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File No. 70-
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM U-1
APPLICATION/DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
NEW ENGLAND ELECTRIC SYSTEM
25 Research Drive
Westborough, Massachusetts 01582
(Name of company filing this statement and
address of principal executive office)
NEW ENGLAND ELECTRIC SYSTEM
(Name of top registered holding company parent of applicant)
Michael E. Jesanis Robert King Wulff
Treasurer Corporation Counsel
25 Research Drive 25 Research Drive
Westborough, Massachusetts 01582 Westborough, Massachusetts 01582
(Names and addresses of agents for service)
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Item 1. Description of Proposed Transaction
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By this Application/Declaration, New England Electric System
(NEES) seeks Commission authorization to enter into financing
arrangements with a syndicate of participating banks (the Banks)
led by Merrill Lynch Capital Corporation (MLCC), as arranger and
syndication agent (the Credit Agreement) pursuant to which NEES
may borrow up to $500 million. NEES also seeks authority to
issue commercial paper or to otherwise engage in short-term
borrowing up to $500 million. The maximum aggregate amount of
debt outstanding hereunder, whether commercial paper or bank debt
would not exceed $500 million at any one time.
Background
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New England Electric System (NEES) is a voluntary
association created in Massachusetts by an Agreement and
Declaration of Trust dated January 2, 1926, as amended, and is a
registered holding company under the Public Utility Holding
Company Act of 1935 (the Act).
Pursuant to Commission's order in File No. 70-8901, NEES is
authorized to issue and sell short-term promissory notes to banks
up to a maximum aggregate principal amount outstanding at any
time not exceeding $100 million. This borrowing authority
expires October 31, 1998. The authority requested in this filing
is intended to supersede such existing authorization.
As reported in NEES' disclosure documents, its subsidiaries,
New England Power Company (NEP) and The Narragansett Electric
Company (Narragansett) have entered into an asset purchase
agreement for the sale of their non-nuclear generation business
to U.S. Generating Company. Consummation of the sale, and
receipt of the sales price, is subject to Commission approval (to
be done under a separate filing), among other regulatory
approvals. At the time of announcing the sale agreement (August
1997), NEES announced a share buyback program of its own common
shares in an amount not to exceed 5 million shares. Funds
borrowed could be used, subject to meeting margin requirements,
to facilitate the share buyback. In addition, NEES may need to
make investments in anticipation of receipt of the sale proceeds
in order to prudently re-deploy funds obtained through the sale.
NEES may also need to make contributions to NEP pending
consummation of the sale. For instance, NEP may need to buy out
of an independent power producer contract. The NEES oil and gas
subsidiary, New England Energy Incorporated, plans to sell its
assets by the end of 1997 or the beginning of 1998 and NEP will
be charged for the losses incurred upon that sale. Borrowings
could also be made for other general corporate purposes.
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The authority requested herein is for five years.
NEES does not have an ownership interest in an exempt
wholesale generator (EWG) or a foreign utility company (FUCO) as
defined in Sections 32 and 33 of the Act. Additionally, NEES is
not a party to, nor does it have any rights under, a service,
sales, or construction agreement with an EWG or a FUCO. NEES
shall comply with the requirements of Rule 53 of the Act in
connection with EWG and FUCO acquisitions and financings. To the
extent that any monies from the borrowings hereunder are used to
invest in, or otherwise acquire an interest in the business of,
any EWGs or FUCOs, NEES will comply with the Commission's orders
in File No. 70-8783 (Release No. 35-26504 dated April 15, 1996,
as supplemented by Release No. 35-26729 dated June 10, 1997).
Borrowings from Banks - Credit Agreement
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NEES proposes to enter into the Credit Agreement described
herein with MLCC, as arranger and syndication agent, and a group
of banks. MLCC has not yet put together the bank syndication.
Exhibit B-1, a term sheet, provides a detailed outline of the
proposed principal terms of the Credit Agreement. A draft of the
Credit Agreement, Exhibit B-2 to this filing, will be filed by
amendment.
The Credit Agreement provides for a revolving facility of
$500 million which reduces to $400 million after three years and
to $300 million after four years. The term would be for five
years. NEES would have the following interest rate options
during the term of the Credit Agreement:
(1) LIBOR Borrowings - NEES may borrow at a periodic fixed
Eurodollar rate with maturities of 1, 2, 3, or 6 months
at the then applicable LIBOR for such maturities plus a
margin over LIBOR (the LIBOR Margin), payable at the
end of each interest period or quarterly for interest
periods longer than 3 months. The LIBOR Margin would
vary according to one level lower than the lowest debt
rating assigned by Standard & Poors or Moody's Investor
Service, respectively, of any of NEP's senior secured
debt rating (so long as NEP has a senior secured debt
rating and otherwise, NEP's senior debt rating),
Narragansett's senior secured debt rating, and
Massachusetts Electric Company's senior secured debt
rating.
(2) Base Rate Borrowings - NEES may borrow at the highest
of (i) the Administrative Agent's base rate, (ii) 1/2
of one percent per annum above the latest three-week
moving average of secondary market offering rates in
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the United States for three-month certificates of
deposit of major U.S. money market banks adjusted to
the nearest 1/4 of 1 percent and (iii) 1/2 of one
percent per annum above the federal funds rate.
Such base rate borrowings would be payable quarterly in
arrears and would be calculated on the basis of a
365/366 day year.
(3) Competitive Bid Borrowings - NEES may be able to borrow
at the rate obtained through Competitive Bids. NEES
may request competitive bids for an aggregate
outstanding amount not to exceed $100 million (of the
$500 million facility). Banks may, at the request of
NEES, but without obligation, bid competitively to make
loans at rates determined by each Bank and with
maturities requested by NEES. The Banks' bids will be
accepted by NEES in order of effective cost, starting
with the bid at the lowest rate.
Under the Credit Agreement, a facility fee would be payable
on the percentage amount of each Bank's obligation to make
advances to NEES under the Credit Agreement multiplied by no more
than 11 basis points plus the Applicable Percentage (the Facility
Fee). The Applicable Percentage would also vary according to
debt rating, as described above for the LIBOR Margin. The
Facility Fee is payable upon each Bank's commitment, irrespective
of usage. The Facility Fee is payable by NEES quarterly in
arrears.
An arrangement and syndication fee is set forth in Exhibit
C.
The administration of the Credit Agreement will be conducted
by the Administrative Agent for an annual fee to be negotiated.
The Credit Agreement will be unsecured. NEES has the option
of reducing the commitments under the Credit Agreement, or making
prepayments at any time without penalty.
Cost of Funds
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Pricing for the Credit Agreement has not yet been
negotiated. However, based upon the current senior secured long
term debt ratings of NEES subsidiaries, the initial effective
cost of funds borrowed under the Credit Agreement (including the
Facility Fee) should not exceed 30 basis points over LIBOR,
excluding expenses. The cost of funds (including the Facility
Fee) could increase up to no more than 50 basis points over
LIBOR, excluding expenses, dependent upon changes in the debt
ratings of the NEES subsidiaries. Final pricing will be supplied
by amendment.
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Borrowings from Banks - Short-term
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NEES may also make arrangements with certain banks for
short-term lines of credit, for various purposes, including
support of commercial paper.
The proposed borrowings from banks by NEES will be evidenced
by notes payable maturing in less than one year from the date of
issuance.
NEES will negotiate with banks the interest costs of such
borrowings. NEES pays fees to the banks in lieu of compensating
balance arrangements. The effective interest cost of borrowings
from a bank will not exceed the greater of the bank's base or
prime lending rate, or the rate published in the Wall Street
Journal as the high federal funds rate, plus, in either case, one
percent. Certain of such borrowings may be without prepayment
privileges. Based on the current base lending rate of 8.25% and
an equivalent or lower high federal funds rate, the effective
interest costs of such borrowing would not exceed 9.25% per
annum.
Payment of any short-term promissory notes prior to maturity
will be made on the basis most favorable to NEES, taking into
account fixed maturities, interest rates, and any other relevant
financial consideration.
Sale of Commercial Paper to Dealers
-----------------------------------
NEES proposes to issue and sell commercial paper directly to
one or more nationally recognized commercial paper dealers (CP
Dealer). Initially the CP Dealer will be CS First Boston
Corporation and/or Merrill Lynch Money Markets Incorporated, but
this may change as warranted.
The commercial paper so issued and sold will satisfy the
requirements of Section 3(a)(3) of the Securities Act of 1933 and
be in the form of unsecured promissory notes having varying
maturities of not in excess of 270 days. Actual maturities will
be determined by market conditions, the effective interest cost
to NEES, and NEES' cash requirements at the time of issuance.
The commercial paper will be in denominations of not less than
$50,000. The terms of the commercial paper will not provide for
prepayment prior to maturity. The commercial paper will be
purchased by the CP Dealer from the issuer at a discount which
will not be in excess of the discount then prevailing for
commercial paper of comparable quality and maturity which is sold
to commercial paper dealers. The CP Dealer will initially
reoffer the commercial paper at a discount rate not more than 1/8
of 1% per annum less than the prevailing discount rate to NEES.
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The effective interest cost to NEES of commercial paper will
generally not exceed the effective interest cost of the base
lending rate at BankBoston (formerly The First National Bank of
Boston). However, the effective interest cost of such paper is
based on the supply of, and demand for, that and similar paper at
the time of sale. Specifically, on several previous occasions
short-term money markets have become very volatile during brief
periods of extraordinary demand, and the interest costs of
commercial paper have exceeded bank base rates. Because such
volatile market conditions usually exist for brief periods, it is
not anticipated that any sale of commercial paper with interest
costs in excess of bank base rates would have a significant
marginal impact on the annual interest cost of NEES. Therefore,
while it is not anticipated that the effective annual cost of
borrowing through commercial paper will exceed the annual base
rate borrowing from BankBoston, in order to obtain maximum
flexibility during the periods described above, commercial paper
may be issued with a maturity of not more than 90 days with an
effective cost in excess of the then-existing lending rate.
The decision to borrow from banks or issue commercial paper
will be based on the cost of such funds and their availability
for the anticipated borrowing period.
Filing of Certificates of Notification
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Within 45 days after the end of each calendar quarter, NEES
will file a certificate of notification covering the transactions
effected pursuant to the authority requested herein during such
quarter. Such certificate will show the dates and amounts of all
new money borrowings, whether by issuance of notes to banks or by
sale of commercial paper, the names of the lenders, the maximum
concurrent amount of notes outstanding to banks and CP Dealers,
the aggregate total outstanding at any one time, and the
aggregate total outstanding at the end of such quarter. Each
certificate will include, with respect to the issue and sale of
commercial paper, the effective interest cost for such promissory
note issued as commercial paper. The final certificate of
notification will be accompanied by the required past tense
opinion of counsel.
Item 2. Fees, Commissions and Expenses
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In addition to the fees described in Item 1, NEES will pay
the fees and expenses of MLCC's counsel, Sherman & Sterling, of
New York. Certain services are to be performed at the actual
cost by New England Power Service Company, (NEPSCO) an affiliated
service company, operating pursuant to the provisions of Section
13 of the Act and the Commission's rules thereunder. The
<PAGE>
services of NEPSCO will consist principally of services performed
by the Executive and Administrative Department, the Corporate
Department (including attorneys), the Treasury Department
(including accountants and financial analysts), and the Office
Service Department, and are estimated not to exceed $12,000.
Item 3. Applicable Statutory Provisions
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Sections 6(a) and 7 of the Act are applicable to the issue
and sale of notes by NEES to banks and CP Dealers. The payment
of indebtedness from the proceeds of the proposed borrowings is
exempted from Sections 9(a) and 12 of the Act by Rule 42.
Item 4. Regulatory Approval
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No state commission and no Federal commission (other than
the Securities and Exchange Commission) has jurisdiction over the
issue and sale of the notes by NEES.
Item 5. Procedure
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It is requested that the Commission take action with respect
to this Application/Declaration without a hearing being held and
that an order be issued allowing this Application/Declaration to
become effective on or before November 15, 1997 or as soon as
practicable.
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 Corporate Regulation 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.
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Item 6. Exhibits and Financial Statements
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(a) Exhibits
B-1 Term Sheet
*B-2 Draft Credit Agreement
C Arrangement and Syndication Fee
*F Opinion of Counsel
H Proposed Form of Notice
*To be supplied by amendment.
(b) Financial Statements
1 Balance Sheets of NEES and of NEES and
Subsidiaries Consolidated, as of June 30, 1997, on
an actual basis. (1)
2 Statements of Income and Retained Earnings of NEES
and of NEES and Subsidiaries Consolidated for the
twelve months ended June 30, 1997.
3 Pro Forma to the Capital Structure of NEES
(1) The proposed transactions will have no material effect
on the Balance Sheets of NEES or of NEES and
Subsidiaries Consolidated; therefore, pro forma
statements, except as provided in 3, are omitted.
Since the date of the balance sheets, there have been no
material changes which were not in the ordinary course of
business.
A Financial Data Schedule is also provided.
Item 7. Information as to Environmental Effects
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The proposed transaction does not involve a major Federal
action significantly affecting the quality of the human
environment.
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SIGNATURE
---------
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned company has duly caused this
statement to be signed on its behalf by the undersigned officer
thereunto duly authorized.
NEW ENGLAND ELECTRIC SYSTEM
s/Michael E. Jesanis
___________________________
Michael E. Jesanis
Vice President and
Treasurer
Date: September 23, 1997
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.
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Exhibit Index
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Exhibit Description Page
- ------- ----------- ----
B-1 Term Sheet Filed herewith
B-2 Draft Credit Agreement To be filed
by amendment
C Arrangement and Syndication Confidential
Fee Treatment
requested
F Opinion of Counsel To be filed
by amendment
H Proposed Form of Notice Filed herewith
Financial
Statement No. Description Page
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1A Balance Sheet of NEES as Filed herewith
of June 30, 1997,
on an actual basis
1B Balance Sheet of NEES and Filed herewith
Subsidiaries Consolidated,
as of June 30, 1997, on an
actual basis
2A Statement of Income and Filed herewith
Retained Earnings of NEES
for the twelve months
ended June 30, 1997
2B Statement of Income and Filed herewith
Retained Earnings of NEES
and Subsidiaries
Consolidated for the twelve
months ended June 30, 1997
3 Pro Forma of NEES Capital Filed herewith
Structure
27 Financial Data Schedules for Filed herewith
NEES and for NEES and
Subsidiaries
<PAGE>
EXHIBIT B-1
NEW ENGLAND ELECTRIC SYSTEM
SUMMARY OF TERMS AND CONDITIONS
Capitalized terms not otherwise defined in this Summary of Terms
and Conditions have the meanings set forth in the letter to which
this Summary of Terms and Conditions is attached.
FIVE-YEAR FACILITY
Borrower: NEES, a Massachusetts trust.
Amount/Type
of Facility: Up to U.S.$500,000,000 revolving
credit facility.
Purpose: The Five-Year Facility shall be
used for working capital and other
general corporate purposes and may
be used for certain stock
repurchases. Amounts borrowed
under the Five-Year Facility may be
borrowed, repaid and reborrowed.
Final Maturity Date: Five years from the Closing Date.
Mandatory Commitment
Reduction: On the third anniversary of the
Closing Date, the amount available
under the Five-Year Facility shall
be reduced permanently to
$400,000,000. On the fourth
anniversary of the Closing Date,
the amount available under the
Five-Year Facility shall be reduced
permanently to $300,000,000.
Lenders: MLCC and other financial
institutions acceptable to MLCC and
to Borrower.
Arranger and
Syndication Agent: Merrill Lynch & Co. ("Merrill"), as
Arranger, will act as sole and
exclusive arranger and syndication
agent for a syndicate of Lenders.
<PAGE>
Administrative Agent: BankBoston, or such other Lender
chosen by the Borrower and
acceptable to MLCC.
Documentation Agent: Credit Suisse First Boston, or such
other Lender chosen by the Borrower
and acceptable to MLCC.
Closing Date: On or prior to December 15, 1997.
Optional Prepayment/
Commitment
Reduction: Optional reductions in commitments
or prepayments under the Facility
shall be permitted at any time, in
whole or in part, at the option of
the Borrower, at par, subject to
LIBOR breakage and/or redeployment
costs.
Interest Rates and
Interest Periods: Payable at the Applicable Margin
(as hereinafter defined) above the
Eurodollar Rate (360 day basis)
(adjusted for reserves) or, at the
Borrower's option, the Base Rate
(365/366 day basis).
(a) Base Rate: means a
fluctuating rate per annum equal at
all times to the highest of (i) the
Administrative Agent's publicly
announced "base rate", (ii) 1/2 of
one percent per annum above the
latest three-week moving average of
secondary market offering rates in
the United States for three-month
certificates of deposit of major
U.S. money market banks adjusted to
the nearest 1/4 of 1 percent and
(iii) 1/2 of one percent per annum
above the federal funds rate.
(b) Eurodollar Rate: means the
average rate per annum (rounded
upward to the nearest 1/16th of one
percent) at which deposits in U.S.
dollars are offered by the
Administrative Agent to prime banks
in the London interbank market at
11:00 A.M. (London time) two
business days before the first day
<PAGE>
of the Interest Period (to be
defined in the loan documentation)
and in amounts approximately equal
to such Reference Bank's Eurodollar
Advances (to be defined in the loan
documentation) for a period equal
to such Interest Period, adjusted
for reserve requirements.
Eurodollar Rate borrowings shall be
available for 1, 2, 3 or 6 month
interest periods.
The "Applicable Margin" means a
percentage per annum as determined
by the Implied Debt Rating (as
defined below) in effect from time
to time, as set forth in the
pricing grid attached hereto as
Schedule I.
"Implied Debt Rating" means, at any
time, one level lower than the
lowest of (i) the senior secured
debt rating by Moody's Investors
Service, Inc. ("Moody's") or
Standard & Poor's, a division of
The McGraw-Hill Companies, Inc.
("S&P"), of Massachusetts Electric
Company ("Mass. Electric"), (ii)
the senior secured debt rating by
Moody's or S&P of The Narragansett
Electric Company ("Narra Electric")
and (iii) the senior secured debt
rating by Moody's or S&P of New
England Power Company ("NEP") so
long as NEP has a senior secured
debt rating and otherwise the
senior debt rating of NEP by
Moody's or S&P.
During the continuance of any
Default (to be defined in the loan
documentation) under the loan
documentation, the Applicable
Margin shall increase by 2% per
annum.
Interest Payment: At the end of each Interest Period
for each Advance, but at least
quarterly.
Annual Agency Fee: As agreed between the
Administrative Agent and the
Borrower.
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Facility Fees: __ basis points per annum plus the
Applicable Percentage (as
hereinafter defined) on the
aggregate amount of each Lender's
Commitment (to be defined in the
loan documentation) from the
Closing Date through the date of
termination of the commitments,
payable quarterly in arrears. The
"Applicable Percentage" means a
percentage per annum as determined
by the Implied Debt Rating in
effect from time to time, as set
forth in the pricing grid attached
hereto as Schedule I.
Borrowings: Borrowings shall be in minimum
amounts of $5,000,000 and integral
multiples of $1,000,000, with
respect to Eurodollar Rate Advances
and $5,000,000 and integral
multiples of $1,000,000 with
respect to Base Rate Advances. All
Advances shall be made by the
Lenders ratably in proportion to
their respective Commitments.
Borrowings will be available on
three business days' notice for
Eurodollar Rate Advances and,
subject to the approval of the
Administrative Agent, on same
business day's notice for Base Rate
Advances and otherwise on one
business day's notice for Base Rate
Advances.
Swing Line Facility: The Five-Year Facility will have a
swing line subfacility (the "Swing
Line Subfacility") to be provided
by the Lender serving as
Administrative Agent. The maximum
principal amount of advances
(collectively, "Swing Line
Advances") outstanding at any time
under the Swing Line Subfacility
may not exceed $10,000,000. Each
Swing Line Advance shall be in a
minimum amount of $1,000,000 and
integral multiples of $500,000.
Borrowings under the Swing Line
Subfacility will be available on
same day's notice and will be made
as Base Rate Advances.
<PAGE>
Competitive
Bid Advance
Facility: NEES may invite the Lenders under
the Five-Year Facility to bid for
fixed rate or Eurodollar Rate
Advances for requested maturities
ranging from 7 to 180 days for
fixed rate borrowings and for 1, 2,
3, or 6 months for Eurodollar Rate
borrowings. Each Lender may bid,
or may choose not to bid, at its
discretion in response to any such
invitation to bid. The Borrower's
notice requesting any such bids
shall specify the proposed date of
borrowing, amount and maturity date
of borrowing, interest payment
schedule, the interest rate basis
to be used by the Lenders in
bidding, and such other terms as
the Borrower may specify. The
Agent shall administer the
Competitive Bids (to be defined in
the loan documentation) and, in
such capacity, shall advise the
Lenders of the terms of the
Borrower's notice. The Borrower
may accept none of the bids or may
accept one or more bids submitted
by such Lenders, provided that (i)
the Borrower may not accept bids in
excess of the requested bid amount
for any maturity, (ii) bids will be
accepted from the bidding Lenders
in order from lowest cost to
highest cost and (iii) bids
received at the same bid rate will
be allocated among the Lenders
making such bids in proportion to
the amount which each Lender bid at
such bid rate. While any
Competitive Bid Advances are
outstanding, the availability of
the Five-Year Facility shall be
reduced and deemed used by the
amount equal to the outstanding
amount of such Advances. The
aggregate outstanding amount of
Competitive Bid Advances will not
exceed $100,000,000 and the
aggregate outstanding amount of
Competitive Bid Advances made by
any one Lender will not exceed
<PAGE>
$50,000,000. For each Competitive
Bid invitation, the Borrower will
pay to the Administrative Agent a
fee to be agreed upon.
CONDITIONS PRECEDENT
Conditions Precedent
to Initial Extension
of Credit: The conditions precedent to the
initial extension under the
Facility will be those customarily
found in MLCC's credit agreements
for financings and others
appropriate in the judgment of MLCC
for this transaction, including,
without limitation, the following:
(a) All loan documentation relating to
the Facility, including a credit
agreement incorporating
substantially the terms and
conditions outlined herein, shall
be in form and substance
satisfactory to the Lenders.
(b) Delivery of promissory notes,
certified resolutions, and
incumbency and officers'
certificates certifying truth of
representations and warranties and
absence of events of default and
incipient defaults and Lenders'
satisfaction with the charter and
bylaws of the Borrower and each
agreement or instrument relating
thereto.
(c) All governmental and third party
consents and approvals (including,
without limitation, SEC approvals)
necessary in connection with the
transactions contemplated hereby
shall have been obtained (without
the imposition of any conditions
that are not acceptable to the
Lenders) and shall remain in
effect; and no law or regulation
shall be applicable in the judgment
of the Lenders that restrains,
prevents or imposes materially
adverse conditions upon the
Facility.
<PAGE>
(d) NEES shall have delivered copies of
audited consolidated and unaudited
consolidating financial statements,
in each case as at and for the
fiscal year ended on December 31,
1996, and NEES shall have delivered
consolidated financial statements
as at and for the fiscal quarter
ended June 30, 1997.
(e) The Lenders shall have received
satisfactory opinions of counsel to
the Borrower and of counsel to the
Agent.
(f) All accrued fees and expenses of
the Arranger and the Lenders
(including the fees and expenses of
counsel to the Arranger) shall have
been paid.
Conditions Precedent to
each Borrowing:
(a) All representations and warranties
are true and correct on and as of
the date of such Borrowing (unless
such Borrowing consists solely of a
renewal of an interest period or a
conversion of Advances from
Eurodollar Rate Advances to Base
Rate Advances or Base Rate Advances
to Eurodollar Rate Advances, in
which cases paragraphs (b) and (c)
below shall apply), before and
after giving effect to such
Borrowing and to the application of
proceeds therefrom, as though made
on and as of such date.
(b) No event has occurred and is
continuing or would result from
such Borrowing or from the
application of the proceeds
therefrom, which constitutes an
Event of Default or would
constitute an Event of Default but
for the requirement that notice be
given or time elapse or both.
<PAGE>
(c) The Agent shall have received such
other approvals, opinions or
documents as any Lender, through
the Agent, may reasonably request.
REPRESENTATIONS, WARRANTIES AND COVENANTS
Representations and
Warranties: The Facility will contain those
representations and warranties
customarily found in MLCC's credit
agreements for similar financings and
others appropriate in the judgment of
MLCC for such transaction, including,
without limitation, the following:
(a) Due organization, valid existence and
good standing.
(b) Execution, delivery and performance of
the loan documents, and the transactions
contemplated thereby, (i) are duly
authorized and (ii) do not contravene
(x) charter or by-laws or (y) any law or
contractual restriction.
(c) All governmental or third party
authorizations, approvals (including,
without limitation, regulatory
approvals) or consents required for the
execution, delivery and performance of
the loan documentation have been
obtained.
(d) Loan documents have been duly executed
and delivered and are legal, valid,
binding and enforceable obligations.
(e) Financial statements fairly present
financial condition of Borrower and its
subsidiaries and, are prepared in
accordance with GAAP.
(f) Absence of material adverse change in
the business, condition (financial or
otherwise), operations or properties of
Borrower and its Material Subsidiaries
(as defined below), taken as a whole,
since December 31, 1996.
(g) No pending or threatened litigation,
investigation or proceeding that (i)
could be reasonably expected to have a
<PAGE>
material adverse effect on (x) the
business, condition (financial or
otherwise), operations or properties of
Borrower and its Material Subsidiaries,
taken as a whole, (y) the rights and
remedies of the Agent or the Lenders or
(z) the ability of Borrower to perform
its obligations under the loan documents
or (ii) purports to affect the legality,
validity or enforceability of any loan
document or the consummation of the
transactions contemplated thereby.
(h) ERISA representations and warranties.
(i) Compliance with the Investment Company
Act, the Public Utility Holding Company
Act, Regulation U and environmental
laws.
(j) Following the application of the
proceeds of each Advance, not more than
25 percent of the value of the assets
(either of Borrower or of Borrower and
its Subsidiaries) will consist of margin
stock.
"Material Subsidiary" means, at any time, a
Subsidiary of Borrower whose assets at such
time exceed 10% of the assets of Borrower and
its Subsidiaries or which contributes more
than 10% of the income of Borrower and its
Subsidiaries (in each case on a consolidated
basis).
Affirmative The Facility will contain those
Covenants: affirmative covenants customarily found
in MLCC's credit agreements for similar
financings and others appropriate in the
judgment of MLCC for this transaction,
including, without limitation, the
following:
(a) Compliance with laws and regulations.
(b) Payment of taxes and other obligations.
(c) Maintenance of appropriate and adequate
insurance.
(d) Preservation of corporate existence,
rights (charter and statutory),
franchises, permits, licenses and
approvals. (NEES may change its
<PAGE>
structure from a trust to a corporation
with the approval of the Lenders, such
approval not to be unreasonably
withheld.)
(e) Visitation and inspection rights.
(f) NEES shall maintain ownership of 100% of
NEP, Mass. Electric and Narra Electric,
free and clear of all liens, claims and
encumbrances.
(g) Use of loan proceeds.
(h) Customary financial and other reporting
requirements including, without
limitation, annual audited (delivered
within 120 days after the end of each
fiscal year) and quarterly unaudited
financial statements (delivered within
60 days after the end of the first three
quarters of each fiscal year), in each
case consolidated for NEES, as well as
notices of defaults, compliance
certificates and other business and
financial information as any Lender
shall reasonably request.
(i) Maintain (i) a senior secured debt
rating by Moody's or S&P for each of
Mass. Electric and Narra. Electric and
(ii) a senior debt rating by Moody's or
S&P of NEP.
Negative The Facility will contain those
Covenants: negative covenants customarily found in
MLCC's credit agreements for similar
financings (with such exceptions as may
be agreed upon in the loan
documentation) and others appropriate in
the judgment of MLCC for this
transaction, including, without
limitation, restrictions upon:
(a) Liens (exceptions to include liens in
existence as of the Closing Date and
certain liens incurred in the ordinary
course of the Borrower's business).
(b) Mergers and consolidations (exceptions
to include mergers and consolidations
where the Borrower is the surviving
corporation, the nature of the
<PAGE>
Borrower's business does not change, and
no Default or Event of Default
(including, without limitation, a
Default or Event of Default related to
failure to satisfy the financial
covenant or a Default or Event of
Default described in paragraph (j) under
"Events of Default" below) would result
therefrom).
(c) Sales, transfers and other dispositions
of assets (other than (i) sales in the
ordinary course of business, (ii) the
sale of all assets or stock of New
England Energy Incorporated, (iii), the
sale of all assets or stock of
Naragansett Energy Resources Company,
(iv) the sale of NEP's interests in
nuclear generation assets (such assets
to be defined in the loan
documentation), (v) the sale of NEP's
interest in the "Wyman 4 Facility" (such
interest to be defined in the loan
documentation), (vi) the sale of assets
pursuant to the purchase and sale
agreement among NEP, Narra Electric and
U.S. Generating Company, publicly
announced in August 1997, of the non-
nuclear generating business of NEP and
Narra Electric (such assets to be
defined in the loan documentation and to
include three fossil-fuel generating
stations, 15 hydroelectric stations and
the entitlements under approximately
1,100 megawatts of capacity procured
under power contracts with other
utilities and independent power
producers) and (vii) after giving effect
to the sale described in the preceding
clause (vi), 5% of the total assets of
the Borrower and its subsidiaries, taken
as a whole).
(d) Changing the nature of its business
(other than after giving effect to the
transactions described in clauses (ii)
through (vi) of the immediately
preceding paragraph (c)).
(e) Use of loan proceeds to buy registered
stock (other than registered stock of
the Borrower or a Subsidiary thereof).
<PAGE>
Financial Consolidated Total Debt (to be defined in the
Covenant: loan documentation) not to exceed 65% of
Consolidated Total Capitalization (to be
defined in the loan documentation), measured
quarterly.
EVENTS OF DEFAULT
Events of Default: The Facility will contain those events
of default customarily found in MLCC's
credit agreements for similar financings
and others appropriate in the judgment
of MLCC for this transaction, including,
without limitation, the following:
(a) The Borrower shall fail to pay any
principal when due or shall fail to pay
any interest under the Facility or other
sum within two business days after the
same becomes due.
(b) Any representation or warranty of the
Borrower in any of the loan
documentation or in any certificate or
financial information delivered pursuant
thereto shall not be correct in all
material respects when made or
confirmed.
(c) The Borrower shall fail to perform or
comply with (within a specified period
of time, where customary and
appropriate, after notice or knowledge
of such failure) any term or covenant in
any of the loan documentation.
(d) NEES or any of its Material Subsidiaries
shall default under any debt obligation
in excess of $20,000,000, if the effect
of such default is to cause or permit
acceleration of the maturity of such
obligation.
(e) Any bankruptcy, insolvency or similar
proceeding shall be instituted by or,
unless stayed within 60 days, against
the Borrower or any of its Material
Subsidiaries.
(f) Any material non-monetary judgment shall
be entered against the Borrower or any
of its Material Subsidiaries and shall
<PAGE>
remain unsatisfied or unstayed for
60 days or enforcement action shall be
taken.
(g) Any judgment in excess of $20,000,000
shall be entered against NEES or any of
its Material Subsidiaries and shall
remain unsatisfied or unstayed for
30 days or enforcement action shall be
taken.
(h) Standard ERISA defaults.
(i) Any of the loan documentation shall
cease to be enforceable against the
Borrower.
(j) (i) Any person or two or more persons
acting in concert shall have acquired
beneficial ownership (within the meaning
of Rule 13d-3 of the Securities and
Exchange Commission under the Securities
Exchange Act of 1934), directly or
indirectly, of voting stock (to be
defined in the loan documentation and to
include an interest in a corporation or
in a business trust) of NEES (or other
securities convertible into such voting
stock) representing 20% or more of the
combined voting power of all voting
stock of NEES; or (ii) during any period
of up to 24 consecutive months,
individuals who at the beginning of such
24-month period were directors or
trustees of NEES shall cease for any
reason to constitute a majority of the
board of directors or trustees of the
Borrower.
OTHER
Expenses: The Borrower shall pay all of MLCC's, the
Arranger's and the Administrative Agent's due
diligence, syndication and all other
out-of-pocket expenses incurred by them
(including the fees and expenses of counsel
to the Arranger), and shall pay all expenses
of the Administrative Agent in connection
with the administration of the loan
documentation. The Borrower shall also pay
the expenses of the Lenders in connection
with the enforcement of any of the loan
documentation.
<PAGE>
Indemnity: The Borrower agrees to indemnify and hold
harmless each Indemnified Party from and
against any and all claims, damages, losses
and liabilities, joint or several, to which
any such Indemnified Party may become
subject, in each case arising out of or in
connection with or relating to (including,
without limitation, in connection with any
investigation, litigation or proceeding or
preparation of a defense in connection
therewith) this Commitment Letter, the Fee
Letter, the Facility, the loans under the
Facility or the use or proposed use of the
proceeds of any such loan, any of the
transactions contemplated by any of the
foregoing or in the loan documentation and
the performance by MLCC or any of its
affiliates of the services contemplated by
this Commitment Letter and to reimburse any
Indemnified Party for any and all reasonable
expenses (including, without limitation,
reasonable fees and expenses of counsel) as
they are incurred in connection with the
investigation of or preparation for or
defense of any pending or threatened claim or
any action or proceeding arising therefrom,
whether or not such Indemnified Party is a
party and whether or not such claim, action
or proceeding is initiated or brought by or
on behalf of the Borrower or any of its
affiliates and whether or not any of the
transactions contemplated hereby are
consummated or this Commitment Letter is
terminated. The Borrower will not be liable
under the foregoing indemnification
provisions to an Indemnified Party to the
extent that any loss, claim, damage,
liability or expense is found in a final,
nonappealable judgment by a court of
competent jurisdiction to have resulted from
such Indemnified Party's gross negligence or
willful misconduct.
The Borrower agrees that no Indemnified Party
shall have any liability (whether direct or
indirect, in contract or tort or otherwise)
to Borrower or its respective security
holders or creditors related to or arising
out of in connection with this Commitment
Letter, the Fee Letter, the Facility, the
loans under the Facility or the use or
proposed use of the proceeds of any such
loan, any of the transactions contemplated by
<PAGE>
any of the foregoing or in the loan
documentation and the performance by MLCC or
any of its affiliates of the services
contemplated by this Commitment Letter except
to the extent that any loss, claim, damage,
liability or expense is found in a final,
nonappealable judgment by a court of
competent jurisdiction to have resulted from
such Indemnified Party's gross negligence or
willful misconduct.
The Borrower agrees that, without MLCC's
prior written consent, it will not settle,
compromise or consent to the entry of any
judgment in any pending or threatened claim,
action or proceeding in respect of which
indemnification has been or could be sought
under the indemnification provisions of this
Commitment Letter (whether or not MLCC or any
other Indemnified Party is an actual or
potential party to such claim, action or
proceeding), unless such settlement,
compromise or consent (i) includes an
unconditional written release in form and
substance satisfactory to the Indemnified
Parties of each Indemnified Party from all
liability arising out of such claim, action
or proceeding and (ii) does not include any
statement as an admission of fault,
culpability or failure to act by or on behalf
of an Indemnified Party.
In the event that an Indemnified Party is
requested or required to appear as a witness
in any action brought by or on behalf of or
against the Borrower or any of its affiliates
in which such Indemnified Party is not named
as a defendant, the Borrower agrees to
reimburse MLCC for all reasonable expenses
incurred by it in connection with such
Indemnified Party's appearing and preparing
to appear as such a witness, including,
without limitation, the fees and
disbursements of its legal counsel, and to
compensate MLCC in an amount to be mutually
agreed upon.
Majority Lenders: Lenders owed at least 51% of the then
aggregate unpaid principal amount of the
Advances owing to the Lenders under the
Facility, or, if no such principal amount is
then outstanding, Lenders having at least 51%
of the Commitments under the Facility.
<PAGE>
Assignments and
Participations: Assignments must be in a minimum amount
of $5,000,000 and in integral multiples
$100,000 and are subject to the consent
of the Borrower and the Agent (which
consent shall not be unreasonably
withheld), other than in the case of an
assignment to a Lender or an affiliate
of such assigning Lender.
Participations shall be permitted
without restriction other than usual and
customary restrictions on voting and
consent rights of participants.
Any Lender may at any time create a
security interest in all or any portion
of its rights under the loan documents
in favor of any Federal Reserve Bank in
accordance with Regulation A of the
Board of Governors of the Federal
Reserve System.
Miscellaneous: Standard yield protection (including
compliance with risk-based capital
guidelines, increased costs, payments
free and clear of withholding taxes and
interest period breakage indemnities),
eurodollar illegality and similar
provisions.
Governing Law: New York.
Counsel to
Arranger: Shearman & Sterling.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
NEW ENGLAND ELECTRIC SYSTEM
Pricing Grid
$500,000,000 Five Year Revolving Credit Facility
Level 1 Level 2 Level 3 Level 4 Level 5 Level 6
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Implied AA-/Aa3 A+/A1 A/A2 A-/A3 BBB+/Baa1 BBB/Baa2
Debt or better or lower
Rating
Applicable
Margin
Applicable
Percentage
</TABLE>
<PAGE>
EXHIBIT H
Proposed Form of Notice
-----------------------
New England Electric System ("NEES"), 25 Research Drive,
Westborough, Massachusetts 01582, a registered holding company,
has filed an application/declaration with this Commission
pursuant to Sections 6(a) and 7 of the Public Utility Holding
Company Act of 1935 ("Act").
NEES proposes to issue and sell up to a maximum aggregate
outstanding principal amount of $500,000,000 of any combination
of long term notes to banks, short-term notes to banks, or
issuance of commercial paper to commercial paper dealers, from
time to time for a period of five years. NEES proposes to enter
into financing arrangements with a syndicate of banks led by
Merrill Lynch Capital Corporation as arranger and syndication
agent (Credit Agreement). The Credit Agreement would provide for
a five-year unsecured revolving facility of $500 million which
would reduce to $400 million after three years and $300 million
after four years. The commercial paper proposed to be issued and
sold by NEES would be in the form of unsecured promissory notes
having varying maturities of not in excess of 270 days. Any
short-term notes will mature in less than one year from the date
of issuance. NEES will negotiate with banks the interest costs
of such borrowings.
<PAGE>
<TABLE>
Financial Statement 1A
NEW ENGLAND ELECTRIC SYSTEM
(Parent Company Only)
Balance Sheet
At June 30, 1997
(Unaudited)
<CAPTION>
ASSETS
------
(In Thousands)
<S> <C>
Investments:
Common stocks of subsidiaries, at equity $1,647,286
Notes of subsidiaries 42,310
Other investments 3,886
----------
Total investments 1,693,482
----------
Current assets:
Cash 12
Temporary cash investments - subsidiary company 7,100
Accounts receivable from subsidiaries 527
Interest and dividends receivable of subsidiaries 48,140
Other current assets 48
----------
Total current assets 55,827
----------
Deferred federal income taxes 2,978
----------
$1,752,287
==========
CAPITALIZATION AND LIABILITIES
------------------------------
Common share equity:
Common shares, par value $1 per share:
Authorized - 150,000,000 shares
Issued - 64,969,652 shares $ 64,969
Paid-in capital 736,567
Retained earnings (including $643,084,000 of
undistributed subsidiary earnings) 904,826
----------
Total common share equity 1,706,362
----------
Current liabilities:
Accounts payable (including $2,000 to subsidiaries) 2,489
Other accrued expenses 1,538
Dividends payable 34,403
----------
Total current liabilities 38,430
----------
Other reserves and deferred credits 7,495
----------
$1,752,287
==========
</TABLE>
<PAGE>
<TABLE>
Financial Statement 1B
NEW ENGLAND ELECTRIC SYSTEM AND SUBSIDIARIES
Consolidated Balance Sheet
At June 30, 1997
(Unaudited)
<CAPTION>
ASSETS
------
(In Thousands)
<S> <C>
Utility plant, at original cost $5,783,877
Less accumulated provisions for depreciation and amortization 1,921,852
----------
3,862,025
Construction work in progress 50,178
----------
Net utility plant 3,912,203
----------
Oil and gas properties, at full cost 1,291,288
Less accumulated provision for amortization 1,114,345
----------
Net oil and gas properties 176,943
----------
Investments:
Nuclear power companies, at equity 49,464
Other subsidiaries, at equity 43,213
Other investments 103,101
----------
Total investments 195,778
----------
Current assets:
Cash 3,955
Accounts receivable, less reserves of $20,793,000 229,588
Unbilled revenues 63,100
Fuel, materials, and supplies, at average cost 80,362
Prepaid and other current assets 78,209
----------
Total current assets 455,214
----------
Deferred charges and other assets 403,566
----------
$5,143,704
==========
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 736,773
Retained earnings 904,825
Treasury stock - 149,238 shares (5,185)
Unrealized gain on securities, net 2,684
----------
Total common share equity 1,704,067
Minority interests in consolidated subsidiaries 46,195
Cumulative preferred stock of subsidiaries 126,166
Long-term debt 1,484,542
----------
Total capitalization 3,360,970
----------
Current liabilities:
Long-term debt due within one year 104,710
Short-term debt 170,825
Accounts payable 127,793
Accrued taxes 25,357
Accrued interest 24,632
Dividends payable 37,350
Other current liabilities 132,434
----------
Total current liabilities 623,101
----------
Deferred federal and state income taxes 724,712
Unamortized investment tax credits 90,728
Other reserves and deferred credits 344,193
----------
$5,143,704
==========
</TABLE>
<PAGE>
<TABLE>
Financial Statement 2A
NEW ENGLAND ELECTRIC SYSTEM
(Parent Company Only)
Statement of Income
Twelve Months Ended June 30, 1997
(Unaudited)
<CAPTION>
(In Thousands)
<S> <C>
Equity in earnings of subsidiaries $212,844
Interest income - subsidiaries 754
--------
Total income from subsidiaries 213,598
Other income 104
---------
Total income 213,702
Corporate and fiscal expenses (includes $1,764,000 for cost
of services billed by an affiliated company) 7,065
Federal income tax benefit (434)
---------
Income before interest 207,071
Interest 305
---------
Net income $ 206,766
=========
Statement of Retained Earnings
Retained earnings at beginning of period $ 851,389
Net income 206,766
Dividends declared on common shares (153,329)
---------
Retained earnings at end of period $ 904,826
=========
</TABLE>
<PAGE>
<TABLE>
Financial Statement 2B
NEW ENGLAND ELECTRIC SYSTEM AND SUBSIDIARIES
Statement of Consolidated Income
Twelve Months Ended June 30, 1997
(Unaudited)
<CAPTION>
(In Thousands)
<S> <C>
Operating revenue $2,429,139
----------
Operating expenses:
Fuel for generation 373,324
Purchased electric energy 530,530
Other operation 524,489
Maintenance 131,403
Depreciation and amortization 240,618
Taxes, other than income taxes 145,063
Income taxes 138,137
----------
Total operating expenses 2,083,564
----------
Operating income 345,575
Other income:
Equity in income of generating companies 9,978
Other income (expense), net (12,435)
----------
Operating and other income 343,118
----------
Interest:
Interest on long-term debt 109,638
Other interest 16,562
Allowance for borrowed funds used during construction (2,328)
----------
Total interest 123,872
----------
Income after interest 219,246
Preferred dividends and net gain on reacquisition
of preferred stock 5,964
Minority interests 6,791
----------
Net income $ 206,491
==========
Average common shares 64,949,413
Net income per average common share $3.18
Dividends declared per share $2.36
Statement of Consolidated Retained Earnings
Retained earnings at beginning of period $ 850,939
Net income 206,491
Dividends declared on common shares (153,055)
Premium on redemption of preferred stock 450
---------
Retained earnings at end of period $ 904,825
=========
</TABLE>
<PAGE>
<TABLE>
Financial Statement 3
NEW ENGLAND ELECTRIC SYSTEM
(Parent Company Only)
Capital Structure Proformed to Include
$500 Million of Short-Term Debt
At June 30, 1997
(Unaudited)
<CAPTION>
(In Thousands)
<S> <C>
Common share equity:
Common shares, par value $1 per share:
Authorized - 150,000,000 shares
Issued - 64,969,652 shares
Outstanding - 64,969,652 shares $ 64,969
Paid-in capital 736,567
Retained earnings (including $643,084,000 of
undistributed subsidiary earnings) 904,826
----------
Total common share equity $1,706,362
Short-term debt $ 500,000
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> OPUR1
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE BALANCE SHEET AND RELATED STATEMENTS OF INCOME, AND
RETAINED EARNINGS OF NEW ENGLAND ELECTRIC SYSTEM (PARENT
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> 12-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 0
<OTHER-PROPERTY-AND-INVEST> 1,693,482
<TOTAL-CURRENT-ASSETS> 55,827
<TOTAL-DEFERRED-CHARGES> 2,978
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,752,287
<COMMON> 64,969
<CAPITAL-SURPLUS-PAID-IN> 736,567
<RETAINED-EARNINGS> 904,826
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,706,362
0
0
<LONG-TERM-DEBT-NET> 0
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 45,925
<TOT-CAPITALIZATION-AND-LIAB> 1,752,287
<GROSS-OPERATING-REVENUE> 0
<INCOME-TAX-EXPENSE> (434)
<OTHER-OPERATING-EXPENSES> 7,065
<TOTAL-OPERATING-EXPENSES> 6,631
<OPERATING-INCOME-LOSS> (6,631)
<OTHER-INCOME-NET> 213,702
<INCOME-BEFORE-INTEREST-EXPEN> 207,071
<TOTAL-INTEREST-EXPENSE> 305
<NET-INCOME> 206,766
0
<EARNINGS-AVAILABLE-FOR-COMM> 206,766
<COMMON-STOCK-DIVIDENDS> 153,329
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 173,514
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<TABLE> <S> <C>
<PAGE>
<ARTICLE> OPUR1
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED BALANCE SHEET AND RELATED CONSOLIDATED
STATEMENTS OF INCOME, RETAINED EARNINGS AND CASH FLOWS OF NEW
ENGLAND ELECTRIC SYSTEM, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
<SUBSIDIARY>
<NUMBER> 1
<NAME> NEES CONSOLIDATED
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<PERIOD-TYPE> 12-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 3,912,203
<OTHER-PROPERTY-AND-INVEST> 372,721
<TOTAL-CURRENT-ASSETS> 455,214
<TOTAL-DEFERRED-CHARGES> 403,566 <F1>
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 5,143,704
<COMMON> 64,970
<CAPITAL-SURPLUS-PAID-IN> 736,773
<RETAINED-EARNINGS> 904,825
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,704,067 <F3>
0
126,166 <F2>
<LONG-TERM-DEBT-NET> 1,484,542
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 170,825
<LONG-TERM-DEBT-CURRENT-PORT> 104,710
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,553,394
<TOT-CAPITALIZATION-AND-LIAB> 5,143,704
<GROSS-OPERATING-REVENUE> 2,429,139
<INCOME-TAX-EXPENSE> 138,137
<OTHER-OPERATING-EXPENSES> 1,945,427
<TOTAL-OPERATING-EXPENSES> 2,083,564
<OPERATING-INCOME-LOSS> 345,575
<OTHER-INCOME-NET> (2,457)
<INCOME-BEFORE-INTEREST-EXPEN> 343,118
<TOTAL-INTEREST-EXPENSE> 123,872
<NET-INCOME> 206,491
5,964 <F2>
<EARNINGS-AVAILABLE-FOR-COMM> 206,491
<COMMON-STOCK-DIVIDENDS> 153,055
<TOTAL-INTEREST-ON-BONDS> 109,638
<CASH-FLOW-OPERATIONS> 518,544
<EPS-PRIMARY> $3.18
<EPS-DILUTED> $3.18
<FN>
<F1> Total deferred charges includes other assets.
<F2> Preferred stock reflects preferred stock of subsidiaries. Preferred
stock dividends reflect preferred stock dividends of subsidiaries.
<F3> Total common stockholders equity is reflected net of treasury stock at
cost and unrealized gain on securities.
</FN>
