<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-7471
(LOGO) THE NARRAGANSETT ELECTRIC COMPANY
(Exact name of registrant as specified in charter)
Rhode Island 05-0187805
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
280 Melrose Street, Providence, R.I. 02901
(Address of principal executive offices)
Registrant's telephone number, including area code
(401-784-7000)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes (X) No ( )
Common stock, par value $50 per share, authorized and
outstanding: 1,132,487 shares at June 30, 1997.
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
- ----------------------------
<TABLE>
THE NARRAGANSETT ELECTRIC COMPANY
Statements of Income
Periods Ended June 30
(Unaudited)
<CAPTION>
Quarter Six Months
-------- ----------
1997 1996 1997 1996
---- ---- ---- ----
(In Thousands)
<S> <C> <C> <C> <C>
Operating revenue $119,894 $116,470 $251,360 $243,755
-------- -------- -------- --------
Operating expenses:
Fuel for generation and purchased electric
energy (principally from New England
Power Company, an affiliate) 72,271 68,779 149,444 142,468
Other operation 17,477 18,156 35,303 35,259
Maintenance 3,032 2,967 5,747 6,954
Depreciation 5,599 7,220 11,703 14,357
Taxes, other than federal income taxes 9,205 9,972 19,473 20,053
Federal income taxes 2,491 1,131 6,468 4,133
-------- -------- -------- --------
Total operating expenses 110,075 108,225 228,138 223,224
-------- -------- -------- --------
Operating income 9,819 8,245 23,222 20,531
Other income:
Other income (expense), net (127) (125) (1,183) (1,234)
-------- -------- -------- --------
Operating and other income 9,692 8,120 22,039 19,297
-------- -------- -------- --------
Interest:
Interest on long-term debt 4,190 4,304 8,495 8,596
Other interest 431 830 824 1,514
Allowance for borrowed funds used during
construction - credit (14) (131) (58) (220)
-------- -------- -------- --------
Total interest 4,607 5,003 9,261 9,890
-------- -------- -------- --------
Net income $ 5,085 $ 3,117 $ 12,778 $ 9,407
======== ======== ======== ========
Statements of Retained Earnings
Retained earnings at beginning of period $123,738 $111,716 $119,978 $108,227
Net income 5,085 3,117 12,778 9,407
Dividends declared on cumulative
preferred stock (536) (536) (1,072) (1,072)
Dividends declared on common stock (5,663) (3,114) (9,060) (5,379)
-------- -------- -------- --------
Retained earnings at end of period $122,624 $111,183 $122,624 $111,183
======== ======== ======== ========
The accompanying notes are an integral part of these financial statements.
Per share data is not relevant because the Company's common stock is wholly
owned by New England Electric System.
</TABLE>
<PAGE>
<TABLE>
THE NARRAGANSETT ELECTRIC COMPANY
Statements of Income
Twelve Months Ended June 30
(Unaudited)
<CAPTION>
1997 1996
---- ----
(In Thousands)
<S> <C> <C>
Operating revenue $511,190 $501,422
-------- --------
Operating expenses:
Fuel for generation and purchased electric
energy (principally from New England
Power Company, an affiliate) 304,036 291,225
Other operation 71,669 74,535
Maintenance 11,802 13,076
Depreciation 25,245 30,877
Taxes, other than federal income taxes 37,950 37,794
Federal income taxes 14,286 10,905
-------- --------
Total operating expenses 464,988 458,412
-------- --------
Operating income 46,202 43,010
Other income:
Allowance for equity funds used during
construction (322)
Other income (expense), net (681) (960)
-------- --------
Operating and other income 45,521 41,728
-------- --------
Interest:
Interest on long-term debt 17,104 17,153
Other interest 2,193 3,515
Allowance for borrowed funds used during
construction - credit (101) (1,433)
-------- --------
Total interest 19,196 19,235
-------- --------
Net income $ 26,325 $ 22,493
======== ========
Statements of Retained Earnings
Retained earnings at beginning of period $111,183 $ 97,345
Net income 26,325 22,493
Dividends declared on cumulative preferred stock (2,143) (2,143)
Dividends declared on common stock (12,741) (6,512)
-------- --------
Retained earnings at end of period $122,624 $111,183
======== ========
The accompanying notes are an integral part of these financial statements.
Per share data is not relevant because the Company's common stock is wholly
owned by New England Electric System.
</TABLE>
<PAGE>
<TABLE>
THE NARRAGANSETT ELECTRIC COMPANY
Balance Sheets
(Unaudited)
<CAPTION>
June 30, December 31,
ASSETS 1997 1996
------ ---- ----
(In Thousands)
<S> <C> <C>
Utility plant, at original cost $750,188 $742,481
Less accumulated provisions for depreciation 193,273 187,690
-------- --------
556,915 554,791
Construction work in progress 6,836 5,392
-------- --------
Net utility plant 563,751 560,183
-------- --------
Current assets:
Cash 1,385 1,727
Accounts receivable:
From sales of electric energy 50,351 54,426
Other (including $1,296,000 and $1,253,000
from affiliates) 2,684 3,415
Less reserves for doubtful accounts 5,884 5,149
-------- --------
47,151 52,692
Unbilled revenues 16,200 15,300
Fuel, materials and supplies, at average cost 4,208 4,300
Prepaid and other current assets 16,551 15,919
-------- --------
Total current assets 85,495 89,938
-------- --------
Deferred charges and other assets 54,672 56,881
-------- --------
$703,918 $707,002
======== ========
CAPITALIZATION AND LIABILITIES
------------------------------
Capitalization:
Common stock, par value $50 per share,
authorized and outstanding 1,132,487 shares $ 56,624 $ 56,624
Premiums on preferred stocks 170 170
Other paid-in capital 80,000 80,000
Retained earnings 122,624 119,978
-------- --------
Total common equity 259,418 256,772
Cumulative preferred stock 36,500 36,500
Long-term debt 173,574 178,517
-------- --------
Total capitalization 469,492 471,789
-------- --------
Current liabilities:
Long-term debt due in one year 12,500 32,500
Short-term debt (including $5,725,000 and
$5,300,000 to affiliates) 24,900 19,025
Accounts payable (including $47,929,000 and
$40,425,000 to affiliates) 51,729 45,221
Accrued liabilities:
Taxes 4,788 3,877
Interest 4,919 5,677
Other accrued expenses 18,521 11,949
Customer deposits 5,783 5,638
Dividends payable 6,198 2,801
-------- --------
Total current liabilities 129,338 126,688
-------- --------
Deferred federal income taxes 81,191 81,880
Unamortized investment tax credits 7,270 7,517
Other reserves and deferred credits 16,627 19,128
-------- --------
$703,918 $707,002
======== ========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
THE NARRAGANSETT ELECTRIC COMPANY
Statements of Cash Flows
Six Months Ended June 30
(Unaudited)
<CAPTION>
1997 1996
---- ----
(In Thousands)
<S> <C> <C>
Operating Activities:
Net income $ 12,778 $ 9,407
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 11,703 14,357
Deferred federal income taxes and
investment tax credits, net (1,259) 165
Allowance for funds used during construction (58) (220)
Decrease (increase) in accounts receivable, net
and unbilled revenues 4,641 11,135
Decrease (increase) in fuel, materials, and supplies 92 162
Decrease (increase) in prepaid and other current assets (632) (1,107)
Increase (decrease) in accounts payable 6,508 2,661
Increase (decrease) in other current liabilities 6,870 459
Other, net 260 500
-------- --------
Net cash provided by operating activities $ 40,903 $ 37,519
-------- --------
Investing Activities:
Plant expenditures, excluding allowance for
funds used during construction $(15,239) $(29,196)
Other investing activities (146)
-------- --------
Net cash used in investing activities $(15,385) $(29,196)
-------- --------
Financing Activities:
Dividends paid on common stock $ (5,663) $ (2,831)
Dividends paid on preferred stock (1,072) (1,072)
Long-term debt - issues 2,000
Long-term debt - retirements (25,000) (2,000)
Changes in short-term debt 5,875 (5,300)
Premium on reacquisition of long-term debt (260)
-------- --------
Net cash provided by (used in) financing activities$(25,860) $ (9,463)
-------- --------
Net increase (decrease) in cash and cash equivalents $ (342) $ (1,140)
Cash and cash equivalents at beginning of period 1,727 1,999
-------- --------
Cash and cash equivalents at end of period $ 1,385 $ 859
======== ========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
Note A - Hazardous Waste
- ------------------------
The Federal Comprehensive Environmental Response, Compensation
and Liability Act, more commonly known as the "Superfund" law,
imposes strict, joint and several liability, regardless of fault,
for remediation of property contaminated with hazardous substances.
The electric utility industry typically utilizes and/or
generates in its operations a range of potentially hazardous
products and by-products. The Company is a wholly-owned retail
subsidiary of New England Electric System (NEES). NEES
subsidiaries have an internal environmental audit program and an
external waste disposal vendor audit and qualification program
intended to enhance compliance with federal, state, and local
requirements regarding the handling of potentially hazardous
products and by-products.
The Company has been named as a potentially responsible party
(PRP) by either the United States Environmental Protection Agency
or the Massachusetts Department of Environmental Protection for
three sites (two of which are located in Massachusetts) at which
hazardous waste is alleged to have been disposed. The Company is
currently aware of other sites, and may in the future become aware
of additional sites, that it may be held responsible for
remediating.
Gas was manufactured from coal in Rhode Island in the past. The
Company is aware of five sites on which gas was manufactured or
manufactured gas was stored that were owned either by the Company
or by its predecessor companies. It is not known to what extent
the Company would be held liable for hazardous wastes, if any, left
at these manufactured gas locations.
Predicting the potential costs to investigate and remediate
hazardous waste sites continues to be difficult. There are also
significant uncertainties as to the portion, if any, of the
investigation and remediation costs of any particular hazardous
waste site that may ultimately be borne by the Company. A
preliminary review by a consultant hired by the NEES companies of
the potential cost of investigating and, if necessary, remediating
Rhode Island manufactured gas sites resulted in costs per site
ranging from less than $1 million to $11 million. An informal
survey of other utilities conducted on behalf of NEES and its
subsidiaries indicated costs in a similar range. The NEES
companies have received recovery amounts from certain insurers,
and, where appropriate, the Company intends to seek recovery from
other insurers and from other PRPs, but it is uncertain whether,
<PAGE>
Note A - Hazardous Waste - Continued
- ------------------------
and to what extent, such efforts will be successful. The Company
believes that hazardous waste liabilities for all sites of which it
is aware are not material to its financial position.
In October 1996, the American Institute of Certified Public
Accountants issued new accounting rules for Environmental
Remediation Liabilities which become effective in 1997. These new
rules do not have a material effect on the Company's financial
position or results of operations.
Note B
- ------
In the opinion of the Company, these statements reflect all
adjustments (which include normal recurring adjustments) necessary
for a fair statement of the results of its operations for the
periods presented and should be considered in conjunction with the
notes to the financial statements in the Company's 1996 Annual
Report.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
---------------------------------------------------------
Condition and Results of Operations
-----------------------------------
This section contains management's assessment of The
Narragansett Electric Company's (the Company) (a wholly-owned
retail subsidiary of New England Electric System (NEES)) financial
condition and the principal factors having an impact on the results
of operations. This discussion should be read in conjunction with
the Company's financial statements and footnotes and the 1996
Annual Report on Form 10-K.
Earnings
- --------
Net income for the second quarter and first six months of 1997
increased $2.0 million and $3.4 million, respectively, from the
corresponding periods in 1996. These increases reflect an $11
million increase in base distribution rates that became effective
on January 1, 1997.
Industry Restructuring
- ----------------------
For a full discussion of industry restructuring activities in
Massachusetts, Rhode Island and New Hampshire, see "Industry
Restructuring" in the Company's Form 10-K for 1996.
Industry Restructuring Update
As previously reported, the Rhode Island statute and related
settlement covering customer choice and electric utility
restructuring provide for full recovery of the costs of generating
assets and oil and gas related assets (including regulatory assets)
not recoverable through the divestiture of New England Power
Company's (NEP) (a wholly-owned wholesale subsidiary of NEES) and
the Company's generating business. A Rhode Island settlement
reached in May 1997 among the Company, NEP, the Rhode Island Public
Utilities Commission (RIPUC) and the Rhode Island Division of
Public Utilities and Carriers to implement the stranded cost
recovery provisions of the Utility Restructuring Act of 1996 is
pending before the FERC. FERC action is expected later in 1997.
The NEES companies have reached an agreement with all three of
its unions regarding benefits and other assistance including early
retirement and severance programs, to union employees that are
affected by the restructuring of the electric utility industry and
the NEES companies divestiture of its generation business. The
<PAGE>
NEES companies have also announced similar early retirement and
severance programs for management employees. The NEES companies
anticipate that industry restructuring and divestiture will lead to
workforce reductions. The expected cost of such programs will be
substantially recovered from the proceeds of the sale of the
generating business.
In July 1997, the Governor of Rhode Island signed in to law
bills further implementing utility restructuring in Rhode Island.
The Securitization Act establishes a framework at the RIPUC for
utilities to seek approval for the issuance of bonds secured by
customers obligations to pay stranded cost charges. The 1997
Amendments to the Utility Restructuring Act modify the law so that
utilities will not have to transfer their transmission assets to
another company and make other technical amendments.
Accounting Implications
Historically, electric utility rates have been based on a
utility's costs. As a result, electric utilities are subject to
certain accounting standards that are not applicable to other
business enterprises in general. Statement of Financial Accounting
Standards No. 71, Accounting for the Effects of Certain Types of
Regulation (FAS 71), requires regulated entities, in appropriate
circumstances, to establish regulatory assets, and thereby defer
the income statement impact of certain costs expected to be
recovered in future rates. At December 31, 1996, the Company had
approximately $44 million in net regulatory assets in compliance
with FAS 71. The Company believes that the continuing rate-making
policies and practices of the RIPUC and the terms of the Rhode
Island statute will enable the Company to recover both its specific
costs of providing ongoing distribution services and stranded costs
billed to it by NEP. The Company believes that these factors will
allow it to continue to apply FAS 71. However, despite the
progress made to date, it is possible that the final restructuring
plans ultimately ordered by regulatory bodies would not reflect
full recovery of stranded costs, including a fair return on those
costs as they are being recovered. In the event that future
circumstances should cause the application of FAS 71 to be
discontinued, a noncash write-off of previously established
regulatory assets would be required.
Year 2000 Computer Issues
- -------------------------
In the next two-and-one-half years, most large companies will
face a potentially serious information systems (computer) problem
because most software application and operational programs written
in the past will not properly recognize calendar dates beginning in
<PAGE>
the year 2000. This could force computers to either shut down or
lead to incorrect calculations. The NEES companies began the
process of identifying the changes required to their computer
programs and hardware during 1996. The necessary modifications to
the NEES companies' centralized financial, customer, and
operational information systems are expected to be completed by the
end of 1998. The NEES companies believe they will incur
approximately $20 million of costs between now and January 1, 2000,
associated with making the necessary modifications identified to
date to the centralized systems. Noncentralized systems are
currently being reviewed for Year 2000 problems. The NEES
companies are unable to predict the costs to be incurred for
correction of such noncentralized systems, but expect the scope and
schedule for such work to be less complex than for its centralized
information systems.
Operating Revenue
- -----------------
The following table summarizes the changes in operating
revenue:
<TABLE>
<CAPTION>
Increase (Decrease) in Operating Revenue
Second Quarter Six Months
-------------- ------------
1997 vs 1996 1997 vs 1996
------------- ------------
(In Millions)
<S> <C> <C>
Sales to ultimate customers - $(2)
Rate changes $ 3 6
Fuel recovery 1 4
Demand Side Management (DSM) (1) -
--- ---
$ 3 $ 8
=== ===
</TABLE>
The increase in revenues due to rate changes reflects an $11
million increase in base rates, approved by the RIPUC, effective
January 1, 1997 in accordance with the Utility Restructuring Act of
1996.
The increase in fuel recovery revenues is due to increased
replacement power fuel purchases by NEP due to the reduced
generation of partially owned nuclear units. These costs are
passed on to the Company through NEP's fuel clause. The Company,
in turn, passes these costs on to its customers.
<PAGE>
Operating Expenses
- ------------------
The following table summarizes the changes in operating
expenses which are discussed below:
<TABLE>
<CAPTION>
Increase (Decrease) in Operating Expenses
Second Quarter Six Months
-------------- ------------
1997 vs 1996 1997 vs 1996
-------------- ------------
(In Millions)
<S> <C> <C>
Fuel for generation and
purchased electric energy:
Fuel $ 1 $ 4
Integrated facilities
credit from NEP 2 3
Purchases and demand charges
and other 1 -
Other operation and maintenance:
DSM (1) (1)
Depreciation (2) (3)
Taxes 1 2
--- ---
$ 2 $ 5
=== ===
</TABLE>
For a discussion of fuel costs, see the "Operating Revenue"
section.
The decrease in depreciation and the decrease in the integrated
facilities credits from NEP both reflect reduced dismantlement
costs associated with the retired South Street generation plant.
This decrease in depreciation expense was partially offset by new
plant expenditures.
<PAGE>
Utility Plant Expenditures and Financings
- -----------------------------------------
Cash expenditures for utility plant totaled $15 million in the
first six months of 1997. The funds necessary for utility plant
expenditures were primarily provided by net cash from operating
activities, after the payment of dividends. The Company plans to
issue $10 million of long-term debt in 1997.
At June 30, 1997, the Company had $25 million of short-term
debt outstanding of which $19 million represents commercial paper
borrowings. The Company currently has lines of credit with banks
totaling $41 million. There were no outstanding borrowings under
these lines of credit at June 30, 1997.
For the twelve-month period ending June 30, 1997, the ratio of
earnings to fixed charges was 3.06.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
- --------------------------
Information concerning the restructuring dockets before the
Federal Energy Regulatory Commission, discussed in Part I of this
report in Management's Discussion and Analysis of Financial
Condition and Results of Operations, is incorporated herein by
reference and made a part hereof.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
The Company is filing the following revised exhibit for
incorporation by reference into its registration statement on Form
S-3, Commission file No. 33-61131.
12 Statement re computation of ratios
The Company is filing Financial Data Schedules.
The Company filed a report on Form 8-K dated July 14, 1997,
containing Item 5, Other Events.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report on Form 10-Q for
the quarter ended June 30, 1997 to be signed on its behalf by the
undersigned thereunto duly authorized.
THE NARRAGANSETT ELECTRIC COMPANY
s/Howard W. McDowell
Howard W. McDowell
Controller, Authorized Officer, and
Principal Accounting Officer
Date: July 31, 1997
Exhibit Index
<PAGE>
Exhibit Index
-------------
Exhibit Description Page
- ------- ----------- ----
12 Statement re computation of Filed herewith
ratios
27 Financial Data Schedule Filed herewith
Exhibit 12
<PAGE>
<TABLE>
THE NARRAGANSETT ELECTRIC COMPANY
Computation of Ratio of Earnings to Fixed Charges
(SEC Coverage)
(Unaudited)
<CAPTION>
12 Months
Ended
June 30, 1997 Years Ended December 31,
Actual -------------------------------------------------------------
(Unaudited) 1996 1995 1994 1993 1992
-------------- ---- ---- ---- ---- ----
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Net Income $26,325 $22,954 $23,910 $14,589 $14,274 $21,052
- ----------
Add income taxes and fixed charges
- ----------------------------------
Current federal income taxes 10,614 6,918 7,212 1,020 2,183 4,608
Deferred federal income taxes 3,376 4,675 3,512 3,930 2,199 4,560
Investment tax credits - net (496) (498) (503) (508) (508) (507)
Interest on long-term debt 17,104 17,205 16,627 14,334 12,715 13,290
Interest on short-term debt and other2,193 2,883 3,663 2,897 2,074 1,277
------- ------- ------- ------- ------- -------
Net earnings available for fixed charges $59,116 $54,137 $54,421 $36,262 $32,937 $44,280
------- ------- ------- ------- ------- -------
Fixed charges:
Interest on long-term debt $17,104 $17,205 $16,627 $14,334 $12,715 $13,290
Interest on short-term debt and other2,193 2,883 3,663 2,897 2,074 1,277
------- ------- ------- ------- ------- -------
Total fixed charges $19,297 $20,088 $20,290 $17,231 $14,789 $14,567
======= ======= ======= ======= ======= =======
Ratio of earnings to fixed charges 3.06 2.69 2.68 2.10 2.23 3.04
- ----------------------------------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AND RELATED STATEMENTS OF INCOME, RETAINED EARNINGS AND CASH FLOWS
OF THE NARRAGANSETT ELECTRIC COMPANY, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<PERIOD-TYPE> 6-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 563,751
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 85,495
<TOTAL-DEFERRED-CHARGES> 54,672 <F1>
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 703,918
<COMMON> 56,624
<CAPITAL-SURPLUS-PAID-IN> 80,170
<RETAINED-EARNINGS> 122,624
<TOTAL-COMMON-STOCKHOLDERS-EQ> 259,418
0
36,500
<LONG-TERM-DEBT-NET> 173,574
<SHORT-TERM-NOTES> 5,725 <F2>
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 19,175
<LONG-TERM-DEBT-CURRENT-PORT> 12,500
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 197,026
<TOT-CAPITALIZATION-AND-LIAB> 703,918
<GROSS-OPERATING-REVENUE> 251,360
<INCOME-TAX-EXPENSE> 6,468
<OTHER-OPERATING-EXPENSES> 221,670
<TOTAL-OPERATING-EXPENSES> 228,138
<OPERATING-INCOME-LOSS> 23,222
<OTHER-INCOME-NET> (1,183)
<INCOME-BEFORE-INTEREST-EXPEN> 22,039
<TOTAL-INTEREST-EXPENSE> 9,261
<NET-INCOME> 12,778
1,072
<EARNINGS-AVAILABLE-FOR-COMM> 11,706
<COMMON-STOCK-DIVIDENDS> 9,060
<TOTAL-INTEREST-ON-BONDS> 8,495
<CASH-FLOW-OPERATIONS> 40,903
<EPS-PRIMARY> 0 <F2>
<EPS-DILUTED> 0 <F2>
<FN>
<F1> Total deferred charges includes other assets.
<F2> Per share data is not relevant because the Company's common stock is
wholly-owned by New England Electric System.
</FN>
