<PAGE>
File No. 70-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1
APPLICATION/DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
NEW ENGLAND ELECTRIC SYSTEM
(Name of company filing this statement)
25 Research Drive, Westborough, Massachusetts 01582
(Address of principal executive offices)
NEW ENGLAND ELECTRIC SYSTEM
Name of top registered holding company parent
of the participating companies herein)
Michael E. Jesanis Robert King Wulff
Treasurer Corporation Counsel
25 Research Drive 25 Research Drive
Westborough, MA 01582 Westborough, MA 01582
(Names and addresses of agents for service)
<PAGE>
Item 1. Description of Proposed Transactions
------------------------------------
New England Power Company (NEP), Massachusetts Electric Company (Mass.
Electric), The Narragansett Electric Company (Narragansett), and Granite State
Electric Company (Granite) are wholly owned subsidiaries of New England
Electric System (NEES), a holding company registered under the Public Utility
Holding Company Act of 1935 (the 1935 Act). Mass. Electric, Narragansett, and
Granite are retail electric utilities incorporated and doing business in
Massachusetts, Rhode Island, and New Hampshire, respectively. NEP is a
wholesale electric generation and transmission utility and supplies the
majority of the electricity needs for these affiliates.
NEES proposes to make, from time to time through December 31, 1996, one
or more capital contributions to NEP, Mass. Electric, Narragansett, and
Granite, not to exceed an aggregate of $50 million in each case for NEP, Mass.
Electric, and Narragansett, and $3 million for Granite. NEP, Mass. Electric,
Narragansett, and Granite will credit their capital contributions to "Other
Paid-In Capital", and NEES will record such capital contributions as
"Investments in Subsidiaries, Consolidated." NEES will obtain the funds for
such capital contributions from dividends paid to it by its subsidiaries,
repayment of notes from subsidiaries or through short-term borrowings.
By Order of the Commission dated December 11, 1992 (HCAR No. 25701) and
Supplemental Order of the Commission dated June 18, 1993 (HCAR No. 25832),
NEES was granted authority to make capital contributions through December 31,
1994. The authority of the new order by which NEES intends to make the
capital contributions as proposed above shall commence on January 1, 1995.
NEP, Mass. Electric, Narragansett, and Granite will apply the funds
received from the capital contributions toward the cost of, or the
reimbursement of the treasury for, or the payment of short-term borrowings
incurred for, retirement of outstanding general and refunding and first
mortgage bonds and preferred stock, capitalizable additions and improvements
to plant and property, or other corporate purposes.
Forecasts of 1995-1996 construction expenditures, excluding allowance
for funds used during construction, indicate that NEP will invest
approximately $280 million, Mass. Electric will invest approximately
$205 million, Narragansett will invest approximately $100 million, and Granite
will invest approximately $9 million for such purposes. In the aggregate,
approximately 70% of the four companies' construction expenditures are
expected to be financed internally. The balance of construction expenditures
will need to be funded from external sources, including the proposed capital
contributions.
Neither NEES nor any of its subsidiaries has an ownership interest in an
exempt wholesale generator (EWG) or a foreign utility company (FUCO) as
defined in Sections 32 and 33 of the 1935 Act. Further, none of the capital
contributions will be used for the acquisition of an interest in an EWG or a
FUCO.
Additionally, neither NEES nor any of its subsidiaries is or will be, as
a consequence of the proposed transactions, a party to, or has any rights
under, a service, sales, or construction agreement with an EWG or a FUCO.
<PAGE>
Item 2. Fees, Commissions, and Expenses
-------------------------------
There are no fees or commissions to be paid in connection with the
proposed transactions other than the fee for filing this Application/
Declaration under the 1935 Act of $2,000; incidental services will be
performed by New England Power Service Company at the actual cost thereof.
The cost of such services is estimated not to exceed $1,000.
New England Power Service Company is an affiliated service company
operating pursuant to Section 13 of the 1935 Act and the Commission's rules
thereunder.
Item 3. Applicable Statutory Provisions
-------------------------------
NEES considers that the proposed capital contributions are subject to
the provisions of Section 12 of the 1935 Act and Rule 45 thereunder.
Item 4. Regulatory Approval
-------------------
No action by any state or federal commission (other than the Securities
and Exchange Commission) is necessary to carry out the proposed transactions.
Item 5. Procedure
---------
It is requested that the Commission take action with respect to this
Application/Declaration without a hearing being held and that this statement
become effective and be granted on or before December 1, 1994, or as soon
thereafter as possible.
NEES (i) does not request a recommended decision by a hearing officer,
(ii) does not request a recommended decision by any other responsible officer
of the Commission, (iii) hereby specifies that the Division of Investment
Management may assist in the preparation of the Commission's decision, and
(iv) hereby requests that there be no 30-day waiting period between the date
of issuance of the Commission's Order and the date on which it is to become
effective.
Item 6. Exhibits and Financial Statements
---------------------------------
(a) Exhibits
* F Opinion of Counsel
G Proposed Form of Notice
(b) Financial Statements
1-a Balance Sheet of NEES at June 30, 1994, actual and pro-forma
1-b Statement of Income and Retained Earnings for NEES for
twelve months ended June 30, 1994**
2-a Balance Sheet of New England Power Company at June 30, 1994,
actual and pro-forma
<PAGE>
2-b Statement of Income and Retained Earnings for New England
Power Company for twelve months ended June 30, 1994**
3-a Balance Sheet of Massachusetts Electric Company at June 30,
1994, actual and pro-forma
3-b Statement of Income and Retained Earnings for Massachusetts
Electric Company for twelve months ended June 30, 1994**
4-a Balance Sheet of The Narragansett Electric Company at
June 30, 1994, actual and pro-forma
4-b Statement of Income and Retained Earnings for The
Narragansett Electric Company for twelve months ended
June 30, 1994**
5-a Balance Sheet of Granite State Electric Company at June 30,
1994, actual and pro-forma
5-b Statement of Income and Retained Earnings for Granite State
Electric Company for twelve months ended June 30, 1994**
6-a Consolidated Balance Sheet of NEES and subsidiaries at
June 30, 1994, actual**
6-b Statement of Consolidated Income and Retained Earnings of
NEES and subsidiaries, for twelve months ended June 30,
1994**
* To be supplied by amendment.
** The proposed transactions will have no material effect on
the Income Statements of NEES, its subsidiaries, and of NEES
and subsidiaries consolidated, nor will it have effect on
the Balance Sheet of NEES and subsidiaries consolidated;
therefore, pro-forma statements have been omitted.
There were no material events, not in the ordinary course of business,
since the date of the balance sheets.
Item 7. Information as to Environmental Effects
---------------------------------------
The proposed transaction does not involve a major federal action
significantly affecting the quality of the human environment.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, the undersigned company has duly caused this Application/Declaration
to be signed on its behalf, as indicated, by the undersigned officer thereunto
duly authorized by such company.
NEW ENGLAND ELECTRIC SYSTEM
s/Michael E. Jesanis
By______________________________
Michael E. Jesanis
Treasurer
Date: October 21, 1994
The name "New England Electric System" means the trustee or trustees for the
time being (as trustee or trustees but not personally) under an agreement and
declaration of trust dated January 2, 1926, as amended, which is hereby
referred to, and a copy of which as amended has been filed with the Secretary
of the Commonwealth of Massachusetts. Any agreement, obligation or liability
made, entered into or incurred by or on behalf of New England Electric System
binds only its trust estate, and no shareholder, director, trustee, officer or
agent thereof assumes or shall be held to any liability therefor.
<PAGE>
EXHIBIT AND FINANCIAL STATEMENT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
F Opinion of Counsel To be filed by
amendment
G Proposed Form of Notice Filed herewith
Financial
Statement No.
- -------------
1-a Balance Sheet of NEES at June 30, Filed herewith
1994, actual and pro-forma
1-b Statement of Income and Retained Filed herewith
Earnings for NEES for twelve months
ended June 30, 1994
2-a Balance Sheet of New England Power Filed herewith
Company at June 30, 1994, actual
and pro-forma
2-b Statement of Income and Retained Filed herewith
Earnings for New England Power Company
for twelve months ended June 30, 1994
3-a Balance Sheet of Massachusetts Electric Filed herewith
Company at June 30, 1994, actual and
pro-forma
3-b Statement of Income and Retained Earnings Filed herewith
for Massachusetts Electric Company for
twelve months ended June 30, 1994
4-a Balance Sheet of The Narragansett Electric Filed herewith
Company at June 30, 1994, actual and
pro-forma
4-b Statement of Income and Retained Earnings Filed herewith
for The Narragansett Electric Company for
twelve months ended June 30, 1994
5-a Balance Sheet of Granite State Electric Filed herewith
Company at June 30, 1994, actual and
pro-forma
5-b Statement of Income and Retained Earnings Filed herewith
for Granite State Electric Company for
twelve months ended June 30, 1994
6-a Consolidated Balance Sheet of NEES and Filed herewith
subsidiaries at June 30, 1994, actual
6-b Statement of Consolidated Income and Filed herewith
Retained Earnings of NEES and subsidiaries,
for twelve months ended June 30, 1994
<PAGE>
Exhibit G
PROPOSED FORM OF NOTICE
-----------------------
New England Electric System (NEES), a registered holding company, has
filed an application/declaration with this Commission pursuant to Section 12
of the Public Utility Holding Company Act of 1935 (the Act) and the
Commission's rules thereunder. NEES proposes to make, from time to time
through December 31, 1996, one or more capital contributions to New England
Power Company (New England Power), Massachusetts Electric Company (Mass.
Electric), the Narragansett Electric Company (Narragansett), and Granite State
Electric Company (Granite), not to exceed an aggregate of $50 million in each
case for New England Power, Mass. Electric, and Narragansett, and $3 million
for Granite. New England Power, Mass. Electric, Narragansett, and Granite
will credit their capital contributions to "Other Paid-In Capital," and NEES
will record such capital contributions as "Investments in Subsidiaries,
Consolidated."
The proposed capital contributions will permit New England Power, Mass.
Electric, Narragansett, and Granite to raise funds while maintaining
appropriate balances of debt and equity.
<PAGE>
<TABLE>
Financial Statement 1-a
Page 1 of 2
NEW ENGLAND ELECTRIC SYSTEM
(Parent Company Only)
Balance Sheet
At June 30, 1994
(Actual and Pro Forma)
(Unaudited)
ASSETS
------
<CAPTION>
Actual Adjustments Pro Forma
------ ----------- ---------
(In Thousands)
<S> <C> <C> <C>
Investments:
Common stocks of subsidiaries, at equity $1,508,845 $153,000 $1,661,845
Notes of subsidiaries 51,894 51,894
Other investments 657 657
---------- -------- ----------
Total investments 1,561,396 153,000 1,714,396
---------- -------- ----------
Current assets:
Cash 33 33
Temporary cash investments - subsidiary company 3,100 (3,100)
Interest, dividends and accounts receivable
(including $32,550,000 from subsidiaries) 32,622 (32,622)
Other current assets 30 30
---------- -------- ----------
Total current assets 35,785 (35,722) 63
---------- -------- ----------
Deferred federal income taxes 2,215 2,215
---------- -------- ----------
$1,599,396 $117,278 $1,716,674
========== ======== ==========
CAPITALIZATION AND LIABILITIES
------------------------------
Common share equity:
Common shares, par value $1 per share:
Authorized - 150,000,000 shares
Outstanding - 64,969,652 shares $ 64,970 $ 64,970
Paid-in capital 736,567 736,567
Retained earnings (including $565,695,000 of
undistributed subsidiary earnings) 757,192 757,192
---------- -------- ----------
Total common share equity 1,558,729 1,558,729
---------- -------- ----------
Current liabilities:
Short-term debt $117,278 117,278
Accounts payable (including $211,000 to subsidiaries) 1,094 1,094
Other accrued expenses 500 500
Dividends payable 33,110 33,110
---------- -------- ----------
Total current liabilities 34,704 117,278 151,982
---------- -------- ----------
Deferred credits 5,963 5,963
---------- -------- ----------
$1,599,396 $117,278 $1,716,674
========== ======== ==========
</TABLE>
<PAGE>
Financial Statement 1-a
Page 2 of 2
NEW ENGLAND ELECTRIC SYSTEM
(Parent Company Only)
The pro forma adjustments to show the estimated effect of the proposed
transactions on the foregoing Balance Sheet at June 30, 1994 are as follows:
Debit - Common stock of subsidiaries, at equity $153,000,000
Credit - Temporary cash investments - subsidiary company $ 3,100,000
Interest, dividends and accounts receivable $ 32,622,000
Short-term debt $117,278,000
To reflect (1) a capital contribution from New England Electric System
in the amount of $50 million each to New England Power Company, Massachusetts
Electric Company and The Narragansett Electric Company, and $3 million to
Granite State Electric Company and (2) the funding of this contribution
through the utilization of (i) temporary cash investments and (ii) interest,
dividends and accounts receivable, and the incurrence of short-term debt.
<PAGE>
Financial Statement 1-b
NEW ENGLAND ELECTRIC SYSTEM
(Parent Company Only)
Statement of Income
Twelve Months Ended June 30, 1994
(Unaudited)
(In Thousands)
Equity in earnings of subsidiaries $ 209,496
Interest income - subsidiaries 308
---------
Total income from subsidiaries 209,804
Other income 109
---------
Total income 209,913
Corporate and fiscal expenses (includes $1,827,000 for cost
of services billed by an affiliated company) (17,553)
Federal income taxes 6,986
---------
Income before interest 220,480
Interest 132
---------
Net income $ 220,348
=========
Statement of Retained Earnings
Retained earnings at beginning of period $ 685,398
Net income 220,348
Dividends declared on common shares (146,507)
Premium on redemption of preferred stock of subsidiaries (2,047)
---------
Retained earnings at end of period $ 757,192
=========
<PAGE>
<TABLE>
Financial Statement 2-a
Page 1 of 2
NEW ENGLAND POWER COMPANY
Balance Sheet
At June 30, 1994
(Actual and Pro Forma)
(Unaudited)
ASSETS
------
<CAPTION>
Actual Adjustments Pro Forma
------ ----------- ---------
(In Thousands)
<S> <C> <C> <C>
Utility plant, at original cost $2,481,790 $2,481,790
Less accumulated provisions for depreciation
and amortization 975,099 975,099
---------- -------- ----------
1,506,691 1,506,691
Net investment in Seabrook 1 under rate settlement 71,683 71,683
Construction work in progress 249,841 249,841
---------- -------- ----------
Net utility plant 1,828,215 1,828,215
---------- -------- ----------
Investments:
Nuclear power companies, at equity 46,727 46,727
Nonutility property and other investments, at cost 19,932 19,932
---------- -------- ----------
Total investments 66,659 66,659
---------- -------- ----------
Current assets:
Cash 1,710 1,710
Accounts receivable, principally from sales of
electric energy:
Affiliated companies 192,914 192,914
Others 62,446 62,446
Fuel, materials and supplies, at average cost 64,964 64,964
Prepaid and other current assets 27,692 27,692
---------- -------- ----------
Total current assets 349,726 349,726
---------- -------- ----------
Accrued Yankee Atomic costs 91,520 91,520
Deferred charges and other assets 162,679 162,679
---------- -------- ----------
$2,498,799 $2,498,799
========== ======== ==========
CAPITALIZATION AND LIABILITIES
------------------------------
Capitalization:
Common stock, par value $20 per share,
authorized and outstanding 6,449,896 shares $ 128,998 $ 128,998
Premiums on capital stocks 86,829 86,829
Other paid-in capital 288,000 $ 50,000 338,000
Retained earnings 374,651 374,651
---------- -------- ----------
Total common equity 878,478 50,000 928,478
Cumulative preferred stock, par value $100 per share 60,516 60,516
Long-term debt 667,535 667,535
---------- -------- ----------
Total capitalization 1,606,529 50,000 1,656,529
---------- -------- ----------
Current liabilities:
Short-term debt (including $12,475,000 to affiliates) 84,150 (50,000) 34,150
Accounts payable (including $58,581,000 to affiliates) 161,860 161,860
Accrued liabilities:
Taxes 15,102 15,102
Interest 10,039 10,039
Other accrued expenses 13,889 13,889
Dividends payable 21,820 21,820
---------- -------- ----------
Total current liabilities 306,860 $(50,000) 256,860
---------- -------- ----------
Deferred federal and state income taxes 348,324 348,324
Unamortized investment tax credits 61,658 61,658
Accrued Yankee Atomic costs 91,520 91,520
Other reserves and deferred credits 83,908 83,908
---------- -------- ----------
$2,498,799 $2,498,799
========== ======== ==========
</TABLE>
<PAGE>
Financial Statement 2-a
Page 2 of 2
NEW ENGLAND POWER COMPANY
The pro forma adjustments to show the estimated effect of the proposed
transactions on the foregoing Balance Sheet at June 30, 1994 are as follows:
Debit - Short-term debt $50,000,000
Credit - Other paid-in capital $50,000,000
To reflect (1) a $50,000,000 capital contribution from the parent, New
England Electric System and (2) the utilization of the proceeds from the
capital contribution for the repayment of outstanding short-term debt.
<PAGE>
Financial Statement 2-b
NEW ENGLAND POWER COMPANY
Statement of Income
Twelve Months Ended June 30, 1994
(Unaudited)
(In Thousands)
Operating revenue, principally from affiliates $1,548,881
----------
Operating expenses:
Fuel for generation 281,375
Purchased electric energy 506,466
Other operation 184,927
Maintenance 104,533
Depreciation and amortization 133,937
Taxes, other than income taxes 53,482
Income taxes 100,065
----------
Total operating expenses 1,364,785
----------
Operating income 184,096
Other income:
Allowance for equity funds used during construction 5,813
Equity in income of nuclear power companies 5,441
Other income (expense) - net (2,449)
----------
Operating and other income 192,901
----------
Interest:
Interest on long-term debt 40,818
Other interest 5,524
Allowance for borrowed funds used during
construction - credit (3,246)
----------
Total interest 43,096
----------
Net income $ 149,805
==========
Statement of Retained Earnings
Retained earnings at beginning of period $ 306,926
Net income 149,805
Dividends declared on cumulative preferred stock (3,811)
Dividends declared on common stock (77,399)
Premium on redemption of preferred stock (870)
----------
Retained earnings at end of period $ 374,651
==========
<PAGE>
<TABLE>
Financial Statement 3-a
Page 1 of 2
MASSACHUSETTS ELECTRIC COMPANY
Balance Sheet
At June 30, 1994
(Actual and Pro Forma)
(Unaudited)
ASSETS
------
<CAPTION>
Actual Adjustments Pro forma
------ ----------- ---------
(In Thousands)
<S> <C> <C> <C>
Utility plant, at original cost $1,308,853 $1,308,853
Less accumulated provisions for depreciation 363,456 363,456
---------- -------- ----------
945,397 945,397
Construction work in progress 23,068 $ 12,755 35,823
---------- -------- ----------
Net utility plant 968,465 12,755 981,220
---------- -------- ----------
Current assets:
Cash 676 676
Accounts receivable:
From sales of electric energy 134,945 134,945
Other (including $1,780,000 from affiliates) 14,994 14,994
Less reserves for doubtful accounts 13,077 13,077
---------- -------- ----------
136,862 136,862
Unbilled revenues 40,800 40,800
Materials and supplies, at average cost 12,846 12,846
Prepaid and other current assets 15,045 15,045
---------- -------- ----------
Total current assets 206,229 206,229
---------- -------- ----------
Deferred charges and other assets 57,768 57,768
---------- -------- ----------
$1,232,462 $ 12,755 $1,245,217
========== ======== ==========
CAPITALIZATION AND LIABILITIES
------------------------------
Capitalization:
Common stock, par value $25 per share, authorized
and outstanding 2,398,111 shares $ 59,953 $ 59,953
Premiums on capital stocks 45,862 45,862
Other paid-in capital 141,310 $ 50,000 191,310
Retained earnings 138,317 138,317
---------- -------- ----------
Total common equity 385,442 50,000 435,442
Cumulative preferred stock 50,000 50,000
Long-term debt 259,651 259,651
---------- -------- ----------
Total capitalization 695,093 50,000 745,093
---------- -------- ----------
Current liabilities:
Long-term debt due within one year 25,000 25,000
Short-term debt (including $12,475,000 to affiliates) 37,245 (37,245)
Accounts payable (including $149,078,000
to affiliates) 160,144 160,144
Accrued liabilities:
Taxes 4,148 4,148
Interest 7,500 7,500
Other accrued expenses 65,000 65,000
Customer deposits 5,372 5,372
Dividends payable 7,373 7,373
---------- -------- ----------
Total current liabilities 311,782 (37,245) 274,537
---------- -------- ----------
Deferred federal and state income taxes 151,041 151,041
Unamortized investment tax credits 19,430 19,430
Other reserves and deferred credits 55,116 55,116
---------- -------- ----------
$1,232,462 $ 12,755 $1,245,217
========== ======== ==========
</TABLE>
<PAGE>
Financial Statement 3-a
Page 2 of 2
MASSACHUSETTS ELECTRIC COMPANY
The pro forma adjustments to show the estimated effect of the proposed
transactions on the foregoing Balance Sheet at June 30, 1994 are as follows:
Debit - Construction work in progress $12,755,000
Short-term debt $37,245,000
Credit - Other paid-in capital $50,000,000
To reflect (1) a $50,000,000 capital contribution from the parent, New
England Electric System and (2) the utilization of the proceeds from the
capital contribution for the repayment of outstanding short-term debt and the
payment of construction expenditures.
<PAGE>
Financial Statement 3-b
MASSACHUSETTS ELECTRIC COMPANY
Statement of Income
Twelve Months Ended June 30, 1994
(Unaudited)
(In Thousands)
Operating revenue $1,471,405
----------
Operating expenses:
Purchased electric energy, principally from
New England Power Company, an affiliate 1,086,203
Other operation 202,601
Maintenance 25,508
Depreciation 41,698
Taxes, other than income taxes 27,489
Income taxes 21,545
----------
Total operating expenses 1,405,044
----------
Operating income 66,361
Other income:
Other income (expense) - net (890)
----------
Operating and other income 65,471
----------
Interest:
Interest on long-term debt 21,435
Other interest 4,673
Allowance for borrowed funds used during
construction - credit (286)
----------
Total interest 25,822
----------
Net income $ 39,649
==========
Statement of Retained Earnings
Retained earnings at beginning of period $ 123,481
Net income 39,649
Dividends declared on cumulative preferred stock (3,614)
Dividends declared on common stock (20,383)
Premium on redemption of preferred stock (816)
----------
Retained earnings at end of period $ 138,317
==========
<PAGE>
<TABLE>
Financial Statement 4-a
Page 1 of 2
THE NARRAGANSETT ELECTRIC COMPANY
Balance Sheet
At June 30, 1994
(Actual and Pro Forma)
(Unaudited)
ASSETS
------
<CAPTION>
Actual Adjustments Pro forma
------ ----------- ---------
(In Thousands)
<S> <C> <C> <C>
Utility plant, at original cost $547,063 $547,063
Less accumulated provisions for depreciation 162,929 162,929
-------- -------- --------
384,134 384,134
Construction work in progress 65,417 $ 34,550 99,967
-------- -------- --------
Net utility plant 449,551 34,550 484,101
-------- -------- --------
Current assets:
Cash 1,425 1,425
Accounts receivable:
From sales of electric energy 49,288 49,288
Other (including $5,368,000 from affiliates) 12,749 12,749
Less reserves for doubtful accounts 4,165 4,165
-------- -------- --------
57,872 57,872
Fuel, materials and supplies, at average cost 7,181 7,181
Prepaid and other current assets 10,060 10,060
-------- -------- --------
Total current assets 76,538 76,538
-------- -------- --------
Deferred charges and other assets 53,784 53,784
-------- -------- --------
$579,873 $ 34,550 $614,423
======== ======== ========
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 45,000 $ 50,000 95,000
Retained earnings 84,755 84,755
-------- -------- --------
Total common equity 186,549 50,000 236,549
Cumulative preferred stock 36,500 36,500
Long-term debt 173,905 173,905
-------- -------- --------
Total capitalization 396,954 50,000 446,954
-------- -------- --------
Current liabilities:
Short-term debt to affiliates 15,450 (15,450)
Accounts payable (including $45,663,000 to affiliates) 52,909 52,909
Accrued liabilities:
Taxes 2,250 2,250
Interest 5,211 5,211
Other accrued expenses 16,963 16,963
Customer deposits 5,514 5,514
Dividends payable 1,102 1,102
-------- -------- --------
Total current liabilities 99,399 (15,450) 83,949
-------- -------- --------
Deferred federal income taxes 62,662 62,662
Unamortized investment tax credits 8,772 8,772
Other reserves and deferred credits 12,086 12,086
-------- -------- --------
$579,873 $ 34,550 $614,423
======== ======== ========
</TABLE>
<PAGE>
Financial Statement 4-a
Page 2 of 2
THE NARRAGANSETT ELECTRIC COMPANY
The pro forma adjustments to show the estimated effect of the proposed
transaction on the foregoing Balance Sheet at June 30, 1994 are as follows:
Debit - Construction work in progress $34,550,000
Short-term debt to affiliates $15,450,000
Credit - Other paid-in capital $50,000,000
To reflect (1) a $50,000,000 capital contribution from the parent, New
England Electric System and (2) the utilization of the proceeds from the
capital contribution for the repayment of outstanding short-term debt to
affiliates and the payment of construction expenditures.
<PAGE>
Financial Statement 4-b
THE NARRAGANSETT ELECTRIC COMPANY
Statement of Income
Twelve Months Ended June 30, 1994
(Unaudited)
(In Thousands)
Operating revenue $480,613
--------
Operating expenses:
Fuel for generation 245
Purchased electric energy, principally from
New England Power Company, an affiliate 306,474
Other operation 70,825
Maintenance 11,584
Depreciation 21,900
Taxes, other than federal income taxes 36,031
Federal income taxes 4,025
--------
Total operating expenses 451,084
--------
Operating income 29,529
Other income:
Allowance for equity funds used
during construction 1,005
Other income (expense) - net (646)
--------
Operating and other income 29,888
--------
Interest:
Interest on long-term debt 13,336
Other interest 2,325
Allowance for borrowed funds used during
construction - credit (1,054)
--------
Total interest 14,607
--------
Net income $ 15,281
========
Statement of Retained Earnings
Retained earnings at beginning of period $ 74,326
Net income 15,281
Dividends declared on cumulative preferred stock (2,226)
Dividends declared on common stock (2,265)
Premium on redemption of preferred stock (361)
--------
Retained earnings at end of period $ 84,755
========
<PAGE>
<TABLE>
Financial Statement 5-a
Page 1 of 2
GRANITE STATE ELECTRIC COMPANY
Balance Sheet
At June 30, 1994
(Actual and Pro Forma)
(Unaudited)
ASSETS
------
<CAPTION>
Actual Adjustments Pro forma
------ ----------- ---------
(In Thousands)
<S> <C> <C> <C>
Utility plant, at original cost $58,340 $58,340
Less accumulated provisions for depreciation 15,195 15,195
------- ------ -------
43,145 43,145
Construction work in progress 1,051 $3,000 4,051
------- ------ -------
Net utility plant 44,196 3,000 47,196
------- ------ -------
Current assets:
Cash and temporary cash investments (including $1,225,000
with affiliated companies) 1,440 1,440
Accounts receivable:
From sales of electric energy 5,058 5,058
Other (including $50,000 from affiliates) 104 104
Less reserves for doubtful accounts 254 254
------- ------ -------
4,908 4,908
Materials and supplies, at average cost 367 367
Prepaid and other current assets 277 277
------- ------ -------
Total current assets 6,992 6,992
------- ------ -------
Deferred charges and other assets 1,601 1,601
------- ------ -------
$52,789 $3,000 $55,789
======= ====== =======
CAPITALIZATION AND LIABILITIES
------------------------------
Capitalization:
Common stock, par value $100 per share, authorized
and outstanding 60,400 shares $ 6,040 $ 6,040
Other paid-in capital 4,000 $3,000 7,000
Retained earnings 7,859 7,859
------- ------ -------
Total common equity 17,899 3,000 20,899
Long-term notes 14,000 14,000
------- ------ -------
Total capitalization 31,899 3,000 34,899
------- ------ -------
Current liabilities:
Long-term notes due within one year 1,400 1,400
Accounts payable (including $6,661,000 to affiliates) 7,259 7,259
Other accrued expenses 5,628 5,628
Customer deposits 793 793
Dividends payable 60 60
------- ------ -------
Total current liabilities 15,140 15,140
------- ------ -------
Deferred federal income taxes 2,839 2,839
Unamortized investment tax credits 1,119 1,119
Other reserves and deferred credits 1,792 1,792
------- ------ -------
$52,789 $3,000 $55,789
======= ======= =======
</TABLE>
<PAGE>
Financial Statement 5-a
Page 2 of 2
GRANITE STATE ELECTRIC COMPANY
The pro forma adjustments to show the estimated effect of the proposed
transaction on the foregoing Balance Sheet at June 30, 1994 are as follows:
Debit - Construction work in progress $3,000,000
Credit - Other paid-in capital $3,000,000
To reflect (1) a $3,000,000 capital contribution from the parent company,
New England Electric System and (2) the utilization of the proceeds from the
capital contribution for the payment of construction expenditures.
<PAGE>
Financial Statement 5-b
GRANITE STATE ELECTRIC COMPANY
Statement of Income
Twelve Months Ended June 30, 1994
(Unaudited)
(In Thousands)
Operating revenue $63,786
-------
Operating expenses:
Purchased electric energy, principally from
New England Power Company, an affiliate 45,440
Other operation 9,373
Maintenance 1,422
Depreciation 1,899
Taxes, other than federal income 1,741
Federal income taxes 632
-------
Total operating expenses 60,507
-------
Operating income 3,279
Other income (expense) - net, including related taxes (113)
-------
Operating and other income 3,166
-------
Interest:
Interest on long-term notes 1,350
Other interest 365
Allowance for borrowed funds used during
construction - (credit) (7)
-------
Total interest 1,708
-------
Net income $ 1,458
=======
Statement of Retained Earnings
Retained earnings at beginning of period $ 6,763
Net income 1,458
Dividends declared on common stock (362)
-------
Retained earnings at end of period $ 7,859
=======
<PAGE>
Financial Statement 6-a
NEW ENGLAND ELECTRIC SYSTEM AND SUBSIDIARIES
Consolidated Balance Sheet
At June 30, 1994
(Unaudited)
ASSETS
------
(In Thousands)
Utility plant, at original cost $4,759,611
Less accumulated provisions for depreciation and amortization 1,567,715
----------
3,191,896
Net investment in Seabrook 1 under rate settlement 71,683
Construction work in progress 339,377
----------
Net utility plant 3,602,956
----------
Oil and gas properties, at full cost 1,233,835
Less accumulated provision for amortization 928,995
----------
Net oil and gas properties 304,840
----------
Investments:
Nuclear power companies, at equity 46,727
Other subsidiaries, at equity 43,388
Other investments, at cost 33,623
----------
Total investments 123,738
----------
Current assets:
Cash 4,370
Accounts receivable, less reserves of $17,496,000 256,842
Unbilled revenues 40,800
Fuel, materials and supplies, at average cost 88,194
Prepaid and other current assets 58,688
----------
Total current assets 448,894
----------
Accrued Yankee Atomic costs 91,520
Deferred charges and other assets 293,428
----------
$4,865,376
==========
CAPITALIZATION AND LIABILITIES
------------------------------
Capitalization:
Common share equity:
Common shares, par value $1 per share:
Authorized - 150,000,000 shares
Outstanding - 64,969,652 shares $ 64,970
Paid-in capital 736,823
Retained earnings 757,192
----------
Total common share equity 1,558,985
Minority interests in consolidated subsidiaries 54,206
Cumulative preferred stock of subsidiaries 147,016
Long-term debt 1,512,381
----------
Total capitalization 3,272,588
----------
Current liabilities:
Long-term debt due within one year 37,920
Short-term debt 96,445
Accounts payable 151,615
Accrued taxes 22,663
Accrued interest 24,721
Dividends payable 38,063
Other current liabilities 129,007
----------
Total current liabilities 500,434
----------
Deferred federal and state income taxes 704,947
Unamortized investment tax credits 98,056
Accrued Yankee Atomic costs 91,520
Other reserves and deferred credits 197,831
----------
$4,865,376
==========
<PAGE>
Financial Statement 6-b
NEW ENGLAND ELECTRIC SYSTEM AND SUBSIDIARIES
Statement of Consolidated Income
Twelve Months Ended June 30, 1994
(Unaudited)
(In Thousands)
Operating revenue $2,230,337
----------
Operating expenses:
Fuel for generation 236,913
Purchased electric energy 507,139
Other operation 452,554
Maintenance 144,147
Depreciation and amortization 298,326
Taxes, other than income taxes 123,854
Income taxes 141,640
----------
Total operating expenses 1,904,573
----------
Operating income 325,764
Other income:
Allowance for equity funds used during construction 6,818
Equity in income of generating companies 10,483
Other income (expense) - net (3,893)
----------
Operating and other income 339,172
----------
Interest:
Interest on long-term debt 94,860
Other interest 11,329
Allowance for borrowed funds used during construction (4,594)
----------
Total interest 101,595
----------
Income after interest 237,577
Preferred dividends of subsidiaries 9,652
Minority interests 7,577
----------
Net income $ 220,348
==========
Statement of Consolidated Retained Earnings
Retained earnings at beginning of period $ 685,398
Net income 220,348
Dividends declared on common shares (146,507)
Premium on redemption of preferred stock of subsidiaries (2,047)
----------
Retained earnings at end of period $ 757,192
==========
