852
Unrecovered plant and
decommissioning costs 48,659
Deferred FAS 109 costs (Note B) 40,922
Deferred FAS 106 costs 6,685
Mendon Road judgment (Note J) 6,154
Manufactured Gas Production
Environmental Liability 21,158
Unrecovered CTC plant assets 209,667
Accrued CTC assets 262,607
Other regulatory assets 44,667
Total regulatory assets 652,371
Other deferred charges and assets:
Split dollar life insurance premiums 33,721
Unamortized debt expenses 1,916
Goodwill 6,230
Other 44,888
Total Other Assets $739,126
Regulatory assets represent deferred costs for which future revenues are
expected in accordance with regulatory practices. These costs are expensed
when the corresponding revenues are received in order to appropriately match
revenues and expenses. Unrecovered CTC plant assets increased in 1999 as a
result of the divestiture of generation assets in 1999. Accrued CTC assets
increased in 1999 as a result of the transfer of power contracts to various
non-affiliated parties in 1999.
Other Liabilities: The components of Other Liabilities at December 31, 1999
are detailed as follows:
1999
Unamortized investment tax credits $10,212
FAS 109 liability 8,122
FAS 106 liability 16,339
Decommissioning liabilities of jointly
owned companies 45,955
Pension liability 33,925
Accrued CTC liabilities 41,391
Proceeds from divestiture of generation assets 109,525
Contract buyout payables 96,454
Manufactured gas production environmental liability 21,158
Other 35,172
Total Other Liabilities $418,253
Regulatory Accounting: Core Electric companies are subject to certain
accounting rules that are not applicable to other industries. These accounting
rules allow regulated companies, in appropriate circumstances, to establish
regulatory assets and liabilities which defer the current financial impact of
certain costs that are expected to be recovered in future rates. In light of
approved restructuring settlement agreements and restructuring legislation in
both Massachusetts and Rhode Island, EUA has determined that Montaup no longer
will apply the provisions of Financial Accounting Standards Board's (FASB)
Statement of Financial Accounting Standards No. 71 (FAS71), "Accounting for the
Effects of Certain Types of Regulation" for the generation portion of its
business. Montaup ceased applying SFAS 71 to its ongoing generation portion of
its business effective January 1, 1998. Approved restructuring settlement
agreements with parties in Massachusetts and Rhode Island, the two states in
which Montaup operates, allow Montaup full recovery of stranded generation
investments as of December 31, 1997 and as such Montaup incurred no asset
impairment. As disclosed below in Generation Divestiture, Montaup has divested
all of its generation assets and power purchase agreements with the exception
of its 4.0% (46mw) ownership interest in the Millstone 3 nuclear station and
its 12 mw entitlement from the Vermont Yankee nuclear unit. Post-divestiture
ongoing generation operations will include the two aforementioned nuclear units
in which Montaup will continue to have an interest. The approved settlement
agreements also provide Montaup with recovery of 100% of embedded nuclear
investments as of December 31, 1997 and recovery of 80% of its post 1997 on
going nuclear generation operations. Because only 20% of Montaup's remaining
nuclear operations will no longer be subject to the accounting treatment
pursuant to SFAS 71 and would be subject to market risk, management believes
that the discontinuation of SFAS 71 for Montaup's post-divestiture generation
business will not have a material impact on EUA's results of operations or
financial position. EUA believes its transmission and retail distribution
businesses continue to meet the criteria for continued application of FAS71.
Generation Divestiture: Terms of approved electric utility restructuring
settlement agreements provide that EUA exit the electric generation business.
Through separately negotiated agreements, EUA has completed the transfer of
all of its non-nuclear generation assets and power purchase contracts to
various non-affiliated parties, with the exception of its 4.0% (46
mw) ownership interest in the Millstone 3 nuclear station. Vermont Yankee has
agreed to sell the 540-mw nuclear unit in which Montaup has a 2.5% equity (12
mw) interest.
The sales of EUA's generating assets totaling 509 mw amounted to $133.2
million in aggregate. The net proceeds from the sales, as defined in the
settlement agreements, have been recorded as a regulatory liability at the time
of sale and will be returned to customers via a Residual Value Credit (RVC)
through the year 2009.
EUA has also agreed to make contribution payments to two parties in
exchange for their assumption of all future obligations under six purchased
power contracts. These fixed monthly payments ranging from $850,000 to $2.6
million, will be made from the effective date through 2009. EUA recorded a
liability for these fixed contributions, and a regulatory asset for a like
amount due to recoverability. In addition, in July 1999, EUA agreed to a
buyout of its obligations under the Pilgrim Nuclear purchased power contract in
conjunction with the sale of the unit by Boston Edison Co. (BEC) to Entergy
Nuclear Generating Co. (Entergy). This agreement included a buyout payment by
EUA to BEC of $111.7 million, along with a short-term, fixed-price purchased
power agreement with Entergy for declining shares of the unit's output
beginning with 11% in 1999 and ending with 5.5% in 2004. Entergy will assume
all future operating and decommissioning obligations. Accordingly, in the third
quarter of 1999, Montaup recorded a regulatory asset of approximately $111.7
million, a corresponding current liability of $105.6 million, and a long-term
liability of $6.1 million.
EUA will continue to attempt to sell and/or transfer its minority interest
in Millstone 3. Until such time as this and the Vermont Yankee units are
divested, EUA will share 80% of the operating costs and revenues associated
with the units with customers and 20% with shareholders.
(B) Income Taxes:
EUA adopted FASB Statement No. 109, "Accounting for Income Taxes"
(FAS109), which requires recognition of deferred income taxes for temporary
differences that are reported in different years for financial reporting and
tax purposes using the liability method. Under the liability method, deferred
tax liabilities or assets are computed using the tax rates that will be in
effect when temporary differences reverse. Generally, for regulated companies,
the change in tax rates may not be immediately recognized in operating results
because of ratemaking treatment and provisions in the Tax Reform Act of 1986.
Total deferred tax assets and liabilities for 1999 include the following:
Deferred Tax Deferred Tax
Assets Liabilities
(In thousands) 1999 1999
Plant Related Plant Related
Differences $14,085 Differences $117,444
Deregulation 12,877 Refinancing
NOL Costs 1,247
Carryforward 2,554 Deregulation 62,681
Employee Benefit Employee
Accruals 5,686 Benefit Accruals 5,791
Acquisitions 3,018 Other 18,475
Other 21,108 Total $205,638
Total $59,328
As of December 31, 1999, EUA has recorded on its Consolidated Balance
Sheet a regulatory liability to ratepayers of approximately $8.1 million.
These amounts primarily represent excess deferred income taxes resulting from
the reduction in the federal income tax rate and also include deferred taxes
provided on investment tax credits. Also at December 31, 1999 a regulatory
asset of approximately $41.0 million, has been recorded, representing the
cumulative amount of federal income taxes on temporary depreciation differences
which were previously flowed through to ratepayers.
<TABLE>
NOTE B - INCOME AND DEFERRED TAXES:
Components of income and deferred tax expense for Eastern Utilities Associates
and Subsidiary Companies for 1999 are as follows:
<CAPTION>
Blackstone
Eastern EUA Valley Newport Eastern
EUA Utilities Service Electric Electric Edison
Consolidated Associates Corporation Company Company Consolidated
<S> <C> <C> <C> <C> <C> <C>
Federal:
Current $606,826 $28 $76,877 3,257,527 $1,866,869 $6,601,250
Deferred 14,327,748 (216,810) 37,164 368,753 566,751 11,515,044
Investment tax credit, Net (1,264,364) 0 0 (176,390) (3,966) (1,084,008)
13,670,210 (216,782) 114,041 3,449,890 2,429,654 17,032,286
State:
Current 2,058,310 0 55,227 146 2,052 1,859,628
Deferred 3,168,259 0 5,892 30,266 0 2,907,445
5,226,569 0 61,119 30,412 2,052 4,767,073
Charged to Operations (Federal & State) 18,896,779 (216,782) 175,160 3,480,302 2,431,706 21,799,359
Charged to Other Income:
Current 215,947 (1,694,338) 0 (24,699) (5,273) (2,021,101)
Deferred (8,879,475) (794,328) 0 0 0 (2,977,120)
Investment Tax Credit, Net (4,914,696) 0 0 0 (80,658) (4,834,038)
Total $5,318,555 ($2,705,448) $175,160 3,455,603 $2,345,775 11,967,100
Federal income tax expense was different than the amounts computed by applying the statutory rates to book
income subject to tax for the following reasons:
Tax Computed at Statutory Rates $8,589,681 ($706,048) $149,091 3,219,396 $2,417,674 13,825,622
(Decrease) Increase in Tax From:
Equity Component of AFUDC (96,742) (34,283) (3,525) (58,934)
Depreciation of Equity AFUDC 2,181,208 4,242 271,952 103,228 1,766,879
Amortization and Utilization of ITC (6,179,060) (176,390) (84,624) (5,918,046)
State Tax, Net of Federal Income Tax Benefit 3,040,966 0 39,727 19,768 1,334 2,697,265
Other (2,217,498) (1,999,400) (17,900) 155,160 (88,312) (345,686)
Total $5,318,555 ($2,705,448) $175,160 3,455,603 $2,345,775 11,967,100
* Companies dissolved in 1999.
</TABLE>
<TABLE>
NOTE B - INCOME AND DEFERRED TAXES: (Continued)
Components of income and deferred tax expense for Eastern Utilities Associates and
Subsidiary Companies for 1999 are as follows:
<CAPTION>
EUA EUA EUA
EUA Energy Energy EUA Telecom-
Cogenex Investment Services Ocean munications
Consolidated Consolidated Corpor. Corpor. Corporation*
<S> <C> <C> <C> <C> <C>
Federal:
Current ($4,349,788) ($5,959,745) ($273) ($925,057) $39,138
Deferred 1,204,966 859,919 0 (7,967) (72)
Investment tax credit, Net 0 0 0 0
(3,144,822) (5,099,826) (273) (933,024) 39,066
State:
Current 136,190 4,361 706
Deferred 204,867 19,789 0
341,057 24,150 706
Charged to Operations (Federal & State) (2,803,765) (5,075,676) 433 (933,024) 39,066
Charged to Other Income:
Current 656,085 191,296 0 3,113,681 296
Deferred 365,667 (5,181,144) 0 (292,550) 0
Investment Tax Credit, Net 0 0 0
Total ($1,782,013) (10,065,524) $433 $ 1,888,107 $39,362
Federal income tax expense was different than the amounts computed by the rates to book income subject for the following reasons:
Tax Computed at Statutory Rates ($2,847,247) ($9,563,153) $12,432 $2,022,239 $59,675
(Decrease) Increase in Tax From:
Equity Component of AFUDC
Depreciation of Equity AFUDC (6,182) 41,089
Amortization and Utilization of ITC
State Tax, Net of Federal Income Tax Benefit 263,638 17,213 459 1,266 296
Other 807,778 (519,584) (12,458) (176,487) (20,609)
Total ($1,782,013) ($10,065,524) $433 $1,888,107 $39,362
* Companies dissolved in 1999.
</TABLE>
<TABLE>
NOTE B - INCOME AND DEFERRED TAXES (continued):
Components of income and deferred tax expense for Eastern Edison Company and Subsidiary
for 1999 are as follows:
<CAPTION>
Eastern Eastern Montaup
Edison Edison Electric
Consolidated Company Company
<S> <C> <C> <C>
Federal:
Current $6,601,250 $4,963,904 $1,637,346
Deferred 11,515,044 2,106,727 9,408,317
Investment tax credit, Net (1,084,008) (301,776) (782,232)
17,032,286 6,768,855 10,263,431
State:
Current 1,859,628 1,061,515 798,113
Deferred 2,907,445 1,549,908 1,357,537
4,767,073 2,611,423 2,155,650
Charged to Operations (Federal & State) 21,799,359 9,380,278 12,419,081
Charged to Other Income:
Current (2,021,101) (21,978) (1,999,123)
Deferred (2,977,120) 0 (2,977,120)
Investment Tax Credit, Net (4,834,038) 0 (4,834,038)
Total $11,967,100 $9,358,300 $2,608,800
Federal income tax expense was different than the amounts computed by applying the statutory
rates to book income subject to tax for the following reasons:
Eastern Eastern Montaup
Edison Edison Electric
Consolidated Company Company
Tax Computed at Statutory Rates $13,825,622 $8,070,196 $5,755,426
(Decrease) Increase in Tax From:
Equity Component of AFUDC (58,934) 0 (58,934)
Depreciation of Equity AFUDC 1,766,879 (246,741) 2,013,620
Amortization and Utilization of ITC (5,918,046) (301,776) (5,616,270)
State Tax, Net of Federal Income Tax Benefit 2,697,265 1,694,903 1,002,362
Other (345,686) 141,718 (487,404)
Total $11,967,100 $9,358,300 $2,608,800
</TABLE>
<TABLE>
NOTE B - INCOME AND DEFERRED TAXES (continued):
Components of income and deferred tax expense for EUA Cogenex and Subsidiary Companies for 1999 are as follows:
<CAPTION>
EUA EUA
Cogenex EUA EUA EUA Cogenex
Corporation Cogenex Cogenex Cititzens West
Consolidated Corporation NEM Inc. Canada Corporation Corporation
<S> <C> <C> <C> <C> <C> <C>
Federal:
Current ($4,349,788) ($5,181,694) $642,609 ($7,468) $102,724 $94,041
Deferred 1,204,966 827,962 316,455 (6,182) 93,918 (27,187)
(3,144,822) (4,353,732) 959,064 (13,650) 196,642 66,854
State:
Current 136,190 76,026 456 0 34,050 25,658
Deferred 204,867 201,616 9,107 0 (1,800) (4,056)
287,205 277,642 9,563 0 32,250 21,602
Charged to Operations (Federal & State) (2,803,765) (4,076,090) 968,627 (13,650) 228,892 88,456
Charged to Other Income:
Current 656,085 656,085 0 0 0 0
Deferred 365,667 365,667 0 0 0 0
Total ($1,782,013) ($3,054,338) $968,627 ($13,650) $228,892 $88,456
Federal income tax expense was different than the amounts computed by applying the statutory rates
to book income subject to tax for the following reasons:
Tax Computed at Statutory Rates ($2,847,247 ($3,945,851) $1,023,854 ($10,089) $219,769 ($134,930)
(Decrease) Increase in Tax From:
Depreciation of Equity AFUDC (6,182) 0 0 (6,182) 0 0
State Tax, Net of Federal Income Tax Benefit 263,638 222,418 6,216 0 20,963 14,041
Other 807,778 669,095 (61,443) 2,621 (11,840) 209,343
Total ($1,782,013 ($3,054,338 $968,627 ($13,650) $228,892 $88,456
</TABLE>
<TABLE>
NOTE B - INCOME AND DEFERRED TAXES (continued):
Components of income and deferred tax expense for EUA Energy Investment and Subsidiary Companies for 1999 are as follows:
<CAPTION>
EUA Energy EUA Energy Eastern EUA
Investment Investment EUA Unicord EUA Compression
Consolidated Corporation Transcapacity* Corpor.* Bioten Services*
<S> <C> <C> <C> <C> <C> <C>
Federal:
Current ($5,959,745) ($10,125,848) $4,166,103 $ $ $
Deferred 859,919 872,564 (12,645) 0 0 0
Investment tax credit, Net 0 0 0 0 0 0
(5,099,826) (9,253,284) 4,153,458 0 0 0
State:
Current 4,361 1,820 2,541 0 0 0
Deferred 19,789 19,789 0 0 0 0
24,150 21,609 2,541 0 0 0
Charged to Operations (Federal & State) (5,075,676) (9,231,675) 4,155,999
Charged to Other Income:
Current 191,296 0 596,382 (412,578) 7,492
Deferred (5,181,144) (236,836) 0 (5,016,450) 72,142
Total ($10,065,524) ($9,468,511) $4,155,999 $596,382 ($5,429,028) $79,634
Federal income tax expense was different than the amounts computed by applying the statutory
rates to book income subject to tax for the following reasons:
Tax Computed at Statutory Rates ($9,563,153) ($10,040,210) $4,907,295 $853,291 ($5,400,905) $117,376
Increase (Decrease) in Tax From:
State Tax, Net of Federal Income Tax Benefit 17,213 14,046 1,652 0 1,219 296
Other (519,584) 557,653 (752,948) (256,909) (29,342) (38,038)
Total ($10,065,524) ($9,468,511) $4,155,999 $596,382 ($5,429,028) $79,634
* Companies dissolved in 1999.
</TABLE>
(C) Capital Stock:
The Agreement and Plan of Merger dated February 1, 1999 by and among New
England Electric System (NEES) and EUA, which was approved by EUA shareholders
and is subject to various regulatory agencies' approval, provides for NEES to
purchase all of the outstanding EUA shares for $31 per share in cash. The
transaction was completed on April 19, 2000. The merger agreement
contained an upward price adjustment because the merger did not close within six
months from May 17, 1999, the date EUA shareholders approved the merger plan.
Therefore, since November 17, 1999, NEES paid an additional $0.003 per day
per share for EUA's outstanding common stock, or $31.459 per share.
There was no change in the number of common shares outstanding during 1999.
As permitted, the Company accounts for its stock-based compensation, as
discussed below, using the method prescribed in Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" (APB25) and as
permitted under FASB Statement No. 123, "Accounting for Stock-Based
Compensation" (FAS123).
The Company established a Restricted Stock Plan in 1989. Under the
Restricted Stock Plan, executives and certain key employees may be granted
restricted common shares of the Company. In 1998, 1997 and 1995, approximately
74,000 shares, 95,000 shares, and 61,000 shares, respectively, of restricted
common shares, valued at approximately $1.8 million and $2.4 million, and $1.4
million respectively, were granted. The issued shares are restricted for a
period ranging from two to five years and all shares are subject to forfeiture
if specified employment services are not met. There are no exercise prices
related to these share grants. During the applicable restriction period, the
recipient has all the voting, dividend, and other rights of a record holder
except that the shares are nontransferable. The annual compensation
expense related to these grant awards was approximately $1.6 million in 1999
and 1998 and was immaterial for 1997. There are no material differences in the
Company recording its annual compensation expense under APB25 from the
requirements under FAS123. All of the restricted shares became
immediately vested upon the completion of EUA's merger with NEES.
The preferred stock provisions of the Retail Subsidiaries place certain
restrictions upon the payment of dividends on common stock by each company. At
December 31, 1999 each company was in excess of the minimum requirements which
would make these restrictions effective.
In the event of involuntary liquidation, the holders of non-redeemable
preferred stock of the Retail Subsidiaries are entitled to $100 per share plus
accrued dividends. In the event of voluntary liquidation, or if redeemed at
the option of these companies, each share of the non-redeemable preferred stock
is entitled to accrued dividends plus the following:
Company Issue Amount
Blackstone: 4.25% issue $104.40
5.60% issue 103.82
Newport: 3.75% issue 103.50
In July 1999, EUA filed an application under the Public Utility Holding
Company Act with the Securities and Exchange Commission (SEC) requesting
authorization for Eastern Edison to transfer all its investment in Montaup,
including Montaup's preferred stock, common stock and debenture bonds, to EUA.
Montaup would then become a wholly-owned subsidiary of EUA. Also related to
this transfer, Eastern Edison filed a Petition for Approval of the transfer or
Request for Alternative Findings of No Jurisdiction with the DTE. A public
hearing was held at the DTE on October 18, 1999 at which no one from the public
intervened. Eastern Edison received an order from the DTE on January 4, 2000,
approving the transfer. SEC approval was received on February 4, 2000 and the
transfer of Montaup from Eastern Edison to EUA was consummated with a filing at
the DTE on February 17, 2000.
(D) Redeemable Preferred Stock:
Eastern Edison's 6 5/8% Preferred Stock issue is entitled to an annual
mandatory sinking fund sufficient to redeem 15,000 shares commencing September
1, 2003. The redemption price is $100 per share plus accrued dividends. All
outstanding shares of the 6 5/8% issue are subject to mandatory redemption on
September 1, 2008, at a price of $100 per share plus accrued dividends. In the
event of liquidation, the holders of Eastern Edison's 6 5/8% Preferred Stock
are entitled to $100 per share plus accrued dividends.
(E) Long-Term Debt:
The various mortgage bond issues of Blackstone, Eastern Edison, and
Newport are collateralized by substantially all of their utility plant.
In April 1999, Montaup completed the sale of its Somerset Station to NRG
Energy Inc. for approximately $55 million. In July 1999, Montaup used the
proceeds from this sale to redeem $54.8 million of its outstanding securities
wholly-owned by Eastern Edison. Eastern Edison used these proceeds along with
a capital contribution from EUA to redeem $40 million of 8%, $40 million of 6
7/8%, and $8 million of 6.35% First Mortgage and Collateral Trust Bonds.
These First Mortgage bonds were collateralized by securities of Montaup, which
were wholly-owned by Eastern Edison. The principal amount of Montaup securities
wholly-owned by Eastern Edison at December 31, 1999 was approximately $134
million. See Note C -Capital Stock for a discussion of Eastern Edison's
transfer of its investment in Montaup to EUA in February 2000.
In August 1999, Eastern Edison used short term borrowings to redeem its
$35 million 7.78% Secured Medium Term notes.
In September 1999, Newport used short-term borrowings to redeem $1.4
million of 9% and $8 million of 9.8% First Mortgage Bonds at maturity. In
November 1999, Newport used available cash to redeem the remaining balance of
approximately $440,000 of its 6.5% Small Business Administration Loan.
Blackstone's Variable Rate Demand Bonds are collateralized by an
irrevocable Letter of Credit which expires on July 31, 2000. The letter of
credit permits an extension of one year upon mutual agreement of the bank and
Blackstone.
Newport's Variable Rate Electric Energy Facilities Revenue Refunding Bonds
are collateralized by an irrevocable Letter of Credit which expires on January
6, 2000, and permits an extension of one year upon mutual agreement of the bank
and Newport. EUA Service Corporation's (EUA Service) 10.2% Secured Notes due
2008 are collateralized by certain real estate and property of the company.
The EUA System's aggregate amount of current cash sinking fund
requirements and maturities of long-term debt, (excluding amounts that may be
satisfied by available property additions) for each of the five years following
1999 are: $62.5 million in 2000, $14.2 million in 2001, $10.4 million in 2002,
$11.9 million in 2003, and $11.5 million in 2004.
EUA Cogenex was not in compliance with the interest coverage covenant
contained in certain of its unsecured note agreements at December 31, 1999.
EUA Cogenex is seeking a waiver from note holders. Under the terms of these
note agreements, since EUA Cogenex was not in compliance with certain
covenants, the note holders may, with written notice to EUA Cogenex, declare
the notes immediately due and payable. Accordingly, $20.7 million of long-term
debt has been reclassified as current maturities of long-term debt on the
Consolidated Balance Sheet as of December 31, 1999. It is anticipated that EUA
Cogenex will be in compliance by the end of the second quarter of 2000.
EUA Cogenex is marketing the sale of a portfolio of certain of its project
cash flows. EUA Cogenex is currently negotiating the terms of a sale agreement
with interested lenders. In early 2000, EUA filed a request with the SEC to
allow for EUA's guarantee of EUA Cogenex's ongoing performance obligations
related to the projects to be sold. SEC approval of EUA's guarantee is
expected in late March or April of 2000 and the sale of the portfolio is
expected to be completed in the second quarter of 2000. EUA Cogenex intends to
redeem all of its long-term debt of approximately $77 million with the proceeds
from the sale.
(F) Fair Value Of Financial Instruments:
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate:
Cash and Temporary Cash Investments: The carrying amount approximates fair
value because of the short-term maturity of these instruments.
Long Term Notes Receivable and Net Investment in Sales-Type Leases: The fair
value of these assets are based on market rates of similar securities.
Preferred Stock and Long-Term Debt of Subsidiaries: The fair value of the
System redeemable preferred stock and long-term debt were based on quoted
market prices for such securities at December 31, 1999.
The estimated fair values of the System's financial instruments at
December 31, 1999 were as follows:
Carrying Fair
($ in thousands) Amount Value
1999 1999
EUA
Cash and Temporary Cash Investments $ 91 $ 91
Redeemable Preferred Stock - -
Long-Term Debt - -
EUA Service
Cash and Temporary Cash Investments 762 762
Redeemable Preferred Stock - -
Long-Term Debt 5,100 5,250
Blackstone
Cash and Temporary Cash Investments 99 99
Redeemable Preferred Stock - -
Long-Term Debt 32,000 33,936
Newport
Cash and Temporary Cash Investments 60 60
Redeemable Preferred Stock - -
Long-Term Debt 9,225 9,244
Eastern Edison - Consolidated
Cash and Temporary Cash Investments 788 788
Redeemable Preferred Stock 30,000 30,525
Long-Term Debt 40,000 39,666
EUA Cogenex - Consolidated
Cash and Temporary Cash Investments 5,294 5,294
Redeemable Preferred Stock - -
Long-Term Notes Receivable and
Net Investment in Sales-Type Leases 35,499 35,603
Long-Term Debt 77,400 79,293
EUA Energy - Consolidated
Cash and Temporary Cash Investments 348 348
Redeemable Preferred Stock - -
Long-Term Debt - -
EUA Ocean State
Cash and Temporary Cash Investments 38 38
Redeemable Preferred Stock - -
Long-Term Debt 23,637 24,860
(G) Lines Of Credit:
In July 1997, several EUA System companies entered into a three-year
revolving credit agreement allowing for borrowings in aggregate of up to $225
million, as amended in November 1999, from all sources of short-term credit. On
November 23, 1999, Eastern Edison and Montaup entered into a $60 million credit
agreement to facilitate the buy out of the Pilgrim Station purchase power
agreement between Montaup and Boston Edison and for other general corporate
purposes. As of December 31, 1999, various financial institutions have
committed up to $75 and $60 million under each of the respective credit
facilities. In addition to the $135 million available under these credit
facilities, EUA System companies maintain short-term lines of credit
with various banks totaling $90 million for an aggregate amount available of
$225 million. At December 31, 1999, the EUA System had unused short-term lines
of credit of approximately $81.0 million. During 1999, the weighted average
interest rate for short-term borrowings was 5.5%.
(H) Jointly Owned Facilities:
At December 31, 1999, in addition to the stock ownership interests
discussed in Note A, Nature of Operations and Summary of Significant Accounting
Policies - Jointly Owned Companies, Montaup had direct ownership interests in
the following electric generating facility:
Accumulated Net
Utility Provision for Utility Construction
Percent Plant in Depreciation Plant in Work in
($ in thousands) Owned Service & Amortization Service Progress
Montaup:
Millstone Unit 3 4.01% $178,359 $64,785 $113,574 $485
The foregoing amounts represent Montaup's interest in Millstone Unit 3,
including nuclear fuel where appropriate, and are included on the like-
captioned lines on the Consolidated Balance Sheet. At December 31, 1999
Montaup's total net investment in nuclear fuel amounted to $2.2 million.
Montaup's share of related operating and maintenance expenses of Millstone Unit
3 reflected in the preceding table are included in the corresponding operating
expenses.
(I) Financial Information By Business Segments:
Statement of Financial Accounting Standards No. 131, Disclosures about
Segments of an Enterprise and Related Information (SFAS 131), requires
disclosure of certain financial and descriptive information by operating
segments. The Core Electric Business includes results of the electric utility
operations of Blackstone, Eastern Edison, Newport and Montaup.
Energy Related Business includes results of our diversified energy-related
subsidiaries, EUA Cogenex, EUA Ocean State and EUA Energy. EUA
Telecommunications and EUA Energy Services, which were included in Energy
Related Business, were dissolved in 1999.
Corporate results include the operations of EUA Service and EUA Parent.
EUA does not have any intersegment revenues. Financial data for the business
segments are as follows:
Year Ended December 31, 1999
($ in thousands)
Core Electric Energy Related Corporate Total
Operating Revenues $499,717 $54,050 $ $553,767
Pre-Tax Operating Income 82,237 (5,922) (2,152) 74,163
Income Taxes 17,769 (9,920) (2,530) 5,319
Depreciation and
Amortization 33,740 10,764 6 44,510
Cash Construction Expenditures 23,877 33,015 147 57,039
Equity in Subsidiary Earnings 839 8,394 9,233
Net Interest Charges 21,353 9,932 5,793 37,078
Net Interest Income 1,774 5,879 17 7,670
Net Earnings 35,534 (19,638) 1,022 16,918
Years ended December 31, ($ in thousands)
1999
Total Plant and Other Investments
Core Electric $450,885
Energy Related 136,395
Corporate 17,753
Total Plant and Other Investments 605,033
Other Assets
Core Electric 768,183
Energy Related 56,513
Corporate 38,124
Total Other Assets 862,820
Total Assets $1,467,853
(J) Commitments And Contingencies:
Nuclear Fuel Disposal and Nuclear Plant Decommissioning Costs: The owners (or
lead participants) of the nuclear units in which Montaup has an interest have
made, or expect to make, various arrangements for the acquisition of uranium
concentrate, the conversion, enrichment, fabrication and utilization of nuclear
fuel and the disposition of that fuel after use. The owners (or lead
participants) of United States nuclear units have entered into contracts with
the Department of Energy (DOE) for disposal of spent nuclear fuel in accordance
with the Nuclear Waste Policy Act of 1982 (NWPA). The NWPA requires (subject
to various contingencies) that the federal government design, license,
construct and operate a permanent repository for high level radioactive wastes
and spent nuclear fuel and establish a prescribed fee for the disposal of
such wastes and nuclear fuel. The NWPA specifies that the DOE provide for the
disposal of such waste and spent nuclear fuel starting in 1998. Objections on
environmental and other grounds have been asserted against proposals for
storage as well as disposal of spent nuclear fuel. The DOE now estimates that
a permanent disposal site for spent fuel will not be ready to accept
fuel for storage or disposal until as late as the year 2010. In early 1998, a
number of utilities filed suit in federal appeals court seeking, among other
things, an order requiring the DOE to immediately establish a program for the
disposal of spent nuclear fuel. On May 5, 1998, the Court of Appeals denied
several motions brought in the proceeding, including several motions for
injunctive relief brought by the utility petitioners. In particular, the Court
denied the requests to require the DOE to immediately establish a program for
the disposal of spent nuclear fuel. In late October and early November 1998,
the U.S. Court of Federal Claims issued rulings with respect to Yankee Atomic,
Maine Yankee, and Connecticut Yankee finding that the DOE was financially
responsible for failing to accept spent nuclear fuel. These rulings clear the
way for Yankee Atomic, Connecticut Yankee and Maine Yankee to pursue at trial
their individual damage claims. The DOE filed a motion to stay the case
pending resolution of its appeal request granted by the Appeals Court. In
October 1999, the Court issued a stay order on the damage claims. Montaup owns
a 4.01% interest in Millstone 3. Northeast Utilities, the operator of the
units, indicates that Millstone 3 has sufficient on-site storage facilities
which, with rack additions, can accommodate its spent fuel for the projected
life of the unit.
The Energy Policy Act of 1992 requires that a fund be created for the
decommissioning and decontamination of the DOE uranium enrichment facilities.
The fund will be financed in part by special assessments on nuclear power
plants in which Montaup has an interest. These assessments are calculated
based on the utilities' prior use of the government facilities and have
been levied by the DOE, starting in September 1993, and will continue over 15
years. This cost is passed on to the joint owners or power buyers as an
additional fuel charge on a monthly basis and is currently being recovered by
Montaup through rates.
Montaup has a 4.5% equity ownership in Connecticut Yankee, a nuclear
generating facility which is in the process of decommissioning. Montaup's
share of the total estimated costs for the permanent shutdown, decommissioning,
and recovery of the investment in Connecticut Yankee is approximately $19.3
million. On August 31, 1998, a FERC law judge rejected Connecticut Yankee's
filed plan to decommission the plant. The judge claimed that estimates of
clean-up costs were flawed and certain restoration costs were not supported.
The judge also said Connecticut Yankee could not pass on spent fuel storage
costs to rate-payers. The judge recommended that Connecticut Yankee withdraw
its decommissioning plan and submit a new plan which addresses the issues cited
by him. FERC will review the judge's recommendations and issue a decision on
this case in the coming months. If FERC concurs with the judge's
recommendation, this may result in a write down of certain of Connecticut
Yankee plant investments. Montaup cannot predict the ultimate outcome of
FERC's review.
Also, Montaup is recovering through rates its share of estimated
decommissioning costs for Millstone 3. Montaup's share of the current estimate
of total costs to decommission Millstone 3 is approximately $24.8 million in
1999 dollars. This figure is based on studies performed for Northeast
Utilities, the lead owner of the unit. Montaup also pays into decommissioning
reserves pursuant to contractual arrangements with other nuclear generating
facilities in which it has an equity ownership interest. Such expenses are
currently recoverable through rates.
Pensions: EUA maintains a noncontributory defined benefit pension plan
(Retirement Plan) covering most of the employees of the EUA System. Retirement
Plan benefits are based on years of service and average compensation over the
four years prior to retirement. It is the EUA System's policy to fund the
Retirement Plan on a current basis in amounts determined to meet the funding
standards established by the Employee Retirement Income Security Act of 1974.
Total pension (income) expense for the Retirement Plan, including an amount
related to the 1997 voluntary retirement incentive offer, for 1999 included
the following components:
(In thousands) 1999
Service cost $3,051
Interest cost 10,776
Expected return on assets (16,797)
Net amortization:
Prior service cost 763
Net actuarial gain (556)
Transition asset (274)
Net periodic pension income $(3,037)
Subsidiary curtailment*
Total periodic pension income expense $(3,037)
* During 1999, Montaup recorded a regulatory asset of approximately $2.7
million related to the cost of offering an early retirement plan and a
$700,000 gain due the curtailment of the plan. This amount will be recovered
as part of Montaup's CTC billed to its retail affiliates.
Assumptions to determine pension costs:
1999
Discount rate 6.75%
Compensation increase rate 4.25%
Long-term return on assets 9.50%
The following tables set forth the actuarial present value of projected
benefit obligations, fair value of assets and funded status at December 31,
1999:
Reconciliation of Projected Benefit Obligation
(In thousands)
1999
Beginning of year benefit obligation $159,458
Service cost 3,051
Interest cost 10,776
Actuarial (gain) loss (20,760)
Disbursements (10,959)
Plan amendments 3,656
Special benefit termination
cost 2,676
Curtailment gain (1,038)
End of year benefit obligation $146,860
Reconciliation of Fair Value of Assets
(In thousands)
1999
Beginning of year fair value of assets $212,837
Actual return on plan assets 46,796
Disbursements (10,959)
End of year fair value of assets $248,674
Reconciliation of Funded Status
(In thousands) 1999
Projected benefit obligation (PBO) $(146,860)
Fair value of plan assets (FVA) 248,674
PBO less than FVA (funded status) 101,814
Unrecognized prior service cost 6,714
Unrecognized net transition obligation (asset) (387)
Unrecognized net actuarial (gain) (105,049)
Net amount recognized $3,092
The discount rate used to determine pension obligations, effective January
1, 2000 was changed from 6.75% to 7.75% and was used to calculate the plan's
funded status at December 31, 1999.
At December 31, 1999, approximately $2.5 million was included in other
liabilities for unfunded non-qualified pension benefits related to the 1997
voluntary retirement incentive.
EUA also maintains non-qualified supplemental retirement plans
(Supplemental Plans) for certain officers and trustees of the EUA System.
Benefits provided under the Supplemental Plans are based primarily on
compensation at retirement date. EUA maintains life insurance on
certain participants of the Supplemental Plans, and policy cash values and
death benefits may be available to offset EUA's obligations under the
Supplemental Plans. As of December 31, 1999, approximately $8.2 million was
included in accrued expenses and other liabilities for these plans. Expenses
related to the Supplemental Plans were $2.2 million in 1999.
EUA also provides a defined contribution 401(k) savings plan for
substantially all employees. EUA's matching percentage of employees' voluntary
contributions to the plan, amounted to $1.7 million in 1999.
Post-Retirement Benefits: Retired employees are entitled to participate in
health care and life insurance benefit plans. Health care benefits are subject
to deductibles and other limitations. Health care and life insurance benefits
are partially funded by EUA System companies for all qualified employees.
The total cost of post-retirement benefits other than pensions, including
an amount related to the 1997 voluntary retirement incentive offer, for 1999
includes the following components:
(In thousands) 1999
Service cost $1,091
Interest cost 4,822
Expected return on assets (2,352)
Net amortization:
Net actuarial (gain) (266)
Transition obligation 2,841
Net periodic postretirement
benefit cost 6,136
Subsidiary curtailment *
Voluntary retirement incentive *
Total periodic postretirement
benefit cost $6,136
* Montaup recorded a regulatory asset of approximately $5.5 million due to a
loss resulting from the curtailment of the plan, and $200,000 related to the
cost of offering an early retirement plan. This amount will be recovered as
part of Montaup's CTC billed to its retail affiliates.
Assumptions to determine post-retirement costs:
Discount rate 6.75%
Health care cost trend rate
- near-term 6.00%
- long-term 5.00%
Compensation increase rate 4.25%
Long-term return on assets
- union 8.50%
- non-union 7.50%
The following tables forth the actuarial present value of accumulated
postretirement benefit obligation, fair value of assets and funded status at
December 31, 1999.
Reconciliation of Accumulated Post-retirement Benefit Obligation
(In thousands) 1999
Beginning of year benefit
obligation (January 1) $69,628
Service cost 1,091
Interest cost 4,821
Participant contributions 145
Actuarial (gain) loss (6,389)
Disbursements (3,707)
Special benefit termination
cost 205
Curtailment gain (746)
End of year benefit
obligation (December 31) $65,048
Reconciliation of Fair Value Assets
(In thousands) 1999
Beginning of year fair value of
assets (January 1) $30,195
Actual return on plan assets 2,762
Company contributions 6,173
Participant contributions 144
Disbursements (3,707)
End of year fair value of
assets (December 31) $35,567
Reconciliation of Funded Status
(In thousands) 1999
Accumulated post-retirement benefit
obligation (APBO) $(65,048)
Fair value of plan assets (FVA) 35,567
APBO (in excess of) FVA (Funded Status) (29,481)
Unrecognized net transition
obligation 36,938
Unrecognized net actuarial gain (20,500)
Net amount recognized $(13,043)
Effect of 1% Change in Assumed Health Care Cost Trend Rate
One Percent
(In thousands) Increase Decrease
Effect on 1999 service and interest cost
components of net-periodic costs $917 $(728)
Effect on 1999 accumulated post-retirement
benefit obligation $ 8,440 $ (6,855)
The discount rate used to determine post-retirement benefit obligations
effective January 1, 2000 was changed from 6.75% to 7.75% and was used to
calculate the funded status of post-retirement benefits at December 31, 1999.
Long-Term Purchased Power Contracts: The EUA System is committed under long-
term purchased power contracts, expiring on various dates through September
2021, to pay certain charges whether or not energy is received in addition to
other amounts that depend on the actual amount of energy delivered. In 1999,
these purchased power contracts, with the exception of the nuclear
entitlements, were transferred to third parties under terms that result in
fixed payments through 2009. In addition, Montaup's obligations to Boston
Edison under the Pilgrim contract have been essentially reduced to its share of
the property tax settlement with the town of Plymouth, and Montaup is obligated
to Entergy under the replacement contract only for energy actually delivered.
It is anticipated that in 2000, Montaup will make a payment to terminate its
purchase obligation from Vermont Yankee. Under terms in effect as of December
31, 1999, the aggregate commitments under the long-term purchased power
contracts are approximately $46 million in 2000, $37 million in 2001, $39
million in 2002, $23 million in 2003, $24 million in 2004 and $98 million for
the ensuing years. These amounts, which also include certain continuing
obligations (primarily for decommissioning) to Vermont Yankee and the retired
nuclear plants, are currently fully recoverable through rates.
Environmental Matters: There is an extensive body of federal and state
statutes governing environmental matters, which permit, among other things,
federal and state authorities to initiate legal action providing for liability,
compensation, cleanup, and emergency response to the release or threatened
release of hazardous substances into the environment and for the cleanup of
inactive hazardous waste disposal sites which constitute substantial hazards.
Because of the nature of the EUA System's business, various by-products and
substances are produced or handled which are classified as hazardous under the
rules and regulations promulgated by the United States Environmental Protection
Agency (EPA) as well as state and local authorities. The EUA System generally
provides for the disposal of such substances through licensed contractors,
but these statutory provisions generally impose potential joint and several
responsibility on the generators of the wastes for cleanup costs. Subsidiaries
of EUA have been notified with respect to a number of sites where they may be
responsible for such costs, including sites where they may have joint and
several liability with other responsible parties. It is the policy of the EUA
System companies to notify liability insurers and to initiate claims. EUA is
unable to predict whether liability, if any, will be assumed by, or can be
enforced against, the insurance carriers in these matters.
On December 13, 1994, the United States District Court for the District of
Massachusetts (District Court) issued a judgment against Blackstone, finding
Blackstone liable to the Commonwealth of Massachusetts (Commonwealth) for the
full amount of response costs incurred by the Commonwealth in the cleanup of a
by-product of manufactured gas at a site at Mendon Road in Attleboro,
Massachusetts. The judgment also found Blackstone liable for interest and
litigation expenses calculated to the date of judgment. The total liability is
approximately $5.9 million, including approximately $3.6 million in interest
which had accumulated since 1985. Due to the uncertainty of the ultimate
outcome of this proceeding and anticipated recoverability whether through
rates, insurance providers or other parties, Blackstone recorded an asset for
the amount funded under the escrow agreement (discussed below) consistent with
provisions of SFAS 5, specifically paragraphs 3, 10, and 13 and SFAS 71,
specifically paragraphs 3 and 9. This amount is included with Other Assets on
the Consolidated Balance Sheets at December 31, 1999 and 1998. Should the EPA
determine the substance to be non-toxic, the company may be able to retain the
entire escrowed amount and would relieve both the asset and liability from its
balance sheet at that time. However should the EPA determine that the
substance is hazardous, the company would amortize its asset, net of amounts
recovered through insurance proceeds or from other parties, over a five year
period in accordance with the company's established rate recovery mechanisms of
similar costs.
Blackstone filed a Notice of Appeal of the District Court Judgment and
filed its brief with the United States Court of Appeals for the First Circuit
(First Circuit) on February 24, 1995. On October 6, 1995, the First Circuit
vacated the District Court's judgment and ordered the District Court to refer
the matter to the EPA to determine whether the chemical substance, ferric
ferrocyanide (FFC), contained within the by-product is a hazardous substance.
On January 20, 1995, Blackstone entered into an escrow agreement with the
Commonwealth whereby Blackstone deposited $5.9 million with an escrow agent who
transferred the funds into an interest bearing money market account. The
distribution of the proceeds of the escrow account will be determined upon the
final resolution of the judgment. No additional interest expense will
accrue on the judgment amount.
On January 28, 1994, Blackstone filed a complaint in the District Court,
seeking, among other relief, contribution and reimbursement from Stone &
Webster Inc., of New York City and several of its affiliated companies (Stone &
Webster), and Valley Gas Company of Cumberland, Rhode Island (Valley) for any
damages incurred by Blackstone regarding the Mendon Road site. On November 7,
1994, the Court denied motions to dismiss the complaint which were filed by
Stone & Webster and Valley. This proceeding was stayed in December 1995
pending final EPA determination as to whether FFC is a hazardous substance.
In addition, Blackstone has notified certain liability insurers and has
filed claims with respect to the Mendon Road site, as well as other sites.
Blackstone reached settlement with one carrier for reimbursement of legal costs
related to the Mendon Road case. In January 1996, Blackstone received the
proceeds of the settlement.
As of December 31, 1999, the EUA System had incurred costs of
approximately $9.5 million (excluding the $5.9 million Mendon Road judgment) in
connection with the investigation and clean-up of these sites, substantially
all of which relate to Blackstone. These amounts have been financed primarily
by internally generated cash. Blackstone is currently amortizing all of
its incurred costs over a five-year period consistent with prior regulatory
recovery periods and is recovering certain of those costs in rates.
EUA estimates that additional costs of up to $2.2 million (excluding the
$5.9 million Mendon Road judgment) may be incurred at these sites through 2000,
$1.4 million of which of which relates to Blackstone and $800,000 which relates
to sites at which Blackstone is a potentially responsible party. Estimates
beyond 2000 cannot be made since site studies, which are the basis of these
estimates, have not been completed. As a result of the recoverability of
cleanup costs in rates and the uncertainty regarding both its estimated
liability, as well as its potential contributions from insurance carriers and
other responsible parties, EUA does not believe that the ultimate impact of the
environmental costs will be material to the financial position of the EUA
System or to any individual subsidiary and thus no loss provision is required
at this time.
During the second quarter of 1999, EUA identified four new sites related
to the production of manufactured gas at which certain environmental conditions
may exist. Three sites are associated with Blackstone and one site is
associated with Eastern Edison. EUA has conducted a preliminary assessment of
the potential cost of remediation at these sites. An engineering model was
recently obtained by the Company to provide the estimated potential
costs. Since site specific studies have not yet been performed, EUA has
recorded a minimum liability for each of these sites based on this engineering
model to recognize risk assessment, monitoring, and legal and administrative
costs.
In addition, EUA has recorded estimated environmental remediation
liabilities for two previously-identified manufactured gas plant sites
associated with Blackstone. The sites are the Tidewater site, the location of
a former electric generating station and manufactured gas plant in
Pawtucket, Rhode Island, and the Hamlet Avenue Site, a former manufactured gas
plant site located in Woonsocket, Rhode Island. Estimates were not previously
recorded for these locations since site-specific studies had not been completed
and a reliable engineering model deemed essential to develop a reasonable
estimate was not previously available.
With respect to the Tidewater site, EUA completed its site investigation
study during the third quarter of 1999 to determine the nature and extent of
contamination. The study identified elevated levels of hazardous substances
over an extended area of both the surface and subsurface. The Hamlet Street
site assessment has not yet been finalized. However, the assessment
conducted to date has determined that varying degrees of hazardous substances
are present at that site.
Therefore, in the third quarter of 1999, a total estimated remediation
liability of $21.2 million was recorded as a long-term liability with a
corresponding charge to a regulatory asset on the Consolidated Balance Sheet.
Blackstone and Eastern Edison are currently recovering certain environmental
cleanup costs in rates. In addition, the Company will seek recovery of certain
costs from its insurance carriers and other possible responsible parties. The
Company expects, based on prior regulatory approvals, to recover such costs in
future rates. As a result, the Company does not believe that the ultimate
impact of the cleanup costs associated with these sites will be material to the
results of its operations or its financial position.
See Note A, Nature of Operations and Summary of Significant Accounting
Policies - Generation Divestiture regarding EUA's divestiture of generation
assets.
A number of scientific studies in the past several years have examined
the possibility of health effects from Electric and Magnetic Fields (EMF) that
are found wherever there is electricity. While some of the studies have
indicated some association between exposure to EMF and health effects, many
others have indicated no direct association. Some states have enacted
regulations to limit the strength of EMF at the edge of transmission line
rights-of-way. The Rhode Island legislation has enacted a statute which
authorizes and directs the Rhode Island Energy Facility Siting Board to
establish rules and/or regulations governing construction of high
voltage transmission lines of 69 kv or more. Management cannot predict the
ultimate outcome of the EMF issue.
Guarantee of Financial Obligations: EUA has guaranteed or entered into equity
maintenance agreements in connection with certain obligations of its
subsidiaries. EUA has guaranteed the repayment of EUA Cogenex's $24.5 million,
10.56% unsecured long-term notes due 2005 and EUA Ocean State's $26.1 million,
9.59% unsecured long-term notes due 2011. In addition, EUA has entered into
equity maintenance agreements in connection with the issuance of EUA Service's
10.2% Secured Notes and EUA Cogenex's 9.6% Unsecured Notes. Under the December
1992 settlement agreement with EUA Power, EUA reaffirmed its guarantee of up to
$10 million of EUA Power's share of the decommissioning costs of Seabrook I and
any costs of cancellation of Seabrook I or Seabrook II. EUA guaranteed this
obligation in 1990 in order to secure the release to EUA Power of a $10 million
fund established by EUA Power at the time EUA Power acquired its Seabrook
interest. EUA has not provided a reserve for this guarantee because management
believes it unlikely that EUA will ever be required to honor the guarantee.
Montaup is a 3.27% equity participant in two companies which own and
operate transmission facilities interconnecting New England and the Hydro
Quebec system in Canada. Montaup has guaranteed approximately $3.7 million of
the outstanding debt of these two companies. In addition, Montaup and Newport
have minimum rental commitments which total approximately $10.5 million and
$1.3 million, respectively, under a noncancelable transmission facilities
support agreement for years subsequent to 1999.
Other: Since early 1997, fourteen plaintiffs brought suits against numerous
defendants, including EUA, for injuries and illness allegedly caused by
exposure to asbestos over approximately a thirty-year period, at various
premises, including some owned by EUA companies. The total damages claimed in
all of these complaints is $34 million in compensatory and punitive damages,
plus exemplary damages and interest and costs. Each complaint names
between fifteen and twenty-eight defendants, including EUA. These complaints
have been referred to the applicable insurance companies. Counsel has been
retained by the insurers and is actively defending all cases. Six cases have
been dismissed as against EUA companies. EUA cannot predict the ultimate
outcome of this matter at this time.
A pending class action, filed on March 2, 1998, in the Massachusetts
Supreme Judicial Court naming all Massachusetts electric distribution
companies, including Eastern Edison, and certain Massachusetts state agencies
as defendants, seeks to invalidate certain sections of the Electric Utility
Restructuring Act of 1997. The Act directs the Massachusetts Department of
Telecommunications and Energy to impose mandatory charges on all electricity
sold to customers, except those served by a municipal lighting plant, to fund
energy efficiency activities and to promote renewable energy projects. In
addition to declaratory judgment, plaintiffs seek remittance of monies paid by
customers to each distribution company by customers for renewable projects
together with any interest earned. The outcome of this class action is
unknown at this time however, Eastern Edison is vigorously defending the
lawsuit.
On February 15, 2000, the United States Attorney for the District of
Massachusetts informed the Company that his office is investigating possible
criminal conduct, including mail fraud by EUA Cogenex and/or its employees.
The conduct in question involves alleged intentional overbilling by EUA Cogenex
of certain cogeneration customers during 1994 and 1995, when EUA Cogenex owned
cogeneration projects, and filing false information with FERC in order to
maintain the facilities' status as qualifying facilities under the Public
Utility Regulatory Policies Act of 1978. EUA Cogenex is fully cooperating with
the United States Attorney's investigation. Although the Company cannot
predict the ultimate outcome of this investigation, the Company does not
believe that it will have a material effect on the financial position of the
Company.
Exhibit D
EASTERN UTILITIES ASSOCIATES AND
AFFILIATED CORPORATIONS
Federal Income Tax Allocation Agreement
Pursuant to Rule 45(c). Public Utility Holding
Company Act of 1935 and I.R.C. Regulation Section
1.1552-1(a) (1) and Section 1.1502-33(d)(3)
This agreement made as of April 6, 2000, among Eastern Utilities
Associates (the designation of the trustees for the time being under a
Declaration of Trust dated April 2, 1928, as amended) (EUA); Eastern Edison
Company, a Massachusetts corporation (Eastern); Blackstone Valley Electric
Company, a Rhode Island corporation (Blackstone); Newport Electric Corporation,
a Rhode Island corporation (Newport); Montaup Electric Company, a Massachusetts
corporation (Montaup); EUA Service Corporation, a Massachusetts corporation
(EUA Service); EUA Cogenex Corporation, a Massachusetts corporation (Cogenex);
EUA Energy Investment Corporation, a Massachusetts corporation (EUA Energy);
EUA Ocean State Corporation, a Rhode Island corporation (Ocean State); Eastern
Unicord Corporation, a Massachusetts corporation (Unicord); Northeast Energy
Management, Inc., a Massachusetts corporation (NEM); EUA TransCapacity, Inc., a
Massachusetts corporation (TransCapacity); EUA Cogenex-Canada, Inc., a Canadian
corporation (Cogenex-Canada); EUA Bioten, Inc., a Massachusetts corporation
(Bioten); EUA Cogenex-West Corporation, a Massachusetts corporation (Cogenex-
West); EUA Citizens Conservation Services, Inc., a Massachusetts Corporation
(CCS); EUA Energy Services, Inc. a Massachusetts corporation (EUA ESI); EUA
Compression Services, Inc., a Massachusetts corporation (Compression); and EUA
Telecommunications, Inc, a Massachusetts corporation (Telecommunications).
W I T N E S S E T H T H A T:
WHEREAS, the term "AFFILIATES" as used herein shall be deemed to refer to
Eastern, Blackstone, Newport, Montaup, EUA Service, Cogenex, EUA Energy, Ocean
State, Unicord, NEM, TransCapacity, EUA Cogenex-Canada, Bioten, Cogenex-West,
CCS, EUA ESI, Compression and Telecommunications, the AFFILIATES together with
EUA, and the CONSOLIDATED AFFILIATES as a collective taxpaying unit is
sometimes referred to as the "GROUP" and
WHEREAS, EUA owns directly or indirectly at least 80 percent of the issued
and outstanding shares of each class of voting common stock of each of the
AFFILIATES; each of the CONSOLIDATED AFFILIATES is a member of an affiliated
group within the meaning of Section 1504 of the Internal Revenue Code of 1954,
as amended (the "Code"), of which EUA is the common parent; and the GROUP
presently participates in the filing of a consolidated income tax return.
Definitions
A. Corporate Tax Benefit - The amount by which the consolidated tax is
reduced by including a net corporate tax loss or other net tax benefit
in the consolidated return. The value of the benefit of the operating
loss shall be determined by applying the then current corporate income
tax rate to the amount of the loss. The value of a credit is the
actual tax savings (100%). The value of capital losses used to offset
capital gains shall be computed at the then current tax rate applicable
to capital gains for corporations. The value of any corporate tax
benefit to be reimbursed to a member shall be reduced by the amount of
any alternate minimum tax attributable to such member.
B. Separate Return Tax - The tax on the corporate taxable income of an
affiliate company computed as though such company were not a member of
the consolidated group.
C. Excess Tax Credits - The investment tax credit, alternate minimum tax
credit, research and development credit, energy tax credit or other
similar credit that would be allowable in the consolidation (were it
not for a limitation provided by law) in excess of the amount of such
credits which could be utilized on a separate return basis with regard
to such limitations.
EUA and the AFFILIATES agree as follows:
Allocation Procedures in Accordance with I.R.C. Regulation
Sections 1.1552-1(a)(1) and 1.1502-33(d)(3)
A. General Rule
Step 1 - The consolidated tax liability shall be apportioned among the
companies in the ratio that each member's separate taxable income bears to the
sum of the separate taxable incomes of all members having taxable income.
Step 2 - An additional amount will be allocated to the members at 100% of
the excess of the member's separate tax liability over the consolidated tax
liability allocated to the member under Step 1. Under no circumstances shall
the tax allocated to a member exceed its separate tax liability.
Step 3 - The total of the amounts allocated under Step 2 is credited to
those members who had "corporate tax benefits" as follows:
(a) Those members having a negative allocation under Step 2;
(b) If the total of the "corporate tax benefits" is greater than the total
reduction in the consolidated tax, then the benefits arising from the
inclusion of negative taxable incomes in the consolidated return shall
be recognized and paid prior to the benefits arising from excess tax
credits.
(c) If the total benefits attributable to the negative taxable incomes of
the members are not absorbed in the consolidated return, the benefit
allocated to each company shall be in proportion to their respective
negative taxable incomes.
(d) If the total benefits attributable to the excess tax credits are not
applied in the consolidated return, the benefit allocated to each
company shall be in proportion to their respective excess tax credits.
Step 4 - If the total consolidated tax liability shall result in an
"Alternative Minimum Tax" liability position then an additional amount will be
added to Steps 1 and 2. This additional amount will be allocated to the
members based upon their proportionate amounts of alternate minimum taxable
income.
Step 5 - Reimbursement - Benefiting members will reimburse the others no
later than 90 days after the filing of the consolidated tax return.
B. Unused Corporate Tax Benefits
A member that is entitled to payment for a tax benefit, but does not
receive such payment because of the rules in Step 3 shall retain such right for
the future to the extent that such benefit can be applied against the
consolidated tax liability. Uncompensated corporate tax benefits arising from
negative taxable income shall have priority over the benefits attributable to
excess tax credits.
C. Tax Adjustments
In the event of any adjustments to the tax returns of any of the
CONSOLIDATED AFFILIATES filed (by reason of an amended return, a claim for
refund or an audit by the Internal Revenue Service), the liability, if any, of
each of the AFFILIATES under Section A shall be redetermined to give effect to
any such adjustment as if it had been made as part of the original computation
of tax liability, and payments between EUA and the appropriate AFFILIATES shall
be made within 120 days after any such payments are made or refunds are
received, or, in the case of contested proceedings, within 120 days after a
final determination of the contest. Interest and penalties, if any,
attributable to such an adjustment shall be paid by each AFFILIATE to EUA in
proportion to the increase in such AFFILIATE'S separate return tax liability
computed under Section A of this Agreement that is required to be paid to EUA.
In any situation in which the Group's tax liability is adjusted by a revenue
agent's report or a court settlement and an item-by-item modification is not
made, the Group shall consult its accountants for assistance in determining a
fair allocation of the adjusted liability.
D. Subsidiaries of Affiliates
If at any time, any of the AFFILIATES acquires or creates one or more
subsidiary corporations that are includible corporations of the Group, they
shall be subject to this Agreement and all references to the AFFILIATES herein
shall be interpreted to include such subsidiaries as a group.
E. Successors
This Agreement shall be binding on and insure to the benefit of any
successor, by merger, acquisition of assets or otherwise, to any of the parties
hereto (including but not limited to any successor of EUA or any of the
AFFILIATES succeeding to the tax attributes of such corporation under Section
381 of the Code) to the same extent as if such successor had been an original
party to this agreement.
F. Special Rule
In making the tax allocations provided for in this agreement,
notwithstanding any of the foregoing, no corporate tax benefits shall be
allocated to EUA. Although the separate corporate taxable income or taxable
loss of EUA and any tax credits attributable to EUA will be included
in the consolidated return, only the tax savings attributable to such items
shall be allocated to the other AFFILIATES as if EUA were not a member of the
Group. In making this allocation, the tax savings of EUA shall be allocated
only to members of the Group having taxable income.
Also, in making the tax allocations, only those tax consequences
attributable to non-affiliated transactions shall remain with EUA Service
Corporation in accordance with Section A of this Agreement. All others will be
allocated to the other AFFILIATES.
G. Termination Clause
This Agreement shall apply to the taxable year ending December 31, 1999,
unless all of the members of the Group agree in writing to terminate the
Agreement prior to the end of the taxable year. The Agreement shall be
renewable on a year to year basis for subsequent taxable years, provided all of
the members of the Group agree in writing, prior to the end of the immediately
preceding taxable year, to extend the Agreement one additional year.
Notwithstanding any termination, this Agreement shall continue in effect with
respect to any payment or refunds due for all taxable periods prior to
termination.
IN WITNESS WHEREOF, the duly authorized representatives of the parties
have set their hands this 6th of April, 2000.
EASTERN UTILITIES ASSOCIATES
By /s/Donald G. Pardus
Donald G. Pardus
Title: Chairman of the Board
EUA SERVICE CORPORATION EUA COGENEX-CANADA
By /s/Robert Powderly By /s/Edward Liston
Robert Powderly Edward Liston
Title: Executive Vice President Title: President
BLACKSTONE VALLEY ELECTRIC COMPANY EUA ENERGY INVESTMENT CORPORATION
By /s/John Carney By /s/John R. Stevens
John Carney John R. Stevens
Title: President Title: President
EASTERN EDISON COMPANY EASTERN UNICORD CORPORATION
By /s/ Michael Hirsh By /s/John R. Stevens
Michael Hirsh John R. Stevens
Title: Vice President Title: President
MONTAUP ELECTRIC COMPANY EUA TRANSCAPACITY, INC.
By /s/Kevin Kirby By /s/John R. Stevens
Kevin Kirby John R. Stevens
Title: Vice President Title: President
EUA COGENEX CORPORATION EUA BIOTEN, INC.
By /s/Edward Lsiton By /s/John R. Stevens
Edward Liston John R. Stevens
Title: President Title: President
NORTHEAST ENERGY MANAGEMENT, INC. EUA OCEAN STATE CORPORATION
By /s/ Edward Liston By /s/Clifford J. Hebert, Jr.
Edward Liston Clifford J. Hebert, Jr.
Title: President Title: Treasurer
EUA COGENEX WEST CORPORATION NEWPORT ELECTRIC CORPORATION
By /s/ Mark White By /s/Michael Hirsh
Mark White Michael Hirsh
Title: Executive Vice President Title: Vice President
EUA CITIZENS CONSERVATION SERVICES, INC. EUA ENERGY SERVICES, INC.
By /s/Mark White By /s/Kevin Kirby
Mark White Kevin Kirby
Title: Executive President Title: Vice President
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