<PAGE>
File No. 70-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1
APPLICATION/DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
NEW ENGLAND ELECTRIC RESOURCES, INC.
25 Research Drive
Westborough, Massachusetts 01582
(Names of companies filing this statement
and address of principal executive offices)
NEW ENGLAND ELECTRIC SYSTEM
(Name of top registered holding company in parent system)
John G. Cochrane Robert King Wulff
Treasurer Corporation Counsel
25 Research Drive 25 Research Drive
Westborough, MA 01582 Westborough, MA 01582
(Names and Addresses of agents for service)
<PAGE>
PAGE 2
New England Electric Resources, Inc. (NEERI), a wholly-owned,
non-utility subsidiary of New England Electric System (NEES), was
organized for the purpose of pursuing new business opportunities.
NEES is a registered holding company under the Public Utility
Holding Company Act of 1935 (the Act), owning electric company
subsidiaries, a service company subsidiary (New England Power
Service Company), and an energy company subsidiary (New England
Power) (collectively, the System).
Neither NEES nor any subsidiary has an ownership interest in
an exempt wholesale generator (EWG) or foreign utility company
(FUCO) as defined in Sections 32 and 33 of the Act. Additionally,
neither NEES nor any subsidiary is a party to, or has any rights
under, a service, sales or construction agreement with an EWG or
FUCO.
In File No. 70-7950, NEERI sought the Commission's
authorization to invest up to $10 million in research and
development activities. As NEERI stated in its Form U-1, the
types of projects and technologies which it intended to pursue
"include, without limitation...Electro-technologies, energy
efficiency and power quality measures...Other developing
environmental, new generation and transmission technologies[.]"
By its order dated February 23, 1995 (Release No. 35-26235), the
Commission authorized this activity. Further, the Commission
authorized NEES to provide $10 million in financing to NEERI to
establish a research and development fund for these activities.
In its Application/Declaration on Form U-1, File No. 70-
7950, NEERI agreed "that any acquisition of securities by it using
any of the research and development funds requested herein will
remain subject to further Commission authorization." By the
present filing, NEERI seeks to obtain Commission approval to
acquire the securities of a company developing a new generation
technology for the performance monitoring and risk management of
power turbines.
1. Item 1: Description of Proposed Transaction
-------------------------------------------
NEERI seeks to invest in Monitoring Technology Corporation
(MTC), a Virginia corporation and the developer of a vibration
monitoring technology for the risk management and performance
monitoring of power turbines. In return for NEERI's equity
investment of $500,000, MTC will 1) issue shares of preferred
stock and warrants to NEERI; 2) waive the participation fee,
currently estimated at $200,000, for NEERI's power company
affiliate, New England Power (NEP), to participate as a testing
site for MTC's vibration monitoring technology; and 3) offer NEP
significant discounts on certain future services from MTC.
<PAGE>
PAGE 3
The MTC Technology
------------------
MTC is developing a method to read vibration frequency
"signatures" of power turbines and other turbomachines. This
technology, referred to as Rotational Vibration Monitoring (RVM),
would enable turbine operators to monitor their machines during
normal operations and quantitatively analyze turbine performance
and predict mechanical problems. This method of continuous,
automated on-line monitoring, when compared to present technology,
would result in 1) reduced turbine maintenance costs; 2) early
warning of some potential catastrophic failures; and 3) ultimately
more efficient turbine performance. Current predictive
maintenance for turbines requires periodically taking the turbines
off-line, usually for several weeks at a time, to perform
inspections for potential problems. This process is labor-
intensive and results in significant maintenance and associated
down-time costs, including the cost of purchasing replacement
power during the outage period. Therefore, it is desirable to
encourage the development of new technologies, such as RVM, which
would enable power generators to manage the mechanical condition,
availability and performance of turbines in a more cost effective
and efficient manner. While initially targeted at electric
utilities, RVM technology has the potential for further
application in other areas, such as propulsion and industrial
turbines.
New England Power, an affiliate of NEERI, operates a total of
fourteen combustion or steam turbines at three electrical
generation plants. Outages for these turbines occur at an average
of once a year and last several weeks, at a cost (not including
replacement power costs) representing a significant portion of
plant operating budgets. Further development in RVM technology is
therefore clearly functionally related to the System in that it
would benefit affiliates and their customers by reducing these
costs while increasing the availability and efficient performance
of power turbines. Although NEP desires such continued
development, NEP does not believe that such development is an
appropriate risk to be borne by NEP's electric customers. NEERI's
investment in MTC, as described below, includes the opportunity
for NEP to participate in MTC's product development beta program
at a minimal cost to NEP, while allowing NEERI to make a
potentially beneficial investment.
Purchase of Equity in MTC and NEP's Participation in the Beta
Program
--------------------------------------------------------
Pursuant to an agreement (the Agreement) yet to be negotiated
with MTC, NEERI intends to invest $500,000 in MTC. In return for
NEERI's equity investment of $500,000, MTC will 1) issue shares of
preferred stock and warrants to NEERI; 2) waive the participation
<PAGE>
PAGE 4
fee, currently estimated at $200,000, for New England Power (NEP),
to participate in MTC's beta program as an RVM testing site; and 3)
offer NEP significant discounts on future RVM services.
NEERI intends to purchase shares of MTC's convertible
preferred stock (the Shares) at a price of $1.75 per share, for a
total equity investment of $500,000. NEERI's investment in the
Shares will result in NEERI's ownership of not more than 5% of the
voting securities of MTC. The Shares may be converted to shares of
common stock upon the closing of an initial public offering in
which MTC's proceeds from such offering are not less than $10
million and in which the share offering price is $3.50 or more.
NEERI will also receive A and B warrants which will be exercisable
under certain terms and conditions to ensure that NEERI's
ownership does not exceed 5% of the voting securities of MTC. Both
the Shares and warrants will have full ratchet anti-dilution
protection.
In addition to the Shares and warrants, MTC will allow NEP,
NEERI's power company affiliate, to participate in MTC's RVM
development beta program. MTC will waive the beta program
participation fee, currently estimated at $200,000, for NEP. NEP
will offer MTC access to one of its generating units and auxiliary
equipment to allow testing and development of RVM technology.
Outside of this, NEP will allow MTC only limited access to other
station resources to support the beta program. In return, NEP
will achieve its stated objective of participation in RVM product
development, and will also receive compensation for its
participation in the program in the form of future RVM service
discounts, should NEP decide to purchase any future RVM services
from MTC.
Finally, NEERI requests authority to invest up to an
additional $500,000 in MTC. MTC, as a start-up company, has
limited financial resources to meet financial emergencies and is
likely to require additional investment prior to commercialization
of its product. Therefore, NEERI wishes to be in a position to
make limited additional investments in a prompt manner.
Financing by NEES
-----------------
By Order dated February 23, 1995 (Release No. 35-26235), the
Commission authorized NEES to provide financing for NEERI's
research and development activities. Specifically, the Commission
authorized NEES to provide financing to NEERI in an amount not to
exceed $10 million through non-interest bearing subordinated notes
or capital contributions. Pursuant to this authorization, NEES
now proposes to provide financing for NEERI's development
activities related to the MTC project. This financing will be
<PAGE>
PAGE 5
accomplished through either capital contributions or non-interest
bearing subordinated notes, and will be credited against the $10
million amount previously authorized by the Commission.
2. Item 2: Fees, Commissions and Expenses
--------------------------------------
Services incidental to the transactions described herein will
be performed by New England Power Service Company (NEPSCO) and
billed to NEERI at the actual cost thereof. NEPSCO is an
affiliated service company operating pursuant to Section 13 of the
Act and the Commission's rules thereunder. The cost of such
services to be paid by NEERI is not expected to exceed $5000.00, to
be incurred primarily by the Corporate Department (including
attorneys) and the Treasury Department (including accountants).
These amounts include a $2,000.00 filing fee paid by wire transfer
to the Commission at the time of filing this
application/declaration.
3. Item 3: Applicable Statutory Provisions
---------------------------------------
Sections 9(a) and 10 are believed to be applicable to the
acquisition by NEERI of the securities of MTC.
4. Item 4: Regulatory Approval
---------------------------
No federal or state commission or regulatory body, other than
the Commission, has jurisdiction over the proposed transactions.
5. Item 5: Procedure
-----------------
The applicants request that the Commission take action with
respect to this Application/Declaration without a hearing being
held, on or before March 15, 1996.
The applicants (i) do not request a recommended decision by a
hearing officer; (ii) do not request a recommended decision by any
other responsible officer of the Commission; (iii) hereby specify
that the Division of Investment Management may assist in the
preparation of the Commission's decision; and (iv) hereby request
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.
<PAGE>
PAGE 6
6. Item 6: Exhibits
----------------
(a) Exhibits
*B Agreement with MTC
*F Opinion of Counsel
G Financial Data Schedules
H Proposed Form of Notice
(b) Financial Statements
1-A Balance Sheet of NEERI at September 30, 1995,
Actual and Pro Forma
1-B Statement of Income and Retained Deficit for
NEERI for twelve months ended September 30,
1995, Actual and Pro Forma
2-A Consolidated Balance Sheet of NEES at
September 30, 1995, Actual and Pro Forma
2-B Statement of Consolidated Income and Retained
Earnings for NEES for twelve months ended
September 30, 1995, Actual and Pro Forma
*3-A Balance Sheet of MTC at September 30, 1995
*3-B Income Statement of MTC for twelve months
ended September 30, 1995
*3-C Financial Statements for MTC for fiscal years
1991, 1992, 1993 and 1994.
* To be filed by amendment
7. Item 7: Environmental Effects
-------------------------------
The transactions proposed by this Application/Declaration do
not involve a major federal action significantly affecting the
quality of the human environment.
<PAGE>
PAGE 7
SIGNATURE
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned Company has duly caused this
Application/Declaration on Form U-1 to be signed on its behalf by
the undersigned officer thereunto duly authorized by the Company.
NEW ENGLAND ELECTRIC RESOURCES, INC.
s/John G. Cochrane
By _____________________________
John G. Cochrane
Treasurer
Dated: January 29, 1996
<PAGE>
EXHIBIT AND FINANCIAL STATEMENT INDEX
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ----
B Agreement(s) with MTC To be filed
by amendment
F Opinion of Counsel To be filed
by amendment
G Financial Data Schedules Filed
herewith
H Proposed Form of Notice Filed
herewith
FINANCIAL STATEMENT
NO.
- -------------------
1-A Balance Sheet of NEERI at Filed
September 30, 1995, Actual herewith
and Pro Forma
1-B Statement of Income and Retained Filed
Deficit for NEERI for twelve herewith
months ended September 30, 1995,
Actual and Pro Forma
2-A Consolidated Balance Sheet Filed
of NEES at September 30, 1995, herewith
Actual and Pro Forma
2-B Statement of Consolidated Income Filed
and Retained Earnings for NEES herewith
for twelve months ended September 30,
1995, Actual and Pro Forma
3-A Balance Sheet of MTC at To be filed
September 30, 1995 by amendment
3-B Income Statement of MTC for To be filed
twelve months ended September 30 by amendment
1995
3-C Financial Statements for MTC for To be filed
fiscal years 1991, 1992, 1993 by amendment
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> OPUR1
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AND RELATED STATEMENTS OF INCOME, RETAINED EARNINGS AND
CASH FLOWS OF NEW ENGLAND ELECTRIC RESOURCES, INC., AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995
<PERIOD-END> SEP-30-1995 SEP-30-1995
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 0 0
<OTHER-PROPERTY-AND-INVEST> 1,000 1,500
<TOTAL-CURRENT-ASSETS> 828 828
<TOTAL-DEFERRED-CHARGES> 226 <F1> 226 <F1>
<OTHER-ASSETS> 0 0
<TOTAL-ASSETS> 2,054 2,554
<COMMON> 1 1
<CAPITAL-SURPLUS-PAID-IN> 0 500
<RETAINED-EARNINGS> (1,271) (1,271)
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,704 <F2> 2,204 <F2>
0 0
0 0
<LONG-TERM-DEBT-NET> 0 0
<SHORT-TERM-NOTES> 0 0
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 0 0
0 0
<CAPITAL-LEASE-OBLIGATIONS> 0 0
<LEASES-CURRENT> 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 350 350
<TOT-CAPITALIZATION-AND-LIAB> 2,054 2,554
<GROSS-OPERATING-REVENUE> 0 0
<INCOME-TAX-EXPENSE> 0 0
<OTHER-OPERATING-EXPENSES> 0 0
<TOTAL-OPERATING-EXPENSES> 0 0
<OPERATING-INCOME-LOSS> 0 0
<OTHER-INCOME-NET> (1,025) (1,025)
<INCOME-BEFORE-INTEREST-EXPEN> (1,025) (1,025)
<TOTAL-INTEREST-EXPENSE> 0 0
<NET-INCOME> (1,025) (1,025)
0 0
<EARNINGS-AVAILABLE-FOR-COMM> 0 0
<COMMON-STOCK-DIVIDENDS> 0 0
<TOTAL-INTEREST-ON-BONDS> 0 0
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> 0 <F3> 0 <F3>
<EPS-DILUTED> 0 <F3> 0 <F3>
<FN>
<F1> Total deferred charges includes other assets.
<F2> Total common stockholders equity includes subordinated notes payable to the
parent.
<F3> Per share data is not relevant because the Company's common stock is wholly-owned by New England Electric System.
</FN>
<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.
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1994
<PERIOD-END> SEP-30-1995 SEP-30-1994
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 3,834,159 3,834,159
<OTHER-PROPERTY-AND-INVEST> 385,374 385,874
<TOTAL-CURRENT-ASSETS> 501,419 500,919
<TOTAL-DEFERRED-CHARGES> 426,849 <F1> 426,849 <F1>
<OTHER-ASSETS> 0 0
<TOTAL-ASSETS> 5,147,801 5,147,801
<COMMON> 64,970 64,970
<CAPITAL-SURPLUS-PAID-IN> 736,823 736,823
<RETAINED-EARNINGS> 820,090 820,090
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,620,367 <F4> 1,639,356 <F4>
0 0
147,016 <F2> 147,016 <F2>
<LONG-TERM-DEBT-NET> 1,639,356 1,669,356
<SHORT-TERM-NOTES> 192,600 <F3> 192,600 <F3>
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 22,520 22,520
0 0
<CAPITAL-LEASE-OBLIGATIONS> 0 0
<LEASES-CURRENT> 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,525,942 1,525,942
<TOT-CAPITALIZATION-AND-LIAB> 5,147,801 5,147,801
<GROSS-OPERATING-REVENUE> 2,248,401 2,248,401
<INCOME-TAX-EXPENSE> 117,670 117,670
<OTHER-OPERATING-EXPENSES> 1,832,580 1,832,580
<TOTAL-OPERATING-EXPENSES> 1,950,250 1,950,250
<OPERATING-INCOME-LOSS> 298,151 298,151
<OTHER-INCOME-NET> 17,752 17,752
<INCOME-BEFORE-INTEREST-EXPEN> 315,903 315,903
<TOTAL-INTEREST-EXPENSE> 106,751 106,751
<NET-INCOME> 192,731 192,731
8,689 <F2> 8,689 <F2>
<EARNINGS-AVAILABLE-FOR-COMM> 192,731 192,731
<COMMON-STOCK-DIVIDENDS> 151,326 151,326
<TOTAL-INTEREST-ON-BONDS> 105,284 105,284
<CASH-FLOW-OPERATIONS> 401,167 401,167
<EPS-PRIMARY> $2.97 $2.97
<EPS-DILUTED> $2.97 $2.97
<FN>
<F1> Total deferred charges includes other assets and accrued Yankee Atomic costs.
<F2> Preferred stock reflects preferred stock of subsidiaries. Preferred stock
dividends reflect preferred stock dividends of subsidiaries.
<F3> Short-term notes includes commercial paper obligations and notes payable to
banks.
<F4> Total common stockholders equity is reflected net of treasury stock at cost.
</FN>
<PAGE>
EXHIBIT H
PROPOSED FORM OF NOTICE
New England Electric Resources, Inc. (NEERI), a wholly-owned,
non-utility subsidiary of New England Electric System (NEES), has
filed Form U-1 Application/Declaration File No. 70-____ under
Sections 9(a) and 10 of the Public Utility Holding Company Act of
1935 (the Act).
In File No. 70-7950, NEERI sought the Commission's
authorization to invest up to $10 million in research and
development activities. As NEERI stated in its Form U-1, the types
of projects and technologies which it intended to pursue "include,
without limitation...Electro-technologies, energy efficiency and
power quality measures...Other developing environmental, new
generation and transmission technologies[.]" By its order dated
February 23, 1995 (Release No. 35-26235), the Commission authorized
this activity. Further, the Commission authorized NEES to provide
$10 million in financing to NEERI to establish a research and
development fund for these activities.
In its Application/Declaration on Form U-1, File No. 70-7950,
NEERI agreed "that any acquisition of securities by it using any of
the research and development funds requested herein will remain
subject to further Commission authorization." NEERI now seeks to
obtain Commission approval to acquire the securities of a company
developing a new generation technology for the performance
monitoring and risk management of power turbines. Pursuant to the
authority previously granted by the Commission, NEES proposes to
provide funding for this research and development activity.
<PAGE>
<TABLE>
Financial Statement 1-A
Page 1 of 2
NEW ENGLAND ELECTRIC RESOURCES, INC.
Balance Sheet
At September 30, 1995
(Actual and Pro Forma)
(Unaudited)
ASSETS
------
<CAPTION>
ActualAdjustmentsPro Forma
--------------------------
(In Thousands)
<S> <C> <C> <C>
Investments, at cost $ 1,000 $ 500 $ 1,500
------- -------- --------
Total 1,000 500 1,500
------- -------- --------
Current assets:
Cash 171 171
Accounts receivable 299 299
Tax benefit receivable 358 358
------- -------- --------
Total current assets 828 828
------- -------- --------
Deferred charges and other assets 226 226
------- -------- --------
$ 2,054 $ 500 $ 2,554
======= ======== ========
PARENT COMPANY'S INVESTMENT AND LIABILITIES
-------------------------------------------
Common stock, par value $1 per share $ 1 $ 1
Subordinated notes payable to parent 2,974 2,974
Other paid-in capital $ 500 500
Retained deficit (1,271) (1,271)
------- -------- --------
Total parent company investment 1,704 500 2,204
Current liabilities:
Accounts payable to associated companies 36 36
Accounts payable 15 15
------- -------- --------
Total current liabilities 51 51
------- -------- --------
Deferred income taxes 299 299
------- -------- --------
$ 2,054 $ 500 $ 2,554
======= ======== ========
</TABLE>
<PAGE>
Financial Statement 1-A
Page 2 of 2
NEW ENGLAND ELECTRIC RESOURCES, INC.
The pro forma adjustments to show the estimated effect of the proposed
transactions on the foregoing Balance Sheet at September 30, 1995 are as
follows:
Debit - Cash $500,000
Credit - Other paid-in capital $500,000
To reflect the receipt of a capital contribution from New England Electric
System.
Debit - Investments, at cost $500,000
Credit - Cash $500,000
To reflect the use of the above capital contribution to fund a proposed
investment in MTC.
<PAGE>
<TABLE>
Financial Statement 1-B
Page 1 of 1
NEW ENGLAND ELECTRIC RESOURCES, INC.
Statement of Loss and Retained Deficit
Twelve Months Ended September 30, 1995
(Unaudited)
<CAPTION>
Actual
------
(In Thousands)
<S> <C>
Services rendered to nonassociated companies $ 110
Miscellaneous loss (250)
-------
Total income (140)
-------
Outside services employed 1,559
Interest on long-term notes
Income taxes (674)
-------
Total expense 885
-------
Net loss $(1,025)
=======
Retained deficit at beginning of period $ (246)
-------
Retained deficit at end of period $(1,271)
=======
</TABLE>
<PAGE>
<TABLE>
Financial Statement 2-A
Page 1 of 2
NEW ENGLAND ELECTRIC SYSTEM AND SUBSIDIARIES
Consolidated Balance Sheet
At September 30, 1995
(Actual and Pro Forma)
(Unaudited)
ASSETS
------
<CAPTION>
ActualAdjustments Pro Forma
----------------- ---------
(In Thousands)
<S> <C> <C> <C>
Utility plant, at original cost $ 5,240,449 $5,240,449
Less accumulated provisions for
depreciation and amortization 1,701,562 1,701,562
----------- ------------------
3,538,887 3,538,887
Net investment in Seabrook 1 under
rate settlement 19,012 19,012
Construction work in progress 276,260 276,260
----------- ------------------
Net utility plant 3,834,159 3,834,159
----------- ------------------
Oil and gas properties, at full cost 1,260,927 1,260,927
Less accumulated provision for amortization 1,018,531 1,018,531
----------- ------------------
Net oil and gas properties 242,396 242,396
----------- ------------------
Investments:
Nuclear power companies, at equity 47,080 47,080
Other subsidiaries, at equity 40,790 40,790
Other investments, at cost 55,108 $ 500 55,608
----------- ------------------
Total investments 142,978 500 143,478
----------- ------------------
Current assets:
Cash 7,795 (500) 7,295
Accounts receivable, less reserves of $18,910,000 268,548 268,548
Unbilled revenues 47,300 47,300
Fuel, materials and supplies, at average cost 99,269 99,269
Prepaid and other current assets 78,507 78,507
----------- ------------------
Total current assets 501,419 (500) 500,919
----------- ------------------
Accrued Yankee Atomic costs 104,257 104,257
Deferred charges and other assets 322,592 322,592
----------- ------------------
$ 5,147,801 $5,147,801
=========== ==================
CAPITALIZATION AND LIABILITIES
------------------------------
Capitalization:
Common share equity:
Common shares, par value $1 per share:
Authorized - 150,000,000 shares
Issued - 64,969,652 shares $ 64,970 $ 64,970
Paid-in capital 736,823 736,823
Retained earnings 820,090 820,090
----------- ------------------
1,621,883 1,621,883
Less 45,196 shares of treasury stock, at cost 1,516 1,516
----------- ------------------
Total common share equity 1,620,367 1,620,367
Minority interests in consolidated subsidiaries 49,620 49,620
Cumulative preferred stock of subsidiaries 147,016 147,016
Long-term debt 1,639,356 1,639,356
----------- ------------------
Total capitalization 3,456,359 3,456,359
----------- ------------------
Current liabilities:
Long-term debt due within one year 22,520 22,520
Short-term debt 192,600 192,600
Accounts payable 141,414 141,414
Accrued taxes 25,731 25,731
Accrued interest 23,469 23,469
Dividends payable 39,262 39,262
Other current liabilities 92,562 92,562
----------- ------------------
Total current liabilities 537,558 537,558
----------- ------------------
Deferred federal and state income taxes 765,366 765,366
Unamortized investment tax credits 92,910 92,910
Accrued Yankee Atomic costs 104,257 104,257
Other reserves and deferred credits 191,351 191,351
----------- ------------------
$ 5,147,801 $5,147,801
=========== ==================
</TABLE>
<PAGE>
Financial Statement 2-A
Page 2 of 2
NEW ENGLAND ELECTRIC SYSTEM AND SUBSIDIARIES
The pro forma adjustments to show the estimated effect of the proposed
transaction on the foregoing consolidated Balance Sheet at September 30, 1995
are as follows:
Debit - Other investments, at cost $500,000
Credit - Cash $500,000
To reflect the use of cash to fund a proposed investment in MTC.
<PAGE>
<TABLE>
Financial Statement 2-B
Page 1 of 1
NEW ENGLAND ELECTRIC SYSTEM AND SUBSIDIARIES
Statement of Consolidated Income
Twelve Months Ended September 30, 1995
(Unaudited)
<CAPTION>
Actual
------
(In Thousands)
<S> <C>
Operating revenue $2,248,401
----------
Operating expenses:
Fuel for generation 221,209
Purchased electric energy 554,381
Other operation 506,576
Maintenance 154,850
Depreciation and amortization 269,265
Taxes, other than income taxes 126,299
Income taxes 117,670
----------
Total operating expenses 1,950,250
----------
Operating income 298,151
Other income:
Allowance for equity funds used during
construction 10,690
Equity in income of generating companies 9,728
Other income (expense) - net (2,666)
----------
Operating and other income 315,903
----------
Interest:
Interest on long-term debt 105,284
Other interest 14,961
Allowance for borrowed funds used during
construction (13,494)
----------
Total interest 106,751
----------
Income after interest 209,152
Preferred dividends of subsidiaries 8,689
Minority interests 7,732
----------
Net income $ 192,731
==========
Average common shares 64,955,646
Net income per common share $2.97
Statement of Retained Earnings
Retained earnings at beginning of period $ 778,685
Net income 192,731
Dividends declared on common shares (151,326)
----------
Retained earnings at end of period $ 820,090
==========
</TABLE>
