Modified
FORM U-13-60
ANNUAL REPORT
For the Period
Beginning January 1, 1999 and Ending December 31, 1999
To The
U.S. Securities and Exchange Commission
of
HEC Inc.
A Subsidiary Service Company
Date of Incorporation: June 19, 1990
State under which Incorporated:
The Commonwealth of Massachusetts
Location of Principal Executive Offices of Reporting Company
24 Prime Parkway
Natick, MA 01760
Report filed pursuant to Order dated July 27, 1990
in file number 70-7698
Name, title, and address of officer to whom correspondence concerning this
report should be addressed:
Linda A. Jensen, Treasurer
HEC Inc.
24 Prime Parkway
Natick, MA 01760
Name of Principal Holding Company Under Which Reporting
Company is Organized:
Northeast Utilities
INSTRUCTIONS FOR THE USE OF MODIFIED FORM U-13-60
1. Number of Copies - Each annual report shall be filed in duplicate. The
company should prepare and retain at least one extra copy for itself in
case correspondence with reference to the report becomes necessary.
2. Definitions - Definitions contained in Instruction 01-8 to the Uniform
System of Accounts for Mutual Service Companies and Subsidiary Service
Companies, Public Utility Holding Company Act of 1935, as amended
February 2, 1979 shall be applicable to words or terms used specifically
within this Form U-13-60.
3. Organization Chart - The company shall submit with each annual report a
copy of its current organization chart.
LISTING OF SCHEDULES AND ANALYSIS OF ACCOUNTS
Schedule Page
Description of Schedules and Accounts Acct. No. No.
- ------------------------------------- --------- ----
Description of system of accounting 3
COMPARATIVE BALANCE SHEET Schedule I 4-5
- -------------------------
Company property Schedule II 6
Accumulated provision for depreciation and
amortization of company property Schedule III 7
Accounts receivable and accounts
receivable from associate companies Schedule V 8
Miscellaneous deferred debits Schedule IX 9
Proprietary capital Schedule XI 10
Long-term debt Schedule XII 11
Current and accrued liabilities Schedule XIII 12
Notes to financial statements Schedule XIV 13-15
COMPARATIVE INCOME STATEMENT Schedule XV 16
- ----------------------------
Analysis of billing - non-associate companies Account 458 17
Departmental analysis of salaries Account 920 18
Outside services employed Account 923 19-20
Miscellaneous general expenses Account 930.2 21
Rents Account 931 22
Taxes other than income taxes Account 408 23
Notes to statement of income (included above) Schedule XVIII 24
ORGANIZATION CHART 25
- ------------------
Annual Report of: HEC Inc.
for the Twelve Months Ended December 31, 1999
Description of the system of accounting employed by HEC Inc.:
HEC Inc. maintains its accounting books and records on a computer network
using a general ledger software package developed by BST Consultants. The
chart of accounts is a standard set developed for architectural and engineering
firms. HEC's subsidiary, Select Energy Contracting Inc., maintains its records
on CF Data System using the standard chart of accounts developed within the
general contracting business. Revenues and expenses are recorded on an accrual
basis. A more detailed description of HEC's accounting policies can be found
in the Notes to the Financial Statements.
<TABLE>
<CAPTION>
ANNUAL REPORT OF HEC INC.
AND SUBSIDIARIES
SCHEDULE I - COMPARATIVE BALANCE SHEET
Give balance sheet of the Company as of December 31, 1999 and 1998
- -------------------------------------------------------------- ------------ ------------
ACCOUNT ASSETS AND OTHER DEBITS AS OF DECEMBER 31
- -------------------------------------------------------------- ------------ ------------
1999 1998
<S> <C> <C>
COMPANY PROPERTY
101 Company property (Schedule II) $ 18,437,013 $ 4,291,941
107 Construction work in progress (Schedule II) 0 0
------------ ------------
Total Property 18,437,013 4,291,941
------------ ------------
108 Less accumulated provision for depreciation and
amortization of company property (Schedule III) 3,926,721 3,012,857
------------ ------------
Net Company Property 14,510,292 1,279,084
------------ ------------
INVESTMENTS
123 Investments in associate companies (Schedule IV) 0 0
124 Other Investments (Schedule IV) 0 0
------------ ------------
Total Investments 0 0
------------ ------------
CURRENT AND ACCRUED ASSETS
131 Cash 3,609,341 423,493
134 Special deposits
135 Working funds 1,800 1,800
136 Temporary cash investments (Schedule IV)
141 Notes receivable
143 Accounts receivable (Schedule V) 8,925,507 2,867,670
144 Accumulated provision of uncollectible accounts
145 Notes receivable from associate companies
146 Accounts receivable for associate companies (Schedule V) 98,822 796,281
152 Fuel stock expenses undistributed
154 Materials and supplies 189,151 0
163 Stores expense undistributed
165 Prepayments 270,902 144,498
174 Miscellaneous current and accrued assets
------------ ------------
Total Current and Accrued Assets 13,095,523 4,233,742
------------ ------------
DEFERRED DEBITS
181 Unamortized debt expense
184 Clearing Accounts
186 Miscellaneous deferred debits (Schedule IX) 7,317,432 1,923,274
188 Research, development, or demonstration expenditures 0 0
190 Accumulated deferred income taxes 287,292 79,703
------------ ------------
Total Deferred Debits 7,604,724 2,002,977
------------ ------------
TOTAL ASSETS AND OTHER DEBITS $ 35,210,539 $ 7,515,803
============ ============
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF HEC INC.
AND SUBSIDIARIES
SCHEDULE I - COMPARATIVE BALANCE SHEET
Give balance sheet of the Company as of December 31, 1999 and 1998
- -------------------------------------------------------------- ------------ ------------
ACCOUNT LIABILITIES AND PROPRIETARY CAPITAL AS OF DECEMBER 31
- -------------------------------------------------------------- ------------ ------------
1999 1998
<S> <C> <C>
PROPRIETARY CAPITAL
201 Common stock issued (Schedule XI) $ 100 $ 100
211 Miscellaneous paid-in capital (Schedule XI) 18,999,855 3,998,565
215 Appropriated Retained Earnings (Schedule XI) 0 0
216 Unappropriated Retained Earnings (Schedule XI) (132,422) (562,215)
------------ ------------
Total Proprietary Capital 18,867,533 3,436,450
------------ ------------
LONG-TERM DEBT
223 Advances from associate companies (Schedule XII) 0 0
224 Other long-term debt (Schedule XII) 725,000 525,000
225 Unamortized premium on long-term debt 0 0
226 Unamortized discount on long-term debt 0 0
------------ ------------
Total Long Term Debt 725,000 525,000
------------ ------------
CURRENT AND ACCRUED LIABILITIES
231 Notes Payable 0 0
232 Accounts Payable 6,333,340 1,520,936
233 Notes payable to associate co's (Schedule XIII) 3,500,000 1,000,000
234 Accounts payable to associate co's (Schedule XIII) 176,656 55,704
236 Taxes accrued 448,025 220,528
237 Interest Accrued
238 Dividends declared
241 Tax collections payable (Schedule XIII) 36,154 18,124
242 Misc. current and accrued liabilities (Schedule XIII) 4,674,447 570,132
------------ ------------
Total Current and Accrued Liabilities 15,168,622 3,385,424
------------ ------------
DEFERRED CREDITS
253 Other deferred credits
255 Accumulated deferred investment tax credits
------------ ------------
Total Deferred Credits 0 0
------------ ------------
283 Accumulated Deferred Income Taxes 449,384 168,929
------------ ------------
TOTAL LIABILITIES AND PROPRIETARY CAPITAL $ 35,210,539 $ 7,515,803
============ ============
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF HEC INC.
AND SUBSIDIARIES
For the Year Ended December 31, 1999
SCHEDULE II - COMPANY PROPERTY
BALANCE AT BALANCE AT
BEGINNING OTHER 1/ CLOSE
DESCRIPTION OF YEAR ADDITIONS SALES CHANGES OF YEAR
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
COMPANY PROPERTY
Account
- ------
301 ORGANIZATION 14,583 12,356,669 12,371,252
303 MISCELLANEOUS INTANGIBLE PLANT 0 0
304 LAND AND LAND RIGHTS 0 0
305 STRUCTURES AND IMPROVEMENTS 0 0
306 LEASEHOLD IMPROVEMENTS 11,367 69,095 80,462
307 EQUIPMENT 2/ 0 0
308 OFFICE FURNITURE & EQUIPMENT 1,374,525 1,192,420 2,566,945
309 AUTOMOBILES, OTHER VEHICLES 57,098 526,888 583,986
AND RELATED GARAGE EQUIPMENT
310 AIRCRAFT AND AIRPORT EQUIPMENT 0 0
311 OTHER COMPANY PROPERTY 3/ 2,834,368 2,834,368
-----------------------------------------------------
SUBTOTAL 4,291,941 14,145,072 0 0 18,437,813
-----------------------------------------------------
107 CONSTRUCTION WORK IN 0
PROGRESS 4/
-----------------------------------------------------
TOTAL 4,291,941 14,145,072 0 0 18,437,013
=====================================================
1/ PROVIDE AN EXPLANATION OF THOSE CHANGES CONSIDERED MATERIAL:
None
2/ SUB-ACCOUNTS ARE REQUIRED FOR EACH CLASS OF EQUIPMENT OWNED. THE COMPANY SHALL PROVIDE
A LISTING BY SUB-ACCOUNT OF EQUIPMENT ADDITIONS DURING THE YEAR AND THE BALANCE AT
THE CLOSE OF THE YEAR.
Not applicable
3/ DESCRIBE OTHER COMPANY PROPERTY:
ENCORE Inservice Property consists of energy efficient fixtures and metering equipment
installed in end-user facilities under a program sponsored by a New England utility
company. HEC Inc. is paid based on the savings generated by the fixtures over a specified
period of time. The equipment remains the property of HEC Inc. until the end of the
contract and is amortized over the life of the contract.
4/ DESCRIBE CONSTRUCTION WORK IN PROGRESS
None
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF HEC INC.
AND SUBSIDIARIES
For the Twelve Months Ended December 31, 1999
SCHEDULE III
ACCUMULATED PROVISION FOR DEPRECIATION AND
AMORTIZATION OF COMPANY PROPERTY
BALANCE AT ADDITIONS OTHER 1/ BALANCE
BEGINNING CHARGED TO CHANGES AT CLOSE
DESCRIPTION OF YEAR ACCT 403/404 SALES ADD/(DEDUCT) OF YEAR
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
COMPANY PROPERTY
Account
- ------
301 ORGANIZATION 12,102 337,808 349,910
303 MISCELLANEOUS INTANGIBLE PLANT 0 0
304 LAND AND LAND RIGHTS 0 0
305 STRUCTURES AND IMPROVEMENTS 0 0
306 LEASEHOLD IMPROVEMENTS 8,869 1,500 10,369
307 EQUIPMENT 0 0
308 OFFICE FURNITURE & EQUIPMENT 991,469 240,652 (2,553) 1,229,568
309 AUTOMOBILES, OTHER VEHICLES 25,807 52,693 78,500
AND RELATED GARAGE EQUIPMENT
310 AIRCRAFT AND AIRPORT EQUIPMENT 0 0
311 OTHER COMPANY PROPERTY 2/ 1,974,610 283,764 2,258,374
-----------------------------------------------------
TOTAL 3,012,857 916,417 0 (2,553) 3,926,721
=====================================================
1/ PROVIDE AN EXPLANATION OF THOSE CHANGES CONSIDERED MATERIAL:
Not applicable
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF HEC INC.
AND SUBSIDIAIRES
For the Twelve Months Ended December 31, 1999
SCHEDULE V - ACCOUNTS RECEIVABLE AND
ACCOUNTS RECEIVABLE FROM ASSOCIATE COMPANIES
INSTRUCTIONS: Complete the following schedule listing accounts receivable and
accounts receivable from each associate company. Where the
service company has provided accomodation or convenience
payments for associate companies, a separate listing of total
payments for each associate company by sub-account should be
provided.
BALANCE AT BALANCE AT
BEGINNING CLOSE
DESCRIPTION OF YEAR OF YEAR
- -------------------------------------------------- ----------------- ----------
<S> <C> <C>
Account
143 Accounts Receivable from clients $2,867,670 $8,925,507
---------- ----------
TOTAL $2,867,670 $8,925,507
========== ==========
146 Accounts Receivable from Associate Companies
Northeast Utilities Service Company $ 0 $ 0
The Connecticut Light & Power Company 723,496 8,823
Western Massachusetts Electric Company 72,785 61,030
Public Service Company of New Hampshire 0 0
Select Energy, Inc. 0 28,969
---------- ----------
TOTAL $ 796,281 $ 98,822
========== ==========
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF HEC INC.
AND SUBSIDIARIES
For the Twelve Months Ended December 31, 1999
SCHEDULE IX - MISCELLANEOUS DEFERRED DEBITS
INSTRUCTIONS: Provide detail of items in this account. Items less than $10,000
may be grouped, showing the number of items in each group.
BALANCE AT BALANCE AT
BEGINNING CLOSE
DESCRIPTION OF YEAR OF YEAR
- ---------------------------------------------------- ------------------ ----------
<S> <C> <C>
Account
- -------
186 Miscellaneous Deferred Debits
Accrued Receivable for energy systems &
design contracts, net $1,913,274 $7,309,932
West Virginia Legal Receivable 10,000 7,500
---------- ----------
TOTAL $1,923,274 $7,317,432
========== ==========
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF HEC INC.
AND SUBSIDIARIES
For the Twelve Months Ended December 31, 1999
SCHEDULE XI - PROPRIETARY CAPITAL
NUMBER OF PAR OR STATED OUTSTANDING CLOSE OF
SHARES VALUE NUMBER OF PERIOD
ACCT. CLASS OF STOCK AUTHORIZED PER SHARE SHARES TOTAL AMOUNT
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
201 COMMON STOCK 100 1 100 100
- ----------------------------------------------------------------------------------------------
INSTRUCTIONS: Classify amounts in each account with brief explanations, disclosing
the general nature of transactions which give rise to the
reported amounts.
DESCRIPTION AMOUNT
- ----------------------------------------------------------------------------------------------
211 Miscellaneous paid-in-capital 19,000,000
211.84 Currency Translation Adjustment (145)
215 Appropriated Retained Earnings None
-------------
TOTAL 18,999,855
=============
INSTRUCTIONS: Give particulars concerning net income or (loss) during the year,
distinguishing between compensation for the use of capital owed or
net loss remaining for servicing nonassociates per the General
Instructions of the Uniforn Systems of Accounts. For dividends paid
during the year in cash or otherwise, provide rate percentage,
amount of dividend, date declared and date paid.
BALANCE AT NET INCOME BALANCE AT
BEGINNING OR DIVIDENDS CLOSE
DESCRIPTION OF YEAR (LOSS) PAID OTHER (1) OF YEAR
- --------------------------------------------------------------------------------------------------
216 Unappropriated Retained Earnings (562,215) 659,113 0 (229,320) (132,422)
-----------------------------------------------------------
TOTAL (562,215) 659,113 0 (229,320) (132,422)
===========================================================
(1) Allocation of benefits - Employee Stock Ownership Plan.
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF HEC INC. AND SUBSIDIARIES
For the Year Ended December 31, 1999
SCHEDULE XII
LONG-TERM DEBT
INSTRUCTIONS: Advances from associate companies should be reported separately for advances in
notes, and advances on open account. Names of associate companies from which
advances were received shall be shown under the class and series of obligation
column. for Account 224 - - Other long-term debt provide the name of creditor
company or organization, terms of obligation, date of maturity, interest rate, and
the amount authorized and outstanding.
- -------------------------------------------------- --------- --------- --------- ---------- ---------
BALANCE BALANCE
TERMS OF OBLIG. DATE AT AT
CLASS & SERIES OF INTEREST AMOUNT BEGINNING DEDUCTIONS CLOSE
NAME OF CREDITOR OF OBLIGATION MATURITY RATE AUTHORIZED OF YEAR ADDITIONS (1) OF YEAR
- -------------------------------------------------- --------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
ACCOUNT 223 - $ $ $ $ $
ADVANCES FROM
ASSOCIATE
COMPANIES:
ACCOUNT 224 -
OTHER
LONG-TERM DEBT:
Arizona Public 1996 Secured
Service Notes 12/31/2000 7.84% 250,000 250,000 250,000
Arizona Public 1997 Secured
Service Notes 12/31/2000 7.84% 275,000 275,000 275,000
Arizona Public 1999 Secured
Service Notes 12/31/2000 7.84% 200,000 0 200,000 200,000
-------- -------- -------- -------- --------
$725,000 $525,000 $200,000 $ 0 $725,000
======== ======== ======== ======== ========
(1) GIVE AN EXPLANATION OF DEDUCTIONS:
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF HEC INC.
AND SUBSIDIARIES
For the Twelve Months Ended December 31, 1999
SCHEDULE XIII - CURRENT ACCRUED LIABILITIES
INSTRUCTIONS: Provide balance of notes and accounts payable to each associate
company. Give descriptions and amount of miscellaneous current
and accrued liabilities. Items less than $10,000 may be grouped,
showing the number of items in each group.
BALANCE AT BALANCE AT
BEGINNING CLOSE
DESCRIPTION OF YEAR OF YEAR
- --------------------------------------------- ------------------- ----------
<S> <C> <C>
Account
- -------
233 NOTES PAYABLE TO ASSOCIATE COS. $ 1,000,000 $3,500,000
---------- ----------
TOTAL $ 1,000,000 $3,500,000
========== ==========
234 ACCOUNTS PAYABLE TO ASSOCIATE COS.
Northeast Utilities Service Company $ 55,704 $ 167,987
Select Energy, Inc. 0 8,669
---------- ----------
TOTAL $ 55,704 $ 176,656
========== ==========
241 TAX COLLECTIONS PAYABLE $ 18,124 $ 36,154
---------- ----------
TOTAL $ 18,124 $ 36,154
========== ==========
242 MISCELLANEOUS CURRENT AND
ACCRUED VENDOR LIABILITIES
Accrued Audit Fee $ 32,687 $ 48,846
Accrued Legal 0 18,359
Accrued Incentive Expense 119,069 1,146,087
Accrued Accounts Payable 26,288 0
Accrued Lighting Maintenance 37,596 35,360
Reserve for energy savings guarantee 104,000 154,000
Deferred Compensation 211,109 876,237
Notes Payable-Other 0 1,500,000
Accrued Interest 0 77,671
Accrued Warranty 0 10,247
Accrued West Virginia Legal Credit 10,000 7,500
Accrued Payroll 0 144,464
Subcontractors Advances 0 629,213
Miscellaneous (3 Items) 29,383 26,463
---------- ----------
TOTAL $ 570,132 $4,674,447
========== ==========
</TABLE>
ANNUAL REPORT OF HEC INC.
AND SUBSIDIARIES
For the Twelve Months Ended December 31, 1999
SCHEDULE XIV
NOTES TO FINANCIAL STATEMENTS
INSTRUCTIONS: The space below is provided for important notes regarding the
financial statements or any account thereof. Furnish
particulars as to any significant contingent assets or
liabilities existing at the end of the year. Notes relating to
financial statements shown elsewhere in this report may be
indicated here by reference.
(1) Summary of Significant Accounting Policies
(a) General
HEC Inc. (the "Company"), a wholly-owned subsidiary of Northeast
Utilities Enterprises, Inc. ("NUEI"), provides design and energy
services for engineering and installation of energy efficient
equipment. The consolidated statements of the Company include the
accounts of Southwest HEC Energy Services L.L.C., owned 99% by HEC and
three wholly-owned subsidiaries, HEC Energy Consulting Canada Inc.,
Select Energy Contracting Inc., and Reed's Ferry Supply Co., Inc. HEC's
subsidiary, Select Energy Contracting, Inc (formerly HEC International
Corporation) purchased the assets of a mechanical contractor in August
1999. At the same time, HEC purchased Reed's Ferry Supply Co., Inc.
Significant intercompany transactions have been eliminated in
consolidation.
(b) Revenue Recognition
Revenues include amounts earned under contracts for the design and
installation of energy systems and the realization of energy savings.
Certain revenues are recognized by the percentage-of-completion method
as work progresses for contracts in process. Other revenues are
recognized as savings are realized by customers. Losses on contracts
are fully recognized in the period they become estimable.
(c) Depreciation
Depreciation and amortization are provided using straight-line methods
over the estimated useful lives of the assets.
(2) Short-Term Debt
The Company is a participant in the Northeast Utilities system Money
Pool (Pool). As a limited participant, HEC is limited to borrowing funds
provided by NU parent. The Pool provides a more efficient use of the cash
resources of the system, and reduces outside short-term borrowings.
Northeast Utilities Service Company (a wholly-owned subsidiary of NU)
administers the Pool as agent for the member companies. Borrowing based
on loans from NU parent bear interest at NU parent's cost and must be
repaid based upon the terms of NU parent's original borrowing. At
December 31, 1999 and 1998, HEC had approximately $3,500,000 and $1,000,000
in borrowings at 4.9 and 5.8 percent respectively, from the Pool.
(3) Long-Term Debt
Southwest HEC entered into a variable debt agreement with Arizona Public
Service ("APS") on December 7, 1995. The note requires an initial loan
of $100,000 with additional advances to Southwest HEC of $50,000 quarterly,
beginning April 1, 1996, until a maximum balance of $250,000 was reached.
The interest rate is set annually based on the long-term interest rate APS
reports on its FERC Form 1. The 1999 interest for the notes was 7.84%.
During 1999, APS made additional advances amounting to $200,000 to help
fund the expansion of the federal government program. The interest rate on
the advances made in 1999 is 7.84%. The total principal is due on
December 31, 2000, unless the notes are converted to a 50% ownership in
Southwest HEC.
(4) Defined Contribution Plan
The Company with the exception of Select Energy Contracting, Inc.(SECI)
participates in NU's 401(k) plan which covers substantially all employees.
Eligible employees may contribute up to 16% of their compensation to the
plan, and the Company will contribute up to 3% of each employee's
compensation. Employees become vested in contributions by specified
percentages over a five year period. Select Energy Contracting, Inc.
participates in its own 401(k) plan which covers substantially all
employees. Eligible employees may contribute up to 16% of their
compensation to the plan, and SECI contributes up to 3% of each employee's
compensation. Employees become vested in contributions by specified
percentages over a twenty year period.
(5) Leases
The Company has certain operating leases for offices and equipment expiring
at various dates through 2004. During 1999 and 1998, HEC charged
approximately $552,000 and $398,000 respectively, in operating lease rental
payments to operating expense. Future minimum rentals payable for
operating leases are as follows:
2000 $ 623,300
2001 492,200
2002 451,600
2003 445,000
2004 209,100
----------
Total $2,221,200
==========
<TABLE>
<CAPTION>
ANNUAL REPORT OF HEC INC
AND SUBSIDIARIES
For the Twelve Months Ended December 31, 1999 and 1998
SCHEDULE XV - STATEMENT OF INCOME
YEAR ENDED YEAR ENDED
DECEMBER 31 DECEMBER 31
ACCOUNT DESCRIPTION 1999 1998
- ------------------------------------------------------- ------------------------
<S> <C> C>
INCOME
457 Services rendered to Associate Companies $ 861,503 $ 2,515,694
458 Services rendered to Nonassociate Companies 44,959,860 20,192,403
421 Miscellaneous Income/(Loss) 7,616 152,095
----------- -----------
TOTAL INCOME 45,828,979 22,860,192
=========== ===========
EXPENSE
904 Reserve for Uncollectible Accounts 187,355 10,000
920 Salaries and Wages 7,639,488 4,350,734
921 Office Supplies and Expense 14,389,963 4,827,617
922 Administrative Expense transferred-credit 0 0
923 Outside Services Employed 19,401,730 12,632,911
924 Property Insurance 46,829 33,098
925 Injuries and Damages 142,226 126,270
926 Employee Pensions and Benefits 801,716 402,923
928 Regulatory Commission Expense
930.1 General Advertising Expense 15,473 2,940
930.2 Miscellaneous General Expense 137,027 88,502
931 Rents 551,600 397,899
935 Maintenance of Structures and Equipment 85,293 36,210
403 Depreciation and Amortization Expense 576,222 440,883
404 Amortization - Organization Costs 372,230 2,977
408 Taxes other than Income Taxes 443,724 355,851
409 Income Taxes 17 28,722
410 Provision for Deferred Income Taxes 222,076 0
411 Provision for Deferred Income Taxes-Credit 0 (310,120)
411.5 Investment Tax Credit 0 0
426.1 Donations 0 0
426.5 Other Deductions 0 0
427 Interest on Long-term Debt 0 0
428 Amortize Debt Expenses 0 0
430 Interest on Debt to Associate Companies 100,884 74,971
431 Other Interest Expense 56,013 32,576
----------- -----------
TOTAL EXPENSE 45,169,866 23,534,964
----------- -----------
NET INCOME/(LOSS) $ 659,113 $ (674,772)
=========== ===========
</TABLE>
ANNUAL REPORT OF HEC INC
AND SUBSIDIARIES
For the Twelve Months Ended December 31, 1999
ANALYSIS OF BILLING
NONASSOCIATE COMPANIES
ACCOUNT 458
EXCESS
OR TOTAL
DEFICIENCY AMOUNT
DESCRIPTION TOTAL COST 458-4 BILLED
- ---------------------------------------------------- -----------
ENERGY MANAGEMENT SERVICES $32,709,162
DEMAND SIDE MANAGEMENT SERVICES 65,513
CONSULTING SERVICES 5,874,165
MECHANICAL CONTRACTING 6,311,020
-----------
TOTAL $44,959,860
===========
INSTRUCTIONS: Provide a brief description of the services
rendered to each nonassociate company.
Energy Management Services:
Engineering and installation of energy conservation measures.
Demand Side Management Services:
Engineering and consulting services in the design,
implementation, and evaluation of demand side management
programs.
Consulting Services:
Other engineering and design services.
Mechanical Contracting:
Installation of Plumbing and HVAC equipment.
ANNUAL REPORT OF HEC INC
AND SUBSIDIARIES
For the Twelve Months Ended December 31, 1999
DEPARTMENTAL ANALYSIS OF SALARIES
ACCOUNT 920
NAME OF DEPARTEMENT OR SALARY NUMBER OF
SERVICE FUNCTION EXPENSE PERSONNEL
- ------------------------------------------ ---------------------------
ADMINISTRATION $2,002,906 21
ENGINEERING 4,473,956 156
MARKETING 1,162,626 15
------------ ----
TOTAL $7,639,488 192
============ ====
<TABLE>
<CAPTION>
ANNUAL REPORT OF HEC INC.
AND SUBSIDIARIES
For Twelve Months Ended December 31, 1999
OUTSIDE SERVICES EMPLOYED
ACCOUNT 923
From Whom "A"-Associate Description
Purchased "NA"-Nonassociate Amount of Services
- ------------------------------------------- -----------------------------
<S> <C>
SUBCONTRACTOR SERVICES
Bel Aire Mechanical NA 1,190,958 Mechancial Contractor
Carr Canyon Contractors NA 411,263 Mechancial Contractor
Positive Energy Contractors NA 1,301,911 Lighting Contractor
Lightron of Cornwall NA 450,971 Lighting Contractor
Burns Brothers Contracting NA 1,415,281 Electrical/Lighting Contractor
Building Controls NA 255,063 Mechanical Contractor
Lewis Oil Company NA 243,895 Mechanical Contractor
Fresh Meadow Mechanical NA 3,229,177 Mechanical Contractor
CRK Contracting NA 220,076 Mechanical Contractor
Ashley Mechanical NA 745,165 Mechanical Contractor
Haley's Metal Shop NA 587,876 Mechanical Contractor
Johnson Controls NA 690,722 EMS Contractor
Horizon Metals Inc NA 164,394 Mechanical Contractor
Longo Industries NA 938,251 Mechanical Contruction
KB Insultech NA 138,315 Plumbing Contractor
Mytech Corporation NA 478,072 EMS Contractor
Keystone Controls NA 276,633 Mechanical Contruction
T.M Bier and Associates NA 180,872 Mechanical Contractor
Thomas Heating & AC NA 134,685 Electrical Contractor
Queens Industrial Elect. NA 235,836 Electrical Contractor
York International NA 173,900 Mechanical Contractor
Twenty nine Vendors NA 450,271
-----------
TOTAL SUBCONTRACTORS $13,913,587
-----------
SUBCONTRACTOR SUPPLIERS
Aquamarine/Daisy NA 1,102,723 Boiler Supplier
Connecticut Trane Co NA 528,401 Chiller Supplier
The Granite Group NA 320,237 Plumbing Supplier
Newport Steel NA 409,406 Piping Supplier
Independent Pipe NA 202,168 Plumbing Supplier
Northpoint Supply NA 156,864 Plumbing Supplier
Thompson-Durkee Co NA 288,783 Plumbing Supplier
Kelly & Hayes NA 219,988 Electrical/Lighting Supplier
Sensorswitch NA 250,950 Lighting Supplier
-----------
TOTAL SUBCONTRACTOR SUPPLIERS $ 3,479,520
-----------
CONSULTING SERVICES
EEM NA 1,307,126 Engineering/Construction Mgment
Thirty six Vendors NA 511,943
-----------
TOTAL CONSULTING SERVICES $ 1,819,069
-----------
LEGAL SERVICES
Three Vendors NA $ 34,741
-----------
AUDITING SERVICES
Arthur Andersen NA $ 56,118
-----------
MARKETING AGENTS & CONSULTANTS
Four Vendors NA $ 52,423
-----------
OTHER PROFESSIONAL SERVICES
Six Vendors NA $ 46,272
-----------
TOTAL $19,401,730
===========
</TABLE>
ANNUAL REPORT OF HEC INC
AND SUBSIDIARIES
For the Twelve Months Ended December 31, 1999
MISCELLANEOUS GENERAL EXPENSE
ACCOUNT 930.2
INSTRUCTIONS: Provide a listing of the amount included in Account 930,
"Miscellaneous General Expense," classifying such expenses
according to their nature. Payments and expenses permitted
by Section 321(b)(2) of the Federal Election Campaign Act,
as amended by Public Law 94-283 in 1976 (2 U.S.C Section
441(b)(2) shall be separately classified.
DESCRIPTION AMOUNT
- ----------------------------------------------------------- --------
Utilities $ 27,302
Miscellaneous 62,048
Recruiting 47,677
--------
TOTAL $137,027
========
ANNUAL REPORT OF HEC INC
AND SUBSIDIARIES
For the Twelve Months Ended December 31, 1999
RENTS
ACCOUNT 931
INSTRUCTIONS: Provide a listing of the amount included in Account 931 "Rents,"
classifying such expenses by major groupings of property, as
defined in the account definition of the Uniform System of
Accounts.
DESCRIPTION AMOUNT
- ----------------------------------------------------- --------------
Office Space $ 497,518
Equipment Rental 54,082
--------------
TOTAL $ 551,600
==============
ANNUAL REPORT OF HEC INC
AND SUBSIDIARIES
For the Twelve Months Ended December 31, 1999
TAXES OTHER THAN INCOME TAXES
ACCOUNT 408
INSTRUCTIONS: Provide an analysis of Account 408, "Taxes Other than Income
Taxes. Separate the analysis into two groups: (1) other than
U.S. Government taxes, and (2) U.S. Government taxes. Specify
each of the various kinds of taxes and show the amounts thereof.
Provide a subtotal for each class of tax.
KIND OF TAX AMOUNT
----------
1) Other than U.S. Government taxes
City & County Taxes $ 6,826
State Franchise Taxes 32,365
State Unemployment Taxes 46,683
----------
Subtotal $ 85,874
----------
2) U.S. Government taxes
Employer's FICA Tax $ 346,556
Federal Unemployment Taxes 11,294
----------
Subtotal $ 357,850
----------
TOTAL $ 443,724
==========
ANNUAL REPORT OF HEC INC AND SUBSIDIARIES
For the Year Ended December 31, 1999
SCHEDULE XVIII
NOTES TO STATEMENTS OF INCOME
INSTRUCTIONS: The space below is provided for important notes regarding the
statement of income or any account thereof. Furnish
particulars as to any significant increases in services rendered
or expenses incurred during the year. Notes relating to
financial statements shown elsewhere in this report may be
indicated here by reference.
See Notes to Financial Statements on pages 13 through 15.
ANNUAL REPORT OF HEC INC. AND SUBSIDIARIES
ORGANIZATION CHART (AS OF DECEMBER 31, 1999)
President - Thomas W. Philbin, Ph.D.
- Executive Vice President and Chief Operating Officer -
James B. Redden, P.E.
- President - Denron - Dennis Morrisette
- Vice President - David S. Dayton
- Vice President - Finance, Treasurer, and Clerk - Linda A. Jensen
ANNUAL REPORT OF HEC INC. AND SUBSIDIARIES
SIGNATURE CLAUSE
Pursuant to the requirements of the Public Utility Holding Company Act of 1935
and in accordance with release numbers 22719, and order numbers File No.
70-7698, the undersigned company has duly caused this report to be signed on
its behalf by the undersigned officer thereunto duly authorized.
HEC INC. AND SUBSIDIARIES
-----------------------------
(Name of Reporting Company)
By: /s/ Linda Jensen
-----------------------------
(Signature of Signing Officer)
Linda Jensen, Vice President-
Finance, Treasurer and Clerk
-----------------------------
(Printed Name and Title of
Signing Officer)
Date: April 24, 2000
-----------------------------
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<NAME>HEC INC. AND SUBSIDIARIES
<MULTIPLIER>1
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-END> DEC-31-1999 DEC-31-1998
<BOOK-VALUE> PER-BOOK PER-BOOK
<NET-SERVICE-COMPANY-PROPERTY> 14,510,292 1,279,084
<TOTAL-INVESTMENTS> 0 0
<TOTAL-CURRENT-ASSETS> 13,095,523 4,233,742
<TOTAL-DEFERRED-DEBITS> 7,604,724 2,002,977
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<TOTAL-ASSETS-AND-DEBITS> 35,210,539 7,515,803
<TOTAL-PROPRIETARY-CAPITAL> 18,867,533 3,436,450
<TOTAL-LONG-TERM-DEBT> 725,000 525,000
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<NOTES-PAYABLE-ASSOCIATE-COMP> 3,500,000 1,000,000
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<DEFERRED-INCOME-TAX> 449,384 168,929
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<MISC-INCOME-OR-LOSS> 7,616 152,095
<TOTAL-INCOME> 45,828,979 22,860,192
<SALARIES-AND-WAGES> 7,639,488 4,350,734
<EMPLOYEE-PENSION-AND-BENEFIT> 801,716 402,923
<OTHER-EXPENSES> 36,728,662 18,781,307
<TOTAL-EXPENSES> 45,169,866 23,534,964
<NET-INCOME> 659,113 (674,772)
<TOTAL-EXPENSES-DIRECT-COST> 45,169,866 23,534,964
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