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File Nos. 70-7950/70-8555
CERTIFICATE OF NOTIFICATION
(Rule 24)
SECURITIES AND EXCHANGE COMMISSION
BY
NEES GLOBAL , INC. (NG)
(Formerly NEES GLOBAL TRANSMISSION, INC. (NGT))
In accordance with the orders of the Securities and Exchange Commission
dated September 4, 1992 and May 15, 1995, the following is a report for the
third quarter of 1998:
1. Effective May 1, 1998, NGT changed its name to NEES Global, Inc.
(NG). NG is a Massachusetts corporation which was formed in
January 1992. NG was not capitalized until October 13, 1992 when
one thousand shares of NG common stock were issued to New England
Electric System (NEES).
On June 25, 1998, New England Water Heater Co., Inc. (NEWH), an
energy-related company, became a wholly-owned subsidiary of NG in
accordance with Rule 58 of the Act. The company's financial
statements are consolidated with NG. In the third quarter of 1998,
NEWH purchased at net book value all rental water heaters from its
affiliates, Massachusetts Electric Company and The Narragansett
Electric Company.
NG is a party to an agreement with a company located in
Pennsylvania to provide ongoing work as a subcontractor for
electric meter retrofit services. The work took place in
Massachusetts. No revenue was recognized in the third quarter of
1998.
NG is a party to an agreement to provide construction related
services at a job site in Minnesota. The project is complete and
no additional revenue will be recognized.
NG entered into agreements with companies located in Virginia,
Minnesota, Ohio, Maine, Illinois, Indiana, Vermont, District of
Columbia, and the Netherlands to provide consulting services. A
total of $261,000 in revenue was recognized in the third quarter of
1998.
In the third quarter of 1998, NG invested $193,000 to maintain a
one percent interest in AllEnergy Marketing Co., LLC., an
affiliated "energy-related company" within the meaning of Rule 58 of
the Act.
2. As of September 30, 1998, NEES had purchased 1,000 shares of NG
common stock and had made subordinated loans and other paid-in
capital contributions to NG totaling $27,926,000 and $4,353,000,
respectively.
3. As of September 30, 1998, NG employed no permanent personnel.
However, during the three-month period ending September 30, 1998,
64 employees of associated companies of NEES billed portions of
their time to NG.
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4. As of September 30, 1998, NG had not purchased or received from
associated companies of NEES any intellectual property.
5. During the three-month period ended September 30, 1998, NG received
legal, financial, and other administrative services from New
England Power Service Company, amounting to $194,000.
6. Attached in Exhibits A through C are the consolidated financial
statements of NG. These statements include a balance sheet, income
statement, and statement of cash flows. All significant
intercompany transactions have been eliminated.
In May 1995, NG invested $1,000,000 in Separation Technologies,
Inc. (STI). This investment is in the form of 153,846 shares of 6%
cumulative convertible preferred stock. NG also provides
maintenance services for STI equipment on an as needed basis, for
which no revenue was recognized in the third quarter of 1998.
In July 1996, NG invested $475,000 in Monitoring Technologies, Inc.
This investment is in the form of 271,429 shares of Series E
convertible preferred stock.
In July 1997, NG invested $1,000,000 in Underwater Unlimited Diving
Services, Inc. (UUDSI) in the form of 200,000 shares of Convertible
Nonvoting Preferred Stock. As of the third quarter of 1998, NG had
made capital contributions totaling $250,000 in HydroServ Group,
Inc. In September 1998, NG decided to terminate its 50 percent
interest in HydroServ Group LLC (HG). As a result of its decision
to terminate its interest in the HG joint venture, NG recognized a
charge to expense of $1,009,000 in the third quarter of 1998
representing its investment in UUDSI and its net equity investment
in HG.
In August 1997, NG invested $1,400,000 in Nexus Energy Software,
Inc. in the form of 1,000,000 shares of Series A Preferred Stock.
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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 certificate of
notification (Commission's File Nos. 70-7950 and 70-8555) to be signed on its
behalf by the undersigned officer thereunto duly authorized.
NEES GLOBAL, INC.
s/John G. Cochrane
By: _________________________________
John G. Cochrane
Treasurer
Date: November 30, 1998
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EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
A Balance Sheet at September 30, 1998 Filed
(Unaudited, subject to adjustment) herewith
B Statement of Income and Filed
Accumulated Deficit for the twelve herewith
months ended September 30, 1998
(Unaudited, subject to adjustment)
C Statement of Cash Flows Filed
for the twelve months ended herewith
September 30, 1998
(Unaudited, subject to adjustment)
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Exhibit A
NEES GLOBAL, INC.
Consolidated Balance Sheet
September 30, 1998
(Unaudited, Subject to Adjustment)
(thousands of dollars)
ASSETS
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Current assets:
Cash $ 890
Accounts receivable, less reserves of $98,000 845
Accounts receivable from affiliates 12
Other current assets 781
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Total current assets 2,528
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Fixed assets:
Property and equipment 20,429
Accumulated depreciation (3,472)
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Total fixed assets 16,957
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Investments at cost:
Separation Technologies, Inc. 1,000
Monitoring Technologies, Inc. 475
Nexus, Inc. 1,400
AllEnergy Marketing Co., LLC 614
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Total investments 3,489
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Total assets $22,974
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LIABILITIES AND PARENT COMPANY'S INVESTMENT
- -------------------------------------------
Current liabilities:
Accounts payable $ 288
Accounts payable to affiliates 7
Accrued taxes 369
Miscellaneous accrued liabilities 120
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Total current liabilities 784
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Deferred credits and other liabilities 156
Parent company's investment:
Common stock, par value $1 per share 1
Subordinated notes payable to parent 27,926
Other paid-in capital 4,353
Accumulated deficit (10,246)
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Total parent company's investment 22,034
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Total liabilities and parent company's
investment $22,974
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Exhibit B
NEES GLOBAL, INC.
Consolidated Statement of Income and Accumulated Deficit
For the Twelve Months Ended September 30, 1998
(Unaudited, Subject to Adjustment)
(thousands of dollars)
INCOME
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Rental water heater revenue $ 1,822
Consulting revenue and other 593
Equity in earnings - HydroServ Group, LLC (192)
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Total income 2,223
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EXPENSE
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Operation and maintenance expenses 3,232
Depreciation 393
Loss from investment in Underwater Unlimited Diving
Services, Inc. and HydroServ Group, LLC 1,009
Income taxes (1,041)
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Total expenses 3,593
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Net loss $ (1,370)
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Accumulated deficit at beginning of period $ (8,876)
Accumulated deficit at end of period $(10,246)
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Exhibit C
NEES GLOBAL, INC.
Statement of Cash Flows
For the Twelve Months Ended September 30, 1998
(Unaudited, Subject to Adjustment)
(thousands of dollars)
Operating Activities:
Net loss $(1,370)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Depreciation 393
Loss on investment in UUDSI and HG 1,009
(Increase)/decrease in other current assets (723)
(Increase)/decrease in accounts receivable (316)
Increase/(decrease) in accounts payable (54)
Increase/(decrease) in other current liabilities 82
Other, net 183
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Net cash used in operating activities $ (796)
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Investing Activities:
Fixed asset expenditures $(12,978)
Investment in HydroServ Group, LLC (150)
Investment in AllEnergy Marketing Co., LLC (614)
Investment in New England Water Heater Co., Inc. (4,228)
--------
Net cash used in investing activities $(17,970)
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Financing Activities:
Subordinated notes payable to parent-net $15,177
Capital contribution from parent 4,353
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Net cash provided by financing activities $19,530
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Net increase/(decrease) in cash and cash equivalents $ 764
Cash and cash equivalents at beginning of period 126
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Cash and cash equivalents at end of period $ 890
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